TIDMIHC
RNS Number : 7362R
Inspiration Healthcare Group PLC
26 September 2017
26 September 2017
Inspiration Healthcare Group plc
("Inspiration Healthcare" or the "Company")
Interim Results
Inspiration Healthcare Group plc (AIM: IHC), the global medical
device company, today announces its unaudited interim results for
the six months ended 31 July 2017 ("H1 2017/18").
Highlights:
-- Revenue up 1% to GBP7.2m in line with expectations (H1 2016/17: GBP7.1m)
-- International sales up 20% to GBP2.3m, with strong growth in Europe (H1 2016/17: GBP1.9m)
-- Revenue from Own Branded products increased by 8% to GBP3.5m (H1 2016/17: GBP3.2m)
-- Operating Profit of GBP0.5m (H1 2016/17: GBP0.6m)
-- GBP0.1m of one-time costs for quality management and regulatory compliance systems
-- Cash remains strong ending the half year at GBP1.8m
-- Trading in line with expectations, with pipeline in place for
uplift in profit performance during the second half of the
financial year.
Neil Campbell, Chief Executive Officer, said today: "We are very
pleased to have maintained our revenue in the first half, in line
with our expectations, as certain product sales were restricted due
to outsourced manufacturing and the upgrading of our regulatory
compliance systems. The significant improvement in our quality
management and compliance systems across all areas of the business
however has given us a much stronger platform to support future
growth, starting in the second half."
Enquiries:
Inspiration Healthcare Tel: 01455 840555
Group plc
Neil Campbell, Chief Executive
Officer
Mike Briant, Chief Financial
Officer
-------------------------------- -------------------
Nominated Adviser & Broker Tel: 0207 397 8900
Cenkos Securities plc
Bobbie Hilliam (NOMAD)
-------------------------------- -------------------
Cadogan PR Tel: 07771 713608
Alex Walters
-------------------------------- -------------------
About Inspiration Healthcare
Inspiration Healthcare (AIM: IHC) is a global supplier of
medical technology for critical care, operating theatre and other
medical applications. The Company provides high quality innovative
products to patients and caregivers around the world that help to
improve patient outcomes and efficiencies of healthcare
organisations with patient focused customer service and technical
support.
The Company's own brand of critical care solutions span
non-invasive respiratory management, thermoregulation and
diagnostics, and patient warming for newborns through to adults in
intensive care and the operating theatre, whilst the distribution
business supplies solutions to support specialised surgical
procedures and infusion therapies.
Present in over 50 countries worldwide, Inspiration Healthcare's
success has been built on continuous innovation, excellent customer
service and an inherent commitment to improving the quality of life
of patients, working in close collaboration with key opinion
leaders and stakeholders in the clinical and medical community
across the globe.
Further information on Inspiration Healthcare can be seen at
www.inspiration-healthcare.com
Chairman's Statement
As confirmed in our AGM statement of 30 June 2017, I am pleased
to report that the Group's business continues to trade in line with
our expectations, with revenue for the first half slightly up on
the equivalent period last year. During the half, we have
strengthened our management team with the recently announced
appointments and significantly upgraded our quality and regulatory
systems, whilst we continue to grow internationally. We are also
pleased to have completed the restructuring of our business now
focused on medical technology.
Critical care continues to perform well, despite delays in CE
mark clearance for new products arising from increased regulatory
requirements, with sales of our Inspire nCPAP neonatal non-invasive
respiratory range continuing to grow strongly. Additionally, we are
seeing increased interest from developing countries in our
Tecotherm cooling products.
Operating room sales for the Alpha patient warming range showed
the anticipated reduction in revenue whilst we redevelop our
product offerings which are scheduled to be completed by the end of
the current financial year. Our Home Healthcare products range
continues to perform well in a niche market.
Our investment in management and regulatory resources in the
first half, despite reducing reported profits in the short term,
will provide an enhanced platform for our business to develop going
forward.
Financial Review
Revenue for the six months to 31 July 2017 was GBP7.2 million
(2016/17: GBP7.1 million), in line with expectations and up 1% over
the equivalent period for the previous year.
Reported Operating Profit for the period at GBP514k was GBP68k
or 12% below the same period last year (H1 2016/17: GBP582k before
exceptional items). However, the year on year decline is primarily
due to additional investment in management and regulatory resources
with the latter including GBP100k for one-time costs to strengthen
this function. This investment was made to assist the Group achieve
its future growth aspirations.
Profit after tax for the six months to 31 July 2017 was GBP461k
compared to GBP361k for the same period to 31 July 2016 (the latter
being after exceptional costs of GBP135k).
Revenue from our own brand products increased 8% year on year to
GBP3.5m for the first half and accounted for 48% of revenue, up
from 45% for the equivalent period. This is particularly pleasing
as we have now extracted historical Industrial revenues from the
business (GBP0.1m H1 2016/17). Revenue from Distributed products
declined to GBP2.6m, representing 37% of total revenue (H1 2016/17:
40%). The gross margin of 45% was broadly in line with last year
due to the improved product mix offsetting the impact of adverse
movements in exchange rates on distributor product margins. Over
the longer term we have the ability to protect our gross margins
through natural currency hedges and selective price increases, but
short-term volatility of exchange rates of Sterling against the
Euro and the US Dollar continues to present some challenges.
Investment in management and regulatory resources resulted in an
increase in overheads of 6%. However, due to savings achieved from
the Rotherham closure at the end of last year and other cost
management initiatives the overall increase in overheads was
limited to 2% or GBP63k (before exceptional items in the prior
year). Investment in R&D (combined capital and expensed)
amounted to approximately 4% of revenue in the first half. We
expect total spend on R&D to increase in the second half.
As a consequence of the above factors reported Operating Profit
was down 12% to GBP0.5m (2016/17: GBP0.6m). Operating margin was
7.2% (2016/17: 8.2%).
The resulting reported earnings per share was 1.5p (2016 before
exceptional items: 1.6p).
Net cash at 31 July 2017 was GBP1.8 million, down from the
year-end position of GBP2.1 million, partly due to settlement of
exceptional items booked last year.
At the AGM held on 30 June a capital reduction programme was
approved and, following the necessary court hearings, I am pleased
to say that this was completed in early August. Historical
accumulated losses have now been eliminated following the
completion of the Capital Reduction which will allow the Company
the flexibility to distribute profits to shareholders as dividends
at some point in the future. However, the Board intends that there
will be significant retention of earnings to finance growth.
Operational Review
International sales increased by 20% mainly due to a strong
performance of our core Neo-natal product range in Europe and the
Middle-East. We continue to push ahead establishing strong
relationships with our international partners and prospective
customers and as new products come to fruition we expect to
continue to build on our distribution network. We have spent time
looking at ways of improving our access to the USA market which we
feel will be a key region for growth over the next few years. The
launch of key new products in the USA is dependent on FDA clearance
which is now being looked at as part of our wider strategy for this
market.
Our investment in our International sales team over the past 18
months is now reaping dividends as we have established stronger
partnership with our distributors in key markets in Europe and the
Middle East.
Domestic market revenues (comprising the UK and Republic of
Ireland) were down by 6% to GBP4.9m in H1 2017/18 (H1 2016/17:
GBP5.2m) due to previously referred to regulatory delays to new
product releases. The underlying trend in the NHS in the UK is to
look for products that offer superior clinical outcomes at a price
point that offers value for the NHS. Our sales and marketing team
are continually looking at ways to improve how we communicate our
value proposition in the UK and Ireland to differentiate our
offering from that of our competitors through, for example, managed
service contracts and new technologies.
Market Review
Our Critical Care sales increased 4.2% year on year to GBP4.2m,
despite delays to the launch dates of the LifeStart and rPAP Driver
products. We remain confident that these products will do well once
regulatory clearances have been concluded and we have seen
continued interest in all our products, both in enquiries from
developing healthcare systems and in relation to clinical trials in
established markets. It is also encouraging that we are being
approached by inventors of medical devices looking to partner with
us to take their invention to market. We are currently evaluating a
number of collaborative projects that could be potentially
disruptive in the market.
In Operating Theatre our emphasis has been on highlighting the
benefits of managed service contracts which we are well placed to
implement in the UK as NHS Trusts consider different ownership and
usage models of the redeveloped patient warming system. This has
inevitably reduced revenue in the short term but we are confident
that this will lead to greater adoption of the product and
profitability in the longer term. We have also more aggressively
targeted opportunities for distributed products in this area as we
seek to develop revenue streams for future years.
Our Home Healthcare sales were up by 7% on the same period last
year to GBP1.1m, despite the removal of industrial revenue, which
was previously reported in this revenue segment, due to the closure
of the Rotherham facility.
Outlook
Our strengthened management team and quality systems will allow
us to accelerate growth in the longer term. As a consequence, our
focus is now on advancing the rate of new products to be released
into our key markets. We believe that our enhanced capabilities in
the areas of quality management and regulatory compliance will meet
the demands of our industry and position us well for the
future.
Our expectation for the full year remains unchanged, maintaining
our returns on a growing revenue line.
MARK ABRAHAMS Chairman
26 September 2017
Unaudited Consolidated Statement of Comprehensive Income
For the six months ended 31 July 2017
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31-Jul 31-Jul 31-Jan
2017 2016 2017
Notes GBP'000 GBP'000 GBP'000
--------------------------------- ------ ---------------- ------------ ---------------
Revenue 7,185 7,117 14,323
Cost of sales (3,983) (3,910) (7,965)
Gross profit 3,202 3,207 6,358
Operating expenses (2,688) (2,760) (5,913)
Operating profit 514 447 445
Analysed as:
Operating profit before
impairment of goodwill
and intangible assets
and exceptional items 514 582 1,163
Exceptional items 4 - (135) (718)
Operating profit 514 447 445
--------------------------------- ------ ---------------- ------------ ---------------
Finance income - 2 3
Finance costs (2) (1) (4)
Profit on ordinary activities
before taxation 512 448 444
Taxation 5 (51) (87) (132)
Profit retained attributable
to the owners of the parent
company 461 361 312
Earnings per share, before
exceptional items attributable
to owners of the parent
company during the period
- basic and diluted 1.5p 1.6p 3.4p
Earnings per share for
Inspiration Healthcare
Group attributable to
owners of the parent company
during the period - basic
and diluted 1.5p 1.2p 1.0p
All recognised gains and losses are included in the Consolidated
Statement of Comprehensive Income, as such there is no other
comprehensive income.
Unaudited Consolidated Statement of Financial Position
As at 31 July 2017
Unaudited Unaudited Audited
As at As at As at
31-Jul 31-Jul 31-Jan
2017 2016 2017
Notes GBP'000 GBP'000 GBP'000
-------------------------------------------------------------------------------- ----------------- ----------------- -----------------
ASSETS
Non-current assets
Intangible assets 765 318 535
Goodwill - - -
Property, plant and equipment 491 164 365
Deferred tax asset - 47 -
Investments 106 100 106
-----------------
1,362 629 1,006
-------------------------------------------------------------------------------- ----------------- ----------------- -----------------
Current assets
Inventories 829 1,063 778
Trade and other receivables 2,082 1,728 2,491
Current tax asset - 60 -
Cash and cash equivalents
8 1,792 3,009 2,165
-------------------------------------------------------------------------------- ----------------- ----------------- -----------------
4,703 5,860 5,434
Total assets 6,065 6,489 6,440
-------------------------------------------------------------------------------- ----------------- ----------------- -----------------
Liabilities
Current liabilities
Trade and other payables 1,942 2,349 2,816
Obligations under finance
leases - 24 16
Deferred income 433 416 368
Current tax liability 79 379 77
2,454 3,168 3,277
Non-current liabilities
Deferred income 12 114 25
Deferred tax liability 13 33 13
Total liabilities 2,479 3,315 3,315
-------------------------------------------------------------------------------- ----------------- ----------------- -----------------
Net assets 3,586 3,174 3,125
-------------------------------------------------------------------------------- ----------------- ----------------- -----------------
Shareholders' equity
Called up share capital 3,067 3,067 3,067
Share premium account - 9,929 9,929
Merger reserve 391 4,600 4,600
Reverse acquisition reserve (16,164) (16,164) (16,164)
Accumulated profit 16,292 1,742 1,693
Total equity 3,586 3,174 3,125
-------------------------------------------------------------------------------- ----------------- ----------------- -----------------
Total liabilities and equity 6,065 6,489 6,440
-------------------------------------------------------------------------------- ----------------- ----------------- -----------------
Unaudited Consolidated Statements of Cash flows
For the six months ended 31 July 2017
Unaudited Unaudited Audited
6 months 6 months Year
ended Ended ended
31-Jul 31-Jul 31-Jan
2017 2016 2017
Notes GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations
9 162 817 771
Interest paid (2) (1) (4)
Taxation paid (50) 56 (203)
--------------- --------------- -----------------
Net cash inflow from operating
activities 110 872 564
-------------------------------------- --------------- --------------- -----------------
Cash flow from investing activities
Interest received - 2 3
Purchase of property, plant
and equipment (198) (56) (313)
Purchase of intangible assets (14) (36) (58)
Capitalised development costs (255) (84) (327)
Acquisition of investment - - (6)
Net cash used in investing
activities (467) (174) (701)
-------------------------------------- --------------- --------------- -----------------
Cash flow from financing activities
Finance leases (16) (8) (17)
Net cash used in financing
activities (16) (8) (17)
-------------------------------------- --------------- --------------- -----------------
Net (decrease) / (decrease)
in cash and cash equivalents (373) 690 (154)
Cash and cash equivalents at
the beginning of the period 2,165 2,319 2,319
Cash and cash equivalents at
the end of the period 1,792 3,009 2,165
-------------------------------------- --------------- --------------- -----------------
Unaudited Consolidated Statement of Changes in
Shareholder Equity
For the six months ended 31 July 2017
Called
up Share Reverse
Share premium Merger acquisition Retained Total
Capital account reserve reserve earnings equity
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
Shareholders' equity
at 31 January 2016 3,067 9,929 4,600 (16,164) 1,381 2,813
Profit for the period
and total comprehensive
expenses - - - - 361 361
Shareholders' equity
at 31 July 2016 3,067 9,929 4,600 (16,164) 1,742 3,174
Loss for the period
and total comprehensive
expenses - - - - (49) (49)
Shareholders' equity
at 31 January 2017 3,067 9,929 4,600 (16,164) 1,693 3,125
Profit for the period
and total comprehensive
expenses - - - - 461 461
Capital reduction exercise:
* Issue of B Shares to Capitalise Merger Reserve 4,209 (4,209) -
* Cancellation of B Shares (4,209) 4,209 -
* Cancellation of Share Premium Account - (9,929) - 9,929 -
Shareholders' equity
at 31 July 2017 3,067 - 391 (16,164) 16,292 3,586
------------------------------------------------------ ---------- ----------- ----------- ---------------- -------------- -----------
Capital Reduction
On 26(th) July 2017, the High Court issued an order confirming
the cancellation of Inspiration Healthcare Group PLC's share
premium account and the first tranche of B shares issued to
capitalise GBP4,208,858 of the amount standing to the credit of the
merger reserve. Following registration with Companies House, the
Capital Reduction became effective on 28 July 2017.
Subsequently, on the 9th August 2017 the High Court issued an
order confirming the cancellation of the second tranche of B shares
to capitalise GBP391,274 of the amount standing to the credit of
the merger reserve. Following registration with Companies House,
the Capital Reduction became effective on 14 August 2017.
Notes to the interim report
1. Basis of Preparation
This condensed consolidated interim financial information for
the six months ended 31 July 2017 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 2017, 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. After making enquiries, the directors
have a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future.
The Group therefore continues 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
2017 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 2016 is also
unaudited. The audited accounts for the year ended 31 January 2017
for Inspiration Healthcare Group plc were approved by its Board of
Directors on 3 May 2017 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 2017 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. Exceptional items
There are no exceptional items in the current period. GBP135k
incurred in the equivalent prior year period relate to severance
costs following the change of Group Finance Director.
Exceptional items for the year ended 31 July 2017 include the
costs of closure of the corporate office and manufacturing site at
Rotherham and the Albourne R&D facility.
6 months 6 months Year
ended ended ended
31-Jul 31-Jul 31-Jan
2017 2016 2017
GBP'000 GBP'000 GBP'000
------------------------------- ---------- --------- ---------
Professional fees in relation
to the reverse acquisition - - (62)
Severance and related costs - 136 136
Closure of facilities - - 644
-------------------------------- --------- --------- ---------
Total exceptional items - 136 718
-------------------------------- --------- --------- ---------
5. Taxation
A provision has been made for corporation tax at the rate of
19.4% on the estimated taxable profits for the period.
6. Dividends Paid
There are no immediate plans to pay dividends for Inspiration
Healthcare Group plc.
7. Earnings/(loss) per share
The calculation of earnings per ordinary share is based on a
profit of GBP461k (31 July 2016: GBP361k, 31 January 2016: GBP312k)
and on a weighted average number of ordinary shares of 30,667,548
for each period.
8. Cash and cash equivalents
Cash and cash equivalents compromise solely of cash and cash in
hand and held by the Group.
The carrying amounts of the Group's cash and cash equivalents
are denominated in the following currencies:
Unaudited Unaudited Audited
6 months 6 months Year
ended Ended Ended
31-Jul 31-Jul 31-Jan
2017 2016 2017
GBP'000 GBP'000 GBP'000
-------------------------------- ---------- ---------- ---------
Pound Sterling 1,262 2,647 1,715
Euro 425 262 77
US Dollars 104 96 373
JPY 1 4 -
Net cash inflow from operating
activities 1,792 3,009 2,165
-------------------------------- ---------- ---------- ---------
9. Note to the Consolidated Statement of Cash flows
Unaudited Unaudited Audited
6 months 6 months Year
Ended Ended Ended
31-Jul 31-Jul 31-Jan
2017 2016 2017
GBP'000 GBP'000 GBP'000
Profit before taxation 512 448 444
Adjustments for:
Net finance costs / (income) 2 (1) 1
Depreciation and amortisation 111 103 204
Loss on disposal of tangible
asset 1 - 2
(Increase) / decrease in inventories (51) (284) 2
Decrease / (Increase) in trade
and other receivables 409 303 (461)
(Decrease) / increase in trade
and other payables (874) 131 598
Increase / (decrease) in deferred
income 52 117 (19)
----------- ---------- -----------------
Net cash inflow from operating
activities 162 817 771
-------------------------------------- ----------- ---------- -----------------
10. Contingent liabilities
Included within cash and cash equivalents is a deposit for
GBP150k that is used as collateral for bank facilities provided by
HSBC Bank plc to Inspiration Healthcare Group plc.
Inspiration Healthcare Limited has provided a fixed and floating
charge over its assets as collateral for bank facilities provided
by The Royal Bank of Scotland plc. Throughout all periods reported
there have been no borrowings on this facility. In addition, The
Royal Bank of Scotland plc provide a bank guarantee to HM Revenue
and Customs as security for its Duty Deferment Scheme.
During the normal course of business, the group offers
warranties against its products against clearly defined peformance
specifications.
11. Related party transactions
-- Investment in Neuroprotexeon Limited
The company has a holding of 10.4% (2016: 12.8%) of the issued
ordinary share capital of Neuroprotexeon Limited and holds 25,000
options to purchase ordinary shares at an exercise price of GBP0.23
per share which have been exercised since 31 July. The investment
agreement provides the Group with the right to appoint a director.
Neil Campbell is currently appointed as a Non-Executive Director as
the Group's representative.
-- Lease of Leicestershire facility
Inspiration Healthcare Limited entered into a lease in respect
of Gildor House in Earl Shilton, Leicestershire for an annual rent
of GBP19,250 on 8 April 2008. The lease term is for ten years from
April 2008. The last rent review date in the term has already
passed. The landlord of the property is a self-invested pension
plan ("SIPP") controlled by Neil Campbell, Toby Foster, Simon
Motley, Malcolm Oxley and Graham Walls. The annual charge was
deemed to be at a market rate by Standard Life Trustee Limited on
18 April 2008. This was reviewed on 6 August 2013, with the market
rate remaining unchanged.
-- Key management
Directors control 28% of the voting shares of the legal parent
company
Registered Office:
2 Satellite Business Village
Fleming Way
Crawley RH10 9NE
Telephone: +44 (0) 1455 840555
Fax: +44 (0) 1455 841464
website www.Inspiration-healthcare.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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