REG - Induction Healthcare - Audited Final Results
28/11/2022 07:00
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RNS Number : 7369H Induction Healthcare Group PLC 28 November 2022
Induction Healthcare Group PLC
("Induction", the "Company", or the "Group")
Audited Final Results
Induction (AIM: INHC), a leading digital health platform driving
transformation of healthcare systems worldwide, announces its audited final
results for the year ended 31 March 2022.
Financial Highlights
Metric 2022 2021 Restated
Total proforma revenue(1) £12.1m £1.5m
Non-Cash IFRS 3 Revenue adjustment(1) (£4.2m) (£0.1m)
Revenue from Contracts with Customers £7.9m £1.4m
Gross Profit £5.0m £0.7m
Loss for the year £8.4m £7.6m
Adjusted EBITDA(2) £0.0m £(4.1m)(3)
· Under the provisions of IFRS 3, a Fair Value adjustment is applied to
acquired deferred revenue as a part of acquisition accounting. This adjustment
reduces reported total revenue recognised from customer contracts by £4.2m
(2021: £0.1m).
o Increased revenue from contracts with customers is up 464% to £7.9m
(2021: £1.4m)
· Adjusted EBITDA(2) post IFRS 3 fair value adjustment of £0
(Break-Even) (2021: £(4.1)m restated(3))
· Annually Recurring Revenue ('ARR(5)') grew to £13.5m (2021: £2.0m)
taking into account the multi-year renewal of NHS England Attend Anywhere
contracts post period end.
o NHS England contract renewals: £6.6m ARR, which was ahead of management
expectations
o Majority of NHS England Attend Anywhere contracts moved from one year to a
multi-year term.
o The Group delivered organic ARR growth of 100% year on year (£4m (2021:
£2m))
· £7.5m cash as at 31 March 2022 (2021: £2.5m)
Operational Highlights
· £25 million fundraise through a placing of 35,714,285 new Ordinary
Shares
o Completion of the acquisition of Attend Anywhere Pty Ltd in June 2021 for
a cash consideration of £16.4 million plus the issue of 14,285,714
consideration shares with a value of £9.0m
· Induction Zesty contract win with South West London integrated care
system ("ICS"), one of the first ICS led procurements for digital patient
services in England
· 100% year-on-year growth for Induction Zesty
· DWP Contract to support the virtualisation of the UK benefits system
using Induction Attend Anywhere, the first contract outside of a healthcare
setting
· Induction AA national contract renewals with NHS Scotland and NHS
Wales
Post period end highlights
· Appointment of Christopher Samler as Non-Executive Chairman
· Successful contract renewals with 94% of existing English NHS
customers for Induction Attend Anywhere, which secured 86% of group recurring
revenues by value
· Non-exclusive Software Reseller Agreement signed with System C
Healthcare Limited for Induction Zesty
James Balmain, CEO of Induction Healthcare, said: "The global digital health
market is predicted to grow by 23.31% to US$7,844m in 2025(4) and Induction's
market segment is maturing rapidly, driven by an acute need for digital
transformation in hospitals around the world.
"We have made strong growth in FY22 and a key focus for the Group following
the acquisition of Attend Anywhere Pty Ltd was the renewal of Induction Attend
Anywhere contracts throughout the UK, of which we have been very successful
with many NHS Trusts choosing to renew for two or three years. We have
continued to work alongside existing health providers to deliver results and
our high margin and scalable SaaS operation remains the core driver of the
business. In the period we also achieved record ARR and retain a strong cash
position of £7.5m following the placing and acquisition.
"As the world recovers from the pandemic, the pace of change is creating
significant opportunities for companies in our sector - Induction is well
positioned to capture global market share in the coming years."
Annual Report and Accounts and Notice of AGM
The Annual Report and Accounts and notice of AGM will be available later this
morning on the Company's website;
https://inductionhealthcare.com/investors/financial-reports-and-publications/
(https://inductionhealthcare.com/investors/financial-reports-and-publications/)
.
Copies will be posted to shareholders in due course.
(1) Total pro-forma revenue is stated before the application of IFRS3 being a
fair value adjustment relating to the deferred revenue acquired as part of the
Attend Anywhere Pty Limited acquisition in June 2021 and the acquisitions of
Zesty Limited (June 2020) and Horizon Strategic Partners Limited (November
2019), giving pro-forma recognised revenue of £12.1m (2021: £1.5m). After
applying this non-cash adjustment, recognised revenue from customer contracts
for the year is £7.9m (2021: £1.4m restated).
(2) Adjusted EBITDA is EBITDA (Loss £5.8m) adjusted for exceptional items
(+£0.5m), share based payment adjustments (+£0.6m) and other non-cash items
(+£0.4m), and application of IFRS 3 relating to fair value adjustments
(+£4.2m) arriving at pro-forma Adjusted EBITDA for the year £0.0m (2021:
£(4.1)m). Refer to the Financial Review for further details.
(3) Adjusted EBITDA for the year ended 31 March 2021 has been restated to take
into account the effects of share-based payments and the impact of the
application of IFRS 3 in the prior period. Refer to Note 6 in the Consolidated
Financial Statements for further details on the prior period
adjustment.
(4) Source: "Global Virtual Healthcare Market, Cumulative Impact of COVID-19",
p31
(5) Annual Recurring Revenue ("ARR") is defined as annualised contracted
Software-as-a-Service ("SaaS") fee. ARR is calculated as the annually
recurring licence fees from contracts existing at 31 March 2022 that expire on
1 April 2022 or later. It represents the annualised value of the recurring
revenue base that is expected to be carried into future periods, and its
growth is a forward-looking indicator of reported recurring revenue growth.
ARR differs from recognised revenue due to the timing of revenue recognition,
which includes amounts for partial years based on contract start dates,
whereas ARR is an annualised amount. Recognised revenue also includes
non-recurring non-SaaS fees.
(6) Restated balances relate to Revenue from Contracts with Customers -
reducing recognised revenue from £1.5m to £1.4m, Gross Profit - reducing
from £0.8m to £0.7m, Loss for the year - increasing from £7.5m to £7.6m
and Adjusted EBITDA - reducing from (£4.0m) to (£4.1m)
ENQUIRIES
Induction Via Walbrook PR Ltd: induction@walbrookpr.com
James Balmain, Chief Executive Officer
Guy Mitchell, Chief Financial Officer
Singer Capital Markets (Nominated Adviser and Broker) +44 (0)20 7496 3000
Philip Davies / Kailey Aliyar
Walbrook PR Ltd induction@walbrookpr.com
Paul McManus / Alice Woodings Mob: +44(0)7980 541 893 / +44 (0)7407 804 654
About Induction - www.inductionhealthcare.com
(http://www.inductionhealthcare.com)
Induction (AIM: INHC) Induction delivers a suite of software solutions through
a single integrated platform that transforms care delivery. Our system-wide
applications help healthcare providers and administrators to deliver care at
any stage remotely as well as face-to-face - giving the communities they serve
greater flexibility, control and ease of access. Purpose-built for integration
with leading Electronic Medical Record (EMR) platforms, our products offer
immediate stand-alone value that becomes even greater when integrated with
pre-existing systems.
Used at scale by national and regional healthcare systems, as well non-health
government services, our applications are relied upon by hundreds of thousands
of clinicians and millions of patients across almost every hospital in the
British Isles.
Chair Statement
I am delighted to have recently joined the Induction leadership team following
a successful year for the Group. The global COVID-19 pandemic has
significantly accelerated the shift, that was already underway, towards
digitising care delivery. Throughout the world, providers and patients expect
greater flexibility in all aspects of their life, including in the way they
deliver and receive care. Induction is at the heart of this transformation.
Induction delivered a record year for trading in FY22, driven mainly by the
acquisition of Attend Anywhere, leading to substantial increases in both
revenue and contracted ARR (Annually Recurring Revenue). Equally, excluding
the effect of the Attend Anywhere acquisition, the Group delivered organic ARR
growth of 100% year on year (£4m (2021: £2m)). The Group made a loss before
tax of £(9.6)m (2021: £(8.1)m restated).
The increased losses incurred reflect the Group's continued investment to
allow it to scale and grow ARR and revenue in future years. In addition,
following the placing to raise £25m in June 2021, net cash as at 31 March
2022 improved substantially from £2.5m to £7.5m. Following strong renewals
of NHS England contracts for Induction Attend Anywhere in March 2022, and some
of these contracts renewing and paying more than 1 year in advance, the
Group's cash position has further improved post-period end.
The Attend Anywhere acquisition provided the business with national scale and
a strong market position in an area of prominent growth and investment. In
February 2022, NHS England issued a delivery plan(7) to tackle the backlog of
elective care and our leading products, Induction Zesty and Induction Attend
Anywhere, are well placed to support this initiative with their strong market
positions in the UK. However, the backlog of waiting times in elective care
following the COVID-19 pandemic is not confined to the NHS and represents an
opportunity for Induction globally. We are well positioned to help ease these
global stresses by integrating Induction products into existing healthcare
systems - the precise strategic approach represents an immediate focus for the
Board.
It is a particularly exciting, albeit challenging, time for Induction and for
the executive team and Board - the demand for our products, both in the UK and
globally has never been stronger and the company, the management team and the
Board have to evolve to meet this challenge. Induction is a small, relatively
fast growth business with many of the growing pains associated with scale up.
As we grow we will need to ensure that we have the products, systems and
internal processes that meet our customers' and management's needs. Above all,
we will need to attract and retain high quality and experienced people at
every level in order to ensure that we hit our commitments to our
shareholders. In a tight labour market, particularly in our field of digital
expertise, this is challenging.
I look forward to working with James and the whole Board as we deliver on our
promises and build Induction into the digital healthcare platform of choice. I
also look forward to working closely with you, our stakeholders, as we seek to
build on the value of your investment - I anticipate speaking with many of you
over the coming months.
Christopher Samler
Non-Executive Chairman
28 November 2022
(7)
https://www.england.nhs.uk/coronavirus/wp-content/uploads/sites/52/2022/02/C1466-delivery-plan-for-tackling-the-covid-19-backlog-of-elective-
(https://www.england.nhs.uk/coronavirus/wp-content/uploads/sites/52/2022/02/C1466-delivery-plan-for-tackling-the-covid-19-backlog-of-elective-%20care.pdf)
care.pdf
(https://www.england.nhs.uk/coronavirus/wp-content/uploads/sites/52/2022/02/C1466-delivery-plan-for-tackling-the-covid-19-backlog-of-elective-%20care.pdf)
CEO Statement
31 March 2022 saw the end of a positive year for the Induction Group. We
delivered on all our key financial metrics, ending the period in line with
market expectations.
This performance was mainly driven by the acquisition of Attend Anywhere Pty
Ltd ("Induction Attend Anywhere"), completed in June 2021, adding £11m of ARR
and £1.1m of profit before tax(8).
Revenue increased to £7.9m (2021: £1.4m (restated)), and although the Group
recorded a loss before tax of £9.6m (2021: £8.1m (restated)), this is as a
result of our deliberate continued investment in key areas of the business, as
well as integrating Attend Anywhere.
A significant proportion of Induction Attend Anywhere revenues are generated
from our contracts with NHS England. Immediately post-acquisition, Induction
Attend Anywhere held contracts with 172 English NHS trusts - all of which
expired in March 2022. This presented obvious risk to the group, so we were
delighted to renew contracts with 94% of existing English NHS customers post
period end, which secured 86% of group recurring revenues by value.
The majority of FY23 NHS England contracts for Induction Attend Anywhere were
renewed on either a two or three year term, de-risking group recurring
revenues moving forwards.
In November 2021 we won a contract to supply the Department of Work and
Pensions (DWP) through our partner Involve Visual Collaboration Limited
("Involve") to support the virtualisation of the UK benefits system using
Induction Attend Anywhere. Whilst we are exploring the future potential for
the Induction Attend Anywhere platform in other non-health public sector
settings, we are mindful that our focus is in healthcare.
FY22 was a challenging year for our Induction Zesty patient engagement
platform. Existing customers relied heavily on Induction Zesty during the
pandemic, however new business wins fell short of pre-pandemic forecasts as
NHS hospitals were understandably pre-occupied with treating COVID-19 cases.
I am pleased to report, however, a positive shift in market sentiment as
health systems around the world are now focused on post-COVID recovery.
Induction Zesty is increasingly playing a critical role in reducing elective
waiting lists, a key economic and political focus. Contracted ARR more than
doubled year on year to £1.5m, with much of this growth occurring in the last
quarter of FY22. There has been significant investment during the year in
Induction Zesty capabilities and further development planned and we are
confident Induction Zesty will deliver continued growth in FY23, despite a
challenging economic and political environment.
Our market focus
We remain focused on ambulatory patients in hospitals - outpatients. We
continue to see consolidation and growth opportunities in secondary acute,
specialist tertiary, community and mental health care settings.
Overall, we see attainable recurring annual revenues of between £30m and
£35m over the next 3 years across the British Isles for our current suite of
products.
We are, at heart, a healthcare company. We remain open to partnerships that
deliver our products, out of the box, into other public sector organisations,
but our core focus will remain within healthcare and we will avoid product
customisations for non-healthcare customers that take us away from our core
health product vision.
Annually recuring revenue
We remain committed to building our recurring revenue streams, via multi-year
licensing of our software products, operating a Software as a Service ("SaaS")
business model. Whilst we do generate non-recurring set-up revenue via our
implementation teams, we are resistant to building a large professional
services function, preferring to work with specialist partners.
Another key aspect of our strategy is to focus on the supply of software
products to existing healthcare providers, as opposed to directly employing
care teams and delivering care ourselves. In doing this, we are looking to
preserve the high margins and recurring revenue streams associated with a SaaS
business.
Video consultations - Induction Attend Anywhere
Whilst the COVID-19 pandemic created overnight demand for remote
consultations, we remain focused on ensuring Induction Attend Anywhere's value
proposition is both clearly communicated and successfully enhanced over the
coming months.
A key area of development during FY23 will be our customer success function
and we will continue to invest in the best talent available to drive this
important function forwards. With a large and disparate user base across NHS
England, it's vital we engage with customers to understand changing usage
requirements and close the loop efficiently between customers, product
development and delivery.
Microsoft Teams still remains our clear competitor within secondary care and
we will continue to invest in product development, prioritising new features
that widen the gap further between specialist consulting platforms (Induction
Attend Anywhere) and mainstream business conferencing applications (Teams,
Zoom). Integration into underlying EMR systems, via our HealthStream platform,
is a good example of this.
Digital patient engagement - Induction Zesty
As Patient Engagement Platforms gain increasing national strategic relevance
to the NHS, we are engaged in several key projects, both regionally and
nationally. We are seeing tangible evidence that read and write integrations
into hospital EMR systems (Cerner, System C) are a key selling point and
direct value driver - this 'integrated' strategy will continue to be a focus
for Induction Zesty and our other product lines.
One of the current digital initiatives at many NHS hospitals is patient
initiated follow up booking ("PIFU"). It's estimated that as many as 50% of
hospital follow up appointments allocated to patients are unnecessary. PIFU
workstreams are aiming to allow patients to book only if they need an
appointment, supported by ongoing remote monitoring to effectively manage
clinical risk. Induction Zesty has a complex rules engine that supports this
emerging workflow, creating a unique selling point for the platform. Working
alongside Cerner and Palantir, we expect to launch a fully automated PIFU
platform during FY23. Our strategy is to lead the market on a fully automated
offering, differentiating our product from other request based manual
offerings.
There is clear potential synergy between Induction Attend Anywhere and
Induction Zesty. We are moving forwards with our cross-sell and upsell
strategies and will continue to focus our development effort on tighter
integration between these two products.
Our clinical apps business
Our clinical apps, Induction Guidance and Induction Switch, continue to enjoy
user growth and increasing engagement, ending the year on 288k and 289k users
respectively. ARR grew by 8% for Induction Guidance, supported by a high
contract renewal rate amongst our 122 NHS hospital customers. UK market
growth, however, has proved more challenging for Induction Guidance.
Given the relatively minor contribution our clinical apps make to overall
group revenues and the solid traction we are seeing with our patient facing
products, we are carefully considering the role of clinical apps within the
group moving forwards.
An enterprise 'flexible care' platform, fit for global scale
There is an emerging health IT product category that aims to put the patient
in the centre of their care delivery. Currently this category contains several
product types including Telemedicine, Patient Portals and Virtual Wards. The
core capabilities of each of these overlap to a large degree. Our product
vision is based on the view that, as demand for digital services rises, these
product types will converge into enterprise platforms that deliver value end
to end over the care pathway.
We continue to execute our buy, build and partner strategy with this product
vision in mind.
International growth
The global digital health market is predicted to grow from US $2.8bn in 2021
to US $7.8bn in 2025(9), as the need for more flexible healthcare options
become a necessity due to user behaviour changes and organisational efficiency
requirements.
We see growth potential in new geographical markets and have set this as a
major strategic focus for FY23. Given our scale within the UK NHS, now is a
good time to market our products in new territories. Most developed (and many
developing) health economies have the same post- pandemic challenges as the
UK, especially those around rapidly increasing hospital waiting lists.
Our strategic pillars for growth
· Consolidate our domestic position - we will continue to invest in and
refine our sales, commercial, delivery and customer success capabilities -
ensuring we stay ahead of competitors and deliver strong organic ARR growth.
· Grow our domestic and international channels to market - Partners are
playing an increasingly important role in our growth story. Our partnership
with Cerner, for example, will deliver more than 50% of Induction Zesty's
growth during FY23. As we scale, we attract more partners, creating positive
momentum that further widens our market reach and enhances our product
capabilities. The recently announced (post-period end) VAR agreement with
System C further supports our strategy.
· Invest in and deliver our integrated product strategy - As a product
company, a core tenant of our strategy is a single, enterprise product that
leads the growing digital patient engagement segment.
· Acquisitions and partnerships to drive international expansion - As a
rapidly growing but still early-stage sector, our market is fragmented, with
many small and medium sized companies in each of the major world markets. We
see acquisitions and partnerships with VARs and other similar providers as a
highly valid method to enter new markets with scale and pace.
People
We continue to invest in talent and are more focused than ever on building our
company culture. As companies 'exit lockdown', we are working hard to define a
rewarding and inclusive hybrid working environment. During the year we began
the process of rolling out a group wide performance management and incentive
scheme, ensuring everyone at Induction is aligned to the future success of the
Group.
Under the leadership of Dave Williams, our Group Chief Product and Technical
Officer (previously at Just Eat), we completed a global re-organisation of our
four product and technology teams around the world, who account for over 80%
of the Group total headcount. Key managers now have global, multi-product
responsibility, removing any sense of silos by product and we are now better
placed to grow our business internationally and integrate future acquisitions.
More recently we've attracted a highly experienced Chief Growth Officer, Paul
Tambeau, who is leading our sales, marketing, customer success and
international development teams.
Post-year end we also saw Chris Spencer step down from his position as Chair.
I would like to thank Chris for the great support he has provided to bring the
Group to the strong position it is in today. We welcome Christopher Samler
into the role and I look forward to working alongside him and learning from
him and his valuable expertise as we drive the business forward.
Outlook
It's been a transformational year for Induction and we remain energised about
the future prospects for the Group. Our market segment is maturing rapidly,
driven by an acute need for digital transformation in hospitals around the
world.
Our steadfast focus on working alongside existing health providers as opposed
to directly competing with them in a more disruptive manner is delivering
results. A high margin and scalable SaaS operation remains our core driver as
a business.
As the world recovers from the pandemic, the pace of change is creating
significant opportunities for companies in our sector - Induction is well
positioned to capture global market share in the coming years.
James Balmain
Chief Executive Officer
28 November 2022
(8) Profit before tax contributed by Induction Attend Anywhere is taken after
IFRS 3 adjustments related to deferred revenue of £4.1m related to the
acquisition. Refer to the Financial Review on page 9 for further information
on these adjustments.
(9) Source: "Global Virtual Healthcare Market, Cumulative Impact of COVID-19",
p31
Financial review
Revenue
For the year ended 31 March 2022, revenue from customer contracts, post IFRS 3
fair value adjustments, was
£7.9m (2021: £1.4m, restated(10)).
Under IFRS, deferred revenue is required to be fair valued. This is a non-cash
movement of deferred revenue to goodwill on the group balance sheet and does
not affect future years. The impact of this in the year was £4.2m (2021:
£0.1m). Had the IFRS 3 adjustment not been applied Group revenues would have
been £12.1m on a pro-forma basis for the year (2021: £1.5m).
Reported revenue from customer contracts for Induction Zesty grew to £1.5m
(2021: £0.8m (restated)(10)). The principal driver for this growth has been
the drive to digitise healthcare and booking portals in NHS England.
Revenues for Induction Attend Anywhere, for the 10 months post acquisition,
were £5.7m post the IFRS 3 deferred revenue fair value adjustment and £9.8m
on a pro-forma basis.
Reported revenue from customer contracts for Induction Guidance has remained
steady at £0.6m (2021: £0.6m). Growth has been slower in FY22 than expected.
Contracts acquired as part of the Induction Attend Anywhere acquisition for
NHS England and NHS Scotland were one-year contracts which were due for
renewal at 31 March 2022.
NHS Scotland renewed for 1 year and 94% of trusts in NHS England renewed, many
renewing for periods of 2 or 3 years. To secure the multi-year deals small
discounts were agreed resulting in revenue renewals by value of 86%.
To further illustrate the in-year effect of IFRS fair value adjustments, at
the start of FY23, contracted revenue for Induction Attend Anywhere, post the
NHS Scotland and NHS England renewals was £11.6m, despite renewals for NHS
England contracts at 86% of the prior year value.
In November 2021 a contract was agreed with the Department of Work and
Pensions (DWP), this was a contract for two years with two subsequent 12-month
extensions built in (a 2+1+1 deal) for up to £1.3m of annual revenues.
Induction Switch user numbers have increased in year although there has been
limited sales traction within the year. The carrying value of Switch is
currently £nil and the Board determined that the value of goodwill and
intangible assets should remain at this value.
Revenue from customer contracts, post IFRS 3 adjustments in respect of fair
value, is as follows:
2021
2022 £'000
£'000 (restated(11))
United Kingdom 7,785 1,190
Europe 13 13
United States 18 23
Rest of World 92 135
7,908 1,361
(10) Reported revenue for Zesty for the year ended 31 March 2021 has been
restated to take into the account the application of IFRS 3 deferred revenue
fair value adjustments. Please refer to Note 6 for further information.
(11) Revenue for the year ended 31 March 2021 has been restated to take into
the account the application of IFRS 3 deferred revenue fair value adjustments.
Please refer to Note 6 for further information.
Pro-Forma revenue from customer contracts (pre the IFRS 3 adjustments above):
2022 2021
£'000 £'000
United Kingdom 11,994 1,342
Europe 13 13
United States 18 23
Rest of World 92 135
12,117 1,513
The following table reconciles recognised revenue and pro-forma revenue:
31 March 2021
31 March 2022 £'000
£000 (restated(10))
Revenue 7,908 1,361
Fair value adjustments on contract liabilities 4,209 152
Pro-Forma revenue 12,117 1,513
Both Induction Guidance and Induction Switch form our clinical apps business
and whilst user growth on both platforms has been strong, the board are
considering the role these apps play in generating significant group revenues
moving forwards, given the strong traction we are seeing from our patient
facing platforms Induction Attend Anywhere and Induction Zesty.
Operating Costs
Development expenses increased to £5.9m (2021: £1.9m). This relates to the
increase in headcount and operating costs following the acquisition of
Induction Attend Anywhere, a full year of trading post-acquisition of
Induction Zesty, and continued investment in the development team particularly
for Induction Zesty. Development costs are presented net of capitalised
software development costs. The Group capitalises software development costs
which depreciate over three to five years, resulting in capitalisation of
£3.1m (2021: £1.7m).
Administrative expenses increased to £7.3m (2021: £4.9m), (restated)12).
Again, this relates to the acquisition of Induction Attend Anywhere and full
year trading of Induction Zesty. It also reflects the expansion of the senior
management and leadership functions of the group, fundraise and
acquisition-related transaction costs of £0.5m (2021: £0.4m), and
share-based payment charge of £0.6m (2021: £0.7m).
Sales and marketing expenses increased to £1.2m (2021: £0.6m). This reflects
the investment in the group-wide commercial functions of the Group to acquire
further market share.
Excluding the results of Induction Attend Anywhere, development costs for the
Group were £4.2m (2021: £1.9m), again reflecting the investment in the
development team for Induction Zesty. Administration costs were £6.1m (2021:
£4.9m (restated12)), reflecting the expansion of the senior management and
leadership functions of the Group. Sales and marketing costs were £1.2m
(2021: £0.6m) and relates purely to investment in group-wide commercial
functions.
Reported loss before tax for the year was £9.6m (2021: £8.1m restated).
Core performance measures
Core performance measures are alternative performance measures (APM) which are
adjusted and non-IFRS measures. These measures cannot be derived directly from
our consolidated financial statements. We believe that the following non-IFRS
performance measures, when provided in combination with reported performance,
will provide investors, analysts and other stakeholders with helpful
complementary information to better understand our financial performance and
our financial position from period to period. The measures are not
substitutable for IFRS results and should not be considered superior to
results presented in accordance with IFRS.
We considered the adjusting items, including explanations of why they were
either not related to the underlying performance of the business or impacted
the comparability of the Group's results year-on-year. We also reviewed the
FRC's guidance, and considered adjusting items used by the Group's peers and
have concluded that the appropriate disclosure of those items has been
included.
The Group incurred several exceptional items during the year as per the table
below which shows adjusted operating profit /(loss) before depreciation,
amortisation, impairment, share based payments and exceptional costs of
£(4.2)m (2021: £(4.3)m (restated(12)).
31/03/2021
31/03/2022 £'000
£'000 (restated(12))
Loss before tax (9,574) (8,117)
Add / (Less): Net finance expense / (income) 28 2
Add: Impairment losses - 1,366
Add: Depreciation and amortisation 3,785 1,356
Operating loss before depreciation, amortisation and impairment (5,761) (5,393)
Adjusted for exceptional and non-cash costs:
- Acquisition and fundraise related transaction costs(1) 531 375
- Other exceptional items(3) 404 -
- Share based payments (non-cash)(4) 613 6,984
Adjusted Operating profit/(loss) before, depreciation, amortisation, (4,213) (4,320)
impairment and exceptional costs ("Adjusted EBITDA")
Pro-forma IFRS 3 adjustment: - Fair value adjustments on 4,209 243
contract liabilities2 and contingent consideration
Pro-Forma Adjusted EBITDA (4) (4,077)
1. These costs are directly attributable to business combinations and
are excluded from underlying performance as they would not have been incurred
had the business combination not occurred. They do not relate to the
underlying trading of the Group and are added back to aid comparability of the
Group's profitability year-on-year.
2. As a result of applying IFRS 3 in accounting for acquisitions, the
Group is required to determine the fair value of all acquired assets and
Liabilities at the date of acquisition. This includes determining the fair
value of the contract liabilities ("deferred income") of the acquiree. The
fair value of the contract liabilities (and therefore revenue subsequently
recognised) was less than the amounts recognised by Attend Anywhere, Zesty and
Horizon Strategic Partners on a standalone basis, resulting in a fair value
adjustment of £4.2m related to Attend Anywhere and Zesty (2021: £0.2m fair
value adjustment related to Zesty and Horizon Strategic Partners). This is
excluded from pro-forma adjusted EBITDA on the basis that it is non-cash and
is not representative of the trading performance of the business in the period
and this exclusion ensures comparability. Pro-Forma adjusted EBITDA is also
adjusted to add back £Nil (2021: £0.9m) fair value movement in contingent
consideration.
3. Includes items related to one-time non-recurring executive and senior
management team restructuring costs (£366k) and other one-off items (£38k).
Senior management team restructuring costs are added back to Adjusted EBITDA
due to the fact that these are non-recurring and not representative of the
underlying performance of the Group.
4. Comparative restated to include share-based payments. Share-based
payments are excluded from Adjusted EBITDA due to the fact that these are
non-cash and therefore not representative of the underlying trading of the
group.
(12) This has been restated to take into the account the application of IFRS 3
deferred revenue fair value adjustments and exclusion of share based payments
as a non-cash item. Please refer to Note 6 for further information.
Adjusted EBITDA for the year was £4.3m (2021: £(4.3)m (restated13)). Before
allowing for the application of IFRS 3 pro-forma Adjusted EBITDA) for the year
was £0.0m (2021: £(4.1)m (restated)). It is important to recognise the
difference this adjustment makes to the trading results of the Group as it is
non-cash accounting adjustment only.
Cash
The Group's cash position as at 31 March 2022 was £7.5m (2021: £2.5m). The
operating cash outflow was focused
on growing commercial teams particularly around sales and marketing headcount
and also marketing campaigns, events and supporting materials. These costs are
investments in acquiring future market share and are incurred ahead of future
revenues as the benefit will be seen in future years. In addition, while we
capitalise a large portion of our development costs, shown in investing
activities, there is a portion that is not capitalised and is also included in
operating cash outflows above as a revenue expense. Again, the benefit of this
investment will be realised in future years as we deliver our expanded product
functionality to more customers. Investment outlay of £16.8m (2021: £3.7m)
includes £13.5m for the acquisition payment (net of cash acquired) for
Induction Attend Anywhere and £3.1m for capitalised development costs (2021:
£1.7m).
The Directors regularly monitor cash usage and forecast cashflows to ensure
that the projected business needs are supported, and future acquisitions can
be delivered as part of the overall strategy to grow the business. The
liquidity of the Group is sufficient to meet the cash needs of the business as
they become due, and management have performed a going concern analysis with
no material uncertainties noted (refer to note 1.2 in the consolidated
financial statements for further information).
31/03/2022 31/03/2021
£'000 £'000
Operating cash flows (2,061) (4,012)
Cash balance 7,496 2,472
Assets and Liabilities
Goodwill as at 31 March 2022 of £19.8m (2021: £9.4m) and Intangibles of
£20.9m (2021: £5.9m) are derived from three acquisitions, Attend Anywhere
Pty Ltd during FY22 and Zesty Limited and Horizon Strategic Partners Limited
in the prior years.
The carrying value of Induction Switch goodwill and intangible assets has been
fully impaired by £1.4m in the prior year.
All acquisitions have been valued for IFRS 3 purposes by external consultants
resulting in the investment being recognised among the fair value of net
assets acquired, including deferred revenue.
31/03/2022 31/03/2021
£'000 £'000
Goodwill 19,758 9,373
Intangible assets 20,962 5,884
Trade and other receivables have increased significantly in the year due and
is reflective the overall increased trading during the year. The balance
consists of Induction Attend Anywhere invoices for services performed unpaid
at 31 March 2022.
There is an increase in Trade and other payables in the year due to increased
operating costs and accruals following the acquisition of Induction Attend
Anywhere. Costs relate to hosting, partner commissions, marketing programmes
and professional fees.
Deferred tax liabilities have increased significantly during the year. This is
driven by a £3.7m Liability recognised in relation to fair value adjustments
of intangible assets acquired in business combinations.
Current tax receivable has increased to £1.2m (2021: £0.4m) and relates to
R&D tax credits due for current and prior years. These amounts are
expected to be received within the next 9 months once all tax claims are
submitted to HMRC. Tax payable relates to taxes due by Induction Attend
Anywhere in Australia.
Guy Mitchell
Chief Financial Officer
28 November 2022
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2022
2022 2021
£000 £000
Restated*
Revenue from contracts with customers 7,908 1,361
Cost of sales (2,920) (636)
Gross profit 4,988 725
Sales and marketing expenses (1,209) (590)
Administrative expenses (7,333) (4,900)
Development expenses (5,991) (1,893)
Impairment losses - (1,366)
Loss from operations (9,545) (8,024)
Finance income 1 3
Finance expense (30) (5)
Fair value losses on contingent consideration - (91)
Loss before tax (9,574) (8,117)
Tax credit 1,140 503
Loss for the year (8,434) (7,614)
Exchange gains/(losses) arising on translation on foreign operations 801 (9)
Reclassified to profit and loss during the year 9 (7)
Other comprehensive income for the year, net of tax 810 (16)
Total comprehensive income (7,624) (7,630)
Loss per share attributable to the ordinary equity holders of the parent
Profit or loss
Basic (0.10) (0.19)
Diluted (0.10) (0.19)
Consolidated Statement of Financial Position
As at 31 March 2022
2022 2021
£000 £000
Assets
Non-current assets
Property, plant and equipment 244 15
Intangible assets 20,962 5,884
Goodwill 19,758 9,373
Deferred tax assets 1,540 880
Total non-current assets 42,504 16,152
Current assets
Contract assets 787 155
Trade and other receivables 3,349 896
Current tax receivable 1,240 447
Cash and cash equivalents 7,496 2,472
Total current assets 12,872 3,970
Total assets 55,376 20,122
Liabilities
Non-current liabilities
Contract liabilities 326 187
Deferred tax liability 5,851 1,048
Other financial liabilities 128 -
Total non-current liabilities 6,305 1,235
Current liabilities
Trade and other payables 3,365 1,396
Contract liabilities 2,580 1,027
Current tax payable 789 -
Other financial liabilities 72 -
Total current liabilities 6,806 2,421
Total liabilities 13,111 3,656
Net assets 42,265 16,466
Equity attributable to equity holders of the parent
Share capital 460 210
Share premium reserve 41,665 18,432
Merger reserve 20,206 10,879
Foreign exchange reserve 801 (9)
Other reserves 1,405 792
Retained earnings (22,272) (13,838)
Total equity 42,265 16,466
Consolidated Statement of Changes in Equity
As at 31 March 2022
Foreign
Share Share premium Merger exchange Other reserves Retained earnings Total
capital £000 reserve reserve £000 £000 equity
£000 £000 £000 £000
At 31 March 2020 and 1 April 2020 148 18,432 (10) 7 94 (6,224) 12,447
Comprehensive income for the
year
Loss for the year - - - - - (7,614) (7,614)
Other comprehensive loss for the year
- - - (16) - - (16)
Total comprehensive income for the year
- - - (16) - (7,614) (7,630)
Transactions with owners,
recorded directly in equity
Issue of shares as consideration fora business combination
62 - 10,953 - - - 11,015
Share issue costs - - (64) - - - (64)
Equity settled share-based payments
- - - - 698 - 698
Total contributions by and distributions to owners
62 - 10,889 - 698 - 11,649
At 31 March 2021 and 1 April 2021 210 18,432 10,879 (9) 792 (13,838) 16,466
Comprehensive income for the
year
Loss for the year - - - - - (8,434) (8,434)
Other comprehensive income for the year
- - - 810 - - 810
Total comprehensive income for the year
- - - 810 - (8,434) (7,624)
Transactions with owners,
recorded directly in equity
Issue of ordinary shares 179 24,821 - - - - 25,000
Issue of shares as consideration for
a business combination 71 - 8,929 - - - 9,000
Equity settled share-based
payments - - - - 613 - 613
Share-issue costs - (1,190) - - - - (1,190)
Reclassification of equity - (398) 398 - - - -
Total contributions by and distributions to owners
250 23,233 9,327 - 613 - 33,423
At 31 March 2022 460 41,665 20,206 801 1,405 (22,272) 42,265
Consolidated Statement of Cash Flows
For the year ended 31 March 2022
2022 2021
£000 £000
Cash flows from operating activities
Loss for the year (8,434) (7,614)
Adjustments for
Depreciation of property, plant and equipment 28 7
Amortisation of intangible fixed assets 3,785 1,340
Impairment losses on intangible assets - 1,366
Finance income (1) (3)
Finance expense 30 5
Fair value adjustments on financial liabilities - 91
Share-based payment expense 613 698
Net foreign exchange loss/(gain) - 3
Income tax charge/(credit) (1,146) (503)
3,309 3,004
Movements in working capital:
Decrease/(Increase) in trade and other receivables and contract assets 1,661 (485)
Increase in trade and other payables and contract liabilities 1,115 1,085
Interest received 1 3
Interest paid (30) (5)
Income taxes received 458 -
Income taxes paid (141) -
Net cash used in operating activities (2,061) (4,012)
Cash flows from/(used in) investing activities
Acquisition of subsidiary, net of cash acquired (13,486) (1,987)
Purchases of property, plant and equipment (256) (5)
Payment of software development costs (3,090) (1,660)
Net cash used in investing activities (16,832) (3,652)
Cash flows from/(used in) financing activities
Issue of ordinary shares 25,000 -
Proceeds on other financial liabilities 210 -
Share issue costs (1,190) (64)
Repayment of bank borrowings - (501)
Payment of lease liabilities (12) -
Net cash from/(used in) financing activities 24,008 (565)
Net cash increase/(decrease) in cash and cash equivalents 5,115 (8,230)
Cash and cash equivalents at the beginning of year 2,472 10,718
Exchange gains/(losses) on cash and cash equivalents (91) (16)
Cash and cash equivalents at the end of the year 7,496 2,472
NOTES TO THE YEAR END RESULTS
1. Basis of preparation
The financial information in these results has been prepared using the
recognition and measurement principles of International Accounting Standards,
International Financial Reporting Standards and Interpretations adopted for
use in the United Kingdom (collectively Adopted IFRSs). The principal
accounting policies used in preparing the results are those the Group has
applied in its financial statements for the year ended 31 March 2022.
The financial information set out above does not constitute the Group's
statutory information for the years ended 31 March 2022 or 2021, but is
derived from those accounts. The Group's consolidated financial information
has been prepared in accordance with accounting policies consistent with those
adopted for the year ended 31 March 2021. Statutory accounts for 2021 have
been delivered to the Registrar of Companies and those for 2022 will be
delivered following the Company's annual general meeting. The auditor has
reported on these accounts, their reports were unqualified and did not contain
statements under the Companies Act 2006, s498(2) or (3).
2. Going concern
In assessing the appropriateness of the going concern assumption, the Board of
Directors ("the Directors") has reviewed the ability to continue operating
over the period to 30 April 2024 ("the going concern period"). The Directors
have also reviewed other relevant information, together with considering
scenarios with adverse impacts across the Group's principal risks relating to:
revenue reductions from either non-renewals of major contracts with customers
or downward price pressures; non-materialisation of forecast sales to new
customers and delays in securing new contracts with customers resulting in
delayed cash inflows. These risks are further connected to macro-economic
conditions and the UK government's fiscal policy, in particular the funding
and support to the group's customers which are primarily NHS Trusts and other
government bodies. The Directors determined that the forecast period extends
to 30 April 2024 to take into account the operating cycle of the group, which
sees significant contract renewals in March 2024, with cash inflows received
in April 2024.
The Directors' cash inflows under the base case of going concern assessment
assumes all existing customer contracts with major customers will be renewed
when they come due within the forecast period at the same contract terms. It
also includes assumptions regarding growth in revenues due to new customer
contracts, and growth in revenues due to sales of new products to existing
customers. The base case going concern assessment cash outflows allows
investment in the full range of planned market and product development
activities, through increased employee-related and other spend to achieve
revenue targets over this forecast period.
The Directors have considered a severe but plausible downside scenario whereby
the Group is impacted by: reductions in revenue arising from either
non-renewals of some major customer contracts or downward price pressure;
non-materialisation of some forecast sales to new customers and three to
six-month delays in securing some contracts with new customers resulting in
delays in SaaS revenues and cash inflows, with associated reductions in
incremental costs directly linked to revenue generation. The severe but
plausible downside scenario has indicated that cash balances are their lowest
in March 2024 before increasing again in April 2024 in line with the Group's
operating cycle. At this low point, cash balances remain positive. Under a
more severe scenario, the Directors believe they can timeously respond to
decreases in cash inflows by taking mitigating actions to reduce costs. These
include but are not limited to; delays in hiring new employees; delays in
hiring new contractors; and reducing discretionary spend through, for example,
reducing professional and consulting expenditure and contractor costs.
In determining that there is no material uncertainty related to going concern,
the Directors have applied significant judgement regarding renewals of
existing contracts with major customers, in particular NHS customers. The
Directors have made this judgement after considering the UK budget
announcement in November 2022. Whilst there remains uncertainty as to the
specifics of the NHS funding plan following the budget announcement, the
Directors note that NHS funding generally was increased and there was a focus
on NHS efficiency, which the Group's products / services are designed to
assist with.
Therefore, the Directors believe that the judgement they have made is
appropriate based upon information available at that point.
After due consideration, the Directors have concluded that there is a
reasonable expectation that the Group and Company have adequate resources to
meet their liabilities as they fall due for the period to 30 April 2024, and
therefore these financial statements are prepared on a going concern basis.
3. Revenue
The following is an analysis of the Group's revenue for the year from
continuing operations:
2022 2021
£000 £000
Restated
Provision of software (including set-up services of £0.2m (2021: £Nil)) 7,388 1,188
Post-contract support and maintenance 217 73
Text message revenue 303 100
Total revenue from contracts with customers 7,908 1,361
Revenue from the provision of software of £7.4m is shown after IFRS 3 related
adjustments of £4.2m (2021: £1.4m (restated) after £0.2m of IFRS 3 related
adjustments to deferred income). This includes £0.07m related to Induction
Zesty (2021: £0.12m related to Induction Zesty and £0.03m related to
Induction Guidance). As a result of applying IFRS 3 in accounting for
acquisitions, the Group is required to determine the fair value of all
acquired assets and liabilities. This includes determining the fair value of
the contract liabilities ("deferred income") of the acquiree.
The following is an analysis of revenue by country of destination:
2022 2021
£000 £000
Restated
United Kingdom 7,785 1,190
Europe 13 13
United States 18 23
Rest of World 92 135
Total revenue from contracts with customers 7,908 1,361
Revenue from the United Kingdom of £7.9m is shown after IFRS 3 related
adjustments of £4.2m (2021: £1.4m (restated) after £0.2m of IFRS 3 related
adjustments.
The following is an analysis of revenue by product line. Attend Anywhere Pty
Ltd (Induction Attend Anywhere) was acquired on 9 June 2021, refer to Note 15
for further information. Zesty Limited (Induction Zesty) was acquired on 8
June 2020, see Note 16 for further information.
2022 2021
£000 £000
Restated
Induction Attend Anywhere 5,715 -
Induction Zesty 1,517 753
Induction Guidance 642 603
Induction Switch 34 5
7,908 1,361
Revenue from Induction Attend anywhere of £5.7m is shown after IFRS 3 related
adjustments of £4.1m. Revenue from Induction Zesty of £1.5m is shown after
IFRS 3 related adjustments) of £0.07m (2021: £0.8m (restated) after £0.12m
of IFRS 3 related adjustments). Revenue for Induction Guidance is £0.6m
(2021: £0.6m after £0.03m of IFRS 3 related adjustments).
The following represents the timing of revenue recognition:
2022 2021
£000 £000
Restated
Services transferred over time 7,595 1,196
Services at point in time 313 165
7,908 1,361
The following represents the transaction prices allocated to performance
obligations that are unsatisfied or partially satisfied at 31 March 2022, and
the timing of the recognition of revenue from these balances.
2022 2021
£000 £000
Within one year 985 1,027
More than one year 321 187
1,306 1,214
4. Expenses by nature
The following represents expenses incurred during the year, by nature:
2022 2021
£000 £000
Restated
Employee costs 7,859 5,123
Depreciation of property, plant and equipment 29 7
Amortisation of intangible assets 3,785 1,340
Impairment of goodwill and intangible assets - 1,366
Contractors' costs 2,366 1,103
Acquisition related transaction costs 423 375
Fundraise related transaction costs recognised in profit and loss 108 -
Professional and legal fees 459 359
Research and development expense capitalised (3,090) (1,660)
Share-based payment charge 613 698
Fair value adjustments on financial liabilities - 91
5. Employee benefit expenses
2022 2021
£000 £000
Employee benefit expenses (including directors) comprise:
Wages and salaries 5,735 3,583
Social security costs 551 414
Defined contribution pension cost 309 140
Share-based payment expenses 613 698
Other employee benefits 651 288
Total employee benefit expense 7,859 5,123
The monthly average number of persons, including the directors, employed by
the Group during the year was as follows:
2022 2021
No. of employees No. of employees
Development 40 23
Sales and Marketing 10 12
Delivery and Support 8 -
General and Administrative 19 6
Total Average FTE 77 41
The remuneration of the highest paid director was £0.5m (2021: £0.3m).
Included in other employee benefits is £Nil (2021: £0.03m) compensation for
loss of office paid to a former director of the group. Also included in other
employee benefits is a bonus of £0.4m (2021: £0.1m).
The Group operates a defined contribution pension plan which was put in place
in October 2018. The total expense relating to the plan in the year was £0.3m
(2021: £0.1m).
6. Tax expense
6.1 Income tax recognised in profit or loss
2022 2021
£000 £000
Current tax
Corporation tax expense 360 -
Prior year adjustment in respect of research & development tax credit (764) (446)
Total current tax (405) (446)
Deferred tax expense
Origination and reversal of timing differences (438) (116)
Prior year deferred tax movement (297) 59
Total deferred tax (735) (57)
Tax income on loss on ordinary activities (1,140) (503)
The reasons for the difference between the actual tax charge for the year and
the standard rate of corporation tax in the United Kingdom applied to losses
for the year are as follows:
2022 2021
£000 £000
Loss for the year (9,574) (8,117)
Tax at the standard rate of corporation tax of 20.13% (2021: 19%) (1,927) (1,561)
Research & development tax relief (292) -
Expenses not deductible for tax purposes 1,674 310
Share-based payments 123 124
Prior year adjustments - research and development tax relief (722) (386)
Prior year adjustments on deferred tax (297) -
Deferred tax not recognised 303 961
Other timing differences 109 (50)
Difference in overseas tax rates 328 -
Effective rate change (429) -
Total tax income (1,140) (503)
6.2 Current tax assets and liabilities
2022 2021
£000 £000
Current tax assets
R&D tax credit receivable 1,240 446
Current tax liabilities
Corporation tax liability in Australia (789) -
451 446
Current tax assets relate to research and development tax credits in respect
of 2 subsidiaries, for the years ended 31 March 2020, 31 March 2021 and 31
March 2022. The claim for the year ended 31 March 2020 was submitted to HMRC
and settled post-year end for one subsidiary.
6.3 Deferred tax balances
A deferred tax liability of £3.7m (2021: £0.8m) has been recognised in
relation to the fair value of intangible assets acquired in a business
combinations. A deferred tax liability of £1.05m has been recognised in
relation to the fair value adjustments to contract liabilities acquired in
business combinations. A deferred tax asset of £0.7m (2021: £0.8m) was
recognised in relation to unused tax losses acquired in business combinations.
This deferred tax asset was recognised only to the extent that there are
deferred tax liabilities available with the same tax authority and which will
be unwound in the same period as the deferred tax asset.
A deferred tax asset of £4.2m (2021: £2.8m) has not been recognised due to
uncertainty over future taxable profits in the relevant subsidiaries with tax
losses. The unrecognised deferred tax asset includes those in relation to tax
losses of £17m (2021: £14.6m). These amounts exclude amounts related to
Horizon Strategic Partners Limited, which is expected to generate profits and
for which a deferred tax asset of £0.05m (2021: £0.08m) has been recognised.
They also exclude those for Zesty Limited, where deferred tax assets have been
recognised in relation to the deferred tax liabilities for the intangible
fixed assets acquired through business combinations. A deferred tax asset of
£0.6m (2021: £0.8m) has been recognised for Zesty Limited.
7. Loss per share
7.1 Basic loss per share
2022 2021
£ £
From continuing operations attributable to the ordinary equity holders of the (0.10) (0.19)
Group
Total basic loss per share attributable to the ordinary equity holders of the (0.10) (0.19)
Group
7.2 Diluted loss per share
2022 2021
£ £
From continuing operations attributable to the ordinary equity holders of the (0.10) (0.19)
Group
Total diluted loss per share attributable to the ordinary equity holders of (0.10) (0.19)
the Group
7.3 Reconciliation of loss used in calculating loss per share
2022 2021
£000 £000
Loss attributable to the ordinary equity holders of the Group used in
calculating basic loss per
share and diluted loss per share:
From continuing operations (8,434) (7,614)
(8,434) (7,614)
7.4 Weighted average number of shares used as the denominator
2022 2021
number number
Shares in issue at the beginning of the period 42,050,728 29,626,201
Shares issued 35,714,285 -
Shares issued on business combination 14,285,714 12,424,527
Issued ordinary shares as at the end of the period 92,050,727 42,050,728
Weighted average number of ordinary shares used as the denominator in
calculating basic loss per
82,461,686 39,701,981
share
On 9 June 2021, the Group acquired Attend Anywhere Pty Ltd ("Attend Anywhere"
or "AA"). The consideration for the acquisition included the issue of
14,285,714 new ordinary shares.
As part of the transaction, the Group also completed a fundraise by issuing
35,714,285 new ordinary shares.
8. Business combinations during the year
Subsidiary Acquired
On 9 June 2021, Induction Healthcare Group plc acquired 83.5% of the share
capital of Attend Anywhere Pty Limited and 100% of the share capital of A.C.N.
167 231 307 PTY Ltd ("A.C.N."), which owns 16.5% of the share capital of
Attend Anywhere Pty Limited, thereby obtaining 100% control over Attend
Anywhere Pty Limited. Attend Anywhere Pty Limited owns 100% of the share
capital of Attend Anywhere Limited, a UK subsidiary.
The consideration included cash consideration of £16.4m, plus the issue of
14,285,714 new ordinary shares which had a fair value of £9m. This brings the
total consideration to £25.4m prior to transaction costs.
Attend Anywhere is a leading provider of video consultations in the UK
secondary care market, holding national contracts with NHS Scotland, NHS Wales
and the HSE in Ireland, alongside a number of regional contracts in England.
Attend Anywhere's proprietary technology, allows users to easily access and
use the video service via a common browser, without the need for plug-ins or
downloading a native app.
The Group's strategy is to build a leading and future-forward integrated
virtual care platform, incorporating patient onboarding, clinical guidelines,
digital communications, online appointment management and, via the acquisition
of Attend Anywhere, video consultations. While the current focus is on
secondary care, there is scope to migrate into allied care settings, such as
primary care, mental health and community care.
Attend Anywhere is a clear strategic fit with Induction and the acquisition
will provide a number of commercial, operational and financial benefits, which
are expected to create value for shareholders.
Proportion of voting equity interest acquired Consideration transferred
Name Principal Activity Date of Acquisition £000
Attend Anywhere Pty Limited Provision of video consulting software 09/06/2021 83.50% 21,207
A.C.N. 167 231 307 PTY Ltd Holding Company 09/06/2021 100% 4,191
Attend Anywhere Limited Provision of support services to group entities 09/06/2021 100% (indirect) -
Consideration transferred
The following represents the consideration transferred to the owners of Attend
Anywhere Pty Limited, A.C.N. 167 231 307 PTY Ltd and Attend Anywhere Limited.
2022
£000
Share consideration 9,000
Cash consideration 16,398
Total consideration transferred 25,398
The fair value of cash consideration equals its carrying value. The fair value
of the equity consideration has been determined with reference to the market
value of the shares of Induction Healthcare Group plc immediately prior to the
issue of the consideration shares, adjusted for the impact of a lack of
marketability discount of 10%. The lack of marketability discount arises as a
result of restrictions on the trading of the shares issued to the former
owners of Attend Anywhere Pty Limited and A.C.N 167 231 307 Pty Ltd as
consideration for the acquisition of the company, for a period after the
acquisition. Restrictions on trading of shares extend for 12 months after
acquisition date and share prices may be affected once these restrictions
cease.
Assets acquired and liabilities recognised at the date of acquisition
The following represents assets acquired and liabilities recognised on
acquisition. All amounts are final and not provisional.
2022
£000
Intangible assets 15,193
Cash and cash equivalents 2,912
Other current assets 4,751
Deferred tax liability (4,856)
Other non-current liabilities (85)
Contract liabilities (1,782)
Other current liabilities (746)
Total identifiable net assets at fair value 15,386
The separately identifiable intangible assets and valuation techniques used to
measure the fair value of these material assets acquired were as follows:
Assets acquired Valuation technique
Customer contracts and relationships Income Approach: With and without method. This method estimates the value of
customer related assets by quantifying the impact on cash flows under a
scenario in which the customer-related assets must be replaced. The projected
revenues, operating expenses, and cash flows are calculated in a "With" and
"Without" scenario, and the differential between the cash flows from the two
scenarios serve as the basis for estimating the fair value of the
customer-related asset.
Technology Excess Earnings Method: a stream of revenue and expenses are identified with a
particular group of assets that are necessary to support the earnings
associated with the subject intangible asset. By identifying and subtracting
contributory assets, the residual earnings are estimated to be attributable to
the subject intangible asset and are discounted to present value at an
appropriate discount rate. An obsolescence rate of 25% is applied to the
forecasts used in the valuation model.
Contract liabilities The fair value of the of the deferred revenue liability has been determined
using the bottom-up approach. Under this approach the fair value is determined
to be equal to the costs still to be incurred in fulfilling the performance
obligations related to the contract liability, plus an associated profit on
these costs. The costs still to be incurred in satisfying the remaining
performance obligations are hosting fees, staff costs to support the operation
of the platform and provide support and maintenance and other software fees
necessary for the operation of the platform. A mark-up on cost to be incurred
in fulfilling the performance obligation of 28% was
applied.
Goodwill arising on acquisition
The following represents goodwill arising on acquisition
2020
£000
Consideration transferred at fair value 25,398
Total identifiable net assets at fair value (15,386)
Goodwill arising on acquisition 10,012
Goodwill arising on acquisition relates to the strategic fit with the existing
products of the Group and strengthened market position for the Group. Goodwill
includes intangible assets that were not valued separately, such as the
assembled workforce, potential savings for economies of scale, and potential
development of further product offerings using existing know-how in the
business acquired.
Analysis of cash flows on acquisition
2020
£000
Consideration paid in cash (16,398)
Transaction costs of the acquisition (included in cash flows from operating (423)
activities)
Transaction costs attributable to the issuance of shares (included in cash
flows from financing activities, net of
-
tax)
Less: cash and cash equivalent balances acquired 2,912
Net cash outflows on acquisition (13,909)
Acquisition related costs of £423k were recognised in administrative
expenses.
Impact of acquisition on the results of the Group
From the date of acquisition, Attend Anywhere Pty Limited and A.C.N. 167 231
307 PTY Ltd contributed £5.7m to the revenue of the group and profit before
tax of £1.1m. The Group has not disclosed the impact to revenue and profit
before tax for the 12 month period under IFRS3.B64, as it is impracticable to
determine the impact of the IFRS 3 fair value adjustment to contract
liabilities ("deferred income") at 1 April 2021.
9. Goodwill
Carrying amount of goodwill
The following represents the carrying value of goodwill as at 31 March 2022.
2022 2021
£000 £000
Cost 20,175 9,790
Accumulated impairment (417) (417)
19,758 9,373
The following reconciles goodwill at the beginning and end of the period.
2022 2021
£000 £000
Cost
At 1 April 9,790 1,553
Additions as a result of business combinations 10,012 8,237
Translation differences 373 -
At 31 March 20,175 9,790
Accumulated impairment
At 1 April 417 -
Impairment charge - 417
At 31 March 417 417
Allocation of goodwill to cash generating units
Goodwill is allocated to the Group's cash generating unit as follows:
2022 2021
£000 £000
Induction Attend Anywhere 10,385 -
Induction Zesty 8,237 8,237
Induction Guidance 1,136 1,136
Induction Switch - -
19,758 9,373
The Attend Anywhere CGU consists of the assets and cash flows related to the
Attend Anywhere video consultation product. The Zesty CGU consists of the
assets and cash flows related to the Zesty patient portal product. The
Induction Guidance CGU consists of the assets and cash flows related to the
Induction Guidance product line (formerly MicroGuide, acquired as part of the
acquisition of Horizon Strategic Partners). The Induction Switch CGU consists
of the assets and cash flows related to the Induction Switch app.
10. Intangible assets
Trade name Users Technology Total
(re-presented)
£000 £000 £000 £000
Cost
At 31 March 2020 264 919 1,500 2,683
Additions - internally developed - - - 1,660
Acquired through business combinations 369 507 3,286 4,162
At 31 March 2021 633 1,426 6,446 8,505
Additions - internally developed - - - 3,090
Acquired through business combinations - 7,713 7,480 15,193
Translation differences - 321 398 719
At 31 March 2022 633 9,460 17,414 27,507
Trade name Users Technology Total
(re-presented)
£000 £000 £000 £000
Accumulated amortisation and impairment
At 31 March 2020 15 53 265 333
Charge for the year 61 189 1,090 1,340
Impairment charge 7 23 918 948
At 31 March 2021 83 265 2,273 2,621
Charge for the year 62 1,067 2,658 3,786
Translation differences - 54 83 137
At 31 March 2022 145 1,386 5,014 6,544
Net book value
At 31 March 2020 249 866 1,234 2,349
At 31 March 2021 550 1,161 4,173 5,884
At 31 March 2022 488 8,074 12,400 20,962
Amounts for the "Technology" intangible asset category for the year ended 31
March 2021 and as at 31 March 2020 have been represented in order to combine
the acquired technology assets category with the capitalised development costs
category. This is due to the fact that the nature of the assets is similar.
11. Cash and cash equivalents
2022 2021
£000 £000
Cash at banks and on hand 6,996 872
Short-term deposits 500 1,600
Demand deposits - -
Cash and cash equivalents per the statement of financial position and cash 7,496 2,472
flow statement
Cash at banks earn interest at floating rates based on daily bank deposit
rates. Short-term deposits are made on weekly basis, depending on the
immediate cash requirements of the Group, and earn interest at the respective
short-term deposit rates.
12. Events after the reporting date
There were no material events after the reporting date that have an impact on
these financial statements
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