REG - Inspiration Health - Half-year Report
03/10/2023 07:00
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RNS Number : 4458O Inspiration Healthcare Group PLC 03 October 2023
Inspiration Healthcare Group plc
("Inspiration Healthcare", the "Company" or the "Group")
Interim Results
Underlying growth from core neonatal and infusion businesses
Inspiration Healthcare Group plc (AIM: IHC), the global medical technology
company, announces its unaudited interim results for the six months ended 31
July 2023.
Financial highlights
· Revenue £20.4 million (H1 2023: £20.5 million)
o Neonatal product revenues grew 4% to £16.1 million driven by sales of the
SLE6000 ventilator
o Infusion product revenues were £4.3 million (H1 2023: £4.9 million) due
to de-stocking (now ended) by a major customer. Excluding this customer,
Infusion revenues grew 18% versus H1 2023
· Gross Margin improved to 48.6% (H1 2023: 45.1%), driven by increased
higher margin ventilator sales
· Adjusted EBITDA(1) £1.8 million (H1 2023: £2.2 million)
· Operating Profit before non-recurring items £0.6 million (H1 2023:
£1.0 million)
· Cash generated by operating activities of £3.5 million (H1 2023:
cash outflow of £0.5 million)
· Net debt(2) reduced to £2.1 million (31 January 2023: £3.8 million)
· Interim dividend of 0.205p per share, unchanged from H1 2023
(1) Earnings before interest, tax, depreciation, share based payments and
non-recurring items
(2) Excluding IFRS16 lease liabilities
Operational highlights (including post period)
· Launched extension of SLE6000 range for non-invasive respiratory
support
· Initiated Medical Device Single Audit Program to access Canadian
market and reduce the need for individual country audits
· Streamlining property portfolio to realise operational efficiencies
as well as cost savings
· Strengthened Board with appointments of Alan Olby as CFO and Marlou
Janssen as Non-Executive Director
· Submitted SLE6000 510k application to FDA for US market - post period
end
· Launched US version of LifeStart, our stabilisation platform for
babies that have had a difficult birth - post period end
· Launched new website for improved customer experience
Investor presentation
The Company will provide a live presentation to investors via the Investor
Meet Company platform on Friday, 6 October 2023 at 11am BST. The presentation
will give an update on the Company and an overview of the Group's interim
results. To register for the presentation, please use this link:
https://www.investormeetcompany.com/inspiration-healthcare-group-plc/register-investor
(https://www.investormeetcompany.com/inspiration-healthcare-group-plc/register-investor)
Neil Campbell, Chief Executive Officer of Inspiration Healthcare Group plc,
commented: "During the first six months we have seen underlying growth in our
core neonatal and infusion businesses, driven by continued customer demand for
our products. We also delivered significant improvements in our gross margins
and operating cash flow placing the Group in a stronger financial position. We
have made significant progress with our US expansion strategy, filing for FDA
approval of the SLE ventilators and launching a version of LifeStart that is
aligned with US user requirements. The headwinds seen in H1 are dissipating
and with a strong pipeline of opportunities we are confident of returning to
growth in the second half. We would like to take this opportunity to thank our
shareholders for their continued support and we look forward to the future
with optimism."
Enquiries:
Inspiration Healthcare Group plc Tel: 0330 175 0000
Neil Campbell, Chief Executive Officer
Alan Olby, Chief Financial Officer
Tel: +44(0)20 3100 2000
Nominated Adviser & Broker
Liberum
Phil Walker
Richard Lindley
Will King
Walbrook PR Ltd (Media and Investor Relations) Tel: +44(0)20 7933 8780 or inspirationhealthcare@walbrookpr.com
(mailto:inspirationhealthcare@walbrookpr.com)
Mob: +44(0) 7876 741 001
Anna Dunphy
Mob: +44(0) 7796 794 663
Stephanie Cuthbert
Mob: +44(0) 7747 515 393
Louis Ashe-Jepson
About Inspiration Healthcare
Inspiration Healthcare (AIM: IHC) designs, manufactures and markets pioneering
medical technology. Based in the UK, the Company specialises in neonatal
intensive care medical devices, which are addressing a critical need to help
to save the lives and improve the outcomes of patients, starting with the very
first breaths of life.
The Company has a broad portfolio of its own products and complementary
distributed products, for use in neonatal intensive care designed to support
even the most premature babies throughout their hospital stay. Its own branded
products range from highly sophisticated capital equipment such as ventilators
for life support through to single-use disposables.
The Company sells its products directly to hospitals and healthcare providers
in the UK and Ireland, where it also distributes a range of advanced medical
technologies for infusion therapy. In the rest of the world the Company has
an established network of distribution partners around the world giving access
to more than 75 countries.
The Company operates from its world-class Manufacturing and Technology Centre
in Croydon, South London and from its facility in Hailsham, East Sussex.
Further information on Inspiration Healthcare can be found at
www.inspirationhealthcaregroup.com (https://inspirationhealthcaregroup.com/)
Chairman's Statement
The Group has seen encouraging growth in our core products during the first
half, which has been a significant driver in improving margins towards
historic levels. Operating cash flow also improved, reducing the level of our
net debt and putting the business in a much stronger financial position.
Overall Group revenue for the period was flat at £20.4 million, with growth
of our core products offset by significant regulatory delays to one of our
partners' key products and de-stocking from one of our leading Infusion
customers.
Our neonatal portfolio consists of our own branded products and complementary
distributed products, enabling us to add value to our neonatal customers by
supplying a broad range of specialist products. However, for distributed
products we are reliant on our partners' supply chain and regulatory pathways.
During 2022, one of our partners' products was discontinued. The next
generation product was expected to gain European CE marking under the Medical
Device Regulations early in 2023. However, due to ongoing regulatory delays
and the lead times for delivery and production scheduling this product is now
expected to be commercially available during the first half of next year. On a
true like-for-like basis excluding the discontinued product, in the period
neonatal revenues grew by 11% compared to H1 2023. Sales of our lead product
range, the SLE6000 ventilator, grew strongly driven by strong demand in
Ireland and Israel and a recovery in China.
Our Infusion business sells to a variety of customers including 'homecare
providers', which look after NHS patients in the community freeing up hospital
beds and improving the quality of life for patients. Unfortunately, one of our
major customers over stocked during the previous 12 months and began a stock
reduction exercise in H1. We have worked with the customer to get their
stock levels back to more normalised levels and the de-stocking process is now
complete and a standard run rate is expected in the second half. Excluding
this customer, Infusion revenues grew by 18% compared to H1 2023 as we
expanded use of the products into new therapy areas, demonstrating continued
underlying growth in sales.
Our aim during the first half was to rebuild our margins and return to cash
generation. During FY23, we had a cash outflow of approximately £13 million,
mainly driven by the £6 million investment in the new Manufacturing and
Technology Centre in Croydon and investment in working capital to ensure we
had stock of components to maintain timely delivery of our products to
customers. I am pleased that during the first half of FY24, we have been cash
positive on an operating basis, our capital expenditure has returned to normal
levels and our net borrowings have reduced from £3.8 million at 31 January
2023 to £2.1 million at 31 July 2023. We continue to have a Revolving Credit
Facility of £5 million and Invoice Discounting facility of up to £5 million
giving the Group headroom of almost £8 million to cover cash flow
requirements.
We have been pleased to welcome two new Board members during the first half. I
am delighted that Alan Olby has joined us as Chief Financial Officer, bringing
a great deal of experience as CFO in a growing Life Science business in both
the public and private markets. Alan has already started to put in new systems
and processes to bring about a higher level of rigour to our forecasting and
financial management.
I am also pleased that we have further strengthened our Board with the
appointment of Marlou Janssen. Marlou brings a wealth of Med Tech expertise to
the Board and her operational experience in Med Tech, especially in the USA,
is second to none. I am sure she will play an important role in our strategic
development over the coming years and has already proven insightful and
helpful regarding our plans for international growth.
Operational Review
In March, we launched an extension to our leading range of specialist neonatal
ventilators, which facilitate precise, controlled ventilation for critically
ill infants. We now have three variants of the SLE6000, which have been
specifically designed to meet the different, specialist healthcare needs of
the smallest neonates across critical care, high dependency care and
non-invasive respiratory support. They all offer new 'non-invasive modes',
which allow babies who are less sick to be supported by the ventilator,
therefore accessing a large part of the market that was previously closed to
the product.
The USA has always been an important strategic market for the Company and we
remain focused on expanding our USA presence. In August this year, we
submitted a 510K application to the FDA for the SLE6000 ventilator. Although
there is no guarantee of approval, we hope to launch two variants of the
ventilator along with accessories and other complementary products in the
second half of 2024. We believe this represents a significant potential
commercial opportunity for the Company, given existing ventilators available
in the US, size of the market, and the world wide acceptance of the SLE6000 as
a specialist neonatal ventilator.
Also in the USA, we have recently launched a new version of our LifeStart(TM)
product, which is more aligned with US user requirements by allowing US
manufactured accessories to be added to the platform. LifeStart(TM) is a
specialist unit that can be used as a stabilisation platform for babies that
have experienced a difficult birth. The platform keeps the baby close to its
mother/family whilst the clinician determines when to clamp and cut the
umbilical cord. We are working with our distributor to build out marketing
plans as feedback from the first customers grows.
We are continuing to develop products through our R&D team and are
currently finalising a new respiratory device which provides non-invasive
respiratory support for babies that do not need full intensive care support.
The device has been developed alongside one of our partners, who will sell a
similar device in the adult market. We expect to launch this product in the
second half. Additionally, we are now determining the next phase for Project
Wave, after the trial at Brighton and Sussex Universities Hospital NHS Trust
showed user and patient acceptance of the product and we can start to look at
wider market research to determine pricing and how our commercial launch could
be initiated.
The Company has commenced the process to be certified under the Medical Device
Single Audit Program (MDSAP). This allows a single MDSAP recognised auditing
organisation to conduct a regulatory audit of a medical device manufacturer on
behalf of all the regulatory authorities participating in the program. It
combines various Quality Management requirements from several regulatory
jurisdictions including the USA, Europe, Japan, Australia and Canada. As we
start to roll out our North America strategy it is important to have the most
efficient way of complying with local regulations for the greatest number of
products. Our quality management systems have now been audited to these
regulations and we look forward to gaining certification, allowing our
products to be registered in Canada as well as reducing the need for
individual country audits.
Our Infusion division made substantial progress during the period. We have
invested in extra customer facing employees to build our customer base and
expand the use of the products into new therapy areas, which has resulted in
initial sales. This diversification is an important part of our future growth
strategy and we will continue to launch new products from our partners in this
area of our business over the next twelve months.
As we have brought the three operating companies together we have created a
new website that gives a better user experience to be able to access more
information on Group products on one site. This also has been built to allow
future features to be added to give a better user experience for product
training along with the potential for e-commerce.
In order to bring our teams together at our new Manufacturing and Technology
Centre in Croydon, during the first half we took the decision to close our
site in Earl Shilton, Leicestershire, where we had an operational base for 15
years. Inevitably this impacted some staff who could not relocate to our
Croydon facility, and we are sad to see them leave us but thank them for their
hard work and loyalty over the years and wish them well for the future. Our
Crawley facility has also now closed, and all our Head Office functions have
moved to Croydon, reducing overheads and improving operational efficiency.
While these changes resulted in some one-off exceptional charges in the first
half, we expect to realise annual cash savings of £0.2 million as a result.
Financial Review
Revenue for the six months to 31 July 2023 totalled £20.4 million (H1 2023:
£20.5 million). Whilst broadly flat at a headline level, this masks an
encouraging underlying performance. The neonatal portfolio was held back by
the loss of revenue from a distributed product which contributed £1.0 million
in H1 2023 as explained above. On a like-for-like basis excluding this
distributed product, the neonatal portfolio grew by 11% in the period, driven
by sales of the SLE6000 ventilator.
Our infusion products delivered revenue of £4.3 million in the period (H1
2023: £4.9 million) a decline of 14% versus last year. However, adjusting for
the customer de-stocking during the period, underlying sales grew by 18%,
continuing the growth trend seen in FY23.
Gross margin improved to 48.6% in the period compared to 45.1% in the same
period last year. This improvement has been down to product mix. As we
commented in FY23, our margins were reduced due to product mix and we expected
them to return to historic levels as the mix of products became more
favourable, which has been the case. Although mix can vary during the second
half, we expect margins to stabilise around their current level.
Operating expenses totalled £9.3 million in the period (H1 2023: £8.2
million) reflecting wage inflation increasing employment costs which are the
largest category within our overheads, as well as increasing travel expenses
with overseas markets re-opening, increased regulatory fees and the impact of
exchange rate movements.
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 July 31 July 31 January
2023 2022 2023
£'000 £'000 £'000
Operating profit 150 1,049 431
Non-recurring items 406 - 1,158
Adjusted operating profit 556 1,049 1,589
Depreciation 653 601 1,354
Amortisation 462 466 931
Share based payment 89 87 132
Adjusted EBITDA 1,760 2,203 4,006
Adjusted EBITDA(1) amounted to £1.8 million, a decrease of 20% over H1 2023
as the increased gross profit was offset by increased in operating expenses.
Operating profit for the period was £0.2 million after the inclusion of
non-recurring charges of £0.4 million largely resulting from the restructure
of operations with the closure of the offices at Earl Shilton and Crawley,
which is now complete.
Finance costs increased to £0.3 million in the period (H1 2023 £0.2 million)
as a result of increases in interest rates and higher average net debt
compared to the prior period.
Net Debt as at 31 July 2023 was £2.1 million, a net inflow of £1.7 million
for the first half. Net Debt has been reduced as a result of EBITDA generation
and a focus on reducing working capital. Headroom against the Group's bank
facilities (£5 million RCF and £5 million invoice discounting facility) was
£7.9 million at 31 July providing significant flexibility to manage working
capital flows.
Dividend
We confirm that our interim dividend payment will remain at the same level as
H2 2023 at 0.205p per share. This will be payable to shareholders on the
register on 24 November 2023 and will be paid on 22 December 2023. The
shares will go ex-dividend on 23 November 2023.
Outlook
The Company continues to execute its strategy to drive growth through
maximising sale of existing products, geographic expansion and R&D
investment to broaden its product portfolio and is well positioned to benefit
from the growth of the neonatal and infusion markets.
With a strong pipeline of opportunities for both neonatal and infusion
products, combined with the underlying growth seen in the first half, we are
confident in returning to growth in the second half and expect to maintain the
improvement in margins for the remainder of the year.
Mark Abrahams
Chairman
3 October 2023
(1)Earnings before interest, tax, depreciation, share based payments and
non-recurring items
Unaudited Consolidated Income Statement and Statement of Total Comprehensive
Income
For the six months ended 31 July 2023
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 July 31 July 31 January
2023 2022 2023
Notes £'000 £'000 £'000
Revenue 20,370 20,523 41,233
Cost of sales (10,472) (11,261) (23,140)
Gross profit 9,898 9,262 18,093
Operating expenses (9,342) (8,213) (16,504)
Operating profit (before non-recurring costs) 556 1,049 1,589
Non-recurring costs 4 (406) - (1,158)
Operating profit (after non-recurring costs) 150 1,049 431
Finance income 30 18 40
Finance cost (320) (182) (395)
(Loss) / Profit before tax (140) 885 76
Income tax 5 84 (119) 196
(Loss) / Profit attributable to the owners of the parent company and total (56) 766 272
comprehensive (loss)/income for the period
Earnings per share, attributable to owners of the parent company
Basic expressed in pence per share 7 (0.08p) 1.57p 0.40p
Diluted expressed in pence per share 7 (0.08p) 1.55p 0.39p
Unaudited Consolidated Statement of Financial Position
As at 31 July 2023
Unaudited Unaudited Audited
As at As at As at
31 July 31 July 31 January
2023 2022 2023
Restated*
£'000 £''000 £'000
Notes
Assets
Non-current assets
Intangible assets 17,251 16,357 17,004
Property, plant and equipment 7,235 5,692 7,497
Right of use assets 5,680 7,025 5,970
Deferred tax asset 373 136 324
30,539 29,210 30,795
Current assets
Inventories 10,493 8,739 9,935
Trade and other receivables 10,167 10,147 11,888
8
Cash and cash equivalents 1,948 3,033 2,276
22,608 21,919 24,099
Total assets 53,147 51,129 54,894
Liabilities
Current liabilities
Trade and other (6,849) (7,446) (5,812)
payables
9
Lease liabilities (770) (760) (822)
Borrowings - - (2,079)
Contract liabilities (449) (319) (531)
(8,068) (8,525) (9,244)
Non-current liabilities
Lease (5,852) (6,541) (6,176)
liabilities
Borrowings (4,000) - (4,000)
(9,852) (6,541) (10,176)
Total liabilities (17,920) (15,066) (19,420)
Net assets 35,227 36,063 35,474
Shareholders' equity
Called up share capital 6,823 6,812 6,813
Share premium account 18,905 18,838 18,842
Reverse acquisition reserve (16,164) (16,164) (16,164)
Share based payment reserve 421 365 405
Retained earnings 25,242 26,212 25,578
Total equity 35,227 36,063 35,474
*A prior period adjustment was made in relation to deferred tax in the Audited
Financial Statements for the year ended 31 January 2023 and consequently,
adjustments to Goodwill and Deferred Tax have been made in the Consolidated
Statement of Financial Position as at 31 July 2022. Please see note 10 for
further detail.
Unaudited Consolidated Statement of Changes in Shareholders' Equity
For the six months ended 31 July 2023
Called up Share Capital Reverse acquisition reserve Share based payment reserve Retained earnings Total
equity
Share Premium
£'000 £'000 £'000 £'000 £'000 £'000
6,812 (16,164) 278 25,725 35,489
At 1 February 2022 (restated) 18,838
Profit for the period 1 February 2022 to 31 July 2022 - - 766 766
- -
Total comprehensive income for the period - - 766 766
- -
Transactions with owners in their capacity of owners
Dividends - -- -- -- (279) (279)
Employee share scheme expense - - - 87
- 87
Total transactions with owners - - 87 (279) (192)
-
At 31 July 2022 (restated) 6,812 (16,164) 365 26,212 36,063
18,838
Loss for the period 1 August 2022 to 31 January 2023 - - - (494) (494)
-
Total comprehensive loss for the period - - - (494) (494)
-
Transactions with owners in their capacity of owners
Dividends - - - - (140) (140)
Issue of Ordinary Shares, net of transaction costs and tax 1 - (5) - -
4
Employee share scheme expense - - 45 - 45
-
Total transactions with owners 1 - 40 (140) (95)
4
At 31 January 2023 6,813 18,842 (16,164) 405 25,578 35,474
Loss for the period 1 February 2023 to 31 July 2023 - - - (56) (56)
-
Total comprehensive loss for the period - - - (56) (56)
-
Transactions with owners in their capacity of owners
Dividends - - - - (280) (280)
Issue of Ordinary Shares, net of transaction costs and tax 10 - (73) - -
63
Employee share scheme expense - - 89 - 89
-
Total transactions with owners 10 - 16 (280) (191)
63
At 31 July 2023 6,823 (16,164) 421 25,242 35,227
18,905
Unaudited Consolidated Statements of Cash flows
For the six months ended 31 July 2023
Unaudited Unaudited Audited
6 months 6 months Year
ended Ended ended
31 July 31 July 31 January
2023 2022 2023
£'000 £'000 £'000
Cash flows from operating activities
(Loss)/Profit for the period/year (56) 766 272
Adjustments for:
Depreciation and amortisation 1,115 1,067 2,285
Employee share scheme expense 89 87 132
Loss/(profit) on disposal of tangible assets 125 3 (26)
Loss on disposal of intangible assets - - 6
Loss on disposal of right of use assets 4 - -
Remeasurement of leases 36 - (25)
Impairment of right of use assets - - 446
Finance income (30) (18) (40)
Finance expense 320 182 395
Income tax (credit)/expense (84) 119 (196)
1,519 2,206 3,249
Increase in inventories (558) (2,290) (3,486)
Decrease/(increase) in trade and other receivables 1,411 (1,125) (2,501)
Increase/(decrease) in trade and other payables 1,037 908 (740)
(Decrease)/increase in contract liabilities (82) (206) 7
Cash flows generated from/(used in) operations 3,327 (507) (3,471)
Taxation received 189 - -
Net cash generated from/(used in) operating activities 3,516 (507) (3,471)
Cash flows from investing activities
Bank interest received 9 2 5
Interest on lease receivables 21 16 35
Purchase of property, plant and equipment (206) (4,067) (6,226)
Purchase of intangible assets (63) (54) (140)
Capitalised development costs (646) (944) (1,976)
Net cash used in investing activities (885) (5,047) (8,302)
Cash flows from financing activities
Principal elements of lease payments (435) (315) (697)
Principal elements of lease receipts 150 105 217
Interest on lease liabilities (140) (152) (300)
Interest paid on loans and borrowings (88) (25) (84)
Bank interest paid (87) - -
Dividends paid to the holders of the parent (280) (279) (419)
(Repayment of)/proceeds from loans and borrowings (2,079) - 6,079
Net cash (used in)/generated from financing activities (2,959) (666) 4,796
Net decrease in cash and cash equivalents (328) (6,220) (6,977)
Cash and cash equivalents at the beginning of the period/year 2,276 9,253 9,253
Cash and cash equivalents at the end of the period/year 1,948 3,033 2,276
Notes to the Unaudited Interim Financial Statements
For the six months ended 31 July 2023
1. Basis of Preparation
This condensed consolidated interim financial information for the six months
ended 31 July 2023 have been prepared in accordance with AIM rule 18 in
relation to half year reports. This information should be read in conjunction
with the annual financial statements for the year ended 31 January 2023, which
have been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union.
2. Going concern basis
The Group meets its day-to-day working capital requirements through its cash
resources and borrowing facilities. At 31 July 2023 net debt of the Group was
£2.1 million and available facilities of up to £10 million provided cash
headroom of up to £7.9 million. Consequently, the Directors believe that the
Group has sufficient liquidity to meet its obligations as they fall due and
consider it appropriate to continue to adopt the going concern basis in
preparing its consolidated interim financial statements.
3. Interim financial information
The interim financial information for the period ended 31 July 2023 is
unaudited and does not constitute statutory accounts within the meaning of
Section 434 of the Companies Act 2006. The interim financial information for
the period ended 31 July 2022 is also unaudited. The audited accounts for the
year ended 31 January 2023 for Inspiration Healthcare Group plc were approved
by its Board of Directors on 11 May 2023 and have been delivered to the
Registrar of Companies with an unqualified audit report.
The Company's annual report and financial statements for the year ended 31
January 2023 were prepared under International Financial Reporting Standards
(IFRS) as adopted by the European Union, International Financial Reporting
Interpretations Committee (IFRIC) interpretations and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS. The standards
used are those published by the International Accounting Standards Board
(IASB) and endorsed by the EU at the time of preparing those statements.
4. Non-recurring items
Non-recurring items are items which, given their nature, management believes
should be disclosed separately for the purposes of presenting the results of
the Group and the earnings per share figures. During the six months ending
31 July 2023, the Group recognised the following non-recurring items:
Unaudited Unaudited Audited
6 months 6 months Year
Ended Ended Ended
31 July 31 July 31 January
2023 2022 2023
£'000 £'000 £'000
Impairments of leased properties - - 446
Restructuring costs 266 - -
Aborted acquisition costs - - 467
Other 140 - 245
Total 406 - 1,158
Restructuring costs include asset impairments, severance and related costs
following the Group's decision to close the Earl Shilton and Crawley offices
to consolidate the property portfolio and centralise the business in Croydon.
Other includes project consultancy costs and legal fees relating to a
contract dispute.
Notes to the Unaudited Interim Financial Statements (continued)
For the six months ended 31 July 2023
5. Taxation
Unaudited Unaudited Audited
6 months 6 months Year
Ended Ended Ended
31 July 31 July 31 January
2023 2022 2023
£'000 £'000 £'000
UK corporation tax (credit)/charge in the period (35) 168 42
Deferred tax credit in the period (49) (49) (238)
Tax on (loss)/profit on ordinary activities (84) 119 (196)
6. Dividends
The final dividend for the year ended 31 January 2023 of 0.41 per share (2022:
0.41p per share) was paid to shareholders on 28 July 2023.
The Board has declared an interim dividend of 0.205p per share (H1 2023:
0.205p per share) to be paid on 22 December 2023.
7. Earnings per ordinary share
Basic earnings per share for the period is calculated by dividing the profit
attributable to ordinary shareholders for the year after tax by the weighted
average number of shares in issue.
Basic diluted earnings per share is calculated by adjusting the weighted
average number of ordinary shares in issue to assume conversion of all
potential dilutive ordinary shares.
Unaudited Unaudited Audited
6 months 6 months Year
Ended Ended Ended
31 July 31 July 31 January
2023 2022 2023
£'000 £'000 £'000
(Loss)/Profit attributable to equity holders of the Company (56) 766 272
Add back non-recurring items 406 - 1,158
Add back amortisation of intangible assets acquired through business 302 302 605
combinations
Numerator for underlying earnings per share calculation 652 1,068 2,035
Notes to the Unaudited Interim Financial Statements (continued)
For the six months ended 31 July 2023
The weighted average number of shares in issue and the diluted weighted
average number of shares in issue were as follows:
Unaudited Unaudited Audited
6 months 6 months Year
Ended Ended Ended
31 July 31 July 31 January
2023 2022 2023
Number of Ordinary Shares in issue at the beginning of the period/year 68,130,606 68,121,447 68,121,447
Weighted average number of shares issued during the period/year 67,727 - 5,771
Weighted average number of ordinary shares in issue during the period/year for 68,198,333 68,121,447 68,127,218
the purposes of basic earnings per share
Dilutive effect of potential Ordinary shares:
Share options 1,121,012 866,052 691,392
Diluted weighted number of shares in issue for the purpose of diluted earnings 69,319,345 68,987,499 68,818,610
per share
The basic and diluted earnings per share are as follows:
Unaudited Unaudited Audited
6 months 6 months Year
Ended Ended Ended
31 July 31 July 31 January
2023 2022 2023
pence pence pence
Basic earnings per share (0.08) 1.57 0.40
Adjust for:
Non-recurring items 0.60 - 1.70
Amortisation of intangible assets acquired through business combinations 0.44 0.44 0.89
Adjusted basic earnings per share 0.96 2.01 2.99
Diluted earnings per share (0.08) 1.55 0.39
Adjusted for:
Non-recurring items 0.59 - 1.68
Amortisation of intangible assets acquired through business combinations 0.44 0.44 0.88
Adjusted diluted earnings per share 0.95 1.99 2.95
Notes to the Unaudited Interim Financial Statements (continued)
For the six months ended 31 July 2023
8. Trade and Other Receivables
Audited
Unaudited Unaudited 31 January 2023
31 July 2023 31 July 2022 £'000
£'000 £'000
Trade receivables 8,802 9,019 10,393
Loss allowance (321) (230) (266)
Net trade receivables 8,481 8,789 10,127
UK corporation tax receivable - - 143
Other taxes and social security - - 304
Net investment in leases 620 436 616
Other receivables 350 117 183
Prepayments and accrued income 716 805 515
Total 10,167 10,147 11,888
9. Trade and Other Payables
Audited
Unaudited Unaudited 31 January 2023
31 July 2023 31 July 2022 £'000
£'000 £'000
Trade payables 4,841 4,852 4,081
Other taxes and social security 686 212 257
Other payables 523 289 434
Accrued expenses 799 2,093 1,040
Total 6,849 7,446 5,812
10. Prior year adjustment
A Prior period adjustment has been made in respect of the Group's deferred
tax. In FY2021, the Group recognised a deferred tax liability relating to
taxable temporary differences that arose from the recognition of intangibles
on the acquisition of SLE Limited in July 2020. At the time of the
acquisition, a deferred tax asset was not recognised. However, accounting
standards require a deferred tax asset to be recognised to the extent of the
existing deferred tax liability and therefore a deferred tax asset should have
been recognised in FY2021.
This was corrected by restating each of the affected financial statement line
items for prior periods at the time of the audited financial statements for
the year ended 31 January 2023 and as a result, the 31 July 2022 interim
results presented herein have also been restated accordingly.
Further information on the financial impact of the prior period adjustment can
be found in the Group's audited accounts for the year ended 31 January 2023.
11. Related party transactions
Lease of Leicestershire facility
The Leicestershire facility at Earl Shilton is rented on an arms length basis
from a self-invested pension plan controlled by Neil Campbell and others. In
April 2023, the Directors made the decision to close the Earl Shilton office,
in order to further consolidate the Group's properties, reduce overheads and
bring teams together at our new Manufacturing and Technology Centre in
Croydon. All affected employees have been notified of this decision and the
office closed at the end of September 2023.
Employment of related parties
Several close family members of the Directors are employed by the Group, and
they are remunerated at a fair market rate which is commensurate with their
roles.
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