2006/7
www.lidco.com
LiDCO Group Plc
Annual Report and Accounts
for the year ended 31 January 2007
LiDCO Group Plc
Sales and Marketing:
Unit M, South Cambridge Business Park
Babraham Road, Sawston
Cambridge CB22 3JH
T: +44 (0)1223 830 666
F: +44 (0)1223 837 241
USA Distribution Office:
Wren Medical Systems
905 Lakeside Drive
Gurnee, IL 60031
T: +1847 625 0600
F: +1847 625 0981
UK Office:
16 Orsman Road
London
N1 5QJ
T: +44 (0)20 7749 1500
F: +44 (0)20 7749 1501
LiDCO Group Plc Annual Report and Accounts 2006/7 LiDCO researches, develops, manufactures
and markets innovative medical devices.
Our products primarily serve critical-care and
cardiovascular risk hospital patients who
require real-time cardiovascular monitoring.
Contents
01 Highlights
02 R&D Progress
04 Chairman’s Statement
06 Chief Executive Officer’s Review
14 Financial Review
16 Board of Directors
16 Clinical Advisory Board
18 Corporate Governance Report
20 Directors’ Remuneration Report
24 Directors’ Report
28 Report of the Independent Auditors
29 Principal Accounting Policies
31 Consolidated Profit and Loss Account
32 Balance Sheets
33 Consolidated Cash Flow Statement
34 Notes to the Financial Statements
42 Company Information
43 Notice of Annual General Meeting LiDCO Group Plc
Annual Report and Accounts 2006/7
1
HIGHLIGHTS
FINANCIAL HIGHLIGHTS
• Despite tough trading conditions turnover remains
steady at £3.44m (2005/6: £3.42m)
• Gross margin unchanged at 77% (excluding fees paid
for monitors through financing arrangements)
• Cash outflow before financing improved 28%
at £1.60m (2005/6: £2.21m)
• Cash balance up 55% from £0.95m to £1.47m
excluding the convertible loan of £1m
• Pre-tax operating loss up 17% at £2.59m
(2005/6 £2.21m)
• Loss per share 2.10p (2005/6: 2.04p)
CORPORATE HIGHLIGHTS
• Roll-out begun of the LiDCOplus monitor version 4.0
software with enhanced fluid management platform
and intra-thoracic blood volume parameter
• Launch of the LiDCOview PC based software
for clinical research and audit applications
• First successful demonstration of the LiDCOlive –
remote monitoring product in Japan and the
Czech Republic
• Regulatory approval for the lithium injection
in Switzerland
• Placing of 17,500,000 new Ordinary Shares at 20p
to raise £3.5 million before expenses in May
COMMERCIAL HIGHLIGHTS
• Sensors sales: volumes up 8% to 24,316 units;
sales value up 14% at £1.93 million
• Installed monitors worldwide base: up 12%
from 923 to 1,035 units
• Slowness in export markets revenue balanced
by 31% growth in domestic UK sales
• Med-Dynamix: contract signed to distribute
technically-leading complementary urine
monitoring product
The investor presentation ‘LiDCO’s Preliminary Results – Twelve months ended
31st January 2007’ is available on the LiDCO website (www.lidco.com).
01 02 03 04/5 05/6 06/7
12 months
1,130
2,042
2,717
750
Stocking order Japan
1967
2,267
3,421 3,443
Sales growth
£’000
01 02 03 04/5 05/6 06/7
12 months
(5,496)
(3,370) (3,552)
(2,214)
(1,596)
Cash outflow before financing
£’000
(7,391)
Monitor installed base
Disposables sales
Monitor installed base and disposables growth
Units
1,200
1,000
800
600
400
200
0
30,000
25,000
20,000
15,000
10,000
5,000
0
01 02 03 04/5 05/6 06/7
12 months
Monitors – No. of units
Disposables – No. of units LiDCO Group Plc
Annual Report and Accounts 2006/7
2
R&D PROGRESS
LiDCOplus 4th Generation Software and New PC-based Software Products
Improvements to the LiDCOplus Monitor – The V4.0 Software
STRATEGY
Business Model
• Customers are offered a choice of outright
purchase of the LiDCOplus Monitor or free of
charge placement in return for enhanced
pricing on the associated LiDCO disposables
• In the UK and USA sales are through LiDCO’s
direct sales force
• In other territories sales are through
distributors
Customers
Major hospitals in developed and fast
developing countries
Hospital market segments:
• Intensive care unit/high dependency unit
• Risk surgery/operating room
• Cardiac surgery
• Interventional cardiology
PRODUCTS
Features and Benefits of the V4.0 Software
• Enhanced fluid management
• Targeting of oxygen delivery
• Improvements are designed to help in the
implementation of Early Goal Directed Therapy
(EGDT) to aid high risk surgery and other
patients requiring fluids and drug support.
Oxygen delivery target for EGDT. Oxygen delivery and consumption.
Predicted response to fluids.
Actual response to fluids.
At-a-glance easy to read screens. LiDCO Group Plc
Annual Report and Accounts 2006/7
3
USA UK Continental Europe Rest of the World
2005/6
2006/7
767
Sales by region
£’000
1,123
1,535
550
213
2,012
511
153
USA UK Continental Europe Rest of the World
2005/6
2006/7
429
Monitor installed base
Units
409
152
201
161
207
237
162
INTERNATIONAL SALES
LiDCOview SE and LiDCOview Pro Features:
• Graphical display on any PC of downloaded
hemodynamic data
• Simplifies data analysis for clinical audit or research purposes
• LiDCOview SE available now
• LiDCOview Pro coming soon
LiDCOlive Features:
• Transforms any PC into a hemodynamic monitor
• Patient’s hemodynamics can be reviewed remotely
on or off site
• Improved monitoring
– shows physician exactly what is happening real-time on
the ward
– reduces time delays for clinical decisions
– improves efficiency of clinical staff
– no additional hardware required
– works on an existing PC or Laptop
• Demonstrated at meetings in Japan and Europe.
LiDCOview and LiDCOlive:
PC applications that transform any PC into a remote
hemodynamic monitor and clinical audit tool.
Data download to memory stick
Real-time data via ethernet Validation studies by leading
centres continued to endorse the
strengths of our technology within
the medical community and our
products continued to win
accolades from key opinion
leaders.
LiDCO Group Plc
Annual Report and Accounts 2006/7
4
CHAIRMAN’S STATEMENT LiDCO Group Plc
Annual Report and Accounts 2006/7
5
During the year ended 31
January 2007 we continued to
pursue our strategy of
strengthening the Company’s
position by marketing our highly
accurate, IP-protected minimally
invasive hemodynamic
monitoring products in
territories across the world.
Our products are developed, manufactured
and assembled under strict quality standards
in our facility at Hoxton, London and sold
through our direct sales force in the UK and
US, and via distributors in 15 other countries.
Product development continued, both
incrementally in response to market feedback
and more substantially on product
innovations, to expand further the use and
applicability of our products in a range of
hospital settings. Validation studies by leading
centres continued to endorse the strengths of
our technology within the medical community
and our products continued to win accolades
from key opinion leaders.
Overall sales for the year were at a similar
level to the previous year, at £3.44 million,
split 44% and 56% between capital and
disposables/annuity sales. Growth in sales,
especially in the first half of the year, was
hindered by competitor activity, particularly in
the US, and in the UK by the NHS freeze on
capital expenditure which lasted until well
into the year. However, cash outflow before
financing was 28% better than the prior year
and UK sales continued their trend of strong
annual growth, increasing by 31% to £2.01
million. At the year-end the Group’s cash
position stood at £1.47 million; in addition,
approximately £1 million remains available for
draw-down under the Laurus convertible
loan facility.
In May 2006, the Company raised £3.5
million (£3.2 million after expenses) to finance
the strengthening of its direct sales force and
further product development, repay
substantially all the outstanding Laurus loan
(approx £1.1 million) and provide working
capital. On behalf of the Board I would like to
thank our investors for their continued
support of the Company.
In September 2006, an agreement was
signed with Med-Dynamix, whereby their
urine monitoring products are sold in the
UK through LiDCO’s high quality sales
team. Our respective products are
complementary in potentially enabling more
complete fluid monitoring information in the
critical care environment.
The Group’s finance director, Hugh McGarel-
Groves resigned in January. Interim
arrangements have been made until a
replacement is appointed.
Looking ahead, we will continue to pursue
our current strategy of strengthening the
value of the Company through further
growing revenues, both through our
strengthened sales force and existing
distribution network as well as through new
collaborative and distribution arrangements.
In addition, we will continue to invest in the
development of new products, namely
LiDCOlive and our anesthesia offering. In
managing these activities and the business
generally, we will continue to maintain careful
control of costs.
Finally, I would like to thank
all the Group’s staff and
Directors for their dedication
and hard work during the year
and our Clinical Advisory Board
for their continuing support
and enthusiasm.
Theresa Wallis
Chairman
LiDCO Group Plc LiDCO Group Plc
Annual Report and Accounts 2006/7
6
CHIEF EXECUTIVE OFFICER’S REVIEW
Hospitals purchasing our
technology are buying into a
proven strong clinical case
coupled to a very compelling
business case. LiDCO Group Plc
Annual Report and Accounts 2006/7
7
Introduction
Expectations for last year were high following
on from 2005/2006 in which revenues
increased by more than 50% (annualised).
Disappointingly however, sales progress was
slowed by a combination of disruptive
competition and a temporary capital
equipment freeze in the UK. As a result,
turnover for the year was virtually unchanged
from the previous year, while losses
increased marginally, mostly due to non-
recurring items. Nevertheless, LiDCO still
made substantial progress and a healthy
growth rate has now resumed at the
beginning of 2007. Of particular note, despite
the NHS capital freeze for a substantial part
of the year, the Company increased UK sales
revenue by 31%. This growth was supported
by further outcome studies like the St
George’s study – which continue to influence
positively the presentation of our clinical and
business cases. Last year our world-wide
installed base of monitors increased from
923 to 1,035 units with a substantial increase
in placements seen in the second half of the
year that are now contributing to growing
disposable sales.
Prior year and current trading
Given LiDCO’s continuing revenue growth in
the UK, the slowing of sales experienced
during the period was confined to our export
markets. The majority of the sales shortfall
against expectations related to delayed
revenue from our installed base and sales
pipeline in the US market. Sensor sales from
our existing installed base and new
evaluations of our products were delayed
and prolonged by a major US competitor
seeking the trialing of its products. This had
the effect of both slowing the completion of
new equipment sales and temporarily
suppressing disposable sales in existing
accounts while customers evaluated the new
product offering.
I am pleased to say that, although disruptive
to our business in 2006, these activities have
not resulted in the permanent loss of a
material amount of our US business. Indeed,
by the end of the year US sensor unit sales
were only down 5% over the prior period.
Looking beyond the US, despite
experiencing similar delays in monitor
sales/placements, sensor disposable sales
revenues were significantly up in all other
territories (17% UK, 23% Europe and 53%
ROW). Pricing remained strong over the
period with gross margin maintained at 77%
(excluding fees paid for monitors placed
through financing arrangements).
The Company expects the factors that held
back growth in 2006/7 to be of less
significance in 2007/8 and has already seen
a substantial increase in monitor placements
feeding through to growth in the recurring
disposable income.
Trading in the first two
months of this year has seen a
62% increase in total revenue
compared to February and
March in 2006.
Monitor consumables revenue over the same
period are up by 35% and sales growth in the
USA has increased 68%, admittedly a figure
which flatters because of the disappointment
of the prior year. Although it is just a little early
to know whether these trends will continue
throughout the year - LiDCO starts the
current year on an optimistic note. A clearer
picture should emerge by the time of our
Annual General Meeting.
Market trends and LiDCO’s response
In 2004 the USA spent $1.9 trillion on
healthcare or 16% of GDP (Rothschild’s
market report). Healthcare spending is
estimated to be $4.0 trillion by 2015. This is
$6,300 per person in 2004 and predicted to
be $12,300 by 2015. In 2004 US healthcare
provided 13.5 million jobs and 19% or 3.6
million new employment positions will be in
healthcare - more than any other industry.
The ageing population, coupled to physician
and nursing shortages means that
hemodynamic monitoring will benefit from
this increasing expenditure as a growing
number of monitored beds will be required
by hospitals. In tandem we are seeing
demand for integrated clinical information
and patient management solutions to
increase efficiency of staff, reduce hospital
errors and facilitate clinical review and audit.
Customers are also beginning
to request further improvements
in the functionality of the
LiDCOplus Monitor and
associated software products
that allow patient monitoring
by a physician at a site remote
from the intensive care unit.
Given the above macroeconomics it is not
surprising that overall the transition to
minimally invasive hemodynamic monitoring
is continuing apace. During the year, we
estimate the minimally invasive
cardiovascular monitoring market grew by
more than 50%, from US$40 million to
approximately US$67 million per annum
(summary of company published data). The
underlying market dynamics, therefore,
remain very encouraging for sales of our
leading-edge minimally invasive
hemodynamic monitoring technology.
The clinical and business case for adoption
of our products continues to grow. This past
year has seen the conclusion and
subsequent presentation of two additional
clinical outcome studies using LiDCO’s
technology. These studies showed
reductions in mortality, length of stay and
complications in surgery and shock patients.
Given the market dynamics it is not
surprising that the market leader for the
declining traditional invasive catheter based
approach has responded with its own
minimally invasive product and that
customers would at least want to evaluate
this technology. We know from our own experience that this
first phase of the roll-out of a new technology
will be crucial as customers compare the
new technology to existing standards of care.
We believe that accuracy is crucial to the
care of both critically ill patients and the
provision of Early Goal Directed Therapy
(EGDT) to surgery patients.
LiDCO has the only calibrated
arterial pressure waveform
monitor that has been shown
to improve outcomes and
reduce hospital stay in high risk
surgery patients.
This is a crucial and increasingly important
marketing edge. Avoiding complications in
this group of patients can drastically reduce
a hospital’s costs. Complications from
critically ill patients can cost hospitals a
disproportionate amount. The LiDCO
system helps reduce those complications
and costs. This is important as we are now
living in an era when hospital revenues are
largely fixed, so the costs and complications
of surgery have necessarily come under
considerable scrutiny.
A case in point is St George’s Hospital,
London who showed that they had saved on
average £4,800 per patient treated using
LiDCO products to implement EGDT and are
now treating all such patients through use of
our technology. We have worked hard to
provide an accurate and effective product
that can materially lower a hospital’s costs
when treating high-risk surgery patients.
Hospitals purchasing our
technology are buying into a
proven strong clinical case
coupled with a very compelling
business proposition. It is for
the competition to match the
existing standards set by
our technology.
Development and sales /
marketing strategy
Our development strategy continues to be to
respond quickly to market opportunities
providing solutions that differentiate ourselves
from the competition through providing the
most highly evolved hemodynamic
monitoring products. The development of the
version 4.0 software and the new LiDCO PC
products LiDCOview (launched) and
LiDCOlive (in development) are LiDCO’s
response to these customer-led market
requirements.
The LiDCOplus Monitor consequently has
always commanded a premium price and we
expect that our product developments will
ensure that this continues to be the case.
Our challenges and risks for 2007/8 are
therefore not so much on the technical front
but rather to ensure that we participate in the
revenue that is increasingly being spent as
the market transitions to minimally invasive
hemodynamic monitoring. We have spent
significant energies in 2006/7 securing
business, building our sales pipeline and
developing new software products. In
2007/8, we should see the fruits from our
investment in our business and existing
relationships to both grow existing business
and expand into new hospitals. However, we
do not have the same sales and marketing
resources as our larger competitors so we
have to be more efficient and targeted in our
activities. While recognizing we need
additional sales resource in our export
territories, last year 58% of our sales came
from the UK market, where we have a strong
direct sales force. We estimate the market for
hemodynamic monitoring products in the UK
to be around £7m per annum. We have
annual UK sales of £2m so there is a very
significant amount of existing business for us
to take in a territory where we compete on a
more equal footing with the competition.
In the USA we are clearly still under
resourced to fully access the market
opportunity. Nevertheless, the US is our
second biggest market and we expect to
make good progress this year. We have to
be highly focused on regions where we have
sales people and where we can expect that
our established base of opinion leading
university hospital accounts will have the
maximum impact. Of course we will continue
to seek sales partnerships in this most
important market.
LiDCO Group Plc
Annual Report and Accounts 2006/7
8
CHIEF EXECUTIVE OFFICER’S REVIEW
Continued
Background
Previous findings on the use of LiDCO’s
technology in high-risk surgery patients have
shown that achieving and maintaining
increased oxygen delivery immediately after
major surgery significantly reduces the
patients’ risk of post-operative complications
by more than one third and also reduces the
length of time spent in hospital by an average
of 12 days (St George’s Hospital, London
study). Implementation of a similar strategy in
other hospitals across the NHS could result
in estimated savings of £500 million annually.
Two further studies from investigators in the
USA and Brazil show that use of LiDCO’s
technology improves clinical outcomes in
both high-risk surgery patients and patients
admitted to intensive care for treatment for
shock. In high-risk surgery patients use of
LiDCO for the application of early goal
CASE STUDY
IMPROVING OUTOMES IN SURGERY
AND SHOCK PATIENTS LiDCO Group Plc
Annual Report and Accounts 2006/7
9
In European export markets we are seeing
increasing commitment from our distribution
partners. In most cases they are gaining
confidence as the market grows and a
number are employing extra sales staff
specifically to promote our products. We still
have weaknesses in some European
territories – notably in Germany where we
and our distributor partner are under-
resourced to compete in such a large market
against a heavily entrenched local competitor.
In the rest of the world we expect the main
development during the coming year to be
the appointment of more distributors in the
Middle East, where we expect to find
significant demand in the considerable
hospital expansion that is occurring.
Product quality
Commercial success has to be
underpinned by manufacturing
excellence. Once again I am
delighted to report that our
product quality and customer
feedback continues to be
first-rate.
Furthermore, our in-house manufacturing
automation and partnerships with our
component suppliers will continue to reduce
the cost of sales and help improve margins.
Trading review
UK
Overall sales revenue up 31% to £2,012,000
(2005/6: £1,535,000)
Monitor sales revenue up 53% to £921,000
(2005/6: £603,000)
Sensor, fee for use & rental sales up 17%
to £1,091,000 (2005/6: £932,000)
Sensor, fee for use units up 16% at 11,041
(2005/6: 9,521)
As in the USA, sales in the UK continue to
be made by our direct sales force. 2006/7
was a particularly challenging year for NHS
finances so achieving an increase in revenues
of 31% was an excellent result. A number of
university hospitals converted to our
technology. In particular, we were delighted
that in September 2006 the new
cardiothoracic surgery department at
Southampton University Healthcare Trust
Hospital chose to purchase six of our
LiDCOplus monitors, taking the total number
of monitors at this hospital to 14.
Despite the UK being one of the most
developed and hence competitive markets
for hemodynamic monitoring we remain
optimistic that the UK market will continue to
grow at a brisk pace within both the high risk
surgery and intensive care settings.
‘The use of a therapeutic
approach guided by oxygen
delivery calculated by the
LiDCOplus Monitor, intra-operatively
and post-operatively, is a feasible
and practical approach to guide
oxygen delivery optimization
therapy during major surgeries
in high-risk patients. Better
perfusion of vital organs resulting
in a much lower rate of
complications, mortality and
duration of hospital stay were seen
in the optimized patients.’
Dr Susan Lobo, São José do Rio Preto
‘We were impressed by the
difference in both mortality and
length of stay among the various
monitors. This is an important
finding which deserves further
study. Since the introduction of
LiDCO, the number of patients
monitored has increased due to
its less invasive nature while the
rate of pulmonary artery
catheter usage has reduced.’
Professor Steve Hata, University of Iowa
directed therapy both during and immediately
post surgery reduces hospital length of stay
by over 50% (13 to 6 days) and reduces
mortality from 27% to 6%.
In shock patients it reduces the mortality
rate of patients from 32% to 12%, when
compared to patients treated with the older
more traditional invasive technology
(pulmonary artery catheter).
01 02 03 04/5 05/6 06/7
12 months
113
300
706
860
1,535
2,012
UK sales
£’000
+
31%
UK
Sales growth USA
Overall sales revenue down 32% to
£767,000 (2005/6: £1,123,000)
Monitor sales revenue down 54% to
£263,000 (2005/6: £572,000)
Sensor, fee for use & rental sales down 9%
to £504,000 (2005/6: £551,000)
Sensor, fee for use units down 6% at 8,250
(2005/6: 8,741)
Our sales in the US are made through a
direct sales force of six people. The market
was clearly very competitive in the US in
2006/7. Sales in the US were delayed by
more protracted evaluations as a result of
targeted defensive action by our main US-
based competitor demanding that their
products should also be evaluated by our
prospective customers. This is the inevitable
consequence of both a developing market
opportunity and our successes in the US
market. We are still the only non - US
company to make any significant headway in
the market while competing against a very
strong domestic market leader. As
mentioned we have had a good start to
monitor sales and placements since January
and we have not lost any significant
customer. We expect to see a return of US
sales growth in 2007.
Continental Europe
Overall sales revenue down 7% to £511,000
(2005/6: £550,000)
Monitor sales revenue down 29% to
£225,000 (2005/6: £317,000)
Sensor, fee for use & rental sales up 23% to
£286,000 (2005/6: £233,000)
Sensor, fee for use units up 17% at 4,260
(2005/6: 3,650)
The reduction in monitor sales was mostly a
consequence of variances in capital stocking
orders to distributors between the periods.
We are still effectively rolling out the product
in Europe, so revenue variances will arise.
Additionally, as in the US, competitive
activities effectively held back sales by a few
months. Nevertheless, the disposable sales
increase demonstrates good usage from the
installed base of monitors. Our distributors
are motivated and excited by the revenue
possibilities that our technology offers them.
We have more work to do in Europe in
particular in Germany, Holland and Belgium
where we would like to improve on our
distribution support. We expect 2007 will see
a return to significant revenue growth in the
European market.
Rest of the World (‘ROW’)
Overall sales revenue down 28% to
£153,000 (2005/6: £213,000)
Monitor sales revenue down 69% to £34,000
(2005/6: £111,000)
Sensor, fee for use & rental sales up 53% to
£49,000 (2005/6: £32,000)
Sensor, fee for use units up 21% at 765
(2005/6: 630)
This is our smallest territory and is highly
influenced by the phasing of monitor sales to
distributors. We anticipate growth in this
territory both through sales to existing
partners and the appointment of additional
distributors in 2007.
Sales progress in Japan through our
distributor has been disappointing. Japan
is the second biggest market in the world
for hemodynamic monitoring products.
Crucial to success in this territory is
achieving hospital reimbursement for our
product. Our distributor is selling or
renting/leasing our product to hospitals
without this benefit at the moment. Whilst
there has been some adoption of LiDCO
technology and a favorable technical
reception we are in discussions on ways
to resolve this slow progress.
LiDCO Group Plc
Annual Report and Accounts 2006/7
10
CHIEF EXECUTIVE OFFICER’S REVIEW
Continued
Background
Accurately measuring the volume of blood in
the thorax could be of significant benefit to
patients and should widen the attraction of its
system to doctors working in intensive care.
Importantly, this development will take away
the need to insert an invasive catheter into
the central venous system, and heart or major
artery, which is the currently established
technique for taking this measurement.
The ITBV measurement is part of the product
improvements and new features introduced
in the version 4.0 software. The lithium ion
injection is currently used by LiDCO as a
marker substance to measure cardiac
output. Combining this existing measurement
with the time taken for the lithium marker to
transit from the injection point to the LiDCO
sensor provides a new measurement –
the ITBV.
CASE STUDY
INTRODUCTION OF A NEW
MEASUREMENT, NAMELY THE INTRA-
THORACIC BLOOD VOLUME (ITBV) LiDCO Group Plc
Annual Report and Accounts 2006/7
11
Clinical Outcome Data
In March, the University of Iowa presented
the results of their clinical outcome audit,
where our technology’s effects on patient
outcome were compared to those achieved
with more traditional monitoring products.
The results of this study were presented at
the International Society of Intensive Care
and Emergency Medicine (ISICEM ) meeting
in Brussels in March.
When compared to the
outcome for patients treated
with the older more traditional
invasive technology (pulmonary
artery catheter) the use of our
technology reduced the
mortality rate of patients in
shock treated in intensive care
from 32% to 12%.
This result is a demonstration of the potential
of our technology to not only improve results
in surgical patients but also in shock
patients, who are a much more complex and
difficult to treat group. This study will be of
great interest to the intensive care
community in the USA and further afield.
Also in March at the ISICEM we announced
that a surgery patients study was presented
by the Division of Critical Care, Faculdade de
Medicina de são José do Rio Preto, Brazil.
LiDCO's technology was used to optimise
hemodynamics both during the surgery itself,
as well as for eight hours post operatively.
The additional surgical period of optimisation
was undertaken in order to see if the
excellent results seen in the previous UK St
George's study could be taken one step
further by even earlier intervention. This study
demonstrated that LiDCOplus monitor
mediated EGDT reduced hospital length of
stay by half (6 days versus 13) in the control
group and also reduced mortality, only two
patients (6%) dying against seven (27%) in
the non treated historical controls.
Complications in the EGDT treated patients
were also halved.
The results of this trial and the
Iowa data are very supportive to
our US and other export
markets, showing, as already
demonstrated in the UK, that use
of our accurate and minimally
invasive monitoring product will
produce considerable clinical and
cost benefits for the patient and
hospital. The benefits of
hemodynamic monitoring clearly
outweigh the investment required
to adopt this approach.
‘The lithium ion based
measurement of ITBV
significantly augments the utility
of the LiDCOplus Monitor.
I believe this parameter will prove
to be highly useful in the
management of cardiac
performance to optimise
oxygen delivery in patients
requiring fluid replacement. The
availability of this measurement
should substantially increase
the market potential for use of
our patent protected lithium
based technology.’
Dr Terry O’Brien,
Chief Executive of LiDCO
Physicians endeavour to increase the
thoracic blood volume in order to
rehydrate patients in surgery, trauma and
intensive care locations. Correct fluid
management improves cardiac performance
and critically the oxygen delivery to vital
organs that has been shown to reduce
hospital bed stay. The ITBV is a much
more sensitive guide to the fluid management
of patients than the traditional invasive
catheter based measurement of pulmonary
artery wedge pressure. LiDCO expects
that this new measurement will have
widespread application in the improved
fluid management of patients. Research and Development and
Product Applications
LiDCOplus Monitor Software Version 4.0,
LiDCOview, LiDCOlive & LiDCOlite
2006 to March 2007 was a very productive
period for us. At our research day at St
Thomas’ Hospital we demonstrated our new
version 4.0 software and clinical research /
clinical audit software (LiDCOview).
This version comprises an enhanced fluid
management platform and enables
measurement of a new parameter, intra
thoracic blood volume (ITBV). This and our
other new software products are designed to
increase usability within the existing intensive
care patient market, and also enhance use
within an emerging high risk surgery patient
market where fluid management and the
targeting of oxygen delivery is important.
In order to help hospitals implement Early
Goal Directed Therapy (EGDT), St George’s
Hospital’s high risk surgery protocol, the
clinician/nurse is now able to set a visual and
patient specific oxygen delivery target on the
monitor’s Graph Screen.
Following implementation of the treatment
protocol, the patient’s LiDCOview file can
then be downloaded and used on a PC with
Windows software to fully evaluate the
treatment given. This has the benefit of
allowing hospitals implementing EGDT to
achieve a quantitative analysis/audit of the
hemodynamic parameters, in particular the
time taken to achieve the oxygen delivery
goals and average oxygen delivery achieved
post operatively. Achieving specific goals for
oxygen delivery has been shown to reduce
hospital stay by an average of 12 days.
LiDCOlive remote patient viewing software
allows hemodynamic data to be exported
real-time to a computer at a remote location
via the internet. In March we demonstrated
that the LiDCOplus Monitor can export real-
time hemodynamic data via the internet
direct to a computer at a remote location.
A patient being treated at Frimley Park
Hospital in England was monitored in real
time by physicians attending a meeting in
Kobe, Japan and similarly a patient in the
University Hospital in Olomouc, Czech
Republic, was remotely monitored at a
meeting in Brno.
The doctors attending the meetings could
see exactly the same data and trending data
display via our product LiDCOlive as did the
nurses looking after the patient. The ability of
a senior physician to see the same data as
the nurse, without having to always attend
the ward, is a much more efficient use of a
highly trained and increasingly stretched
clinical resource. Potentially this enables a
physician to monitor the hemodynamic status
of several patients in different locations. The
LiDCOlive software product will be of great
interest to hospitals that are looking to find
ways of coping with the growing shortage of
critical care staff. We expect that this product
will be ready for launch towards the end of
2007 to early 2008.
LiDCO’s anesthesia offering
Hospitals can now start to see the additional
advantages of an investment in the
LiDCOplus monitor and the associated
LiDCO software products. These are
targeted at producing both clinical and
productivity improvements that are not
available from our competitors. The majority
of our customers are working in intensive
care locations, however, we are increasingly
seeing requests and actual usage during
anesthesia. Accordingly, we are developing a
new product that is specifically designed for
use in the operating room by anesthetists.
The objective is to produce a simple to set
up product with new user screens that focus
on fluid management and optimisation of
blood flow. We will keep the market informed
of developments in this anesthesia market.
LiDCO Group Plc
Annual Report and Accounts 2006/7
12
CHIEF EXECUTIVE OFFICER’S REVIEW
Continued
Background
The number of monitored beds in hospitals
is steadily increasing and now represents
10% of all in-patient beds and approximately
30% of a hospital’s revenues. Hemodynamic
monitoring guided fluid and drug therapy
enables the maintenance of key physiological
parameters such as cardiac output and
oxygen delivery, thereby significantly reducing
complications and costs associated with
treatment of high-risk patients. The growing
shortage of the highly skilled intensive care
staff necessary to care for these patients
has created a requirement for a monitoring
technology that not only provides real
time hemodynamic data but also allows
the more efficient use of existing clinical
staff’s expertise.
The LiDCOlive Product – towards the ‘virtual
ICU’. One way of achieving this is to take
both the patient data and monitor display to
the clinician irrespective of physical location.
LiDCO is therefore developing a software
product called LiDCOlive that can display the
LiDCOplus Monitor trend screen and real
time patient data on any PC or laptop
anywhere - in or out of the hospital.
The requirement is that the customer has a
LiDCOplus Monitor at the patient’s bedside
that is connected to the hospital network and
then on to the internet. The clinician can then
log on externally to the hospital’s server with
a standard PC and see exactly the same
data and screen display as the nurse at the
CASE STUDY
DEMONSTRATION OF A NEW
REMOTE HEMODYNAMIC MONITORING
PRODUCT – LIDCOlive LiDCO Group Plc
Annual Report and Accounts 2006/7
13
Further applications for LiDCO's Minimally
Invasive Monitoring System
Important progress has been made in taking
LiDCO’s technology into a number of niche
markets. During the year a number of
presentations and papers were published on
the LiDCO technology in the obstetric and
veterinary arenas.
In January 2007, LiDCO announced the
publication of a study conducted by the
Department of Pediatrics at Baylor College of
Medicine, Texas. The study investigated the
accuracy of the LiDCO arterial waveform
power approach (LiDCO’s PulseCO software)
to continuously measure cardiac output in
children undergoing cardiac catheterization.
This technique had not been previously
validated in pediatric patients. The study,
published in Pediatric Critical Care Medicine
2006 (Volume 7: Issue 6 Pages 532-535)
stated that: ‘Arterial pulse wave analysis by
the PulseCO system provided a novel,
minimally invasive method of determining
real-time cardiac output in children’. Until
now it has been difficult and risky to measure
cardiac output in sick children.
This study therefore demonstrates a new
clinical application for our technology and we
are very excited about the possibility of our
technology being used to enable EGDT in
children. Our technology is licensed to be
used in children above the weight of 40 kgs
but this paper has encouraged us to
consider a US application for extension of
our technology’s use to children below 40kgs
in weight.
Regulatory affairs
In June 2006, approval of the LiDCO System
lithium chloride injection was received from
the Swiss regulatory body Swissmedic.
This latest registration now provides LiDCO
with full marketing approval in 14
European countries.
Dr Terry O’Brien
Chief Executive Officer
bedside. The clinician and nurse can then
discuss potential treatment approaches and
both immediately and simultaneously see the
effects of their agreed change in fluid or drug
therapy. This ‘virtual ICU’ approach using
LiDCO’s technology has the potential to
considerably improve the care of high-risk
patients and make savings to hospitals
budgets. The LiDCOlive was demonstrated
both in Japan (Kobe) during the Japanese
Intensive Care Society meeting and in a
critical care meeting in Brno, Czech Republic
during the first week of March. At both
meetings patients were monitored remotely,
with live patient data being sent via the
internet from the University Hospital in
Olomouc, Moravia and Frimley Park Hospital,
Surrey, UK.
‘We are delighted to be the first
hospital to implement the
LiDCOlive remote patient viewing
software. In the critical care
environment the ability to remotely
monitor a patient’s hemodynamic
data represents a significant step
forward. With remote access to
LiDCO’s advanced minimally
invasive monitoring technology we
are able to assist colleagues at the
bedside to make the best
treatment decisions for our
patients. Clearly the ability to see
LiDCO’s advanced user interfaces
from a remote PC as if one were
at the bedside makes treatment
decisions much more meaningful.
One now has the ability to solicit
remote expert opinion as if they
were with you in the intensive
care unit. In terms of patient care
the impact of time and distance
on the delivery of experience and
expert knowledge, to the bedside
are considerably diminished.’
Dr. Loua Shaikh
Department of Critical Care Medicine,
Frimley Park Hospital, UK Group cash balances at
31 January 2007 are £1,474,000
as compared with £951,000
at 31 January 2006.
LiDCO Group Plc
Annual Report and Accounts 2006/7
14
FINANCIAL REVIEW LiDCO Group Plc
Annual Report and Accounts 2006/7
15
Turnover was steady at £3,443,000, up 1%
on the previous 12 months (2005/6:
£3,421,000). Within this total, sales of
monitors through financing arrangements, for
placements in hospitals reduced by 9% to
£399,000 in 2006/7 down from £437,000
sold in 2005/06.
The gross profit margin
excluding fees paid for monitors
sold through financing
arrangements remained
constant at 77% for both
2006/7 and 2005/6.
Total costs of monitors sold through financing
arrangements and placed in hospitals were
£314,000, up from £62,000 in 2005/6. This
has contributed to a reduction in the gross
profit margin (including financing costs) to
67% in 2006/7 from 75% in 2005/6.
Administration expenses at £4,939,000 in
2006/7 increased moderately by 4% from
£4,771,000 in 2005/6. The increase is mainly
attributable to a non-cash FRS 20 Share
Option charge of £66,000, and one off
premises costs of £65,000 and professional
fees of £90,000. Underlying administration
expenses have not increased over the
previous year.
Loss per share for the 12 month period is
2.10p up 3% from 2.04p in 2005/6. Loss on
ordinary activities after taxation is £2,385,000
up 17% on the previous 12 months (2005/6:
£2,035,000).
The tax charge continues to be nil, whilst the
Group remains at the pre-profit stage.
Substantial tax losses have been
accumulated both in the UK and USA, which
will permit significant deferral of future tax
charges once profitability is reached. In the
UK, the Group qualifies for research and
development (R&D) tax credits and these are
reported within the tax line in the profit and
loss account. The year under review included
R&D tax credits of £142,000 relating to
2006/7 and £62,000 relating to prior years.
The proceeds of the May 2006 Placing have
been used in part to increase expenditure on
R&D after capitalisation by 15% to £247,000
(2005/6: £215,000)
Cash outflow before financing of £1,596,000
represents a reduction in net outflow of 28%
from £2,214,000 in 2005/6. This is partly due
to an improvement of 28% in debtors’
collection days, down from 160 days in
2005/6 to 115 days in 2006/7. This
contributed to a reduction in trade debtors’
balances to £1,088,000 in 2006/7 from
£1,508,000 in 2005/6.
Creditors’ payment days have reduced to 45
days in 2006/7 down from 55 days in
2005/6, while trade creditors’ balances have
reduced 7% to £415,000 in 2006/7, down
from £444,000 in 2005/6.
Stock as a percentage of turnover has
reduced to 31% in 2006/7 from 33% in
2005/6.
Group cash balances at 31
January 2007 are £1,474,000
as compared with £951,000
at 31 January 2006.
On 26 May 2006, the Company announced
it had placed 17,500,000 shares at a price of
20p per share raising £3.5m before expenses
with Institutions and a number of private
investors.
A drawdown of £1,074,000 against the
Laurus loan facility was repaid on 26 May
2006 out of proceeds of the 2006 placing.
The Group saved interest payable on the
loan and made an exchange gain of
£64,000. The amount currently outstanding
is £51,000 and the balance of up to £1
million of the loan facility remains available to
meet future cash requirements.
The placement of monitors increased by
12% to 1,035 units in 2006/7 up from 923
units in 2005/6. This increase is below the
budgeted increase, partly due to intense
competition in the USA and further
exacerbated by an increase in number of
returned monitors from US distributors who
were taken over or merged during the year.
For the future, we do not expect significant
changes to stock balances, debtors’
collection days and creditors’ payment days.
Cash balances will reduce whilst we remain
pre-profit and we expect to drawdown the
Laurus loan facility sometime during the
current trading year.
A key performance indicator (‘KPI’) is the
maintenance of margins. Over the past year,
excluding fees for sale of monitors through
financing arrangements, profit margins have
been held steady at 77% for both years and
we expect this to continue throughout 2007/8.
A second KPI is to maintain pricing and this
was also achieved over the past year in
comparison to 2005. The average sterling
sales price of a monitor and sensor was
constant comparing 2006/7 to 2005/6.
Payments of fees through the financing
arrangement are expected to peak in 2007/8
and thereafter reduce significantly by 2009/10.
Accounting policies
International Financial Reporting Standards
(IFRS) are not mandatory for the Group, as an
AIM-quoted Company, until the interim results
for the six months to 31 July 2007 are
reported. The Group has decided not to
implement IFRS earlier than the mandatory
date and therefore these results are produced
in accordance with existing UK Accounting
Standards. The Company will prepare its
Interim accounts due to be published in
October 2007 in accordance with IFRS.
Dr Terry O’Brien
Chief Executive Officer
2005/6
Monitors 47%
Sensors 47%
FFU/Rental 4%
Licence Fees 2%
2006/7
Monitors 42%
Sensors 53%
FFU/Rental 3%
Licence Fees 2%
Sales as percentages
Monitors Sensors FFU/Rental Licence fees
2005/6
2006/7
1,443
Sales by type
£’000
1,603 1,611
137
70
1,818
111
70 LiDCO Group Plc
Annual Report and Accounts 2006/7
16
BOARD OF DIRECTORS
Dr Max Jonas
Dr Jonas is a senior consultant anaesthetist
at Southampton University Hospital, with
particular expertise and interest in the
application of hemodynamic monitoring to
medical intensive-care and surgery.
Professor David Bennett
David Bennett is Professor of Intensive Care
Medicine at St George’s Hospital, London
where until 2003 he was Director of the mixed
medical/surgical intensive care unit, a position
he held for more than 25 years. David has
chaired numerous scientific committees, was
honorary secretary of the European Society of
Intensive Care Medicine and editor-in-chief of
Clinical Intensive Care. He is on the editorial
board of Intensive Care Medicine and Critical
Care. He reviews regularly for these journals
and also for Critical Care Medicine and
Anaesthesia and Analgesia.
1. Dr Terence O’Brien
Chief Executive Officer
CLINICAL ADVISORY BOARD
2. Theresa Wallis
Chairman
3. Dr David Band
Scientific Director
4. John Barry
Sales and Marketing Director
5. Ian Brown
Non-Executive Director LiDCO Group Plc
Annual Report and Accounts 2006/7
17
Professor Michael Pinsky
Professor Pinsky is Professor of Critical
Care Medicine, Bioengineering and
Anesthesiology at the University of Pittsburgh
School of Medicine, USA and is a member of
the editorial board of the American Journal of
Respiratory and Critical Care Medicine,
Intensive Care Medicine, Journal of Critical
Care and Critical Care Forum. He is
editor-in-chief of the eMedicine textbook
Critical Care Medicine. He has a wide range
of research interests – among them being the
study of heart-lung interactions,
hemodynamic monitoring, cardiovascular
physiology, sepsis and outcomes research.
He is a world leading authority on the
application of both existing invasive, and the
more recently introduced minimally invasive,
monitoring technologies.
Professor William (Bill) Peruzzi
Professor Peruzzi is chief medical officer
at Memorial Hermann Hospital and Memorial
Hermann Children’s Hospital, Houston,
Texas. Bill joined Memorial Hermann in
1995 from Northwestern University,
Feinberg School of Medicine in Chicago,
where he served as professor of
anesthesiology, chief of the Critical Care
Medicine Section, and Director of the
Anesthesiology Critical Care Fellowship
Program. He has particular clinical expertise
in general and neurosurgical intensive care
and at Memorial Hermann is responsible for
a number of functions including serving as
the administrative advocate for medical staff,
service quality, ethics, performance
improvement and infection control.
Dr Christopher Wolff
Dr Wolff holds the post of Research Fellow at
St Thomas’ Hospital, Department of Applied
Physiology, London. He is a clinician,
physiologist and mathematician and has
major research interests in respiratory and
cardiovascular physiology.
1. Dr Terence O’Brien
Chief Executive Officer
Dr O’Brien co-founded the Group in 1991.
Prior to that, he has held senior positions
with biomedical companies including Sandoz
SA, Pharmacia AB, Meadox Medical Inc,
Novamedix Ltd, Enzymatix Ltd and Surgicraft
Ltd. Dr O’Brien was associate commercial
director at Enzymatix, which subsequently
listed on the London Stock Exchange as
ChiroScience Plc. Over the last 25 years Dr
O’Brien has been involved in the research
and development and subsequent marketing
of a number of medical device technologies
that are now standards of care in the
anesthesia, critical care and surgery markets.
2. Theresa Wallis
Chairman
Ms Wallis has worked most of her career in
financial services, moving into the technology
commercialisation sector in 2001. She
worked for the London Stock Exchange for
13 years, where from 1995 she was chief
operating officer of the Alternative Investment
Market (AIM), having managed the market’s
development and launch in 1994/5. From
2001 to end 2006 she was a principal
executive of ANGLE plc, a venture
management and consulting business
focusing on the commercialisation of
technology and development of
technology-based industry. She is currently a
non-executive director of Noble Income &
Growth VCT plc. She is also a member of
the Quoted Companies Alliance’s Executive
Committee and Chairman of its Markets and
Regulations Committee. During her early
career, from 1979 to 1988, she was with
Hambros Bank and then Canadian Imperial
Bank of Commerce.
4. John Barry
Sales and Marketing Director
Mr Barry joined the Group in February 2001.
He entered the medical industry working for
Baxter Healthcare Inc. In 1997 he was
appointed director of marketing for critical
care in Europe and in 1999, when Baxter
Healthcare sold Edwards Lifesciences
Corporation, Mr Barry was appointed director
of marketing for the cardiac surgery business
of Edwards Lifesciences Corporation in
Europe, the Middle East and Africa.
3. Dr David Band
Scientific Director
Dr Band co-founded the Group in 1991 and
is the co-inventor of the LiDCO System. He
is a specialist in the field of respiratory
physiology, electrochemistry and ion-selective
electrodes. He has a degree in medicine, and
was a reader in applied physiology in the
Division of Physiology,
GKT School of Biomedical Sciences,
St Thomas’ campus.
5. Ian Brown
Non-Executive Director
For the past 25 years, Mr Brown has worked
exclusively in the medical devices industry
and has extensive experience of developing
and introducing new medical devices to the
market in the UK and overseas. Between
1986 and 2003, he was involved as an
executive director and shareholder in a
medical device start-up Company
(Novamedix Group), initially as sales and
marketing director and later as managing
director. In his early career Mr Brown worked
in a number of UK and international sales and
marketing positions for Johnson & Johnson,
Smiths Industries and Pharmacia AB. Compliance with the Combined Code
Companies that have shares traded on the Alternative Investment Market (AIM) of the London Stock Exchange are not required to comply with
the disclosures of the Combined Code on Corporate Governance which is appended to the Listing Rules of the Financial Services Authority
(‘the 2006 FRC Code’). However, the Board is committed to maintain the highest standards of corporate governance, where appropriate for a
company of this size.
The Board of Directors – Board Composition
The Board currently consists of three executive directors and two non-executive directors. The non-executive directors are free from any
relationship with the executive management of the Company and the Board considers that both non-executive directors, other than through
their shareholding, are independent directors. The non-executive directors bring a wide range of skills and experience to the Board and fulfil a
vital role in corporate accountability. The finance director, Hugh McGarel-Groves resigned on 22 January 2007.
Mr Brown is the Senior Independent non-executive director.
There were 12 scheduled meetings during the year with additional special meetings as required.
Board evaluation and performance
The Board completed a Board evaluation during the year, when the functioning and composition of the Board and each Committee was
assessed. It is the Board’s intention to continue to review annually its performance and that of its Committees.
Company Secretary
All the directors have access to the advice and services of the Company Secretary and the appointment and removal of the Company
Secretary is a matter for the Board as a whole. The Company Secretary through the Chairman is responsible for ensuring directors receive
accurate, timely and clear information in a form that enables them to discharge their duties.
The Company Secretary attends all Board and Committee meetings and is responsible for ensuring compliance with the relevant procedures,
rules and regulations.
Independent professional advice
All directors are able to take independent financial advice in the furtherance of their duties if necessary, at the Company’s expense.
Re-election of directors
Under the Company’s Articles of Association, all new directors are required to resign and seek re-election at the first Annual General Meeting
following their appointment. All directors are required to seek re-election at intervals of no more than three years.
Each of the executive directors has a service contract, which contains a notice period of one year. The non-executive directors do not have
service contracts with the Company but have letters of appointment.
Board information
Board members are given appropriate documentation in advance of each Board and Committee meeting. Senior executives below Board level
are invited to attend Board meetings for the purpose of making presentations on their areas of responsibility.
Committees of the Board
Audit Committee
The members of the Committee are Ms Wallis (Chairman) and Mr Brown. The external auditors also attend meetings. The Committee
considers financial reporting and internal controls. It also reviews the scope and results of the external audit and the independence and
objectivity of the auditors. It meets at least twice a year and reviews the interim and annual accounts before they are submitted to the Board.
The Committee met twice during the year. The Committee considers annually whether the auditors remain independent for the purposes of the
audit. This year the fee for non-audit work is £34,000 against an audit fee of £37,000. The Committee is satisfied that the auditors remain
independent for the purposes of the annual audit. The Committee consider that for the size of the Company and at its current stage of
development that a separate internal audit function cannot be justified, but the matter is re-considered annually by the Committee.
Remuneration Committee
The members of the Committee are Ms Wallis (Chairman) and Mr Brown. The Committee reviews and sets the remuneration of the executive
directors. It reviews and recommends policy for the salaries and bonuses of all other staff. It advises on share schemes and approves the
granting of share options. The Committee met nine times during the year.
LiDCO Group Plc
Annual Report and Accounts 2006/7
18
CORPORATE GOVERNANCE REPORT Nominations Committee
The members of the Committee are Ms Wallis (Chairman), Mr Brown and Dr O’Brien. The Committee considers, at the request of the Board,
candidates for new appointments to the Board and advises on all matters relating to Board appointments. The Committee did not meet during
the year.
Attendance record at Board meetings and Committees
Audit Remuneration Nomination
Name Position Board Meetings Committee Committee Committee
Ms T Wallis Non-executive Chairman 22 (22) 2 (2) 9 (9) 0 (0)
Dr T K O’Brien Chief Executive Officer 20 (22) n/a n/a 0 (0)
Mr H McGarel-Groves* Finance director 16 (22) n/a n/a n/a
Dr D Band Scientific director 14 (22) n/a n/a n/a
Mr J Barry Sales & Marketing director 20 (22) n/a n/a n/a
Mr I Brown Non-executive director 19 (22) 2 (2) 9 (9) 0 (0)
Numbers in brackets denote the total number of meetings during the year.
*Mr H. McGarel-Groves resigned on 22 January 2007.
Relations with shareholders
The Company seeks to maintain and enhance good relations with its shareholders. The Company’s interim and annual reports are
supplemented by published updates to investors on technical and commercial progress. All investors have access to up-to-date information
on the Company via its website, www.lidco.com which also provides contact details for investor relations enquiries. All shareholders are invited
to make use of the Company’s Annual General Meeting to raise any questions regarding the management of the Company.
The Chief Executive and Chairman meet regularly with shareholders and the investing community and report to the Board feedback from those
meetings. Both non-executive directors have the opportunity to attend shareholder meetings. The Board is kept informed on market views
about the Company at all times.
Accountability and audit – Going concern
As discussed in the accounting policies and on the basis of current financial projections, the directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the
going concern basis in preparing the accounts.
Internal control and risk management
During the year the Board completed a full and thorough risk and controls analysis. The Board has an established and formal process for the
assessment of key risks to the business. The risk assessment is updated on an ongoing basis and reviewed bi-annually at Board meetings.
Further details may be found in the Directors’ Report.
Monitoring of effectiveness
The composition of the Board and the senior management team provides a suitable range of knowledge and experience to enable adequate risk
monitoring. The Company’s information systems provide detailed, regular variance reports which are reviewed and acted upon by the Board.
The external auditors report separately to the Board on the Company’s accounting and internal controls as part of their normal audit work. The directors present their Remuneration Report which covers the remuneration of both the executive and non-executive directors. The report
will be subject to shareholder vote at the forthcoming Annual General Meeting (AGM) in June 2007.
Committee membership
The membership of the Remuneration Committee is made up of the following non-executive directors:
T Wallis (Chairman)
I G Brown
None of the Committee members has any day to day involvement in the running of the Company, nor do they have any business or other
relationship that could affect, or appear to affect, the exercise of their independent judgement, other than as shareholders. No director plays a
part in any discussion about his or her own remuneration.
Remuneration policy of the executive directors
The Committee determines on behalf of the Board, the remuneration for the Executive directors and reviews remuneration policies for all staff.
Remuneration levels are set in order to attract high calibre recruits and to retain and motivate those directors and employees once they have
joined the Company to ensure the future success of the business and to deliver both short and long-term shareholder value. This is achieved
by a combination of base salary, bonuses and share options, which are offered to executive directors and to employees at all levels.
The Committee met nine times in the year. During the year the Committee sought advice from New Bridge Street Consultants LLP who has no
connection with the Company other than having provided previous remuneration advice to the Company, on the framework for executive
directors’ bonuses. The Committee is assisted by the Company Secretary.
Base salary
All three executive directors receive a base salary and allowance in lieu of benefits. The salary reflects the experience and level of competence
of the individual to whom it applies, as judged by the Committee, taking into account salary levels in the market.
Annual bonus
The executive directors who served during the year are members of the Company’s Senior Management Bonus Scheme. Under the terms of
the scheme, the Remuneration Committee assesses the directors’ individual performances soon after the end of the financial year, judged
against pre-determined benchmarks.
The criteria for awarding bonuses during the year included Corporate and personal objectives. Corporate objectives included sales
performance, the Company’s cash position, long-term debtor receipts and share price. Bonuses are capped at 50% of base salary.
Remuneration policy of the non-executive directors
The Board determines the remuneration of the non-executive directors.
The non-executive directors do not participate in the Company’s share option schemes and are not eligible for annual incentive payments or
benefits in kind.
All non-executive directors are reimbursed for travel and related business expenses reasonably incurred in performing their duties.
LiDCO Group Plc
Annual Report and Accounts 2006/7
20
DIRECTORS’ REMUNERATION REPORT Remuneration of directors
Year ended 31 Jan 2007
Allowance in
Salary and fees lieu of benefits Bonus Total 2005/6
£’000 £’000 £’000 £’000 £’000 (Restated)*
T A Wallis
1
44 –– 44 40
T K O’Brien 174 37 26 237 238
H M J McGarel-Groves
2
173 23 – 196 90
J G Barry 161 35 26 222 214
D M Band 42 88 58 58
A E B Wiegman –– –– 13
I G Brown 28 –– 28 11
Total 622 103 60 785 664
1
For the first eleven months of the year Ms Wallis’ fees were payable to ANGLE Technology Limited, thereafter the fees were paid directly to her.
2
Mr McGarel-Groves was employed for part of the year until 22 January 2007, the date of his resignation. Included in his salary and fees is the sum of £66,000 which
together with 239,130 shares issued to him at 11.5p per share was paid as part of settlement arrangements on resignation. His employment commenced in May 2005.
*The remuneration for 2005/6 has been restated to include the bonuses paid to directors after the year end.
Contracts of service
Details of the service contracts currently in place for the directors who have served during the year are as follows:
Executive directors
The service contracts of Dr O’Brien, Dr Band and Mr Barry are dated 29 June 2001 and are not set for a specific term but include a rolling
12 month notice period. Mr McGarel-Groves, who resigned on 22 January 2007, had a service contract with the Company dated 5 April 2005
which included a rolling 6 months’ notice period. Non-executive directors
The non-executive directors do not have service contracts with the Company. The letter of appointment for each non-executive director states
that they are appointed for an initial period of three years. At the end of the initial period the contract may be renewed for a further period if the
Company and the director agree. In keeping with best practice, these appointments are terminable without notice by either party.
The Chairman’s appointment was renewed in 2006 to the period ending 19 December 2008.
In addition, all directors retire by rotation at the Company’s Annual General Meeting and, where appropriate, offer themselves for re-election.
Directors’ interests in share options
The non-executive directors do not participate in the Company’s share incentive plans. Options were granted to the executive directors as follows:
Options at Options granted Lapsed during Options at Exercise Exercisable
Option type 31 January 2006 during 2006 the year 31 January 2007 price from Expiry Date
T O’Brien EMI 750,000 750,000 13p Dec-05 Dec-12
EMI 11,627 11,627 21.5p Apr-08 Apr-15
2001 ESOS 265,768 265,768 21.5p Apr-08 Apr-15
H McGarel-Groves EMI 250,000 250,000 20.75p See note 2
EMI 229,166 229,166 21p See note 2
Unapproved 20,834 20,834 21p See note 2
D Band EMI 750,000 750,000 13p Dec-05 Dec-12
EMI 11,627 11,627 21.5p Apr-08 Apr-15
2001 ESOS 53,489 53,489 21.5p Apr-08 Apr-15
J Barry 1997 ESOS 106,250 106,250 5p July-01 July-11
2001 ESOS 211,000 211,000 13p Dec-05 Dec-12
EMI 539,000 539,000 13p Dec-05 Dec-12
2001 ESOS 90,000 90,000 28.25p Nov-06 Nov-13
2005 ESOS 356,844 356,844 21.5p Apr-08 Apr-15
2005 ESOS 1,177,878 1,177,878 22p See note 1
EMI 136,045 136,045 22p See note 1
2006 ESOS 45,000 45,000 21p June-09 June-16
Total 4,709,528 5,004,528
Note 1
In April 2005 Mr Barry was granted share options with accelerated vesting as follows:
• 192,436 Unapproved share options vesting 31/12/05 exercisable at 22p
• 328,481 Unapproved share options vesting 30/04/06 exercisable at 22p
• 656,961 Unapproved share options vesting 30/09/06 exercisable at 22p
• 136,045 EMI share options vesting 31/12/05 exercisable at 22p
Each tranche remains exercisable for a period of 10 years from date of grant
Note 2
Mr McGarel-Groves resigned on 22 January 2007. His share options remain exercisable for a period of 6 months from date of resignation.
The share prices were 19.75p on 1 February 2006 and 10.5p on 31 January 2007, with a high and low during the year of 24.25p and 10.50p respectively.
Pensions
No pension contributions were payable by the Group during the year (2005: £nil).
LiDCO Group Plc
Annual Report and Accounts 2006/7
22
DIRECTORS’ REMUNERATION REPORT
Continued Shareholder return
The graph below shows the share price performance since 31 January 2002, using the FTSE TechMARK Mediscience Index as a comparator,
which the directors consider to be the most suitable bench mark index.
Relative price scale
T Wallis
Chairman of the Remuneration Committee
April 2007
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
LiDCO MediScience
31-01-02
31-07-02
31-01-03
31-07-03
31-01-04
31-07-04
31-01-05
31-07-05
31-01-06
31-07-06
31-01-07 The directors of Lidco Group plc present their annual report and audited financial statements (Annual Report)
for the year ended 31 January 2007.
Principal activities
The principal activity of the Group is the development, manufacture and sale of cardiac monitoring equipment.
Results and Dividends
The Group’s turnover for the year was £3,443,000 (2005/6: £3,421,000). The Group made a consolidated loss after taxation of £2,385,000
(2005/6: £2,035,000). The directors do not recommend the payment of a dividend. (2005/6: £nil).
The Company’s share price at 31 January 2007 was 10.5p (31January 2006: 19.75p).
Research and Development
The Group continued to develop the LiDCOplus
TM
system during the year, as set out in the Chief Executive Officer's Review. Expenditure
excluding capitalised costs on research and development amounted to £247,000 (2005/6: £215,000) in addition to clinical trials costs of
£18,000 (2005/6: £Nil), product registration costs of £178,000 (2005/6: £191,000) and software development costs of £214,000 (2005/6:
£170,000) which are capitalised on the balance sheet and amortised.
Share Capital and Share Premium Account
Full details of the authorised and issued share capital of the Company, together with details of the movements in the Company’s issued share
capital and the share premium accounts during the year, are shown in notes 12 and 15 to the financial statements. The Company placed in
May 2006, 17.5m shares at a price of 20p, raising £3.5m before expenses.
Directors
The directors of the Company who served during the year are set out below; short biographies are set out on pages 16 and 17.
Theresa Wallis Non-Executive Chairman
Terry O’Brien Chief Executive Officer
Hugh McGarel-Groves* Finance director
John Barry Sales and Marketing director
David Band Scientific director
Ian Brown Non-executive director
*Mr McGarel-Groves resigned on 22 January 2007.
Dr O’Brien retires by rotation and, being eligible, offers himself for re-election. Dr Band retires by rotation and, being eligible, offers himself, for
re-election at the forthcoming Annual General Meeting.
Directors’ remuneration
The Remuneration Report which includes information regarding directors’ service contracts, appointment arrangements and interests in share
options can be found on pages 20 to 23.
Directors’ interests in shares
The directors who held office at 31 January 2007 had beneficial interests in the ordinary shares of the Company as shown below:
Directors’ shareholdings
Ordinary shares of 0.5p each
31 January 2007 31 January 2006
Number Number
T A Wallis 108,000 108,000
T K O’Brien 10,109,577 10,109,577
J G Barry 379,642 379,642
D M Band 7,060,832 7,060,832
I G Brown 100,000 100,000
The directors have no interests in the shares of the Company’s subsidiary undertakings.
Directors’ indemnities and Directors and Officers’ insurance
The Company has exercised the power given by shareholders at the 2006 Annual General Meeting to extend the indemnities to Directors and
Officers against liability to third parties. The directors also have Directors and Officers insurance cover in place in respect of personal liabilities
which may be incurred by directors and officers in the course of their service with the Company.
LiDCO Group Plc
Annual Report and Accounts 2006/7
24
DIRECTORS’ REPORT
For the year ended 31 January 2007 Employment policy
Equal opportunity is given to all employees regardless of their gender, race or ethnic origin, religion, age, disability, or sexual orientation.
The policy of the directors is to encourage the involvement of all employees in the development and performance of the Group. Employees are
regularly briefed on the Group’s activities through information releases and meetings. All employees are encouraged to invest in the Group
through participation in the share option schemes.
Supplier payment policy
It is and will continue to be the policy of the group to negotiate with suppliers so as to obtain the best available terms taking account of quality,
delivery, price and period of settlement and, having agreed those terms, to abide by them. The total amount of the Group’s trade creditors
falling due within the year ended 31 January 2007 represents 45 day’s worth (2005/6: 55 days) as a proportion of the total amount invoiced by
suppliers during the period.
Significant shareholdings
In accordance with sections 198 to 208 of the Companies Act 1985, the Company has been notified that the following shareholders, other
than directors, had a beneficial interest in 3% or more of the Company’s ordinary share capital as at 31 March 2007.
Number of shares in Percentage
Shareholder which there is an interest notified*
R M Greenshields 9,042,407 7.64%
H J Leitch 7,376,571 6.23%
Cheviot Asset Management 6,892,183 5.82%
P A Brewer 6,822,221 5.76%
AXA Framlington 6,500,000 5.49%
Liontrust Investment Services Ltd 6,014,439 5.08%
*The percentages shown are based on the issued share capital at that date.
Charitable and political donations
The Group made no charitable or political donations in the year (2006: £nil).
Statement of directors’ responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and United
Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs
of the Group and Parent Company and of the profit or loss of the Group for that period. In preparing these financial statements, the directors
are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the
financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue
in business.
In so far as the directors are aware:
• there is no relevant audit information of which the Company’s auditors are unaware; and
• the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to
establish that the auditors are aware of that information.
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of
the Company and enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s
website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation
in other jurisdictions.
Under applicable law and regulations, the directors are also responsible for preparing a Directors’ Report, Directors’ Remuneration Report and
Corporate Governance Statement that comply with that law and those regulations. Going concern
After making reasonable enquiries and performing analysis, the directors have formed a judgement, at the time of approving the financial
statements, that there is a reasonable expectation that the Group has access to adequate resources to continue in operational existence for
the foreseeable future. On the basis of the anticipated levels of sales, costs and cash flow, the directors have satisfied themselves that the
level of cash and other financing facilities available to the business is sufficient for at least the next 12 months. For these reasons, the directors
continue to adopt the going concern basis in preparing the financial statements.
Financial risk management
The financial risk management objectives and policies of the Group, including the exposure to interest rate risk, liquidity risk and currency risk
are set out in notes 23 and 24 to the financial statements.
International Financial Reporting Standards (IFRS)
The Company will prepare its Interim Accounts for the 6 months’ period to 31 July 2007 in accordance with IFRS.
Business review
A review of the Group’s performance during the financial year, its product development and market position is contained in the Chief Executive
Officer’s Review and Financial Report which should be read as part of the Directors’ Report.
Principal risks and uncertainties
The management of the business and the implementation of the Group's strategy are subject to a number of risks. The key business risks
affecting the Group are:
• financial – financial risks are referred to above;
• development of competing products - this can restrict the Group's ability to make further progress in improving its share of the minimally
invasive hemodynamic monitoring market. The Group addresses this by consistently seeking independent validation of its products and
introducing further product developments and enhancements, as referred to in the Chief Executive Officers' Review;
• healthcare spending – the Group's performance is affected by hospitals’ expenditure and budgetary restraints which the Group mitigates
by targeting its efforts and resources according to specific opportunities and market expansion in different territories;
• competition activity from market leaders in the US and Japan. The group is competing against established market leaders. The progress in
these markets achieved by the Company is more fully described in the Chief Executive Officer’s Review.
Key Performance Indicators (KPIs)
The Board monitors progress of the Group's strategy and by reference to KPIs, specifically revenue growth, gross margin, price maintenance,
working capital levels and market positions. These KPIs have been addressed in the Chief Executive Officers' Review and the Financial Review.
Internal control and risk management
During the year the Board completed a full and thorough risk and controls analysis. The Board has an established and formal process for the
assessment of key risks to the business. The risk assessment is updated on an ongoing basis.
The key procedures designed to provide an effective system of internal control are described below:
Control environment
The Company's control environment is the responsibility of the directors and individual managers at all levels. The Board has implemented an
organisational structure with clearly-defined responsibilities and lines of accountability. New financial authority limits have been reviewed and
implemented during the year.
Information systems and controls
Detailed budgets and forecasts are prepared annually and progress against expectations is reviewed monthly by the Board. Underpinning
these budgets is a system of internal financial control, based on authorisation procedures. As a medical device Company, LiDCO also has a
system of Regulatory controls, to ensure compliance with all requirements of the Medicines and Healthcare Products Regulatory Agency
(MHRA), the US Food & Drug Administration (FDA) and other medical bodies. Three inspections took place during the year, from MHRA, FDA
and the ISO 9000 inspecting Notified Body. All audits and inspections were passed and licences and certificates renewed.
Risk controls
The Board review risk within the Company formally on a bi-annual basis. The process is conducted by the Company Secretary based on input
from all departments in the business and covering all types of risk. Risks are then collated in a report and ranked according to priority.
Movements in risk priority are also reviewed against the last review and trends are investigated. Actions to mitigate risks are identified and
agreed and progress on these actions is monitored throughout the year.
Actions following risk reviews
A new committee was set up during the year to review risk in the IT area where the Company-wide review identified some areas where
additional improvements would be made and to make recommendations to the Board to resolve matters requiring attention. New internal
financial controls were implemented during the year. In particular the revenue recognition policy was reviewed and strengthened. A disaster
recovery policy was approved during the year.
LiDCO Group Plc
Annual Report and Accounts 2006/7
26
DIRECTORS’ REPORT
Continued
For the year ended 31 January 2007 Environmental, social and governance matters
The Company reviews environmental, social and governance matters as part of its bi-annual risk assessment. Part of that review is to ensure
that the Company has in place effective systems for managing these risks.
Environmental policy
The Company has signed up with a compliance scheme to recycle and dispose of electrical waste in accordance with the requirements of the
Waste Electrical and Electronic Equipment Directive. The Company has also conducted a due diligence exercise and risk assessment and
does not expect to generate any significant electrical waste. Where possible, products are recycled within the Company.
All the Company’s materials suppliers have confirmed that they comply with The Restrictions on use of Hazardous Products Directive.
For the future, the Company will continue to monitor environmental risk but has not identified any significant risk to the Company’s short or
long term value.
Ethical policy
The Company is committed to and expects its employees to attain the highest standards of business and personal ethics. As a world wide
seller of medical equipment, we respect the laws of the countries in which we operate.
As a medical equipment supplier, the Company operates under a highly regulated environment and it is the Company’ policy and a key
performance indicator that the Company complies with relevant regulations at all times.
Social policy
Within the Company, there is a responsibility to promote the welfare of its staff particularly in their development and retention. An HR manager
was appointed last year with responsibilities including the promotion of welfare of staff. Annual appraisals have been introduced to help identify
strengths and weaknesses with a view to structuring programmes to aid staff in their long term development.
Within the community, the Company, by supplying life saving equipment to hospitals, makes a valuable contribution to the welfare and
recovery of sometimes very sick hospital patients most of whom are in intensive care and to the improvement of their quality of life.
The St Georges’ Hospital study* demonstrates that the use of Early Goal Directed Therapy in conjunction with the LiDCO system reduces
complications and saves 12 bed days per patient. Patients can return to their normal lives more quickly. We maintain a strong investment in
Research and Development to try to enhance the contribution we make to saving lives. The Company is committed to conducting its business
in a socially responsible way in relation to all the stakeholders in the business including the communities in which we operate.
Auditors
In accordance with section 388 of the Companies Act 1985, a resolution to re-appoint Grant Thornton UK LLP will be proposed at the
forthcoming Annual General Meeting.
Annual General Meeting
The Notice to convene the Annual General Meeting (AGM) of the Company to be held on 21 June 2007, is set out on Pages 43 and 44 of this
Annual Report which includes an explanation of the resolutions together with an enclosed form of proxy.
By order of the Board
Rob Lamb
Company Secretary
April 2007 We have audited the Group and Parent Company financial statements (the financial statements) of LiDCO Group PLC for the year ended
31 January 2007 which comprise the principal accounting policies, the Consolidated profit and loss account, the Consolidated and Company
balance sheets, the Consolidated cash flow statement and related notes 1 to 25. These financial statements have been prepared under the
accounting policies set out therein.
This report is made solely to the Company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit
work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of the directors and auditors
The directors’ responsibilities for preparing the Annual Report and the financial statements in accordance with United Kingdom law and
Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the statement of directors’ responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards
on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements have been
properly prepared in accordance with the Companies Act 1985. We also report to you whether, in our opinion, the information given in the
Directors’ Report is consistent with the financial statements.
We read other information contained in the Annual Report, and consider whether it is consistent with the audited financial statements.
This other information comprises only the Directors’ Report, Corporate Governance Report, Directors’ Remuneration Report, Chairman’s
Statement, Chief Executive Officer’s Review, and the Financial Review. We consider the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.
Basis of opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board.
An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes
an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of
whether the accounting policies are appropriate to the Group’s and Company’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide
us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by
fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the
financial statements.
Opinion
In our opinion the financial statements:
• give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the Group’s and the
Parent Company’s affairs as at 31 January 2007 and of the Group’s loss for the year then ended,
• have been properly prepared in accordance with the Companies Act 1985; and
• the information given in the Directors’ Report is consistent with the financial statements for the year ended 31 January 2007.
Grant Thornton UK LLP
Registered Auditors
Chartered Accountants
LiDCO Group Plc
Annual Report and Accounts 2006/7
28
REPORT OF THE INDEPENDENT AUDITORS
TO THE MEMBERS OF LIDCO GROUP PLC Basis of preparation
The financial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom
accounting standards.
The principal accounting policies of the Company have remained unchanged from the previous year and are set out below. The effect of
FRS 20 ‘share based payment’, introduced this year, on prior year results, was £129,000.
Basis of consolidation
The consolidated accounts incorporate the Financial Statements of the Company and all its subsidiaries.
Going concern
The financial statements have been prepared on the going concern basis, which assumes that the Company will have sufficient funds to
continue in operational existence for the foreseeable future. The Company has continued to invest in the development of its operations and as
a result has continued to trade at a loss in the in the year ended 31 January 2007.
The directors have approved forecasts for the foreseeable future, which indicate that the Company will have sufficient funding to continue to
trade during that period. The forecasts assume a level of new sales about which there is uncertainty. If such new sales are not achieved, the
directors believe that there are sufficient opportunities available to them to obtain additional funding from sources which are currently being
explored, to enable the Company to continue to develop its operations and to meet its liabilities as they fall due. Accordingly the financial
statements have been prepared on a going concern basis. The financial statements do not include any adjustments that would be required in
the event that the Company had insufficient funding available.
Merger accounting
Admission to the AIM Market of the London Stock Exchange occurred on 5 July 2001. The restructuring of the Group agreed by the
shareholders in February 2001, under which the minority holdings in LiDCO Limited would be bought out in exchange for shares in LiDCO
Group, was conditional upon admission and is therefore deemed to have occurred on 5 July 2001.
The directors consider that the relative rights of the shareholders have in substance remained unchanged during the re-organisation.
Merger accounting was therefore adopted as the accounting treatment for the re-organisation. No purchased goodwill is created in the
transaction and the assets and liabilities of LiDCO Limited are not adjusted to reflect their market value.
Turnover
Turnover represents amounts receivable from product sales, including monitors, sensors, fees for use and rentals, service contracts, carriage,
warranty repairs and income from licence agreements granted, excluding value added tax. The basis of recognition is on the delivery of
products. For income from licences, the basis of recognition is from the date that the licence is granted, recognised in equal instalments over
the licence period.
Research and development
Research expenditure is written off to the profit and loss account as it is incurred. Development expenditure is written off as incurred, except
where it relates to a technically, commercially and financially viable project, when the identifiable expenditure is capitalised and amortised over
the period the Company is expected to benefit, not exceeding three years.
Income from investments
Investments in subsidiary undertakings are stated at cost less provision for impairment.
Intangible fixed assets
Intangible fixed assets represent costs relating to product registration in new countries and software development costs and clinical trials on
the LiDCO and PulseCO systems. Where the directors are satisfied as to the technical, commercial and financial viability of these projects the
expenditure has been capitalised and is amortised in equal amounts over the useful life of five years for product registration costs and three
years for software development and clinical trials.
PRINCIPAL ACCOUNTING POLICIES Tangible fixed assets and depreciation
Depreciation is calculated to write down the cost less estimated residual value of all tangible fixed assets other than freehold land by equal
annual instalments over their expected useful lives. The rates generally applicable are:
Leasehold improvements Over the life of the lease
Plant and machinery 10% per annum
Fixtures and fittings 12.5% per annum
Office equipment 20% per annum
Computer equipment 33% per annum
Leases
Operating lease rentals are charged to the profit and loss account as incurred.
Stocks
Stocks are stated at the lower of attributable production costs and net realisable value.
Capital instruments
Capital instruments are accounted for and classified as share capital and debt according to their form.
Foreign currency
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in
foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Any gain or loss arising from a change in exchange
rates subsequent to the date of the transaction is included as an exchange gain or loss in the profit and loss account.
Financial instruments
Financial assets and liabilities are recognised in the Group Balance Sheet when the Group becomes party to the contractual provisions
of the instrument.
The accompanying accounting policies and notes form an integral part of these financial statements.
LiDCO Group Plc
Annual Report and Accounts 2006/7
30
PRINCIPAL ACCOUNTING POLICIES
Continued The accompanying accounting policies and notes form an integral part of these financial statements.
Year ended Year ended
31 January 2007 31 January 2006
£’000 £’000
Note (Restated)
Turnover 1 3,443 3,421
Cost of sales (1,127) (871)
Gross profit 2,316 2,550
Administrative expenses (4,939) (4,771)
Operating loss (2,623) (2,221)
Interest receivable 69 42
(2,554) (2,179)
Interest payable (35) (35)
Loss on ordinary activities before taxation 1 (2,589) (2,214)
Tax on loss on ordinary activities 3 204 179
Loss on ordinary activities after taxation 15 (2,385) (2,035)
Loss per share (basic and diluted) (p) 14 (2.10) (2.04)
All transactions arise from continuing operations.
There were no recognised gains or losses other than the profit for the financial year.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 January 2007 Group Company
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Fixed assets
Intangible assets 4 656 473 – –
Tangible assets 5 854 1,038 – –
Investments 6 – – 65 65
1,510 1,511 65 65
Current assets
Stocks 7 1,080 1,140 – –
Debtors 8 1,421 1,995 70 115
Amounts due from subsidiary undertaking 8 – – 20,101 18,742
Cash at bank and in hand 1,474 951 1,304 367
3,975 4,086 21,475 19,224
Creditors: amounts falling due within one year 9 (846) (759) – –
Net current assets 3,129 3,327 21,475 19,224
Total assets less current liabilities 4,639 4,838 21,540 19,289
Creditors: amounts falling due after more than one year 10 (51) (1,177) (51) (1,125)
Net assets 4,588 3,661 21,489 18,164
Capital and reserves
Called up share capital 12 592 503 592 503
Share premium account 15 20,723 17,566 20,723 17,566
Merger reserve 8,513 8,513 – –
Other reserve – (88) – (88)
Profit and loss account 15 (25,240) (22,833) 174 183
Shareholders’ funds 4,588 3,661 21,489 18,164
The financial statements were approved by the Board of Directors on 18 April 2007.
Ms Theresa Wallis Dr Terence O’Brien
Director Director
LiDCO Group Plc
Annual Report and Accounts 2006/7
32
CONSOLIDATED BALANCE SHEETS
At 31 January 2007
The accompanying accounting policies and notes form an integral part of these financial statements. Year ended Year ended
31 January 2007 31January 2006
Note £’000 £’000
Net cash outflow from operating activities 17 (1,366) (1,804)
Returns on investments and servicing of finance
Interest received 69 42
Interest paid (35) (35)
Net cash inflow from returns on investments 34 7
Taxation 283 –
Capital expenditure and financial investment
Purchase of tangible fixed assets (137) (55)
Purchase of intangible fixed assets (410) (362)
Net cash outflow from capital expenditure and financial investment (547) (417)
Net cash outflow before financing (1,596) (2,214)
Financing
Issue of ordinary share capital 3,245 203
Convertible loan drawdowns (1,126) 1,355
Net cash inflow from financing 2,119 1,558
Increase/(decrease) in cash 523 (656)
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 January 2007 1. Turnover and loss on ordinary activities before taxation
Turnover by destination is analysed as follows:
2007 2006
£’000 £’000
United States 767 1,123
United Kingdom 2,012 1,535
Continental Europe 511 550
Rest of World 153 213
3,443 3,421
Turnover by type
2007 2006
£’000 £’000
Monitor sales 1,443 1,603
Sensor sales 1,818 1,611
Fee per use 111 137
Licence fees 70 70
3,443 3,421
All turnover, operating loss and net assets originated within the United Kingdom.
The loss on ordinary activities before taxation is stated after:
2007 2006
£’000 £’000
Auditors’ remuneration:
Fees payable to the Company auditors for the audit of the Group accounts 14 11
Fees payable to the Company auditors for other services:
Audit of the Company’s subsidiaries 23 22
Other services relating to tax 24 15
Other services 10 6
Research and development 247 215
Depreciation of tangible fixed assets 185 238
Amortisation of intangible fixed assets 227 202
Rental of land and buildings 233 306
2. Directors and employees
Staff costs during the year were as follows:
2007 2006
Group £’000 £’000
(Restated)
Wages and salaries 2,269 2,034
Social security costs 188 181
Share based payments charge 95 129
2,552 2,344
The average number of employees (including executive directors) of the Company during the year was:
2007 2006
Production 11 13
Sales 16 16
Administration 11 7
38 36
Fees payable for directors’ services are set out in the Directors’ Remuneration Report on pages 20-23.
LiDCO Group Plc
Annual Report and Accounts 2006/7
34
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 January 2007 3. Tax on loss on ordinary activities
The tax credit is based on the loss for the year and represents:
2007 2006
£’000 £’000
United Kingdom corporation tax at 30% (2006: 30%) – –
Adjustments in respect of prior year (62) (69)
Tax credit (142) (110)
(204) (179)
Loss on ordinary activities multiplied by standard rate of corporation tax in the United Kingdom
of 30% (2006: 30%) (777) (626)
Effect of:
Expenses not deductible for tax purposes 211 162
Capital allowances for the period in excess of depreciation 44 16
Increase in tax losses 543 469
Other timing differences (21) (21)
Research and development tax credits (142) (110)
Current tax credit for period (142) (110)
4. Intangible fixed assets
Clinical Product Software
trials registration development Total
Group £’000 £’000 £’000 £’000
Cost
At 1 February 2006 74 191 1,064 1,329
Additions 18 178 214 410
At 31 January 2007 92 369 1,278 1,739
Amortisation
At 1 February 2006 74 22 760 856
Provided in the year 3 56 168 227
At 31 January 2007 77 78 928 1,083
Net book amount at 31 January 2007 15 291 350 656
Net book amount at 31 January 2006 – 169 304 473
5. Tangible fixed assets
Leasehold Plant and Fixtures and Office Computer
improvements machinery fittings equipment equipment Total
Group £’000 £’000 £’000 £’000 £’000 £’000
Cost
At 1 February 2006 541 408 115 39 970 2,073
Additions 14 352 113 137
Disposals ––– – (136) (136)
At 31 January 2007 555 411 120 41 947 2,074
Depreciation
At 1 February 2006 187 217 76 35 520 1,035
Provided in the year 57 28 10 2 88 185
Disposals ––– –––
At 31 January 2007 244 245 86 37 608 1,220
Net book amount at 31 January 2007 311 166 34 4 339 854
Net book amount at 31 January 2006 354 191 39 4 450 1,038 6. Investments
Shares in subsidiary
undertakings
Company £’000
Cost and net book value
At 1 February 2006 and at 31 January 2007 65
The Company’s beneficial interest in subsidiary undertakings consists of:
Country Nature of
of registration Holding business
Lidco Limited England and Wales 100% Surgical instruments and appliances
Cassette Analytical Systems Limited England and Wales 100% Dormant
7. Stocks
2007 2006
Group £’000 £’000
Raw materials and consumables 152 212
Finished goods and goods for resale 928 928
1,080 1,140
8. Debtors
Group Company
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Trade debtors 1,088 1,508 – –
Prepayments and accrued income 149 256 70 112
Other debtors 184 231 – 3
Inter-Company debt – – 20,101 18,742
1,421 1,995 20,171 18,857
The Inter-Company debt relates to the on-going funding provided to the principal trading subsidiary, Lidco Limited, whilst it continues to be
loss-making. This debt has been reviewed by the directors of the Company, who consider there is no impairment, though the full amount may
not be recoverable within one year.
9. Creditors: amounts falling due within one year
Group Company
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Trade creditors 415 444 – –
Other creditors 78 59 – –
Accruals and deferred income 353 256 – –
846 759 – –
LiDCO Group Plc
Annual Report and Accounts 2006/7
36
NOTES TO THE FINANCIAL STATEMENTS
Continued
For the year ended 31 January 2007 10. Creditors: amounts falling due after more than one year
Group Company
2007 2006 2007 2006
£’000 £’000 £’000 £’000
Deferred income – 52 – –
Convertible loan 51 1,125 51 1,125
51 1,177 51 1,125
A US$2 million 3 year convertible loan agreement was entered into with Laurus Master Fund Ltd (‘Laurus’) on 10 August 2005. This is
convertible into ordinary shares of the Company at any time during the 3 year period at a price of 24p, or at 85% of the average closing price
over the preceding 10 trading days, if lower and if the conversion has been requested by the Company. Interest is payable at 1.5% above
New York Journal Prime, which has resulted in an effective interest rate of circa 9.75%.
A total drawdown of $2,445,000 was made in 2005 against the Laurus loan facility, of which all but $100,000 was subsequently repaid on
26 May 2006 out of the proceeds of the 2006 Placing. A conversion of $445,000 into 1,166,920 ordinary shares in the Company was made
on 17 November 2005. The balance of the Laurus loan at 31 January 2007 was £51,000 (2005/6: £2,000,000).
11. Deferred taxation
Group Company
2007 2006 2007 2006
Unprovided £’000 £’000 £’000 £’000
Accelerated capital allowances 144 506 – –
Other (6,276) (5,927) – –
(6,132) (5,421) – –
12. Share capital
2007 2006
£’000 £’000
Authorised 150,000,000 ordinary shares of 0.5p each 750 750
Allotted, called up and fully paid 118,096,850 ordinary shares of 0.5p each 592 503
17,764,130 new shares were issued during the year of which, on 26 May 2006, 17,500,000 ordinary shares at a price of 20p each were
issued following a Placing on 26 May 2006. 25,000 shares were issued on the exercise of a share option on 21 September 2006 for a total
consideration of £3,250 and 239,130 shares were issued to a former finance director who resigned on 22 January 2007 at a price of
11.5p each. 13. Share based payments
Equity-settled share option scheme
The Company has a share option scheme for selected employees and directors of the Group. Options are exercisable at a price equal to the
average quoted market price of the Company’s shares on the date of grant. The vesting period is over a variable period up to 3 years.
2007 2006
Weighted average Weighted average
Number exercise price (p) Number exercise price (p)
Outstanding at the beginning of the year 7,714,673 15.9 6,652,250 35.6
Issued in the year 825,250 21.0 4,431,440 21.7
Forfeited during the year (281,299) 24.1 (2,871,017) 58.9
Exercised during the year (25,000) 13.0 (498,000) 23.3
Outstanding at the end of the year 8,233,624 15.5 7,714,673 15.9
Exercisable at the end of the year 4,317,173 16.0 3,180,731 13.1
These fair values were calculated using a Black-Scholes option pricing model as follows:
2007 2006
Weighted average share price (p) 19.0 19.0
Weighted average exercise price (p) 19.0 19.0
Expected volatility 40% 40%
Expected life 3.5 3.5
Risk free rate 5% 5%
Expected dividend yield – –
The expected volatility is based on the Group's historical volatility averaged over a period equal to the expected life.
The expected life is the average expected period to exercise. The risk free rate of return is based on the UK Government gilts.
14. Loss per share
Loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares
during the year. Share options are regarded as dilutive if the exercise price was below the market price at 31 January 2007.
Year ended 31 January Year ended 31 January
2007 2006
£’000 £’000
(Restated)
Loss after tax for the financial year (£’000) (2,385) (2,035)
Weighted average number of ordinary shares (‘000) 113,836 99,572
Effect of dilutive share options (‘000) – 2,996
Adjusted weighted average number of ordinary shares (‘000) 113,836 102,307
Loss per share – basic and diluted (p) (2.10) (2.04)
LiDCO Group Plc
Annual Report and Accounts 2006/7
38
NOTES TO THE FINANCIAL STATEMENTS
Continued
For the year ended 31 January 2007 15. Reserves
Share Profit
premium Merger Other Equity and loss
account reserve reserve reserve account
Group £’000 £’000 £’000 £’000 £’000
At 1 February 2006 17,566 8,513 (88) – (22,833)
Issue of share capital 3,157 ––– –
Transfer –– 88 – (88)
FRS 20 charge –– –– 66
Loss for the financial year –– –– (2,385)
At 31 January 2007 20,723 8,513 –– (25,240)
Company
Share Profit
premium Other Equity and loss
account reserve reserve account
Company £’000 £’000 £’000 £’000
At 1 February 2006 17,566 (88) – 183
Issue of share capital 3,157 –––
Transfer – 88 – (88)
Profit for the financial year ––– 79
At 31 January 2007 20,723 –– 174
In accordance with the exemptions given by section 230 of the Companies Act 1985, the holding Company has not prepared its own profit
and loss account. The profit for the year of the Company was £79,000 (2005/6: £8,000).
The other reserve relates to the former investment in shares in the Employee Share Ownership Trust.
16. Reconciliation of movements in shareholders’ funds
2007 2006
Group £’000 £’000
Loss for the financial year (2,385) (2,035)
Share based payments 66 129
Issue of shares 3,246 432
927 (1,474)
Opening shareholders’ funds 3,661 5,135
Closing shareholders’ funds 4,588 3,661
17. Net cash outflow from operating activities
2007 2006
£’000 £’000
(Restated)
Operating loss (2,622) (2,221)
Depreciation and amortisation charges 412 440
Share based payments 66 129
Decrease in stock 196 25
Decrease/(increase) in debtors 495 (307)
Increase in creditors 87 130
Net cash outflow from operating activities (1,366) (1,804) 18. Reconciliation of net cash flow to movement in net debt
2007 2006
Group £’000 £’000
Cash movement in the year 523 (656)
Increase in loan 1,125 (1,355)
Change in net cash in the year 1,648 (2,011)
Conversion of loan into share capital – 230
1,648 (1,781)
Net opening (debt)/cash at 1 February 2006 (174) 1,607
Net closing cash/(debt) at 31 January 2007 1,474 (174)
19. Analysis of changes in net debt
At 1 Feb 2006 Cash flow At 31 Jan 2007
Group £ £ £
Cash in hand 951 523 1,474
Convertible loan (1,125) 1,074 (51)
Net cash (174) 1,597 1,423
20. Capital commitments
The Company had no capital commitments at 31 January 2007 or 31 January 2006.
21. Contingent liabilities
At 31 January 2007, the group registered a rent deposit deed dated 24 July 2006 with Companies House in favour of HB Sawston No1 Ltd
and HB Sawston No 2 Ltd to secure rent obligations on the sales office at Sawston Cambridgeshire in the sum of £14,870. The Bank
guarantee (£118,116) for the previous sales office at Granta Park Cambridge has been fully discharged.
There were no other contingent liabilities at 31 January 2007 or 31 January 2006.
22. Leasing commitments
Operating lease payments amounting to £280,000 (2006: £231,000) are due within one year. The leases to which these amounts relate expire
as follows:
2007 2006
Land and Land and
Buildings Other Buildings Other
£’000 £’000 £’000 £’000
In one year or less 123 47 97 48
Between one and five years 110 – 86 –
233 47 183 48
23. Financial instruments
Financial instruments
The Group’s financial instruments comprise cash and liquid resources, borrowing and items such as trade debtors and rate creditors that arise
from its operations.
The main risks that arise from the Group’s financial instruments are interest rate, currency and liquidity risk. The board reviews and agree
policies for managing each of these risks and they are summarised below.
Liquidity risk
The Group seeks to manage this financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest surplus cash
assets safely and profitably.
Currency risk
The Group manages currency risk by assessing the net exposure in each non-sterling currency in which exposure arises. The only such
exposure relates to US dollars and this has been assessed as minimal, since the Laurus loan US$ liability and US operating costs are more
than offset by US$ receivables from sales.
LiDCO Group Plc
Annual Report and Accounts 2006/7
40
NOTES TO THE FINANCIAL STATEMENTS
Continued
For the year ended 31 January 2007 24. Interest rate profile
Group
Floating rate Fixed rate
Cash current Deposit and Cash current Deposit and
bank accounts return account bank accounts return account Total
Financial assets at 31 January 2007 £’000 £’000 £’000 £’000 £’000
Currency
Sterling 70 1,304 –– 1,374
US dollars 100 ––– 100
At 31 January 2007 170 1,304 –– 1,474
Floating rate Fixed rate
Cash current Deposit and Cash current Deposit and
bank accounts return account bank accounts return account Total
Financial assets at 31 January 2006 £’000 £’000 £’000 £’000 £’000
Currency
Sterling 541 256 – 119 916
US dollars 35 ––– 35
At 31 January 2006 576 256 – 119 951
Floating rate Fixed rate
2007 2006 2007 2006
Financial Liabilities £’000 £’000 £’000 £’000
Currency
US dollars 51 1,125 – –
Interest on the Laurus convertible loan agreement is payable at 1.5% above New York Journal Prime, which has resulted in an effective
interest rate of circa 9.75%.
The Group did not have any financial liabilities at 31 January 2006.
Fair values of financial assets and liabilities
There was no difference between the fair value and the book value of financial assets and liabilities.
Hedging
The Group did not hedge its financial transactions in the current period or preceding year.
Currency profile
Sterling is the main functional currency of the Group. The following analysis of net monetary assets and liabilities shows the Group’s currency
exposures excluding trade debtors and trade creditors. The Group did not use forward contracts or other derivatives to manage its currency
exposure in the year ended 31 January 2007. The amounts shown represent the transactional (or non-structural) exposures that give rise to the
net currency gains and losses recognised in the profit and loss account. Such exposures comprise the monetary assets and monetary liabilities of
the Group that are not denominated in sterling.
Group
Deposit account Deposit Account
2007 2006
Financial assets £’000 £’000
Currency
US dollars 100 35
Convertible loan Convertible loan
2007 2006
Financial liabilities £’000 £’000
Currency
US dollars 51 1,125
25. Transactions with related parties
The Company has taken advantage of the exemption in Financial Reporting Standard No 8 ‘Related party disclosures’ and has not disclosed
transactions with Group undertakings.
There are no other related party transactions. LiDCO Group Plc
Annual Report and Accounts 2006/7
42
Company registration number
2659005
Registered office
16 Orsman Road
London
N1 5QJ
Company website
www.lidco.com
Directors
Ms T Wallis Non-executive Chairman
Dr T K O’Brien Chief Executive Officer
Mr J G Barry Sales and Marketing director
Dr D Band Scientific director
Mr I G Brown Non-executive director
Secretary
Mr R Lamb
Auditors
Grant Thornton UK LLP
Registered Auditors
Chartered Accountants
Grant Thornton House
Melton Street
Euston Square
London
NW1 2EP
Solicitors
Herbert Smith
Exchange House
Primrose Street
London
EC2A 2HS
Hewitsons
Shakespeare House
42 Newmarket Road
Cambridge
CB5 8EP
Registrars
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Nominated Adviser
and Stockbroker
Panmure Gordon & Co
Moorgate Hall
155 Moorgate
London
EC2M 6XB
Bankers
Barclays Bank Plc
PO Box 885
Mortlock House
Vision Park
Histon
Cambridge
CB4 9DE
COMPANY INFORMATION
ADVISERS TO THE COMPANY
Scientific advisory panel
Professor Solomon Aronson Professor, Department of Anaesthesia & Critical Care,
University of Chicago, specialising in major surgery and
intensive care medicine.
Dr William Peruzzi Associate Professor of Anaesthiology, Northwestern
University Medical School & Director of Respiratory Care,
Northwestern Memorial Hospital, specialising in neurosurgical
intensive care.
Dr Max Jones Consultant Anaesthetist, Southampton University Hospital,
in medical intensive care.
Dr Christopher Wolff Honorary Clinical Pharmacologist, St. Bartholomew’s
Hospital, in Applied Physiology.
Professor Michael Pinsky Professor of Critical Care Medicine, Bioengineering and
Anesthesiology at the University of Pittsburgh School
of Medicine, USA.
Professor David Bennett Professor of Intensive Care Medicine at St George’s
Hospital London. Notice is hereby given that the Annual General Meeting (the ‘Meeting’) of Lidco Group plc (the ‘Company’) will be held at the offices of
Buchanan Communications at 45 Moorfields, London EC2Y 9AE on 21 June 2007 at 11 am to transact the following business.
Resolutions 1 to 6 inclusive will be proposed as ordinary resolutions. Resolution 7 will be proposed as a special resolution.
Resolution 1
To receive the audited financial statements of the Company and the Directors’ report and the Auditors’ report thereon for the year ended
31 January 2007.
Resolution 2
To receive and approve the Directors’ remuneration report for the year ended 31 January 2007.
Resolution 3
To re-elect Dr Terry O’Brien as a Director who retires by rotation and offers himself for re-election.
Resolution 4
To re-elect Dr David Band who is 70 as a Director who retires by rotation and offers himself for re-election.
Resolution 5
To re-appoint Grant Thornton UK LLP , as auditors of the Company and to authorise the Directors to determine their remuneration.
Resolution 6
That the Directors be and they are generally and unconditionally authorised in accordance with S80 of the Companies Act 1985 to exercise all
the powers of the Company to allot relevant securities (as defined in S80 (2) of that Act) up to an aggregate nominal amount of £197,000
provided that this authority shall expire on the date of the next Annual General Meeting of the Company or 15 months from the date of this
meeting, whichever is the earlier, save that the Company shall be entitled to make offers or agreements before the expiry of such authority
which would or might require relevant securities to be allotted after such expiry and the Directors shall be entitled to allot relevant securities
pursuant to any such offer or agreement as if this authority had not expired; and all unexercised authorities previously granted to the Directors
to allot relevant securities be and are hereby revoked.
Resolution 7
That the Directors be and they are hereby empowered pursuant to S95 of the Companies Act 1985 to allot equity securities (within the
meaning of S94 of that Act) for cash pursuant to the authority conferred by Resolution 6 above or by way of sale of treasury shares
(as defined in S162 of that Act) as if S89 (1) of that Act did not apply to any such allotment provided that this power shall be limited to:
(i) the allotment of equity securities in connection with a rights issue, open offer or other offer of securities in favour of the holders of ordinary
shares on the register of members at such record dates as the Directors may determine and other persons entitled to participate therein
where the equity securities respectively attributable to the interests of ordinary shareholders are proportionate (as nearly as maybe) to the
respective numbers of ordinary shares held or deemed to be held by them on any such record dates, subject to such exclusions or other
arrangements as the Directors may deem necessary or expedient to deal with treasury shares, fractional entitlements or legal or practical
problems arising under the laws of any overseas territory or the requirements of any regulatory body or stock exchange or by virtue of the
shares being represented by depository receipts or any other matter whatever; and
(ii) the allotment (otherwise than pursuant to sub-paragraph (i) above) to any person or persons of equity securities up to an aggregate
nominal amount of £59,000;
and shall expire upon the expiry of the general authority conferred by Resolution 6 above, save that the Company shall be entitled to make
offers or arrangements before the expiry of such power which would or might require equity securities to be allotted or treasury shares sold
after such expiry and the Directors shall be entitled to allot equity securities or sell treasury shares pursuant to any such offer or arrangement
as if the power conferred hereby had not expired.
LIDCO GROUP PLC
Notice of Annual General Meeting Explanatory notes on resolutions
Resolution 1
The Companies Act 1985 (‘the Act’) requires the Directors to lay the before the Company in a general meeting copies of the Company’s
annual accounts and the reports of the Directors and Auditors on those accounts.
Resolution 2
This resolution seeks approval of the Directors’ Remuneration report.
Resolutions 3 and 4
Article 88 (a) of the Articles of Association of the Company specifies the conditions under which Directors must retire and offer themselves for
re-election. Dr O’Brien and Dr Band are due to retire by rotation and approval is sought for their re-election. Dr Band was 70 on 1st August
2006 but the Company’s Articles provide that no director shall be disqualified from re-election as a director solely by reason of his age.
Resolution 5
Section 385 of the Act requires that every public company at each meeting at which accounts are laid to appoint an auditor to hold office until
the conclusion of the next Annual General Meeting at which accounts are to be laid. Section 390 A requires that the remuneration of the
Auditors appointed under section 385 is to be fixed by the Company in general meeting. This resolution proposes the re-appointment of Grant
Thornton UK LLP and authorises the Directors to fix their remuneration.
Resolution 6
Resolution 6 seeks authority under section 80 of the Act for the Directors to allot un-issued shares or other relevant securities up to an amount
equal to approximately one third of the anticipated nominal amount of the Company’s current issued share capital. This equates to 39,400,000
ordinary shares of 0.5p each having an aggregate nominal value of £197,000. The Company’s issued share capital at the date of this notice is
118,335,980 ordinary shares. The authority will expire on the earlier of the 2008 Annual General Meeting and the date 15 months from the
date of this Annual General Meeting.
Resolution 7
Resolution 7 seeks authority for the Directors to allot equity securities for cash,
(i) in connection with a rights issue or other offer of securities to existing shareholders subject to such arrangements as the Directors deem
expedient to deal with such matters as fractional entitlements and legal and practicable problems arising in overseas jurisdictions and
(ii) otherwise free of shareholders’ normal statutory pre-emptive rights under S89 of the Act up to an aggregate nominal amount of £59,000,
representing 11,800,000 shares of 0.5 pence or an amount equal approximately to 10% of the Company’s anticipated issued share capital
at the date of the Annual General Meeting.
The Directors consider that the Company should have a reasonable degree of flexibility to allot equity securities for cash if an opportunity
arises which they consider to be in the Company’s best interests.
LiDCO Group Plc
Annual Report and Accounts 2006/7
44
LIDCO GROUP PLC
Notice of Annual General Meeting (Contd) 2006/7
www.lidco.com
LiDCO Group Plc
Annual Report and Accounts
for the year ended 31 January 2007
LiDCO Group Plc
Sales and Marketing:
Unit M, South Cambridge Business Park
Babraham Road, Sawston
Cambridge CB22 3JH
T: +44 (0)1223 830 666
F: +44 (0)1223 837 241
USA Distribution Office:
Wren Medical Systems
905 Lakeside Drive
Gurnee, IL 60031
T: +1847 625 0600
F: +1847 625 0981
UK Office:
16 Orsman Road
London
N1 5QJ
T: +44 (0)20 7749 1500
F: +44 (0)20 7749 1501
LiDCO Group Plc Annual Report and Accounts 2006/7