Deltex Medical Group plc (LON:DEMG) Chief Executive Officer Ewan Phillips caught up with DirectorsTalk for an exclusive interview to discuss their results for year-ending 31st December 2015
Q1: Now you reported your 2015 numbers this morning and I have today things are looking pretty positive, what were the key highlights for Deltex Medical?
A1: Well, the key highlights for us were the export growth that we achieved. So very strong export growth, US overall revenues were up just over 4a0% which compared to the previous year they were just under 20% and they were around 10-15% the year before that so clear signs of a step up in the US growth. Other international places, if you look at the key thing for us, the consumable, the single patient disposable probe, those by volume were up 40% or 41%, we suffered a little on the euro exchange rate but even then the revenues in sterling were up 27% so those the real highlights. I should point out of course that we also had a disappointing year trying to sell our technology into the NHS where we went backwards, which is rather bizarre because it was one of the very few technologies that the NHS decided that it should adopt fully, but there you go that’s real problems in the NHS rather than any problem with our business.
Q2: Can you tell us a little bit more about how the US is developing as your key focus?
A2: Yes, well the US is a very big place, which is quite daunting to a very small company which isn’t even American, and what Deltex Medical Group is doing there is looking really very much to build through focus. So the current phase we’re in is our sort of platform-building phase prior to future national roll out, our core goal is to get to 30 what we’re calling ‘platform program accounts’, these are hospitals who are on a program to embed the use of our technology into routine use. Our definition of that is that they’re people who are at or more likely on a programme to get to using 100 probes a month, that’s worth about $250,000 to us a year in revenue terms on vary high margins so it’s an attractive business when you do that in its own right. We’re trying to get to 30, as of today we’ve got 20, at the end of the year we have 17 so we’ve added 3 more, we’ve got quite a lot well down the pipeline so we hope to get past that 30 mark relatively soon. The next phase is how to we go from there to national roll out, we did raise some money at the beginning of this year which means that we can add in 2 more territories, Texas and Florida, which are the 2 big population centres we don’t cover, those we think we’ll still do slightly putting the cost ahead of revenue curve. Elsewhere, we think we’ve got enough pipeline and demand that we will add any more cost behind the revenue curve as that gets pulled through so the whole thing ought to be self-financing beyond the Texas and Florida. So really we’ve already got a couple of our territories, we’re really moving into roll out mode already, it’s a question of getting the whole country up there and doing that. So looking very exciting, what you have to do when you’re small is keep your discipline and your focus and do the things you’re never going to get returns and ignore all the exciting opportunities which are not part of your core plan.
Q3: So what are the key objectives for 2016 for Deltex Medical Group?
A3: Key objectives are to get the business so that, at least at the operating level, it is generating cash, that is the fundamental objective that we want to get to and we’re not actually far off that. If you look at last year an average of £200,000 but at the US it’s anywhere near its targets and it’s getting quite close to them and that relatively will be another £100,000 a month growing further as the year goes on. We’ve taken some cost out, reduced our overheads, the overheads that we were spending at the fourth quarter of last year, we were taking £100,000 a month out of those and we have added some extra costs in the States and some other things to do. We’ve then got growth coming through from other international markets and a whole programme there to study in the UK and then hopefully by the end of this year move it back to growth.
