Induction Healthcare Group PLC

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

Audited Final Results

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

Financial Highlights

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

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

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

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

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

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

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

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

Operational Highlights

·    £25 million fundraise through a placing of 35,714,285 new Ordinary Shares

o  Completion of the acquisition of Attend Anywhere Pty Ltd in June 2021 for a cash consideration of £16.4 million plus the issue of 14,285,714 consideration shares with a value of £9.0m

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

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

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

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

Post period end highlights

·    Appointment of Christopher Samler as Non-Executive Chairman

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

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

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

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

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

Annual Report and Accounts and Notice of AGM

The Annual Report and Accounts and notice of AGM will be available later this morning on the Company's website; https://inductionhealthcare.com/investors/financial-reports-and-publications/.

Copies will be posted to shareholders in due course.

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

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

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

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

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

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

ENQUIRIES

About Induction - www.inductionhealthcare.com

Induction (AIM: INHC) Induction delivers a suite of software solutions through a single integrated platform that transforms care delivery. Our system-wide applications help healthcare providers and administrators to deliver care at any stage remotely as well as face-to-face - giving the communities they serve greater flexibility, control and ease of access. Purpose-built for integration with leading Electronic Medical Record (EMR) platforms, our products offer immediate stand-alone value that becomes even greater when integrated with pre-existing systems.

Used at scale by national and regional healthcare systems, as well non-health government services, our applications are relied upon by hundreds of thousands of clinicians and millions of patients across almost every hospital in the British Isles. 

Chair Statement

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

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

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

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

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

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

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

Christopher Samler

Non-Executive Chairman

28 November 2022

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

CEO Statement

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

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

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

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

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

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

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

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

Our market focus

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

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

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

Annually recuring revenue

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

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

Video consultations - Induction Attend Anywhere

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

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

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

Digital patient engagement - Induction Zesty

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

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

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

Our clinical apps business

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

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

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

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

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

International growth

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

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

Our strategic pillars for growth

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

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

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

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

People

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

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

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

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

Outlook

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

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

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

James Balmain

Chief Executive Officer

28 November 2022

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

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

Financial review

Revenue

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

£7.9m (2021: £1.4m, restated¹⁰).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Operating Costs

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

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

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

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

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

Core performance measures

Core performance measures are alternative performance measures (APM) which are adjusted and non-IFRS measures. These measures cannot be derived directly from our consolidated financial statements. We believe that the following non-IFRS performance measures, when provided in combination with reported performance, will provide investors, analysts and other stakeholders with helpful complementary information to better understand our financial performance and our financial position from period to period. The measures are not substitutable for IFRS results and should not be considered superior to results presented in accordance with IFRS.

We considered the adjusting items, including explanations of why they were either not related to the underlying performance of the business or impacted the comparability of the Group's results year-on-year. We also reviewed the FRC's guidance, and considered adjusting items used by the Group's peers and have concluded that the appropriate disclosure of those items has been included.

The Group incurred several exceptional items during the year as per the table below which shows adjusted operating profit /(loss) before depreciation, amortisation, impairment, share based payments and exceptional costs of £(4.2)m (2021: £(4.3)m (restated¹²).

1.    These costs are directly attributable to business combinations and are excluded from underlying performance as they would not have been incurred had the business combination not occurred. They do not relate to the underlying trading of the Group and are added back to aid comparability of the Group's profitability year-on-year.

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

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

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

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

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

Cash

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

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

The Directors regularly monitor cash usage and forecast cashflows to ensure that the projected business needs are supported, and future acquisitions can be delivered as part of the overall strategy to grow the business. The liquidity of the Group is sufficient to meet the cash needs of the business as they become due, and management have performed a going concern analysis with no material uncertainties noted (refer to note 1.2 in the consolidated financial statements for further information).

Assets and Liabilities

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

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

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

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

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

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

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

Guy Mitchell

Chief Financial Officer

28 November 2022

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2022