REG - Totally PLC - Final Results <Origin Href="QuoteRef">TLY.L</Origin> - Part 1
RNS Number : 6824ATotally PLC28 March 201728 March 2017
Totally plc
("Totally", "the Company" or "the Group")
Results for the year ended 31 December 2016
The Board of Totally (AIM: TLY), the provider of a range of out-of-hospital services to the healthcare sector in the UK, is pleased to announce its audited results for the year ended 31 December 2016.
Highlights
Significant progress made delivering a progressive 'buy and build' strategy, aimed at establishing Totally as a leading provider of 'out of hospital' care in the UK
Three acquisitions successfully completed during 2016:
o Premier Physical Healthcare Ltd ("Premier"), a provider of physical healthcare services to both public and private patients, for up to 6.75 million and subscription to raise 6.2 million completed in April 2016
o About Health Limited ("About Health"), a provider of community based health services under contract to the NHS with a focus on dermatology services, for up to 7.7 million completed in June 2016
o Optimum Sports Performance Centre ("Optimum"), providing physiotherapy to private markets, for up to 650k completed in November 2016
New and renewed contracts with a value in excess of 1.7m per annum in revenues secured in 2016 by acquired businesses
Positive start to FY 2017 with five subsidiary businesses continuing to secure new business and renew existing contracts with both the NHS England and private sector organisations
Oversubscribed placing and open offer completed in March 2017 raising 17.6 million to capitalise on potential acquisition opportunities within the UK out-of-hospital healthcare market
Continuing to evaluate value accretive acquisition opportunities focused on the UK NHS outsourced healthcare services market, estimated to be worth in the region of 20 billion per year*
Financial Overview
Group turnover increased to 4.0m (2015: 0.6m) exceeding market expectations
Gross profit increased to 1.4m (2015: 0.4m)
EBITDA loss of 1.7m (2015: 0.4m)
Cash position of over 17 million following completion of placing and open offer in March 2017
Wendy Lawrence, CEO of Totally plc, said: "I am pleased to be able to report on the Company's full year results at a stage when we are preparing to bring our buy and build strategy to the next level following a successful oversubscribed 17.6m placing and open offer in March this year. It was a hugely significant fundraise for the Company and represented a defining moment in our expansion as we continue to build ourselves as a leading out of hospital healthcare services provider in the UK. The positive response we received from investors was incredibly encouraging as we act as a consolidator in the fragmented UK healthcare market and seek attractive opportunities.
"Our first three acquisitions have already been successfully integrated and are generating significant value upside for shareholders. We remain focused on progressively adding to the Group through strategic and value accretive acquisitions in 2017, and look forward to updating the market further to this effect in due course."
*Source: Centre for Health and the Public Interest: The contracting NHS - can the NHS handle the outsourcing of clinical services? (2015).
For further information please contact:
Totally plc
020 3866 3335
Wendy Lawrence, Chief Executive
Bob Holt, Chairman
Allenby Capital Limited(Nominated Adviser & Joint Corporate Broker)
020 3328 5656
Nick Athanas
Virginia Bull
Richard Short
Cenkos Securities plc(Joint Corporate Broker)
020 7397 8900
Alex Aylen - Sales
Bobbie Hilliam - Corporate Finance
Yellow Jersey PR
0776 932 5254
Felicity Winkles
Joe Burgess
Chairman's Statement
Business Progress
It gives me great pleasure to report on the significant progress made during the period as we continue to build ourselves into the leading out of hospital healthcare service provider in the UK.
To this end, we successfully completed three acquisitions, focusing on expanding our service offering within the UK healthcare sector and targeting the NHS trend towards outsourcing and outcome based commissioning, a market worth approximately 20bn per annum. The successful integration of these acquisitions saw us begin to deliver on our progressive 'buy and build' strategy, implemented upon my appointment as Chairman at the end of 2015. We intend to continue acting as a consolidator in the fragmented healthcare market, capitalising on the attractive opportunities that our disruptive, outcome-based, outsourced healthcare service model offers, and ultimately delivering value to shareholders as we build critical mass in 2017 and beyond.
The three acquisitions, worth a total consideration of up to 15.1m, included Premier Physical Healthcare, an occupational physiotherapy provider, acquired in April 2016 for up to 6.75m; About Health, a provider of community based dermatology services, acquired in June 2016 for up to 7.7m; and Optimum Sports Performance Centre, providing physiotherapy to private markets, acquired in November for up to 650k. These acquisitions, since incorporation, have secured new and renewed contracts with a value in excess of 1.7m per annum, and represent only the beginning of the Group's transformation. They add to our other two subsidiaries, Totally Health, a clinical coaching service which helps people with long-term conditions via local healthcare providers and My Clinical Coach, the direct-to-consumer equivalent. In total our five subsidiaries have generated revenues of 4m for the year ended 31 December 2016.
We are also pleased to confirm that the Company has made a positive start to the new financial year and our subsidiaries have continued to secure new business and renew existing contracts with both the NHS and other public and private sector organisations. Further, we were extremely pleased to have raised almost 18m through an oversubscribed placing and open offer in March 2017. The amount raised is testament to the confidence that existing and institutional investors have in our proposed growth strategy and the capabilities of our strong management team to deliver. We look forward to updating the market on the continued momentum within the group as we use the placing funds to target further acquisition opportunities that complement our vision of delivering preventative and responsive care to improve people's health, reduce healthcare reliance, re-admissions and emergency admissions.
Strategy
As previously stated we have implemented a progressive 'buy and build' strategy focused on consolidating the fragmented healthcare market to become a leading out of hospital healthcare provider across the UK. As the NHS moves non-acute care components out of hospitals and into the community, we are well positioned to capture much of this market and capitalise on the attractive opportunity that the 20bn plus per annum industry offers.
For the year ahead we will continue to be engaged in delivering our growth strategy, adding to the range of services provided by the Company through working with organisations that share our vision.
We have a number of desirable target companies in our anticipated acquisition pipeline with business models demonstrating recurring revenues and attractive margins, underpinned by long-term contracts and high barriers to entry. Our targeted consideration for these acquisitions is between 3m and 15m.
As we continue to acquire businesses, we will continue to carefully manage their integration into the Group to ensure streamlined costs, economies of scale and robust financial performance at a subsidiary level to benefit the plc bottom line.
As we buy more businesses which complement our business model, there will be further opportunities to deliver on our growth strategy whilst utlilising the acquired expertise to offer a broader range of services. This will bolster our position within the industry and thus build our reputation as a leading out of hospital healthcare provider across the UK.
Financials
We are pleased to report that revenues for the year exceeded market expectations by 0.7m totalling 4.0m, generating a gross profit of 1.4m and a loss before tax of 1.5m which was more than 0.3m less than market expectations. The loss before tax of 1.5m includes an amortisation charge of 0.6m relating to intangible value of contracts acquired during the year.
Our cash position as at 31 December 2016 stood at 1m, however subsequent to the placing completed in March 2017 sits at over 17m which we will look to utlilise in line with our ambitious buy and build strategy.
Outlook
Our strategy remains unchanged and we expect to continue to be acquisitive and complementary to those businesses that are already part of Totally plc. We believe that we are well positioned to deliver strong organic growth from our existing subsidiaries and the continued integration of our three newest businesses. Where appropriate, we will make further acquisitions to develop the breadth and depth of our services, building ourselves as a highly cash generative healthcare company and the market leaders in UK out of hospital health services.
I want to take this opportunity to thank my fellow directors, our employees and shareholders for their continued support during the past year and I look forward to 2017 and beyond with optimism as we enter the next phase of our transformation.
Bob Holt OBE
Chairman
CEO Statement
Positive progress
The headway made by our group of companies in 2016 has been extremely encouraging. During the course of the financial year, Totally plc's five subsidiaries won new and renewed contracts with revenues in excess of 1.7m per annum. As a leading provider of out of hospital healthcare in the UK delivering preventative and responsive care to improve people's health, reduce healthcare reliance, re-admissions and emergency admissions, we are very proud to be working with the NHS as well as public and private sector organisations which include HM Prisons and the UK Police Forces.
We have five subsidiaries that sit under the Totally plc group. We have Totally Health which provides clinical health coaching to help patients with long term conditions and My Clinical Coach, our direct to consumer service which offers clinical health coaching for people with long-term conditions or for general wellness. In addition, during 2016 we acquired Premier Physical Healthcare, an occupational physiotherapy and podiatry company, About Health, a provider of dermatology and referral management services services, and Optimum Sports Performance Centre, providing physiotherapy to private markets.
Our subsidiaries are performing well and are adding real synergies across the spectrum of out of hospital care, delivering services outside of hospitals and bringing care closer to people's homes and places of work.
Premier Physical Healthcare (PPH)
We acquired Premier Physical Healthcare in April 2016 for a maximum consideration of 6.75m. Since then the business has successfully signed contracts with a number of public sector organisations including HM Prisons and Police Forces across the UK, as well as a number of CCGs.
Shortly after acquisition, in April of 2016, PPH secured nine additional prison contracts covering 21 locations around the UK with Care UK. These contracts are for a minimum of five years, with the total value of the being circa 300,000 per annum.
Following this, in July 2016, PPH secured a four-year Occupational Health Physiotherapy Framework Agreement with the Surrey and Sussex Police Force, for musculoskeletal physiotherapy services. This contract will run to 30 June 2020 and has an estimated referral rate of 480 new consultations per year, with over 400 follow-ups, indicatively worth 60,000 per annum in revenues.
In a similar vein, the business also secured the renewal of two contracts with the South Kent Coast and Milton Keynes NHS Clinical Commissioning Groups for the provision of physiotherapy services. These three-year contract renewals are each indicatively worth 30,000 per annum in revenues.
In October, PPH was awarded a six-year contract worth approximately 125,000 with New Hall Prison and Askham Grange Prison in Yorkshire, as part of its ongoing work with Care UK. Later, in November 2016, the business won a three-year contract worth approximately 60,000 with the Occupational Health Unit of Bedfordshire Police, Cambridgeshire Constabulary and Hertfordshire Constabulary for physiotherapy and musculoskeletal treatments to the police force, ensuring they are fit to undertake their roles.
PPH was also awarded "Best Physiotherapy Chain 2016 - UK" in the 2016 International Life Sciences Awards.
I'm also pleased to confirm that since the end of the reporting period PPH has also secured a three-year activity-based contract extension with NHS Swale Clinical Commissioning Group as well as a new 140,000 contract with NHS Care and Custody Health.
About Health
We acquired About Health in June 2016 for up to 7.7m, since then the business has attained impressive results. It retained and/or extended all existing contracts, as well as winning a number of new contracts, collectively totalling a value of around 1.2m revenues per annum. Contracts include a number of Referral Management Services contracts for NHS Clinical Commissioning Groups worth around 480,000 per annum, and in November 2016, About Health was awarded a 763,000 per annum three-year contract renewal to provide dermatology services to NHS East Lancashire CCG, with an option to extend for a further two years.
In October 2016, About Health was awarded a 120,000 contract extension and pilot scheme for referral management services. The business extended its existing contract to deliver a pilot RMS for North Tyneside Clinical Commissioning Group by a further 12 months. This extension followed a highly successful initial evaluation which resulted in significant savings for the CCG. In the same month it also secured a 240,000 12-month pilot of a similar service for North Durham CCG. This Contract added cardiology and gastroenterology as two new specialities to the RMS.
In November 2016, the business was awarded a one-year contract extension with NHS Lancashire North Clinical Commissioning Group, worth 120,000 per annum. Following the end of the reporting period it also secured a new 130,000 12-month RMS contract with Harrogate and Rural District CCG.
Optimum Sports Performance Centre
We acquired Optimum Sports Performance Centre in November of 2016 for a maximum consideration of 650,000. Optimum represents a strong fit with Totally's mission of becoming the leading provider of 'out of hospital' health care in the UK, and brings with it a broad range of value-add services in sports rehabilitation and physiotherapy, along with significant additional revenue potential.
Totally Health - incorporating MyClinicalCoach
Totally Health launched Clinical Health Coaching services in a number of new locations across England and in April 2016, the business commenced a three-year partnership with Healthwise to bring award-winning health education directly to the people of the United Kingdom, giving more people access to resources to help them make better health decisions and health behaviour changes.
In 2016, we launched our direct to consumer service, My Clinical Coach. In December 2016, Totally Health secured a 12-month contract with Guy's and St Thomas' NHS Foundation Trust to provide clinical health coaching services to 50 participants of the Millwall Football Club community trust programme.
The business achieved a number of awards and accolades over the course of the year achieving a special commendation at the National Association of Primary Care Awards alongside Manor Medical Centre in the "Pathway Innovation of the Year"category, and it was also awarded "Clinical Team of the Year - Diabetes" at the General Practice Awards.
We were also thrilled that Totally Health was one of the founding members of the British Lung Foundation's pioneering new Living Well Alliance in November 2016.
Outlook
Following the success of our operating businesses in 2016 I expect 2017 to be no less fruitful as we complete the integration of Optimum Sports Performance Centre, further develop new service delivery models across the Group and look to further acquisitions in line with our ongoing strategy.
We operate across the healthcare sector, both Public and Private sector as well as Direct to Consumer services where spend is largely non-discretionary. We continue to place great emphasis on securing high quality contracts that provide clear and sustainable margins. Our dedication to providing our clients with first class service and value remains undiminished.
Sustained funding and frequent demand issues will continue to be the catalyst for change in the healthcare market. Whilst I do not see a strong prospect of immediate fundamental change, I am clear in my view that the needs of people cannot be met by the current health infrastructure, confirmed in recent announcements on new initiatives by the Secretary of State for Health. Increasingly, commissioners will look to such organisations as Totally to support them in delivering their key objectives. Moreover, further opportunities will result from localised health related outsourcing. Our approach to service quality and innovation puts us in a strong position, and, as this market evolves, we will benefit disproportionately.
Finally, I would like to take this opportunity to thank everyone who works within Totally for their dedication to what they do on a daily basis. Without them we couldn't deliver our strategy or maintain our reputation as providers of first class healthcare related services.
Wendy Lawrence
Chief Executive Officer
Financial Review
The year has been a transformational one for Totally plc as we completed three acquisitions. Premier completing in the in the first quarter, About Health completing in the second quarter and Optimum Sports Performance Centre completing in the final quarter.
I am pleased with the progress of the Group in 2016 with the acquisitions integrating well into the Group and having a positive impact on the Groups finances:
FY 2016
FY 2015
Revenue
4.0m
0.6m
Gross Profit
1.4m
0.4m
LBITDA
(1.7m)
(0.4m)
LBT
(1.5m)
(0.4m)
Net Assets
5.1m
0.5m
Cash
1.0m
0.4m
The above results are positive with revenue exceeding market expectations by 0.7m, the loss before tax being more than 0.3m less than market expectations and LBITDA being 0.2m better than market expectations.
The loss before tax of 1.5m includes an amortisation charge of 0.6m relating to intangible value of contracts acquired during the year.
The finance function continues to support efficiencies across The Group through three main areas:
1) Efficiency drives in infrastructure and overheads
2) Efficiency drives in how services are delivered
3) New products and revenue streams
These efficiencies are driven through a combination of business process alignment and improvement, sharing of resources and the leveraging of technology. In 2016 we reduced overheads in subsidiaries by sharing resources at Group level. These had a direct cost saving to the Group.
As the Group expands more cost savings will be driven without adversely affecting revenue generation, delivery or profitability; in time, and where appropriate, shared service centre resource models will be introduced.
In March 2017, a successful placing of 17.6m was completed. This provides the Group with sufficient capital to execute further acquisitions, satisfy deferred consideration obligations and provide working capital.
The Group infrastructure has been invested in during 2016 to put in place resource to support the expansion of the Group now and for future acquisitions. This includes resource to facilitate cross subsidiary tenders and collaboration and IT infrastructure and governance to allow subsidiaries to tender for larger more complex bids. This investment is expected to realise payback in 2017.
The acquired subsidiaries have all performed well in 2016 and in line with expectations with the following PBT contributions for 2016: Premier 0.2m and About Health 0.2m.
The direct to consumer product, My Clinical Coach, was launched in 2016. In response to internal market research the Board decided to reposition the proposition in 2017 to include physiotherapy and dermatology. These additional routes to market and product offerings will leverage the current platform and technology. However further development is needed to include these offerings. In addition the technology platform remains capitalised (0.7m) and no amortisation charge recognised in 2016 while this and further development is being progressed. On launching the extended services the platform costs will be amortised.
Donald Baladasan
Chief Financial Officer
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMEBER 2016
Continuing operations
Note
2016
'000
2015
'000
Revenue
5
3,977
577
Cost of sales
(2,600)
(184)
Gross profit
1,377
393
Administrative expenses
(2,516)
(708)
Employee benefit expense
7
(20)
(44)
Loss before exceptional items
(1,159)
(359)
Exceptional items
(494)
-
Loss before interest, tax ,depreciation and amortisation
Depreciation
(1,653)
(24)
(359)
(4)
Amortisation
(645)
-
Operating loss
(2,322)
(363)
Share issue costs
-
(49)
Finance income
9
830
-
Finance costs
-
(1)
Loss before taxation
(1,492)
(413)
Income tax
8
(24)
-
Loss for the year attributable to the equity shareholders of the parent company
(1,516)
(413)
Other comprehensive income/(expense)
-
-
Total comprehensive loss for the year net of tax attributable to the equity shareholders of the parent company
(1,516)
(413)
2016
2015
Earnings / (Loss) per share
Note
Pence
Pence
Basic and diluted
Continuing operations
19b
(8)
(15)
Total
(8)
(15)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMEBER 2016
Share premium
Retained
Equity
shareholders'
Share capital
account
earnings
deficit
000
000
000
000
At 1 January 2015
2,453
4,147
(6,739)
(139)
Total comprehensive loss for the year attributable to owners of the parent
-
-
(413)
(413)
Issue of share capital
602
387
-
989
Credit on issue of warrants
-
-
55
55
At 1 January 2016
3,055
4,534
(7,097)
492
Total comprehensive loss for the year attributable to owners of the parent
-
-
(1,516)
(1,516)
Issue of share capital
1,002
5,120
-
6,122
Credit on issue of warrants and options
-
-
25
25
Share premium cancellation *
-
(9,645)
9,645
-
Deferred shares buy - back**
(2,055)
-
2,055
-
At 31 December 2016
2,002
9
3,112
5,123
*In August 2016, following approval by shareholders, the approval of the High Court and the subsequent registration of the Court order with the Register of Companies, the 9.61m share premium account was cancelled, thereby creating distributable reserves.
** In July 2016, following approval by shareholders, the Company progressed the proposed Buy-Back by the Company of all its Deferred Shares and issued one Ordinary Share to Totally's Chairman Bob Holt at nominal value of 0.10, thereby creating the distributable reserves.
The balance of the share premium account may not legally be distributed under section 831 of the Companies Act 2006.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMEBER 2016
2016
2015
Note
000
000
000
000
Non-current assets
Intangible assets
13
12,669
218
Property, plant and equipment
10
95
6
12,764
224
Current assets
Inventory
11
6
-
Trade and other receivables
14
2,047
78
Cash and cash equivalents
998
359
3,051
437
Total assets
15,815
661
Current liabilities
Trade and other payables
15
(922)
(169)
Deferred acquisition consideration falling due within one year
17
(1,641)
-
Borrowings/Invoice discounting
16
(62)
-
(2,625)
(169)
Non- Current liabilities
Deferred acquisition consideration falling due after more than one year
17
(8,018)
-
Other payables
(25)
-
Borrowings
16
(15)
-
Deferred Tax
8
(9)
-
(8,067)
-
Total liabilities
(10,692)
(169)
Net current assets
426
268
Net assets
5,123
492
Shareholders' equity
Called up share capital
19
2,002
3,055
Share premium account
19
9
4,534
Retained earnings
19
3,112
(7,097)
Equity shareholders' funds
5,123
492
These financial statements were approved by the Board of Directors on 27 March 2017 and were signed on its behalf by:
Wendy Lawrence Donald Baladasan
Director Director
Totally plc
Company registration No: 3870101 (England and Wales)
The accompanying notes form part of the financial statements.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMEBER 2016
2016
2015
Note
000
000
Cash flows from operating activities
Loss for the year
(1,516)
(413)
Adjustments for:
- Options and warrants charge
6
25
55
- Amortisation and depreciation
10/13
669
4
- Tax expense recognised in profit or loss
24
-
- Finance income
9
(830)
-
Movements in working capital:
- Movement in trade and other receivables
(503)
74
- Movement in trade and other payables
(25)
(318)
Cash generated from operations
(2,156)
(598)
- Income tax paid
(51)
-
Net cash flows from operating activities
(2,207)
(598)
Cash flow from investing activities
Purchase of property, plant and equipment
(34)
(4)
Acquisition of subsidiaries
17
(2,756)
Development of intangible assets
13
(495)
(218)
Net cash flows from investing activities
(3,285)
(222)
Cash outflow before financing
(5,492)
(820)
Cash flow from financing activities
Issue of share capital, net
6,122
989
Borrowings/invoice discounting increase
19
Finance lease payments
(10)
Net cash flows from financing activities
6,131
989
Net increase in cash and cash equivalents
639
169
Cash and cash equivalents at beginning of year
359
190
Cash and cash equivalents at end of year
998
359
The accompanying notes form part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
1. General information
Totally plc is a public limited company ("Company") incorporated in the United Kingdom under the Companies Act 2006 (registration number 3870101). The Company is domiciled in the United Kingdom and its registered address is Hamilton House, Mabledon Place London WC1H 9BB. The Company's Ordinary Shares are traded on the AlM market of the London Stock Exchange ("AIM").
The Group's principal activities have been the provision of innovative solutions to the healthcare sector, provided by its subsidiaries Totally Health Limited, My Clinical Coach Limited, About Health Limited and Optimum Sports Performance Centre Limited , Premier Physical Healthcare Ltd and its subsidiaries Premier Ergonomics Ltd and Core Ergonomics Limited.
The Company's principal activity is to act as a holding company for its subsidiaries.
2. Authorisation of financial statements and statement of compliance with IFRS
The financial statements for the period ended 31 December 2016 were authorised for issue by the Board of Directors and the Statements of financial position were signed on the Board's behalf by Wendy Lawrence and Don Baladasan on 27 March 2017.
The Group's financial statements have been prepared in accordance with IFRS and International Financial Reporting Interpretations Committee ("IFRIC") interpretations as endorsed by the European Union, and bearing in mind those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements of Totally plc have been prepared in accordance with Financial Reporting Standard 101, Reduced Disclosure Framework (FRS 101). The financial statements have been prepared under the historical cost convention, and in accordance with the Companies Act 2006. The Company's financial statements are presented in Sterling.
In preparing these financial statements the Company has taken advantage of all disclosure exemptions conferred by FRS 101. Therefore these financial statements do not include:
certain comparative information as otherwise required by EU endorsed IFRS;
certain disclosures regarding the Company's capital;
a statement of cash flows;
the effect of future accounting standards not yet adopted;
the disclosure of the remuneration of key management personnel; and
disclosure of related party transactions with wholly owned fellow group companies
In addition, and in accordance with FRS 101 further disclosure exemptions have been adopted because equivalent disclosures are included in the consolidated financial statements of Totally plc. The company financial statements do not include certain disclosures in respect of:
Share based payments; and
Fair value measurement (other than certain disclosures required as a result of recording financial instruments at fair value).
As permitted by Section 408 of the Companies Act 2006 no income statement is presented for the Company. The Company made a loss of 1,018,315 for the year ended 31 December 2016 (2015: loss 387,000).
3. Basis of preparation
The financial year represents the 366 days to 31 December 2016, and the prior financial year, 365 days to 31 December 2015. The consolidated financial statements have been prepared on the historical cost basis and are presented in sterling and all values are rounded to the nearest thousand pounds (000) except when otherwise indicated.
TheGroup's business activities, together with the factors likely to affect its future development, performance and position are set out in the Business Review.. The financial position of the company, its cash flows, liquidity position and borrowing facilities are described in the Finance Director's Review.. In addition, notes to the financial statements include the company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.
The Group has considerable financial resources together with longterm contracts with a number of customers and suppliers across different geographic areas and industries. As a consequence, the directors believe that the company is well placed to manage its business risks successfully despite the current uncertain economic outlook.
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The financial statements are prepared on a going concern basis which the Directors believe to be appropriate for the following reasons.
The Group completed the placing of 31,993,247 shares during March 2017 raising over 17m to fund deferred consideration liabilities, working capital and the further development of the direct to consumer platform into physiotherapy and dermatology.
The Group Budget for the following 12 months from the date of the accounts showed a cash requirement to April 2018 of 5m, pre-placing. This requirement related to a deferred consideration falling due April 2017 and April 2018 and working capital.
4. Summary of significant accounting policies
Basis of consolidation
The Group's financial statements include the results of the Company and its subsidiaries, all of which are prepared up to the same date as the parent company. Uniform accounting policies are adopted by all companies in the Group.
Subsidiaries
Subsidiaries are all entities over which the Group has the ability to exercise control and are accounted for as subsidiaries. The trading results of subsidiaries acquired during the year end are included in the Consolidated Statement of Comprehensive Income form the effective date of acquisition.
All intra-group transactions, balances, income and expenditure are eliminated on consolidation.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date irrespective of the extent of any minority interest. The excess of cost of acquisition over the fair values of the Group's share of identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair value of identifiable net assets acquired (i.e. discount on acquisition) is recognised directly in the Statement of Comprehensive Income. All acquisition expenses have been reported within the consolidated income statement immediately.
Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by other members of the Group.
Revenue recognition - innovative solutions for healthcare
Revenue is generated by providing clinical health coaching, supporting shared decision making services, software solutions to the healthcare sector, physiotherapy and dermatology services. Services are provided through short term and long term contracts.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
Clinical health coaching, supporting shared decision making services and software solutions to the healthcare sector
Profit is recognised on contracts, if the final outcome can be assessed with reasonable certainty, by including in the income statement revenue and related costs as contract activity progresses. Revenue is calculated as that proportion of total contract value which costs to date bear to total expected costs for that contract.
Physiotherapy and dermatology services
Revenue represents invoiced sales of services to regional Care Commissioning Groups of the National Health Service. Revenue is recognised in the month when the service is provided, as this is the point when revenue activity can be reliably measured. At this point there is a probable inflow of economic resources to the entity.
Finance costs
Finance costs comprise interest payable on bank overdrafts and bank charges and are recognised on an accruals basis.
Finance income
Finance income relates to income related to the fair value adjustment of the deferred consideration. This fair value adjustment relates to the net present value of the deferred consideration discounted at 3.5%.
Property, plant and equipment
Property, plant and equipment is carried at cost less accumulated depreciation and any recognised impairment in value. Cost comprises the aggregate amount paid to acquire assets and includes costs directly attributable to making the asset capable of operating as intended.
Depreciation is calculated to write down the cost of the assets to their residual values by equal instalments over the estimated useful economic lives as follows:
Computer equipment
-
2 and 5 years
Fixtures and fittings
-
2 and 3 years
Short leasehold property
-
lease term
The assets' residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate on an annual basis. An asset is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the period that the asset is derecognised.
Inventories
Inventories are valued at the lower of cost and net realisable value. In general cost is determined on a first in first out basis and includes all direct expenditure and production overheads based on a normal level of activity. Net realisable value is the price at which the stocks can be sold in the normal course of business after allowing for the costs of realisation and where appropriate for the costs of conversion from its existing state to a finished condition.
Goodwill
Goodwill arising on consolidation is recorded as an intangible asset and is the surplus of the cost of acquisition over the Group's interest in the fair value of identifiable net assets (including intangible assets) acquired.
Goodwill is deemed to have an identifiable useful life as there is no foreseeable limit to the period over which assets is expected to generate an economic benefit.
Goodwill is reviewed annually for impairment. Any impairment identified as a result of the review is charged in the Statement of Comprehensive Income.
On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Intangible assets other than goodwill - research and development and value of contacts acquired
An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to the extent that it is probable that the expected future economic benefits attributable to the asset will flow to the Group and that its cost can be measured reliably. Such intangible assets are carried at cost less amortisation. Amortisation is charged to the Statement of Comprehensive Income on a straight-line basis over the intangible assets' useful economic life.
The amortisation period is typically 1-10 years depending on the life of the related asset.
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Development expenditure is capitalised only if all of the following conditions are met:
development costs can be measured reliably;
the project is technically and commercially feasible;
future economic benefits are probable; and
the Group has sufficient resources available to complete development and use the asset.
The expenditure capitalised includes only (i) the cost of gross direct labour that is directly attributable to preparing the asset for its intended use or (ii) third party costs incurred directly on the development activities above. The Company estimates the proportion of salaries cost that is directly attributable in respect of development costs.
Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses. Other research and development expenditure not meeting the above criteria is recognised in the income statement as incurred.
Intangible Value of Contracts is the fair value of contracts acquired on acquisition. The value of these contracts is based on the net present value of gross profit and directly attributable overheads. The contract values are amortised on a straight line basis over the life of the contract in line with IFRS.
Impairment of non-current assets
At each balance sheet date, the Group reviews amounts of its intangible fixed assets and property, plant and equipment to determine whether there is any indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset, which is the higher of its fair value less costs to sell and its value in use, is estimated in order to determine the extent of the impairment loss. Where the asset does not generate cash flows that are independent from other assets, the company estimates the recoverable amount of the cash-generating unit ("CGU") to which the asset belongs. For non-current assets excluding goodwill, the CGU is deemed to be cash generating asset or the trading company whichever is the smaller CGU. For goodwill, the CGU is deemed to be the business acquired.
An impairment charge is recognised in the income statement in the period in which it occurs. Where an impairment loss subsequently reverses due to a change in its original estimate, the carrying amount of the asset is increased to the revised estimate of its recoverable amount. The increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior periods.
Trade and other receivables
Trade receivables, which are generally received by the end of month following terms, are recognised and carried at the lower of their original invoiced value and recoverable amount. Provision is made when it is likely that the balance will not be recovered in full. Balances are written off when the probability of recovery is considered remote.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short-term deposits with an original maturity of three months or less. Bank overdrafts that are repayable on demand and form an integral part of cash management are included as components of cash and cash equivalents for the purposes of the cash flow statement.
Trade and other payables
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade and other payables are recognised at original cost.
Borrowings
Borrowings are initially recognised at fair value, being proceeds received less directly attributable transaction costs incurred. Borrowings are subsequently measured at amortised cost with any transaction costs amortised to the income statement over the period of the borrowings using the effective inters method.
Foreign currencies transactions
Transactions denominated in foreign currencies are translated at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the year-end are translated at the exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement.
Leased assets
Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards of ownership to the Group. All other leases are classified as operating leases.
The Group has a short lease on its premises. This is accounted for as an 'operating lease' and the rental charges are charged to the income statement on a straight line basis over the life of the lease. Other operating leases are treated in the same manner.
Exceptional items
Exceptional items are those items that, in the Directors' view, are required to be separately disclosed by virtue of their size or incidence to enable a full understanding of the Group's financial performance.
Share-based payments
The Group provides benefits to employees (including Directors) of the Group in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares ('equity-settled transactions').The fair value of the employee services rendered is determined by reference to the fair value of the shares awarded or options granted, excluding the impact of any non-market vesting conditions. All share options are valued using an option-pricing model (Black-Scholes). This fair value is charged to the income statement over the vesting period of the share-based payment scheme, with the corresponding increase in equity.
The value of the charge is adjusted in the income statement over the remainder of the vesting period to reflect expected and actual levels of options vesting, with the corresponding adjustment made in equity.
Income taxes
Current income tax assets and liabilities are measured at the amount expected to be recovered or paid to the taxation authorities based on tax rates and laws that are enacted or substantively enacted by the year end date. Deferred income tax is recognised using the balance sheet liability method, providing for temporary differences between the tax bases and the accounting bases of assets and liabilities. Deferred income tax is calculated on an undiscounted basis at the tax rates that are expected to apply in the period when the liability is settled and the asset is realised, based on tax rates and laws enacted or substantively enacted at the year end date.
Deferred income tax liabilities are recognised for all temporary differences, except for an asset or liability in a transaction that is not a business combination and at the time of the transaction, effects neither the accounting profit nor taxable profit or loss.
Deferred income tax is charged or credited to the income statement, except when it relates to items charged or credited to equity, in which case the deferred tax is also dealt with in equity. Deferred income tax assets and liabilities are offset against each other only when the Company has a legally enforceable right to do so.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences can be utilised.
Retirement benefits
The Group operates a defined contribution plan. A defined contribution plan is a pension plan under which the company pays fixed contribution into a separate entity. Contributions payable to the plan are charged to the income statement in the period to which they relate. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Use of assumptions and estimates
The Group makes judgements, estimates and assumptions that effect the application of policies and reported amounts of assets and liabilities, income and expenses. The resulting accounting estimates calculated using these judgements and assumptions will, by definition, seldom equal the related actual results but are based on historical experience and expectations of future events. The Group estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision effects only that period, or in the period of revision and future periods if the revision effects both current and future periods.
The estimates and assumptions that have a significant effect on the amounts recognised in the financial statements are those related to establishing depreciation and amortisation periods and the estimates in relation to future cash flows and discount rates utilised in the impairment testing of intangible and tangible fixed assets.
The Group has estimated the proportion of salaries directly attributable to development costs, which were capitalised during the year 2016 and 2015.
Change in accounting policies
No new standards, amendments or interpretations, effective for the first time for the financial year beginning on or after 1 January 2016 have had a material impact on the Group or parent company.
The following new standards, amendments to standards and interpretations will be mandatory for the first time in future financial years.
IFRS 9, "Financial Instruments" ("IFRS 9") (IASB effective date 1 January 2018).
IFRS 16, "Leases" ("IFRS 16") (IASB effective date 1 January 2019).
IAS 7, "Statement of Cash Flows" ("IAS 7") (IASB effective date 1 January 2017).
IAS 12, "Income Taxes" ("IAS 12") (IASB effective date 1 January 2017).
IFRS 12 "Disclosure of interests in Other Entities" (IASB effective date 1 January 2017).
IFRS 15, "Revenues from Contracts with Customers" ("IFRS 15") (IASB effective date 1 January 2018).
IFRS 2, "Share-based Payment" ("IFRS 2") (IASB effective date 1 January 2018).
IAS 28 "Investments in Associates and Joint Ventures" (IASB effective date 1 January 2018).
IAS 40 "Investment Property" (IASB effective date 1 January 2018).
The revised standards will be adopted when effective in the Group's consolidated financial statements, although are not expected to have a significant impact on the Group.
5. Segmental analysis - operating segments
Segment information is presented in respect of the Group's operating segments. Segments are determined by reference to the internal reports reviewed by the Board.
The chief operating decision maker ("CODM") for the purpose of IFRS 8 is the executive management team. For the purpose of resource allocation and assessment of performance, the CODM regularly reviews information based on the goods and services at a revenue and EBITDA level.
The Board have assessed that the basis for segment reporting should be changed due to acquisition of new business during 2016.
The following segments were determined:
Totally Health and MyClinicalCoach are providers of innovative solutions to the healthcare sector.
Totally plc represents a head office function.
Premier Physical Healthcare Ltd provides a comprehensive range of treatments and advice for musculoskeletal injures and conditions.
About Health Limited provides the high-quality dermatology services.
Optimum Sports Performance Centre Limited provides physiotherapy services.
The Group's management reporting and controlling systems use the accounting policies that are the same as those referred to in Note 4.
Segmental analysis - segment measures
The Group measures the performance of its operating segments through a measure of segment profit or loss which is referred to as EBITDA. This measure is reported to the CODM for the purposes of resource allocation and assessment of performance.
Interest income, interest expense and income tax expense are not included in the EBITDA profit measure which is reviewed by the CODM. Tax and treasury balances are managed centrally.
Segment assets and liabilities are not regularly provided to the CODM. The Group has elected, as provided under IFRS 8 "Operating Segments" (amended 2009) not to disclose a measure of segment assets or liabilities where these amounts are not regularly provided to the CODM.
Inter-segment revenue is recorded at values that represent estimated third-party selling prices.
With respect to geographical regions, revenue is generally allocated to countries based on the location where the goods and services are provided. Non-current assets are disclosed according to the location of the businesses to which the assets relate. In 2016 and 2015, all segments operated solely in the UK, and as a result no secondary format is provided in the financial statements.
Segmental analysis - major customers
During the year there were 8 customers (2015: 2) which separately comprised 10% or more of revenue of each subsidiary.
2016
2015
'000
'000
Totally Health
Major Customer 1
150
62
Major Customer 2
53
55
203
117
Premier
Major Customer 1
Major Customer 2
896
520
-
-
1,416
-
About Health
Major Customer 1
Major Customer 2
381
177
-
-
558
-
Optimum
Major Customer 1
Major Customer 2
25
15
-
-
40
-
Primary reporting format - business segments
The table below sets out information for the Group's business segments for the years ended 31 December 2016 and 2015. Segment revenue represents revenue from external customers arising from the sale of goods and services.
The type of products sold by each segment is detailed in the Strategic Report. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Analysis by business segment 2016
Totally
Premier
About Health
Optimum
Head Office
Total
Health
My Clinical
Physical
Healthcare
Sports
Performance
Coach
Centre
000
000
000
000
'000
'000
Revenue
218
2,077
1,538
144
-
3,977
EBITDA
(853)
178
192
30
(1,200)
(1,653)
Amortisation
Depreciation
-
(1)
(2)
(15)
(645)
(6)
(645)
(24)
Operating (loss)/profit
(853)
177
190
15
(1,851)
(2,322)
Share issue costs
-
-
-
-
-
-
Finance income
-
-
--
830
830
Finance costs
-
-
-
-
-
-
(Loss)/profit before tax
(853)
177
190
15
(1,021)
(1,492))
Income tax
-
3
(13)
(14)
-
(24)
(Loss)/profit after tax
(853)
180
177
1
(1,021)
(1,516)
Segment assets
354
526
785
620
13,530
15,815
Segment liabilities
(146)
(267)
(245)
(216)
9,818
10,692
Analysis by business segment 2015
Innovative
Head
solutions for
Office
Healthcare*
Total
000
000
000
Revenue
577
-
577
EBITDA
(29)
(330)
(359)
Depreciation
(4)
-
(4)
Operating (loss)/profit
(33)
(330)
(363)
Share issue costs
-
(49)
(49)
Finance costs
-
(1)
(1)
(Loss) before tax
(33)
(380)
(413)
Income tax
-
-
-
(Loss) after tax
(33)
(380)
(413)
Segment assets
178
170
348
Segment liabilities
(323)
(164)
(487)
*Totally Health and MyClinicalCoach are providers of innovative solutions to the health sector.
6. Loss on operating activities before taxation
2016
2015
000
000
Loss on ordinary activities before and after taxation is stated after charging:
Share-based payments (See note 20(b))
25
55
Impairment charge for provisions in relation to irrecoverability of trade receivables
-
-
Operating lease charges - land and buildings
74
29
Defined contribution pension schemes
24
-
Expenses in connection with the acquisition of subsidiaries
495
-
Depreciation
24
4
Amortisation
645
-
Auditors' remuneration
Fees payable to the Company's auditors for the audit of the parent company and
20
17
consolidated financial statement
The audit of the Company's subsidiaries
19
5
Fees payable to the Company's auditors for the other services:
Other services
91
-
Tax compliance services
6
1
7. Employee information
The average number of persons employed by the Group (including Directors) during the year, analysed by category, was as follows:
Number of employees
PLC/TH/MCC
2016
2015
Management and finance
IT
7
2
5
-
Sales and marketing
2
1
Administrative
1
1
Health coaches and project managers
6
6
Non-executive directors
3
3
21
16
Optimum
Management and finance
Administrative
Physios
4
7
27
38
-
About Health
Management and finance
Administrative
Clinicians
5
13
3
21
-
Premier
Management and finance
Administrative
Physios
12
7
20
39
* The figures for Premier, About Health and Optimum relate to the period from acquisition.
Staff costs for the above employees and Directors (included under Administrative expenses):
2016
2015
000
000
PLC/TH/MCC
Wages and salaries
647
644
Social security costs
74
61
Share based payments*
20
44
Pension costs
1
-
742
749
Optimum
Wages and salaries
Social security costs
80
8
-
-
Pension costs
-
-
88
-
About Health
Wages and salaries
Social security costs
165
25
-
Pension costs
19
-
209
-
Premier
Wages and salaries
Social security costs
751
94
-
Pension costs
1
-
846
The compensation for employees and Directors (included under Administrative expenses) includes the following:
2016
2015
Directors
Key management personnel
Staff
Total
Directors
Key management personnel
Staff
Total
000
000
000
000
000
000
000
000
Share based payments
15
4
-
19
44
-
-
44
SAYE
1
-
-
1
-
-
-
-
16
4
-
20
44
-
-
44
Directors' emoluments
2016
Salaries & fees
Bonus
Pension
2016
2015
contribution
000
000
000
000
000
Executive directors
W Lawrence
106
-
-
106
93
A Margolis (resigned 28 /09/ 2015) **
-
-
-
-
51
D Baladasan
88
-
-
88
75
Non-Executive directors
T Bourne
15
-
-
15
4
M Rogers
15
-
-
15
1
R Holt*
-
-
-
-
-
M J Sinclair (resigned 15/09/ 2015) **
-
-
-
-
30
J Clipsham (resigned 25 /09/2015) **
-
-
-
-
29
S Laitner (resigned 6 /11/ 2015)
-
-
-
-
17
224
-
-
224
300
* R Holt has an agreement not to receive any emoluments until the Group's EBITDA exceeds 1m per annum
** During 2015, the directors listed below terminated their employment contracts and severance payments included in director's emoluments above are as follows:
Dr. M J Sinclair - 12,500
A Margolis - 30,000
J Clipsham - 6,250
Employee benefits
Share - based employee remuneration
The Group operates an equity-settled share based compensation plan for Directors and executives. In accordance with IFRS 1, the Group has elected to implement the measurement requirements of IFRS 2 in respect of only those equity-settled share options that were granted after 7November 2002 and that had not vested as at 1 January 2005. The fair value of the employee services received in exchange for the grant of options is recognised as an expense over the vesting period. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted at the grant date.
At each year end date, the Group revises its estimate of the number of options that are expected to vest. It recognises the impact of the revision of original estimates, if any, in the Statement of Consolidated Income, and a corresponding adjustment to equity over the remaining vesting period. When share options are cancelled the Group accounts for the cancellation as an acceleration of vesting and therefore recognises immediately the amount that otherwise would have been recognised for services received over the remainder of the vesting period. The fair value of share options has been assessed using the Black Scholes Model. For SAYE plans, employees are required to contribute towards the plan .This non-vesting condition is taken into account in calculating grant date fair value.
Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital, with any excess being recorded as share premium.
8. Taxation
(a) Taxation charge
2016
2015
000
000
Total current income tax charged in the income statement
24
-
(b) Taxation reconciliation
The current income tax charge for the period is explained below:
2016
2015
000
000
Loss before tax
(1,494)
(413)
Taxation at the standard UK income tax rate of 20.00 % (2015: 20.75 %)
(299)
(86)
Non deductible expenses
106
14
Amortisation of intangible assets
129
-
Capital allowances in excess of depreciation
(5)
-
Tax losses utilised
(1)
-
Adjustments to tax charge in respect of prior periods
3
-
Losses carried forward
91
72
Total income tax charged in the income statement
24
-
(c) Deferred tax
Estimated tax losses of approximately 3,320,000 (2015: 3,006,000) are available to relieve future profits of the Group. A deferred tax asset has not been recognised in respect of these losses due to uncertainty as to the timing and tax rate at which these losses will be utilised against future taxable profit streams.
A deferred tax liability of 8,980 (2015: Nil) has been recognised in relation to accelerated capital allowances.
9. Finance income
2016
2015
000
000
Finance income
830
-
Total finance income
830
-
Finance income relates to the fair value adjustment of the deferred consideration. The fair value adjustment is based on net present value of the deferred consideration discounted at 3.5%.
10. Property, plant and equipment
Short
Motor
Plant
Office
leasehold
Computer
Vehicles
Machinery
Equipment
property
equipment
Total
Group
000
000
000
000
000
000
Cost
At 1 January 2016
-
-
-
32
6
38
Additions
-
-2
-
22
24
Acquisition of PPH/AH/Optimum
31
124
69
-
-
224
At 31 December 2016
31
124
71
32
28
286
Depreciation
At 1 January 2016
29
3
32
Acquisition of PPH/AH/Optimum
57
15
-
-
72
Provided in the year
9
41
29
3
5
87
At 31 December 2016
9
98
44
32
8
191
At 31 December 2016
22
26
27
-
20
95
At 31 December 2015
-
-
-
3
3
6
Computer
equipment
Total
Company
000
000
Cost
At 1 January 2016
2
2
Additions
20
20
At 31 December 2016
22
22
Depreciation
At 1 January 2016
1
1
Provided in the year
3
3
At 31 December 2016
4
4
Net book value
18
18
At 31 December 2016
18
18
At 31 December 2015
1
1
11. Inventories
2016
2015
000
000
Consumables
2
-
Goods for resale
4
-
6
-
The cost of inventories recognised as an expense in administrative costs amounted to 6,000.
12. Investments
Company
Investments in share capital of wholly owned subsidiaries.
Total
000
Cost
At 1 January 2016
-
Additions
Acquisition of Premier Physical Healthcare Ltd
Acquisition of About Health Limited
Acquisition of Optimum Sports Performance Centre Limited
5,117
7,700
650
At 31 December 2016
13,467
Net book value
At 31 December 2016
13,467
At 31 December 2015
-
The Directors believe that the carrying value of the investments is supported by the expected future profitability of the subsidiaries.
The subsidiary companies, all of which have been consolidated, at 31 December 2016 are as follows. All shares are held directly by the company except My Clinical Coach Ltd which is wholly owned by Totally Health Ltd
Percentage of
Subsidiary undertakings held directly
Country of incorporation
equity capital held
Nature of business
Totally Health Limited
England and Wales
100%
Bespoke IT healthcare solutions
My Clinical Coach Limited
England and Wales
100%
Direct to consumer health coaching services
Premier Physical Healthcare Ltd *
England and Wales
100%
Physiotherapy and podiatry service
About Health Limited
England and Wales
100%
Dermatology service
Optimum Sports Performance Centre Limited
England and Wales
100%
Physiotherapy service
*The subsidiaries of Premier Physical Healthcare Ltd, all of which have been consolidated, at 31 December 2016 are as follows:
Subsidiary undertakings held directly
Country of incorporation
equity capital held
Nature of business
Premier Ergonomics Limited
England and Wales
100%
Provision of ergonomic risk
assessment
Core Ergonomics Limited
England and Wales
90%
Provision of online health
and safety risk assessments
13. Intangible assets
Group
Development costs
Intangible value of contracts
Goodwill
Total
'000
'000
'000
'000
Cost
At 1 January 2016
218
-
-
218
Additions
495
-
-
495
Acquisition of PPH/AH/Optimum
-
1,239
11,362
12,601
At 31 December 2016
713
1,239
11,362
13,314
Amortisation
At 1 January 2016
-
-
-
-
Provided in the year
-
645
-
645
At 31 December 2016
-
645
-
645
Net book value
At 31 December 2016
713
594
11,362
12,669
At 31 December 2015
218
-
-
218
Development costs relate to the design and construction of the business to consumer service (B2C) My Clinical Coach. As at 31 December 2016 the B2C service was still in the development phase and therefore no amortisation has been recognised in the income statement. Management estimates the useful economic life of the system to be 5 years once development has been completed.
Intangible Value of Contracts is the fair value expected profitability of contracts acquired on acquisition. The value of these contracts is based on the net present value of the gross profit and directly attributable overheads.
. The contract values are amortised on a straight line basis over the life of the contracts in line with IFRS.
14. Trade and other receivables
Group
Group
Company
Company
2016
2015
2016
2015
000
000
000
000
Trade receivables
1,146
33
-
-
Other receivables
473
-
186
-
Directors' loans
3
6
-
-
Prepayments and deferred costs
425
39
47
10
Amounts owed by group undertakings
-
-
2,459
1,057
2,047
78
2,692
1,067
The creation of provision for impaired trade receivables is included in administration costs in the income statement. Amounts charged to the allowance account are generally written off when there is no expectation of recovering further cash. There is no provision for other receivables. The ageing analysis of trade receivables is as follows:
2016
2015
2016
2015
000
000
000
000
Under three months
888
33
-
-
Three to six months
257
-
-
-
Over six months
1
-
-
-
1,146
33
-
-
The Group holds no collateral against these receivables at the year end date and does not charge interest on its overdue receivables. The other classes within trade and other receivables do not contain impaired assets.
15. Trade and other payables
Group
Group
Company
Company
2016
2015
2016
2015
000
000
000
000
Current
Trade payables
713
92
82
33
Amounts owed to group undertakings
-
-
-
-
Other taxes and social security
77
20
-
-
Other creditors
18
11
-
-
Corporation tax
43
-
-
-
Accruals
71
46
25
20
922
169
107
53
Trade payables and accruals principally comprise amounts outstanding from purchases and ongoing costs. The directors consider that the carrying amount of trade payables approximates to their fair value.
16. Financial liabilities - borrowings
Undrawn facilities
As at 31 December 2016 and 31 December 2015 the Group had no undrawn overdraft facilities.
Other borrowings
Obligations under finance lease
Invoice discounting facilities
2016
'000
Obligations under finance lease
Invoice discounting facilities
2015
'000
Current
6
56
62
-
-
-
Non-Current
15
-
15
-
-
-
21
56
77
-
-
-
17.Business combinations
Premier Physical Healthcare Ltd
On 1 April 2016, the Company acquired the entire share capital of Premier Physical Healthcare Ltd and its wholly subsidiaries for maximum consideration of 6.75 million, based on the financial performance of Premier. Premier is a provider of physiotherapy, podiatry and ergonomics services to a variety of clients. The company was acquired to embark on the Company's 'buy and build strategy' and to bring new and complementary routes to the existing health coaching service. The assets and liabilities as at 1 April 2016 arising from the acquisition were as follows:
Fair value
000
Property and equipment
4
Trade receivables and other debtors
410
Trade and other payables
(256)
Borrowings
(62)
Taxes and social security
(39)
Net assets acquired
57
Goodwill
4,339
Value of contracts
721
Total consideration
5,117
Satisfied by:
Cash
544
Deferred consideration falling due within one year
1,028
Deferred consideration falling due more after more than one year
3,545
5,117
The consideration for the acquisition is to be satisfied through the initial cash payment of 341,974, followed by the second cash payment of 172,101 made in August 2016 and three potential deferred payments payable between 2017 and 2019 being settled as to 80 per cent. in cash and 20 per cent. via the issue of the new Ordinary Shares, based on the financial performance of the Premier. The provision of 4.2 m in relation to the subsequent considerations have been recognised in the consolidated statement of financial position.
Acquisition related cost of 284,808 has been recognised as an exceptional administrative expense in the consolidated statement of comprehensive income.
About Health Limited
On 15 June 2016, the Company acquired the entire share capital of About Health Limited for a total maximum consideration of 7,7 million, based on the financial performance of About Health. About Health provides community based health services under contact to the NHS and a leader in the provision of dermatology and patient referral management services. The acquisition of About Health is the next key step in the Company implementing its "buy and build'' strategy and growing a diversified portfolio in the out of hospital care sector. The assets and liabilities as at 15 June 2016 arising from the acquisition were as follow:
Fair value
000
Property and equipment
9
Trade receivables and other debtors
626
Cash in hand
108
Trade and other payables
(302)
Taxes and social security
(54)
Net assets acquired
387
Goodwill
6,795
Value of contracts
518
Total consideration
7,700
Satisfied by:
Cash
2,033
Deferred consideration falling due within one year
606
Deferred consideration falling due more after more than one year
5,061
7,700
The consideration for the acquisition is to be satisfied through the first initial cash payment of 2,033,529 (of which 0.2m was used to settle shareholders' loans due to About Health Limited), followed by three potential deferred payments payable between 2017 and 2019 being settled as to 80 per cent. in cash and 20 per cent. via the issue of the new Ordinary Shares, based on the financial performance of the About Health.
The provision of 5.2 m in relation to the subsequent considerations have been recognised in the consolidated statement of financial position.
Acquisition related cost of 161,612 has been recognised as an exceptional administrative expense in the consolidated statement of comprehensive income.
Optimum Sports Performance Centre Limited
On 14 November 2016, the Company acquired the entire share capital of Optimum Sports Performance Centre Ltd. Optimum is an established provider of physiotherapy services in the UK and the acquisition complements Totally's existing services. The assets and liabilities as at 15 November 2016 arising from the acquisition were as follow:
Fair value
000
Property and equipment
66
Inventory
6
Trade receivables and other debtors
433
Cash in hand
132
Trade and other payables
(205)
Deferred tax
(10)
Net assets acquired
422
Goodwill
228
Total consideration
650
Satisfied by:
Cash
400
Deferred consideration falling due within one year
64
Deferred consideration falling due more after more than one year
186
650
The consideration for the acquisition is to be satisfied through the first initial cash payment of 400,000, followed by two potential deferred payments payable between 2017 and 2018, wholly based on the financial performance of the Optimum for the financial year ending 31 December 2016 and 31 December 2017.
The provision of 231,930 in relation to the subsequent considerations have been recognised in the consolidated statement of financial position. The total consideration payable should not exceed 650,000.
Acquisition related cost of 47,755 has been recognised as an exceptional administrative expense in the consolidated statement of comprehensive income.
The goodwill arose on the acquisitions as the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce. These benefits are not recognised separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets. None of the goodwill arising on these acquisitions is expected to be deductible for tax purpose.
Deferred considerations
Under the purchase agreements to acquire the above mentioned companies, contingent consideration of up to 9.11 m is payable subject to the business performance during the three years after acquisition dates. The amounts payable have been discounted for the time value of money at a discount rate of 3.5%. As a result of discounting, the finance income of 829,795 has been recognised in the consolidated income statement and the provision in relation to this consideration has been recognised in the consolidated financial statements as follows:
Premier Physical Healthcare
About
Health
Optimum
Sports
Physiotherapy
Total
2016
Total
2015
Centre
'000
'000
Current
993
585
63
1,641
-
Non-Current
3,222
4,628
168
8,018
-
4,215
5,213
231
9,659
-
18. Financial instruments
The Group's financial instruments comprise cash and various items, such as trade receivables and trade payables, that arise directly from The Group's activities expose the Group to a number of risks including capital management risk, credit risk and liquidity risk. The policies
Fair values of financial instruments
For the following financial assets and liabilities: trade and other payables, trade and other receivables and cash at bank and in hand, the carrying amount approximates the fair value of the instrument due to the short-term nature of the instrument.
The Group's activities expose the Group to a number of risks including capital management risk, credit risk and liquidity risk. The policies for managing these risks are regularly reviewed and agreed by the Board.
It is the Group's policy that no trading in financial instruments should be undertaken.
Capital management risk
The Group's main objective when managing capital is to protect returns to shareholders by ensuring the Group will continue to trade in the foreseeable future. The Group also aims to optimise its capital structure of debt and equity so as to minimise its cost of capital. The Group in particular reviews its levels of borrowing and the repayment dates, setting these out against forecast cash flows and reviewing the level of available funds.
The capital structure of the Group currently consists of cash and cash equivalents and equity attributable to holders of the parent, comprising issued share capital, reserves and retained earnings. The Group continually looks at having the most appropriate capital structure to enable the Group to maximise value to all stakeholders.
In the future, as the Group executes its expansion strategy, debt may be considered as part of the most appropriate capital structure. If debt were to be introduced the Group will review the gearing ratio to monitor the capital return. This ratio would be calculated as the total borrowings divided by total capital. Total borrowings include "current and non-current borrowings" as shown in the Consolidated Statement of Financial Position. Total capital is calculated as "equity" as shown in the Consolidated Statement of Financial Position plus total borrowings. The Group remains financed by its share capital and reserves and expects to fund future working capital through the equity.
The below table details analysis of the Group's capital management structure.
2016
2015
'000
'000
Debt
(77)
-
Cash and cash equivalents
998
359
Net cash
921
359
Equity
5,726
492
Debt to equity ratio
1.34 %
0.00%
Interest rate risk
The Group and Company's interest rate exposure arises mainly from the interest-bearing borrowings as disclosed in note 16. All of the Group's facilities were at floating rates, which exposed the entity to cash flow risk. As at 31 December 2015 there are no loans outstanding and no undrawn overdraft facilities available to the Group.
Foreign exchange risk
The Group and Company operates principally in the United Kingdom and as such the majority of the Group and Company's financial assets and liabilities are denominated in sterling, and there is no material exposure to exchange risks.
Credit risk
The Group's credit risk primarily relates to trade and other receivables and accrued income. The amounts presented in the statement of financial position are net of allowances for doubtful receivables, estimated by the Group's management.
Customer credit risk is managed by each business unit subject to the Group's established policy, procedures and controls relating to customer credit management. Credit limits are established for all customers and are based inter alia on credit checks. Outstanding customer receivables are regularly monitored.
Liquidity risk
Cash balances and borrowings are managed so as to maximise interest earned and minimise interest paid, while maintaining the liquidity requirement of the business. When seeking borrowings, the directors consider the commercial terms available and, in consultation with their advisors, consider whether such terms should be fixed or variable and are appropriate to the business.
The Group would normally expect that sufficient cash is generated in the operating cycle to meet the contractual cash flows through effective cash management.
19. Share capital and reserves
(a) Share capital
31 December 2016
31 December 2015
000
000
Authorised
20,014,079 ordinary shares of 10p each (2015: 9,994,953 of 10p each)
2,002
1,000
Deferred shares of 0.9p each (2015: 228,402,392 of 0.9p each) -see below
-
2,055
2,002
3,055
Allotted, called up and fully paid
20,014,079 ordinary shares of 10p each (2015: 9,994,953 of 10p each)
2,002
1,000
Deferred shares of 0.9p each (2015: 228,402,392 of 0.9p each)
-
2,055
2,002
3,055
In July 2016, following approval by shareholders, 228,402,392 deferred shares representing 67% of the share capital were bought back by the Company from the proceeds of one Ordinary Share issued to Totally's Chairman Bob Holt at 10 pence. The buy back was arranged in order to increase distributable reserves. The share capital of 2,055m was transferred to retained earnings.
The Ordinary shares carry full voting rights, the right to attend general meetings of the Company and full rights to receive dividends. The shares do not confer any rights of redemption.
The Deferred Shares carried no voting rights, no rights to attend general meetings of the Company, and no rights to receive dividends. The Deferred Shares do carry a right to participate in any return of capital to the extent of 0.01 pence per Deferred Share but only after each Ordinary Share has received in aggregate capital repayments totalling 1,000,000 per Ordinary Share.
Number of ordinary shares
2016
2015
Balance at 1 January pre consolidation
9,994,953
397,617,450
Issue of shares - pre consolidation - see below
-
1,499,212
Total balance pre consolidation
-
399,116,662
Total balance post consolidation
9,994,953
3,991,166
Issue of shares - see below
10,019,126
6,003,787
Balance at 31 December
20,014,079
9,994,953
(1) In August 2015, the Company reorganised its share capital. Every 100 existing ordinary shares of 0.1 pence each was consolidated into one ordinary shares of 10 pence.
(2) In March 2016, the Company issued 10,000,000 new ordinary shares of 10 pence each.
(3) In July 2016, following approval by shareholders to buy-back by the Company of all its Deferred Shares, the Company has issued one Ordinary Share to Totally's Chairman Bob Holt at nominal value 10 pence.
(4) In July 2016 , Allenby Capital Limited exercised warrants to acquire 1,167 new ordinary shares of 10 pence each in the Company. The exercise price was 60 pence and proceeds realisable by the Company from this warrant exercise were 700.20.
(5) In September 2016, Optiva Securities Limited Ltd exercised warrants to acquire 17,958 new ordinary shares of 10 pence each in the Company. The exercise price was 60 pence and proceeds realisable by the Company from this warrant exercise were 10,775.
(b) Earnings per share
Earnings per share
2016
2015
Basic and diluted earnings (continuing operations) (000)
(1,516)
(413)
Weighted average number of shares used in basic and diluted earnings per share calculations
(continuing operations) (000) pre consolidation
-
282,874
Weighted average number of shares used in basic and diluted earnings per share calculations
(continuing operations) (000) post consolidation*
17,973
2,828
Basic earnings per share (continuing operations) (Pence)
(8)
(15)
* The weighted average number of shares and prior year earnings per share data has been restated to reflect share consolidation in 2015.
Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.
None of the share options or warrants in issue had a dilutive effect on earnings per share in 2016 and 2015.
(c) Share premium account
The share premium account represents the amounts received by the Company on the issue of ordinary shares that are in excess of the nominal value of the issued shares. Directly chargeable issue costs are charged to the share premium account.
On 26 August 2016, the High Court approved the cancellation of the balance standing to the credit of The Company's share premium account. As a consequence of the Capital Reduction, 9.645 million of the Company's share premium account has been cancelled and distributed to retain earnings.
The capitalredemptionreserve is a non-distributable reserve and representspaid up sharecapital.
(d) Retained earnings
This reserve records the accumulated profits and losses of the Group less dividends paid.
(e) Share options
During 2016, 334,949 share options were granted under SAYE scheme. Details of all options in issue during 2016 are as follows:
Exercise
Exercise
Outstanding at
Issued
Expired
Residual at
Grant date
period
price
start of year
in year
in year
31 December 2016
11/11/2015
10 years
44p
250,000
-
-
250,000
11/11/2015
10 years
44p
100,000
-
-
100,000
11/11/2015
10 years
44p
50,000
-
-
50,000
11/11/2015
10 years
44p
50,000
-
-
50,000
11/11/2016
3 years
46p
-
334,949
-
334,949
450,000
334,949
-
784,949
(f) Share warrants
Details of all warrants in issue during 2016 are as follows:
Outstanding at
Residual at
Grant date
Exercise period
Exercise price
start of year
Issued in year
Expired/exercised in year
31 December 2016
30September 2008
No expiry date
100p
350,000
-
-
350,000
8 October 2009
Within 10 years from grant date
100p
1,667
-
-
1,667
11June 2013
Within 3 years from grant date
120p
56,838
-
56,838
-
26September 2013
Within 3 years from grant date
60p
19,125
-
19,125
-
427,630
-
75,463
351,667
(g) Managing capital
Our objective in managing the capital structure is to ensure that the Group has the financial capacity, liquidity and flexibility to support the existing business and to fund opportunities as they arise.
20. Share-based employee remuneration
During the year ended 31 December 2016 the Group and Company had three share based payment arrangements as described below.
(a) Employee Share Options
Totally plc Enterprise Management Incentive Plan - 10 year limit *
The estimated fair value of each option has been calculated using the Black Scholes option pricing model for different options granted. The estimated fair value of outstanding options varies between 10.9 and 11.5 pence. The model inputs are share price at grant date, exercise price, expected volatility of 29 per cent, no expected dividends, contractual life of three years, and a risk free interest rate of four per cent. A reconciliation of option movements over the year is shown below.
The volatility of the Company's share price on each date of grant was calculated as the average of the standard deviations of daily continuously compounded returns on the stock of the company, calculated back over a period commensurate with the expected life of the option. The risk-free rate used is the yield to maturity on the date of grant, with term to maturity equal to the expected life of the option. It is assumed that options would be exercised within two years of the date on which they vest.
*Don Baladasan's share options are not part of the EMI Plan.
2016
2016 weighted
2015
2015 weighted
Number
average price
Number
average price
'000s
Pence
'000s
Pence
Outstanding at 1 January
450
44
5,125
1
Granted
335
46
30,450
44
Exercised
-
-
-
-
Expired/surrendered
-
-
(35,125)
(44)
Outstanding at 31 December
785
90
450
1
2016
2015
Range of exercise price (Pence)
44-46
44
Weighted average exercise price (Pence)
45
44
Number of shares (000's)
785
450
Weighted average remaining life years - Expected
5
5
Weighted average remaining life years - Contractual
6
10
(b) Warrants
The estimated fair value of each warrant has been calculated using the Black Scholes option pricing model for different warrants granted as outlined in Note 17. The estimated fair value of warrants varies between 0.49 pence and 0.01 pence. The model inputs are share price at grant date, exercise price, expected volatility of 29 per cent, no expected dividends, maximum contractual life of three years, and a risk free interest rate of four per cent. A maximum three year contractual life has been used to reflect the non-tradability of the warrants compared to the actual contractual life in any cases in excess of three years. The full cost of the warrants is recognised at the date of grant. Comparatives are based on ordinary shares of 10 pence.
(b) Save As You Earn (SAYE) scheme
The SAYE was introduced in December 2016 following shareholder approval. Options are granted for a period of three years. Options are exercisable at a price based on the quoted market price of the Company's shares at the time of invitation, discounted by up to 20%. Options are forfeited if the employee leaves the Totally Group before the options vest which impact on the number of options expected to vest. If an employee stops saving but continues in employment, this is treated as a cancellation which results in an acceleration of the share-based payment.
Principal terms of SAYE scheme
Number of options Maximum award limit under the plan will be limited by maximum contribution of 500 per month
Exercise price 46p
Vesting period Three - year
Performance conditions None
Expiry conditions Options are forfeit if the employee leaves the Group before the options have been vested.
The Group recognises the following expenses related to share-based payments:
2016
2015
000
000
Expense arising from issue of share options - equity settled
19
44
Expense arising from issue of share warrants - equity settled
5
11
SAYE
1
-
25
55
21. Company statement of changes in equity
Share premium
Profit and loss
Equity share-
Company
Share capital
account
account
holders' deficit
000
000
000
000
At 1 January 2015
2,453
4,147
(5,906)
694
Loss for the year
-
-
(387)
(387)
Issue of share capital
602
387
-
989
Credit on issue of share warrants
-
-
55
55
At 31 December 2015
3,055
4,534
(6,238)
1,351
Loss for the year
-
-
(375)
(375)
Issue of share capital
1,002
5,120
-
6,122
Credit on issue of share options
-
-
25
25
Share Premium cancellation
(9,645)
9,645
-
Deferred shares buy - back
(2,055)
-
2,055
-
At 31 December 2016
2,002
9
5,1127,123
The loss for the year dealt with in the financial statements of the parent company is shown above.
As permitted by Section 408 of the Companies Act 2006, no separate income statement is presented in respect of the parent company.
22. Commitments
(a) Capital expenditure commitments
At 31 December 2016 and 2015 the Group had no capital commitments.
(b) Operating leases agreements
At 31 December 2016 and 2015 the Group had the following aggregate minimum lease payments under non-cancellable operating lease rentals:
Group
Company
2016
2015
2016
2015
000
000
000
000
Land and buildings
Within one year
156
81
126
-
Between two and five years
201
7
168
-
After more than five years
-
-
-
-
357
88
294
-
Other assets
Within one year
21
-
2
-
Between two and five years
19
-
5
-
After more than five years
-
-
-
-
40
-
7
-
According to the sublease agreement, as at 31 December 2016 lease payment of 5,619 (included above as payment within one year) should be paid by the sub-tenant.
In June 2016, the Company entered into a new 3 years' office lease agreement.
23. Related party transactions
The Group has taken advantage of the exemption available under IAS 24, "Related Party Disclosures", not to disclose details of transactions between Group undertakings which are eliminated on consolidation.
Included within current liabilities in the Company statement of financial position are amounts owed to 100% subsidiary undertakings of 2.4m (2015: 1m). The movement in the Company's balances with its subsidiaries reflects the Group's banking facilities and arrangements operating during the year.
As at 31 December 2016 the following related party transactions are required to be disclosed in accordance with IAS 24:
(a) The Company paid subcontractors fees of 88,000 (2015: 106,868) for financial and marketing consultancy to Mataxis Ltd of which Donald Baladasan is director. Of which 88,000 (2015: 74,538) is included within Director's emoluments shown in Note 7.
Loans provided to directors and key management personnel were as follows:
W. Lawrence
Key management personnel
Total
000
000
000
Balance at 1 January 2016
6
3
9
Amounts advanced
3
10
13
Amounts repaid
(6)
(3)
(9)
Balance at 31 December 2016
3
10
13
The year end balances are included within Director's loans and other receivables in Note 14. The loans are non-interest bearing and repayable by 31 December 2017.
Details of directors' emoluments can be found in Note 7.
Details of the key management personnel' transactions can be found in Note 7.
24. Events after the reporting period
(a)On 12 January 2017, Premier Physical Healthcare Ltd, a wholly owned subsidiary of Totally plc, won a three-year activity - based contract extension with NHS Swale Clinical Commissioning Group.
(b) On 19 January 2017, About Health Limited, a wholly owned subsidiary of Totally plc, secured a new 130,000 12-month contract with Harrogate and Rural District Clinical Commissioning Group.
(c) On 10 February 2017, Totally Health Limited a wholly owned subsidiary of Totally plc, was awarded a new 15-month contract worth 45,000 with Stowhealth GP practice.
(d) On 27 February 2017, the Company announced a Placing and Open offer to raise up to approximately 18 million (before expenses) at an issue priceof 55 pence per New Ordinary Share. On 17 March 2017 the Placing and Open Offer completed having raised a total of 17.6m (before expenses).
(e) On 7 March 2017,Premier Physical Healthcare Ltd, a wholly owned subsidiary of Totally plc, was awarded a three-year contract with NHS Care & Custody Health. Under this contact, Premier will deliver Physiotherapy and Podiatry services into two UK Prisons, HMP Whatton and HMP Gartree.
(f) On 17 March 2017, About Health Limited, a wholly owned subsidiary of Totally plc, secured a new 90,000 6-month contract with NHS Blackburn with Darwen Clinical Commissioning Group.
25. Ultimate controlling party
There is no single ultimate controlling party.
This information is provided by RNSThe company news service from the London Stock ExchangeENDFR LFFVVVEIDFID
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