Final Results
Deltex Medical Group PLC
15 March 2005
Deltex Medical Group plc
Preliminary results for the year ended 31 December 2004
15 March 2005 - Deltex Medical Group plc ('Deltex Medical' or 'Company') today
announces its preliminary results for the year ended 31 December 2004.
Financial Highlights
• Net cash outflow before financing reduced by £1m to £2m (2003: £3m)
• Pre-exceptional loss before tax of £2.1m (2003: £2.4m)
• £1.9m of additional equity raised in 2004
• Net cash of £1.1m at period end
• Current plans indicate sufficient cash to see Company to profitability
Operating Highlights
• Number of patients in UK completing treatment with a Deltex Medical
oesophageal probe almost doubled from 55 to over 100 per day
• First NHS hospital to adopt routine use of CardioQ in moderate and major
surgery reports potential annual savings of £1.1m
• First US Veterans Administration hospital adopts CardioQ as standard of
care for moderate and major surgical procedures
• Negotiations continue with over 20 NHS hospitals regarding implementation
of CardioQ as standard of care
• UK government-funded controlled clinical trial demonstrates that use of
CardioQ significantly reduces complications, reduces hospital stay and saves
money in bowel surgery
Nigel Keen, Chairman of Deltex Medical, said: 'It is frustrating to report a
lack of sales progress when the body of published evidence supporting
haemodynamic optimisation is so compelling. It is, nevertheless, increasingly
clear that hospitals around the world are being persuaded of the benefits of
CardioQ and we are confident that our ongoing negotiations, particularly in the
UK with NHS Trust hospitals, will result in sales progress during the coming
year.'
For further information, please contact:-
Deltex Medical Group plc 01243 774 837
Nigel Keen, Chairman
Andy Hill, Chief Executive
Ewan Phillips, Finance Director
Financial Dynamics
David Yates/Lucy Briggs 0207 831 3113
Chairman's Statement
Group Summary
Deltex Medical's CardioQ(TM) monitor uses disposable ultrasound probes inserted
into the oesophagus through the mouth or nose to determine the amount of blood
being pumped around the body - 'circulating blood volume'. Reduced circulating
blood volume is known as hypovolaemia and occurs as a consequence of blood loss
or dehydration. If blood volume is reduced significantly, the body cannot
deliver sufficient oxygen to the vital organs. This causes medical
complications including peripheral and major organ failure, which can lead to
death. Hypovolaemia affects almost all patients undergoing surgery because of
the combined effects of pre-operative starvation, the impact of anaesthetic
gases and the trauma of surgery itself. Guided by the CardioQ and using fluids
and drugs to optimise the amount of circulating blood and the heart's
performance, doctors can significantly reduce post-operative complications
allowing patients to make a fuller, more complete recovery and return home
earlier. The opportunities the CardioQ offers for improved quality and
efficiency of care through helping patients get better, quicker can be
summarised: the CardioQ saves lives and saves money.
It is Deltex's strategy to make the use of the CardioQ a standard of care in
operating theatres for all patients undergoing moderate and high risk surgery as
well as for its use to be the treatment of choice in Intensive Care Units for
the rapid monitoring of severely ill patients. Adopting the CardioQ as a
standard of care empowers hospitals to both improve the quality of care they
give and the efficiency with which they give it. The efficiency benefits allow
the hospital to choose to: increase capacity; or reduce costs; or redeploy
existing resources to meet local priorities.
Trading Results
Sales 2004 2004 2004 2004 2004 2004
Probes Monitors Probes Monitors Other Total
Units units £'000 £'000 £'000 £'000
______ ______ ______ ______ ______ ______
Direct markets
UK hospitals 18,082 39 1,254 169 53 1,476
UK audit projects - - - - - -
______ ______ ______ ______ ______ ______
UK Total 18,082 39 1,254 169 53 1,476
USA 4,520 3 273 10 1 284
Distributor markets
Europe 8,627 56 390 277 2 669
Far East & Latin America 681 11 32 32 1 65
______ ______ ______ ______ ______ ______
31,910 109 1,949 488 57 2,494
______ ______ ______ ______ ______ ______
(continued from table above)
Sales 2003 2003 2003 2003 2003 2003
Probes Monitors Probes Monitors Other Total
Units units £'000 £'000 £'000 £'000
______ ______ ______ ______ ______ ______
Direct markets
UK hospitals 14,755 50 1,036 173 30 1,239
UK audit projects 5,020 77 252 385 2 639
______ ______ ______ ______ ______ ______
UK Total 19,775 127 1,288 558 32 1,878
USA 4,970 4 336 20 1 357
Distributor markets
Europe 7,450 97 292 358 4 654
Far East & Latin America 3,155 42 135 59 1 195
______ ______ ______ ______ ______ ______
35,350 270 2,051 995 38 3,084
______ ______ ______ ______ ______ ______
Overall, Group sales for the year to 31 December 2004 were £2,494,000, compared
to £3,084,000 in 2003. Probe sales were 31,910 units, compared to 35,350 units
in 2003, but with strong underlying growth in probe usage in our key UK and
European markets.
Deltex Medical made considerable progress throughout 2004 in positioning the
CardioQ as the product of choice for hospitals wishing to implement haemodynamic
optimisation as a standard of care in operating theatres. It made further
progress in establishing the principle that haemodynamic optimisation should be
a standard of care for the many millions of patients who undergo moderate and
major surgery in developed healthcare systems every year. At the same time the
Company continued to make steady progress in selling its products to intensive
care units in its main target markets.
The major challenge for the Company in 2005 and beyond is to convert this strong
marketing position into monitor sales and a substantial and expanding recurring
revenue stream from its disposable oesophageal probes. To deliver such long
term sustainable income will necessitate the Company continuing to overcome the
barriers to new medical technology adoption in all its markets, and, as a
priority in the shorter term, in the UK where the sales pipeline has grown most
dramatically. The key successes in 2004 have demonstrated the scale of the
economic benefits which using the CardioQ as a standard of care delivers over
and above the previously proven clinical benefits to patients.
In 2003 the Company sponsored a series of data collection exercises in five UK
NHS Trusts aimed at assessing the impact of implementing the CardioQ as a
standard of care. Towards the end of 2003, these Trusts purchased sufficient
monitors to enable them to undertake these projects as well as large numbers of
probes relative to prior consumption; as these Trusts consumed these probes
throughout 2004 and ordered only very minimal extra probes while they reduced
their stocks, the 2003 orders need to be considered in assessing sales
performance year on year.
In the UK in 2004, the company sold 18,082 probes with a total sales value of
£1,254,000 compared to 14,775 probes (excluding sales relating to the audit
projects) for £1,036,000 in 2003. Our estimates of the number of UK patients
per day being treated using the CardioQ take account of hospital stockholding
and show an increase in underlying probe consumption of over 80% over the period
from 55 to at least 100. We sold 39 CardioQ monitors in the UK in 2004 compared
to 127 in 2003, of which 77 were to the five Trusts highlighted.
This level of CardioQ sales in the UK was disappointing, particularly given the
step-change in interest in the CardioQ in the final quarter of 2004. However,
the impact of this step-change is shown by our assessment of the UK pipeline at
31 December 2004 as being large enough that it would more than double the
operating theatre installed base from our top forty target hospitals alone. In
total, we estimate that the pipeline for sales in the UK is at least four times
what it was at the end of 2003.
Underlying hospital purchases of probes in Europe in 2004 were over 40% ahead of
2003 by volume. The adverse impact of reduced stock-holding by two of our
larger distributors meant that actual probe sales by the Company to our
distributors increased by a lower rate of 16% by volume. However, increased
prices to our distributors meant the value of probe sales increased by 34% from
£292,000 to £390,000 in the year. This growth in probe sales was offset by a
decline in monitor sales as we worked with our distributors to concentrate on
increasing usage of the CardioQ following a period of success in expanding the
installed base.
Probe sales by volume in the USA fell by 9% from 4,970 to 4,520, with a slightly
larger fall in sales by value due to the weak dollar. The decline is directly
attributed to our decision to focus on identified key target accounts in Texas
and Illinois and withdraw direct support to other areas. Our focus remains on
gaining acceptance for wide-scale use of the CardioQ in a small number of
hospitals as a base for future expansion. Since the year-end, the Veterans'
Administration (VA) Hospital in San Antonio has started to use the CardioQ as
the preferred monitor to implement haemodynamic optimisation as a standard of
care for higher risk surgical patients. Federal funding and administrative
constraints will determine when we can recognise the revenue for the nine
CardioQ monitors installed in December and when buying our probes become part of
the hospital's procurement protocols in order to catch up with its clinical
protocols.
Sales in the Far East and Latin America reflected the Company's decision to
redeploy investment away from these markets into the UK and Europe and hence
reduced from £195,000 to £65,000. We continue to provide remote support to our
distributors in these regions, thereby allowing the necessary clinical
groundwork to be undertaken, but at low cost to the Company.
Tight control of our costs in the USA and Far East and Latin America territories
means that only minimal future sales growth is necessary for our operations in
them to be cash generative; previously these territories have absorbed
disproportionate amounts of cash relative to levels of sales.
The net loss before taxation for the period amounted to £2,773,000 after an
exceptional charge of £652,000 relating to the cost of the UK hospital post
procurement audit projects set up in 2003. Without this non-recurring charge
the loss would have been £2,121,000 compared to £2,396,000 in 2003.
The net cash outflow from operating activities for the period was £1,988,000, a
reduction of £972,000 (33%) from £2,960,000 in 2003. Cash in hand at the end of
the year was £1,207,000 (2003: £1,093,000). During the year the Company raised
a total of £1,879,000 in new equity capital, after expenses, through the issue
of 2,751,666 new shares under option agreements and the placing of a further
4,629,630 new shares. In addition, a £500,000 working capital facility was
negotiated with the Company's bankers during the period; £105,000 of this
invoice discounting facility had been drawn down at 31 December 2004, meaning
the Company had net cash of £1,102,000 (2003: £1,093,000).
It is the Board's belief that current plans indicate that cash on hand and
facilities are sufficient to see the Company to profitability.
Since the year end we have seen continued growth in probe sales in the UK as
well as encouraging signs for sales growth in all our other markets. While we
have continued to make considerable progress towards completing a significant
number of larger, hospital-wide sales in the UK, USA and Europe, our experience
has shown that we cannot predict with certainty when the hospitals will be in a
position to place the order for initial wider-scale implementation of our
equipment. Accordingly we have effected measures to reduce our headcount by
20%, reduce the amount of stock we build and reduce our overheads. These
measures, together with the base level of sales growth coming through, have been
designed to ensure that the Company is in a strong position to exploit the
step-up in sales the Board expects to follow on from the progress made in 2004.
Markets
UK
New clinical studies from Worthing hospital and the Middlesex hospital added to
the overwhelming body of scientific evidence demonstrating that the CardioQ
delivers substantial clinical benefit, both in intensive care and operating
theatres. Even before these studies, leading academic doctors had assessed the
body of evidence as being Level 1A; this is the highest possible level of
scientific evidence and demands a change in clinical practice. Haemodynamic
optimisation is one of only two techniques affecting surgical patients where
Level 1A evidence is in place. This means that, in an era of 'evidence based
medicine', there is stronger evidence supporting haemodynamic optimisation than
there is for any of the traditional care interventions and protocols currently
regarded as standards of care.
Late in 2003, in order to ensure that the clinical benefits shown in the
published clinical trials are repeatable in the day-to-day practice in ordinary
hospitals and that the clinical benefits which are delivered do translate into
economic benefits, the Company sponsored a series of data collection exercises
in five NHS Trusts. These exercises were aimed at assessing the impact of
implementing the CardioQ as a standard of care. The work gave us invaluable
first hand knowledge of just how difficult it is for typical NHS hospitals to
track the details of the individual treatments received by their patients and to
identify the costs or benefits of these treatments. Work continues on these
projects.
These experiences have enabled us to design new ways of working with individual
NHS Trusts which allow us to help the Trust identify the benefit of making the
use of the CardioQ a standard of care in the hospital. In September 2004, the
Medway Maritime NHS Trust completed its audit of the impact of wide-scale use of
the CardioQ in operating theatres on moderate and major risk surgical patients.
The Trust found that the CardioQ reduced the average length of stay after
surgery by three days, approximately 30%, for the range of moderate and major
risk surgery where it was used. This equated to an approximate saving of £800
per patient. The probes used cost the hospital £45-85 each and the monitors
£5,000 each. Based on the Medway experience, full payback on the cost of the
monitor is achieved after eight patients - for the average NHS Trust treating
its share of the one million patients with existing clinical evidence, full
payback on the capital investment would be achieved within between one and two
days per monitor. The feedback from other sites undertaking similar audits is
consistent with the Medway conclusions.
We believe that the Medway experience underpins the highly compelling story
which evidences why hospitals should use the CardioQ as a standard of care in
moderate and major surgery. Ultimately there are only two sound reasons why a
hospital should purchase new medical equipment: either to improve care or to
reduce cost. The CardioQ does both.
Our initiatives to inform anaesthetists, surgeons and hospital managers of the
dual benefits of the CardioQ led to a dramatic increase in interest in
implementing the CardioQ as a standard of care. Each of our seventeen strong UK
sales and training team reported a step-change both in customers' reception and
perception of the CardioQ opportunity. This translated into a significant
increase in the UK pipeline. At the start of the year we were working with
small groups of doctors in less than ten hospitals towards wide-scale adoption
of the CardioQ. By the end of the year we were working with far larger groups
of doctors in over forty hospitals and had engaged the hospital managers in
twenty of these.
For these twenty hospitals proposals were well in hand for them to place orders
before our 31 December year end for the additional monitors and associated
probes necessary for them to begin to implement making the CardioQ on a wider
scale as a standard of care. The values of these proposed orders ranged from
just over £40,000 for the smallest hospitals to in excess of £100,000 for larger
hospitals. However in the event none of them were able to conclude their
internal processes in line with the timetables which had been set, even where
support was unequivocal from both doctors and managers.
We have identified three main reasons for this lack of progress. Firstly, it is
clear that, despite enormous public spending increases, many NHS Trusts are
facing significant financial deficits and are reacting by spending even less
than normal on new equipment. Secondly many Trusts have very complex
organisation structures which make decision making slow and, thirdly, many
hospitals find it difficult to track the economic benefits from changes to
established practices.
Developments at these twenty hospitals since 31 December 2004 are:
• A partial order has been received from one hospital, with the balance
deferred until the hospital's new financial year.
• The internal business case has been approved at two hospitals and we have
been informed that the orders are pending.
• Local audits are underway in respect of three hospitals, with all feedback
to date being positive; sales orders are contingent on the results of these
audits.
• We are awaiting initial orders from three hospitals who have agreed to
purchase initial monitors and to undertake local audits with a view to then
acquiring further monitors.
• Proposals for local audits using loaned equipment are under discussion
with four hospitals.
• Business cases submitted to senior managers at four hospitals have been
very well received, but no final decision has yet been taken.
• Recently introduced total bans on any new expenditure have stalled
progress at two hospitals.
• Progress at one hospital has been delayed pending publication later in
2005 of the results of a clinical trial of the CardioQ in bowel surgery,
which are expected to be highly supportive.
We are working on a number of marketing initiatives aimed at unblocking the
pipeline and expect these to make an impact on key decision makers over the
course of 2005. In the meantime, the pipeline continues to expand and sales of
probes to the existing installed base are showing solid year-on-year growth.
Europe
Throughout 2004, the lessons learned from our experience in the UK continued to
be adapted to make them applicable to individual European territories. Working
with our distributors in the key territories of Germany, Austria, the
Netherlands, Spain, Italy and France, we have identified candidate hospitals to
be the first in their country to adopt routine haemodynamic optimisation, using
the CardioQ, as a standard of care across moderate and major surgery and in
intensive care.
We have set our distributors two clear goals for 2005; firstly, to establish and
support activities at these reference sites and, secondly, to continue the drive
to increase probe consumption by installed monitors.
United States of America
Deltex Medical maintains a small team of dedicated clinical sales people in the
USA. This team has responsibility for contact with a small but important group
of key physicians who are regular users of our technology.
Our primary goal in the USA is to develop a business model that can overcome the
barriers that face any small, non-US company trying to establish a sustainable
market presence. To this end we are working with one significant public
provider, the Veterans Administration (VA) system, in order to develop the
strength and breadth of the user base. An established VA user base will allow
us to make progress with the reimbursement processes which will be required for
the CardioQ to be widely used in US healthcare practice. Additionally, we are
working with one insurance-led provider to examine how our core value
proposition might fit with the hospital system they own and manage.
Approaching this complex market in this way, we plan to develop a scalable
business model that will be of interest to a third-party for wide-scale
implementation in the future. This strategy means that we have been able to
minimise our investment and support while maintaining the presence required to
pursue the current projects.
The VA hospital in San Antonio, Texas is a leading centre within the VA system
for technology appraisal and the development of new clinical protocols. This
hospital agreed in 2004 to undertake an audit of the impact of routine
haemodynamic optimisation based upon the model established at the Medway
hospital. Because of delays caused by funding issues within the VA system, the
final results of this audit are still awaited. The anaesthetists and surgeons
have however, with the approval of hospital management, implemented significant
changes to patient management based on their experience to date.
For example, prior to use of the CardioQ, all patients undergoing radical
prostate surgery were routinely admitted to the surgical intensive care unit
(SICU) for one day. Early in the audit anaesthetists and surgeons recognised
that these patients were in better condition as they came out of surgery and
therefore amended the standard pathway. Now these patients go to the SICU only
in an emergency, generating a significant saving in per patient costs.
The visibility of haemodynamic optimisation as an important technique with real
application in the US market has been increased over the last year as a result
of publicity for a major clinical trial into the treatment of sepsis patients at
the Henry Ford Hospital in Detroit which was funded by a major US medical device
company. The hospital has been one of the Company's larger customers for
several years and the CardioQ is the monitor of choice in day to day clinical
practice for the clinicians who undertook the study.
Far East and Latin America
We have previously announced our decision to restrict our support of
distributors in these regions and move to 'remote' support from our UK base.
This approach has enabled us significantly to reduce cost with no adverse impact
upon the quality of business flowing from the distributors.
Since the last quarter of 2004 we have seen a small improvement in the volume of
sales to the Far East and a substantial improvement in the timing of payment for
product shipped. It is our intention to continue on this basis for the
foreseeable future and at least until revenues justify further 'in country'
support. Our distributors are well placed to exploit increased interest in
haemodynamic optimisation and are fully trained in the use of our technology.
Research and Development
Our research and development efforts have been focused on the further
development and clinical evaluation of the wholly non-invasive SupraQ(TM)
device. This product has enormous commercial potential.
By the end of year, the research and development team had demonstrated that it
was quick and easy to use the SupraQ to capture a signal with the device in the
clinical setting.
We are now working with a small number of doctors who are familiar with the
CardioQ in order to complete the validation of the product prior to commercial
launch. The validation process requires us to demonstrate repeatability of
multiple readings from the same patient, the ability to show progressive changes
in fluid status in patients with hypovolaemia, and equivalence with the CardioQ.
Only when this phase of the product development cycle is successfully
completed will we be able to launch a first generation device for use in
specific clinical applications.
In June 2004 we launched a dedicated paediatric monitor, the CardioQPTM and
probe, the KDP. The CardioQP is intended for use in children undergoing surgery
or in intensive care and is suitable for monitoring babies down to 3Kg in
weight. This device is only for sale to specialist paediatric centres and
allows us to bring the benefits of 'early indicator' monitoring that only
flow-based monitors can provide to this vulnerable and haemodynamically volatile
group of patients.
Prospects
Deltex Medical is better positioned than ever before to continue to strengthen
its market leading position as haemodynamic optimisation becomes further
embedded as a standard of care for the management of patients undergoing
moderate and major surgery.
In parallel with our own profile-raising activities, initiatives are being
implemented by a prestigious group of senior doctors in the UK that are based
upon our core marketing messages. These initiatives are targeted at
politicians, the Department of Health and the wider NHS and will further
highlight the urgent need to modernise surgical patient care. The doctors have
stated that they believe that because of the economic and clinical benefits that
accrue it should no longer to be acceptable for UK hospitals to function without
implementing haemodynamic optimisation as a standard of care.
We are confident that our strategy will deliver better care for patients,
enormous savings for healthcare providers and increasing and sustainable value
to our shareholders.
Nigel Keen
Chairman
15 March 2005
Consolidated profit and loss account
for the year ended 31 December 2004
Note 2004 2003
£'000 £'000
Unaudited Audited
______ ______
Turnover 2 2,494 3,084
Cost of sales (907) (1,222)
______ ______
Gross profit 1,587 1,862
______ ______
Net operating expenses (4,374) (4,287)
______ ______
Operating loss (2,787) (2,425)
Net interest 14 29
______ ______
Loss on ordinary activities before taxation (2,773) (2,396)
Tax on loss on ordinary activities 19 4
______ ______
Loss for the financial year (2,754) (2,392)
______ ______
Loss per share - basic and diluted 5 (4.3p) (4.7p)
______ ______
The above results all relate to continuing operations. The loss on ordinary
activities before taxation and the loss for the financial year have been
computed on the historical cost basis.
Statement of Group total recognised gains and losses
for the year ended 31 December 2004
2004 2003
£'000 £'000
Unaudited Audited
______ ______
Loss for the financial year (2,754) (2,392)
Currency translation differences in foreign currency net investment (5) (55)
______ ______
(2,759) (2,447)
______ ______
Consolidated balance sheet
At 31 December 2004
2004 2003
£'000 £'000
Unaudited Audited
______ ______
Fixed assets
Tangible assets 136 191
______ ______
Current assets
Stocks 758 572
Debtors:
amounts falling due within one year 783 1,953
amounts falling due after more than one year 72 -
Cash at bank and in hand 1,207 1,093
______ ______
2,820 3,618
Creditors:
amounts falling due within one year (920) (1,059)
______ ______
Net current assets 1,900 2,559
______ ______
Total assets less current liabilities 2,036 2,750
Creditors:
amounts falling due after more than one year (7) -
Provisions for liabilities and charges (35) -
Net assets 1,994 2,750
______ ______
Capital and reserves
Called up share capital 695 617
Share premium account 12,182 10,381
Capital redemption reserve 17,476 17,476
Merger reserve - 1,776
Profit and loss account (28,359) (27,500)
______ ______
Equity shareholders' funds 1,994 2,750
______ ______
Consolidated cash flow statement
for the year ended 31 December 2004
Note 2004 2003
£'000 £'000
Unaudited Audited
______ ______
Net cash outflow from operating activities 3 (1,988) (2,960)
______ ______
Returns on investments and servicing of finance
Interest received 15 31
Finance lease interest (1) (2)
______ ______
Net cash inflow from returns on investments and servicing of finance 14 29
______ ______
Taxation 102 36
Capital expenditure
Purchase of tangible fixed assets (9) (45)
______ ______
Net cash outflow from capital expenditure (9) (45)
______ ______
Net cash outflow before financing (1,881) (2,940)
______ ______
Financing
New finance leases 15 -
Other borrowings 105 -
Capital element of finance lease rentals (2) (5)
Issue of ordinary share capital 1,964 2,161
Expenses in connection with share issue (85) (132)
Net cash inflow from financing 1,997 2,024
______ ______
Increase/ (decrease) in net cash in the year 116 (916)
______ ______
Notes to the preliminary results
for the year ended 31 December 2004
1. Nature of the financial information
The financial statements for Deltex Medical Group plc have yet to be approved
for the year ended 31 December 2004. The financial information set out in this
announcement does not constitute the Company's statutory accounts for the year
ended 31 December 2004 or 31 December 2003. The financial information for the
year ended 31 December 2003 is derived from the statutory accounts for that year
which have been delivered to the Registrar of Companies. The auditors reported
on those accounts; their report was unqualified and did not contain a statement
under either Section 237 (2) or Section 237 (3) of the Companies Act 1985. The
statutory accounts for the year ended 31 December 2004 will be finalised on the
basis of the financial information presented by the directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the Company's Annual General meeting.
The preliminary results have been prepared in accordance with applicable
accounting standards. The particular accounting policies adopted are the same
as those adopted in the financial statements for the year ended 31 December
2004.
2. Turnover
The Group's activities consist solely of the manufacture, maintenance and
marketing of medical devices. By origin, all sales are United Kingdom sales
except for £284,000 of sales from the Company's US subsidiary (2003: £357,000).
2004 2004 2004 2004
Probes Monitors Other Total
£'000 £'000 £'000 £'000
______ ______ ______ ______
Analysis of turnover by destination
Direct markets
United Kingdom 1,254 169 53 1,476
United States of America 273 10 1 284
Distributor markets
Rest of Europe 390 277 2 669
Rest of the World 32 32 1 65
______ ______ ______ ______
1,949 488 57 2,494
______ ______ ______ ______
(continued from table above)
2003 2003 2003 2003
Probes Monitors Other Total
£'000 £'000 £'000 £'000
______ ______ ______ ______
Analysis of turnover by destination
Direct markets
United Kingdom 1,288 558 32 1,878
United States of America 336 20 1 357
Distributor markets
Rest of Europe 292 358 4 654
Rest of the World 135 59 1 195
______ ______ ______ ______
2,051 995 38 3,084
______ ______ ______ ______
3. Reconciliation of operating loss to net cash outflow from operating
activities
2004 2003
£'000 £'000
Unaudited Audited
______ ______
Operating loss (2,787) (2,425)
Depreciation on tangible fixed assets 79 186
(Increase)/decrease in stocks (186) 77
Decrease/(increase) in debtors 1,015 (1,029)
(Decrease)/increase in creditors (207) 27
Costs associated with share option schemes 124 223
Foreign exchange differences (26) (19)
______ ______
Net cash outflow from operating activities (1,988) (2,960)
______ ______
4. Dividends
The directors do not recommend payment of a dividend (2003: nil).
5. Loss per share
The loss per share calculation for 2004 is based on the loss for the financial
year of £2,754,000 and weighted average number of shares in issue of 63.4
million. For 2003 the loss per share calculation was based upon the loss of
£2,392,000 and weighted average number of shares in issue of 50.8 million.
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.
6. Distribution of announcement
Copies of this announcement are being sent to all shareholders and will be
available for collection free of charge from the Company's registered office at
Terminus Road, Chichester, West Sussex PO19 8TX.
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