REG - Induction Healthcare - Final Results
04/07/2024 07:00
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RNS Number : 0683V Induction Healthcare Group PLC 04 July 2024
Induction Healthcare Group PLC
("Induction", the "Company", or the "Group")
FY24 Audited Final Results
London, UK - 4 July 2024: Induction Healthcare Group PLC ("Induction", the
"Company", or the "Group"; AIM: INHC), a leading digital health platform
driving transformation of healthcare systems, announces its audited final
results for the year ended 31 March 2024.
Financial Highlights
· Revenues from customer contracts up 5.6% to £14.4m (Note 1) (2023:
£13.6m Note 2)
· Gross margin 78.4% (2023: 63.1%)
· Adjusted EBITDA positive £0.3m (Note 3) (2023 loss of £4.0m)
· Adjusted Operating loss of £0.2m (Note 4) (2023: loss of £4.8m)
· Loss for the year £3.3m (2023: loss of £17.4m)
· Net cash at the year-end of £3.7m (2023: £4.3m)
Operational Highlights
· Achieved objective of EBITDA breakeven having completed cost
containment and margin enhancement programme
· Zesty revenues up by 133% with strong pipeline for growth in FY25
o 17 Zesty customers, covering 3.2m patients, now connected to the NHS App
o Launched Zesty in 5 new Trusts, with 4 additional Trusts contracted to
go-live within the next 12 months
o Signed a total of £3.4m (includes previously-announced contracts) in
contracts with NHS England Trusts to fund new deployments and build out new
functionality to generate growth
· Attend Anywhere market share in England maintained in a challenging
renewals environment
· Successfully built and launched the first phase of our integrated
product which enables a patient to view and launch their Attend Anywhere
consultation from within Zesty. Five customers have already purchased the
integrated functionality.
· Divested non-core assets Switch, and post-period end sold Guidance
for £1.2m
Paul Tambeau, CEO of Induction Healthcare, said: "The Zesty portal continues
to be our growth engine as the NHS sees value in digitizing interactions with
patients who have an outpatient appointment. Not only did we secure new wins,
but we developed new features and deepened our integration with Oracle Cerner
which can generate new growth for Induction. Growth in Zesty has helped to
counteract downward pressure on pricing with Attend Anywhere."
Notes
1 Reported revenue from continuing operations is stated after reclassifying
assets held for sale under IFRS5 (Induction Guidance £0.7m). Induction
Guidance assets were held for sale at year end 31 March 2024 and classified
under discontinued operations (Total recognised revenue from continuing
operations £13.65m plus discontinuing operations £0.7m was £14.4m).
2 Reported revenues from continuing operations is stated after reclassifying
assets held for sale under IFRS5 (Induction Switch, 2023 and Induction
Guidance £0.7m). These product assets were held for sale at year end 31 March
2023 and classified under discontinued operations (Total recognised revenue
from continuing operations £12.9m plus discontinuing operations £0.7m was
£13.6m).
3. Adjusted EBITDA is Operating Loss from continuing operations (£4.2m)
before amortisation of £4.0m and non-cash foreign exchange adjustment £0.3m,
restructuring £0.1m and non-recurring items £0.1m.
4 Adjusted operating loss is Operating loss £4.2m before depreciation,
amortisation £4.0m and impairment, £ nil. (2023: Adjusted operating loss was
£4.8m which is Operating loss of £17.4m before depreciation and amortisation
£4.9m, and impairment £7.7m.
Annual Report and Accounts and Notice of AGM
The Annual Report and Accounts and notice of AGM will be available later today
on the Company's website:
https://inductionhealthcare.com/investors/financial-reports-and-publications/
(https://inductionhealthcare.com/investors/financial-reports-and-publications/)
. Copies of both documents will be posted to shareholders in due course. The
AGM will be held at 10.00 am on Tuesday 13th August 2024.
Enquiries
Induction
Christopher Samler, Chair +44 (0)7712 194092
Paul Tambeau, Chief Executive Officer +44 (0)7983 104443
Singer Capital Markets (Nominated Adviser and Broker) +44 (0)20 7496 3000
Philip Davies
Alaina Wong
Jalini Kalaravy
About Induction - www.inductionhealthcare.com
(http://www.inductionhealthcare.com/)
Induction (AIM: INHC) Induction delivers a suite of software solutions that
transforms care delivery and the patient journey through hospital. Our
system-wide applications help healthcare providers and administrators to
deliver care at any stage remotely as well as face-to-face - giving the
communities they serve greater flexibility, control and ease of access.
Purpose-built for integration with leading Electronic Medical Record (EMR)
platforms, our products offer immediate stand-alone value that becomes even
greater when integrated with pre-existing systems.
Used at scale by national and regional healthcare systems, as well non-health
government services, our applications are relied upon by hundreds of thousands
of clinicians and millions of patients across almost every hospital in the
British Isles.
Highlights from Annual Report
Chair's Statement
Over the year, Induction has continued to successfully transform itself from
an unprofitable, vulnerable business with a disparate product set into one
that is profitable, self-sustaining, and offers an integrated product to the
UK healthcare market. We have also, as we committed to shareholders, divested
two non-core assets and ensured that our cost base is appropriate for a
business of our size.
Our message to shareholders twelve months ago, as we embarked on this
objective, was that we had enacted difficult measures to start this process
and that we expected a particularly challenging period ahead.
A year later, it is very pleasing to report, and a testimony to the hard work
of the team, that in all of these major aims we are broadly on track and,
although there is still much work to be done to drive growth into the
business, the platform for this anticipated growth is in place and secure.
Although much of this activity has been inwardly focused, the company also
faces its market with increased confidence. Induction is at the centre of the
current NHS focus on digital efficiencies which are a precondition to drive
necessary change into the UK healthcare system.
It is universally recognised that effective and integrated patient management
systems are at the heart of the challenges of both waiting lists and of the
patient 'journey' through the hospital system. Induction's products are
central to this and the business has, over the year, won a number of contracts
with Trusts to provide digital services that will enable administrators,
clinicians and the whole of the clinical team to offer a better service to
patients at lower overall cost to the paying body.
At the centre of this is the Zesty portal for patients and administrators.
Winning new Zesty contracts has been critical in ensuring that the business
has been able to weather the price and market share pressures associated with
the legacy video product (Attend Anywhere). Notwithstanding the presence of
Teams, we have held our market share for Attend Anywhere - testimony to the
strength of a bespoke healthcare focused product.
In our report for last year we talked to the key technical goal of integrating
our platform over the coming year so that patients and clinicians gained
access to our various digital amenities through one platform. It is
particularly pleasing to note that an important first phase, of enabling a
patient to see and launch their video consultation from within the portal, has
been completed on time and on budget. This new integrated platform together
with other product and supply chain improvements will ease our customer
journey, enhance customer loyalty and reduce our cost base.
Last year I reported on the difficult changes to both Board and the senior
executive team that we felt were necessary to effect the radical
transformation we desired. I am pleased to report that these changes have been
successful - there have been no subsequent changes and the Board and senior
team have remained in position.
I genuinely thank them for all of their counsel, support and incredibly hard
work in challenging circumstances.
The full year results outcome was an EBITDA on continuing operations, adjusted
for normalisation, improved to £0.3m (2023: loss of £4.0m). Whilst the
immediate stabilisation goals have been met, the challenge for this year and
beyond is to drive growth of the top line and at the same time to retain our
profitability as well as our focus.
The healthcare market for our products and services is changing rapidly and
for the immediate future we have to invest heavily in the product and sales
capability to meet this growing opportunity. Such investment will be in both
people and processes but will not be at the expense of our previous
profitability commitments to shareholders.
In conclusion, my message to our shareholders is that whilst we have succeeded
in our task to date, we recognise that, to fully fulfil the company's
potential and to achieve the value our shareholders deserve, we need to drive
our revenue onto a higher trajectory. The current direction of travel in the
NHS bodes well for Induction although we are fully aware of the challenges,
and potential opportunities, which may be presented by the anticipated change
in government or in spending priorities. Either way we feel confident that
with the team we have and Induction's product capabilities we are as well
positioned as any to capitalise on a changing NHS.
Christopher Samler
Non-executive Chair
4th July 2024
CEO Statement
Achieving Breakeven, Building New Revenue
Our key focus this year was to stabilise the business, execute on our
integrated product strategy, and put Induction onto a self-sustaining path
without the need for immediate funding. I'm very pleased that we have
delivered on these objectives.
We achieved our target adjusted EBITDA £0.3m (compared to a loss of £4.0m
EBITDA in FY24). An important initiative was to implement efficiencies in
our cloud infrastructure which resulted in a 56% reduction in hosting cost.
That has driven a 15.3% improvement in gross margin to 78.4.%. There are
additional initiatives we are implementing this year that will drive further
reductions in cloud hosting costs.
We've also carefully managed our cash position so that we didn't have to
return to the market for more funding. We ended the year with £3.7m in cash
which was ahead of market expectation.
Market Conditions Impacting Growth
Delivering breakeven also required growth in revenue. We ended FY24 at £14.4m
of total Group recognised revenue, 5.6% ahead of the previous year. Zesty
continues to be our growth engine which delivered £4.9m in revenue (up 133%).
This growth in Zesty is making up for revenue churn with Attend Anywhere as we
move customers in England to utilisation-based contracts.
Growth in Zesty included £3.4m in contracts with the NHS as part of a
national mandate for hospitals to acquire a patient portal (of which £2.9m
has been recognised in the year). Through these contracts we were also able
to:
· Further integrate Zesty with Oracle Cerner and widely-used diagnostic
booking systems;
· Enhance our Form Builder module to support waitlist validation and
patient initiated follow up (PIFU) pathways; and,
· Build new functionality, such as digitising maternity records.
We signed contracts with 4 new NHS England Trusts to implement Zesty, all to
be rolled out in FY25, which will bring our total contracted number of NHS
Trusts to 21.
All platform and product enhancements underpin valuable upsell opportunities
for FY25.
Integrated Product Strategy
We delivered on our integrated product strategy goals for this year which will
provide enhanced functionality to drive growth and customer retention.
We completed an important first phase of enabling patients to see and launch
their Attend Anywhere consultation from within the Zesty. Five customers have
already purchased this new functionality, with more expected to follow. This
year we will continue to develop that integration for patients, as well as
integrate Attend Anywhere into electronic medical records so that clinicians
can see and launch a video consultation from within their electronic medical
record. This will improve both patient and clinician experience.
We also built single sign-on capabilities which allow third-party providers to
connect with Zesty to deliver enhanced functionality for patients. For
example, at Whittington NHS Trust, we connected a surgical pre-assessment tool
called Lifebox to Zesty so that patients could complete the questionnaire via
the portal. The functionality we built this year will allow us to build an
ecosystem of partners that can drive revenue.
We also continued our partnership with the NHS Wayfinder Programme - the team
responsible for connecting services into the NHS App. As of the end of FY24,
we had 17 NHS Trusts connected to Zesty via the NHS App. A total of 3.2m
patients now have access to Zesty via the NHS App, with 1.7m of those having
registered to the portal.
Given our integrated product focus on supporting the interaction between care
teams and patients, we have deprecated or divested non-strategic assets, such
as Switch in June 2023 and also recently completed the divestment of Guidance,
which was announced as being sold on 1st July 2024 for £1.2m.
Key Focus in FY25: Driving New Revenue Growth
All NHS England Trusts have now moved to utilisation-based contracts for
Attend Anywhere, from centrally funded population-based contracts. With
utilisation-based contracts we have the ability to increase revenues by
driving adoption and utilisation. It is also important to note that the number
of Trusts that have churned is low, and we continue to hold our market share
in NHS England.
Whilst there is room to change the trajectory of Attend Anywhere revenue,
Zesty will continue to be our growth engine. There are greenfield
opportunities to sell Zesty into NHS Acute Trusts that either don't have a
portal, are looking to upgrade from a non-NHS-accredited portal, or switch due
to poor performance of their existing provider. We also see opportunity in the
integration of Attend Anywhere and digitised maternity records.
Integrating Attend Anywhere into Zesty, as well as into the Trust's electronic
medical record, will provide for a better user experience and drive greater
adoption. This integrated capability, which includes video, will be important
as we seek to grow into Community & Mental Health.
Our partnership with Oracle Cerner continues to be productive and fruitful and
provides a further funnel of new opportunities for Zesty.
As we look to FY25 and beyond, we need to start driving revenue growth in
other parts of the health care system. By selling into other areas of the
health system, we have a greater ability to sign regional ICS wide contracts
that connect a patient's care journey.
Outlook
The NHS continues to prioritise investments in digitising the health care
system to drive efficiencies and provide a greater experience for patients. In
the past year we have seen the NHS mandate that all acute trusts have a
patient portal, and they continue to direct funding to support the system
deliver on that mandate. And whilst we are in the midst of a general election
in 2024, all of the major parties are talking about the importance of
investing in digital health.
The NHS also continues to tackle growing waiting lists, with 6.3m patients
still waiting for an outpatient appointment as of March 2024. We're seeing
growing demand for our Form Builder module to help Trusts validate their
waiting list.
Through our enhanced appointment capability we're also playing a role in
reducing 'did not attend' rates by an average of 30%, freeing up spots for
patients that need them. On that basis, our product suite is well suited to
support the NHS meet this mounting challenge.
Where FY24 was the year of stabilising the business, FY25 is a year for
generating growth in new areas so that we can accelerate our performance into
the future.
With the team we have around us, I believe we can be successful.
Paul Tambeau
CEO
4th July 2024
Financial Review
Revenue
Revenue from contracts with customers for the year to 31 March 2024 per table
below was £14.4m (2023: £13.6m). Excluding a non-cash accounting adjustment
revenues from all operations grew 5.6% in the year to 31 March 2024.
Revenue analysis 31 31
March 2024 March 2023
£000 £000
Revenues from customer contracts (1) 14,359 13,584
Non-cash IFRS3 adjustment - (74)
Total Revenue from all operations 14,359 13,510
Revenue - Discontinued operations (2) 711 626
Reported revenue
Revenue - continuing operations(3) 13,648 12,884
1 Reported revenue from continuing operations is stated after reclassifying
revenue from assets held for sale under IFRS5 (Induction Guidance £0.7m).
These product assets were held for sale at year end 31 March 2024 and
classified under discontinued operations. Total recognised revenue from
continuing operations of £13.6m and discontinued operations £0.7m was
£14.4m versus 2023: Continuing operations £12.9m, plus IFRS3 adjustment
(£0.1m) and discontinued operations £0.6m equalling £13.6m).
2 Revenue from product assets (Induction Guidance) is disclosed under IFRS5 as
assets held for sale.
3 After excluding discontinued operations revenue (£0.7m). For reference
only the comparative recognised 2023 revenue was £0.6m.
The majority of the Group's revenue came from Induction Attend Anywhere which
has decreased by 17.8% to £8.8m (2023: £10.7m) due to pricing pressures,
while revenue from Induction Zesty has increased by 223% to £4.9m (2023:
£2.2m).
Induction's other clinical apps (Switch and Guidance) delivered £0.7m (2023:
£0.6m).
While focus is on sustainable annualized revenue growth management also takes
note of ARR. ARR differs from annualized revenue due to the timing of revenue
recognition, which includes amounts for partial years based on contract start
dates, whereas ARR is an annualized amount. Recognised revenue also includes
non-SaaS Professional Services fees in our Zesty category of £2.9m
(2023:£0.5m).
ARR from all operations as at 1(st) April 2024 was £10.0m (2023: £13.5m).
This represented the annualized value of the recurring revenue base that
expected to be carried into future periods. This represents the stabilizing of
Attend Anywhere revenues and the relative increase of Professional services
revenues in Zesty.
Gross profit
Reported Gross profit was £10.7. million (2023: £8.1 million) with gross
margin much improved at 78.4% versus prior year reported margin (2023:
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
attributable to a reduction in direct costs, particularly web hosting expenses
which were targeted for efficiencies, and a proportional increase in high
margin professional services revenue in the year.
Capitalised development costs
Development expenses for the year were £8.8m (2023: £9.3m) an decrease of
£0.5m representing a lower level of capitalised development.
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.
Where the nature of the features developed during the year do not meet the
criteria for capitalisation under IAS38 costs are charged directly to the
operating costs of the business.
Impairment charge
Management performed an impairment review as at 31 March 2024 in accordance
with IAS 36 'Impairment of assets'. The results of this review showed no
evidence of impairment, and no impairment charge was recognised in the income
statement (2023: £7.7m). The basis of the impairment review is explained in
further detail in note 16 - Goodwill, within the financial statements.
Operating expenses
Excluding the adjusting items depreciation, amortisation and share based
payments, operating expenses were reduced by £2.1m, driven by decreased
development expenses.
Core performance measures
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 was £0.3m (2023: loss of £4.0m).
Table 1(3) 31/03/2023 31/03/2023
£m £m
Loss before tax from continuing operations (4.2) (17.4)
Add: Impairment losses - 7.7
Add: Depreciation and amortisation 4.0 4.9
Operating loss before depreciation, amortisation and impairment
(0.2) (4.8)
Adjusted for exceptional and non-cash costs:
- Other exceptional items(1) 0.5 0.8
- Share based payments (non-cash) 0.3 0.4
Adjusted Operating profit/(loss) before, depreciation, amortisation,
impairment share-based payments and exceptional costs
0.6 (3.6)
Adjusted EBITDA from continuing operations(2) 0.3 (4.0)
(1) Restructuring costs £0.1, non-cash foreign exchange movement £0.3m,
Non-recurring costs £0.1m.
(2 ) After share-based payments charge £0.3m (2023: £0.4m)
3 The above table presents an Alternative Performance Measure that may not be
readily comparable with other similarly termed items found elsewhere(.)
Cash
Cash as at 31 March 2024 was £3.7m (2023: £4.3m). Following on from the cost
containment exercise in the prior financial year, the Leadership Team focused
on cash conservation and cost efficiencies during the current period.
We continue to tightly manage our cost base which, as at 31 March 2024, was
reduced by over 30% on a monthly basis from the level at March 2023.
Going concern
The Group incurred an operating loss on continuing operations of £4.2m for
the year ended 31 March 2024 (2023 £17.4m), however, it had total assets of
£33.4m inclusive of £3.7m 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
2026, including downside scenarios.
Assets and Liabilities
Goodwill as at 31 March 2024 of £10.3m (2023: £10.6m) and intangibles of
£11.2m (2023: £15.3m) 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 no impairment was
required (2023: £7.7m). Refer to note 17 of the financial statements.
Trade Receivables were £3.5m Trade (2023: £2.1m) reflecting increased
invoicing activity at the period end. Trade payables were £1.2m (2023:
£0.8m) due to increased supplier activity towards period end delivering
revenue generating activities.
Taxation
Current tax receivable £0.8m (2023: £1.1m) consists of Research and
Development tax credits due to the Group for current and prior years. As
with many other companies the Group has experienced delay to the repayments of
tax credits. Nevertheless, we anticipate receipts will arise, in due course,
after appropriate follow-up.
Loss before tax
The Group net loss before tax was £4.2m (2023: £17.4m). The year-on-year
change is driven by a non-cash impairment charge in 2023 of £7.7m, with no
current year charge. See note 17 to the financial statements.
Discontinued operations
During the year ending 31 March 2024 the Group classified the Induction
Guidance product as being held for sale, as a result of a decision to focus on
patient facing products in the secondary care market. The Induction Guidance
business was announced as sold on 1st July 2024.
Principal risks and uncertainties.
As more fully described in the Directors' Report and notes to the financial
statements 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
4th July 2024
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2024
2024 2023
£000 £000
Continuing operations
Revenue from contracts with customers 13,648 12,884
Cost of sales (2,948) (4,754)
Gross profit 10,700 8,130
Sales and marketing expenses (1,096) (1,523)
Administrative expenses (5,018) (6,942)
Development expenses (8,788) (9,287)
Impairment losses - (7,758)
Loss from operations (4,202) (17,380)
Finance income 6 1
Finance expense (11) (7)
Loss before tax (4,207) (17,386)
Tax credit 962 798
Loss for the year from continuing operations (3,245) (16,588)
Discontinued operations
Loss from discontinued operations, net of tax (767) (795)
Gain on sale of disposal group 755 -
Loss for the year (3,257) (17,383)
Other comprehensive income
Exchange gains/(losses) arising on translation on foreign operations (1,106) (162)
Exchange gains / (losses) on translation of foreign operations reclassified to 142 (801)
profit and loss during the year
Other comprehensive income for the year, net of tax (964) (963)
Total comprehensive income (4,221) (18,346)
Loss per share attributable to the ordinary equity holders of the parent £ £
Basic (0.04) (0.19)
Diluted (0.04) (0.19)
Loss per share from continuing operations attributable to the ordinary equity
holders of the parent
Basic (0.03) (0.18)
Diluted (0.03) (0.18)
Consolidated Statement of Financial Position
As at 31 March 2024
2024 2023
£000 £000
Assets
Non-current assets
Property, plant and equipment 6 9
Intangible assets 11,162 15,251
Goodwill 10,264 10,685
Deferred tax assets 501 556
Total non-current assets 21,933 26,501
Current assets
Contract assets 1,366 1,228
Trade and other receivables 3,758 2,672
Current tax receivable 814 1,175
Cash and cash equivalents 3,690 4,287
Assets held for sale 1,813 2,474
Total current assets 11,441 11,836
Total assets 33,374 38,337
Liabilities
Non-current liabilities
Contract liabilities 3,920 3,588
Deferred tax liability 2,831 3,870
Other financial liabilities - 56
Total non-current liabilities 6,751 7,514
Current liabilities
Trade and other payables 3,571 2,713
Provisions - 529
Contract liabilities 1,702 2,198
Current tax payable - -
Liabilities associated with assets held for sale 913 1,016
Other financial liabilities 57 72
Total current liabilities 6,243 6,528
Total liabilities 12,994 14,042
Net assets 20,380 24,295
Equity attributable to equity holders of the parent
Share capital 469 462
Share premium reserve 41,976 41,665
Merger reserve 20,205 20,205
Foreign exchange reserve (1,106) (162)
Other reserves 1,566 1,578
Retained earnings (42,730) (39,453)
Total equity 20,380 24,295
Consolidated Statement of Changes in Equity
As at 31 March 2024
Foreign exchange reserve
Share capital Share premium Merger reserve £000 Other reserves Retained earnings Total equity
£000 £000 £000 £000 £000 £000
At 31 March 2022 and 1 April 2022 460 41,665 20,205 801 1,405 (22,274) 42,262
Comprehensive income for the
year
Loss for the year - - - - - (17,383) (17,383)
Other comprehensive gain / (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 and 1 April 2023 462 41,665 20,205 (162) 1,578 (39,453) 24,295
Comprehensive income for the
year
Loss for the year - - - - - (3,257) (3,257)
Other comprehensive income / (loss) for the year
- - - (944) - (20) (964)
Total comprehensive income for the year
- - - (944) - (3,277) (4,221)
Transactions with owners,
recorded directly in equity
Issue of shares on exercise of equity
settled share-based payments 7 311 - - (311) - 7
Equity settled share-based
payments - - - - 299 - 299
Total contributions by and distributions to owners
7 311 - - (12) - 306
At 31 March 2024 469 41,976 20,205 (1,106) 1,566 (42,730) 20,380
Consolidated Statement of Cash Flows
For the year ended 31 March 2024
2024 2023
£000 £000
Cash flows from operating activities
Loss for the year (3,257) (17,383)
Adjustments for
Depreciation of property, plant and equipment 2 119
Amortisation of intangible fixed assets 4,029 4,716
Impairment losses on intangible assets - 7,758
Finance income (6) (1)
Finance expense 11 7
Share-based payment expense 299 377
Net foreign exchange loss/(gain) (180) 63
Income tax (credit)/charge (962) (798)
(Gain/ loss on sales of disposal group (750) -
(814) (5,142)
Movements in working capital:
(Increase)/decrease in trade and other receivables and contract assets (1,224) 166
Increase in trade and other payables and contract liabilities 591 2,972
Net movements in working capital (633) 3,138
Interest received 6 1
Interest paid (11) (7)
Income taxes received 365 65
Income taxes paid - (863)
Net cash used in operating activities (1,087) (2,808)
Cash flows (used in)/from investing activities
Disposal of discontinued operations 750 -
Purchases of property, plant and equipment - (17)
Payment of software development costs (329) (810)
Net cash used in investing activities 421 (827)
Cash flows from/(used in) financing activities
Issue of ordinary shares 7 2
Payment of lease liabilities (70) (72)
Net cash used in financing activities (63) (70)
Net cash decrease in cash and cash equivalents (729) (3,705)
Cash and cash equivalents at the beginning of year 4,287 7,496
Exchange gains on cash and cash equivalents 132 496
Cash and cash equivalents at the end of the year 3,690 4,287
Notes (forming part of the abridged financial statements)
1. Basis of preparation
These results for the year ended 31 March 2024 are an abridged statement of
the full Annual Report which was approved by the Board of Directors on 3 July
2024. 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 2024 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 2024 will be made
available on the Company's website.
2. Going concern
The Group has recognised total revenues during the year of £14.4m (including
revenue from discontinued operations of £0.8m) (2023: £13.6m and £0.6m) and
had cash balances at 31 March 2024 of £3.7m (2023: £4.3m) with net cash
outflows from operating activities during the year of £0.3m (2023: £2.8m).
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 31 October 2026 ("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 31 October 2026 to take into account the operating cycle of the group,
which sees significant contract renewals in March 2026, with cash inflows
received in April-June 2026.
The Directors' cash inflows under the base case of going concern assessment
assumes a significant majority of 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 January 2025 before increasing again in March/April 2025 in line with the
Group's operating cycle. At this low point, cash balances remain positive.
Under a 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 backfilling employees;
delays/non-backfilling 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 contemporary
knowledge of NHS intentions with regards to digitisation. Whilst there is
always uncertainty as to the specifics of NHS funding plans, 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 31 October 2026, 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
9). 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.
The following is an analysis of the Group's revenue for the year from
continuing operations:
2024 2023
£000 £000
Provision of software (including set-up services of £0.2m (2023: £0.1m)) 10,172 11,703
Post-contract support and maintenance 355 258
Text message revenue 630 431
Professional services 2,491 492
Total revenue from contracts with customers 13,648 12,884
All revenue from continuing operations in the above table is derived from the
United Kingdom.
The following is an analysis of revenue by product line. Revenues for
Induction Guidance and Induction Switch have been included in the results of
discontinuing operations, refer note 13.
2024 2023
£000 £000
Induction Attend Anywhere 8,791 10,709
Induction Zesty 4,857 2,175
13,648 12,884
The following represents the timing of revenue recognition:
2024 2023
£000 £000
Services transferred over time 10,527 11,961
Services at point in time 3,121 923
13,648 12,884
The following represents the transaction prices allocated to performance
obligations that are unsatisfied or partially satisfied at 31 March 2024, and
the timing of the recognition of revenue from these balances.
2024 2023
£000 £000
Within one year 7,240 1,330
More than one year 7,919 171
15,159 1,501
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.
2024 2023
£000 £000
Employee costs 7,543 9,630
Depreciation of property, plant and equipment 2 119
Amortisation of intangible assets 3,926 4,514
Impairment of goodwill and intangible assets - 7,758
Contractors' costs 2,249 2,756
Professional and legal fees 203 512
Research and development expense capitalised (329) (805)
Share-based payment charge 299 377
5. Employee benefit expenses for continuing operations
The following represents employee benefit expenses from continuing operations.
2024 2023
£000 £000
Employee benefit expenses (including directors) comprise:
Wages and salaries 5,415 6,934
Social security costs 652 801
Defined contribution pension cost 301 359
Share-based payment expenses 299 361
Other employee benefits 881 1,175
Total employee benefit expense 7,543 9,630
6. Loss per share
6.1 Basic loss per share
2024 2023
£ £
From continuing operations attributable to the ordinary equity holders of the (0.03) (0.18)
Group
Total basic loss per share attributable to the ordinary equity holders of the (0.04) (0.19)
Group
6.2 Diluted loss per share
2024 2023
£ £
From continuing operations attributable to the ordinary equity holders of the (0.03) (0.18)
Group
Total diluted loss per share attributable to the ordinary equity holders of (0.04) (0.19)
the Group
6.3 Reconciliation of loss used in calculating loss per share
2024 2023
£000 £000
Loss attributable to the ordinary equity holders of the Group used in
calculating basic loss per
share and diluted loss per share:
From continuing operations (3,245) (16,588)
From discontinued operations (767) (795)
Gain on sale of disposal group 755 -
(3,257) (17,383)
6.4 Weighted average number of shares used as the denominator
2024 2023
number number
Shares in issue at the beginning of the period 92,380,298 92,050,725
Issue of ordinary shares on exercise of equity settled share-based payments 1,469,076 329,573
Issued ordinary shares as at the end of the period 93,849,374 92,380,298
Weighted average number of ordinary shares used as the denominator in
calculating basic loss pershare
92,781,687 92,370,368
During the year ended 31 March 2024, the Group issued 1,469,076 shares to
option holders who exercised options held under the equity settled share-based
payments scheme, the NTA Plan.
7. Goodwill
7.1 Carrying amount of goodwill
The following represents the carrying value of goodwill as at 31 March 2024.
2024 2023
£000 £000
Cost 17,743 18,164
Accumulated impairment (7,479) (7,479)
10,264 10,685
The following reconciles goodwill at the beginning and end of the period.
2024 2023
£000 £000
Cost
At 1 April 18,164 20,175
Transferred to assets of disposal groups held for sale - (1,553)
Translation differences (421) (458)
At 31 March 17,743 18,164
Accumulated impairment
At 1 April 7,479 417
Impairment charge - 7,758
Transferred to assets of disposal groups held for sale - (696)
At 31 March 7,479 7,479
The net carrying value of goodwill transferred to assets of disposal groups
held for sale was £0.8m. During the year ended 31 March 2023, the Group
classified the Induction Guidance CGU as a disposal group held for sale. This
remains held for sale at 31 March 2024. As a result, goodwill balances
relating to this CGU 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:
2024 2023
£000 £000
Induction Attend Anywhere 9,507 9,928
Induction Zesty 757 757
10,264 10,685
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.
Goodwill in relation to the Induction Guidance CGU has been re-classified to
assets of disposal groups held for sale in accordance with IFRS 5 "Non-current
assets held for sale and discontinued operations.
8. Intangible assets
Trade name Users Technology Total
£000 £000
£000
£000
Cost
At 31 March 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
Additions - internally developed - - 329 329
Translation differences - (363) (512) (875)
At 31 March 2024 369 7,784 16,460 24,613
Accumulated amortisation and impairment
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
Charge for the year 37 1,387 2,606 4,030
Translation differences - (182) (305) (487)
At 31 March 2024 141 3,461 9,849 13,451
Net book value
At 31 March 2023 265 5,891 9,095 15,251
At 31 March 2024 228 4,323 6,611 11,162
9. Events after the reporting date
On the 1(st) July 2024 the Group announced the completion of the sale of
Horizon Strategic Partners Ltd ("Induction Guidance"), a supplier of a
clinical management platform to facilitate the curation, review and
dissemination of antimicrobial resistance guidelines, for a consideration of
£1.2m. This sale is in line with the previously announced strategy to divest
non-core assets. The revenues of Induction Guidance are disclosed as part of
the discontinued operations.
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