Interim Results

RNS Number : 9308Z

Deltex Medical Group PLC

20 September 2022

 

The information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation

20 September 2022

Deltex Medical Group plc

("Deltex Medical" or the "Group")

Interim results to 30 June 2022

Deltex Medical Group plc (AIM: DEMG), the global leader in oesophageal Doppler monitoring, today announces its unaudited interim results for the six months ended 30 June 2022 (the "Period").

HIGHLIGHTS

Financial

§ Group returns to growth with revenues up 8% to £1.2 million (H1 2021: £1.1 million)

§ International division revenues up 39% to £555,000 (H1 2021: £399,000)

§ Gross margin increased to 74% (H1 2021: 64%) as a result of improved manufacturing efficiencies and the positive effect of weak sterling on US dollar-denominated revenues

§ Adjusted EBITDA loss of £418,000 (H1 2021: loss of £242,000; the 2021 figure included receipt of £193,000 in furlough payments)

§ Operating loss of £0.6 million (H1 2021: £0.5 million) reflecting increased commitment towards international sales and marketing spend

§ Cash at hand on 30 June 2022 of £0.6 million (H1 2021: £0.6 million)

Commercial

§ Strong performance from the International division, with further growth expected

§ Commercial activities in the UK and the USA modified, via a number of new initiatives, to target growth assuming that restricted access within hospitals is now the 'new normal'

§ Since the start of H2, we have received two orders in the USA for monitors from new accounts: one from a healthcare system covering multiple hospitals and the second from a large university hospital; both of these accounts had been close to ordering before the pandemic, but have now decided to proceed with the TrueVue Doppler technology

§ Good progress made towards completing the new, next generation monitor, despite ongoing supply chain challenges. The launch of the monitor is expected later this year and we expect strong demand from distributors in relation to replacing legacy monitors

Nigel Keen, Chairman of Deltex Medical, said:

"I am delighted that the Group has returned to growth after suffering severe disruption to its business as a result of the pandemic."

"Our International division is performing strongly, with further growth anticipated. In addition, there are preliminary but encouraging signs that US hospitals are beginning to start to order our monitors after long delays due to Covid-19."

"Our technical teams continue to make good progress with our new, next generation monitor. The hardware is largely complete; we are now finalising the software and regulatory compliance. This new product is expected to help increase activity levels in all territories."

For further information, please contact:

Deltex Medical Group plc	01243 774 837
Nigel Keen, Chairman	[e-mail]
Andy Mears, Chief Executive
Natalie Wettler, Group Finance Director
Allenby Capital Limited - Nominated Adviser and Broker	020 3328 5656
Jeremy Porter / Vivek Bhardwaj (Corporate Finance)	[e-mail]
Tony Quirke (Sales & Corporate Broking)

Notes for Editors

Deltex Medical's technology

Deltex Medical's TrueVue System uses proprietary haemodynamic monitoring technology to assist clinicians to improve outcomes for patients as well as increase throughput and capacity for hospitals.

Deltex Medical has invested over the long term to build a unique body of peer-reviewed, published evidence from a substantial number of trials carried out around the world. These studies demonstrate statistically significant improvements in clinical outcomes providing benefits both to patients and to the hospital systems by increasing patient throughput and expanding hospital capacity.

The Group's flagship, world-leading, ultrasound-based oesophageal Doppler monitoring ("ODM") is supported by 24 randomised control trials conducted on anaesthetised patients. As a result, the primary application for ODM is focussed on guiding therapy for patients undergoing elective surgery.

During 2021, Deltex Medical's engineers and scientists carried out successful research in conjunction with the UK's National Physical Laboratory ("NPL"), which has enabled the Group's 'gold standard' ODM technology to be extended and developed so that it can be used completely non-invasively. This will significantly expand the application of Deltex Medical's technology to non-sedated patients. This new technological enhancement, which will be released on the new next generation monitor, will substantially increase the addressable market for the Group's haemodynamic monitoring technologies and is complementary to the long-established ODM evidence base.

Deltex Medical's new non-invasive technology has potential applications for use in a number of healthcare settings, including:

§ Accident & Emergency for the rapid triage of patients, including the detection and diagnosis of sepsis, an important capability for patients presenting with COVID-19 symptoms;

§ in general wards to help facilitate a real-time, data-driven treatment regime for patients whose condition might deteriorate rapidly; and

§ in critical care units to allow regular monitoring of patients post-surgery who are no longer sedated or intubated.

One of the key opportunities for the Group is positioning this new, non-invasive technology for use throughout the hospital. Deltex Medical's haemodynamic monitoring technologies provide clinicians with beat-to-beat real-time information on a patient's circulating blood volume and heart function. This information is critical to enable clinicians to optimise both fluid and drug delivery to patients.

Deltex Medical's business model is to drive the recurring revenues associated with the sale of single-use disposable ODM probes which are used in the TrueVue System and to complement these revenues with a new incremental revenue stream to be derived from the Group's new non-invasive technology.

Both the existing single-use ODM probe and the new, non-invasive device will connect to the same, next generation monitor which is due for launch in 2022. Monitors are sold or, due to hospitals' often protracted procurement times for capital items, loaned in order to encourage faster adoption of the Group's technology.

Deltex Medical's customers

The principal users of Deltex Medical's products are currently anaesthetists working in a hospital's operating theatre and intensivists working in ICUs. This customer profile will change as the Group's new non-invasive technology is adopted by the market. In the UK the Group sells directly to the NHS. In the USA the Group sells directly to more than 30 major hospitals that appreciate the value of Deltex Medical's evidence-based approach to haemodynamic management. The Group also sells through distributors in more than 40 countries in the European Union, Asia and the Americas.

Deltex Medical's objective

To see the adoption of Deltex Medical's next generation TrueVue System, comprising both minimally invasive and non-invasive technologies, as the standard of care in haemodynamic monitoring for all patients from new-born to adult, awake or anaesthetised, across all hospital settings globally.

For further information please go to www.deltexmedical.com  

Chairman's statement

Financial results

During the Period, the Group returned to growth for the first time since the pandemic. Our business, which is largely focussed on generating sales into operating theatres carrying out elective surgery, was significantly adversely affected by the pandemic.

Revenues for the six months ended 30 June increased by 8% to £1.2 million (2021: £1.1 million). This increase reflects a strong performance from our International division (which excludes the USA), with revenues increasing by 39% to £555,000 (2021: £399,000).

The Group's gross margin increased significantly to 74% (2021: 64%). This increase was linked to substantially improved manufacturing efficiencies, as our manufacturing team returned to work full time, as well as a positive effect on profitability associated with the weakness of sterling and a high proportion of US dollar-denominated revenues.

Adjusted EBITDA, which comprises the operating loss adjusted for depreciation, amortisation, equity-settled non-executive directors' fees, share-based payments and certain other items, was a loss of £(418,000) (2021: £(242,000)). A substantial proportion of the year-on-year difference relates to furlough payments received in H1 2021 which totalled £193,000.

The slight increase in overheads to £1.5 million (2021: £1.4 million) is principally linked to an increase in sales and marketing expenditure focussed on our International division, as travel routes re-opened and once again we were able to provide direct support from the UK to our overseas distributors.

Loss before taxation was £662,000 (2021: £(531,000)).

Cash at hand on 30 June 2021 was £0.6 million (2020: £0.6 million).

Commercial activities

In 2022 our business plans had initially anticipated that the UK and US markets would start to open up rapidly, as Covid-related restrictions were withdrawn in hospitals. This would have given rise to improved access for our sales teams and clinical educators to the key decision makers within hospitals. Whilst such access restrictions have begun to ease, they are still a long way from the access levels enjoyed by our experts pre-Covid. In some hospital systems we are also seeing shortages in clinical staff which is causing delays in elective surgery as well as a lack of availability of clinicians to meet with our sales teams.

There continues to be a substantial backlog in elective surgical procedures around the world as a direct consequence of the pandemic. We were expecting to see increased demand for Deltex Medical's haemodynamic monitoring technologies to help reduce this backlog, due to the evidence base which demonstrates that TrueVue Doppler's technology is linked to reduced patient length-of-stay and improved clinical outcomes. Whilst we have seen such demand emerging in our International division, and more recently in the US, we have not yet seen this increase in the UK.

Given these access challenges in our two key direct markets (the UK and US), earlier this year we decided to modify our commercial plans on the basis that restricted access to sales teams, and other third parties, has effectively become the "new normal" in many UK and US hospitals. Accordingly, we have been working on a number of new initiatives to help drive revenue, notwithstanding the restricted access to operating theatres carrying out elective surgery in UK and US hospitals. Such initiatives include:

§ establishing an on-line training programme - the TrueVue Advanced Learning Academy (the "Academy") - that provides clinicians with a comprehensive training programme on haemodynamics, including details on the published evidence base, and how best to use TrueVue Doppler. The Academy provides detailed information on how to manage a patient's haemodynamic status during surgery, as well as if deployed in an intensive care unit ("ICU"), based on data derived from peer-reviewed papers. Longer term we plan to expand this on-line training programme further to include Continuing Professional Development (CPD) qualifying points; and

§ starting to promote and sell the TrueVue Doppler into high-value veterinary applications, working with a number of 'Key Opinion Leader' veterinary centres. Although this is not expected to be a large addressable market, there are preliminary indicators that veterinarians are increasingly interested in monitoring the haemodynamic status of small and exotic animals which we believe will become a profitable niche. We have started to see traction in the UK, US and in parts of Europe, including establishing our first dedicated veterinary distributor.

Although it is too early to pronounce that these, and various other earlier-stage, initiatives have been successful, there are some encouraging preliminary signs. Further, the launch of the new, next generation monitor is planned for later this year. We anticipate that its launch will generate significant activity levels, including from our overseas distributors where we are expecting strong order demand in relation to replacing legacy monitors.

These initiatives have been specifically designed to help support our existing user-base and develop new customers whilst our traditional methods of selling into hospitals in the UK and USA are severely constrained.

Our modified plans also anticipate that the NHS is going to continue to face a number of major challenges in the short to medium term and we therefore reduced our UK sales resources in the first half.

Our International division enjoyed strong sales growth of 39% in the first half of the year. This growth stemmed primarily from territories that enjoyed unrestricted access to operating theatre staff and anaesthetists during the pandemic. In many cases our experts were also able to assist the in-country distributors with appropriate training. Being able to access these territories, in conjunction with the distributors, during the past two years has ensured that we have created a pipeline of orders that are now being converted into revenues.

We are expecting our International division to continue to perform robustly in the second half of 2022. We are also working on a small number of substantial orders, including the potential expansion of an order from a distributor in Latin America that was previously announced on 26 January, 2022.

Product development: new, next generation monitor

Our technical teams have been working hard to finish the new, next generation monitor which is important to our future growth. This new device is needed to help drive activity levels for our minimally invasive technology and our new, novel non-invasive Doppler-based single-use probe sales.

We have continued to experience difficulties with extended and/or unpredictable supply chains, including obsolescence of components as well as long lead times and inflationary price increases. We have partially mitigated these challenges by buying key components early.

The hardware engineering for the new monitor is substantially complete and we are now focusing on finalising the software as well as working on a number of regulatory compliance points.

We have also been developing the new non-invasive Doppler-based haemodynamic monitoring device that is complementary to our existing product range which we believe will form an important part of our future growth and long-term strategy. This non-invasive device will also benefit from the substantial body of published evidence that demonstrates that the appropriate use of TrueVue Doppler gives rise to improved clinical outcomes and reduced patient length-of-stay. Improved clinical outcomes and reduced patient length-of-stay are going to remain critically important for hospitals in the foreseeable future.

Current trading and prospects

The Group has returned to growth and the gross margin has returned to levels that we were achieving before the Covid pandemic.

Weak sterling is also helping our gross margin to increase and we believe that this phenomenon is likely to continue in the short to medium term.

Our International division is growing strongly, in large part due to a more benign environment in terms of unrestricted access to hospitals, and we believe that there is further growth to come.

Before the pandemic started, we had built up a stock of monitors in anticipation of receipt of orders from a number of hospitals around the world that we had been working with for some time. Since the beginning of the second half of the year, we have begun to see encouraging, albeit preliminary, signs of demand recovering in the USA for Deltex Medical's TrueVue Doppler technology, including orders from US hospital systems that had previously been put on hold when Covid-19 started. As we ship the monitors to fulfil these US orders, we are not only benefiting from converting inventory into cash, but are also converting US dollars into sterling at an advantageous foreign exchange rate.

The launch of the new monitor is an important element of the future plans of the Group. Good progress was made in the first half of 2022 and we are planning on launching the new monitor later this year. We anticipate that its launch will generate significant activity levels, including from our overseas distributors where we are expecting strong order demand in relation to replacing legacy monitors.

Nigel Keen

Chairman

20 September 2022

Condensed Consolidated Statement of Comprehensive Income
For the period ended 30 June 2022

		Unaudited		Audited
	Note	Six months ended 30 June 2022 £'000	Six months ended 30 June 2021 £'000	Year ended  31 December 2021 £'000
Revenue	4	1,158	1,072	2,259
Cost of sales		(306)	(381)	(684)
Gross profit		852	691	1,575
Administrative expenses		(779)	(777)	(1,585)
Sales and distribution expenses		(554)	(466)	(957)
Research and Development, Quality and Regulatory		(120)	(117)	(207)
Total costs		(1,453)	(1,360)	(2,749)
Other operating income	6	-	193	312
Other gain	8	30	25	57
Operating loss		(571)	(451)	(805)
Finance costs		(91)	(80)	(173)
Loss before taxation		(662)	(531)	(978)
Tax credit on loss	8	-	7	12
Loss for the period/year		(662)	(524)	(966)
Other comprehensive income/(expense)
Items that may be reclassified to profit or loss:
Net translation differences on overseas subsidiaries		15	1	(2)
Other comprehensive income/(expense) for the period/year, net of tax		15	1	(2)
Total comprehensive loss for the period/year		(647)	(523)	(968)
Total comprehensive loss for the period/year attributable to:
Owners of the Parent		(651)	(524)	(969)
Non-controlling interests		4	1	1
		(647)	(523)	(968)
Loss per share - basic and diluted	9	(0.10)p	(0.09)p	(0.17p)

Condensed Consolidated Balance Sheet

As at 30 June 2022

		Unaudited		Audited
	Note	30 June 2022 £'000	30 June 2021 £'000	31 December 2021 £'000
Assets
Non-current assets
Property, plant and equipment		274	271	264
Intangible assets		3,419	2,756	3,135
Financial assets at amortised cost		171	157	157
Total non-current assets		3,864	3,184	3,556
Current assets
Inventories	10	835	812	796
Trade receivables		540	392	455
Financial assets at amortised cost		15	15	15
Other current assets		92	103	91
Current income tax recoverable		99	94	69
Cash and cash equivalents	11	611	553	413
Total current assets		2,192	1,969	1,839
Total assets		6,056	5,153	5,395
Liabilities
Current liabilities
Borrowings	12	(700)	(163)	(702)
Trade and other payables	13	(1,419)	(1,527)	(1,478)
Total current liabilities		(2,119)	(1,690)	(2,180)
Non-current liabilities
Borrowings	12,14	(1,048)	(1,010)	(1,028)
Trade and other payables	13	(203)	(252)	(228)
Provisions		(60)	(51)	(57)
Total non-current liabilities		(1,311)	(1,313)	(1,313)
Total liabilities		(3,430)	(3,003)	(3,493)
Net assets		2,626	2,150	1,902
Equity
Share capital	15	6,991	5,773	5,849
Share premium		33,672	33,444	33,502
Capital redemption reserve		17,476	17,476	17,476
Other reserve		632	537	573
Translation reserve		148	136	133
Convertible loan note reserve		82	82	82
Accumulated losses		(56,254)	(55,173)	(55,588)
Equity attributable to owners of the Parent		2,747	2,275	2,027
Non-controlling interests		(121)	(125)	(125)
Total equity		2,626	2,150	1,902

Condensed Consolidated Statement of Changes in Equity for the six months ended 30 June 2022 (unaudited)

	Share capital	Share premium	Capital redemption reserve	Other reserve	Convertible loan note reserve	Translation reserve	Accumulated losses	Total	Non-controlling interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2022	5,849	33,502	17,476	573	82	133	(55,588)	2,027	(125)	1,902
Comprehensive income
Loss for the period	-	-	-	-	-	-	(666)	(666)	4	(662)
Other comprehensive income for the period	-	-	-	-	-	15	-	15	-	15
Total comprehensive income for the six-month period	-	-	-	-	-	15	(666)	(651)	4	(647)
Transactions with owners of the Group
Shares issued during the year	1,142	285	-	-	-	-	-	1,427	-	1,427
Issue expenses	-	(115)	-	-	-	-	-	(115)	-	(115)
Equity-settled share-based payment	-	-	-	59	-	-	-	59	-	59
Balance at 30 June 2022	6,991	33,672	17,476	632	82	148	(56,254)	2,747	(121)	2,626

 

Condensed Consolidated Statement of Changes in Equity for the six months ended 30 June 2021 (unaudited)

	Share capital	Share premium	Capital redemption reserve	Other reserve	Convertible loan note reserve	Translation reserve	Accumulated losses	Total	Non-controlling interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2021	5,773	33,444	17,476	505	82	135	(54,648)	2,767	(126)	2,641
Comprehensive income
Loss for the period	-	-	-	-	-	-	(525)	(525)	1	(524)
Other comprehensive income for the period	-	-	-	-	-	1	-	1	-	1
Total comprehensive income for the six-month period	-	-	-	-	-	1	(525)	(524)	1	(523)
Transactions with owners of the Group
Equity-settled share-based payment	-	-	-	32	-	-	-	32	-	32
Balance at 30 June 2021	5,773	33,444	17,476	537	82	136	(55,173)	2,275	(125)	2,150

Condensed Consolidated Statement of Changes in Equity for the year ended 31 December 2021 (audited)

	Share capital	Share premium	Capital redemption reserve	Other reserve	Convertible loan note reserve	Translation reserve	Accumulated losses	Total	Non-controlling interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2021	5,773	33,444	17,476	505	82	135	(54,648)	2,767	(126)	2,641
Comprehensive income
Loss for the period	-	-	-	-	-	-	(967)	(967)	1	(966)
Other comprehensive income for the period	-	-	-	-	-	(2)	-	(2)	-	(2)
Total comprehensive income for year	-	-	-	-	-	(2)	(967)	(969)	1	(968)
Transactions with owners of the Group
Shares issued during the year	76	58	-	-	-	-	-	134	-	134
Equity-settled share-based payment	-	-	-	95	-	-	-	95	-	95
Transfers	-	-	-	(27)	-	-	27	-	-	-
Balance at 31 December 2021	5,849	33,502	17,476	573	82	133	(55,588)	2,027	(125)	1,902

Condensed Consolidated Statement of Cash Flows

For the period ended 30 June 2022

		Unaudited		Audited
		Six months ended 30 June 2022 £'000	Six months ended 30 June 2021 £'000	Year  ended 31 December 2021 £'000
Cash flows from operating activities
Loss before taxation		(662)	(531)	(978)
Adjustments for:
Net finance costs		91	80	173
Depreciation of property, plant and equipment		36	35	74
Amortisation of intangible assets		20	26	40
Share-based payment expense		59	32	95
Other tax income		(30)	(25)	(57)
Effect of exchange rate fluctuations		15	1	(2)
		(471)	(382)	(655)
(Increase)/decrease in inventories		(39)	83	89
(Increase)/decrease in trade and other receivables		(100)	199	148
Increase in trade and other payables		24	109	191
Increase in provisions		3	-	6
Net cash (used in)/from operations		(583)	9	(221)
Interest paid		(69)	(63)	(131)
Income taxes received		-	-	61
Net cash used in operating activities		(652)	(54)	(291)
Cash flows from investing activities
Purchase of property, plant and equipment		(46)	(1)	(23)
Capitalised development expenditure (net of grants)		(304)	(228)	(621)
Net cash used in investing activities		(350)	(229)	(644)
Cash flows from/(used in) financing activities
Issue of ordinary share capital		1,341	-	-
Expenses in connection with share issue		(115)	-	-
Net movement in invoice discounting facility		(2)	4	43
Standby loan facility drawdown		-	-	500
Principal lease payments		(22)	(20)	(41)
Net cash generated from/(used in) financing activities		1,202	(16)	502
Net increase/(decrease) in cash and cash equivalents		200	(299)	(433)
Cash and cash equivalents at beginning of the period		413	853	853
Exchange loss on cash and cash equivalents		(2)	(1)	(7)
Cash and cash equivalents at the end of the period		611	553	413

 

Notes to the condensed consolidated interim financial statements

1.  Reporting Entity

These condensed consolidated interim financial statements ('Interim Financial Statements') are the consolidated financial statements of Deltex medical Group plc, a public company limited by shares registered in England and Wales, and its subsidiaries ('the Group'). Deltex Medical Group plc is quoted on AIM of the London Stock Exchange.  The address of the registered office is Deltex Medical Group plc, Terminus Road, Chichester, PO19 8TX, registered number 03902895. These Interim Financial Statements are as at and for the period ended 30 June 2022.

The Group is principally involved with the manufacture and sale of advanced haemodynamic monitoring technologies.

2.  Basis of accounting

These interim financial statements are for the six months ended 30 June 2022 and have been prepared in accordance with IAS 34, 'Interim Financial Reporting'. They do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 December 2021 (Annual Report & Accounts 2021).

These interim financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The summary of results for the year ended 31 December 2021 is an extract from the published consolidated financial statements of the Group for that year which have been reported on by the Group's auditors and delivered to the Registrar of Companies. The Independent Auditors' Report on the Annual Report & Accounts for 2021 was unqualified.

These interim financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 31 December 2021 and are expected to be applied in the preparation of the financial statements for the year ending 31 December 2022. There are no accounting pronouncements which have become effective from 1 January 2022 that have a significant impact on the Group's interim financial statements. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

The interim financial statements were approved for issue by the Board of Directors on 20 September 2022.

3.  Use of judgements and estimates

In preparing these interim financial statements, management has had to make judgements and estimates that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, income and expenses. Although these estimates are based on the directors' best knowledge of the amount, event or actions, it should be noted that actual results may differ from those estimates.

The significant judgements and estimates made by the directors in applying the Group's accounting policies and key sources of estimation uncertainty were the same as those disclosed in Annual Report & Accounts 2021.

4.  Revenue
The following table provides an analysis of the Group's sales by revenue stream and markets. This information is regularly provided to the Group's CODM:

For the six months ended 30 June 2022 (Unaudited)
	Direct markets					Indirect markets
	Probes	Monitors	Other	Probes	Monitors	Other	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
UK	222	59	42	-	-	-	323
USA	241	15	24	-	-	-	280
France	-	-	-	235	6	2	243
Latin America	-	-	-	34	49	2	85
South Korea	-	-	-	78	-	-	78
Other countries	17	26	-	84	18	4	149
	480	100	66	431	73	8	1,158
For the six months ended 30 June 2021 (Unaudited)
	Direct markets					Indirect markets
	Probes	Monitors	Other	Probes	Monitors	Other	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
UK	268	15	28	-	-	-	311
USA	302	36	24	-	-	-	362
France	-	-	-	181	20	4	205
Scandinavia	-	-	-	63	-	1	64
South Korea	-	-	-	67	-	-	67
Other countries	7	-	-	35	21	-	63
	577	51	52	346	41	5	1,072
For the year ended 31 December 2021 (Audited)
	Direct markets					Indirect markets
	Probes	Monitors	Other	Probes	Monitors	Other	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
UK	524	60	86	-	-	-	670
USA	561	55	47	-	-	-	663
France	-	-	-	489	29	8	526
Scandinavia	-	-	-	105	-	2	107
South Korea	-	-	-	134	-	2	136
Portugal	-	-	-	35	-	-	35
Other countries	10	-	-	53	58	1	122
	1,095	115	133	816	87	13	2,259

The Group's revenue disaggregated between the sale of goods and the provision of services is set out below. All revenues from the sale of goods are recognised at a point in time; maintenance income is recognised over time.

	Period ended		Year ended
	30 June 2022	30 June 2021	31 December 2021
	£'000	£'000	£'000
Sale of goods	1,131	1,056	2,192
Maintenance income	27	16	67
	1,158	1,072	2,259

The following table provides information about trade receivables and contract liabilities from contracts with customers. There were no contract assets at either 30 June 2022 or 1 January 2022.

	30 June 2022	1 January 2022
	£'000	£'000
Trade receivables which are in 'Trade and other receivables'	540	455
Contract liabilities	(52)	(57)

The following aggregated amounts of transaction prices relate to the performance obligations from existing contracts that are unsatisfied or partially unsatisfied as at 30 June 2022:

	2022	2023	2024	2025	Total
	£'000	£'000	£'000	£'000	£'000
Revenue expected to be recognised	15	23	3	11	52

5.  Segmental analysis

Assessment of performance and the allocation of resources are made on the basis of results derived from the sale of probes, monitors and other products analysed by territory, of which revenues and gross margins are regularly reported to the Group's Chief Executive Officer, who has been identified as the Chief Operating Decision Maker (CODM). The CODM also monitors a profit measure described internally as 'adjusted earnings before interest, tax, depreciation and amortisation, share-based payments, non-executive directors' fees, as well as any exceptional items' (Adjusted EBITDA). However, this measure is reported at a Group level rather than an operating segment which is based on the nature of the goods provided rather than the geographical market in which they are sold.

The unaudited operating segment results for the six months ended 30 June 2022 are:

	Probes1	Monitors	Other	Unallocated	Total
	£'000	£'000	£'000	£'000	£'000
Revenues	912	173	73	-	1,158
Adjusted gross profit2	675	128	52	-	855
Sales and marketing costs	-	-	-	-	(554)
Administration costs	-	-	-	-	(618)
R&D costs	-	-	-	-	(2)
Quality and regulation costs	-	-	-	-	(99)
Adjusted EBITDA	-	-	-	-	(418)

1.  Managed care service revenue is categorised as probe revenue

2.  Gross profit excluding the depreciation charge relating to monitors loaned to customers and production equipment

The unaudited operating segment results for the six months ended 30 June 2021 were:

	Probes1	Monitors	Other	Unallocated	Total
	£'000	£'000	£'000	£'000	£'000
Revenues	923	92	57	-	1,072
Adjusted gross profit2 3	701	74	26	-	801
Sales and marketing costs3	-	-	-	-	(399)
Administration costs3	-	-	-	-	(572)
R&D costs3	-	-	-	-	(3)
Quality and regulation costs3	-	-	-	-	(69)
Adjusted EBITDA	-	-	-	-	(242)

1.  Managed care service revenue is categorised as probe revenue

2.  Gross profit excluding the depreciation charge relating to monitors loaned to customers and production equipment

3.  Other operating income is allocated within the corresponding expense categories

The audited operating segment results for the year ended 31 December 2021 were:

	Probes1	Monitors	Other	Unallocated	Total
	£'000	£'000	£'000	£'000	£'000
Revenues	1,911	202	146	-	2,259
Adjusted gross profit2 3	1,448	171	102	-	1,721
Sales and marketing costs3	-	-	-	(889)	(889)
Administration costs3	-	-	-	(1,180)	(1,180)
R&D costs3	-	-	-	(8)	(8)
Quality and regulation costs3	-	-	-	(148)	(148)
Adjusted EBITDA	-	-	-	-	(504)

1.  Managed care service revenue is categorised as probe revenue

2.  Gross profit excluding the depreciation charge relating to monitors loaned to customers and production equipment

3.  Other operating income is allocated within the corresponding expense categories

The reconciliation of the profit measure used by the Group's CODM to the result reported in the Group's consolidated SOCI is set out below:

	Unaudited		Audited
	30 June 2022 £'000	30 June 2021 £'000	31 December 2021 £'000
Adjusted EBITDA	(418)	(242)	(504)
Non-cash items:
Depreciation of property, plant and equipment	(36)	(35)	(74)
Amortisation of development costs	(20)	(26)	(40)
Non-executive directors' fees and employer's social security costs	(68)	(68)	(138)
Share-based payment expense	(59)	(32)	(95)
Change in accumulated absence cost liability	-	(73)	(11)
Cash item: Other tax income	30	25	57
	(153)	(209)	(301)
Operating loss	(571)	(451)	(805)
Finance costs	(91)	(80)	(173)
Loss before tax	(662)	(531)	(978)
Tax credit on loss	-	7	12
Loss for the period/year	(662)	(524)	(966)

6.  Other operating income

Other operating income comprised:

	Unaudited		Audited
	30 June 2022	30 June 2021	31 December 2021
	£'000	£'000	£'000
UK Job Retention Scheme	-	148	206
US Payment Protection Plan	-	45	106
	-	193	312

7.  Dividends

The Directors cannot recommend the payment of a dividend for 2022 (2021: nil).

8.  Tax credit on loss

	Unaudited		Audited
	30 June 2022	30 June 2021	31 December 2021
	£'000	£'000	£'000
Research and development tax credit	-	(7)	(12)
Total tax credit on loss	-	(7)	(12)

The other gain amount for six months to 30 June 2022 of £30,000 (six months to 30 June 2021: £25,000) comprises tax income arising from the Research and Development Expenditure Credit scheme which is accounted for as a government grant. 

9.  Loss per share
Basic loss per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares issued during the year.

The loss per share calculation for six months to 30 June 2022 is based on the of £666,000 and the weighted average number of shares in issue of 672,175,129.

For the six months to 30 June 2021, the loss per share calculation is based on the loss of £525,000 and the weighted average number of shares in issue of 577,290,545.

For the year ended 31 December 2021, the loss per share calculation is based on the loss of £967,000 and the weighted average number of shares in issue of 580,712,339.

While the Group is loss-making, the diluted loss per share and the loss per share are the same.

10.  Inventories

Inventories at 30 June 2022 include the following finished Goods: 14,894 probes (30 June 2021: 12,887) and 176 monitors (30 June: 217).

11.  Cash at bank

	Unaudited		Audited
	30 June 2022	30 June 2021	31 December 2021
	£'000	£'000	£'000
Cash at bank	611	553	413

12.  Borrowings

	Unaudited				Audited
	30 June 2022		30 June 2021		31 December 2021
	Current	Non-current	Current	Non-current	Current	Non-current
	£'000	£'000	£'000	£'000	£'000	£'000
Invoice discount facility	200	-	163	-	202	-
Standby loan facility	500	-	-	-	500	-
Convertible loan note	-	1,048	-	1,010	-	1,028
	700	1,048	163	1,010	702	1,028

The Standby loan facility is repayable in full on or before 31 December 2023.

13.  Trade and other payables

	Unaudited				Audited
	30 June 2022		30 June 2021		31 December 2021
	Current	Non-current	Current	Non-current	Current	Non-current
	£'000	£'000	£'000	£'000	£'000	£'000
Trade payables	338	-	223	-	298	-
Other payables	280	-	315	-	259	-
Social security and other taxes	120	-	139	-	169	-
Lease obligations	49	203	43	252	46	228
Contract liabilities	52	-	77	-	57	-
Employee short-term benefits	41	-	103	-	41	-
Accrued expenses	540	-	627	-	608	-
	1,419	203	1,527	252	1,478	228

14.  Convertible loan note

The convertible loan note recognised in the Condensed Consolidated Balance Sheet is calculated as:

	Financial liability	Equity component	Total
	£'000	£'000	£'000
Carrying amount at 1 January 2022	1,028	82	1,110
Interest expense	63	-	63
Interest paid	(43)	-	(43)
Carrying amount at 30 June 2022	1,048	82	1,130

The convertible loan note falls due for repayment in February 2024. The convertible loan note is, at the option of the loan note holder, convertible at any time into new ordinary shares of 1 penny each at a conversion price of 4 pence per share.

15.  Share capital

In February 2022, the Company raised £1,396,000, before expenses, through subscription for 111,720,000 new ordinary shares at a price of 1.25 pence per share. Additionally, in January 2022, 2,400,000 new ordinary shares were issued in connection with the termination agreement of a former employee.

There were no share options exercised during the six months ended 30 June 2022 or the six months ended 30 June 2021.

16.  Seasonal fluctuations

Revenues in our Distributor markets are traditionally higher in the second half of the financial year due to the purchasing patterns of customers.

17.  Foreign exchange rates

The following are the principal foreign exchange rates that have been used in the preparation of the condensed consolidated interim financial statements:

	Unaudited				Audited
	30 June 2022		30 June 2021		31 December 2021
	Average rate	Closing rate	Average rate	Closing rate	Average rate	Closing rate
Sterling/US dollar	1.30	1.22	1.39	1.38	1.38	1.35
Sterling/Euro	1.19	1.16	1.15	1.17	1.16	1.19
Sterling/Canadian dollar	1.65	1.57	1.73	1.71	1.72	1.71

18.  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 Group's registered office at Terminus Road, Chichester, PO19 8TX, United Kingdom. This announcement is available, free of charge, from the Company's website at www.deltexmedical.com

19.  Cautionary statement

This announcement contains forward-looking statements which are made in good faith based on the information available at the time of its approval. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by several risks and uncertainties that are inherent in any forward-looking statement which could cause actual results to differ materially from those currently anticipated. Nothing in this document should be considered to be a profit forecast.

 

END

 

 

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