REG - Inspecs Group PLC - Full Year Trading Update

InspecsAnnouncement

26/01/2023 07:01

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RNS Number : 8768N  Inspecs Group PLC  26 January 2023

26 January 2023

Inspecs Group plc

("Inspecs" or "the Group")

 

Full Year Trading Update

 

Inspecs Group plc, a leading designer, manufacturer, and distributor of
eyewear (sunglasses, optical frames, lenses and low vision products), today
announces a trading update for the year ended 31 December 2022 ahead of
reporting its final results on 27 April 2023.

 

Highlights

·    Full year trading in line with revised expectations

·    China production volume increased in 2022 despite COVID-19
restrictions

·    Norville losses narrowed in Q4 and further progress continues to be
made

·    Skunk Works generated its first commercial income

·    Operational efficiencies expected to deliver further benefits in 2023

 

The Group's trading performance for the year, despite COVID-19 restrictions
mainly in China and Vietnam, was in line with expectations as revised in
October 2022, delivering Group revenue of $246.0m (2021: $246.5m). A breakdown
of this revenue performance is shown below:

 

 Revenue ($m)              12 months to 31 December 2021  12 months to 31 December 2022  Movement

 Existing business         246.3                          233.4                          (12.9)
 Acquisitions during 2021  0.2                            12.6                           12.4
 Total                     246.5                          246.0                          (0.5)

 

On a constant exchange rate basis(1):

 Revenue ($m)              12 months to 31 December 2021  12 months to 31 December 2022  Movement

 Existing business         246.3                          256.9                          10.6
 Acquisitions during 2021  0.2                            13.1                           12.9
 Total                     246.5                          270.0                          23.5

 

1. Constant exchange rates: figures at constant exchange rates have been
calculated using the average exchange rates in effect for the corresponding
period in the relevant comparative year.

 

On a constant exchange rate basis(1), revenue increased by $23.5m from $246.5m
to $270.0m, an increase of 9.5%. In Asia, our factories maintained production
throughout most of the year, despite both supply chain and COVID-19
restrictions.

 

The Group saw a decrease in order flow in Q3 2022 following a slowdown in our
German, French and other European markets, resulting in a reduction of sales
in Q4. As a result, the Board implemented a cost reduction programme to
improve operational efficiency in 2023. The Group's other markets remain in
line with management expectations. The Group order book as at 31 December 2022
was $41.9m (31 December 2021: $42.0m on a constant currency basis).

 

The Group experienced several headwinds in 2022, in particular, a large
decrease in the Euro against the US Dollar which had a material impact on the
reporting of our European business. Freight costs, which are now reducing,
were at record highs in 2022, and material, product and operating costs all
rose significantly in the year. Management are making good progress at
Norville, having cut costs to streamline the business and are now focused on
growing revenue. Our research and development department, Skunk Works,
generated its first commercial revenues in 2022 and management expect further
growth in 2023.

 

Financial position

The Group's net debt (excluding leases) increased by $1.4m during the year to
$34.1m (31 December 2021: $32.7m). Following the Group's trading update in
October 2022, the Group agreed with its lender, HSBC, to a covenant waiver at
31 December 2022 and a relaxation of covenants through to 30 September 2023 to
provide additional headroom. As a result, the Board will not be proposing a
final dividend for 2022 or a dividend for 2023.

 

Outlook

The Group will continue to seek operational efficiencies and reduce costs
where appropriate while maintaining execution of its growth strategy. The
Group anticipates beginning construction of its new manufacturing facilities
in H2 2023 funded from free cashflow. The Group enters 2023 with a good order
book and is confident that it will enhance value for all stakeholders.

 

Richard Peck, Chief Executive Officer commented: "The Group experienced
significant financial and trading headwinds in 2022 and the Board has
implemented both cost reduction and operational efficiency programmes to
ensure a better performance is delivered in 2023. Having taken over as CEO on
1 December 2022, I am confident that these programmes will ensure the Group is
fit for the future and best placed to take advantage of the exciting growth
opportunities that I see in the market."

 

 

For further information please contact:

 

 Inspecs Group plc                         via FTI Consulting

 Richard Peck (CEO)                        Tel: +44 (0) 20 3727 1000

 Chris Kay (CFO)

 Peel Hunt (Nominated Adviser and Broker)  Tel: +44 (0) 20 7418 8900

 Adrian Trimmings

 Andrew Clark

 Lalit Bose

 FTI Consulting (Financial PR)             Tel: +44 (0) 20 3727 1000

 Alex Beagley

 Harriet Jackson

 Alice Newlyn

About Inspecs Group plc

 

INSPECS is a Bath-based designer, manufacturer and distributor of eyewear
frames and optically advanced spectacle lenses. The Group produces a broad
range of frames and lenses, covering optical, sunglasses and safety, which are
either "Branded" (either under licence or under the Group's own proprietary
brands), or "OEM" (including private label on behalf of retail customers, as
well as unbranded).

INSPECS aims to be the leader in eyewear solutions through its
vertically-integrated business model and has adopted a three-pillar growth
strategy to achieve this: (i) continue to grow organically; (ii) undertake
further acquisitions (and drive value through leveraging the Group's internal
capabilities); and (iii) extend the Group's manufacturing capacity.

INSPECS customers include global optical and non-optical retailers, global
distributors and independent opticians, with its distribution network covering
over 80 countries and reaching approximately 75,000 points of sale.

INSPECS has operations across the globe: with offices and subsidiaries in the
UK, Germany, Portugal, Scandinavia, the US and China (including Hong Kong,
Macau and Shenzhen), and manufacturing facilities in Vietnam, China, the UK
and Italy.

More information is available at: https://inspecs.com (https://inspecs.com)
 

 

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