Deltex Medical : Annual Report and Accounts 2022

2022 Annual Report & Accounts

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A UK-headquartered international medical device company which develops, manufactures and distributes a clinically-proven haemodynamic monitoring technology that has been shown to:

ƒ improve outcomes for patients; and ƒ reduce patient length-of-stay,

thereby increasing throughput and capacity for hospitals whilst lowering healthcare costs.

Real-time oesophageal Doppler haemodynamic monitoring: improves patient outcomes; increases hospital throughput

Deltex Medical at a glance

Our technology

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

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

The Group's flagship, world-leading, ultrasound-based oesophageal Doppler monitoring ("ODM") is supported by 24 randomised control trials conducted on anaesthetised patients. As a result, the primary application for ODM is focussed on guiding therapy for patients undergoing elective surgery. The Group will shortly launch a new, next generation monitor which will make the use of the ODM technology more intuitive and provide augmented data on the status of each patient.

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

Our new non-invasive technology has potential applications for use in a number of healthcare settings, including:

• ƒ Accident & Emergency for the rapid triage of patients, including the detection and diagnosis of sepsis;

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

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

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

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

Both the existing single-use ODM probe and the new, non-invasive device will connect to the same, next generation monitor which is due for launch in 2023. Monitors are sold or, due to hospitals' often protracted procurement times for capital items, loaned in order to encourage faster adoption of the Group's technology.

Our customers

The principal users of our products are currently anaesthetists working in a hospital's operating theatre and intensivists working in ICUs. This customer profile will change as our new non-invasive technology is adopted by the market. In the UK we sell directly to the NHS. In the USA we sell directly to a range of hospital systems. We also sell through distributors in more than 40 countries in the European Union, Asia and the Americas.

Our objective

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

Visit us online for further information atwww.deltexmedical.com

Contents
Page
Overview
Highlights	1
Chairman's Statement	2
Business Review	4
Governance
Directors	7
Directors' Responsibility Statement	9
Company Secretary and Advisers	10
Corporate Governance statement	11
Strategic Report	14
Principal Risks of the Group	17
Directors' Report	20
Directors' Remuneration Report	22
Report of the Audit Committee	27
Independent Auditors' report	29
Financial information
Consolidated financial statements	36
Notes to the consolidated financial statements	41
Parent company financial statements	74
Notes to the parent company financial statements	76
Notice of Annual General Meeting	83

HIGHLIGHTS

Financial

• ƒ Revenues increased by 10% to £2.5 million (2021: £2.3 million)

• ƒ Strong performance by International division with a 30% increase in revenues to £1.2 million (2021: £0.9 million)

• ƒ Increase in average selling prices drove gross margin up to 74% (2021: 70%)

• ƒ Overheads held at £2.9 million (2021: £2.7 million)

• ƒ Adjusted EBITDA of £(0.6) million (2021: £(0.5) million)

• ƒ Loss for the year £(1.1) million (2021: £(1.0) million)

• ƒ Gross expenditure on research and product development: £0.8 million (2021: £0.7 million)

• ƒ Cash at hand of £0.5 million (2021: £0.4 million)

Business / commercial activities

• ƒ Sales of the current monitor were strong across all three divisions in 2022: UK: +83%; USA: +126% and International: +253%; historically, monitor sales have given rise to increased probe sales

• ƒ Further growth from the International division expected

• ƒ As previously reported, the Group has been participating in a national tender for haemodynamic monitoring with one of its Latin American distributors. Hospitals have now started to place orders with this distributor in a contract process that is expected to continue for some 2 months, by when further information on the orders to be placed on Deltex Medical should be known

• ƒ New targeted commercial approach in the USA to drive increases in revenues on a more cost effective and region-by-region basis

• ƒ The external Electromagnetic Compatibility testing required to obtain regulatory approval to launch the new monitor onto the UK and European markets has been successfully concluded which allows the final testing and associated internal documentation to be completed.

• ƒ Work is continuing on the new, novel non-invasive TrueVue ODM technology with a substantial addressable market

Commenting on the results, Nigel Keen, Chairman of Deltex Medical, said:

"We are encouraged by double digit growth in revenues during the year."

"The performance of the International division has been notably strong over the last two years - and we are expecting continuing progress this year."

"The 'heavy lifting' has been done in terms of new product development - and we are expecting the level of investment in R&D to reduce going forwards."

"The launch of the new, next generation monitor will be extremely helpful for sales across all our territories - both via direct sales and our overseas distributors."

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