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Share Name Share Symbol Market Type Share ISIN Share Description
Deltex Medical Group Plc LSE:DEMG London Ordinary Share GB0059337583 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.025 2.13% 1.20 1.10 1.30 1.20 1.175 1.175 342,553 13:15:38
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Health Care Equipment & Services 4.3 -0.2 -0.0 - 6

Deltex Medical Group PLC Interim results to 30 June 2020

21/09/2020 7:00am

UK Regulatory (RNS & others)


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TIDMDEMG

RNS Number : 5050Z

Deltex Medical Group PLC

21 September 2020

21 September 2020

Deltex Medical Group plc ("Deltex Medical" or the "Group")

Interim results to 30 June, 2020

Deltex Medical Group plc (AIM: DEMG), the global leader in oesophageal Doppler monitoring, today announces its unaudited interim results to 30 June 2020.

HIGHLIGHTS

COVID-19

-- Deltex Medical's TrueVue system is primarily used by clinicians to guide clinical practice during elective surgery; however, elective surgery in our key markets was effectively halted by the COVID-19 ("CV-19") pandemic earlier this year

-- in the UK, TrueVue Doppler is also used in intensive care units ("ICUs") for very sick patients. Use of TrueVue Doppler increased at the height of the pandemic during March and April, but dropped back sharply as admission to ICUs for CV-19 patients reduced

-- there are preliminary signs that elective surgery is now beginning to increase as pressure to reduce waiting lists starts to grow, particularly overseas

Financial

-- revenues: GBP1.2 million (2019: GBP2.0 million)

-- 33% reduction in like-for-like revenues: GBP1.2 million (2019: GBP1.8 million)

-- 25% reduction in overhead costs to GBP1.3 million (2019: GBP1.7 million)

-- adjusted EBITDA: GBP(0.2) million (2019: GBP0.2 million)

-- loss for the period: GBP(0.6) million (2019: GBP(0.3) million)

-- cash at hand - 30 June 2020: GBP0.6 million (30 June 2019: GBP0.6 million)

Business

-- the reduction in revenues linked to the cessation of elective surgical procedures in our key markets has been partially offset by the treatment of CV-19 patients in ICUs

-- careful stewardship of cash resources, including use of Government furlough scheme and successful application to the US Government's Paycheck Protection Program

-- good progress being made on new product development, including securing further grant funding

-- focus now on positioning the business for progress in 2021

Nigel Keen, Chairman of Deltex Medical, said:

"The first half was challenging, but our much lower cost base and careful stewardship of cash means that the business is well placed for future opportunities."

"Although it was pleasing to see the Group's TrueVue Doppler being used to treat a number of acutely sick COVID-19 NHS patients in March and April, the decline in elective surgery in our key markets adversely affected the business significantly."

"We are confident that as the number of elective surgical procedures starts to climb, in part due to increasing pressure to reduce waiting lists, so the financial performance of the Group will improve."

For further information, please contact:

 
 Deltex Medical Group plc                   01243 774 837 
 Nigel Keen, Chairman                        investorinfo@Deltexmedical.com 
 Andy Mears, Chief Executive 
 David Moorhouse, Group Finance Director 
 
 Arden Partners plc                         020 7614 5900 
 Ciaran Walsh                                info@arden-partners.com 
  Dan Gee-Summons 
 
 Joint Broker 
 Turner Pope Investments (TPI) Ltd          0203 657 0050 
 Andy Thacker                                info@turnerpope.com 
  Zoe Alexander 
 

This announcement contains Inside Information as defined under the Market Abuse Regulation (EU) No. 596/2014.

Notes for Editors

Deltex Medical manufactures and markets haemodynamic monitoring technologies which are primarily used in critical care and general surgical procedures. Deltex Medical's proprietary oesophageal Doppler monitoring ("ODM") (TrueVue Doppler) measures blood flow velocity in the central circulation in real time. Minimally invasive, easy to set-up and quick to focus, the technology generates a low-frequency ultrasound signal which is highly sensitive to changes in blood flow and measures such changes in 'real time'. Deltex Medical is the only company in the enhanced haemodynamic space to have built a robust and credible evidence base demonstrating both the clinical and economic benefits of its core technology: TrueVue Doppler. This technology has been proven in a wide range of clinical trials to reduce complications suffered by patients after surgery and consequently can save hospitals money.

Deltex Medical's TrueVue System on the CardioQ-ODM+ monitor platform now provides clinicians with two further advanced haemodynamic monitoring technologies. TrueVue Impedance is an entirely non-invasive monitoring technology which transmits low magnitude, high frequency electrical signals through the thorax and measures the changes to this signal when the heart pumps blood. TrueVue PressureWave uses the peripheral blood pressure signal analysis to give doctors information on changes in the circulation and is particularly suited to monitoring lower risk or haemodynamically stable patients.

Group goal

Haemodynamic management is now becoming widely accepted as a vital part of the anaesthesia protocols for surgical patients, as well as treating ventilated intensive care patients, including ventilated COVID-19 patients. Consequently, the Group's focus is on maximising value from the opportunities presented, as enhanced haemodynamic management is adopted into routine clinical practice around the world. The Group aims to provide clinicians with a single platform - a 'haemodynamic workstation' - which offers them a range of technologies from simple to sophisticated to be deployed according to the patient's clinical condition as well as the skill and expertise of the user. Doing this will enable the Group to partner with healthcare providers to support modern haemodynamic management across the whole hospital.

The Group is currently in the implementation phase of achieving this goal in a number of territories worldwide, operating directly in the UK and the USA, and via agreements with approximately 40 distributors overseas

Chairman's statement

Financial results

The adverse impact of COVID-19 ("CV-19") on the business is reflected in the results of the first half.

The Group saw significantly increased sales into UK intensive care units ("ICUs") in March and April, as intensivists started to use Deltex Medical's equipment to improve the treatment of CV-19 patients, particularly to help avoid acute kidney injuries. In 2019 we negotiated the termination of a third-party distribution agreement, which included revenues of GBP0.2 million in the first half of 2019, accordingly the like-for-like H1 2019 revenues were GBP1.8 million, meaning that the H1 2020 revenues of GBP1.2 million declined by 33% on a like-for-like basis. On a statutory basis the loss of revenues from elective surgical procedures in the first half resulted in total Group revenues declining by 42% to GBP1.2 million (2019: GBP2.0 million).

When the scale of the impact of the CV-19 pandemic became clear, especially the adverse impact globally on elective surgery volumes, management took rapid and robust action. This included aggressively cutting discretionary expenditure from March and furloughing the majority of the Group's UK employees from May. These proactive steps resulted in a 25% reduction in costs in the first half to GBP1.3 million (2019: GBP1.7 million).

Adjusted EBITDA for the period was a loss of GBP0.2 million (2019: positive GBP0.2 million).

During the period the Group was awarded an Innovation Continuity Grant by Innovate UK worth approximately GBP0.2 million to help the funding of its new product development programme which last year received an Innovate UK Smart award. The cash associated with this grant was received in July 2020. Deltex Medical continues to work closely with Innovate UK to explore additional funding sources for its new product development programme.

The Group also successfully applied for a cash grant of US$0.2 million under the US Government's Paycheck Protection Program, which was received in July 2020.

There continues to be careful stewardship of the Group's cash resources with cash at hand at 30 June, 2020 of GBP0.6 million (2019: GBP0.6 million).

Commercial activities

Deltex Medical's TrueVue Doppler haemodynamic monitoring technology was originally developed for use in ICUs where it provides extremely accurate data to help guide therapy for very sick patients whose haemodynamic status is changing rapidly. More recently, other technologies have entered the market to provide more indicative data on the haemodynamic status of ICU patients who are relatively stable.

For patients in the Operating theatre ("OR"), whose haemodynamic status is intrinsically unstable, the Group's TrueVue Doppler technology has become the standard of care supported by a significant number of positive clinical trial results published in scientific journals. Since the use of TrueVue Doppler in the OR is a higher margin business than its use in the ICU, and the OR also typically represents a larger addressable market, Deltex Medical has focussed its sales and marketing activities on promoting the use of its TrueVue Doppler technology in the OR setting.

When the CV-19 pandemic struck, clinicians saw that patients admitted into ICU were often critically haemodynamically unstable. This prompted intensivists who were familiar with the benefits of Deltex Medical's technology to start to use the TrueVue Doppler system to treat this cohort of very sick ICU patients. Accordingly, in March and April we saw usage rates significantly increase in UK ICUs.

In parallel, we saw elective surgery being stopped by healthcare systems in our key markets as hospitals focused on treating the large numbers of extremely sick CV-19 patients being admitted into ICUs. This decline in elective surgical procedures resulted in a very significant reduction in orders for TrueVue Doppler probes from the Group's established customer base.

Since May, as lockdown brought the pandemic under control, the number of CV-19 patients in UK and US ICUs has reduced substantially, with many ICUs being nearly completely empty. Elective surgical procedures are, however, only just beginning to restart and often initially at a much lower level, as hospitals reshape their services to be able to withstand the possibility of a second wave of CV-19 patients whilst at the same time putting in place measures which will allow an increase in normal clinical interventions.

Deltex Medical has seen increased activity levels from our key markets since August. For example:

-- in the United States, our direct sales team is beginning to see the number of elective surgical procedures in US hospitals increasing. It is too early to be able to assess how quickly it will take our US hospital customers to get back to full capacity, although we believe that the USA is currently moving faster than the UK, notwithstanding the continuing relatively high CV-19 transmission rates;

-- in the UK, there are signs that elective surgery is beginning to restart following the end of the summer holiday period. There is also significant pressure from both patients and clinicians to reduce the substantial waiting lists which developed during lockdown for both NHS and private patients. There is a clear recognition that it is better clinically, and less expensive, to treat patients via elective surgical procedures as opposed to waiting for patients' underlying health issues to deteriorate and require emergency interventions. We have seen a UK hospital place an order for 10 new TrueVue Monitors for its ORs following intense use of the TrueVue Doppler technology in its ICUs during the peak of the CV-19 pandemic. It is currently too early to estimate how quickly elective procedures will return to normal, pre-pandemic levels in NHS and private hospitals in the UK; and

-- through our international network of distributors, we are seeing signs of orders returning to more normal levels of demand. For example, in France, Deltex Medical's distributor ordered probes in August for the first time this year and we have also seen orders from Korea as well as some smaller European customers.

New product development

Deltex Medical's new product development programme, including the development of the new Monitor, has continued despite the disruption caused by engineers working from home. Good progress has been made, including securing further grant funding for elements of this development work.

Brexit

The Group has a number of contingency plans already in place which can be quickly implemented to respond to the different possible outcomes associated with Brexit and the EU-UK Withdrawal Agreement negotiations.

Current trading and prospects

Deltex Medical's core haemodynamic monitoring business remains focused on elective surgery. As elective surgery numbers increase worldwide, so the Group's financial performance will improve. In the meantime, we believe that the Group will continue to trade at a reduced level of activity in comparison to pre-CV-19 levels, but that this level of activity is sustainable and is expected to be broadly cash neutral.

Although the second half is expected to be an improvement on the first half of 2020, the ongoing elective surgery delays will result in revenues being materially behind market expectations. The Group does have some significant live tenders with potential international buyers. However, the Board has taken a prudent approach with guidance due to the limited visibility on these large potential orders. We expect revenue levels in 2021 to recover to previous levels seen in 2019.

On the back of the CV-19 ICU experience, the Group is now working with key opinion leaders in the UK and the United States to develop data to show how the protocolized use of TrueVue Doppler on severely sick CV-19 patients can significantly improve patient outcomes.

Since the beginning of September, a number of Deltex Medical employees have been taken off furlough to return to work on a part-time basis in order to help the Group satisfy increasing demand for its TrueVue Doppler probes.

Deltex Medical's focus for the rest of this year will be to ensure that the business is optimally positioned for 2021, including maximising cash generation and, assisted by the Innovate Smart award, continuing with its programme of new product development.

Nigel Keen

Chairman

21 September, 2020

Condensed Consolidated Statement of Comprehensive Income

for the period ended 30 June 2020

 
                                                               Unaudited               Audited 
                                                        Six months   Six months           Year 
                                                             ended        ended          ended 
                                                           30 June      30 June    31 December 
                                                              2020         2019           2019 
----------------------------------------------  -----  -----------  -----------  ------------- 
                                                 Note      GBP'000      GBP'000        GBP'000 
 Revenue                                            4        1,157        1,993          4,256 
 Cost of sales                                               (364)        (487)          (974) 
----------------------------------------------  -----  -----------  -----------  ------------- 
 Gross profit                                                  793        1,506          3,282 
 Administrative expenses                                     (575)        (853)        (1,515) 
 Sales and distribution expenses                             (542)        (624)        (1,220) 
 Research and Development, Quality and 
  Regulatory                                                 (185)        (250)          (446) 
 Impairment loss on trade receivables                            -            -           (11) 
 Exceptional costs                                 16            -            -          (137) 
----------------------------------------------  -----  -----------  -----------  ------------- 
 Total costs                                               (1,302)      (1,727)        (3,329) 
----------------------------------------------  -----  -----------  ----------- 
 Operating profit / (loss) before exceptional 
  costs and other gain                                       (509)        (221)             90 
 Exceptional costs                                 16            -            -          (137) 
----------------------------------------------  -----  -----------  -----------  ------------- 
 Other gain                                         7           19            -             13 
 Operating loss                                              (490)        (221)           (34) 
 Finance costs                                                (88)         (86)          (176) 
----------------------------------------------  -----  -----------  -----------  ------------- 
 Loss before taxation                                        (578)        (307)          (210) 
 Tax credit on loss                                 7            4           38             51 
----------------------------------------------  -----  -----------  -----------  ------------- 
 Loss for the period/year                                    (574)        (269)          (159) 
----------------------------------------------  -----  -----------  -----------  ------------- 
 
 Other comprehensive (expense)/income 
 Items that may be reclassified to profit 
  or loss: 
 Net translation differences on overseas 
  subsidiaries                                                  24            1            (8) 
----------------------------------------------  -----  -----------  -----------  ------------- 
 Other comprehensive (expense)/income 
  for the period/year, net of tax                               24            1            (8) 
----------------------------------------------  -----  -----------  -----------  ------------- 
 Total comprehensive loss for the period/year                (550)        (268)          (167) 
----------------------------------------------  -----  -----------  -----------  ------------- 
 
 Total comprehensive loss for the period/year 
  attributable to: 
 Owners of the Parent                                        (560)        (269)          (169) 
 Non-controlling interests                                      10            1              2 
----------------------------------------------  -----  -----------  -----------  ------------- 
                                                             (550)        (268)          (167) 
----------------------------------------------  -----  -----------  -----------  ------------- 
 
 Loss per share - basic and diluted                 8      (0.11)p      (0.05)p        (0.03p) 
----------------------------------------------  -----  -----------  -----------  ------------- 
 
 

Condensed Consolidated Balance Sheet

 
                                                      Unaudited            Audited 
                                                  30 June    30 June   31 December 
                                                     2020    2019(1)          2019 
                                          Note 
                                                  GBP'000    GBP'000       GBP'000 
--------------------------------------  ------  ---------  ---------  ------------ 
 Assets 
 Non-current assets 
 Property, plant and equipment                        344        403           395 
 Intangible assets                                  2,696      2,595         2,651 
 Financial assets at amortised cost                   159        161           157 
--------------------------------------  ------  ---------  ---------  ------------ 
 Total non-current assets                           3,199      3,159         3,203 
 Current assets 
 Inventories                                 9      1,000        946           915 
 Trade and other receivables                          655      1,051         1,062 
 Financial assets at amortised cost                   214        214           214 
 Other current assets                                 114        104           113 
 Current income tax recoverable                       103        100            80 
 Cash and cash equivalents                  10        568        595           908 
--------------------------------------  ------  ---------  ---------  ------------ 
 Total current assets                               2,654      3,010         3,292 
--------------------------------------  ------  ---------  ---------  ------------ 
 Total assets                                       5,853      6,169         6,495 
 Liabilities 
 Current liabilities 
 Borrowings                                 12       (77)      (267)         (188) 
 Trade and other payables                   13    (2,185)    (2,026)       (2,198) 
 Total current liabilities                        (2,262)    (2,293)       (2,386) 
--------------------------------------  ------  ---------  ---------  ------------ 
 Non-current liabilities 
 Borrowings                              12,14    (1,092)    (1,052)       (1,072) 
 Trade and other payables                           (300)      (334)         (320) 
 Provisions                                          (65)       (56)          (62) 
--------------------------------------  ------  ---------  ---------  ------------ 
 Total non-current liabilities                    (1,457)    (1,442)       (1,454) 
--------------------------------------  ------  ---------  ---------  ------------ 
 Total liabilities                                (3,719)    (3,735)       (3,840) 
--------------------------------------  ------  ---------  ---------  ------------ 
 Net assets                                         2,134      2,434         2,655 
--------------------------------------  ------  ---------  ---------  ------------ 
 
 Equity 
 Share capital                              15      5,249      5,123         5,249 
 Share premium                                     33,230     33,230        33,230 
 Capital redemption reserve                        17,476     17,476        17,476 
 Other reserve                                        468      1,076           439 
 Translation reserve                                  165        150           141 
 Convertible loan note reserve                         82         82            82 
 Accumulated losses                              (54,407)   (54,563)      (53,823) 
--------------------------------------  ------  ---------  ---------  ------------ 
 Equity attributable to owners of the 
  Parent                                            2,263      2,574         2,794 
 Non-controlling interests                          (129)      (140)         (139) 
--------------------------------------  ------  ---------  ---------  ------------ 
 Total equity                                       2,134      2,434         2,655 
--------------------------------------  ------  ---------  ---------  ------------ 
 

1. Certain comparatives have been restated to be consistent with the presentation used in the 2019 Annual Report & Accounts (Note 17).

Condensed Consolidated Statement of Changes in Equity for the period ended 30 June 2020 (unaudited)

 
                                          Capital             Convertible                                         Non-controlling 
                     Share     Share   redemption     Other     loan note   Translation   Accumulated                    interest     Total 
                   capital   premium      reserve   reserve       reserve       reserve        losses     Total                      equity 
                   GBP'000   GBP'000      GBP'000   GBP'000       GBP'000       GBP'000       GBP'000   GBP'000           GBP'000   GBP'000 
----------------  --------  --------  -----------  --------  ------------  ------------  ------------  --------  ----------------  -------- 
 Balance at 
  1 January 2020     5,249    33,230       17,476       439            82           141      (53,823)     2,794             (139)     2,655 
 Comprehensive 
  income 
 Loss for the 
  period                 -         -            -         -             -             -         (584)     (584)                10     (574) 
 Other 
  comprehensive 
  income for the 
  period                 -         -            -         -             -            24             -        24                 -        24 
----------------  --------  --------  -----------  --------  ------------  ------------  ------------  --------  ----------------  -------- 
 Total 
  comprehensive 
  income for the 
  six-month 
  period                 -         -            -         -             -            24         (584)     (560)                10     (550) 
 Transactions 
  with owners 
  of the company 
 Equity-settled 
  share-based 
  payment                -         -            -        29             -             -             -        29                 -        29 
 Balance at 
  30 June 2020       5,249    33,230       17,476       468            82           165      (54,407)     2,263             (129)     2,134 
----------------  --------  --------  -----------  --------  ------------  ------------  ------------  --------  ----------------  -------- 
 

Condensed Consolidated Statement of Changes in Equity for the period ended 30 June 2019 (unaudited)

 
                                          Capital             Convertible                                         Non-controlling 
                     Share     Share   redemption     Other     loan note   Translation   Accumulated                    interest     Total 
                   capital   premium      reserve   reserve       reserve       reserve        losses     Total                      equity 
                   GBP'000   GBP'000      GBP'000   GBP'000       GBP'000       GBP'000       GBP'000   GBP'000           GBP'000   GBP'000 
----------------  --------  --------  -----------  --------  ------------  ------------  ------------  --------  ----------------  -------- 
 Balance at 1 
  January 2019, 
  as restated        4,927    33,230       17,476       953            82           149      (54,293)     2,524             (141)     2,383 
 Comprehensive 
  income 
 Loss for the 
  period                 -         -            -         -             -             -         (270)     (270)                 1     (269) 
 Other 
  comprehensive 
  income for the 
  period                 -         -            -         -             -             1             -         1                 -         1 
----------------  --------  --------  -----------  --------  ------------  ------------  ------------  --------  ----------------  -------- 
 Total 
  comprehensive 
  income for the 
  six-month 
  period                 -         -            -         -             -             1         (270)     (269)                 1     (268) 
 Transactions 
  with owners 
  of the company 
 Equity-settled 
  share-based 
  payment                -         -            -       123             -             -             -       123                 -       123 
 Share options 
  exercised            196         -            -         -             -             -             -       196                 -       196 
----------------  --------  --------  -----------  --------  ------------  ------------  ------------  --------  ----------------  -------- 
 Balance at 
  30 June 2019       5,123    33,230       17,476     1,076            82           150      (54,563)     2,574             (140)     2,434 
----------------  --------  --------  -----------  --------  ------------  ------------  ------------  --------  ----------------  -------- 
 

Condensed Consolidated Statement of Changes in Equity for the year ended 31 December 2019 (audited)

 
                                          Capital             Convertible                                         Non-controlling 
                     Share     Share   redemption     Other     loan note   Translation   Accumulated                    interest 
                   capital   premium      reserve   reserve       reserve       reserve        losses     Total                       Total 
                                                                                                                                     equity 
                   GBP'000   GBP'000      GBP'000   GBP'000       GBP'000       GBP'000       GBP'000   GBP'000           GBP'000   GBP'000 
----------------  --------  --------  -----------  --------  ------------  ------------  ------------  --------  ----------------  -------- 
 Balance at 1 
  January 2019, 
  as restated        4,927    33,230       17,476       953            82           149      (54,293)     2,524             (141)     2,383 
 Comprehensive 
  income 
 Loss for the 
  period                 -         -            -         -             -             -         (161)     (161)                 2     (159) 
 Other 
  comprehensive 
  income for the 
  period                 -         -            -         -             -           (8)             -       (8)                 -       (8) 
----------------  --------  --------  -----------  --------  ------------  ------------  ------------  --------  ----------------  -------- 
 Total 
  comprehensive 
  income for 
  year                   -         -            -         -             -           (8)         (161)     (169)                 2     (167) 
 Transactions 
  with owners 
  of the Group 
 Equity-settled 
  share-based 
  payment                -         -            -       117             -             -             -       117                 -       117 
 Transfers               -         -            -     (631)             -             -           631         -                 -         - 
 Share options 
  exercised            322         -            -         -             -             -             -       322                 -       322 
----------------  --------  --------  -----------  --------  ------------  ------------  ------------  --------  ----------------  -------- 
 Balance at 
  31 December 
  2019               5,249    33,230       17,476       439            82           141      (53,823)     2,794             (139)     2,655 
----------------  --------  --------  -----------  --------  ------------  ------------  ------------  --------  ----------------  -------- 
 

Condensed Consolidated Statement of Cash Flows

for the period ended 30 June 2020

 
                                                         Unaudited            Audited 
                                                  Six months   Six months        Year 
                                                       ended        ended    ended 31 
                                                     30 June      30 June    December 
                                                        2020         2019        2019 
                                                     GBP'000      GBP'000     GBP'000 
----------------------------------------------   -----------  -----------  ---------- 
 Cash flows from operating activities 
 Loss before taxation                                  (578)        (307)       (210) 
 Adjustments for: 
 Net finance costs                                        88           86         176 
 Depreciation of property, plant and 
  equipment                                               97          100         149 
 Profit on disposal of loan monitors                    (35)          (2)        (36) 
 Amortisation of intangible assets                        40           71          84 
 Share-based payment expense                              29          123         117 
 Effect of exchange rate fluctuations                    (1)            2         (2) 
-----------------------------------------------  -----------  -----------  ---------- 
                                                       (360)           73         278 
 (Increase)/decrease in inventories                     (85)        (257)       (235) 
 Decrease in trade and other receivables                 383          479         427 
 Increase/(decrease) in trade and other 
  payables                                              (16)           27         212 
 Increase in provisions                                    3            -           6 
 Net cash from/(used in) operations                     (75)          322         688 
 Interest paid                                          (67)         (69)       (139) 
 Income taxes received                                     -           11          60 
-----------------------------------------------  -----------  -----------  ---------- 
 Net cash generated from/(used in) 
  operating activities                                 (142)          264         609 
 Cash flows from investing activities 
 Purchase of property, plant and equipment              (10)         (12)        (10) 
 Proceeds from the sale of loan monitors                   -            6          59 
 Capitalised development expenditure                    (85)        (138)       (250) 
 Net cash used in investing activities                  (95)        (144)       (201) 
 Cash flows from financing activities 
 Issue of ordinary share capital                           -          196         322 
 Outflow from decrease in invoice discounting 
  facility                                             (111)        (281)       (356) 
 Repayment of obligations under finance 
  leases                                                (17)         (16)        (33) 
-----------------------------------------------  -----------  -----------  ---------- 
 Net cash (used in)/generated from 
  financing activities                                 (128)        (101)        (67) 
-----------------------------------------------  -----------  -----------  ---------- 
 Net increase in cash and cash equivalents             (365)           19         341 
 Cash and cash equivalents at beginning 
  of the period                                          908          580         580 
 Exchange (loss)/gain on cash and cash 
  equivalents                                             25          (4)        (13) 
-----------------------------------------------  -----------  -----------  ---------- 
 Cash and cash equivalents at the end 
  of the period/year                                     568          595         908 
-----------------------------------------------  -----------  -----------  ---------- 
 

Notes to the condensed consolidated interim financial statements

   1.   Reporting Entity 

Deltex Medical Group plc is a company that is domiciled in the United Kingdom. It is incorporated in England and Wales (Company Number 03902895) and its registered office is at Terminus Road, Chichester, PO19 8TX, United Kingdom. These condensed consolidated interim financial statements (Interim Financial Statements) as at and for the period ended 30 June 2020 comprise the Company and its subsidiaries (together referred to as 'the Group'). The Group is principally involved with the manufacture and sale of advanced haemodynamic monitoring technologies.

   2.   Basis of accounting 

These interim financial statements have been prepared in accordance with IAS 34, 'Interim Financial Reporting', and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 December 2019 (Annual Report & Accounts 2019). They do not include all 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.

These condensed consolidated 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 2019 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 2019 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

These condensed consolidated 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 2019 and are expected to be applied in the preparation of the financial statements for the year ending 31 December 2020. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

These condensed consolidated interim financial statements were approved by the Board of Directors and approved for issue on 21 September 2020.

   3.   Use of judgements and estimates 

In preparing these interim financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. 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 2019.

   4.   Revenue 

The Group's revenue disaggregated by primary geographical markets is as follows:

 
                           For the six months ended 30 June 2020 (Unaudited) 
                                  Direct markets                       Indirect markets 
                     Probes   Monitors   Third Party     Other    Probes   Monitors     Other     Total 
                    GBP'000    GBP'000       GBP'000   GBP'000   GBP'000    GBP'000   GBP'000   GBP'000 
-----------------  --------  ---------  ------------  --------  --------  ---------  --------  -------- 
 UK                     377         16             -        31         -          -         -       424 
 USA                    477         16             -        12         -          -         -       505 
 France                   -          -             -         -         -          -         7         7 
 Scandinavia              -          -             -         -        41          -         -        41 
 South Korea              -          -             -         -        53          -         1        54 
 Peru                     -          -             -         -         -          -         -         - 
 Other countries          -          -             -         -        96         28         2       126 
-----------------  --------  ---------  ------------  --------  --------  ---------  --------  -------- 
                        854         32             -        43       190         28        10     1,157 
-----------------  --------  ---------  ------------  --------  --------  ---------  --------  -------- 
 
                           For the six months ended 30 June 2019 (Unaudited) 
                                  Direct markets                       Indirect markets 
                     Probes   Monitors   Third Party     Other    Probes   Monitors     Other     Total 
                    GBP'000    GBP'000       GBP'000   GBP'000   GBP'000    GBP'000   GBP'000   GBP'000 
-----------------  --------  ---------  ------------  --------  --------  ---------  --------  -------- 
 UK                     441         19           178        44         -          -         -       682 
 USA                    719          -             -         2         -          -         -       721 
 France                   -          -             -         -       250          -         4       254 
 Scandinavia              -          -             -         -        42          -         1        43 
 South Korea              -          -             -         -       139          -         2       141 
 Peru                     -          -             -         -         -          -         -         - 
 Other countries         16          -             -         -       102         27         7       152 
-----------------  --------  ---------  ------------  --------  --------  ---------  --------  -------- 
                      1,176         19           178        46       533         27        14     1,993 
-----------------  --------  ---------  ------------  --------  --------  ---------  --------  -------- 
 
                             For the year ended 31 December 2019 (Audited) 
                                  Direct markets                       Indirect markets 
                     Probes   Monitors   Third Party     Other    Probes   Monitors     Other     Total 
                    GBP'000    GBP'000       GBP'000   GBP'000   GBP'000    GBP'000   GBP'000   GBP'000 
-----------------  --------  ---------  ------------  --------  --------  ---------  --------  -------- 
 UK                     902         49           293       107         -          -         -     1,351 
 USA                  1,443         45             -        42         -          -         -     1,530 
 France                   -          -             -         -       289          9         6       304 
 Scandinavia              -          -             -         -        83          -         1        84 
 South Korea              -          -             -         -       277         10         3       290 
 Peru                     -          -             -         -       258          -         3       261 
 Other countries         29          -             -         -       251        148         8       436 
-----------------  --------  ---------  ------------  --------  --------  ---------  --------  -------- 
                      2,374         94           293       149     1,158        167        21     4,256 
-----------------  --------  ---------  ------------  --------  --------  ---------  --------  -------- 
 

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

 
                                                     Period ended                       Year ended 
                                             30 June              30 June              31 December 
                                                2020                 2019                     2019 
                                             GBP'000              GBP'000                  GBP'000 
-------------------------------  -------------------  -------------------  ----------------------- 
            Sale of goods                      1,138                1,961                    4,176 
            Maintenance income                    19                   32                       80 
                                               1,157                1,993                    4,256 
-------------------------------  -------------------  -------------------  ----------------------- 
 

The following table provides information about trade receivables and contract liabilities from contracts with customers. There were no contract assets at either 30 June 2020 or 1 January 2020.

 
                                                                          30 June              1 January 
                                                                             2020                   2020 
                                                                          GBP'000                GBP'000 
------------------------------------------------------------  -------------------  --------------------- 
            Trade receivables which are in 'Trade and other 
             receivables'                                                     437                  1,062 
            Contract liabilities                                             (72)                   (53) 
------------------------------------------------------------  -------------------  --------------------- 
 

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 2020:

 
                                        2020                 2021                 2022                 2023                Total 
                                     GBP'000              GBP'000              GBP'000              GBP'000              GBP'000 
-----------------------  -------------------  -------------------  -------------------  -------------------  ------------------- 
            Revenue 
             expected 
             to be 
             recognised                   33                   33                    1                    5                   72 
-----------------------  -------------------  -------------------  -------------------  -------------------  ------------------- 
 
   5.   Segment results 

Performance is monitored, and the allocation of resources is made, on the basis of results derived from the sale of probes, monitors and third-party products for 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 (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 segment results for the six months ended 30 June 2020 were:

 
                                                          Third 
                              Probes(1)    Monitors       party     Other    Unallocated     Total 
                                                       products 
                                GBP'000     GBP'000     GBP'000   GBP'000        GBP'000   GBP'000 
--------------------------  -----------  ----------  ----------  --------  -------------  -------- 
 Revenues                         1,044          60           -        53              -     1,157 
--------------------------  -----------  ----------  ----------  --------  -------------  -------- 
 Adjusted gross profit(2)           726          68           -        41              -       835 
--------------------------  -----------  ----------  ----------  --------  -------------  -------- 
 
 Sales and marketing 
  costs(3)                            -           -           -         -              -     (519) 
 Administration costs(3)              -           -           -         -              -     (423) 
 R&D costs(3)                         -           -           -         -              -      (53) 
 Quality and regulation 
  costs(3)                            -           -           -         -              -      (81) 
--------------------------  -----------  ----------  ----------  --------  -------------  -------- 
 Adjusted EBITDA(4)                   -           -           -         -              -     (241) 
--------------------------  -----------  ----------  ----------  --------  -------------  -------- 
 
   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. Excluding non-cash costs namely depreciation, amortisation, share-based payment expense, non-executive directors' fees and accumulated absence costs

4. Earnings before interest, tax, depreciation and amortisation, share-based payment expense and non-executive directors' fees

The unaudited segment results for the six months ended 30 June 2019 were:

 
                                                          Third 
                              Probes(1)    Monitors       party     Other    Unallocated     Total 
                                                       products 
                                GBP'000     GBP'000     GBP'000   GBP'000        GBP'000   GBP'000 
--------------------------  -----------  ----------  ----------  --------  -------------  -------- 
 Revenues                         1,709          46         178        60              -     1,993 
--------------------------  -----------  ----------  ----------  --------  -------------  -------- 
 Adjusted gross profit(2)         1,416          41          83        32              -     1,572 
--------------------------  -----------  ----------  ----------  --------  -------------  -------- 
 
 Sales and marketing 
  costs(3)                            -           -           -         -          (632)     (632) 
 Administration costs(3)              -           -           -         -          (615)     (615) 
 R&D costs(3)                         -           -           -         -           (62)      (62) 
 Quality and regulation 
  costs(3)                            -           -                     -          (110)     (110) 
--------------------------  -----------  ----------  ----------  --------  -------------  -------- 
 Adjusted EBITDA(4)                   -           -           -         -              -       153 
--------------------------  -----------  ----------  ----------  --------  -------------  -------- 
 
   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. Excluding non-cash costs namely depreciation, amortisation, share-based payment expense, non-executive directors' fees and accumulated absence costs

4. Earnings before interest, tax, depreciation and amortisation, share-based payment expense and non-executive directors' fees

The audited segment results for the year ended 31 December 2019 were:

 
                                                          Third 
                              Probes(1)    Monitors       party     Other    Unallocated     Total 
                                                       products 
                                GBP'000     GBP'000     GBP'000   GBP'000        GBP'000   GBP'000 
--------------------------  -----------  ----------  ----------  --------  -------------  -------- 
 Revenues                         3,533         260         293       170              -     4,256 
--------------------------  -----------  ----------  ----------  --------  -------------  -------- 
 Adjusted gross profit(2)         2,881         232         127       113              -     3,353 
--------------------------  -----------  ----------  ----------  --------  -------------  -------- 
 
 Sales and marketing 
  costs(3)                            -           -           -         -        (1,304)   (1,304) 
 Administration costs(3)              -           -           -         -        (1,297)   (1,297) 
 R&D costs(3)                         -           -           -         -          (139)     (139) 
 Quality and regulation 
  costs(3)                            -           -                     -          (222)     (222) 
--------------------------  -----------  ----------  ----------  --------  -------------  -------- 
 Adjusted EBITDA(4)                   -           -           -         -              -       391 
--------------------------  -----------  ----------  ----------  --------  -------------  -------- 
 
   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. Excluding non-cash costs namely depreciation, amortisation, share-based payment expense, non-executive directors' fees and accumulated absence costs

4. Earnings before interest, tax, depreciation and amortisation, share-based payment expense and non-executive directors' fees

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    30 June   31 December 
                                                      2020       2019          2019 
                                                   GBP'000    GBP'000       GBP'000 
-----------------------------------------------  ---------  ---------  ------------ 
 Adjusted EBITDA                                     (241)        153           391 
 Non-cash items: 
 Depreciation of property, plant and equipment        (61)       (98)         (149) 
 Amortisation of development costs                    (40)       (71)          (84) 
 Non-executive directors' fees and employer's 
  social security costs                               (72)       (72)         (136) 
 Share-based payment expense                          (29)      (123)         (117) 
 Change in accumulated absence cost liability         (66)       (10)            26 
 Bonus accrual releases                                  -          -            22 
 Cash item: Other tax income                            19          -            13 
-----------------------------------------------  ---------  ---------  ------------ 
                                                     (249)      (374)         (425) 
-----------------------------------------------  ---------  ---------  ------------ 
 Operating loss                                      (490)      (221)          (34) 
 Finance costs                                        (88)       (86)         (176) 
-----------------------------------------------  ---------  ---------  ------------ 
 Loss before tax                                     (578)      (307)         (210) 
 Tax credit on loss                                      4         38            51 
-----------------------------------------------  ---------  ---------  ------------ 
 Loss for the period/year                            (574)      (269)         (159) 
-----------------------------------------------  ---------  ---------  ------------ 
 
   6.   Dividends 

The Directors cannot recommend the payment of a dividend (2019: nil) for 2020.

   7.   Tax credit on loss 
 
                                                                          Unaudited                          Audited 
                                                                 30 June              30 June              31 December 
                                                                    2020                 2019                     2019 
                                                                 GBP'000              GBP'000                  GBP'000 
---------------------------------------------------  -------------------  -------------------  ----------------------- 
            Research and development tax credit                      (4)                 (52)                     (64) 
            Adjustment in respect of prior periods                     -                   14                       13 
---------------------------------------------------  -------------------  -------------------  ----------------------- 
            Total tax credit on loss                                 (4)                 (38)                     (51) 
---------------------------------------------------  -------------------  -------------------  ----------------------- 
 

The other gain amount for six months to 30 June 2020 of GBP19,000 (six months to 30 June 2019: GBPnil) comprises tax income arising from the Research and Development Expenditure Credit scheme which is accounted for as a government grant.

   8.   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 2020 is based on the loss after tax attributable to owners of the parent of GBP584,000 and the weighted average number of shares in issue of 524,868,826.

The loss per share calculation for six months to 30 June 2019 is based on the loss after tax attributable to owners of the parent of GBP270,000 and the weighted average number of shares in issue of 502,437,787.

The loss per share calculation for the year ended 31 December 2019 is based on the loss after tax attributable to owners of the parent of GBP161,000 and the weighted average number of shares in issue of 509,679,881. While the Company is loss-making, the diluted loss per share and the loss per share are the same.

   9.    Inventories 

Inventories at 30 June 2020 include the following Finished Goods: 21,398 probes and 250 monitors.

10. Cash at bank

 
                                                Unaudited                          Audited 
                                       30 June              30 June              31 December 
                                          2020                 2019                     2019 
                                       GBP'000              GBP'000                  GBP'000 
-------------------------  -------------------  -------------------  ----------------------- 
            Cash at bank                   568                  595                      908 
-------------------------  -------------------  -------------------  ----------------------- 
 

11. Net cash

 
                                                                  Unaudited                              Audited 
                                                         30 June              30 June              31 December 
                                                            2020                 2019                     2019 
                                                         GBP'000              GBP'000                  GBP'000 
-------------------------------------------  -------------------  -------------------  ----------------------- 
            Cash at bank                                     568                  595                      908 
            Less Invoice discount facility                  (77)                (267)                    (188) 
-------------------------------------------  -------------------  -------------------  ----------------------- 
                                                             491                  328                      720 
-------------------------------------------  -------------------  -------------------  ----------------------- 
 
 

12. Borrowings

 
                                                                        Unaudited                                                                          Audited 
                                                          30 June 2020                        30 June 2019                                31 December 2019 
                                      Current              Non-current              Current              Non-current              Current              Non-current 
                                      GBP'000                  GBP'000              GBP'000                  GBP'000              GBP'000                  GBP'000 
------------------------  -------------------  -----------------------  -------------------  -----------------------  -------------------  ----------------------- 
            Invoice 
             discount 
             facility                      77                        -                  267                        -                  188                        - 
            Convertible 
             loan 
             notes                          -                    1,092                    -                    1,052                    -                    1,072 
------------------------  -------------------  -----------------------  -------------------  -----------------------  -------------------  ----------------------- 
                                           77                    1,092                  267                    1,052                  188                    1,072 
------------------------  -------------------  -----------------------  -------------------  -----------------------  -------------------  ----------------------- 
 

13. Trade and other payables

 
                                                                        Unaudited                                                                          Audited 
                                                          30 June 2020                        30 June 2019                                31 December 2019 
                                      Current              Non-current              Current              Non-current              Current              Non-current 
                                      GBP'000                  GBP'000              GBP'000                  GBP'000              GBP'000                  GBP'000 
------------------------  -------------------  -----------------------  -------------------  -----------------------  -------------------  ----------------------- 
            Trade 
             payables                     445                        -                  360                        -                  381                        - 
            Other 
             payables                     348                        -                  345                        -                  483                        - 
            Social 
             security 
             and other 
             taxes                        175                        -                  122                        -                  129                        - 
            Lease 
             obligations                   35                      300                   35                      334                   32                      320 
            Contract 
             liabilities                   72                        -                  150                        -                   53                        - 
            Employee 
             short-term 
             liabilities                   98                        -                   67                        -                   31                        - 
            Accrued 
             expenses                   1,012                        -                  947                        -                1,089                        - 
------------------------  -------------------  -----------------------  -------------------  -----------------------  -------------------  ----------------------- 
                                        2,185                      300                2,026                      334                2,198                      320 
------------------------  -------------------  -----------------------  -------------------  -----------------------  -------------------  ----------------------- 
 

14. Convertible loan note

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

 
                                                             Financial                  Equity 
                                                             liability               component                Total 
                                                               GBP'000                 GBP'000              GBP'000 
----------------------------------------------  ----------------------  ----------------------  ------------------- 
            Carrying amount at 1 January 2020                    1,072                      82                1,154 
            Interest expense                                        64                       -                   64 
            Interest paid                                         (44)                       -                 (44) 
----------------------------------------------  ----------------------  ----------------------  ------------------- 
            Carrying amount at 30 June 2020                      1,092                      82                1,174 
----------------------------------------------  ----------------------  ----------------------  ------------------- 
 

The convertible loan note falls due for repayment in February 2022. The convertible loan note is, at the option of the loan note holder, convertible at anytime into new ordinary shares of 1 penny each at a conversion price of 4 pence per share.

15. Share capital

During the six months ended 30 June 2020, there were no share issues or exercises of shares.

16. Exceptional items

Exceptional items comprised:

 
                                   Unaudited                                      Audited 
                                  30 June                  30 June              31 December 
                                     2020                     2019                     2019 
                                  GBP'000                  GBP'000                  GBP'000 
 ----------------------------------------  -----------------------  ----------------------- 
 Payments in lieu of notice                          -           -                         65 
 Compensation for loss of office                     -           -                         30 
 Write off of research and development 
 obsolete projects                                   -           -                         42 
----------------------------------------  ------------  ----------  ------------------------- 
                                                     -           -                        137 
----------------------------------------  ------------  ----------  ------------------------- 
 
 

17. 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.

18. Restatement of prior period balance sheet amounts

Certain comparative balances at 30 June 2019 have been restated to reflect presentational changes made in the preparation of the 2019 Annual Report & Accounts. The table below summarises the changes made:

 
 
 
 
                                                  Prior period 
                                                adjustment for 
                         As reported    removal of capitalised    As restated 
                                                  dilapidation 
                             GBP'000                   GBP'000        GBP'000 
---------------------  -------------  ------------------------  ------------- 
 Non-current assets 
 Property, plant and 
  equipment                      490                      (87)            403 
---------------------  -------------  ------------------------  ------------- 
 
 
 
 
 
                                               Prior period 
                                             adjustment for 
                             As reported     discounting of    As restated 
                                               dilapidation 
                                                  provision 
                                 GBP'000            GBP'000        GBP'000 
-------------------------  -------------  -----------------  ------------- 
 Non-current liabilities 
 Provisions                        (114)                 58           (56) 
-------------------------  -------------  -----------------  ------------- 
 

19. Foreign exchange rates

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

 
                                                                          Unaudited                                                       Audited 
                                                    30 June 2020                              30 June 2019                            31 December 2019 
                                            Average              Closing              Average              Closing              Average              Closing 
                                               rate                 rate                 rate                 rate                 rate                 rate 
------------------------------  -------------------  -------------------  -------------------  -------------------  -------------------  ------------------- 
            Sterling/US dollar                 1.27                 1.24                 1.30                 1.27                 1.28                 1.31 
            Sterling/Euro                      1.15                 1.10                 1.15                 1.12                 1.14                 1.17 
            Sterling/Canadian 
             dollar                            1.72                 1.68                 1.73                 1.66                 1.70                 1.71 
------------------------------  -------------------  -------------------  -------------------  -------------------  -------------------  ------------------- 
 

20. 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, PO19 8TX, United Kingdom. This announcement is available, free of charge, from the Company's website at www.deltexmedical.com

21. 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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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END

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