TIDMDEMG
RNS Number : 2226M
Deltex Medical Group PLC
20 September 2021
20 September 2021
Deltex Medical Group plc
("Deltex Medical" or the "Group")
Interim results to 30 June 2021
Deltex Medical Group plc (AIM: DEMG), the global leader in
oesophageal Doppler monitoring, today announces its unaudited
interim results to 30 June 2021.
HIGHLIGHTS
Financial
-- revenues of GBP1.1 million (2020: GBP1.2 million)
-- unchanged adjusted EBITDA loss of GBP242,000 (2020: loss of
GBP241,000)
-- 8% improvement in loss before taxation of GBP0.5 million
(2020: loss of GBP0.6 million)
-- cash at hand on 30 June 2021 of GBP0.6 million (2020: GBP0.6
million)
-- standby debt facility of GBP0.5 million put in place;
currently undrawn
Commercial
-- as expected, trading was challenging in H1 as, pre-COVID-19,
80% of Group revenues were generated from elective surgery which
continues to be severely disrupted
-- preliminary encouraging signs of probe sales increasing month
on month, albeit from a low level, correlated with higher elective
surgery rates around the world
-- US probe revenues remain at reduced levels reflecting, among
other things, continuing impact on elective surgery due to
COVID-19-related disruption
-- increased investment by 'payers' to reduce the backlog of
elective surgery should help the Group's trading performance in the
future
-- strong performance by the international division in the first
half is expected to carry on into the second half
Nigel Keen, Chairman of Deltex Medical, said:
"We always expected the first half to be challenging as COVID-19
continues to delay significantly elective surgical procedures
around the world; however, we are encouraged by the increases in
quarterly probe sales since the beginning of the year."
"We expect activity in the second half to be stronger than in
the first half due to increased levels of elective surgery around
the world and continuing stronger performance by our international
division."
"The significant disruption to the global supply chain of
electronic components has been widely reported and is extremely
frustrating. It is in marked contrast to the success of the product
development work carried out by our engineering team on the new
monitor."
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
Arden Partners plc 020 7614 5900
Paul Shackleton info@arden-partners.com
Joint Broker
Turner Pope Investments (TPI) Ltd 0203 657 0050
Andy Thacker info@turnerpope.com
James Pope
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 as it forms part of UK
law by virtue of the European Union (Withdrawal) Act 2018
("MAR").
Notes for Editors
Deltex Medical manufactures and markets haemodynamic monitoring
technologies which are primarily used in critical care and general
surgical procedures. Deltex Medical's proprietary oesophageal
Doppler monitoring ("ODM") (TrueVue Doppler) measures blood flow
velocity in the central circulation in real time. Minimally
invasive, easy to set-up and quick to focus, the technology
generates a low-frequency ultrasound signal which is highly
sensitive to changes in blood flow and measures such changes in
'real time'. Deltex Medical is the only company in the enhanced
haemodynamic monitoring space to have built a robust and credible
evidence base demonstrating both the clinical and economic benefits
of its core technology: TrueVue Doppler. This technology has been
proven in a wide range of clinical trials to reduce complications
suffered by patients after surgery and consequently can save
hospitals money.
Deltex Medical's TrueVue System on the CardioQ-ODM+ monitor
platform now provides clinicians with two further advanced
haemodynamic monitoring technologies. TrueVue Impedance is an
entirely non-invasive monitoring technology which transmits low
magnitude, high frequency electrical signals through the thorax and
measures the changes to this signal when the heart pumps blood.
TrueVue PressureWave uses the peripheral blood pressure signal
analysis to give doctors information on changes in the circulation
and is particularly suited to monitoring lower risk or
haemodynamically stable patients. The next generation TrueVue
monitor is targeted for release in H1 2022.
Group goal
Haemodynamic management is now becoming widely accepted as a
vital part of the anaesthesia protocols for surgical patients, as
well as treating ventilated intensive care patients, including
ventilated COVID-19 patients. Consequently, the Group's focus is on
maximising value from the opportunities associated with: the CV-19
pandemic; the elective surgery backlog; and the higher profile of
haemodynamic monitoring which has arisen from the recent
consolidation in the sector. The Group aims to provide clinicians
with a modern, next generation, single 'haemodynamic workstation'
platform which offers them a range of technologies from simple to
sophisticated to be deployed according to the patient's clinical
condition as well as the skill and expertise of the user. Doing
this will enable the Group to partner with healthcare providers to
support modern haemodynamic management across the whole
hospital.
The Group is currently in the implementation phase of achieving
this goal in a number of territories worldwide, operating directly
in the UK and the USA, and via agreements with approximately 40
distributors overseas.
Chairman's statement
Financial results
Revenues for the six months ended 30 June were GBP1.1 million
(2020: GBP1.2 million) reflecting subdued activity in the first
half due to low levels of elective surgical procedures across the
majority of the territories into which the Group sells. Unlike
2020, where activity levels were at pre-pandemic levels in the
months of January and February, the whole of the first half of 2021
was adversely affected by COVID-19 and the associated reduced
volumes of elective surgery.
The reported gross margin was 64% (2020: 65%). In the first half
of 2019 the gross margin was 76%. The comparatively lower gross
margin in 2021 reflects lower activity levels and reduced
manufacturing-related recoveries in the first half.
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 unchanged
year-on-year with a loss of GBP(242,000) (2020: GBP(241,000)).
Overheads at GBP1.4 million (2020: GBP1.3 million) were broadly
the same. Prior year overheads were reduced by a one-off credit
relating to receipt of a GBP117,000 payment in relation to the
termination of a third-party distribution agreement.
Other operating income increased to GBP0.2 million (2020:
GBP49,000), principally reflecting increased COVID-19-related
furlough payments.
Loss before taxation was an 8% improvement on prior year at
GBP0.5 million (2020: GBP0.6 million).
Cash at hand on 30 June 2021 was GBP0.6 million (2020: GBP0.6
million).
New standby debt facility
There are preliminary but encouraging signs that based on, among
other things, a quarterly analysis of probe unit sales, the Group
is beginning to see an increase in activity from the low levels
seen at the beginning of the year.
The Board believes that activity levels should continue to rise
in the second half as elective surgery begins to increase around
the world. There are substantial backlogs in elective surgical
procedures in all the territories into which the group, directly or
indirectly, sells into. These backlogs represent a significant and
growing issue for governments and healthcare 'payers'.
The principal risk to the continuing increase in elective
surgical procedures currently appears to be the spread of the delta
variant of COVID-19, particularly among individuals who have not
been fully vaccinated. Some intensive care units in hospitals in
the southern states of the USA are reported to be full with
COVID-19 patients and as a result elective surgery has been
cancelled in these hospitals. There are also reports of COVID-19
patient hospitalisation levels starting to increase in certain
hospitals in the UK. As a result, the Board believes that there is
a significant degree of uncertainty as to the likely trajectory of
increases in elective surgery and hence associated uncertainty with
the likely increases in Group revenues.
Since the start of the pandemic, the Group has been managing its
cash resources extremely carefully. This has included reducing
working capital by reducing its stock levels and trade debtors.
Given the uncertainties relating to COVID-19 hospitalisation rates
it is not possible to predict how quickly or reliably levels of
elective surgery will climb and hence predict with a high degree of
certainty increased TrueVue probe revenues. Accordingly, the Board
has been considering carefully likely demands for cash mindful that
cash at hand was GBP0.6 million at the 30 June, 2021 and has
considered a number of funding options. The Board has entered into
an agreement with Imperialise Limited, a company controlled by
Nigel Keen for a GBP0.5 million standby loan facility (on arm's
length commercial terms) until 31 December, 2022 in the event that
the Group experiences increased demands for cash during this
period. The Company will only draw down on the facility if
necessary.
The interest rate on the facility is 8% per annum, and it is
unsecured. The facility is repayable in full on or before 31
December 2022.
Nigel Keen is a director of both Imperialise Limited and Deltex
Medical, and accordingly, this transaction constitutes a related
party transaction under Rule 13 of the AIM Rules for Companies. The
independent directors, being Andy Mears, Natalie Wettler, Julian
Cazalet, Mark Wippell, Christopher Jones and Tim Irish, having
consulted with the Company's nominated adviser, consider that the
terms of the transaction are fair and reasonable insofar as its
shareholders are concerned.
Commercial activities
Before the pandemic, 80% of the Group's probe sales were
associated with elective surgery. As a result, the Group's
probe-related revenues have been severely adversely affected by
COVID-19.
Deltex Medical sells directly into the UK and US healthcare
markets. In these markets it is seeing widely varying levels of
demand for its probes from existing customers. In most areas where
demand is lower, this appears to reflect the existence of COVID-19
'hot spots' which reduce the number of available critical care beds
and result in a reduction in elective surgical procedures. Even
when the number of COVID-19 patients reduces in a hospital's
critical care unit(s), it can take some time for elective surgery
levels to be increased substantially.
The Group has good data, particularly from the US, which show
that an experienced and successful clinical educator can drive
demand for its probes from existing customers. The converse is also
true: where Deltex Medical is unable to gain access for its
clinical educators to a customer, there is often a concomitant
reduction in probe demand. Accordingly, customer access remains a
key driver for the Group's commercial success. The Group is
continuing to experience differing levels of access for its
clinical educators and trainers, depending on each hospital's
policy in respect of visits by third party vendors.
Due to the public 'payer' status of the National Health Service,
the size of the backlog of elective surgical procedures in the UK
is extremely politically sensitive. Recent reports suggest that
there are some 5.5 to 6 million cases awaiting elective surgery.
The UK Government has recently announced tax increases to finance
substantially higher ongoing levels of funding for the NHS to
address this backlog. The allocation of this funding should be
positive for the Group's financial performance into 2022 and
beyond.
The Board has decided to keep sales and marketing spend in the
USA at a low level until it is clear that US hospitals are opening
up and prepared to accept clinical educators back onto their
premises. The Board believes that, on balance, the risk of higher
levels of US sales and marketing spend not generating a concomitant
increase in revenues represents a more substantial risk than
waiting for the US market to recover before increasing the Group's
investment in US sales and marketing expenditure.
The Group's international division has been the success story of
the first half, particularly in the second quarter. It has seen
significantly higher activity levels, with notably stronger levels
of demand from France. The Board believes that these higher levels
of demand will continue into the second half, and other
international territories should also start to experience increases
in demand as the levels of elective surgery climb around the world.
However, international territories which have seen very high levels
of COVID-19, such as Peru, continue to generate reduced demand for
Deltex Medical probes at the current time.
New product development
Deltex Medical's engineering teams have made good progress in
the first half on the design and development of the new monitor
which will significantly improve the functionality and usability of
the Group's probes and other non-invasive haemodynamic monitoring
technologies.
Unfortunately, the widely reported significant lengthening of
lead times for a number of key components manufactured overseas,
especially electronics, has adversely affected the timetable for
the product launch of the new monitor. Given this significant
uncertainty over component availability, the launch of the new
monitor has now been re-scheduled for the first half of 2022. This
component-related slippage means that it will no longer be possible
for the Group to generate revenues from the new monitor this
year.
Current trading and prospects
As expected, trading has been depressed during the first half
and during the summer months with COVID-19 restrictions in place in
many of our territories, particularly in the USA; however, trading
is beginning to improve, albeit from low levels. For example, for
the past four months we have seen month-on-month increases in probe
revenues. We also expect probe revenues to continue to improve
through to the end of the year.
Our production facility has been on part-time furlough for the
majority of the year; however, the production teams are now back
full time as demand for TrueVue Doppler probes increases. It is
encouraging to see our Chichester facility fully operational once
more.
Deltex Medical's probe sales are strongly correlated with
elective surgery levels around the world, and as the number of
elective surgical procedures continue to increase so there should
be a concomitant increase in probe sales. The two principal risks
relating to this increase in probe sales comprise: (i) any further,
substantial COVID-19 outbreaks which cause reductions in elective
surgery; and (ii) the lack of appropriate access for the Group's
clinical educators to its existing customer base.
Probe sales in the USA remain at reduced levels and there is
significant upside to Group revenues if we can successfully
increase activity levels in our US accounts as the pandemic abates
and elective surgery levels start to climb in US hospitals.
The lack of availability of the new monitor has constrained the
Group's ability to generate significant equipment-related revenues
this year which will have an adverse impact on expected revenues
this year.
Nigel Keen
Chairman
20 September 2021
Condensed Consolidated Statement of Comprehensive Income
For the period ended 30 June 2021
Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
---------------------------------------------- ----- ----------- ----------- -------------
Note GBP'000 GBP'000 GBP'000
Revenue 4 1,072 1,157 2,398
Cost of sales (381) (401) (757)
---------------------------------------------- ----- ----------- ----------- -------------
Gross profit 691 756 1,641
Administrative expenses (777) (578) (1,472)
Sales and distribution expenses (466) (550) (964)
Research and Development, Quality and
Regulatory (117) (186) (246)
Impairment reversal on trade receivables - - 11
Exceptional costs 16 - - (232)
---------------------------------------------- ----- ----------- ----------- -------------
Total costs (1,360) (1,314) (2,903)
---------------------------------------------- ----- ----------- -----------
Other operating income 193 49 469
---------------------------------------------- ----- ----------- -----------
Other gain 25 19 171
---------------------------------------------- ----- ----------- -----------
Operating loss (451) (490) (622)
---------------------------------------------- ----- ----------- ----------- -------------
Finance costs (80) (88) (172)
---------------------------------------------- ----- ----------- ----------- -------------
Loss before taxation (531) (578) (794)
Tax credit on loss 7 7 4 9
---------------------------------------------- ----- ----------- ----------- -------------
Loss for the period/year (524) (574) (785)
---------------------------------------------- ----- ----------- ----------- -------------
Other comprehensive income/(expense)
Items that may be reclassified to profit
or loss:
Net translation differences on overseas
subsidiaries 1 24 (6)
---------------------------------------------- ----- ----------- ----------- -------------
Other comprehensive income/(expense)
for the period/year, net of tax 1 24 (6)
---------------------------------------------- ----- ----------- ----------- -------------
Total comprehensive loss for the period/year (523) (550) (791)
---------------------------------------------- ----- ----------- ----------- -------------
Total comprehensive loss for the period/year
attributable to:
Owners of the Parent (524) (560) (804)
Non-controlling interests 1 10 13
---------------------------------------------- ----- ----------- ----------- -------------
(523) (550) (791)
---------------------------------------------- ----- ----------- ----------- -------------
Loss per share - basic and diluted 8 (0.09)p (0.11)p (0.15p)
---------------------------------------------- ----- ----------- ----------- -------------
Condensed Consolidated Balance Sheet
As at 30 June 2021
Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
Note
GBP'000 GBP'000 GBP'000
-------------------------------------- ------ --------- --------- ------------
Assets
Non-current assets
Property, plant and equipment 271 344 305
Intangible assets 2,756 2,696 2,554
Financial assets at amortised cost 157 159 153
-------------------------------------- ------ --------- --------- ------------
Total non-current assets 3,184 3,199 3,012
Current assets
Inventories 9 812 1,000 895
Trade and other receivables 392 655 576
Financial assets at amortised cost 15 214 15
Other current assets 103 114 122
Current income tax recoverable 94 103 61
Cash and cash equivalents 10 553 568 853
-------------------------------------- ------ --------- --------- ------------
Total current assets 1,969 2,654 2,522
-------------------------------------- ------ --------- --------- ------------
Total assets 5,153 5,853 5,534
Liabilities
Current liabilities
Borrowings 12 (163) (77) (159)
Trade and other payables 13 (1,527) (2,185) (1,416)
Total current liabilities (1,690) (2,262) (1,575)
-------------------------------------- ------ --------- --------- ------------
Non-current liabilities
Borrowings 12,14 (1,010) (1,092) (993)
Trade and other payables (252) (300) (274)
Provisions (51) (65) (51)
-------------------------------------- ------ --------- --------- ------------
Total non-current liabilities (1,313) (1,457) (1,318)
-------------------------------------- ------ --------- --------- ------------
Total liabilities (3,003) (3,719) (2,893)
-------------------------------------- ------ --------- --------- ------------
Net assets 2,150 2,134 2,641
-------------------------------------- ------ --------- --------- ------------
Equity
Share capital 15 5,773 5,249 5,773
Share premium 33,444 33,230 33,444
Capital redemption reserve 17,476 17,476 17,476
Other reserve 537 468 505
Translation reserve 136 165 135
Convertible loan note reserve 82 82 82
Accumulated losses (55,173) (54,407) (54,648)
-------------------------------------- ------ --------- --------- ------------
Equity attributable to owners of the
Parent 2,275 2,263 2,767
Non-controlling interests (125) (129) (126)
-------------------------------------- ------ --------- --------- ------------
Total equity 2,150 2,134 2,641
-------------------------------------- ------ --------- --------- ------------
Condensed Consolidated Statement of Changes in Equity for the
period ended 30 June 2021 (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 2021 5,773 33,444 17,476 505 82 135 (54,648) 2,767 (126) 2,641
Comprehensive
income
Loss for the
period - - - - - - (525) (525) 1 (524)
Other
comprehensive
income for the
period - - - - - 1 - 1 - 1
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Total
comprehensive
income for the
six-month
period - - - - - 1 (525) (524) 1 (523)
Transactions
with owners
of the Group
Equity-settled
share-based
payment - - - 32 - - - 32 - 32
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Balance at
30 June 2021 5,773 33,444 17,476 537 82 136 (55,173) 2,275 (125) 2,150
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Condensed Consolidated Statement of Changes in Equity for the
period ended 30 June 2020 (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 2020 5,249 33,230 17,476 439 82 141 (53,823) 2,794 (139) 2,655
Comprehensive
income
Loss for the
period - - - - - - (584) (584) 10 (574)
Other
comprehensive
income for the
period - - - - - 24 - 24 - 24
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Total
comprehensive
income for the
six-month
period - - - - - 24 (584) (560) 10 (550)
Transactions
with owners
of the Group
Equity-settled
share-based
payment - - - 29 - - - 29 - 29
Balance at
30 June 2020 5,249 33,230 17,476 468 82 165 (54,407) 2,263 (129) 2,134
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Condensed Consolidated Statement of Changes in Equity for the
year ended 31 December 2020 (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 2020 5,249 33,230 17,476 439 82 141 (53,823) 2,794 (139) 2,655
Comprehensive
income
Loss for the
period - - - - - - (798) (798) 13 (785)
Other
comprehensive
income for the
period - - - - - (6) - (6) - (6)
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Total
comprehensive
income for
year - - - - - (6) (798) (804) 13 (791)
Transactions
with owners
of the Group
Shares issued
during the
year 524 217 - - - - - 741 - 741
Issue expenses - (3) - - - - - (3) - (3)
Equity-settled
share-based
payment - - - 39 - - - 39 - 39
Transfers - - - 27 - - 27 - - -
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Balance at
31 December
2020 5,773 33,444 17,476 505 82 135 (54,648) 2,767 (126) 2,641
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Condensed Consolidated Statement of Cash Flows
For the period ended 30 June 2021
Unaudited Audited
Six months Six months Year
ended ended ended 31
30 June 30 June December
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------------------------------- ----------- ----------- ----------
Cash flows from operating activities
Loss before taxation (531) (578) (794)
Adjustments for:
Net finance costs 80 88 172
Depreciation of property, plant and
equipment 35 97 103
Profit on disposal of loan monitors - (35) -
Amortisation of intangible assets 26 40 40
Write off of research and development
projects not taken forwards - - 222
Modification gain on convertible loan
note - - (119)
Share-based payment expense 32 29 39
Other tax income (25) - (52)
Effect of exchange rate fluctuations 1 (1) (6)
-------------------------------------------- ----------- ----------- ----------
(382) (360) (395)
(Increase)/decrease in inventories 83 (85) 13
Decrease in trade and other receivables 199 383 680
Increase/(decrease) in trade and other
payables 109 (16) (303)
Increase in provisions - 3 (11)
Net cash from/(used in) operations 9 (75) (16)
Interest paid (63) (67) (132)
Income taxes received - - 80
-------------------------------------------- ----------- ----------- ----------
Net cash generated from/(used in)
operating activities (54) (142) (68)
Cash flows from investing activities
Purchase of property, plant and equipment (1) (10) (6)
Capitalised development expenditure (228) (85) (165)
Net cash used in investing activities (229) (95) (171)
Cash flows from financing activities
Issue of ordinary share capital - - 253
Expenses in connection with share
issue - - (3)
Net movement in invoice discounting
facility 4 (111) (23)
Principal lease payments (20) (17) (37)
-------------------------------------------- ----------- ----------- ----------
Net cash (used in)/generated from
financing activities (16) (128) 190
-------------------------------------------- ----------- ----------- ----------
Net increase in cash and cash equivalents (299) (365) (49)
Cash and cash equivalents at beginning
of the period 853 908 908
Exchange (loss)/gain on cash and cash
equivalents (1) 25 (6)
-------------------------------------------- ----------- ----------- ----------
Cash and cash equivalents at the end
of the period/year 553 568 853
-------------------------------------------- ----------- ----------- ----------
Notes to the condensed consolidated interim financial
statements
1. Reporting Entity
Deltex Medical Group plc is a company that is domiciled in the
United Kingdom. It is incorporated in England and Wales (Company
Number 03902895) and its registered office is at Terminus Road,
Chichester, PO19 8TX, United Kingdom. These condensed consolidated
interim financial statements (Interim Financial Statements) as at
and for the period ended 30 June 2021 comprise the Company and its
subsidiaries (together referred to as 'the Group'). The Group is
principally involved with the manufacture and sale of advanced
haemodynamic monitoring technologies.
2. Basis of accounting
These interim financial statements have been prepared in
accordance with IAS 34, 'Interim Financial Reporting', and should
be read in conjunction with the Group's last annual consolidated
financial statements as at and for the year ended 31 December 2020
(Annual Report & Accounts 2020). They do not include all 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.
These condensed consolidated 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 2020 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 2020 was unqualified, however, it did draw
attention to the impact of COVID-19 on the Group by way of
emphasis, but the opinion was not modified, and did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006.
These condensed consolidated 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
2020 and are expected to be applied in the preparation of the
financial statements for the year ending 31 December 2021. The
Group has not early adopted any other standard, interpretation or
amendment that has been issued but is not yet effective.
These condensed consolidated interim financial statements were
approved by the Board of Directors and approved for issue on 20
September 2021.
3. Use of judgements and estimates
In preparing these interim financial statements, management has
made judgements and estimates that affect the application of
accounting policies and the reported amounts of assets and
liabilities, income and expense. 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 2020.
4. Revenue
The Group's revenue disaggregated by primary geographical
markets is as follows:
For the six months ended 30 June 2021 (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 268 15 28 - - - 311
USA 302 36 24 - - - 362
France - - - 181 20 4 205
Scandinavia - - - 63 - 1 64
South Korea - - - 67 - - 67
Other countries 7 - - 35 21 - 63
----------------- -------- --------- -------- -------- --------- --------- --------
577 51 52 346 41 5 1,072
----------------- -------- --------- -------- -------- --------- --------- --------
For the six months ended 30 June 2020 (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 377 16 31 - - - 424
USA 477 16 12 - - - 505
France - - - - - 7 7
Scandinavia - - - 41 - - 41
South Korea - - - 53 - 1 54
Other countries - - - 96 28 2 126
----------------- -------- --------- -------- -------- --------- --------- --------
854 32 43 190 28 10 1,157
----------------- -------- --------- -------- -------- --------- --------- --------
For the year ended 31 December 2020 (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 652 102 83 - - - 837
USA 858 16 26 - - - 900
France - - - 170 - 10 180
Scandinavia - - - 95 - 2 97
South Korea - - - 159 - 1 160
Portugal - - - 86 - - 86
Other countries 15 32 - 78 11 2 138
----------------- -------- --------- -------- -------- --------- --------- --------
1,525 150 109 588 11 15 2,398
----------------- -------- --------- -------- -------- --------- --------- --------
The Group's revenue disaggregated between the sale of goods and
the provision of services is set out below. All revenues are
recognised at a point in time.
Period ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------------------- ------------------- ------------------- -----------------------
Sale of goods 1,056 1,138 2,338
Maintenance income 16 19 60
1,072 1,157 2,398
------------------------------- ------------------- ------------------- -----------------------
The following table provides information about trade receivables
and contract liabilities from contracts with customers. There were
no contract assets at either 30 June 2021 or 1 January 2021.
30 June 1 January
2021 2021
GBP'000 GBP'000
------------------------------------------------------------ ------------------- ---------------------
Trade receivables which are in 'Trade and other
receivables' 355 576
Contract liabilities (77) (58)
------------------------------------------------------------ ------------------- ---------------------
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 2021:
2021 2022 2023 2024 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Revenue
expected
to be
recognised 45 25 4 3 77
----------------------- ------------------- ------------------- ------------------- ------------------- -------------------
5. Segment results
Performance and the allocation of resources are made on the
basis of results derived from the sale of probes and monitors for
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 segment results for the six months ended 30 June
2021 were:
Probes(1) Monitors Other Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ----------- ---------- -------- ------------- --------
Revenues 923 92 57 - 1,072
------------------------- ----------- ---------- -------- ------------- --------
Adjusted gross profit(2
3) 701 74 26 - 801
------------------------- ----------- ---------- -------- ------------- --------
Sales and marketing
costs(3) - - - - (399)
Administration costs(3) - - - - (572)
R&D costs(3) - - - - (3)
Quality and regulation
costs(3) - - - - (69)
------------------------- ----------- ---------- -------- ------------- --------
Adjusted EBITDA - - - - (242)
------------------------- ----------- ---------- -------- ------------- --------
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
3. Other operating income is allocated within the corresponding expense categories
The unaudited segment results for the six months ended 30 June
2020 were:
Probes(1) Monitors Other Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ----------- ---------- -------- ------------- --------
Revenues 1,044 60 53 - 1,157
------------------------- ----------- ---------- -------- ------------- --------
Adjusted gross profit(2
3) 726 68 41 - 835
------------------------- ----------- ---------- -------- ------------- --------
Sales and marketing
costs(3) - - - - (519)
Administration costs(3) - - - - (423)
R&D costs(3) - - - - (53)
Quality and regulation
costs(3) - - - - (81)
------------------------- ----------- ---------- -------- ------------- --------
Adjusted EBITDA - - - - (241)
------------------------- ----------- ---------- -------- ------------- --------
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
3. Other operating income is allocated within the corresponding expense categories
The audited segment results for the year ended 31 December 2020
were:
Probes(1) Monitors Other Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ----------- ---------- -------- ------------- --------
Revenues 2,113 161 124 - 2,398
------------------------- ----------- ---------- -------- ------------- --------
Adjusted gross profit(2
3) 1,585 136 106 - 1,827
------------------------- ----------- ---------- -------- ------------- --------
Sales and marketing
costs(3) - - - (942) (942)
Administration costs(3) - - - (903) (903)
R&D costs(3) - - - (23) (23)
Quality and regulation
costs(3) - - - (167) (167)
------------------------- ----------- ---------- -------- ------------- --------
Adjusted EBITDA - - - - (208)
------------------------- ----------- ---------- -------- ------------- --------
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
3. Other operating income is allocated within the corresponding expense categories
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
2021 2020 2020
GBP'000 GBP'000 GBP'000
----------------------------------------------- --------- --------- ------------
Adjusted EBITDA (242) (241) (208)
Non-cash items:
Depreciation of property, plant and equipment (35) (61) (103)
Amortisation of development costs (26) (40) (40)
Write off of research and development
projects not taken forwards - - (222)
Non-executive directors' fees and employer's
social security costs (68) (72) (172)
Share-based payment expense (32) (29) (39)
Change in accumulated absence cost liability (73) (66) 1
Bonus accrual releases - - (10)
Gain on convertible loan note - - 119
Cash item: Other tax income 25 19 52
----------------------------------------------- --------- --------- ------------
(209) (249) (414)
----------------------------------------------- --------- --------- ------------
Operating loss (451) (490) (622)
Finance costs (80) (88) (172)
----------------------------------------------- --------- --------- ------------
Loss before tax (531) (578) (794)
Tax credit on loss 7 4 9
----------------------------------------------- --------- --------- ------------
Loss for the period/year (524) (574) (785)
----------------------------------------------- --------- --------- ------------
6. Dividends
The Directors cannot recommend the payment of a dividend (2020:
nil) for 2021.
7. Tax credit on loss
Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
--------------------------------------------------- ------------------- ------------------- -----------------------
Research and development tax credit (7) (4) (9)
Adjustment in respect of prior periods - - -
--------------------------------------------------- ------------------- ------------------- -----------------------
Total tax credit on loss (7) (4) (9)
--------------------------------------------------- ------------------- ------------------- -----------------------
The other gain amount for six months to 30 June 2021 of
GBP25,000 (six months to 30 June 2020: GBP19,000) 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 2021 is
based on the loss after tax attributable to owners of the parent of
GBP525,000 and the weighted average number of shares in issue of
577,290,545.
The loss per share calculation for six months to 30 June 2020 is
based on the loss after tax attributable to owners of the parent of
GBP584,000 and the weighted average number of shares in issue of
524,868,826.
The loss per share calculation for the year ended 31 December
2020 is based on the loss after tax attributable to owners of the
parent of GBP798,000 and the weighted average number of shares in
issue of 526,448,659. While the Company is loss-making, the diluted
loss per share and the loss per share are the same.
9. Inventories
Inventories at 30 June 2021 include the following finished
Goods: 12,887 probes and 217 monitors.
10. Cash at bank
Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------------- ------------------- ------------------- -----------------------
Cash at bank 553 568 853
------------------------- ------------------- ------------------- -----------------------
11. Net cash
Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------------------------------- ------------------- ------------------- -------------------------
Cash at bank 553 568 853
Less Invoice discount facility (163) (77) (159)
------------------------------------------- ------------------- ------------------- -------------------------
390 491 694
------------------------------------------- ------------------- ------------------- -------------------------
12. Borrowings
Unaudited Audited
30 June 2021 30 June 2020 31 December 2020
Current Non-current Current Non-current Current Non-current
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------------------- ----------------------- ------------------- ----------------------- ------------------- -----------------------
Invoice
discount
facility 163 - 77 - 159 -
Convertible
loan
notes - 1,010 - 1,092 - 993
------------------------ ------------------- ----------------------- ------------------- ----------------------- ------------------- -----------------------
163 1,010 77 1,092 159 993
------------------------ ------------------- ----------------------- ------------------- ----------------------- ------------------- -----------------------
13. Trade and other payables
Unaudited Audited
30 June 2021 30 June 2020 31 December 2020
Current Non-current Current Non-current Current Non-current
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------------------- ----------------------- ------------------- ----------------------- ------------------- -----------------------
Trade
payables 223 - 445 - 201 -
Other
payables 315 - 348 - 249 -
Social
security
and other
taxes 139 - 175 - 141 -
Lease
obligations 43 252 35 300 41 274
Contract
liabilities 77 - 72 - 58 -
Employee
short-term
liabilities 103 - 98 - 30 -
Accrued
expenses 627 - 1,012 - 696 -
------------------------ ------------------- ----------------------- ------------------- ----------------------- ------------------- -----------------------
1,527 252 2,185 300 1,416 274
------------------------ ------------------- ----------------------- ------------------- ----------------------- ------------------- -----------------------
14. 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 2021 993 82 1,075
Interest expense 61 - 61
Interest paid (44) - (44)
---------------------------------------------- ---------------------- ---------------------- -------------------
Carrying amount at 30 June 2021 1,010 82 1,092
---------------------------------------------- ---------------------- ---------------------- -------------------
The convertible loan note falls due for repayment in February
2024. The convertible loan note is, at the option of the loan note
holder, convertible at anytime into new ordinary shares of 1 penny
each at a conversion price of 4 pence per share.
15. Share capital
During the six months ended 30 June 2021, there were no share
issues or exercises of shares.
16. Exceptional items
Exceptional items comprised:
Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
--------------------------------------- --------------------- --------------------- -----------------------
Net bonus accrual and staff advances
movement - - 10
Write off of research and development
obsolete projects - - 222
---------------------------------------- --------------------- -------------------- -------------------------
- - 232
---------------------------------------- --------------------- -------------------- -------------------------
17. 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.
18. Foreign exchange rates
The following are the principal foreign exchange rates used in
the preparation of the condensed consolidated interim financial
statements:
Unaudited Audited
30 June 2021 30 June 2020 31 December 2020
Average Closing Average Closing Average Closing
rate rate rate rate rate rate
------------------------------ ------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Sterling/US dollar 1.39 1.38 1.27 1.24 1.29 1.37
Sterling/Euro 1.15 1.17 1.15 1.10 1.13 1.12
Sterling/Canadian
dollar 1.73 1.71 1.72 1.68 1.73 1.74
------------------------------ ------------------- ------------------- ------------------- ------------------- ------------------- -------------------
19. 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
Company'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
20. 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 EAANNFSFFEFA
(END) Dow Jones Newswires
September 20, 2021 02:00 ET (06:00 GMT)
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