2022 Annual Report & Accounts
(cid:39)(cid:72)(cid:79)(cid:87)(cid:72)(cid:91)(cid:3)(cid:48)(cid:72)(cid:71)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)
A UK-headquartered international medical device company which develops,
manufactures and distributes a clinically-proven haemodynamic monitoring
technology that has been shown to:
(cid:131)(cid:3)
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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
(cid:3)
Deltex Medical at a glance
Our technology
Deltex Medical’s TrueVue System uses proprietary haemodynamic monitoring technology to assist clinicians to
improve outcomes for patients as well as increase throughput and capacity for hospitals.
Deltex Medical has invested over the long term to build a unique body of peer-reviewed, published evidence from a
substantial number of trials carried out around the world. These studies demonstrate statistically significant
improvements in clinical outcomes providing benefits both to patients and to the hospital systems by increasing
patient throughput and expanding hospital capacity.
The Group’s flagship, world-leading, ultrasound-based oesophageal Doppler monitoring (“ODM”) is supported by 24
randomised control trials conducted on anaesthetised patients. As a result, the primary application for ODM is
focussed on guiding therapy for patients undergoing elective surgery. The Group will shortly launch a new, next
generation monitor which will make the use of the ODM technology more intuitive and provide augmented data on
the status of each patient.
Deltex Medical’s engineers and scientists carried out successful research in conjunction with the UK’s National
Physical Laboratory (“NPL”), which has enabled the Group’s ‘gold standard’ ODM technology to be extended and
developed so that it can be used completely non-invasively. This will significantly expand the application of Deltex
Medical’s technology to non-sedated patients. This new technological enhancement, which will be released on the
new next generation monitor, will substantially increase the addressable market for the Group’s haemodynamic
monitoring technologies and is complementary to the long-established ODM evidence base.
Our new non-invasive technology has potential applications for use in a number of healthcare settings, including:
(cid:131) Accident & Emergency for the rapid triage of patients, including the detection and diagnosis of sepsis;
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in general wards to help facilitate a real-time, data-driven treatment regime for patients whose condition
might deteriorate rapidly; and
in critical care units to allow regular monitoring of patients post-surgery who are no longer sedated or
intubated.
One of the key opportunities for the Group is positioning this new, non-invasive technology for use throughout the
hospital. Deltex Medical’s haemodynamic monitoring technologies provide clinicians with beat-to-beat real-time
information on a patient’s circulating blood volume and heart function. This information is critical to enable clinicians
to optimise both fluid and drug delivery to patients.
Our business model is to drive the recurring revenues associated with the sale of single-use disposable ODM probes
which are used in the TrueVue System and to complement these revenues with a new incremental revenue stream to
be derived from the Group’s new non-invasive technology.
Both the existing single-use ODM probe and the new, non-invasive device will connect to the same, next generation
monitor which is due for launch in 2023. Monitors are sold or, due to hospitals’ often protracted procurement times
for capital items, loaned in order to encourage faster adoption of the Group’s technology.
Our customers
The principal users of our products are currently anaesthetists working in a hospital’s operating theatre and
intensivists working in ICUs. This customer profile will change as our new non-invasive technology is adopted by the
market. In the UK we sell directly to the NHS. In the USA we sell directly to a range of hospital systems. We also sell
through distributors in more than 40 countries in the European Union, Asia and the Americas.
Our objective
To see the adoption of our next generation TrueVue System, comprising both minimally invasive and non-invasive
technologies, as the standard of care in haemodynamic monitoring for all patients from new-born to adult, awake or
anaesthetised, across all hospital settings globally.
Visit us online for further information at www.deltexmedical.com
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
(cid:131) Revenues increased by 10% to £2.5 million (2021: £2.3 million)
(cid:131) Strong performance by International division with a 30% increase in revenues to £1.2
million (2021: £0.9 million)
(cid:131)
Increase in average selling prices drove gross margin up to 74% (2021: 70%)
(cid:131) Overheads held at £2.9 million (2021: £2.7 million)
(cid:131) Adjusted EBITDA of £(0.6) million (2021: £(0.5) million)
(cid:131) Loss for the year £(1.1) million (2021: £(1.0) million)
(cid:131) Gross expenditure on research and product development: £0.8 million (2021: £0.7
million)
(cid:131) Cash at hand of £0.5 million (2021: £0.4 million)
Business / commercial activities
(cid:131) Sales of the current monitor were strong across all three divisions in 2022: UK: +83%;
USA: +126% and International: +253%; historically, monitor sales have given
rise to increased probe sales
(cid:131) Further growth from the International division expected
(cid:131) As previously reported, the Group has been participating in a national tender for
haemodynamic monitoring with one of its Latin American distributors. Hospitals have
now started to place orders with this distributor in a contract process that is expected
to continue for some 2 months, by when further information on the orders to be
placed on Deltex Medical should be known
(cid:131) New targeted commercial approach in the USA to drive increases in revenues on a
more cost effective and region-by-region basis
(cid:131) The external Electromagnetic Compatibility testing required to obtain regulatory
approval to launch the new monitor onto the UK and European markets has been
successfully concluded which allows the final testing and associated internal
documentation to be completed.
(cid:131) Work is continuing on the new, novel non-invasive TrueVue ODM technology with a
substantial addressable market
Commenting on the results, Nigel Keen, Chairman of Deltex Medical, said:
“We are encouraged by double digit growth in revenues during the year.”
“The performance of the International division has been notably strong over the last two
years – and we are expecting continuing progress this year.”
“The ‘heavy lifting’ has been done in terms of new product development - and we are
expecting the level of investment in R&D to reduce going forwards.”
“The launch of the new, next generation monitor will be extremely helpful for sales across all
our territories – both via direct sales and our overseas distributors.”
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Real-time oesophageal Doppler haemodynamic monitoring:
improves patient outcomes; increases hospital throughput
CHAIRMAN’S STATEMENT
Financial results
Group revenues for the year ended 31 December 2022 increased by 10% to £2.5 million
(2021: £2.3 million), assisted by another strong performance from the Group’s International
division.
Last year we announced that the International division had achieved a 40% increase in
revenues to £0.9 million. This year we can announce that the division posted a further 30%
increase in revenues to £1.2 million. We believe that there is further profitable revenue
growth to be generated by this division.
Probe revenues declined slightly to £1.8 million (2021: £1.9 million).
Group monitor sales increased by a robust 166% to £0.5 million (2021: £0.2 million). This is
a good result taking into account that these monitor sales related to the current version of
the monitor.
Gross margin increased again in 2022 to 74% (2020: 70%) reflecting enhanced discipline in
relation to our pricing policies and a proactive campaign to obtain inflationary increases in
price points. The gross margin also benefited from the relative weakness of sterling against
the US dollar.
Overheads increased 4% to £2.9 million (2021: £2.7 million).
Adjusted EBITDA (comprising earnings before interest, tax, depreciation and amortization,
share-based payments and non-executive directors’ fees) was a loss of £(0.6) million (2021:
£(0.5) million). Adjusted EBITDA is reconciled to operating loss in note 3.2 of the financial
statements.
Gross cash expenditure on research and product development by the Group (excluding the
effect of grants or capitalisation of product development) amounted to £0.8 million (2021:
£0.7 million). The net amount, having taken into account grants, was £0.7 million (2021: £0.6
million). Our plans anticipate expenditure on research and product development to decline
during 2023.
Operating loss for the year was £(0.9) million (2021: £(0.8) million).
Loss for the year was £(1.1) million (2021: £(1.0) million).
Cash at hand at 31 December was £0.5 million (2021: £0.4 million).
Business activities
Deltex Medical sells directly, via its own sales teams, into UK and US hospitals. We continue
to see significant constraints imposed on our sales teams in terms of being able to access
key decision makers in UK and US hospitals’ operating theatres (“ORs”) and intensive care
units (“ICUs”). Notwithstanding these specific sales-related challenges, we did see a
substantial increase in sales of monitors in both territories. Sales of monitors into UK
hospitals increased by 77% and into US hospitals by 122%. We believe that this substantial
increase in monitor sales is all the more impressive given that the market is aware that
Deltex Medical will shortly launch a new, next generation monitor.
Although probe sales declined slightly in both our direct markets, the fact that customers
increased significantly their purchases of monitors is, we believe, extremely encouraging as
historically probe revenues have tended to increase in accounts where monitors have
recently been purchased.
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Deltex Medical’s International division continues to impress with a 30% revenue growth
recorded in the year. In the last two years revenues have nearly doubled from £0.7 million to
£1.2 million. We have worked carefully on a rolling programme of cost reduction initiatives to
ensure that the Group’s monitors and probes both enjoy significant gross margins. As a
result, we are able to sell on a profitable basis to hospitals around the world via our
extensive network of overseas distributors. We believe that there is further growth to come
from our International division. The Group has been participating in a national tender for
haemodynamic monitoring with one of its Latin American distributors. Hospitals have now
started to place orders with this distributor in a contract process that is expected to continue
for some two months, by when further information on the orders to be placed on Deltex
Medical should be known.
Significant progress has been made on the development of Deltex Medical’s new monitor.
The external Electromagnetic Compatibility testing required to obtain regulatory approval to
launch the new monitor onto the UK and European markets has been successfully
concluded which allows the final testing and associated internal documentation to be
completed. This is expected to take approximately two months.
The launch of this new, next generation monitor enables us to progress to the next stage of
our strategic product development programme, including the development of the new non-
invasive TrueVue ODM technology which has a substantial addressable market.
Employees
On behalf of the Board, I would like to thank Deltex Medical’s high quality and dedicated
employees for their hard work during the year. The adverse after-effects of the Covid
pandemic continued to be felt in a number of ways during 2022 and we very much
appreciate the key contributions from our UK and overseas teams.
Current trading and prospects
The significant increase in monitor sales in all three divisions in 2022 augurs well for
increases in probe revenues in the future.
We believe that there continue to be significant opportunities for growth from the
International division, and we are particularly focussed on maximising the commercial
benefits associated with a national tender in Latin America.
We are seeing strong interest in our new monitor, particularly from the UK, and we believe
that its launch will also help drive revenues in 2023.
The fact that the new monitor is substantially complete is extremely helpful in terms of
reducing the quantum of cash expenditure on new product development going forwards.
Further, we will be able to free up our technical teams to carry out broader customer support
activities as well as more targeted, and less capital intensive, product development.
2023 has started well.
Nigel Keen
Chairman
29 March 2023
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Real-time oesophageal Doppler haemodynamic monitoring:
improves patient outcomes; increases hospital throughput
BUSINESS REVIEW
Overview
Deltex Medical is the world leader in high accuracy 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 demonstrated that
an ODM-driven haemodynamic protocol can result in statistically significant reductions in
post-operative complications such as acute kidney injuries, 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 should be a key factor for reducing
the backlog in elective surgery, particularly in the UK.
Deltex Medical’s technology was originally developed in a London ICU 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 OR, and particularly for complex elective surgical procedures.
Before the Covid pandemic, approximately 80% of the Group’s revenues were associated
with elective surgical procedures in ORs. The near-complete cessation of elective surgery
during the pandemic was highly disruptive to Deltex Medical’s commercial activities,
particularly in the UK and the USA, where the Group sells its technology directly. Although
elective surgery has re-started around the world as the pandemic subsides, Deltex Medical’s
sales teams are still experiencing more restricted levels of access to the OR and ICU than
they enjoyed pre-pandemic.
Our key challenge for 2023 is to maximise the commercial benefits for the Group of the
launch of the new monitor. We are also hoping to land a significant Latin American contract
for both monitors and probes. We will also continue to educate, in conjunction with our
overseas distributors, decision-makers in hospitals about the potential capacity / throughput-
related and financial benefits associated with using the Deltex Medical TrueVue ODM
technology during elective surgery.
Three principal divisions: UK, USA and International
Deltex Medical’s commercial activities are structured across three divisions: the UK; the
USA and International.
The Group has not yet managed to drive commercial activity up to pre-pandemic levels in
the UK and US divisions for a number of reasons. Many hospitals have imposed significant
restrictions on salespersons or clinical educators accessing ORs or ICUs. Once hospitals
stop using Deltex Medical’s ODM technology, it can take some time to re-instigate the use of
ODM via updated standard operating procedures. We have also been restricting, particularly
in the USA, expenditure on sales and marketing activities as we diverted resources into
completing the development of our new monitor. We know from experience that where our
sales personnel are unable to obtain meaningful face-to-face access to anaesthetists, or
other appropriate OR staff, then probe usage typically declines over time.
One way in which we have been seeking to mitigate the impact of greater restrictions for our
sales teams in meeting hospital-based decision-makers in person is by increasing the use of
online materials, including training via the launch of the online Deltex Medical Academy.
Notwithstanding some of the challenges that the Group has faced in terms of accessing
customers, we have been encouraged by a significant year-on-year increase in monitor
revenues into our three divisions: UK (+ 77%); USA (+122%); and International (+ 221%). It
is notable that these increases all relate to the current version of the monitor. These monitor
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sales should result in increased probe revenues which will be helpful in terms of driving up
high margin recurring revenues in the future.
In the UK we have seen strong interest via pre-launch educational presentations for our new
monitor from a number of NHS hospitals. We believe that there will be significant demand for
the new monitor once it is formally fully launched onto the UK market.
There remains a substantial backlog in elective surgery in the UK. This backlog represents
both an opportunity and a challenge for the Group. For example, there are powerful
arguments, supported by the published evidence base, that the use of Deltex Medical’s
TrueVue technology increases patient throughput in the hospital and improves patient
outcomes, thereby helping reduce the size (and associated cost) of the elective surgery
backlog. Conversely, we have seen evidence in some NHS hospitals that the senior
management teams are under pressure to reduce the backlog and, notwithstanding the
peer-reviewed published evidence base, are reluctant to promote the adoption of new
technology at this time.
In 2022, mindful of the need to conserve our cash resources, we decided to adopt a more
focussed and targeted sales and marketing strategy in the USA. For example, we have been
supporting the trial and evaluation of the TrueVue ODM technology in a Top 5 US hospital
system on the East coast. Thus far the feedback from this prestigious hospital has been
most encouraging. As and when this leading US hospital decides to roll out the use of
TrueVue on a protocolised basis, we believe that this will be extremely helpful for Deltex
Medical to generate new customer accounts in the region. Adopting such a targeted regional
approach is a significantly more cost-effective way of expanding the Group’s coverage of the
important US market. We intend to replicate this targeted approach with other leading US
hospital systems in different regions, and build back up our US coverage on a region-by-
region basis.
In 2022 the International division had another good year with overall revenue growth of 30%
to £1.2 million (2021: £0.9 million). A substantial proportion of this growth came from Latin
America. We continue to support our network of international distributors closely. Many of
these distributors have long-standing and close relationships with ORs in hospitals, and
enjoy privileged access to key decision makers.
There has been consolidation among suppliers of haemodynamic monitoring equipment over
the last five years. This has resulted in consolidation of sales teams. As a result, on a
number of occasions Deltex Medical has benefited from less competition in certain
territories.
Product development and innovation
During 2022, our research and development team were focussed on completing the
development of our new, next generation TrueVue monitor. This task was made more
challenging by pandemic-related disruption to electronic supply-chains. There is some
evidence that the disruption to these supply chains is beginning to abate.
In order to obtain the necessary regulatory approvals to launch the new monitor onto the UK
and European markets, there is a requirement to complete Electromagnetic Compatibility
(EMC) testing. EMC testing is carried out through an external test house and these tests
have recently been successfully completed.
Now EMC testing has been completed the device can be passed through acoustic testing
and the internal documentation required to support the regulatory submissions can be
finalised. This self-certification process is expected to be completed shortly following which
the new monitor will be available for sale in the UK and European markets.
Once the new monitor has been successfully launched in the UK and Europe, we intend to
complete the necessary FDA filings to obtain US regulatory approval so that the new, next
generation monitor should be launched onto the US market next year. We are expecting to
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sell the new monitor into new accounts as well as existing customers that wish to upgrade
their ODM technology.
Following the launch of the new monitor, we will be refocussing our research and
development team to work on a complementary, non-invasive haemodynamic monitoring
technology which leverages the extensive evidence base supporting the use of our existing
ODM technology. This new technology will allow instantaneous non-invasive haemodynamic
monitoring, via the new monitor, anywhere in the hospital. This new, novel technology
should substantially broaden the potential applications, and hence addressable market size,
for the Group’s Doppler-based ultrasound technology. We are continuing to work with the
UK’s National Physical Laboratory to explore how the use of cutting-edge science will enable
us to improve the performance and data generation from Deltex Medical’s core ultrasound
technology. We anticipate advancing this research project significantly in 2023.
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. The post-Brexit regulatory regime in the UK, as well as for UK companies selling
into Europe, is still evolving and we keep actual or prospective changes in applicable
regulations under close scrutiny.
In Europe the transition from the Medical Device Directive to the European Medical Device
Regulation (“MDR”) has been deferred until 2028. Although this reduces some regulatory-
associated complexity in the short term, there is still considerable uncertainty as to what
steps will be required, by when, for a Class II medical device manufacturer to comply with
MDR in the future.
Conclusion
Completion of the new monitor will greatly enhance Deltex Medical’s technological offering to
the market as well as opening up the possibility to use this device as a platform for further
product line extensions. We are particularly interested in the commercial potential associated
with the easier-to-use non-invasive haemodynamic monitoring technology which we are also
developing.
So far market feedback and demand for the new monitor has been encouraging, both from
prospective and existing customers, and we see its launch as a critical building block in
driving up probe revenues across all three divisions.
We have concluded that the Covid era restrictions imposed on salespersons to stop them
from enjoying relatively open access to ICUs and ORs will continue in the future. We have
taken a number of mitigation steps to enable us to commercialise successfully our
technology with this ‘new normal’ in mind.
Andy Mears
Chief Executive
29 March 2023
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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 Trust, a charity
established to support 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. After graduating in Economics from Cambridge, he qualified as a
Chartered Accountant before joining Cazenove in 1973, becoming a Partner in 1978.
Latterly he was until 2007 a Managing Director - Corporate Finance of JPMorgan Cazenove
advising listed companies. He is Chairman of The Lindsell Train Investment Trust plc and a
Trustee of two charities.
Tim Irish
Tim joined the Board in 2021. He 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. Tim
currently holds four other non-executive director positions in health and technology related
entities based in the UK, EU and USA.
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 Health Ltd, and non-executive Director
of MediSieve Ltd, Causeway Therapeutics Ltd, Carbometrics Ltd and Health Enterprise East
Ltd. 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.
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He is a Trustee of the BMT Employee Benefit Trust, 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 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.
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 Group Strategic Report, the Directors’
Report and the financial statements in accordance with applicable law and regulations.
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:
(cid:131) select suitable accounting policies and then apply them consistently;
(cid:131) 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 Parent Company financial statements, subject to any
material departures disclosed and explained in the financial statements;
(cid:131) make judgements and accounting estimates that are reasonable and prudent; and
(cid:131) 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.
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Company Secretary and Advisers
Company Secretary and Registered Office
Natalie Wettler FCA
Terminus Road
Chichester
West Sussex PO19 8TX
Nominated adviser
Allenby Capital Limited
5th Floor
5 St Helen’s Place
London.EC3A 6AB
Independent auditors
CLA Evelyn Partners Limited (formerly Nexia Smith & Williamson)
Cumberland House
15 – 17 Cumberland Place
Southampton SO15 2BG
Principal bankers
NatWest Bank Limited
5 East Street
Chichester
West Sussex PO19 1HH
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
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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:
(cid:131) supporting evidence-based medicine to create sustainable health benefits in the
communities which we serve;
(cid:131)
investing in our products, services and people;
(cid:131) partnering with clinicians to help them adopt the technologies within our TrueVue
System;
(cid:131) communicating openly and honestly with our customers and with each other;
(cid:131) providing excellent levels of support, education and training, taking into account any
constraints imposed directly or indirectly as a result of post-Covid restrictions;
(cid:131) continuing to be thought-leaders to drive innovation; and
(cid:131) 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
facing hospitals around the globe following the Covid pandemic.
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; however, in 2022 many of these meetings
took place on a face-to-face basis, including the AGM.
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, principally by the CEO and the FD, on wider
- 11 -
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. This information is discussed at the monthly Board meetings and, as
appropriate, is incorporated into the Group’s strategy and execution plans.
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 specific internal controls or risk management
issues may be discussed with the Audit Committee on an ad hoc basis throughout the
year.
A summary of the Board’s assessment of the principal risks and uncertainties facing the
Group are set out on pages 17 to 19 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. The biographical
details of the non-executive Directors are set out on pages 7 to 8. These details show that
the Board comprises individuals with different backgrounds and extensive commercial
experience which, taken in the round, helps to demonstrate the independence of the
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, which is discussed
and agreed by the Board.
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 sector, 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 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.
Separate Audit, Remuneration and Nomination committees have been established.
At least twice a year the Chairman informally discusses Board and committee
performance with the other Directors to explore how further improvements to the
performance of the Board could be made.
- 12 -
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
prospective 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 for the Group.
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 2022 all the Non-Executive Directors attended all the Board meetings in the year
save for one director who was not able to attend the October Board meeting. As a
result, Board decisions are made in the light of up-to-date, relevant information and
discussions.
The Group’s Quality System, which is regularly audited by outside regulatory bodies,
also helps augment the governance regime of the Group.
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
29 March 2023
- 13 -
Strategic Report
The Directors have set out below their Strategic Report for the year ended 31 December
2022.
The Strategic Report should be read in conjunction with the rest of this document and in
particular the following sections:
1. Chairman’s Statement (page 2)
2. Business Review (page 4)
3. Corporate Governance (page 11)
4. Principal Risks of the Group (page 17)
5. Directors’ Report (page 20)
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.
Group KPIs for the year ending 31 December:
Adjusted EBITDA (£000)
Operating loss (£000)
Gross profit margin
Cash and cash equivalents (£000)
Probe revenues (£000)
Monitor revenues (£000)
Going concern
2022
(607)
(947)
74%
471
2021
(504)
(805)
70%
413
1,800
1,911
537
202
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.
In December 2022, Mr. Nigel Keen, the Chairman and the Group’s largest shareholder,
advanced an additional £0.25 million to the Group by way of an extension to the previously
established £0.5 million standby loan facility in order to help fund the costs to complete the
new monitor. The intention is that this £0.25 million advance will be repaid as soon as
possible and specifically when positive operating cashflow is generated by way of sales of
the new monitor. Further information relating to the extension to the standby loan facility was
set out in an announcement dated 22 December 2022. The interest rate on the standby loan
facility is 8% and is repayable on or before 30 June 2024.
During February 2023 the Group negotiated an extension to the maturity date of its
convertible loan notes from 28 February 2024 to 30 June 2026 and announced this
extension on 27 February 2023. This convertible security is recognised in the Group balance
sheet at £1.1 million and the coupon payable is 8%.
Further information on the standby loan facility and the convertible loan notes are set out in
Note 17.2.
The Directors have reviewed detailed budgets and forecasts until 30 June 2024, which take
into account, among other things, the possible continued after effects of post-Covid
- 14 -
restrictions and associated disruption 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 probes and monitors.
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:
(cid:131)
(cid:131)
(cid:131)
(cid:131)
(cid:131)
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;
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
(cid:131)
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 in summary on
pages 11 to 13 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 17.
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. During Covid we worked hard to support our employees as much as
was possible. Since the end of the pandemic, we have allowed employees to work from
home wherever practicable.
- 15 -
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, its after effects, including a significant reduction
in the number of “face-to-face” meetings we are able to achieve in the UK and USA. We
have tried to compensate, to the extent possible, for the restrictions / constraints imposed on
our interactions with actual or prospective customers, by the use of online video meetings
and creating an online training and education academy which is free to access for our
customers.
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.
The regulations which govern our products increasingly give rise to environmental
considerations. As part of our new product development work we consider carefully
environmental aspects such as the product’s carbon footprint as well as ways of reducing
the amount of plastic components and packaging. We are also aware that many of our
customers require us to respond to information requests relating to the Group’s approach to
the environment.
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.
For more information on our approach to interacting with shareholders please see the
Corporate Governance Statement on page 11.
The Strategic Report comprising pages 14 to 16 has been approved by the Directors and
signed
By order of the Board
Natalie Wettler
Company Secretary
29 March 2023
- 16 -
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 new or unforeseen specific risks
or uncertainties could arise in the future that are not summarised below.
Personnel
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 educating (and re-educating)
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, including in a high inflation environment with a
structural shortage of personnel in the South of England, represent risk to the Group.
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).
In Europe we are working on the transition 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 into the European
marketplace. The implementation date of MDR has now been deferred until December 2028
for Class IIb medical devices. The impact of transitioning from the existing MDD regulations
to MDR is currently unknown. There is a level of risk inherent in the uncertainty associated
with this transition to MDR.
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 the Group’s 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
- 17 -
to time, the subject 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 specific risks
for patients and to aid their speedy recovery. It is also the case that, to date, no such
litigation has been commenced against the Group or its products.
A number of hospitals have put in place restrictions, particularly post Covid, 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 (or prospective 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” fully to meetings by Deltex Medical’s sales teams remains 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, particularly in the UK, 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.
Disturbed supply chains
Although the risks directly associated with Covid have subsided significantly, there remain
ongoing issues with elongated or disturbed supply chains. Such disruption initially originated
as a result of Covid. As China abandons its attempt to eradicate Covid then the Group
believes that the disruption to supply chains, particularly in respect of electronic
components, should subside.
The risks for the Group associated with such disrupted supply chains have been
exacerbated due to their impact on Deltex Medical’s ongoing development programmes,
including the new, next generation monitor and the non-invasive device. Although these
development programmes are substantially advanced, and in the case of the next
generation monitor close to completion, even small component failures can have a
substantial adverse impact on the launch date for new products. Such failures cannot be
mitigated by holding a large stock of specialist components.
Research and Development
The Group is currently carrying out a substantial and complex product development
programme. Such programmes are not without risk. Further, as the regulatory environment
for medical devices becomes more onerous around the world, successfully completing
development programmes is not without risk.
Although the Group seeks to mitigate these risks based in large part by drawing upon its
many years of experience of carrying out product development in and around oesophageal
Doppler monitoring as well as the judicious use of consultants, it is not possible to mitigate
all the risks associated with carrying out research and development. Further information on
the Group’s research and development work is set out in the Business Review under the
heading ‘Product development and innovation’.
Competition
A number of competitors sell products to the same group of clinicians as Deltex Medical
targets, 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. Such competitors use different technologies
to the oesophageal Doppler-based technology used by the Group. Moreover, the Board
- 18 -
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 – currency fluctuations
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, profits and cash, and as such represents a form of risk.
Financial – credit risk
The Group sells to a network of distributors around the world. The majority of these
distributors are heavily focussed on the elective surgery sector. Deltex Medical faces 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:
(cid:131)
the effects of inflation on all of the Group’s input costs, especially in respect of
employee salaries, raw materials, purchased components and energy costs;
(cid:131) changes in government policies and spending plans, particularly in respect of
healthcare systems;
(cid:131)
(cid:131)
(cid:131)
lower than anticipated rates of adoption of the Group’s products in existing key
markets;
the availability to the Group of resources, including financial resources, to pursue its
strategy and other opportunities that it comes across; 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.
- 19 -
Directors’ Report
The Directors present their report and the audited consolidated financial statements for the
year ended 31 December 2022.
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 2,
the Business Review on page 4 and the Principal Risks of the Group on page 17.
Subsequent events
On 27 February 2023, the maturity date of the convertible loan notes was extended from 26
February 2024 to 30 June 2026. All other terms of the convertible loan notes, which were
issued in February 2016, remain unchanged. The Group have considered the financial
impact of this modification, being an estimated gain of £89,000 following the extension of the
maturity date.
On 29 March 2023, the maturity date of the standby loan facility provided by Mr. Nigel Keen,
Chairman of Deltex Medical, was extended from 31 December 2023 to 30 June 2024. All
other terms relating to the standby loan facility remain unchanged. Further information on
the standby loan facility is set out in the Strategic Report on page 14.
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 23 to the financial
statements on pages 69 to 72.
Dividends
The Directors cannot propose the payment of a dividend for 2022 (2021: £nil).
Directors
The Directors of the Group who served during the year are shown below. Biographical
details are given on pages 7 and 8.
Nigel Keen
Andy Mears
Natalie Wettler
Julian Cazalet
Tim Irish
Chris Jones
Mark Wippell
Non-executive Chairman
Chief Executive
Group Finance Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
In the case of each Director in office at the date the Directors’ report is approved:
(cid:131) 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
(cid:131)
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.
- 20 -
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.
Employee engagement
Approximately once a quarter a Board meeting is organised at the Group’s Chichester
headquarters. Time is scheduled into the meeting to allow the non-executive Directors to
have an opportunity to examine progress on the various product development programmes
as well as to talk informally with employees across the facility. In addition, from time to time
the Board asks an employee to give a presentation at the beginning of the meeting to help
educate and inform the Directors on a particular topic. Together these actions help promote
the engagement of the Group’s employees with the Directors.
Independent auditors
The independent auditors, CLA Evelyn Partners Limited (formerly known as 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 17 May 2023 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
29 March 2023
- 21 -
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
29 March 2023
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. It also has input
on other remuneration matters concerning the Group’s employees. 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:
(cid:131) considering and determining the remuneration policy for the Executive Directors;
(cid:131) within this agreed policy, considering and determining the total remuneration
packages of each of the Executive Directors of the Group;
(cid:131) 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;
(cid:131)
reviewing and noting remuneration trends across the Group; and
(cid:131) 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
- 22 -
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.
This report sets out the Directors’ remuneration policy for 2022 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. It is important for the motivation and retention
of the executives 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 2022 and concluded that it has a remuneration policy which is a good balance between
competitive pay, incentives to develop and the growth of the Company in line with its
strategy; and that it 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. Salaries were last reviewed across the Group on 1 July 2022.
The Executive Directors’ base salary will be reviewed on 1 July 2023. 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:
- 23 -
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.
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
2022
200,000
7,500
8,000
£
£
£
2021
200,000
7,500
8,000
Natalie Wettler
2022
125,000
7,500
5,000
2021**
65,589
4,456
1,735
David Moorhouse***
2021
30,875
-
-
Total
2022
325,000
15,000
13,000
2021
296,464
11,956
9,735
£
-
-
-
-
-
-
-
Total
£
215,500
215,500
137,500
71,780
30,875
353,000
318,155
*
**
‘Benefits’ comprise the provision of a car allowance paid in cash
Natalie Wettler was appointed to the Board on 27 May 2021
*** David Moorhouse retired from the Board on 27 May 2021
- 24 -
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.
Andy Mears
share options
Exercise
from date
Exercise
to date
2003 Enterprise
Management
Incentive Scheme
6 August 2021
5 August 2028
27 April 2024
26 April 2031
Exercise
price (£)
0.01
0.018
Number
5,000,000
5,000,000
16 February 2025
15 February 2032
0.0135
15,000,000
Total
25,000,000
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.
Natalie Wettler
share options
Exercise
from date
Exercise
to date
2003 Enterprise
Management
Incentive Scheme
1 December 2023
30 November 2030
27 April 2024
26 April 2031
Exercise
price (£)
0.01
0.01
16 February 2025
15 February 2032
0.0135
Total
NON-EXECUTIVE DIRECTORS
Number
225,000
2,500,000
8,500,000
11,225,000
Non-executive
Directors
Year
Cash
settled
Directors’
fees
Equity
settled
Directors’
fees
Benefits Pension
Annual
bonus
Long term
incentive
awards
£
£
£
£
£
£
Nigel Keen
2022
2021
Julian Cazalet
2022
2021
Chris Jones
2022
2021
Mark Wippell
2022
2021
2022
Tim Irish*
Total
33,333
33,333
24,000
24,000
24,000
24,000
24,000
24,000
-
-
-
-
-
-
-
-
18,000
2021*
17,123
-
2022
2021
18,000
105,333
17,123
105,333
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
£
33,333
33,333
24,000
24,000
24,000
24,000
24,000
24,000
18,000
17,123
123,333
122,456
- 25 -
*
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 7. The rules of NICE mean that he could only
accept cash remuneration for his role as a non-executive director and accordingly was not eligible for equity
settled Directors’ fees during 2022. Mr Irish is now eligible to receive equity settled Directors’ fees which will
now comprise his remuneration as a non-executive from 1 January 2023.
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 and 2022 will
be settled by the issue of Deltex Medical ordinary shares during the course of 2023.
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 2022 are shown in the table below.
DEMG Directors’
shareholdings
Legally owned
Unexercised
options
Andy Mears
Natalie Wettler
Nigel Keen
Julian Cazalet
Tim Irish
Chris Jones
6,658,731
1,010,400
99,852,821
27,153,971
3,021,211
4,297,291
Mark Wippell
11,037,875
-
-
-
-
-
-
-
Unvested options
subject to
performance under
the EMI scheme
25,000,000
11,225,000
-
-
-
-
-
Approval
This report was adopted by the Committee on 29 March 2023 and has been approved
subsequently by the Board.
Nigel Keen
Chairman of the Remuneration Committee
29 March 2023
- 26 -
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
29 March 2023
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:
(cid:131) monitor the integrity of both the Group’s Interim and annual report and accounts;
(cid:131)
review any significant financial reporting matters that may arise, and agree on the
reasonableness of the judgements that they may contain;
(cid:131) 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;
(cid:131) ensure that 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;
(cid:131)
review the adequacy and effectiveness of the Group’s systems of internal control and
risk management; and
(cid:131) 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.
- 27 -
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.
Information relating to the Principal Risks of the Group can be found on pages 17 to 19.
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 principal significant reporting matters that were considered by the Audit Committee
during the year comprised, in summary, 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 Audit 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 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 CLA Evelyn Partners Limited’s (formerly 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.
- 28 -
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 2022 which comprise 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 the preparation of the
group financial statements is applicable law and UK-adopted international accounting standards. The
financial reporting framework that has been applied in the preparation of the parent company financial
statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced
Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
(cid:120) 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 2022 and of the group’s loss for the year then ended;
(cid:120) the group financial statements have been properly prepared in accordance with UK-adopted
international accounting standards;
(cid:120) the parent company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
(cid:120) 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.
- 29 -
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 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
Description of risk
How the matter was addressed in the audit
The cash flow
projections which
support going
concern and
development costs
not yet available for
use for group and
parent company
investment ,
goodwill and
intercompany
balances with
subsidiaries
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
including consideration of the
sensitivity of the assumptions
in the projections.
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
- 30 -
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:
(cid:120)
(cid:120)
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 current period to actual
post year end outcomes;
(cid:120) discussion with management over
(cid:120)
(cid:120)
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;
(cid:120) 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
(cid:120)
and sensitivity assumptions to
derive a value in use.
(cid:120)
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.
Revenue recognition
including contract
liabilities
Revenue recognition continues
to be a key focus for the group
to meet market expectations.
As part of our procedures relating to revenue
recognition as described in note 2 of the
group financial statements the key
procedures performed were:
(cid:120)
reviewing transactions around the
year end and tracing to supporting
documentation to determine if the
sale was recorded in the correct
period;
(cid:120)
(cid:120) 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 the
extent that future revenues
from the products will
generate sufficient returns to
cover the development costs
over its useful economic life.
This can be a highly
judgemental area.
As part of our procedures regarding the
development costs as described in note 12 of
the group financial statements, the key
procedures performed were:
(cid:120)
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;
(cid:120) 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
- 31 -
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 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.
(cid:120)
Our application of materiality
The materiality for the group financial statements as a whole (“group FS materiality”) was set at £49,000.
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 approximately 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 £39,200. 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 with external
customers 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 £39,200 being 80% of group FS
materiality, for purposes of assessing the risks of material misstatement and determining the nature,
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
judgement or estimation in the financial statements other than the capitalisation and recoverability of
capitalised development costs as referred to in our key audit matters above.
Performance materiality for the parent company financial statements was set at £31,360, 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:
(cid:120)
(cid:120)
(cid:120)
challenging the assumptions used in the detailed budgets and forecasts prepared by
management for the financial period ending 30 June 2024;
considering historical trading performance both prior to, during and subsequent to the Covid-19
pandemic;
comparing the forecast results to those actually achieved in the 2022 financial year and
- 32 -
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 2023 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 group’s financing facilities and the repayment dates;
considering the group’s funding position and requirements; and
considering the sensitivity of the assumptions and re-assessing headroom after sensitivity.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
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 the 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 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:
(cid:120)
(cid:120)
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:
(cid:120) 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
(cid:120) the parent company financial statements are not in agreement with the accounting records and
returns; or
(cid:120) certain disclosures of directors’ remuneration specified by law are not made; or
(cid:120) 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 9, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and
- 33 -
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.
We understand that the group complies with the framework through:
(cid:120) Outsourcing tax compliance to external experts.
(cid:120) Outsourcing foreign payroll to external experts.
(cid:120)
Subscribing to relevant updates from external experts and making changes to internal
procedures and controls as necessary.
(cid:120) 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:
(cid:120) 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.
(cid:120) 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:
(cid:120) 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:
(cid:120) Manipulation of the financial statements, especially revenue, via fraudulent journal entries in
particular those affecting revenue recognition around the year end.
- 34 -
(cid:120) Provisions including stock and trade debtor provisions as these are estimates by management.
(cid:120) 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.
(cid:120) Estimates and judgements made by management regarding the forecasts and discount rate used
in the impairment review of group balances and investments in subsidiaries in respect of the
parent entity financial statements.
(cid:120) Group’s status as AIM listed entity which creates an incentive for fraudulent financial reporting
to show favourable results to the market.
The procedures we carried out to gain evidence in the above areas included:
(cid:120) 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 as
noted in the key audit matters section above;
Substantive testing around whether revenue was recorded in the correct period;
Substantive work on material areas affecting profits; and
(cid:120)
(cid:120)
(cid:120) 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.
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
CLA Evelyn Partners Limited
Statutory Auditor
Chartered Accountants
15-17 Cumberland Place
Southampton
Hampshire
SO15 2BG
Date: 29 March 2023
- 35 -
Consolidated statement of comprehensive income
For the year ended 31 December 2022
Revenue
Cost of sales
Gross profit
Administrative expenses
Sales and distribution expenses
Research and Development, Quality and Regulatory
Impairment loss on trade receivables
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
Note
3
4
15
4
9
7
6
7
2022
£’000
2,482
(643)
1,839
(1,560)
(1,027)
(231)
(39)
(2,857)
-
71
(947)
(199)
(1,146)
1
(1,145)
35
35
2021
£’000
2,259
(684)
1,575
(1,585)
(957)
(207)
-
(2,749)
312
57
(805)
(173)
(978)
12
(966)
(2)
(2)
Total comprehensive loss for the year
(1,110)
(968)
Total comprehensive loss for the year attributable to:
Owners of the Parent
Non-controlling interests
(1,114)
4
(1,110)
(969)
1
(968)
Loss per share – basic and diluted
10
(0.17p)
(0.17p)
The notes on pages 41 to 73 form an integral part of these consolidated financial statements.
- 36 -
Consolidated balance sheet
As at 31 December 2022
Company Number 03902895
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
11
12
15
14
15
15
15
17
17
17
17
19
20
25
25
25
25
25
25
2022
£’000
269
3,769
164
4,202
821
456
15
140
72
471
1,975
6,177
(935)
(1,704)
(2,639)
(1,069)
(177)
(64)
(1,310)
(3,949)
2,228
6,990
33,672
17,476
527
168
82
(56,566)
2,349
(121)
2,228
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
(55,588)
2,027
(125)
1,902
The notes on pages 41 to 73 form an integral part of these consolidated financial statements. The financial
statements on pages 36 to 40 were approved by the Board of Directors and authorised for issue on
29 March 2023 and were signed on its behalf by:
Chairman
Nigel Keen
- 37 -
Natalie Wettler
Group Finance Director
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Consolidated statement of cash flows
for the year ended 31 December 2022
Cash flows from operating activities
Loss before taxation
Adjustments for:
Finance costs
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share-based payment expense
Other gain
Effect of exchange rate fluctuations
(Increase)/Decrease in inventories
(Increase)/Decrease in trade and other receivables
Increase in trade and other payables
Increase in provisions
Net cash used in operations
Interest paid
RDEC 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 repayment
Standby loan facility drawdown
Principal lease payments
Net cash generated from financing activities
Net increase/(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
2022
£’000
(1,146)
199
88
40
125
(71)
35
(730)
(48)
(57)
306
7
(522)
(153)
69
(606)
(70)
(674)
(744)
1,340
(115)
(17)
(500)
750
(45)
1,413
63
413
(5)
471
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
The notes on pages 41 to 73 form an integral part of these consolidated financial statements.
- 40 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
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 2021.
New and amended Standards and Interpretations effective for the first time in the financial year beginning 1
January 2022 but not relevant to the Group or Company:
(cid:120) Amendments to IAS 37 – Onerous contracts – Cost of Fulfilling a Contract
(cid:120) Amendments to IAS 16 – Property, plant, and equipment – Proceeds before intended use
(cid:120) Amendments to IFRS 3 – Conceptual framework for Financial Reporting
(cid:120) Annual Improvements to IFRS Accounting Standards 2018-2020 Cycle
New and amended Standards and Interpretations issued but not effective for the financial year beginning 1
January 2022:
IAS 8 – Amendments to definition of Accounting Estimates
(cid:120)
(cid:120) Amendment to IAS 1 and IFRS Practice Statement 2 – Disclosure of accounting policies
(cid:120) Amendments to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a single transaction
(cid:120) Amendments to IFRS 16 - Leases: Lease Liability in a Sale and Leaseback
(cid:120) Amendments to IAS 1 – Classification of liabilities as Current or Non-current
(cid:120) Amendments to IAS 1 – Non-current liabilities with covenants
The directors do not expect that the adoption of items listed above will have a material impact on the financial
statements of the Group or Company in future periods.
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.
- 41 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
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.
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.
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:
2022
2021
Average Rate
Closing rate
Average rate
Closing rate
Sterling/US Dollar
Sterling/Euro
Sterling/Canadian Dollar
1.24
1.17
1.61
1.21
1.13
1.64
1.38
1.16
1.72
1.35
1.19
1.71
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.
- 42 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
1.6 Use of key judgements and key sources of estimation uncertainty
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 assets,
liabilities, income and expenses. However, actual results may differ from these results.
Key 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. Management must exercise judgement on whether there are any
indicators of impairment to the capitalised costs. Where necessary, the Directors will perform impairment
reviews which involve estimation uncertainty around the future economic benefits.
Key Sources of Estimation Uncertainty
Information about estimation uncertainties at 31 December 2022 that could have a risk of adjustment to the
carrying amount of assets in the next financial year is considered in the following notes:
Research and development
As noted above, where necessary, the Directors will perform impairment reviews which involve estimation
uncertainty around the future economic benefits of capitalised development costs.
Trade receivables
Notes 15 and 23 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.
In December 2022, the Group extended the standby loan facility with Imperialise Limited by £250,000 to
£750,000 in order to help fund the costs to complete the new monitor. The Group intends to repay the
£250,000 as soon as possible and specifically when positive operating cashflow is generated by way of sales
of the new monitor. All other terms of the standby loan facility, which was issued in September 2021, remain
unchanged. Furthermore, on 29 March 2023, the maturity date of the standby loan facility was extended from
31 December 2023 to 30 June 2024.
In February 2023, the maturity date of the convertible loan notes was extended from 26 February 2024 to 30
June 2026. All other terms of the convertible loan notes, which were issued in February 2016, remain
unchanged.
The Directors have reviewed detailed budgets and forecasts until 30 June 2024. In making their forecasts, the
Directors have carefully considered the possible continued after effects of post-Covid restrictions and
associated disruption 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.
- 43 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
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
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 and non-executive directors’ fees’
(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.
- 44 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
3.2 Note
The operating segment results for 2022 are:
Revenues
Adjusted gross profit2
Sales and marketing costs
Administration costs
R&D costs
Quality and regulation
costs
Adjusted EBITDA
Probes1
Monitors
Other
Unallocated
£’000
1,800
1,323
£’000
537
416
-
-
-
-
-
-
-
-
-
-
£’000
£’000
145
107
-
-
-
-
-
-
-
(1,027)
(1,192)
(36)
(195)
-
Total
£’000
2,482
1,843
(1,027)
(1,192)
(36)
(195)
(607)
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 (£4,000)
The operating segment results for 2021 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
1,911
1,448
£’000
202
171
£’000
146
102
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
£’000
-
-
(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 (£22,000)
3. Other operating income is allocated within the corresponding expense categories (£124,000)
- 45 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
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
Impairment loss on trade receivables
Non-executive directors’ fees and employer’s NIC
Share-based payment expenses
Change in accumulated absence cost liability
Cash item:
Other tax income
Operating loss
Finance costs
Loss before tax
Tax credit on loss
Loss for the year
2022
£’000
(607)
(88)
(40)
(39)
(136)
(125)
17
71
(340)
(947)
(199)
(1,146)
1
(1,145)
2021
£’000
(504)
(74)
(40)
-
(138)
(95)
(11)
57
(301)
(805)
(173)
(978)
12
(966)
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 2022
Direct market
Indirect markets
Probes
Monitors
Other
Probes
Monitors
Other
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
UK
USA
France
Latin America
South Korea
Hong Kong
Austria
Cayman Islands
Other countries
461
463
-
-
-
-
-
-
19
943
106
122
-
-
-
-
-
-
30
258
75
51
-
-
-
-
-
-
-
-
-
4641
-
-
15
90 212
132
13
44
24
90
-
32
-
18
2
-
-
8
2
-
3
2
1
3
126
857
279
19
642
636
487
304
132
48
46
43
144
2,482
1. Total revenue for this segment relates to a single external customer
- 46 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
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
-
-
4891
-
-
29
105 -
134
35
53
816
-
-
58
87
-
-
8
2
2
-
1
670
663
526
107
136
35
122
13
2,259
1. Total revenue for this segment relates to a single external customer
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 at the
point the service is carried out.
Sale of goods
Maintenance income
2022
£’000
2,430
52
2,482
2021
£’000
2,192
67
2,259
The following table provides information about trade receivables and contract liabilities from contracts with
customers. There were no contract assets at either 31 December 2022 or 31 December 2021.
Trade receivables which are in ‘Trade and other receivables’
Contract liabilities (Note 17.3)
31 December
2022
31 December
2021
£’000
456
(39)
£’000
455
(57)
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 2022:
Revenue expected to be recognised
2023
£’000
25
2024
£’000
2
2025
£’000
2
2026
£’000
Total
£’000
10
39
Revenue recognised in 2022 which was included in contract liabilities at 31 December 2021 amounted to
£30,000. Revenue recognised in 2021 included in contract liabilities at 31 December 2020 amounted to £54,000.
- 47 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
4.
Expenses
4.1 Expenses by nature
The following table provides information on the nature of expesnes recognised within the Statement of
Comprehensive Income:
Changes in inventories and work in progress expensed
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
Short-term leases
Net foreign exchange (gain)/loss
Audit and accountancy costs
Meeting and other public relations costs
Professional and consultancy costs
Other tax income
Other
2022
£’000
25
481
2,119
235
136
88
40
19
(30)
71
42
268
(71)
6
3,429
2021
£’000
(99)
548
2,145
153
138
74
40
18
14
61
23
312
(57)
6
3,376
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.
CLA Evelyn Partners Limited
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
2022
£’000
10
47
57
2021
£’000
10
35
45
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
- 48 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
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
2022
£’000
2,049
247
60
2,356
(357)
1,999
2021
£’000
2,051
230
58
2,339
(317)
2,022
Accumulated absence liability movement
(17)
11
Accrued bonuses for the year
Share-based payment expense
12
125
2,119
17
95
2,145
The pensions cost expense of £60,000 (2021: £58,000) 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
2022
Number
2021
Number
44
11
15
10
2
6
44
46
11
16
10
3
6
46
- 49 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
5.4 Directors’ emoluments
Aggregate emoluments
Sums paid to third parties for directors’ services
Contributions to the Group’s defined contribution scheme
Sums paid to third parties for the services of a director comprise:
Third party payee Director
2022
£’000
430
33
13
476
2021
£’000
398
33
10
441
2022
£’000
2021
£’000
Imperialise Limited
Nigel Keen
33 33
5.5 Highest paid director
Aggregate emoluments
Contributions to director’s personal pension scheme
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
2022
£’000
2021
£’000
207
8
215
2022
£’000
3
128
28
29
11
199
207
8
215
2021
£’000
2
124
4
34
9
173
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.
- 50 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
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
2022
£’000
2021
£’000
(1)
-
(1)
-
(1)
(12)
-
(12)
-
(12)
In 2022, the other gain includes an amount of £71,000 (2021 £57,000) 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 (2021: lower) than the effective rate of corporation tax in the
UK of 19% (2021: 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% (2021: 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
Non-deductible expenses
Total tax credit on loss
8.
Deferred tax
8.1 Accounting policy
2022
£’000
(1,146)
(218)
2021
£’000
(978)
(186)
(153)
326
16
4
24
(121)
269
5
3
18
(1)
(12)
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.
- 51 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
8.2 Note
At 31 December 2022, the Group had accumulated trading losses carried forward which are available to offset
against future profits of £39,050,000 (2021: £39,333,000) resulting in an unrecognised potential deferred tax
asset of £9,327,000 (2021: £9,397,000).
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
2022
£’000
1,125
65
1,190
2022
£’000
1,003
2021
£’000
938
65
1,003
2021
£’000
644
187
359
1,190
1,003
2022
£’000
2021
£’000
(1,003)
(644)
(187)
(359)
(1,190)
(1,003)
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.
Other operating income
9.1 Accounting policy
Government grants which are recognised in the Statement of Comprehensive Income as operating income 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 same period as the
related expenditure.
9.2 Note
Other operating income comprised:
UK Job Retention Scheme
US Payment Protection Plan
2022
£’000
-
-
-
2021
£’000
206
106
312
- 52 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
10
Basic and diluted loss per share
The loss per share calculation is based on the loss of £1,149,000 and the weighted average number of shares
in issue of 685,490,974. For 2021, the loss per share calculation is based on the loss of £967,000 and the
weighted average number of shares in issue of 580,712,339. While the Group is loss-making, the diluted loss
per share and the loss per share are the same.
11
Property, plant and equipment
11.1 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:
(cid:131)
(cid:131)
(cid:131)
(cid:131)
(cid:131)
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 increase 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.
The Group monitors probe usage by customers that have loan monitors and where, for various reasons, probe
volumes do not support the loaned monitor state, the under-utilised monitors are removed and held ready to
meet future demand for monitors by other customers.
- 53 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
11.2 Note
Leasehold property Right of use
Plant and
Fixtures and
Machines loaned
and improvements
asset
equipment
£'000
£'000
£'000
fittings
£'000
to customers
£'000
Total
£'000
2
1,529
2,617
Cost
At 1 January 2021
180
427
Exchange difference
-
-
Additions
-
-
479
-
23
-
-
Transferred from inventory
-
-
-
-
At 31 December 2021
180
427
Exchange difference
-
-
Additions
-
-
Transferred from inventory
-
-
Disposals
At 31 December 2022
Accumulated depreciation
At 1 January 2021
-
180
178
-
427
155
Exchange difference
-
-
Depreciation charge
At 31 December 2021
2
180
Exchange difference
-
Depreciation charge
Disposals
At 31 December 2022
Net book value
At 1 January 2021
At 31 December 2021
At 31 December 2022
-
-
180
2
-
-
48
203
-
49
-
252
272
224
175
502
5
70
-
-
577
476
-
7
483
5
18
-
506
3
19
71
2
-
-
-
-
2
2
-
-
2
-
-
-
2
-
-
-
10
-
10
1,549
164
-
23
(501)
1,235
10
23
10
2,660
169
70
23
(501)
2,421
1,501
2,312
10
17
1,528
164
21
(501)
1,212
28
21
23
10
74
2,396
169
88
(501)
2,152
305
264
269
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
2022
£’000
2021
£’000
36
52
-
88
22
52
-
74
- 54 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
12
Intangible assets
12.1 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 2022, £113,000 (2021: £77,000) 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.
12.2 Note
Cost
At 1 January 2021
Additions
At 31 December 2021
Additions
At 31 December 2022
Accumulated amortisation
At 1 January 2021
Amortisation expense
At 31 December 2021
Amortisation expense
At 31 December 2022
Net book value
At 1 January 2021
At 31 December 2021
At 31 December 2022
Development
costs
£’000
Goodwill
£’000
3,713
621
4,334
674
5,008
1,225
40
1,265
40
1,305
2,488
3,069
3,703
66
-
66
-
66
-
-
-
-
-
66
66
66
Total
£’000
3,779
621
4,400
674
5,074
1,225
40
1,265
40
1,305
2,554
3,135
3,769
Amortisation expense of £40,000 (2021: £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 £2,813,000 (2021: £2,273,000) relating to the
- 55 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
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 £93,000 net book value (2021: £124,000) 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, with approximately 7 years of amortisation period remaining at the
year end.
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
2022
£’000
468
216
2021
£’000
333
216
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.
13 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
Nature of trading activities
Deltex Medical Limited
UK
Manufacture and marketing of medical devices
Deltex Medical, SC, Inc USA
Marketing and sales of medical devices in the
USA
Deltex Medical Espana
SL
Spain
Marketing and sales of medical devices in
Spain
Deltex Medical Canada Canada
Limited
Marketing and sales of medical devices in
Canada
Deltex Medical
Holdings Inc
Deltex Inc
Deltex Medical Inc
USA
USA
USA
Dormant
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
Deltex Medical Canada Limited reported revenue of £15,000 (2021: £7,000), a profit of £8,000 (2021: £1,000)
and net liabilities of £295,000 (2021: £291,000).
- 56 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
14
Inventories
14.1 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.
14.2 Note
Raw materials and consumables
Work in progress
Finished goods
2022
£’000
246
64
511
821
2021
£’000
217
24
555
796
There is a specific provision for slow-moving inventory of £23,000 (2021: £21,000), which have been categorised
as finished goods.
15
Trade and other receivables
15.1 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.
- 57 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
15.2. Note
Trade receivables
Trade receivables
Less loss allowance
2022
£’000
495
(39)
456
2021
£’000
455
-
455
As at 31 December 2022, trade receivables of £36,000 (2021: £98,000 were past due but not impaired. The
ageing analysis of these trade receivables is as follows:
Up to 3 months past due
3 to 6 months past due
Over 6 months past due
Financial assets at amortised cost
Staff advances
Other receivables
2022
£’000
32
-
4
36
2021
£’000
16
18
64
98
2022
2021
Current Non-current
Current
Non-current
£’000
£’000
£’000
£’000
15
-
15
-
164
164
15
-
15
-
157
157
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
16
Cash and cash equivalents
16.1 Accounting policy
2022
£’000
35
105
140
2021
£’000
3
88
91
For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and deposits
held at call with financial institutions.
- 58 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
16.2 Note
Cash at bank
17
Financial liabilities
17.1 Accounting policy
2022
£’000
471
2021
£’000
413
The Group’s financial liabilities include borrowings, trade payables and other payables.
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.
- 59 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
17.2 Note
Borrowings
Invoice discounting facility
Standby loan facility
Convertible loan note
2022
2021
Current
Non-current
Current
Non-current
£’000
£’000
£’000
£’000
185
750
-
935
-
-
1,069
1,069
202
500
-
702
-
-
1,028
1,028
Invoice discounting facility
The amount shown represents the cash drawn down under an invoice discounting facility; There was
£6,000 undrawn amounts at the end of the year (2021: £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 (2021: 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 June 2026, 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 2022
Interest expense
Interest paid
Carrying amount at 31 December 2022
Financial
liability
£’000
Equity
component
£’000
1,028
129
(88)
1,069
82
-
-
82
Total
£’000
1,110
129
(88)
1,151
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% (2021: 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. Furthermore, in December 2022, the standby loan facility was extended by £250,000 to £750,000, with
no changes made to the repayment date or interest rate.
- 60 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
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
2022
Rate
%
4.32
3.42
6.05
Amount
£’000
61
91
33
185
2021
Rate
%
2.91
2.75
4.30
Amount
£’000
60
104
38
202
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.
17.3. Trade and other payables
Trade payables
Other payables
Social security and other taxes
Lease obligations
Contract liabilities
Employee short-term benefits
Accrued expenses
2022
2021
Current
£’000
Non-current
£’000
Current
£’000
Non-current
£’000
507
258
158
52
39
24
666
1,704
-
-
-
177
-
-
-
177
298
259
169
46
57
41
608
1,478
-
-
-
228
-
-
-
228
In February 2022, the Group settled £86,000 of historical bonuses held within accrued expenses at 31
December 2021 by way of a share issue.
Included within other payables is an amount of £255,000 (2021: £253,000) 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.
18
Leases
18.1 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
- 61 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
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;
(cid:120)
(cid:120) variable lease payments that are based on an index or a rate;
(cid:120) amounts expected to be payable by the lessee under residual value guarantees;
(cid:120)
(cid:120) 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.
Right-of-use assets are measured at cost comprising the following:
(cid:120) the amount of the initial measurement of lease liability;
(cid:120) any lease payments made at or before the commencement date less any lease incentives received;
(cid:120) 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.
18.2 Note
Included within Property, plant and equipment is the net book amount of £175,000 (2021: £224,000)
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 £49,000 (2021: £48,000) relating to the depreciation expense of this asset and included within finance
costs is an amount of £29,000 (2021: £34,000) 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 £19,000 (2021: £18,000) relating to short term leases.
Included within trade and other payables in the Consolidated Balance sheet are current lease obligations
amounting to £52,000 (2021: £46,000) and non-current lease obligations amounting to £177,000 (2021:
£228,000). The non-current lease obligations are all due in 2 to 5 years. The weighted average
incremental borrowing rate applied to the lease was 12% (2021: 12%).
The total cash outflow for leases in the period was £75,000 (2021: £75,000).
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
- 62 -
2022
£’000
75
206
-
281
2021
£’000
75
281
-
356
Notes to the consolidated financial statements
for the year ended 31 December 2022
19
Provision for liabilities
19.1 Accounting policy
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.
19.2 Note
At 1 January 2021
Unwinding of discounting
At 1 January 2022
Unwinding of discounting
At 31 December 2022
Dilapidation
provision
£’000
51
6
57
7
64
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.
20
Share capital and share premium
20.1 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.
20.2 Note
At 1 January 2022 and 31 December 2022, the authorised share capital of the Company comprised
6,568,546,210 ordinary shares with a nominal value of 1 penny each.
- 63 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
The movement in the Company’s issued share capital is set out below:
At 1 January 2021
Share issues:
15 July 2021
22 July 2021
At 31 December 2021
Share issues:
17 January 2022
14 February 2022
Share issue expenses:
Number of
shares
(thousands)
Ordinary
shares
£’000
Share
premium
£’000
Total
£’000
577,291
5,773
33,444
39,217
6,282
1,371
63
13
47
11
110
24
584,944
5,849
33,502
39,351
2,400
24
6
30
111,720
1,117
279
1,396
14 February 2022
-
-
(115)
(115)
At 31 December 2022
699,064
6,990
33,672
40,662
Net proceeds from the issue of shares totalled £1,311,000 (2021: £134,000), after expenses of £115,000
(2021: £nil). Non-cash proceeds from the issue of shares to clear historical equity settled director fees
totalled £6,000 (2021: £134,000).
21
Share-based payments
21.1 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.
- 64 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
21.2 Note
The Group has two current share option schemes:
(cid:120)
(cid:120)
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.
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.
14,041,750
7
17,198,288
1
31,240,038
-
-
14,500,000
1
14,500,000
Options outstanding at
1 January 2021
Granted during the year
Lapsed during the year
(36,500)
9 (162,676)
1 (199,176)
Expired during the year
(1,498,000) 17 (70,471)
1 (1,568,471)
Options outstanding at
31 December 2021
12,507,250
6
31,465,141
1
43,972,391
Granted during the year
-
- 23,500,000
1 23,500,000
Lapsed during the year
(11,487,250)
4
(5,206,250)
1
(16,693,500)
Expired during the year
(1,020,000)
24
(232,675)
1 (1,252,675)
Options outstanding at
31 December 2022
-
-
49,526,216
1
49,526,216
- 65 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
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.
9,041,750
7
10,710,788
1
19,752,538
7,507,250
12
10,627,641
1
18,134,891
-
-
5,394,966
1
5,394,966
Options exercisable at
1 January 2021
Options exercisable at
31 December 2021
Options outstanding at
31 December 2022
There were no share options exercised during the year ended 31 December 2022 or the year ended 31
December 2021. The mid-market closing price of the Company’s shares at the end of the year was 1.0
pence (2021: 1.3 pence).
Details of the remaining contractual life of share options outstanding for each of the share option schemes
is shown in the table below:
Weighted average remaining contractual life
of options outstanding at the end of the
financial year
2011 Executive Share Option
Scheme
2003 Enterprise Management
Incentive Scheme
2022 Years
2021 Years
2022 Years
2021 Years
-
6.04
8.33
8.25
Fair value of options granted
Share options granted under the 2003 EMI scheme had an estimated weighted average fair value of 1.4
pence (2021: 1.3 pence) and £44,407 (2021: £42,057) 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 2022
were:
February 2022
April 2021
April 2021
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
1.35p
1.35p
50%
3 years
1.40%
1.8p
1.0p
65%
3 years
0.86%
Fair value at measurement date
0.7p
1.4p
1.8p
1.8p
65%
3 years
0.86%
1.3p
- 66 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
No share options were granted under the 2011 ESOS scheme during the year ended 31 December 2022 or
the year ended 31 December 2021.
Contractor options
There were no contractor options granted during the year ended 31 December 2022.
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.
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.
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 2022. The option has an exercise
period of 10 years from grant date.
These are the only outstanding options held by contractors.
- 67 -
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2
2
Notes to the consolidated financial statements
for the year ended 31 December 2022
23
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
expected maturities for all non-derivative financial liabilities. The amounts disclosed in the table are the
expected undiscounted cash flows at 31 December.
Less
than
1 year
£’000
Between
1 and 2
years
£’000
185
-
Invoice discounting
facility
Convertible loan note 88
Lease obligations
75
1,173
1,136
75
-
2022
Between
2 and 5
years
£’000
-
-
131
-
2021
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
-
-
-
255
202
-
-
-
88
75
909
88
75
-
1,136
206
-
-
-
253
Trade and other
payables
Standby loan
facility
750
-
-
-
500
-
-
-
2,271
1,211
131
255
1,774
163
1,342
253
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.
- 69 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
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
2022
2021
US
Dollars
£’000
6
116
(62)
10
Euro
£’000
2
168
(2)
(91)
US
Dollars
£’000
69
101
(43)
-
Euro
£’000
120
176
(13)
(104)
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
%
10.0
10.0
2022
Profit
£’000
9
8
Equity
£’000
Sensitivity
%
9
8
5.0
5.0
2021
Profit
£’000
11
9
Equity
£’000
11
9
Euros
US Dollar
If the Euro strengthened against Sterling by 10% (2021: 5%), an aggregate foreign exchange gain of £9,000
(2021: £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
- 70 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
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.
The credit loss provision of £39,000 represents 7.8% of the Group trade receivables balance as at 31
December 2022 (2021: £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 31 December 2021 or 31 December 2022.
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.
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
- 71 -
2022
£’000
2021
£’000
229
1,069
750
2,048
185
2,233
274
1,028
500
1,802
202
2,004
Notes to the consolidated financial statements
for the year ended 31 December 2022
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
%
2022
Profit
£’000
0.5
1.0
0.5
-
-
-
Equity
£’000
Sensitivity
%
-
-
-
0.5
1.0
0.5
2021
Profit
£’000
-
-
-
Equity
£’000
-
-
-
Euros
US Dollar
Sterling
The amounts in the table above are rounded to the nearest £’000. Where the amount is less than £500, it is
displayed as £nil within the table.
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.
24
Related party transactions
24.1 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
24.2 Other transactions
2022
£’000
484
38
13
68
603
2021
£’000
445
38
10
32
525
During the year, £40,000 (2021: £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 2022, £10,082 (2021: £10,082) was owing in respect of
interest for the quarter ended 31 December 2022 (2021: Quarter ended 31 December 2021).
- 72 -
Notes to the consolidated financial statements
for the year ended 31 December 2022
At 31 December 2022, a further £10,290 (2021: £4,252) was owing in respect of interest for the quarter
ended 31 December 2022 to Imperialise Limited, on its standby loan facility, which was set up in
September 2021. During the year, the Group drew down a further £250,000 on this facility. At 31
December 2022, the balance of the standby loan facility to Imperialise Limited was £750,000 (2021:
£500,000).
25
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.
26
Subsequent events
On 27 February 2023, the maturity date of the convertible loan notes was extended from 26 February
2024 to 30 June 2026. All other terms of the convertible loan notes, which were issued in February 2016,
remain unchanged. The Group have considered the financial impact of this modification, being an
estimated gain of £89,000 following the extension of the maturity date.
On 29 March 2023, the maturity date of the standby loan facility was extended from 31 December
2023 to 30 June 2024. All other terms of the standby loan facility, which was initially issued in
September 2021, remain unchanged.
- 73 -
Parent company balance sheet
As at 31 December 2022
Company Number 03902895
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
2022
£’000
66
5,109
2,084
7,259
10
251
261
(1,087)
(826)
6,433
(1,069)
5,364
6,990
33,672
17,476
527
82
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
(53,381)
(52,620)
(173)
171
(53,383)
5,364
(788)
27
(53,381)
4,101
The notes on pages 76 to 82 form an integral part of these financial statements. The financial statements on
pages 74 to 75 were approved by the Board of Directors and authorised for issue on 29 March 2023 and were
signed on its behalf by:
Nigel Keen
Chairman
Natalie Wettler
Group Finance Director
- 74 -
Parent company statement of changes in equity
For the year ended 31 December 2022
Share
capital
£’000
5,773
Share
premium
account
£’000
Capital
redemption
reserve
£’000
33,444
17,476
Other
reserve
£’000
505
Convertible
loan note
reserve
£’000
Accumulated
losses
£’000
82
(52,620)
Total
£’000
4,660
-
-
-
-
76
58
-
-
-
-
-
-
-
-
-
5,849
33,502
17,476
-
-
-
-
-
-
-
285
(115)
-
-
-
-
-
-
-
-
-
-
-
95
(27)
573
-
-
-
-
125
(171)
-
-
-
-
-
(788)
(788)
(788)
(788)
-
-
27
134
95
-
82
(53,381)
4,101
-
-
-
-
-
-
(173)
(173)
(173)
(173)
-
-
-
171
1,426
(115)
125
-
6,990
33,672
17,476
527
82
(53,383)
5,364
Balance at 1 January 2021
Comprehensive expense
Loss for the year
Total comprehensive
expense for the year
Shares issued during the
year
Equity-settled share-based
payment
Transfers
Balance at
31 December 2021
Comprehensive expense
Loss for the year
Total comprehensive
expense for the year
Issue expenses
Equity-settled share-based
payment
Transfers
Balance at
31 December 2022
Shares issued during the
year
1,141
The notes on pages 76 to 82 form an integral part of these financial statements.
- 75 -
Notes to the parent company financial statements
For the year ended 31 December 2022
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 accordance 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:
(cid:131)
(cid:131)
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
(cid:131)
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’;
(cid:131)
(cid:131)
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
(cid:131)
Estimates and Errors’;
(cid:131)
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
(cid:131)
members of a Group, provided that any subsidiary which is a party to the transaction is wholly owned by such
a member.
1.2 Key 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
- 76 -
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 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
- 77 -
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 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 Company’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’ 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 36 to 40 of the Annual Report
& Accounts 2022.
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
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
- 78 -
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 CLA Evelyn
Partners Limited (formerly Nexia Smith & Williamson) was £10,000 (2021: £10,000).
There were no fees paid to the Company’s auditors, CLA Evelyn Partners Limited (formerly Nexia Smith &
Williamson), for services other than the statutory audit.
3
Directors’ emoluments
Aggregate emoluments
Short term benefits paid to third parties
2022
£’000
90
33
123
2021
£’000
89
33
122
There are no (2021: 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 (2021: £33,333), for the services of a director.
Remuneration, including Executive directors, is provided in the Directors’ remuneration report on pages 22
to 26.
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 (2021: 5). None of the directors had contracts
for service so the monthly average number of employees was nil (2021: nil).
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 profit
of £8,000 (2021: loss of £1,000).
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 56 of this Annual Report &
Accounts.
- 79 -
Cost
At 1 January 2022
At 31 December 2022
Accumulated impairment
At 1 January 2022
Impairment (reversal)/charge
At 31 December 2022
Net book amount
At 31 December 2021
At 31 December 2022
Investments in
subsidiary
undertakings
£’000
45,601
45,601
41,401
(909)
40,492
4,200
5,109
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 five-
year period ending 31 December 2027 (2021: three-year period ending 31 December 2024). A terminal
value was calculated using the forecast cash flows for the year ended 31 December 2027 using a long-
term growth rate of 2.25% (2021: 2.25%). Forecast cash flows were discounted using a pre-tax discount
rate of 15.4% and post-tax rate of 11.6% (2021: pre- tax rate of 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 reversal of £909,000 (2021: impairment reversal of £93,000) 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.
Current
Other receivables
Non-current
2022
£’000
2021
£’000
10
10
6
6
Amount owed by subsidiary undertakings
2,084
1,596
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
2022 was £14,223,000 (31 December 2021: £11,875,000), an increase of £2,348,000 in the year, which
- 80 -
has been recognised in profit or loss in the Parent Company’s SOCI. The gross balances outstanding at 31
December 2022 were £16,307,000 (31 December 2021: £13,471,000).
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
2022
£’000
78
259
750
1,087
2022
£’000
1,069
2021
£’000
80
159
500
739
2021
£’000
1,028
See notes 20 and 21 of the Consolidated Financial Statements for full details of the Company’s share
capital and its share option schemes.
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 2021
Credited to profit or loss in the SOCI
At 31 December 2021
Charged to profit or loss in the SOCI
At 31 December 2022
Deferred tax assets
At 1 January 2021
Foreign
exchange
£’000
30
(133)
(103)
103
-
Tax losses
£’000
(30)
Charged to profit or loss in the SOCI
133
At 31 December 2021
Credited to profit or loss in the SOCI
At 31 December 2022
103
(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 2022 or 31 December
2021.
- 81 -
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 24, 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 27 February 2023, the maturity date of the convertible loan notes was extended from 26 February 2024
to 30 June 2026. All other terms of the convertible loan notes, which were issued in February 2016, remain
unchanged. The Group have considered the financial impact of this modification, being an estimated gain of
£89,000 following the extension of the maturity date.
On 29 March 2023, the maturity date of the standby loan facility was extended from 31 December 2023
to 30 June 2024. All other terms of the standby loan facility, which was initially issued in September 2021,
remain unchanged.
- 82 -
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 2022 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 03902895)
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 17 May 2023 (the
“AGM”) is set out on pages 87 to 89 (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.
- 83 -
Directors:
Nigel Keen (Chairman)
Andrew Mears
Natalie Wettler
Julian Cazalet
Tim Irish
Christopher Jones
Mark Wippell
29 March 2023
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 2022
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 2022.
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 17 May 2023 (the “AGM”), is set out on pages
87 to 89 (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 2022 (the “Annual Report & Accounts 2022”).
Resolutions 2, 3 and 4 - Re-election of directors
Resolution 2 proposes the re-election of Nigel Keen as a director; Resolution 3 proposes the re-election of Andy
Mears as a director; and Resolution 4 proposes the re-election of Mark Wippell 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, Nigel Keen, Andy Mears
and Mark Wippell offer themselves for re-election as proposed by resolutions 2, 3 and 4.
Biographical details of Nigel Keen, Andy Mears and Mark Wippell are set out on pages 7 and 8 of the Annual
Report & Accounts 2022. 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
CLA Evelyn Partners Limited (formerly 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.
- 84 -
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 18 May 2022 (the “2022
AGM”), the directors were given authority to allot relevant securities up to a maximum aggregate nominal value of
£4,660,424 (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 29 March 2023)
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 29 March 2023. 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 2022 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 29 March 2023).
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:
(cid:131) Register your vote electronically by logging on to www.sharevote.co.uk: or
(cid:131) 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 15 May 2023. Your attention is drawn to the notes on the enclosed form of proxy.
- 85 -
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
- 86 -
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 17 May 2023 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 2022, together with the
reports of the directors and of the auditors thereon.
2. To re-elect as a director Nigel Keen.
3. To re-elect as a director Andy Mears.
4. To re-elect as a director Mark Wippell.
5. To re-appoint CLA Evelyn Partners Limited (formerly 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);
- 87 -
(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
29 March 2023
Registered office:
Terminus Road
Chichester PO19 8TX
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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 15 May 2023 (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 2022 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 15 May 2023 (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 2022, 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 2022 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 2022. 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 15 May 2023 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 15 May 2023 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 29 March 2023, 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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