TIDMSPEC
RNS Number : 6193L
Inspecs Group PLC
07 September 2023
7 September 2023
INSPECS Group plc
("INSPECS", "the Company" or "the Group")
Interim Results
INSPECS Group plc, a global eyewear and lens design house and
manufacturer, presents its unaudited interim results for the six
months ended 30 June 2023. This is the first set of results in the
Group's new reporting currency of GBP.
Financial highlights:
-- Revenue increased by 6.1% to GBP111.2m (H1 2022: GBP104.8m)
-- On a constant exchange rates basis(1) , revenue increased
by 2.3% to GBP107.2m (H1 2022: GBP104.8m)
-- Operating profit increased by 25.1% to GBP4.6m (H1 2022:
GBP3.6m)
-- Gross profit margin 51.4% (H1 2022: 50.5%)
-- Underlying EBITDA(2) increased by 5.4% to GBP12.1m (H1
2022: GBP11.4m)
-- Adjusted Profit Before Tax (PBT)(2) of GBP6.9m (H1 2022:
GBP7.5m)
-- Adjusted PBT Basic Earnings Per Share (EPS)(2) of GBP0.07
(H1 2022: GBP0.07)
-- Reported Profit Before Tax of GBP3.8m (H1 2022: GBP0.2m
loss(3) )
-- Reported basic EPS of GBP0.02 (H1 2022: GBP(0.03) (3)
), with diluted EPS of GBP0.02 (H1 2022: GBP(0.03) (3)
)
-- Cash generated from operations GBP11.5m (H1 2022: GBP8.7m)
-- Net debt excluding leasing GBP22.7m (31 December 2022:
GBP27.6m)
Operational highlights:
-- 6.9m eyewear frames sold in H1 2023, compared to 6.2m
in H1 2022
-- Strong revenue growth in UK (+20%), North America (+9%)
and LATAM (+277%)
-- Substantial growth of low vision aids revenue in North
America (+19%) to GBP5.9m in H1 2023
-- Construction of the new Vietnam manufacturing facility
commenced in May 2023, with scheduled completion in H1
2024
-- Norville losses reduced substantially compared H1 2022
-- Renewal completed on key licensed brands; Marco Polo and
Ted Baker
-- Orders received for a key licence brand by a global retailer
to be delivered in Q4 2023
-- Successful launch of a women's Titanflex range in Germany
-- Significant growth in commercial activity within Skunkworks,
the Group's research and development division
-- Good progress against objectives outlined in our ESG framework
1 Constant currency exchange rates: figures at constant
currency exchange rates have been calculated using
the average exchange rates in effect for the corresponding
period in the relevant comparative period (H1 2022).
2 Refer to table "Underlying EBITDA and Adjusted PBT".
3 Comparative figures have been restated throughout to
be presented in GBP following a change in presentational
currency. See note 2 for further details. In addition,
the six-month period to 30 June 2022 has been restated
following a retrospective adjustment, see note 11.
Richard Peck, CEO of INSPECS, said:
"The Group has made steady progress during the period, with an
improved trading and cash generation performance. We remain focused
on achieving operational efficiency gains and continue to identify
integration opportunities across our global trading platform.
Construction of our new manufacturing facility in Vietnam
commenced in May 2023, with expected completion in H1 2024. Once
fully operational, this will increase the manufacturing capacity of
the Group to circa 12 million units per year.
Trading in the second half to date has been in line with our
expectations and our order books remain at a good level. Whilst we
remain cautious in relation to global economic and political
events, we remain confident with our full year outlook."
For further information please contact:
INSPECS Group plc via FTI Consulting
Richard Peck (CEO) Tel: +44 (0) 20
Chris Kay (CFO) 3727 1000
Peel Hunt (Nominated Adviser and Broker) Tel: +44 (0) 20
Adrian Trimmings 7418 8900
Andrew Clark
Lalit Bose
FTI Consulting (Financial PR) Tel: +44 (0) 20
Alex Beagley 3727 1000
Harriet Jackson INSPECS@fticonsulting.com
Rafaella de Freitas
About INSPECS Group plc
INSPECS is a leading provider of eyewear solutions to the global
eyewear market. The Group produces a broad range of eyewear frames,
low vision aids and lenses, covering optical, sunglasses and
safety, which are either "Branded" (either under licence or under
the Group's own proprietary brands), or "OEM" (unbranded or private
label on behalf of retail customers).
INSPECS is building a global eyewear business through its
vertically-integrated business model. Its continued growth is
underpinned by six core drivers, including; increasing the
penetration of its own-brand portfolio, increasing distribution in
Asian Pacific markets, growing its travel retail markets,
maximising group synergies, expanding its manufacturing capacity
and scaling the research and development department as it develops
new and innovative eyewear channels.
The Group has operations across the globe: with offices and
subsidiaries in the UK, Germany, Portugal, Scandinavia, the US and
China (including Hong Kong, Macau and Shenzhen), and manufacturing
facilities in Vietnam, China, the UK and Italy.
INSPECS customers are global optical and non-optical retailers,
global distributors and independent opticians, with its
distribution network covering over 80 countries and reaching
approximately 75,000 points of sale.
More information is available at: www.INSPECS.com
CHIEF EXECUTIVE REVIEW
I am pleased to present our results for the six months ended 30
June 2023. The Group has performed well during the period,
achieving record first half revenue of GBP111.2m (H1 2022:
GBP104.8m) a 6.1% increase. The Group sold 6.9m eyewear units in
the period, up 11.3% compared to 6.2m eyewear units sold in H1
2022.
The Group made an Underlying EBITDA of GBP12.1m compared to
GBP11.4m for the same period in 2022.
On a constant exchange basis, Group revenues increased 2.3% from
GBP104.8m to GBP107.2m.
The Group's performance at the Underlying EBITDA level in H1
2023 exceeded our previous record performance of H1 2022 by 5.4%.
The Group saw good growth in our UK and North American businesses,
and a significant reduction in the operational losses at Norville,
as a result of our cost saving programme. Our European markets
(excluding the UK) remained relatively flat. Our gross profit
margin, despite cost inflationary pressures, increased to 51.4%
from 50.5%. Administrative expenses in the period of GBP49.3m (H1
2022: GBP46.6m) were well controlled, decreasing from 44.4% to
44.3% of revenue.
The Group has made key licence renewals, including Marco Polo
and Ted Baker, as well as receiving a significant order from a
global retailer for a key licence brand which will be delivered in
Q4 2023.
UK
Within the UK market, revenue has increased by 19.5% to
GBP13.6m, driven by increased distribution to major retail
chains.
Europe
Revenue in Europe at GBP52.2m was flat year on year with a
strong performance in our key German market offset by a softer
performance in other European markets. During the period TitanFlex,
a brand designed for comfort, successfully launched a new range for
women.
North America
Revenue within North America has increased by GBP3.0m (8.6%) to
GBP37.4m, with good growth in our frame and low vision operating
entities.
Frames and Optics
Our Frames and Optics distribution business increased its
external revenue from GBP93.2m in H1 2022 to GBP100.2m in H1 2023,
an increase of 7.6%. This was driven mainly by a good performance
in the UK and North American markets.
Wholesale
In line with our expectations for the first six months, external
revenue from the Wholesale business for H1 2023 was GBP9.0m,
compared to GBP9.9m in H1 2022. We expect to see increased activity
in the second half.
Lenses
Our lens manufacturing business has reported external revenue
growth of 13.9%, with losses from the division decreasing by
GBP0.9m to GBP1.2m. We continue to make steady progress, with
increased revenue and operational activity, and a drive towards
profitability in the future.
Manufacturing
Construction of our new manufacturing facility in Vietnam
commenced in May 2023, with expected completion in H1 2024. Once
fully operational, this will increase the manufacturing capacity of
the Group to circa 12 million units per year.
We continue to evaluate our Portugal manufacturing facility,
which would mainly supply our European markets.
Research and development
The research and development division of the business,
Skunkworks, has continued to work on the development of innovative
eyewear channels, resulting in significant growth in commercial
activity during H1 2023.
ESG
Following the establishment of our ESG Committee in 2022, we
have been progressing against our ESG goals. During the period the
Group donated two water filtration units for local schools in
Vietnam and offset over 4,500 TCO(2) e through renewable energy
projects. We continue to assess ways in which we can further
integrate ESG into our corporate strategy.
Eyewear market
The eyewear market is projected to grow at a rate of 4.4% per
year between 2023 and 2027 (data from Statista.com) providing a
resilient base to support our long-term growth strategy.
Outlook
Trading in the second half to date has been in line with our
expectations and our order books remain at a good level. Whilst we
remain cautious in relation to global economic and political
events, we remain confident with our full year outlook.
I would like to thank all our teams across the globe who have
contributed to this good performance in H1 2023, and their
continuing hard work and dedication in achieving our long-term goal
of developing INSPECS Group into one of the world's leading eyewear
companies.
Richard Peck
7 September 2023
FINANCIAL REVIEW
Revenue
Revenue increased to GBP111.2m from GBP104.8m in H1 2022, an
increase of 6.1%. This was driven by strong growth in our UK and
North American markets. On a constant exchange rate (1) revenues
increased 2.3% from GBP104.8m (H1 2022) to GBP107.2m.
Gross Profit Margin
The Group's gross profit margin increased from 50.5% in H1 2022
to 51.4% in H1 2023. The Group continues to actively manage its
gross profit margin despite cost inflation.
Operating Profit
The Group's operating profit increased 25.1% to GBP4.6m (H1
2022: GBP3.6m).
Underlying EBITDA
The Group's Underlying EBITDA (as calculated in the 'Underlying
EBITDA and Adjusted PBT' table below) increased from GBP11.4m in H1
2022 to GBP12.1m in H1 2023.
Finance Expenses
Our reported net finance costs increased from GBP1.3m in H1 2022
to GBP2.0m reflecting the rise in interest rates around the globe.
Net finance costs include GBP0.1m (H1 2022: GBP0.3m) relating to
the amortisation of capitalised loan arrangement fees.
Depreciation and amortisation
The increase in depreciation is driven by the renewal of key
leases across the Group.
Period ended Period ended
30 June 2023 30 June 2022
GBPm GBPm
-------------- -------------- --------------
Depreciation 3.4 3.0
Amortisation 3.3 3.4
-------------- -------------- --------------
Total 6.7 6.4
-------------- -------------- --------------
Profit/(Loss) Before Tax
Profit before tax for the period was GBP3.8m (H1 2022: GBP0.2m
loss). The increase of GBP4.0m is after an increase in finance
costs of GBP0.7m, an increase in amortisation and depreciation of
GBP0.3m and an improvement in exchange adjustments on borrowings of
GBP2.8m.
Adjusted Profit Before Tax
The Group's Adjusted Profit Before Tax (PBT) decreased from
GBP7.5m in H1 2022 to GBP6.9m in H1 2023 as a result of increased
net interest costs (excluding amortisation of loan arrangement
fees) of GBP0.9m and an increase in depreciation of GBP0.4m.
Cash Generation
Cash management was a key focus in the period and the Group
generated a net cash inflow from operating activities of GBP8.4m in
H1 2023 compared to GBP4.7m in H1 2022.
Cash Position
The Group's cash as of 30 June 2023 was GBP25.9m compared to
GBP22.2m as at 31 December 2022.
Net Debt
The Group has delivered strong cash generation in the first half
and as a result, net debt (excluding leases) decreased by GBP4.9m
to GBP22.7m (31 December 2022: GBP27.6m). During the period, the
Group invested GBP0.9m on construction of our new manufacturing
facility in Vietnam and paid a further GBP2.2m of deferred and
contingent consideration relating to the EGO and BoDe
acquisitions.
Financing
The Group finances its operation through the following
borrowings and facilities.
Drawn at
Drawn at 31 December
30 June 2023 2022
Expires GBPm GBPm
-------------------------- --------------- ------------- ------------
Group revolving credit
facility October 2024 29.5 30.0
Term loans October 2024 9.7 10.5
Revolving credit facility
USA 1-year rolling 6.7 7.2
Invoice discounting 1-year rolling 2.1 1.5
Other 0.5 0.6
-------------------------------------------- ------------- ------------
Total 48.5 49.8
-------------------------------------------- ------------- ------------
Leverage (using debt to equity ratio)
The Group's leverage position is shown below:
30 June
2023
--------------- -------
Actual ratio 1.99
Required ratio 3.00
--------------- -------
The Group's leverage is calculated using a twelve-month rolling
EBITDA. The Group's performance in the second half of 2022 was weak
and resulted in lower reported EBITDA. As a result of the improved
trading performance in the first half and our current expectations
for the full year, it is expected that, subject to market
conditions, the Group's leverage will continue to improve in the
second half of 2023.
Inventory
Our revenue to inventory ratio has improved compared to 30 June
2022 with increased revenue being delivered from a similar
inventory base.
Period ended Period ended
30 June 2023 30 June 2022
GBPm GBPm
---------------------------- -------------- --------------
Revenue 111.2 104.8
Inventory 42.3 42.4
Revenue to inventory ratio 2.6 2.5
---------------------------- -------------- --------------
Current asset ratio
The current ratio is a liquidity ratio that measures a company's
ability to pay short-term obligations, or those due within one
year.
Period ended Period ended
30 June 2023 30 June 2022
GBPm GBPm
--------------------- -------------- --------------
Current Assets 106.7 103.3
Current Liabilities 69.7 66.4
Ratio 1.5 1.6
--------------------- -------------- --------------
Quick ratio
The quick ratio is an indicator of a company's short-term
liquidity position and measures a company's ability to meet its
short-term obligations with its most liquid assets.
Period ended Period ended
30 June 2023 30 June 2022
GBPm GBPm
--------------------- -------------- --------------
Current Assets 106.7 103.3
Less Inventory (42.3) (42.4)
--------------------- -------------- --------------
64.4 60.9
--------------------- -------------- --------------
Current Liabilities 69.7 66.4
Ratio 0.9 0.9
--------------------- -------------- --------------
Earnings per Share
The Group's Basic Adjusted PBT Earnings per Share for the 6
months to 30 June 2023 was GBP0.07 compared to GBP0.07 for the 6
months to 30 June 2022.
Dividend
As previously announced the Group does not intend to pay a
dividend in 2023 and accordingly is not proposing a dividend for
the period ended 30 June 2023.
Underlying EBITDA and Adjusted PBT
The below table shows how Underlying EBITDA and Adjusted PBT are
calculated:
6 months 6 months 12 months
ended 30 ended 30 ended 31
June 2023 June 2022 December
Restated 2022
(1) Restated
(1)
GBP'000 GBP'000 GBP'000
Revenue 111,199 104,809 200,957
----------------- ---------------------- --------------
Gross Profit 57,147 52,893 98,860
Operating expenses (52,592) (49,253) (100,046)
Operating profit/(loss) 4,555 3,640 (1,186)
Add back: Amortisation 3,252 3,445 6,893
Add back: Depreciation 3,361 2,950 6,744
----------------- ---------------------- --------------
EBITDA 11,168 10,035 12,451
Add back: Share based payment
expense 526 638 1,398
Add back: Earn out on acquisition 366 770 1,544
----------------- ---------------------- --------------
Underlying EBITDA 12,060 11,443 15,393
Add back: Purchase Price Allocation
('PPA') release on inventory
through cost of sales - 27 132
----------------- ---------------------- --------------
Adjusted Underlying EBITDA 12,060 11,470 15,525
Less: Depreciation (3,361) (2,950) (6,744)
Less: Net interest (excluding
amortisation of loan arrangement
fees) (1,846) (990) (1,979)
----------------- ---------------------- --------------
Adjusted Profit Before Tax
(PBT) 6,853 7,530 6,802
----------------- ---------------------- --------------
Adjusted PBT earnings per
share
GBP GBP GBP
Basic Adjusted PBT Earnings
per Share for the period attributable
to the equity holders of the
parent 0.07 0.07 0.07
Diluted Adjusted PBT Earnings
per Share for the period attributable
to the equity holders of the
parent 0.06 0.07 0.06
1 Comparative figures have been restated throughout to be presented in
GBP following a change in presentational currency. See note 2 for
further details. In addition, the six-month period to 30 June 2022 has
been restated following a retrospective adjustment, see note 11.
Underlying EBITDA segmental information
Underlying EBITDA by reportable segment (as defined in note 4) for the
six months ended 30 June 2023 is as
follows: Frames Wholesale Lenses Total before Adjustments Total
and
Optics adjustments &
& elimination
eliminations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 102,876 9,922 2,069 114,867 (3,668) 111,199
Operating
profit/(loss) 7,272 887 (1,248) 6,911 (2,356) 4,555
-------- ---------- -------- ------------- ------------ --------
Add back:
Amortisation 2,809 433 10 3,252 - 3,252
Depreciation 2,663 347 336 3,346 15 3,361
Share based
payments 198 161 - 359 167 526
Earn out on
acquisitions 366 - - 366 - 366
-------- ---------- -------- ------------- ------------ --------
Underlying
EBITDA 13,308 1,828 (902) 14,234 (2,174) 12,060
-------- ---------- -------- ------------- ------------ --------
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 30 June 2023
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Unaudited
Unaudited 6 months ended
6 months ended 30 June 2022
Notes 30 June 2023 Restated
GBP'000 GBP'000
REVENUE 4 111,199 104,809
Cost of sales (54,052) (51,916)
GROSS PROFIT 57,147 52,893
Distribution costs (3,328) (2,703)
Administrative expenses (49,264) (46,550)
OPERATING PROFIT 4,555 3,640
Non-underlying costs 9 - (911)
Exchange adjustments on
borrowings 1,210 (1,585)
Share of loss of associates (4) (1)
Finance costs (2,103) (1,371)
Finance income 145 39
PROFIT/(LOSS) BEFORE INCOME
TAX 3,803 (189)
Income tax (1,720) (2,685)
PROFIT/(LOSS) FOR THE
PERIOD 2,083 (2,874)
OTHER COMPREHENSIVE INCOME:
Exchange adjustment on
consolidation (3,973) 4,272
TOTAL COMPREHENSIVE (LOSS)/PROFIT
FOR THE PERIOD (1,890) 1,398
============================== =========================
Earnings per share GBP GBP
Basic EPS for the period
attributable
to the equity holders
of the parent 5 0.02 (0.03)
------------------------------ -------------------------
Diluted EPS for the period
attributable
to the equity holders
of the parent 5 0.02 (0.03)
------------------------------ -------------------------
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
Note Unaudited
Unaudited As at As at
As at 30 June 31 December
30 June 2022 2022
2023 Restated Restated
GBP'000 GBP'000 GBP'000
ASSETS
NON-CURRENT
ASSETS
Goodwill 55,578 56,206 55,578
Intangible assets 32,248 38,523 36,170
Property Plant
and equipment 33,840 38,598 37,107
Investment in
associates 105 91 112
Net investment - 675 - -
sublease
Deferred tax 6,337 8,180 7,007
-------------- ------------ --------------
128,783 141,598 135,974
-------------- ------------ --------------
CURRENT ASSETS
Inventories 42,349 42,402 48,158
Trade and other
receivables 6 36,647 34,532 31,144
Net investment - 110 - -
sublease
Tax receivable 1,719 1,233 3,681
Cash and cash
equivalents 25,862 25,179 22,153
------------
106,687 103,346 105,136
-------------- ------------ --------------
Assets held for
sale 832 - 832
-------------- ------------ --------------
TOTAL ASSETS 236,302 244,944 241,942
-------------- ------------ --------------
EQUITY
SHAREHOLDERS'
EQUITY
Called up share
capital 1,017 1,017 1,017
Share premium 89,508 89,508 89,508
Foreign currency
translation
reserve 5,461 7,478 9,434
Share option
reserve 3,153 2,092 2,703
Merger reserve 5,340 5,340 5,340
Retained earnings 1,698 4,057 (461)
-------------- ------------ --------------
TOTAL EQUITY 106,177 109,492 107,541
-------------- ------------ --------------
LIABILITIES
NON-CURRENT
LIABILITIES
Financial liabilities
- borrowings
Interest
bearing loans
and borrowings 51,525 53,109 16,548
Deferred
consideration 652 1,776 1,350
Deferred tax 8,203 14,215 9,548
-------------- ------------ --------------
60,380 69,100 27,446
-------------- ------------ --------------
CURRENT LIABILITIES
Trade and other
payables 7 38,921 40,175 39,153
Right of return
liability 11,862 8,885 10,613
Financial liabilities
- borrowings
Interest
bearing loans
and borrowings 13,140 13,144 51,746
Invoice discounting 2,089 708 1,490
Deferred
consideration 1,333 1,304 2,518
Tax payable 2,400 2,136 1,435
------------
69,745 66,352 106,955
-------------- ------------ --------------
TOTAL LIABILITIES 130,125 135,452 134,401
-------------- ------------ --------------
TOTAL EQUITY AND
LIABILITIES 236,302 244,944 241,942
-------------- ------------ --------------
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 2023
Called Share Foreign Share Retained Merger Total
up premium currency option earnings reserve equity
share translation reserve
capital reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
SIX MONTHSED 30
JUNE 2023
Balance at 1
January
2023 1,017 89,508 9,434 2,703 (461) 5,340 107,541
Profit for the
period - - - - 2,083 - 2,083
Other comprehensive
loss - - (3,973) - - - (3,973)
-------------- ----------- --------------- ------------ ---------- --------- -------------
Total comprehensive
loss - - (3,973) - 2,083 - (1,890)
Share-based
payments - - - 526 - - 526
Share options
forfeited - - - (76) 76 - -
Balance at 30 June
2023 (unaudited) 1,017 89,508 5,461 3,153 1,698 5,340 106,177
-------------- ----------- --------------- ------------ ---------- --------- -------------
SIX MONTHSED 30
JUNE 2022
Balance at 1
January
2022 restated 1,017 89,508 3,206 1,454 6,931 5,340 107,456
Loss for the period - - - - (2,874) - (2,874)
Other comprehensive
income - - 4,272 - - - 4,272
-------------- ----------- --------------- ------------ ---------- --------- -------------
Total comprehensive
profit/(loss) - - 4,272 - (2,874) - 1,398
Share-based
payments - - - 638 - - 638
-------------- ----------- --------------- ------------ ---------- --------- -------------
Balance at 30 June
2022
restated
(unaudited) 1,017 89,508 7,478 2,092 4,057 5,340 109,492
-------------- ----------- --------------- ------------ ---------- --------- -------------
INTERIM CONSOLIDATED STATEMENT OF CASH FLOW
For the period ended 30 June 2023
-------------------------------------------------------------------------------------------------------
Unaudited Unaudited
6 months 6 months
ended ended
30 June 30 June
2023 2022
Restated
GBP000 GBP000
Cash flows from operating
activities
Profit/(loss) before income
tax 3,803 (189)
Depreciation charges 3,361 2,950
Amortisation charges 3,252 3,445
Share based payments 526 638
Earn out on acquisitions 366 770
Exchange adjustments on borrowings (1,210) 1,585
Share of loss from associate 4 1
Finance costs 2,103 1,371
Finance income (145) (39)
---------------------
12,060 10,532
Decrease/(increase) in inventories 5,809 (1,203)
Increase in trade and other
receivables (5,503) (3,290)
(Decrease)/increase in trade
and other payables (866) 2,688
---------------------
Cash generated from operations 11,500 8,727
Interest paid (1,831) (1,353)
Tax paid (1,248) (2,646)
-------------------- ---------------------
Net cash flow from operating
activities 8,421 4,728
-------------------- ---------------------
Cash flows used in investing
activities
Purchase of intangible fixed
assets (124) (59)
Purchase of property plant
and equipment (1,361) (1,007)
Interest received 145 39
---------------------
Net cash flows used in investing
activities (1,340) (1,027)
-------------------- ---------------------
Cash flow from financing
activities
Bank loan principal repayments
in period (1,010) (1,112)
New loans in the period - 1,612
Movement in invoice discounting
facility 599 1,092
Loan transaction costs (70) (105)
Principal payments on leases (1,999) (1,548)
Net cash flows used in financing
activities (2,480) (61)
-------------------- ---------------------
Net increase in cash and
cash
equivalents 4,601 3,640
Cash and cash equivalents
at
beginning of the period 22,153 22,024
Net foreign currency movements (892) (485)
-------------------- ---------------------
Cash and cash equivalents
at end of period 25,862 25,179
==================== =====================
NOTES TO THE INTERIM CONSOLIDATED STATEMENTS
For the period ended 30 June 2023
---------------------------------------------
1. GENERAL INFORMATION
INSPECS Group plc is a public company limited by shares and is
incorporated in England and Wales. The address of the Company's
principal place of business is Kelso Place, Upper Bristol Road,
Bath BA1 3AU.
The principal activity of the Group in the period was that of
design, production, sale, marketing and distribution of high
fashion eyewear and OEM products worldwide.
2. ACCOUNTING POLICIES
Going concern
Based on the Group's forecasts, the interim financial statements
have been prepared on the going concern basis as the Directors have
assessed that there is a reasonable expectation that the Group will
be able to continue in operation and meet its commitments as they
fall due over the going concern period to 30 September 2024.
The assessment has considered the Group's current financial
position as follows:
-- The Group improved its cash position during the period with
net debt including leasing dropping from GBP27.6m at 31 December
2022 to GBP22.7m at 30 June 2023.
-- Cash generated from operations in the period amounted to GBP11.5m (2022 H1: GBP8.7m).
-- The Group balance sheet has net assets of GBP106.2m and net current assets of GBP36.9m.
-- The Group's net debt excluding leasing improved by GBP4.9m in
the six months to 30 June 2023.
The assessment has considered the current measures being put in
place by the Group to preserve cash and ensure continuity of
operations through:
-- Ensuring continuation of its supply chain, building on the
benefit of having its own manufacturing sites and by securing
alternative third-party supply lines.
-- Maintaining geographical sales diversification, focusing
sales to online customers and seeking new revenue streams around
the globe.
-- Ability to service both the major global retail chains and
significant distribution to the independent eyewear market
following the acquisitions completed over recent periods.
-- Retaining cash for investment into the Group by not paying a dividend to shareholders.
Basis of preparation
The interim consolidated financial statements for the six months
ended 30 June 2023 have been prepared in accordance with IAS 34
Interim Financial Reporting and with accounting policies that are
consistent with the Group's Annual Report and Financial Statements
for the period ended 31 December 2022.
Effective from 1 January 2023, the reporting currency of the
Group was changed to GBP from USD to allow for greater transparency
for investors and other stakeholders. Accordingly, comparative
information is therefore also restated in GBP.
The comparative financial information for the period ended 30
June 2022 in this interim report does not constitute statutory
accounts for that period under 434 of the Companies Act 2006 and is
unaudited.
Accounting policies are included in detail within the latest
Annual Report.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of the Group's historical information requires
management to make judgements, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities, and their accompanying disclosures, and the disclosure
of contingent liabilities. Uncertainty about these assumptions and
estimates could result in outcomes that could require a material
adjustment to the carrying amounts of the assets or liabilities in
the future.
Estimation uncertainty
In addition to the going concern section of note 2, the key
assumptions concerning the future and other key sources of
estimation uncertainty at the end of the reporting period, that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial period, are described below.
Right of return liability
Management applies assumptions in determining the right of
return liability and the associated right of return asset. These
assumptions are based on analysis of historical data trends, but
require estimation of appropriate time periods and expected return
rates. The right of return liability at the period end is
GBP11,862,000 (31 December 2022: GBP10,613,000) in line with the
accounting methodology used as at 31 December 2022.
4. SEGMENT INFORMATION
The Group operates in three operating segments, which upon
application of the aggregation criteria set out in IFRS 8 Operating
Segments results in three reporting segments:
-- Frames and Optics product distribution.
-- Wholesale - being OEM and manufacturing distribution.
-- Lenses - being manufacturing and distribution of lenses.
The criteria applied to identify the operating segments are
consistent with the way the Group is managed. In particular, the
disclosures are consistent with the information regularly reviewed
by the CEO and the CFO in their role as Chief Operating Decision
Makers, to make decisions about resources to be allocated to the
segments and to assess their performance.
The reportable segments subject to disclosure are consistent
with the organisation model adopted by the Group during the six
months ended 30 June 2023 are as below:
Frames Wholesale Lenses Total before Adjustments Total
and
Optics adjustments &
& elimination
eliminations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External 100,220 9,016 1,963 111,199 - 111,199
Internal 2,656 906 106 3,668 (3,668) -
------------- --------------------- ---------- ------------- ------------ ----------
102,876 9,922 2,069 114,867 (3,668) 111,199
Cost of sales (51,174) (5,731) (1,240) (58,145) 4,093 (54,052)
------------- --------------------- ---------- ------------- ------------ ----------
Gross profit 51,702 4,191 829 56,722 425 57,147
Expenses (44,430) (3,304) (2,077) (49,811) (2,781) (52,592)
---------- ------------- ------------ ----------
Operating
profit/(loss) 7,272 887 (1,248) 6,911 (2,356) 4,555
---------- ------------- ------------
Exchange
adjustment
on borrowings 1,210
Finance costs (2,103)
Finance income 145
Share of loss
of associates (4)
Taxation (1,720)
----------
Profit for the
period 2,083
----------
Reported segments relating to the balance sheet as at 30 June
2023 are as follows:
Frames Wholesale Lenses Total Adjustments Total
and before
Optics adjustments & elimination
&
eliminations
GBP'000 GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
Total assets 325,541 62,385 9,955 397,881 (167,916) 229,965
Total
liabilities (177,949) (6,040) (13,836) (197,825) 145,057 (52,768)
--------------------- ---------------------- ----------- ------------------------ ------------------------ -----------
147,592 56,345 (3,881) 200,056 (22,859) 177,197
--------------------- ---------------------- ----------- ------------------------ ------------------------
Deferred tax
asset 6,337
Deferred tax
liability (8,203)
Current tax
liability (2,400)
Borrowings (66,754)
------------
Group net
assets 106,177
------------
Total assets are the Group's gross assets excluding deferred tax
asset. Total liabilities are the Group's gross liabilities
excluding loans and borrowings, and deferred tax liability.
The reportable segments subject to disclosure are consistent
with the organisation model adopted by the Group during the six
months ended 30 June 2022 (restated) are as below:
Frames Wholesale Lenses Total before Adjustments Total
and
Optics adjustments &
& elimination
eliminations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External 93,166 9,919 1,724 104,809 - 104,809
Internal 2,892 2,352 113 5,357 (5,357) -
------------- --------------------- ---------- ------------- ------------ ----------
96,058 12,271 1,837 110,166 (5,357) 104,809
Cost of sales (48,166) (6,712) (1,491) (56,369) 4,453 (51,916)
------------- --------------------- ---------- ------------- ------------ ----------
Gross profit 47,892 5,559 346 53,797 (904) 52,893
Expenses (42,133) (3,275) (2,500) (47,908) (1,345) (49,253)
---------- ------------- ------------ ----------
Operating
profit/(loss) 5,759 2,284 (2,154) 5,889 (2,249) 3,640
---------- ------------- ------------
Exchange
adjustment
on borrowings (1,585)
Non-underlying
costs (911)
Finance costs (1,371)
Finance income 39
Share of loss
of associates (1)
Taxation (2,685)
----------
Loss for the
period (2,874)
----------
Reported segments relating to the balance sheet as at 31
December 2022 (restated) are as follows:
Frames Wholesale Lenses Total Adjustments Total
and before
Optics adjustments & elimination
&
eliminations
GBP'000 GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
Total assets 327,596 70,197 10,470 408,263 (173,328) 234,935
Total
liabilities (179,578) (12,523) (12,887) (204,988) 151,354 (53,634)
--------------------- ---------------------- ----------- ------------------------ ------------------------ -----------
148,018 57,674 (2,417) 203,275 (21,974) 181,301
--------------------- ---------------------- ----------- ------------------------ ------------------------
Deferred tax
asset 7,007
Deferred tax
liability (9,548)
Current tax
liability (1,435)
Borrowings (69,784)
------------
Group net
assets 107,541
------------
Total assets are the Group's gross assets excluding deferred tax
asset. Total liabilities are the Group's gross liabilities
excluding loans and borrowings, and deferred tax liability.
Acquisition costs, finance costs and income, and taxation are
not allocated to individual segments as the underlying instruments
are managed on a Group basis.
Deferred tax and borrowings are not allocated to individual
segments as they are managed on a Group basis.
Adjusted items relate to elimination of all intra-Group items
including any profit adjustments on intra-Group revenues that are
eliminated on consolidation, along with the profit and loss items
of the parent company.
Adjusted items in relation to segmental assets and liabilities
relate to the elimination of all intra-Group balances and
investments in subsidiaries, and assets and liabilities of the
parent company.
The revenue of the Group is attributable to the one principal
activity of the Group.
Geographical analysis
The Group's revenue by destination is split in the following
geographic areas:
Unaudited Unaudited
6 months ended 6 months ended
30 June 2023 30 June 2022
Restated
GBP'000 GBP'000
United Kingdom 13,621 11,396
Europe (excluding
UK) 52,161 52,278
North America 37,428 34,457
South America 1,315 349
Asia 2,993 3,228
Australia 3,515 3,033
Other 166 68
-----------------
111,199 104,809
================= =================
5. EARNINGS PER SHARE
Basic Earnings per Share ("EPS") is calculated by dividing the
profit for the period attributable to ordinary equity holders of
the parent by the weighted average number of ordinary shares
outstanding during the period.
Diluted EPS is calculated by dividing the profit attributable to
ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the period plus the
weighted average number of ordinary shares that would be issued on
conversion of all the dilutive potential ordinary shares into
ordinary shares, to the extent that the inclusion of such shares is
not anti-dilutive. During the period to 30 June 2022 the Group made
a loss; therefore, diluted EPS is not applicable as the impact of
potential ordinary shares is anti-dilutive.
Basic earnings per share is GBP0.02 (30 June 2022: GBP(0.03)),
with diluted earnings per share of GBP0.02 (30 June 2022:
GBP(0.03)). The following table reflects the income and share data
used in the basic and diluted EPS calculations:
Basic weighted
average number Total
6 months ended 30 June of Ordinary earnings Earnings per
2023 Shares ('000) (GBP'000) share (GBP)
-------------------------------- ------------------ ----------- -------------
Basic EPS 101,672 2,083 0.02
Diluted EPS 107,492 2,083 0.02
Adjusted PBT basic EPS 101,672 6,878 0.07
Adjusted PBT diluted EPS 107,492 6,878 0.06
-------------------------------- ------------------ ----------- -------------
Basic weighted
average number Total
6 months ended 30 June of Ordinary earnings Earnings per
2022 (restated) Shares ('000) (GBP'000) share (GBP)
--------------------------- --------------- ---------- ------------
Basic EPS 101,672 (2,874) (0.03)
Diluted EPS 107,028 (2,874) (0.03)
Adjusted PBT basic EPS 101,672 7,530 0.07
Adjusted PBT diluted EPS 107,028 7,530 0.07
--------------------------- --------------- ---------- ------------
Within INSPECS Group plc, each Ordinary share carries the right to
participate in distributions, as respects dividends and as respects
capital on winding up.
6. TRADE AND OTHER RECEIVABLES
Unaudited Unaudited As at
As at As at 31 December
30 June 2023 30 June 2022 2022
Restated Restated
GBP'000 GBP'000 GBP'000
Trade receivables 26,298 25,038 22,670
Prepayments 3,381 3,237 2,267
Other receivables 6,968 6,257 6,207
-------------------
36,647 34,532 31,144
-------------------- ------------------- --------------------
7. TRADE AND OTHER PAYABLES
Unaudited Unaudited As at
31 December
2022
Restated
As at As at
30 June 30 June
2023 2022
Restated
GBP'000 GBP'000 GBP'000
Trade payables 23,530 22,460 22,140
Amounts owed to related
parties 185 185 198
Other payables 798 483 464
Social security and
other taxes 4,723 4,593 4,232
Royalties & provisions 3,216 5,656 4,073
Accruals 6,469 6,798 8,046
38,921 40,175 39,153
----------- ---------- ---------------
8. NET DEBT
Unaudited Unaudited As at
31 December
2022
As at As at
30 June 30 June
2023 2022
GBP'000 GBP'000 GBP'000
Restated Restated
Cash and cash equivalents 25,862 25,179 22,153
Interest bearing borrowings
excl. leasing (46,449) (46,081) (48,300)
Invoice discounting (2,089) ( 708) (1,490)
----------- --------------------- ---------------
Net debt excluding
leasing (22,676) (21,610) (27,637)
----------- --------------------- ---------------
Lease liability (18,216) (20,172) (19,994)
Net debt including
leasing (40,892) (41,782) (47,631)
==================== ========== ===============
9. NON-UNDERLYING COSTS
Non-underlying costs during the six months to 30 June 2022
related to accounting alignment of acquisitions which occurred in
2021 as well as work on ongoing acquisitions and restructuring.
10. SHARE-BASED PAYMENTS
Certain employees of the Group are granted options over the
shares in INSPECS Group. The options are granted with a fixed
exercise price and have vesting dates of between one and three
years after date of grant.
The Group recognises a share-based payment expense based on the
fair value of the awards granted, and an equivalent credit directly
in equity to share option reserve. On exercise of the shares by the
employees, the Group is charged the intrinsic value of the shares
by INSPECS Group plc and this amount is treated as a reduction of
the capital contribution, and it is recognised directly in
equity.
Share options outstanding at the end of the period have the
following expiry date and exercise prices:
Grant date Expected life Exercise Number of
of price per share options
options option GBP
11 October 2019 3-5 years 1.01 412,102
27 February
2020 3-5 years 1.95 1,923,110
22 December
2020 3-5 years 2.10 1,290,000
26 February
2021 3-5 years 3.25 641,036
21 June 2021 3-5 years 3.51 90,000
31 August 2021 3-5 years 3.70 275,000
23 December
2021 3-5 years 3.70 414,999
28 February
2022 3-5 years 3.75 641,036
11. RESTATED PROFIT/(LOSS) BEFORE TAX
The 2022 Annual Report and Accounts included restated primary
statements for the year to 31 December 2021 relating to a prior
year adjustment concerning the treatment of contingent
consideration payable on business combinations. The 30 June 2022
comparative primary statements have therefore also been restated
within these interims, with the impact on profit before tax for the
six months to 30 June 2022 being as follows:
GBP'000
Profit before tax 30 June 2022 (converted
to GBP) 581
Adjustments relating to earn-out on contingent
consideration (770)
----------------------------
Restated loss before tax 30 June 2022 (189)
----------------------------
12. POST BALANCE SHEET EVENTS
Since the end of the interim period on 30 June 2023 there were
no material events that the directors consider material to the
users of these interim statements.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR SSDFMMEDSESU
(END) Dow Jones Newswires
September 07, 2023 02:00 ET (06:00 GMT)
Inspecs (LSE:SPEC)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Inspecs (LSE:SPEC)
Gráfica de Acción Histórica
De May 2023 a May 2024
