Interim Results
27/09/2022 07:00
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RNS Number : 7159A Medica Group PLC 27 September 2022
27 September 2022
Medica Group PLC
Interim results for the six months to 30 June 2022
Further period of growth and recovery, significant contract renewals and new
client wins across the business, and continued delivery against long-term
strategic objectives
Market remains strong. Continued focus on building capacity to meet demand,
and Medica remains well-positioned as a leader in teleradiology
Medica Group PLC (LSE: MGP, "Medica", the "Company" or the "Group"), an
international provider of high-quality telemedicine services, announces its
unaudited results for the six months ended 30 June 2022.
Key highlights
Six months to Six months to Change Change
30 June 2022 30 June 2021 £'000s %
£'000s £'000s
Revenue 36,009 26,436 9,573 36
Gross profit 17,498 13,504 3,994 30
Gross profit margin 48.6% 51.1%
Underlying operating profit ¹ 6,206 4,255 1,951 46
Underlying operating margin 17.2% 16.1%
Underlying profit before tax ² 5,889 3,976 1,913 48
Profit before tax 4,412 2,215 2,197 99
Underlying basic EPS (pence) ³ 3.96 2.82 1.14 40
Basic EPS (pence) 2.86 1.47 1.39 95
Interim dividend (pence) 0.93 0.89 0.04 4
30 June 2022 30 June 31 December 2021
£'000 2021 £'000
£'000
Cash and cash equivalents 6,440 11,640 9,616
Net Cash/(Debt) ⁴ 857 (35) 3,877
(1) Underlying operating profit is a non-IFRS measure and is calculated as
operating profit before exceptional items, share based payments, amortisation
in respect of assets acquired on acquisition and other one-off costs including
deal fees.
(2) Underlying profit before tax is a non-IFRS measure and is calculated as
profit before tax before exceptional items, share based payments and
amortisation in respect of assets acquired on acquisition and other one-off
costs including deal fees
(3) Underlying earnings per share is a non-IFRS measure and is calculated as
Earnings per share before exceptional items, share based payments and
amortisation in respect of assets acquired on acquisition and other one-off
costs including deal fees
(4) Net cash/(debt) is a non-IFRS measure and is calculated by subtracting
bank borrowings from cash and cash equivalents
A reconciliation of non-statutory measures in included in note 11.
Roy Davis, Chairman of Medica, said:
"The Company has continued to execute against its strategy and delivered
double-digit growth, in line with expectations, for the first half of 2022.
The team performed well, renewing existing contracts and winning new
teleradiology clients in the UK and Ireland. In addition, Medica launched new
managed radiology services in Ireland and expanded its base of clinical trial
clients in the US. The demand for teleradiology services remains strong as
healthcare systems continue to tackle significant waiting lists for scanning
and reporting. Medica remains focused on further improving its technology
platform and expanding its network of radiologists, specialist doctors and
clinicians to meet this demand for the rest of this year and into 2023.
Medica's overall strategic objectives and long-term aspirations remain on
track. The Company will continue to pursue its organic growth strategy to
further diversify its remote reporting services, and to expand the scale and
breadth of its services via potential acquisitions."
Dr Stuart Quin, Chief Executive Officer of Medica, said:
"This has been another positive period of growth for Medica. In the UK and
Ireland, strong NightHawk growth has been driven by successful contract
renewals with existing clients and new contract wins, and we have advanced the
rollout of our ambitious FutureTech programme. In the UK, whilst Elective
demand has returned to pre-pandemic levels, the second quarter was impacted by
a shortage of radiologist capacity that limited our ability to capitalise on
strong client demand. This trend continued over the summer period, although
capacity is now returning to more normal levels this month. We continued to
grow our US business, RadMD, over the period with some exciting new client
wins and we are proud to have supported a major therapy through to approval
for one of our largest clients. RadMD continues to be well-positioned in a
fast-growing, attractive international market with opportunity for further
organic growth and M&A."
"Demand for our services is at an all-time high in the UK and Ireland as
healthcare providers grapple with the huge backlog of patients waiting for
diagnosis and treatment following the pandemic. Our focus during the remainder
of this year and into 2023 remains on working closely with our hospital
clients to help them to manage demand and, to do this, we are working hard to
maximise the utilisation of existing radiologist capacity and continuing to
build our network of specialist radiologists both in the UK and Ireland, as
well as overseas. We are making progress towards this end but, as we have
previously indicated, the UK and Irish healthcare markets remain
capacity-constrained and as a result, demand for reporting continues to exceed
the availability of radiologists. In the near-term we are prioritising our
strategically important NightHawk service, including new initiatives relating
to our acute reporting offering, without impacting our ability to grow the UK
business as a whole. In the long-term, our infrastructure, expertise, recent
investments in technology, and the continued strong market demand mean we
remain confident that Medica will maintain its market-leading position in
teleradiology."
Financial highlights
· Total revenue of £36.0m compared to £26.4m in H1 2020,
representing growth of 36% including the positive impact of Medica Ireland and
RadMD.
o UK NightHawk and acute revenue increased by 14% from £14.3m to £16.2m
compared to H1 2021 as a result of a combination of underlying market growth,
successful contract renewals with existing clients and new contract wins.
o UK Elective revenue increased 61% YoY from £6.2m to £9.9m, reflecting
strong demand for services in response to the backlog of patients requiring
scanning.
o Ireland revenue increased 24% from £4.5m to £5.6m due to a combination
of an increase in the number of scan and reporting contracts in ultrasound and
plain film, as well as underlying organic growth in existing contracts coupled
with a record increase in the number of new out-of-hours teleradiology
hospital clients.
o US/clinical trials (RadMD) contributed revenue of £4.3m for the full
six-month period, an increase of 16% compared to H2 2021 as strong growth in
the contracted orderbook converted to revenue.
· Group gross profit margin reduced from 51.1% to 48.6% but
remained above pre-pandemic levels (H1 2020: 47.1%). This reflected the
expected reduction in gross margin in the UK to 48.1% as competition in the
market impacted repricing and new contracts, but also the impact of the mix
from Ireland and the US.
· Underlying operating profit increased by £1.9m to £6.2m (H1
2021: £4.3m).
· Underlying basic EPS also increased by 40.4% from 2.82 pence to
3.96 pence per share. Basic EPS increased from 1.47 pence to 2.86 pence per
share.
· The business remained ungeared at the period end with net cash of
£0.9m (2021 net debt of £0.04m) after taking account of strong operating
cashflow, continued good working capital management and the payment of
deferred consideration for RadMD and Medica Ireland.
· Interim 2022 dividend of 0.93 pence per share (2021: 0.89 pence)
declared representing an increase of 4.5%.
Operational highlights
· Successful launch of a new Picture Archive and Communication
System (PACS) in February with continued investment in our FutureTech platform
· Growth in Same-Day reporting activity and expansion of urgent
reporting hours in the UK, reflecting growing demand
· New contract commenced to provide scanning and reporting services
for Ireland's leading private insurer at their new state-of-the-art clinic in
south Dublin
· Record number of new out-of-hours clients across Ireland as an
increasing number of hospitals look to partner to deliver scanning services
during the night, as anticipated in our investment thesis
· Strong performance in our diabetic retinopathy screening and
surveillance contract in Ireland as patient throughput returns to pre-pandemic
levels
· Further expansion of RadMD's orderbook and pipeline, as well as
reach into new therapy areas and pharma clients
· Elective demand has returned to pre-pandemic levels, with
initiatives underway to increase capacity to better meet demand, including:
o Improving availability and utilisation of existing capacity
o Continuing to improve our reporting platform technology to drive
productivity
o Reducing the time to onboard new radiologists
o Initiatives to accelerate recruitment overseas
For further information, please contact:
Medica Group Plc: +44 (0)33 33 111 222
Stuart Quin, Chief Executive Officer
Richard Jones, Chief Financial Officer
FTI Consulting +44 (0)20 3727 1000
Victoria Foster Mitchell
Sam Purewal
Liberum (Joint Broker) +44 (0)20 3100 2000
Phil Walker
Richard Lindley
Numis (Joint Broker) +44 (0)20 7260 1000
Freddie Barnfield
Duncan Monteith
Euan Brown
About Medica Group PLC
Medica (LSE: MGP) is an international provider of high-quality telemedicine
services. It is the market leader in teleradiology in the UK and Ireland,
working with more than 100 NHS Trusts and HSE hospitals in Ireland, in
addition to private hospitals, insurance groups and diagnostic imaging
companies. Its network of consultant radiologists, radiographers and
specialist doctors interpret and report MRI, CT, ultrasound and X-ray images
on behalf of healthcare providers, using Medica's bespoke, secure technology
platform for fast and responsive delivery. The company's core services include
NightHawk, an urgent, out-of-hours offering available to clients 24/7 with
dedicated pathways for stroke and major trauma, and Elective, for routine
reporting.
In Ireland, Medica carries out patient scanning, as well as reporting, and
runs a diabetic retinopathy screening programme for the National Screening
Service. Through its US business, RadMD, Medica provides global pharmaceutical
and biotech companies, as well as contract research organisations with
specialist imaging services for clinical trials.
For more information, please visit: www.medicagroupplc.com
(http://www.medicagroupplc.com)
Interim Management Report
Chairman's statement
I am pleased to present Medica Group's interim financial statements for the
six months to 30 June 2022.
UK performed well especially in NightHawk
Our strategically important NightHawk business performed very well in the
first half as we focused on renewing contracts and expanding our service
offering. We also focused our Elective capacity as far as possible on meeting
demand from our existing clients. Our Elective revenues, whilst recovering
strongly compared to 2021 when Covid-19 still impacted us, were limited in the
second quarter and over the summer by the availability of radiologists who
responded to additional demand from their Trusts by way of overtime and
additional shifts, as well as their taking accrued annual leave.
Encouragingly, since the summer, we are starting to see this availability
return to normal levels.
Strong growth in our acquired businesses
The first half saw a strong performance from our two acquired operations in
Ireland and the US. We have continued to invest in both businesses to sustain
this strong growth and expect to see the payback in terms of net margin
improvement over time. We continue to evaluate opportunities to scale
particularly in support of our clinical trials business.
I am also pleased to announce that for the period to 30 June 2022, the Board
has decided to declare an interim dividend of 0.93p per share.
Outlook
Following a strong first half performance, Medica continues to be well
positioned. We continue to grow our strategically important NightHawk client
base both in the UK and Ireland and are also seeing strong demand for new
acute services. For our Elective service, the challenge has been both the
availability of existing radiologist capacity, as well as initiating
sufficient additional capacity to meet strong demand. This has limited our
ability to generate the revenue growth we had expected in Elective over the
period and into the summer, however, the current initiatives to increase
capacity should support growth for the rest of this year and into 2023. Our US
business continues to grow its revenues strongly, and we expect this to
continue through the remainder of the year into next year as the pipeline of
new opportunities convert to revenue.
Roy Davis
Chairman
Financial and business review
UK NightHawk reporting activity has increased significantly, driven by growth
in the number of exams performed for existing clients, as well as clients
expanding the hours over which the NightHawk service operates. In addition, an
increase in more complex cross-sectional studies, new contract wins
(particularly from former clients returning to Medica) and new services,
including the expansion of our "Same-Day" reporting service, have resulted in
good revenue growth after taking account of changes to pricing with new and
renewed contracts. Importantly, Medica has been successful in renewing a
significant number of NightHawk contracts with existing clients on
three-to-five-year terms. This includes contract renewals for which
procurement was delayed during the pandemic.
Within our urgent services segment, the team has continued to expand Medica's
daytime urgent and "Same-Day" services in response to demand from our NHS
clients for more rapid and efficient reporting outside of the traditional
overnight "NightHawk" service.
UK Elective reporting performance in H1 2022 was materially ahead of H1 2021,
with the latter period still significantly impacted by Covid-19. Compared to
H2 2021, Elective revenues in H1 2022 were 7% lower reflecting the temporary
disruptive impact on Elective services in February from the switch to the new
PACS system. This was compounded by challenges with maximising radiologist
capacity from our existing network, as well as recruiting sufficient new
reporting capacity, particularly in the more complex modalities. This trend
continued into the summer period and has been driven by a combination of
factors including radiologists spending more time supporting their NHS
hospitals with overtime, the impact of substantial accrued annual leave from
the pandemic being taken later in the first half and over the summer and
extended time to onboard new radiologists in the UK and overseas. Importantly,
since the start of September, we are starting to see the return of radiologist
availability to expected levels.
During the period, net rostered reporting hours increased by 11%. The UK team
is focused on initiatives to increase Elective capacity, including:
1. Improving availability and utilisation of existing capacity
2. Reducing the time to onboard new capacity
3. Increasing the number of fully employed radiologists
4. Initiatives to speed up recruitment overseas
5. Improvements to our reporting platform technology to improve
productivity
Overall, after taking account of apportioned group overheads, UK underlying
operating profit margin increased to 21% (2021:15%), however, this was a
decline of 4% compared to H2 2021, reflecting the impact of pricing changes
for renewed NH contracts, including those delayed by the pandemic to H1 2022
and increased costs only partially offset by operational leverage through
better NH performance.
Ireland continuing to perform strongly
Medica Ireland continued to perform strongly during the period, exceeding our
expectations. Revenue of £5.6 million represented an increase of 24% over the
same period last year. This was driven by an increased number of scan and
reporting contracts in ultrasound and plain film, as well as a significant
increase in the number of new out-of-hours teleradiology hospital clients.
Medica is now providing services in all hospital groups across Ireland and
this year, expects to more than double the number of out-of-hours clients that
have worked with us since the business was acquired in November 2020. Medica
has also expanded its partnership with Ireland's leading health insurer,
providing diagnostic services at a new state-of-the-art clinic in south
Dublin. This new service is already performing ahead of plan. Additionally,
the Medica Vision diabetic retinopathy screening service is performing to plan
and supporting the National Screening Service in Ireland to return to
pre-pandemic levels of patient screening and surveillance.
After taking account of apportioned group overheads, underlying operating
margin reduced from 19% to 14% YoY, which reflected an increase in investment
in operational management to support current and future growth potential.
RadMD continuing to scale rapidly
RadMD continued to develop its full-service client base in new and existing
therapy areas. The combined orderbook and risk-adjusted pipeline at the end of
June 2022 was $48.1m, compared to $54.0m at the end of December 2021 after
taking account of new business offset by the conversion to revenue in the
period. This orderbook and pipeline continues to underpin the current growth
in reported revenues, with H1 2022 revenue increasing 16% compared to H2 2021.
We continue to focus on increasing the scale of our international clinical
trials business as this is key to generating operating efficiencies. The US
now has an established business development team based across the country and
continues to invest in clinical and project management capacity and
capability, as well as IT expertise, to manage the ongoing strong growth in
top-line revenues. During the period, the team signed new contracts with
sizeable pharmaceutical and biotech clients and continued to extend
relationships with existing clients.
After taking account of apportioned group overheads, RadMD reported a
break-even position in H1 after also taking account of the investment in
people to support the strong growth profile.
Operating cost base
As noted above, we continue to invest in our cost base in Ireland and RadMD to
support current and future growth and as a result, this investment will take
time to be reflected in operational leverage. We continued to closely monitor
the inflationary environment during the period and, as a result, took
proactive steps to address the increased cost of living by awarding a one-off
payment to all staff across the business in July and an increase in base
salary for all staff will take effect from 1 October as a mid-year measure in
addition to the normal annual pay increase in April.
Net Debt Capex and Deferred consideration
Medica started the year with net cash of £3.9m. During the period total
cash inflow from operating activities was £3.4m after strong operating
cashflow of £4.4m (H1 2021: £2.2m), adjustments for non-cash items less a
negative working capital movement in the period of £3.6m (H1 2021: £3.5m).
This represented an operating profit to cash conversion in the period of 54%
(H1 2021: 26%).
During the period Medica also paid £5.7m in total (2021: £nil) in deferred
consideration of which £4.0m related to RadMD and £1.7m related to Medica
Ireland. Capex in the period was £1.4m (2021: £1.2m) which included new IT
equipment for employees and workstations for reporters, as well as costs
relating to the ongoing FutureTech programme, including licences and
capitalised internal costs.
Dividend
For the period to 30 June 2022, the board has decided to declare an interim
dividend of 0.93 pence per share which will be paid on 04 November 2022 to
shareholders on the register as at 07 October 2022. This represents an
increase of 4.5% over the prior year interim dividend of 0.89 pence per share.
The Board has considered the performance of the business and the cash
requirements to support the growth strategy and will continue to review our
dividend policy in line with our intention that it remains progressive.
Outlook
UK NightHawk ("NH") reporting
Having successfully re-tendered for NH contracts representing c. 23% of NH
revenue so far this year, our focus is on continuing to drive growth in NH
revenues by expanding Same-Day and urgent daytime services, as well as adding
new NH capacity to support increased volumes from our existing clients and new
contracts scheduled to be deployed in the remainder of the year. Overall, we
expect NH revenues to continue to grow at low double-digit rates throughout
the rest of 2022.
UK Elective reporting
The UK continues to face a severe shortage of Elective reporting capacity as
the NHS continues its efforts to increase the amount of diagnostic scanning
capacity that can be delivered within both the hospital and community
environment. Year to date, overall reporting capacity has only increased
slightly and the recent Royal College of Radiologists staffing census
indicates an expected shortfall of almost 40% of radiologists required to
conduct all of the work required by the NHS by 2026, equal to 3,166 Consultant
radiologists.
Medica's initiatives to increase capacity will take time to deliver. Whilst we
are starting to see a return to more normal levels of radiologist availability
in September, the impact of capacity challenges earlier in the year and into
the summer, together with a focus on urgent reporting mean that we now expect
Elective revenues to be relatively flat in the second half compared to the
first half of 2022 albeit with a positive uptick in Q4 based on current trends
and with new capacity coming on stream.
Looking ahead to 2023, we will continue to focus on expanding reporting
capacity for both urgent and Elective services as well as evaluating new
service lines in allied areas of telemedicine.
Ireland
Our Irish business continues to develop a strong pipeline of new contract
opportunities particularly in the introduction of out-of-hours services to new
clients, as well as expansion of the number of hours of urgent reporting
provided to existing clients. Alongside this, Medica continues to expand its
managed service operations by delivering more scanning and reporting of
ultrasound and plain film images particularly in support of primary care
waiting list initiatives. In addition, work has begun on the re-tender for the
Diabetic Retinopathy screening and surveillance contract which is due to be
awarded later in the second half for planned commencement at the start of
2023. We therefore continue to expect Ireland to grow faster than our UK
business in the medium term.
RadMD
Since our acquisition of RadMD, we have increased support for new business
development activity and are investing in new systems and expanding our
operations team. The new team established late last year are already starting
to demonstrate the benefits of a more proactive market approach and we expect
both the pipeline and orderbook to grow and to convert into continued strong
revenue growth. This includes signing new, sizeable pharma and biotech clients
in new and legacy therapeutic areas, as well as increasing our penetration of
existing client accounts. Inevitably an improvement in net margin will take
time to deliver as we continue to invest ahead of the anticipated strong
growth. We continue to evaluate opportunities to add scale to our clinical
trials business via M&A and partnerships.
Summary
Overall, considering current year investments for growth in Ireland and RadMD,
the impact of an increase in payroll costs across the group, and a reduction
in our expectations for Elective revenues this year, we expect Group revenue
for the full year to be line with market expectations with net operating
margin for the year to be moderately below expectations.
Forward looking statements
Certain statements in this interim report are forward looking. Although the
Board believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that these expectations
will prove to have been correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements.
Stuart Quin Richard Jones
Chief Executive Officer Chief Financial Officer
27 September 2022 27 September 2022
Statement of Directors' Responsibilities
The Directors confirm to the best of their knowledge that
a) The interim condensed consolidated financial information has been
prepared in accordance with IAS 34 as adopted by the European Union; and
b) The Interim Report includes a fair view of the information as required
by:
· DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during the first
half of 2021 and their impact on the interim condensed consolidated financial
information; and a description of the principal risks and uncertainties for
the remaining second half of the year; and
· DTR4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first half of
2021 and any material changes in the related party transactions described in
the last Annual Report.
The Directors of Medica Group PLC and their functions are listed below:
Roy Davis Chairman
Stuart Quin Chief Executive Officer
Richard Jones Chief Financial Officer
Barbara Moorhouse Senior Non-Executive Director
Joanne Easton Non-Executive Director
Junaid Bajwa Non-Executive Director
By order of the Board
Richard Jones
Chief Financial Officer
27 September 2022
CONDENSED CONSOLIDATED INCOME STATEMENT AND CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2022
Unaudited 6 months ended Unaudited 6 months ended
30 June 2022 30 June 2021
£000 £000
Underlying Non-Underlying Total Underlying Non-Underlying Total
(Note 8) (Note 8)
As restated(1) As restated(1)
Notes £'000 £'000 £'000 £'000 £'000 £'000
Revenue 36,009 - 36,009 26,436 - 26,436
Cost of sales (18,511) - (18,511) (12,932) - (12,932)
Gross profit 17,498 - 17,498 13,504 - 13,504
Administrative expenses (11,292) (1,097) (12,389) (9,249) (1,794) (11,043)
Operating profit 6,206 (1,097) 5,109 4,255 (1,794) 2,461
Finance costs (257) (380) (637) (279) 33 (246)
Share of results from joint ventures (60) - (60) - - -
Profit before tax 5,889 (1,477) 4,412 3,976 (1,761) 2,215
Income tax charge (1,046) 132 (914) (661) 175 (486)
Profit for the period attributable to equity shareholders 4,843 (1,345) 3,498 3,315 (1,586) 1,729
Statement of Comprehensive Income
Profit for the period 3,498 1,729
Other comprehensive income 1,088 19
Total comprehensive income for the period 4,586 1,748
Basic profit per ordinary share (pence) 9 2.86 1.47
Diluted profit per ordinary share (pence) 9 2.82 1.47
(1) The prior period amounts have been restated for the correction of prior
period presentation errors, profit for the period is unaffected. See note 5
for more detail.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2022
Notes Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
£000 £000 £000
ASSETS
Non-current assets
Goodwill 12 31,195 30,290 30,357
Other intangible assets 13 22,805 23,366 22,399
Property, plant and equipment 3,936 4,948 4,521
Deferred tax 170 400 186
Investments in joint ventures 52 56 -
58,158 59,060 57,463
Current assets
Trade and other receivables 15,741 13,838 14,271
Cash and cash equivalents 6,440 11,640 9,616
22,181 25,478 23,887
Total assets 80,339 84,538 81,350
LIABILITIES
Current liabilities
Trade and other payables (9,138) (7,985) (9,576)
Borrowings 14 (5,583) (11,675) (5,739)
Lease liabilities (178) (328) (280)
Contingent consideration 15 (1,859) (4,701) (5,335)
Current tax (838) (281) (880)
(17,596) (24,970) (21,810)
Net current assets 4,585 508 2,077
Total assets less current liabilities 62,743 59,568 59,540
Non-current liabilities
Lease liabilities (844) (1,008) (814)
Contingent consideration 16 - (1,545) (1,553)
Deferred tax (2,048) (2,719) (2,270)
(2,892) (5,272) (4,637)
Net assets 59,851 54,296 54,903
EQUITY
Issued capital 16 245 245 245
Share premium 30,329 30,306 30,324
Foreign exchange reserve 966 21 (122)
Retained earnings 28,311 23,724 24,456
59,851 54,296 54,903
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 2022
Issued capital Foreign exchange reserve Retained earnings Total equity
£'000 Share premium £'000 £'000 £'000
£'000
At 1 January 2021 (audited) 223 14,721 2 21,507 36,453
Share based payments - - - 220 220
Deferred tax on share based payment transactions - - - 268 268
Issue of ordinary shares 22 15,585 - - 15,607
Transactions with owners 22 15,585 - 488 16,095
Profit for the period - - - 1,729 1,729
Other comprehensive income - - 19 - 19
Total comprehensive income for the period - - 19 1,729 1,748
At 30 June 2021 (unaudited) 245 30,306 21 23,724 54,296
Issue of ordinary shares - 18 - - 18
Share based payments - - - 462 462
Deferred tax on share based payment transactions - - - (301) (301)
Dividends paid - - (3,167) (3,167)
Transactions with owners - 18 - (3,006) (2,988)
Profit for the period - - - 3,738 3,738
Other comprehensive income - - (143) - (143)
Total comprehensive income for the period - 18 (143) 732 607
At 31 December 2021 (audited) 245 30,324 (122) 24,456 54,903
Issue of ordinary shares - 5 - - 5
Share based payments - - - 326 326
Deferred tax on share based payment transactions - - - 31 31
Transactions with owners - 5 - 357 362
Profit for the period - - - 3,498 3,498
Other comprehensive income - - 1,088 - 1,088
Total comprehensive income for the period - - 1,088 3,498 4,586
At 30 June 2022 (unaudited) 245 30,329 966 28,311 59,851
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 30 June 2022
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2022 2021 2021
£000 £000 £000
Operating activities
Profit for the period 3,498 1,729 5,467
Add back taxation 914 486 1,872
Profit before tax 4,412 2,215 7,339
Adjustments for:
Depreciation 1,031 845 1,672
Amortisation 1,516 1,329 2,816
Loss on disposal of tangible and intangible assets - 55 55
Share based payments 326 220 682
Social security costs of share-based payment charge 19 135 78
Fair value movement on contingent consideration - (147) -
Contingent consideration paid in excess of fair value (1,013) - -
Foreign exchange (52) (474) (590)
Finance costs 637 393 1,143
Share of results of joint ventures 60 - 56
Changes in:
(Increase)/decrease in trade and other receivables (1,069) (4,435) (4,725)
(Decrease)/increase in trade and other payables (1,798) 1,239 2,811
Tax paid (712) (250) (1,614)
Cash inflow from operating activities 3,357 1,125 9,723
Investing activities
Purchase of subsidiary net of cash acquired - (11,429) (11,429)
Purchase of property, plant and equipment (392) (892) (1,310)
Purchase of software intangibles (1,015) (289) (763)
Contingent consideration paid (4,612) - -
Additional investment in joint ventures (111) - -
Cash outflow from investing activities (6,130) (12,610) (13,502)
Cash flows from financing activities
Repayment of lease liability (129) (197) (407)
Proceeds from borrowings 3,792 11,592 11,592
Repayment of borrowings 4,000 (17,586) (23,522)
Issue of ordinary share capital net of issue costs 5 15,607 16,162
Cost to issue ordinary share capital - - (537)
Dividends paid to ordinary shareholders - - (3,167)
Interest paid (109) (154) (424)
Net cash (outflow)/inflow from financing activities (504) 9,262 (303)
Net change in cash and cash equivalents (3,277) (2,223) (4,082)
Movement in net cash
Cash and cash equivalents, beginning of period 9,616 13,934 13,934
Decrease in cash and cash equivalents (3,277) (2,223) (4,082)
Foreign exchange on cash and cash equivalents 101 (71) (236)
Cash and cash equivalents, end of period 6,440 11,640 9,616
NOTES TO THE FINANCIAL STATEMENTS
For the period ended 30 June 2022
1. Basis of preparation
These interim consolidated financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting. They do not include all
disclosures that would otherwise be required in a complete set of financial
statements and should be read in conjunction with the 2021 annual report. They
have been reviewed by Grant Thornton UK LLP but have not been audited.
2. Going concern
The Group had cash and cash equivalents at 30 June 2022 of £6.44 million
and a three-year, £30 million revolving credit facility (RCF), obtained in
May 2021, of which £5.58 million was drawn as at 30 June 2021. Net cash at 30
June 2022 was therefore £0.86 million.
In addition, the RCF has an accordion option under which Medica can request up
to an additional £22.5 million on the same terms as the existing £30
million. The credit facility is provided jointly by Nat West, Lloyds and
Silicon Valley Bank, is subject to leverage and interest cover covenants and
is secured on certain assets of the Group. It is drawn in short term tranches
of debt which are repayable within 12 months of draw-down. These tranches of
debt can be rolled over provided certain conditions are met, including
covenant compliance. The Group considers that it is highly unlikely it would
be unable to exercise its right to roll-over the debt. This due to mitigating
actions it could take to maintain compliance with these conditions, including
future covenant requirements, even in downside scenarios.
The Directors have prepared cashflow forecasts for a period of at least 12
months from the date of approval of these financial statements (the forecast
period). These indicate that the Group will have sufficient funds to meet its
liabilities as they fall due, and will continue to comply with its loan
covenants, throughout the forecast period.
Consequently, the Directors are confident that the Group will have sufficient
funds to continue to meet its liabilities as they fall due for at least 12
months from the date of approval of the financial statements and have
therefore determined it is appropriate to adopt the going concern basis in
preparing the financial statements.
3. Significant accounting policies
The accounting policies applied by the Group in this condensed set of
consolidated financial statements are consistent with those applied by the
Group in its consolidated financial statements for the year ended 31 December
2021. In addition, the accounting policies used are consistent with those that
the Directors intend to use in the Annual Report and Financial Statements for
the year ending 31 December 2022. Taxes on income in the interim period are
accrued using the tax rate that would be applicable to the expected total
annual earnings.
4. New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all the new or amended Accounting
Standards and Interpretations issued by the International Accounting Standards
Board ('IASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet
mandatory have not been early adopted.
No accounting policies have been amended during the period to 30 June 2022.
5. Prior period restatements - correction of prior period presentation errors
During the period the directors' reviewed the prior period presentation of the
condensed consolidated income statement and note 8. Restatements have been
made to the prior period comparatives to:
(i) correctly present the fair value adjustments on contingent consideration
totalling a £147k credit which was previously included in non-underlying
administrative expenses now presented in finance costs. The effect of the
restatement was an increase in total administrative expenses from £10,896k to
£11,043k and a decrease in total finance costs from £393k to £246k. There
were equal and offsetting movements in increasing non-underlying
administrative expenses from £1,647k to £1,794k and decreasing
non-underlying finance costs from £114k to £33k credit, thus having no
impact on underlying results. Note 8 was updated to correct the spit of
non-underlying expenses between administrative and finance costs. Note 12 was
updated, reducing the operating profit and removing the £147k credit from
non-underlying add backs in reconciling operating profit to non-underlying
operating profit.
6. Key judgements and sources of estimation uncertainty
During the period there were no new judgements or estimates made by management
in applying the accounting policies of the Group. All judgements and estimates
are consistent with those stated in the annual report for the year ended 31
December 2021.
7. Segment reporting
Management prepare and monitor financial information for the Group's three key
geographies, UK, Ireland and the US. This financial information is reviewed
and used by the Chief Operational Decision Maker (considered to be the CEO) in
managing the operating activities of the Group.
In the UK, Medica generates revenues via two key service lines, Nighthawk
(urgent and quick turnaround services) and Elective. In Ireland revenues are
generated from tele-radiology, managed services, and a contract with the
National Screening Service to deliver Ophthalmology services. In the US
revenues are generated from providing radiology reporting to Pharma customers
directly as full service iCRO services and indirectly via Contract Research
Organisations (CRO's) as reader only services. These activities are
collectively referred to as imaging core lab services.
Unaudited Unaudited
UK Ireland USA 30 June UK Ireland USA 30 June
£000 £000 £000 2022 £000 £000 £000 2021
£000 £000
UK NightHawk 16,195 - - 16,195 14,252 - - 14,252
UK Elective 9,947 - - 9,947 6,163 - - 6,163
Ireland - 5,604 - 5,604 - 4,529 4,529
iCRO - - 4,263 4,263 - - 1,492 1,492
Revenue 26,142 5,604 4,263 36,009 20,415 4,529 1,492 26,436
Cost of sales (13,577) (2,953) (1,981) (18,511) (10,228) (2,101) (603) (12,932)
Gross profit 12,565 2,651 2,282 17,498 10,187 2,428 889 13,504
Operating expenses (7,164) (1,852) (2,276) (11,292) (7,061) (1,567) (621) (9,249)
Operating profit 5,401 799 6 6,206 3,126 861 268 4,255
Finance costs (118) (134) (5) (257) (132) (145) (2) (279)
Share of results from joint ventures (60) - - (60) - - - -
Profit before tax 5,223 665 1 5,889 2,994 716 266 3,976
Tax (961) (113) 28 (1,046) (539) (103) (19) (661)
Underlying profit for the period 4,262 552 29 4,843 2,455 613 247 3,315
Non-underlying loss for the period (1,345) (1,586)
Profit for the period 3,498 1,729
UK Ireland USA Unaudited 30 June UK Ireland USA Unaudited
£000 £000 £000 2022 £000 £000 £000 30 June
£000 2021
£000
Non-current assets (excl deferred tax) 25,047 17,487 15,454 57,988 26,389 18,538 14,133 59,060
Additions to non-current assets 1,301 76 30 1,407 1,169 13 10,212 11,394
Total assets less current liabilities 34,971 15,360 12,412 62,743 34,921 12,523 12,124 59,568
Net assets 33,682 13,667 12,502 59,851 33,259 9,073 11,964 54,296
8. Non-underlying items
Non-underlying costs include items that are considered by the Directors to be
one-off in nature such as legal and professional fees in relation to
acquisitions, board succession fees and other non-recurring items and also
include amortisation costs in respect of acquired intangibles and
non-cash-based share based payment charges. For a reconciliation of non-IFRS
financial KPI's see note 11.
Unaudited Unaudited
30 June 30 June
2022 2021
As restated(2)
£000 £000
Amortisation of acquired intangible assets 1,198 1,027
Foreign exchange loss/(gain) on contingent consideration 13 (125)
Acquisition costs incurred(1) (875) 356
Share based payment charge 326 220
Social security costs on share based payment charge 19 135
Group recruitment costs - 49
Depreciation adjustment to align to group accounting policies 173 -
Legal and professional fees 243 132
Total non-underlying costs included within operating expenses 1,097 1,794
Fair value adjustment on contingent consideration 380 (33)
Total non-underlying costs before tax 1,477 1,761
Income tax (132) (175)
Total non-underlying items after taxation 1,345 1,586
(1)Acquisition costs incurred in the 30 June 2022 period relates to
revaluation gains on loans used to finance the acquisition of the US entities.
(2) The prior period amounts have been restated for the correction of prior
period presentation errors. See note 5 for more detail.
9. Earnings per share
Both the basic and diluted profit per share have been calculated using the
profit after tax attributable to shareholders of Medica Group PLC as the
numerator. The calculation of the basic profit per share is based on the
profit attributable to ordinary shareholders divided by the weighted average
number of shares in issue during the period.
Unaudited Unaudited
30 June 30 June
2022 2021
£000 £000
Profit for the period attributable to ordinary shareholders 3,498 1,729
Effects of non-underlying items net of tax (see note 8) 1,345 1,586
Underlying profit for the period attributable to ordinary shareholders 4,843 3,315
Weighted average number of ordinary shares (000's) 122,429 117,357
Dilutive effect of share options (000's) 1,437 243
Weighted average number of ordinary shares (000's) 123,866 117,600
Basic profit per ordinary share (pence) 2.86p 1.47p
Diluted profit per ordinary share (pence) 2.82p 1.47p
Underlying basic profit per ordinary share (pence) 3.96p 2.82p
Underlying diluted profit per ordinary share (pence) 3.91p 2.82p
As at 30 June 2022 the directors assessed the potentially dilutive effect of
contingently issuable shares, which comprise share options awarded under the
Performance Share Plan (PSP), options under the Deferred Bonus Plan (DBP),
options under the Company Share Option Plan (CSOP) and options under the Save
as You Earn plan (SAYE).
As at 30 June 2022 there were 5,744,999 options outstanding of which 1,437,400
were considered dilutive. The calculation of diluted earnings per share above
takes into consideration the Group's performance against the targets within
the Performance Share Plan to 30 June 2022.
10. Dividends
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
£000 £000 £000
Final dividend for 2020: 1.7p per share - - 2,079
Interim dividend for 2021: 0.89p per share - - 1,088
The final dividend for 2021 of £2,192k (1.79 pence per share) was paid on 22
July 2022.
An interim dividend for 2022 of £1.1m (0.93 pence per share) is proposed by
the Directors and will be paid on 4 November 2022 to shareholders on the
register as at 7 October 2022.
11. Reconciliation of non-IFRS financial KPIs
The Group uses several key performance indicators to monitor the performance
of its business. This note reconciles these key performance indicators to
individual lines in the financial statements.
In the directors' view it is important to consider the underlying performance
of the business during the year. Therefore, the directors have used certain
Alternative Performance Measures (APMs) which are not IFRS-compliant metrics.
The APMs are consistent with those established within the IPO prospectus and
the prior year annual report. It is the directors' intention to monitor and
reassess the appropriateness of the APMs in future periods.
Unaudited Unaudited
30 June 30 June
2022 2021
As restated(1)
£000 £000
Reconciliation of underlying operating profit
Operating profit 5,109 2,461
Adjustments for:
Effects of amortisation of acquired intangibles 1,198 1,027
Effects of shared based payments 345 355
Foreign exchange gain on contingent consideration 13 (176)
Acquisition costs incurred (875) 384
Group recruitment costs - 49
Depreciation adjustment to align to group accounting policies 173 -
Legal and professional fees 243 155
Underlying operating profit 6,206 4,255
Underlying operating profit margin 17.2% 16.1%
Reconciliation of underlying profit before tax
Profit for the period 3,498 1,729
Adjustments for:
Non-underlying profits or losses net of tax (see note 8) 1,345 1,586
Underlying profit after tax 4,843 3,315
Income tax charge on underlying expenses 1,046 661
Underlying profit before tax 5,889 3,976
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
£000 £000 £000
Reconciliation of net cash / (debt)
Cash and cash equivalents 6,440 11,640 9,616
Borrowings due within one year (5,583) (11,675) (5,739)
Net cash / (debt) 857 (35) 3,877
(1) The prior period amounts have been restated for the correction of prior
period presentation errors, profit for the period is unaffected. See note 5
for more detail.
12. Goodwill
UK Ireland USA Total
£000 £000 £000 £000
Cost
At 1 January 2021 (audited) 15,948 7,525 - 23,473
Additions - - 6,817 6,817
At 30 June 2021 (unaudited) 15,948 7,525 6,817 30,290
Foreign exchange adjustment - (76) 143 67
At 31 December (audited) 15,948 7,449 6,960 30,357
Foreign exchange adjustment - 25 813 838
At 30 June 2022 (unaudited) 15,948 7,474 7,773 31,195
13. Intangible assets
Customer Software Brand Total
relationships and £000 £000
£000 technology
£000
Cost
At 1 January 2021 (audited) 17,169 6,647 2,317 26,133
Additions - 289 - 289
Disposals - (97) - (97)
Acquisitions through business combinations 6,612 - 699 7,311
At 30 June 2021 (unaudited) 23,781 6,839 3,016 33,636
Additions - 474 - 474
Foreign exchange 29 - 15 44
At 31 December 2021 (audited) 23,810 7,313 3,031 34,154
Additions - 1,015 - 1,015
Disposals - (1,765) - (1,765)
Foreign exchange 918 - 93 1,011
At 30 June 2022 (unaudited) 24,728 6,563 3,124 34,415
Amortisation
At 1 January 2021 (audited) 3,445 4,652 886 8,983
Charge for the period 796 463 70 1,329
Eliminated in respect of disposals - (42) - (42)
At 30 June 2021 (unaudited) 4,241 5,073 956 10,270
Charge for the period 956 451 80 1,487
Foreign exchange (2) - - (2)
At 31 December 2021 (audited) 5,195 5,524 1,036 11,755
Charge for the period 957 477 82 1,516
Eliminated in respect of disposals - (1,765) - (1,765)
Foreign exchange 97 - 7 104
At 30 June 2022 (unaudited) 6,249 4,236 1,125 11,610
Net book value
At 30 June 2022 (unaudited) 18,479 2,327 1,999 22,805
At 31 December 2021 (audited) 18,615 1,789 1,995 22,399
At 30 June 2021 (unaudited) 19,540 1,766 2,060 23,366
At 31 December 2020 (audited) 13,724 1,995 1,431 17,150
14. Borrowings
Borrowings due in less than one year
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
£000 £000 £000
Revolving Credit Facility (RCF) 5,583 11,675 5,739
Total 5,583 11,675 5,739
During the six months ended 30 June 2022 £4.0m of the £5.7m GBP RCF was
repaid and £3.7m ($4.7m) was drawn down in USD on which a £0.1m foreign
exchange translation loss was recognised during the period. The RCF facility
is recognised net of arrangement fees of £0.3m (Dec 2021: £0.3m). These
reduced by £0.1m for the unwind of the fees and increased by £0.1m for
additional fees incurred on extending the facility by a further year. The
initial term was three years, extendable by a further two years which is now
extendable by one year following the extension in the period.
In the prior year on 23 April 2021, the previous Revolving Credit Facility
balance of was repaid in full. After recognition of a foreign exchange
translation gain of £0.3m, the amount repaid was £5.6m. On 5 May 2021, the
term debt of £12m was also repaid in full as part of a refinance of the
Group's debt facilities with £12m of a new £30m RCF drawn down on the same
date.
The facility has a margin above SONIA and SOFR for GBP and USD drawn funds
respectively, in the range of 2% to 3% depending on leverage and
non-utilisation fees on undrawn the facility at 35% of the applicable margin.
Repayment of loans are due at the end of each interest period of up to six
months. The remining interest periods for the GBP and USD loans at 30 June
2022 were one and four months being repayable at the start of August and
November respectively. New loans can be drawn down on submission of a
utilisation request.
Security has been granted to the new banking syndicate of three banks
comprising Lloyds, NatWest and Silicon Valley Bank over the UK companies and
limited security over non-UK entities. Additionally, the group has access to
an unutilised accordion facility up to £22.5m.
The RCF requires interest and leverage covenants to be met under the terms of
the Group's facility agreement, and these requirements have been met as at all
prior covenant testing dates.
15. Contingent consideration
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
£000 £000 £000
Amounts due in less than one year 1,859 4,701 5,335
Amounts due in more than one year - 1,545 1,553
Total 1,859 6,246 6,888
16. Contingent consideration (continued)
Reconciliation of contingent consideration
Global Diagnostics Ireland Limited RadMD LLC
£000 £000
Total
£000
As at 1 January 2021 3,531 - 3,531
Acquired on acquisition - 2,924 2,924
Fair value adjustment on contingent consideration (121) 88 (33)
Foreign exchange (165) (11) (176)
As at 30 June 2021 3,245 3,001 6,246
Fair value adjustment on contingent consideration 50 576 626
Foreign exchange (65) 81 16
As at 31 December 2021 3,230 3,658 6,888
Fair value adjustment on contingent consideration 45 335 380
Amounts paid (1,672) (4,051) (5,723)
Foreign exchange 33 281 314
As at 30 June 2022 1,636 223 1,859
Amounts due in less than one year 1,636 223 1,859
Amounts due in more than one year - - -
Global Diagnostics Ireland Limited
Contingent consideration reduced by £1,594k during the period mainly driven
by a payment of £1,672k on commencement of a new contract as specified in the
terms of the agreement. This was offset by an increase of £45k due to the
fair value movement in relation to the unwinding of the time value of money
and an increase of £33k relating to foreign exchange revaluation from Euros
to GBP. £20k of the foreign exchange arises on consolidation of the Global
Diagnostics Ireland and been recognised in the foreign exchange reserve.
The balance on 30 June 2022 of £1,636k is disclosed under current liabilities
on the statement of financial position. £171k of this was paid in July 2022
and the remaining balance is payable in the first half of 2023.
RadMD LLC
Contingent consideration reduced by £3,435k during the period mainly driven
by a payment of £4,051k relating to the finalisation of the earnout based on
adjusted 2021 EBITDA. This was offset by an increase of £145k in the fair
value due to a higher adjusted 2021 EBITDA than originally estimated resulting
in a higher payment of contingent consideration. As the events occurred after
the acquisition date a charge has been recognised in the income statement and
not taken to goodwill. The balance also increased by £190k due to the fair
value movement in relation to the unwinding of the time value of money.
Additionally, the balance increased by £281k due to foreign exchange
revaluation from USD to GBP which has been recognised in the foreign exchange
reserve.
The balance on 30 June 2022 of £223k relates to the earnout based on the 2022
EBITDA which is payable in the first half of 2023 and is disclosed under
current liabilities on the statement of financial position.
17. Equity
Ordinary share capital issued and fully paid
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
£000 £000 £000
122,433,635 (June 2021, 122,390,760; December 2021: 122,428,836) ordinary 245
shares of £0.002 each
245 245
Total ordinary share capital of the Company 245 245 245
Issue of share capital during the period
On 30 June 2022, 4,799 ordinary shares of £0.002 each were issued for cash at
£1.12 per share.
Share premium
£5k was recognised in share premium on the issue of ordinary shares during
the period.
18. Related party transactions
There were no related party transactions during the period.
19. Post balance sheet events
In July 2022 contingent consideration in relation to the Ireland acquisition
of £171k was paid as discussed in note 14. There were no other post balance
sheet events during the post balance sheet period.
Statement of Directors' Responsibilities
The Directors confirm to the best of their knowledge that
a) The interim condensed consolidated financial information has been
prepared in accordance with IAS 34 as adopted by the European Union; and
b) The Interim Report includes a fair view of the information as required
by:
DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first half of
2022 and their impact on the interim condensed consolidated financial
information; and a description of the principal risks and uncertainties for
the remaining second half of the year; and
DTR4.2.8R of the Disclosure Guidance and Transparency Rules, being related
party transactions that have taken place in the first half of 2022 and any
material changes in the related party transactions described in the last
Annual Report.
The Directors of Medica Group PLC and their functions are listed below:
Roy Davis Chairman
Stuart Quin Chief Executive Officer
Richard Jones Chief Financial Officer
Barbara Moorhouse Senior Non-Executive Director
Joanne Easton Non-Executive Director
Junaid Bajwa Non-Executive Director
By order of the Board
Richard Jones
Chief Financial Officer
27 September 2022
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