Preliminary Results Announcement
Deltex Medical Group plc
Preliminary results for the year ended 31 December 2010
1 March 2011 - Deltex Medical Group plc ("Deltex Medical", "Group" or "Company"), the global leader in oesophageal Doppler monitoring (ODM), today announces its preliminary results for the year ended 31 December 2010.
Financial Highlights
· Sales increased 11% to £6.3m
· Gross margin 74%
· Adjusted operating loss reduced 77% to £0.3m
· Operating loss reduced 33% to £1.35m
· Operating cash positive in second half
· Cash at 31 December of £0.7m
Operating Highlights
· CardioQ-ODM used on over 5,000 patients a month
· UK surgical probe sales up 26% (34% up in second half)
· USA probe sales up 27%
· CardioQ-ODM selected for adoption by four of the ten NHS English regions (to date)
· Positive draft recommendation from National Institute for Health and Clinical Excellence (NICE)
· Additional revenue available for UK hospitals adopting CardioQ-ODM as quality initiative
· First managed care service contract signed in UK worth at least £180,000 over three years
· Largest US hospital account signs contract worth over $400,000 a year
· Tender won to supply Paris hospital system for three years
Nigel Keen, Chairman, commented:
"Deltex Medical has entered an exciting phase of its development. The Company passed the operating cash break-even point for the first time in the second half of 2010. Sales are growing in all our target markets with the strongest growth coming from the markets on which we are most focused. Sales of surgical probes in the UK in the second half of 2010 and to date in 2011 are indicating an acceleration in growth rates and there are a number of UK health policy initiatives that are aimed at wider scale adoption of ODM going forward."
For further information, please contact:-
Deltex Medical Group plc 01243 774 837
Nigel Keen, Chairman njk@deltexmedical.com
Ewan Phillips, Chief Executive eap@deltexmedical.com
Paul Mitchell, Finance Director pjm@deltexmedical.com
Nominated Adviser & Broker
Arden Partners plc 020 7614 5900
Chris Hardie chris.hardie@arden-partners.com
Jamie Cameron jamie.cameron@arden-partners.com
Kreab Gavin Anderson 020 7074 1800
Robert Speed rspeed@kreabgavinanderson.com
Deborah Walter dwalter@kreabgavinanderson.com
Notes for Editors
Deltex Medical manufactures and markets the CardioQ-ODMÔ system. CardioQ-ODM changes the way doctors care for surgical patients allowing them to recover faster and leave hospital sooner and in better health than they otherwise would do. The performance of the system has been validated through independently conducted, randomised controlled clinical trials and is being translated into routine clinical practice in leading hospitals around the world.
CardioQ-ODM comprises a monitor and a single patient disposable probe. The probe is placed into the oesophagus through either the mouth or nose and the tip positioned facing the adjacent descending aorta. A low frequency ultrasound signal, generated by the monitor, is bounced off the blood travelling down the aorta and the Doppler principle is used to determine the velocity of the blood flow, expressed in distance per cardiac cycle - 'Stroke Distance'. The monitor also calculates the amount of time that blood is flowing down the aorta as a proportion of a cardiac cycle - 'Flow Time'.
The monitor uses a validated proprietary nomogram to extrapolate volumetric data (Stroke Volume, Cardiac Output etc) from the directly measured flow velocity. The nomogram utilises the patient's age weight and height, effectively to estimate the size of the aorta in which the velocity of the flow is being measured. Crucially this means that any reported relative change in Stroke Volume is absolutely identical to the relative change in the directly measured flow velocity variable of Stroke Distance. CardioQ-ODM immediately and reliably identifies even very small changes in the blood flow velocity allowing doctors to intevene earlier and on smaller changes than with any other approach.
Intra-operative individualised Doppler guided fluid management entails insertion and focusing of the probe to obtain a baseline reading, giving a small (200 to 250 ml) fluid challenge directly into the vascular system and seeing if Stroke Volume (or Stroke Distance) increases by more than 10%. If the increase is more than 10%, repeat fluid boluses are administered until such time as the increase is less than 10%: after this no further fluid is given unless Stroke Volume falls by more than 10% - the process is designed to achieve and maintain the individual patient's optimal Stroke Volume. CardioQ-ODM is also used during surgery to guide administration of vaso-active agents such as inotropes.
The CardioQ-ODM helps patients by enabling doctors to reduce the complications that arise from a medical condition that is common to almost all patients having surgery and many others in intensive care or arriving in the accident and emergency department. This condition is known as hypovolaemia - a reduction in circulating blood volume - and in surgical patients arises as a direct consequence of the combined effects of pre-operative starvation, the anaesthetic agents and the blood and fluid losses associated with the surgical procedure itself. Hypovolaemia means that the body struggles to get sufficient blood to the tissues and vital organs which are consequently starved of essential oxygen. This can cause medical complications including peripheral and major organ failure, which if not dealt with quickly can lead to severe compromise or even death.
There are already over 2,300 CardioQ-ODMs currently in use in hospitals worldwide and distribution arrangements are in place in over 30 countries. In addition, there are currently more than 250 clinical publications on the use of the CardioQ-ODM which have repeatedly:-
· Validated the results of CardioQ-ODM against known standards for measuring cardiac output
· Proved that CardioQ-ODM works in a wide range of surgical procedures
· Proved that CardioQ-ODM delivers 50% or more reductions in post-operative complications and 25% or more reductions in length of hospital stay: better care at lower cost.
The SupraQÔis an entirely non-invasive device which uses an ultrasound probe held at the base of the patient's neck to track the flow of blood in the aorta; it presents the same data as the CardioQ-ODM in a similar format and is used for taking snapshots or monitoring over short periods.
Chairman's Statement
Deltex Medical made progress in all its key markets during 2010 with revenues rising by 11% to £6,279,000. Gross margins were 74% overall and over 80% in our direct sales markets. Operating expenses were £249,000 (4%) lower than in 2009 at £5,995,000. The operating loss was reduced by £665,000 (33%) to £1,353,000. The 2009 operating loss of £2,018,000 was after exceptional items included within operating expenses of £555,000.
Cash used in operations was reduced by 53% to £791,000 and adjusted operating cashflows before movements in working capital was reduced by 77% to £300,000. Both these totals for the year were lower than at the interim stage and in the second half of the year Deltex Medical generated cash from operations. Cash at 31 December was £699,000.
Passing the operating cash breakeven point in the second half of the year was a major development for the Company and is a product of sales growth and cost control. Our cash cost base remains 20% below its peak in 2008 and only a few carefully targeted and modest increases are planned for 2011. The momentum driving our sales growth means the Company is on track towards consistent generation of cash and profitability.
Sales growth rates in our key target markets continued their recovery from the lower levels seen in the first half of 2009 and have continued to be encouraging in the early part of 2011. Revenues from surgical probes in the UK were 26% ahead over the whole of 2010, a significant step-up from the 16% growth achieved in the first half of the year. Probe revenues in the USA were 27% ahead of 2010, with higher growth in the geographical areas in which we are focused.
Our goal is to make oesophageal Doppler monitoring (ODM) a standard of care for patients undergoing major surgery and in intensive care. We believe that, in most modern health systems, it is essential to have a robust evidence base of both clinical benefit and cost effectiveness in order to achieve system-wide adoption of a new medical technology. Deltex Medical is one of the very first medical technology companies to have completed the investment necessary to build such an evidence base: as a result, use of ODM during surgery has the proven potential to deliver both clinical and economic benefits that are material at each of patient, hospital and system level.
The UK is the Company's most developed market and a country which has placed improving the quality of patient outcomes at the top of its health policy agenda. Providing better quality care to patients often results in such care being less expensive and so healthcare systems looking to reduce costs should focus efforts on improving quality of care.
Since early 2010 there have been a growing number of NHS initiatives which are aimed at acting as drivers to the system-wide uptake of CardioQ-ODM: in January 2010 the NHS Technology Adoption Centre published its 'How to Why to' guide on how to implement CardioQ-ODM effectively into routine practice in NHS hospitals; in March 2010, the UK Department for Health published its guide 'Delivering Enhanced Recovery - helping patients to get better sooner after surgery' where improved intraoperative fluid management using ODM is one of the key recommendations; in October 2010 the National Institute for Health and Clinical Excellence (NICE) published draft guidance to the NHS recommending CardioQ be used in patients undergoing major or high risk surgery who would otherwise require invasive cardiac monitoring; in November 2010 the NHS published a series of exemplars for quality targets against which hospitals can earn premium payments including three related to enhanced recovery and one specific to ODM - the only such technology specific exemplar; since the inception of the NHS Innovative Technology Adoption Procurement Programme. Four of the ten English health regions have so far selected ODM for roll-out in their first year's programme - more regions than for any other technology in the programme.
Quality agendas are emerging as central to health policy in a number of countries including the USA and Spain where we have direct sales operations. These are underpinned by the requirement for evidence of the effectiveness of new medical technologies, treatments and processes. In France, where clinician advocacy and patient benefit rather than health economics remain the most powerful drivers behind new medical technology adoption, CardioQ-ODM underwent a comprehensive clinical evaluation resulting in our distributor being awarded a three year tender to supply the Paris hospital system.
Deltex Medical has entered an exciting phase of its development. The Company passed the operating cash break-even point for the first time in the second half of 2010. Sales are growing in all our target markets with the strongest growth coming from the markets on which we are most focused. Sales of surgical probes in the UK in the second half of 2010 and to date in 2011 are indicating an acceleration in growth rates and there are a number of UK health policy initiatives that are aimed at wider scale adoption of ODM going forward.
Nigel Keen
Chairman
1 March 2011
Operating Review
Overview
During 2010 Deltex Medical strengthened its position as the global market leader in oesophageal Doppler monitoring (ODM). ODM benefits substantial numbers of patients, the largest group being patients undergoing major or high risk surgery and the potential of ODM is being recognised increasingly by each of clinicians, health policy makers and healthcare administrators. ODM during surgery is a simple procedure that is easy to learn and quick to perform and so can be implemented successfully into routine clinical practice.
Global economic conditions were more favourable for the sale of innovative medical technology in 2010 than in 2009, although hospital budgets remained constrained in many countries with restrictions on budgets for both capital spending and disposable items. The Company has adapted its business model to support momentum in the uptake of ODM both in markets it supports directly and those it supplies through distributors. As a result, the Company delivered increased sales overall in all its key markets with the strongest contributors to growth coming from the key revenue streams from sale of disposable probes for use in surgery in the UK, USA and focus markets in Europe.
Coupled with the increase in sales, tight cost control meant that the vast majority of the additional margin on sales flowed through to the bottom line and contributed to the Company generating operating cash in the second half of the year.
We are pursuing a number of exciting research and development projects aimed at broadening the clinical markets for our products and aim to accelerate these as cash flows allow.
Trading results
Revenue
|
|
2010 |
2010 |
2010 |
2010 |
2010 |
2010 |
2009 |
2009 |
2009 |
2009 |
2009 |
2009 |
|
|
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 |
32,510 |
54 |
2,611 |
500 |
179 |
3,290 |
29,290 |
53 |
2,430 |
391 |
172 |
2,993 |
|
USA |
7,230 |
3 |
830 |
29 |
5 |
864 |
6,220 |
2 |
655 |
12 |
6 |
673 |
|
Spain |
1,190 |
5 |
131 |
57 |
0 |
188 |
605 |
- |
69 |
- |
- |
69 |
|
Distributor markets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
10,810 |
76 |
597 |
326 |
10 |
933 |
9,895 |
104 |
594 |
599 |
18 |
1,211 |
|
Far East & Latin America |
9,341 |
136 |
426 |
571 |
7 |
1,004 |
7,930 |
102 |
333 |
355 |
6 |
694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,081 |
274 |
4,595 |
1,483 |
201 |
6,279 |
53,940 |
261 |
4,081 |
1,357 |
202 |
5,640 |
Revenue grew by £639,000 (11%) to £6,279,000. £514,000 of the growth (80%) came from increased sales of disposable probes which grew by 13% to £4,595,000: the CardioQ-ODM was used to treat, on average, over 5,000 patients each month. Recurring revenue streams, probe sales plus monitor service and maintenance, accounted for 76% of total Group revenue.
The largest contributors to probe growth were sales of surgical probes in the UK which increased by £347,000 (26%) to £1,702,000 and sales of probes in the USA which increased by £175,000 (27%) to £830,000. The year on year growth in surgical probe sales in the UK increased in the second half of the year to 34% from 16% in the first half.
Monitor sales increased by £126,000 (9%) to £1,483,000. Although monitor sales in the UK were £109,000 higher than in 2009, they were still nearly 19% behind 2008 levels: compared to 2008, monitor sales in the UK in 2010 included higher proportions of sales to private hospitals and of sales to NHS intensive care units which were funded by charitable donations rather than out of constrained NHS budgets. We estimate that in many parts of the UK, NHS budgets for new capital equipment were up to 80% lower than in 2007 or 2008. To ensure momentum in the adoption of CardioQ-ODM, the Company placed over 80 monitors into NHS operating theatres during 2010 either on a loan basis or under a managed care service contract. Towards the end of the year we agreed the first of our revised format for managed care service contracts with an NHS hospital worth a minimum of £180,000 over three years. In many of our export markets our distributors encountered similar budget constraints and monitor sales were generally strongest into those economies, less affected by the global recession.
Operating results
The operating loss decreased by £665,000 (33%) from £2,018,000 in 2009 to £1,353,000 in 2010. This reduction was a product of the increase in revenue and reduced costs. Operating costs include substantial non-cash items including accounting charges for share-based payment, depreciation and amortisation of fixed assets and intangible assets, clinical trial charges and changes to provisions. An adjusted loss for the year has been presented on the face of the Consolidated Statement of Comprehensive Income to separate out the impact of these non-cash charges. This shows an adjusted loss for 2010 of £300,000 was 77% lower than in 2009.
Gross margins were 74%, slightly lower than in 2009 (75%) due to changes to sales mix. The Group's long term target is to deliver and sustain gross margins of at least 80% and it achieved this in 2010 in each of its direct sales markets of UK, USA and Spain.
Operating costs in 2009 included exceptional charges totalling £555,000. Excluding these, the 2010 operating loss was £110,000 lower than in 2009. Operating expenses in 2010 were £249,000 lower than in 2009, including an additional £359,000 of non-cash costs. Such costs were approximately £400,000 higher than originally expected primarily as a result of accounting for the early completion of clinical trials around the end of the year and a post year-end provision in respect of the current political uncertainty in the Middle East. Cash operating expenses were kept under tight control in 2010 with a view to accelerating profitability without affecting the potential long term market penetration of CardioQ-ODM. The overall loss for the year was £520,000, 26% lower than in 2009.
Cash
Cash at 31 December 2010 was £699,000. The Company was operating cash positive in the second half of 2010, increasing its cash between 1 July 2010 and 31 December 2010 by £126,000.
Net cash used in operating activities in 2010 was £979,000 (55%) less than in 2009 and £1,597,000 (67%) less than in 2008.
Sales are normally higher in the second half of the year than the first half both because of underlying growth trends and because of higher than usual orders from international distributors as they agree their marketing programmes for the following year: in 2010 the Company achieved circa 20% of the year's sales in December. Sales growth in the first two months of 2011 has encouraged the Board that the Company is on track to deliver at least the levels of continuing sales growth required to become consistently cash positive throughout a financial year.
Markets
There are currently two established clinical applications for the CardioQ-ODM: firstly, to guide fluid management during surgery and secondly, to monitor cardiac output in critical care settings.
Individualised Doppler guided fluid management using the CardioQ-ODM is increasingly recognised as a core component of optimal intra-operative care for large numbers of patients undergoing major surgery. The potential market includes patients likely to be under general or large regional anaesthetic for an hour or more, patients undergoing surgery that involves access to a body cavity, expected significant blood loss or laparoscopic (keyhole) surgery.
To date, CardioQ-ODM has been shown to deliver benefit in every type of surgery in which its use has been evaluated. Government records, independently validated as part of the NICE evaluation process on CardioQ-ODM, indicate over 800,000 adult patients a year undergoing surgery in the NHS in England to whom the CardioQ-ODM evidence base already applies, with further potential usage in private hospitals, paediatric surgery and lower risk adult surgery. The incidence of major surgery per head of population is broadly similar in most developed healthcare systems.
In critical care settings, well-equipped hospitals will often have more than one cardiac output monitoring technology available. In this environment, ODM's strengths are that it is quick to set up, easy to use, safe, low cost and the ideal technology for a patient in crisis requiring rapid or frequent intervention. The potential market for cardiac output monitoring in critical care is a fraction of the size of that for intra-operative fluid management.
United Kingdom
In total UK sales grew by £297,000 (10%) over 2009, representing a return to growth after a 5% decline in 2009. 70% of the sales growth in the year came in the second half giving a clear indication of growing momentum in the UK.
The biggest driver of UK sales growth came from sales of surgical probes which increased by £347,000 (26%): the surgical probe growth compared to 2009 was 16% in the first half of the year and 34% in the second half of the year.
Sales of intensive care probes fell by £166,000 (15%) over the year, continuing a trend towards lower usage of cardiac output monitoring in UK intensive care units as clinical practice has evolved: whereas in the past most patients were sedated to the point of unconsciousness while in intensive care, the preference now is to keep them awake and mobile where possible, thus reducing the need for cardiac output monitoring. The Company expects the market for CardioQ-ODM in UK intensive care medicine to level off over time.
There are a number of UK health policy initiatives coming to bear and highlighted in the Chairman's statement which might provide opportunities for accelerated uptake of CardioQ-ODM either individually or collectively. As a result of these, combined with continued increase in acceptance amongst UK clinicians that there is benefit to more active management of patients' circulations during surgery, the case for hospitals to adopt CardioQ-ODM is increasingly compelling. NICE's evaluation provides gold standard validation that CardioQ-ODM improves patient outcomes and reduces costs and the possibility of additional reimbursement as a quality indicator means hospitals can also increase income. In addition, the work of the NHS Technology Adoption Centre sets out a clear roadmap as to how CardioQ-ODM can be implemented effectively into routine practice.
United States of America
Sales in the USA were £191,000 (28%) ahead of 2009, driven by a £175,000 (27%) increase in probe sales: probe sales comprised over 96% of total sales in the USA where our normal model is to place monitors free of charge in return for higher probe prices.
We have continued to refine our approaches to sales, clinical training and customer support in the USA and are increasingly confident in our ability to generate attractive returns on our investments once there is a reasonable degree of clinical acceptance of the need to manage better patients' central circulations during surgery. As a consequence, in those hospitals where we focused, we increased probe revenues from CardioQ-ODM's surgical application by over 40%. Momentum has been maintained through January and February 2011.
Our largest account in the USA is also our largest single account in the world. In May it entered a contract with us for the supply of not less than 200 probes a month with a minimum value in excess of $400,000 per year. Rapid growth in our second largest account in the USA established it as one of our ten largest accounts globally.
Our objective in the USA is to achieve system-wide adoption of the CardioQ-ODM to guide fluid management during major surgery. Our strategy is to work with a small number of reputable hospitals to achieve broad penetration of individualised Doppler guided fluid management within them and to demonstrate the clinical and economic benefits of this implementation. We are also working centrally to raise awareness of the opportunities created by the advances in care enabled by CardioQ-ODM.
Recognition of the important impact of haemodynamic management on surgical outcomes in the USA has for many years lagged this recognition in the UK and Europe, however, there are clear signs of this changing with haemodynamic management featuring more prominently on the agendas of clinical meetings for anaesthetists and surgeons.
Progress with translating the US reimbursement policy into practice since the Centers for Medicare and Medicaid Services (CMS) national coverage determination in 2007 has been slow with a clear reluctance on behalf of many of CMS's agents to implement the policy. In the second half of 2009 we adopted a more sophisticated approach to supporting reimbursement into actual practice, including increased engagement with both policy makers and local CMS decision makers. In 2010 in some of our geographical focus areas this has proved successful and led to an easier path to reimbursement for clinicians: as expected, where reimbursement is established satisfactorily, it is associated with more rapid adoption of CardioQ-ODM.
International
Distributors service export markets, with the exceptions of USA and Spain, with support from a small team of our own staff.
Sales to distributors in 2010 totalled £1,937,000, an increase of £32,000 over 2009. This increase mainly comprises the net effect of a £96,000 (10%) increase in probe revenues and a £57,000 (6%) decrease in monitor sales. Changes in the sales mix meant average selling prices for probes were slightly reduced from £52 to £51. The average selling price of monitors to distributors fell by 9% to £4,231 reflecting the more difficult markets for capital sales in many healthcare systems.
Probe growth was strongest in our best established distributor markets in France, Scandinavia and Peru. In December in France our distributor won a major tender to be able to supply CardioQ-ODM probes to the Parisian hospital system for three years. As a result, our French distributor purchased 24 additional CardioQ-ODM monitors towards the end of the year.
International monitor sales were generally strongest, relative to prior years, into the Middle East, where many economies were protected from the impact of global recession through oil exports. Since the year end, however, there has been a degree of political turmoil in this region as a result of which the Company has made a provision against its sovereign risk exposure on amounts owing by distributors in certain countries.
We have a small direct sales team in Spain whose efforts are focused entirely on two projects aimed at establishing the drivers necessary for system-wide adoption of CardioQ-ODM. Sales in 2010 were £188,000 (2009: £69,000) as a result primarily of a small number of one-off orders related to these projects which may not be repeated until after completion of the projects.
In the first project we are supporting a group of leading colorectal surgeons who are pioneering the introduction of enhanced recovery surgical care bundles in Spain: use of CardioQ-ODM is one of four mandatory steps out of the 14 within the programme due to its demonstrably high impact on patient outcome. This group has told us that it expects the number of participating hospitals to increase in the next year.
We are also supporting a multi-centre trial sponsored by Spanish agencies responsible for health technology assessment. By the end of 2010, four hospitals had purchased the equipment needed for the trial which is expected to take at least a year to complete. The trial includes patients undergoing major abdominal, gynaecological, urological and trauma surgery.
Research and Development
Our research and development ('R&D') activities are focused in two areas: firstly, the further development of our CardioQ-ODM monitors and probes with a particular objective of making them still easier to use in broader clinical settings and applications; secondly research into and development of complementary and new products.
Prospects
We have started 2011 with confidence. We generated operating cash in the second half of 2010, have growing sales and signs of increasing momentum in our key target markets, a lean and effective cost base, strong margins and a full pipeline of sales prospects. Our products are independently validated as delivering better care, better health and lower costs which puts them in the "sweet spot" of evolving health policy in many developed health economies.
Ewan Phillips
Chief Executive
1 March 2011
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2010
Note Unaudited Unaudited
2010 2009
£'000 £'000
Revenue 6,279 5,640
Cost of sales (1,637) (1,414)
Gross profit 4,642 4,226
Administrative expenses (2,346) (2,919)
Sales and distribution costs (3,367) (3,070)
Research and development costs (282) (255)
(5,995) (6,244)
Operating loss (1,353) (2,018)
Analysed as:
Operating loss before exceptional items (1,374) (1,463)
Exceptional items 21 (555)
Operating loss (1,353) (2,018)
Finance income 1 2
Finance costs (161) (114)
Loss before taxation (1,513) (2,130)
Tax on loss 45 142
Loss for the year (1,468) (1,988)
Other comprehensive income
Exchange differences taken to reserves (6) (16)
Other comprehensive income for the year, net of tax (6) (16)
Total comprehensive income for the year (1,474) (2,004)
Loss per share - basic and diluted 5 (1.1p) (1.9p)
Consolidated Statement of Comprehensive Income
Alternative performance measures (note 2)
Unaudited Unaudited
2010 2009
£'000 £'000
Adjusted operating loss
Operating loss including non-cash items (1,353) (2,018)
Share based payments 522 528
Equity settled costs 116 164
Net non-cash clinical trial charges/(credits) 70 (114)
Depreciation and amortisation 154 95
Net increase in provisions, including receivables 136 70
Sundry non-cash charges/(credits) 55 (2)
Adjusted operating loss before non - cash items (300) (1,277)
These supplementary disclosures do not form part of the Consolidated statement of comprehensive income and these tables are not included in the notes to the financial statements.
Consolidated Balance Sheet
at 31 December 2010
Unaudited Unaudited
2010 2009
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 239 232
Intangible assets 437 263
Trade and other receivables 328 326
Total non-current assets 1,004 821
Current assets
Inventories 573 492
Trade and other receivables 1,996 2,037
Current income tax recoverable 95 148
Cash and cash equivalents 699 1,480
Total current assets 3,363 4,157
Total assets 4,367 4,978
Liabilities
Current liabilities
Borrowings (689) (526)
Trade and other payables (1,226) (1,262)
Total current liabilities (1,915) (1,788)
Non - current liabilities
Borrowings (1,335) (1,304)
Provisions for other liabilities and charges (108) (87)
Total non - current liabilities (1,443) (1,391)
Total liabilities (3,358) (3,179)
Net assets 1,009 1,799
Equity
Share capital 1,320 1,269
Share premium 20,116 19,974
Capital redemption reserve 17,476 17,476
Other reserves 2,890 2,399
Translation reserve 5 11
Retained deficit (40,798) (39,330)
Total equity 1,009 1,799
Consolidated Statement of Changes in Equity
for the year ended 31 December 2010
|
Group |
Share capital |
Share premium |
Capital redemption |
Other Reserve |
Translation reserve |
Retained deficit |
Total equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2009 |
1,004 |
18,110 |
17,476 |
1,709 |
27 |
(37,342) |
984 |
|
|
--- |
--- |
--- |
--- |
--- |
--- |
--- |
|
Comprehensive income |
|
|
|
|
|
|
|
|
Loss for the period |
- |
- |
- |
- |
- |
(1,988) |
(1,988) |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
Shares issued during the period |
265 |
- |
- |
- |
- |
- |
265 |
|
Premium on shares issued during the period |
- |
1,972 |
- |
- |
- |
-
|
1,972 |
|
Issue expenses |
- |
(108) |
- |
- |
- |
- |
(108) |
|
Credit in respect of service cost settle by award of options |
-
|
-
|
- |
690 |
- |
- |
690 |
|
Exchange movements taken to reserves |
-
|
-
|
-
|
-
|
(16)
|
-
|
(16)
|
|
|
--- |
--- |
--- |
--- |
--- |
--- |
--- |
|
Total comprehensive income for the year |
265 |
1,864 |
-
|
690 |
(16) |
(1,988) |
815 |
|
|
--- |
--- |
--- |
--- |
--- |
--- |
--- |
|
Balance at 31 December 2009 |
1,269 |
19,974 |
17,476 |
2,399 |
11 |
(39,330) |
1,799 |
|
|
--- |
--- |
--- |
--- |
--- |
--- |
--- |
|
Comprehensive income |
|
|
|
|
|
|
|
|
Loss for the period |
- |
- |
- |
- |
- |
(1,468) |
(1,468) |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
Shares issued during the period |
51 |
- |
- |
- |
- |
- |
51 |
|
Premium on shares issued during the period |
- |
142 |
- |
- |
- |
- |
142 |
|
Issue expenses |
- |
- |
- |
- |
- |
- |
- |
|
Credit in respect of service cost settle by award of options |
- |
- |
- |
491 |
- |
- |
491 |
|
Exchange movements taken to reserves |
- |
- |
- |
- |
(6) |
- |
(6) |
|
|
--- |
--- |
--- |
--- |
--- |
--- |
--- |
|
Total comprehensive income for the year |
51 |
142 |
- |
491 |
(6) |
(1,468) |
(790) |
|
|
--- |
--- |
--- |
--- |
--- |
--- |
--- |
|
Balance at 31 December 2010 |
1,320 |
20,116 |
17,476 |
2,890 |
5 |
(40,798) |
1,009 |
|
|
========= |
========= |
========= |
========= |
========= |
========= |
========= |
Consolidated Statement of Cash Flows
for the year ended 31 December 2010
Unaudited Unaudited
2010 2009
Note £'000 £'000
Net cash used in operations 4 (791) (1,701)
Interest paid (97) (68)
Income taxes received 98 -
Net cash used in operating activities (790) (1,769)
Analysed as:
Net cash used in operating activities before exceptional items (679) (1,308)
Exceptional items (111) (461)
Net cash used in operating activities (790) (1,769)
Cash flows from investing activities
Purchase of property, plant & equipment (143) (112)
Capitalised development expenditure (213) (143)
Interest received 1 2
Net cash used in investing activities (355) (253)
Cash flows from financing activities
Issue of ordinary share capital 193 2,237
Expenses in connection with share issue - (108)
Proceeds from increase in borrowings 187 1,002
Effect of exchange rate fluctuations on borrowings 8 (36)
Expenses in connection with new borrowing (16) (44)
Repayment of obligations under finance leases (7) (5)
Net cash generated from financing activities 365 3,046
Net (decrease)/increase in cash and cash equivalents (780) 1,024
Cash and cash equivalents at beginning of the year 1,480 475
Effect of exchange rate fluctuations on cash held (1) (19)
Cash and cash equivalents at end of the year 699 1,480
1 Nature of the financial information
This unaudited Preliminary Results Statement containing condensed financial information for the year ended 31st December 2010 is prepared in accordance with the accounting policies set out in the Annual Report 2009. New standards, amendments to standards or interpretations which were effective in the financial year beginning 1 January 2010 have not had a material effect on the group's financial statements.
The income statement, statement of comprehensive income, cash flow statement and statement of changes in equity for the year ended 31st December 2010 and the balance sheet at that date, are subject to completion of the audit and may also change should a significant adjusting event occur before the approval of the Annual Report 2010.
This Preliminary 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 balance sheet at 31st December 2009 has been derived from the full Group accounts published in the Annual Report 2009, which has been delivered to the Registrar of Companies and on which the report of the independent auditors was 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 Preliminary Results Statement.
a) 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. A reconciliation of the operating loss to the adjusted operating loss is shown beneath the Consolidated Statement of Comprehensive Income.
b) Adjusted operating cashflow before movement in working capital
This is defined as the operating cashflow before movement in working capital which relates to cash transactions only. Therefore any non-cash working capital elements have been removed. A reconciliation of the adjusted operating cashflow before movement in working capital to the operating cashflow before movement in working capital is shown beneath the Notes to the Cashflow Statement (note 4).
3 Dividends
The directors do not recommend payment of a dividend (2009: nil).
4 Notes to the Cashflow Statement
Unaudited Unaudited
2010 2009
£'000 £'000
Operating loss (1,353) (2,018)
Adjustments for:
Depreciation of property, plant and equipment 115 55
Amortisation of intangible assets 39 40
Exchange (gain)/loss on fixed assets (5) 5
Loss on disposal of fixed assets 26 -
Share based payments 491 690
Operating cashflows before movement in working capital (687) (1,228)
(Increase)/decrease in inventories (59) 75
Increase in trade and other receivables (6) (442)
Decrease in trade and other payables (60) (112)
Increase in provisions 21 6
Net cash used in operations (791) (1,701)
Operating cashflows before movement in working capital
Alternative performance measures (note 2)
Unaudited Unaudited
2010 2009
£'000 £'000
Adjusted operating cashflow before movement in working capital
Operating cashflow before movement in working capital (687) (1,228)
Equity settled costs 147 2
Net increase in provisions, including receivables 136 70
Net non- cash clinical trial charges/(credits) 70 (114)
Sundry non-cash charges 34 (7)
Adjusted operating cashflow before movement in working capital (300) (1,277)
These supplementary disclosures do not form part of the note to the cashflow statement and these tables are not included in the notes to the financial statements.
5 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 2010 is based on the loss of £1,468,000 and weighted average number of shares in issue of 129,563,192. For 2009 the loss per share calculation was based upon the loss of £1,988,000 and weighted average number of shares in issue of 105,398,460.
6 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 2010 will be sent to shareholders in due course. Both this announcement and the Report and Accounts (when released) will be available to download from the Company's website free of charge at www.deltexmedical.com.
This information is provided by RNS