22nd Apr 2008 07:00
Ultrasis PLC22 April 2008 Ultrasis plc ("Ultrasis" or the "Company) Interim results for the six months ended 31 January 2008 Highlights • Sales growth of 50% for the period • Maiden operating profit before charges for share based payments of £74,000 (2007: loss £71,000) • Deferred income of £1,955,000 (2007: £655,000) • Debt free with cash at bank of £1,002,000 Commenting, Nigel Brabbins, Chief Executive, said: "These results confirm Ultrasis' position in the interactive healthcare marketas the leading provider of CCBT (computer delivered cognitive behaviouraltherapy) and demonstrate the Company's potential for strong, profitable growthbased on a robust renewable income stream. Now firmly established within theNHS, we intend to address the retail market for Beating the Blues(R), togetherwith our other suite of products and will continue to seek other opportunitiesin the interactive healthcare sector." Further information: Ultrasis plc:Nigel Brabbins, Chief Executive +44 (0) 20 7566 3900 Gerald Malone, [email protected] www.ultrasis.com Capital MS&L:James Madsen +44 (0) 20 7307 5330 JMFinn Capital Markets Ltd, Nominated Adviser and Joint BrokerGeoff Nash +44 (0) 20 7600 1658 www.jmfinncapitalmarkets.com Marshall Securities, Joint Broker:John Webb +44 (0) 20 7490 3788 ULTRASIS PLC Interim report for the six months ended 31 January 2008 Statement from Chairman and Chief Executive We are pleased to report a maiden operating profit of £74,000 before share basedpayments which demonstrates the Company's continued progress. Strong andsustainable revenues are reflected in the 50% sales growth over the same periodlast year. Continued high renewal levels for the core product, Beating the Blues(R) - confirm its effectiveness as a treatment for mild to moderate depression -and point to a secure income base. Beating the Blues Uptake of Beating the Blues(R) continues to grow. Increasing numbers of PCTs arecomplying with national policy and implementing Beating the Blues(R) for thetreatment of their population. We also continue to maintain robust renewallevels from customers who have experienced the effectiveness of Beating theBlues(R) and the benefits it provides in comparison with anti depressants andother forms of treatment. Public awareness of Beating the Blues(R) is growing. We are increasinglycontacted by individuals who do not wish to approach their GP about depressiveillness and wish to purchase Beating the Blues privately. An estimated sixmillion people suffer from anxiety and depression in the UK alone and evidencesuggests that in excess of 25% of people with mental health problems do not goto their GP or the NHS for support. To meet this growing need for confidentialand immediate support we will soon be making available a retail version ofBeating the Blues(R) with 24/7 telephonic support. This will be sold via ouronline portal, The Wellness Shop www.thewellnessshop.co.uk. Financial highlights These are the first results of the Group to be stated under InternationalFinancial Reporting Standards (IFRS) and the comparatives have been restated onthis basis. The principal impact of IFRS on the results has been therequirement to capitalise certain development expenditure as required by IAS 38,resulting in a £82,000 reduction to the loss for the six months ended 31 January2007 and £80,000 for the year ended 31 July 2007. The effect of the adjustmentson the results and equity of the Group are set out in note 4. In the six months ended 31 January, 2008, recognised revenue from ordinaryoperating activities grew 50% to £1,038,000 from £692,000, in the same periodlast year. At 31 January 2008 deferred income which comprises invoiced amountsfor services to be rendered in future periods amounted to £1,955,000 (31 January2007: £655,000). During the period operating expenses increased by 18% on thesame period last year, before share based payments, demonstrating continuedlevels of control and improved operating efficiencies from increased volumes.The loss for the period (after non-cash charges for share based paymentsrequired under IFRS 2) was £200,000 (2007: £297,000). Outlook Ultrasis now has a growing interactive healthcare business and, with no debt andsufficient cash reserves, is well positioned to promote both strategic andorganic growth. We are confident of building significantly on our UK base and weare receiving increasing interest from the US, Europe and other overseas marketswhere we intend developing our position, extending our reach and exploiting thegrowing demand for innovative interactive health care. Nigel Brabbins Gerald MaloneChief Executive Non executive Chairman 22 April 2008 CONSOLIDATED INCOME STATEMENT for the six months ended 31 January 2008 Six months ended Six months ended Year ended 31 Jan 31 Jan 31 Jul Notes 2008 2007 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Revenue 2 1,038 692 1,577 Cost of sales (73) (9) (23) Gross profit 965 683 1,554 Administrative expenses- Share based payments (283) (235) (495)- Other (891) (754) (1,743)- Loss on the disposal of non-current - - (12)assets (1,174) (989) (2,250) Operating profit/(loss)Before share based payments 74 (71) (201)Share based payments (283) (235) (495) (209) (306) (696) Finance costs (4) (1) (9)Finance income 13 10 16 9 9 7 Loss before taxation (200) (297) (689) Taxation - - 4 Loss for the period 2 (200) (297) (685) Loss per shareBasic and Diluted loss per share (p) 3 (0.013) (0.020) (0.046) CONSOLIDATED BALANCE SHEET as at 31 January 2008 31 Jan 31 Jan 31 Jul Notes 2008 2007 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Non-current assetsIntangible assets 2,563 2,579 2,565Plant and equipment 52 37 37 Total non-current assets 4 2,615 2,616 2,602 Current assetsInventories 27 28 27Trade and other receivables 1,373 301 929Cash and cash equivalents 1,002 593 879 Total current assets 2,402 922 1,835 Current liabilitiesTrade and other payables (438) (211) (509)Deferred revenue (1,955) (655) (1,388) Total current liabilities (2,393) (866) (1,897) Net current assets/(liabilities) 9 56 (62) Net assets 2 2,624 2,672 2,540 EquityShare capital 1,478 1,478 1,478Share premium account 21,104 21,104 21,104Share option reserve 953 410 670Other reserves 6,650 6,650 6,650Merger reserve 2,324 2,324 2,324Foreign exchange reserve (28) (27) (29)Retained losses 4 (29,857) (29,267) (29,657) 4 2,624 2,672 2,540 CONSOLIDATED CASH FLOW STATEMENT for the six months ended 31 January 2008 Six months Six months ended Year ended 31 ended 31 Jan 31 Jan Jul 2008 2007 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Cash generated from/(used in) operationsOperating profit/(loss) (209) (306) (696)Share based payments 283 235 495Depreciation charge 12 6 13Loss on disposal of non-current assets - - 12Amortisation of capitalised development costs 2 - 2(Increase)/decrease in inventories - - 1(Increase)/decrease in debtors (444) 128 (500)Increase/(decrease) in creditors 495 (268) 759Tax received - - 4 Net cash generated from/(used in) operating 139 (205) 90activities Investing activitiesInterest received 13 10 16Development expenditure (1) (82) (82)Purchases of plant and equipment (24) (1) (8)Net cash used in investing activities (12) (73) (74) Financing activitiesInterest paid (4) (1) (9) Net cash used in financing activities (4) (1) (9) Net increase/(decrease) in cash and cash 123 (279) 7equivalents Cash and cash equivalents at beginning of 879 872 872period Cash and cash equivalents at end of period 1,002 593 879 NOTES TO THE FINANCIAL INFORMATION for the six months ended 31 January 2008 1. Accounting policies i. Basis of preparation The next annual financial statements of Ultrasis plc (the "Company") will beprepared in accordance with International Financial Reporting Standards (IFRS)as adopted for use in the EU, applied in accordance with the provisions of theCompanies (Northern Ireland) Order 1986. Accordingly, the interim financial information in this report has been preparedusing accounting policies consistent with IFRS. IFRS is subject to amendment andinterpretation by the International Accounting Standards Board (IASB) and theInternational Financial Reporting Interpretations Committee (IFRIC) and there isan ongoing process of review and endorsement by the European Commission. Thefinancial information has been prepared on the basis of IFRS that the Directorsexpect to be applicable as at 31 July 2008. The financial information has been prepared under the historical costconvention. The principal accounting policies set out below have beenconsistently applied to all periods presented. ii. IFRS transition IFRS 1 permits companies adopting IFRS for the first time to take certainexemptions from the full requirements of IFRS in the transition period. Theinterim financial information has been prepared on the basis of the followingexemptions: • Business combinations prior to 1 August 2006 have not been to comply With IFRS 3 "Business Combinations" • IFRS 2 "Share-based Payments has been applied retrospectively to those options that were issued after 7 November 2002 and had not vested by 1 August 2006. The disclosures required by IFRS 1 concerning the transition from UK GAAP toIFRS are given in note 4. iii. Non-statutory accounts The financial information for the year end 31 July 2007 set out in this interimreport does not comprise the Company's statutory accounts as defined by Article248(3) (c) in Part VIII of the Companies (Northern Ireland) Order 1986. The statutory accounts for the year ended 31 July 2007, which were preparedunder UK Generally Accepted Accounting Practice (UK GAAP), have been deliveredto the Registrar of Companies in Northern Ireland. The auditors reported onthose accounts; their report was unqualified and did not contain a statementunder Article 245(4) of the Companies (Northern Ireland) Order 1986. The financial information for the 6 months ended 31 January 2008 and 31 January2007 is unaudited. iv. Basis of consolidation The financial information incorporates the results of the Company and entitiescontrolled by the Company (its subsidiaries), together the "Group". Control isachieved where the Company has the power to govern the financial and operatingpolicies of an investee entity so as to obtain benefits from its activities. Where necessary, adjustments are made to the results of subsidiaries to bringthe accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated onconsolidation. v. Revenue recognition Revenue is measured at the fair value of the consideration received orreceivable and represents amounts receivable for goods and services provided inthe normal course of business, net of discounts, VAT and other sales relatedtaxes. Revenue arising from the sale of services is recognised when and to the extentthat the Group obtains the right to consideration in exchange for theperformance of its contractual obligations as follows: - Revenue from software licenses and maintenance and support contracts isrecognised pro-rata over the duration of the agreement, provided that there areno significant vendor obligations remaining and collectability of the debt isexpected. - Revenue derived from the development of software products for customerson a fixed-fee basis is recognised by the percentage completion method on acontract-by-contract basis. Costs are written off in the year in which they areincurred. Changes in estimated total costs or contract values may result inrevisions to revenue in the period in which the revisions arise. Provisions forany estimated losses on uncompleted contracts are made in the period in whichsuch losses are determinable. For development services undertaken on a time andexpense basis, revenue is recognised as the service is performed. Billings in excess of revenue recognised are held in the balance sheet under "Deferred revenue". vi. Foreign currency Transactions in foreign currency are recorded at the rates of exchangeprevailing on the dates of the transactions. At each balance sheet date,monetary assets and liabilities that are denominated in foreign currencies areretranslated at the rates prevailing on the balance sheet date. Exchange gainsand losses on short-term foreign currency borrowings and deposits are includedwith net interest payable. Exchange differences on all other transactions,except relevant foreign currency loans, are taken to operating profit. The results of overseas operations where the exchange rates do not fluctuatesignificantly are translated at the average rates of exchange during the period.Assets and liabilities on the balance sheet are translated at the closing rateat the date of the balance sheet. All resulting exchange differences arerecognised as a separate component of equity vii. Share based payments The cost of share-based employee compensation arrangements, whereby directorsand employees receive remuneration in the form of shares or share options, isrecognised as an expense in the income statement. The total expense to be apportioned over the vesting period of the benefit isdetermined by reference to the fair value (excluding the effect of nonmarket-based vesting conditions) at the date of grant. The assumptionsunderlying the number of awards expected to vest are subsequently adjusted forthe effects of non market-based vesting to reflect the conditions prevailing atthe balance sheet date. Fair value is measured by the use of a binomial model.The expected life used in the model has been adjusted, based on management'sbest estimate, for the effects of the non-transferability, exercise restrictionsand behavioural considerations. viii. Plant and equipment Plant and equipment are stated at cost less accumulated depreciation and anyrecognised impairment loss. Depreciation is charged so as to write off the cost of assets, over theirestimated useful lives, using the straight-line method, on the following bases: Leasehold improvements - 10 years or the life of the lease whichever is shorterOffice equipment - 4 to 15 yearsFixtures and fittings - 4 to 10 years When assets are sold or retired the difference between the net proceeds and thenet carrying amount of the assets is recognised as a gain or loss in otheroperating income or expenses, respectively. ix. Inventories Inventories are stated at the lower of cost and net realisable value. Cost iscomprised of direct materials and, where applicable, direct labour costs andthose overheads that have been incurred in bringing the inventories to theirpresent location and condition. Cost is calculated using the weighted averagemethod. Net realisable value represents the estimated selling price less allestimated costs of completion and costs to be incurred in marketing, selling anddistribution. x. Financial instruments Cash and cash equivalents comprises cash held by the Group and short-term bankdeposits with an original maturity of three months or less. xi. Intangible assets Purchased intangible assets are capitalised at cost and written off on astraight line basis over their estimated useful economic life of 20 years. Thecarrying value of Intangible Assets is reviewed annually by the Directors andprovision is made for any impairment. Development costs where they meet the criteria defined in IAS 38 are capitalisedand are written off over their estimated useful economic life. Capitaliseddevelopment costs are reviewed annually and provision is made for anyimpairment. xii. Critical accounting judgements and key sources of estimation uncertainty The preparation of financial information in conformity with generally acceptedaccounting practice requires management to make estimates and judgements thataffect the reported amounts of assets and liabilities as well as the disclosureof contingent assets and liabilities at the balance sheet date and the reportedamounts of revenues and expenses during the reporting period. Estimates and judgements are continually evaluated and are based on historicalexperience and other factors, including expectations of future events that arebelieved to be reasonable under the circumstances. The significant judgementsmade by management in applying the Group's accounting policies and the keysources of estimation uncertainty were: 1. Valuation of the Group's Intangible Assets The Group acquired a licence to the retail market for its products as part ofthe acquisition of the Healthstar Group in 2006. The Directors believe that theconditions prevailing at the balance sheet date indicate that the carrying valueof the licence has not been impaired. Amortisation of the licence has not yetcommenced as the Group has not as yet realised commercial benefit from it. 2. Share based payments In determining the fair value of equity settled share based payments and therelated charge to the income statement, the Group makes assumptions about futureevents and market conditions. In particular, judgement must be made as to thelikely number of shares that will vest, and the fair value of each awardgranted. The fair value is determined using a valuation model which is dependenton further estimates, including the Group's future dividend policy, employeeturnover, the timing with which options will be exercised and the futurevolatility in the price of the Group's shares. Such assumptions are based onpublicly available information and reflect market expectations and advice takenfrom qualified personnel. Different assumptions about these factors to thosemade by the Group could materially affect the reported value of share basedpayments. 3. Revenue Recognition In deciding when to recognise revenue the Directors are required to consider ona case by case basis whether there are any ongoing obligations to the Group'scustomers. When, in their opinion, there are no significant ongoingobligations, revenue is recognised immediately, otherwise it is deferred and isrecognised pro-rata over the duration of the agreement as described in Note 1,part v above. 4. Capitalised Development Costs Development costs where they meet the criteria defined in IAS 38 are capitalisedand are written off over their estimated useful economic life. The judgementsand key sources of estimation uncertainty relate to the Directors estimation ofthe useful economic life and how the intangible asset will generate probablefuture economic benefits. In assessing this, the Directors consider theexistence of a market for the product being developed based on their experienceand estimate how long revenues may be generated from the sale of the product.The Directors annually review both the estimated useful life and whetherpreviously capitalised development costs continue to meet IAS 38 criteria. 2. Segment information The Company considers there to be only one class of business, interactivehealthcare. Geographical Segments United Kingdom Rest of the World Group Jan 2008 Jan 2007 Jan 2008 Jan 2007 Jan 2008 Jan 2007 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) £'000 £'000 £'000 £'000 £'000 £'000Revenue by destination: 961 524 77 168 1,038 692Revenue by origin: 961 524 77 168 1,038 692Loss on ordinary (188) (282) (12) (15) (200) (297)activities beforetaxation: Net assets / liabilities 3,784 3,296 (1,160) (624) 2,624 2,672 3. Basic and Diluted loss per share Six months ended Six months Year ended 31 31 Jan ended 31 Jan Jul 2008 2007 2007 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Loss Loss for the purposes of basic and diluted loss (200) (297) (685) per share being loss for the period attributable to equity shareholders Number of shares Weighted average number of ordinary shares for 1,478,070,955 1,478,070,955 1,478,070,955 the purposes of basic and diluted loss per share 4. Transition to IFRS Ultrasis plc reported under UK GAAP in its previously published financialstatements for the year ended 31 July 2007. The interim financial information inthis report has been prepared using accounting policies consistent with IFRS.The analysis below shows a reconciliation of net assets and loss as reportedunder UK GAAP as at 31 July 2007 to the revised net assets and loss under IFRSas reported in these financial statements. There is also a reconciliation of netassets under UK GAAP to IFRS at the comparative interim date, being 31 January2007. The differences all arise from the requirement under IFRS to capitalisedevelopment costs that meet certain criteria. Under UK GAAP this was optionaland hence it had been the Company's policy to write off all development costs asincurred. The development costs incurred in the year ended 31 July 2007 have nowbeen retrospectively capitalised and are being amortised through the IncomeStatement in the current period. Reconciliation of equity at Previous GAAP Effect of IFRS transition to IFRS31 July 2007 £'000 £'000 £'000Non-current assets 2,522 80 2,602Current liabilities (1,781) (116) (1,897)Non-current liabilities (116) 116 -Net assets 2,460 80 2,540 Retained losses (29,737) 80 (29,657)Equity shareholders' funds 2,460 80 2,540 Reconciliation of equity at Previous GAAP Effect of IFRS transition to IFRS31 January 2007 £'000 £'000 £'000 Non-current assets 2,534 82 2,616Net assets 2,590 82 2,672Retained losses (29,349) 82 (29,267)Equity shareholders' funds 2,590 82 2,672 Reconciliation of loss for Previous GAAP Effect of IFRSthe year ended 31 July 2007 transition to IFRS £'000 £'000 £'000Administrative expenses (2,318) 80 (2,238)Loss for the period (765) 80 (685) Losses on disposal of non-current assets were shown separately after operatingprofit/loss under UK GAAP, under IFRS they are shown within administrativeexpenses. The change is purely presentational hence this has not been includedin the above reconciliation. Reconciliation of loss for Previous GAAP Effect of IFRSthe year ended 31 January transition to IFRS2007 £'000 £'000 £'000Administrative expenses (1,071) 82 (989)Loss for the period (379) 82 (297) Cashflow statement The Group's consolidated cash flow statements are presented in accordance withIAS 7. The statements present substantially the same information as thatrequired under UK GAAP, with the following principal exceptions: 1. Under UK GAAP, cashflows are presented under nine standard headings, whereasIFRS requires the classification of cash flows resulting from operating,investing and financing activities. 2. The cash flows reported under IAS 7 relate to movements in cash and cashequivalents, which include cash and short term liquid investments. Under UKGAAP, cash comprises cash in hand and deposits repayable on demand. 3. Development expenditure under UK GAAP was written off within operating profit/(loss), whereas under IFRS it is capitalised and amortised. The resultantimpact on the cashflow statement is purely presentational and sees the cashgenerated from operations in the comparative figures for both 31 January 2007and 31 July 2007 increased by £82,000 and the development expenditure under theheading of Investing Activities increased by an equal amount. 4. Tax received under UK GAAP was presented under the heading of Taxationwhereas under IFRS is it shown within operating activities in the comparativefigures for 31 July 2007. The Company advises that its Nominated Adviser and Joint Broker, JMFinn CapitalMarkets Ltd, now conducts business under the trading name FinnCap. Copies of this interim report will be available from the Company's website:www.ultrasis.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Ultrasis Plc