TIDMINHC
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 GBP13.6m(1) (proforma 2022: GBP12.1m(2) )
-- Gross margin steady at 63.1% (2022: 63.1%)
-- Business rightsizing programme completed by year end with
projected annual savings of GBP6m compared to FY23
-- Operating loss narrowed to GBP4.8m(3) (2022: (GBP5.3m))
-- Net cash at the year-end of GBP4.3m (2022: GBP7.5m)
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 GBP6.0m 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 GBP0.7m). These product assets were
held for sale at year end 31 March 2023 and classified under
discontinued operations (Total recognised revenue from continuing
operations GBP12.9m plus discontinuing operations GBP0.7m was
GBP13.6m). Note 2: Reported revenue from customer contracts as at
31 March 2022 is stated after the application of IFRS3 being a fair
value adjustment (GBP4.2m) 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 GBP12.1m compared with the reported figure of GBP7.9m. Note 3:
Operating Loss from continuing operations (GBP17.4m) before
depreciation GBP0.1m, amortisation GBP4.8m and non-cash impairment
GBP7.7m.
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/
. 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
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. GBP6 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 GBP4.8m (2022: GBP5.3m) 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 GBP7.7m
(2022: GBP nil), the Group's loss for the year reached GBP17.4m
(2022: Loss GBP8.4m).
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 GBP1.5m in
FY22 to GBP2.2m 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.GBP1.5m 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 GBP13.6m (pro-forma 2022: GBP12.1m).
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
GBP000 GBP000
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 GBP0.6m). These product assets were held for
sale at year end 31 March 2023 and classified under discontinued
operations (Total recognised revenue from continuing operations
GBP12.9m, plus IFRS3 adjustment (GBP0.1m) and discontinued
operations GBP0.6m was GBP13.6m, 2022: GBP12.1m).
2 Reported revenue from customer contracts as at 31 March 2022
is stated after the application of IFRS3 being a fair value
adjustment (GBP4.2m) 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 GBP12.1m.
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 (GBP0.6m). For
reference only the comparative recognised 2022 revenue was
GBP0.7m.
The majority of the Group's revenue came from Induction Attend
Anywhere which has grown by 9.9% to GBP10.8m (2022: GBP9.8m), while
revenue from Induction Zesty has leapt to GBP2.2m (2022: GBP1.5m).
Induction's other clinical apps (Switch and Guidance) delivered
GBP0.6m (2022: GBP0.7m).
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 GBP13.5m (2022:
GBP12.3m). 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 GBP8.1 million (2022: GBP5.0 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 GBP12.1m 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 GBP9.3m (2022: GBP6.0m)
an increase of GBP3.3m. 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 GBP2.2m and, an increase of
development expenses of GBP1.1m.
Prior year additions to internally generated intangible assets
were GBP3.1m reflecting the amount capitalised in the year to 31
March 2022. The comparable figure for the period to 31 March 2023
is GBP0.8m. 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 GBP7.7m 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 GBP2.4m driven by
increased development expenses and restructuring costs.
Core performance measures
Our rightsizing programme resulted in restructuring costs of
GBP0.8m 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 GBP0.5m - the equivalent of an
annualised GBP6.0m 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 GBP3.6m (Re-presented 2022:
GBP3.8m).
31/03/2022
3 1 / GBPm
0 3 / 2 Re-presented
0 23
GBPm
------------------------------------- --------- -------------
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 c
o s t s 1 - 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 GBP4.3m (2022: GBP7.5m). 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
GBP4.8m for the year ended 31 March 2023 (2022 GBP5.3m), however,
it had net assets of GBP24.3m inclusive of GBP4.3m 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 GBP10.7m (2022: GBP19.8m) and
intangibles of GBP15.3m (2022: GBP21.0m) 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
GBP7.4m has been applied. Refer to note 17 of the financial
statements.
Trade Receivables were GBP2.7m (2022: GBP3.3m) reflecting
increased collection activity at the period end. Trade payables
were GBP2.7m (2022: GBP3.4m) in part reflecting the impact of the
right sizing programme reduced monthly costs.
Taxation
Current tax receivable GBP1.1m (2022: GBP1.2m) consists of
Research and Development tax credits due to the Group for current
and prior years. Post year end the Group received GBP0.3m 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 GBP17.4m (2022: loss of GBP9.1
million (re-presented)) the year-on-year change is driven by a
non-cash impairment charge of GBP7.7m.
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 GBP0.8m (for reference: 2022
GBP0.4m) 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
GBP000 GBP000
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 gain s / ( l o s s e s ) 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 GBP000 GBP000
==================================================== ======= ========================= ==============
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 Share Merger exchange Other Retained Total equity
capital premium reserve reserve reserves earnings GBP000
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
================== ============== ============== ================== ============= ============= ==============
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
GBP000 GBP000
================================================================== =============================== ==============
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 l o s s / ( gai n ) 63 -
Income tax charge / (cr edi t) (798) (1,146)
=================================================================== =============================== ==============
(5,142) (5,125)
Movements in working capital:
De c r e a s e / ( I n c r e a s e ) 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 gain s / ( l o sses ) 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
GBP13.6m (2022: GBP7.9m) and had cash balances at 31 March 2023 of
GBP4.3m (2022: GBP7.5m) with cash outflows from operating
activities during the year of GBP2.8m (2022: GBP2.1m).
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
GBP000 GBP000
Re-presented
============================================================================= ======= =============
Provision of software (including set-up services of GBP0.1m (2022: GBP0.2m)) 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 GBP11.7m (2022:
GBP6.7m) is shown after IFRS 3 related adjustments of GBP0.07m
(2022: GBP4.2m)). This includes GBP0.05m related to Induction Zesty
(2022: GBP0.07m) and GBP0.02m related to Induction Attend Anywhere
(2022: GBP4.2m). 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
GBP000 GBP000
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 GBP12.8m (2022: GBP7.2m) is
shown after IFRS 3 related adjustments of GBP0.07m (2022:
GBP4.2m).
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
GBP000 GBP000
================================================================== ======= =======
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
GBP000 GBP000
========================================================== ======= =======
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
GBP GBP
==================================================================================== ====== ======
From continuing operations attributable to the ordinary equity holders of the Group (0.18) (0.10)
==================================================================================== ====== ======
Total basic loss per share attributable to the ordinary equity holders of the Group (0.19) (0.10)
==================================================================================== ====== ======
6.2 Diluted loss per share
2023 2022
GBP GBP
====================================================================================== ====== ======
From continuing operations attributable to the ordinary equity holders of the Group (0.18) (0.10)
====================================================================================== ====== ======
Total diluted loss per share attributable to the ordinary equity holders of the Group (0.19) (0.10)
====================================================================================== ====== ======
6.3 Reconciliation of loss used in calculating loss per
share
2023 2022
GBP000 GBP000
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
share 92,370,367 82,461,686
==================================================================================== ============ ============
7 Goodwill
7.1 Carrying amount of goodwill
The following represents the carrying value of goodwill as at 31
March 2023.
2023 2022
GBP000 GBP000
======================= ======= =======
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
GBP000 GBP000
======================================================= ======= =======
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 GBP0.8m. 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
GBP000 GBP000
========================== ======= =======
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
GBP000 GBP000 GBP000 GBP000
===========================================================================================
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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END
FR NKKBBFBKDBON
(END) Dow Jones Newswires
July 31, 2023 02:00 ET (06:00 GMT)
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