15th Mar 2005 07:02
Deltex Medical Group PLC15 March 2005 Deltex Medical Group plc Preliminary results for the year ended 31 December 2004 15 March 2005 - Deltex Medical Group plc ("Deltex Medical" or "Company") todayannounces its preliminary results for the year ended 31 December 2004. Financial Highlights • Net cash outflow before financing reduced by £1m to £2m (2003: £3m) • Pre-exceptional loss before tax of £2.1m (2003: £2.4m) • £1.9m of additional equity raised in 2004 • Net cash of £1.1m at period end • Current plans indicate sufficient cash to see Company to profitability Operating Highlights • Number of patients in UK completing treatment with a Deltex Medical oesophageal probe almost doubled from 55 to over 100 per day • First NHS hospital to adopt routine use of CardioQ in moderate and major surgery reports potential annual savings of £1.1m • First US Veterans Administration hospital adopts CardioQ as standard of care for moderate and major surgical procedures • Negotiations continue with over 20 NHS hospitals regarding implementation of CardioQ as standard of care • UK government-funded controlled clinical trial demonstrates that use of CardioQ significantly reduces complications, reduces hospital stay and saves money in bowel surgery Nigel Keen, Chairman of Deltex Medical, said: "It is frustrating to report alack of sales progress when the body of published evidence supportinghaemodynamic optimisation is so compelling. It is, nevertheless, increasinglyclear that hospitals around the world are being persuaded of the benefits ofCardioQ and we are confident that our ongoing negotiations, particularly in theUK with NHS Trust hospitals, will result in sales progress during the comingyear." For further information, please contact:- Deltex Medical Group plc 01243 774 837Nigel Keen, ChairmanAndy Hill, Chief ExecutiveEwan Phillips, Finance Director Financial DynamicsDavid Yates/Lucy Briggs 0207 831 3113 Chairman's Statement Group Summary Deltex Medical's CardioQ(TM) monitor uses disposable ultrasound probes insertedinto the oesophagus through the mouth or nose to determine the amount of bloodbeing pumped around the body - 'circulating blood volume'. Reduced circulatingblood volume is known as hypovolaemia and occurs as a consequence of blood lossor dehydration. If blood volume is reduced significantly, the body cannotdeliver sufficient oxygen to the vital organs. This causes medicalcomplications including peripheral and major organ failure, which can lead todeath. Hypovolaemia affects almost all patients undergoing surgery because ofthe combined effects of pre-operative starvation, the impact of anaestheticgases and the trauma of surgery itself. Guided by the CardioQ and using fluidsand drugs to optimise the amount of circulating blood and the heart'sperformance, doctors can significantly reduce post-operative complicationsallowing patients to make a fuller, more complete recovery and return homeearlier. The opportunities the CardioQ offers for improved quality andefficiency of care through helping patients get better, quicker can besummarised: the CardioQ saves lives and saves money. It is Deltex's strategy to make the use of the CardioQ a standard of care inoperating theatres for all patients undergoing moderate and high risk surgery aswell as for its use to be the treatment of choice in Intensive Care Units forthe rapid monitoring of severely ill patients. Adopting the CardioQ as astandard of care empowers hospitals to both improve the quality of care theygive and the efficiency with which they give it. The efficiency benefits allowthe hospital to choose to: increase capacity; or reduce costs; or redeployexisting resources to meet local priorities. Trading Results Sales 2004 2004 2004 2004 2004 2004 Probes Monitors Probes Monitors Other Total Units units £'000 £'000 £'000 £'000 ______ ______ ______ ______ ______ ______Direct marketsUK hospitals 18,082 39 1,254 169 53 1,476UK audit projects - - - - - - ______ ______ ______ ______ ______ ______UK Total 18,082 39 1,254 169 53 1,476USA 4,520 3 273 10 1 284Distributor marketsEurope 8,627 56 390 277 2 669Far East & Latin America 681 11 32 32 1 65 ______ ______ ______ ______ ______ ______ 31,910 109 1,949 488 57 2,494 ______ ______ ______ ______ ______ ______ (continued from table above)Sales 2003 2003 2003 2003 2003 2003 Probes Monitors Probes Monitors Other Total Units units £'000 £'000 £'000 £'000 ______ ______ ______ ______ ______ ______Direct marketsUK hospitals 14,755 50 1,036 173 30 1,239UK audit projects 5,020 77 252 385 2 639 ______ ______ ______ ______ ______ ______UK Total 19,775 127 1,288 558 32 1,878USA 4,970 4 336 20 1 357Distributor marketsEurope 7,450 97 292 358 4 654Far East & Latin America 3,155 42 135 59 1 195 ______ ______ ______ ______ ______ ______ 35,350 270 2,051 995 38 3,084 ______ ______ ______ ______ ______ ______ Overall, Group sales for the year to 31 December 2004 were £2,494,000, comparedto £3,084,000 in 2003. Probe sales were 31,910 units, compared to 35,350 unitsin 2003, but with strong underlying growth in probe usage in our key UK andEuropean markets. Deltex Medical made considerable progress throughout 2004 in positioning theCardioQ as the product of choice for hospitals wishing to implement haemodynamicoptimisation as a standard of care in operating theatres. It made furtherprogress in establishing the principle that haemodynamic optimisation should bea standard of care for the many millions of patients who undergo moderate andmajor surgery in developed healthcare systems every year. At the same time theCompany continued to make steady progress in selling its products to intensivecare units in its main target markets. The major challenge for the Company in 2005 and beyond is to convert this strongmarketing position into monitor sales and a substantial and expanding recurringrevenue stream from its disposable oesophageal probes. To deliver such longterm sustainable income will necessitate the Company continuing to overcome thebarriers to new medical technology adoption in all its markets, and, as apriority in the shorter term, in the UK where the sales pipeline has grown mostdramatically. The key successes in 2004 have demonstrated the scale of theeconomic benefits which using the CardioQ as a standard of care delivers overand above the previously proven clinical benefits to patients. In 2003 the Company sponsored a series of data collection exercises in five UKNHS Trusts aimed at assessing the impact of implementing the CardioQ as astandard of care. Towards the end of 2003, these Trusts purchased sufficientmonitors to enable them to undertake these projects as well as large numbers ofprobes relative to prior consumption; as these Trusts consumed these probesthroughout 2004 and ordered only very minimal extra probes while they reducedtheir stocks, the 2003 orders need to be considered in assessing salesperformance year on year. In the UK in 2004, the company sold 18,082 probes with a total sales value of£1,254,000 compared to 14,775 probes (excluding sales relating to the auditprojects) for £1,036,000 in 2003. Our estimates of the number of UK patientsper day being treated using the CardioQ take account of hospital stockholdingand show an increase in underlying probe consumption of over 80% over the periodfrom 55 to at least 100. We sold 39 CardioQ monitors in the UK in 2004 comparedto 127 in 2003, of which 77 were to the five Trusts highlighted. This level of CardioQ sales in the UK was disappointing, particularly given thestep-change in interest in the CardioQ in the final quarter of 2004. However,the impact of this step-change is shown by our assessment of the UK pipeline at31 December 2004 as being large enough that it would more than double theoperating theatre installed base from our top forty target hospitals alone. Intotal, we estimate that the pipeline for sales in the UK is at least four timeswhat it was at the end of 2003. Underlying hospital purchases of probes in Europe in 2004 were over 40% ahead of2003 by volume. The adverse impact of reduced stock-holding by two of ourlarger distributors meant that actual probe sales by the Company to ourdistributors increased by a lower rate of 16% by volume. However, increasedprices to our distributors meant the value of probe sales increased by 34% from£292,000 to £390,000 in the year. This growth in probe sales was offset by adecline in monitor sales as we worked with our distributors to concentrate onincreasing usage of the CardioQ following a period of success in expanding theinstalled base. Probe sales by volume in the USA fell by 9% from 4,970 to 4,520, with a slightlylarger fall in sales by value due to the weak dollar. The decline is directlyattributed to our decision to focus on identified key target accounts in Texasand Illinois and withdraw direct support to other areas. Our focus remains ongaining acceptance for wide-scale use of the CardioQ in a small number ofhospitals as a base for future expansion. Since the year-end, the Veterans'Administration (VA) Hospital in San Antonio has started to use the CardioQ asthe preferred monitor to implement haemodynamic optimisation as a standard ofcare for higher risk surgical patients. Federal funding and administrativeconstraints will determine when we can recognise the revenue for the nineCardioQ monitors installed in December and when buying our probes become part ofthe hospital's procurement protocols in order to catch up with its clinicalprotocols. Sales in the Far East and Latin America reflected the Company's decision toredeploy investment away from these markets into the UK and Europe and hencereduced from £195,000 to £65,000. We continue to provide remote support to ourdistributors in these regions, thereby allowing the necessary clinicalgroundwork to be undertaken, but at low cost to the Company. Tight control of our costs in the USA and Far East and Latin America territoriesmeans that only minimal future sales growth is necessary for our operations inthem to be cash generative; previously these territories have absorbeddisproportionate amounts of cash relative to levels of sales. The net loss before taxation for the period amounted to £2,773,000 after anexceptional charge of £652,000 relating to the cost of the UK hospital postprocurement audit projects set up in 2003. Without this non-recurring chargethe loss would have been £2,121,000 compared to £2,396,000 in 2003. The net cash outflow from operating activities for the period was £1,988,000, areduction of £972,000 (33%) from £2,960,000 in 2003. Cash in hand at the end ofthe year was £1,207,000 (2003: £1,093,000). During the year the Company raiseda total of £1,879,000 in new equity capital, after expenses, through the issueof 2,751,666 new shares under option agreements and the placing of a further4,629,630 new shares. In addition, a £500,000 working capital facility wasnegotiated with the Company's bankers during the period; £105,000 of thisinvoice discounting facility had been drawn down at 31 December 2004, meaningthe Company had net cash of £1,102,000 (2003: £1,093,000). It is the Board's belief that current plans indicate that cash on hand andfacilities are sufficient to see the Company to profitability. Since the year end we have seen continued growth in probe sales in the UK aswell as encouraging signs for sales growth in all our other markets. While wehave continued to make considerable progress towards completing a significantnumber of larger, hospital-wide sales in the UK, USA and Europe, our experiencehas shown that we cannot predict with certainty when the hospitals will be in aposition to place the order for initial wider-scale implementation of ourequipment. Accordingly we have effected measures to reduce our headcount by20%, reduce the amount of stock we build and reduce our overheads. Thesemeasures, together with the base level of sales growth coming through, have beendesigned to ensure that the Company is in a strong position to exploit thestep-up in sales the Board expects to follow on from the progress made in 2004. Markets UK New clinical studies from Worthing hospital and the Middlesex hospital added tothe overwhelming body of scientific evidence demonstrating that the CardioQdelivers substantial clinical benefit, both in intensive care and operatingtheatres. Even before these studies, leading academic doctors had assessed thebody of evidence as being Level 1A; this is the highest possible level ofscientific evidence and demands a change in clinical practice. Haemodynamicoptimisation is one of only two techniques affecting surgical patients whereLevel 1A evidence is in place. This means that, in an era of "evidence basedmedicine", there is stronger evidence supporting haemodynamic optimisation thanthere is for any of the traditional care interventions and protocols currentlyregarded as standards of care. Late in 2003, in order to ensure that the clinical benefits shown in thepublished clinical trials are repeatable in the day-to-day practice in ordinaryhospitals and that the clinical benefits which are delivered do translate intoeconomic benefits, the Company sponsored a series of data collection exercisesin five NHS Trusts. These exercises were aimed at assessing the impact ofimplementing the CardioQ as a standard of care. The work gave us invaluablefirst hand knowledge of just how difficult it is for typical NHS hospitals totrack the details of the individual treatments received by their patients and toidentify the costs or benefits of these treatments. Work continues on theseprojects. These experiences have enabled us to design new ways of working with individualNHS Trusts which allow us to help the Trust identify the benefit of making theuse of the CardioQ a standard of care in the hospital. In September 2004, theMedway Maritime NHS Trust completed its audit of the impact of wide-scale use ofthe CardioQ in operating theatres on moderate and major risk surgical patients.The Trust found that the CardioQ reduced the average length of stay aftersurgery by three days, approximately 30%, for the range of moderate and majorrisk surgery where it was used. This equated to an approximate saving of £800per patient. The probes used cost the hospital £45-85 each and the monitors£5,000 each. Based on the Medway experience, full payback on the cost of themonitor is achieved after eight patients - for the average NHS Trust treatingits share of the one million patients with existing clinical evidence, fullpayback on the capital investment would be achieved within between one and twodays per monitor. The feedback from other sites undertaking similar audits isconsistent with the Medway conclusions. We believe that the Medway experience underpins the highly compelling storywhich evidences why hospitals should use the CardioQ as a standard of care inmoderate and major surgery. Ultimately there are only two sound reasons why ahospital should purchase new medical equipment: either to improve care or toreduce cost. The CardioQ does both. Our initiatives to inform anaesthetists, surgeons and hospital managers of thedual benefits of the CardioQ led to a dramatic increase in interest inimplementing the CardioQ as a standard of care. Each of our seventeen strong UKsales and training team reported a step-change both in customers' reception andperception of the CardioQ opportunity. This translated into a significantincrease in the UK pipeline. At the start of the year we were working withsmall groups of doctors in less than ten hospitals towards wide-scale adoptionof the CardioQ. By the end of the year we were working with far larger groupsof doctors in over forty hospitals and had engaged the hospital managers intwenty of these. For these twenty hospitals proposals were well in hand for them to place ordersbefore our 31 December year end for the additional monitors and associatedprobes necessary for them to begin to implement making the CardioQ on a widerscale as a standard of care. The values of these proposed orders ranged fromjust over £40,000 for the smallest hospitals to in excess of £100,000 for largerhospitals. However in the event none of them were able to conclude theirinternal processes in line with the timetables which had been set, even wheresupport was unequivocal from both doctors and managers. We have identified three main reasons for this lack of progress. Firstly, it isclear that, despite enormous public spending increases, many NHS Trusts arefacing significant financial deficits and are reacting by spending even lessthan normal on new equipment. Secondly many Trusts have very complexorganisation structures which make decision making slow and, thirdly, manyhospitals find it difficult to track the economic benefits from changes toestablished practices. Developments at these twenty hospitals since 31 December 2004 are: • A partial order has been received from one hospital, with the balance deferred until the hospital's new financial year. • The internal business case has been approved at two hospitals and we have been informed that the orders are pending. • Local audits are underway in respect of three hospitals, with all feedback to date being positive; sales orders are contingent on the results of these audits. • We are awaiting initial orders from three hospitals who have agreed to purchase initial monitors and to undertake local audits with a view to then acquiring further monitors. • Proposals for local audits using loaned equipment are under discussion with four hospitals. • Business cases submitted to senior managers at four hospitals have been very well received, but no final decision has yet been taken. • Recently introduced total bans on any new expenditure have stalled progress at two hospitals. • Progress at one hospital has been delayed pending publication later in 2005 of the results of a clinical trial of the CardioQ in bowel surgery, which are expected to be highly supportive. We are working on a number of marketing initiatives aimed at unblocking thepipeline and expect these to make an impact on key decision makers over thecourse of 2005. In the meantime, the pipeline continues to expand and sales ofprobes to the existing installed base are showing solid year-on-year growth. Europe Throughout 2004, the lessons learned from our experience in the UK continued tobe adapted to make them applicable to individual European territories. Workingwith our distributors in the key territories of Germany, Austria, theNetherlands, Spain, Italy and France, we have identified candidate hospitals tobe the first in their country to adopt routine haemodynamic optimisation, usingthe CardioQ, as a standard of care across moderate and major surgery and inintensive care. We have set our distributors two clear goals for 2005; firstly, to establish andsupport activities at these reference sites and, secondly, to continue the driveto increase probe consumption by installed monitors. United States of America Deltex Medical maintains a small team of dedicated clinical sales people in theUSA. This team has responsibility for contact with a small but important groupof key physicians who are regular users of our technology. Our primary goal in the USA is to develop a business model that can overcome thebarriers that face any small, non-US company trying to establish a sustainablemarket presence. To this end we are working with one significant publicprovider, the Veterans Administration (VA) system, in order to develop thestrength and breadth of the user base. An established VA user base will allowus to make progress with the reimbursement processes which will be required forthe CardioQ to be widely used in US healthcare practice. Additionally, we areworking with one insurance-led provider to examine how our core valueproposition might fit with the hospital system they own and manage. Approaching this complex market in this way, we plan to develop a scalablebusiness model that will be of interest to a third-party for wide-scaleimplementation in the future. This strategy means that we have been able tominimise our investment and support while maintaining the presence required topursue the current projects. The VA hospital in San Antonio, Texas is a leading centre within the VA systemfor technology appraisal and the development of new clinical protocols. Thishospital agreed in 2004 to undertake an audit of the impact of routinehaemodynamic optimisation based upon the model established at the Medwayhospital. Because of delays caused by funding issues within the VA system, thefinal results of this audit are still awaited. The anaesthetists and surgeonshave however, with the approval of hospital management, implemented significantchanges to patient management based on their experience to date. For example, prior to use of the CardioQ, all patients undergoing radicalprostate surgery were routinely admitted to the surgical intensive care unit(SICU) for one day. Early in the audit anaesthetists and surgeons recognisedthat these patients were in better condition as they came out of surgery andtherefore amended the standard pathway. Now these patients go to the SICU onlyin an emergency, generating a significant saving in per patient costs. The visibility of haemodynamic optimisation as an important technique with realapplication in the US market has been increased over the last year as a resultof publicity for a major clinical trial into the treatment of sepsis patients atthe Henry Ford Hospital in Detroit which was funded by a major US medical devicecompany. The hospital has been one of the Company's larger customers forseveral years and the CardioQ is the monitor of choice in day to day clinicalpractice for the clinicians who undertook the study. Far East and Latin America We have previously announced our decision to restrict our support ofdistributors in these regions and move to 'remote' support from our UK base.This approach has enabled us significantly to reduce cost with no adverse impactupon the quality of business flowing from the distributors. Since the last quarter of 2004 we have seen a small improvement in the volume ofsales to the Far East and a substantial improvement in the timing of payment forproduct shipped. It is our intention to continue on this basis for theforeseeable future and at least until revenues justify further 'in country'support. Our distributors are well placed to exploit increased interest inhaemodynamic optimisation and are fully trained in the use of our technology. Research and Development Our research and development efforts have been focused on the furtherdevelopment and clinical evaluation of the wholly non-invasive SupraQ(TM) device. This product has enormous commercial potential. By the end of year, the research and development team had demonstrated that itwas quick and easy to use the SupraQ to capture a signal with the device in theclinical setting. We are now working with a small number of doctors who are familiar with theCardioQ in order to complete the validation of the product prior to commerciallaunch. The validation process requires us to demonstrate repeatability ofmultiple readings from the same patient, the ability to show progressive changesin fluid status in patients with hypovolaemia, and equivalence with the CardioQ.Only when this phase of the product development cycle is successfullycompleted will we be able to launch a first generation device for use inspecific clinical applications. In June 2004 we launched a dedicated paediatric monitor, the CardioQPTM andprobe, the KDP. The CardioQP is intended for use in children undergoing surgeryor in intensive care and is suitable for monitoring babies down to 3Kg inweight. This device is only for sale to specialist paediatric centres andallows us to bring the benefits of 'early indicator' monitoring that onlyflow-based monitors can provide to this vulnerable and haemodynamically volatilegroup of patients. Prospects Deltex Medical is better positioned than ever before to continue to strengthenits market leading position as haemodynamic optimisation becomes furtherembedded as a standard of care for the management of patients undergoingmoderate and major surgery. In parallel with our own profile-raising activities, initiatives are beingimplemented by a prestigious group of senior doctors in the UK that are basedupon our core marketing messages. These initiatives are targeted atpoliticians, the Department of Health and the wider NHS and will furtherhighlight the urgent need to modernise surgical patient care. The doctors havestated that they believe that because of the economic and clinical benefits thataccrue it should no longer to be acceptable for UK hospitals to function withoutimplementing haemodynamic optimisation as a standard of care. We are confident that our strategy will deliver better care for patients,enormous savings for healthcare providers and increasing and sustainable valueto our shareholders. Nigel KeenChairman15 March 2005 Consolidated profit and loss accountfor the year ended 31 December 2004 Note 2004 2003 £'000 £'000 Unaudited Audited ______ ______Turnover 2 2,494 3,084Cost of sales (907) (1,222) ______ ______Gross profit 1,587 1,862 ______ ______Net operating expenses (4,374) (4,287) ______ ______Operating loss (2,787) (2,425)Net interest 14 29 ______ ______Loss on ordinary activities before taxation (2,773) (2,396)Tax on loss on ordinary activities 19 4 ______ ______Loss for the financial year (2,754) (2,392) ______ ______Loss per share - basic and diluted 5 (4.3p) (4.7p) ______ ______ The above results all relate to continuing operations. The loss on ordinaryactivities before taxation and the loss for the financial year have beencomputed on the historical cost basis. Statement of Group total recognised gains and lossesfor the year ended 31 December 2004 2004 2003 £'000 £'000 Unaudited Audited ______ ______Loss for the financial year (2,754) (2,392)Currency translation differences in foreign currency net investment (5) (55) ______ ______ (2,759) (2,447) ______ ______ Consolidated balance sheetAt 31 December 2004 2004 2003 £'000 £'000 Unaudited Audited ______ ______Fixed assetsTangible assets 136 191 ______ ______Current assetsStocks 758 572Debtors:amounts falling due within one year 783 1,953amounts falling due after more than one year 72 -Cash at bank and in hand 1,207 1,093 ______ ______ 2,820 3,618Creditors:amounts falling due within one year (920) (1,059) ______ ______Net current assets 1,900 2,559 ______ ______Total assets less current liabilities 2,036 2,750 Creditors:amounts falling due after more than one year (7) - Provisions for liabilities and charges (35) - Net assets 1,994 2,750 ______ ______Capital and reservesCalled up share capital 695 617Share premium account 12,182 10,381Capital redemption reserve 17,476 17,476Merger reserve - 1,776Profit and loss account (28,359) (27,500) ______ ______Equity shareholders' funds 1,994 2,750 ______ ______ Consolidated cash flow statementfor the year ended 31 December 2004 Note 2004 2003 £'000 £'000 Unaudited Audited ______ ______Net cash outflow from operating activities 3 (1,988) (2,960) ______ ______Returns on investments and servicing of financeInterest received 15 31Finance lease interest (1) (2) ______ ______ Net cash inflow from returns on investments and servicing of finance 14 29 ______ ______ Taxation 102 36 Capital expenditurePurchase of tangible fixed assets (9) (45) ______ ______Net cash outflow from capital expenditure (9) (45) ______ ______Net cash outflow before financing (1,881) (2,940) ______ ______FinancingNew finance leases 15 -Other borrowings 105 -Capital element of finance lease rentals (2) (5)Issue of ordinary share capital 1,964 2,161Expenses in connection with share issue (85) (132) Net cash inflow from financing 1,997 2,024 ______ ______Increase/ (decrease) in net cash in the year 116 (916) ______ ______ Notes to the preliminary resultsfor the year ended 31 December 2004 1. Nature of the financial information The financial statements for Deltex Medical Group plc have yet to be approvedfor the year ended 31 December 2004. The financial information set out in thisannouncement does not constitute the Company's statutory accounts for the yearended 31 December 2004 or 31 December 2003. The financial information for theyear ended 31 December 2003 is derived from the statutory accounts for that yearwhich have been delivered to the Registrar of Companies. The auditors reportedon those accounts; their report was unqualified and did not contain a statementunder either Section 237 (2) or Section 237 (3) of the Companies Act 1985. Thestatutory accounts for the year ended 31 December 2004 will be finalised on thebasis of the financial information presented by the directors in thispreliminary announcement and will be delivered to the Registrar of Companiesfollowing the Company's Annual General meeting. The preliminary results have been prepared in accordance with applicableaccounting standards. The particular accounting policies adopted are the sameas those adopted in the financial statements for the year ended 31 December2004. 2. Turnover The Group's activities consist solely of the manufacture, maintenance andmarketing of medical devices. By origin, all sales are United Kingdom salesexcept for £284,000 of sales from the Company's US subsidiary (2003: £357,000). 2004 2004 2004 2004 Probes Monitors Other Total £'000 £'000 £'000 £'000 ______ ______ ______ ______Analysis of turnover by destinationDirect marketsUnited Kingdom 1,254 169 53 1,476United States of America 273 10 1 284Distributor marketsRest of Europe 390 277 2 669Rest of the World 32 32 1 65 ______ ______ ______ ______ 1,949 488 57 2,494 ______ ______ ______ ______ (continued from table above) 2003 2003 2003 2003 Probes Monitors Other Total £'000 £'000 £'000 £'000 ______ ______ ______ ______Analysis of turnover by destinationDirect marketsUnited Kingdom 1,288 558 32 1,878United States of America 336 20 1 357Distributor marketsRest of Europe 292 358 4 654Rest of the World 135 59 1 195 ______ ______ ______ ______ 2,051 995 38 3,084 ______ ______ ______ ______ 3. Reconciliation of operating loss to net cash outflow from operating activities 2004 2003 £'000 £'000 Unaudited Audited ______ ______Operating loss (2,787) (2,425)Depreciation on tangible fixed assets 79 186(Increase)/decrease in stocks (186) 77Decrease/(increase) in debtors 1,015 (1,029)(Decrease)/increase in creditors (207) 27Costs associated with share option schemes 124 223Foreign exchange differences (26) (19) ______ ______Net cash outflow from operating activities (1,988) (2,960) ______ ______ 4. Dividends The directors do not recommend payment of a dividend (2003: nil). 5. Loss per share The loss per share calculation for 2004 is based on the loss for the financialyear of £2,754,000 and weighted average number of shares in issue of 63.4million. For 2003 the loss per share calculation was based upon the loss of£2,392,000 and weighted average number of shares in issue of 50.8 million. The Group had no dilutive potential ordinary shares in either year, which wouldserve to increase the loss per ordinary share. Therefore there is no differencebetween the loss per ordinary share and the diluted loss per ordinary share. 6. Distribution of announcement Copies of this announcement are being sent to all shareholders and will beavailable for collection free of charge from the Company's registered office atTerminus Road, Chichester, West Sussex PO19 8TX. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Deltex Medical