TIDMLID
RNS Number : 8469B
LiDCO Group Plc
13 October 2020
LIDCO GROUP PLC
("LiDCO", "Group" or the "Company")
Interim Results for the six months ended 31 July 2020
LiDCO (AIM: LID), the hemodynamic monitoring company, announces
its unaudited Interim Results for the six months ended 31 July 2020
(H1). The Group has delivered a record H1 performance, seeing
strong cash generation and trading, coupled with continued success
seen with its High Usage Programme ("HUP"), for which revenues are
up 83%.
Financial Highlights
-- LiDCO product revenues (excluding third party products) up 83% to GBP6.1m (H1 FY20: GBP3.3m)
-- Total revenues (including 3(rd) party products) up 75% to GBP6.2m (H1 FY20: GBP3.5m)
-- Adjusted profit before tax (adjusting for share-based
payments and exceptional items) increased by GBP2.0m to GBP1.2m (H1
FY20: GBP0.8m loss)
-- Exceptional profit on exit of Orsman Road premises GBP0.2m (H1 FY20: GBPnil)
-- Profit after tax up by GBP2.2m to GBP1.4m (H1 FY20: GBP0.8m loss)
-- Earnings per share 0.56p (H1 FY20: loss per share 0.34p)
-- Net cash inflow of GBP1.8m (H1 FY20: net cash outflow GBP0.5m)
-- Strong balance sheet to support growth strategy, with cash
balances on 31 July 2020 of GBP3.1m (31 January 2020: GBP1.4m) and
no borrowings
Operational Highlights
-- COVID-19 related demand resulted in the Company selling 230 monitors (H1 FY20: 111)
-- Continued success with HUP, revenues up 83% to GBP1.5m (H1 FY20: GBP0.8m)
-- Global installed base of HUP monitors increased by 14% to 327
at 31 July 2020 (31 January 2020: 286)
-- Regulatory approvals received for commercial sale of latest monitor in Brazil and Columbia
-- Successful transition of manufacturing and administration to two new London locations
Commenting, Matt Sassone, Chief Executive Officer of LiDCO,
said:
"I am so proud of the team and all of their work which has
enabled LiDCO to increase our market-leading share in the UK and
achieve a record H1 performance. The cash generated in H1 will
enable us to invest further in the business to accelerate our
growth, especially in the US, the largest market for hemodynamic
monitoring. We achieved a CAGR of 65% in US HUP revenues during the
two years to 31 January 2020 and we believe there is the
opportunity for a good return on focused investment in our
commercial operations in the US to accelerate revenue growth
further.
"As healthcare providers try to return to normal practice, they
are facing unprecedented financial and operational challenges, and
LiDCO, with its Software as a Service (SaaS) offering, is
well-placed to meet both the clinical and financial needs of our
customers."
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
LiDCO Group Plc www.lidco.com
Matt Sassone (CEO) Tel: +44 (0)20 7749 1500
T im Hall (CFO)
N+1 Singer Tel: +44 (0)20 7496 3172
Aubrey Powell / George Tzimas (Corporate Finance)
Tom Salvesen (Corporate Broking)
Walbrook PR Ltd Tel: 020 7933 8780 or lidco@walbrookpr.com
Paul McManus Mob: 07980 541 893
Lianne Cawthorne Mob: 07584 391 303
CHIEF EXECUTIVE OFFICER'S REVIEW
The Group achieved a record first half performance with LiDCO
product revenues up by 83% compared with the first half of last
year, by successfully responding to the short-term increase in
demand related to the COVID-19 pandemic. The Group introduced
widespread measures to protect its employees and this performance
was achieved due to the dedication and flexibility of employees who
worked tirelessly during the period.
The exceptionally strong sales in the first half was due to
increased demand for advanced hemodynamic monitors as healthcare
providers expanded critical care services to deal with the COVID-19
pandemic, especially in the UK, where LiDCO is the market leader.
LiDCO technology is now used in over 80% of acute NHS trusts.
The level of demand in the first half of the year clearly
demonstrates how hemodynamic optimisation is seen by many
clinicians as playing a key role in the management of the complex
interaction of respiratory and cardiovascular factors seen when
treating COVID-19 patients. LiDCO provides a market leading
solution, via either the arterial line or non-invasively, to
support the diagnostic and therapy-guiding functional hemodynamic
tests as recommended by frontline experts and international
guidelines(*) .
Feedback from frontline clinicians indicate that, due to the
high patient-to-staff ratios associated with a surge of ICU
patients, customers gravitated to LiDCO's hemodynamic monitor
because it is easy to interact with, simple to set up and has
guided clinical protocols to support patient care. For example,
LiDCO is unique in incorporating three ventilator-associated,
guided fluid tests as recommended by key opinion leaders during
COVID-19 educational webinars hosted by the European Society of
Intensive Care Medicine.
As has been widely reported, around the world many elective
surgeries have been postponed as healthcare systems prioritised
resources to deal with the pandemic. In the UK, there was a
three-month postponement of non-urgent elective surgery which began
in April 2020 and resulted, according to Birmingham University, in
June's routine NHS procedures being as much as 72% lower
year-on-year. Feedback from LiDCO's commercial staff in the UK and
US indicate that surgical activity is gradually returning to
previous levels, but remains dampened by additional infection
control practices and continuing preparations for a further wave of
infections.
LiDCO's Software as a Service (SaaS) HUP business model
continues to be a success by enabling healthcare providers to
improve patient outcomes while reducing the cost of care. The
ability to treat an unlimited number of patients without the need
for a dedicated disposable is greatly appreciated by customers.
From a business perspective, in H1 the forward visibility of
revenues and historical growth of the HUP contract base protected
the business from some of the reduction in consumable sales as a
result of postponement of elective surgeries. HUP contracts vary in
length, typically being multi-year with fees invoiced annually at
the beginning of each contract year but recognised as revenues over
the contract year, with the unrecognised portion being shown as
deferred income on the balance sheet. As the HUP contract base
grows, so does the forward income visibility.
Despite the postponement of elective surgeries, LiDCO's
recurring revenues grew by 12% to GBP2.83m (H1 FY20: GBP2.53m) as
HUP revenues increased by 83% to GBP1.46m (H1 FY20: GBP0.80m) more
than offsetting the reduction of consumable sales of GBP0.36m
compared with H1 FY20. The growth in HUP revenues was generated by
the contracted HUP revenue base, as well as additional demand from
new and existing customers.
As countries across the world continue to manage the COVID-19
pandemic with some preparing for a second wave, the business is
primed to meet any increased demand and is actively engaging with a
number of customers considering further investment in advanced
hemodynamic monitoring to treat an anticipated rise in the number
of COVID-19 patients.
Financial Results
Total revenues were up 75% to GBP6.16m (H1 FY20: GBP3.51m) as a
result of strong growth in sales of LiDCO products which increased
83% to GBP6.10m (H1 FY20: GBP3.33m). This was driven by increased
demand, primarily in the UK, for hemodynamic monitors during the
peak months of the COVID-19 pandemic. As anticipated, sales of low
margin, third-party products declined by 68% to GBP0.06m (H1 FY20:
GBP0.18m) following termination of the Merit Medical distribution
contract for Argon products.
Gross profit increased 102% to GBP4.47m (H1 FY20: GBP2.22m) as a
result of the strong sales growth and an increase in gross margin
to 72.6% (H1 FY20: 63.2%). The improvement in gross margin was
mainly due to labour and overhead cost efficiencies, and changes to
the sales mix as the direct market proportion of LiDCO product
sales increased to 80.0% of total sales (H1 FY20: 71.2%).
Sales and marketing costs decreased by 2% to GBP1.67m (H1 FY20:
GBP1.70m) with savings from reduced travel and exhibition costs
during the pandemic being partly offset by increased commission
payments in the UK on the above budget sales.
Development and regulatory expenses increased by 4% to GBP0.42m
(H1 FY20: GBP0.40m). Administration expenses increased by 35% to
GBP1.16m (H1 FY20: GBP0.86m) due to a number of factors, including
increased provisions for management bonuses reflecting the
exceptionally strong financial performance in H1, increased legal
and professional fees in part due to the capital reorganisation and
above inflationary rises in several expenses such as insurance.
These increases outweighed the savings in sales and marketing costs
such that total operating expenses increased by 10% to GBP3.24m (H1
FY20: GBP2.96m).
Share-based payments resulted in a charge of GBP49,000 (H1 FY20:
GBP69,000).
Exceptional income of GBP332,000 (H1 FY20: GBPnil) was recorded
in the period primarily relating to compensation due from the
landlord on the vacation of the Group's previous premises in Orsman
Road. Exceptional expenses of GBP132,000 (H1 FY20: GBPnil) were
incurred in moving to the new production facility in north London
and the new office in central London.
The Group made a profit before tax in the period of GBP1.37m (H1
FY20: GBP0.82m loss). The availability of tax losses, for which no
deferred tax asset had been recognised, reduced the tax charge such
that the Group recorded a profit after tax in the period of
GBP1.36m (H1 FY20: GBP0.82m loss) and earnings per share of 0.56p
(H1 FY20: 0.34p loss per share).
Adjusted EBITDA (adjusted for share-based payments and
exceptional items) for the period increased by GBP2.04m to GBP1.85m
(H1 FY20: GBP0.19m loss).
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2020 2019 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------- ---- ----------- ----------- ------------
Profit/(loss) from operations 1,382 (812) (1,202)
Depreciation and amortisation 621 551 1,146
-------------------------------------- ----------- ----------- ------------
EBITDA 2,003 (261) (56)
Share-based payments charge 49 69 96
Exceptional items (net) (200) - -
-------------------------------- ---- ----------- ----------- ------------
Adjusted EBITDA 1,852 (192) 40
-------------------------------------- ----------- ----------- ------------
Net cash inflow from operating activities increased by GBP2.40m
to GBP2.53m (H1 FY20: 0.13m) mainly as a result of the increase in
EBITDA and receipt of the R&D tax credit of GBP0.18m in H1,
rather than in H2 as in the previous financial year.
Net cash used in investing activities, which comprises purchases
of plant and equipment including monitors placed on long-term loan
to hospitals and capitalised R&D, increased 15% to GBP0.62m (H1
FY20: GBP0.54m) primarily due to an investment of GBP0.26m in
fitting out of the Group's new production and office
facilities.
Interest and capital payments in respect of leases increased as
a result of the move to the new facilities, leading to an increase
in the net cash outflow from financing activities to GBP0.13m (H1
FY20: GBP0.12m).
Overall there was an increase in net cash of GBP1.77m (H1 FY20:
GBP0.53m outflow) in the period such that the Group had cash
balances of GBP3.13m as at 31 July 2020 (31 January 2020:
GBP1.36m). The Board believes that a large part of this cash is not
needed for day-to-day working capital purposes and is available for
investment in accelerating the growth of the business.
Sales Performance
In the UK, LiDCO product revenues grew by 157% to GBP4.14m (H1
FY20: GBP1.61m), as UK hospitals invested in growing their critical
care provision by acquiring new monitors to meet anticipated
COVID-19 needs. The Company sold 146 monitors to NHS hospitals (H1
FY20: 14). Although the majority of these were sold to existing
customers, the Company was successful in winning a number of new
customers, further increasing LiDCO's share of the UK market.
During the period, the number of HUP monitors with annual licences
increased by 28% to 96 units (31 January 2020: 75 units) with an
annualised value of GBP1.01m (31(st) January 2020: GBP0.77m) and 10
customers have now contracted for HUP agreements (including 2 new
customers). In addition to this, a number of short-term HUP
licences were sold to customers dealing with the influx of COVID-19
patients. The majority of these were extended beyond the initial
three-month term and the Company expects that a significant
percentage will convert to contracted annual licences in the
future. As a result, revenues from these licences are included in
recurring revenues.
US revenues declined 11% to GBP0.79m (H1 FY20: GBP0.89m), as US
hospitals focussed on preparing for or dealing with COVID-19 and
did not appear to have the same urgency to expand hemodynamic
monitoring capacity as the UK NHS hospitals. Instead, the focus on
dealing with the pandemic suppressed routine purchasing activity,
leading to delays in finalising a number of new HUP contracts which
had been expected to close during H1. Recurring revenues grew
slightly compared with the first half of last year driven by the
carry-through from strong growth in HUP contracts last year, which
offset declines in per patient disposables due to the reduced
number of elective surgeries. Testament to the attractiveness and
high retention rate of the HUP business model, all existing
customers due to renew their contracts in H1 did so during the
period. At the end of July, the number of HUP monitors in the US
remained at 156 units (31 January 2020: 156 units). As at 31 July
2020, the US pipeline of potential HUP contracts was worth
approximately USD 5m of annual revenue, of which over a third have
successfully completed on-site clinical evaluations.
Sales outside of the Group's two direct markets grew by 41% to
GBP1.17m (H1 FY20: GBP0.83m). Sales to distributors in Europe and
ROW increased by 28% and 49% respectively. The number of monitors
under HUP contracts was up nearly 50% to 75 units (31 January 2020:
51 units). Following discussions with its supplier, the Company has
agreed to temporarily suspend supplying CNAP finger-cuff technology
to its distributor in China. LiDCO products continue to be sold
there using the more prevalent arterial line input. The Board does
not expect this temporary suspension to have a material effect on
the Group's sales.
Third-party sales in H1 FY21 included zero sales (H1 FY20:
GBP0.16m) of Argon critical care products following earlier
termination of the contract with Merit Medical. The UK commercial
team is continuing to promote selected third-party products, as
previously announced, but progress in H1 was impeded by the
COVID-19 pandemic.
Further details of the Company's performance, in terms of
revenues by key geographies, are given in the table below:
6 months to July 2020 6 months to July 2019
Capital Recurring Other Total Capital Recurring Other Total
Revenues Revenues Revenues Revenues
------------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
LiDCO Revenues
UK 2,698 1,430 11 4,139 221 1,369 23 1,613
US 1 788 2 791 112 771 4 887
Europe 151 231 3 385 68 223 9 300
Rest of
World 404 381 1 786 357 167 4 528
------------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
3,254 2,830 17 6,101 758 2,530 40 3,328
------------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
3rd Party Revenues
UK 49 9 - 58 - 183 - 183
------------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
Total Sales 3,303 2,839 17 6,159 758 2,713 40 3,511
------------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
Capital revenues include the sales of monitors and other
equipment to customers. Recurring revenues include sales of
smartcards, sensors, software licenses and service contracts. Japan
revenues are included within Rest of World.
Strategic plans
LiDCO's strategy is to build shareholder value through the
commercialisation of LiDCO monitoring systems and associated
high-margin recurring revenues. Increasing the numbers of
productive LiDCO-enabled monitors is expected to increase the
amount of recurring revenues generated from customers.
Geographical expansion is key to LiDCO's capacity to address the
worldwide opportunity for sales of its technology. A key focus for
geographic expansion is the US, which is the largest market for
hemodynamic monitoring. Pre-pandemic HUP revenues in the US grew at
a two year CAGR of 65% and, given the substantial pipeline of
opportunities, generated by a relatively small commercial resource,
the Board believes that there is the opportunity for good returns
by expanding its commercial operations in the US to accelerate
revenue growth further. The Board's intention is to gradually
invest existing cash resources to start this expansion with a goal
of more than tripling LiDCO's market share in the US to 10% within
the next five years. The timing and pace of this expansion will
depend upon the Board's assessment of the effect of COVID-19 on
market receptiveness.
The Group continues to explore corporate partnerships which
would expand LiDCO's commercial reach and drive increased returns
from its technology.
LiDCO will continue to invest in research and development to
maintain its technology leadership and deliver further
differentiation of LiDCO's offering. The Group continues to work on
developing its next generation algorithms including exploring the
use of artificial intelligence by applying machine learning to
analyse data and provide assistance to clinicians.
The Board believes that the quality of LiDCO's products, along
with promotion of its highly differentiated and attractive SaaS HUP
model for customers with high annual usage, has the potential to
drive significant market share gains in the US and other target
markets.
Excellence in product design, manufacturing and sales and
marketing are at the core of LiDCO's values. Patent protection is
sought where possible for LiDCO products, the efficacy of which
continues to be supported by a growing body of data showing their
clinical benefit and cost-effectiveness.
Brexit and the end of the Transition Period
The Board continues to follow the progress of the trade
negotiations and has actioned plans in case the transition period
ends without a trade agreement.
The Board continues to hope that a no deal situation will be
avoided but is reassured by the steps already taken by management.
The Board believes that a no deal scenario will have no material
impact on staffing and talent retention.
Premises
During H1, the Company exited its former premises in Orsman
Road, London and completed lease agreements on two more suitable
premises: a serviced office in central London for administrative
staff; and a facility in north London for logistics and production
activities. Despite considerable disruption caused by the COVID-19
pandemic, the move was completed ahead of the budgeted timeframe
due to the hard work and dedication of those employees involved.
The costs of the move were more than covered by compensation
received from the landlord of the Orsman Road premises for agreeing
to an early lease termination - as set out in Note 8: Exceptional
Income and Expense. The change of premises is not expected to have
a material impact on the on-going operating costs of the
business.
Outlook
The COVID-19 pandemic has reaffirmed the importance of
hemodynamic monitoring when treating critically ill patients. By
being able to respond to the surge in demand, LiDCO has benefited
from a significant increase in sales, cash and installed base, with
the potential for increased recurring revenues in the future. The
pipeline of opportunities, especially USD 5m of potential HUP
contracts in the US, remains significant and more attractive than
ever as hospitals face a backlog of surgical procedures at the same
time as unprecedented financial pressures.
Healthcare systems have had to delay standard purchasing
decisions and postpone many elective surgeries as they prioritised
their efforts to deal with the pandemic. Given the current status
of the pandemic, it is too early to predict whether delayed
purchasing decisions and postponed elective surgeries will catch up
in time to benefit LiDCO's performance in H2. Although some
opportunities are under discussion, the Board does not currently
expect that H2 will benefit from a further significant boost to
sales as a result of the pandemic.
The attractiveness of LiDCO's SaaS business model - its ease of
use, the ability to serve, unlimited patients, and associated
reduced costs - means that the Company is well-positioned to take
further market share. Furthermore, the resilience of revenues in
the last six months is testament to the value of having a large
contracted base of recurring revenues with high retention
rates.
In the last few months, LiDCO's commercial teams have been able
to recommence visits to customers and, based on current trading,
the Board anticipates that total sales in the second half will be
broadly in line with in the second half of last year. Operational
costs for the year as a whole are expected to be slightly higher
than last year as higher commissions and bonuses earned from the
exceptional performance in H1 are expected to exceed savings made
due to travel restrictions.
The Board remains confident that LiDCO is well-placed to grow
sales from pre-pandemic levels as markets return to normal.
Matt Sassone
Chief Executive Officer
13 October 2020
*To find out more information about the use of hemodynamic
monitoring in managing COVID-19 sources please use the following
links:
- Key Opinion Leader webinar
https://esicm-tv.org/webinar7_live_27-haemodynamic-management-in-covid-19-patients.html?fbclid=IwAR0NbnD5vH5zM_wsKvtP4j31KQwtKKfIOuEHLjXZtx_t7WMCV9zmIE0y9O4
- Key Opinion Leader webinar
https://esicm-tv.org/webinar11_live_32-haemodynamic-management-of-covid-19-septic-shock.html
- NICE guidelines
https://www.bmj.com/content/369/bmj.m1963
- Surviving Sepsis Campaign: guidelines on the management of
critically ill adults with Coronavirus Disease 2019 (COVID-19)
https://link.springer.com/article/10.1007/s00134-020-06022-5
- Blog by LiDCO user: Adapting in COVID-19? Calibrate the LiDCO system with an echo!
https://www.lidco.com/adapting-in-covid-19-calibrate-the-lidco-system-with-an-echo/
CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
For the six months ended 31 July 2020
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2020 2019 2020
Unaudited Unaudited* Audited
Note GBP'000 GBP'000 GBP'000
------------------------------------------- ----- ----------- ------------ --------------
Revenue 7 6,159 3,511 7,547
Cost of sales (1,685) (1,293) (2,627)
------------------------------------------- ----- ----------- ------------ --------------
Gross profit 4,474 2,218 4,920
Sales and marketing (1,670) (1,704) (3,419)
Development and regulatory (416) (400) (783)
Administration (1,157) (857) (1,824)
------------------------------------------- ----- ----------- ------------ --------------
Total operating expenses (3,243) (2,961) (6,026)
------------------------------------------- ----- ----------- ------------ --------------
Operating profit/(loss) before
share-based payments and exceptional
items
Share-based payment charge 1,231 (743) (1,106)
Exceptional income (49) (69) (96)
Exceptional expense 8 332 - -
8 (132) - -
------------------------------------------- ----- ----------- ------------ --------------
Operating profit/(loss) 1,382 (812) (1,202)
------------------------------------------- ----- ----------- ------------ --------------
Finance income - 1 1
Finance expense (14) (9) (13)
------------------------------------------- ----- ----------- ------------ --------------
Profit/(loss) before tax 1,368 (820) (1,214)
Taxation (4) (1) 185
------------------------------------------- ----- ----------- ------------ --------------
Profit/(Loss) for the period
and total comprehensive income/(expense)
attributable to equity holders
of the parent 1,364 (821) (1,029)
------------------------------------------- ----- ----------- ------------ --------------
Earnings/(Loss) per share (basic
and diluted) 9 0.56p (0.34p) (0.42p)
------------------------------------------- ----- ----------- ------------ --------------
* The figures for the six months ended 31 July 2019 have been
restated for a change in classification of certain expenses from
administrative expenses to cost of sales. Further details of this
restatement can be found in note 4 to the accounts.
CONDENSED CONSOLIDATED Balance Sheet
At 31 July 2020
31 July 31 July 31 January
2020 2019 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------- ----------- ----------- -----------
Non-current assets
Property, plant and equipment 1,003 1,013 867
Right-of-use assets 906 367 224
Intangible assets 2,345 2,125 2,342
--------------------------------------- ----------- ----------- -----------
4,254 3,505 3,433
--------------------------------------- ----------- ----------- -----------
Current assets
Inventory 1,458 1,539 1,545
Trade and other receivables 1,401 1,440 1,986
Tax receivable - 188 183
Cash and cash equivalents 3,134 1,188 1,360
--------------------------------------- ----------- ----------- -----------
5,993 4,355 5,074
--------------------------------------- ----------- ----------- -----------
Current liabilities
Lease liabilities (114) (218) (116)
Trade and other payables (1,404) (963) (1,440)
Deferred income (893) (766) (1,230)
--------------------------------------- ----------- -----------
(2,411) (1,947) (2,786)
--------------------------------------- ----------- ----------- -----------
Net current assets 3,582 2,408 2,288
--------------------------------------- ----------- ----------- -----------
Non-current liabilities
Lease liabilities (822) (131) (120)
--------------------------------------- ----------- ----------- -----------
(822) (131) (120)
--------------------------------------- ----------- ----------- -----------
Net assets 7,014 5,782 5,601
--------------------------------------- ----------- ----------- -----------
Equity attributable to equity holders
of the parent
Share capital 1,221 1,221 1,221
Share premium - 30,342 30,342
Merger reserve 8,513 8,513 8,513
Retained earnings (2,720) (34,294) (34,475)
--------------------------------------- ----------- ----------- -----------
Total equity 7,014 5,782 5,601
--------------------------------------- ----------- ----------- -----------
CONDENSED consolidated COMPREHENSIVE Cash flow Statement
For the six months ended 31 July 2020
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2020 2019 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit/( Loss) before tax 1,368 (820) (1,214)
Finance income - (1) (1)
Finance expense 14 9 13
Depreciation and amortisation charges 621 551 1,146
Share based payments 49 69 96
Decrease in inventories 87 341 335
Decrease/(increase) in receivables 585 465 (81)
(Decrease)/increase in payables (38) (411) 66
(Decrease)/increase in deferred income (337) (71) 393
Income tax received/(paid) 179 (2) 192
-------------------------------------------- ----------- ----------- ------------
Net cash inflow from operating activities 2,528 130 945
-------------------------------------------- ----------- ----------- ------------
Cash flows from investing activities
Purchase of property, plant & equipment (294) (232) (306)
Purchase of intangible assets (329) (309) (794)
Finance income - 1 1
-------------------------------------------- ----------- ----------- ------------
Net cash used in investing activities (623) (540) (1,099)
-------------------------------------------- ----------- ----------- ------------
Cash flows from financing activities
Finance expense (14) (9) (13)
Principal elements of lease payments (117) (110) (190)
-------------------------------------------- ----------- ----------- ------------
Net cash outflow from financing activities (131) (119) (203)
-------------------------------------------- ----------- ----------- ------------
Net increase/(decrease) in cash and
cash equivalents 1,774 (529) (357)
-------------------------------------------- ----------- ----------- ------------
Opening cash and cash equivalents 1,360 1,717 1,717
-------------------------------------------- ----------- ----------- ------------
Closing cash and cash equivalents 3,134 1,188 1,360
-------------------------------------------- ----------- ----------- ------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY
For the six months ended 31 July 2020
Share Share Merger Retained Total
capital premium reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- --------- --------- --------- ---------- ----------
At 1 February 2019 1,221 30,342 8,513 (33,542) 6,534
Share-based payment expense - - - 9 6 96
Transactions with owners - - - 96 96
-------------------------------- --------- --------- --------- ---------- ----------
Loss and total comprehensive
expense for the year - - - (1,029) (1,029)
-------------------------------- --------- --------- --------- ---------- ----------
At 31 January 2020 1,221 30,342 8,513 (34,475) 5, 601
Share based payment expense - - - 49 49
-------------------------------- --------- --------- --------- ---------- ----------
Transactions with owners - - - 49 49
-------------------------------- --------- --------- --------- ---------- ----------
Capital reduction - (30,342) - 30,342 -
Profit and total comprehensive
income for the period - - - 1,364 1,364
-------------------------------- --------- --------- --------- ---------- ----------
At 31 July 2020 1,221 - 8,513 (2,720) 7,014
-------------------------------- --------- --------- --------- ---------- ----------
NOTES TO THE INTERIM STATEMENT
1. BASIS OF PREPARATION
The Group's interim report for the six months ended 31 July 2020
was authorised for issue by the directors on 12 October 2020. The
consolidated interim financial information, which is unaudited,
does not constitute statutory accounts within the meaning of
Section 435 of the Companies Act 2006. Accordingly, this condensed
report is to be read in conjunction with the Annual Report for the
year ended 31 January 2020, which has been prepared in accordance
with the principal accounting policies adopted by the Group,
International Financial Reporting Standards (IFRS) and
International Financial Reporting Interpretations (IFRIC) as
adopted by the European Union and those parts of the Companies Act
2006 applicable to companies reporting under IFRS, and any public
announcements made by the Group during the interim reporting
period.
The statutory accounts for the year ended 31 January 2020 have
been reported on by the Group's auditors, received an unqualified
audit report and have been filed with the registrar of companies at
Companies House. The unaudited condensed interim financial
statements for the six months ended 31 July 2020 have been drawn up
using accounting policies and presentation expected to be adopted
in the Group's full financial statements for the year ending 31
January 2021, which are those set out in note 1 to the Group's
audited financial statements for the year ended 31 January 2020
together with the new accounting policies that have been applied
from 1 February 2020 included in note 3.
Having reviewed the Group's operations and forecasts, the
directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, the directors continue to adopt the going
concern basis in preparing the unaudited condensed interim
financial statements.
2. ACCOUNTING POLICIES
The interim financial information has been prepared on the basis
of the recognition and measurement requirements of IFRS, which were
the accounting policies used in the Report and Accounts for the
Group for the year ended 31 January 2020 as amended for new
accounting policies that have been applied from 1 February 2020 as
set out in Note 3 below.
3. CHANGES IN ACCOUNTING POLICIES - NEW IFRS
The following pronouncements have been issued by the
International Accounting Standards Board (IASB) and are effective
for annual periods on or after 1 January 2020.
-- Amendments to IFRS 9, IAS 39 and IFRS 7 - "Interest Rate Benchmark Reform"
-- Amendments to IFRS 3 - "Definition of a Business"
-- Amendments to IAS 1 and IAS 8 - "Definition of Material"
-- "Amendments to References to the Conceptual Framework in IFRS Standards"
The adoption of the above pronouncements has had an immaterial
impact on the financial position of the Group as at 31 July 2020
and on the consolidated results and cash flows of the Group in six
months ending 31 July 2020.
4. CHANGES IN ACCOUNTING POLICIES - PRIOR YEAR
RECLASSIFICATION
In the interim results for the financial period ending 31 July
2019, the Group reported labour and direct overhead costs related
to the following activities within operating expenses:
-- the production of manufactured products;
-- the testing of bought-in products;
-- the repair of products;
-- goods inwards and warehousing of raw materials and finished goods stock; and
-- the assembly, packaging and dispatch of products.
In preparing the Report and Accounts for the year ended 31
January 2020, the Board that it would provide more meaningful
information and be more comparable with the reporting of other
companies if the labour and direct overhead costs related to these
activities were reported within cost of sales. Furthermore,
facility and information technology costs not reallocated to cost
of sales and previously included within overhead expenses classed
as "Operations" have been reallocated to other overhead expense
categories. The impact of these changes to the reported figures for
the six months ending 31 July 2019 are shown in the table
below.
As previously As reported
Six months ended 31 July reported Adjustments in this Interim
2019 Statement
---------------------------- -------------- -------------- -----------------
Cost of sales (GBP'000s) (948) (345) (1,293)
Gross profit (GBP'000s) 2,563 (345) 2,218
Gross margin (%) 73% (10%) 63%
Operations (507) 507 -
Sales and marketing (1,702) (2) (1,704)
Development and regulatory (393) (7) (400)
Administration (704) (153) (857)
5. CHANGES IN ACCOUNTING POLICIES - EXCEPTIONAL ITEMS
In order to provide more meaningful information and not to
distort trends the directors have decided to separately identify
exceptional items in the Condensed Consolidated Comprehensive
Income Statement.
Exceptional items are defined as those significant items which
are separately disclosed by virtue of their size or incidence to
enable a full understanding of the Group's financial performance.
Transactions that may give rise to an exceptional item include
gains and losses on the disposal of an asset, costs incurred in
relation to the acquisition or sale of a business, and
non-recurring restructuring costs.
6. GOING CONCERN
As mentioned in the Chief Executive's Review, the COVID-19
pandemic has led to increased sales of the Group's hemodynamic
monitors that in turn have generated significant profits and cash
inflows for the Group in the reporting period. In light of the use
of the Group's hemodynamic monitors in the treatment of COVID-19
patients and the sales performance in the first half of the
financial year, the directors do not expect the continuing pandemic
or "second wave" of COVID-19 cases to have a negative impact on the
financial performance of the Group.
The Board has considered detailed monthly financial forecasts
for the remainder of the current financial year as well as
longer-term forecasts for the next five years along with related
assumptions, risks and opportunities. Having considered these
forecasts, the directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future being the period of 12 months from the
date of this interim statement. Accordingly, the directors continue
to adopt the going concern basis in preparing the unaudited
condensed interim financial statements.
7. REVENUE AND SEGMENTAL INFORMATION
The Group has one segment - the supply of monitors, disposables
and support services associated with the use of the LiDCO's cardiac
monitoring equipment. Geographical and product type analysis is
used by management to monitor sales activity and is presented
below:
Revenue and result by geographical region
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2020 2019 2020
Group revenue GBP'000 GBP'000 GBP'000
UK - LiDCO products 4 ,139 1,613 3,580
UK - third party products 5 8 183 191
USA 7 91 887 1,766
Continental Europe 38 5 300 631
Rest of World 7 86 528 1,379
-------------------------------------- ----------- ----------- ------------
6 ,159 3,511 7,547
-------------------------------------- ----------- ----------- ------------
Result
--------------------------------------
UK - LiDCO products 2,331 485 1,362
UK - third party products 27 27 38
US (164) (124) (461)
Europe 221 152 266
Rest of World 389 211 533
-------------------------------------- ----------- ----------- ------------
Total 2,804 751 1,738
Unallocated costs (1,622) (1,563) (2,940)
Exceptional item (net) 200 - -
-------------------------------------- ----------- ----------- ------------
Operating profit/ ( loss) 1,382 (812) (1,202)
-------------------------------------- ----------- ----------- ------------
Revenue by type
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2020 2019 2020
GBP'000 GBP'000 GBP'000
Capital revenues 3 ,254 758 1,051
Recurring revenues 2,830 2,530 5,040
Distributed third party disposables 58 183 1,134
-------------------------------------- ----------- ----------- ------------
Total product and license revenue 6,142 3,471 7,225
Other income 17 40 99
-------------------------------------- ----------- ----------- ------------
Total revenues 6,159 3,511 7,324
-------------------------------------- ----------- ----------- ------------
The Group can identify trade receivables and trade payables
relating to the geographical segments. As noted above, the Group
has one segment and other assets and liabilities together with
non-sales related overheads are not accounted for on a segment by
segment basis. Accordingly, segment assets, liabilities and segment
cash flows are not provided. Service contract income is included
within recurring revenue.
During the period there was one customer (H1 FY20: none) that
accounted for more than 10% of the Group's total revenue. This
customer accounted for 26% of the Group's total revenue in the
period.
8. EXCEPTIONAL INCOME AND EXPENSE
The exceptional income and expense relate to the move from the
Group's previous premises in Orsman Rd to its new production
facility in north London and administrative offices in central
London. The exceptional income of GBP332,000 (H1 FY20: GBPnil)
consists of GBP330,000 of initial compensation from the landlord
payable within five business days of the Group vacating the
premises and a GBP2,000 gain under IFRS 16 from the early
termination of the lease. The Group vacated the Orsman Rd premises
on 23 July 2020 and received the initial compensation in its bank
account on 3 August 2020. This cash is not included in the cash
balance reported as at 31 July 2020.
The Group is due a further GBP110,000 of compensation from the
landlord contingent on the landlord selling the Orsman Rd facility.
This amount will be recognised in the Group's accounts when
notification has been received from the landlord that the building
has been sold. The landlord has advised that its current
expectation is for the sale to complete in early 2021, once
necessary planning and other matters are resolved.
The exceptional expense of GBP132,000 (H1 FY20: GBPnil) consists
of the following expenses:
GBP'000s
---------
Running expenses of the new facilities prior to occupation 43
Running expenses of old facility post occupation 31
Extra employment costs related to the move 50
Other move related costs 8
---------
132
---------
9. EARNINGS PER SHARE
The calculation of the earnings per share (basic and diluted)
for the six months to 31 July 2020 is based on the profit for the
period of GBP1,364,000 (H1 FY20: GBP821,000 loss) and the weighted
average number of shares in issue during the period of 244,174,908
(H1 FY20: 244,174,908).
10. DISTRIBUTION OF THE INTERIM STATEMENT
Copies of this statement will be available for collection free
of charge from the Company's registered office at Unit D4, Mowlem
Trading Estate, Leeside Road, London, N17 0QJ. An electronic
version will be available on the Company's website,
www.lidco.com.
The Company's presentation of its interim results for the six
months ended 31 July 2020 will also be available from today on the
LiDCO website www.lidco.com .
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END
IR UUVNRROURAAA
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