Annual Report
and Financial Statements
2023
I N N O V A T E | C R E A T E | I N S P I R E
INSPIRATION HEALTHCARE GROUP PLC
Our Mission
Our mission is to pioneer medical technology that improves the outcomes of patients,
starting with the very first breaths of life.
Our Purpose
To improve health outcomes by providing highly advanced medical technology.
Our Values
As a Group we strive to meet all of these values:
Patient Focused
Read more on p26
Outcome Changing
Read more on p18
Pioneering
Read more on p12
Research Driven
Read more on p32
Group Highlights
Strategic & Operational
u Resilient revenues marginally ahead in a year
of unprecedented global macro-economic
uncertainty
Post Year-end
u Cash generative in Q1 FY2024
u Extension to the SLE6000 ventilator range
Read our Annual Report online:
inspirationhealthcaregroup.com
u Domestic sales growth of 13%
u Branded Products sales growth of 8%
u Major investment in new state of the art
Manufacturing and Technology Centre
u Medical Device Regulation (EU)
– Technical Files all submitted
u Increasing inventory to secure long term
supply chain and meet customer
satisfaction levels
u Project WAVE study recruitment complete
– analysis underway
u Progressed USA regulatory submissions
u Expanded acute care portfolio with launch
of additional distributed products in the UK
and Ireland
2
Annual Report and Financial Statements 2023
Group Financial Highlights
Financial
Group Revenue
Net cash position2
Operating Profit
£41.2m
FY2022: £41.1m
£(3.8)m
FY2022: £9.3m
£0.4m
FY2022: £4.3m
Adjusted EBITDA1
Proposed final dividend
£4.0m
FY2022: £6.4m
0.41p
FY2022: 0.41p per share
1 Earnings before interest, tax, depreciation,
amortisation, impairment, share-based
payments and non-recurring items
2 Cash and cash equivalents, less revolving
credit facility and invoice finance borrowings
3 Up to £5m invoice discounting facility plus
existing £5m revolving credit facility
Increased borrowing facilities3
Gross Profit Margin
put in place in December 2022
Up to £10m
44%FY2022: 50%
Contents
Strategic Report
04 About the Group
05 Global Market Revenue
06 Our Business
07 Business Model
08 Chairman’s Report
14 Our Business Strategy
20 Chief Executive Officer’s Review
28 Operating and Financial Review
31 Environment and Sustainability
34 Principal Risks and Uncertainties
40 Companies Act Section 172 Statement
Governance
43 Statement of Corporate Governance
50 Audit Committee Report
52 Board of Directors
54 Directors’ Report
58 Directors’ Remuneration Report
Financial Statements
64
Independent Auditors’ Report
to the Members of Inspiration Healthcare Group plc
72 Consolidated Income Statement
72
Consolidated Statement of
Comprehensive Income
73
Consolidated Statement of Financial Position
74
Consolidated Statement of Changes in Equity
75 Consolidated Cash Flow Statement
76
Notes forming part of the Consolidated Financial
Statements
108 Company Statement of Financial Position
109 Company Statement of Changes in Equity
110
Notes forming part of the Company Financial
Statements
Shareholder Information
115 Shareholder Information
116 Advisors
inspirationhealthcaregroup.com
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INNOVATE | CREATE | INSPIRE
INSPIRATION HEALTHCARE GROUP PLC
About the Group
Inspiration Healthcare (AIM: IHC) designs, manufactures
and markets medical technology. As a global
provider of medical technology, our mission is to
pioneer medical technology that improves the
outcomes of patients, starting with the very first
breaths of life.
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’s Branded products focus on neonatal
intensive care and a distributed product portfolio,
which enables the Group to add value to our
customers through a more comprehensive product
range. Both are complemented by our Service
support.
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
Therapies
with
(distribution of infusion-focused technologies in
the UK and Ireland).
spare parts); and
Infusion
The Group sells its Acute Care products globally
through a network of distributors
in more
than 75 countries. Products range from highly
sophisticated capital equipment
to
single use disposables all of which can help
improve outcomes of extremely sick patients.
The combination of capital equipment and
disposables gives the Group a blend of one-off
and recurring revenue streams.
through
The Group’s three operating companies have
implemented quality management
locally
systems specific for their business needs, 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 (“R&D”).
Additionally,
the companies sell Distributed
Products which complement and add value to
our portfolio and offer Technology Support to
customers requiring maintenance and training
along with ownership and usage options, including
rentals and emergency hire.
In the UK and Ireland, the Group offers direct sales
for most of its products supported by Technology
Support. We offer on site and return-to-base repair
and maintenance along with 24/7 emergency hire
of equipment and long-term lease arrangements
for our Branded products.
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 products which
we distribute must be synergistic, add value to
our existing portfolio and not compete with other
products in the portfolio.
The Group invests for growth through its R&D
and market development, controlling numerous
patents on its technology. It has strong links with
academic Key Opinion Leaders around the world
and supports clinical research in the field of
neonatal intensive care.
Find out more:
inspirationhealthcaregroup.com
04
Annual Report and Financial Statements 2023
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STRATEGIC REPORT
Global Market Revenue
“
The Group sells its
Acute Care products
globally through a
network of distributors
into more than
75 countries
We sell directly into the UK and Ireland (“Domestic”) and partner with established independent
distributors in the rest of the world, actively selling in more than 75 countries.
Percentage of Revenue by Market
Domestic 48%
FY2022: 43%
Asia Pacific 23%
FY2022: 25%
Europe 13%
FY2022: 15%
Middle East and Africa 13%
FY2022: 13%
Americas 3%
FY2022: 4%
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05
INNOVATE | CREATE | INSPIRE Our Business
We look at our business in different ways for Market Sectors and Revenue Streams:
Market Sectors (excluding freight1)
Revenue Streams (excluding freight1)
Acute Care £29.2m (FY2022: £29.5m)
Branded Products £24.4m (FY2022: £22.5m)
The hospital setting where our main focus is
neonatology.
Where we are the legal manufacturer of the
product and we control the intellectual property.
Infusion Therapies £9.1m (FY2022: £7.0m)
Distributed Products £13.6m (FY2022: £13.6m)
A distributed product portfolio that is focused on
various infusion therapies in different settings,
including the patient’s home or the hospital.
Where we sell products from a third party
predominantly in the UK and Ireland and in some
cases worldwide.
Service £2.6m (FY2022: £4.2m)
Technology Support £2.9m (FY2022: £4.6m)
Our revenue derived for our service activities,
including planned preventative maintenance,
repairs and spare parts.
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 Group Total Revenue in addition to the above also includes £0.3m of freight (FY2022: £0.4m)
06
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC STRATEGIC REPORT
INNOVATE | CREATE | INSPIRE
Business Model
We design, manufacture and market medical technology globally. We invest in our business to maximise
opportunities for existing products in existing markets, drive our portfolio into new markets through
regulatory approvals and expand our portfolio through product development and complementary
Distributed Products. Our significant global reach into more than 75 markets is achieved through both
direct sales and distribution partners.
The products move from development and over time help to grow our business organically as
they become established products in existing markets. The products we distribute for third-party
manufacturers complement and support our Branded Products and add value to our customers. We
strive to maximise the customer experience through customer support, education and technology
support offerings.
Our business model always aims 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.
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inspirationhealthcaregroup.com 07
Chairman’s
Report
Mark Abrahams Chairman
Highlights
u Resilient revenues marginally ahead
In a year of unprecedented global
macro-economic uncertainty
u Major Investment in new state-of-the-art
Manufacturing and Technology Centre
Giving greater capacity, efficiencies
and capability
u Submitted all key Technical files for
CE marking under MDR
Keeps us well prepared for a rapidly changing
regulatory environment in the EU
u Project Wave Study
Recruitment complete
u Growth in the UK for Infusion Therapies
u New website and further integrated
branding launched
Helping identify us as an enlarged Group
around the world
u Extension to the SLE6000 ventilator range
Expanding the market potential with
non-invasive ventilator
08
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC
Our Business
This year I am reporting on a year of significant
investment and internal achievements. Despite
challenging market conditions that arose during
the year we continued to make progress to position
the Company for long-term sustainable growth.
The conflict in Ukraine and, consequently, inflation
and shifting confidence put significant pressures
on healthcare budgets and spending. Coupled
with this, we have to also acknowledge that in
China, the largest export market for the Group’s
products in the previous year, the pandemic was
still problematic. The authorities determined that
the best way to deal with this terrible disease
was further lockdowns, making trade with China
more difficult than in previous years. This also
disrupted supply chains for both logistics and
materials sourced.
The Group delivered revenues that were marginally
ahead of FY2022 at £41.2m (FY2022: £41.1m), which
reflected growth outside of China and Russia,
traditionally important markets for the Group.
When I look back and see the issues that were
thrown at us, and at many other companies, I am
proud that we achieved much and invested in the
business to ensure that we are in better shape
now than we were a year ago.
EBITDA, before non-recurring items, was lower
than the previous year at £4.0m (FY2022: £6.4m)
primarily because of sales mix and its effect on
gross margin. Notably, we sold more Infusion
Therapies Distributed Products into the UK market
and less Branded ventilators due to global market
uncertainties. This switch was a direct result of the
external environment mentioned above.
There was a £13.1m cash outflow in the year
resulting in a closing net cash position of £(3.8)m,
driven by investment in the new Manufacturing
and Technology Centre in Croydon, an increased
inventory level to ensure continuity of supply and
customer service levels and increased debtors
“
I am proud that we
achieved much and
invested in the business
to ensure that we are in
better shape now than we
were a year ago
from strong
fourth quarter revenues. Higher
than planned spend at the Manufacturing and
Technology Centre was due to high construction
cost inflation, an earlier than expected payment
and specification changes. These specification
changes will however deliver
long-term cost
savings. We delivered a positive cash flow position
in Q1 FY2024, in line with our plan.
Our new Manufacturing and Technology Centre
has enabled us to close our Crawley office at the
end of January 2023, and in April 2023 we informed
the employees affected that we will be closing our
Leicestershire facility. From these closures, we will
see additional operational efficiencies. We have
identified further initiatives within the business that
will improve our cash-based operating expenses
going forward.
It is important to emphasise that, although we are
focused strategically on the neonatal intensive
care sector, we have always had a broad portfolio
which provides resilience to the business. This was
demonstrated during the year when slowdown
in international sales was offset by increased
revenues in our Domestic market.
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09
INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comSTRATEGIC REPORT Chairman’s Report continued
is
investment
Investing for Growth
Our most notable
in our new
Manufacturing and Technology Centre in Croydon,
which was the home of SLE Ltd, a company we
acquired in 2020. Maintaining the highly skilled
workforce was paramount and it was important
to find a site suitable for high tech manufacturing,
along with the facilities we need as a fully
integrated company (including research and
development and technology support). Now with
approximately 4,200 sq metres (50% more space
than the previous Croydon site), the state-of-the-
art design allows for more efficient warehousing
and laboratories for product development and
testing, along with creating a modern working
environment for our employees.
I am pleased to say that we completed the move
in the first half of the year with no accidents and
with only one day of lost production. The site is now
fully operational and helped us deliver a record
month at the end of our financial year.
The Manufacturing and Technology Centre has
been developed with the future in mind. We have
incorporated a number of energy-saving initiative:
solar panels on the roof help provide hot water and
power to our air source heat pumps for heating the
buildings and roof lights have been maintained
which allow us to use low energy lighting and in
the summer months turn off lighting altogether.
With the addition of trees and plants that produce
no resins or pollens and do not attract aphids,
carbon dioxide is naturally processed within the
building, reducing the number of air changes
needed and hence reducing the energy required
for heating and cooling. Numerous other initiatives
have been incorporated and we feel that this is a
true demonstration of what can be achieved by
smaller British manufacturing companies.
Our employees are at the heart of the company
and in addition, we have implemented sit/stand
desks throughout, modern work benches for
manufacturing and technology support, electric
charging points for electric cars, open plan break
out areas for informal meetings and, of course, a
safe environment that would minimise disruption in
the event of another Covid-19 outbreak, with ultra-
violet and HEPA-filtered air handling alongside
modern communication facilities that allow for a
true clear desk policy.
Ahead of New Regulatory
Requirements
Around the end of 2022, the European Commission
proposed, and subsequently enacted, to delay
implementation of some aspects of the
the
new Medical Device Regulations,
relieving
some pressure on the Notified Bodies. The UK
Government has also postponed the introduction
of regulatory legislation. Our team has been
working hard, mainly
in our Research and
Development and regulatory groups, updating our
technical documentation, writing new reports that
are required by the new regulations and finally
submitting all our Technical Files to our Notified
Body for their review ahead of this deadline. It has
been a huge amount of work and was completed
before the announcement of the postponement
of the deadlines. However, the sooner the files
were submitted, the sooner the products would
be approved to the latest regulations, and we take
comfort in knowing our technical documentation
is up-to-date. Bringing the companies together
is quite a complex regulatory challenge, aligning
quality management systems to work efficiently.
This has been helped by the implementation
of Trackwise Digital, our new software tool for
helping our document management compliance,
which has received positive feedback from our
Notified Body.
10
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC STRATEGIC REPORT
Our market seems to be returning to normal with
activity at our biggest trade shows returning
close to pre-pandemic levels. We had a strong
presence at both shows we attended, enabling our
international sales and marketing team to meet
distributors face-to-face for the first time, in some
cases, since pre-Covid-19. We have been rolling out
a number of marketing initiatives around branding,
bringing more aligned messages across the
three operating companies in the Group and
launched a new website that went live at the end
of February 2023.
“
The Manufacturing and
Technology Centre has
been developed with the
future in mind
Strengthened Team
During the year we improved the management
of our supply chain, with the critical appointment
of Francesca Stenhouse as Head of Procurement
and Supply Chain. This role is pivotal in working
with our suppliers, including internal and external
logistics, to drive efficiencies in our business. The
year has been difficult for our suppliers and I thank
them for their support during the year. Without
their assistance we would not have been able to
produce the products we did and, although we
invested in component stock, our suppliers helped
with their understanding of the situation.
Jon Ballard, our Chief Financial Officer, resigned
during the year. On behalf of the Board, I would
like to thank Jon for his hard work over the past five
years and wish him all the very best for the future.
Paul Bergin joined the Company as Interim CFO
and the recruitment for a new permanent CFO is
expected to conclude in the summer of this year.
Our employees have endured a tough year.
I can only thank them all for their support of the
company during the last 12 months and we hope
that we can all enjoy a better year ahead.
Positioned for Future Growth
Although the external disruptions to supply chain
and markets remain, we have been able to adapt
to, and cope with, this new environment. We
have introduced more resilience into our supply
chain and this has helped our ability to ease our
customers through these uncertain times with the
robust assurance of our quality and excellence of
our life-saving products.
Following a strong Q4 FY2023, the year has
commenced
line with our plans. While
uncertainties remain, we are cautiously optimistic
that we will return to our usual growth patterns.
in
The Group’s world-leading expertise, broad
portfolio of best-in-class, specialist products and
established customer relationships enable us to
address the critical needs of the neonatal intensive
care market and help save lives and improve
outcomes of premature and sick babies around
the world. We have a clear growth strategy focused
on maximising in-market sales, geographic and
portfolio expansion and strategic M&A and we
believe we are well placed to realise our long-term
ambition of becoming a world-leading provider of
innovative medical technology.
Mark Abrahams
Chairman
11 May 2023
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inspirationhealthcaregroup.com
11
INNOVATE | CREATE | INSPIRESTRATEGIC REPORT INSPIRATION HEALTHCARE GROUP PLC
Pioneering
“
Enabling our teams
to be pioneering
in their work is an
important factor
in how this value
runs through the
business
12
Annual Report and Financial Statements 2023
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INNOVATE | CREATE | INSPIRE
Brook Nolson
Chief Operating Officer
We spoke to Brook Nolson, Chief Operating Officer, about our core value, pioneering.
“Pioneering is a difficult thing to live up to.
We have to constantly work towards being
pioneering, it’s an aspirational value. Within
the Group, I feel we have lots of examples of
where we have been pioneers, when we have
led the way. Early in our history we were involved
in the seminal TOBY study which eventually
led to the new practice of total body cooling,
for babies who have suffered from perinatal
asphyxia, to be changed globally and how
range provided gas
the SLE ventilation
flow specifically designed
rapid
breathing infant.
the
for
Enabling our teams to be pioneering in their
work is an important factor in how this value
runs through the business. It is important that
we develop a culture which supports freedom
of thought and ideas. This was taken into
consideration when we designed our state-of-
the-art Manufacturing and Technology Centre
which we relocated to in June 2022.
To facilitate pioneering thoughts, it is essential
to create environments, both physically and
virtually, that enable our teams to collaborate,
and give them space to explore, challenge
and evaluate; and be able to promote cross
-functional team working. We believe we have
done this which, in turn, is helping to drive
creativity in all areas.
We have created an environment where we
can quickly adapt and respond to change.
Driving change can enable us to pioneer,
or at least be at the forefront when we see
something is potentially pioneering.
The Group were early implementors of the
four-day week, offering our teams the option
to compress their hours if this better suited
their working preferences. In October 2021 we
implemented an improved parental leave policy,
“New Beginnings”, providing additional support
for parents of babies admitted into a NICU.
Our approach to sustainability has some
great examples of where we are leading
the way, utilising sustainable energy – solar
thermal systems – within our manufacturing
facility and setting our own targets for Net
Zero. Being at the cutting edge is important
for us, adopting new technologies and ways
of working early so we can be at the forefront.
Research drives how we develop products. If we
see a pioneering technology we can provide
a platform for these concepts, enabling us
to be in the vanguard of neonatology. We
have created a work environment where the
people who can pioneer are at the heart
of the business. Our ethos to find, develop,
articulate and implement new technologies
and methodology is unique to us.”
Our mission is to pioneer
medical technology that
improves the outcomes of
patients, starting with the
very first breaths of life
inspirationhealthcaregroup.com
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Our Business
Strategy
Our group designs, manufactures and markets medical technology with a global reach into more than
75 markets.
Our Products
leading-edge products
We offer a range of
to our exacting
manufactured
contract
standards
manufacturers
the world.
For information on each product please visit
our website.
third-party
to supply around
in-house or
through
We view our revenue streams in three distinct
areas: Branded Products, Distributed Products and
Technology Support.
Branded Products
those which we
Our Branded Products are
sell under our own brand, usually as the legal
manufacturer with control over the intellectual
property, and place these products on the
market globally.
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 their
life.
Our mission is to pioneer medical technology that
improves the outcomes of patients, starting with
the very first breaths of life.
Visit us online: inspirationhealthcaregroup.com
14
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Distributed Products
Our Distributed Products are where we market and
sell products from a third-party manufacturer
predominantly in the UK and Ireland, and in some
cases worldwide.
Distributed Products complement our Branded
Product portfolio and add value to our customer
proposition as we can offer a more comprehensive
product range.
Technology Support
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.
Our flexible approach offers short and long-term
rental of equipment for a specific patient or period.
We look to find manufacturers to partner with
pioneering technology
in niche areas where
we can truly add value as a partner and
for us. This
their products
win-win approach has served us well and helped
us offer a comprehensive range of technology to
our customers.
truly add value
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.
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comSTRATEGIC REPORT Our Business Strategy continued
Global Reach
Our Markets
Our global reach means our medical technology
is available in more than 75 countries. We sell
Ireland (“Domestic”)
directly
into the UK and
independent
and partner with established
distributors in the rest of the world. This model
provides us with significant global coverage and
opportunity including access to international Key
Opinion Leaders (“KOLs”) with whom we develop
relationships to drive our product development
and education offerings.
international markets,
In all
regulations are
becoming more widespread to ensure patient
safety. 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.
“
We sell directly into
the UK and Ireland and
partner with established
independent distributors
in the rest of the world
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s
t
d
o
T
m
e
c
e
r E
h
n
n
g
a
olo
g
ge
ment
y Support
a rket
e t o M
t
u
R o
Acute Care
The Acute Care market is the hospital setting where
our main focus is neonatal intensive care. We are
privileged to work in markets that are involved in
trying to save the lives of some of the most fragile
patients. More than 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 five and are estimated to
have caused more than one million deaths in 2018
(Source: World Health Organization).
technology
The
in our products has been
developed to improve patient outcomes, whether
it is a baby who has been born prematurely, or a
patient undergoing surgery.
Infusion Therapies
We have a dedicated sales team selling a range of
Distributed Products for different Infusion Therapies
such as parenteral feeding, pain management and
chemotherapy. This area is rapidly growing and,
although we do not invest in R&D for these products,
it is a strategic area of focus for our business.
Service
Our Service offering covers various products both
Branded and third party, including those where
we may not have exclusive distribution rights. This
allows us to add value to our customers around
the world with technical support and spare parts.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC
Our Business
Inspiration Healthcare Group
is an ethical
Company with high principles in business. We take
our responsibilities towards Environmental, Social
and Governance (“ESG”) 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 environmental
and sustainability efforts are an important part of
how we run our business, and we have committed
a section of this annual report to this topic. Please
see page 31 for more information.
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 outcomes for patients
and want to do this in a way that has maximum
benefit for society. Our charitable giving initiative
offers us the opportunity to support charities that
align with our core values.
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, including
prioritising internal promotion opportunities before
reviewing external candidates, where appropriate.
We have considered our employees’ overall
wellbeing. Through our Group’s People team, we
offer a range of benefits:
u ‘Blended Working Policy’ allowing employees
to work from home for up to 40% of their time
u Compressed working hours, allowing
employees to choose whether they would like
to work a four-day compressed working week
and benefit from a three-day weekend
u Improved parental pay for all new parents,
including adoptions, and additional paid
time off for those parents who have a
premature baby
u Mental Health and Well-being App providing
employees with 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
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 (“AIM”) 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.
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comSTRATEGIC REPORT INSPIRATION HEALTHCARE GROUP PLC
Outcome Changing
“
Being outcome
changing really
is at the core of
what we do. It’s
in the service
that we offer,
in the products
we develop
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Laura Edwards
Vice President Marketing and Product Management
We asked Laura Edwards, Vice President Marketing and Product Management, to
provide some insight on how the business lives by its core value, outcome changing.
improving outcomes
in a business
“We are fortunate to work
committed
for
to
patients globally; some of the patients we
serve are the most fragile and vulnerable.
An internal questionnaire was sent out to all
Group employees asking the question “why
are you proud to work here?” Personally, I
feel the results spoke for themselves. The top
three answers were, our team, the babies
our technology helps, and contributing to
saving lives. It’s not just neonatal patients we
are changing outcomes for; our technology
supports patients from the very first breaths of
life but our portfolio also has offerings which
patients may engage with at any point within
their lives.
It is not just the patients we change outcomes
for either. Our holistic approach to healthcare
means our technology can impact others
too. We strive to offer family-centred care
and a great example of this is our LifeStart™.
The LifeStart™ enables a clinician to start to
care for a baby at the mother’s side straight
after delivery while also maintaining the
umbilical cord which we now know offers
numerous benefits to the baby. Not only can
the outcome of the patient be improved, we
aim for the parents to have a more positive
experience too.
technology
to our new
Our teams are dedicated to all aspects
that affect the patient, from the design and
to providing
development of
in the use of our products. The
training
relocation
state-of-the-art
Manufacturing and Technology Centre has
provided the ability to set up an educational
training suite. The training suite can be used
for hands-on training and simulations with
healthcare professionals and,
to
integrated cameras, international training can
be provided online.
thanks
We have the opportunity to
improve the
outcomes of patients globally. This year it was
great to be able to support a charity working
to procure medical equipment for Ukraine with
our thermoregulation products. During the
Covid-19 pandemic, our CEO Neil Campbell
was part of the Ventilator Challenge, and
Inspiration Healthcare played a vital role in
delivering life-saving equipment to the NHS.
Being outcome changing really is at the core
of what we do. It’s in the service that we offer,
in the products we develop, in the portfolio we
distribute and in our day-to-day activities as a
team all striving to pioneer medical technology
that improves outcomes for patients, starting
with the very first breaths of life.”
We have the opportunity
to improve the outcomes
of patients globally
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comSTRATEGIC REPORT Chief Executive
Officer’s Review
Neil Campbell Chief Executive Officer
20
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Welcome
During the last 12 months, we had to adapt our
business plans due to the changing geopolitical
situation around the world. Lockdowns in China
affected customer orders and supply chain, whilst
the conflict in Ukraine affected sales across Russia
and Belarus. Our business has always been robust
and, in these times of unprecedented challenge,
our revenue was marginally ahead year-on-year
has due to geographic and product mix, our gross
profit was lower which had a knock-on to EBITDA
and operating profit.
We have strategically invested in areas of our
business where we think it will give both short-
term and long-term growth. Short-term we have
invested in our inventory and employees, and
long-term we have invested in our infrastructure,
software tools and new product development.
We believe that, despite the short-term issues we
have experienced globally, fundamentally the
Group is in a stronger place than it was 12 months
ago. Our new Manufacturing and Technology
Centre gives us greater capacity and capability
and will deliver cost efficiencies. Our convergence
of our three operating companies has led to
an investment to streamline the three quality
management systems which will lead to greater
efficiencies and reduction in costs associated
with audits.
Research and Development (“R&D”)
At the start of our financial year the deadline for
the new EU Medical Device Regulations (“MDR”)
to be adhered to was May 2024. To enable us
to achieve this, our Notified Body required us
to submit the Technical Files by January 2023.
Consequently, we concentrated R&D resources
to ensure that the technical documentation was
ready to comply with the new MDR. In December
2022, it was announced that the current Medical
Device Directive (“MDD”) would be extended in
Europe, subject to certain conditions. Having
now submitted for MDR, according to our original
timelines, we are in a strong position, reducing
pressure on future resources.
“
We have strategically
invested in areas of our
business where we think
it will give both short-term
and long-term growth
A review of structure and resources in R&D has
allowed us to better focus our activities. The
benefits of this are already being realised and in
Q1 FY2024 we launched a series of enhancements
for products, starting with our flagship product,
the SLE6000, followed by a variant of the LifeStart™
(our resuscitation and stabilisation platform) for
the USA. Following this, we expect to launch at
least one other new Branded product this year.
Project Wave finished recruiting patients into the
study. At the time of writing, the results are still
with the research group and haven’t been made
public. We look forward to sharing these results in
due course and will determine the next phases of
the project as we learn more from the researchers.
We have invested 8% of revenue in R&D this year
leading-edge solutions to
to further develop
improve patient outcomes, whilst streamlining the
processes to improve time-to-market.
Sales and Marketing
During the year our marketing team has been
working on a new website for the Group, bringing
together a cohesive branding and messaging
across the operating companies along with giving
a better customer experience and improving our
investor relations area.
The website went live on 1st March 2023 and has
been designed to allow further enhancements
for education and training for our customers,
both as end users of our technology and as
distribution partners.
21
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comSTRATEGIC REPORT Chief Executive Officer’s Review continued
We have also been able
to attend major
tradeshows more easily compared to previous
years when various Covid-19 restrictions were
in place. This year we attended both Medica
(Dusseldorf, November) and Arab Health (Dubai,
January). The level of attendance was higher
in both shows than the previous year, giving our
international team a chance to sit down with
distribution partners and discuss activity that will
come to fruition in the next 12 months.
Scientific meetings, those where our end users
present research and discuss the hot topics of the
day, are returning but are predominantly ‘hybrid’ –
a combination of face-to-face and virtual. These
do give us an opportunity to re-build relationships
with Key Opinion Leaders (“KOLs”) as well as to gain
a greater understanding of the areas of research
that are intriguing our customers.
Clinical Support
One of our ‘USPs’ is our approach to our customers.
Being able to demonstrate how our products are
used adds to our value proposition. During various
lockdowns and travel restrictions, our team were
creative in the way we supported our customers
who were both choosing and using our technology.
We started by using video conferencing to
engage with customers around the world and
have moved forward with a dedicated space
in our new Croydon facility for user training. Our
Clinical Suite allows us to bring customers face-
to-face to see how our technology can be used
and, using mannequins and cameras through
video conferencing, we can also show how our
technology can be used around the world.
Although this does not negate the need for
meeting our customers and business partners,
it does reduce the financial and environmental
costs of travel, and allows us to engage quickly
with any customer around the world, offering the
first-rate experience that they have been used to
in person.
Acute Care
Revenue was slightly lower than the previous year
at £29.2m (FY2022: £29.5m). This was mainly driven
by challenges in the markets of China and Russia:
Covid-19 lockdowns in China which made it more
difficult for our distributor to do demonstrations
at a time when there is a strong preference for
domestic products and the impact of the conflict
in Ukraine on Russia and Belarus. Our team
continue to exploit this demand for our products
in other markets.
We did see an upturn in orders towards the end of
the calendar year which has carried on into the
beginning of 2023. It has been especially pleasing
to see orders from UK hospitals being placed
which will improve margin as we sell direct in the
UK and Ireland.
In this financial year, we made the strategic
decision to ‘end of life’ the Patient Warming
System, due to the obsolescence and rising costs
of components which would have meant a major
re-design. This means terminating the production
of new products but maintaining the existing
products in the market with the supply of spare
parts for a number of years.
We are looking forward to planned introductions of
new products in our Acute Care area starting in Q1
with range extensions to some key product lines.
These new products (including the announced
increase in our Ventilator range in March 2023) are
expected to drive the Acute Care range back to a
more normal level of growth in the coming year.
Infusion Therapies
The portfolio we offer in Infusion Therapies was
less impacted by macro-economic conditions.
This is one reason why we strive to offer a diverse
portfolio of products. Not only can we add value
to our customers with an extensive range, we
can remain agile in our sales approaches. We
increased our investment in our Infusion Therapies
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC One of our ‘USPs’
our customers “
is our approach to
area that yielded positive results with revenue
increasing to £9.1m (FY2022: £7.0m) that partially
offset the loss of revenue from the Acute Care
area (albeit at lower margins).
Infusion Therapies is expected to grow further in this
coming year as we invest in sales and marketing
activity to take advantage of a well identified
opportunity. We are working with our principals
for whom we distribute products and are excited
to have made progress in other areas of Infusion.
No longer being seen as a specialist in Parenteral
Feeding, we have launched new technologies in
Patient Controlled Analgesia for acute pain and
obstetrics and increased our market share in
Oncology (for ambulatory chemotherapy where
the clinicians wish to be able to monitor patients’
drug delivery remotely).
Service
The year saw a planned reduction in Service with
revenues at £2.6m (FY2022: £4.2m) and in line
with our expectations at the beginning of the
year. This was primarily due to the planned loss
of a distribution contract for ventilators and the
subsequent loss of maintenance contracts and a
decrease in Tecotherm service as the product is
no longer on the market. During the year, we re-
structured the area of business following the move
to our Manufacturing and Technology Centre that
has given us a dedicated warehouse for Service.
This will improve our customer experience for the
delivery of spare parts plus the repair and return
of capital equipment. We have also made some
cost savings from which we will receive the full
year benefit in FY2024.
Quality and Regulatory
Our operating companies each have
their
own Quality Management System (“QMS”) that
has previously been audited by three different
Notified Bodies. During the year, we made strides
to harmonise into one QMS which will mean
streamlined auditing and a reduction in these
regulatory audit fees. It will also give us greater
flexibility to be able to use different locations
for any of the operating companies’ processes
rather than certain processes only being able to
be carried out in one location. We had numerous
audits during the year as we have started our QMS
transition to MDR. These successful audits have
paved the way for us to reduce the number of
Notified Bodies during FY2024 which will, in turn,
give greater efficiencies and savings.
As stated in the section about R&D, it was a
strategic imperative to ensure that our technical
documentation was ready for submission for
a MDR CE mark submission. We are currently
awaiting feedback from our Notified Body.
in
We have also been engaged with the Food
and Drug Administration (“FDA”)
the USA
regarding our ventilators. The FDA have been
very informative of the approach they expect us
to take should we wish to file for clearance and
we have subsequently performed a gap analysis
between what documentation we have and what
is expected with a resource plan to be able to
bridge the gap so that we can file for regulatory
clearance in due course.
Manufacturing & Supply Chain
Our
Technology
new Manufacturing and
Centre has been operational since summer
last year, providing approximately double the
manufacturing floor space and using automated
warehouse systems to house small components
and finished goods.
With the flow of production designed to be efficient,
we believe we can double output from the ‘shop
floor’ on the same shift pattern. This will enable
new products, that would have been previously
contract manufactured, to be manufactured in-
house, improving margins.
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comSTRATEGIC REPORT Chief Executive Officer’s Review continued
We have recognised that supply chains are still
very fragile and the management of these will be
a key requirement during the next couple of years
as we still battle to get components. To this end we
have recruited a Group Head of Procurement and
Supply Chain, Francesca Stenhouse, to lead this
area of our business. Francesca’s remit not only
covers suppliers but also logistics and all aspects
of production planning, working closely with
sales management to ensure that forecasts are
delivered against from our factory and partners.
With the investment, not only in infrastructure but
also in people, we have placed a great deal of
emphasis on driving efficiencies and scale into
our business that will bode well for the future.
IT and Finance
Bringing the three companies together has meant
the alignment of Priority, our Group Enterprise
Resource Planning (“ERP”) system, which is now
complete and delivering greater efficiencies. We
have also been rolling out Trackwise Digital, our
new online document management system. This
will integrate into Priority and start to become a
seamless system with the same up-to-date level
of information no matter which software tool it is
accessed from.
Our Charitable Giving Initiative
Our Charitable Giving Initiative has continued to
receive requests for donations and during the
year I am pleased to say that our employee-only
committee agreed to support several charities
with donations totalling £85,000 (FY2022: £13,000).
Donations are made on our behalf through
CAF with monies we donated in FY2022. This
also included a donation through the Disasters
Emergency Committee to the victims of the
Ukraine conflict. Further information on these very
worthwhile causes can be found on our website.
“
I would like to thank every
employee for their hard work
and commitment to the
company over the last
12 months
Our Employees
The year has been difficult for everyone with
rising energy and food costs, and we recognise
that our employees are no different to others who
are suffering.
We continue with a number of initiatives to reduce
the impact of these with numerous employee
benefits, including the option for a compressed
week (that reduces commuting costs), hybrid
working
reducing commuting costs),
money-saving schemes from retailers, along with
salary sacrifice for bikes and cars. We have also
adopted a number of wellness initiatives to help
with physical and mental health issues.
(again
I would like to thank every employee for their hard
work and commitment to the company over the
last 12 months and I hope the next 12 months will
be easier for all of us.
24
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Future
We continue to challenge ourselves to ensure that we structure our business to meet our growth
ambitions and invest appropriately where we can realise the most opportunity. This year we have
delivered on some complex projects, which we feel put us in good stead for the next financial year, due
to greater capacity, capability and efficiencies.
KEY PERFORMANCE INDICATORS (“KPIs”)
Revenue growth1
Proportion of revenue from international markets2
Revenue from Branded Products3
Revenue generated from products developed4
Gross margin5
R&D expenditure as a percentage of revenue6
Adjusted EBITDA margin7
Adjusted diluted EPS8
2023
0.4%
52%
59%
2%
44%
8%
10%
3.0p
2022
11%
57%
55%
5%
50%
9%
16%
7.0p
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.
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 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.
5 Gross profit expressed as a percentage of total revenue.
interest,
7 Adjusted earnings before
tax, depreciation,
amortisation, share-based payments and non-recurring 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.
8 Adjusted diluted EPS is measured before non-recurring items
and add back of amortisation of intangible assets acquired
through business combinations. See note 8 to the Financial
Statements for more information.
6 Total spend on research and development, whether capitalised
under development costs or expensed
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.
the
to
Neil Campbell
Chief Executive Officer
11 May 2023
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25
INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comSTRATEGIC REPORT INSPIRATION HEALTHCARE GROUP PLC
Patient Focused
“
Every person in the
team is driven by
improving patient
quality of life. It’s
about recognising
these individuals
have a condition
which impacts
their everyday life
26
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STRATEGIC REPORT
Katie McHale
Vice President – Infusion Therapies and Homecare
We asked Katie McHale, Vice President – Infusion Therapies and Homecare, how the
core value of being patient focused runs through her and her team.
“I am a qualified nurse and I have cared for
patients at the start of life and at the end of
life. It is important that all patients have a
positive experience, no matter how difficult
the situation. Seeing patients impacted by
chronic conditions is hard and I, and many of
my team, can speak from personal experience
about how challenging that is. The majority
of the Infusion Therapies team are qualified
healthcare professionals as well as some
having personal experience through family
members too.
We are passionate about patients receiving
the best possible care, whether it is through
the nursing they receive or the products being
used during care. The products really do make
a difference to the patients. We look to ask,
do the patients have the right equipment
for them? We aim for the patients using the
technology we provide to feel comfortable
and empowered in using their devices.
Our home care team provide training in the
patient’s own home and we work closely with
our customers to understand their patient
cohort. In the world of home care, we feel
the patient should be empowered to make
a choice about the devices they use, as well
as being confident in their use. Our team
provide customer support over the phone
and visit patients at home to provide hands-
on training. It is all about quality of life. We
want the patients to feel engaged with the
devices they are using and to have the best
experience possible.
in
the
team
Every person
is driven by
improving patient quality of life. It’s about
recognising these individuals have a condition
which impacts their everyday lives, and we
can provide them with the equipment and
accessories which enable them to live as
normally as possible. Our acute pain device is
designed for ambulatory use; we want to offer
mobility and flexibility for the patient. It’s all
about improving outcomes and quality of life
for patients.
We hold our values very highly; we are patient
focused and we put the patient first. We add
value through expertise and strive to build
trust with our customers and patients. Our
team know they are making a difference to a
patient’s life.”
We are passionate about
patients receiving the
best possible care
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27
INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.com Operating and
Financial Review
I am pleased to report on the Group performance for the financial year ended 31 January 2023 (“FY2023”).
Revenue
Group revenue increased 0.4% to £41.2m (FY2022:
£41.1m).
increased by
Group Domestic
13%
revenue
to £19.9m (FY2022: £17.6m) primarily driven by
continuing growth in Infusion Therapies, partially
offset by the planned exiting of domestic service
revenue from distributed ventilation products.
Macro-economic uncertainty, particularly
in
China, as well as the geopolitical consequence
of the conflict in Ukraine, resulted in International
to £21.3m
revenue
(FY2022: £23.4m).
reducing overall by 9%
It is worth highlighting that 31% of full year revenue
was generated in the fourth quarter. This expected
increase in our order inflow and subsequent
delivery of product was driven by increased
Domestic and International capital purchases,
particularly of ventilators.
Branded Products
Branded Products revenue grew 8% to £24.4m
(FY2022: £22.5m) driven by the fourth quarter
increase in ventilator sales, referred to above,
and also due to the planned exit of distributed
products following the acquisition of SLE Ltd. This
growth was despite the impact of global market
uncertainty on certain export markets.
Distributed Products
Distributed Products revenue was flat year-on-year
at £13.6m (FY2022: £13.6m). Continued growth in our
Infusion product range was offset by the planned
exit from third-party ventilator sales. These third-
party ventilators are being replaced with SLE
ventilators in the UK and Ireland, contributing to an
increase in Branded Products.
Technology Support
Technology Support revenue reduced 37% to £2.9m
(FY2022: £4.6m). This reduction was impacted by
the planned exiting of third-party ventilators and
the Tecotherm cooling device change of service
arrangements related to its end of life. Group
total revenue also
includes £0.3m of freight
(FY2022: £0.4m).
Gross Profit
Gross profit of £18.1m was 12% lower than the
prior year (FY2022: £20.6m). With revenue broadly
flat, this reflected a gross margin reduction from
50.2% to 43.9%. This reduction was driven by the
mix of products in different territories and a lower
revenue from Technology Support which is at
high margins.
Operating Profit
The Group reported Adjusted Operating Profit
(before non-recurring items) of £1.6m (FY2022: £4.3m).
Administrative expenses were broadly flat year-
on-year at £16.5m (FY2022: £16.3m), despite the
highly inflationary macro-economic environment.
There were £1.2m of non-recurring items in the
year (FY2022: £nil), comprising £0.5m of leased
property impairment relating to the consolidation
of our property portfolio following the move to the
new Manufacturing and Technology Centre, £0.5m
of aborted acquisition costs and £0.2m of other
costs (see note 4).
resulted
This
non-recurring items, of £0.4m (FY2022: £4.3m).
in an Operating profit, post
Adjusted EBITDA reduced to £4.0m (FY2022: £6.4m).
With revenue and administrative expenses broadly
flat year-on-year, this reduction was primarily
driven by the mix of products in different territories.
Adjusted EBITDA margin reduced from 15.6% to 9.7%.
28
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Operating Profit
Non-recurring items
Adjusted Operating Profit
Depreciation
Amortisation of intangible assets
Impairment of right of use asset
Share based payment
Adjusted EBITDA
Taxation
The Group has recorded a tax credit of £196,000
(FY2022: £271,000).
Earnings Per Share (“EPS”)
Basic EPS and diluted EPS were 0.40p per share
and 0.39p per share, respectively (FY2022: 6.22p
and 6.16p).
Adjusted basic and diluted EPS (before non-
recurring items) were 2.99p and 2.95p, respectively
(FY2022: 7.11p and 7.04p).
2023
£’000
431
1,158
1,589
1,354
931
-
132
2022
£’000
Change
£'000
4,255
(3,824)
-
1,158
4,255
1,069
837
122
139
(2,666)
285
94
(122)
(7)
4,006
6,422
(2,416)
Cash Flow
Net cash (cash and cash equivalents less the
Company’s Revolving Credit Facility “RCF” and
invoice financing facility) was £(3.8)m as at 31
January 2023 (FY2022: £9.3m). The £13.1m decrease
in the year was driven by the investment in the new
Manufacturing and Technology Centre in Croydon
(including an earlier than expected payment),
increased inventory levels to ensure continuity of
supply chain and customer service level, higher
debtors due to strong fourth quarter revenues and
non-recurring items.
Net cash flow used in operating activities was
a £3.5m outflow (FY2022: £3.6m inflow), with the
decrease reflecting the increased working capital
level, referred to above, as well as lower profitability.
Cash outflow on investing activities was £8.3m
(FY2022: £4.0m) of which £2.0m related to capital
development expenditure and the majority of the
balance to investment in the new Manufacturing
and Technology Centre. There was also £1.3m of
financing outflows.
The Group has a £5m RCF in place and during
December 2022 entered
invoice
discounting facility of up to £5m. As at 31 January
2023, £4.0m of the RCF and £2.1m of the invoice
discounting facility were utilised. Total headroom
as at 31 January was £6.2m.
into an
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comSTRATEGIC REPORT Operating and Financial Review continued
Net Assets
The value of non-current assets as at 31 January
2023 totalled £30.8m (FY2022: £25.1m). The net
£5.7m year-on-year
relates
to investment in the new Manufacturing and
Technology Centre.
increase mostly
Inventory
increased to £9.9m (FY2022: £6.4m)
which was impacted by the need to secure
components to ensure continuity of supply chain.
Trade and other receivables increased by £2.6m to
£11.9m (FY2022: £9.3m), reflecting a planned strong
fourth quarter order and revenue level. Trade and
other payables decreased by £0.8m to £5.8m
(FY2022: £6.6m).
Net Assets remained flat at £35.5m as at 31 January
2023.
Dividends
The interim dividend of 0.205p per share (FY2022:
0.205p) was paid on 28 December 2022. The Board
is recommending a final dividend of 0.41p per share
(FY2022: 0.41p) to make a total dividend for the year
of 0.615p per share (FY2021: 0.615p). If approved by
shareholders at the AGM, the final dividend will
be paid on 28 July 2023 to shareholders on the
register on 30 June 2023.
“
Branded Products revenue grew
8% driven by the fourth quarter
increase in ventilator sales
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.
Share Price During the Year
The range of market prices during the year from
1 February 2022 to 31 January 2023 was 52p to
113.5p and the mid-market price of the Company’s
ordinary shares at 31 January 2023 was 52p.
Neil Campbell
Chief Executive Officer
11 May 2023
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Environment and
Sustainability
A proud advocate for British manufacturing, we
are committed to both people and the planet,
building into every aspect of our business the
most sustainable and environmentally friendly
processes and materials possible.
Our operating companies, where applicable,
comply to the Waste Electric and Electronic
Equipment (“WEEE”) Regulations in Europe ensuring
any product or material, that has to be disposed
of, is treated in the most responsible manner.
(“ABHI”)
the Association of British
Our Trade Body,
our
HealthTech
Industries
site as part of a case study,
“Supporting
Sustainability”. To read the full article please visit:
inspirationhealthcaregroup.com/news/abhi-
supporting-sustainability-a-case-study-from-
inspiration-healthcare
visited
We implemented industry measurement tools in
accordance with Scope 1, 2 and 3. This information
has given us our starting point towards being Net
Zero for directly controllable emissions by 2035.
Metric
Vehicle fleet EV
Vehicle fleet Hybrid
Petrol/Diesel
FY2023
64%
36%
0%
In 2022 we consolidated three warehouses into
our new state-of-the-art Manufacturing and
Technology Centre. Building sustainability into the
design was a priority focus for Brook Nolson, Chief
Operating Officer and our director responsible
for sustainability. We are proactively committed
to reviewing our carbon impact, allowing us to
identify where opportunities exist to reduce and
improve our carbon impact rather than relying
on carbon offset. We are committed to working
towards all the operating companies within
the group being accredited to internationally
recognised standards such as ISO14001.
Natural energy has been utilised throughout
the building with electricity, domestic water,
and temperature control coming
from solar
thermal and air source energy systems; bought
in energy is from renewable sources only. Internal
landscaping offers a natural carbon reduction
and our vehicle fleet has been replaced with
fully electric powered or hybrid vehicles where
possible.. We continue to explore sustainable
options that can benefit both the planet and our
business as efficiency gains can make a positive
impact in terms of cost and also waste. The new
cardboard compactor reduces the net amount
of landfill that leaves our premises, which in turn
reduces large refuse collection vehicle journeys.
We are working with our supply chain partners to
use repackable/reusable containers and recycled
packaging, which reduce the amount of packing
used along the supply chain.
To read the full article please visit:
inspirationhealthcaregroup.com/news/abhi-supporting-
sustainability-a-case-study-from-inspiration-healthcare
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comSTRATEGIC REPORT INSPIRATION HEALTHCARE GROUP PLC
Research Driven
“
Being research
driven enables
us to understand
trends which allow
us to focus on
concepts and new
technologies early
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Dr Peter Reynolds,
Vice President Clinical, Innovation and Compliance
We spoke to Dr Peter Reynolds, Vice President Clinical, Innovation and Compliance,
about the core value of being research driven.
“Our culture embeds the principle of being
research driven into what we do. When we
think about our products, we do not want to
focus purely on features; we ask ourselves how
can our technologies add value and support
healthcare professionals
their
clinical aims and deliver the best outcomes to
their patients.
to achieve
I am in a somewhat unique position as I still work
part-time as a Neonatal Consultant in the NHS,
where my patients are, of course, my priority. At
Inspiration Healthcare, we are patient-focused
and want to design products with them in
mind. We also want to develop products that
support and benefit the clinicians, hospitals
and parents. Being research driven supports
us in this. Published research shows us that,
in Neonatology, ever smaller patients are
being treated and are surviving with better
outcomes, so we need to be looking forwards
as to how we can support that. We work with
Key Opinion Leaders and University groups
who help us define the clinical need and the
research work needed to develop the answers.
Being research driven enables us to ask how
can we refine our offerings to benefit our
customers and the patients they serve?
improve outcomes. Our LifeStart™, currently in
its 10th year, facilitates delayed cord clamping
immediate
while enabling simultaneous,
clinical stabilisation.
The flagship SLE6000 ventilator was developed
with the aim of optimising ventilation to reduce
lung damage and improve outcomes in babies.
Evidence-based techniques, such as accurate
controlled volume delivery, synchronisation
with the baby’s breathing efforts, careful
control of oxygen delivery using Oxygenie™,
and maximising lung recruitment using real-
time feedback loops, are all features which are
used daily on a global basis.
Clinical research
into our product
is fed
development and then our products have
supported further research into how outcomes
can be improved for patients.
research driven enables us
Being
to
understand trends, which allow us to focus on
concepts and new technologies early, as well
as thinking how we can address the needs of
the medical community early. This can feed
into both our product development and into
the partners we wish to work with, as part of
our complementary distributed portfolio.
A key element of optimal care is placing babies
on the best possible clinical trajectory after
they are born, while minimising the impact of
their critical care support. An example of the
earliest intervention after birth is deferring
the clamping of the umbilical cord, which
has been shown to reduce deaths and
Being research driven is also core to our teams
who are responsible for providing training on
our products, as they need to be up-to-date
on the latest evidence and research. My vision
is to support the best clinical evidence with
intuitive, easy-to-use, reliable, accurate and
user-friendly technology.”
Being research driven enables
us to ask how can we refine our
offerings to benefit our customers
and the patients they serve?
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comSTRATEGIC REPORT Principal Risks and
Uncertainties
Overview of our principal risks and uncertainties
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 and mitigating actions and is
drawn from a more complete list of risks which are reviewed quarterly by the Board.
Risk Appetite
Risk appetite can be defined as ‘the amount and type of risk’ that the Group is willing to take 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.
Our approach to Strategic risk is ‘Seeking’, as we aim to be innovative in our specialist areas in pursuit
of higher returns.
For Operational risks we adopt a ‘Cautious’ approach, where we are only prepared to accept some
limited loss.
Our approach for Financial & Compliance risk is ‘Minimal’.
Strategic (“Seeking”)
1. 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.
Current Mitigation
Risk Movement
It is the Group’s intention to increase the proportion of revenue from products where
we own or control intellectual property to minimise this risk. Additionally, the company
will continue to invest in New Product Development and market development
to reduce the reliance on third party products. Where distribution is deemed as
important, long-term contracts are typically signed, but if a distributorship be lost, all
efforts will be made to replace the revenue with alternative products and sales and
marketing will constantly horizon scan for alternatives.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC 2. New Product Development
New product development carries risk around cost and timescales for delivery. Due to the nature of the work,
there are usually significant unknowns which may take longer and cost more to resolve. It could also be that
intellectual property owned by a third party could be breached.
Additionally, competitors could bring out better products more quickly, meaning the investment justification for
the project is outdated.
Current Mitigation
Risk Movement
Projects are reviewed regularly by the Board. However, throughout the year, pieces
of work are carried out to improve products and add value to maintain competitive
advantage.
Major projects are started with commercial justification and market need, given a
priority based on revenue generation and strategic need. Resources are allocated
and timetables agreed.
They are managed through a staged process with Board approval at project inception
and at post evaluation, final business case phase, at which point development costs
are capitalised.
The Vice President - Clinical, Innovation and Compliance - reports to the CEO and
reports on projects, risks and costs, through regular project summary meetings, and is
also invited to present to the Board twice a year on key projects. Product management
review the market and feedback to senior management about the market dynamic.
3. Key Principal Loses Accreditation
Our principals need to maintain their ISO13485:2016 certificates along with the EC certificate/UKCA Mark to be
able to sell products into the EU/UK. If these are lost, operating companies in the Group will not be able to import
goods and sell them on.
Current Mitigation
Risk Movement
There is a possibility to appoint a new principal selling a competitive product.
The mitigation against lost revenue will need to be aligned to the likely time that
the principal will be out of the market and the disruption caused by on-boarding a
new principal.
The Group’s operating companies have made principals aware of the new
requirements to give them adequate time to comply.
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35
INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comSTRATEGIC REPORT Principal Risks and Uncertainties continued
4. Management of Acquisitions
(pre and post completion)
The stated strategy of the Group is to grow by a mixture of organic sales and acquisitions.
Actionable acquisition targets are not guaranteed to be delivered or be found in a set period of time. There is
a need for senior management time to find acquisitions, do due diligence and run the business without strong
second tier management.
Current Mitigation
Risk Movement
The Executive team have developed a reliable model that can be used pre-
acquisition and understand the need for synergies to be realistic and pragmatic with
a suitable plan to extract benefits once the acquisition has completed.
Management also has to carefully assess the managerial capability of any target
and identify supplementary resource requirements during due diligence. Every
acquisition will bring its own challenges and needs which will mean that the post-
acquisition plan will be individually tailored.
5. Revenue Growth
(International and Domestic)
We are targeting double-digit revenue growth.
Macro political conditions could have an impact on our market at home and overseas i.e. Covid-19, conflicts,
trade wars, Brexit.
Recession in the UK could lead to NHS spending on our products being reduced.
Current Mitigation
Risk Movement
Macro-economic events such as the pandemic, Brexit and major conflicts have
to be managed well, using cross-company skills. It is impossible to plan for every
eventuality, but early visibility and quick action to create a management group that
can manage the situation has been shown to be an effective way of minimising the
risk to the Group.
Having a diversified market for our products is important as is investing in time for
management to be aware of any trade issues that may arise. The ability to be agile
and find alternative products and markets to focus on is a key strength of the Group.
6. Sustainability
Major customers such as the NHS are becoming increasingly vocal and demanding on the adoption of
sustainability which will drive purchasing decisions.
Additionally, employees, shareholders and other stakeholders are increasingly concerned about the
impact companies have on the environment. This can have a knock-on effect on employee morale,
recruitment/retention and the ability to raise capital.
Current Mitigation
Risk Movement
Brook Nolson, an Executive Director of the Group, has responsibility for sustainability.
We are monitoring our Scope 1, 2 and 3 emissions and act as appropriate to reduce
them while growing our business.
Recent initiatives such as investment in our new facility, electric vehicles, hybrid
working and compressed working week etc have reduced our environmental impact
as we work towards our aim of Net Zero.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Operational and Financial
1. Dependence on Third Party Suppliers and supply chain interruption
(not Principals in this instance)
The Group’s business depends on products and services provided by third parties. If there is any interruption
to the supply of products/services by third parties or those products/services, for whatever reason, the Group’s
business will be adversely affected.
Reasons include inter alia: scalable supply, adverse quality, delivery on time, upgrade of products etc.
Current Mitigation
Risk Movement
The Chief Operating Officer is ultimately responsible for supplier management and
aligns stock levels with sales forecasts to balance customer satisfaction with
working capital.
Supplier management, both commercially and from a Quality Management System
perspective, is reviewed regularly (at QMS Management Review). The Executives’
planning involves looking at where to bring manufacturing in-house/on-shoring and
second sourcing to ensure maintaining flow of goods.
Recent events due to the pandemic have highlighted a need to adapt to be able to
change components quickly. Diverting R&D resources to make this happen mitigates
some of the risk, along with using cash to increase stock holding as components
become scarce. Supply chains are expected to be variable for some time as the
world recovers from the pandemic and issues arising from the Ukraine war.
2. Reliance on Key Individuals/Talent Management
The success of the Group will depend largely upon the expertise and relationships of the Board and other
senior employees. The loss of any of the key individuals could have an adverse effect on the Group until such
time as relationships are re-established.
Current Mitigation
Risk Movement
The Group’s remuneration strategy is designed to retain and motivate the Executive
team and other senior managers. The Remuneration Committee sets the remuneration,
bonus and long-term incentives for the Executive team.
The Executive team are working to reduce reliance on personal relationships in key
areas and to ensure that key partners are aware of a team approach.
Enlarged Group and strengthened management reduce the potential impact of
any loss.
3. Changes in Legislation and Regulation
Global regulatory bodies continue to increase their expectations of manufacturers and distributors of medical
devices to ensure products are safe and effective.
All markets in which the Group operates are highly regulated and legislation can change from time to time,
which may impact the ability of the Group to sell products in a particular country.
Current Mitigation
Risk Movement
The Group has stringent procedures and controls in order to comply with the relevant
legal and regulatory conditions in the UK and in its export markets. The Group also
has a Quality Assurance and Regulatory Affairs (“QARA”) department dedicated to
liaising with the regulatory authorities to monitor any changes in conditions and
ensure continuing compliance with the existing and new conditions.
The QARA team are tasked with horizon scanning for legislation and, coupled with
R&D, will keep documentation up-to-date to ensure compliance.
37
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comSTRATEGIC REPORT Principal Risks and Uncertainties continued
4. Health and Safety
The Health and Safety of all our employees, customers and partners is a priority item for the Board as we
recognise that everyone has a right to work in a safe and pleasant environment, free from adverse events.
Current Mitigation
Risk Movement
The Board requires Health and Safety to be discussed at the beginning of every
Board meeting based on a report from an Executive responsible for Health and Safety
(currently the Chief Operating Officer). Metrics are reviewed and action taken should
these start to show a negative trend.
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.
5. General Commercial Contracts
The Group relies on Contracts with various customers, suppliers and advisors, including: Distribution
Agreements, Non-Disclosure Agreements, Contracts of Employment, Manufacturing Agreements, Quality
Agreements etc.
Current Mitigation
Risk Movement
The Group tries, where possible, to always use its own template agreements that are
reviewed and updated from time to time by Executives and again, where appropriate,
by the Group’s legal advisors. The Group aims to ensure these templates are fair
for both parties but with the aim of protecting the Group’s interest. Contracts of
employment and best practice are reviewed with employment lawyers regularly to
ensure that they are current.
6. Retention Group’s Certificates and other Licences
The medical 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 products the Group places on the market are safe and
compliant with that territory. Regulatory approvals are required to market and sell medical devices into both
the UK and export markets.
Current Mitigation
Risk Movement
The Group has three companies and has invested more heavily in employees as it
has transitioned to Medical Device Single Audit Program and plans for MDR in Europe.
Each company has its own locally implemented Quality Management System
(“QMS”) and audits. The audits are thoroughly prepared for; however, the audits are
independent and outcomes are not guaranteed. The companies have resources
to undertake remedial action as appropriate. The companies are working towards
harmonising their procedures to be able to utilise a single QMS which will allow for a
simpler auditing process.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC 7. Intellectual Property Rights
The Company has intellectual property that it needs to protect. This can be in the form of new ideas, marketing
specifications, market data and information relating to products.
Current Mitigation
Risk Movement
The Group protects its intellectual property by using legal means (such as patents
and trademarks) where appropriate or by keeping knowledge in-house (such
as trade secrets). In-house information is protected through various contractual
arrangements such as non-disclosure agreements with suppliers, and contracts of
employment for employees.
8. IT Systems and Cyber Security
Our systems may be vulnerable to a cyber attack, theft of intellectual property, malicious intrusion, data
privacy breaches or other significant disruption. We have a layered security approach in place to prevent,
detect and respond, to minimise the risk and disruption of any intrusions, and to monitor our systems on an
ongoing basis for current or potential threats.
In-house IT Support is supplemented by external IT experts, as and when required.
Greater dependency on cloud-based systems and therefore broadband for connectivity could leave the
business vulnerable if connectivity was lost.
Current Mitigation
Risk Movement
The Group has identified that the biggest threats to IT Security are (i) either
accidental or deliberate removal/corruption of data by employees or contractors;
and (ii) hacking into our systems by third parties.
The Group uses data encryption and cyber security services from leading technology
suppliers and all software is updated regularly. The Group will be applying for Cyber
essentials to provide greater assurance to customers.
The Audit Committee will carry out a “deep dive” review on cyber security in FY2024.
We have implemented dual access and backup support systems, using fibre
connections from two separate sources and 4G cell technology, to minimise any
impact. We are also able to deploy key areas of the business to work using mobile
technology in unaffected locations.
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comSTRATEGIC REPORT Companies Act
Section 172 Statement
Our Employees
Our employees are key to the Group’s success, and we rely on a committed workforce to help us achieve
our business objectives.
Key decisions in the year
How do we engage with our stakeholders
We engage with our employees in a
number of different ways, including via our
intranet platform, weekly newsletters and
regular all-employee briefings.
This year, the Group held a series of virtual
Question Time seminars, giving employees
the opportunity to ask questions about
the business.
The Group also operates an incentivised
improvement ideas scheme to increase
engagement and drive forward idea
generation and sharing of good practices.
For more information on how the Group
engages with its employees, refer to our
Statement of Corporate Governance – QCA
Principle 3A on page 44.
Continuing our compressed working week arrangement
The Board made the decision in the year to continue the
compressed four-day working week as feedback from
employees was overwhelmingly positive. This benefit has also
attracted new talent to the Group by offering greater flexibility.
The compressed working week continues to be available to all
employees, on an “opt-in” basis.
The Group launched several surveys during the year to obtain
feedback from our employees on the compressed working week.
As part of our annual Benefits Survey, which asked employees to
rank Company benefits in terms of importance, the compressed
working week was the most voted for benefit.
Improved Health and Safety protocols
The Health and Safety of our employees continues to be a top
priority for the Board and we continue to adopt a proactive
approach to improving our Health and Safety procedures.
We are pleased to report that our new Environmental, Health
& Safety (“EHS”) software platform has been successfully
implemented across the group. The EcoOnline EHS platform
provides streamlined reporting of safety observations and
management of risk assessments, safety audits and corrective
actions. The platform has been integrated with the existing STAR
(Stop, Think, Act, Report) initiative to allow continuity of the safety
reporting process and sustain employee engagement.
By recording the source of hazard observations, we can measure
employee engagement as a KPI to monitor the effectiveness
of our Health and Safety initiative, STAR. Since the introduction
of STAR, employee engagement in the reporting of safety
observations has increased.
Following our decision to introduce a requirement to meet
the Institute of Advanced Motorists tests in 2022, we require
all employees who regularly drive for business to complete
the course.
Our goal in FY2024 is the certification of our Environmental and
Health and Safety Management systems to ISO 14001 & 45001
respectively. Certification audits, to be conducted by BSI, are
scheduled for Q3 and Q4.
Closing our Head Office in Crawley
The Board made the decision in the year to close our Head
Office in Crawley to consolidate our properties and to bring
our teams together at our new Manufacturing and Technology
Centre in Croydon.
Individual consultations were conducted with those affected by
the decision to close our Crawley premises. The Group has also
offered greater flexible working options to those affected and we
are pleased to report no leavers as a result of the closure.
40
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Our Customers
Successful engagement with our customers is paramount to meeting our strategic objectives and
growing our business.
Key decisions in the year
How we engage with our stakeholders
Increased in-person customer visits to our new facilities
During the year, we have hosted several international customer
visits, as well as NHS Trusts, at our new facilities, which have
given us the opportunity to demonstrate the full suite of our
products and services and helped us to secure new customer
relationships.
Resource committed to the new EU Medical Device Regulation
(“MDR”)
The Board made the decision to invest significant Research and
Development resources to the new EU MDR and we are pleased
to report that all technical files were submitted ahead of time,
all sites have been audited by British Standards Institution and
all audits were passed, leaving us in a strong position to move
forward with the new Regulation.
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
online and in-person conferences and
have hosted several visits to our new
Manufacturing and Technology Centre in
Croydon.
We also continue to engage with our
customers through a variety of channels,
including our websites, social media
platforms, virtual sales and training
meetings and through email engagement
such as customer feedback surveys.
Our Suppliers
Managing our supply chain and engaging effectively with our suppliers is critical to the smooth running
of our operations. Through continued engagement with our suppliers, we have built positive, long-
lasting partnerships.
Key decisions in the year
How we engage with our stakeholders
Appointment of new Head of Procurement and Supply Chain
In light of the current economic environment and the
uncertainties surrounding procurement, the Board made the
decision to appoint a new Head of Procurement and Supply
Chain, Francesca Stenhouse. Francesca comes with more
than 10 years of supply chain experience and leadership in the
manufacturing industry.
As part of our continued commitment to
our supplier relationships, the Group holds
monthly critical supply chain meetings,
with a minimum of two face-to-face
meetings taking place a year.
These monthly supplier meetings and site
visits with our key suppliers, enable us to
develop stronger relationships with our
suppliers, to optimise the Group’s buying
strength as an amalgamated group and
to ensure our procurement process is
operating in the most efficient manner
possible
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41
INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comSTRATEGIC REPORT Companies Act Section 172 Statement continued
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.
Key decisions in the year
How we engage with our stakeholders
Approval of interim dividend
An interim dividend was paid in December 2022 and a final
dividend has been recommended.
For more information on the total dividend for the year, refer to
the Directors’ Report on pages 54 to 57.
The Group regularly communicates
with its shareholders, through investor
presentations, roadshows, retail
shareholder events and Regulatory News
Service (“RNS”) announcements.
We have invited a number of investors to
our Croydon site over the year, which gave
investors and stockbrokers the opportunity
to see the new facility.
For further information on how the
company engages with its investors, refer
to our Statement of Corporate Governance
– QCA Principle 2 on page 43.
Neil Campbell
Chief Executive Officer
11 May 2023
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC 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.
Our statement of corporate governance can also be found on our website:
inspirationhealthcaregroup.com/investors/corporate-governance
QCA PRINCIPLES
Deliver Growth
1. Establish a strategy and business model
2. Seek to understand and meet shareholder
which promote long-term value for
shareholders
needs and expectations
The Group’s purpose is to improve outcomes by
providing highly advanced medical technology.
Our mission is to pioneer medical technology that
improves the outcomes of patients, starting with
the first breaths of life.
Our strategy is defined clearly in Our Business
Strategy (on pages 14 to 17). 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.
These 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 25, measure various growth and profitability
metrics, reflecting our business model.
through our
Relationships with our shareholders are important
to provide effective
to us and we seek
communications
Interim and
Annual Reports along with Regulatory News
RNS
Service
Reach. We also use the Group’s website, www.
inspirationhealthcaregroup.com for both financial
and general news relevant to shareholders.
announcements,
including
The Executive Directors meet existing and
potential shareholders 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, during the year, Cenkos Securities plc,
has been briefed regularly and updated the
Board during the year on shareholder sentiment
and expectations.
43
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comGOVERNANCE Statement of Corporate Governance continued
their participation
The Annual General Meeting (“AGM”) is regarded
as an opportunity to meet, listen, and present
to shareholders and
is
encouraged. All Directors attend the AGM and are
available to meet shareholders individually or as
a group. This year’s AGM was back to being an
open meeting. For each resolution the number of
proxy votes received for, against and withheld is
circulated to all attendees. All 2022 AGM resolutions
were passed.
institutional
During the year the Executive team hosted a
number of
investors at our new
Croydon site to see the level of investment in
friendly
our state-of-the-art, environmentally
Manufacturing and Technology Centre. The
feedback from these visits about the new facility,
where our Croydon-based team operate from,
was very positive.
3. Take into account wider stakeholder and
social responsibilities and their implications
for long-term success
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 4 to 42. The Group’s
Purpose is widely understood and drives the
decision-making which aims to optimise the long-
term value of the business.
A. Employees
two all Company
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, Bob Beveridge,
has the additional responsibility of representing
employees’ interests at the Board and has
time”
hosted
meetings, where employees are able to ask
questions to the Executive Team. Additionally,
our Senior Independent Director visits our sites
from time to time to talk to employees across
the Group. This allows not only employees to
raise any comments informally but also gives
the Board general feedback on the well-
being and mood of employees. He is also the
Board level point of contact for the Group’s
whistleblowing policy.
“question
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 have extended our flexible working
arrangements, including a blended working
policy as well as a compressed four-day working
week which has been adopted by about a third
of our workforce.
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. Our new facility in Croydon has a number
of
infections such as
Covid-19 spreading throughout the building. At
other sites we have protocols in place to prevent
spread in different ways, such as changing shift
patterns and employees working from home
where possible.
initiatives to prevent
We hold regular all-employee online meetings to
keep employees updated on business progress.
We also have a company-wide meeting where
we recognise both individual employees and
teams within our business who have performed
exceptionally well during the year, along with
giving everyone a chance to meet colleagues
from other areas of the business and build an
‘esprit de corps’. Non-executive Directors are
also invited to attend to gain an invaluable
insight into the culture of the business. We also
operate an incentivised improvement ideas
scheme.
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
full co-
operation with those partners. Our reputation for
innovative, outcome-enhancing products and
excellent service is key and we regularly seek
in
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC 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. We also support scientific research
where appropriate and attend scientific
meetings that both support ongoing clinical
research and allow
for engagement with
customers at various levels from Professors of
medicine to junior nursing staff.
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. The appointment of a senior
member of staff to manage our supply chain will
further develop our relationships with suppliers.
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 six months
and Board reports
the Executives are
from
discussed at Board meetings where ‘ad hoc’
risks are discussed and action undertaken to
mitigate them.
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 consider 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.
is responsible
The Board
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 Board
The Audit Committee assists
in
discharging its duties regarding the Financial
the
Statements, accounting policies and
maintenance of proper internal business and
operational and
including
liaison with the Group’s external auditors.
financial controls,
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 Authorisation controls and limits built into the
Group-wide ERP system, Priority
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
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comGOVERNANCE Statement of Corporate Governance continued
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,
including the Chairman, 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 Microsoft Teams or Zoom. Face-
to-face meetings are preferable as they allow the
Board to see different operating facilities and
meet other employees.
receive adequate
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,
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 Directors
are tasked with constructively challenging 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 adhoc 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 the week before
meetings, allowing time for full consideration and
necessary clarifications before the meetings.
Board reports from the Executive team are also
circulated to the Board in months when there is
no formal Board meeting to ensure continuity
and transparency in activity in the business.
Board dinners are held from time to time to allow
broader discussion and development of effective
Board relations in an informal environment.
46
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
to
and, where appropriate, agreed with the rest of
the Board.
interests are
reported
The Chief Financial Officer resigned during the
year but remained as the Company Secretary
until March 2023. The Board has appointed an
from March
outsourced Company Secretary
2023. The Company Secretary 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. An announcement
about a new Chief Financial Officer will be made
in due course. Until such time we have a well-
qualified temporary Chief Financial Officer.
6. Ensure that between them the Directors
have the necessary up-to-date experience,
skills and capabilities
The 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
52 and 53.
The Board undertakes an appraisal process to see
how the mix of skills, experience and behaviours
align with the Company’s ambitions from time
to time. Skills and experience required are also
discussed at the Nominations Committee as
part of succession planning. Currently, the Board
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,
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC innovation, international trading, risk management,
corporate governance, and M&A.
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.
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.
identified a need
The Board
to strengthen
Company Secretarial activity and, as such, has
appointed an outsourced Company Secretary
from March 2023. The Company Secretary 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.
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 focused on strategic matters and the
remaining seven meetings focused on specific key
matters, including risk management, health and
safety, sustainability, environmental, 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 FY2024.
The Board considers succession planning for
both Executive and Non-executive Directors on an
adhoc basis.
8. Promote a corporate culture that is based
on ethical values and behaviours
is understood and
The Group’s culture
led
by the example set by the behaviours of the
Executive Directors, one of whom was the founder
of
into
Inspiration Healthcare Limited. Taking
account that the Group is relatively small, with
approximately 220 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 focused
u Outcome changing
u Pioneering
u Research driven
functions
Our new Manufacturing and Technology Centre in
Croydon has helped improve cohesion within the
Group, with colleagues from all Group companies
working across all
including R&D,
Marketing, Sales and Finance. We announced the
closure of our Crawley facility, which has led to
the relocation of employees to our Croydon and
Hailsham facilities, as well as giving those affected
more time to work from home, concentrating
resources in fewer sites. We are more proactively
bringing our field-based employees together for
regular face-to-face meetings. These initiatives,
along with further integration of processes across
the Group, will develop a stronger ‘esprit de corps’
within the Group.
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47
INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comGOVERNANCE Statement of Corporate Governance continued
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.
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 50 and 51. The terms of reference
for the Audit Committee can be found on the
Group’s website.
Remuneration Committee
The report of the Remuneration Committee is
set out on pages 58 to 63. The Remuneration
Committee has two members, Liz Shanahan
(Chair) and Bob Beveridge. The Company Secretary
attends by invitation and, where appropriate,
leaves the meeting should there be a conflict of
interest. 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.
The detailed
the
Remuneration Committee can be found on the
Group’s website.
terms of
reference
for
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, skills and experience as well as composition
of the Board, and nominates candidates to fill
Board vacancies.
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 expects to evolve
these over time as the business grows. There
is a clear division of responsibilities between
the Chairman and the Chief Executive Officer.
leading the
The Chairman
Board, setting its agenda and monitoring its
effectiveness. He meets regularly and separately
with the Chief Executive Officer and the other Non-
executive Directors.
is responsible for
The Board has recently reviewed the schedule of
matters reserved for its decision and a full copy is
published on the Group’s website.
Matters reserved for Board decision include:
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
u Review of key financial matters, including
approval of financial plans and changes to
capital structure
u Acquisitions and disposals of businesses,
material capital expenditure, treasury policy,
and dividends
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
u Stock exchange-related issues, including the
approval of key communications
All Directors receive monthly information on the
Group’s operational and financial performance
and a full set of papers are circulated to the Board
in advance of meetings.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC A more detailed terms of reference for the Nominations Committee can be found on the Group’s website.
Membership of the Board committees is as follows:
Audit Committee (AC)
Remuneration Committee (RC)
Nominations Committee (NC)
M Abrahams
L Shanahan
N Campbell
B Beveridge
n/a
n/a
Chair
Member
Chair
n/a
n/a
Member
Member
Chair
Member
Member
The following table sets out the member attendance at Board and Committee meetings during the year
ended 31 January 2023.
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 and Company Secretary
J Ballard, Company Secretary
Board
9/9
9/9
9/9
9/9
9/9
8/9
1/9
AC
n/a
n/a
5/5
n/a
5/5
n/a
n/a
RC
n/a
n/a
2/2
n/a
2/2
n/a
n/a
NC
2/2
2/2
2/2
n/a
2/2
n/a
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
formal
informal
The Board has
responsibilities and
agendas and three sub-committees. Additionally,
strong
relations are maintained
between Executive and Non-executive Directors.
During the last year most meetings have taken
place face-to-face and Non-executive Directors
have continued to meet with other senior managers
informally to give advice and assistance. One
board dinner has been held during the year to
provide opportunities for broader discussions.
to
The Chief Executive Officer and the Chief Financial
Officer make presentations
institutional
shareholders and analysts each year, immediately
following the release of interim and full-year
results. They also attend retail shareholder events,
both in person and online. The slides used for such
presentations are made available on the Group’s
website under the Reports and Presentations
section and recording of presentations from
retail
investor meetings are generally made
available on the platform of the organisers. The
Group retains a financial public relations firm to
assist it in ensuring that key messages reach the
appropriate audiences.
investors after
The Chief Executive Officer and Chief Financial
results
Officer meet with
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.
Mark Abrahams
Chairman
11 May 2023
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49
INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comGOVERNANCE Audit Committee
Report
The Audit Committee comprises two 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.
Financial Reporting
The Committee has recently concluded that the
Annual Report and Financial Statements for the
year ended 31 January 2023, 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 in particular the following key matters
of judgement:
u Capitalisation of product development
expenditure (including significant regulatory
expenditure) as part of a refreshed Product
Innovation process
u Valuation of goodwill and intangible assets,
and any possible impairment indicators
u Revenue recognition in terms of determining
when control has passed to the customer
u Deferred tax
In terms of Going Concern, the Committee
considered a range of scenarios for both the
budget and
three-year business plan,
including a reasonable worst-case scenario. It
was concluded that the going concern basis is
appropriate. Please refer to the Directors’ Report
on pages 54 to 57 for further detail.
the
External Audit
The audit plan was reviewed in October and
shared with the Board. The FY2023 audit process
was more efficient than the prior year and the
delivery of the agreed plan was 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 approved the
FY2023 audit plan.
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
interim accounts and
(including annual 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 FY2023 audit plan and audit
engagement letter
u Review of effectiveness of the external auditor
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC The fees paid to the auditors, BDO, were £227,000
(FY2022: £205,000) for FY2023 audit services, and
£4,000 (FY2022: £3,000) for non-audit services.
No services were provided pursuant to contingent
fee arrangements.
u Key Performance Indicators (“KPIs”)
A set of financial KPIs are reported each month
to the Board
u Strong cash management
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 34 to 39.
During the year the Committee reviewed key
financial processes and an updated analysis of
the internal control environment.
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
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.
it has acted
Bob Beveridge
Chair, Audit Committee
Key control procedures continue as follows:
11 May 2023
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
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51
INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comGOVERNANCE
Board of Directors
“
The Board is
satisfied that, it
has an effective
and appropriate
balance of skills
and experience
Neil Campbell
Chief Executive Officer
Brook Nolson
Chief Operating Officer
In 2003, Neil became CEO and
founding partner of Inspiration
Healthcare Limited, leading the
company through the reverse
acquisition of Inditherm plc and
onto AIM in June 2015. Neil has
spent more than 30 years in the
Medical Technology industry
for both blue chips and small
companies. Neil has had an
extensive commercial career in
medical devices in international
sales and marketing in neonatal
intensive care and operating
theatre products, as well as having
direct sales experience in the UK
and Australia. Neil has previously
also been a director of 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, business
development, market development,
international sales and marketing,
product development, regulatory
affairs, strategic planning, M&A.
Brook has been a key member of
the Inspiration Healthcare team
since 2013. In July 2020 he became
Chief Operating Officer for the
Group, having been a Non-executive
Director since 2015. With considerable
experience, domestically and
internationally, in managing
manufacturing, implementing
strategic development plans and
leading organisational change
where the teams can grow, Brook
has designed and developed new
facilities, encompassing as many
sustainable features as possible, that
enable expansion and efficiency
to work together and with a bias
towards maximising output through
the use of technology and systems
to ensure that highly regulated
environments have constantly
improving visibility. Brook is a
member of The Cambridge Institute
for Sustainability Leadership (CISL),
having completed his studies in
Sustainability Management for the
Corporate Environment with the
University of Cambridge. Previous
Group Directorships include: Birse
Group plc, Willmott Dixon Group
and Morgan Sindall plc.
Key areas of expertise
Corporate sustainability,
strategic growth, restructuring,
business transformation, product
development, leadership and
management development.
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Annual Report and Financial Statements 2023INSPIRATION 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 this 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
Strategy, corporate governance,
international M&A, financial
management, operational
management, investor relations,
international business risk
management.
Bob Beveridge FCA, Non-executive
Director and Senior Independent
Director, joined the Board in
August 2015 and is Chair of the
Audit Committee. Bob has wide-
ranging Non-executive Director
and public company experience;
he is currently Chairman of
the Berkshire Local Enterprise
Partnership, 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 the Employee
Representative to the Board.
Key areas of expertise
Senior financial skills relating to M&A,
investor relations, risk management,
financing, audit committees and
corporate governance, digital
technology and financial strategy.
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 Advanced Medical Solutions plc
and Celadon Pharmaceuticals plc
as well as being a Director and
Trustee of CWPlus, the charitable
arm of Chelsea & Westminster
Foundation Trust Hospital in London,
where she was a Non-executive
Director for more than five years.
She is also a member of the
organisation’s Innovations Advisory
Board.
Liz has a degree in Computer
Programming and Maths from
University College Cork, and she
is an alumnus of the University of
Virginia, Darden School of Business.
Key areas of expertise
Pharmaceutical and healthcare
industry expertise, financial including
M&A, risk management, public policy,
ESG strategy, international markets,
communications and investor
relations.
53
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comGOVERNANCE Directors’
Report
Although the Group has no information to suggest
such a scenario might occur, it has modelled a
significant downside scenario based on its main
risks, as identified in the Risks and Uncertainties
on page 34 to 39 of the Annual Report, including
a significant downturn in forecast revenue of 15%.
If such a scenario occurred, the Group would
implement procedures to reduce overheads and
if necessary, utilise the remaining undrawn Invoice
Discounting Facility and Revolving Credit Facility
(due for renewal June 2024).
As at 31 March 2023 net cash of the Group was
(£2.0m), and there was cash headroom of £8.0m.
The Group has access to borrowing facilities of
up to £10.0m. Consequently, the Directors believe
that the Group has sufficient liquidity to meet
obligations as they fall due up to the end of May
2024 and consider it appropriate to prepare the
Financial Statements on the going concern basis.
The Directors present their report on the Group
the audited
and Company,
Consolidated Financial Statements of the Group
and Company for the year ended 31 January 2023
(“FY2023”).
together with
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 the Alternative Investment Market
(“AIM”), a market operated by the London Stock
Exchange plc.
Going Concern
The Group provides essential 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 is not something that can be reduced by
election or choice.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Results and Dividends
The results of the Group are set out in detail on page
72. An interim dividend of 0.205p per share (FY2022:
0.205p per share) was paid on 28 December 2022.
The board is recommending a final dividend of
0.41p per share (FY2022: 0.41p per share) to make
a total dividend for the year of 0.615p per share
(FY2022: 0.615p 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 42.
Political and Charitable Donations
No charitable donations were made during the
year (FY2022: £nil), however, disbursements were
made to the value of £85,000 (FY2022: £13,000) from
the donation made to CAF in FY2022. No political
donations were made (FY2022: £nil).
technology. During the year, the Group incurred
costs totalling £3.2m (FY2022: £3.7m) including
expenditure capitalised in accordance with IAS38.
Involvement of Employees
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 40 to 42.
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
its products,
get more regulatory clearances around the
world and bring its innovative product range
to more customers and ultimately, help more
babies survive.
in R&D to enhance
Financial Instruments and
Risk Management
Disclosures
regarding
instruments
the Principal Risks and
are provided within
Uncertainties on pages 34 to 39 and note 19 to the
Consolidated Financial Statements.
financial
The Directors of the Company who
served during the year and up to
the date of signing the Financial
Statements were:
M S Abrahams Non-executive Chairman
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
its product
development,
offerings and improve the effectiveness of its
in order to extend
N J Campbell
Chief Executive Officer
B Nolson
Chief Operating Officer
J Ballard
Chief Financial Officer and
Company Secretary
(resigned as Chief Financial Officer on
5 December 2022 and as Director on
22 December 2022)
B J Beveridge
Non-executive Director
L A Shanahan
Non-executive Director
Further information relating to the Board is detailed
on pages 52 and 53.
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55
INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comGOVERNANCE Directors’ Report continued
Directors’ Interests in Shares
and Contracts
Directors’ interests in shares of the Company at
31 January 2023 and 31 January 2022, and any
changes subsequent to 31 January 2023, are
disclosed in the Directors’ Remuneration Report
on page 63. 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.
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.
Substantial Interests
At close of business on 10 May 2023, the Company
had been notified of the following interests which
amounted to 3% or more of the issued capital of
the Company:
Shareholder
BGF Investment
Management Ltd
Berenberg Bank
S G Motley
N J Campbell
Octopus Investments
Nominees Limited
Premier Miton Group plc
Liontrust Asset
Management
T Foster
Castlefield Investment
Partners
Number of
shares
Percentage
holding
11,015,487
16.1%
5,932,251
4,511,628
4,416,646
4,380,000
4,022,234
3,838,415
3,412,975
2,113,819
8.7%
6.6%
6.5%
6.4%
5.9%
5.6%
5.0%
3.1%
Annual General Meeting
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.
Reappointment of Independent
Auditors
BDO LLP have expressed their willingness to
continue in office and a resolution to reappoint
them is proposed for consideration at the AGM.
Statement of Directors’
Responsibilities
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).
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:
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
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC
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
Neil Campbell
Chief Executive Officer
11 May 2023
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
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.
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
is the responsibility of the Directors.
website
The Directors’ responsibility also extends to the
ongoing integrity of the Financial Statements
contained therein.
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57
INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comGOVERNANCE Directors’
Remuneration Report
I am very pleased to be able to present my
Directors’ Remuneration Report as Chair of the
Remuneration Committee, on behalf of the Board,
for the financial year ended 31 January 2023
(“FY2023”).
Overview of year
Like so many businesses, we started 2022/23 very
optimistically. We were putting Covid-19 behind
us, supply chains were easing and the healthcare
market was showing strong signs of recovery.
Within weeks, things changed dramatically with the
invasion of Ukraine and the turmoil has made this
a year of unprecedented and constant challenge.
despite
internal
This year has been one of significant investment
and
the
achievements,
challenges. We moved to our new state-of-the-art
Manufacturing and Technology Centre in Croydon,
with only one day manufacturing down-time and
not a single Health and Safety incident. The Board
are immensely proud of the move, which has been
well received by our employees and customers
alike. There have been extensive challenges
around inflation, ongoing supply chain issues
and submitting files for EU regulatory compliance,
(Medical Device Regulation) for all products across
the entire portfolio.
Our Chief Financial Officer and Company
Secretary, Jon Ballard, resigned during the year. It
has been a tough year for our Executive Directors,
but they retain a strong focus on the success of
the business and tackle every challenge head on.
revenues
The Group delivered
that were
marginally ahead of FY2022, but they fell short
of the threshold for bonuses. The Remuneration
Committee, however, used its discretion in relation
to non-financial targets for the Executives.
Membership
The Remuneration Committee has two members,
Bob Beveridge, and myself, Liz Shanahan.
The Committee has met formally twice 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 managers’ remuneration
and reviewing and approving the rules of share
incentive plans.
followed
Remuneration policy
The Committee has
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, designed to
incentivise them but not to detract from the goals
of corporate governance.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC The composition of each Executive Director’s
remuneration is based on a fixed element together
with a short and longer term performance-related
element, and they are reviewed annually by the
Committee. The Executive Directors, including the
Chief Executive Officer, each have a six-month
notice period. 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 while
dealing fairly with each individual case.
to
including
terminate
The Non-executive Directors,
the
Chairman, each have a letter of appointment
for a three-year term. Under the terms of the
letters, either party can serve six months’ written
notice
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 four months. As of 11 May 2023,
the Chairman has served on the Board for 7.8
years, Bob Beveridge has served 7.7 years and I
have been in place for 2.4 years.
The Executive Directors’ fixed packages consist
of basic salary, pension contributions of 5% of
basic salary on a matched contribution basis, a
company vehicle, private healthcare insurance
and a death in service insurance scheme.
The performance-related aspects consist of an
annual maximum bonus scheme of 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 Ltd in 2020, there were
inevitably some misalignments between
the
remuneration policies across the Group. As we
noted last year, we aimed to align those policies
and harmonise salaries across the Group. This is
now complete. We have a number of well received
employee benefits and our compressed week pilot
has now been rolled out across the business and
is working well. Our SAYE scheme, launched in 2020
which was designed to encourage our workforce
to engage in the long-term future of the business
for their commitment,
and to reward them
remains well subscribed. Currently, 90 employees
are participating with 326,159 shares committed.
Executive pay ratio reporting
While 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. We still have a gap in our gender diversity,
as well as our gender pay. We have always been
very proud of our record here so, as a Board, we
have asked the Executive Directors to take a more
detailed review of this within the business and I
look forward to reporting improvements next year.
Executive Pay Ratio Reporting remains stable, with
the highest paid executive receiving just over five
times the average package within the business
and just over 12 times the lowest package.
Executive remuneration for year
ending 31 January 2023
Fixed Aspects
In
line with the rest of the employees, the
Executive Directors received a salary increase of
3.5% in FY2023. 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, remained unchanged
in FY2023.
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comGOVERNANCE Directors’ Remuneration Report continued
Performance-related Aspects
Bonus
The maximum annual bonus achievable
for
the Executive Directors is 100% of basic salary. In
FY2023, the financial targets were based on four
performance measures: revenue, EBITDA, new
product development and cash flow. The Health
and Safety target is based on having no reportable
incidents, see Table 2. The underachievement of
the financial performance was such that, none of
the Executive Directors were entitled to any portion
of that aspect of their bonus in FY2023.
For the Chief Executive Officer and Chief Financial
Officer, 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.
Table 1: Directors’ Remuneration (Audited)
The targets for the Chief Operating Officer are
a mixture of those financial targets alongside
some specific targets in relation to their role. In
FY2023, the financial targets were based on four
performance measures: revenue, EBITDA, new
product development and cash flow. The Health
and Safety target is based on having no reportable
incidents, see Table 2. The Chief Operating
Officer’s targets were based on our facility move
and customer and distributor service
levels
and satisfaction. Subsequently, for all Executive
Directors, there was a small allocation of bonus
against our Health and Safety targets. The Chief
Operating Officer also received a bonus for two
aspects of his particular targets. Details are set
out in Table 2.
Salary
Annual Bonus
Pensions
Benefits
Total
Remuneration
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
Executives
Neil Campbell
Brook Nolson
Jon Ballard1
Non-executive Directors
Mark Abrahams
Bob Beveridge
Liz Shanahan
207
165
129
45
30
30
200
160
130
45
30
30
5
67
4
–
–
–
82
131
53
–
–
–
606
595
76
266
10
8
6
–
–
–
24
10
8
7
–
–
–
25
14
13
11
–
–
–
38
14
13
12
–
–
–
39
236
253
150
45
30
30
306
312
202
45
30
30
744
925
1Jon Ballard joined the Board on 1 July 2020 and resigned on 22 December 2022
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Table 2: Annual Bonus Performance Criteria FY2023
Annual Bonus - 100% of Salary
Measures
Profit – EBITDA
Budget Revenue – Sales
Cap Year-end Net Cash
Stretch New Product Development
Health and Safety
Successful migration to new site
Customer service levels and satisfaction
Supplier service levels and satisfaction
Total
Long-term incentive Plan
(“LTIP”)
Historically, the LTIP performance measures were
based 50% on new product introductions and 50%
on revenue growth.
As we noted previously, the LTIP lapsed in 2019 and
2020 so there were no LTIPs vested this year. LTIP
options were granted in FY2023 to the Executive
Directors for assessment and vesting at FY2025,
subject to the performance measures being
achieved. As of 31 January 2023, there are, including
Directors, 377,282 (FY2022: 477,538) share options in
existence - see Table 5. For Directors’ total interest
in shares, see Table 6.
% of Max Bonus
CEO & CFO
60.0%
22.5%
5.0%
10.0%
2.5%
0.0%
0.0%
0.0%
% of Max Bonus
COO
25.0%
7.5%
5.0%
10.0%
2.5%
30.0%
10.0%
10.0%
100.0%
100.0%
Priorities and Executive remuneration for
year ending 31 January 2024
The Committee continually assesses and reviews
the policy, mindful at the moment of the ongoing
uncertainty brought on by the war in Ukraine and
the impact of inflation on supply chains and the
continued growth of the business. The Committee
concluded
the Executive
remuneration arrangements are appropriate, with
some small changes in performance criteria.
that, on balance,
Salary
We have agreed an increase in salary for the
Executive Directors for FY2024 of 7%, in line with the
rest of the workforce.
Annual bonus
The bonus arrangements for Executive Directors
in FY2024 are detailed below, see Table 3, with
some specific operational targets for the Chief
Operating Officer.
Table 3: Annual Bonus Performance Criteria FY2024
Annual Bonus - 100% of Salary
Measures
Profit – EBITDA
Budget Revenue – Sales
Cap Year-end Net Cash
Stretch New Product Development
Health and Safety
Implementation of customer satisfaction metrics
Supplier satisfaction levels and metrics
Implemented CRM system
Flow sensor manufacture metric
% of Max Bonus
CEO & CFO
60.0%
22.5%
5.0%
10.0%
2.5%
0.0%
0.0%
0.0%
% of Max Bonus
COO
25.0%
7.5%
5.0%
10.0%
2.5%
12.5%
12.5%
12.5%
12.5%
Total
100.0%
100.0%
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comGOVERNANCE Directors’ Remuneration Report continued
LTIP
The revised LTIP for our Executive Directors 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 two-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
FY2024 LTIP - measures - evaluated over three years
Measures
Revenue growth
A number of measurable ESG targets
Total
As a growth business our performance criteria
aim to achieve a balance between incentive,
governance and fairness. We are delighted to
report that, as mentioned last year, we have, for
the first time, included a number of ESG metrics
within our LTIP measures and we look forward to
reporting on that over the next few years.
Weighting %
60
40
100
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
2022
Granted
during the
year
Exercised
during the
year
Lapsed
during the
year
At
31 January
2023
Date of
Award
Performance
Period
Exercising
Date
Expiry
Date
N Campbell
J Ballard
B Nolson
65,385
50,000
115,385
6,250
23,252
32,500
62,002
40,000
40,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
65,385
05 Nov 18
50,000
07 May 21
01 Feb 18
31 Jan 21
01 Feb 21
31 Jan 24
27 Apr 21
26 Apr 23
01 May 241
30 Apr 26
115,385
6,250
–
08 Nov 17
–
–
23,252
08 Nov 18
32,500 07 May 21
01 Feb 17
31 Jan 20
01 Feb 18
31 Jan 21
01 Feb 21
31 Jan 24
21 Apr 20
20 Apr 22
27 Apr 21
26 Apr 23
01 May 241
30 Apr 26
6,250
55,752
–
–
40,000
07 May 21
01 Feb 21
31 Jan 24
01 May 241
30 Apr 26
40,000
1Expected exercise date based on anticipated results date, may be subject to change.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC
Table 6: Directors’ 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 A Shanahan
*Jon Ballard resigned as Director on 22 December 2022
31 January 2023
31 January 2022
256,576
4,416,646
15,375
34,323
35,000
256,576
4,416,646
15,375
34,323
35,000
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 54 to 57 setting out
substantial interests in the Company.
Conclusion
The year ending 31 January 2023 has been incredibly challenging. Although many of those challenges
remain, our entire workforce, including our Executive team, have shown great resilience. The team ran
the business seamlessly throughout the year, making sure the delivery of products to our customers
was uninterrupted, helping to save the lives and improve outcomes, around the globe, for one of
society’s most vulnerable groups, premature and sick babies. The Group delivered strong operational
performance and delivered revenues that were marginally ahead of FY2022, but, sadly, they fell short of
the threshold for bonuses and this is reflected in the Directors’ remuneration.
Liz Shanahan
Chair, Remuneration Committee
11 May 2023
1 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 10 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 performance criteria (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.
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63
INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comGOVERNANCE Independent
Auditor’s Report
to the members of Inspiration Healthcare Group Plc
Opinion on the financial statements
In our opinion:
u 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 2023 and of the Group’s profit for the year then ended;
u The Group financial statements have been properly prepared in accordance with UK adopted
international accounting standards;
u The Parent Company financial statements have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting Practice; and
u 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 2023 which comprise the consolidated
income statement, the consolidated statement of comprehensive income, the consolidated statement
of financial position, the consolidated statement of changes in shareholders’ equity, the consolidated
cash flow statement, the company statement of financial position and the company statement
of changes in equity 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:
u We obtained the Directors’ budgeted operating results, budgeted cashflow and forecast covenant
compliance covering 12 months from the date of approval of these financial statements and checked
that the information was arithmetically accurate;
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC u We critically reviewed these budgets and forecasts and assessed the achievability of the projections
outlined within the Director’s model, specifically with reference to detailed performance and growth
assumptions. This included challenge of assumptions with reference to the current economic climate
and current year and post year end performance against budget
u We confirmed the arithmetic accuracy and the appropriateness of sensitivity analysis performed
and performed additional sensitivity testing to determine whether any variances would result in a risk
to going concern including the impacts on budgeted cashflows and covenant compliance;
u We confirmed the applicable financial covenants to relevant loan documentation to ensure
inputs are consistent with the definitions within the financing arrangement and have been calculated
correctly;
u We evaluated the Group’s disclosures on going concern compliance against the requirements of the
accounting standards.
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
Materiality
83% (2022: 88%) of Group profit before tax excluding non-recurring items
95% (2022: 95%) of Group revenue
93% (2022: 93%) of Group total assets
Revenue recognition
2023
Y
2022
Y
Group financial statements as a whole
£93,600 (2022: £198,000) based on 5% of the last three years average
Profit before tax (2022: 5% of Profit before tax)
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 analytical reviews. All audit work on both significant and non-significant components was performed
by the group engagement team.
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comGOVERNANCE Independent Auditor’s Report continued
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.
Key audit matter
Revenue
Recognition
(Note 1 and note 3)
Inspiration Healthcare Group revenue
includes the sale of Branded and
distributed 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
from the inappropriate or incorrect
calculation of the split between
revenue and the contract liability.
The group has a number of
international markets in which it
operates, which may drive more
complexities with revenue recognition.
We therefore consider there to be a
risk of fraud and error over compliance
with IFRS 15 Revenue from Contracts
with Customers (“IFRS 15”) for revenue
contracts with overseas customers and
distributors.
We therefore have determined revenue
recognition to be a key audit matter.
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 invoices from
November 2022 to February 2023
through to supporting documentation
to check that these items had been
appropriately accounted for in the
correct period.
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
that was subsequently reversed.
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.
For a sample of revenue recognised
for overseas distributors, we have
obtained copies of the agreements
to check 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 through to supporting
documentation.
Key observations:
Based on the work performed we did
not identify any indicators to suggest
that revenue has not been recognised
appropriately.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC INNOVATE | CREATE | INSPIRE
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.
Based on our professional judgement, we determined materiality for the financial statements as a whole
and performance materiality as follows:
Parent company
financial statements
2023
£’000
88,300
2022
£’000
188,000
95% of Group
materiality
95% of Group
materiality
Parent
company
materiality
was capped
at £88,300
to respond to
aggregation
risk
Parent
company
materiality
was capped
at £188,000
to respond to
aggregation
risk
Materiality
Basis for
determining
materiality
Rationale for
the benchmark
applied
Group
financial statements
2022
£’000
198,000
5% of Profit
before tax
Profit before
tax is a key
benchmark
for users of
the financial
statements of
the group
2023
£’000
93,600
5% of the average
Profit before tax over
the last three years
The volatility in
the current year is
considered to be
unusual and not
necessarily due to
the general market
conditions. The
impact of one-
off transactions
and of supply
chain difficulties
experienced by the
business cased the
result for the year
to be significantly
lower than usual. We
therefore applied an
average to normalise
the impact of the
result of the year.
Performance
materiality
Basis for
determining
performance
materiality
70,200
148,500
66,200
141,000
75% of Group materiality as this is
reflective of our perceived risk of
the financial statements containing
misstatements, after considering
previous experience of this audit
engagement
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
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comGOVERNANCE Independent Auditor’s Report continued
Component materiality
For the purposes of our Group audit opinion, we set materiality for each significant component of the
Group, apart from the Parent Company whose materiality is set out above, based on a percentage
of between 66% and 84% (2022: 64% and 86%) of Group materiality dependent on the size and our
assessment of the risk of material misstatement of that component. Component materiality ranged
from £61,800 to £78,500 (2022: £130,000 to £173,000). In the audit of each component, we further applied
performance materiality levels of 75% (2022: 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 £3,720 (2022: £8,000). We also agreed to report differences below this threshold that, in our
view, warranted reporting on qualitative grounds.
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:
u 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
u 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:
u 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
u The Parent Company financial statements are not in agreement with the
accounting records and returns; or
u Certain disclosures of Directors’ remuneration specified by law are not
made; or
u We have not received all the information and explanations we require for
our audit.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC 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.
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:
Non-compliance with laws and regulations
Based on:
u Our understanding of the Group and the industry in which it operates;
u Discussion with management and those charged with governance including the Audit Committee;
u Obtaining and understanding of the Group’s policies and procedures regarding compliance with
laws and regulations; and
we considered the significant laws and regulations to be UK-adopted international accounting
standards for the Group and Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ for the
Parent Company, Companies Act 2006, AIM listing rules and UK tax compliance regulations which is the
principal jurisdiction in which the group operates.
The Group is also subject to laws and regulations where the consequence of non-compliance could
have a material effect on the amount or disclosures in the financial statements, for example through
the imposition of fines or litigations. We identified such laws and regulations to be the health and
safety legislation.
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comGOVERNANCE Independent Auditor’s Report continued
Our procedures in respect of the above included:
u Review of minutes of meeting of those charged with governance for any instances of non-
compliance with laws and regulations;
u Review of correspondence with regulatory and tax authorities for any instances of non-compliance
with laws and regulations;
u Review of financial statement disclosures and agreeing to supporting documentation;
u Involvement of tax specialists in the audit;
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud.
Our risk assessment procedures included:
u Enquiry with management and those charged with governance including the Audit Committee
regarding any known or suspected instances of fraud;
u Obtaining an understanding of the Group’s policies and procedures relating to:
u Detecting and responding to the risks of fraud; and
u Internal controls established to mitigate risks related to fraud.
u Review of minutes of meeting of those charged with governance for any known or suspected
instances of fraud;
u Discussion amongst the engagement team as to how and where fraud might occur in the
financial statements;
u Performing analytical procedures to identify any unusual or unexpected relationships that may
indicate risks of material misstatement due to fraud;
Based on our risk assessment, we considered the areas most susceptible to fraud to be revenue
recognition, for which our procedures have been set out in the Key Audit Matters section above,
capitalisation of development costs, completeness of the warranty provision and management override
of controls.
Our procedures in respect of the above included:
u We addressed the risk of management override of controls, considered to be in connection with the
posting of inappropriate journals and bias in significant management estimates and judgements,
through testing journal entries processed during the year and subsequent to year end that met a
specific criteria, including a review of late adjustments, adjustments to non-recurring items and
consolidation journals. Where we identified journals that met our criteria as being unusual, we
challenged management and verified these to supporting documentation. We also evaluated
whether there was bias in setting significant estimates and judgements by the Directors that
represented a risk of material misstatement due to fraud
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC u In response to the risk in relation to the completeness of the warranty provision, we obtained from
management an understanding of the work completed. We compared the work completed to that
forecast in the prior year to check that all expected work had been completed, and obtained third
party confirmation of the successful completion.
u In order to address the fraud risk in relation to capitalisation of development costs, we have
selected a sample of costs capitalised to ensure these meet the criteria of the accounting
standards. We have discussed with individuals outside of finance to understand the status of
ongoing projects, considering the commercial and technical feasibility, to ensure the costs are
being appropriately capitalised. We have also challenged management on their forecasts to check
that no impairment of costs capitalised is necessary.
We also communicated relevant identified laws and regulations and potential fraud risks to all
engagement team members who were all deemed to have appropriate competence and capabilities
and remained alert to any indications of fraud or non-compliance with laws and regulations throughout
the audit.
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
11 May 2023
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
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INNOVATE | CREATE | INSPIREinspirationhealthcaregroup.comGOVERNANCE Consolidated Income Statement
for the year ended 31 January 2023
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
BASIC EXPRESSED IN PENCE PER SHARE
DILUTED EXPRESSED IN PENCE PER SHARE
Note
3
4
6
6
7(a)
2023
Adjusted
£’000
2023
Non-recurring
items
£’000
41,233
(23,140)
18,093
(16,504)
1,589
40
(395)
1,234
196
–
–
–
(1,158)
(1,158)
–
–
(1,158)
–
2023
Total
£’000
41,233
(23,140)
18,093
(17,662)
431
40
(395)
76
196
1,430
(1,158)
272
8
8
2.99p
2.95p
0.40p
0.39p
2022
Total
Restated
£’000
41,050
(20,458)
20,592
(16,337)
4,255
9
(301)
3,963
271
4,234
6.22p
6.16p
A Prior Year Adjustment has been made in relation to Deferred Tax and consequently, an adjustment
to Income Tax has been made to the Consolidated Income Statement for the year ended 31 January
2022. Please see note 27 for further detail.
Consolidated Statement of Comprehensive Income
for the year ended 31 January 2023
PROFIT FOR THE YEAR
OTHER COMPREHENSIVE INCOME
ITEMS THAT MAY BE RECLASSIFIED TO PROFIT OR LOSS
Cash flow hedges
TOTAL OTHER COMPREHENSIVE INCOME FOR THE YEAR
2023
Adjusted
£’000
2023
Non-recurring
items
£’000
1,430
(1,158)
–
–
–
–
2023
Total
£’000
272
–
–
2022
Total
Restated
£’000
4,234
9
9
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
1,430
(1,158)
272
4,243
The accompanying notes form an integral part of these Consolidated Financial Statements.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC
Consolidated Statement of Financial Position
as at 31 January 2023
ASSETS
NON-CURRENT ASSETS
Intangible assets
Property, plant and equipment
Right of use assets
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
Borrowings
Contract liabilities
NON-CURRENT LIABILITIES
Lease liabilities
Borrowings
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
31 January
2023
Note
£’000
31 January
2022
Restated
£’000
31 January
2021
Restated
£’000
10
11
12
21
13
14
15
17
12
18
20
12
18
21
22
22
22
22
17,004
7,497
5,970
324
30,795
9,935
11,888
2,276
24,099
54,894
(5,812)
(822)
–
(2,079)
(531)
(9,244)
(6,176)
(4,000)
–
(10,176)
(19,420)
35,474
6,813
18,842
(16,164)
405
–
25,578
35,474
15,825
1,798
7,383
87
14,249
919
3,102
–
25,093
18,270
6,449
9,313
9,253
8,190
5,163
10,653
25,015
24,006
50,108
42,276
(6,552)
(647)
–
–
(524)
(6,809)
(369)
(9)
–
(533)
(7,723)
(7,720)
(6,896)
–
–
(2,796)
–
(241)
(6,896)
(3,037)
(14,619)
(10,757)
35,489
31,519
6,812
18,838
(16,164)
278
–
25,725
6,812
18,838
(16,164)
139
(9)
21,903
35,489
31,519
A Prior Year Adjustment has been made in relation to Deferred Tax and consequently, adjustments to
Goodwill and Deferred Tax have been made in the Consolidated Statements of Financial Position as
at 31 January 2021 and 31 January 2022. Please see note 27 for further detail.
The accompanying notes form an integral part of these Consolidated Financial Statements.
The Consolidated Financial Statements were approved by the Board of Directors on 11 May 2023 and
signed on its behalf by:
Neil Campbell
Director
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Consolidated Statement of Changes in Equity
for the year ended 31 January 2023
Note
Issued
share
capital
£’000
6,812
–
Share
premium
account
£’000
18,838
–
AT 1 FEBRUARY 2021 (RESTATED)
Profit for the year (Restated)
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
24
TOTAL TRANSACTIONS WITH OWNERS
AT 31 JANUARY 2022 (RESTATED)
Profit for the year
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR
TRANSACTIONS WITH OWNERS IN
THEIR CAPACITY AS OWNERS
Issue of Ordinary Shares, net of
transaction costs and tax
Dividends
Employee share scheme expense
24
TOTAL TRANSACTIONS WITH OWNERS
–
–
–
–
–
–
–
–
–
–
6,812
–
18,838
–
–
1
–
–
1
–
4
–
–
4
Reverse
acquisition
reserve
£’000
(16,164)
–
–
–
–
–
–
(16,164)
–
–
–
–
–
–
Share
based
payment
reserve
£’000
139
–
–
–
–
139
139
278
–
Other
reserves
£’000
Retained
earnings
£’000
Total
£’000
(9)
–
21,903
4,234
31,519
4,234
9
9
–
–
–
–
–
–
9
4,234
4,243
(412)
–
(412)
139
(412)
(273)
25,725
272
35,489
272
–
–
272
272
(5)
–
132
127
405
–
–
–
–
–
(419)
–
–
(419)
132
(419)
(287)
–
25,578
35,474
AT 31 JANUARY 2023
6,813
18,842
(16,164)
The accompanying notes form an integral part of these Consolidated Financial Statements.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC
Consolidated Cash Flow Statement
for the year ended 31 January 2023
Note
2023
£’000
2022
Restated
£’000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year
Adjustments for:
Depreciation and amortisation
Remeasurement of leases
Impairment of right of use assets
Employee share scheme expense
(Profit)/Loss on disposal of tangible assets
Loss on disposal of intangible assets
Finance income
Finance expense
Income tax
(Increase)/decrease in inventories
Increase in trade and other receivables
Decrease in trade and other payables
Increase/(decrease) in contract liabilities
CASH FLOWS (USED IN)/GENERATED FROM OPERATIONS
Taxation paid
NET CASH (USED IN)/GENERATED FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Bank interest received
Interest received on leases
Purchase of property, plant and equipment
Purchase of intangible assets
Capitalised development costs
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
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
NET CASH GENERATED FROM/(USED IN) FINANCING ACTIVITIES
NET DECREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the year
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
272
2,285
(25)
446
132
(26)
6
(40)
395
(196)
3,249
(3,486)
(2,501)
(740)
7
(3,471)
–
(3,471)
5
35
(6,226)
(140)
(1,976)
(8,302)
(697)
217
(300)
(84)
(419)
6,079
4,796
(6,977)
9,253
2,276
12
24
10
6
6
7(a)
7(b)
6
6
11
10
10
12
14
6
6
9
18
15
4,234
1,906
(46)
122
139
192
133
(9)
301
(271)
6,701
1,741
(4,037)
(266)
(9)
4,130
(554)
3,576
1
8
(1,425)
(338)
(2,208)
(3,962)
(382)
74
(244)
(50)
(412)
–
(1,014)
(1,400)
10,653
9,253
75
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS
Notes forming part of the Consolidated
Financial Statements for the year ended 31 January 2023
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 Alternative Investment Market (“AIM”), a market operated by 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 Consolidated 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 essential 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 is not something that can be reduced by election
or choice.
Although the Group has no information to suggest such a scenario might occur, it has modelled a
significant downside scenario based on its main risks, as identified in the Risks and Uncertainties on
page 34 to 39 of the Annual Report, including a significant downturn in forecast revenue of 15%. If such
a scenario occurred, the Group would implement procedures to reduce overheads and, if necessary,
utilise the remaining undrawn Invoice Discounting Facility and Revolving Credit Facility (due for renewal
June 2024).
As at 31 March 2023 net cash of the Group was (£2.0m), and there was cash headroom of £8.0m. The
Group has access to borrowing facilities of up to £10.0m. Consequently, the Directors believe that the
Group has sufficient liquidity to meet obligations as they fall due up to the end of May 2024 and consider
it appropriate to prepare the Financial Statements on the going concern basis.
GROUP
The Consolidated Financial Statements cover the year ended 31 January 2023.
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.
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.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Consolidated Financial Statements continued
1. Accounting policies continued
CRITICAL ESTIMATES AND JUDGEMENTS
The presentation of Consolidated 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.
JUDGEMENTS
The Group applies judgement in how it applies its accounting policies, which could materially affect
the numbers disclosed in these Consolidated Financial Statements. The key accounting judgements
that have been applied in these Consolidated Financial Statements are as follows:
u 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 (“R&D”) 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 2023 of R&D tax credit
claims made for the year.
u 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 as 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 £1,976,000 (2022: £2,208,000) which includes £620,000 (2022: £287,000) of employee time spent
on development projects. See note 10.
u NON-RECURRING ITEMS
Non-recurring items are items which, given their nature, management believes should be disclosed
separately for the purposes of presenting the results of the Group and earnings per share figures.
Management believes that presenting these items separately enables users of the Consolidated
Financial Statements to obtain a clear and consistent view of the Group’s underlying operating
performance. In identifying the non-recurring 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. The non-recurring items in the year relate to aborted acquisition costs,
write down of right of use assets, project consultancy costs and legal costs relating to a contract
dispute. See note 4b.
u 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.
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS
Notes forming part of the Consolidated Financial Statements continued
1. Accounting policies continued
u REVENUE
The Group’s revenue recognition policy is set out on page 83 of the Annual Report.
In accordance with IFRS 15, when the criteria for recognising revenue over time is not met, revenue
is recognised at the point in time when control of the goods or services is passed to the customer.
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. Control of the goods or services may pass to the customer
at the point of physical delivery of the goods or for ex-works shipments, at the point of collection by
the customer.
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
Consolidated Financial Statements.
The key estimates applicable to the Consolidated Financial Statements, which have a significant risk of
resulting in a material adjustment in future financial years are as follows:
u 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 £7,834,659 arose in SLE Limited prior to the acquisition by Inspiration Healthcare
Group plc on 7 July 2020 and £7,342,903 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 Ltd. 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 2023 is £1,505,000 (2022: £1,485,000). See also
note 21 on Deferred Tax.
u 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 13.3% is used. The net book value of capitalised development costs as at 31 January
2023 is £5,160,000 (2022: £3,347,000). 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 five 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 £157,000 (2022: £155,000). There was no impairment recognised in the year (2022: £nil).
78
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC
Notes forming part of the Consolidated Financial Statements continued
1. Accounting policies continued
u GOODWILL
Impairment testing is an area involving management’s judgement, requiring assessment as to whether
the carrying value of the operating sector 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:
u The selection of discount rates to reflect the risks involved
u Future revenue and costs
u 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.
PRIOR YEAR ADJUSTMENT
A Prior Year Adjustment has been made in respect of the Group’s deferred tax asset. In FY2021, the
Group recognised a deferred tax liability relating to taxable temporary differences that arose from the
recognition of intangibles on the acquistion of SLE Limited in July 2020. At the time of the acquisition,
a deferred tax asset was not recognised. However, accounting standards require a deferred tax asset
to be recognised to the extent of the existing deferred tax liability and therefore a deferred tax asset
should have been recognised in FY2021. This has been corrected by restating each of the affected
financial statement line items for prior periods and by presenting a third Statement of Financial Position
as at 31 January 2021. See note 27.
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.
The following rates are applied:
Leasehold improvements
Over the term of the lease
Fixtures and fittings
Motor vehicles
10% - 25% per annum
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 incurred.
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Notes forming part of the Consolidated Financial Statements continued
1. Accounting policies continued
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 principal 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 and are reviewed for impairment when objective
evidence suggests that events or circumstances 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 and
an impairment loss is recognised in the Consolidated Statement of Comprehensive Income.
During the year, the Group continued to lease its patient warming products, acting as the lessor in
these arrangements. These contracts contain both lease and non-lease components. 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. 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.
The Group also sub-let several of its former Croydon properties during the year. These sub-leases
have been accounted for as finance leases in accordance with IFRS 16. On commencement of the
sub-lease, the Group derecognised the right of use asset relating to the head lease and recognised
a net investment in the sub-lease. Any differences between the carrying amount of the right of use
asset and the net investment in the sub-lease is taken to the Consolidated Income Statement. The
Group continues to recognise the lease liability relating to the head lease, which represents the lease
payments owed to the head landlord. During the term of the sub-lease, the Group recognises both
interest income on the sub-lease and interest expense on the head lease.
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. A 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.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Consolidated Financial Statements continued
1. Accounting policies continued
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.
Development expenditure on an individual project is recognised as an intangible asset when the Group
can demonstrate:
u The technical and commercial feasibility of completing the intangible asset so that the asset will be
available for use or sale
u Its intention to complete and its ability to use or sell the developed asset
u Its future economic benefits are probable
u The availability of adequate technical, financial and other resources to complete the asset
u 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 five 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 three 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.
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.
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Notes forming part of the Consolidated Financial Statements continued
1. Accounting policies continued
RECOGNITION AND VALUATION OF FINANCIAL ASSETS AND LIABILITIES
Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand.
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 macro-economic 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.
EMPLOYEE BENEFITS
Defined contribution pension plans
The costs of contributing to defined contribution stakeholder pension schemes 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.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Consolidated Financial Statements continued
1. Accounting policies continued
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.
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 of the three 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”.
u Customer receives benefits as performed/another would need to re-perform
u Create/enhance an asset a customer controls
u 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, which is either when delivered or when
collected under ex-works arrangements. The goods supplied are primarily medical devices or parts
used in medical devices.
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 on 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.
The Group also recognises revenue from the rental of its patient warming equipment. These rental
contracts contain both lease and non-lease (service) components. The Group applies IFRS 15 to allocate
the consideration relating to the service component of the contracts, over the contract term. The lease
component is accounted for as a finance lease in accordance with IFRS 16. 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. The revenue relating to these
rental contracts is included within Technology Support in note 3.
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Notes forming part of the Consolidated Financial Statements continued
1. Accounting policies continued
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. 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.
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:
u The initial recognition of goodwill
u The initial recognition of assets and liabilities that affect neither accounting nor taxable profit other
than in a business combination
u The differences relating to investments in subsidiaries to the extent that they will probably not
reverse in the foreseeable future
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
The following amendments were effective during the year. These amendments do not have a material
impact on the Financial Statements:
u Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
u Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
u Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41)
u References to Conceptual Framework (Amendments to IFRS 3)
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Consolidated Financial Statements continued
1. Accounting policies continued
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 2023:
u Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
u Definition of Accounting Estimates (Amendments to IAS 8)
u Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
The following amendments are effective for the period beginning 1 February 2024:
u IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback)
u IAS 1 Presentation of Financial Statements (Amendment - Classification of Liabilities as Current or
Non-current)
u IAS 1 Presentation of Financial Statements (Amendment - Non-current Liabilities with Covenants)
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 28 to 30 for further information.
u Adjusted EBITDA
u Adjusted Operating Profit
u Adjusted EPS
2. Segmental analysis
Inspiration Healthcare Group operates in a single business segment, providing essential medical
equipment. 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 the Operating and financial review sections of the strategic report.
The sectors are defined in Market Sectors/Revenue Streams on page 6.
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Notes forming part of the Consolidated 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
– Freight
Revenue recognised Over Time
– Technology Support
TOTAL
2023
£’000
2022
£’000
19,340
547
5,315
9,458
5,386
1,187
41,233
17,078
545
5,955
10,230
5,456
1,786
41,050
2023
£’000
2022
£’000
24,360
13,624
261
360
2,628
41,233
22,524
13,606
304
356
4,260
41,050
In the current year, no single customer accounted for more than 10% (2022: 10%) of revenue.
All revenue reported by the Group 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:
u Revenue for sale of goods and rental contracts is recognised at the point in time when the goods are
delivered or collected 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
u 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 £524,000 which had been included in Contract Liabilities
at 1 February 2022 (1 February 2021: £533,000). See note 20 on Contract Liabilities.
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.
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 case
of revenue recognised over time, as incurred. No costs of obtaining contracts are capitalised.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Consolidated Financial Statements continued
4(a). Expenses by nature
Cost of sales
Employee benefit expense1
Depreciation
– property, plant and equipment
– right of use assets
Amortisation
– intangible fixed assets
– acquisition related intangible assets
Impairment of right of use assets2
Trade receivables loss allowance
(Profit)/Loss on disposal of intangible and tangible assets
Foreign exchange (gains)/losses
R&D expenditure
Non-recurring costs
Other expenses
Note
5
11
12
10
10
12
4(b)
2023
£’000
23,140
10,326
523
831
326
605
–
4
(20)
(79)
116
1,158
3,872
2022
£’000
20,458
10,523
363
706
232
605
122
54
325
69
348
–
2,990
TOTAL COST OF SALES AND OPERATING EXPENSES
40,802
36,795
1 Wages and salaries of R&D employees have been included in Employee benefit expense above
2 In FY2023, impairments of right of use assets have been included within non-recurring costs above. For more detail, see note 4b
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 relations to prior year 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
4(b). Non-recurring items
During the year, the Group recognised the following non-recurring items:
Impairments of leased properties
Aborted acquisition costs
Other
TOTAL NON-RECURRING ITEMS
Impairment of leased properties
2023
£’000
182
30
15
227
4
4
2022
£’000
116
29
60
205
3
3
2023
£’000
446
467
245
1,158
Following the move to our new Manufacturing and Technology Centre, the Group took the decision to
consolidate its property portfolio and, as a result, there was an impairment of our right of use assets of
£446,000, relating to our Crawley and former Croydon properties.
Aborted acquisition costs
£467,000 were financial and tax due diligence work and consultancy fees related to an aborted acquisition.
Other
£105,000 relates to project consultancy costs incurred in the year. £140,000 were legal fees relating to
a contract dispute.
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Notes forming part of the Consolidated Financial Statements continued
5. Employees
Aggregate employee costs are as follows:
Wages and salaries
Social security costs
Defined contribution pension scheme cost
Share-based payment expense
TOTAL
2023
£’000
8,645
1,069
480
132
2022
£’000
8,896
1,078
410
139
10,326
10,523
Employee costs include the costs of the Executive and Non-executive Directors along with severance
payments of £30,000 (2022: £39,000).
KEY MANAGEMENT
Key management control 7% (2022: 7%) of the voting shares of the Company.
Key management comprise the Group’s Executive Directors, as well as the Group’s Interim Chief
Financial Officer.
The aggregate compensation for key management personnel is as follows:
Salaries and benefits
Contributions to defined contribution pension scheme
TOTAL
2023
£’000
650
24
674
2022
£’000
795
25
820
Monthly average number of persons employed (including Executive and Non-executive Directors and
excluding agency staff) analysed by category:
Management and Administration
Sales
Development and Quality
Production
TOTAL
2023
2022
74
40
61
35
210
72
40
54
29
195
The number of Directors for whom retirement benefits are accruing under defined contribution pension
schemes during the year were 3 (2022: 3).
No Directors exercised share options during the year (2022: none).
Directors’ remuneration for the year was as follows:
Salaries and benefits
Contributions to defined contribution pension scheme
TOTAL
2023
£’000
720
24
744
2022
£’000
900
25
925
Please refer to the Directors’ Remuneration Report on pages 58 to 63 for further detail.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Consolidated Financial Statements continued
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
7(a). Analysis of tax for the year
DOMESTIC CURRENT YEAR TAX*
UK corporation tax
Current year
Prior Year Adjustment
TOTAL CURRENT TAX CHARGE
Deferred tax
Origination and reversal of temporary timing differences
Prior Year Adjustment
TOTAL DEFERRED TAX CREDIT
TAX ON PROFIT ON ORDINARY ACTIVITIES
*All tax in both FY2023 and FY2022 arose in the UK
7(b). Analysis of current corporation tax assets
Net liability at 1 February
TAX PAYMENTS
Final payments relating to prior year
TOTAL TAX PAYMENTS MADE DURING THE YEAR
Tax receipts in relation to current year
Current year UK corporation tax charge
Prior Year Adjustment
NET ASSET AT 31 JANUARY
2023
£’000
2022
£’000
35
5
40
(84)
(300)
(11)
(395)
8
1
9
(50)
(244)
(7)
(301)
Note
2023
£’000
2022
Restated
£’000
14
28
42
(668)
430
(238)
(196)
2023
£’000
185
–
–
–
(14)
(28)
143
21
Note
16
16
–
56
56
(311)
(16)
(327)
(271)
2022
£’000
(313)
554
554
–
–
(56)
185
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS
Notes forming part of the Consolidated Financial Statements continued
7. Income tax continued
7(c). Factors affecting tax for the year
The tax assessed for the year is lower (2022: lower) than the standard rate of corporation tax in the UK
19.00% (2022: 19.00%) as explained below:
Profit on ordinary activities before taxation
Tax using the effective UK corporation tax rate of 19.00%
(2022: 19.00%)
Effects of:
Non-deductible expenses
Additional deduction for research and development
Fixed asset differences
Other permanent differences
Adjustment in respect of prior periods
Amendments to deferred tax and timing
TOTAL TAX EXPENSE
EFFECTIVE TAX RATE
2023
£’000
76
14
188
(314)
44
–
(137)
9
(196)
2022
Restated
£’000
3,963
753
56
(497)
49
12
40
(684)
(271)
EFFECTIVE TAX RATE
2023
%
2022
Restated
%
19.0
246.9
(413.1)
58.2
–
(180.7)
11.8
19.0
1.4
(12.5)
1.2
0.3
1.0
(17.3)
(257.9)
(6.9)
The effective tax rate for FY2023 is lower than FY2022. This decrease is largely due to the recognition
of previously unrecognised losses. The non-deductible expenses largely relate to aborted acquisition
costs incurred in the 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 unrecognised losses estimated at £6,019,271 (2022: £5,938,903), which were
transferred to the Group due to the reverse acquisition of Inditherm. 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. See note 21 Deferred Tax for more information.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC
Notes forming part of the Consolidated 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.
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.
FY2022 earnings per share have been restated as a result of the Prior Year Adjustment relating to
deferred tax, please see note 27 for further detail.
PROFIT
Profit attributable to equity holders of the Company
Add back non-recurring items
Add back amortisation of intangible assets acquired through
business combinations
NUMERATOR FOR ADJUSTED EARNINGS PER SHARE CALCULATION
Note
4(b)
2023
£’000
2022
Restated
£’000
272
1,158
605
2,035
4,234
–
605
4,839
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
DILUTED WEIGHTED AVERAGE NUMBER OF SHARES IN ISSUE DURING THE YEAR
FOR THE PURPOSES OF DILUTED EARNINGS PER SHARE
See note 24 for further information regarding share options.
The basic and diluted earnings per share for the year are as follows:
2023
2022
68,121,447
5,771
68,121,447
–
68,127,218
68,121,447
691,392
672,175
68,818,610
68,793,622
EARNINGS PER SHARE
Adjust for:
Non-recurring items
Add back amortisation of intangible assets acquired through
business combinations
ADJUSTED EARNINGS PER SHARE
Basic
2023
pence
0.40
1.70
0.89
2.99
Diluted
2023
pence
0.39
1.68
0.88
2.95
Basic
2022
(Restated)
pence
Diluted
2022
(Restated)
pence
6.22
6.16
–
0.89
7.11
–
0.88
7.04
An adjusted basic earnings per share and an adjusted 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.
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS
Notes forming part of the Consolidated Financial Statements continued
9. Dividends
The interim dividend for the year ended 31 January 2023 of 0.205p per share (2022: 0.205p per share)
was paid on 28 December 2022. The proposed final dividend of 0.41p per share (2022: 0.41p per share)
is subject to approval by shareholders at the AGM and has not been recognised as a liability as at
31 January 2023. If approved, the final dividend will be paid on 28 July 2023 to shareholders on the
register on 30 June 2023.
10. Intangible assets
COST
At 1 February 2021 (Restated)
Capitalised in the year
Disposals
AT 1 FEBRUARY 2022
Capitalised in the year
Disposals
AT 31 JANUARY 2023
ACCUMULATED AMORTISATION
At 1 February 2021
Charge in the year
Disposals
AT 1 FEBRUARY 2022
Charge in the year
AT 31 JANUARY 2023
NET BOOK VALUE
AT 31 JANUARY 2023
At 31 January 2022 (Restated)
Total
£’000
15,934
2,546
(183)
18,297
2,116
(6)
20,407
1,685
837
(50)
2,472
931
485
338
(67)
756
140
–
896
361
77
(50)
388
169
Goodwill
£’000
Intangible
assets
£’000
Development
costs
£’000
Intellectual
property
£’000
Software
costs
£’000
7,610
–
–
5,528
–
–
2,035
2,208
(116)
7,610
5,528
4,127
–
–
–
–
1,976
(6)
276
–
–
276
–
–
7,610
5,528
6,097
276
423
605
–
1,028
605
625
155
–
780
157
276
–
–
276
–
–
–
–
–
–
–
1,633
937
276
557
3,403
7,610
7,610
3,895
4,500
5,160
3,347
–
–
339
368
17,004
15,825
As a consequence of the Prior Year Adjustment relating to deferred tax, Goodwill has been restated at
1 February 2021. See note 27 for further detail.
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 are 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 2024 approved by management. The cash flows 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% (2022: 2%) 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% (2022:
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 19% (2022: 31%) would need to be applied for there to be zero headroom.
Sensitivity analyses have been performed on the carrying value of all remaining goodwill using
post-tax discount rates up to 13%. Revenue growth would need to reduce by 4.1% year-on-year with no
change in cost growth assumptions for there to be zero headroom.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC
Notes forming part of the Consolidated Financial Statements continued
11. Property, plant and equipment
COST
At 1 February 2021
Additions in the year
Disposals in the year
AT 1 FEBRUARY 2022
Additions in the year
Disposals in the year
AT 31 JANUARY 2023
ACCUMULATED DEPRECIATION
At 1 February 2021
Charge in the year
Disposals in the year
AT 1 FEBRUARY 2022
Charge in the year
Disposals in the year
AT 31 JANUARY 2023
NET BOOK VALUE
AT 31 JANUARY 2023
At 31 January 2022
Leasehold
improvements
£’000
Fixtures
and
fittings
£’000
Plant,
machinery,
office
equipment
£’000
Motor
vehicles
£’000
467
899
(220)
1,146
5,894
–
7,040
114
73
(58)
129
241
–
370
6,670
1,017
121
2
(17)
106
6
–
1,516
525
(154)
1,887
326
(6)
112
2,207
61
24
(17)
68
8
–
76
36
38
1,061
249
(132)
1,178
257
(2)
1,433
774
709
58
–
–
58
–
–
58
7
17
–
24
17
–
41
17
34
Total
£’000
2,162
1,426
(391)
3,197
6,226
(6)
9,417
1,243
363
(207)
1,399
523
(2)
1,920
7,497
1,798
Depreciation charged for the financial year is split between cost of sales £60,000 (2022: £19,000) and
administrative expense £463,000 (2022: £344,000) in the Consolidated Income Statement.
12. Leases
The Group has annual commitments under non-cancellable leases 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 and Croydon.
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS
Notes forming part of the Consolidated Financial Statements continued
12. Leases continued
RIGHT OF USE ASSETS
At 1 February 2021
Additions in the year
Amortisation
Lease remeasurement
Impairment
Disposal
AT 1 FEBRUARY 2022
Additions in the year
Amortisation
Lease remeasurement
Derecognition1
Impairment
AT 31 JANUARY 2023
Land and
buildings
£’000
Plant,
machinery
and motor
vehicles
£’000
2,886
5,917
(565)
(1,069)
(122)
–
7,047
51
(649)
12
(312)
(446)
5,703
216
269
(141)
–
–
(8)
336
113
(182)
–
–
–
267
Total
£’000
3,102
6,186
(706)
(1,069)
(122)
(8)
7,383
164
(831)
12
(312)
(446)
5,970
1 During the year, the Group entered into several sub-leases of its former Croydon properties. On commencement of the sub-leases, the right of use
asset relating to the head lease was derecognised and a net investment asset was recognised. The net investment is presented in Trade and Other
Receivables, note 14.
LEASE LIABILITY
At 1 February 2021
Additions in the year
Interest expense
Lease payments
Lease remeasurement
AT 1 FEBRUARY 2022
Additions in the year
Interest expense
Lease payments
Lease remeasurement
AT 31 JANUARY 2023
Current
Non-current
TOTAL
Land and
buildings
£’000
Plant,
machinery
and motor
vehicles
£’000
2,965
5,633
238
(475)
(1,141)
7,220
52
289
(820)
(13)
6,728
200
268
6
(151)
–
323
113
11
(177)
–
270
2023
£’000
822
6,176
6,998
Total
£’000
3,165
5,901
244
(626)
(1,141)
7,543
165
300
(997)
(13)
6,998
2022
£’000
647
6,896
7,543
The total cash outflow for leases during the year was £997,000 (2022: £626,000).
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Consolidated Financial Statements continued
12. Leases continued
At 31 January 2023 and 31 January 2022, the Group’s cash commitments relating to leases are as follows:
AT 31 JANUARY 2023
AT 31 JANUARY 2022
13. Inventories
Raw materials
Work in progress
Finished goods
TOTAL
Total
£’000
9,462
10,375
1 year
or less
£’000
1,094
927
1 to 2
years
£’000
937
1,038
2 to 5
years
£’000
1,588
2,095
2023
£’000
7,749
563
1,623
9,935
Over
5 years
£’000
5,843
6,315
2022
£’000
3,731
703
2,015
6,449
Inventories are presented net of provisions of £337,000 (2022: £550,000) to write down the values to
management’s estimate of net realisable value.
14. Trade and other receivables
Trade receivables
Loss allowance
Net trade receivables
UK corporation tax receivable
Other taxes and social security
Net investment in leases
Other receivables
Prepayments and accrued income
TOTAL
2023
£’000
10,393
(266)
10,127
143
304
616
183
515
11,888
2022
£’000
8,434
(230)
8,204
185
26
230
200
468
9,313
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 30-60 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.
At 31 January 2023, the Group uses a customer invoice discounting facility with recourse, under
which the Group can borrow against certain notifiable trade receivables. The Group is committed to
underwrite any of the debts transferred and therefore continues to recognise the trade receivables
until the debtors repay or default. Since the trade receivables continue to be recognised, the business
model of the Group is not affected.
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Notes forming part of the Consolidated Financial Statements continued
14. Trade and other receivables continued
The loss allowance as at 31 January 2023 and 31 January 2022 was determined as follows for trade
receivables:
31 JANUARY 2023 – £000’S
Expected loss rate
Gross carrying amount – Trade receivable
Current
0.14%
6,887
More than
30 days
past due
More than
60 days
past due
More than
120 days
past due
0.43%
1,545
0.82%
1,001
0.00%
718
LOSS ALLOWANCE
9
7
8
–
31 JANUARY 2022 - £000’S
Expected loss rate
Gross carrying amount – Trade receivable
Current
0.01%
5,952
More than
30 days
past due
More than
60 days
past due
More than
120 days
past due
0.04%
1,599
0.14%
634
0.00%
22
LOSS ALLOWANCE
1
1
1
–
Additional
Total
242
242
10,393
266
Additional
Total
227
227
8,434
230
Additional loss allowance represents provisions against specific trade receivables.
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:
Pounds Sterling
Euro
US Dollars
Swiss Franc
TOTAL
2023
£’000
8,991
1,870
1,024
3
11,888
2022
£’000
7,440
1,059
814
–
9,313
During the year, the Group held net investments in leases relating to the leasing of the Group’s patient
warming equipment and the sub-lease of two of its properties. The net investment recognised in
respect of these leases has been included in trade and other receivables.
NET INVESTMENT FROM PATIENT WARMING RENTALS
At 1 February 2021
Additions in the year
Interest Income
Lease receipts
AT 1 FEBRUARY 2022
Additions in the year
Interest Income
Lease receipts
AT 31 JANUARY 2023
96
£’000
–
304
8
(82)
230
261
29
(181)
339
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Consolidated Financial Statements continued
14. Trade and other receivables continued
NET INVESTMENT FROM SUB-LEASE OF PROPERTIES
At 1 February 2022
Additions in the year
Interest Income
Lease receipts
AT 31 JANUARY 2023
£’000
–
342
6
(71)
277
15. Cash and cash equivalents
Cash and cash equivalents comprise solely cash at bank available on demand.
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 2023.
16. Current tax
The following are the major current tax assets recognised by the Group.
UK corporation tax asset
Note
14
2023
£’000
143
2022
£’000
185
At the year-end date the Group has not recognised a separate receivable in respect of potential
research and development tax claims (2022: £nil).
17. Trade and other payables
CURRENT
Trade payables
Other taxes and social security
Other payables
Accrued expenses
Warranty provisions
TOTAL
Note
2023
£’000
2022
£’000
4,081
257
434
1,040
–
5,812
3,534
367
344
2,028
279
6,552
The fair value of trade and other payables approximates to book value at 31 January 2023. Trade
payables are non-interest bearing and the average credit period taken for trade purchases is 48 days
(2022: 53 days). Accruals are normally settled monthly throughout the financial year.
During the year, £182,000 of costs were incurred in relation to the replacement of boards contained
within both the SLE 4000 and SLE 5000 ventilators, and a £97,000 provision was released.
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Notes forming part of the Consolidated Financial Statements continued
18. Borrowings
Revolving Credit Facility (“RCF”)
Invoice Financing Facility
2023
£’000
4,000
2,079
6,079
2022
£’000
–
–
–
£4m has been presented as a non-current liability in the Statement of Financial Position as at 31 January
2023 and £2.1m has been presented as a current liability.
REVOLVING CREDIT FACILITY (RCF)
The Group has a £5m RCF facility in place, which expires in 2024 with the option to extend and attracts a
2.5% margin above SONIA. During the year, the Group utilised £4m of the RCF facility. 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 2023.
Drawdowns can be made on a 1, 2 or 3-month basis which can be rolled as required until the
facility expires.
The movement in the RCF during the year was as follows:
At 1 February 2022
Proceeds from drawdown of loans
Repayment of loans
Interest payable
Interest paid
AT 31 JANUARY 2023
INVOICE FINANCING FACILITY
£’000
–
4,000
–
84
(84)
4,000
During the year, the Group entered into an invoice financing facility to borrow cash against notifiable
trade receivables. The arrangement with the bank is such that the customers remit cash directly with
the bank and invoices are settled against the facility directly. The Group continues to bear the credit
risk relating to any defaulting customers and therefore the related trade receivables continue to be
recognised on the Consolidated Statement of Financial Position. See note 14.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Consolidated Financial Statements continued
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 34 to 39.
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 payables
Other payables
Accrued expenses
Warranty provision
Note
2023
£’000
2022
£’000
14
14
15
17
17
17
17
10,127
183
2,276
4,081
434
1,040
–
8,204
200
9,253
3,534
344
2,028
279
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.
19(a). Derivatives
The Group uses forward currency contracts to hedge its financial risks of changes in foreign exchange
rates, in relation to Euro inventory purchases during the year. Derivatives are only used for economic
hedging purposes and not as speculative investments.
The Group did not have any forward currency contracts in FY2023.
Forward foreign exchange contracts are fair value adjusted through other comprehensive income within
reserves 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.
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.
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99
INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Notes forming part of the Consolidated Financial Statements continued
19. Financial risk management and financial instruments continued
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 are of good credit quality, including those
that are past due.
The carrying value of financial assets recorded in the Financial Statements 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 15.
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.
At 31 January 2023 and 31 January 2022, the Group’s liabilities had contractual maturities which are
summarised as follows:
Carrying
amount
£’000
(4,081)
(6,998)
(3,534)
(7,543)
Total
£’000
(4,081)
(6,998)
(3,534)
(7,543)
1 year
or less
£’000
(4,081)
(822)
(3,534)
(647)
1 to 2
years
£’000
–
(698)
–
(732)
2 to 5
years
£’000
–
(983)
–
(1,403)
Over
5 years
£’000
–
(4,495)
–
(4,761)
2023
Trade payables
Lease liabilities
2022
Trade payables
Lease liabilities
19(d). Interest rate risk
Although the Group’s financing activities in the year expose it to the financial risks of interest rates, the
Directors do not believe that the Group’s financial stability is threatened because of this risk as interest
expense is not considered significant to the Group. The Board keeps this risk under regular review and
will, as appropriate, enter into derivative financial instruments in order to manage any significant risks.
INTEREST RATE SENSITIVITY
If the Bank of England SONIA interest rate increased by 1% and all other variables remained constant,
the Group’s profit after tax for the year and reserves would have decreased by £50,000 (2022: £50,000).
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Consolidated Financial Statements continued
19. Financial risk management and financial instruments continued
19(e). Foreign currency risk
Although the Group has some exposure to foreign currency risk from trading transactions in currencies
other than GBP, the Directors do not believe that the Group’s financial stability is threatened because
of an exposure to this risk as there is a natural hedge due to the balance of imports and exports.
The Board keeps this risk under regular review and will, as appropriate, enter into derivative financial
instruments in order to manage any significant risks.
19(f). Capital risk
The Group establishes credit limits for all financial instruments taking into account independent ratings,
past experience and other factors. The capital risk of cash deposits is further reduced by spreading
investment across more than one bank.
19(g). Capital management
The Directors’ 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 2023
31 January 2022
Within 1
year
£’000
531
524
1 to 2
years
£’000
–
–
2 to 3
years
£’000
–
–
3 to 4
years
£’000
–
–
4 to 5
years
£’000
–
–
Total
£’000
531
524
21. Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and movements
thereon during the current and prior reporting years.
The Group has made a Prior Year Adjustment in respect of the FY2021 deferred tax asset arising on
acquisition of SLE Limited. This note has been restated accordingly. Please see note 27 for further detail
of the Prior Year Adjustment.
Note that the effective future tax rate is 25% (2022: 25%).
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Notes forming part of the Consolidated Financial Statements continued
21. Deferred tax continued
Asset at beginning of year
Credit to Goodwill on acquisition
Credit to the Income Statement for the year
Included directly in equity
ASSET AT END OF YEAR
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
The elements of deferred taxation provided for are as follows:
Unused tax losses relating to SLE
Unused tax losses relating to Inditherm
Short-term timing differences
DEFERRED TAX ASSET
Accelerated capital allowances
Intangible assets
Intangibles arising on business combinations
Short term timing differences
DEFERRED TAX LIABILITY
2023
£’000
2,012
–
351
–
2,363
2023
£’000
(1,925)
(114)
–
–
(2,039)
2023
£’000
1,959
331
73
2,363
2023
£’000
(186)
(879)
(974)
–
2022
Restated
£’000
2021
Restated
£’000
900
–
1,112
–
2,012
2022
£’000
(1,141)
(784)
–
–
–
957
–
(57)
900
2021
£’000
(227)
49
(6)
(957)
(1,925)
(1,141)
2022
Restated
£’000
2021
Restated
£’000
1,661
351
–
2,012
2022
£’000
(140)
(751)
(1,125)
91
900
–
–
900
2021
£’000
(197)
–
(976)
32
(2,039)
(1,925)
(1,141)
The deferred tax assets and deferred tax liabilities have been presented on a net basis in the
Consolidated Statements of Financial Position, as follows:
Deferred tax asset
Deferred tax liability
NET DEFERRED TAX ASSET/(LIABILITY)
2023
£’000
2,363
(2,039)
324
2022
Restated
£’000
2,012
(1,925)
2021
Restated
£’000
900
(1,141)
87
(241)
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Consolidated Financial Statements continued
21. Deferred tax continued
At the year-end date the Group had gross unused losses of £15,248,186 (2022: £13,988,205) potentially
available to offset against future profits, which largely relate to the unused losses arising in SLE
Limited prior to the acquisition by Inspiration Healthcare Group plc on 7 July 2020 (2023: £7,834,659,
2022: £6,645,302) and brought forward losses transferred to the Group due to the reverse acquisition
of Inditherm plc (2023 and 2022: £7,342,903). 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 it is estimated that taxable profits will
be generated in the future and consequently, a deferred tax asset has been recognised in respect of
these losses. A deferred tax asset has also been recognised in respect of the brought forward losses
transferred to the Group following the acquisition of SLE Limited. A Prior Year Adjustment has been made
to recognise a deferred tax asset to the extent of the deferred tax liability relating to the intangibles
recognised on the acquisition of SLE Limited. See note 27.
The amounts of deferred tax not recognised are as follows:
UNUSED TAX LOSSES
2023
£’000
1,505
2022
Restated
£’000
1,485
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%.
22. Shareholders’ equity
22(a). Called up share capital
SHARE CAPITAL
AT 1 FEBRUARY 2022
Issue of share options
AT 31 JANUARY 2023
Number of shares
(Allotted & Issued)
Share capital
£’000
68,121,447
9,159
68,130,606
6,812
1
6,813
The Group issued 9,159 shares on the exercise of share options relating to the employee share option
scheme.
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
SHARE PREMIUM
AT 1 FEBRUARY 2022
Issue of share options
AT 31 JANUARY 2023
£’000
18,838
4
18,842
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Notes forming part of the Consolidated Financial Statements continued
22. Shareholders’ equity continued
22(c). Reverse acquisition reserve
The reverse acquisition reserve of £(16,164,000) (2022: £(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 £405,000 (2022: £278,000), represents the expense recognised in
the Consolidated Income Statement in relation to the Group Share Option Scheme. See note 24.
23. Commitments
23(a). Capital commitments
At 31 January 2023, the Company had capital expenditure commitments totalling £nil (2022: £nil).
23(b). Lease commitments
The total amount included within administrative expenses in relation to short-term leases during the
year was £2,000 (2022: £2,000). All balances are due within 12 months.
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.
The Black-Scholes model is used to determine fair value.
Details of the share options outstanding at 31 January 2023 and movements during the year by exercise
price is show below:
2023
2022
Average
exercise
price per
share option
£nil
£nil
£nil
£nil
£nil
£nil
£nil
Number of
options
477,538
–
(6,250)
(67,756)
(6,250)
397,282
192,833
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
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
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Consolidated Financial Statements continued
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
7 November 2017
7 November 2018
7 May 2021
TOTAL
20 April 2022
26 April 2023
30 April 2026
Exercise
price
£nil
£nil
£nil
Weighted average remaining contractual life of options outstanding at the end of the year
Share
options
31 January
2023
–
192,833
204,449
Share
options
31 January
2022
12,500
216,085
248,953
397,282
477,538
1.8 years
2.9 years
The assessed fair value at grant date of options granted during the year ended 31 January 2023 was
£0.53 (2022: £1.20). Fair value is determined by the Black-Scholes pricing model.
SHARESAVE PLAN
The Group operates an employee Sharesave scheme which is available to all employees subject to
qualifying conditions. The scheme encourages 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 2023 and movements during the year by exercise
price are shown below:
Outstanding as at 1 February
Granted during the year
Exercised during the year
Forfeited during the year
AS AT 31 JANUARY
2023
2022
Average
exercise
price per
share option
£0.87
£0.82
£0.55
£0.73
Number of
options
310,524
115,126
(2,909)
(96,582)
Average
exercise
price per
share option
£nil
£0.87
£nil
£nil
Number of
options
150,529
159,995
–
–
£0.75
326,159
£0.87
310,524
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
31 March 2022
TOTAL
19 March 2023
25 March 2024
30 March 2025
Exercise
price
£0.55
£0.87
£0.82
Share
options
31 January
2023
108,969
119,708
97,482
Share
options
31 January
2022
150,529
159,995
–
326,159
310,524
An amount of £132,000 (2022: £139,000) 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.
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Notes forming part of the Consolidated Financial Statements continued
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 2023 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
(2022: No material field issues noted).
26. Pension schemes
The Group made contributions in respect of defined contribution pension arrangements of £480,000
(2022: £410,000). At the year-end the amount of contributions payable to the schemes was for the
£25,000 (2022: £37,000).
27. Prior Year Adjustment
A Prior Year Adjustment has been made in respect of the Group’s deferred tax asset. In FY2021, the
Group recognised a deferred tax liability relating to taxable temporary differences that arose from the
recognition of intangibles on the acquisition of SLE Limited in July 2020. At the time of the acquisition,
a deferred tax asset was not recognised. However, accounting standards require a deferred tax asset
to be recognised to the extent of the existing deferred tax liability and therefore a deferred tax asset
should have been recognised in FY2021. This has been corrected by restating each of the affected
financial statement line items for prior periods. The following tables summarise the impacts on the
Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
IMPACT OF CORRECTION OF ERROR
As previously
reported
£’000
Adjustments
£’000
As restated
£’000
15,206
28,027
43,233
(1,141)
(10,516)
(957)
–
14,249
28,027
(957)
42,276
900
–
(241)
(10,516)
(11,657)
900
(10,757)
21,960
9,616
31,576
(57)
–
(57)
21,903
9,616
31,519
31 JANUARY 2021
Intangibles
Other
TOTAL ASSETS
Deferred Tax Liability
Other
TOTAL LIABILITIES
Retained Earnings
Other
TOTAL EQUITY
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Consolidated Financial Statements continued
27. Prior Year Adjustment continued
31 JANUARY 2022
Intangibles
Deferred Tax Asset
Other
TOTAL ASSETS
Deferred Tax Liability
Other
TOTAL LIABILITIES
Retained Earnings
Other
TOTAL EQUITY
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 JANUARY 2022
PROFIT BEFORE TAX
Income Tax
PROFIT FOR THE YEAR
EARNINGS PER SHARE
FOR THE YEAR ENDED 31 JANUARY 2022
Basic EPS
Diluted EPS
28. Related party transactions
There is no ultimate controlling party.
IMPACT OF CORRECTION OF ERROR
As previously
reported
£’000
16,782
470
34,197
Adjustments
£’000
As restated
£’000
(957)
(383)
(1)
15,825
87
34,196
51,449
(1,341)
50,108
(1,925)
(14,619)
1,925
–
–
(14,619)
(16,544)
1,925
(14,619)
25,141
9,764
584
–
25,725
9,764
34,905
584
35,489
IMPACT OF CORRECTION OF ERROR
As previously
reported
£’000
Adjustments
£’000
As restated
£’000
3,963
(370)
3,593
–
641
641
3,963
271
4,234
IMPACT OF CORRECTION OF ERROR
As previously
reported
Adjustments
As restated
5.28p
5.22p
0.94p
0.94p
6.22p
6.16p
LEASE OF LEICESTERSHIRE FACILITY
The Leicestershire facility at Earl Shilton is rented on an arms length basis for £22,000 per annum
(2022: £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.
EMPLOYMENT OF RELATED PARTIES
Several close family members of the directors are employed by the Group, and they are remunerated
at a fair market rate which is commensurate with their role.
29. Subsequent events
In April 2023, the Directors made the decision to close the Earl Shilton (Leicestershire) office, in order
to further consolidate our properties, reduce overheads and bring teams together at our new
Manufacturing and Technology Centre in Croydon. The expected closure date is August 2023. Discussions
are ongoing with those employees affected by the decision.
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Company Statement of Financial Position
as at 31 January 2023
(Registered Number: 03587944)
ASSETS
NON-CURRENT ASSETS
Investments
Deferred tax asset
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
NON CURRENT LIABILITIES
Borrowings
Total liabilities
NET ASSETS
SHAREHOLDERS’ EQUITY
Called up share capital
Share premium account
Share-based payment reserve
Retained earnings
TOTAL EQUITY
Note
2023
£’000
2022
£’000
4
8
5
6
7
9
9
9
32,881
43
32,924
7,996
199
8,195
32,881
63
32,944
1,433
310
1,743
41,119
34,687
(8,594)
(8,594)
(4,000)
(4,000)
(12,594)
28,525
6,813
18,842
560
2,310
28,525
(7,973)
(7,973)
–
–
(7,973)
26,714
6,812
18,838
433
631
26,714
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 profit for the year ended 31 January
2023 is £2,098,000 (£2,643,000, excluding non-recurring items) (2022: loss £1,943,000, no non-recurring
items).
The accompanying notes form an integral part of these Financial Statements.
The Company Financial Statements were approved by the Board of Directors on 11 May 2023 and
signed on its behalf by:
Neil Campbell
Director
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Company Statement of Changes in Equity
for the year ended 31 January 2023
AT 1 FEBRUARY 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
AT 31 JANUARY 2022
Profit for the year
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY
AS OWNERS
Issue of Ordinary Shares, net of transaction costs and tax
Dividends
Employee share scheme expense
Issued
share
capital
£’000
6,812
–
Share
premium
account
£’000
18,838
–
Share
based
payment
reserve
£’000
Retained
earnings
£’000
Total
£’000
294
–
2,986
(1,943)
28,930
(1,943)
–
–
–
–
–
–
–
–
–
–
6,812
–
18,838
–
–
1
–
–
–
4
–
–
–
–
–
139
139
433
–
–
–
(1,943)
(1,943)
(412)
–
(412)
139
(412)
(273)
631
2,098
26,714
2,098
–
2,098
2,098
(5)
–
132
–
(419)
–
–
(419)
132
TOTAL TRANSACTIONS WITH OWNERS
1
4
127
(419)
(287)
AT 31 JANUARY 2023
6,813
18,842
560
2,310
28,525
The accompanying notes form an integral part of these Financial Statements.
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS
Notes forming part of the Company
Financial Statements for the year ended 31 January 2023
1. Accounting policies
BASIS OF PREPARATION
The Company Financial Statements cover the year ended 31 January 2023.
The Company 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.
The following exemptions from the requirements of IFRS have been applied in the preparation of the
Company Financial Statements, in accordance with FRS 101:
u 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)
u IFRS 7, ‘Financial Instruments: Disclosures’
u 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)
u 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
u 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)
– 134-136 (capital management disclosures)
u IAS 7, ‘Statement of cash flows’
u 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)
u Paragraph 17 of IAS 24, ‘Related party disclosures’ (key management compensation)
u 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
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC
Notes forming part of the Company Financial Statements continued
1. Accounting policies continued
SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies adopted by the Company are the same as those disclosed in
note 1 to the Consolidated Financial Statements. The relevant accounting policies for the Company that
are disclosed in note 1 to the Consolidated Financial Statements are as follows:
u Cash and cash equivalents
u Trade and other receivables
u Trade and other payables
u Share capital
u Taxation
The accounting policies relevant only to the Company are as follows:
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 Company’s business model for managing financial assets.
CRITICAL ESTIMATE AND JUDGEMENTS
Impairment of investments in subsidiaries
The carrying value of investments in subsidiaries is disclosed in note 4 of the Company Financial
Statements. Determining whether an investment is impaired involves management’s judgement,
requiring assessment of the recoverable amount, by comparing to market capitalisation at differing
points during the year.
2. Employees
Aggregate employee costs are as follows:
Wages and salaries
Social security costs
Defined contribution pension scheme cost
Share-based payment expense
TOTAL
2023
£’000
1,203
162
79
132
1,576
2022
£’000
1,396
183
46
139
1,764
Company employment costs are recharged from its subsidiary company, Inspiration Healthcare
Limited, and include the costs of the Directors of the Group and senior management working in
Group roles.
No employees are directly employed by the Company.
No emoluments were directly paid by the Company.
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Notes forming part of the Company Financial Statements continued
3. Auditor’s remuneration
The auditor’s remuneration relating to audit services to the Company has been disclosed in note 4 to
the Consolidated Financial Statements.
4. Investments
Cost
At 1 February 2022
Additions in the year
AT 31 JANUARY 2023
Net book value
AT 31 JANUARY 2023
At 31 January 2022
Note
£’000
32,881
–
32,881
32,881
32,881
There have been no new investments in the year.
The Company has the following interests in subsidiary undertakings registered and operating in
England and Wales:
Name
Nature of business
Direct/
indirect
ownership
% of total
issued
share
capital
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
Direct
Indirect
Indirect
Direct
Direct
Direct
Direct
Indirect
100
100
100
100
100
100
100
100
The registered office of the above companies is:
2 Satellite Business Village, Fleming Way, Crawley, England, RH10 9NE
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:
Commerce Park, Commerce Way, Croydon, CR0 4YL
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
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Notes forming part of the Company Financial Statements continued
5. Trade and other receivables
Amounts receivable from subsidiary undertakings
Other taxes and social security
Other receivables
Prepayments and accrued income
TOTAL
2023
£’000
7,688
187
18
103
7,996
2022
£’000
1,286
26
16
105
1,433
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.
The carrying amounts of the Group’s receivables are denominated in Pound Sterling.
6. Cash and cash equivalents
Cash and cash equivalents comprise solely cash at bank and cash held by the Company.
The Company currently banks with HSBC Bank plc, which has a Moody’s long-term rating of A1 as at
31 January 2023.
7. Trade and other payables
CURRENT
Trade payables
Other taxes and social security
Amounts payable to subsidiary undertakings
Other payables
Accrued expenses
TOTAL
2023
£’000
204
–
8,141
3
246
8,594
2022
£’000
22
4
7,319
3
625
7,973
The fair value of trade and other payables approximates to book value at 31 January 2023. Amounts due
to Group undertakings are non-interest bearing, unsecured and repayable on demand.
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Notes forming part of the Company Financial Statements continued
8. Deferred tax
The following are the major deferred tax assets recognised by the Company and movements thereon
during the current and prior reporting year.
Note that the effective future tax rate is 25% (2022: 25%).
Asset at beginning of year
Credit to the Income Statement for the year
ASSET AT END OF YEAR
The elements of deferred taxation provided for are as follows:
Short-term timing differences
DEFERRED TAX ASSET
Note
2023
£’000
63
(20)
43
2023
£’000
43
43
2022
£’000
25
38
63
2022
£’000
63
63
9. Shareholders’ equity
9(a). Called up share capital and share premium
The Share Capital and Share Premium amounts have been disclosed in note 22 to the Consolidated
Financial Statements.
9(b). Share-based payment reserve
The share-based payment reserve of £560,000 (2022: £433,000), represents the expense recognised in
the Company level Income Statement in relation to the Group Share Option Scheme.
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC 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 online 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 and you will
require your unique investor code, which can be
found on your share certificate, for this purpose.
Share dealing services
You can buy and sell 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, the Channel Islands
or the Isle of Man.
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.
registered office
The
is
Central Square, 29 Wellington Street, Leeds LS1 4DL.
www.linkgroup.eu
Link Group
for
Duplicate share register accounts
If you are receiving more than one copy of our
report, it could be that 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.
For general shareholder enquiries,
please 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
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INNOVATE | CREATE | INSPIRE inspirationhealthcaregroup.comFINANCIAL STATEMENTS Advisors
Company Secretary
Charlie Strickland
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 advisor and broker Cenkos Securities plc, 6,7,8 Tokenhouse Yard, London EC2R 7AS
Legal advisors
CMS Cameron McKenna Nabarro Olswang LLP, Cannon Place, 78
Cannon Street, London EC4N 6AF
Registrars
Link Group, 10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL
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Annual Report and Financial Statements 2023INSPIRATION HEALTHCARE GROUP PLC Registered Office:
Inspiration Healthcare Group plc
2 Satellite Business Village, Crawley,
West Sussex RH10 9NE, UK
inspirationhealthcaregroup.com
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