15th Mar 2006 07:03
Ascribe plc15 March 2006 Ascribe plc ("Ascribe" or "the Group") Interim results for the 6 months ended 31 December 2005 Ascribe plc (AIM:ASP), the health IT group, reports its interim results for the6 months ended 31 December 2005. Highlights • Turnover increased 176% to £4.5m (2004: £1.6m) • Like for like sales increased by 20% (2004: £3.8m) • Maintenance revenue represents 62% of total turnover • Operating profit before goodwill and share based payments grew to £0.98m (2004: £0.03m) • Operating profit grew to £0.67m (2004: loss: £0.02m) • Adjusted EPS increased to 0.75p (2004: 0.06p) • Completed acquisition of Barwick Systems Limited • Strengthened market position as major supplier to UK NHS of Pharmacy, Mental Health and Community Care and A&E IT solutions Commenting on the results, Stephen Critchlow, Executive Chairman said: "Thisexcellent result for the first half of the year supports our strategy ofdelivering real benefit for healthcare customers worldwide. Our customers workto provide patient benefit on a daily basis with our systems, whereimplementation delivers real savings and improvements in patient care. This isdelivering sustainable growth in a market that has an increasing demand forclinical systems." Graham Lewis, Chief Executive Officer added: "The first six months of thisfinancial year have been very successful for Ascribe. As we advised the marketin January, trading has been in line with expectations and the half year resultsdemonstrate the growth in revenues and profitability. The acquisitions that wehave made since the flotation on AIM have proved to be successful for all thereasons that the Board identified before the acquisitions. The Board isactively working on growing the core business organically and through furtheracquisitions. We remain confident in our strategy and approach to the market." For further information: Ascribe plc Tel: +44 (0) 161 280 8080Stephen Critchlow, Executive ChairmanGraham Lewis, Chief Executive OfficerJeremy Lee, Group Finance Director Evolution Securities Limited Tel: +44 (0) 20 7071 4300Jeremy Ellis Citigate Dewe Rogerson Tel: +44 (0) 20 7638 9571Ginny PulbrookJustin Griffiths Chairman's statement I am delighted to present our results for the six months ended 31 December 2005.Ascribe has made significant progress over the period through a combination oforganic growth and the contribution of acquisitions made in the last financialyear. We have established ourselves as a major supplier to the National Health Servicein the UK and have a solid platform for growth in our overseas markets. We havebuilt a group to provide IT solutions for the Healthcare market. There has been much publicity about the delays in the National Programme for IT(NPfIT) now called Connecting for Health (CfH). Our strategy remains to providesolutions compliant to the standards required by the initiative, directly to thehospitals requiring them, as well as through the programme. We are now seeingmany more customers engage with us about their future plans to deliver thefunctionality they require. In acquiring companies in complementary markets we can now address clinical ITneeds across a broader market and help to deliver the IT solutions required tomodernise the NHS and support our customers worldwide. The delays in Nationalinitiatives are leaving a demand for IT solutions that we are now in an idealposition to satisfy. Financial results In the six months ended 31 December 2005 revenues grew 176% to £4.5m (2004:£1.6m). Like for like sales growth across all our divisions was excellent withtotal proforma sales growth for the period of 20%. During the same period, operating profit before goodwill amortisation and sharebased payments ("adjusted operating profit") grew to £0.98m (2004: £0.03m). Trading across the Group has been very good. I am delighted with the Group'ssuccess in winning new business in the Pharmacy and Primary & Unscheduled Caredivisions. I am also very pleased with the strong sales growth in our MentalHealth & Community Care division arising from the launch of new NationalProgramme compliant solutions and the expanded user base accessing our software.Ascribe's record of winning new business with long term maintenance contractshas sustained our level of recurring maintenance at 62% (2004: 61%) of totalturnover. The Group has a strategy of committing significant and carefully targetedinvestment into research and development which I believe will deliversustainable profitability in future periods. All this investment is written offin the period incurred. The Group's adjusted operating profit margin for theperiod is 21% (2004: 2%). Financial Reporting Standard 21 (Post Balance Sheet Events) ("FRS21") has beenapplied for the first time in the current period. This required the dividendshown in the Profit and Loss Account for the year ended 30 June 2005 but paidafter that date to be recognised in the period when the dividend was paid. Nointerim dividend has been proposed at this point in time. Financial Reporting Standard 20 (Share Based Payments) ("FRS20") has beenapplied for the first time in the current period. This requires the Group tocalculate a charge to the profit and loss account for the fair value of shareoptions granted to staff and directors. Ascribe's policy is to set the exerciseprice of share options at the market price prevailing on the day that the optionwas granted. £0.1m has been charged to the Profit and Loss Account in thecurrent period as a result of applying FRS20. The application of FRS20 and FRS21 represents a change in accounting policieswhich has required the comparative periods to be restated. This represents anaccounting adjustment only; there are no cash implications with respect to theserestatements. Balance Sheet At 31 December 2005 the Group had net assets of £6.9m (2004: £4.2m). A significant proportion of the Group's cashflow is generated at the beginningof the NHS year, April, when annual maintenance contracts are issued and paid.These sales are recorded in creditors, deferred income, and released to theProfit and Loss Account evenly through the year. Operating cash conversion afteradjusting for the swing in deferred income represented 90% of adjusted operatingprofit. At 31 December 2005 the Group's cash balance amounted to £1.9m with nobank borrowings or other debt finance. Review of operations I am delighted by the mix of talented staff, innovative products, strongcustomer bases and potential to improve patient care within the Group. Ourstrategy is to focus on sales synergies arising from greater scale, presence andpenetration that Ascribe has in the health IT market place. Each of our divisions has a significant and often leading share of the marketsin which they operate. This represents a superb customer platform forcross-selling opportunities. We are seizing these sales opportunities as well asgaining market share by winning new customers. Supporting this emphasis on sales, I am encouraged by the steps that the Grouphas taken in integrating its operational resources. Customer service, projectmanagement, new product development, and market development have all beenstrengthened through the combined and coordinated efforts of Ascribe's enlargedteam. Pharmacy division The Pharmacy division has enjoyed a continuous programme of deliveringdepartmental, ward-based and retail pharmacy, electronic prescribing andelectronic nurse administration systems during the period. Six substantial newcontracts, running for between three and seven years were won in the first halfof the financial year. Mental Health & Community Care division The Group's Mental Health & Community Care division performed strongly in thefirst half. There was a 20% increase in ePEX user licences as community basedusage continues to grow. Newly developed solutions meeting the messaging "Choose& Book" requirements of Connecting for Health ("CfH") and providing users with aweb-tools package have both generated excellent account development sales. I amalso encouraged with the cross-selling results of Ascribe's medicines managementsolution into community based substance misuse clinics. Primary & Unscheduled Care division The Primary & Unscheduled Care division has had its busiest year ever. Thedivision continues to win new orders across the UK and Ireland for emergencydepartment software solutions. During the six months ended 31 December 2005, wehave had a new customer "going live" each month and this is set to increase inthe second half of the year, as delivery of the five major hospital contractswon in the first half are installed. These new contracts are expected to run fora minimum of three years, adding to our future recurring maintenance revenues. Strategy The central component of Ascribe's mission is to provide IT solutions that makehealthcare better. The Group is focusing on the delivery of solutions directlyto clinicians and health professionals whilst matching new product developmentto the requirements of today's health drivers. Demand from hospitals for products to be delivered directly is increasing andour strategy of focusing on local needs is yielding considerable growth in ourmarket share. We are also delighted that the National Programme also recognisethat Ascribe's products meet the needs of the marketplace and are now offeringsome of our products to customers purchasing systems through Connecting forHealth (CfH). This demonstrates that Ascribe is capable of delivering solutionsnationally which have not been delivered by other suppliers. We expect thatthese sales will be made directly to hospitals but there is also increasingdemand from National Initiatives. Acquisitions With our increasing confidence in our ability to offer a complete solution toour customers extended from our medicines management core, we are looking toextend the acquisition programme further. We will continue to acquire businessesthat are earnings enhancing and in complementary markets to strengthen ourposition as the clinical IT solution of choice. These acquisitions will befinanced through our operating cash, debt finance and the issue of shares inorder to maximise shareholder benefits. The acquisition of Barwick Systems Limited on 14 March 2006 for a total cashconsideration of £2m places us in the Patient Administration market for thefirst time. The acquisition is earnings enhancing. The turnover and profit foryear ended 31 March 2005 for this company was £0.7m and £0.2m. The company isgrowing and the cross-selling opportunities to its customers will addsignificantly to our growth in the coming years. Prospects With the delays in the National Programme, Ascribe is well placed to meet thedemand for systems created by the need to have a more efficient and costeffective NHS. The first half of the financial year progressed in line withmanagement expectations and we are pleased with the progress in 2006. Thepipeline of opportunities for organic growth, cross-selling and new marketdevelopment is excellent and we are continuing to pursue a number of acquisitionopportunities. There are great opportunities for Health IT companies with solutions ready tomeet clinicians' needs. I believe that we are well placed to meet those needs.At the same time, the opportunities for consolidation in our marketplace remaincompelling and we will seek to realise our strategy of increasing shareholdervalue through the acquisition of complementary earnings enhancing businesses. I would like to thank our staff for their considerable efforts during thisperiod and the Board remains confident about the Group's prospects for theremainder of the financial year and beyond. Stephen Critchlow Executive Chairman15 March 2006 Consolidated Profit & Loss Account for the 6 months ended 31 December 2005 Restated 6 months 6 months Restated year ended ended 31 ended 31 December December 30 June 2005 2005 2004 £'000*+ £'000* £'000* Turnover 4,537 1,644 5,347Cost of sales (348) (61) (415) --------- -------- ---------Gross profit 4,189 1,583 4,932 --------- -------- ---------Administrativeexpenses -other (3,207) (1,549) (4,040) --------- -------- ---------Operatingprofit beforegoodwillamortisationand sharebased payments 982 34 892 --------- -------- ---------Administrativeexpenses -goodwillamortisation (211) (11) (148)Administrativeexpenses -share basedpayments** (104) (38) (130) --------- -------- ---------Operatingprofit/(loss) 667 (15) 614 --------- -------- ---------Interestreceived 50 11 50 --------- -------- ---------Profit/(loss)on ordinaryactivitiesbeforetaxation 717 (4) 664 --------- -------- ---------Taxation (232) (7) (149) --------- -------- ---------Profit/(loss)on ordinaryactivitiesafter taxation 485 (11) 515 --------- -------- ---------Dividends andappropriations- Equity (108) - - --------- -------- ---------Dividends andappropriations- non equity - (92) (92) --------- -------- ---------Retainedprofit/(loss) 377 (103) 423 --------- -------- --------- Pence Pence PenceAdjusted basicearnings pershare 0.75 0.06 0.93Basicearning/(loss)per share 0.45 (0.16) 0.61Fully dilutedearnings/(loss)per share 0.44 - 0.59 --------- -------- --------- * - Neither audited or reviewed** - Administrative expenses - Share Based Payments, represents a charge arising from the adoption of Financial Reporting Standard 20, Share Based Payments+ - All amounts shown relate to continuing operations Consolidated Statement of Total Recognised Gains and Losses for the 6 monthsended 31 December 2005 Restated 6 months Restated year 6 months ended 31 ended ended 31 December 30 June December 2005 2004 2005 £'000* £'000* £'000* Profit/(loss)for the period 377 (103) 423 Currencytranslationdifferences onforeigncurrency netinvestments (13) - (3) Chargerecognised onadoption ofFRS 20** 104 - - Chargerecognised onadoption ofFRS 21** 108 - - --------- -------- ---------Total gainsand lossesrecognised 576 (103) 420 --------- -------- ---------Effects ofprior yearadjustments (108) - --------- -------- ---------Total gainsand lossesrecognisedsince the lastannual report 468 (103) 420 --------- -------- --------- * - Neither audited or reviewed** - See note 8 Consolidated Balance Sheet as at 31 December 2005 Restated 31 31 December December Restated 2005 2004 30 June 2005 £'000* £'000* £'000* Fixed assets Intangible fixedassets 8,101 4,658 8,312 Tangible fixedassets 150 296 215 --------- -------- --------- 8,251 4,954 8,527 Current assets Debtors: due withinone year 1,841 1,134 1,524 Cash at bank and inhand 1,864 1,376 2,700 --------- -------- --------- 3,705 2,510 4,224 Creditors: amountsfalling due withinone year (4,811) (3,172) (6,074) --------- -------- ---------Net currentliabilities (1,106) (662) (1,850) --------- -------- ---------Total assets lesscurrent liabilities 7,145 4,292 6,677 --------- -------- ---------Creditors: amountsfalling due aftermore than one year (200) (100) (200) --------- -------- ---------Net assets 6,945 4,192 6,477 --------- -------- ---------Capital and reserves** Called up sharecapital 1,070 1,034 1,070 Shares to be issued 855 - 855 Share premiumaccount 6,979 6,192 6,979 Merger reserve 561 574 561 Profit and lossaccount (2,520) (3,608) (2,988) --------- -------- ---------Equityshareholders' funds 6,945 4,192 6,477 --------- -------- --------- * - Neither audited or reviewed** - All items under capital and reserves are equity Consolidated cash flow statement for the 6 months ended 31 December 2005 Restated 6 6 months months Restated year ended 31 ended ended December 2005 31 December 30 June 2005 2004 Consolidated cash flow £'000* £'000* £'000*statement Net cash(outflow)/inflow fromoperatingactivities (770) (193) 1,764 Returns oninvestmentsand servicingof finance 50 11 50 Acquisitions - (587) (1,246) Corporation tax - 7 (4) Capitalexpenditure (8) (19) (35) Equitydividends paid (108) - - --------- -------- ---------Net cash(outflow)/inflow beforefinancing (836) (781) 529 Financing - 1,544 1,541 --------- -------- ---------(Decrease)/Increase in cash (836) 763 2,070 --------- -------- --------- Reconciliation of operating profit/(loss) to netcash inflow/(outflow) from operating activities Operating profit/(loss) 667 (15) 614 Depreciation 73 78 185 Amortisation 211 11 148 Share based payments 104 38 130 (Profit)/loss on sale of tangible fixed assets (5) - 6 (Increase) in debtors (317) (209) (206) (Decrease)/Increase in creditors (1,503) (96) 887 -------- -------- ---------Net cash (outflow)/inflow from operating (770) (193) 1,764activities -------- -------- --------- * - Neither audited or reviewed Reconciliation of net cash flow to movement innet funds (Decrease)/increase in cash (836) 763 2,070 Exchange movement - - (4) Cash outflow from decrease in bank overdraft 21 - - Net funds at beginning of period 2,679 613 613 --------- -------- ---------Net funds at end of period 1,864 1,376 2,679 --------- -------- --------- Notes 1 The Interim Report for the six months ended 31 December 2005 is unaudited and was approved by the directors on 14 March 2006. The financial information set out above does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The information for the comparative figures has been extracted from the previously published Interim and Annual Reports restated for the adoption of Financial Reporting Standard 20, Share Based Payments and Financial Reporting Standard 21, Events after the Balance Sheet Date. The Annual Report from which the information for the year ended 30 June 2005 has been extracted from, has been delivered to the Registrar of Companies and contained an unqualified audit opinion. 2 The directors do not recommend the payment of a dividend. 3 Apart from as disclosed in Note 1, the accounting policies used are consistent with those applied in the latest published consolidated accounts. 4 Segmental analysis Turnover is wholly attributable to the principal activities. A geographical analysis of turnover is as follows: 6 months 6 months ended 31 ended 31 Year ended December December 30 June 2005 2004 2005 £'000* £'000* £'000 United Kingdom 4,310 1,434 4,921 Rest of the World 227 210 426 --------- -------- -------- 4,537 1,644 5,347 --------- -------- -------- 5 Debtors 31 December 31 December 30 June 2005 2004 2005 £'000* £'000* £'000 Trade debtors 1,061 643 999 Amounts recoverable oncontracts 502 189 155 Other debtors 106 194 40 Prepayments and accruedincome 172 108 330 --------- --------- ------- 1,841 1,134 1,524 --------- --------- ------- * - Neither audited or reviewed 6 Creditors Restated 31 December 31 December 30 June 2005 2004 2005 £'000* £'000* £'000* Bank overdraft - - 21 Trade creditors 251 279 264 Corporation tax 438 205 209 Other taxation and socialsecurity 361 189 400 Deferred consideration 1,000 800 1,000 Other creditors - - 16 Deferred income 2,406 1,477 3,751 Accruals 355 222 413 --------- --------- ------- 4,811 3,172 6,074 --------- --------- ------- 7 Earnings per share The basic, diluted and adjusted earnings per share have been calculated on thefollowing basis: Restated 6 months Restated 6 year ended 31 months ended ended December 31 December 30 June 2005* 2004* 2005* Adjusted profit/(loss)for the period(£'000)+ 800 38 793 Profit/(loss)for the period(£'000) 485 (11) 515 Basic weightedaverage number of shares(thousands) 107,004 65,972 84,946 Fully dilutedweighted averagenumber of shares(thousands) 111,152 65,972 86,226 + Adjusted profit for the period represents the profit after taxation of theperiod excluding charges in relation to goodwill amortisation and share basedpayments 8 Prior period adjustments A prior period adjustment has been made due to the adoption of Financial Reporting Standard 20, Share Based Payments (FRS20). The charge for the year ended 30 June 2005 was £130k of which £38k related to the six months ended 31 December 2004. A prior period adjustment has been made due to the adoption of Financial Reporting Standard 21, Post Balance Sheet Events (FRS21). The dividend that was proposed in June 2005 but paid after that date has been included within the period that it was paid. No interim dividend has been proposed at this time. 9 Copies of this statement are being sent to all shareholders and will be available to the public at the Company's Registered office at Ascribe House, Branker Street, Westhoughton, Bolton BL5 3JD. * - Neither audited or reviewed This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ASP.L