REG - Deltex Med Grp PLC - Interim results to 30 June 2023
18/09/2023 07:00
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RNS Number : 6799M Deltex Medical Group PLC 18 September 2023
The information contained within this announcement was deemed by the Company
to constitute inside information as stipulated under the UK Market Abuse
Regulation
18 September 2023
Deltex Medical Group plc
("Deltex Medical", the "Company" or the "Group")
Interim results to 30 June 2023
Deltex Medical Group plc (AIM: DEMG) today announces its unaudited interim
results for the six months ended 30 June 2023 (the "Period").
HIGHLIGHTS
Financial
§ Revenues of £1.1m (H1 2022: £1.2 million).
§ Adjusted EBITDA loss of £361,000 (H1 2022: loss of £418,000).
§ Operating loss of £0.5 million (H1 2022: £0.6 million).
§ Gross margin of 69% (H1 2022: 74%).
§ Cash at hand on 30 June 2023 of £0.1 million (H1 2022: £0.6 million).
§ Fundraise completed in August 2023, raising new cash for the business of
£1.89 million and £350,000 debt converted to equity to strengthen the
Company's balance sheet.
Commercial
§ New TrueVue monitor CE marked and released in the UK and EU and revenues
expected in November 2023.
§ The restructuring has now been successfully completed. Net proceeds of the
fundraise have been used to strengthen the balance sheet and implement the
Group's restructuring plan to remove c.£1.0m from the cost base.
§ Commercial activities in the UK and the USA modified to focus on selling
the new TrueVue monitor into existing accounts and increase existing
single-use oesophageal doppler monitoring ("ODM") probe usage.
§ Subject to regulatory approvals, clinical evaluation in a leading UK
hospital has now been approved to commence this year in relation to the new
non-invasive Doppler-based haemodynamic monitoring device.
§ Government released funding for the national tender in Latin America at the
end of August 2023 and hospitals are now in the process of choosing which
equipment to purchase.
Nigel Keen, Chairman of Deltex Medical, said:
"It has been a challenging first half, but the successful completion of the
fundraise in August 2023 has strengthened the balance sheet and subsequently
enabled the Board and management to focus on driving the business forward by
delivering growth with a streamlined cost base."
"The launch of the new next generation TrueVue monitor is anticipated to
increase activity levels in the UK and EU ahead of other international
regulatory approvals being obtained. In anticipation of starting to fulfil
orders before the end of the year, we are manufacturing the new TrueVue
monitors."
"The new TrueVue monitor will be used as the platform for the new non-invasive
ultrasound device and clinical evaluations for this are planned to start
before the end of 2023."
For further information, please contact:
Deltex Medical Group plc 01243 774 837
Nigel Keen, Chairman investorinfo@Deltexmedical.com (mailto:investorinfo@Fitbitmedical.com)
Andy Mears, Chief Executive
Natalie Wettler, Group Finance Director
Allenby Capital Limited - Nominated Adviser 020 3328 5656
& Broker
Jeremy Porter / Vivek Bhardwaj (Corporate Finance) info@allenbycapital.com (mailto:info@allenbycapital.com)
Tony Quirke / Stefano Aquilino (Sales & Corporate Broking)
Notes for Editors
Deltex Medical's technology
Deltex Medical's TrueVue System uses proprietary haemodynamic monitoring
technology to assist clinicians to improve outcomes for patients as well as
increase throughput and capacity for hospitals.
Deltex Medical has invested over the long term to build a unique body of
peer-reviewed, published evidence from a substantial number of trials carried
out around the world. These studies demonstrate statistically significant
improvements in clinical outcomes providing benefits both to patients and to
the hospital systems by increasing patient throughput and expanding hospital
capacity.
The Group's flagship, world-leading, ultrasound-based oesophageal Doppler
monitoring ("ODM") is supported by 24 randomised control trials conducted on
anaesthetised patients. As a result, the primary application for ODM is
focussed on guiding therapy for patients undergoing elective surgery, although
sedated patients in intensive care are still an important part of our
business. The Group's new, next generation monitor makes the use of the ODM
technology more intuitive and provides augmented data on the status of each
patient.
Deltex Medical's engineers and scientists carried out successful research in
conjunction with the UK's National Physical Laboratory ("NPL"), which has
enabled the Group's 'gold standard' ODM technology to be extended and
developed so that it can be used completely non-invasively. This will
significantly expand the application of Deltex Medical's technology to
non-sedated patients. This new technological enhancement, which will be
released on the new next generation monitor, will substantially increase the
addressable market for the Group's haemodynamic monitoring technologies and is
complementary to the long-established ODM evidence base.
Deltex Medical's new non-invasive technology has potential applications for
use in a number of healthcare settings, including:
§ Accident & Emergency for the rapid triage of patients, including the
detection and diagnosis of sepsis;
§ in general wards to help facilitate a real-time, data-driven treatment
regime for patients whose condition might deteriorate rapidly; and
§ in critical care units to allow regular monitoring of patients post-surgery
who are no longer sedated or intubated.
One of the key opportunities for the Group is positioning this new,
non-invasive technology for use throughout the hospital. Deltex Medical's
haemodynamic monitoring technologies provide clinicians with beat-to-beat
real-time information on a patient's circulating blood volume and heart
function. This information is critical to enable clinicians to optimise both
fluid and drug delivery to patients.
Deltex Medical's business model is to drive the recurring revenues associated
with the sale of single-use disposable ODM probes which are used in the
TrueVue System and to complement these revenues with a new incremental revenue
stream to be derived from the Group's new non-invasive technology.
Both the existing single-use ODM probe and the new, non-invasive device will
connect to the same, next generation monitor launched in July 2023. Monitors
are sold or, due to hospitals' often protracted procurement times for capital
items, loaned in order to encourage faster adoption of the Group's technology.
Deltex Medical's customers
The principal users of Deltex Medical's products are currently anaesthetists
working in a hospital's operating theatre and intensivists working in ICUs.
This customer profile will change as the Group's new non-invasive technology
is adopted by the market. In the UK the Group sells directly to the NHS. In
the USA the Group sells directly to a range of hospital systems. The Group
also sells through distributors in more than 40 countries in the European
Union, Asia and the Americas.
Deltex Medical's objective
To see the adoption of Deltex Medical's next generation TrueVue System,
comprising both minimally invasive and non-invasive technologies, as the
standard of care in haemodynamic monitoring for all patients from new-born to
adult, awake or anaesthetised, across all hospital settings globally.
For further information please go to www.deltexmedical.com
(http://www.deltexmedical.com)
Chairman's statement
Financial results
Revenues for the six months ended 30 June were £1.1 million (2022: £1.2
million). This reflects subdued activity levels in elective surgery across the
UK and the US as well as a combination of delays in the launch of the new
TrueVue monitor and the award of the national tender for haemodynamic
monitoring in Latin America, as originally stated in the Company's
announcement on 6 July 2023.
The Group's gross margin decreased to 69% (2022: 74%). This decrease was
linked to excess capacity within production. The Company is pleased to note
that this excess capacity has since been reduced as part of the Company
broader restructuring which completed in September 2023.
Adjusted EBITDA, which comprises the operating loss adjusted for depreciation,
amortisation, equity-settled non-executive directors' fees, share-based
payments and certain other items, was a loss of £361,000 (2022: £(418,000)).
The Group's overheads have reduced to £1.2 million (2022: £1.5 million).
This is as a result of a decrease in sales and marketing expenditure of
£130,000, due to a reduction in personnel and their associated costs, as well
as an increase in sales activity in relation to the new monitor leading to
higher capitalisation in H1 2023. There was also a decrease in administration
expenses as a result of lower share based payment charges in H1 2023, as well
as a modification gain of £89,000 on the extension of the convertible loan
note.
Loss before taxation was £536,000 (2022: £(662,000)).
Cash at hand at 30 June 2023 was £0.1 million (2022: £0.6 million).
Commercial activities
Unexpected delays in releasing the new TrueVue monitor and in the award of a
national tender for haemodynamic monitoring with one of the Group's Latin
American distributors significantly impacted the Group's financial position in
the first half of the year. As a result, on 26 June 2023 the Group's ordinary
shares were suspended from trading on AIM, pending clarification of the
Group's financial position.
As announced on 2 August 2023 the Group successfully completed a £1.89
million fundraise and capital reorganisation. Proceeds of the fundraise have
been used to strengthen the balance sheet and implement the Group's cost
cutting and restructuring plan, the objective being to reduce approximately
£1.0 million from the cost base. The restructuring has now been completed and
the cost savings will be fully effective from October 2023.
During the period, our business plan had anticipated that the UK and US
healthcare markets would recover, with improved access for our sales and
clinical teams. Whilst access has begun to improve, it is a long way from
pre-Covid 19 access levels. Accordingly, we have concluded that access to
hospitals, especially in the UK, will remain very challenging for the
foreseeable future. We also continue to see disruption in the UK from
shortages in clinical staff, as well as the knock-on effect from industrial
action, which disrupts and delays elective surgery. All of these issues
collectively reduce the opportunity for our sales and clinical teams to meet
face to face with clinicians in a clinical environment. It's for these reasons
that we have, amongst other areas, concentrated on reducing the Company's
direct sales personnel headcount in the UK and US in order to streamline the
business following completion of the fundraise in August 2023.
With reduced sales and clinical teams, it's now more important than ever to be
able to promote our technology across digital platforms. In 2022 we
established our on-line training programme, the TrueVue Advanced Learning
Academy (the "Academy"), which provides clinicians with a comprehensive
training programme on haemodynamics, including details on the published
evidence base, and how best to use TrueVue Doppler-based monitoring device.
The Academy provides detailed information on how to manage a patient's
haemodynamic status during surgery as well as while in intensive care. The
Academy is proving to be well received and works as a very good resource to
deliver training remotely.
Sales in our international division were suppressed due to delays in the award
of the national tender for haemodynamic monitoring with one of the Group's
Latin American distributors. Originally, the Group's expectation was that this
contract would be announced before the end of the Period. We now understand
that the government released funding for the national tender at the end of
August 2023 and hospitals are now in the process of choosing which equipment
to purchase. We remain confident that this national tender may potentially
result in significantly increased revenues being generated from this region.
Product development: new, next generation TrueVue monitor
As announced on 10 July 2023, the new next generation TrueVue monitor has been
released in the UK and EU and can now be deployed into UK hospitals for final
marketing evaluations to ensure there are no teething issues, with revenues
forecasted for the Group from new monitor sales to commence in November
2023.
The new TrueVue monitor is expected to help drive activity levels in the UK
and EU, with existing customers and distributors upgrading from the existing
device to the new next generation TrueVue monitor.
We continue to develop the new non-invasive Doppler-based haemodynamic
monitoring device that is complementary to our existing product range and
which will also run on the new TrueVue platform. Our prototype new
non-invasive Doppler-based haemodynamic monitoring device is anticipated to be
completed in Q4 2023. We believe this new device will form a very important
part of our future growth and long-term strategy. This non-invasive device
will also benefit from the substantial body of published evidence that
demonstrates that the appropriate use of the TrueVue Doppler gives rise to
improved clinical outcomes and reduced patient length-of-stay. Improved
clinical outcomes and reduced patient length-of-stay are going to remain
critically important goals for hospitals in the foreseeable future,
particularly as hospitals face increased governmental pressure to improve
healthcare infrastructure for an ever-growing population.
The development work for the non-invasive device is supported by an Innovate
UK Grant and completion of this development cycle is scheduled for the end of
September 2023. A clinical evaluation in a leading UK hospital has now been
approved to commence this year, subject to the non-invasive device gaining the
necessary regulatory approvals. This evaluation process is anticipated to last
six weeks.
Current trading and prospects
Following completion of the restructuring, the Group is fully focused on
generating positive monthly EBITDA at high gross margins. The Group
anticipates achieving this by the end of the calendar year having
significantly reduced Group headcount and therefore reducing overheads by
approximately £1.0 million.
Our international division is well positioned for growth. We are confident
that the Latin American national tender for haemodynamic monitoring will
progress in the Group's favour and that as a result, we will be well
positioned to further increase revenues across the region.
The launch of the new next generation TrueVue monitor will significantly
increase the Group's pipeline for capital purchases from existing customers
and distributors, who are anticipated to replace their legacy monitors. It
will also help to underpin existing probe revenues whilst providing the
platform for the development of the new non-invasive Suprasternal device.
We look forward to reporting further progress in due course, as the Board is
confident that the strategy and restructuring has positioned the Group for
growth and success.
Nigel Keen
Chairman
15s September 2023
Condensed Consolidated Statement of Comprehensive Income
For the period ended 30 June 2023
Unaudited Audited
Note Six months ended Six months Year
30 June
ended
ended
2023
30 June
31 December 2022
2022
£'000
£'000
£'000
Revenue 4 1,059 1,158 2,482
Cost of sales (331) (306) (643)
Gross profit 728 852 1,839
Administrative expenses (642) (779) (1,560)
Sales and distribution expenses (427) (554) (1,027)
Research and Development, Quality and Regulatory (116) (120) (231)
Impairment loss on trade receivables - - (39)
Total costs (1,185) (1,453) (2,857)
Other gain 7 40 30 71
Operating loss (417) (571) (947)
Finance costs (119) (91) (199)
Loss before taxation (536) (662) (1,146)
Tax credit adjustment 7 (1) - 1
Loss for the period/year (537) (662) (1,145)
Other comprehensive income/(expense)
Items that may be reclassified to profit or loss:
Net translation differences on overseas subsidiaries 6 15 35
Other comprehensive income/(expense) for the period/year, net of tax 6 15 35
Total comprehensive loss for the period/year (531) (647) (1,110)
Total comprehensive loss for the period/year attributable to:
Owners of the Parent (532) (651) (1,114)
Non-controlling interests 1 4 4
(531) (647) (1,110)
Loss per share - basic and diluted 8 (0.08)p (0.10)p (0.17p)
Condensed Consolidated Balance Sheet
As at 30 June 2023
Unaudited Audited
Note 30 June 30 June 31 December 2022
2023
2022
£'000
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 237 274 269
Intangible assets 3,986 3,419 3,769
Financial assets at amortised cost 159 171 164
Total non-current assets 4,382 3,864 4,202
Current assets
Inventories 9 824 835 821
Trade receivables 440 540 456
Financial assets at amortised cost 15 15 15
Other current assets 136 92 140
Current income tax recoverable 40 99 72
Cash and cash equivalents 10 107 611 471
Total current assets 1,562 2,192 1,975
Total assets 5,944 6,056 6,177
Liabilities
Current liabilities
Borrowings 11 (1,147) (700) (935)
Trade and other payables 12 (1,744) (1,419) (1,704)
Total current liabilities (2,891) (2,119) (2,639)
Non-current liabilities
Borrowings 11,13 (998) (1,048) (1,069)
Trade and other payables 12 (148) (203) (177)
Provisions (67) (60) (64)
Total non-current liabilities (1,213) (1,311) (1,310)
Total liabilities (4,104) (3,430) (3,949)
Net assets 1,840 2,626 2,228
Equity
Share capital 14 7,091 6,991 6,990
Share premium 33,682 33,672 33,672
Capital redemption reserve 17,476 17,476 17,476
Other reserve 559 632 527
Translation reserve 174 148 168
Convertible loan note reserve 82 82 82
Accumulated losses (57,104) (56,254) (56,566)
Equity attributable to owners of the Parent 1,960 2,747 2,349
Non-controlling interests (120) (121) (121)
Total equity 1,840 2,626 2,228
Condensed Consolidated Statement of Changes in Equity for the six months ended 30 June 2023 (unaudited)
Share capital Share premium Capital redemption reserve Other reserve Convertible loan note reserve Translation reserve Accumulated losses Total Non-controlling interest Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 6,990 33,672 17,476 527 82 168 (56,566) 2,349 (121) 2,228
1 January 2023
Comprehensive income
Loss for the period - - - - - - (538) (538) 1 (537)
Other comprehensive income for the period - - - - - 6 - 6 -
6
Total comprehensive income for the six-month period - - - - - 174 (538) (532) 1 (531)
Transactions with owners of the Group
Shares issued during the year 101 10 - - - - - 111 - 111
Issue expenses - - - - - - - - - -
Equity-settled share-based payment - - - 32 - - - 32 - 32
Balance at 7,091 33,682 17,476 559 82 174 (57,104) 1,960 (120) 1,840
30 June 2023
Condensed Consolidated Statement of Changes in Equity for the six months ended 30 June 2022 (unaudited)
Share capital Share premium Capital redemption reserve Other reserve Convertible loan note reserve Translation reserve Accumulated losses Total Non-controlling interest Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 5,849 33,502 17,476 573 82 133 (55,588) 2,027 (125) 1,902
1 January 2022
Comprehensive income
Loss for the period - - - - - - (666) (666) 4 (662)
Other comprehensive income for the period - - - - - 15 - 15 -
15
Total comprehensive income for the six-month period - - - - - 15 (666) (651) 4 (647)
Transactions with owners of the Group
Shares issued during the year 1,142 285 - - - - - 1,427 1,427
Issue Expenses - (115) - - - - - (115) (115)
Equity-settled share-based payment - - - 59 - - - 59 - 59
Balance at 6,991 33,672 17,476 632 82 148 (56,254) 2,747 (121) 2,626
30 June 2022
Condensed Consolidated Statement of Changes in Equity for the year ended 31 December 2022 (audited)
Share capital Share premium Capital redemption reserve Other reserve Convertible loan note reserve Translation reserve Accumulated losses Total Non-controlling interest Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2022 5,849 33,502 17,476 573 82 133 (55,588) 2,027 (125) 1,902
Comprehensive income
Loss for the period - - - - - - (1,149) (1,149) 4 (1,145)
Other comprehensive income for the period - - - - - 35 35 - 35
-
Total comprehensive income for year - - - - - 35 (1,149) (1,114) 4 (1,110)
Transactions with owners of the Group
Shares issued during the year 1,141 285 - - - - - 1,426 - 1,426
Issue expenses - (115) - - - - - (115) - (115)
Equity-settled share-based payment - - - 125 - - - 125 - 125
Transfers - - - (171) - - 171 - - -
Balance at 6,990 33,672 17,476 527 82 168 (56,566) 2,349 (121) 2,228
31 December 2022
Condensed Consolidated Statement of Cash Flows
For the period ended 30 June 2023
Unaudited Audited
Six months Six months Year
ended
ended
ended 31
30 June
30 June
December 2022
2023
2022
£'000
£'000
£'000
Cash flows from operating activities
Loss before taxation (536) (662) (1,146)
Adjustments for:
Net finance costs 119 91 199
Depreciation of property, plant and equipment 38 36 88
Amortisation of intangible assets 20 20 40
Share-based payment expense 32 59 125
Gain on convertible loan note modification (89)
Other tax income (40) (30) (71)
Effect of exchange rate fluctuations 6 15 35
(450) (471) (730)
(Increase)/decrease in inventories (3) (39) (48)
(Increase)/decrease in trade and other receivables 25 (100) (57)
Increase in trade and other payables 147 24 306
Increase in provisions 3 3 7
Net cash (used in)/from operations (278) (583) (522)
Interest paid (98) (69) (153)
Income taxes received 71 - 69
Net cash used in operating activities (305) (652) (606)
Cash flows from investing activities
Purchase of property, plant and equipment (6) (46) (70)
Capitalised development expenditure (net of grants) (236) (304) (674)
Net cash used in investing activities (242) (350) (744)
Cash flows from/(used in) financing activities
Issue of ordinary share capital - 1,341 1,340
Expenses in connection with share issue - (115) (115)
Net movement in invoice discounting facility (38) (2) (17)
Standby loan facility repayment - - (500)
Standby loan facility drawdown 250 - 750
Principal lease payments (22) (22) (45)
Net cash generated from/(used in) financing activities 190 1,202 1,413
Net increase/(decrease) in cash and cash equivalents (357) 200 63
Cash and cash equivalents at beginning of the period 471 413 413
Exchange loss on cash and cash equivalents (7) (2) (5)
Cash and cash equivalents at the end of the period 107 611 471
Notes to the condensed consolidated interim financial statements
1. Reporting Entity
These condensed consolidated interim financial statements ('Interim Financial
Statements') are the consolidated financial statements of Deltex Medical Group
plc, a public company limited by shares registered in England and Wales, and
its subsidiaries ('the Group'). Deltex Medical Group plc is quoted on the AIM
market of the London Stock Exchange. The address of the registered office is
Deltex Medical Group plc, Terminus Road, Chichester, PO19 8TX, registered
number 03902895. These Interim Financial Statements are as at and for the
period ended 30 June 2023.
The Group is principally involved with the manufacture and sale of advanced
haemodynamic monitoring technologies.
2. Basis of accounting
These interim financial statements are for the six months ended 30 June 2023
and have been prepared in accordance with IAS 34, 'Interim Financial
Reporting'. They do not include all of the information required for a complete
set of IFRS financial statements. However, selected explanatory notes are
included to explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and should be
read in conjunction with the Group's last annual consolidated financial
statements as at and for the year ended 31 December 2022 (Annual Report &
Accounts 2022).
These interim financial statements do not constitute statutory accounts within
the meaning of Section 434 of the Companies Act 2006. The summary of results
for the year ended 31 December 2022 is an extract from the published
consolidated financial statements of the Group for that year which have been
reported on by the Group's auditors and delivered to the Registrar of
Companies. The Independent Auditors' Report on the Annual Report &
Accounts for 2022 was unqualified.
These interim financial statements have been prepared applying the accounting
policies and presentation that were applied in the preparation of the Group's
published consolidated financial statements for the year ended 31 December
2022 and are expected to be applied in the preparation of the financial
statements for the year ending 31 December 2023. There are no accounting
pronouncements which have become effective from 1 January 2023 that have a
significant impact on the Group's interim financial statements. The Group has
not early adopted any other standard, interpretation or amendment that has
been issued but is not yet effective.
The interim financial statements were approved for issue by the Board of
Directors on 15 September 2023.
3. Use of judgements and estimates
In preparing these interim financial statements, management has had to make
judgements and estimates that affect the application of the Group's accounting
policies and the reported amounts of assets, liabilities, income and expenses.
Although these estimates are based on the directors' best knowledge of the
amount, event or actions, it should be noted that actual results may differ
from those estimates.
The significant judgements and estimates made by the directors in applying the
Group's accounting policies and key sources of estimation uncertainty were the
same as those disclosed in Annual Report & Accounts 2022.
4. Revenue
The following table provides an analysis of the Group's sales by revenue
stream and markets. This information is regularly provided to the Group's
CODM:
For the six months ended 30 June 2023 (Unaudited)
Direct markets Indirect markets
Probes Monitors Other Probes Monitors Other Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
UK 212 113 15 - - - 340
USA 156 4 20 - - - 180
France - - - 248(1) - 2 250
Scandinavia - - - 49 - 1 50
Latin America - - - 37 - - 37
Hong Kong - - - 6 62 - 68
Portugal - - - 63 - - 63
Other countries 5 - 1 39 22 4 71
373 117 36 442 84 7 1,059
1. Total revenue for this segment relates to a single external customer
For the six months ended 30 June 2022 (Unaudited)
Direct markets Indirect markets
Probes Monitors Other Probes Monitors Other Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
UK 222 59 42 - - - 323
USA 241 15 24 - - - 280
France - - - 235(1) 6 2 243
Scandinavia - - - 34 49 2 85
South Korea - - - 78 - - 78
Other countries 17 26 - 84 18 4 149
480 100 66 431 73 8 1,158
1. Total revenue for this segment relates to a single external customer
For the year ended 31 December 2022 (Audited)
Direct markets Indirect markets
Probes Monitors Other Probes Monitors Other Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
UK 461 106 75 - - - 642
USA 463 122 51 - - - 636
France - - - 464¹ 15 8 487
Latin America - - - 90 212 2 304
South Korea - - - 132 - - 132
Hong Kong - - - 13 32 3 48
Austria - - - 44 - 2 46
Cayman Islands - - - 24 18 1 43
Other countries 19 30 - 90 2 3 144
943 258 126 857 279 19 2,482
1. Total revenue for this segment relates to a single external
customer
The Group's revenue disaggregated between the sale of goods and the provision
of services is set out below. All revenues from the sale of goods are
recognised at a point in time; maintenance income is recognised over time.
Period ended Year ended
30 June 2023 30 June 2022 31 December 2022
£'000 £'000 £'000
Sale of goods 1,038 1,131 2,430
Maintenance income 21 27 52
1,059 1,158 2,482
The following table provides information about trade receivables and contract
liabilities from contracts with customers. There were no contract assets at
either 30 June 2023 or 1 January 2023.
30 June 1 January
2023
2023
£'000 £'000
Trade receivables which are in 'Trade and other receivables' 440 456
Contract liabilities (48) (36)
The following aggregated amounts of transaction prices relate to the
performance obligations from existing contracts that are unsatisfied or
partially unsatisfied as at 30 June 2023:
2023 2024 2025 2026 Total
£'000 £'000 £'000 £'000 £'000
Revenue expected to be recognised 9 28 2 9 48
5. Segmental analysis
Assessment of performance and the allocation of resources are made on the
basis of results derived from the sale of probes, monitors and other products
analysed by territory, of which revenues and gross margins are regularly
reported to the Group's Chief Executive Officer, who has been identified as
the Chief Operating Decision Maker (CODM). The CODM also monitors a profit
measure described internally as 'adjusted earnings before interest, tax,
depreciation and amortisation, share-based payments, non-executive directors'
fees, as well as any exceptional items' (Adjusted EBITDA). However, this
measure is reported at a Group level rather than an operating segment which is
based on the nature of the goods provided rather than the geographical market
in which they are sold.
The unaudited operating segment results for the six months ended 30 June 2023
are:
Probes(1) Monitors Other Unallocated Total
£'000 £'000 £'000 £'000 £'000
Revenues 815 201 43 - 1,059
Adjusted gross profit(2) 572 145 21 - 738
Sales and marketing costs - - - - (425)
Administration costs - - - - (587)
R&D costs - - - - (1)
Quality and regulation costs - - - - (86)
Adjusted EBITDA - - - - (361)
1. Managed care service revenue is categorised as probe revenue
2. Gross profit excluding the depreciation charge relating to monitors
loaned to customers and production equipment (£10,000)
The unaudited operating segment results for the six months ended 30 June 2022
were:
Probes(1) Monitors Other Unallocated Total
£'000 £'000 £'000 £'000 £'000
Revenues 912 173 73 - 1,158
Adjusted gross profit(2) 675 128 52 - 855
Sales and marketing costs - - - - (554)
Administration costs - - - - (618)
R&D costs - - - - (2)
Quality and regulation costs(3) - - - - (99)
Adjusted EBITDA - - - - (418)
1. Managed care service revenue is categorised as probe revenue
2. Gross profit excluding the depreciation charge relating to monitors
loaned to customers and production equipment
The audited operating segment results for the year ended 31 December 2022
were:
Probes(1) Monitors Other Unallocated Total
£'000 £'000 £'000 £'000 £'000
Revenues 1,800 537 145 - 2,482
Adjusted gross profit(2) 1,323 416 107 - 1,843
Sales and marketing costs - - - (1,027) (1,027)
Administration costs - - - (1,192) (1,192)
R&D costs - - - (36) (36)
Quality and regulation costs - - - (195) (195)
Adjusted EBITDA - - - - (607)
1. Managed care service revenue is categorised as probe revenue
2. Gross profit excluding the depreciation charge relating to monitors
loaned to customers and production equipment (£4,000)
The reconciliation of the profit measure used by the Group's CODM to the
result reported in the Group's consolidated SOCI is set out below:
Unaudited Audited
30 June 30 June 31 December
2023
2022
2022
£'000
£'000
£'000
Adjusted EBITDA (361) (418) (607)
Non-cash items:
Depreciation of property, plant and equipment (38) (36) (88)
Amortisation of development costs (20) (20) (40)
Impairment loss on trade receivables - - (39)
Non-executive directors' fees and employer's social security costs (71) (68) (136)
Share-based payment expense (32) (59) (125)
Change in accumulated absence cost liability (24) - 17
Gain on convertible loan note 89 - -
Cash item: Other tax income 40 30 71
(56) (153) (340)
Operating loss (417) (571) (947)
Finance costs (119) (91) (199)
Loss before tax (536) (662) (1,146)
Tax credit on loss (1) - 1
Loss for the period/year (537) (662) (1,145)
6. Dividends
The Directors cannot recommend the payment of a dividend for 2023 (2022: nil).
7. Tax credit on loss
Unaudited Audited
30 June 30 June 31 December
2023
2022
2022
£'000 £'000 £'000
Research and development tax credit adjustment 1 - (1)
Total tax credit adjustment 1 - (1)
The other gain amount for six months to 30 June 2023 of £40,000 (six months
to 30 June 2022: £30,000) comprises tax income arising from the Research and
Development Expenditure Credit scheme which is accounted for as a government
grant.
8. Loss per share
Basic loss per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares issued
during the year.
The loss per share calculation for six months to 30 June 2023 is based on the
loss of £538,000 and the weighted average number of shares in issue of
703,227,881.
For the six months to 30 June 2022, the loss per share calculation is based on
the loss of £666,000 and the weighted average number of shares in issue of
672,175,129.
For the year ended 31 December 2022, the loss per share calculation is based
on the loss of £1,149,000 and the weighted average number of shares in issue
of 685,490,974.
While the Group is loss-making, the diluted loss per share and the loss per
share are the same.
9. Inventories
Inventories at 30 June 2023 include the following finished Goods: 16,800
probes (30 June 2022: 14,894) and 113 monitors (30 June 2022: 176).
10. Cash at bank
Unaudited Audited
30 June 30 June 31 December
2023
2022
2022
£'000 £'000 £'000
Cash at bank 107 611 471
11. Borrowings
Unaudited Audited
30 June 2023 30 June 2022 31 December 2022
Current Non-current Current Non-current Current Non-current
£'000 £'000 £'000 £'000 £'000 £'000
Invoice discount facility 147 - 200 - 185 -
Standby loan facility 750 - 500 - 750 -
Bridging loan facility 250 - - - - -
Convertible loan note - 998 - 1,048 - 1,069
1,147 998 700 1,048 935 1,069
On 2 August 2023, as part of a fundraising and capital reorganisation,
£100,000 of the Standby loan facility was converted into 50,000,000 loan
conversion shares at a price of 0.2 pence per share. As part of this
transaction, the remaining £650,000 Standby loan facility has had the
maturity extended to £250,000 repayable by 30 June 2025 and £400,000
repayable by 31 December 2025. The interest rate remains at 8% per annum.
In April 2023, a bridging loan facility provided by Imperialise Limited, a
company controlled by Nigel Keen, was put in place for £250,000 with a
minimum term of three months. The interest rate on the facility was 12% per
annum, and the facility was unsecured. On 2 August 2023, as part of a
fundraising and capital reorganisation, the bridging loan facility was
converted into 125,000,000 loan conversion shares at a price of 0.2 pence per
share.
12. Trade and other payables
Unaudited Audited
30 June 2023 30 June 2022 31 December 2022
Current Non-current Current Non-current Current Non-current
£'000 £'000 £'000 £'000 £'000 £'000
Trade payables 600 - 338 - 507 -
Other payables 249 - 280 - 258 -
Social security and other taxes 145 - 120 - 158 -
Lease obligations 55 148 49 203 52 177
Contract liabilities 48 - 52 - 39 -
Employee short-term benefits 48 - 41 - 24 -
Accrued expenses 599 - 540 - 666 -
1,744 148 1,419 203 1,704 177
13. Convertible loan note
The convertible loan note recognised in the Condensed Consolidated Balance
Sheet is calculated as:
Financial liability Equity component Total
£'000 £'000 £'000
Carrying amount at 1 January 2023 1,069 82 1,151
Modification gain (89) - (89)
Interest expense 61 - 61
Interest paid (43) - (43)
Carrying amount at 30 June 2023 998 82 1,080
The convertible loan note falls due for repayment in June 2026. The
convertible loan note is, at the option of the loan note holder, convertible
at any time into new ordinary shares of 1 penny each at a conversion price of
4 pence per share.
14. Share capital
In April 2023, 9,993,805 new ordinary shares were issued at a price of 1.1
pence per share to satisfy certain deferred non-executive directors' fees for
the year ended 31 December 2021.
There were no share options exercised during the six months ended 30 June 2023
or the six months ended 30 June 2022.
15. Seasonal fluctuations
Revenues in our Distributor markets are traditionally higher in the second
half of the financial year due to the purchasing patterns of customers.
16. Foreign exchange rates
The following are the principal foreign exchange rates that have been used in
the preparation of the condensed consolidated interim financial statements:
Unaudited Audited
30 June 2023 30 June 2022 31 December 2022
Average Closing Average Closing Average Closing rate
rate
rate
rate
rate
rate
Sterling/US dollar 1.23 1.27 1.30 1.22 1.24 1.21
Sterling/Euro 1.14 1.16 1.19 1.16 1.17 1.13
Sterling/Canadian dollar 1.67 1.68 1.65 1.57 1.61 1.64
17. Subsequent events
On 2 August 2023, the Company raised £1.89m before expenses, through
subscription for 207,500,000 subscriptions shares, 625,500,000 placing shares
and 110,629,270 retail offer shares, all at 0.2 pence per share.
On the same date, a capital reorganisation to change the nominal value of the
Company's ordinary shares to 0.01p per share was completed.
On the same date, as part of a fundraising and capital reorganisation,
£100,000 of the Standby loan facility was converted into 50,000,000 loan
conversion shares at a price of 0.2 pence per share. As part of this
transaction, the remaining £650,000 Standby loan facility has had the
maturity extended to £250,000 repayable by 30 June 2025 and £400,000
repayable by 31 December 2025. The interest rate remains at 8% per annum.
In April 2023, a bridging loan facility provided by Imperialise Limited, a
company controlled by Nigel Keen, was put in place for £250,000 with a
minimum term of three months. The interest rate on the facility was 12% per
annum, and the facility was unsecured. On 2 August 2023, as part of a
fundraising and capital reorganisation, the bridging loan facility was
converted into 125,000,000 loan conversion shares at a price of 0.2 pence per
share.
Furthermore, on 2 August 2023, 18,966,477 new ordinary shares were issued at a
price of 0.2 pence per share to Imperialise Limited, a company controlled by
Nigel Keen, to satisfy the Chairman's fees of £33,333 plus employer national
insurance contributions for the year ended 31 December 2022.
18. Distribution of the announcement
Copies of this announcement are sent to shareholders on request and will be
available for collection free of charge from the Group's registered office at
Terminus Road, Chichester, PO19 8TX, United Kingdom. This announcement is
available, free of charge, from the Company's website at www.deltexmedical.com
(http://www.deltexmedical.com)
19. Cautionary statement
This announcement contains forward-looking statements which are made in good
faith based on the information available at the time of its approval. It is
believed that the expectations reflected in these statements are reasonable,
but they may be affected by several risks and uncertainties that are inherent
in any forward-looking statement which could cause actual results to differ
materially from those currently anticipated. Nothing in this document should
be considered to be a profit forecast.
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