TIDMLID
RNS Number : 8404P
LiDCO Group Plc
15 October 2019
LIDCO GROUP PLC
("LiDCO", "Group" or the "Company")
Half-year Report
Interim Results for the six months ended 31 July 2019
LiDCO (AIM: LID), the hemodynamic monitoring company, announces
its unaudited Interim Results for the six months ended 31 July
2019.
Financial Highlights
-- LiDCO product revenues (excluding third party products) up 10% to GBP3.3m (H1 2018: GBP3.0m)
-- Total revenues (including 3(rd) party products) down 4% to GBP3.5m (H1 2018: GBP3.6m)
-- US revenues up 47% (42% on a constant currency basis) to GBP0.9m (H1 2018: GBP0.6m)
-- EBITDA loss reduced by 70% to GBP0.3m (H1 2018: loss GBP0.9m)
-- Loss per share 0.34p (H1 2018: loss per share 0.52p)
-- Net cash outflow of GBP0.5m (H1 2018: net cash outflow
GBP1.2m) - late receipt of tax credit (GBP0.2m) post period end
-- Strong balance sheet to support growth strategy with cash
balances at 31 July 2019 of GBP1.2m (31 January 2019: GBP1.7m), and
no debt
Operational Highlights
-- Continued success with High Usage Programme ("HUP") with
revenues up 115% to GBP0.8m (H1 2018: GBP0.4m)
-- Global installed base of HUP monitors increased by 52 (H1
2018: 34) to 216 at 31 July 2019 (31 January 2019: 164)
-- Regulatory approvals received for commercial sale of latest monitor in China and South Korea
-- 159 monitors sold/placed in period (H1 2018: 132 monitors)
-- Signed Latin American master distribution agreement for LiDCO
products with Brazil based Elysian Fields Medical
-- Appointment of Tim Hall as CFO to the Board in March 2019
Post Period End
-- Further increase in global installed base of HUP monitors of 26 to 242 at 11 October 2019
-- 130 HUP monitors in the US as at 11 October 2019 generating
annualised recurring revenues of $1.44m
-- Signed non-invasive technology agreement with CNSystems
Medizintechnik AG ("CNS") to incorporate latest technology
improvements into CNS's continuous, non-invasive blood pressure
monitoring ('CNAP') product
-- Appointment of Jim Wetrich as Non-executive Director to the Board in August 2019
Commenting, Matt Sassone, Chief Executive Officer of LiDCO,
said: "We've had a good start to the year as we were able to
transition more UK customers to HUP and it is pleasing to report
that this continues into H2. In the US we are continuing to gain
success from a comparatively small sales presence, which
demonstrates the potential of the HUP business model. With HUP
gathering more momentum, we are focussed on achieving a strong
second half performance as the business moves progressively towards
profitability, driven by a strong recurring revenue base."
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
LiDCO Group Plc www.lidco.com
Matt Sassone (CEO) Tel: +44 (0)20 7749 1500
Tim Hall (CFO)
finnCap Tel: +44 (0)20 7600 1658
Geoff Nash / Hannah Boros (Corporate
Finance)
Andrew Burdis (Corporate Broking)
Walbrook PR Ltd Tel: 020 7933 8780 or lidco@walbrookpr.com
Paul McManus Mob: 07980 541 893
Lianne Cawthorne Mob: 07584 391 303
CHIEF EXECUTIVE OFFICER'S REVIEW
The first half results clearly demonstrate how the Company's
differentiated High Usage Programme (HUP) offering and the
strategic shift to a 'Software as a Service' (SaaS) model is
starting to deliver. Customer experience and feedback continues to
be excellent. Financially, HUP delivers greater revenue visibility
alongside strong cash generation.
HUP revenues in the first six months grew 115% to GBP0.81m (H1
2018: GBP0.37m) contributing strongly to the overall performance of
the business in the period. As at 11 October the Company has 242
HUP monitors placed in the market (31 January 2019: 164) that will
generate annualised revenues of GBP2.1m. HUP contracts vary in
length but are typically for three years with the customer able to
extend the contract for a further one or two years. Fees are
invoiced annually at the beginning of each contract year, but the
income is recognised over the contract year with the unrecognised
deferred income being shown on the balance sheet. Unrecognised
deferred income relating to HUP contracts was GBP0.77m at 31 July
2019 (31 July 2018: GBP0.37m).
The Board has identified that, as the largest market for
hemodynamic monitoring, the US offers the greatest opportunity for
LiDCO. Accordingly, the Company continues to invest in gaining
share in this growing market. In addition to its success to date,
the Company has been able to build a substantial pipeline of
opportunities as customers recognise the possibility to save money
versus their current supplier, whilst being able to monitor
additional patients without incremental costs. In the current
environment in the US healthcare market, the proposition of
managing costs whilst delivering high-value, high-quality care,
means that LiDCO's HUP offering is well placed and timely.
LiDCO currently has a small direct US salesforce that is
adapting to navigate a complex purchasing environment. Since
launching its HUP offering, LiDCO has evolved its approach to meet
customer requirements to the point that some customers are now
utilising capital funding to purchase monitors as part of their HUP
contract. The Board is pleased that Jim Wetrich has joined as a
Non-executive Director and believe that his knowledge and
relationships of the US market will help the Company shorten the US
sales cycle.
In the UK, LiDCO's home market, the Company is aiming to convert
its larger customers to the HUP business model. The Group initially
evaluated this approach with its largest UK account in January 2018
and, encouragingly, the customer has been able to treat more
patients and has increased its investment in hemodynamic
monitoring. Following this success, a total of eight of LiDCO's
larger customers have, as at 11 October 2019, signed multi-year HUP
contracts, meaning that a total of GBP0.8m or 26% of LiDCO's
recurring revenues in the UK have now converted to HUP.
This strategy to actively convert larger UK customers to the
SaaS business model has a short-term transitional impact on
revenues for two reasons: (i) customers typically de-stock
smartcard inventory ahead of transitioning and (ii) revenues which
would have normally been booked in the year are deferred and
recognised over 12 months. Nevertheless, once established, HUP
provides a better forward view of revenues and a highly competitive
offering for customers.
In the UK, as previously announced, the termination of the Argon
Critical Care distribution contract impacted the first half
performance contributing just GBP0.16m compared to GBP0.63m in H1
2018. The Company has signed three exclusive distribution
agreements for complimentary products which it expects over time to
collectively exceed the financial contribution previously generated
by the Argon distribution.
Outside of the Group's two direct markets, LiDCO focuses on
specific countries which offer the best opportunities for
geographic expansion. The take up of hemodynamic monitoring varies
greatly across the world, and the Board's aim is to build a number
one or two position in specific target countries that are rapidly
adopting relevant clinical pathways, such as enhanced recovery
after surgery. This strategy took major steps forward in the first
six months of the financial year, as the Company achieved
regulatory approval for its latest hemodynamic monitor
LiDCOrapid(v3) in both China and South Korea, and appointed Elysian
Fields as its master distributor in Latin America.
Financial Results
Overall revenues were down 4% to GBP3.51m (H1 2018: GBP3.64m) as
a result of the previously announced termination of the Argon
Critical Care distribution contract. However, sales of LiDCO
products increased 10% to GBP3.33m (H1 2018: GBP3.02m).
Gross profit increased 7% to GBP2.56m (H1 2018: GBP2.39m) with
the gross margin increasing to 73.0% (H1 2018: 65.7%) due to the
decline in sales of low margin third-party products.
Sales and marketing costs decreased by 16% to GBP1.70m (H1 2018:
GBP2.04m) primarily as a result of cost saving measures put in
place at the beginning of the year and open sales positions at that
time. Operational costs, which include facilities, systems and
logistics, reduced 6% to GBP0.51m (H1 2018: GBP0.54m), mainly due
to lower salary costs arising from headcount reductions.
Administration expenses increased to GBP0.70m (H1 2018: GBP0.63m)
primarily due to recruitment expenses and increased salary costs.
Product development costs were 1% below those of the prior period
at GBP0.39m (H1 2018: GBP0.40m). Total operating expenses decreased
by 8% to GBP3.30m (H1 2018: GBP3.60m).
The EBITDA loss for the period was reduced by 70% to GBP0.26m
(H1 2018: GBP0.88m). The implementation of IFRS 16 "Leases" in the
period reduced the EBITDA loss by GBP0.1m.
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2019 2018 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------- ---- ----------- ----------- ------------
Loss from operations (812) (1,275) (2,138)
Depreciation 551 391 832
---------------------------- ----------- ----------- ------------
EBITDA (261) (884) (1,306)
---------------------------- ----------- ----------- ------------
Net cash inflow from operating activities was GBP0.13m (H1 2018:
outflow GBP0.61m). The increase in net cash generated from
operating activities arose from the reduction in EBITDA loss and
favourable working capital movements, partly offset by the deferral
into H2 of the R&D tax credit, of GBP0.19m (H1 2018: GBP0.14m)
in respect of the previous financial year, normally received in
H1.
Net cash used in investing activities, which represents
purchases of plant and equipment including monitors placed on
long-term loan to hospitals and capitalised R&D, was down 3% to
GBP0.54m (H1 2018: GBP0.56m).
Net cash outflow from financing activities of GBP0.12m (H1 2018:
GBPnil) relates to interest and capital payments in respect of
property and car rentals previously classified as operating leases
under IAS 17.
Net cash outflow was GBP0.53m (H1 2018: GBP1.17m) such that the
Company had cash balances at 31 July 2019 of GBP1.19m (31 January
2019: GBP1.72m).
Sales Performance
In the UK, LiDCO product revenues declined by 8% to GBP1.61m (H1
2018: GBP1.76m) due to the timing of certain large orders and the
Company's decision to transition another four of its larger
customers to the HUP business model. The impact of these two
factors is estimated to have reduced H1 revenue by GBP0.2m. As
explained above, the strategy to actively convert UK customers to
the SaaS business model, has a transitional impact on revenues as
these customers typically de-stock inventory ahead of transitioning
to HUP. Overall the Company believes that it is maintaining its
leading share of the UK hemodynamic monitoring market.
US revenues were up 47% (42% on a constant currency basis) to
GBP0.89m (H1 2018: GBP0.61m), with the growth being driven by the
continued success of the HUP offering. Capital sales in the first
half increased as a result of utilising customer's capital budgets
to accelerate the contracting of HUP monitors. As at 11 October the
installed base of HUP monitors has grown to 130 units (31 January
2019: 95) generating annualised recurring revenues of $1.44m.
In Continental Europe, sales were up 27% to GBP0.30m (H1 2018:
GBP0.24m). The strong performance in first half, was partly due to
distributors building inventory ahead of a no-deal Brexit and the
success of signing new distributors in Eastern Europe.
In the Rest of World, sales grew by 27% to GBP0.53m (H1 2018:
GBP0.42m). During the period the Chinese Food and Drug
Administration (CFDA) approved the commercial sale of LiDCO's
latest monitor and sales of stock to LiDCO's Chinese distributor
ahead of its re-launch in this important growing market positively
impacted H1.
Third party sales were impacted by the expected decline as a
result of the termination of the Argon critical care contract by
Merit Medical. In the first six months, revenues of these lower
margin third party products reduced to GBP0.16m (H1 2018:
GBP0.63m). The UK commercial team is focusing on launching the
newly signed distribution product ranges, and whilst progress is
slower than originally anticipated it is expected that with time
these will replace the contribution made by the terminated Argon
distribution agreement.
Further details of the Company's performance, in terms of
revenues by key geographies, are given in the table below:
6 months to July 2019 6 months to July 2018
Capital Recurring Other Total Capital Recurring Other Total
Revenues Revenues Revenues Revenues
------------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
LiDCO Revenues
UK 221 1,369 23 1,613 163 1,564 31 1,758
US 112 771 4 887 22 579 4 605
Europe 68 223 9 300 93 136 7 236
Rest of
World 357 167 4 528 179 236 2 417
------------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
758 2,530 40 3,328 457 2,515 44 3,016
------------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
3rd Party Revenues
UK - 183 - 183 - 627 - 627
------------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
Total Sales 758 2,713 40 3,511 457 3,142 44 3,643
------------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
Capital revenues include the sales of monitors and other
equipment to customers. Recurring revenues include sales of
smartcards, sensors, software licenses and service contracts. Japan
revenues have now been included within Rest of World.
Strategic plans
LiDCO's strategy is to build shareholder value through the
commercialisation of LiDCO monitoring systems and associated high
margin repeat revenues. Increasing the numbers of productive
LiDCO-enabled monitors should ultimately increase the amount of
repeat revenues generated from customers.
Geographical expansion is key to LiDCO's capacity to address the
worldwide opportunity for sales of its technology. The Company is
focused on the US as the largest market for hemodynamic monitoring
and has invested in commercial operations there to accelerate
revenue growth whilst maintaining LiDCO's leadership position in
the UK.
LiDCO will continue to invest in research and development to
maintain its technology leadership and deliver further
differentiation of LiDCO's offering. The Board believes that the
quality of LiDCO's products, along with promotion of its highly
differentiated and attractive pricing model for customers with high
annual usage, will drive significant market share gains in the US
and other target markets.
Excellence in product design, manufacturing and sales and
marketing are at the core of LiDCO's values. Patent protection is
sought where possible for LiDCO products and their position is
supported by a growing body of data showing their clinical benefit
and cost-effectiveness.
Brexit
The Board continues to follow progress in Brexit negotiations,
and has actioned plans in case the UK exits the European Union (EU)
on 31 October 2019 without a withdrawal agreement. The following
steps are being implemented as necessary to limit the risk of
Brexit having an adverse impact on the Company.
LiDCO is in the process of moving all current CE marks to a
domicile within the EU for regulatory purposes. This action has
minimal impact to the business with the exception of the need to
change LiDCO product labelling over time.
The Company's Lithium Chloride registration as a pharmaceutical
is in the process of relocating from the UK Medicines and
Healthcare products Regulatory Agency (MHRA) to another EU
regulatory agency. The Company will continue to monitor the
changing regulatory requirements and evaluate the viability of
business in individual European markets when considering the
regulatory costs.
Default arrangements under World Trade Organisation rules
generally levy no tariffs on medical products. However, the Company
has decided to move some inventory into Europe to mitigate any
potential supply disruption.
The Board believes that Brexit will have no material impact on
staffing and talent retention.
The Board continues to hope that a no deal situation will be
avoided and that, as a minimum, trade with EU entities will be
unaffected for the duration of a transitional period.
Premises
The Company has been informed by the landlord of its premises in
London that they wish to redevelop the property and will not renew
the lease at the end of its current term in June 2021. Contracts
are currently being finalised in respect of a new short-term lease,
which provides benefits to both parties, to replace the existing
lease for the remainder of the term. The Company is progressing
plans to find alternative premises.
Outlook
LiDCO continues to make good progress with its High Usage
Programme in the US and, having established a foundation of
prestigious accounts in the US, the Company is well-positioned to
take further market share in the world's largest hemodynamic
monitoring market. There is a substantial pipeline of advanced
opportunities for new HUP accounts and, while predicting the timing
of conversion to signed contracts remains an imprecise art, the
volume and value of such high visibility contracted revenue
opportunities continues to grow. The Board therefore expects to see
further benefits as LiDCO's pipeline conversion progresses in the
US. In addition, the Board recognises the mid-term benefits of
transitioning its larger UK customers to the same HUP model.
As a result, it is expected that the second half will build on
the good start to the year as the appeal of the HUP business model
continues to attract customers. Overall the Board expects
significant LiDCO sales momentum when compared with the second half
of last year and, with overheads remaining largely flat on the
prior year, the Board expects performance will benefit from the
operational gearing in the business.
Matt Sassone
Chief Executive Officer
15 October 2019
CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
For the six months ended 31 July 2019
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2019 2018 2019
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
------------------------------------- ----- ----------- ----------- ---------------------
Revenue 4 3,511 3,643 7,324
Cost of sales (948) (1,251) (2,489)
------------------------------------- ----- ----------- ----------- ---------------------
Gross profit 2,563 2,392 4,835
Sales and marketing (1,702) (2,038) (3,787)
Operations (507) (542) (1,010)
Administration (704) (626) (1,235)
Product development (393) (396) (798)
------------------------------------- ----- ----------- ----------- ---------------------
Total operating expenses (3,306) (3,602) (6,830)
------------------------------------- ----- ----------- ----------- ---------------------
Operating loss before share-based
payments (743) (1,210) (1,995)
Share-based payment charge (69) (65) (143)
------------------------------------- ----- ----------- ----------- ---------------------
Operating loss (812) (1,275) (2,138)
------------------------------------- ----- ----------- ----------- ---------------------
Finance income 1 1 1
Finance expense (9) - -
------------------------------------- ----- ----------- ----------- ---------------------
Loss before tax (820) (1,274) (2,137)
Income tax (1) 9 196
------------------------------------- ----- ----------- ----------- ---------------------
Loss for the period and total
comprehensive expense attributable
to equity holders of the parent (821) (1,265) (1,941)
------------------------------------- ----- ----------- ----------- ---------------------
Loss per share (basic and diluted) 5 (0.34p) (0.52p) (0.80p)
------------------------------------- ----- ----------- ----------- ---------------------
CONDENSED CONSOLIDATED Balance Sheet
At 31 July 2019
31 July 31 July 31 January
2019 2018 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------- ----------- ----------- -----------
Non-current assets
Property, plant and equipment 1,013 1,018 949
Right to use assets 367 - -
Intangible assets 2,125 2,011 2,083
--------------------------------------- ----------- ----------- -----------
3,505 3,029 3,032
--------------------------------------- ----------- ----------- -----------
Current assets
Inventory 1,539 2,118 1,880
Trade and other receivables 1,440 2,218 1,928
Tax receivable 188 - 188
Cash and cash equivalents 1,188 2,056 1,717
--------------------------------------- ----------- ----------- -----------
4,355 6,392 5,713
--------------------------------------- ----------- ----------- -----------
Current liabilities
Lease liabilities (218) - -
Trade and other payables (963) (1,918) (1,374)
Deferred income (766) (371) (837)
--------------------------------------- -----------
(1,947) (2,289) (2,211)
--------------------------------------- ----------- ----------- -----------
Net current assets 2,408 4,103 3,502
--------------------------------------- ----------- ----------- -----------
Non-current liabilities
Lease liabilities (131) - -
--------------------------------------- ----------- ----------- -----------
(131) - -
--------------------------------------- ----------- ----------- -----------
Net assets 5,782 7,132 6,534
--------------------------------------- ----------- ----------- -----------
Equity attributable to equity holders
of the parent
Share capital 1,221 1,221 1,221
Share premium 30,342 30,342 30,342
Merger reserve 8,513 8,513 8,513
Retained earnings (34,294) (32,944) (33,542)
--------------------------------------- ----------- ----------- -----------
Total equity 5,782 7,132 6,534
--------------------------------------- ----------- ----------- -----------
CONDENSED consolidated COMPREHENSIVE Cash flow Statement
For the six months ended 31 July 2019
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2019 2018 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Loss before tax (820) (1,274) (2,137)
Finance income (1) (1) (1)
Finance expense 9 - -
Depreciation and amortisation charges 551 391 832
Share based payments 69 65 143
Decrease/(increase) in inventories 341 (764) (526)
Decrease in receivables 465 1,038 1,318
(Decrease)/increase in payables (411) 102 (442)
(Decrease)/increase in deferred income (71) (297) 169
Income tax (paid)/received (2) 126 135
-------------------------------------------- ----------- ----------- ------------
Net cash inflow/(outflow) from operating
activities 130 (614) (509)
-------------------------------------------- ----------- ----------- ------------
Cash flows from investing activities
Purchase of property, plant & equipment (232) (238) (351)
Purchase of intangible assets (309) (320) (651)
Finance income 1 1 1
-------------------------------------------- ----------- ----------- ------------
Net cash used in investing activities (540) (557) (1,001)
-------------------------------------------- ----------- ----------- ------------
Cash flows from financing activities
Finance expense (9) - -
Principle elements of lease payments (110) - -
-------------------------------------------- ----------- ----------- ------------
Net cash outflow from financing activities (119) - -
-------------------------------------------- ----------- ----------- ------------
Net decrease in cash and cash equivalents (529) (1,171) (1,510)
-------------------------------------------- ----------- ----------- ------------
Opening cash and cash equivalents 1,717 3,227 3,227
-------------------------------------------- ----------- ----------- ------------
Closing cash and cash equivalents 1,188 2,056 1,717
-------------------------------------------- ----------- ----------- ------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY
For the six months ended 31 July 2019
Share Share Merger Retained Total
capital premium reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ --------- --------- --------- ---------- ----------
At 1 February 2018 1,221 30,342 8,513 (31,744) 8,332
Share based payment expense - - - 143 143
Transactions with owners - - - 143 143
------------------------------ --------- --------- --------- ---------- ----------
Loss and total comprehensive
expense for the year - - - (1,941) (1,941)
------------------------------ --------- --------- --------- ---------- ----------
At 31 January 2019 1,221 30,342 8,513 (33,542) 6,534
Share based payment expense - - - 69 69
------------------------------ --------- --------- --------- ---------- ----------
Transactions with owners - - - 69 69
------------------------------ --------- --------- --------- ---------- ----------
Loss for the half year - - - (821) (821)
------------------------------ --------- --------- --------- ---------- ----------
At 31 July 2019 1,221 30,342 8,513 (34,294) 5,782
------------------------------ --------- --------- --------- ---------- ----------
NOTES TO THE INTERIM STATEMENT
1. BASIS OF PREPRATION
The Group's interim report for the six months ended 31 July 2019
was authorised for issue by the directors on 15 October 2019. The
consolidated interim financial information, which is unaudited,
does not constitute statutory accounts within the meaning of
Section 435 of the Companies Act 2006. Accordingly, this condensed
report is to be read in conjunction with the Annual Report for the
year ended 31 January 2019, which has been prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted
by the European Union, and any public announcements made by the
Group during the interim reporting period.
The statutory accounts for the year ended 31 January 2019 have
been reported on by the Group's auditors, received an unqualified
audit report and have been filed with the registrar of companies at
Companies House. The unaudited condensed interim financial
statements for the six months ended 31 July 2019 have been drawn up
using accounting policies and presentation expected to be adopted
in the Group's full financial statements for the year ending 31
January 2020, which are those set out in note 1 to the Group's
audited financial statements for the year ended 31 January 2019
together with the new accounting policies that have been applied
from 1 February 2019 included in note 3.
Having reviewed the Group's operations and forecasts, the
directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, the directors continue to adopt the going
concern basis in preparing the unaudited condensed interim
financial statements.
2. ACCOUNTING POLICIES
The interim financial information has been prepared on the basis
of the recognition and measurement requirements of IFRS, which were
the accounting policies used in the Report and Accounts for the
Group for the year ended 31 January 2019. The accounting policies
are those used in the last annual accounts and include the new
accounting policies that have been applied from 1 February 2019 as
set out in Note 3 below.
3. CHANGES IN ACCOUNTING POLICIES
On 1 February 2019 the Group adopted IFRS 16 "Leases", which has
been issued by the IASB to replace IAS 17 "Leases". The Group has
used the "modified retrospective approach" to the implementation of
IFRS 16 under which a lessee does not have to restate comparative
information.
IFRS 16 changes lease accounting for lessees in that:
-- Lease agreements give rise to an asset representing the right
to use the leased item and a liability for future lease payments.
Previously under IAS 17, a liability was not recorded for future
operating lease payments, which were disclosed as commitments;
-- Lease costs are recognized in the form of depreciation of the
right to use asset and interest on the lease liability which will
be discounted at either the interest rate implicit in the lease or,
when this is not determinable, the expected incremental borrowing
rate for the Group for the item under lease. Under IAS 17,
operating lease rentals were expensed on a straight-line basis over
the lease term within operating expenses;
-- Net cash inflows from operating activities and payments
classified within the cash flow from financing activities both
increase, as, under IFRS 16, payments made at both the lease
inception and subsequently are characterized as repayments of lease
liabilities and interest. Net cash flows are not impacted by IFRS
16.
The adoption of IFRS 16 does not affect revenue recognition of
the Group.
The impact of the adoption of IFRS 16 on the Group consolidated
balance sheet as at 31 July 2019 is shown in the table below.
31 July IFRS 16 31 July
2019 adjustments 2019
Reason for change under IAS GBP'000s as reported
17 GBP'000s
GBP'000s
Recognition of right
to use asset for rented
items previously classed
Non-current assets as operating leases 3,138 367 3,505
----------------------------- ----------- ------------- -------------
Adjustment for previously
recognized prepayment
relating to property
Current assets lease 4,378 (23) 4,355
----------------------------- ----------- ------------- -------------
Recognition of current
portion of lease liability
Current liabilities for rented items (1,729) (218) (1,947)
----------------------------- ----------- ------------- -------------
Recognition of lease
liability due greater
than one year for rented
Non-current liabilities items - (131) (131)
----------------------------- ----------- ------------- -------------
The impact of the adoption of IFRS 16 on the Group consolidated
comprehensive income statement, EBITDA and the Group consolidated
cash flow statement are shown in the table below.
6 months Reversal 6 months
to of IAS IFRS 16 to
31 July 17 entries adjustments 31 July
Reason for change 2019 under GBP'000s GBP'000s 2019 as
IAS 17 reported
GBP'000s GBP'000s
Removal of IAS
17 lease costs
and recording of
depreciation of
Operating expenses right to use assets (3,310) 119 (115) (3,306)
----------------------- ------------ ------------ -------------- ----------
Recording of interest
Finance expense on lease liability - - (9) (9)
----------------------- ------------ ------------ -------------- ----------
Loss before
tax Net of above changes (816) 119 (124) (821)
----------------------- ------------ ------------ -------------- ----------
Removal of lease
costs from operating
EBITDA expenses (380) 119 - (261)
----------------------- ------------ ------------ -------------- ----------
Net cash inflow Lease cost payments
from operating recorded within
activities financing activities 11 119 - 130
----------------------- ------------ ------------ -------------- ----------
Net cash used Recognition of
in financing lease liability
activities payments - - (119) (119)
----------------------- ------------ ------------ -------------- ----------
4. REVENUE AND SEGMENTAL INFORMATION
The Group has one segment - the supply of monitors, disposables
and support services associated with the use of the LiDCO's cardiac
monitoring equipment. Geographical and product type analysis is
used by management to monitor sales activity and is presented
below:
Revenue and result by geographical region
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2019 2018 2019
Group revenue GBP'000 GBP'000 GBP'000
UK - LiDCO products 1,613 1,758 3,559
UK - third party products 183 627 1,134
USA 887 605 1,376
Continental Europe 300 236 467
Rest of World 528 417 788
-------------------------------------- ----------- ----------- ------------
3,511 3,643 7,324
-------------------------------------- ----------- ----------- ------------
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2019 2018 2019
Result GBP'000 GBP'000 GBP'000
-------------------------------------- ----------- ----------- ------------
UK - LiDCO products 485 643 1,305
UK - third party products 27 125 227
US (124) (736) (779)
Europe 152 (7) 132
Rest of World 211 130 163
-------------------------------------- ----------- ----------- ------------
Total 751 155 1,048
Unallocated costs (1,563) (1,430) (3,186)
-------------------------------------- ----------- ----------- ------------
Operating loss (812) (1,275) (2,138)
-------------------------------------- ----------- ----------- ------------
Revenue by type
Capital revenues 758 457 1,051
Recurring revenues 2,530 2,515 5,040
Distributed third party disposables 183 627 1,134
-------------------------------------- ----------- ----------- ------------
Total product revenue 3,471 3,599 7,225
-------------------------------------- ----------- ----------- ------------
Other income 40 44 99
-------------------------------------- ----------- ----------- ------------
Total revenues 3,511 3,643 7,324
-------------------------------------- ----------- ----------- ------------
The Group can identify trade receivables and trade payables
relating to the geographical segments. As noted above, the Group
has one segment and other assets and liabilities together with
non-sales related overheads are not accounted for on a segment by
segment basis. Accordingly, segment assets, liabilities and segment
cash flows are not provided. Service contract income is included
within recurring revenue.
During the period there were no customers that accounted for
more than 10% of the Group's total revenue (H1 2018: nil).
5. LOSS PER SHARE
The calculation of the loss per share for the six months to 31
July 2019 is based on the loss for the period of GBP821,000 (H1
2018: GBP1,265,000) and the weighted average number of shares in
issue during the period of 244,174,908 (H1 2018: 244,174,908).
6. DISTRIBUTION OF THE INTERIM STATEMENT
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.
The Company's presentation of its interim results for the six
months ended 31 July 2019 will also be available from today on the
LiDCO website www.lidco.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR USRBRKSARAAA
(END) Dow Jones Newswires
October 15, 2019 02:00 ET (06:00 GMT)
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