TIDMINHC
RNS Number : 6769M
Induction Healthcare Group PLC
23 September 2021
Induction Healthcare Group PLC
("Induction", the "Company", or the "Group")
Final results for the year ended 31 March 2021
Induction (AIM: INHC), a leading virtual care platform driving
digital transformation of healthcare systems worldwide, announces
its audited final results for the year ended 31 March 2021.
Financial Highlights
-- Revenues of GBP1,513k (FY20: GBP148k)
-- Average monthly revenues increasing by 79% year on year
-- Reported revenue from Induction Guidance grew to GBP636k
(2020: GBP148k representing five months of revenue recognised post
acquisition)
-- Cash position at 31 March 2021 was GBP2,472k (2020: GBP10,718k)
Operational Highlights
-- 68% increase in users of Induction platforms
-- Clinical users increased to 217,000 (57% yoy) for Induction Switch 1
-- Registered patients increased to 212,000 (176% yoy) for Induction Zesty 2
-- Clinical users increased to 215,000 (27% yoy) for Induction Guidance 3
-- Acquisition of Zesty Limited in June 2020
-- Strategic collaboration with Cerner to resell Induction Zesty
patient portal platform to Cerner customers in UK and Ireland
-- Collaboration with Apple, Cerner and Milton Keynes University
Hospital NHS Trust to enable Health Records on iPhone, a 'first of
type' NHS innovation for patients
-- Contract for Induction Zesty with the Royal Free London NHS
Foundation Trust ("RFL") to deliver the My RFL Care patient portal
as the first phase of an ambitious roadmap for RFL's digital
patient services
-- Public sector and academic contracts with the University of the West of England and South Gloucestershire Council for Induction Booking
-- Three-year contract for Induction Switch with a London-based NHS Foundation Trust
Post Period Highlights
-- GBP25 million fundraise through a placing of 35,714,285 new Ordinary Shares
o Completion of the acquisition of Attend Anywhere Pty Ltd in
June 2021 for a cash consideration of GBP16.34 million plus the
issue of 14,285,714 consideration shares with a value of
GBP10.0m
-- Attend Anywhere delivered GBP10.4 million in revenues and
GBP4.5 million in EBITDA in the full year to 30 June 2021
(unaudited)
-- Strong sales momentum with three prominent hospitals across
South East England, contracting to deploy Induction Zesty to
deliver their digital patient portals, worth a total of GBP440k
-- NHS Wales renewed its existing annual contract with Attend
Anywhere in July 2021 with an expansion of its previous scope, for
GBP1.63m (prior year GBP1.2m).
-- Cash position of GBP13.5m as at 31 August 2021 (post
fundraise and acquisition of Attend Anywhere Pty Ltd).
-- Unaudited revenue in the five months to 31 August 2021 stands
at GBP3.48m and the Group currently has GBP7.5m of contracted
revenues for final seven months of FY22.
-- The Board's expectations for the remainder of FY22 remain unchanged.
James Balmain, CEO of Induction, said : "Despite the pandemic we
have had a solid year with average monthly revenues increasing by
79%, and with the Global Virtual Healthcare Market predicted to
grow significantly, Induction is well placed to be a major
competitor in this international space.
" Post period end, the fundraise and acquisition of Attend
Anywhere has positioned us well for the next 12 months. As we look
to move beyond secondary care, the post period end acquisition of
Attend Anywhere will aid us in offering a more complete, 'whole
system' platform which will be beneficial to patient and clinical
users, both of which have increased as a result of the
pandemic.
"I would like to thank the Induction team for their hard work
over a challenging 12 months and look forward keeping investors
updated as we continue to enhance our 'Induction Anywhere'
platform."
Annual Report and Accounts and Notice of AGM
The Annual Report and Accounts and notice of AGM, will be
available later this morning on the Company's website;
https://inductionhealthcare.com/investors/financial-reports-and-publications/
, in accordance with AIM Rule 20. Copies will be posted to
shareholders in due course.
Investor Presentation
James Balmain, Chief Executive Officer, and Olly Drake, Interim
Chief Financial Officer, will be hosting a live online presentation
relating to the annual report via the Investor Meet Company
platform at 4.30pm (BST) on Monday 4 October 2021 . The
presentation is open to all existing and potential
shareholders.
Investors can sign up to Investor Meet Company for free and
register for the presentation here:
https://www.investormeetcompany.com/induction-healthcare-group-plc/register-investor
A recording of the presentation, a PDF of the slides used, and
responses to the Q&A session will be available on the Investor
Meet Company platform afterwards .
-S-
ENQUIRIES
Induction Via Walbrook PR Ltd: induction@walbrookpr.com
James Balmain, Chief Executive Officer
Singer Capital Markets (Nominated
Adviser and Broker) +44 (0) 20 7496 3000
Philip Davies / Kailey Aliyar
Walbrook PR Ltd induction@walbrookpr.com
Paul McManus / Alice Woodings Mob: +44(0)7980 541 893 / +44 (0)7407
804 654
About Induction - www.inductionhealthcare.com
Induction (AIM: INHC) is a leading virtual care platform driving
digital transformation of healthcare systems worldwide. Induction
solutions enhance the investments hospitals have made and lay the
foundation for their future. Our products can enable information
sharing between busy doctors, alleviate operational burdens on
hospitals or put patients in better control of their care, all
while ensuring the highest standards of clinical safety and
information security. We unchain staff and patients from the
limitations of paper-based and desktop systems, creating
substantial time and cost efficiencies.
More than 225,000 hospital doctors across multiple territories,
including the UK, Ireland, Australia and South Africa, as well as a
rapidly growing number of more than 300,000 UK patients, choose
Induction solutions.
Induction Switch is the number one healthcare collaboration app
in the UK, used by the majority of hospital doctors within the NHS.
The app helps to increase productivity and enhance communication by
securely sharing phone numbers and bleeps, bookmarks, documents and
messages in a clinical setting.
Induction Guidance provides medical organisations, including
most hospital trusts within the NHS, with the ability to
collaboratively create, edit, and publish their own local medical
guidelines in a secure and locally administrated environment. This
increases knowledge of, and adherence to, guidance.
Induction Zesty is a market-leading digital platform for
patients visiting hospitals. The platform allows patients to book
and access their appointments, read their clinical letters, store a
copy of their clinical record and provide data to their care teams
remotely. It is not just a compelling patient experience, but also
delivers significant cost benefits to hospitals.
Induction Attend Anywhere is the UK market leader in secondary
care video consultations. It helps hospitals, health systems and
other customers offer video consultations to patients and service
users as a normal part of day-to-day clinical activity. Our vision
is for video consultations to improve lives and help address
social, access, equity and sustainability challenges by allowing
healthcare providers to determine how and when they see a patient
based on each individual case: in-person, via video or on the
telephone .
Induction HealthStream is a proprietary data integration
platform that reads and writes patient demographic, appointment and
clinical record data between a growing number of hospital EHR
systems and the Induction platforms. This connectivity between
stakeholders and legacy IT systems adds substantial value to
pre-existing health IT investment and allows large-scale adoption
of Induction app-based services.
Chair's statement
Despite the pandemic, Induction has had a strong year as the
Company has continued to deliver on the objectives set out when it
joined AIM in May 2019. In the financial year to 31 March 2021,
Induction has seen its first full year of revenues of GBP1.5m and
an average increase of 68% in users of Induction platforms.
The fiscal year ended with a strong pipeline and solid order
book as the Group saw an increase in patients and clinical users.
Induction's suite of SaaS tools has been established to combine to
deliver a comprehensive virtual care platform and, while the Group
has a continued focus on UK secondary care markets, it has the
scope to further grow into new local markets and
internationally.
Key Achievements
Following the acquisition of Zesty Limited in June 2020, in
October 2020 a strategic collaboration agreement was signed with
Cerner Corporation (Nasdaq: CERN) in the UK and Ireland to jointly
develop patient engagement solutions for NHS hospitals with
Induction Zesty. Cerner is a leader in health care technology
interoperability and a patient facing platform that represents the
best of Induction Zesty and the best of Cerner presents a great
solution for both existing and new Cerner customers. As part of the
Cerner agreement, NHS Trusts that are already Cerner clients will
also have access to the Company's Induction Zesty patient portal
under their existing contractual arrangements.
Following this, Induction Zesty collaborated with Apple and
Cerner to support the roll out of "Health Records on iPhone" to
patients at Milton Keynes University Hospital NHS Trust (MKUH), one
of the first two NHS hospital trusts to launch this feature in the
UK. As at the end of July 2021 over 94,000 patients are registered
at Milton Keynes to be able to access this functionality on their
iPhones and the Group is looking forward to continuing the
partnership with Apple, Cerner and many more hospitals in the UK so
they can offer Health Records on iPhone to their patients.
The Company has seen excellent commercial momentum with the NHS
over the last twelve months including new contracts with Royal Free
London, Sussex Community NHS Foundation Trust, and East & North
Hertfordshire NHS Trust. Broader public sector contracts include
the University of the West of England and South Gloucestershire
Council, for the Induction Booking app to enable the booking of
COVID-19 lateral flow tests.
Sales momentum has accelerated in recent months for Induction
Switch and in May 2021 we concluded a three- year contract with a
London- based NHS Foundation Trust to support its 10,000 clinicians
and staff. Post-year end the sales pipeline has continued to mature
with three prominent hospitals across South East England,
contracting to deploy Induction Zesty to deliver their digital
patient portals. These contracts are worth a total of GBP440k with
time periods that range between 12 to 20 months.
The acquisition of Attend Anywhere in June 2021 is pivotal for
Induction going forward as it reinforces the Group's already strong
NHS footprint and brings GBP7.7m in annual contract value across
183 NHS England Trusts, GBP2.1m in Scotland and GBP1.6m in
Wales.
People
Following our acquisition of Zesty Limited, on 8 June 2020, our
Board was strengthened with the arrival of Andy Williams to the
Board as a Non-Executive Director and James Balmain as joint CEO
alongside Hugo Stephenson.
Chris Ryan, Attend Anywhere's former CEO, joined the Company's
executive management team in June 2021, and we are delighted to
welcome him as his expertise and industry knowledge will be
instrumental to the Group's business going forward.
I would especially like to thank the entire Induction team for
their incredible work over the last twelve months. The pandemic has
been challenging for all and the Group could not have reached these
significant milestones without the dedication and resilience of its
employees.
Strategy
The Board has set an ambitious growth trajectory including
international expansion, and a move beyond secondary care, to offer
a more complete, 'whole system' platform. Induction's M&A
strategy will act as a rapid enabler for this. Induction has
continued to execute its "buy and build"' strategy successfully,
acquiring four businesses since its AIM IPO in May 2019 (Attend
Anywhere post year-end), and considers itself well placed to hold a
strong market position in a significant area of growth and
investment.
Outlook
Whilst the impact of COVID-19 caused difficulties for the
business in engaging with clients, more importantly it has also
been a significant driver for uptake of Induction's virtual care
platforms and has brought to the foreground the momentum to
digitally transform healthcare. The NHS spends around GBP1bn on
technology systems each year and the existing evidence of
significant usage proves that our solutions are not only efficient
but also the preferred platforms of healthcare professionals.
The current financial year is an opportunity for Induction to
help the NHS to deliver the benefits of this momentum. The
flexibility and adaptability of Induction's SaaS platforms and
focus on evidence-based sales is driving growth in all areas of the
business. Alongside this, the post year end acquisition of Attend
Anywhere further enhances our combined product offering, increasing
our attraction to investors and customers alike.
Chris Spencer, Chair
Executive Directors' Statement
Overview
The Group has made solid progress in the last 12 months,
completing the acquisition of Zesty amidst the lockdown and laying
the foundation during the latter months of FY21 for acquiring
Attend Anywhere in June. In the meantime, Induction's core products
going into the year -Induction Switch and Induction Guidance - have
been greatly relied upon by clinical users during the COVID-19
pandemic.
FY21 has been a challenging year for many businesses,
particularly technology start-ups like Induction Healthcare.
Throughout the year we have faced significant and unforeseeable
business challenges as a result of the COVID-19 pandemic, including
the heavy reliance of front-line clinical users on our core
Induction Switch and Induction Guidance applications, while at the
same time facing healthcare administrations naturally focused on
emergent priorities and unable to spare bandwidth for monetisation
discussions around Switch, or deep system integrations with Zesty -
despite their ability to unlock future operational efficiencies.
For many of our clients, hospitals and healthcare systems, FY21 was
crisis unfolding in both slow motion and at warp speed. Despite
these challenges, we ended the year having closed the acquisition
of Zesty during a lockdown, as well as signing a value-added
reseller agreement with Cerner Corporation, the first of its type
for Cerner in the UK digital healthcare market. We also supported
Apple in the launch of their Health Records on iPhone service at
Milton Keynes hospital. This is the first time that secondary care
health records have been available through patient Apple devices in
the UK.
For an organisation that began FY21 with an almost universally
used but unmonetised app (Induction Switch), and the then recent
acquisition of MicroGuide (Induction Guidance) still early in its
soon to be successful earn-out journey, Induction Healthcare
entered FY22 as one of the leading providers of health IT across
the UK, with a comprehensive toolkit - used at national scale
across the secondary healthcare systems - enabling digital
collaboration between healthcare providers, administrators and
patients. Over the last quarter of the year, we made significant
progress towards the acquisition of Attend Anywhere - a complex
international transaction that was completed after year end. At the
same time, we managed to roll out major new features to all our
products with software teams working entirely remotely and dealt
with the challenges of completing major due diligence and team
integration projects without ever being able to meet in person.
Prior to the acquisition of Attend Anywhere, Induction ended
FY21 with revenue growing to GBP1.5 million (FY20: GBP0.1 million),
clinical users growing to 217,000 (57% yoy) and registered patients
growing to 212,000 (176% yoy). Induction Guidance remains prevalent
in the clinical guidance market in the UK, with average monthly
revenues increasing by 79% year on year. Our Induction Switch
platform currently has more than 230,000 clinical users and; while
we made the decision to keep much of Induction Switch available
free of charge during the pandemic, we have now commenced the
monetisation journey for this platform with a three-year deal
signed at the Royal Free London.
Landmark deployments of Induction Zesty at the Royal Free London
and The Royal Wolverhampton act as exemplar reference cases for the
platform to the wider English NHS secondary care market. In a
first-of-type regional outpatient transformation platform,
Induction Zesty achieved preferred supplier status with the South
West London integrated care system (ICS) in conjunction with our
partner Cerner - allowing patients who visit any of the four acute
or three community providers within the ICS to manage their care
directly and access records, appointments and care pathway
information through a single platform. Our integrated platform,
currently in development, will also directly onboard patients to
telephone or video consultations via Attend Anywhere.
The post year end acquisition of the video consultation platform
Attend Anywhere is our most significant to date and establishes our
promise of flexible care at a national scale across the UK. Our
toolkit now enables providers to engage with other providers
(Induction Switch), healthcare institutions to engage with their
providers (Induction Guidance), patients to engage with their
healthcare institutions (Induction Zesty), and - most importantly -
patients to engage with healthcare providers (Attend Anywhere). We
entered FY22 managing some of the most used tools in each of these
domains, and now covering the complete secondary care patient
pathway by offering pre-treatment patient support via digital
correspondence, appointment booking and remote data capture, the
full range of in- person, telephone or live-video consultations and
post treatment follow up support.
Attend Anywhere is a strongly accretive acquisition, delivering
GBP10.4 million in revenues and GBP4.5 million in EBITDA in the
year to 30 June 2021 (unaudited). Induction's platforms are most
effective and exciting when they are synergised as an end-to-end
platform. Going forward, our 'Induction Anywhere' solution will
retain their flexibility as standalone tools and create a new level
of efficiency and value for our clients when they are used
together.
Upsell in existing channels
Following the acquisition of Attend Anywhere, Induction is now
contracted with over 80% of NHS Secondary trusts in England and
holds national contracts in Scotland, Wales and the Republic of
Ireland (ROI), enabling significant scope to support our customers
with further group products. Whilst Induction Zesty has a key role
to play in enhancing the provider benefit and patient experience of
Attend Anywhere our Induction Switch and Induction Guidance
products offer further benefits as we move forwards with regional
deals in line with the roll out of ICSs.
Complementary adjacent sectors
As health and social care become more tightly connected and
regional funding is made available for healthcare providers, local
authorities and national services need to support a more flexible
approach to citizen engagement, our tried and tested national
capability is a credible proposition for central payers. We are
actively pursuing complementary sectors, whilst ensuring our
relentless focus on excellent user experience.
Equally important is the shift towards regional patient
engagement, regardless of care setting. We remain actively
interested in opportunities to expand more directly into primary
and community care, whilst retaining our market lead and expertise
in secondary care.
We see expansion into new territories as a vital part of our
medium-term strategy. Following the acquisition of Attend Anywhere,
we now have a team in Melbourne, Australia and intend to launch
Attend Anywhere in the Australian market in the coming months,
generating revenues during FY23. Key partnerships, including our
landmark Value-Added Reseller agreement with the Cerner
Corporation, provide an exciting route to market.
Accretive M&A
We continue to evaluate our global market for potential
acquisitions. We're most focused on targets that will accelerate
our entry into new territories, whilst delivering EBITDA to the
group.
People
Despite the challenges of remote working, we've made great
in-year and post year end progress on attracting top talent to
Induction. Building a focused and highly skilled team is critical
to our growth. Notable hires include a Group Chief Revenue Officer,
Chief Legal and Admin Officer (with a core M&A skillset) and
more recently a highly experienced Chief Technical Officer.
We're equally focused on developing talent and supporting our
people to grow and excel in their roles, ensuring that incentives
are aligned with shareholder value and our people are rewarded via
stock options.
Operational execution
We've made good progress in building out our product,
development, account management, customer success and sales teams.
Induction will always be a group with product at its core and we've
taken huge steps forward in engaging with our customers and closing
the loop on user feedback. We've established our target operating
model, successfully integrating our acquisitions into a group wide
functional organisational structure, avoiding siloed teams by
product line.
Critically, we're working at pace to instill P&L
accountability throughout the organisation - with a clear focus to
reach EBITDA neutrality by the end of FY22, moving towards cash
generation by the end of FY23.
Diversity and inclusion
The global events of the last 12 months have reinforced our
belief that a diverse and inclusive workforce are not just a social
good, but a commercial advantage. Fair practices in hiring and
talent development, as well as maintaining safe and supportive
company cultures, are key to the Group's success and the
encouragement of diverse voices within it.
Climate and the Environment
Digital tools and transformation are the basis of our products
and we are in a privileged position to support our clients and
champion positive change on sustainability and our environment. We
will do this in four ways:
-- ensure we continue to be the best corporate citizen we can possibly be;
-- ensure sustainability is at the heart of the workforce and how we operate;
-- influence customers to make sustainable choices whenever we do work for them; and
-- create new products that help our customers rethink their
services for the challenges and opportunities ahead.
Outlook
The Global Virtual Healthcare Market is predicted to grow by
23.31% 4 by 2025 and Induction is well placed to be a major
competitor in this international space. The Company has strong
sales momentum, recurring revenue, and a pipeline of orders with
multi-year contracts, as well as proven ability to create value for
healthcare systems at a regional and national level.
In our view, our current leading market position is due to
Induction's ability to work alongside existing systems. We can
operate our platforms at scale without loss of functionality,
efficiency or margin. The establishment of a scalable SaaS platform
that provides value to all stakeholders:
-- administrators, healthcare providers and patients
-- means that we help existing healthcare systems evolve to
become what they want to be, rather than compete with these systems
and disrupt what they do.
As the COVID-19 pandemic recedes around the world, we are
incredibly excited at the Group's enviable position in the UK
market and scope for significant global growth in the next 3-5
years.
Dr Hugo Stephenson, James Balmain,
Group Executive Director Chief Executive Officer
Financial Review
Revenue
For the year ended 31 March 2021, reported revenue increased to
GBP1,513k (2020: GBP148k).
Reported revenue from Induction Guidance (Horizon Strategic
Partners Limited) grew to GBP636k (2020: GBP148k representing five
months of revenue recognised post acquisition). The principal
drivers for this growth have been upselling new product lines and
the sale to the Mexico Better Health Programme in June 2020.
Reported revenue from Induction Zesty of GBP872k reflects just
under 10 months of revenue recognised since the acquisition of
Zesty Limited. Induction Zesty's revenues were certainly impacted
by COVID-19 as many of our existing and potential customers were
understandably focused on initially treating acute patients and
subsequently implementing the national vaccine. On the other hand,
COVID-19 has strongly demonstrated the need for our leading
technology and, aligned with our Cerner partnership, we are
confident of a stronger year to 31 March 2022.
Whilst Induction Switch has seen a continued increase in its
user numbers and some sales traction post year end, reported
revenues of GBP5k from Induction Switch in the year have not been
as expected. Whilst the Board sees great value in the user base and
further monetisation, the Group's strategy is to focus attention
and investment on higher value revenue streams which in turn are
complemented and supported by the Induction Switch user base. The
impairment review noted that the carrying value of Induction Switch
significantly exceeded the value in use calculation, which used
cash flow projections over a five-year period. The Board therefore
determined that the value of goodwill and intangible assets should
be impaired by GBP1.37 million (2020: GBPnil)
2021 2020
GBP'000 GBP'000
=============== ======== ========
United Kingdom 1,342 131
Europe 13 2
United States 23 11
Rest of World 135 4
=============== ======== ========
1,513 148
=============== ======== ========
Operating Costs
Administration costs have increased to GBP5,052k (2020:
GBP2,330k). This mainly relates to an increase in headcount from
the acquisition of Zesty Limited and a full year of trading post
acquisition of Horizon Strategic Partners Limited in the prior
year. The Group capitalises software development and hosting costs
which depreciate over three to five years, resulting in
capitalisation of GBP1,660k (2020: GBP761k).
Reported loss before tax for the year was GBP8,117k (2020:
GBP3,527k).
Core performance measures
Core performance measures are alternative performance measures
(APM) which are adjusted and non-IFRS measures. These measures
cannot be derived directly from our consolidated financial
statements. We believe that the following non-IFRS performance
measures, when provided in combination with reported performance,
will provide investors, analysts and other stakeholders with
helpful complementary information to better understand our
financial performance and our financial position from period to
period. The measures are not substitutable for IFRS results and
should not be considered superior to results presented in
accordance with IFRS.
We considered the adjusting items, including explanations of why
they were either not related to the performance of the business or
impacted the comparability of the Group's results year-on-year. We
also reviewed the FRC's guidance, considered adjusting items used
by the Group's peers and have concluded that the appropriate
disclosure of those items has been included.
The Group incurred several exceptional items during the year as
per the table below which shows adjusted operating loss before
depreciation, amortisation, impairment and exceptional costs of
GBP4,775k (2020: GBP2,736k).
2021 2020
GBP'000 GBP'000
============================================================ ======== ========
Loss before tax (8,117) (3,527)
Add / (Less): Net finance expense / (income) 2 (47)
Add: Impairment losses 1,366 -
Add: Depreciation and amortisation 1,356 324
============================================================ ======== ========
Operating loss before depreciation, amortisation
and impairment (5,393) (3,250)
Adjusted for exceptional costs:
- IPO costs expensed1 - 281
- Acquisition related transaction costs2 375 150
- Fair value adjustments on contingent consideration
and contract liabilities3 243 83
============================================================ ======== ========
Adjusted Operating loss before, depreciation, amortisation,
impairment and exceptional costs (4,775) (2,736)
============================================================ ======== ========
1. The prior year saw GBP281k of IPO costs expensed through the
Income Statement. These costs have been excluded as they are
non-recurring and do not relate to the underlying trading of the
Group.
2. These costs are directly attributable to business
combinations and are excluded from underlying performance as they
would not have been incurred had the business combination not
occurred. They do not relate to the underlying trading of the Group
and are added back to aid comparability of the Group's
profitability year-on-year.
3. The unwinding of the discount on these liabilities and
contingent consideration is also excluded from underlying
performance on the basis that it is non-cash and the balance is
driven by the Group's assessment of the time value of money and
this exclusion ensures comparability.
Cash
The Group's cash position at 31 March 2021 was GBP2,472k (2020:
GBP10,718k). The operating cash outflow was focused on investment
in our developers and products and ongoing AIM listing costs, as we
build the framework and foundations. Investment outlay of GBP3,652k
(2020: GBP1,727k) includes a GBP1,500k earnout payment for Horizon
Strategic Partners Limited and GBP1,660k for capitalised
development costs. Financing cash outflows include the repayment of
a third-party loan of GBP501k, which was repaid following the
acquisition of Zesty Limited.
The Directors regularly monitor cash usage and forecast
cashflows to ensure that the projected business needs are
supported, and future acquisitions can be delivered as part of the
overall strategy to grow the business.
2021 2020
GBP'000 GBP'000
===================== ======== ========
Operating cash flows (4,012) (3,346)
Cash balance 2,472 10,718
===================== ======== ==========
Assets and Liabilities
Goodwill at 31 March 2021 of GBP9,373k (2020: GBP1,553k) and
Intangibles of GBP5,884k (2020: GBP2,349k) are derived from two
acquisitions, Zesty Limited during the year and Horizon Strategic
Partners Limited in the prior year.
As previously noted, the carrying value of Induction Switch
goodwill and intangible assets has been impaired by GBP1,366k.
2021 2020
GBP'000 GBP'000
================== ================================================================ ===================
Goodwill 9,373 1,553
Intangible assets 5,884 2,349
================== ================================================================ ===================
Post Balance Sheet Events
On 8 June 2021, the Company announced that it had raised GBP25
million through a placing of 35,714,285 new Ordinary Shares at a
price of 70p per share. On the 9 June 2021, the Company announced
the Completion of the acquisition of Attend Anywhere Pty Ltd for a
cash consideration of GBP16.34 million, which included GBP0.79
million as payment for Attend Anywhere's net assets at completion
and the issue of 14,285,714 consideration shares (having a value
equivalent to GBP10 million at the placing price).
The acquisition of Attend Anywhere Pty Ltd adds critical mass,
transformational revenues but another profitable and cash
generative business to the Group.
Consolidated Statement of Profit or Loss
For the year ended 31 March 2021
2021 2020
GBP000 GBP000
============================================== ======= =======
Revenue 1,513 148
Cost of Sales (636) (73)
Gross Profit 877 75
============================================== ======= =======
Sales and marketing expenses (590) (274)
Administrative expenses (5,052) (2,330)
Development expenses (1,893) (962)
Impairment Losses (1,366) -
============================================== ======= =======
Loss from Operations (8,024) (3,574)
Finance income 3 47
Finance Expense (5) -
Fair value losses on contingent consideration (91) (83)
============================================== ======= =======
Loss before tax (8,117) (3,527)
Tax credit 503 -
Loss for the year (7,614) (3,527)
============================================== ======= =======
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2021
2021 2020
GBP000 GBP000
=============================================== ======= =======
Loss for the year (7,614) (3,527)
Exchange (losses)/gains arising on translation
on foreign operations (9) 8
Reclassified to profit and loss during the
year (7) (1)
=============================================== ======= =======
(16) 7
=============================================== ======= =======
Other comprehensive income for the year, net
of tax (16) 7
=============================================== ======= =======
Total comprehensive income (7,630) (3,520)
=============================================== ======= =======
Loss per share attributable to the ordinary
equity holders of the parent
Profit or Loss
Basic (0.19) (0.13)
Diluted (0.19) (0.13)
Consolidated Statement of Financial Position
As at 31 March 2021
2021 2020
GBP000 GBP000
====================================== ======== =======
Assets
Non-current assets
Property, plant and equipment 15 -
Intangible assets 5,884 2,349
Goodwill 9,373 1,553
Deferred tax assets 880 97
====================================== ======== =======
Total non-current assets 16,152 3,999
====================================== ======== =======
Current assets
Contract assets 155 23
Trade and other receivables 896 140
Cash and cash equivalents 2,472 10,718
Other current financial assets 447 -
====================================== ======== =======
Total current assets 3,970 10,881
====================================== ======== =======
Total assets 20,122 14,880
====================================== ======== =======
Liabilities
Non-current liabilities
Contract liabilities 187 38
Deferred tax liability 1,048 321
====================================== ======== =======
Total non-current liabilities 1,235 359
====================================== ======== =======
Current liabilities
Trade and other payables 1,396 402
Contract liabilities 1,027 263
Other financial liabilities - 1,409
Total current liabilities 2,421 2,074
====================================== ======== =======
Total liabilities 3,656 2,433
====================================== ======== =======
Net assets 16,466 12,447
====================================== ======== =======
Equity attributable to equity holders
of the parent
Share capital 210 148
Share premium reserve 18,432 18,432
Merger reserve 10,879 (10)
Foreign exchange reserve (9) 7
Other reserves 792 94
Retained earnings (13,838) (6,224)
====================================== ======== =======
Total equity 16,466 12,447
====================================== ======== =======
Consolidated Statement of Changes in Equity
As at 31 March 2021
Foreign
Share Share Merger exchange Other Retained Total
capital premium reserve reserve reserves earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
================================= ========= =========== ========= =========== ============ ========== =========
At 1 April 2019 66 - - (1) - (2,707) (2,642)
Comprehensive income for
the year
Loss for the year - - - - - (3,527) (3,527)
Other comprehensive loss
for the year - - - 8 - - 8
================================= ========= =========== ========= =========== ============ ========== =========
Total comprehensive loss
for the year - - - 7 - (3,527) (3,520)
Transactions with owners,
recorded directly in
equity
Reserves arising on acquisition
of subsidiaries - - (10) - - 10 -
Issue of shares pre-Initial
Public Offering 9 1,991 - - - - 2,000
Issue of shares to settle
loans and borrowings 9 1,991 - - - - 2,000
Issue of shares as consideration
for a business
combination 2 398 - - - - 400
Issue of shares on Initial
Public Offering 62 14,521 - - - - 14,583
Share issue costs - (469) - - - - (469)
Equity settled share-based
payments - - - - 94 - 94
Total contributions by and
distributions to owners 82 18,432 (10) - 94 10 18,608
================================= ========= =========== ========= =========== ============ ========== =========
At 31 March 2020 and 1 April
2020 148 18,432 (10) 7 94 (6,224) 12,447
================================= ========= =========== ========= =========== ============ ========== =========
Comprehensive income for
the year
Loss for the year - - - - - (7,614) (7,614)
Other comprehensive loss
for the year - - - (16) - - (16)
================================= ========= =========== ========= =========== ============ ========== =========
Total comprehensive income
for the year - - - (16) - (7,614) (7,630)
Transactions with owners,
recorded directly in
equity
Issue of shares as consideration
for a business
combination 62 - 10,953 - - - 11,015
Share issue costs - - (64) - - - (64)
Equity settled share-based
payments - - - - 698 - 698
Total contributions by and
distributions to owners 62 - 10,889 - 698 - 11,649
================================= ========= =========== ========= =========== ============ ========== =========
At 31 March 2021 210 18,432 10,879 (9) 792 (13,838) 16,466
================================= ========= =========== ========= =========== ============ ========== =========
Consolidated Statement of Cash Flows
For the year ended 31 March 2021
2021 2020
GBP000 GBP000
===================================================== ======= =======
Cash flows from operating activities
Loss for the year (7,614) (3,527)
Adjustments for
Depreciation of property, plant and equipment 7 -
Amortisation of intangible fixed assets 1,340 323
Impairment losses on intangible assets 1,366 -
Finance income (3) (47)
Finance expense 5 -
Fair value adjustments on financial liabilities 91 83
Share-based payment expense 698 94
Net foreign exchange loss/(gain) 3 (7)
Income tax credit (503) -
===================================================== ======= =======
3,004 446
Movements in working capital:
(Increase) / decrease in trade and other receivables
and contract assets (485) 29
Increase / (decrease) in trade and other payables
and contract liabilities 1,085 (342)
Interest received 3 47
Interest paid (5) -
===================================================== ======= =======
Net cash (used in)/from operating activities (4,012) (3,346)
===================================================== ======= =======
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired (1,987) (976)
Purchases of property, plant and equipment (5) -
Repayments by related parties - 10
Payment of software development costs (1,660) (761)
===================================================== ======= =======
Net cash used in investing activities (3,652) (1,727)
===================================================== ======= =======
Cash flows from financing activities
Issue of ordinary shares - 16,584
Share issue costs (64) (469)
Proceeds from related party borrowings - 500
Repayment of bank borrowings (501) -
Repayment of related party borrowings - (1,000)
===================================================== ======= =======
Net cash (used in)/from financing activities (565) 15,615
===================================================== ======= =======
Net cash (decrease)/increase in cash and cash
equivalents (8,230) 10,542
Cash and cash equivalents at the beginning
of year 10,718 169
Exchange (loss)/gains on cash and cash equivalents (16) 7
===================================================== ======= =======
Cash and cash equivalents at the end of the
year 2,472 10,718
===================================================== ======= =======
NOTES TO THE YEAR RESULTS
1. Basis of preparation
The financial information in these results has been prepared
using the recognition and measurement principles of
International Accounting Standards, International Financial
Reporting Standards and Interpretations adopted for use in the
United Kingdom (collectively Adopted IFRSs). The principal
accounting policies used in preparing the results are those the
Group has applied in its financial statements for the year ended 31
March 2021.
The financial information set out above does not constitute the
group's statutory accounts for the years ended 31 March 2020 or 31
March 2021 but is derived from those accounts. The statutory
accounts for the year ended 31 March 2020 have been delivered to
the Registrar of Companies and those for 2021 will be delivered
following the group's annual general meeting. The auditors have
reported on these accounts, their reports were unqualified, did not
include references to any matters to which the auditors drew
attention by way of emphasis without qualifying their reports, and
did not contain statements under s.498(2) or (3) of the Companies
Act 2006. The information contained in this statement does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006.
2. Going concern
The Group has recognised revenues from commercial deals during
the year of GBP1,513k (2020: GBP148k), however it is still largely
reliant on cash from financing activities to fund on-going
operations.
The Group made adjusted operating losses before interest, tax,
depreciation, amortisation, impairment and exceptional costs for
the year ended 31 March 2021 of GBP4,775k (2020: GBP2,736k) and had
cash balances at 31 March 2021 of GBP2,472k (2020: GBP10,718k) with
cash outflows from operating activities during the year of
GBP3,948k (2020: GBP3,347k).
On 8 June 2021, the Company announced that it had raised GBP25
million through a placing of 35,714,285 new Ordinary Shares at a
price of 70p per share (refer note 12). On the 9 June 2021, the
Company announced the completion of the acquisition of Attend
Anywhere Pty Ltd for a cash consideration of approximately
GBP16,348k, which included approximately GBP788k as payment for
Attend Anywhere's net assets at completion; and the issue of
14,285,714 Consideration Shares (having a value equivalent to GBP10
million at the Placing Price).
Following the share placing and acquisition the Group has seen
an incremental increase in cash reserves of GBP10 million, which
will be used to support product development and international
expansion.
In assessing the appropriateness of the going concern
assumption, the Board of Directors has reviewed the projected cash
flow forecasts to 31 March 2023 of the enlarged Group and other
relevant information, together with considering scenarios with
adverse impacts across the Group's principal risks relating to
COVID-19 and macro-economic conditions. Management's base case
going concern assessment allows investment in the full range of
planned market and product development activities, to achieve
revenue targets over this forecast period. Management has
considered a severe but plausible downside scenario whereby the
Group sees six-month delays in signing new revenues and a 33%
reduction in renewals of Attend Anywhere Pty Limited's existing
contracts, together with a series of mitigating actions, which
resulted in the Group remaining viable over the going concern
period.
After due consideration, the Board has concluded that there is a
reasonable expectation that the Group and Company have adequate
resources to meet its liabilities as they fall due for at least 12
months from the date of this report, and therefore these financial
statements are prepared on a going concern basis.
3. Revenue
The following is an analysis of the Group's revenue for the year
from continuing operations:
2021 2020
GBP000 GBP000
====================================== ======= =======
Provision of software 1,340 148
Post-contract support and maintenance 73 -
Text message revenue 100 -
====================================== ======= =======
1,513 148
====================================== ======= =======
The following is an analysis of revenue by country of
destination:
2021 2020
GBP000 GBP000
=============== ======= =======
United Kingdom 1,342 131
Europe 13 2
United States 23 11
Rest of World 135 4
=============== ======= =======
1,513 148
=============== ======= =======
The following is an analysis of revenue by product line. Zesty
Limited (Induction Zesty) was acquired on 8 June 2020, see Note 8
for further information.
2021 2020
GBP000 GBP000
=================== ======= =======
Induction Zesty 872 -
Induction Guidance 636 148
Induction Switch 5 -
1,513 148
=================== ======= =======
Timing of revenue recognition:
2021 2020
GBP000 GBP000
=============================== ======= =======
Services transferred over time 1,347 148
Services at point in time 165 -
1,513 148
=============================== ======= =======
4. Expenses by nature
2021 2020
GBP000 GBP000
================================================ ============================== =============
Employee costs 5,123 2,106
Depreciation of property, plant and equipment 7 -
Amortisation of intangible assets 1,340 323
Impairment of goodwill and intangible assets 1,366 -
Contractors' costs 1,103 538
Acquisition related transaction costs 375 150
Professional and legal fees 359 583
Research and development expense capitalised (1,660) (761)
Share-based payment charge 698 94
Fair value adjustments on financial liabilities 91 83
Fair value adjustments on contract liabilities 152 -
Fair value adjustments on contract liabilities relate to the
unwinding of adjustments made to the contract liabilities of
acquirees at acquisition. These adjustments unwind as the revenue
to which the contract liability balance relates is recognised.
5. Employee benefit expenses
2021 2020
GBP000 GBP000
================================================ ============================== ==============
Employee benefit expenses (including directors)
comprise:
Wages and salaries 3,583 1,717
Social security costs 414 191
Defined contribution pension cost 140 96
Share-based payment expenses 698 94
Other employee benefits 288 8
================================================ ============================== ==============
Total employee benefit expense 5,123 2,106
================================================ ============================== ==============
The monthly average number of persons, including the directors,
employed by the Group during the year was as follows:
2021 2020
No. of employees No. of
employees
=========================== ========================================================= ===================
Development 23 11
Sales and Marketing 12 2
General and Administrative 6 3
=========================== ========================================================= ===================
Total Average FTE 41 16
=========================== ========================================================= ===================
The remuneration of the highest paid director was GBP259k (2020:
GBP303k). Included in other employee benefits is GBP30k (2020:
GBPNil) compensation for loss of office paid to a former director
of the group.
The Group operates a defined contribution pension plan which was
put in place in October 2018. The total expense relating to the
plan in the year was GBP140k (2020: GBP94k).
6. Tax expense
6.1 Income tax recognised in profit or loss
2021 2020
GBP000 GBP000
=============================================== ======= =======
Current tax
Research & development tax credit (446) -
Induction Switch 5 -
Total current tax 1,513 -
=============================================== ======= =======
Deferred tax expense
Origination and reversal of timing differences (116) -
Prior year deferred tax movement 59 -
=============================================== ======= =======
Total deferred tax (57) -
=============================================== ======= =======
Tax income on loss on ordinary activities (503) -
=============================================== ======= =======
The reasons for the difference between the actual tax charge for
the year and the standard rate of corporation tax in the United
Kingdom applied to losses for the year are as follows:
2021 2020
GBP000 GBP000
=========================================================== ========== ==============
Loss for the year (8,117) (3,527)
Tax at the standard rate of corporation tax of 19%
(2020: 19.11%) (1,561) (674)
Non-tax deductible amortisation of goodwill and impairment 9 (1)
Expenses not deductible for tax purposes, other than
goodwill, amortisation and impairment 301 108
Depreciation on tangible assets - -
Share-based payments 124 18
Prior year adjustments (386) -
Deferred tax not recognised 961 550
Other (50) -
=========================================================== ========== ================
Total tax income (503) -
=========================================================== ========== ================
6.2 Current tax assets and liabilities
2021 2020
GBP000 GBP000
========================== =============================================== ===========
Current tax assets
R&D tax credit receivable 446 -
446 -
========================== =============================================== ===========
Current tax assets relate to research and development tax
credits in respect of a subsidiary, for the years ended 31 March
2019 and 31 March 2020. The claim for the year ended 31 March 2019
was submitted to HMRC and settled post-year end. Other subsidiaries
do not have a recent history of claims and therefore an estimate
for these has not been made, due to the uncertainty regarding
timing and amount of such claims.
6.3 Deferred tax balances
A deferred tax liability of GBP791k (2020: GBP321k) has been
recognised in relation to fair value adjustments of intangible
assets acquired in business combinations. A deferred tax asset of
GBP791k (2020: GBP97k) was recognised in relation to unused tax
losses acquired in business combinations. This deferred tax asset
was recognised only to the extent that there are deferred tax
liabilities available with the same tax authority and which will be
unwound in the same period as the deferred tax asset.
A deferred tax asset of GBP2,787k (2020: GBP1,058k) has not been
recognised due to uncertainty that the asset will be utilised in
the foreseeable future as the Group has yet to obtain significant
sources of income. The unrecognised deferred tax asset includes
those in relation to tax losses of GBP14,605k (2020: GBP6,144k).
These amounts exclude amounts related to Horizon Strategic Partners
Limited, which is expected to generate profits and for which a
deferred tax asset of GBP89k (2020: GBP97k) has been
recognised.
7 . Loss per share
(i) Basic loss per share
2021 2020
GBP GBP
======================================================== ====== ======
From continuing operations attributable to the ordinary
equity holders of the Group (0.19) (0.13)
======================================================== ====== ======
Total basic loss per share attributable to the ordinary
equity holders of the Group (0.19) (0.13)
======================================================== ====== ======
(ii) Diluted loss per share
2021 2020
GBP GBP
========================================================== ====== ======
From continuing operations attributable to the ordinary
equity holders of the Group (0.19) (0.13)
========================================================== ====== ======
Total diluted loss per share attributable to the ordinary
equity holders of the Group (0.19) (0.13)
========================================================== ====== ======
(iii) Reconciliation of loss used in calculating loss per share
2021 2020
GBP000 GBP000
======================================================= ============== ===========
Profit attributable to the ordinary equity holders of the Group used
in calculating basic loss per share
and diluted loss per share:
From continuing operations (7,614) (3,527)
======================================================= ============== ==============
(7,614) (3,527)
======================================================= ============== ==============
(iv) Weighted average number of shares used as the denominator
2021 2020
number number
===================================================== ========== ==========
Shares in issue at the beginning of the period 29,626,201 65,591
Shares issued on share split - 13,052,609
Shares issued - 3,826,086
Shares issued on IPO - 12,681,915
Shares issued on business combination 12,424,527 -
===================================================== ========== ==========
Issued ordinary shares as at the end of the period 42,050,728 29,626,201
Weighted average number of ordinary shares used as
the denominator in calculating basic loss per share 39,701,981 26,189,458
On 9 June 2021, the Group acquired Attend Anywhere Pty Ltd
("Attend Anywhere"). The consideration for the acquisition included
the issue of 14,285,714 new Ordinary Shares.
As part of the transaction, the Group also completed a fundraise
by issuing 35,714,285 new Ordinary Shares.
Both the above transactions would have significantly changed the
number of shares outstanding used to calculate the loss per share,
if they had occurred prior to 31 March 2021.
8. Business combinations during the year
8.1 Subsidiaries acquired
On 8 June 2020, Induction Healthcare Group plc acquired 100% of
the share capital of Zesty Limited for a consideration comprising
GBP500k in cash, plus the issue of 12,424,527 New Ordinary
Shares.
Proportion
Date of of voting Consideration
Name Principal activity acquisition equity transferred
interests GBP000
acquired
%
============== ============================================= ============== ================ ==================
Provision of software
Zesty Limited to healthcare organisations 08/06/20 100 11,514
============== ============================================== ============= ================ ==================
8.2 Consideration transferred
The following represents the consideration transferred to the
owners of Zesty Limited.
Zesty Limited
GBP000
===================== =============
Cash 500
Equity consideration 11,014
===================== =============
Total consideration 11,514
===================== =============
The fair value of cash consideration equals its carrying value.
The fair value of the equity consideration has been determined with
references to the market value of the shares of Induction
Healthcare Group plc immediately prior to the issue of the
consideration shares, adjusted for the impact of a lack of
marketability discount of 10%.
8.3 Assets acquired and liabilities recognised at the date of
acquisition
The following represents assets acquired and liabilities
recognised on acquisition.
Zesty Limited
GBP000
============================================ =============
Non-current assets
Property, plant and equipment 18
Intangible assets 4,163
Other non-current assets 884
Current assets
Cash and cash equivalents 13
Other current assets 313
Non-current liabilities
Loans and borrowings (417)
Deferred tax liabilities (791)
Current liabilities
Other current liabilities (821)
Loans and borrowings (85)
============================================ =============
Total identifiable net assets at fair value 3,277
============================================ =============
The separately identifiable intangible assets and valuation
techniques used to measure the fair value of these material assets
acquired were as follows:
Assets acquired Valuation technique
=============== =====================================================================================
Trade Name Relief-from-royalty savings method. This method
considers the discounted estimated royalty payments
that are expected to be avoided as a result of the
patents being owned.
Users Premium profits method. This method estimates the
value of customer-related assets by quantifying the
impact on cash flows under a scenario in which the
customer related assets must be replaced, assuming
all of the assets required to operate the business
are in place except the customer-related assets.
Technology Replacement cost method. This method establishes
value based on the cost of reproducing or replacing
the asset, less depreciation from functional or economic
obsolescence. A corroborating analysis was performed
using the multi-period excess earnings method. The
multi-period excess earnings method considers the
present value of net cash flows expected to be generated
by the customer relationships, by excluding any cash
flows related to contributory assets.
=============== =====================================================================================
8.4 Goodwill arising on acquisition
Zesty Limited
GBP000
============================================ =============
Consideration transferred 11,514
Total identifiable net assets at fair value 3,277
============================================ =============
Goodwill arising on acquisition 8,237
============================================ =============
8.5 Net cash outflow on acquisition
2021
GBP000
=================================================================== =================
Consideration paid in cash (500)
Transaction costs of the acquisition (included in cash flows
from operating activities) (269)
Transaction costs attributable to the issuance of shares (included
in cash flows from financing activities, net of tax) (64)
Less: cash and cash equivalent balances acquired 13
=================================================================== =================
Net cash flow on acquisition (820)
=================================================================== =================
Acquisition related costs of GBP269k were recognised in
administrative expenses. Acquisition related costs of GBP64k relate
to the issuance of shares and were capitalised to share premium.
All issue costs were recognised.
8.6 Impact of acquisition on the results of the Group
From the date of acquisition, Zesty Limited contributed GBP872k
to the revenue of the group and net losses of GBP1,921k to the loss
before tax from continuing operations of the Group. If the
acquisition had taken place at the beginning of the year,
contribution to revenue from continuing operations would have been
GBP954k and contribution to loss before tax from continuing
operations for the Group would have been GBP2,306k.
9. Goodwil l
The following represents the carrying value of goodwill as at 31
March 2021.
2021 2020
GBP000 GBP000
======================= ======= ==============
Cost 9,790 1,553
Accumulated impairment (417) 1,136
9,373 1,553
======================= ======= ==============
2021 2020
GBP000 GBP000
=============================================== ======= ==============
Cost
At 1 April 1,553 -
Additions as a result of business combinations 8,237 1,553
=============================================== ======= ==============
As at 31 March 9,790 1,136
=============================================== ======= ==============
Accumulated impairment
Impairment charge 417 -
=============================================== ======= ==============
At 31 March 417 -
=============================================== ======= ==============
9.1 Allocation of goodwill to cash generating units
Goodwill is allocated to the Group's cash generating unit as
follows:
2021 2020
GBP000 GBP000
=================== ======= ==============
Induction Zesty 8,237 -
Induction Guidance 1,136 1,136
Induction Switch - 417
=================== ======= ==============
9,373 1,553
=================== ======= ==============
Induction Zesty
The Zesty CGU consists of the assets and cash flows related to
the Zesty patient portal product. The recoverable amount of the
Zesty CGU of GBP10,902k as at 31 March 2021 has been determined
based on a value-in-use calculation using cash flow projections for
a five-year period. The pre-tax discount rate applied to cash flow
projections is 17.4% and cash flows beyond the five-year period are
extrapolated using a declining growth rate, determined using the
H-model. The recoverable amount of this CGU exceeded its carrying
amount by GBP1,334k. No impairment charge resulted from this
analysis. Refer to sensitivity disclosures below.
Induction Guidance
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 recoverable amount of the Induction
Guidance CGU of GBP3,385k as at 31 March 2021 (2020: GBP3,830k) has
been determined based on a value-in-use calculation using cash flow
projections for a five-year period. The pre-tax discount rate
applied to cash flow projections is 17.7% (2020: 10.6%) and cash
flows beyond the five-year period are extrapolated using a 2%
growth rate (2020: 2.7%). The recoverable amount of this CGU
exceeded its carrying amount by GBP1,231k. No impairment charge
resulted from this analysis. Refer to sensitivity disclosures
below.
Induction Switch
The Induction Switch CGU consists of the assets and cash flows
related to the Induction Switch app. During the year ended 31 March
2021, the performance of the Induction Switch app did not align to
management's previous expectations and forecasts. This was due to
challenges in monetising the app, due to the COVID-19 pandemic
changing priorities for the customers of the Group. As a result of
this, management's forecasts of future cash inflows were updated to
reflect these delays in monetisation. The recoverable amount of the
Induction Switch CGU of GBPNil as at 31 March 2021 (2020:
GBP11,441k) has been determined based on a value-in-use calculation
using cash flow projections for a five year period. The pre-tax
discount rate applied to cash flow projections is 16.7% (2020:
17.9%) and cash flows beyond the five-year period are extrapolated
using a 2% growth rate (2020: 2%). An impairment charge of
GBP1,366k was recognised on the Induction Switch CGU, and would
have been included in administrative expenses if presented by
function on the statement of profit and loss. This impairment
charge was allocated to all identifiable individual assets within
the CGU as follows: GBP418k to goodwill; GBP33k
to intangible assets acquired in a business combination; and
GBP915k to capitalised development costs (refer Note 10).
Management does not expect any further impairment of the assets
related to the Induction Switch CGU. Refer to sensitivity
disclosures below.
Key assumptions used in value-in-use calculations and
sensitivity to changes in assumptions. The calculation of
value-in-use for all 3 CGU's is most sensitive to the following
assumptions:
-- Earnings before interest, tax, depreciation and amortisation
("EBITDA") margins
-- Discount rates
-- Growth rates used to extrapolate cash flows beyond the
forecast period.
EBITDA - EBITDA is determined by deducting the budgeted costs to
be incurred (cash outflows) from payments received from customers.
Cash inflows are determined based on detailed budgets for the first
2 years of the forecast period, and then extrapolated for the
remaining forecast period using an appropriately declining growth
rate to reach the terminal growth rate.
Detailed budgets are determined using assumptions on existing
customer renewal rates; sales of additional services to existing
customers; sales made to new customers; and pricing assumptions
based on a standard price list as determined by the Group's pricing
policy. Cash outflows are based on values achieved in the year to
31 March 2021, adjusted for an appropriate growth rate depending on
the nature of the cash outflow. Decreased demand can lead to a
decline in EBITDA. A reasonable possible decrease of 1% in EBITDA
would not result in an impairment of either the Zesty or Induction
Guidance CGU. A reasonably possible decrease of 7.4% would result
in the impairment of the Zesty CGU. A decrease of 32.6% would
result in the impairment of the Induction Guidance CGU.
Discount rates - Discount rates represent the current market
assessment of the risks specific to each CGU, taking into account
the time value of money and individual risks of the underlying
assets that have been incorporated in the cash flow estimates. The
discount rate calculation is based on the specific circumstances of
the Group and is derived from the weighted average cost of capital
(WACC). The WACC takes into account both debt and equity. The cost
of equity is derived from the expected return on investment by the
Group's investors. The cost of debt is based on the
interest-bearing borrowings the Group is obliged to service. CGU
specific risk is incorporated by applying individual beta factors.
The beta factors were evaluated for the first time in the year
ended 31 March 2020, based on publicly available market data.
Adjustments to the discount rate are made to factor in the specific
amount and timing of the future tax flows in order to reflect a
pre-tax discount rate. The assumptions made in determining the
discount rate were updated during the year ended 31 March 2021 to
reflect the changes in the nature of the business as a result of
the acquisition of Zesty Limited.
A reasonable possible rise in the pre-tax discount rate of 1% to
18.4% in the Zesty CGU would result in an impairment of the CGU. A
rise in the pre-tax discount rate of 5.5% to 23.2% in the Induction
Guidance CGU would result in an impairment of the CGU.
Terminal growth rate
The terminal growth rate is the growth rate used to forecast
cash inflows and outflows into perpetuity. As the terminal growth
rate for the Induction Guidance and Induction Zesty CGU's is 2%,
there would be no material impact to the recoverable amount of any
decreases in the terminal growth rate.
10. Intangible assets
Capitalised Trade name Users Technology Total
development
costs GBP000
GBP000 GBP000 GBP000 GBP000
========================== ================================== ========== ============== ========== ==============
Cost
At 1 April 2019 197 - - 36 233
Additions internal 761 - - - 761
Acquired through business
combinations 229 264 919 277 1,689
========================== ================================== ========== ============== ========== ==============
At 31 March 2020 1,187 264 919 313 2,683
========================== ================================== ========== ============== ========== ==============
Additions - internally
developed 1,660 - - - 1,660
Acquired through business
combinations 1,081 369 507 2,205 4,162
========================== ================================== ========== ============== ========== ==============
At 31 March 2021 3,928 633 1,426 2,518 8,505
========================== ================================== ========== ============== ========== ==============
Capitalised Trade name Users Technology Total
development
costs GBP000
GBP000 GBP000 GBP000 GBP000
========================= ==================================== ========== ============= ========== ==============
Accumulated amortisation
and impairment
At 1 April 2019 - - - 10 10
Charge for the year 224 15 53 31 323
At 31 March 2020 224 15 53 41 333
========================= ==================================== ========== ============= ========== ==============
Charge for the year 851 61 189 239 1,340
Impairment charge 915 7 23 3 948
At 31 March 2021 1,990 83 265 283 2,621
========================= ==================================== ========== ============= ========== ==============
Net book value
At 1 April 2019 197 - - 26 223
At 31 March 2020 963 249 866 271 2,349
========================= ==================================== ========== ============= ========== ==============
At 31 March 2021 1,939 550 1,161 2,234 5,884
========================= ==================================== ========== ============= ========== ==============
The impairment charge of GBP948k recognised on capitalised
development costs and acquired intangible assets relates to the
allocation of the impairment loss recognised in the Induction CGU
to individual assets within the CGU.
11. Cash and cash equivalents
2021 2020
GBP000 GBP000
========================================================= ======= =======
Cash at banks and on hand 872 671
Short-term deposits 1,600 10,047
========================================================= ======= =======
Cash and cash equivalents per the statement of financial
position and cash flow statement 2,472 10,718
========================================================= ======= =======
Cash at banks earn interest at floating rates based on daily
bank deposit rates. Short-term deposits are made on weekly basis,
depending on the immediate cash requirements of the Group, and earn
interest at the respective short-term deposit rates.
12. Events after the reporting date
On 9 June 2021, the Group acquired Attend Anywhere Pty Ltd
("Attend Anywhere"), a private Australian-based video consultation
provider in the UK. The Acquisition (which comprised the
acquisition of 818 shares in Attend Anywhere together with the
acquisition of 1 share in A.C.N. 167 231 307 Pty Ltd, a company
which owns the remaining shares in Attend Anywhere) resulted in
Induction owning the whole issued share capital (100%) and voting
rights of Attend Anywhere.
The acquisition of Attend Anywhere is an opportunity for the
Induction Healthcare Group to provide a comprehensive virtual care
platform for hospitals, doctors and patients. Attend Anywhere
extends the Group's existing product set with a mature video
consultation platform already being widely used by NHS hospitals
across the UK. It will also deliver Attend Anywhere customers an
even higher standard of user support, technical resilience and
customer service, via the Group's existing UK based
infrastructure.
The consideration for the Acquisition comprised GBP16,348k in
cash including an amount equal to Attend Anywhere's net assets at
completion of the Acquisition as calculated in accordance with the
SPA (estimated to be GBP788k) and the issue of 14,285,714 new
Ordinary Shares (the "Consideration Shares").
As part of the transaction, on 8 June 2021, the Company
announced that it had raised GBP25 million through a placing of
35,714,285 new Ordinary Shares at a price of 70p per share. Part of
the proceeds of the Placing was used to fund the Cash Consideration
and fees in respect of the Acquisition and the remainder will be
used to provide the Group with additional working capital.
Following completion of the Acquisition, Chris Ryan, Attend
Anywhere's CEO, joined the Company's executive management team and
holds 11,002,445 Ordinary Shares.
The Group is in the process of determining the accounting
impacts of the acquisition and completing the purchase price
allocation in accordance with IFRS 3, however this is not yet
complete. Therefore, the Group has determined that providing the
disclosures required by IFRS 3 for business combinations effected
after the reporting date is not practicable.
[1] P.2
[2] P.2
[3] P.2
[4] Global Virtual Healthcare Market, Cumulative Impact of COVID-19", p31
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END
FR BRGDCBBDDGBD
(END) Dow Jones Newswires
September 23, 2021 02:00 ET (06:00 GMT)
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