23rd Oct 2007 07:01
Ultrasis PLC23 October 2007 Ultrasis plc Final results for the year ended 31 July 2007 Highlights • Turnover ahead 27% (42% ahead in the second half) on the previous year at £1,577,000 (2006: £1,243,000) • High renewal rate and strong sales pipeline for 2008 with some forward contracts already in place • Deferred income of £1,388,000, £1,272,000 of which is revenue recognisable within the financial year ending 31 July 2008 • Group remains debt free. Cash balance of £879,000 (2006: £872,000) • Company is self financing with projected income flows to cover both working capital and development needs from internal resources • Implementation of Beating the Blues(R) across PCTs expected to benefit from the additional £170m funding of psychological therapies recently announced by the Secretary of State • New "blue chip" customers and partners: Priory Group, ICAS, Turning Point. For further information please contact: Ultrasis plc: Nigel Brabbins, Chief Executive +44 (0) 20 7566 [email protected] www.ultrasis.com Insinger de Beaufort: Noelle Greenaway +44 (0) 20 7190 7000 Media enquiries: Capital MS&L Peter Curtain / James Madsen +44 (0) 20 7307 [email protected] Statement from Chairman and Chief Executive This year has been defined by the announcement of the then Secretary of State,The Rt Hon Patricia Hewitt MP, that Beating the Blues should be available fromApril 2007 to all patients with mild to moderate depression, via their GP. Ithas become clear that funding for this had not been set aside resulting in themajority of PCTs struggling to meet the commitment and a slow uptake. We were therefore delighted when the Prime Minister confirmed in hisComprehensive Spending Review that extra funding would be directed to PCTs fortreating depression and anxiety. This was swiftly supported with theannouncement by Alan Johnson of an additional £170m funding over the next threeyears for the Improving Access to Psychological Therapies (IAPT) programme. Weexpect this to now result in the full implementation of Beating the Blues acrossthe NHS as directed by NICE. Beyond this we are delighted to report our moves into new markets for ourproducts and that continued sales successes have produced a strong cash balance,with no borrowings, and a sales pipeline making us financially secure and selffinancing. Financial results Consolidated turnover of £1,577,000 shows a 27% increase on 2006 (£1,243,000). It should be noted that turnover in the second half was 42% ahead of last yearwith first half growth of only 4% as a result of the NHS withholdingexpenditure pending the completion of the National Framework Agreement forBeating the Blues(R). Deferred income at the balance sheet date stands at£1,388,000, which includes some recent sizeable contract wins not yet reflectedin turnover or operating profit. In accordance with FRS 20 the group has incurred a non cash charge of £495,000in respect of options granted. (2006 as restated: £175,000). Otheradministrative expenses increased by 29%, mostly through recruitment ofadditional personnel needed to deliver Beating the Blues(R) in the NHS. This hasresulted in an operating loss of £269,000 before share-based payments and£764,000 after share-based payments (2006: £188,000 and as restated £363,000respectively). The Group remains debt free with cash balances of £879,000 at 31July 2007. Beating the Blues(R) in the NHS In February 2006 the National Institute for Health & Clinical Excellence ("NICE") recommended Beating the Blues (R). We were pleased in March 2007 whenthe national framework was agreed with the Department of Health as the basis forcontracts to provide computerised cognitive behavioural therapy (cCBT) toPrimary Care Trusts ("PCTs"). We were also pleased of course when the thenSecretary of State for Health, The Rt Hon Patricia Hewitt MP, confirmed thatBeating the Blues(R) should "now be available and provided by PCTs". Thisposition was reiterated on the NHS Choices website which continues to advisepatients to ask their GPs for Beating the Blues(R). Despite these assurances, the practical implementation has been slow. Thesestatements were misleading and patients continue to be denied Beating the Blues(R) as contracting for provision of Beating the Blues(R) to date falls far shortof the Government's stated commitments. Since that announcement only 24 of the153 PCTs, mainly in the East Midlands, have purchased and made available Beatingthe Blues(R). The East Midlands Strategic Health Authority immediately saw thebenefits for its patients and negotiated a collaborative purchase for its PCTs. Ultrasis has continued to press the government and the Department of Health todeliver its committed policy with approaches to the Directors of Mental Healthand the Directors responsible for the IAPT programme. We have lobbied MPs, thenew Secretary of State (the Rt Hon Alan Johnson MP) and the Prime Minister andhave again received a public commitment to support the NICE guidelines onDepression and Anxiety. Alan Johnson, on the 10 October 2007 announced under the Prime Minister'sComprehensive Spending Review the provision of an extra £170m for the expansionof psychological therapies and commitment to implement NICE guidelines for thetreatment of depression and anxiety. We are taking steps which we hope willresult in all PCTs following the East Midlands lead, fulfilling their legalobligations to patients and successfully implementing national policy. Although the pace of contracting for the provision of Beating the Blues(R) inthe NHS has been frustrating we remain confident that the Government's pledge toprovide cCBT across primary care settings in England and Wales will be honoured. Corporate In January, we entered into an agreement with the Priory Group, a leadingindependent provider of specialist mental healthcare and education services, todeliver Beating the Blues(R) to Croydon Primary Care Trust as part of theirsuccessful tender for providing all of the psychological services to the peopleof Croydon. Ultrasis, of course, enjoys success in markets other than the NHS. A recent andsignificant contract win was with ICAS, a leading EAP (employee assistanceprovider). ICAS is providing Beating the Blues(R) as an integral component ofthe services offered to its corporate clients, providing active support of theprogramme through its well established telephonic counselling and remote casemanagement services. ICAS is a new customer for Ultrasis, in a significant newmarket, underlining the substantial potential for Beating the Blues(R) inmarkets beyond those where it is currently deployed. The agreement is furtherrecognition of the benefits of using computers to deliver access to treatmentsfor common mental health problems such as depression and anxiety. Conditions Management Programme / Pathways to Work As we described last year we entered into a pilot contract in the North West ofEngland to provide Beating the Blues(R) as part of the DWP conditions managementprogramme to assist with moving people from incapacity benefit to paidemployment. In achieving this we worked with Turning Point, the UK's leading social careorganisation, to provide a fully managed service, providing the facilities,infrastructure and hands on personnel to deliver, administer and manage Beatingthe Blues(R). Ultrasis and Turning Point have since announced a jointpartnership which will enable Primary Care Trusts to have the option tocommission a voluntary sector provider to provide this fully delivered serviceto its population. In addition to the fully delivered service, we have also taken the opportunityto launch CMP Direct http://www.icasworld.com/cmp/ with ICAS - a jointinitiative providing a remote service model to those companies successful intheir DWP Pathways to Work tenders. CMP Direct provides a cost effective modelof case management, 24-hour telephone counselling and access to computer basedprogrammes for depression and other conditions. New Developments We launched www.thewellnessshop.co.uk towards the end of last year to create aplatform for entry into new markets and provide a vehicle for retailing onlinethe products from our Relief Series range plus Tension Taker. Our intention wasalways to create a vehicle for retailing our core product Beating the Blues(R)for those users who would prefer to access the programme directly. We will shortly be providing this as a service to those people who do not wishto follow a referral route via their GP and the NHS. The support of patientsduring the programme will be provided by a third party provider of psychologicalservices nationwide. The Market The significance of mental health as a disabling disease is increasinglyrecognised in the UK and in other markets. The World Health Organisationpublishes a report on http://www.who.int/mental_health/management/depression/definition/en/ stating that depression is the leading cause of disability andwill be the second leading contributor to the global burden of disease by 2020.In the UK depression is by far the most common mental health problem withbetween 8% and 12 % of the population (as many as 6 million people) suffering adepressive and/or anxiety related condition today. One in three consultations atGP level is with people who have emotional or psychological problems as the mainhealth problem. Ultrasis has one of the key proven solutions that is ready andable to make a significant impact on such a prevalent problem. Efficacy We continue to build on the initial data assessed by NICE in recommendingBeating the Blues(R) for implementation in the NHS. The British Journal of Clinical Psychology (November 2006) included a report ofa study about the use of Beating the Blues(R) in routine care. The study(entitled "The effectiveness of computerised cognitive behavioural therapy inroutine care" by Cavanagh et al) demonstrates that Beating the Blues(R) deliverssimilar benefits to the user as obtained by routine delivery of face to faceCBT. Although initially designed for primary care, Beating the Blues(R) is also ofproven benefit in more specialised settings such as the CBT Department inChelmsford. This centre has used the programme for over five years and demonstratedincreased capacity and a significant reduction in waiting times. Patientsassessed as suitable for cCBT are offered the programme and fully two thirds ofpeople who complete require no further treatment. In this type of settingBeating the Blues(R) can deliver the workload of a specialist nurse therapist atunder one fifth of the cost whilst achieving the desired clinical outcomes andmaintaining the exceptional standards of care required. A detailed analysis of data from the Chelmsford specialist CBT unit has shownthat Beating the Blues(R) works equally well in treating depression in peoplewith co-morbid physical illnesses (such as Irritable Bowel Syndrome, ChronicFatigue Syndrome, recurrent headaches, and asthma) when compared to people withdepression alone. This important published study is the first demonstration that cCBT can helpdepression in these conditions and demonstrates the broad application of Beatingthe Blues(R) US and Europe We are delighted to confirm we have renewed our contract with MHN (ManagedHealth Networks) in the US for the provision of our Relief Series and Drink &Drug wise products for another two years. We continue to work with MHN on otherdevelopments including potential partnerships to customise Beating the Blues(R)for provision in key markets within the US. Discussions with a broad range of other potential partners in the US and Europeare under way. Management and staff We were delighted to announce the appointment this year of John Smith to theboard. John joined Ultrasis in May 2005 as UK Sales Director. He worked withinthe NHS for more than 22 years and held a number of senior management posts,culminating in the role of Director of an NHS trust specialising in the deliveryof mental health services. We would like to thank all members of the team for their continued efforts onbehalf of the group. Gerald Malone Nigel Brabbins Non-Executive Chairman Chief Executive 22 October 2007 Consolidated Profit And Loss Account for the year ended 31 July 2007 2007 2006 AS RESTATED £000 £000Turnover - software licensing and services 1,577 1,243 Cost of sales (23) (17) ________ ________Gross profit 1,554 1,226 Administrative expenses - other (1,823) (1,414) - non-cash expenses re share options (495) (175) (2,318) (1,589) ________ ________Operating loss (764) (363) - loss on the disposal of fixed assets (12) (10) ________ ________Loss on ordinary activities before interest (776) (373) Finance income/(charges) (net) 7 (79) ________ ________Loss on ordinary activities before taxation (769) (452)Tax on loss on ordinary activities 4 (2) ________ ________Loss on ordinary activities after taxation (765) (454) ________ ________ Loss per shareBasic (0.05) p (0.03) pDiluted (0.05) p (0.03) p * Results for both years all resulted from continuing operations. Consolidated Statement of Total Recognised Gains and Losses for the year ended31 July 2007 2007 2006 AS RESTATED £000 £000 Retained loss for the year (765) (454) Foreign exchange translation differences on foreign currency net (14) (7)investment in subsidiaries __________ __________Total recognised loss for the year (779) (461) __________Prior Year Adjustment (175) __________Total recognised losses since last annual report (954) __________ Consolidated balance sheet as at 31 July 2007 2007 2006 AS RESTATED £000 £000Fixed assetsIntangible assets 2,485 2,497Tangible assets 37 43 __________ __________ 2,522 2,540 __________ __________Current assetsStock 27 28Debtors 929 429Cash at bank and in hand 879 872 __________ __________ 1,835 1,329Creditors: amounts falling due within one year (1,781) (1,029) __________ __________Net current assets 54 300 __________ __________Total assets less current liabilities 2,576 2,840Creditors: amounts falling due after more than one year (116) (96) __________ __________Net assets 2,460 2,744 __________ __________Capital and reservesCalled-up share capital 1,478 1,478Share premium account 21,104 21,104Share option reserve 670 175Capital reduction reserve 6,650 6,650Merger Reserve 2,324 2,324Profit and loss account (29,766) (28,987) __________ __________Equity shareholders' funds 2,460 2,744 __________ __________ Consolidated Cash Flow Statement for the year ended 31 July 2007 2007 2006 £000 £000 Net cash inflow from operating activities 4 292Returns on investments and servicing of finance 7 8Taxation 4 -Capital expenditure (8) (10)Acquisitions - (93) __________ __________Net cash inflow before management of liquid resources and financing 7 197Financing - 235 __________ __________Increase in cash in the year 7 432 __________ __________ Reconciliation of operating loss to net cash outflow from operating activities 2007 2006 AS RESTATED £000 £000 Operating loss (764) (363)Non-cash movement re Share Options 495 175Depreciation charge 13 19Fees settled in shares - 145Decrease in Stock 1 -Increase in debtors (500) (223)Increase in creditors 759 539 __________ __________Net cash outflow from operating activities 4 292 __________ __________ Analysis of cash flows 2007 2006 £000 £000Returns on investments and servicing of financeInterest received 16 14Interest paid (9) (6) __________ __________Net cash inflow/(outflow) 7 8 __________ __________ TaxationTax Credit Received 4 - AcquisitionsAcquisition costs - (215)Healthstar Group Plc - Cash acquired - 122 __________ __________Net cash outflow - (93) __________ __________ Capital expenditure and financial investmentPurchase of tangible fixed assets (8) (10) __________ __________Net cash outflow (8) (10) __________ __________FinancingIssue of share capital - 235 _________ _________Net cash inflow - 235 __________ __________ Analysis and reconciliation of net funds 1 August 31 July 2006 Cash flow 2007 £000 £000 £000 Cash in hand and at bank 872 7 879 _________ _________ _________Net funds 872 7 879 _________ _________ _________ 2007 2006 £000 £000 Increase in cash in the year 7 432 __________ __________Change in net funds resulting from cash flows 7 432Other non-cash changes - 738 __________ __________Movement in net funds in year 7 1,170Net funds/(debt) at 1 August 872 (298) __________ __________Net funds at 31 July 879 872 __________ __________ Note to the preliminary statement 1. Nature of financial information: The financial information set out in the announcement does not constitute thecompany's statutory accounts for the years ended 31 July 2007 or 31 July 2006.The auditors have reported on the statutory accounts for the years ended 31 July2007 and 31 July 2006 and their audit reports were unqualified and did notinclude any statements under Article 243 (3) of the Companies (Northern Ireland)Order, 1986. The accounts for the year ended 31 July 2006 have been filed with the Registrarof Companies. The full statutory accounts for the year ended 31 July 2007 willbe posted to shareholders before the end of January 2008. The accounts have been prepared on the historical cost basis and on a basisconsistent with the accounting policies disclosed in the Annual Report andAccounts for the year ended 31 July 2006 and also the new accounting policyapplicable in this period as described below. Share based payments The share option programme allows directors and staff to acquire shares of theCompany. The fair value of options granted after 7 November 2002 and those notyet vested as at the Company's effective date of FRS 20 (which is 1 January2006) is recognised as an employee expense with a corresponding increase inequity. The fair value is measured at grant date and spread over the periodduring which the employees become unconditionally entitled to the options. Thefair value of the options granted is measured using an option pricing model,taking into account the terms and conditions upon which the options weregranted. The amount recognised as an expense is adjusted to reflect the actualnumber of share options that vest (see note 2 for further details). 2. Exceptional items - Share based payment During the year the year FRS20 was introduced which requires a notional chargeto the P&L in respect of share options issued to Directors and Staff. Thecharge to the P&L for the year was £495,000 (2006 as restated: £175,000). Share options were granted to directors and staff as follows: - in March 2006 which vest in March 2009 - in May 2007 which vest in May 2010 All are contingent upon the achievement of the following criteria: - 60% for continuous employment during the vesting period and - 40% for achievement of annual profit targets 2007 Weighted average exercise price (p) Number of share options Outstanding at the beginning of the period 111,500,000 1.09pIssued during the period 59,350,000 1.35pOutstanding at the end of the period 170,850,000 1.18pExercisable at the end of the period - - The weighted average contractual life of the share options outstanding at yearend was 9 years. The value of the options is measured by the use of a binomial pricing model. The inputs into the binomial model were as follows: Options issued May 2007 Options issued March 2006 Share price at grant date 1.35p 2.14pExercise price 1.35p 1.09pVolatility 45% 45%Expected life 3 years 3 yearsRisk free rate 5.25% 4.41%Expected dividend yield - - Expected volatility was determined by calculating the historical volatility ofthe Group's share price over the previous 3 years. The expected life used inthe model has been adjusted, based on management's best estimate, for the effectof non-transferability, exercise restrictions and behavioural considerations. 3. Reserves Share Capital Share Premium reduction Profit and Merger Option Account reserve Loss account reserve reserve TotalGroup £000 £000 £000 £000 £000 £000 At 1 August 2006 as reported 21,104 6,650 (28,812) 2,324 - 1,266Prior Year Adjustment - - (175) 175 -At 1 August 2006 as restated 21,104 6,650 (28,987) 2,324 175 1,266 Transfer to share option reserve - - - - 495 495Retained loss for the year - - (779) - - (779) __________ __________ __________ __________ __________ __________At 31 July 2007 21,104 6,650 (29,766) 2,324 670 982 __________ __________ __________ __________ __________ __________ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Ultrasis Plc