2021 Annual Report & Accounts
Deltex Medical
A UK-headquartered international medical device company which develops,
manufactures and distributes a clinically-proven haemodynamic monitoring
technology that has been shown to:
▪
▪
improve outcomes for patients; and
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 controlled trials conducted on anaesthetised patients. As a result, the primary application for ODM is
focussed on guiding therapy for patients undergoing elective surgery.
During 2021, Deltex Medical’s engineers and scientists carried out successful research in conjunction with the UK’s
National Physical Laboratory (“NPL”), which has enabled the Group’s ‘gold standard’ ODM technology to be extended
and developed so that it can be used completely non-invasively. This will significantly expand the application of
Deltex Medical’s technology to non-sedated patients. This new technological enhancement 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:
▪ Accident & Emergency for the rapid triage of patients, including the detection and diagnosis of sepsis, an
important capability for patients presenting with COVID-19 symptoms;
▪
▪
in general wards to help facilitate a real-time, data-driven treatment regime for patients whose condition
might deteriorate rapidly; and
in critical care units to allow regular monitoring of patients post-surgery who are no longer sedated or
intubated.
One of the key opportunities for the Group in 2022 is positioning this new, non-invasive technology for use
throughout the hospital. Our 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 our new non-invasive technology.
Both the existing single-use ODM probe and the new, non-invasive device connect to the same, next generation
monitor which is due for launch in 2022. Monitors are sold or, due to hospitals’ often protracted procurement times
for capital items, loaned in order to encourage faster adoption of our 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 more than 30 major hospitals that
appreciate the value of our evidence-based approach to haemodynamic management. 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 at www.deltexmedical.com
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Contents
Overview
Highlights
Chairman’s Statement
Business Review
Governance
Directors
Directors’ Responsibility Statement
Company Secretary and Advisers
Corporate Governance statement
Strategic Report
Principal Risks of the Group
Directors’ Report
Directors’ Remuneration Report
Report of the Audit Committee
Independent Auditors’ report
Financial information
Consolidated financial statements
Notes to the consolidated financial statements
Parent company financial statements
Notes to the parent company financial statements
Notice of Annual General Meeting
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HIGHLIGHTS
Financial
▪
▪
revenues: £2.3 million (2020: £2.4 million)
International division performed well in 2021 with growth of 40% to £0.9 million (2020: £0.7
million)
▪ gross margin up slightly to 70% (2020: 68%)
▪ overheads flat at £2.7 million (2020: £2.7 million, excluding exceptional items)
▪ adjusted EBITDA: £(0.5) million (2020: £(0.2) million)
▪
loss for the year: £(1.0) million (2020: £(0.8) million)
▪ cash at hand (31 December, 2021): £0.4 million (2020: £0.9 million), before £1.4 million (gross)
fund raising announced on 8 February 2022
Business
▪ during 2021 many of Deltex Medical’s principal markets were effectively closed as elective
surgical procedures were cancelled around the world due to the pandemic. Elective surgery is
now starting to resume globally
▪ many hospitals barred access to salespersons and clinical educators for a large proportion of the
year, which compounded the sales challenges facing the Group
▪ post pandemic, there is now a substantial backlog in elective surgical procedures around the
world which represents a significant commercial opportunity for Deltex Medical as its TrueVue
Doppler technology has been shown to reduce patient length-of-stay and hence increase hospital
throughput / capacity
▪
there are now encouraging signs of hospital access improving for our sales teams
▪ excellent progress was made in research and product development during 2021, both in the
development of our new, next generation monitor which will be launched in 2022 and our new
non-invasive Doppler-based haemodynamic monitoring technology which has broader
applications within the hospital setting
▪
trading in 2022 has started positively including the announcement in January 2022 of a US$0.2
million order from the Americas
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Commenting on the results, Nigel Keen, Chairman of Deltex Medical, said:
“2021 was a challenging year for Deltex Medical; however, as the pandemic subsides the prospects for
the Group in 2022 are encouraging.”
“The size of the backlog in elective surgery around the world creates an opportunity to leverage the
benefits of Deltex Medical’s technology, particularly in relation to increasing patient throughput and
improved outcomes.”
“The expected return to normal levels of elective surgery represents a significant commercial
opportunity for the Group.”
“The launch of our next generation state-of-the-art monitor coupled with our new, easy-to-use non-
invasive monitoring device, with its broader applicability throughout the hospital, provides opportunities
for the Group to expand its addressable markets.”
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Chairman’s Statement
Real-time oesophageal Doppler haemodynamic monitoring:
improves patient outcomes; increases hospital throughput
Introduction
As expected, 2021 turned out to be a challenging year for Deltex Medical, although I can report that we
are encouraged by the way that 2022 has started.
Our technology is principally used during elective surgery. Unfortunately, elective surgery was effectively
closed for much of the year as health systems across the world continued to grapple with the impact of
the COVID-19 (“Covid”) pandemic whilst deciding how best to restart elective surgery. Intensive Care
Units (“ICUs”) once again filled up with mainly unvaccinated, extremely sick patients. Staff shortages
compounded the provision-of-care challenges facing hospitals.
Although at the beginning of the pandemic, starting in late March 2020, there was an uptick in sales of
the Group’s haemodynamic monitoring technology into ICUs, this rapidly became dwarfed by the drop-
off in the use of our products associated with the cessation of elective surgery in almost all hospitals in
the world.
In all our markets there is now a large backlog of patients requiring elective surgical procedures. This
represents a clinical and, increasingly, a political problem, particularly for government-funded healthcare
systems. An NHS publication “Delivery plan for tackling the COVID-19 backlog of elective care”
published on 8 February 2022 states that “Six million people are now on the waiting list, up from 4.4
million before the pandemic.”
On 1 December 2021 the UK’s National Audit Office published a report entitled: “NHS Backlog and
waiting times in England”. This report states that “Under two plausible scenarios, the elective care
waiting list will be longer in 2025 than it is today.” Further, this report suggests that under one of these
scenarios the waiting list in March 2025 will contain 12.0 million patient pathways, compared to 5.8
million in September 2021.
The size and scale of the backlog means that hospitals and health systems should be looking to use our
technology to help them rapidly reduce the elective surgery backlog and this represents a significant
commercial opportunity for the Group. Conversely, the sheer size and scale of the backlog may also
make it challenging to sell new technology into a stressed operating theatre environment, as clinicians
are under acute pressure to work rapidly through operating lists. In addition, many hospitals have been
slow at reopening access in the operating theatre to people not directly involved in the surgical process.
This makes it more difficult for our clinical educators to provide clinical support to new clinicians who
have been significantly less active in respect of elective surgery for the last two years.
While the environment starts to normalise, we will focus our commercial activities on hospital accounts
that had previously adopted and used the Group’s TrueVue Doppler technology in the operating theatre.
In addition to driving back up usage rates from existing users, we will separately introduce a number of
different initiatives to drive adoption of our new, non-invasive haemodynamic monitoring technology
which we will be launching later this year. We believe that this new, broad application, non-invasive
technology will, as well as being adopted by new users, help drive interest in, and usage of, our long-
standing minimally invasive ODM technology. This is due to the new device allowing anaesthetists to
quickly assess which of their patients will benefit from having the use of the advanced ODM technology.
The evidence showing that the use of our Doppler-based haemodynamic monitoring technology
improves patient outcomes and increases hospital capacity (as a result of shorter patient length-of-stay)
is strong. We believe that the next generation monitor which we will launch in 2022 and the new
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completely non-invasive device, which will also be available on this monitor, will represent a compelling
solution for clinicians and hospital systems needing to handle their patient throughput more effectively.
Financial results
Group revenues for the year ended 31 December 2021 were £2.3 million (2020: £2.4 million) and reflect
the impact of Covid on elective surgery. In 2021 the entire year’s results were affected by the pandemic
whereas in 2020 we had reasonable activity levels in the first quarter. Probe revenues declined by 9.6% to
£1.9 million (2020: £2.1 million). Monitor revenues increased by 25% to £202,000 (2020: £161,000)
reflecting improved trading in our International division in the year.
The consolidated gross margin in 2021 was 70% (2020: 68%). The slight increase in gross margin reflects
a number of manufacturing efficiency savings that we were able to capture during the year.
Overheads were flat in the year totalling some £2.7 million (2020: £2.7 million, excluding exceptional
costs of £232,000).
In the year the total value of UK and US government salary support schemes was £0.3 million (2020: £0.4
million).
Adjusted EBITDA for the year (comprising earnings before interest, tax, depreciation and amortisation,
share-based payments, non-executive directors’ fees, as well as any exceptional items) was a loss of
£(0.5) million (2020: £(0.2) million).
Loss for the year was £(1.0) million (2020: £(0.8) million).
Cash at hand at 31 December 2021 was £0.4 million (2020: £0.9 million). This cash resource has since
been supplemented by a fund raising of £1.4 million (gross) which was announced on 8 February 2022.
Business activities
Whilst our direct sales operations in the UK and the USA struggled to gain access to customers during
the year as the majority of hospitals had put in place bans on visits by salespeople or clinical educators,
our International division saw revenues grow by 40% to £926,000 (2020: £661,000). This growth helps to
demonstrate the potential of, and associated opportunity with, our international network of some 40
distributors across the world.
During 2021 the Group’s research and development team focussed on completing the development of
our next generation monitor for launch in 2022. Launch of this monitor will provide us with immediate
access to new potential revenue streams through sales of this updated device to existing users, as well as
providing a platform for the introduction of our new non-invasive haemodynamic monitoring technology
later this year.
Employees
On behalf of the Board, I would like to thank Deltex Medical’s highly trained and dedicated employees,
most of whom are based in the UK and the USA, for their continuing efforts and dedication in the very
taxing environment which we saw throughout 2021. In these very difficult circumstances, our employees
displayed great flexibility and fortitude, and remained responsive to our customers’ wishes throughout
the year.
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Current trading and prospects
As access to hospitals improves for our direct sales forces in the UK and the USA then we expect our
business to begin to normalise.
We also anticipate that our international business will continue to grow in 2022 and we have already
announced a US$0.2 million order from a territory in the Americas which we expect will generate
significant contracted single-use probe revenues this year.
Following the £1.4 million (gross) fund raising announced in February 2022, Deltex Medical, with the
benefit of its grant awards, will have sufficient financial resources to complete the development of its
next generation monitor and its new, broad application, non-invasive haemodynamic monitoring
technology
Our initial focus is to drive activity levels back up to those achieved by the Group prior to the pandemic.
Once attained, we believe that there is clear scope to grow the business, both in the UK, USA and in
other international territories.
Nigel Keen
Chairman
6 April 2022
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Business Review
Overview
Deltex Medical is the world leader in highly accurate oesophageal Doppler monitoring (“ODM”), via its
TrueVue platform, which allows real-time monitoring of a patient’s haemodynamic status.
A substantial number of peer-reviewed, randomised controlled trials have shown that an ODM-driven
haemodynamic protocol can result in statistically significant reductions in post-operative complications,
resulting in lower costs for hospitals due to shorter patient length-of-stay. This is not only good for
patients but also increases throughput and capacity for hospitals, which will be a key factor in the near
term for reducing the backlog in elective surgery.
Deltex Medical’s technology was originally developed in an ICU in London to assist with the treatment of
acutely unwell critical care patients. Over time demand for the Group’s high fidelity oesophageal
Doppler-based haemodynamic monitoring technology has migrated from the ICU to the operating
theatre, and particularly for elective surgery. Before the pandemic, approximately 80% of the Group’s
revenues were associated with elective surgical procedures in operating theatres. Accordingly, the
cessation of elective surgery for much of 2021 was highly disruptive to Deltex Medical’s commercial
activities.
During 2021, our research and development team made impressive and substantial progress both in
completing the development of our new, next generation TrueVue monitor and also in developing a
complementary, non-invasive haemodynamic monitoring technology which leverages the extensive
evidence base supporting the use of our existing ODM technology. The new device allows instantaneous
non-invasive deployment anywhere in the hospital. This substantially broadens the potential applications,
and hence addressable market size, for the Group’s technology.
Our key challenge for 2022 is to ensure that, as hospitals open up and the volume of elective surgery
increases, the Group is able to capitalise on these increased activity levels in operating theatres as well as
capturing all the upside associated with our new non-invasive Doppler-based technology.
COVID-19
When Covid first emerged in 2020, the Group initially experienced increased demand for its TrueVue
Doppler technology in ICUs, as clinicians worked to establish the optimal treatment protocols for
severely sick Covid patients.
Over the last two years Covid treatment protocols have improved and the importance of haemodynamic
monitoring as a part of optimal Covid treatment is now better understood. However, in developed
countries the number of patients in ICUs has declined, in large part as vaccination rates have increased
substantially, resulting in a decline in demand for the Group’s oesophageal Doppler technology in ICUs
for the treatment of ventilated Covid patients.
Around the world there is now a substantial backlog in elective surgical procedures as a result of the
closure of operating theatres during the pandemic.
The chart below from the British Medical Association shows the increase in the NHS backlog of elective
care from 4.4 million people at the start of the pandemic to 6.1 million in December 2021.
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The second chart (‘Figure 25’) from the National Audit office shows that under two plausible scenarios,
the NHS backlog in March 2025 could be substantially higher than today, with one estimate putting the
backlog as high as 12.0 million.
This backlog in elective care, which is a global phenomenon, represents a significant commercial
opportunity for Deltex Medical as use of its TrueVue Doppler technology should result in greater patient
throughput in respect of elective surgery, and hence increased hospital capacity.
One of the largest challenges that the Group, in common with most medical device companies, currently
faces is that many hospitals around the world have restricted access to salespersons and clinical
educators to help reduce the risk of the spread of Covid within hospitals.
Visits by Deltex Medical salespersons and clinical educators within the operating room environment
results in appropriate levels of operating theatre staff trained in the use of ODM. The Group has internal
studies which show that higher probe usage in these units is associated with recent visits by Deltex
Medical employees. Conversely, it also has data which show that hospitals which have not been visited
by a Deltex Medical employee for some time typically display reduced probe usage. As a result, one of
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the key challenges which the Group is focussing on this year is improving access for its direct sales force
to hospitals in the UK and the USA.
The Group is considering a number of strategies to improve customer access, including possibly
collaborating with larger groups which, as a result of their size and financial resources, have better reach
and penetration into the operating theatre market.
Covid has also had a significant adverse effect on global supply chains, particularly in respect of
semiconductors and raw materials. This has created issues for the Group’s product development
activities, and, in particular, contributed materially to the slippage of the launch of our next generation
monitor from 2021 into 2022.
During 2021 the Group adopted a number of work-from-home protocols. Whilst working from home has
had some advantages for some of our employees, it has also created challenges as the Group’s research
& development (“R&D”) teams were forced to carry out complex development work remotely and
without full access to Deltex Medical’s research laboratories located in our headquarters in Chichester.
These Covid challenges should be seen in the context of the Group’s pre-pandemic results when the
Group had positive adjusted EBITDA of £0.4 million in 2019 and revenues nearly twice the 2021 level.
(2021 revenues: £2.3 million; 2019: £4.3 million). Our primary focus is to return the business to these
previously achieved activity levels, and then start to build profitable growth thereafter.
Product development and innovation
The ability to innovate and drive haemodynamic monitoring technology forward remains a key
component of the Group’s strategy.
The need for the new, next generation monitor has been apparent for some time. In 2021 a substantial
proportion of our R&D activities were focussed on bringing this monitor to market. We anticipate
launching the new, next generation monitor later this year.
Much of our product development work has been assisted by a number of competitively-won grant
awards. For example, in 2021 the Group was notified of grant awards worth approximately £0.6 million
(gross) (2020: nil), including a prestigious Smart Award from Innovate UK. Work eligible for the latest
grant starts in April 2022.
One notable grant award related to collaborative work between Deltex Medical and the UK’s National
Physical Laboratory (“NPL”) based in Teddington. This collaborative research work has enabled the Group
to extend the application and utility of its oesophageal Doppler monitoring, including the development
of a non-invasive device with broad utility.
Deltex Medical’s oesophageal Doppler is classified as a minimally-invasive device; however, it still
requires the insertion of a probe down the oesophagus of a sedated or anaesthetised patient. The
requirement for the patient to be sedated has historically limited the application of our ODM technology.
However, development work carried out in 2021 with NPL has enabled Deltex Medical to develop a new,
non-invasive haemodynamic monitoring device which can be placed at the base of the patient’s neck
(the suprasternal notch) to generate real-time, highly accurate data on the haemodynamic status of the
patient. This non-invasive device, which can provide clinicians with an instant measurement of a patient’s
haemodynamic status, will significantly expand the possible applications and size of the addressable
market for the Group. In addition to adoption by new users, this non-invasive device should help drive
interest in, and usage of, our long-standing minimally invasive ODM technology as the use of the new
device will allow anaesthetists to assess which of their patients will benefit from the more intense
monitoring available through the use of the TrueVue system.
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Market developments
The majority of the Group’s activities are currently centred around the treatment of human patients
within the hospital setting. However, we have also been developing our haemodynamic monitoring
platform for use in veterinary applications in the treatment of small animals in a number of different sites
around the world. Although the size of this market is currently quite small, we believe that it has the
potential to grow. Accordingly, we are working closely with, and supporting technologically, a number of
key opinion leading veterinarians who are interested in the application of the Group’s TrueVue Doppler
technology in the treatment of sick animals.
Regulatory
Deltex Medical designs and manufactures Class II medical devices which it sells around the world. As a
result, its business activities can be significantly affected by changes to regulations. At any time there are
typically a number of regulatory changes under consideration from the regulatory bodies governing such
devices.
Fortunately, to date the effect on the Group from Brexit has been relatively limited, although we have
been forced to register our products in Spain, despite having sold into the Spanish market for more than
15 years. The post-Brexit regulatory regime is still evolving and we keep actual or prospective changes in
regulations under close review.
In Europe we are currently in the process of transitioning from the Medical Device Directive to the
Medical Device Regulation (“MDR”). The European MDR comprises a new set of regulations that govern
the production and distribution of medical devices in Europe. Compliance with this new regulation is
mandatory for medical device companies that want to sell their products into the European marketplace.
There are certain provisions within the MDR which, if enforced in a timely manner, could help Deltex
Medical. For example, there is an increasing requirement for manufacturers of medical devices to
generate their own body of efficacy data, and not to rely on third party data in regulatory submissions.
Deltex Medical benefits from a substantial body of published literature relating to the use of its
technology which shows statistically significant effects associated with improving patient outcomes and
reducing patient length-of-stay. As the MDR comes into effect we anticipate that the value and utility of
the Group’s own scientific evidence base should continue to increase.
Three principal divisions: UK, USA and International
Deltex Medical structures its commercial activities around three divisions: the UK; the USA and
International.
Although in 2021 access to customer accounts was extremely limited, we have had some notable
successes with long-standing customers in both the UK and the USA. For example, at some institutions
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we have been able to stay in close contact remotely with anaesthetists, which has resulted in a steady
stream of probe usage, albeit at much lower levels than before the pandemic started. However, it is clear
that where our sales personnel are unable to obtain meaningful access to anaesthetists, or other
appropriate operating theatre staff, then probe usage typically declines.
Over recent months there have been encouraging signs where we have been able to start to re-engage
with operating theatre personnel in a number of hospitals. As hospitals open up again, we plan to
expand the size of our sales team in the USA and focus on our existing accounts, which should help us to
start to drive up high margin single-use probe revenues.
The International division performed well in 2021 with growth of 40% to £0.9 million (2020: £0.7 million).
The Group’s distributor in France achieved strong activity levels, partly as a result of a long-term contract
with the Association of Public Hospitals in Paris. In January 2022 one of the Group’s distributors in the
Americas won contracts worth some US$0.2 million which combined the sale of monitors with
predetermined and contracted probe sales to a number of public hospitals.
Not all of the Group’s international distributors performed strongly during the pandemic. Many of these
distributors comprise businesses focussed on selling equipment and consumables into operating
theatres which, similar to Deltex Medical, have seen much lower activity levels in 2021.
Conclusion
The Covid pandemic is transitioning to becoming endemic in the community and the elevated
vaccination rates around the world mean that hospitals are now starting to open up access to suppliers,
and their sales teams, once again. They are also starting to work hard to reduce their respective backlogs
in elective surgery.
We made a number of important steps forward with our product development programmes in 2021 and
look forward to the launch this year of the next generation monitor as well as the finalisation of the new,
non-invasive device with substantially larger addressable market size.
In February 2022 we announced a £1.4 million (gross) fund raising which will, among other things, enable
us to take advantage of the substantial grant finance that totalled £0.6 million (gross) that we were
awarded last year.
Our key challenge for 2022 is to release the next generation TrueVue monitor, along with our new non-
invasive ultrasound device, and see elective surgery activity levels return to the levels that were being
achieved before the Covid pandemic became evident.
Andy Mears
Chief Executive
6 April 2022
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Directors
NON-EXECUTIVE DIRECTORS
Nigel Keen Chairman, MA FCA FIET
Nigel has been involved with Deltex Medical since 1988 and has been Chairman since 1996. He is also
Chairman of the following companies: Oxford Academic Health Science Network, established by the
National Health Service in England to align the interests of patients in its region with academia, industry
and the healthcare system; and MedAccess Guarantee Limited, a UK-based social finance company
with the pioneering mission to make global healthcare markets work for everyone.
His career has encompassed venture capital, industry and banking. He has a degree in engineering from
Cambridge University, is a Fellow of the Institute of Chartered Accountants, a Fellow of the Institute of
Engineering and Technology and has been involved in the formation and development of high
technology businesses for more than thirty years. Nigel is Chairman of the Remuneration Committee.
Julian Cazalet MA FCA
Julian joined the Board in April 2008 and is Chairman of the Audit Committee. Julian is considered as an
Independent Non-Executive Director by the Board because of the quality of his judgment derived from
his extensive experience of corporate boards gained throughout his career. He was until 2007 a
Managing Director — Corporate Finance of JPMorgan Cazenove. After graduating in Economics from
Cambridge, he qualified as a Chartered Accountant before joining Cazenove in 1973. He became a
Partner in 1978. From 1989 he worked in Corporate Finance, firstly in Equity Capital Markets and
subsequently advising listed companies. He is Chairman of The Lindsell Train Investment Trust plc and a
Trustee of two charities.
Tim Irish
Tim has worked in the life sciences industry for 35 years. His career has spanned global health
technology companies across Europe and North America, including GSK, GE and Philips. Tim is a
Professor of Practice at King's College London (KCL) and Chairman, KHP MedTech Innovations Ltd, a
joint venture between KCL and two of London’s leading NHS Trusts, Guy’s & St Thomas’ and King’s
College Hospital. Tim joined the Board of the National Institute for Health and Care Excellence (“NICE”)
in April 2015 and was promoted to Vice-Chair. He left the Board of NICE in November 2021 but is still a
consultant to the organisation. Tim currently holds four other non-executive director positions in health
and technology related entities based in the UK, EU and USA. Tim joined the Board on 20 January 2021.
Christopher Jones
Chris Jones joined the Board in June 2015 and brings over 30 years of experience in Fortune 500 and
VC funded healthcare companies in both the UK and the USA. He is Executive Chairman of: Mologic
Ltd, Global Access Diagnostics Ltd, Elasmogen Ltd and OR Productivity Ltd; and non-executive Director
of MediSieve, Causeway Therapeutics and Health Enterprise East. Chris is a US national who came to
the UK in 2008 to become CEO of GlySure. Prior to joining GlySure he was CEO of Tensys Medical
developing and commercialising a novel continuous, non-invasive blood pressure monitor resulting in the
sale of the company in 2008. Chris also spent nine years with Nellcor Inc, a division of Tyco Healthcare,
most recently as VP of Marketing responsible for the $700M WW pulse oximetry and critical care
businesses. He has a Bachelor of Science Degree in Molecular Biophysics and Biochemistry from Yale
University.
Mark Wippell
Mark, who joined the Board in 2014, has broad international commercial experience gained through
working extensively with UK, North American and other overseas based companies. He is an
Association Member of BUPA and a member of the CW Innovation Advisory Group supported by CW+,
the official charity of the Chelsea & Westminster NHS Foundation Trust. He mentors, and invests in,
technology businesses and is a mentor on fintech accelerator programmes powered by Techstars. He
was formerly a senior corporate partner of Allen & Overy LLP, is past Chairman of the American
European Business Association and was previously a member of advisory committees at Oxford
University. Mark is qualified as a lawyer in the UK and the US.
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EXECUTIVE DIRECTORS
Andy Mears, Chief Executive
Andy joined Deltex Medical in 1989 as an Electronics Engineer. During his career with Deltex Medical he
has held a number of roles, including: Product Manager, Production Manager and Operations Director.
Andy was appointed Group Sales Director in 2010, Managing Director in 2015 and Chief Executive in
2018.
Andy regularly advises Departments within the UK government on their strategies to encourage UK
healthcare companies to trade internationally. Within these roles he has been an active member of the
All-Party Parliamentary Group (APPG) for Trade & Investment as well as more recently a member of the
UK Life Science Export Trade Advisory Group (ETAG) helping to define post-BREXIT trade agreements.
Natalie Wettler, Group Finance Director, FCA
Natalie commenced her Deltex Medical career in 2011 and has held a number of senior roles in the
Group’s finance department between 2011 and 2016. Natalie re-joined the Group in January 2020 as
Group Financial Controller and was appointed Group Finance Director in May 2021.She has a Bachelor
of Science Degree in Cognitive Science from the University of Sheffield and qualified as a Chartered
Accountant with Grant Thornton in the UK and continued her Grant Thornton career in New Zealand.
Natalie’s experience in the medical sector also includes head of Finance for Peak Primary Limited in
New Zealand in the Primary Healthcare sector.
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Directors’ Responsibility Statement
The Directors are responsible for preparing the Annual Report and the financial statements in
accordance with applicable law and regulation. Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors have prepared the Group financial
statements in accordance with UK-adopted international accounting standards and parent company
financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable
law). Under company law the Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company, and of
the profit or loss of the Group for that period. In preparing the financial statements, the Directors are
required to:
▪ select suitable accounting policies and then apply them consistently;
▪ state whether international accounting standards have been followed for the Group financial
statements; and United Kingdom Accounting Standards, comprising FRS 101, have been
followed for the Company financial statements, subject to any material departures disclosed and
explained in the financial statements;
▪ make judgements and accounting estimates that are reasonable and prudent; and
▪ prepare the financial statements on a going concern basis unless it is inappropriate to presume
that the Group and Parent Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Group and Parent Company’s transactions and disclose with reasonable accuracy at any time
the financial position of the Group and Parent Company; and enable them to ensure that the financial
statements comply with the Companies Act 2006. The Directors are also responsible for safeguarding the
assets of the Group and Parent Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities. In addition, the directors are responsible for ensuring that they
meet their responsibilities under the AIM rules. The Directors are responsible for the maintenance and
integrity of the Group’s website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
15
Company Secretary and Advisers
Company Secretary and Registered Office
Natalie Wettler FCA
Terminus Road
Chichester
West Sussex PO19 8TX
Nominated adviser and Joint Broker
Arden Partners plc
125 Old Broad Street
London EC2N 1AR
Joint Broker
Turner Pope Investments (TPI) Limited
8 Frederick’s Place
London EC2R 8AB
Independent auditors
Nexia Smith & Williamson
Cumberland House
15 – 17 Cumberland Place
Southampton SO15 2BG
Principal bankers
Santander Corporate and Commercial
1 Dorset Street
Southampton SO15 2DP
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
16
Corporate Governance Statement
Chairman’s introduction
Our purpose is to provide returns to our shareholders by enabling improvements in outcomes for patients
around the world by creating, validating and delivering innovative healthcare solutions associated with
haemodynamic monitoring. We aim to achieve this by:
▪ supporting evidence-based medicine to create sustainable health benefits in the communities
which we serve;
▪
investing in our products, services and people;
▪ partnering with clinicians to adopt the technologies within our TrueVue System;
▪ communicating openly and honestly with our customers and with each other;
▪ providing excellent levels of support, education and training, taking into account any restrictions
imposed directly or indirectly as a result of Covid;
▪ continuing to be thought-leaders to drive innovation; and
▪ establishing appropriate committees of the Board and related governance structures, including
those required under section 172 of the Companies Act 2006, to help monitor and guide the aims
summarised above.
The Board of Deltex Medical has chosen to adopt the QCA Corporate Governance Code (the QCA
Code) that was published by the Quoted Companies Alliance in April 2018. The Code is structured
around a number of broad principles which the Board seeks to apply and which are summarised below.
Further information in relation to how the Board applies the Code is set out in the Corporate Governance
section of the Group’s website. https://www.deltexmedical.com/investor-relations/aim-rule-26/corporate-
governance/
1) Establish a strategy and business model which promote long-term value for shareholders
Deltex Medical’s strategy and business model are described within this document and, in particular,
within the Chairman’s Statement and the Business Review. These sections also describe the
strategy the Group has adopted to navigate the specific challenges created by Covid.
The Board keeps the Group’s strategy and business model under close and continuing review.
2) Seek to understand and meet shareholder needs and expectations
The Board’s primary contact with both institutional and private shareholders is through the
Chairman, the Chief Executive (“CEO”) and the Group Finance Director (“FD”). The CEO and FD
typically meet with the Group’s institutional and large private shareholders, who wish to meet with
them, twice a year around the publication of the annual accounts and interim results. In 2021 as a
result of Covid the majority of these meetings were held via telephone or on-line video systems.
3) Take into account wider stakeholder and social responsibilities, and their implications for
long-term success
Engaging with our stakeholders strengthens the Group’s relationships and helps it to make better
business decisions which, in turn, helps it deliver on its commitments.
The Board is regularly updated on wider stakeholder engagement and feedback in order to help it
stay abreast of relevant insights into the issues, including social responsibilities, that matter most to
the Group’s stakeholders.
4) Embed effective risk management, considering both opportunities and threats, throughout
the organisation
The Board is responsible for the systems of risk management and internal control, and for reviewing
their effectiveness.
The internal controls are designed to manage rather than eliminate risk and provide reasonable, but
not absolute, assurance against material misstatement or loss. Through the activities of the Audit
Committee, the effectiveness of these internal controls is formally reviewed annually – although
17
specific internal controls or risk management issues may be discussed with the Audit Committee on
an ad hoc basis throughout the year.
In 2021 considerable time was spent by the Board reviewing actual or potential risks associated with
Covid and their possible mitigation. This included carefully considering how best to address access
restrictions imposed by hospitals on Deltex Medical’s salespersons and clinical educators.
A summary of the Board’s assessment of the principal risks and uncertainties facing the Group are
set out on pages 23 to 25 of this document.
5) Maintain the Board as a well-functioning, balanced team led by the Chairman
The Group is led by the Board of Directors which comprises the Non-Executive Chairman, two
executive Directors and four non-executive Directors. Nigel Keen, the Non-Executive Chairman, is
responsible for the running of the Board and Andy Mears, the Chief Executive, has executive
responsibility for managing the Group’s business activities and implementing the Group’s strategy.
To allow the Board to discharge its duties effectively, all Directors are provided with relevant
information on a timely basis. In this regard, management reports and appropriate supporting
documentation are provided to all Directors in advance of all Board and Committee meetings.
6) Ensure that between them the Directors have the necessary up-to-date experience, skills and
capabilities
The Board comprises individuals with wide ranging commercial and business management
experience in the healthcare market, supported by other Directors with careers in investment
banking and the law. Each Director brings experience of other relevant businesses which helps the
Board, as a whole, benchmark and appraise the Group’s progress and strategy.
7) Evaluate Board performance based on clear and relevant objectives, seeking continuous
improvement
The Board has chosen not to undertake formal reviews of Board performance. Instead, the
Chairman periodically discusses the input of each Director with the individual concerned to ensure
that their contribution to the Board is, and remains, both effective and relevant; and that they remain
committed to the success of the Group.
8) Promote a corporate culture that is based on ethical values and behaviours
As a provider of regulated medical devices to patients across the world, ethical behaviour by its
Directors and employees is critically important to the Group. Our products are designed and
manufactured by our well-trained employees in Chichester (UK) who comply with our established
Quality System. Our sales teams and clinical educators promote our products, and their benefits, to
clinicians and healthcare systems in an open way. Further, we provide extensive training to
customers, or potential customers, to allow them to gain the maximum advantage from Deltex
Medical’s products and their use in the clinical setting.
9) Maintain governance structures and processes that are fit for purpose and support good
decision-making by the Board
The Board has established a regular programme of Board Meetings at which the Executive
Directors report on the progress of the business, and their assessment of the actual or prospective
risks and opportunities.
There are a minimum of ten Board meetings scheduled per year. The Non-Executive Directors
spend approximately a day a month working on Deltex Medical related matters, including reviewing
the Board papers. The Chairman maintains contact both with the Board, the Executive Directors and
employees between Board Meetings, and typically spends approximately three days a month
working on Group-related matters.
In 2021 all the Non-Executive Directors attended all the Board meetings in the year save for: (i) the
June Board meeting when two directors were unable to attend; (ii) July Board: one director; (iii)
October Board: one director; and (iv) December Board: one director. As a result, Board decisions
are made in the light of up-to-date and relevant information.
The Group’s Quality System, which is regularly audited by outside regulatory bodies, also helps
augment the governance regime of the Group.
18
10) Communicate how the Company is governed and is performing by maintaining a dialogue
with shareholders and other relevant stakeholders
Extensive dialogue is maintained with shareholders and other stakeholders to discuss the
opportunities for and challenges facing the Group.
Although this shareholder and stakeholder dialogue is primarily built around the Group’s annual and
interim results, shareholders are informed of significant developments relating to the business
through periodic stock exchange RNS announcements or news updates uploaded to the Group’s
website.
It is the Board’s role to ensure that Deltex Medical Group plc is managed for the long-term benefit of all
Deltex Medical’s stakeholders with effective, efficient and timely decision making. Corporate governance
is an important element of that task, which reduces risk and adds value to Deltex Medical. As your
Chairman, I am committed that the Group should uphold the highest standards of governance
commensurate to its size and the complexity of its business.
Nigel Keen
Chairman
6 April 2022
19
Strategic Report
The Directors have set out below their Strategic Report for the year ended 31 December 2021.
The Strategic Report incorporates, and should be read in conjunction with, the rest of this document and
in particular the following sections:
1. Chairman’s Statement (page 5)
2. Business Review (page 8)
3. Corporate Governance (page 17)
4. Principal Risks of the Group (page 23)
5. Directors’ Report (page 26)
Key performance indicators
The key performance indicators that are used to monitor the performance of the Group are set out in the
table below and are discussed in more detail in the Chairman’s Statement and the Business Review.
Adjusted EBITDA (£000)
Operating loss (£000)
Gross profit margin
Cash and cash equivalents (£000)
Probe revenues (£000)
Monitor revenues (£000)
Going concern
2021
(504)
(805)
70%
413
2020
(208)
(622)
68%
853
1,911
2,113
202
161
The Group meets its day-to-day working capital requirements through a combination of operational cash
flows, an invoice discounting facility and, if required, the raising of additional finance. During the Covid
pandemic the Group also made use of Salary Support Schemes provided by the UK and US
governments.
In February 2022, the Group raised £1.4 million (gross) through a share subscription which provided
additional cash resources to the Group. In addition, the Group agreed a 12 month extension to the
standby loan facility which is now repayable on or before 31 December 2023.
The Directors have reviewed detailed budgets and forecasts until 30 June 2023, which take into account,
among other things, the possible continued effects of Covid on the Group’s business. This review
indicates that the Group is expected to continue trading as a going concern based on projected net cash
flows derived from sales of the Group.
The Directors consider that they have reasonable grounds to believe that the Group will have adequate
resources to continue in operational existence for the foreseeable future and it is therefore appropriate to
prepare the financial statements on the going concern basis.
Section 172 statement
The Directors of the Company must act in accordance with a set of general duties which are described in
section 172 of the UK Companies Act 2006 and which are summarised as follows:
A director of a company must act in the way they consider, in good faith, would be most likely to promote
the success of the company for the benefit of its shareholders as whole and, in doing so, have regard
(amongst other matters) to:
▪
▪
▪
the likely consequences of any decisions in the long-term;
the interests of the company’s employees;
the need to foster the company’s business relationships with suppliers, customers and others;
20
▪
▪
the impact of the company’s operations on the community and the environment;
the desirability of the company maintaining a reputation for high standards of business conduct;
and
▪
the need to act fairly between shareholders of the company.
Within Deltex Medical the Directors fulfil their duties, as summarised above, through a corporate
governance structure that delegates day-to-day decision making to the Executive Directors and the
management of the Company and which is described on pages 17 to 19 within this document. In
addition, the following paragraphs summarise how the Directors fulfil other aspects of their duties:
Risk management
We provide highly regulated medical devices to our customers who currently operate principally in
hospital intensive care units and operating theatres / rooms. Accordingly, it is important that we identify,
evaluate, manage and mitigate the risks we face effectively, and that we continue to develop our
approach to risk management proactively. For further information see the section entitled ‘Principal Risks
of the Group’ on page 23.
Our employees
The Company is committed to being a responsible business.
Our behaviour is aligned with the expectations of our employees, customers, shareholders, communities
and society as whole. We are a medical device company and improving outcomes for patients is at the
heart of what we do. For our business to succeed we need to manage our employees’ performance and
develop talent whilst ensuring that we operate as efficiently as possible.
As part of our response to Covid, we decided not to make any redundancies as we value our highly
trained and flexible workforce, and wanted to support them as much as possible during the pandemic.
Further, we have allowed employees to work from home wherever practicable.
For further information on our employees see the Chairman’s Statement, the Business Review and the
report of the Remuneration Committee.
Business relationships
Our strategy prioritises organic growth in the UK and internationally, driven by cross-selling our
sophisticated medical device products to existing customers and distributors, and securing new
customers for the Group. To do this we need to develop and maintain strong customer and distributor
relationships, although this has been made substantially more challenging as a result of the pandemic
and the effective cessation of “face-to-face” meetings in our main territories. We have tried to
compensate for this, to the extent possible, by the judicious use of on-line video meetings.
We also need to develop and maintain close relationships with our suppliers, many of whom we have
worked with for a number of years. For more information see the Chairman’s Statement and Business
Review.
Anti-bribery and corruption legislation, including the UK Bribery Act and the US Foreign Corrupt
Practices Act, also apply to Deltex Medical’s business. There is a strong global focus on compliance in
both established and developing markets. For more information on our approach to compliance see the
corporate governance section in our website: https://www.deltexmedical.com/investor-relations/aim-rule-
26/corporate-governance/
Community and environment
The Company’s approach is to use its position, as far as it can and on a proportionate and responsible
basis, as an employer and medical device vendor to hospitals to create positive change for the people
and communities with which we interact.
Shareholders
The Board is committed to engaging openly with our shareholders, as we recognise the importance of a
continuing effective dialogue, whether with large institutional investors, private or employee
shareholders.
21
For more information on our approach to interacting with shareholders please see the Corporate
Governance Statement on page 17.
The Strategic Report comprising pages 20 to 22 has been approved by the Directors and signed
By order of the Board
Natalie Wettler
Company Secretary
6 April 2022
22
Principal Risks of the Group
The Directors have summarised below what they believe to be the principal risks and uncertainties
currently facing the Group. This summary of the principal risks and uncertainties facing the Group should
be read in conjunction with the rest of this document including, in particular, the Chairman’s Statement
and the Business Review. Note that this summary represents the Board’s best assessment and
judgement as at the date of this document and, given the nature of business risk and associated
uncertainties, there can be no assurances that specific risks or uncertainties could arise in the future that
are not summarised below.
Personnel
In normal years Deltex Medical undertakes continuous reviews of its staff with a focus on encouraging
excellence and increasing relevant skills among its employees. As a result of the pandemic, it has been
harder to carry out systematic staff reviews and implement targeted training programmes to expand
employee skills. Accordingly, in 2021 we have sought to carry out staff reviews on an ad hoc and
pragmatic basis. We anticipate that as pandemic-associated disruption to our business declines, we will
be able to return to a more systematic system of appraisals and reviews. Nonetheless being able to
carry out timely appraisals and reviews of Group employees, including in our US subsidiary, even as the
pandemic declines is not without risk.
The successful selling of the Group’s technology depends on a number of factors, including: (i) the skill,
motivation and experience of our sales personnel in appraising clinicians of the effective use of Deltex
Medical’s products; (ii) the manufacturing of its products to the highest specification, including
engineering precision and sterility; (iii) the experience and innovation of its research and development
personnel developing novel products; and (iv) the skill and thoroughness of its quality assurance team in
ensuring that all products leaving the factory in Chichester conform to the highest standards and
prevailing regulatory requirements. Together these factors, including our ability to recruit and retain
appropriately skilled individuals in each role, represent risk in as much that they comprise a complex and
demanding series of skill-sets and activities that the Group needs to maintain and manage.
Regulatory environment
The Group operates in a number of highly regulated environments which inherently represents a risk. It
has a robust Quality Management System which is maintained on the Entropy document control system
hosted by the British Standards Institute (“BSI”). This quality system is reviewed regularly by the
European Union regulatory body, BSI and the USA’s Food and Drug Administration (FDA). To date the
main impact of Brexit has been the requirement to register our products in Spain although we anticipate
that future Brexit-related legislation could have an impact on the Group’s procedures in respect of the
export of both monitors and probes, and this represents a potential increase in risk for the Group. At the
current time it is too early to assess the longer-term impact of Brexit associated challenges on our EU
exports. In Europe we are currently in the process of transitioning from the Medical Device Directive to
the Medical Device Regulation (“MDR”). The European MDR is a new set of regulations that governs the
production and distribution of medical devices in Europe, and compliance with the regulation is
mandatory for medical device companies that want to sell their products in the European marketplace
The Group maintains a continuous watch on new regulatory requirements and has plans in place to
mitigate in the short term any likelihood of stock shortages associated with changes in the regulatory
framework.
The Group operates across the world and is subject to extensive legislation and regulation, including
with respect to anti-bribery and corruption, in each country in which the Group operates. Our
international operations are governed by the UK Bribery Act and the US Foreign Corrupt Practices Act
which prohibit us or our representatives from making or offering improper payments to government
officials and other persons or accepting payments for the purpose of obtaining or maintaining business.
Our international operations in the developing markets which operate through distributors increase our
Group exposure to these risks.
Hospitals and the clinical environment
The Group operates in an environment where, by their very nature, surgical procedures are being
undertaken on sick, and sometimes extremely sick, patients. Hospitals are, from time to time, the subject
23
of litigation by disaffected patients or their relatives; and there is a risk that the Group could be co-joined
in such litigation. However, it should be noted that the Group’s haemodynamic monitoring technology is
designed to minimise certain risks for patients and to aid their speedy recovery. It is also the case that to
date no such litigation has occurred against the Group or its products.
A number of hospitals have put in place restrictions which effectively stop or severely curtail the ability
for Deltex Medical’s salespersons or clinical educators from meeting with relevant decision-makers
within the hospital. The Group has summary information which suggests that Deltex Medical’s sales are
greatly enhanced by regular face-to-face meetings with users and, conversely, a lack of such face-to-
face meetings tends to result in, over time, a decline in sales. Accordingly, how quickly hospitals “open
up” is likely to be a key determinant of Group revenues in the short to medium term and as such this
represents a significant risk to Deltex Medical.
There is a substantial backlog associated with elective surgery which had to be cancelled during the
pandemic. Although this backlog represents a significant opportunity for increased sales by the Group
and its distributors, there is an element of risk, and uncertainty associated, with how hospitals and/or
health systems will seek to reduce this backlog.
COVID-19
The Group’s commercial activities, and in particular the demand for its products, are exposed to the risks
created by the continued global spread of Covid, including new strains of the disease, and the extent to
which vaccination programmes, lock-downs and other actions by governments, healthcare systems and
relevant authorities are successful to curtail the effect of the pandemic. Although in many countries it
appears that Covid is being brought under control and the pandemic is migrating to become a lower
acuity endemic problem, this is still significant uncertainty on a country-by-country basis as to the
ongoing short-term and long-term effect of Covid on the markets in which the Group operates.
There are other risks posed by Covid, including the impact on our employees and the suppliers of
components necessary for the manufacture of our high technology equipment and single use
consumables. Disruption to supply chains with substantially extended lead times represents a significant
risk. As part of its risk mitigation planning, the Group currently has a relatively high level of stocks, both
of components and finished goods, so that this supply risk can be minimised, at least in the near future.
However, as Deltex Medical develops new products then the risk from disrupted or extended supply
chains on such innovation could be more acute.
Further information on the potential effect of Covid on the Group is set out elsewhere in this document,
including in the Chairman’s Statement and the Business Review.
Competition
A number of competitors sell products to the same group of clinicians as Deltex Medical with the same
objective: to measure a patient’s haemodynamic status. Some of these competitors are significantly
larger and have substantially greater financial resources which represents a key risk factor for the Group.
At a certain level all these competitors use different technologies to the oesophageal Doppler-based
technology used by the Group. Moreover, the Board believes that none of these competitors have a
clinical evidence base which is equivalent to that supporting the use of the Group’s technology.
There is also a risk that as the technology around “wearables” develops, a competitor could develop
small “wearable” products which also provide high fidelity haemodynamic monitoring which is broadly
equivalent, at least in part, to the Group’s oesophageal Doppler TrueVue technology.
Financial
The Group is exposed to currency fluctuations. Its principal cost base is in pounds sterling. However, it
receives a significant proportion of its revenue in US dollars and euros. As a result, movements in the
exchange rates between sterling and other currencies have a direct impact on Group revenue and
profits, and as such represents a form of risk.
It is clear that inflation is increasing in a number of the territories in which the Group operates. It is not
yet clear whether this inflation will be transitory or long-term. Prolonged high rates of inflation would
represent a risk to the Group and its activities.
The Group sells to a network of distributors around the world. The majority of these distributors are
heavily focussed on the elective surgery sector. The volume of elective surgical procedures has
24
significantly reduced in all territories as a result of the Covid pandemic. Accordingly, it is likely that Deltex
Medical faces heightened risk in respect of its financial exposure to these distributors.
Other risks and uncertainties
There are a number of other risks and uncertainties which affect, or could affect, the Group including:
▪ changes in government policies and spending plans, particularly in respect of healthcare
systems;
▪
▪
▪
lower than anticipated rates of adoption of the Group’s products in existing key markets;
the availability to the Group of resources, including cash, to pursue its strategy and other
opportunities that it comes across;
technological difficulties and/or supply chain challenges, including the availability of raw materials
at reasonable prices, required for: (i) the timely development and launch of new products; and (ii)
the ability to continue to be able to manufacture equipment and consumables on a cost-effective
basis; and
▪
the consequences of the war in Ukraine and associated geopolitical stresses which could
adversely affect the global economy and make it harder for Deltex Medical to export successfully.
25
Directors’ Report
The Directors present their report and the audited consolidated financial statements for the year ended
31 December 2021.
Future developments
The Group’s business activities, together with the factors likely to affect its future developments,
performance and position are set out in the Chairman’s Statement on page 5, the Business Review on
page 8 and the Principal Risks of the Group on page 23.
Financial risk management
The financial risk management objectives and policies of the Group, including exposure to currency risk,
interest rate risk and liquidity risk are set out in note 24 to the financial statements on pages 75 to 78.
Dividends
The Directors cannot propose the payment of a dividend (2020: £nil) for 2021.
Directors
The Directors of the Group who served during the year are shown below. Biographical details are given
on pages 13 and 14.
Nigel Keen
Andy Mears
Natalie Wettler*
Julian Cazalet
Chris Jones
Mark Wippell
Tim Irish**
David Moorhouse***
Non-executive Chairman
Chief Executive
Group Finance Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Group Finance Director
*
**
Natalie Wettler was appointed to the Board and became Group Finance Director on 27 May 2021
Tim Irish was appointed to the Board on 20 January 2021
*** David Moorhouse retired as Group Finance Director and from the Board on 27 May 2021
In the case of each Director in office at the date the Directors’ report is approved:
▪ so far as the Director is aware, there is no relevant audit information of which the Group and
Parent Company’s auditors are unaware; and
▪
they have taken all the steps that they ought to have taken as a Director in order to make
themselves aware of any relevant audit information and to establish that the Group and Parent
Company’s auditors are aware of that information.
Directors’ indemnities
As permitted by the Companies Act 2006, the Company has indemnified the Directors in respect of
proceedings brought by third parties and qualifying third party indemnity insurance was in place
throughout the year and up to the date of approval of the financial statements.
Research & development activities
Deltex Medical Limited, a subsidiary, undertakes research and development work in support of the
Group’s principal manufacturing activities. Further information on the Group’s research and development
activities can be found earlier in this document.
26
Independent auditors
The independent auditors, Nexia Smith & Williamson, have indicated their willingness to continue in
office and a resolution concerning their reappointment will be proposed at the forthcoming Annual
General Meeting.
Annual General Meeting
The notice convening the Annual General Meeting, which will take place on 18 May 2022 at 11.00 a.m.
at the London offices of DAC Beachcroft at 25 Walbrook, London EC4N 8AF, can be found at the back
of this Report.
By order of the Board.
Natalie Wettler
Company Secretary
6 April 2022
27
Directors’ Remuneration Report
Introduction from Nigel Keen, Chairman of the Remuneration Committee
I am pleased to present this report on behalf of the Remuneration Committee.
Deltex Medical has appointed all the Non-Executive Directors to the Remuneration Committee and the
Committee meets regularly during the year to discuss matters concerning the Executive Directors of the
Group and more broadly on other topics concerning the Group’s employees and their remuneration.
The Board considers that this supervision by the Remuneration Committee is an important component of
good corporate governance for the Group as a whole.
During the year the Committee has been involved in reviewing the remuneration of all the Group’s
employees and in particular for the Executive Directors and senior managers.
The Committee believes that the remuneration policy continues to both support and motivate our senior
team to achieve the Company’s strategic objectives and long-term growth for our shareholders.
I would be pleased to respond to any queries should any shareholder require more information about our
remuneration policies.
Yours sincerely
Nigel Keen
Chairman of the Remuneration Committee
6 April 2022
The Remuneration Committee
The Remuneration Committee (the “Committee”) is responsible for recommending to the Board the
remuneration packages for the Executive Directors and has supervision of the bonus and share incentive
strategy for the Group’s executive management. The Chairman and the Executive Directors are
responsible for determining the remuneration of the Non-Executive Directors, and the Remuneration
Committee, excluding Mr. Keen, is responsible for determining the remuneration of the Chairman.
The role of the Committee includes:
▪ considering and determining the remuneration policy for the Executive Directors;
▪ within this agreed policy, considering and determining the total remuneration packages of each of
the Executive Directors of the Group;
▪ approving the design and performance targets for all performance-related plans for executives as
well as the overall total annual payments made under such plans;
▪
reviewing and noting remuneration trends across the Group; and
▪ determining the policy for pension arrangements, service agreements and termination payments
to Executive Directors.
The members of the Committee are appointed by the Board and during the year comprised all the
independent non-executive Directors: Julian Cazalet, Chris Jones, Mark Wippell and Tim Irish as well as
the Chairman of the Board, Nigel Keen. Mr Keen is the Chairman of the Committee. The Board
considers that Nigel, with his experience of working at senior levels in global companies, including
technology companies, has the most appropriate blend of skills and experience to be Chairman of the
Remuneration Committee.
All members served throughout the year, save Tim Irish who joined the Board on 20 January, 2021.
28
This report sets out the Directors’ remuneration policy for 2021 and beyond. As a company listed on
AIM, the Company is not required to comply with Schedule 8 of the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008 as amended in August 2013 (the “Regulations”),
nor is it required to comply with the principles relating to Directors’ remuneration in the UK Corporate
Governance Code 2016 (the “Code”). This report has not been audited. It should be read in conjunction
with details of the Directors’ remuneration in notes 5.4 and 5.5 which forms part of the audited financial
statements.
The remuneration policy promotes the delivery of the Group’s strategy and seeks to align the interests of
the Directors and Deltex Medical’s shareholders. The Committee reviews the link between incentive
structure and strategy regularly to ensure that remuneration packages are appropriate to attract,
motivate and retain the high calibre executives who are needed to deliver the Group’s strategy.
The Group has an incentive driven policy which seeks to reward executives fairly and responsibly based
on Group performance and their individual contribution. The Group has a strategy aimed at delivering
profitable growth and it is important for the motivation, particularly mindful of the additional stress and
responsibilities imposed by the Covid pandemic, and retention that the remuneration of the executives
takes into account the Group’s plans for sustainable, profitable growth and the increasing complexity of
the business.
The Committee considers carefully the motivational effects of the incentive structure in order to ensure
that it is effective and does not have any unintentionally negative impact on matters such as governance,
environmental or social issues. More generally, the Committee ensures that the overall remuneration
policy does not encourage inappropriate risk taking.
During the year the Committee considered whether the current policy remained appropriate for 2021 and
concluded that it has a remuneration policy which is a good balance between competitive pay, incentives
to develop and grow the Company in line with its strategy and effectively rewards for success, and does
not reward where targets are not met. As in previous years, the Committee had set stretching
performance targets for the annual bonus which were clearly linked to the strategy and financial
performance of the Group. Salary increases were last implemented across the Group on 1 July 2019.
The Executive Directors’ base salary will be reviewed on 1 July 2022. Awards under the Deltex Medical
Share Option Scheme for each Executive Director will be made at a maximum of 100% of salary.
Vesting of the awards after three years will be determined by EPS performance.
There are no material differences in the structure of remuneration arrangements for the Executive
Directors and senior management, aside from quantum and participation levels in incentive schemes,
which reflect the fact that a greater emphasis is placed on performance-related pay for Executive
Directors and the most senior individuals in the management team. Outside the senior management
team, the Group aims to provide remuneration structures for employees which reflect market norms.
Executive Directors’ service contracts and policy on cessation
Details of the service contracts of the Executive Directors, available for inspection at the Group’s
registered office are as follows:
Executive director
Contract date
Unexpired term of contract
Andy Mears
6 November 2018
Rolling contract; 6 months’ notice
Natalie Wettler
28 May 2021
Rolling contract; 6 months’ notice
Non-executive Directors
For the appointment of a new Chairman or non-executive Director, the fee arrangement would be in
accordance with the approved remuneration policy in place at the time.
Non-executive Directors do not have service contracts but are appointed under letters of appointment.
Their appointment can be terminated without notice and with no compensation payable on termination,
other than accrued fees and expenses.
Chairman
Under an arrangement between the Group and Imperialise Limited, Nigel Keen is retained to act as
Chairman of the Group. His current term of appointment commenced on 19 April 2009. This
arrangement can be terminated by either party at any time by the giving of six months’ notice.
29
Directors’ remuneration
The remuneration paid to the Directors during the year under review and the previous year is
summarised in the tables below:
EXECUTIVE DIRECTORS
Executive Director
Year
Cash
settled
salary
Benefits Pension
Annual
bonus
£
£
£
£
Andy Mears
2021
200,000
7,500
8,000
2020
200,000
7,500
11,710
Natalie Wettler*
2021
65,589
4,456
1,735
David Moorhouse**
2021
2020
30,875
65,825
-
-
-
-
Total
2021
296,464
11,956
9,735
2020
265,825
7,500
11,710
*
**
Natalie Wettler was appointed to the Board on 27 May 2021.
David Moorhouse retired from the Board on 27 May 2021.
‘Benefits’ comprise the provision of a car allowance paid in cash.
-
-
-
-
-
-
Total
£
215,500
219,210
71,780
30,875
65,825
318,155
285,035
Andy Mears has an interest in share options over Deltex Medical ordinary shares as per the table below.
Certain of these options cannot be exercised without first fulfilling performance criteria.
2011 Executive share
option scheme
Total
2003 Enterprise
Management Incentive
Scheme
Total
Exercise
from date
Exercise
to date
Exercise
price (£)
10 October 2015
10 October 2022
0.2400
10 June 2018
10 June 2025
20 September 2020
20 September 2027
22 July 2023
22 July 2030
0.1100
0.0400
0.0133
Number
150,000
375,000
1,562,500
4,000,000
6,087,500
6 August 2021
5 August 2028
0.01
10,000,000
27 April 2024
26 April 2031
0.018
5,000,000
15,000,000
30
Natalie Wettler has an interest in share options over Deltex Medical ordinary shares as per the table
below. Certain of these options cannot be exercised without first fulfilling performance criteria.
2003 Enterprise
Management Incentive
Scheme
Total
Exercise
from date
Exercise
to date
1 December 2023
30 November 2030
27 April 2024
26 April 2031
Exercise
price (£)
0.01
0.01
Number
225,000
2,500,000
2,725,000
NON-EXECUTIVE DIRECTORS
Cash
settled
Directors’
fees
Equity
settled
Directors’
fees
Benefits Pension
Annual
bonus
Long term
incentive
awards
£
£
£
£
£
£
Non-executive
Directors
Year
Nigel Keen
Julian Cazalet
Chris Jones
Mark Wippell
Tim Irish*
2021
2020
2021
2020
2021
2020
2021
2020
2021
-
-
-
-
-
-
-
-
33,333
33,333
24,000
24,000
24,000
24,000
24,000
24,000
17,123
-
Sir Duncan Nichol** 2020
-
24,000
Total
2021
2020
17,123
105,333
-
129,333
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
£
33,333
33,333
24,000
24,000
24,000
24,000
24,000
24,000
17,123
24,000
122,456
129,333
*
Tim Irish was appointed to the Board on 20 January 2021. He was Vice Chair of NICE until November 2021, as
described in the biographical details of the Directors on page 13. The rules of NICE mean that he can only accept cash
remuneration for his role as a non-executive director and accordingly is not eligible for equity settled Directors’ fees.
**
Sir Duncan Nichol retired from the Board on 31 December 2020.
Director fees are either settled in cash or by the issue of equity. At the current time non-executive
Director fees are intended to be settled by the issue of equity instruments in the Group in order to help
Deltex Medical conserve its cash resources and apply them to innovative product development as well
the expansion of the Group’s commercial activities. It is currently intended that such non-executive
Director fees in respect of 2021 will be settled by the issue of Deltex Medical ordinary shares during the
course of 2022.
31
Dilution limits
The rules governing the Employee Share Option Scheme (“ESOS”) provide that overall dilution through
the issuance of new shares via employee share schemes should not exceed an amount equivalent to
10% of the Group’s issued share capital over a ten-year period. The Committee monitors the position
prior to the making of any award under these share option schemes to ensure that the Group remains
within this limit. At the date of this Report, the Group’s headroom position remains within this 10% limit.
Directors’ shareholdings
Directors’ shareholdings as at 31 December 2021 are shown in the table below.
Legally owned
Unexercised
options
5,858,731
-
79,852,821
17,153,971
4,297,291
10,237,875
3,021,211
-
-
-
-
-
-
-
Unvested
options subject
to performance
under the EMI
scheme
Unvested options
subject to
performance
under the ESOS
15,000,000
6,087,500
2,725,000
-
-
-
-
-
-
-
-
-
-
-
Andy Mears
Natalie Wettler
Nigel Keen
Julian Cazalet
Chris Jones
Mark Wippell
Tim Irish
Directors’ shareholdings at 6 April 2022 which incorporate the changes in the share register as a result
of the February 2022 fund raising are shown in the table below.
Legally owned
6,658,731
1,010,400
99,852,821
27,153,971
4,297,291
11,037,875
3,021,211
Andy Mears
Natalie Wettler
Nigel Keen
Julian Cazalet
Chris Jones
Mark Wippell
Tim Irish
Approval
This report was adopted by the Committee on 6 April 2022 and has been approved subsequently by the
Board.
Nigel Keen
Chairman of the Remuneration Committee
6 April 2022
32
Report of the Audit Committee
Introduction from Julian Cazalet MA FCA, Chairman of the Audit Committee
I am pleased to present this report on behalf of the Audit Committee. I have been Chair of the Audit
Committee since 2015 and consider that I have recent and relevant financial experience.
During the year, I have spoken with a number of shareholders to discuss various matters and I look
forward to continuing to do so in the coming year.
Julian Cazalet MA FCA
Audit Committee Chairman
6 April 2022
Key responsibilities
The primary responsibility of the Audit Committee is to assist the Board fulfil its oversight responsibilities
in respect of the Group’s financial reporting, accounting systems, risk management and associated
public disclosure. Accordingly, the Audit Committee is required to:
▪ monitor the integrity of both the Group’s interim and annual report and accounts;
▪
review any significant financial reporting matters that may arise, and agree on the
reasonableness of the judgements that they may contain;
▪ advise on the clarity of disclosure of information provided in the report with the objective of
ensuring that the annual report and accounts, as a whole, is fair and balanced;
▪ ensure that the both the Group’s interim and annual report and accounts have been prepared in
accordance with applicable accounting standards and that any significant estimates made are
considered to be reasonable;
▪
review the adequacy and effectiveness of the Group’s systems of internal control and risk
management; and
▪ oversee the relationship with the Group’s independent auditors, reviewing the effectiveness of the
external audit and advising the Board on their appointment and remuneration.
Audit Committee governance
The Audit Committee comprises all the Non-Executive Directors and was chaired during the year under
review by Julian Cazalet who is a Chartered Accountant with recent and relevant financial experience.
The other Non-Executive Directors who served during the year under review are all considered to have
the ability and experience necessary to understand both interim and annual reports and accounts.
The Audit Committee usually meets twice a year along with the Executive Directors, by invitation. A
private meeting is also held with the Group’s independent auditors without the Executive Directors in
attendance.
Activities of the Audit Committee during the year
Internal controls and risk management
The Board has collective responsibility for the effectiveness of the Group’s system of internal control.
The Audit Committee has assisted the Board with its review of the effectiveness of these internal
controls and risk management during the year, principally through discussion with the Executive
Directors and other senior managers within the Group. In addition, the Audit Committee receives reports
from its external auditors which contain, among other things, control findings that are relevant to its work.
33
Information relating to the Principal Risks of the Group can be found on pages 23 to 25.
Financial reporting matters and judgements
The Audit Committee has received updates on the key judgemental financial reporting areas in the
Annual Report and Accounts from the Group Finance Director and considered the findings from the
external auditors on these matters. The significant reporting matters that were considered by the Audit
Committee during the year are summarised below and comprised:
i.
the carrying value of investments in subsidiaries and group balances in the Parent Company’s
individual financial statements as well as detailed analyses prepared to examine and consider the
disclosure required in respect of going concern. The Committee reviewed the key assumptions
used in the underlying cash flow forecasts which were used as the basis for the value-in-use
calculation required by the relevant accounting standards. The key assumptions reviewed in the
cash flow forecasts were the sales growth rates, gross margins and likely progression of the
overheads. In the context of the value-in-use calculation, the Committee satisfied itself that the
pre-tax discount rate was appropriate to use.
External audit
Prior to the commencement of the audit, the Audit Committee received an audit planning document from
the auditors which set out the auditor’s perceived audit risks and the scope of the work to be performed.
The Audit Committee was satisfied that the risks identified were aligned with its own assessment and
that the proposed approach was appropriate for a high quality audit to be performed.
Following the completion of the audit, the Audit Committee received from the auditors a post-audit
management letter which set out the key findings from the audit. The auditors also confirmed their
independence and how they comply with their professional and regulatory requirements.
The Audit Committee has confirmed that it is satisfied with the independence, objectivity and the
effectiveness of Nexia Smith & Williamson’s audit and has recommended to the Board that they are
reappointed.
A resolution to this effect will be proposed at the forthcoming Annual General Meeting.
34
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DELTEX MEDICAL GROUP PLC
Opinion
We have audited the financial statements of Deltex Medical Group Plc (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 31 December 2021 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of
Changes in Equity, the Consolidated Statement of Cash Flows, the Parent Company Balance Sheet, the
Parent Company Statement of Changes in Equity and the notes to the financial statements, including
significant accounting policies. The financial reporting framework that has been applied in their
preparation is applicable law and UK-adopted international accounting standards and, as regards the
parent company financial statements, applicable law and United Kingdom Accounting Standards, including
FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the parent
company’s affairs as at 31 December 2021 and of the group’s loss for the year then ended;
• the group financial statements have been properly prepared in accordance with UK-adopted
international accounting standards
• the parent company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
• the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
group and parent company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and
we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our approach to the audit
Of the group’s five reporting components, we subjected two to audits for group reporting purposes and
three to specific audit procedures where the extent of our audit work was based on our assessment of the
risk of material misstatement and of the materiality of that component. The latter were not individually
significant enough to require an audit for group reporting purposes but were still material to the group.
For each of the group’s three reporting components that were subject to specific audit procedures as
outlined above, all financial records are held in the UK and were subject to audit work by the group
engagement team. A component auditor was engaged to perform a stock take in the United States and the
results of this stock take were reviewed by the group engagement team.
The components within the scope of our work covered 100% of group revenue, 100% of group profit before
tax, and 100% of group net assets.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period, and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified, including those which had the greatest
35
effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of
the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Key audit
matter
The cash flow
projections
which support
going concern
and
development
costs not yet
available for
use
for group and
parent and
parent
company
investment,
goodwill and
intercompany
balances
with
subsidiaries
Revenue
recognition
including
contract
liabilities
Description of risk
How the matter was addressed in the audit
The Group is loss-making
and has relied on equity
funding to provide working
capital in previous years.
Management have prepared
a budget and cash flow
forecast indicating that in
their view the group and
parent company can
continue to operate as a
going concern for at least
12 months from the date
the financial statements
are
approved. These forecasts
were also used to assess
whether the value of
development costs not yet
available for use were
impaired.
Cash flow projections are
inherently judgemental
and
subject to fluctuation with
expenditure requirements.
As
a result, these projections
were a key area of audit
focus.
Furthermore, the parent
company has significant
balances relating to
investments in subsidiaries
and receivables due from
group companies.
The group’s assessment of
carrying value requires
significant judgement in
particular regarding cash
flows, growth rates,
discount
rates and sensitivity
assumptions to derive a
value in use.
Revenue recognition
continues to be a key focus
for the group to meet
market expectations.
We challenged the assumptions used in the cash flow
forecasts for going concern as described in note 1.7 of
the group financial statements and in respect of the
impairment reviews as described in notes 5 and 6 of the
parent company financial statements.
The main procedures performed on the forecasts and
areas where we challenged management were as
follows:
•
testing the quality of management forecasting
by comparing cash flow forecasts for prior
periods to actual outcomes and investigating any
material variances to assess the reliability of
management forecasting;
testing the quality of management forecasting
by comparing cash flow forecasts for the current
period to post year end actual outcomes;
•
•
• discussion with management over the basis and
appropriateness of key assumptions used in the
cashflow forecasts;
verifying the consistency of forecasts used in the
impairment calculations with those used for
going concern assessment where appropriate;
reviewing management’s sensitivity calculations
to understand the impact of changing the key
assumptions on cashflows and value in use;
•
• performing our own further sensitivity
calculations to understand the impact of
changing the key assumptions and the effect on
cashflows and value in use;
• considering the value in use derived from
forecasts alongside valuation using market
capitalisation approach where appropriate in
assessing impairment; and
reviewing the disclosures around going concern
and impairments in the financial statements to
ensure they are consistent with the work
performed.
•
In performing our procedures, we used our internal
valuation specialists to assess the appropriateness of
the model and the discount rate and long term growth
rates applied.
As part of our procedures relating to revenue
recognition as described in note 2 of the group financial
statements the key procedures performed were:
•
reviewing transactions around the year end and
traced to supporting documentation to
36
•
determine if the sale was recorded in the
correct period;
tracing a sample of sales from customer order to
the nominal ledger, ensuring contract liability
postings were complete for these transactions;
• performing testing of contract liability balances
to ensure that revenue was being correctly
deferred; and
reviewing the revenue recognition policies
disclosed in the financial statements to
determine if these policies were in accordance
with IFRS15 and in line with the accounting
treatment adopted.
•
Capitalisation
of
development
costs and
impairment of
development
costs
The group has significant
intangible assets arising
from
the capitalisation of the
costs relating to products
in development.
For products in
development the main risk
is assessing the
ability to successfully
commercialise the
individual product
concerned to generate
revenues and returns from
the products
over its useful economic
life. This can be a highly
judgemental area.
Forecasts were also
produced by Management
as part of an impairment
review of the recoverable
amount of development
projects which are not yet
available for use.
As part of our procedures regarding the development
costs as described in note 13 of the group financial
statements, the key procedures performed were:
•
tracing a sample of project development costs
capitalised in the year to supporting
documentation ensuring they were valid capital
expenditure and the relevant capitalisation
criteria under IAS 38 were met;
• discussing a sample of development projects in
progress and completed at the year end with
management and individuals within the
development team where appropriate to
understand the future prospects of the projects
and considered whether any impairment was
required. Explanations received were checked
for consistency with our understanding of the
business and the wider market as well as
considering forecasts of future revenues and
returns for the individual projects and
impairment reviews for development costs not
yet available for use; and
reviewing the useful economic life of a sample
projects to determine if the useful economic life
is appropriate.
•
Our application of materiality
The materiality for the group financial statements as a whole (“group FS materiality”) was set at £45,100.
This has been determined with reference to the benchmark of the group’s revenue, which we consider to
be one of the principal considerations for members of the company in assessing the group’s
performance. Group FS materiality represents 2% of the group’s revenue as presented on the face of the
Consolidated Statement of Comprehensive Income.
The materiality for the parent company financial statements as a whole (“parent FS materiality”) was set
at £36,080. This has been determined with reference to the benchmark of the parent company’s net
assets as it exists only as a holding company for the group and carries on no trade in its own right. Parent
FS materiality represents approximately 1% of the parent company’s net assets as presented on the face of
the parent company balance sheet.
Performance materiality for the group financial statements was set at £36,080, being 80% of group FS
materiality, for purposes of assessing the risks of material misstatement and determining the nature,
37
timing and extent of further audit procedures. We have set it at this amount to reduce to an appropriately
low level the probability that the aggregate of uncorrected and undetected misstatements exceeds group
FS materiality. We judged this level to be appropriate based on our understanding of the group and its
financial statements, as updated by our risk assessment procedures and our expectation regarding current
period misstatements including considering experience from previous audits. It was set at 80% to reflect
the fact that few misstatements were expected in the current period and there is little estimation in the
financial statements.
Performance materiality for the parent company financial statements was set at £28,864, being 80% of parent
FS materiality. It was set at 80% to reflect the fact that few misstatements were expected in the current
period and there is little judgement or estimation in the parent company financial statements other than the
recoverability of the carrying value of investments in subsidiaries and intercompany balances with
subsidiaries as referred to in our key audit matters above.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group and parent company’s ability to continue to adopt
the going concern basis of accounting included:
• challenging the assumptions used in the detailed budgets and forecasts prepared by management for
the financial period ending 30 June 2023;
• considering historical trading performance both prior to and during the Covid-19 pandemic;
• comparing the forecast results to those actually achieved in the 2021 financial year and investigating
any material variances as required in order to assess the reliability of management forecasting;
• comparing the forecast results to those actually achieved in the 2022 financial period so far;
• reviewing bank statements to monitor the cash position of the group post year end, and obtaining an
understanding of significant expected cash outflows (such as capital expenditure) in the forthcoming
12-month period;
• considering the cash proceeds and financial headroom following the share subscription of £1.4m post
year end;
• considering the group’s funding position and requirements; and
• considering the sensitivity of the assumptions and re-assessing headroom after sensitivity.
As part of our evaluation of going concern, we have requested management to perform additional work
concerning sensitivity on their assumptions to assess the financial headroom in their models.
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the group and parent
company’s ability to continue as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in
the relevant sections of this report.
Other information
The other information comprises the information included in the Annual Report and Accounts, other than
the financial statements and our auditor’s report thereon. The directors are responsible for the other
information contained within Annual Report and Accounts. Our opinion on the financial statements does
not cover the other information and, except to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon. Our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements, or our knowledge obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are
38
required to determine whether this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their
environment obtained in the course of the audit, we have not identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and
returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 15, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and
fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed
below. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud.
We obtained a general understanding of the group’s legal and regulatory framework through enquiry of
management concerning: their understanding of relevant laws and regulations; the entity’s policies and
procedures regarding compliance; and how they identify, evaluate and account for litigation claims. We
also drew on our existing understanding of the group’s industry and regulation.
39
We understand that the group complies with the framework through:
• Outsourcing tax compliance to external experts.
• Outsourcing foreign payroll to external experts.
•
Subscribing to relevant updates from external experts and making changes to internal procedures
and controls as necessary.
• Ensuring certification under ISO 13485 (Quality Management System) and compliance with local
regulators for their products which is essential to be able to sell their products in the UK and
overseas.
In the context of the audit, we considered those laws and regulations: which determine the form and
content of the financial statements; which are central to the group’s ability to conduct its business; and
where failure to comply could result in material penalties. We identified the following laws and regulations
as being of significance in the context of the group:
• The Companies Act 2006, UK-adopted international accounting standards in respect of the
preparation and presentation of the group financial statements and FRS 101 in respect of the
preparation and presentation of the parent company financial statements.
• Compliance with ISO 13485 and regulators such as British Standards Institution “BSI” & U.S. Food
and Drug Administration “FDA”.
We performed the following specific procedures to gain evidence about compliance with the significant
laws and regulations identified above:
• Examined the results of any regulatory compliance audits and performed online searches of key
regulators to ensure adequate compliance certificates were held.
The senior statutory auditor led a discussion with senior members of the engagement team regarding the
susceptibility of the group’s financial statements to material misstatement, including how fraud might
occur. The areas identified in this discussion were:
• Manipulation of the financial statements, especially revenue, via fraudulent journal entries in
particular those affecting revenue recognition around the year end.
• Provisions including stock and trade debtor provisions as these are estimates by management.
• Estimates made by management regarding the useful economic life of capitalised development
costs and associated judgement regarding the viability and long-term recoverability of the carrying
value of these projects.
• Group’s status as AIM listed entity which creates an incentive for fraudulent financial reporting to
show favourable results to the market.
These areas were communicated to the other members of the engagement team not present at the
discussion.
The procedures we carried out to gain evidence in the above areas included:
• Challenging management regarding the assumptions used in the estimates and judgements
identified above and comparison to historical data and post-year-end data as appropriate;
Substantive testing around whether revenue was recorded in the correct period;
Substantive work on material areas affecting profits; and
•
•
• Testing journal entries, focusing particularly on postings to unexpected or unusual accounts and
journals outside the normal scope of the client business as well as journal entries affecting the
recognition of revenue around the year end.
A further description of our responsibilities is available on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
40
Use of our report
This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
parent company’s members those matters we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the parent company and the parent company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Julie Mutton
Senior Statutory Auditor, for and on behalf of
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
15-17 Cumberland Place
Southampton
Hampshire
SO15 2BG
Date: 6 April,2022
41
Consolidated statement of comprehensive income
For the year ended 31 December 2021
Note
3
4
24
9
4
10
7
6
7
Revenue
Cost of sales
Gross profit
Administrative expenses
Sales and distribution expenses
Research and Development, Quality and Regulatory
Impairment reversal on trade receivables
Exceptional costs
Total costs
Other operating income
Other gain
Operating loss
Finance costs
Loss before taxation
Tax credit on loss
Loss for the year
Other comprehensive expense
Items that may be reclassified to profit or loss:
Net translation differences on overseas subsidiaries
Other comprehensive expense for the year, net of tax
Total comprehensive loss for the year
Total comprehensive loss for the year attributable to:
Owners of the Parent
Non-controlling interests
2021
£’000
2,259
(684)
1,575
(1,585)
(957)
(207)
-
-
(2,749)
312
57
(805)
(173)
(978)
12
(966)
(2)
(2)
2020
£’000
2,398
(757)
1,641
(1,472)
(964)
(246)
11
(232)
(2,903)
469
171
(622)
(172)
(794)
9
(785)
(6)
(6)
(968)
(791)
(969)
1
(968)
(804)
13
(791)
Loss per share – basic and diluted
11
(0.17p)
(0.15p)
The notes on pages 47 to 80 form an integral part of these consolidated financial statements.
42
Consolidated balance sheet
As at 31 December 2021
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Financial assets at amortised cost
Total non-current assets
Current assets
Inventories
Trade receivables
Financial assets at amortised cost
Other current assets
Current income tax recoverable
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Borrowings
Trade and other payables
Total current liabilities
Non-current liabilities
Borrowings
Trade and other payables
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Capital redemption reserve
Other reserve
Translation reserve
Convertible loan note reserve
Accumulated losses
Equity attributable to owners of the Parent
Non-controlling interests
Total equity
Note
12
13
16
15
16
16
16
18
18
18
18
20
21
26
26
26
26
26
26
2021
£’000
264
3,135
157
3,556
796
455
15
91
69
413
1,839
5,395
(702)
(1,478)
(2,180)
(1,028)
(228)
(57)
(1,313)
(3,493)
1,902
5,849
33,502
17,476
573
133
82
2020
£’000
305
2,554
153
3,012
895
576
15
122
61
853
2,522
5,534
(159)
(1,416)
(1,575)
(993)
(274)
(51)
(1,318)
(2,893)
2,641
5,773
33,444
17,476
505
135
82
(55,588)
(54,648)
2,027
(125)
1,902
2,767
(126)
2,641
The notes on pages 47 to 80 form an integral part of these consolidated financial statements. The financial
statements on pages 42 to 46 were approved by the Board of Directors and authorised for issue on 6 April 2022
and were signed on its behalf by:
Nigel Keen
Chairman
Natalie Wettler
Group Finance Director
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T
Consolidated statement of cash flows
for the year ended 31 December 2021
Cash flows from operating activities
Loss before taxation
Adjustments for:
Net finance costs
Depreciation of property, plant and equipment
Amortisation of intangible assets
Write off of research and development projects not taken
forward
Modification gain on convertible loan note
Share-based payment expense
Other tax income
Effect of exchange rate fluctuations
Decrease in inventories
Decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
Net cash used in operations
Interest paid
Income taxes received
Net cash used in operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Capitalised development expenditure (net of grants)
Net cash used in investing activities
Cash flows from / (used in) financing activities
Issue of ordinary share capital
Expenses in connection with share issue
Net movement in invoice discount facility
Standby loan facility drawdown
Principal lease payments
Net cash generated from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Exchange loss on cash and cash equivalents
Cash and cash equivalents at end of the period
2021
£’000
(978)
173
74
40
-
-
95
(57)
(2)
(655)
89
148
191
6
(221)
(131)
61
(291)
(23)
(621)
(644)
-
-
43
500
(41)
502
(433)
853
(7)
413
2020
£’000
(794)
172
103
40
222
(119)
39
(52)
(6)
(395)
13
680
(303)
(11)
(16)
(132)
80
(68)
(6)
(165)
(171)
253
(3)
(23)
-
(37)
190
(49)
908
(6)
853
The notes on pages 47 to 80 form an integral part of these consolidated financial statements.
46
Notes to the consolidated financial statements
for the year ended 31 December 2021
Principal accounting policies
1.
Presented below are those accounting policies that relate to the financial statements as a whole and
include details of new accounting standards that are, or will be effective for 2022 or later years. To
facilitate the understanding of each note to the financial statements, those accounting policies that are
relevant to a particular category are presented within the relevant notes. These policies have been
consistently applied to all the years presented, unless otherwise stated.
1.1. General information
These financial statements are the consolidated financial statements of Deltex Medical Group plc, a
public company limited by shares registered in England and Wales, and its subsidiaries (‘the Group’).
Deltex Medical Group plc is listed on AIM of the London Stock Exchange. The address of the registered
office is Deltex Medical Group plc, Terminus Road, Chichester, PO19 8TX, registered number 03902895.
The Group is principally involved with the manufacture and sale of advanced haemodynamic monitoring
technologies.
1.2. Basis of reporting
The consolidated financial statements have been prepared in accordance with UK-adopted International
Accounting Standards. The consolidated financial statements have been prepared under the historical
cost convention and on a going concern basis as discussed in more detail under the ‘Basis of
Preparation’ section of this note.
These 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 2020.
There are no new and amended Standards and Interpretations adopted by the Group for the year ended
31 December 2021.
New and amended Standards and Interpretations issued but not effective for the financial year beginning
1 January 2021 include:
Amendment to IAS 1: ‘Classification of Liabilities as Current or Non-current’
Amendment to IAS 12 ‘Deferred tax related to assets and liabilities arising from a single transaction’
IAS 8: Definition of accounting estimates
IAS 1: Disclosure initiative – accounting policies
IAS 16: PPE: Proceeds before intended use
1.3. Basis of consolidation
The consolidated financial statements include the financial statements of the Parent Company and all of
its subsidiaries. All intra-group transactions, balances, income and expenses are eliminated on
consolidation. Consistent accounting policies have been adopted across the Group. Subsidiaries are all
entities over which the Group has control. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that control ceases. The Group applies
the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date. The Group recognises for any non-controlling interest in the acquiree on an acquisition-
by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the
recognised amounts of acquiree’s identifiable net assets.
47
Notes to the consolidated financial statements
for the year ended 31 December 2021
Costs related to acquisition, other than those associated with the issue of debt or equity securities that the
Group incurs in connection with a business combination, are expensed as incurred. If the contingent
consideration is classified as equity, it is not remeasured, and settlement is accounted for within equity.
Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or
loss.
1.4. Foreign currency translation
The functional and presentational currency for the Parent Company is UK pounds sterling. Group companies
use their local currency as their functional currency. Transactions denominated in currencies other than the
functional currency are recorded at the rates of exchange prevailing on the dates of the transactions.
At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are
re-translated at the rates prevailing on the balance sheet date, with any gains or losses being included in
the net profit or loss of the period.
On consolidation, the assets and liabilities of the Group’s overseas operations are translated at exchange
rates prevailing on the balance sheet date. Income and expense items are translated at the average
exchange rates for the period. Exchange differences arising, if any, are dealt with through the Group’s
reserves, until such a time as the subsidiary is sold whereupon the cumulative exchange differences
relating to the net investment in that foreign subsidiary are recognised as part of the profit or loss on
disposal in the Consolidated Statement of Comprehensive Income. However, cumulative exchange
differences arising prior to 1 January 2006 remain in equity as permitted by IFRS 1.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing rate. The Group has elected to treat goodwill and
fair value adjustments arising on acquisitions before the date of transition to IFRS as sterling denominated
assets and liabilities.
The following are the principal foreign exchange rates that have been used in the preparation of the
financial statements:
2021
2020
Average Rate
Closing rate
Average rate
Closing rate
Sterling/US Dollar
Sterling/Euro
Sterling/Canadian Dollar
1.38
1.16
1.72
1.35
1.19
1.71
1.29
1.13
1.73
1.37
1.12
1.74
Impairment of property, plant and equipment and intangible assets
1.5
At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment
and intangible assets to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to
determine the extent of any impairment loss. The recoverable amount is the higher of the asset’s value in
use and its fair value less costs to sell. Value in use is calculated using cash flow projections for the asset
(or Group of assets where cash flows are not identifiable for specific assets) discounted at the Group’s cost
of capital. If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its
carrying amount, the carrying amount of the asset (or cash generating unit) is reduced to its recoverable
amount. Non-financial assets other than goodwill which have suffered an impairment are reviewed for
possible reversal of impairment at each reporting date.
1.6 Use of judgements and estimates
In preparing these consolidated financial statements, management has had to make judgements and
estimates that affect the application of the Group’s accounting policies and the reported amounts of
48
Notes to the consolidated financial statements
for the year ended 31 December 2021
assets, liabilities, income and expenses. However, actual results may differ from these results.
Judgements
Research and development
Costs for research and development activities are only capitalised as intangible assets if the qualification
criteria are met. These criteria are met only when the technical as well as commercial feasibility can be
demonstrated and cost can be measured reliably. The amounts capitalised represent the Group’s
judgement of which costs have met these criteria. There is a risk that the intangible asset will not
generate the required future economic benefits and therefore could result in potential impairments.
Estimates
Information about estimation uncertainties at 31 December 2021 that could have a risk of adjustment to
the carrying amount of assets in the next financial year is considered in the following note:
Trade receivables
Notes 16 and 24 provide information on the measurement of expected credit losses in respect of trade
receivables, staff advances and other receivables.
1.7 Going concern
The Group meets its day-to-day working capital requirements through a combination of operational cash
flows, an invoice discounting facility and, if required, the raising of additional finance. During the Covid
pandemic the Group also made use of Salary Support Schemes provided by the UK and US
governments.
The Directors have reviewed detailed budgets and forecasts until 30 June 2023, which take into account,
among other things, the possible continued effects of Covid on the Group’s business. This review
indicates that the Group is expected to continue trading as a going concern based on projected net cash
flows derived from sales of the Group. In February 2022, the Group raised £1.4 million (gross) through a
share subscription which provided additional cash resources to the Group. In addition, the Group agreed
a 12 month extension to the standby loan facility which is now repayable on or before 31 December 2023.
The Directors consider that they have reasonable grounds to believe that the Group will have adequate
resources to continue in operational existence for the foreseeable future and it is therefore appropriate to
prepare the financial statements on the going concern basis.
2.
Revenue recognition
2.1 Accounting policy
Revenue arises predominantly from the sale of advanced haemodynamic monitoring equipment which
comprise monitors and consumable items such as single use probes and other ancillary items such as
cables, roll stands etc. Revenue is also earned from after sales maintenance contracts.
In determining whether to recognise revenue, the Group applies the following 5-step process:
1.
2.
3.
4.
5.
identifying the contract with the customer;
identifying the performance obligations set out in the contract;
determining the overall transaction price;
allocating the transaction price to the performance obligations; and
recognising revenue either when or as performance obligation(s) are satisfied.
The Group recognises contract liabilities for consideration received in advance of unsatisfied performance
49
Notes to the consolidated financial statements
for the year ended 31 December 2021
obligations and reports these amounts as other liabilities in the Consolidated Balance Sheet. Typically,
these amounts relate to consideration received in advance for after-sales maintenance contracts or,
occasionally, consideration received from new customers in settlement of pro-forma sales invoices.
Monitor and consumable revenues
Revenue on monitors and consumables is recognised when the Group transfers the control of the assets
to the customer. For customers in both the UK and the USA, this is when the goods are accepted for
delivery at the customer’s specified delivery address. For our network of independent distributors which
form our ‘International’ business stream, the transfer of control occurs on despatch of the goods in
accordance with the Group’s distributor agreements.
Preventative planned maintenance (PPM) agreements
The Group enters into PPM agreements with customers for the provision of an annual service for their
monitors. These agreements can range in length from 1 to 10 years and provide for an annual service for
each monitor specified by the serial number on the PPM agreement. Revenue is recognised when the
service has been completed and the monitor is ready for use by the customer. As noted above,
consideration received from customers in advance of completing the service of their monitors is
recognised as other liabilities in the Consolidated balance sheet.
3.
Segmental analysis
3.1 Accounting policy
Assessment of performance and the allocation of resources are made on the basis of results derived from
the sale of probes, monitors and other products analysed by territory, of which revenues and gross
margins are regularly reported to the Group’s Chief Executive Officer, who has been identified as the
Chief Operating Decision Maker (CODM). The CODM also monitors a profit measure described internally
as ‘adjusted earnings before interest, tax, depreciation and amortisation, share-based payments, non-
executive directors’ fees, as well as any exceptional items’ (Adjusted EBITDA). However, this measure is
reported at a Group level rather than an operating segment which is based on the nature of the goods
provided rather than the geographical market in which they are sold.
3.2 Note
The operating segment results for 2021 are:
Revenues
Adjusted gross profit2 3
Sales and marketing costs3
Administration costs3
R&D costs3
Quality and regulation
costs3
Adjusted EBITDA
Probes1
Monitors
Other
Unallocated
£’000
1,911
1,448
£’000
202
171
-
-
-
-
-
-
-
-
-
-
£’000
£’000
146
102
-
-
-
-
-
-
-
(889)
(1,180)
(8)
(148)
-
Total
£’000
2,259
1,721
(889)
(1,180)
(8)
(148)
(504)
1. Managed care service revenue is categorised as probe revenue
2. Gross profit excluding the depreciation charge relating to machines loaned to customers and production equipment
3. Other operating income is allocated within the corresponding expense categories
50
Notes to the consolidated financial statements
for the year ended 31 December 2021
The operating segment results for 2020 were:
Revenues
Adjusted gross profit2 3
Sales and marketing costs3
Administration costs3
R&D costs3
Quality and regulation
costs3
Adjusted EBITDA
Probes1
Monitors
Other
Unallocated
£’000
2,113
1,585
£’000
161
136
£’000
124
106
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
£’000
-
-
(942)
(903)
(23)
(167)
-
Total
£’000
2,398
1,827
(942)
(903)
(23)
(167)
(208)
1. Managed care service revenue is categorised as probe revenue
2. Gross profit excluding the depreciation charge relating to machines loaned to customers and production equipment
3. Other operating income is allocated within the corresponding expense categories
The reconciliation of the profit measure used by the Group’s CODM to the result reported in the Group’s
consolidated SOCI is set out below:
Adjusted EBITDA
Non-cash items:
Depreciation of property, plant and equipment
Amortisation of development costs
Write off of research and development projects not taken forward
Non-executive directors’ fees and employer’s NIC
Share-based payment expenses
Change in accumulated absence cost liability
Net bonus accrual and staff advances movement
Gain on convertible loan note
Cash item:
Other tax income
Operating loss
Finance costs
Loss before tax
Tax credit on loss
Loss for the year
2021
£’000
(504)
(74)
(40)
-
(138)
(95)
(11)
-
-
57
(301)
(805)
(173)
(978)
12
(966)
2020
£’000
(208)
(103)
(40)
(222)
(172)
(39)
1
(10)
119
52
(414)
(622)
(172)
(794)
9
(785)
51
Notes to the consolidated financial statements
for the year ended 31 December 2021
The following table provides an analysis of the Group’s sales by revenue stream and markets. This
information is regularly provided to the Group’s CODM:
For the year ended 31 December 2021
Direct markets
Indirect markets
Probes
Monitors
Other
Probes
Monitors
Other
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
UK
USA
France
Scandinavia
South Korea
Portugal
Other countries
524
561
-
-
-
-
10
1,095
60
55
-
-
-
-
-
86
47
-
-
-
-
-
115
133
-
-
489
105
134
35
53
816
-
-
29
-
-
-
58
87
-
-
8
2
2
-
1
670
663
526
107
136
35
122
13
2,259
For the year ended 31 December 2020
Direct markets
Indirect markets
Probes
Monitors
Other
Probes
Monitors
Other
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
UK
USA
France
Scandinavia
South Korea
Portugal
Other countries
652
858
-
-
-
-
15
1,525
102
16
-
-
-
-
32
150
83
26
-
-
-
-
-
109
-
-
170
95
159
86
78
588
-
-
-
-
-
-
11
11
-
-
10
2
1
-
2
837
900
180
97
160
86
138
15
2,398
The Group’s revenue disaggregated between the sale of goods and the provision of services is set out
below. All revenues from the sale of goods are recognised at a point in time; maintenance income is
recognised over time.
Sale of goods
Maintenance income
2021
£’000
2,192
67
2,259
2020
£’000
2,338
60
2,398
52
Notes to the consolidated financial statements
for the year ended 31 December 2021
The following table provides information about trade receivables and contract liabilities from contracts with
customers. There were no contract assets at either 31 December 2021 or 31 December 2020.
Trade receivables which are in ‘Trade and other receivables’
Contract liabilities (Note 18.3)
31 December
2021
31 December
2020
£’000
455
(57)
£’000
576
(58)
The following aggregated amounts of transaction prices relate to the performance obligations from existing
contracts that are unsatisfied or partially unsatisfied as at 31 December 2021:
Revenue expected to be recognised
2022
£’000
36
2023
£’000
7
2024
£’000
14
Total
£’000
57
Revenue recognised in 2021 which was included in contract liabilities at 31 December 2020 amounted to
£54,000. Revenue recognised in 2020 included in contract liabilities at 31 December 2019 amounted to
£46,000.
4.
Expenses
4.1 Expenses by nature
Changes in inventories and work in progress
Raw materials and consumables used
Employee benefit costs
Other employee costs
Non-executive directors’ fees
Depreciation of property, plant and equipment
Amortisation of development costs
Write off of research and development projects not taken forward
Short-term leases
Net foreign exchange loss/(gain)
Audit and accountancy costs
Meeting and other public relations costs
Professional and consultancy costs
Gain on convertible loan note
Other income
Other
2021
£’000
(99)
548
2,145
153
138
74
40
-
18
14
61
23
312
-
(57)
6
3,376
2020
£’000
(20)
380
2,289
159
172
103
40
222
20
(10)
70
(54)
199
(119)
(52)
90
3,489
53
Notes to the consolidated financial statements
for the year ended 31 December 2021
4.2 Auditors’ remuneration
During the year, the Group (including its overseas subsidiaries) obtained the following services from the
Group’s auditors at the cost detailed below.
Nexia Smith & Williamson
Fees payable to the Group’s auditors for the audit of Parent Company and
consolidated financial statements
Fees payable to the Group’s auditors for other services:
The audit of the Group’s subsidiaries
Tax compliance services
2021
£’000
10
35
-
45
2020
£’000
10
33
7
50
5.
Employees
5.1 Accounting policy
Short-term obligations
Liabilities for wages and salaries, including annual leave, that are expected to be settled wholly within twelve
months after the end of the period in which the employees render the related service are recognised in
respect of employee services up to the end of the financial reporting period. They are measured at the
amounts expected to be paid when the liabilities are settled. The liabilities are categorised as current
liabilities within trade and other payables in the Consolidated Balance Sheet.
Post-employment obligations
The Group operates two defined contribution schemes for its employees. One scheme is for UK based
employees and the other is for US based employees.
For defined contribution schemes, the Group pays contributions to privately administered pension schemes
on a mandatory, contractual or discretionary basis. The Group has no further payment obligations once the
contributions have been paid. The contributions are recognised as an employee benefit expense when they
are due.
5.2 Employee benefit expense
Wages and salaries
Social security costs
Pension costs – defined contribution plans
Less amounts capitalised as research and development expenses
2021
£’000
2,051
230
58
2,339
(317)
2,022
Accumulated absence liability movement
11
Accrued bonuses for the year
Accrued bonuses and staff advances from prior periods released
Share-based payment expense
17
-
95
2,145
2020
£’000
2,162
256
62
2,480
(309)
2,171
(1)
20
60
39
2,289
54
Notes to the consolidated financial statements
for the year ended 31 December 2021
The pensions cost expense of £58,000 (2020: £62,000) represents the aggregate amount paid and
payable into defined contribution pension schemes on behalf of employees.
5.3 Average monthly number of people employed
Number of employees
Average monthly number of people (including executive directors) employed:
Sales and marketing
Production
Office and management
Quality and regulatory
Research and development
Total monthly average headcount
5.4 Directors’ emoluments
Aggregate emoluments
Sums paid to third parties for directors’ services
Contributions to directors’ personal pension schemes
Contributions to the Group’s defined contribution scheme
2021
Number
2020
Number
46
11
16
10
3
6
46
2021
£’000
398
33
-
10
441
50
12
17
11
4
6
50
2020
£’000
369
33
1
12
415
Sums paid to third parties for the services of a director comprise:
Third party payee Director
2021
£’000
2020
£’000
Imperialise Limited
Nigel Keen
33 33
5.5 Highest paid director
Aggregate emoluments
Contributions to director’s personal pension scheme
2021
£’000
2020
£’000
207
8
215
207
12
219
55
Notes to the consolidated financial statements
for the year ended 31 December 2021
6.
Finance costs
Invoice discount facility
Convertible loan note
Standby loan facility
Lease liability finance expense
Other interest
7.
Tax credit on loss
7.1 Accounting policy
2021
£’000
2
124
4
34
9
173
2020
£’000
1
128
-
43
-
172
The tax credit represents the sum of current tax and deferred tax. Tax is recognised in profit or loss in the
Consolidated Statement of Comprehensive Income (SOCI) except to the extent that it relates to items
recognised in equity, in which case it is recognised in other comprehensive income in the Consolidated SOCI.
The current tax is based on taxable results for the year calculated using tax rates that have been enacted or
substantively enacted by the balance sheet date.
7.2 Note
Current tax
Research and development tax credit
Adjustment in respect of prior years
Total current tax
Total deferred tax
Total tax credit on loss
2021
£’000
2020
£’000
(12)
-
(12)
-
(12)
(9)
-
(9)
-
(9)
In 2021, the other gain includes an amount of £57,000 (2020: £52,000) comprising tax income arising from
the Research and Development Expenditure Credit scheme which is accounted for as a government grant.
The taxable credit on the loss for the year is lower (2020: lower) than the effective rate of corporation tax in
the UK of 19% (2020: 19%) applied to the Group’s loss on ordinary activities before tax. The differences
are explained below:
Loss on ordinary activities before tax
Loss on ordinary activities multiplied by the standard rate in the UK of 19% (2020: 19%)
Effects of:
Non-taxable income
Losses carried forward for which no deferred tax asset has been recognised
Tax rate of difference on receivable research and development tax credit
Difference on tax rate on payable research and development tax credit
Rate change adjustment
Non-deductible expenses
Total tax credit on loss
2021
£’000
(978)
(186)
(121)
269
5
3
-
18
2020
£’000
(794)
(151)
(101)
240
(7)
3
-
7
(12)
(9)
56
Notes to the consolidated financial statements
for the year ended 31 December 2021
8.
Deferred tax
8.1 Accounting policy
Deferred tax is provided using the balance sheet date liability method on temporary differences between
the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases
used in the computation of taxable profit.
In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial recognition (other than in a business
combination) of other assets or liabilities in a transaction that affects neither the tax profit nor the
accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the
extent that it is not probable that sufficient taxable profits will be available to allow all or part of the asset to
be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
settled or the asset is realised. Tax assets and liabilities are offset when there is a legally enforceable right
to offset current tax assets against current liabilities and when the deferred income taxes relate to the same
fiscal authority.
8.2 Note
At 31 December 2021, the Group had accumulated trading losses carried forward which are available to
offset against future profits of £39,333,000 (2020: £34,286,000) resulting in an unrecognised potential
deferred tax asset of £9,397,000 (2020: £6,854,000).
Loss relief is available indefinitely in the UK and for 20 years in the USA. Trading losses in the USA do not
begin to expire until 2028. The movement in deferred income tax assets and liabilities during the year,
without taking into consideration the offsetting of balances within the same jurisdiction, is set out below:
Deferred tax liabilities
Development costs
Accelerated capital allowances
At 1 January
Charged to profit or loss in the Consolidated SOCI
At 31 December
Deferred tax asset on losses
At 1 January
Credited to profit or loss in the Consolidated SOCI
At 31 December
57
2021
£’000
938
65
1,003
2021
£’000
644
359
1,003
2021
£’000
(644)
(359)
2020
£’000
588
56
644
2020
£’000
404
240
644
2020
£’000
(404)
(240)
(1,003)
(644)
Notes to the consolidated financial statements
for the year ended 31 December 2021
Changes to the UK corporation tax rates were substantively enacted as part of the Finance Act 2021.
These include increases to the UK corporation tax rate from 19% to 25% effective 1 April 2023. Deferred
taxes at the balance sheet date have been measured using this substantively enacted rate.
9.
Exceptional items
9.1 Accounting policy
As permitted by IAS1, ‘Presentation of Financial Statements’, certain items are presented separately in the
Consolidated SOCI as exceptional items where, in the judgement of the directors, they need to be
presented separately by virtue of their nature, size or incidence in order to obtain a clear and consistent
presentation of the Group’s underlying business performance.
9.2 Note
Exceptional items comprised:
Net bonus accrual and staff advances movement
Write off of research and development projects not taken forward
10. Other operating income
10.1 Accounting policy
2021
£’000
-
-
-
2020
£’000
10
222
232
Government grants are accounted for under the accruals model as permitted by IAS 20, ‘Accounting for
Government Grants and Disclosure of Government Assistance’. Grants related to income are recognised in
the Statement of Comprehensive Income under other operating income in the same period as the related
expenditure.
10.2 Note
Other operating income comprised:
UK Job Retention Scheme
US Payment Protection Plan
Other operating income – 3rd party termination agreement
11
Basic and diluted loss per share
2021
£’000
206
106
-
312
2020
£’000
214
138
117
469
The loss per share calculation is based on the loss of £967,000 and the weighted average number of
shares in issue of 580,712,339. For 2020, the loss per share calculation is based on the loss of £798,000
and the weighted average number of shares in issue of 526,448,659. While the Group is loss-making, the
diluted loss per share and the loss per share are the same.
58
Notes to the consolidated financial statements
for the year ended 31 December 2021
12
Property, plant and equipment
12.1 Accounting policy
Property, plant and equipment is stated at cost, net of depreciation and any provision for impairment. The
cost of purchased assets includes the original purchase price together with any incidental expenses of
acquisition.
Depreciation is calculated to write down property, plant and equipment to their estimated realisable
values, by equal annual instalments over their expected useful economic lives at the following periods:
▪
▪
▪
▪
▪
Leasehold property and improvements: five years or to the end of the lease term, if shorter
Right of use asset: over the period of the lease term
Plant and equipment: three to five years
Machines loaned to customers: five years
Fixtures and fittings: three to five years
Estimated residual values and useful lives are reviewed annually and adjusted where necessary.
Machines loaned to customers
In order to support key accounts and increased probe usage, monitors may be placed on long-term loan
with customers. Where these monitors are expected to be placed for a period longer than six months, the
monitors are transferred at book value to property, plant and equipment and depreciated over five years.
Where monitors are placed on a short-term loan of less than six months and it is expected that the monitors
will be sold thereafter, the monitors are included within inventories.
Other than managed care contracts, the Group has no contractual obligation to provide loan monitors for a
specified period of time. The Group monitors probe usage by customers that have loan monitors and
where, for various reasons, probe volumes do not support the loaned monitor estate the under-utilised
monitors are removed and held ready to meet future demand for monitors by other customers.
59
Notes to the consolidated financial statements
for the year ended 31 December 2021
12.2 Note
Depreciation has been included in the following expenses in profit or loss in the Consolidated SOCI:
Cost of sales
Administration expenses
Research and development expenses
2021
£’000
22
52
-
74
2020
£’000
49
51
3
103
60
Leasehold propertyRight of use Plant andFixtures and Machines loanedand improvementsassetequipmentfittingsto customersTotal£'000£'000£'000£'000£'000£'000CostAt 1 January 2020180 427 478 2 1,570 2,657 Exchange difference - -(2) -(51)(53)Additions - -3 -3 6 Transferred from inventory - - - -7 7 At 31 December 2020180 427 479 2 1,529 2,617 Exchange difference - -- - 10 10 Additions - -23 - - 23 Transferred from inventory - -- - 10 10 At 31 December 2021180 427 502 2 1,549 2,660 Accumulated depreciationAt 1 January 2020176 107 465 2 1,512 2,262 Exchange difference - -(2)- (51)(53)Depreciation charge2 48 13 - 40 103 At 31 December 2020178 155 476 2 1,501 2,312 Exchange difference -- - - 10 10 Depreciation charge2 48 7 - 17 74 At 31 December 2021180 203 483 2 1,528 2,396 Net book valueAt 1 January 20204 320 13 - 58 395 At 31 December 20202 272 3 - 28 305 At 31 December 2021- 224 19 - 21 264
Notes to the consolidated financial statements
for the year ended 31 December 2021
13
Intangible assets
13.1 Accounting policy
Expenditure on research and development is charged to profit or loss in the Consolidated SOCI in the year
in which it is incurred. The exception to this being expenditure incurred in respect of the development of
new products where the outcome of those projects is assessed as being reasonably certain for viability and
technical feasibility and the costs incurred can be reliably measured. Such expenditure is capitalised and
amortised over the estimated period of sale for each product, commencing in the year that sales of the
product are first made. The Useful Economic Life (UEL) is assessed annually by the directors to reflect the
pattern of benefits expected to flow from the intangible asset. As such, the amortisation period relates to a
specific period to reflect the benefits, being between 6 and 10 years. The carrying amounts of intangible
assets have been reviewed at the balance sheet date and the directors consider that there is no indication
that those assets have suffered an impairment loss.
Government grants are received for innovative research and development projects. The grants are
recognised when there is reasonable assurance that the conditions of the grant will be complied with and
that the grants will be received. Government grants are offset against the development costs to which they
relate to. During the year to 31 December 2021, £77,000 (2020: £464,000) was recognised from
government grants.
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill
might be impaired. Goodwill represents the goodwill that arose in 2013 on the acquisition of the trade and
assets of Deltex Medical Canada Limited. The directors have tested goodwill for impairment based on the
profitability and value in use, and consider the balance to be recoverable.
13.2 Note
Cost
At 1 January 2020
Amounts written off
Additions
At 31 December 2020
Additions
At 31 December 2021
Accumulated amortisation
At 1 January 2020
Amounts written off
Amortisation expense
At 31 December 2020
Amounts written off
Amortisation expense
At 31 December 2021
Net book value
At 1 January 2020
At 31 December 2020
At 31 December 2021
Development
costs
£’000
Goodwill
£’000
Total
£’000
3,770
(222)
165
3,713
621
4,334
1,185
-
40
1,225
-
40
1,265
2,585
2,488
3,069
61
66
-
-
66
-
66
-
-
-
-
-
-
-
66
66
66
3,836
(222)
165
3,779
621
4,400
1,185
-
40
1,225
-
40
1,265
2,651
2,554
3,135
Notes to the consolidated financial statements
for the year ended 31 December 2021
Amortisation expense of £40,000 (2020: £40,000) has been categorised as research and development
expenditure in profit or loss in the Consolidated SOCI.
Included within development costs are costs amounting to £2,273,000 (2020: £1,707,000) relating to the
Group’s new monitor development project. This amount has not been amortised as the project has not yet
been completed. The Group also has an amount of £124,000 net book value (2020: £155,000) relating to
the development of its high-definition impedance cardiography product which became available for sale in
May 2017 and has been amortised from that date.
Other individually material projects, all of which have not been amortised as the projects are still in
progress, are:
Project description
Suprasternal Doppler Probe
TrueVue Velocity Pressure Loops
2021
£’000
333
216
2020
£’000
308
215
The directors have carried out impairment reviews on the development projects which are still in progress
as required by IAS 36 in respect of recoverable amounts and no impairment has been noted.
14 Subsidiary undertakings
Details of the Group’s subsidiary undertakings are set out below. In all cases, the direct holding is 100% of
the ordinary shares unless otherwise stated:
Name
Country of
incorporation
and place of
business
Deltex Medical Limited
Deltex Medical, SC, Inc USA
UK
Spain
Deltex Medical Espana
SL
Deltex Medical Canada Canada
Limited
Deltex Medical
Holdings Inc
USA
Nature of trading activities
Manufacture and marketing of medical devices
Marketing and sales of medical devices in the
USA
Marketing and sales of medical devices in
Spain
Marketing and sales of medical devices in
Canada
Dormant
Deltex Inc
Deltex Medical Inc
USA
USA
Dormant
Dormant
The registered addresses of the Group’s subsidiary undertakings are:
Proportion
of ordinary
shares
directly
held by the
parent
%
Proportion
of shares
held by
non-
controlling
interests
%
100
100
100
51
100
100
100
-
-
-
49
-
-
-
Subsidiary undertaking
Deltex Medical Limited
Deltex Medical, SC, Inc
Registered Address
Terminus Road, Chichester, United Kingdom PO19 8TX
330 East Coffee St., Greenville, South Carolina, USA
Deltex Medical Holdings Inc
330 East Coffee St., Greenville, South Carolina, USA
Deltex Inc
Deltex Medical Inc
330 East Coffee St., Greenville, South Carolina, USA
330 East Coffee St., Greenville, South Carolina, USA
Deltex Medical Espana SL
C/ del Mirador, 3A, 17250 Playa De Aro, Girona, Spain
Deltex Medical Canada Limited
Baine Johnston Centre, 10 Fort William Place, St John’s NL A1C 5W4, Canada
62
Notes to the consolidated financial statements
for the year ended 31 December 2021
Deltex Medical Canada Limited reported revenue of £7,000 (2020: £45,000), a profit of £1,000 (2020:
£27,000) and net liabilities of £291,000 (2020: £287,000).
15
Inventories
15.1 Accounting policy
Inventories, including work in progress and finished goods, are stated at the lower of cost and net realisable
value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that
have been incurred in bringing the inventories to their present location and condition. Labour and overheads
are allocated on the basis of normal operating capacity using standard rates. The standard labour and
overhead rate are reviewed at each year end. Cost is calculated using the first in, first out basis.
Net realisable value represents the estimated selling price less all estimated costs of completion and costs to
be incurred in marketing, selling and distribution.
Provision is made for obsolete, slow-moving or defective items where appropriate.
15.2 Note
Raw materials and consumables
Work in progress
Finished goods
2021
£’000
217
24
555
796
2020
£’000
289
-
606
895
There is a specific provision for slow-moving inventory of £21,000 (2020: £nil), which have been categorised
as finished goods.
16
Trade and other receivables
16.1 Accounting policy
Trade receivables, which are the only financial assets at amortised cost, are non-interest bearing and
generally have a 30 day term for sales made in the UK and the USA, and a 60 day term for sales made to
other overseas customers. Due to their short maturities, the carrying amount of trade and other receivables
is a reasonable approximation of their fair value.
The carrying amount of trade receivables includes receivables which are subject to a secured invoice
discounting arrangement. Under this arrangement, the Group has transferred the relevant receivables to the
invoice discounting organisation in exchange for cash and is prohibited from selling or pledging the
receivables. However, the Group has retained late payment and credit risk. In the light of this, the Group
continues to recognise the transferred assets in their entirety in its balance sheet.
The Group classifies its other financial assets at amortised cost. Based on prior experience and an
assessment of the current economic environment, the Group do not consider an impairment provision is
required against the financial assets at amortised cost and consider that the carrying amount of these is a
reasonable approximation of their fair value.
As required by IFRS 9, the Group applies the simplified approach to measuring impairment losses which
uses lifetime expected loss allowance for all trade receivables and contract assets.
63
Notes to the consolidated financial statements
for the year ended 31 December 2021
16.2. Note
Trade receivables
Trade receivables
Less loss allowance
Financial assets at amortised cost
Staff advances
Other receivables
2021
£’000
455
2020
£’000
576
-
-
455
576
2021
2020
Current Non-current
Current
Non-current
£’000
£’000
£’000
£’000
15
-
15
-
157
157
15
-
15
-
153
153
Other receivables generally arise from transactions outside the normal operating activities of the Group.
The amount outstanding relates to a trade receivable due from the non-controlling interest in the Group’s
Canadian subsidiary which is repayable on demand. However, the amount outstanding is expected to be
recovered within the next five to ten years depending on the amount of cash generated from sales made in
the Canadian market and has, therefore, been classified as a non-current asset.
Other current assets
Sundry debtors
Prepayments
17
Cash and cash equivalents
17.1 Accounting policy
2021
£’000
3
88
91
2020
£’000
85
37
122
For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and deposits
held at call with financial institutions.
17.2 Note
Cash at bank
18
Financial liabilities
18.1 Accounting policy
The Group’s financial liabilities include borrowings, trade payables and other payables.
64
2021
£’000
413
2020
£’000
853
Notes to the consolidated financial statements
for the year ended 31 December 2021
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and
the redemption value is recognised in profit or loss in the Consolidated SOCI over the period of the
borrowing using the effective interest method.
Compound financial instruments issued by the Group comprise convertible loan notes that can be converted
to share capital at the option of the holder, and the number of shares to be issued does not vary with
changes in their fair value. The liability component of a compound financial instrument is recognised initially
at the fair value of a similar financial liability that does not have an equity conversion feature.
The equity component is recognised initially as the difference between the fair value of the compound
financial instrument as a whole and the fair value of the financial liability component. Any directly attributable
transaction costs are allocated to the financial liability and equity components in proportion to their initial
carrying amounts. Subsequent to initial recognition, the financial liability component is measured at
amortised cost using the effective interest method. The equity component of a compound financial
instrument is not re-measured subsequent to initial recognition except on conversion or expiry.
Where a non-substantial modification of a financial liability occurs, and the financial liability is not
derecognised, the Group recalculates the amortised cost of the modified financial liability by discounting the
modified contractual cash flows using the original effective interest rate and recognises any gain or loss in
other gain or other costs in profit or loss in the Consolidated SOCI.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of the financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs in the
Consolidated SOCI.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the balance sheet date.
Trade payables and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the
financial year which are unpaid. The amounts are unsecured and are usually paid within the agreed credit
terms of the relevant party concerned. Trade payables and other payables are presented as current liabilities
unless payment is not due within 12 months after the end of the reporting period. They are recognised
initially at their fair value and subsequently at amortised cost using the effective interest method.
18.2 Note
Borrowings
Invoice discounting facility
Standby loan facility
Convertible loan note
2021
2020
Current
Non-current
Current
Non-current
£’000
£’000
202
500
-
702
-
-
1,028
1,028
£’000
159
-
-
159
£’000
-
-
993
993
65
Notes to the consolidated financial statements
for the year ended 31 December 2021
Invoice discounting facility
The amount shown represents the cash drawn down under an invoice discounting facility; There was £nil
undrawn amounts at the end of the year (2020: £nil). The amount outstanding under this facility is secured
by way of a fixed charge over the Group’s UK, USA and a proportion of the international trade receivables.
Amounts drawn down under the facility are repayable from the end of the month of invoice.
This is an ongoing facility and is separated into three accounts being Sterling, US$ and Euro currencies.
The facility is subject to one month’s notice (2020: one month’s notice) on either side and is not subject to
an annual review.
Convertible loan note
The maturity date of the convertible loan notes is February 2024, at a conversion price of 4p per share.
The convertible loan note recognised in the Consolidated Balance Sheet is calculated as:
Carrying amount at 1 January 2021
Interest expense
Interest paid
Carrying amount at 31 December 2021
Financial
liability
£’000
Equity
component
£’000
993
123
(88)
1,028
82
-
-
82
Total
£’000
1,075
123
(88)
1,110
The directors consider that the coupon payable of 8% on the convertible loan note continues to be at a
market rate of interest and, therefore, the carrying amount approximates to its fair value. The effective rate of
interest is 13.14% (2020: 13.14%).
Standby loan facility
In September 2021, a standby loan facility provided by Imperialise Limited, a company controlled by Nigel
Keen, was put in place for £500,000. The interest rate on the facility is 8% per annum, and the facility is
unsecured. In February 2022, the standby loan facility maturity was extended by 12 months to 31 December
2023.
Borrowings in foreign currencies
The carrying amounts of the Group invoice discount facility borrowings are denominated in different
currencies and are subject to differing average effective interest rates.
Sterling
Euro
US Dollar
2021
2020
Rate
%
2.91
2.75
4.30
Amount
£’000
60
104
38
202
Rate
%
3.17
2.75
4.93
Amount
£’000
47
80
32
159
All other of the Group’s borrowings are at variable rates of interest other than the convertible loan note and
standby loan facility as disclosed above.
66
Notes to the consolidated financial statements
for the year ended 31 December 2021
18.3. Trade and other payables
Trade payables
Other payables
Social security and other taxes
Lease obligations
Contract liabilities
Employee short-term benefits
Accrued expenses
2021
2020
Current
Non-current
Current
Non-current
£’000
£’000
£’000
£’000
298
259
169
46
57
41
608
1,478
-
-
-
228
-
-
-
228
201
249
141
41
58
30
696
1,416
-
-
-
274
-
-
-
274
Included within other payables is an amount of £253,000 (2020: £249,000) which is payable to the non-
controlling interest in the Group’s Canadian Subsidiary. This amount is expected to be settled in full over
the next 5 – 10 years depending on the amount of cash generated from sales made in the Canadian
market. However, as the amount is repayable on demand it has been categorised as a current liability.
The directors consider that the carrying amount of trade payables and other payables approximates to their
fair value.
19
Leases
19.1 Accounting policy
At the inception of a contract, the Group assesses whether the contract is, or contains a lease. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased
asset is available for use by the Group. Each lease payment is allocated between the liability and finance
cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic
rate of interest on the remaining balance of the liability for each period. The right-of use asset is
depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
•
• variable lease payments that are based on an index or a rate;
• amounts expected to be payable by the lessee under residual value guarantees;
•
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
option.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be
determined, or the Group’s incremental borrowing rate.
67
Notes to the consolidated financial statements
for the year ended 31 December 2021
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs.
Short-term leases
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of
machinery that have a lease term of 12 months or less and leases of low-value assets (being less than
£5,000), including short-term office space. The Group recognises the lease payments associated with
these leases as an expense on a straight-line basis over the lease term.
19.2 Note
Included within Property, plant and equipment is the net book amount of £224,000 (2020: £272,000)
relating to the right-of-use asset arising from the lease over the Group’s head office and factory in
Chichester. Included within administration expenses in profit or loss in the Consolidated SOCI is an amount
of £48,000 (2020: £48,000) relating to the depreciation expense of this asset and included within finance
costs is an amount of £34,000 (2020: £43,000) relating to the finance charge on the related lease
obligation. Included within administration expenses in profit or loss in the Consolidated SOCI is an amount
of £18,000 (2020: £20,000) relating to short term leases.
Included within trade and other payables in the Consolidated Balance sheet are current lease obligations
amounting to £46,000 (2020: £41,000) and non-current lease obligations amounting to £228,000 (2020:
£274,000). The non-current lease obligations are all due in 2 to 5 years.
The total cash outflow for leases in the period was £75,000 (2020: £95,000).
The table below shows the maturity analysis of the lease obligation using contractual undiscounted cash
flows:
Within 1 year
Within 2 to 4 years
More than 5 years
20
Provision for liabilities
20.1 Accounting policy
2021
£’000
75
281
-
356
2020
£’000
75
300
56
431
Provisions are recognised when the Group has a present legal or constructive obligation in respect of a
past event and it is probable that settlement will be required of an amount that can be reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the obligation.
The increase in the provision due to passage of time is recognised as an interest expense in profit or loss
in the Consolidated SOCI.
68
Notes to the consolidated financial statements
for the year ended 31 December 2021
20.2 Note
At 1 January 2020
Unwinding of discounting
At 1 January 2021
Unwinding of discounting
At 31 December 2021
Dilapidation
provision
£’000
46
5
51
6
57
Dilapidation provision
Under the terms of the operating leases over land and buildings, predominantly in the UK, the Group has
an obligation to return the property in a specified condition at the end of the lease. As the unexpired lease
term is more than one year, the provision has been classified as a non-current liability. It is expected that
the provision will be utilised within the next 10 years. The dilapidation provision has been discounted and
the unwinding of the discounting is on an annual basis.
21
Share capital and share premium
21.1 Accounting policy
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
the exercise of share options are shown in equity as a deduction, net of tax, from the proceeds.
21.2 Note
At 1 January 2021 and 31 December 2021, the authorised share capital of the Company comprised
6,568,546,210 ordinary shares with a nominal value of 1 penny each.
The movement in the Company’s issued share capital is set out below:
At 1 January 2020
Share issues:
21 December 2020
Share issue expenses
21 December 2020
At 31 December 2020
Share issues:
15 July 2021
22 July 2021
Number of
shares
(thousands)
Ordinary
shares
£’000
Share
premium
£’000
Total
£’000
524,869
5,249
33,230
38,479
52,422
524
217
741
-
-
(3)
(3)
577,291
5,773
33,444
39,217
6,282
63
47
110
1,371
13
11
24
At 31 December 2021
584,944
5,849
33,502
39,351
Net proceeds from the issue of shares totalled £134,000 (2020: £738,000), after expenses of £nil (2020:
£3,000). Non-cash proceeds from the issue of shares to clear historical equity settled director fees totalled
£134,000 (2020: £485,000).
69
Notes to the consolidated financial statements
for the year ended 31 December 2021
22
Share-based payments
22.1 Accounting policy
The Group awards directors, employees and certain of the Group’s distributors and advisers equity-settled
share- based payments, from time to time, on a discretionary basis. In accordance with IFRS 2 ‘Share-
based payments’, equity-settled share-based payments are measured at fair value at the time of grant. Fair
value is measured by the use of a Black–Scholes option pricing model. Due to the specialist nature of the
work performed by contractors, the Group is unable to reliably measure the fair value and therefore the fair
value is measured using an option pricing model.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight- line basis over the vesting period, based on the Group’s estimate of the number of shares that will
eventually vest. The options are subject to vesting conditions of up to seven years, and their fair value is
recognised as an expense with a corresponding increase in ‘other reserves’ in equity over the vesting
period. The proceeds received net of any directly attributable transaction costs are credited to share capital
(nominal value) and share premium when the options are exercised. At each balance sheet date, the entity
revises its estimates of the number of options that are expected to vest. It recognises the impact of the
revision to original estimates, if any, in profit or loss in the Consolidated SOCI, with a corresponding
adjustment to equity. The fair value of the equity-settled share-based payment is recharged by the
Company to the subsidiary operating company at fair value. The expense is, therefore, recognised in the
subsidiary operating company, with the equity reserve being recognised in the Company.
The expected volatility of the Company’s share price is based on the historic volatility (based on the
remaining life of the options), adjusted for any expected changes to future volatility due to publicly available
information.
22.2 Note
The Group has two current share option schemes:
•
•
Deltex Medical Group 2011 Executive Share Option Scheme (HMRC Approved Scheme); and
Deltex Medical 2003 Enterprise Management Incentive plan (‘EMI’).
Options granted under the Approved Share Option Scheme are valued at the market price on the date of
grant. Options are conditional on the employee completing three years’ service (the vesting period). The
options are exercisable starting three years from the grant date, subject to the Group achieving certain
performance conditions; the options have a contractual term of ten years. The Group has no legal or
constructive obligation to repurchase or settle the options in cash.
Options granted under the EMI scheme are either granted at 1p per option or at market price on the date of
grant and are conditional on the employee completing three years’ service. Options granted in lieu of cash
for bonuses or salary obligations relating to past achievement have no vesting period.
Options that are conditional on the employee completing three years’ service have a three year vesting
period. The options have a contractual term of ten years. The Group has no legal or constructive obligation
to repurchase or settle the options in cash.
70
Notes to the consolidated financial statements
for the year ended 31 December 2021
Details of share options outstanding during the year for the Group’s share option schemes are as follows:
2011 Executive Share Option
Scheme
2003 Enterprise Management
Incentive Scheme
Number
of
options
No.
Weighted
average
exercise
price
p
Number
of
options
No.
Weighted
average
exercise
price
p
Total
No.
10,384,000
10
10,760,788
1
21,144,788
Options outstanding at
1 January 2020
Granted during the year
5,000,000
1 6,487,500 1
11,487,500
Lapsed during the year
(1,342,250)
4 -
- (1,342,250)
Expired during the year
-
- (50,000)
1 (50,000)
Options outstanding at
31 December 2020
Granted during the year
14,041,750
7
17,198,288
1
31,240,038
-
- 14,500,000
1 14,500,000
Lapsed during the year
(36,500)
9
(162,676)
Expired during the year
(1,498,000)
17
(70,471)
1
1
(199,176)
(1,568,471)
Options outstanding at
31 December 2021
12,507,250
6
31,465,141
1
43,972,391
Share options exercisable at the end of the year were:
2011 Executive Share Option
Scheme
2003 Enterprise Management
Incentive Scheme
Number
of
options
No.
Weighted
average
exercise
price
p
Number
of
options
No.
Weighted
average
exercise
price
p
Total
No.
4,929,000
7
10,760,788
1
15,689,788
9,041,750
7
10,710,788
1
19,752,538
7,507,250
12
10,627,641
1
18,134,891
Options exercisable at
1 January 2020
Options exercisable at
31 December 2020
Options outstanding at
31 December 2021
There were no share options exercised during the year ended 31 December 2021 or the year ended 31
December 2020. The mid-market closing price of the Company’s shares at the end of the year was 1.3
pence (2020: 1.45 pence).
71
Notes to the consolidated financial statements
for the year ended 31 December 2021
Details of the remaining contractual life of share options outstanding for each of the share option schemes
is shown in the table below:
2011 Executive Share Option
Scheme
2003 Enterprise Management
Incentive Scheme
Weighted average remaining contractual life
of options outstanding at the end of the
financial year
2021 Years
2020 Years
2021 Years
2020 Years
6.04
6.36
8.25
8.25
Fair value of options granted
Share options granted under the 2003 EMI scheme had an estimated weighted average fair value of 1.3
pence (2020: 1.3 pence) and £42,057 (2020: £1,655) in aggregate. The fair value of a share option at grant
date is determined using a Black Scholes option pricing model which takes into account the share price at
date of grant and the expected price volatility of the underlying share, the exercise price of the option, the
expected term of the option and the risk-free interest rate for the term of the option.
The model inputs for the 2003 EMI scheme options granted during the year ended 31 December 2021
were:
April 2021
April 2021 December 2020
Share price at grant date
Exercise price
Expected price volatility of the Company’s shares
Expected option life (expressed as weighted average life
used in modelling)
Risk-free interest rate
1.8p
1.0p
65%
3 years
0.86%
1.8p
1.8p
65%
3 years
0.86%
1.3p
1.3p
66%
3 years
0.41%
Fair value at measurement date
1.4p
1.3p
0.9p
No share options were granted under the 2011 ESOS scheme during the year ended 31 December 2021.
Share options granted during the year ended 31 December 2020 had a fair value of 0.6 pence and £3,990
in aggregate.
The model inputs for the 2011 ESOS scheme options granted during the year ended 31 December 2020
were:
Share price at grant date
Exercise price
Expected price volatility of the Company’s shares
Expected option life (expressed as weighted average life
used in modelling)
Risk-free interest rate
Fair value at measurement date
July 2020
1.3p
1.3p
66%
3 years
0.15%
0.6p
72
Notes to the consolidated financial statements
for the year ended 31 December 2021
Contractor options
On 6 December 2021, 2,000,000 share options were granted to a contractor under the 2003 EMI scheme
with an exercise price of 1.3 pence per share. The share options are exercisable from the grant date and
may be exercised in part or in whole at any time during the exercise period. The option has an exercise
period of 10 years from grant date. The vesting period has been recognised during the year in line with the
contract of work being performed.
On 15 July 2020, 4,000,000 share options were granted to two contractors under the 2003 EMI scheme
with an exercise price of 1.3 pence per share. The share options are exercisable from the grant date and
may be exercised in part or in whole at any time during the exercise period. The options have an exercise
period of 10 years from grant date. The vesting period has been recognised over 3 years in line with the
contract of work to be performed.
A further option over 500,000 shares with an exercise price of 1.22 pence per share, exercisable from the
date of grant of 9 October 2018 also remain outstanding at 31 December 2021. The option has an exercise
period of 10 years from grant date.
These are the only outstanding options held by contractors.
The share-based payment expense relating to the share options granted during the year had a fair value of
0.7 pence per share and £14,679 in aggregate.
73
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3
2
Notes to the consolidated financial statements
for the year ended 31 December 2021
24
Financial risk management
The Group’s financial instruments comprise some cash and various items, such as trade receivables and
trade payables that arise directly from its operations. It is, and has been throughout the period under
review, the Group’s policy that no trading in financial instruments shall be undertaken. The Board reviews
and agrees policies for managing liquidity risk, currency risk, credit risk, interest rate risk and capital risk.
The policies have remained unchanged throughout the year.
Liquidity risk
The Group is managed to ensure that sufficient cash reserves and credit facilities are available to meet
liquidity requirements. The Group has available to it an invoice discounting facility and a standby loan
facility to supplement working capital needs. From time to time, additional funding is raised to allow the
Group to invest in its strategic projects to develop the business in its chosen markets. Management
monitors rolling forecasts of the Group’s liquidity reserves which comprise undrawn invoice discounting
facilities, undrawn standby loan facilities and cash and cash equivalents on the basis of expected cash
flows.
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on their
contractual maturities for all non-derivative financial liabilities. The amounts disclosed in the table are the
contractual undiscounted cash flows.
Less
than
1 year
£’000
Between
1 and 2
years
£’000
202
-
2021
Between
2 and 5
years
£’000
-
Invoice discounting
facility
Convertible loan note 88
75
909
88
75
-
1,136
206
-
2020
Between
5 and 10
years
£’000
Less
than
1 year
£’000
Between
1 and 2
years
£’000
Between
2 and 5
years
£’000
Between 5
and 10
years
£’000
-
-
-
253
159
-
-
-
88
75
897
88
75
-
1,224
225
-
-
56
249
500
-
-
-
-
-
-
-
1,774
163
1,342
253
1,219
163
1,449
305
Lease obligations
Trade and other
payables
Standby loan
facility
Currency risk
The Group has overseas subsidiaries in the USA, Spain and Canada and as a result, the Group’s sterling
balance sheet can be affected by movements in the US Dollar, Euro and Canadian dollar exchange rates.
The Group also has transactional currency exposures. Such exposures arise from sales and purchases
by operating units in currencies other than the unit’s functional currency. In general, all overseas
operating units trade and hold assets and liabilities in their functional currency. The Group does not
engage in any hedging in respect of currency risks.
75
Notes to the consolidated financial statements
for the year ended 31 December 2021
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in sterling,
was as follows:
Cash at bank
Trade receivables
Trade payables
Invoice discount facility
2021
2020
US
Dollars
£’000
69
101
(43)
-
Euro
£’000
120
176
(13)
(104)
US
Dollars
£’000
158
267
(2)
-
Euro
£’000
108
160
-
(80)
The table below details the Group’s sensitivities to changes in sterling against the respective foreign
currencies. The sensitivities represent management’s assessment of the effect on monetary assets of the
reasonably possible changes in foreign exchange rates.
The sensitivities analyses of the Group’s exposure to foreign currency risk at the year-end has been
determined based upon the assumption that the increase in Euro, US Dollar and Canadian Dollar exchange
rates is effective throughout the financial year and all other variables remain constant.
However, these potential changes are hypothetical and actual foreign exchange rates may differ significantly
depending on developments occurring in global financial markets.
Sensitivity
%
5.0
5.0
2021
Profit
£’000
11
9
Equity
£’000
Sensitivity
%
11
9
5.0
5.0
2020
Profit
£’000
11
29
Equity
£’000
1
29
Euros
US Dollar
If the Euro strengthened against Sterling by 5% (2020: 5%), an aggregate foreign exchange gain of £11,000
(2020: £11,000) would be recognised in both profit or loss in the Consolidated SOCI and equity comprising
of gains on the trade payables and invoice discount facility, offset by exchange losses on cash at bank
balances and trade receivables. The opposite movement would occur if the Euro weakened.
A similar fact pattern applies to the strengthening of the US dollar against sterling.
Credit risk
The Group is exposed to credit related losses in the event of non-performance by counter parties in
connection with financial instruments. The Group takes actions to mitigate this exposure by ensuring
adequate background on credit risk is known about counterparties prior to contracting with them and through
selection of counterparties with suitable credit ratings. The Group monitors its exposure to credit risk on an
ongoing basis.
The Group is also exposed to credit related losses and territory specific credit risk in the event of non-
performance by counterparties in connection with financial instruments.
The Group uses international distributors in a number of overseas territories. In order to assist the
distributors in developing their markets, these distributors may be given extended trade terms. Extended
trade terms, by their nature can increase the credit risk to the Group. Such risks are carefully managed
through direct relationships with the distributors and knowledge of their markets. The maximum credit risk
76
Notes to the consolidated financial statements
for the year ended 31 December 2021
exposure at the balance sheet date is represented by the carrying value of financial assets and there are no
significant concentrations of credit risk.
The Group’s financial assets that are subject to the credit loss model are namely trade receivables from the
sale of inventory and the provision of preventative planned maintenance contracts and other receivables.
The level of expected credit losses on trade receivables is considered to be immaterial given the nature of
the Group’s customer base. In the UK, USA and Canada, its customers are predominantly large hospitals.
There have not been any bad debts experienced during the year.
Occasionally bad debts have been experienced in our International distributor-led market. However, as this
market has been developed over many years, our network of independent distributors has remained
relatively stable and consequently the expectation of incurring a credit loss is considered to be immaterial.
There is no current credit loss provision as at 31 December 2021 (2020: £nil).
Other receivables relate to a historic trade receivable balance owed by the non-controlling interest in Deltex
Medical Canada Limited. Based on expectations of future trading, the expectation of incurring a credit loss is
considered to be immaterial.
While cash is subject to the impairment requirements of IFRS 9, no such impairment loss was identified
either at 1 January 2021 or 31 December 2021.
For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted.
As at the date of signing the financial statements, all cash and cash equivalents are held with institutions with
an ‘A’ rating as per Standard & Poors.
The maximum credit risk exposure at the balance sheet date is represented by the carrying value of the
financial assets and there are no significant concentrations of credit risk.
Interest Rate Risk
The Group has both interest-bearing assets and interest-bearing liabilities. The Group’s policy is to seek the
highest possible return on interest-bearing assets without bearing significant credit risk, and to minimise the
rate payable on interest-bearing liabilities. The Group places its cash balances on deposit at floating rates of
interest. Surplus cash balances are placed on short-term deposit (less than three months). No interest rate
swaps are used. Interest rate risk comprises both the interest rate price risk that results from borrowing at
fixed rates of interest and also the interest cash flow risk that results from borrowing at variable rates.
77
Notes to the consolidated financial statements
for the year ended 31 December 2021
The Group has borrowings at both fixed and floating rates as shown below:
Fixed rates:
Lease obligations
Convertible loan note
Standby loan facility
Floating rates
Invoice discounting facility
2021
£’000
2020
£’000
274
1,028
500
1,802
202
2,004
315
993
-
1,308
159
1,467
The following table shows the Group’s sensitivity to a hypothetical change in interest rates throughout the
year, with all other variables remaining constant:
Sensitivity
%
2021
Profit
£’000
0.5
1.0
0.5
-
-
-
Equity
£’000
Sensitivity
%
-
-
-
0.5
1.0
0.5
2020
Profit
£’000
-
-
-
Equity
£’000
-
-
-
Euros
US Dollar
Sterling
Capital risk
The Group’s objectives when managing capital (ordinary shares) are to safeguard the Group’s ability to
continue as a going concern in order to provide future returns to shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
Ordinary shares are classified as equity. The Board’s policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain future development of the business. The
Board encourages employees to hold shares in the Company. This has been carried out through the
Company’s various executive share option plans.
The Board seeks to maintain a balance between the higher returns that might be possible with higher
levels of borrowings and the advantages and security afforded by a sound capital position and discusses
these at regular Board meetings. There were no changes to the Group’s approach to capital management
during the year.
The Group is not subject to any externally imposed capital requirements.
78
Notes to the consolidated financial statements
for the year ended 31 December 2021
25
Related party transactions
25.1 Key management compensation
The Group has defined its key management personnel to be the Board of Directors.
Short-term employee benefits
Short term benefits paid to third parties
Post-employment benefits
Share-based payments
25.2 Other transactions
2021
£’000
445
38
10
32
525
2020
£’000
413
38
13
32
496
During the year, £40,000 (2020: £40,000) was paid to Imperialise Limited, a company controlled by Nigel
Keen, non-executive Chairman of the Group, that was due on its £500,000 nominal amount holding of the
Convertible Loan Notes 2024. At 31 December 2021, £10,082 (2020: £10,055) was owing in respect of
interest for the quarter ended 31 December 2021 (2020: Quarter ended 31 December 2020).
At 31 December 2021, a further £4,252 (2020: £nil) was owing in respect of interest for the quarter ended
31 December 2021 to Imperialise Limited, on its standby loan facility, which was set up in September
2021. At 31 December 2021, the balance of the standby loan facility to Imperialise Limited was £500,000.
26
Capital and reserves
Details of the movement in reserves are set out in the Statement of Changes in Equity. A description of
each reserve is set out below:
Name of reserve
Capital redemption reserve
Other reserve
Translation reserve
Convertible loan note reserve
Nature and purpose
This reserve represents the nominal value of ordinary shares
that were repurchased and subsequently cancelled in
December 2001. This reserve is non-distributable and
represents paid up share capital.
This reserve represents the reserve that is used to recognise
the grant date fair value of options issued to employees but
not yet exercised. On exercise, lapse or expiry, the amount
relating to the options exercised is transferred to
Accumulated Losses.
Exchange differences arising on the translation of the foreign
controlled entity are recognised in other comprehensive
income in the Consolidated SOCI and accumulated in a
separate reserve within equity. The cumulative amount is
reclassified to profit or loss in the Consolidated SOCI when
the net investment is disposed of.
This reserve represents the residual value attributed to the
equity conversion component at the time of issue of the
Convertible loan notes. On conversion or redemption, the
amount relating to the principal amount either converted or
redeemed is transferred to Accumulated Losses.
79
Notes to the consolidated financial statements
for the year ended 31 December 2021
27
Subsequent events
On 8 February 2022, the Group raised £1,396,000, before expenses, through subscription for 111,720,000
new Deltex Medical ordinary shares at a price of 1.25 pence per share.
Also on 8 February 2022, the standby loan facility which was set up on 20 September 2021, was extended
for an additional year, and is repayable in full on or before 31 December 2023. As already noted, the facility
is provided by Imperialise Limited, a company controlled by Nigel Keen. The interest rate remains
unchanged on the facility at 8% per annum, and is unsecured.
80
Parent company balance sheet
As at 31 December 2021
Non-current assets
Intangible assets - Goodwill
Investments
Trade and other receivables
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Current liabilities
Trade and other payables
Net current (liabilities)/assets
Total assets less current liabilities
Non-current liabilities
Trade and other payables
Net assets
Equity
Share capital
Share premium
Capital redemption reserve
Other reserve
Convertible loan note reserve
Accumulated losses:
At 1 January
Loss for the year
Transfers
Accumulated losses
Total equity
Note
4
5
6
6
7
8
2021
£’000
66
4,200
1,596
5,862
6
-
6
(739)
(733)
5,129
(1,028)
4,101
5,849
33,502
17,476
573
82
(52,620)
(788)
27
(53,381)
4,101
2020
£’000
66
4,107
1,431
5,604
46
253
299
(250)
49
5,653
(993)
4,660
5,773
33,444
17,476
505
82
(50,078)
(2,515)
(27)
(52,620)
4,660
The notes on pages 83 to 89 form an integral part of these financial statements. The financial statements on
pages 81 to 82 were approved by the Board of Directors and authorised for issue on 6 April 2022 and were
signed on its behalf by:
Nigel Keen
Chairman
Natalie Wettler
Group Finance Director
81
Parent company statement of changes in equity
For the year ended 31 December 2021
Share
capital
£’000
5,249
Share
premium
account
£’000
Capital
redemption
reserve
£’000
33,230
17,476
Other
reserve
£’000
439
Convertible
loan note
reserve
£’000
Accumulated
losses
£’000
82
(50,078)
Total
£’000
6,398
-
-
-
-
524
217
-
-
-
(3)
-
-
-
-
-
-
-
-
-
-
-
-
39
27
5,773
33,444
17,476
505
-
-
76
-
-
-
-
-
58
-
-
-
-
-
-
-
-
-
5,849
33,502
17,476
-
-
-
-
95
(27)
573
-
-
-
-
-
-
82
-
-
-
-
-
-
(2,515)
(2,515)
(2,515)
(2,515)
-
-
-
(27)
741
(3)
39
-
(52,620)
4,660
(788)
(788)
(788)
(788)
-
-
-
27
134
-
95
-
82
(53,381)
4,101
Balance at 1 January 2020
Comprehensive expense
Loss for the year
Total comprehensive
expense for the year
Shares issued during the
year
Issue expenses
Equity-settled share-based
payment
Transfer
Balance at
31 December 2020
Comprehensive expense
Loss for the year
Total comprehensive
expense for the year
Shares issued during the
year
Issue expenses
Equity-settled share-based
payment
Transfers
Balance at
31 December 2021
The notes on pages 83 to 89 form an integral part of these financial statements.
82
Notes to the parent company financial statements
For the year ended 31 December 2021
1
Principal accounting policies
1.1 Basis of preparation
These financial statements are the financial statements for Deltex Medical Group plc, the parent of the
Deltex Medical Group, which operates as a Group holding company. It is a public company, limited by
shares and is incorporated in England and Wales. It is listed on AIM of the London Stock Exchange. The
financial statements have been prepared in accordance with Financial Reporting Standard 101, ‘Reduced
Disclosure Framework’ (FRS 101).
They have been prepared on the going concern basis under the historical cost convention and in accordance
with the Companies Act 2006 as applicable to companies using FRS 101. The preparation of financial
statements in conformity with FRS 101 requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Company’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements are disclosed below.
No income statement is presented by the Company as permitted by Section 408 of the Companies Act 2006.
The following exemptions from the requirements of IFRS have been applied in the preparation of these
financial statements, in accordance with FRS 101:
▪
▪
▪
▪
▪
▪
▪
▪
The requirements of IFRS 7 ‘Financial Instruments: Disclosures’;
The requirements of paragraphs 91-99 of IFRS 13, ‘Fair Value Measurement’;
The requirement in paragraph 38 of IAS 1, ‘Presentation of Financial Statements’ to present
comparative information in respect of:
•
•
•
paragraph 79(a)(iv) of IAS 1;
paragraph 73(e) of IAS 16, ‘Property, Plant and Equipment’; and
Paragraph 118(e) of IAS 38, ‘Intangible Assets’;
The requirements of paragraphs 10(d), 10(f), 39(c) and 134-136 of IAS 1;
The requirements of IAS 7, ‘Statement of Cash Flows’;
The requirements of paragraphs 30 and 31 of IAS 8, ‘Accounting Policies, Changes in Accounting
Estimates and Errors’;
The requirements of paragraph 17 of IAS 24, ‘Related Party Disclosures’; and
The requirements in IAS 24 to disclose related party transactions entered into between two or more
members of a Group, provided that any subsidiary which is a party to the transaction is wholly owned
by such a member.
1.2
Judgements and key sources of estimation uncertainty
The Company has funded the trading activities of its principal subsidiaries by way of intra-group loans. The
83
Notes to the parent company financial statements
For the year ended 31 December 2021
amounts advanced did not have any specific terms relating to their repayment, were unsecured and were
interest free.
In light of the above, management have had to determine whether such loan balances should be
accounted for as loans and receivables in accordance with IFRS 9, ‘Financial Instruments’, or whether, in
fact, it represents an interest in a subsidiary which is outside the scope of IFRS 9 and accounted for in
accordance with IAS 27, ‘Separate Financial Statements’.
Management have concluded that, whilst in substance, the loans represent an interest in a subsidiary as
the funding provided is considered to provide the subsidiary with a long term source of capital, in legal
form, the loans are financial liabilities of the subsidiaries concerned. Therefore, the loans are accounted for
in accordance with IFRS 9 and are carried at their amortised cost less any credit loss allowances, if any.
The carrying amount of the loans are assessed for credit impairment and if considered to be credit impaired
a credit loss provision is recognised. In determining whether a credit loss provision is required,
management must determine whether there has been a significant change in the credit risk of the
respective subsidiary. If there has, then management are required to recognise a lifetime credit loss. The
key estimate is the determination of the probability of default and the loss given default under a range of
scenarios, and the likelihood of each scenario and the relevant credit loss occurring.
1.3 Significant accounting policies
Investments
Investments which comprise investments in share capital are stated at cost less any provisions for
impairment in value. At each balance sheet date, the Company reviews the carrying amount of the
investments to determine whether there is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent
of any impairment loss. The recoverable amount is the higher of the investment’s value in use and its fair
value less costs to sell. Value in use is calculated using cash flow projections for the investments
discounted at the Company’s cost of capital.
If the recoverable amount of the investment is estimated to be less than its carrying amount, the carrying
amount of the investment is reduced to its recoverable amount. An impairment loss is recognised in profit
and loss in the Statement of Comprehensive Income (SOCI), unless the relevant investment is carried at a
revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Deferred taxation
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements, with the exception of when the
deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that
is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss.
Deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, carried forward tax credits or tax losses can
be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are
expected to apply when the related asset is realised or liability is settled, based on tax rates and laws
enacted or substantively enacted at the balance sheet date. The carrying amount of deferred income tax
assets is reviewed at each balance sheet date. Deferred income tax assets and liabilities are offset, only if
a legally enforceable right exists to set off current tax assets against current tax liabilities, the deferred
income taxes relate to the same taxation authority and that authority permits the Company to make a single
84
Notes to the parent company financial statements
For the year ended 31 December 2021
net payment.
Foreign currency translation
Foreign currency monetary assets and liabilities are translated into sterling at the rate of exchange ruling at
the balance sheet date. Transactions in overseas currencies are translated at the rate of exchange ruling
on the date of the transaction or at a contracted rate if applicable. Any gains or losses arising during the
year have been dealt with in profit or loss in the SOCI.
1.4 Share-based payments
The Company awards directors, employees and certain of the Group’s distributors and advisors equity-
settled share-based payments, from time to time, on a discretionary basis. In accordance with IFRS 2
‘Share-based payments’, equity-settled share-based payments are measured at fair value at the time of
grant. Fair value is measured by use of a Black-Scholes model. The fair value determined at the grant date
of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period,
based on the Company’s estimate of the number of shares that will eventually vest. The options are subject
to vesting conditions of up to six years, and their fair value is recognised as an expense with a
corresponding increase in ‘other reserves’ equity over the vesting period. At each balance sheet date, the
entity revises its estimates of the number of options that are expected to vest.
It recognises the impact of the revision to original estimates, if any, in profit or loss in the SOCI with a
corresponding adjustment to reserves. The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share premium when the options are exercised.
The fair value of the equity-settled share-based payment is recharged by the Company to the subsidiary
operating company at fair value. The expense is therefore recognised in the subsidiary operating company,
with the equity reserve being recognised in the Group company.
Related party transactions
The Company is the ultimate parent undertaking of the Deltex Medical Group plc and is therefore included
in the consolidated financial statements of that Group, which are on pages 42 to 46 of the Report &
Accounts 2021.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand and deposits held with banks.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
Terms of loans to subsidiaries
The Company uses its cash to fund the operations of its subsidiaries until such a time that the subsidiaries
are in a position to return the monies to Group. These loans are interest free and have no fixed repayment
date, apart from a £3,000,000 10% fixed interest-bearing loan which is repayable on demand. Interest
income is recognised using the effective interest method. The effective interest rate is the rate that exactly
discounts estimated future cash payments to the gross carrying amount of the financial asset or the
amortised cost of the financial liability.
In calculating interest income, the effective interest rate is applied to the gross carrying amount of the
financial asset when the asset is not judged to be credit impaired. If subsequent to initial recognition a
financial asset becomes credit impaired, interest income is calculated by applying the effective interest rate
to the financial asset’s amortised cost. If the financial asset is no longer credit impaired, then the interest
85
Notes to the parent company financial statements
For the year ended 31 December 2021
calculation reverts to the gross basis.
Compound financial instruments
Compound financial instruments issued by the Company comprise convertible notes that can be converted
to share capital at the option of the holder, or subject to certain conditions at the option of the Company
and the number of shares to be issued does not vary with changes in their fair value. The liability
component of a compound financial instrument is recognised initially at the fair value of a similar liability
that does not have an equity conversion option.
The equity component is recognised initially as the difference between the fair value of the compound
financial instrument as a whole and the fair value of the liability component. Any directly attributable
transaction costs are allocated to the liability and equity components in proportion to their initial carrying
amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at
amortised cost using the effective interest method. The equity component of a compound financial
instrument is not re-measured subsequent to initial recognition except on conversion or expiry.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer
settlement of the liability for at least 12 months after the end of the reporting period.
2
Auditors’ remuneration
The statutory audit fee in respect of the Parent Company’s financial statements payable to Nexia Smith &
Williamson was £10,000 (2020: £10,000).
Fees paid to the Company’s auditors, Nexia Smith & Williamson, for services other than the statutory audit
are not disclosed in these financial statements because the consolidated group financial statements of the
ultimate parent undertaking, Deltex Medical Group plc, disclose the non-audit fees on a consolidated basis.
3
Directors’ emoluments
Aggregate emoluments
Short term benefits paid to third parties
2021
£’000
89
33
122
2020
£’000
96
33
129
There are no (2020: nil) benefits accruing to directors under personal pension plans.
Included in the above figure are amounts payable to the employing company, Imperialise Limited, of
£33,333 (2020: £33,333), for the services of a director.
Remuneration, including Executive directors, is provided in the Directors’ remuneration report on pages 28
to 32.
All Executive directors in office at the year-end receive their emoluments from Deltex Medical Limited, a
subsidiary undertaking of the Group. Except for financing activities, their services to the Company are
incidental to their services to the Group as a whole. The average number of non-executive directors by
function, categorised as administrative for both years, was 5 (2020: 5). None of the directors had contracts
for service so the monthly average number of employees was nil (2020: nil).
86
Notes to the parent company financial statements
For the year ended 31 December 2021
4
Intangible fixed assets – Goodwill
This amount represents the goodwill that arose in 2013 on the acquisition of the trade and assets of Deltex
Medical Canada Limited. The directors have tested goodwill for impairment based on the profitability and
value in use, and consider the balance to be recoverable. Deltex Medical Canada Limited reported a loss of
£1,000 (2020: profit of £27,000).
5
Investments
The directors consider that the carrying value of the investments is supported by their future cash
flows. Details of the Company’s subsidiary undertakings are set out on page 62 of this Annual
Report & Accounts.
Cost
At 1 January 2021
At 31 December 2021
Accumulated impairment
At 1 January 2021
Impairment (credit)/charge
At 31 December 2021
Net book amount
At 31 December 2020
At 31 December 2021
Investments in
subsidiary
undertakings
£’000
45,601
45,601
41,494
(93)
41,401
4,107
4,200
The carrying value of investments in subsidiaries were compared to their recoverable amounts based on
valuation in use calculations derived from management approved budgets and forecasts covering the
three-year period ending 31 December 2024 (2020: three-year period ending 31 December 2023). A
terminal value was calculated using the forecast cash flows for the year ended 31 December 2023 using a
long-term growth rate of 2.25% (2020: 2.25%). Forecast cash flows were discounted using a pre-tax
discount rate of 20% (2020: 20%) which reflects the current market assessments of the time value of
money and the risks specific to the Company. This impairment calculation resulted in an impairment credit
of £93,000 (2020: impairment charge of £1,971,000) to be recognised in profit or loss in the Parent
Company’s Statement of Comprehensive Income (SOCI).
6
Trade and other receivables
In 2013, the Group reclassified £3,000,000 of the long-term investments by Group in Deltex Medical
Limited as a long-term loan. This loan is being charged interest at a rate of 10% per annum, is unsecured
and fell due for repayment on 1 January 2018. Since that time, the Parent Company has effectively rolled
the loan forward on the existing terms except for the fact that the amount is now repayable on demand.
However, the Company has no current intention of making a demand for payment for either this or any of
the other intra-group loans that are outstanding. As a consequence, the amounts falling due are classified
as non-current assets.
87
Notes to the parent company financial statements
For the year ended 31 December 2021
Current
Other receivables
Non-current
2021
£’000
2020
£’000
6
6
46
46
Amount owed by subsidiary undertaking
1,596
1,431
On transition to IFRS 9, the Company determined that the historical intra-group loans that had previously
been accounted for as part of the cost of investment in subsidiaries were credit impaired. It concluded that
the term loan owed by Deltex Medical Limited was not. However, it was further concluded that that there
had been a significant change in credit risk of that loan and, consequently, an expected life credit loss was
recognised.
The expected credit losses were determined based on different recovery options and credit loss scenarios.
Three recovery options were considered which included full repayment of the balances outstanding, the
possibility of a trade sale and the recovery through continued trading. The likelihood of each occurring was
assessed together with the expected credit loss under each scenario. The expected credit loss recognised
represents the weighted average of the lifetime credit losses. The expected credit loss at 31 December
2021 was £11,875,000 (31 December 2020: £10,572,000), an increase of £1,303,000 in the year, which
has been recognised in profit or loss in the Parent Company’s SOCI. The gross balances outstanding at 31
December 2021 were £13,471,000 (31 December 2020: £12,003,000).
7
Creditors: amounts falling due within one year
Trade payables
Accruals
Standby loan facility
8
Creditors: amounts falling due after more than one year
Convertible loan note
9
Share capital
2021
£’000
80
159
500
739
2021
£’000
1,028
2020
£’000
43
207
-
250
2020
£’000
993
See notes 21 and 22 of the Consolidated Financial Statements for full details of the Company’s share
capital and its share option schemes.
88
Notes to the parent company financial statements
For the year ended 31 December 2021
10
Deferred tax
The movement in deferred income tax assets and liabilities during the year, without taking into
consideration the offsetting of balances within the same tax jurisdiction, is as follows:
Deferred tax liabilities
At 1 January 2020
Credited to profit or loss in the SOCI
At 31 December 2020
Credited to profit or loss in the SOCI
At 31 December 2021
Deferred tax assets
At 1 January 2020
Foreign
exchange
£’000
34
(4)
30
(133)
(103)
Tax losses
£’000
(34)
Charged to profit or loss in the SOCI
4
At 31 December 2020
Charged to profit or loss in the SOCI
At 31 December 2021
(30)
133
103
Changes to the UK corporation tax rates were substantively enacted as part of the Finance Act 2021.
These include increases to the UK corporation tax rate from 19% to 25% effective 1 April 2023. Deferred
taxes at the balance sheet date have been measured using this substantively enacted rate.
11
Ultimate controlling party
There are no shareholders with overall control of the Company as at 31 December 2021 or 31 December
2020.
12
Related party transactions
Exemption has been taken under FRS 101 paragraph 8(k) from disclosing related party transactions
between the Company and its subsidiary undertakings and from paragraph 8(j) from disclosing key
management compensation. The directors of Deltex Medical Group plc had no other material transactions,
other than those disclosed in note 25, with the Company during the year, other than as a result of service
agreements. Details of directors’ remuneration is disclosed in the Directors’ Remuneration Report.
13
Subsequent events
On 8 February 2022, the Group raised £1,396,000, before expenses, through subscription for 111,720,000
new Deltex Medical ordinary shares at a price of 1.25 pence per share.
Also on 8 February 2022, the standby loan facility which was set up on 20 September 2021, was extended
for an additional year, and is repayable in full on or before 31 December 2023. As already noted, the facility
is provided by Imperialise Limited, a company controlled by Nigel Keen. The interest rate remains
unchanged on the facility at 8% per annum, and is unsecured.
89
Notice of Annual General Meeting
This Document is Important and requires your Immediate Attention. If you are
in doubt as to the action you should take, you are recommended immediately to seek your own
personal financial advice from your stockbroker, bank manager, solicitor, accountant or other
independent financial adviser authorised under the Financial Services and Markets Act 2000. If you
have sold or otherwise transferred all of your shares in Deltex Medical Group plc, you should pass
this document, the accompanying form of proxy and the annual report and accounts of Deltex
Medical Group plc for the financial year ended 31 December 2021 without delay to the stockbroker,
bank or other person who arranged the sale or transfer so they can pass these documents to the
person who now holds the shares. This document should be read in conjunction with the
accompanying Form of Proxy.
DELTEX MEDICAL GROUP plc
(Incorporated in England, registered number 03902905)
NOTICE OF ANNUAL GENERAL MEETING
Notice of an annual general meeting of Deltex Medical Group plc (the “Company”) to be held at the
offices of DAC Beachcroft LLP, 25 Walbrook, London, EC4N 8AF at 11.00 am on 18 May 2022 (the
“AGM”) is set out on pages 94 to 96 (inclusive) of this document. To be valid as a proxy in respect
of the AGM, the form of proxy accompanying this document must be completed and returned in
accordance with the instructions thereon so as to be received by the Company’s registrars, Equiniti,
Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, not less than 48 hours before the
time of the meeting or of any adjournment of the meeting.
90
Directors:
Nigel Keen (Chairman)
Andrew Mears
Natalie Wettler
Julian Cazalet
Tim Irish
Christopher Jones
Mark Wippell
6 April 2022
To holders of ordinary shares of 1p each (“Ordinary Shares”) in the capital of Deltex Medical Group plc (the
“Company”)
Dear Shareholder
Notice of Annual General Meeting of the Company (“AGM”) and annual accounts for the year ended 31
December 2021
I am pleased to send you details of arrangements for our annual general meeting, together with the annual
accounts of the Company, which contain the reports of the directors and the auditors, for the year ended 31
December 2021.
The formal notice of the annual general meeting of the Company, which will take place at the offices of DAC
Beachcroft LLP, 25 Walbrook, London, EC4N 8AF at 11:00am on 18 May 2022 (the “AGM”), is set out on pages
94 to 96 (inclusive) of this document.
Immediately following the AGM, Andy Mears, CEO, will provide a presentation related to a Company Update. This
will take place in the same location as the AGM.
The purpose of this letter is to explain certain aspects of the business of the AGM to you.
Resolution 1 - Receipt of audited financial statements
Resolution 1 deals with the receipt of the directors’ and auditors’ reports and the accounts of the group for the
financial year ended 31 December 2021 (the “Annual Report & Accounts 2021”).
Resolutions 2, 3 and 4 - Re-election of directors
Resolution 2 proposes the re-election of Julian Cazalet as a director; Resolution 3 proposes the re-election of
Christopher Jones as a director; and Resolution 4 proposes the re-election of Natalie Wettler as a director. The
Company’s articles of association (the “Articles”) require that at each annual general meeting one third of the
directors (excluding directors being elected for the first time) must retire by rotation; accordingly, Julian Cazalet,
Christopher Jones and Natalie Wettler offer themselves for re-election as proposed by resolutions 2, 3 and 4.
Biographical details of Julian Cazalet, Christopher Jones and Natalie Wettler are set out on pages 13 and 14 of the
Annual Report & Accounts 2021. The Board considers that the considerable experience that each of these
directors bring will continue to be beneficial to the Company.
Resolution 5 – Re-appointment of auditors
Nexia Smith & Williamson have expressed their willingness to continue as the Company’s auditors. Resolution 5
proposes their re-appointment and authorises the directors to determine their remuneration.
91
Resolution 6 – Power to allot and issue shares
The directors are not permitted to allot new shares (or to grant rights over shares) unless authorised to do so by
the shareholders of the Company. At the annual general meeting of the Company held on 27 May 2021 (the “2021
AGM”), the directors were given authority to allot relevant securities up to a maximum aggregate nominal value of
£3,848,602 (being two thirds of the then issued ordinary share capital of the Company). This authority expires at
the conclusion of the AGM and the directors are seeking a fresh shareholder authority to allot relevant securities.
Accordingly, it is proposed that the directors are given general authority to allot relevant securities up to an
aggregate nominal value of £2,330,212 (being one-third of the issued ordinary share capital as at 31 March 2022)
and in addition to allot relevant securities only in connection with a rights issue or open offer up to a further
aggregate nominal value of £2,330,212.
Accordingly, if this resolution is passed, the directors will have the authority in certain circumstances to allot new
shares and other relevant securities up to a total aggregate nominal value of £4,660,424 representing an amount
equal to two-thirds of the Company’s issued share capital as at 31 March 2022. Although the directors have no
present intention of exercising this authority, the general authority to allot shares will provide flexibility for the
Company to allot shares and to grant rights to subscribe for or to convert into shares when they consider it to be in
the Company’s interests to do so.
The authority, if granted, will expire on the earlier of the conclusion of the Company’s next annual general meeting
after the passing of this resolution and 15 months from the date of passing this resolution. The Board intends to
seek its renewal at subsequent annual general meetings of the Company.
Resolution 7 – Disapplication of the statutory rights of pre-emption
Section 561 of the Companies Act 2006 gives holders of equity securities (within the meaning of that Act) certain
rights of pre-emption on the issue for cash of new equity securities (other than in connection with an employee
share scheme). The directors believe that it is in the best interests of the shareholders that the directors should
have limited authority to allot ordinary shares (or rights to convert into or subscribe for ordinary shares, or sell any
ordinary shares which the Company elects to hold in treasury) for cash without first having to offer such shares to
existing shareholders in proportion to their existing holdings.
Resolution 7 proposes, in substitution for the powers that were granted to the directors at the 2021 AGM, that
power be granted to allot securities for cash on a non-pre-emptive basis up to a maximum aggregate nominal
value equal to £2,330,212 (representing approximately thirty-three per cent. of the nominal issued share capital of
the Company as at 31 March 2022).
The resolution also disapplies the pre-emption rights to the extent necessary to facilitate rights issues, open offers
and similar transactions without having to follow the specific statutory procedures that would otherwise apply to
such issues.
The authority, if granted, will expire on the earlier of the conclusion of the Company’s next annual general meeting
after the passing of this resolution and 15 months from the date of passing this resolution. The Board intends to
seek its renewal at subsequent annual general meetings of the Company.
Resolution 7 will be proposed as a special resolution.
Action to be taken
Your participation at the AGM is important to us. The AGM is a great opportunity for shareholders to communicate
directly with us, express their views and to ask questions and we welcome your attendance. Whether or not you
propose coming to the AGM and you want to vote on any of the resolutions you can do this in one of two ways:
▪ Register your vote electronically by logging on to www.sharevote.co.uk: or
▪ Complete and return the enclosed proxy form
Proxy appointments, whether submitted electronically or by post, must be received by Equiniti by no later than
11.00 am on 16 May 2022. Your attention is drawn to the notes on the enclosed form of proxy.
92
Recommendation
Your directors believe that all the proposals to be considered at the AGM are in the best interests of the Company
and its shareholders as a whole and recommend that shareholders vote in favour of the resolutions, as they intend
to do in respect of their own beneficial shareholdings of 153,032,300 ordinary shares in aggregate, representing
approximately 22 percent of the ordinary shares currently in issue.
Yours sincerely
Nigel Keen
Chairman
93
DELTEX MEDICAL GROUP plc
NOTICE OF ANNUAL GENERAL MEETING
NOTICE is hereby given that the ANNUAL GENERAL MEETING of Deltex Medical Group plc will be held at the
offices of DAC Beachcroft LLP, 25 Walbrook, London, EC4N 8AF at 11:00 am on 18 May 2022 to transact the
following business:
Ordinary Business
As ordinary business, to consider and if thought fit pass the following resolutions, which will be proposed as
ordinary resolutions:
1. To receive the Company’s audited financial statements for the year ended 31 December 2021, together with the
reports of the directors and of the auditors thereon.
2. To re-elect as a director Julian Cazalet.
3. To re-elect as a director Christopher Jones.
4. To re-elect as a director Natalie Wettler.
5. To re-appoint Nexia Smith & Williamson as auditors of the Company to hold office until the conclusion of the next
annual general meeting at which accounts are laid before the Company and that their remuneration be fixed by the
directors.
To transact any other ordinary business of the Company.
Special Business
As special business, to consider and if thought fit pass the following resolutions, of which resolution 6 will be
proposed as an ordinary resolution and resolution 7 as a special resolution:
6. THAT, in accordance with section 551 of the Companies Act 2006 (the “Act”), the directors be generally and
unconditionally authorised to allot Relevant Securities (as defined below):
6.1. comprising equity securities (as defined by section 560 of the Act) up to an aggregate nominal amount of
£2,330,212 in connection with an offer of such securities by way of a rights issue or open offer
(a) to holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings;
and
(b) to holders of other equity securities as required by the rights of those securities or as the directors
otherwise consider necessary,
but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in
relation to treasury shares, fractional entitlements, record dates, legal or practical problems in or under the
laws of any territory or the requirements of any regulatory body or stock exchange; and
6.2. in any other case, up to an aggregate nominal amount of £2,330,212,
provided that this authority shall, unless renewed, varied or revoked by the Company, expire 15 months after
the passing of this resolution or, if earlier, at the conclusion of the next annual general meeting of the
Company after the passing of this resolution, save that the Company may, before such expiry, make offers or
agreements which would or might require Relevant Securities to be allotted and the directors may allot
Relevant Securities in pursuance of such offer or agreement notwithstanding that the authority conferred by
this resolution has expired. This resolution revokes and replaces all unexercised authorities previously
granted to the directors to allot Relevant Securities but without prejudice to any allotment of shares or grant of
rights already made, offered or agreed to be made pursuant to such authorities.
In this resolution, “Relevant Securities” means:
(a) shares in the Company, other than shares allotted pursuant to:
(i) an employee share scheme (as defined in section 1166 of the Act);
94
(ii) a right to subscribe for shares in the Company where the grant of the right itself constitutes a Relevant
Security; or
(iii) a right to convert securities into shares in the Company where the grant of the right itself constitutes a
Relevant Security; and
(b) any right to subscribe for or to convert any security into shares in the Company other than rights to
subscribe for or convert any security into shares allotted pursuant to an employee share scheme (as defined
in section 1166 of the Act).
References to the allotment of Relevant Securities in this resolution include the grant of such rights.
7. THAT, subject to the passing of resolution 6, the directors be authorised to allot equity securities (as defined in
section 560 of the Act) for cash under the authority conferred by that resolution and/or to sell ordinary shares held
by the Company as treasury shares as if section 561 of the Act did not apply to any such allotment or sale,
provided that such authority shall be limited to:
(a) the allotment of equity securities in connection with an offer of equity securities (but, in the case of the authority
granted under 6.1, by way of a rights issue or open offer only)
(i) to the holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings;
and
(ii) to holders of other equity securities as required by the rights of those securities or as the directors otherwise
consider necessary,
but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in
relation to treasury shares, fractional entitlements, record dates, legal or practical problems in or under the laws of
any territory or the requirements of any regulatory body or stock exchange; and
(b) the allotment of equity securities or sale of treasury shares (otherwise than pursuant to paragraph 7(a) of this
resolution) to any person up to an aggregate nominal amount of £2,330,212.
The authority granted by this resolution will expire 15 months after the passing of this resolution or, if earlier, at the
conclusion of the next annual general meeting of the Company after the passing of this resolution, save that the
Company may, before such expiry, make offers or agreements which would or might require equity securities to
be allotted (or treasury shares to be sold) after the authority expires and the directors may allot equity securities
(or sell treasury shares) in pursuance of any such offer or agreement as if the authority had not expired. This
resolution revokes and replaces all unexercised powers previously granted to the directors to allot equity
securities or sell treasury shares as if section 561 of the Act did not apply but without prejudice to any allotment of
equity securities or sale of treasury shares already made or agreed to be made pursuant to such authorities.
By order of the Board
Natalie Wettler
Company Secretary
6 April 2022
Registered office:
Terminus Road
Chichester PO19 8TX
95
Notes:
Any member entitled to attend and vote at the annual general meeting is entitled to appoint one or more
proxies (who need not be a member of the Company) to attend and to vote instead of the member.
Completion and return of a form of proxy will not preclude a member from attending and voting at the
meeting in person, should he or she subsequently decide to do so. In order to be valid, any form of proxy
and power of attorney or other authority under which it is signed, or a notarially certified or office copy of
such power or authority, must reach the Company’s registrars, to Equiniti, Aspect House, Spencer Road,
Lancing, West Sussex, BN99 6DA, not less than 48 hours before the time of the meeting or of any
adjournment of the meeting.
Shareholders wishing to appoint a proxy and register their proxy votes electronically should visit the
website, www.sharevote.co.uk. The on-screen instructions will give details on how to appoint a proxy and
submit proxy voting instructions. Electronic proxy appointments and voting instructions must be received by
no later than 11.00 am on 16 May 2022 (or 48 hours excluding non-working days before an adjourned
meeting) in order to be valid. Shareholders may not use any other electronic address or telephone number,
whether found in this circular and Notice of Meeting, or in the Annual Report & Accounts 2021 or on any
form of proxy or the Company’s website, for the purposes of submitting voting instructions or appointing
proxies. The only electronic address accepted for this stated purpose is the one at the website,
www.sharevote.co.uk.
To be entitled to attend and vote at the annual general meeting (and for the purpose of the determination
by the Company of the votes they may cast), shareholders must be registered in the register of members of
the Company at 6:30 pm on 16 May 2022 (or in the case of any adjournment, on the date which is forty-
eight hours before the time of the adjourned meeting). Changes to the register of members after the
relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the
annual general meeting. A copy of this notice, within the Annual Report & Accounts 2021, can be found on
the Company’s website, www.deltexmedical.com.
Shareholders can, at no cost, obtain copies of the audited financial statements of the Company for the year
ended 31 December 2021 and the directors’ and auditors’ reports on those financial statements by
application to the Company Secretary at the registered office of the Company. Biographical details of each
director who is being proposed for re-election by shareholders are set out in the Company’s annual report
and accounts for the year ended 31 December 2021. To appoint a proxy or to give or amend an instruction
to a previously appointed proxy via the CREST system, the CREST message must be received by the
issuer’s agent, Equiniti (ID RA19), not later than 11.00 am on 16 May 2022 or, in the case of any
adjournment, on the date which is forty-eight hours before the time of the adjourned meeting.
For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to
the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the
message. After this time any change of instructions to a proxy appointed through CREST should be
communicated to the proxy by other means. CREST Personal Members or other CREST sponsored
members, and those CREST Members who have appointed voting service provider(s) should contact their
CREST sponsor or voting service provider(s) for assistance with appointing proxies via CREST. For further
information on CREST procedures, limitations and system timings please refer to the CREST Manual.
We may treat as invalid a proxy appointment sent by CREST in the circumstances set out in Regulation
35(5) (a) of the Uncertified Securities Regulations 2001. In any case your proxy form must be received by
the Company’s registrars no later than 48 hours before the time of the meeting or of any adjourned meeting
excluding any part of day that is not a working day.
If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity
platform, a process which has been agreed by the Company and approved by the Registrar. For further
information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 11:00 am
on 16 May 2022 in order to be considered valid. Before you can appoint a proxy via this process you will
need to have agreed to Proxymity’s associated terms and conditions. It is important that you read these
carefully as you will be bound by them and they will govern the electronic appointment of your proxy.
As at 31 March 2022, the Company’s issued share capital consists of 699,063,796 ordinary shares of 1p
each, carrying one vote each. No shares are held in treasury.
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