26 Apr 2010 07:00
| Press Release | 26 April 2010 |
LIDCO GROUP PLC
("LiDCO" or the "Company")
Preliminary Results for the year to 31 January 2010
LiDCO (AIM:LID), the UK-based hemodynamic monitoring company, today announces its Preliminary Results for the year to 31 January 2010.
Financial Highlights:
| Ø | Revenue up 18% to £5.37m (2008/9: £4.53m) |
| Ø | Export sales £3.54m now 66% of income and up by 50% (2008/9: £2.36m) |
| Ø | USA sales biggest contributor up by 120% to £2.28m (2008/9: £1.03m) |
| Ø | Recurring revenue up 22% to £3.13m (2008/9: £2.57m) - now 58% of revenue |
| Ø | Operating loss reduced by 14% to £1.54m (2008/9: £1.80m) |
| Ø | Loss per share reduced to 0.87p (2008/9: 1.16p) |
| Ø | Strengthened balance sheet - cash balance £1.85m (2008/9: £0.49m), |
| Ø | Borrowings repaid and £3.02m of equity raised in the year |
Operational Highlights:
| Ø | LiDCO products now distributed by Covidien in the USA, the Group's biggest market |
| Ø | Highest single year increase in installed monitor base. LiDCOplus & LiDCOrapid monitors installed base up 37% to 2,075. 565 monitors sold or placed in the period (2008/9: 326) |
| Ø | Sensors, smartcard and fees-per-use volumes up 26% to 37,918 units (2008/09: 30,125 units) |
| Ø | Selected as sole technology for OPTIMISE - UK Government sponsored multi-centre clinical outcomes study |
| Ø | Second generation LiDCOrapid v1.02 software launched |
| Ø | Work commenced to integrate Covidien's depth of anesthesia Bispectral Index (BIS) product onto LiDCOrapid platform monitor |
| Ø | LiDCOrapid Japanese registration progressing - launch expected in 2011 |
Commenting on the results Terry O'Brien, Chief Executive, said: "The Board is confident that LiDCO with its much strengthened balance sheet and commercial partners has the finances, products and increasingly the sales reach to compete effectively in this growing market opportunity. The Board looks to the future with increasing confidence and the Group remains on track to deliver its maiden profit this year."
The investor presentation "LiDCO's Preliminary Results - twelve months to 31 January 2010" will be available from today on the LiDCO website (www.lidco.com).
For further information, please contact:
| LiDCO Group Plc |
|
| Terry O'Brien (CEO) | Tel: +44 (0)20 7749 1500 |
| Paul Clifford (Finance Director) |
|
| Theresa Wallis (Chairman) | www.lidco.com |
| FinnCap |
|
| Geoff Nash / Marc Young Stephen Norcross (Broking) | Tel: +44 (0)20 7600 1658 www.finncap.com |
Media enquiries:
| Abchurch |
|
| Heather Salmond / Joanne Shears/ Simone Elviss | Tel: +44 (0) 20 7398 7728 |
| simone.elviss@abchurch-group.com | www.abchurch-group.com |
About LiDCO Group Plc
LiDCO is a supplier of minimally invasive hemodynamic monitoring equipment and disposables to hospitals. These products are used primarily for the management of adult hospital patients requiring critical care or at major cardiovascular risk. LiDCO's computer-based technology can significantly reduce the complications (particularly infections) and costs associated with major surgery. The technology was invented in the Department of Applied Physiology based at St Thomas' Hospital, London. LiDCO is based in the UK and its shares are traded on AIM. For more information please see www.lidco.com.
The Company's sales office is in Cambridge, its manufacturing facility / general administration base is in Hoxton, London, and its current products are:
* LiDCOplus is a computer-based platform monitor used in the Intensive Care Unit for real-time continuous display of hemodynamic parameters including cardiac output, oxygen delivery and fluid-volume responsiveness (PPV% and SVV%)
* LiDCOrapid: our new cardiac output monitor designed specifically for use in the Operating Theatre for fluid and drug management. The monitor enables acute-care physicians to get accurate and immediate feedback on the patient's fluid and hemodynamic status - a key measure of overall well-being both during and after surgery. The benefits are:
| ·; | Early and rapid warning of hemodynamic change |
| ·; | Aids choice of therapeutic route: fluid or drug |
| ·; | Quantification of hemodynamic response, particularly stroke volume |
| ·; | Guides more effective delivery of fluids - the right amount at the right time |
| ·; | Advanced hemodynamic care has been shown to contribute to: - Reduced morbidity and complications, length of stay & overall cost of care |
* LiDCO single-patient-use disposables used in conjunction with the LiDCOplus and LiDCOrapid.
* LiDCOview:an easy-to-use graphical display of historical LiDCOplus and LiDCOrapid hemodynamic data.
* LiDCO's Distribution Network:
The Company sells via its own direct sales force to hospitals in the UK, and in export markets predominantly through a worldwide network of speciality critical care and anesthesia distributors.
CHAIRMAN'S STATEMENT
I am pleased to report another very good year for LiDCO and we have made excellent progress on our strategy for growth. Revenues grew by 18%, our installed base of monitors increased by a record 37% and disposables unit sales rose 26%. We ended the year with important new distribution partnerships in place, a strengthened cash position and no borrowings. Against a background of the banking crisis, currency fluctuations, and subsequent recession, we believe that this is a considerable achievement.
Our strategy for growth remains clearly focused on three key areas: products, market access and evidence and awareness.
Products
We create high value, high margin products that are innovative and have strong intellectual property protection.
Our products are developed in close consultation with leading clinicians and assembled at our London facility, under strict quality standards. Our portfolio of integrated products enables measurement, analysis, audit, training and sharing of real-time and historic hemodynamic data, in both critical care units and the operating theatre. Demand for other older, invasive catheter-based hemodynamic monitoring is declining due to concerns over associated risks. LiDCO's products not only help improve patient outcomes by significantly reducing infections and length of hospital stays, they also save money as a result.
Launched in 2008, the LiDCOrapid monitor and disposables meet the needs of the growing high-risk surgery market and other applications where quick and easy set-up is required and continuous trend information is important. During the year we continued to focus our sales resources on establishing the LiDCOrapid in the market.
Market access
LiDCO's sales and distribution operations focus on specific types of patient within target clinical settings.
Until 2008, our market was mainly intensive and critical care units, but the launch of the LiDCOrapid gave us access to the high-risk surgery market potentially worth US$800m. Furthermore, the product's ease of use has attracted a wide range of distributors in both new and existing territories. In 2009/10, two thirds of our sales were exports. We significantly improved the Group's access to two of the world's biggest markets, the USA and Japan through distribution partnerships with Aspect Medical Systems, Inc (now part of Covidien) and Becton, Dickinson and Company (BD).
Evidence and awareness
We recognise that continued sales growth depends on a growing appreciation in the acute care community of the clinical and economic benefits of making the use of hemodynamic monitoring part of normal protocol. We will increasingly promote knowledge and understanding of our products, highlighting their advantages to clinicians, administrators and healthcare policy makers.
Scientific evidence is increasingly linking the optimisation of patients' hemodynamic status with better outcomes and reduced hospital stays. LiDCO has been selected as the sole technology for two multi-centre government-funded studies in the UK and US. OPTIMISE is sponsored by the UK Government for optimising cardiovascular management in high-risk abdominal surgery patients and in the US, MOnIToR is a transplantation donor organ optimisation study.
Financial position
To strengthen the Group's balance sheet and reduce exposure to potentially uncertain banking facilities, £3.02m (net) was raised through the issue of 31,916,000 ordinary shares last summer to existing investors, new institutional funds and management. This, together with the license fees received, enabled the Group to repay its borrowings.
The Group's cash balance at the year end was £1.8m. Our robust position, coupled with our partners' strong balance sheets, means we have the capital structure to address the growing market, if necessary, through placing (rather than selling) of monitors and deriving income from recurring disposable sales.
Prospects
Healthcare is expected to remain one of the most defended expenditures in developed countries. As hospitals seek to improve efficiency by reducing costly surgical complications, demand for minimally invasive hemodynamic monitoring products is likely to grow. The addition of the LiDCOrapid to our portfolio and the expansion of our distributor network will enable us to take full advantage of future opportunities.
I would like to thank our shareholders for their continued support over the past year. I am also grateful to my fellow Directors for their wise counsel, our staff for their dedication and hard work and our Clinical Advisory Board for their valuable contribution. We look forward with confidence to delivering our first profit this year.
Theresa Wallis
Chairman
23 April 2010
CHIEF EXECUTIVE OFFICER'S STATEMENT
Overview
This was another productive year during which the Group maintained growth, repaid its borrowings and reduced distribution costs whilst significantly expanding its route to market. Sales increased by 18% to £5.4m, split between 42% capital (including license fees) and 58% recurring revenue. We are in a strong position to generate continued growth, with the right products, a strengthened balance sheet and increasing sales resources.
The worldwide recession and the requirement for universal healthcare coverage in the USA means that hospital finances are under increasing stress. Reducing complications, wound and central line infections and length of stay in high-risk surgery patients has become a prime objective. During the year we accumulated new clinical data and improved customer awareness of the potential savings from using LiDCO's products. Abstracts and papers on the use of our technology in: organ transplantation, major and bariatric surgery, intensive care and cardiology were published by investigators in Europe, the USA and Asia. Customers have an increasingly strong evidence-based business case for the adoption of advanced hemodynamic monitoring.
Outlook and Prospects
The global market for hemodynamic monitoring products will continue to grow. We estimate worldwide sales revenues for minimally invasive hemodynamic monitoring products grew by less than the average 30% seen in the previous two years. We believe this was a consequence of global economic disruption coupled with what proved to be reduced, or in some cases entirely absent capital and disposable revenue budgets. However, market drivers remain and have become more relevant. Customers will continue to move away from the use of the older, invasive catheter products. Medicare in the USA is no longer prepared to pay hospitals for treatment of catheter and surgery related complications and infections.
The focus is shifting from hospitals increasing the number of surgeries undertaken towards improving the quality of care. In the UK, NHS expenditure at 7.7% of GDP is forecast to be ring fenced to the extent possible given the deficit and economy. So it is likely that the NHS will need to make annual efficiency savings of more than £4bn by 2012-13. Expectations regarding hospital efficiency savings are outlined in a new national program: QIPP - Quality, Innovation, Productivity and Prevention. A key element of this program is pathway redesign. In particular, the increasing adoption of 'enhanced' surgical pathways is encouraged. Elements of the pathways include better pre-operative assessment and planning; the goal being to reduce the stress of the operation with post-operative care structured around achieving the earliest recovery. Better intra-operative fluid management and, if necessary, continued hemodynamic monitoring and targeted post-operative oxygen delivery are necessary to achieve the best results.
The use of LiDCO technology on high-risk surgery patients can reduce complications by more than a third, costs by £4,800 per patient and hospital stay by up to 12 days1. The LiDCOrapid monitor can be used to optimise fluids and blood flow both in or outside of surgery and in conscious or ventilated patients. Other products that are incrementally invasive and/or that can only be easily used in ventilated patients, are often less practical for the management of the whole surgical pathway.
In the USA, new legislation will extend healthcare cover to an additional 32 million people. This program is also trying to lower costs through a series of public policy mechanisms within Medicare and Medicaid and is likely over time to fundamentally change the way doctors are reimbursed and will encourage the adoption of the safest, cheapest and most effective medical procedures. The USA is currently spending 15.3% of GDP on healthcare - about double that of the UK.
Medicare has decided not to reimburse healthcare providers for treatment of hospital-acquired infections. We believe this will encourage use of LiDCO products to implement fluid optimisation strategies in high-risk patients.
Worldwide, there looks to be a general need to improve the efficiency of treatments for high-risk patients, and ultimately there is likely to be convergence on what is "best practice". Companies that are proven to provide the best, most cost effective and most widely adoptable technology will prosper. Hospitals will also require training in the adoption of new technology and "best practice"; this is why we are developing further training materials and a hemodynamic workshop in conjunction with St George's Hospital, London.
Markets
In April 2009 an exclusive sales and marketing license for the LiDCOrapid was granted to BD in Japan. In July, Aspect Medical was appointed as distributor for the LiDCOrapid for the USA. BD and Covidien - who acquired Aspect in October - are major global medical technology groups. The combined up-front license fees from these distribution agreements amounted to £940,000.
The Group had a record year in terms of the number of monitors sold and placed in hospitals; the lower priced LiDCOrapid was the key driver behind this. Capital sales, excluding Med One sales, are reflective of the increased numbers sold and were up by £210,000 (13%).
LiDCO's strategy is to sell directly to hospitals in the UK and work with existing third party distributors in export territories. The new US arrangements materially improved sales force representation while significantly reducing our US distribution costs by about £650,000 per annum. The integration of Covidien's Nellcor critical care and Aspect's surgery sales teams took place this February. The enlarged team, which we believe to be the largest monitoring equipment sales force in the USA gives us a far greater reach into the USA than was originally envisaged with Aspect.
Sales in the USA doubled across the period through the above changes in the distribution channel. All sales staff have now had at least their initial training and are incentivised through a sales commission plan. Further training is an on going process. New accounts have already been secured and we expect the sales pipeline to grow substantially during 2010.
We anticipate that BD's sales in Japan will start in 2011.
In the UK we expect the hemodynamic monitoring market to continue to grow, and we have a developing pipeline of new accounts. There is a growing expectation that hospitals will adopt hemodynamic monitoring as part of their plans to reengineer surgical pathways. We have recruited a new UK sales manager and are looking to add to our sales and nurse educator team in the year. We are also excited about our collaboration with the St George's Hospital simulation centre in London, where we will be running regular courses that deal with the practical implementation of our technology. The staff there who have used our technology for many years and have experience of saving up to 12 bed days per high-risk surgery patient undergoing LiDCO-directed therapies.
A study was conducted using LiDCO's products that assessed the value of simultaneous brain and hemodynamic monitoring during major peripheral vascular surgery in high-risk patients. The technical synergies between Covidien's depth of anesthesia monitoring (BIS) and LiDCO's technology have great potential to deliver the market's most evolved fluid and hemodynamic monitoring product. Combining these technologies into a monitor on the LiDCOrapid platform is an exciting and commercially valuable project that is now underway.
1 Early goal-directed therapy after major surgery reduces complications and duration of hospital stay. A randomized, controlled trial, Critical Care 2005, 9:R687-R693 doi:10.1186/cc3887
Sales and trading
Revenues were up 18% to £5.37m (2008: £4.53m), with a 73% increase in the number of LiDCO monitors sold / placed in the year (565 up vs. 326). Disposables numbers were up 26% at 37,918 and associated income was also up, by 21% at £3.13m. Export sales now represent 66% of income - up from 52%. Disposable revenue growth and the higher numbers of monitors placed have been driven by demand for the LiDCOrapid through our expanded distribution network. Monitor sales, excluding Med One sales, are more reflective of the increased numbers sold and were in fact up by £210,000 (13%). Paradoxically, total capital income (including Med One income) was down £104,000. This was a consequence of the higher number of lower priced LiDCOrapid monitors sold coupled to prior period capital revenues being improved by the sales of monitors placed in the UK (£314,000) to Med One. Although sales of placed monitors to Med One have been useful in the past to improve cash flow and to reduce risk, our stronger capital base means that we are now in a position to finance this ourselves - hence there were no such sales in the period.
The installed base at the year end stands at 2075 units, an increase of 37% in the year. The LiDCOrapid portion of this grew by 514 units, an increase of 84% over the previous year and now represents 38% of the installed base. This has been achieved within 21 months of launch and across a turbulent economic period. As previously reported, the focus necessary to launch and promote the LiDCOrapid had a knock-on effect on the growth and capital revenues from sales of our calibrated product - the LiDCOplus monitor.
The lack of capital budgets in hospitals delayed product sales for most of the year. The disposables revenues almost certainly underplay the full impact the increase in installed base is likely to have on future disposables sales. As monitors are transferred from distributors into hospitals, LiDCOrapid smart card sales should produce further growth in this income stream.
Review of revenue and units sold & placed
|
| Year to 31 Jan 2010 | Year to 31 Jan 2009 | Increase/ (decrease) | Increase/ (decrease) % |
| Revenue by type (£'000) |
|
|
|
|
| - Monitors | 1,855 | 1,959 | (104) | (5%) |
| - Excl. Med One | 1,855 | 1,645 | 210 | 13% |
| - Sensors/cards/use fees | 3,125 | 2,573 | 552 | 21% |
| - Licence Fees | 387 | 0 | 387 |
|
| - Total Revenues | 5,367 | 4,532 | 835 | 18% |
| Monitors (Units) | 565 | 326 | 239 | 73% |
| Sold | 536 | 310 | 226 |
|
| Placed | 29 | 16 | 13 |
|
| Sensor, smart card and Fee per Use Sales (Units) | 37,918 | 30,125 | 7,793 | 26% |
| Installed Base (year end) | 2,075 | 1,510 | 565 | 37% |
Geographic segmental sales reporting
The installed base increased in all regions by between 17% and 63%. The strongest growth was in the USA where monitors sold/placed and revenue were up 349% and 121% respectively including distributor stocking sales. In the UK, despite a severe slowdown in activity by the NHS, particularly in the first half of the year, the number of monitors sold/placed increased modestly to 47 vs 43. However, overall revenues were affected negatively by hospitals moving to the placing model of acquisition, rather than capital purchase (16 vs 8), and greater numbers of lower priced LiDCOrapid monitors in the mix of monitors sold. In continental Europe, distributor stocks moved more slowly than expected to their respective customers, resulting in a general destocking of monitors occurring during the period. We expect sales of monitors to European distributors to improve in 2010. However, there are continuing issues for some territories as distributors have to fund cash flow issues stemming from increasingly delayed payment times.
Disposables units sold increased in all regions with income up in UK, USA and ROW cumulatively up by £0.6m (29%). Although disposables unit numbers in the EU rose by 4%, income was down £40,000 due to a mix shift towards the lower transfer price of the LiDCOrapid smart card. Some cannibalisation of higher priced LiDCOplus sensor sales by lower price LiDCOrapid disposables, at both hospital and distributor levels, has clearly occurred in the year. Whilst this may continue, it should be increasingly diluted by the growing LiDCOrapid sales into new accounts where LiDCOplus monitors have not been purchased.
We are optimistic about sales in 2010, although still concerned about the economy and the return to economic growth. We expect good disposables sales revenue growth in all territories, as monitors installed in the latter part of 2009 begin to contribute to disposables revenues, augmented by additional income generated by our expanded sales force.
USA
| Ø | Total sales revenue up by 121% to £2.28m (2008/9: £1.03m) |
| Ø | Monitor sales up 96% to £0.88m (2008/9: £0.45m) |
| Ø | Sensor, smart card, fee for use sales up 96% at £1.12m (2008/9: £0.57m) |
| Ø | Installed base up by 346 (63%) to 892 (2008/9: 546) |
Continental Europe
| Ø | Total sales revenue down 9% to £0.99m (2008/9: £1.09m) |
| Ø | Monitor sales down 10% to £0.53m (2008/9: £0.59m) |
| Ø | Sensor, smart card sales down 8% to £0.46m (2008/9: £0.50m) |
| Ø | Installed base up by 131 (29%) to 589 (2008/9: 458) |
UK
| Ø | Total sales revenue excluding Med One steady at £1.82m (2008/9: £1.85m) Med One revenues Nil in period (2008/9: £0.314m) |
| Ø | Monitor sales revenue down 16% to £0.33m (2008/9: £0.396m) |
| Ø | Sensor, smart card and fee for use sales up 3% to £1.49m (2008/9: £1.45m) |
| Ø | Installed base up by 47 (18%) to 313 (2008/9: 266) |
Rest of World & Other Income
| Ø | Total sales revenue up 12% to £0.28m (2008/9: £0.25m) |
| Ø | Monitor sales down 40% to £0.12m (2008/9: £0.20m) |
| Ø | Sensor and smart card sales up 22% to £61,000 (2008/9: £50,000) |
| Ø | License fees income £0.10m (2008/9: £nil) |
| Ø | Installed base up by 41 (17%) to 281 (2008/9: 240) |
FINANCIAL REVIEW
Operating results
Turnover increased by 18% to £5.37m (2008/09: £4.53m). Operating losses decreased by 14% to £1.54m (2008/09: £1.80m) and the loss per share was reduced to 0.87 pence (2008/09: 1.16 pence). Exports represented 66% of sales (2008/09: 52%).
The installed base of monitors increased in the year by 565 units (2008/09: 326 units) to 2,075 units (2008/09: 1,510 units), representing an increase of 37%. The increase in the installed base comprised 514 LiDCOrapid monitors and 51 LiDCOplus monitors with 536 (2008/09: 310) of the monitors being sold and 29 (2008/09: 16) being placed.
Recurring revenues from sales of disposables, service contracts and fees for use increased by 21% from £2.57m to £3.13m.
The average margin across all products against external procurement costs fell during the period from 81% to 75%. This was partly a consequence of higher monitor costs due to exchange rate movements and partly due to reduced margins achieved on sales of LiDCOrapid monitors to distributors. Future profitability will significantly depend on margins achieved on disposables. These remained high during the year, albeit with a small reduction in margins on smart cards due to the increased proportion sold to distributors. Margins achieved on LiDCOplus sensors remained steady at 86% and on smart cards fell by 3% to 92%.
Sales of LiDCOrapid smart cards are expected to be an important revenue stream in future. It is too early to establish the average smart card usage per monitor but in UK customers using it for more than 12 months we have seen rates in individual hospitals as high as 11 cards per monitor per month.
Overall gross margin on sales including Med One costs was 61%, down from 67% last year. Med One payments in the period amounted to £688,000 (2008/09: £587,000). There were no sales to Med One during the year (2008/09 £314,000) and as a result Med One payments have now peaked and should reduce to nil over the next two years, increasing the overall gross margin.
The effect of the movement in foreign exchange rates during the year was to increase administration expenses by £223,000 in comparison to the previous year. In addition, non-US related sales and marketing costs increased £127,000. Thus, although the bulk of the US sales force was transferred to Aspect in July 2009 (which reduced costs in the second half by about £325,000), administrative expenses increased by £16,000. A significant element of the adverse fluctuations in exchange rates was the sales and marketing overhead in the USA.
Taxation
As the Group is still at the pre-profit stage there was no tax charge for the year. The Group has a potential deferred tax asset of £6.4m although this has not been recognised in the accounts. In the UK, the Group qualifies for research and development tax credits, which are estimated as £120,000 in 2009/10 and are shown in the income statement.
Cash, financing and working capital
The net cash outflow before financing activities was £1.044m (2009: £1.8m), with an outflow of £743,000 in the first half and £301,000 in the second. Historically the Group has used bank loans, overdrafts and invoice discount financing facilities as a means of providing working capital. To reduce our dependence on such facilities in future, the Group issued 31,916,000 new ordinary shares at 10p to existing investors, including management and to new institutional investors raising £3.02m net of costs. This allowed the Group to repay overdraft and invoice discount balances of £608,000 outstanding at the start of the year. The Group was also in receipt of £940,000 in up-front license fees from Aspect and BD. As well as strengthening the balance sheet, these funds will more readily help the Group to adopt a placing model for its monitors with its UK customer base. Cash balances at 31 January 2010 amounted to £1.85m. The Board anticipate this will be sufficient to see the Group through to profitability and positive cash flow. In addition the Group has an unutilised overdraft facility of £500,000.
Inventory at the year end was £1.09m, an increase of £41,000, but as a percentage of turnover reduced from 23% to 20%. Expenditure on fixed and intangible assets in the year of £606,000 was broadly similar to the previous year and below the charge for depreciation and amortization of £672,000. Expenditure on fixed and intangible assets is not expected to rise significantly in the foreseeable future.
The Group issued warrants to Aspect over 13,915,324 ordinary shares. The warrants are exercisable in two stages, provided Aspect achieves its sales minimums in the first two years of the agreement. The warrants are exercisable at 14.3 pence per share.
The Group continues to monitor overheads and cash carefully and is expecting to achieve its maiden profit in the current financial year.
PRODUCT DEVELOPMENT
The first half of 2010 will see us continue to refine the LiDCOrapid graphical user interface whilst improving and simplifying customer use and connectivity to our monitors. The first phase of these changes was completed in July 2009 when we announced the launch of the LiDCOrapid version 1.02. This new software added user-adjustable timescales for trending fluid parameters, and two extra screens (History and Data charting). These enhancements are being seamlessly added to our installed monitor base and have been well received by our UK and export customers in the six months since launch.
The next revision of the LiDCOrapid software - version 1.03 will be available later this summer and will have a number of new features:
- Universal pressure waveform module: This - and associated LiDCOrapid software changes - will allow wider market adoption by making it easier to access arterial blood pressure data where, to date, access has been difficult, or where the primary patient monitor does not provide the necessary analogue arterial pressure output.
- LiDCO monitor language localisation: This converts the information on the LiDCOrapid monitors' screens from English into 22 languages. Users can select from the appropriate language menu on the start-up screen.
- RS232 Communication changes: This will allow the LiDCOrapid monitor to communicate with a wider range of hospital information systems - one current project is to connect to GE's information system. Hospitals increasingly require that hemodynamic monitors can pass data to their information systems. A configurable output makes this an easier process.
Platform evolution - the LiDCO & BIS Combination Monitor
There is considerable interest from customers in producing a combined product that can realise the synergies between Aspect's (now Covidien) Bispectral Index (BIS) product and the LiDCOrapid monitor. The former ensures the correct depth of anesthesia is achieved, and the latter is used while the patient remains in surgery to restore blood pressure and cardiac output to pre-surgery levels.
To quantify the value of a LiDCO and BIS combination, we supported a prospective study at King's College Hospital, London. This study has now concluded successfully and some of the results have been submitted for presentation. The results demonstrate that their simultaneous availability produces a unique insight into the underlying factors driving the large blood pressure changes occurring when a patient is anesthetized.
Evidence - development of supportive clinical and business cases
Our growth strategy is clearly focused on providing minimally invasive hemodynamic monitoring products that can be effectively sold through our direct sales force and distribution channel partners. Increasingly our customers are demanding that such products are supported with higher levels of evidence that their use will be cost effective. Helpfully as time moves on, more and more customers are documenting how our products have helped with the care of their patients. Over the last year valuable insights into specific uses have been demonstrated in the fields of: organ transplantation, major and bariatric surgery, intensive care and cardiology.
At the start of this year the UK's National Technology Adoption Centre (NTAC) reported UK Hospitals' trusts experiences using/adopting the technique of hemodynamic intra-operative goal directed fluid management. NTAC's role is to work with NHS organisations to understand and overcome the barriers to the implementation of evidence based technologies that will deliver improved patient outcomes and effective use of NHS resources. The result of that work was the development of a business case template that is intended to be tailored by NHS Trusts to facilitate the implementation of this technique with the goal of improving clinical outcomes following major surgery, leading to reduced hospital stay driving improved efficiency and productivity. Customers have an increasingly strong evidence-based business case for the adoption of advanced hemodynamic monitoring that coincides with a strong imperative to reduce costs and improve productivity.
REGULATORY AFFAIRS and QUALITY
During the year LiDCO was successfully audited against the requirements of ISO13485:2003, ISO9001:2000, the EU Medical Devices Directive and the Health Canada Medical Device Regulations.
Our activities and products comply with the requirements of all recently published EU Directives - the Waste Electrical & Electronic Equipments (WEEE) regulations; the Restrictions of the use of certain Hazardous Substances in Electrical and Electronic Equipment (RoHS) regulations; the Registration, Evaluation and Authorisation of Chemicals (REACH) regulations; the Waste Batteries and Accumulators regulations; the Batteries and Accumulators (Placing on the Market) regulations; the Machinery Directive and the Eco Design Directive.
LiDCO's products are registered in a number of major territories and registration of LiDCO products is ongoing in Japan, China, Colombia, Russia and Argentina.
Terry O'Brien
Chief Executive Officer
23 April 2010
CONSOLIDATED comprehensive INCOME STATEMENT
For the year ended 31 January 2010
|
| Year ended 31 January 2010 £'000 | Year ended 31 January 2009 £'000 |
| Revenue | 5,367 | 4,532 |
| Cost of sales | (2,074) | (1,512) |
| Gross profit | 3,293 | 3,020 |
| Administrative expenses | (4,832) | (4,816) |
| Loss from operations | (1,539) | (1,796) |
| Finance income | 5 | 57 |
| Finance expense | (11) | (31) |
| Loss before tax | (1,545) | (1,770) |
| Income Tax | 118 | 120 |
| Loss and total comprehensive expense for the year attributable to equity holders of the parent | (1,427) | (1,650) |
| Loss per share (basic and diluted) (pence) | (0.87) | (1.16) |
All transactions arise from continuing operations.
There were no recognised gains or losses other than the loss for the financial year.
CONSOLIDATED Balance Sheet
At 31 January 2010
|
|
2010 £'000 |
2009 £'000 |
| Non-current assets |
|
|
| Property, plant and equipment | 587 | 671 |
| Intangible assets | 764 | 746 |
|
| 1,351 | 1,417 |
| Current assets |
|
|
| Inventory | 1,094 | 1,053 |
| Trade and other receivables | 1,649 | 1,686 |
| Current tax | 120 | 120 |
| Cash and cash equivalents | 1,846 | 487 |
|
| 4,709 | 3,346 |
| Current liabilities |
|
|
| Trade and other payables | (603) | (905) |
| Deferred income | (614) | (37) |
| Borrowings | (10) | (618) |
|
| (1,227) | (1,560) |
|
|
|
|
| Net current assets | 3,482 | 1,786 |
| Total assets less current liabilities | 4,833 | 3,203 |
|
|
|
|
| Equity attributable to equity holders of the parent |
|
|
| Share Capital | 869 | 710 |
| Share premium | 25,393 | 22,531 |
| Merger reserve | 8,513 | 8,513 |
| Retained earnings | (29,956) | (28,575) |
| Total equity | 4,819 | 3,179 |
|
|
|
|
| Non-current liabilities |
|
|
| Finance lease liability | 14 | 24 |
| Total non-current liabilities | 14 | 24 |
|
|
|
|
| Total equity and non-current liabilities | 4,833 | 3,203 |
consolidated Cash flow Statement
For the year ended 31 January 2010
|
| Year ended 31 January 2010 £'000 | Year ended 31 January 2009 £'000 |
| Loss before tax | (1,545) | (1,770) |
| Depreciation and amortisation charges | 672 | 688 |
| Share based payments | 46 | 91 |
| (Increase)/decrease in inventories | (41) | (214) |
| Decrease/(increase) in receivables | 37 | (357) |
| (Decrease)/(increase) in payables | (302) | 294 |
| Increase in deferred income | 577 | - |
| Income tax credit received | 118 | 121 |
| Net cash outflow from operating activities | (438) | (1,147) |
| Cash flows from investing activities |
|
|
| Purchase of property, plant & equipment | (132) | (208) |
| Purchase of intangible fixed assets | (474) | (447) |
| Net cash used in investing activities | (606) | (655) |
| Net cash outflow before financing | (1,044) | (1,802) |
| Cash flows from financing activities |
|
|
| Repayment of finance lease | (10) | - |
| Issue of ordinary share capital | 3,021 | - |
| Convertible loan repayment | - | (553) |
| Invoice discounting financing facility | (364) | 364 |
| Net cash inflow/(outflow) outflow from financing activities | 2,647 | (189) |
| Net increase/(decrease) in cash and cash equivalents | 1,603 | (1,991) |
|
Opening cash and cash equivalents |
243 |
2,234 |
|
Closing cash and cash equivalents |
1,846 |
243 |
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended 31 January 2010
|
|
Share capital
|
Share premium |
Merger reserve |
Retained earnings |
Total equity |
| At 1 February 2008 | 710 | 22,550 | 8,513 | (27,016) | 4,757 |
| Issue of share capital | - | (19) | - | - | (19) |
| Share based payment expense | - | - | - | 91 | 91 |
| Loss and total comprehensive expense and total recognised loss for the year | - | - | - | (1,650) | (1,650) |
| At 31 January 2009 | 710 | 22,531 | 8,513 | (28,575) | 3,179 |
| Issue of share capital | 159 | 2,862 | - | - | 3,021 |
| Share based payment expense | - | - | - | 46 | 46 |
| Loss and total comprehensive expense and total recognised loss for the year | - | - | - | (1,427) | (1,427) |
| At 31 January 2010 | 869 | 25,393 | 8,513 | (29,956) | 4,819 |
The share premium account represents the excess over the nominal value for shares allotted.
The merger reserve represents a non distributable reserve arising from historic acquisitions.
NOTES TO THE FINANCIAL STATEMENTS
1. NATURE OF THE FINANCIAL INFORMATION
These financial statements have been prepared in accordance with the principle accounting policies adopted by the Group, International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations (IFRIC) as adopted by the EU and those parts of the Companies Act 2006 applicable to companies reporting under and were approved by the Board on 23 April 2010. They are presented in sterling, which is the functional currency of the parent company and the Group. The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.
These results are audited, however the financial information does not constitute statutory accounts as defined under section 434 of the Companies Act 2006. The financial information for the year ended 31 January 2009 has been derived from the Group's statutory accounts for that year, as filed with the Registrar of Companies. The auditors' report on the statutory accounts for the year ended 31 January 2009 was unqualified and did not contain statements under section 498 of the Companies Act 2006.
The financial statements have been prepared on the going concern basis, which assumes that the Group will have sufficient funds to continue in operational existence for the foreseeable future. The Group has continued to invest in the development of its operations and in particular by continuing to invest in both its direct and indirect sales channels during the year. As a result the Group has continued to trade at a loss during the year ended 31 January 2010.The Group finances its operations through shareholders' funds and an overdraft facility. The directors have approved forecasts for the foreseeable future, which indicate that the Group will have sufficient funds to trade during that period. During the year the Group appointed a new distributor in the USA. As part of the agreement, the Group transferred the bulk of its US sales force to the distributor reducing US sales costs by about £650,000 in a full year.
The accounting policies used in completing this financial information have been consistently applied in all periods shown. These accounting policies are detailed in the Group's financial statements for the year ended 31 January 2009 which can be found on the Group's website. The following standards have been adopted for the accounts for the year to January 2010 with no significant impact:
IAS 1 (revised), 'Presentation of Financial Statements' - the revised standard brings new disclosure requirements regarding 'non-owner changes in equity' and 'owner changes in equity', which are now required to be shown separately. Under this revised guidance the Group has elected to continue to present two performance statements: an income statement and a statement of comprehensive income (previously the 'statement of recognised income and expense').
This financial information has been prepared under the revised disclosure requirements. IFRS 8, 'Operating segments' - IFRS 8 replaces IAS 14, 'Segment reporting'. IFRS 8 requires a 'management approach' under which segment information is presented on the same basis as that used for internal reporting purposes. This has not resulted in a change to reported segments. IFRS 7 (amendment) 'Financial Instruments: Financial Instruments: Improving disclosures about financial instruments' - the amendment requires enhanced disclosures about fair value measurement and liquidity risk.
The following standards, interpretations and amendments to existing standards are not yet effective and have not been adopted early by the Group: IFRIC 16: Hedges;IFRS 3: Business combinations; andIAS 39: Financial instruments.
2. DISTRIBUTION
Copies of this statement will be available for collection free of charge from the Company's registered office at 16 Orsman Road, London N1 5QJ. An electronic version will be available on the Company's website, www.lidco.com. Copies of the Annual report and accounts will be posted to shareholders in May together with the notice of the Annual General Meeting.