Audited Final Results

RNS Number : 7369H

Induction Healthcare Group PLC

28 November 2022

 

Induction Healthcare Group PLC

("Induction", the "Company", or the "Group")

Audited Final Results

Induction (AIM: INHC), a leading digital health platform driving transformation of healthcare systems worldwide, announces its audited final results for the year ended 31 March 2022.

Financial Highlights

Metric	2022	2021 Restated
Total proforma revenue1	£12.1m	£1.5m
Non-Cash IFRS 3 Revenue adjustment1	(£4.2m)	(£0.1m)
Revenue from Contracts with Customers	£7.9m	£1.4m
Gross Profit	£5.0m	£0.7m
Loss for the year	£8.4m	£7.6m
Adjusted EBITDA2	£0.0m	£(4.1m)3

· Under the provisions of IFRS 3, a Fair Value adjustment is applied to acquired deferred revenue as a part of acquisition accounting. This adjustment reduces reported total revenue recognised from customer contracts by £4.2m (2021: £0.1m).  

o  Increased revenue from contracts with customers is up 464% to £7.9m (2021: £1.4m)

· Adjusted EBITDA² post IFRS 3 fair value adjustment of £0 (Break-Even) (2021: £(4.1)m restated³)

· Annually Recurring Revenue ('ARR⁵') grew to £13.5m (2021: £2.0m) taking into account the multi-year renewal of NHS England Attend Anywhere contracts post period end.

o  NHS England contract renewals: £6.6m ARR, which was ahead of management expectations

o  Majority of NHS England Attend Anywhere contracts moved from one year to a multi-year term.

o  The Group delivered organic ARR growth of 100% year on year (£4m (2021: £2m))

· £7.5m cash as at 31 March 2022 (2021: £2.5m)

Operational Highlights

· £25 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 £16.4 million plus the issue of 14,285,714 consideration shares with a value of £9.0m

· Induction Zesty contract win with South West London integrated care system ("ICS"), one of the first ICS led procurements for digital patient services in England

· 100% year-on-year growth for Induction Zesty

· DWP Contract to support the virtualisation of the UK benefits system using Induction Attend Anywhere, the first contract outside of a healthcare setting

· Induction AA national contract renewals with NHS Scotland and NHS Wales

Post period end highlights

· Appointment of Christopher Samler as Non-Executive Chairman

· Successful contract renewals with 94% of existing English NHS customers for Induction Attend Anywhere, which secured 86% of group recurring revenues by value

· Non-exclusive Software Reseller Agreement signed with System C Healthcare Limited for Induction Zesty

James Balmain, CEO of Induction Healthcare, said: "The global digital health market is predicted to grow by 23.31% to US$7,844m in 2025⁴ and Induction's market segment is maturing rapidly, driven by an acute need for digital transformation in hospitals around the world.

"We have made strong growth in FY22 and a key focus for the Group following the acquisition of Attend Anywhere Pty Ltd was the renewal of Induction Attend Anywhere contracts throughout the UK, of which we have been very successful with many NHS Trusts choosing to renew for two or three years. We have continued to work alongside existing health providers to deliver results and our high margin and scalable SaaS operation remains the core driver of the business. In the period we also achieved record ARR and retain a strong cash position of £7.5m following the placing and acquisition.

"As the world recovers from the pandemic, the pace of change is creating significant opportunities for companies in our sector - Induction is well positioned to capture global market share in the coming years."

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/ .

Copies will be posted to shareholders in due course.

¹ Total pro-forma revenue is stated before the application of IFRS3 being a fair value adjustment relating to the deferred revenue acquired as part of the Attend Anywhere Pty Limited acquisition in June 2021 and the acquisitions of Zesty Limited (June 2020) and Horizon Strategic Partners Limited (November 2019), giving pro-forma recognised revenue of £12.1m (2021: £1.5m).  After applying this non-cash adjustment, recognised revenue from customer contracts for the year is £7.9m (2021: £1.4m restated).

² Adjusted EBITDA is EBITDA (Loss £5.8m) adjusted for exceptional items (+£0.5m), share based payment adjustments (+£0.6m) and other non-cash items (+£0.4m), and application of IFRS 3 relating to fair value adjustments (+£4.2m) arriving at pro-forma Adjusted EBITDA for the year £0.0m (2021: £(4.1)m). Refer to the Financial Review for further details.

³ Adjusted EBITDA for the year ended 31 March 2021 has been restated to take into account the effects of share-based payments and the impact of the application of IFRS 3 in the prior period. Refer to Note 6 in the Consolidated Financial Statements for further details on the prior period adjustment. 

⁴ Source: "Global Virtual Healthcare Market, Cumulative Impact of COVID-19", p31

⁵ Annual Recurring Revenue ("ARR") is defined as annualised contracted Software-as-a-Service ("SaaS") fee. ARR is calculated as the annually recurring licence fees from contracts existing at 31 March 2022 that expire on 1 April 2022 or later. It represents the annualised value of the recurring revenue base that is expected to be carried into future periods, and its growth is a forward-looking indicator of reported recurring revenue growth. ARR differs from recognised revenue due to the timing of revenue recognition, which includes amounts for partial years based on contract start dates, whereas ARR is an annualised amount. Recognised revenue also includes non-recurring non-SaaS fees.

⁶ Restated balances relate to Revenue from Contracts with Customers - reducing recognised revenue from £1.5m to £1.4m, Gross Profit - reducing from £0.8m to £0.7m, Loss for the year - increasing from £7.5m to £7.6m and Adjusted EBITDA - reducing from (£4.0m) to (£4.1m)

ENQUIRIES

Induction James Balmain, Chief Executive Officer Guy Mitchell, Chief Financial Officer	Via Walbrook PR Ltd: [e-mail]
Singer Capital Markets (Nominated Adviser and Broker)	[phone]
Philip Davies / Kailey Aliyar
Walbrook PR Ltd	[e-mail]
Paul McManus / Alice Woodings	Mob: [phone]

About Induction - www.inductionhealthcare.com

Induction (AIM: INHC) Induction delivers a suite of software solutions through a single integrated platform that transforms care delivery. 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.  

Chair Statement

I am delighted to have recently joined the Induction leadership team following a successful year for the Group. The global COVID-19 pandemic has significantly accelerated the shift, that was already underway, towards digitising care delivery. Throughout the world, providers and patients expect greater flexibility in all aspects of their life, including in the way they deliver and receive care. Induction is at the heart of this transformation.

Induction delivered a record year for trading in FY22, driven mainly by the acquisition of Attend Anywhere, leading to substantial increases in both revenue and contracted ARR (Annually Recurring Revenue). Equally, excluding the effect of the Attend Anywhere acquisition, the Group delivered organic ARR growth of 100% year on year (£4m (2021: £2m)). The Group made a loss before tax of £(9.6)m (2021: £(8.1)m restated).

The increased losses incurred reflect the Group's continued investment to allow it to scale and grow ARR and revenue in future years. In addition, following the placing to raise £25m in June 2021, net cash as at 31 March 2022 improved substantially from £2.5m to £7.5m. Following strong renewals of NHS England contracts for Induction Attend Anywhere in March 2022, and some of these contracts renewing and paying more than 1 year in advance, the Group's cash position has further improved post-period end.

The Attend Anywhere acquisition provided the business with national scale and a strong market position in an area of prominent growth and investment. In February 2022, NHS England issued a delivery plan⁷ to tackle the backlog of elective care and our leading products, Induction Zesty and Induction Attend Anywhere, are well placed to support this initiative with their strong market positions in the UK. However, the backlog of waiting times in elective care following the COVID-19 pandemic is not confined to the NHS and represents an opportunity for Induction globally. We are well positioned to help ease these global stresses by integrating Induction products into existing healthcare systems - the precise strategic approach represents an immediate focus for the Board.

It is a particularly exciting, albeit challenging, time for Induction and for the executive team and Board - the demand for our products, both in the UK and globally has never been stronger and the company, the management team and the Board have to evolve to meet this challenge. Induction is a small, relatively fast growth business with many of the growing pains associated with scale up.

As we grow we will need to ensure that we have the products, systems and internal processes that meet our customers' and management's needs. Above all, we will need to attract and retain high quality and experienced people at every level in order to ensure that we hit our commitments to our shareholders. In a tight labour market, particularly in our field of digital expertise, this is challenging.

I look forward to working with James and the whole Board as we deliver on our promises and build Induction into the digital healthcare platform of choice. I also look forward to working closely with you, our stakeholders, as we seek to build on the value of your investment - I anticipate speaking with many of you over the coming months.

Christopher Samler

Non-Executive Chairman

28 November 2022

⁷ https://www.england.nhs.uk/coronavirus/wp-content/uploads/sites/52/2022/02/C1466-delivery-plan-for-tackling-the-covid-19-backlog-of-elective- care.pdf

CEO Statement

31 March 2022 saw the end of a positive year for the Induction Group. We delivered on all our key financial metrics, ending the period in line with market expectations.

This performance was mainly driven by the acquisition of Attend Anywhere Pty Ltd ("Induction Attend Anywhere"), completed in June 2021, adding £11m of ARR and £1.1m of profit before tax⁸.

Revenue increased to £7.9m (2021: £1.4m (restated)), and although the Group recorded a loss before tax of £9.6m (2021: £8.1m (restated)), this is as a result of our deliberate continued investment in key areas of the business, as well as integrating Attend Anywhere.

A significant proportion of Induction Attend Anywhere revenues are generated from our contracts with NHS England. Immediately post-acquisition, Induction Attend Anywhere held contracts with 172 English NHS trusts - all of which expired in March 2022. This presented obvious risk to the group, so we were delighted to renew contracts with 94% of existing English NHS customers post period end, which secured 86% of group recurring revenues by value.

The majority of FY23 NHS England contracts for Induction Attend Anywhere were renewed on either a two or three year term, de-risking group recurring revenues moving forwards.

In November 2021 we won a contract to supply the Department of Work and Pensions (DWP) through our partner Involve Visual Collaboration Limited ("Involve") to support the virtualisation of the UK benefits system using Induction Attend Anywhere. Whilst we are exploring the future potential for the Induction Attend Anywhere platform in other non-health public sector settings, we are mindful that our focus is in healthcare.

FY22 was a challenging year for our Induction Zesty patient engagement platform. Existing customers relied heavily on Induction Zesty during the pandemic, however new business wins fell short of pre-pandemic forecasts as NHS hospitals were understandably pre-occupied with treating COVID-19 cases.

I am pleased to report, however, a positive shift in market sentiment as health systems around the world are now focused on post-COVID recovery. Induction Zesty is increasingly playing a critical role in reducing elective waiting lists, a key economic and political focus. Contracted ARR more than doubled year on year to £1.5m, with much of this growth occurring in the last quarter of FY22. There has been significant investment during the year in Induction Zesty capabilities and further development planned and we are confident Induction Zesty will deliver continued growth in FY23, despite a challenging economic and political environment.

Our market focus

We remain focused on ambulatory patients in hospitals - outpatients. We continue to see consolidation and growth opportunities in secondary acute, specialist tertiary, community and mental health care settings.

Overall, we see attainable recurring annual revenues of between £30m and £35m over the next 3 years across the British Isles for our current suite of products.

We are, at heart, a healthcare company. We remain open to partnerships that deliver our products, out of the box, into other public sector organisations, but our core focus will remain within healthcare and we will avoid product customisations for non-healthcare customers that take us away from our core health product vision.

Annually recuring revenue

We remain committed to building our recurring revenue streams, via multi-year licensing of our software products, operating a Software as a Service ("SaaS") business model. Whilst we do generate non-recurring set-up revenue via our implementation teams, we are resistant to building a large professional services function, preferring to work with specialist partners.

Another key aspect of our strategy is to focus on the supply of software products to existing healthcare providers, as opposed to directly employing care teams and delivering care ourselves. In doing this, we are looking to preserve the high margins and recurring revenue streams associated with a SaaS business.

Video consultations - Induction Attend Anywhere

Whilst the COVID-19 pandemic created overnight demand for remote consultations, we remain focused on ensuring Induction Attend Anywhere's value proposition is both clearly communicated and successfully enhanced over the coming months.

A key area of development during FY23 will be our customer success function and we will continue to invest in the best talent available to drive this important function forwards. With a large and disparate user base across NHS England, it's vital we engage with customers to understand changing usage requirements and close the loop efficiently between customers, product development and delivery.

Microsoft Teams still remains our clear competitor within secondary care and we will continue to invest in product development, prioritising new features that widen the gap further between specialist consulting platforms (Induction Attend Anywhere) and mainstream business conferencing applications (Teams, Zoom). Integration into underlying EMR systems, via our HealthStream platform, is a good example of this.

Digital patient engagement - Induction Zesty

As Patient Engagement Platforms gain increasing national strategic relevance to the NHS, we are engaged in several key projects, both regionally and nationally. We are seeing tangible evidence that read and write integrations into hospital EMR systems (Cerner, System C) are a key selling point and direct value driver - this 'integrated' strategy will continue to be a focus for Induction Zesty and our other product lines.

One of the current digital initiatives at many NHS hospitals is patient initiated follow up booking ("PIFU"). It's estimated that as many as 50% of hospital follow up appointments allocated to patients are unnecessary. PIFU workstreams are aiming to allow patients to book only if they need an appointment, supported by ongoing remote monitoring to effectively manage clinical risk. Induction Zesty has a complex rules engine that supports this emerging workflow, creating a unique selling point for the platform. Working alongside Cerner and Palantir, we expect to launch a fully automated PIFU platform during FY23. Our strategy is to lead the market on a fully automated offering, differentiating our product from other request based manual offerings.

There is clear potential synergy between Induction Attend Anywhere and Induction Zesty. We are moving forwards with our cross-sell and upsell strategies and will continue to focus our development effort on tighter integration between these two products.

Our clinical apps business

Our clinical apps, Induction Guidance and Induction Switch, continue to enjoy user growth and increasing engagement, ending the year on 288k and 289k users respectively. ARR grew by 8% for Induction Guidance, supported by a high contract renewal rate amongst our 122 NHS hospital customers. UK market growth, however, has proved more challenging for Induction Guidance.

Given the relatively minor contribution our clinical apps make to overall group revenues and the solid traction we are seeing with our patient facing products, we are carefully considering the role of clinical apps within the group moving forwards.

An enterprise 'flexible care' platform, fit for global scale

There is an emerging health IT product category that aims to put the patient in the centre of their care delivery. Currently this category contains several product types including Telemedicine, Patient Portals and Virtual Wards. The core capabilities of each of these overlap to a large degree. Our product vision is based on the view that, as demand for digital services rises, these product types will converge into enterprise platforms that deliver value end to end over the care pathway.

We continue to execute our buy, build and partner strategy with this product vision in mind.

International growth

The global digital health market is predicted to grow from US $2.8bn in 2021 to US $7.8bn in 2025⁹, as the need for more flexible healthcare options become a necessity due to user behaviour changes and organisational efficiency requirements.

We see growth potential in new geographical markets and have set this as a major strategic focus for FY23. Given our scale within the UK NHS, now is a good time to market our products in new territories. Most developed (and many developing) health economies have the same post- pandemic challenges as the UK, especially those around rapidly increasing hospital waiting lists.

Our strategic pillars for growth

· Consolidate our domestic position - we will continue to invest in and refine our sales, commercial, delivery and customer success capabilities - ensuring we stay ahead of competitors and deliver strong organic ARR growth.

· Grow our domestic and international channels to market - Partners are playing an increasingly important role in our growth story. Our partnership with Cerner, for example, will deliver more than 50% of Induction Zesty's growth during FY23. As we scale, we attract more partners, creating positive momentum that further widens our market reach and enhances our product capabilities. The recently announced (post-period end) VAR agreement with System C further supports our strategy.

· Invest in and deliver our integrated product strategy - As a product company, a core tenant of our strategy is a single, enterprise product that leads the growing digital patient engagement segment.

· Acquisitions and partnerships to drive international expansion - As a rapidly growing but still early-stage sector, our market is fragmented, with many small and medium sized companies in each of the major world markets. We see acquisitions and partnerships with VARs and other similar providers as a highly valid method to enter new markets with scale and pace.

People

We continue to invest in talent and are more focused than ever on building our company culture. As companies 'exit lockdown', we are working hard to define a rewarding and inclusive hybrid working environment. During the year we began the process of rolling out a group wide performance management and incentive scheme, ensuring everyone at Induction is aligned to the future success of the Group.

Under the leadership of Dave Williams, our Group Chief Product and Technical Officer (previously at Just Eat), we completed a global re-organisation of our four product and technology teams around the world, who account for over 80% of the Group total headcount. Key managers now have global, multi-product responsibility, removing any sense of silos by product and we are now better placed to grow our business internationally and integrate future acquisitions.

More recently we've attracted a highly experienced Chief Growth Officer, Paul Tambeau, who is leading our sales, marketing, customer success and international development teams.

Post-year end we also saw Chris Spencer step down from his position as Chair. I would like to thank Chris for the great support he has provided to bring the Group to the strong position it is in today. We welcome Christopher Samler into the role and I look forward to working alongside him and learning from him and his valuable expertise as we drive the business forward.

Outlook

It's been a transformational year for Induction and we remain energised about the future prospects for the Group. Our market segment is maturing rapidly, driven by an acute need for digital transformation in hospitals around the world.

Our steadfast focus on working alongside existing health providers as opposed to directly competing with them in a more disruptive manner is delivering results. A high margin and scalable SaaS operation remains our core driver as a business.

As the world recovers from the pandemic, the pace of change is creating significant opportunities for companies in our sector - Induction is well positioned to capture global market share in the coming years.

James Balmain

Chief Executive Officer

28 November 2022

⁸ Profit before tax contributed by Induction Attend Anywhere is taken after IFRS 3 adjustments related to deferred revenue of £4.1m related to the acquisition. Refer to the Financial Review on page 9 for further information on these adjustments.

⁹ Source: "Global Virtual Healthcare Market, Cumulative Impact of COVID-19", p31

Financial review

Revenue

For the year ended 31 March 2022, revenue from customer contracts, post IFRS 3 fair value adjustments, was

£7.9m (2021: £1.4m, restated¹⁰).

Under IFRS, deferred revenue is required to be fair valued. This is a non-cash movement of deferred revenue to goodwill on the group balance sheet and does not affect future years. The impact of this in the year was £4.2m (2021: £0.1m). Had the IFRS 3 adjustment not been applied Group revenues would have been £12.1m on a pro-forma basis for the year (2021: £1.5m).

Reported revenue from customer contracts for Induction Zesty grew to £1.5m (2021: £0.8m (restated)¹⁰). The principal driver for this growth has been the drive to digitise healthcare and booking portals in NHS England.

Revenues for Induction Attend Anywhere, for the 10 months post acquisition, were £5.7m post the IFRS 3 deferred revenue fair value adjustment and £9.8m on a pro-forma basis.

Reported revenue from customer contracts for Induction Guidance has remained steady at £0.6m (2021: £0.6m). Growth has been slower in FY22 than expected.

Contracts acquired as part of the Induction Attend Anywhere acquisition for NHS England and NHS Scotland were one-year contracts which were due for renewal at 31 March 2022.

NHS Scotland renewed for 1 year and 94% of trusts in NHS England renewed, many renewing for periods of 2 or 3 years. To secure the multi-year deals small discounts were agreed resulting in revenue renewals by value of 86%.

To further illustrate the in-year effect of IFRS fair value adjustments, at the start of FY23, contracted revenue for Induction Attend Anywhere, post the NHS Scotland and NHS England renewals was £11.6m, despite renewals for NHS England contracts at 86% of the prior year value.

In November 2021 a contract was agreed with the Department of Work and Pensions (DWP), this was a contract for two years with two subsequent 12-month extensions built in (a 2+1+1 deal) for up to £1.3m of annual revenues.

Induction Switch user numbers have increased in year although there has been limited sales traction within the year. The carrying value of Switch is currently £nil and the Board determined that the value of goodwill and intangible assets should remain at this value.

Revenue from customer contracts, post IFRS 3 adjustments in respect of fair value, is as follows:

	2022 £'000	2021 £'000 (restated11)
United Kingdom	7,785	1,190
Europe	13	13
United States	18	23
Rest of World	92	135
	7,908	1,361

¹⁰ Reported revenue for Zesty for the year ended 31 March 2021 has been restated to take into the account the application of IFRS 3 deferred revenue fair value adjustments. Please refer to Note 6 for further information.

¹¹ Revenue for the year ended 31 March 2021 has been restated to take into the account the application of IFRS 3 deferred revenue fair value adjustments. Please refer to Note 6 for further information.

Pro-Forma revenue from customer contracts (pre the IFRS 3 adjustments above):

	2022 £'000	2021 £'000
United Kingdom	11,994	1,342
Europe	13	13
United States	18	23
Rest of World	92	135
	12,117	1,513

The following table reconciles recognised revenue and pro-forma revenue:

	31 March 2022 £000	31 March 2021 £'000 (restated10)
Revenue	7,908	1,361
Fair value adjustments on contract liabilities	4,209	152
Pro-Forma revenue	12,117	1,513

Both Induction Guidance and Induction Switch form our clinical apps business and whilst user growth on both platforms has been strong, the board are considering the role these apps play in generating significant group revenues moving forwards, given the strong traction we are seeing from our patient facing platforms Induction Attend Anywhere and Induction Zesty.

Operating Costs

Development expenses increased to £5.9m (2021: £1.9m). This relates to the increase in headcount and operating costs following the acquisition of Induction Attend Anywhere, a full year of trading post-acquisition of Induction Zesty, and continued investment in the development team particularly for Induction Zesty. Development costs are presented net of capitalised software development costs. The Group capitalises software development costs which depreciate over three to five years, resulting in capitalisation of £3.1m (2021: £1.7m).

Administrative expenses increased to £7.3m (2021: £4.9m), (restated)12). Again, this relates to the acquisition of Induction Attend Anywhere and full year trading of Induction Zesty. It also reflects the expansion of the senior management and leadership functions of the group, fundraise and acquisition-related transaction costs of £0.5m (2021: £0.4m), and share-based payment charge of £0.6m (2021: £0.7m).

Sales and marketing expenses increased to £1.2m (2021: £0.6m). This reflects the investment in the group-wide commercial functions of the Group to acquire further market share.

Excluding the results of Induction Attend Anywhere, development costs for the Group were £4.2m (2021: £1.9m), again reflecting the investment in the development team for Induction Zesty. Administration costs were £6.1m (2021: £4.9m (restated12)), reflecting the expansion of the senior management and leadership functions of the Group. Sales and marketing costs were £1.2m (2021: £0.6m) and relates purely to investment in group-wide commercial functions.

Reported loss before tax for the year was £9.6m (2021: £8.1m restated).

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 underlying performance of the business or impacted the comparability of the Group's results year-on-year. We also reviewed the FRC's guidance, and 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 profit /(loss) before depreciation, amortisation, impairment, share based payments and exceptional costs of £(4.2)m (2021: £(4.3)m (restated¹²).

	31/03/2022 £'000	31/03/2021 £'000 (restated12)
Loss before tax	(9,574)	(8,117)
Add / (Less): Net finance expense / (income)	28	2
Add: Impairment losses	-	1,366
Add: Depreciation and amortisation	3,785	1,356
Operating loss before depreciation, amortisation and impairment	(5,761)	(5,393)
Adjusted for exceptional and non-cash costs:
- Acquisition and fundraise related transaction costs1	531	375
- Other exceptional items3	404	-
- Share based payments (non-cash)4	613	6,984
Adjusted Operating profit/(loss) before, depreciation, amortisation, impairment and exceptional costs ("Adjusted EBITDA")	(4,213)	(4,320)
Pro-forma IFRS 3 adjustment: - Fair value adjustments on contract liabilities2 and contingent consideration	4,209	243
Pro-Forma Adjusted EBITDA	(4)	(4,077)

1.  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.

2.  As a result of applying IFRS 3 in accounting for acquisitions, the Group is required to determine the fair value of all acquired assets and Liabilities at the date of acquisition. This includes determining the fair value of the contract liabilities ("deferred income") of the acquiree. The fair value of the contract liabilities (and therefore revenue subsequently recognised) was less than the amounts recognised by Attend Anywhere, Zesty and Horizon Strategic Partners on a standalone basis, resulting in a fair value adjustment of £4.2m related to Attend Anywhere and Zesty (2021: £0.2m fair value adjustment related to Zesty and Horizon Strategic Partners). This is excluded from pro-forma adjusted EBITDA on the basis that it is non-cash and is not representative of the trading performance of the business in the period and this exclusion ensures comparability. Pro-Forma adjusted EBITDA is also adjusted to add back £Nil (2021: £0.9m) fair value movement in contingent consideration.

3.  Includes items related to one-time non-recurring executive and senior management team restructuring costs (£366k) and other one-off items (£38k). Senior management team restructuring costs are added back to Adjusted EBITDA due to the fact that these are non-recurring and not representative of the underlying performance of the Group.

4.  Comparative restated to include share-based payments. Share-based payments are excluded from Adjusted EBITDA due to the fact that these are non-cash and therefore not representative of the underlying trading of the group.

¹² This has been restated to take into the account the application of IFRS 3 deferred revenue fair value adjustments and exclusion of share based payments as a non-cash item. Please refer to Note 6 for further information. 

Adjusted EBITDA for the year was £4.3m (2021: £(4.3)m (restated13)). Before allowing for the application of IFRS 3 pro-forma Adjusted EBITDA) for the year was £0.0m (2021: £(4.1)m (restated)). It is important to recognise the difference this adjustment makes to the trading results of the Group as it is non-cash accounting adjustment only.

Cash

The Group's cash position as at 31 March 2022 was £7.5m (2021: £2.5m). The operating cash outflow was focused

on growing commercial teams particularly around sales and marketing headcount and also marketing campaigns, events and supporting materials. These costs are investments in acquiring future market share and are incurred ahead of future revenues as the benefit will be seen in future years. In addition, while we capitalise a large portion of our development costs, shown in investing activities, there is a portion that is not capitalised and is also included in operating cash outflows above as a revenue expense. Again, the benefit of this investment will be realised in future years as we deliver our expanded product functionality to more customers. Investment outlay of £16.8m (2021: £3.7m) includes £13.5m for the acquisition payment (net of cash acquired) for Induction Attend Anywhere and £3.1m for capitalised development costs (2021: £1.7m).

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. The liquidity of the Group is sufficient to meet the cash needs of the business as they become due, and management have performed a going concern analysis with no material uncertainties noted (refer to note 1.2 in the consolidated financial statements for further information).

	31/03/2022 £'000	31/03/2021 £'000
Operating cash flows	(2,061)	(4,012)
Cash balance	7,496	2,472

Assets and Liabilities

Goodwill as at 31 March 2022 of £19.8m (2021: £9.4m) and Intangibles of £20.9m (2021: £5.9m) are derived from three acquisitions, Attend Anywhere Pty Ltd during FY22 and Zesty Limited and Horizon Strategic Partners Limited in the prior years.

The carrying value of Induction Switch goodwill and intangible assets has been fully impaired by £1.4m in the prior year.

All acquisitions have been valued for IFRS 3 purposes by external consultants resulting in the investment being recognised among the fair value of net assets acquired, including deferred revenue.

	31/03/2022 £'000	31/03/2021 £'000
Goodwill	19,758	9,373
Intangible assets	20,962	5,884

Trade and other receivables have increased significantly in the year due and is reflective the overall increased trading during the year. The balance consists of Induction Attend Anywhere invoices for services performed unpaid at 31 March 2022.

There is an increase in Trade and other payables in the year due to increased operating costs and accruals following the acquisition of Induction Attend Anywhere. Costs relate to hosting, partner commissions, marketing programmes and professional fees.

Deferred tax liabilities have increased significantly during the year. This is driven by a £3.7m Liability recognised in relation to fair value adjustments of intangible assets acquired in business combinations.

Current tax receivable has increased to £1.2m (2021: £0.4m) and relates to R&D tax credits due for current and prior years. These amounts are expected to be received within the next 9 months once all tax claims are submitted to HMRC. Tax payable relates to taxes due by Induction Attend Anywhere in Australia.

Guy Mitchell

Chief Financial Officer

28 November 2022

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2022

		2022 £000	2021 £000 Restated*
Revenue from contracts with customers		7,908	1,361
Cost of sales		(2,920)	(636)
Gross profit		4,988	725
Sales and marketing expenses		(1,209)	(590)
Administrative expenses		(7,333)	(4,900)
Development expenses		(5,991)	(1,893)
Impairment losses		-	(1,366)
Loss from operations		(9,545)	(8,024)
Finance income		1	3
Finance expense		(30)	(5)
Fair value losses on contingent consideration		-	(91)
Loss before tax		(9,574)	(8,117)
Tax credit		1,140	503
Loss for the year		(8,434)	(7,614)
Exchange gains/(losses) arising on translation on foreign operations		801	(9)
Reclassified to profit and loss during the year		9	(7)
Other comprehensive income for the year, net of tax		810	(16)
Total comprehensive income		(7,624)	(7,630)

Loss per share attributable to the ordinary equity holders of the parent
Profit or loss
Basic		(0.10)	(0.19)
Diluted		(0.10)	(0.19)

Consolidated Statement of Financial Position

As at 31 March 2022

	2022 £000	2021 £000
Assets
Non-current assets
Property, plant and equipment	244	15
Intangible assets	20,962	5,884
Goodwill	19,758	9,373
Deferred tax assets	1,540	880
Total non-current assets	42,504	16,152
Current assets
Contract assets	787	155
Trade and other receivables	3,349	896
Current tax receivable	1,240	447
Cash and cash equivalents	7,496	2,472
Total current assets	12,872	3,970
Total assets	55,376	20,122
Liabilities
Non-current liabilities
Contract liabilities	326	187
Deferred tax liability	5,851	1,048
Other financial liabilities	128	-
Total non-current liabilities	6,305	1,235
Current liabilities
Trade and other payables	3,365	1,396
Contract liabilities	2,580	1,027
Current tax payable	789	-
Other financial liabilities	72	-
Total current liabilities	6,806	2,421
Total liabilities	13,111	3,656
Net assets	42,265	16,466
Equity attributable to equity holders of the parent
Share capital	460	210
Share premium reserve	41,665	18,432
Merger reserve	20,206	10,879
Foreign exchange reserve	801	(9)
Other reserves	1,405	792
Retained earnings	(22,272)	(13,838)
Total equity	42,265	16,466

Consolidated Statement of Changes in Equity

As at 31 March 2022

Share capital £000		Share premium £000	Merger reserve £000	Foreign exchange reserve £000	Other reserves £000	Retained earnings £000	Total equity £000
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 fora 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 and 1 April 2021	210	18,432	10,879	(9)	792	(13,838)	16,466
Comprehensive income for the year
Loss for the year	-	-	-	-	-	(8,434)	(8,434)
Other comprehensive income for the year	-	-	-	810	-	-	810
Total comprehensive income for the year	-	-	-	810	-	(8,434)	(7,624)
Transactions with owners, recorded directly in equity
Issue of ordinary shares	179	24,821	-	-	-	-	25,000
Issue of shares as consideration for a business combination	71	-	8,929	-	-	-	9,000
Equity settled share-based payments	-	-	-	-	613	-	613
Share-issue costs	-	(1,190)	-	-	-	-	(1,190)
Reclassification of equity	-	(398)	398	-	-	-	-
Total contributions by and distributions to owners	250	23,233	9,327	-	613	-	33,423
At 31 March 2022	460	41,665	20,206	801	1,405	(22,272)	42,265

Consolidated Statement of Cash Flows

For the year ended 31 March 2022

	2022 £000	2021 £000
Cash flows from operating activities
Loss for the year	(8,434)	(7,614)
Adjustments for
Depreciation of property, plant and equipment	28	7
Amortisation of intangible fixed assets	3,785	1,340
Impairment losses on intangible assets	-	1,366
Finance income	(1)	(3)
Finance expense	30	5
Fair value adjustments on financial liabilities	-	91
Share-based payment expense	613	698
Net foreign exchange loss/(gain)	-	3
Income tax charge/(credit)	(1,146)	(503)
	3,309	3,004
Movements in working capital:
Decrease/(Increase) in trade and other receivables and contract assets	1,661	(485)
Increase in trade and other payables and contract liabilities	1,115	1,085
Interest received	1	3
Interest paid	(30)	(5)
Income taxes received	458	-
Income taxes paid	(141)	-
Net cash used in operating activities	(2,061)	(4,012)
Cash flows from/(used in) investing activities
Acquisition of subsidiary, net of cash acquired	(13,486)	(1,987)
Purchases of property, plant and equipment	(256)	(5)
Payment of software development costs	(3,090)	(1,660)
Net cash used in investing activities	(16,832)	(3,652)
Cash flows from/(used in) financing activities
Issue of ordinary shares	25,000	-
Proceeds on other financial liabilities	210	-
Share issue costs	(1,190)	(64)
Repayment of bank borrowings	-	(501)
Payment of lease liabilities	(12)	-
Net cash from/(used in) financing activities	24,008	(565)
Net cash increase/(decrease) in cash and cash equivalents	5,115	(8,230)
Cash and cash equivalents at the beginning of year	2,472	10,718
Exchange gains/(losses) on cash and cash equivalents	(91)	(16)
Cash and cash equivalents at the end of the year	7,496	2,472

NOTES TO THE YEAR END 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 2022.

The financial information set out above does not constitute the Group's statutory information for the years ended 31 March 2022 or 2021, but is derived from those accounts. The Group's consolidated financial information has been prepared in accordance with accounting policies consistent with those adopted for the year ended 31 March 2021. Statutory accounts for 2021 have been delivered to the Registrar of Companies and those for 2022 will be delivered following the Company's annual general meeting. The auditor has reported on these accounts, their reports were unqualified and did not contain statements under the Companies Act 2006, s498(2) or (3).

2.  Going concern

In assessing the appropriateness of the going concern assumption, the Board of Directors ("the Directors") has reviewed the ability to continue operating over the period to 30 April 2024 ("the going concern period"). The Directors have also reviewed other relevant information, together with considering scenarios with adverse impacts across the Group's principal risks relating to: revenue reductions from either non-renewals of major contracts with customers or downward price pressures; non-materialisation of forecast sales to new customers and delays in securing new contracts with customers resulting in delayed cash inflows. These risks are further connected to macro-economic conditions and the UK government's fiscal policy, in particular the funding and support to the group's customers which are primarily NHS Trusts and other government bodies. The Directors determined that the forecast period extends to 30 April 2024 to take into account the operating cycle of the group, which sees significant contract renewals in March 2024, with cash inflows received in April 2024.

The Directors' cash inflows under the base case of going concern assessment assumes all existing customer contracts with major customers will be renewed when they come due within the forecast period at the same contract terms. It also includes assumptions regarding growth in revenues due to new customer contracts, and growth in revenues due to sales of new products to existing customers. The base case going concern assessment cash outflows allows investment in the full range of planned market and product development activities, through increased employee-related and other spend to achieve revenue targets over this forecast period.

The Directors have considered a severe but plausible downside scenario whereby the Group is impacted by: reductions in revenue arising from either non-renewals of some major customer contracts or downward price pressure; non-materialisation of some forecast sales to new customers and three to six-month delays in securing some contracts with new customers resulting in delays in SaaS revenues and cash inflows, with associated reductions in incremental costs directly linked to revenue generation. The severe but plausible downside scenario has indicated that cash balances are their lowest in March 2024 before increasing again in April 2024 in line with the Group's operating cycle. At this low point, cash balances remain positive. Under a more severe scenario, the Directors believe they can timeously respond to decreases in cash inflows by taking mitigating actions to reduce costs. These include but are not limited to; delays in hiring new employees; delays in hiring new contractors; and reducing discretionary spend through, for example, reducing professional and consulting expenditure and contractor costs.

In determining that there is no material uncertainty related to going concern, the Directors have applied significant judgement regarding renewals of existing contracts with major customers, in particular NHS customers. The Directors have made this judgement after considering the UK budget announcement in November 2022. Whilst there remains uncertainty as to the specifics of the NHS funding plan following the budget announcement, the Directors note that NHS funding generally was increased and there was a focus on NHS efficiency, which the Group's products / services are designed to assist with.

Therefore, the Directors believe that the judgement they have made is appropriate based upon information available at that point.

After due consideration, the Directors have concluded that there is a reasonable expectation that the Group and Company have adequate resources to meet their liabilities as they fall due for the period to 30 April 2024, 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:

	2022 £000	2021 £000 Restated
Provision of software (including set-up services of £0.2m (2021: £Nil))	7,388	1,188
Post-contract support and maintenance	217	73
Text message revenue	303	100
Total revenue from contracts with customers	7,908	1,361

Revenue from the provision of software of £7.4m is shown after IFRS 3 related adjustments of £4.2m (2021: £1.4m (restated) after £0.2m of IFRS 3 related adjustments to deferred income). This includes £0.07m related to Induction Zesty (2021: £0.12m related to Induction Zesty and £0.03m related to Induction Guidance). As a result of applying IFRS 3 in accounting for acquisitions, the Group is required to determine the fair value of all acquired assets and liabilities. This includes determining the fair value of the contract liabilities ("deferred income") of the acquiree.

The following is an analysis of revenue by country of destination:

	2022 £000	2021 £000 Restated
United Kingdom	7,785	1,190
Europe	13	13
United States	18	23
Rest of World	92	135
Total revenue from contracts with customers	7,908	1,361

Revenue from the United Kingdom of £7.9m is shown after IFRS 3 related adjustments of £4.2m (2021: £1.4m (restated) after £0.2m of IFRS 3 related adjustments.

The following is an analysis of revenue by product line. Attend Anywhere Pty Ltd (Induction Attend Anywhere) was acquired on 9 June 2021, refer to Note 15 for further information. Zesty Limited (Induction Zesty) was acquired on 8 June 2020, see Note 16 for further information.

	2022 £000	2021 £000 Restated
Induction Attend Anywhere	5,715	-
Induction Zesty	1,517	753
Induction Guidance	642	603
Induction Switch	34	5
	7,908	1,361

Revenue from Induction Attend anywhere of £5.7m is shown after IFRS 3 related adjustments of £4.1m. Revenue from Induction Zesty of £1.5m is shown after IFRS 3 related adjustments) of £0.07m (2021: £0.8m (restated) after £0.12m of IFRS 3 related adjustments). Revenue for Induction Guidance is £0.6m (2021: £0.6m after £0.03m of IFRS 3 related adjustments).

The following represents the timing of revenue recognition:

	2022 £000	2021 £000 Restated
Services transferred over time	7,595	1,196
Services at point in time	313	165
	7,908	1,361

The following represents the transaction prices allocated to performance obligations that are unsatisfied or partially satisfied at 31 March 2022, and the timing of the recognition of revenue from these balances.

	2022 £000	2021 £000
Within one year	985	1,027
More than one year	321	187
	1,306	1,214

4. Expenses by nature

The following represents expenses incurred during the year, by nature:

	2022 £000	2021 £000 Restated
Employee costs	7,859	5,123
Depreciation of property, plant and equipment	29	7
Amortisation of intangible assets	3,785	1,340
Impairment of goodwill and intangible assets	-	1,366
Contractors' costs	2,366	1,103
Acquisition related transaction costs	423	375
Fundraise related transaction costs recognised in profit and loss	108	-
Professional and legal fees	459	359
Research and development expense capitalised	(3,090)	(1,660)
Share-based payment charge	613	698
Fair value adjustments on financial liabilities	-	91

5. Employee benefit expenses

	2022 £000	2021 £000
Employee benefit expenses (including directors) comprise:
Wages and salaries	5,735	3,583
Social security costs	551	414
Defined contribution pension cost	309	140
Share-based payment expenses	613	698
Other employee benefits	651	288
Total employee benefit expense	7,859	5,123

The monthly average number of persons, including the directors, employed by the Group during the year was as follows:

	2022 No. of employees	2021 No. of employees
Development	40	23
Sales and Marketing	10	12
Delivery and Support	8	-
General and Administrative	19	6
Total Average FTE	77	41

The remuneration of the highest paid director was £0.5m (2021: £0.3m). Included in other employee benefits is £Nil (2021: £0.03m) compensation for loss of office paid to a former director of the group. Also included in other employee benefits is a bonus of £0.4m (2021: £0.1m).

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 £0.3m (2021: £0.1m).

6. Tax expense

6.1 Income tax recognised in profit or loss

	2022 £000	2021 £000
Current tax
Corporation tax expense	360	-
Prior year adjustment in respect of research & development tax credit	(764)	(446)
Total current tax	(405)	(446)
Deferred tax expense
Origination and reversal of timing differences	(438)	(116)
Prior year deferred tax movement	(297)	59
Total deferred tax	(735)	(57)
Tax income on loss on ordinary activities	(1,140)	(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:

	2022 £000	2021 £000
Loss for the year	(9,574)	(8,117)
Tax at the standard rate of corporation tax of 20.13% (2021: 19%)	(1,927)	(1,561)
Research & development tax relief	(292)	-
Expenses not deductible for tax purposes	1,674	310
Share-based payments	123	124
Prior year adjustments - research and development tax relief	(722)	(386)
Prior year adjustments on deferred tax	(297)	-
Deferred tax not recognised	303	961
Other timing differences	109	(50)
Difference in overseas tax rates	328	-
Effective rate change	(429)	-
Total tax income	(1,140)	(503)

6.2 Current tax assets and liabilities

	2022 £000	2021 £000
Current tax assets
R&D tax credit receivable	1,240	446
Current tax liabilities
Corporation tax liability in Australia	(789)	-
	451	446

Current tax assets relate to research and development tax credits in respect of 2 subsidiaries, for the years ended 31 March 2020, 31 March 2021 and 31 March 2022. The claim for the year ended 31 March 2020 was submitted to HMRC and settled post-year end for one subsidiary.

6.3 Deferred tax balances

A deferred tax liability of £3.7m (2021: £0.8m) has been recognised in relation to the fair value of intangible assets acquired in a business combinations. A deferred tax liability of £1.05m has been recognised in relation to the fair value adjustments to contract liabilities acquired in business combinations. A deferred tax asset of £0.7m (2021: £0.8m) 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 £4.2m (2021: £2.8m) has not been recognised due to uncertainty over future taxable profits in the relevant subsidiaries with tax losses. The unrecognised deferred tax asset includes those in relation to tax losses of £17m (2021: £14.6m). These amounts exclude amounts related to Horizon Strategic Partners Limited, which is expected to generate profits and for which a deferred tax asset of £0.05m (2021: £0.08m) has been recognised. They also exclude those for Zesty Limited, where deferred tax assets have been recognised in relation to the deferred tax liabilities for the intangible fixed assets acquired through business combinations. A deferred tax asset of £0.6m (2021: £0.8m) has been recognised for Zesty Limited.

7 . Loss per share

7.1 Basic loss per share

	2022 £	2021 £
From continuing operations attributable to the ordinary equity holders of the Group	(0.10)	(0.19)
Total basic loss per share attributable to the ordinary equity holders of the Group	(0.10)	(0.19)

7.2 Diluted loss per share

	2022 £	2021 £
From continuing operations attributable to the ordinary equity holders of the Group	(0.10)	(0.19)
Total diluted loss per share attributable to the ordinary equity holders of the Group	(0.10)	(0.19)

7.3 Reconciliation of loss used in calculating loss per share

	2022 £000	2021 £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	(8,434)	(7,614)
	(8,434)	(7,614)

7.4 Weighted average number of shares used as the denominator

	2022 number	2021 number
Shares in issue at the beginning of the period	42,050,728	29,626,201
Shares issued	35,714,285	-
Shares issued on business combination	14,285,714	12,424,527
Issued ordinary shares as at the end of the period	92,050,727	42,050,728
Weighted average number of ordinary shares used as the denominator in calculating basic loss per share	82,461,686	39,701,981

On 9 June 2021, the Group acquired Attend Anywhere Pty Ltd ("Attend Anywhere" or "AA"). 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.

8. Business combinations during the year

Subsidiary Acquired

On 9 June 2021, Induction Healthcare Group plc acquired 83.5% of the share capital of Attend Anywhere Pty Limited and 100% of the share capital of A.C.N. 167 231 307 PTY Ltd ("A.C.N."), which owns 16.5% of the share capital of Attend Anywhere Pty Limited, thereby obtaining 100% control over Attend Anywhere Pty Limited. Attend Anywhere Pty Limited owns 100% of the share capital of Attend Anywhere Limited, a UK subsidiary.

The consideration included cash consideration of £16.4m, plus the issue of 14,285,714 new ordinary shares which had a fair value of £9m. This brings the total consideration to £25.4m prior to transaction costs.

Attend Anywhere is a leading provider of video consultations in the UK secondary care market, holding national contracts with NHS Scotland, NHS Wales and the HSE in Ireland, alongside a number of regional contracts in England. Attend Anywhere's proprietary technology, allows users to easily access and use the video service via a common browser, without the need for plug-ins or downloading a native app.

The Group's strategy is to build a leading and future-forward integrated virtual care platform, incorporating patient onboarding, clinical guidelines, digital communications, online appointment management and, via the acquisition of Attend Anywhere, video consultations. While the current focus is on secondary care, there is scope to migrate into allied care settings, such as primary care, mental health and community care.

Attend Anywhere is a clear strategic fit with Induction and the acquisition will provide a number of commercial, operational and financial benefits, which are expected to create value for shareholders.

Name	Principal Activity	Date of Acquisition	Proportion of voting equity interest acquired	Consideration transferred £000
Attend Anywhere Pty Limited	Provision of video consulting software	09/06/2021	83.50%	21,207
A.C.N. 167 231 307 PTY Ltd	Holding Company	09/06/2021	100%	4,191
Attend Anywhere Limited	Provision of support services to group entities	09/06/2021	100% (indirect)	-

Consideration transferred

The following represents the consideration transferred to the owners of Attend Anywhere Pty Limited, A.C.N. 167 231 307 PTY Ltd and Attend Anywhere Limited.

	2022 £000
Share consideration	9,000
Cash consideration	16,398
Total consideration transferred	25,398

The fair value of cash consideration equals its carrying value. The fair value of the equity consideration has been determined with reference 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%. The lack of marketability discount arises as a result of restrictions on the trading of the shares issued to the former owners of Attend Anywhere Pty Limited and A.C.N 167 231 307 Pty Ltd as consideration for the acquisition of the company, for a period after the acquisition. Restrictions on trading of shares extend for 12 months after acquisition date and share prices may be affected once these restrictions cease.

Assets acquiredandliabilitiesrecognisedatthedateofacquisition

The following represents assets acquired and liabilities recognised on acquisition. All amounts are final and not provisional.

	2022 £000
Intangible assets	15,193
Cash and cash equivalents	2,912
Other current assets	4,751
Deferred tax liability	(4,856)
Other non-current liabilities	(85)
Contract liabilities	(1,782)
Other current liabilities	(746)
Total identifiable net assets at fair value	15,386

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
Customer contracts and relationships	Income Approach: With and without 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. The projected revenues, operating expenses, and cash flows are calculated in a "With" and "Without" scenario, and the differential between the cash flows from the two scenarios serve as the basis for estimating the fair value of the customer-related asset.
Technology	Excess Earnings Method: a stream of revenue and expenses are identified with a particular group of assets that are necessary to support the earnings associated with the subject intangible asset. By identifying and subtracting contributory assets, the residual earnings are estimated to be attributable to the subject intangible asset and are discounted to present value at an appropriate discount rate. An obsolescence rate of 25% is applied to the forecasts used in the valuation model.
Contract liabilities	The fair value of the of the deferred revenue liability has been determined using the bottom-up approach. Under this approach the fair value is determined to be equal to the costs still to be incurred in fulfilling the performance obligations related to the contract liability, plus an associated profit on these costs. The costs still to be incurred in satisfying the remaining performance obligations are hosting fees, staff costs to support the operation of the platform and provide support and maintenance and other software fees necessary for the operation of the platform. A mark-up on cost to be incurred in fulfilling the performance obligation of 28% was applied.

Goodwill arising on acquisition

The following represents goodwill arising on acquisition

	2020 £000
Consideration transferred at fair value	25,398
Total identifiable net assets at fair value	(15,386)
Goodwill arising on acquisition	10,012

Goodwill arising on acquisition relates to the strategic fit with the existing products of the Group and strengthened market position for the Group. Goodwill includes intangible assets that were not valued separately, such as the assembled workforce, potential savings for economies of scale, and potential development of further product offerings using existing know-how in the business acquired.

Analysis ofcashflowsonacquisition

	2020 £000
Consideration paid in cash	(16,398)
Transaction costs of the acquisition (included in cash flows from operating activities)	(423)
Transaction costs attributable to the issuance of shares (included in cash flows from financing activities, net of tax)	-
Less: cash and cash equivalent balances acquired	2,912
Net cash outflows on acquisition	(13,909)

Acquisition related costs of £423k were recognised in administrative expenses.

Impact ofacquisitionontheresultsoftheGroup

From the date of acquisition, Attend Anywhere Pty Limited and A.C.N. 167 231 307 PTY Ltd contributed £5.7m to the revenue of the group and profit before tax of £1.1m. The Group has not disclosed the impact to revenue and profit before tax for the 12 month period under IFRS3.B64, as it is impracticable to determine the impact of the IFRS 3 fair value adjustment to contract liabilities ("deferred income") at 1 April 2021.

9. Goodwill

Carrying amount of goodwill

The following represents the carrying value of goodwill as at 31 March 2022.

	2022 £000	2021 £000
Cost	20,175	9,790
Accumulated impairment	(417)	(417)
	19,758	9,373

The following reconciles goodwill at the beginning and end of the period.

	2022 £000	2021 £000
Cost
At 1 April	9,790	1,553
Additions as a result of business combinations	10,012	8,237
Translation differences	373	-
At 31 March	20,175	9,790
Accumulated impairment
At 1 April	417	-
Impairment charge	-	417
At 31 March	417	417

Allocation of goodwill to cash generating units

Goodwill is allocated to the Group's cash generating unit as follows:

	2022 £000	2021 £000
Induction Attend Anywhere	10,385	-
Induction Zesty	8,237	8,237
Induction Guidance	1,136	1,136
Induction Switch	-	-
	19,758	9,373

The Attend Anywhere CGU consists of the assets and cash flows related to the Attend Anywhere video consultation product. The Zesty CGU consists of the assets and cash flows related to the Zesty patient portal product. The Induction Guidance CGU consists of the assets and cash flows related to the Induction Guidance product line (formerly MicroGuide, acquired as part of the acquisition of Horizon Strategic Partners). The Induction Switch CGU consists of the assets and cash flows related to the Induction Switch app.

10. Intangible assets

	Trade name	Users	Technology (re-presented)	Total
	£000	£000	£000	£000
Cost
At 31 March 2020	264	919	1,500	2,683
Additions - internally developed	-	-	-	1,660
Acquired through business combinations	369	507	3,286	4,162
At 31 March 2021	633	1,426	6,446	8,505
Additions - internally developed	-	-	-	3,090
Acquired through business combinations	-	7,713	7,480	15,193
Translation differences	-	321	398	719
At 31 March 2022	633	9,460	17,414	27,507

	Trade name	Users	Technology (re-presented)	Total
	£000	£000	£000	£000
Accumulated amortisation and impairment
At 31 March 2020	15	53	265	333
Charge for the year	61	189	1,090	1,340
Impairment charge	7	23	918	948
At 31 March 2021	83	265	2,273	2,621
Charge for the year	62	1,067	2,658	3,786
Translation differences	-	54	83	137
At 31 March 2022	145	1,386	5,014	6,544
Net book value
At 31 March 2020	249	866	1,234	2,349
At 31 March 2021	550	1,161	4,173	5,884
At 31 March 2022	488	8,074	12,400	20,962

Amounts for the "Technology" intangible asset category for the year ended 31 March 2021 and as at 31 March 2020 have been represented in order to combine the acquired technology assets category with the capitalised development costs category. This is due to the fact that the nature of the assets is similar.

11. Cash and cash equivalents

	2022 £000	2021 £000
Cash at banks and on hand	6,996	872
Short-term deposits	500	1,600
Demand deposits	-	-
Cash and cash equivalents per the statement of financial position and cash flow statement	7,496	2,472

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

There were no material events after the reporting date that have an impact on these financial statements

 

END

 

 

FR UWSARUWUAURA