TIDMLID
RNS Number : 3377K
LiDCO Group Plc
10 April 2018
LIDCO GROUP PLC
("LiDCO" or the "Company" or the "Group")
Final Results
LiDCO (AIM: LID), the hemodynamic monitoring company, announces
its audited Final Results for the year ended 31 January 2018.
Financial highlights
-- LiDCO product revenue (excluding third party products) up 2% to GBP6.87m (2017: GBP6.76m)
-- Total revenue up 1% to GBP8.27m (2017: GBP8.21m)
-- Capital sales up 50% to GBP1.87m (2017: GBP1.25m)
-- High Usage Programme (HUP) deferred revenues of GBP0.60m (2017: nil)
-- Gross margin (excluding third party products) of 73% (2017: 79%)
-- Adjusted loss before tax* of GBP1.84m (2017: profit GBP0.06m)
-- Reported loss before tax of GBP2.22m (2017: profit GBP0.10m)
-- Loss per share of 0.86 pence (2017: profit per share 0.09 pence)
-- Net cash outflow before financing of GBP1.67m (2017: inflow
GBP0.52m), following investment in growth plan
-- Debt free with cash at year-end of GBP3.23m (2017: GBP4.90m)
* adjusted for share-based payments of GBP0.1m and one-off stock
write-down of GBP0.3m
Details on revenue, gross margin and cash are provided in the
full statement below and in the Company presentation. A summary
slide can be viewed here:
http://www.rns-pdf.londonstockexchange.com/rns/3377K_-2018-4-9.pdf
Operational highlights
-- LiDCO product revenues excluding China up 9% to GBP6.87m
(2017: GBP6.27m), with an additional GBP0.60m (2017: nil) of
deferred revenues on the balance sheet
-- No sales to China (2017: GBP0.49m) due to temporary hold on
product sales pending approval of a key accessory
-- Execution of geographical expansion plan following 2016
fundraising. Recruitment of 10 sales & marketing heads
-- First two HUP accounts in USA announced in the year and
largest UK customer also agreed to convert to HUP
-- At 31 January 2018, global HUP installed base of 96 monitors
generating total annualised license revenue of GBP0.73m (2017:
nil)
-- New monitor platform with additional functionality launched
in USA, Europe and Japan following regulatory clearances
-- 315 monitors sold/placed (2017: 227)
-- First royalty revenues received from ICU Medical
-- New strategic partners signed as exclusive distributors in
Japan (Merit Medical) and France (Spacelabs)
-- Appointment of Jill McGregor as Chief Financial Officer
Post year end
-- Notification of termination of UK Argon Critical Care
products distribution contract in September 2018
Commenting on the results Matthew Sassone, Chief Executive
Officer, said: "As planned, 2017 was an investment year for LiDCO
and I am encouraged by the way our expansion plan is developing in
line with our strategy. Excluding China, LiDCO sales grew 9%, and
we also added GBP0.6m of deferred revenues from our HUP, where we
have a strong and growing pipeline of opportunities.
"The launch of the new monitor, the transition to multi-year HUP
contracts and a one-off inventory write off has affected our
profitability in the short-term. However, we remain on track to
benefit from greatly improved earnings as we continue to win HUP
contracts, which bring good forward visibility and cash
generation."
LiDCO Group Plc www.lidco.com
Matt Sassone (CEO) Tel: +44 (0)20 7749 1500
Jill McGregor (CFO)
finnCap Tel: +44 (0)20 7600 1658
Geoff Nash / Emily Watts (Corporate
Finance)
Stephen Norcross (Corporate Broking)
Walbrook PR Ltd Tel: 020 7933 8780 or lidco@walbrookpr.com
Paul McManus (Media Relations) Mob: 07980 541 893
Lianne Cawthorne (Media Relations) Mob: 07584 391 303
The Company presentation of results will be available from today
on the LiDCO website: www.lidco.com.
Strategic Report
This was a year of investment as the Group expanded its
commercial presence in the USA whilst building from a solid
platform in our home UK market. The Group also introduced its novel
differentiated business model, High Usage Plan (HUP), which has the
potential to substantially increase the adoption of hemodynamic
monitoring and provide good forward visibility of our revenues and
cash flows. Through these actions, we believe that we have better
positioned the Group for sustained higher growth in the medium
term.
Overall 2017 was a successive year of growth, with LiDCO product
revenues growing 2% over prior year. However, the underlying
performance was even stronger when considering the revenue
recognition effect of HUP, with deferred revenues up GBP0.60m, as
well as the temporary hold on product sales to China pending
approval of a key accessory.
The fundamentals of the business remain strong and we continue
to progress our strategy, which can be grouped under the following
headings:
-- Geographical expansion from a solid UK home market
-- Commercial success with a differentiated business model
-- Maintaining technology leadership
Geographical expansion
The Board estimates that the global market for hemodynamic
monitoring is currently in excess of $200m per annum of which we
have approximately a 4% share. In the UK, the Group enjoys a
strengthening market leading position, with over 50% of NHS acute
care hospitals using its technology and has continued to grow
revenues in what many regard as challenging conditions. However,
the UK still represents 60% of LiDCO product revenues and the Board
has identified a number of key geographies where we feel that we
can gain a more significant market share.
The USA is the largest market for hemodynamic monitoring,
representing nearly half of the global demand. We believe this
market offers the Group the greatest opportunity to grow and have
invested in expanding our local commercial presence to 11 people to
realise this. Whilst highly competitive, early indications are that
the market is responding well to our differentiated pricing
approach and we have developed a significant pipeline of potential
large users that previously would not have considered changing from
their current supplier.
Japan is the second largest hemodynamic monitoring market, and,
whilst LiDCO has been present in the market for a number of years,
market share has been less than 1% in a market that is historically
difficult to penetrate due to challenging registration and
reimbursement processes. It is pleasing that during the year we
registered our new monitor platform as well as signing a new
exclusive distributorship with Merit Medical, which has a
well-established commercial infrastructure in the market. This
positions the Group well to exploit the local reimbursement for
both its minimally invasive and non-invasive technologies and gain
greater market share in this established hemodynamic market.
In the rest of the world, we continue to make progress in
creating the infrastructure needed to deliver our geographical
expansion plans. Our internal resources are focused on managing
distributors in the territories with the greatest mid-to-long term
market opportunities, and we utilise master distribution companies
to manage those distributors which we feel will be better served by
a more local presence. As part of this more tailored approach to
distribution management, we have selected markets within Europe,
the Middle East and Asia where we have identified strong growth
opportunities and are investing with the right partners to achieve
the necessary registrations and promotional activities to further
market development and widen the adoption of hemodynamic
monitoring.
During the financial year ending January 2018, we invested
significantly in additional commercial headcount for the USA,
Europe and the Middle East in order to accelerate future revenue
growth and gain greater market share outside of our home market.
Supplementary to this we also added extra commercial headcount in
the UK in order to reinforce our market leading position in our
home market.
Commercial Focus
During the year the Group invested heavily in the commercial
activities of the business in order to improve our sales efforts
and the way that we promote ourselves globally. As well as
additional headcount, we increased our marketing efforts to raise
the profile of LiDCO in our targeted markets. This involved higher
profile attendance at key trade shows in the USA, an extensive
digital promotional campaign and the launch of new websites.
Tied into our commercial approach is the transition to HUP. This
differentiated license agreement model is focused on attracting the
larger more established users of hemodynamic monitoring to convert
to LiDCO technology, especially but not exclusively in our key
growth US market. Although HUP involves customers paying in advance
for the services, under IFRS, revenue is only recognised over the
period which the payment covers. As the business transitions to HUP
we expect to benefit from enhanced cash flow but the deferral of
revenue will mean that there is a lag effect on the profit and loss
account. As the HUP programme builds, the Board believes that these
multi-year license agreements will provide good visibility of
future revenues alongside strong cash generation that will greatly
enhance the quality of the Group's earnings.
Technology Leadership
In July 2017 we launched our striking new slim widescreen
monitor platform, LiDCOunity v2. It incorporates the core value
proposition of combining the full suite of LiDCO technology into
one offering. The new monitor brings together LiDCO's non-invasive,
minimally invasive and calibrated technologies, enabling continuous
hemodynamic monitoring, including monitoring of level of
consciousness across the entire clinical pathway in one monitor. In
addition, it has a number of new additional features, such as an
updated graphical user interface with a more intuitive menu system,
internal battery for transportation and new clinical guidance
protocols to aid users.
The launch of this new product was one of the factors behind our
strong capital sales performance this year.
Financial Review
Revenues
LiDCO product revenues in the year grew by 2% to GBP6.87m (2017:
GBP6.76m) with total revenues (including third party products) up
1% to GBP8.27m (2017: GBP8.21m). Excluding China, where no sales
were recorded in the year as regulatory approval is sought to
register a key accessory and the new monitor platform, LiDCO
product revenues were up 9% to GBP6.87m (2017: GBP6.27m). Total
revenues in China were GBP0.49m in 2017.
As of 31 January 2018, LiDCO had GBP0.60m (2017: nil) of
deferred revenues on the balance sheet arising from the HUP, with a
global installed base of 96 monitors generating total annualised
license revenue of GBP0.73m (2017: nil).
Further comment on revenues by territory is provided in the
operational review.
Gross profit and margin
The overall gross profit margin from LiDCO product revenues was
73% (2017: 79%) with 3% of the reduction resulting from an increase
in the inventory provision of GBP0.3m due to obsolescence of older
products, especially following the launch of the new monitor. The
remaining 3% reduction in margin was due to the mix of products
sold during the year - there was an increased proportion of lower
margin capital sales and a lower proportion of higher margin
consumables, which was not offset by the effect of the higher
margin HUP business as most of that revenue was deferred until
2018/19. The gross margin achieved on the sale of third party
products remained unchanged at 20%. Overall, gross profit reduced
by 6% to GBP5.27m (2017: GBP5.60m).
Overheads
Overheads before share-based payments increased to GBP7.38m
(2017: GBP5.54m) as expected, due to the increase in commercial
activities and additional headcount primarily in the USA.
Personnel-related costs remained at 66% of overheads and the
average full time equivalent headcount (excluding non-executive
directors) was 49 employees (2017: 42 employees). Share-based
payments resulted in a charge of GBP109,000 (2017: credit
GBP41,000).
Earnings and tax
The Group made an adjusted loss before tax (adjusting for
share-based payments of GBP0.1m and a one-off stock write down of
GBP0.3m) of GBP1.84m (2017: profit GBP0.06m). After charging for
share-based payments and receiving the benefit of GBP0.12m of
research and development tax credits, the Group made an overall
loss for the year of GBP2.09m (2017: profit GBP0.19m), equating to
a loss per share of 0.86 pence (2017: profit per share 0.09
pence).
Cash flow, borrowings and cash balances
The Group invested in additional headcount and marketing
activities as expected and had a net cash outflow in the year
before financing activities of GBP1.67m (2017: inflow GBP0.52m).
HUP contributed GBP0.3m of positive cash flow in the year (2017:
nil).
Year-end cash balances amounted to GBP3.23m (2017: GBP4.90m).
The Group remains debt free.
Property, plant and equipment
There was a net increase in property, plant and equipment in the
year of GBP0.10m. Investment in medical monitors totalled GBP0.39m
comprising HUP monitors, medical monitors placed on long term loan
to hospitals in the UK and USA for active use, where the hospital
pays for consumables, and monitors for demonstration purposes and
clinical trials.
Intangible assets
Expenditure on intangible assets in the period was GBP0.48m
(2017: GBP0.52m) of which GBP0.42m (2017: GBP0.46m) was spent on
product development with a further GBP0.06m (2017: GBP0.06m) on new
product registrations predominantly in overseas territories.
Expenditure on product development included the next generation
LiDCOunity hardware platform, significant improvements to the
operating system and the graphical user interface, and amendments
to the software to allow additional flexible pricing models.
Inventory
Inventory reduced to GBP1.35m in the year (2017: GBP1.47m).
During the year an additional GBP0.3m was charged to the profit and
loss account for inventory provisions and write-offs due to
obsolescence of older products, especially following the launch of
the new monitor. Traditional rates of inventory turn cannot always
be applied to the Group as it relies on a number of single-source
key suppliers and strategically maintains high levels of inventory
in respect of such suppliers.
Operational Review
Revenue performance by product and key geographies
12 months to January 2018 12 months to January 2017
------------- ----------------------------------------- -----------------------------------------
Capital Recurring Other Total Capital Recurring Other Total
Revenue Revenues Revenue Revenues
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
LiDCO Sales
UK 686 3,383 73 4,142 337 3,381 67 3,785
USA 497 849 11 1,357 295 881 7 1,183
Europe 222 272 10 504 267 453 18 738
Rest of
World 468 389 5 862 351 703 3 1,057
------------- --------- ---------- -------- -------- --------- ---------- -------- --------
1,873 4,893 99 6,865 1,250 5,418 95 6,763
------------- --------- ---------- -------- -------- --------- ---------- -------- --------
Third party
sales
UK - 1,402 - 1,402 - 1,449 - 1,449
------------- --------- ---------- -------- -------- --------- ---------- -------- --------
Total Sales 1,873 6,295 99 8,267 1,250 6,867 95 8,212
------------- --------- ---------- -------- -------- --------- ---------- -------- --------
Capital revenues include the sales of monitors and other
equipment to customers. Recurring revenues are sales of consumables
including smartcards and sensors, software licenses (including HUP)
and service contracts. Japan revenues have now been included within
Rest of World.
During the period a total of 315 monitors (2017: 227 monitors)
were sold or placed in the year primarily due to the launch of the
new monitor platform and the HUP business model. Revenue from
capital sales was GBP1.87m (2017: GBP1.25m). Recurring revenues
decreased by 10% to GBP4.89m (2017: GBP5.42m). This decline can be
mainly attributed to the transition to HUP and not being able to
recognise all the revenue in year, as well as a reduction in
recurring revenue sales in our distributor markets primarily due to
China.
UK
LiDCO had another strong performance in its home market,
building on its market leading position. LiDCO product revenues
grew 9% to GBP4.14m (2017: GBP3.79m). The growth was driven by
strong monitor sales, with capital revenues of GBP0.69m (2017:
GBP0.34m), up 103% compared with the prior year, boosted by the
launch of the Group's new monitor LiDCOunity v2 increasing volumes
and achieving a higher selling price.
The Group has decided to selectively introduce the HUP model to
the UK, and, in the year, converted its largest UK customer to this
model. The intention is to demonstrate the clinical and economic
benefits of expanding the use of hemodynamic monitoring, thereby
seeking to re-engage national support and guidelines for wider
adoption.
Sales of third party Argon Medical products in the UK declined
3% to GBP1.40m (2017: GBP1.45m) as a result of the current pricing
pressure climate of the NHS. After year end the Group announced
that Merit Medical, which recently acquired the Argon Medical
business, has given notice to terminate LiDCO's UK distribution
contract. In 2017/18 Argon products contributed GBP1.4 million to
the overall sales of LiDCO at 20% gross margin (compared to 73%
margins from LiDCO products). The Group is looking for other
distribution opportunities to take advantage of its sales reach in
the UK, which it hopes will attract higher margins.
USA
The Board has identified the USA as the market with the greatest
opportunities for growth, with the region continuing to develop as
the adoption of hemodynamic monitoring continues to expand.
Historically, we sold direct via a small sales team and as a
result, market access has been a limiting factor in LiDCO's success
in this competitive market. During the year we invested in
expanding our local commercial presence to 11 people, as well as
launching our differentiated license fee model, HUP. These
investments were in place for the second half of the year.
With the benefit of a strong first half performance driven by
capital sales, LiDCO's revenues in the USA for the year were up 15%
to GBP1.36m (2017: GBP1.18m). The focus in the second half of the
year was weighted towards the launch of HUP and at the end of
January 2018 the Group had 58 HUP monitors under multi-year
agreements with annualised recurring revenues in excess of
$0.6m.
The feedback from HUP has been extremely positive and the
expanded team has been able to develop a significant pipeline of
opportunities. Although by targeting the highest users of advanced
hemodynamic monitoring the selling cycle remains quite long, we are
confident that this is the right strategy to take share in this
large and growing market.
Late in 2017, we started to receive royalty income from ICU
Medical, which has licensed LiDCO's core algorithm for its new
Cogent(TM) monitor. This product is currently only available in the
USA and has been launched to support their substantial existing
invasive catheter-based cardiac output monitoring business. We see
ICU Medical's approach as symbiotic to our offering, however do not
expect forthcoming royalty payments to have a material impact in
2018/19.
Continental Europe
Sales in Europe declined by 32% to GBP0.50m (2017: GBP0.74m)
with total monitor sales of 52 units compared with 38 units last
financial year. This year we experienced strong sales in Spain,
Denmark and Switzerland. The latter two countries successfully
launching HUP, with the subsequent short term impact to recurring
revenues. The rest of the shortfall in recurring revenues in this
region can be attributed to weaker consumable sales to the Czech
Republic, Slovenia and Serbia, where we are working with our
distributors on local activities to support the installed base of
business.
We continue to refresh our approach, especially to expand our
presence in some of the larger countries in the region as
demonstrated by the recent announcement that the Group signed an
exclusive three year agreement with Spacelabs Healthcare to
distribute its products in France.
As part of the expansion plan, we have invested in a dedicated
distribution manager for this region and expect to build a more
significant business in 2018/19.
Rest of World
Sales in ROW declined by 18% to GBP0.86m (2017: GBP1.06m) due to
not being able to sell products to our Chinese distributor whilst
the Group registers a key accessory and its new monitor platform,
as announced during 2017. Excluding China, sales in ROW actually
grew by 52% driven by strong growth in Japan and the Middle
East.
During the year, the Group announced the registration of its
latest monitor platform and the appointment of Merit Medical Japan,
a leading provider of critical care products, as its new exclusive
distributor in Japan. Japan is the world's second largest market
for advanced hemodynamic monitoring, it has a highly embedded
market leader and is historically a conservative market to change.
However, in the year, LiDCO experienced strong in-market growth of
consumable sales and now, with the combined effects of launching
our new monitor and partnering with Merit Medical, the Board
believes that LiDCO is well positioned to gain greater market share
in this important market.
Following good growth in the Middle East in the previous year,
the Group decided to invest in a locally based clinical training
resource. Working with our master distributor, we are building a
good foundation across multiple countries and have been able to
register our products in other key countries such as Saudi
Arabia.
As previously announced, during the year, the Group made no
sales to its Chinese distributor due to the requirement to gain
further regulatory approval in China for a key accessory and the
new monitor. LiDCO is continuing to support its distributor in
seeking these regulatory approvals, and whilst it is difficult to
forecast exactly when this will be achieved, the Group anticipates
this will be during 2018. The future prospects for LiDCO in the
country remain strong and we do not believe that this temporary
delay in our sales effort will reduce our ability to take share in
this rapidly developing hemodynamic market in the medium term.
New Products
The key achievement in the year was the launch of the new
monitor platform, LiDCOunity v2. This new look monitor platform has
received very positive customer feedback and driven the strong
capital sales in year. Since launch, at the end of H1, we have
shipped over 200 units.
The new monitor hardware is a significant step forward and
provides the platform for new developments in the future. In near
term we expect incremental software development on the new monitor
platform, as we evaluate emerging opportunities to expand from the
core LiDCO technology offering.
New Business Model
Incorporated in the new monitor platform is LiDCO's highly
differentiated High Usage Programme (HUP), which has also been a
success since its launch.
HUP is a software license fee offering that enables customers to
use LiDCO's non-invasive and minimally invasive technology for a
fixed flat fee without limiting patient numbers. Until now, all
hemodynamic monitoring has been charged on a per patient basis,
either through fees or through charging for consumables. The
Directors believe that this has limited the use of monitoring,
despite multiple studies having demonstrated its significant
benefits to patients and reduction of overall healthcare costs. The
Directors believe that LiDCO's HUP proposition to the customer is
simple and compelling, allowing hospitals to treat more patients
for less cost per patient and for a known fixed cost.
Due to the way that LiDCO's algorithm works its been possible to
make LiDCOunity v2 monitors work, in HUP mode only, without any
requirement for dedicated consumables, meaning that we can provide
unlimited usage whilst maintaining high gross margins.
Early indications are confirming the Board's belief that this
new software licensing model will encourage higher patient use,
increase technology adoption and provide greater visibility of
future revenue.
Intellectual Property
Underpinning our technology and revenue streams is a strong
brand and patent position. Patent cover provides us with a
protectable product and strong market position. Wherever possible
we take the initiative in developing and protecting our advances in
physiological signal processing and intelligent graphical user
interfaces. During the year, we have submitted further patent
applications on novel developments that enhance our core
technology.
Outlook
The Group has invested significantly in our commercial
operations, ensuring that we have the resources to expand our
product sales into the many countries where adoption of advanced
hemodynamic monitoring is now occurring. Combined with our new
product launches and the introduction of the new high usage pricing
model, we are well placed to exploit the large number of
opportunities in our pipeline.
As the business continues to win HUP contracts, it will
transition towards more multi-year license contracts, providing
good visibility of revenues alongside strong cash generation. The
Board expects this to greatly enhance the quality of the Group's
earnings although accounting for such contracts will have a
short-term impact on revenue recognition as the income will
typically be spread over the term of the contract as opposed to
monitor and consumables revenues being recognised when invoiced.
The Board expects the installed base of monitors to continue to
grow but the transition to HUP will make comparisons with prior
years difficult in the short term, especially in the first half of
2018/19 due to the high value of capital sales in the USA.
Although notice has been given to terminate the distribution
agreement for Argon Medical products at the end of September 2018,
the Board aims to offset the effect of this by signing additional
distribution agreements to take advantage of its sales reach in the
UK.
The Board is targeting a year of significant sales growth for
LiDCO products in 2018/19 compared with the year just ended and
believes that gross profit margins will return to historical levels
due to higher recurring revenues. Operational expenses are expected
to remain at a similar level to 2017/18.
The Board believes that the Group has good prospects for growth
and looks to the future with confidence.
How we create value: our business model
LiDCO is a UK-based manufacturer and supplier of monitoring
equipment. LiDCO monitors are 'platform' in design. This means they
can be easily and cost-effectively upgraded to add new software
features and parameters by the addition of USB-connected modules.
Our technology, coupled with our low-cost manufacturing and product
sourcing skills, combine to produce a highly differentiated,
patent-protected monitor with a recurring income stream either from
the sale of dedicated high margin single patient use consumables
and / or usage licenses.
Our monitors continuously display a number of crucial
physiological parameters including arterial blood pressure, the
effects of anaesthesia on the level of consciousness of the brain,
the requirement for intravenous fluids and the amount of blood and
oxygen supplied to the body's tissues and organs. We provide this
crucial data via an easy-to-interpret monitor user interface which
helps clinicians and nurses ensure that vital organs are adequately
perfused and that patients are not over-anaesthetised or
sedated.
Historically, hemodynamic monitoring was invasive in nature,
requiring the insertion of invasive central catheters. For this
reason, it was only available to a restricted number of the
high-risk patients that could potentially benefit. LiDCO's
technology does not require the insertion of central catheters and
can be used completely non-invasively and in both ventilated and
non-ventilated patients.
Our customers are acute care physicians and nurses working in
major hospitals caring for emergency and high-risk patients.
Hospitals are migrating away from invasive technologies towards the
use of less invasive monitoring, which has been shown to be cost
effective and improve outcomes. Use of LiDCO monitors in high-risk
patients in both intensive care and surgical settings has been
shown to reduce mortality, complications, length of hospital stay
and improve quality of life.
The key features of our business model:
We have developed a new generation of hemodynamic monitoring
products designed to address a growing market opportunity - the
current market is internally estimated to be $200m. LiDCO's
internal calculations have estimated that there is scope for
patients and healthcare providers to benefit from a substantial
increase in use of hemodynamic monitoring, which could lead to a
full market potential of up to $2 billion per annum. Key features
of our business model include:
-- We generate revenues principally through the sale of
single-use consumables and / or the sale of usage licenses into a
growing installed base of LiDCO-enabled monitors.
-- Our new HUP model is designed to encourage an increase in use
of hemodynamic monitoring by leasing monitors and software and
allowing healthcare providers to have unrestricted use of the
leased assets, rather than paying on a per patient basis.
-- HUP contracts are medium-term contracts paid periodically in advance .
-- Our consumable products are produced in high volume with low
cost manufacturing processes and have a high margin.
-- Sales of our products are supported by over 200 clinical
studies and an ever-growing body of evidence to satisfy purchaser
requirements for clinical and cost-effectiveness.
-- We protect our recurring revenue income stream through having
patented products with high levels of proprietary intellectual
property which are subject to on-going development.
-- We provide first-class training and education to our
customers. This helps entrench our technology and reduce hospitals
costs, with a focus on providing LiDCO with a sustainable recurring
income.
Delivering our objectives: our strategy
Our strategy is to build shareholder value through the
commercialisation of LiDCO monitoring systems and associated high
margin recurring revenues. Excellence in product design,
manufacturing and sales and marketing are at the core of our
values. Our products are patent protected and supported by a
growing body of data showing their clinical and cost-effectiveness.
Our technology is not only usable in traditional locations such as
the intensive care and surgery departments, but also in any area of
the hospital where high-risk patients require such monitoring.
Hospitals acquiring our hemodynamic platform monitors can
transition from traditional invasive catheter-based monitoring to
LiDCO's minimally or non-invasive monitoring in high-risk patients,
thereby reducing complications and lowering costs and length of
stay.
Geographical expansion is key to LiDCO's capacity to address the
worldwide opportunity for sales of our technology. LiDCO has made
recent investments in the USA, Europe and the Middle East to
support this initiative. Our sales and distribution model has three
elements:
-- Direct sales into hospitals in the UK and USA.
-- Outside of our two direct markets, we sell via distribution
partners. Our depth of margin on disposable sales allows us to
attract quality specialist distribution partners on an exclusive
and non-exclusive basis, plus where necessary we sometimes work
through master distribution organisations to manage our
distributors on our behalf.
-- Our core technologies are patented and we see licensing our
technology as another way to access the market. We have licensed
our algorithm on a non-exclusive basis to a major corporate partner
in the USA in return for future royalty payments.
Measuring our performance: KPIs
The following KPIs are some of the indicators used by management
to measure performance during the year:
Key Performance Indicators
Year to January Year to January
2018 2017
------------------------------------------ ---------------- ----------------
Revenue growth of LiDCO products 2% 14%
Gross profit margin on LiDCO products 73% 79%
LiDCO product revenue per FTE sales
employee GBP0.51m GBP0.68m
% LiDCO product overseas revenue 40% 44%
% of recurring revenue on LiDCO products 71% 80%
Monitors sold/placed in the year 315 227
Installed base of HUP monitors 96 -
Annualised value of HUP contracts GBP0.73m -
------------------------------------------ ---------------- ----------------
During the year the Group expanded its commercial reach, the
KPIs reflect this ahead of seeing the full impact of the
investment. A number of the KPIs were influenced by the launch of
the new monitoring platform with the differentiated HUP pricing
model, the short-term impact of having no sales to China and the
strong sales performance in the UK.
Business objectives
Our objective is to increase our geographical presence beyond
our market leading position in our home UK market. The Directors
believe that there are multiple opportunities in the growing
hemodynamic monitoring market, with the largest opportunity being
in the USA. To realise accelerated revenue growth we have
significantly invested in our commercial operations.
We have expanded our presence in the USA and UK as well as
Europe and the Middle East in the distribution territories. Due to
the high margins of our offering the Board believes that this
strategy will result in stronger profitability in the mid-term.
Our corporate collaborations are an important element of our
business. There are a number of these in place, ranging from OEM
module licensing-in (Medtronic and CNSystems), distribution
provisions (Merit Medical) through to royalty-based licensing-out
arrangements (ICU Medical).
The Directors believe that our recent new product launches will
enable us to maintain our technology leadership position and our
innovative High Usage license model differentiates us further.
Further product improvements will look to add incremental features
that improve clinical decision making as well as catering for both
the expert and novice user. At the foundation of our product
development strategy is the objective of enabling our technology to
be used along every step of the emergency or elective patient's
care pathway.
We will continue to focus on improving our promotional
activities, with an increased digital presence as we recognise our
customers rely on this for large parts of purchasing or
post-purchase support. New websites and on-line services are
continuing to be developed that the Board believes will provide
improved education for users and highlight the application of our
technology in multiple clinical settings. We continue to target
specific high risk surgery and critical care patient care pathways
with our promotional activities to maximise our return on the
greatest opportunities in our direct markets of UK and USA.
CONSOLIDATED comprehensive INCOME STATEMENT
For the year ended 31 January 2018
Note Year ended Year ended
31 January 31 January
2018 2017
GBP'000 GBP'000
Revenue 8,267 8,212
Cost of sales (2,999) (2,612)
Gross profit 5,268 5,600
Administrative expenses (7,380) (5,543)
Operating (loss)/profit, before
exceptional cost and share based
payments
Share based payments (2,112) 57
(109) 41
Operating (loss)/profit (2,221) 98
Finance income 3 6
Finance expense - (2)
(Loss)/profit before tax (2,218) 102
Income tax 125 85
(Loss)/profit and total comprehensive
(expense)/income for the year attributable
to equity holders of the parent (2,093) 187
(Loss)/profit per share (basic
and diluted) (pence) 2 (0.86) 0.09
CONSOLIDATED Balance Sheet
At 31 January 2018
2018 2017
GBP'000 GBP'000
Non-current assets
Property, plant and equipment 912 809
Intangible assets 1,950 1,958
2,862 2,767
Current assets
Inventory 1,354 1,467
Trade and other receivables 3,246 2,684
Current tax 127 93
Cash and cash equivalents 3,227 4,901
7,954 9,145
Current liabilities
Trade and other payables (1,816) (1,504)
Deferred income (668) (92)
(2,484) (1,596)
Net current assets 5,470 7,549
Net assets 8,332 10,316
Equity attributable to equity holders
of the parent
Share capital 1,221 1,221
Share premium 30,342 30,342
Merger reserve 8,513 8,513
Retained earnings (31,744) (29,760)
Total equity 8,332 10,316
consolidated Cash flow Statement
For the year ended 31 January 2018
Year ended Year ended
31 January 31 January
2018 2017
GBP'000 GBP'000
(Loss)/profit before tax (2,218) 102
Finance income (3) (6)
Finance expense - 2
Depreciation and amortisation
charges 862 722
Share-based payments 109 (41)
Decrease in inventories 113 472
Increase in receivables (562) (204)
Increase in payables 312 21
Increase/(decrease) in deferred
income 576 (24)
Income tax credit received 91 161
Net cash (outflow)/inflow from
operating activities (720) 1,205
Cash flows from investing activities
Purchase of property, plant &
equipment (480) (168)
Purchase of intangible assets (477) (521)
Proceeds on the sale of equipment - -
Finance income 3 6
Net cash used in investing activities (954) (683)
Net cash (outflow)/inflow before
financing (1,674) 522
Cash flows from financing activities
Finance expense - (2)
Issue of ordinary share capital - 2,794
Net cash inflow from financing
activities - 2,792
Net (decrease)/increase in cash
and cash equivalents (1,674) 3,314
Opening cash and cash equivalents 4,901 1,587
Closing cash and cash equivalents 3,227 4,901
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended 31 January 2018
Share Merger Retained Total
Share premium reserve earnings equity
capital GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
At 1 February 2016 971 27,798 8,513 (29,906) 7,376
Issue of share capital 250 2,544 - - 2,794
Share-based payment credit - - - (41) (41)
Transactions with owners 250 2,544 - (41) 2,753
Profit and total comprehensive
income for the year - - - 187 187
At 31 January 2017 1,221 30,342 8,513 (29,760) 10,316
Share-based payment expense - - - 109 109
Transactions with owners - - - 109 109
Loss and total comprehensive
expense for the year - - - (2,093) (2,093)
At 31 January 2018 1,221 30,342 8,513 (31,744) 8,332
NOTES TO THE FINANCIAL STATEMENTS
1. NATURE OF THE FINANCIAL INFORMATION
These financial statements have been prepared in accordance with
the principle accounting policies adopted by the Group,
International Financial Reporting Standards (IFRS) and
International Financial Reporting Interpretations (IFRIC) as
adopted by the EU and those parts of the Companies Act 2006
applicable to companies reporting under and were approved by the
Board on 9 April 2018. They are presented in sterling, which is the
functional currency of the parent company and the Group. The
preparation of financial statements in accordance with IFRS
requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Although these estimates are based on
management's best knowledge of current events and actions, actual
results may ultimately differ from those estimates.
These results are audited, however the financial information
does not constitute statutory accounts as defined under section 434
of the Companies Act 2006. The financial information for the year
ended 31 January 2017 has been derived from the Group's statutory
accounts for that year, as filed with the Registrar of Companies.
The auditors' report on the statutory accounts for the year ended
31 January 2017 was unqualified and did not contain statements
under section 498 of the Companies Act 2006.
The accounting policies used in completing this financial
information have been consistently applied in all periods shown.
These accounting policies are detailed in the Group's financial
statements for the year ended 31 January 2018 which can be found on
the Group's website.
2. EARNINGS PER SHARE
The earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the year. The basic
earnings per share for the year is based on a loss after tax of
GBP2,093,000 (2017: profit GBP187,000) and weighted average number
of shares in issue of 244,174,908 (2017: 198,969,429). The diluted
earnings per share is based on the above calculation adjusted to
allow for the issue of shares on the assumed conversion of all
dilutive options. Share options are regarded as dilutive when, and
only when, their conversion would decrease earnings or increase the
loss per share. The diluted earnings per share is based upon a
weighted average number of shares of 244,174,908.
3. DISTRIBUTION
Copies of this statement will be available for collection free
of charge from the Company's registered office at 16 Orsman Road,
London N1 5QJ. An electronic version of this announcement and the
Annual report and accounts will be available today on the Company's
website, www.lidco.com. Copies of the Annual report and accounts
will be posted to shareholders later this month together with the
notice of the Annual General Meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UGUCACUPRGQB
(END) Dow Jones Newswires
April 10, 2018 02:00 ET (06:00 GMT)
Lidco (LSE:LID)
Historical Stock Chart
From Apr 2024 to May 2024
Lidco (LSE:LID)
Historical Stock Chart
From May 2023 to May 2024