21st Mar 2007 07:02
Ascribe plc21 March 2007 Press Release 21 March 2007 Ascribe plc ("Ascribe" or "the Group") Interim results for the six months ended 31 December 2006 Ascribe plc (AIM:ASP), the health IT group, reports its interim results for thesix months ended 31 December 2006. Highlights • Turnover increased by 65% to £7.5 million (2005: £4.5 million) • Long term maintenance contract revenue represents 66% of total turnover (2005: 62%) • Strong order book at 31 December 2006 • Operating profit before goodwill and share based payments (adjusted operating profit) up by 59% to £1.56 million (2005: £0.98 million) • Operating profit increased to £0.74 million (2005: £0.67 million) • Adjusted basic EPS 41% higher at 1.06p (2005: 0.75p) • Exciting opportunity for the business of a reported change of strategy in the NHS National Programme for IT (NPfIT). Commenting on the results, Stephen Critchlow, Executive Chairman, said: "Duringthe period we have been able to demonstrate the success that comes fromfocussing on our customers. Our market leading products have been delivered viaan integrated strategy that meets the national requirements of the healthservice whilst positioning Ascribe to deliver the functionality demanded by ourNHS and overseas customers." - Ends - For further information:Ascribe plcStephen Critchlow, Executive Chairman Tel: +44 (0) 870 053 4545Jeremy Lee, Group Finance Director www.ascribe.com Cenkos Securities plcIan Soanes, Corporate Finance Tel: +44 (0) 20 7397 [email protected] www.cenkos.com Media enquiries:AbchurchJustin Heath / Stephanie Cuthbert Tel: +44 (0) 20 7398 [email protected] www.abchurch-group.com Chairman's Statement I am delighted to present the results of the Group for the six months ended 31December 2006. The increase in Ascribe's market share demonstrates our abilityto grow by selling directly to Hospital Trusts, during a period of continueduncertainty caused by the reported change of strategy by the National Programmefor Information Technology ("NPfIT"), currently known as Connecting for Health("CfH"). In the first half year of trading we have committed investment toresearch and development to ensure that we have the systems in place to supporta period of substantial growth, which we expect to come from customers that havenow waited too long for delivery from the NPfIT. The Board expects that thisdemand will add new business without affecting the core stability of the Group'sincome streams from maintenance and follow-on sales from existing customers.Ascribe's pipeline for new sales has never been stronger, both in this countryand overseas. Financial results In the six months ended 31 December 2006 sales grew by 65% to £7.5 million(2005: £4.5 million). An excellent order intake in December meant that theactual order book taken into 2007 was at a record high, providing a solidplatform for the second half of our financial year. Trading across the Group has been excellent. The Group has continued to succeedin winning new business, particularly in both the Pharmacy and Primary &Unscheduled Care divisions. In December the Group's Mental Health & CommunityCare division won the largest order taken by the Group since flotation. OurElectronic Patient Record division has grown steadily during the period andrevenues include income from the installation of new hospital electronic patientrecord systems at two Trusts; these orders were awarded to us notwithstandingNPfIT competition. Long term maintenance contract revenues continue to underpinthe business comprising 66% of total turnover for the six months ended 31December 2006 (2005: 62%). During the same period, operating profit before goodwill amortisation and sharebased payments ("adjusted operating profit") grew 59% to £1.56 million (2005:£0.98 million). The Group amortises goodwill over the Board's estimate of useful economic lifeof between 5 and 20 years. Following the three acquisitions completed in theyear ended 30 June 2006, the amortisation of goodwill for the period hasincreased from £0.21 million to £0.77 million. Nevertheless, operating profitshave increased by 10% to £0.74 million (2005: £0.67 million). The Group targets investment in research and development to improve patient careby enhancing the solutions available to clinicians. The Board believes thatthis focus will deliver additional new sales and profit in future periods. TheBoard balances investment for future growth with the delivery of satisfactoryongoing financial returns - the Group's underlying adjusted operating marginremains healthy at 21% (2005: 22%). Adjusted basic earnings per share increased by 41% to 1.06 pence (2005: 0.75pence). Basic earnings per share for the period, calculated after deductedgoodwill amortisation and share based payments, is 0.34 pence (2005: 0.45pence). Balance Sheet and Funding At 31 December 2006 the Group had net assets of £11.5 million (2005: £6.9million). At the same date the Group's net debt was £3.88 million - the combined overdraftand debt facility is £5.35 million. A high proportion of Ascribe's annualmaintenance contracts are invoiced at the start of the NHS year in April, and assuch, the Group is highly cash generative in the second half of its financialyear. The Group's revenue recognition policy remains unchanged and is set out in ourannual report. The increase in deferred income at 31 December 2006 is aconsequence of the consolidation of the three additional acquisitions in theyear ended 30 June 2006 including invoiced capital sales deferred until fullyrecognisable. NPfIT Ascribe's strategy is to provide software solutions, which are compliant to thestandards required by the NPfIT initiative, directly to Hospital Trustsrequiring them, rather than through the Programme. This strategy was madenecessary when NPfIT originally selected only a handful of healthcare softwaredevelopers as accredited suppliers. In spite of this, Ascribe continued todevelop commercially successful healthcare products that have focussed upondelivering to the needs of clinicians and patients. As noted by the media, the NPfIT has indicated that it intends to implement an "Alternative Supplier Catalogue". This move is welcomed by Ascribe and we havebeen approached by the NPfIT to be a preferred supplier for this initiative. Wehave previously declined to accept the liabilities associated with NationalProgramme delivery, however, this new initiative would allow us to continue tosupply locally as an approved NPfIT supplier as the proposed initiative willreturn to freedom of choice to Trusts, to select an IT system based on 'best ofbreed' and have it delivered and installed in a faster timeframe. Ascribe remains convinced that focusing on the patient as the ultimate customeris the right approach, since our systems remain at the heart of healthcaredelivery. We now appear to be able to achieve this from within the framework ofthe NPfIT. Demand from hospitals for the direct delivery of products remains very strongand our strategy of focusing on local needs is yielding growth in our marketshare. We are delighted that Local Service Providers to the NPfIT recognisethat Ascribe's products meet the needs of the market place and are now offeringsome of our products to customers purchasing systems through Connecting forHealth. Pharmacy division Hospital Pharmacy systems have now penetrated over 50% of the available UKmarket and the division continues to sell new systems. Eight Pharmacy Systemshave been ordered in the first half of our financial year. Our newopportunities come from a range of additional services that our web-basedtechnology now makes possible. These include medicines management andelectronic prescribing, where we can see these solutions contributing to acontinuing road map for growth for many years to come. We are also selling ournew web based pharmacy product both in the UK and overseas which is designed forgreater system interoperability. Mental Health & Community Care division This division has a busy delivery schedule to its customers both in the UK andoverseas. In December 2006 the division won an order in the South of Englandworth in excess of £1.87m over the five year life of the contract. In additionthe division has won significant new orders in Australia and New Zealand. Themedia continues to raise the public's level of awareness of mental health issuesand our portfolio now includes a greater range of solutions that can provideenhanced record-keeping and care path management solutions to healthprofessionals working within the community. Primary & Unscheduled Care division The division continues to grow steadily. Our Primary care team are workingclosely with Connecting for Health on the new General Practioner Systems ofChoice contract and the Primary care product continues to meet the extensivedemands of the Scottish Enhanced Functionality (SEF) required by the ScottishExecutive. There are also increasing additional revenue opportunities throughthe delivery of integrated system (third party) enhancements to our GP solution. Ascribe's Unscheduled Care solution continues to win new orders and thepipeline of customers requiring the enhanced functionality provided by Ascribe'ssoftware is increasing. This division is expected to benefit significantly onceAscribe is accepted as an NPfIT solution supplier. Electronic Patient Records ("EPR") In line with many of the Group's acquisitions, both of the EPR businesses whichcomprise this division have seen their sales grow as a result of thecross-selling opportunities arising from being part of an enlarged Group; whichin part is the result of the reassurance that customers have from Ascribe'sreputation for delivery. We have seen two new Patient Administration Systems(PAS) with EPR capabilities go live prior to December 2006. These are thecornerstones to secondary care delivery and have been installed at sites whowere previously expecting software from the NPfIT. Review of operations I warmly welcome Chris Dickson to the Executive Board. He has shown himself tobe a real asset to the team, rapidly applying the considerable experience thathe has gained through previous senior roles with BUPA and other privatehealthcare providers. During the period we have been able to work on a numberof operational projects to build the Group and maximise its future capability;this is in addition to continuing to deliver systems to our customers on a dayto day basis. Ascribe is constantly reviewing its skill mix and I am pleased tosee the skills and abilities of the team grow at the same time as we complimentthe team with some excellent new recruits. The Group is implementing a common certified quality management system acrosssupport, development and other departments; a VOIP (Voice Over InternetProtocol) telephone system, connecting all offices - including overseas - to thesame switchboard, enabling a location independent method of working for ourcustomers; a new group-wide customer relationship management system which willput all of the enlarged Group's activity onto a single information system; andsome targeted office refurbishment enabling the consolidation of certain officeswhich are estimated to yield over £130k savings in 2007/8. One of the largest exercises in progress is the consolidation of Ascribe'sdevelopment team, now over 80 strong, with 10 additional staff being recruitedover the coming year. This initiative is progressing to plan and the resultsare expected to provide additional resource to the Group over the next few yearsas we deliver common clinical modules to multiple markets. The Group has been able to build a broad set of leading products which are ableto meet the majority of the needs of our customers in the NHS; additionalbenefits will be delivered as more systems become integrated through ourweb-based integration technology. This means that many of the new salesopportunities involve all of our divisions working together. To this end wehave developed a group project infrastructure which ensures that these largescale solutions are delivered effectively. Acquisitions We have now had sufficient time to integrate recent acquisitions into the Group.Whilst this is an ongoing task Ascribe is now in a good position to grow theGroup further organically and by acquisition. We intend to strengthen both ourimplementation capability and our clinical focus in the coming year. We willonly consider acquisitions that are earnings enhancing as they become part ofthe Group. Prospects The outlook for Ascribe continues to be very encouraging with an order book thatis stronger than ever. The first half of the year progressed in line withmanagement expectations and we are pleased with the outlook for 2007. Theconditions and prospects for additional business are in place with pent updemand matched with an excellent product portfolio meeting clinicians' needs.Organic growth, cross-selling opportunities and new market development continuesto feature throughout the Group; we are also working on some larger projectswhere our entire portfolio is offered as an integrated solution. Ascribe's staff are a credit to the Group. They have made considerableimprovements to the future capability of the business as well as working hard todeliver an excellent service to today's customers. I would like to take thisopportunity to thank them all. The Board remains confident about the Group's prospects for the remainder of thefinancial year and beyond. Stephen CritchlowExecutive Chairman21 March 2007 Consolidated Profit & Loss Account for the six months ended 31 December 2006 6 months 6 months Audited ended ended Year ended 31 December 31 December 30 June 2006 2005 2006 £'000(1,2) £'000(1) £'000Turnover 7,474 4,537 9,881Cost of sales (486) (348) (701)Gross profit 6,988 4,189 9,180Administrative expenses - other (5,428) (3,207) (7,030)Operating profit before goodwill amortisationand share based payments 1,560 982 2,150Administrative expenses - goodwillamortisation (771) (211) (593)Administrative expenses - share based payments (52) (104) (162)Total administrative expenses (6,251) (3,522) (7,785)Operating profit 737 667 1,395Interest (paid)/received (111) 50 7Profit on ordinary activities before taxation 626 717 1,402Taxation (239) (232) (290)Profit on ordinary activities after taxation 387 485 1,112Dividends and appropriations (148) (108) (107)Retained profit 239 377 1,005 Pence Pence PenceAdjusted basic earnings per share 1.06 0.75 1.73Basic earnings per share 0.34 0.45 1.03Fully diluted earnings per share 0.31 0.44 0.99 Consolidated Statement of Total Recognised Gains and Losses for the six monthsended 31 December 2006 6 months 6 months Audited ended ended Year ended 31 December 31 December 30 June 2006 2005 2006 £'000(1) £'000(1) £'000Profit for the period 387 485 1,112Currency translation differences on foreigncurrency net investments 52 (13) (50)Total gains and losses recognised since the lastannual report 439 472 1,062 Consolidated Balance Sheet as at 31 December 2006 Audited 31 December 31 December 30 June 2006 2005 2006 £'000(1) £'000(1) £'000Fixed assetsIntangible fixed assets 18,190 8,101 18,961Tangible fixed assets 246 150 294 18,436 8,251 19,255Current assetsDebtors: due within one year 3,970 1,841 3,124Cash at bank and in hand 155 1,864 3,160 4,125 3,705 6,284Creditors: amounts falling due within one year (7,469) (4,811) (11,330)Net current liabilities (3,344) (1,106) (5,046)Total assets less current liabilities 15,092 7,145 14,209Creditors: amounts falling due after more thanone year (3,632) (200) (3,041)Net assets 11,460 6,945 11,168Capital and reserves(3)Called up share capital 1,142 1,070 1,142Shares to be issued 2,155 855 2,155Share premium account 9,182 6,979 9,181Merger reserve 561 561 561Profit and loss account (1,580) (2,520) (1,871)Equity shareholders' funds 11,460 6,945 11,168 Consolidated cash flow statement for the six months ended 31 December 2006 Consolidated cash flow statement 6 months ended 6 months ended Audited 31 December 31 December Year ended 2006 2005 30 June 2006 £'000(1) £'000(1) £'000Net cash (outflow)/inflow from operating (2,182) (770) 2,407activitiesReturns on investments and servicing of finance (32) 50 7Corporation taxation (90) - (319)Capital expenditure and financial investment (10) (8) (94)Acquisitions and disposals(4) (850) - (5,179)Equity dividends paid (148) (108) (107)Net cash outflow before financing (3,312) (836) (3,285)Financing 595 - 2,550Fundraising - - 38 595 - 2,588Decrease in cash (2,717) (836) (697) Reconciliation of operating profit to net cash(outflow)/ inflow from operating activities Operating profit 737 667 1,395Depreciation 58 73 118Amortisation 771 211 593Share based payments 52 104 162Profit on sale of tangible fixed assets - (5) (9)Increase in debtors (846) (317) (606)(Decrease)/increase in creditors (2,954) (1,503) 754Net cash (outflow)/inflow from operating (2,182) (770) 2,407activities Reconciliation of net cash flow to movement in netdebt Decrease in net cash (2,717) (836) (697)Exchange movement (53) - 49Cash (inflow)/outflow from increase/(decrease) in (595) 21 (2,550)debtNet (debt)/funds at beginning of period (519) 2,679 2,679Net (debt)/funds at end of period (3,884) 1,864 (519) 1 - Neither audited or reviewed 2 - All amounts shown relate to continuing operations 3 - All items under capital and reserves are equity 4 - Payment of £800,000 was made to the vendors of Footman Walker AssociatesLimited on 7 July 2006 following the successful completion of the earn-out asdetailed in the Sale and Purchase Agreement. Payment of £50,000 was made to thevendors of Park Systems Limited on 27 July 2006 as part payment of the deferredconsideration as documented in the Sale and Purchase Agreement. Notes 1. The Interim Report for the six months ended 31 December 2006 is unauditedand was approved by the directors on 21 March 2007. The financial informationset out above does not constitute statutory accounts within the meaning ofsection 240 of the Companies Act 1985. The Annual Report, from which theinformation for the year ended 30 June 2006 has been extracted from, has beendelivered to the Registrar of Companies and contained an unqualified auditopinion. 2. The directors do not recommend the payment of a dividend. 3. The accounting policies used are consistent with those applied in the latestpublished consolidated accounts. 4. Segmental analysisTurnover is wholly attributable to the principal activities. A geographical analysis of turnover isas follows: 6 months ended 6 months ended Audited 31 December 31 December Year ended 2006 2005 2006 £'000(1) £'000(1) £'000United Kingdom 6,276 4,310 8,964Rest of the World 1,198 227 917 7,474 4,537 9,881 5. Debtors Audited 31 December 31 December 30 June 2006 2005 2006Trade debtors 2,862 1,061 2,309Amounts recoverable on contracts 93 502 87Other debtors 108 106 107Prepayments 327 99 298Accrued income 580 73 323 3,970 1,841 3,124 6. Creditors AuditedAmounts falling due within one year: 31 December 31 December 30 June 2006 2005 2006 £'000(1) £'000(1) £'000 Bank overdraft 841 - 1,129Bank loan 816 - 759Trade creditors 536 251 685Corporation tax 666 438 510Other taxation and social security 493 361 721Deferred consideration 150 1,000 1,000Other creditors - - 53Deferred income 3,494 2,406 5,881Accruals 473 355 592 7,469 4,811 11,330Amounts falling due after more than one year:Bank loan 2,382 - 1,791Deferred consideration 1,250 200 1,250 3,632 200 3,041 7. Earnings per share The basic, diluted and adjusted earnings per share have been calculated on thefollowing basis: 6 months ended Restated Restated 31 December 6 months ended Year ended 2006(1) 31 December 30 June 2006 2005(1)Adjusted profit for the period (£'000)* 1,210 800 1,867Profit for the period (£'000) 387 485 1,112Basic weighted average number of shares 114,179 107,004 107,678(thousands)Fully diluted weighted average number of shares 123,120 111,152 112,060(thousands) * Adjusted profit for the period represents the profit after taxationfor the period excluding charges in relation to goodwill amortisation and sharebased payments 8. Copies of this statement are being sent to all shareholders and will beavailable to the public at the Company's Registered office at Ascribe House,Brancker Street, Bolton BL5 3JD. - Ends - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ASP.L