SPEC Inspecs Group Plc

29 January 2024

Inspecs Group plc

("INSPECS" or "the Group")

Full Year Trading Update

Inspecs Group plc, a leading designer, manufacturer, and distributor of eyewear (sunglasses, optical frames, lenses and low vision products), today announces a trading update for the year ended 31 December 2023 ahead of reporting its final results on 17 April 2024.

The Group has maintained its focus on margin improvement through 2023 and expects to report a 16.1% increase in unaudited Adjusted Underlying EDITDA to £18.0m (2022: £15.5m). Despite this, financial performance is below the market expectations due to softer trading in December.

Highlights

·   Operational efficiencies have driven an increased EBITDA margin on sales in the year, with continual progress expected in 2024.

·    Vietnam expansion remains on track and budget, and provides enhanced sustainability, with first production in H1 2024.

·    Norville losses continue to reduce with new management growing sales and improving performance.

·    Skunk Works continues to drive innovation and commercial revenues.

·    Global launch of licenced eyewear brand secured during 2023 with launch in spring 2024.

·    Integration of US businesses commenced in 2023 to generate synergies within the Americas during 2024.

·    Reduction in net debt despite capex expenditure in Vietnam and deferred acquisition consideration, with significant cash generation in 2023.

Revenue

Group revenue of £200.3m was broadly flat on 2022 (£201.3m), below our expectations, however the Board remains positive for 2024 with new accounts and distribution in place. On a constant exchange rate basis¹, revenue decreased by £3.2m to £197.8m (2022: £201.0m).

1. Constant exchange rates: figures at constant exchange rates have been calculated using the average exchange rates in effect for the corresponding period in the relevant comparative year.

Financial position

The Group's net debt (excluding leases) decreased by £3.3m during the year to £24.3m (31 December 2022: £27.6m). The Group invested £3.0m in the new Vietnam factory to provide additional capacity, and a further £2.2m on deferred acquisition consideration. Leverage has reduced in line with Board expectations.

Acquisitions

Post period end, on 22 January 2024, the Group acquired Norwegian distributor, A-Optikk AS, for a nominal sum. This acquisition marks a resumption of strategic acquisitions which increase the Group's vertical integration.  It will strengthen our Nordic business expansion plans and gives the Group a new distribution hub in the Norwegian market. 

Financial liquidity

In December, the Group exercised its option to extend its facilities with HSBC for 12 months to October 2025, keeping the same margin. The Board expects to further extend its facilities during the forthcoming year.

Outlook

The Group will continue to focus on delivering further operational efficiencies and reducing costs, while also reducing net debt and leverage. The new Vietnam facility is scheduled to come onstream in H1 2024, further enhancing the Group's competitive position. The Group remains focused on driving sales across all our operating businesses in 2024 and continuing to develop Group synergies to enhance performance.  

Richard Peck, Chief Executive Officer commented:

"Whilst our revenue performance was affected by a soft market in December, I am encouraged that our focus on operational efficiencies in 2024 delivered an improvement in our margins. The Group has also reduced its net debt while investing in significant additional manufacturing capacity for the future, with our new Vietnam facility coming onstream in H1 2024. Having further strengthened the balance sheet and extended the maturity of our financing facilities, I look forward to driving sales in 2024, whilst continuing our programme of improving operational efficiency and continuing to develop Group synergies to enhance our performance."

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").

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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" (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: 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 products. 

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. Its distribution network covers over 80 countries and reaches approximately 75,000 points of sale.

More information is available at: www.INSPECS.com