TIDMINHC
RNS Number : 1245I
Induction Healthcare Group PLC
10 December 2020
10 December 2020
Induction Healthcare Group PLC
("Induction", the "Company", or the "Group")
Half year results
First year of revenue; strong momentum for recurring revenue
Induction, a leading healthcare technology company that helps
achieve digital efficiencies for hospitals, their front-line
clinicians and patients, announces results for the six months ended
30 September 2020.
Financial highlights
-- First full year of revenue
-- Strong momentum in sales and Annual Recurring Revenue (ARR)
run rate across all its subscription-based software products
-- Revenues of GBP0.6m, includes first revenue generated by
Induction Switch (as previously indicated)
-- Robust balance sheet, with net cash of GBP5.0 million;
prudent management of costs and cashflow
-- Deferred revenue at GBP0.6m (H1 2020: nil)
Strategic progress
-- Induction Zesty (leading provider of patient portals to NHS Hospitals in the UK):
o Strategic collaboration with Cerner to resell Induction Zesty
patient portal platform to Cerner customers in UK and Ireland
o Platform 'go live' at the Royal Free London NHS Foundation
Trust(1)
o C ollaboration with Apple, Cerner and Milton Keynes University
Hospital NHS Trust to enable Health Records on iPhone, a 'first of
type' NHS innovation for patients
o S elected for NHSX Spark Dynamic Purchasing System to support
organisations procure remote monitoring solutions
-- Induction Switch (number one healthcare collaboration app in the UK)
o Accepted on to NHSX Clinical Communications Framework to help
NHS Trusts phase out pagers and procure communication services
o First commercial contract with South Wales Trauma Network
enabling multiple clinical teams to communicate via messaging and
share resources
-- Induction MicroGuide (platform enabling medical organisations
to create and publish medical guidelines)
o Achieved first large-scale international commercial contract
in Mexico
o As previously announced, achieved earn-out ahead of
schedule
-- Strong user growth and engagement (YoY)
o Induction Switch: users up 64%, directory calls up 34%
o MicroGuide: users up 32%, guideline page views up 40%
o Induction Zesty: users up 190%
-- Continuing investment in product development to support new
features and additional services
Current trading and outlook
-- Sales momentum and recurring revenue provides a foundation for future growth
-- Strong pipeline of orders with multi-year contracts
-- H ealthy acquisition pipeline targeting new and complementary
products and geographies, supporting the strategy to add solutions
that deliver value to patients, doctors and other clinicians
-- Growth of registered users and user engagement across
Induction's product suite, and progress with key frameworks and
collaborations such as NHSX Clinical Communication Framework and
Cerner creates a strong foundation for continued growth in
recurring revenue in the year ahead
Dr Hugo Stephenson, Joint-CEO of Induction Healthcare, said:
"The Group has generated excellent commercial momentum in the
first half of the current financial year and has delivered its
first full year of revenues. I am particularly excited by our
momentum with customers, such as the first NHS contract in South
Wales for Induction Switch, and admission onto the NHSX Clinical
Communications Framework. We are proud to work in collaboration
with Apple and Milton Keynes Hospital NHS Trust on a 'first of
type' NHS innovation, enabling patients to view their Health
Records on their own iPhone. Our acquisitions continue to perform
and integrate well, as shown by MicroGuide achieving its earn out
ahead of schedule. We have an exciting and active pipeline of
acquisition opportunities which will further enhance the product
offering of the Group.
"Ongoing growth in user engagement, amongst doctors and patients
alike, is testament to the value healthcare stakeholders are
getting across the range of Induction products. This progress,
allied to our robust balance sheet, future contracted revenue, a
major collaboration with Cerner and NHSX Clinical Communications
framework , supports confidence of further progress in the
remainder of the financial year."
(1) https://www.royalfree.nhs.uk/my-rfl-care-patient-portal/
S
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
About Induction
Induction (INHC.LSE) is a UK based health IT company with
leading user traction enabling the digital transformation of
secondary care. This is done by rolling up smaller solutions that
are loved by doctors, staff and patients and giving those solutions
the infrastructure, credibility and interoperability they need to
achieve commercial success at scale. Induction Switch is the number
one healthcare collaboration app in the UK, used by the majority of
hospital doctors. Over 190,000 doctors across multiple territories,
including the UK, Ireland, Australia and South Africa - as well as
a rapidly growing cohort of over 140,000 patients - choose to use
Induction products over traditional methods of managing care.
CEO REVIEW
Induction has performed strongly, once again, in the last six
months. We have grown user engagement substantially and established
strong commercial momentum. Not only have we generated our first
full year of revenues, we are seeing revenue growth across all of
our platforms.
We continued to be user-led, focused on growing our core user
base across the Switch, MicroGuide and Induction Zesty platforms,
delivering a range of new features and additional services to
support users' work during the challenges of the COVID-19
pandemic.
In the reporting period, the Group's revenue increased to
GBP0.6m (H1 2020: nil). MicroGuide continued to build recurring
revenue through the longer-term nature of its contracts. The
six-month period saw revenue generation from Induction Switch for
the first time. The Group has created a new sales team building
strong foundations that we expect to deliver sustained growth in
both annual recurring revenue and future contracted revenue in the
coming six months, particularly via our partnership with Cerner and
our acceptance onto the centrally funded NHSX Clinical
Communications framework.
The growth in our platforms has increased our reach across our
key NHS markets. Induction products are growing into 'digital
utilities' used multiple times a day by healthcare professionals
and patients, saving them valuable time and helping drive better
outcomes for patients.
As the NHS 'restarts' following the intense and ongoing
disruption of COVID-19, there is significant focus on using digital
platforms to streamline care and we believe the Group is well
placed to support our NHS customers achieve their objectives during
and after the current COVID-19 pandemic. Our people have adapted
well to the challenges of working from home and reduced customer
face to face meetings while in parallel successfully integrating
the pre-existing Induction and Zesty businesses.
Induction Zesty is well positioned to deliver solutions to NHS
hospitals in response to a growing demand for remote monitoring and
online triage tools. Induction Switch and MicroGuide, continue to
allow multi-disciplinary teams to communicate, collaborate and
share clinical guidelines in a secure and locally administrated
environment.
Strategy execution
In the last six months we have continued to execute our 'buy and
build' strategy successfully, evidenced by the Zesty acquisition in
June 2020 and Horizon Strategic Partners Limited achieving their
earnout ahead of schedule. As a consequence, the Group is
benefitting from the economies of scale as well as the synergies
derived from operating across a similar customer base.
Outlook and current trading
The business has created new commercially focused teams to
accelerate sales as we look to capitalise on the Cerner VAR
partnership and Induction Switch's inclusion in the NHSX Clinical
Communication Framewor k . We aim to drive revenues from the
ongoing development of Switch and MicroGuide through the loyal
MicroGuide customer base.
Sales momentum, recurring revenue, our pipeline of orders with
multi-year contracts, and a healthy acquisition pipeline provide a
foundation for future growth. This allied to growth in registered
users and user engagement underpins our confidence of further
progress in the remainder of the financial year.
FINANCIAL REVIEW
The first half of the financial year has been a period of
operational resilience, revenue growth, and integration of the
Zesty acquisition. While the COVID-19 pandemic saw the business
adapt to the "new normal" of operational practices and the joining
of two businesses and cultures, the Group was able to focus on
building a new organisational structure that has set the
foundations for the business to drive commercial performance.
We have prudent management of costs and cashflow while the
business drives revenue and invests in further development of its
apps. Overall, the business delivered a good performance in the
period as it successfully executed on its strategy of complementary
acquisitions and organic revenue growth. As a consequence of this
active investment the Group recognised GBP0.6m of sales in the
period (H1 2020: nil) and has deferred revenues on the balance
sheet of GBP0.6m (H1 2020: nil).
Switch secured its first contract that also contributed to
revenue in the period. The Group recurring revenue for the period
accounted for 78.7% of the total revenue, with the remaining 21.3%
being one off service fees to implement the Zesty app. The
MicroGuide app had revenue for the period of GBP0.3m, which
delivered growth of 100% against prior year. Since the acquisition
of Zesty in June 2020, the platform has increased its annually
recurring revenue run rate by 54% to September 2020.
Loss before Tax at GBP3.2m (H1 2020: loss before tax GBP2.2m),
increased on last year primarily reflecting the combined investment
in product development following the acquisition of the Zesty. The
adjusted loss before tax for the Group was GBP2.3m (H1 2020:
adjusted loss before tax GBP1.9m) having adjusted for the
amortisation of acquired intangibles of GBP0.6m (H1 2020: GBP0) and
acquisition costs of GBP0.3m (H1 2020: GBP0.3m) The Group also
capitalised software development expenditure of GBP0.7m (H1 2020:
GBP0.2m) during the period.
To maintain its strong financial position, the Group is focused
on tight cash and working capital management as one of its key
priorities. Cash at 30 September was GBP5.0m (H1 2020: GBP13.6m).
During the six month period the Group used GBP2.4m in its operating
activities. In addition, the Group invested GBP2.0m in
acquisitions, consisting GBP1.5m relating to the final earnout
payment for MicroGuide (Horizon Strategic Partners Limited) and
GBP0.5m being the cash component of the Zesty acquisition. The
Group had no borrowing at 30 September 2020, having repaid in full
a high interest bearing loan of GBP0.5m inherited as part of the
Zesty acquisition.
Condensed Consolidated Statement of Comprehensive Income
(Unaudited)
For the six months ended 30 September 2020
30 September 30 September
2020 2019
(Restated)
Note GBP000 GBP000
------------- -----------------------------
Revenue from contracts with
customers 3 582 -
Cost of sales (304) (48)
------------------------------------ ------------- -----------------------------
Gross Profit/(loss) 278 (48)
Other Income - -
Sales and marketing expenses (296) (76)
Development expenses (991) (518)
Administrative expenses (2,087) (1,583)
Other operating expenses (91) -
------------------------------------
Operating loss (3,187) (2,225)
------------------------------------ ------------- -----------------------------
Finance Costs (4) -
Finance Income 2 17
------------------------------------
Loss before tax (3,189) (2,208)
------------------------------------ ------------- -----------------------------
Taxation 5 7 -
------------------------------------
Loss for the financial year/period (3,182) (2,208)
------------------------------------ ------------- -----------------------------
Attributable to:
Equity holders of the parent (3,182) (2,208)
------------------------------------
(3,182) (2,208)
------------------------------------ ------------- -----------------------------
Loss per share from operations
------------------------------------ ------------- -----------------------------
- Basic 6 (0.09) (0.10)
- Diluted 6 (0.09) (0.10)
------------------------------------ ------------- -----------------------------
Amounts presented for the period 30 September 2019 have been
restated, refer Note 1.
Condensed Consolidated Statement of Comprehensive Income
(Unaudited)
For the six months ended 30 September 2020
30 September 30 September
2020 2019
(Restated)
Note GBP'000 GBP'000
------------- -------------
Loss for the year/period (3,182) (2,208)
---------------------------------------------- ------------- -------------
Other comprehensive income
Items that may be reclassified to profit
or loss
Foreign currency translation differences (4) (1)
Reclassified to profit and loss during
the period (7) 0
Other comprehensive income for the financial
year/period (11) 0
---------------------------------------------- ------------- -------------
Total comprehensive loss for the financial
year/period (3,193) (2,209)
---------------------------------------------- ------------- -------------
Attributable to:
Equity holders of the parent (3,193) (2,209)
(3,193) (2,209)
---------------------------------------------- ------------- -------------
Loss per share:
Basic loss per share (GBP) 6 (0.09) (0.10)
Diluted loss per share (GBP) 6 (0.09) (0.10)
Amounts presented for the period 30 September 2019 have been
restated, refer Note 1.
Condensed Consolidated Statement of Financial Position
As at 30 September 2020
30 September 2020 31 March 2020
Unaudited Audited
Note GBP'000 GBP'000
------------------ --------------
Non-current assets
Goodwill 9 9,928 1,553
Intangible Assets 9 6,550 2,349
Property, Plant and Equipment 18 -
Deferred tax assets 5 871 97
-----------------------------------------------------
17,367 3,999
----------------------------------------------------- ------------------ --------------
Current assets
Trade and other receivables 10 396 140
Contract Assets 171 23
Cash and cash equivalents 11 5,014 10,718
-----------------------------------------------------
5,581 10,881
----------------------------------------------------- ------------------ --------------
Total assets 22,948 14,880
----------------------------------------------------- ------------------ --------------
Non-current liabilities
Contract liabilities 274 38
Deferred tax liabilities 1,088 321
-----------------------------------------------------
1,362 359
----------------------------------------------------- ------------------ --------------
Current liabilities
Trade and other payables 12 820 402
Contract liabilities 298 263
Loans and borrowings 14 - -
Other financial liabilities 14 - 1,409
-----------------------------------------------------
1,118 2,074
----------------------------------------------------- ------------------ --------------
Total liabilities 2,480 2,433
-----------------------------------------------------
Net assets/(liabilities) 20,468 12,447
----------------------------------------------------- ------------------ --------------
Equity attributable to equity holders of the parent
Share capital 13 210 148
Share premium 13 29,321 18,432
Translation reserve (4) 7
Other reserves 356 94
Merger reserve (10) (10)
Accumulated deficit (9,405) (6,224)
-----------------------------------------------------
20,468 12,447
----------------------------------------------------- ------------------ --------------
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 September 2020
Share Share Translation Other Merger Accumulated Total
Capital Premium reserve reserve reserve deficit equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------ -------- -------- ------------ -------- -------- ------------ --------
Balance at 1
April 2020 148 18,432 7 94 (10) (6,224) 12,447
Total comprehensive
loss for the
period
Loss for the
period - - - - - (3,182) (3,182)
Other comprehensive
loss for the
period - - (11) - - - (11)
Total comprehensive
loss for the
period - - (11) - (3,182) (3,193)
---------------------------------- -------- -------- ------------ -------- -------- ------------ --------
Transactions
with owners,
in their capacity
as owners
Issue of ordinary
shares as consideration
for a business
combination 62 10,953 - - - - 11,015
Share-issue costs - (64) - - - - (64)
Equity-settled
share-based payments - - - 262 - - 262
Total contributions
by and distributions
to owners 62 10,889 - 262 - - 11,213
---------------------------------- -------- -------- ------------ -------- -------- ------------ --------
Balance at 30
September 2020 210 29,321 (4) 356 (10) (9,405) 20,468
---------------------------------- -------- -------- ------------ -------- -------- ------------ --------
Share Share Translation Other Merger Accumulated Total
Capital Premium reserve reserve reserve deficit equity
(Restated) (Restated) (Restated)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- ----------- ------------ -------- ------------------- ------------ --------
Balance at 1
April 2019 66 - (1) - - (2,707) (2,642)
Total comprehensive
loss for the
period
Loss for the
period - - - - - (2,208) (2,208)
Other comprehensive
loss for the
period - - 1 - - - 1
Total comprehensive
loss for the
period - - 1 - - (2,208) (2,207)
------------------------ -------- ----------- ------------ -------- ------------------- ------------ --------
Transactions
with owners,
in their capacity
as owners
Reserves arising
on acquisition
of subsidiaries - - - - (10) 10 -
Pre-IPO shares
issued 9 1,991 - - - - 2,000
Shares issued
to settle loan
notes 9 1,991 - - - - 2,000
Issue of ordinary
shares as
consideration
for a business
combination 2 398 - - - - 400
IPO shares issued 62 14,521 - - - - 14,584
Share-issue costs - (469) - - - - (469)
Equity-settled
share-based payments - - - 39 - - 39
Total contributions
by and distributions
to owners 82 18,432 - 39 (10) 10 18,554
------------------------ -------- ----------- ------------ -------- ------------------- ------------ --------
Balance at 30
September 2019 148 18,432 - 39 (10) (4,905) 13,705
------------------------ -------- ----------- ------------ -------- ------------------- ------------ --------
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 September 2020
For the period ended For the period ended
Note 30 September 2020 30 September 2019
(Restated)
GBP000 GBP000
-------------------------------------------------------------- --------------------- ---------------------
Cash flows from operating activities
Loss for the financial year/period (3,182) (2,208)
Adjustments for:
Amortisation and impairment of intangible assets 561 21
Finance costs 4 -
Finance income (2) (17)
Share-based payment expense 262 -
Net foreign exchange differences (10) -
Fair value adjustment of contingent consideration 91 -
Taxation (7) -
(2,283) (2,204)
--------------------- ---------------------
Decrease / (Increase) in trade and other receivables and contract
assets (75) 165
(Decrease) / Increase in trade and other payables and contract
liabilities (79) (395)
Interest received 2 17
Interest paid (4) -
Income taxes received - -
Income taxes paid - -
Net cash used in operating activities (2,439) (2,417)
---------------------------------------------------------------------- --------------------- ---------------------
Cash flows from investing activities
Payments for acquiring businesses, net of cash acquired (1,987) -
Payment of software development costs (687) -
Acquisitions of property, plant and equipment (3) -
Net cash from investing activities (2,677) -
-------------------------------------------------------------- --------------------- ---------------------
Cash flow from financial activities
Repayments of loans and borrowings (514) -
Share issue costs (64) -
Share issue proceeds - 15,809
Net cash from financing activities (578) 15,809
---------------------------------------------------------------------- --------------------- ---------------------
Net increase in cash equivalents (5,694) 13,392
Cash and cash equivalents at the beginning of the financial
year/period 10,718 169
Effects of exchange rate changes on cash and cash equivalents (10) (1)
Cash and cash equivalents at the end of the financial year/period 5,014 13,560
====================================================================== ===================== =====================
Amounts presented for the period 30 September 2019 have been
restated, refer Note 1.
Notes to the Condensed Consolidated Interim Financial
Statements
1. General Information
Reporting entity
Induction Healthcare Group PLC ("Induction" the "Parent" or the
"Company") is publicly listed on the AIM market of the London Stock
Exchange ("LSE") incorporated, domiciled and registered in the
United Kingdom. The registered number is 11852026 and the
registered address is 20 St. Dunstan's Hill, London, United
Kingdom, EC3R 8HL. Induction is a leading healthcare technology
company helping to streamline delivery of care by providing
software to healthcare professionals.
As of 30 September 2020, Induction Healthcare Group PLC
comprised of six legal subsidiaries, that are majority owned and
controlled, and therefore fully consolidated in the Company's
consolidated financial statements. Details of the Company's
subsidiaries are included in note 8.
Basis of preparation
These interim financial statements have been prepared and
approved by the directors in accordance with International
Financial Reporting Standards as adopted by the EU ("Adopted
IFRSs"). They do not include all the information required for a
complete set of IFRS financial statements. However, selected
explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in the
Group's financial position and performance since the last annual
consolidated financial information included in the annual report
and accounts as of and for the year ended 31 March 2020.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Parent obtained control
and continue to be consolidated until the date when such control
ceases. The financial information of the subsidiaries is prepared
for the same reporting period as the Parent, using consistent
accounting policies. All intra-group balances, transactions,
unrealised gains and losses resulting from intra-group transactions
are eliminated in full.
Changes in the Parent's interest in a subsidiary that do not
result in a loss of control are accounted for as equity
transactions.
When the Parent loses control over 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.
These interim financial statements are unaudited and were
approved by the Board of Directors and authorised for issue on 26
November 2019 and are available on the Company's website at
www.inductionhealthcare.com under "Investors - Financial reports
& publications".
Going concern
For the period ended 30 September 2020, the group made a loss of
GBP3,188,355 and had net current assets of GBP4,462,519. 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 will have sufficient funds to continue
to meet its liabilities as they fall due for at least twelve months
from the date of approval of the financial statements and have
therefore prepared the financial statements on a going concern
basis.
Restatement of prior period
During the year ended 31 March 2020, and after the condensed
consolidated financial statements for the 6-month period to 30
September 2019 had been reported, the Group finalised the purchase
price allocation for the acquisition of Podmedics Limited under
IFRS 3, within the measurement period of one year. This resulted in
a restatement of the period to 30 September 2019.
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.
An intangible asset of GBP500,000 was previously recognised in
the condensed consolidated interim financial statements for the
period ended 30 September 2019. As part of the completion of the
purchase price allocation, this was allocated to individually
identifiable intangible assets, with the remainder of the
consideration being allocated to goodwill. In addition, the
individually identified intangible assets were amortised from the
date of acquisition.
The impact of the restatement on the period to 30 September 2019
is as follows:
Period to 30 September 2019
GBP000
Increase to goodwill 417
Decrease to intangible assets (417)
Increase to amortisation expense 12
In addition, 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 was accounted for as a common control
transaction in the financial statements for the year ended 31 March
2020 and resulted in a negative merger reserve of GBP10,388. The
results for the 6 month period to 30 September 2019 have been
restated for the effect of recognising the merger reserve. The
impact is a decrease in the merger reserve of GBP10,388, and a
corresponding decrease in accumulated deficit. The impact is net
Nil on total equity.
2. Accounting policies
2.1 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.
2.2 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.
2.3 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.
2.4 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.
2.5 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.
2.6 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 Group plc's own equity instruments, it is either a
non-derivative that includes no obligation to deliver a variable
number of Induction Healthcare Group 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 Group
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.
2.7 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 6-month period to 30 September 2020, 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
------------------- ------------------- ------------------- -------------------
2.8 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.
2.9 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.
2.10 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.
2.11 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 period. 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 period.
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
2.12 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.
2.13 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 6-month period ended 30 September
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. Revenue
Disaggregated revenue information
Period to 30 September 2020 Period to 30 September 2019
GBP000 GBP000
Geographical markets
United Kingdom 529 -
Europe 4 -
United States 13 -
Rest of World 37 -
-------------------------------------------- ---------------------------- ----------------------------
Total Revenue from contracts with customers 582 -
-------------------------------------------- ---------------------------- ----------------------------
4. Share Based Payments
On the admission to the AIM market 22 May 2019, the Group
established the Company Share Option Plan ("CSOP") that awarded
executive directors, management and other employees share options.
The award is granted in the form of share options over ordinary
share of 0.5pence each with the intent of normal vesting after a
minimum period of three periods from the date of grant. Vesting is
subject to continued services of the participant and may be subject
to performance conditions. No options issued during the period had
any vesting conditions other than service conditions attached. The
Group accounts for the plan as and equity settled plan. There were
no cancellations or modifications to the awards in the 6-month
period to 30 September 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
period is:
Period to 30 September 2020 Period to 30 September 2019
GBP000 GBP000
Expense arising from equity settled share base
payment transactions 262 39
---------------------------------------------------- ----------------------------- -----------------------------
Total expense arising from share-based payment
transactions 262 39
---------------------------------------------------- ----------------------------- -----------------------------
Movements during the period
The following table illustrates the number and weighted average
exercise prices (WAEP) of, and movements in, share options during
the period.
Period to 30 September 2020 Period to 30 September 2020
Number WAEP (GBP)
Outstanding at 1 April 2020 767,402 0.005
Granted during the period 1,753,651 0.005
Forfeited during the period (104,347) 0.005
Exercised during the period - -
Expired during the period - -
---------------------------------- ----------------------------- -----------------------------
Outstanding at 30 September 2020 2,416,706 0.005
----------------------------------- ----------------------------- -----------------------------
Exercisable at 30 September 2020 - -
Period to 30 September 2019 Period to 30 September 2019
Number WAEP (GBP)
Outstanding at 1 April 2019 - -
Granted during the period 405,821 0.005
Forfeited during the period (26,086) 0.005
Exercised during the period - -
Expired during the period - -
---------------------------------- ----------------------------- -----------------------------
Outstanding at 30 September 2019 379,735 0.005
----------------------------------- ----------------------------- -----------------------------
Exercisable at 30 September 2019 - -
The weighted average remaining contractual life for the share
options outstanding as at 30 September 2020 was 3 years.
The weighted average fair value of options granted during the
period was GBP1,081,543.
All options issued during the period have an exercise price of
GBP0.005.
The inputs used in the Black-Scholes-Merton valuation model for
the period ended 30 September 2020 are:
Period to 30 September 2020
Dividend yield (%) 0%
Expected volatility (%) 50%
Risk-free interest rate (%) 0.62%
Expected life of share options (periods) 3.94
Weighted average share price (GBP) 0.92
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
the same industry 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.
5. Taxation
30 September 30 September
2020 2019
GBP000 GBP000
Current Tax:
UK corporation tax on losses of year - -
Deferred Tax:
Origination and reversal of temporary differences 7 -
--------------------------------------------------- ------------ ------------
Tax on loss on ordinary activities 7 -
--------------------------------------------------- ------------ ------------
Reconciliation of effective tax rate
30 September 30 September
2020 2019
GBP000 GBP000
Profit / (Loss) on ordinary activities for the period, before tax (3,189) (2,198)
Tax at the UK corporation tax rate of 19% 619 418
Non-deductible expenses (47) (2)
Share-based payments (49)
Current year losses for which no deferred tax asset was recognised (530) (416)
--------------------------------------------------------------------
Total tax credit 7 -
-------------------------------------------------------------------- ------------ ------------
A net deferred tax liability of GBP214,552 has been recognised
in relation to intangible assets acquired in a business
combination.
A deferred tax asset of GBP2,223,743 has not been recognised due
to uncertainty that the asset will be utilised in future as the
Group is still in a loss-making position. The unrecognised deferred
tax asset includes those in relation to tax losses of
GBP10,967,497.
Deferred tax balances have been recognised at the rate expected
to apply when the deferred tax is forecast to be utilised based on
substantively enacted rates at the balance sheet date.
6. Earnings per share
The calculation of basic and fully diluted earnings per share
has been based on the following loss attributable to ordinary
shareholders and weighted-average number of ordinary shares
outstanding.
Loss attributable to ordinary shares (basic and diluted)
30 September 30 September
2020 2019
GBP000 GBP000
(Restated)
Loss attributable to ordinary shares (basic and diluted) (3,182) (2,208)
------------ ------------
(3,182) (2,208)
------------ ------------
Amounts presented for the period 30 September 2019 have been
restated, refer Note 1.
Weighted average number of ordinary shares (basic and
diluted)
Period to 30 September 2020 Period to 30 September 2019
Shares in issue on 1 April 29,626,201 65,591
Share split on 7 May 2019 13,052,609
Shares issued on 7 May 2019 3,826,086
Shares issued on 22 May 2019 on IPO 12,681,915
Shares issued in a business combination 12,424,527
----------------------------------------------------
Issued ordinary shares as at the end of the period 42,050,728 29,626,201
---------------------------------------------------- -------------------------------- ----------------------------
Weighted-average number of ordinary shares (basic
and diluted) 37,366,070 22,609,605
---------------------------------------------------- -------------------------------- ----------------------------
Basic loss per share (0.09) (0.10)
Diluted loss per share (0.09) (0.10)
7. Business Combinations
Acquisition of Zesty Limited
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. The New Ordinary Shares represent approximately 41.9 per
cent. of the issued share capital of the Company pre the
acquisition of Zesty Limited and represent approximately 29.5 per
cent of the Company's current issued share capital. The New
Ordinary Shares will 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.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of
Zesty Limited at the date of acquisition were:
Note Fair Value recognised on acquisition
GBP000
Assets
Non-current assets
Intangible Assets 9 4,072
Other non-current assets 791
Current assets
Cash 13
Other current assets 310
5,186
-------------------------------------
Liabilities
Non-current liabilities 417
Current liabilities 1,630
2,047
-------------------------------------
Total identifiable net assets at fair value 3,139
Goodwill arising on acquisition 8,375
Purchase Consideration transferred 11,514
=====================================
Purchase consideration
GBP'000
Cash consideration 500
Equity consideration 11,014
Total consideration 11,514
========
Analysis of cash flows on acquisition
GBP'000
Cash consideration (500)
Transaction costs of the acquisition (included in cash flows from operating activities) (269)
Net cash acquired with the subsidiary (included in cash flows from investing activities) 13
Transaction costs attributable to the issuance of shares (included in cash flows from financing
activities, net of tax) (64)
Net cash flow on acquisition (820)
========
8. Investments in subsidiaries
Company Registered number Principal Country of Ownership
activities incorporation
30 September 2020 31 March 2020
Induction Investment Holding
Healthcare Limited 11232772 Company United Kingdom 100% -
Induction 11237890 Provision of United Kingdom 100% 100%
Healthcare (UK) software to
Limited healthcare
providers
Induction 625119397 Provision of Australia 100% 100%
Healthcare Pty Ltd software to
healthcare
providers
Podmedics Limited 6840040 Dormant United Kingdom 100% 100%
Horizon Strategic 6285278 Provision of United Kingdom 100% 100%
Partners Limited software to
healthcare
providers
Zesty Limited 08294659 Provision of United Kingdom 100% -
software to
healthcare
providers
9. Intangible assets
Goodwill Technology Users Tradename Development costs Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
Balance at 31 March 2020 1,553 313 919 264 1,187 4,236
Recognised on acquisitions 8,375 2,245 379 369 1,998 13,366
Internally developed - - - - 687 687
At 30 September 2020 9,928 2,558 1,298 633 3,872 18,289
---------------------------- --------- ----------- ------- ---------- ------------------ -------
Amortisation
Balance at 31 March 2020 - 42 53 15 224 334
Recognised on acquisitions - 2 - - 917 919
Provided during the year - 104 77 27 350 558
At 30 September 2020 - 148 130 42 1,491 1,811
---------------------------- --------- ----------- ------- ---------- ------------------ -------
Net book value
At 31 March 2020 1,553 271 866 249 963 3,902
---------------------------- --------- ----------- ------- ---------- ------------------ -------
At 30 September 2020 9,928 2,410 1,168 591 2,381 16,478
---------------------------- --------- ----------- ------- ---------- ------------------ -------
10. Trade and other receivables
30 September 2020 31 March 2020
GBP000 GBP000
Receivables from third-party customers 240 80
Other receivables 148 53
Prepayments 8 7
------------------ --------------
396 140
------------------ --------------
11. Cash and cash equivalents
30 September 2020 31 March 2020
GBP000 GBP000
Cash at banks and on hand 1,014 671
Short-term deposits 4,000 10,047
------------------ --------------
Cash and cash equivalents per the statement of financial position and cash
flow statement 5,014 10,718
------------------ --------------
12. Trade and other payables
30 September 2020 31 March 2020
GBP000 GBP000
Trade payables 202 39
Accruals 495 299
Social security and other taxes 84 49
Related parties - -
Other payables 39 15
------------------ --------------
820 402
------------------ --------------
Included within trade and other payables is GBPnil expected to
be settled in more than 12 months.
13. Capital and Reserves
Share Capital
No. of shares ('000)
In issue at 1 April 2020 29,626,610
Issue of ordinary shares as consideration for a business combination 12,424,527
---------------------
In issue at 30 September 2020 42,051,137
---------------------
Share Premium
GBP'000
At 1 April 2020 18,433
Issue of ordinary shares as consideration for a business combination 10,952
Transaction costs on issue of shares (64)
--------
At 30 September 2020 29,321
--------
14. Financial Instruments
Loans and Borrowings
As part of the purchase agreement with the previous owners of
Zesty Limited, the Group acquired the loans and borrowings of Zesty
Limited.
The loans were repaid in full during the period. Early repayment
penalties of GBP50,000 were incurred upon settlement and have been
included in administrative expenses.
GBP000
Balance at 1 April 2020 -
Acquired in business combination 514
Settled during the period (514)
Balance at 30 September 2020 -
=======
Financial Liabilities at fair value through profit and loss
During the period, the Group settled the contingent
consideration liability arising in the prior year from the
acquisition of Horizon Strategic Partners Limited. Losses on
remeasurement of GBP91,000 were included in administrative
expenses.
GBP000
Balance at 1 April 2020 1,409
Loss on remeasurement to fair value recognised in other operating expenses 91
Settled during the period (1,500)
Balance at 30 September 2020 -
========
15. Related Parties
Transactions with key management personnel
The compensation of key management personnel (directors) is as
follows:
30 September 2020 30 September 2019
GBP000 GBP000
Short-term employee benefits 431 260
Post-employment pension and other benefits 25 27
Termination benefits - -
Share based payment transactions 148 12
Key management remuneration including social security costs 604 299
------------------ ------------------
Total compensation paid to key management personnel 604 299
------------------ ------------------
16. Subsequent Events
Strategic Collaboration
On 12 October, the Group announced a strategic collaboration
with Cerner Corporation (Nasdaq: CERN), a global health care
technology company.
Zesty, Induction's market-leading patient portal for hospitals,
and Cerner will develop a joint patient engagement solution to help
NHS trusts deliver an easier, quicker and more efficient service
for patients. This collaboration will closely align existing
patient facing technology in the UK and Ireland, building on the
benefits of Cerner's patient portal solution Healthelife SM and
Zesty's integration capability with Cerner's electronic health
record (EHR), Cerner Millennium(R).
As part of the value-added reseller (VAR) agreement, NHS Trusts
that are already Cerner clients will have access to Zesty's
market-leading patient portal under their existing contractual
arrangements.
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END
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