Classroom
to Clinic
ultrasound
Intelligent Ultrasound Group plc
2023 Annual Report and Accounts
Intelligent Ultrasound Group plc 2023 Annual Report and Accounts
Overview
Strategic Report
Corporate Governance
Financial Statements
1
02
Overview
Highlights
What We Do
Contents
05
Strategic Report
Chairman’s Statement
Chief Executive’s Review
Business Model
Our Strategy
Strategy in Action
2
3
Key Performance Indicators
Environmental, Social and Governance
S172 Statement
Risk Management
Principal Risks
Financial Review
41
Corporate Governance
Board of Directors
Chairman’s Introduction
Corporate Governance Report
Nomination Committee Report
Audit and Risk Committee Report
Remuneration Committee Report
Directors’ Report
Statement of Directors’ Responsibilities
41
43
44
49
50
52
56
58
5
7
13
14
15
17
18
26
30
32
38
59
Financial Statements
Independent Auditor’s Report
Group Statement of Profit and Loss
and Other Comprehensive Income
Group and Company Statements
of Financial Position
Group Statement of Changes in Equity
Parent Company Statement of Changes
in Equity
Group and Company Statement
of Cash Flows
Notes to the Financial Statements
Glossary of Terms
Corporate Directory
59
63
64
65
66
67
68
94
94
Chief Executive’s Review
Another year of good progress
Page 7
Business Model
How we create value for our stakeholders
Page 13
Our Strategy
Making ultrasound easier to learn,
making ultrasound simpler to use
Page 14
Environmental, Social and Governance
Report
Page 18
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Overview
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Financial Statements
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Highlights
Financial
£11.2m
Group revenue
£2.0m
Clinical AI revenue
+11%
+203%
£3.0m
Cash and cash
equivalents
£2.6m
Loss after tax
-58%
-13%
Operational
ScanNav Assist (SonoLyst)
SonoLystlive launched as a standard
feature on GE Healthcare’s Voluson
Expert 22 and 20 ultrasound machines.
ScanNav FetalCheck
New AI development programme
for gestational age (GA) estimation
in pre-natal care.
Simulation
New version upgrades for Bodyworks
and Babyworks launched as well
as a new endometriosis module
for Scantrainer.
ScanNav Liver
Signed a research agreement with the
University of Dundee to develop AI-
based tools for screening patients with
liver disease.
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Strategic Report
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What we do
Providing real time support
from ‘Classroom to Clinic’
Our purpose
Our vision
Easier to learn
Real-time ultrasound education
and training through high-fidelity
ultrasound simulation
Simulation products
Simpler to use
AI-driven image analysis to
make ultrasound smarter
and more accessible
Clinical AI products
Unlock ultrasound
for everyone
Training
Guiding
Supporting
Our markets – 2023 revenue
Direct – North America
Direct – United Kingdom
Reseller network – Rest of the World
£2.8m
£3.6m
£4.8m
Specialties
– Anaesthesiology
– Cardiology
– Critical care
– Emergency medicine
– General radiology
– Intensive care
– Needling
– Obstetrics & Gynaecology
– Paediatrics & Neonatology
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What we do continued
A unique range of ultrasound products in a growing market
Classroom
simulation
Hospital training rooms
and simulation centres
Market
by 2026*
c.$200m
PoCUS**
OBGYN
Clinical AI
software
Clinical scanning and
operating theatres
Obstetrics
AI image analysis for
obstetric ultrasound
Market
by 2028***
$1.3bn
Echo
Neonate and
Paediatric
Anaesthesiology
AI assistance for
regional anaesthesia
*
https://www.stratviewresearch.com/2288/ultrasound-simulator-market.html
** Point of care ultrasound
*** Artificial Intelligence in Ultrasound
Imaging Market – Global Industry Trends
and Forecast to 2028 | Data Bridge
Market Research
Needling
Ultrasound guided
needling simulator
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Chairman’s Statement
‘Classroom to Clinic’
gathering pace
This has been a positive year of progress
for the Group, driven by our AI-related sales
almost tripling to £2m (2022: £0.7m) and
as a result Group revenue rose by 11% to
£11.2m (2022: £10.1m).
Riccardo Pigliucci
Non-executive Chairman
£2m
Clinical AI
revenue
£11.2m
Group
revenue
Importantly, our AI software developments
continued to hit key milestones during the
year: GE HealthCare launched SonoLystlive
as standard on the Voluson Expert
range of ultrasound machines; ScanNav
FetalCheck, our new AI gestational age
estimation software that is in development
was purchased for a number of field trials
in Africa funded by the Bill & Melinda Gates
Foundation; and we commenced the proof-
of-concept development work for our AI
liver software, following the signing of our
data agreement with Dundee University
and NHS Trust.
Strategy
Our unique ‘Classroom to Clinic’
ultrasound strategy is based on:
– Growing the Group’s ‘Classroom’
related revenues through increased
sales of our four ultrasound simulator
platforms and the continued expansion
of our simulator range into new medical
market segments
– Continuing to build our ‘Clinic’ related
AI revenues through increased royalty
income from GE HealthCare, who
incorporate our 20-week obstetrics
ScanNav AI technology in their Voluson
ultrasound systems; increased sales of
our proprietary stand alone AI-driven
ScanNav Anatomy and NeedleTrainer
Plus systems, sold through our direct
sales and reseller operations; and future
new proprietary stand-alone AI-driven
products such as ScanNav FetalCheck
gestational age estimation aimed at
opening up new global medical
imaging markets
This novel ‘Classroom to Clinic’ approach
enables us to work with future clinical
customers early in their medical careers,
aiding brand recognition and product
credibility and then, as they progress to
real patient scanning and life-long learning,
supports them with workflow or diagnostic
AI-based medical imaging software.
We believe this unique approach
to ultrasound will enable the Group
to continue to grow in 2024.
People
I would like to thank all our staff, in
the UK, US and China, for working so
hard to grow the business during the
year and meet all our development and
regulatory milestones.
Shareholders
We continue to have a broad spread
of supportive shareholders, and we maintain
an open-door policy at our head office in
Cardiff and would welcome any visitors
who wish to enjoy hands-on experience
of our cutting-edge ‘Classroom to
Clinic’ technology.
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11%
Revenue growth
in 2023
Chairman’s Statement continued
“ Another year of important
progress and we achieved our
key target to grow AI-related
sales to £2m in 2023”
Board and governance
During the year, Ian Whittaker, who has
served as an Executive Director and
Chief Operating Officer (COO) since joining
the Group on the acquisition of Inventive
Medical Ltd in August 2016, chose to
retire from the Board of Directors and his
position as COO. Ian remains with the
Group in a part-time capacity to assist
on projects, as required.
The Board extends its thanks to Ian for his
commitment and invaluable contribution to
significantly growing the simulation revenue
over the last seven years and wishes him
continued success in his business and
personal endeavours.
ESG
ESG remains an important part of our
reporting and we believe we continue to
have a positive impact locally, nationally
and globally. We have continued to make
improvements in all aspects of ESG and
aspire to be a global force for good,
empowering people to have access to
medical ultrasound, one of the world’s
most important imaging modalities.
See our full report on page 18.
Outlook
2023 has been another year of
important progress for the Group, as we
commercialize our regulatory-approved
clinical AI software products and develop
the next generation of diagnostic AI software.
We achieved our number one target for
the year, which was to grow AI-related
sales to £2m. In addition, our relationship
with GE HealthCare continued to develop
positively with the launch of SonoLystlive,
powered by our obstetrics AI software,
on the Voluson Expert ultrasound
machine range and post year-end on the
Signature ultrasound range. In Q4 2023,
we announced the first trials in Africa that
will be using our ScanNav FetalCheck AI
software to enable an unskilled user to
automatically obtain the gestational age
of a fetus.
As we start 2024, the UK market is
experiencing tougher trading conditions
due to the current reduction in NHS capital
expenditure spending. We are therefore
keeping a tight control on our overheads
to offset any potential reduction in UK
revenue. When these cost controls are
combined with the growing revenue
from our high margin AI-related products
and non-UK related simulation markets,
the business continues to forecast that
it will reach profitability with its current
cash resources.
Riccardo Pigliucci
Non-executive Chairman
30 April 2024
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Chief Executive’s Review
Easier to learn
Simpler to use
We make clinical diagnostic ultrasound easier
to learn and simpler to use by providing
clinicians around the world with real-time
support from the classroom to the clinic.
AI is a key element of this unique approach,
and the report below details the progress
made in 2023 and the key challenges
faced during the year.
Stuart Gall
Chief Executive Officer
SIMULATION (Classroom)
We design, develop and sell some of the
world’s leading high-fidelity ultrasound
training simulators. Training medical
professionals in the skills required to
competently scan with diagnostic
ultrasound remains an important
building block of our business.
The Group’s simulation revenue declined
slightly by 3% to £9.1m (2022: £9.4m) in
2023, mainly due to lower-than-expected
sales in Western Europe and China
throughout the year and recognised revenue
being slightly less than we anticipated in
the final quarter of 2023. However, it should
be noted that the 2022 UK simulation
revenue figures included c.£1.9m of one-
off orders from the NHS, so adjusting for
this, simulation revenue in 2023 actually
increased by 21% (2022*: £7.5m).
We have four ultrasound simulation-only
platform technologies focused on the
following markets:
– ScanTrainer – obstetrics and
gynaecology (OBGYN)
– HeartWorks – echocardiography and
anesthesiology (ECHO)
– BodyWorks – emergency medicine,
critical care, intensive care and
point-of-care (PoCUS)
– BabyWorks – neonate and paediatrics
*
Alternative performance measure for 2022
UK simulation revenues
UK simulation revenues £m
Alternative performance measure basis
Unadjusted
2023
2.4
2.4
2022
Movement
3.0
4.9
-22%
-52%
These ultrasound training platforms are,
in the main, high-value, capital equipment
sold to the global medical institution
market, through our direct sales forces
in the US and UK, plus a network of 23
resellers covering over 30 countries in the
rest of the world. To date we have sold
c. 1,700 simulators into over 800 medical
institutions around the world.
Research & Development
During the financial year, the
simulation R&D team focused on the
following developments:
3D Echo MPR release for HeartWorks
In February, we added Multiplanar
Reconstruction (MPR) as an optional extra
to the HeartWorks simulation platform for
cardiac anatomy and echocardiography,
enabling students to build their confidence
in 3D cardiac image acquisition and
manipulation techniques.
BodyWorks 4.5
In August we launched BodyWorks 4.5,
the latest version of our female patient
point-of-care simulator that includes ten
new high-value cases within the lung and
gastric regions, as well as improvements
to the custom patient lists to deliver
increased flexibility for trainees and tutors.
BabyWorks 2.0
In June we launched an upgraded
version of BabyWorks with new modules
for cardiac, cranial, gastric and line
placement. The modules were developed
in collaboration with leading specialists
in infant medicine to ensure the content
is aligned with the latest requirements
of neonatal and paediatric point-of-care
ultrasound (PoCUS).
Endometriosis module
for ScanTrainer
It is estimated that 10% of women
worldwide have endometriosis so
in May a new endometriosis augmented
reality training module was launched
for ScanTrainer to support clinicians
in learning how to locate and identify
endometriotic disease in the ovaries, bowel
and bladder using transvaginal ultrasound.
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Chief Executive’s Review continued
“ We train medical professionals in the
skills required to competently scan
with diagnostic ultrasound”
Territory Review – Simulation
United Kingdom
Revenue declined by 52% to £2.4m
(2022: £4.9m) partly due to the receipt of
£1.9m of one-off orders from a UK NHS
training initiative in 2022. Excluding these
exceptional orders, the UK like-for-like
revenue declined by 22%.
There were two main factors that impacted
simulator training budgets in the UK
during 2023. Firstly, the NHS has had
to implement cost savings to cover the
increased cost of locum doctors and
overtime caused by the doctors strikes
during the year. Secondly, the merger of
Health Education England (HEE) and NHS
England impacted one of the biggest
sources of funding for simulation in the
NHS. All these reduced anticipated training
spend in the second half of the year, by
pushing expected orders into 2024.
Although this merger is now broadly
complete, the UK market is dominated
by NHS-related spending and there are
concerns that the ongoing junior doctor
strike will reduce funds normally made
available for capital purchases. So although
there remains strong purchasing interest in all
our simulation products, we are monitoring
closely whether the shortfalls in NHS Trust
finances will impact 2024 training budgets.
North America
Revenue increased by over 60% to £4.5m
(2022: £2.8m), a record high, with strong
sales across all our simulator product
platforms. We were particularly encouraged
by the take-up of our new est simulator,
BabyWorks, with medical schools such
as the University of Nebraska Medical
Center (UNMC) investing in the simulator,
to expand its clinical simulation programme
into bedside ultrasound for infants.
We continued to invest in the US-based
sales team in 2023 and moved to a larger
office and build space in Alpharetta. We
also improved our application specialist
web-based demo facilities and with an
encouraging long-term sales pipeline, we
look forward to continued growth in the
North American direct-to-market operation
in 2024.
Rest of the World
Revenue increased by 31% to £2.3m
(2022: £1.7m).
We currently have 28 resellers that sell
our simulators outside the UK and North
America and the revenue stream has
been somewhat of a rollercoaster in
recent years. 2023 continued that trend
with sales returning to 2021 levels and,
although we had positive sales growth in
India, Scandinavia, South Africa and Israel,
the sales growth in China was slower than
expected and sales in Western Europe,
Gulf and Australia were disappointing.
Simulation revenue
UK
£2.4m
(2022*: £3.0m)
-22%*
£4.5m
(2022: £2.8m)
+62%
£2.3m
(2022: £1.7m)
+31%
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Chief Executive’s Review continued
“ One of the leading independent AI software vendors
in real-time ultrasound image analysis. Our products
provide real-time workflow enhancements that
support faster, more standardised scanning and
support decision-making”
However, with over £1m of revenue being
generated in the final quarter of 2023,
and with the increased range of products,
growing pipeline and anticipated sales
growth from China, we hope to continue
to grow the reseller market in 2024.
CLINICAL AI (Clinic)
Real-time clinical AI software that makes
medical ultrasound easier to use is a key
part of our ‘Classroom to Clinic’ vision,
and we were delighted that our AI-related
revenue tripled to £2.0m (2022: £0.7m).
We are one of the leading independent AI
software vendors in real-time ultrasound
image analysis and our products provide
real-time workflow enhancements that
support faster, more standardised
scanning, and importantly also support
decision-making, so that the stress of
scanning can be reduced and the potential
‘burn-out’ of clinicians being asked to
increase productivity is minimised.
We have three AI-related software
products available in the market:
– ScanNav Assist obstetric AI software
that powers GE HealthCare’s SonoLyst
software on their Voluson range of
women’s healthcare ultrasound machines;
– ScanNav Anatomy Peripheral Nerve
Block (PNB) for real-time regional
anaesthesia highlighting; and
– NeedleTrainer that incorporates the
PNB software to teach ultrasound-
guided needling skills.
We expect 2024 to be another year
of significant sales growth for our
AI-related products.
ScanNav Assist (SonoLyst)
Our ScanNav Assist AI technology drives
GE HealthCare’s SonoLyst X/IR and Live
software, the world’s first fully integrated
ultrasound AI tool that automatically
and in real-time recognises the 21 views
recommended for the second trimester
(20 week) fetal sonography scan.
Integrated into GE HealthCare’s Voluson
SWIFT and Expert ultrasound machines,
SonoLyst is available in two formats:
– SonoLyst X/IR is a virtual on-board
expert utilising AI to automatically identify
fetal anatomy on the operator’s saved
views, enhancing efficiency and providing
quality assurance by comparing the
image to the standard criteria to ensure
image acquisition quality and consistency.
– SonoLystlive is a fully automated
version of X/IR that automatically
saves the optimal views live as the
operator scans, enhancing efficiency,
consistency and saving up to 40%
of time on routine 20-week scans.
By automatically and in real-time
supporting the sonographer in their
decision-making, the software can also
help reduce the often considerable stress
of obtaining the recommended views.
203%
growth in
Clinical AI revenues
in 2023
The issue of burnout in scanning centres
is increasing around the world and it is
hoped that the adoption of this technology
will help reduce this burden.
GE HealthCare is the largest medical
imaging company in the world and under
our long-term agreement has exclusive
rights to our clinical AI technology in the
field of women’s healthcare until 2029.
The royalty terms, product sales and the
timings of the related product launches
under this agreement are undisclosed.
The launch in October of SonoLystlive
as a standard feature on GE HealthCare’s
Voluson Expert 22 and 20 ultrasound
machines was a key commercial
milestone as this is GE HealthCare’s
premium ultrasound machine in the obstetric
market. Post year-end Sonolystlive was also
launched on the Voluson Signature range.
GE HealthCare is the dominant manufacturer
in this market, with over 50% market share
of the 35,000-plus ultrasound machines that
are sold annually. We therefore expect to see
increased SonoLyst sales throughout 2024
and beyond as SonoLyst continues to be
rolled out globally.
ScanNav Anatomy Peripheral
Nerve Block (PNB)
Our FDA and CE cleared ScanNav
Anatomy PNB AI software simplifies
ultrasound-guided needling by providing
the user with real-time AI-driven anatomy
highlighting for a range of medical
procedures. The device supports the
performance of healthcare professionals
who are suitably qualified, but who perform
ultrasound-guided local anaesthesia
procedures on a less frequent basis.
The device supports ten common
peripheral nerve blocks and is sold as a
standalone screen that is plugged into
existing anaesthesiology ultrasound
machines to provide clinicians with real-
time highlighting of their live ultrasound
image. Our aim is to support anaesthetists,
who are competent but less confident in
the specialist knowledge of ultrasound
anatomy, to perform nerve blocks and as a
result increase the number of ultrasound-
guided nerve blocks that they can perform.
The device is available for sale in
the US, UK, France, Germany, Spain
and Scandinavia. During the year
several important studies were released
to demonstrate how ScanNav Anatomy
PNB can help support the adoption
of ultrasound-guided regional
anaesthesia (UGRA).
The accuracy of ScanNav Anatomy PNB
was rated as 93.5% by expert clinicians1:
– Clinical trials demonstrated that
ScanNav Anatomy PNB is:
– helpful in identifying specific
structures: in up to 99.7% of cases1
– helpful for confirming the correct
block view in up to 99.3% of cases1
Could reduce the incidence of adverse
events (such as nerve injury) and block
failures by between 62.9% and 86.3%.
Studies also demonstrated a relative
increase in delivery of UGRA by 40.4%1
showing ScanNav Anatomy PNB is;
– helpful to experts in teaching (including
in clinical setting);
– helpful to non-experts in training and
clinical practice.
With over 25,000 anaesthesiology
machines in operation in the US, UK and
Western Europe markets, and ultrasound-
guided peripheral nerve blocks increasingly
being used as a prudent alternative to
general anaesthesia as well as a method of
concurrent analgesia (potentially reducing
opioid usage), we continue to believe that
ScanNav Anatomy PNB has considerable
growth potential over the coming years.
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Chief Executive’s Review continued
25,000
anaesthesiology
machines in US, UK
and Western Europe
markets
ScanNav Anatomy PNB is also available as
a training simulator for medical learning on
volunteers, prior to patient contact and as
such is incorporated into our NeedleTrainer
simulator (see below).
NeedleTrainer
Developed by the clinical AI software
team as a spin-off from the ScanNav
Anatomy PNB research and development,
NeedleTrainer is the first of its kind, using
a retractable needle and virtual image
overlays to simulate needling on a live
participant, using a live ultrasound scan.
This enables trainees to develop hand-eye
coordination, optimum positioning, and
accuracy in ultrasound-guided interventional
procedures in a realistic and safe clinical
environment with minimal risk.
The system is sold with the trainer version
of our ScanNav Anatomy PNB AI-driven
software integrated into the device and is
also sold as a standalone device, with the
GE Vscan Air handheld ultrasound machine.
The product is sold into major simulation
centres, anaesthesiology departments,
emergency and primary healthcare centres.
“ ScanNav FetalCheck, a new AI development
programme for gestational age estimation in prenatal
care, is our first diagnostic AI software that aims to
enable a non-skilled or skilled user to automatically
establish the gestational age (GA) accurately with
minimal training”
We also sell a Classroom to Clinic
(C2C) needling package that includes a
NeedleTrainer system, that is placed into
the simulation centre, and a ScanNav
Anatomy PNB clinical system, that is
then placed into the operating theatre
block room. This enables:
– trainee anaesthetists to learn
with confidence;
– more qualified anaesthetists to
conduct PNBs;
– increase the number of PNBs per
hospital to be increased.
Future ScanNav AI products
During 2023 we progressed the
development of our next two AI
software products.
ScanNav FetalCheck
At the end of 2023 we announced a new
AI development programme for gestational
age estimation in prenatal care. ScanNav
FetalCheck is our first diagnostic AI
software that aims to enable a non-skilled
or skilled user to automatically establish the
gestational age (GA) accurately with minimal
training. Pregnant women are usually offered
two routine ultrasound scans. The first
at 11–14 weeks is performed to confirm
viability of the fetus as well as the gestational
age to pinpoint the likely due-date. A second
scan at 18-20 weeks focuses on detecting
congenital abnormalities. Additional scans
may be offered to monitor high-risk or
complex pregnancies.
Having an accurate gestational age
is important in the management of
pregnancy, both to assess fetal growth and
to inform treatment choice in the event that
complications are seen. However, accurate
determination of GA is difficult in low
and middle -income countries (LMICs)
as, currently, GA must be measured by
trained sonographers.
Our ScanNav FetalCheck software
aims to enable a non-skilled user to get
an accurate GA with minimal training
and without the need for an expensive
high-end ultrasound machine. It has the
potential to transform antenatal care both
in LMICs and in high income countries
(HICs) by allowing the age of the fetus
to be assessed in a primary care setting
where women need it.
We were also pleased to announce that
a leading university in Africa purchased
four ScanNav FetalCheck systems as
part of a trial to evaluate biomarkers and
other factors which affect the probability
of stillbirth.
Post year-end we also announced that
our ScanNav FetalCheck AI software is
to be used in the largest ever trial on the
use of aspirin to prevent pre-eclampsia.
Conducted in Kenya, Ghana and South
Africa, the trial is funded by the Bill &
Melinda Gates foundation and led by
Concept Foundation (see page 23).
1 https://onlinelibrary.wiley.com/doi/10.1002/ca.23742
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Chief Executive’s Review continued
“ Signed a research agreement with the University
of Dundee to initiate the proof-of-concept work
to develop AI-based tools for screening patients
with liver disease”
30%
of the world’s
population have
MASLD
It aims to advance evidence on pre-
eclampsia prevention and inform policies
so that women who are treated with
aspirin to prevent pre-eclampsia receive
a dose that is both effective and safe.
All clinical trial sites will use Intelligent
Ultrasound’s ScanNav FetalCheck
software to enable frontline healthcare
professionals, with no prior experience
of ultrasound, to quickly estimate
gestational age.
ScanNav FetalCheck is currently not
licensed for clinical use.
ScanNav Liver
In November 2023 we were pleased to
announce that we had signed a research
agreement with the University of Dundee
to initiate the first phase of proof-of-
concept work to develop AI-based tools
for screening patients with liver disease.
Utilising the comprehensive archive
comprising over 1m ultrasound images
from approximately 50,000 patients
from the University of Dundee and NHS
Tayside, our AI team intends to create
machine-learning models that make it
easier to determine stage liver disease
and monitor disease progression.
1 Fatty Liver Disease (liverfoundation.org)
2
NAFLD, NASH and fatty liver disease –
British Liver Trust
The agreement, which is mainly royalty-
based, will allow Intelligent Ultrasound
to develop ultrasound-based AI tools
with the potential to support clinicians
in the clinical management of metabolic
dysfunction-associated steatotic liver
disease (MASLD) and its advanced
form, metabolic dysfunction-associated
steatohepatitis (MASH).
MASLD is the leading cause of liver
disease and is closely related to obesity,
the rates of which are rising1.
Monitoring MASLD is important as patients
in the early stages of the disease may
be able to reduce the effects on their
liver with dietary and lifestyle changes if
caught in time2.
Around 30% of the world’s population have
MASLD, and by 2030 it is expected that
healthcare systems will need to accurately
stage the disease to allow them to target
treatment. As current methods for diagnosis
are either invasive, costly, or inaccurate,
it is hoped that AI-based ultrasound may
prove to be a cost-effective point-of-care
technique that can give clinicians the
answers they need.
Prof. John Dillon at the University of Dundee
is a world-renowned hepatologist, who
played a major role in introducing Hepatitis
C screening in Scotland. We believe that his
team’s clinical experience, combined with
the richness of the Dundee dataset, will
create a strong pairing with our expertise in
creating healthcare AI solutions. Signing the
research agreement was a key longer-term
step for us as we look to build our fourth
AI ultrasound platform and we have high
hopes for this proof-of-concept work.
Challenges to the ‘Classroom
to Clinic’ business
Ultrasound continues to be a growing
medical diagnostic tool, with increasing
demand for training tools that can enhance
a medical practitioner’s scanning skills
and clinical products that can assist
sonographers. However, there continue
to be capital expenditure limitations on
medical training budgets for high-value
medical simulators and on the clinical side
hospital funding can also be hard to access,
with long adoption periods and purchase
cycles of between six to 18 months.
This makes revenue forecasting difficult,
especially during times of government
spending cutbacks, political upheaval,
changes of government or pandemics
when funds can be diverted
to frontline care.
The purchasing decisions made by
medical institutions in the simulation
market remain broadly based on the
quality of training combined with value
for money, rather than simply the
lowest priced solution.
During 2023, we continued to respond
well to competitive products and pricing
and margin pressures by offering a variety
of purchase price points, expanding our
product extensions and increasing our
e-learning options that can work in tandem
with our hands-on training simulators.
To counter clinical funding constraints our
clinical AI products are competitively priced
and aim to either provide improvements
to the workflow, destress the scanning
process or enable more clinicians to
confidently complete a procedure that
will save a hospital money. After a two-
year period where we increased our key
component stocks to combat supply
chain pressure, during the second half
of 2023 we have been able to reduce
our stock levels and now have only three
components that have a lead time longer
than four weeks.
We are conscious that, for a relatively
small company, there has to be constant
monitoring of cash and stock against
revenue forecasts and potential supply
chain spikes. To date we have managed
this well and will continue with the current
policy in 2024.
We continue to review supplier costs
and overheads and are conducting a
component savings review but expect
our simulation gross margin to hold stable
in 2024. We are currently reviewing the
option for price increases in the second
half of 2024.
The AI-based ultrasound imaging software
market is recognised as having significant
global potential and as such there is
considerable competition from both the
existing ultrasound manufacturers and well-
funded independent AI software vendors.
With the revenue models for AI-driven
software still in the relatively early stages of
commercialisation, we continue to have a
two-pronged go-to-market strategy:
– Our ScanNav Assist software is being
sold through a royalty-based, ‘on-
machine’ licence with GE HealthCare,
whose established sales network
can provide faster roll-out of our
technology in the new ultrasound
machine market; and
– Our ScanNav Anatomy PNB software
is being sold through our own sales
network directly to the global pool
of existing ultrasound machines via
our own portable ‘plug-in’ real-time
AI-enabled device.
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Chief Executive’s Review continued
“ The AI-based ultrasound imaging software
market is recognised as having significant global
potential and as such there is considerable
competition from both the existing ultrasound
manufacturers and well-funded independent AI
software vendors”
Although the restrictions caused by the
pandemic have now fully receded in all our
markets, there are several potential threats
to the world, regional and local economies.
These include:
– The continued threat that the Russian
invasion and illegal occupation of Ukraine
could escalate to the point where it
impacts other European countries
– The Israeli-Hamas war and
increased tension in the Middle
East region escalating
– The impact on hospital budgets
of an economic slowdown in UK,
Europe and China
– The disruption to government spending
plans that can be caused by imminent
elections in the US and UK
– The continuation of the junior doctors
strike in the UK significantly reducing
funds available for capital purchases.
Quality Management System
Meeting the standards of ISO 13485:2016
remains a high priority for the Group, as we
continue to ensure the consistent design,
development, production, installation, and
sale of medical devices that are safe for
their intended purpose.
Workplace environment
We have a great team that has worked
incredibly hard all year and I would like to
thank everyone for enabling us to achieve
so much.
Shareholders
I would also like to thank our shareholders
for their continued support as we grow our
Classroom to Clinic vision and produce
cutting edge AI software that will make
ultrasound easier to use for medical
professionals around the world.
Looking ahead
In 2023 over half of our AI-related revenue
came from our women’s health-related
AI software sales, which included both
GE HealthCare royalty income, combined
with revenue from studies utilising our
ScanNav FetalCheck AI software we are
well placed to continue this growth.
Stuart Gall
Chief Executive Officer
30 April 2024
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Business model
Creating
value
Our purpose
To make ultrasound, the world’s fastest, safest and cheapest
imaging modality, easier to learn and simpler to use
Our values
Integrity, honesty and commitment to excellence
Our key strengths
Our value chain
Creating value for
our stakeholders
Products and
product pipeline
See ‘What we do’ on page 3
Skilled
leadership team
See the Board of Directors on page 41
Growing
addressable markets
See the Chief Executive’s review
on page 7
Innovate, develop and partner
We are ultrasound specialists. Ideas are generated by regular
cross-functional meetings where staff and Key Opinion Leaders (KOLs)
are encouraged to bring new ideas from their own unique experiences
of the ultrasound market
Investors
Build and supply
Although we are mainly an assembly and software integration
operation, the prime objective is to deliver high quality, reliable products
to our customers, from our UK operations centre in Caerphilly, Wales
Routes to market
We have three routes to market:
– Direct: through a team of specialist business development
managers based out of Cardiff, UK and Alpharetta, USA
– Resellers: we have over 20 specialist resellers of our products
in the EMEA region, Asia and Australasia
– OEM’s: royalty-based licence agreements for our AI software
Customers
In the main, our customers fall into two distinct categories:
– Clinical institutions – including, but not limited to: hospitals,
medical teaching schools, sonography schools, imaging centres,
simulation centres and medical companies
– Ultrasound vendors – such as GE HealthCare
Employees
Partners
Suppliers
Customers
Healthcare
professionals
Community
and
environment
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Our strategy
We continue to build
our business based
on our ‘Classroom to
Clinic’ strategy
Strategic Framework
Make ultrasound
easier to learn
Make ultrasound
simpler to use
Objective
2023 Objectives
2023 Progress
2024 Objectives
– Advance ultrasound training
– Generate c.£10m revenue
– Simulation sales in 2023 of £9.1m
through simulation
from simulation
– Continue to build our range of world-
class ultra-realistic simulators to be
one of the world leaders in ultrasound
training through simulation
– Increase US revenue with an
expanded sales team
– Launch BabyWorks v2.0,
BodyWorks v4.5 and ScanTrainer
endometriosis module
– Increase e-learning content
and sign first overseas e-learn
commercial agreement
– US revenues increased by 62%
– Bodyworks 4.5 and BabyWorks
v2.0 released
– ScanTrainer endometriosis
module released
– Overseas e-learn commercial
agreement signed
– Generate c.£11m revenue from
simulation with growth across
all three regions
– Explore feasibility of low-cost
opportunities to address changing
simulation market
– Maintaining and sustaining our current
Simulation Platforms whilst moving
into new market segments
– Develop ‘Needling on Eve’
on BodyWorks
– Empower clinicians through AI
– Generate c.£2m revenue from
– Clinical AI sales increased by 203%
– Double Clinical AI revenue to c.£4m
– Follow clinicians into the scanning
room to give them world-leading
AI-driven tools that enable them to
scan patients faster and better
AI-related sales
– Continue to develop GE
Healthcare relationship
– Complete additional studies for
ScanNav PNB
to £2.0m
– SonoLystlive launched as a standard
feature on Voluson Expert 20 and 22
– New ScanNav FetalCheck AI software
development programme announced
– Continue to develop GE
Healthcare relationship
– SonoLystlive to launch on Voluson
Signature 20 and 18
– Continue to develop ScanNav
– Expand use of ScanNav PNB and
– First phase of ScanNav Liver
FetalCheck AI software
– Enable AI for primary care and
– Sign new image database agreements
– Research agreement signed with
at‑home use
– Explore long-term partnership
– Develop AI that will enable ultrasound
opportunities
University of Dundee which provides
access to over 1m images
NeedleTrainer
development started
– Increase clinical sales of ScanNav PNB
– Continue ScanNav Liver development
using the image data from University
of Dundee
scanning in primary care and ultimately
at home to enable ultrasound for all
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Strategy in Action continued
Case study
Easier to learn Simpler to use
Southmead Hospital invests in
BabyWorks to teach bedside
ultrasound for neonates
Southmead Hospital, Bristol has invested in the BabyWorks simulator to
support hands‑on teaching in bedside ultrasound for neonatology trainees.
BabyWorks will allow trainees on the neonatal wards to develop skills in
Point‑of‑Care Ultrasound (PoCUS) and echocardiography in a risk‑free
supportive environment.
Southmead Hospital is a regional
tertiary centre and joint-lead centre for
the northern sector of the Southwest
Neonatal Network. In addition to
internal training, the department has
set up a regional training course
using BabyWorks.
Dr David Evans MBE, Consultant
Neonatologist & Director of Medical
Education shared “it’s quite difficult to
learn on babies because they’ll start
protesting, they get cold, and they’re
being disturbed. So, it is very useful to
practice on a simulator.”
BabyWorks allows trainees to learn
probe manipulation, viewing windows,
and ultrasound image interpretation
in a supported environment, without
the pressures of clinical practice. This
allows trainees to build confidence and
technique to apply to real-life scanning,
so when training in-clinic they can
maximise time and reduce the stress
to the infant.
“It means that they’re not rushing when
they are scanning a baby” explained Dr
Amiel Billetop, Consultant Neonatologist.
“When scanning an infant, they have a lot of
external factors that they’re worrying about
at the same time as trying to scan. If they’ve
already practised in a simulated way on a
manikin, then they can maximise their time
scanning the infant.”
Dr Evans added “The manikin also means
you are able to slow down and unpick
what they’re doing during the examination,
because you can’t do that when scanning
a real baby as that would prolong the
examination, which would be to the
detriment of the baby. The 3D models and
the simulations offered with BabyWorks
provide that ability to move offline if you
like, and to explore just how you get the
standard views.”
For more information visit www.
intelligentultrasound.com/news
“ It means that they’re
not rushing when they
are scanning a baby”
Dr Amiel Billetop
Consultant Neonatologist
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“ We are required
to train doctors so
they are ready for
independent practice,
but we need to train
safely and effectively
whilst mitigating risk
to patients”
Dr Alasdair Taylor
Consultant Anaesthetist,
Ninewells Hospital, Dundee
Strategy in Action continued
Case study
Easier to learn Simpler to use
NHS Education for Scotland
invests in NeedleTrainer and
ScanNav Anatomy PNB to
deliver enhanced ‘Classroom
to Clinic’ learning
NHS Education for Scotland (NES) is an education and training body and
a national health board within the National Health Service (NHS) Scotland,
UK. NES aims to lead the design and delivery of high quality technology‑
enhanced learning for the health and social care workforce across Scotland.
Dr Ed Mellanby is the Simulation
Associate Postgraduate Dean for
Scotland. He commented that “It is a
huge challenge to consistently meet
the requirements of training in regional
anaesthesia in a safe and reliable way.
We are developing a national approach
to simulation training in Scotland, with
the aim of sharing resources. This
technology aligns with that ambition
and with both patient and curriculum
requirements. I am really excited to see
how this can reduce the variability in
practice and training, and witness the
positive impact on performance that we
believe this will produce.”
Dr Alasdair Taylor (Consultant Anaesthetist,
Ninewells Hospital, Dundee) is working
closely with Dr Melanby to deliver this
NES investment. Alasdair explained
“as a team, we want to increase the
delivery of safe and efficacious ultrasound
guided regional anaesthesia (UGRA)
to patients in Scotland. Patients benefit
from reduced morbidity, improved pain
scores, and a reduced opiate requirement
resulting in fewer/less serious side effects.
Organisations can benefit from greater
theatre efficiency, and shorter length and
cost of in-patient stay. Also, with the long-
term aim of performing more awake regional
anaesthesia, we can achieve a reduced
carbon footprint for surgical procedures.”
However, the risks of poorly performed
UGRA and ultrasound-guided needle
insertion are well documented, including
damage to nerves that can lead to chronic
pain, loss of sensation and muscle
weakness. Poor identification of structures
on ultrasound can lead to needle trauma
(such as to blood vessels, the lung,
bowel and kidney).
For more information visit www.
intelligentultrasound.com/news/
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Key Performance Indicators
Measuring success
We assess Group operational
and strategic progress against
key performance indicators,
or KPIs.
These KPIs provide a clear direction as to how
we should achieve our goals. Importantly, these
measures are reflected in management targets
and are aligned with our growth objectives and
our purpose, strategy and vision.
Link to strategic pillars
Make ultrasound
easier to learn
Make ultrasound
simpler to use
Link to risks
1 Strategic
2 Commercial/operational
3 Financial
4 Compliance
*Restated - see page 68
For more on information our strategic pillars
see page 14
For more information on risks see page 30
Financial
Revenue £m
1
2
3
Cash and
cash equivalents £m
1
3
Gross margin %
3
2023
2022
2021
11.2
2023
3.0
10.1
2022
7.2
7.6
2021
5.0
2020
5.2
2020
8.8
2023
2022*
2021
2020
61
60
60
60
2023: increase of 11%
2023: decrease of 58%
2023: increase of 1%
Revenue from
sales of simulation
and clinical AI products
Operational
AI image
1
database (millions)
4
2023
66
2022
37
2021
15
2020 4
Cash resources available
Gross margin
New products
launched (number)
1
2 4
2023
2022
2021
2020
2
4
3
3
2023: increase of 29m
2023: 4 new upgrades
launched
Total number of AI database
ultrasound images
Total new products/
versions launched
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Environmental, Social and Governance
A global force
for good
“ We aspire to being a global force for good, empowering
people to have access to medical ultrasound, one of
the world’s leading imaging modalities.”
Stuart Gall
Chief Executive Officer
Our three guiding principles
Make a positive
impact on
the world
Do the right thing
while making
an impact
Enjoy making
an impact
Message from the CEO
ESG remains a core element of our
mission and strategy, and we continue
to make improvements in both reducing
the environmental impact of our products,
operations and practices and our
reporting at all levels.
– We are now in our second year of
expanded Scope 3 impact analysis.
– Our flexible working policy is both
popular and productive.
– We encourage our employees to think
about how they travel to work and
reward green travel.
– Our STEM and local university
engagement programme continues,
and we commenced our local
intern programme.
– We have made changes to the
composition of our Board to meet
the corporate governance standards
for an AIM-listed company
I am also delighted to include two new
case studies that again demonstrate the
impact our products and services make
on patients and the medical community
around the world.
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Environmental, Social and Governance continued
ESG Impact
– 1500+ systems operating in over 800 medical
institutions around the world.
– Over 1000 systems using our real-time AI image
analysis software.
– ScanNav FetalCheck, our gestational age software,
is to be used in the largest-ever trial on the use of
aspirin to prevent pre-eclampsia (see page 24).
– Partnership with WFUMB to educate underserved
regions of the world (see page 23).
– 38% female representation on the Board.
– 35% female representation across the Board,
Management and Group.
– 1,056 tonnes of CO2 emissions in 2023 fully offset
in Gold Standard VAR projects.
UN Sustainability Development Goals
At the heart of the United Nation’s 2030 agenda for sustainable development are
17 Sustainable Development Goals (SDGs), which recognise that ending poverty
and other deprivations must go hand-in-hand with strategies that improve health
and education, reduce inequality, and spur economic growth – all while tackling
climate change and working to preserve our oceans and forests.
The SDGs we consider to be the most relevant to Intelligent Ultrasound are:
At a product level we believe we have an impact through our Classroom to Clinic
products helping to support, guide and speed up ultrasound which helps improve
global health and wellbeing.
Specifically, this:
– improves access to better maternal health and health of newborns;
– speeds up scanning and improves scanning skills in emergency medicine,
critical care and intensive care;
– enables safer ultrasound guided needling procedures.
At a Group level, albeit in a small way, we align to the following SDGs by:
Easier to learn
Real-time ultrasound
education and training
through high-fidelity
ultrasound simulation
Simpler to use
AI-driven image
analysis to make
ultrasound smarter and
more accessible
Simulation
Clinical AI
Unlock ultrasound
for everyone
Supporting the health and wellbeing of our employees:
– Providing opportunities to continually develop our employees.
– Commitment to ensure equal opportunities for all, irrespective of gender.
– Supporting our local community.
– Endeavouring to conduct our business in accordance with the best practices.
– Standards of quality and safety.
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Environmental, Social and Governance continued
Our ESG Framework is built around our 3 Pillars: Environment, Social (People and Product), Governance.
Framework
Environment
Principles
Social (people)
Principles
Social (product)
Principles
Governance
Principles
– Minimise the negative impact on the planet
– Provide a safe and supportive work environment
– Operate in an ethical and responsible manner
– Be honest, transparent and responsible
– Continue to build a positive culture
– Help society by providing products that help
– Meet the highest standards of corporate
Stakeholders
Stakeholders
– Have a positive impact on our local communities
patient outcomes
Stakeholders
– Employees
– Customers
– Patients
– Employees
– Patients
– Clinicians
– Investors
– The planet
– Clinicians
– Local communities
Commitment
Commitment
Commitment
governance relative to our size
Stakeholders
– Investors
– Employees
– Customers
– Patients
Commitment
– Understanding our full impact on the environment
– Attract, retain and develop our talent
– Uphold ethical standards in our supplier
– Zero tolerance to bribery, corruption or fraud
– Manage energy-use efficiently and increase
– Enable equality, diversity and inclusion to thrive
and reseller chain
– Support employee health, safety and wellbeing
– Continue to increase our recyclable packaging
renewables where possible
– Improve recycling and reduce waste
– Increase web demonstrations and online training
to reduce first-touch travel impact
2023 metric
– Total CO2 emissions
– Total CO2 emissions per £ of revenue
– Total CO2 emissions per employee
– Green travel scheme expenditure
UN Sustainable Goals
– Support charity work
– Support local STEM engagement
– Support local university intern schemes
2023 metric
– % employee turnover
– % female representation
– % staff survey response-rate
– Local STEM events
– Interns engaged
– Employee charity days
UN Sustainable Goals
2023 metric
– Scope 3 CO2 emissions
– % of recyclable packaging
UN Sustainable Goals
UN Sustainable Goals
– Robust data governance and compliance
– Commitment to quality management
system (QMS)
2023 metric
– Compliance with the QCA Corporate
Governance Code
– Report cases of bribery, corruption or fraud
– Whistleblower reports
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Environmental, Social and Governance continued
Environment
Environmental
Carbon dioxide emissions (tonnes CO2)
Carbon dioxide emissions (tonnes CO2 per employee)
Carbon dioxide emissions (kg CO2 per £ of revenue)
Scope 1 to 3 CO2 emissions offset
Environmental and sustainability policies
2023
2022
1,056.0
1,136.0
15.8
0.09
100%
Yes
17.5
0.11
100%
Yes
Highlights from 2023
– We maintained our status of a carbon-
neutral company
– We reduced our total Scope 1 to 3
carbon emissions by 7% in 2023
– Our employee commuting scheme
continues to incentivise low-carbon travel
– Electric car and bicycle
purchase scheme
– Free electric charging available
to all employees at both our
Hodge House and Caerphilly sites
– We strive to reduce the environmental
impact of all of our packaging. All our
cardboard packaging now comes
from sustainable sources, our packing
peanuts are fully biodegradable and
our pallets are locally sourced. Only
30% of our bubble wrap packaging is
from recycled materials but it can itself
be recycled
– In late 2022 we started to ship the
cart systems we purchase from North
America via sea freight instead of air
freight which has reduced our upstream
emissions in 2023
– At the end of 2022 we joined the DHL
GO Green Scheme which allows us to
reduce our emissions associated with
outbound shipping through the use of
Sustainable Aviation Fuel (SAF)
– We continue to review international
travel and conference attendance, and
continued to conclude that travel was
acceptable for the level of business
and necessary, given the nature
of the products we sell
– Web-based sales demonstrations and
training continue to be the first point
of customer contact and the primary
training medium and since October
2023 these have been monitored using
the Group’s time-tracking software
– Where possible we try to buy
locally, and utilise recycled and/or
recyclable materials
– We also completed a review of the
energy tariffs to ensure the energy
we use is sustainable and from
renewable sources
– We continued with our local support of
the charity Stump Up for Trees in Wales
Offsetting
– We have offset 100% of the Group’s
2023 CO2 equivalent greenhouse
gas emissions through the following
Climate Partner Gold Standard
Verified Emissions Reductions
(VER) programmes:
– Renewable energy in Asia.
– Water filters and solar lamps
in India.
Goals for 2024
– Review where we can make further
positive changes to our products
and packaging
– Continue to buy local, recycled
and/or recyclable materials
where possible
– Review shipping/protective casings
to reduce installation impact on
travel and resources
– Increase web demonstrations and
training in UK and US offices
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Environmental, Social and Governance continued
Environment
2022
Change
Emissions by Scope
1%
3%
96%
Scope 1
Scope 2
Scope 3
Emission sources (tonnes CO2 )
Scope 1
Vehicle fleet
Scope 2
Purchased electricity for own use
Purchased heating, steam, and cooling for
own use
Scope 3
Purchased goods and services
Fuel and energy-related activities
Upstream transportation and distribution
Business travel
Employee commuting
Downstream transportation and distribution
End-of-life treatment of sold products
2023
9.9
9.9
29.5
26.9
5.7
5.7
33.9
31.2
2.6
1,016.6
526.1
2.7
1,096.4
553.6
5.7
38.8
184.7
57.2
203.3
3.1
136.4
163.4
43.4
195.7
4.2
4.2
(4.4)
(4.3)
(0.1)
(79.8)
(27.5)
2.6
(97.6)
21.3
13.8
7.6
0.8
1,056.0
0.8
1,136.0
–
(80.0)
Scope 1
Covers the emissions we make
directly, e.g. our buildings or
vehicles
Scope 2
Covers the emissions we make
indirectly, e.g. the energy we buy
to heat and cool our buildings
Scope 3
Covers all the indirect emissions
associated with our value chain,
e.g. from our suppliers through
to our customers
Direct Emissions
(tonnes CO2)
Indirect emissions
(tonnes CO2)
9.9
2022: 5.7
29.5
2022: 33.9
Indirect emissions
(tonnes CO2)
1,016.6
2022: 1,096.4
– Scope 3 emissions reduced by 7% relating mainly to lower stock purchases and the
inbound shipping emissions associated with lower purchases
– Scope 1 and Scope 2 emissions combined are consistent year-on-year
– There has been a small reclassification of emissions from Scope 2 to Scope 1 in 2023
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2023
2022
Case study
Easier to learn Simpler to use
Environmental, Social and Governance continued
Social
Social
Employee turnover (%)
Staff survey response rate (%)
Happy staff (%)
Female representation (all Company) (%)
17%
74%
88%
35%
13%
87%
94%
36%
Highlights from 2023
– First interns joined the Group in the summer of
2023 for a one-month IUG internship programme.
– As part of our STEM commitments, we attended a
local science festival and also talked at a primary
school assembly. Our aim at these events is
to give children exposure to the fundamentals
of ultrasound, which we believe we do in an
interactive and fun environment.
– Our annual staff survey continued to be really
positive and showed that a high majority of our
employees continue to be ‘happy’ working for
the Company.
– Supported the World Federation for Ultrasound
in Medicine and Biology (WFUMB) in its mission
to bring sustainable ultrasound programmes to
the underserved areas of the world by providing
training simulators to support a number
of education.
– First year that our employees could take advantage
of a ‘Charity Day’; an extra day’s annual leave to
carry out charitable work.
– Switched to a new workplace pension scheme
provider that has a higher proportion of sustainable
investment funds.
– Female representation across the Group is 36%.
– Our employees continue to work on a flexible basis.
This continues to be well received by our staff and
makes a significant contribution to the attractiveness
of working for Intelligent Ultrasound. For the last two
years, our annual, anonymous staff survey shows us
that almost 90% of our staff recommend Intelligent
Ultrasound as a great place to work. Although there
will always be areas we can improve, most of our
employees believe we are doing rewarding work
that is making a real difference to hospitals and
patients around the world.
– We continue to offer employees an excellent
combination of attractive salary packages and
a flexible work environment located in a vibrant
university capital city.
– Our team in North America receive an attractive
salary package, but there is a high cost to providing
appropriate health care and pension provisions,
that is difficult for a small company to provide.
We continue to review how to overcome these
issues for our US-based employees.
Goals for 2024
– Ongoing support for the WFUMB
support programme
– Increase the local schools STEM programme
Supporting WFUMB in its mission
to bring sustainable
ultrasound programmes to the
underserved areas of the world
In December 2022 we announced that we would be supporting the World Federation
for Ultrasound in Medicine and Biology (WFUMB) in its mission to bring sustainable
ultrasound programmes to the underserved areas of the world to improve global
healthcare through collaboration, communication and education.
Under the partnership we have donated a ScanTrainer Compact obstetrics and gynaecology
and general medicine training simulator as well as a neonate and paediatric BabyWorks training
simulator to WFUMB to support their ongoing ultrasound education programme.
The simulators have already been used in a number of congresses and regional Centre of
Education courses including two of the key WFUMB events in 2023 – EUROSON 2023 in
Riga, Latvia and the WFUMB Congress in Muscat, Oman.
We have provided training and product support through our enhanced web demonstration facility
in Cardiff and provided logistics support where appropriate.
Lynne Rudd of WFUMB said:
“ The amazing donation
of a ScanTrainer and
BabyWorks and the support
that Intelligent Ultrasound
has provided is providing
invaluable hands-on
experience at our worldwide
Centres of Education
courses and congresses.”
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Environmental, Social and Governance continued
Case study
Easier to learn Simpler to use Investment Employees
Measuring gestational age
in primary care in sub-
Saharan Africa
ScanNav FetalCheck, our gestational age software, is to be used in the
largest‑ever trial on the use of aspirin to prevent pre‑eclampsia.
Conducted in Kenya, Ghana and
South Africa, the trial is funded by the
Bill & Melinda Gates Foundation and
led by the international NGO Concept
Foundation*. It will compare the effects
of daily intake of two different doses of
aspirin during pregnancy: 75mg and
150mg among pregnant women at high
risk of developing pre-eclampsia. It aims
to advance evidence on pre-eclampsia
prevention and inform policies so that
women who are treated with aspirin to
prevent pre-eclampsia receive a dose
that is both effective and safe.
Having an accurate gestational age is
important in the prevention of pre-
eclampsia for two reasons. Firstly, the
risk of the condition depends on a
number of clinical factors which change
with gestational age. Secondly, the
prophylactic effect of aspirin depends
on when it is first administered within
the pregnancy. However, accurate
determination of fetal age is difficult
in LMICs as it must be measured by
trained sonographers, and very few
front-line healthcare workers have the
necessary skills.
The clinical trial sites conducting risk
screening will use our ScanNav FetalCheck
software to enable frontline healthcare
professionals, with no prior experience
of ultrasound, to quickly estimate
gestational age.
The software uses artificial intelligence (AI)
to estimate the gestational age without
requiring the sonographer to take precise
biometry measurements. As well as
allowing any healthcare professional to
make the measurement, the technology
also reduces equipment cost and speeds
up the scan without compromising
accuracy**.
Our aim is to roll out the technology in
primary care settings in both LMICs and in
high-income countries (HICs) by allowing
the age of the fetus to be assessed in a
primary care setting where women need it.
This will not only help reduce the incidence
of pre-eclampsia but can also improve the
management of other pregnancy-related
conditions that affect mother and fetus.
“ It will compare the
effects of daily intake
of two different doses
of aspirin during
pregnancy: 75 mg
and 150mg among
pregnant women at
high risk of developing
pre- eclampsia.”
*
The project is conducted in collaboration between Concept Foundation, Burnet Institute, University of Ghana, University of Nairobi, University of Cape Town, Nossal
Institute for Global Health – University of Melbourne, Tommy’s National Centre for Maternity Improvement, and Intelligent Ultrasound, with the generous financial
support of Bill & Melinda Gates Foundation.
**
ScanNav FetalCheck is currently not licensed for clinical use. Validation studies are in progress.
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Environmental, Social and Governance continued
Environmental, Social and Governance continued
Governance
Governance
Female representation on the Board
Independent Board members
CEO cash compensation (vs. UK median earnings)
Highest to lowest pay ratio
CEO & Chairperson role split
Adheres to relevant corporate governance code
ESG meetings held
Whistleblowing reports
Political campaigns, lobbying or think tanks
2023
2022
38%
50%
5.9 x
9.0 x
Yes
Yes
10
0
0
30%
50%
6.1 x
12.1 x
Yes
Yes
10
0
0
Highlights from 2023
– Improved the framework of KPIs across
the Group.
– Zero reported incidents of bribery,
corruption or fraud.
– Reduced the size of the Board from
nine Directors to eight.
– Conducted company-wide training on
bribery and corruption, mental health
and wellbeing, unconscious bias and
health and safety at work.
– We believe we have strong corporate
governance practices that help
us protect the interests of all our
stakeholders, including customers,
employees, shareholders and
local communities.
Goals for 2024
– Continue on our path to meeting
the full requirements of the QCA
Corporate Governance Code
Board of Directors
The Board is responsible for oversight of
the Group’s global business. This includes
setting a culture of accountability, the
highest standards of ethical conduct and
strong corporate values. Its core areas
of oversight include strategy, executive
performance, financial performance,
risk management and internal control
framework and ESG matters.
Our governance practices include:
– annual election of all Directors by
majority vote;
– 100% committee independence;
– oversight of corporate responsibility
and ESG matters;
– 50% of Directors are independent.
Oversight and Management
of ESG
The ESG Working Group meets on a
monthly basis, is chaired by the CEO and
comprises – three Executive Directors, two
Non-executive Directors and three staff
representatives.
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S172 Statement
Strong
relationships
with our
stakeholders
Engaging and maintaining strong relationships
with stakeholders is a key factor in determining
the long-term success and sustainability of
Intelligent Ultrasound – not only in delivering
the Group’s strategy, vision and values,
but also in directly benefitting employees,
partners, suppliers, customers, consumers
and shareholders alike.
The Board is proactive in ensuring
that dialogue and engagement with
stakeholders takes place and that
feedback is taken into account in the
Board’s decision-making.
The Directors are required by law to
act in good faith to promote success
of the Company for the benefit of the
shareholders as a whole. The following
table describes how the Board has had
regard to the matters set out in section
172 of the Companies Act 2006. Please
also refer to the following disclosures
throughout the Annual Report.
The Directors discharge their duties by
monitoring and assessing stakeholder
interests in two primary ways:
I. Regular information flow from the
Executive Directors
The Executive Directors are directly involved
in day-to-day business operations. The
Non-executive Directors receive regular
written and verbal business updates from
the Executive Directors via monthly reports,
face-to-face at regular Board meetings or
between Board meetings as required.
II. Direct engagement of
Board members
Directors are expected, where appropriate,
to engage directly with, or on behalf of,
stakeholders. The Directors consider the
interests of each of our key stakeholder
groups when considering their duties
under S172 and take into account the
information gathered through engagement
with these stakeholders when determining
the Group’s strategies and key decisions.
Identifying our stakeholders
The Company’s stakeholders are the people who use our products and those who which
have an interest in our vision, purpose and strategy or who may otherwise be affected
by decisions made by its Board. The views and feedback of healthcare professionals,
our partners, our customers, our suppliers, our people and investors are all taken into
account in considering the long-term consequences of the Board’s decision-making.
For each of our key stakeholders, the following disclosure sets out the material issues,
how the Board engages and how the engagement has influenced Board decisions.
Section 172 factor
Read more
Page
The likely consequences of any decision in
the long-term
Our business model
Our strategy
The interests of the Company’s employees
Section 172 Report
The need to foster the Company’s
business relationships with suppliers,
customers and other stakeholders
Social section within the
ESG Report
Section 172 Report
The impact of the Company’s operations
on the community and the environment
Environmental section within
our ESG Report
The desirability of the Company maintaining
a reputation for high standards of
business conduct
Governance
Risk management
Our business model
13
14
26
23
26
21
41
30
13
The need to act fairly between members of
the Company
Corporate Governance Report 44
Community &
environment
Healthcare
professionals
Partners
Customers
Board
Suppliers
People
Shareholders
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S172 Statement continued
Healthcare professionals
Customers
We engage with the healthcare professionals who use our products to ensure the products meet their needs
We stay close to our current and potential customers, building long-term relationships
Material issues and topics
Material issues and topics
– Products continue to support the needs of the healthcare professional
– Manage key customer relationships through our direct and reseller sales network
How we engage
– Meet project development milestones
– Customer satisfaction
– Product innovation
How we engage
– Clinical dialogue to agree the product specification at the development stage of a new product and
– Exhibitions worldwide to showcase our products and obtain market feedback
upgrades to an existing product
– Ongoing clinical and commercial dialogue collated, circulated, and discussed at regular product
development meetings
– Targeted research to determine market changes
– Key opinion leader meetings held on a regular basis to understand future market changes
– Regional account management structure across the world to encourage meaningful, consistent and
ongoing engagement with customers and collation of feedback that is then discussed at regular product
development meetings and fed into the healthcare professional feedback and product development
described above
– Product roadmaps to give customers increased clarity improvements to the provision of support and service
2023 outcomes
2023 outcomes
– The Board and management take into account the opinions of healthcare professional in planning and
– Annual product planning meeting discussing each of the product pillars in detail taking into account
design of new product development, as well as product upgrades, to ensure new product platforms meet
new segments of the market and upgrades meet the needs of clinical professionals
customer feedback, discussions with the sales teams and R&D as well as desk-based and market research
Direct enablers who help us to deliver
Impact on decisions made in 2023
An example of how the Board has considered and responded to stakeholder needs in 2023 are as follows:
Driving uptake of ScanNav Anatomy PNB (PNB) in the clinical setting
In order to support the uptake of PNB in the clinical setting, the Board needed to address the current challenges:
– The user needs and barriers to Ultrasound Guided Regional Anaesthesia (UGRA) delivery.
– Appropriateness and adequacy of sales resources.
– Key differences in the North America (NA) market and how this impacts strategy and activities.
– How we can utilise medical experts to support medical education activity and peer-to-peer learning initiatives.
A number of key changes have been made in 2023 as a result of the above review which the Board expects to drive revenue growth in this product:
– Additional and focused sales resource in NA.
– Appointment of clinical advisor to support Key Opinion Leader (KOL) identification and development, development and delivery of clinical data and delivery of Medical Education Programme.
– Delivery of peer-to-peer medical education programme, delivering a comprehensive Regional Anaesthesia (RA) education in partnership with clinical experts and educational institutions.
– Expansion of our online educational offering to support novice and less experienced users in developing their knowledge prior to delivering UGRA.
– Needs and evidence-based sell with support materials designed to facilitate discussion and address challenges in training and adopting UGRA within an institution.
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S172 Statement continued
Employees
Shareholders
Suppliers
Our employees are incredibly important. We rely on their skills,
experience, knowledge and diversity to deliver our vision
Our employees are a highly skilled and technical workforce. They
are an essential component of the Group’s ability to stay ahead in
a fast-paced competitive environment
All Board decisions are made to promote the long-term success
of the Group for the benefit of our shareholders. We aim to attract
shareholders who are interested in a long-term holding in our
Company
We give high priority to communicating effectively with our shareholders
on strategy, governance and financial and operational performance
Our relationship with our suppliers is integral to the delivery of quality
products to our customers and the operational success of our
business
Material issues and topics
– Employee care and value
– Retention and talent
Material issues and topics
– Our vision and strategy
Material issues and topics
– Maintaining security of supply of key components
– Financial and operational performance
– Competitiveness of component pricing and monitoring of cost
– Remuneration and benefits package
– Path to profitability
– Diversity and inclusion
– Flexible working
– Day-to-day engagement from executive team
– Communicating our strategic priorities and ambition
– Responsible business practices
How we engage
How we engage
– Weekly ‘all staff’ meeting with dialogue between the CEO and all
employees enables employees to freely ask questions
– Annual ‘all UK employee’ engagement event
– Annual ‘all staff’ survey to understand our people’s views on all
aspects of the Company, including engagement, communication,
environment and ESG
– A wide range of communication channels are used, including
in-person meetings, videos, podcasts and online access to
written training.
– Regular meetings between members of the Board, the Company’s
major shareholders, analysts and corporate broker
– Participation in sector-relevant investor conferences
– A commitment to ensure that the training, career development and
– Publishing Annual Report and Accounts to share with shareholders
promotion of all employees is non-discriminatory
and the subsequent Annual General Meeting
– Regular employee updates to increase understanding of vision,
– Results statements, trading updates and press releases as required
strategy, performance and priorities
– Videos and presentations on the Company website from investor
relations events
– Investor roadshows and technology open days
inflation
– Research and development investment to resolve any component
problems
– Approval of large purchase order requests in line with approval limits
– Ensure compliance with our ESG framework
How we engage
– Strong, collaborative long-term relationships
– Regular meetings and conversations with key suppliers to ensure
uninterrupted supply chain
– Key component and shipping tenders, as and when appropriate
– Dialogue between the R&D and manufacturing teams to determine
component issue solutions
2023 outcomes
2023 outcomes
2023 outcomes
– In June we held an annual employee offsite engagement event
– The Board reviews the feedback received from shareholders
– Minimised component price and supply increases
– In H2 we conducted an anonymous staff survey covering topics
such as happiness, flexible working, ESG, communications and
training. Overall the results were very positive and the feedback
was reviewed at Executive and Board level and actions agreed
as required
following investor roadshows
– We held a technology open day in our Cardiff office to demonstrate
our products to shareholders in April 2023
– Renegotiated payment terms with some key suppliers
– Conducted a shipping tender process
– Agreed new call-off schedule for certain key components to match
sales demand
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S172 Statement continued
Direct enablers who help us to deliver
Partners
Community & environment
Other stakeholders
Includes our resellers who market and sell our products outside the UK
and the US; as well as our clinical AI ultrasound vendor partners
We aim to build a profitable and sustainable business that delivers our
vision of enabling ultrasound for everyone
Material issues and topics
– Pricing and commercial terms
To continue to make improvements to reduce the environmental
impact of our products, operations and practices
Material issues and topics
– Minimise any negative impacts on the environment, including our
– Review of impact of regional market developments
carbon footprint
– Accessible training
– Continuity of supply
How we engage
– Have a positive influence on local and international communities
How we engage
– Clear and understandable product positioning and pricing
– Support local employment
– Meetings with vendors scheduled throughout the year with key
– Local community engagement
decision-makers and key implementers
– Continual commercial dialogue with partners
– Ongoing reseller product training
– Regular meetings to review performance and feedback from
the market
2023 outcomes
– Local purchasing where possible
2023 outcomes
– Review of regional performance to understand in detail the issues
– See our ESG Report for full details. Highlights included:
and any remedial actions required. In 2023 these included:
– Improve the product knowledge through better training
– Understand the regional pricing pressures
– Ensure the products address competitive offerings for the
regional market
– Reduced our carbon emissions by 7% in 2023
– Offset our total emissions in Gold Standard VAR projects
– First summer intern programme started in August
– Our ScanNav Fetalcheck software used in largest African trial led by
Bill & Melinda Gates Foundation
The Board engages with and considers the interest of any other
stakeholders who may be interested in the Company’s business or
otherwise be impacted by its decisions.
Examples of other stakeholders include research partners, academic
institutions, professional advisers, analysts and governance bodies,
which include proxy advisors and regulators.
These stakeholders are considered by the Board through a
combination of:
– regular reports and presentations including operational reports and
updates on investor relations, health and safety, employees and
corporate governance
– a strategy review attended by the Board that considers the purpose
of the Group and its strategy, which is supported by a budget for the
following year and a medium-term financial plan
– formal consideration of R&D projects and the risk management process
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Risk Management
Managing risk
The Board
Sets the tone on risk
management culture
Reviews the principal risks
and ensures they are aligned
with overall goals and
strategic objectives
Audit & Risk
Committee
Reviews the effectiveness
of risk management and
internal control systems
Organisational
culture, policies and
procedures
Executive
Committee
Reviews and identifies risks
across the business
Oversees execution and
implementation
of controls
to manage risks
Risk monitoring and reporting
Visibility of Group risks is delivered through
our risk register which is updated in detail
by the Executive team at least annually. An
effective and successful risk management
process balances risk and reward and
is dependent on the judgement of the
likelihood and impact of the risk involved.
The review process will evaluate identified
risks to establish root causes, financial
and non-financial impacts and likelihood of
occurrence. We use a scoring system to
assess the likelihood of a risk materialising
and the potential impact on the Group.
The risks are prioritised in terms of severity
based on the scoring and a mitigation
plan is prepared to reduce the risk.
Once controls and mitigating factors are
considered, the risk is reassessed and
rescored (mitigated score) to ascertain
the net exposure.
The assessment of impact multiplied by
Probability results in a gross risk rating. A
mitigating control rating of High, Medium
or Low is then applied to this to calculate a
net or mitigated risk rating. This residual risk
remaining is indicative of the risk appetite
that we consider to be tolerable/acceptable
in order to achieve our strategic and
operational effectiveness.
This ensures alignment between our view
of acceptable risk exposure and the ability
to achieve strategic objectives.
The review process of the Executive
Committee is as follows:
1. Review of the existing risks including
changes required to the:
– Description
–
Impact
– Risk scoring
– The mitigating controls in place.
2. Agree any actions required to further
mitigate those risks.
3. Identify any new or emerging risks.
4. Agree the risk rating status, controls
and further actions required.
5. Monitor agreed mitigation measures.
Emerging risks
Emerging risks are those where we do
not believe we have sufficient clarity to
be able to assess their likely impact or
their likelihood of occurrence. Such risks
are unlikely to impact the business in the
near term but may have the potential to
significantly impact the business in the
medium to long term. ESG and climate
change risk remain an emerging risk as
it is a complex and dynamic risk that will
continue to evolve over time.
Risk categories
The risks are split into four broad categories:
– Strategic
– Commercial and Operational
– Financial
– Compliance
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Risk Management continued
Risk appetite
Risk appetite is the level of risk that an organisation or individual is
willing to accept in pursuit of its objectives. It represents the amount
and type of risk that an entity is prepared to seek, tolerate, or take on.
No risk exists in isolation from others and risk management is about
finding the right balance between risks and opportunities to act in the
best interests of stakeholders.
Risk category
Strategic
Commercial & Operational
Financial
Compliance
Risk appetite
High
Medium to high
Low to medium
Low
Heat map of principal risks
During the year, the Audit and Risk Committee reviewed the principal
risks and uncertainties facing the Group and continues to focus on
those which could threaten the sustainability of our business model,
our reputation, future performance expectations and liquidity.
The principal risks are not intended to be an exhaustive list of all the
risks the Group faces but include all known material risks in relation
to the Group and the markets and industry within which we operate.
The environment in which we operate is constantly evolving and
can be affected by events that are outside of our control and which
may impact on us both operationally and financially. New risks may
emerge, the potential impact of known risks, including how quickly
they escalate, and/or our or our assessment of these risks may
need to change.
Principal risk heat map
Financial
Strategic
Foreign
exchange
Product
pipeline
High inflation
Liquidity
Revenue from
AI products
US and reseller
expansion
Laws and
regulations
Regulatory
Compliance
Direct clinical
revenue growth
Budget
availability
Talent
management
Single source
supply
Cyber risk
ESG and
climate change
Regulatory
approval
Supply chain
Geopolitical
Commercial
& Operational
Increased
Decreased
New
No change
High risk
Low risk
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Principal Risks
Risk
Risk description
Impact
Key mitigating actions
Change
from 2022
Link to
strategy
Strategic risks
Product pipeline
Risk that product pipeline cannot
support required revenue growth:
– Wrong product or
product extensions
– New competitive technology
– Correct route to market not selected
– Market takes longer to understand
product benefits
– Regulatory approval for new
products takes longer
Slower than anticipated revenue
growth and depending on severity this
can impact liquidity, path to profitability
and the Company value
Monitoring and forecasting of revenues by product by region
Review of feedback from customers taken into account in the ongoing development
of our products
Regular review of new competitive products and technology
Revenue from
AI products
Risk that we do not achieve material
revenues from our GE HealthCare
agreement, as there are many factors
outside our control:
Slower than anticipated revenue
growth and depending on severity this
can impact liquidity, path to profitability
and the Company value
Regular meetings with GE Healthcare to understand customer feedback, product
pipeline, marketing strategy and launch schedules
SonoLyst software is now standard on Voluson Expert 22 and 20 ultrasound machines
– Product launch timetable
– Product acceptance by customers
– Sales process
US and reseller
growth
Risk that we do not achieve material
growth in the US and reseller sales
Slower than anticipated revenue
growth and depending on severity this
can impact liquidity, path to profitability
and the Company value
Additional resource has been put in place in the US to achieve growth
Improved marketing campaigns aligned to the strategy
Maintain close working relationship with our resellers
Increased online training to resellers provided to ensure optimum product knowledge
Change key
Link to strategic pillars
Increased
Decreased
New
No change
Make ultrasound easier to learn
Make ultrasound simpler to use
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Principal Risks continued
Risk
Risk description
Impact
Key mitigating actions
Commercial & Operational risks
Change
from 2022
Link to
strategy
Regulatory
approval
Geopolitical
Failure to achieve regulatory approval
of new AI products as well as changes
in regulation may require us to reapply
for approval or prevent the further use
of those products
The requirements of regulators continue
to evolve and potentially may increase
the regulatory burden for our products
Geopolitical and other unexpected
events affecting our ability to operate
or sell such as a global pandemic
or war
Supply chain
Budget availability
The Group is unable to fulfil its sales
orders due to stock component
shortages or a major issue in the
supply chain, especially where the
Group is reliant on a single-source
supplier for manufacturing
Reduced availability of public sector
training budgets for ultrasound
training equipment
Higher costs of development
Delay in product launch may impact
lower than anticipated revenue growth
and depending on severity this can
impact liquidity, path to profitability
and the Company value
Inability to access hospitals to demo
products leading to reduced revenues
in regions affected
Could potentially impact on the
supply chain in terms of availability
of supply or cost increases which
impact profitability
Significant business disruption leading
to being unable to fulfil orders and
demand resulting in loss of revenue
Slower than anticipated revenue
growth and, depending on severity this
can impact liquidity, path to profitability
and the Company value
ESG and climate
change
The Group fails to plan and respond
to the environmental and climate
change agenda
Yet to be determined
We manage this risk by employing experienced professionals combined with external
advisers who consult with regulatory authorities on the design of any products or
programmes that may be required
Installation of web demonstration rooms in both the UK and US offices to enable
remote selling.
Back-up supplier contingency plans where feasible
Keep informed of global events and economic conditions in the territories we operate
to ensure risks are monitored accordingly
The Group has effective supply chain management
Seek to maintain appropriate buffer stock levels of key components to minimise risk
Business interruption (BI) insurance is procured to transfer an element of the financial risk
Experienced sales managers who monitor the availability of public sector budgets
and communicate this through sales review meetings on a regular basis
The Classroom to Clinic strategy aims to move the Group away from a dependency
on training budgets
Increased business focus on ESG and associated risks through ESG Committee and
detailed annual reporting
Change key
Link to strategic pillars
Increased
Decreased
New
No change
Make ultrasound easier to learn
Make ultrasound simpler to use
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Principal Risks continued
Risk
Risk description
Impact
Key mitigating actions
Change
from 2022
Link to
strategy
Commercial & Operational risks continued
Cyber risk
Increased levels of cyber-crime
represent a threat to the Group and
may lead to business disruption or
loss of data
Failure to protect against the threat
of cyber-attack could adversely
impact the systems performing
critical functions which could lead
to a significant breach of security,
jeopardising sensitive information and
financial transactions of the Group
A data breach or attack resulting in
operational disruption could reduce
the effectiveness of our systems.
This in turn could result in loss of
revenue, loss of financial, customer
or employee data, fines and/or
reputational damage
The Group has invested in the protection of its data and IT systems from the threat of
cyber-attack
Cyber security policies and procedures exist to minimise this risk, including preventative
and detective controls
We have an experienced IT Manager who monitors and responds to new and expanding
cyber risks and seeks to implement best practice in IT security management
Proactive and reactive security controls are implemented, including up-to-date
anti-virus software, network/system monitoring and regular penetration testing to
identify vulnerabilities
Incident response capability is in place to mitigate the impact of a cyber-attack on our
day-to-day operations, including disaster recovery and business continuity plans to
support the business in the event of a significant attack
The Group also has in place cyber insurance, providing coverage and protection against
a range of cyber-related security threats to enable the Group to transfer an element of
financial risk and liability
Change key
Link to strategic pillars
Increased
Decreased
New
No change
Make ultrasound easier to learn
Make ultrasound simpler to use
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Corporate Governance
Financial Statements
35
Principal Risks continued
Risk
Risk description
Impact
Key mitigating actions
Commercial & Operational risks continued
Change
from 2022
Link to
strategy
Talent
management
Recruitment of expertise in relation
to machine-learning, industrial
software development experience
and product management continues
to be highly competitive
The loss of key employees could
potentially weaken the Group’s
operational and management
capabilities, potentially impeding
its ability to grow
Our ability to attract, develop and
retain a diverse range of skilled people
is critical if we are to compete and
grow effectively
Loss of continuity/loss of
knowledge as a result of employee
turnover, potentially leading to
operational inefficiencies
Direct clinical
revenue growth
The risk that increasing revenues from
selling clinical products into a clinical
setting is unsuccessful
Potential lack of required skills and
expertise to support the continued
growth of the business, its systems,
procedures, and processes
Slower than anticipated revenue
growth and depending on severity this
can impact liquidity, path to profitability
and the Company value
Single‑source
supply
The risk that reliance on a single
supplier for a key component creates
a vulnerability
Potential point of failure that can
result in an inability to supply
specific products
The Group maintains a competitive remuneration package to retain existing employees
and attract high quality applicants for new roles
These include:
– Competitive salary and regular benchmarking
– Provision of online training and development
– Annual learning and development budgets
– Flexible working arrangements
– Wellness focus through health insurance
– Leadership workshops for all managers
– Annual performance reviews and incentive plans
– Share option scheme
A comprehensive review considered and sought to address the challenges with selling
new Clinical AI products in a clinical market, including:
– Additional and focused sales, clinical advisor resources and improved sales
support materials
– Medical education programmes planned in 2024 in partnership with clinical experts
and educational institutions
– Improved platform and educational support content
There is dual-source supply for key components wherever possible. Where a single
supplier exists mitigating actions include:
– Forward ordering and holding sufficient buffer inventory
Increased cost of supply and exposure
to cost increases
– Business interruption insurance in place
– Working closely with suppliers
Change key
Link to strategic pillars
Increased
Decreased
New
No change
Make ultrasound easier to learn
Make ultrasound simpler to use
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Principal Risks continued
Risk
Risk description
Impact
Key mitigating actions
Change
from 2022
Link to
strategy
Financial Risks
Liquidity
Foreign exchange
Inflation
The risk that the Group does not reach
cash profitability and is unable to raise
further funding through equity placings
or through debt
This could lead to a winding down or
need to sell or restructure the business
Post year-end a £2m overdraft facility was agreed with HSBC
Group cash forecasts are prepared as part of the annual budget and actuals are
monitored against these balances on a monthly basis
Cash reforecasts are produced on a periodic basis throughout the year
See the ‘going concern’ statement on page 56
The Group has transactional and
translational currency exposures. The
Group has a US subsidiary; it makes
purchases of inventory and incurs
other costs in foreign currencies but
accounts for the business in sterling
therefore the reporting of revenues
and profits is subject to volatility due
to changes in the exchange rates
Risk of rising cost of key components
and overheads including payroll costs
Adverse movements in sterling
exchange rates vs. US dollar as
well the Euro to a lesser extent
The current split of the Group has provided a natural hedge over the past few years,
but this is reviewed annually. The Group would consider using foreign currency hedging
instruments to mitigate the impact of unhedged currency fluctuations if required
Impact on gross margins if costs
cannot be passed on to customers
through increases in sales prices
Price increases are passed on to customers, where possible, in an annual pricing review
Change key
Link to strategic pillars
Increased
Decreased
New
No change
Make ultrasound easier to learn
Make ultrasound simpler to use
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Principal Risks continued
Risk
Risk description
Impact
Key mitigating actions
Change
from 2022
Link to
strategy
Compliance Risks
Regulatory
compliance
Laws and
regulations
Risk of non-compliance with product
classification regulations and registration
requirements, including relevant
internal/external quality regulations and
requirements, across all territories in
which our products are manufactured
and sold
We need to comply with ongoing
regulatory requirements, such as
to maintain a QMS, for which we
are subject to periodic inspections
(scheduled and unscheduled),
restrictions in relation to promotional
materials and post-market safety
surveillance programmes
Risk of non-compliance with relevant
laws and regulations in the countries
in which we operate, including
anti-corruption laws, IP breaches,
data privacy laws, competition
laws, accounting, taxation and
AIM listing regulations
The sales tax and general tax
environment is more complex and
the risk of incorrectly reporting and
paying relevant taxes increases as
the business grows
Non-compliance with product
classification regulations/registration
requirements may result in products
having to be withdrawn from the
market, with a consequential
loss of sales
Losing the ISO13485 accreditation
would impact regulatory approval
Our internal regulatory team is focused on the development of quality documentation for
the QMS
All documentation is stored and available should any resubmission be necessary, and our
quality systems are designed to be sufficiently robust to withstand any necessary scrutiny
Bribery, anti-slavery, and corruption all
carry their own penalties, and risk of
reputational damage
Breaches of taxation rules also
carry a risk of interest and penalties
becoming payable
Breaches of AIM rules can lead
to penalties
Training for all employees on anti-bribery, anti-money laundering, competition law and GDPR
Gift and Hospitality register maintained
Corporate compliance overseen by CFO
Engagement of third-party experts in the US to help us ensure compliance with local
rules and regulations
IASME Governance certificate in progress
The Group continues to mitigate the risk of litigation by reviewing its IP position against all its
competitors and conducting annual reviews of its freedom to operate in its target markets
Change key
Link to strategic pillars
Increased
Decreased
New
No change
Make ultrasound easier to learn
Make ultrasound simpler to use
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Financial review
Positive momentum
Summary financial performance
£m (unless otherwise stated)
Revenue
Gross profit (restated*)
Gross profit margin (%) (restated*)
Expensed R&D
Administrative expenses (restated*)
Operating loss
Loss after taxation
Gross R&D costs
Net cash used in operating activities
Cash and cash equivalents
2023
11.17
6.84
61%
(1.15)
(8.72)
(3.02)
(2.58)
(2.96)
(1.71)
3.03
2022 Change (%)
10.10
6.08
60%
(1.69)
(8.07)
(3.67)
(2.98)
(3.20)
(0.68)
7.17
+11
+13
+1
-32
+8
-18
-13
-8
+150
-58
11%
Revenue growth
in 2023
£2.6m
Loss after tax
Helen Jones
Chief Financial Officer
Income statement
Revenue
The Group delivered overall growth in revenues of 11% in 2023 to £11.2m
(2022: £10.1m) with Clinical AI revenues experiencing 203% growth from 2022
and Simulation revenues declining slightly by 3%.
Simulation
£m
UK
North America
Rest of the World
2023
2.36
4.51
2.27
9.14
2022 Change (%)
2022** Change (%)
4.91
2.78
1.74
9.43
-52
+62
+31
-3
3.01
2.78
1.74
7.53
-22
+62
+31
+21
Simulation revenues reduced by 3% in 2023, although 2022 revenues included £1.9m
of ‘one-off’ revenue from a national NHS England echocardiography ultrasound training
programme. Excluding this exceptional one-off revenue, simulation revenue on a like-for
-like basis increased by 21% in 2023.
It was encouraging that North American revenues grew 62% in 2023 after significant
investment in resource and marketing over the past two years. Despite the strengthening
of sterling against the US dollar in 2023 the region saw good growth in sales across all
products, in particular Babyworks, the newest product in the range.
Revenues increased by a third from the reseller network outside of the UK and North
America to £2.27m (2022: £1.74m). Although some countries such as China and
Australia performed below expectation, we started to see strong sales in the last quarter
of the year which is expected to continue into 2024.
UK revenues declined by 52% in 2023, partly due to the one-off large NHS order in
the prior year and also due to a reduction in NHS general training budgets with funding
diverted to other priority areas.
Clinical AI
£m
UK
North America
Rest of the World
2023
0.41
0.31
1.31
2.03
2022 Change (%)
0.24
0.16
0.27
0.67
+72
+96
+382
+203
** Adjusted on a ‘like-for-like’ basis
*
2022 restated for a reclassification of labour and distribution costs – see page 68 for details
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Financial review continued
Clinical AI revenues trebled in 2023 to £2.03m (2022: £0.67m), with positive growth in sales from NeedleTrainer
(NT) and ‘Classroom to Clinic’ NT products (C2C), SonoLyst royalty income as well as revenues relating to the
ScanNav Fetal check studies (see the case study on page 24).
Operating loss
The operating loss decreased by 18% to £3.02m (2022: £3.67m) driven partly by the 13% increase in gross
profit and higher capitalised R&D costs.
Gross profit
Gross profit increased by 13% to £6.84m (2022 restated*: £6.08m) directly associated with higher revenues.
Average gross margin also improved by 1% to 61% (2022*: 60%).
Simulation gross margin % in 2023 of 60% remained the same as in 2022 with a more favourable product mix,
offset by a lower proportion of revenue coming from direct sales in the UK and North America (75% in 2023
versus 82% in 2022).
Clinical AI gross margin improved to 68% (2022: 58%) with the prior year margin impacted by the cost of a
component upgrade to the NeedleTrainer demonstration units.
Research and development (R&D) costs
£m
R&D
– Expensed
– Capitalised
Simulation
Clinical AI
2023
2022
Change (%)
1.15
1.81
2.96
0.91
2.05
1.69
1.51
3.20
1.24
1.96
-32
+20
-8
-27
+5
Administrative expenses
£m
Sales, marketing and distribution
Other general and administrative
Other non-cash costs:
Share-based payment charges
Depreciation and amortisation
2023
3.77
3.10
0.24
1.61
8.72
*Restated
2022
Change (%)
3.56
2.74
0.38
1.38
8.07
+6
+13
-36
+17
+8
The Group incurred lower R&D expenditure in 2023 of £2.96m (2022: £3.20m). The simulation R&D team
was largely focused on continuing to enhance the BabyWorks functionality as well as the development of the
new version of BodyWorks. Lower external development costs resulted in a 27% reduction in R&D spend
on simulation products.
The Clinical AI R&D team continued to make further improvements to NeedleTrainer, developed ScanNav
FetalCheck and started the first phase of ScanNav Liver. R&D expenditure relating to clinical AI products
remained broadly flat year-on-year at £2.05m (2022: £1.96m).
* 2022 restated for a reclassification of labour and distribution costs – see page 68 for details
Administrative expenses increased by 9% to £8.72m (2022 restated: £8.07m) with salary increases, higher sales
and exhibition-related distribution costs and insurance costs in the US as well as general higher inflationary
increases impacting other administrative costs.
Amortisation charges increased by £0.2m reflecting the higher capitalised development costs in 2022 and 2023.
Share-based payment charges reduced by 36% to £0.24m (2022: £0.38m) with historical share option charges
being fully recognised in the prior year as well as increased forfeiture rates.
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Financial review continued
Taxation
The total tax credit in 2023 was £0.44m
(2022: £0.72m). The Group claims each
year for R&D tax credits and, since it is
loss-making, elects to surrender these
tax credits for a cash rebate. The credit
is £0.28m lower than in 2022 due to
the changes in the SME R&D tax credit
legislation which came into effect from
1 April 2023 where the enhanced
deduction for SMEs reduced from 130%
to 86%, and the amount of tax credit
reduced from 14.5% down to 10%.
As at 31 December 2023, the Group
had cumulative gross UK tax losses of
approximately £20.02m (31 December
2022: £18.81m) for which the Group
continues to hold a cautious view, and
consequently chooses to not recognise
those losses as a deferred tax asset.
Balance sheet
and working capital
Net assets at 31 December 2023 were
£9.74m (31 December 2022: £12.2m).
Intangible assets of £4.10m increased
by £0.82m, with £1.81m of R&D costs
capitalised in 2023 (2022: £1.49m),
offset by a £0.99m amortisation charge.
Capitalised R&D costs were higher in
the year despite lower R&D spend due
to more expenditure meeting the criteria
for capitalisation in 2023.
Working capital reduced by £3.16m
to £5.07m at 31 December 2023 (31
December 2022: £8.23m) with cash and
cash equivalents decreasing by £4.14m,
offset by higher trade and other receivables
of £1.37m due to a higher proportion of
orders being received in November and
December compared to the prior year.
Inventory of £1.45m was lower by £0.15m
(2022: £1.60m) following a review during
the year to reduce the inventory of certain
raw material components.
Included within current assets is the
R&D tax credit receivable of £0.46m (31
December 2022: £0.71m). This is £0.25m
lower than as at 31 December 2022 due
to the changes in the SME R&D tax credit
legislation from 1 April 2023.
During the year £1.81m (2022: £1.47m)
of product development costs were
capitalised within intangible assets, with
more development cost meeting the criteria
for capitalisation in 2023 compared to the
prior year.
Current liabilities were £3.27m
(31 December 2022: £3.28m), with
trade payables of £1.23m (31 December
2022: £1.36m) and accruals of £1.12m
(31 December 2022: £0.97m) largely
relating to sales-based royalties payable,
sales commissions and annual bonuses.
Lease liabilities of £0.69m (31 December
2022: £0.49m) increased in the year
following the expansion of the warehouse
facility in Caerphilly in August 2023
as well as a move to a new office in
North America.
Deferred income at 31 December 2023
was £0.57m (31 December 2022: £0.55m)
which relate to extended warranties and
technical support. These amounts are
deferred and released to the income
statement over the life of the extended
warranty and support period.
The share-based payment reserve
increased by £0.24m to £2.00m (31
December 2022: £1.75m) due to the
share-based payment charge of £0.25m
for the year.
Cash flow
The Group reported cash and cash
equivalents of £3.03m at 31 December 2023
(31 December 2022: £7.17m), a decrease
of £4.14m.
£m
Operating
Investing
Financing
Exchange (gains)/losses
(Decrease)/increase in cash
2023
(1.71)
(2.12)
(0.24)
(0.07)
2022
(0.69)
(1.82)
4.55
0.18
and cash equivalents
(4.14)
2.22
Operating cash outflows increased by
£1.02m in 2023 despite reduced operating
cash outflows of £0.79m. These were
offset by adverse movements in working
capital of £1.24m (2022: £0.26m)
particularly due to timing of invoicing
impacting trade and other receivables as
well as lower R&D tax credits received in
the year of £0.69m (2022: £0.96m).
The net cash outflow arising from
investing activities was £2.12m (2022:
£1.82m) relating to capitalised R&D
expenditure of £1.81m (2022: £1.47m)
and £0.33m (2022: £0.38m) of property,
plant and equipment, the majority of
which relates to the capitalisation of
sales demonstration equipment.
The net cash outflow from financing
activities was £0.27m (2022: £4.55m
inflow), mainly relating to lease payments
of £0.21m and the associated interest.
The prior year included the net funds
received following the share placing in
November 2022.
Going concern
In undertaking a ‘going concern’ review,
the Directors have reviewed three financial
projections to 31 December 2025 based
on the existing base budget, a flexed, more
conservative version of the base budget
and a reforecast based on current trading;
these all include estimates and assumptions
regarding the product development projects,
sales pipeline, future revenues and costs and
timing and quantum of investments in the
R&D programmes.
Post year-end, the Company secured access
to a £2m overdraft facility with HSBC
which provides additional liquidity to
support the Company’s working capital
needs but is scheduled for review within 12
months of signing the financial statements.
If the Group subsequently becomes reliant
on the availability of the facility to meet its
short term liquidity needs, a failure to renew
or extend the facility could impact its ability
to continue as a going concern. Additionally,
if the Group’s performance does not meet
that projected and available facilities are
insufficient to meet its liquidity needs then
the Group may need to find alternative
sources of finance. These circumstances
represent a material uncertainty that may
cast significant doubt upon the Group’s
and the Company’s ability to continue as
a going concern.
Notwithstanding the uncertainties around
timing and magnitude of future cashflows,
the Directors believe existing cash reserves,
expected cash flows from operating
activities as well as the availability of the
overdraft facility if required, are sufficient to
meet the Group and Company’s obligations
as they fall due for at least the next twelve
months from the date of approval of these
financial statements.
The Directors have therefore concluded that
it is appropriate to prepare the Group and
Company financial statements on a going
concern basis and do not include any
adjustments that would result if the Group
or the Company was unable to continue as
a going concern.
Helen Jones
Chief Financial Officer
30 April 2024
The Company is required by the
Companies Act 2006 to include
a Strategic Report in its Annual
Report. The information that fulfils
this requirement can be found from
pages 1 to 40.
The Strategic Report contains
certain forward-looking statements.
These statements are made by the
Directors in good faith based on
the information available to them up
to the approval of this report and
such statements should be treated
with caution due to the inherent
uncertainties, including both economic
and business risk factors, underlying
any such forward-looking information.
This Strategic Report was approved by
the Board on 30 April 2024 and signed
on its behalf by:
Stuart Gall
Chief Executive Officer
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Board of Directors
An experienced Board
Riccardo Pigliucci
Non‑executive Chairman
Appointed: 2012
Stuart Gall
Chief Executive Officer
Helen Jones
Chief Financial Officer
Appointed: 2009 (p/t), 2014 (f/t)
Appointed: 2020
Nicholas Sleep
Chief Technology Officer
Appointed: 2012
Professor Nick Avis
Non‑executive Director
Appointed: 2006
Experience
Riccardo has more than 30 years’ experience
of guiding private and publicly listed high-
technology companies and brings a wide range
of experience in sales, marketing, operations,
financing, acquisitions and public offerings within
the medical sector. He is a former president,
COO and board member of The Perkin Elmer
Corporation, has served as CEO of Life
Sciences International plc, chairman and CEO
of Discovery Partners International and was on
the board of several private and publicly listed
companies including Dionex, a public company
purchased by Thermo Fisher in December
2010, DVS Sciences, sold in January 2014 to
Fluidigm and Affymetrix, sold to Thermo Fisher
in March 2016. Mr Pigliucci is a member of
the UK Institute of Directors and has received
a Professional Director Certification from the
American College of Corporate Directors,
a public company Director education and
credentialing organisation.
Experience
Stuart was a joint founder and executive director
of Fusion IP plc, an AIM-listed university IP
commercialisation company, before its purchase by
IP Group plc for £103m in 2014. Stuart has a sales,
marketing and general management background
with over 25 years’ experience in starting small
technology-led companies, fundraising for and
managing SMEs and acting as an executive
director for a number of public companies. Stuart
is an engaging and motivational leader with an
energetic management style and the drive and
enthusiasm to ‘tell the Intelligent Ultrasound story’.
In addition to Fusion IP, he has previously worked
at British Airways plc, The Promotions Partnership
Limited, Anvil Limited and Toad Group plc and was
formerly a NED with i2L Ltd. He is currently a NED
of Cambridge Cognition Plc. He attends relevant
events to keep his skills up to date.
Experience
After graduating with BSc(Hons) in French and
Spanish, Helen began her career in accounting
and finance at PwC where she qualified as a
Chartered Accountant. Before joining the Group
in 2020, Helen was part of the senior finance
team at Amerisur Resources plc, an AIM-quoted
oil and gas company, and prior to this had spent
over ten years in various senior group finance
and tax roles within Tata Steel Europe. Helen is a
Fellow of the Institute of Chartered Accountants
in England and Wales and has experience
in corporate acquisitions, restructurings and
disposals, debt and equity transactions, IFRS
reporting and investor relations. She attends
regular external courses during the year to
keeps her skills up to date and most recently
the ICAEW’s global leadership Financial Talent
Executive Network programme.
Experience
Before joining the Group, Nicholas ran his own
consultancy specialising in providing management
support to early-stage companies. Nicholas is
an experienced software engineer but has also
run companies in areas as diverse as stem cell
therapeutics and biofuels. Previous companies
include The Technology Partnership Limited,
Magnecell Limited, Procognia Limited (where he
negotiated out-licensing deals with Qiagen and GE)
and The Automation Partnership Limited (where
he grew a £0.4m annual turnover business to over
£3m in two years). Nicholas has a BscMEng from
The University of Manchester and an MBA from
Cranfield School of Management. Nicholas takes
an active part in the national debate on both the
benefits of machine learning for medical imaging
and the roadblocks that need to be removed
for this potential to be realised. He keeps his
skills current by interaction with colleagues,
internal training courses and regular attendance
of clinical symposia.
Experience
Nick was the Scientific Director for the Group
in its formative years. Nick’s research interests
include: interactive and real-time visualisation and
virtual/augmented reality systems; computational
steering; application acceleration using many-
core devices, remote rendering; interactive grid
middleware and visual analytics of social media
data. Nick has conducted many successful
projects with both academic and industrial
partners including Electronics Visualization Lab,
University of Chicago, Wuhan Technical University
and Toyota Motor Corporation (Japan). In 2013
he joined the University of Chester to establish
the first new Faculty of Science and Engineering
and in 2018 was appointed Pro-Vice-Chancellor
for Research and Knowledge Transfer. In January
2021 he became CEO of Clean Power Ltd and in
2023 joined Greater Manchester Business Growth
Hub as a Commercialisation Specialist supporting
growing businesses. Nick is a member of the
Engineering and Physical Sciences (EPSRC)
peer review college and was previously a lay
member of the Postgraduate Medical Education
and Training Board (PMETB) and the General
Medical Council (GMC). Nick has completed the
Entrepreneurial University Leadership Programme.
Independent
Executive Directors
Committees
Remuneration
Nomination
Audit and Risk
ESG
Chairman
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Board of Directors continued
Ingeborg Øie
Non‑executive Director
Appointed: 2021
Michèle Lesieur
Non‑executive Director
Appointed: 2021
Christian Guttmann
Non‑executive Director
Appointed: 2022
Experience
Ingeborg has significant financial, corporate
governance and investor relations experience,
having been a medical devices and healthcare
services analyst at Goldman Sachs and Jefferies
as well as CFO of next-generation surgical
robotics company, CMR Surgical, Chief Strategy
Officer and CFO of digital health company Huma
and currently CFO of Agreena. She was also a
non-executive director of formerly listed Georgia
Healthcare Group, the largest healthcare services
provider in Georgia.
Experience
Michèle has significant experience in the
medical imaging industry as well as corporate
governance, and investor relations, having been
CEO of Philips France and General Manager of
Philips Healthcare France, and most recently
CEO of Euronext listed Supersonic Imagine
and Non-executive Director of EOS Imaging,
a formerly listed software medtech company.
Michèle remains chairman of the board of
Intrasense, a listed software medtech company
and non-executive director of Prodways Group,
a listed 3D printing company.
Experience
Christian joined the Board on 15 August
2022. Dr Guttmann is a recognised leader in
shaping the global agenda on AI regulation and
standards, as well as having outstanding AI
research, development and AI commercialisation
experience. He has edited and authored
seven books, over 50 publications and has
three patents in the field of AI. Christian is
currently an executive director of the Nordic
Artificial Intelligence Institute (NAII) and vice
president of Engineering, Decisioning and AI at
Pegasystems in Sweden. He has built over 100
novel AI systems and products and has been an
organiser/steering committee member at major
AI conferences. As a founder of the Nordic AI
Institute, he advises governments, thinktanks
and businesses around the world.
Ian Whittaker
Chief Operating Officer
Appointed: 2016
Retired: 21 June 2023
Experience
Ian was formerly the CEO of Inventive Medical Ltd
(IML), the cardio ultrasound simulation company
which was acquired by the Company in August
2016. Ian previously held general management
roles at Hewlett Packard (HP) in the UK and EMEA,
living in Grenoble and Geneva for five years. He
was appointed to the HP UK Board in 2001,
working as vice president for HP’s UK Consumer,
Imaging and Printing business, where he was
closely involved in the integration of Compaq into
the HP group following its acquisition in 2002.
Since leaving HP in 2005, Ian worked with blue-
chip US technology companies and UK start-ups
before being appointed CEO of IML in 2010 and
COO of the Group in September 2016.
Independent
Executive Directors
Committees
Remuneration
Nomination
Audit and Risk
ESG
Chairman
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Chairman’s Introduction
Riccardo Pigliucci
Chair of the Board
ESG
The Board recognises the many
environmental, social and governance
issues that may affect the sustainability of
the Group and which are of importance
to our stakeholders. In 2023 we have
continued on our ESG journey which is
overseen by the ESG Committee and its
progress is also discussed regularly at
Board-level. You can read more about the
work of the Committee on page 18. The
Board would like to thank all shareholders
and colleagues for their continued support,
and we look forward to continuing with our
good work during 2023.
Riccardo Pigliucci
Chair of the Board
30 April 2024
Dear Shareholder
On behalf of the Board, I am pleased
to present the Corporate Governance
Report for the year ended 31 December
2023. The report includes details about
the Board, our individual roles and
responsibilities, and the activities of
each Committee to demonstrate how
we have discharged our responsibilities
to stakeholders during 2023.
Changes to the Board
Having served as an Executive Director
and Chief Operating Officer since joining
the Group on the acquisition of Inventive
Medical Ltd in August 2016, Ian Whittaker
did not seek re-election to the Board of
Directors at the 2023 AGM in June 2023
and retired from his position as COO on
31 December 2023 but will remain with
the Group in a part-time capacity to assist
on projects, as required. The Board joins
me in thanking Ian for his commitment
and invaluable contribution to significantly
growing the simulation revenue and
profitability over the last seven years and
we wish him continued success in his
business and personal endeavours.
Corporate Governance
The Board continues to be committed to
supporting high standards of corporate
governance, and in this section of the
Annual Report we set out our governance
framework and describe the work we
have done to ensure good corporate
governance throughout the Company and
its subsidiaries (the Group). As Chair, my
primary responsibility is to lead the Board
effectively and ensure that the Group’s
corporate governance is appropriate and
adopted across all our business activities. I
am also responsible for ensuring our Board
agenda ensures that we examine all the key
operational and financial issues affecting
our strategy.
Intelligent Ultrasound is traded on the AIM
market of the London Stock Exchange.
The Directors recognise the importance
of sound corporate governance and are
committed to maintaining high standards
of corporate governance. As a Company
whose shares are admitted to AIM, the
Board has adopted and complies with
the Quoted Companies Alliance’s Corporate
Governance Code (the QCA Code) to
the extent that they are appropriate for
a company of the size and nature of
the Group, in establishing its corporate
governance policies.
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Corporate Governance Report
Riccardo Pigliucci
Chair of the Board
The Board and its committees
The Board is responsible for leading and
controlling the Company and has overall
authority for the management and conduct
of its business, strategy and development.
The Board is focused on ensuring the
long-term sustainable success of the Group
and the continuous creation of value for its
shareholders and stakeholders.
The Board has established Audit and
Risk, Remuneration, Nomination and
ESG Committees with formally delegated
duties and responsibilities. Reports from
each of these Committees can be found
on pages 49 to 55. The ESG Report is on
page 18. Each Committee Chair reports to
the Board on the activities considered and
determined by the relevant Committee.
The Audit and Risk Committee has
primary responsibility for monitoring the
quality of internal controls and ensuring
that the financial performance of the
Group is properly measured and reported
on. It receives and reviews reports from
the Group’s management and external
auditors relating to the interim and annual
accounts, and accounting and internal
control systems in use throughout the
Group. The Audit and Risk Committee
meets at least three times in each financial
year and has unrestricted access to the
Group’s external auditors.
The Remuneration Committee reviews
the performance of the Executive
Directors and makes recommendations
to the Board on matters relating to their
remuneration and terms of service. The
Remuneration Committee also makes
recommendations to the Board on
proposals for the granting of share options
and other equity incentives pursuant to
the employee share option schemes
or equity incentive plans in operation
from time to time. The Remuneration
Committee meets at least twice each year
to set targets for the Executive Board and
review their remuneration.
The Nomination Committee has primary
responsibility for succession planning
and Board composition. The Committee
meets at such times as the Chair of the
Committee requires.
The Executive Directors are employed
full-time by the Group. The Non-executive
Directors are contracted to work for the
Company for 20 days per annum.
Board meetings
The Board meetings are conducted either
in-person or on Microsoft Teams. The
Chair expects Non-executive Directors
to provide sufficient commitment to the
Company for advance preparation and
attendance at Board and Committee
meetings, together with ad hoc availability
at other times. In leading and controlling
the Company, the Directors are expected
to attend all meetings. The Board and its
Committees meet regularly on scheduled
dates including a two-day strategy
planning meeting the purpose of which
is to review progress in delivering agreed
plans and to develop and settle the
Group’s business plans and long-term
strategic targets and set the framework
for the achievement of those. From this
session, the Group’s strategic plan and
business model is agreed. The CEO is
responsible for the implementation of
the strategy and communicates to all
employees through regular all-Company
meetings on Teams and an annual Group
away-day.
The Non-executive Directors communicate
directly with Executive Directors between
formal Board meetings as required and the
Non-executive Directors meet the Chair
without the Executive Directors present at
least once a year.
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Corporate Governance Report continued
Attendance at Board and Committee meetings during 2023
Key activities for the Board and Committees in 2023
Board
meeting
Audit
and Risk
Committee
Remuneration
Committee
Nomination
Committee
ESG
Committee
Strategic planning
Topic
Activities
Number of meetings in 2023
Chair
Current Directors
Riccardo Pigliucci
Stuart Gall
Helen Jones
Nicholas Sleep
Nick Avis
Ingeborg Øie
Michèle Lesieur
Christian Guttmann
Ian Whittaker1
12
RP
12
12
12
12
11
12
11
10
12
3
IO
n/a
n/a
n/a
n/a
n/a
3
3
2
n/a
4
ML
n/a
n/a
n/a
n/a
3
4
4
n/a
n/a
4
ML
4
n/a
n/a
n/a
3
4
4
n/a
n/a
10
SG
n/a
10
10
10
10
9
n/a
n/a
n/a
¹ Retired from the Board on 21 June 2023 but continued to attend until 31 December 2023
Two-day strategy meeting including R&D strategy, new product development,
patent review, funding, commercialisation and key medical/scientific
advisor feedback
2024 Budget
Presentation of the budget from the CFO, review of supporting budget paper and
budget approval
2023 Reforecast
Presentation of the 2023 reforecast in July
Fundraising
Review of equity and debt fundraising requirements as appropriate
Financial performance,
Company results and
trading statements
Considered the financial performance of the Group and key performance targets.
Full and half-year trading update, full and half-year announcements, Annual
Report and monitored performance against budget through regular presentations
from the CFO
Corporate
development
Investor engagement
and broker
presentations
Nomination
Committee
Remuneration
Committee
Audit and Risk
Committee
ESG Committee
Review of M&A and related opportunities
Full and half-year results presentations, analyst calls and investor roadshows,
AGM and presentations from the broker
Board composition and committee membership, NED recruitment and
appointment, terms of reference
Review of 2024 salary proposals and 2024 Annual Incentive Scheme; and
monitoring of the 2023 Annual Incentive Scheme, objectives and targets,
terms of reference
Review terms of reference, annual audit process and fees, external auditor,
consideration of internal audit function, IP risk review, KPI performance, risk
review, financial reporting issues, non-audit services policy
2023 ESG objectives, review of 2022 ESG Report, ESG survey review, review
of ESG initiative progress during the year
The QCA Code
The QCA Code sets out ten corporate governance principles and how to apply these principles, including a set
of specific disclosures required in the Company’s Annual Report and Accounts or on its website.
The Company’s disclosures on its website (the Website Disclosures) can be found at:
https://www.intelligentultrasound.com/aim-rule-26/
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Corporate Governance Report continued
Statement of compliance with the QCA Corporate Governance Code
Principle
Commentary
1 Establishing a strategy and
business model to promote
long‑term value for shareholders
2 Seeking to understand and
meet shareholder needs
and expectations
The Group’s business model and strategy to deliver shareholder value in the medium to long term is discussed in the Strategic Report.
The section Risk Management includes a discussion of the key challenges facing the Group and how these will be addressed
Further information
Business model: page 13
Strategy: page 14
Responsibility for shareholder liaison rests principally with our CEO supported by our CFO and Chairman, alongside our advisers Cavendish
and TB Cardew. However, all our Board members attach a high degree of importance to providing shareholders with clear and transparent
information on the Group’s activities, strategy and financial position. The Board holds meetings with institutional investors and other large
shareholders following the release of the interim and financial results. We provide the market and shareholders with the results of AGM and
GM voting via RNS and other communication channels, including the Group’s website. We also participate from time-to-time in investor
shows offering smaller and private investors insight into our business and also access to our management team
Details of all shareholder communications
are provided on our website
See the Shareholders’ section of the
Section 172 report: page 28
3 Taking into account wider
stakeholder and social
responsibilities and their
implications for long‑term success
The Board recognises its responsibility under UK law to promote the success of the Group for the benefit of its stakeholders and
understands that the business has a responsibility towards its stakeholders including shareholders, employees, customers, partners,
suppliers and to the local community. The Board is very conscious that the tone and culture it sets impacts all aspects of the Group and
the way employees behave and operate. The Board encourages open dialogue and commitment to providing the best service possible
to the Group’s stakeholders. The Company monitors feedback from all its stakeholders and the Board uses this to develop future policy
and make decisions
See the Section 172 Report which details
our key stakeholders
See the business model on page 13
4 Embedding effective risk
management, considering
both opportunities and threats
throughout the organisation
5 Maintaining the Board as a well‑
functioning, balanced team led
by the Chairman
Our Executive Directors are closely involved in the day-to-day operations of the Group and report to the Board in detail at monthly
intervals. Relevant papers are distributed to members of the Board in advance of Board and Committee meetings. Detailed financial
reports of the Group’s financial performance are also provided on a regular basis
Our risk management process is explained
on page 30
The Board reviews a matrix of the key risks which sets out how these are managed and mitigated through internal and other controls
and processes
The Board comprises the independent Non-executive Chairman, three Executive Directors and four Non-executive Directors
Biographies of the Directors: page 41
The Board considers that Michèle Lesieur, Christian Guttmann and Ingeborg Øie are independent Non-executive Directors.
Currently no Senior Independent Director has been appointed, but the Board continues to evaluate a possible appointment
Key corporate governance changes in the
year: page 43
Although Riccardo Pigliucci has served on the Board for over ten years; the Board considers that he is an independent Non-executive
Chairman in both character and judgement
To ensure the Board functions well, the Board meets at least 11 times each year and it is the responsibility of the Company Secretary
(supported by reports submitted by the Executive Directors) to provide the Board with high-quality information in a timely manner to
facilitate the proper assessment of the matters requiring a decision or insight
Audit and Risk Committee Report: page 50
Nomination Committee Report: page 49
Remuneration Committee Report: page 52
We also hold an annual strategy meeting.
Each Non-executive Director continues to demonstrate that they have sufficient time to devote to our business
To support the Board we have put in place Audit and Risk, Remuneration and Nomination Committees all of which have agreed formal
terms of reference
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Principle
Commentary
6 Ensuring that between them the
Directors have the necessary
up‑to‑date experience, skills
and capabilities
The Board is satisfied that the Directors have an effective and appropriate balance of skills and experience, including in the areas of
innovation, software development, the use of medical ultrasound, finance, marketing, international trade and corporate acquisitions
The Board includes some diversity in terms of the background and gender of each Director
Further information
Nomination Committee Report: page 49
Biographies of the Directors: page 41
7 Evaluating Board performance
based on clear and relevant
objectives, seeking
continuous improvement
The Nomination Committee reviews the balance and composition of the Board and its Committees taking into account the skills and
experience of each Board member
Each new Director undertakes an induction programme to strengthen their understanding of the business
The Chairman regularly assesses the performance of each of the Directors (including by way of one-to-one meetings) to ensure that they
remain committed to the business, that their individual contributions are relevant and effective and where relevant, they have maintained
their independence
Key corporate governance changes in the
year: page 43
Agreed objectives and targets are set each year for the Executive Directors and performance measured against these metrics
Over the past three years the Board membership has been through significant changes in personnel, and we have allowed the new
Board members to settle into their roles before embarking on a new evaluation exercise
8 Promoting a corporate culture
based on ethical values
and behaviours
The Board has an ethics policy which forms part of the Staff Handbook and a breach of the policy by any member of staff would result in
disciplinary action to ensure that the Company’s ethical values and behaviours recognised and respected. A summary of the policy is set
out below:
See Section 172: page 28
Business model: page 13
It is the policy of Intelligent Ultrasound to conduct its business at all times and throughout the world with honesty and integrity and the
Company will continue to be an ethical and responsible company. The Company recognises it has a responsibility for all the actions of
its employees in connection with the activities of the organisation. In view of this, the Company believes that the ethics demonstrated
by our employees should give all customers, shareholders, suppliers, colleagues, business partners and regulators confidence that
the Company operates in a way that avoids any suggestion of improper or personal motives or actions. Therefore, all employees are
expected to conduct themselves in accordance with the Company’s Code of Ethics at all times
The Company has a clear set of values and purpose which are communicated to the organisation regularly by the Board. The Board
principally monitors and assesses corporate culture through an annual staff survey
The Board has established four Committees to discharge its roles and responsibilities: an Audit and Risk Committee, a Remuneration
Committee, a Nomination Committee and an ESG Committee. Each Committee is governed by its own terms of reference which are
created and reviewed by the Board to ensure they are appropriate to support the Board and to ensure good decision-making
Audit and Risk Committee Report: page 50
Remuneration Committee Report: page 49
The CEO is responsible for the day-to-day leadership of the Group, the management team and its employees. The CEO is responsible,
in conjunction with the Executive Directors and senior management, for the execution of the Company’s strategy approved by the Board
and the implementation of Board decisions
Nomination Committee Report: page 52
We maintain a regular dialogue with our shareholders through investor presentations for our annual and interim reports, investor
conferences, shareholder meetings, podcasts, technology open days and through our broker Cavendish
See the Section 172 Report which details
our engagement with shareholders: page 28
Audit and Risk Committee Report: page 50
Nomination Committee Report: page 49
Remuneration Committee Report: page 52
9 Maintaining governance
structures and processes
that are fit for purpose and
support good decision‑making
by the Board
10 Communicating how the
Company is governed and is
performing by maintaining a
dialogue with shareholders and
other relevant stakeholders
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Areas in which the Company’s governance structures and practices differ
from the expectations set out by the QCA Code and proposed changes in
governance arrangements.
Understanding shareholder needs and expectations
The Company’s shareholders include a number of private individuals who have invested through VCT/EIS and
other investment funds and it is not possible to engage with all elements of the Company’s shareholder base
to gain an understanding of their needs and expectations. However, the Directors (principally the CEO and
CFO) endeavour to meet with major shareholders and engage with others at presentations made to groups
of shareholders. All Directors attend the Company’s Annual General Meeting with shareholders. Existing and
potential investors are also invited to contact the Company about any investor relations matters by emailing
intelligentultrasound@tbcardew.com
That the Company Secretary should not be an Executive Director
The Board members have significant external board director experience and are aware that they may seek
independent professional advice at the Company’s expense to discharge their duties. The roles of CFO and
Company Secretary have been combined in the interests of efficiency and cost, however the separation of the
roles is reviewed annually.
Review of the performance of the Board as a whole and committees
The QCA Code requires that a regular review for effectiveness is also carried out for the Board as a whole and
for individual committees. Whilst an external Board evaluation was performed in 2020, there was no such review
in 2023 for either the Board or the individual committees. Due to the significant changes in the Board since then
we have allowed the new Board members to settle into their roles before embarking on an evaluation exercise.
Riccardo Pigliucci
Chair of the Board
30 April 2024
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Nomination Committee Report
Michèle Lesieur
Chair of the Nomination Committee
Composition of the Committee
Member
Michèle Lesieur (Chair)
Riccardo Pigliucci
Ingeborg Øie
Nick Avis
Attendance
4
4
4
3
Induction of new Directors
New Directors are taken through a
comprehensive induction programme
which is tailored to their individual needs
and understanding of the technologies,
markets and issues facing the Company.
Michèle Lesieur
Chair of the Nomination Committee
30 April 2024
Dear Shareholder
On behalf of the Nomination Committee
(the Committee), I am pleased to introduce
the Nomination Committee report in which
we set out the Committee’s report on its
activities during the year.
Responsibilities
The main responsibilities are set out in its
terms of reference, which are available on
the Group’s website:
www.intelligentultrasound.com/
directors-and-committees/
The terms of reference for the Committee
are based on the ICSA guidelines.
The purpose of the Committee is to ensure
an orderly succession of candidates for
Executive Directors and NEDs, and to
advise the Board on matters of corporate
governance relating to the appointment
and reappointment of Directors. In fulfilling
this purpose, the Committee is required to:
– Identify, evaluate and nominate
candidates to fill Board vacancies
– Make recommendations to the Board
regarding the annual re-election
of Directors
– Ensure an appropriate succession plan
is in place for the Chair and all Directors
– Ensure an orderly succession plan is
in place for senior executives
– Advise on matters of governance such
as Board diversity
Diversity
The Committee recognises the importance
of a diverse Board and is mindful of the
issue of Board diversity in its succession
plans. It also acknowledges the
importance of ensuring that the selection
of Directors should be based upon a range
of factors including skills, experience,
qualifications, background and values.
Accordingly, all vacancies are filled taking
into account these wider factors and are
not based to a disproportionate extent on
any one factor such as gender or ethnicity.
Principal activities during
the year
The Committee met formally four times
in 2023.
As outlined in the report last year,
since 2021 the Committee has been
responsible for the search for additional
and replacement Non-executive Directors
to join the Board with the aim of building a
more diverse skills matrix appropriate for
the Board’s size and strategy. During 2023,
the Committee largely focused on the
search for a senior Non-executive Director
to join the Board in 2024. The Committee
met potential candidates but no decision
has been taken in 2023. In addition, at
the 2023 AGM Ian Whittaker retired from
the Board but continued in his COO role
until 31 December 2023. The Committee
agreed his role and responsibilities would
be combined with those of the CEO Stuart
Gall in 2024.
An external consultant was used as an
adviser to the Board to conduct the search
for these appointments.
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Audit and Risk Committee Report
Ingeborg Øie
Chair of the Audit and Risk Committee
Composition of the Committee
Member
Ingeborg Øie (Chair)
Christian Guttmann
Michèle Lesieur
Attendance
3
2
3
Dear Shareholder
I am pleased to present this report, which
is my second as Chair of the Audit & Risk
Committee (the Committee), and in the
following pages I aim to share insights into
the activities undertaken or overseen by
the Committee during the year.
Role of the Committee
The Committee oversees the Group’s
financial reporting process and risk
management process on behalf of the
Board of Directors, and in accordance with
the Terms of Reference, which have been
reviewed in the year.
The Committee is responsible on behalf of
the Board for:
– monitoring the integrity of the financial
statements and overseeing the financial
reporting process
– reviewing the effectiveness of the
Group’s systems of risk management
and internal control
– approving the appointment,
reappointment, remuneration and
removal of the external auditor, as well
as overseeing the external auditor’s
independence and effectiveness in
delivering a quality audit. The Group’s
auditor CLA Evelyn Partners Limited
(Evelyn) were appointed in 2022
The Terms of Reference can also be found
on the Group website:
www.intelligentultrasound.com/
directors-and-committees/
Significant matters and how
these were addressed
i) Going concern assessment
As part of the process of preparing the
going concern statement, a thorough
review is carried out on the Group’s
budgets and cashflow projections, taking
account of possible changes in trading
performance under three scenarios:
– Existing base budget
– A flexed, more conservative version of
the base budget
– A projection based on latest trading
All of the above forecasts include estimates
and assumptions regarding the product
development projects, sales pipeline,
future revenues and costs and timing
and quantum of investments in the R&D
programmes. Following a detailed review
of the scenarios, combined with the £2m
overdraft facility agreed with HSBC post
year end, the Committee recommended
that the Board adopt the going concern
basis in preparing these financial
statements as the Committee believes
that this overdraft facility, combined with
existing cash reserves and expected
cash flows from operating activities,
are sufficient to meet the Group and
Company’s obligations as they fall due for
at least the next 12 months from the date
of approval of these financial statements.
If the Group subsequently becomes reliant
on the availability of the facility to meet
its short-term liquidity needs, a failure to
renew or extend the facility could impact
its ability to continue as a going concern.
Committee focus in FY2023
The Committee met three times this year.
As Committee Chair, I met with the Evelyn
audit partner to discuss planning, updates
on audit findings and timelines. Having an
open dialogue is also important to ensure
that the Committee takes into account
the feedback and external perspective of
the auditors. I also met with management
as appropriate ahead of meetings to
discuss specific items of focus to report
to the Committee. After each meeting, I
also reported back to the Board on the
Committee’s activities, the main issues
discussed and matters of relevance.
Each year Committee reviews its cycle
of work for the year ahead and sets out
a plan to ensure that the work of the
management and Committee is balanced
through the year and that all relevant
topics are covered.
Financial reporting
The Directors have the primary
responsibility for the financial statements,
for maintaining effective internal control
over financial reporting, and for assessing
the effectiveness of internal control over
financial reporting. The Committee has
reviewed, with both management and the
external auditor, where the more significant
judgements have been made and the
quality and appropriateness of the Group’s
accounting policies.
In fulfilling its oversight responsibilities, the
Committee reviewed and discussed the
audited consolidated financial statements
included in this Annual Report with
management and the Group’s external
auditor, including a discussion of the
quality, not just the acceptability, of the
accounting principles; the reasonableness
of significant judgments; and the clarity of
disclosures in the financial statements.
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Audit and Risk Committee Report continued
Approval
This report was reviewed and approved by
the Committee and signed on its behalf by:
Ingeborg Øie
Chair of the Audit & Risk Committee
30 April 2024
Other activities
At the August 2023 meeting, the
Committee reviewed and approved the
policy on non-audit services, ensuring
compliance with the QCA guidance.
Approval of the financial
statements
The Committee has concluded that it
has acted in accordance with its Terms
of Reference. At the meeting in April 2024
the Committee considered each section
of the Annual Report and the document
as a whole, as proposed by the Company,
and subsequent to a review of the final
draft of the Annual Report and Accounts;
it reached the conclusion and advised the
Board that it considered the 2023 Annual
Report and Accounts to be fair, balanced
and understandable and, combined with
the QCA Code Website Disclosures,
provided the information necessary
to assess the Group’s business plan
and strategy.
The Committee received further updates
from management regarding continued
improvements to the impairment review
process and assessment of going concern.
The Committee is pleased to see a
strengthened process.
External audit
The Committee reviewed and agreed the
audit scope and plan for the FY23 audit
and subsequently met with the external
auditor on 4 April 2024 to discuss the
announcement, results of their audit to that
date, their evaluation of the Company’s
internal control and the overall quality of
the Group’s financial reporting.
The Committee agreed that:
– the audit contributed to the integrity of
the Group’s financial reporting
– the relationship between Evelyn and
both the Committee and management
continues to be effective
– Evelyn demonstrated an appropriate
degree of professional scepticism and
deployed a team with the required
level of skill and expertise to enable
an effective audit
– the audit strategy and plan was
appropriately scoped, communicated
and executed
– Evelyn continues to be independent and
recommended to the Board that the
reappointment of Evelyn, as our external
auditor, be put to our shareholders for
approval at the 2024 AGM (this was
subsequently approved by the Board)
Internal audit
The Group does not have an internal
audit function, as the Board does not
consider the current scale and complexity
of operations warrant such a function.
The Committee regularly reviews this on
behalf of the Board, and our review during
2023 concluded this was still appropriate.
In addition, the Committee reviewed and
discussed together with management the
effectiveness of the Group’s internal control
over financial reporting and the significant
improvements that continue to be made.
Risk management and
internal controls system
The Group has continued to enhance
and further embed its framework of risk
management, controls and assurance
for dealing with its landscape of risks.
An update on actions arising from the
November 2022 detailed review was
provided to the Committee in August
and a detailed review of the risk register
was undertaken by this Committee on
the Board’s behalf in November. The
Committee agreed with management
any actions required to manage or
mitigate these risks effectively.
A separate detailed review of the
information security risk management
process was also undertaken during the
year and, following this, the Committee
was satisfied that the Group has adequate
information risk management processes
and controls in place.
Additionally, if the Group’s performance
does not meet that projected, and
available facilities are insufficient to meet
its liquidity needs, then the Group may
need to find alternative sources of finance.
These circumstances represent a material
uncertainty that may cast significant doubt
upon the Group’s and the Company’s
ability to continue as a going concern.
Notwithstanding the uncertainties
around timing and magnitude of future
cashflows, the Directors believe existing
cash reserves, expected cash flows
from operating activities as well as
the availability of the overdraft facility
if required, are sufficient to meet the
Group and Company’s obligations as
they fall due for at least the next 12
months from the date of approval of
these financial statements.
The Directors have therefore concluded that
it is appropriate to prepare the Group and
Company financial statements on a going
concern basis. The financial statements
do not include any adjustments that would
result if the Group or the Company was
unable to continue as a going concern.
ii) Intangible asset impairment
The Committee considered the carrying
value of intangible assets in the 2023
financial statements together with the
recoverability of the carrying value through
future cash flows. For the purposes of its
annual impairment testing process, the
Group assesses the recoverable amount of
each of the Group’s cash-generating units
(CGUs) based on the calculation of the
value-in-use. The Committee reviewed the
impairment methodology and specifically
assessed the key assumptions used to
estimate the recoverable amount of each
CGU, including future cash flows and
discount rates applied in the calculation of
the value-in-use, along with the sensitivity
analysis performed.
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Remuneration Committee Report
Michèle Lesieur
Chair of the Remuneration Committee
Composition of the Committee
Member
Michèle Lesieur
Ingeborg Øie
Nick Avis
Attendance
4
4
3
Dear Shareholder
On behalf of the Board, I am pleased to
present the Report of the Remuneration
Committee for the year ended
31 December 2023.
This report sets out the Company’s
remuneration practices and how they align
the interests of the executive team with
those of the shareholders and also outlines
the Executive Directors’ Annual Incentive
Scheme for the current year, which is
designed to underpin the Company’s
objective to provide shareholder value.
Membership
Although only members of the Committee
have the right to attend meetings, other
individuals, such as external advisers,
the Chair of the Board and the CEO,
may be invited to attend for all or part
of any meeting.
Role of the Committee
The Committee meets at least three times
per year and is responsible for determining
the policy for Directors’ remuneration and
setting remuneration for the Company’s
Chair and Executive Directors, and other
senior management who report to the
CEO. The objective of the remuneration
policy is to ensure that the executive team
are provided with appropriate incentive
to encourage enhanced performance
and in a fair and responsible manner, are
rewarded for their individual contributions
to the success of the Group. We also
determine the measures and targets
for the Annual Incentive Scheme for the
Executive Directors as well as long-term
incentive plans and awards.
Terms of Reference
The Terms of Reference of the
Remuneration Committee are available on
the Company’s website at:
www.intelligentultrasound.com/
directors-and-committees/
Basis of preparation
As an AIM-quoted Company, the
information provided in the report is
disclosed to fulfil the requirements of AIM
Rule 19. The Company is not required to
comply with Schedule 8 of the Large and
Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008,
however, it is committed to achieving high
governance standards.
The information is unaudited except
where stated.
Director’s remuneration
The Committee aims to ensure that the
total remuneration for Executive Directors
is designed to:
– Be competitive and to attract, retain and
motivate executives of a high calibre
– Be appropriate to the scale of
their responsibility
– Provide for a significant element of at-
risk performance-related pay
– Ensure Directors identify with the
interests of shareholders and are
fairly remunerated in the light of
their own personal performance
and their contribution to the Group’s
overall performance
The remuneration package for Executive
Directors comprises:
– Basic salary: Salary and benefits are
reviewed annually by the Committee
and benchmarked against comparable
roles in the sector and general
market conditions
– Pension allowance: Each Executive
Director receives a pension allowance
equivalent to 10% of their basic salary
– Performance-related pay: The Annual
Incentive Scheme is payable to each
Executive Director according to the
achievement of a number of measurable
objectives and growth targets
– Share-based incentives: The Company
operates a share option scheme for
Executive Directors and permanent
employees. Share options are normally
granted to Directors on appointment
and to employees after one
year’s service
– Other benefits in kind including life
insurance and health insurance
Directors’ service contracts
All Executive Directors are employed
under service contracts. The services of
all Executive Directors may be terminated
by the Company or individual giving six
months’ notice.
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Remuneration Committee Report continued
Directors’ remuneration (audited)
The Directors’ remuneration for the year ended 31 December 2023 was:
Current Directors
Nick Avis
Stuart Gall
Christian Guttmann
Helen Jones
Michèle Lesieur
Ingeborg Øie
Riccardo Pigliucci
Nicholas Sleep
Former Directors
Ian Whittaker1
Nazar Amso
David Baynes
Andrew Barker
Total
1 Retired 21 June 2023
Salaries & fees
£’000
Accrued
AIS
£’000
Pension
£’000
Car allowance
£’000
Other benefits
£’000
25
206
25
127
30
30
60
196
78
–
–
–
777
–
19
–
13
–
–
–
20
8
–
–
–
60
–
21
–
11
–
–
–
20
8
–
–
–
60
–
14
–
–
–
–
–
–
–
–
–
–
–
2
–
1
–
–
–
1
8
–
–
–
14
12
Total
2023
£’000
25
262
25
152
30
30
60
237
102
–
–
–
923
Total
2022
£’000
25
294
10
168
25
25
60
257
212
12
10
30
1,128
Basic salary
Salary and benefits are reviewed annually by the Committee and benchmarked against comparable roles in the sector and general market conditions.
Pensions
Each Executive Director receives a pension allowance equivalent to 10% of their basic salary.
Performance‑related pay
i) 2024 Annual Incentive Scheme
The Chief Executive can earn up to a maximum of 35% of his base salary on the successful achievement of the following:
– 35% based on hitting Group revenue and cash targets.
Each Executive Director can earn up to a maximum of 30% of their base salary on the successful achievement of the following:
– 35% based on hitting Group revenue and cash targets.
The Committee may exercise its discretion over up to half of the potential scheme payment.
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Remuneration Committee Report continued
ii) 2023 Annual Incentive Scheme
The Chief Executive can earn up to a maximum of 35% of his base salary on the successful achievement of
the following:
Directors’ interests in share options
At 31 December 2023 the following options had been granted to the Directors and remain current
and unexercised:
– 28% based on hitting Group revenue, EBITDA-adjusted and cash targets, and 7% based on the achievement
of individual performance-based targets.
Each Executive Director can earn up to a maximum of 30% of their base salary on the successful achievement
of the following:
– 25% based on hitting Group revenue, EBITDA adjusted and cash targets, and 5% based on the achievement
of individual performance-based targets.
The Committee may exercise its discretion over up to half of the potential scheme payment.
Directors and their interests
The Directors’ interests in the shares of the Company (audited) are detailed below:
Current Directors
Stuart Gall
Nicholas Sleep
Helen Jones
Nick Avis
Riccardo Pigliucci
Ingeborg Øie
Michèle Lesieur
Christian Guttmann
Former Directors
Ian Whittaker1
1 Retired 21 June 2023
At 31
December
2023
No.
% of issued
Ordinary
share capital
At 31
December
2022
No.
% of issued
Ordinary
share capital
1,491,042
583,871
149,292
407,754
117,648
216,216
–
–
0.46%
0.18%
0.05%
0.12%
0.04%
0.07%
–
–
1,491,042
583,871
149,292
407,754
117,648
216,216
–
–
0.46%
0.18%
0.05%
0.12%
0.04%
0.07%
–
–
532,253
0.16%
532,253
0.16%
Parties related to Professor Nick Avis hold 141,177 shares representing 0.04% (2022: 0.05%) of the issued
share capital.
Executive
Directors
Stuart Gall
Stuart Gall
Stuart Gall
Stuart Gall
Stuart Gall
Nicholas Sleep
Nicholas Sleep
Nicholas Sleep
Nicholas Sleep
Nicholas Sleep
Helen Jones
Helen Jones
Helen Jones
Non–executive
Directors
Nick Avis
Riccardo Pigliucci
Riccardo Pigliucci
Former
Directors
Ian Whittaker1
Ian Whittaker1
Ian Whittaker1
1 Retired 21 June 2023
Option
exercise
price
(pence)
At
1 January
2023
No.
Granted
during year
No.
Lapsed
during year
No.
At
31 December
2023
No.
Expiry date
19.00
42.50
268,000
324,000
11.25
2,437,000
15.25
1,087,498
–
–
–
–
–
1,031,750
(268,000)
–
1 May 2023
–
–
–
–
324,000
2,437,000
30 June 2024
29 May 2028
1,087,498
21 December 2030
1,031,750
21 December 2033
9.60
19.00
42.50
268,000
260,000
11.25
1,605,000
15.25
1,033,711
9.60
–
980,725
12.00
1,000,000
15.25
662,266
–
–
9.60
–
636,540
42.50
19.00
42.50
40,000
216,000
80,000
20.50
200,000
11.25
1,000,000
15.25
824,790
–
–
–
–
–
–
(268,000)
–
260,000
1,605,000
1 May 2023
30 June 2024
29 May 2028
–
–
–
–
–
–
–
–
–
–
–
–
1,033,711
21 December 2030
980,725
21 December 2033
1,000,000
24 April 2030
662,266
21 December 2030
636,540
21 December 2033
40,000
30 June 2024
(216,000)
–
1 May 2023
–
–
–
–
80,000
30 June 2024
200,000
1,000,000
4 April 2027
29 May 2028
824,790
21 December 2030
11,306,265
2,649,015
(752,000) 13,203,280
The vesting conditions are detailed in note 23 of the financial statements.
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Remuneration Committee Report continued
M&A bonus arrangement
The Remuneration Committee provides incentives for senior management to realise reward for growth
with the Long-term Incentive Plan, through share price appreciation of awarded stock options, however, the
Remuneration Committee also recognises the need to provide management with an incentive in the form of a
cash award that will be payable upon the completion of a potential exit event through an M&A Bonus. To provide
a dual incentive structure, the M&A Bonus is underpinned by the Long-term Incentive Option which can be
exercised in accordance with its own terms.
The maximum amount of cash payable to each participant under the M&A Bonus will be based on a multiple of
50% of each Executive Director’s remuneration if the price per share to be paid by an acquirer is £0.18 or more
and will increase with any increase in the price per share paid by an acquirer above £0.18. The total M&A bonus
pool for all participants is capped at 2.9% of the eventual sale price of the Company. The actual amount of cash
payable under the M&A Bonus will be calculated after deduction of any gain in the Long-Term Incentive Option in
issue at the time of the M&A Bonus agreement in December 2020.
Post-year end the Board approved, following a recommendation from the Committee, to amend the terms of the
M&A Bonus so that the starting threshold price per share paid by an acquirer is adjusted to reflect the movement
in the FTSE AIM All-Share Index since the date of the initial grant of the M&A Bonus.
Non‑executive Directors
The salary of the Chair is determined by the Committee excluding the Chair and the salaries of the Non-
executive Directors are determined by the Board excluding the Non-executive Directors following a
recommendation from the Chair of the Remuneration Committee, after consultation with independent advisers
and published data. The Non-executive Directors each receive fees of £25,000 per annum, with an additional
£5,000 per annum for each committee chaired. The Remuneration Committee plans to recommend that
these fees are kept in line with those of comparable similar-sized-companies in the sector, and general market
conditions. Prior to 2018, the Non-executive Directors have been awarded a small number of share options in
previous years and no further options will be issued.
The Chair of the Committee will be available at the 2024 AGM to answer any questions about the Group’s senior
management remuneration policies and practices.
Approval
This report was reviewed and approved by the Remuneration Committee and signed on its behalf by:
Michèle Lesieur
Chair of the Remuneration Committee
30 April 2024
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Directors’ Report
The Directors present
their report and audited
consolidated financial
statements of Intelligent
Ultrasound Group plc
(the Company and the
Group) for the year ended
31 December 2023.
General information
The Company is incorporated as a public
limited company and is registered in
England and Wales with registered number
09028611. Its registered office is at Floor
6A, Hodge House, 114-116 St Mary
Street, Cardiff, CF10 1DY.
The Group’s principal activities are the
development, marketing and distribution
of medical training simulators and the
development, distribution and licence
of clinical ultrasound AI-based software.
Information included in
the Strategic Report
The Directors have chosen to set out
the following information in the Strategic
Report which would otherwise be required
to be contained in the Directors’ Report:
– Performance of the business
– Financial review
– Principal risks and uncertainties
– Important events which have occurred
post period-end and
– Likely future developments
Dividends
The Directors do not recommend the
payment of a dividend (2022 £nil).
Research and development
The Group’s research and development
activity plays an important role in the
operational and financial success of the
business. The Group spent £2.90m (2022:
£3.20m) on research and development
activities of which £1.15m (2022: £1.69m)
was expensed and £1.75m (2022: £1.51m)
was capitalised as an intangible asset.
Going concern
In undertaking a going concern review,
the Directors have reviewed three financial
projections to 31 December 2025 based
on the existing base budget, a flexed, more
conservative version of the base budget and
a reforecast based on current trading, all of
which include estimates and assumptions
regarding the product development projects,
sales pipeline, future revenues and costs
and timing and quantum of investments
in the R&D programmes. Post year-
end, the Company secured access to a
£2m overdraft facility with HSBC which
provides additional liquidity to support the
Company’s working capital needs but is
scheduled for review within 12 months
of signing the financial statements. If the
Group subsequently becomes reliant on the
availability of the facility to meet its short-
term liquidity needs, a failure to renew or
extend the facility could impact its ability to
continue as a going concern. Additionally,
if the Group’s performance does not meet
that projected and available facilities are
insufficient to meet its liquidity needs then the
Group may need to find alternative sources
of finance. These circumstances represent a
material uncertainty that may cast significant
doubt upon the Group’s and the Company’s
ability to continue as a going concern.
Notwithstanding the uncertainties around
timing and magnitude of future cashflows,
the Directors believe existing cash reserves,
expected cash flows from operating
activities as well as the availability of the
overdraft facility if required, are sufficient to
meet the Group and Company’s obligations
as they fall due for at least the next 12
months from the date of approval of these
financial statements.
The Directors have therefore concluded that
it is appropriate to prepare the Group and
Company financial statements on a going
concern basis. The financial statements
do not include any adjustments that would
result if the Group or the Company was
unable to continue as a going concern.
Financial instruments
A description of the Group’s financial risk
management objectives and policies,
as well as disclosure of exposure to price
risk, credit risk, liquidity risk and cash
flow risk is included in note 25 to the
financial statements.
Directors and their interests
The following Directors have held office
during the year under review and up to
date of this report:
Current Directors
– Stuart Gall
– Helen Jones
– Riccardo Pigliucci
– Nicholas Sleep
– Ingeborg Øie
– Michèle Lesieur
– Nicholas Avis
– Christian Guttmann
Former Directors
– Ian Whittaker
(retired 21 June 2023)
The Directors’ interest in shares, share
options and their remuneration is set out
in the Remuneration Report. There have
been no changes to Directors’ interests
between the end of the period under
review and one month prior to the notice
of the AGM.
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Directors’ Report continued
Insurance
The Company and its subsidiaries have made qualifying third-party indemnity provisions for the benefit of its
Directors, which remain in force at the date of this report and throughout the year. Directors’ and Officers’ liability
insurance is provided for all Directors of the Company.
Auditors
The auditors, CLA Evelyn Parters Limited, have indicated their willingness to continue in office, and a resolution
that they be reappointed will be proposed at the Annual General Meeting.
By order of the Board
Helen Jones
Chief Financial Officer and Company Secretary
30 April 2024
Corporate governance
The Company’s statement on corporate governance can be found in the Corporate Governance Report.
The report forms part of this Directors’ Report and is incorporated into it by cross-reference.
Statement as to Disclosure of Information to the Auditor
The Directors who were in office on the date of approval of these financial statements have confirmed:
– As far as they are aware, that there is no relevant audit information of which the auditor is unaware
– Each of the Directors has confirmed that they have taken all the steps that they ought to have taken as
Directors in order to make themselves aware of any relevant audit information and to establish that it has been
communicated to the auditor
This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies
Act 2006.
Substantial shareholdings
The following shareholders held 3% or more of the issued share capital of the Company as at 31 March 2024:
Shareholder
IP Group plc
Parkwalk Advisors
Octopus Investments
Polar Capital
Amati Global Investors
Canaccord Genuity Wealth Management
Brett Sheradon Gordon
Herald Investment Management
Dowgate Capital
Rathbones
Number of shares
% of issued capital
(as at date of
notification)
67,858,641
35,965,600
35,847,252
27,263,236
22,025,000
13,771,400
12,172,500
11,448,900
10,314,372
9,878,158
20.76
11.00
10.97
8.34
6.74
4.21
3.72
3.50
3.16
3.02
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Statement of Director’s Responsibilities
The Directors are
responsible for preparing
the Annual Report and the
financial statements in
accordance with applicable
law and regulations.
The Directors are responsible for
keeping adequate accounting records
that are sufficient to show and explain
the Company’s transactions and disclose
with reasonable accuracy at any time the
financial position of the Company and
enable them to ensure that the financial
statements comply with the Companies
Act 2006.
The Directors are also responsible
for ensuring that they meet their
responsibilities under the AIM Rules.
They are also responsible for safeguarding
the assets of the Company and hence
for taking reasonable steps for the
prevention and detection of fraud and
other irregularities.
The Directors are responsible for the
maintenance and integrity of the corporate
and financial information included on the
Company’s website.
Legislation in the United Kingdom governing
the preparation and dissemination of financial
statements may differ from legislation in
other jurisdictions.
Helen Jones
Chief Financial Officer
and Company Secretary
30 April 2024
Company law requires the Directors to
prepare financial statements for each
financial year. Under that law the Directors
are required to prepare the Group
and Company financial statements in
accordance with UK-adopted international
accounting standards (IFRS).
Under company law the Directors must
not approve the accounts 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 Group and Company
financial statements, the Directors are
required to:
– properly select and apply
accounting policies
– make judgments and accounting
estimates that are reasonable
and prudent
– present information, including
accounting policies, in a manner that
provides relevant, reliable, comparable
and understandable information
– provide additional disclosures
when compliance with the specific
requirements in IFRS Standards
are insufficient to enable users to
understand the impact of particular
transactions, other events and
conditions on the entity’s financial
position and financial performance
– prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and Company will continue
in business.
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Independent Auditor’s Report to the members of Intelligent Ultrasound Group plc
Opinion
We have audited the financial statements of Intelligent Ultrasound Group plc. (the Parent Company) and its
subsidiaries (the Group) for the year ended 31 December 2023 which comprise the Group statement of profit
and loss and other comprehensive income, the Group and Company statements of financial position, the
Group statement of changes in equity, the Company statement of changes in equity, the Group and Company
statements of cash flow and the notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted
international accounting standards and as regards the Parent Company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
In our opinion:
– the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as at 31 December 2023 and of the Group’s loss for the year then ended;
– the Group financial statements have been properly prepared in accordance with UK-adopted international
accounting standards;
– the Parent Company financial statements have been properly prepared in accordance with UK-adopted
international accounting standards as applied in accordance with the provisions of the Companies Act
2006; and
– the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
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 are independent of the Group and 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. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Our approach to the audit
Of the Group’s four reporting components, we subjected four to audits for Group-reporting purposes.
An additional dormant component has also been subject to audit work.
The components within the scope of our work covered 100% of Group revenue, 100% of Group profit before
tax, and 100% of Group net assets.
Key audit matters
Key audit matters are those matters that, in our professional judgment, 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) 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
Description of risk
How the matter was addressed in the audit
Classification
and valuation
of intangibles
As the business continues to
grow there has been significant
capitalisation of costs relating
to intangible assets within the
two subsidiaries Medaphor
Limited (Simulation) and
Intelligent Ultrasound Limited
(Clinical AI).
The entities capitalise qualifying
development costs as intangible
assets, which are material to the
Group’s financial statements. The
audit risk is considered significant,
given the stringent requirements
that must be met to capitalise
these costs in accordance with
IAS 38.
In addition, the value of these
costs to the Group, once
capitalised, presents an area of
audit risk, given the uncertainty
and value of future sales, and
the projected future life of the
intangible asset and amortisation
period assigned. For these reasons
we have considered this an area
of key audit focus.
The main procedures performed on the recognition
and valuation assessments, including areas where
we challenged management were as follows:
– Obtaining and agreeing the breakdown of
intangible assets by ongoing/finalised projects
to note 12 in the financial statements.
– Assessing a sample of costs capitalised for each
project at year-end against the recognition criteria
of IAS 38 and corroborating the explanations
received from management with information
obtained elsewhere.
– Substantive testing a sample of costs
capitalised during the year by agreeing to
supporting documents and assessing them
against the recognition criteria of IAS 38.
– Reviewing the amortisation charged during
the year, to ensure it has been calculated in
accordance with the Group’s amortisation
policy, and consideration of whether the
amortisation period is appropriate for the
specific costs capitalised.
– Reviewing management’s assessment of the value
of the intangible assets against the impairment
indicators of IAS 36.
– Obtaining, reviewing and recalculating key
judgements used in the impairment assessment
including the use of valuations specialists to assess
the discount rate and growth assumptions.
– Reviewing and challenging the capitalisation
policy of those assets being developed but
not yet capitalised.
Considering the appropriateness of the disclosures
made in the financial statements in respect of
these assets.
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Independent Auditor’s Report to the members of Intelligent Ultrasound Group plc continued
Key audit matter
Description of risk
How the matter was addressed in the audit
Valuation of
investment in
subsidiaries &
intercompany
receivables
The Group and trading entities
have historic losses. We
have identified that significant
management judgement
is required to assess the
indicators of impairment and
the requirements of IFRS 9,
specifically the expected credit
loss model for financial assets to
be held at amortised cost.
The main procedures performed on the valuation
of investments and recoverability of intercompany
receivables, including areas where we challenged
management were as follows:
– Obtaining and agreeing the breakdown
of investments in subsidiaries, including
share options granted to note 14 in the
financial statements.
– Testing the carrying investment balance of
each entity and separately considering the net
asset position and the forecast value in use of
the entities.
– Obtaining, reviewing and recalculating key
judgements used in the impairment assessment
including the use of valuations specialists to
assess the discount rate and growth assumptions.
– Perform a review of managements forecasts and
challenge the assumptions used in the value-in-
use calculation for each subsidiary.
– Obtaining and agreeing the breakdown of
intercompany receivables to note 16 in the
Company financial statements
– Challenge management’s assessments of the
expected credit loss to be recognised in relation
to the intercompany receivable in line with IFRS9.
Considering the appropriateness of the disclosures
made in the financial statements in respect of
these assets.
Emphasis of Matter – forecast performance of Clinical AI & Simulation
divisions used for the recoverability of intangible assets, investment value
and intercompany receivables
We draw attention to note 4 and note 16 in the financial statements concerning key estimation uncertainty, and
specifically, the forecast sales of Clinical AI & Simulation products used in assessing the recoverability of £4.10m
of intangible asset on the Groups statement of financial position; and £6.57m of investment value and £20.79m
of intercompany receivables on the statement of financial position of the Company.
As described in note 4 the recoverability of these assets is dependent on sales of Clinical AI & Simulation
products being delivered and cash collected, the timing and actuality of which is not certain. The financial
statements do not reflect any impairments that may be required if the above Group assets totalling £4.10m
or the above Company assets totalling £27.36m are not recoverable. Our opinion is not modified in respect
of this matter.
Our application of materiality
The materiality for the Group financial statements as a whole (Group FS materiality) was set at £223,400. This
has been determined with reference to the benchmark of the Group’s revenue, which we consider to be one
of the principal considerations for members of the Company in assessing the Group’s performance. Group FS
materiality represents 2% of the Group’s revenue as presented on the face of the Group statement of profit and
loss and other comprehensive income. Revenue growth is a key performance indicator of the Group to improve
performance from a loss-making position.
The materiality for the Parent Company financial statements as a whole (parent FS materiality) was set at £223,399.
This has been determined with reference to the benchmark of the Parent Company’s net assets and capped
at £1 less than Group FS materiality. Parent FS materiality represents 5% of the Parent Company’s net assets
as presented on the face of the Parent Company statement of financial position, capped at £1 less than Group
FS materiality. The Company holds the investments in the subsidiaries whilst assisting in the financing of these
entities. The value of the Company is therefore based on the performance of the trading subsidiaries.
Performance materiality for the Group financial statements was set at £178,720, being 80% of Group FS
materiality, for purposes of assessing the risks of material misstatement and determining the nature, timing
and extent of further audit procedures. We have set it at this amount to reduce to an appropriately low level
the probability being that the aggregate of uncorrected and undetected misstatements exceeds Group FS
materiality. We judged this level to be appropriate based on our understanding of the Group and its financial
statements, as updated by our risk assessment procedures and our expectation regarding current period
misstatements including considering experience from previous audits. It was set at 80% to reflect the fact
that few misstatements were expected in the current period; and also considered areas of judgements and
estimation uncertainty.
Performance materiality for the Parent Company financial statements was set at £178,720, being 80% of parent
FS materiality. It was set at 80% to reflect the fact that few misstatements were expected in the current period;
and also considered areas of judgements and estimation uncertainty.
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Independent Auditor’s Report to the members of Intelligent Ultrasound Group plc continued
Material uncertainty relating to going concern
We draw your attention to note 3 to the financial statements which explains that the Company is reliant on
achieving forecasts, and thereby potentially on banking facilities, which are due for renewal within 12 months
of the signing of these accounts or securing additional funding.
Although the Directors have prepared cash-flow projections to support their decision to use the going concern
basis, it is important to note that the timing and magnitude of future cash flows remain uncertain.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the Strategic Report and the Directors’ Report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and
– the Strategic Report and the Directors’ Report have been prepared in accordance with applicable
legal requirements.
As stated in note 3, these conditions indicate that a material uncertainty exists which may cast significant doubt
on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Notwithstanding the above, 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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or
the Directors’ Report.
Our evaluation of the Directors’ assessment of the Group and Parent Company’s ability to continue to adopt the
going concern basis of accounting included:
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:
– Challenging the assumptions used in the detailed budgets and forecasts prepared by management for the
financial years ending 2024 and 2025;
– Considering historical trading performance by comparing recent growth rates of both revenue and operating
profit across the Group’s geographical and market segments;
– Assessing the appropriateness of the assumptions concerning growth rates and inputs to the discount rate
against latest market expectations and macro-economic assumptions;
– Comparing the forecast results to those actually achieved in the 2024 financial period so far;
– Reviewing bank statements to monitor the cash position of the Group post year-end, and obtaining an
understanding of significant expected cash outflows (such as capital expenditure) in the forthcoming
12-month period;
– Considering the Group’s funding position and requirements;
– Considering the sensitivity of the assumptions and reassessing headroom after sensitivity.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
Other information
The other information comprises the information included in the Annual Report, other than the financial statements
and our auditor’s report thereon. The Directors are responsible for the other information contained within the
Annual Report. 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.
– adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit
have not been received from branches not visited by us; or
– the Parent Company financial statements are not in agreement with the accounting records and returns; or
– certain disclosures of Directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 58, 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
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.
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Independent Auditor’s Report to the members of Intelligent Ultrasound Group plc continued
We obtained a general understanding of the Group’s legal and regulatory framework through enquiry
of management concerning their understanding of relevant laws and regulations, the entity’s policies
and procedures regarding compliance, and how they identify, evaluate and account for litigation claims.
We also drew on our existing understanding of the Company’s industry and regulation.
Overall, the senior statutory auditor was satisfied that the engagement team collectively had the appropriate
competence and capabilities to identify or recognise irregularities. In particular, both the senior statutory auditor
and the audit manager have a number of years’ experience in dealing with companies in the technology and
medical sector and also with companies listed on the AIM market of the London Stock Exchange.
We understand that the Group complies with the framework through:
– outsourcing payroll, share-based payments computations and tax compliance to external experts;
– subscribing to relevant updates from external experts, and making changes to internal procedures and
controls as necessary;
– updating operating procedures, manuals and internal controls as legal and regulatory requirements change.
Given the management’s structure and reporting lines, any litigation or claims would come to the Directors’
attention as being of significance in the context of the Group.
A further description of our responsibilities is available on the FRC’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.
In the context of the audit, we considered those laws and regulations which determine the form and content of
the financial statements, which are central to the Group’s ability to conduct its business, and where there is a risk
that failure to comply could result in material penalties. We identified the following laws and regulations as being
of significance in the context of the Group:
Carl Deane
Senior Statutory Auditor, for and on behalf of
CLA Evelyn Partners Limited
Statutory Auditor
Chartered Accountants
Portwall Place
Portwall Lane
Bristol
BS1 6NA
30 April 2024
– The Companies Act 2006 and UK-adopted international accounting standards in respect of the preparation
and presentation of the financial statements.
– AIM rules and the UK Market Abuse Regulation.
– UK taxation law.
– Regulatory approval for clinical products.
We performed the following specific procedures to gain evidence about compliance with the significant laws and
regulations identified above:
– Inspected the monthly Board meeting minutes to ensure there are no reports of non-compliance.
– Reviewed legal expenses accounts to identify any potential legal issues which may indicate instances of
non-compliance.
– Inspected regulatory approval documentation from the FDA and CE to ensure only approved products
are capitalised.
The senior statutory auditor led a discussion with senior members of the engagement team regarding the
susceptibility of the entity’s financial statements to material misstatement, including how fraud might occur. The
areas identified in this discussion were:
– manipulation of the financial statements, especially revenue, via fraudulent journal entries, particularly as the
size of the Company means that there is little opportunity for segregation of duties.
These areas were communicated to the other members of the engagement team not present at the discussion.
The procedures we carried out to gain evidence in the above areas included:
– Testing a sample of revenue journal entries back to supporting documentation.
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Group Statement of Profit and Loss and Other Comprehensive Income
For the year ended 31 December 2023
Continuing operations
Revenue
Cost of sales
Gross profit
Other income
Administrative expenses
Operating loss
Finance income
Finance costs
Loss before taxation
Taxation
Loss attributable to the equity shareholders of the parent
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange (loss)/gain arising on translation of foreign operations
Other comprehensive (loss)/gain for the period
Total comprehensive loss attributable to the equity shareholders of the parent
Loss per ordinary share attributable to the equity shareholders of the parent
Basic and diluted (pence)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes
See note 3 for details of the restatement as a result of a change in accounting policy
Note
5
6
7
8
8
9
2023
£’000
11,173
(4,334)
6,839
9
(9,868)
(3,020)
26
(29)
(3,023)
441
(2,582)
Restated
2022
£’000
10,100
(4,024)
6,076
8
(9,756)
(3,672)
1
(31)
(3,702)
718
(2,984)
(90)
(90)
238
238
(2,672)
(2,746)
11
(0.79)
(1.08)
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Group and Company Statements of Financial Position
As at 31 December 2023
Group
Company
Group
Company
Non‑current assets
Intangible assets
Property, plant and equipment
Investments in subsidiaries
Trade and other receivables
Current assets
Inventories
Trade and other receivables
Current tax asset
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Deferred income
Lease liabilities
Provisions
Note
12
13
14
16
15
16
17
18
19
13
20
2023
£’000
4,095
1,293
–
61
2022
£’000
3,272
1,174
–
61
5,449
4,507
1,450
3,398
462
3,031
8,342
13,790
1,603
2,025
713
7,166
11,507
16,014
2023
£’000
2022
£’000
–
245
6,569
20,848
27,662
–
260
–
82
342
–
388
6,328
11,849
18,565
–
192
–
5,027
5,219
Non‑current liabilities
Deferred income
Lease liabilities
Other payables
Total liabilities
Net assets
Equity
Share capital
Share premium
Accumulated losses
28,004
23,784
Share-based payment reserve
Merger reserve
Foreign exchange reserve
(445)
Other reserves
(2,698)
(2,732)
(294)
(244)
(35)
(337)
(188)
(22)
(3,271)
(3,279)
(333)
–
(150)
–
(483)
–
(118)
–
(563)
Note
19
13
18
2023
£’000
(272)
(446)
(65)
(783)
(4,054)
9,736
2022
£’000
(209)
(298)
(65)
(572)
(3,851)
12,163
2023
£’000
–
(112)
(65)
(177)
(660)
2022
£’000
–
(263)
(65)
(328)
(891)
27,344
22,893
22
3,269
30,207
3,269
30,207
3,269
30,207
3,269
30,207
(32,533)
(29,951)
(12,761)
(16,967)
1,998
6,538
92
165
1,753
6,538
182
165
1,916
4,548
–
165
1,671
4,548
–
165
9,736
12,163
27,344
22,893
The accompanying notes are an integral part of these financial statements.
The Company has elected to take the exemption under Section 408 of the Companies Act 2006 to not present
the statement of comprehensive income for the Company. The result for the Company for the year was a gain of
£4.2m (2022: loss of £4.5m).
These financial statements were approved and authorised for issue by the Board of Directors on 30 April 2024
and were signed on its behalf by:
Helen Jones
Chief Financial Officer
Stuart Gall
Chief Executive Officer
Company number: 09028611
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Group Statement of Changes in Equity
For the year ended 31 December 2023
As at 31 December 2021
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Transactions with owners, recorded directly in equity
Issue of share capital
Cost of share-based awards
As at 31 December 2022
Loss for the year
Other comprehensive expense
Total comprehensive loss for the year
Transactions with owners, recorded directly in equity
Cost of share-based awards
As at 31 December 2023
Share capital
£’000
Note
Share
premium
£’000
Accumulated
losses
£’000
2,707
25,959
–
–
–
562
–
–
–
–
4,248
–
3,269
30,207
–
–
–
–
–
–
–
–
(26,967)
(2,984)
–
(2,984)
–
–
(29,951)
(2,582)
–
(2,582)
–
3,269
30,207
(32,533)
22
23
23
Share‑based
payment
reserve
£’000
1,373
Merger
reserve
£’000
6,538
–
–
–
–
380
1,753
–
–
–
245
1,998
–
–
–
–
–
6,538
–
–
–
–
6,538
Foreign
exchange
reserve
£’000
(56)
–
238
238
–
–
182
–
(90)
(90)
–
92
Other
reserves
£’000
165
–
–
–
–
–
165
–
–
–
–
165
Total equity
£’000
9,719
(2,984)
238
(2,746)
4,810
380
12,163
(2,582)
(90)
(2,672)
245
9,736
The above Group statement of changes in equity should be read in conjunction with the accompanying notes.
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Parent Company Statement of Changes in Equity
For the year ended 31 December 2023
As at 31 December 2021
Loss for the year
Total comprehensive loss for the year
Transactions with owners, recorded directly in equity
Issue of share capital
Cost of share-based awards
As at 31 December 2022
Gain for the year
Total comprehensive income for the year
Transactions with owners, recorded directly in equity
Cost of share-based awards
As at 31 December 2023
Share capital
£’000
Note
Share
premium
£’000
Accumulated
losses
£’000
Share‑based
payment
reserve
£’000
2,707
25,959
(12,435)
1,291
–
–
562
–
–
–
(4,532)
(4,532)
4,248
–
–
–
3,269
30,207
(16,967)
–
–
–
–
–
–
4,206
4,206
–
3,269
30,207
(12,761)
–
–
–
380
1,671
–
–
245
1,916
22
23
23
Merger
reserve
£’000
4,548
–
–
–
–
4,548
–
–
–
4,548
Other
reserves
£’000
Total equity
£’000
165
–
–
–
–
165
–
–
–
165
22,235
(4,532)
(4,532)
4,810
380
22,893
4,206
4,206
245
27,344
The above Parent Company Statement of Changes in Equity should be read in conjunction with the accompanying notes.
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Group and Company Statement of Cash Flows
For the year ended 31 December 2023
Group
2023
£’000
Company
2022
£’000
2023
£’000
2022
£’000
Note
Group
2023
£’000
Company
2022
£’000
2023
£’000
2022
£’000
Note
Cash flows from
operating activities
(Loss)/profit before taxation
Depreciation
Amortisation of intangible assets
Credit loss allowance on
intercompany receivables
Finance costs/(income)
Share-based payment charge
Operating cash flows before
movement in working capital
Decrease/(increase) in inventories
(Increase)/decrease in trade and
other receivables
Increase/(decrease) in trade and
other payables
Increase in provisions
Cash used in operations
Income taxes received
Net cash used in
operating activities
(3,023)
(3,702)
629
986
–
3
245
604
780
–
30
380
(1,160)
151
(1,908)
(404)
(1,413)
739
7
13
(2,402)
691
(70)
–
(1,643)
959
7
7
8
10
15
16
16
20
9
(10)
4
(577)
–
(69)
(112)
–
(758)
–
Cash flows from
investing activities
4,206
143
–
(4,532)
143
–
Purchase of property, plant and
equipment
(Increase) in intercompany loans
Internally generated intangible assets
(4,920)
3,744
Interest received
21
4
(620)
–
40
101
–
(479)
–
(479)
Net cash used in
investing activities
Cash flows from
financing activities
Proceeds from issue of new shares
Share issue costs
Principal elements of lease payments
Interest paid
Net cash (used in) generated
by financing activities
Net (decrease)/increase in cash
and cash equivalents
Cash and cash equivalents at
beginning of year
Exchange (gains)/losses on cash and
cash equivalents
Cash and cash equivalents at
end of year
(338)
–
(357)
–
12
8
(1,809)
(1,467)
26
1
–
(4,079)
–
26
–
(652)
–
1
(2,121)
(1,823)
(4,053)
(651)
22
22
13
8
–
–
(207)
(29)
5,200
(390)
(231)
(31)
–
–
(118)
(15)
5,200
(390)
(138)
(22)
(236)
4,548
(134)
4,650
(4,068)
2,041
(4,945)
3,520
17
7,166
4,950
5,027
1,507
(67)
175
3,031
7,166
–
82
–
5,027
The accompanying notes are an integral part of these financial statements.
(1,711)
(684)
(758)
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Notes to the Financial Statements
For the year ended 31 December 2023
1. General information
Intelligent Ultrasound Group plc (the Company) is a public company limited by shares and incorporated and
domiciled in the United Kingdom whose shares are traded on AIM, a market operated by the London Stock
Exchange. The Company’s registration number is 09028611 and its registered office address is Floor 6A,
Hodge House, 114–116 St Mary Street, Cardiff, CF10 1DY.
The Company’s principal activity is that of a holding company. The Group’s principal activities are the
development, marketing and distribution of medical training simulators and clinical ultrasound software.
The Company is the parent entity and the ultimate Parent Company of the Group.
2. New and amended standards adopted by the Group
Impact of the initial application of other new and amended IFRS Standards that are
effective for the current year
– IFRS 17 Insurance Contracts
– IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 (Amendment – Disclosure
of Accounting Policies)
– IAS 8 Accounting policies, Changes in Accounting Estimates and Errors (Amendment – Definition of
Accounting Estimates)
3. Accounting policies
Basis of preparation
Compliance with IFRS
The Group and Company financial statements have been prepared in accordance UK-adopted international
accounting standards.
Historical cost convention
The financial statements have been prepared on historical cost basis except certain financial assets and liabilities
are measured at fair value at the end of each reporting period.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes
into account the characteristics of the asset or liability if market participants would take those characteristics
into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or
disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-
based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of
IFRS 16, and measurements that have some similarities to fair value but are not fair value, such as net realisable
value in IAS 2 or value-in-use in IAS 36.
– IAS 12 Income Taxes (Amendment – Deferred Tax related to Assets and Liabilities arising from a
Single Transaction)
The accounting policies set out in this note have been applied consistently to all periods presented in these
financial statements.
The Standards did not have any impact on the financial statements of the Group.
New and revised IFRS Standards in issue but not yet effective
At the date of authorisation of these financial statements, the Group has not applied the following new and
revised IFRS Standards that have been issued but are not yet effective.
Mandatorily effective for periods beginning on or after 1 January 2024.
– IFRS 16 Leases (Amendment – Liability in a Sale and Leaseback)
– IAS 1 Presentation of Financial Statements (Amendment – Classification of Liabilities as Current or
Non-Current)
– IAS 1 Presentation of Financial Statements (Amendment – Non-current Liabilities with Covenants)
Mandatorily effective for periods beginning on or after 1 January 2025.
– Lack of Exchangeability (Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates)
The Directors do not expect that the adoption of the Standards listed above will have a material impact on
the financial statements of the Group in future periods.
Restatement
In 2023 there was a change in accounting policy to recognise distribution costs and warehouse labour within
cost of sales instead of administrative expenses to more accurately reflect the direct costs associated with
generating revenue.
For comparative purposes the 2022 income statement has been restated below.
Revenue
Cost of sales
Gross profit
Other income
Administrative expenses
Operating loss
As previously
reported
Reclassification
As restated
2022
£’000
10,100
(3,766)
6,334
8
(10,014)
(3,672)
2022
£’000
–
(258)
(258)
–
258
–
2022
£’000
10,100
(4,024)
6,076
8
(9,756)
(3,672)
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Notes to the Financial Statements continued
For the year ended 31 December 2023
3. Accounting policies continued
Foreign currency translation
i) Functional and presentation currency
The individual financial statements of each Group entity are presented in the currency of the primary economic
environment in which it operates (its functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each Group Company are expressed in sterling, which is the
functional currency of the Company, and the presentation currency for the consolidated financial statements.
ii) Transactions and balances
These financial statements are presented in sterling which is considered to be the currency of the primary
economic environment in which the Group operates. This decision was based on the Group’s workforce being
based mainly in the UK and that sterling is the currency in which management reporting and decision-making
is based.
In preparing the financial statements of the Group entities, foreign currency transactions are translated into the
functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions, and from the translation of monetary assets and
liabilities denominated in foreign currencies at year-end exchange rates, are generally recognised in profit or loss.
They are deferred in equity if they are attributable to part of the net investment in a foreign operation.
Non-monetary items carried at historical cost are reported using the exchange rate at the date of the transaction.
Non-monetary items carried at fair value are reported at the rate that existed when the fair values were
determined.
iii) Group Companies
The results and financial position of foreign operations (none of which has the currency of a hyper-inflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
– Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet.
– Income and expenses for each statement of profit or loss and statement of comprehensive income are
translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case income and expenses are translated at the
dates of the transactions).
Going concern
In undertaking a going concern review, the Directors have reviewed three financial projections to 31 December 2025
based on the existing base budget, a flexed, more conservative version of the base budget and a reforecast based
on current trading; all of which include estimates and assumptions regarding the product development projects, sales
pipeline, future revenues and costs and timing and quantum of investments in the R&D programmes. Post year-end,
the Company secured access to a £2m overdraft facility with HSBC which provides additional liquidity to support the
Company’s working capital needs but is scheduled for review within 12 months of signing the financial statements.
If the Group subsequently becomes reliant on the availability of the facility to meet its short term liquidity needs, a
failure to renew or extend the facility could impact its ability to continue as a going concern. Additionally, if the Group’s
performance does not meet that projected and available facilities are insufficient to meet its liquidity needs then the
Group may need to find alternative sources of finance. These circumstances represent a material uncertainty that may
cast significant doubt upon the Group’s and the Company’s ability to continue as a going concern.
Notwithstanding the uncertainties around timing and magnitude of future cashflows, the Directors believe
existing cash reserves, expected cash flows from operating activities as well as the availability of the overdraft
facility if required, are sufficient to meet the Group and Company’s obligations as they fall due for at least the
next twelve months from the date of approval of these financial statements.
The Directors have therefore concluded that it is appropriate to prepare the Group and Company financial
statements on a going concern basis. The financial statements do not include any adjustments that would
result if the Group or the Company was unable to continue as a going concern.
Basis of consolidation
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee
if all three of the following elements are present: power over the investee, exposure to variable returns from the
investee and the ability of the investor to use its power to affect those variable returns. Control is reassessed
whenever the facts and circumstances indicate that there may be a change in any of these elements of control.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when
the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of
during the year are included in profit or loss from the date the Company gains control until the date when the
Company ceases to control the subsidiary. Where necessary, adjustments are made to the financial statements
of subsidiaries to bring the accounting policies used into line with the Group’s accounting policies. All intraGroup
assets and liabilities, equity, income, expenses and cash flows relating to transactions between the members of
the Group are eliminated on consolidation. The consolidated financial statements incorporate the results of the
Company and its subsidiary undertakings. The Company was incorporated on 7 May 2014.
– All resulting exchange differences are recognised in other comprehensive income.
There are no restrictions over the Company’s ability to access or use assets and settle liabilities of the Group.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities at the
closing rate are recognised in other comprehensive income. When a foreign operation is sold or any borrowings
forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or
loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and
liabilities of the foreign operation and translated at the closing rate. Exchange differences are recognised on
other comprehensive income.
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Notes to the Financial Statements continued
For the year ended 31 December 2023
3. Accounting policies continued
Revenue recognition
In accordance with IFRS 15 ‘Revenues from Contracts with Customers’, revenue is measured by reference to
the fair value of consideration received or receivable by the Group, excluding value added tax (or similar local
sales tax), in exchange for transferring the promised goods or services to the customer. Revenue excludes value
added tax or similar local sales tax. The consideration is allocated to each separate performance obligation that
is identified in a sales contract, based on standalone selling prices.
i) Revenue from the sale of systems
Performance obligations and timing of revenue recognition
The majority of the Group’s revenue is derived from selling goods (principally simulation systems including
related software licences) with revenue recognised at a point in time when control of the goods has transferred
to the customer. This is generally when the goods are delivered to the customer or collected by the customer’s
agents from the Group’s premises. The licence is integral to the functionality of the simulation system and
is not considered a separate performance obligation applying the guidance in IFRS 15:B54. As no software
updates are made throughout the period of ownership, the licence represents the right for the customer to
use the Group’s IP. Revenue from resellers (outside the UK and North America) is recognised based on ‘ship
to order’ with control passing when the goods have been delivered to the reseller. There is no returns policy.
The customer may elect to purchase installation and training services in relation to the goods supplied by the
Group. The revenue from these services is recognised once the installation and training have been provided.
The delivery of the systems and related software licence coincides with the provision of installation services
and the delivery of training. Consequently, the sale is treated as if it was one single performance obligation
recognised at a point in time.
The price of the goods supplied by the Group usually includes 12 months’ technical support and a first-year
warranty. The technical support is accounted for as a separate performance obligation, with revenue recognised
pro-rata to an estimate of the typical profile of the time spent on delivering the support required by customers
in the first year (with 60% of the time spent in the first three months and the remaining balance spent on a
straight-line basis over the remaining nine months). First-year warranties are not accounted for as separate
performance obligations as they relate to ‘assurance-type’ warranties (i.e. assurance that the product will
function as intended) rather than ‘service-type’ warranties. No revenue is allocated to these warranties but
instead a provision is made for the costs of satisfying the warranties in accordance with IAS 37 ‘Provisions,
Contingent Liabilities and Contingent Assets’. When an extended warranty (see below) is purchased a portion
of the transaction price is allocated to that separate performance obligation.
Customers are able to purchase extended warranties, Cloud access, ongoing service support (which incorporates
ad-hoc minor ‘bug-fixes’) and, for some products, new-release software upgrades (distinguished from minor ‘bug-
fixes’, as these upgrades incorporate enhancements to the functionality of the software). The revenues from extended
warranties, Cloud access and ongoing service support are recognised on a straight-line basis over the term
of the related contract. Revenues from the new release software upgrades, which is considered a right-to-use
licence, are recognised on delivery of the software upgrades.
First-year warranties are not accounted for as separate performance obligations as they relate to ‘assurance-
type’ warranties (i.e. assurance that the product will function as intended) rather than ‘service-type’ warranties.
When an extended warranty is purchased a portion of the transaction price is allocated.
Revenue is recognised over time for certain contracts if any of the three criteria are met:
– the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the
entity performs;
– the entity’s performance creates or enhances an asset that the customer controls as the asset is created or
enhanced; or
– the entity’s performance does not create an asset with an alternative use to the entity, and the entity has an
enforceable right to payment for performance completed to date.
The contracts for the purchase of ScanNav FetalCheck systems funded by the Bill & Melinda Gates foundation
and led by Concept Foundation met the three criteria above and therefore the revenue associated with this
contract is recognised as the costs are incurred to create the assets based on the output method which
involves measuring the value of the goods or services transferred to date. The transaction price is allocated
to the performance obligation based on the percentage of completion.
Determining the transaction price
The Group’s revenue is almost entirely derived from fixed-price contracts and therefore, the amount of revenue
to be earned from each contract is determined by reference to those fixed prices. In certain situations, discounts
may be given (for example, for larger orders or sales to key opinion leader customers).
Allocating amounts to performance obligations
For the vast majority of contracts there is a fixed-unit price (considered to be the standalone selling price) for
each product or service sold (including installation and training, extended warranties, Cloud access, ongoing
support and software upgrades). For all contracts, any reductions are given at a specific time – when the
contract is agreed. Discounts are allocated to the specific performance obligations in the contract on a pro-rata
basis based upon the stand-alone selling prices. The amount of revenue relating to first-year technical support
is estimated using a cost-plus model recognised by reference to the typical profile of the time spent in providing
support in the first year.
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Notes to the Financial Statements continued
For the year ended 31 December 2023
3. Accounting policies continued
Costs of obtaining contracts and costs of fulfilling contracts
Commissions paid to sales staff for generating sales orders are recognised when the customer order has been
received. Sales are invoiced in all cases when control of the goods passes to the customer or, in the case of
services to be delivered in the future, at the point in time when the customer has agreed to purchase these
future services. The value of future services extending beyond one year is not significant and so no prepaid
commission is recorded as the amounts involved would not be material. No judgement is needed to measure
the costs of obtaining contracts – it is the commission paid. The costs of fulfilling contracts do not result in the
recognition of a separate asset because:
– such costs are included in the carrying amount of inventory for contracts involving the sale of goods; and
– for service contracts, revenue is recognised over time by reference to the stage of completion meaning
that control of the asset (the service) is transferred to the customer on a continuous basis as the service is
provided. Consequently, no asset for work in progress is recognised.
Significant payment terms
Invoices for goods that are delivered at a point in time are rendered when control of the goods has passed to
the customer. Invoices for services that are delivered over time are rendered on the date on which the customers
agree to purchase those services. Most customers are allowed 30 days’ credit from the date of invoice. New
distribution customers or existing customers with a poor credit history are required to pay 50% of the invoice on
placement of their order, with the balance payable 30 days from delivery of the goods to them. These payment
terms apply to both goods that are delivered at a point in time and services that are delivered over time.
Practical expedients
The Group has taken advantage of the practical expedient not to account for significant financing components
where the time difference between receiving consideration and transferring control of goods (or services) to its
customer is one year or less. As noted above, the Group has also taken the practical expedient in IFRS 15.94
allowing for non-capitalisation of the costs of obtaining a contract.
ii) Clinical AI – royalty income
Revenue is recognised for licences of intellectual property in exchange for sales-based royalties when the
customer’s subsequent sales and activation occurs. When the royalty relates to a right-to-use licence, it is
recognised at a point in time when the final sales to the end customer occurs.
Share-based payments
The Company issues equity-settled share-based payments to certain employees and Directors of Group
Companies. Equity-settled share-based payments are measured at the fair value of the equity instruments at
the grant date. The fair value excludes the effect of non-market-based vesting conditions. Details regarding the
determination of the fair value of equity-settled share-based transactions are set out in note 23.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of the number of equity instruments
that will eventually vest. At each reporting date, the Group revises its estimate of the number of equity
instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the
revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects
the revised estimate, with a corresponding adjustment to the share-based payment reserves.
Financial instruments
Financial assets and financial liabilities are recognised in the statement of financial position when the entity
becomes a party to the contractual provisions of the instrument.
Trade receivables
Trade receivables are initially recognised at their transaction price and subsequently measured at their
amortised cost using the effective interest method less any loss allowance. The Group applies the IFRS 9
simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade
receivables. To measure expected credit losses on a collective basis, trade receivables are Grouped based
on similar credit risk and ageing. Institutional customers such as hospitals and medical schools are assigned
the lowest credit risk and non-institutional customers with poor credit history are assigned the highest credit
risk. The expected loss probability rates are based on management’s experience of historical credit losses for
each Group of trade receivables. The resultant provision matrix is then adjusted for current and forward-looking
information based upon management’s knowledge of the customer concerned, the prospects of recovery and
includes any negative macroeconomic factors relating to the territory or sector in which the customer operates.
For trade receivables, which are reported net, provisions for impairment are recorded in a separate provision
account with the loss being recognised through the statement of comprehensive income. On confirmation
that the trade receivable will not be collectable or the indicators are that there is no reasonable prospect of
recovery (due to, for example, the insolvency of the customer or legal advice that the prospects of recovery
are remote), it is deemed to be credit impaired and the gross carrying value of the asset is written off against
the associated provision.
The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial
difficulty and there is no realistic prospect of recovery. Any recoveries made are recognised in profit or loss.
Amounts owed by subsidiary undertakings (Company only)
Amounts owed by subsidiary undertakings are classified and measured in accordance with the requirements of
IFRS 9 including applying the Expected Credit Loss (ECL) model for impairment. Amounts owed by subsidiary
undertakings are considered to be in default when there is evidence that the borrower will have insufficient liquid
assets to repay the amount due on demand.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into. A financial liability is a contracted obligation to deliver cash or another financial asset
to another entity. An equity instrument is any contract that evidences a residual interest in the assets of the
Group after deducting all of its liabilities.
Trade payables
Trade payables are initially recognised at fair value and subsequently at amortised cost using the effective
interest method.
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Notes to the Financial Statements continued
For the year ended 31 December 2023
3. Accounting policies continued
Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a
business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values
of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and
the equity interest issued by the Group in exchange for control of the acquiree. Acquisition-related costs are
recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair
value at the acquisition date, except that:
– deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are
recognised and measured in accordance with IAS 12 and IAS 19 respectively;
– liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based
payment arrangements of the Group entered into to replace share-based payment arrangements of the
acquiree are measured in accordance with IFRS 2 at the acquisition date; and
– assets (or disposal Groups) that are classified as held for sale in accordance with IFRS 5 are measured in
accordance with that Standard.
Goodwill
Goodwill arising on consolidation is recorded as an intangible asset and is the surplus of the cost of the
acquisition over the Group’s interest in the fair value of identifiable net assets (including intangible assets)
acquired. Goodwill is reviewed annually for impairment. Any impairment identified as a result of the review
is charged to the statement of comprehensive income.
Other intangible assets
An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to
the extent that it is probable that the expected future economic benefits attributable to the asset will flow to
the Group and that its cost can be measured reliably. Subsequent to initial recognition, internally generated
intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses.
Internally generated Intangible assets – research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Development cost expenditure is incurred at the later stage of the project and the probability of success should
be more apparent. Once the feasibility of the project can be verified and all elements of the recognition criteria
is satisfied, any future costs will be classed as development. Any expenditure that was incurred and expensed
during the research phase cannot subsequently be capitalised.
Development expenditure is capitalised as an intangible asset only if the following conditions can
be demonstrated:
– The technical feasibility of completing the intangible asset so that it will be available for use or sale.
– The intention to complete the intangible asset and to use or sell.
– The ability to use or sell the intangible asset.
– It is probable that future economic benefits will flow to the Group.
– The availability of adequate technical, financial and other resources to complete the development to use
or sell the intangible asset.
– The attributable expenditure of the asset during its development can be reliably measured.
The probability of future economic benefits must be based on reasonable and supportable assumptions
about conditions which will exist over the life of the asset and that there is the existence of a market for
the intangible asset.
Technical feasibility is generally considered to be the formal process of assessing whether it is technically possible
to develop/manufacture a product. An appropriate point may be when the entity has completed all the planning,
design and testing activities that are necessary to establish that an asset can be produced to meet its design
specifications, including functions, features and technical performance requirements.
If the Group is unable to demonstrate the commercial feasibility of the project, then all costs must be expensed
under the scope of the research phase.
Medical device product development capitalisation
Regulatory requirements are an important factor in restricting the ability of an entity to meet the recognition
criteria in certain industries.
A strong indication that an entity has met all of the above criteria for capitalisation arises when it obtains regulatory
clearance. It is the clearest point at which the technical feasibility of completing the asset is proven and this is the
most difficult criterion to demonstrate. Obtaining regulatory clearance is also sometimes considered as the point at
which all relevant criteria, including technical feasibility, are considered to be met. For the Group, this is CE marking
in the EU and FDA clearance in the US. If clearance is received in one market but not in another, provided that the
entity considers regulatory clearance in a secondary market is a formality and it is considered highly probable that
clearance will be granted, then capitalisation can commence after clearance in the first market. If the Company has
judged that registration is probable, and there are likely to be low barriers to obtaining regulatory clearance, it is
likely to be technically feasible.
Providing that regulatory clearance from one major marketplace is achieved, clearance in other markets is
considered highly probable and the remaining recognition criteria can be demonstrated, the development
phase commencement date will be the noted date of regulatory clearance, either CE or FDA.
Subsequent measurement
IAS 38 states that an entity must choose either the cost model or the revaluation model for each class of
intangible assets. The Group have elected to follow the cost model based on no active market existing for
internally developed intangible assets at the end of their useful life. Intangible assets will be carried in the
financial statements at cost less accumulated amortisation and impairment losses.
It is assumed that all internally developed intangible assets have a finite life (a limited period of benefit to
the Group). An impairment test must be carried out on any intangible asset if there is an indication to do so.
The residual value (RV) of a finite life intangible asset is assumed to be zero, unless an active market exists
at the end of the useful life of the asset to provide a reliable measurement of RV. For prudence, the Group
assumes the RV of all internally developed intangible assets to be zero.
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Notes to the Financial Statements continued
For the year ended 31 December 2023
3. Accounting policies continued
Amortisation of intangible assets
Development expenditure thus capitalised is amortised on a straight-line basis over its useful life. Amortisation
commences when the project is available for commercial sale.
The Group will assess the estimated useful life of each project on an individual basis by considering the guidance
stated in the standard, including:
Intangible assets acquired as part of a business combination
For acquisitions, the Group recognises intangible assets separately from goodwill provided they are separable
or arise from contractual or other legal rights and their fair value can be measured reliably. Intangible assets
are initially recognised at fair value, which is regarded as their cost. Intangible assets are subsequently held
at cost less accumulated amortisation and impairment losses. Where intangible assets have finite lives, their
cost is amortised on a straight-line basis over those lives. The nature of intangible assets recognised and their
estimated useful lives is as follows:
– expected usage by the entity of the asset and whether it could be managed efficiently by another
management team;
– the typical product life cycle for the asset and published information about useful lives of similar assets that
Intellectual property
Brands
5 to 10 years
5 years
are used in a similar way;
– technical, technological, commercial or other types of obsolescence;
– the stability of the industry in which the asset operates, and changes in market demand for the products or
services from or related to the asset;
– expected actions by actual or potential competitors;
– the level of maintenance required to maintain the asset’s operating capability, and whether management
intends to perform that level of maintenance;
– the period for which the entity has control of the asset and any legal or similar limits on the asset’s use;
– whether the asset’s useful life is dependent on the useful life of other assets of the entity.
Amortisation is charged so as to write off the costs of intangible assets over their estimated useful lives, on the
following basis:
Impairment of intangible assets
The Group assesses annually whether there is any indication that any of its assets have been impaired.
If such indication exists, the asset’s recoverable amount is estimated and compared to its carrying value.
Where the asset does not generate cash flows that are independent from other assets, the Group estimates
the recoverable amount of the smallest cash-generating unit to which the asset is allocated. If the recoverable
amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount an impairment loss
is recognised immediately in the statement of comprehensive income.
For goodwill, intangible assets that have an indefinite life and intangible assets not yet available for use, the
recoverable amount is estimated annually or whenever there is an indication of impairment.
Property, plant and equipment
Property, plant and equipment are stated at cost less any subsequent accumulated depreciation or
impairment losses.
Development costs
Software licences
20%
33%
Straight line
Straight line
Depreciation is provided on all property, plant and equipment at rates calculated to write each asset down to
its estimated residual value over its expected useful life, as follows:
Subsequent expenditure
Subsequent expenditure can be capitalised if capital in nature i.e. improves the capacity of an asset from its
existing condition and provides additional functionality. This includes module upgrades or enhancements but
excludes software repairs and fixes.
Subsequent expenditure that needs regulatory approval
Expenditure incurred to add new functionality should not be capitalised if the new functionality will require
filing for new regulatory approval. This requirement implies that technical feasibility of the modified device has
not been achieved. This does not apply to expenditure on additional filings in other countries provided that
approval in other countries is considered highly probable.
Derecognition
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between
the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset
is derecognised.
Furniture, fixtures and equipment
Plant & equipment
R&D/demonstration units
Other
25%
25%
33%
25%
Straight line
Straight line
Straight line
Straight line
The assets’ residual values and useful lives are reviewed at each year-end and adjusted if appropriate. The
carrying values of property, plant and equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be recoverable.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
are expected to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement
of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset
and is recognised in profit or loss.
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Notes to the Financial Statements continued
For the year ended 31 December 2023
3. Accounting policies continued
Leases
The Group leases various property and motor vehicles. Rental contracts are typically made for fixed periods of
two to five years and may include extension and termination options. These are used to maximise operational
flexibility in terms of managing the assets used in the Group’s operations, The Group assesses at contract
inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the
use of an identified asset for a period of time in exchange for consideration.
The Group applies a single recognition and measurement approach for all leases, except for short-term leases
and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use
assets representing the right to use the underlying assets.
Any change in the terms and conditions of a lease agreement subsequent to its commencement date that
results in a change in the scope of the lease, the lease consideration, or both will be identified as a lease
modification. The Group will assess each lease modification to determine whether it represents a separate
lease, a termination of the existing lease, or a continuation of the existing lease with revised terms. If a lease
modification results in the addition of a distinct asset or a distinct lease component, the modification will be
treated as a separate lease if it meets the criteria for lease classification under IFRS 16. If a lease modification
effectively terminates the existing lease and creates a new lease, the Group will account for the termination and
the new lease separately. Any difference between the carrying amount of the lease liability for the terminated
lease and the consideration paid or payable for the termination will be recognised in the income statement. If a
lease modification does not result in the addition of a distinct asset or a distinct lease component and does not
effectively terminate the existing lease, it will be accounted for as a continuation of the existing lease with revised
terms. The carrying amount of the lease liability will be adjusted to reflect the revised lease payments based on
the updated lease term and consideration.
i) Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or
before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a
straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. If ownership
of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a
purchase option, depreciation is calculated using the estimated useful life of the asset.
The cost of a right-of-use asset also includes an estimate of costs to be incurred by the lessee in dismantling
and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset
to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce
inventories. The lessee incurs the obligation for those costs either at the commencement date or as a
consequence of having used the underlying asset during a particular period.
The right-of-use assets are also subject to impairment and are considered in the light of the losses of the Group
and where impairment indicators are identified for other assets.
ii) Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value
of lease payments to be made over the lease term. The lease payments include fixed payments (including in
substance fixed payments) less any lease incentives receivable.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate based on
average lending rates at the lease commencement date because the interest rate implicit in the lease is not
readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the
accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments
(e.g. changes to future payments resulting from a change in an index or rate used to determine such lease
payments) or a change in the assessment of an option to purchase the underlying asset. No such modifications
have occurred during the period.
iii) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and
equipment (i.e. those leases that have a lease term of 12 months or less from the commencement date and
do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases
of office equipment that are considered to be low value, based upon IASB guidance of approximately £5,000.
Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-
line basis over the lease term.
Impairment of property, plant and equipment
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment to
determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment
loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable
and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-
generating units, or otherwise they are allocated to the smallest Group of cash-generating units for which a
reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing 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 for which
the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount,
the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised immediately in profit or loss.
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Corporate Governance
Financial Statements
75
Notes to the Financial Statements continued
For the year ended 31 December 2023
3. Accounting policies continued
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the
asset or cash-generating unit in prior years. A reversal of an impairment loss is recognised immediately in profit
or loss to the extent that it eliminates the impairment loss which has been recognised for the asset in prior years.
Any increase in excess of this amount is treated as a revaluation increase.
Investments in subsidiaries
The Company’s investments in its subsidiaries are included at cost plus the fair value of options in the
Company’s shares that have been granted to the employees of each subsidiary less any provision for
impairment.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise
those temporary differences and losses.
Deferred tax liabilities are not recognised for taxable temporary differences between the carrying amount and
tax bases of investments in foreign operations where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax
assets arising from deductible temporary differences associated with such investments and interests are only
recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the
benefits of the temporary differences and they are expected to reverse in the foreseeable future. Deferred tax
assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities
and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or
to realise the asset and settle the liability simultaneously.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly
liquid investments with original maturities of three months or less.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is determined on weighted average
basis and includes all direct expenditure. Net realisable value is the price at which the stocks can be sold in
the normal course of business after allowing for the costs of realisation and where appropriate for the costs
of conversion from its existing state to a finished condition. Provision is made for obsolete, slow moving and
defective stocks.
Income tax
The income tax credit for the period is the tax receivable on the current period’s taxable loss, based on the
applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
The current income tax credit is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the Company and its subsidiaries and associates operate
and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that
a taxation authority will accept an uncertain tax treatment. The Group measures its tax balances either based on
the most likely amount or the expected value, depending on which method provides a better prediction of the
resolution of the uncertainty.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income
tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than
a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted
by the end of the reporting period and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
UK Research and Development Tax Incentive regimes
The Group accounts for amounts claimed under the SME scheme as tax credits. R&D expenditure credits are
recognised as income over the periods necessary to match them with the related costs and are included within
Other income.
Pension costs
Pension allowances, contributions to defined contribution pension schemes and contributions to personal
pension schemes are charged to the statement of comprehensive income in the year to which they relate.
Warranty claims
Provision is made for liabilities arising in respect of expected assurance type warranty claims (i.e. 12 months)
based upon management’s best estimate of the Group’s liability for remedial work and warranties granted on
products sold.
Equity
Ordinary share capital represents the nominal value of equity shares. Share premium represents the excess over
nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.
The merger reserve is the non-statutory premium arising on shares issued as consideration for acquisitions of
subsidiaries where merger relief under the relevant section of the Companies Act applies.
The foreign exchange reserve represents the differences arising on translating the foreign operations into the
sterling presentation currency, for the purposes of preparing the consolidated financial statements of the Group.
It also includes foreign exchange differences arising on intercompany loans that form part of the net investment
in the subsidiary.
The share-based payment reserve comprises the grant date fair value of share options granted to employees
and Directors which are yet to be exercised. The share-based payment reserve is used to record the credit to
equity over the vesting period in an equity-settled SBP arrangement.
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Corporate Governance
Financial Statements
76
Notes to the Financial Statements continued
For the year ended 31 December 2023
4. Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements requires the use of accounting estimates which, by definition, will
seldom equal the actual results. Management also needs to exercise judgement in applying the Group’s
accounting policies. This note provides an overview of the areas that involved a higher degree of judgement or
complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions being
revised. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are
recognised prospectively.
i) Critical accounting judgements
In preparing the 2023 financial statements, management has made various judgements in the process of
applying the entity’s accounting policies. The following represents those judgments, apart from those involving
estimation uncertainty (see (ii)), made by management which have the most significant effect on the amounts
recognised in the financial statements.
Capitalisation of internally generated intangible assets
The Group capitalises internal and external software development costs, in particular internal staff costs.
The point at which such internal costs are capitalised as well as their magnitude is a key area of judgement.
A key area in respect of the stage of development of internally developed technology is subject to judgement
as to when a product’s future economic value justifies capitalisation. In making this judgement, management
assesses each project against each of the capitalisation criteria. If one of the conditions is not met, then the
costs attributable to the project would not be capitalised. It is common practice within the regulated medical
device sector that technical feasibility with respect to Clinical AI software products is not achieved until regulatory
approval to use and sell to the market is obtained. In the current and prior year, the Directors applied this
judgement with respect to research and development costs for Anatomy PNB. Directors also applied judgement
to the point of capitalisation of development costs that relate to new products that are an extension of existing
products that already have regulatory approval, are available for sale and for which commercial terms have
been agreed.
ii) Key sources of estimation uncertainty
The key source of estimation uncertainty that has a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year is discussed below.
Impairment assessment of intangible assets
For the intangible assets that have a finite life, the Directors considered the need to impair the carrying value
of intangible assets by performing a review for indicators of impairment by assessing the performance of the
assets against qualitative and quantitative factors. If any of these factors are present a detailed impairment
review is undertaken. A detailed impairment assessment is performed by assessing the asset’s value-in-use
which requires management to make a number of estimates. The most sensitive estimate is in relation to
management’s estimates of future forecasted revenues and the associated future cash collection on the basis
that these are relatively new products which have no extensive history of sales upon which to base the forecasts.
During the period ended 31 December 2023, the Clinical AI-related and Simulation assets with a carrying value
of £2.1m and £2.0 respectively were tested for impairment. The calculations use five-year cash flow projections
based on financial budgets approved by management covering a two-year period. Cash flows for periods three
to five are extrapolated using estimated growth rates and growth rates beyond five years are consistent with
forecasts specific to the sector in which the CGU operates.
Reasonable sensitivities applied to the cashflow projections indicate that there is significant headroom before
any impairment would be required. In the scenario that Clinical AI revenues only grow by 22.7% year on year
in the value in use calculation, this would result in full impairment of the carrying value of the asset by £2.1m.
If simulation revenue decreased by 50% over the five years used in the value-in-use calculation for Simulation
assets there would still be adequate headroom.
Recoverability of amounts due from subsidiary undertakings (Company only)
The Company has applied the IFRS 9 general approach to measure expected credit losses arising from
amounts owed by its subsidiary undertakings. This required the Directors to make judgements to arrive at a
weighted average expected credit loss based on a number of forecast cash flow scenarios and the assignment
of probability factors to each scenario. Amounts owed by subsidiary undertakings is £20.8m (2022: £11.8m) –
see Note 16 for the movements in the loss allowances in 2023 and reasonable sensitivities applied.
Investment in subsidiaries impairment (Company only)
The Directors perform an annual impairment assessment for the investments held in subsidiaries by the
Company by performing a review for indicators of impairment by assessing the performance of the subsidiaries
against qualitative and quantitative factors. If any of these factors are present a detailed impairment review is
undertaken. A detailed impairment assessment is performed by assessing the subsidiary’s value in use which
requires management to make a number of estimates. The calculations use five-year discounted cash flow
(DCF) projections based on financial budgets approved by management covering a two year period. Cashflows
for periods four to five are extrapolated using estimated growth rates and growth rates beyond five years are
consistent with forecasts specific to the sector in which the subsidiary operates.
The recoverability of the investments is dependent on future revenues and associated cash collection of
Simulation and Clinical AI products, the timing and value of which can be uncertain and require a level of
management estimation. The most sensitive estimate is in relation to future revenues for new products which
have no extensive history of sales upon which to base the forecasts.
The value in use assessments determined that the £6.57m of investments held by the Company did not require
impairment. Additionally, after applying reasonable sensitivities to the expected revenue growth rates, this
conclusion remained unchanged.
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77
Notes to the Financial Statements continued
For the year ended 31 December 2023
5. Operating segments
Operating segments reflect the way in which information is presented to and reviewed by the Chief Operating
Decision Maker (CODM) for the purposes of making strategic decisions and assessing Group-wide performance.
The Group’s Board of Directors (the Board) is the Group’s CODM. The Group evaluates performance of the
operational segments on the basis of revenue and gross profit. Apart from Intangible assets and Property,
plant and equipment, all other assets and liabilities are reported to the Board at Group-level and are not
separated segmentally.
Included within non-UK revenues are sales to the following country which accounted for more than 10% of the
Group’s total revenue for the year:
USA
2023
£’000
4,201
2022
£’000
2,808
The format of revenue reporting is based on the Group’s management and internal reporting (including reports
to the CODM). The Group has two operating segments, Simulation and Clinical AI.
The Group had no customers who accounted for more than 10% of the Group revenue for the year ended
31 December 2023 or 2022.
– Simulation: sales of ultrasound simulation systems and related services
– Clinical AI: sales of AI-related ultrasound image analysis software products
Other segment information
Depreciation
and amortisation
Additions to non‑current
assets
2023
£’000
1,037
434
144
1,615
2022
£’000
942
299
143
1,384
2023
£’000
1,509
990
–
2,499
2022
£’000
1,258
605
–
1,863
Non-current assets based outside the UK
Right-of-use assets include leased offices for Intelligent Ultrasound North America Inc (IUNA), based in Georgia.
The net book value as at 31 December 2023 was £0.19m (2022: £0.03m).
6. Other income
Other income
Other income includes employee contributions towards Company cars.
2023
£’000
9
2022
£’000
8
Simulation
Clinical AI
Central
2023
Revenue
Cost of sales
Gross profit
2022*
Revenue
Cost of sales*
Gross profit*
* See note 3 for details of the 2022 restatement
Revenue by destination of external customer
United Kingdom
North America (USA & Canada)
Rest of World
Timing of revenue recognition
At a point in time
Over time
Simulation
£’000
Clinical AI
£’000
9,144
(3,838)
5,306
2,029
(496)
1,533
Simulation
£’000
Clinical AI
£’000
9,432
(3,742)
5,690
668
(282)
386
2023
£’000
2,769
4,828
3,576
11,173
10,674
499
Total
£’000
11,173
(4,334)
6,839
Total
£’000
10,100
(4,024)
6,076
2022
£’000
5,145
2,943
2,012
10,100
9,591
509
Clinical AI royalty income is included within Rest of the World based on the external customer’s invoicing country
rather than the destination of the end customer.
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Strategic Report
Corporate Governance
Financial Statements
78
Notes to the Financial Statements continued
For the year ended 31 December 2023
7. Operating loss
2023
£’000
2022
£’000
9. Taxation
i) Analysis of income tax credit in the year
Operating loss is stated after charging/(crediting):
Raw materials and consumables used
3,405
2,960
Current tax
Depreciation
Right-of-use assets
Other assets
Amortisation of intangible assets
Staff costs (note 10)
Exchange gain/(loss)
Auditor’s remuneration
Audit of Group financial statements
Audit of Company and subsidiaries
Review of interim accounts
R&D Cost
– Expensed
– Amortised
R&D tax credit
R&D tax credit relating to prior periods
Deferred tax
223
381
780
5,647
Origination and reversal of timing differences
(75)
Effect of tax rate change on opening balance
Income tax credit
247
382
986
5,150
78
57
60
5
47
58
5
1,161
847
1,695
641
In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate
would increase to 25% (rather than remaining at 19%, as previously enacted). This new law was substantively
enacted on 24 May 2021. Deferred taxes at 31 December 2023 have been measured using these enacted tax
rates and reflected in these financial statements.
ii) Factors affecting the tax credit
The Group has made a taxable loss for the year (2022: loss) and therefore has not recognised all of the deferred
tax asset arising due to uncertainty over the timing of future profit.
Staff and other development costs of £1.75m not included in the operating loss have been capitalised as
intangible assets during the year (2022: £1.49m).
8. Finance income and costs
Finance income
Interest income from bank deposits
Finance costs
Interest on lease liabilities
Loss before taxation
2023
£’000
2022
£’000
Loss on ordinary activities multiplied by the standard rate of corporation tax in the
UK of 23.52% (2022: 19%)
(26)
29
3
(1)
31
30
Effects of:
Fixed asset differences
Expenses not deductible/income not taxable
Differences between R&D expenditure credit (SME Scheme) and capitalised
revenue expenditure
Adjustments in respect of prior periods
Remeasurement of deferred tax for changes in tax rates
Movement in deferred tax not recognised
Additional deduction for R&D expenditure
Surrender of tax losses for R&D tax credit refund
Income tax credit
2023
£’000
(460)
19
(441)
–
–
2022
£’000
(711)
(7)
(718)
–
–
(441)
(718)
2023
£’000
(3,023)
2022
£’000
(3,702)
(711)
(703)
9
85
19
(15)
1
157
(492)
506
(441)
(18)
101
(329)
(7)
–
(9)
–
247
(718)
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Financial Statements
79
2023
No.
2022
No.
27
6
19
15
67
30
4
17
14
65
Notes to the Financial Statements continued
For the year ended 31 December 2023
9. Taxation continued
iii) Deferred tax
The unrecognised and recognised deferred tax asset/(liability) comprises the following:
Group
10. Employees
The average monthly number of persons (including Executive Directors)
employed by the Group was:
Unrecognised
Recognised
Research and development
Accelerated capital allowances
Intangible assets
Provisions
Tax losses
Total asset
2023
£’000
2022
£’000
–
–
–
5,008
5,008
–
–
–
4,805
4,805
2023
£’000
(195)
(938)
4
1,129
–
2022
£’000
(190)
(727)
3
914
–
The movement in each temporary difference is shown in the reconciliation below, including the amounts
charged/(credited) to the income statement.
Production
Sales, marketing and distribution
Management and administration
The Company has no other employees and the only staff costs incurred by the Company relate to fees paid to
Non-executive Directors (see the Remuneration Report for details).
The average monthly number of Non-executive Directors employed by the
Company was:
2023
No.
5
2022
No.
6
Accelerated
capital
allowances
£’000
Intangible
assets
£’000
Provisions
£’000
Tax losses
£’000
Total
£’000
Staff costs for the employees and Executive Directors of the Group (included under administrative expenses and
in staff costs capitalised under development costs):
At 1 January
Charged/(credited) to income statement
As at 31 December
190
5
195
727
187
938
(3)
(1)
(4)
(914)
(215)
(1,129)
–
–
Where a deferred tax liability arises, an equal amount of trade losses has been recognised so that the net
position at entity level is nil. The deferred tax liabilities relate to accelerated capital allowances mainly due
to claims for annual investment allowances (AIA) with respect to eligible fixed asset additions, R&D claims
in MedaPhor where development costs are capitalised and R&D claims are made under s.1308 CTA 2009,
reducing the tax base of these assets and intangible assets acquired with IML and IUL.
Wages and salaries
Social security costs
Pensions
Share-based payments
Total employed staff costs
Staff costs capitalised
Company
Tax losses
Total asset
Unrecognised
Recognised
2023
£’000
953
953
2022
£’000
755
755
2023
£’000
–
–
2022
£’000
–
–
Staff costs included under administrative expenses
2023
£’000
5,595
552
164
245
6,556
(1,406)
5,150
2022
£’000
5,510
526
131
380
6,547
(900)
5,647
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80
Notes to the Financial Statements continued
For the year ended 31 December 2023
10. Employees continued
Key management for the Group is considered to be the Board of Directors of the Group. This includes Ian
Whittaker’s full costs for the year, he was employed in his COO role until the end of the year but retired as a
Director on the 21 June 2023.
11. Loss per Ordinary share
The loss per Ordinary share has been calculated using the loss for the year and the weighted average number of
Ordinary shares in issue during the year as follows:
Short-term employee benefits
Post-employment benefits
Share-based payments
Directors’ remuneration comprises the following:
Salaries and fees (including estimated value of other benefits)
Fees paid to third parties in respect of services provided by Directors
Directors’ pension costs
2023
£’000
941
67
31
1,025
2023
£’000
862
–
59
2022
£’000
1,062
67
153
1,282
2022
£’000
1,052
10
66
No Directors are accruing benefits under Company-defined contribution pension schemes (2022: None). Each
Executive Director is entitled to a 10% pension allowance.
Loss after taxation
Number of Ordinary shares of 1p each
2023
£’000
(2,582)
2022
£’000
(2,984)
2023
No.
2022
No.
Basic and diluted weighted average number of Ordinary shares
326,869,921 275,274,014
Basic and diluted loss pence per share
(0.79)
(1.08)
At 31 December 2023 and 2022 there were share options outstanding (see note 23) which could potentially
have a dilutive impact but were anti-dilutive in both years.
12. Intangible assets
Arising From business combinations
Other intangibles
Goodwill
£’000
Intellectual
property
£’000
Capitalised
development
costs
£’000
Brand
£’000
Software
licences
£’000
This remuneration includes the following amounts in respect of the highest paid
Director:
Salaries and fees (including estimated value of other benefits)
Pension costs
2023
£’000
2022
£’000
Cost
At 1 January 2022
Additions
3,328
3,038
–
–
241
21
274
20
At 31 December 2022
3,328
3,038
Additions
–
–
At 31 December 2023
3,328
3,038
The highest paid Director held 1,491,042 (2022: 1,491,042) shares at the year-end and share options in the
Company totalling 4,880,248 (2022: 4,116,498). None of the Directors exercised any of their share options
during the year (2022: None).
Further details of Directors’ fees and salaries, bonuses, pensions and share options are given in pages 52 to 55
in the Remuneration Report, which forms part of these financial statements.
Amortisation/impairment
At 1 January 2022
Charge for year
At 31 December 2022
Charge for year
At 31 December 2023
Net book value
At 31 December 2023
At 31 December 2022
At 1 January 2022
3,328
–
3,328
–
3,328
–
–
–
2,240
139
2,379
139
2,518
520
659
798
133
–
133
–
133
133
–
133
–
133
–
–
–
4,792
1,494
6,286
1,809
8,095
3,032
641
3,673
847
4,520
3,575
2,613
1,760
25
–
25
–
25
25
–
25
–
25
–
–
–
Total
£’000
11,316
1,494
12,810
1,809
14,619
8,758
780
9,538
986
10,524
4,095
3,272
2,558
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Financial Statements
81
Notes to the Financial Statements continued
For the year ended 31 December 2023
12. Intangible assets continued
i) Intellectual property
Intellectual property (IP) was acquired as part of the acquisition of IML and IUL and is amortised over their
estimated useful lives of five and ten years respectively. The IP acquired from IML relates to the HeartWorks
echocardiology simulator software and associated trademarks. The IP acquired from IUL relates to the ScanNav
Assist software and ultrasound scan images.
Material individual intangible assets within IP are as follows:
– £0.52m (2022: £0.66m) in relation to the acquisition of IUL with a remaining amortisation period of 2.75 years
as at 31 December 2023.
ii) Capitalised development costs
Amortisation is charged on a straight-line basis over their estimated useful lives, on the following basis:
Development costs
Software licences
20%
33%
iii) Impairment tests
For the intangible assets that have a finite life, the Directors considered the need to impair the carrying value
of intangible assets by performing a review for indicators of impairment by assessing the performance of the
assets against qualitative and quantitative factors. If any of these factors are present a detailed impairment
review is undertaken. A detailed impairment assessment is performed by assessing the asset’s value-in-use
which requires management to make a number of estimates. The most sensitive estimate is in relation to
management’s estimates of future revenues on the basis that these are new products which have no extensive
history of sales upon which to base the forecasts.
During the period ended 31 December 2023, the Clinical AI and Simulation assets of £2.1m and £2.0m were
tested for impairment. The calculations use five-year cash flow projections based on financial budgets approved
by management covering a two-year period. Cash flows for periods three to five are extrapolated using
estimated growth rates and growth rates beyond five years are consistent with forecasts specific to the sector in
which the CGU operates.
Reasonable sensitivities applied to the cashflow projections indicate that there is significant headroom before any
impairment would be required.
– A 21% reduction in the budgeted revenue over the five years used in the value-in-use calculation for Clinical
AI assets would result in full impairment of the carrying value of the asset
– If the Simulation revenue decreased by 50% over the five years used in the value-in-use calculation for
Simulation assets there would still be adequate headroom.
13. Property, plant & equipment
i) Group
Leasehold
Improvements
£’000
Furniture &
fixtures
£’000
Plant &
equipment
£’000
Right‑of‑use
assets
£’000
Cost
At 1 January 2022
Additions
Disposals
Foreign exchange
At 31 December 2022
Additions
Disposals
Foreign exchange
At 31 December 2023
Depreciation
At 1 January 2022
Charge for year
Disposals
Foreign exchange
At 31 December 2022
Charge for year
Disposals
Lease modifications
Foreign exchange
At 31 December 2023
Net book value
At 31 December 2023
At 31 December 2022
At 1 January 2022
70
–
–
–
70
–
–
–
70
27
17
–
–
44
17
–
–
–
61
9
26
43
43
4
–
–
47
6
(1)
–
52
18
11
–
–
29
10
–
–
–
39
13
18
25
Total
£’000
2,621
369
(77)
35
1,472
1,036
324
(67)
4
41
(10)
31
1,733
1,098
2,948
331
(20)
(1)
353
(219)
(8)
690
(240)
(9)
2,043
1,224
3,389
824
353
(67)
(17)
1,093
355
(12)
–
(1)
1,435
608
640
648
352
223
(10)
43
608
247
(219)
(70)
(5)
561
663
490
684
1,221
604
(77)
26
1,774
629
(231)
(70)
(6)
2,096
1,293
1,174
1,400
Total depreciation expense of £0.63m (2022: £0.60m) has been charged to administrative expenses in the
income statement. The addition of £0.35m to the right-of-use assets relate to a new IUNA office lease and a new
lease for our build operations in Caerphilly.
The disposal of the right-to-use asset in 2023 relates to the disposal of the former IUNA office lease and a
Company vehicle.
Plant and machinery additions include new demonstration units issued from stock.
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Financial Statements
82
Notes to the Financial Statements continued
For the year ended 31 December 2023
13. Property, plant & equipment continued
ii) Company
Cost
At 1 January 2022 and 2023
Additions
At 31 December 2022 and 2023
Depreciation
At 1 January 2022
Charge for year
At 31 December 2022
Charge for year
At 31 December 2023
Net book value
At 31 December 2023
At 31 December 2022
At 1 January 2022
Right‑of‑use
assets
£’000
718
–
718
186
144
330
143
473
245
388
532
Maturity analysis of lease liabilities:
Year 1
Year 2
Year 3
Year 4
Year 5
Less: unearned interest
Analysed as:
Current
Non-current
Group
2023
£’000
271
218
100
98
61
748
(58)
690
244
446
690
2022
£’000
205
195
117
–
–
517
(31)
486
188
298
486
Company
2023
£’000
160
114
–
–
–
274
(11)
263
151
112
263
Set out below are the movements during the period in the carrying amount of the lease liability:
iii) Leases
The balance sheet shows the following amounts relating to leases:
Right‑of‑use assets
Premises
Vehicles
Group
Company
2023
£’000
577
86
663
2022
£’000
462
28
490
2023
£’000
245
–
245
2022
£’000
388
–
388
At 1 January
Non‑cash changes:
New leases
Interest on lease liability
Lease modifications
Foreign exchange
Cash changes:
Interest paid
Principal repaid
At 31 December
Group
Company
2023
£’000
486
353
29
61
(3)
(29)
(207)
690
2022
£’000
670
41
31
–
6
(31)
(231)
486
2023
£’000
381
–
15
–
–
(15)
(118)
263
2022
£’000
133
160
114
–
–
407
(26)
381
118
263
381
2022
£’000
519
–
22
–
–
(22)
(138)
381
Leases are the only liability arising from financing activities.
In accordance with IFRS 16, a £61k lease modification has been recognised during the year to reflect the
expansion of the warehouse facility in Caerphilly.
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Financial Statements
83
Notes to the Financial Statements continued
For the year ended 31 December 2023
13. Property, plant & equipment continued
The following amounts relating to leases are recognised in profit and loss in the year to 31 December 2023:
The registered office for the undertakings incorporated in England & Wales is Floor 6A, Hodge House,
114–116 St Mary Street, Cardiff, CF10 1DY. IUNA’s registered office address is 1111 Alderman Drive,
Alpharetta, Georgia 30005.
Short-term or low-value expense
Depreciation expense on right-of use-assets – property
Depreciation expense on right-of-use-assets – vehicles
Interest expense on lease liabilities
Cash outflows from short-term or low-value leases are £0.003m (2022: £0.002m).
14. Investments in subsidiaries
At 1 January
Equity settled share options granted to employees of subsidiaries
At 31 December
2023
£’000
3
215
32
29
279
Company
2023
£’000
6,328
241
6,569
2022
£’000
2
208
15
31
256
2022
£’000
5,951
377
6,328
The movement in the year represents the capital contribution made by the Company to its subsidiaries for the
cost of remunerating the subsidiary’s employees under share-based payment arrangements which will be settled
in the Company’s own shares. The movement is equal to the share-based payment expense recognised in the
subsidiaries. An equal credit to equity has been reflected in the statement of changes in equity.
The Company’s subsidiary undertakings are as follows:
Name of undertaking
MedaPhor Limited (Med)
Company
number
Incorporated in
05176992
England & Wales
Intelligent Ultrasound North America, Incorporated (IUNA)
–
USA
Intelligent Ultrasound Limited (IUL)
IML Finance Limited (dormant)
Inventive Medical Limited (dormant)
MedaPhor International Limited (dormant)
08107443
England & Wales
10289063
England & Wales
06468381
England & Wales
08838635
England & Wales
Intelligent Ultrasound Innovations Limited (dormant)
13772674
England & Wales
Interest in
Ordinary
share capital
100%
100%
100%
100%
100%
100%
100%
The principal activity of Med is the development and sale of simulation-based ultrasound training equipment.
The principal activity of IUNA is the sale of simulation-based ultrasound training equipment.
The principal activity of IUL is the sale and development of AI-based medical imaging software.
MedaPhor International Limited, IML Finance Limited and Intelligent Ultrasound Innovations Limited are
dormant companies.
Impairment review of the carrying amount of the Company’s investments in subsidiaries
The investments in subsidiaries are assessed annually to determine if there is any indication that any of the
investments might be impaired. At the 2023 year-end, it was identified that each subsidiary had not achieved its
budget for the year and therefore a value-in-use calculation was performed for each investment and compared
against the carrying value.
– For IUL its recoverable amount indicated that no impairment of the carrying value of the investments of £3.2m
was required
– For IUNA its recoverable amount indicated that no changes were required to the brought-forward impairment
provision of £2.2m
– For Med its recoverable amount indicated that no changes were required to the brought-forward impairment
provision of £4.4m
The recoverable amount was determined based on a value-in-use calculation which requires the use of
assumptions. The calculations use five-year discounted cash-flow (DCF) projections based on financial budgets
approved by management covering a two-year period. Cashflows for periods four to five are extrapolated
using estimated growth rates, and growth rates beyond five years are consistent with forecasts specific to the
sector in which the subsidiary operates. The DCF model is sensitive to expected future cash inflows. The most
sensitive estimate is in relation to management’s estimates of future revenues. Estimates have been based on
management’s conservative view of market demand by region for the products.
The key assumptions used in the DCF projections are as follows:
– Sales growth after year 3: 5%
– Long term growth rate: 2%
– Pre-tax discount rate: 14.9%
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Financial Statements
84
Notes to the Financial Statements continued
For the year ended 31 December 2023
15. Inventories
Raw materials
Work in progress
Finished goods
Group
2023
£’000
1,136
209
105
1,450
2022
£’000
1,543
14
46
1,603
The costs of individual items of inventory are determined using a weighted average cost. Inventories recognised
as an expense during the year ended 31 December 2023 amounted to £3.41m (2022: £2.96m). These were
included in ‘cost of sales’. The above figures include a provision for obsolete stock of £Nil (2022: £Nil).
Inventory written off in the year, included within ‘cost of sales’, totalled £0.02m (2022: £0.15m).
Inventories of £1.5m (2022: £1.6m) are expected to be recovered within 12 months.
16. Trade and other receivables
i) Included within non-current assets
Financial assets at amortised cost
Amounts owed by subsidiary undertakings
Group
Company
2023
£’000
61
–
61
2022
£’000
61
–
61
2023
£’000
61
20,787
20,848
2022
£’000
61
11,788
11,849
The financial assets at amortised cost represent refundable deposits paid to the landlord of the UK head office.
Its value recorded in the balance sheet is considered to be a reasonable approximation of fair value.
Amounts owed by subsidiary undertakings relate to Med, IUL and IUNA.
ii) Included within current assets
Trade receivables
Other receivables
VAT and other sales taxes
Prepayments
Group
Company
2023
£’000
2,457
23
172
746
2022
£’000
1,356
69
88
512
3,398
2,025
2023
£’000
–
–
170
90
260
2022
£’000
–
–
86
106
192
The carrying value of trade and other receivables approximates fair value.
Group
Trade receivables are initially recognised at their transaction price and subsequently measured at their
amortised cost using the effective interest method less any loss allowance. The Group applies the IFRS
9 simplified approach to measuring expected credit losses using a lifetime expected credit loss for trade
receivables. To measure expected credit losses on a collective basis, trade receivables are Grouped based
on similar credit risk and ageing. Customers are assigned one of four credit risk profiles (A to D) with A being
the lowest credit risk profile (institutional customers such as hospitals and medical schools) and D the highest
(non-institutional customers with a poor credit history). The expected loss probability rates are based on
management’s experience of historical credit losses for each Group of trade receivables. The resultant provision
matrix is then adjusted for current and forward-looking information based upon management’s knowledge
of the customer concerned and the prospects of recovery. The allowance that has been made for estimated
irrecoverable trade receivables is £0.087m (2022: £0.052m). The movement in the impairment allowance is
included in Administrative Expenses in profit and loss.
At 31 December 2023 the lifetime expected loss allowance for trade receivables is as follows:
1–30 days
past due
31–60 days
past due
61–90 days
past due
More than
90 days past
due
Expected loss rate
Customer profile A
Customer profile B
Customer profile C
Customer profile D
Current
–
–
0.5%
5%
–
–
5%
10%
–
5%
10%
15%
10%
15%
20%
25%
Trade receivables
Gross carrying
amount
Loss allowance
Trade receivables
– net
Current
£’000
1,691
–
1,691
1–30 days
past due
£’000
31–60 days
past due
£’000
61–90 days
past due
£’000
More than
90 days past
due
£’000
163
(2)
161
120
(4)
116
194
(16)
178
376
(65)
2,544
(87)
311
2,457
At 31 December 2022 the lifetime expected loss allowance for trade receivables is as follows:
Expected loss rate past due
Current
1–30 days
31–60 days
past due
61–90 days
past due
More than
90 days past
due
Customer profile A
Customer profile B
Customer profile C
Customer profile D
–
–
0.5%
5%
–
–
5%
10%
–
5%
10%
15%
10%
15%
20%
25%
15%
20%
25%
30%
15%
20%
25%
30%
Total
2023
£’000
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Intelligent Ultrasound Group plc 2023 Annual Report and Accounts
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Financial Statements
85
Notes to the Financial Statements continued
For the year ended 31 December 2023
16. Trade and other receivables continued
ii) Included within current assets continued
Trade receivables
Gross carrying
amount
Loss allowance
Trade receivables
– net
Current
£’000
1–30 days
past due
£’000
31–60 days
past due
£’000
61–90 days
past due
£’000
More than
90 days past
due
£’000
576
–
576
472
(6)
466
94
(3)
91
15
(4)
11
251
(39)
212
Total
2022
£’000
1,408
(52)
1,356
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable
mentioned above. The Group does not hold any collateral as security.
Movements in the loss allowance for trade receivables are as follows:
At 1 January
Increase in loss allowance
At 31 December
There are no trade receivables within the Company.
Company
Impairment allowance in respect of receivables from subsidiary undertakings.
At 1 January
Increase in loss allowance
Reversal of loss allowance
At 31 December
Group
2023
£’000
52
35
87
2022
£’000
24
28
52
Company
2023
£’000
10,715
3,549
(8,469)
5,795
2022
£’000
6,971
3,744
–
10,715
The gross carrying values for the Company upon which the loss allowance is based is as follows:
2023
2022
Risk
category
Carrying
value
£’000
Loss
allowance
£’000
Net
£’000
Carrying
value
£’000
Loss
allowance
£’000
In default
22,330
(1,635)
20,695
18,777
(10,104)
In default
In default
36
–
4,216
(4,160)
36
56
19
3,707
–
(611)
3,096
Net
£’000
8,673
19
Med
IUNA
IUL
At 31 December
26,582
(5,795)
20,787
22,503
(10,715)
11,788
The intercompany loans are interest free and repayable on demand. Under IFRS 9, these amounts fall under the
definition of ‘Hold to Collect’ receivables and meet the SPPI test and consequently these amounts should be
included at Amortised Cost and the General ECL model should be adopted.
An intercompany receivable is considered to be in default when there is evidence that the borrower will have
insufficient liquid assets to repay the amount due on demand. The assessment of whether a receivable is credit
impaired focuses on events that have already taken place which provide evidence of impairment. In the case of
the amounts due from Med Ltd and IUL:
– There is no history of repayment.
– The indebtedness has increased year-on-year.
– The subsidiaries would be insolvent without funding from PLC.
– The subsidiaries would have no prospect of repayment of the amounts if demanded by PLC (or their
fellow subsidiary to whom they owe the amount) (and would not be able to borrow from a third party to
make the repayment).
The amounts due to the Company are therefore considered credit impaired and so are at Stage 3 = Life-time
ECL, interest on a net basis.
The loss allowances for intercompany receivables are based on assumptions about risk of default and expected
loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment
calculation, based on the Group’s past history and existing market conditions, as well as forward-looking
estimates at the end of each reporting period.
The estimation technique used to measure the expected credit loss was based upon a weighted average
assessment of six different scenarios impacting cash flows as follows:
Scenario
Scenario description
1
2
3
4
5
6
Performs to budget
As scenario 1 and sold* for 5 x EBITDA in year 5
Exceeds budget by 20%
As scenario 3 and sold for 5 x EBITDA in year 5
Underperforms against budget by 20%
As scenario 5 and sold for 5 x EBITDA in year 5
* sold refers to the disposal of the investment in the entity.
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Intelligent Ultrasound Group plc 2023 Annual Report and Accounts
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Corporate Governance
Financial Statements
86
Notes to the Financial Statements continued
For the year ended 31 December 2023
16. Trade and other receivables continued
There has been no change in the estimation techniques or significant assumptions made during the current
reporting period. There are no financial instruments for which credit risk has increased significantly since
initial recognition.
17. Cash and cash equivalents
Sensitivity analysis
Amounts due from Med
i) If the probability of Med:
– performing to budget reduces from 40% to 30%
– exceeding budget by 20% reduces from 5% to 0%;
– underperforming budget by 20% increases from 10% to 25%
The loss allowance recognised would increase by £1.2m.
ii) If the probability of Med:
– performing to budget reduces from 40% to 39.5%;
– underperforming budget by 20% increases from 10% to 15.5%;
The loss allowance recognised would increase by £0.50m.
Amounts due from IUNA
i) If the probability of IUNA:
– performing to budget reduces from 40% to 30%
– exceeding budget by 20% reduces from 5% to 0%
– underperforming budget by 20% increases from 10% to 25%
The loss allowance recognised would increase by £0.38m.
ii) If the probability of IUNA:
– performing to budget reduces from 40% to 15%
– exceeding budget by 20% reduces from 5% to 0%
– underperforming budget by 20% increases from 10% to 40%
The loss allowance recognised would increase by £0.62m.
Cash at bank and on hand
18. Trade and other payables
Current liabilities
Trade payables
Taxation and social security
Other payables
Accruals
Non‑current liabilities
Other payables
Group
Company
2023
£’000
3,031
2022
£’000
7,166
2023
£’000
82
2022
£’000
5,027
Group
Company
2023
£’000
1,235
235
103
1,125
2,698
65
2,763
2022
£’000
1,359
397
5
971
2,732
65
2,797
2023
£’000
2022
£’000
170
–
–
163
333
65
398
230
–
–
215
445
65
510
The Directors consider that the carrying amount of current and non-current liabilities approximates their fair value.
Other payables relate to a dilapidation liability payable at the end of the UK office lease in 2026.
19. Deferred income
Deferred income expected to be recognised
Within one year – included in current liabilities
In the second to fifth years inclusive – included in non-current liabilities
Group
2023
£’000
294
272
566
2022
£’000
337
209
546
Amounts due from IUL
Given the full impairment of the intercompany loan to IUL, no further sensitivity analysis has been performed as
this would not affect the loss allowance.
Deferred revenue released to the income statement in 2023 is £0.5m (2022: £0.21m).
The vast majority of the Group’s contracts are for delivery of goods and services within the next 12 months.
However, certain support and extended warranty contracts have been entered into which extend beyond 12
months and the value of these contracts is included in deferred income within current and non-current liabilities.
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87
Notes to the Financial Statements continued
For the year ended 31 December 2023
20. Provisions
The nominal values and the premium arising on shares issued in 2022 are as follows:
At 1 January
Provision made in the year
At 31 December
Group
2023
£’000
22
13
35
2022
£’000
22
–
22
The warranty provision is estimated to be due within one year.
The provision represents management’s best estimate of the Group’s liability for remedial work and warranties
granted on products sold net of warranty amounts recoverable from its suppliers. The Group sources its
simulation system hardware from third-party suppliers and, while there is always some uncertainty relating to
new technology, the actual annual remedial and warranty costs incurred suggest that the provision is sufficient.
21. Non‑current liabilities – deferred taxation
At 1 January
Released
At 31 December
Group
2023
£’000
–
–
–
2022
£’000
–
–
–
Where a deferred tax liability arises in Med and IUL, an equal amount of trade losses has been recognised so
the net position at entity level is nil. The deferred tax liabilities relate to accelerated capital allowances mainly due
to claims for annual investment allowances (AIA) with respect to eligible fixed asset additions and R&D claims in
Med where development costs are capitalised and R&D claims are made under s.1308 CTA 2009, reducing the
tax base of these assets.
22. Share capital
Date
1 and 2 December 2022
Number
of shares
56,216,436
Nominal
value
£’000
562
Premium
£’000
4,638
On 1 December 2022 the Company placed 56,216,436 newly issued shares of 1 pence each in the capital of
the Company at a price of 9.25 pence per share. Share issue costs of £0.39m have been netted off against
share premium arising on the new share issue.
Ordinary shares have a par value of 1 pence. They entitle the holder to participate in dividends, and to share in
the proceeds of winding up the Company in proportion to the number of and amounts paid on the shares held.
On a show of hands, every holder of ordinary shares present at a meeting, in person or by proxy, is entitled to
one vote; and, on a poll, each share is entitled to one vote. Ordinary shares have equal rights, preferences and
no restrictions on distributions of dividends nor the repayment of capital.
The Company does not have a limited amount of authorised capital.
23. Share‑based payments
Share options
The Company has issued options under the Intelligent Ultrasound Group plc EMI Approved Share Option Scheme
and several individual unapproved share option schemes to subscribe for Ordinary shares of 1 pence each in the
Company. The purpose of the share option schemes is to retain and motivate eligible employees and Directors.
Group
The movement in share options outstanding is summarised in the following table:
2023
2022
Weighted
average
exercise
price
(pence)
Number of
options
15.05
23,816,323
9.81
1,650,000
Number of
options
24,326,323
10,799,347
(2,824,058)
(16.29)
(1,140,000)
32,301,612
10,389,265
13.19
24,326,323
16.88
6,839,710
Weighted
average
exercise
price
(pence)
15.28
14.30
(18.82)
15.05
15.87
2,824,058 options expired during the periods covered by the above table as detailed on the following page.
Authorised, allotted, issued and fully paid
Number
£’000
Number
£’000
2023
2022
Ordinary shares of 1p each
Balance at 1 January
Shares issued for cash
At 31 December
326,869,921
3,269
270,653,485
–
–
56,216,436
326,869,921
3,269
326,869,921
2,707
562
3,269
At 1 January
Granted
Forfeited
At 31 December
Vested and exercisable at 31 December
No share options were exercised in the year.
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Intelligent Ultrasound Group plc 2023 Annual Report and Accounts
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Corporate Governance
Financial Statements
88
Notes to the Financial Statements continued
For the year ended 31 December 2023
23. Share‑based payments continued
The exercise price and number of shares to which the options relate are as follows:
Option exercise price (pence)
Unapproved schemes
19.00
42.50
16.22
12.75
12.50
11.25
7.75
8.00
11.00
15.25
EMI schemes
16.51
42.50
50.00
51.50
42.50
29.00
20.50
16.22
12.50
11.25
8.00
11.00
12.00
15.00
15.25
16.51
14.30
11.25
11.25
9.60
9.60
Total
Grant
date
15/08/2014
30/06/2014
06/10/2017
06/10/2017
19/01/2018
29/05/2018
20/12/2018
18/01/2019
09/08/2019
21/12/2020
15/08/2014
30/06/2014
15/08/2014
01/01/2016
18/08/2016
21/12/2016
04/04/2017
06/10/2017
19/01/2018
29/05/2018
18/01/2019
09/08/2019
24/04/2020
23/10/2020
21/12/2020
02/12/2021
15/06/2022
26/05/2023
26/05/2023
21/12/2023
21/12/2023
–
2022
Granted
Forfeited
2023
Expiry (years)
Risk‑free rate
of return
%
Expected
volatility
%
Vested
Notes
216,000
200,000
133,920
500,000
600,000
2,709,040
150,000
150,000
150,000
3,054,292
644,000
904,000
23,529
20,000
20,000
60,000
200,000
317,835
1,800,000
3,332,960
220,000
50,000
1,300,000
863,529
4,202,218
1,105,000
1,400,000
–
–
–
–
24,326,323
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
300,000
1,050,000
3,365,362
6,083,985
10,799,347
(216,000)
–
–
–
–
–
–
–
(50,000)
(50,000)
(536,000)
(200,000)
(23,529)
–
–
–
–
–
(100,000)
(1,000,000)
–
–
–
(23,529)
(275,000)
–
(350,000)
–
–
–
–
(2,824,058)
–
200,000
133,920
500,000
600,000
2,709,040
150,000
150,000
100,000
3,004,292
108,000
704,000
–
20,000
20,000
60,000
200,000
317,835
1,700,000
2,332,960
220,000
50,000
1,300,000
840,000
3,927,218
1,105,000
1,050,000
300,000
1,050,000
3,365,362
6,083,985
32,301,612
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
–
1.79
2.815
1.41
1.41
1.409
1.339
1.285
1.38
0.54
0.24
1.79
2.815
2.508
2.009
0.687
1.44
1.071
1.41
1.408
1.339
1.38
0.54
0.3
0.33
0.24
0.8
2.45
4.28
4.28
3.56
3.56
–
35
35
35
35
37
38.9
58
46.6
61.9
75.3
35
35
35
17
22
32
32
35
37
38.9
46.6
61.9
75.7
76.4
75.3
69.2
67.62
60
60
60
60
–
–
200,000
133,920
500,000
–
–
150,000
150,000
100,000
3,004,292
108,000
528,000
–
20,000
20,000
60,000
60,000
317,835
–
–
220,000
50,000
–
840,000
3,927,218
–
–
–
–
–
–
10,389,265
Fully vested
Fully vested
Fully vested
Fully vested
(iii)
–
Fully vested
Fully vested
Fully vested
Fully vested
Fully vested
(i)
Fully vested
Fully vested
Fully vested
Fully vested
(ii)
Fully vested
(iii)
(iv)
Fully vested
Fully vested
(iv)
Fully vested
Fully vested
(vii)
(v)
(v)
(v)
(vi)
(vi)
–
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Intelligent Ultrasound Group plc 2023 Annual Report and Accounts
Overview
Strategic Report
Corporate Governance
Financial Statements
89
Notes to the Financial Statements continued
For the year ended 31 December 2023
23. Share‑based payments continued
The weighted average exercise price for options granted in the year is equivalent to the weighted average fair
value of the options at the measurement date.
The fair value of the equity-settled share options granted is estimated as at the date of grant using a binomial
probability option pricing model taking into account the terms and conditions upon which the options were
granted. The volatility has been estimated by reference to comparable listed companies and the dividend yield
has been assumed to be 0% for all schemes.
IV. 1,413,924 of these options vest when the Company’s share price reaches 25p; 585,702 vest when the
share price reaches 37.5p and 333,335 vest when the share price reaches 50p.
V.
These options vest three years from grant date.
VI. These options vest equally in three tranches over a three-year period.
VII. 1,105,000 of these options vest two years from the grant date.
The weighted average exercise price for options granted in the year is equivalent to the weighted average fair
value of the options at the measurement date.
Company
The movement in share options outstanding is summarised in the following table:
The fair value of the equity-settled share options granted is estimated as at the date of grant using a binomial
probability option pricing model taking into account the terms and conditions upon which the options were
granted. The volatility has been estimated by reference to comparable listed companies and the dividend yield
has been assumed to be 0% for all schemes.
The Group charged £0.245m to the statement of comprehensive income in respect of share-based payments
for the financial year ended 31 December 2023 (2022: £0.38m).
The weighted average remaining life of all share options outstanding at 31 December 2023 is seven years and
0 months (2022: four years and two months).
At 1 January
Granted
Forfeited or Lapsed
At 31 December
2023
2022
Number of
options
1,316,000
400,000
(216,000)
1,500,000
Weighted
average
exercise price
(pence)
18.30
9.60
Number of
options
1,681,000
–
(19.00)
(365,000)
15.88
18.16
1,316,000
1,199,920
Weighted
average
exercise price
(pence)
20.33
–
27.63
18.3
18.6
Vesting conditions:
Vested and exercisable at 31 December
1,100,000
I.
II.
176,000 of these options will vest when the Group achieves breakeven EBITDA for a financial year and the
remainder have vested.
60,000 of these options vest when the Group achieves breakeven EBITDA for a financial year; 80,000 of
these options will vest on the earlier of the Group achieving EBITDA of £2m or £10m revenue for a financial
year and the remainder vested on 4 April 2020.
The share options in the Company relate to historical options granted to Non-executive Directors and
internal consultants.
No share options were exercised in the year. The weighted average exercise price for options granted in the year
is equivalent to the weighted average fair value of the options at the measurement date.
III. 266,742 of these options vest when the Company’s share price reaches 25p; 1,094,964 vest when the
share price reaches 37.5p and 1,347,334 vest when the share price hits 50p.
400,000 options were granted, and 216,000 options expired during the periods covered by the above table as
detailed on the following page.
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Intelligent Ultrasound Group plc 2023 Annual Report and Accounts
Overview
Strategic Report
Corporate Governance
Financial Statements
90
Notes to the Financial Statements continued
For the year ended 31 December 2023
23. Share‑based payments continued
The share options in the Company relate to historical options granted to Non-executive Directors and internal consultants.
No share options were exercised in the year. The weighted average exercise price for options granted in the year is equivalent to the weighted average fair value of the options at the measurement date.
365,000 options expired during the periods covered by the above table as detailed on the following page.
Option exercise price (pence)
Unapproved schemes
19.00
42.50
16.22
12.75
7.75
15.25
EMI schemes
9.60
Total
2022
Granted
Forfeited
2023
Expiry (years)
Risk‑free rate
of return
%
Expected
volatility
%
Grant
date
15/08/2014
30/06/2014
06/10/2017
06/10/2017
20/12/2018
21/12/2020
216,000
200,000
133,920
500,000
150,000
116,080
–
–
–
–
–
–
21/12/2023
–
–
1,316,000
400,000
400,000
(216,000)
–
–
–
–
–
–
–
200,000
133,920
500,000
150,000
116,080
400,000
(216,000)
1,500,000
10
10
10
10
10
10
10
–
1.79
2.815
1.41
1.41
1.285
0.24
3.56
–
Vested
Notes
–
Forfeited
200,000
Fully vested
133,920
Fully vested
500,000
Fully vested
150,000
Fully vested
35
35
35
35
58
75.3
116,080
Fully vested
60
–
–
1,100,000
(i)
–
The fair value of the equity-settled share options granted is estimated as at the date of grant using a binomial
probability option pricing model taking into account the terms and conditions upon which the options were
granted. The volatility has been estimated by reference to comparable listed companies and the dividend yield
has been assumed to be 0% for all schemes.
24. Related party transactions
i) Key management personnel compensation
Details of the remuneration and share transactions of the Directors, who are the key management personnel of
the Group, are disclosed in the Remuneration Report and in note 10.
The Company charged £0.004m to the statement of comprehensive income in respect of share-based
payments for the financial year ended 31 December 2023 (2022: £0.003m).
The weighted average remaining life of all share options outstanding at 31 December 2023 is five years and four
months (2022: four years and two months).
Vesting conditions
(i) These options vest equally in 3 tranches over a 3 year period.
ii) Transactions with related parties
Med, IUNA, IML and IUL are related parties by virtue of being subsidiary Companies of the Company. During the
year working capital funding was provided by the Company to Med and IUL. The gross amounts outstanding
from subsidiary undertakings to the Company at 31 December 2023 totalled £26.58m (2022: £22.59m). The
gross amounts owed by the Company at 31 December 2023 totalled £nil (2022: £nil).
The Company incurs an obligation to settle share-based payment arrangements relating to employees of
subsidiary Companies (IUL, Med, IUNA). The cost is reflected in the movement in the cost of investment in
note 14.
IP Group plc (IPG) is a related party by virtue of their significant shareholdings in the Company. The value of the
expenses (which exclude Directors’ fees noted above) paid to IPG are disclosed below.
Professor Nazar Amso was a Director of the Company until June 2022 and also a Director and shareholder of
Advanced Medical Simulation Online Limited (AMSOL). The value of the goods and services sold to AMSOL to
the date of his resignation in 2022 is disclosed below.
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Intelligent Ultrasound Group plc 2023 Annual Report and Accounts
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Strategic Report
Corporate Governance
Financial Statements
91
Notes to the Financial Statements continued
For the year ended 31 December 2023
24. Related‑party transactions continued
Company
Med (working capital)
Med (recharges, e.g. Director fees, VAT and insurance refunds)
IUNA (working capital)
IUNA (expenses)
IUL (working capital)
IUL (expenses)
IPG (expenses)
Group
AMSOL (goods and services sold)
IPG (expenses)
2023
£’000
3,700
(147)
–
17
506
3
–
2023
£’000
–
36
2022
£’000
833
(525)
–
19
235
90
6
2022
£’000
(3)
6
iii) Outstanding balances arising from sales and purchases of goods and services
Net amounts after allowance for expected credit losses owed by/(to) each related party. See note 16 for detail
on expected credit losses recognised.
Company
Med
IUL
IUNA
2023
£’000
20,695
56
36
2022
£’000
8,673
3,096
19
Net amount owed by subsidiaries (after credit losses)
20,787
11,788
Group
IPG
2023
£’000
–
2022
£’000
(1)
25. Financial instruments
i) Financial risk factors – Group and Company
The Group and Company has exposure to liquidity, credit and market risks from its use of financial instruments.
This note sets out the Group’s key policies and processes for managing these risks.
Liquidity risk
Liquidity risk is that the Group and Company might be unable to meet its obligations and arises from trade and
other payables. The Group manages liquidity risk by maintaining adequate cash reserves and by continuously
monitoring forecasts and actual cash flows.
Capital risk management
The Company’s objectives when managing capital, which comprises all components of equity, 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. The Company
reviews the recoverable amount of each trade debt on individual basis at the end of each reporting period to
ensure that adequate loss allowance is made for irrecoverable amount. In order to maintain or adjust the capital
structure, the Company may issue new shares or sell assets.
Credit risk
The Group and Company’s principal financial assets are bank balances and trade and other receivables.
The credit risk is primarily attributable to its trade receivables and the Group and Company attaches
considerable importance to the collection and management of trade receivables. Standard credit terms are net
30 days from date of invoice. Overdue trade receivables are managed through a phased escalation culminating
in legal action but in general credit risk is considered very low. Please refer to note 16 for more detail on the
expected credit loss.
The credit risk associated with bank balances is considered as limited because the counterparties are banks with
A-rated credit scores assigned by international credit-rating agencies such as Moody’s and Standard & Poors.
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange
rate fluctuations arise. The Group’s main exposure is to the US dollar (USD) and the euro (EUR).
Amounts owed by and investments in subsidiary undertakings (Company only).
In addition to the financial risk factors facing the Group described above, the Company also provides working
capital funding for its trading subsidiaries; Med, IUNA and IUL which are included within the intercompany
loan balance although repayable on demand is not expected to be repaid in the next 12 months. The funding
provided is supported by annual budgets including monthly cash flows which are approved at the start of each
year by the Board. The recoverability of the amounts owed to the Company by its subsidiary undertakings
and the Company’s investments in its subsidiary undertakings are dependent on the ability of the subsidiary
undertaking businesses to grow in line with the longer term forecasts of the Group. The Board monitors the
performance of the Company’s subsidiary undertakings by monthly reviews of management accounts including
the sales order pipeline and cash flows compared to budget. The Company has determined that the amounts
due from its subsidiary undertakings at 31 December 2023 totalling £5.80m (2022: £10.38m) were credit
impaired. See note 16 for the movement in the expected credit loss in the year.
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Strategic Report
Corporate Governance
Financial Statements
92
Notes to the Financial Statements continued
For the year ended 31 December 2023
25. Financial instruments continued
ii) Financial instruments by category – Group
Financial assets
Financial assets measured at amortised cost
Trade and other receivables: non-current
Trade and other receivables: current
Cash and cash equivalents
Total financial assets
Financial liabilities measured at amortised cost
Trade payables
Accruals
Non-current liabilities – other payables
Lease liabilities: current
Lease liabilities: non-current
Total financial liabilities
iii) Financial instruments by category – Company
Financial assets
Financial assets measured at amortised cost
Trade and other receivables: non-current
Trade and other receivables: current
Amounts owed by subsidiary undertakings
Cash and cash equivalents
Total financial assets
Financial liabilities
2023
£’000
61
2,629
2,690
3,031
5,721
2022
£’000
Financial liabilities measured at amortised cost
Trade payables
Amounts owed to subsidiary undertakings
61
Accruals
1,425
1,486
7,166
8,652
Other payables: non-current
Lease liabilities: current
Lease liabilities: non-current
Total financial liabilities
2023
£’000
2022
£’000
170
–
163
65
151
112
661
230
–
215
65
118
263
891
Group and Company
Trade payables and receivables generally have a remaining life of less than one year so their value recorded in
the balance sheet is considered to be a reasonable approximation of fair value. Other receivables relate to a
refundable deposit paid to the landlord of the UK Head Office on expiration of the lease term in September 2026.
Amounts owed by subsidiary undertakings are repayable on demand but are not expected to be repaid within
the next 12 months.
Other payables relate to a dilapidation liability owed to the landlord of the UK head office payable on expiration of
the lease term in 2026.
The value of the amounts owed by subsidiary undertakings is considered to approximate fair value.
Please refer to note 13 for the maturity analysis of lease liabilities.
1,235
1,356
799
65
244
446
557
65
184
298
2,789
2,460
2023
£’000
61
–
20,787
20,848
82
20,930
2022
£’000
61
–
11,788
11,849
5,027
16,876
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Strategic Report
Corporate Governance
Financial Statements
93
Notes to the Financial Statements continued
For the year ended 31 December 2023
25. Financial instruments continued
iv) Currency denomination
Financial assets and liabilities are denominated in the following currencies:
Financial assets
Group
Company
v) Currency fluctuations
At the year end the Group was exposed to fluctuations in the US dollar, Canadian dollar, Swiss franc and
the euro against sterling. The following table details the Group’s sensitivity to a 10% increase or decrease in
sterling against the relevant foreign currencies rounded to the nearest £’000. 10% represents management’s
assessment of a reasonable possible change in foreign currency exchange rates.
The sensitivity analysis includes only outstanding foreign-currency denominated monetary items and adjusts their
translation at the period-end for a 10% weakening in foreign currency rates. A negative number below indicates
a decrease in profit where sterling strengthens against the relevant currency. For a 10% strengthening in sterling
against the foreign currency, there would be an equal and opposite impact on profit and loss.
2023
£’000
2022
£’000
20,848
11,849
–
–
–
–
–
–
US dollar
80
5,025
Swiss franc
Euro
2,690
1,486
20,848
11,849
Canadian dollar
2023
£’000
1,341
972
83
294
2022
£’000
558
852
54
22
536
2,033
19
1
442
3,031
5,721
5,757
738
25
9
637
7,166
8,652
2
–
–
–
2
–
–
–
82
20,930
5,027
16,876
26. Events after the reporting period
Post year end, the Company secured access to a £2 million overdraft facility with HSBC which provides additional
liquidity to support the Company’s working capital needs but is scheduled for review within 12 months of signing
the financial statements.
27. Ultimate Parent and controlling party
The ultimate Parent Company is Intelligent Ultrasound Group plc.
Group
Company
There was no overall controlling party as at 31 December 2023 or 31 December 2022.
2023
£’000
2,606
106
22
55
2022
£’000
2,099
289
71
1
2023
£’000
2022
£’000
661
891
–
–
–
–
–
–
Group
2023
£’000
264
9
65
(5)
2022
£’000
129
42
10
–
Trade and other receivables
Sterling
US dollar
Canadian dollar
Euro
Cash and cash equivalents
Sterling
US dollar
Canadian dollar
Swiss franc
Euro
Total financial assets
Financial liabilities
Trade payables
Sterling
US dollar
Euro
Swiss franc
Total financial liabilities
2,789
2,460
661
891
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Intelligent Ultrasound Group plc 2023 Annual Report and Accounts
Intelligent Ultrasound Group plc 2023 Annual Report and Accounts
Overview
Overview
Strategic Report
Strategic Report
Corporate Governance
Corporate Governance
Financial Statements
Financial Statements
94
94
Glossary of Terms
Corporate Directory
Term
AI
CGU
ECHO
ECL
ESG
GHG
IML
ISUOG
IU
IUL
IUNA
MED
NED
OBGYN
OEM
PACS
Description
Artificial intelligence
Cash generating unit
Echocardiogram
Expected credit losses
Environmental Social and Governance
Greenhouse gas
Inventive Medical Limited
International Society of Ultrasound in Obstetrics and Gynaecology
Intelligent Ultrasound
Intelligent Ultrasound Limited
Intelligent Ultrasound North America, Inc
Medaphor Limited
Non-executive Director
Obstetrics & Gynaecology
Original equipment manufacturer
Picture archiving and communication system
PNB Trainer
Peripheral nerve block trainer
PoCUS
QMS
RDEC
TEE
TTE
Point-of-care ultrasound
Quality management system
Research and development expenditure credit
Transoesophageal echocardiogram
Transthoracic echocardiogram
Board of Directors
Nicholas Avis
Stuart Gall
Christian Guttman
Helen Jones
Michèle Lesieur
Ingeborg Øie
Riccardo Pigliucci
Nicholas Sleep
Company secretary
and registered office
Helen Jones
Floor 6A, Hodge House
114–116 St Mary Street
Cardiff
CF10 1DY
United Kingdom
Auditor
CLA Evelyn Partners Limited
Portwall Place
Portwall Lane
Bristol
BS1 6NA
United Kingdom
Registrar and receiving agents
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
United Kingdom
Nominated adviser and broker
Cavendish Capital Markets Limited
One Bartholemew Close
London
EC1A 7BL
United Kingdom
Public/investor relations
TB Cardew
29 Lincoln’s Inn Fields
London
WC2A 3EG
United Kingdom
Legal advisers
Memery Crystal LLP
165 Fleet Street
London
EC4A 2DY
United Kingdom
CBP024934
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Contents Generation – PageContents Generation – Sub PageContents Generation – Section Intelligent Ultrasound Group plc
Registered office
Floor 6A, Hodge House
114-116 St Mary Street
Cardiff
CF10 1DY
United Kingdom