Half Yearly Report

RNS Number : 7301K

Ultrasis PLC

26 April 2010

 

Ultrasis plc ("Ultrasis" or the "Company")

 

Interim results for the six months ended 31 January 2010

 

Highlights

·; Profitability continued in spite of delayed NHS expenditure and ongoing business development costs. (Profit before tax: £237,000, 2009: £400,000).

·; Costs tightly controlled at £1,408,000 (2009: £1,523,000).

·; Revenue down due to pause in NHS market - £1,668,000 (2009: £1,933,000).

·; Cash position £2,248,000. The Company remains debt free.

·; Progress in securing new domestic and international markets for future growth.

·; Key grants secured for new product development with potential for use with mobile technologies.

 

 

Commenting, Nigel Brabbins, CEO, said:

 

"Progress has slowed in NHS markets as healthcare commissioners reflect on new guidelines from the National Institute for Health and Clinical Excellence (NICE) supporting the introduction of computerised cognitive behavioural therapy (CCBT) and widening therapeutic options. However, contract success in Northern Ireland - where we are on target for full roll-out by December 2010 - illustrates the long term potential of NHS markets in the rest of the UK.

 

We continue to occupy a strong position in the delivery of CCBT. Meanwhile considerable progress has been made in broadening the company's business base. "Beating the Blues" (BTB), marketed by our Dutch partners Innohealth B.V, is now reimbursable through insurance  in Holland, we have secured a strategic partnership with Instep Ltd. in New Zealand, established a collaboration with Brain Resource Ltd in the USA and GetFit has won a contract with Hummingbird Coaching Services in the USA.

 

We have also announced a groundbreaking partnership with General Healthcare Group, the leading provider of independent healthcare services in the UK, for the exclusive delivery of BTB to the private healthcare and insurance markets. The potential for revenue growth in these markets is high.

 

Other prospects which should bear fruit and deliver cash in due course are being pursued. The Board continues to look to the future with confidence."

 

 

For further information please contact:

 

Nigel Brabbins Ultrasis CEO E-Mail: [email protected] Telephone: +44 (0) 20 7566 3900 Fax: +44 (0) 20 7253 5313

 

Geoff Nash FinnCap Nominated Adviser and Joint Broker Telephone: +44 (0) 20 7600 1658

 

John Webb Marshall Securities Joint Broker Telephone: +44 (0) 207 490 3788

 

Karen White/Sarah Rice JBP Public Relations E-[email protected], [email protected]

Telephone: +44 (0) 117 907 3400

 

 

Statement from Chairman and Chief Executive

 

Although progress in Ultrasis' NHS market has been frustratingly slow the Company remains profitable, has cash reserves of £2,248,000 and remains debt free. We have acted quickly to contain costs where possible as income has slowed. Among our competitors we will, therefore, be well placed when purchasing activity in NHS markets resumes.

 

We continue to cultivate new markets in the Netherlands and the USA. We are confident that a number of current commercial negotiations will result in revenue generating contracts in the coming months. GetFit's contract with Hummingbird Coaching for its "GetFit Fitness" exercise management service illustrates the potential in that global market.

 

Ultrasis' standing and the quality of its therapies have been reaffirmed by the award of EU and UK research grants in the fields of mental health intervention and insomnia.

 

Our markets

The NHS - Beating the Blues - Penetration of the NHS market in England remains strong although growth has slowed. In Northern Ireland contracted coverage is universal, across all GP practices and roll-out is proceeding as planned with 220 out of 360 practices completed to date. The markets in Scotland and Wales are being addressed.

 

Purchasing activity slowed in anticipation of the National Institute for Health and Clinical Excellence (NICE) publishing extended depression guidelines - October 2009. The new guidelines reinforced the case for cognitive behavioural therapy delivered by computer (CCBT) but widened the scope of therapeutic options beyond "Beating the Blues" (BTB). Combined with purchasers' state of self imposed pre election "Purdah", this has resulted in market inertia. We are confident that, post election, purchasing activity will resume and BTB, as the proven, evidence based market leader, will be strongly placed and remain the preferred solution over other available options.

 

UK private sector - breaking new ground - We have also announced a groundbreaking five year partnership with General Healthcare Group (GHG), the leading provider of independent healthcare services in the UK, for the exclusive delivery of BTB to the private healthcare and insurance markets.

Delivered principally through GHG's subsidiary, BMI hospitals, BTB will become a core part of their emotional and mental health support for patients, not only used as a stand-alone therapy. The potential for revenue growth in these markets is high.

 

Commercial discussions with other potential customers and partners continue and we are confident that, as with Brain Resource Ltd, General Healthcare Group and Hummingbird Coaching Services LLC, these will lead to additional revenue earning contracts.

 

The Netherlands - The Dutch language version of BTB has been accepted by health care insurers as reimbursable to all users in a primary care setting. Our partner, Innohealth B.V , is now embarking on a drive across primary care to ensure BTB is offered as a treatment option.

 

The USA - Our strategic co-operation with Brain Resource Limited, an Australian based company, has resulted in Ultrasis' self help programmes being incorporated into their "My Brain Solutions" platform, allowing users immediate access to solutions for stress, anxiety and insomnia. The programme is being used in the USA by Optum Health, the behavioural health arm of United Health.

 

GetFit, Ultrasis' wholly owned provider of well-being solutions acquired in December 2008, has contracted with Hummingbird Coaching Services LLC, a leading US-based health coaching company with international reach, to include our online exercise management service "GetFit Fitness" to include within their flagship programme, "MyHealthCoach.com".

 

 

Financial Highlights

We are pleased to report a profit before tax in the six months ended 31st January 2010 of £237,000 (2009: £400,000).

 

Revenues in the period were £1,668,000 (2009: £1,933,000), the reduction being due to a slow-down in our domestic NHS market. This is disappointing, but the Company - the largest provider of CCBT to the NHS - is in good financial health to weather the slow down which we assess as temporary and in a stronger financial position to do so than competitors.

 

Cash balances at 31st January 2010 were £2,248,000 and the company was (and remains) debt free.

 

Research

Recognition of Ultrasis' credentials in the field of computer delivered healthcare and the quality of BTB is evidenced by our participation in research projects:-

 

Optimi - "Online Predictive Tools for Intervention in Mental Illness" - This is an EU research project applied to mental health that seeks to develop new solutions to identify high stress and mild depressive symptoms to enable the provision of CCBT swiftly and effectively, pre-empting the onset of more serious conditions. Ultrasis is a project partner. We expect that the outcome of this research will lead to tangible new products for deployment across the EU.

 

ENACT - Research project funded by Engineering and Physical Sciences Research Council (EPSRC) - "Exploiting Social Networks to Augment Cognitive Behavioural Therapy" (ENACT) is a two year project led by Lincoln University focusing on the development and enhancement of a CCBT package for the treatment of insomnia. Ultrasis is a major participant in the project.

 

Outlook

Our primary objective in the coming months is to regain momentum in our NHS market, still the provider of the majority of Ultrasis' revenue, as the uncertainty among purchasers created by the NICE review and the imminent general election dispels. Costs will remain under tight control and constant review.

 

In parallel we intend to build on our recent success in entering new markets, establishing revenue producing partnerships and seeking research grants which add to the company's credibility.

 

It is the board's policy to reduce Ultrasis' dependence on the NHS as a source of revenue, while still recognising the potential for growth in that market and its importance as a valued blue chip customer for our services.

 

The market for health solutions delivered by computer is increasing as healthcare providers worldwide struggle to contain costs and the demand for preventive "wellbeing" products increases.

 

Ultrasis remains well placed to continue to exploit that market using its existing product portfolio and will add to it, as with the acquisition of GetFit, whenever the opportunity arises.

 

 

Nigel Brabbins Gerald Malone

Chief Executive Non executive Chairman

 

 

26 April 2010

CONSOLIDATED statement of comprehensive income for the six months ended 31 January 2010

 

			Six months ended 31 Jan		Six months ended 31 Jan				Year ended 31 Jul
	Notes		2010		2009				2009
			(unaudited)		(unaudited)				(audited)
			£'000		£'000				£'000
Revenue			1,668		1,933				4,168
Cost of sales			(22)		(30)				(32)
Gross profit			1,646		1,903				4,136
Administrative expenses
- Share based payments			(48)		(195)				(391)
- Other			(1,360)		(1,328)				(3,068)
			(1,408)		(1,523)				(3,459)
Operating profit
Before share based payments			286		575				1,068
Share based payments			(48)		(195)				(391)
			238		380				677
Finance costs			(3)		(2)				(6)
Finance income			2		22				33
			(1)		20				27
Profit before taxation			237		400				704
Taxation	2		(62)		2,567				2,496
Profit for the period			175		2,967				3,200
Total comprehensive income for the year			175		2,967				3,200
Earnings per share
Basic earnings per share (p)		3	0.02		0.20				0.21
Diluted earnings per share (p)		3	0.02		0.20				0.21

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six months ended 31 January 2010

	Share capital	Share premium	Share option reserve	Capital reduction reserve	Merger reserve	Translation reserve	Retained losses	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 August 2008	1,478	21,104	1,236	6,650	2,324	(25)	(30,000)	2,767
Total comprehensive income for the period	-	-	-	-	-	-	2,967	2,967
Foreign exchange translation differences	-	-	-	-	-	45	-	45
Issue of equity share capital	27	178	-	-	-	-	-	205
Share based payments	-	-	195	-	-	-	-	195
Balance at 31 January 2009	1,505	21,282	1,431	6,650	2,324	20	(27,033)	6,179
Balance at 1 August 2008	1,478	21,104	1,236	6,650	2,324	(25)	(30,000)	2,767
Total comprehensive income for the period	-	-	-	-	-	-	3,200	3,200
Foreign exchange translation differences	-	-	-	-	-	30	-	30
Issue of equity share capital	30	198	-	-	-	-	-	228
Share based payments	-	-	391	-	-	-	-	391
Balance at 31 July 2009	1,508	21,302	1,627	6,650	2,324	5	(26,800)	6,616
Total comprehensive income for the period	-	-	-	-	-	-	175	175
Foreign exchange translation differences	-	-	-	-	-	(7)	-	(7)
Share based payments	-	-	48	-	-	-	-	48
Balance at 31 January 2010	1,508	21,302	1,675	6,650	2,324	(2)	(26,625)	6,832

CONSOLIDATED BALANCE SHEET as at 31 January 2010

 

		31 Jan		31 Jan		31 Jul
		2010		2009		2009
		(unaudited)		(unaudited)		(audited)
		£'000		£'000		£'000
Non-current assets
Intangible assets		2,852		2,923		2,925
Plant and equipment		38		40		41
Deferred tax assets		2,434		2,567		2,496
Total non-current assets		5,324		5,530		5,462
Current assets
Inventories		15		19		15
Trade and other receivables		1,252		2,882		1728
Cash and cash equivalents		2,248		1,646		2,858
Total current assets		3,515		4,547		4,601
Current liabilities
Trade and other payables		(231)		(763)		(774)
Deferred revenue		(1,776)		(3,135)		(2,673)
Total current liabilities		(2,007)		(3,898)		(3,447)
Net current assets		1,508		649		1,154
Net assets		6,832		6,179		6,616
Equity
Share capital		1,508		1,505		1,508
Share premium account		21,302		21,282		21,302
Share option reserve		1,675		1,431		1,627
Other reserves		6,650		6,650		6,650
Merger reserve		2,324		2,324		2,324
Foreign exchange reserve		(2)		20		5
Retained losses		(26,625)		(27,033)		(26,800)
		6,832		6,179		6,616

 

CONSOLIDATED CASH FLOW STATEMENT for the six months ended 31 January 2010

 

 

		Six months ended 31 Jan		Six months ended 31 Jan		Year ended 31 Jul
		2010		2009		2009
		(unaudited)		(unaudited)		(audited)
		£'000		£'000		£'000
Cash (used in)/generated from operations
Operating profit		238		380		677
Share based payments		48		195		391
Depreciation charge		9		10		19
Amortisation of capitalised development costs		88		68		149
Decrease in inventories		-		-		4
Decrease/(Increase) in receivables		476		(2,174)		(994)
(Decrease)/Increase in payables		(1,440)		1,140		625
Net cash (used in)/generated from operating activities		(581)		(381)		871
Investing activities
Interest received		2		22		33
Acquisition of Getfit Technologies		-		(26)		(30)
Development expenditure		(24)		-		(23)
Purchases of plant and equipment		(2)		(6)		(6)
Net cash used in investing activities		(24)		(10)		(26)
Financing activities
Interest paid		(3)		(2)		(6)
Net cash used in financing activities		(3)		(2)		(6)
Net (decrease)/increase in cash and cash equivalents		(608)		(393)		839
Cash and cash equivalents at beginning of period		2,858		2,036		2,036
Effects of exchange rate changes on the balance of cash held in foreign currencies		(2)		3		(17)
Cash and cash equivalents at end of period		2,248		1,646		2,858

 

 

 

NOTES TO THE FINANCIAL INFORMATION for the six months ended 31 January 2010

 

1. Nature of financial information

 

The consolidated interim financial statements of Ultrasis plc (the "Company") comprise the result of the Company and its subsidiaries for the period 1 August 2009 to 31 January 2010. The financial information contained in this interim report does not constitute statutory accounts as defined by section 435 of the Companies Act 2006. The interim financial information is unaudited and incorporates unaudited comparative figures for the interim period 1 August 2008 to 31 January 2009 and extracts from the audited financial statements for the year to 31 July 2009. The financial information for the year ended 31 July 2009 set out in this interim report does not constitute the Company's statutory accounts for that period. The statutory accounts for the year ended 31 July 2009 have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006 and did not include references to any matters to which the auditor drew attention by way of emphasis.

 

The interim financial information has been prepared using International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU. The interim financial information has been prepared on a basis consistent with the accounting policies disclosed in the Annual Report and Accounts for the year ended 31 July 2009.

The presentation of the primary financial statements has been modified in order to comply with IAS 1 (revised). However the revised standard has no impact on the reported results or financial position of the group.

 

 

 

2. Taxation:

 

i. Tax credit

 

The tax (charge)/credit for the period comprise:

 

	Six months ended 31 Jan 2010		Six months ended 31 Jan 2009		Year ended 31 Jul 2009
	(unaudited) £'000		(unaudited) £'000		(audited) £'000
Deferred tax	(62)		2,567		2,496

 

 

 

ii. Factors affecting tax charge for the prior periods

 

The tax assessed for the prior periods was lower than that resulting from applying the standard rate of corporation tax.

 

The differences are explained below:

 

	Six months ended 31 Jan 2010		Six months ended 31 Jan 2009		Year ended 31 Jul 2009
	(unaudited)		(unaudited)		(audited)
	%		%		%
Standard tax rate for period as a percentage of profit / (loss)	28		28		28
Effect of:
Expenses not deductible for tax purposes	-		15		17
Tax losses not recognised	-		22		34
Capital allowances for period greater than depreciation	(2)		1		(2)
Utilisation of tax losses	-		(66)		(77)
Recognition of deferred tax assets			(642)		(356)
Total tax (charge)/credit rate for the year as a percentage of profit	26		(642)		(356)

 

 

Deferred tax assets of £2,567,000 were recognised during the prior period in line with IFRS guidance. The tax charge for the current period has been offset against these losses and the balance carried forward on the balance sheet for offset against future tax charges.

 

 

 

iii. Factors that may affect the future tax charge

 

Amounts of unprovided deferred tax assets are as follows:

 

	Six months ended 31 Jan 2010			Six months ended 31 Jan 2009				Year ended 31 Jul 2009
	£'000			£'000				£'000
	(unaudited)			(unaudited)				(audited)
Applicable tax rate	28%			28%				28%
	£'000			£'000				£'000
Trading Losses and other losses	2,466			2,117				2,466
Capital Losses	1,912			1,912				1,912
Depreciation in excess of capital allowances	3			2				3
Fair value adjustments	(487)			(470)				(487)
	3,894			3,561				3,894

Deferred tax assets in relation to trading losses are only recognised when taxable trading profits are considered more likely than not to arise in the companies that have such losses available for future offset. Capital losses are available only to offset future capital gains realised by the relevant companies.

 

3. Basic and Diluted earnings per share

 

	Pence per share
	Six months ended 31 Jan 2010	Six months ended 31 Jan 2009	Year ended 31 Jul 2009
Basic and diluted earnings per share	0.02	0.20	0.21
Adjusted and adjusted diluted earnings per share	0.02	0.04	0.07

 

 

Adjusted basic earnings per share is calculated based on earnings after interest but excludes the charge for share based payments and the credit for deferred tax both of which have a non-cash effect.

 

Potentially dilutive ordinary shares, all of which arise from share options, were anti-dilutive at the balance sheet date and were therefore excluded from the calculations of diluted earnings per share and diluted adjusted earnings per share.

 

The calculations of earnings per share are based on the following profits and numbers of shares:

 

		Six months ended 31 Jan		Six months ended 31 Jan		Year ended 31 Jul
		2010 £'000		2009 £'000		2009 £'000
		(unaudited)		(unaudited)		(audited)
	Profit
	Profit for the purposes of basic earnings per share, being profit for the period attributable to equity shareholders	175		2,967		3,200
	Number of shares
	Weighted average number of ordinary shares for the purposes of basic profit per share	1,507,853,258		1,482,543,006		1,494,611,416
	Weighted average number of ordinary shares for the purposes of diluted profit per share	1,507,853,258		1,482,543,006		1,494,611,416

 

 

 

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