TIDMINHC
RNS Number : 2926V
Induction Healthcare Group PLC
06 August 2020
6 August 2020
Induction Healthcare Group PLC
("Induction Healthcare", the "Company", or the "Group")
Full year results for the year ended 31 March 2020
Delivering against our growth strategy by increasing user and
engagement numbers while
enhancing our group product capabilities with two strategic
acquisitions
Chosen by over 300,000 doctors, 90,000 patients, 175 acute
hospitals, and integrated with three of the top five UK hospital
electronic health record systems
Induction Healthcare, a leading healthcare technology company
that helps healthcare professionals deliver better care more
efficiently, today announces its full year results for the year
ended 31 March 2020.
The Company has successfully executed on its buy-and-build goals
during the year - completing three acquisitions, including Zesty
post period end, and has significantly increased user engagement
with its core products - while managing cash within budget. The
Group's engagement with the majority of NHS acute Trusts and
doctors creates significant opportunity for sales growth ahead and
positions the Company favourably for future transactions as a
leading provider of healthcare technology for healthcare
professionals, institutions and patients.
Full year highlights
-- Induction Switch & MicroGuide: growth in registered user numbers and engagement
- Induction Switch : +73.4% YoY growth in registered users to
138,095 (FY2019: 79,649) and +68% YoY growth in directory calls and
guideline lookups to 2.03 million (FY2019: 1.21 million); used by
the majority of NHS hospital doctors*
- MicroGuide : +35.5% YoY growth in registered users to 168,678
(FY2019: 124,485) and +82% YoY growth in guideline page views to
8.86 million (FY19: 4.87 million); used by the majority of NHS
hospitals*
-- Balance sheet remains strong with cash at 31 March 2020 of GBP10.7 million
* NHS Workforce Statistics - March 2020
Post-period highlights
-- In June 2020, completed acquisition of revenue-generating
Zesty Limited, a market leading patient portal for hospitals in the
UK
-- Appointment of Joint-CEO's James Balmain and Hugo Stephenson effective 8(th) June 2020
-- MicroGuide trading strongly and likely to reach profitability
and achieve its earn-out target ahead of schedule following its
acquisition by the Company in November 2019
-- Induction has supported NHS Nightingale London since its launch in April 2020
-- Induction signed a contract in Mexico for MicroGuide to
support the Global Better Health Programme
-- In May 2020, the first paying NHS hospital customer signed up
to Induction Switch's commercial offering, including newsfeed,
directory, messaging and document sharing
-- Increased pressure on global healthcare systems as a result
of COVID-19 has seen continued growth in user numbers and
engagement for Induction Healthcare's MicroGuide and Induction
Switch products, with the total number of Induction Switch users
growing from 138,095 at 31 March 2020 to 149,364 at 31 July
2020
Current trading and outlook
-- Ongoing development of new Induction Switch features, including:
- Real time notification of patient test results, straight to a
healthcare professional's own device
- Direct connectivity with hospital electronic health record
(EHR) systems
- Clinical images to be pulled direct to a healthcare
professional's device
-- Healthy acquisition pipeline targeting new and complementary products and geographies
-- Expectation that Induction Switch will generate revenues in
the current financial year (in addition to MicroGuide and Zesty
which are already revenue-generating)
Dr Hugo Stephenson, Joint CEO of Induction, said :
" We have made excellent progress since our IPO over a year ago.
This was a transformational year for us as we embarked on the
journey of buy and build while delivering critical tools that
healthcare professionals continue to rely on during the COVID-19
crisis.
"In under a year we have become one of the leading players in
the UK healthcare IT market, with the majority of NHS hospital
doctors, the majority of NHS Trusts, and a market leading number of
patients choosing to use our products so people get better
care.
"This success is testament to the efficiency and quality of our
technology, as well as demonstrating the value of solutions
designed specifically for healthcare, especially during a global
pandemic when the demand for delivering the right resources to the
right places at the right time is at an all-time high."
James Balmain, Joint CEO of Induction, said :
"By combining Zesty's patient facing platforms with the existing
large user base of health professionals on the Induction platforms
has created one of the most compelling digital offerings in the UK
health IT market. Our increased reach and scale are already
accelerating our partnerships with large health IT vendors and I'm
particularly encouraged by signs of growth in our future recurring
revenue."
ENQUIRIES
Induction Healthcare Via FTI Consulting
Dr Hugo Stephenson, Joint Chief Executive
Officer
James Balmain, Joint Chief Executive Officer
Numis Securities (Nominated Adviser and
Broker) +44 (0) 207 260 1000
James Black / Freddie Barnfield / Huw Jeremy
/ Matthew Jones
FTI Consulting +44 (0) 203 727 1000
Jamie Ricketts / Elena Kalinskaya / Sam Purewal
/ Mary Whittow
About Induction
Induction Healthcare Group PLC is a leading healthcare
technology company that helps healthcare professionals deliver
better care more efficiently. The Group has three platforms.
Induction Switch and MicroGuide support healthcare professionals in
multiple markets, including the UK, Ireland, Iceland, Australia,
New Zealand, United States, Mexico, South Africa, Tanzania, Ghana,
Uganda, Zambia, Malawi and Cambodia. The third platform, Zesty, is
a leading provider of patient portals to NHS Hospitals in the
UK.
Induction Switch is the number one healthcare collaboration
platform in the UK, used by the majority of hospital doctors within
the NHS. The platform helps over 140,000 registered users in
multiple territories to increase productivity and enhance
communication by securely sharing phone numbers and bleeps,
bookmarks, documents and messages in a clinical setting.
The MicroGuide platform provides medical organisations with the
ability to collaboratively create, edit, and publish their own
local medical guidelines in a secure and locally administrated
environment. The platform helps over 170,000 registered users in
multiple territories, including the majority of hospital trusts
within the NHS.
The Zesty platform enables patients to manage their care direct
from their smartphone. The Zesty patient portal removes the
friction from everyday health related tasks, like booking and
managing appointments, reading letters digitally and sharing copies
of electronic medical records.
Chairman's statement
I am pleased to report a year of beginnings and solid progress
for Induction Group in creating and acquiring products that help
clinical teams and patients remove friction from basic but
essential tasks. Tools our users choose to use.
Key achievements
The last year was transformational for Induction and was marked
by significant progress in its development as a growing business
with its successful admission to trading on AIM on 22 May 2019. The
IPO raised GBP16.6 million of gross proceeds which placed Induction
in a strong position to deliver on its growth strategy and allowed
it to establish and grow its registered user base, deliver its
first organic product improvements under the Induction Switch brand
(acquired shortly before the IPO), and begin to implement its
strategy of carefully selected synergistic and revenue generating
acquisitions through MicroGuide and, after the period end,
Zesty.
With Induction Switch, MicroGuide and Zesty combined, Induction
creates one of the first technology platforms that interconnects
patients, healthcare professionals, and healthcare information
across both multiple hospital sites and electronic health record
systems (EHR) platforms.
People and culture
During the year we attracted and retained key talent, selecting,
and developing exceptional people motivated by our healthcare first
culture. Our teams include developers, clinicians, and commercial
individuals all brought together by a common drive to grow their
areas of the business in the mid- and long- term for the good of
all our stakeholders including patients and healthcare
professionals.
I would like to thank all our people for delivering such a
strong performance through their commitment, hard work, and support
of the Group, especially in light of the many personal challenges
that COVID-19 has presented to working people across the world.
Board
Executive Board members
Membership of the executive board was refined during the year as
the company grew. By the year end, Dr. Hugo Stephenson was Chief
Executive Officer, Shelley Fraser Chief Financial Officer, and Ibs
Mahmood, Chief Business Officer. This gave the executive team a
strong blend of commercial, clinical, financial, investor
relations, and M&A experience with a considerable
entrepreneurial focus. After the year end, the executive board was
further strengthened by the addition of James Balmain from Zesty as
Chief Executive Officer alongside Hugo Stephenson, who, amongst
other things, brings with him a strong selection of hospital
C-suite level relationships. Ibs Mahmood's expertise in investor
relations and M&A was retained in the business despite his
stepping back from the board to ensure an appropriate numerical
balance between executive and non-executive members.
Non-Executive Board members
The Non-Executive board members bring a wealth of knowledge in
software engineering and IT management (Jane Silber), accountancy
and professional services (Leslie-Ann Reed), healthcare software,
and legal/ corporate governance (Chris Spencer) and the regulatory
and political landscape (Andy Williams, appointed post-year end, a
former CEO of NHS Digital).
Outlook
Innovation remains key for our future and we will continue to
invest in technology development, both organically and through
acquisition.
Our strategy is closely aligned with NHS policy in bringing
clinical benefits and efficiencies for clinicians and patients
alike which will drive growth for all the areas of the
business.
Our financial objectives are to extend the cash runway for
further acquisitions, integrate the new businesses, streamline
reporting and automate processes, further reduce costs, and grow
revenue.
We are unique in the breadth of users we serve and believe we
are well positioned for future success.
Chris Spencer, Chairman
5 August 2020
Joint CEO review
Overview
2019 /20 was a strong foundation year for the Induction
Healthcare Group . We demonstrated strong adoption of the Induction
Switch product by over 150,000 healthcare professionals, primarily
across the UK but also including new geographies in Australia,
South Africa, Ireland and North America.
We also began our journey of bu ying and building , launching
new features for Induction Switch that have proven particularly
useful during the COVID-19 crisis and acquiring MicroGuide, which
has provided a springboard for revenue growth across our
software-as-a-service products , now servicing more than 95 NHS
acute trusts .
Our recent acquisition of the Zesty patient portal and its
HealthStream integration gateway for EHR has rounded out a solid
foundation . This now joins up a critical mass of healthcare
practitioners and patients as users, NHS trusts and hospitals as
clients, and linkages with pre-existing healthcare information
technology infrastructure.
We achieved on-budget costs through persistent cost control
across the business, despite significant one-off charges associated
with our IPO and corporate development activities.
Our pace of execution has also improved significantly over the
year , incorporating many learnings relating to remote management
of systems development and information governance. As a result, we
were able to accelerate launch of new features such as user
generated TeamSpaces, newsfeeds and document sharing on Induction
Switch ahead of COVID-19 market needs , and follow an ambitious
timeline for the integration of Induction Switch , MicroGuide and
the Zesty platforms.
None of this would have be en possible without strong demand for
our products by healthcare professionals and patients. Over the
course of the year, our user base of healthcare professionals ,
mostly doctors , has more than doubled while the number of patients
using the Zesty patient portal grew from 32,000 to over 90,000 by
31 July 2020. T his was accomplished without any spend on
advertising .
As more healthcare professionals and patients seek to use mobile
technology to manage care, we believe that interest in our products
from healthcare organisations around the world, who are keen to
enhance the capability of their large health IT investments, will
continue to grow.
In an otherwise challenging economic environment, both doctors
and patients continue to use our platforms in ever increasing
numbers. In addition, our acquisition and integration of proven
complimentary solutions gives us confidence we have established a
strong foundation for future revenue growth.
Business review
Our key performance indicators show progress increasing user
numbers and building even greater user engagement.
Key Performance Indicators for the Group (as at 31 March
2020)*
-- Induction Switch
o 138,095 registered users, an increase of 73.4% over the
period;
o 60,706 average monthly users in March 2020, an increase of
51.4% over the period;
o Users looked up 13.25 million numbers in the directory, made
3.26 million calls using Induction Switch and looked up 119,130
guidelines to date;
o 778 UK healthcare institutions used an Induction Group
product; and
o 851 private workspaces (TeamSpaces) were set up with 11,200
"Level 1" users ("Level 1" users have free access to the basic
package of features such as directory, dialer, guidelines and
messaging, as well as an administrator who controls membership and
content through an administrative portal).
-- MicroGuide
o 168,678 registered users, an increase of 35.5% over the
period;
o 1,850 guide publications created, an increase of 51% over the
period
o 8,863,502 guideline page views, an increase of 82% over the
period
*The figures presented exclude Zesty, which was acquired post
year -end.
Responding to COVID-19
We are also acutely aware that as healthcare systems face
increasing pressure during this period, staff and patients are
relying heavily upon our tools to operate under rapidly changing
and unfamiliar conditions. Induction has been supporting global
efforts to combat COVID-19 through its technology and tools for
healthcare professionals in the NHS (UK), and also in Ireland,
Iceland, Australia, New Zealand, United States, Mexico, South
Africa, Tanzania, Ghana, Uganda, Zambia, Malawi and Cambodia .
Our Induction Switch and MicroGuide products provide healthcare
professionals with the most up-to-date medical guidelines and
contact details, helping them navigate through the current
unfamiliar and quickly evolving work environment in hospitals, as
well as communicate securely with their colleagues. The Zesty
portal, acquired after year end, allows patients to book or
reschedule outpatient appointments electronically, and capture
clinical information at the time of booking that can be routed to
assist with triage and resource planning. Since the outbreak of
COVID-19, we have seen significant increases in user engagement
across our product range - to access information, allocate
resources, and make decisions.
Engagement with our tools and technology reflects the demand for
secure, low cost solutions in a period of unprecedented pressure on
global healthcare professionals and services. As a result, we have
invested - and continue to invest - in scalability and security to
ensure our systems are available even under extraordinary
conditions.
Growth strategy
Our strategy is simple, buying and building out an ecosystem of
products that healthcare stakeholders choose to use so people get
better care, and ensuring that these tools: 1) provide a
consistent, intuitive user experience; 2) are seamlessly
interoperable within the Induction Healthcare ecosystem, 3) allow
stakeholders to connect with each other across roles and
organisations - irrespective of the underlying IT systems; and 4)
add value to an organization's existing IT infrastructure
Current trading and outlook
As our year-end coincided with the height of the COVID-19
pandemic, we have seen users increasingly engage with our tools.
Since 31 March 2020, our registered user base for Induction Switch
has continued to grow from 138,095 to 149,364. We are seeing
increased interest from hospitals and healthcare systems in
expanding commercial relationships across our range of products.
For example, the Induction Switch was selected for use as a primary
communication tool at the NHS Nightingale London Trust. MicroGuide
was selected to support Barts Health NHS Trust in the Nightingale
London project with antimicrobial and COVID-19 content. We believe
that this increased interest reflects a desire to solve problems -
particularly under remote working conditions and social distancing
- using well established solutions that already have widespread
workforce acceptance.
With new features recently added to Induction Switch, as well as
ongoing development of further additional features, we are
confident that we will be able to continue growing our user base,
as well as their levels of engagement, across geographies. We
maintain a healthy pipeline of acquisition targets and look forward
to building the Group further to deliver for healthcare
professionals and patients.
Zesty and MicroGuide are already revenue generating and we
expect Induction Switch to start producing revenue during the
current financial year.
Dr Hugo Stephenson, Joint Chief James Balmain, Joint Chief
Executive Officer Executive Officer
5 August 2020 5 August 2020
Financial review
The Group delivered a solid financial performance against our
IPO objectives set in May 2019, managing our cash balance by
exceeding our budget and executing on three acquisitions, two
during the year and another post-year end.
It has been an exciting year executing our buy-and build
strategy with the focus now on revenue growth and cost control to
achieve a profitable business in the short to medium term.
Revenue
In our first year, reported revenue of GBP148,480 was generated
by the MicroGuide app, reflecting five months of revenue recognised
since the acquisition of Horizon Strategic Partners Limited. The
MicroGuide business continues to build a strong recurring revenue
portfolio, grow the customer base and cash generative position. It
starts the new financial year with an order book of GBP50,417.
Meanwhile, Induction Switch grew its registered users during the
year by 73.4% to 138,095. The focus for next year is to monetise
the app across the healthcare community.
In May 2020 Induction Switch signed its first revenue generating
customer to a level 1 TeamSpace, which includes newsfeed,
directory, messaging, document sharing and an administration
portal.
Revenue has been generated from the following geographies:
31-Mar-20
GBP'000
United Kingdom 131
Europe 2
United States 11
Rest of World 4
----------
148
Operating Costs
Reported loss before tax for the year was GBP3,527,766. (2019:
GBP2,707,000). The Group incurred a number of exceptional items
during the year, including IPO and acquisition costs as per the
table below showing adjusted normalised operating loss before
interest, tax, depreciation and amortisation of GBP2,736,530 (2019:
GBP2,171,000). Administration costs have increased to GBP2,330,394
(2019: GBP1,066,000). The Group increased headcount by three
employees from the acquisition of Horizon Strategic Partners
Limited and appointment of CEO, employee recruitment fees, first
year office rent and professional and legal fees. The Group's
accounting policy is to capitalise software development and hosting
costs which depreciate over three years, resulting in
capitalisation of GBP761,066 (2019: GBP196,951).
31-Mar-20 31-Mar-19
GBP'000 GBP'000
Loss before tax (3,527) (2,707)
Less: net finance income (47) -
Add: depreciation and amortisation 324 10
---------- ----------
Operating Loss before depreciation and amortisation (3,250) (2,697)
Adjusted for:
- IPO costs expensed 281 497
- Acquisition related transaction costs 150 29
- Fair value adjustments on contingent 83 -
consideration
---------- ----------
Adjusted Loss before interest, tax, depreciation
and amortisation (2,736) (2,171)
---------- ----------
Cash
The Group's cash position as at 31 March 2020 was GBP10,718,474
(2019: GBP169,000). The Group's operating cash outflow was focused
on investment in our developers, ongoing AIM listing costs and
one-off set up costs related to the start-up of the business, as we
build the framework and foundations for a strong business.
Investment of GBP1,736,812 relates to payments for the initial cash
consideration component of the two acquisitions completed during
the year, and payments for capitalised development costs. Financing
cash outflows relate to the repayment of the related party loan of
GBP1,000,000. The business operates from net shareholder funds
achieved at IPO fund raise (GBP16,584,202). The Directors regularly
monitor cash usage and forecast cashflows to ensure that the
projected business needs are supported, and future acquisitions can
be achieved as part of our overall strategy to grow the
business.
Assets and Liabilities
Goodwill GBP1,553,482 (2019: GBPnil) and Intangibles
GBP2,348,428 (2019: GBP222,000) have derived from two acquisitions,
Podmedics Limited and Horizon Strategic Partners Limited, during
the year. Both transactions have been valued for accounting
purposes by external consultants resulting in the investment being
recognised between goodwill and intangible assets as per note 15
below.
Other Liabilities of GBP1,408,831 (2019: GBPnil) comprise the
fair value at 31 March 2020 of the deferred consideration of
GBP1,325,000 from the Horizon Strategic Partners Limited earn-out
condition, which represents a maximum payout of GBP1,500,000
discounted at 10.74% as explained in note 23. At the date of
signing the financial statements, the earn-out was highly likely to
be achieved earlier than the expected end of the earn-out period of
30 September 2020.
Shelley Fraser, Chief Financial Officer
5 August 2020
Consolidated Income Statement
For the year ended 31 March 2020 and period 5 March 2018 to 31
March 2019
Note 2020 2019
GBP000 GBP000
Revenue from contracts with customers 5 148 -
Cost of sales 6 (73) (66)
_______ _______
Gross profit / (loss) 75 (66)
Sales and marketing expenses (274) (264)
Development expenses (962) (1,300)
Administrative expenses (2,330) (1,066)
Other operating expenses (83) (11)
_______ _______
Operating loss 6 (3,574) (2,707)
Finance income 10 47 -
_______ _______
Loss before tax (3,527) (2,707)
Taxation 11 - -
_______ _______
Loss for the financial year / period (3,527) (2,707)
_______ _______
Loss attributable to:
Equity holders of the parent (3,527) (2,707)
_______ _______
(3,527) (2,707)
_______ _______
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2020 and period 5 March 2018 to 31
March 2019
Note 2020 2019
GBP000 GBP000
Loss for the year / period (3,527) (2,707)
Other comprehensive loss
Items that will be reclassified to
profit or loss
Foreign currency translation differences 8 (1)
Reclassified to profit and loss during
the year (1) -
_______ _______
Other comprehensive loss for the
period 7 (1)
_______ _______
Total comprehensive loss for the
period (3,520) (2,708)
_______ _______
Loss attributable to:
Equity holders of the parent (3,520) (2,708)
_______ _______
(3,520) (2,708)
_______ _______
Pence
Loss per share:
Basic loss per share (GBP) 12 (0.13) (0.21)
Diluted loss per share (GBP) 12 (0.13) (0.21)
Consolidated Statement of Financial Position
As at 31 March
Note 2020 2019
GBP000 GBP000
Non-current assets
Goodwill 15 1,553 -
Intangible assets 15 2,349 222
Deferred tax assets 11 97 -
_______ _______
Total non-current assets 3,999 222
_______ _______
Current assets
Trade and other receivables 17 140 128
Contract assets 5 23 -
Other current financial assets 16 - 100
Cash and cash equivalents 18 10,718 169
_______ _______
Total current assets 10,881 397
_______ _______
Total assets 14,880 619
_______ _______
Non-current liabilities
Contract liabilities 21 38 -
Deferred tax liabilities 11 321 -
_______ _______
Total non-current liabilities 359 -
_______ _______
Current liabilities
Trade and other payables 20 402 761
Contract liabilities 21 263 -
Loans and borrowings 19 - 2,500
Other financial liabilities 23 1,409 -
_______ _______
Total current liabilities 2,074 3,261
_______ _______
Total liabilities 2,433 3,261
_______ _______
Net assets / (liabilities) 12,447 (2,642)
_______ _______
Equity attributable to equity holders
of the parent
Share capital 22 148 66
Share premium 22 18,432 -
Translation reserve 22 7 (1)
Other reserves 22 94 -
Merger reserve 22 (10) -
Accumulated deficit 22 (6,224) (2,707)
_______ _______
Total equity 12,447 (2,642)
_______ _______
Consolidated Statement of Changes in Equity
For the year ended 31 March 2020 and period 5 March 2018 to 31
March 2019
Note Share Translation Other Merger Accumulated
capital Share premium reserve reserves reserve deficit Total equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 5 - - - - - - -
March 2018
- -
Total
comprehensive
loss for the
period
Loss for the
period - - - - - (2,707) (2,707)
Other
comprehensive
loss for the
period - - (1) - - - (1)
_______ _______ _______ _______ _______ _______ _______
Total
comprehensive
loss for the
period - - (1) (2,707) (2,708)
_______ _______ _______ ______ ______ _______ _______
Transactions
with owners,
recorded
directly in
equity
Issue of shares 22 66 - - - 66
_______ _______ _______ ______ ______ _______ _______
Total
contributions
by and
distributions
to owners 66 - - - - - 66
_______ _______ _______ ______ ______ _______ _______
Balance at 31
March 2019 and
1 April 2019 66 - (1) - - (2,707) (2,642)
Total
comprehensive
loss for the
year
Loss for the
year - - - - - (3,527) (3,527)
Other
comprehensive
loss for the
year - - 8 - - - 8
_______ _______ _______ ______ ______ _______ _______
Total
comprehensive
loss for the
year - - 7 - - (3,527) (3,520)
Transactions
with owners,
recorded
directly in
equity
Reserves
arising on
acquisition of
subsidiaries 13 - - - - (10) 10 -
Issue of shares
pre-Initial
Public
Offering 22 9 1,991 - - - - 2,000
Issue of shares
to settle
loans and
borrowings 22 9 1,991 - - - - 2,000
Issue of shares
as
consideration
for a business
combination 22 2 398 - - - - 400
Issue of shares
on Initial
Public
Offering 22 62 14,521 - - - - 14,583
Share issue
costs - (469) - - - - (469)
Equity settled
share-based
payments 9 - - - 94 - - 94
_______ _______ _______ ______ ______ _______ _______
Total
contributions
by and
distributions
to owners 82 18,432 - 94 (10) 10 18,608
_______ _______ _______ ______ ______ _______ _______
Balance at 31
March 2020 148 18,432 7 94 (10) (6,224) 12,447
_______ _______ _______ _______ _______ _______ _______
Consolidated Cash Flow Statement
For the year ended 31 March 2020 and period 5 March 2018 to 31
March 2019
Note 2020 2019
GBP000 GBP000
Cash flows from operating activities
Loss for the financial year / period (3,527) (2,707)
Adjustments for:
Amortisation and impairment of intangible
assets 323 11
Finance costs 10 - -
Finance income 10 (47) -
Share based payment expense 9 94 -
Net foreign exchange differences (7) -
Fair value adjustment of contingent
consideration 83 -
_______ _______
446 11
Decrease / (increase) in trade and
other receivables and contract assets 29 (228)
(Decrease) / increase in trade and
other payables and contract liabilities (341) 761
Interest received 47 -
_______ _______
Net cash used in operating activities (3,346) (2,163)
_______ _______
Cash flows from investing activities
Acquisitions of subsidiaries, net
of cash acquired 13 (976) -
Expenditure on internally generated
intangibles 15 (761) (197)
Loans to related parties 19 10 -
_______ _______
Net cash from investing activities (1,727) (197)
_______ _______
Cash flows from financing activities
Proceeds from related party borrowings 19 500 2,500
Repayment of related party borrowings 19 (1,000)
Proceeds from the issue of share
capital 22 16,584 30
Transaction costs on issue of shares 22 (469)
_______ _______
Net cash from financing activities 15,615 2,530
_______ _______
Net increase in cash and cash equivalents 10,542 170
Cash and cash equivalents at the
beginning of the financial year /
period 169 -
Effect of exchange rate fluctuations
on cash and cash equivalents 7 (1)
_______ _______
Cash and cash equivalents at 31 March
2020 18 10,718 169
_______ _______
Notes
(forming part of the financial statements)
1. General Information
Induction Healthcare Group plc is a public company incorporated,
domiciled and registered in England in the United Kingdom. Its
principal activity is the provision of software to healthcare
professionals. The registered number is 11852026 and the registered
address is 20 St. Dunstan's Hill, London, United Kingdom, EC3R
8HL.
Induction Healthcare Group plc was formed on 28 February 2019
with an initial shareholding of 1 share at a nominal value of GBP1.
On 1 April 2019 Induction Healthcare Group plc acquired 100% of the
share capital of Induction Healthcare Limited, the previous parent
company of the Group, in a share for share exchange transaction.
This has been accounted for as a common control transaction under
IFRS 3 B1 (see Note 13).
These financial statements include the consolidated financial
information of Induction Healthcare Group plc (the "Company") and
its subsidiaries (together referred to as the "Group"). Details of
Induction Healthcare Group plc's subsidiaries are included in Note
14. The Group has only one reportable segment.
2. Accounting policies
Both the financial statements of the Group and the financial
statements of the Company have been prepared and approved by the
Board of Directors in accordance with International Financial
Reporting Standards as adopted by the EU ("Adopted IFRSs").
Judgements made by the Board of Directors, in the application of
these accounting policies that have a significant effect on the
financial statements and estimates with a significant risk of
material adjustment in the next year are discussed in Note 3.
2.1 Basis of preparation
These financial statements have been prepared on the historical
cost basis except for other financial assets and liabilities, which
are stated at fair value. The consolidated financial statements are
presented in pounds and all values are rounded to the nearest
thousand (GBP'000), except where otherwise indicated.
2.2 Going concern
The Group made a loss of GBP3,527,766 for the year ended 31
March 2020 and had net current assets of GBP8,807,220, inclusive of
cash of GBP10,718,474. The Board of Directors have reviewed the
projected cash flow forecasts to 31 March 2022 and other relevant
information, together with considering the severe yet plausible
downside scenarios of COVID-19 and have a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future, and that the Group and
Company will have sufficient funds to continue to meet their
liabilities as they fall due for at least twelve months from the
date of approval of the financial statements and therefore have
prepared the financial statements on a going concern basis.
2.3 Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
In assessing control, the Group takes into consideration potential
voting rights. The acquisition date is the date on which control is
transferred to the acquirer. The financial information of
subsidiaries is included in these financial statements from the
date that control commences until the date that control ceases.
Losses applicable to the non-controlling interests in a subsidiary
are allocated to the non-controlling interests even if doing so
causes the non-controlling interests to have a deficit balance.
Change in subsidiary ownership and loss of control
Changes in the Group's interest in a subsidiary that do not
result in a loss of control are accounted for as equity
transactions.
Where the Group loses control of a subsidiary, the assets and
liabilities are derecognised along with any related non-controlling
interest and other components of equity. Any resulting gain or loss
is recognised in profit or loss. Any interest retained in the
former subsidiary is measured at fair value when control is
lost.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are
eliminated.
2.4 Business combinations
All business combinations are accounted for by applying the
acquisition method. Business combinations are accounted for using
the acquisition method as at the acquisition date, which is the
date on which control is transferred to the Group. The cost of an
acquisition is measured as the aggregate of the consideration
transferred, which is measured at the acquisition date fair value,
and the amount of any non-controlling interests in the acquiree.
For each business combination, the Group elects whether to measure
the non-controlling interests in the acquiree at fair value or at
the proportionate share of the acquiree's identifiable net
assets.
When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition
date.
Any contingent consideration payable is recognised at fair value
at the acquisition date. If the contingent consideration is
classified as equity, it is not re-measured and settlement is
accounted for within equity. Otherwise, subsequent changes to the
fair value of the contingent consideration are recognised in profit
or loss.
Goodwill is initially measured at the acquisition date at cost,
being:
-- the fair value of the consideration transferred; plus
-- the recognised amount of any non-controlling interests in the acquiree; plus
-- the fair value of the existing equity interest in the acquiree; less
-- the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is
recognised immediately in profit or loss.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group's cash-generating
units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree
are assigned to those units.
Where goodwill has been allocated to a cash-generating unit
(CGU) and part of the operation within that unit is disposed of,
the goodwill associated with the disposed operation is included in
the carrying amount of the operation when determining the gain or
loss on disposal. Goodwill disposed in these circumstances is
measured based on the relative values of the disposed operation and
the portion of the cash-generating unit retained.
Costs related to the acquisition, other than those associated
with the issue of debt or equity securities, are expensed as
incurred.
2.5 Current versus non-current classification
The Group presents assets and liabilities in the statement of
financial position based on current/non-current classification. An
asset is current when it is:
-- Expected to be realised or intended to be sold or consumed in the normal operating cycle
-- Held primarily for the purpose of trading
-- Expected to be realised within twelve months after the reporting period or
-- Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve months
after the reporting period
All other assets are classified as non-current. A liability is
current when:
-- It is expected to be settled in the normal operating cycle
-- It is held primarily for the purpose of trading
-- It is due to be settled within twelve months after the reporting period or
-- There is no unconditional right to defer the settlement of
the liability for at least twelve months after the reporting
period
The terms of the liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as
non-current assets and liabilities.
2.6 Fair value measurement
The Group measures financial instruments at fair value.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either:
-- In the principal market for the asset or liability or
-- In the absence of a principal market, in the most
advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible
by the Group.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest.
A fair value measurement of a non-financial asset takes into
account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset
in its highest and best use.
The Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
All assets and liabilities measured at fair value are classified
into a fair value hierarchy based on the valuation technique used
to determine fair value as follows:
-- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e., as prices) or indirectly (i.e., derived from
prices)
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a
liability fall into different levels of the fair value hierarchy,
then the fair value measurement is categorised in its entirety in
the same level of the fair value hierarchy as the lowest level
input that is significant to the entire measurement.
Fair value related disclosures for financial instruments that
are measured at fair value are summarised in the following
notes:
-- Disclosures for valuation methods, significant estimates and
assumptions - Notes 3, 13 and 23.
-- Financial instruments (including those carried at amortised cost) - Note 23
-- Contingent consideration - Note 23
2.7 Foreign currency
Transactions in foreign currencies are translated to the
respective functional currencies of Group entities at the foreign
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the
consolidated statement of financial position date are retranslated
to the functional currency at the foreign exchange rate ruling at
that date. Foreign exchange differences arising on translation are
recognised in the consolidated income statement. Non-monetary
assets and liabilities that are measured in terms of historical
cost in a foreign currency are translated using the exchange rate
at the date of the transaction. Non-monetary assets and liabilities
denominated in foreign currencies that are stated at fair value are
retranslated to the functional currency at foreign exchange rates
ruling at the dates the fair value was determined.
The functional currency of the Company is Sterling. The assets
and liabilities of foreign operations with functional currencies
other than Sterling, including fair value adjustments arising on
consolidation, are translated to the Group's presentational
currency, Sterling, at foreign exchange rates ruling at the
consolidated statement of financial position date. The revenues and
expenses of foreign operations are translated at an average rate
for the year where this rate approximates to the foreign exchange
rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign
operations are reported as an item of other comprehensive income
and accumulated in the translation reserve.
Exchange differences arising from a monetary item receivable
from or payable to a foreign operation, the settlement of which is
neither planned nor likely in the foreseeable future, are
considered to form part of a net investment in a foreign operation
and are recognised directly in equity in the translation
reserve.
When a foreign operation is disposed of in its entirety or
partially such that control is lost, the cumulative amount in the
translation reserve related to that foreign operation is
reclassified to profit or loss as part of the gain or loss on
disposal.
2.8 Financial instruments
Classification of financial instruments
Financial instruments issued by the Group are treated as equity
only to the extent that they meet the following two conditions:
(a) they include no contractual obligations upon the Group to
deliver cash or other financial assets or to exchange financial
assets or financial liabilities with another party under conditions
that are potentially unfavourable to the Group; and
(b) where the instrument will or may be settled in Induction
Healthcare plc's own equity instruments, it is either a
non-derivative that includes no obligation to deliver a variable
number of Induction Healthcare plc's own equity instruments or is a
derivative that will be settled by the company exchanging a fixed
amount of cash or other financial assets for a fixed number of its
own equity instruments.
To the extent that this definition is not met, the proceeds of
issue are classified as a financial liability. Where the instrument
so classified takes the legal form of Induction Healthcare plc's
own shares, the amounts presented in the financial statements for
called up share capital and share premium account exclude amounts
in relation to those shares.
Recognition and initial measurement
Non-derivative financial instruments comprise other receivables,
cash and cash equivalents, loans and borrowings, and trade and
other payables. All financial assets and liabilities are initially
recognised when the Group becomes a party to the contractual
provisions of the instrument. Financial assets and liabilities are
initially measured at fair value plus, for items measured at
amortised cost, transaction costs directly attributable to its
acquisition or issue. A trade receivable without a significant
financing component is initially measured at the transaction
price.
Financial assets - classification and subsequent measurement
On initial recognition, a financial asset is classified as
measured at amortised cost or fair value through profit or loss
("FVTPL"). The Group has no financial assets measured at fair value
through other comprehensive income ("FVOCI"). A financial asset is
measured at amortised cost if it is both: held within a business
model whose objective is to hold assets to collect contractual cash
flows; and its contractual terms give rise to cash flows that are
solely payments of principal and interest on the amount
outstanding.
For the purposes of this assessment, "principal" is defined as
the fair value of the financial asset on initial recognition, and
"interest" is defined as consideration for the time value of money
and for the credit risk associated with the principal amount
outstanding. In assessing whether the contractual cash flows are
solely payments of principal and interest, the Group considers the
contractual terms of the instrument, including any terms which may
affect the timing or amount of contractual cash flows. All
financial assets not measured at amortised cost are measured at
FVTPL.
Financial assets at FVTPL are subsequently measured at fair
value with net gains and losses, including any interest or dividend
income, recognised in profit or loss.
Financial assets measured at amortised cost are subsequently
measured at amortised cost using the effective interest method. The
amortised cost is reduced by impairment losses.
Interest income, foreign exchange gains and losses, and
impairment are recognised in profit or loss. Any gain or loss on
derecognition is recognised in profit or loss.
Financial liabilities - classification and subsequent
measurement
Financial liabilities are classified as measured at amortised
cost or FVTPL. A financial liability is classified as at FVTPL if
it is classified as held-for-trading, it is a derivative or it is
designated as such on initial recognition.
Financial liabilities at FVTPL are measured at fair value and
net gains and losses, including any interest expense, are
recognised in profit or loss.
All other financial liabilities are subsequently measured at
amortised cost using the effective interest method. Interest
expense and foreign exchange gains and losses are recognised in
profit or loss. Any gain or loss on derecognition is also
recognised in profit or loss.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and cash equivalents for the purpose only of the
consolidated cash flow statement.
Derivative financial instruments and other financial assets
Other financial assets comprise call options. Options are
initially classified as FVTPL and recognised at fair value based on
the consideration paid for the option. Subsequently, the options
are measured at fair value and the gain or loss on remeasurement to
fair value is recognised immediately in profit or loss.
Business model assessment
The Group makes an assessment of the objective of the business
model in which a financial asset is held at a portfolio level as
this best reflects the way the business is managed and information
provided to management. The assessment includes consideration of
the stated objectives of the portfolio, the performance of the
portfolio, the risks that affect the performance of the business
model, and the frequency, volume and timing of sales of financial
assets.
Impairment
The Group recognises loss allowances for expected credit losses
("ECLs") on financial assets measured at amortised cost. The Group
measures loss allowances at an amount equal to lifetime ECLs,
except for cash and cash equivalents which is measured using
12-month ECLs. ECLs are a probability-weighted estimate of credit
losses and are measured as the present value of all cash shortfalls
expected on financial assets, using the effective interest rate of
the financial asset. Lifetime ECLs are the ECLs which result from
all possible default events over the expected life of a financial
instrument. When determining ECLs, the Group considers reasonable
and supportable qualitative and quantitative information that is
relevant and available without undue cost or effort. The Group
considers a financial asset to be in default when the borrower is
unlikely to pay its obligations to the Group in full without
recourse by the Group to actions such as realising security (if any
held) or when the financial asset is more than 90 days overdue.
Loss allowances for financial assets measured at amortised cost
are deducted from the gross carrying amount of the assets. The
carrying amount of a financial asset is written off when the Group
has no reasonable expectation of recovering a financial asset in
its entirety or a portion thereof.
Derecognition
The Group derecognises a financial asset when the contractual
rights to receive cash flows from the asset expire, or when it
transfers the rights to receive the contractual cash flows in a
transaction in which substantially all of the risks and rewards of
ownership are transferred.
The Group derecognises a financial liability when its
contractual obligations are discharged or cancelled, or expire.
2.9 Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in a
business combination is their fair value at the date of
acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and accumulated
impairment losses. Internally generated intangibles, excluding
capitalised development costs, are not capitalised and the related
expenditure is reflected in profit or loss in the period in which
the expenditure is incurred.
The useful lives of intangible assets are assessed as either
finite or indefinite.
Intangible assets with finite lives are amortised over the
useful economic life and assessed for impairment whenever there is
an indication that the intangible asset may be impaired. The
amortisation period and the amortisation method for an intangible
asset with a finite useful life are reviewed at least at the end of
each reporting period. Changes in the expected useful life or the
expected pattern of consumption of future economic benefits
embodied in the asset are considered to modify the amortisation
period or method, as appropriate, and are treated as changes in
accounting estimates. The amortisation expense on intangible assets
with finite lives is recognised in the statement of profit or loss
in the expense category that is consistent with the function of the
intangible assets.
Intangible assets with indefinite useful lives are not
amortised, but are tested for impairment annually, either
individually or at the cash-generating unit level. The assessment
of indefinite life is reviewed annually to determine whether the
indefinite life continues to be supportable. If not, the change in
useful life from indefinite to finite is made on a prospective
basis.
An intangible asset is derecognised upon disposal (i.e., at the
date the recipient obtains control) or when no future economic
benefits are expected from its use or disposal. Any gain or loss
arising upon derecognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying
amount of the asset) is included in the statement of profit or
loss.
Research and development
Expenditure on research activities is recognised in the
consolidated income statement as an expense as incurred.
Expenditure on development activities is capitalised if the
product or process is technically and commercially feasible and the
Group intends to and has the technical ability and sufficient
resources to complete development, future economic benefits are
probable and if the Group can measure reliably the expenditure
attributable to the intangible asset during its development.
Development activities involve a plan or design for the production
of new or substantially improved products or processes. The
expenditure capitalised includes direct labour and directly
attributable expenses such as hosting fees. Other development
expenditure is recognised in the consolidated income statement as
an expense as incurred. Capitalised development expenditure is
stated at cost less accumulated amortisation and less accumulated
impairment losses.
Other intangible assets
Expenditure on internally generated goodwill and brands is
recognised in the consolidated income statement as an expense as
incurred. Other intangible assets that are acquired by the Group
are stated at cost less accumulated amortisation and accumulated
impairment losses.
Intangible assets acquired in a business combination
During the year, the Group acquired trade and brand names, users
and technology as part of business combinations.
Amortisation is charged to the consolidated income statement on
a straight-line basis over the estimated useful lives of intangible
assets unless such lives are indefinite. Intangible assets with an
indefinite useful life and goodwill are systematically tested for
impairment at each statement of financial position date. Other
intangible assets are amortised from the date they are available
for use.
A summary of the policies applied to the Group's intangible
assets are as follows:
Technology Users Trade Name Capitalised
development
costs
Useful life 3 - 10 years 3 - 10 years 3 -10 years 3 years
------------------- ------------------- ------------------- -------------------
Amortisation Straight line Straight line Straight line Straight line
method over the expected over the expected over the expected over the expected
life of the life of the life of the life of the
asset asset asset asset
------------------- ------------------- ------------------- -------------------
Internally Acquired Acquired Acquired Internally
generated or developed
acquired
------------------- ------------------- ------------------- -------------------
2.10 Impairment of non-financial assets
The Group assesses, at each reporting date, whether there is any
indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required,
the Group estimates the asset's recoverable amount.
For the purpose of impairment testing, assets that cannot be
tested individually are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or groups
of assets (the "cash-generating unit" or "CGU").
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell. The recoverable amount is determined for an individual asset,
unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. When
the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. In determining fair value less
costs of disposal, recent market transactions are taken into
account. If no such transactions can be identified, an appropriate
valuation model is used. These calculations are corroborated by
valuation multiples, quoted share prices for publicly traded
companies or other available fair value indicators.
The Group bases its impairment calculation on most recent
budgets and forecast calculations, which are prepared separately
for each of the Group's CGUs to which the individual assets are
allocated. These budgets and forecast calculations generally cover
a period of five years. A long-term growth rate is calculated and
applied to project future cash flows after the fifth year.
Impairment losses of continuing operations are recognised in the
statement of profit or loss in expense categories consistent with
the function of the impaired asset.
For assets excluding goodwill, an assessment is made at each
reporting date to determine whether there is an indication that
previously recognised impairment losses no longer exist or have
decreased. If such indication exists, the Group estimates the
asset's or CGU's recoverable amount. A previously recognised
impairment loss is reversed only if there has been a change in the
assumptions used to determine the asset's recoverable amount since
the last impairment loss was recognised. The reversal is limited so
that the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount that would have
been determined, net of depreciation, had no impairment loss been
recognised for the asset in prior years. Such reversal is
recognised in the statement of profit or loss unless the asset is
carried at a revalued amount, in which case, the reversal is
treated as a revaluation increase.
Goodwill is tested for impairment annually as at 31 March and
when circumstances indicate that the carrying value may be
impaired.
Impairment is determined for goodwill by assessing the
recoverable amount of each CGU (or group of CGUs) to which the
goodwill relates. When the recoverable amount of the CGU is less
than its carrying amount, an impairment loss is recognised.
Impairment losses relating to goodwill cannot be reversed in future
periods.
2.11 Employee benefits
Short term employee benefits
Short term employee benefits are expensed as the related service
is provided. A liability is recognised if the Group has a present
legal or constructive obligation to pay an amount as a result of
past employee service and the obligation can be estimated
reliably.
Defined contribution plans
A defined contribution plan is a post-employment benefit plan
under which the company pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay
further amounts. Obligations for contributions to defined
contribution pension plans are recognised as an expense in the
consolidated income statement in the periods during which services
are rendered by employees.
Share-based payment transactions
Share-based payment arrangements in which the Group receives
goods or services as consideration for its own equity instruments
are accounted for as equity-settled share-based payment
transactions, regardless of how the equity instruments are obtained
by the Group.
The grant date fair value of share-based payment awards granted
to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the
employees become unconditionally entitled to the awards. The fair
value of the options granted is measured using an option valuation
model, taking into account the terms and conditions upon which the
options were granted. The amount recognised as an expense is
adjusted to reflect the actual number of awards for which the
related service and non-market vesting conditions are expected to
be met, such that the amount ultimately recognised as an expense is
based on the number of awards that do meet the related service and
non-market performance conditions at the vesting date. For
share-based payment awards with market and non-vesting conditions,
the grant date fair value of the share-based payment is measured to
reflect such conditions and there is no true-up for differences
between expected and actual outcomes.
Share-based payment transactions in which the Group receives
goods or services by incurring a liability to transfer cash or
other assets that is based on the price of the Group's equity
instruments are accounted for as cash-settled share-based payments.
The fair value of the amount payable to employees is recognised as
an expense, with a corresponding increase in liabilities, over the
period in which the employees become unconditionally entitled to
payment. The liability is remeasured at each statement of financial
position date and at settlement date. Any changes in the fair value
of the liability are recognised as personnel expenses in profit or
loss.
2.12 Provisions
A provision is recognised in the consolidated statement of
financial position when the Group has a present legal or
constructive obligation as a result of a past event, that can be
reliably measured and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a
pre-tax rate that reflects risks specific to the liability.
2.13 Revenue
The Group is in the business of providing access to the Group's
proprietary applications. Revenue from contracts with customers is
recognised when control of the goods or services are transferred to
the customer at an amount that reflects the consideration to which
the Group expects to be entitled in exchange for those goods or
services.
The transaction price is determined based on the standard list
price in line with the Group's pricing policy. Revenue is therefore
shown net of value added tax and trade discounts and is reported
for healthcare institutions, whereby healthcare institutions are
charged a subscription fee for making the applications available to
users.
Control is transferred, and performance obligations are
satisfied over time over the subscription period and therefore this
revenue is recognised rateably over the period of the
subscription.
Payment is due within 30 days of date of invoice.
The Group did not enter into any transactions with variable
consideration, rights of return, volume rebates or significant
financing components during the year. The Group does not have any
warranty obligations.
A contract asset is initially recognised for renewals of
subscriptions, where the customer continues to have access to the
applications, but has not been invoiced for the subscription
renewal. Upon receipt of a purchase order from the customer and
invoicing by the Group, the balance is reclassified to trade
receivables.
A contract liability is recognised if a payment is received from
a customer in advance of the subscription period to which that
payment relates.
The Group has not incurred any costs to obtain or fulfil
contracts with customers during the year.
The Group has elected to use the practical expedient to
disregard the significant financing component for contracts with a
subscription period of 12 months or less
2.14 Expenses
Cost of sales
Cost of sales consists of the direct costs associated with the
Group's proprietary applications, including costs incurred for
server hosting and data population.
Lease payments
Payments made under leases are recognised in the consolidated
income statement on a straight-line basis over the term of the
lease. Lease incentives received are recognised in the consolidated
income statement as an integral part of the total lease
expense.
Financial income
Financial income comprises interest received on cash balances
held by the Group and is recognised in profit or loss as it
accrues, using the effective interest method. Foreign currency
gains and losses are reported on a net basis.
2.15 Taxation
Tax on the profit or loss for the period comprises current and
deferred tax. Tax is recognised in the consolidated income
statement except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the period, using tax rates enacted or
substantively enacted at the statement of financial position date,
and any adjustment to tax payable in respect of previous
periods.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a
business combination, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the statement of financial position
date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised. Deferred tax assets
are reviewed at each reporting date and recognised to the extent
that it has become probable that future taxable profits will be
available against which they can be used.
Expenses and assets are recognised net of the amount of sales
tax, except:
-- When the sales tax incurred on a purchase of assets or
services is not recoverable from the taxation authority, in which
case, the sales tax is recognised as part of the cost of
acquisition of the asset or as part of the expense item, as
applicable
-- When receivables and payables are stated with the amount of
sales tax included
The net amount of sales tax recoverable from, or payable to, the
taxation authority is included as part of receivables or payables
in the statement of financial position.
Research and Development Expenditure Credits ("RDEC") to be
received in cash are recorded in other income in the period in
which the qualifying expenditure was incurred, once the underlying
claim methodology has been agreed with HM Revenue & Customs. No
RDEC were recognised during the year ended 31 March 2020 due to the
fact that this year is the first year of submission of a claim, and
there is therefore uncertainty over the amount and timing of the
amount to be received in cash.
Research and development tax credits claimed from HM Revenue
& Customs are taken as a credit in the period in which the
qualifying research and development costs are incurred. No credits
have been recognised due to the uncertainty over the amount and
timing of the credits.
3. Significant accounting judgements, estimates and assumptions
The preparation of the Group's consolidated financial statements
requires management to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the accompanying disclosures, and disclosures of
contingent assets and liabilities. Uncertainty about these
assumptions and estimates could result in outcomes that require
material adjustment to the carrying amounts of assets or
liabilities affected in future periods.
Other disclosures relating to the Group's exposure to risks and
uncertainties includes:
Note 23
* Capital management
Note 23
* Financial instruments risk management and policies
Note 13
* Sensitivity analyses disclosures
In the process of applying the Group's accounting policies,
management has applied the following judgements, estimates and
assumptions:
Significant Judgements
Development Costs
The Group capitalises costs for product development projects.
Initial capitalisation of costs is based on management's judgement
that technological and economic feasibility is confirmed.
Technological feasibility is achieved when a product development
project has reached a defined milestone according to an established
project management model. Economic feasibility is achieved when a
market for the product has been identified.
Acquired intangibles
Management has made judgements in determining the methodology
used to value intangible assets acquired in its business
combinations. Please refer to Note 13 for more information.
Significant estimates
Development costs
In determining the amounts to be capitalised, management makes
assumptions regarding the percentage of employee time spent on
development activities. At 31 March 2020, the carrying amount of
capitalised development costs was GBP761,065 (2019:
GBP196,953).
Impairment of goodwill and intangible assets
Impairment exists when the carrying value of an asset or cash
generating unit exceeds its recoverable amount, which is the higher
of its fair value less costs of disposal and its value in use. The
fair value less costs of disposal calculation is based on available
data from sales transactions, conducted at arm's length, for
similar assets or observable market prices less incremental costs
of disposing of the asset. The value in use calculation is based on
a Discounted Cash Flow ("DCF") model. The cash flows are derived
from the budget for the next two years and projections for another
3 years and do not include restructuring activities that the Group
is not yet committed to or significant future investments that will
enhance the performance of the assets of the CGU being tested. The
recoverable amount is sensitive to the discount rate used for the
DCF model as well as the expected future cash-inflows and the
growth rate used for extrapolation purposes. These estimates are
most relevant to goodwill recognised by the Group. The key
assumptions used to determine the recoverable amount for the
different CGUs, including a sensitivity analysis, are disclosed and
further explained in Note 13.
Valuation of acquired intangibles
Management has made estimates in determining the value of
intangible assets acquired in its business combinations. Please
refer to Note 13 for more information.
Other non-significant estimates
Share-based payments
Estimating fair value for share-based payment transactions
requires determination of the most appropriate valuation model,
which depends on the terms and conditions of the grant. This
estimate also requires determination of the most appropriate inputs
to the valuation model including the expected life of the share
option, volatility and dividend yield and making assumptions about
them. For the measurement of the fair value of equity-settled
transactions with employees at the grant date, the Group uses the
Black-Scholes-Merton model. The assumptions and models used for
estimating fair value for share-based payment transactions are
disclosed in Note 9.
Taxes
Deferred tax assets are recognised for unused tax losses to the
extent that it is probable that taxable profit will be available
against which the losses can be utilised. Significant management
judgement is required to determine the amount of deferred tax
assets that can be recognised, based upon the likely timing and the
level of future taxable profits, together with future tax planning
strategies.
The Group has GBP6,143,590 (2019: GBP2,580,000) of tax losses
carried forward. These losses relate to subsidiaries that have a
history of losses, do not expire, and may not be used to offset
taxable income elsewhere in the Group. The subsidiaries neither
have any taxable temporary difference nor any tax planning
opportunities available that could partly support the recognition
of these losses as deferred tax assets.
On this basis, the Group has determined that it cannot recognise
deferred tax assets on the tax losses carried forward.
If the Group was able to recognise all unrecognised deferred tax
assets, profit and equity would have increased by GBP1,057,585.
Further details on taxes are disclosed in Note 11.
Fair value measurement of financial instruments
When the fair values of financial assets and financial
liabilities recorded in the statement of financial position cannot
be measured based on quoted prices in active markets, their fair
value is measured using valuation techniques including the DCF
model. The inputs to these models are taken from observable markets
where possible, but where this is not feasible, a degree of
judgement is required in establishing fair values. Judgements
include considerations of inputs such as liquidity risk, credit
risk and volatility. Changes in assumptions relating to these
factors could affect the reported fair value of financial
instruments. See Note 23 for further details.
Contingent consideration, resulting from business combinations,
is valued at fair value at the acquisition date as part of the
business combination. When the contingent consideration meets the
definition of a financial liability, it is subsequently remeasured
to fair value at each reporting date. The determination of the fair
value is based on discounted cash flows. The key assumptions take
into consideration the probability of meeting each performance
target and the discount factor (see Note 13 for details.)
As part of the accounting for the acquisition of Horizon
Strategic Partners Limited, contingent consideration with an
estimated fair value of GBP1,325,397 was recognised at acquisition
date and remeasured to GBP1,408,831 as at 31 March 2020. Future
developments may require further revisions to the estimate. The
maximum contingent consideration to be paid is GBP1,500,000. The
contingent consideration is classified as other financial liability
(see Note 23).
Other assets
During the year ended 31 March 2019, Induction Healthcare
Limited paid GBP100,000 for an option to acquire either the shares
or the assets of Podmedics Limited in exchange for consideration of
GBP400,000 satisfied in either shares or cash. The option was held
at cost as this was deemed to be equal to the fair value. The
option was recognised initially at cost. At 31 March 2019 no formal
decision had been made with regard to whether to exercise the
option, there had been no material change in Podmedics between the
time of the acquisition of the option and the period end, and
therefore management had concluded that there had been no material
change in the fair value of the option. During the year ended 31
March 2020, the option was exercised as part of the acquisition of
the share capital of Podmedics Limited. The value of the option was
included as part of the consideration transferred for the
acquisition of Podmedics Limited (see Note 13 for more
details).
4. Application of new and revised accounting standards
The following new and amended IFRSs have been issued and been
applied by the Group in these financial statements.
-- IFRS 16 Leases (effective date 1 January 2019).
IFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining whether an
Arrangement contains a Lease,
SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the
Substance of Transactions Involving the Legal Form of a Lease. The
standard sets out the principles for the recognition, measurement,
presentation and disclosure of leases and requires lessees to
recognise most leases on the balance sheet.
The Group adopted IFRS 16 using the modified retrospective
method of adoptions, with the date of initial application 1 April
2019. The Group elected to use the transition practical expedient
to not reassess whether a contract is, or contains, a lease at 1
April 2019. The Group applied the standard only to contracts that
were previously identified as leases applying IAS 17 and IFRIC 4 as
the date of initial application. The Group elected to use the
recognition exemptions for lease contracts that, at the
commencement date, have a lease term of 12 months or less
(short-term leases), and lease contracts for which the underlying
asset is of low value (low-value assets). During the year the Group
only entered into short-term leases and therefore there is no
impact to the financial statements arising from the initial
application of IFRS 16.
-- IFRIC 23 Uncertainty over Income Tax Treatments (effective
date 1 January 2019) - the Group does not have any uncertain tax
treatments that fall within the scope of IFRC 23, therefore the
impact is considered immaterial.
-- Annual Improvements to IFRS Standards 2015-2017 Cycle
(effective date 1 January 2019) - no impact noted.
The Group has not yet early adopted any standards,
interpretations or amendments that have been issued but are not yet
effective.
5. Revenue from contracts with customers
5.1 Disaggregated revenue information
Year to 31 Period to
March 2020 31 March 2019
GBP000 GBP000
Geographical markets
United Kingdom 131 -
Europe 2 -
United States 11 -
Rest of World 4 -
_______ _______
Total Revenue from contracts with customers 148 -
_______ _______
5.2 Contract balances
Year to 31 Period to
March 2020 31 March 2019
GBP000 GBP000
Trade receivables 80 -
Contract assets 23 -
Contract liabilities 301 -
The acquisition of a subsidiary resulted in all the above
increases in contract balances.
Contract assets relate to revenue earned from the continuing
access to and usage of the Group's products and services for
renewals of subscriptions, which have not yet been invoiced. During
2020, GBPNil was recognised as provision for expected credit losses
on contract assets, as the Group has concluded that expected credit
losses are not material to the Group.
Contract liabilities include long-term advances received for
long-term subscription contracts, and short-term advances for
subscription contracts with a term of 12 months or shorter. During
2020, GBPNil was recognised as interest on long-term advances,
increasing the contract liabilities' balance, as the Group has
concluded that none of the Group's contracts contain a significant
financing element.
5.3 Performance obligations
The performance obligations of the Group relate to the provision
of access to the software platforms and applications developed by
the Group. The performance obligation is satisfied over time during
the subscription period. The contracts of the Group have two
alternative payment options. Customers can subscribe annually for a
transaction price equal to the cash selling price or pay a
discounted transaction price if they subscribe for a term longer
than 12 months.
The Group does not supply any products with rights of return or
refund rights.
The remaining performance obligations expected to be recognised
relate to the provision of access to the Group's products and
services for contracts with existing customers. The transaction
price allocated to the remaining performance obligations are as
follows:
Year to 31 Period to
March 2020 31 March 2019
GBP000 GBP000
Within one year 241 -
More than one year 122 -
-
6. Expenses by nature
Included in net loss for the period are the following:
Year to 31 Period to
March 2020 31 March
2019
GBP000 GBP000
Employee benefit expense 2,106 706
Contractors 538 1,155
Acquisition related transaction costs 150 -
Depreciation, amortisation and impairment 324 11
Professional and legal fees 583 724
Capitalised research and development costs (761) (197)
Remeasurement of contingent consideration 83 -
7. Auditors remuneration
Year to 31 Period to
March 2020 31 March
2019
GBP000 GBP000
Audit of these financial statements 80 50
* Audit of Group financial statements 53 50
* Audit of the parent company financial statements 27 -
_______ _______
Total audit fees 80 50
_______ _______
Interim financial statement review 15 -
Non-audit fees in relation to initial public
offering 79 77
_______ _______
Total non-audit fees 94 77
_______ _______
Total audit and non-audit fees 174 127
_______ _______
8. Employee benefits
The average number of full time equivalent (FTE) persons
employed by the Group (including Directors) during the year,
analysed by category, was as follows:
Year to 31 Period to 31
March 2020 March 2019
No. of employees No. of employees
Development 11 5
Sales and marketing 2 1
General and administrative 3 1
_______ _______
Total average FTE 16 7
_______ _______
The aggregate payroll costs of these persons were as
follows:
Year to 31 Period to
March 2020 31 March
2019
GBP000 GBP000
Wages and salaries 1,720 610
Social security costs 198 70
Contributions to defined contribution plans 94 26
Share based payment expense 94 -
_______ _______
Total employee benefit expense 2,106 706
_______ _______
The remuneration of the highest paid Director was
GBP302,979.
The Group operates a defined contribution pension plan which was
put in place in October 2018. The total expense relating to this
plan in the current year was GBP93,696.
9. Share-based payments
On the admission to the AIM market 22 May 2019, the Group
established the Non-Tax Advantaged Share Option Plan which awards
executive directors, management and other employees share options.
The award is granted in the form of share options over ordinary
share of GBP0.005 each with the intent of normal vesting after a
minimum period of three years from the date of grant. Vesting is
subject to continued services of the participant. No options issued
during the year had any vesting conditions other than service
conditions attached. The Group accounts for the plan as an equity
settled plan. There were no cancellations or modifications to the
awards in 2020.
The fair value of share options is estimated at the grant date
using a Black-Scholes-Merton model, taking into account the terms
and conditions on which the options were granted.
The expense recognised for employee services received during the
year is:
Year to
31 March
2020
GBP000
Expense arising from equity settled share base payment
transactions 94
_______
Total expense arising from share based payment transactions 94
_______
Movements during the year
The following table illustrates the number and weighted average
exercise prices (WAEP) of, and movements in, share options during
the year
Year to Period
31 March to 31 March
2020 2020
Number WAEP (GBP)
Outstanding at 1 April 2019 - -
Granted during the year 431,351 0.005
Forfeited during the year (143,198) 0.005
Exercised during the year - -
Expired during the year - -
Outstanding at 31 March 2020 288,153
Exercisable at 31 March 2020 - -
_______ _______
Total expense arising from share based payment
transactions (GBP000) 94 -
_______ _______
The weighted average remaining contractual life for the share
options outstanding as at 31 March 2020 was 3.43 years. Options
expire after 10 years.
The weighted average fair value of options granted during the
year was GBP345,029.
All options issued during the year have an exercise price of
GBP0.005.
The inputs used in the Black-Scholes-Merton valuation model for
the year ended 31 March 2020 are:
Year to
31 March
2020
Weighted average fair values at the measurement date 242,492
Dividend yield (%) 0%
Expected volatility (%) 50%
Risk-free interest rate (%) 0.62%
Expected life of share options (years) 3.94
Weighted average share price (GBP) 0.68
The expected life of share options is based on current
expectations and is not necessarily indicative of exercise patterns
that may occur. Due to the fact that the Induction Healthcare Group
plc does not have listed share data for the same period as the
expected life of the share options, the expected volatility is
based on an average of the volatilities of comparable companies in
comparative industries and of the same market capitalisation as the
Group. This volatility reflects an assumption that the volatility
is indicative of future trends, which may not necessarily be the
actual outcome.
10. Net finance costs
Year to Period
31 March to 31 March
2020 2019
GBP000 GBP000
Interest arising from revenue contracts - -
Interest income on unimpaired financial assets 47 -
_______ _______
Total finance income 47 -
_______ _______
11. Taxation
Recognised in the income statement and equity
Year to Period to
31 March 31 March
2020 2019
GBP000 GBP000
Current income tax:
UK corporation tax on losses of year - -
Adjustments in respect of current income tax - -
of previous year
Deferred tax:
Origination and reversal of temporary differences - -
Income tax expense reported in the income statement - -
Current tax recognised directly in equity - -
Deferred tax recognised directly in equity - -
Total tax recognised directly in equity - -
Tax expense in income statement, total tax - -
expense and tax recognised in equity
Reconciliation of effective tax rate
Year to Period to
31 March 31 March
2020 2019
GBP000 GBP000
Profit / (loss) on ordinary activities before
tax (3,527) (2,707)
Tax at the Group's effective tax rate of 19.11% (674) 514
Effects of:
Non-deductible expenses:
Contingent consideration remeasurement 26
Other non-deductible expenses 82 (127)
Amortisation on intangible assets (2)
Research and development relief - -
Share-based payments 18 -
Prior year adjustments - -
Current period losses for which no deferred
tax asset was recognised 550 (387)
_______ _______
Total tax expense - -
_______ _______
Deferred tax recognised
Year to Period
31 March to 31 March
2020 2019
GBP000 GBP000
General provisions - -
Tax losses 97 -
Intangible assets (321)
_______ _______
Total deferred tax asset / liability (224) -
_______ _______
Reflected in the statement of financial position
as follows:
Deferred tax assets 97
Deferred tax liabilities (321)
Reconciliation of deferred tax liabilities, net
Year to Period
31 March to 31 March
2020 2019
GBP000 GBP000
Opening deferred tax balance at tax rate of - -
17%
Deferred tax acquired in business combinations (224) -
Tax expense during the period recognised in - -
profit or loss
_______ _______
Closing deferred tax at tax rate of 19% (224) -
_______ _______
A deferred tax liability of GBP224,068 has been recognised in
relation to fair value adjustments of intangible assets acquired in
business combinations. A deferred tax asset of GBP97,100 has been
recognised in relation to unused tax losses acquired in the
business combination with Horizon Strategic Partners Limited.
A deferred tax asset of GBP1,057,585 has not been recognised due
to uncertainty that the asset will be utilised in the foreseeable
future as the Group has yet to obtain significant sources of
income. The unrecognised deferred tax asset includes those in
relation to tax losses of GBP6,143,590. These amounts exclude
amounts related to Horizon Strategic Partners Limited, which is
expected to generate profits and for which a deferred tax asset has
been recognised.
Deferred tax balances have been recognised at the rate expected
to apply when the deferred tax attribute is forecast to be utilised
based on tax rates substantively enacted at 31 March 2020. A
reduction in the UK corporation tax rate from 21% to 20% (effective
from 1 April 2015) was substantively enacted on 2 July 2013.
Further reductions to 19% (effective from 1 April 2017) and to 18%
(effective 1 April 2020) were substantively enacted on 26 October
2015, and an additional reduction to 17% (effective 1 April 2020)
was enacted on 15 September 2016. This reduction was then reversed
and a rate of 19% maintained from 1 April 2020, this was
substantively enacted on 17 March 2020.
12. Loss per share
Basic loss per share is calculated by dividing the profit for
the year attributable to ordinary equity holders of the parent by
the weighted average number of ordinary shares outstanding during
the year.
Diluted loss per share is calculated by dividing the profit
attributable to ordinary equity holders of the parent (after
adjusting for interest on the convertible preference shares) by the
weighted average number of ordinary shares outstanding during the
year plus the weighted average number of ordinary shares that would
be issued on conversion of all the dilutive potential ordinary
shares into ordinary shares.
The following table reflects the income and share data used in
the basic and diluted loss per share calculations:
Loss attributable to ordinary shares (basic and diluted)
Year to Period to
31 March 31 March
2020 2019
GBP000 GBP000
Loss attributable to ordinary shares (basic
and diluted) (3,527) (2,707)
_______ _______
(3,527) (2,707)
_______ _______
Weighted average number of ordinary shares (basic and
diluted)
Year to Period to
31 March 31 March
2020 2019
Number Number
Shares in issue at the beginning of the period 65,591 -
Issued ordinary shares as at 5 March 2018 - 20,000
Shares issued on 4 September 2018 - 9,828
Shares issued on 5 September 2018 - 35,763
Share split on 7 May 2019 13,052,609 13,052,609
Shares issued on 7 May 2019 3,826,086 -
Shares issued on 22 May 2019 on IPO 12,681,915 -
_______ _______
Issued ordinary shares as at the end of the
period 29,626,201 13,118,200
_______ _______
Weighted-average number of ordinary shares
(basic and diluted) 26,189,458 13,162,362
_______ _______
Basic loss per share (GBP) (0.13) (0.21)
Diluted loss per share (GBP) (0.13) (0.21)
Share options granted to employees as discussed in Note 9 have
not been included in the calculation of diluted loss per share, as
they are anti-dilutive during the year. At 31 March 2020, 288,153
share options are outstanding.
Loss per share for the period to 31 March 2019 has been restated
to take into account the share split on 7 May 2020.
On 8 June 2020, Induction Healthcare Group plc acquired 100% of
the share capital of Zesty Limited for a consideration comprising
GBP500,000 in cash, plus the issue of 12,424,527 New Ordinary
Shares (refer Note 27). If this transaction had occurred before 31
March 2020, this would have changed the number of ordinary shares
used in the loss per share calculation significantly.
13. Business combinations
Group restructuring
On 28 February 2019, a new parent holding company, Induction
Healthcare Group plc, was formed with an initial shareholding of
one share issued at GBP1.
On 1 April 2019, Induction Healthcare Group plc and Induction
Healthcare Limited executed a share for share exchange, whereby
Induction Healthcare Group plc acquired 100% of the share capital
in Induction Healthcare Limited, in consideration for the issuance
of shares in Induction Healthcare Group plc to the shareholders of
Induction Healthcare Limited. This was done on the basis of one
ordinary share in Induction Healthcare Group plc for each ordinary
share in Induction Healthcare Limited.
Induction Healthcare Group plc issued 65,590 shares with a
nominal value of GBP1 to the holders of equivalent shares in
Induction Healthcare Limited. This has been treated as a common
control transaction and the comparative historical financial
statements have been presented as if the transaction had already
taken place. At the point of acquisition, Induction Healthcare
Limited had retained losses of GBP10,388, and therefore a merger
reserve has been recognised for this amount. The transaction has
been recognised at book value.
Acquisition of Podmedics Limited
On 7 May 2019, Induction Healthcare Limited exercised the option
to acquire the share capital of Podmedics Limited which was
acquired in September 2018 for GBP100,000 (refer Note 16).
Subsequently, Dr Edward Wallitt, Induction Healthcare Limited and
Podmedics Limited entered into a share purchase agreement pursuant
to which Induction Healthcare Limited acquired the entire issued
share capital of Podmedics Limited (06840040) from Dr Edward
Wallitt. The consideration payable under the share purchase
agreement was GBP400,000 which was satis ed following Admission by
the issue by the Company to Dr Edward Wallitt of 347,826 Ordinary
Shares in the capital of the Induction Healthcare Group PLC.
Pursuant to the share purchase agreement, Dr Edward Wallitt granted
customary warranties and a tax deed to Induction Healthcare
Limited. The primary reason for the acquisition was to bring under
the Group's control all of the assets and intellectual property
relating to Induction Switch.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of
Podmedics Limited as at the date of acquisition were:
Note Fair Value
recognised
on acquisition
GBP000
Assets
Intangible assets 15 91
Cash 18 1
Other current assets 12
_______
Total assets 104
_______
Liabilities
Other current liabilities (4)
Deferred tax arising on acquisition 11 (17)
_______
Total liabilities (21)
_______
Total identifiable net assets at fair value 83
_______
Goodwill arising on acquisition 417
_______
Purchase Consideration transferred 500
_______
The valuation technique used for measuring the fair value of
material assets acquired was based on the replacement cost
approach.
The goodwill of GBP417,361 reflects the value of the anticipated
long-term revenue generating capabilities of the business. None of
the goodwill recognised is expected to be deductible for income tax
purposes.
The operations of Podmedics Limited became dormant shortly after
acquisition by the Group, and it has contributed GBPNil to the loss
before tax of the Group. The operations and intellectual property
of Podmedics have been included within the Induction CGU, and
continue to be developed by the Group as part of the operations of
this CGU. If the combination had taken place at the beginning of
the year, contribution to loss before tax from continuing
operations for the Group would have been GBPNil.
Purchase consideration transferred
The following table summarises the acquisition date fair value
of each major class of consideration transferred:
Note GBP'000
Exercise of option classified as other financial
assets 16 100
Equity instruments (347,826 ordinary shares) 22 400
Total consideration transferred 500
Analysis of cash flows on acquisition
GBP'000
Transaction costs of the acquisition (included in cash
flows from operating activities) (2)
Net cash acquired with the subsidiary (included in cash
flows from investing activities) 1
Transaction costs attributable to the issuance of shares -
(included in cash flows from financing activities, net
of tax)
Net cash flow on acquisition (1)
Induction Healthcare Group plc issued 347,826 ordinary shares as
consideration for the 100% interest in Podmedics Limited. The fair
value of GBP1.15 per share is calculated with reference to recent
transactions with shareholders. This is also the price at which the
shares of the Company were placed at the Initial Public Offering on
22 May 2020.
The attributable costs of the issuance of the shares of GBP2,000
have been charged directly to equity as a reduction in the share
premium.
Acquisition of Horizon Strategic Partners Limited
On 5 November 2019, the Group acquired 100% of the share capital
of Horizon Strategic Partners Limited, a non-listed company based
in the United Kingdom, in exchange for GBP506,610 initial cash
consideration, contingent consideration of GBP1,325,397 and assumed
liabilities of GBP522,979. Horizon owns MicroGuide - a
revenue-generating app providing medical organisations with
functionality to create, edit, and publish their own local medical
guidelines in a secure and locally administrated environment. These
guidelines can be accessed by clinicians, at the point of care,
either on a mobile device or an intranet. The Group acquired
Horizon due to the fact that MicroGuide brings to the Group a
further substantial NHS user base.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of
Horizon Strategic Partners Limited as at the date of acquisition
were:
Note Fair value recognised
on acquisition
GBP000
Assets
Intangible assets 15 1,598
Cash 53
Other current assets 61
Deferred tax assets 11 97
_______
Total assets 1,809
_______
Liabilities
Deferred tax liability 304
Contract liabilities 221
Current liabilities 64
_______
Total Liabilities 589
_______
Total identifiable net assets at fair value 1,220
_______
Goodwill arising on acquisition 1,136
_______
Purchase consideration transferred 2,356
_______
The deferred tax liability mainly comprises the tax effect of
the accelerated depreciation for tax purposes of intangible assets
acquired in the business combination.
Contract liabilities were remeasured to fair value at the
acquisition date to take into account the costs that market
participants would incur to acquire such contract liabilities.
The goodwill of GBP1,135,581 comprises the value of the
established, long-term revenue generating capabilities of the
business. None of the goodwill recognised is expected to be
deductible for income tax purposes.
The valuation techniques used for measuring the fair value of
material assets acquired were as follows:
Assets acquired Valuation technique
Trade name Relief-from-royalty method
Users Multi-period excess earnings method
Technology Replacement cost approach, corroborated with the relief-from-royalty
method
From the date of acquisition, Horizon Strategic Partners Limited
contributed GBP148,480 of revenue, and net profit of GBP72,970 to
consolidated loss before tax from continuing operations of the
Group. If the acquisition had taken place at the beginning of the
year, contribution to revenue from continuing operations would have
been GBP382,983 and contribution to loss before tax from continuing
operations for the Group would have been GBP43,020.
Purchase consideration transferred
GBP'000
Cash 507
Contingent consideration 1,326
Liabilities assumed 523
_______
Total consideration 2,356
_______
Analysis of cash flows on acquisition
GBP'000
Transaction costs of the acquisition (included in cash
flows from operating activities) (60)
Net cash acquired with the subsidiary (included in cash
flows from investing activities) 53
Transaction costs attributable to the issuance of shares -
(included in cash flows from financing activities, net
of tax)
-------
Net cash flow on acquisition (7)
-------
Transaction costs of GBP60,000 have been expensed under
administrative expenses in the Income Statement.
Contingent consideration
As part of the purchase agreement with the previous owners of
Horizon Strategic Partners Limited, a contingent consideration has
been agreed, in the form of an earn-out agreement. The contingent
consideration is based on a multiple of 4.29 times the cash
collected from customers for subscription fees which are invoiced
and paid from 1 October 2019 to 30 September 2020 (the earn-out
period). The cash collected from customers excludes a baseline cash
amount of GBP225,000 and VAT. Contract liabilities as at the date
of acquisition are deducted in arriving at the contingent
consideration. The maximum amount to be paid out as contingent
consideration is GBP1,500,000, based on a maximum cash target of
GBP622,390. The previous owners of Horizon Strategic Partners
Limited have the right to choose whether payment of the contingent
consideration is settled in cash, or in shares of the Induction
Healthcare Group plc. The number of shares issued to settled the
contingent consideration are variable and dependent on the market
value of shares immediately preceding the date the target is
reached.
As at 31 March 2020, the key performance indicators of Horizon
Strategic Partners Limited show that it is highly probable that the
target will be achieved, based on actual cash collected to that
date of GBP257,938, receivables of GBP79,950 and visibility of
highly probable subscription renewals and new customers pipeline.
The fair value of the contingent consideration determined at 31
March 2020 reflects this development, and a remeasurement charge of
GBP83,434 has been recognised through profit or loss. The fair
value is determined using a probability-weighted expected value
approach. The significant unobservable inputs used in the fair
value measurements, together with a quantitative sensitivity
analysis as at 31 March 2020 are provided in Note 23. Subsequent to
year end, management have assessed that it is highly probably that
the earn-out target will be met, refer Note 27. A reconciliation of
the fair value of the contingent consideration liability is
provided below:
GBP'000
As at 1 April 2019 -
Liability arising on business combination 1,326
Unrealised fair value changes recognised in profit or
loss 83
_______
As at 31 March 2020 1,409
_______
The contingent consideration liability is due for final
measurement and payment to the former shareholders of Horizon
Strategic Partners Limited on 30 September 2020.
14. Investments in subsidiaries
The consolidated financial statements of the Group include:
Registered Registered address Principal Country
number activities of incorporation Ownership
Company 2020 2019
20 St. Dunstan's Investment
Induction Healthcare Hill, London EC3R Holding
Limited 11232772 8HL, United Kingdom Company United Kingdom 100% -
20 St. Dunstan's
Induction Healthcare Hill, London EC3R Provision
(UK) Limited 11237890 8HL, United Kingdom of software United Kingdom 100% 100%
23 Regent St,
Induction Healthcare Prahran, Victoria, Provision
Pty Ltd 625119397 Australia, 3181 of software Australia 100% 100%
20 St. Dunstan's
Podmedics Limited Hill, London EC3R
(non-trading) 06840040 8HL, United Kingdom Non-trading United Kingdom 100% -
20 St. Dunstan's
Horizon Strategic Hill, London EC3R Provision
Partners Limited 06285278 8HL, United Kingdom of software United Kingdom 100% -
Induction Healthcare Group plc is the ultimate parent company of
the Group and directly owns Induction Healthcare Limited and
Horizon Strategic Partners Limited, and indirectly owns the other
entities specified above through its ownership of Induction
Healthcare Limited.
Horizon Strategic Partners Limited (registered number 06285278)
and Podmedics Limited (registered number 06840040) have taken
advantage of the exemption from audit under section 479A of the
Companies Act 2006, and Induction Healthcare Group plc has provided
a parental guarantee in accordance with section S479C of the
Companies Act 2006.
All subsidiaries have reporting periods that end on 31 March
2020.
15. Goodwill and intangible assets
Acquired intangible assets
Capitalised
Trade development
Goodwill Technology Users name costs Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
Balance at 5 March - - - - - -
2018
Acquired through
business combinations - 36 - - - 36
Internally developed - - - - 197 197
_______ _______ _______ _______ _______ _______
Balance at 31 March
2019 - 36 - - 197 233
_______ _______ _______ _______ _______ _______
Acquired through
business combinations 1,553 277 919 264 229 3,242
Internally developed 761 761
_______ _______ _____ ______ _______ _______
Balance at 31 March
2020 1,553 313 919 264 1,187 4,236
_______ _______ ______ ______ _______ _______
Amortisation and
impairment
Balance at 5 March - - - - - -
2018
Amortisation for
the period - 11 - - - 11
_______ _______ ______ ______ _______ _______
Balance at 31 March
2019 - 11 - - - 11
_______ _______ _______ _______ _______ _______
Amortisation for
the period - 31 53 15 224 323
_______ _______ ______ ______ _______ _______
Balance at 31 March
2020 - 42 53 15 224 334
_______ _______ ______ ______ _______ _______
Net book value
At 5 March 2018 - - - - - -
At 31 March 2019 - 25 - - 197 222
At 31 March 2020 1,553 271 866 249 963 3,902
_______ _______ _______ _______ _______ _______
Acquisitions during the year
Intangible assets relating to technology, users and trade names
were acquired during the year through business combinations.
Capitalised development costs
The capitalised development costs consist of the cost incurred
on developing the Induction app from 1 January 2019 onwards, the
date at which the project passed the technological feasibility
milestone, development costs acquired in the business combination
with Horizon Strategic Partners and the costs incurred on the
MicroGuide applications post-acquisition of Horizon Strategic
Partners.
Amortisation and impairment charge
Amortisation of the acquired intangible assets are is recognised
over 3 to 10 years in other development expenses in the
consolidated income statement.
Amortisation was recognised on capitalised development costs
from 1 April 2019, the date at which the assets were brought into
use. Amortisation is recognised over 3 years in development
expenses in the consolidated income statement.
Goodwill
For impairment testing, goodwill acquired through business
combinations is allocated to the Induction and MicroGuide Cash
Generating Units ("CGU's") respectively. These represent the lowest
aggregation of assets which generate independent cash inflows,
where management evaluate the business.
Carrying amount of goodwill allocated to each of the CGU's
31 March 2020
GBP'000
Induction CGU 417
MicroGuide CGU 1,136
-------------
Total 1,553
-------------
The Group performed its annual impairment test in March 2020.
The Group did not note any specific indicators of impairment of
either of the CGU's.
Induction CGU
The recoverable amount of the Induction CGU of GBP11,440,692 as
at 31 March 2020 has been determined based on a value in use
calculation using cash flow projections for a ten year period. The
pre-tax discount rate applied to cash flow projections is 16.1% and
cash flows beyond the five-year period are extrapolated using a 2%
growth rate, which is an inflationary rate. It was concluded that
the fair value less costs to sell did not exceed the value in use.
No impairment charge resulted from this analysis.
MicroGuide CGU
The recoverable amount of the MicroGuide CGU of GBP3,829,643 as
at 31 March 2020 has been determined based on a value in use
calculation using cash flow projections for a five year period. The
pre-tax discount rate applied to cash flow projections is 10.6% and
cash flows beyond the five-year period are extrapolated using a 2%
growth rate. It was concluded that the fair value less costs to
sell did not exceed the value in use. No impairment charge resulted
from this analysis.
Key assumptions used in value in use calculations and
sensitivity to changes in assumptions
The calculation of value in use for both the Induction CGU and
MicroGuide CGU's is most sensitive to the following
assumptions:
-- Annual recurring subscription fees received from customers
-- Earnings before interest, tax, depreciation and amortisation ("EBITDA") margins
-- Discount rates
-- Growth rates used to extrapolate cash flows beyond the forecast period.
Subscription payments received from customers - Subscription
payments represent advanced payments received from customers in
advance of the subscription period to which the amount relates, and
includes amounts received in advance for subscription period which
may exceed one year. Decreased demand can lead to a decline in
subscription payments. A decrease of 1% in subscription payments
received would not result in an impairment of either CGU. A
decrease of 1.3% would result in an impairment of the Induction
CGU. A decrease of 11% would result in the impairment of the
MicroGuide CGU.
EBITDA - EBITDA is determined by deducting the budgeted costs to
be incurred (cash outflows) from subscription payments received
from customers. Cash outflows are based on values achieved in the
year to 31 March 2020, adjusted for an appropriate growth rate
depending on the nature of the cash outflow. Decreased demand can
lead to a decline in EBITDA. A decrease of 1% in EBITDA would not
result in an impairment of either CGU. A decrease of 103.9% in
EBITDA would result in an impairment of the Induction CGU. A
decrease of 34.9% would result in the impairment of the MicroGuide
CGU.
Discount rates - Discount rates represent the current market
assessment of the risks specific to each CGU, taking into account
the time value of money and individual risks of the underlying
assets that have been incorporated in the cash flow estimates. The
discount rate calculation is based on the specific circumstances of
the Group and is derived from the weighted average cost of capital
(WACC). The WACC takes into account both debt and equity. The cost
of equity is derived from the expected return on investment by the
Group's investors. The cost of debt is based on the
interest-bearing borrowings the Group is obliged to service. CGU
specific risk is incorporated by applying individual beta factors.
The beta factors were evaluated for the first time in the year
ended 31 March 2020, based on publicly available market data.
Adjustments to the discount rate are made to factor in the specific
amount and timing of the future tax flows in order to reflect a
pre-tax discount rate.
A rise in the pre-tax discount rate to 19.3% in the Induction
CGU would result in an impairment of the CGU. A rise in the pre-tax
discount rate to 14.8% in the MicroGuide CGU would result in an
impairment of the CGU.
16. Derivative instruments
2020 2019
GBP000 GBP000
Other financial assets designated as fair
value through profit or loss - 100
_______ _______
Total other financial assets - 100
_______ _______
Other financial assets at 31 March 2019 comprised an option to
acquire either the shares or the assets of Podmedics Limited, a
company providing a healthcare application used by a substantial
number of healthcare professionals in the UK, in exchange for and
additional consideration of GBP400,000 satisfied in either shares
or cash. The option was exercised on 7 May 2019, refer Note 13.
17. Trade and other receivables and contract assets
Trade and other receivables
2020 2019
GBP000 GBP000
Receivables from third-party customers 80 -
Loans to director and employees - 10
Other receivables 53 102
Prepayments 7 16
_______ _______
Total trade and other receivables 140 128
_______ _______
Trade receivables are non-interest bearing and are generally on
terms of 30 days. Included within trade and other receivables is
GBPnil expected to be recovered in more than 12 months. For terms
and receivables relating to related party receivables, please refer
to Note 25.
Contract assets
As at 31 March 2020, the Group has contract assets of GBP22,631
(2019: GBPNil). Contract assets arise as a result of the
acquisition of Horizon Strategic Partners Limited during the year,
refer to Note 13.
Allowance for expected credit losses
No allowance for expected credit losses has been recognised
during the year, due to the nature of the customers of the Group
(primarily NHS), for which the risk of default has been assessed to
be negligible.
The significant changes in the balances of trade receivables and
contract assets are discloses in Note 5. Information on credit risk
exposures are disclosed in Note 23.
18. Cash and cash equivalents
2020 2019
GBP000 GBP000
Cash at banks and on hand 671 169
Short-term deposits 10,047 -
_______ _______
Cash and cash equivalents per the statement
of financial position and cash flow statement 10,718 169
_______ _______
Cash at banks earns interest at floating rates based on daily
bank deposit rates. Short-term deposits are made on a weekly basis,
depending on the immediate cash requirements of the Group, and earn
interest at the respective short-term deposit rates.
19. Loans and borrowings
This note provides information about the contractual terms of
the Group's interest-bearing loans and borrowings, which are
measured at amortised cost. The loan has not been discounted as the
effective interest over the period of the loan would not be
material and the loan was subsequently settled on 4 June 2019. For
more information about the Group's exposure to interest rate and
foreign currency risk, see Note 23.
2020 2019
GBP000 GBP000
Current liabilities
Loan from director - 2,500
_______ _______
- 2,500
_______ _______
Terms and debt repayment schedule
Nominal Year
interest of Carrying Carrying
Currency rate maturity Face value amount Face value amount
2020 2020 2019 2019
GBP000 GBP000 GBP000 GBP000
Loan from
director GBP 0% 2019 - - 2,500 2,500
_______ _______ _______ _______
- 0 2,500 2,500
_______ _______ _______ _______
The director loan was repaid as part of the Initial Public
Offering.
Changes in loans and borrowings from financing activities
Total
GBP000
Balance at 5 March 2018 -
_______
Changes from financing cash flows
Proceeds from loans and borrowings 2,500
_______
Total changes from financing cash flows 2,500
_______
Other changes
Interest expense -
Interest paid -
_______
Total other changes -
_______
Balance at 31 March 2019 and 1 April 2019 2,500
_______
Proceeds from loans and borrowings 500
Repaid during the year (3,000)
_______
Balance at 31 March 2020 -
_______
20. Trade and other payables
2020 2019
GBP000 GBP000
Trade payables 39 149
Accruals 299 561
Social security and other taxes 49 -
Related parties - -
Other payables 15 50
_______ _______
Total trade and other payables 402 760
_______ _______
Included within trade and other payables is GBPnil expected to
be settled in more than 12 months.
All trade and other payables are non-interest bearing and are
normally settled on 30 day terms.
21. Contract liabilities
2020 2019
GBP000 GBP000
Long-term advances 301 -
_______ _______
Total contract liabilities 301 -
_______ _______
Current 263 -
Non-current 38 -
Contract liabilities arise as a result of the acquisition of
Horizon Strategic Partners Limited, refer Note 13.
22. Capital and reserves
For the purposes of the Group's capital management, capital
includes issued share capital, share premium and all other equity
reserves attributable to the equity holders of the parent. The
primary objective of the Group's capital management is to maximise
shareholder value. The Group manages its capital structure and
makes adjustments in light of changes in economic conditions and
the requirements of the financial covenants. The Group does not
have any interest bearing loans and borrowings.
Share capital
Ordinary shares issued and fully paid
No. of shares
('000)
In issue at 5 March 2018 (date of incorporation) -
Issued for cash 30
Issued in exchange for intangible asset (see Note
8) 36
_______
In issue at 31 March 2019 - fully paid 66
_______
Share split 13,053
Issue of shares pre-IPO 1,739
Issue of shares to settle loans and borrowings 1,739
Issue of shares as consideration for a business combination 348
Issue of shares on IPO 12,682
_______
In issue at 31 March 2020 29,627
_______
2020 2019
GBP000 GBP000
Allotted, called up and fully paid
Ordinary shares of GBP0.05 (2019: GBP1)
each 148 66
_______ _______
148 66
_______ _______
Shares classified as liabilities -
Shares classified in equity 148 66
_______ _______
Total share capital 148 66
_______ _______
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of Induction Healthcare Group plc.
During the period Induction Healthcare Group plc issued
29,626,200 (2019: 65,591) of GBP0.005 (2019: GBP1) ordinary shares
for a consideration of GBP19,049,792 (2019: GBP65,591).
Share premium
GBP000
At 5 March 2018 -
_______
At 31 March 2019 -
_______
Share split -
Issue of shares pre-IPO 1,991
Issue of shares to settle loans and borrowings 1,991
Issue of shares as consideration for a business combination 398
Issue of shares pre-IPO 14,521
IPO costs capitalised (469)
_______
Total share premium 18,432
_______
Other reserves
Other reserves arise from the Group's equity settled share
option scheme. Refer to Note 9 for further details.
Translation reserve
The translation reserve comprises all foreign exchange
differences arising since 5 March 2018 (date of incorporation) from
the translation of the financial information of foreign
operations.
Dividends
No dividends were recognised during the year (2019:GBPNil).
Merger reserve
On 1 April 2019, Induction Healthcare Group plc and Induction
Healthcare Limited executed a share for share exchange, whereby
Induction Healthcare Group plc acquired 100% of the share capital
in Induction Healthcare Limited, in consideration for the issuance
of shares in Induction Healthcare Group plc to the shareholders of
Induction Healthcare Limited. This was done on the basis of one
ordinary share in Induction Healthcare Group plc for each ordinary
share in Induction Healthcare Limited.
Induction Healthcare Group plc issued 65,590 shares with a
nominal value of GBP1 to the holders of equivalent shares in
Induction Healthcare Limited. This has been treated as a common
control transaction and the comparative historical financial
statements have been presented as if the transaction had already
taken place. At the point of acquisition, Induction Healthcare
Limited had retained losses of GBP10,388, and therefore a merger
reserve has been recognised for this amount. The transaction has
been accounted for at book value.
23. Financial instruments
The following table shows the carrying amounts and fair values
of financial instruments as at 31 March 2019. For financial assets
and liabilities not measured at fair value, the carrying amount is
considered to be a reasonable approximation of fair value.
Financial assets
2020 2019
GBP000 GBP000
Financial assets at fair value through profit
or loss
Other financial assets - 100
_______
100
_______
Financial assets measured at amortised cost
Trade receivables 80 -
Loans to director and employees - 10
Other receivables 53 102
Prepayments 7 -
Cash and cash equivalents 10,718 169
_______ _______
10,858 281
_______ _______
Debt instruments at amortised cost include trade receivables and
receivables from related parties.
The business does not hold any other form of financial assets.
No assets require impairment.
Management have assessed that the fair values of cash and short
term deposits and other receivables approximate their carrying
amounts largely due to the short-term maturities of these
instruments.
All financial instruments measured at fair value are considered
to be Level 3 financial instruments in the fair value hierarchy.
Other financial assets comprise the cost of an option to acquire
either the shares or the assets of Podmedics Limited in exchange
for consideration of GBP400,000 satisfied in either shares or cash.
Whilst no formal valuation process was undertaken, the option was
recognised initially at cost, which represented the market value at
the time that the option was acquired. The option was exercised on
7 May 2020, at which point the fair value was still considered to
be equal to its cost. There are no significant unobservable inputs
used in the valuation of the option.
Financial liabilities
2020 2019
GBP000 GBP000
Financial liabilities measured at amortised
cost
Trade and other payables 402 107
Interest bearing loans and borrowings - 2,500
Other current liabilities - -
Financial liabilities at fair value through
profit or loss
Contingent consideration 1,409 -
_______ _______
1,811 2,607
_______ _______
As part of the purchase agreement with the previous owners of
Horizon Strategic Partners Limited, a contingent consideration has
been agreed, in the form of an earn-out agreement. The contingent
consideration is based on a multiple of 4.29 times the cash
collected from customers for customer subscriptions (over and above
the baseline cash amount of GBP225,000), which are invoiced and
paid from 1 October 2019 to 30 September 2020 (the earn-out
period). Contract liabilities as at the date of acquisition are
deducted in arriving at the contingent consideration. The maximum
amount to be paid out as contingent consideration is
GBP1,500,000.
The previous owners of Horizon Strategic Partners Limited have
the right to choose whether payment of the contingent consideration
is effected in cash, or in shares of the Induction Healthcare Group
plc.
Management have assessed that the fair values of trade payables
and other current liabilities approximate their carrying amounts
largely due to the short-term maturities of these instruments.
Fair values
The following table reconciles the balance of the contingent
consideration at 31 March 2020:
GBP000
Balance on 1 April 2019 -
Incurred on acquisition through a business combination 1,326
Loss on remeasurement to fair value recognised in
other operating expenses 83
-----------
Balance on 31 March 2020 1,409
-----------
The measurement of the fair value of the contingent
consideration liability falls within Level 3 of the fair value
hierarchy and determined with reference to significant unobservable
inputs. The fair value has been determined using a
probability-weighted expected value approach. The significant
unobservable inputs to this calculation consist of:
- estimates of the cash expected to be received from customer
subscriptions during the earn-out period, based on historical
experience and known status of contract negotiations. These range
between GBP272,740 and GBP622,390 (at which point the maximum
earn-out value of GBP1,500,000 is reached). The most likely outcome
was assessed to be GBP619,975, at which point the earn-out payment
would be GBP1,489,639. A 10% decrease in the cash target would
result in a decrease of the contingent liability of GBP201,969.
- Assessments of the probabilities of each scenario -
probabilities range between 2% and 80%. The probability of the
earn-out payment of GBP1,489,639 as above being reached was
assessed at 80%. The probability that the maximum earn-out payment
of GBP1,500,000 being reached was assessed at 15%. A decrease in
the probability of the single most likely outcome of 10% would
result in a decrease of the contingent consideration of
GBP25,246.
- Discount rate - The discount rate used was 10.74%. A 1%
increase in the discount rate would result in a decrease of the
contingent consideration of GBP8,836.
Risk management
The Group's principal financial liabilities, other than
contingent consideration, comprise loans and borrowings, and trade
and other payables. The main purpose of these financial liabilities
is to finance the Group's operations. The Group's principal
financial assets include trade receivables, and cash and short-term
deposits that derive directly from its operations.
The Group has exposure to the following principal financial
risks in the operation and management of its
business:
(i) Liquidity risk;
(ii) Credit risk; and
(iii) Market risk
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
treasury policies are designed to ensure that sufficient cash is
available to support current and future business requirements. Cash
management is a core feature of the Group's business model and
rolling cash flow forecasts, updated on at least a monthly basis,
are reviewed to manage these requirements. At 31 March 2020, the
contractual maturity of all financial liabilities was less than 12
months.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from the Group's
receivables from customers and investment securities. The Group's
principal financial assets are cash and cash equivalents, trade
receivables, other financial assets, and other receivables, the
carrying values of which represent the Group's maximum exposure to
credit risk in relation to financial assets, as shown in this note.
The Group's credit risk is primarily attributable to its cash and
cash equivalents. The credit risk arising from cash and cash
equivalents is limited because the counterparties are banks with
triple-A credit ratings assigned by international credit-rating
agencies.
The credit risk arising from trade receivables and contract
assets is assessed as limited, due to the nature of the
counterparties, which consist of primarily NHS customers.
Therefore, no provision for expected credit losses has been
recognised on trade receivables or contract assets as this is
considered immaterial.
Current <30 days 30 - 60 days 61 - 90 days >91 days
GBP000 GBP000 GBP000 GBP000
Trade receivables 44 29 6 -
Contract assets 23 - - -
Market risk
Market risk is the risk that he fair value or future cash flows
of a financial instrument will fluctuate because of changes in
market prices, such as foreign exchange rates, interest rates and
equity prices. Market risk comprises three types of risk: interest
rate risk, currency risk and other price risk. Interest rate risk
is not considered to be material to the Group. The Group is not
exposed to any other market risks aside from foreign currency
risk.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future
cash flows of an exposure will fluctuate because of changes in
foreign exchange rates. The Group's exposure to the risk of changes
in foreign exchange rates relates primarily to the Group's
operating activities (when revenue or expense is denominated in a
foreign currency) and the Group's net investments in foreign
subsidiaries.
The Groups main exposure is to the United States dollar and the
Australian dollar. However, the Group's exposure is limited as the
sums involved are relatively small. The Group has a bank account
denominated in Australian dollars and the Group's exposure to
foreign exchange risk is limited by ensuring the Group has enough
cash in this account to cover approximately six months of
expenditure. The Group's exposure to foreign currency risk is as
follows. This is based on the carrying amount for monetary
financial instruments other financial assets and liabilities based
on notional amounts. Sensitivity analysis has not been presented as
the effects of reasonably possible strengthening or weakening of
the foreign currencies below would not have a material impact on
the Group's financial information.
31 March 2020
Sterling Australian Euro Total
dollar
GBP000 GBP000 GBP000 GBP000
Cash and cash equivalents 10,717 1 - 10,718
Other receivables 139 1 - 140
Loans and borrowings - - - -
Trade and other payables (367) (13) - (380)
_______ _______ _______ _______
Statement of financial
position exposure 10,489 (11) - 10,478
_______ _______ _______ _______
31 March 2019
Sterling Australian Total
dollar
GBP000 GBP000 GBP000
Cash and cash equivalents 167 2 169
Other receivables 128 - 128
Loans and borrowings (2,500) - (2,500)
Trade and other payables (760) (1) (761)
_______ _______ _______
Statement of financial
position exposure (2,965) 1 (2,964)
_______ _______ _______
Capital management
The Group's policy is to maintain capital sufficient to sustain
the future development of the business.
24. Commitments
As at 31 March 2020 the Group had no capital commitments (2019:
GBPNil). At 31 March 2020 the commitments of the Group under
short-term leases for the next 12 months was GBP63,920.
25. Contingencies
As at 31 March 2020 the Group had a contingent consideration
liability of 1,408,831 (2019: GBPNil). Refer to Note 13 and Note 23
for further information.
26. Related parties
Identity of related parties with which the Group has
transacted
Note 14 provides information about the Group's structure,
including subsidiaries and the holding company.
The related parties with which the Group has transacted are Hugo
Stephenson, a Director of the Group.
During the Period ended 31 March 2019, Induction Healthcare
Limited entered into a loan agreement with Hugo Stephenson, a
Director of Induction Healthcare Limited, under which he agreed to
lend the company up to GBP4,000,000. The loan may be drawn down at
any time up to 31 December 2019. The loan is repayable in the event
of an Initial Public Offering or a financing which raises not less
than GBP20m in equity or a sale of a controlling interest or
substantially the whole of the assets to a third party purchaser.
The loan is unsecured and is interest free. As at 31 March 2019,
the amount drawn down was GBP2,499,975. During the year to 31 March
2020, the Group drew down additional proceeds of GBP500,000 from a
loan from this related party, and repaid the full balance of
GBP2,999,975. At 31 March 2020, there are no balances outstanding
with related parties.
The Group has not made any sales to or purchases from related
parties during the year.
Transactions with key management personnel
Directors of Induction Healthcare Group plc and their immediate
relatives control 22.85 per cent of the voting shares of Induction
Healthcare Group plc.
The compensation of key management personnel (including the
Directors) is as follows:
2020 2019
GBP000 GBP000
Short-term employee benefits 584 376
Post-employment pension and other benefits 92 14
Termination benefits -
Share based payment transactions 13
Key management remuneration including
social security costs 689 390
Total compensation paid to key management
personnel 689 390
Key management remuneration comprises
short-term employee benefits only.
Directors' remuneration has been disclosed in the Director's
Report. Refer to page 41 and 42 of the Annual Report and Accounts
2020, tables "Directors remuneration (audited)" and "Directors'
shareholding and share interests (audited)".
Other related party transactions
During the period ended 31 March 2019, the Group entered into an
option to acquire the shares or assets of Podmedics Limited, a
company owned by Edward Wallitt, a member of the key management
personnel for the years ended 31 March 2019 and 31 March 2020. The
consideration for the option was GBP100,000. During the year ended
31 March 2020, the Group exercised the option and acquired
Podmedics Limited for an additional consideration of GBP400,000,
settled in 347,826 shares of GBP1.15 each.
During the period ended 31 March 2019, Induction Healthcare
Limited entered into a loan agreement with Sebastien Jantet, a
Director of the Group, under which is agreed to lend him GBP6,552
to fund the purchase of 6,552 GBP1 ordinary shares in Induction
Healthcare Limited. The loan is repayable by 31 December 2019. The
loan is unsecured, and interest is due on the outstanding amount at
an interest rate equal to the base rate of the Bank of England. As
at 31 March 2019, the amount outstanding was GBP6,581. The loan was
subsequently settled on 30 May 2019.
During the period ended 31 March 2019, Induction Healthcare
Limited entered into a loan agreement with Dale Jessop, a member of
key management personnel, under which is agreed to lend him
GBP3,276 to fund the purchase of 3,276 GBP1 ordinary shares in
Induction Healthcare Limited. The loan is repayable by 31 December
2019. The loan is unsecured, and interest is due on the outstanding
amount at an interest rate equal to the base rate of the Bank of
England. As at 31 March 2019, the amount outstanding was GBP3,290.
The loan was subsequently settled on 23 May 2019.
27. Subsequent events
Acquisition of Zesty Limited
On 8 June 2020, Induction Healthcare Group plc acquired 100% of
the share capital of Zesty Limited for consideration comprising
GBP500,000 in cash, plus the issue of 12,424,527 new Ordinary
Shares. The new Ordinary Shares represented approximately 41.9 per
cent. of the existing issued share capital of the Company prior to
the acquisition and represent approximately 29.5 per cent of the
enlarged Share Capital. The new Ordinary Shares rank pari passu
with the existing Ordinary Shares in the Company.
Zesty Limited is a digital healthcare patient engagement
platform company. Zesty's platform provides an integration layer
with a hospital's electronic patient record ("EPR") or patient
administration system ("PAS") and a portal that allows patients to
manage their hospital outpatient appointments, read their
administrative and clinical correspondence, attend a video based
consultation and store a personal copy of their clinical record,
through this integration layer.
For the year ended 31 December 2018, Zesty reported revenue of
GBP1,035,540 and a net loss before tax of GBP509,725, with a net
current asset position of GBP333,738 as at 31 December 2018.
Zesty was acquired due to the fact that integrating Zesty and
Induction's technologies, the enlarged group will, in the
Directors' view, be one of the first technology platforms to
interconnect patients, clinicians and healthcare information across
both multiple hospital sites and EPR platforms. The Directors
expect the acquisition to provide many synergistic benefits,
including sales to the same sales channel, pooling software
engineering resources, and bringing extensive experience to
management and the Board of Directors.
Payment of contingent consideration to former owners of Horizon
Strategic Partners Limited
In June 2020, management's forecasts of the cash collected from
customers of Horizon Strategic Partners Limited indicated that it
is highly probable that the maximum earn-out payment of
GBP1,500,000 will be paid to the former shareholders of the entity.
These forecasts are based on cash collected (excluding VAT) during
the earn-out period, plus amounts invoiced and not yet collected,
for which payment is expected prior to 30 September 2020 based on
the Group's credit terms.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR PAMMTMTAMTJM
(END) Dow Jones Newswires
August 06, 2020 02:00 ET (06:00 GMT)
Induction Healthcare (LSE:INHC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Induction Healthcare (LSE:INHC)
Historical Stock Chart
From Jul 2023 to Jul 2024