23rd Sep 2005 07:00
Ascribe plc23 September 2005 23 September 2005 Ascribe plc Maiden preliminary results Ascribe plc ("Ascribe" or "the Company"), the health IT group focusing onmedicines management, today announces its maiden preliminary results for theyear ended 30 June 2005 following its admission to AIM on 17 December 2004. Highlights: Financial • Pro forma* profit before tax** increased to £1.3 million (2004: £0.2 million) • Profit before tax increased to £0.8million (2004: £(0.4) million loss) • Pro forma* turnover increased to £6.8 million (2004: £6.3 million) • Pro forma* adjusted EPS increased to 1.0 pence • First dividend of 0.1 pence per share declared • Recurring maintenance revenue of 61% • Strong balance sheet with net cash of £2.7 million * Taken from a pro forma profit and loss account to show the results of theGroup as if it had been trading in its form at flotation for a full 12 monthswith three acquisitions in May and June being included in the results from thedates of their acquisitions. ** Before goodwill amortisation Operational • Management team strengthened • Ascribe systems now installed in over 50% of UK hospitals • Four acquisitions made during the year, widening market coverage to include: • Mental health • Community care • Child care • GP practices • Accident & Emergency • Retail pharmacy Chris Moore, Chairman of Ascribe, commented: "2005 has been a remarkablysuccessful year for the Group with exceptional financial results that surpassedour initial expectations. This success has come from strong organic growth andimpressive value yielded from acquisitions made at and since our flotation". Stephen Critchlow, Chief Executive of Ascribe, added: "We look ahead to the newyear with excellent visibility of earnings. The business has a good order book,a strong sales pipeline reinforced by an excellent record of winning publictenders, a healthy record of providing follow-on products to existing customersand a recurring maintenance contract income level running at 61% of sales in theperiod." "Furthermore, we expect our strategy of adding earnings-enhancing acquisitionsto an organically growing core medicines management business to deliver enhancedgrowth in the coming years." Contacts: Ascribe plc Tel: +44 (0) 207 638 9571 until 12:30pmStephen Critchlow Tel: +44 (0) 161 280 8080Chief Executive Jeremy Lee Tel: +44 (0) 207 638 9571 until 12:30pmGroup Finance Director Tel: +44 (0) 161 280 8080 Citigate Dewe Rogerson Tel: +44 (0) 207 638 9571Ginny PulbrookJustin Griffiths CHAIRMANS'S STATEMENT I am delighted to present Ascribe's maiden preliminary results since itsadmission to AIM on 17 December 2004. The Group has made significant progress inthe medicines management market and has delivered excellent financial resultsfor the year, surpassing initial expectations. This success comes from strongorganic growth and impressive value yielded from the acquisitions made at, andsince, flotation. Trading Results 2005 has been a remarkably successful year for the Group. Following an earlierperiod of significant investment in software development, the company has beenable to apply greater focus on creating and pursuing sales opportunities.Turnover has increased by 89% to £5.3m (2004: £2.8m). Operating profit of £0.7m(2004: (£0.4m)) represents a £1.1m turnaround in profitability over the previousyear. In order to provide a better understanding of our trading results we haveprepared a pro forma profit and loss account which is set out in the FinancialReview below. This shows the results of the Group as if it had been trading inits form at flotation for a full twelve months with the three acquisitions madein May and June 2005 being included in the results from their dates ofacquisition. I am very pleased to report that the pro forma profit before taxand the amortisation of goodwill has grown to £1.3m in the year to 30 June 2005from a profit of £0.2m in 2004. This has been due to continued organic growth insales of our medicines management software, the expansion of the Group, and thedelivery of synergies and economies of scale from transforming the enlargedgroup into flexible and efficient divisions able to call upon key and commonresources. Sales revenue visibility is robust with 61% of pro forma revenues for thecurrent year being derived from recurring maintenance contracts and a further17% of account development revenue from existing customers. The Group continuesto perform very well in the tenders for which it competes. Pro forma adjusted basic earnings per share in 2005 increased to 1.0 p from 0.3pin 2004. The Group's balance sheet is strong with net cash at 30 June 2005 of £2.7m.Operating cashflow for the year represented 198% of operating profits. Management and Staff During the period since flotation we have established a strong plc board and aneffective operating management team who are well positioned to deliver enhancedshareholder value from the enlarged Group. In an increasingly competitiveenvironment, attention to the needs of patients and customers becomesincreasingly important and I would like to thank all of our employees for theirhard work during the year which have helped us to maintain our market leadingposition in medicines management. Dividends The Board has decided to recommend a progressive dividend policy that sharessome of the trading success with shareholders whilst recognising the requirementfor cash to pursue further acquisitions. The Board recommends a first and finaldividend of 0.1p per share. Subject to approval by the shareholders at the AGMon 26 October 2005 this dividend will be paid on 27 October 2005 to shareholderson the register at the close of business on 7 October 2005. Current Trading and Outlook Ascribe has started the new financial year trading in line with managementexpectations and we expect to continue to deliver value for our customers andtheir patients, our shareholders and our employees. Our strategy for growth,based on adding market-leading companies with earnings-enhancing IT solutions toour existing core medicines management business, provides a growing platformfrom which to deliver enhanced growth in the coming years. The company hasalready begun to benefit from synergistic sales opportunities between productsand healthcare markets, demonstrating the value of solid organic growth and amore cohesive set of healthcare solutions to our customers and investors. We enter the new financial year with excellent visibility of earnings - an orderbook at record levels, a strong bank of tendering activity and prospects andrecurrent maintenance income that represents over half of the Group's totalincome. Chris Moore, Chairman. CHIEF EXECUTIVE'S REPORT Strategy Ascribe's web-based medicines management software provides a solution to arelatively new market. Strong organic growth can be achieved by offering theseproducts as follow-on sales to any customer handling medicines. Ascribe'sIntegrated Clinical Workstation ("ICW") software also provides an integrationcapability allowing the Group to move to a single product strategy. Using thisapproach Ascribe can grow stakeholder value when acquiring other businesses inthe Health IT sector by improving their solution offering and sales revenue, andoptimising their overhead structure. Operations Since flotation we have organised the group into three divisions - Pharmacy,Mental Health & Community Care and Primary & Unscheduled Care. These divisionsbenefit from a group sales and product strategy. Common services across theGroup are managed to improve performance and deliver economies of scale. Ouroverseas operations provide a route to market for the integrated product. Wewill be launching the new web-based pharmacy and ICW software in our overseasmarkets in November 2005. Pharmacy The Pharmacy Division comprises the traditional hospital and retail pharmacymarkets together with the emerging opportunities in ward-based electronicprescribing. The Division has a market leading position in UK hospital pharmacywith Ascribe software installed in more than 50% of hospitals. With theacquisition of Park Systems, the Group now also supplies retail pharmacycustomers. In addition the Division has systems in 41 hospitals in South EastAsia and Australasia, where it has a sales office in Brisbane. The Division has enjoyed continued organic growth during the year. New softwaresolutions have been installed and are in live usage at 27 new sites. With uniquefunctionality and access to a clinical decision support database the ascribeproduct has won nearly 90% of the tendering activity in this market in recentyears. Its modern architecture facilitates simple integration with otherhospital systems. An experienced operations team, which includes a highproportion of pharmacists, ensures that implementations are efficient andeffective for the customer. Further sales are expected where the new medicinesmanagement and electronic prescribing systems are sold to existing pharmacycustomers. Mental Health and Community Care Over 100 primary care trusts in the UK and Ireland use the Group's solutions.With a track record of delivering for over 20 years, ePEX is seen as a leader inthe Mental Health IT market. We are already delivering Ascribe's new web-basedmedicines management solution for drug misuse and customer feedback has beenexcellent. These solutions are expected to comprise a significant element of thedivision's organic growth in the coming year. Healthcare Trusts are widening the usage of care systems in the community. Manycustomers have therefore extended their software licences to include furtherusers and modules. This increases recurring maintenance revenue and has beenaccelerated by improved system functionality, particularly in the sphere ofweb-based electronic care management modules. Increasingly, field-based mentalhealth and child care clinicians are using our systems, day to day, to treatpatients in the community. Primary and Unscheduled Care This Division delivers software to accident & emergency (A&E) departments, minorinjuries clinics and GP practices throughout the UK and Ireland. The GP system is supported by a loyal user group who use traditional GPmanagement software. Primary care processes are changing considerably andAscribe is committed to offering flexible software solutions to the new ways ofworking. This is being driven by a move to commission healthcare services fromlarger and more capable facilities in the community, offering unscheduled caresuch as treating minor injuries. In May 2005 Ascribe acquired Footman Walker,which supplies software to 30% of A&E departments in the UK as well as some ofthe newer minor injuries units. Since acquisition, contracts for four new siteshave been won, demonstrating the growth potential within this Division. We arealso developing software to serve the needs of newer GP surgeries where extrafunctionality is required. This approach has been designed to complement the NHS"Connecting for Health" programme. The recent sales orders for A&E solutions have taken this business to a recordsales level as it moves into the delivery phase of its latest system offering, "Symphony". Symphony is based on the same Microsoft technologies as the Ascribeproducts and will be rapidly integrated to enable a single product offering. Product Strategy Our web-based medicines management solution will be integrated with the currentproduct offerings of our recent acquisitions, providing an ideal vehicle todeliver integrated modules as follow-on sales to current customers. Thereorganisation of the development operation will ensure that Ascribe can offer asingle product to any health IT market. Growth arising from this strategy is expected to be delivered progressively overthe next five years. Using the Group's overseas development team in tandem withUK staff that has domain knowledge will mean that our development resource willbe optimised and will be more effective in its delivery. This strategy willenable development teams from incremental acquisitions to quickly reap thebenefits of scale and a common software architecture. Sales and Marketing We have a healthy sales pipeline against the products currently available.Customers are demanding integration and clinical functionality to addresschanges in healthcare, where systems become organised around the needs of bothpatients and the healthcare organisation. Ascribe's Medicines Managementsoftware delivers the functionality required to address the needs of ourcustomers today and also delivers integration that can be used to deliver otherproducts from our merged group, seamlessly, to the customer withoutre-development. Business Development Strong organic growth is coming from selling our departmental and clinicalsystems directly to clinicians. Customers are demanding an integrated approachto patient care from a responsive supplier that can be flexible as healthsystems change both in the NHS and overseas. Ongoing acquisitions of companies that can use Ascribe IT solutions to enhancedelivery to their customers, or who can add to this product offering, will putAscribe in a dominant position as a clinical systems provider. Stephen Critchlow, Chief Executive FINANCIAL REVIEW Plc Creation The Company was incorporated and registered in England and Wales on 12 August2004. On 17 December 2004, the Company's ordinary shares were admitted totrading on AIM. Operating Results (including unaudited pro forma results) The reported results in the profit and loss account represent the trading ofthree elements of the group: firstly, the Company since incorporation; secondly,ASC Computer Software Limited and its subsidiaries ("ASC") for the year andfinally, all other subsidiaries since acquisition. These results show turnoverof £5.3m and operating profit before amortisation of goodwill of £0.9m. In order to provide a clearer understanding of the Group's results we haveproduced a pro forma profit and loss statement, which shows the results for theGroup as if its constituent elements (namely ASC and Protechnic Exeter Limited("Protechnic") at the time of flotation at 17 December 2004 had been trading forthe full year). The results of the acquisitions made in late May and June 2005have been included from their respective dates of acquisition. The pro formaresults for both years have been prepared on the basis of current accountingpolicies except insofar as a) the same 2005 past-year goodwill amortisationcharge for Protechnic has been used for 2004; b) the same 2005 interest credithas been used for 2004; and c) the same 2005 non-equity dividend has been usedfor 2004. The comparative pro forma results for the year to June 2004 representthe results of ASC and Protechnic only for that period. Pro forma Profit and Loss Account Proforma year ended 30 Proforma year ended 30 June 2005 June 2004 £'000 £'000 Turnover 6,767 6,243Cost of Sales (724) (867)Gross Profit 6,043 5,376Overheads (4,864) (5,240)Operating Profit* 1,179 136Interest receivable 97 97Profit on ordinary activities before taxand goodwill 1,276 233Goodwill amortisation (148) (148)Profit on ordinary activities before tax 1,128 85Pro forma earnings per shareBasic 0.80p 0.11pDiluted 0.79p 0.11pAdjusted basic* 1.03p 0.34p * Before goodwill amortisation Earnings per Share Adjusted basic earnings per share is 0.9p (2004: (0.5p)) Adjusted basic proforma earnings per share is 1.0p, up from the previous year (2004: 0.3p). Tax The tax charge for the year of £0.15m represents an effective rate of 15.8% onprofit before tax and goodwill amortisation. This is due to the tax lossesutilised against profits made in ASC and the availability of enhanced allowancesfrom investment in R&D activity across the Group. Balance Sheet and Cash Flow The balance sheet as at 30 June 2005 shows net assets of £6.4m, which includesgoodwill of £8.3m, deferred income of £3.7m and deferred cash consideration of£1.2m. It also includes net cash balances of £2.7m. During the year the Group'scash flow from operating activities was strong, representing a conversion rateof 198% of operating profit before goodwill amortisation. The funds raised atfloat were used to repay ASC's preference shareholders and to meet the initialcash consideration for the Protechnic acquisition. The Group remains highly cashgenerative, not least because of the high level of recurring annual maintenancecontract income paid in advance. Acquisitions On 17 December 2004, the Group acquired the entire share capital of ProtechnicExeter Limited and its subsidiaries. The initial consideration of £5m wassatisfied by £2.7m in cash and £2.3m in shares. Further consideration of £0.8min cash is payable if certain performance criteria are met. On 20 May 2005, Footman Walker Associates Limited and its subsidiary wasacquired for an initial consideration of £1.8m. This was satisfied by £1m incash and £0.8m in shares. A further £0.8m consideration is payable (£0.2m incash and £0.6m in cash or shares) if certain performance criteria are met. On 17 June 2005, the Group acquired Arkive Computing Limited for an initialconsideration of £52,000 in cash and shares, and deferred consideration of£55,000. On 21 June 2005, the Group acquired Park Systems Limited for an initial cashconsideration of £13,000 plus a deferred consideration of up to £0.4m (£0.2m incash and £0.2m in cash or shares), subject to meeting certain performancecriteria. Goodwill Amortisation A charge of £0.15m for the amortisation of goodwill has been made during theyear, representing a part-year charge in all cases. Goodwill is being amortisedover 20 years for each of the acquisitions made during the year. Jeremy Lee, Finance Director CONSOLIDATED PROFIT AND LOSS ACCOUNTYear ended 30 June 2005 2005 2005 2004 2004 £'000 £'000 £'000 £'000 TURNOVERContinuing operations 3,086 2,826Acquisitions 2,261 - 5,347 2,826 Cost of sales (415) (50) Gross profit 4,932 2,776 Administrative expenses (4,188) (3,214) Continuing operations 392 (438)Acquisitions 352 -OPERATING PROFIT / (LOSS) 744 (438) Continuing operations 392 (438)Acquisitions 500 -Operating profit/(loss) before goodwillamortisation 892 (438)Goodwill amortisation (148) - Interest receivable 50 17 PROFIT / (LOSS) ON ORDINARY ACTIVITIES BEFORE 794 (421)TAXATION Tax on profit / (loss) on ordinary activities (149) 118 PROFIT / (LOSS) ON ORDINARY ACTIVITIES AFTER 645 (303)TAXATIONDividends and appropriations (200) (216) RETAINED PROFIT / (LOSS) 445 (519) Earnings / (loss) per ordinary share Adjusted basic 0.93p (0.48p)Basic 0.65p (0.82p)Fully diluted 0.64p (0.82p) CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Profit / (loss) for the financial year 445 (519)Exchange loss (3) (1) Total recognised gains and losses relating to the 442 (520)year CONSOLIDATED BALANCE SHEET30 June 2005 2005 2004 £'000 £'000 FIXED ASSETSIntangible fixed assets 8,312 -Tangible assets 215 239 8,527 239CURRENT ASSETSDebtors 1,524 716Cash at bank and in hand 2,700 613 4,224 1,329 CREDITORS: amounts falling due (6,181) (1,254)within one year NET CURRENT (LIABILITIES) / ASSETS (1,957) 75 TOTAL ASSETS LESS CURRENT LIABILITIES 6,570 314 CREDITORS: amounts falling due after more (200) -than one year NET ASSETS 6,370 314 CAPITAL AND RESERVESCalled up share capital 1,070 2,929Shares to be issued 855 -Share premium account 6,979 468Merger reserve 561 -Profit and loss account (3,095) (3,083) SHAREHOLDERS' FUNDS 6,370 314 SHAREHOLDERS' FUNDSEquity shareholders' funds 6,370 (2,440)Non-equity shareholders' funds - 2,754 6,370 314 CONSOLIDATED CASH FLOW STATEMENTYear ended 30 June 2005 Note 2005 2004 £'000 £'000 £'000 £'000 Net cash inflow / (outflow) from operating activities 1 1,764 (284) Returns on investments and servicing of financeInterest received 50 15 TaxationCorporation tax (paid) / received (4) 269 Capital expenditurePurchase of tangible fixed assets (39) (7)Disposal of tangible fixed assets 4 - (35) (7)AcquisitionsNet cash acquired with subsidiaries 2,687 -Cash consideration and expenses (3,933) - (1,246) - Net cash inflow / (outflow) before financing 529 (7) FinancingIssue of ordinary share capital 5,000 50Fundraising expenses (705) -Repayment of preference shares (2,300) -Preference shares redemption payment (454) - Net cash inflow before financing 1,541 50 Increase in cash 2 2,070 43 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENTYear ended 30 June 2005 1. RECONCILIATION OF OPERATING PROFIT/(LOSS) TO NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 2005 2004 £'000 £'000 Operating profit / (loss) 744 (438)Depreciation of tangible fixed assets 185 162Goodwill amortisation 148 -Loss on sale of tangible fixed assets 6 -(Increase) / decrease in debtors (206) 28Increase / (decrease) in creditors 887 (36) Net cash inflow / (outflow) from operating activities 1,764 (284) 2. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2005 2004 £'000 £'000 Increase in cash in the year 2,070 43Exchange movements (4) (3) Net funds at 1 July 613 573 Net funds at 30 June 2,679 613 3. EARNINGS / (LOSS) PER SHARE Basic earnings per share are calculated by dividing profit for the financialyear attributable to ordinary shareholders by the weighted average number ofshares in issue. Diluted earnings per share is the weighted average number ofordinary shares in issue adjusted for the potential ordinary share dilution fromshare options and shares to be issued. Adjusted basic earnings per share wascalculated by adding back goodwill amortisation and the dividends andappropriations relating to non equity shares repaid at flotation, to moreaccurately reflect the Group's underlying earnings. 2005 2004 Basic Adjusted Diluted Basic Adjusted Diluted £'000 £'000 £'000 £'000 £'000 £'000Profit/(loss) after taxation 645 645 645 (303) (303) (303)Non-equity appropriations (93) - (93) (216) - (216)(pre-flotation)Goodwill amortisation - 148 - - - -Profit/(loss) attributable to 552 793 552 (519) (303) (519)ordinary shareholdersNumber of shares (thousands) 84,946 84,946 86,226 62,886 62,886 62,886Earnings (loss) per share 0.65p 0.93p 0.64p (0.82p) (0,48p) (0.82p)(pence) NOTES Year ended 30 June 2005 1. The financial information set out above in respect of the years ended 30 June 2005 and 30 June 2004 does not constitute the company's financial statements for those periods but has been derived from the audited statutory accounts for those years and the unaudited financial information within the Chairman's Statement, the Chief Executive's Report and the Financial Review in the 2005 accounts. The Group's maiden set of statutory accounts for the year ended 30 June 2005 will be delivered to the Registrar of Companies shortly. The auditors have reported on those accounts; their report was unqualified and does not contain statements under s237(2) or (3) Companies Act 1985. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ASP.L