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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Lidco Group Plc | LSE:LID | London | Ordinary Share | GB0030546849 | ORD 0.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 11.75 | 11.50 | 12.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMLID
RNS Number : 9506T
LiDCO Group Plc
26 March 2019
LIDCO GROUP PLC
("LiDCO" or the "Company" or the "Group")
Final results
Results to 31 January 2019
LiDCO (AIM: LID), the hemodynamic monitoring company, announces its audited Final Results for the year ended 31 January 2019. The Group has delivered good progress for the roll out of its High Usage Programme ('HUP'). Whilst this transition has had a short-term impact on revenues, the Group is now well-positioned for strong growth in the current financial year.
Operational highlights
-- Recurring revenues increased to 81% of total LiDCO product revenues (2018: 71%)
-- Global contracted base of HUP monitors increased to 164 (2018: 96) monitors generating total annualised license revenues of GBP1.40m (2018: GBP0.73m)
-- US contracted base of HUP monitors increased to 95 monitors (2018: 58 units); US recurring revenues grew nearly 50% to GBP1.27m (2018: GBP0.85m)
-- Three of LiDCO's larger UK customers signed multi-year HUP contracts - representing GBP0.45m (14%) of LiDCO's 2018/19 recurring revenues in the UK
-- Exclusive UK distribution agreements signed with Maicuff, Antmed and Xavant -- Submission for new monitoring platform made to Chinese regulatory authorities -- New exclusive distributors signed in Sweden, Finland, Romania, Taiwan, and Sri Lanka
Financial highlights
-- Total revenue of GBP7.32m (2018: GBP8.27m). LiDCO product revenue (excluding third-party products) was down 10% to GBP6.19m (2018: GBP6.87m), the reduction due to a number of non-recurring factors
-- HUP deferred revenues of GBP0.77m up 28% (2018: GBP0.60m) -- Gross margin (excluding third-party products) of 74.5% (2018: 73%) -- Adjusted loss before tax* of GBP1.99m (2018: loss GBP1.84m) -- Reported loss before tax of GBP2.14m (2018: loss GBP2.22m) -- Loss per share of 0.80 pence (2018: loss per share 0.86 pence)
-- Net cash outflow before financing of GBP1.51m (2018: GBP1.67m), H2 cash outflow GBP0.32m (2018: GBP0.76m)
-- Debt free with cash at year-end of GBP1.72m (2018: GBP3.23m)
* adjusted for share-based payments of GBP0.1m in both 2018 and 2019 and one-off stock write-down of GBP0.3m in 2018
Post year end
-- Further 48 HUP monitors signed, bringing the global contracted base of HUP monitors to 212, generating total annualised license revenues of GBP1.82m
-- Appointment of Tim Hall as Chief Financial Officer -- New master distributor appointed in Latin America
Commenting on the results Matthew Sassone, Chief Executive Officer, said: "We continue to make good progress with the transition to the HUP business model and it's pleasing to see a further 48 HUP monitors signed since the year end. Since launching HUP in mid-2017 we have built a recurring revenue base from HUP of over GBP1.8m. The growing base of HUP monitors and the underlying fundamentals of the business positions the Company for strong growth in the current financial year and beyond."
LiDCO Group Plc www.lidco.com Matt Sassone (CEO) Tel: +44 (0)20 7749 1500 Tim Hall (CFO) finnCap Tel: +44 (0)20 7600 1658 Geoff Nash / Hannah Boros (Corporate Finance) Andrew Burdis (ECM) Walbrook PR Ltd Tel: 020 7933 8780 or lidco@walbrookpr.com Paul McManus (Media Relations) Mob: 07980 541 893 Lianne Cawthorne (Media Relations) Mob: 07584 391 303
The Company presentation and 2018/19 Annual Report and Accounts will be available from today on the LiDCO website: www.lidco.com.
Strategic Report
Chairman's statement
The Group has continued to make good headway with its differentiated High Usage Programme ("HUP") business model following its launch in July 2017. As the business wins HUP contracts, it transitions towards multi-year licence revenues, giving greater visibility alongside stronger cash generation as customers pay in advance of services being provided, albeit with revenues being spread, typically over 12 months. In 2018/19 the number of monitors under HUP increased over 70% to 164. As at 20 March 2019, the Group had 212 monitors contracted under the HUP worth GBP1.82m per annum of recurring revenues.
Although total revenues for 2018/19 (including third-party products) at GBP7.32m (2018: GBP8.27m) were down 11.4%, this fall was due to a number of non-recurring factors:
- the transition to HUP has deferred revenue from the current financial year;
- the transition to HUP has also dampened Q4 sales, as some customers have reduced purchases of consumables in anticipation of converting to HUP in their new financial year, which commences in April 2019;
- demand for capital monitor purchases was lower than expected in Q4 as customers conserved or diverted cash as part of their Brexit mitigation measures; and
- sales were reduced by the termination of the low-margin Argon distribution contract, which has been replaced by three higher margin distribution agreements coming on stream in 2019/20.
The Directors expect that growth will resume in 2019/20, underpinned by the growing contracted base of HUP contracts.
The Group's cash balances at 31 January 2019 totalled GBP1.72m and the Group remains debt free. As set out in the Annual Report and Accounts, the Board believes that LiDCO retains the appropriate strength in its balance sheet to deliver its strategic objective of creating a profitable business with good forward visibility from cash-generative recurring revenue streams.
On 11 March 2019 we were pleased to welcome Tim Hall to the Board as Chief Financial Officer and Company Secretary. Tim is a Chartered Accountant with extensive finance leadership within the med-tech sector.
Chief Executive's report
The Group continued its transition to its differentiated Software as a Service (SaaS) model, the HUP, which has the potential to substantially increase the adoption of hemodynamic monitoring and provide greater forward visibility of revenues and cash flows. Through this transition the Board believes that the Group will be positioned for sustained growth in the medium term.
HUP is differentiated from competitors by not having a charge per patient use, which encourages hospitals to use hemodynamic monitoring more widely by removing concerns about budgetary constraints. Numerous studies have shown that the use of hemodynamic monitoring improves patient outcomes, reduces length of stay and healthcare costs. The Board believes that these benefits provide healthcare providers with a strong justification to adopt the HUP model.
LiDCO's differentiated SaaS model is focused on attracting the larger more established users of hemodynamic monitoring to convert to LiDCO technology and for the Group's existing customers to extend the adoption of hemodynamic monitoring to a wider patient base.
The initial hospitals that LiDCO converted to HUP in the year ended 31 January 2018 have been reporting their first-year experience after HUP implementation. Under the unlimited programme the number of patients receiving hemodynamic monitoring in these accounts in both the UK & US has significantly increased. In one NHS hospital, after the first 10 months of implementation, the number of patients treated had increased 31% to 5,338 patients compared with 4,065 in the corresponding prior period. Likewise, a major USA customer expanded the numbers of patients being monitored by 30% whilst hemodynamic monitoring expenditure reduced by over 50%. This provides clear, real-world evidence that LiDCO technology is delivering increased value to both healthcare providers and patients.
The Group's strategy is to expand geographically from its strong position in its home UK market by gaining market share with its differentiated business model and market leading technology. HUP is a strategic focus for the Group, especially but not exclusively in the key US market. As of 20 March 2019, the global contracted base of HUP comprised 212 monitors, generating total annualised license revenues of GBP1.82m.
In the UK, the Group enjoys a leading market share, with over 50% of NHS acute care hospitals using its technology. However, the UK still represents 58% of LiDCO product revenues and the Board has identified a number of key geographies where it believes that the Group can gain a more significant market share.
The US is the largest market for hemodynamic monitoring, representing nearly half of the global demand. The Board believes this market offers the Group the greatest opportunity to grow and this has been the main focus of commercial efforts. Whilst highly competitive, early indications are that the market is responding well to LiDCO's differentiated pricing approach. Since launching the High Usage programme in July 2017, the number of HUP monitors in the US has grown to 132 across 20 accounts as at 20 March 2019 generating contracted annualised recurring revenues in excess of $1.51m (GBP1.16m). In addition, the US sales team has developed a significant pipeline of potential large users that previously would not have considered changing from their current supplier. This pipeline continues to build with the value of annualised business currently in negotiation or evaluating LiDCO's offering worth approximately $1.5m and $2.1m respectively. The focus is very much on transitioning these to signed contracts, typically with initial terms of two to three years.
In the rest of the world, the Group continues to make progress in creating the infrastructure needed to deliver the Board's geographical expansion plans. The Group's internal resources are focussed on managing distributors in the territories with the greatest mid to long term market opportunities, and master distribution companies are utilised to manage those distributors which are expected to be better served by a more local presence. As part of this more tailored approach to distribution management, LiDCO has selected markets within Europe, the Middle East and Asia where strong growth opportunities have been identified and the Group is investing with the right partners to achieve the necessary registrations and promotional activities to further market development and widen the adoption of hemodynamic monitoring.
Post period end, the Company signed a master distribution agreement for LiDCO products with Elysian Fields Medical covering a number of territories across Latin America. The Brazil based master distributor will cover all the major countries in Latin America, including Brazil, Mexico, Argentina, Chile, Uruguay, Peru, Columbia and Paraguay, actively promoting the LiDCO product range in a market, which LiDCO management estimates represents 10% of current global demand.
During the year the Group continued its investment in the commercial activities of the business in order to improve its sales efforts and the way that it promotes the LiDCO technology globally. Over the last two years investment has been made in additional commercial headcount for the USA, Europe and the UK. Management monitor where these additional resources are allocated to best accelerate future revenue growth and gain greater market share.
Financial Review
Revenues
Overall, LiDCO product revenues for the year ended 31 January 2019 were GBP6.19m (2018: GBP6.87m) and total revenues (including third-party products) were GBP7.32m (2018: GBP8.27m).
As of 31 January 2019, LiDCO had GBP0.77m (2018: GBP0.60m) of deferred revenues on the balance sheet arising from the HUP, with a global contracted base of 164 (2018: 96) monitors generating total annualised license revenues of GBP1.40m (2018: GBP0.73m).
Further comment on revenues by territory is provided in the operational review.
Gross profit and margin
Gross profit reduced by 8% to GBP4.84m (2018: GBP5.27m) due to lower revenue, partly offset by an increase in gross margin from 64% to 66%. The gross margin achieved on the sale of third-party products remained unchanged at 20%. However, the gross margin achieved on sales of LiDCO products increased to 74.5% (2018: 73%) even though a greater proportion of sales in rest of world were made through master distributors.
Overheads
Overheads before share-based payments reduced to GBP6.83m (2018: GBP7.38m) with strict control of expenditure and lower commissions payable. During the year the Group was able to realise some efficiencies in its back-office headcount and the average full-time equivalent headcount (excluding non-executive directors) was 48 employees (2018: 49 employees). Share-based payments were a charge of GBP143,000 (2018: GBP109,000).
Earnings and tax
The Group made an adjusted loss before tax (adjusting for share-based payments) of GBP1.99m (2018: GBP2.11m). After charging for share-based payments and receiving the benefit of GBP0.19m of research and development tax credits, the Group made an overall loss for the year of GBP1.94m (2018: GBP2.09m), equating to a loss per share of 0.80 pence (2018: 0.86 pence).
Cash flow, borrowings and cash balances
The Group continued to invest in the US market in line with the strategy of geographical expansion, supporting the sales force with marketing activities and had a net cash outflow in the year before financing activities of GBP1.51m (2018: GBP1.67m). HUP contributed GBP0.2m of positive cash flow in the year (2018: GBP0.3m). The outflow reflects the investments made in commercial resources and some significant non-recurring investments in working capital in H1 as the Group managed various changes in the supply chain of the LiDCOplus consumables, as explained under Inventory below.
The Group's cash outflow in H2 was GBP0.32m compared with GBP1.19m in H1 and cash balances at 31 January 2019 totalled GBP1.72m (31 January 2018: GBP3.23m). The Group remains debt free. As set out in the Annual Report and Accounts, the Board believes that LiDCO retains the appropriate strength in its balance sheet to deliver its strategic objectives.
Property, plant and equipment
There was a small investment in property, plant and equipment in the year of GBP0.35m (2018: GBP0.48m). Investment in medical monitors totalled GBP0.32m (2018: GBP0.39m) comprising HUP monitors, medical monitors placed on long-term loan to hospitals in the UK and USA for active use, where the hospital pays for disposables, and monitors for demonstration purposes and clinical trials.
Intangible assets
Expenditure on intangible assets in the period was GBP0.65m (2018: GBP0.48m) of which GBP0.59m (2018: GBP0.42m) was spent on product development with a further GBP0.06m (2018: GBP0.06m) on new product registrations predominantly in overseas territories. Expenditure on product development included the continued improvements to the next generation LiDCOunity hardware platform launched mid-2017, improving its Graphical User Interface (GUI) to include guided protocols, case reporting and parameter notifications.
Inventory
Inventory increased to GBP1.88m in the year (2018: GBP1.35m). During the year, the Group changed supplier for two of its LiDCOplus disposables products and purchased 18 months' supply of product to cover the transition period which resulted in significant non-recurring investments in working capital of GBP0.3m. The supplier of the Lithium Chloride also increased the manufacturing batch size five-fold resulting in the requirement to purchase larger quantities of product. Traditional rates of inventory turn cannot always be applied to the Group as it relies on a number of single-source key suppliers and strategically maintains high levels of inventory in respect of such suppliers.
Operational Review
Revenue performance by product and key geographies
Hot Features
Premium
12 months to January 2019 12 months to January 2018
Monitors Recurring Other Total Monitors Recurring Other Total
Revenues Revenues
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
LiDCO Sales
UK 378 3,108 73 3,559 686 3,383 73 4,142
US 102 1,267 7 1,376 497 849 11 1,357
Europe 152 304 11 467 222 272 10 504
Rest of
World 419 361 8 788 468 389 5 862
------------- --------- ---------- -------- -------- --------- ---------- -------- --------
1,051 5,040 99 6,190 1,873 4,893 99 6,865
------------- --------- ---------- -------- -------- --------- ---------- -------- --------
3rd party
sales
UK - 1,134 - 1,134 - 1,402 - 1,402
------------- --------- ---------- -------- -------- --------- ---------- -------- --------
Total Sales 1,051 6,174 99 7,324 1,873 6,295 99 8,267
------------- --------- ---------- -------- -------- --------- ---------- -------- --------
Recurring revenues include sales of smartcards, sensors, software licenses (including HUP) and service contracts. Japan revenues are included within Rest of World.
LiDCO continues to make progress with its HUP offering. Since its launch in July 2017, as at 20 March 2019 the Group had a total global contracted base of 212 HUP monitors (31 January 2018: 96 units) generating GBP1.82m (31 January 2018: GBP0.73m) of annualised HUP contracts with the revenue recognition being spread over the term of the contract. The total value of contracts signed to 20 March 2019 is GBP6.7m
The growth of the HUP business is illustrated in the table below:
Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19` 20-Mar-19
HUP Monitors Placed
- No 1 45 96 98 130 135 164 212
------- ------- ------- ------- ------- ------- -------- ----------
Annual Contract Value
- GBPk 10 305 730 832 1,123 1,181 1,403 1,817
------- ------- ------- ------- ------- ------- -------- ----------
UK
In the UK, LiDCO is seeking to convert its largest customers to the HUP business model. The Group initially evaluated this approach with its largest UK account in January 2018 and, encouragingly, the customer has been able to treat more patients and has increased its investment in hemodynamic monitoring. Following this success, three more of LiDCO's larger customers have signed multi-year HUP contracts, meaning that a total of GBP0.45m or 14% of LiDCO's recurring revenues in the UK have now been converted to HUP.
This strategy, to actively convert UK customers to the SaaS business model had a transitional impact on revenue recognition within the financial year through the deferral of revenues which would normally have been booked in the year. These deferred revenues will be recognised over the 12 months from signing the HUP agreements. The transition to HUP has also dampened Q4 sales, as some customers have reduced purchases of consumables in anticipation of converting to HUP in their new financial year, which commences in April 2019. Demand for capital monitor purchases has also been lower than expected as customers conserved or diverted cash as part of their Brexit mitigation measures. As a result, sales in Q4 were less than the usual peak and LiDCO product revenues for the year were GBP3.56m (2018: GBP4.14m).
Following the previously announced termination of the Merit distribution contract for Argon products and subsequent signing of new third-party opportunities, third-party sales were GBP1.13m (2018: GBP1.40m). During the year, the Group has sourced alternative distribution opportunities to replace the contribution made by Argon products. In general, the margin on the alternative distribution opportunities will be significantly higher than with the Argon products, although LiDCO will need to invest in inventory to support the sales. LiDCO is now the exclusive distributor for Maicuff, Antmed and Xavant in the UK.
In July 2018, the Group signed a three-year agreement to take full distribution responsibilities for Maicuff's extensive range of Non-Invasive Blood Pressure (NIBP) disposable products in the UK. LiDCO will introduce these products to the UK market. With increased focus on infection control, the UK market is experiencing significant growth in disposable NIBP cuffs as the market moves away from using reusable NIBP cuffs in high risk areas.
Antmed disposable pressure transducers are a direct competitor for the previously distributed Argon products. LiDCO introduced these products to the UK market having signed a three-year agreement in October 2018.
The Company has recently signed an exclusive UK distribution agreement with Xavant Technology (Pty) Ltd. ("Xavant") to take full distribution responsibilities for Xavant's Advanced Nerve Stimulation and Monitoring Technology in the UK as from 1(st) February 2019. Xavant is a leading supplier of quantitative neuromuscular monitoring for use during general anaesthesia.
USA
In the US, the strong growth of HUP meant that recurring revenues, which includes per patient disposables and service contracts, grew nearly 50% to GBP1.27m (2018: GBP0.85m). LiDCO has gained a further 11 new US HUP customers, with the US contracted base at 31(st) January 2019 standing at 95 monitors (2018: 58 units) worth GBP0.83m per annum. These new HUP customers are prestigious reference accounts. Since 31 January 2019 a further six HUP agreements have been signed in the US, covering 37 monitors and GBP0.33m per annum contracted revenue.
In the US, there remains an encouraging pipeline of prospective customers, many at an advanced stage of contracting, but the timing of finalising these agreements remains difficult to predict. Whilst, at times, progress appears slower than originally anticipated, the Group's management and sales team are learning how to anticipate and overcome identified causes as well as building various relationships to help penetrate the US market, which is the largest in the world for hemodynamic monitoring. The Board believes that its disruptive HUP model will continue to gain traction in the US and anticipates that its US operations will become cash flow break-even during the course of the coming financial year.
Continental Europe
Sales in Europe were flat at GBP0.47m (2018: GBP0.50m) with total monitor sales of 32 units compared with 52 units last financial year. The Group had a noteworthy tender win in Finland and had further success in Denmark with the HUP model. LiDCO has a strong position in a few selected markets within Europe and continues to work on expanding its presence in some of the larger countries in the region by partnering with the appropriate distributors. During 2018/19 the Group signed an exclusive three year agreement with Spacelabs Healthcare SAS France to distribute LiDCO products in France.
Rest of World
Overall revenues outside of the UK, US and continental European markets were GBP0.79m (2018: GBP0.86m). Strong revenue growth in Japan and preliminary orders from new distribution channels were offset by weaker demand from the Middle East region primarily driven by no sales to Iran, where the market environment has been the impacted by US sanctions.
LiDCO continues to invest in geographical expansion during the year, applying for several regulatory registrations in key target markets in South East Asia and Latin America, which are expected to begin to bring benefits in 2019/20. Importantly, the Company made significant progress towards registering its latest monitor platform in China. All the prerequisite testing and documentation was completed during 2018 with the submission to CFDA being made in January 2019. The normal timescales for the CFDA to review this type of filing is a few months and LiDCO's distributor in China is standing by to launch the new monitor as soon as approval is received.
Outlook
The Board continues to assess its investments in its commercial operations, ensuring that the Group has the right resources to expand its product sales into the many countries where adoption of advanced hemodynamic monitoring is now occurring. LiDCO remains focused on exploiting the large number of opportunities identified by the introduction of its differentiated HUP model.
As the business continues to win HUP contracts, it will transition towards more multi-year license contracts, providing good visibility of revenues alongside strong cash generation. The Board expects this to greatly enhance the quality of the Group's earnings although accounting for such contracts will continue to have a short-term impact on revenue recognition as the income will typically be spread over the term of the contract as opposed to monitor and consumables revenues being recognised when invoiced.
In the USA, the Board expects the contracted base of monitors to continue to grow and the business will benefit from the full year impact of HUP contracts won in 2018/19. In the UK the transition to HUP will make comparisons with prior years difficult as some customers will reduce purchases of consumables in anticipation of converting to HUP and HUP revenues are spread into the subsequent financial year, unlike capital sales of monitors which are, typically, recorded as sales as delivered.
The Group expects the three newly signed distribution agreements in the UK, which generate higher gross margins, to start to have an impact and go some way to close the contribution gap created by the loss of the Argon Medical products UK distribution contract.
The Board anticipates significant revenue growth in 2019/20 as the current annualised base of HUP contracts carries forward, partially offset by lower third-party sales as the business transitions to the new third-party distribution agreements. Gross margins are expected to improve further due to a favourable LiDCO product mix and higher margins on the new third-party sales, whilst operating expenses are expected to remain broadly stable.
How LiDCO creates value: the Group's business model
LiDCO is a UK-based manufacturer and supplier of monitoring equipment. LiDCO monitors are 'platform' in design. This means they can be easily and cost-effectively upgraded to add new software features and parameters by the addition of USB-connected modules. LiDCO technology, coupled with its low-cost manufacturing and product sourcing skills, combine to produce a highly differentiated, patent-protected monitor with a recurring income stream either from the sale of dedicated high margin single patient use disposables and/or usage licenses.
LiDCO monitors continuously display a number of crucial physiological parameters including arterial blood pressure, the effects of anaesthesia on the level of consciousness of the brain, the requirement for intravenous fluids and the amount of blood and oxygen supplied to the body's tissues and organs. This crucial data is provided via an easy-to-interpret monitor user interface which helps clinicians and nurses ensure that vital organs are adequately perfused and that patients are not over-anesthetised or sedated.
Historically, hemodynamic monitoring was invasive in nature, requiring the insertion of invasive central catheters. For this reason, it was only available to a restricted number of the high-risk patients that could potentially benefit. Although that option is available with LiDCOplus, LiDCO's other technology does not require the insertion of central catheters and can be used completely non-invasively and in both ventilated and non-ventilated patients.
LiDCO's customers are acute care physicians and nurses working in major hospitals caring for emergency and high-risk patients. Hospitals are migrating away from invasive technologies towards the use of less invasive monitoring, which has been shown to be cost effective and improve outcomes. Use of LiDCO monitors in high-risk patients in both intensive care and surgical settings has been shown to reduce mortality, complications, length of hospital stay and improve quality of life.
The key features of LiDCO's business model:
LiDCO has developed a new generation of hemodynamic monitoring products designed to address a developing disposable market opportunity - internally estimated to be potentially $2 billion per
annum.
-- The Group generates revenues principally through the sale of high margin single-use disposables and/or the sale of software licenses into a growing contracted base of LiDCO-enabled monitors.
-- The Group protects its recurring revenue income stream through having patented products with high levels of proprietary intellectual property which are subject to on-going development.
-- Sales of LiDCO's products are supported by over 200 clinical studies and an ever-growing body of evidence to satisfy purchaser requirements for clinical and cost effectiveness.
-- LiDCO provides first-class training and education to its customers. This helps entrench our technology and reduce hospitals costs, with a focus on providing LiDCO with a sustainable recurring income.
Delivering the Board's objectives: strategy
The Board's strategy is to build shareholder value through the commercialisation of LiDCO monitoring systems and associated high margin recurring revenues. Excellence in product design, manufacturing and sales and marketing are at the core of the Group's values. LiDCO's main products are patent protected and supported by a growing body of data showing their clinical and cost-effectiveness. The Group's technology is not only usable in traditional locations such as the intensive care and surgery departments, but also in any area of the hospital where high-risk patients require such monitoring. Hospitals acquiring our hemodynamic platform monitors can transition from traditional invasive catheter-based monitoring to LiDCO's minimally or non-invasive monitoring in high-risk patients, thereby reducing complications and lowering costs and length of stay.
Geographical expansion is key to LiDCO's capacity to address the worldwide opportunity for sales of our technology. The Group's sales and distribution model has three elements:
-- Direct sales into hospitals in the UK and USA.
-- Outside of the Group's two direct markets, sales are via distribution partners. The depth of margin on disposable sales allows LiDCO to attract quality specialist distribution partners on an exclusive and non-exclusive basis. In addition, where appropriate, the Group sometimes work through regional master distribution organisations to manage distributors on its behalf.
-- LiDCO's core technologies are patented and the Board sees licensing the Group's technology as another way to access the market. The LiDCO algorithm has been licensed on a non-exclusive basis to a major corporate partner in the USA in return for future royalty payments.
Measuring the Group's performance: KPIs
The following KPIs are some of the indicators used by management to measure performance during the year:
Key Performance Indicators
Year to January Year to January
2019 2018
--------------------------------------- ---------------- ----------------
Revenue growth of LiDCO products -10% 2%
Gross profit margin on LiDCO products 74.5% 73%
LiDCO product revenue per FTE sales
employee GBP0.44m GBP0.51m
% LiDCO product overseas revenue 43% 40%
% of recurring revenue 81% 71%
Monitors sold/placed in the year 236 315
Contracted base of HUP monitors 164 96
Annualised value of HUP contracts GBP1.40m GBP0.73m
--------------------------------------- ---------------- ----------------
The KPIs are linked to the Group's strategic initiative of commercial expansion and measuring the success of its differentiated HUP pricing model. LiDCO product revenues were lower due to the transition to HUP, as some customers have reduced purchases in anticipation of converting to HUP and demand for capital monitor purchases was lower than expected in the UK. LiDCO gross margin percentage improved due to a favourable mix of product and geographical sales. The success of HUP in the US has positively influenced the regional revenue split and the specific HUP KPIs.
CONSOLIDATED comprehensive INCOME STATEMENT
For the year ended 31 January 2019
Note Year ended Year ended
31 January 31 January
2019 2018
GBP'000 GBP'000
Revenue 7,324 8,267
Cost of sales (2,489) (2,999)
-------------------------------------- ----- ----------- -----------
Gross profit 4,835 5,268
Administrative expenses (6,830) (7,380)
-------------------------------------- ----- ----------- -----------
Operating loss before share-based
payments (1,995) (2,112)
Share-based payments charge (143) (109)
-------------------------------------- ----- ----------- -----------
Operating loss (2,138) (2,221)
-------------------------------------- ----- ----------- -----------
Finance income 1 3
-------------------------------------- ----- ----------- -----------
Loss before tax (2,137) (2,218)
Income tax 196 125
-------------------------------------- ----- ----------- -----------
Loss and total comprehensive expense
for the year attributable to equity
holders of the parent (1,941) (2,093)
-------------------------------------- ----- ----------- -----------
Loss per share (basic and diluted)
(pence) 2 (0.80) (0.86)
-------------------------------------- ----- ----------- -----------
CONSOLIDATED Balance Sheet
At 31 January 2019
2019 2018
GBP'000 GBP'000
Non-current assets
Property, plant and equipment 949 912
Intangible assets 2,083 1,950
--------------------------------------- --------- ---------
3,032 2,862
--------------------------------------- --------- ---------
Current assets
Inventory 1,880 1,354
Trade and other receivables 1,928 3,246
Current tax 188 127
Cash and cash equivalents 1,717 3,227
--------------------------------------- --------- ---------
5,713 7,954
--------------------------------------- --------- ---------
Current liabilities
Trade and other payables (1,374) (1,816)
Deferred income (837) (668)
--------------------------------------- --------- ---------
(2,211) (2,484)
--------------------------------------- --------- ---------
Net current assets 3,502 5,470
--------------------------------------- --------- ---------
Net assets 6,534 8,332
--------------------------------------- --------- ---------
Equity attributable to equity holders
of the parent
Share capital 1,221 1,221
Share premium 30,342 30,342
Merger reserve 8,513 8,513
Retained earnings (33,542) (31,744)
--------------------------------------- --------- ---------
Total equity 6,534 8,332
--------------------------------------- --------- ---------
consolidated Cash flow Statement
For the year ended 31 January 2019
Year ended Year ended
31 January 31 January
2019 2018
GBP'000 GBP'000
Loss before tax (2,137) (2,218)
Finance income (1) (3)
Depreciation and amortisation
charges 832 862
Share-based payments 143 109
(Increase)/decrease in inventories (526) 113
Decrease/(increase) in receivables 1,318 (562)
(Decrease)/increase in payables (442) 312
Increase in deferred income 169 576
Income tax credit received 135 91
--------------------------------------- ----------- -----------
Net cash outflow from operating
activities (509) (720)
--------------------------------------- ----------- -----------
Cash flows from investing activities
Purchase of property, plant &
equipment (351) (480)
Purchase of intangible assets (651) (477)
Finance income 1 3
--------------------------------------- ----------- -----------
Net cash used in investing activities (1,001) (954)
--------------------------------------- ----------- -----------
Net cash outflow before and after
financing (1,510) (1,674)
--------------------------------------- ----------- -----------
Net decrease in cash and cash
equivalents (1,510) (1,674)
--------------------------------------- ----------- ----------- Opening cash and cash equivalents 3,227 4,901 --------------------------------------- ----------- ----------- Closing cash and cash equivalents 1,717 3,227 --------------------------------------- ----------- -----------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended 31 January 2019
Share Merger Retained Total
Share premium reserve earnings equity
capital GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
At 1 February 2017 1,221 30,342 8,513 (29,760) 10,316
Share-based payment expense - - - 109 109
------------------------------ ---------- ---------- ---------- ----------- ----------
Transactions with owners - - - 109 109
------------------------------ ---------- ---------- ---------- ----------- ----------
Loss and total comprehensive
expense for the year - - - (2,093) (2,093)
------------------------------ ---------- ---------- ---------- ----------- ----------
At 31 January 2018 1,221 30,342 8,513 (31,744) 8,332
Share-based payment expense - - - 143 143
------------------------------ ---------- ---------- ---------- ----------- ----------
Transactions with owners - - - 143 143
------------------------------ ---------- ---------- ---------- ----------- ----------
Loss and total comprehensive
expense for the year - - - (1,941) (1,941)
------------------------------ ---------- ---------- ---------- ----------- ----------
At 31 January 2019 1,221 30,342 8,513 (33,542) 6,534
------------------------------ ---------- ---------- ---------- ----------- ----------
NOTES TO THE FINANCIAL STATEMENTS
1. NATURE OF THE FINANCIAL INFORMATION
These financial statements have been prepared in accordance with the principle accounting policies adopted by the Group, International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations (IFRIC) as adopted by the EU and those parts of the Companies Act 2006 applicable to companies reporting under IFRS and were approved by the Board on 25 March 2019. They are presented in sterling, which is the functional currency of the parent company and the Group. The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.
These results are audited, however the financial information does not constitute statutory accounts as defined under section 434 of the Companies Act 2006. The financial information for the year ended 31 January 2019 has been derived from the Group's statutory accounts for that year. The auditors' report on the statutory accounts for the year ended 31 January 2019 was unqualified and did not contain statements under section 498 of the Companies Act 2006.
The accounting policies used in completing this financial information have been consistently applied in all periods shown. These accounting policies are detailed in the Group's financial statements for the year ended 31 January 2019 which can be found on the Group's website.
2. EARNINGS PER SHARE
The earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year. The basic earnings per share for the year is based on a loss after tax of GBP1,941,000 (2018: loss GBP2,093,000) and weighted average number of shares in issue of 244,174,908 (2018: 244,174,908). The diluted earnings per share is based on the above calculation adjusted to allow for the issue of shares on the assumed conversion of all dilutive options. Share options are regarded as dilutive when, and only when, their conversion would decrease earnings or increase the loss per share. The diluted earnings per share is based upon a weighted average number of shares of 244,174,908.
3. DISTRIBUTION
Copies of this statement will be available for collection free of charge from the Company's registered office at 16 Orsman Road, London N1 5QJ. An electronic version of this announcement and the Annual report and accounts will be available today on the Company's website, www.lidco.com. Copies of the Annual report and accounts will be posted to shareholders who have requested a hard copy later this month together with the notice of the Annual General Meeting.
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.
END
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March 26, 2019 03:00 ET (07:00 GMT)
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