REG - Intelligent Ultrasnd - Half-year Report
14/08/2024 07:00
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RNS Number : 3283A Intelligent Ultrasound Group PLC 14 August 2024
Intelligent Ultrasound Group plc
Half Year Results 2024
Intelligent Ultrasound Group plc (AIM: IUG), the 'classroom to clinic'
ultrasound company, specialising in artificial intelligence (AI) software and
simulation, announces its unaudited half year results to 30 June 2024.
Post period end on 18 July 2024, the Group announced that it had entered into
a conditional sale and purchase agreement for the sale of its Clinical AI
business (Intelligent Ultrasound Limited and certain other clinical AI related
assets) to GE HealthCare for an enterprise value of £40.5 million on a cash
free/debt free basis. The proposed sale, that excludes the NeedleTrainer and
NeedleTrainer Plus products, was approved by shareholders on 6 August 2024 and
is now only subject to regulatory approval expected by the end of September
with completion of the sale to follow in October.
The results from the Clinical AI business have been reported as a discontinued
operation and the remaining Simulation business (now including NeedleTrainer)
as continuing operations.
Positives in the first half of 2024 were:
· ROW reseller sales growing 37% to £1.6m (H1 2023: £1.1m)
· NeedleTrainer revenues increased to £1.0m (H1 2023: £0.5m)
· Administrative costs reduced by £0.1m to £4.0m (H1 2023: £4.1m)
and include a number of cost savings across the Group
· Cash burn reduced significantly to £2.0m (H1 2023: £3.8m) leaving
cash as at 30 June 2024 of £1.0m (31 December 2023: £3.0m)
However, revenue from continuing operations in the first half of the year
declined by 22% to £4.5m (H1 2023: £5.8m). This results from a decline in
the UK and North American markets.
· The decline in UK sales was expected, due to previously flagged NHS
budget pressure, reducing sales by 58% to £0.8m (H1 2023: £1.9m)
· However, the 23% decline in North America sales to £2.2m (H1 2023:
£2.8m) was not anticipated, with nearly £0.7m of expected sales held in
delivery backlog or purchase order delays
The Group loss after tax for the period was £2.0m (H1 2023: £1.2m), of which
£1.3m (H1 2023: £0.5m) relates to continuing operations and £0.7m (H1 2023:
£0.8m) relating to discontinued operations.
Riccardo Pigliucci, Chair of Intelligent Ultrasound commented:
"We have spent the last seven years successfully creating first-to-market AI
products and have built a strong capability in real-time automated ultrasound
image analysis, so we are delighted that our achievements have been recognised
by GE HealthCare.
The remaining Simulation Business had a difficult trading period in the first
half of this year with a material decline in sales in the UK due to NHS
budgeting constraints and a decline in the US due to delivery backlog and
purchase order delays. However, going forward Simulation will be boosted by
the inclusion of the NeedleTrainer range previously reported in our Clinical
AI business, and the Board will use the time between signing and completion to
conduct a comprehensive review of the business.
It is the Board's intention to make a material return of capital following a
review of the growth potential and capital requirements of the
post-transaction business and is taking legal and tax advice on structure of a
return. An announcement detailing the proposed use of funds and strategic
direction for the Company is expected to be made by the time the sale
completes."
Enquiries:
Intelligent Ultrasound Group plc www.intelligentultrasound.com (http://www.intelligentultrasound.com)
Stuart Gall, CEO Tel: +44 (0)29 2075 6534
Helen Jones, CFO
Cavendish Capital Markets Limited
(Nominated advisor and broker)
Giles Balleny (Corporate Finance) Tel: +44 (0)20 7397 8900
Nigel Birks (ECM)
Dale Bellis (Sales)
Cardew Group - PR Advisors Intelligentultrasound@ (mailto:Intelligentultrasound@cardewgroup.com) c
(mailto:Intelligentultrasound@cardewgroup.com) ardewgroup
(mailto:Intelligentultrasound@cardewgroup.com) .com
(mailto:Intelligentultrasound@cardewgroup.com)
Allison Connolly Tel: +44 (0)7587 453955
Emma Pascoe-Watson Tel: +44 (0)7774 620415
Jessica Pilling Tel: +44 (0)7918 584573
About Intelligent Ultrasound Group
Intelligent Ultrasound (AIM: IUG) is one of the world's leading 'classroom to
clinic' ultrasound companies, specialising in real-time hi-fidelity virtual
reality simulation for the ultrasound training market ('classroom') and
artificial intelligence-based clinical image analysis software tools for the
diagnostic medical ultrasound market ('clinic'). Based in Cardiff in
the UK and Atlanta in the US, the Group has two revenue streams:
Simulation
Real-time hi-fidelity ultrasound education and training through simulation.
Our main products are the ScanTrainer obstetrics and gynaecology training
simulator, the HeartWorks echocardiography training simulator,
the BodyWorks Eve Point of Care and Emergency Medicine training simulator
with Covid-19 module and the new BabyWorks Neonate and Paediatric training
simulator and now includes NeedleTrainer that teaches real-time
ultrasound-guided needling and incorporates the training version of ScanNav
Anatomy PNB. To date over 1,700 simulators have been sold to over 800
medical institutions around the world.
Clinical AI software
Deep learning-based algorithms to make ultrasound machines smarter and more
accessible using our proprietary ScanNav ultrasound image analysis technology.
Current products on the market utilising this technology are GE
HealthCare's SonoLyst software that is incorporated in their Voluson Expert,
Signature and SWIFT ultrasound machines; ScanNav Anatomy PNB that simplifies
ultrasound-guided needling by providing the user with real-time AI-based
anatomy highlighting for a range of medical procedures.
www.intelligentultrasound.com (http://www.intelligentultrasound.com/)
NOTE: ScanNav Anatomy PNB is CE approved and cleared for sale in the US by the
FDA but is not available for sale in any other territory requiring government
approval for this type of product.
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
Sale of clinical AI business to GE HealthCare
Post period end on 18 July 2024, the Group announced that it had entered into
a conditional sale and purchase agreement for the sale of the Clinical AI
business (Intelligent Ultrasound Limited and certain other clinical AI related
assets) to GE HealthCare for an enterprise value of £40.5 million on a cash
free/debt free basis. The proposed sale, which excludes the NeedleTrainer and
NeedleTrainer Plus products, was approved by shareholders on 6 August 2024 and
is now only subject to regulatory approval expected by the end of September
with completion of the sale expected in October.
Transaction highlights:
· Sale of the Clinical AI Business to GE HealthCare agreed for an
enterprise value of £40.5 million.
· Disposal excludes the NeedleTrainer/Trainer Plus product which
will be retained within the remaining Simulation Business.
· The Simulation Business generated total revenues of £10.0
million in the financial year ended 31 December 2023 (including £0.8m
relating to the NeedleTrainer product).
· The consideration represents an implied value of 12.4p per
Ordinary Share on current issued share capital and a premium of 70.9 per cent
to the Ordinary Share price on 17 July 2024 and a premium of 30.9 per cent to
the volume weighted share price for the last 12 months. The Proposed
Transaction also values the Clinical AI Business at 33.8 times full year 2023
revenues of that business.
· The transaction is subject to confirmation from the Competition
and Markets Authority under the Enterprise Act, and the Investment Security
Unit under the National Security and Investment Act, that they do not oppose
the transaction.
· It is the Board's intention to make a material return of capital
following a review of the growth potential and capital requirements of the
post-transaction business and taking legal and tax advice on the structure of
a return.
· An announcement detailing the proposed use of funds and future
strategic direction for the post-transaction business is expected to be made
by the time of completion of the Proposed Transaction, which, dependent on the
timing of the Regulatory Consents, is expected to be in October this year.
Full details on the sale can be found in the 'Proposed disposal of the
Clinical AI business' Circular
(https://www.intelligentultrasound.com/wp-content/uploads/2024/07/Notice-of-General-Meeting-6th-August.pdf)
.
Continuing operations (Simulation including NeedleTrainer)
Revenue
As we will be retaining the NeedleTrainer products in the simulation portfolio
post the GE HealthCare transaction, we have reclassified the NeedleTrainer
revenue into the simulation revenue for H1 2024 and its comparative period, H1
2023.
Simulation revenue (including NeedleTrainer) in the first half of the year
declined by 22% to £4.5m (H1 2023: £5.8m).
This resulted from a decline in the UK and North American markets:
· The decline in UK sales was expected, due to previously flagged NHS
budget pressure, reducing sales by 58% to £0.8m (H1 2023: £1.9m)
· However, the 23% decline in North America sales to £2.2m (H1 2023:
£2.8m) was not anticipated, with nearly £0.7m of expected sales held in
either delivery backlog or purchase order delays
Positives in the first half were:
· Reseller sales (ROW) increasing by 37% to £1.6m (H1 2023: £1.1m),
with growing sales into China, the Middle East and Germany
· NeedleTrainer related sales doubling to £1.0m (2023: £0.5m)
Research and Development
In the period we focussed on developing the:
· HeartWorks cardiac updates to our BabyWorks 2.0 simulator
· New needling functionality for our BodyWorks POCUS simulator
· New Endometriosis Plus Compact simulator
· Updates to NeedleTrainer including new video and e-learning content
and additional needle lengths
Discontinued operations (Clinical AI excluding NeedleTrainer)
Revenue
Clinical AI related revenue increased by 94% to £0.4m (H1 2023: £0.2m) and
is based on sales of three AI products:
· Our ScanNav Assist AI technology drives GE HealthCare's SonoLyst X/IR
and SonoLystLive software, the world's first fully integrated ultrasound AI
tool that automatically and in real-time recognises the 21 views recommended
for fetal sonography imaging. SonoLystLive is now a standard feature on the
Voluson Expert 22 and 20; and in April 2024 was launched as a standard on the
new Voluson Signature 20 ultrasound machine. SonoLystLive is also an optional
extra on the Voluson Expert 18 and Signature 18 ultrasound machines and
SonoLyst X/IR is an optional extra on the SWIFT ultrasound machines.
· ScanNav Anatomy Peripheral Nerve Block ("PNB") is our own CE and FDA
cleared, direct-to-market device, that simplifies ultrasound-guided needling
by providing the user with real-time AI-based anatomy highlighting for a range
of medical procedures.
· ScanNav FetalCheck is a pre-regulatory approval AI based software
that enables an unskilled user to automatically measure gestational age. It
continues to be used in the largest ever trial on the use of aspirin to
prevent pre-eclampsia that is being conducted in Kenya, Ghana and South Africa
in a trial funded by the Bill & Melinda Gates Foundation and led by the
international NGO Concept Foundation.
Board Changes
On completion of the GE HealthCare transaction, Nicholas Sleep will be
resigning as Director and joining the GE HealthCare team. I would like to take
this opportunity to thank Nicholas for his drive and superb contribution to
building such a successful Clinical AI operation and adding so much to the
Group, both commercially and technically. He and his excellent team will all
be missed.
Operations
We continue to operate out of our head office in the centre of Cardiff, the
North America office in Alpharetta, Georgia and warehouse operation in
Caerphilly. We successfully operate a flexible hybrid work environment,
whereby the majority of employees combine office and at-home working that is
appropriate to the Company and employee.
Environmental, Social, and Governance (ESG)
In May we published our third ESG report in the 2023 annual report and
accounts. We continue to instigate new initiatives to promote better employee
and local engagement and believe we are having a positive impact locally,
nationally and globally.
The full report can be viewed here: 2023 Annual Report & Accounts
(https://www.intelligentultrasound.com/wp-content/uploads/2024/05/44733-INT-Annual-Report-2023_WEB.pdf)
Financial Review
The sale of the Clinical AI business to GE HealthCare has been classified as
an Asset Held for Sale in the balance sheet and presented as a discontinued
operation in the income statement in line with the requirements of IFRS 5
'Disposal of subsidiaries, businesses and non-current assets'. The
comparatives have been restated as if the operation had been discontinued from
the start of the comparative period. The assets and liabilities of the
Clinical AI business are presented separately on the balance sheet.
Revenue
Continuing operations (Simulation including NeedleTrainer)
Revenue declined by 22% (£1.3m) in H1 2024 to £4.5m (H1 2023: £5.8m).
Continuing operations include revenue from NeedleTrainer which is remaining
within the product portfolio but was previously reported within the Clinical
AI business.
The majority of the decline in simulation revenues was attributable to the UK
market, where sales were down £1.1m (58%) on last year to £0.8m (H1 2023:
£1.9m) with NHS budget availability still constrained. Sales in North America
also declined by 23% to £2.2m (H1 2023: £2.8m). Positively, sales from
resellers in the ROW region improved by 37% to £1.6m (H1 2023: £1.1m).
With the decline in revenue, gross profit for the period decreased by £0.9m
to £2.6m (H1 2023 (restated*): £3.5m) and in addition the average gross
margin dropped to 57% (H1 2023 (restated): 61%) mainly due to the higher
proportion of reseller sales and product mix variances.
Discontinued operations (Clinical AI excluding NeedleTrainer)
Revenues increased by 94% to £0.4m (H1 23: £0.2m) mainly arising from growth
in royalty income from GEHC.
Administrative costs
H1 2024 H1 2023* FY2023
Continuing operations £m £m £m
Cash overheads 3.11 3.38 6.41
Non-cash costs 0.84 0.75 1.37
3.95 4.13 7.78
Discontinued operations 1.03 1.15 2.05
Total administrative costs 4.98 5.28 9.83
*restated for discontinued operations and a reclassification of distribution
and direct labour costs of £0.17m into cost of sales
Cash overheads relating to continuing operations were £3.11m, £0.27m lower
than the prior period. This mainly arose from lower sales commissions and
reduced marketing and external R&D spend.
Overheads from discontinued operations also decreased due to a decision to
delay certain R&D projects and other planned product marketing
expenditures as well as freeze recruitment and leavers replacements.
Loss after tax
The Group loss after taxation for the period was £2.0m (H1 2023: £1.0m),
£1.3m relating to continuing operations and £0.7m to discontinued
operations.
Balance Sheet
The Group's net assets at 30 June 2024 reduced by £1.7m to £8.0m (31
December 2023: £9.7m), mainly relating to the cash burn in the period of
£2.08m combined with lower trade receivables of £0.5m associated with
variations in timing of invoicing in Q2 2024. Liabilities (excluding the
£9.5m intercompany loan included within the liabilities held for sale)
reduced by £0.9m to £2.3m (31 December 2023: £3.3m) due to lower trade
payables and accruals.
The assets and liabilities of the Clinical AI business have been shown
separately on the balance sheet with the intercompany loan owed by the
Clinical AI business of £9.5m shown within liabilities held for sale and the
associated receivable in the remaining business shown within current assets.
The 2023 R&D tax credit of £0.5m is expected to be received in September.
Total lease liabilities decreased by £0.1m to £0.6m (31 December 2023:
£0.7m) with ongoing lease payments reducing the amounts owed to the end of
the lease period.
The Group had cash and cash equivalents of £1.0m at 30 June 2024 (31 December
2023: £3.0m), a decrease of £2.0m in the period (H1 2023: £3.9m) and an
improvement of £1.8m compared to H1 2023 despite £0.3m higher operating cash
outflows of £0.9m (H1 2023: £0.6m). The prior period was significantly
impacted by higher working capital balances associated with timings of trade
receivables in Q4 and purchases of inventory which resulted in net cash
outflows from operating activities of £2.7m. Net cash outflows in H1 2024
have reduced to £1.5m with working capital movements. Cash outflows from
investing activities totalled £0.7m (H1 2023: £0.9m), of which £0.5m
related to capitalised R&D costs (H1 2023: £0.7m) and £0.2m of additions
to property, plant and equipment (H1 2023: £0.2m). The net cash outflow from
financing activities was £0.1m (H1 2023: £0.2m), principally relating to
lease payments.
Outlook
Having spent the last seven years successfully creating first-to-market AI
products and building a strong capability in real-time automated ultrasound
image analysis, we are delighted that our achievements have been recognised by
GE HealthCare.
The remaining simulation business, which had a difficult trading period in the
first half of this year, will be boosted by the inclusion of the NeedleTrainer
range previously reported in our Clinical AI business, and the Board will use
the time between signing and completion of the sale to GE HealthCare to
conduct a comprehensive review of the remaining simulation business.
It is the Board's intention to make a material return of capital following a
review of the growth potential and capital requirements of the
post-transaction business and taking legal and tax advice on structure of a
return. An announcement detailing the proposed use of funds and strategic
direction for the Company is expected to be made in October when the sale of
the clinical AI business to GE HealthCare is expected to complete.
Stuart Gall
CEO
14 August 2024
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
Restated* Restated*
Note Unaudited Unaudited Year
6 months 6 months ended ended
ended 30 June 31 December
30 June 2023 2023
2024
CONTINUING OPERATIONS £'000 £'000 £'000
REVENUE 4 4,543 5,839 9,935
Cost of sales (1,960) (2,293) (3,975)
GROSS PROFIT 2,583 3,546 5,960
Other income - 4 9
Administrative expenses (3,952) (4,122) (7,774)
OPERATING LOSS (1,369) (572) (1,811)
Finance income - 16 26
Finance costs (15) (12) (29)
PROFIT/LOSS) BEFORE TAXATION (1,384) (568) (1,808)
Taxation 5 49 84 152
PROFIT/(LOSS) FROM CONTINUING OPERATIONS (1,335) (484) (1,656)
DISCONTINUED OPERATIONS
Loss from discontinued operations, net of tax 6 (659) (756) (926)
LOSS ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS OF THE PARENT (1,994) (1,240) (2,582)
Continuing operations (1,335) (484) (1,656)
Discontinued operations (659) (756) (926)
(1,994) (1,240) (2,582)
OTHER COMPREHENSIVE INCOME/(EXPENSE)
Items that will or may be reclassified to profit or loss:
Exchange gain/(loss)arising on translation of foreign operations 19 (84) (90)
OTHER COMPREHENSIVE INCOME/(EXPENSE) FOR THE PERIOD 19 (84) (90)
TOTAL COMPREHENSIVE EXPENSE ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS OF THE (2,013) (1,324) (2,672)
PARENT
LOSS PER SHARE (BASIC AND DILUTED, PENCE)
CONTINUING OPERATIONS
- Basic and diluted 7 (0.41) (0.15) (0.51)
CONTINUING AND DISCONTINUED OPERATIONS
- Basic and diluted 7 (0.61) (0.38) (0.79)
*Restated for discontinued operations and reclassification of direct labour
and distribution costs into cost of sales. See Note 1 for detail
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note Unaudited Unaudited Restated*
30 June 30 June Audited
2024 2023 31 December
2023
£'000 £'000 £'000
NON-CURRENT ASSETS
Intangible assets 2,405 3,541 4,095
Property, plant and equipment 1,112 1,316 1,293
Trade and other receivables 61 61 61
3,578 4,918 5,449
CURRENT ASSETS
Inventories 1,375 1,869 1,450
Trade and other receivables 8 12,150 3,725 3,398
Current tax asset 204 972 462
Cash and cash equivalents 951 3,335 3,031
Assets held for sale 6 2,244 - -
16,924 9,901 8,341
TOTAL ASSETS 20,502 14,819 13,790
CURRENT LIABILITIES
Trade and other payables 9 (1,696) (2,561) (2,698)
Deferred income (339) (336) (294)
Lease liabilities (246) (193) (244)
Provisions (55) (22) (35)
Liabilities held for sale 6 (9,495) - -
(11,831) (3,112) (3,271)
NON-CURRENT LIABILITIES
Deferred income (328) (237) (272)
Lease liabilities (322) (391) (446)
Other payables (65) (65) (65)
(715) (693) (783)
TOTAL LIABILITIES (12,546) (3,805) (4,054)
NET ASSETS 7,956 11,014 9,736
EQUITY
Share capital 10 3,269 3,269 3,269
Share premium 30,207 30,207 30,207
Accumulated losses (34,527) (31,191) (32,533)
Share-based payment reserve 2,193 1,928 1,998
Merger reserve 6,538 6,538 6,538
Foreign exchange reserve 111 98 92
Other reserves 165 165 165
TOTAL EQUITY 7,956 11,014 9,736
*Restated for Asset and Liabilities held for sale
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share-based payment
reserve Foreign exchange reserve
Share capital Share Accumulated losses Merger reserve Other reserves Total
premium equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
AT 1 JANUARY 2023 3,269 30,207 (29,951) 1,753 6,538 182 165 12,163
COMPREHENSIVE EXPENSE FOR THE PERIOD
Loss for the period - - (1,240) - - - - (1,240)
Other comprehensive income - - - - - (84) - (84)
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Share-based payments - - - 175 - - - 175
AT 30 JUNE 2023 3,269 30,207 (31,191) 1,928 6,538 98 165 11,014
COMPREHENSIVE INCOME/(EXPENSE) FOR THE PERIOD
Loss for the period - - (1,342) - - - - (1,342)
Other comprehensive income - - - - - (6) - (6)
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Issue of share capital
Share-based payments - - - 70 - - - 70
AT 31 DECEMBER 2023 3,269 30,207 (32,533) 1,998 6,538 92 165 9,736
COMPREHENSIVE INCOME/(EXPENSE) FOR THE PERIOD
Loss for the period - - (1,994) - - - - (1,994)
Other comprehensive expense - - - - - - 19
19
TRANSACTIONS WITH OWNERS, RECORDED DIRECTLY IN EQUITY
Share-based payments - - - 195 - - - 195
AT 30 JUNE 2024 3,269 30,207 (34,527) 2,193 6,538 111 165 7,956
CONSOLIDATED STATEMENT OF CASH FLOWS
Restated* Restated*
Unaudited Unaudited 12 months ended
6 months ended 6 months 31 December 2023
30 June 2024 ended
30 June 2023
£'000 £'000 £'000
Loss before tax from continuing operations (1,384) (568) (1,808)
Loss before tax from discontinued operations (615) (928) (1,215)
Loss before tax (1,999) (1,496) (3,023)
Add back:
Depreciation 332 306 629
Amortisation of intangible assets 592 466 986
Net finance costs / (income) 16 (4) 3
Share-based payments expense 196 175 245
Operating cash flows before movement in working capital (863) (553) (1,160)
Movement in inventories 74 (267) 151
Movement in trade and other receivables 239 (1,763) (1,413)
Movement in trade and other payables (733) (123) 20
Movement in provisions 20 - -
Cash used in operations (1,263) (2,706) (2,402)
Income taxes (paid)/received - (2) 691
NET CASH USED IN OPERATING ACTIVITIES (1,263) (2,708) (1,711)
Continuing operations (631) (2,151) (1,503)
Discontinued operations (632) (557) (208)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (162) (213) (338)
Interest received - 16 26
Internally generated and purchase of intangible assets (542) (737) (1,809)
NET CASH USED IN INVESTING ACTIVITIES (704) (934) (2,121)
Continuing operations (436) (669) (1,094)
Discontinued operations (268) (265) (1,027)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal elements of lease payments (117) (139) (207)
Finance costs paid (16) (14) (29)
NET CASH USED IN BY FINANCING ACTIVITIES (133) (153) (236)
Continuing operations (133) (153) (236)
Discontinued operations - - -
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,100) (3,795) (4,068)
Continuing operations (1,200) (2,973) (2,833)
Discontinued operations (900) (822) (1,235)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,031 7,166 7,166
Exchange gains / (losses) on cash and cash equivalents 20 (36) (67)
CASH AND CASH EQUIVALENTS AT END OF PERIOD 951 3,335 3,031
*Restated for Continuing and Discontinued operations
NOTES TO THE CONSOLIDATED INTERIM REPORT
for the six months ended 30 June 2024
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The financial information contained in this interim report has not been
audited by the Group's auditor and does not constitute statutory accounts as
defined in Section 434 of the Companies Act 2006. The Directors approved and
authorised this interim report on 13 August 2024. The financial information
for the preceding full year is extracted from the statutory accounts for the
financial year ended 31 December 2023. Those accounts, upon which the
auditor issued an unqualified opinion and did not include a statement under
Section 498(2) or (3) of the Companies Act 2006, have been delivered to the
Registrar of Companies. The report drew attention by way of emphasis to a
material uncertainty related to going concern and forecast performance of
Clinical AI & Simulation divisions used for the recoverability of
intangible assets, investment value and intercompany receivable.
This interim report has been prepared in accordance with UK AIM Rules for
Companies. The Group has not applied IAS 34 "Interim Financial Reporting"
(which is not mandatory for AIM listed companies) in the preparation of this
interim report. The interim report has been prepared in a manner consistent
with the accounting policies set out in the statutory accounts for the
financial year ended 31 December 2023.
The comparative periods have been restated to reclassify the results of the
discontinued operations. The H1 2023 income statement has also been restated
for the change in accounting policy to recognised distribution and direct
labour costs within cost of sales (see page 68 of the 2023 Annual Report and
Accounts for more detail). The restatement has not yet been subject to audit.
The Company is a limited liability company incorporated and domiciled in
England & Wales and whose shares are quoted on AIM, a market operated by
The London Stock Exchange. The Group financial statements are presented in
pounds Sterling.
Going concern
Post period end on 18 July 2024, the Board announced it had entered into a
conditional sale and purchase agreement for the sale of its Clinical AI
business (Intelligent Ultrasound Limited and certain other clinical AI related
assets) to GE HealthCare. While the Group intends to return a substantial
portion of the proceeds to shareholders, it will retain some of proceeds to
strengthen the remaining Group's financial position. The Group believes that
the sale proceeds, together with its existing resources, provide sufficient
financial resources to meet its liabilities as they fall due for at least the
next twelve months. In light of the foregoing, the Group's directors have a
reasonable expectation that the Group will continue as a going concern for the
foreseeable future.
Discontinued operations
The Group classifies an operation as discontinued when it has disposed of or
intends to dispose of a business component that represents a separate major
line of business or geographical area of operations. The post-tax profit or
loss of the discontinued operations is shown as a single line on the face of
the consolidated statement of profit or loss, separate from the continuing
operating results of the Group. When an operation is classified as a
discontinued operation, the comparative consolidated statement of profit or
loss is represented as if the operation had been discontinued from the start
of the comparative year. Expenses are presented as discontinued if they will
cease to be incurred on disposal of the discontinued operation.
Assets and liabilities held for sale
Where the Group expects to recover the carrying amount of a group of assets
through a sale transaction rather than through continuing use, and a sale is
considered to be highly probable at the reporting date, the assets are
classified as held for sale and measured at the lower of cost and fair value
less costs to sell. No depreciation or amortisation is charged in respect of
non-current assets classified as held for sale once the classification has
been made.
2. BASIS OF CONSOLIDATION
The consolidated interim report incorporates the results of the Company and
its subsidiary undertakings.
3. NEW ACCOUNTING STANDARDS
Several amendments and interpretations apply for the first time in 2024, but
do not have an impact on the interim condensed consolidated financial
statements of the Group.
4. REVENUE ANALYSIS
The following table provides an analysis of the Group's revenue by geography
based upon location of the Group's customers.
Restated* Restated*
Period ended Unaudited Unaudited 12 months ended 31 December
6 months ended 30 June 6 months ended 30 June 2023
2024 2023
£'000 £'000 £'000
Continuing operations
United Kingdom 818 1,899 2,769
North America 2,164 2,795 4,828
Rest of World 1,561 1,142 2,414
4,543 5,836 10,011
Discontinued operations
Rest of World 442 220 1,171
Intercompany royalty income (7) (8) (9)
4,978 6,064 11,173
*Restated for Continuing and Discontinued operations
Clinical AI royalty income is included in the regions but is based on the
external customer's invoicing country rather than the destination of the end
customer.
5. TAXATION
Restated* Restated*
Unaudited Unaudited Unaudited 12 months ended 31 December 2023
6 months ended 30 June 6 months ended 30 June 2023
2024
£'000 £'000 £'000
Continuing operations
R&D tax credit 49 86 171
R&D tax credit relating to prior periods - - (19)
US corporation tax - (2) -
49 84 152
Discontinued operations
R&D tax credit - - -
R&D tax (charge)/credit relating to prior periods (44) 172 289
5 256 441
6. DISCONTINUED OPERATIONS AND ASSET HELD FOR SALE
Post period end on 18 July 2024, the Board announced it had entered into a
conditional sale and purchase agreement for the sale of its Clinical AI
business (Intelligent Ultrasound Limited and certain other clinical AI related
assets) to GE HealthCare for a consideration of £40.5m. Although the
agreement is subject to shareholder approval, which was obtained on 6 August
2024, the Group believed that it was highly probable that the transactions
would complete within 12 months of the date of the announcement and so was
classified as a disposal group held for sale and a discontinued operation from
the period end date.
The results of the Clinical AI discontinued operation business are presented
below.
Unaudited Unaudited Restated*
6 months 6 months ended 12 months
ended 30 June ended
30 June 2023 31 December
2024 2023
£'000 £'000 £'000
REVENUE 4 442 220 1,171
Cost of sales (23) - (291)
GROSS PROFIT 419 220 880
Administrative expenses (1,034) (1,148) (2,095)
OPERATING LOSS (615) (928) (1,215)
LOSS BEFORE TAXATION (615) (928) (1,215)
Taxation 5 44 (172) (289)
LOSS AFER TAX FROM DISCONTINUED OPERATIONS (659) (756) (926)
The major classes of assets and liabilities classified as held for sale as at
30 June 2024 are, as follows:
Unaudited
As at 30 June
2024
£'000
Assets
Intangible assets 1,640
Current tax asset 265
Trade and other receivables 339
Assets held for sale 2,244
Liabilities
Trade and other payables (83)
Accruals (83)
Intercompany loans payable to other group companies (9,329)
Liabilities held for sale (9,495)
Net liabilities held for sale (7,251)
7. LOSS PER SHARE
Restated* Restated*
Unaudited Unaudited 12 months ended 31 December
6 months ended 30 June 6 months ended 30 June 2023 2023
2024
£'000 £'000 £'000
Loss from continuing operations (1,335) (484) (1,656)
Loss from discontinued operations (659) (756) (926)
Loss for the year after taxation (1,994) (1,240) (2,582)
Number of shares: No. No. No.
Basic and diluted weighted average number of ordinary shares 326,869,921 326,869,921 326,869,921
Basic and diluted loss pence per share:
Continuing operations (0.41) (0.15) (0.51)
Discontinued operations (0.20) (0.23) (0.28)
(0.61) (0.38) (0.79)
In the periods ended 30 June 2024, 30 June 2023 and 31 December 2023 there
were share options in issue which could potentially have a dilutive impact,
but as the Group is loss making in all periods, they are anti-dilutive and
therefore the weighted average number of ordinary shares for the purpose of
the basic and dilutive loss per share is the same.
8. CURRENT ASSETS - TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited
As at As at As at 31 December
30 June 30 June 2023
2024 2023
£'000 £'000 £'000
Trade receivables 1,720 2,728 2,457
Other receivables 148 126 195
Prepayments 953 871 746
Loan due from Asset held for sale 9,329 - -
12,150 3,725 3,398
9. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES
Unaudited Unaudited Audited
As at As at As at 31 December
30 June 30 June 2023
2024 2023
£'000 £'000 £'000
Trade payables 798 1,053 1,235
Taxation and social security 167 255 235
Other payables - 1 103
Accruals 731 1,252 1,125
1,696 2,561 2,698
10. SHARE CAPITAL
Allotted, issued and fully paid: No. £'000
Ordinary shares of 1p each
Balance at 1 January 2023 and 30 June 2023 326,869,921 3,269
Shares issued for cash - -
Balance at 31 December 2023 and 30 June 2024 326,869,921 3,269
11. INTERIM ANNOUNCEMENT
A copy of this report will be posted on the Company's website at Intelligent
Ultrasound (https://www.intelligentultrasound.com/reports-presentations/) .
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