TIDMDEMG
RNS Number : 5050Z
Deltex Medical Group PLC
21 September 2020
21 September 2020
Deltex Medical Group plc ("Deltex Medical" or the "Group")
Interim results to 30 June, 2020
Deltex Medical Group plc (AIM: DEMG), the global leader in
oesophageal Doppler monitoring, today announces its unaudited
interim results to 30 June 2020.
HIGHLIGHTS
COVID-19
-- Deltex Medical's TrueVue system is primarily used by
clinicians to guide clinical practice during elective surgery;
however, elective surgery in our key markets was effectively halted
by the COVID-19 ("CV-19") pandemic earlier this year
-- in the UK, TrueVue Doppler is also used in intensive care
units ("ICUs") for very sick patients. Use of TrueVue Doppler
increased at the height of the pandemic during March and April, but
dropped back sharply as admission to ICUs for CV-19 patients
reduced
-- there are preliminary signs that elective surgery is now
beginning to increase as pressure to reduce waiting lists starts to
grow, particularly overseas
Financial
-- revenues: GBP1.2 million (2019: GBP2.0 million)
-- 33% reduction in like-for-like revenues: GBP1.2 million
(2019: GBP1.8 million)
-- 25% reduction in overhead costs to GBP1.3 million (2019:
GBP1.7 million)
-- adjusted EBITDA: GBP(0.2) million (2019: GBP0.2 million)
-- loss for the period: GBP(0.6) million (2019: GBP(0.3)
million)
-- cash at hand - 30 June 2020: GBP0.6 million (30 June 2019:
GBP0.6 million)
Business
-- the reduction in revenues linked to the cessation of elective
surgical procedures in our key markets has been partially offset by
the treatment of CV-19 patients in ICUs
-- careful stewardship of cash resources, including use of
Government furlough scheme and successful application to the US
Government's Paycheck Protection Program
-- good progress being made on new product development,
including securing further grant funding
-- focus now on positioning the business for progress in
2021
Nigel Keen, Chairman of Deltex Medical, said:
"The first half was challenging, but our much lower cost base
and careful stewardship of cash means that the business is well
placed for future opportunities."
"Although it was pleasing to see the Group's TrueVue Doppler
being used to treat a number of acutely sick COVID-19 NHS patients
in March and April, the decline in elective surgery in our key
markets adversely affected the business significantly."
"We are confident that as the number of elective surgical
procedures starts to climb, in part due to increasing pressure to
reduce waiting lists, so the financial performance of the Group
will improve."
For further information, please contact:
Deltex Medical Group plc 01243 774 837
Nigel Keen, Chairman investorinfo@Deltexmedical.com
Andy Mears, Chief Executive
David Moorhouse, Group Finance Director
Arden Partners plc 020 7614 5900
Ciaran Walsh info@arden-partners.com
Dan Gee-Summons
Joint Broker
Turner Pope Investments (TPI) Ltd 0203 657 0050
Andy Thacker info@turnerpope.com
Zoe Alexander
This announcement contains Inside Information as defined under
the Market Abuse Regulation (EU) No. 596/2014.
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 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.
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 presented, as enhanced
haemodynamic management is adopted into routine clinical practice
around the world. The Group aims to provide clinicians with a
single platform - a 'haemodynamic workstation' - 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
The adverse impact of COVID-19 ("CV-19") on the business is
reflected in the results of the first half.
The Group saw significantly increased sales into UK intensive
care units ("ICUs") in March and April, as intensivists started to
use Deltex Medical's equipment to improve the treatment of CV-19
patients, particularly to help avoid acute kidney injuries. In 2019
we negotiated the termination of a third-party distribution
agreement, which included revenues of GBP0.2 million in the first
half of 2019, accordingly the like-for-like H1 2019 revenues were
GBP1.8 million, meaning that the H1 2020 revenues of GBP1.2 million
declined by 33% on a like-for-like basis. On a statutory basis the
loss of revenues from elective surgical procedures in the first
half resulted in total Group revenues declining by 42% to GBP1.2
million (2019: GBP2.0 million).
When the scale of the impact of the CV-19 pandemic became clear,
especially the adverse impact globally on elective surgery volumes,
management took rapid and robust action. This included aggressively
cutting discretionary expenditure from March and furloughing the
majority of the Group's UK employees from May. These proactive
steps resulted in a 25% reduction in costs in the first half to
GBP1.3 million (2019: GBP1.7 million).
Adjusted EBITDA for the period was a loss of GBP0.2 million
(2019: positive GBP0.2 million).
During the period the Group was awarded an Innovation Continuity
Grant by Innovate UK worth approximately GBP0.2 million to help the
funding of its new product development programme which last year
received an Innovate UK Smart award. The cash associated with this
grant was received in July 2020. Deltex Medical continues to work
closely with Innovate UK to explore additional funding sources for
its new product development programme.
The Group also successfully applied for a cash grant of US$0.2
million under the US Government's Paycheck Protection Program,
which was received in July 2020.
There continues to be careful stewardship of the Group's cash
resources with cash at hand at 30 June, 2020 of GBP0.6 million
(2019: GBP0.6 million).
Commercial activities
Deltex Medical's TrueVue Doppler haemodynamic monitoring
technology was originally developed for use in ICUs where it
provides extremely accurate data to help guide therapy for very
sick patients whose haemodynamic status is changing rapidly. More
recently, other technologies have entered the market to provide
more indicative data on the haemodynamic status of ICU patients who
are relatively stable.
For patients in the Operating theatre ("OR"), whose haemodynamic
status is intrinsically unstable, the Group's TrueVue Doppler
technology has become the standard of care supported by a
significant number of positive clinical trial results published in
scientific journals. Since the use of TrueVue Doppler in the OR is
a higher margin business than its use in the ICU, and the OR also
typically represents a larger addressable market, Deltex Medical
has focussed its sales and marketing activities on promoting the
use of its TrueVue Doppler technology in the OR setting.
When the CV-19 pandemic struck, clinicians saw that patients
admitted into ICU were often critically haemodynamically unstable.
This prompted intensivists who were familiar with the benefits of
Deltex Medical's technology to start to use the TrueVue Doppler
system to treat this cohort of very sick ICU patients. Accordingly,
in March and April we saw usage rates significantly increase in UK
ICUs.
In parallel, we saw elective surgery being stopped by healthcare
systems in our key markets as hospitals focused on treating the
large numbers of extremely sick CV-19 patients being admitted into
ICUs. This decline in elective surgical procedures resulted in a
very significant reduction in orders for TrueVue Doppler probes
from the Group's established customer base.
Since May, as lockdown brought the pandemic under control, the
number of CV-19 patients in UK and US ICUs has reduced
substantially, with many ICUs being nearly completely empty.
Elective surgical procedures are, however, only just beginning to
restart and often initially at a much lower level, as hospitals
reshape their services to be able to withstand the possibility of a
second wave of CV-19 patients whilst at the same time putting in
place measures which will allow an increase in normal clinical
interventions.
Deltex Medical has seen increased activity levels from our key
markets since August. For example:
-- in the United States, our direct sales team is beginning to
see the number of elective surgical procedures in US hospitals
increasing. It is too early to be able to assess how quickly it
will take our US hospital customers to get back to full capacity,
although we believe that the USA is currently moving faster than
the UK, notwithstanding the continuing relatively high CV-19
transmission rates;
-- in the UK, there are signs that elective surgery is beginning
to restart following the end of the summer holiday period. There is
also significant pressure from both patients and clinicians to
reduce the substantial waiting lists which developed during
lockdown for both NHS and private patients. There is a clear
recognition that it is better clinically, and less expensive, to
treat patients via elective surgical procedures as opposed to
waiting for patients' underlying health issues to deteriorate and
require emergency interventions. We have seen a UK hospital place
an order for 10 new TrueVue Monitors for its ORs following intense
use of the TrueVue Doppler technology in its ICUs during the peak
of the CV-19 pandemic. It is currently too early to estimate how
quickly elective procedures will return to normal, pre-pandemic
levels in NHS and private hospitals in the UK; and
-- through our international network of distributors, we are
seeing signs of orders returning to more normal levels of demand.
For example, in France, Deltex Medical's distributor ordered probes
in August for the first time this year and we have also seen orders
from Korea as well as some smaller European customers.
New product development
Deltex Medical's new product development programme, including
the development of the new Monitor, has continued despite the
disruption caused by engineers working from home. Good progress has
been made, including securing further grant funding for elements of
this development work.
Brexit
The Group has a number of contingency plans already in place
which can be quickly implemented to respond to the different
possible outcomes associated with Brexit and the EU-UK Withdrawal
Agreement negotiations.
Current trading and prospects
Deltex Medical's core haemodynamic monitoring business remains
focused on elective surgery. As elective surgery numbers increase
worldwide, so the Group's financial performance will improve. In
the meantime, we believe that the Group will continue to trade at a
reduced level of activity in comparison to pre-CV-19 levels, but
that this level of activity is sustainable and is expected to be
broadly cash neutral.
Although the second half is expected to be an improvement on the
first half of 2020, the ongoing elective surgery delays will result
in revenues being materially behind market expectations. The Group
does have some significant live tenders with potential
international buyers. However, the Board has taken a prudent
approach with guidance due to the limited visibility on these large
potential orders. We expect revenue levels in 2021 to recover to
previous levels seen in 2019.
On the back of the CV-19 ICU experience, the Group is now
working with key opinion leaders in the UK and the United States to
develop data to show how the protocolized use of TrueVue Doppler on
severely sick CV-19 patients can significantly improve patient
outcomes.
Since the beginning of September, a number of Deltex Medical
employees have been taken off furlough to return to work on a
part-time basis in order to help the Group satisfy increasing
demand for its TrueVue Doppler probes.
Deltex Medical's focus for the rest of this year will be to
ensure that the business is optimally positioned for 2021,
including maximising cash generation and, assisted by the Innovate
Smart award, continuing with its programme of new product
development.
Nigel Keen
Chairman
21 September, 2020
Condensed Consolidated Statement of Comprehensive Income
for the period ended 30 June 2020
Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
---------------------------------------------- ----- ----------- ----------- -------------
Note GBP'000 GBP'000 GBP'000
Revenue 4 1,157 1,993 4,256
Cost of sales (364) (487) (974)
---------------------------------------------- ----- ----------- ----------- -------------
Gross profit 793 1,506 3,282
Administrative expenses (575) (853) (1,515)
Sales and distribution expenses (542) (624) (1,220)
Research and Development, Quality and
Regulatory (185) (250) (446)
Impairment loss on trade receivables - - (11)
Exceptional costs 16 - - (137)
---------------------------------------------- ----- ----------- ----------- -------------
Total costs (1,302) (1,727) (3,329)
---------------------------------------------- ----- ----------- -----------
Operating profit / (loss) before exceptional
costs and other gain (509) (221) 90
Exceptional costs 16 - - (137)
---------------------------------------------- ----- ----------- ----------- -------------
Other gain 7 19 - 13
Operating loss (490) (221) (34)
Finance costs (88) (86) (176)
---------------------------------------------- ----- ----------- ----------- -------------
Loss before taxation (578) (307) (210)
Tax credit on loss 7 4 38 51
---------------------------------------------- ----- ----------- ----------- -------------
Loss for the period/year (574) (269) (159)
---------------------------------------------- ----- ----------- ----------- -------------
Other comprehensive (expense)/income
Items that may be reclassified to profit
or loss:
Net translation differences on overseas
subsidiaries 24 1 (8)
---------------------------------------------- ----- ----------- ----------- -------------
Other comprehensive (expense)/income
for the period/year, net of tax 24 1 (8)
---------------------------------------------- ----- ----------- ----------- -------------
Total comprehensive loss for the period/year (550) (268) (167)
---------------------------------------------- ----- ----------- ----------- -------------
Total comprehensive loss for the period/year
attributable to:
Owners of the Parent (560) (269) (169)
Non-controlling interests 10 1 2
---------------------------------------------- ----- ----------- ----------- -------------
(550) (268) (167)
---------------------------------------------- ----- ----------- ----------- -------------
Loss per share - basic and diluted 8 (0.11)p (0.05)p (0.03p)
---------------------------------------------- ----- ----------- ----------- -------------
Condensed Consolidated Balance Sheet
Unaudited Audited
30 June 30 June 31 December
2020 2019(1) 2019
Note
GBP'000 GBP'000 GBP'000
-------------------------------------- ------ --------- --------- ------------
Assets
Non-current assets
Property, plant and equipment 344 403 395
Intangible assets 2,696 2,595 2,651
Financial assets at amortised cost 159 161 157
-------------------------------------- ------ --------- --------- ------------
Total non-current assets 3,199 3,159 3,203
Current assets
Inventories 9 1,000 946 915
Trade and other receivables 655 1,051 1,062
Financial assets at amortised cost 214 214 214
Other current assets 114 104 113
Current income tax recoverable 103 100 80
Cash and cash equivalents 10 568 595 908
-------------------------------------- ------ --------- --------- ------------
Total current assets 2,654 3,010 3,292
-------------------------------------- ------ --------- --------- ------------
Total assets 5,853 6,169 6,495
Liabilities
Current liabilities
Borrowings 12 (77) (267) (188)
Trade and other payables 13 (2,185) (2,026) (2,198)
Total current liabilities (2,262) (2,293) (2,386)
-------------------------------------- ------ --------- --------- ------------
Non-current liabilities
Borrowings 12,14 (1,092) (1,052) (1,072)
Trade and other payables (300) (334) (320)
Provisions (65) (56) (62)
-------------------------------------- ------ --------- --------- ------------
Total non-current liabilities (1,457) (1,442) (1,454)
-------------------------------------- ------ --------- --------- ------------
Total liabilities (3,719) (3,735) (3,840)
-------------------------------------- ------ --------- --------- ------------
Net assets 2,134 2,434 2,655
-------------------------------------- ------ --------- --------- ------------
Equity
Share capital 15 5,249 5,123 5,249
Share premium 33,230 33,230 33,230
Capital redemption reserve 17,476 17,476 17,476
Other reserve 468 1,076 439
Translation reserve 165 150 141
Convertible loan note reserve 82 82 82
Accumulated losses (54,407) (54,563) (53,823)
-------------------------------------- ------ --------- --------- ------------
Equity attributable to owners of the
Parent 2,263 2,574 2,794
Non-controlling interests (129) (140) (139)
-------------------------------------- ------ --------- --------- ------------
Total equity 2,134 2,434 2,655
-------------------------------------- ------ --------- --------- ------------
1. Certain comparatives have been restated to be consistent with
the presentation used in the 2019 Annual Report & Accounts
(Note 17).
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 company
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
period ended 30 June 2019 (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 2019,
as restated 4,927 33,230 17,476 953 82 149 (54,293) 2,524 (141) 2,383
Comprehensive
income
Loss for the
period - - - - - - (270) (270) 1 (269)
Other
comprehensive
income for the
period - - - - - 1 - 1 - 1
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Total
comprehensive
income for the
six-month
period - - - - - 1 (270) (269) 1 (268)
Transactions
with owners
of the company
Equity-settled
share-based
payment - - - 123 - - - 123 - 123
Share options
exercised 196 - - - - - - 196 - 196
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Balance at
30 June 2019 5,123 33,230 17,476 1,076 82 150 (54,563) 2,574 (140) 2,434
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Condensed Consolidated Statement of Changes in Equity for the
year ended 31 December 2019 (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 2019,
as restated 4,927 33,230 17,476 953 82 149 (54,293) 2,524 (141) 2,383
Comprehensive
income
Loss for the
period - - - - - - (161) (161) 2 (159)
Other
comprehensive
income for the
period - - - - - (8) - (8) - (8)
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Total
comprehensive
income for
year - - - - - (8) (161) (169) 2 (167)
Transactions
with owners
of the Group
Equity-settled
share-based
payment - - - 117 - - - 117 - 117
Transfers - - - (631) - - 631 - - -
Share options
exercised 322 - - - - - - 322 - 322
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Balance at
31 December
2019 5,249 33,230 17,476 439 82 141 (53,823) 2,794 (139) 2,655
---------------- -------- -------- ----------- -------- ------------ ------------ ------------ -------- ---------------- --------
Condensed Consolidated Statement of Cash Flows
for the period ended 30 June 2020
Unaudited Audited
Six months Six months Year
ended ended ended 31
30 June 30 June December
2020 2019 2019
GBP'000 GBP'000 GBP'000
---------------------------------------------- ----------- ----------- ----------
Cash flows from operating activities
Loss before taxation (578) (307) (210)
Adjustments for:
Net finance costs 88 86 176
Depreciation of property, plant and
equipment 97 100 149
Profit on disposal of loan monitors (35) (2) (36)
Amortisation of intangible assets 40 71 84
Share-based payment expense 29 123 117
Effect of exchange rate fluctuations (1) 2 (2)
----------------------------------------------- ----------- ----------- ----------
(360) 73 278
(Increase)/decrease in inventories (85) (257) (235)
Decrease in trade and other receivables 383 479 427
Increase/(decrease) in trade and other
payables (16) 27 212
Increase in provisions 3 - 6
Net cash from/(used in) operations (75) 322 688
Interest paid (67) (69) (139)
Income taxes received - 11 60
----------------------------------------------- ----------- ----------- ----------
Net cash generated from/(used in)
operating activities (142) 264 609
Cash flows from investing activities
Purchase of property, plant and equipment (10) (12) (10)
Proceeds from the sale of loan monitors - 6 59
Capitalised development expenditure (85) (138) (250)
Net cash used in investing activities (95) (144) (201)
Cash flows from financing activities
Issue of ordinary share capital - 196 322
Outflow from decrease in invoice discounting
facility (111) (281) (356)
Repayment of obligations under finance
leases (17) (16) (33)
----------------------------------------------- ----------- ----------- ----------
Net cash (used in)/generated from
financing activities (128) (101) (67)
----------------------------------------------- ----------- ----------- ----------
Net increase in cash and cash equivalents (365) 19 341
Cash and cash equivalents at beginning
of the period 908 580 580
Exchange (loss)/gain on cash and cash
equivalents 25 (4) (13)
----------------------------------------------- ----------- ----------- ----------
Cash and cash equivalents at the end
of the period/year 568 595 908
----------------------------------------------- ----------- ----------- ----------
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 2020 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 2019
(Annual Report & Accounts 2019). 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 2019 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 2019 was unqualified, did not draw attention to
any matters by way of emphasis, 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
2019 and are expected to be applied in the preparation of the
financial statements for the year ending 31 December 2020. 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 21
September 2020.
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 2019.
4. Revenue
The Group's revenue disaggregated by primary geographical
markets is as follows:
For the six months ended 30 June 2020 (Unaudited)
Direct markets Indirect markets
Probes Monitors Third Party Other Probes Monitors Other Total
GBP'000 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
Peru - - - - - - - -
Other countries - - - - 96 28 2 126
----------------- -------- --------- ------------ -------- -------- --------- -------- --------
854 32 - 43 190 28 10 1,157
----------------- -------- --------- ------------ -------- -------- --------- -------- --------
For the six months ended 30 June 2019 (Unaudited)
Direct markets Indirect markets
Probes Monitors Third Party Other Probes Monitors Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- --------- ------------ -------- -------- --------- -------- --------
UK 441 19 178 44 - - - 682
USA 719 - - 2 - - - 721
France - - - - 250 - 4 254
Scandinavia - - - - 42 - 1 43
South Korea - - - - 139 - 2 141
Peru - - - - - - - -
Other countries 16 - - - 102 27 7 152
----------------- -------- --------- ------------ -------- -------- --------- -------- --------
1,176 19 178 46 533 27 14 1,993
----------------- -------- --------- ------------ -------- -------- --------- -------- --------
For the year ended 31 December 2019 (Audited)
Direct markets Indirect markets
Probes Monitors Third Party Other Probes Monitors Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- --------- ------------ -------- -------- --------- -------- --------
UK 902 49 293 107 - - - 1,351
USA 1,443 45 - 42 - - - 1,530
France - - - - 289 9 6 304
Scandinavia - - - - 83 - 1 84
South Korea - - - - 277 10 3 290
Peru - - - - 258 - 3 261
Other countries 29 - - - 251 148 8 436
----------------- -------- --------- ------------ -------- -------- --------- -------- --------
2,374 94 293 149 1,158 167 21 4,256
----------------- -------- --------- ------------ -------- -------- --------- -------- --------
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
2020 2019 2019
GBP'000 GBP'000 GBP'000
------------------------------- ------------------- ------------------- -----------------------
Sale of goods 1,138 1,961 4,176
Maintenance income 19 32 80
1,157 1,993 4,256
------------------------------- ------------------- ------------------- -----------------------
The following table provides information about trade receivables
and contract liabilities from contracts with customers. There were
no contract assets at either 30 June 2020 or 1 January 2020.
30 June 1 January
2020 2020
GBP'000 GBP'000
------------------------------------------------------------ ------------------- ---------------------
Trade receivables which are in 'Trade and other
receivables' 437 1,062
Contract liabilities (72) (53)
------------------------------------------------------------ ------------------- ---------------------
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 2020:
2020 2021 2022 2023 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Revenue
expected
to be
recognised 33 33 1 5 72
----------------------- ------------------- ------------------- ------------------- ------------------- -------------------
5. Segment results
Performance is monitored, and the allocation of resources is
made, on the basis of results derived from the sale of probes,
monitors and third-party products 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 (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
2020 were:
Third
Probes(1) Monitors party Other Unallocated Total
products
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ----------- ---------- ---------- -------- ------------- --------
Revenues 1,044 60 - 53 - 1,157
-------------------------- ----------- ---------- ---------- -------- ------------- --------
Adjusted gross profit(2) 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(4) - - - - - (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. Excluding non-cash costs namely depreciation, amortisation,
share-based payment expense, non-executive directors' fees and
accumulated absence costs
4. Earnings before interest, tax, depreciation and amortisation,
share-based payment expense and non-executive directors' fees
The unaudited segment results for the six months ended 30 June
2019 were:
Third
Probes(1) Monitors party Other Unallocated Total
products
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ----------- ---------- ---------- -------- ------------- --------
Revenues 1,709 46 178 60 - 1,993
-------------------------- ----------- ---------- ---------- -------- ------------- --------
Adjusted gross profit(2) 1,416 41 83 32 - 1,572
-------------------------- ----------- ---------- ---------- -------- ------------- --------
Sales and marketing
costs(3) - - - - (632) (632)
Administration costs(3) - - - - (615) (615)
R&D costs(3) - - - - (62) (62)
Quality and regulation
costs(3) - - - (110) (110)
-------------------------- ----------- ---------- ---------- -------- ------------- --------
Adjusted EBITDA(4) - - - - - 153
-------------------------- ----------- ---------- ---------- -------- ------------- --------
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. Excluding non-cash costs namely depreciation, amortisation,
share-based payment expense, non-executive directors' fees and
accumulated absence costs
4. Earnings before interest, tax, depreciation and amortisation,
share-based payment expense and non-executive directors' fees
The audited segment results for the year ended 31 December 2019
were:
Third
Probes(1) Monitors party Other Unallocated Total
products
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ----------- ---------- ---------- -------- ------------- --------
Revenues 3,533 260 293 170 - 4,256
-------------------------- ----------- ---------- ---------- -------- ------------- --------
Adjusted gross profit(2) 2,881 232 127 113 - 3,353
-------------------------- ----------- ---------- ---------- -------- ------------- --------
Sales and marketing
costs(3) - - - - (1,304) (1,304)
Administration costs(3) - - - - (1,297) (1,297)
R&D costs(3) - - - - (139) (139)
Quality and regulation
costs(3) - - - (222) (222)
-------------------------- ----------- ---------- ---------- -------- ------------- --------
Adjusted EBITDA(4) - - - - - 391
-------------------------- ----------- ---------- ---------- -------- ------------- --------
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. Excluding non-cash costs namely depreciation, amortisation,
share-based payment expense, non-executive directors' fees and
accumulated absence costs
4. Earnings before interest, tax, depreciation and amortisation,
share-based payment expense and non-executive directors' fees
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
2020 2019 2019
GBP'000 GBP'000 GBP'000
----------------------------------------------- --------- --------- ------------
Adjusted EBITDA (241) 153 391
Non-cash items:
Depreciation of property, plant and equipment (61) (98) (149)
Amortisation of development costs (40) (71) (84)
Non-executive directors' fees and employer's
social security costs (72) (72) (136)
Share-based payment expense (29) (123) (117)
Change in accumulated absence cost liability (66) (10) 26
Bonus accrual releases - - 22
Cash item: Other tax income 19 - 13
----------------------------------------------- --------- --------- ------------
(249) (374) (425)
----------------------------------------------- --------- --------- ------------
Operating loss (490) (221) (34)
Finance costs (88) (86) (176)
----------------------------------------------- --------- --------- ------------
Loss before tax (578) (307) (210)
Tax credit on loss 4 38 51
----------------------------------------------- --------- --------- ------------
Loss for the period/year (574) (269) (159)
----------------------------------------------- --------- --------- ------------
6. Dividends
The Directors cannot recommend the payment of a dividend (2019:
nil) for 2020.
7. Tax credit on loss
Unaudited Audited
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
--------------------------------------------------- ------------------- ------------------- -----------------------
Research and development tax credit (4) (52) (64)
Adjustment in respect of prior periods - 14 13
--------------------------------------------------- ------------------- ------------------- -----------------------
Total tax credit on loss (4) (38) (51)
--------------------------------------------------- ------------------- ------------------- -----------------------
The other gain amount for six months to 30 June 2020 of
GBP19,000 (six months to 30 June 2019: GBPnil) 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 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 six months to 30 June 2019 is
based on the loss after tax attributable to owners of the parent of
GBP270,000 and the weighted average number of shares in issue of
502,437,787.
The loss per share calculation for the year ended 31 December
2019 is based on the loss after tax attributable to owners of the
parent of GBP161,000 and the weighted average number of shares in
issue of 509,679,881. 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 2020 include the following Finished
Goods: 21,398 probes and 250 monitors.
10. Cash at bank
Unaudited Audited
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
------------------------- ------------------- ------------------- -----------------------
Cash at bank 568 595 908
------------------------- ------------------- ------------------- -----------------------
11. Net cash
Unaudited Audited
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
------------------------------------------- ------------------- ------------------- -----------------------
Cash at bank 568 595 908
Less Invoice discount facility (77) (267) (188)
------------------------------------------- ------------------- ------------------- -----------------------
491 328 720
------------------------------------------- ------------------- ------------------- -----------------------
12. Borrowings
Unaudited Audited
30 June 2020 30 June 2019 31 December 2019
Current Non-current Current Non-current Current Non-current
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------------------- ----------------------- ------------------- ----------------------- ------------------- -----------------------
Invoice
discount
facility 77 - 267 - 188 -
Convertible
loan
notes - 1,092 - 1,052 - 1,072
------------------------ ------------------- ----------------------- ------------------- ----------------------- ------------------- -----------------------
77 1,092 267 1,052 188 1,072
------------------------ ------------------- ----------------------- ------------------- ----------------------- ------------------- -----------------------
13. Trade and other payables
Unaudited Audited
30 June 2020 30 June 2019 31 December 2019
Current Non-current Current Non-current Current Non-current
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------------------- ----------------------- ------------------- ----------------------- ------------------- -----------------------
Trade
payables 445 - 360 - 381 -
Other
payables 348 - 345 - 483 -
Social
security
and other
taxes 175 - 122 - 129 -
Lease
obligations 35 300 35 334 32 320
Contract
liabilities 72 - 150 - 53 -
Employee
short-term
liabilities 98 - 67 - 31 -
Accrued
expenses 1,012 - 947 - 1,089 -
------------------------ ------------------- ----------------------- ------------------- ----------------------- ------------------- -----------------------
2,185 300 2,026 334 2,198 320
------------------------ ------------------- ----------------------- ------------------- ----------------------- ------------------- -----------------------
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 2020 1,072 82 1,154
Interest expense 64 - 64
Interest paid (44) - (44)
---------------------------------------------- ---------------------- ---------------------- -------------------
Carrying amount at 30 June 2020 1,092 82 1,174
---------------------------------------------- ---------------------- ---------------------- -------------------
The convertible loan note falls due for repayment in February
2022. 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 2020, there were no share
issues or exercises of shares.
16. Exceptional items
Exceptional items comprised:
Unaudited Audited
30 June 30 June 31 December
2020 2019 2019
GBP'000 GBP'000 GBP'000
---------------------------------------- ----------------------- -----------------------
Payments in lieu of notice - - 65
Compensation for loss of office - - 30
Write off of research and development
obsolete projects - - 42
---------------------------------------- ------------ ---------- -------------------------
- - 137
---------------------------------------- ------------ ---------- -------------------------
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. Restatement of prior period balance sheet amounts
Certain comparative balances at 30 June 2019 have been restated
to reflect presentational changes made in the preparation of the
2019 Annual Report & Accounts. The table below summarises the
changes made:
Prior period
adjustment for
As reported removal of capitalised As restated
dilapidation
GBP'000 GBP'000 GBP'000
--------------------- ------------- ------------------------ -------------
Non-current assets
Property, plant and
equipment 490 (87) 403
--------------------- ------------- ------------------------ -------------
Prior period
adjustment for
As reported discounting of As restated
dilapidation
provision
GBP'000 GBP'000 GBP'000
------------------------- ------------- ----------------- -------------
Non-current liabilities
Provisions (114) 58 (56)
------------------------- ------------- ----------------- -------------
19. 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 2020 30 June 2019 31 December 2019
Average Closing Average Closing Average Closing
rate rate rate rate rate rate
------------------------------ ------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Sterling/US dollar 1.27 1.24 1.30 1.27 1.28 1.31
Sterling/Euro 1.15 1.10 1.15 1.12 1.14 1.17
Sterling/Canadian
dollar 1.72 1.68 1.73 1.66 1.70 1.71
------------------------------ ------------------- ------------------- ------------------- ------------------- ------------------- -------------------
20. 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
21. 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 EAPNEADAEEFA
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