TIDMIUG
RNS Number : 9908W
Intelligent Ultrasound Group PLC
29 April 2021
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is considered to be in the public domain.
Intelligent Ultrasound Group plc
("Intelligent Ultrasound" or the "Group" or the "Company")
Unaudited Preliminary Results for the Year Ended 31 December
2020
Intelligent Ultrasound Group plc (AIM: IUG), the ultrasound
artificial intelligence (AI) software and simulation company,
announces its unaudited preliminary results for the year ended 31
December 2020, showing another positive year of progress, despite
the restrictions of the pandemic.
Financial highlights:
-- The simulation division worked extremely hard to minimise the
negative impact of Covid-19 and as a result, Group revenue only
declined by 13% to GBP5.2m (2019: GBP5.9m)
-- Despite the reduction in revenue, operating loss improved by 2% to GBP4.5m (2019: GBP4.6m)
-- The balance sheet was strengthened in May 2020 with a placing
and open offer which raised GBP4.8m after expenses
-- Year-end cash at GBP8.8m (2019: GBP7.3m) and no debt (excluding IFRS 16 lease liabilities)
-- Current cash of GBP6.6m
Operational highlights:
-- Launch of SonoLyst (incorporating ScanNav Assist AI
technology) as an option on GE Healthcare's Voluson SWIFT
ultrasound machine at the end of 2020
-- SonoLyst is the world's first fully integrated AI tool that
recognises the 20 views recommended by the International Society of
Ultrasound in Obstetrics and Gynaecology (ISUOG) for mid-trimester
fetal images
-- Commenced the CE and FDA regulatory approval process for
ScanNav Anatomy Peripheral Nerve Block stand-alone device, with
in-built AI software, that can be plugged into existing
anaesthesiology ultrasound machines
Post year end:
-- Reached the significant milestone of installing our 1000(th) ultrasound training simulator
-- Received CE approval for ScanNav Anatomy Peripheral Nerve Block
Commenting on the results, Riccardo Pigliucci, Chairman of
Intelligent Ultrasound said:
"This has been a positive year for the Group considering the
impact of the Covid-19 lockdowns on our access to hospitals and the
ability of our development teams to cope with the remoteness of
home working.
We minimised the effect of the pandemic on simulation division
sales and Group operating losses, launched our first AI software
with GE Healthcare, the world's largest ultrasound manufacturer and
raised GBP4.8m from existing shareholders in May to strengthen our
balance sheet.
2021 has started well, with encouraging simulation sales as well
as the recent announcement of CE approval for our second clinical
AI software product. As such we remain confident that we can
continue to build a successful 'Classroom to Clinic' ultrasound
business and reach the profitability inflection point from a
growing stream of simulation and clinical AI revenues. On behalf of
the Board, I would like to thank our shareholders for their
continued support, and we look forward to a successful 2021."
For further information, please contact:
Intelligent Ultrasound Group plc www. intelligentultrasound.com
Stuart Gall, CEO Tel: +44 (0)29 2075 6534
Helen Jones, CFO
Cenkos Securities - Nominated Advisor Tel: +44 (0)20 7397 8900
and Broker
Giles Balleny / Max Gould (Corporate
Finance)
Michael Johnson / Julian Morse
(Sales)
Walbrook PR Tel: +44 (0)20 7933 8780 or intelligentultrasound@walbrookpr.com
Anna Dunphy / Paul McManus Mob: +44 (0)7876 741 001 / Mob: +44
(0)7980 541 893
About Intelligent Ultrasound Group
Intelligent Ultrasound (AIM: IUG) develops artificial
intelligence-based clinical image analysis software tools for the
diagnostic medical ultrasound market and hi-fidelity virtual
reality simulators for the ultrasound training market. Based in
Cardiff in the UK and Atlanta in the US, the Group operates two
divisions:
Clinical AI Division
Focusses on developing deep learning-based algorithms to make
ultrasound machines smarter and more accessible. Products in the
market include :
ScanNav Assist
ScanNav Assist uses machine-learning based algorithms to
automatically identify and grade ultrasound images. GE Healthcare's
SonoLyst software on their Voluson SWIFT ultrasound machine
incorporates the ScanNav Assist AI technology and has received CE
approval and 510(k) clearance from the FDA. SonoLyst is the world's
first fully integrated AI tool that recognises the 20 views
recommended by the International Society of Ultrasound in
Obstetrics and Gynaecology mid-trimester practice guidelines for
fetal imaging.
ScanNav Anatomy
ScanNav Anatomy PNB uses machine-learning based algorithms to
simplify ultrasound-guided needling by providing the user with
real-time AI-based anatomy highlighting software for a range of
medical procedures. ScanNav Anatomy has received CE approval and
has also been submitted for FDA regulatory approval. ScanNav
Anatomy PNB is therefore not available for sale in the US or any
other territory requiring government approval for this type of
product.
Simulation Division
Focusses on hi-fidelity ultrasound education and training
through simulation. Its main products are the ScanTrainer OBGYN
training simulator, the HeartWorks echocardiography training
simulator, the BodyWorks Eve Point of Care and Emergency Medicine
training simulator with Covid-19 module and the new AI-based
Anatomy PNB training simulator. To date over 1,000 simulators have
been sold to over 600 medical institutions around the world.
www.intelligentultrasound.com
CHAIRMAN'S STATEMENT
2020 has been another year of progress for the Group, with the
clinical AI division announcing the successful launch of its
ultrasound AI software in partnership with GE Healthcare, the
global leader in women's health ultrasound and the simulation
division working extremely hard to minimise the negative impact of
Covid-19 on 2020 sales revenue, with the launch of the BodyWork's
Covid-19 lung training simulator.
Clinical AI:
-- GE Healthcare's SonoLyst technology on the Voluson SWIFT
ultrasound machine, that utilises our ScanNav Assist AI software,
received CE approval for sale in Europe and 510(k) clearance from
the FDA for sale in the USA at the end of 2020. SonoLyst is the
world's first fully integrated ultrasound AI tool that recognises
the 20 views recommended by the International Society of Ultrasound
in Obstetrics and Gynaecology (ISUOG) mid-trimester practice
guidelines for fetal imaging
-- Our ScanNav Anatomy Peripheral Nerve Block (PNB) AI software
was submitted for both CE and FDA approval during the year, with CE
approval announced post year-end on 12 April 2021
Simulation:
-- Revenue of GBP5.2m (2019: GBP5.9m), the decline of 13% being
mainly due to the impact of the global pandemic during the year in
the territories where we do not have a direct sales
organization.
-- Sales in the UK and USA grew by over 13% to GBP3.7m (2019: GBP3.3m)
-- Sales in Europe and Asia, that are made through our reseller
network, were impacted by global Covid-19 restrictions and declined
to GBP1.4m (2019: GBP2.6m)
Group:
-- Operating loss was lower at GBP4.5m (2019: loss of GBP4.6m)
with selling and marketing cost reductions helping to minimise the
Covid-19 impact of lower revenues
-- Cash at bank at 31 December 2020 was GBP8.8m (2019: GBP7.3m)
after receiving GBP4.8m net of costs in May 2020 from the
successful placing and open offer
Strategy
We continue to progress our 'Classroom to Clinic' ultrasound
strategy based on:
-- Growing simulation revenues from our direct UK and US
operations and global reseller channels, by expanding our range of
ultrasound training simulators into new medical market sectors;
and
-- Building on our partnership with GE Healthcare, that
incorporates our ScanNav AI technology in their latest ultrasound
systems, to grow clinical AI revenues through royalty-based
licences with ultrasound machine manufacturers; and
-- Marketing, through our direct sales organisation, proprietary
stand-alone AI systems that target the large pool of existing
ultrasound machines.
Three years on from our strategic 'Classroom to Clinic'
expansion, we believe the successful progress of all parts of the
business is reaffirming the wisdom of this decision and we look
forward to continuing to build on this momentum.
Board and governance
The Board continues to recognise the importance of maintaining
the highest standards of corporate governance and is fully aware
that the Group is in transition from a typical founders and venture
driven company to a more mature public entity.
At the end of 2019 we therefore appointed an external advisor to
conduct a full review of our Board and its performance and also
held meetings with a number of our major shareholders during 2020,
to allow us to fully align the Group's corporate governance with
stakeholder expectations.
The key actions enacted from this review were:
-- The establishment of a Nomination Committee of the Board with
the task to reconfigure our Board to comply with both the
independence, as well as the seniority requirement of today's
public companies
-- The goal to reduce, by 2022, the size of the board from the
current nine directors to seven while maintaining a majority of
independent non-executive directors (NEDs)
-- The goal to increase board diversity and the relevant
experience of the directors in the ultrasound equipment market and
in the evolving AI sector
2021 and 2022 will therefore be transition years with newly
appointed NEDs overlapping with current directors, some of whom
will not stand for re-election the following year.
People
2020 has been a difficult year for many companies, as we have
all had to learn how to cope with the unpredictable impact of
Covid-19 and I would like to thank all our staff for working so
hard and performing so well in such difficult circumstances.
The move of our head office to larger premises in the centre of
Cardiff was well timed, giving us the ability to continue key
research in a Covid-secure environment, as well as building new
web-based demo facilities that have enabled product sales
demonstrations to continue in these restricted times.
Outlook
This has been a positive year for the Group considering the
impact of the Covid-19 lockdowns on our access to hospitals and the
ability of our development teams to cope with the remoteness of
home working.
We minimised the effect of the pandemic on simulation division
sales and Group operating losses, launched our first AI software
with GE Healthcare, the world's largest ultrasound manufacturer and
raised a net GBP4.8m from existing shareholders in May to
strengthen our balance sheet.
2021 has started well, with encouraging simulation sales, as
well as the recent announcement of CE approval for our second
clinical AI software product. As such we remain confident that we
can continue to build a successful 'Classroom to Clinic' ultrasound
business and reach the profitability inflection point from a
growing stream of simulation and clinical AI revenues.
Riccardo Pigliucci
Non-executive chairman
CEO REVIEW
Intelligent Ultrasound is harnessing the power of the new
generation of artificial intelligence (AI) algorithms to make
ultrasound simpler to use and easier to learn, by providing
guidance and support to medical professionals whilst they are
scanning.
AI is a key element of our 'Classroom to Clinic' approach to
ultrasound as we expand both our simulation and clinical AI
divisions. The report below details how each division operates, the
progress made in 2020 and the key challenges faced during the
year.
CLINICAL AI DIVISION
Our clinical AI division continues to build on the original work
of Professor Alison Noble FRS OBE, and Professor Aris Papageorghiou
FRCOG from The University of Oxford. Alison and Aris still work
with us today, keeping us informed of the latest advances in the
machine learning field, to ensure that we can develop products that
meet real clinical needs.
In under three years the AI development team has grown to over
30 software engineers, image segmenters and medical and regulatory
advisors. Their leading-edge development work is underpinned by a
well-curated and growing database of over five million ultrasound
images that we have used to develop our range of AI-based ScanNav
real-time image analysis software products. These products are
focused on moving AI into the clinic to give real-time support to
clinicians whilst they are scanning.
ScanNav Assist
For obstetricians, our ScanNav Assist AI technology acts like a
personal scanning assistant, by comparing the image or view
acquired to specific criteria on standard views within a fetal
scan, to ensure they contain the required anatomy for the imaging
plane.
In 2019, we entered a long-term partnership agreement for our
ScanNav Assist AI software with GE Healthcare, one of the world's
leading ultrasound manufacturers. At the end of September 2020 GE
Healthcare announced the launch of the Voluson SWIFT, which is the
first GE ultrasound system to feature SonoLyst, the new software
that utilises our ScanNav Assist real-time image analysis software
to enhance workflow and improved consistency by reducing
variability between operators. SonoLyst is the world's first fully
integrated AI tool that recognises the 20 views recommended by the
ISUOG mid-trimester practice guidelines for fetal sonography
imaging:
SonoLystIR
Utilises ScanNav Assist to perform automated detection of the
key scanning views and automated selection of the relevant Voluson
SonoBiometry measurement tools. SonoLystIR automatically detects
anatomy then selects all applicable annotations and measurements,
enhancing workflow and reducing variability between operators for
improved consistency.
SonoLystX
Utilises ScanNav Assist to compare the acquired image to
standardised criteria, to ensure that it meets clinical standards.
SonoLystX is a virtual onboard ultrasound expert that can help
enhance accuracy and quality and is ideal for teaching, training,
and quality assurance to ensure quality image standards and
consistency.
SonoLyst is an optional add-on to the Voluson SWIFT and is the
first AI software to be launched under the Group's long-term
agreement with GE Healthcare, that provides for the integration of
Intelligent Ultrasound's real-time AI image analysis software into
GE Healthcare's Voluson women's health ultrasound portfolio.
Although the terms of the agreement are confidential and
undisclosed for commercial reasons, the Voluson SWIFT received CE
approval for sale in Europe and 510(k) clearance from the FDA for
sale in the USA at the end of 2020 and we would therefore look to
be able to report more fully on clinical AI division revenues in
our 2021 half year results.
Initial user feedback has been encouraging and with pandemic
related restrictions on hospital capital expenditure expected to
ease in the second half of 2021, combined with the full global
roll-out of the Voluson SWIFT, this should result in a growth of
our clinical sales through the second half of the year. However, we
would expect 2022 to be a truer indication of the royalty
generation potential of this first product in our AI range.
Intelligent Ultrasound's aim is to develop future variants of
ScanNav Assist that will support additional protocol-based scanning
in both obstetrics and general radiology.
ScanNav Anatomy
ScanNav Anatomy uses the latest AI technology to automatically
highlight the live ultrasound image to enhance the accuracy and
standardisation of ultrasound image interpretation, by making it
easier to identify key anatomical structures. This supports the
performance of healthcare professionals who are suitably qualified,
but who perform ultrasound-guided procedures on a less frequent
basis.
Our first version of the product, ScanNav Anatomy PNB, received
CE approval in April 2021 and supports nine common peripheral nerve
blocks (a form of local anaesthesia). It will be sold as a
stand-alone screen mounted on a portable stand that can be plugged
into existing anaesthesiology ultrasound machines. The device will
provide clinicians with continuous feedback from real-time
highlighting of their live ultrasound. Users can also
re-familiarise themselves with blocks that are carried out less
frequently using the system's integrated 3D animations.
ScanNav Anatomy PNB is also available as a training simulator
for medical learning on volunteers, prior to patient contact.
Increasingly, ultrasound-guided peripheral nerve blocks are
being used as a prudent alternative to general anaesthesia, but not
all anaesthetists have the specialist knowledge of ultrasound
anatomy to perform them. Through the adoption of ScanNav PNB, it is
hoped that hospitals will be able to increase the number of
ultrasound-guided nerve blocks that they can perform.
We intend to sell the cart-based system to the UK market using
our existing in-house sales resources, with an expected launch in
Q2 2021. In addition, we continue to progress the product's FDA
regulatory filing to enable a version of the product to be sold in
the US(1), as well as seeking to licence an integrated version of
the product to the major ultrasound manufacturers.
Intelligent Ultrasound's aim is to develop further variants of
ScanNav Anatomy that can be added to the existing ScanNav IPU
hardware platform and support scanning in both interventional
radiology and general radiology, as appropriate.
Future ScanNav AI products(1)
The Group has the following additional products in various early
stages of development.
ScanNav Detect
ScanNav Detect aims to facilitate the automatic recognition of
abnormalities within a general medical ultrasound scan, confirming
that a clinician has correctly scanned the anatomical area of
interest, and then flagging any areas of potential abnormality, so
the patient can be triaged to a specialist.
(1) AI products in development may require US FDA or other
regulatory approval, as such this material should be considered
informational only and does not constitute an offer to sell or
infer claims or benefits.
We expect ScanNav Detect to allow more point-of-care medical
practitioners to use ultrasound imaging for frontline medical
diagnostic sonography. Once developed such a device would be likely
to support a broad range of medical professionals including GPs,
midwives, paramedics and doctors working in Emergency Rooms.
Developments include:
-- Lung/Covid-19
-- Prostate
-- Liver
ScanNav HealthCheck
ScanNav HealthCheck is a proof-of-concept development area that
aims to build on our current ScanNav medical practitioner AI
technology, to enable consumers to perform ultrasound scanning on
themselves.
In the long term, as the price of ultrasound hardware decreases
to a point, such that consumers can plug devices into their
smartphones; and the performance of our AI software advances, we
aim to provide enabling software for mass market AI-based
ultrasound scanning at home, for the health-conscious consumer.
Challenges to the Clinical AI Division
The medical imaging AI software market remains immensely
exciting, potentially hugely significant, yet still unproven. In
addition, there is considerable competition from both existing
ultrasound manufacturers and new AI start-ups and many of these are
extremely well funded.
To respond to these challenges, we remain focussed on developing
AI software that has both a clinical need and a clear economic
rationale for its purchase; and we will continue to build our AI
image database to ensure we have high quality, curated images that
are relevant to building AI algorithms in the field of
anaesthesiology, obstetrics, gynaecology, radiology and primary
care medicine.
In addition, we will deploy a two-pronged marketing strategy
to:
-- Sign royalty-based, 'on-machine' licences for the provision
of real-time AI for the next generation of ultrasound machines with
the major manufacturers, whose established sales networks can
provide faster access to our technology in the new ultrasound
machine market
-- Sell our own proprietary stand-alone, real-time AI enabled
devices to the global pool of existing ultrasound machines, through
our own sales network
In summary, to date, we have signed our first partnership
agreement with GE Healthcare, and they have launched SonoLyst,
their first product to incorporate our ScanNav Assist technology.
In April 2021 we received CE regulatory approval for ScanNav
Anatomy PNB, our first direct to market proprietary stand-alone
device and will launch this into the UK market in Q2 2021.
These successes are enabling us to focus on rolling these first
products out to market, working with key opinion leaders to build
compelling study data, such that we can convert early-stage
interest into long-term sales and demonstrate the revenue potential
of AI in ultrasound from 2022 onwards.
SIMULATION DIVISION
Training clinicians through hi-fidelity simulation is a
cornerstone of our business and has been the foundation of our
expertise in understanding the clinical needs of medical
professionals who rely on ultrasound imaging and its growing
diagnostic capabilities in medicine.
Based in Cardiff (UK), Alpharetta (US) and with representation
in Beijing (China), our simulation division continues to design,
develop and sell some of the world's leading hi-fidelity training
systems for teaching ultrasound scanning to medical professionals
in institutions and medical device companies.
During the year we continued to focus on three key markets
-- Obstetrics/gynaecology (OBGYN)
-- Echocardiography/anaesthesiology (ECHO)
-- Emergency medicine/point-of-care (PoCUS) markets
This will continue in 2021 and is expected to be supplemented
with the in-house development of new simulator platforms that, when
combined with the existing products ranges, should accelerate our
growth from 2022 onwards.
Highlighting the synergy between our two divisions, one of the
new simulation platforms is a spin-off from the clinical AI
development team and represents a new area of joint development for
the Group, whereby some of our new AI developments may also have
training simulator potential.
Our ultrasound training simulators are, in the main, high value,
capital equipment sales made to the global medical institution
market and sold through our direct sales forces in the US and UK
and a network of almost 30 resellers in the rest of the world. In
March 2021, we were delighted to announce the significant sales
milestone of installing our 1000(th) ultrasound simulation system,
a BodyWorks Eve PoCUS and Covid-19 training simulator, at the Ohio
State University College of Medicine, one of the leading medical
institutions in North America.
Research & Development
At the start of the pandemic in early 2020, the simulation
R&D team resources were diverted to focus on the development of
a Covid-19 version of our BodyWorks Point-of-Care simulator,
designed to train frontline healthcare providers to use lung
ultrasonography.
Ultrasound has major utility for patient monitoring of
respiratory-related Covid-19 due to its safety, repeatability,
absence of radiation, low cost and point of care use. Our Covid-19
upgrade module was made available globally and free of charge, to
all our existing customers and enabled rapid and effective training
of many healthcare professionals working in the front line.
Examples include the UK Nightingale hospitals, New York's Harbour
Healthcare hospitals and Ohio State University system, to name but
a few.
During the year we also continued to release new products,
including a new version of the HeartWorks Augmented Reality tablet
with its exceptional 3D cardiac anatomy, and a comprehensive module
upgrade for ScanTrainer to add new training modules to its teaching
material.
At the beginning of 2021 we released in the UK, the first
AI-enabled training simulator for peripheral nerve blocks. As
highlighted above, this represents a new area of joint development
opportunity for the Group, whereby new AI developments may also
have training simulator sales potential.
We also are in the process of releasing a significant number of
remote learning options for our simulators to help with the
flexible and hybrid learning requirements that training needs to
provide in the current environment.
Territory Review
Sales in a Covid-19 impacted year declined by 13% to GBP5.2m
(2019: GBP5.9m), but there are positive signs that 2021 will see a
return to growth and that the expansion of our hi-fidelity
simulator range will continue this growth in the longer term.
United Kingdom
Revenue increased by 95% to GBP1.4m (2019: GBP0.7m)
The UK rebounded well after a difficult 2019. The relaxing of
NHS spending limitations by the UK government opened up the backlog
of interest in our simulator range from UK universities and
teaching hospitals. Importantly, the development of our free
Covid-19 training module aimed at training medical professionals
working on the pandemic frontline, increased sales of our BodyWorks
simulator. The successful training of the Nightingale hospitals'
staff, at such short notice, was particularly rewarding for the
team.
We continue to have significant purchasing interest in all our
simulation products in the UK and look forward to continuing this
growth in 2021.
North America
Revenue decreased by 10% to GBP2.3m (2019: GBP2.6m)
Sales in North America recovered well in the year, to finish
only 10% down on 2019, despite the on/off effect of Covid-19 and
its subsequent restrictions on access to teaching institutions and
hospitals.
In a number of major US states, including New York, Ohio and
California, our free Covid-19 training module achieved significant
success in training frontline staff responding to the pandemic.
With almost every major face-to-face trade exhibition event in
the US cancelled during the year, we were able to adapt our sales
processes by building a new virtual demonstration room in
Alpharetta (Atlanta) for potential customers. This enabled sales
demos to continue, even during total state lockdowns. As such, even
with hospital visits severely restricted, the US team was able to
recover from the initial sales downturn in the first half of the
year and is confident that this recovery will continue in 2021.
Rest of the World (ROW)
Revenue decreased by 46% to GBP1.4m (2019: GBP2.6m)
Although our combined direct sales force in the UK and North
America was able to mitigate the effect of the pandemic and grow
sales by a combined 15% to GBP3.8m (2019: GBP3.3m), many of our
resellers, who are one step removed from us in the sales process,
were unable to mitigate the impact and in some cases, were closed
for virtually the whole year.
However, there were signs of a recovery in sales in Germany,
Scandinavia and China during the second half of the year and sales
in 2021 have started encouragingly, with training and product sales
support being provided to our resellers from our new, state-of-the
art web demonstration room in our head office in Cardiff.
Challenges to the Simulation Division
Training budgets for high value simulators within the global
healthcare markets remain affected by restricted health budgets,
which can be both hard to access and predict, especially during
times of political upheaval or global pandemics, when funds are
diverted from training to frontline care.
We continue to respond well to competitive products and
associated pricing and margin pressures, by offering a range of
simulators that provide the highest standard of ultrasound
training, at a variety of price points. Purchasing decisions in our
sector of the market continue to be based on quality of training
and value for money, rather than simply the lowest priced
solution.
However, we have also recognised that eLearning is an important
element of the training mix and are developing a range of online
training solutions that work in tandem with our hands-on training
simulators.
The impact of Covid-19 in reducing the ability to demo in
hospitals, meet potential customers at trade shows and train our
resellers has been met by an increase in online marketing, combined
with the development of new web demo rooms with on-site training
resource in Atlanta and Cardiff.
Finally, the development and launch of our first AI-based
training simulator for PNB, demonstrates the potential for clinical
AI developments to result in training simulator spin-offs, that
could provide future incremental revenue to the Group.
Quality Management System (QMS)
The Group continues to meet the standards of ISO 13485:2016 to
ensure the consistent design, development, production, installation
and sale of medical devices that are safe for their intended
purpose. Post year-end, the Group has changed its Notified Body to
Dare!! Services B.V.
Workplace environment
During the year, the Group moved to a larger, more modern and
flexible head office space in the centre of Cardiff, and also moved
the Group's warehouse and technical support operation to new
premises in Caerphilly. The combined effect of these moves was to
significantly improve the Group's ability to operate effectively
during the pandemic restrictions, as well as providing the
facilities for post-pandemic growth of both divisions.
Our staff have been tremendous in this very difficult working
year, mixing at-home and office work to minimise the impact of the
pandemic on the business. Safety of employees has been of key
importance and we quickly acted to ensure all employees, where
possible, had the resources to be able to work effectively from
home.
I would like to convey my thanks to all staff, for being so
supportive during the year.
Brexit
Sales to European resellers in 2020 were relatively small and as
such, the impact of Brexit on the business has been minimal to
date.
Looking ahead
Despite the understandable concerns over Covid-19 and its
potential ongoing negative impact on revenue in 2021, we are
encouraged by the start to the year.
For the simulation division, 2021 is expected to be a year of
new product launches and revenue growth and our simulator sales
have started well.
For the clinical AI division, we have our first AI product on GE
Healthcare's Voluson SWIFT and we have just received CE approval
for our second AI product, ScanNav Anatomy PNB. We are, however,
conscious that the pandemic is still restricting hospital access
and budgets and that our new AI products are launching into new
markets that need time to accept the product and time to build
significant sales. 2021 is therefore expected to be a year where we
will continue to invest heavily in R&D, but also focus on
generating the compelling key opinion leader study data that will
enable the longer-term acceptance and subsequent sales potential of
AI in ultrasound to be realised from 2022 onwards.
The directors continue to believe that the current cash position
will be sufficient to enable the Group to meet its anticipated
profitability inflection point from expected future revenues from
the clinical AI division. We remain optimistic about the
opportunities for the Group in this exciting sector of the market
and would like to thank our shareholders and investors for their
continued support.
Finally, with our move to new offices in Cardiff, we would be
delighted to welcome any shareholders or prospective investors
should they wish to visit us to see our technology for
themselves.
Stuart Gall
Chief executive officer
FINANCIAL REVIEW
Summary financial performance
GBPm (unless otherwise stated) 2020 2019
-------------------------------------------- ------ ------
Revenue 5.2 5.9
Gross profit 3.2 3.5
Gross profit margin (%) 61 58
Administrative expenses (7.9) (8.2)
Operating loss (4.5) (4.6)
Net cash used in operating activities (2.3) (3.3)
Loss after taxation (3.3) (4.2)
Cash and investments (short term deposits) 8.8 7.3
-------------------------------------------- ------ ------
Revenue
Revenues from the simulation division declined by 13% in 2020 to
GBP5.2m (2019: GBP5.9m), mainly caused by a significant downturn in
revenue due to the impact of Covid-19 on our reseller network in
Europe and Asia, where sales year on year were down by GBP1.2m
(46%). This was offset however by an increase in sales in the UK
and US combined of GBP0.5m (13%).
Simulation division revenue
GBPm 2020 2019
----- -----
UK 1.4 0.7
North America 2.4 2.6
Rest of World 1.4 2.6
5.2 5.9
----- -----
Clinical AI division revenue
First revenue from our clinical AI division was generated at the
end of the year and totalled GBP17k (2019: GBP0k).
Gross profit
Gross margin increased from 58% in 2019 to 61% in 2020, due
largely to the higher proportion of direct sales representing 73%
of total sales (2019: 56%).
Operating costs
The operating loss improved by GBP0.1m to GBP4.5m (2019:
GBP4.6m), despite gross profits decreasing by GBP0.3m to GBP3.2m
(2019: GBP3.5m). This reduction in gross profits was offset by a
GBP0.4m saving in administrative expenses, down to GBP7.8m (2019:
GBP8.2m), due to a significant decrease in travel and marketing
costs, with lockdown restrictions preventing our sales teams from
providing live on-site demonstrations of our products and the
majority of exhibitions and conferences being cancelled in the
year.
Research and development (R&D) costs
GBPm 2020 2019
----- -----
R&D
* Expensed 2.0 2.2
* Capitalised 0.6 0.5
2.6 2.7
----- -----
Simulation division 0.9 1.2
Clinical AI division 1.7 1.5
----- -----
Total R&D spend in 2020, including both expensed and
capitalised costs, was GBP2.6m which is GBP0.1m lower than in 2019.
Expensed R&D costs of GBP2.0m in 2020 largely relate to
activity in the clinical AI division, which had not yet met the
criteria for capitalisation under IAS 38. A further GBP0.6m (2019:
GBP0.5m) of costs relating to the continued ongoing development of
products in the simulation division were capitalised within
intangible assets, which are being amortised over three years.
Other income
Other income includes an advance of GBP0.12m ($0.16m) relating
to the US Government's Paycheck Protection Program which allowed US
small businesses to apply for forgivable loans to pay for their
payroll and certain other costs during the pandemic.
RDEC to the amount of GBP0.83m was received in relation to
R&D projects which have been previously in receipt of grant
funding which cannot be claimed under the R&D SME regime. RDEC
is recognised as taxable income within other income.
Taxation
The Group claims each year for R&D tax credits and, since it
is loss-making, elects to surrender these tax credits for a cash
rebate. The amount included within the consolidated income
statement in respect of amounts received and receivable for the
surrender of R&D expenditure was GBP0.9m (2019: GBP0.2m), this
includes a GBP0.2m credit following a change in accounting policy
to recognise R&D tax credits on an accruals basis.
Included within the tax credit of GBP1.2m is a deferred tax
credit of GBP0.3m, which represents the movement in the
consolidated deferred tax liability as well as the recognition at
the year end of an equivalent deferred tax asset in relation to the
intangible fixed assets acquired on acquisition of IUL and IML
representing the view that the intangible fixed assets have value
which will lead to the accumulated trading losses being utilised in
the future.
As at 31 December 2020, the Group has cumulative gross UK tax
losses of approximately GBP15.7m (2019: GBP14.3m) for which no
deferred tax asset has been recognised.
Share placing
On 4 May 2020 the Company issued a further 49,400,000 new
ordinary shares of 1 pence each at a price of 10.5 pence per share
which raised GBP5.2m before costs, and GBP4.8m after costs.
The proceeds have been and will continue to be used for the
research and development costs of bringing clinical AI products to
market, to continue the development of our simulation products and
general working capital.
Statement of financial position
Consolidated net assets increased to GBP12.7m (2019: GBP11.1m).
Intangible fixed assets of GBP2.0m were GBP0.3m lower than the
carrying amount at 31 December 2019 of GBP2.3m. Additions to
intangibles in the year were GBP0.6m (2019: GBP0.5m) relating to
capitalised development costs; whereas amortisation of all
intangibles including IP and brands totalled GBP0.9m (2019:
GBP1.0m). Property, plant equipment of GBP1.3m (2019: GBP0.5m)
includes GBP0.9m of new right of use assets in relation to the
leases of the new head office in Cardiff and the new manufacturing
and technical support operation warehouse in Caerphilly. This much
larger warehouse has enabled the Group to hold higher inventory
levels in anticipation of any Covid-19 related delays resulting in
inventory at year end totalling GBP1.0m (2019: GBP0.7m).
Cash and short-term deposits
Cash and cash equivalents at 31 December 2020 was GBP8.8m (2019:
GBP1.8m), an increase of GBP7.0m.
Net cash used in operating activities was GBP2.3m, GBP1.0m lower
than in 2019 (2019: GBP3.3m). This decrease was due to the lower
operating loss combined with improvements in the management of net
working capital as well as higher R&D tax credits of GBP0.36m
(2019: GBP0.1m).
The net cash inflow arising from investing activities was
GBP4.6m (2019: outflow GBP6.3m), largely relating to the maturity
of the GBP5.5m that was held on short term deposit offset by
capitalised internally generated intangible assets of GBP0.6m
(2019: GBP0.5m).
The net cash inflow from financing activities of GBP4.7m (2019:
GBP5.8m) included GBP4.8m raised from the share placing less lease
payments of GBP0.1m.
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
for the year ended 31 December 2020
Unaudited Audited
Note 2020 2019
GBP'000 GBP'000
Continuing operations
REVENUE 2 5,170 5,916
Cost of sales (1,999) (2,462)
--------- -------
GROSS PROFIT 3,171 3,454
Other income 3 207 157
Administrative expenses (7,859) (8,169)
OPERATING LOSS (4,481) (4,558)
Finance income 17 1
Finance costs (17) (3)
--------- -------
LOSS BEFORE TAXATION (4,481) (4,560)
Taxation 4 1,175 338
LOSS ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS
OF THE PARENT (3,306) (4,222)
--------- -------
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to profit
or loss:
Exchange loss arising on translation
of foreign operations (77) (33)
--------- ---------
OTHER COMPREHENSIVE LOSS FOR THE PERIOD (77) (33)
TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE
TO THE EQUITY SHAREHOLDERS OF THE PARENT (3,383) (4,255)
========= =========
LOSS PER ORDINARY SHARE ATTRIBUTABLE
TO THE EQUITY SHAREHOLDERS OF THE PARENT
Basic and diluted (pence) 5 (1.30) (2.37)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2020
Unaudited Audited
2020 2019
Note GBP'000 GBP'000
NON-CURRENT ASSETS
Intangible assets 1,963 2,332
Property, plant and equipment 1,313 545
Trade and other receivables 61 -
------------ -----------------
3,337 2,877
------------ -----------------
CURRENT ASSETS
Inventories 1,048 663
Trade and other receivables 2,025 2,700
Current tax assets 671 148
Investments (short term deposits) - 5,500
Cash and cash equivalents 8,774 1,790
------------ -----------------
12,518 10,801
------------ -----------------
TOTAL ASSETS 15,855 13,678
------------ -----------------
CURRENT LIABILITIES
Trade and other payables 6 (1,901) (1,670)
Deferred income (142) (325)
Lease liabilities (170) (53)
Provisions (10) (95)
------------ -----------------
(2,223) (2,143)
------------ -----------------
NON-CURRENT LIABILITIES
Deferred income (275) (109)
Deferred taxation - (288)
Lease liabilities (603) (20)
Other payables (65) -
------------ -----------------
(943) (417)
------------ -----------------
TOTAL LIABILITIES (3,166) (2,560)
------------ -----------------
NET ASSETS 12,689 11,118
------------ -----------------
EQUITY
Share capital 2,694 2,200
Share premium 25,959 21,653
Share warrants 126 126
Accumulated losses (23,381) (20,075)
Share-based payment reserve 842 688
Merger reserve 6,538 6,538
Foreign exchange reserve (89) (12)
------------ -----------------
TOTAL EQUITY 12,689 11,118
------------ -----------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2020
Share Share Share Accumulated Share-based Merger Foreign
capital premium warrants losses payment reserve exchange Total
reserve reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
AS AT 1 JANUARY 1,566 16,437 126 (15,853) 562 6,538 21 9,397
COMPREHENSIVE
INCOME FOR
THE YEAR
Loss for the
year - - - (4,222) - - - (4,222)
Other comprehensive
loss - - - - - - (33) (33)
TRANSACTIONS
WITH OWNERS,
RECORDED DIRECTLY
IN EQUITY
Issue of share
capital 634 5,703 - - - - - 6,337
Cost of raising
finance - (487) - - - - - (487)
Cost of share-based
awards - - - - 126 - - 126
--------- --------- ---------- ------------ ------------ --------- ---------- ---------
634 5,216 - - 126 - - 5,976
--------- --------- ---------- ------------ ------------ --------- ---------- ---------
AS AT 31 DECEMBER
2019 2,200 21,653 126 (20,075) 688 6,538 (12) 11,118
--------- --------- ---------- ------------ ------------ --------- ---------- ---------
COMPREHENSIVE
INCOME FOR
THE YEAR
Loss for the
year - - - (3,306) - - - (3,306)
Other comprehensive
loss - - - - - - (77) (77)
TRANSACTIONS
WITH OWNERS,
RECORDED DIRECTLY
IN EQUITY
Issue of share
capital 494 4,693 - - - - - 5,187
Cost of raising
finance - (387) - - - - - (387)
Cost of share-based
awards - - - - 154 - - 154
--------- --------- ---------- ------------ ------------ --------- ---------- ---------
494 4,306 - - 154 - - 4,954
--------- --------- ---------- ------------ ------------ --------- ---------- ---------
AS AT 31 DECEMBER
2020 (unaudited) 2,694 25,959 126 (23,381) 842 6,538 (89) 12,689
========= ========= ========== ============ ============ ========= ========== =========
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2020
Unaudited Audited
2020 2019
GBP'000 GBP'000
Cash flows from operating
activities
Loss before tax (4,481) (4,560)
Depreciation 406 334
Amortisation of intangible assets 937 1,040
Fair value adjustment on share warrants 21 -
Loss on disposal of property, plant and
equipment 26
Finance costs - 2
Share-based payment charge 154 126
--------- --------
Operating cash flows before movement in
working capital (2,937) (3,058)
Movement in inventories (389) 188
Movement in trade and other receivables 590 (786)
Movement in trade and other payables 198 283
Movement in provisions (84) -
--------- --------
Cash used in operations (2,622) (3,373)
Income taxes received 362 80
--------- --------
NET CASH USED IN OPERATING ACTIVITIES (2,260) (3,293)
--------- --------
Cash flows from investing activities
Purchase of property, plant and equipment (371) (355)
Disposal of property, plant and equipment - 12
Decrease/(increase) in short term deposits 5,500 (5,500)
Internally generated intangible assets (568) (485)
Interest received 17 -
NET CASH USED IN INVESTING ACTIVITIES 4,578 (6,328)
--------- --------
Cash flows from financing activities
Issue of new shares 5,187 6,337
Share issue costs (387) (487)
Principal elements of lease payments (62) (37)
Finance costs paid (17) (2)
NET CASH GENERATED FROM FINANCING ACTIVITIES 4,721 5,811
--------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 7,039 (3,811)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 1,790 5,607
Exchange losses on cash and cash equivalents (55) (6)
CASH AND CASH EQUIVALENTS AT OF YEAR 8,774 1,790
========= ========
1. GENERAL INFORMATION
Intelligent Ultrasound Group plc ("the Company") is a public
limited liability company incorporated and domiciled in the United
Kingdom whose shares are traded on AIM, a market operated by the
London Stock Exchange. The Company's registration number is
09028611 and its registered office address is Floor 6A Hodge House,
114-116 St Mary Street, Cardiff, CF10 1DY.
The financial information set out in the announcement does not
constitute the company's statutory accounts for the years ended 31
December 2020 or 2019. The financial information for the year ended
31 December 2019 is derived from the statutory accounts for that
year which have been delivered to the Registrar of Companies. The
auditors reported on those accounts: their report was unqualified,
did not draw attention to any matters by way of emphasis and did
not contain a statement under s498(2) or (3) of the Companies Act
2006. The audit of the statutory accounts for the year ended 31
December 2020 is not yet complete. These accounts will be finalised
on the basis of the financial information presented by the
directors in this preliminary announcement and will be delivered to
the Registrar of Companies following the company's annual general
meeting.
BASIS OF PREPARATION
The financial information has been prepared in accordance with
the recognition and measurement criteria of International Financial
Reporting Standards ('IFRS') adopted for use in the European Union
(EU) and in accordance with the AIM rules and the Companies Act
2006. However, this announcement does not itself contain sufficient
information to comply with IFRS. The Company will publish full
financial statements that comply with EU adopted IFRS in May
2021.
The unaudited consolidated preliminary results have been
prepared on a going concern basis and has been approved by the
Board of Directors.
The unaudited consolidated preliminary results incorporate the
results of the Company and its subsidiary undertakings (together
the 'Group').
The accounting policies applied in these unaudited consolidated
preliminary results are consistent with those of the annual
financial statements for the year ended 31 December 2019.
2. SEGMENTAL OPERATIONS
The Group identifies reportable operating segments based on
internal management reporting that is regularly reviewed by the
chief operating decision maker (CODM). The CODM is the Board of
Directors.
The format of revenue reporting is based on the Group's
management and internal reporting (including reports to the CODM)
of the Divisions below which carry different risks and rewards and
are used to make strategic decisions. The Group has two operating
segments:
i) Simulation division
Revenue arises from sales of ultrasound training simulation
systems and related services.
ii) Clinical AI division
Revenue arises from sales of regulatory approved AI-based
ultrasound image analysis software products.
2. SEGMENTAL OPERATIONS (continued)
2020 Simulation Clinical Corporate Total
AI
GBP'000 GBP'000 GBP'000 GBP'000
REVENUE 5,153 17 - 5,170
Cost of sales (1,999) - - (1,999)
---------- -------- --------- ---------
GROSS PROFIT 3,154 17 - 3,171
Other income 207 - - 207
Administrative expenses (4,703) (2,239) (917) (7,859)
OPERATING LOSS (1,342) (2,222) (917) (4,481)
Finance income - - 17 17
Finance costs (6) - (11) (17)
---------- -------- --------- ---------
LOSS BEFORE TAXATION (1,348) (2,222) (911) (4,481)
Taxation 488 687 - 1,175
---------- -------- --------- ---------
LOSS ATTRIBUTABLE TO THE EQUITY
SHAREHOLDERS OF THE PARENT (860) (1,535) (911) (3,306)
---------- -------- --------- ---------
2019 Simulation Clinical Corporate Total
AI
GBP'000 GBP'000 GBP'000 GBP'000
REVENUE 5,916 - - 5,916
Cost of sales (2,462) - - (2,462)
---------- -------- --------- -------
GROSS PROFIT 3,454 - - 3,454
Other income 157 - - 157
Administrative expenses (5,197) (2,125) (847) (8,169)
OPERATING LOSS (1,586) (2,125) (847) (4,558)
Finance income - - 1 1
Finance costs (3) - - (3)
---------- -------- --------- -------
LOSS BEFORE TAXATION (1,589) (2,125) (846) (4,560)
Taxation 152 186 - 338
---------- -------- --------- -------
LOSS ATTRIBUTABLE TO THE EQUITY
SHAREHOLDERS OF THE PARENT (1,437) (1,939) (846) (4,222)
---------- -------- --------- -------
Revenue by destination of external customer
Year ended 31 December Simulation Clinical Total
2020 division AI
division
GBP'000 GBP'000 GBP'000
United Kingdom 1,419 - 1,419
North America 2,324 - 2,324
Rest of World 1,410 17 1,427
--------- ---------------- ----------
5,153 17 5,170
--------- ---------------- ----------
Goods transferred at a point
in time 4,907 17 4,924
Services transferred over
time 246 - 246
--------- ---------------- ----------
2. SEGMENTAL OPERATIONS (continued)
Year ended 31 December Simulation Clinical Total
2019 Division AI
Division
GBP'000 GBP'000 GBP'000
United Kingdom 720 - 720
North America 2,580 - 2,580
Rest of World 2,616 - 2,616
--------------- ---------- ----------
5,916 - 5,916
--------------- ---------- ----------
Goods transferred at a point
in time 5,597 - 5,597
Services transferred over
time 319 - 319
--------------- ---------- ----------
Included within non-UK revenues are sales to the following
countries which accounted for more than 10% of the Group's total
revenue for the year:
2020 2019
GBP'000 GBP'000
USA 2,036 2,204
China 421 598
======= ========
The Group had no customers who accounted for more than 10% of
the Group revenue for the year ended 31 December 2020 or the year
ended 31 December 2019.
Net operating assets/(liabilities) by division :
2020 2019
GBP'000 GBP'000
Simulation division (10,689) (9,707)
Clinical AI division (3,124) (1,714)
Group 26,502 22,539
-------- -------
12,689 11,118
======== =======
3. OTHER INCOME
2020 2019
GBP'000 GBP'000
US Government grant income 124 -
UK grant income - 157
R&D expenditure credit (RDEC) 83 -
------- -------
207 157
======= =======
4. TAXATION
2020 2019
GBP'000 GBP'000
Current tax
R&D tax credit (673) (168)
R&D tax credit relating to prior periods (214) (80)
------- --------------
(887) (248)
Deferred tax
Origination and reversal of timing differences (289) (90)
Effect of tax rate change on opening balance 1 -
------- --------------
(288) (90)
======= ==============
Income tax credit (1,157) (338)
======= ==============
5. LOSS PER ORDINARY SHARE
The loss per ordinary share has been calculated using the loss
for the year and the weighted average number of ordinary shares in
issue during the year as follows:
2020 2019
GBP'000 GBP'000
Loss for the year after taxation (3,306) (4,222)
------- -------
2020 2019
Number Number
Number of ordinary shares of 1p each:
Basic and diluted weighted average numbers
of ordinary shares 254,915,148 178,503,090
Basic and diluted loss per share (pence) (1.30) (2.37)
=========== ===========
At 31 December 2020 and 2019 there were share options
outstanding which could potentially have a dilutive impact but were
anti-dilutive in both years.
6. TRADE AND OTHER PAYABLES
2020 2019
GBP'000 GBP'000
Current liabilities
Trade payables 842 716
Taxation and social security 169 81
Accruals 829 764
Share warrants 61 40
Other - 69
1,901 1,670
Non-current liabilities
Other payables 65 -
------- -------
1,966 1,670
------- -------
7. SHARE CAPITAL
2020 2019
Number GBP'000 Number GBP'000
Allotted, issued and fully
paid
Ordinary shares of 1p each
Balance at 1 January 219,996,792 2,200 156,627,749 1,566
Shares issued for cash 49,400,000 494 63,369,043 634
Balance at 31 December 269,396,792 2,694 219,996,792 2,200
==================== ============ ===================== ============
The fair values and premium arising on shares issued in 2020 and
2019 are as follows:
Date
Number of shares Fair value Premium
GBP GBP
------------------ ------------ ---------
4 May 2020 49,400,000 494,000 4,493,000
28 August 2019 63,369,043 633,690 5,703,214
------------------ ------------ ---------
On 4 May 2020 the Company placed 49,400,000 newly issued shares
of 1 pence each in the capital of the Company at a price of 10.5
pence per share. Share issue costs of GBP0.39m have been netted off
against the share premium arising on the new share issue.
On 28 August 2019 the Company placed 63,369,043 newly issued
shares of 1 pence each in the capital of the Company at a price of
10 pence per share. Share issue costs of GBP0.49m have been netted
off against the share premium arising on the new share issue.
Share warrants
The consideration for the acquisition of IUL on 6 October 2017
included 837,795 share warrants with a fair value of GBP125,669
which were issued on completion. The terms of the warrant
instrument agreement allow the holder to subscribe for a fixed
number of shares in the Company for a fixed subscription price. In
accordance with IAS 32 'Financial Instruments: Presentation', a
contract that will be settled by the entity delivering a fixed
number of its own equity instruments in exchange for a fixed amount
of cash or another financial asset is an equity instrument.
One third of the consideration payable in respect of the
acquisition of IUL in 2017 was deferred for 12 months from
completion with the actual number of deferred shares and warrants
to be issued dependent on any vendor warranty or indemnity breaches
(as specified in the Sale and Purchase Agreement) arising during
that 12 month period. The Company was not aware of any vendor
warranty or indemnity breaches and so the 418,897 deferred
consideration warrants were issued at their fair value. These
warrants remain as a financial liability and are measured at fair
value through the income statement.
The share warrants expire on 10 July 2021.
8. PUBLICATION OF FINANCIAL STATEMENTS
It is anticipated that the full Annual Report will be published
in May 2021. Copies will be available at the Company's head office;
Floor 6A Hodge House, 114-116 St Mary Street, Cardiff, CF10 1DY and
on the Company's website ( www.intelligentultrasound.com ).
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END
FR SEAEFAEFSEFL
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April 29, 2021 02:00 ET (06:00 GMT)
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