REG - Deltex Med Grp PLC - Results for the year ended 31 December 2022
30/03/2023 07:00
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RNS Number : 6892U Deltex Medical Group PLC 30 March 2023
The information contained within this announcement was deemed by Deltex
Medical to constitute inside information as stipulated under the UK Market
Abuse Regulation
30 March 2023
Deltex Medical Group plc
("Deltex Medical" or the "Group")
Results for the year ended 31 December 2022
Deltex Medical Group plc (AIM: DEMG), the global leader in oesophageal Doppler
monitoring, today announces its results for the year ended 31 December 2022.
HIGHLIGHTS
Financial
§ Revenues increased by 10% to £2.5 million (2021: £2.3 million)
§ Strong performance by International division with a 30% increase in
revenues to £1.2 million (2021: £0.9 million)
§ Increase in average selling prices drove gross margin up to 74% (2021: 70%)
§ Overheads held at £2.9 million (2021: £2.7 million)
§ Adjusted EBITDA of £(0.6) million (2021: £(0.5) million)
§ Loss for the year £(1.1) million (2021: £(1.0) million)
§ Gross expenditure on research and product development: £0.8 million (2021:
£0.7 million)
§ Cash at hand of £0.5 million (2021: £0.4 million)
§ Standby loan facility repayment date extension to 30 June 2024
Business / commercial activities
§ Sales of the current monitor were strong across all three divisions in
2022: UK: +83%; USA: +126% and International: +253%; historically, monitor
sales have given rise to increased probe sales
§ Further growth from the International division expected
§ As previously reported, the Group has been participating in a national
tender for haemodynamic monitoring with one of its Latin American
distributors. Hospitals have now started to place orders with this distributor
in a contract process that is expected to continue for some 2 months, by when
further information on the orders to be placed on Deltex Medical should be
known
§ New targeted commercial approach in the USA to drive increases in revenues
on a more cost effective and region-by-region basis
§ The external Electromagnetic Compatibility testing required to obtain
regulatory approval to launch the new monitor onto the UK and European markets
has been successfully concluded which allows the final testing and associated
internal documentation to be completed.
§ Work is continuing on the new, novel non-invasive TrueVue ODM technology
with a substantial addressable market
Related party transaction
On 22 December 2022 Deltex Medical announced an extension to a standby loan
facility (the "Loan") provided by Imperialise Limited, a company controlled by
Nigel Keen, Chairman of Deltex Medical, of which he is a director. Mr. Keen
has now agreed to extend the repayment date for the Loan from 31 December 2023
to 30 June 2024 (the "Transaction"). All other terms relating to the Loan
remain unchanged. The Transaction constitutes a related party transaction with
Nigel Keen under Rule 13 of the AIM Rules for Companies. Accordingly, the
directors independent of the Transaction, being Andy Mears, Natalie Wettler,
Julian Cazalet, Tim Irish, Christopher Jones and Mark Wippell, having
consulted with Deltex Medical's nominated adviser, Allenby Capital, consider
that the terms of the Transaction are fair and reasonable insofar as the
Group's shareholders are concerned.
Commenting on the results, Nigel Keen, Chairman of Deltex Medical, said:
"We are encouraged by double digit growth in revenues during the year."
"The performance of the International division has been notably strong over
the last two years - and we are expecting continuing progress this year."
"The 'heavy lifting' has been done in terms of new product development - and
we are expecting the level of investment in R&D to reduce going forwards."
"The launch of the new, next generation monitor will be extremely helpful for
sales across all our territories - both via direct sales and our overseas
distributors."
For further information, please contact:
Deltex Medical Group plc 01243 774 837
Nigel Keen, Chairman investorinfo@Deltexmedical.com
Andy Mears, Chief Executive
Natalie Wettler, Group Finance Director
Nominated Adviser & Broker 020 3328 5656
Allenby Capital Limited
Jeremy Porter / Vivek Bhardwaj (Corporate Finance) 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. The
Group will shortly launch a new, next generation monitor which will make the
use of the ODM technology more intuitive and provide 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 which is due for launch in 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
Group revenues for the year ended 31 December 2022 increased by 10% to £2.5
million (2021: £2.3 million), assisted by another strong performance from the
Group's International division.
Last year we announced that the International division had achieved a 40%
increase in revenues to £0.9 million. This year we can announce that the
division posted a further 30% increase in revenues to £1.2 million. We
believe that there is further profitable revenue growth to be generated by
this division.
Probe revenues declined slightly to £1.8 million (2021: £1.9 million).
Group monitor sales increased by a robust 166% to £0.5 million (2021: £0.2
million). This is a good result taking into account that these monitor sales
related to the current version of the monitor.
Gross margin increased again in 2022 to 74% (2020: 70%) reflecting enhanced
discipline in relation to our pricing policies and a proactive campaign to
obtain inflationary increases in price points. The gross margin also benefited
from the relative weakness of sterling against the US dollar.
Overheads increased 4% to £2.9 million (2021: £2.7 million).
Adjusted EBITDA (comprising earnings before interest, tax, depreciation and
amortization, share-based payments and non-executive directors' fees) was a
loss of £(0.6) million (2021: £(0.5) million). Adjusted EBITDA is reconciled
to operating loss in note 3 in the notes at the back of this document.
Gross cash expenditure on research and product development by the Group
(excluding the effect of grants or capitalisation of product development)
amounted to £0.8 million (2021: £0.7 million). The net amount, having taken
into account grants, was £0.7 million (2021: £0.6 million). Our plans
anticipate expenditure on research and product development to decline during
2023.
Operating loss for the year was £(0.9) million (2021: £(0.8) million).
Loss for the year was £(1.1) million (2021: £(1.0) million).
Cash at hand at 31 December was £0.5 million (2021: £0.4 million).
Business activities
Deltex Medical sells directly, via its own sales teams, into UK and US
hospitals. We continue to see significant constraints imposed on our sales
teams in terms of being able to access key decision makers in UK and US
hospitals' operating theatres ("ORs") and intensive care units ("ICUs").
Notwithstanding these specific sales-related challenges, we did see a
substantial increase in sales of monitors in both territories. Sales of
monitors into UK hospitals increased by 77% and into US hospitals by 122%. We
believe that this substantial increase in monitor sales is all the more
impressive given that the market is aware that Deltex Medical will shortly
launch a new, next generation monitor.
Although probe sales declined slightly in both our direct markets, the fact
that customers increased significantly their purchases of monitors is, we
believe, extremely encouraging as historically probe revenues have tended to
increase in accounts where monitors have recently been purchased.
Deltex Medical's International division continues to impress with a 30%
revenue growth recorded in the year. In the last two years revenues have
nearly doubled from £0.7 million to £1.2 million. We have worked carefully
on a rolling programme of cost reduction initiatives to ensure that the
Group's monitors and probes both enjoy significant gross margins. As a result,
we are able to sell on a profitable basis to hospitals around the world via
our extensive network of overseas distributors. We believe that there is
further growth to come from our International division. The Group has been
participating in a national tender for haemodynamic monitoring with one of its
Latin American distributors. Hospitals have now started to place orders with
this distributor in a contract process that is expected to continue for some
two months, by when further information on the orders to be placed on Deltex
Medical should be known.
Significant progress has been made on the development of Deltex Medical's new
monitor. The external Electromagnetic Compatibility testing required to obtain
regulatory approval to launch the new monitor onto the UK and European markets
has been successfully concluded which allows the final testing and associated
internal documentation to be completed. This is expected to take approximately
two months.
The launch of this new, next generation monitor enables us to progress to the
next stage of our strategic product development programme, including the
development of the new non-invasive TrueVue ODM technology which has a
substantial addressable market.
Employees
On behalf of the Board, I would like to thank Deltex Medical's high quality
and dedicated employees for their hard work during the year. The adverse
after-effects of the Covid pandemic continued to be felt in a number of ways
during 2022 and we very much appreciate the key contributions from our UK and
overseas teams.
Current trading and prospects
The significant increase in monitor sales in all three divisions in 2022
augurs well for increases in probe revenues in the future.
We believe that there continue to be significant opportunities for growth from
the International division, and we are particularly focussed on maximising the
commercial benefits associated with a national tender in Latin America.
We are seeing strong interest in our new monitor, particularly from the UK,
and we believe that its launch will also help drive revenues in 2023.
The fact that the new monitor is substantially complete is extremely helpful
in terms of reducing the quantum of cash expenditure on new product
development going forwards. Further, we will be able to free up our technical
teams to carry out broader customer support activities as well as more
targeted, and less capital intensive, product development.
2023 has started well.
Nigel Keen
Chairman
29 March 2023
BUSINESS REVIEW
Overview
Deltex Medical is the world leader in high accuracy oesophageal Doppler
monitoring ("ODM"), via its TrueVue platform, which allows real-time
monitoring of a patient's haemodynamic status.
A substantial number of peer-reviewed, randomised controlled trials have
demonstrated that an ODM-driven haemodynamic protocol can result in
statistically significant reductions in post-operative complications such as
acute kidney injuries, resulting in lower costs for hospitals due to shorter
patient length-of-stay. This is not only good for patients but also increases
throughput and capacity for hospitals, which should be a key factor for
reducing the backlog in elective surgery, particularly in the UK.
Deltex Medical's technology was originally developed in a London ICU to assist
with the treatment of acutely unwell critical care patients. Over time demand
for the Group's high fidelity oesophageal Doppler-based haemodynamic
monitoring technology has migrated from the ICU to the OR, and particularly
for complex elective surgical procedures.
Before the Covid pandemic, approximately 80% of the Group's revenues were
associated with elective surgical procedures in ORs. The near-complete
cessation of elective surgery during the pandemic was highly disruptive to
Deltex Medical's commercial activities, particularly in the UK and the USA,
where the Group sells its technology directly. Although elective surgery has
re-started around the world as the pandemic subsides, Deltex Medical's sales
teams are still experiencing more restricted levels of access to the OR and
ICU than they enjoyed pre-pandemic.
Our key challenge for 2023 is to maximise the commercial benefits for the
Group of the launch of the new monitor. We are also hoping to land a
significant Latin American contract for both monitors and probes. We will also
continue to educate, in conjunction with our overseas distributors,
decision-makers in hospitals about the potential capacity / throughput-related
and financial benefits associated with using the Deltex Medical TrueVue ODM
technology during elective surgery.
Three principal divisions: UK, USA and International
Deltex Medical's commercial activities are structured across three divisions:
the UK; the USA and International.
The Group has not yet managed to drive commercial activity up to pre-pandemic
levels in the UK and US divisions for a number of reasons. Many hospitals have
imposed significant restrictions on salespersons or clinical educators
accessing ORs or ICUs. Once hospitals stop using Deltex Medical's ODM
technology, it can take some time to re-instigate the use of ODM via updated
standard operating procedures. We have also been restricting, particularly in
the USA, expenditure on sales and marketing activities as we diverted
resources into completing the development of our new monitor. We know from
experience that where our sales personnel are unable to obtain meaningful
face-to-face access to anaesthetists, or other appropriate OR staff, then
probe usage typically declines over time.
One way in which we have been seeking to mitigate the impact of greater
restrictions for our sales teams in meeting hospital-based decision-makers in
person is by increasing the use of online materials, including training via
the launch of the online Deltex Medical Academy.
Notwithstanding some of the challenges that the Group has faced in terms of
accessing customers, we have been encouraged by a significant year-on-year
increase in monitor revenues into our three divisions: UK (+ 77%); USA
(+122%); and International (+ 221%). It is notable that these increases all
relate to the current version of the monitor. These monitor sales should
result in increased probe revenues which will be helpful in terms of driving
up high margin recurring revenues in the future.
In the UK we have seen strong interest via pre-launch educational
presentations for our new monitor from a number of NHS hospitals. We believe
that there will be significant demand for the new monitor once it is formally
fully launched onto the UK market.
There remains a substantial backlog in elective surgery in the UK. This
backlog represents both an opportunity and a challenge for the Group. For
example, there are powerful arguments, supported by the published evidence
base, that the use of Deltex Medical's TrueVue technology increases patient
throughput in the hospital and improves patient outcomes, thereby helping
reduce the size (and associated cost) of the elective surgery backlog.
Conversely, we have seen evidence in some NHS hospitals that the senior
management teams are under pressure to reduce the backlog and, notwithstanding
the peer-reviewed published evidence base, are reluctant to promote the
adoption of new technology at this time.
In 2022, mindful of the need to conserve our cash resources, we decided to
adopt a more focussed and targeted sales and marketing strategy in the USA.
For example, we have been supporting the trial and evaluation of the TrueVue
ODM technology in a Top 5 US hospital system on the East coast. Thus far the
feedback from this prestigious hospital has been most encouraging. As and when
this leading US hospital decides to roll out the use of TrueVue on a
protocolised basis, we believe that this will be extremely helpful for Deltex
Medical to generate new customer accounts in the region. Adopting such a
targeted regional approach is a significantly more cost-effective way of
expanding the Group's coverage of the important US market. We intend to
replicate this targeted approach with other leading US hospital systems in
different regions, and build back up our US coverage on a region-by-region
basis.
In 2022 the International division had another good year with overall revenue
growth of 30% to £1.2 million (2021: £0.9 million). A substantial proportion
of this growth came from Latin America. We continue to support our network of
international distributors closely. Many of these distributors have
long-standing and close relationships with ORs in hospitals, and enjoy
privileged access to key decision makers.
There has been consolidation among suppliers of haemodynamic monitoring
equipment over the last five years. This has resulted in consolidation of
sales teams. As a result, on a number of occasions Deltex Medical has
benefited from less competition in certain territories.
Product development and innovation
During 2022, our research and development team were focussed on completing the
development of our new, next generation TrueVue monitor. This task was made
more challenging by pandemic-related disruption to electronic supply-chains.
There is some evidence that the disruption to these supply chains is beginning
to abate.
In order to obtain the necessary regulatory approvals to launch the new
monitor onto the UK and European markets, there is a requirement to complete
Electromagnetic Compatibility (EMC) testing. EMC testing is carried out
through an external test house and these tests have recently been successfully
completed.
Now EMC testing has been completed the device can be passed through acoustic
testing and the internal documentation required to support the regulatory
submissions can be finalised. This self-certification process is expected to
be completed shortly following which the new monitor will be available for
sale in the UK and European markets.
Once the new monitor has been successfully launched in the UK and Europe, we
intend to complete the necessary FDA filings to obtain US regulatory approval
so that the new, next generation monitor should be launched onto the US market
next year. We are expecting to sell the new monitor into new accounts as well
as existing customers that wish to upgrade their ODM technology.
Following the launch of the new monitor , we will be refocussing our research
and development team to work on a complementary, non-invasive haemodynamic
monitoring technology which leverages the extensive evidence base supporting
the use of our existing ODM technology. This new technology will allow
instantaneous non-invasive haemodynamic monitoring, via the new monitor,
anywhere in the hospital. This new, novel technology should substantially
broaden the potential applications, and hence addressable market size, for the
Group's Doppler-based ultrasound technology.
We are continuing to work with the UK's National Physical Laboratory to
explore how the use of cutting-edge science will enable us to improve the
performance and data generation from Deltex Medical's core ultrasound
technology. We anticipate advancing this research project significantly in
2023.
Regulatory
Deltex Medical designs and manufactures Class II medical devices which it
sells around the world. As a result, its business activities can be
significantly affected by changes to regulations. The post-Brexit regulatory
regime in the UK, as well as for UK companies selling into Europe, is still
evolving and we keep actual or prospective changes in applicable regulations
under close scrutiny.
In Europe the transition from the Medical Device Directive to the European
Medical Device Regulation ("MDR") has been deferred until 2028. Although this
reduces some regulatory-associated complexity in the short term, there is
still considerable uncertainty as to what steps will be required, by when, for
a Class II medical device manufacturer to comply with MDR in the future.
Conclusion
Completion of the new monitor will greatly enhance Deltex Medical's
technological offering to the market as well as opening up the possibility to
use this device as a platform for further product line extensions. We are
particularly interested in the commercial potential associated with the
easier-to-use non-invasive haemodynamic monitoring technology which we are
also developing.
So far market feedback and demand for the new monitor has been encouraging,
both from prospective and existing customers, and we see its launch as a
critical building block in driving up probe revenues across all three
divisions.
We have concluded that the Covid era restrictions imposed on salespersons to
stop them from enjoying relatively open access to ICUs and ORs will continue
in the future. We have taken a number of mitigation steps to enable us to
commercialise successfully our technology with this 'new normal' in mind.
Andy Mears
Chief Executive
29 March 2023
Consolidated statement of comprehensive income
For the year ended 31 December 2022
2022 2021
£'000 £'000
Revenue 2,482 2,259
Cost of (643) (684)
sales
Gross profit 1,839 1,575
Administrative expenses (1,560) (1,585)
Sales and distribution expenses (1,027) (957)
Research and Development, Quality and Regulatory (231) (207)
Impairment loss on trade (39) -
receivables
Total (2,857) (2,749)
costs
Other operating - 312
income
Other 71 57
gain
Operating loss (947) (805)
Finance (199) (173)
costs
Loss before taxation (1,146) (978)
Tax credit on 1 12
loss
Loss for the year (1,145) (966)
Other comprehensive expense
Items that may be reclassified to profit or loss:
Net translation differences on overseas subsidiaries 35 (2)
Other comprehensive expense for the year, net of tax 35 (2)
Total comprehensive loss for the year (1,110) (968)
Total comprehensive loss for the year attributable to:
Owners of the Parent (1,114) (969)
Non-controlling interests 4 1
(1,110) (968)
Loss per share - basic and
diluted
(0.17p) (0.17p)
Consolidated balance sheet
As at 31 December 2022
Company Number 03902895
2022 2021
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 269 264
Intangible assets 3,769 3,135
Financial assets at amortised cost 164 157
Total non-current assets 4,202 3,556
Current assets
Inventories 821 796
Trade receivables 456 455
Financial assets at amortised cost 15 15
Other current assets 140 91
Current income tax recoverable 72 69
Cash and cash equivalents 471 413
Total current assets 1,975 1,839
Total assets 6,177 5,395
Liabilities
Current liabilities
Borrowings (935) (702)
Trade and other payables (1,704) (1,478)
Total current liabilities (2,639) (2,180)
Non-current liabilities
Borrowings (1,069) (1,028)
Trade and other payables (177) (228)
Provisions (64) (57)
Total non-current liabilities (1,310) (1,313)
Total liabilities (3,949) (3,493)
Net assets 2,228 1,902
Equity
Share capital 6,990 5,849
Share premium 33,672 33,502
Capital redemption reserve 17,476 17,476
Other reserve 527 573
Translation reserve 168 133
Convertible loan note reserve 82 82
Accumulated losses (56,566) (55,588)
Equity attributable to owners of the Parent 2,349 2,027
Non-controlling interests (121) (125)
Total equity 2,228 1,902
Consolidated statement of changes in equity for the year ended 31 December
2022
Capital redemption Convertible loan note reserve Non-controlling interest Total
Share capital Share premium reserve Other reserve Translation Accumulated Total equity
reserve losses
£'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
31 December 2022 6,990 33,672 17,476 527 82 168 (56,566) 2,349 (121) 2,228
Consolidated statement of changes in equity for the year ended 31 December
2021
Capital redemption Convertible loan note reserve Non- controlling
Share capital Share premium reserve Other reserve Translation Accumulated Total interest Total equity
reserve losses
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2021
5,773 33,444 17,476 505 82 135 (54,648) 2,767 (126) 2,641
Comprehensive income
Loss for the period - - - - - - (967) (967) 1 (966)
Other comprehensive income for the period - - - - - (2) - (2) - (2)
Total comprehensive income for year - - - - - (2) (967) (969) 1 (968)
Transactions with owners of the Group
Shares issued during the year 76 58 - - - - - 134 - 134
Equity-settled share- based payment - - - 95 - - - 95 - 95
Transfers - - - (27) - - 27 - - -
Balance at 5,849 33,502 17,476 573 82 133 (55,588) 2,027 (125) 1,902
31 December 2021
Consolidated statement of cash flows
for the year ended 31 December 2022
2022 2021
£'000 £'000
Cash flows from operating activities
Loss before taxation (1,146) (978)
Adjustments for:
Finance costs 199 173
Depreciation of property, plant and equipment 88 74
Amortisation of intangible assets 40 40
Share-based payment expense 125 95
Other gain (71) (57)
Effect of exchange rate fluctuations 35 (2)
(730) (655)
(Increase)/Decrease in inventories (48) 89
(Increase)/Decrease in trade and other receivables (57) 148
Increase in trade and other payables 306 191
Increase in provisions 7 6
Net cash used in operations (522) (221)
Interest paid (153) (131)
RDEC taxes received 69 61
Net cash used in operating activities (606) (291)
Cash flows from investing activities
Purchase of property, plant and equipment (70) (23)
Capitalised development expenditure (net of grants) (674) (621)
Net cash used in investing activities (744) (644)
Cash flows from / (used in) financing activities
Issue of ordinary share capital 1,340 -
Expenses in connection with share issue (115) -
Net movement in invoice discount facility (17) 43
Standby loan facility repayment (500) -
Standby loan facility drawdown 750 500
Principal lease payments (45) (41)
Net cash generated from financing activities 1,413 502
Net increase/(decrease) in cash and cash equivalents 63 (433)
Cash and cash equivalents at beginning of the period 413 853
Exchange loss on cash and cash equivalents (5) (7)
Cash and cash equivalents at end of the period 471 413
1. Nature of the financial information
This Results Summary containing condensed financial information for the year
ended 31 December 2022 should be read in conjunction with the Deltex Medical
Group Plc's Annual Report & Accounts 2022 which were prepared in
accordance with UK-adopted International Accounting Standards. The
consolidated financial statements have been prepared under the historical cost
convention and on a going concern basis.
Financial information contained in this document does not constitute statutory
accounts within the meaning of section 434 of the Companies Act 2006 ('the
Act'). The statutory accounts for the year ended 31 December 2021 have been
filed with the Registrar of Companies and those for the year ended 31 December
2022 will be filed with the Registrar of Companies following the Annual
General Meeting. The report of the independent auditor on those statutory
accounts was unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or (3) of the
Act. The report for year ended 31 December 2021 of the independent auditor on
those statutory accounts was unqualified and did not contain a statement under
section 498(2) or (3) of the Act.
2. Accounting policies
The Group's principal accounting policies can be found in the Group's Annual
Report & Accounts 2022.
Going concern
The Group meets its day-to-day working capital requirements through a
combination of operational cash flows, an invoice discounting facility and, if
required, the raising of additional finance.
In December 2022, the Group extended the standby loan facility with
Imperialise Limited by £250,000 to £750,000 in order to help fund the costs
to complete the new monitor. The Group intends to repay the £250,000 as soon
as possible and specifically when positive operating cashflow is generated by
way of sales of the new monitor. All other terms of the standby loan
facility, which was issued in September 2021, remain unchanged. Furthermore,
on 29 March 2023, the maturity date of the standby loan facility was extended
from 31 December 2023 to 30 June 2024.
In February 2023, the maturity date of the convertible loan notes was extended
from 26 February 2024 to 30 June 2026. All other terms of the convertible
loan notes, which were issued in February 2016, remain unchanged.
The Directors have reviewed detailed budgets and forecasts until 30 June 2024.
In making their forecasts, the Directors have carefully considered the
possible continued after effects of post-Covid restrictions and associated
disruption on the Group's business. This review indicates that the Group is
expected to continue trading as a going concern based on projected net cash
flows derived from sales of the Group.
The Directors consider that they have reasonable grounds to believe that the
Group will have adequate resources to continue in operational existence for
the foreseeable future and it is therefore appropriate to prepare the
financial statements on the going concern basis.
3. Revenue and EBITDA
For the year ended 31 December 2022
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
For the year ended 31 December 2021
Direct markets Indirect markets
Probes Monitors Other Probes Monitors Other Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
UK 524 60 86 - - - 670
USA 561 55 47 - - - 663
France - - - 4891 29 8 526
Scandinavia - - - 105 - 2 107
South Korea - - - 134 - 2 136
Portugal - - - 35 - - 35
Other countries 10 - - 53 58 1 122
1,095 115 133 816 87 13 2,259
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 at the point
the service is carried out.
2022 2021
£'000 £'000
Sale of goods 2,430 2,192
Maintenance income 52 67
2,482 2,259
The reconciliation of Adjusted EBITDA used by the Group's Chief Operating
Decision Maker (CODM) to the result reported in the Group's consolidated SOCI
is set out below:
2022 2021
£'000 £'000
Adjusted EBITDA (607) (504)
Non-cash items:
Depreciation of property, plant and equipment (88) (74)
Amortisation of development costs (40) (40)
Impairment loss on trade receivables (39) -
Non-executive directors' fees and employer's NIC (136) (138)
Share-based payment expenses (125) (95)
Change in accumulated absence cost liability 17 (11)
Cash item:
Other tax income 71 57
(340) (301)
Operating loss (947) (805)
Finance costs (199) (173)
Loss before tax (1,146) (978)
Tax credit on loss 1 12
Loss for the year (1,145) (966)
The following table provides information about trade receivables and contract
liabilities from contracts with customers. There were no contract assets at
either 31 December 2022 or 31 December 2021.
31 December 31 December
2022 2021
£'000 £'000
Trade receivables which are in 'Trade and other receivables' 456 455
Contract liabilities (39) (57)
The following aggregated amounts of transaction prices relate to the
performance obligations from existing contracts that are unsatisfied or
partially unsatisfied as at 31 December 2022:
2023 2024 2025 2026 Total
£'000 £'000 £'000 £'000 £'000
Revenue expected to be recognised 25 2 2 10 39
Revenue recognised in 2022 which was included in contract liabilities at 31
December 2021 amounted to £30,000. Revenue recognised in 2021 included in
contract liabilities at 31 December 2020 amounted to £54,000.
4. Dividends
The directors cannot recommend payment of a dividend (2021: nil).
5. Basic and diluted loss per share
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. For 2021, the loss per share calculation is based on the loss of £967,000 and the weighted average number of shares in issue of 580,712,339. While the Group is loss-making, the diluted loss per share and the loss per share are the same.
6. Subsequent events
On 27 February 2023, the maturity date of the convertible loan notes was extended from 26 February 2024 to 30 June 2026. All other terms of the convertible loan notes, which were issued in February 2016, remain unchanged. The Group have considered the financial impact of this modification to the loan's maturity date and determined that it is not substantial resulting in an estimated gain of £89,000 which will be recognised in the Consolidated Statement of Comprehensive Income for the year ended 31 December 2023.
On 29 March 2023, the maturity date of the standby loan facility was extended from 31 December 2023 to 30 June 2024. All other terms of the standby loan facility, which was initially issued in September 2021, remain unchanged.
Distribution of Annual Report and Accounts
The Group will shortly be posting a copy of the Annual Report and Accounts for
the year ended 31 December 2022 to shareholders, together with a Notice of
Annual General Meeting to be held at 11.00 am on 17 May 2023 at the offices of
DAC Beachcroft LLP, 25 Walbrook, London, EC4N 8AF.
A copy of the Annual Report and Accounts and the Notice of Annual General
Meeting will also shortly be available from the Group's website at
www.deltexmedical.com
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