REG - Induction Healthcare - Audited Final Results
31/07/2023 07:00
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RNS Number : 6414H Induction Healthcare Group PLC 31 July 2023
Induction Healthcare Group PLC
("Induction", the "Company", or the "Group")
FY23 Audited Final Results
Induction (AIM: INHC), a leading digital health platform driving
transformation of healthcare systems, announces its audited final results for
the year ended 31 March 2023.
Financial Highlights
· Revenues up 12.1% to £13.6m(1) (proforma 2022: £12.1m(2))
· Gross margin steady at 63.1% (2022: 63.1%)
· Business rightsizing programme completed by year end with projected
annual savings of £6m compared to FY23
· Operating loss narrowed to £4.8m(3) (2022: (£5.3m))
· Net cash at the year-end of £4.3m (2022: £7.5m)
Operational Highlights
· Attend Anywhere (video conferencing platform) revenues increase by
9.9% and margins maintained despite competitive pressures.
· Renewed Attend Anywhere national contracts with NHS Scotland (3
years) and NHS Wales (1 year with option to extend).
· Zesty patient management platform revenues increase by 50% despite
delays in Government funding and NHS Wayfinder programme. More than 1 million
UK patients are using Zesty to manage their care.
· Completion of NHS Single Sign On and integration of core portal
features into the NHS App.
· Completed business right sizing and cost reduction programme which
puts us on track with our commitment to self-sustaining growth and cash
breakeven in 2024. Removed circa £6.0m annualized costs.
· Initiated an integrated product development programme to allow
patients and clinicians to use our entire product suite seamlessly, creating a
strong platform for future growth.
Post Period End Highlights
· Paul Tambeau appointed CEO and John McIntosh appointed CFO.
Christopher Samler returns to a non-Executive Chair position.
· Non-core asset (Switch) sold for a material consideration.
Paul Tambeau, CEO of Induction Healthcare, said: "We are pleased to report an
overall revenue growth rate of over 12% despite market headwinds and at the
same time as we completed on significantly rightsizing our cost base. The
business is now firmly on a sustainable footing and this, together with our
fast-growing patient management platform (Zesty), which grew significantly,
indicates that we are well positioned for the coming year."
Note 1: Reported revenue from continuing operations is stated after
reclassifying assets held for sale under IFRS5 (Induction Switch and Induction
Guidance £0.7m). These product assets were held for sale at year end 31
March 2023 and classified under discontinued operations (Total recognised
revenue from continuing operations £12.9m plus discontinuing operations
£0.7m was £13.6m). Note 2: Reported revenue from customer contracts as at 31
March 2022 is stated after the application of IFRS3 being a fair value
adjustment (£4.2m) relating to the deferred revenue acquired as part of the
Attend Anywhere Pty Limited acquisition in June 2021. Had this adjustment not
been applied, pro-forma recognised revenue from customer contracts for the
year would have been £12.1m compared with the reported figure of £7.9m.
Note 3: Operating Loss from continuing operations (£17.4m) before
depreciation £0.1m, amortisation £4.8m and non-cash impairment £7.7m.
Annual Report and Accounts and Notice of AGM
The Annual Report and Accounts and notice of AGM will be available later today
on the Company's website:
https://inductionhealthcare.com/investors/financial-reports-and-publications/
(https://inductionhealthcare.com/investors/financial-reports-and-publications/)
. Copies of both documents will be posted to shareholders in due course.
Enquiries
Induction Healthcare Group PLC
Christopher Samler, Chair +44 (0)7712 194092
Paul Tambeau, Chief Executive Officer +44 (0)7983 104443
Singer Capital Markets (Nominated Adviser and Broker) +44 (0)20 7496 3000
Philip Davies
Alaina Wong
Jalini Kalaravy
About Induction - www.inductionhealthcare.com
(http://www.inductionhealthcare.com/)
Induction (AIM: INHC) Induction delivers a suite of software solutions that
transforms care delivery and the patient journey through hospital. 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.
Highlights from Annual Report
Chair's Statement
The year ending March 2023 has been a particularly challenging period for
Induction. The Group has faced both market challenges, as the NHS has
struggled to come to terms with the new post-Covid reality, and internal
challenges precipitated by our own managerial failings. As a Board we
recognised and addressed both of these strong headwinds, putting in place a
series of measures which have been both painful and absolutely necessary, but
which have been vindicated.
Having reached the middle of the first quarter of financial year 2024, it is
apparent that the strong medicine we have administered to the business is
having a positive impact and, although it is too early to be definitive, the
future looks distinctly brighter. Market opportunities are also opening up as
Government policy stabilises in the post-Johnson/Truss era.
The lack of healthcare policy consistency immediately post-Covid, as well as
the lack of clarity over central funding, characterised most of the financial
year. As waiting lists expanded and the Department of Health struggled to line
up behind clear, funded policies to address the problem, the previously
announced commitments to invest in digital platforms were constantly delayed.
As a consequence, expectations of growth, particularly with NHS commissioning
groups for our appointment setting platform Zesty were seriously delayed.
By early 2023 it was becoming clear that a more consistent and properly funded
digital approach to the challenge of cutting waiting times was emanating from
the Department of Health. It is from this revised approach that Induction
hopes to benefit from over the coming year and the current indications are
positive.
At the same time our expected growth in the Zesty platform has been delayed by
policy indecision, so also our video conferencing platform (Attend Anywhere)
has come under pricing and competitive pressure from a combination of
post-Covid changes in usage patterns, and a more active challenge to our
previously strong market position.
Attend Anywhere is a video platform specifically designed for clinicians and
hospitals and their patients and has several unique features which directly
address these needs. However, these features are costly to support and it is
often tempting for hospital trusts to opt for Microsoft Teams or similar which
are perceived as being 'free'. Despite these pressures, Attend Anywhere has
retained most of its share - retaining NHS Wales, NHS Scotland and many of the
English Trusts, demonstrating the benefits of a health-specific application.
As reported at the time, last year's financial audit was severely delayed and
this, combined with other key indicators, led the Board to conclude that
significant changes were necessary to the management and internal processes of
the company.
In December 2022 we replaced the senior management with an interim team - with
the Chair stepping into the executive role, Paul Tambeau moving to interim COO
and John McIntosh interim CFO position. The Board and the executive moved
quickly to stem the cash outflows and to create a sustainable business that
would ensure that we have no requirement to come to the market for more cash.
Our previous CEO (James Balmain) moved to a commercial sales position focused
on Zesty. This move ideally suited his skills and expertise and his ongoing
activity in this role, as well as providing the link between sales and product
definition, is proving invaluable.
The 'rightsizing' of Induction necessitated cutting both our ambitions, our
activities, and our headcount. We put on hold our ambition to grow by
acquisition and at the same time we significantly reduced the breadth of our
activities. We cut out non-core activity (i.e. activity that doesn't relate
exclusively to secondary healthcare) and set about divesting our non-core
assets (the clinical apps comprising Switch and Guidance). At the same time,
we reduced our headcount and associated cost base by circa 30%. We also
ruthlessly examined our hosting cost base and have seen that cost fall by over
35%. The resulting rightsizing programme has eliminated annualised expenditure
of c. £6 million, putting the Group on a sustainable footing for the future.
All cash costs relating to the Group's restructuring have been fully
recognised in the results to 31 March 2023.
The full year results outcome was an EBITDA loss on continuing operations
which narrowed to £4.8m (2022: £5.3m) with the rightsizing process
completing in March 2023. To this end the full year results before tax for 31
March 2023 are a watershed, reflecting the impact of certain material non-cash
impairment charges. Inclusive of a non-cash impairment charge of £7.7m (2022:
£ nil), the Group's loss for the year reached £17.4m (2022: Loss
£8.4m).
These measures were painful on every level, however we now have a sustainable
business which is smaller, leaner and significantly more focused. We also have
a business which is better able to meet the digital challenges, as well as the
opportunities, that the fast-changing NHS presents.
In response to the challenge we faced in the middle of last year we have also
sought to enhance our Board - both in terms of people and our processes. To
this end we appointed Ian Johnson as our senior non-executive director. Ian
has a wealth of experience in the healthcare environment. Meanwhile we said
farewell to Leslie-Ann Reed who resigned at the end of her term in October
2023. More recently, and subsequent to the end of the financial year (May
2023), we announced that Hugo Stephenson, a director and founder, resigned at
the end of his term. We thank both for their service to Induction.
Consistent with our commitment to hire a permanent leadership team, Paul
Tambeau (CEO) and John McIntosh (CFO) were appointed to the board on 30 June
2023. At the same time, with the outlook more positive, I stepped back to
the non-executive Chair position.
Whilst, as a Board, we know that these changes have been fundamental to a
sustainable future, we also know that they would not have been made possible
without the drive and support of our leadership teams and all employees -
across all the geographies we operate in. As a result of their action and
determination we can look forward to significantly improved prospects for 2024
and we genuinely thank them for their part in turning our business around.
Finally, it remains for me to thank our long-suffering shareholders. You have
placed your confidence in the Board, the leadership team and in me. I believe
that in time we will justify that confidence.
Christopher Samler
Non-executive Chair
CEO Statement
Double Digit Growth
FY23 saw a 12.1% increase in recognized revenue from all operations and 9.7%
increase in ARR. Whilst this partly relates to the business being able to
recognize a full year of Attend Anywhere revenue, our main growth engine was
Zesty, growing from £1.5m in FY22 to £2.2m in FY23.
In addition to this growth within Zesty, there are a number of Trusts which
have purchased Zesty via our partners Oracle Cerner and SystemC for deployment
in FY24 but are yet to be recognised as contracted ARR while we finalise
flow-through contracting with our partner. Induction also played a leadership
role in partnering with the NHS Wayfinder Programme in embedding core Zesty
functionality into the NHS App, including single sign-on. This will position
Induction well for growth into the future as the NHS seeks to move more
patient-facing activities into the NHS App.
With our Attend Anywhere business, we were pleased to renew our national
contract with NHS Scotland contract for 3 years, and our NHS Wales national
contract for another 1 year, with the option to renew for an additional year.
We retained a large proportion of our NHS England contracts despite
challenging market conditions.
Market Conditions Impacting Growth
Renewals in our Attend Anywhere business, especially within NHS England, were
under pressure as the national funding that supported these contracts during
COVID came to an end. This put downward pressure on pricing as Trusts, many of
which are already under financial constraint, had to find the budget to fund
the renewal. We were successful at renewing 81% of these contracts. With the
NHS's national contract with Microsoft, we also saw Trusts looking at Teams as
an alternative solution. Whilst Teams doesn't have some of the health-specific
capability of Attend Anywhere, such as robust waiting room functionality,
we've had to work with Trusts in recognizing the administrative burden this
would put on them. Finally, with the health care sector moving to more
in-person appointments following COVID, we have seen a decline in usage of
video consultations. Our Customer Success team has prioritized getting closer
to our customers to help drive utilization and to help generate continuing
value for patients and clinicians.
Notwithstanding the strong growth in our Zesty business, there were delays in
the NHS Wayfinder program as well as the provision of national funding for
Trusts to procure a portal. NHS procurement cycles and processes also factored
into our growth in FY23.
Business Rightsizing & Focus
In the last quarter of FY23, we executed a plan to right-size the business and
get our costs in check so that Induction was on a more sustainable footing.
This involved reducing the Group's headcount (across a mix of employees and
contractors) across our global team. It also involved reducing our operating
costs, particularly web hosting and professional fees. The result of this
program was circa 30% being cut from the c.£1.5m monthly operating costs
incurred at the beginning of the final quarter of the year.
In completing the restructuring, we also reshaped business processes and
provided a much-needed focus to all areas of the Group's operation. The
result is a better understanding of the economics of our products and where
and how it should be playing to maximize margin. In March 2023, we gained
approval of our FY24 Operating Plan and Budget which built on our approach of
closely managing costs, focusing on key priorities, and delivering value to
the customer.
In focusing the business on our core strategy, we had to look at our product
suite. With the development of a new integrated product strategy, our focus
going forward will be on supporting the interactions between care teams and
patients. That meant we have decided to divest assets that don't align with
this strategy, notably Induction Switch and Induction Guidance. The Induction
Switch business was subsequently sold for a material undisclosed sum post year
end. We also decided to shut down our Booking application since much of this
functionality sits within Zesty, and it wasn't generating sufficient revenue
to justify significant investments required to upgrade the technology.
Finally, in the short term, we are going to be focused on the UK market.
International growth is an important part of the Group's future, but only once
we have stabilized the UK business and matured our business operations to take
on new territories.
Looking Ahead with Renewed Focus
Within our FY24 Operating Plan, we're going to be focused on executing on 4
Key Goals:
1. To be a profitable and sustainable growing business to deliver our
commitments to shareholders. This involves strengthening our sales
capabilities and capitalizing on near-term growth opportunities. We are
working to industrialise systems and processes within the business to ensure
we continue to closely monitor our cost base.
2. To successfully develop our Integrated Product. We are investing in
bringing functionality from Zesty, Attend Anywhere and FormBuilder together
for customers in a way that enables us to be responsive to customer needs.
With these building blocks in place, we will be looking at how we expand our
capabilities to meet growing customer needs.
3. To be customer centric and commercial in everything we do. We will
get closer to our customers to truly understand their pressures and how we can
support them. Our customers also have valuable insight into how our integrated
product should develop.
4. To implement and continuously develop an inclusive, performance
driven and rewarding employee experience. We are investing in the growth and
development of our people as we seek to build a culture where people want to
grow their careers.
Outlook
As we execute on our plan, we believe there are market factors that can
generate new growth for the business. Underlying demand for digital healthcare
services is growing as the NHS seek to make up for COVID-driven backlogs,
while at the same time treating new patients. This has resulted in potential
new funding streams from the NHS to tackle these challenges, presenting a
strong opportunity for the business going forward.
The NHS continues to prioritize further developments within the NHS App,
enabling Induction to become more embedded in the health ecosystem. There is
also new funding available to Trusts to procure or enhance their patient
portals, which Induction is well positioned to capitalize on.
We're also seeing increasing demand for integrating the capabilities of both
our Zesty and Attend Anywhere platforms, creating a better experience for
clinicians and patients.
Given the rightsizing changes we have already implemented, and the growth
opportunities in front of us, we are confident this puts the Group in a
sustainable position.
Paul Tambeau
CEO
Financial Review
Revenue
The twelve months to 31st March 2023 was the first period the Group has
benefited from a full year of recognised revenue from its Induction Attend
Anywhere acquisition.
Revenue from contracts with customers for the year to 31 March 2023 per table
below was £13.6m (pro-forma 2022: £12.1m). Excluding a non-cash accounting
adjustment revenues from all operations grew 12.1% in the year to 31 March
2023.
In our prior year reporting for the twelve months to 31st March 2022 we
applied an adjustment to revenues to account for IFRS 3 requirements.
Consequently, as a more appropriate year on year comparison, recognised
revenue for the year of reporting should be compared with prior year pro-forma
full year revenue. This period end also saw our non-core products, Switch
and Guidance being put up for sale. These two product assets are classified
as discontinued operations on the face of the P&L under IFRS5 - as assets
held for sale)
31 31
March 2023 March 2022
£000 £000
Re-presented
Revenue analysis
Revenues from customer contracts (1) 13,584 12,116
Non-cash IFRS3 adjustment (2) (74) (4,209)
Revenue from all operations 13,510 7,907
Revenue - Discontinued operations (3) 627 676(4)
Reported revenue
Revenue - continuing operations 12,884 (4) 7,231
1 Reported revenue from continuing operations is stated after reclassifying
assets held for sale under IFRS5 (Induction Switch and Induction Guidance
£0.6m). These product assets were held for sale at year end 31 March 2023
and classified under discontinued operations (Total recognised revenue from
continuing operations £12.9m, plus IFRS3 adjustment (£0.1m) and discontinued
operations £0.6m was £13.6m, 2022: £12.1m).
2 Reported revenue from customer contracts as at 31 March 2022 is stated after
the application of IFRS3 being a fair value adjustment (£4.2m) relating to
the deferred revenue acquired as part of the Attend Anywhere Pty Limited
acquisition in June 2021. Had this adjustment not been applied, pro-forma
revenues from contracts with customers would have been £12.1m.
3 Revenue from product assets (Induction Switch and Induction Guidance) is
disclosed under IFRS5 as assets held for sale.
4 After excluding discontinued operations revenue (£0.6m). For reference
only the comparative recognised 2022 revenue was £0.7m.
The majority of the Group's revenue came from Induction Attend Anywhere which
has grown by 9.9% to £10.8m (2022: £9.8m), while revenue from Induction
Zesty has leapt to £2.2m (2022: £1.5m). Induction's other clinical apps
(Switch and Guidance) delivered £0.6m (2022: £0.7m).
The headwinds which curtailed revenue growth in the second half of the year
predicated a rightsizing programme to bring the Group's cost base into line
with our sustainable revenue growth. The restructuring was completed by year
end and all associated costs have been provided for in the year to 31st March
2023.
While focus is on sustainable recognised revenue growth management also takes
note of ARR. 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.
ARR from all operations as at 1st April 2023 was £13.5m (2022: £12.3m).
This represented the annualised value of the recurring revenue base that
expected to be carried into future periods, and its growth is a
forward-looking indication of recurring revenue growth.
Gross profit
Reported Gross profit was £8.1 million (2022: £5.0 million) with gross
margin steady at 63.1% versus prior year reported margin from all operations
(2022: 63.1%). Direct costs are predominantly made up of web hosting
expenses, sales and delivery staff costs. The year-on-year increase in gross
profit is not directly attributable to revenue growth due to the prior year
FY22 accounts reporting revenue from customer contracts after IFRS 3 fair
value adjustment. Had the prior year IFRS 3 adjustment not been applied prior
year Group revenues would have been £12.1m on a pro-forma basis. Given the
consistent year-on-year gross margin percentage, growth of gross profit is
more comparable to recognised revenue growth from customer contracts of 12.1%
as described in the Revenue section above.
Capitalised development costs
Development expenses for the year were £9.3m (2022: £6.0m) an increase of
£3.3m. The reported cost increase for the year to 31 March 2023 is made up of
two components: a lower level of capitalised development cost of £2.2m and,
an increase of development expenses of £1.1m.
Prior year additions to internally generated intangible assets were £3.1m
reflecting the amount capitalised in the year to 31 March 2022. The comparable
figure for the period to 31 March 2023 is £0.8m. This capitalised development
expense movement has been charged directly to the income statement rather than
being capitalised in the year.
In determining the amounts to be capitalised management makes assumptions
regarding the percentage of staff time spent on development activities. There
is a high level of estimation uncertainty over the estimates, as the ability
to reliably track time is inhibited by the time recording method. The nature
of the features developed during the year do not meet the criteria for
capitalisation under IAS38. This conclusion resulted in costs, which would
otherwise have been taken to the balance sheet, being charged directly to the
operating costs of the business. As a result of this decision the reported
development expenses more closely represent the development cash outflows
experienced by the business in the year of reporting.
Impairment charge
Management performed an impairment review as at 31 March 2023 in accordance
with IAS 36 'Impairment of assets'. The resulting non-cash impairment charge
of £7.7m is explained in further detail in note 17 - Goodwill within the
financial statements.
Operating expenses
Excluding the adjusting items depreciation, amortisation and share based
payments, operating expenses grew by £2.4m driven by increased development
expenses and restructuring costs.
Core performance measures
Our rightsizing programme resulted in restructuring costs of £0.8m being
charged to the income statement. By the 31st March 2023 the cost containment
action had resulted in monthly cost reductions of the order of £0.5m - the
equivalent of an annualised £6.0m reduction in cash outflow.
The Group's Operating Plan is focused on sustainable growth. Management
considers that EBITDA is the key operating metric to measure the Group's
performance and progress towards sustainable growth. In addition, the Group
also measures and presents performance in relation to various other non-GAAP
measures, such as gross margin, and revenue growth. ARR is considered useful
to determine long term revenue growth, viewed in the context of sustainable
growth.
Adjusted EBITDA results are prepared to provide a more comparable indication
of the Group's core business performance by removing the impact of certain
items including exceptional items (material and non-operating related costs),
and other, non-trading, items that are reported separately. Adjusted results
exclude items as set out in the consolidated statement of comprehensive
income.
Adjusted EBITDA loss was £3.6m (Re-presented 2022: £3.8m).
31/03/2022
31/03/2023 £m
£m Re-presented
Loss before tax for the year - all operations (18.3) (9.5)
Loss from discontinued operations 0.9 0.4
Loss before tax from continuing operations (17.4) (9.1)
Add: Impairment losses 7.7 -
Add: Depreciation and amortisation 4.9 3.8
Operating loss before depreciation, amortisation and impairment
(4.8) (5.3)
Adjusted for exceptional and non-cash costs:
- Acquisition and fundraise related - transaction costs1
- 0.5
- Other exceptional items1 0.8 0.4
- Share based payments (non-cash) 0.4 0.6
Adjusted Operating profit/(loss) before, depreciation, amortisation,
impairment and exceptional costs
("Adjusted EBITDA")
(3.6) (3.8)
Adjusted EBITDA from continuing operations (3.6) (3.8)
(1)Restructuring costs.
Cash
Cash as at 31 March 2023 was £4.3m (2022: £7.5m). As described above, the
Leadership Team focused on cost containment and cash conservation during the
last quarter of the year. Processes around cash have been revisited to
ensure projected business needs are sustainable.
We continue to tightly manage our cost base which, as at 31 March 2023, was
reduced by over 30% on a monthly basis from the level at the beginning of
2023.
Going concern
The Group incurred an operating loss on continuing operations of £4.8m for
the year ended 31 March 2023 (2022 £5.3m), however, it had net assets of
£24.3m inclusive of £4.3m of cash and cash equivalents.
Management has performed a going concern analysis as described in the
Directors report. The liquidity of the group is judged sufficient to meet the
cash needs of the Group as they fall due.
The directors have considered the applicability of the going concern basis in
the preparation of the financial statements. This included a review of
financial results, internal budgets and cash flow forecasts to 31 October
2024, including downside scenarios.
Assets and Liabilities
Goodwill as at 31 March 2023 of £10.7m (2022: £19.8m) and intangibles of
£15.3m (2022: £21.0m) are derived from the earlier acquisitions, Attend
Anywhere Pty Limited, Zesty Limited and Horizon Strategic Partners Limited.
Following a review of the carrying value of the assets a non-cash impairment
charge of £7.4m has been applied. Refer to note 17 of the financial
statements.
Trade Receivables were £2.7m (2022: £3.3m) reflecting increased collection
activity at the period end. Trade payables were £2.7m (2022: £3.4m) in
part reflecting the impact of the right sizing programme reduced monthly
costs.
Taxation
Current tax receivable £1.1m (2022: £1.2m) consists of Research and
Development tax credits due to the Group for current and prior years. Post
year end the Group received £0.3m of tax R&D reclaim. In spite of the
delay to the repayments we expect further receipts in due course after
appropriate follow-up.
Loss before tax
The Group net loss before tax was £17.4m (2022: loss of £9.1 million
(re-presented)) the year-on-year change is driven by a non-cash impairment
charge of £7.7m.
Discontinued operations
During the year ending 31 March 2023 the Group classified the Induction Switch
and Induction Guidance products as being held for sale, as a result of a
decision to focus on patient facing products in the secondary care market.
This resulted in removal of discontinued operations losses of £0.8m (for
reference: 2022 £0.4m) from the Group profit and loss. Refer to note 13 of
the financial statements for further details.
Principal risks and uncertainties.
As more fully described in the Directors' Report and notes to the financial
statements included in the annual report, the amounts and timing of future
revenues remain uncertain. However, the executive has taken significant
steps, which we believe mitigate the Group's risks.
John McIntosh
Chief Financial Officer
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2023
Notes 2023 2022
£000 £000
Re-presented
Continuing operations
Revenue from contracts with customers 3 12,884 7,231
Cost of sales (4,754) (2,751)
Gross profit 8,130 4,987
Sales and marketing expenses (1,523) (1,092)
Administrative expenses (6,952) (7,260)
Development expenses (9,287) (5,256)
Impairment losses 4 (7,748) -
Loss from operations (17,380) (9,129)
Finance income 1 1
Finance expense (7) (30)
Loss before tax (17,386) (9,158)
Tax credit 798 1,082
Loss for the year from continuing operations (16,588) (8,432)
Discontinued operations
Loss from discontinued operations, net of tax (795) (356)
Loss for the year (17,383) (8,432)
Other comprehensive income
Exchange gains/(losses) arising on translation on foreign operations (963) 810
Other comprehensive income for the year, net of tax (963) 810
Total comprehensive income (18,346) (7,266)
Loss per share attributable to the ordinary equity holders of the parent
Basic 6 (0.19) (0.10)
Diluted (0.19) (0.10)
Loss per share from continuing operations attributable to the ordinary equity
holders of the parent
Basic 6 (0.18) (0.10)
Diluted (0.18) (0.10)
Consolidated Statement of Financial Position
As at 31 March 2023
2023 2022
Notes £000 £000
Assets
Non-current assets
Property, plant and equipment 9 244
Intangible assets 8 15,251 20,962
Goodwill 7 10,685 19,758
Deferred tax assets 556 1,540
Total non-current assets 26,501 42,504
Current assets
Contract assets 1,228 786
Trade and other receivables 2,672 3,347
Current tax receivable 1,175 1,240
Cash and cash equivalents 4,287 7,496
Assets held for sale 2,474 -
Total current assets 11,836 12,869
Total assets 38,337 55,373
Liabilities
Non-current liabilities
Contract liabilities 3,588 326
Deferred tax liability 3,870 5,851
Other financial liabilities 56 128
Total non-current liabilities 7,514 6,305
Current liabilities
Trade and other payables 2,713 3,365
Provisions 528 -
Contract liabilities 2,198 2,579
Current tax payable - 789
Liabilities associated with assets held for sale 1,016 -
Other financial liabilities 72 72
Total current liabilities 6,527 6,805
Total liabilities 14,041 13,110
Net assets 24,296 42,263
Equity attributable to equity holders of the parent
Share capital 462 460
Share premium reserve 41,665 41,665
Merger reserve 20,205 20,205
Foreign exchange reserve (162) 801
Other reserves 1,578 1,405
Retained earnings (39,452) (22,273)
Total equity 24,296 42,263
Consolidated Statement of Changes in Equity
As at 31 March 2023
Foreign
Share capital Share premium Merger exchange Other reserves Retained earnings Total equity
£000 £000 reserve reserve £000 £000 £000
£000 £000
At 31 March 2021 and 1 April 2021 210 18,432 10,879 (9) 792 (13,839) 16,465
Comprehensive income for the
year
Loss for the year - - - - - (8,434) (8,434)
Other comprehensive gain / (loss) 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 - 8,928 - - - 8,999
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 9,326 - 613 - 33,422
At 31 March 2022 and 1 April 2022 460 41,665 20,205 801 1,405 (22,273) 42,263
Comprehensive income for the
year
Loss for the year - - - - - (17,383) (17,383)
Other comprehensive income / (loss) for the year
- - - (963) - - (963)
Total comprehensive income for the year
- - - (963) - (17,383) (18,346)
Transactions with owners,
recorded directly in equity
Issue of shares on exercise of equity
settled share-based payments 2 - - - (204) 204 2
Equity settled share-based
payments - - - - 377 - 377
Total contributions by and distributions to owners
2 - - - 173 204 379
At 31 March 2023 462 41,665 20,205 (162) 1,578 (39,452) 24,296
Consolidated Statement of Cash Flows
For the year ended 31 March 2023
2023 2022
£000 £000
Cash flows from operating activities
Loss for the year (17,383) (8,434)
Adjustments for
Depreciation of property, plant and equipment 119 28
Amortisation of intangible fixed assets 4,726 3,785
Impairment losses on intangible assets 7,748 -
Finance income (1) (1)
Finance expense 7 30
Fair value adjustments on financial liabilities - -
Share-based payment expense 377 613
Net foreign exchange loss/(gain) 63 -
Income tax charge/(credit) (798) (1,146)
(5,142) (5,125)
Movements in working capital:
Decrease/(Increase) in trade and other receivables and contract assets 166 1,661
(Decrease)/Increase in trade and other payables and contract liabilities 2,972 1,115
Interest received 1 1
Interest paid (7) (30)
Income taxes received 65 458
Income taxes paid (863) (141)
Net cash used in operating activities (2,808) (2,061)
Cash flows from/(used in) investing activities
Acquisition of subsidiary, net of cash acquired - (13,486)
Purchases of property, plant and equipment (17) (256)
Payment of software development costs (810) (3,090)
Net cash used in investing activities (827) (16,832)
Cash flows from/(used in) financing activities
Issue of ordinary shares 2 25,000
Proceeds on other financial liabilities - 210
Share issue costs - (1,190)
Repayment of bank borrowings - -
Payment of lease liabilities (72) (12)
Net cash from/(used in) financing activities (70) 24,008
Net cash increase/(decrease) in cash and cash equivalents (3,705) 5,115
Cash and cash equivalents at the beginning of year 7,496 2,472
Exchange gains/(losses) on cash and cash equivalents 496 (91)
Cash and cash equivalents at the end of the year 4,287 7,496
Notes (forming part of the abridged financial statements)
1 Basis of preparation
The preliminary results for the year ended 31 March 2023 are an abridged
statement of the full Annual Report which was approved by the Board of
Directors on 28(th) July 2023. The consolidated financial statements in the
full Annual Report are prepared in accordance with UK-adopted International
Financial Reporting Standards (' UK-Adopted IFRS'), with IFRS as issued by the
International Accounting Standards Board ('IASB') and with the requirements of
the Companies Act 2006. The auditor's report on those consolidated financial
statements was unqualified, and did not contain statements under section
498(2) or 498(3) of the Companies Act 2006. The preliminary results do not
comprise statutory accounts within the meaning of section 434(3) of the
Companies Act 2006. The Annual Report for the year ended 31 March 2023 will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting. The financial information included in this preliminary announcement
does not itself contain sufficient information to comply with IFRS. The annual
report and audited financial statements for the year ended 31 March 2023 will
be made available on the Company's website.
2 Going concern
The Group has recognised total revenues during the year of £13.6m (2022:
£7.9m) and had cash balances at 31 March 2023 of £4.3m (2022: £7.5m) with
cash outflows from operating activities during the year of £2.8m (2022:
£2.1m).
During the year ended 31 March 2023, the Group successfully completed a
rightsizing programme, estimated to deliver c. 30% reduction in costs.
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 June 2025 ("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 June 2025 to take into account the operating cycle of the group, which
sees significant contract renewals in March 2025, with cash inflows received
in April and May 2025.
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 April 2024 before increasing again in May 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 June 2025, and
therefore these financial statements are prepared on a going concern basis.
3 Revenue
During the year ended 31 March 2023, the Group classified the Induction Switch
and Induction Guidance products as disposal groups held for sale (refer Note
13). Consequently, revenues from contracts with customers arising from these
products have been presented as part of results from discontinued operations.
Revenues as presented in this note include only revenues from continuing
operations, and comparative amounts for the year ended 31 March 2022 have been
re-presented to exclude the impact of discontinued operations.
The following is an analysis of the Group's revenue for the year from
continuing operations:
2023 2022
£000 £000
Re-presented
Provision of software (including set-up services of £0.1m (2022: £0.2m)) 11,703 6,711
Post-contract support and maintenance 258 217
Text message revenue 431 303
Professional services 492 -
Total revenue from contracts with customers 12,884 7,231
Revenue from the provision of software of £11.7m (2022: £6.7m) is shown
after IFRS 3 related adjustments of £0.07m (2022: £4.2m)). This includes
£0.05m related to Induction Zesty (2022: £0.07m) and £0.02m related to
Induction Attend Anywhere (2022: £4.2m). 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 from continuing operations by country
of destination:
2023 2022
£000 £000
Re-presented
United Kingdom 12,884 7,231
Europe - -
United States - -
Rest of World - -
Total revenue from contracts with customers 12,884 7,231
Revenue from the United Kingdom of £12.8m (2022: £7.2m) is shown after IFRS
3 related adjustments of £0.07m (2022: £4.2m).
4 Expenses by nature for continuing operations
The following represents expenses incurred during the year, by nature. These
amounts exclude the results of discontinued operations, which are presented
separately in Note 13.
2023 2022
£000 £000
Employee costs 9,630 7,859
Depreciation of property, plant and equipment 119 29
Amortisation of intangible assets 4,514 3,785
Impairment of goodwill and intangible assets 7,748 -
Contractors' costs 2,756 2,366
Acquisition related transaction costs - 423
Fundraise related transaction costs recognised in profit and loss - 108
Professional and legal fees 512 459
Research and development expense capitalised (805) (3,090)
Share-based payment charge 377 613
5 Employee benefit expenses for continuing operations
The following represents employee benefit expenses from continuing operations.
2023 2022
£000 £000
Employee benefit expenses (including directors) comprise:
Wages and salaries 6,934 5,735
Social security costs 801 551
Defined contribution pension cost 359 309
Share-based payment expenses 361 613
Other employee benefits 1,175 651
Total employee benefit expense 9,630 7,859
6 Loss per share
6.1 Basic loss per share
2023 2022
£ £
From continuing operations attributable to the ordinary equity holders of the (0.18) (0.10)
Group
Total basic loss per share attributable to the ordinary equity holders of the (0.19) (0.10)
Group
6.2 Diluted loss per share
2023 2022
£ £
From continuing operations attributable to the ordinary equity holders of the (0.18) (0.10)
Group
Total diluted loss per share attributable to the ordinary equity holders of (0.19) (0.10)
the Group
6.3 Reconciliation of loss used in calculating loss per share
2023 2022
£000 £000
Re-presented
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 (16,588) (8,076)
From discontinued operations (795) (356)
(17,383) (8,432)
6.4 Weighted average number of shares used as the denominator
2023 2022
number number
Shares in issue at the beginning of the period 92,050,727 42,050,728
Shares issued - 35,714,285
Issue of ordinary shares on exercise of equity settled share-based payments 329,573 -
Shares issued on business combination - 14,285,714
Issued ordinary shares as at the end of the period 92,380,300 92,050,727
Weighted average number of ordinary shares used as the denominator in
calculating basic loss per
92,370,367 82,461,686
share
7 Goodwill
7.1 Carrying amount of goodwill
The following represents the carrying value of goodwill as at 31 March 2023.
2023 2022
£000 £000
Cost 18,164 20,175
Accumulated impairment (7,479) (417)
10,685 19,758
The following reconciles goodwill at the beginning and end of the period.
2023 2022
£000 £000
Cost
At 1 April 20,175 9,790
Additions as a result of business combinations - 10,012
Transferred to assets of disposal groups held for sale (1,553) -
Translation differences (458) 373
At 31 March 18,164 20,175
Accumulated impairment
At 1 April 417 -
Impairment charge 7,758 417
Transferred to assets of disposal groups held for sale (696) -
At 31 March 7,479 417
The net carrying value of goodwill transferred to assets of disposal groups
held for sale was £0.8m. During the year ended 31 March 2023, the Group
classified the Induction Switch and Induction Guidance CGU's as disposal
groups held for sale, refer to Note 13. As a result, goodwill balances
relating to these CGU's have been reclassified to assets held for sale, after
the impairment losses detailed below were recognized.
7.2 Allocation of goodwill to cash generating units
Goodwill is allocated to the Group's cash generating unit as follows:
2023 2022
£000 £000
Induction Attend Anywhere 9,928 10,385
Induction Zesty 757 8,237
Induction Guidance - 1,136
Induction Switch - -
10,685 19,758
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.
Goodwill in relation to the Induction Guidance and Induction Switch CGU's have
been re-classified to assets of disposal groups held for sale in accordance
with IFRS 5 "Non-current assets held for sale and discontinued operations.
8 Intangible assets
Trade name
Users
Technology Total
£000
£000
£000 £000
Cost
At 31 March 2021 633 1,426 6,446 8,505
Additions - internally developed - - 3,090 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
Additions - internally developed - - 809 809
Transferred to assets of disposal groups held for sale (264) (919) (1,024) (2,207)
Translation differences - (394) (556) (950)
At 31 March 2023 369 8,147 16,643 25,159
Accumulated amortisation and impairment
At 31 March 2021 83 265 2,273 2,621
Charge for the year 61 1,067 2,658 3,786
Translation differences - 54 83 137
At 31 March 2022 144 1,386 5,014 6,544
Charge for the year 62 1,620 3,034 4,716
Transferred to assets of disposal groups held for sale (102) (355) (513) (970)
Translation differences - (395) 13 (382)
At 31 March 2023 104 2,256 7,548 9,908
Net book value
At 31 March 2022 489 8,074 12,400 20,963
At 31 March 2023 265 5,891 9,095 15,251
9 Events after the reporting date
On the 30th June 2023 the Group announced the completion of the sale of
Switch, a directory app, for an undisclosed sum. This is in line with the
previously announced strategy to focus on sustainable growth and allows
additional cost savings to be applied. The revenues of Switch are disclosed
as part of the discontinued operations.
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