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Totally PLC (TLY)

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Tuesday 07 July, 2020

Totally PLC

Preliminary results

RNS Number : 1882S
Totally PLC
07 July 2020
 

7 July 2020

Totally plc

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

Preliminary results for the 12-month period ended 31 March 2020

Totally plc (AIM: TLY), the provider of a range of healthcare services across the UK and Ireland, is pleased to announce its results for the 12-month period ended 31 March 2020.

Operational highlights

· Successfully completed acquisition of Greenbrook Healthcare in June 2019 via reverse takeover

·Greenbrook Healthcare secured new Urgent Treatment Centre contract in Watford for the Company's Urgent Care division

· Secured largest dermatology contract to date for About Health in Manchester

·Launched new Insourcing start-up business, Totally Healthcare, in October 2019 delivering Insourcing services across the UK and Ireland

·Continued to provide frontline healthcare services supporting the NHS to manage the COVID-19 pandemic

· 97% of registered services rated as 'Good' by the Care Quality Commission (CQC)

Financial highlights

· Revenue up 35.8% to £105.9m (2019: £78.0m)

· Gross margin improved to 18.1% (2019: 15.5%)

· Underlying EBITDA* up 265% to £4.0m** (2019: £1.1m)

· Loss before tax of £3.4m (2019: £1.8m)

· Cash up 19% to £8.9m as at 31 March 2020 (31 March 2019: £7.5m)

· Paid a maiden interim dividend to shareholders in February 2020 of 0.25p per share

*Earnings before interest, tax, depreciation and amortisation, before exceptional items outlined in the notes to the financial statements

**Includes £1.6m impact relating to implementation of IFRS 16

Post period end highlights

· Significant contract extensions awarded to Vocare worth a total of £19.5m

· Mobilisation and restart of Planned Care and Insourcing care divisions

· Continued support to NHS across all operating divisions in response to COVID-19

·Maiden final dividend of 0.25 pence per share proposed bringing total dividend for the year to 0.50 pence per share

 

CHAIRMAN'S STATEMENT

The year ended 31 March 2020 was a good year for Totally delivering profit before depreciation and amortisation during times of unrivalled political instability which included BREXIT and a General Election followed by the worldwide pandemic of COVID-19 which has impacted on every person and every business.

Totally's strategy has always been to support the NHS to manage the pressures and demands placed upon healthcare services. The COVID-19 pandemic is no exception, and everyone at Totally has stood shoulder to shoulder with the NHS and delivered patient-facing services throughout this period and continues to do so. At the time of writing, we are still very much in a period of uncertainty as everyone works together to ensure services are robust and ready for any second wave of demand.  What is very clear to the Board of Totally is that our strategy has been, and continues to be, correctly focused during these unprecedented times.

Whilst we expect the business to grow in 2021 and beyond, due to current run rates and new contract wins, the timing of new tenders, which is a key part of our growth plans, remains uncertain due to the COVID-19 pandemic and its impact on the NHS. We are therefore unable to give firm guidance at this stage on our growth expectations for the current financial year and the Board has considered it appropriate for market forecasts to be withdrawn at this time. The medium to long term outlook and trajectory of the business however remains unchanged. Shareholders should also be pleased that we expect continued growth in operating cash flow and the Board therefore remain committed not only to the payment of dividends but also in continuing with our progressive dividend policy. Accordingly, the Board is pleased to propose a maiden final dividend of 0.25 pence per share taking the total dividends for the year to 0.50 pence per share. Subject to shareholder approval at the upcoming AGM the final dividend will be paid in October 2020.

With the expertise of our leadership teams, we will continue to ensure our services respond to any changes in demand we receive and that we support our staff to deliver exceptional services in partnership with the NHS and other public sector bodies across the UK and Ireland. Whilst the way we secure new business has changed, the demand for our services is not expected to diminish.

During the year, we completed the acquisition of Greenbrook Healthcare, which increased our presence across London in Urgent Care. You will read throughout this report the progress that's been made with integrating Greenbrook Healthcare into our Urgent Care Division and harnessing technology will continue to build to our market-leading position.

The Group also launched its Insourcing business, Totally Healthcare, which during its first few months of operations secured contracts across the UK and Ireland delivering services to provide bespoke services to reduce hospital waiting lists. Already its reputation is for delivering services quickly, efficiently and of high quality to every patient treated. Of course, these services were put on hold during the pandemic as all elective healthcare services were suspended to focus on managing COVID-19. Totally Healthcare is now back working and supporting hospitals plan for how they reduce the waiting times and waiting lists which have increased during the first half of 2020.

We all know that cash is a seen as a barometer of the success of any business and we reported £8.9m cash at the bank at year end, an accurate reflection of the efforts of all our support teams to ensure we operationally deliver across the business.

All of this has been achieved during the most testing times which reflects the outstanding commitment and expertise of everyone across the Group for which I commend them. We must also thank our investors for their continued support which enables us to continue to deliver our strategic intentions of becoming a partner of choice for the delivery of healthcare services across the UK.

Bob Holt OBE

Chairman

7 July 2020

 

CHIEF EXECUTIVE OFFICER'S REVIEW

Building strong partnerships with a reputation for delivering high quality care  even during the most difficult  times

I am pleased to report excellent progress across the Group with a strong set of results during a year when we saw many external challenges including the Covid-19 pandemic which impacted all of our businesses towards the end of the reporting period.

Our management team has seized every opportunity presented to them to strengthen our market position and support the delivery of healthcare services across our three divisions.

Demand for our services continues to be strong, on the back of our reputation for delivery of high-quality services. 26 out of 27 of our registered services with the Care Quality Commission are rated as good, an excellent position to grow from and it has been pleasing to see continuing improvement in our CQC ratings reflecting the high-quality care we provide.

Our three distinct business divisions - Urgent Care, Planned Care and Insourcing - provide a portfolio of healthcare services across the UK and Ireland built on the expertise and commitment of our people, ensuring the patients we treat receive the highest quality of care quickly and efficiently.  We partner with healthcare organisations across the UK supporting them to manage demand for services.

We continue to support the NHS by working on the frontline delivering services to manage the demand from the Covid-19 pandemic but also respond to the need to reduce waiting times and waiting lists due to the suspension of elective healthcare services.

Whilst we expect the business to grow during 2020/21 and the medium to long term outlook for the business remains unchanged, we are unable to give clear guidance at this stage of the impact of COVID-19 on the current financial year and as such the Board has resolved to withdraw market forecasts at this time. Each of our divisions has been affected in different ways by the COVID-19 pandemic and demand for many of our services remains strong. COVID-19 has though inevitably resulted in delays being encountered with the NHS awarding tenders and there has been an impact on the near-term visibility for growth, particularly in Planned Care.

Of course, our results demonstrate the significant progress we have made, regardless of external forces. New contracts were secured across the three divisions, including the largest to date within our Planned care division to deliver Dermatology outpatient services across Manchester. In addition, we have continued to secure a number of vital contract extensions in both Urgent Care and Planned Care which underpin our foundations for continued growth -in excess of £20m of contract extensions were secured in the period under review.

Building on our Strategy

During the year, we have focused on delivering services across the Group that are sustainable and reactive to changes in demand.

· High-quality: has to be at the centre of everything we do. Our reputation is built upon this core requirement.

· Geography: during the year, we have successfully expanded our footprint across the UK and Ireland and are now delivering services across England, Scotland, Wales, Northern Ireland and the Republic of Ireland.

· Diversification: across our divisions ensuring we deliver models of care across all areas of high demand in the healthcare sector and that our divisions support each other by "cross-selling" services to both existing and potential new customers.

· Learning: from everything we do, both positive and negative, and ensuring we stay ahead of our competition with our approach to disrupting care models and delivering real tangible benefits.

· Supporting: our people and investing in them as they are at the core of what we do.

 

The Future

I would like to re-emphasise my confidence in the team of people we have and their ability to grow the business organically and via acquisitions, as well as continually review and develop the range of services we offer.

We are well positioned to further build on our market-leading positions in all of our divisions. Building on our strong relationships with our commissioners and supporting government bodies to proactively manage the demands placed on healthcare services during unprecedented events such as the recent Covid-19 pandemic when we experienced major increases in demand for our services, specifically in NHS 111. We were able, with the dedication of our people, to stand shoulder to shoulder with other healthcare professionals, and deliver services 24/7 across England supporting everyone by providing the high-quality services we are known to deliver.

I look forward to updating you further as we continue to expand our services across the UK

 

Wendy Lawrence

Chief Executive Officer

7 July 2020

 

 

STRATEGIC REVIEW

Operational changes during the period

Since acquiring Greenbrook Healthcare in June 2019, we have taken the opportunity to review our care delivery models in our Urgent Treatment Centres across the country to ensure we retain our competitive advantage to remain the largest independent provider of UTCs across England.

This has involved a critical review of all aspects of the care pathways across both Vocare and Greenbrook Healthcare taking the best from both and delivering excellence to the patients we see. Our staff take pride in what they do and deliver services with a passion and experience that sets us apart.

Despite the difficult political backdrop, which resulted in the number of tendering opportunities being significantly reduced (Brexit, General Election, COVID-19), we have secured new business, and opened our new Urgent Treatment Centre in Watford in July 2019 (delayed opening due to COVID-19). We have retained contracts to continue the delivery of services in our UTCs, 111 and numerous other services across England.

During the summer of 2019, we embedded our new delivery structure with the creation of our three delivery divisions.

· Urgent Care

· Planned Care

· Insourcing

Early in 2020, it became clear that the UK was about to be impacted by the worldwide pandemic, COVID-19. Healthcare providers braced themselves as demand to access services escalated. Our delivery divisions were all impacted differently.

Urgent Care saw demand increase in excess of 200% above normal levels for access to its NHS 111 services across the country. Vocare who is our specialist provider of 111 systems responded accordingly and worked tirelessly, shoulder to shoulder, with NHS England to coordinate the delivery of core 111 services alongside new services targeted for the management of COVID-19 and onboarding additional staff to help meet the unprecedented demand.

Vocare quickly mobilised its Emergency Preparedness, Resilience and Response processes to ensure every part of the business and every member of staff were supported during the ever-changing landscape. This was supported by our Business Continuity Plan activation across the Totally Group to ensure government guidance was quickly adopted and implemented.

Our Urgent Treatment Centres and GP Out of Hours services saw a decline in demand which meant that staff could be redeployed to where demand was increasing while still enabling all of our business to support its people by observing social distancing and isolation requirements and applying them across all staff groups.

Our internal mandatory systems for Staff Absence Management (SAMS) was reviewed and adapted to ensure every member of staff who needed to be absent from the workplace was supported by a clinician to ensure national guidance and advice was followed. This involved many changes including:

· Increased working from home with the provision of equipment to enable this change.

· Increased use of video meetings and clinical consultations.

·Decrease in working from offices where home working is possible and for those services where office working is essential changes made to the workplace to meet the latest advice. This included:

Increased spaces for work for social distancing.

Provision of PPE.

Increased workplace cleaning regimes.

Provision of more space for essential call centre capacity.

All of the above resulted in a minimum number of staff being furloughed or made redundant while working through the pandemic.

Our Planned Care and Insourcing divisions saw contracts paused whilst all elective healthcare services were stopped across the UK. During that period waiting lists and referrals for healthcare services increased with estimates from the NHS of over 10million people now waiting for treatment. Whilst our planned care division prepares for services to restart, our insourcing business, Totally Healthcare resumed some of its services in early June.

Whilst no tenders have been issued by the NHS in recent months, the Group has put in place extensions to a number of existing contracts across its operating subsidiaries and we anticipate this continuing. New business is currently being secured as a result of the Group's national coverage, existing relationships and partnering arrangements.

All of the above ensured that Totally as a group of businesses were able to not only support the NHS during the COVID-19 pandemic, but also demonstrated how to approach service delivery during such times. Our strategy remains as being regarded as a partner of choice for the NHS and other healthcare bodies to respond to increases in demand for services whatever the cause may be.

The Board and the management team could not be prouder of the way our people responded during this time and we must ensure they know how valued they are by Totally plc and the businesses within it.

 

FINANCIAL REVIEW

The results reflect a successful year for the Group; well positioned for further scale and delivering diversification through the creation of three distinct divisions.

The acquisition of a quality urgent care provider, Greenbrook Healthcare and the creation of a new business in Insourcing have strengthened the financial performance of the Group. Growth in revenue was 35.8% year on year at £105.9m, and the Group generated a loss before tax of £3.4m (2019: £1.8m loss). Underlying EBITDA increased by 265% to £4.0m. This includes a £1.6m positive impact relating to IFRS 16.

The Group is cash generative and responded with the distribution of our maiden dividend in February 2020. The Board is also proposing the payment of a full year dividend of 0.25 pence per share, payable in October 2020. The intention is to consider future dividend payments based upon the trading performance of the Group.

Growth in revenues was 35.8% primarily driven by the in-year acquisition, bringing revenues to £105.9m. New contract wins were adversely impacted by the uncertainty created by Brexit and the general election. NHS commissioning understandably paused during this time; nonetheless, the Group was able to secure extensions of several existing contracts across the Group, plus a significant new contract for Planned Care, in Manchester. The new Insourcing division delivered over £1m in revenues in its first period of trading.

Gross margin improved to 18.1% from 15.5%, largely as a result of improved performance in the underlying Urgent Care division. This improved performance has resulted in a reduction in provisions relating to performance related incentives of £1m. Underlying margin is therefore 17.2%.

All of our businesses continually review service delivery models and this approach has supported us through our response to the global pandemic. By utilising additional technology, reducing face to face contact, delivering 111 24/7 and flexing our services we have continued to deliver sustainable support to our partners, the NHS.

The Group posted an EBITDA, excluding exceptional costs relating to the acquisition and impairment of goodwill, of £4.0m. The loss before tax of £3.4m is stated after an amortisation charge of £2.8m relating to the intangible value of contracts acquired.

 

31 March 2020

31 March 2019

Revenue

105.9

78.0

Gross profit

19.2

12.1

EBITDA

4.0

1.1

Exceptional items

(2.0)

0.1

Depreciation

(2.0)

(0.6)

Amortisation

(3.1)

(2.2)

Operating loss

(3.1)

(1.6)

Loss before tax

(3.4)

(1.8)

Net assets

34.4

25.9

Cash

8.9

7.5

 

A prudent view of growth in Planned Care revenues has been considered in light of the impact of the COVID-19 pandemic.  As a consequence, we recognised an impairment of goodwill relating to this cash generating unit (CGU).  The carrying value of goodwill in relation to this CGU after impairment is £7.8m.

 

 

12 months to

12 months to

 

31 March 2020

31 March 2019

 

£000

£000

Acquisition-related costs

528

465

Impairment of goodwill

1,500

2,000

Revaluation of contingent consideration

0

(2,668)

Other exceptional costs

0

77

Total exceptional items

2,028

(126)

Tax credit attributable to exceptional items

(100)

404

Total exceptional items after tax

1,928

278

 

 

Acquisition costs

The acquisition costs comprised legal, professional and other related expenditure and amounted to £0.5m (2019: £0.5m).

Cash flow statement

Cash generated from operating activities is positive in the year reflecting improved underlying profitability of the Group. Cash outflow relating to the acquisition of Greenbrook, net of cash acquired was £8.0m. The acquisition was funded by the issue of share capital, net of expenses of £9.3m.

In June 2019, the Company issued 97,390,939 new ordinary shares of 10 pence each. The Company also issued 25,000,000 new ordinary shares of 10 pence each as part of the consideration for the acquisition of Greenbrook Healthcare (Hounslow) Limited and Greenbrook Healthcare (Earl's Court) Limited on the same date.

 

31 March 2020

31 March 2019

Net cash flows from operating activities

2.9

(1.8)

Net cash flows from investing activities

(8.6)

(0.9)

Net cash flows from financing activities

7.1

0

Net increase/(decrease) in cash and cash equivalents

1.4

(2.7)

Cash and cash equivalents at the beginning of the year

7.5

10.2

Cash and cash equivalents at the end of the year

8.9

7.5

 

Maiden final dividend

We remain committed to the payment of dividends as we believe this reflects our confidence in the Company's future prospects. The Board is therefore pleased to be recommending to shareholders a maiden final dividend of 0.25 pence per share. This, together with the interim dividend of 0.25 pence per share paid in February 2020, makes a total dividend for the year of 0.50 pence per share. Subject to approval by shareholders at the Annual General Meeting to be held on 7 September 2020, the final dividend will be paid on 16 October 2020 to shareholders on the register as at the close of business on 18 September 2020. The shares will be marked ex-dividend on 17 September 2020.

Acquisition of Greenbrook Healthcare

On 20 June 2019, the Company completed the acquisition of the entire share capital of Greenbrook Healthcare (Hounslow) Limited and the convertible loan note in Greenbrook Healthcare (Earl's Court) Limited for a maximum consideration of £11.5m on a cash-free and debt-free basis with a normalised level of working capital. The table below sets out the adjustments to the purchase price to reflect a normalised level of working capital which has resulted in additional consideration payable of £4.7m.

Greenbrook is one of the leading providers of Urgent Care Centres in London. The company was acquired as part of the Group's stated "buy and build" strategy and to bring new and complementary routes to the existing healthcare services offered by the Group. Greenbrook's Urgent Care services provide synergies with Totally's existing subsidiary businesses, in particular Vocare, and complements its business model of providing preventative and responsive healthcare in out-of-hospital settings to improve people's health, reduce NHS healthcare reliance, re-admissions and emergency admissions to hospital.

The assets and liabilities as at 20 June 2019 arising from the acquisition were as follows:

 

Carrying

Fair value

Fair

 

amount

adjustment

value

 

£000

£000

£000

Property, plant and equipment

308

0

308

Intangible assets: customer contracts

0

9,354

9,354

Right-of-use assets

1,425

0

1,425

Trade receivables and other debtors

4,712

0

4,712

Cash in hand

5,781

0

5,781

Trade and other payables

(6,955)

(763)

(7,718)

Lease liabilities

(1,425)

0

(1,425)

Onerous contracts

0

(529)

(529)

Deferred tax

(34)

(1,438)

(1,472)

Convertible loan notes

(50)

0

(50)

Net assets acquired

3,762

6,624

10,386

Goodwill

 

 

5,850

Total consideration

 

 

16,236

Satisfied by:

 

 

 

Cash

 

 

13,736

Ordinary shares issued

 

 

2,500

 

 

 

16,236

 

The goodwill is attributable to the knowledge and expertise of the workforce, the expectation of future contracts and the operating synergies that arise from the Group's strengthened market position. Any impairment charges will not be deductible for tax purposes.

Included in the fair value of Greenbrook are provisions for additional costs or potential costs that existed at the time of acquisition.

Changes in accounting policies

The Group adopted IFRS 16 with a transition date of 1 April 2019. The Group has chosen not to restate comparatives on adoption and, therefore, the revised requirements are not reflected in the prior year financial statements. Rather, these changes have been processed at the date of initial application and recognised in the opening equity balances. Details of the impact this standard has had are given below.

IFRS 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is twelve months or less, or where the underlying asset is of low value. IFRS 16 substantially carries forward the lessor accounting in IAS 17, with the distinction between operating leases and finance leases being retained. The Group does not have significant leasing activities acting as a lessor.

As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under IFRS 16, the Group recognises right-of-use assets and lease liabilities for most leases. However, the Group has elected not to recognise right-of-use assets and lease liabilities for some leases of low value assets based on the value of the underlying asset when new or for short-term leases with a lease term of twelve months or less.

On adoption the Group recognised right-of-use assets at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments. Lease liabilities are measured at the present value of the remaining lease payments, discounted using the Group's incremental borrowing rate as at 1 April 2019. The Group's incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions.

The impact of adopting IFRS 16 on the Consolidated Statement of Profit or Loss is to increase profit before exceptional items by £1,636,000, increase depreciation by £1,509,000 and increase finance costs by £235,000.

The impact of adopting IFRS 16 on the Consolidated Statement of Financial Position can be seen below:

 

31 March 2019

IFRS 16

1 April 2019

 

£000

£000

£000

Assets

 

 

 

Right-of-use assets

  -

  4,083

       4,083

Prepaid rent

-

(57)

(57)

Liabilities

 

 

 

Lease liabilities

  -

  4,026

  4,026

 

The impact of adopting IFRS 16 on the Consolidated Cash Flow Statement is to increase operating cash flows and decrease financing cash flows by £1,744,000 respectively. The following table reconciles the minimum lease commitments disclosed in the Group's 31 March 2019 financial statements to the amount of lease liabilities recognised on 1 April 2019.

 

 

£000

Minimum operating lease commitment at 31 March 2019

 

  5,295

Inclusion of previously unrecognised commitments

 

  151

Less: short-term leases not recognised under IFRS 16

 

  (71)

Less: low value leases not recognised under IFRS 16

 

  (17)

Less: licences not considered leases under IFRS 16

 

  (434)

Undiscounted lease payments

 

  4,924

Less: effect of discounting using the incremental borrowing rate

 

  (898)

Lease liability as at 1 April 2019

 

  4,026

 

Lisa Barter

Finance Director

7 July 2020

 

For further information please contact:

 

Totally plc 

020 3866 3335

Wendy Lawrence, Chief Executive

Bob Holt, Chairman

 

 

Allenby Capital Limited (Nominated Adviser & Joint Corporate Broker)

020 3328 5656

Nick Athanas

Liz Kirchner

 

 

Canaccord Genuity Limited (Joint Corporate Broker)

020 7523 8000

Bobbie Hilliam

Alex Aylen

 

 

Yellow Jersey PR

020 3004 9512

Georgia Colkin

Joe Burgess

 

 

 

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2020

 

 

 

 

 

12 months to 31 March 2020

12 months to 31 March 2019

Continuing operations

 

 

 

£000

£000

Revenue

 

 

 

 

  105,948

  78,007

Cost of sales

 

 

 

 

  (86,772)

  (65,939)

Gross profit

 

 

 

 

  19,176

  12,068

Administrative expenses

 

 

 

  (15,140)

  (10,962)

Profit before exceptional items

 

 

  4,036

  1,106

Exceptional items

 

 

 

  (2,028)

  126

Profit before interest, tax and depreciation

 

 

  2,008

  1,232

Depreciation and amortisation

 

 

  (5,122)

  (2,822)

Operating loss

 

 

 

 

  (3,114)

  (1,590)

Finance income

 

 

 

  6

  3

Finance costs

 

 

 

 

  (302)

  (228)

Loss before taxation

 

 

 

  (3,410)

  (1,815)

Income tax credit

 

 

 

  577

  313

Loss for the year attributable to the equity
shareholders of the parent company

 

  (2,833)

  (1,502)

Other comprehensive income

 

 

 

  -

  -

Total comprehensive loss for the year net of tax
attributable to the equity shareholders of the parent company

 

  (2,833)

  (1,502)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12 months to  31 March 2020

12 months to 31 March 2019

Loss per share

 

 

 

 

Pence

Pence

From continuing operations:

 

 

 

 

 

Basic

 

 

 

 

(1.82)

(2.51)

Diluted

 

 

 

 

(1.82)

(2.51)

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2020

 

 

 

 

 

Share capital

Share premium

Retained earnings

Equity shareholders' funds

 

 

 

 

 

£000

£000

£000

£000

At 1 April 2018

 

 

 

 5,979

 16,408

 4,951

  27,338

Total comprehensive loss for the year

 

 

  -

  -

 (1,502)

  (1,502)

Credit on issue of warrants and options

 

 

  -

  -

  43

  43

At 31 March 2019

 

 

 

 5,979

 16,408

 3,492

  25,879

Total comprehensive loss for the year

 

 

  -

  -

 (2,833)

  (2,833)

Cancellation of share premium account

 

 

  -

  (16,408)

 

16,408

  -

Issue of shares

 

 

 

 12,240

  -

  -

  12,240

Expenses attached to equity issue

 

 

  -

  -

  (450)

  (450)

Dividend payment

 

 

 

  -

  -

  (455)

  (455)

Credit on issue of warrants and options

 

 

  -

  -

  64

  64

At 31 March 2020

 

 

 

 18,219

  -

     16,226

  34,445

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2020

 

 

 

 

 

 

 

 

 

31 March 2020

31 March 2019

 

 

 

 

£000

£000

Non-current assets

 

 

 

 

Intangible assets

 

 

  39,631

  28,824

Property, plant and equipment

 

  789

  599

Right-of-use assets

 

 

  4,129

  -

Investments in subsidiaries

 

  -

  -

Deferred tax

 

 

 

408

  158

 

 

 

 

  44,957

  29,581

Current assets

 

 

 

 

Inventories

 

 

 

  77

  68

Trade and other receivables

 

  11,185

  8,606

Cash and cash equivalents

 

 

  8,923

  7,520

 

 

 

 

  20,185

  16,194

Total assets

 

 

 

  65,142

  45,775

Current liabilities

 

 

 

 

Trade and other payables

 

 

  (24,182)

  (18,784)

Contingent consideration

 

 

  (271)

  (322)

Lease liabilities

 

 

  (1,449)

  (5)

 

 

 

 

  (25,902)

  (19,111)

Non-current liabilities

 

 

 

 

Trade and other payables

 

 

  (786)

  (768)

Lease liabilities

 

 

  (2,729)

  (3)

Deferred tax

 

 

 

  (1,280)

  (14)

 

 

 

 

  (4,795)

  (785)

Total liabilities

 

 

  (30,697)

  (19,896)

Net current liabilities

 

 

  (5,717)

  (2,917)

Net assets

 

 

 

  34,445

  25,879

Shareholders' equity

 

 

 

 

Called up share capital

 

 

  18,219

  5,979

Share premium

 

 

  -

  16,408

Retained earnings

 

 

  16,226

  3,492

Equity shareholders' funds

 

  34,445

  25,879

 

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2020

 

 

 

 

 

31 March 2020

31 March 2019

 

 

 

 

 

£000

£000

Cash flows from operating activities

 

 

 

 

Loss for the year

 

 

 

  (2,833)

  (1,502)

Adjustments for:

 

 

 

 

 

- options and warrants charge

 

 

  64

  43

- depreciation and amortisation

 

 

  5,122

  2,822

- impairment of goodwill

 

 

 

  1,500

  2,000

- tax (income)/expense recognised in profit or loss

 

  (577)

  (313)

- finance income

 

 

 

  (6)

  -

- finance costs

 

 

 

  302

  112

- revaluation of contingent consideration

 

 

  -

  (2,668)

Movements in working capital:

 

 

 

 

- inventories

 

 

 

 

  (8)

  10

- movement in trade and other receivables

 

  2,076

  1,100

- movement in trade and other payables

 

 

  (2,637)

  (3,457)

Cash used for operations

 

 

 

  3,003

  (1,853)

Income tax received/(paid)

 

 

 

  (104)

  39

Net cash flows from operating activities

 

 

  2,899

  (1,814)

Cash flows from investing activities

 

 

 

 

Purchase of property, plant and equipment

 

  (397)

  (265)

Additions of intangible assets

 

 

  (192)

  (491)

Acquisition of subsidiaries, net of cash acquired

 

  (7,955)

  -

Contingent consideration paid

 

 

  (51)

  (130)

Net cash flows from investing activities

 

 

  (8,595)

  (886)

Cash flows from financing activities

 

 

 

 

Issued share capital, net of expenses

 

 

  9,289

  -

Dividends paid to the holders of the parent

 

  (455)

  -

Interest paid

 

 

 

 

  (97)

  -

Principle paid on lease liabilities

 

 

  (1,638)

  (4)

Net cash flows from financing activities

 

 

  7,099

  (4)

Net increase / (decrease) in cash and cash equivalents

 

  1,403

  (2,704)

Cash and cash equivalents at the beginning of year

 

  7,520

  10,224

Cash and cash equivalents at the end of the year

 

  8,923

  7,520

 

 

 

 

 

 

 

 

NOTES TO THE FINANCIAL INFORMATION

FOR THE YEAR ENDED 31 MARCH 2020

1. GENERAL INFORMATION

Totally plc is a public limited company ("the Company") incorporated in the United Kingdom under the Companies Act 2006 (registration number 3870101). The Company is domiciled in the United Kingdom and its registered address is Cardinal Square West, 10 Nottingham Road, Derby DE1 3QT. The Company's ordinary shares are traded on the AIM market of the London Stock Exchange ("AIM").

The Group's principal activities are the provision of innovative and consolidatory solutions to the healthcare sector, which are provided by the Group's wholly owned subsidiaries.

The Company's principal activity is to provide management services to its subsidiaries.

 

2. BASIS OF PREPARATION

The financial information set out in this announcement does not constitute statutory accounts as defined by section 435 of the Companies Act 2006. It has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) adopted for use in the European Union, including IFRIC interpretations issued by the International Accounting Standards Board, and in accordance with the AIM rules and is not therefore in full compliance with IFRS. The principal accounting policies applied in the preparation of the financial information are detailed in note 3.

The financial statements for the year ended 31 March 2020 are not authorised for issue however it is anticipated that audit reports will not be modified and will not draw attention to any matters by way of emphasis or contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The financial information has been prepared on the historical cost basis and are presented in Sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.

The Directors have produced forecasts that have been sensitised to reflect plausible downside scenarios as a result of the COVID-19 pandemic and its impact on the group's operations given the nature of its contracts with customers and the customer base. These demonstrate the Group is forecast to generate profits and cash in the year ending 31 March 2021 and beyond and that the Group has sufficient cash reserves to enable the Group to meet its obligations as they fall due for a period of at least 12 months from the date of signing of these financial statements.

As such, the Directors are satisfied that the Group has adequate resources to continue to operate for the foreseeable future. For this reason, they continue to adopt the going concern basis for preparing these financial statements.

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

The Group's financial statements include the results of the Company and its subsidiaries, all of which are prepared up to the same date as the parent company.

Subsidiaries

Subsidiaries are all entities over which the Company has the ability to exercise control and are accounted for as subsidiaries. The trading results of subsidiaries acquired or disposed of during the period end are included in the income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

All intra-group transactions, balances, income and expenditure are eliminated on consolidation.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Company. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date irrespective of the extent of any non-controlling interest. The excess of cost of acquisition over the fair values of the Group's share of identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair value of identifiable net assets acquired (i.e. discount on acquisition) is recognised directly in the income statement. All acquisition expenses have been reported within the income statement immediately.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income.

Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies used in line with those used by other members of the Group.

Revenue recognition

Revenue is generated by providing clinical health coaching, supporting shared decision-making services and software solutions to the healthcare sector, physiotherapy, dermatology and urgent care services. Services are provided through short-term and long-term contracts.

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Clinical health coaching, supporting shared decision-making services and software solutions to the healthcare sector

Revenue is recognised as services are provided. Revenue is recognised in the month when the service is provided, as this is the point when revenue activity can be reliably measured.

Physiotherapy and dermatology services

Revenue represents invoiced sales of services to regional Care Commissioning Groups of the National Health Service. Revenue is recognised in the month when the service is provided, as this is the point when revenue activity can be reliably measured. Revenue can be subject to clawback adjustments based on performance against criteria as detailed in the individual contracts.

Insourcing services

Revenue is recognised as services are provided. Revenue is recognised in the month when the service is provided, as this is the point when revenue activity can be reliably measured.

Urgent Care services

Revenue is recognised as services are provided. Revenue is recognised in the month when the service is provided, as this is the point when revenue activity can be reliably measured. Revenue can be subject to clawback adjustments based on performance against criteria as detailed in the individual contracts.

All revenue originates in the United Kingdom.

Finance income

Finance income comprises bank interest received, recognised on an accruals basis.

Finance costs

Finance costs comprise bank charges and interest on leases recognised under IFRS 16. The prior year also included the unwinding of the fair value adjustment of the contingent consideration.

Property, plant and equipment

Property, plant and equipment is carried at cost less accumulated depreciation and any recognised impairment in value. Cost comprises the aggregate amount paid to acquire assets and includes costs directly attributable to making the asset capable of operating as intended.

Depreciation is calculated to write down the cost of the assets to their residual values by equal instalments over the estimated useful economic lives as follows:

Motor vehicles

- 3 and 5 years

Computer equipment

- 2 and 5 years

Plant and machinery and Office equipment

- 2 to 5 years

Freehold property improvements and Short leasehold property

- 3 to 10 years

 

The assets' residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate on an annual basis. An asset is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the period that the asset is de-recognised.

Inventories

Inventories are valued at the lower of cost and net realisable value. In general, costs are determined on a first in first out basis and includes all direct expenditure based on a normal level of activity. Net realisable value is the price at which the stocks can be sold in the normal course of business after allowing for the costs of realisation and where appropriate for the costs of conversion from its existing state to a finished condition.

Intangible assets other than goodwill

Intangible assets other than goodwill comprise computer software and customer contracts and relationships.

Computer software is recognised at cost and subsequently amortised over its expected useful economic life of three years.

Customer contracts and the related customer relationships were acquired in business combinations and recognised separately from goodwill. They are initially recognised at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, these assets are amortised over the expected life of contracts and reported at cost less accumulated amortisation and accumulated impairment losses. Assets are reviewed for impairment on at least an annual basis.

Goodwill

Goodwill represents the excess of the fair value of the consideration of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is considered to have an indefinite useful life. Goodwill is tested for impairment annually and again whenever indicators of impairment are detected and is carried at cost less any provision for impairment.

Impairment of non-current assets

For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units ("CGUs") or groups of CGUs that is expected to benefit from the synergies of the combination. These comprise Urgent Care and Planned Care segments and at 31 March 2020 the goodwill allocated to each amounted to £22,674,000 and £7,836,000 respectively.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.

The value of the goodwill was tested for impairment during the current financial year by means of comparing the recoverable amount of each CGU or group of CGUs with the carrying value of its goodwill.

The calculation of the CGUs' value in use is calculated on the cash flows expected to be generated using the latest budget and forecast data. Estimates of revenue and costs are based on past experience and expectations of future changes in the market.

Board approved cash flow projections for five years are used and then extrapolated out assuming flat cash flows and discounted at a pre-tax rate of 10% (2019: 10%) over five years and then into perpetuity.

Based on the operating performance of the CGUs, an impairment of goodwill of £1.5m was identified in the current financial year (2019: £2.0m).

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Trade and other receivables

Trade receivables, which are generally received by the end of month following terms, are recognised and carried at the lower of their original invoiced value less provision for expected credit losses.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and short-term deposits with an original maturity of three months or less.

Trade and other payables

Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade and other payables are recognised at original cost.

Borrowings

Borrowings are initially recognised at fair value, being proceeds received less directly attributable transaction costs incurred. Borrowings are subsequently measured at amortised cost with any transaction costs amortised to the income statement over the period of the borrowings using the effective interest method.

Foreign currencies transactions

Transactions denominated in foreign currencies are translated at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the period end are translated at the exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement.

Leased assets

Until 31 March 2019, leases of property, plant and equipment were classified as either finance leases or operating leases. From 1 April 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Company.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of fixed lease payments. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the lessee's incremental borrowing rate is used, being the rate that the lessee would have to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset with similar terms, security and conditions.

Lease payments are allocated between principle and finance costs. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the initial measurement of lease liability, any lease payments made at or before the commencement date less any lease incentives received, and any initial direct costs.

Right-of-use assets are depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

Payments associated with short-term leases of equipment and vehicles and all leases of assets considered low value are recognised as an expense in profit or loss on a straight-line basis. Short-term leases are leases with a lease term of twelve months or less.

Exceptional items

Exceptional items are those items that, in the Directors' view, are required to be separately disclosed by virtue of their size or incidence to enable a full understanding of the Group's financial performance.

Income taxes

Current income tax assets and liabilities are measured at the amount expected to be recovered or paid to the taxation authorities based on tax rates and laws that are enacted or substantively enacted by the period end date. Deferred income tax is recognised using the balance sheet liability method, providing for temporary differences between the tax bases and the accounting bases of assets and liabilities. Deferred income tax is calculated on an undiscounted basis at the tax rates that are expected to apply in the period when the liability is settled and the asset is realised, based on tax rates and laws enacted or substantively enacted at the period end date.

Deferred income tax liabilities are recognised for all temporary differences, except for an asset or liability in a transaction that is not a business combination, and at the time of the transaction affects neither the accounting profit nor taxable profit or loss.

Deferred income tax is charged or credited to the income statement, except when it relates to items charged or credited to equity, in which case the deferred tax is also dealt with in equity. Deferred income tax assets and liabilities are offset against each other only when the Company has a legally enforceable right to do so.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences can be utilised.

Retirement benefits

The Group operates a defined contribution plan. A defined contribution plan is a pension plan under which the employer pays fixed contribution into a separate entity. Contributions payable to the plan are charged to the income statement in the period to which they relate. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Company only accounting policies

The following principal accounting policies have been applied:

Investments

Fixed asset investments are stated at cost less provisions for diminution in value.

Deferred tax

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the Company Statement of financial position differs from its tax base, except for differences arising on:

· the initial recognition of goodwill;

· the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

·investments in subsidiaries where the Company is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted.

Share-based payments

The Group provides benefits to employees (including Directors) of the Group in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares. The fair value of the employee services rendered is determined by reference to the fair value of the shares awarded or options granted. Share options are valued using the Black Scholes pricing model, or the Monte Carlo model where performance-based market vesting conditions apply. This fair value is charged to the income statement over the vesting period of the share-based payment scheme, with the corresponding increase in equity.

The value of the charge is adjusted in the income statement over the remainder of the vesting period to reflect expected and actual levels of options vesting, with the corresponding adjustment made in equity.

Standards adopted in the year

During the year the Group adopted IFRS 16 with a transition date of 1 April 2019.

There have been no other standards adopted that have had a material impact on the financial statements and no standards adopted in advance of their implementation dates.

Standards, interpretations and amendments not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the International Accounting Standards Board ("IASB") that are effective in future accounting periods that the Group has decided not to adopt early. The following amendments are effective for the period beginning 1 April 2020:

· IAS 1 Presentation of Financial Statements;

·IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material); and

· IFRS 3 Business Combinations (Amendment - Definition of Business).

In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether liabilities are classified as current or non-current. These amendments clarify that current or non-current classification is based on whether an entity has a right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period.

The Group does not believe that the amendments to IAS 1 will have a significant impact on the classification of its liabilities.

 

 

4. (LOSS)/EARNINGS PER SHARE

 

 

 

12 months to 31 March 2020

12 months to 31 March 2019

 

 

 

Earnings

Basic loss per share

Diluted loss per share

Earnings

Basic loss per share

Diluted loss per share

 

 

 

£'000

 

 

£'000

 

 

Loss before exceptional items

  (905)

(0.58)p

(0.58)p

  (1,224)

(2.05)p

(2.05)p

Effect of exceptional items

 

  (1,928)

(1.24)p

(1.24)p

  (278)

(0.46)p

(0.46)p

(Loss)/profit attributable to owners of the parent

  (2,833)

(1.82)p

(1.82)p

  (1,502)

(2.51)p

(2.51)p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

2019

 

 

 

 

 

 

 

£'000

£'000

Weighted average number of ordinary shares

 

 

 

 

  155,696

  59,795

Dilutive effect of shares from share options

 

 

 

 

  -

  -

Fully diluted weighted average number of ordinary shares

 

 

 

 

  155,696

  59,795

 


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