19th Sep 2007 07:01
Ascribe plc19 September 2007 Press Release 19 September 2007 Ascribe plc ("Ascribe" or "the Group") Final Results Ascribe plc (AIM:ASP), the health IT Group, today announces its Final Resultsfor the year ended 30 June 2007. Highlights - Revenues up 55% to £15.3m (2006: £9.9m)- Recurring maintenance revenue at 63% (2006: 62%)- Earnings before interest, taxation, depreciation and amortisation(1) (EBITDA) increased 54% to £3.7m (2006: £2.4m(3))- Adjusted operating profit(2) up 55% to £3.5m (2006: £2.3m(3))- Operating margin(2) of 23% (2006: 23%(3))- Adjusted profit before tax(2) up 46% to £3.3m (2006: £2.3m(3))- Profit before tax up by 11% to £1.7m (2006: £1.5m(3))- Operating cash is 121% (2006: 111%(3)) of operating profit(2)- Adjusted earnings per share(2) up 29% to 2.38p (2006: 1.85p(3))- Dividend of 0.17p per share proposed - an increase of 31% on last year (1) before charge for share based payments(2) before goodwill amortisation and charge for share based payments(3) restated for prior year adjustment - change in accounting policy for development costs Stephen Critchlow, Executive Chairman of Ascribe plc commented "I am delightedwith the progress that Ascribe is making in all areas of its business, growingprofit and turnover by 55% in the year. There were some delays in sales inEngland, which are now resolving, as the market moves to local procurement. Theopportunities this offers encouraged us to invest in improved systems and extrapeople. Together with our success overseas we are well positioned as a capablesupplier, able to offer a complete solution to our customers at local level." For further information please contact: Ascribe plcStephen Critchlow, Executive Chairman Tel: +44 161 280 8080Jeremy Lee, Group Finance Director www.ascribe.com CenkosIan Soanes Tel: +44 20 7397 8900 www.cenkos.com Media enquiries: AbchurchStephanie Cuthbert / Justin Heath Tel: +44 20 7398 [email protected] www.abchurch-group.com Executive Chairman's Statement Introduction I am pleased to report good progress across the Group as our acquisitionsperform well and we see organic growth. Whilst there was uncertainty in themarket in the last quarter of the financial year this is generally resolved atlocal level, where we trade directly with hospital trusts, and leaves us withenormous opportunity and an increased sales pipeline. Our challenge has been togrow the Group's operational capacity to meet this demand. After a period of consolidation, the Group has an excellent platform toundertake and integrate further acquisitions. Ascribe has now moved to havingeach Group function under one manager and one group-wide control system. TheAscribe brand is now evolving and will be further developed. We have maximisedour ability to respond to defined markets, through our divisions, using commongroup-wide services. Ascribe has invested heavily in the development of its integrated suite ofsoftware. Some of the implementations delayed at the end of our financial yearwere the first customer sites going live on our web based platform. Thisplatform enables us to install and maintain customers more efficiently andeffectively as well as delivering all our products as an integrated package.Since the year end these customers have gone live on the software. This givesme confidence that our plans to maximise operational capacity are beingdelivered as well as giving us follow on sales opportunities as new and existingcustomers seek to upgrade. The investment in enlarging the Group's sales and marketing team is showing thefirst signs of success as Ascribe has won new sales in overseas markets. Sincethe year end the Group has won its first Accident and Emergency contract inAustralia. We now have many more cross selling opportunities as we produce asuite of compatible software solutions against a common sales and marketingplan. Our customers are able to buy all of their solutions from a singlesupplier and use them to complement solutions they already have acquired fromAscribe. A Successful Year Ascribe's strategy of combining organic growth and earnings enhancingacquisitions has continued to fuel our growth this year. Turnover has increasedby 55% to £15.3m (2006: £9.9m). Operating profit before goodwill amortisationand share based payments has increased 55% to £3.5m (2006: £2.3m restated)yielding a return on sales of 23% (2006: 23%). Adjusted basic earnings per sharefor the year increased by 29% to 2.38p from 1.85p restated in 2006. This year's record profitability has been fully converted into cash - operatingcash in 2007 was 121% of operating profit (2006: 111% restated). Strategy The business can grow from strength to strength selling at local level. We canadd acquisitions to the Group with little distraction to gain market share andoperational capacity. We are maximising our efficiency to allow us to operate athigher levels as we expect demand to rise further in the coming years. Toensure Ascribe keeps and expands its market share we focus on the patient as theend customer in all that we do. Market Ascribe trades in multiple markets globally and across many healthcare sectors,although generally at local level. This gives us resilience to current changesin the English NHS as well as many cross selling opportunities. We currentlytrade in the UK, Ireland, Australia, New Zealand, Malaysia and Hong Kong. Lord Hunt, the minister responsible for Connecting for Health stated in May thisyear that "we can and should devolve more to the local level" Whilst thisinitially created uncertainty around the funding model, we believe that thisgives us a great opportunity in the markets we trade. This is now demonstratedin our strong pipeline of sales. The Group's overseas markets have performed well and new sales are now comingfrom areas where we have invested our sales and marketing efforts. The English market has been disappointed by promises from the nationalinitiatives that have not been delivered. It is quite possible that Ascribecould deliver to the English national agenda through various channels such asthe alternative supplier catalogue (Additional Supply Capability and Capacity "ASCC") or may be directly to the Local Service Providers ("LSP's"). Aftercontinuing to win in competitive tenders against all competition, including thatcoming from the National Programme for IT ("NPfIT"), we know we are able todeliver in a market which is now able to make local decisions to procure. Management and Staff Ascribe's Board has been strengthened by the welcome arrival of a newNon-Executive Director, Ian Priestner, formerly a member of the ExecutiveLeadership Team at United Utilities plc. Having spent the last twelve months consolidating and growing the businessorganically I am proud of what the team has achieved. The Group is now capableof addressing the wider opportunity ahead of us, improving patient care anddelivering value to stakeholders. On your behalf, I would like to thank thestaff at Ascribe for all their hard work during the year. Dividend The Board has recommended a final dividend of 0.17p per share (2006: 0.13p).Subject to shareholder approval, the final dividend will be paid on 1 November2007 to shareholders on the register at the close of business on 12 October2007. Current Trading and Outlook Ascribe continues to expand the capacity of the Group by maximising ouroperational synergies, moving products to our more efficient web based platformand undertaking further recruitment. This positions Ascribe to quickly respondas customers prepare to buy locally. The feedback we are getting from our customers about the Group's new productsand integrated software means we are confident about the expectations for 2007/8. Many of our customers have extended their contracts with us this year givingus assurance about our long term maintenance income which still exceeds 60% ofour turnover. Stephen CritchlowExecutive Chairman Chief Operating Officer's Review Introduction Ascribe's business model is to supply Health IT solutions directly to HealthcareTrusts at local levels in the UK and overseas. Integration and Consolidation The Group has undertaken a comprehensive programme of integration andconsolidation of the businesses acquired since flotation designed to ensure weare able to take full advantage of our growing market opportunity in the UK andoverseas. Investment in our key operational activities has included consolidation of oursoftware development team which has led to improved product management anddevelopment planning. Core functionality is now used across multiple marketareas improving efficiency and the ability to integrate our software. Inparallel with the improvement in the effectiveness of software development andthe wider commercial opportunities in the UK and overseas health IT markets, theBoard has approved the capitalisation of part of its development expenditure aspermitted by UK GAAP. This capitalisation results in an intangible asset thatrepresents the investment in new software solutions which will underpin futuresales over the medium term. The processes used by our project management and implementation teams have alsobeen improved with teams now able to deliver multiple products. In addition tothis, our support operations have been consolidated and a new customerrelationship management system has been introduced; together these will provideimproved robustness and efficiency of our customer support. Our finance systemshave been replaced to provide improved management reporting. Operating Divisions Ascribe has four market-based divisions: Pharmacy; Electronic Patient Records;Mental Health and Community Care; and Primary and Unscheduled Care. Over thelast twelve months these divisions have seen new sales in three broad areas;existing customers looking for additional licenses and increased functionality;new customers looking for robust and available IT solutions that can be easilyintegrated with their existing systems and processes; and thirdly, there is agrowing number of healthcare providers looking to Ascribe to delivercombinations of our products, across multiple departments, on an ongoing basis, to provide a single cohesive and integrated patient-centricsolution - which we can deliver; Gateshead NHS Health Trust being a particularexample of a customer who is purchasing multi-product five year contractextensions. Many of our contracts yield recurring maintenance income for aminimum period of between three and five years, being the length of the initialcontract, and enhance further the visibility of the Group's earnings. Pharmacy Ascribe's Pharmacy Division has continued to win new health IT contracts duringthe year and continues to install our new web pharmacy software solution in theUK and overseas; this product upgrade not only increases the scalability of oursolution, it also supports additional and complimentary pharmacy and reportingsystems, such as Ascribe's electronic prescribing and medicines managementsolutions. Primary and Unscheduled Care Our Primary and Unscheduled Care Division has installed our Accident andEmergency system, Symphony, at a number of sites including Guys and St Thomas',and Hammersmith and Charing Cross in London and at Dewsbury which becomes one ofa group of three hospitals operating from a single Symphony database. Ascribe'sGP system, Exeter, has passed conformance testing for Scottish EnhancedFunctionality (SEF) Tranche 3. Amongst other benefits this includes tighterprescribing safety checks including warnings for similarly named drugs. Mental Health and Community Care (MH&CC) This division continues to perform well within its existing user base by sellingincreased licenses and new feature enhancing modules. Major new contractsinclude a significant new agreement to supply a MH&CC solution to Central and North West London NHS Foundation Trust. Our customers for this division are represented by small dedicated teams and departments through to major trusts, such as Bolton, Salford & Trafford Mental Health. Electronic Patient Record (EPR) Our EPR division has performed exceptionally well, overcoming competition fromNational Programme suppliers. Contract extensions have been sold to WestMiddlesex University Hospital NHS Trust and to County Durham and DarlingtonFoundation NHS Trust as part of an extended and expanded contract. New andextended contracts have also been sold to customers including South TeesHospitals NHS Trust, Northern Lincolnshire and Goole Hospitals NHS Trust andHull and East Yorkshire Hospitals NHS Trust. The division also expanded itsNPfIT compliant 'Choose and Book' Services and successfully sold thisfunctionality to Gateshead Health NHS Trust, Mid Yorkshire Hospitals NHS Trustand Benenden. This means that all of Ascribe's Patient Administration Systemcustomers will have a compliant direct booking service for 'Choose and Book'. Sales and Marketing Our overseas activities have performed ahead of expectations with orders fromnew customers, orders for new functionality from our current customers as wellas contracts to upgrade our pharmacy customers to the new web based solution. Iam pleased to report that our international operations have contributed 14.4% ofthe Group's turnover compared to 9.3% in 2006. Due to a variety of factors ourUK turnover has not grown as expected. Orders have been delayed in the EnglishNHS as localised procurement processes are being re-established. We are still inactive negotiations on all these contracts and expect them to be delivered inthe year in which we are now trading. Some have been achieved in the last fewweeks. Chris DicksonChief Operating Officer Financial Review The year ended 30 June 2007 saw record sales and profitability during a periodwhen the business invested significant time and funds into the integration ofthe seven acquisitions made by Ascribe in the two and a half years sinceflotation. The business is now positioned to continue growing organically and tointegrate further acquisitions. Trading Results Turnover grew 55% to £15.3m for the year ended 30 June 2007 (2006: £9.9m) whilstlike-for-like organic sales growth has increased by an average of 3%. Turnovergenerated from recurring maintenance contracts remains a significant and visiblecomponent of the Group's revenue, comprising 63% of sales during the year (2006:62%). The remaining sales, of new software solutions, are generated from new andexisting customers. The Group has an enviable record in competing for newtenders whilst the cross selling opportunities from introducing furthercompanies to the Group have continued to drive account development sales withexisting customers. The Board's decision in May 2006 to invest in the Australasian market at a timewhen its web-based software solutions were nearly ready for launch has createdmomentum in our overseas sales. The proportion of the Group's sales beinggenerated outside the UK and Ireland grew in 2007 to 14.4% (2006: 9.3%) to £2.2mrepresenting an organisation with critical mass capable of further growth in theregion. Operating margins have remained constant during the year. The return on sales,before goodwill amortisation and share based payments, is 23% (2006: 23%). Thisrepresents a mix of the impact of increased sales, the investment in theintegration of the acquired businesses in readiness for further growth and thecapitalisation of development expenditure under the guidelines set out under UKGAAP. The Board is committed to the continued and targeted investment inresearch and development expenditure, which for 2007 amounted to £2.74m (2006:£1.86m). Operating profit before goodwill amortisation and share based payments was £3.5mcompared to £2.3m as restated in the previous year. Adjusted EBITDA grew to£3.7m (2006: £2.4m restated). Operating profit after goodwill amortisation andshare based payments grew 24% to £1.9m (2006: £1.5m restated). Accounting Policies Following the Group's review of its accounting under SSAP 13, Accounting forResearch and Development Expenditure, the financial statements for the yearended 30 June 2006 have been restated to show the impact of capitalisedexpenditure relating to the period up to that date. During the year the group has capitalised development costs of £0.6m (2006:£0.1m restated). A prior year adjustment has been made in respect of thecapitalised development credit relating to the period before 1 July 2006. International Financial Reporting Standards The requirement to comply with International Financial Reporting Standards ("IFRS") is effective for accounting periods commencing on or after 1 January2007. Our December 2007 Interim Report and June 2008 Annual Report will bepresented under IFRS. As UK GAAP accounting closely mirrors the IFRS treatment of share based payments and the capitalisation of developmentexpenditure, the principal areas that will have material impact on the Groupresults relate only to goodwill amortisation and financial instruments. UnderIFRS the annual goodwill amortisation will cease and be replaced by a fullimpairment review at the balance sheet date with any impairment charge beingwritten off to the profit and loss account. Interest The Group is now a net payer of interest although, due to its very seasonal cashflow, the Group is in a net cash position for part of the year, including theyear end as a result of the annual invoicing and payment of maintenancecontracts. Net interest payable for the year was £187k (2006: £(7)k). The Grouphas a five year bank loan and a offsetting overdraft facility with RBS, takenout to part fund the consideration of earlier acquisitions. Interest is paid at1.5% over the Royal Bank of Scotland plc's base rate. Goodwill A charge of £1.54m (2006: £0.59m) for the amortisation of goodwill has been madein the year. Amortisation represents a full year's charge for all seven of theacquisitions made since flotation. Goodwill arising on consolidation continues to be amortised over a period oftwenty years. Goodwill purchased as part of the acquisition of the healthcaredivision of Jade Health is being amortised over a period of five years. In allcases these are the periods that the Board believe the Group will deriveeconomic benefit. Taxation The tax charge for the year of £0.39m (2006: £0.29m) represents an effectiverate of tax of 11.6% (2006: 12.8%) on profit before tax, goodwill amortisationand share based payments. The effective rate of tax remains low due to theGroup's ability to utilise the UK tax credits arising from investment inresearch and development. Earnings per share Adjusted basic earnings per share ("EPS"), before goodwill amortisation andshare based payments, increased 29% to 2.38p (2006: 1.85p restated). Basic EPS,calculated after charging goodwill amortisation reduced to 1.14p (2006: 1.15prestated). Funding and bank facilities The Group's net funds position at 30 June 2007 was £0.8m (2006: Net debt £0.5m).The Group has an overdraft facility and a fixed term debt facility with itsprincipal banker, the Royal Bank of Scotland plc. The facilities include a term loan facility amounting to £3.4m at 30 June 2007(2006: £2.6m) which will be repaid by 30 June 2011 and an overdraft facility of£1.6m (2006: £1.6m) The interest charge for both the loan and overdraftfacilities is 1.5% over the Royal Bank of Scotland plc's base rate. Acquisitions Ascribe has not made any acquisitions during 2007 as it has focused on theintegration of the seven made during the two and a half years since flotation.Further acquisitions are constantly being considered where they are earningsenhancing and represent good value for the Group's stakeholders. Dividends In November 2006, a dividend of 0.13p per ordinary share was paid in respect ofthe year ended 30 June 2006. The Board has recommended to the Group'sshareholders that a final dividend of 0.17p per ordinary share be paid duringthe year ending 30 June 2008. Jeremy LeeGroup Finance Director Consolidated Profit and Loss Accountfor the year ended 30 June 2007 Restated 2006Continuing operations Note 2007 £'000 £'000Turnover 15,313 9,881Cost of sales (1,544) (701)Gross profit 13,769 9,180Goodwill amortisation (1,536) (593)Share based payments (98) (162)Other administration expenses (10,253) (6,909)Total administration expenses (11,887) (7,664)Operating profit before goodwill 3,516 2,271amortisation and share based paymentsOperating profit 1,882 1,516Bank interest received 38 48Interest payable (225) (41)Profit on ordinary activities before 1,695 1,523taxationTaxation on ordinary activities (387) (290)Profit on ordinary activities after 1,308 1,233taxationBasic earning per share - pence 2 1.14 1.15Fully diluted earnings per share - pence 2 1.09 1.11 Consolidated Statement of Total Recognised Gains and Lossesfor the year ended 30 June 2007 2007 2006 £'000 £'000Profit for the year 1,308 1,233Currency translation differences on retranslation (12) (50)of subsidiary undertakingsTotal gains and losses recognised 1,296 1,183Effects of prior year adjustments 121Total gains recognised since the last annual 1,417report Consolidated and Company Balance Sheetat 30 June 2007 Group Company Restated Restated Note 2007 2006 2007 2006 £'000 £'000 £'000 £'000Fixed assetsIntangible fixed assets 16,815 19,082 - -Tangible fixed assets 507 294 97 83Investment in subsidiary - - 19,345 20,796undertakings 17,322 19,376 19,442 20,879Current assetsDebtors: amounts falling due 3 3,075 3,124 1,891 892within one yearDebtors: amounts falling due after 3 - - - 2,000more than one yearTotal debtors 3 3,075 3,124 1,891 2,892Cash at bank and in hand 4,190 3,160 887 - 7,265 6,284 2,778 2,892 Creditors: amounts falling due 4 (10,293) (11,330) (5,260) (7,210)after more than one year Net current liabilities (3,028) (5,046) (2,482) (4,318) Total assets less current 14,294 14,330 16,960 16,561liabilities Creditors: amounts falling due 4 (3,224) (5,196) (3,224) (5,196)after more than one year Net assets 11,070 9,134 13,736 11,365 Capital and reservesCalled up share capital 1,143 1,142 1,143 1,142Shares to be issued 650 - 650 -Share premium account 9,220 9,181 9,220 9,181Merger reserve 561 561 - -Profit and loss account (504) (1,750) 2,723 1,042 Shareholders' funds 11,070 9,134 13,736 11,365 Consolidated Cash Flow Statementfor the year ended 30 June 2007 Restated Note Year ended Year ended 30 June 2007 30 June 2006 £'000 £'000Net cash inflow from operating activites 5 4,287 2,528 Return on investments and servicing of finance: (225) (41)Interest paid 38 48Interest received (187) 7 Taxation:Corporation tax paid (594) (319) Capital expenditure and Financial Investment:Purchase of tangible fixed assets (385) (103)Purchase of intangible fixed assets (788) (121)Proceeds from the sale of fixed assets - 9Net cashflow from capital expenditure and financial (1,173) (215)investment Acquisitions:Net cash acquired with subsidaries - 2,424Cash consideration and expenses (38) (6,803)Payment of deferred consideration (850) (800)Net cashflow from acquisitions (888) (5,179) Equity dividends paid to shareholders (148) (107) Net cash inflow/(outflow) before financing 1,297 (3,285) Financing:Fundraising expenses - 38Loan advances 1,431 2,600Loan repayments (557) (50) 874 2,588 Increase/(decrease) in cash 5 2,171 (697) Notes year ended 30 June 2007 1 The financial information set out herein in respect of the years ended 30June 2007 and 30 June 2006 does not constitute the company's financialstatements within the meaning of s240 Companies Act 1985 for those periods buthas been derived from the audited statutory accounts for those years and theunaudited financial information within the Executive Chairman's Statement, Chiefoperating Officer's Review and the Financial Review in the 2007 accounts. TheGroup's statutory accounts for the year ended 30 June 2007 will be delivered tothe Registrar of Companies shortly. The auditors have reported on thoseaccounts; their report was unqualified and does not contain statements unders237(2) or (3) Companies Act 1985. 2 Basic earnings per share are calculated by dividing profit for thefinancial year attributable to ordinary shareholders by the weighted averagenumber of shares in issue. Diluted earnings per share is the weighted averagenumber of ordinary shares in issue adjusted for the potential ordinary sharedilution from share options and shares to be issued. Adjusted basic earning pershare was calculated by adding back goodwill amortisation, share based paymentsand the dividends and appropriations relating to non-equity shares repaid atflotation, to more accurately reflect the Group's underlying earnings. Restated 2007 2006 Basic Adjusted Diluted Basic Adjusted DilutedProfit after taxation (£'000) 1,308 1,081 1,308 1,233 1,233 1,233Share based payments (£'000) - 98 - - 162 -Goodwill amortisation (£'000) - 1,536 - - 593 -Profit attributable to ordinary 1,308 2,715 1,308 1,233 1,988 1,233shareholders (£'000)Number of shares (thousands) 114,250 114,250 120,487 107,678 107,678 110,865Earning per share (pence) 1.14 2.38 1.09 1.15 1.85 1.11 Basic weighted average no. of - - 114,250 - - 107,678shares (thousands)Dilution arising from share - - 4,227 - - 3,187options (thousands)Dilution from shares to be - - 2,010 - - -issued (thousands)Diluted weighted average number - - 120,487 - - 110,865of shares 3 Debtors Amounts falling due within one year: Group Company 2007 2006 2007 2006 £'000 £'000 £'000 £'000Trade debtors 2,008 2,309 - -Amounts due from subsidiary undertakings - - 1,724 787Amounts recoverable on contracts 92 87 - -Other debtors 12 107 57 51Prepayments and accrued income 951 621 36 54Deferred taxation 12 - 74 - 3,075 3,124 1,891 892 Amounts falling due after more than one year:Amounts due from subsidiary undertakings - - - 2,000 - - - 2,000 Total Debtors 3,075 3,124 1,891 2,892 4 Creditors Amounts falling due within one year: Group Company 2007 2006 2007 2006 £'000 £'000 £'000 £'000Bank overdraft - 1,129 - 1,129Bank loan 700 759 700 759Trade creditors 1,245 685 116 155Amounts owed to subsidiary undertakings - - 3,358 3,846Corporation tax 306 510 8 -Other taxation and social security 906 721 4 -Deferred consideration 1,000 1,000 1,000 1,000Other creditors 181 53 9 10Deferred income 5,628 5,881 - -Accruals 327 592 65 311 10,293 11,330 5,260 7,210 Amounts falling due after more than one year:Bank loan 2,724 1,791 2,724 1,791Deferred consideration 500 3,405 500 3,405 3,224 5,196 3,224 5,196 5 Notes to the Cash Flow statement RestatedReconciliation of operating profit to net cash inflow from operating 30 June 2007 30 June 2006activities £'000 £'000Operating profit 1,882 1,516Depreciation of tangible fixed assets 168 118Goodwill amortisation 1,536 593Capitalised development expenditure amortisation 195 -Charge for share based payments 98 162Loss/(profit) on sale of tangible fixed assets 4 (9)Decrease/(increase) in debtors 49 (606)Increase in creditors 355 754Net cash inflow from operating activities 4,287 2,528 Reconciliation of net cash flow to movement in net funds/(debt)Increase/(decrease) in cash 2,171 (697)Cash inflow from increase in debt (874) (2,550)Change in net cash/(debt) arising from cash flow 1,297 (3,247)Exchange movement (12) 49Opening net funds (519) 2,679Closing net funds/(debt) 766 (519) Analysis of changes in net (debt)/funds 1 July 2006 Non-cash 30 June 2007 £'000 Cash flow movement £'000 £'000 £'000Bank overdraft (1,129) 1,129 - -Cash at bank 3,160 1,042 (12) 4,190 2,031 2,171 (12) 4,190Debt due within one year (759) 59 - (700)Debt due after more than one year (1,791) (933) - (2,724) (519) 1,297 (12) 766 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ASP.L