[Need to insert Deltex
Medical group plc logo
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2023 Annual Report & Accounts
Deltex Medical
A UK-headquartered international
develops,
medical
manufactures and distributes a clinically-proven haemodynamic monitoring
technology that has been shown to:
company
device
which
■
■
improve outcomes for patients; and
reduce patient length-of-stay,
thereby increasing throughput and capacity for hospitals whilst lowering healthcare costs.
Real-time oesophageal Doppler haemodynamic monitoring:
improves patient outcomes; increases hospital throughput
Deltex Medical at a glance
Our technology
Deltex Medical's TrueVue System uses proprietary haemodynamic monitoring technology to assist clinicians to
improve outcomes for patients as well as increase throughput and capacity for hospitals.
Deltex Medical has invested over the long term to build a unique body of peer-reviewed, published evidence from
a substantial number of trials carried out around the world. These studies demonstrate statistically significant
improvements in clinical outcomes providing benefits both to patients and to the hospital systems by increasing
patient throughput and expanding hospital capacity.
The Group's flagship, world-leading, ultrasound-based oesophageal Doppler monitoring ("ODM") is supported by
24 randomised control trials conducted on anaesthetised patients. As a result, the primary application for ODM is
focussed on guiding therapy for patients undergoing elective surgery, although sedated patients in intensive care
are still an important part of our business. The Group's new, next generation monitor makes the use of the ODM
technology more intuitive and provides 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.
Deltex Medical's new non-invasive technology has potential applications for use in a number of healthcare
settings, including:
▪ Accident & Emergency for the rapid triage of patients, including the detection and diagnosis of sepsis;
▪
▪
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.
Deltex Medical's 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, new
TrueVue monitor which was released onto the market in November 2023. Monitors are sold or, due to hospitals'
often protracted procurement times for capital items, may be loaned in order to encourage faster adoption of the
Group's technology.
Our customers
The principal users of Deltex Medical's products are currently anaesthetists working in a hospital's operating
theatre and intensivists working in ICUs. This customer profile will change as the Group's new non-invasive
technology is adopted by the market. In the UK the Group sells directly to the NHS. In the USA the Group sells
directly to a range of hospital systems. The Group also sells through distributors in more than 40 countries in the
European Union, Asia and the Americas.
Our objective
To see the adoption of Deltex Medical's new TrueVue monitor, 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.
For more information see: 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
■ Successfully completed the restructuring of the business and achieved annualised cost savings
of approximately £1.0 million
■ Revenues of £1.8 million (2022: £2.5 million), primarily reflecting the impact from unexpected
delays in releasing the new TrueVue monitor and difficult market conditions
■ Adjusted EBITDA of £(0.9) million (2022: £(0.6) million)
■ £1.89 million fundraise completed in August 2023 with net proceeds successfully used to
strengthen the balance sheet and implement the Group’s restructuring plan
■ Achieved a 31% reduction in overheads (excluding exceptional costs) to £2.0 million (2022:
£2.9 million). The annualised reduction in overheads is expected to be c. £1 million
■ Gross cash expenditure on research and product development by the Group (excluding the
effect of grants or capitalisation of product development) amounted to £0.6 million (2022: £0.8
million). The net amount, having taken into account grants, was £0.4 million (2022: £0.7
million).
■ Cash in hand at 31 December 2023 of £0.7 million (2022: £0.5 million)
Business / commercial activities
■ Launch of the new TrueVue monitor in the UK and the EU with encouraging interest levels from
existing legacy monitor users and orders now increasing, suggesting a large potential
replacement market
■ Markets in the Middle East, Asia and South America also being targeted for the new TrueVue
monitor where Europe’s CE mark is recognised, with preparatory work also underway for local
regulatory approvals
■ Work started on the FDA 510(k) premarket regulatory filing for the new TrueVue monitor which,
when approved, will enable sales into the USA which are expected to start in 2025
■ Good progress in securing production efficiencies associated with the manufacture of the new
TrueVue monitor
■ Ongoing successful development work on a new non-invasive Doppler-based haemodynamic
monitoring device incorporating Deltex Medical’s core oesophageal doppler monitoring (“ODM")
technology with a substantial addressable market
■
Implementation of new lower cost and more efficient digital marketing strategies in line with the
Group’s new “zero-based budgeting” approach
■ Have met the operational and internal financial targets agreed by the Board for the first quarter
and the outlook is positive
Commenting on the results, Nigel Keen, Chairman of Deltex Medical, said:
“2023 was a difficult year for the Group; however, we have successfully refinanced the business
and reduced our cost base substantially and I am pleased to be able to report that 2024 has started
well.”
“We also launched the new TrueVue monitor and see a significant upgrade and replacement
market.”
“Good progress is being made on a new, easy-to-use non-invasive device which sits on the same
platform as Deltex Medical’s core ODM technology.”
1
Real-time oesophageal Doppler haemodynamic monitoring:
improves patient outcomes; increases hospital throughput
CHAIRMAN’S STATEMENT
Introduction
We are pleased to report that we successfully completed the restructuring of the Group’s business as
well as achieving annualised cost savings of approximately £1.0 million. We have since met the
operational and internal financial targets agreed by the Board for the first quarter of the year and the
outlook is positive.
Notwithstanding 2023 initially being a difficult year for Deltex Medical, 2023 saw a number of key
milestones achieved by the Group, including the successful turnaround of the business.
Deltex Medical faced three principal challenges which together contributed to the Group needing to
carry out a fundraise, details of which were announced by Deltex Medical on 14 July 2023 (the
“Fundraise”). These challenges comprised:
▪
▪
▪
a continuing slow pick-up in activity levels post the end of the Covid-19 pandemic;
extended lead times for certain specific components needed to complete the new TrueVue
monitor development, largely related to post Covid-19 supply chain issues. This resulted in the
slippage of the launch date for the new TrueVue monitor; and
delays in orders and the award of a national tender for haemodynamic monitoring with one of
the Group’s Latin American distributors which had been expected to have strong short-term
prospects for cash generation.
The Fundraise has enabled the Group to turnaround its business with the result that:
▪
▪
▪
the cost base of the Group has been significantly reduced, bringing down the cashflow
breakeven point substantially;
lower cost and more efficient digital marketing techniques have been adopted which are
expected to help drive incremental revenues albeit with smaller salesforces in the UK and USA;
and
the new TrueVue monitor was completed and launched in the UK and Europe, as well as global
markets that recognise the EU’s ‘CE mark’, in November 2023.
Since its launch, a number of existing users of the Group’s oesophageal Doppler monitoring
technology have shown strong levels of interest in the new TrueVue monitor with orders now
increasing. In parallel, good progress has been made by the Group in relation to streamlining the
manufacturing processes associated with the new monitor.
Financial results
Group revenues for the year ended 31 December 2023 decreased by 28% to £1.8 million (2022:
£2.5 million) primarily reflecting difficult market conditions and the delayed launch to the new
TrueVue monitor. These issues collectively adversely affected the sales of the Group’s single-use
disposable ODM probes which declined to £1.4 million (2022: £1.8 million).
As a proportion of total Group revenues, direct sales into the USA and UK remained broadly
unchanged at 50% (2022: 51%).
Deltex Medical’s European customers have been aware of the expected launch of the new
TrueVue monitor and during the year became increasingly reluctant to purchase the previous
generation monitor. As a result, monitor revenues reduced by 52% to £258,000 (2022:
£537,000).
The reduction in activity levels also adversely affected overhead recovery in the Chichester
production facility, resulting in the Group’s gross margin reducing to 63% (2022: 74%).
Overheads, excluding exceptional costs, decreased by 31% to £2.0 million (2022: £2.9 million).
The exceptionals of £366,000 largely related to restructuring costs, namely reducing the Group’s
2
headcount, including payments in lieu of notice, redundancy costs and associated legal fees. In
addition, £141,000 was associated with writing off research and development projects not taken
forward.
Adjusted EBITDA (comprising earnings before interest, tax, depreciation and amortisation,
share-based payments and non-executive directors’ fees) was a loss of £(860,000) (2022:
£(607,000)). 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 £0.6 million (2022: £0.8
million). The net amount, having taken into account grants, was £0.4 million (2022: £0.7 million).
This year-on-year reduction reflects that the majority of the costs for the development work on
the new TrueVue monitor were incurred before 2023.
Operating loss for the year was £(1.1) million (2022: £(0.9) million). Loss for the year was £(1.3) million
(2022: £(1.1) million).
Cash at hand at 31 December 2023 was £0.7 million (2022: £0.5 million).
Business activities
Deltex Medical sells directly, via its own sales teams, into UK and US hospitals, and via a
network of distributors into approximately 40 other international territories.
The Group’s direct sales teams continue to experience constraints in being able to access
clinicians in UK and US hospitals’ operating theatres (“ORs”) and intensive care units (“ICUs”).
These constraints were imposed by UK and US hospitals during the Covid-19 pandemic, and
many of these constraints remain in place notwithstanding the end of the pandemic.
Despite 2023 being a challenging year for the Group, progress was made on a number of fronts
including:
▪
the launch of the new monitor;
▪ development work on the new, novel non-invasive device;
▪ a substantial reduction in costs – leading to a significantly lower breakeven point; and
▪
improved marketing following adoption of new digital techniques.
These items are more fully described in the accompanying Business Review.
The Board remains focussed on the importance of cash generation. Accordingly, Deltex
Medical’s business development activities are increasingly focused on ensuring significant
incremental increases in revenues from a small number of existing and targeted prospective
customers.
Employees
On behalf of the Board, I would like to thank all of the Group’s employees for their hard work during
what was a challenging and at times stressful year.
I would also like to thank Julian Cazalet, Mark Wippell and Tim Irish who retired as non-
executive directors of the Group on 1 December 2023. Together they have been a source of
invaluable wise counsel and sound advice over a number of years.
We were separately delighted to welcome Ben Carswell to the Board on 1 December as a non-
executive director.
Current trading and prospects
The launch of the new, next generation TrueVue monitor is a key milestone for the Group, with the
first sale of the new TrueVue monitor having taken place at the end of November 2023.
We are seeing encouraging levels of interest in this product from the UK and our international
distributors. Work has already started on the FDA 510(k) premarket regulatory submission to the
US Food and Drug Administration (the “FDA”) which, once regulatory approval has been received,
3
will enable us to sell the new monitor into the US market.
We are continuing to drive forwards the development of our new non-invasive device. We believe
the new device will be used in clinical areas not served well by our existing products and will
therefore allow us to sell into significantly larger markets.
We continue to focus on optimising the commercial opportunities associated with a small
number of significant tenders, including in Latin America, where we believe that Deltex Medical’s
ODM technology has strong opportunities to take market share.
After a tough 2023, I am pleased to be able to report that 2024 has started well and we are much
encouraged for the future.
Nigel Keen
Chairman
27 March 2024
4
Real-time oesophageal Doppler haemodynamic monitoring:
improves patient outcomes; increases hospital throughput
BUSINESS REVIEW
Overview
Deltex Medical is a world leader in high accuracy oesophageal Doppler monitoring, via its
TrueVue platform, which allows real-time monitoring by clinicians of a patient’s haemodynamic
status.
More than twenty 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. The use of the ODM technology is good for patients. It also increases
throughput and capacity for hospitals, which should help reduce the backlog in elective surgery,
which is a particular issue in the United Kingdom.
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 ODM-based haemodynamic monitoring technology has migrated from the ICU to the
OR, particularly for complex elective surgical procedures; however, there are now signs of
increasing interest from ICUs in the ODM technology.
Before the Covid-19 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 to hospitals directly.
Although, post-pandemic, elective surgery has restarted around the world, medical device sales
teams, including Deltex Medical’s, are still experiencing more restricted levels of access to ORs
and ICUs than they enjoyed pre-pandemic.
Launch of the new TrueVue monitor
After a number of years in development, the Group released its new TrueVue monitor onto the
market in November 2023. The development of the new device had taken longer than expected
as a result of disrupted supply chains during, and for some time after, the Covid-19 pandemic.
The new monitor has been designed to act as a platform for a range of complementary
technologies, including a new, novel non-invasive device that the Group is also developing.
Orders for the new TrueVue monitor are increasing which is encouraging. There is a substantial
domestic and international replacement and upgrade market, which it is anticipated will drive
orders in the short to medium term. In addition, the Group expects to see probe orders increasing
based on new monitor equipment sales.
The new TrueVue monitor has been designed with production engineering input in order to reduce
the prime costs of the equipment as well as enhance its overall reliability. Good progress has
been made with reducing the labour hours required for each of the sub-assemblies as the Group
streamlines its manufacturing processes. Overall, the gross margin on the new TrueVue monitor is
expected to be higher than the previous unit, although price points vary significantly between
direct sales into the UK (as well as, post launch, the USA) and overseas sales to distributors.
Work has started on assembling the necessary documents required for the 510(k) premarket
regulatory submission to the US FDA. It is planned that the FDA filing process should be
completed in 2025 and sales of the new monitor into the US market should follow shortly
thereafter.
Non-invasive device
Deltex Medical’s current ODM device is principally used on sedated patients: typically those admitted
to ICUs or being operated on within ORs. The resultant haemodynamic data derived from the ODM
technology is extremely accurate and has been shown in some 24 published randomised controlled
trials to be associated with significantly improved patient outcomes and reduced costs to hospitals as
5
a result of shorter hospital stays. However, limiting the use of this technology just to patients in ICUs
and ORs self-evidently reduces the size of the addressable market and constrains the Group’s
revenues.
The new non-invasive Doppler-based haemodynamic monitoring device that the Group is developing
is designed to use the same underlying oesophageal Doppler haemodynamic monitoring technology
which is supported by a large body of published literature. However, a different, novel design will
enable the technology to be used non-invasively and thus on a much larger patient population.
Although this new non-invasive device is still in the development phase, the Group is working on the
basis that it should ultimately end up representing a form of digital haemodynamic stethoscope. This
will give healthcare workers, from doctors to nurses across a range of departments, immediate
access to high quality, real time haemodynamic data for patients. In turn, these data are anticipated to
give rise to improved and more rapid treatment of patients throughout a hospital or other clinical care-
giving facility such as the emergency services or a primary care doctor’s office.
Deltex Medical believes that this new, non-invasive device, with a substantially larger addressable
market, represents a significant opportunity for the Group to drive substantial profitable growth.
In parallel with working on the technical development aspects of this new, novel non-invasive
technology, Deltex Medical is carrying out structured ‘voice of the customer’ discussions with
prospective hospital-based users to determine how best to launch, and charge for, this new non-
invasive ODM technology. Discussions with a number of the Group’s international distributors suggest
that there could be significant overseas market demand when this new device is launched.
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 faced difficulties in driving its commercial activities back to those levels seen pre the
Covid-19 pandemic in its two direct sales territories of the UK and the USA. Many hospitals have
imposed significant restrictions on salespersons or clinical educators accessing ORs or ICUs. Once
any hospital stops using Deltex Medical’s ODM technology, it can take time and significant resources
to re-instigate the use of the technology as the clinical staff change rapidly and new staff need to be
trained on the use of ODM.
Deltex Medical has also been restricting expenditure on sales and marketing activities in the UK and
USA in advance of the launch of the new monitor.
One way in which the Group has been seeking to mitigate the impact of its reduced sales and
marketing spend, as well as the impact of greater restrictions on sales teams meeting hospital-based
decision-makers in person, is by increasing the use of digital marketing materials. The Group is
adopting a number of digital marketing techniques as well as training via the launch of its online
Deltex Medical Academy.
The Group monitors closely per user probe revenues. Internal analyses demonstrate that only small
increases in per (hospital) account probe purchases, or the successful adoption of the ODM
technology by a small number of new, high-volume users, should drive the Group to positive
cashflow.
There remains a substantial, and increasing, backlog in elective surgery as a result of the Covid-19
pandemic. In the UK the adverse effects of this backlog on patients have been exacerbated by a
number of strikes by NHS healthcare workers. 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 a
hospital and improves patient outcomes, thereby helping to reduce the size (and associated cost) of
the backlog. Conversely, there is some anecdotal evidence that certain NHS hospitals, under
pressure to reduce the backlog, are reluctant to promote the adoption of new and/or different
technologies.
Following the launch of the new TrueVue monitor, Deltex Medical has now notified all UK hospitals
6
that the previous legacy version (CardioQ-ODM+) is now obsolete. The Group has a regulatory
requirement to provide service support to maintain these devices for ten years. Many NHS hospitals
with the previous monitor are expected to apply for funding from capital replacement programmes to
purchase the new monitor.
As it will take some time to complete the submissions required to receive FDA approval for the new
TrueVue monitor, the Group’s US operation has been tasked with supporting as many existing
customers as possible in order to drive up probe sales, whilst cultivating these existing relationships in
advance of the launch of the new TrueVue monitor into the US market, which is expected to be next
year.
The International division, with its team of some 40 overseas distributors, continues to represent an
important route to market for the Group’s products. International sales represent approximately half of
the Group’s revenues.
In the first quarter of 2024, the new TrueVue monitor has been demonstrated at three large
international medical exhibitions. Deltex Medical attended Arab Health in January 2024, which is now
one of the largest medical device exhibitions worldwide, where it also met with a number of its
distributors. Deltex Medical also attended the Korea International Medical & Hospital Equipment Show
(KIMES) in Seoul, as historically the legacy monitor sold well in South Korea.
Earlier this month, the Group exhibited at the World Congress of Anaesthesia (WCA) in Singapore
which is held every four years. The advantages of using Deltex Medical’s technology were presented
at the WCA by a clinician who presented data that demonstrated that the ODM technology should be
used on young fit patients; and not just sick elderly patients.
Although the Latin American contract that the Group was awarded last year has not developed as
rapidly as was first expected, there are encouraging signs that over the next couple of years this
contract will be an important source of revenues to Deltex Medical. In this respect, it is encouraging
that some hospitals in that market have already started to purchase probes that are linked to this
contract.
Product development and innovation
During 2023, the research and development team were focussed on completing the development of
the new TrueVue monitor. This included the completion of complex and onerous regulatory testing,
including electromagnetic compatibility (EMC) testing.
Notwithstanding that the successful development of the new monitor was the Group’s priority,
research work also continued on the development of the new, novel non-invasive haemodynamic
monitoring technology, including the integration of the recommendations of the National Physical
Laboratory arising from Deltex Medical’s collaborative research work with them.
In addition to the development work on the new non-invasive device, work continues in relation to
supporting the launch of the new TrueVue monitor.
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 the
Group keeps 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, and by when,
for a Class II medical device manufacturer to comply with MDR in the future.
Investment in the Group’s regulatory activities remains an important part of the business and is critical
for its future success.
7
Conclusion
Completion of the new TrueVue monitor has greatly enhanced Deltex Medical’s technological
offering to the market as well as opening up the possibility to use this instrument as a platform for
further product line extensions. We are particularly interested in the commercial potential, and
significantly larger addressable market, associated with the easier-to-use non-invasive
haemodynamic monitoring technology which we are developing.
Initial market feedback and demand for the new monitor has been encouraging, both from
existing and prospective customers. We see its launch as a critical building block in driving up
probe revenues across all three of the Group’s divisions.
Our key challenge is to commercialise the Group’s new technologies successfully from our
significantly lower cost base by maximising the use of digital marketing. As we start to generate
cash, we will be able to initiate further sales initiatives to drive up revenues.
We are pleased with the progress that we have made to date in 2024.
Andy Mears
Chief Executive
27 March 2024
8
Directors
NON-EXECUTIVE DIRECTORS
Nigel Keen, Chairman, MA FIET
Nigel has been involved with Deltex Medical since 1988 and has been Chairman since 1996.
He is also Chairman of the following companies: Health Innovation Network Oxford and
Thames Valley, 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 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.
Christopher Jones, Non-Executive Director
Chris joined the Board in June 2015 and brings over 30 years of experience in Fortune 500 and
venture capital funded healthcare companies in both the UK and the USA.
He is currently the Senior Independent non-executive director (SID) of Deltex Medical.
He is Executive Chairman of: Verinnogen Ltd, and non-executive Director of MediSieve Ltd,
Causeway Therapeutics Ltd, Carbometrics Ltd, Rockridge Medical 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.
Ben Carswell, Non-Executive Director, MBA, FCA
Ben joined the Board on 1 December 2023 and is Chairman of the audit committee.
Ben is a seasoned business leader with experience in commercialising Software-as-a-Service
(SaaS) platforms for start-ups and established businesses.
Ben is currently a non-board director at Kraken Technologies, which forms part of Octopus Energy
Group. Ben was previously Chief Commercial Officer at DPR Limited and has held senior positions
at Fiserv and MoPowered.
9
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.
10
-
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.
The Directors have prepared the Group financial statements in accordance with UK-adopted
international accounting standards and parent company financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law).
Under company law the Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the Group and Parent
Company, and of the profit or loss of the Group for that period. In preparing the financial
statements, the Directors are required to:
■
■
select suitable accounting policies and then apply them consistently;
state whether international accounting standards have been followed for the Group
financial statements; and, as regards United Kingdom Accounting Standards,
comprising FRS 101, whether the relevant accounting standards have been followed
for the Parent Company financial statements, subject to any material departures
disclosed and explained in the financial statements;
■ make judgements and accounting estimates that are reasonable and prudent; and
■
prepare the financial statements on a going concern basis unless it is inappropriate to
presume that the Group and Parent Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to
show and explain the Group and Parent Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Group and Parent Company; and enable
them to ensure that the financial statements comply with the Companies Act 2006.
The Directors are also responsible for safeguarding the assets of the Group and Parent
Company and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities. In addition, the Directors are responsible for ensuring that they meet their
responsibilities under the AIM Rules for Companies.
The Directors are also 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.
11
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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
and broker
Allenby Capital Limited
5th Floor
5 St Helen’s Place
London EC3A 6AB
Independent auditor
Cooper Parry Group Limited
Sky View, Argosy Road
East Midlands Airport
Castle Donnington
DE74 2SA
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
12
Corporate Governance Statement
Chairman’s introduction
Deltex Medical’s purpose is to provide returns to shareholders by enabling improvements in
outcomes for patients around the world by creating, validating and delivering innovative
healthcare solutions associated with haemodynamic monitoring.
The Group aims to achieve this by:
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supporting evidence-based medicine to create sustainable health benefits in the
communities which it serves;
investing in products, services and its employees;
partnering with clinicians to help them adopt the technologies associated with
Deltex Medical’s TrueVue System;
communicating openly and honestly with its customers as well as internally among
colleagues;
providing excellent levels of support, education and specialist training, taking into
account any constraints imposed directly or indirectly as a result of post-Covid
hospital access restrictions;
continuing to be thought-leaders to drive innovation; and
establishing appropriate committees of the Board and related governance structures,
including those required under section 172 of the Companies Act 2006, to help
monitor and guide the aims summarised above.
The Board of Deltex Medical has chosen to adopt the QCA Corporate Governance Code (the
“QCA Code”) that was published by the Quoted Companies Alliance in April 2018. The Code
is structured around a number of broad principles which the Board seeks to apply and which
are summarised below.
Further information in relation to how the Board applies the QCA 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 Deltex Medical in terms of obtaining access to hospitals by its sales teams
following restrictions put in place during and since the Covid pandemic.
The Board keeps the Group’s strategy and business model under close and continuing
review, most notably at its regular Board meetings.
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, if
they wish to meet, twice a year, typically around the publication date of the annual
accounts and the interim results.
Shareholders are otherwise kept up to date via announcements made through a
regulatory information service on matters of a material substance and/or regulatory
nature.
13
3) Take into account wider stakeholder and social responsibilities, and their
implications for long-term success
The Board believes that engaging with its stakeholders strengthens the Group’s
relationships and helps it to make better business decisions which, in turn, helps it to
deliver on its commitments and responsibilities.
The Board is regularly updated, principally by the CEO and the FD, on wider stakeholder
engagement and feedback in order to help it stay abreast of relevant insights into the
issues, including social responsibilities, that matter most to the Group’s stakeholders. 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 21 to 23 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 two non-executive Directors.
In December 2023 three longstanding non-executive Directors stepped down; and a new
non-executive Director was appointed. This change in the composition of the Board has
helped to refresh it and keep it well-functioning.
The biographical details of the Directors are set out on pages 9 to 10. 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 and
appropriateness of the non-executive Directors. In this respect, for the purpose of the QCA
Code, Chris Jones is considered to be the senior independent non-executive Director and
Ben Carswell is considered to be an independent non-executive Director.
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 as well as appropriate financial and public market skills.
Each non-executive Director brings experience of other relevant businesses which helps
the Board, as a whole, benchmark and appraise the Group’s progress and strategy. The
Board is not dominated by one individual and all Directors have the ability to challenge
proposals put forward to any meetings.
14
The Company retains the services of independent advisors including financial and legal
advisers that are available to the Board and who provide support and guidance to the
Board.
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 and Remuneration 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.
The Board considers that the corporate governance policies that it currently has in place
for Board performance reviews are commensurate with the size and the current
development stage of the Group.
8) Promote a corporate culture that is based on ethical values and behaviours
As a provider of regulated medical devices to patients across the world, ethical
behaviour by Deltex Medical’s Directors and employees is critically important to the
Group’s success.
The Group’s products are designed and manufactured by highly-trained employees
based in Chichester (UK) who comply with Deltex Medical’s long-established and
extensively audited Quality System.
The Group’s sales teams and clinical educators promote Deltex Medical’s products, and
their benefits, to clinicians and healthcare systems in an open way; and by reference to
the substantial body of published academic studies which support the use of the
TrueVue technology. Further, the Group provides extensive training to customers to
allow them to gain the maximum advantage from its 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 2023 all the non-executive Directors attended the scheduled Board meetings in the
year except that: (i) Tim Irish was unable to attend the May and November Board
meetings; and (ii) Mark Wippell was unable to attend the September meeting. 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 support and enhance 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
Deltex Medical maintains an ongoing and continuous dialogue with shareholders and
15
other stakeholders to discuss, among other things, the opportunities for, and challenges
facing, the Group.
Although the shareholder and stakeholder dialogue is primarily built around the Group’s
annual and interim results, as referred to in paragraphs 2) and 3) above, shareholders
are informed of significant developments relating to the business through periodic stock
exchange RNS announcements and/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 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
27 March 2024
16
Strategic Report
The Directors have set out below their Strategic Report for the year ended 31 December 2023.
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 5)
3. Corporate Governance (page 13)
4. Principal Risks of the Group (page 21)
5. Directors’ Report (page 24)
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)
2023
(860)
2022
(607)
(1,052)
(947)
63%
705
1,425
258
74%
471
1,800
537
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.
On 14 July 2023, the Group published a circular to shareholders (the “Circular”) providing
details on a placing and subscription of new ordinary shares to raise £1.67 million (before
expenses); a retail offer to raise up to £0.5 million; and a capital reorganisation to change the
nominal value of the Group’s existing ordinary shares (together the “Fundraise”).
On 24 July 2023, the Group announced that the retail offer had raised gross proceeds of
£221,258.54; and that accordingly the Fundraise had raised a total of £1.89 million (before
expenses).
In addition, the Circular provided details on £1.0 million of short-term loans to the Group from
Imperialise Limited, a company controlled by Nigel Keen, Chairman of Deltex Medical. In
order to improve the Group’s working capital position, Imperialise Limited agreed to
restructure these short-term loans so that: (i) £0.25 million will be repayable by 30 June 2025;
(ii) £0.4 million by 31 December 2025; and (iii) the balance of £0.35 million was repaid by the
issue of 175 million new ordinary shares in the Group as part of the Fundraise.
The Circular explained that the net proceeds of the Fundraise were expected to be used for,
among other things, near-term working capital and to fund non-recurring restructuring costs
which were expected to give rise to approximately £1.0 million of annualised cost savings. On
18 September 2023, the Group announced in its interim results that this restructuring plan had
been implemented and some £1.0 million had been removed from the cost base.
17
Further information on the Fundraise is set out in the Circular, an electronic copy of which can be
obtained from Deltex Medical’s website: https://www.deltexmedical.com/wp-
content/uploads/2023/07/266481-Placing-and-subscription-WEB.pdf
Further information on the standby loan facility and the convertible loan notes are set out in Note
17.
The Directors have reviewed detailed budgets and forecasts until 30 June 2025, which take into
account, among other things, the launch of the new TrueVue Monitor and the effect of a
significantly lower cost base. This review indicates that the Group is expected to continue trading
as a going concern based on projected net cash flows derived from the sales of Deltex Medical
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 can be 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 a whole and, in doing
so, have regard (amongst other matters) to:
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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
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 13 to 16 within this document. In addition, the following paragraphs summarise how the
Directors fulfil other aspects of their duties under section 172:
Risk management
The Group sells highly regulated medical devices. Its customers are principally located in
hospital intensive care units and operating theatres / rooms. Given the nature of the Group’s
business, it is important that Deltex Medical identifies, evaluates, manages and mitigates the
risks that it identifies affect, or could affect, its business. For further information on the
identification of these risks, see the section entitled ‘Principal Risks of the Group’ on page
21.
Our employees
Deltex Medical has a long-standing commitment to being a responsible business.
The Group’s behaviour is aligned with the expectations of its employees, customers,
shareholders, communities and society as a whole.
For Deltex Medical to succeed the Group needs to, among other things, help ensure that its
employees are performing to the best of their abilities. As part of this, the Group carries out
18
appropriate training and continuous professional development.
Considerable planning work was undertaken during the headcount reduction process in the
second half of 2023 to ensure that this process was, and was seen to be, carried out in a fair,
equitable and professional manner.
Business relationships
The Group’s strategy targets organic growth via direct sales in the UK and the USA, and
internationally via a network of overseas distributors.
Deltex Medical sells a sophisticated medical device - comprising a monitor (i.e. equipment /
hardware) and probes (i.e. consumables) - to existing and new customers as well as to
distributors.
In order to successfully generate revenues, the Group needs to develop and maintain strong
customer and distributor relationships. This has been made substantially more challenging
in recent years as a result of the pandemic and its after effects, especially as there has been
a significant reduction in the number of “face-to-face” meetings in hospitals in the UK and
USA.
Deltex Medical has tried to compensate, to the extent possible, for the restrictions /
constraints imposed on interactions or meetings with actual or prospective hospital-based
customers, by the use of online video meetings and creating an online training and
education academy which is free to access for customers.
The Group also needs to develop and maintain close relationships with suppliers, many of
which have worked with Deltex Medical for a number of years.
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 with this legislation in both established and developing markets.
For more information on the Group’s approach to compliance with anti-bribery
legislation see the corporate governance section on the website:
https://www.deltexmedical.com/investor-relations/aim-rule-26/corporate-governance/
Community and environment
The Group’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 create positive change for
the people and communities with which it interacts.
The regulations which govern its products increasingly give rise to environmental
considerations. As part of all new product development work, the Group considers carefully
environmental aspects such as the product’s carbon footprint as well as ways of reducing
the number of non-recyclable plastic components and packaging used in the production
process.
The Group is also mindful that as a supplier to the NHS it should be carbon net zero by
2050, and has started to think through the steps that it needs to take to meet this target.
Deltex Medical is also aware that many of its customers require detailed responses to
information requests relating to the Group’s approach to the protection of the environment.
Shareholders
The Board is committed to engaging openly with the Group’s shareholders. The Board
also recognises the importance of a continuing dialogue with shareholders, whether
with large institutional investors, private shareholders or employee shareholders.
19
For more information on Deltex Medical’s approach to interacting with shareholders please see
the Corporate Governance Statement on page 13.
The Strategic Report comprising pages 17 to 20 has been approved by the Directors and
signed
By order of the Board
Natalie Wettler
Company Secretary
27 March 2024
20
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 of risks and
uncertainties 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 will not arise in the future that are not summarised or referred to below.
Personnel
The successful selling of the Group’s technology depends on a number of factors, including:
(i) the skill, motivation and experience of its sales personnel in educating (and re-educating)
clinicians about the benefits associated with the effective use of Deltex Medical’s products; (ii) the
manufacturing of its products to detailed specifications, including appropriate engineering
tolerances and sterility; (iii) the experience and innovation of its research and development team
developing the next generation of its novel products; and (iv) the skill and thoroughness of its
quality assurance team in ensuring that all products leaving its manufacturing facilities in
Chichester conform to the highest standards and prevailing regulatory requirements. Together
these factors, including the ability to recruit and retain appropriately skilled and motivated
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 territories and sectors which inherently
represents and/or creates 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 appropriate European Union regulatory body, BSI and the American Food and Drug
Administration.
In Europe, Deltex Medical is 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. Compliance with these regulations is
mandatory for medical device companies that want to sell their products on the European market.
The implementation date of MDR has now been deferred until December 2028 for Class IIb
medical devices. The impact of the transition from the existing MDD regime to MDR is currently
unknown. There is a level of risk inherent in the uncertainty and costs associated with the
transition to MDR.
The Group operates across the world and is subject to extensive legislation and regulation,
including with respect to anti-bribery and anti-corruption laws. Deltex Medical’s international
operations are governed by the UK Bribery Act and the US Foreign Corrupt Practices Act which
prohibit, directly or via representatives, the making or offering of improper payments to
government officials and other persons; or accepting payments for the purpose of obtaining or
maintaining business. The Group’s international operations in developing markets via distributors
increase its 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
21
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, the Group notes that its 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 suppliers’ / vendors’ salespersons or clinical educators from
meeting with relevant decision-makers within a hospital.
The Group has historic sales data which suggest 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 receptive or open hospitals are to the setting up of face-to-face meetings by
Deltex Medical’s sales teams is an important determinant of direct sales in the short to medium
term; and as such this openness, or lack thereof, represents a significant commercial risk to
Deltex Medical. This issue is also pertinent as regards the successful launch, and sales, of the
new monitor.
There is a substantial backlog, particularly in the UK, of elective surgical procedures that had to be
cancelled during the pandemic. The recent strikes by healthcare workers in the NHS has made
the resolution of the UK backlog more challenging. Although this backlog represents a potential
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.
Research and Development (“R&D”)
The Group is currently carrying out a substantial and complex product development programme.
Such R&D programmes are challenging and are not without risk. Further, as the regulatory
environment for medical devices becomes more onerous around the world, the successful
completion of development programmes becomes more difficult.
Although the Group seeks to mitigate these R&D-associated risks based in large part by drawing
upon its 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. Moreover, the costs of product
development in the medical device sector continue to rise due to ever more onerous regulatory
regimes; and the Group does not have unlimited, or substantial, financial resources which it can
apply to its R&D activities.
Further information on the Group’s R&D work is set out in the Business Review.
Competition
A number of competitors sell products to the same group of clinicians that Deltex Medical is
targeting. Most of these competitors’ products have the same objective as the Group’s, namely to
measure a patient’s haemodynamic status.
Some of these competitors are significantly larger and have substantially greater financial and
marketing resources than the Group. This represents a key risk factor for Deltex Medical.
Substantially all of these competitors use different technologies to the oesophageal Doppler-based
technology used by the Group. The Board believes that none of these competitors have a clinical
evidence base which is equivalent to that supporting the use of the Group’s technology; however,
there is a risk that the end-customer will not take into account this evidence base when evaluating
Deltex Medical’s Doppler-based technology.
There is also a risk that as the technology around “wearables” improves and develops, a
competitor(s) could develop small “wearable” devices which it subsequently markets with claims of
generating similar high fidelity haemodynamic monitoring data; and which it claims are broadly
equivalent, at least in part, to the Group’s oesophageal Doppler TrueVue
22
technology. The Board believes that for a number of technical reasons there will not be true
comparability between Deltex Medical’s TrueVue technology and any such “wearable” device;
however, there are marketing and ease-of-use related risks associated with such potential
market developments and competitor activities.
Financial – ongoing funding requirements
The Group has recently implemented: a significant cost reduction, largely relating to reducing its
headcount; the launch of a new product; and is also carrying out complex ongoing product
development, most notably in relation to the new non-invasive product. Since the pandemic the Group
has been loss making at the adjusted EBITDA level.
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:
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■
■
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;
changes in government policies and spending plans, particularly in respect of
healthcare systems;
lower than anticipated orders for the Group’s products and a concomitant negative effect
on the Group’s cashflows;
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, including in
the Middle East, which could adversely affect the global economy and make it harder for
Deltex Medical to export successfully.
23
Directors’ Report
The Directors present their report and the audited consolidated financial statements for the year
ended 31 December 2023.
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 5 and the Principal Risks of the Group on page 21.
Subsequent events
There are no subsequent events to disclose since the balance sheet date.
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 referred to in the Principal Risks on page 21
and are set out in note 23 to the financial statements on pages72 to 75.
Dividends
The Directors do not propose the payment of a dividend for 2023 (2022: £nil).
Directors
The Directors of the Group who served during 2023 are shown below. Biographical details of the
current Directors are given on pages 9 and 1 0 .
Nigel Keen
Non-executive Chairman
Andy Mears
Chief Executive
Natalie Wettler
Group Finance Director
Chris Jones
Non-executive Director (Senior independent Director)
Ben Carswell
Non-executive Director (joined the Board on 1 December 2023)
Julian Cazalet
Non-executive Director (stepped down on 1 December 2023)
Tim Irish
Non-executive Director (stepped down on 1 December 2023)
Mark Wippell
Non-executive Director (stepped down on 1 December 2023)
In the case of each Director in office at the date that the Directors’ report is approved:
■
■
so far as the Director is aware, there is no relevant audit information of which the Group
and Parent Company’s auditor is unaware; and
the Directors 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 auditor is aware of that information.
24
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 and 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, including in the Business Review.
Employee engagement
Approximately once a quarter a Board meeting takes place at the Group’s Chichester
headquarters. Time is scheduled during this 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 a Board 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 (and vice versa).
Independent auditor
On 4 December 2023, Deltex Medical announced that it had approved the appointment of Cooper
Parry Group Limited (“Cooper Parry”) as the Group’s new external auditor and that CLA Evelyn
Partners had resigned as auditor. A resolution concerning the appointment of Cooper Parry will be
proposed at the forthcoming Annual General Meeting.
Annual General Meeting
The notice convening the Annual General Meeting, which will take place on 8 May 2024 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
27 March 2024
25
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
Deltex Medical’s senior team to achieve the Group’s strategic objectives and long-term growth for
shareholders.
In July 2023 the Group completed a fundraising at a deeply discounted share price. The effect of
this is substantially to reduce the value of the existing share options held by the Group’s
executive team. In addition, both of the two existing share option schemes in the Company have
reached a point where under their rules no further options can be granted. Accordingly, the
Remuneration Committee has decided to put in place two new share incentive plans. The first will
be a plan under which up to 15% of the Company’s share capital from time to time can be made
available to award share options to the Group’s employees over a ten-year period. The shares
will be issued with an option price at or above the market price at the time of issue. The options
will vest in not less than three years and will be exercisable up to ten years from the date of
issue. For the executive directors, the option grants will be subject to performance conditions
which will be agreed at the time of issue and which will require the achievement of stretching
targets.
In addition to this new plan, the Company intends to make a one-off issue of a number of
performance options to each of the two executive directors. These options will be issued at 0.2p
per share, the price at which the new shares were issued at the fundraising in 2023. The options
will be exercisable between three and ten years after issue subject to the achievement of
performance conditions geared to achieving the successful turn round leading to sustainable
profitability for the business. For each recipient the number of performance options granted
he Company at the time of gr nt. Taking
would equate to up t
both schemes together, the proportion of the Company’s share capital from time to time that can
be made available to award share options to the Group’s employees over a ten-year period will
be limited to a maximum of 20%.
he is ue share cap tal of t
o 5% of
t
d
a
s
i
I would be pleased to respond to any queries should any shareholder require more information
about the Group’s remuneration policies.
Yours sincerely
Nigel Keen
Chairman of the Remuneration Committee
27 March 2024
26
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:
■
considering and determining the remuneration policy for the executive Directors;
■ within this agreed policy, considering and determining the total remuneration
packages of each of the executive Directors of the Group;
■
■
■
approving the design and performance targets for all performance-related plans for
employees as well as the overall total annual payments made under such plans;
reviewing and noting remuneration trends across the Group; and
determining the policy for pension arrangements, service agreements and
termination payments to executive Directors.
The members of the Committee are appointed by the Board and during the year comprised all the
independent non-executive Directors.
Nigel Keen is the Chairman of the Committee. The Board considers that Nigel, with his
experience of working at senior levels in global healthcare and technology companies, has the
most appropriate blend of skills and experience to be chairman of the Committee.
All members served throughout the year, save for Messrs Cazalet, Irish and Wippell who stepped down
from the Board and all Board committees on 1 December 2023; and for Ben Carswell who was appointed
to the Board and the Committee on 1 December 2023.
This report sets out the Directors’ remuneration policy for 2023 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 form part of the audited financial statements.
The remuneration policy is designed to promote 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 employees who are needed to execute
the Group’s strategy.
The Group seeks to reward employees 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 its employees that their remuneration 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 seeks to ensure
that the overall remuneration policy does not encourage inappropriate risk taking.
27
During the year the Committee considered whether the current policy remained appropriate for 2023.
It aims to have a remuneration policy which is appropriately balanced between competitive pay,
incentives to develop and the growth of the Group in line with its strategy; and that it effectively
rewards for success and does not reward where targets are not met. Salaries were last reviewed
across the Group on 1 July 2023 and the Circular associated with the Fundraise included information
on changes to the executive Directors’ remuneration. As part of the changes agreed at the time of the
Fundraise, the CEO agreed to a 40% reduction in salary until January 2025. Similarly, the FD agreed
to a 20% reduction in salary until January 2025. Furthermore, cash expenditure needs to be tightly
controlled while the Group is achieving its turn round to profitability which restricts the opportunity for
the normal cash bonus arrangements.
As described in the introduction, two new share option plans are being introduced. The first is a
medium-term plan which will allow options to be awarded from time to time to the Group’s employees,
including executive Directors.
Awards under this plan for each executive Director will normally be made at a maximum of 100% of
salary. Vesting of the awards after three years will be determined by stretching performance conditions
decided at the time of issue geared to the successful completion of the Group’s business plan. Taking
into account the award of the performance options referred to below, the initial awards for the executive
Directors will be restricted to 50% of salary.
In addition to this new plan the Company intends to make a one-off issue of a number of performance
options to each of the two executive Directors. For each recipient the number of performance options
granted would equate to up to 5% of the issued share capital of the Company at the time of grant. The
options will be exercisable between three and ten years after issue subject to the achievement of
performance conditions geared to achieving the successful turn round leading to sustainable
profitability for the business.
The Group is very small yet it operates in a complex, highly regulated international medical device
market. It is intended that the issue of these performance options takes account of this and recognises
the agreed reduction in salary by the two executive Directors as well as the absence of a cash bonus
plan in the near term.
Apart from the performance options described herein, 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, which are available for inspection at the
Group’s registered office, are as follows:
Executive director Contract date
Unexpired term of contract
Andy Mears
6 November 2018
Rolling contract; 6 months’ notice
Natalie Wettler
28 May 2021
Rolling contract; 6 months’ notice
Non-executive Directors
For the appointment of a new Chairman or non-executive Director, the fee arrangement would be
in accordance with the approved remuneration policy in place at the time.
Non-executive Directors do not have service contracts but are appointed under letters of appointment.
Their appointment can be terminated without notice and with no compensation payable on termination,
other than accrued fees and expenses.
Chairman
Under an arrangement between the Group and Imperialise Limited, Nigel Keen is retained to act as
28
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’ written 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
Total
£
£
£
£
£
Andy Mears
2023
175,000
7,500
8,000
2022
200,000
7,500
8,000
Natalie Wettler
2023
2022
116,667
7,500
125,000
7,500
4,750
5,000
-
-
-
-
Total
2023
2022
291,667
15,000
12,750
325,000
15,000
13,000
-
*
‘Benefits’ comprise the provision of a car allowance paid in cash
190,500
215,500
128,917
137,500
319,417
353,000
Andy Mears has an interest in share options over Deltex Medical ordinary shares as per the table
below. These options cannot be exercised without first fulfilling certain EPS-based 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 certain EPS-based
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
Number
225,000
2,500,000
16 February 2025
15 February 2032
0.0135
8,500,000
Total
11,225,000
29
NON-EXECUTIVE DIRECTORS
Non-executive
Directors
Year
Cash
settled
Directors’
fees
Equity
settled
Directors’
fees
Benefits Pension
Annual
bonus
Long term
incentive
awards
Total
£
£
£
£
£
£
£
-
-
-
-
-
-
-
-
-
18,000
1,500
-
33,333
33,333
-
-
24,000
-
22,000
-
-
-
-
-
1,500
79,333
18,000
33,333
Nigel Keen
2023
2022
Julian Cazalet
2023
*
Chris Jones
**
Mark Wippell
***
Tim Irish
****
2022
2023
2022
2023
2022
2023
2022
Ben Carswell
2023
*****
Total
2022
2023
2022
Notes to the above table
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,333
33,333
-
-
24,000
-
22,000
-
-
18,000
1,500
-
80,833
51,333
*
**
***
****
*****
Julian Cazalet stepped down from the Board on 1 December 2023. As part of the Fundraise, he
waived his fees in respect of 2022 and elected to waive his fees for the 11 months ended 1
December 2023
Chris Jones waived his 2022 fees as part of the Fundraise
Mark Wippell stepped down from the Board on 1 December 2023. As part of the Fundraise he
waived his fees in respect of 2022 and his 2023 fees were settled by the issue of new ordinary
shares in the Group in January 2024
Tim Irish was appointed to the Board on 20 January 2021 and stepped down on 1 December 2023.
His 2022 fees were settled in cash in January 2024. He also elected to waive his fees for the 11
months ended 1 December 2023
Ben Carswell was appointed to the Board on 1 December 2023. His fees for 2023 were settled in
cash in January 2024
The Circular relating to the Fundraise set out further information on the emoluments of the non-
executive Directors, including the waiving of certain fees by the non-executive Directors.
As at 30 June 2023 the total accrued liability on the balance sheet relating to deferred equity settled
fees to the non-executive Directors was £170,000. Deltex Medical had previously announced on 21
December 2020 that it intended to satisfy the Chairman’s and the non-executive Directors’ (save for
Tim Irish’s) emoluments through the issue of ordinary shares at the prevailing mid-market price on
a semi annual basis.
30
The most recent tranche of ordinary shares issued in relation to this accrued liability was
announced on 11 April 2023 in respect of fees for the year ended 31 December 2021. As part of
the Proposals set out in the Circular, the non-executive directors (save for Tim Irish) agreed to
waive their fees for the year ended 31 December 2022. However, 18,966,477 new ordinary shares
were issued to Imperialise Limited (a company controlled by Nigel Keen, Chairman of Deltex
Medical) in lieu of the Chairman’s fees plus employer national insurance contributions for the year
ended 31 December 2022.
In 2024 the quantum of the non-executive Directors’ emoluments will remain unchanged. The
Chairman will receive £33,333 which he intends to be equity settled. The quantum of the non-
executive Directors’ fees is different, depending on whether they are cash or equity settled.
Currently the non-executive directors can select on a pro rata basis between £24,000 in respect of
equity settled fees for the year; and £18,000 for cash settled fees for the year. At the current time,
the intention is that the non-executive Directors will receive fees that are 50% equity settled and
50% cash settled. The share issuance associated with the equity settled fees is expected to occur
on an annual basis when permitted.
Dilution limits
Under the new share option plan, up to 15% of the Company’s share capital from time to time over
a ten year period can be made available to award share options to the Group’s employees.
Directors’ shareholdings
Directors’ shareholdings as at 31 December 2023 are shown in the table below.
DEMG Directors’
shareholdings
Legally owned
Unexercised
options
Andy Mears
11,658,731
Natalie Wettler
1,010,400
Nigel Keen
332,267,649
Ben Carswell
-
Chris Jones
64,479,109
-
-
-
-
-
Unvested options
subject to
performance under
the EMI scheme
25,000,000
11,225,000
-
-
-
Approval
This report was adopted by the Committee on 27 March 2024 and has been approved subsequently by
the Board.
Nigel Keen
Chairman of the Remuneration Committee
27 March 2024
31
Report of the Audit Committee
Introduction from Ben Carswell MBA 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 1 December 2023 when I joined the Board and consider that I have recent and
relevant financial experience.
Ben Carswell MBA FCA
Audit Committee Chairman
27 March 2024
Key responsibilities
The primary responsibility of the Audit Committee is to assist the Board fulfil its oversight
responsibilities in respect of the Group’s financial reporting, accounting systems, risk management
and associated public disclosure. Accordingly, the Audit Committee is required to:
■ monitor the integrity of both the Group’s interim and annual report and accounts;
■
■
■
■
■
review any significant financial reporting matters that may arise, and agree on the
reasonableness of the judgements that they may contain;
advise on the clarity of disclosure of information provided in the report with the objective of
ensuring that the annual report and accounts, as a whole, is fair and balanced;
ensure that both the Group’s interim and annual report and accounts have been prepared in
accordance with applicable accounting standards and that any significant estimates made are
considered to be reasonable;
review the adequacy and effectiveness of the Group’s systems of internal control and
risk management; and
oversee the relationship with the Group’s independent auditor, 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, up to 1 December 2023, by Julian Cazalet who is a Chartered Accountant with recent
and relevant financial experience; and thereafter until the year end by Ben Carswell who is also 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 auditor without the executive Directors in
attendance.
32
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 auditor 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 21 to 23.
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 auditor 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 cashflow 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 Group’s overheads. In the context of the value-in-use
calculation, the Committee satisfied itself that the discount rate adopted was appropriate to use.
External audit
Prior to the commencement of the audit, the Audit Committee received an audit planning document
from the auditor 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 auditor a
post-audit management letter which set out the key findings from the audit. The auditor 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 Cooper Parry Group Limited and has recommended to the Board that they are
reappointed.
A resolution to this effect will be proposed at the forthcoming Annual General Meeting.
33
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 2023 which comprise the Consolidated Statement of Comprehensive
Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company
Statements of Changes in Equity, the Consolidated Statement of Cash Flows and 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 Financial Reporting Standard 101 ‘Reduced
Disclosure Framework’ (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s
affairs as at 31 December 2023 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with UK adopted international
accounting standards;
the parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are independent of the group and parent company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Our approach to the audit
We adopted a risk-based audit approach. We gained a detailed understanding of the group’s business, the
environment it operates in and the risks it faces.
The key elements of our audit approach were as follows:
In order to assess the risks identified, the engagement team performed an evaluation of identified components and
to determine the planned audit responses based on a measure of materiality, calculated by considering the
significance of components as a percentage of the group’s total revenue and profit before taxation and the group’s
total assets.
From this, we determined the significance of each component to the group as a whole and devised our planned
audit response. In order to address the audit risks described in the Key audit matters section which were identified
during our planning process, we performed a full-scope audit of the financial statements of the parent company,
Deltex Medical Group plc, and of the group’s UK and US trading subsidiaries, providing 100% coverage of revenues
and profit before tax for these components.
The operations that were subject to full-scope audit procedures made up 99% of consolidated revenues and 90%
of consolidated profit after tax. We applied analytical procedures to the Balance Sheets and Income Statements of
the entities comprising the remaining operations of the group, focusing on applicable risks identified as above, and
their significance to the group’s balances.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial statements of the current year and include the most significant assessed risks of material misstatement
34
(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.
Risk Description
Revenue recognition:
As detailed in note 2 to the financial statements,
the Group’s
Significant Accounting Policies,
revenue is generated from two main streams, as
follows:
the sale of equipment;
•
• maintenance contracts.
it
is
Given the material nature of revenue and the variety of
the
methods
recognition and
appropriateness of
management’s application of the Group’s revenue
recognition accounting policies represents a key
risk area of significant judgement in the financial
statements.
generated
revenue
through,
Capitalisation of development costs:
The group capitalises a significant amount of
development costs, which is held on the Balance
Sheet as an intangible asset and amortised over its
estimated useful life.
The carrying value of these intangible assets is
£3,899,000 and new costs capitalised in the year
total £361,000.
Given the amounts involved are significant, there is a
risk that costs are being capitalised incorrectly or
that those costs are not recoverable through future
cashflows, causing a risk of impairment.
Impairment of investments in subsidiaries (parent
company only)
The parent company holds
its
subsidiaries which have been significantly
impaired in previous years.
investments
in
Our response to the risk
We have assessed accounting policies for consistency
and appropriateness with the financial reporting
framework and in particular that revenue was
recognised when performance obligations were
fulfilled.
the
consistency of application as well as the basis of
any recognition estimates.
In addition, we
reviewed
for
We have obtained an understanding of processes
through which the business initiates, records,
processes and reports revenue transactions.
We performed walkthroughs of the processes as set
out by management, to ensure controls appropriate
to the size and nature of operations are designed
and
the
transaction cycle.
implemented correctly
throughout
We tested equipment sales to gain assurance over the
completeness, existence and accuracy of reported
revenue.
We tested ongoing maintenance contracts to gain
assurance over the completeness, existence and
accuracy of reported revenue.
We performed cut-off procedures to test transactions
around the year end and verified a sample of
revenue to originating documentation to provide
evidence that transactions were recorded in the
correct year.
We reviewed a sample of additions during the year and
assessed for evidence that capitalisation criteria
have been met appropriately.
Our procedures did not
identify any material
misstatements in the revenue recognised during
the year.
intangible assets, and assessed
We reviewed future forecast cashflows in respect of
these
the
appropriateness of the assumptions concerning
growth rates and inputs to the discount rates
against latest market expectations.
We performed sensitivity analysis
to determine
whether an impairment would be required if
revenue did not increase at the forecast rate.
We reviewed future forecast cashflows in respect of
the
each of
appropriateness of the assumptions concerning
growth rates and inputs to the discount rates
against latest market expectations.
the subsidiaries, and assessed
Both the cost, and the remaining carrying value are
material to the parent company and therefore there
is a risk that there is further impairment, or that the
previous impairment does not remain valid in light
of current trading and future forecast results.
We performed sensitivity analysis
to determine
whether an impairment would be required if
revenue did not increase at the forecast rate.
35
We reviewed management’s calculation of impairment
reversal in the year and tested the arithmetical
accuracy of both the impairment models and the
resulting reversal calculation.
Our application of materiality
We apply the concept of materiality in planning and performing our audit, in determining the nature, timing and
extent of our audit procedures, in evaluating the effect of any identified misstatements, and in forming our
audit opinion.
The materiality for the group financial statements as a whole was set at £35,520. This has been determined
with reference to the benchmark of the group’s revenue which we consider to be an appropriate measure for
a group of companies such as these. Materiality represents 2% of group revenue. Performance materiality has
been set at 80% of group materiality.
The materiality for the parent company financial statements as a whole was set at £28,400 and performance
materiality represents 80% of materiality. This has been determined with reference to the parent company’s
net assets, which we consider to be an appropriate measure for a holding company with investments in trading
subsidiaries, but has been restricted to 80% of our group materiality.
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 entity’s ability to continue to adopt the going concern basis
of accounting included:
•
•
•
•
•
•
Reviewing management’s cash flow forecasts for a period of at least 12 months from the date of
approval of these financial statements;
Challenging management on key assumptions included in their forecast scenarios;
Considering the potential impact of various scenarios on the forecasts;
Considering the group’s ability to repay borrowings as they fall due and to operate within current
agreed facilities;
Reviewing results post year end to the date of approval of these financial statements and assessing
them against original budgets; and
Reviewing management’s disclosures in the financial statements.
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'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, other than the financial statements
and our auditor’s report thereon. The directors are responsible for the other information included in the annual
report. 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 audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the financial statements or a material
misstatement of the other information. 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.
36
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or
the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept, or returns adequate for our audit have not been
received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 11, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error. In preparing the financial
statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
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. The extent to which our procedures are capable of detecting irregularities,
including fraud, is detailed below:
Our assessment focused on key laws and regulations the company has to comply with and areas of the financial statements
we assessed as being more susceptible to misstatement. These key laws and regulations included but were not limited to
compliance with the Companies Act 2006, UK adopted international accounting standards, United Kingdom Generally
Accepted Accounting Practice (UK GAAP) and relevant tax legislation.
37
We are not responsible for preventing irregularities. Our approach to detecting irregularities included, but was not limited
to, the following:
•
•
•
•
•
obtaining an understanding of the legal and regulatory framework applicable to the entity and how the entity is
complying with that framework;
obtaining an understanding of the entity’s policies and procedures and how the entity has complied with these,
through discussions and sample testing of controls;
obtaining an understanding of the entity’s risk assessment process, including the risk of fraud;
designing our audit procedures to respond to our risk assessment; and
performing audit testing over the risk of management override of controls, including testing of journal entries and
other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the
normal course of business and reviewing accounting estimates for bias specially in relation to the carrying value
of goodwill and intangible assets..
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that
compliance with law or regulation is removed from the events and transactions reflected in the financial statements, as we
will be less likely to become aware of non-compliance. The risk is also greater regarding irregularities occurring due to fraud
rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. We are not
responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’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.
Melanie Hopwell (Senior Statutory Auditor)
For and on behalf of Cooper Parry Group Limited
Statutory Auditor
Sky View
Argosy Road
East Midlands Airport
Caste Donington
Derby
DE74 2SA
Date: 27 March 2024
38
Consolidated statement of comprehensive income
For the year ended 31 December 2023
Note
3
4
15
9
4
7, 17
6
7
Revenue
Cost of sales
Gross profit
Administrative expenses
Sales and distribution expenses
Research and Development, Quality and Regulatory
Impairment loss on trade receivables
Exceptional costs
Total costs
Other gain
Operating loss
Finance costs
Loss before taxation
Tax credit on loss
Loss for the year
Other comprehensive expense
Items that may be reclassified to profit or loss:
Net translation differences on overseas subsidiaries
Other comprehensive expense for the year, net of tax
Total comprehensive loss for the year
Total comprehensive loss for the year attributable to:
Owners of the Parent
Non-controlling interests
2023
£’000
1,776
(651)
1,125
(1,081)
(685)
(217)
-
(366)
(2,349)
172
(1,052)
(230)
(1,282)
-
(1,282)
5
5
(1,277)
(1,252)
(25)
(1,277)
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
(1,110)
(1,114)
4
(1,110)
Loss per share – basic and diluted
10
(0.11p)
(0.17p)
The notes on pages 44 to 76 form an integral part of these consolidated financial statements.
39
Consolidated balance sheet
As at 31 December 2023
Company Number 03902895
Assets
Non-current assets
Property, plant and equipment
Intangible assets
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
14
15
15
15
16
17
17
17
17
19
20
20
25
25
25
25
25
2023
£’000
198
3,965
4,163
716
177
-
87
84
705
1,769
5,932
(79)
(855)
(934)
(1,665)
(119)
(71)
(1,855)
(2,789)
3,143
7,204
35,650
17,476
473
173
82
(57,769)
3,289
(146)
3,143
2022
(restated)*
£’000
269
3,769
4,038
821
456
15
140
72
471
1,975
6,013
(935)
(1,540)
(2,475)
(1,069)
(177)
(64)
(1,310)
(3,785)
2,228
6,990
33,672
17,476
527
168
82
(56,566)
2,349
(121)
2,228
*See note 15.2 for details of the prior year restatement relating to an offset of a debtor and creditor balance
The notes on pages 44 to 76 form an integral part of these consolidated financial statements. The financial
statements on pages 39 to 43 were approved by the Board of Directors and authorised for issue on
27
signed
March
behalf
2024
were
and
by:
on
its
Nigel Keen
Chairman
Natalie Wettler
40
Group Finance Director
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C
Consolidated statement of cash flows
for the year ended 31 December 2023
Cash flows from operating activities
Loss before taxation
Adjustments for:
Finance costs
Depreciation of property, plant and equipment
Amortisation of intangible assets
Loss on disposal of property, plant and equipment
Write off of research and development projects not taken forward
Modification gain on convertible loan note
Non-Executive Director fees
Share-based payment expense
Other gain
Effect of exchange rate fluctuations
Decrease/(Increase) in inventories
Decrease/(Increase) in trade and other receivables
(Decrease)Increase in trade and other payables
Decrease in staff advances
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
2023
£’000
2022
£’000
(1,282)
(1,146)
230
110
23
11
141
(89)
91
-
(83)
5
(843)
105
332
(691)
15
7
(1,075)
(191)
71
(1,195)
(9)
(361)
(370)
1,887
(193)
(106)
-
250
(52)
1,786
221
471
13
705
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
The notes on pages 44 to 76 form an integral part of these consolidated financial statements.
43
Notes to the consolidated financial statements
for the year ended 31 December 2023
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 2023 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 quoted on the Alternative Investment Market 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 ‘Going Concern’ 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 2023.
New standards adopted for the year ended 31 December 2023
The following amendments to standards were applicable during the year but did not have a material impact on the
Group:
• Amendments to IAS 1 Presentation of Financial Statements
• Amendments to IAS 12 Income Taxes—Deferred Tax related to Assets and Liabilities arising from a Single
Transaction
• Amendments to IAS 12 Income Taxes— International Tax Reform—Pillar Two Model Rules
• Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors—Definition of
Accounting Estimates
Standards, amendments and Interpretations to existing Standards that are not yet effective and have
not been adopted early by the Group
At the date of authorisation of these financial statements, several new, but not yet effective, Standards,
amendments to existing Standards, and Interpretations have been published by the IASB. None of these
Standards, amendments or Interpretations have been adopted early by the Group.
Management anticipate that all relevant pronouncements will be adopted for the first period beginning on or after
the effective date of the pronouncement.
New standards, amendments and interpretations not adopted in the current year have not been disclosed as they
are not expected to have a material impact on the Group’s financial statements.
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.
44
Notes to the consolidated financial statements
for the year ended 31 December 2023
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 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 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:
2023
2022
Average Rate
Closing rate
Average rate
Closing rate
Sterling/US Dollar
Sterling/Euro
Sterling/Canadian Dollar
1.24
1.15
1.68
1.27
1.15
1.69
1.24
1.17
1.61
1.21
1.13
1.64
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.
45
Notes to the consolidated financial statements
for the year ended 31 December 2023
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 2023 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.
The Directors have reviewed detailed budgets and forecasts until 30 June 2025 that were prepared by the
Group. This review indicates that the Group is expected to continue trading as a going concern based on
projected net cash flows derived from revenue generated by the Group. As a result of the Group’s restructuring
which took place in 2023, the Group’s cost base has been reduced to a level appropriate for the current
revenues 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.
46
Notes to the consolidated financial statements
for the year ended 31 December 2023
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.
47
Notes to the consolidated financial statements
for the year ended 31 December 2023
3.2 Note
The operating segment results for 2023 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
1,425
928
£’000
258
165
£’000
93
36
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
£’000
-
(101)
(782)
(905)
(14)
(187)
-
Total
£’000
1,776
1,028
(782)
(905)
(14)
(187)
(860)
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) and including
exceptional items (£101,000)
The operating segment results for 2022 were:
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
145
107
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
£’000
-
-
(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)
48
Notes to the consolidated financial statements
for the year ended 31 December 2023
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
Gain on convertible loan note
Write off of research and development projects not taken forward
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
2023
£’000
(860)
(110)
(23)
-
(91)
89
(141)
-
1
83
(192)
(1,052)
(230)
(1,282)
-
(1,282)
2022
£’000
(607)
(88)
(40)
(39)
(136)
-
-
(125)
17
71
(340)
(947)
(199)
(1,146)
1
(1,145)
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 2023
Direct market
Indirect markets
Probes
Monitors
Other
Probes
Monitors
Other
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
UK
USA
France
Portugal
Latin America
Scandinavia
Hong Kong
South Korea
Other countries
394
287
-
-
-
-
-
-
10
691
113
20
-
-
-
-
-
-
6
139
42
40
-
-
-
-
-
-
3
85
-
-
283
185
91
64
6
47
56
732
-
-
-
-
16
4
62
5
32
-
-
2
-
-
1
-
4
3
549
347
285
185
107
69
68
56
110
119
10
1,776
49
Notes to the consolidated financial statements
for the year ended 31 December 2023
For the year ended 31 December 2022
Direct markets
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
-
-
-
-
-
-
-
-
-
464
90
132
13
44
24
90
-
-
15
212
-
32
-
18
2
-
-
8
2
-
3
2
1
3
126
857
279
19
642
636
487
304
132
48
46
43
144
2,482
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
2023
£’000
1,732
44
1,776
2022
£’000
2,430
52
2,482
The following table provides information about trade receivables and contract liabilities from contracts with
customers. There were no contract assets at either 31 December 2023 or 31 December 2022.
Trade receivables which are in ‘Trade and other receivables’
Contract liabilities (Note 17.3)
31 December
2023
31 December
2022
£’000
177
(44)
£’000
456
(39)
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 2023:
Revenue expected to be recognised
2024
£’000
31
2025
£’000
4
2026
£’000
2
2027
£’000
7
Total
£’000
44
Revenue recognised in 2023 which was included in contract liabilities at 31 December 2022 amounted to
£24,000. Revenue recognised in 2022 included in contract liabilities at 31 December 2021 amounted to £30,000.
50
Notes to the consolidated financial statements
for the year ended 31 December 2023
4.
Expenses
4.1 Expenses by nature
The following table provides information on the nature of expenses recognised within the Statement of
Comprehensive Income:
Raw materials and consumables used
Employee benefit costs
Non-executive directors’ fees
Depreciation of property, plant and equipment
Amortisation of development costs
Write off of research and development projects not taken forward
Short-term leases
Net foreign exchange loss/(gain)
Gain on convertible loan note
Other tax income
Other
2023
£’000
357
1,716
91
110
23
141
17
18
(89)
(83)
527
2022
£’000
506
2,119
136
88
40
-
19
(30)
-
(71)
622
2,828
3,429
4.2 Auditor’s remuneration
During the year, the Group (including its overseas subsidiaries) obtained the following services from the Group’s
auditors at the cost detailed below.
Cooper Parry Group Limited
Fees payable to the Group’s auditor for the audit of Parent Company and
consolidated financial statements
Fees payable to the Group’s auditor for other services:
The audit of the Group’s subsidiaries
2023
£’000
10
50
60
2022
£’000
10
47
57
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
51
Notes to the consolidated financial statements
for the year ended 31 December 2023
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
Accumulated absence liability movement
Accrued bonuses for the year
Share-based payment expense
2023
£’000
1,867
213
55
2,135
(403)
1,732
(1)
(15)
-
1,716
2022
£’000
2,049
247
60
2,356
(357)
1,999
(17)
12
125
2,119
The pensions cost expense of £55,000 (2022: £60,000) 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
2023
Number
2022
Number
37
9
12
9
2
5
37
44
11
15
10
2
6
44
52
Notes to the consolidated financial statements
for the year ended 31 December 2023
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
2023
£’000
354
33
13
400
2022
£’000
430
33
13
476
2023
£’000
2022
£’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
2023
£’000
182
8
190
2023
£’000
7
123
65
24
11
230
2022
£’000
207
8
215
2022
£’000
3
128
28
29
11
199
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.
53
Notes to the consolidated financial statements
for the year ended 31 December 2023
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
2023
£’000
2022
£’000
(1)
1
-
-
-
(1)
-
(1)
-
(1)
In 2023, the other gain includes an amount of £83,000 (2022 £71,000) 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 (2022: lower) than the effective rate of corporation tax in the
UK of 25% (2022: 19%) applied to the Group’s loss on ordinary activities before tax. The differences are
explained below:
Loss before tax
Loss multiplied by the standard rate in the UK of 25% (2022: 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
2023
£’000
(1,282)
(321)
2022
£’000
(1,146)
(218)
(21)
341
1
-
-
-
(153)
326
16
4
24
(1)
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.
54
Notes to the consolidated financial statements
for the year ended 31 December 2023
8.2 Note
At 31 December 2023, the Group had accumulated trading losses carried forward which are available to offset
against future profits of £41,208,000 (2022: £39,050,000) resulting in an unrecognised potential deferred tax
asset of £9,779,000 (2022: £9,327,000).
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
2023
£’000
1,222
49
1,271
2023
£’000
1,190
81
1,271
2023
£’000
2022
£’000
1,125
65
1,190
2022
£’000
1,003
187
1,190
2022
£’000
(1,190)
(1,003)
(81)
(1,271)
(187)
(1,190)
The UK corporation tax rates were increased from 19% to 25% effective 1 April 2023. Deferred taxes at the
balance sheet date have been measured using this enacted rate.
9.
Exceptional items
9.1 Accounting policy
As permitted by IAS1, ‘Presentation of Financial Statements’, certain items are presented separately in the
Consolidated SOCI as exceptional items where, in the judgement of the directors, they need to be presented
separately by virtue of their nature, size or incidence to obtain a clear and consistent presentation of the Group’s
underlying business performance.
9.2 Note
Exceptional items comprised:
Payments in lieu of notice
Redundancy costs
Legal and professional costs relating to redundancies
Write off of research and development projects not taken forward
55
2023
£’000
107
98
19
142
366
2022
£’000
-
-
-
-
-
Notes to the consolidated financial statements
for the year ended 31 December 2023
10
Basic and diluted loss per share
The loss per share calculation is based on the loss of £1,257,000 and the weighted average number of shares
in issue of 1,181,214,755. For 2022, 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. 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:
■
■
■
■
■
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.
56
Notes to the consolidated financial statements
for the year ended 31 December 2023
11.2 Note
Leasehold property
and improvements
Right
of use
asset
Plant and
Fixtures and
Machines loaned
equipment
fittings
to customers
£'000
£'000
£'000
£'000
£'000
Total
£'000
Cost
At 1 January 2022
Exchange difference
Additions
Transferred from inventory
Disposals
At 31 December 2022
Exchange difference
Additions
Transferred from inventory
Disposals
180
427
-
-
-
-
-
-
-
-
180
427
-
-
-
-
-
-
-
-
At 31 December 2023
180
427
Accumulated depreciation
At 1 January 2022
Exchange difference
Depreciation charge
Disposals
At 31 December 2022
Exchange difference
Depreciation charge
Disposals
180
203
-
-
-
-
49
-
180
252
-
-
-
-
49
-
At 31 December 2023
180
301
Net book value
At 1 January 2022
At 31 December 2022
At 31 December 2023
-
-
-
224
175
126
502
5
70
-
-
577
(2)
9
-
(19)
565
483
5
18
-
506
(2)
22
(19)
507
19
71
58
2
-
-
-
-
2
-
-
-
-
2
2
-
-
-
2
-
-
-
2
-
-
-
Depreciation has been included in the following expenses in profit or loss in the Consolidated SOCI:
Cost of sales
Administration expenses
2023
£’000
59
51
110
57
1,549
2,660
164
-
23
(501)
1,235
(69)
-
39
(260)
945
169
70
23
(501)
2,421
(71)
9
39
(279)
2,119
1,528
2,396
164
21
(501)
1,212
(71)
39
(249)
931
21
23
14
169
88
(501)
2,152
(73)
110
(268)
1,921
264
269
198
2022
£’000
36
52
88
Notes to the consolidated financial statements
for the year ended 31 December 2023
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 20 years. The carrying amounts of intangible assets have been reviewed at the
balance sheet date and other than amounts written off, the directors consider that there is no indication that the
remaining 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 2023, £267,000 (2022: £113,000) 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 2022
Additions
At 31 December 2022
Additions
Amounts written off
At 31 December 2023
Accumulated amortisation
At 1 January 2022
Amortisation expense
At 31 December 2022
Amortisation expense
Amounts written off
At 31 December 2023
Net book value
At 1 January 2022
At 31 December 2022
At 31 December 2023
Development
costs
£’000
Goodwill
£’000
4,334
674
5,008
361
(384)
4,985
1,265
40
1,305
23
(242)
1,086
3,069
3,703
3,899
66
-
66
-
-
66
-
-
-
-
-
-
66
66
66
Total
£’000
4,400
674
5,074
361
(384)
5,051
1,265
40
1,305
23
(242)
1,086
3,135
3,769
3,965
Amortisation expense of £23,000 (2022: £40,000) has been categorised as research and development
expenditure in profit or loss in the Consolidated SOCI.
58
Notes to the consolidated financial statements
for the year ended 31 December 2023
Included within development costs are costs amounting to £3,027,000 (2022: £2,813,000) relating to the
Group’s new monitor development project which became available for sale at the end of November 2023 and
has been amortised from that date, with a charge of £13,000 recognised in the year (2022: £nil).
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
2023
£’000
591
218
2022
£’000
468
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
Deltex Medical Espana
SL
Deltex Medical Canada Canada
Limited
Spain
Deltex Medical
Holdings Inc
Deltex Inc
Deltex Medical Inc
USA
USA
USA
Marketing and sales of medical devices in the
USA
Marketing and sales of medical devices in
Spain
Marketing and sales of medical devices in
Canada
Dormant
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 £11,000 (2022: £15,000), a (loss)/profit of (£55,000) (2022:
£8,000) and net liabilities of £341,000 (2022: £295,000).
59
Notes to the consolidated financial statements
for the year ended 31 December 2023
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
2023
£’000
266
54
396
716
2022
£’000
246
64
511
821
There is no specific provision for slow-moving inventory in 2023 (2022: £23,000, categorised as finished goods).
15
Trade and other receivables
15.1 Accounting policy
Trade receivables, which are 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.
60
Notes to the consolidated financial statements
for the year ended 31 December 2023
15.2 Note
Trade receivables
Trade receivables
Less loss allowance
2023
£’000
177
-
177
2022
£’000
495
(39)
456
As at 31 December 2023, trade receivables of £17,000 (2022: £36,000) 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
2023
£’000
2022
£’000
11
2
4
17
32
-
4
36
2023
2022
Current
Non-current
£’000
£’000
Current
£’000
Non-current
(restated)
Staff advances
-
-
15
£’000
-
Other receivables generally arise from transactions outside the normal operating activities of the Group.
Restatement
In the prior year, a non-current other receivable was recognised of £164,000. The amount outstanding
related to a trade receivable due from the non-controlling interest in the Group’s Canadian subsidiary.
Within trade and other payables (see note 17.3) in the prior year, was an amount of £255,000, payable to
the non-controlling interest in the Group’s Canadian subsidiary. These balances have been offset in the
financial statements, with the prior year balances being restated as a net payable of £91,000. The offset
balance as at 31 December 2023 is a net payable of £89,000.
Other current assets
Sundry debtors
Prepayments
16
Cash and cash equivalents
16.1 Accounting policy
2023
£’000
2
85
87
2022
£’000
35
105
140
For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and deposits
held at call with financial institutions.
61
Notes to the consolidated financial statements
for the year ended 31 December 2023
16.2 Note
Cash at bank
17
Financial liabilities
17.1 Accounting policy
2023
£’000
2022
£’000
705
471
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.
62
Notes to the consolidated financial statements
for the year ended 31 December 2023
17.2 Note
Borrowings
Invoice discounting facility
Standby loan facility
Convertible loan note
2023
2022
Current
Non-current
Current
Non-current
£’000
79
-
-
79
£’000
-
650
1,015
1,665
£’000
£’000
185
750
-
935
-
-
1,069
1,069
Invoice discounting facility
The amount shown represents the cash drawn down under an invoice discounting facility; There was
£1,000 undrawn amounts at the end of the year (2022: £6,000). The amount outstanding under this facility is
secured by way of a fixed charge over the Group’s UK trade receivables and a proportion of the Group’s
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 (2022: one month’s notice) on either side and is not subject to
an annual review.
Convertible loan note
In February 2023, the maturity date of the convertible loan notes was extended from February 2024 to June 2026.
All other terms of the convertible loan notes, which were issued in February 2016, at a conversion price of 4p per
share, remain unchanged.
A gain of £89,000 was recognised in profit or loss in the Consolidated SOCI within other gain following the
extension of the maturity date.
The convertible loan note recognised in the Consolidated Balance Sheet is calculated as:
Carrying amount at 1 January 2023
Modification gain
Interest expense
Interest paid
Carrying amount at 31 December 2023
Financial
liability
£’000
1,069
(89)
123
(88)
1,015
Equity
component
£’000
82
-
-
-
82
Total
£’000
1,151
(89)
123
(88)
1,097
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% (2022: 13.14%).
Standby loan facility
On 2 August 2023, as part of the fundraising and capital reorganisation, £100,000 of the £750,000 Standby
loan facility was converted into 50,000,000 loan conversion shares at a price of 0.2 pence per share. As part
of this transaction, the remaining £650,000 Standby loan facility had the maturity extended to £250,000 being
repayable by 30 June 2025 and £400,000 being repayable by 31 December 2025. The interest rate remains
at 8% per annum.
63
Notes to the consolidated financial statements
for the year ended 31 December 2023
In April 2023, a bridging loan facility provided by Imperialise Limited, a company controlled by Nigel Keen,
was put in place for £250,000 with a minimum term of three months. The interest rate on the facility was 12%
per annum, and the facility was unsecured. On 2 August 2023, as part of the fundraising and capital
reorganisation, the full bridging loan facility was converted into 125,000,000 loan conversion shares at a price
of 0.2 pence per share.
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
2023
Rate
%
7.47
6.54
8.77
Amount
£’000
40
33
6
79
2022
Rate
%
4.32
3.42
6.05
Amount
£’000
61
91
33
185
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
2023
Current
Non-current
£’000
173
89
94
58
44
23
374
855
£’000
-
-
-
119
-
-
-
119
2022
Current
(restated)
£’000
507
94
158
52
39
24
666
1,540
Non-current
£’000
-
-
-
177
-
-
-
177
During 2023, the Group settled £55,000 of historical bonuses held within accrued expenses at 31 December
2022 as a result of the Group’s restructuring and a retirement.
Included within other payables is an offset amount of £89,000 (2022 restated: £91,000) 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. See note 15.2 for details of the prior year restatement.
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.
64
Notes to the consolidated financial statements
for the year ended 31 December 2023
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased
asset is available for use by the Group. Each lease payment is allocated between the liability and finance
cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic
rate of interest on the remaining balance of the liability for each period. The right-of use asset is depreciated
over the shorter of the asset's useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
•
• variable lease payments that are based on an index or a rate;
• amounts expected to be payable by the lessee under residual value guarantees;
•
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
option.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be
determined, or the Group’s incremental borrowing rate.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs.
Short-term leases
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of
machinery that have a lease term of 12 months or less and leases of low-value assets (being less than
£5,000), including short-term office space. The Group recognises the lease payments associated with
these leases as an expense on a straight-line basis over the lease term.
18.2 Note
Included within Property, plant and equipment is the net book amount of £126,000 (2022: £175,000)
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 (2022: £49,000) relating to the depreciation expense of this asset and included within finance
costs is an amount of £23,000 (2022: £29,000) 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 £17,000 (2022: £19,000) relating to short term leases.
Included within trade and other payables in the Consolidated Balance sheet are current lease obligations
amounting to £58,000 (2022: £52,000) and non-current lease obligations amounting to £119,000 (2022:
£177,000). 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% (2022: 12%).
The total cash outflow for leases in the period was £75,000 (2022: £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
65
2023
£’000
75
131
206
2022
£’000
75
206
281
Notes to the consolidated financial statements
for the year ended 31 December 2023
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 2022
Unwinding of discounting
At 1 January 2023
Unwinding of discounting
At 31 December 2023
Dilapidation
provision
£’000
57
7
64
7
71
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 31 December 2023, the authorised share capital of the Company comprised 656,854,621,000 ordinary
shares with a nominal value of 0.01 penny each (2022: 6,568,546,210 with a nominal value of 1 penny
each).
On 1 August, at an EGM of the Group, a resolution was passed to sub-divide and redesignate each existing
ordinary share (709,057,601 shares) of 1 penny to one new ordinary share of 0.01 pence and one deferred
share of 0.99 pence.
66
Notes to the consolidated financial statements
for the year ended 31 December 2023
The movement in the Company’s issued share capital is set out below:
At 1 January 2022
Share issues:
17 January 2022 (1p)
14 February 2022 (1p)
Share issue expenses:
14 February 2022
At 31 December 2022
Share issues:
17 April 2023 (1p)
Change in nominal value 709,058,000 shares:
1 August 2023 Deferred shares (0.99p)
1 August 2023 Ordinary shares (0.01p)
2 August 2023 (0.01p)
Share issue expenses:
2 August 2023
Number of
shares
(thousands)
Ordinary
shares
£’000
Deferred
shares
£’000
Share
premium
£’000
Total
£’000
584,944
5,849
2,400
24
111,720
1,117
-
-
699,064
6,990
9,994
100
709,058
7,090
-
-
-
-
-
-
-
-
-
709,058
1,137,596
-
7,019
71
71
114
-
7,019
-
33,502
39,351
6
279
30
1,396
(115)
(115)
33,672
40,662
10
33,682
-
-
33,682
2,161
110
40,772
7,019
71
40,772
2,275
-
-
-
(193)
(193)
At 31 December 2023
1,846,654
185
7,019
35,650
42,854
Net proceeds from the issue of shares totaled £2,192,000 (2022: £1,311,000), after expenses of £193,000
(2022: £115,000). There were no non-cash proceeds from the issue of shares to clear historical equity
settled director fees (2022: £6,000).
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. 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. Fair value is measured by
the 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 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.
67
Notes to the consolidated financial statements
for the year ended 31 December 2023
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.
21.2 Note
The Group has two current share option schemes:
•
•
Deltex Medical 2003 Enterprise Management Incentive plan (‘EMI’); and
Deltex Medical Group 2011 Executive Share Option Scheme (HMRC Approved Scheme).
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 nominal value 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
Weighted
average
Number
Weighted
average
of
options
exercise
price
of
options
exercise
price
Options outstanding at
1 January 2022
No.
p
No.
12,507,250
6
31,465,141
Granted during the year
-
-
23,500,500
p
1
1
Total
No.
43,972,391
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
Lapsed during the year
Expired during the year
Options outstanding at
31 December 2023
-
49,526,216
-
(4,130,860)
- (12,023)
1
1
1
49,526,216
(4,130,860)
(12,023)
-
45,383,333
1
45,383,333
-
-
-
-
68
Notes to the consolidated financial statements
for the year ended 31 December 2023
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.
7,507,250
12
10,627,641
-
-
-
-
5,394,966
9,383,333
1
1
1
18,134,891
5,394,966
9,383,333
Options exercisable at
1 January 2022
Options exercisable at
31 December 2022
Options outstanding at
31 December 2023
There were no share options exercised during the year ended 31 December 2023 or the year ended 31
December 2022. The mid-market closing price of the Company’s shares at the end of the year was 0.145
pence (2022: 1 pence).
Details of the remaining contractual life of share options outstanding for each of the share option schemes
is shown in the table below:
2011 Executive Share Option
Scheme
2003 Enterprise Management
Incentive Scheme
Weighted average remaining contractual life
of options outstanding at the end of the
financial year
2023 Years
2022 Years
2023 Years
2022 Years
-
-
7.42
8.33
Fair value of options granted
There were no share options granted under the 2003 EMI scheme during the year ended 31 December
2023. Share options granted during the year ended 31 December 2022 had an estimated weighted
average fair value of 1.4 pence and £44,407 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:
Exercise price
Expected price volatility of the Company’s shares
February 2022
1.35p
50%
Expected option life (expressed as weighted average life used in modelling)
3 years
Risk-free interest rate
Fair value at measurement date
1.40%
0.7p
69
Notes to the consolidated financial statements
for the year ended 31 December 2023
No share options were granted under the 2011 ESOS scheme during the year ended 31 December 2023 or
the year ended 31 December 2022.
Contractor options
There were no contractor options granted during the year ended 31 December 2023.
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. These share options fully lapsed during the year ended 31
December 2023.
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 2023. The option has an exercise
period of 10 years from grant date.
These 2,500,000 (2022: 6,500,000) options are the only outstanding options held by contractors.
70
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2
2
Notes to the consolidated financial statements
for the year ended 31 December 2023
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
79
88
75
546
-
Between
1 and 2
years
£’000
-
2023
Between
2 and 5
years
£’000
-
88
1,166
75
-
650
56
-
-
Invoice discounting
facility
Convertible loan note
Lease obligations
Trade and other
payables
Standby loan
facility
Between
5 and 10
years
£’000
-
-
-
248
Less
than
1 year
£’000
185
Between
1 and 2
years
£’000
-
88
75
1,173
1,136
75
-
-
-
750
2022
Between
2 and 5
years
£’000
Between 5
and 10
years
£’000
-
-
131
-
-
-
-
-
255
-
788
813
1,222
248
2,271
1,211
131
255
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.
72
Notes to the consolidated financial statements
for the year ended 31 December 2023
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
2023
2022
US
Dollars
£’000
88
29
(-)
(6)
Euro
£’000
117
34
(-)
(33)
US
Dollars
£’000
6
116
(62)
10
Euro
£’000
2
168
(2)
(91)
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
2023
Profit
£’000
14
14
Equity
£’000
Sensitivity
%
14
14
10.0
10.0
2022
Profit
£’000
9
8
Equity
£’000
9
8
Euros
US Dollar
If the Euro strengthened against Sterling by 10% (2022: 10%), an aggregate foreign exchange gain of
£14,000 (2022: £9,000) 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
73
Notes to the consolidated financial statements
for the year ended 31 December 2023
exposure at the balance sheet date is represented by the carrying value of financial assets and there are no
significant concentrations of credit risk.
The Group’s financial assets that are subject to the credit loss model are namely trade receivables from the
sale of inventory and the provision of preventative planned maintenance contracts and other receivables.
The level of expected credit losses on trade receivables is considered to be immaterial given the nature of
the Group’s customer base. In the UK, USA and Canada, its customers are predominantly large hospitals.
There have not been any bad debts experienced during the year.
Occasionally bad debts have been experienced in our International distributor-led market. However, as this
market has been developed over many years, our network of independent distributors has remained
relatively stable and consequently the expectation of incurring a credit loss is considered to be immaterial.
There is no credit loss provision of the Group trade receivables balance as at 31 December 2023 (2022:
£39,000).
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 2023 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
74
2023
£’000
2022
£’000
177
1,015
650
1,842
79
1,921
229
1,069
750
2,048
185
2,233
Notes to the consolidated financial statements
for the year ended 31 December 2023
There is no material change to the Group’s profit or equity if a hypothetical change of 1% is applied to
interest rates in the current year and prior year, with all other variables remaining constant.
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. The remuneration of the
Board of Directors is already disclosed in the Directors’ emoluments note (see note 5.4).
24.2 Other transactions
During the year, £40,000 (2022: £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 2023, £10,082 (2022: £10,082) was owing in respect of
interest for the quarter ended 31 December 2023 (2022: Quarter ended 31 December 2022).
At 31 December 2023, a further £13,107 (2022: £10,290) was owing in respect of interest for the quarter
ended 31 December 2023 to Imperialise Limited, on its standby loan facility, which was set up in September
2021. At 31 December 2023, the balance of the standby loan facility to Imperialise Limited was £650,000
(2022: £750,000).
75
Notes to the consolidated financial statements
for the year ended 31 December 2023
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.
76
Parent company balance sheet
As at 31 December 2023
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
2023
£’000
66
5,771
2,347
8,184
7
1
8
(227)
(219)
7,965
(1,665)
6,300
7,204
35,650
17,476
473
82
(53,383)
(1,256)
54
(54,585)
6,300
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
(53,381)
(173)
171
(53,383)
5,364
No income statement is presented by the Company as permitted by Section 408 of the Companies Act 2006.
The loss for the year is £1,256,000 (2022: loss of £173,000).
The notes on pages 79 to 85 form an integral part of these financial statements. The financial statements on
pages 77 to 78 were approved by the Board of Directors and authorised for issue on 27 March 2024 and were
signed on its behalf by:
Nigel Keen
Chairman
Natalie Wettler
Group Finance Director
77
Parent company statement of changes in equity
for the year ended 31 December 2023
Share
capital
£’000
5,849
Share
premium
account
£’000
Capital
redemption
reserve
£’000
33,502
17,476
Other
reserve
£’000
573
Convertible
loan note
reserve
£’000
Accumulated
losses
£’000
82
(53,381)
Total
£’000
4,101
-
-
1,141
-
-
-
-
-
285
(115)
-
-
-
-
-
-
-
-
6,990
33,672
17,476
-
-
214
-
-
-
-
-
2,171
(193)
-
-
-
-
-
-
-
-
7,204
35,650
17,476
-
-
-
-
125
(171)
527
-
-
-
-
-
(54)
473
-
-
-
-
-
-
82
-
-
-
-
-
-
(173)
(173)
(173)
(173)
-
-
-
171
1,426
(115)
125
-
(53,383)
5,364
(1,256)
(1,256)
(1,256)
(1,256)
-
-
-
54
2,385
(193)
-
-
82
(54,585)
6,300
Balance at 1 January 2022
Comprehensive expense
Loss for the year
Total comprehensive
expense for the year
Shares issued during the
Year
Issue expenses
Equity-settled share-based
payment
Transfers
Balance at
31 December 2022
Comprehensive expense
Loss for the year
Total comprehensive
expense for the year
Shares issued during the
year
Issue expenses
Equity-settled share-based
payment
Transfers
Balance at
31 December 2023
The notes on pages 79 to 85 form an integral part of these financial statements.
78
Notes to the parent company financial statements
for the year ended 31 December 2023
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 quoted on the London Stock Exchange’s Alternative
Investment Market. 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:
■
■
The requirements of IFRS 7 ‘Financial Instruments: Disclosures’;
The requirements of paragraphs 91-99 of IFRS 13, ‘Fair Value Measurement’;
The requirement in paragraph 38 of IAS 1, ‘Presentation of Financial Statements’ to present
■
comparative information in respect of:
•
•
•
paragraph 79(a)(iv) of IAS 1;
paragraph 73(e) of IAS 16, ‘Property, Plant and Equipment’; and
Paragraph 118(e) of IAS 38, ‘Intangible Assets’;
■
■
The requirements of paragraphs 10(d), 10(f), 39(c) and 134-136 of IAS 1;
The requirements of IAS 7, ‘Statement of Cash Flows’;
The requirements of paragraphs 30 and 31 of IAS 8, ‘Accounting Policies, Changes in Accounting
■
Estimates and Errors’;
■
The requirements of paragraph 17 of IAS 24, ‘Related Party Disclosures’; and
The requirements in IAS 24 to disclose related party transactions entered into between two or more
■
members of a Group, provided that any subsidiary which is a party to the transaction is wholly owned by such
a member.
1.2 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
amounts advanced did not have any specific terms relating to their repayment, were unsecured and were
interest free.
79
Notes to the parent company financial statements
for the year ended 31 December 2023
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
80
Notes to the parent company financial statements
for the year ended 31 December 2023
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 39 to 43 of the Annual Report
& Accounts 2023.
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.
81
Notes to the parent company financial statements
for the year ended 31 December 2023
The equity component is recognised initially as the difference between the fair value of the compound
financial instrument as a whole and the fair value of the liability component. Any directly attributable
transaction costs are allocated to the liability and equity components in proportion to their initial carrying
amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at
amortised cost using the effective interest method. The equity component of a compound financial
instrument is not re-measured subsequent to initial recognition except on conversion or expiry.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer
settlement of the liability for at least 12 months after the end of the reporting period.
2
Auditor’s remuneration
The statutory audit fee in respect of the Parent Company’s financial statements payable to Cooper Parry
Group Limited was £10,000 (2022: CLA Evelyn Partners Limited £10,000).
There were no fees paid to the Company’s auditor, Cooper Parry Group Limited, for services other than
the statutory audit.
3
Directors’ emoluments
Aggregate emoluments
Short term benefits paid to third parties
2023
£’000
48
33
81
2022
£’000
90
33
123
There are no (2022: 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 (2022: £33,333), for the services of a director.
Remuneration, including Executive directors, is provided in the Directors’ remuneration report on pages 26
to 31.
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 (2022: 5). None of the directors had contracts
for service so the monthly average number of employees was nil (2022: 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 loss
of £55,000 (2022: profit of £8,000).
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 59 of this Annual Report &
Accounts.
82
Notes to the parent company financial statements
for the year ended 31 December 2023
Cost
At 1 January 2023
At 31 December 2023
Accumulated impairment
At 1 January 2023
Impairment (reversal)/charge
At 31 December 2023
Net book amount
At 31 December 2022
At 31 December 2023
Investments in
subsidiary
undertakings
£’000
45,601
45,601
40,492
(662)
39,830
5,109
5,771
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 2028 (2022: five-year period ending 31 December 2027). A terminal
value was calculated using the forecast cash flows for the year ended 31 December 2028 using a long-
term growth rate of 2.25% (2022: 2.25%). Forecast cash flows were discounted using a pre-tax discount
rate of 15.4% and post-tax rate of 11.6% (2022: pre- tax rate of 15.4% and post-tax rate of 11.6%) 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 £662,000 (2022: impairment reversal of
£909,000) 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
Amount owed by subsidiary undertakings
2023
£’000
2022
£’000
7
7
10
10
2,347
2,084
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
83
Notes to the parent company financial statements
for the year ended 31 December 2023
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
2023 was £16,047,000 (31 December 2022: £14,223,000), an increase of £1,824,000 in the year, which
has been recognised in profit or loss in the Parent Company’s SOCI. The gross balances outstanding at 31
December 2023 were £18,394,000 (31 December 2022: £16,307,000).
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
Standby loan facility
9
Share capital
2023
£’000
57
170
-
227
2023
£’000
1,015
650
1,665
2022
£’000
78
259
750
1,087
2022
£’000
1,069
-
1,069
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 2022
Charged to profit or loss in the SOCI
At 31 December 2022
Credited to profit or loss in the SOCI
At 31 December 2023
Deferred tax assets
At 1 January 2022
Credited to profit or loss in the SOCI
At 31 December 2022
Charged to profit or loss in the SOCI
At 31 December 2023
84
Foreign
exchange
£’000
(103)
103
-
(8)
(8)
Tax losses
£’000
103
(103)
-
8
8
Notes to the parent company financial statements
for the year ended 31 December 2023
The UK corporation tax rate increased from 19% to 25% effective 1 April 2023. Deferred taxes at the
balance sheet date have been measured using this enacted rate.
11
Ultimate controlling party
There are no shareholders with overall control of the Company as at 31 December 2023 or 31 December
2022.
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.
85
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 2023 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 8 May 2024 (the
“AGM”) is set out on pages 90 to 92 (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.
86
Directors:
Nigel Keen (Chairman)
Andrew Mears
Natalie Wettler
Christopher Jones
Ben Carswell
To holders of ordinary shares of 0.01p 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 2023
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 2023.
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 8 May 2024 (the “AGM”), is set out on pages 90
to 92 (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 2023 (the “Annual Report & Accounts 2023”).
Resolutions 2, 3 and 4 - Re-election and election of directors
Resolution 2 proposes the re-election of Christopher Jones as a director; and Resolution 3 proposes the re-
election of Natalie Wettler as a director. The Company’s articles of association (the “Articles”) require that at
each annual general meeting one third of the directors (excluding directors being elected for the first time) must
retire by rotation; accordingly, Christopher Jones and Natalie Wettler offer themselves for re-election as proposed
by resolutions 2 and 3.
Resolution 4 proposes the re-appointment of Ben Carswell, who was appointed as a director on 1 December
2023. In accordance with the Articles, having been appointed since the last annual general meeting, Ben
Carswell ceases to be a director at the conclusion of the AGM unless re-appointed at the meeting; accordingly,
being eligible, Ben Carswell offers himself for re-appointment as proposed by resolution 4.
Biographical details of Christopher Jones, Natalie Wettler and Ben Carswell are set out on pages 9 and 10 of the
Annual Report & Accounts 2023. The Board considers that the considerable experience that each of these
87
directors bring will continue to be beneficial to the Company.
Resolution 5 – Re-appointment of auditors
Cooper Parry Group Limited 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.
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 17 May 2023 (the “2023
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 £63,201 (being one-third of the issued ordinary share capital as at 27 March 2024)
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 £63,201.
Shareholders will recall that in August 2023, the Company’s share capital was reorganised in connection with the
fundraising which was successfully completed at that time. As part of the reorganisation, new ordinary shares
were created at a par value of 0.01p per share (compared with the previous ordinary shares which had a par
value of 1p per share). Accordingly, the authority requested in this Resolution 6 is over a lower nominal value of
shares although this comprises a larger number of shares. For further information please read Note 20 of the
Annual Report & Accounts 2023.
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 £126,402 representing an amount
equal to two-thirds of the Company’s issued share capital as at 27 March 2024. 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 2023 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 £63,201 (representing approximately thirty-three per cent. of the nominal issued share capital of the
Company as at 27 March 2024).
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
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seek its renewal at subsequent annual general meetings of the Company.
Resolution 7 will be proposed as a special resolution.
New Employee Share Option Arrangements
Currently the Company has two share options plans, neither of which are available for new awards as each of them
has passed the end dates set out in their respective rules. Accordingly, in order to align the interests of the
employees with the Company’s shareholders, the Company’s Remuneration Committee, which comprises all of the
Company’s independent directors, proposes to put in place new employee share option arrangements. A
description of the proposals is set out in the Directors’ Remuneration Report which can be found on page 26 of the
Annual Report & Accounts 2023.
Action to be taken
Your participation at the AGM is important to us. The AGM is a great opportunity for shareholders to communicate
directly with us, express their views and to ask questions and we welcome your attendance. Whether or not you
propose coming to the AGM and you want to vote on any of the resolutions you can do this in one of two ways:
■ Register your vote electronically by logging on to www.sharevote.co.uk: or
■ Complete and return the enclosed proxy form
Proxy appointments, whether submitted electronically or by post, must be received by Equiniti by no later than
11.00 am on 6 May 2024. Your attention is drawn to the notes on the enclosed form of proxy.
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 387,847,065 ordinary shares in aggregate, representing
approximately 20 percent of the ordinary shares currently in issue.
Yours sincerely
Nigel Keen
Chairman
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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 8 May 2024 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 2023, together with the
reports of the directors and of the auditors thereon.
2. To re-elect as a director Christopher Jones.
3. To re-elect as a director Natalie Wettler.
4. To elect as a director Ben Carswell.
5. To re-appoint Cooper Parry Group Limited 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
£63,201 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 £63,201,
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);
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(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 £63,201.
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
8 April 2024
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 6 May 2024 (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 2023 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 6 May 2024 (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 2023, 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 2023 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 2023. 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 6 May 2024 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 6 May 2024 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 27 March 2024, the Company’s issued share capital consists of 1,896,025,700 ordinary shares of
0.01p each, carrying one vote each. No shares are held in treasury.
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