Final Results

RNS Number : 0931H

Deltex Medical Group PLC

11 March 2015

 



Deltex Medical Group plc

("Deltex Medical" or "the Company")

Results Summary for the year ended 31 December 2014

11 March 2015 - Deltex Medical Group plc, the global leader in oesophageal Doppler monitoring (ODM), today announces its audited results for the year ended 31 December 2014.

Key performance measures

·      US $ surgical probe sales up 20% before forex; 14% in sterling to £1.0m (2013: £0.9m)

·      Mixed performance for International surgical probes

o  France up 17% before forex; 9% sterling to £0.6m

o  £Nil sales to South African and Peruvian distributors (2013: £0.4m)

o  Overall decrease £0.4m to £1.1m

·    UK surgical probes decreased £0.6m (20%) to £2.5m on adverse market conditions: UK operating costs cut and additional revenue streams added

·    Gross profit margin on probes maintained at 76%

·      Net monitor income less costs increased to £0.5m (2013: £0.4m)

o  £0.4m (58%) increase in monitor revenues to £1.1m

o  Record £0.3m 60 monitor order from NHS Supply Chain to support current year installed base expansion

·      Investments on track following £4.2m net new equity funds raised

o  US expanded from three to seven sales territories

o  US pipeline expanded significantly with its development broadly on track

o  Operational improvement and product development projects on track

·      Cash position increased to £2.9m (2013: £1.5m)

Operating Highlights

·      Established market leadership for ODM in the more developed surgical enhanced haemodynamic management markets

·      Added a second major haemodynamic management technology to its product range: the CardioQ-ODM+.

·      Successfully secured its largest ever order for monitors with 60 units from central funds allocated to NHS Supply Chain

·      Restructured UK business to maximise ability to generate incremental cash

·      Introduced two new third party products to sell to the UK anaesthesia and critical care markets

·      Increased our US sales territories from three to seven

Statutory results

·      Revenue decreased £0.7m to £6.5m (2013: £7.2m)

·      Combined probe and monitor gross margin 70% (2013: 72%)

·      Operating loss of £2.99m (2013: operating loss of £2.1m) after US market development costs of £0.4m (2013: £0.6m)

Nigel Keen, Chairman of Deltex Medical, commented:

"'Deltex Medical had a difficult year in 2014 with the UK market affected by NHS cash constraints and the NHS failing to follow through its decision to implement ODM at pace. This was exacerbated by procurement delays in a number of our overseas sales territories. We have restructured our UK business to both reduce costs and increase revenues.

We made satisfactory progress in the USA and are on track to establish a platform for national roll-out towards the middle of 2016. Our market leading businesses in France and Sweden continue to grow well and prior investment is creating opportunities to build additional strong businesses in Spain and Canada.'

'The Company has the financial and other resources required to see through its US market development plans as well as to bring to market a number of exciting and innovative product developments."

For further information, please contact:-

Deltex Medical Group plc	01243 774 837 [e-mail]
Nigel Keen, Chairman
Ewan Phillips, Chief Executive
Paul Mitchell, Finance Director
Nominated Adviser & Joint Broker
Arden Partners plc	020 7614 5900
Chris Hardie
Joint Broker
Zeus Capital Partners
John Goold	020 7533 7727
Financial Public Relations
Newgate	020 7653 9850
Tim Thompson
Ed Treadwell
Robyn McConnachie

Notes for Editors

Deltex Medical manufactures and markets haemodynamic monitoring technologies. Deltex Medical's ODM is the only technology to measure blood flow 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 flow and measures them immediately. Deltex has been the only company in the enhanced haemodynamic space to build a robust and credible evidence base proving the clinical and economic benefits of its core technology, ODM. Randomised, controlled trials using Doppler have demonstrated that early fluid management intervention will reduce post-operative complications, reduce intensive care admissions, and reduce the length of hospital stay.

During 2013, the Company launched the CardioQ-ODM+ monitor that offers clinicians both of the two best-established technologies, Deltex Medical's ODM technology as well as Pulse Pressure Waveform Analysis ('PPWA') in one monitor. This allows clinicians to have unique real time insights into each of flow, pressure and resistance, the three pillars of haemodynamics.

Company goal

ODM is increasingly recognised as a standard of care for patients undergoing major surgery and in critical care. The broader clinical area of haemodynamic management of which ODM is a core constituent is also now becoming widely accepted as an important new medical modality. Consequently, the Company's focus is on maximising value from the opportunities presented as enhanced haemodynamic management is adopted into routine clinical practice around the world.

The Company is currently in the implementation phase of achieving this goal in a number of territories worldwide, operating directly in the UK, USA, Spain and Canada and through distribution arrangements in a further 30 countries.

There are over 3,200 monitors installed in hospitals around the world and over 600,000 patients have been treated to date using Deltex Medical's single patient disposable probes.

Chairman's Statement

Strategy evolving: market development increasingly conducive to corporate alliances

Deltex Medical's goal is to build a major medical technology business that generates substantial returns for its shareholders by providing medical solutions which improve the quality of healthcare delivery for patients while, at the same time, lowering its cost.

Clinical and economic need established

For many years Deltex has focused on establishing the clinical and economic need for our oesophageal Doppler monitoring ('ODM') technology and we believe this has been achieved. ODM is increasingly recognised as a standard of care for patients undergoing major surgery and in critical care. The broader clinical area of haemodynamic management of which ODM is a core constituent is also now becoming widely accepted as an important new medical modality. Deltex is focused on maximising value from the opportunities presented as enhanced haemodynamic management is adopted into routine clinical practice around the world.

Deltex has been the only company in the enhanced haemodynamic space to build a robust and credible evidence base proving the clinical and economic benefits of its core technology. ODM is becoming widely adopted in a number of large market segments, particularly high risk surgery and with high risk surgical patients and Deltex has established market leadership for ODM in the more developed surgical enhanced haemodynamic management markets.

Deltex has added a second major haemodynamic management technology to its product range: the CardioQ-ODM+. This technology offers doctors the two best established technologies, ODM and Pulse Pressure Waveform Analysis ('PPWA'). Deltex intends to launch new parameters and displays that combine the ODM flow signal with the PPWA pressure information. This will allow clinicians unique real time insights into each of the three pillars of haemodynamics, namely; flow, pressure and resistance.

We are currently evaluating a number of further parameters for integration into our monitors, each of which has the potential to add incremental consumable revenue streams within the current financial year. Subject to performance, they will be available with the new monitor platform we are developing for release within the next two years. This new platform will be the first multi-modal haemodynamic 'workstation'.

Our product development strategy will serve the emerging market for enhanced haemodynamic management, allowing doctors to choose the inputs, parameters and workload most appropriate to the individual patient's circumstances.

This strategy creates opportunities for corporate partnerships to run complementary technologies off a Deltex platform and to integrate ODM with other platforms. The Company is actively seeking such opportunities with the intention of Deltex becoming cash flow positive more quickly while also scaling up its operations.

Placing and open offer

In June 2014 we completed a placing and open offer raising £4.2m net of expenses. The funds are being deployed to support expansion in the USA, accelerate product development, implement manufacturing improvements and to introduce e-learning and customer relationship management systems: all projects are progressing well and we expect to see returns starting to come through during 2015.

Export progress offset by adverse UK market performance

Increasing clinical acceptance and traction of our products in the USA, France and some other overseas markets was offset in 2014 by very disappointing failings in the UK NHS's implementation of its decision to roll-out ODM fully at pace and scale. These, together with wide-scale destocking as a result of a financial crisis in the NHS, resulted in our UK revenues of £3.7m being £0.5m down on 2013: a similar fall in revenues reported by our closest competitor indicates that the Company maintained its market leading position in surgery. Against this background Deltex successfully secured its largest ever order for monitors with 60 units from central funds allocated to NHS Supply Chain. An ongoing commitment to the wider adoption of ODM has been evidenced since the year end by its inclusion for the first time on the NHS Innovation Scorecard. Cash generated by our UK operations was approximately £260,000 (17%) down on the prior year at circa £1,300,000 (2013: £1,560,000). A small number of export orders, subject to procurement tenders, which were due to be completed in 2014 did not materialise as the tender processes were delayed by the purchasers. This, combined with adverse currency movements and the disappointing UK performance, resulted in a 9% decrease in group revenues at £6.5m (2013: £7.2m). Operating losses increased by £0.9m to £2.99m (2013: £2.1m). Cash at the end of the year was £2.9m (2013: £1.5m).

UK business repositioned to maximise cash returns

Since January, we have restructured our UK business to maximise its ability to generate incremental cash in line with our long term plans. To achieve this we have introduced two new third party products to sell to the UK anaesthesia and critical care markets and we are evaluating a small number of further products to add to our portfolio. We have also reduced our planned 2015 annualised cost base across the Group by circa £1.0m including £0.8m of existing 2014 costs. A further £0.4m of planned investment costs has been saved through negotiating an extended lease on our existing factory. We have increased our critical care focus where our CardioQ-ODM+ device is the best value, safest and easiest to use PPWA system. We are making promising progress in establishing new, digitally supported, marketing strategies enabling clinicians to comply with their own patient treatment protocols.

US and other overseas programmes on track

Our US expansion programme remains broadly on track. We have increased our US sales territories from three to seven in the last 12 months. We completed successful clinical evaluations in major target accounts on schedule and are now beginning to see these bear fruit with new implementation agreements and additional dedicated trainer accounts. Since the year end we have started a series of further clinical evaluations in which are expected to become dedicated trainer accounts during the course of the current financial year.

Many of the Company's export markets are traditionally more receptive than the UK to innovative medical technologies as well as being more effective at driving through quality improvement programmes. We have made good progress in building substantial businesses in both the USA and France, our two largest export markets, throughout 2014.

Innovation pipeline coming through

We made good progress in 2014 on development projects whose returns are expected to start to come through over the course of 2015. In March 2014 we released the first ODM patient simulator which shortens significantly the training time for new users. This month we launched our first online e-learning module which teaches clinicians the fundamentals of ODM in around twenty minutes. Intermediate and advanced modules are currently in development. In January we started training our production staff on the probe tip assembly process which has been brought in-house to improve margins and we are finalising a series of process improvements aimed at streamlining probe manufacturing to further improve margins.

We have also made good progress with a number of our R&D projects and, subject to satisfactory clinical trials, we expect to release a number of enhanced and new products as the year progresses both to supplement existing revenue streams and provide incremental income. These trials will also determine the modalities we include at the launch of our next generation monitoring platform which we expect to be the first platform designed as a complete workstation for enhanced haemodynamic management. We plan to finalise the specification in the second half of the year and the new platform is expected to be ready for transfer to manufacturing approximately twelve months after that.

Board changes

Paul Mitchell has accepted a role as Finance Director at a privately owned medical technology business which will afford him greater operational responsibility. Paul has spent over 12 years with Deltex Medical including the last five as Finance Director. We thank him for his contribution and wish him well in his new endeavour. Paul will be leaving the Board on 2 April 2015 and is also resigning as Company Secretary. We have appointed Group Financial Controller, Barry Curtis, as Company Secretary with immediate effect and have started a process to appoint a replacement Finance Director.

I am pleased to announce that Sir Duncan Nichol has agreed to stay on as a Non-Executive Director to help the Company steer itself through a period of change in the NHS, our largest customer. Duncan will therefore be offering himself for re-election at the forthcoming Annual General Meeting.

Prospects

Deltex Medical had a difficult year in 2014 with the UK market affected by NHS cash constraints and the NHS failing to follow through its decision to implement ODM at pace. This was exacerbated by procurement delays in a number of our overseas sales territories. We have restructured our UK business to both reduce costs and increase revenues.

We made satisfactory progress in the USA and are on track to establish a platform for national roll-out towards the middle of 2016. Our market leading businesses in France and Sweden continue to grow well and prior investment is creating opportunities to build additional strong businesses in Spain and Canada.

The Company has the financial and other resources required to see through its US market development plans as well as to bring to market a number of exciting and innovative product developments.

Nigel Keen

Chairman

11 March 2015

Operating Review

Proforma results

	Full year 2014 £'000	Full year 2013 £'000
Probe revenue
Surgical probes	4,558	5,509
Critical care probes	713	788
	----	----
Total probe revenue	5,271	6,297
	----	----
Cost of sales- probes	(1,287)	(1,542)
	----	----
Gross profit probes	3,984	4,755
	----	----
Monitor and sundry income
Sundry income	45	35
Net monitor income less costs*	517	379
	----	----
	562	414
Cash costs	(6,223)	(5,455)
	----	----
Loss before non-cash and US market development	(1,677)	(286)
	----	----
Non- cash costs	(872)	(1,213)
	----	----
Loss before US market development costs	(2,549)	(1,499)
US market development costs	(441)	(599)
	----	----
Operating loss	(2,990)	(2,098)
	----	----

	2014 £'000	2013 £'000
*Net monitor income less costs comprises:
Revenue from monitors sold	1,055	668
Maintenance revenue	78	87
Cost of sales - monitors	(401)	(201)
Amortisation cost of placed monitors	(215)	(175)
	----	----
Total	517	379
	----	----

Probe revenue in 2014 was £1,026,000 (16%) below 2013 leading to a £771,000 decrease in gross profit on probes. Gross margin on probes was maintained at 75.6% despite adverse currency movement impacts on probe export revenues. The main adverse movements in probe sales were the UK (£703,000) and Rest of World (£412,000: including Peru of £201,000 and South Africa of £177,000). Larger positive probe revenue growth, after adverse currency effects, came from the USA (£123,000), France (£46,000) and Canada (£92,000).

Net monitor income less costs was £138,000 higher than in 2013 reflecting a 58% increase in monitor revenue to £1,055,000. In total the Company sold 216 monitors in 2014 and placed a further 195. In the UK we recorded our largest ever monitor sale with 60 monitors sold to NHS Supply Chain for further sale to NHS hospitals. Cash costs were £768,000 (14%) higher at £6,223,000 reflecting mainly increased expenditure on US field team expansion and specific marketing and operations projects.

Loss before non-cash and US market development, a key indicator of the Company's cash consumption from trading, was £1,677,000 (2013: £286,000). This level of cash consumption from trading was approximately £0.7m higher than in the Company's plan, primarily driven by deterioration in the UK market. The Company has implemented a series of measures, both cost cutting and revenue generating, to restructure the UK business in order to maximise its ability to generate cash in the face of the changed local market conditions.

Total cash at 31 December 2014 was £2,934,000.

Statutory results

Revenue as reported in the Consolidated Statement of Comprehensive Income was £6,507,000 (2013: £7,151,000). The £644,000 reduction comprised the net effect of a £1,026,000 (16%) decrease in probe revenue and a £382,000 (45%) increase in monitor and monitor maintenance revenue. Gross margins were slightly lower at 70% (2013: 72%) due to the mix between lower margin monitor sales and placements compared to higher margin probe sales: probe margins were unchanged at 76% and are expected to improve as North American sales grow and the effect of margin improvement initiatives comes through.

Costs were kept under tight control with total charges up just under 4% at £7,536,000 (2013: £7,267,000). Increased spend in the USA and Canada was offset by a £158,000 reduction in spend on the US Market Development project to £441,000; this project is expected to be completed in 2015. Overall the operating loss of £2.99m was £0.9m higher (2013: £2.1m).

UK Market

Deltex Medical has a strong market leading position in UK Intra-Operative Fluid Management ('IOFM') with the largest installed base and the highest number of patients treated. A recent survey suggested 87% of UK consultant anaesthetists have access to one of our monitors, approximately double that of the next most commonly available technology. CardioQ-ODM is the only IOFM technology recommended by the National Institute for Health and Care Excellence ('NICE') and is the only IOFM technology with the evidence base to justify such a recommendation. Patients who are not treated with ODM may be exposed to avoidable harm through post-operative complications which are expensive to treat in the short term and have a long term deleterious effect on patients' life expectancy.

Sales of surgical probes were £628,000 (20%) lower in 2014 than 2013 at £2,466,000 with a further fall in revenue from critical care probes of £75,000 (10%). The Company estimates that all the decline in critical care probes and most or all the decline in surgical probes is as a result of wide-spread de-stocking by NHS hospitals in response to a growing cash crisis. Despite this de-stocking, the Company increased sales of surgical probes to over 70 UK hospitals, approximately one third of our customer base and maintained share in the surgical market.

NHS England recognised the public health and economic benefits of ODM as one of six high impact innovations to be adopted fully at pace and scale in its 2011 Innovation Health & Wealth report. This implementation was not carried through as planned.  It was over a year late, dramatically scaled down in ambition and was implemented in a way which alienated the clinicians whose practice needed to change to derive the benefits of ODM. In addition hospitals were allowed to adopt ineffective or inferior technologies as substitutes for ODM. While the threat of severe financial penalties did drive growth in 2013 the penalties were not enforced and then abandoned in 2014 with the NHS failing to enforce the replacement regime. Abandoning this CQUIN pre-qualification mechanism was seen by many hospitals as a signal that they no longer needed to push adoption of ODM or IOFM. The Government has now announced a new review of technology adoption in the NHS. The Board considers it highly unlikely that momentum will be restored by central NHS initiatives in the foreseeable future. The Company is therefore focusing its efforts on clinician led quality improvement programmes to help restore momentum behind adoption of ODM in the UK over the course of 2015. The Board expects this shift back to clinician led adoption to focus attention back onto clinical effectiveness and away from compliance with financial protocols: such a shift plays to ODM's strengths of demonstrably superior outcomes for patients over both alternative technologies and the unmonitored administration of fluids and vaso-active drugs.

Monitor sales in 2014 in the UK were £161,000 ahead of 2013 at £404,000, boosted by a sale to NHS Supply Chain of 60 monitors in December which will be installed in NHS hospitals as they purchase them from NHS Supply Chain. This was the Company's largest ever monitor order and, given that the funding for the deal came from central funds, is encouraging evidence of an ongoing desire to spread the adoption of ODM. Over the course of the year the UK installed base increased by 39 monitors to 1,105 monitors, comprising 775 surgical monitors and 330 critical care monitors.

Our UK sales and clinical support operation generated net cash of £1,300,000 in 2014, circa £260,000 less than in 2013: we achieved this against a background of reduced sales by careful management of resources, efficient use of staff and placing refurbished rather than new monitors wherever possible. The Company reinvests incremental cash generated in the UK into overseas markets and we have taken steps to maximise this going forward by reducing costs, adding in distribution of third party products, realign our marketing to focus on clinical markets and introducing new and enhanced own label products.

US market

Sales of surgical probe increased by 20% in local currency and after the effects of exchange movements by 14% to £1,001,000. Dedicated trainer accounts accounted for more than 100% of this growth.

Our strategy in the USA is to develop a small number of prestigious hospital accounts where our products are embedded broadly and deeply into routine usage across major surgery with the goal of positioning the business for national roll-out of ODM. Our goal is to have thirty or more such accounts established by mid-2016 and we made very good progress towards achieving this is 2014:

·      We successfully completed the clinical evaluations and established the necessary depth of clinical support in all 2014 target hospitals by the middle of October to hit our target of ten dedicated trainer accounts by the end of the year. While we had hired and trained clinical support staff for each new target, the budgetary and procurement processes have taken longer than originally advised by the hospitals and we had not secured formal implementation agreements and initial stocking orders by year end.

·      We increased the number of fully fledged dedicated trainer accounts from four to six over the year, have added a seventh in January 2015 and expect at least three more in the near term.

·      In view of the longer purchasing time frames we have experienced due to the spread of value analysis committees across US hospitals, we are focusing our resources on getting the evaluations in our next ten target accounts finished in the first half of the year with a view to being at 20 or more dedicated trainer accounts by 31 December 2015.

·      We are already progressing with sufficient additional hospitals to enable us deliver our mid-2016 target of 30 dedicated trainer accounts.

We have expanded our US presence significantly since the first half of 2014 in response to a substantial step-up in clinical interest in fluid management and enhanced recovery approaches to major surgery. Hospitals looking to implement evidence-based protocols continue to approach us because of the unique strength of our evidence base. The three more established sales territories with which we entered 2014 increased US dollar sales by 36% and each came into 2015 with strong pipelines. We added two more territories in the second half of 2014, a sixth in February 2015 and expect to have established a seventh by the end of this month. Each of the new territories is built around influential pipeline accounts where we have already completed much of the initial development work.

The key findings of our burden of illness study from our research collaboration with Premier Inc. are expected to be published shortly in a high impact journal. These are expected to show that poor intra-operative and poor post-operative fluid management cause poor outcomes and highlight the management of fluids as an important area for quality improvement in the USA. Premier Inc are uniquely positioned to disseminate these findings and have a track record for both highlighting problems and facilitating consequent quality improvement efforts at both hospital and federal level. This strand of our US market development work is therefore on track, concurrent with our account development work, to create an opportunity for national roll-out of ODM in 2016.

International markets

Progress in International markets in 2014 was mixed. Surgical probe sales of £1,091,000 were £446,000 (29%) lower than in 2013 (£1,537,000). We continued to make good progress in France with surgical probe sales up 17% on a constant currency and 9% in sterling: this follows growth of 37% in 2013 and our distributor estimates that the underlying market is growing at between 25% and 30% following national clinical guidelines in 2013. We continued to make good progress in a number of countries including Sweden, where we are market leader and Austria. We did not make any significant sales to our South African distributor this year (2014: £2,000; 2013: £421,000 including £177,000 of surgical probes) as they have experienced tender process delays in potential new sites and delays in approval of probe budgets for monitors installed under 2013 tender wins. In Peru, where we are clear market leader, a series of strikes by clinical staff has reduced surgical volumes substantially meaning our distributor did not need to order any probes (2013: £201,000): they did buy 50 CardioQ-ODM+ monitors so that they could expand the installed base to match new hospital builds and we expect solid future growth in this market.

In the first year of our joint venture in Canada we made satisfactory progress in opening or developing a small number of accounts generating surgical probe sales of £95,000. However, a tender scheduled by a provincial hospital system to be awarded in December has been deferred into 2015 for further evaluation. We set up the first of two further demonstration sites requested last week and are scheduled to set up the second at the end of the month. Doctors at one of Canada's leading teaching hospitals have completed the first randomised controlled trial of the benefits of adding ODM to an established enhanced recovery programme and we expect the results to be published in the first half of the year and to provide an impetus for our business.

Underlying probe growth in Spain was masked by our decision to terminate our relationship with a local distributor who had been supporting sales of CardioQ-ODM in several regions of Spain as a result of which surgical probe sales were £26,000 (2013: £78,000). This gives us the flexibility to put in place the most appropriate means of distribution as the Spanish healthcare system moves towards national roll-out of both enhanced recovery and ODM. We understand that the results of a Government funded multi-centre randomised controlled trial of ODM have been written up and will be submitted to a leading medical journal shortly.

Prospects

The NHS failure to implement effectively its decision to roll-out ODM nationally made 2014 an especially challenging year for Deltex Medical. The NHS's problems coincided with an increased focus on the USA where the market for enhanced haemodynamic management and ODM is developing well. We have therefore restructured our UK business to maximise incremental cash generation from it so that we can concentrate on the opportunities that will generate the fastest growth and greatest value. Our new product pipeline and digital initiatives are already firmly re-establishing ourselves as the most innovative company in the enhanced haemodynamic management market.

Ewan Phillips

Chief Executive

11 March 2015

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2014

		2014 Probes £'000	2014 Other £'000	2014 Total £'000	2013 Probes £'000	2013 Other £'000	2013 Total £'000
Probe revenue
Surgical probes		4,558	-	4,558	5,509	-	5,509
Critical care probes		713	-	713	788	-	788
Other revenue		-	1,236	1,236	-	854	854
		---	---	---	---	---	---
Total revenue		5,271	1,236	6,507	6,297	854	7,151
		---	---	---	---	---	---
Cost of sales		(1,287)	(674)	(1,961)	(1,542)	(440)	(1,982)
		---	---	---	---	---	---
Gross profit		3,984	562	4,546	4,755	414	5,169
		---	---	---	---	---	---
Administrative expenses				(2,463)			(2,145)
Sales and distribution costs				(3,938)			(3,940)
Research and development				(694)			(583)
US market development costs				(441)			(599)
				---			---
Total costs				(7,536)			(7,267)
Operating loss before costs of US market development costs				(2,549)			(1,499)
US market development costs				(441)			(599)
				---			---
Operating loss*				(2,990)			(2,098)
				---			---
Finance income				2			1
Finance costs				(107)			(120)
				---			---
Loss before taxation				(3,095)			(2,217)
Tax credit on loss				144			111
				---			---
Loss for the financial year				(2,951)			(2,106)
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Exchange differences taken to reserves				45			(31)
				---			---
Other comprehensive loss for the year, net of tax				45			(31)
				---			---
Total comprehensive loss for the year				(2,906)			(2,137)
				---			---
Total comprehensive loss for the year attributable to:
Owners of the parent				(2,816)			(2,145)
Non-controlling interest				(90)			8
				---			---
				(2,906)			(2,137)
				---			---
Loss per share basic and diluted				(1.5p)			(1.3p)
				---			---
*Operating loss is split:
Cash loss				(1,677)			(286)
US market development costs				(441)			(599)
Non -cash charges (net)				(872)			(1,213)
				---			---
Operating loss				(2,990)			(2,098)
				---			---

Consolidated Balance Sheet

at 31 December 2014

		2014	2013
		£'000	£'000
Assets
Non-current assets
Property, plant and equipment		737	585
Intangible assets		1,745	1,502
Trade and other receivables		5	10
Total non-current assets		2,487	2,097
Current assets
Inventories		1,273	920
Trade and other receivables		2,757	3,081
Current income tax recoverable		140	118
Cash and cash equivalents		2,934	1,459
Total current assets		7,104	5,578
Total assets		9,591	7,675
Liabilities
Current liabilities
Borrowings		(1,109)	(1,284)
Trade and other payables		(2,444)	(1,855)
Total current liabilities		(3,553)	(3,139)
Non - current liabilities
Borrowings		(1,050)	(1,028)
Provisions for other liabilities and charges		(116)	(135)
Total non - current liabilities		(1,166)	(1,163)
Total liabilities		(4,719)	(4,302)
Net assets		4,872	3,373
Equity
Share capital		2,130	1,709
Share premium		30,323	26,440
Capital redemption reserve		17,476	17,476
Other reserves		4,318	4,217
Translation reserve		(6)	(51)
Retained deficit		(49,287)	(46,426)
Equity attributable to owners of the Parent		4,954	3,365
Non-controlling interest		(82)	8
Total equity		4,872	3,373

Consolidated Statement of Changes in Equity 

for the year ended 31 December 2014

 

Group	Share capital	Share premium	Capital redemption	Other Reserve	Translation Reserve	Retained deficit	Total	Non - controlling interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2013	1,510	23,659	17,476	3,792	(20)	(44,312)	2,105	-	2,105
Comprehensive income
Loss for the year	-	-	-	-	-	(2,114)	(2,114)	8	(2,106)
Other comprehensive income
Exchange movements taken to reserves	-	-	-	-	(31)	-	(31)	-	(31)
Total comprehensive income for the year	-	-	-	-	(31)	(2,114)	(2,145)	8	(2,137)
Shares issued during the year	199	-	-	-	-	-	199	-	199
Premium on shares issued during the year	-	2,892	-	-	-	-	2,892	-	2,892
Issue expenses	-	(111)	-	-	-	-	(111)	-	(111)
Credit in respect of service cost settle by award of options	-	-	-	425	-	-	425	-	425
Balance at 31 December 2013	1,709	26,440	17,476	4,217	(51)	(46,426)	3,365	8	3,373
Comprehensive income
Loss for the year	-	-	-	-	-	(2,861)	(2,861)	(90)	(2,951)
Other comprehensive income
Exchange movements taken to reserves	-	-	-	-	45	-	45	-	45
Total comprehensive income for the year	-	-	-	-	45	(2,861)	(2,816)	(90)	(2,906)
Shares issued during the year	421	-	-	-	-	-	421	-	421
Premium on shares issued during the year	-	4,145	-	-	-	-	4,145	-	4,145
Issue expenses	-	(262)	-	-	-	-	(262)	-	(262)
Credit in respect of service cost settle by award of options	-	-	-	101	-	-	101	-	101
Balance at 31 December 2014	2,130	30,323	17,476	4,318	(6)	(49,287)	4,954	(82)	4,872

Consolidated Statement of Cash Flows

for the year ended 31 December 2014

		2014	2013
	Note	£'000	£'000
Cash flows used in operating activities
Net cash used in operations	5	(1,821)	(1,427)
Interest paid		(104)	(98)
Income taxes received		122	107
Net cash used in operating activities		(1,803)	(1,418)
Cash flows used in investing activities
Purchase of property, plant & equipment		(372)	(364)
Capitalised development expenditure		(465)	(411)
Acquisition of subsidiary		-	(174)
Interest received		2	1
Net cash used in investing activities		(835)	(948)
Cash flows generated from financing activities
Issue of ordinary share capital		4,566	2,698
Expenses in connection with share issue		(262)	(111)
Proceeds from increase in borrowings		-	580
Repayment of borrowings		(187)	-
Repayment of obligations under finance leases		(16)	(13)
Net cash generated from financing activities		4,101	3,154
Net increase in cash and cash equivalents		1,463	788
Cash and cash equivalents at beginning of the year		1,459	677
Exchange losses on cash and cash equivalents		12	4
Cash and cash equivalents at end of the year		2,934	1,459

1   Nature of the financial information

This Results Statement containing condensed financial information for the year ended 31st December 2014 is prepared in accordance with the accounting policies set out in the Annual Report 2014. New standards, amendments to standards or interpretations which were effective in the financial year beginning 1 January 2014 have not had a material effect on the group's financial statements.

This Results Statement does not constitute statutory accounts of the Group within the meaning of sections 434(3) and 435(3) of the Companies Act 2006. The full set of audited financial statements are

available online at www.deltexmedical.com and will be sent out to shareholders with the AGM notice in due course. The balance sheet at 31st December 2013 has been derived from the full Group accounts published in the Annual Report 2013, which has been delivered to the Registrar of Companies. The report of the independent auditors for the year ended 31 December 2014 and 2013 were unqualified and did not contain a statement under section 498 of the Companies Act 2006.

2   Alternative financial measures

The Group uses a number of alternative (non-Generally Accepted Accounting Practice (non-GAAP)) financial measures, which are not defined by IFRS. The Directors use these measures in order to assess the underlying operational performance of the Group and as such these measures are important and should be considered alongside the IFRS measures. The following non-GAAP measures are referred to in this Results Statement.

(a)  Proforma results - Chairman's statement
This presents our progress against key performance indicators: probe sales and margins, cash costs, net income from or cost of increasing the installed base, profit before and after non-cash items and profit before investment in the Premier project.

(b)  Adjusted operating loss beneath the Consolidated Statement of Comprehensive Income
This is defined as operating loss before non-cash charges to the Consolidated Statement of Comprehensive Income. Non-cash costs comprise Share based payments, equity settled costs, clinical trial charges arising from non-cash barter transactions and depreciation and amortisation. A reconciliation of the operating loss to the adjusted operating loss is shown beneath the Consolidated Statement of Comprehensive Income.

3   Revenue

Sales	2014	2014	2014	2014	2014	2014	2013	2013	2013	2013	2013	2013
	Probes	Monitors	Probes	Monitors	Other	Total	Probes	Monitors	Probes	Monitors	Other	Total
	units	units	£'000	£'000	£'000	£'000	units	units	£'000	£'000	£'000	£'000
Direct markets
UK	37,640	87	3,179	404	149	3,732	47,605	59	3,882	243	151	4,276
USA	8,850	5	1,001	72	2	1,075	7,676	3	878	31	4	913
Spain	270	-	26	-	2	28	725	-	78	-	1	79
Canada	770	2	95	15	-	110	170	1	3	17	-	20
Distributor markets
Europe	15,760	34	843	164	15	1,022	16,780	17	917	77	16	1,010
Far East & Latin America	2,275	88	127	400	13	540	11,120	53	539	300	14	853
	65,565	216	5,271	1,055	181	6,507	84,076	133	6,297	668	186	7,151

UK probes sales are split:

	2014 Units	2014 £'000	2013 Units	2013 £'000
Surgical	31,655	2,466	40,690	3,094
ICU	5,985	713	6,915	788
	37,640	3,179	47,605	3,882

4   Dividends

The directors do not recommend payment of a dividend (2013: nil).

5   Notes to the Consolidated Statement of Cash flows

	2014	2013
	£'000	£'000
Loss before taxation	(3,095)	(2,217)
Adjustments for:
Net finance costs	105	119
Depreciation of property, plant and equipment	256	217
Amortisation of intangible assets	164	109
Effect of exchange rate fluctuations on borrowings	(12)	(22)
Exchange (gain)/loss on property, plant and equipment	(8)	3
Loss on disposal of property, plant and equipment	19	22
Share based payments	101	425
Operating cashflows before movement in working capital	(2,470)	(1,344)
(Increase)/decrease in inventories	(295)	93
Decrease/(increase) in trade and other receivables	329	(119)
Increase/(decrease) in trade and other payables	634	(27)
Decrease in provisions	(19)	(30)
Net cash used in operations	(1,821)	(1,427)

6   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 Group had no dilutive potential ordinary shares in either year, which would serve to increase the loss per ordinary share. Therefore, there is no difference between the loss per ordinary share and the diluted loss per ordinary share.

The loss per share calculation for 2014 is based on the loss of £2,861,000 and weighted average number of shares in issue of 194,514,518. For 2013 the loss per share calculation was based upon the loss of £2,114,000 and weighted average number of shares in issue of 164,175,818.

7   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, West Sussex PO19 8TX. Copies of the Report and Accounts for the year ended 31 December 2014 will be sent to shareholders in due course. Both this announcement, Report and Accounts and Results Presentation are available to download from the Company's website free of charge at www.deltexmedical.com.

 

END

 

 

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