12 July 2022

Totally plc

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

Preliminary results for the 12-month period ended 31 March 2022

Record growth, whilst positioning for the future

Totally plc (AIM: TLY), a leading provider of frontline healthcare services, corporate fitness and wellbeing services across the UK and Ireland, is pleased to announce its preliminary results for the 12-month period ended 31 March 2022.

Financial highlights

·    12% increase in revenue to £127.4 million (2021: £113.7 million).

·    18% gross margin (2021: 18.3%).

·    24% increase in underlying EBITDA to £6.2 million, excluding £0.2 million in exceptional items (2021: £5.0 million EBITDA).

·    Substantial increase in profit before tax to £1.3 million (2021: £0.1 million).

·    Cash as at 31 March 2022 of £15.3 million (31 March 2021: £14.8 million).

·    Total dividend for the year of 1.00 pence per share (2021: 0.50 pence per share).

·    Substantial increase in basic earnings per share to 0.59 pence (2021: 0.17 pence).

·    Urgent Care revenue increased by 3.6% to £109.2 million (2021: £105.4 million); 17.8% gross margin (2021: 17.8%).

·    Planned Care revenue increased by 43.7% to £7.5 million (2021: £5.2 million); 20.6% gross margin (2021: 23.7%).

·    Insourcing revenue increased substantially to £10.3 million (2021: £3.1 million); 17.4% gross margin (2021: 26.8%).

Operational highlights

·    All Care Quality Commission registered services are rated as "Good".

·    Delivered services to 2.5 million patients, reducing pressure on NHS-led services.

·    Awarded new contracts totalling c. £59 million including three-year contract with King's College NHS Foundation Trust for a new urgent treatment centre ("UTC") and five-year contract for the provision of GP out of hours ("GPOOH") services in Staffordshire and Stoke.

·    Numerous contract extensions totalling c. £72 million, underpinning recurring revenues, as healthcare commissioners sought to maintain service consistency in a year still impacted by COVID-19.

·    Completed acquisitions of Pioneer Health Care Limited ("Pioneer") and Energy Fitness Professionals Limited ("EFP").

 Post period highlights

·    Multiple contract extensions awarded, underpinning recurring revenue, including:

o  Contract extensions, together valued at £19 million, for the management of five UTCs across North West London, awarded to Greenbrook Healthcare Limited ("Greenbrook") and Vocare Limited ("Vocare").

o  Vocare awarded three contract extensions to continue to deliver GPOOH services across the North East of England with a total value of c. £4.2 million.

o  EFP awarded five-year contract extension for the delivery of on-site gyms for the Royal Mail, valued at a total of £2.5 million.

o  Greenbrook awarded a contract extension for the delivery of its virtual consulting service in South-East London valued at £0.4 million, enabling patients who have been directed to a UTC by NHS 111 to see a clinician virtually.

·    Final dividend of 0.50 pence per share proposed, bringing total dividend for the year to 1.00 pence per share.

Investor presentation

A reminder that Wendy Lawrence, CEO and Lisa Barter, CFO, will provide a live presentation relating to the preliminary results and outlook for the Company via the Investor Meet Company platform on 13 July 2022 at 10:00 BST. The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via the Investor Meet Company dashboard up until 9:00am the day before the meeting, or at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet Totally plc via:

https://www.investormeetcompany.com/totally-plc/register-investor  

Investors who already follow Totally plc on the Investor Meet Company platform will automatically be invited.

CHAIRMAN'S STATEMENT

I am pleased to report a further year of record results for the Group.

Revenues were £127.4 million (2021: £113.7 million) with underlying EBITDA (excluding exceptional items) of £6.2 million (2021: £5.0 million). Net cash as at 31 March 2022 stood at £15.3 million (31 March 2021: £14.8 million).

During the year, we continued to help manage increasing demand whilst progressing our buy and build strategy to ensure we are positioned strongly to support the NHS and other healthcare providers over the next five to ten years.

We significantly grew our insourcing capability in response to growing demand, mobilised new services within urgent care, and contributed to strategic projects to improve the delivery of existing service models, such as NHS 111, to ensure that every patient can access the support they need.

We have made great progress against our buy and build strategy with two key acquisitions completed in the year. The addition of Pioneer Health Care and Energy Fitness Professionals to the Group enables us to respond to challenges faced in healthcare at the current time and equips us for a changing healthcare landscape where wellbeing is higher on the agenda and waiting lists are at all-time highs.

Everything we do is made possible by the experience and commitment of our teams, whether they are leading the integration of our new businesses or supporting patients on the front line. During the year, we also progressed our agenda to become an employer of choice and rolled out enhancements to our benefits packages which further recognise the value that each member of the team creates for the business. We thank all of those who work for us, and those we work with, for their continued engagement and commitment to patient care. 

We look forward to a further year of growth as we seek to improve healthcare outcomes by providing essential support to reduce waiting times.   Recently, we have commenced a Board Review in line with the QCA Corporate Governance Code to ensure that that we have the right skills and experience at Board level to drive further success. We remain focused on our buy and build strategy and we continue to seek out earnings enhancing opportunities where they support our overall strategy.

Bob Holt OBE

Chairman

12 July 2022

CHIEF EXECUTIVE OFFICER'S REVIEW

Introduction

I am pleased to report another set of excellent results during a year which has continued to present challenges to everyone delivering services in the healthcare sector.

Society opened for business again, and as the general population sought to make up for "the lockdown years", we have responded to huge increases in demand. During the year, we delivered services to 2.5 million patients.  This rising pressure on healthcare services has been alongside the continuation of working to strict COVID-19 guidelines, including working in full PPE and following regulations for self-isolation and testing regimes. Our staff have continued to stand alongside their healthcare colleagues to deliver exceptional care in difficult circumstances, whilst demand for our services continued to increase beyond all our estimates and those of the NHS. Totally has been there to provide additional capacity to support demand and ensure that every patient receives access to the appropriate care when and where they need it.

During the year, we also completed two quite different acquisitions as we continued with our stated buy and build strategy. The acquisition of Pioneer Health Care in March 2022 provides us with numerous growth opportunities as waiting lists for elective care continue to grow. Pioneer has a strong market reputation and brings extensive experience and expertise to the Totally group. The acquisition of Energy Fitness Professionals in December 2021 enables us to develop corporate services and support employee wellbeing as the population returns to the workplace. EFP provides both direct and remote online wellbeing services and holds contracts with numerous "blue-chip" companies. Leaders from both acquired companies have taken up new roles in Totally to drive forward growth across the Group.

Trading performance

The Group made excellent progress during the year and performance exceeded our internal management and consensus market expectations. Performance was supported by increased demand attributed to the impact of the global pandemic which continued to increase demand for services and led to significant growth in waiting lists. We remain debt free and held healthy cash balances throughout the period reflecting our excellent approach to cash management.

A detailed update on our trading performance is included later in this report from our Chief Financial Officer, Lisa Barter.

Strategic progress

We have made significant progress against our strategy during the year.

Recognising the importance of our people and culture, we launched a new set of company values and completed and implemented a full review of terms and conditions and benefits for all employees across the Group, which enables us to offer a new, standardised benefits package across the majority of the Group.

Our two completed acquisitions, in line with our buy and build strategy, further strengthen our ability to respond to the increasing demands on the healthcare system and increasing focus on health and wellbeing by large corporate employers. The acquisition of EFP was completed in mid-December 2021 and Pioneer Health Care in mid-March 2022; financial contributions for this year are therefore small.

We also continued to invest in our infrastructure with several significant strategic projects to further enhance our efficiencies and ability to respond to demand. We have implemented a new combined HR and finance system and completed an extensive project to move employees onto one email and network domain, increasing security for our partners and patients and making it easier for our businesses to work together and deliver economies of scale.

Within our expanded communications and marketing function, we have refreshed our Totally plc website and are now completing the migration of our business websites onto one website for all services. To improve internal communications with staff we have also rolled out a new intranet across the Totally group, giving our teams access to the information they need to do their jobs all in one place and providing additional support and materials that underpin our values and our culture.

Growth

We believe that we are a leading provider of healthcare services, supporting healthcare commissioners and providers to respond proactively and robustly to changes in demand for services and indeed to provide new models of care as required.

We hold long-term contracts for our services across the UK. During the year, we successfully retained contracts that were due to expire and secured new work across the Group. We have also seen several shorter-term renewals as healthcare commissioners sought to rapidly secure continuity of service without distracting precious resources from the operational tasks at hand. These shorter-term renewals have been secured based on strong relationships and excellent service delivery and help underpin our recurring revenues.

Elective care - through insourcing, outsourcings and Any Qualified Provider ("AQP") - continues to present a huge opportunity for growth. The number of people on waiting lists is higher than ever, presenting extended opportunities for this area of the business. The NHS in England alone estimates it will take up to five years to reduce waiting lists back to pre-pandemic levels.

Our people

Our people are our greatest asset and what make Totally unique in its flexibility to respond quickly and professionally to every demand faced.

We would not be where we are today without the team that we have built, and continue to build and invest in. The incredible pressure that everyone has worked through during the COVID-19 pandemic cannot be understated. We remain immensely proud of what our teams have done throughout the year and continue to do every day.

Recruitment is now a challenge for every business and certainly everyone delivering healthcare. Attracting the best people remains a top priority for Totally, hence the time, effort and resources we dedicate to supporting service delivery and the people who work with us.

The future

Recent acquisitions and new opportunities within existing business areas present opportunities to grow organically and we remain acquisitive in line with our stated buy and build strategy.

We are working in partnership with NHS England at the forefront of plans to deliver a single virtual contact centre framework which presents opportunity for the business to grow flexibly, utilising a centre of excellence structure to deliver the absolute best care to patients.

The opportunities in elective care and outpatient services are huge. Since acquisition, Pioneer has seen a stepped increase in the number of enquiries from hospitals to assist with waiting list reduction and secured multiple contract extensions, expanding the specialties offered through existing contracts and geographic spread.

We are progressing with the development of a digital offering which brings together services from EFP and the Totally Group to help corporate customers support their workforces. We can see strong potential in this marketplace, with increased activity as employers bring their staff back to the office.

In the year ahead we will remain focused on making further progress with our growth strategy whilst ensuring we maintain the delivery of high-quality services.

We will continue to invest in our growing and increasingly skilled workforce, ensuring we deliver the best care possible to every patient we treat whilst growing the business and increasing our coverage across the UK.

In line with the UK's commitment to creating a zero-carbon economy, we will also continue to focus on the further reduction of our carbon footprint. We have already reduced our fleet of emergency vehicles, as well as using more energy efficient vehicles where possible, and promote recycling and the use of LED lighting across our premises.

I thank all shareholders for their continued support during what can only be described as challenging but exciting times. We will continue to ensure that we drive business growth through sensible acquisition and organic growth activity across the Group.

Wendy Lawrence

Chief Executive Officer

12 July 2022

STRATEGIC REVIEW

Strengthened position for the future

URGENT CARE DIVISION

Progress during the year

The removal of COVID-19 restrictions for the general population during the year and the emergence of the several COVID-19 variants increased pressure across urgent care services. COVID-19 infection rates peaked, driving sustained demand for NHS 111. In urgent treatment centres we saw a return to previously high levels of demand, further increased by challenges experienced by patients seeking to access primary care. In total, Urgent Care teams across Totally responded to the needs of almost 2.5 million patients either through NHS 111, UTCs or other services.  Our experienced management team worked closely with healthcare commissioners to respond to these challenges and maintain service delivery.

Over the course of the 12-month period, the Urgent Care team secured and mobilised new long-term contracts worth c. £59 million. In October 2021 we rapidly mobilised a new urgent treatment centre at King's College NHS Foundation Trust at Denmark Hill, Southwark (London). Greenbrook Healthcare is contracted to deliver the UTC for three years. In March 2022, Vocare was awarded a contract for the provision of GPOOH services for both Stafford and Stoke CCGs. The contract enables Vocare to continue to provide services across the region for at least a further five years, serving an increased population of c. 1.2 million. The contract was awarded after a competitive tender and replaces the services previously provided by Vocare as part of an Integrated Urgent Care contract. The service has now been mobilised.

In addition to these new contracts, the Urgent Care Division secured contract extensions totalling c. £72 million including the continuation of NHS 111 services in Staffordshire and Stoke, a two-year contract extension to provide Initial Accommodation Centre users with GP services in the Hillingdon Borough of London, and the extension of contracts to provide UTCs across multiple areas in London.

The future

Demand for all urgent care services continues to outstrip NHS capacity. We will continue to provide high-quality, innovative care models which support patients' access to good care.

PLANNED CARE DIVISION

Progress during the year

This year has seen the normalising of services within the Planned Care Division, with face-to-face consultations restarting, alongside a continuation of online support where this was possible or needed.

The future

During the next year, we will seek to develop new service models that will ensure patients can continue to access service quickly.

PIONEER HEALTH CARE

Progress during the year

Following the acquisition of Pioneer Health Care in March 2022, activities commenced to combine the business with Totally's insourcing business, Totally Healthcare, to create a single provider of insourcing and outsourcing services (including Any Qualified Provider status) under the Pioneer brand. The combined business will leverage the strengths within each organisation and provide resilient capacity to deliver much-demanded insourcing and outsourcing services across a wide range of surgical and medical patients, free at the point of delivery to NHS patients.

Good progress has been made and a hugely experienced leadership team has been put in place to take the business forward. The migration of finance activity into the Group, to capture economies of scale, has been undertaken and a review of HR, IT, branding and marketing activity is substantially underway.

Since becoming part of the Totally group, Pioneer has seen a stepped increase in the number of enquiries from hospitals to assist with the reduction of waiting lists in recent months and secured multiple contract extensions which include the expansion of medical specialities covered as well as the number of hospitals from which services can be delivered. Contract extensions cover the whole of England but with a particular focus on the Midlands, Yorkshire and the North of England.

The future

NHS England estimates that it will take five years to reduce waiting lists to pre-pandemic levels, creating a huge opportunity for providers able to deliver quality care.  Pioneer is an established quality provider which, until acquisition, limited its work to the North of England and now, as part of Totally, has the potential to grow its footprint across the UK and Ireland, offering our expanded range of services to both new and existing customers.

ENERGY FITNESS PROFESSONALS

Progress during the year

Since the acquisition, EFP has mobilised two new contracts, been awarded a further five-year extension with long-standing customer the Royal Mail, and work has begun on the development of an enhanced digital services offering which brings together existing services from Totally and EFP.

Since the removal of COVID-19 restrictions in the UK, EFP has witnessed a change in approach across all business sectors, with many businesses adopting hybrid working patterns for their employees and refurbishing and enhancing their fitness and wellbeing offering to encourage employees back to the workplace.

EFP has continued to develop its digital offering, "Health Hub", leveraging capabilities within EFP and the broader Totally group to provide new opportunities for new and existing customers.

The future

As corporate customers offer flexible working patterns, there is a growing need to provide physical and mental health services that can be accessed both in person and online. EFP provides this combination of services. During the coming year we will continue to expand the ranges of services offered, drawing on the combined expertise within EFP and other Totally businesses.

FINANCIAL REVIEW

Outstanding trading performance

Pressure on urgent and emergency care in the UK continued to increase during 2021/22 and Totally has remained a key partner to the NHS throughout the year. We continue to be well positioned to support the management of increasing demand, not only in urgent care but also the ever-increasing waiting lists for diagnostic and elective treatment.

We continued to respond to changes in demand driven by the global COVID-19 pandemic. Changes to guidance in society during the year led to increased levels of the virus which impacted demand for our NHS 111 services and required a stronghold of healthcare protocols to protect our own staff and maintain services. Alongside this, demand across urgent care also continued to rise, reflecting a society that sought to "live life as normal" whilst experiencing challenges accessing primary care.

Waiting lists for elective care continued to rise, presenting further opportunities for our Insourcing Division and new acquisition, Pioneer Health Care, which was completed in March 2022. In December 2021, we also completed the acquisition of Energy Fitness Professionals, a provider of corporate wellbeing services, presenting the opportunity to diversify our contract base, expand into the corporate market and respond to growing demand for employee wellbeing solutions.

Further sustainable growth was delivered through a combination of organic growth and sensible M&A activity. Growth in revenue was 12% year on year at £127.4 million and the Group generated a profit before tax of £1.3 million (2021: £0.1 million). Underlying EBITDA increased 24% to £6.2 million (2021: £5.0 million), excluding exceptional items of £0.2 million during the year.

The Group continues to be cash generative. As at 31 March 2022, the Company was in a healthy financial position with £15.3 million of net cash (31 March 2021: £14.8 million), after £7.4 million was utilised to complete aforementioned acquisitions, with no debt financing. During the period, the Company secured a £5.0 million rolling credit facility, should it be required at any time in the future. To date this has not been utilised.

The Company accordingly made the distribution of its interim dividend in February 2022. The intention is to consider future dividend payments based upon the trading performance of the Group.

Growth in revenue was primarily driven by an increase in insourcing services. Total revenue from the provision of insourcing services was £10.3 million (2021: £3.1 million) predominantly made up of revenue from Totally Healthcare which more than tripled to £9.6 million (2021: £3.1 million), as hospitals and trusts sought support to tackle increasing waiting lists.  An additional £0.7 million of revenue was contributed by Pioneer Health Care, which was acquired by the Group on 10 March 2022.  Urgent Care revenue increased 3.6% to £109.2 million. Planned Care revenues increased by 43.7% to £7.5 million, as face-to-face consultations increased. Revenue from Energy Fitness Professionals, acquired on 15 December 2021, totalled £0.3 million.

The Group secured a number of new contracts for urgent care services during the financial year totalling c. £59 million, including a five-year contract for the provision of GPOOH for Staffordshire and Stoke-on-Trent CCGs and a three-year contract for the provision of an UTC for King's College NHS Foundation Trust. Both contracts have now been fully mobilised. Additionally, contract extensions for urgent care services worth c. £72 million were secured, reflecting long-term relationships with healthcare commissioners and service quality.  These extensions, importantly, underpin recurring revenue for the Group.

All trading divisions and businesses continue to tender for relevant contracts where opportunity exists.

Margin reduced slightly to 18.0% (2021: 18.3%) largely as a result of managing COVID-19 regulations.

All of our businesses continually review service delivery models and this approach has supported us through our response as we exit the global pandemic. We continue to use additional technology to offer services remotely, delivering NHS 111 24/7 and flexing our services to deliver sustainable support to our partner, the NHS.

The Group posted an EBITDA of £6.2 million excluding exceptional items of £0.2 million. The profit before tax of £1.3 million is stated after an amortisation charge of £2.3 million relating to the intangible value of contracts acquired.

Exceptional items

Exceptional items, amounting to £0.2 million, related to costs incurred in the acquisitions of Energy Fitness Professionals and Pioneer Health Care.

Cash flow statement

Cash generated from operating activities remains positive in the year, reflecting improved profitability of the Group offset by investment in M&A activity.

Contingent consideration

The contingent consideration arising on acquisition is discussed below.  The remaining balance of the Vocare contingent consideration relates to monies advanced to employees during the first month of employment. The balance is payable quarterly and reflects advances recovered from employees when they leave.

Acquisition of Energy Fitness Professionals

On 16 December 2021, the Company completed the acquisition of the entire share capital of Energy Fitness Professionals Limited for £1.3 million on a cash-free and debt-free basis with a normalised level of working capital.

The Consideration comprises £1.0 million in cash on completion, satisfied using existing cash resources of the Company, and up to £0.3 million in cash on a deferred basis based on the audited financial performance of EFP for the financial year ending 31 March 2023. 

Energy Fitness Professionals works with a growing number of high-profile organisations across the UK, including large corporates, central Government departments, universities, and colleges to provide workplace wellbeing and corporate fitness services. EFPs offering includes gym design and gym management, alongside digital services to support employee wellbeing in the workplace, focusing on physical and mental wellbeing.  The acquisition provides Totally with access to a strong client base and digital foundation to respond to increasing market demand from employers for services which support employees with both physical and mental wellbeing services, in physical locations and online.

The provisional assets and liabilities as at 16 December 2021 arising from the acquisition were as follows:

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.

Acquisition of Pioneer Health Care

On 10 March 2022, the Company completed the acquisition of the entire share capital of Pioneer Health Care Limited for up to £13.0 million on a cash-free and debt-free basis with a normalised level of working capital.

The Consideration was payable as to 80% in cash and the remaining 20% satisfied by the issue of new ordinary shares in Totally. £6.9 million was paid on completion, on a cash-free and debt-free basis, and up to £6.1 million is payable on a deferred basis, based on the financial performance of Pioneer in the year ended 31 March 2022 and expected to be paid in September 2022.

Pioneer Health Care is a highly reputable and independent healthcare provider of specialist NHS secondary care services, free at the point of delivery and which the Board believes provides an additional platform for further future profitable growth. Pioneer Health Care delivers insourcing and outsourcing services across a wide range of surgical and medical specialities to NHS patients and holds contracts with NHS Foundation Trusts and Clinical Commissioning Groups ("CCGs"), predominantly across the North of England. Pioneer also holds the difficult-to-acquire AQP status, which enables it to offer services direct to NHS patients across the whole of England, free at the point of delivery, where there is sufficient demand.

The provisional assets and liabilities as at 10 March 2022 arising from the acquisition were as follows:

The initial accounting for the acquisition of Pioneer Health Care Limited has only been provisionally determined at the end of the reporting period.  For tax purposes, the tax values of Pioneer Health Care Limited's assets are required to be reset based on market values of the assets.  At the date of finalisation of these consolidated financial statements, the necessary market valuations and other calculations had not been finalised and they have therefore only been provisionally determined based on the directors' best estimate of the likely tax values.

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.

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 final dividend of 0.50 pence per share. This, together with the interim dividend of 0.50 pence per share paid in February 2022, makes a total dividend for the year of 1.00 pence per share. Subject to approval by shareholders at the Annual General Meeting to be held on 5 September 2022, the final dividend will be paid on 12 October 2022 to shareholders on the register as at the close of business on 9 September 2022. The shares will be marked ex-dividend on 8 September 2022.

Lisa Barter ACA

Chief Financial Officer

12 July 2022

For further information please contact:

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the year ended 31 March 2022

Consolidated Statement of Changes in Equity

For the year ended 31 March 2022

Consolidated Statement of Financial Position

As at 31 March 2022

Consolidated Cash Flow Statement

For the year ended 31 March 2022

NOTES TO THE FINANCIAL INFORMATION

FOR THE YEAR ENDED 31 MARCH 2022

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 prepared in accordance with the recognition and measurement principles of international accounting standards in conformity with the requirements of the Companies Act 2006 and in accordance with the AIM rules and is therefore not 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 2022 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 is presented in Sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report. The financial position of the Group is described in the Financial Review.

The Group has consistently had net current liabilities in recent reporting periods which reflects the nature of the contractual terms with customers and suppliers. The Group carefully manages financial resources, closely monitoring the working capital cycle and has long-term contracts with a number of customers and suppliers across different geographic areas within the United Kingdom and industries. Based on the existing cash balances, underlying performance and cash flows generated from operating activities, the Directors believe that the Group has sufficient financial resources to be able to meet its obligations as they fall due for a period of at least 12 months from the date of this financial information and are comfortable that it is a going concern.

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 are deemed to be an asset or liability are 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 comprises the provision of services to the healthcare sector, including urgent care, physiotherapy, dermatology, insourcing, outsourcing and corporate wellbeing services.  Services are provided through short-term and long-term contracts.

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.

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.

Planned care 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. 

Urgent care services

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.

Corporate wellbeing services

Revenue arises from provision of management services for corporate gyms and upfront monthly membership fees for gyms paid by individuals. Both are recognised in the month to which they relate.

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.

Government grants 

The Group applied for government support programmes introduced in response to the global pandemic. Included in comprehensive income in 2021 was £967,000 of government grants obtained relating to supporting the payroll of the Company's employees (2022: £nil). The Company elected to present this as reducing the related expense. The Company had to commit to spending the assistance on payroll expenses, and not reduce employee head count below prescribed levels for a specified period of time. The Company does not have any unfulfilled obligations relating to this programme.

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:

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, cost is 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 ("CGU"s) or groups of CGUs that is expected to benefit from the synergies of the combination.

A CGU 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 CGU 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.

On disposal of the relevant CGU, 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 the 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 currency 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

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 principal 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.

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.

New and amended standards adopted by the Group

The accounting policies adopted are consistent with those of the previous financial year. New or amended financial standards or interpretations adopted during the year are detailed below:

•     Amendments to IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement, IFRS 7 Financial Instruments: Disclosures, and IFRS 16 Leases - Interest Rate Benchmark Reform (Phase 2)

•     Amendments to IFRS 16 Leases - COVID-19-Related Rent concessions beyond 30 June 2021.

No material impact has arisen as a result of applying these standards.

Standards, interpretations and amendments not yet effective

The following standards, amendments and interpretations, which are effective for reporting periods beginning after the date of these financial statements, have not been adopted early:

In reviewing the above standards, the Company does not believe that there will be a material impact on the financial statements.

4. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. Dilutive potential ordinary shares are those share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the period. For diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares unless there is a loss before exceptional items.