Annual Report
and Financial Statements
2022
Our Mission
Our mission is to provide high quality innovative products to patients and
caregivers around the world that help to improve patient outcomes, while
driving efficiencies of healthcare organisations with patient focused customer
service and technical support.
STRATEGIC REPORT
04 About the Group
05 Global Market Revenue
06 Our Business
08 Chairman’s Report
14 Our Business Strategy
22 Chief Executive Officer’s Review
30 Operating and Financial Review
34 Environmental and Sustainability
36 Principal Risks and Uncertainties
FINANCIAL STATEMENTS
66 Independent Auditors’ Report
to the Members of Inspiration Healthcare Group plc
72 Consolidated Income Statement
72 Consolidated Statement of Comprehensive Income
73 Consolidated and Company Statements of Financial
Position
44 Companies Act Section 172 Statement
74 Consolidated and Company Statements of Changes in
GOVERNANCE
46 Statement of Corporate Governance
52 Audit Committee Report
54 Board of Directors
56 Directors’ Report
Shareholders’ Equity
76 Consolidated Cash Flow Statement
77 Notes forming part of the Financial Statements
SHAREHOLDER INFORMATION
106 Shareholder information
60 Directors’ Remuneration Report
107 Advisors
02
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Group Highlights
FINANCIAL
Group Revenue
£41.1m
FY2021: £37.0m
Operating Profit
£4.3m
FY2021: £3.2m
Gross Margin
50.2%
FY2021: 48.7%
Adjusted EBITDA1
£6.4m
FY2021: £5.6m
Net cash position2
£9.3m
FY2021: £10.7m
Proposed final dividend
0.41p
per share
1 Earnings before interest, tax, depreciation, amortisation, impairment, share based payments and non-trading items.
2 After significant investment in capital expenditure: Facilities, R&D and IT systems.
STRATEGIC
u Export growth and realising
synergies within the enlarged
Group
u Successfully integrated SLE
and Viomedex into the Group
OPERATIONAL
u Strengthened and expanded
Management
u Queen’s Award for Enterprise
and Innovation for SLE Limited
for its OxyGenie® software
based algorithm
u Roll-out of the Group’s
Enterprise Resource Planning
system into Viomedex and SLE
u Investment in new manufacturing
and technology centre in the UK
u China/Japan key registrations
approved for SLE6000 ventilator
with major orders from
distribution partners
u Project Wave patient
recruitment/patient
range extension
u R&D Expenditure
increased to 9%
of revenue
u Introduction of new and improved
electronic quality management
system throughout the Group
u Renewed long-term Distribution
Agreement with Micrel
u Charitable giving initiative
launched and implemented
u Introduction of new Group logos
and unified branding
u Adopted a number of well-being
initiatives for employees
POST-YEAR END
u Launch for diagnosing antibiotic
induced hearing loss in UK
and Ireland in conjunction with
genedrive plc
03
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.uk
About the Group
inspirationhealthcaregroup.plc.uk
Inspiration Healthcare (AIM: IHC) is a global provider
of medical technology for use in critical care & operating
theatres with a focus on neonatal care and a distributor
for infusion therapies. The Group provides high-quality,
innovative products to patients around the world which
help to improve patient outcomes, and it actively invests in
innovative product opportunities and disruptive technologies.
The Group also acts as a distributor for third party
companies that wish to access the UK and the Republic of
Ireland’s health systems using the Group’s sales and service
expertise and knowledge of these healthcare providers.
The therapy areas in which we distribute products such as
Infusion Therapy, Respiratory and Developmental Care add
value to our product portfolio.
The Group reports its revenue in three areas of its business:
Acute Care (which includes neonatal intensive care and the
operating theatre); Service (a range of maintenance and
repair options with spare parts); and Infusion Therapy (a
UK distribution business).
The Group invests for growth through its Research and
Development function holding numerous patents on its
technology and has strong links with academic Key Opinion
Leaders around the world and supports clinical research in
the field of neonatal intensive care.
The Group sells neonatal intensive care and operating theatre
equipment globally through a network of distributors into
over 75 countries. Products range from highly sophisticated
capital equipment through to single use disposables all
of which can help improve outcomes of extremely sick
patients. The blend of capital and disposables gives the
Group a blend of one-off and recurring revenue streams.
The Group’s operating companies have a harmonised quality
management system, albeit locally implemented, and sell
a range of Branded Products where the Group controls
the Intellectual Property and on which the Group has a
strategic focus and invests in Research and Development.
Additionally, the companies sell Distributed Products which
add value to the Group and offer Technology Support to
customers
training along
with ownership and usage options including rentals and
emergency hire.
requiring maintenance and
In the UK and Ireland the Group offers direct sales for most
of its products supported by Technology Support offering
on site and return to base repair and maintenance along
with 24/7 emergency hire of equipment and long-term lease
arrangements for its own brand products.
04
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Global Market Revenue
We sell directly into the UK and Ireland (“Domestic”) and partner with established independent distributors
in the rest of the world actively selling in over 75 countries.
Percentage of Revenue by Market
Domestic 43%
Asia Pacific 25%
FY2021 66%
FY2021 11%
Europe 15%
Middle East & Africa 13%
Americas 4%
FY2021 14%
FY2021 5%
FY2021 4%
05
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Our Business
We look at our business in different ways for Market Sectors and Revenue Streams:
Market Sectors (excluding freight)
Revenue Streams (excluding freight)
Acute Care1 £29.5m
(FY2021: £27.7m)
The hospital setting mainly neonatal intensive
care and also the operating theatre and
adult/paediatric intensive therapy units.
Infusion Therapy £7.0m
(FY2021: £6.0m)
A distributed product portfolio that is focused
on various infusion therapies in different
settings including the patient’s home or the
hospital. We have a growing business around
infusion products for various treatments.
Service £4.2m
(FY2021: £3.0m)
Our revenue derived for our service activities
including planned preventative maintenance,
repairs and spare parts.
Branded Products £22.5m
(FY2021: £11.5m)
Where we are the legal manufacturer
of the product and we control the
intellectual property.
Distributed Products1 £13.6m
(FY2021: £22.2m)
Where we sell products from a third party
predominantly in the UK and Ireland and
in some cases worldwide.
Technology Support £4.6m
(FY2021: £3.0m)
Where we offer usage and ownership options
(including short and long-term rentals),
maintenance programmes and training to
allow users to maximise their experience
with our Group’s products.
1 F Y2021 Distributed Products and Acute Care revenue
includes £7.3m of one off Covid-19 revenue
06
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Business Model
We are a fully integrated medical technology company covering
everything from new product development, manufacturing,
sales and marketing along with post-sales support.
We also distribute technology for third party manufacturers
which supplements and complements our Branded Products
and add value to our customers.
We invest in our product portfolio to develop new products
and technologies and, along with regulatory approvals,
investment in sales and marketing activities, we develop
new markets.
The products move from development and over time help to
grow our business organically as they become established
products in existing markets.
Our business model has always been to be cash generative
from operations as we sell existing products into existing
markets. During the product life cycle they generate profits
and cash for the Group which in turn we use to re-invest
in our business through R&D or by acquisitions for future
growth. As we have matured we can afford to pay a dividend
to our shareholders.
NEW
PRODUCTS
INVEST
NEW
MARKETS
NEW
PRODUCTS
ACQUIRE
NEW
MARKETS
EXISTING
PRODUCTS
GROWTH
EXISTING
MARKETS
PROFIT
CASH
RE-
INVESTMENT
DIVIDENDS
07
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Chairman’s Report
We are agile in our approach
to managing the challenges
ahead and remain confident in
our growth prospects
2021/22 Highlights
u Export growth and realising synergies within the enlarged Group.
Exports grew by 87%
u Investment in new manufacturing and technology centre in the UK.
Longer-term growth and ambitions led us to review the suitability of
our facilities in Croydon
u Charitable giving initiative launched and implemented.
A committee made up entirely of employees
A number of donations through this initiative have been approved
u Introduction of new Group logos and unified branding.
Will help our customers around the world identify companies within the Group
u Adopted a number of well-being initiatives for employees.
Allowing employees to work from home up to 40% of the time
Introduced a compressed working week, where employees can request to work
four long days and have an extended weekend
08
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC
Welcome to this annual report where I have the pleasure
of discussing the achievements of the enlarged Group
despite the prevailing headwinds of Covid-19. This year
sees the first full year including the reporting of SLE, our
transformational, award-winning transaction completed in
July 2020 and it is pleasing to see what progress has been
made this year.
Last year, I reported on the achievements of the Group
during a year that we had supplied over 500 ventilators for
the NHS in its battle against Covid-19 from our overseas
manufacturing partners, alongside helping in the Ventilator
Challenge project that saw a further 13,000 ventilators
manufactured, whilst maintaining growth and continuing
the integration of SLE.
This year, we had no such one-off revenues from
Covid-19 (FY2021: £7.3million), only our own on-going
sales. Therefore, what is extremely pleasing is that our
revenues grew across the Group to £41.1million (FY2021:
£37.0million) whilst improving overall gross margins given
the lockdown conditions around the world during the last
two years. Despite the issues caused by Covid-19 remaining
throughout the year, our post tax profits were up to
£3.6million (FY2021: £2.8million) and our cash generation
remained strong with closing cash at the financial year-end
of £9.3million (FY2021: £10.7million).
This performance was underpinned by our expansive
distribution network where the network from the acquisition
of SLE has enhanced and enlarged the Group’s capability
around the world. Our exports grew by 87%. Some of
this growth was due to cross selling opportunities that
were identified when we acquired SLE, being able to sell
disposables from other businesses in the Group has allowed
us to win business where we would not previously have.
I would like to thank our distribution partners and end users
around the world for their continued support of our products
whilst battling their own local Covid-19 related conditions.
We look forward to bringing more products to them over
the coming years through regulatory clearance and product
development to bring greater success. We should not forget
that we have had challenges this year in visiting hospitals
and supporting patients. Essential visits only have been
allowed, but with all the precautions needed to maintain
the safety of our employees.
09
Mark Abrahams
Chairman
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Chairman’s Report continued
Just over a year ago we decided to give increased focus to
improving the performance of our Infusion Therapy team
through additional investment in resources. I am delighted
to say that the results of these small changes have been
truly remarkable and that in the UK, our sales of Infusion
Therapy products have grown by 16%. We are now looking
at how we can continue to add to the momentum in this
area in the UK and Ireland to achieve even greater growth
next year.
The regulations in the industry continue to create a
challenge to most companies as the European Union
transitions from the Medical Devices Directive to the Medical
Devices Regulation. As we are integrating three companies
together each with their own quality management systems
and regulatory approvals, we have decided to make an
investment in a new electronic quality management system.
There has been good progress with this throughout the year
as our team aligns processes and procedures to make us
more efficient, effective and maintain our compliance.
As with most industries, our input costs in the UK, in terms
of materials (especially ‘silicon chips’), inbound freight and
energy have been hit hard by inflationary pressure, and
similarly our distributors have to also manage their costs
(such as freight) and local market costs. Managing these
changing costs in a rapidly changing environment has been
challenging and being able to improve our margins to 50.2%
(FY2021: 48.7%) shows great resilience in our product
portfolio and our ability to extract efficiencies across the
Group. We have taken advantage of being able to look at the
resources across the Group and made some restructuring
changes. This has allowed us to focus resources where they
are most needed for longer-term growth.
Looking at our longer-term growth and ambitions led us
to review the suitability of our facilities in Croydon and
after careful consideration we decided to invest in a new
manufacturing and technology centre in the UK as our
main centre for R&D and Manufacturing of our capital
equipment, especially the SLE brand of ventilators. We have
been working on our sustainability over the past few years,
but planning a new facility allowed us to concentrate on
creating something very special for our future. Over the year
many of our team, led by our Chief Operating Officer Brook
Nolson, have spent time planning our move to a new state-
of-the-art purpose designed facility. The move includes a
‘soft start’ during May to validate all processes and systems
whilst maintaining production at our old facilities along with
the associated regulatory approvals.
Looking at our longer-term
growth and ambitions led us to
invest in a new manufacturing
and technology centre in the UK
10
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Integration of the recently acquired companies into the
Group has gone well, and we now have new logos and
branding that will help our customers around the world
identify companies within the Group. Additionally, we have
standardised across the Group with one Enterprise Resource
Planning (“ERP”) system. This allows our teams across
the Group to extract data more readily from all operating
companies giving management information more quickly.
Our people underpin the business and finding a location
within a short distance of the current premises was difficult
but important. It allows us to retain our loyal and dedicated
team whilst being able to offer a modern, uplifting working
environment. We want to be an exemplar of British Medical
Technology and the new facilities focus heavily on reducing
our carbon footprint with passive ventilation and green
spaces to reduce our heating, energy efficient lighting,
charging points for electric cars, along with better well-
being spaces for our employees. We continue to invest in
our people and look to develop the talented employees we
have as we grow.
Unfortunately, social distancing and recommendations of
working from home have meant that many of our colleagues
have yet to meet one another in person and we hope this will
change over the coming year. We have carefully considered
how we can integrate well-being for all our employees along
with both aligning and improving our employee benefits.
Initiatives such as an electric car scheme and cycle to work,
alongside salary sacrifice for employee pensions, have been
combined with flexible working. Having listened to what
our employees wanted, along with recruiting new members
of the team we have chosen to be progressive with the
location of working for certain roles; allowing employees
to work from home up to 40% of the time, or work from
another location within the Group if it is more convenient.
Additionally, we have introduced a compressed working
week, where employees can ask to work four long days and
have an extended weekend and approximately one third of
our staff have chosen this option. This flexible approach
has been appreciated by our team and coupled with being
able to work at different sites we have become a modern
flexible employer.
Last year, we detailed information about a charitable giving
initiative we were implementing. In order to distribute
monies from the Charities Aid Foundation to which a
donation was made during FY2021, we have a committee
made up entirely of members of staff who review requests
for donations from small medical based charities and
determine whether they fit with our values. A number of
donations through this initiative have been approved and
we look forward to being able to support more charities in
the future.
Every year I thank our employees for their loyalty and
hard work, this year perhaps these words are even more
deserved, especially for those who, despite lockdowns and
the worries over new variants of Covid-19, managed to have
record months and a record year.
Outlook statement
The beginning of our new fiscal year started with promise,
the Covid-19 pandemic was nearly over but the war in
Ukraine quickly made the world outlook look very different.
Like many companies, although we are not dependent
on oil and gas, we recognise that there will be increased
inflationary pressures in all markets in the forthcoming
months which will put additional pressure on suppliers
and customers. However, our Group has shown remarkable
resilience over the past few years and been able to grow
despite the macro-economic conditions. In the current
financial year our order book remains high and demand for
our products remains strong. We are agile in our approach
to managing the challenges ahead and remain confident in
our growth prospects.
Mark Abrahams
Chairman
3 May 2022
11
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Innovate
Advanced neonatal ventilator - SLE6000
The SLE6000 ventilator is advanced medical technology
designed specifically for the most vulnerable patients who can
weigh as little as 500g. It’s design enables precise delivery of
extremely small volumes of vital breathing gases to tiny infant
lungs during ventilation, less than a teaspoon of gas per breath.
We manufacture ventilators which offer all modes of ventilation
for the neonate, from non-invasive modes such as CPAP and
High Flow through to complex invasive modes such as High
Frequency Oscillation.
12
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC OxyGenie®
Accurate control of the amount of oxygen delivered is vital.
Our advanced software OxyGenie® addresses this through the
use of an exclusively licensed patented algorithm which responds
automatically to changes in the baby’s blood oxygen saturations,
allowing the ventilator to quickly make adjustments to maintain
oxygen levels within safe limits.
13
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Our Business Strategy
We are committed to
reducing our impact on the
planet wherever possible and
undertake regular reviews
of our practices
Our Business
Inspiration Healthcare Group is an ethical Company with
high principles in business. We take our responsibilities
towards ESG (Environmental, Social and Governance)
seriously and are always looking at ways to improve the
way we operate our business, especially around issues that
affect society as a whole.
Environmental
We are committed to reducing our impact on the planet
wherever possible and undertake regular reviews of
our practices to do so. Our aim is to have all operating
companies within the Group working towards internationally
recognised standards such as ISO14001 with the aim of
being accredited to these standards.
We have already initiated some changes to reduce our
carbon footprint such as a policy to convert all company car
users to fully Electric Vehicles /or hybrid (for exceptionally
high mileage users only) by the end of 2023. We recycle
wherever possible and adopt proactive working with
suppliers on new materials and production methods to
reduce environmental impact. Our operating companies,
where applicable, comply to the WEEE (Waste Electric and
Electronic Equipment) Regulations in Europe.
14
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC We are actively involved with our Trade Body, the ABHI (the
Association of British HealthTech Industries) and provide
input into sustainability initiatives for our industry, our
Chief Operating Officer, Brook Nolson, is a member of the
sustainability working party at the ABHI. We intend to place
much greater emphasis on this area of our business over the
next few years as we take a more holistic approach to our
supply chain and the design of new products.
Our new manufacturing and technology centre in Croydon
will reduce our carbon footprint over time with low energy
heating and ventilation systems and lighting along with
more efficient workspace. Our New Product Development
processes consider the environmental impact of our
products throughout their life.
Social
As a medical technology company we are deeply embedded
in society to improve the outcomes for patients around the
world. We are committed to using technology to improve
patients’ lives but will do this in a way that has maximum
benefit for society. We have also set up a charitable giving
initiative, focused on neonatal research which we hope will
have a significant impact on the lives of premature and sick
babies in the future.
We are an ethical employer and create a positive working
environment for our employees. We aim to have roles that
challenge, engage and develop our teams to their fullest
potential. We are an equal opportunities employer and
we aim to promote from within the Company wherever
possible to give all our employees the chance of improving
themselves and support them with relevant training.
We have considered our employees overall well-being.
Through our Group’s HR team, we have recently launched
the following initiatives:
u ‘Blended Working Policy’ allowing employees to work
from home for up to 40% of their time
u Trialling of a compressed working week, allowing
employees to choose whether they would like to work
a 4-day compressed working week and benefit from a
3-day ‘weekend’, that if successful will be offered to our
employees in the future
u Improved parental pay for all new parents, including
adoptions as well as, additional paid time off for those
parents who have a premature baby
u Mental Health and Well-being App providing employees
access to support if and when needed.
In addition to the above, we monitor gender pay and
recognise that we benefit from a diverse workforce as this
brings about diversity of thinking which in turn will improve
the Group’s performance. Finally, we invest in training and
development of all of our employees so that no matter where
they are in our business they can flourish.
We are committed to ethical business practices and ensure
all our employees understand their obligations to further
ensure that business is conducted in a fair and transparent
manner.
Our operating companies have codes of conduct for how
employees should expect to be treated and treat others.
As a global supplier we respect cultures around the world.
However, we never compromise on certain areas of our
business and we have policies around issues such as modern
slavery, bribery and corruption and money laundering to
ensure we are adopting best practice in these areas.
Governance
As a Company listed on the Alternative Investment Market of
the London Stock Exchange we follow the Quoted Companies
Alliance good practice on Governance. Our Board consists
of both Executive and Non-executive Directors. The Non-
executive Directors are independent and are there to help
guide us where needed along the path of best practice of
Corporate Governance and ensure everything we do is of
the highest level of governance and transparency.
15
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Our Business Strategy continued
Our Products
We have a range of leading edge products manufactured
in-house or to our exacting standards through third party
contract manufacturers to supply around the world.
For information on each product please visit our websites.
We view our revenue streams in three distinct areas:
Branded Products, Distributed Products and
Technology Support.
Branded Products
Our branded products are those which we sell under our
own brand, usually as the legal manufacturer with control
over the intellectual property and place these products on
the market around the world.
We invest in R&D activities across our range of products to
ensure our products are at the forefront of medical science
as well as recognising the products environmental impact
during its life.
Each product brand is distinct but follows the same ethos of
improving patient outcomes using leading edge technology.
16
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Distributed Products
Technology Support
Our Distributed Products are where we sell products from
a third party manufacturer predominantly in the UK and
Ireland and in some cases worldwide. These are products
for which we have an agreed relationship to sell the products
in certain territories, mainly the UK and Ireland, although in
some instances further afield.
Distributed Products complement our own Branded Product
portfolio and add value to our customer proposition as we
can offer a more comprehensive product range.
We look to find manufacturers to partner with who have
great technology in niche areas where we can truly add
value as a partner and their products truly add value for
us. This win-win approach has served us well and helped
us offer a wonderful range of technology from around the
world to our customers.
Our Technology Support offers usage and ownership
options, service including planned preventative maintenance
programmes, repairs and spare parts and training courses to
allow users to maximise their experience with our Group’s
products.
Not all our customers want the same thing in terms of
ownership or maintenance support, some wish to rent/hire
equipment, some like to do their own maintenance, others
prefer us to do it for them. Our flexible approach offers short
and long-term rental of equipment for a specific patient or
period.
We offer planned preventative maintenance directly or
through our distribution partners, with genuine spare parts,
and technical training. In our more complex products, we
offer different levels of training to ensure that clinicians
by the bedside understand the maximum benefits our
technology can deliver.
17
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Our Business Strategy continued
We sell directly into the UK
and Ireland (“Domestic”)
and partner with established
independent distributors in
the rest of the world
Global Reach
We sell directly into the UK and Ireland (“Domestic”) and
partner with established independent distributors in the rest
of the world. Our partners actively sell in over 75 countries
around the world.
This model gives us the best of both worlds, as we can
develop and support the direct market, giving access to Key
Opinion Leaders (“KOL’s”) for knowledge of market trends that
feed into new product development and first-hand product
feedback via a team of clinically minded sales people.
We can use the local knowledge and expertise of like-minded
distributors, who can sell our products alongside others in
their portfolio, and add value to their customers the way
we do domestically. These distributors often introduce us
to local KOL’s in their country which in turn feeds into our
knowledge base for future product development.
18
In all international markets, regulations are becoming more
widespread to ensure patient safety. It is important that we
have an expert team to help work with distributors so that
localisation of products, such as translations of instructions
and other labels, or any specific regulatory requirements
are met.
This is an important blend of skills and expertise between
local distributors, to provide intimate market knowledge, and
our own sales, marketing and regulatory team to ensure the
products are fit for the market and ensure local compliance.
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Our Markets
Acute Care
Infusion Therapy
We have a dedicated team selling a range of distributed
products for Infusion Therapy for applications such as
parenteral feeding and chemotherapy. This area is rapidly
growing and although we do not invest in R&D for these
products, it is an important part of our business.
The Acute Care market is the hospital setting where we
sell to neonatal intensive care units and also obstetric
departments and operating theatres. We are privileged to
work in markets that involve trying to save the lives of some
of the most fragile patients. Over 15 million babies are born
prematurely every year (approx. 1 in 10 live births) and
globally this number is rising. Complications from preterm
births are the leading cause of deaths in children under 5
and are estimated to cause over 1 million deaths in 2018
(Source: World Health Organisation).
The technology in our Branded Products is aimed at giving
all patients the best possible outcome whether it is a baby
that has been born prematurely, or a patient undergoing
surgery and needing to be kept warm.
Service
Our Service offering covers various products both own
brand and third party, including those that we may not have
exclusive distribution rights to. This allows us to add value
to our customers around the world with technical support
and spare parts.
19
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Create
New manufacturing and technology centre
Our new state-of-the-art facilities have been purposely
designed to strengthen the Group’s R&D capabilities, where
the latest thinking in the design and development of life
saving medical technology can be showcased.
Minimising the Group’s impact on the environment and
maximising the use of the most sustainable products and
solutions has been integrated into the design of the state-
of-the-art facility while also providing an environment which
nurtures multi-disciplinary working.
This is an exciting stage of our integration and enabling the
Group to further recognise the synergies available to us.
Our new facilities will give us an amazing
platform for growth in a new state-of-the-art
manufacturing and R&D facility where we
can be proud to design, develop and produce
leading edge medical technology to help
improve the outcomes of premature babies
around the world
Neil Campbell
Chief Executive Officer
20
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Green working
u Maximising the use of the most sustainable
products and solutions integrated into design
u Environmentally friendly heating and cooling
will be utilised rather than air conditioning
u Internal green spaces have been incorporated
to absorb carbon dioxide in a natural way
u Electric car charging points and bike
storage installed
Employee focused
u Increasing capacity by more than 50% to support
our growth ambition
u Excellent design and test laboratories for new
product development
u Ergonomic “sit and stand” desks
u Automated parts of warehouse for greater efficiency
u Breakout areas for enhanced cross collaborative working
u Designed to enhance efficient working
Educational facilities
u Education suite for clinical application
training
u Technical Support training suite for
Engineer training
u Improved internal presentation and
communication capabilities
21
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Chief Executive Officer’s Review
We now have a product range the envy of
many in the neonatal intensive care space.
We are now on a journey to bring more
of these products through our expanded
distribution network to drive our
growth internationally
Welcome
The past year has been a year of integration and investment
for the Group. We acquired Viomedex in September 2019
and SLE in July 2020, it was inevitable that 2021 would
be a year that we start to integrate the business more fully
and take advantage of the synergies we now have in an
enlarged Company. Within the last couple of years, we
have transformed from employees of around 80 to now
over 200, turnover of £18million to now over £41million
and systems that were suitable for a smaller business are
being transformed into systems that will allow us to grow
substantially in the future.
and
complemented
We now have a product range the envy of many in the
neonatal intensive care space, with high end ventilators
supplemented
respiratory
disposables, thermo-regulating and resuscitation products
that help the baby from the first breath of life, along with
equipment to help determine injury to the newborn brain.
We are now on a journey to bring more of these products
through our expanded distribution network to drive our
growth internationally.
by
22
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC The bringing together of our people has been challenging
due to the pandemic, but I am proud to see what they
have managed to achieve in the past 12 months. We now
have one Enterprise Resource Planning (“ERP”) system in
place across all our companies, we have one sales team
and we have re-branded and are realising cross-selling
opportunities. This would be difficult in a normal year but
the progress we have made in the past 12 months or so is
outstanding.
I have always considered Medical Devices as Medical
Technology, they involve a vast array of complex engineering
solutions to deliver safe function for clinical staff to improve
the outcomes of patients. When we consider the challenges
our products face to help doctors, nurses and therapists
around the world treat babies weighing as little as 350g,
every aspect of the product can be seen to solve complex
technically challenging problems.
Whether it is a ventilator, with electronics, pneumatics
and software-based control systems, that deliver accurate
amounts of air and oxygen to the most fragile of patients,
or disposable silicone prongs that sit just inside the baby’s
(yet to be fully formed) nose ensuring the most delicate of
tissue is treated gently but the therapy prescribed is given
accurately, our Group truly is a technology leader.
It is as a medical technology company, that I can say
we have had a successful year with revenue growth of
over 11% to £41.1million and sales of our Branded and
Technology Support products accounting for 66% of our
revenues. We have truly transformed from when we started
out as a distributor in 2003 to where we are today a global
technology provider and leader.
We have seen the Group come
together this year and grow
as a technology company
with greater reach as well as
make progress of a number of
initiatives that will allow future
long-term growth
23
Neil Campbell
Chief Executive Officer
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Chief Executive Officer’s Review continued
It was a proud day for the Group when our subsidiary,
SLE Limited, were given a Queen’s Award for Enterprise:
Innovation for the OxyGenie® software algorithm. This
software can be built into the SLE6000 ventilator and
automatically keeps the baby’s oxygen saturation at the
prescribed levels. This innovative control system, invented
by Prof Peter Dargaville and Dr Tim Gale and their team at
the University of Tasmania, is already proving a commercial
success and independent research is showing the benefits
to users and patients alike.
We have faced our challenges in the last financial year with
Covid-19 and the consequences that it has brought. Despite
input costs rising rapidly, outstripping efficiency savings we
would normally expect to see, we have been able to sell
higher margin, value added Branded Products and overall
it is pleasing to report that margins actually increased to
50.2% compared to 48.7% last year.
Research And Development
Over the year our R&D team have faced several challenges.
Firstly, the job of developing new features and designing new
products to ensure our product range was the best it could
be; secondly, there was the no small matter of progressing
the Technical Documentation for our products going through
CE mark approvals under Medical Device Regulations
(“MDR”) to ensure they meet the new requirements and,
finally, helping to resolve supply chain issues that were
consuming the world, especially for ‘silicon chips’.
Our engineering and procurement teams worked tirelessly
to select and validate new components and suppliers to
minimise impact of scarce components and keep the
factory running. Thankfully, at least for the time being, the
worst is over and, with re-engineered designs to use more
readily available components and some astute procurement
working with our supplier partners, we are in a much better
place and can be confident looking forward that we could
withstand similar supply shortages.
We started recruitment of the Project Wave clinical trial, the
first trial organised by the Group. Due to various reasons,
primarily due to Covid-19, recruitment was slower than
hoped and consequently we took the opportunity to widen
the recruitment by lowering the age of the baby from 27
weeks gestational age to 24 weeks gestational age. We now
have momentum in the recruitment and we look forward to
hearing the results in due course.
It was a proud day for the Group when
our subsidiary, SLE Limited, were
given a Queen’s Award for Enterprise:
Innovation for the OxyGenie® software
algorithm that can be built into the
SLE6000 ventilator
24
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Sales and Marketing
Our sales and marketing approach has always been to
help caregivers understand the true clinical value of the
technology we offer. To us, it is vitally important to support
our customers through clinical training and support, we do
this directly in the UK and internationally through helping
our distributors offer a similar approach to their customers.
We are investing in clinical training and our new Croydon
manufacturing and technology centre will encompass
training and education for all the Group’s products.
We are seeing more growth in the FirstBreath nCPAP range
which was developed at Viomedex. We believe this product
will be a natural successor to the Inspire nCPAP product
and we are now in a great position to roll this out around
the world as regulatory approvals permit.
In the UK there are several areas of note:
u In Acute Care, our planned exit from our distribution
agreement for the Acutronic Fabian ventilators has
allowed us to concentrate on selling the SLE products
directly in the UK and Ireland. This has been a great
success and our team have won a number of accounts
with the SLE6000 where its OxyGenie® closed loop
oxygen control algorithm software has been extremely
well received.
u We have also made good progress with our Patient
Warming System used in surgery. With its numerous
advantages such as low energy use, it has grown
in popularity as the NHS looks to reduce its carbon
footprint. We have introduced a dedicated sales team to
focus on this area and improved our ‘rental’ offering to
remove the barriers to ownership.
u Our Infusion Therapy area has benefited from a different
resources. By
focus and additional
management
offering exceptional customer support, even throughout
Covid-19, coupled with excellent products, Infusion
Therapy has grown by in excess of 15% on top of a
record year last year.
Export markets in general and Asia-Pacific in particular,
have grown in importance since we acquired SLE now
accounting for 57% of our Group revenue (FY2021:34%).
We continue to see good activity in all export markets for
SLE, and although the revenue of some Inspiration brands
were effected by Covid-19, we have seen renewed interest
in these products. When we acquired SLE and Viomedex,
it was with international growth in mind. The synergies
between these two product ranges have started to be
realised with distributors being able to access a greater
range of products and subsequently we have gained sales
that would not have been possible before.
The growth internationally is an excellent achievement
given the limited amount of travel that we have been able
to undertake this year and we moved into the new financial
year with a strong order book. We look forward to being
able to spend more time with our distribution partners when
the pandemic abates, and we can travel more freely which
in turn should drive future growth.
We launched a new website at Group level to help
differentiate from the operating companies, giving our
investors and customers platforms that are appropriate for
their needs. We will continue to refine our digital strategy
and online presence going forward as we further integrate
the brands. Our Marketing team has been strengthened
by the appointment of Laura Edwards as Group Head of
Marketing. We were pleased to attend Arab Health in Dubai
in January, it would appear there is a desire to return to
face-to-face exhibitions and conferences in our industry,
and it gave us an opportunity to show our new corporate
branding as we bring the three companies together for the
first time on the international stage.
25
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Chief Executive Officer’s Review continued
Quality and Regulatory
Our Charitable Initiative
Last year we set up a charitable giving initiative within
the Group, aimed at donating small amounts of money to
charities that are aligned with our philosophies. Charities
can request donations and a committee chaired by Dr
Peter Reynolds (VP Clinical, Innovation and Compliance)
and made up of four staff members from across the Group
review requests and agree donations they see appropriate.
As well as supporting neonatal charities, I am pleased to
say that the committee has also agreed to donate £20,000
to the Disaster Emergency Crisis (“DEC”) for the tragedy
that is happening in Ukraine.
Our Employees
Our employees have been tremendous over the last year,
working diligently to ensure another record year under very
trying circumstances, I cannot thank them enough for their
hard work and dedication to the Group.
During the last year we have been looking at initiatives
to offer a better working environment across the Group to
our employees. We have brought SLE benefits in line with
the rest of the Group in addition to continuing to enhance
benefits across the Group. We value our employees and
understand that we have all suffered from the stresses
caused by Covid-19.
In June we ‘stopped our world’ for the day and gave
everyone a ‘well-being day’ to take time off and relax, a
gesture greatly appreciated by everyone. We subsequently
have brought in policies to allow employees to work from
home up to 40% of their week and have introduced a trial
4-day compressed week, allowing employees to opt to work
4 longer days and have an extended weekend. We will
continue to look at innovative ways to improve the well-
being of our employees.
As I have said many times in the past, our industry is
highly regulated and there have been untold pressures on
regulators around the world, partly due to the changing
legislation, and partly due to the need to react urgently to
devices for Covid-19.
Therefore, it is of real note that we achieved registration
(and subsequent sales) of the SLE6000 in China and
Japan. We have also been working hard with aligning our
product range with the needs for the new Medical Device
Regulations (EU) and the UKCA mark.
Within the Group we currently have four Notified Bodies
supporting our companies, over the next 12 months
we will work towards reducing this to partners that can
accommodate all the Group’s needs going forward. One of
the key investments over the last 12 months has been the
introduction of a new and improved electronic document
management system which will aid our compliance and
add efficiencies to our processes. This will also help as
we submit our products to the FDA for approval in the USA
as data required for regulatory filing can be more easily
accessed.
Manufacturing & Supply chain
their
recorded
largest volume of ventilators
SLE
manufactured in a 12-month period during FY2022. It
should not be forgotten that this was against a background
of having to plan for shortages of components and resolve
those issues on a day-by-day basis to ensure we could work
efficiently. Even the supply of cardboard boxes became an
issue that needed to be overcome, packaging forms part of
the medical device.
Supply chain challenges were noted across our business,
including our single use, disposable production at our
Viomedex site, despite these challenges across our Group,
we achieved a record year. Logistics were stretched at times
to be able to bring products and components in and turn
them around for onward shipping. We have worked hard
with our partners around the world and thank them for their
help and support.
26
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Investment
Future
Investment for our future continues to be a theme in our
Group. We have made strong progress bringing every
operating company onto
the Group’s standard ERP
system which will give better data and business analytics.
Coupled with this, we have brought in a new electronic
quality management system software that can link to our
ERP system to be able to ensure efficient and effective
compliance.
Using the cash on our balance sheet we have decided to
deploy our capital in two key other areas that will have long
lasting impacts on our business: new facilities and Research
& Development. Our new purpose built manufacturing and
technology centre will build the foundation for future growth
for many years whilst giving a modern working environment
for our employees. We have adopted a sustainable approach
to manufacturing, investing in automation to improve
efficiencies. As well as the new factory, we will have a new
technical support centre for returning products and a new
R&D centre. Investment in new product development will
be key to our long-term growth, and as a percentage of
revenue we invested 9% this year (FY2021: 4%) and expect
to maintain this going forward to bring new technologies
into new markets around the world.
As we move forward we recognise more and more about
the need to reduce our impact on the environment around
us. We acknowledge that the NHS in England & Wales
require suppliers to be ‘net zero’ by 2045 and NHS
Scotland by 2040, our ambition is to be ahead of this and
we are well on our way, with our offering of electric cars
to our employees (compulsory for senior management),
our new environmentally friendly manufacturing and
technology centre, our new products will be developed to
reduce their impact in manufacturing, usage and disposal
and a commitment to keep improving. We continue to
seek out ways of reducing our environmental footprint.
We have seen the Group come together this year and
grow as a technology company with greater reach as well
as make progress on a number of initiatives that will allow
future long-term growth. We will continue to challenge
ourselves to reduce our carbon footprint as we grow our
business around the world, but with a strong portfolio
of products we feel that we are in a great position to
accelerate our growth.
KEY PERFORMANCE INDICATORS (“KPI’s”)
Revenue growth1
Proportion of revenue from international markets2
Revenue from Branded Products3
Growth in revenue from Branded Products4
Revenue generated from products developed5
Gross margin6
R & D of revenue7
Adjusted EBITDA margin8
Adjusted Operating margin9
Underlying diluted EPS10
2022
11%
57%
55%
96%
5%
50%
9%
16%
10%
6.1p
2021
108%
34%
31%
113%
3%
49%
4%
15%
12%
7.6p
FY2021 KPI’s include both ‘one off’ Covid-19 revenue and revenue generated by
SLE Limited from date of acquisition
1 Year-on-year growth in reported revenue as per Consolidated Income Statement.
2 The proportion of total revenue generated from international markets, which excludes
Ireland as we class Ireland as a domestic market. Our aim is to increase revenue
generated from international markets. This year International revenue benefited from a
full year’s contribution from SLE Limited as reported in the Operational and Financial
Review on page 30.
3 The proportion of total revenue generated from Branded Products. This includes products
where we are the legal manufacturer. Our aim is to increase the proportion of revenue
generated from such products.
4 Year-on-year growth in Branded Products.
5
The proportion of total revenue from products that we have developed and released to
market in the last three financial years. Our aim is to increase the proportion of such
revenue.
6 Gross profit expressed as a percentage of total revenue as a result of increasing the
revenue measures above.
7 Total spend on research and development, whether capitalised under development costs
or expensed to the Income Statement as a percentage of total revenue. This measure is
an indicator of the cash committed to research and development which is an important
aspect of our strategy.
8 Adjusted earnings before interest, tax, depreciation, amortisation, share based payments
and non-trading items as a percentage of total revenue. Adjusted EBITDA is considered
by the Board to be a useful, alternative performance measure, reflecting the operational
profitability of the business. For investors it is especially useful for comparing companies
with different capital investment, debt and tax profiles. Our aim is to increase Adjusted
EBITDA margin over time.
9 Operating profit before exceptional items as a percentage of total revenue. Our aim is to
increase operating margin over time.
10 Underlying diluted EPS is measured before non-trading non-trading items and add back
of amortisation of intangible assets acquired through business combinations. See note 8
to the Financial Statements for more information.
Neil Campbell
Chief Executive Officer
3 May 2022
27
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Inspire
The most vulnerable patients
We are on our journey to becoming a world leader in medical
technology. Our technologies are designed to support some
of the most vulnerable patient groups from their first breath
and early journey through hospital. Additionally we offer
products for monitoring temperature during surgery and
supplementary Branded Products with the distribution of
excellent medical technology.
This is underpinned by our servicing offering which is
designed to ensure consistent high-quality care. We are
driven by our patients and by our company values; outcome
changing, research driven, pioneering and patient focused.
Our success is propelled by a team who are dedicated to
our patients and are driven to improve the challenges faced
by healthcare professionals globally.
u Every year, an estimated 15 million babies are born
preterm1,3 and this number is rising2.
u Preterm birth complications are
for
approximately 1 million deaths in 2015 – the largest
cause of mortality in infants aged under 5 (18%)2.
responsible
u Our neonatal intensive care portfolio is designed to
support the most vulnerable patients from the first
moments of life.
Sources:
1 Before 37 completed weeks of gestation
2 Global, regional, and national causes of under-5 mortality in 2000-15 – Liu L et al 2016
3 Global, Regional & National estimates of levels of preterm birth 2014 – Chawanpaiboon et al 2019
28
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Our technologies are designed
to support some of the most
vulnerable patient groups from
their first breath and early
journey through hospital
29
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Operating and Financial Review
Internationally, Group revenue
grew by 87% to £23.4million
benefiting from a full year’s
contribution from SLE Limited
2021/22 Financial Highlights
Group Revenue
£41.1m
FY2021 £37.0m
Adjusted EBITDA1
£6.4m
FY2021 £5.6m
Operating Profit
£4.3m
FY2021 £3.2m
Net cash position2
£9.3m
FY2021 £10.7m
Gross Margin
50.2%
FY2021 48.7%
Proposed final dividend
0.41p
per share
1 Earnings before interest, tax, depreciation, amortisation, impairment, share based payments and non-trading items.
2 After significant investment in capital expenditure: Facilities, R&D and IT systems.
30
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC I am delighted to report that the Group performed ahead of
market expectations for the financial year ended 31 January
2022 (“FY2022”).
Revenue
Group revenue increased by 11% to £41.1million (FY2021:
£37.0million).
Group domestic revenue increased by 3% to £17.6million,
excluding £7.3million of one off Covid-19 specific revenue
received during the prior year. This is reflective of the full
year impact of the acquisition of SLE Limited, replacement
of third party ventilator sales with SLE ventilators offset by
the exclusion of £7.3million of Covid-19 specific revenues
in the prior year.
Internationally, Group revenue grew by 87% to £23.4million
benefiting from a full year’s contribution from SLE Limited.
Branded Products
Branded Product revenue grew 96% to £22.5million in
the year primarily benefiting from the acquisition of SLE
Limited. Increased sales of the Group’s AlphaCore5 Patient
Warming System, Cosytherm2 and LifeStart also contributed
reflecting customers desire to adopt new practices.
Distributed Products
revenue decreased by 9%
Distributed Product
to
£13.6million in the year, excluding £7.3million of Covid-19
revenue received during the prior year. This is reflective of
the replacement of third party ventilator sales with the SLE
brand of ventilators offset in part by strong performance
across Infusion Therapy.
Technology Support
Technology Support revenue including technical support
increased by 52% to £4.6million in the year, again benefiting
from a full year’s contribution from SLE Limited, a one off
receipt of £0.2million and further success in relation to the
rental initiative of our AlphaCore5 patient warming system
totalling £0.3million.
31
Jon Ballard
Chief Financial Officer
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Operating and Financial Review continued
Gross Profit
Gross Profit of £20.6million (FY2021: £18.0million)
increased by 14% due to both a year-on-year increase in
revenue and an improved gross margin which increased
from 48.7% to 50.2%. Gross margins primarily benefited
from improved revenue mix towards Branded Product
margins offset in part by increases in cost of goods.
Operating Profit
The Group reported Adjusted Operating Profit of £4.3million
(FY2021: £4.3million).
Administrative expenses increased by 11%. This increase
included a full year of overheads associated with SLE
Limited, increased depreciation primarily as a result of IFRS
16 accounting treatment in relation to the lease on the new
Croydon facility and continued investment in personnel to
maintain revenue growth.
There were no non-trading items in the year. Prior year
non-trading items totalled £1.0million of which £0.6million
related to expenses incurred in relation to the acquisition
of SLE Limited and £0.4million representing full and final
settlement of the contingent consideration arrangements
relating to the acquisition Vio Holdings Limited (the parent
Company of Viomedex Limited).
The Group delivered Operating profit of £4.3million, an
increase of 31% on the prior year. The growth was due to
the decrease in non-trading items offset in part by increased
depreciation as a result of the IFRS 16 accounting treatment
in relation to the lease on the new Croydon site.
Adjusted EBITDA amounted to £6.4million, an increase
of £0.8million over the prior year mainly due to increased
revenue and improved gross margin offset in part by
increased administrative expenses. Adjusted EBITDA
margin improved from 15.2% to 15.6%.
ADJUSTED EBITDA
2022
£’000
2021
£’000
6,422
5,611
Depreciation
Amortisation of intangible assets
Impairment of intangible assets
Impairment of right of use asset
Share Based Payment
(1,069)
(837)
–
(122)
(139)
(606)
(622)
(47)
–
(78)
ADJUSTED OPERATING PROFIT
4,255
4,258
Change
£’000
811
(463)
(215)
47
(122)
(61)
(3)
Non-trading items:
Acquisition related expenses
Final settlement of deferred
consideration
–
–
(579)
579
(435)
435
OPERATING PROFIT
4,255
3,244
1,011
The Group delivered Operating
Profit of £4.3million, an increase
of 31% on the prior year
32
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC
Investment in R&D including capitalised development costs
amounted to 9% (FY2021: 4%) of revenue.
The Group has a £5million Revolving Credit Facility (“RCF”)
in place which was not utilised during the year and remained
undrawn at the year-end.
Taxation
The Group has recorded a tax charge of £370,000
(FY2021: £318,000). The effective tax rate in FY2022
was 9% (FY2021: 10%). For more detail see note 7 of the
Consolidated Financial Statements.
Earnings Per Share
Basic EPS and diluted EPS were 5.28p and 5.22p per share
respectively (FY2021: 5.10 and 5.07p).
Underlying diluted EPS1 was 6.10p per share, down 19% on
FY2021 of 7.57p. The year-on-year decrease is attributable
to the non recurrence of the one off Covid 19 revenue
of £7.3million received during FY2021 and the full year
impact of the shares issued to acquire SLE Limited, offset
by the impact of a full year profit from the SLE acquisition.
See note 8 for further information.
1 EPS Reconciliation from Diluted EPS
DILUTED EARNINGS PER SHARE
Adjusted for:
Non-trading items
Amortisation of intangible assets acquired
through business combinations
UNDERLYING DILUTED EARNINGS PER
SHARE
2022
pence
5.22
2021
pence
5.07
–
1.82
0.88
0.68
6.10
7.57
Cash Flow
Cash and cash equivalents as at 31 January 2022
amounted to £9.3million, a decrease of £1.4million over the
prior financial year-end reflecting the increased investment
in both research and development and infrastructure. Net
cash generated from operating activities was £3.6million,
£1.2million lower than in FY2021. Cash outflow on investing
activities
totalled £4.0million (FY2021: £14.1million),
of which £2.2million related to capitalised development
expenditure and £1.8million relating to purchase of software
and property, plant and equipment as the Group continues
to integrate key systems across the business and invest in
state-of-the-art facilities.
Net Assets
The value of non-current assets as at 31 January 2022
totalled £26.4million (FY2021: £19.2million).
The year-on-year increase of £7.2million relates to both an
increase in capitalised product development of £2.2million
and an increase in right of use assets primarily relating to
the new Croydon site. Inventory decreased to £6.5million
(FY2021: £8.2million) due to improved working capital
management and manufacturing process.
Trade and other receivables increased by £4.1million to
£9.3million (FY2021: £5.2million) due to sales growth and
phasing. Trade and other payables decreased by £0.2million
to £6.6million (FY2021: £6.8million).
Net Assets increased by £3.3million or 11% to £34.9million
as at 31 January 2022.
Dividends
The interim dividend of 0.205p per share (FY2021:
0.2p) was paid on 29 December 2021. The Board is
recommending a final dividend of 0.41p per share (FY2021:
0.4p) to make a total dividend for the year of 0.615p per
share (FY2021: 0.6p). If approved by shareholders, the
final dividend will be paid on 29 July 2022 to shareholders
on the register on 1 July 2022.
Review of Business
and Future Developments
On a Group basis the business review and future prospects
are set out in the Chairman’s Report on pages 8 to 11 and
the Chief Executive Officer’s Review on pages 22 to 27.
Key performance indicators are discussed on page 27.
Share Price During the Year
The range of market prices during the year 1 February
2021 to 31 January 2022 was 88.5p to 150p and the mid-
market price of the Company’s shares at 31 January 2022
was 102.5p.
Jon Ballard
Chief Financial Officer
3 May 2022
33
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT
Environmental and Sustainability
Reducing our impact on the environment
We have always taken our responsibilities towards ESG
(Environmental, Social and Governance) seriously and are
continuously looking at ways to improve the way we operate
our business, especially around issues that affect society as
a whole. To enable us to drive our aspirations in this area
we were pleased to appoint Brook Nolson, Chief Operating
Officer as the Director Responsible for Sustainability.
As a Group we proactively committed to a full review of our
carbon impact, allowing us to identify where opportunities
exist for us to reduce and improve our carbon impact rather
than relying on Carbon Offset.
We are a fully integrated business, designing, manufacturing
and selling medical technology. Our review has allowed us
to identify areas where we can make improvements which
will offer an obvious impact to the emissions we control.
Developing programmes and projects of engagement
throughout our supply chain we can further examine areas
of improvement in emissions over which we have influence.
This approach has allowed us to identify key areas we aim to
target quickly such as heating, lighting and transportation.
We have already made significant progress on these
environmental initiatives including the introduction of an
electric car fleet for Senior Managers, an electric/hybrid car
fleet for company car drivers and designing a new energy
efficient manufacturing and technology centre in Croydon to
include bio-sustainable electricity, low energy lighting and
low energy heating and ventilation.
We implemented industry measurement tools in accordance
with Scope 1, 2, & 3 to gain an understanding of our current
environmental impact. This information has given us our
starting point towards being Net Zero for directly controllable
emissions by 2035.
34
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC How we will achieve our targets?
2020
2021
2022
2023
Future
Introduction of electric
vehicles for Senior
Managers.
Implemented scope
1 & 2 emissions
measurement.
Board and Senior
Management
assignments for
developing a circular
economy solutions.
Registered with Climate
Hub to gain access to
climate assessment
tools.
Procured 100% REGO-
backed electricity
contracts.
Appointed Brook
Nolson Chief Operating
Officer as the director
responsible for
sustainability.
New Croydon
manufacturing and
technology centre
opens with low
carbon footprint.
Conducting audit
for waste reduction
planning to reduce
waste volumes.
96% of car fleet
electric vehicles/
hybrid.
New products will
include a carbon
reduction plan to
reduce footprint.
100% Electric
vehicles/hybrid for
all users targeted
for 2023.
Meet NHS targets
and reporting.
Target net carbon
zero by 2035 for
all emissions we
directly control.
Our current environmental metrics:
METRIC
Scope 1 Emissions (CO2 tonnes)
Scope 2 Emissions (CO2 tonnes)
Scope 3 Emissions (CO2 tonnes)
Water usage m3
Vehicle fleet EV
Vehicle fleet hybrid/EV (combined)
Packaging weights (tonnes)
FY2022
64
116
27
465
54%
96%
38
35
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Principal Risks and Uncertainties
Overview of our Principal Risks
The Group’s principal risks, our actions to mitigate those risks, a directional indication of whether the risks have increased,
decreased or remained about the same, together with further commentary are set out in the table on the following pages.
This list comprises the material risks post mitigating actions and is drawn from a more complete list of risks which are
reviewed quarterly by the Board.
Principal
Risks
STRATEGIC
Loss of Key Distribution
Principal agreements
New Product Development
Acquisitions
International Growth
Sustainability
Potential
Exposure
Page
Principal
Risks
Potential
Exposure
Page
38
38
39
39
40
OPERATIONAL
Dependence on third party suppliers
and supply chain interruption
Reliance on key individuals
Changes in legislation and regulation
Health and Safety
IT Systems and Cyber Security
Production moving to new
facilities in 2022
Key Risk Trend
41
41
42
42
43
43
p t u q
p
q
Decreasing
Stable
Increasing
The experiences of Covid-19 and Brexit
demonstrated the resilience of our
business model and the agility and
commitment of our employees
36
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Risk Appetite
Risk appetite can be defined as ‘the amount and type of
risk’ that the Group is willing to take in order to meet their
strategic objectives. The Board have applied a differentiated
risk appetite to each major category of risk, i.e. Strategic,
Operational, Financial & Compliance.
The experiences of Covid-19 and Brexit demonstrated
the resilience of our business model and the agility and
commitment of our employees. Our business operations
continue in full, with the majority of our employees adopting
our blended working policy.
Levels of risk were considered against the following
categories:
Covid-19 still remains a risk to our business in the following
areas:
0. Avoid risk: Zero tolerance
1. Minimal risk: As little as reasonably possible
2. Cautious: Prepared to accept some limited loss
3. Open: Prepared to consider balance between risk and reward,
invest for future return
4. Seek: Prepare to be innovative in pursuit of higher returns
5. Mature: Confident of setting high levels of risk appetite
underpinned by rigorous processes and controls
Our Strategic risk appetite is assessed as level 4 (Seek)
as we aim to be innovative in our specialist areas.
For Operational risks we adopt level 2 (Cautious) as our
customer service is integral to our business model.
Our risk appetite for Financial & Compliance is level 1
(Minimal) as we work in a highly regulated industry and
have valuable Intellectual Property to protect.
The acquisition of SLE Limited in the prior year transformed
the scale of the Group and its risk profile. We are a medical
technology business, supplying lifesaving and essential
medical equipment for which there is ongoing strong
demand and a high degree of regulation.
u Production: We may find
difficulties in the supply
chain for materials and
transport.
We have mitigated this by reviewing components and
changing where necessary to components that are
more readily available, placing forward orders, working
with long standing suppliers and we have registered for
Government backed schemes for essential suppliers for
priority freight.
u Employees: Our employees may fall
ill or have loved ones who need
looking after.
Throughout the year we followed national guidance on
home working where appropriate. This allowed us to
keep our factories open and producing much needed
medical technology and allowing to keep our teams safe.
Since the start of the year, we have been encouraging our
teams back to the offices and believe our compressed
working week and hybrid working model will ensure that
we remain efficient and productive as well as safe, giving
our employees a better work/life balance.
u Customers: It is difficult to engage
with customers as before as hospital
staff concentrate on Covid-19 related
activities. International travel is heavily
affected and has limited face-to-face
interaction with distributors.
We have implemented remote interaction through video
conferencing platforms such as Teams and Zoom and have
only visited for face-to-face meetings where appropriate.
37
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT
Principal Risks and Uncertainties continued
Principal Risk
STRATEGIC
Loss of Key Distribution Principal agreements
The loss of any of the Group’s largest distribution agreements to sell medical devices on behalf of third parties may have
a material impact on the Group’s business, prospects, financial condition or results of operations. Major account reviews
take place regularly and plans are mutually agreed. Our strategy is based upon the added value of our supply chain and if
necessary alternative product suppliers can be sourced.
Movement in Year
Risk Trend
q
q
Commentary
Potential Exposure
The proportion of Branded Product
sales has increased from 31% to 55%.
The Vyaire contract has been ended
by mutual agreement.
The distribution contract with Micrel
has been signed for a further three
years.
Mitigation
The Group is increasing the proportion
of sales from products where we own
the intellectual property to minimise
risk. The acquisition of SLE
this
Limited has led to the termination of
one of the largest distribution contracts
(Vyaire) within the Group. Long-term
contracts are typically signed but if a
distributorship should be lost, all efforts
will be made to replace the revenue
with alternative products.
New Product Development
The Group invests in R&D projects in order to develop innovative new products. It works with an advisory panel in order to
prioritise opportunity areas. Continued growth within existing customers depends upon the successful introduction of these
new products. Concerns arise due to the late delivery of the projects, the changing regulatory landscape and competitive
activity in the market-place which may make projects redundant.
Mitigation
Movement in Year
Risk Trend
Commentary
Potential Exposure
t u With the acquisition of SLE, the R&D
team and its capability is greatly
increased, but regulatory bottle necks
are expected in the industry due to
capacity within the regulators including
those within clinical trials due to
needing to catch up post Covid-19.
Projects are reviewed regularly by the
Board and total R&D investment is
increasing in the forthcoming year.
The appointment of a Group Head of
R&D and a Vice President - Clinical,
Innovation and Compliance gives
greater
linkage between marketing
plans and R&D priorities.
The alignment of systems and
processes across the Group has given
greater visibility to tracking projects.
38
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Principal Risk
STRATEGIC continued
Acquisitions
The strategy of the Group is to grow by a mixture of organic sales and acquisitions.
The Group may not be able to find acquisition targets at acceptable prices.
There is also a risk that management does not have adequate time and resources to identify, source, negotiate and integrate
new acquisitions.
Movement in Year
Risk Trend
q
q
Mitigation
Common business system and
processes have been implemented
across recently acquired sites and will
comprise the basis for the integration of
any future acquisitions.
The Executive team have developed a
robust model to evaluate acquisition
prospects and identify synergies.
Commentary
Potential Exposure
The SLE integration continues to
proceed in line with best expectations
and gives assurance in the quality of
our business model, processes and
team in relation to our evaluation of
acquisitions
International Growth
The Group has a wide range of export markets which provide potential for growth.
Geopolitical conditions could have an impact on our markets.
Meaningful development of the US market, the largest medical device market in the world, may require significant investment
in resources and may not generate the expected returns or take longer to crystallise those returns.
Mitigation
It is impossible to plan for ever y
eventuality however, early visibility, quick
action and effective teamwork has been
effective in minimising risks.
A US market research project has
commenced to determine the appetite for
certain products within the Group.
Movement in Year
Risk Trend
q
q
Commentary
Potential Exposure
The acquisition of SLE Limited has
the Group’s
significantly expanded
export markets. Export sales have
increased from 34% to 57% of total.
The Covid-19 pandemic was managed
well within the Group but the full
impact on the world economy remains
unknown.
It is too early to determine the impact
of the conflict in Ukraine to the Group’s
business. The Group revenue in this
region is less than 5% of total.
39
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Principal Risks and Uncertainties continued
Principal Risk
STRATEGIC continued
Sustainability
The Group manufactures a range of disposable and capital equipment sourcing components from around the world and
shipping finished goods globally.
Recently the NHS in England announced it intends to be Net Zero by 2045, with the NHS in Scotland wishing to be Net
Zero by 2040. As other health systems around the world follow suit, the Group risks losing its ability to sell goods unless it
embraces carbon reduction and adopts a sustainable approach to its operations
Movement in Year
Risk Trend
New
Commentary
Potential Exposure
Our
and
new manufacturing
technology centre in Croydon will
be an example of best practice in
low energy manufacturing. Other
initiatives already undertaken would
imply that the Group is ahead of
where many SME Health Tech
companies are in terms of their
environmental impact.
Mitigation
The Group has an Executive Director with
responsibility for Sustainability (Brook
Nolson). We are monitoring our Scope
1, 2, and 3 emissions and take action
as appropriate to reduce them whilst
growing our business.
A new manufacturing and technology
centre in Croydon is being developed with
carbon reduction in mind, along with a
policy for electric vehicles and other
initiatives which are underway, including
trailing a compressed working week and
hybrid working.
40
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Principal Risk
OPERATIONAL
Dependence on third party suppliers and supply chain interruption
The operational capability of the Group depends critically on the efficiency and speed of its supply chain.
If there is any interruption to the supply of products or services by third parties, or those products or services are not
as scalable as anticipated, or at all, or there are problems maintaining quality standards and delivering product to
specification, or there are problems in upgrading such products or services, the Group’s business will be adversely
affected.
Macro-economic factors like Brexit, Covid-19 and the conflict in Ukraine have provided challenges.
Mitigation
Movement in Year
Risk Trend
Commentary
Potential Exposure
The Group maintains appropriate stock
levels of the most critical items to maintain
customer service levels and mitigate this
risk. These are constantly under review
due to current issues in supply chain.
q
q
is now
Sourcing decision making
embedded
in operational planning
processes. Supplier management is
reviewed as part of Quality Management
System.
A disaster recovery plan exists and is
reviewed regularly.
The pandemic impact was beyond
any scenarios envisaged. The Group
demonstrated resilience due to systems,
planning processes and quality of team.
Improved
planning
operational
processes have reduced this risk during
the year.
The Group has implemented its ERP
system into SLE Limited and Viomedex
Limited to give greater visibility to
stock management and
planning,
forecasting.
Engineering work has reduced risk to
certain components. It is expected
that current supply chain issues of
components widely reported will ease
during 2022, although the recent
conflict in Ukraine may make these
issues last longer than thought at the
beginning of the financial year.
Supply chains are expected to be
disrupted for longer due to the conflict
in Ukraine.
Reliance on key individuals
The success of the Group depends crucially upon the expertise and relationships of the Directors and certain other senior
employees. The loss of any of the key individuals could have an adverse effect on the Group.
Movement in Year
Risk Trend
q
q
Commentary
Potential Exposure
The Remuneration Committee ensures
remuneration packages
retain and
motivate the Executive Team and Senior
Managers.
Enlarged Group and strengthened
management reduce potential impact of
any loss.
Mitigation
The Group has a strong, social purpose to
save lives and improve outcomes which
is motivating to employees. Rewards
are competitive. A Long-Term Incentive
Plan (“LTIP”) exists for all senior and key
management roles.
It is the Group’s policy to maintain a safe
and pleasant work environment.
The Group has an excellent benefits
package and has recently introduced
a compressed working week to add to
flexible working to improve employee’s
work/life balance.
41
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Principal Risks and Uncertainties continued
Principal Risk
OPERATIONAL continued
Changes in legislation and regulation
The medical devices industry is highly regulated and each territory, in which the Group operates, is subject to its own
stringent legal and regulatory regime to ensure the Group’s products are safe and compliant. Regulatory approvals are
required to market and sell medical devices into both the UK and export markets.
Mitigation
Movement in Year
Risk Trend
Commentary
Potential Exposure
The Group has stringent internal controls
in order to comply with the relevant
legal and regulatory conditions in the
UK and in its export markets and a
Qualit y Assurance and Regulator y
Affairs department dedicated to liaising
with the regulator y authorities to
monitor any changes in conditions and
ensure continuing compliance with the
existing and new conditions. A Group
Head of QARA oversees regulatory and
compliance matters and investment in a
new document management system will
further reduce risks.
t u For the EU all products are certified to
2024 as part of the transition to MDR.
The UKCA mark is required by June
2023. Preparation for key products to
remain in the UK are underway and
we are working with relevant Notified
Bodies to ensure we will be able to meet
this timetable.
We are implementing a new document
management system to improve
traceability and compliance.
Health and Safety
The importance of Health and Safety is widely recognised across the Group.
Failure to adhere to health and safety regulations within the workplace not only puts our employees at risk but could carry
serious financial, reputational, and legal risk.
We recognise that everyone has a right to work in a safe and pleasant environment free from adverse events.
Mitigation
Movement in Year
Risk Trend
Commentary
Potential Exposure
The Board requires Health and Safety to
be discussed at the beginning of every
Board meeting based on a report from
the Executive Director responsible for
Health and Safety (currently the Chief
Operating Officer).
The Group has a highly qualified Health
and Safety Manager reporting directly to
the Chief Operating Officer. The Group
undertakes regular Health and Safety
training for all employees using an on-
line training portal that records training
for audit purposes.
Initiatives are run regularly to remind
employees that Health and Safety is
everyone’s priority.
42
t u Improved
procedures have
been
implemented and
the Health and
Safety capability significantly increased.
Metrics are reviewed monthly by the
Board and action taken should these
start to show a negative trend.
The business has a proactive approach
to all aspects of Health and Safety
and constantly reviews internal and
external risks to enable training where
appropriate.
An employee Health and Safety focus
group has been established and meets
on a quarterly basis to ensure all areas
of the business have a voice.
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Principal Risk
OPERATIONAL continued
IT Systems and Cyber Security
The Group relies heavily on IT systems for its operational activities.
Two main areas of concern are:
u Human Error: People accidentally or deliberately manipulating data
u Third party hackers gain access to our systems or network.
Mitigation
Movement in Year
Risk Trend
Commentary
Potential Exposure
IT support is complemented by an
external third party which allows a
broader horizon scan of activity and
access to best practices.
t u The Audit Committee will carry out a
“deep dive” review on cyber-security in
2022.
By migrating all businesses onto a
common IT system, we have harmonised
controls and reporting.
Production moving to new facilities in 2022
The Group plans to move its main production facilities into a new, purpose-designed manufacturing and technology centre
during Spring 2022 and there is a risk of short-term disruption to production and therefore sales during the Spring and
Summer.
Movement in Year
Risk Trend
New
Commentary
Potential Exposure
Led by the Chief Operating Officer, the
H&S, Production Engineering, Facilities,
IT, QA/RA and Manufacturing Teams,
are represented at the construction
planning and programming fortnightly
meetings to ensure that integration is as
seamless as possible.
Representation and management of the
contracts is done with a professional
design
team, Chief Operating
Of ficer, and the Project Managers.
Mitigation
We have a strategy that minimises any
impact on manufacturing or despatch of
our products.
Our plan allows for a soft start allowing
time to test and verify ever function and
department prior to enacting a phased
departmental move.
With all the tooling and equipment being
new we will not experience a delay due
to transfer.
We have increased production to hold
slightly higher levels of finished goods in
stock.
Final transfer of the manufacturing
environment will not complete until all the
new systems are fully operational.
Due to the introduction of our ERP and
new automated warehousing systems, we
are able to commence stocking in the new
facilities at the same time as continuing
warehousing from the current locations.
43
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Companies Act Section 172 Statement
Key stakeholders
affected by the
decision
Key decisions made
in the year and how these
decisions were made
How do we
engage with our
stakeholders?
EMPLOYEES
Enhanced flexible working arrangements
to
Employees are key
the
Group’s success, and we rely
on a committed workforce to
help us achieve our business
objectives.
The Board took the decision to enhance its
parental leave and pay policy, as well as to offer
a new compressed 4-day working week.
to all
Management circulated a survey
employees to understand preferences towards
a compressed 4-day working week. While the
survey demonstrated that most employees were
supportive of a compressed working week, the
Group also recognised that working extended
daily hours during the compressed week may
not be suitable for all employees and could
impact work/life balance for some. Recognising
this, the Board agreed to offer the compressed
working week arrangement to employees on an
“opt-in” basis.
Improved health and safety protocols
The Health and Safety of our employees is of
upmost importance to the Group. The Board
appointed a new Group Health and Safety
Manager during the year, who reports directly
to the COO. In addition, the Board agreed that
regular health and safety training and strong
communication channels for our employees
should continue to be a top priority.
CUSTOMERS
Successful engagement with
our customers is paramount
to meeting our
strategic
objectives and growing our
business.
Increased online training to customers
and in-person distributor meetings
During the year, we ramped up online training of
our products. We also held several international
distributor meetings. These meetings were
well attended and aimed to bring distribution
channels together and introduce the benefits of
the SLE acquisition to our distribution networks.
We engage with our employees in a number of
different ways, including, via our intranet platform,
weekly newsletters and regular all-staff briefings.
This year, the Group held a series of virtual Question
Time seminars, giving employees the opportunity to
ask questions about the business.
also
operates
The Group
incentivised
improvement ideas scheme to increase engagement
and drive forward idea generation and sharing of
good practices.
an
For more information on how the Group engages with
its employees, refer to our Statement of Corporate
Governance – QCA Principle 3A on page 47
Several new initiatives have been rolled out during
the year, including our STAR - Stop, Think, Act,
Report - initiative, which was designed to raise
awareness on the importance of reporting near
misses and unsafe conditions. The STAR initiative
was rolled out successfully across the Group in Q4
through our intranet platform.
The Group also introduced advanced driver training
to those who drive on business who fall within
certain criteria.
Our sales teams and senior management engage
with our customers through regular meetings and
through participation in local events and exhibitions.
Throughout the year we held several online and in-
person conferences.
We also continue to engage with our customers
through a variety of channels including our websites,
social media platforms, virtual exhibitions, virtual
sales and training meetings and email engagement
including customer feedback surveys.
Continued commitment to new research
and development centre
The Group has invested in a new state-of-
the-art research and development lab in our
new premises in Croydon as discussed in the
Chairman’s Report pages 8 to 11 and the Chief
Executive Officer’s Review on pages 22 to 27.
through
Communicated
investor presentations
throughout FY2022, regarding investment in new
facilities. Further communications through the
Group’s social media channels are ongoing during
FY2023. Various employee presentations held
throughout the year.
44
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC
Key stakeholders
affected by the
decision
Key decisions made
in the year and how these
decisions were made
How do we
engage with our
stakeholders?
SUPPLIERS
is critical
Managing our supply chain
and engaging effectively with
our suppliers
to
the smooth running of our
operations. Through continued
engagement with our suppliers,
we have built positive, long-
lasting partnerships.
As part of our continued commitment to
our supplier relationships, the Group aimed
to increase visits to supplier sites (when
Covid-19 restrictions allowed) and to continue
to hold regular quarterly meetings with all our
suppliers.
The Group also implemented a new ERP
system to give greater visibility to planning,
stock management and forecasting.
Senior Management engages with our suppliers
through regular meetings, held at least quarterly
and more frequently as needed. The Group has
increased visits to supplier sites when Covid-19
restrictions have allowed,
the year,
the Group
During
its
critical supply chain and through supply chain
management, the Group engages regularly with
these suppliers through a mix of virtual and face-
to-face meetings.
reviewed
INVESTORS
The Group understands the
importance of communicating
regularly with its investors.
Building long-term relationships
with all our shareholders is
critical to the future growth of
the business.
The Group decided to pay an interim dividend
in December 2021 and recommended a final
dividend also.
The Group regularly communicates with
shareholders
roadshows, and retail shareholder events.
its
investor presentations,
through
For more information on the total dividend
for the year, refer to the Directors’ Report on
pages 56 to 59.
Institutional investors visited our Croydon site
in December for a factory visit and company
presentation.
For further information on how the company
engages with its investors, refer to our Statement
of Corporate Governance – QCA Principle 2 on
page 46.
Neil Campbell
Chief Executive Officer
3 May 2022
45
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSTRATEGIC REPORT Statement of
Corporate Governance
As Chairman of the Board, it is my responsibility to ensure
that the Group has both an effective corporate governance
and Board leadership. The Group has adopted the Quoted
Companies Alliance Corporate Governance Code (the
“QCA Code”) and this report follows the structure of these
guidelines and explains how we have applied the guidance.
The Board considers that the Group complies with the QCA
Code.
The Board believes that corporate governance is more than
just a set of guidelines; rather it is a framework which
underpins the core values for running the business in
which we all believe, including a commitment to open and
transparent communications with stakeholders. We believe
that good corporate governance improves performance
while reducing or mitigating risks thereby underpinning the
Group’s long-term success.
During the year under review, we successfully integrated
SLE Limited into the Group, including the implementation
financial management system.
of our standard ERP
Consequently, we reviewed our governance processes to
reflect the enlarged organisation.
Our statement of corporate governance can also be found
on our website.
QCA PRINCIPLES
Deliver Growth
1. Establish a strategy and business model which promote
long-term value for shareholders
The Group’s purpose is to improve health outcomes by
providing highly advanced medical technology. Our mission
is to provide 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.
Our strategy is defined clearly in Our Business Strategy
(on pages 14 to 19). Our business model is set out clearly
on page 7 and on our website. Our strategy and business
model are underpinned by a clear set of values: patient
focus, outcome changing, pioneering and research driven,
which reflect our long-term objective of enhancing patient
care and delivering business growth and profitability.
Our Key Performance Indicators (“KPIs”), which are set out
in the Chief Executive Officer’s Review on page 27 measure
various growth and profitability metrics, reflecting our
business model.
2. Seek to understand and meet shareholder needs and
expectations
Relationships with our shareholders are important to us and
we seek to provide effective communications through our
Interim and Annual Reports along with Regulatory News
Service announcements, including RNS Reach. We also
use the Group’s website, www.inspirationhealthcaregroup.
plc.uk for both financial and general news relevant to
shareholders.
The Executive Directors meet shareholders and other
investors/potential investors at regular intervals during the
year. The Chief Executive Officer and the Chief Financial
Officer make presentations to institutional shareholders
and analysts each year immediately following the release
of interim and full year results. They also attend retail
shareholder events. The slides used for such presentations
are made available on the Group’s website under the Annual
Reports section. The Group’s NOMAD and broker, Cenkos
Securities plc, is briefed regularly and updates the Board
during the year on shareholder sentiment and expectations.
46
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC The Annual General Meeting (“AGM”) is regarded as an
opportunity to meet, listen and present to shareholders and
their participation is encouraged; all Directors attend the
AGM and are available to meet shareholders individually
or as a group. However, because of the pandemic, this
year’s AGM was a closed meeting. For each resolution the
number of proxy votes received for, against and withheld is
circulated to all attendees. All 2021 AGM resolutions were
passed comfortably.
When circumstances allowed in December the Executive
team hosted institutional investors at our Croydon site for
a factory visit and company presentation. Feedback was
very positive.
In January 2022, the Chairman, Mark Abrahams, and
Remuneration Committee Chair, Liz Shanahan, met with
major institutional investors to discuss governance and
reporting matters. Following these meetings the Board
discussed the points raised and agreed some improvements
to annual reporting around ESG and other KPI’s.
3. Take into account wider stakeholder and social
responsibilities and their implications for long-term
success
The health and safety of our workforce is our most
important consideration and features as the first item
on each board meeting agenda. We have introduced a
comprehensive set of processes and measures to keep
our people safe, and we continue to enforce a strong set
of Covid-19 protocols in our offices
We hold regular all-employee on-line meetings to keep
employees updated on business progress and we also
operate an incentivised Improvement Ideas scheme. Due
to the pandemic, we were unable to hold our normal
annual conference for all employees but intend to hold
one as soon as circumstances allow.
B. Customers. A key element of our business model is to
work closely with key opinion leaders in the healthcare
system and to develop, evaluate and enhance our
propositions in full co-operation with those partners. Our
reputation for innovative, outcome-enhancing products
and excellent service is key and we regularly seek
feedback on the performance of our products. Our Vice
President of Clinical, Innovation and Compliance has
considerable experience as a neonatal consultant in the
NHS and ensures high levels of engagement with the
medical community.
The Board considers that it has operated in full regard of its
responsibilities under section 172 of the 2006 Companies
Act as outlined in the Strategic Report on pages 44 to 45.
The Group’s Purpose is widely understood and drives the
decision-making which aims to optimise the long-term
value of the business.
C. Suppliers. Our key strategic suppliers are long-term in
nature and work with the Group on product innovations.
As a medical technology Company, we regularly assess
key supplier performance and engage with them to
discuss and agree objectives and to enhance product
capability and performance.
A. People. Our continued success is built on the talented
people who work here, and employee engagement forms
a major part of our strategy. Our senior independent
Director has the additional responsibility of representing
employees’ interests at the Board and has hosted two
all Company “question time” meetings, where employees
are able to ask questions to the Executive Team. He
is also the Board level point of contact for the Group’s
whistleblowing policy.
Everyone at Inspiration Healthcare Group is a valued
member of the team, and our aim is to help every
individual achieve their full potential. We are a living
wage employer and offer equal opportunities regardless
of race, sex, gender identity or reassignment, age,
disability, religion or belief, marital status, pregnancy
and maternity or sexual orientation. During the year we
implemented and enhanced our Parental leave and Pay
policy as well as flexible working arrangements including
a blended working policy as well as a compressed 4-day
working week which has been adopted by about a third
of our workforce.
4. Embed effective risk management, considering both
opportunities and threats, throughout the organisation
The Board recognises the need for a robust system of internal
controls and risk management. The assessment of risks
and the development of strategies for dealing with these
risks are achieved on an ongoing basis through quarterly
updates from the executive team followed by Board review
and challenge.
Risk management is integral to the ability of the Group to
deliver on its strategic objectives and the Board’s appetite
for risk is communicated to shareholders in this Annual
Report. The Board review the Risk Register formally every 6
months and Board reports from the Executives are discussed
at Board meetings where ‘ad hoc’ risks are discussed and
action to mitigate them undertaken.
47
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukGOVERNANCE
Statement of Corporate Governance continued
The system of internal control is structured around an
assessment of the various risks to the business and is
designed to address those risks that the Board considers
to be material, to safeguard assets against unauthorised
use or disposition and to maintain proper accounting
records which produce reliable financial and management
information. However, any such system of internal control
can provide only reasonable, but not absolute, assurance
against material misstatement or loss. The Board considers
that the internal controls in place are appropriate for the
size, complexity, and risk profile of the Group.
The Board is responsible for reviewing and approving overall
Group strategy, approving revenue and capital budgets and
plans and for determining the financial structure of the
Group including treasury, tax, and dividend policy. Monthly
results and variances from plans and forecasts are reported
to the Board.
The Audit Committee assists the Board in discharging its
duties regarding the Financial Statements, accounting
policies and the maintenance of proper internal business
and operational and financial controls, including liaison
with the Group’s external auditors.
The key features of the Group’s system of internal control
are as follows:
u an ongoing process of risk assessment to identify, evaluate
and manage business risks
u management structure with clearly defined responsibilities
and authority limits
u a comprehensive system of reporting financial results to
the Board
u the Group’s operating companies all maintain Quality
Management Systems certified to ISO 13485:2016 for
industry regulatory compliance
u a comprehensive system of reporting health and safety
performance along with other well-being matters to the
Board
u appraisal and authorisation of major capital expenditure,
research & development projects
u dual signatories on all bank accounts
Maintaining a Dynamic
Management Framework
5. Maintain the Board as a well-functioning, balanced
team led by the Chairman
The Board is made of up three Executive Directors and
three independent Non-executive Directors, chaired by
Mark Abrahams. Meetings are open and constructive, with
every Director participating fully. Meetings take place at our
various sites or through ‘virtual’ meetings using platforms
such as TEAMS or ZOOM. Face to face meetings are
preferable as it allows the Board to see different operating
facilities and meet other employees.
The Chairman is responsible for the leadership of the Board
and ensuring its effectiveness in all aspects of its role. The
Chairman is also responsible for creating the right Board
dynamic and for ensuring that all-important matters, in
particular strategic decisions, receive adequate time and
attention at Board meetings. The Executive Directors are
responsible for the day-to-day running of the business and
developing corporate strategy, while the Non-executive
tasked with constructively challenging
Directors are
the decisions of executive management and satisfying
themselves that the systems of business risk management
and internal financial controls are robust. The Non-executive
Directors give informal advice to the Executives between
meetings and devote sufficient time to be effective in this
regard.
The Board meets regularly during the year as planned as
well as ad-hoc meetings relating to such matters that arise
from time to time; a calendar of meetings and principal
matters to be discussed is agreed at the beginning of each
year. Board papers are circulated at least one week before
meetings, allowing time for full consideration and necessary
clarifications before the meetings. Board dinners are held
from time to time on the evening before meetings and allow
broader discussion and development of effective Board
relations.
The Group has effective procedures in place to monitor and
deal with conflicts of interest. The Board is aware of the
other commitments and interests of its Directors. Changes
to these commitments and interests are reported to and,
where appropriate, agreed with the rest of the Board.
The Chief Financial Officer is also the Company Secretary
and is responsible for ensuring that Board procedures are
followed and that the Group complies with all applicable
rules, regulations and obligations governing its operation. If
required, the Directors are entitled to take independent legal
advice and, if the Board is informed in advance, the cost of
such advice will be reimbursed by the Group.
48
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC 6. Ensure that between them the Directors have the
necessary up-to-date experience, skills and capabilities
8. Promote a corporate culture that is based on ethical
values and behaviours
The Non-executive Directors have both a breadth and
depth of skills and experience to fulfil their roles. All have
experience of being on other Boards of companies listed
on the London Stock Exchange. Details of the Directors’
experience and areas of expertise are outlined in the Board
of Directors section on pages 54 and 55.
The Board undertakes an appraisal process to see how the
mix of skills, experience and behaviours match with the
Company’s ambitions and is satisfied that, between the
Directors, it has an effective and appropriate balance of
skills and experience, needed at this stage of the Group’s
development, including in the areas of medical devices,
sales and marketing, external communications, product
development, finance, innovation, international trading, risk
management, corporate governance, and M&A.
The Group’s culture is understood and led by the example
set by the behaviours of the three Executive Directors,
one of whom was the founder of Inspiration Healthcare
Limited. Taking into account that the Group is relatively
small with approximately 200 employees, this is considered
an effective means of conveying the Group’s approach to
ethical behaviour. The common culture is based upon four
core values:
u Patient focus
u Outcome changing
u Pioneering
u Research driven
The Audit Committee Chair updates his technical and
financial experience by attending workshops held by the
major accounting firms.
The Chair of the Remuneration Committee obtains regular
updates on best practice for executive remuneration
packages and initiates periodic reviews, taking account of
changes to the business.
The integration of SLE provided an opportunity to align
Health and Safety and HR processes, as well as aligning the
quality management and ERP systems used throughout the
Group, which bought a more cohesive culture to the Group
by allowing employees access to the same data platforms.
An extensive communication programme on the Group’s
culture and priorities was carried out to ensure that the SLE
team understand the Group’s expectations and processes.
Other Directors are regularly kept up-to-date via the latest
governance and business updates from major accountancy
or legal firms and via membership of various professional
bodies.
All Directors stand for re-election by shareholders each year.
7. Evaluate Board performance based on clear and
relevant objectives, seeking continuous improvement
A calendar of meetings and principal matters to be discussed
is agreed at the start of the year. The Board held nine
scheduled meetings in the year, two meetings during the
year focused on strategic matters and the remaining seven
meetings focused on specific key matters, including risk
management, R&D reviews, financial forecasts, employee
engagement, and shareholder feedback. Following changes
made after the SLE acquisition the Board intends to use an
externally facilitated evaluation process during 2022.
The Board considers succession planning for the Executive
Directors on an ad-hoc basis.
9. Maintain governance structures and processes that are
fit for purpose and support good decision-making by
the Board
The Board reviews our corporate governance arrangements
regularly and expect to evolve these over time as the
business grows. There is a clear division of responsibilities
between the Chairman and the Chief Executive Officer. The
Chairman is responsible for leading the Board, setting its
agenda and monitoring its effectiveness. He meets regularly
and separately with the Chief Executive Officer and the
other Non-executive Directors.
The Board has recently reviewed the schedule of matters
reserved for its decision and a full copy is published on the
Group’s website.
49
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukGOVERNANCE Statement of Corporate Governance continued
Matters reserved for Board decision include:
Audit Committee
u overall business strategy including Environmental, Social
and Governance
u review of key operational and commercial matters
including health and safety
u review of significant risks, risk appetite, and controls
following report on effectiveness of controls from the
audit committee
The Audit Committee has two members, Bob Beveridge
(Chair) and Liz Shanahan. The Chief Financial Officer and
external auditors attend meetings by invitation. The Audit
Committee’s responsibilities include the review of the
scope, results, and effectiveness of the external audit, the
review of half-year and Annual Financial Statements, and
the review of the Group’s risk management and internal
control systems. A separate report of the Audit Committee
activities is on pages 52 and 53.
u review of key financial matters, including approval of
financial plans, changes to capital structure
The terms of reference for the Audit Committee can be
found on the Group’s website.
u acquisitions and disposals of businesses, material capital
expenditure, treasury policy, and dividends
Remuneration Committee
u governance, including the appointment and removal of
Board members, remuneration of Directors, set up and
delegation of matters to committees and the reviewing of
reporting back thereof
u approval of Financial Statements
The report of the Remuneration Committee is set out on
pages 60 to 65. The Remuneration Committee has two
members, Liz Shanahan (Chair) and Bob Beveridge. The
Committee is responsible for setting the remuneration
arrangements, including short-term bonus and long-term
incentives, for Executive Directors as well as approving the
remuneration principles for senior employees.
u stock exchange-related issues including the approval of
communications
The detailed terms of reference for the Remuneration
Committee can be found on the Group’s website.
All Directors receive monthly information on the Group’s
operational and financial performance and a full set of board
papers circulated to the Board in advance of meetings.
The Board delegates authority to three committees to
assist in meeting its business objectives while ensuring a
sound system of internal control and risk management. The
committees meet independently of Board meetings.
Nominations Committee
The Nominations Committee has four members, Mark
Abrahams (Chair), Bob Beveridge, Liz Shanahan and
Neil Campbell. The Nominations Committee considers
succession planning, reviews the structure, size and
composition of the Board and nominates candidates to fill
Board vacancies.
A more detailed terms of reference for the Nominations
Committee can be found on the Group’s website.
50
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Membership of the Board committees is as follows:
M ABRAHAMS
L SHANAHAN
N CAMPBELL
B BEVERIDGE
Audit Committee (AC)
Remuneration Committee (RC)
Nominations Committee (NC)
n/a
n/a
Chair
Member
Chair
Member
n/a
n/a
Member
Chair
Member
Member
The following table sets out the member attendance at Board and Committee meetings during the year ended
31 January 2022.
BOARD MEMBERS
NUMBER OF MEETINGS ATTENDED
M Abrahams, Chairman
N Campbell, Chief Executive Officer
B Beveridge, Senior Independent Non-executive Director
B Nolson, Chief Operating Officer
L Shanahan, Non-executive Director
J Ballard, Chief Financial Officer
Board
9/9
9/9
9/9
9/9
9/9
9/9
AC
n/a
n/a
5/5
n/a
5/5
n/a
RC
n/a
n/a
3/3
n/a
3/3
n/a
NC
0/0
0/0
0/0
n/a
0/0
n/a
Non-members are invited to attend committees as appropriate.
In addition to the Board committees the Group holds Senior Executive Team meetings on a regular basis, led by the
Chief Executive Officer.
Build Trust
10. Communicate how the Company is governed and
is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
The Board has formal responsibilities and agendas and
three sub-committees; in addition, strong informal relations
are maintained between Executive and Non-executive
Directors. During the last year most meetings have taken
place online and Non-executive Directors have continued
to meet with other senior managers and give advice and
assistance online. Two board dinners have been held during
the year to provide opportunities for broader discussions.
The Chief Executive Officer and Chief Financial Officer meet
with investors after results announcements have been made
and at other shareholder participant events. They also meet
regularly with the Group’s Nomad/ broker to discuss any
shareholder feedback – the Board is briefed accordingly.
The Chief Executive Officer and the Chief Financial Officer
make presentations to institutional shareholders and analysts
each year immediately following the release of interim and
full-year results. They also attend retail shareholder events.
The slides used for such presentations are made available
on the Group’s website under the Annual Reports section.
The Group retains a financial public relations firm to assist
it in ensuring that key messages reach the appropriate
audiences.
Mark Abrahams
Chairman
3 May 2022
51
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukGOVERNANCE Audit Committee Report
The Audit Commit tee comprises
t wo members:
Bob Beveridge, a chartered accountant with recent and
relevant financial experience, and Liz Shanahan. It met five
times during the year with 100% attendance. The Chief
Financial Officer and external auditors attended all meetings
at the invitation of the Committee Chair. The Committee
also met with the external auditors without the presence of
Executive Directors or management.
Role
The Audit Committee is responsible for ensuring that the
financial performance of the Group is properly reported and
reviewed. Its role includes monitoring the integrity of the
Financial Statements (including annual and interim accounts
and results announcements), reviewing internal control
and risk management systems, reviewing any changes to
accounting policies, reviewing and monitoring the extent of
the non-audit services undertaken by external auditors and
advising on the appointment of external auditors.
Main Activities
The main items of business carried out by the committee in
the year included:
u consideration of matters of judgement and other key
audit matters
u review of interim and full year Financial Statements and
Annual Report
u consideration of the external audit report
u going concern review
u review of the risk management process and internal
control procedures
u meeting with the external auditor without management
present
u review of the FY2022 audit plan and audit engagement
letter
u review of effectiveness of the external auditor
The Audit Committee is
responsible for ensuring that
the financial performance
of the Group is properly
reported and reviewed
52
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Financial Reporting
The Committee has recently concluded that the Annual
Report and Financial Statements for the year ended
31 January 2022, taken as whole, are fair, balanced and
understandable and provide the information necessary for
shareholders to assess the Group’s business model, strategy
and performance.
During the year, the Committee considered the following
key matters of judgement:
u Capitalisation of product development spend
u Valuation of goodwill and intangible assets arising from
the acquisition of Viomedex and SLE and any possible
impairment indicators
u Appropriateness of the Group’s segmental reporting
Risk Management and Internal Controls
The risk register is reviewed half yearly in the Board
meetings, following a process agreed by the Audit Committee
to identify and report strategic, operational and financial
risks, the procedures in place to mitigate those risks and
uncertainties and the potential impact on the Group.
The Committee reviewed this report and reported its views
to the Board. The principal risks and uncertainties to which
the Group is exposed are set out in the Strategic Report on
pages 36 to 43.
During the year the Viomedex and SLE businesses were
migrated to the Group’s standard ERP system. There is
strong automation and segregation of duties enforced within
this system. Post year-end the committee will review an
updated analysis of the control environment and make any
necessary recommendations for improvement.
u Alternative performance measures; reviewed rationales
and methodology of calculations
Key control procedures continue as follows:
In terms of Going Concern the committee considered a
range of scenarios for both the budget and the three-year
business plan including a reasonable worst-case scenario. It
was concluded that the going concern basis is appropriate.
External Audit
The FY2021 audit process was extended due to unforeseen
complexities arising from the legacy finance system in SLE
Limited. The Committee agreed to recommend publishing
the Preliminary unaudited results, following a detailed
review of audit work and assurances that the remaining
procedures were not material.
The Committee carried out a detailed assessment of the
root causes and lessons learned in terms of strength of
team, clarity of responsibilities, project management and
communication systems. SLE Limited has been migrated
on to the Group’s standard ERP system during the year
which will enable significant efficiencies. The plan for
FY2022 incorporates these learnings and the delivery of
the plan closely monitored by the Audit Committee. The
Committee considered a number of factors to assess the
auditor’s objectivity and independence, including their
internal procedures, the degree and nature of challenges
and scepticism shown by the partner. The Committee is
satisfied with the independence, objectivity and expertise of
BDO (the Group’s external auditors) and has approved the
FY2022 audit plan. A full review will take place after the
completion of the FY2022 audit.
u Management responsibility and authorisation controls
– the Group has an established management structure
in place, and clearly defined levels of responsibility. In
addition, the Group has an authorisation matrix and
delegation of authorities are built into the ERP system.
The Group also has a comprehensive monthly financial
reporting process.
u Corporate planning process – an annual plan and three-
year strategic plan is updated each year and approved
by the Board. Following approval of the annual budget
by the Board financial performance and variances
against budget are analysed and reported monthly and
challenged centrally.
u Key Performance Indicators (“KPI’s”) – a set of
financial and non-financial KPI’s are
operational,
reported each month to the Board.
u Strong cash management – the Group maintains tight
cash management control through, for example, delegated
authorities and dual signatories on all bank accounts.
The Board has approved a treasury policy covering
counterparty risk and foreign exchange management.
Conclusion
The Committee considers it has acted in accordance with
its responsibilities. The Chair of the Audit Committee will
be available at the Annual General Meeting to answer any
questions about the work of the Committee.
Bob Beveridge
Chair, Audit Committee
3 May 2022
53
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukGOVERNANCE Board of Directors
Neil Campbell Chief Executive Officer
Jon Ballard Chief Financial Officer
Brook Nolson Chief Operating Officer
Jon Ballard FCA joined Inspiration
H e alth c are as Group F inan cial
Controller in June 2017 and was
appointed as Chief Financial Officer in
July 2020. A Chartered Accountant,
Jon has over 20 years’ experience
in both practice and industry across
a range of businesses from SMEs
to Listed Companies, of which the
previous eight have been within
the Medical Device
industry. Jon
previously worked for CR Bard within
the UK business. Jon has a degree
in Physiology from the University of
Bristol.
KEY AREAS OF EXPERTISE
Financial planning and analysis,
financial control, budgeting, audit.
In 2003, Neil became CEO and founding
par tner of Inspiration Healthcare
Limited, leading them through the
reverse acquisition of Inditherm plc and
onto AIM in June 2015. Neil has spent
30 years in the Medical Device industry.
Neil has had an extensive career in
medical devices in international sales
and marketing in neonatal intensive care
and operating theatre products, as well
has having direct sales experience in the
UK and Australia. Neil has previously
also been a Director of Neuroprotexeon
Ltd a drug/device development Company
and currently is an advisor to the Infant
Centre (the
Irish perinatal research
centre) in Cork. Neil has a degree in
Engineering Technology and a Diploma
in International Trade.
KEY AREAS OF EXPERTISE
Medical device market, market
development, international sales and
mar ke ting, pro duc t development,
regulatory affairs, strategic planning,
M&A.
sup p or te d
Having
Inspir atio n
Healthcare as a consultant since
2013, Brook joined the Board as Non-
executive Director in June 2015 and
Chair of the Remuneration Committee
Following the acquisition of SLE, he
stepped down from his previous roles
and became Chief Operating Officer
for the Group. Brook has considerable
experience in managing manufacturing,
implementing strategic development
plans and using technology and ERP
system-based solutions to maximise
productivity. Brook is a member of The
Cambridge Institute for Sustainability
Leadership (CISL) having completed his
studies in Sustainability Management
for the Corporate Environment with
Cambridge University. Previous Group
Directorships include: Birse Group plc,
Willmott Dixon Group and Morgan
Sindall plc.
KEY AREAS OF EXPERTISE
Corporate sustainability Leadership,
s tr ate gic grow t h, re s tr u c t uring,
transformation, product
business
deve lop m e nt,
an d
le a der ship
management development.
54
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Mark Abrahams Non-executive Chairman
Bob Beveridge Non-executive Director
Liz Shanahan Non-executive Director
Mark Abrahams FCA became Chairman
of Inspiration Healthcare Group plc
following the reverse acquisition
transaction in June 2015 and prior
to that was Chairman of Inditherm
plc since 2001. Mark has recently
retired from the Board of Fenner Plc,
following the acquisition by Michelin,
where he has been both Chairman and
Chief Executive Officer for 25 years,
during which time he led a strategy
of converting the Group from a power
transmissions manufacturer to a world
leader in reinforced polymers. Mark
has also held roles as Vice Chair
of Leeds Teaching Hospitals Trust
and Non-executive Chairman of the
Darby Group Plc. He is a Chartered
Accountant and a Companion of the
Institute of Management. He was a
member of the Economics Growth
Board of the CBI.
KEY AREAS OF EXPERTISE
S tr ate g y, c or p or ate gover nan c e,
f i n a n c i a l
i n t e r n a t i o n a l M & A ,
management, operational management,
inve stor
international
business risk management.
relations,
Bob Beveridge FCA, Non- executive
Director and Senior Independent
Director, joined the Board in August
2015 and
the Audit
is Chair of
Committee. Bob has wide ranging Non-
executive Director and public company
experience; he is currently Chairman
of the Thames Valley Berkshire
Local Enterprise Par tnership, Audit
Committee Chair of Finsbury Food
Group plc and member of the audit
committee of the Health Foundation.
Previously he was Group Finance
Director of McBride plc, Marlborough
Stirling plc and Cable and Wireless
Communications plc. In 2021, Bob
became Employee Representative to
the Board.
KEY AREAS OF EXPERTISE
Senior financial skills relating to M&A,
investor relations, risk management,
f inan cing, au dit c ommit te e s an d
c or p or ate
digit al
technology and financial strategy.
gover nan c e,
Liz Shanahan joined the Board as a
Non-executive Director
in October
2020. She is Chair of the Remuneration
Committee and a member of the Audit
Committee.
Until 2014, she was Global Head
of Healthcare & Life sciences at the
NYSE- listed management consultancy,
FTI Consulting Inc., who had, in
2007, acquired the communications
business, Santé Communications,
which she had founded in 1995.
Liz is also a Non-executive Director
of the AIM listed company, Celadon
Pharmaceuticals plc and as Director &
Trustee of CWPlus, the charitable arm
of Chelsea & Westminster Foundation
Trust Hospital in London, where she
was a Non-executive Director for over
five years. She is also a member of the
organisation’s
Innovations Advisory
Board.
Liz has a degree in Computer
Programming & Maths from University
College Cork, and she is an alumnus
of the University of Virginia, Darden
School of Business.
KEY AREAS OF EXPERTISE
Pharmaceutical & Healthcare Industry
expertise, Financial including M&A,
Risk management, Public Policy,
ESG strategy, International Markets,
Communications & Investor Relations.
55
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukGOVERNANCE Directors’ Report
The Directors present their report on the Group and Company,
together with the audited Consolidated Financial Statements of
the Group and Company for the year ended 31 January 2022
(“FY2022”). Inspiration Healthcare Group plc is incorporated
under the laws of England and Wales as a public limited
company and its registered office and principal place of
business is 2 Satellite Business Village, Crawley, West Sussex
RH10 9NE. The Company’s Ordinary Shares are admitted to
and traded on AIM (Alternative Investment Market), a market
operated by the London Stock Exchange plc.
Going Concern
The Group provides critical care equipment to the NHS, to
private healthcare providers and to distributors who provide
the equipment to other healthcare systems internationally.
With a focus on neonatal intensive care the use of the Group’s
products are not something that can be reduced by election
or choice and consequently demand for the Group’s products
is likely to continue or increase with the continuation of the
Covid-19 pandemic.
Although the Group has no information to suggest such a
scenario might occur the Group has modelled a significant
downside scenario based on the main risks to the Group,
as identified in the Principal Risks and Uncertainties on
page 36 to 43 of the Annual Report, including a significant
downturn in forecast revenue of 15% which would not result
in a requirement to draw on the Revolving Credit Facility in the
going concern period.
Based on the above, available funds of £7.9million and access
to an undrawn £5million Revolving Credit Facility (“RCF”) as at
31 March 2022, plus the ability to implement some mitigating
actions identified by the Board in response to a significant
trading downturn, the Directors believe that the Group has
sufficient liquidity to meet obligations as they fall due for at
least twelve months from 3 May 2022 and, therefore, consider
it appropriate to prepare the Financial Statements on the
going concern basis. Further information on the Group’s cash
resources as at 31 January 2022 is given in note 16 of the
Financial Statements.
With a focus on neonatal intensive
care the use of the Group’s products
are not something that can be
reduced by election or choice
56
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Results and Dividends
Involvement of Employees
The results of the Group are set out in detail on page 72. An
interim dividend of 0.205p per share (FY2021: 0.2p per share)
was paid on 29 December 2021. The board is recommending
a final dividend of 0.41p per share (FY2021: 0.4p per share) to
make a total dividend for the year of 0.615p per share (FY2021:
0.6p per share).
Business Review and Future Developments
Details of the business activities during the year can be found
in the Strategic Report on pages 4 to 45.
Political and Charitable Donations
No charitable donations were made during the year (FY2021:
£250,000). No political donations were made (FY2021: £nil).
Financial Instruments and Risk Management
Disclosures regarding financial instruments are provided within
the Principal Risks and Uncertainties on pages 36 to 43 and
note 19 to the Consolidated Financial Statements.
Capital Structure
Details of the Company’s share capital, together with details
of the movements therein, are set out in note 22 to the
Consolidated Financial Statements. The Company has one
class of Ordinary Shares which carry no right to fixed income.
Research and Development
The Group continues to invest in research and development,
in order to extend its product offerings and improve the
effectiveness of its technology. During the year, the Group
incurred costs totalling £3.7million (FY2021: £1.6million)
including expenditure capitalised in accordance with IAS38.
All employees are valued members of the team and our aim is
to help every individual achieve their full potential.
For information on how we engage with our employees, refer to
our section 172 statement on pages 44 and 45.
Customers
A key element of the Group’s business model is to work closely
with Key Opinion Leaders in the healthcare system and to
develop, evaluate and enhance our propositions in full co-
operation with those partners. The Group plans to continue
investment in R&D to enhance its products, get more regulatory
clearances around the world and bring its innovative product
range to more customers and ultimately help more babies
survive.
The Directors of the Company who served during
the year and up to the date of signing the Financial
Statements were:
Director Position
M S Abrahams
Non-executive Chairman
N J Campbell
Chief Executive Officer
B Nolson
J Ballard
Chief Operating Officer
Chief Financial Officer
and Company Secretary
B J Beveridge
Non-executive Director
L A Shanahan
Non-executive Director
Further information relating to the Board is detailed on pages
54 and 55.
57
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukGOVERNANCE Directors’ Report continued
Directors’ Interests in Shares and Contracts
Annual General Meeting
Directors’ interests in shares of the Company at 31 January
2022 and 31 January 2021 and any changes subsequent to
31 January 2022 are disclosed in the Directors’ Remuneration
Report on page 65.
Directors’ interests in contracts of significance to which the
Group was a party during the financial year are disclosed in
note 28 of the Consolidated Financial Statements.
Details of the arrangements for the Annual General Meeting
(“AGM”) and the resolutions to be proposed will be provided in
a separate notice of the AGM that will be sent to shareholders.
Re-appointment of Independent Auditors
BDO LLP have expressed their willingness to continue in
office and a resolution to re-appoint them is proposed for
consideration at the Annual General Meeting.
Indemnification of Directors
As permitted by the Articles of Association, the Directors
have the benefit of an indemnity which is a qualifying third-
party indemnity provision as defined by section 234 of the
Companies Act 2006. The indemnity was in force throughout
the last financial year and is currently in force.
Statement of Directors’ Responsibilities in respect of
the Financial Statements
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable
law and regulation.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law the Directors
have prepared the Group Financial Statements in accordance
with UK adopted International Accounting Standards and
Company Financial Statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 101 “Reduced
Disclosure Framework”, and applicable law).
Substantial Interests
At 3 May 2022 the Company had been notified of the following
interests which amounted to 3% or more of the issued capital
of the Company.
SHAREHOLDER
Number of
shares
Percentage
holding
BGF Investment Management Ltd
10,560,000
Premier Miton Group plc
Berenberg Bank
6,876,114
5,715,170
Octopus Investments Nominees Limited
4,425,000
N J Campbell
S G Motley
T Foster
Liontrust Asset Management
Canaccord Genuity Group Inc
4,416,646
4,111,628
3,755,283
3,279,520
2,969,971
15.5%
10.1%
8.4%
6.5%
6.5%
6.0%
5.5%
4.8%
4.4%
58
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Under Company law the Directors must not approve the
Financial Statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
Company and of the profit or loss of the Group and Company
for that period. In preparing the Financial Statements, the
Directors are required to:
The Directors are responsible for ensuring the annual report
and the Financial Statements are made available on a website.
Financial Statements are published on the Company’s website
in accordance with legislation in the United Kingdom governing
the preparation and dissemination of the Financial Statements,
which may vary from legislation in other jurisdictions.
The maintenance and integrity of the Company’s website is the
responsibility of the Directors. The Directors’ responsibility also
extends to the ongoing integrity of the Financial Statements
contained therein.
Directors’ Confirmations
In the case of each Director in office at the date the Directors’
Report is approved:
u so far as the Director is aware, there is no relevant audit
information of which the Group and Company’s auditors are
unaware; and
u they have taken all the steps that they ought to have taken
as a Director in order to make themselves aware of any
relevant audit information and to establish that the Group
and Company’s auditors are aware of that information.
Jon Ballard
Company Secretary
3 May 2022
u select suitable accounting policies and then apply them
consistently
u state whether applicable UK adopted
International
Accounting Standards have been followed for the Group
Financial Statements and United Kingdom Accounting
Standards, comprising FRS 101, have been followed for
the Company Financial Statements, subject to any material
departures disclosed and explained in the Financial
Statements
u make judgements and accounting estimates that are
reasonable and prudent
u prepare the Financial Statements on the going concern basis
unless it is inappropriate to presume that the Group and
Company will continue in business
u prepare the Financial Statements in accordance with the
rules for the London Stock Exchange for the companies
trading securities on AIM
The Directors are also responsible for safeguarding the assets
of the Group and Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Group and Company
and enable them to ensure that the Financial Statements
comply with the Companies Act 2006.
59
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukGOVERNANCE Directors’ Remuneration Report
I am very pleased to be able to present my second Directors’
Remuneration Report as Chair of
the Remuneration
Committee, on behalf of the Board, for the financial year
ended 31 January 2022 (“FY2022”).
Overview of Year
The challenges of Covid-19 remained with us throughout
2021/22, and again, despite those challenges, the Group
once again delivered a strong financial performance for
FY2022. We are pleased to be able to propose a final
dividend of 0.41p per share this year. The organisation
continued to grow, with a strong focus on the integration of
SLE Limited and a focus on our move to our new Croydon
site. The Committee has reviewed the current remuneration
policy and has made some adjustments. Directors short and
long-term remuneration, as detailed below, continues to
reflect the Group’s strong performance during the year. Our
Chief Financial Officer and Company Secretary, Jon Ballard
and our Chief Operating Officer, Brook Nolson, have now
both settled well into their roles.
Membership
The Remuneration Committee has two members, Bob
Beveridge, and myself, Liz Shanahan.
three
formally
The Committee has met
times but
regularly had informal discussions during the year. The
Committee’s responsibilities include; setting, reviewing
and recommending to the board the remuneration policy
for Executive Directors, certain aspects of other senior
executives remuneration and reviewing and approving the
rules of share incentive plans.
Executive Remuneration Policy
The Committee has followed the Quoted Companies
Alliance (“QCA”) guidance and is fully appraised of the
FRC UK Corporate Governance Code 2018. Our reporting
sits in the enhanced category for most aspects of the QCA
guidance. Our aim is to ensure that it continues to be
appropriate in supporting the Group’s strategy and that it
remains aligned with stakeholders’ interests, in particular
our shareholders and reflects evolving best practice and
regulatory developments. The Committee endeavours to
offer competitive remuneration packages that align with the
Group’s strategy and deliver on the short, medium and long-
term objectives of the organisation. The Committee wants
to ensure that we have packages that are fair, attract and
appropriately incentivise the right calibre senior executives
to the organisation and retain those individuals. We also
want a remuneration policy that is challenging, appropriate
and reflective of the Company’s culture.
The remuneration agreements, as part of their contract of
employment, for this level of executive are a mix of fixed
remuneration and a performance-based
remuneration
which are designed to incentivise them; but not to detract
from the goals of corporate governance.
The composition of each Director’s remuneration is based
on a fixed element together with a short and longer-term
performance related element and are reviewed annually by
the Committee. The Executive Directors, including the Chief
Executive Officer, each have a rolling 6-month contract.
There are no provisions in these contracts for compensation
if there is a change of control. The service contracts do not
contain any provision for compensation on early termination.
In the event of any early termination, the Committee would
seek to mitigate cost to the Group whilst dealing fairly with
each individual case.
The Non-executive Directors, including the Chairman, each
have a letter of appointment for a three-year term. Under
the terms of the letters either party can serve 6 months
written notice to terminate the arrangement. The maximum
compensation payable in the event that appropriate notice
is not given will be the equivalent to the notice term of
the Director’s fees. For the most recently appointed Non-
executive Director, the term is 4 months. As of 3 May 2022,
the Chairman has served on the Board for 6.8 years, Bob
Beveridge has served for 6.7 years and I have been in place
for 1.4 years.
60
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC The Executives fixed packages consist of basic salary,
pension contributions of 5% of basic salary on a matched
contribution basis, a vehicle allowance, private healthcare
insurance and a death in service insurance scheme.
The performance related aspects consist of an annual
bonus scheme between 50% and 100% of salary based on
agreed performance criteria and a long-term incentive plan
(“LTIP”)1. The LTIP award is in the form of a nil cost nominal
value share option over ordinary shares. The market value
of the options granted to each of the executives, (number
of options multiplied by the share price of the date of
grant) equated, in the aggregate, to 30% of base salary
respectively.
No Director participates in decisions about their own
remuneration package.
Workforce Engagement and
Workforce Remuneration
With the acquisition of SLE Limited in 2020, there were
inevitably some misalignments between the remuneration
policies across the Group. As part of our commitment to
the ‘S’ in ESG, in the last 12 months, there has been some
significant work to align those policies with a review and
harmonisation of salaries across the Group. In addition,
we implemented a number of new strategies including life
insurance across all employees, improved annual leave
programmes and the number of other additional employee
benefits. We launched a progressive parental leave and pay
programme, which includes specific provisions for those
whose babies need neonatal intensive care and we have
been trialling a compressed week programme which gives
employees the option to compress their hours into a four-
day working week. Our SAYE scheme, launched in 2020
which was designed to encourage our workforce to engage
in the long-term future of the business and to reward them
for their commitment, remains well subscribed. To date 74
employees have participated and 425,650 shares have
been committed.
Executive Pay Ratio Reporting
Whilst the Group is not obliged to report on this matter,
the Board wishes for the business to be as transparent as
possible on public and social issues. There remains a small
gap between our female and male ratios, an improvement
on 2021 and we remain committed to monitoring and
neutralising it. Executive Pay Ratio Reporting remains
stable, with the highest paid executive receiving just over
5 times the average package within the business and 10
times the lowest package.
Executive Remuneration for
year ending 31 January 2022
Fixed Aspects
Because of the increases given in 2020, none of the
executives received a salary increase in FY2022. The
Executive Directors continue to receive pension contributions
of 5% of basic salary or money purchase scheme on a
matched contribution basis. Other benefits, which comprise
the provision of a vehicle allowance or company car, private
healthcare insurance and a death in service insurance
scheme, have remained unchanged.
Performance Related Aspects
Bonus
The maximum annual bonus achievable for the executives
varies between 50% and 100% of basic salary. Historically,
the targets have been primarily set by reference to a mixture of
challenging financial targets and a Health and Safety target,
which the Committee considers to be strategically important
for the Group. In FY2022, the financial targets were based
on performance measures which are revenue, EBITDA,
new product development and cash flow. The Health and
Safetytarget is based on having no reportable incidents,
see Table 2. For this year, the financial performance of
the Group resulted in an actual bonus achievement, as a
percentage, of just over 80%, for the executives. Details are
set out in Table 1.
1 Under the rules of the Share Option Scheme, the Company may grant both options that qualify as enterprise management incentives under schedule 5 of the Income Tax
(Earnings and Pensions) Act 2003 and unapproved options over Ordinary Shares to any employee of the Group and any of its subsidiaries (including Executive Directors),
subject to various scheme and individual limits.
No option may be granted under the Share Option Scheme if, as a result, the aggregate nominal value of ordinary shares in the capital of the Company issued or issuable
pursuant to options granted during the previous ten years under the Share Option Scheme or any other discretionary employees’ share scheme adopted by the Company would
exceed 5% of the ordinary share capital of the Company in issue on that date. The Remuneration Committee has the discretion to exceed this 5%, in exceptional circumstances
up to a maximum of 10%.
After an initial three-year qualification period options are exercisable at any time up to the tenth anniversary of the date of grant subject to a performance criterion (unless
otherwise noted). There are also provisions, which may allow exercise of the Options in the event of a change of control, subject to the agreement of the Remuneration
Committee.
61
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukGOVERNANCE Directors’ Remuneration Report continued
Table 1: Directors’ Remuneration (Audited)
Remuneration Breakdown
Salary
Benefits
Pensions
Annual Bonus
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
EXECUTIVES
N Campbell
B Nolson1
J Ballard2
T Foster3
M Briant4
NON-EXECUTIVES
M Abrahams5
B Beveridge
L Shanahan6
B Nolson1
200
160
130
–
–
45
30
30
–
595
183
93
66
58
54
29
26
8
38
555
14
13
12
–
–
–
–
–
–
39
8
2
4
4
6
–
–
–
–
24
10
8
7
–
–
–
–
–
–
25
9
2
3
3
3
–
–
–
–
82
131
53
–
–
–
–
–
–
143
93
45
54
13
–
–
–
–
20
266
348
EXECUTIVES
N Campbell
B Nolson1
J Ballard2
T Foster3
M Briant4
NON-EXECUTIVES
M Abrahams5
B Beveridge
L Shanahan6
B Nolson1
Total Fixed Remuneration
Total Variable Remuneration
Total Remuneration
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
224
181
149
–
–
45
30
30
–
659
200
97
73
65
63
29
26
8
38
599
82
131
53
–
–
–
–
–
–
143
93
45
54
13
–
–
–
–
266
348
306
312
202
–
–
45
30
30
–
925
343
190
118
119
76
29
26
8
38
947
1 Brook Nolson was a member of the board until 6 July 2020 as a Non-executive Director and from 7 July 2020 as Chief Operating Officer. The Non-executive Director salary for
2021 reflects a significantly increased time commitment to support specific projects.
2 Jon Ballard joined the board on 1 July 2020
3 Toby Foster resigned from the board effective 7 July 2020
4 Mike Briant resigned from the board effective 30 June 2020
5 During 2021 Mark Abrahams sacrificed three months salary in favour of a charity for nurses who were impacted by Covid-19
6 Liz Shanahan joined the board on 26 October 2020
62
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Table 2: Annual Bonus Performance Criteria FY2022
Annual Bonus – 50% of Salary CEO & CFO, 100% of Salary COO
Measures
Cap Profit – EBITDA
Cap Revenue – Sales
Cap Year-end Net Cash
New Product Development
Health and Safety
Successful migration of SLE Limited
Employee engagement measured
Customer service levels and satisfaction
Total
% of Bonus
CEO & CFO
% of Bonus
COO
27.5
10.0
6.5
2.5
3.5
0.0
0.0
0.0
50.0
32.5
15.0
6.5
2.5
3.5
30.0
5.0
5.0
100.0
Priorities and executive remuneration for year ending
31 January 2023
Long-term Incentive plan (“LTIP”)
The Committee continually assesses and review’s the
policy, mindful at the moment of the ongoing uncertainty
brought on by the war in the Ukraine as well as Covid-19
on supply chains and the continued growth of the business.
The Committee concluded that on balance the executive
remuneration arrangements are appropriate, with some
small changes in performance criteria. We considered the
inclusion of some criteria to reflect a growing desire to
reflect our ESG strategy, but have agreed that it will be more
appropriate to do that next year.
Salary
We have agreed a modest increase in salary for the
Executive Directors for FY2022 of 3.5%, in line with the
rest of the workforce.
Annual bonus
The bonus arrangements for Executive Directors in FY2023
are detailed below, see Table 3, with some specific
operational targets for the Chief Operating Officer.
Table 3: Annual Bonus Performance Criteria FY2023
As outlined last year, the original performance measures
used for Enterprise Management Incentive (“EMI”) were
inconsistent with the Group’s strategic objectives and were
revised. The measures now used are based 40% on new
product introductions and 60% on revenue growth. The
EMI in place from FY2018 continued to utilise the historic
parameters. The Committee has assessed performance
against targets for the 2018 LTIP, which performance period
runs from 1 February 2018 to 31 January 2021, resulting
in 100% vesting of this element for the three-year period to
8th November 2021. Neil Campbell and Jon Ballard both
received the right to exercise 65,385 and 23,252 options
respectively on 7 April 2022.
The LTIP lapsed in 2019 and 2020 and we reintroduced
and refined it last year. As of 31 January 2022, there are,
including Directors, 477,538 (FY2021: 251,837) share
options in existence. For Directors total interest in shares,
see Table 6.
Annual Bonus - 100% of Salary
Measures
Cap Profit - EBITDA
Cap Revenue - Sales
Cap Year-end Net Cash
New Product Development
Health and Safety
Successful migration to new site
Customer service levels and satisfaction
Supplier service levels and satisfaction
Total
% of Bonus
CEO & CFO
% of Bonus
COO
60.0
22.5
5.0
10.0
2.5
0.0
0.0
0.0
25.0
7.5
5.0
10.0
2.5
30.0
10.0
10.0
100.0
100.0
63
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukGOVERNANCE
Directors’ Remuneration Report continued
LTIP
The revised LTIP for our Executive Directors, which was
launched last year, remains in place and continues to be
reflected in similar awards to a number of senior employees.
The rolling programme runs over three-year cycles and has
a 2-year holding period, post vesting with clawback criteria.
The scheme consists of nil cost options, which are subject
to performance conditions (unless noted).
Table 4: LTIP performance criteria
2022 LTIP – measures – over 3 years – evaluated on YE 31 Jan 2024
Measures
Revenue growth
Product launches
Total
As a growth business our performance criteria aim to achieve
a balance between incentive, governance and fairness. We
have made no changes to our performance criteria for this
year, which the Committee have approved, and the Board
have endorsed.
Weighting %
60.0
40.0
100.0
There is an underpin of a baseline EBITDA percentage also required.
Table 5: Outlines all outstanding share awards, with performance conditions, granted to Directors under the LTIP
Number of shares awarded under award
On 01
February
2021
Granted
during the
year
Exercised
during the
year
Lapsed
during the
year
At
31 January
2022
Date of
Award
Performance
Period
Exercising
Date
Expiry
Date
65,385
–
–
50,000
65,385
50,000
6,250
23,252
–
–
–
32,500
29,502
32,500
–
–
40,000
40,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
65,385 08 Nov 18 01 Feb 18
31 Jan 21
50,000 07 May 21 01 Feb 21
31 Jan 24
07 Nov 21 06 Nov 28
07 May 24 06 May 31
115,385
6,250 08 Nov 17 01 Feb 17
31 Jan 20
23,252 08 Nov 18 01 Feb 18
31 Jan 21
32,500 07 May 21 01 Feb 21
31 Jan 24
08 Nov 20 07 Nov 27
07 Nov 21 06 Nov 28
07 May 24 06 May 31
62,002
40,000 07 May 21 01 Feb 21
31 Jan 24
07 May 24 06 May 31
40,000
N CAMPBELL
J BALLARD
B NOLSON
64
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Table 6: Directors’ and Company Secretary’s interests in share capital (audited)
The Directors’ interests in the 10p Ordinary Shares of the Company at the end of the period were:
Directors’ Interests
M S Abrahams
N J Campbell
J Ballard
B Nolson
L Shanahan
The only interests of Directors in share options as at all
dates are set out in the Share Option Scheme section above.
More information can be found in the Directors’ Report
on pages 56 to 59 setting out substantial interests in the
Company.
31 January 2022
31 January 2021
256,576
4,416,646
15,375
34,323
35,000
256,576
4,551,646
15,375
34,323
–
Conclusion
The year ending 31 January 2022 has been a year of growth
and consolidation for all our employees. Despite the ongoing,
external, challenges, the entire workforce, including our
executive team, continued to run the business, seamlessly,
throughout year, making sure the delivery of care to neonates
was uninterrupted. The Group once again delivered a strong
operational and financial performance, and this is once
again reflected in the Directors’ remuneration.
Liz Shanahan
Chair Remuneration Committee
3 May 2022
65
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukGOVERNANCE Independent Auditor’s Report
to the members of Inspiration Healthcare Group Plc
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at
31 January 2022 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted international accounting
standards;
• the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Inspiration Healthcare Group Plc (the ‘Parent Company’) and its subsidiaries
(the ‘Group’) for the year ended 31 January 2022 which comprise the Consolidated Income Statement, the Consolidated
Statement of Comprehensive Income, the Consolidated and the Company Statements of Financial Position, the Consolidated
and Company Statements of Changes in Shareholders’ Equity, the Consolidated Cash Flow Statement and notes to the
financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable
law and UK adopted international accounting standards. The financial reporting framework that has been applied in the
preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted
Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the
Parent Company’s ability to continue to adopt the going concern basis of accounting included:
We reviewed the directors budgets and forecasts for the period to January 2024. We tested the arithmetic accuracy of
these budgets and forecasts;
We evaluated the accuracy of the previous budgets, through comparison of the FY22 budget to actual results achieved
in FY22;
We assessed the appropriateness of the key assumptions used in forecasts; we compared the revenue growth forecasts
with the revenue growth in the current year and prior year (excluding one-off Covid-19 revenue). We considered whether
the cost increases are reasonable given the forecast increase in revenue. We also considered the impact of the ongoing
conflict in Russia and Ukraine on the going concern of the Group;
We reviewed stress tested forecasts and discussed with the directors the assumptions made, and considered the
likelihood of the downside scenario arising and the reasonableness of the directors available mitigating actions. We have
also performed further stress testing to consider the impact of changes in overhead expenditure on the cashflows of the
group;
We compared budgeted results against post year-end management accounts to assess the accuracy of the directors’
forecasts;
We reviewed the adequacy and consistency of the going concern disclosures in the financial statements in light of the
directors going concern assessment; and
We reviewed the minutes of post year-end Board meetings and held discussions with those charged with governance to
identify any significant changes to business operations that would impact going concern.
-
-
-
-
-
-
-
66
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
Overview
Coverage
Key audit matters
88% (2021: 95%) of Group profit before tax
95% (2021: 100%) of Group revenue
93% (2021: 100%) of Group total assets
Revenue Recognition
*Acquisition accounting of S.L.E Limited
Y
N
Y
N
2022
2021
The acquisition accounting of S.L.E Limited was not considered to be a key
audit matter in the current year as this was a one off event occurring in the
prior year with no recurring matters for consideration in the current year.
Materiality
Group financial statements as a whole:
£198,000 (2021:£184,000) based on 5% (2021: 5%) of Profit before tax
(2021: Profit before tax before certain non-trading items)
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system
of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk
of management override of internal controls, including assessing whether there was evidence of bias by the Directors that
may have represented a risk of material misstatement.
We have identified two significant components within the group being Inspiration Healthcare Limited and S.L.E. Limited
which were subject to full scope audits. The non-significant components were subject to specific audit procedures. All audit
work on both significant and non-significant components was performed by the group engagement team.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether
or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the
allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
67
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS Independent Auditor’s Report
to the members of Inspiration Healthcare Group Plc
Key audit matter
Revenue
Recognition
(Note 1 and
note 3)
Within Inspiration Healthcare Group
revenue includes the sale of Branded
and distributor products recognised
at a point in time and the provision of
technology support services recognised
over time.
We consider there to be a risk of fraud
and error connected with recognising
revenue in the correct period around
year end (cut off) as there is an element
of judgement involved in determining
when control passes to the customer.
We also consider there to be a fraud
risk in relation to technology support
revenue arising as a result of the
judgement involved in determining the
period covered by the contract and
from the inappropriate or incorrect
calculation of the split between revenue
and the contract liability.
Following the acquisition of S.L.E.
Limited, the group has significantly
expanded the number of international
markets that it operates in, which may
drive more complexities in revenue
recognition. We
therefore consider
there to be a risk of fraud and error over
compliance with IFRS 15 Revenue from
Contracts with Customers (“IFRS15”)
for revenue contracts with overseas
customers and distributors.
How the scope of our audit addressed the key audit matter
We have checked that the Group’s policy for revenue
recognition for all trading entities is in line with the
requirements of IFRS 15.
We completed cut off testing by tracing a sample of January
2022 and February 2022 invoices for the sale of goods
through to supporting documentation to check that these
items had been appropriately accounted for in the correct
period.
We have selected a sample of
technology support
transactions in the year, agreed these through to invoice
and recalculated the contract liability as at year end based
upon the term outlined within the invoice or contract, as
applicable.
We reviewed a sample of post year end credit notes raised
to check that any items relating to the financial year under
audit had been appropriately provided for and did not
relate to revenue recognised within the year which was
subsequently reversed.
For a sample of revenue recognised for overseas distributors,
we have obtained copies of the agreements to confirm
revenue was recognised in accordance with the terms of
the contract.
We tested all unusual journal posting combinations involving
revenue accounts within the general ledger and agreed
these through to supporting documentation.
Key Observations
Based on the procedures performed we did not identify any
indicators to suggest that revenue has not been recognised
in accordance with the group’s accounting policy.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these
levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements,
and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
68
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Based on our professional judgement, we determined materiality for the financial statements as a whole and performance
materiality as follows:
Group financial statements
Parent company financial statements
2022
£
2021
£
2022
£
2021
£
Materiality
198,000
184,000
188,000
180,000
Basis for determining
materiality
5% of Profit before
tax
Rationale for the
benchmark applied
Profit before tax is a
key benchmark for
users of the financial
statement of the
Group.
5% of Profit before
tax excluding certain
non-trading items
Profit before tax is a
key benchmark for
users of the financial
statements of the
Group.
Non- trading items
were considered to
be one off in relation
to the acquisition
of S. L. E. Limited
and was therefore
adjusted for.
95% of Group
materiality
97% of Group
materiality
Parent company
materiality was
capped at £188,000
to respond to
aggregation risk.
Parent company
materiality was
capped at £180,000
to respond to
aggregation risk.
Performance
materiality
Basis for determining
performance
materiality
148,500
119,600
141,000
117,000
75% of Group
materiality as this
was reflective of our
perceived risk of the
financial statements
containing
misstatements, after
considering previous
experience of this
audit engagement.
65% of Group
materiality as there
were changes in
management in the
year and significant
changes to the Group
structure, and as a
result process and
controls.
75% of parent
company materiality
as this was reflective
of our perceived
risk of the financial
statements containing
misstatements, after
considering previous
experience of this
audit engagement.
65% of parent
company materiality
as there were
changes in
management
during the year
and significant
changes to the Group
structure, and as a
result processes and
controls.
Component materiality
We set materiality for each component of the Group based on a percentage of between 64% to 95% of Group materiality
dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality
ranged from £130,000 to £188,000. In the audit of each component, we further applied performance materiality levels
of 75% of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was
appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £8,000
(2021: £7,300). We also agreed to report differences below this threshold that, in our view, warranted reporting on
qualitative grounds.
69
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS Independent Auditor’s Report
to the members of Inspiration Healthcare Group Plc
Other information
The directors are responsible for the other information. The other information comprises the information included in the
annual report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express
any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in
the financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by
the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
Matters on which we
are required to report by
exception
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the financial
year for which the financial statements are prepared is consistent with the financial
statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company
and its environment obtained in the course of the audit, we have not identified material
misstatements in the strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns
adequate for our audit have not been received from branches not visited by us; or
• the Parent Company financial statements are not in agreement with the accounting
records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the
Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
70
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The
extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
- Through discussion with those charged with governance, we gained an understanding of the legal and regulatory
framework applicable to the Group, the components and the industry in which it operates and considered the risk of
non-compliance or fraud by the Group.
- We focused on laws and regulations that could give rise to a material misstatement in the Group and Parent Company
financial statements, including, but not limited to, the health and safety act, accounting standards and Companies Act
2006.
- Our tests included, but were not limited to, agreement of the financial statement disclosures to underlying supporting
documentation, enquiries or those charged with governance and review of board minutes.
- We assessed the susceptibility of the Group and Parent company’s financial statements to material misstatement, including
how fraud might occur, by discussion with those charged with governance. We considered there was a susceptibility of
fraud relating to management override of controls and improper revenue recognition.
- In addressing the risk of fraud, through management override of controls, we reviewed the appropriateness of journal
entries that were considered to be unusual or higher risk by agreeing the journal raised to supporting documentation. We
assess whether judgements made by management in making accounting estimates are indicative of bias and evaluated
the business rationale of any significant transactions that are unusual or outside of the normal course of business.
- In addressing the risk of fraud relating to revenue recognition our procedures included those set out in the Key Audit
Matters section above.
The engagement partner has assess and confirmed that the engagement team collectively had the appropriate competence
and capabilities to identify or recognise non-compliance with laws and regulations.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising
that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion.
There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware
of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Nigel Harker (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Gatwick, UK
3 May 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
71
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS Consolidated Income Statement
for the year ended 31 January 2022
REVENUE
Cost of sales
GROSS PROFIT
Administrative expenses
OPERATING PROFIT
Finance income
Finance expense
PROFIT BEFORE TAX
Income tax
PROFIT FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY
EARNINGS PER SHARE, ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY
BASIC EXPRESSED IN PENCE PER SHARE
DILUTED EXPRESSED IN PENCE PER SHARE
Note
3
4
6
6
7(a)
2022
£’000
41,050
(20,458)
20,592
(16,337)
2021
£’000
36,980
(18,958)
18,022
(14,778)
4,255
3,244
9
(301)
3,963
(370)
3,593
3
(114)
3,133
(318)
2,815
8
8
5.28p
5.22p
5.10p
5.07p
Consolidated Statement of Comprehensive Income
for the year ended 31 January 2022
PROFIT FOR THE YEAR
OTHER COMPREHENSIVE INCOME
ITEMS THAT MAY BE RECLASSIFIED TO PROFIT OR LOSS
Cash flow hedges
TOTAL OTHER COMPREHENSIVE INCOME/(EXPENSE) FOR THE YEAR
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Note
19
2022
£’000
3,593
2021
£’000
2,815
9
9
31
31
3,602
2,846
The notes on pages 77 to 106 are an integral part of these Consolidated Financial Statements.
72
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC
Consolidated and Company Statements of Financial Position
as at 31 January 2022
(Registered Number: 03587944)
ASSETS
NON-CURRENT ASSETS
Intangible assets
Property, plant and equipment
Right of use assets
Investments
Deferred tax asset
CURRENT ASSETS
Inventories
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Lease liabilities
Financial derivative
Contract liabilities
NON-CURRENT LIABILITIES
Lease liabilities
Deferred tax liability
TOTAL LIABILITIES
NET ASSETS
SHAREHOLDERS’ EQUITY
Called up share capital
Share premium account
Reverse acquisition reserve
Share based payment reserve
Other reserves
Retained earnings
TOTAL EQUITY
GROUP
COMPANY
Note
2022
£’000
2021
£’000
2022
£’000
2021
£’000
10
11
12
13
21
14
15
16
18
12
19
20
12
21
22
22
22
22
22
16,782
1,798
7,383
–
470
15,206
919
3,102
–
–
26,433
19,227
6,449
9,314
9,253
25,016
51,449
(6,552)
(647)
–
(524)
(7,723)
(6,896)
(1,925)
8,190
5,163
10,653
24,006
43,233
(6,809)
(369)
(9)
(533)
(7,720)
(2,796)
(1,141)
(8,821)
(3,937)
–
–
–
32,881
63
32,944
–
1,433
310
1,743
34,687
(7,973)
–
–
–
(7,973)
–
–
–
–
–
3
32,881
25
32,909
–
1,434
586
2,020
34,929
(5,996)
(3)
–
–
(5,999)
–
–
–
(16,544)
(11,657)
(7,973)
(5,999)
34,905
31,576
26,714
28,930
6,812
18,838
(16,164)
278
–
25,141
6,812
18,838
(16,164)
139
(9)
21,960
6,812
18,838
–
433
–
631
6,812
18,838
–
294
–
2,986
34,905
31,576
26,714
28,930
The Company has elected to take the exemption under section 408 of the Companies Act 2006 from presenting
the Company profit and loss account. The Company’s loss for the year ended 31 January 2022 is £1,943,000 (2021:
loss £1,782,000).
The notes on pages 77 to 106 are an integral part of these Consolidated Financial Statements.
The Group Financial Statements on pages 72 to 106 were approved by the Board of Directors on 3 May 2022 and signed
on its behalf by:
Neil Campbell
Director
Jon Ballard
Director
73
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS
Issued
share
capital
£’000
Share
premium
account
£’000
Reverse
acquisition
reserve
£’000
Share
based
payment
reserve
£’000
Other
reserves
£’000
Retained
earnings
£’000
Total
£’000
3,838
3,475
(16,164)
153
(34)
19,281
10,549
–
2,815
2,815
31
–
31
31
2,815
2,846
–
–
–
(6)
(6)
(9)
–
9
(136)
–
(136)
78
–
–
18,245
(6)
(136)
18,181
21,960
31,576
3,593
3,593
–
9
9
3,593
3,602
–
–
–
(412)
–
(412)
(412)
139
(273)
–
25,141
34,905
Consolidated and Company Statements of
Changes in Shareholders’ Equity
GROUP
AT 1 FEBRUARY 2020
Profit for the year
Cash flow hedges:
Income recognised on
hedging instruments
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR
TRANSACTIONS WITH OWNERS IN
THEIR CAPACITY AS OWNERS
Dividends
Employee share scheme expense
Issue of ordinary shares, net of
transaction costs and tax
Deferred tax
Note
22
24
22
21
–
–
–
–
–
–
–
–
–
–
2,974
–
15,363
–
TOTAL TRANSACTIONS WITH OWNERS
2,974
15,363
–
–
–
–
–
–
–
–
–
–
–
–
78
(92)
–
(14)
AT 31 JANUARY 2021
6,812
18,838
(16,164)
139
Profit for the year
Cash flow hedges:
Income recognised on hedging instruments
22
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR
TRANSACTIONS WITH OWNERS IN
THEIR CAPACITY AS OWNERS
Dividends
Employee share scheme expense
24
TOTAL TRANSACTIONS WITH OWNERS
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
AT 31 JANUARY 2022
6,812
18,838
(16,164)
–
–
–
–
139
139
278
For more information see note 22.
The notes on pages 77 to 106 are an integral part of these Consolidated Financial Statements.
74
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC
Consolidated and Company Statements of Changes in Shareholders’ Equity continued
Note
Issued
share
capital
£’000
3,838
Share
premium
account
£’000
3,475
COMPANY
AT 1 FEBRUARY 2020
Loss for the year
TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Dividends
Employee share scheme expense
Proceeds from shares issued, net of transaction
costs and tax
Deferred tax
TOTAL TRANSACTIONS WITH OWNERS
AT 31 JANUARY 2021
Loss for the year
Cash flow hedges:
Income recognised on hedging instruments
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Dividends
Employee share scheme expense
TOTAL TRANSACTIONS WITH OWNERS
24
22
21
22
24
–
–
–
–
–
–
–
–
2,974
–
15,363
–
2,974
15,363
–
–
–
–
–
–
–
–
–
–
–
–
AT 31 JANUARY 2022
6,812
18,838
Share
based
payment
reserve
£’000
308
–
–
–
78
(92)
–
(14)
–
–
–
–
139
139
433
Other
reserves
£’000
Retained
earnings
£’000
Total
£’000
6
–
–
–
–
–
(6)
(6)
–
–
–
–
–
–
–
4,904
12,531
(1,782)
(1,782)
(1,782)
(1,782)
(136)
–
(136)
78
–
–
18,245
(6)
(136)
18,181
2,986
28,930
(1,943)
(1,943)
–
–
(1,943)
(1,943)
(412)
–
(412)
(412)
139
(273)
–
631
26,714
6,812
18,838
294
For more information see note 22.
The notes on pages 77 to 106 are an integral part of these Consolidated Financial Statements.
75
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS
Consolidated Cash Flow Statement
for the year ended 31 January 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year
Adjustments for:
Depreciation and amortisation
Remeasurement of right of use assets
Impairment of right of use assets
Impairment of intangible assets
Employee share scheme expense
Contingent consideration share issue
Loss on disposal of tangible assets
Loss on disposal of intangible assets
Revenue from leased rentals
Finance income
Finance expense
Income tax expense
Decrease/(increase) in inventories
(Increase)/decrease in trade and other receivables
Decrease in trade and other payables
Decrease in contract liabilities
CASH FLOWS GENERATED FROM OPERATIONS
Taxation paid
NET CASH GENERATED FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for acquisition of subsidiary
Cash acquired through business combinations
Bank interest received
Interest received on leased rentals
Purchase of property, plant and equipment
Purchase of intangible assets
Capitalised development costs
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Share issue costs
Principal elements of lease payments
Principal elements of lease receipts
Interest paid on lease liabilities
Interest paid on loans and borrowings
Dividends paid to the holders of the parent
Proceeds from loans and borrowings
Repayments from loans and borrowings
NET CASH (USED IN)/GENERATED FROM FINANCING ACTIVITIES
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the year
Note
2022
£’000
2021
£’000
3,593
2,815
12
10
24
15
6
6
7(a)
7(b)
6
6
11
10
10
22
22
12
15
6
6
9
1,906
(46)
122
–
139
–
192
133
(304)
(9)
301
370
6,397
1,741
(3,733)
(266)
(9)
4,130
(554)
3,576
–
–
1
8
(1,425)
(338)
(2,208)
1,228
–
–
47
78
435
14
65
–
(3)
114
318
5,111
(573)
4,009
(3,597)
(6)
4,944
(209)
4,735
(19,457)
6,314
3
–
(257)
(49)
(614)
(3,962)
(14,060)
–
–
(382)
74
(244)
(50)
(412)
–
–
16,967
(957)
(262)
–
(87)
(27)
(136)
1,500
(1,500)
(1,014)
15,498
(1,400)
10,653
6,173
4,480
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
16
9,253
10,653
76
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC
Notes forming part of the Financial Statements
for the year ended 31 January 2022
1 Accounting Policies
Inspiration Healthcare Group plc (“Company”) is a public limited company incorporated in England and Wales and domiciled
in England. The Company’s registered address is Unit 2, Satellite Business Village, Crawley, West Sussex, RH10 9NE and
the registered company number is 03587944. The Company’s ordinary shares are traded on the AIM Market of the London
Stock Exchange plc.
The principal activities of Inspiration Healthcare Group plc and its subsidiaries (together, the “Group”) continue to be the
sale, service and support of critical care equipment to the medical sector including hospitals.
Basis of preparation
The principal accounting policies adopted in the preparation of these Financial Statements are set out below. These policies
have been consistently applied unless otherwise stated.
The individual Financial Statements of each entity in the Group are presented in the currency of the primary economic
environment in which it operates (the functional currency). The Group Financial Statements are presented in pounds
sterling, which is the presentation currency of the Group.
Going concern basis
The Group provides critical care equipment to the NHS, to private healthcare providers and to distributors who provide
the equipment to other healthcare systems internationally. With a focus on neonatal intensive care the use of the Group’s
products are not something that can be reduced by election or choice and consequently demand for the Group’s products
is likely to continue or increase with the continuation of the Covid-19 pandemic.
Although the Group has no information to suggest such a scenario might occur the Group have modelled a significant
downside scenario based on the main risks to the Group, as identified in the Risks and Uncertainties on page 36 to 43 of
the Annual Report, including a significant downturn in forecast revenue of 15% which would not result in a requirement to
draw on the Revolving Credit Facility in the going concern period.
Based on the above, available funds of £7.9million and access to an undrawn £5million Revolving Credit Facility (“RCF”) as
at 31 March 2022, plus the ability to implement some mitigating actions identified by the Board in response to a significant
trading downturn, the Directors believe that the Group has sufficient liquidity to meet obligations as they fall due for at least
twelve months from 3 May 2022 and, therefore, consider it appropriate to prepare the Financial Statements on the going
concern basis. Further information on the Group’s cash resources as at 31 January 2022 is given in note 16.
Group
The Consolidated Financial Statements cover the year ended 31 January 2022.
The Consolidated Financial Statements have been prepared and approved by the Directors in accordance with UK adopted
international accounting standards in conformity with the requirements of the Companies Act 2006. The Consolidated
Financial Statements are prepared under the historical cost convention, as modified for any financial assets or liabilities
which are stated at fair value through operating profit or loss and for share based payments which are measured at
fair value.
Company
The Company Financial Statements cover the year ended 31 January 2022.
The Financial Statements have been prepared in accordance with Financial Reporting Standard 101, ‘Reduced Disclosure
Framework’ (“FRS 101”). The Financial Statements have been prepared under the historical cost convention and in
accordance with the Companies Act 2006 as applicable to companies using FRS 101.
The preparation of Financial Statements in conformity with FRS 101 requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to
the Financial Statements are disclosed elsewhere in this note.
77
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS
Notes forming part of the Financial Statements
for the year ended 31 January 2022
1 Accounting Policies continued
The following exemptions from the requirements of IFRS have been applied in the preparation of the Company Financial
Statements, in accordance with FRS 101:
Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based payment’ (details of the number and weighted-average exercise
prices of share options, and how the fair value of goods or services received was determined);
IFRS 7, ‘Financial Instruments: Disclosures’;
Paragraphs 91 to 99 of IFRS 13, ‘Fair value measurement’ (disclosure of valuation techniques and inputs used for fair
value measurement of assets and liabilities);
Paragraph 38 of IAS 1, ‘Presentation of Financial Statements’ comparative information requirements in respect of:
– paragraph 79(a)(iv) of IAS 1;
– paragraph 73(e) of IAS 16 Property, plant and equipment;
The following paragraphs of IAS 1, ‘Presentation of Financial Statements’:
– 10(d) (statement of cash flows);
– 10(f) (a statement of financial position as at the beginning of the preceding period when an entity applies an
accounting policy retrospectively or makes a retrospective restatement of items in its Financial Statements, or when
it reclassifies items in its Financial Statements);
– 16 (statement of compliance with all IFRS);
– 38A (requirement for minimum of two primary statements, including cash flow statements);
– 38B-D (additional comparative information);
– 40A-D (requirements for a third statement of financial position);
– 111 (cash flow statement information), and
– 134-136 (capital management disclosures);
IAS 7, ‘Statement of cash flows’;
Paragraph 30 and 31 of IAS 8 ‘Accounting policies, changes in accounting estimates and errors’ (requirement for the
disclosure of information when an entity has not applied a new IFRS that has been issued but is not yet effective);
Paragraph 17 of IAS 24, ‘Related party disclosures’ (key management compensation); and
The requirements in IAS 24, ‘Related party disclosures’ to disclose related party transactions entered into between two
or more wholly owned members of a group.
The accounting policies of the Company are the same as for the Group.
Basis of consolidation
The Financial Statements of the Group consolidate the Financial Statements of Inspiration Healthcare Group plc and its
subsidiary undertakings (together referred to as the “Group”) up to 31 January each year. All subsidiaries have a reporting
date of 31 January.
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to
govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control,
potential voting rights that are currently exercisable or convertible are taken into account. All subsidiaries are 100% owned.
The Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date that
control commences until the date that control ceases, in accordance with IFRS 10. Intra group transactions and balances,
and any unrealised gains or losses arising from intra group transactions, are eliminated in preparing the Consolidated
Financial Statements.
Critical estimates and judgements
The presentation of Financial Statements requires the use of accounting estimates which, by definition, will seldom equal
the actual results. Management also needs to exercise judgement in applying the Group’s accounting policies.
78
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC
Notes forming part of the Financial Statements continued
1 Accounting Policies continued
Judgements
The Group applies judgement in how it applies its accounting policies, which could materially affect the numbers disclosed
in these Financial Statements. The key accounting judgements that have been applied in these Financial Statements are
as follows:
Taxation Provision
In arriving at the tax provision required at the balance sheet date management make a judgement on the accuracy of
preliminary tax computations prior to their submission and acceptance by the tax authorities. As a significant investor
in research and development expenditure this includes judgement on the accuracy of the calculation of R&D tax credits
included within the preliminary computation. Although all endeavours are made to reflect the correct R&D tax credits in
the preliminary tax computation the final tax computation submitted to the relevant tax authorities may differ. See note
7(c) for the impact on the tax provision as at 31 January 2022 of R&D tax credit claims made for the year.
Capitalisation of development costs
In order to capitalise product development costs, there is a requirement for detailed analysis of the technical feasibility
and judgement on the commercial viability of the project. The Board regularly reviews this judgement in respect of
relevant development projects. Commercial viability is based on the future prospects for revenue generated through sales
of the products that are being developed and expected costs to complete the development, as well as costs to make the
products. These estimates are based on historical experience and other factors, including the achievement and timing
of regulatory and registration requirements as well other expectations of future events that are believed to be reasonable
under the circumstances. Actual results may not be in line with the estimates made. The value of product development
costs capitalised during the year was £2,208,000 (2021: £614,000) which includes £287,000 (2021: £310,000) of
employee time spent on development projects. See Note 10.
Non-trading Items
Non-trading items have been presented separately throughout the Financial Statements. These are items that management
believes require separate disclosure by virtue of their nature in order that users of the Financial Statements obtain a
clear and consistent view of the Group’s underlying trading performance. In identifying non-trading items, management
have applied judgement including whether i) the item is related to underlying trading of the Group; and/or ii) how often
the item is expected to occur. There were no non-trading items in the year. In prior year, the non-trading items were
acquisition related.
Leases
Termination options are included in a number of property leases across the Group. This option is used to maximise
operational flexibility in terms of managing contracts. In determining the lease term, management considers all facts
and circumstances that create an economic incentive not to exercise a termination option. Termination options are only
included in the lease term if the lessee is reasonably certain to exercise the option to terminate before the end of the
lease term. The assessment is reviewed if a significant event or a significant change in circumstances occurs which
affects this assessment and that it is within the control of the Group.
Accounting Estimates
The Group is required to make judgements based on estimates and assumptions concerning the future in order to fully
comply with UK adopted IASs. These judgements and estimates are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. Although these
estimates are based on management’s best knowledge of the amount, events or actions, actual results ultimately may differ
from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the year in which the estimate is revised and in any future periods
affected. The following are areas that are deemed to require the most complex judgements about matters that have potential
material impacts on the amounts recognised in the Financial Statements.
79
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS
Notes forming part of the Financial Statements
for the year ended 31 January 2022
1 Accounting Policies continued
The key estimates applicable to the Financial Statements, which have a significant risk of resulting in a material adjustment
in future financial years are as follows:
Deferred taxation
Judgement is required on whether future profitability is likely in making the decision whether or not to recognise a deferred
tax asset. The Group has recognised a deferred tax asset in the year. Unused trading losses of £7,172,534 arose in SLE
Limited prior to the acquisition by Inspiration Healthcare Group plc on 7 July 2020 and £7,370,932 arose in Inditherm plc
prior to the reverse acquisition by Inspiration Healthcare Limited and change of name to Inspiration Healthcare Group plc
in 2015. Following a hive-down exercise undertaken with effect from 31 January 2017 the losses which arose in Inditherm
plc have been transferred to Inspiration Healthcare Limited. There is no time limit on utilising the brought forward losses,
but they can only be set-off against profits generated from the same trading activities they were generated from. Assessment
of future taxable profit of relevant trading activities is based on estimates of future revenue streams, costs, investment
in research and development together with related assumptions on tax credits receivable on such expenditure, amongst
other things. Actual taxable profit and the timing of utilising the brought forward losses may vary from the estimates made.
The analysis and assessment of the likelihood of utilising the losses is reviewed on an annual basis. Should all losses be
able to be utilised in the future the amount of unrecognised deferred tax as at 31 January 2022 is £3,170,000 (2021:
£2,867,000). See note 21 on Deferred Tax.
Impairment
Carrying value of capitalised development costs
The fair value of capitalised development costs is determined by discounting estimated future net cash flows generated
by the asset where no active market for the asset exists. A weighted average cost of capital of 12% is used. The net book
value of capitalised development costs at as 31 January 2022 is £ 3,347,000 (2021: £1,410,000). See note 10 for more
information on capitalised development costs. Additionally, judgement is required on the appropriate amortisation rates
applied to the capitalised product development costs of completed developments, which are based on estimates of useful
lives of between 5 to 10 years and residual values of the assets involved. Actual product lives may vary from estimates
made. Amortisation of product development costs during the year was £155,000 (2021: £186,000). For each year that
the actual product life differs from the estimate made, if applied equally across all such developments, the amortisation
charge for the year would vary by £26,000 (2021: £31,000), which is determined assuming amortisation of the product
development costs is charged over 6 years, rather than 7 years. There was no impairment of capitalised development costs
recognised in the year (2021: £47,000).
Goodwill
Impairment testing is an area involving management’s judgement, requiring assessment as to whether the carrying value
of the operating segment can be supported by the net present value of estimated future cash flows derived from such
asset using cash flow projections which have been discounted at an appropriate rate. In calculating the net present value
of the future cash flows, certain assumptions are required to be made in respect of highly uncertain matters including
management’s expectation of:
the selection of discount rates to reflect the risks involved
future revenue and costs
long-term growth rates
Changing the assumptions selected by management, in particular the discount rate and growth rate assumptions used in
the cash flow projections, could significantly affect the Group’s impairment evaluation and hence results.
Property, plant and equipment
Items of property, plant and equipment are measured at historical cost less accumulated depreciation and any impairment.
Costs include expenditure that is directly attributable to the acquisition of the asset. Depreciation is provided to write off
the cost, less estimated residual value of property, plant and equipment by equal instalments over their estimated useful
economic lives. The assets residual values and useful economic lives are reviewed, and adjusted as appropriate, at each
year-end date. When parts of an item of property, plant and equipment have different useful lives, they are accounted for
as separate items (major components) of property, plant and equipment.
80
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Financial Statements continued
1 Accounting Policies continued
The following rates are applied:
Leasehold improvements
Over the term of the lease
Fixtures and fittings
10% - 25% per annum
Motor vehicles
20% per annum
Plant, machinery and office equipment
15% - 33% per annum
Repairs and maintenance are charged to the Consolidated Income Statement during the financial year in which they
are incurred.
Leases
The Group assesses whether a contract is or contains a lease at inception of a contract. The Group recognises a right of use
asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less) and leases of low value assets.
The lease liability is initially measured at the net present value of the lease payments that are not paid at the commencement
date, discounted using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental
borrowing rate, being the rate the individual lessee would have to pay to borrow the funds necessary to obtain an asset of
similar value to the right of use asset in a similar economic environment with similar terms, security and conditions. Lease
payments are allocated between principle and finance cost. The finance cost is charged to the income statement over the
lease period so as to produce a consistent periodic rate of interest on the remaining balance of the liability for each period.
The right of use assets are measured at cost comprising the amount of the initial measurement of the lease liability. Right
of use assets are depreciated over the shorter period of the lease term and useful life of the underlying asset on a straight-
line basis.
During the year, the Group entered into a number of lease agreements of its patient warming products, acting as the
lessor in these arrangements. These contracts contain both lease and non-lease components. The Group applies IFRS 15
‘Revenue from contracts with customers’ to allocate the consideration relating to the service component of the contracts.
The lease component is accounted for as a finance lease in accordance with IFRS 16 ‘Leases’. On commencement of the
lease, the lease component is initially recognised as a receivable at an amount equal to the net investment in the lease,
with an equal amount recognised as revenue on commencement. The net investment comprises the present value of the
lease payments due to the lessor. The Group uses the interest rate implicit in the lease to measure the net investment
in the lease. At commencement of the lease, the lease payments included in the measurement of the net investment in
the lease comprise the fixed payments for the lease. Finance income is allocated over the lease period so as to produce
a consistent periodic rate of interest on the remaining balance of the asset for each period. The Group applies the lease
payments relating to the period against the gross investment in the lease to reduce both the principal and the unearned
finance income.
Intangible assets
Intangible assets are recognised if it is possible to demonstrate that there will be future economic benefits attributable to the
asset, the cost of the asset can be measured reliably, the asset is separately identifiable and there is control over the use of
the asset. All intangible assets recognised are considered to have finite lives (unless otherwise stated) and are amortised on
a straight-line basis over the period over which the Group expects to benefit from these assets. Amortisation is recognised
in operating expenses. Provision is made for any impairment in the carrying amount of the intangible asset if applicable.
Intellectual property
Purchased intellectual property rights are capitalised and amortised over management’s estimate of their useful economic
life or term of the relevant contract up to a maximum of 10 years.
Capitalised development costs
Where the criteria for capitalisation in IAS 38 ‘Intangible assets’ are met, costs incurred are capitalised and amortised over
their useful economic lives from the point the products are launched to market. The capitalised values are reviewed against
the discounted future economic value, and adjusted as appropriate, at each year-end date.
81
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS Notes forming part of the Financial Statements
for the year ended 31 January 2022
1 Accounting Policies continued
Development expenditure on an individual project is recognised as an intangible asset when the Group can demonstrate:
the technical and commercial feasibility of completing the intangible asset so that the asset will be available for use
or sale
its intention to complete and its ability and intention to use or sell the developed asset
its future economic benefits are probable
the availability of adequate technical, financial and other resources to complete the asset
the ability to measure reliably the expenditure attributable to the asset during development
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated
amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and
the asset is available for use. It is amortised over the period of expected future benefit from the asset which varies between
5 and 10 years. Amortisation is recorded in operating expenses. During the period of development, the asset is tested for
impairment annually.
Research costs
Research expenditure is written off to the Consolidated Statement of Comprehensive Income in the year in which it is incurred.
Software costs
Where the criteria for capitalisation in IAS 38 ‘Intangible assets’ are met, software costs incurred are capitalised and amortised
over their useful economic lives from the point that the software is brought into service. The estimated useful life is 3 years.
Impairment
Intangible assets and goodwill are considered to be impaired if objective evidence suggests that one or more events
have had a negative effect on the estimated future cash flows of that asset. If any such indication exists, the asset’s
recoverable amount is estimated. For goodwill and intangible assets that have an indefinite useful life, the recoverable
amount is estimated at each year-end date. Impairment losses are recognised in the Consolidated Statement of
Comprehensive Income.
Calculation of recoverable amount
Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss would be recognised whenever
the carrying amount of an intangible asset or its cash generating unit exceeds its recoverable amount.
The recoverable amount is the greater of the asset’s fair value less costs to sell and its value in use. In assessing an asset’s
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset.
82
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Financial Statements continued
1 Accounting Policies continued
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct material and, where applicable,
direct labour costs and those overheads that have been incurred in bringing inventories to their present location and
condition on a first in first out basis.
Net realisable value is based on estimated selling price less additional costs to completion or disposal. Allowance is made
for obsolete, defective and slow moving items based on estimated future usage.
Recognition and valuation of financial assets and liabilities
Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand, deposits held on call with banks, other short term highly
liquid investments with original maturities of three months or less, and bank overdrafts which are repayable on demand.
Investments
Investments held are stated at cost less provision for any impairment in value and are classified as financial asset at fair
value through profit or loss.
This classification depends on the Group’s business model for managing the financial assets.
Trade and other receivables
Trade and other receivables are initially measured at the transaction price.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables. The expected loss rates are based on the payment profile of historic sales and
corresponding historical credit losses in addition to considering current and forward macroeconomic factors potentially
affecting the customers’ ability to settle the amount outstanding.
In measuring the expected credit losses, the trade receivables have been assessed on a collective basis and have been
grouped based on days past due.
Trade and other payables
Trade payables are obligations to pay for goods and services. The value of trade payables is the value that would be payable
to settle the liability at the year-end date.
Provisions
Provisions for liabilities are made where the timing or amount of settlement is uncertain. A provision is recognised when:
the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources
will be required to settle the obligation; and the amount can be reliably estimated. Provisions are not discounted on the
grounds of materiality as permitted under IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
Foreign currency transactions and balances
Transactions in foreign currencies are translated to Sterling at the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the year-end date are retranslated to Sterling at
the foreign exchange rate ruling at that date. Any exchange differences arising on the settlement of monetary items or
on translating monetary items at rates different from those at which they were initially recorded are recognised in the
Consolidated Statement of Comprehensive Income in the year in which they arise.
83
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS Notes forming part of the Financial Statements
for the year ended 31 January 2022
1 Accounting Policies continued
Derivatives and hedging activities
The Group uses forward currency contracts to hedge its exposure to the financial risks of changes in foreign exchange rates,
in relation to Euro inventory purchases during the year. The hedging gains and losses are ultimately recognised in profit or
loss through cost of sales during the year. The Group does not use derivative financial instruments for speculative purposes.
At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments and
hedged items including whether changes in the cash flows of the hedging instruments are expected to offset changes
in cash flows of hedged items. The Group documents its risk management objective and strategy for undertaking its
hedge transactions.
Forward currency contracts are fair valued at each balance sheet date. Changes in the fair value on the forward
currency contracts that are designated and effective as hedges of future cash flows are recognised directly in equity.
Amounts deferred in equity are recognised in the income statement in the same year in which the hedged item affects the
income statement.
The full fair value of a hedging derivative is classified as a current asset or liability when the remaining maturity of the
hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.
Employee benefits
Defined contribution pension plans
The costs of contributing to defined contribution stakeholder pension scheme and employees’ personal pension schemes
are charged to the Consolidated Statement of Comprehensive Income in the year in which they relate. The Group has no
further legal or constructive obligations once the contributions have been paid.
Share-based incentives
The Group operates an equity settled share scheme for certain employees. The cost of equity settled share based payments
is measured at fair value at the date of grant, excluding the effect of non-market based vesting conditions. The cost is
recognised in the Consolidated Income Statement on a straight-line basis over the vesting period with the corresponding
amount credited to equity, based on an estimate of the number of shares that will eventually vest. The fair values are
measured using the Black-Scholes model. Please refer to note 24 for more information.
Grants
Revenue based grants are credited as other operating income to the Consolidated Statement of Comprehensive Income
against related expenditure while grants of a capital nature are treated as deferred income and are transferred to the
Consolidated Statement of Comprehensive Income over the expected useful lives of the relevant assets.
Revenue recognition
The Group either recognises revenue from contracts with customers at a point in time or over time as outlined below.
Under IFRS 15 any one the 3 criteria below must be met in order for revenue to be categorised as “over time”. If none are
met then the transaction is deemed to be at a “point in time”.
customer receives benefits as performed/another would not need to re-perform
create/enhance an asset a customer controls
does not create an asset with alternative use and a right to payment for work to date
The Group recognises revenue at a point in time where there is a distinct obligation to transfer goods to the customer,
none of the above criteria are met and the transfer to the customer of control of the goods has taken place. The Group
exercises judgement on the point at which transfer of control has taken place, which is, dependent upon individual contract
shipment terms, typically assessed to be when risk in the goods has been assumed by the customer. This is deemed to
be on ex works basis for the majority of shipments. The goods supplied are primarily medical devices or parts used in
medical devices.
84
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Financial Statements continued
1 Accounting Policies continued
The Group recognises revenue over time where there is an obligation to transfer a service to the customer. This applies to
the provision of technical support of products which are owned by the customer, under a service contract running for a
contract period, which provides for service visits as well as attendance for non-routine faults during the term of the contract.
The Group recognises the revenue evenly over the duration of the contract as the timing of the visits and provision of the
service is not predetermined and this, in the judgement of the Directors, is the most appropriate reflection of the service
being provided. The recognition of revenue over time results in contact liabilities being recognised as contract liabilities
within the Balance Sheet.
The transaction price applied to recognise revenue is the price reflected in the sales invoice submitted to the customer, both
for at the point of sale and over time which are invoiced separately.
Revenue is shown net of value added tax, returns, rebates and discounts.
Provisions for costs are charged to the Consolidated Statement of Comprehensive Income when incurred. No provision is
made for future costs on service and maintenance contracts. Provision is made in full for any losses as soon as they can be
foreseen. Any provisions for foreseeable losses in excess of contract balances are included in current liabilities.
The performance of products is warranted for 12 months against clearly defined performance specifications established
by reference to the technical and development testing carried out at the manufacturing facility. The estimated cost of the
work to be performed under warranty on items sold by the Group would be provided for if management were aware of any
field issues that needed rectification.
At 31 January 2022, the Group held a provision of £279,000 (2021: £468,000) in relation to the replacement of boards
contained within both the SLE 4000 and SLE 5000 ventilators. The provision was included within the opening fair value
balance on the acquisition of SLE Limited. Management are not aware of any other material field issues that would require
a provision to be made for products supplied for distribution outside of the manufacturers’ warranties.
Dividends
Dividends proposed by the Board are recognised in the Financial Statements when they have been approved by shareholders
at the AGM. Interim dividends are recognised when they are paid.
Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues
and incur expenses, including revenue and expenses that relate to transactions with any of the Group’s other components.
The Board of Directors consider that it is appropriate to report results as one single business segment, i.e. Critical Care
Medical Devices. This is consistent with management accounting information reported regularly to the Board. The Group’s
Chief Operating Decision Maker is considered to be the Board. Following the acquisition of SLE Limited this approach is
still considered appropriate as SLE Limited operates within the same business segment as the Group.
Taxation
Tax on the profit or loss for the year comprises the current and deferred tax. Tax is recognised in the Consolidated Statement
of Comprehensive Income except to the extent that it relates to items directly recognised in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted
at the year-end date and any adjustment in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for:
the initial recognition of goodwill
the initial recognition of assets and liabilities that affect neither accounting nor taxable profit other than in a business
combination; and
the differences relating to investments in subsidiaries to the extent that they will probably not reverse in the
foreseeable future.
85
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS Notes forming part of the Financial Statements
for the year ended 31 January 2022
1 Accounting Policies continued
The amount of deferred tax provided is based on the expected amount of realisation or settlement of the carrying amount
of assets and liabilities using tax rates enacted or substantively enacted at the year-end date. A deferred tax asset is
recognised only to the extent that it is probable that future taxable profits will be available against which the temporary
differences can be utilised within a reasonable future timescale.
New standards, amendments and interpretations
There was one new amendment published during the year, as listed below. This amendment does not have an impact on
the Group:
Covid-19 Related Rent Concessions beyond 30 June 2021 (Amendments to IFRS 16)
New standards and interpretations not yet effective
There are a number of standards, amendments to standards and interpretations which have been issued by the IASB that
are effective in future accounting periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning 1 February 2022:
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41);
References to Conceptual Framework (Amendments to IFRS 3)
The following amendments are effective for the period beginning 1 February 2023:
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
Definition of Accounting Estimates (Amendments to IAS 8);
Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12);
The Group has assessed the impact of these new and forthcoming standards and interpretations and does not believe that
these standards and interpretations will have a material impact on the Financial Statements.
Alternative financial measures
In the reporting of its financial performance, the Group uses certain measures that are not defined under IFRS, the
Generally Accepted Accounting Principles (GAAP) under which the Group reports. The Directors believe that these non-
GAAP measures assist with the understanding of the performance of the business. These non-GAAP measures are not a
substitute for, or superior to, any IFRS measures of performance but they have been included as the Directors consider
them to be an important means of comparing performance year-on-year and they include key measures used within the
business for assessing performance.
The Group refers to the following alternative financial measures, please refer to the Operating and Financial Review on
pages 30 to 33 for further information.
Adjusted EBITDA
Adjusted Operating Profit
Underlying EPS
2 Segmental analysis
Inspiration Healthcare Group operates in a single business segment: Critical Care Medical Devices. Within this segment the
Group’s sales activities are split into three market sectors: Distributed, Branded and Technology Support and these sectors
are defined and reported in Our Business Strategy and Operating and Financial Review sections of the Strategic Report
sections of the strategic report. There is no inter-sector trading. Following the acquisition of SLE Limited this approach is
still considered appropriate as SLE Limited operates within the same market sectors as the Group.
The sectors are defined in Market Sectors/Revenue Streams on page 6.
86
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Financial Statements continued
3 Revenue
The Group derives revenue from the transfer of goods and services over time and at a point in time in the following
geographical split:
DOMESTIC
– UK
– Ireland
INTERNATIONAL
– Europe
– Asia Pacific
– Middle East & Africa
– Americas
TOTAL
SIGNIFICANT CATEGORIES OF REVENUE
Revenue recognised at a Point in Time
– Branded Products
– Distributor Products
– Technology Support*
– Other
Revenue recognised Over Time
– Technology Support
TOTAL
2022
£’000
2021
£’000
17,078
545
5,955
10,230
5,456
1,786
41,050
23,446
1,028
5,179
4,128
1,852
1,347
36,980
2022
£’000
2021
£’000
22,524
13,606
304
356
11,465
22,224
–
294
4,260
2,997
41,050
36,980
*Technology Support revenue recognised at a point in time relates to our AlphaCore5 patient warming system.
In the current year, no single customer accounted for more than 10% (2021: 10%) of revenue. In the prior year, NHS
Supply Chain accounted for 20% of revenue, inclusive of “one off” Covid-19 revenue. However, excluding “one off”
Covid-19 revenue, there was also no single customer that accounted for more than 10% of revenue in the prior year.
All revenue reported by the Group and the Company is from contracts with customers.
The relationship between the timing of the satisfaction of the Group’s performance obligations and the typical timing of
payments from contracts with customers is as follows:
For revenue recognised at a point in time a receivable is recognised when the goods are delivered or shipped under ex-
works arrangements, which completes our performance obligation. At this point in time the consideration is unconditional
because only the passage of time is required before payment is due. Payment is typically due between 30 and 60 days
following delivery of the goods.
For revenue recognised over time, payment is typically received annually in advance of the service contract commencing.
The performance obligations are met over the duration of the contract. A Contract Liability is recognised and adjusted
at each reporting period to reflect unsatisfied performance obligations based on a straight-lined apportioned basis over
the term of the customer contract. Included in revenue for the year is £533,000 which had been included in Contract
Liabilities at 1 February 2021 (2021: £376,000). See note 20 on Contract Liabilities for more information.
There have been no significant changes in contract assets or liabilities year-on-year.
The Group does not currently have any material value of contracts where the period between the transfer of the goods or
services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any
of the transaction prices for the time value of money. Contract Liabilities are detailed in note 20.
The contracts from customers do not include any variable consideration. There are no obligations for returns or refunds
other than any required by law in the United Kingdom.
Costs associated with the fulfilment of the contracts from customers are either, in the case of revenue recognised at a
point in time, recognised at the same time as the revenue is recognised, or, in the of case revenue recognised over time,
as incurred. No costs of obtaining contracts are capitalised.
87
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS Notes forming part of the Financial Statements
for the year ended 31 January 2022
4 Expenses by nature
Inventories
Employee benefit expense1
Depreciation
– property, plant and equipment
– right of use assets
Amortisation
– intangible fixed assets
– acquisition related intangible assets
Impairment of intangible fixed assets
Impairment of right of use assets
Trade receivables loss allowance
Loss on disposal of intangible and tangible assets
Foreign exchange losses
R&D expenditure
Other expenses
Note
5
11
12
10
10
10
12
2022
£’000
20,458
10,523
363
706
232
605
–
122
54
325
69
348
2,990
2021
£’000
18,958
8,619
286
320
242
380
47
–
70
79
192
190
4,353
TOTAL COST OF SALES AND OPERATING EXPENSES
36,795
33,736
1 Wages and salaries of R&D employees have been included in Employee benefit expense above
2022
£’000
2021
£’000
The numbers above include:
AUDITORS’ REMUNERATION
Audit fees payable to the Group’s auditor – Group
Audit fees payable to the Group’s auditor – Company
Additional costs in relation to the 2021 audit
TOTAL AUDIT FEES PAYABLE TO THE GROUP’S AUDITOR
Non-audit services provided by the Group’s auditor
TOTAL NON-AUDIT SERVICES PROVIDED BY THE GROUP’S AUDITOR
116
29
60
205
3
3
The additional fees in relation to the 2021 audit were incurred due to the acquisition of SLE in the year.
5 Employees
Aggregate employee costs are as follows:
Wages and salaries
Social security costs
Defined contribution pension scheme cost
Share based payment expense
TOTAL
GROUP
COMPANY
2022
£’000
8,896
1,078
410
139
10,523
2021
£’000
7,409
845
287
78
8,619
2022
£’000
1,396
183
46
139
1,764
99
26
–
125
–
–
2021
£’000
107
8
–
78
193
Employee costs include the costs of the Executive Directors but not the Non-executive Directors, along with severance
payments of £39,000 (2021: £nil).
Company employment costs are recharged from a subsidiary company, Inspiration Healthcare Limited.
88
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC
Notes forming part of the Financial Statements continued
5 Employees continued
Monthly average number of persons employed (including Executive Directors and excluding agency staff) analysed by category:
Management and Administration
Sales
Development and Quality
Production
TOTAL
No employees are directly employed by the Company.
No emoluments were directly paid by the Company.
GROUP
2022
2021
72
40
54
29
195
56
40
36
17
149
The number of Directors for whom retirement benefits are accruing under defined contribution pension schemes during the
year were 3 (2021: 3).
No Directors exercised share options during the year (2021: none).
Director’s remuneration is disclosed in the Directors’ Remuneration Report on pages 60 to 65.
This note should be read in conjunction with the Directors’ Remuneration Report on pages 60 to 65.
6 Finance income and expense
FINANCE INCOME
Interest receivable – Leases
Bank interest receivable
TOTAL FINANCE INCOME
FINANCE EXPENSE
Other interest payable – RCF facility
Other interest payable – Leases
Other interest payable
TOTAL FINANCE EXPENSE
7 Income tax
2022
£’000
2021
£’000
8
1
9
(50)
(244)
(7)
(301)
–
3
3
(27)
(87)
–
(114)
7(a) Analysis of tax charge for the year
Note
2022
£’000
2021
£’000
DOMESTIC CURRENT YEAR TAX *
UK corporation tax
Current year
Prior year adjustment
TOTAL CURRENT TAX EXPENSE
Deferred tax
Origination and reversal of temporary timing differences
Prior year adjustment
Effect of increased tax rate on opening balance
TOTAL DEFERRED TAX
TAX EXPENSE ON PROFIT ON ORDINARY ACTIVITIES
* All tax in both 2022 and 2021 arose in the UK
21
–
56
56
290
24
–
314
370
428
(61)
367
(65)
(11)
27
(49)
318
89
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS
Notes forming part of the Financial Statements
for the year ended 31 January 2022
7 Income tax continued
7(b) Analysis of current corporation tax assets and liabilities
Net liability at 1 February 2021
TAX PAYMENTS
Final payments relating to prior year
Payments on account relating to current year
TOTAL TAX PAYMENTS MADE DURING THE YEAR
Tax receipts in relation to prior year
Current year UK corporation tax charge
Other
Prior year adjustment
Acquired through business combinations
NET ASSET/(LIABILITY) AT 31 JANUARY 2022
Note
17
2022
£’000
(313)
554
–
554
–
–
–
(56)
–
185
2021
£’000
(123)
115
94
209
–
(428)
–
61
(32)
(313)
7(c) Factors affecting tax charge for the year
The tax assessed for the year is lower (2021: lower) than the standard rate of corporation tax in the UK 19.00% (2021:
19.00%) as explained below:
Profit on ordinary activities before taxation
Tax using the effective UK corporation tax rate of 19.00% (2021: 19.00%)
Effects of:
Non-deductible expenses
Additional deduction for research and development
Intangibles arising on business combinations
Fixed asset differences
Other permanent differences
Adjustment in respect of prior periods
Amendments to deferred tax and timing
Total tax expense
EFFECTIVE TAX RATE
2022
£’000
3,963
753
56
(497)
–
49
12
80
(83)
370
2021
£’000
3,133
595
204
(216)
–
–
–
(61)
(204)
318
EFFECTIVE TAX RATE
2022
%
2021
%
19.0
1.4
(12.5)
–
1.2
0.3
2.0
(2.1)
19.0
6.5
(6.9)
–
–
–
(1.9)
(6.5)
9.3
10.2
The effective tax rate for FY2022 is lower than FY2021. The largest factor impacting the decreased effective tax rate is
the value of R&D tax credits. The value of R&D tax credits depends upon the level of expenditure incurred in research and
development on qualifying projects, which may vary from year to year.
Budget 2021 announced that the UK corporation tax rate was to increase from 19% to 25% with effect from 1 April 2023.
A small profits rate of 19% applies for taxable profits of £50,000 or less and a tapered rate will apply to companies with
taxable profits between £50,001 and £249,999. This provision was substantively enacted on 24 May 2021 and the
deferred tax balances have been calculated at 25%.
7(d) Factors that may affect future tax charges
The Group has gross unused losses estimated at £14,563,893 (2021: £15,090,850), of which £7,370,932 (2021:
£7,596,259) were transferred to the Group due to the reverse acquisition and £7,172,534 (2021: £7,490,062) relate to
SLE Limited. Brought forward losses transferred to the Group due to the reverse acquisition are potentially available for
relief against future trading profits generated from the same trade. Losses relating to SLE are potentially available for relief
against future trading profits generated by SLE. See note 21 Deferred Tax for more information.
90
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC
Notes forming part of the Financial Statements continued
8 Earnings per ordinary share
Basic earnings per share for the year is calculated by dividing the profit attributable to ordinary shareholders for the year
after tax by the weighted average number of shares in issue.
Basic diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue to
assume conversion of all potential dilutive ordinary shares.
PROFIT
Profit attributable to equity holders of the Company
Add back non-trading items
Add back amortisation of intangible assets acquired through business combinations
NUMERATOR FOR UNDERLYING EARNINGS PER SHARE CALCULATION
2022
£’000
3,593
–
605
4,198
2021
£’000
2,815
1,014
380
4,209
There were no non-trading items in the year. Non-trading items in FY2021 represent acquisition related expenses of
£579,000 and final settlement of contingent consideration in relation to the acquisition of Viomedex of £435,000.
The weighted average number of shares in issue and the diluted weighted average number of shares in issue were as follows:
SHARES
Number of ordinary shares in issue at the beginning of the year
Weighted average number of shares issued during the year
Weighted average number of ordinary shares in issue during the year
for the purposes of basic earnings per share
Dilutive effect of potential ordinary shares:
Weighted average number of share options
2022
2021
68,121,447
–
38,380,850
16,855,015
68,121,447
55,235,865
672,175
309,342
DILUTED WEIGHTED AVERAGE NUMBER OF SHARES IN ISSUE DURING THE YEAR
FOR THE PURPOSES OF DILUTED EARNINGS PER SHARE
68,793,622
55,545,207
See note 24 for further information regarding share options.
The basic and diluted earnings per share for the year are as follows:
EARNINGS PER SHARE
Adjust for:
Non-trading items
Add back amortisation of intangible assets acquired through business combinations
UNDERLYING EARNINGS PER SHARE
Basic
2022
pence
Diluted
2022
pence
5.28
5.22
–
0.89
6.17
–
0.88
6.10
Basic
2021
pence
5.10
1.83
0.69
7.62
Diluted
2021
pence
5.07
1.82
0.68
7.57
An underlying earnings per share and an underlying diluted earnings per share have also been calculated as in the opinion
of the Directors this will allow shareholders to gain a clearer understanding of the trading performance of the Group.
9 Dividends
The interim dividend for the year ended 31 January 2022 of 0.205p per share (2021: 0.2p per share) was paid on
29 December 2021. The proposed final dividend of 0.41p per share (2021: 0.4p per share) is subject to approval by
shareholders at the AGM and has not been recognised as a liability as at 31 January 2022. If approved, the final dividend
will be paid on 29 July 2022 to shareholders on the register on 1 July 2022.
91
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS
Notes forming part of the Financial Statements
for the year ended 31 January 2022
10 Intangible assets
GROUP
COST
At 1 February 2020
Capitalised in the year
Acquisition of business
Acquired in business combination
Disposals
AT 1 FEBRUARY 2021
Capitalised in the year
Disposals
AT 31 JANUARY 2022
ACCUMULATED AMORTISATION
At 1 February 2020
Charge in the year
Impairment
AT 1 FEBRUARY 2021
Charge in the year
Disposals
AT 31 JANUARY 2022
NET BOOK VALUE
AT 31 JANUARY 2022
At 31 January 2021
Note
Goodwill
£’000
Intangible
assets
£’000
Development
costs
£’000
Intellectual
property
£’000
Software
costs
£’000
27
27
2,021
–
6,546
–
–
492
–
5,036
–
–
8,567
5,528
–
–
–
–
8,567
5,528
–
–
–
–
–
–
–
8,567
8,567
43
380
–
423
605
–
1,028
4,500
5,105
1,486
614
–
–
(65)
2,035
2,208
(116)
4,127
392
186
47
625
155
–
780
3,347
1,410
276
–
–
–
–
276
–
–
276
276
–
–
276
–
–
276
–
–
396
49
–
40
–
485
338
(67)
756
305
56
–
361
77
(50)
388
368
124
Total
£’000
4,671
663
11,582
40
(65)
16,891
2,546
(183)
19,254
1,016
622
47
1,685
837
(50)
2,472
16,782
15,206
There were no impairments of intangible assets in the year (2021: £47,000).
The Group tests goodwill for impairment on an annual basis, or more frequently if there are indications that the goodwill
may be impaired. The recoverable amounts of the cash-generating unit is determined from value in use calculations. The
key assumptions for the value in use calculations are the discount and growth rates used for future cash flows and the
anticipated future changes in revenue and costs. The assumptions used reflect the past experience of management and
future expectations.
The forecasts covering a five-year period are based on the detailed budget for the year ended 31 January 2023 approved by
management. The cashflows beyond the budget are extrapolated for a further four-year period based on future expectations.
This forecast is then extrapolated to perpetuity using a 2% (2021: nil) growth rate.
Annual growth rates for revenues for the five-year forecast period have been included between 10% and 15% year-on-
year and costs between 5% and 10% year-on-year. A post-tax discount rate of 13% (2021: 13%) has been used in these
calculations. The discount rate uses weighted average cost of capital which is reflective of a medical device Company
operating both domestically and internationally. A discount rate of 31% (2021: 43%) would need to be applied for there
to be zero headroom.
Sensitivity analyses performed on the carrying value of all remaining goodwill using post-tax discount rates up to
13%. Revenue growth would need to reduce to 7.5% year-on-year with no change in cost growth assumptions for there to
be zero headroom.
92
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC
Notes forming part of the Financial Statements continued
11 Property, plant and equipment
GROUP
COST
At 1 February 2020
Additions in the year
Acquired in business combinations
Disposals in year
AT 1 FEBRUARY 2021
Additions in the year
Disposals in year
AT 31 JANUARY 2022
ACCUMULATED DEPRECIATION
At 1 February 2020
Charge in the year
Disposals in year
AT 1 FEBRUARY 2021
Charge in the year
Disposals in year
AT 31 JANUARY 2022
NET BOOK VALUE
AT 31 JANUARY 2022
At 31 January 2021
Note
27
Leasehold
improvements
£’000
Fixtures
and
fittings
£’000
Plant,
machinery,
office
equipment
£’000
Motor
vehicles
£’000
274
18
180
(5)
467
899
(220)
1,146
90
29
(5)
114
73
(58)
129
1,017
353
64
2
58
(3)
121
2
(17)
106
52
12
(3)
61
24
(17)
68
38
60
1,143
187
228
(42)
1,516
525
(154)
1,887
869
234
(42)
1,061
249
(132)
1,178
709
455
43
50
–
(35)
58
–
–
58
17
11
(21)
7
17
–
24
34
51
Total
£’000
1,524
257
466
(85)
2,162
1,425
(391)
3,197
1,028
286
(71)
1,243
363
(207)
1,399
1,798
919
Depreciation charged for the financial year is split between cost of sales £19,000 (2021: £22,000) and administrative
expense £344,000 (2021: £264,000) in the Consolidated Income Statement.
12 Leases
Right of use assets
GROUP
At 1 February 2020
Additions in the year
Acquired in business combinations
Amortisation
Lease remeasurement
AT 1 FEBRUARY 2021
Additions in the year
Amortisation
Lease remeasurement
Impairment
Disposal
AT 31 JANUARY 2022
Note
27
Land and
buildings
£’000
533
–
2,718
(272)
(93)
2,886
5,917
(565)
(1,069)
(122)
–
7,047
Plant,
machinery
and motor
vehicles
£’000
20
181
63
(48)
–
216
269
(141)
–
–
(8)
336
Total
£’000
553
181
2,781
(320)
(93)
3,102
6,186
(706)
(1,069)
(122)
(8)
7,383
93
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS
Notes forming part of the Financial Statements
for the year ended 31 January 2022
12 Leases continued
COMPANY
COST
At 1 February 2020
Amortisation
AT 1 FEBRUARY 2021
Amortisation
AT 31 JANUARY 2022
Land and
buildings
£’000
Plant,
machinery
and motor
vehicles
£’000
–
–
–
–
–
8
(5)
3
(3)
–
Total
£’000
8
(5)
3
(3)
–
The total amount included within administrative expenses in relation to short term leases during the year was £2,000
(2021: £6,000). All balances are due within 12 months.
Lease liability
GROUP
At 1 February 2020
Additions in the year
Acquired in business combinations
Interest expense
Lease payments
Lease remeasurement
AT 1 FEBRUARY 2021
Additions in the year
Interest expense
Lease payments
Lease remeasurement
AT 31 JANUARY 2022
COMPANY
At 1 February 2020
Interest expense
Lease payments
AT 1 FEBRUARY 2021
Interest expense
Lease payments
AT 31 JANUARY 2022
Current
Non-current
TOTAL
Note
27
Land and
buildings
£’000
538
–
2,718
78
(276)
(93)
2,965
5,633
238
(475)
(1,141)
7,220
Land and
buildings
£’000
–
–
–
–
–
–
–
Plant,
machinery
and motor
vehicles
£’000
20
181
63
9
(73)
–
200
268
5
(150)
–
323
Plant,
machinery
and motor
vehicles
£’000
8
–
(5)
3
–
(3)
–
GROUP
COMPANY
2022
£’000
647
6,896
7,543
2021
£’000
369
2,796
3,165
2022
£’000
–
–
–
Total
£’000
558
181
2,781
87
(349)
(93)
3,165
5,901
243
(625)
(1,141)
7,543
Total
£’000
8
–
(5)
3
–
(3)
–
2021
£’000
3
–
3
The total cash outflow for leases during the year was £625,000 (2021: £349,000).
94
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC
Notes forming part of the Financial Statements continued
13 Investments
COMPANY
COST
At 1 February 2021
Additions in year
AT 31 JANUARY 2022
NET BOOK VALUE
AT 31 JANUARY 2022
At 31 January 2021
Note
£’000
27
32,881
–
32,881
32,881
32,881
There have been no new investments in the year.
Inspiration Healthcare Group plc has the following interests in wholly owned subsidiaries, joint ventures or associates
registered and operating in England and Wales.
Name
Nature of business
Inspiration Healthcare Limited
Inspiration Homecare Limited *
Inditherm Limited *
Inditherm (Medical) Limited *
Inditherm (UK) Limited *
Inditherm Construction Limited *
Vio Holdings Limited
Viomedex Limited
Sale of medical goods
Dormant
Dormant
Holding Company for intellectual property rights
Dormant
Dormant
Holding Company
Sale and manufacture of medical goods
The registered office of the above companies is:
2 Satellite Business Village, Fleming Way, Crawley, England, RH10 9NE
Direct/
indirect
ownership
Direct
Indirect
Indirect
Direct
Direct
Direct
Direct
Indirect
% of total
issued
share
capital
100
100
100
100
100
100
100
100
Class of
share
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
SLE Limited
Sale and manufacture of medical goods
Direct
100
Ordinary
The registered office of the above Company is:
Twin Bridges Business Park, 232 Selsdon Road, South Croydon, Surrey, England, CR2 6PL
Anaesthetic Services Systems Limited*
Dormant
Indirect
100
Ordinary
The registered office of the above Company is:
C10 Strangford Park Ards Business Centre, Jubilee Road, Newtownards, Co Down, BT23 4YH
Inspiration Healthcare Ireland Limited*
Dormant
Indirect
100
Ordinary
The registered office of the above Company is:
The Black Church, St. Mary’s Place, Dublin, D07 P4AX
* Entities exempt from the requirement to have a statutory audit
14 Inventories
Raw materials
Work in progress
Finished goods
TOTAL
GROUP
COMPANY
2022
£’000
3,731
703
2,015
6,449
2021
£’000
4,243
1,958
1,989
8,190
2022
£’000
2021
£’000
–
–
–
–
–
–
–
–
Inventories are presented net of provisions of £550,000 (2021: £1,049,000) to write down the values to management’s
estimate of net realisable value.
95
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS Notes forming part of the Financial Statements
for the year ended 31 January 2022
15 Trade and other receivables
Trade receivables
Loss allowance
Net trade receivables
Amounts receivable from subsidiary undertakings
UK corporation tax receivable
Other taxes and social security
Net investment in leases
Other receivables
Prepayments and accrued income
TOTAL
Note
17
GROUP
COMPANY
2022
£’000
8,434
(230)
8,204
–
185
26
230
201
468
9,314
2021
£’000
5,163
(411)
4,752
–
–
61
–
104
246
5,163
2022
£’000
–
–
–
1,286
–
26
–
16
105
1,433
2021
£’000
–
–
–
1,281
–
54
–
14
85
1,434
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business
and are generally due for settlement within 30-45 days. Other receivables are generally due for settlement within three
to twelve months. Trade and other receivables are therefore all classified as current. Trade and other receivables are
non-interest bearing and receivable under normal commercial terms. The Directors consider that the carrying value of
trade and other receivables approximates their fair value. Specific provisions are made against doubtful debts arising from
contracts with customers taking the value based on the most likely outcome.
On that basis, the loss allowance as at 31 January 2022 and 31 January 2021 was determined as follows for trade
receivables:
31 JANUARY 2022 – GBP 000’S
Expected loss rate
Gross carrying amount – Trade receivable
Loss allowance
31 JANUARY 2021 – GBP 000’S
Expected loss rate
Gross carrying amount – Trade receivable
Loss allowance
Current
0.01%
5,952
1
Current
0.04%
2,893
1
More than
30 days
past due
More than
60 days
past due
More than
120 days
past due
Additional
Total
0.04%
1,599
1
0.14%
634
1
More than
30 days
past due
More than
60 days
past due
0.09%
1,312
1
0.21%
756
2
0.00%
22
0
More than
120 days
past due
0.00%
202
227
227
8,434
230
Additional
Total
–
407
5,163
411
Additional loss allowance represents provisions against specific trade receivables.
Amounts due from Group undertakings are non-interest bearing, unsecured and repayable on demand.
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable shown above.
The Group does not insure receivables or hold any collateral as security.
The carrying amounts of the Group’s receivables are denominated in the following currencies:
GROUP
COMPANY
2022
£’000
7,440
1,060
814
9,314
2021
£’000
4,215
802
146
5,163
2022
£’000
1,433
–
–
1,433
2021
£’000
1,434
–
–
1,434
Pounds Sterling
Euro
US Dollars
TOTAL
96
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC
Notes forming part of the Financial Statements continued
15 Trade and other receivables continued
During the year, the Group entered into a number of finance lease arrangements of our patient warming equipment. The net
investment recognised in respect of these leases has been included in trade and other receivables:
Net Investment
AT 1 FEBRUARY 2021
Additions in the year
Interest Income
Lease receipts
AT 31 JANUARY 2022
16 Cash and cash equivalents
Cash and cash equivalents comprise solely of cash at bank and cash in held by the Group.
The carrying amounts of the Group’s cash and cash equivalents are denominated in the following currencies:
Pounds Sterling
Euro
US Dollars
Japanese Yen
Emirati Dirham
Swiss Franc
Australian Dollar
Singapore Dollar
GROUP
COMPANY
2022
£’000
7,799
963
468
3
1
14
2
3
2021
£’000
9,754
452
424
3
1
3
12
4
2022
£’000
307
–
3
–
–
–
–
–
Total
£’000
–
304
8
(82)
230
2021
£’000
583
–
3
–
–
–
–
–
BALANCES PER STATEMENT OF CASH FLOWS
9,253
10,653
310
586
The Group currently uses four banks; Royal Bank of Scotland plc, HSBC Bank plc, Bank of Scotland plc and National
Westminster Bank plc. Moody’s give long-term ratings of A1 for all four banks as at 31 January 2022.
17 Current tax
The following are the major current tax assets and liabilities recognised by the Group and movements thereon during the
current and prior reporting year.
UK corporation tax asset/(liability)
Note
15/18
2022
£’000
185
2021
£’000
(313)
At the year-end date the Group has not recognised a separate receivable in respect of potential research and development
tax claims (2021: £nil).
97
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS Notes forming part of the Financial Statements
for the year ended 31 January 2022
18 Trade and other payables
CURRENT
Trade payables
UK corporation tax payable
Other taxes and social security
Amounts payable to subsidiary undertakings
Other payables
Accrued expenses
Warranty provisions
TOTAL
NON-CURRENT
Trade Payables
TOTAL
Note
17
GROUP
COMPANY
2022
£’000
3,534
–
367
–
344
2,028
279
6,552
–
–
2021
£’000
3,069
313
880
–
72
2,000
475
6,809
–
–
2022
£’000
22
–
4
7,319
3
625
–
7,973
–
–
2021
£’000
63
–
–
5,730
–
203
–
5,996
–
–
The fair value of trade and other payables approximates to book value at 31 January 2022. Trade payables are non-
interest bearing and the average credit period taken for trade purchases is 53 days (2021: 63 days). Accruals are normally
settled monthly throughout the financial year.
Amounts due to Group undertakings are non-interest bearing, unsecured and repayable on demand.
As at 31 January 2022 warranty provisions of £279,000 (2021: £475,000) relate to the replacement of boards contained
within both the SLE 4000 and SLE 5000 ventilators (2021: £468,000). The provision was included within the opening
fair value balance sheet of SLE.
19 Financial risk management and financial instruments
The Group’s principal financial instruments comprise trade and other receivables, cash and cash equivalents and trade and
other payables. The main purpose of these financial instruments is to finance the Group’s operations.
The policies to address the risks associated with the Group’s financial instruments are reviewed and approved by the Board.
The main risks arising from the Group’s financial instruments are liquidity risk and credit risk. A summary of the risks is set
out below and also referred to in the Principal Risks and Uncertainties report on pages 36 to 43.
The Group holds the following financial instruments:
FINANCIAL ASSETS
FINANCIAL ASSETS AT AMORTISED COST
Trade receivables
Other receivables
Cash and cash equivalents
FINANCIAL LIABILITIES
LIABILITIES AT AMORTISED COST
Trade and other payables
DERIVATIVE FINANCIAL INSTRUMENTS
Used for hedging
Note
15
15
16
18
2022
£’000
2021
£’000
8,204
201
9,253
6,185
–
4,752
104
10,653
5,616
9
As at 31 January 2022 all the above are due or mature in under three months with the exception of derivatives which are
due or mature in under twelve months.
The Group has not disclosed the fair values for financial instruments such as short-term trade receivables and payables,
because their carrying amounts are a reasonable approximation of fair values.
98
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Financial Statements continued
19 Financial risk management and financial instruments continued
19(a) Derivatives
Derivatives are only used for economic hedging purposes and not as speculative investments. The Group’s accounting
policy for its cash flow hedges is set out in note 1.
The Group has the following financial instruments:
Forward foreign exchange contracts
Forward foreign exchange contacts are fair value adjusted through other comprehensive income within reserves (note 22 (e))
using the rate which would have been achieved should the contracts have been instructed at the year-end. All contracts are
Level 2 financial instruments, not traded in an active market and determined using valuation techniques which maximise
the use of observable market data. All contracts held will be settled within 12 months after the reporting period.
Hedge effectiveness is determined at the inception of the hedge relationship to ensure that an economic relationship exists
between the hedged item and hedging instrument.
19(b) Credit risk
Credit risk principally arises on cash deposits and trade receivables.
The Group monitors defaults of customers and other counterparties and incorporates this information into credit risk
controls. Ongoing credit evaluation is performed on the financial condition of accounts receivable taking into account
independent ratings (where available), its financial position, past experience and other factors.
Management considers that all the above financial assets that are not impaired for each of the reporting dates under review
are of good credit quality, including those that are past due.
The carrying value of financial assets recorded in the Financial Statements, which is net of impairment losses, represents
the Group’s maximum exposure to credit risk as no collateral or other credit enhancements are held.
The credit risk for liquid funds and other short term financial assets relates to the banking institutions holding such
funds and assets on behalf of the Group and may therefore be higher in conditions of general banking uncertainty.
The counterparties are considered to be reputable banks with high quality external risk ratings. Please see note 16.
19(c) Liquidity risk
In the normal course of business the Group is exposed to liquidity risk. The Group’s objective is to ensure that sufficient
resources are available to fund short term working capital and longer-term strategic requirements.
The Group manages its liquidity needs by monitoring cash outflows due in day-to-day business. Liquidity needs are monitored
in various time bands, on a day-to-day and week-to-week basis. Long-term liquidity needs are monitored monthly.
The Group maintains cash and cash equivalents to meet its liquidity requirements for at least a 90 day period.
The Group has a £5m RCF facility available expiring in 2 years with the option to extend and attracts a 2.5% margin above
LIBOR. Banking covenants of EBITDA / finance charges and net debt / EBITDA are in place and are tested quarterly. All
covenants have been complied with during the year ended 31 January 2022.
At 31 January 2022 and 31 January 2021, the Group’s liabilities had contractual maturities which are summarised
as follows:
2022
Trade payables
Lease liabilities
2021
Trade payables
Lease liabilities
Carrying
amount
£’000
(3,534)
(7,543)
(3,069)
(3,165)
Total
£’000
1 year
or less
£’000
(3,534)
(7,543)
(3,534)
(647)
(3,069)
(3,165)
(3,069)
(369)
1 to 2
years
£’000
–
(732)
–
(343)
2 to 5
years
£’000
Over
5 years
£’000
–
(1,403)
–
(4,761)
–
(1,009)
–
(1,444)
The above contractual maturity of the Group’s financial liabilities reflects the gross cash flows, which may differ from the
carrying values of the liabilities at the year-end date.
At 31 January 2022 the Group did not have any loans or borrowings.
99
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS Notes forming part of the Financial Statements
for the year ended 31 January 2022
19 Financial risk management and financial instruments continued
19(d) Interest rate risk
The Group does not believe that its financial stability is threatened because of an exposure to interest rate risk and
consequently does not hedge against it. The Board keeps this risk under regular review.
At 31 January 2022 the Group did not have any loans or borrowings.
19(e) Foreign currency risk
The Group has entered into a number of forward foreign exchange contracts to mitigate an element of the Group’s exposure
to foreign currency risk in relation to purchase of inventory, see note 19a. The Board keeps this risk under regular review.
There is a degree of natural hedge due to the balance of imports and exports.
19(f) Capital risk
The Group establishes credit limits for all financial instruments taking into account independent ratings, past experience
and other factors. The Group’s investment policy is to invest in fixed rate/low risk investments where the capital element
is not at risk to market changes. The capital risk of cash deposits is further reduced by spreading investment across more
than one bank.
19(g) Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order
to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may issue new shares, adjust the amount of dividends paid
to shareholders, return capital to shareholders or sell assets to reduce debt.
20 Contract liabilities
Contract Liabilities arise from unsatisfied performance obligations on rental, managed service, service or maintenance
contracts where revenue is recognised over time. The revenue recognition accounting policy is explained in note 1.
The profile of when this income will be recognised in the Consolidated Statement of Comprehensive Income is as follows:
31 JANUARY 2022
31 January 2021
21 Deferred tax
Within 1
year
£’000
524
533
1 to 2
years
£’000
–
–
2 to 3
years
£’000
–
–
3 to 4
years
£’000
–
–
4 to 5
years
£’000
–
–
Total
£’000
524
533
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the
current and prior reporting year.
Note that the effective future tax rate is 25% (2021: 19%).
Asset at beginning of year
Credit to the Income Statement for the year
Included directly in equity
ASSET AT END OF YEAR
GROUP
COMPANY
2022
£’000
–
470
–
470
2021
£’000
–
–
–
–
2022
£’000
25
38
–
63
2021
£’000
31
–
(6)
25
100
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Financial Statements continued
21 Deferred tax continued
Liability at beginning of year
Charge to the Income Statement for the year
Included directly in equity
Included on business combinations
LIABILITY AT END OF YEAR
Note
27
The elements of deferred taxation provided for are as follows:
Unused tax losses
Short term timing differences
DEFERRED TAX ASSET
Accelerated capital allowances
Intangible assets
Intangibles arising on business combinations
Short term timing differences
DEFERRED TAX LIABILITY
2022
£’000
(1,141)
(784)
–
–
(1,925)
2022
£’000
470
–
470
2022
£’000
(140)
(751)
(1,125)
91
(1,925)
2021
£’000
(227)
49
(6)
(957)
(1,141)
2021
£’000
–
–
–
2021
£’000
(197)
–
(976)
32
(1,141)
2022
£’000
2021
£’000
–
–
–
–
–
2022
£’000
–
63
63
2022
£’000
–
–
–
–
–
–
–
–
–
–
2021
£’000
–
25
25
2021
£’000
–
–
–
–
–
It is expected that £235,000 of the deferred tax liability and £157,000 of the deferred tax asset as at the year-end will be
settled within 12 months of the year ended 31 January 2022 and the remaining £1,690,000 of the deferred tax liability
and £313,000 of the deferred tax asset will be settled after 12 months following the year ended 31 January 2023.
At the year-end date the Group had gross unused losses of £14,563,466 (2021: £15,090,850) potentially available to
offset against future profits. Unused trading losses of £7,172,534 (2021: £7,490,062) arose in SLE Limited prior to the
acquisition by Inspiration Healthcare Group plc on 7 July 2020 and brought forward losses transferred to the Group due
to the reverse acquisition of Inditherm plc amount to £7,370,932 (2021: £7,596,259). The Group has received advice
that these losses can be carried forward and utilised against future taxable profits of the same business from which they
were generated. A streaming methodology has been devised to estimate profits from the business relating to Inditherm plc.
This has been projected forwards and due to anticipated ongoing investment in development of the product range with
consequent benefits of R&D tax credits it is estimated that taxable profits will not be generated for a number of years. Given
a number of uncertainties inherent in the estimations, including revenue generated from recent product launches and the
quantum of R&D tax credits, no deferred tax has been recognised in respect of these losses.
The amounts of deferred tax not recognised are as follows:
UNUSED TAX LOSSES
2022
£’000
3,170
2021
£’000
2,867
Budget 2021 announced that the UK corporation tax rate was to increase from 19% to 25% with effect from 1 April 2023.
A small profits rate of 19% applies for taxable profits of £50,000 or less and a tapered rate will apply to companies with
taxable profits between £50,001 and £249,999. This provision was substantively enacted on 24 May 2021 and the
deferred tax balances have been calculated at 25%.
101
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS Notes forming part of the Financial Statements
for the year ended 31 January 2022
22 Shareholders’ equity
22(a) Called up share capital
SHARE CAPITAL
AS AT 31 JANUARY 2021 AND 2022
Number of shares
(Allotted & Issued)
Share capital
£’000
68,121,447
6,812
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote
per share at meetings of the Company. Ordinary shares have the same rights.
For the purpose of preparing the Consolidated Financial Statements of the Group, the Share Capital represents the nominal
value of the issued share capital of 10p per share.
22(b) Share premium
The share premium reserve arose on the issuing of ordinary shares of 10p for the placement to raise funds for and to settle
part of the consideration for the acquisition of SLE Limited and Vio Holdings Limited and subsidiary undertaking.
SHARE PREMIUM
AS AT 31 JANUARY 2021 AND 2022
£’000
18,838
22(c) Reverse acquisition reserve
The reverse acquisition reserve of £(16,164,000) (2021: £(16,164,000)) arose on the reverse acquisition of Inditherm plc
in 2015.
22(d) Share based payment reserve
The share based payment reserve of £278,000 (2021: £139,000), Company £433,000 (2021: £294,000), represents
the expense recognised in the Consolidated Income Statement in relation to the Group Share Option Scheme. See note 24.
22(e) Other reserves
At 31 January 2022, other reserves were £nil. At 31 January 2021, other reserves of £(9,000) represents other
comprehensive expense of £(9,000).
23 Commitments
23(a) Capital commitments
At 31 January 2022, the Company had capital expenditure commitments totalling £nil (2021: £nil).
23(b) Operating leases
The Group has annual commitments under non-cancellable lease commitments relating primarily to land and buildings,
motor vehicles and office equipment. Land and buildings have been considered separately for lease classification. Land and
buildings amounts relate to leasehold properties at Earl Shilton, Crawley, Hailsham, Croydon and Newtownards.
24 Share based payments
Share Incentive Plan
The Group operates an employee share option scheme which is available to a number of employees and Directors and is
designed to provide long-term incentives for senior managers and above to deliver long-term shareholder returns. Under
the plan, participants are granted options which only vest if certain performance standards are met. Participation in
the plan is at the Board’s discretion and no individual has a contractual right to participate in the plan or receive any
guaranteed benefits.
The amount of options that will vest depends on performance measures based on EPS, EBITDA margin, Revenue growth
and new product release over a performance period of three years or other measures determined by the Remuneration
Committee. Once vested, the options remain exercisable for a period of two years. The assumption is that all performance
measures will be met.
When exercisable, each option is convertible into one ordinary share of 10p each.
102
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Financial Statements continued
24 SHARE BASED PAYMENTS continued
The Black Sholes model is used to determine fair value.
Details of the share options outstanding at 31 January 2022 and movements during the year by exercise price is shown below:
Outstanding as at 1 February
Granted during the year
Exercised during the year
Forfeited during the year
Lapsed during the year
OUTSTANDING AS AT 31 JANUARY
EXERCISABLE AS AT 31 JANUARY
2022
2021
Average
exercise price
per share
option
£nil
£nil
£nil
£nil
£nil
£nil
£nil
Number of
options
251,837
263,953
–
(38,252)
–
477,538
228,585
Average
exercise price
per share
option
£nil
–
£nil
£nil
£nil
£nil
£nil
Number of
options
583,941
–
(147,838)
(109,266)
(75,000)
251,837
12,500
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
Grant Date
Expiry date
8 November 2017
7 November 2018
7 May 2021
TOTAL
7 November 2027
6 November 2028
6 May 2031
Exercise price
Share options
31 January
2022
Share options
31 January
2021
£nil
£nil
£nil
12,500
216,085
248,953
12,500
239,337
–
477,538
251,837
Weighted average remaining contractual life of options outstanding at the end of the year
8.1 years
7.7 years
The assessed fair value at grant date of options granted during the year ended 31 January 2022 was £1.20 (2021: £nil).
Fair value is determined by the Black-Scholes pricing model.
Sharesave Plan
During the year the Group introduced an employee Sharesave scheme which is available to all employees subject to qualifying
conditions. The scheme was introduced to encourage wider employee share ownership of the Company.
The options are exercisable after three years from date of grant. When exercisable, each option is convertible into one ordinary
share of 10p each.
Details of the share options outstanding at 31 January 2022 and movements during the year by exercise price is shown below:
Outstanding as at 1 February
Granted during the year
AS AT 31 JANUARY
2022
2021
Average
exercise price
per share
option
Number of
options
–
£0.87
150,529
159,995
£0.87
310,524
Average
exercise price
per share
option
–
£0.55
£0.55
Number of
options
–
150,529
150,529
103
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS Notes forming part of the Financial Statements
for the year ended 31 January 2022
24 Share based payments continued
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
Grant Date
Expiry date
20 March 2020
26 March 2021
TOTAL
19 March 2023
25 March 2024
Exercise price
Share options
31 January
2022
Share options
31 January
2021
£0.55
£0.87
150,529
159,995
150,529
–
310,524
150,529
An amount of £139,000 (2021: £78,000) has been recognised as a charge within administrative expenses in the
Consolidated Income Statement and a credit to retained earnings within equity.
There were no cash settled share-based payment transactions.
25 Contingent liabilities
During the normal course of business, the Group offers warranties on its products against clearly defined performance
specifications.
As at 31 January 2022 management are not aware of any material field issues that would require provision to be made for
products supplied for distribution outside of manufacturers warranties with the exception of those disclosed within note 18
(2021: No material field issues noted).
26 Pension schemes
The Group made contributions in respect of defined contribution pension arrangements of Group £410,000 (2021:
£287,000) and Company £46,000 (2021: £nil). At the year-end the amount of contributions payable to the schemes were
Group £37,000 (2021: £49,000) and Company £nil (2021: £nil).
27 Business combinations
On 7 July 2020, the Group acquired 100% of the share capital of SLE Limited for £16,200,000 cash and £1,800,000
shares. The Group paid £4,475,000 to the vendors upon the agreement of the Completion Accounts relating to the
acquisition. SLE Limited designs, manufacturers and supplies neonatal ventilators in the respiratory care market worldwide.
Details of the purchase consideration, the net assets acquired and goodwill were as follows:
PURCHASE CONSIDERATION
Cash consideration
Acquired cash distribution
Cash withheld related to asset transferred
CASH CONSIDERATION
Ordinary shares issued
Asset transferred to former owner
TOTAL PURCHASE CONSIDERATION
£’000
16,200
4,475
(1,218)
19,457
1,800
1,218
22,475
The cash consideration was raised via the issue of new ordinary shares.
The fair value of the 2,769,231 ordinary shares issued as part of the consideration paid for SLE Limited was based on a
share price of 65p per share representing a discount of 1.5% to the closing middle market price of 66p per existing ordinary
share on 18 June 2020 being the last practicable date prior to the announcement of the acquisition and fundraising. Issue
costs of £957,000 which were directly attributable to the issue of the shares were netted off against share premium.
104
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC
Notes forming part of the Financial Statements continued
27 Business combinations continued
The assets and liabilities recognised as a result of the acquisition were as follows:
Intangible assets
Property, plant and equipment
Right of use asset
Inventories
Trade and other receivables
Inter-company due
Cash
Trade and other payables
Lease liabilities
NET IDENTIFIABLE ASSETS ACQUIRED
Add:
Goodwill
Intangible Assets
Deferred tax on identified intangible assets
NET ASSETS ACQUIRED
Note
10
10
Fair Value
£’000
40
466
2,781
4,527
4,967
1,218
6,314
(5,682)
(2,781)
11,850
6,546
5,036
(957)
22,475
The goodwill was not deductible for tax purposes.
The fair value of trade and other receivables was £4,967,000 and included trade receivables with a fair value of £3,355,000.
The gross contractual amount for trade receivables due was £3,681,000.
The acquired business contributed revenues of £11,522,000 and profit after tax of £1,726,000 to the Group for the period
from 7 July 2020 to 31 January 2021. If the acquisition had occurred on 1 February 2020, consolidated pro-forma revenue
and profit for the year ended 31 January 2021 would have been £16,912,000 and £1,739,000 respectively. These
amounts have been calculated using the entities’ results and adjusting them for:
differences in the accounting policies between the Group and the subsidiary
‘one off’ Covid-19 related sales and profit
Acquisition related costs of £579,000 have been charged to administrative expenses in the Consolidated Income Statement
for the year ended 31 January 2021.
28 Related party transactions
There is no ultimate controlling party.
Key management
Key management control 7% (2021: 12.9%) of the voting shares of the Company.
Key management comprise the Group’s Executive Directors and prior year, the Managing Director of Inspiration
Healthcare Limited.
The aggregate compensation for key management personnel is as follows:
Salaries and benefits
Contributions to defined contribution pension scheme
TOTAL
Lease of Leicestershire Facility
2022
£’000
795
25
820
2021
£’000
981
23
1,004
The Leicestershire facility at Earl Shilton is rented on an arms length basis for £22,000 per annum (2021: £22,000) from
a self-invested pension plan controlled by Neil Campbell, Toby Foster, Simon Motley and others. The lease was renewed
on an arm’s length basis during April 2018.
105
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukFINANCIAL STATEMENTS Notes forming part of the Financial Statements
for the year ended 31 January 2022
29 Subsequent events
There were no subsequent events.
Shareholder Information
Registrars
The Company’s registrars, Link Group, provide a number of services that, as a shareholder, might be useful to you:
Registrar’s on-line service
By logging onto www.signalshares.com and following the prompts, shareholders can view and amend various details on
their account. You will need to register to use this service for which purpose you will require your unique investor code,
which can be found on your share certificate.
Share dealing services
You can buy shares through any authorised stockbroker or bank that offers a share dealing service in the UK, or in your
country of residence if outside the UK.
Link Group also provides a share dealing service to private shareholders in the UK or Channel Islands. For further information
on the share dealing service provided by Link Group, or to buy and sell shares visit www.linksharedeal.com or call
0371 664 0445. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United
Kingdom will be charged at the applicable international rate. Lines are open between 08:00 – 16:30, Monday to Friday
excluding public holidays in England and Wales).
This is not a recommendation to buy and sell shares and this service may not be suitable for all shareholders. The price
of shares can go down as well as up and you are not guaranteed to get back the amount you originally invested. Terms,
conditions and risks apply.
Link Group is a trading name of Link Market Services Trustees Limited (registered in England and Wales No. 2729260),
which is authorised and regulated by the Financial Conduct Authority. This service is only available to private shareholders
resident in the United Kingdom, the Channel Islands or the Isle of Man.
The registered office for Link Group is, Central Square, 29 Wellington Street, Leeds LS1 4DL. www.linkgroup.eu
Duplicate share register accounts
If you are receiving more than one copy of our report, it could be your shares are registered in two or more accounts on our
register of members. If that was not your intention, please contact Link Group who will be pleased to merge your accounts.
General shareholder enquiries should contact:
Link Group, 10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL
Tel: 0371 664 0300.
Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be
charged at the applicable international rate. We are open between 09:00 - 17:30, Monday to Friday excluding public
holidays in England and Wales.
Email: shareholderenquiries@linkgroup.co.uk
106
Annual Report and Financial Statements 2022INSPIRATION HEALTHCARE GROUP PLC Advisors
Company Secretary
Jon Ballard
Registered Office
Unit 2, Satellite Business Village, Crawley,
West Sussex RH10 9NE
Company number
03587944
Independent Auditors
BDO LLP, 2 City Place, Beehive Ring Road,
Gatwick, West Sussex RH6 0PA
Bankers
HSBC Bank plc, 1st Floor, First Point,
Buckingham Gate, London Gatwick Airport,
West Sussex RH6 0NT
Nominated adviser
and broker
Cenkos Securities plc, 6,7,8
Tokenhouse Yard, London EC2R 7AS
Legal advisers
Gordons LLP, Riverside West,
Whitehall Road, Leeds LS1 4AW
Field Fisher LLP, Riverbank House,
2 Swan Lane, London EC4R 3TT
Registrars
Link Group, 10th Floor, Central Square,
29 Wellington Street, Leeds LS1 4DL
107
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.plc.ukSHAREHOLDER INFORMATION Headquarters and Registered Office:
Inspiration Healthcare Group plc
2 Satellite Business Village, Crawley,
West Sussex RH10 9NE, UK
inspirationhealthcaregroup.plc.uk