DXS International plc : Final Results Thomson Reuters

DXS INTERNATIONAL PLC
(EPIC: DXSP)

AUDITED FINAL RESULTS

The Directors of DXS International plc ("DXS" or the "Company"), the ISDX quoted developer and supplier of clinical decision support systems to Clinical Commissioning Groups ("CCGs"), GPs, Doctors and healthcare professionals are pleased to announce the Company's Final Results for the 12 months ending 30th April 2015.

Financial and Operational Highlights

The year under review has seen a number of significant achievements:

  • Turnover increased by 50% from £1.81m to £2.72m;
  • Cash at bank £480,000 as at 30 April 2015;
  • 16 new CCGs since 30 April bringing the total to 36 CCGs representing 1,400 practices;
  • Full Rollout Approval received from the NHS of GPSoC agreement on 14 September 2015;
  • Strong future pipeline of prospective CCGs.

Commenting on the results, Chairman Bob Sutcliffe said:

"During the past year, the Company has invested heavily to significantly mature its systems and their robustness, thanks largely to the stringent but necessary NHS requirements. This enhanced capability offers any customer, whether in the UK or overseas, the confidence that DXS will deliver a high quality of service and solution and thus provide complete peace of mind.

The Company continues to innovate and is now poised for continued growth and many exciting new revenue streams are expected during the next twelve months."

Contacts:

For further information please contact:

David Immelman, CE0

DXS International plc

www.dxs-systems.co.uk

 
01252 719800
City & Merchant Ltd (Corporate Adviser)  
David Papworth 0207 101 7676
MB Communications (Financial PR)  
Maxine Barnes 07860 489571

About DXS:

DXS International presents up to date treatment guidelines and recommendations, from Clinical Commissioning Groups and other trusted NHS sources, to doctors, nurses and pharmacists in their workflow and during the patient consultation. This effective clinical decision support ultimately translates to improved healthcare outcomes delivered more cost effectively which should significantly contribute towards the NHS achieving its projected efficiency savings.

The following information has been extracted from the Company's audited accounts for the year to 30th April 2015.

The Directors of DXS International plc accept responsibility for this announcement.

CHAIRMAN'S REPORT

The year ending April 2015 has seen a number of significant achievements.

  • Revenue grew by 50% compared with 2014.
  • DXS has received FRA (Full Rollout Approval) on the 14th September 2015. This enables all existing and new DXS Clinical Commissioning Groups "CCG" clients to purchase DXS point of Care via the National Framework Agreement.
  • During 2014 DXS implemented an ongoing program of a number of R&D projects, mainly brought about by customer needs within the UK healthcare sector.
  • The result of this rapid growth has required considerable staff recruitment bringing the staff complement to 90% of full strength for the current number of customers. The total head count now numbers 80.

Revenue grew from £1,815,795 at 30 April 2014 to £2,723,762 at 30 April 2015, a significant year on year increase of 50%. Currently, we have 36 CCG clients representing 1,400 practices and are at varying stages of securing a further 10 new CCG customers. These sales are being driven by the need for CCG's, currently controlling an annual healthcare budget of £70 billion, to find savings of up to £20 billion.

A lot of effort from DXS' Directors and Staff over the last 4 months culminated in the Company's award of FRA (Full Rollout Approval) under the new GP Systems of Choice ("GPSoC"), part of the NHS' overall procurement structure, which was announced on 28 March  2014. Introduced back in 2007, GPSoC is a scheme through which the NHS funds the provision of Clinical Systems to General Practitioner (GP) practices in England. The new GPSoC2 scheme, effective from 1st April 2014, was extended to include "Subsidiary Suppliers" of various IT systems. This FRA approval ensures that DXS has been able to transfer its existing CCG clients and procure new CCG clients through the Lot 1 Framework Agreement.

The healthcare market demands innovation and DXS continues with a program of R&D and has added new modules to our existing Point of Care Solution, all aimed at achieving reduced cost and improved quality of care. Our policy is also to partner with innovative solutions/services that we can leverage off our existing footprint. One area of focus is chronic disease. For example, Diabetes alone consumes 10% of the UK healthcare budget and here we are working with a consortium of UK clinicians to deliver a Personalised Care Pathway Solution which we hope to launch in early 2016.

All GPSoC2 winners are required to meet a minimum set of requirements and are expected to evolve during the life of the contract. Thus, DXS has spent the past period putting in place the resources and systems to bring the Company to the required levels of conformance. This has seen the staff complement rise to approximately 80 (of which 13 are freelance) supported by various new management solutions which include customer support, content management, clinical safety and disaster backup and management.

Our cash position remains positive and at the year end, cash at bank stood at £480,928.

The audited profit for the year ending 30 April 2015 is £242,575 including an unexpected once only write off of £108,580 due to a management share option issue (see Directors Report for more information on this item).

This margin is better than expected due to the gearing up of staff and required systems. The headcount increased from 38 at April 2014 to 60 (including 11 freelancers) at April 2015. This has now levelled off at approximately 80 (including 13 freelancers) and ensures that the Company is fully staffed with the exception of those areas where staff are directly linked to increase in the number of clients or new projects with anticipated new revenue streams.

The Company is now poised for continued growth and many exciting new revenue streams are expected to emerge during the next twelve months.

I particularly want to thank all DXS staff for their ongoing effort and contribution to ensuring that DXS has achieved FRA and in parallel grown the revenue by a significant margin.

Yours sincerely,

Bob Sutcliffe

Chairman

REPORT OF THE DIRECTORS

The directors present their annual report and the audited financial statements for the year ended 30 April 2015. The Chairman's statement which is included in this report includes a review of the achievements of the Company, the trading performance, financial position and trading prospects.

Directors

The directors for the year were:

D Immelman - CEO

S Bauer - MD

B Sutcliffe - Chair

Principal Activities

The group's principal activities during the period were the development and distribution of clinical decision support to General Practitioners, Nurses and Retail Pharmacies in the United Kingdom and South Africa. The commercial side included the licensing of DXS to various CCG's, the sale of e-detailing opportunities to the pharmaceutical industry, the UK Primary Care sector and the licensing of DXS technology to healthcare publishers.

Principal Risks

Failure to achieve predicted quantities of DXS contracts and slower development of additional revenue streams may result in revenues growing more slowly than anticipated.

Financial Instruments

At this stage the Group is not faced with risk relating to interest rates on loans, credit and liquidity.

Dividend

The Directors do not recommend a dividend.

Research and Development

The Company continues to invest into research and development both local and internationally. With the rapid emergence of CCGs in the UK healthcare sector and their requirement to achieve £20 billion of savings by 2015, the demands of CCG's for DXS to design and create new solutions to achieve this is on-going. Each newly developed product represents additional revenue streams for the Company.

Directors' Responsibilities

The directors are responsible for preparing the financial statements for each financial year. The directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

  • Select suitable accounting policies and apply them consistently.
  • Make judgments and accounting estimates that are reasonable and prudent.
  • State whether UK accounting principles have been followed subject to any material departures  disclosed and explained in the financial statements and
  • Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in the business

The directors are responsible for keeping proper accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company's auditors are aware of that information.

Approved by the board and signed on its behalf by:

D A Immelman
Director

28th September 2015

STRATEGIC REPORT

Review of the Company's Business

After being awarded the GPSoC tender in March 2014, we were required to undergo a CAP (Common Assurance Process). This began in March 2015 and the Company was awarded FRA (Full Rollout Approval) under the new GP Systems of Choice ("GPSoC"), part of the NHS' overall procurement structure, which was announced on March 28th 2014.

Meeting all the NHS compliance issues has placed a considerable strain on our limited key management resources, however the Company managed to grow revenues from £1,815,795 at April 2014 to £2,723,762 in April 2015, a significant rise of 50%. This was attributed to increasing our CCG customers combined with our Pharmaceutical revenue.

Considering that we have had to put in place considerable staff and system resources the Company still managed a profit of £242,575 even after the write off of an exceptional item of £108,580 for a "share option valuation". The results for the year include a charge of £108,580 which represents the Directors best estimate of the cost of the Share Options awarded by the group during the year. This charge has been provided in terms of current Accounting Standards. The directors do not believe that this charge is a fair reflection of the cost to the Company and has been overstated due to the volatility in the share price during the period, which arose due to limited share sales into a limited market. Considerable time and expense has been spent in agreeing the £108,580 with the auditors.

Description of Principle Risks and Uncertainties

The principle risk is that a competitor provides the market with a superior Clinical Decision Support Solution and takes market share from DXS. To mitigate this risk DXS continually meets the dynamic needs of its customers through a program of R&D.

A second risk is that of CCG budgets drying up. However, with the recent award of the GPSoC2 contracts, it seems certain that adequate budgets have been made available for the foreseeable future.

Analysis of Business during Year Ending April 2015

Sales growth of 50% was greater than projected. Prospects for the year ending April 2016 are looking good with a number of new prospective clients that have indicated intent to purchase the DXS system in the pipeline. Adding to this are potential new revenue streams which should continue to contribute to considerable revenue and margin growth.

The staff headcount increased from 38 at April 2014 to 60 (includes 11 freelancers) at April 2015. Including 13 freelancers this has now levelled off at almost 80. The only expected additional staff will be directly linked to new sales and product lines.

During the past year the Company has significantly matured in terms of its systems and robustness, thanks largely to the stringent but necessary NHS requirements. Every aspect of the business is now compliant with NHS requirements, one of the most demanding globally.

This should offer any customer, whether in the UK or globally, the confidence that DXS is able to deliver a high quality of service and solution and thus provide complete peace of mind.

Financial KPI

  • Group Revenue £2.7 m an increase of 50%. Definition: Total Group sales including distribution of clinical decision support to General Practitioners and the licensing of DXS to CCGs and healthcare publishers.
  • Underlying Group Profit After Tax £242,575 on a par with the previous year.  A required write off of £108,580 for a management share option valuation has been deducted at arriving at the profit. Should this not have been taken into account, the profit after tax would have increased by 49%. Definition: Underlying profit provides information on the underlying performance of the business adjusting for either income or charges which are both one off or significant.
  • Earnings Per Share 2015 0.7p, 2014 0.7p. Definition: Earnings per share is the underlying profit divided by the average number of ordinary shares in issue.
  • ROCE 2015 18.7%, 2014 20%. Definition: Return on capital employed (ROCE) is the ratio of net operating profit of a company to its capital employed. It measures the profitability of a company by expressing its operating profit as a percentage of its capital employed.

Approved by the board and signed on its behalf by:

D A IMMELMAN

CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 APRIL 2015

          2015   2014
          £   £
Turnover       2,723,762   1,815,795
               
Cost of sales       (461,608)   (403,175)
          ________    ________
          2,262,154   1,412,620
               
Administrative expenses       (2,149,982)   (1,296,017)
             
Provision for costs of share option awards     (108,580)   -
           ________    ________
               
Operating profit/ (loss)       3,592   116,603
               
Other interest receivable and similar income   2,170   1,946
           
Interest payable and similar charges     (35,477)    (41,250)
               
           ________    ________ 
Profit/ (Loss) on ordinary activities before taxation (29,715)   77.029
               
Tax on Profit on ordinary activities     272,290   156,335
        ________    ________
Profit for the year       242,575   233,364
                    
               
Profit per share -            
  • Basic
      .7p   .7p
  • fully diluted
      .6p   .6p
                   

All amounts relate to continuing activities

All recognised gains and losses are included in the profit and loss account

BALANCE SHEET
AS AT 30 APRIL 2015

      Group Group   Company Company
      2015 2014   2015 2014
      £ £   £ £
Fixed Assets            
Intangible assets   2,812,110 2,492,104   - -
Tangible assets   22,132 19,913   - -
Investments   - -   1,077,528 1,001,281
      ________ ________   ________ ________
      2,834,242 2,512,017   1,077,528 1,001,281
      ________ ________    _______  _______
             
Current assets            
Debtors -            
Amounts due in less than one year   1,068,112 753,330   47,650 45,820
Amounts due in more than one year   85,842 88,179   - -
Cash at Bank and in hand   480,928 565,008   287,897 284,152
        ________  ________   ________ ________
      1,634,882 1,406,527   335,547 329,972
Creditors: amounts falling due            
 within one year     (1,907,841) (1,565,167)   (21,778) (21,933)
        ________   ________     ________   ________
Net current assets / (liabilities)   (272,959) (158,640)   313,769 308,039
        ________   ________     ________   ________
Total assets less current liabilities 2,561,283 2,353,337   1,391,297 1,309,320
           
Creditors: amounts falling due after more than one year  (242,128) (393,113)   -
      ________ _______     ________   ________
      2,319,155 1,960,264   1,391,297 1,309,320
                       
Capital and reserves            
Called up share capital   108,592 108,518   108,592 108,518
Share Premium account   1,591,709 1,584,047   1,591,709 1,584,047
Provision for costs of share option awards 108,580 -   108,580 -
Profit and loss account   510,274 267,699   (417,584) (383,245)
       ________  ________   ________ ________
Equity shareholders' funds   2,319,155 1,960,264   1,391,297 1,309,320
                       
               

Approved by the Board for issue on 28th September 2015

D Immelman
Director
S Bauer
Director

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 APRIL 2015

1     Accounting policies

1.1       Accounting convention

The financial statements are prepared under the historical cost convention.

1.2       Compliance with accounting standards

The financial statements are prepared in accordance with applicable United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) which have been applied consistently (except as otherwise stated).

1.3       Basis of consolidation

The group financial statements consolidate those of the company and of its subsidiaries using the acquisition method of accounting. All companies within the group make up their accounts to the same date.

Results of subsidiary undertakings acquired during the financial period are included from the effective date on which control is acquired. The separate net assets of newly acquired  subsidiary undertakings are incorporated into the financial statements on the basis of the fair value to the group as at the effective date.

Goodwill on consolidation is being amortised in equal instalments over its estimated useful economic life of 20 years.

1.4       Turnover 

Turnover represents amounts receivable under contracts and is recognised on a straight line over the life of the contract in accordance with the substantial risks and rewards of the contract. Turnover invoiced in advance is deferred and included with current liabilities. A fair proportion of the revenue in respect of the initial contract for each customer is taken to revenue when the contract is signed.

1.5       Tangible fixed assets and depreciation

Tangible fixed assets are stated at cost less depreciation. Depreciation is provided to write off the cost less estimated residual value of each asset over its expected useful life, as follows:

            Plant & equipment       3-4 years straight line

1.6       Intangible fixed Assets

Deferred Development expenditure is amortised over 5 years on a straight line basis from the date that the specific product is completed and is available for distribution

The Computer software is the basis for the software development of the company.  The software is continually updated and improved. The cost of the Computer software is being amortised in equal instalments over its estimated useful economic life of 20 years.

1.7       Foreign Currency Translation

Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rates ruling at the date of the transaction. All differences are taken to profit and loss account.

1.8       Taxation

The taxation charge in the profit and loss account is based on the taxable profits for the period at current rates of taxation and takes into account any provision for deferred taxation.

1.9       Deferred taxation

Deferred taxation is provided in full on timing differences arising from the different treatment of items for accounting and taxation purposes which are expected to reverse in the future, calculated at current tax rates, where deemed material. Deferred tax assets and liabilities are not discounted.

1.10     Research and Development

Research expenditure is written off to the profit and loss account in the year in which it is incurred. Development expenditure is written off in the same way unless the directors are satisfied as to the technical, commercial and financial viability of individual projects. In this situation, the expenditure is deferred and amortised over the five year period during which the company is expected to benefit. Where a deduction for tax purposes is claimed ahead of the amortisation of the expenditure, the tax benefit is included in Deferred Taxation.

1.11     Operating leases

Rentals payable under operating leases are charged against income on a straight line basis over the lease term.

1.12     Company Profit and Loss Account

The company has taken advantage of the exemption permitted under Section 408 of the Companies Act 2006 and has not presented its own profit and loss account in these financial statements. The company's (loss) after tax for the year was £(34,339) (2014 - profit of £454).

1.13     Fixed Asset Investments

Fixed asset investments are stated at cost less provision for permanent diminution in value.




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Source: DXS International plc via Globenewswire

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