TIDMDEMG
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 GBP1.1m (H1 2022: GBP1.2 million).
-- Adjusted EBITDA loss of GBP361,000 (H1 2022: loss of
GBP418,000).
-- Operating loss of GBP0.5 million (H1 2022: GBP0.6
million).
-- Gross margin of 69% (H1 2022: 74%).
-- Cash at hand on 30 June 2023 of GBP0.1 million (H1 2022:
GBP0.6 million).
-- Fundraise completed in August 2023, raising new cash for the
business of GBP1.89 million and GBP350,000 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.GBP1.0m 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
Andy Mears, Chief Executive
Natalie Wettler, Group Finance Director
Allenby Capital Limited - Nominated
Adviser
& Broker 020 3328 5656
Jeremy Porter / Vivek Bhardwaj (Corporate info@allenbycapital.com
Finance)
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
Chairman's statement
Financial results
Revenues for the six months ended 30 June were GBP1.1 million
(2022: GBP1.2 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
GBP361,000 (2022: GBP(418,000)).
The Group's overheads have reduced to GBP1.2 million (2022:
GBP1.5 million). This is as a result of a decrease in sales and
marketing expenditure of GBP130,000, 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 GBP89,000 on
the extension of the convertible loan note.
Loss before taxation was GBP536,000 (2022: GBP(662,000)).
Cash at hand at 30 June 2023 was GBP0.1 million (2022: GBP0.6
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
GBP1.89 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 GBP1.0 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 GBP1.0 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
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Note GBP'000 GBP'000 GBP'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
30 June 30 June 31 December
2023 2022 2022
Note GBP'000 GBP'000 GBP'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)
Capital Convertible Non-controlling
Share Share redemption Other loan note Translation Accumulated interest Total
capital premium reserve reserve reserve reserve losses Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Balance at
1 January 2023 6,990 33,672 17,476 527 82 168 (56,566) 2,349 (121) 2,228
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
30 June 2023 7,091 33,682 17,476 559 82 174 (57,104) 1,960 (120) 1,840
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Condensed Consolidated Statement of Changes in Equity for the
six months ended 30 June 2022 (unaudited)
Capital Convertible Non-controlling
Share Share redemption Other loan note Translation Accumulated interest Total
capital premium reserve reserve reserve reserve losses Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 - - - - - - (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
30 June 2022 6,991 33,672 17,476 632 82 148 (56,254) 2,747 (121) 2,626
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Condensed Consolidated Statement of Changes in Equity for the
year ended 31 December 2022 (audited)
Capital Convertible Non-controlling
Share Share redemption Other loan note Translation Accumulated interest
capital premium reserve reserve reserve reserve losses Total Total
equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ --------- ---------------- ---------
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
2023 2022 2022
GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- --------- -------- -------- --------- --------- --------
UK 461 106 75 - - - 642
USA 463 122 51 - - - 636
France - - - 464(1) 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 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
(GBP10,000)
The unaudited operating segment results for the six months ended
30 June 2022 were:
Probes(1) Monitors Other Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
(GBP4,000)
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
GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'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
GBP40,000 (six months to 30 June 2022: GBP30,000) 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 GBP538,000 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 GBP666,000 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 GBP1,149,000 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
GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------------------- ----------------------- ------------------- ----------------------- ------------------- -----------------------
Invoice
discount
facility 147 - 200 - 185 -
Standby loan
facility 750 - 500 - 750 -
Bridging 250 - - - - -
loan
facility
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, GBP100,000 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
GBP650,000 Standby loan facility has had the maturity extended to
GBP250,000 repayable by 30 June 2025 and GBP400,000 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
GBP250,000 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
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 Equity
liability component Total
GBP'000 GBP'000 GBP'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 GBP1.89m 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, GBP100,000 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
GBP650,000 Standby loan facility has had the maturity extended to
GBP250,000 repayable by 30 June 2025 and GBP400,000 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
GBP250,000 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 GBP33,333 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
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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END
IR EAPNKFFXDEEA
(END) Dow Jones Newswires
September 18, 2023 02:00 ET (06:00 GMT)
Deltex Medical (LSE:DEMG)
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