Sysgroup Regulatory News (SYS)

13 Sep 2005 07:05

System C Healthcare plc13 September 2005 System C Healthcare plc Preliminary results for the year ended 31 May 2005 System C Healthcare plc ("System C"), a leading independent provider of ITimplementation solutions for the UK healthcare sector, announces its results forthe year ended 31 May 2005. Financial highlights Unaudited Audited 2005 2004Turnover £18.2m £5.6mProfit/(loss) before tax and exceptional items £3.5m £(1.2)mProfit/(loss) before tax £2.5m £(2.2)mOperating cash inflow/ (outflow) £4.2m £(2.3)mAdjusted earnings/(loss) per share - basic (1) 3.48p (1.59)pAdjusted earnings/(loss) per share - diluted (1) 3.08p (1.59)p (1) These EPS figures are calculated prior to the issue of 18,518,519 new shares issued persuant to the flotation which occurred after the year end. Operating highlights • Strong move to profit before tax of £2.5m (2004: loss £2.2m) • Placing and admission to AIM in June 2005 raises net £8.4m for investment • Significant investment in staff capability to create one of the UK's largest teams of dedicated healthcare IT specialists • Successful delivery on first full year of our major contracts with Local Service Provider partners ("LSPs") on the National Programme for IT ("NPfIT") Commenting on the results, Jim Horsburgh, the Chairman said: "I am delighted tobe able to report on a strong set of results. System C has made great progressin the delivery of IT products and implementation solutions in the UK'shealthcare sector. It is particularly pleasing to be able to announce these maiden resultsfollowing our flotation on AIM in June, which raised £8.4m of net proceeds forthe company. We have created a strong team at System C and have increased our resources todeliver future business requirements and have developed a culture which isfounded on delivery and a passion for what we do. With the increasing marketawareness of System C's track record and capability, we are in a strong positionto continue our growth." Enquiries: System C Healthcare plcJim Horsburgh , Chairman 01622 691616Ian Denley, Chief Executive Maitland 020 7379 5151Neil BennettBrian Hudspith A presentation will be made on Tuesday 13 September at 9.30am at the offices ofCollins Stewart (9th Floor, 88 Wood Street, London EC2V 7QR) to analysts and anyinvestors wishing to attend. A copy of this presentation will be available onthe company's website. Chairman's statement 2005 marked a year of great change for System C. We enjoyed strong growth inprofits, revenue and overall size and began playing an important part in what webelieve will prove to be a world class IT programme for healthcare provision inEngland. Better patient care is an imperative within the UK and it is now generallyaccepted that this cannot be achieved without modern, effective and integratedInformation Systems. System C's investment and development of hands-onexpertise in the implementation of healthcare IT over the last 14 years uniquelypositions us to build a significant and profitable healthcare business that cantake advantage of much improved central government funding. Results I am delighted to be able to report on an excellent set of results for the yearended 31 May 2005. Turnover more than trebled to £18.2m (2004: £5.6m), underpinned by ourestablished relationships with NHS hospitals and trusts where we have achieved anumber of milestones in delivering improvements in IT systems leading toimproved patient care and increased levels of efficiency. Within the NPfIT, wehave increased the services delivered in partnership with our key LSP customers.This was our first full year working on this programme and I am delighted thatSystem C has been associated with many of the successful early implementationswhich will drive the much needed improvements and patient benefits in the NHS. The company has now moved into profitability, reflecting the benefits ofincreased scale and capitalising on our previous investment in our deliverycapability. Profit before tax and exceptional items of £3.5m (2004: loss of£1.2m) was achieved whilst continuing to invest in the two key areas of ourbusiness that are critical for future successful growth - people and solutions. The company generated £4.2m of operating cash inflow (2004: £2.3m outflow),reflecting our ability to convert operating profits into cash. The Board is not declaring an ordinary dividend for the year ended 31 May 2005. Flotation on AIM I am particularly pleased to announce these results for a year in which we werealso working towards our flotation on AIM. The flotation process was concludedafter the year end in June 2005. The total value of the placing and employeeoffer was £27.4m of which £8.4m net proceeds was raised for future investment.This leaves the company, in net terms, with no gearing and the resources forfuture growth. Board changes During the year there were a number of changes to the Board of Directors. I am pleased to welcome as non-executive directors John Forrest and ThomasChambers who bring considerable experience to the Board. John Forrest is a nonexecutive director at Interregnum plc having previously been a director of theventure capital company 3i plc from 1996 to 2004. He previously led theprivatisation at NTL, becoming its first CEO. Thomas Chambers is Chief FinancialOfficer for Symbian Ltd and is Chairman of Swedish based UIQ Technology AB. Steve Emery left the board in May due to illness, since when his role as FinanceDirector has been undertaken on an interim basis pending a permanentappointment. Anji Gopal of Barclays Ventures left the board on 18 July 2004 and was replacedby Jeremy Morgan of Barclays Ventures who subsequently left the board post priorto IPO on 21 June. I want to thank them for their tremendous support and we wishthem well for the future Outlook We believe that we are only at the start of a period of significant investmentin UK healthcare IT. However, this is a challenging and complex nationwide ITproject and we are realistic that the pace of development will vary as itprogresses. Indeed, it is this complexity which presents opportunities as wellas challenges for System C and we are well placed to continue to develop newbusiness streams from our combined skills in both IT and healthcare. Iam confident that in the medium to long-term the goals set by the NationalProgramme will be met and that System C is in a strong position to continuegrowing and to become a leading solutions provider in the UK IT healthcaremarket. Chief Executive's Review The year ended 31 May 2005 was an important and successful year for System C.The company delivered strong organic growth and financial performance whilst atthe same time preparing for our listing on AIM which completed successfully inJune 2005. We have developed excellent relationships with our customers and havedelivered against our operational commitments. We have also continued to build acohesive and effective team of people. Strategy Our strategy is to establish a market leading position in the UK in healthcareIT solutions. In doing so, we aim to grow the business profitably by increasingand diversifying our customer base and by benefiting from the increasing marketdemand for IT in the healthcare sector. In particular, we will: * Leverage our significant experience of working directly with NHS hospitals and trusts over the last 14 years to further develop our services business, addressing in particular the NPfIT in England * Build our product based business by developing new customer relationships with NHS hospitals and trusts * Maintain a focused product development capability which is aligned with our long term customers We have made good progress in the year and are aware of the considerableopportunity ahead of us. The NPfIT will inevitably bring significant challengesin the future, but we aim to build on our core position within the programme. Markets Significant and long term Government backed investment in healthcare IT isdriving demand for specialist IT services. The NPfIT, which is being deliveredby the new Department of Health agency Connecting For Health (CfH), hascommitted £6.2 billion to deliver an integrated IT infrastructure in the EnglishNHS by 2010 (source: Delivering NHS IT - The Next Five Years, Silicon BridgeResearch, October 2004). The National Programme is being implemented by fourLSPs who are responsible for system deployment and integration in five regional"clusters". System C has secured contracts with LSPs in three of the fiveregional clusters. Outside the National Programme, in 2002 the Wanless Report highlighted the needfor the more systematic use of IT to improve the efficiency and effectiveness ofhealthcare delivery more generally. In response to this, NHS IT spend isprojected to grow to approximately £2.7 billion a year by 2008 from the currentlevel of approximately £1.2 billion per annum. System C is well placed to address this quite separate level of market demand byproviding IT solutions and services to the many individual NHS hospitals andtrusts directly. At the end of the financial year, we had 19 customerrelationships with hospitals and trusts and we will build on this further in thecoming year. We see growth coming from an increased demand for our services fromexisting customers as well as securing an increasingly larger share of thepopulation of UK hospitals and trusts. Operating review System C is ideally structured to address two separate areas of market demand: 1. Services to LSP customers and on behalf of organisations whose end customer is either the NHS or other clinical organisations, and2. Products provided directly to NHS Hospitals and Trusts. Both are supported by our central development & support capability, whichprovides our people working on client sites with both logistical and technicalsupport. Services 2005 2004Turnover £15.2m £2.9mGross profit £8.8m £1.7mProfit before tax £6.9m £1.2m Services turnover increased by £12.3m and is driven by the contracts we havewith LSPs that cover three of the five regional clusters in the NationalProgramme described above. We have seen a strong demand for those servicesthroughout 2005, significantly stepping up from 2004 when the National Programmebegan. Gross profit has grown broadly in line with turnover to £6.9m and isstated before taking into account the central support services whose costs arereported separately. During the year System C specialists were involved in multiple projects onbehalf of its LSP partners. Projects ranged from design, build and testactivities for a variety of software applications, through to managingimplementations of new systems across multiple healthcare settings, including GPsurgeries, Primary Care Trusts, Mental Health and Community Trusts and AcuteHospital Trusts. Feedback from our LSP partners regarding System C'scontribution has been positive and System C staff played key roles in thesuccessful completion of many of the go-lives during the period. Growth also came from additional contracts to provide data migration (convertingand moving patient data from hospitals' previous computer systems ready forimport into the new systems being provided under the National Programme) andsystems interfacing services. Products 2005 2004Turnover £3.0m £2.7mGross profit £0.6m £1.0mProfit before tax, pre exceptional items £0.4m £0.9m Turnover increased by £0.3 million following 4 new customer contracts as well asnew IT implementations on some of our existing key NHS hospitals. However,profit before tax declined by £0.5 million due to significant installation ofour MedWay product in 2004 which recognised a high level of profitability inthat year. This was not repeated in 2005. We have continued to enhance our MedWay Electronic Record (EPR) product rangeover the course of this year, and have delivered a number of new developmentsand enhancements to our customer sites. Significant go-lives have included:Paperless Communications; Clinical Noting; Electronic Document Managementintegration; and Electronic Prescribing integration. We are also in the officialtesting phase to achieve National Programme 'Choose and Book' compliance. During the year, we have also invested in the development of products to meetnew opportunities created by the National Programme. The HealthData Suite ofproducts provides data validation, reporting and management information systemsconfigured specifically to support the healthcare sector. Customer feedback onthis range of products has been very positive. Development and shared services 2005 2004Loss before tax, pre exceptional items £(3.8)m £(3.3)m Costs increased in the support areas by 15% as a result of the increase in scaleof the business. In particular, the cost of recruiting 87 new staff has beenfully absorbed in the 2005 figures - a significant investment for the company. £1.2m was invested in research and development during the year (£1.6m 2004) witha particular focus on the development of products to meet the new opportunitiescreated by the National Programme. The HealthData Suite of products providesdata validation, reporting and management information systems configuredspecifically to support the healthcare sector. Customer feedback has been verypositive and we expect to see strong demand for these products in FY 2006. People and organisation System C's success relies on having talented and motivated teams of people.During the year we recruited an additional 87 people, which is a significantlevel of growth for a company which started the year with 132. I am pleased thatwe have integrated these new staff into the company successfully. We have a comprehensive personal development programme available to allemployees at all levels. In July 2005, our Training Academy gained the Instituteof IT Trainers (ITT) accreditation. We are committed to maintaining a welltrained and well motivated workforce which we see as critical to the continuingsuccess of the company. The national Investors in People standard, first gainedin 2001 was successfully re-approved in April 2004. Prospects We are at an early stage in the current financial year and sales in the firstquarter have been steady. Although it is difficult to predict precise timing ofthe workflow arising from the National Programme, we expect the level ofbusiness to increase as the year progresses in line with customer requirements.We believe that System C remains well positioned within the IT healthcaremarket. Given the number of business opportunities that exist, we are confidentof achieving a successful outcome for the current financial year and we haveincreased our staff capability accordingly. Profit and Loss Account for the year ended 31 May 2005 Audited Unaudited (As restated) Year ended Year ended Notes 31 May 31 May 2005 2004 £ £ ---------- ----------Turnover 2,3 18,228,185 5,600,135 Cost of sales 3 (8,757,318) (2,881,247) ---------- ----------Gross profit 3 9,470,867 2,718,888 Administration expenses - normal 3 (5,978,204) (3,675,019)Administration expenses - exceptional 2,3,4 (986,004) (921,000) ---------- ----------Administration expenses - total 3 (6,964,208) (4,596,019) ---------- ---------- Operating profit/(loss) 2,506,659 (1,877,131) Interest receivable andsimilar income 351,830 305,524Interest payable and similarcharges (326,914) (578,917) ---------- ----------Profit/(loss) on ordinaryactivities before taxation 2,531,575 (2,150,524) Tax (charge)/credit onprofit/(loss) on ordinaryactivities 5 (421,882) 1,229,091 ---------- ----------Profit/(loss) for thefinancial year 2,109,693 (921,433) Dividends and appropriations 2,6 (66,742) (55,850) Retained profit/(loss) for thefinancial year 13 2,042,951 (977,283) ========== ========== Earnings/(loss) per 1p ordinary share Pence Pence- basic 7 5.15 (2.52)- diluted 7 4.30 (2.52) ---------- ------------ basic (adjusted) 7 3.48 (1.59)- diluted (adjusted) 7 3.08 (1.59) ---------- ----------- The results above relate entirely to continuing operations. There is nodifference between the results reported above and their historical costequivalents. The Company has no recognised gains and losses other than theresults above and therefore no separate statement of total recognised gains andlosses has been presented. Details of the restatements are given in note 2below. Balance Sheet as at 31 May 2005 Audited Unaudited (As restated) Notes 31 May 31 May 2005 2004 £ £ ---------- ---------- Tangible fixed assets 2,017,883 1,945,276 ========== ==========Current assetsStocks - 7,902Debtors 8 8,318,821 6,653,424Cash at bank and in hand 1,223,242 471,397 ---------- ---------- 9,542,063 7,132,723 Creditors - Amounts due within one year 9 (4,314,872) (3,964,345) ---------- ----------Net current assets 5,227,191 3,168,378 ========== ========== Total assets less current liabilities 7,245,074 5,113,654 Creditors - Amounts due after more than one year 10 (1,520,488) (2,510,740)Provisions for liabilities and charges 12 (233,895) - ---------- ---------- (1,754,383) (2,510,740)Net assets 5,490,691 2,602,914 ========== ========== Capital and reservesCalled up share capital 3,821,683 3,795,630Share premium account 13 - 3,774,613Special reserve 13 1,308,496 -Capital redemption reserve 13 134 134Profit and loss account 13 360,378 (4,967,463) ---------- ----------Total shareholders' funds 5,490,691 2,602,914 ========== ========== Details of the restatement are given in note 2 below. Reconciliation of movements in shareholders' funds Audited Unaudited (As restated) Year ended Year ended 31 May 31 May 2005 2004 £ £ ---------- ----------Profit/(loss) for the financial year 2,109,693 (921,433)Dividends and appropriations (66,742) (55,850) ---------- ---------- 2,042,951 (977,283)Credit arising on appropriation inrespect of non-equity shares (note 6) 66,742 55,850Accrual for appropriated dividends (166,923) -UITF 17 charge on grant of share options(note 4) 806,645 -Proceeds from equity shares subscribedat par 26,053 973Proceeds from non-equity sharessubscribed at par - 1,142,867Premium on new share capital subscribed 112,309 23,359Issue costs - (19,998) ---------- ----------Net increase in shareholders' funds 2,887,777 225,768Opening shareholders' funds 2,602,914 2,377,146 ---------- ----------Closing shareholders' funds 5,490,691 2,602,914 ========== ========== Details of the restatement are given in note 2 below. Cash flow statement for the year ended 31 May 2005 Unaudited Audited Year ended Year ended Notes 31 May 31 May 2005 2004 £ £ ---------- ----------Net cash inflow/(outflow) fromoperating activities 14 4,210,687 (2,322,620)Returns on investments and servicing offinanceInterest received 341,345 305,524Interest paid (326,914) (578,917)Net cash inflow/(outflow) fromreturns on investments and servicingof finance 14,431 (273,393) ---------- --------- Taxation 105,638 77,507 Capital expenditure and financial investmentPurchase of tangible fixed assets (890,728) (536,694) ---------- ---------Net cash outflow for capitalexpenditure and financial investment (890,728) (536,694) ---------- ---------Net cash inflow/(outflow) beforefinancing 3,440,028 (3,055,200) FinancingProceeds from issue of equity sharecapital 138,362 24,332Proceeds from issue of non-equityshare capital - 1,142,867Issue costs - (19,998)Net repayment of financing loans (912,502) (765,564) ---------- ----------Net cash (outflow)/inflow fromfinancing (744,140) 381,637 ---------- ---------- Increase/(decrease) in net cash 2,665,888 (2,673,563) ========== ==========Notes 1. Basis of preparation & financial statements The Board of Directors approved these preliminary unaudited results on 12September 2005 which with the exception of the restatements detailed in note 2below, have been prepared using accounting policies that are consistent withthose adopted in the financial statements for the year ended 31 May 2004. The financial information set out above is abridged and does not constitute theCompany's statutory financial statements for the years ended 31 May 2005 or 31May 2004. Statutory financial statements for the year ended 31 May 2004 havebeen reported on by the Company's auditors and delivered to the Registrar ofCompanies. The statutory financial statements for the year ended 31 May 2005will be posted no later than 28 October 2005 to shareholders and once approvedwill be delivered to the Registrar of Companies following the Annual GeneralMeeting on 22 November 2005. The report of the auditor for the year ended 31 May 2004 was unqualified and didnot contain a statement under section 237(2) or (3) of the Companies Act 1985. Copies of the Annual Report and Financial Statements for the year ended 31 May2005 will be available in due course from the Company Secretary, System CHealthcare plc, Brenchley House, Week Street, Maidstone ME14 1RF 2. Restatements The results for the financial year ended 31 May 2004 have been restated inrespect of the two matters described below: Contract renegotiation The prior year figures have been restated to reclassify the £921,000 write-off of accrued income as an exceptional administrative cost rather than as a reduction of turnover as previously reported. This restatement has no impact on the reported loss for that year and has no cash or balance sheet impact. Finance costs on non-equity shares The prior year figures have been restated to disclose £55,850 as anappropriation of dividends in respect of the Company's convertible participatingpreference shares and the redeemable preference shares. The level ofappropriation has been calculated in accordance with FRS 4 "Capital instruments"to provide a constant rate of charge over the period starting from the date ofissue to the date of conversion into ordinary shares (June 2005). Since thedirectors could not legally declare/accrue for such dividends due to theaccumulated deficit on the profit and loss reserve at that time, £55,850 hasbeen credited to profit and loss account reserves. This restatement has noimpact on the overall net assets for the year. 3. Segmental Reporting Unaudited Year ended 31 May 2005 Development and Products Services shared services Total £ £ £ £ ---------- ---------- ---------- ---------- Turnover 2,966,764 15,261,421 - 18,228,185 Cost of sales (2,330,372) (6,426,946) - (8,757,318) ---------- ---------- ----------- ---------- Gross profit 636,392 8,834,475 - 9,470,867 ========== ========== =========== ==========Administration expenses - normal (272,981) (1,918,823) (3,786,400) (5,978,204)Administration expenses - exceptional - - (986,004) (986,004) ---------- ---------- ---------- ---------- Operating profit/(loss) 363,411 6,915,652 (4,772,404) 2,506,659 ========== ========== ========== ========== Net interest 72,316 (62,666) 15,266 24,916 ---------- ---------- Profit/(loss) before tax 435,727 6,852,986 (4,757,138) 2,531,575 ========== ========== ========== ========== Net assets/ (liabilities) 2,044,603 2,504,230 941,858 5,490,691 ========== ========== ========== ========== Audited (As restated) Year ended 31 May 2005 Development and Products Services shared services Total £ £ £ £ ---------- ---------- ---------- ---------- Turnover 2,741,185 2,858,950 - 5,600,135 Cost of sales (1,707,308) (1,173,939) - (2,881,247) ---------- ---------- ---------- ---------- Gross profit 1,033,877 1,685,011 - 2,718,888 ========== ========== ========== ==========Administration expenses - normal (111,902) (506,754) (3,056,363) (3,675,019)Administration expenses - exceptional (921,000) - - (921,000) ---------- ---------- ---------- ---------- Operating profit/(loss) 975 1,178,257 (3,056,363) (1,877,131) ========== ========== ========== ========== Net interest (7,120) (18,575) (247,698) (273,393) ---------- ---------- ---------- ---------- Profit/(loss) before tax (6,145) 1,159,682 (3,304,061) (2,150,524) ========== ========== ========== ========== Net assets/ (liabilities) 1,776,213 1,589,013 (762,312) 2,602,914 ========== ========== ========== ========== There is no difference between the geographical origin and destination ofturnover, all of which arises in the United Kingdom. 4. Exceptional items Audited Unaudited (As restated) Year ended Year ended 31 May 31 May 2005 2004 £ £ ---------- ----------Contract renegotiation - 921,000UITF 17 charge 806,645 -UITF 25 charge 179,359 - ---------- ---------- 986,004 921,000 ========== ========== Contract renegotiation An exceptional charge of £921,000 has been recognised in the financial yearended 31 May 2004 due to the re-scoping and renegotiation of one of theCompany's contracts to supply EPR systems following the announcement by the NHSof The National Programme for IT. The charge arises from the adjustment toaccrued income which will not be realised in the form of cash following there-negotiation of one of the Company's contracts. UITF 17 and UITF 25 charges The charges above arise on the re-pricing of certain share options on 10November 2004, together with the issue of additional share options during theyear ended 31 May 2005. 5. Tax charge/(credit) on profit/(loss) on ordinary activities (a) Analysis of tax charge/(credit) in the year Year ended Year ended 31 May 1 May 2005 2004 £ £ ---------- ----------Current taxUnited Kingdom corporation tax at19%/30% on profit/(loss) for the year 3,887 -Adjustments in respect of previous years - 909 ---------- ----------Total current tax charge (note 5b) 3,887 909 Deferred taxOrigination and reversal of timingdifferences 417,995 (1,230,000) ---------- ----------Total deferred tax charge/(credit) 417,995 (1,230,000) ---------- ----------Tax charge/(credit) on profit/(loss) onordinary activities 421,882 (1,229,091) ========== ========== (b) Factors affecting the tax charge/(credit) in the year The tax for the year differs from the standard rate of corporation tax in the UK(19% for the year ended 31 May 2005 and 30% for the year ended 31 May 2004). Thedifferences are explained below: Unaudited Audited Year ended Year ended 31 May 31 May 2005 2004 £ £ ---------- ----------Profit/(loss) on ordinary activitiesbefore tax 2,531,575 (2,150,524)Profit/(loss) on ordinary activitiesmultiplied by standard rate ofcorporation tax in the UK of 19%/30% 480,999 (645,157) ----------- ----------Effects of:Expenses not deductible for tax purposes 22,671 4,467Differences between capital allowancesand depreciation 32,644 54,219(Utilised)/unutilised losses (686,505) 586,471Other timing differences 154,078 -Adjustments in respect of prior years - 909 ----------- ----------Current tax charge for the year 3,887 909 =========== ==========6. Dividends and appropriations Audited Unaudited (As restated) Year ended Year ended 31 May 31 May 2005 2005Appropriation of non-equity dividends £ £ ---------- ----------£1 preference shares 7 75% £1 convertible participating preference shares 66,735 55,843 ---------- ---------- 66,742 55,850 ========== ========== The above dividend appropriations have been eliminated by crediting the profitand loss account reserves as the Company did not have sufficient distributablereserves to be able to accrue the dividends as payable. Following the capitalreduction referred to in note 13, and subsequent generation of distributableprofits the Company is legally able to declare these dividends as payable.Accordingly, £166,923 has been accrued as payable by debiting profit and lossreserves. 7. Earnings/(loss) per share The calculation of the basic earnings/(loss) per ordinary share ("EPS") is basedon the profit attributable to ordinary shareholders for the financial year of£2,042,951 (2004: loss of £977,283) and the weighted average number of ordinaryshares in issue during the year of 39,657,440 (2004: 38,838,615). The profit/(loss) attributable to ordinary shareholders is after the appropriation ofamounts totalling £66,742 (2004: £55,850) in respect of non-equity dividends onthe Company's convertible participating preference shares and on its redeemablepreference shares. The calculation of the adjusted basic earnings/(loss) per ordinary share of 1peach has been based on the profit/(loss) for the financial year after addingback the appropriation in respect of the non-equity dividends on the Company'sconvertible participating preference shares. These dividends have been addedback to the retained profit/(loss) for each financial year as the class ofshares to which they relate converted into ordinary shares immediately prior tothe admission of the Company's equity shares to AIM on 28 June 2005. The weighted average number of shares used in the calculation of the adjustedbasic earnings/(loss) per share is derived from the weighted average number ofordinary shares in issue during each year plus the weighted average number ofordinary shares that arose on the conversion of the Company's convertibleparticipating preference shares. This reflects the changes to the share capitalof the Company, as described in note 15, which were conditional on admission toAIM, and prior to the issue of the Placing Shares. Unaudited Audited Year ended Year ended 31 May 2005 31 May 2004 Earnings Loss Earnings per share Loss per share £ Pence £ Pence ---------- ---------- ---------- ---------- Basic 2,042,951 5.15 (977,283) (2.52) Diluted 2,042,951 4.30 (977,283) (2.52) Basic - adjusted 2,109,686 3.48 (921,440) (1.59) Diluted - adjusted 2,109,686 3.08 (921,440) (1.59) ========== ========== ========== ========== The following table shows a reconciliation of the weighted average number ofshares used for calculating the basic and diluted earnings/(loss) per share. Unaudited Audited Year ended Year ended 31 May 2005 31 May 2004 EPS Adjusted EPS EPS Adjusted EPS Number of Number of Number of Number of shares shares shares shares ---------- ---------- ---------- -----------Used for calculatingbasic EPS 39,657,440 60,568,411 38,838,615 57,948,847Dilution dueto shareoptions 7,890,523 7,890,523 7,788,409 7,788,409 ---------- ---------- ---------- ---------Used forcalculatingdiluted EPS 47,547,963 68,458,934 46,627,024 65,737,256 ========== ========== ========== ========== 8. Debtors Unaudited Audited 31 May 31 May 2005 2004 £ £ ---------- ---------- Trade debtors 3,399,174 2,189,621Other debtors 28,705 109,696Prepayments and accrued income 4,078,937 3,124,107Deferred tax asset 812,005 1,230,000 ---------- ---------- 8,318,821 6,653,424 ========== ========== Other debtors at 31 May 2005 includes £nil recoverable in respect of researchand development tax credits (2004: £104,729). Prepayments and accrued income as at 31 May 2005 include £3,592,329 in respectof revenue that has been recognised by the Company but which had not beeninvoiced to the customer as at the year end (2004: £2,869,151). Of this amount,£1,923,372 is due in more than one year (2004: £1,264,935). 9. Creditors - Amounts due within one year Unaudited Audited 31 May 31 May 2005 2004 £ £ ---------- ----------Bank loans and overdrafts 12,762 1,926,805Financing loans 933,163 855,413Trade creditors 736,030 128,518Other taxation and social security 1,311,804 528,751Proposed dividends 166,923 -Corporation tax 4,796 -Accruals and deferred income 1,149,394 524,858 ---------- ---------- 4,314,872 3,964,345 ========== ========== Bank loans and overdrafts as at 31 May 2005 comprise £12,762 (2004: £1,319,750)in respect of overdrafts and £nil (2004: £607,055) relating to funds in respectof an invoice discounting facility advanced by the Company's principal bankers,a facility which expired on 31 March 2005 and has not been renewed. 10. Creditors - Amounts due after more than one year Unaudited Audited 31 May 31 May 2005 2004 £ £ ---------- ----------Financing loans 1,520,488 2,510,740 ========== ========== The financing loans represent the outstanding amount of gross borrowings of £4.5million obtained in order to finance certain of the Company's contracts. Thefinancing loans are secured over certain of the Company's fixed assets. 11. Net debt Unaudited Audited At 31 May 2005 At 31 May 2004 £ £ ---------- ----------Cash at bank and in hand 1,223,242 471,397Bank loans and overdrafts (12,762) (1,926,905) ---------- ----------Net cash/ (overdraft) 1,210,480 (1,455,408) Financing loans due in less than one year (933,163) (855,413)Financing loans due in more than one year (1,520,488) (2,510,740) ---------- ----------Net debt (1,243,171) (4,821,561) ========== ========== 12. Provisions for liabilities and charges Property UITF 25 Total dilapidations provision £ £ £ ---------- ---------- ----------At 31 May 2004 - - -Charged in the year 54,536 179,359 233,895 ---------- ---------- ----------At 31 May 2005 54,536 179,359 233,895 ========== ========== ========== The UITF 25 charge arises as a result of the re-pricing, on 10 November 2004, ofthe exercise price to 14p in respect of the options granted to employees overthe 1p ordinary shares of the Company together with the additional optionsissued during the year ended 31 May 2005. 13. Share premium account and reserves Share Capital premium redemption Special Profit and account reserve reserve loss account £ £ £ £ ---------- ---------- ---------- ----------As at 1 June2004 3,774,613 134 - (4,967,463)Retained protitfor the year - - - 2,042,951Premium on 1pordinaryshares issued 112,309 - - -Credit onappropriationof non-equitydividends - - - 66,742Transfer oncapitalreduction (seebelow) (3,886,922) - 864,522 3,022,400Additionaltransfer oncapitalreduction(see below) - - 443,974 (443,974)UITF17 chargeon grant ofshare options - - - 806,645Accrual fornon-equitydividends - - - (166,923) ---------- ---------- ---------- ----------As at 31 May 2005 - 134 1,308,496 360,378 ========== ========== ========== ========== Capital reduction As at 31 January 2005 the balance on the Company's profit and loss account wasan accumulated loss of £3,022,400. This deficit would have been a fetter on theCompany's ability to pay any dividends until eliminated either by future profitsor as a result of a capital reduction. The elimination of this deficit alsoenabled the Company to re-register as a public limited company in advance of theproposed admission of the Company's ordinary shares to AIM. An amount of £3,886,922 was standing to the credit of the Company's sharepremium account as at 31 January 2005 representing the aggregate of premiums atwhich shares of the Company have been issued. This amount could not bedistributed by way of dividend but, with the approval, by special resolution, ofthe Company's shareholders in a general meeting and an order of confirmation ofthe High Court, it would be available to eliminate the deficit on the Company'sprofit and loss reserve. Accordingly, on 4 April 2005 the directors made an application to the Court toreduce the amount standing to the credit of the share premium account of£3,886,922 to £nil, which would result in the elimination of the deficit by thetransfer of £3,022,400 to the profit and loss account and £864,522 to a specialnon-distributable reserve, in accordance with the instructions of the Court. In order to obtain the requisite confirmation from the Court for the reductionof the share premium account, the Company furnished the Court with the requiredundertakings to provide assurance in respect of the protection of the interestsof the Company's creditors, which included the transfer of such profits earnedby the company between 1 February 2005 and the effective date of the capitalreduction to the afore-mentioned special reserve. Profits earned by the Companyduring this period amount to £443,974. The capital reduction became effective on 27 April 2005 when the Registrar ofCompanies issued to the Company a certificate confirming the registration of theOrder of the Court in connection with this matter. The Company is entitled to use the special reserve for the same purposes itcould use a share premium account. In addition to this, the Company is alsoentitled to eliminate any future deficit on its profit and loss reserve as setout in its financial statements, up to the maximum amount held to the credit ofthe special reserve, as at any future accounting reference date. 14. Reconciliation of operating profit/(loss) to net cash inflow/ (outflow) fromoperating activities Unaudited Audited Year ended Year ended 31 May 31 May 2005 2004 £ £ ---------- ----------Operating profit/(loss) 2,506,659 (1,877,131)Depreciation 892,135 738,536Loss on disposal of tangible fixed assets 17,498 -Exceptional charge on share options(note 4) 986,004 -Dilapidations provision 54,536 -Decrease/(increase) in stocks 7,902 (4,610)Increase in debtors (2,177,636) (1,563,534)Increase in creditors 1,923,589 384,119 ---------- ----------Net cash inflow/(outflow) from operatingactivities 4,210,687 (2,322,620) ========== ========== 15. Post balance sheet events (a) Re-registration as a public limited company In anticipation of the proposed admission of the Company's ordinary shares toAIM, and following the passing of a special resolution on 2 June 2005 that it isso re-registered, the Company made an application to the Registrar of Companiesto re-register as a public limited company on 3 June 2005. This became effectiveon 3 June 2005 when the Registrar of Companies issued a certificate confirmingthe change in status of the Company. (b) Changes to share capital prior to admission to AIM Immediately prior to the first admission of the Company's ordinary shares to AIMon 28 June 2005 each convertible participating preference share converted into6.27 1p ordinary shares and 93.73 1p non-voting deferred shares. In addition tothis, the unpaid dividend on the Company's convertible participating preferenceshares will be settled by the issue of additional ordinary shares at the placingprice to an equal value of the outstanding amount as at the date of admission toAIM. Immediately following conversion the company repurchased the non-voting deferredshares for nil consideration, cancelled them and re-designated the un-issuednon-voting deferred shares as 1p ordinary shares. The cancellation of theseshares resulted in a credit to a capital redemption reserve. The Company's redeemable preference shares were redeemed at par, plus the unpaidcumulative dividend three business days after the admission of the Company'sordinary shares to AIM. Notes to the Editors: About System C System C Healthcare plc, established in 1983, specialises in the provision ofinformation systems and solutions to the healthcare sector. Its team ofprofessionals have an average of 14 years healthcare experience and can provideall aspects of systems design, development and deployment services. System C isfounded upon the belief that IT solutions, when properly designed andeffectively implemented, can significantly improve the standards of patient carethat healthcare providers give. System C has developed its own portfolio of healthcare applications, used bythousands of UK healthcare professionals to support patient care. The company'sMedWay electronic patient record product supports a wide variety of functionsfrom the management of outpatient clinics and waiting lists to the storage andretrieval of clinical images. Its HealthData Suite includes a number ofhealthcare-specific solutions, including HealthData Manager, a reporting andmanagement information system configured specifically to support the healthcaresector. System C also offers a wide range of services to Local ServiceProviders, the NHS and third-party suppliers. These include programme/project/change management, design, build and test, implementation, training, datamigration, interfacing and helpdesk/support services. System C has installedpatient-focussed IT systems at over 30 NHS Trusts. System C employs over 200 staff who are divided between the company's offices inMaidstone, Warrington and Swindon, as well as being located throughout the UK atcustomer sites. System C was recently voted 38th in the Sunday Times 100 bestSMEs to work for in 2005. The company has ISO 9001 quality accreditation andencourages staff development through the Investors in People standard and isalso accredited by the Institute of IT Training. System C is a member andbenefactor of Health Level Seven UK (HL7 UK), a group of leading supplierspromoting effective and consistent implementation of healthcare informationstandards in the UK. This information is provided by RNS The company news service from the London Stock Exchange