Results Summary for the year ended 31 Dec 2011

RNS Number : 8298Y

Deltex Medical Group PLC

07 March 2012

 



Deltex Medical Group plc

Results Summary for the year ended 31 December 2011

7 March 2012 - Deltex Medical Group plc ("Deltex Medical", "Group" or "Company"),the global leader in oesophageal Doppler monitoring (ODM), today announces its audited results for the year ended 31 December 2011.

Financial Highlights

·      Sales of £6.3m

·      Higher quality revenue streams: probes generated 83% of cash sales (2010: 76%)

·      Gross margins 72%

·      Operating loss £1.4m (2010: £1.4m)

·      Cash of £0.8m

·      Sales contribution higher than cash costs in H2

·      Additional £0.6m investment in inventory and R&D

Operating Highlights

·      ODM one of six high impact innovations mandated for implementation by NHS

·      CardioQ-ODM the only haemodynamic monitor recommended by NICE

·      US pipeline expanded following implementation results from Duke University hospital

·      First system wide implementation commenced in Canada

·      New clinical trials underpin ODM's clinical benefits in urology and plastic surgery

Current Developments

·      In the UK, surgical probe sales growth over 40% for each of three consecutive months (December 2011, January and February 2012)

·      Partnership agreement with Premier, Inc. in USA opens a route to system wide uptake in USA

·      UK Department of Health selects fluid management in surgery for Innovative Technology Adoption Procurement Programme

·      CardioQ-ODM+ launched in UK

·      CardioQ-ODM and CardioQ-ODM+ awarded NHS Supply Chain tender

·      "Think Doppler" campaign launched

Nigel Keen, Chairman, commented:

"Deltex Medical is in an exciting and unique position. The NHS, the world's largest healthcare provider is actively pursuing the rapid and wide-scale implementation of our products. We are making considerable advances towards creating similar opportunities in other major healthcare systems around the world."

For further information, please contact:-

Deltex Medical Group plc	01243 774 837
Nigel Keen, Chairman	[e-mail]
Ewan Phillips, Chief Executive	[e-mail]
Paul Mitchell, Finance Director	[e-mail]
Nominated Adviser & Broker
Arden Partners plc	020 7614 5900
Chris Hardie	[e-mail]
Jamie Cameron	[e-mail]
Kreab Gavin Anderson	020 7074 1800
Robert Speed	[e-mail]
Deborah Walter	[e-mail]
Madeleine Palmstierna	[e-mail]

Notes for Editors

Deltex Medical manufactures and markets the CardioQ-ODMÔ system. Oesophageal Doppler monitoring using the CardioQ-ODM is the only therapy to measure blood flow in the central circulation in real time. Minimally invasive, easy to set up and quick to focus, the device generates a low-frequency ultrasound signal, which is highly sensitive to changes in flow and measures them immediately. 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.

The CardioQ-ODM has two distinct established clinical applications: firstly, to guide fluid management during surgery and secondly, to monitor cardiac output in critical care settings.

Surgical market

In March 2011 the National Institute for Health & Clinical Excellence ('NICE') recommended that CardioQ-ODM be considered for use in patients undergoing major and high risk surgery and in high risk patients undergoing major surgery. NICE estimated the applicable number of such patients in the NHS in England alone to be over 800,000 each year. CardioQ-ODM has been shown to be effective in both elective and emergency surgery and with both general and regional anaesthetics. This recommendation was specific to CardioQ-ODM and was based on the robust evidence base that it enjoys.

The NICE evaluation and recommendation confirms that the potential global market for CardioQ-ODM in surgery includes tens of millions of patients, even if confined to developed health economies: the most conservative estimate of the potential value of the market opportunity Deltex Medical has created is in excess of £1 billion per annum. The Company's core focus is on building market leading positions in this surgical market, both geographically and by type of surgery.

Critical care market

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.

Through the recent launch of the CardioQ-ODM+, Deltex Medical has incorporated pulse pressure variation, the best validated parameter from the Pulse Pressure Waveform Analysis ('PPWA') approach to monitoring cardiac output. Note that, in surgery, adding PPWA parameters does not expand per se the market potential of ODM, the Company's clinical and market research indicates that it may help accelerate some clinicians' acceptance of the value of ODM measured flow variables.

Company goal

Our goal is to make oesophageal Doppler monitoring (ODM) a standard of care for patients in both these markets. 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 Company is currently in the implementation phase of achieving this goal in a number of territories worldwide and there are already over 2,500 CardioQ-ODMs currently in use in hospitals worldwide and distribution arrangements are in place in over 30 countries.

Chairman's Statement

Deltex Medical made significantly greater progress in all its key markets during 2011 than indicated by the 0.4% increase in headline revenues to £6,303,000 as the underlying growth in the use of probes in surgery, the major market opportunity that we seek to address has been very substantial.  The most significant elements of this growth came from probe sales in the UK and probe sales to our international distributors, which were ahead of 2010 by £259,000 and £159,000 respectively. These increases were driven by increased surgical use and the growth rates for surgical probes in the UK and in our major distributed markets remain at around the established 20% per annum level. Strong growth in surgical probe sales meant December was a record month for probe sales in the UK and surgical probes since the year end have continued to be well ahead of 2011. In the UK, compared to the corresponding month a year previously, surgical probe growth has been over 40% for three consecutive months (December 2011, January and February 2012) and March has started strongly. Monitor sales volumes in the UK in 2012 to date are also well ahead of 2011 and include an order of ten CardioQ-ODMs from one of the NHS Scotland health board to enable implementation of enhanced recovery in bowel surgery in its region.

Gross margins were 72% overall and over 80% in our direct sales markets. Operating expenses were £55,000 lower than in 2010 at £5,940,000. The operating loss was £1,402,000 (2010: £1,353,000).

Cash used in operations increased by £546,000 to £1,337,000 after £430,000 additional investment in inventory in anticipation of more rapid growth and increased investment in research and development to expand our product range. Operating cash outflow before movements in working capital was £822,000 (2010: £687,000). Cash at 31 December was £752,000 and the Company was operating cash neutral in the second half.

We maintained our underlying cash cost base at a similar level to 2010 while increasing investment in research and development and in our UK 'Think Doppler' marketing campaign which was launched to coincide with the December announcement that the NHS is to prioritise full implementation of ODM. Only a few carefully targeted and modest increases in the cost base are planned for 2012. The momentum driving our sales growth means the Company is on track towards consistent generation of cash and profitability.

Probe sales in the USA in 2011 were £125,000 lower than in 2010 despite us maintaining our share of the potential market in all our major accounts and opening important new accounts. The volume of major elective operations in the USA fell sharply in the middle part of 2011 as fears over the economy grew and this led in turn to hospitals reducing stocks of probes.

Restricted capital budgets in many of our markets have held back our reported growth rates. Cash sales of monitors in 2011 were £438,000 (44%) lower than in 2010 with a major fall (£350,000) in revenues from the Middle East which suffered from political volatility. The trend away from capital sales since 2009 supports our strategic focus on increasing probe revenues which are both higher quality and more visible.

Important developments in the UK market, our largest and most developed market, during 2011 have reinforced the NHS's approach to establishing system wide adoption of a new medical technology. In March 2011 the National Institute for Health and Clinical Excellence ('NICE') recommended CardioQ-ODM be considered for use in all patients undergoing major and high risk surgery in the NHS with average savings of £1,100 per patient.  Across the whole UK this equates to an opportunity to save £1 billion of taxpayers' money through better and faster patient recoveries. CardioQ-ODM is the only fluid management monitoring technology recommended by NICE, which found CardioQ-ODM to be "dominant" over alternative cardiac output monitoring technologies during surgery, as it delivers both better outcomes and lower costs.

In December 2011 the chief executive of the NHS announced that ODM was one of six high impact innovations selected for full implementation. Financial penalties for insufficient progress on implementing these six innovations by March 2013 could exceed £15 million per annum in the largest NHS Trusts.

The Department of Health and NHS have formed a 'Task and Finish' group to develop and launch the plan for the implementation of fluid management monitoring in surgery and this is expected to report in the coming weeks. A number of related actions are already clear:

·      Intra-operative fluid management has been selected as one of three technologies to be pushed nationally by the Department of Health's Innovative Technology Adoption Procurement Programme ("ITAPP") in 2012/13

·      ITAPP has authority through inclusion in the NHS operating framework for 2012/13: ITAPP "identifies innovative technologies that can be adopted by local organisations. A small number of evidence-based technologies, including the Oesophageal Doppler Monitoring, are suggested for wide adoption by local health economies."

·      NICE has published a case study on ODM implementation on the NHS Evidence website within its recommendations to support the NHS's drive to improve Quality, Innovation, Productivity and Prevention ("QIPP")

·      NICE's most recent cost savings guidance league table shows CardioQ-ODM as the single highest impact technology it has recommended since 2005, accounting for over 40% of total identified cost savings by NICE

In March 2012 we launched the CardioQ-ODM+, a premium version of our monitors which allows clinicians to pursue an additional fluid management strategy, 'minimisation of respiratory swing', to that normally driven by ODM, 'stroke volume optimisation'. While the evidence base for this approach suggests only modest benefits over traditional care when compared to stroke volume optimisation, we expect it to broaden our products' appeal to clinicians.

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.

Having succeeded in creating an opportunity for potentially transformational growth in the UK, our key priorities in 2012 are to support the NHS deliver its implementation plan and to create similar opportunities for system wide adoption of CardioQ-ODM in other healthcare systems. In France probe consumption increased 20% during the year fol~lowing award of a major tender covering Paris hospitals late in 2010: forthcoming clinical guidelines from the French professional association of anaesthetists are expected to emphasise the importance of fluid management and monitoring during surgery. Doctors in Spain are making good progress with the world's largest randomised trial of fluid management in surgery to date and preliminary results may become available in the coming months. In Canada the Interior Health hospital system has completed satisfactorily the first phase of its CardioQ-ODM implementation programme and the results of the project, which is already generating considerable interest in the broader Canadian healthcare system, are due to be announced shortly.

In the USA, following the presentation of data by Duke University Hospital showing the impact of an enhanced recovery surgical programme using CardioQ-ODM in October 2011, we have embarked on a number of projects aimed at accelerating clinical acceptance and uptake of ODM guided fluid management: the recently announced partnership with Premier Inc is the most advanced of these. Meanwhile doctors are continuing to publish research showing the benefits of CardioQ-ODM in different types of surgery, enabling us to expand our areas of focus to additional surgical specialties.

Deltex Medical is in an exciting and unique position. The NHS, the world's largest healthcare provider, is actively pursuing the rapid and wide-scale implementation of our products. We are making significant advances in creating similar opportunities in other major healthcare systems around the world.

Nigel Keen

Chairman

7 March 2012

Operating Review

Overview

During 2011 Deltex Medical strengthened significantly 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. ODM's potential is being recognised increasingly by each of clinicians, health policy makers and healthcare administrators. ODM during surgery can be implemented successfully into routine clinical practice on a wide scale because it is a simple procedure that is easy to learn, quick to perform and applicable in a very wide range of patients.

In the UK, our largest and most developed market, we completed the proof of concept phase of our development with a recommendation in March 2011 from the National Institute for Health and Clinical Excellence ('NICE') that CardioQ-ODM be considered for use in all patients undergoing major and high risk surgery. The announcement in December 2011 that the NHS is to prioritise full implementation of ODM or similar fluid management monitoring technology confirmed the potential for Deltex Medical to move into a prolonged phase of accelerated growth. Internationally, we are making good progress in developing export markets for CardioQ-ODM.

The robust evidence base showing CardioQ-ODM to both improve patient outcomes and reduce costs gives Deltex Medical a substantial competitive advantage. CardioQ-ODM is the only fluid management monitoring technology recommended by NICE and, to date, NICE has chosen not to evaluate any of the three other haemodynamic monitoring technologies submitted to it by their manufacturers. NICE found CardioQ-ODM to be dominant (both better outcome and lower cost) over the most commonly available competitive approaches.

Probe revenues in 2011 amounted to 83% of total cash sales (which exclude clinical research revenues under barter arrangements), compared to 76% in 2010. Probe growth was strongest in the UK surgical market and in those international distributor markets where we focused most resource. As our business has developed we have increasingly focused on generating probe revenues and taking a pragmatic approach to increasing the installed base of monitors. This transition towards higher quality recurring revenue streams is timely as macro-economic conditions have meant capital budgets have become severely restricted in many of our markets.

In large part the drive behind the NHS decision to implement CardioQ-ODM comes because modern healthcare systems need to deliver higher quality care at lower costs in order to meet changing demographic needs. NICE estimates that CardioQ-ODM can save circa £1,100 per patient on average: this is equivalent to £1 billion saving each year across the whole UK. This emphasis on quality and efficiency has become more urgent as a result of fiscal deficits and healthcare inflation in many developed countries and we believe that adoption in one system is likely to accelerate success in other systems.

Rather than let the shortage of capital budgets slow down our progress in the UK towards CardioQ-ODM being widely adopted for use in surgery, we continued to expand the installed base through lending machines and introducing managed care service contracts. Overall the UK surgical installed base increased by 66 units to 519. In addition the critical care installed base increased by 9 units to 284. Going into the new NHS financial year and launch of the NHS implementation plan for ODM our priority is to expand the surgical installed base rapidly through a combination of monitor price reductions, loan programmes and managed care service contracts.

For those export markets where we work with distributor partners and we see opportunities for accelerated growth through overcoming capital budgetary restrictions holding back monitor installations, we are actively considering new business models which will help rapid growth in the current environment through facilitating wider availability of monitors in operating theatres.

Overall, the modest 5% growth in monitor revenues in the first half turned into a 29% fall in the second half compared to 2010. Where we had anticipated difficulties in repeating monitor revenues from 2010, for example from the Middle-East due to political instability, we were able to redeploy resources and replace some of the lost revenue with higher quality probe revenues backed by exciting growth opportunities in markets such as Canada, Scandinavia, Austria and Australia. In the UK, monitor sales volumes fell sharply from the April start of the NHS financial year and only started to recover towards the end of the year .

Markets

The CardioQ-ODM has two distinct established clinical applications: firstly, to guide fluid management during surgery and secondly, to monitor cardiac output in critical care settings.

Surgical market

In March 2011 the National Institute for Health & Clinical Excellence ('NICE') recommended that CardioQ-ODM be considered for use in patients undergoing major and high risk surgery and in high risk patients undergoing major surgery. NICE estimated the applicable number of such patients in the NHS in England alone to be over 800,000 each year. Clinical evidence to date specifically supports the use of CardioQ-ODM in each of cardiac, orthopaedic, colorectal, renal, urological, other abdominal, gynaecological, plastic, vascular and transplant surgery: furthermore, CardioQ-ODM has been shown to be effective in both elective and emergency surgery and with both general and regional anaesthetics.

The NICE evaluation and recommendation confirms that the potential global market for CardioQ-ODM in surgery includes tens of millions of patients, even if confined to developed health economies: the most conservative estimate of the potential value of the market opportunity Deltex Medical has created is in excess of £1 billion per annum. The Company's core focus is on building market leading positions in this surgical market, both geographically and by type of surgery.

Critical care market

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.

Through the recent launch of the CardioQ-ODM+, Deltex Medical has incorporated pulse pressure variation, the best validated parameter from the Pulse Pressure Waveform Analysis ('PPWA') approach to monitoring cardiac output. Note that, in surgery, although adding PPWA parameters does not expand per se the market potential of ODM, the Company's clinical and market research indicates that it may help accelerate some clinicians' acceptance of the value of ODM measured flow variables.

NICE's assessment of the evidence supporting CardioQ-ODM and PPWA concluded that CardioQ-ODM was dominant (i.e. delivering both better outcomes and lower costs) over PPWA in both surgical and critical care applications. However, in the critical care setting only, there was not sufficient evidence for NICE to recommend CardioQ-ODM ahead of PPWA. ODM's being dominant does not mean no potential value in PPWA: the Company believes that future iterations of the CardioQ-ODM+ will deliver clear and substantial competitive advantages over current PPWA solutions for monitoring applications in critical care settings by combining a best in class monitoring modality with the best tool for guiding intervention.

United Kingdom

Deltex Medical has established a clear market leading position in the UK surgical market as well as a strong presence in the smaller critical care market.

In total UK sales grew by £443,000 (13%) over 2010.

The biggest driver of UK sales growth came from sales of surgical probes which increased by £272,000 (16%) over 2010. After adjusting for the small numbers of hospital bulk orders of surgical probes in both 2010 and 2011, growth in surgical probe sales in the UK has remained broadly in line with the compound annual growth rate of 20% established since 2004. While this growth rate puts ODM amongst the fastest growing broad application new medical technologies in the NHS, the NHS's rate of adoption, and consequently the Company's sales, will need to accelerate significantly to meet the NHS's objective of full implementation.

Sales of intensive care probes stabilised, levelling off after several years of 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.

United States of America

Sales in the USA were £154,000 (18%) behind 2010, with a £125,000 (15%) fall in probe sales: probe sales comprised over 99% of total sales in the USA where our normal model is to place monitors free of charge in return for higher probe prices.

The biggest declines in probe sales compared to 2010 came from our two largest accounts in the USA and were as a result of sharp falls in volumes of elective surgery in the middle part of the year, compounded by hospital de-stocking. Nevertheless, in both accounts we maintained or improved our penetration rates and in 2012 we are pursuing plans aimed at generating substantial growth both in these accounts and in the systems of which they are members.

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 both anaesthetists and surgeons.

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 within them and to demonstrate the clinical and economic benefits of this implementation.

At the annual American Society of Anesthesiolologists meeting in Chicago in October 2011 doctors from Duke University Hospital in North Carolina presented the results of their initial implementation of CardioQ-ODM within a surgical enhanced recovery programme. These showed substantial improvements in patient outcomes as well as good reductions in lengths of hospital stay of up to 40%. We have been able to use this first contemporary data from a major US hospital to build a pipeline of projects for both CardioQ-ODM as a stand-alone improvement in practice and as a cornerstone of implementing modern approaches to surgery. Such projects are designed both to increase sales and to generate compelling evidence for more rapid adoption and roll-out of CardioQ-ODM.

In February 2012 Premier Inc announced that it had selected Deltex Medical and the CardioQ-ODM to participate in its QCEIP ("QUEST Comparative Effectiveness & Innovation Program") programme. This project, includes conducting a study and subsequently producing a peer reviewed abstract, correlating health outcomes to product performance. This abstract is publicised through a variety of Premier's communication channels. We expect successful outcomes from this project to generate opportunities for us to work in a partnership with Premier and a leading teaching hospital to promote the benefits of CardioQ-ODM to Premier's member hospitals. Premier's members account for approximately 30% of US hospital discharges.

International

Distributors service export markets, with the exceptions of those in the USA and Spain, with support from a small team of our own staff.

Sales to distributors in 2011 totalled £1,795,000, a decrease of £142,000 (7%) from 2010. This decrease mainly comprises the net effect of a £159,000 (16%) increase in probe revenues and a £305,000 (34%) decrease in monitor sales. Changes in the sales mix meant average selling prices for probes were £55 compared to £51 in 2010. The average selling price of monitors to distributors was £3,700 compared to £4,235 in 2010.

Probe growth was generally strongest in our best established distributor markets in France, Scandinavia, Austria and Peru. In addition we generated substantial growth in Canada as our distributor acquired monitors and probes to support our first Canadian implementation project in a medium sized hospital system in British Columbia: feedback to date from this project has been overwhelmingly positive and we expect to be able to announce shortly the results and consequent activity.

Probe sales in France were approximately 20% higher at the end of the year than the start, primarily as a result of growth in the Paris area where CardioQ-ODM was successful in a major tender announced late in 2010. The latest generation of professional practice guidelines for anaesthetists in France are due to be published in the next few months and are expected to favour the fluid management strategies enabled by ODM: this would constitute a major development in France where the adoption of innovative medical practice is more heavily weighted towards clinicians than in many other developed health economies.

Sales to the Middle East were circa £350,000 lower than in 2010, due to lower monitor sales. Early in 2011, as signs of political unrest in the region grew, we chose to redirect resource towards supporting growth in higher quality probe revenues in more developed healthcare economies. In recent years the Middle East had been the easiest market into which to sell monitors as capital budgets were largely unaffected by the global economic slowdown. Looking forward, we expect capital budgets to remain constrained in most of our markets in the Middle East and therefore to continue to focus more on higher quality recurring probe revenue streams.

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 2011 total £65,000, £123,000 less than in 2010 which benefited from a small number of one-off orders related to these projects which are not expected to be repeated until after completion of the projects.

In the first project leading colorectal surgeons are introducing surgical enhanced recovery: as a result of its benefits having already been established within the programme in Spain, use of CardioQ-ODM is one of four mandatory interventions out of the 14 in total.

We are also supporting a government sponsored multi-centre trial. The trial includes patients undergoing major abdominal, gynaecological, urological and trauma surgery and is the world's largest randomised controlled clinical trial of fluid management during surgery. The clinical leads have indicated that preliminary data may be available in the next few months. Positive results will represent a major milestone towards system-wide adoption of our products in Spain.

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. In 2011 we increased substantially our investment in R&D and in March 2012 we have launched the CardioQ-ODM+ incorporating additional haemodynamic monitoring parameters giving us the most comprehensive technological offer on the market.

Prospects

We have started 2012 with confidence. 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. In the UK our technology has been prioritised by the NHS as a high impact innovation and we are making good progress towards creating similar opportunities in a growing number of major export markets.

Ewan Phillips

Chief Executive

7 March 2012

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2011

	Note	2011	2010
		£'000	£'000
Revenue		6,303	6,279
Cost of sales		(1,765)	(1,637)
Gross profit		4,538	4,642
Administrative expenses		(2,012)	(2,346)
Sales and distribution costs		(3,532)	(3,367)
Research and development costs		(396)	(282)
		(5,940)	(5,995)
Operating loss		(1,402)	(1,353)
Analysed as:
Operating loss before exceptional items		(1,402)	(1,374)
Exceptional items		-	21
Operating loss		(1,402)	(1,353)
Finance income		1	1
Finance costs		(123)	(161)
Loss before taxation		(1,524)	(1,513)
Tax on loss		103	45
Loss for the year		(1,421)	(1,468)
Other comprehensive income
Exchange differences taken to reserves		(14)	(6)
Other comprehensive income for the year, net of tax		(14)	(6)
Total comprehensive income for the year		(1,435)	(1,474)
Loss per share - basic and diluted	5	(1.0p)	(1.1p)

Consolidated Statement of Comprehensive Income

Alternative performance measures (note 2)                                  

		2011	2010
		£'000	£'000
Adjusted operating loss
Operating loss including non-cash items		(1,402)	(1,353)
Share based payments		386	522
Equity settled costs		182	116
Net non-cash clinical trial charges/(credits)		(387)	70
Depreciation and amortisation		191	154
Net increase in provisions, including receivables		305	136
Sundry non-cash charges/(credits)		(7)	55
Adjusted operating loss before non - cash items		(732)	(300)

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 2011

		2011	2010
		£'000	£'000
Assets
Non-current assets
Property, plant and equipment		309	239
Intangible assets		724	437
Trade and other receivables		8	328
Total non-current assets		1,041	1,004
Current assets
Inventories		912	573
Trade and other receivables		2,818	1,996
Current income tax recoverable		102	95
Cash and cash equivalents		752	699
Total current assets		4,584	3,363
Total assets		5,625	4,367
Liabilities
Current liabilities
Borrowings		(743)	(689)
Trade and other payables		(1,500)	(1,226)
Total current liabilities		(2,243)	(1,915)
Non - current liabilities
Borrowings		(1,359)	(1,335)
Provisions for other liabilities and charges		(167)	(108)
Total non - current liabilities		(1,526)	(1,443)
Total liabilities		(3,769)	(3,358)
Net assets		1,856	1,009
Equity
Share capital		1,421	1,320
Share premium		21,901	20,116
Capital redemption reserve		17,476	17,476
Other reserves		3,286	2,890
Translation reserve		(9)	5
Retained deficit		(42,219)	(40,798)
Total equity		1,856	1,009

Consolidated Statement of Changes in Equity 

for the year ended 31 December 2011

 

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 2010	1,269	19,974	17,476	2,399	11	(39,330)	1,799
Comprehensive income
Loss for the year	-	-	-	-	-	(1,468)	(1,468)
Other comprehensive income
Exchange movements taken to reserves	-	-	-	-	(6)	-	(6)
Total comprehensive income for the year	-	-	-	-	(6)	(1,468)	(790)
Shares issued during the year	51	-	-	-	-	-	51
Premium on shares issued during the year	-	142	-	-	-	-	142
Issue expenses	-	-	-	-	-	-	-
Credit in respect of service cost settle by award of options	-	-	-	491	-	-	491
Balance at 31 December 2010	1,320	20,116	17,476	2,890	5	(40,798)	1,009
Comprehensive income
Loss for the year	-	-	-	-	-	(1,421)	(1,421)
Other comprehensive income
Exchange movements taken to reserves	-	-	-	-	(14)	-	(14)
Total comprehensive income for the year	-	-	-	-	(14)	(1,421)	(1,435)
Shares issued during the year	101	-	-	-	-	-	101
Premium on shares issued during the year	-	1,838	-	-	-	-	1,838
Issue expenses	-	(53)	-	-	-	-	(53)
Credit in respect of service cost settle by award of options	-	-	-	396	-	-	396
Balance at 31 December 2011	1,421	21,901	17,476	3,286	(9)	(42,219)	1,856

Consolidated Statement of Cash Flows

for the year ended 31 December 2011

		2011	2010
	Note	£'000	£'000
Net cash used in operations	4	(1,337)	(791)
Interest paid		(112)	(97)
Income taxes received		97	98
Net cash used in operating activities		(1,352)	(790)
Analysed as:
Net cash used in operating activities before exceptional items		(1,352)	(679)
Exceptional items		-	(111)
Net cash used in operating activities		(1,352)	(790)
Cash flows from investing activities
Purchase of property, plant & equipment		(194)	(143)
Capitalised development expenditure		(346)	(213)
Interest received		1	1
Net cash used in investing activities		(539)	(355)
Cash flows from financing activities
Issue of ordinary share capital		1,939	193
Expenses in connection with share issue		(53)	-
Proceeds from increase in borrowings		70	187
Effect of exchange rate fluctuations on borrowings		(4)	8
Expenses in connection with new borrowing		-	(16)
Repayment of obligations under finance leases		(4)	(7)
Net cash generated from financing activities		1,948	365
Net (decrease)/increase in cash and cash equivalents		57	(780)
Cash and cash equivalents at beginning of the year		699	1,480
Effect of exchange rate fluctuations on cash held		(4)	(1)
Cash and cash equivalents at end of the year		752	699

1   Nature of the financial information

This Results Statement containing condensed financial information for the year ended 31st December 2011 is prepared in accordance with the accounting policies set out in the Annual Report 2011. New standards, amendments to standards or interpretations which were effective in the financial year beginning 1 January 2011 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 2010 has been derived from the full Group accounts published in the Annual Report 2010, which has been delivered to the Registrar of Companies. The report of the independent auditors for the year ended 31 December 2011 and 2010 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)   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 cash flow before movement in working capital

This is defined as the operating cash flow 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 cash flow before movement in working capital to the operating cash flow before movement in working capital is shown beneath the Notes to the Cash flow Statement.

3   Dividends

The directors do not recommend payment of a dividend (2010: nil).

4   Notes to the Consolidated Statement of Cash flows

		2011	2010
		£'000	£'000
Operating loss		(1,402)	(1,353)
Adjustments for:
Depreciation of property, plant and equipment		131	114
Amortisation of intangible assets		60	39
Exchange loss/(gain) on fixed assets		-	(5)
(Gain)/loss on disposal of fixed assets		(7)	27
Share based payments		396	491
Operating cashflows before movement in working capital		(822)	(687)
Increase in inventories		(339)	(81)
Increase in trade and other receivables		(509)	(6)
Increase/(decrease) in trade and other payables		274	(38)
Increase in provisions		59	21
Net cash used in operations		(1,337)	(791)

Operating cash flows before movement in working capital

Alternative performance measures (note 2) 

		2011	2010
		£'000	£'000
Adjusted operating cash flow before movement in working capital
Operating cash flow before movement in working capital		(822)	(687)
Equity settled costs		172	147
Net increase in provisions, including receivables		297	136
Net non- cash clinical trial charges/(credits)		(387)	70
Sundry non-cash charges		8	34
Adjusted operating cash flow before movement in working capital		(732)	(300)

These supplementary disclosures do not form part of the note to the Consolidated Statement of Cash Flows 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 2011 is based on the loss of £1,421,000 and weighted average number of shares in issue of 136,698,498. For 2010 the loss per share calculation was based upon the loss of £1,468,000 and weighted average number of shares in issue of 129,563,192.

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 2011 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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