TIDMDEMG
RNS Number : 8809K
Deltex Medical Group PLC
27 April 2020
27 April 2020 - Deltex Medical Group plc (AIM: DEMG), the global
leader in oesophageal Doppler monitoring, today announces its
results for the year ended 31 December 2019.
Deltex Medical Group plc
("Deltex Medical" or the "Group")
Results for the year ended 31 December 2019
HIGHLIGHTS
Financial
-- the Group posted an operating profit (excluding exceptional
items) of GBP90,000 (2018: loss GBP943,000) - an improvement of
GBP1 million
-- positive adjusted EBITDA of GBP0.4 million (2018: loss GBP0.7
million)
-- revenues GBP4.3 million (2018: GBP5.0 million), reflecting a
focus on profitable business, lower sales & marketing spend and
cessation of a third-party distribution agreement
-- overheads (before exceptional costs) decreased by GBP1.3
million to GBP3.2 million (2018: GBP4.5 million)
-- sales & marketing spend decreased by 44% to GBP1.2
million (2018: GBP2.2 million), reflecting significantly smaller
sales teams in the USA and UK
-- cash and cash equivalents at 31 December 2019 of GBP0.9
million (2018: GBP0.6 million)
COVID-19
-- demand increasing for Deltex Medical TrueVue Doppler systems
in intensive care units in the UK and USA as a result of the
COVID-19 pandemic
-- reduced demand in Q1 for the Group's Doppler probes from
operating rooms - due to cancellation of elective surgery in
anticipation of COVID-19; although increased demand associated with
"catch-up" expected later in the year
Business
-- 2019 was a year of restructuring and refocusing Deltex
Medical
-- benefits of the new strategy - with a substantially lower
cost base - clear from the financial results
-- 22 randomised controlled trials which show the benefit of
measuring aortic blood flow (via TrueVue Doppler) to optimise the
clinical management of patients represent an extremely valuable
asset for the Group
-- work ongoing to extend and augment the technologies on the
Group's TrueVue haemodynamic monitoring platform supported by a UK
Innovate Smart Award
Commenting on the results, Nigel Keen, Chairman of Deltex
Medical, said:
"I am pleased to see the Group generate a profit before
exceptional costs at the operating level."
"The benefits of the restructuring and refocusing work, combined
with the new strategy, are clear and give the Group a sound base to
grow through and after the effects of the COVID-19 pandemic."
"Although the COVID-19 pandemic is horrifying, it is notable
that UK and US intensive care units are beginning to order Deltex
Medical's specialist haemodynamic monitoring technology to help
clinicians select the optimal treatment regime for the ventilated
COVID-19 patients."
Deltex Medical Group plc 01243 774 837
investorinfo@Deltexmedical.com
Nigel Keen, Chairman
Andy Mears, Chief Executive
David Moorhouse, Group Finance Director
Arden Partners plc 020 7614 5900
Ciaran Walsh
Dan Gee-Summons
Joint Broker
Turner Pope Investments (TPI) Ltd 0203 657 0050
info@turnerpope.com
Andy Thacker
Zoe Alexander
This announcement contains Inside Information as defined under
the Market Abuse Regulation (EU) No. 596/2014.
Notes for Editors
Deltex Medical manufactures and markets haemodynamic monitoring
technologies which are primarily used in critical care and general
surgical procedures. Deltex Medical's proprietary oesophageal
Doppler monitoring ("ODM") (TrueVue Doppler) measures blood flow
velocity in the central circulation in real time. Minimally
invasive, easy to set-up and quick to focus, the technology
generates a low-frequency ultrasound signal which is highly
sensitive to changes in blood flow and measures such changes in
'real time'. Deltex Medical is the only company in the enhanced
haemodynamic space to have built a robust and credible evidence
base demonstrating both the clinical and economic benefits of its
core technology: TrueVue Doppler. This technology has been proven
in a wide range of clinical trials to reduce complications suffered
by patients after surgery and consequently can save hospitals
money.
Deltex Medical's TrueVue System on the CardioQ-ODM+ monitor
platform now provides clinicians with two further advanced
haemodynamic monitoring technologies. TrueVue Impedance is an
entirely non-invasive monitoring technology which transmits low
magnitude, high frequency electrical signals through the thorax and
measures the changes to this signal when the heart pumps blood.
TrueVue PressureWave uses the peripheral blood pressure signal
analysis to give doctors information on changes in the circulation
and is particularly suited to monitoring lower risk or
haemodynamically stable patients.
Group goal
Haemodynamic management is now becoming widely accepted as a
vital part of the anaesthesia protocols for surgical patients, as
well as treating ventilated intensive care patients, including
ventilated COVID-19 patients. Consequently, the Group's focus is on
maximising value from the opportunities presented, as enhanced
haemodynamic management is adopted into routine clinical practice
around the world. The Group aims to provide clinicians with a
single platform - a 'haemodynamic workstation' - which offers them
a range of technologies from simple to sophisticated to be deployed
according to the patient's clinical condition as well as the skill
and expertise of the user. Doing this will enable the Group to
partner with healthcare providers to support modern haemodynamic
management across the whole hospital.
The Group is currently in the implementation phase of achieving
this goal in a number of territories worldwide, operating directly
in the UK and the USA, and via agreements with approximately 40
distributors overseas.
Deltex Medical and COVID-19
Deltex Medical: COVID-19 and the hospital Intensive Care Unit
("ICU") setting
At the moment there is no approved drug or vaccine to treat
COVID-19 patients. As a result, intensivists have limited
therapeutic options available for the very sick COVID-19 patients
who have been admitted to an ICU. A recently published research
paper (Cunningham et al. "Treatment of COVID-19: old tricks for new
challenges" Critical Care (2020) 24:91) stated that:
"the management of patients mainly focuses on the provision of
supportive care, e.g., oxygenation, ventilation, and fluid
management." [Emphasis added]
UK ICUs
Since the start of the COVID-19 pandemic in the United Kingdom,
Deltex Medical has seen an increase in demand for its TrueVue
Doppler technology from NHS ICUs in order to help optimise the
treatment of severely ill COVID-19 patients.
Given the rapidly evolving situation, it is currently not
possible to quantify the financial implications of this increase in
demand from NHS ICUs, as it is unclear how long the COVID-19
pandemic will last or the number of severely sick patients who will
be affected. A number of NHS hospitals which have previously used
the Group's TrueVue Doppler technology in their ICUs are placing
orders as a result of the clinical challenges of treating COVID-19
patients in an ICU.
US ICUs
Deltex Medical has a small sales force in the USA which focuses
on sales of its TrueVue Doppler technology principally into
hospital operating rooms ("ORs"). However, the Group has recently
started to see demand for its TrueVue Doppler technology from
hospitals in the USA for use in the ICUs.
As a result of COVID-19 there could be strong demand for
haemodynamic monitoring in US ICUs and there is likely to be an
overall lack of capacity from existing suppliers to satisfy this
potential demand for haemodynamic monitoring technology. In order
to satisfy this potential demand, Deltex Medical is preparing for a
significant increase in demand from the US ICU market. As in the
UK, it is difficult to predict the financial implications for the
Group of such increased demand from US ICUs as a result of
COVID-19.
Rest of world ICUs
Deltex Medical sells its TrueVue range of haemodynamic
monitoring to the rest of the world via a network of international
distributors. Such sales are lower margin and the Group does not
have direct access to, or communication with, the end-user
customer. The Group works closely with its international
distributors to support their sales and marketing efforts; however,
at the moment the Group is focusing its primary sales activities on
direct sales into the key UK and US healthcare markets.
Nevertheless, activity is being seen in sales to ICUs in a number
of international markets served by our distributors.
Deltex Medical: COVID-19 and elective surgery
In the first quarter of 2020, Deltex Medical has seen a decline
in monitor and probe orders for use in elective surgery from UK and
US hospitals and from its international distributors. This is as a
result of the cancellation of elective surgical procedures with the
corresponding decline in demand for the Group's Doppler probes in
the OR which has been caused by the need to keep hospital
facilities and resources available for COVID-19 patients.
Once the COVID-19 pandemic has subsided the Group believes that
there will be significant demand from patients and their physicians
to catch up with the postponed elective procedures to prevent them
from developing into emergencies. This is expected to result in a
pronounced uptick in demand in the future for TrueVue Doppler
probes from the Group's existing OR-based customers. Preliminary
feedback from some of the overseas markets which experienced the
COVID-19 pandemic earlier than the UK, indicates that elective
surgery is beginning to restart in those countries.
Conclusion
Deltex Medical promotes the benefits of its unique Doppler-based
haemodynamic monitoring technology, backed by a substantial body of
high quality scientific evidence, to anaesthetists in the OR and
intensivists in the ICU. It currently appears that the COVID-19
pandemic is providing a powerful external stimulus to drive higher
adoption rates of the Group's TrueVue Doppler technology in ICUs
around the world.
At the moment it is too early to determine what proportion of
the reduction in OR-related revenues experienced at the beginning
of the year will be caught up later in the year. Nor is it possible
to assess how large demand will be this year for TrueVue Doppler
(and other modalities on its TrueVue haemodynamic monitoring
system) in the ICU setting. However, it is already clear that there
is increased demand for the Group's TrueVue Doppler in the ICU
setting.
As part of our management response to the pandemic, we have
taken proactive steps to minimise expenditure and our cost base.
This includes the cessation of all discretionary expenditure and a
hiring freeze. (We have, to date, not furloughed any employees as
they are busy serving, directly or indirectly, our customers, save
for two members of staff for medical reasons.) As a consequence, we
have been able to make significant savings which has further
enhanced our ability to generate cash even at lower activity
levels.
The Group had cash on hand at 31 December 2019 of GBP0.9
million. It is following closely the availability and structure of
COVID-19 related Government-sponsored sources of finance, although
it currently has no need to access such funding sources.
Chairman's Statement
Financial results
Since its foundation as a technologically driven start-up,
Deltex Medical has invested in the development of the TrueVue
System to provide clinicians with the ability to monitor their
patients' haemodynamic condition throughout their journey through
the healthcare system. To validate the safety benefits,
improvements in patient outcomes and the financial savings for the
healthcare system, we have invested heavily in supporting multiple
randomised clinical trials ("RCTs"). There have now been in excess
of 22 RCTs published which show the benefits of measuring aortic
blood flow to optimise the clinical management of patients. This
scientific evidence base derived using our technology is a unique
asset associated with Deltex Medical's technology and a key
differentiator for the Group.
2019 marked a significant milestone in Deltex Medical's long
history as the Group operated profitably, posting an operating
profit (excluding exceptional items) of GBP90,000.
Throughout the year we implemented the Group's new strategy of
reducing overhead costs to target positive EBITDA and focusing
selling activities on high-usage accounts, or accounts where the
Group's TrueVue Doppler technology is already well established.
Although COVID-19 is expected to have a significant effect, 2020
will be the first full year of trading of the re-baselined business
under the new strategy.
The success of the strategy can be seen in the Group's results
with adjusted EBITDA (Earnings before interest, depreciation and
amortisation, share-based payments and non-executive directors'
fees, as well as any exceptional costs) increasing to GBP0.4
million, up by GBP1.1 million from a loss of GBP0.7 million in
2018. The gross margin was also higher at 77% (2018: 71%). This is
also reflected in the operating profit before exceptional items of
GBP90,000 in contrast to a loss of GBP943,000 in 2018. The 2019
exceptional costs relate principally to payments in lieu of notice
and compensation for loss of office to a former Director.
Overheads (before exceptional costs) declined by 29% (GBP1.2
million) to GBP3.2 million (2018: GBP4.5 million), included in
which sales and marketing expenses were reduced by 44% to GBP1.3
million (2018: GBP2.2 million), reflecting significantly smaller
sales teams in the USA and UK.
Reflecting the implementation of the new strategy, revenues for
the year declined by 14% to GBP4.3 million (2018: GBP5.0 million).
The decline in revenue was primarily as a result of:
(i) focusing on the most profitable business and not pursuing market share at all costs;
(ii) the termination of a distribution agreement relating to the
sale of lower margin third-party goods in the UK;
(iii) a substantial reduction in expenditure in sales and
marketing, especially in the USA; and
(iv) reduced levels of activity from the Group's French
distributor as a result of some isolated commercial issues.
Cash on hand at 31 December, 2019 was GBP0.9 million (2018:
GBP0.6 million) and net assets were GBP2.7 million (2018: GBP 2.4
million).
Market positioning and proposition to clinicians
There is a large body of scientific evidence comprising RCTs
which shows that the use of appropriate haemodynamic monitoring
technology to assist the management of medium- and high-risk
anesthetised surgical patients significantly improves patient
outcomes and reduces the incidence rates of avoidable complications
such as acute kidney injuries ("AKIs") and surgical site infections
("SSIs"). The 2018 Fedora study went further, showing that there
were both clinical and financial benefits associated with the
haemodynamic monitoring of low-risk surgical patients, and not just
the medium- and high-risk patients assessed in earlier RCTs.
Substantially all of the evidence supporting the use of
haemodynamic monitoring described in these RCTs was generated using
the Group's TrueVue Doppler technology.
Deltex Medical provides clinicians with a suite of haemodynamic
monitoring technologies via its TrueVue platform led by its
flagship TrueVue Doppler technology. The Doppler technology
provides extremely accurate, real-time data on the haemodynamic
status of patients which enables clinicians to optimise the
clinical status of anaesthetised patients during surgery safely and
rapidly.
Supported by the findings of RCTs, the Group's selling
proposition to intensivists and anaesthetists is that TrueVue
Doppler haemodynamic monitoring results in better outcomes for
surgical and critical care patients with lower associated
costs.
The Group plans to extend the utility and broaden the
applicability of the haemodynamic monitoring technologies on its
TrueVue platform via a number of targeted product development
initiatives, many of which are part-funded by competitively-won
grants.
We promote the use of Deltex Medical's TrueVue Doppler
technology over lower-accuracy and clinically unproven alternatives
to decision-makers in hospitals around the world. We also focus on
the long-term profitability of the Group thereby providing us with
the financial resources to grow the business.
Employees
The Group employs a significant number of talented individuals
across a range of disciplines in the UK and overseas, who work to
make Deltex Medical successful. On behalf of the Board I would like
to thank all the Group's employees for their dedication and hard
work during 2019 - and their resilience so far this year in the
face of the COVID-19 pandemic.
Prospects
There are a number of underlying trends which are helping Deltex
Medical's business, including:
-- an ageing population worldwide with more complex health
issues;
-- a wider acceptance by clinicians of the need for haemodynamic
monitoring;
-- an increasing focus on patient safety, including the
reduction of avoidable complications;
-- the increasing reluctance of insurers to reimburse hospitals
for the costs of avoidable complications, such as AKIs;
-- pressure on hospitals, especially in the USA, to reduce the
cost of in-patient treatment; and
-- following the COVID-19 outbreak, an increasing focus on
infectious diseases and pandemic preparedness.
The Board believes that Deltex Medical is well positioned to
benefit from these trends which are seen in many healthcare markets
around the world.
Over recent months the Group has seen a slowdown in elective
surgical procedures in hospitals throughout the world as a result
of measures taken to combat COVID-19. This has resulted in a
decline in TrueVue Doppler probe usage. In contrast to the
reduction in elective surgery in hospitals, sales of monitors and
probes for critical care use to hospitals in countries fighting the
COVID-19 virus have sharply increased, offsetting the decline from
elective surgical procedures. It is too early to assess the quantum
or timing of these effects on the Group's trading in 2020, in part
as the Group trades through third party distributors in many of
these countries. Further information on COVID-19 is set out in the
section above entitled "Deltex Medical and COVID-19".
The Group's cost base is substantially lower. The sales and
marketing activities are significantly more targeted. There is a
strong emphasis on writing profitable business, as opposed to
pursuing market share at any cost. The foundations are in place for
the Group to target profitable revenue growth from this new
platform with more focused commercial activities.
Nigel Keen
Chairman
April 2020
Business Review
Why clinicians choose TrueVue Doppler
It is widely accepted that, given the published scientific
evidence, anaesthetised patients undergoing surgery should have
their haemodynamic status closely monitored. If such patients are
not monitored carefully with a device providing real-time, accurate
haemodynamic information, then physicians are unable to administer
optimally appropriate fluids and drugs. This can result in severe
adverse outcomes and give rise to extended hospital stays as well
as substantially higher attributable healthcare costs.
Haemodynamic monitoring is not just indicated for anaesthetised
surgical patients but should also be used on other patients,
including those severely unwell patients admitted to ICUs and
Accident & Emergency units for trauma patients.
Multiple RCTs have demonstrated that a TrueVue Doppler
haemodynamic monitoring protocol, which combines targeted fluid and
pharmacological interventions, can improve patient outcomes
significantly, including substantially lowering the risk of
complications such as SSIs and AKIs.
Deltex Medical's TrueVue Doppler technology is acknowledged to
be the "gold standard" for the monitoring of real-time bloodflow.
Its Doppler technology is strongly differentiated from competing
haemodynamic monitoring technologies, which are not supported by an
equivalent evidence base, and which tend to rely on measuring blood
pressure or deriving bloodflow from algorithms. Such information
is, at best, imprecise and, at worst, misleading.
The precision and generation of real-time data from the TrueVue
Doppler technology, along with the unrivalled evidence base
supporting its use on patients with different risk profiles, lies
at the heart of Deltex Medical's technology proposition to its
customers.
New product development
The Group's new product development strategy is to optimise
further the TrueVue Doppler technology as well as to improve and
augment the other haemodynamic monitoring technologies available on
Deltex Medical's TrueVue haemodynamic monitoring platform.
Over the last year the Group has been successful with a number
of UK grant applications to help fund the development and extension
of its technology. In October the Group announced that its
principal subsidiary, Deltex Medical Limited ("DML"), had been
awarded an Innovate UK Smart Award with eligible project costs of
GBP0.5 million, of which 70% are eligible for reimbursement.
Innovate Smart Award is a UK government sponsored research and
development programme and we will use the grant to develop the next
generation of our monitor. During 2019 DML was awarded five grants
with total project costs worth GBP0.63 million, with GBP0.45
million eligible for reimbursement.
The award of these grants has allowed us to accelerate the
investment in these new products which are expected to be completed
over the next two years. Deltex Medical will continue to apply for
grants during 2020 to assist with the funding of the development of
its product range.
Changes in the international regulatory regime for medical
device manufacturers
The Group operates in a number of highly regulated environments.
The Group has a robust Quality Management System which was audited
in October 2019 under the new Medical Device Single Audit Program
("MDSAP"). MDSAP comprises a single regulatory audit of a medical
device manufacturer's quality management system to ensure that it
satisfies the requirements of multiple regulatory jurisdictions.
Following the MDSAP audit the Group's systems are now fully
certified for product sales in the EU, USA, Canada and Australia
until February 2023. The Group also welcomes the added requirements
for proving competitive equivalence in the Medical Device
Regulations ("MDR 2017"). The MDR 2017 specifically prohibits
competitors claiming technical and clinical equivalence to products
such as the Group's TrueVue Doppler monitor and probes without
access to the detailed technical documentation needed to
demonstrate equivalence. The guidance goes on to state "equivalence
might be difficult or impossible in case of limited access to the
technical documentation of the devices". The substantial body of
evidence supporting the use of Deltex Medical's TrueVue Doppler
system means that these changes to international regulations should
be positive for the Group.
Update on the implementation of the new strategy
In 2019 we took a number of important steps to implement the new
strategy which we had adopted in the second half of 2018. These
included identifying further cost reductions, negotiating the
termination of a distribution agreement for third party goods in
the UK and increasing our commercial focus to ensure that the
business opportunities we targeted, particularly in the USA, would
be successful and profitable.
The next stage of the implementation of the strategy is focused
around targeting profitable revenue growth from the new,
reconfigured and leaner platform which we developed during 2019.
This will, of course, be subject to the as yet unknown effect of
COVID-19.
Three principal divisions: the USA, the UK and International
The sales and marketing activities of the Group are managed in
three divisions: the USA, the UK and International.
United States
The USA remains the most important market for the Group's
technologies. The addressable market is substantial and growing.
Sales prices for medical device equipment and consumables in the
USA are higher than in other territories. The patient safety
advocacy groups are growing in influence. The 'payers', such as the
private and public insurers, are ratcheting-up pressure to reduce
the incidence of complications for patients as such payers are
increasingly refusing to pay for SSIs and AKIs which they deem
avoidable. The US Government has announced measures to encourage US
hospitals to reduce the cost of healthcare, and this includes the
costs associated with extended length-of-stay. The cost of
healthcare has widely been reported as being one of the key issues
in the upcoming US presidential election.
Given the opportunities and size of the US healthcare market,
Deltex Medical continues to work on a number of initiatives to
increase its US revenues and market share. For example, in July the
Group announced that it had signed an innovative technology
contract with Vizient, Inc., the largest membership-driven
healthcare performance improvement company in the USA. This deal
with Vizient helps to give our products greater visibility and
credibility to US hospitals.
The principal challenge in the USA remains how to grow the
revenue base significantly whilst controlling the associated sales
and marketing overhead costs.
United Kingdom
The NHS remains extremely price sensitive and historically
disinclined to spend money on technology to reduce future costs. It
remains unclear whether if there are higher levels of future
funding for the NHS this will substantially enhance our business.
Based on previous experience our plans do not anticipate
significantly higher revenues from the NHS; however, the COVID-19
crisis may change our market position in the UK.
Sales to the NHS also remains highly competitive, with other
haemodynamic monitoring companies trying to increase their market
share in the UK, albeit without high precision Doppler-based
technology with its substantial associated scientific evidence
base.
The majority of the research & development work associated
with the TrueVue Doppler platform took place in the UK and as a
result Deltex Medical retains close relationships with academic
'Key Opinion Leaders' in the UK. These relationships remain
important for the Group's ongoing product development programmes
aimed at expanding and extending the haemodynamic monitoring
technologies on the TrueVue platform.
Although the UK remains an important market, the Group's
principal plans for revenue growth by its own direct sales teams
are focussed on the US market.
International
Deltex Medical sells its TrueVue Doppler technology into
approximately 40 other countries via a network of distributors.
During the year we continued to increase the number of
distributors selling the Group's technology and we expect this
division to grow in 2020. Recently signed distribution agreements
covering Asia and South America are expected to help increase our
International revenues this year.
Our French distributor continued to face a number of commercial
challenges during 2019 which resulted in them ordering
significantly less product from us in the year. Although these
issues appear to have been resolved, the adverse effect of COVID-19
on elective surgery in France, as with other territories, has held
back sales to France so far this year.
Conclusion
After approximately 18 months of restructuring and refocusing
the Group, we believe that we now have a stable and appropriately
funded platform from which we can target profitable growth from a
new, lower baseline of activities. However, the COVID-19 pandemic
will inevitably impact the Group's trading in the short-term, both
in a positive and a negative way as has been described above, and
it is currently too early to assess the quantum or timing of these
effects on the Group's trading in 2020.
Andy Mears
Chief Executive
April 2020
Consolidated statement of comprehensive income
For the year ended 31 December 2019
2019 2018
GBP'000 GBP'000
----------------------------------------- --------- ---------
Revenue 4,256 4,955
Cost of sales (974) (1,424)
------------------------------------------ --------- ---------
Gross profit 3,282 3,531
Administrative expenses (1,515) (1,721)
Sales and distribution expenses (1,220) (2,189)
Research and Development, Quality
and Regulatory (446) (526)
Impairment loss on trade receivables (11) (38)
Exceptional costs (137) (287)
------------------------------------------ --------- ---------
Total costs (3,329) (4,761)
------------------------------------------ ---------
Operating profit / (loss) before
exceptional costs and other gain 90 (943)
Exceptional costs (137) (287)
------------------------------------------ --------- ---------
Other gain 13 80
Operating loss (34) (1,150)
Finance costs (176) (188)
------------------------------------------ --------- ---------
Loss before taxation (210) (1,338)
Tax credit on loss 51 74
------------------------------------------ --------- ---------
Loss for the year (159) (1,264)
------------------------------------------ --------- ---------
Other comprehensive (expense)/income
Items that may be reclassified to
profit or loss:
Net translation differences on overseas
subsidiaries (8) 2
------------------------------------------ --------- ---------
Other comprehensive (expense)/income
for the year, net of tax (8) 2
------------------------------------------ --------- ---------
Total comprehensive loss for the
period/year (167) (1,262)
------------------------------------------ --------- ---------
Total comprehensive loss for the
period/year attributable to:
Owners of the Parent (169) (1,268)
Non-controlling interests 2 6
------------------------------------------ --------- ---------
(167) (1,262)
----------------------------------------- --------- ---------
Loss per share - basic and diluted (0.03p) (0.3p)
------------------------------------------ --------- ---------
Consolidated balance sheet
As at 31 December 2019
At 1 January
2019 2018 2018
Restated* Restated*
GBP'000 GBP'000 GBP'000
------------------------------------ ---------- ----------- -------------
Assets
Non-current assets
Property, plant and equipment 395 500 701
Intangible assets 2,651 2,528 2,486
Financial assets at amortised cost 157 155 -
Total non-current assets 3,203 3,183 3,187
Current assets
Inventories 915 680 754
Trade receivables 1,062 1,410 1,618
Financial assets at amortised cost 214 245 378
Other current assets 113 190 54
Current income tax recoverable 80 74 94
Cash and cash equivalents 908 580 219
------------------------------------- ---------- ----------- -------------
Total current assets 3,292 3,179 3,117
------------------------------------- ---------- ----------- -------------
Total assets 6,495 6,362 6,304
Liabilities
Current liabilities
Borrowings (188) (553) (840)
Trade and other payables (2,198) (1,983) (2,650)
Total current liabilities (2,386) (2,536) (3,490)
------------------------------------- ---------- ----------- -------------
Non-current liabilities
Borrowings (1,072) (1,035) (1,004)
Trade and other payables (320) (352) (385)
Provisions (62) (56) (56)
------------------------------------- ---------- ----------- -------------
Total non-current liabilities (1,454) (1,443) (1,445)
------------------------------------- ---------- ----------- -------------
Total liabilities (3,840) (3,979) (4,935)
------------------------------------- ---------- ----------- -------------
Net assets 2,655 2,383 1,369
------------------------------------- ---------- ----------- -------------
Equity
Share capital 5,249 4,927 3,132
Share premium 33,230 33,230 32,915
Capital redemption reserve 17,476 17,476 17,476
Other reserve 439 953 4,752
Translation reserve 141 149 147
Convertible loan note reserve 82 82 84
Accumulated losses (53,823) (54,293) (56,990)
------------------------------------- ---------- ----------- -------------
Equity attributable to owners of
the Parent 2,794 2,524 1,516
Non-controlling interests (139) (141) (147)
------------------------------------- ---------- ----------- -------------
Total equity 2,655 2,383 1,369
------------------------------------- ---------- ----------- -------------
*Prior year figures have been restated to adjust the
dilapidation provision. Please see Note 4.
Consolidated statement of changes in equity for the year ended
31 December 2019
Capital Convertible Non-controlling
Share Share redemption Other loan note Translation Accumulated interest
capital premium reserve reserve reserve reserve losses Total Total
equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Balance at 1
January 2019,
as restated 4,927 33,230 17,476 953 82 149 (54,293) 2,524 (141) 2,383
Comprehensive
income
Loss for the
period - - - - - - (161) (161) 2 (159)
Other
comprehensive
income for the
period - - - - - (8) - (8) - (8)
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Total
comprehensive
income for
year - - - - - (8) (161) (169) 2 (167)
Transactions
with owners
of the Group
Equity-settled
share-based
payment - - - 117 - - - 117 - 117
Transfers - - - (631) - - 631 - - -
Share options
exercised 322 - - - - - - 322 - 322
Balance at
31 December
2019 5,249 33,230 17,476 439 82 141 (53,823) 2,794 (139) (2,655)
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Consolidated statement of changes in equity for the year ended
31 December 2018
Capital Convertible Non-controlling
Share Share redemption Other loan note Translation Accumulated interest
capital premium reserve reserve reserve reserve losses Total Total
equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ --------- ---------------- ---------
Balance at 1
January 2018,
as previously
reported 3,132 32,915 17,476 4,752 84 147 (56,961) 1,545 (147) 1,398
Effect of prior
period
adjustment - - - - - - (29) (29) - (29)
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ --------- ---------------- ---------
Balance at 1
January 2018,
as restated 3,132 32,915 17,476 4,752 84 147 (56,990) 1,516 (147) 1,369
Comprehensive
income
Loss for the
period - - - - - - (1,270) (1,270) 6 (1,264)
Other
comprehensive
income for the
period - - - - - 2 - 2 - 2
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ --------- ---------------- ---------
Total
comprehensive
income for
year - - - - - 2 (1,270) (1,268) 6 (1,262)
Transactions
with owners
of the Group
Shares issued
during the
year 1,787 447 - - - - - 2,234 - 2,234
Issue expenses - (132) - - - - - (132) - (132)
Equity-settled
share-based
payment - - - 166 - - - 166 - 166
Transfers - - - (3,965) (2) - 3,967 - - -
Share options
exercised 8 - - - - - - 8 - 8
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ --------- ---------------- ---------
Balance at 31
December 2018,
as restated 4,927 33,230 17,476 953 82 149 (54,293) 2,524 (141) 2,383
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ --------- ---------------- ---------
.
Consolidated statement of cash flows
for the year ended 31 December 2019
2019 2018
GBP'000 GBP'000
------------------------------------------- --------- ---------
Cash flows from operating activities
Loss before taxation (210) (1,338)
Adjustments for:
Net finance costs 176 188
Depreciation of property, plant and
equipment 149 246
Profit on disposal of loan monitors (36) (12)
Amortisation of intangible assets 84 173
Modification gain on convertible loan
note - (80)
Share-based payment expense 117 166
Effect of exchange rate fluctuations (2) (9)
278 (666)
(Increase)/decrease in inventories (235) 38
Decrease in trade and other receivables 427 52
Increase/(decrease) in trade and other
payables 212 (694)
Increase/(decrease) in provisions 6 (1)
-------------------------------------------- --------- ---------
Net cash generated from / (used in)
operations 688 (1,271)
Interest paid (139) (141)
Income taxes received 60 94
-------------------------------------------- --------- ---------
Net cash generated from / (used in)
operating activities 609 (1,318)
Cash flows from investing activities
Purchase of property, plant and equipment (10) (18)
Proceeds from the sale of loan monitors 59 18
Capitalised development expenditure (250) (214)
Net cash used in investing activities (201) (214)
Cash flows from financing activities
Issue of ordinary share capital 322 2,216
Expenses in connection with share issue - (132)
Net movement in invoice discount facility (356) (171)
Principal lease payments (33) (36)
-------------------------------------------- --------- ---------
Net cash (used in) / generated from
financing activities (67) 1,877
-------------------------------------------- --------- ---------
Net increase in cash and cash equivalents 341 345
Cash and cash equivalents at beginning
of the period 580 219
Exchange (loss)/gain on cash and cash
equivalents (13) 16
-------------------------------------------- --------- ---------
Cash and cash equivalents at end of
the period 908 580
-------------------------------------------- --------- ---------
1. Nature of the financial information
This Results Summary containing condensed financial information
for the year ended 31 December 2019 should be read in conjunction
with the Deltex Medical Group Plc's Annual Report & Accounts
2019 which were in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union (EU),
with interpretations issued by the International Financial
Reporting Interpretations Committee (IFRS IC) and with those parts
of the Companies Act 2006 applicable to companies reporting under
IFRS. The consolidated financial statements have been prepared
under the historical cost convention and on a going concern
basis.
Financial information contained in this document does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006 ('the Act'). The statutory accounts for the
year ended 31 December 2018 have been filed with the Registrar of
Companies and those for the year ended 31 December 2019 will be
filed with the Registrar of Companies following the Annual General
Meeting. The report of the independent auditor on those statutory
accounts was unqualified and did not contain a statement under
section 98(2) or (3) of the Act. The report drew attention by way
of emphasis to the matters set out below in note 2 (Accounting
policies - going concern) and note 7 (Events after the balance
sheet date). The auditor's opinion was not modified in respect of
these matters.
2. Accounting policies
The Group's principal accounting policies can be found on pages
42 to 44 of the Group's Annual Report & Accounts 2019.
Going concern
The directors have reviewed detailed budgets and cash flow
forecasts until 30 June 2021. This review indicates that the Group
is expected to continue trading as a going concern based on
increasing net cash inflows from sales over expenditure of the
Group. The directors recognise that, whilst the short-term impact
of COVID-19 has resulted in an increase in demand in parts of the
business, demand over the coming year is by its nature
uncertain.
Notwithstanding the uncertainties over the impact for the Group
that COVID-19 causes, the directors consider that they have
reasonable grounds to believe that the Group will have adequate
resources to continue in operational existence for the foreseeable
future and it is therefore appropriate to prepare the financial
statements on the going concern basis.
3. Revenue
For the year ended 31 December 2019
Direct markets Indirect markets
Probes Monitors Third Party Other Probes Monitors Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- --------- ------------ -------- -------- --------- -------- --------
UK 902 49 293 107 - - - 1,351
USA 1,443 45 - 42 - - - 1,530
France - - - - 289 9 6 304
Scandinavia - - - - 83 - 1 84
South Korea - - - - 277 10 3 290
Peru - - - - 258 - 3 261
Other countries 29 - - - 251 148 8 436
----------------- -------- --------- ------------ -------- -------- --------- -------- --------
2,374 94 293 149 1,158 167 21 4,256
----------------- -------- --------- ------------ -------- -------- --------- -------- --------
For the year ended 31 December 2018
Direct markets Indirect markets
Probes Monitors Third Party Other Probes Monitors Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- --------- ------------ -------- -------- --------- -------- --------
UK 1,051 5 448 108 - - - 1,612
USA 1,534 17 - 17 - - - 1,568
France - - - - 799 66 35 900
Scandinavia - - - - 62 - - 62
South Korea - - - - 258 - 1 259
Peru - - - - 116 165 - 281
Other countries 49 14 - - 166 34 10 273
----------------- -------- --------- ------------ -------- -------- --------- -------- --------
2,634 36 448 125 1,401 265 46 4,955
----------------- -------- --------- ------------ -------- -------- --------- -------- --------
The Group's revenue disaggregated between the sale of goods and
the provision of services is set out below. All revenues are
recognised at a point in time; maintenance income is recognised
over time.
2019 2018
GBP'000 GBP'000
-------------------- -------- --------
Sale of goods 4,176 4,882
Maintenance income 80 73
4,256 4,955
-------------------- -------- --------
The following table provides information about trade receivables
and contract liabilities from contracts with customers. There were
no contract assets at either 31 December 2019 or 31 December
2018.
31 December 31 December
2019 2018
GBP'000 GBP'000
------------------------------------------- ------------ ------------
Trade receivables which are in 'Trade and
other receivables' 1,062 1,410
Contract liabilities (Note 17.4) (53) (151)
------------------------------------------- ------------ ------------
The following aggregated amounts of transaction prices relate to
the performance obligations from existing contracts that are
unsatisfied or partially unsatisfied as at 31 December 2019:
2020 2021 2022 Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- -------- -------- --------
Revenue expected to be
recognised 50 3 - 53
------------------------ -------- -------- -------- --------
4. Dilapidation provision
Under the terms of the operating leases over land and buildings,
predominantly in the UK, the Group has an obligation to return the
property in a specified condition at the end of the lease. As the
unexpired lease term is more than one year, the provision has been
classified as a non-current liability. It is expected that the
provision will be utilised within the next 10 years. The directors
have reviewed the accounting for the dilapidation provision during
the year, and as a result have made a prior year adjustment to
discount the dilapidation provision and unwind the discounting on
an annual basis.
5. Dividends
The directors cannot recommend payment of a dividend
(2018:nil).
6. Basic and diluted loss per share
The loss per share calculation is based on the loss of
GBP161,000 and the weighted average number of shares in issue of
509,679,881. For 2018, the loss per share calculation is based on
the loss of GBP1,270,000 and the weighted average number of shares
in issue of 471,460,901. While the Group is loss-making, the
diluted loss per share and the loss per share are the same.
7. Events after the balance sheet date
The impact of COVID-19 on the Group's trading in 2020 is likely
to be significant. Deltex Medical has seen a slow-down in elective
surgical procedures in hospitals throughout the world as a
consequence of measures taken to combat COVID-19 which has resulted
in a decline in TrueVue Doppler probe usage. Conversely, sales of
monitors and probes for critical care use to hospitals in countries
fighting the COVID-19 virus have sharply increased. It is too early
to assess the quantum or timing of these effects on the Group's
trading in 2020. The issue is examined in greater depth in the
section at the beginning of this Results Summary entitled "Deltex
Medical and COVID-19".
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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