Last checked at 26 Jan 2011 07:00
System C Healthcare plc
Half year results for the six months ended
30 November 2010
System C Healthcare plc ("System C", or the "Company" or the "Group"), a leading independent provider of information solutions and services to the UK health and social care sectors, announces its unaudited half-yearly results for the six months ended 30 November 2010.
Key Points
This has been a transitional six months for the Group as we have accelerated the shift towards becoming a product-led business. As outlined in our trading update of 1 December and earlier updates, the focus of the Company is shifting from time and materials work in support of the government's National Programme for IT to the sale and deployment of our own large scale and high value products.
As anticipated, this move has led to a reduction in short term revenues and a move towards increasing licensing revenues from system sales which are expected to start coming through in the second half of the year. The decline in revenues and loss in profitability shown in these interim results are in line with management's expectations.
Looking forward, the latest product range, five years in development, has been deployed successfully and new procurements are progressing well. We now have a strong sales pipeline and are currently in negotiations with 34 Trusts.
The key points for the six months ended 30 November 2010 are:
Financial
● Revenue down 27% at £13.3m (2009: £18.3m)
● Loss from operations before the amortisation of acquired intangibles and share based payments £0.1m (2009: £3.2m profit)
● EPS of (0.31)p per share (2009: 2.24p per share)
● Cash balances of £17.0m compared to £16.0m at 30 November 2009, £18.6m at 31 May 2010
● Interim dividend 0.25 pence per share (2009: 0.25 pence per share)
Operational
● Proportion of product sales increased to 56% of group turnover (2009: 48%)
● Successful go-live of the new Medway product suite at University Hospitals Aintree
● Contract won to supply the new Medway product to the Ministry of Defence
● Healthy pipeline of product opportunities for this financial year and beyond
Commenting on these results, Chief Executive Dr Ian Denley said:
"These results are in line with management expectations for this transitional year from a services to a products-led business.
"The demand for large scale hospital systems continues to accelerate and our sales pipeline has grown from just a handful of hospitals 12 months ago to 34 hospitals today. We are already engaged in eight major procurements for whole hospital patient administration and electronic patient record systems (PAS/EPR systems) and I am pleased to announce that we have already advanced to the shortlist in six of them.
"In December we successfully installed the new Medway product suite across one of the country's largest Trusts, with minimum disruption. Some 3,200 doctors, nurses and administrative staff are now using the software for most aspects of patient care. This has given us a first rate demonstrator site for the current and future procurements.
"I am also pleased to announce that our services team has successfully renewed its services framework contract with NHS Connecting for Health for another year. This team's unparalleled experience deploying hospital systems will be crucial as the procurement cycle starts maturing and we start the anticipated volume deployments of Medway.
"I remain very pleased with our progress and in particular with our positioning against our competitors. This is an exciting time for the company as we move into anticipated volume sales of a high value product range."
For further information please contact:
System C Healthcare plc
Ian Denley, Chief Executive
Hedley Mayor, Finance Director Tel: 01622 691 616
Maitland
Emma Burdett
Richard Farnsworth Tel: 020 7379 5151
Charles Stanley Securities
Nominated Adviser
Russell Cook
Mark Taylor Tel: 020 7149 6000
Interim Report
Copies can be obtained from the Company's head and registered office: Brenchley House, Week Street, Maidstone, Kent, ME14 1RF and are available to download from the Company's website www.systemc.com.
Notes to Editors
System C Healthcare plc (www.systemc.com) specialises in the provision of health and social care information systems, systems implementation and consulting services.
System C Healthcare is quoted on the AIM market of the London Stock Exchange (SYS.L).
Chairman's statement
We have had a very busy half year, due to a combination of factors. The general reduction in public sector spending and the software delivery problems of other suppliers working under the National Programme for IT have led to a decline in service revenues. At the same time, Trusts have been freed from central purchasing obligations and the NHS market has opened up to new PAS and EPR business. The focus of the Company has been on managing the transition to being a product-led business. We have augmented our business development capacity and capability to match the surge in new product opportunities. We have also concentrated on deploying our new Medway products to create reference, or demonstrator, sites for future sales.
Revenues are down 27% from the prior year and there has been a loss from operations (before the amortisation of acquired intangibles and share based payments) of £0.1m. This is in line with our preliminary results announcement of 27 September and our interim update on 1 December 2010.
Since the half year we have renewed our services framework contract with the NHS, a contract that helps underpin our services revenues going forward.
We are very pleased with the performance of the new Medway product suite and the progress we are making with Medway in ongoing procurements.
We believe the Company is well positioned with a modern and attractive set of integrated products, proven technology which is delivering real benefits in the most demanding of hospital environments, a services team with unparalleled deployment expertise, and a reputation for reliability.
Results
Revenue for the six months to 30 November decreased 27% to £13.3 million (H1 2009: £18.3 million), with the product division revenue decreasing by 16% to £7.4 million (H1 2009: £8.8 million), largely reflecting the high clinical dashboard revenues in H1 2009. Services revenues decreased by 38% to £5.9 million (H1 2009: £9.6 million).
Gross margins increased to 58% (H1 2009: 57%), which reflects the move towards higher margin product sales.
There was a loss from operations before the amortisation of acquired intangibles and share based payments of £0.1 million (H1 2009: £3.2 million profit) and a loss from operations of £0.8 million (H1 2009: £2.7 million profit).
Loss before taxation was £0.7 million (H1 2009: £2.8 million profit). Basic and diluted loss per share was (0.31) pence per share, down from earnings of 2.24 pence per share and 2.19 pence per share respectively for the same period last year.
The Group remains well capitalised. Our cash position is down slightly from £18.6m at the year end to £17.0m at the 30 November 2010, but has increased by £1.0 million compared with 30 November 2009.
Dividends
The Board is pleased to declare an interim dividend of 0.25 pence per share (2009: 0.25 pence per share). The dividend will be paid on 21 March 2011 to those shareholders on the register at the close of business on 25 February 2011.
Products and software development
The Company has made significant and very encouraging underlying progress in its transition to being a product-led company supplying its Medway software to the health care sector. The new Medway product is now running live at Aintree and other key deployments are progressing well. The sales pipeline is strong and we are expecting to make significant numbers of product sales in the coming year. Revenues in the product division decreased by 16% to £7.4m compared with the first half of 2009, but this was attributable to the scaling back of central NHS development contracts for portal and dashboard, following Government austerity measures.
One of Medway's key selling points is that it is very advanced technically and this was acknowledged by Microsoft in July when System C was named world-wide winner of the prestigious 2010 Microsoft Partner of the Year award in the category 'Public Sector Health Partner'. The award recognises outstanding innovation and solutions which deliver real benefits to a customer's business, and System C was chosen from nearly 3,000 entries globally. The Medway product range is based on the latest Microsoft technologies.
The new Medway product suite was successfully deployed across Aintree NHS Foundation Trust. Over 3,200 Aintree staff, including doctors, nurses, secretaries and managers are now using the fully integrated patient management and electronic patient record system (PAS/EPR) to handle most aspects of patient care.
The latest version of Medway product suite also won a competitive procurement for the Ministry of Defence. The Company is now engaged in the challenging task of deploying Medway as a hospital-wide system at the MoD acute hospital in Camp Bastion, Afghanistan. This is on schedule to go into live operation in the first quarter of 2011. Together with the ongoing deployment at the Royal Devon and Exeter NHS Foundation Trust, a contract win announced on 12 May 2010, these sites provide valuable references for new procurements.
Other significant developments over the period include further inroads into the independent treatment sector market. The Company has won a PAS/EPR contract to supply a new independent treatment centre being built at the Lister Hospital, Stevenage. Independent provider Care UK also went live with the Medway PAS/EPR at six-recently acquired sites.
The Company's resources are now heavily invested in competing for further major sales of the Medway PAS/EPR. The anticipated surge in procurement activity is underway as NHS Trusts take advantage of a relaxation of central IT procurement policies.
Today, System C is shortlisted in six procurements and is in discussion with a total of 34 Trusts. It is anticipating winning significant numbers of sales in this market during 2011 and beyond as more Trusts move through the pipeline into formal procurement, although the timing of these sales and associated revenues remain difficult to predict. To support this process the Company is making significant investment in its bidding and procurement capability.
Liquidlogic, acquired in July 2009, is also experiencing a significant increase in procurement activity in the market for social care products. More competitive procurements were started in the first five months of the period than in the whole of the previous year.
Following the updates on procurement progress in our 1 December trading statement, Liquidlogic has now signed contracts with Cheshire West, Bolton and Gloucestershire councils. In addition, we can report that the company is in the final stages of contract negotiations with a fourth local authority. In December 2010, Liquidlogic was named preferred supplier and has since started proof of concept work on a major project which, if successful, could roll out to over 20,000 users.
In June we announced that NHS Scotland had gone live with a knowledge and education portal developed by System C's web development arm, Conscia, for health and social care staff across Scotland. In recent weeks, Conscia has won a number of other contracts relating to medical education, learning and information support.
Conscia is also building a patient portal for deployment at our hospital sites. This portal will give patients access to their healthcare information, and support communication with their care providers. This ground-breaking development project is in line with the Government's aim to give patients greater control over their own health records.
Services
As outlined in our 15 September 2010 trading update, services revenues slowed down over the period as public sector budgets were tightened and the National Programme for IT lost momentum. Revenues from services contributed £5.9m for the six months to 30 November, compared with £9.6m in the first half of 2009.
This decline in service revenues has been stabilised. Since the half-year end, System C has successfully renewed its framework contract with NHS Connecting for Health and will be working around the country on outstanding system deployments under the National Programme for IT.
Our services capacity and capability remains a key selling advantage for our product sales team. We are expecting significant increases in Medway-related services activity when the current wave of procurements completes later in the calendar year.
Market
Over the course of the last year, we have reported in detail on the changing political and budgetary circumstances affecting the UK health service, and about our response to these changes. In particular, the liberation of NHS Trusts from central purchasing controls has been a material and welcome development, opening the NHS IT market once again to competition.
System C and Liquidlogic are continuing to work on integrating their systems to facilitate the government's vision of joined up service delivery. We are expecting to see real movement in the integration of health and social care services in the medium term and intend to be in the forefront of developments. The government's announcement in December that local authorities and health bodies can now securely access each other's systems through NHSNet is an important step in this direction.
The underlying challenges for the UK in terms of health and social care provision remain unchanged. Care providers have to find a way of improving service quality while making real gains in efficiency and productivity, and at the same time adapting themselves to meet the needs of a rapidly aging population. It is our belief that IT has a central role to play in making this happen.
Risks
The Board continues to review risks influencing the financial and operating performance of the Company. In order to mitigate the effects of public spending constraints we have broadened the scope of services activities, invested in new product ranges to address different needs within the markets, and expanded our client base to include central government, local NHS Trusts, social services departments and private healthcare providers. It should be noted that large procurements take many months to run and there is a risk around the timing of revenues associated with new contract wins.
Staff
System C has been going through a period of transition, and at a time when the health and social care sectors themselves are facing significant structural upheaval. We have regrettably had to make a small number of redundancies over the period as we take steps to keep costs in line. It is a testament to the skill, professionalism and commitment of our staff that our transition has been smooth and on target. I would like to thank everyone for their significant contribution throughout the period.
System C works hard on its commitment to be an employer of choice and we continue to take our responsibilities to our staff extremely seriously. Our business is built on the quality and dedication of our employees.
Hedley Mayor joined System C on 12 July 2010 as group finance director. A qualified Chartered Accountant, Hedley was previously Finance Director of investment firm Octopus Investments. Thomas Chambers, a non executive director at System C, had been acting group finance director.
Christopher McLaren, a non-executive director with the Company for 22 years and chairman for the first 16 of them, retired on 31 December. We would like to take this opportunity to thank him for his huge contribution over the years and to wish him well in his retirement.
Outlook and current trading
Trading has stabilised since the interim period within the services side of the business and revenues are expected to continue at their current levels. On the product side, the Company is armed with a modern, award-winning product suite and large-scale reference sites at a time when the NHS IT market is opening itself up to IT suppliers. The critical ingredients in our transition to being a product-led company are all in place as we move into the final stage of bringing more prominent product revenues on stream.
The sales pipeline is strong - we are currently in negotiations with 34 Trusts - and we are investing heavily in the procurement process. Bids average 1,000 questions each, requiring literally hundreds of pages of individually-tailored responses covering product descriptions, company capacity and capability. They are followed up by lengthy demonstrations, site visits and contract negotiations. Procurements can take between 6 and 12 months to complete, and while the timing of these sales is very difficult to predict, revenues from sales of the Medway PAS/EPR are expected to come on stream during 2011.
The Board continues to see many opportunities for System C within the changing healthcare sector and views prospects for the Company with confidence.
Jim Horsburgh, Chairman
System C Healthcare plc
Group Statement of Comprehensive Income
for the six months ended 30 November 2010
6 months to | 6 months to | Year Ended | ||
30 November | 30 November | 31 May | ||
2010 | 2009 | 2010 | ||
(unaudited) | (unaudited) | (audited) | ||
£'000 | £'000 | £'000 | ||
Revenue | 13,259 | 18,338 | 38,307 | |
Cost of sales | (5,576) | (7,882) | (16,311) | |
Gross profit | 7,683 | 10,456 | 21,996 | |
Research and development costs | (1,675) | (1,748) | (3,912) | |
Amortisation of acquired intangible assets | (533) | (388) | (945) | |
Share based payments | (170) | (91) | (228) | |
Administrative expenses | (6,126) | (5,515) | (11,813) | |
(Loss)/profit from operations before the amortisation of acquired intangibles | ||||
and share based payments | (118) | 3,193 | 6,271 | |
(Loss)/profit from operations | (821) | 2,714 | 5,098 | |
Finance income | 139 | 132 | 267 | |
Finance costs | (1) | (2) | (4) | |
(Loss)/profit before income tax | (683) | 2,844 | 5,361 | |
Income tax | 335 | (592) | (1,072) | |
(Loss)/profit for the period | (348) | 2,252 | 4,289 | |
Total comprehensive income is equal to the '(Loss)/profit for the period' as there is no other comprehensive income for the period | ||||
(Loss)/earnings per ordinary share | ||||
- Basic | (0.31) | 2.24 | 4.07 | |
- Diluted | (0.31) | 2.19 | 3.96 | |
All of the activities of the Group are continuing.
Notes 1 to 12 form an integral part of this condensed consolidated half-yearly financial information.
Consolidated Balance Sheet
as at 30 November 2010
At 30 November | At 30 November | At 31 May | |
2010 | 2009 | 2010 | |
(unaudited) | (unaudited) | (audited) | |
£'000 | £'000 | £'000 | |
ASSETS | |||
Non-current assets | |||
Goodwill | 8,436 | 9,621 | 8,436 |
Other intangible assets | 6,153 | 6,150 | 6,117 |
Property, plant and equipment | 706 | 667 | 665 |
Deferred tax assets | 685 | 303 | 432 |
Trade and other receivables | - | 143 | 176 |
15,980 | 16,884 | 15,826 | |
Current assets | |||
Trade and other receivables | 8,218 | 11,166 | 11,234 |
Current tax assets | 80 | - | - |
Cash and cash equivalents | 16,961 | 16,014 | 18,596 |
25,259 | 27,180 | 29,830 | |
TOTAL ASSETS | 41,239 | 44,064 | 45,656 |
LIABILITIES | |||
Current liabilities | |||
Trade and other payables | 5,566 | 7,430 | 8,742 |
Deferred consideration | - | 2,000 | - |
Current tax liabilities | - | 1,302 | 476 |
5,566 | 10,732 | 9,218 | |
Non-current liabilities | |||
Deferred tax liabilities | 1,592 | 603 | 1,674 |
Provisions | 136 | 167 | 140 |
1,728 | 770 | 1,814 | |
TOTAL LIABILITIES | 7,294 | 11,502 | 11,032 |
NET ASSETS | 33,945 | 32,562 | 34,624 |
SHAREHOLDERS' EQUITY | |||
Share capital | 1,164 | 1,150 | 1,161 |
Share premium account | 21,201 | 20,927 | 21,151 |
Capital redemption reserve | 3,127 | 3,127 | 3,127 |
Own shares held in trust | (2,768) | (2,768) | (2,768) |
Retained earnings | 11,221 | 10,126 | 11,953 |
TOTAL EQUITY | 33,945 | 32,562 | 34,624 |
Notes 1 to 12 form an integral part of this condensed consolidated half-yearly financial information.
Consolidated Statement of Changes in Equity
for the six months ended 30 November 2010 and 30 November 2009
Share capital | Share premium account | Capital redemption reserve | Own shares held in trust | Retained earnings | Total equity | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Balance at 1 June 2009 | 898 | 9,804 | 3,127 | (1,235) | 8,289 | 20,883 |
Profit for the period | - | - | - | - | 2,252 | 2,252 |
Share based payments charge | - | - | - | - | 91 | 91 |
Issue of new shares | 252 | - | - | (1,533) | - | (1,280) |
Premium on issue of new shares | - | 11,123 | - | - | - | 11,122 |
Dividends | - | - | - | - | (506) | (506) |
Balance at 30 November 2009 | 1,150 | 20,927 | 3,127 | (2,768) | 10,126 | 32,562 |
Balance at 1 June 2010 | 1,161 | 21,151 | 3,127 | (2,768) | 11,953 | 34,624 |
Loss for the period | - | - | - | - | (348) | (348) |
Share based payments charge | - | - | - | - | 170 | 170 |
Issue of new shares | 3 | - | - | - | - | 3 |
Premium on issue of new shares | - | 50 | - | - | - | 50 |
Dividends | - | - | - | - | (554) | (554) |
Balance at 30 November 2010 | 1,164 | 21,201 | 3,127 | (2,768) | 11,221 | 33,945 |
Notes 1 to 12 form an integral part of this condensed consolidated half-yearly financial information
Consolidated Cash Flow Statement
for the six months ended 30 November 2010
6 months ended | 6 months ended | Year ended | |
30 November | 30 November | 31 May | |
2010 | 2009 | 2010 | |
(unaudited) | (unaudited) | (audited) | |
£'000 | £'000 | £'000 | |
Cash flows from operating activities | |||
Cash generated from operations | 692 | 2,810 | 7,598 |
Finance costs | (1) | (2) | (4) |
Income tax paid | (556) | (178) | (1,250) |
Net cash generated by operating activities | 135 | 2,630 | 6,344 |
Cash flows from investing activities | |||
Acquisition of subsidiaries, net of cash acquired | - | (9,874) | (9,874) |
Purchases of property, plant and equipment | (203) | (302) | (457) |
Purchase of intangible software | (36) | - | - |
Capitalised development costs | (1,156) | (510) | (1,570) |
Finance income | 127 | 133 | 268 |
Net cash used in investing activities | (1,268) | (10,553) | (11,633) |
Cash flows from financing activities | |||
Issue of share capital | 52 | 9,740 | 9,976 |
Dividends paid | (554) | (506) | (794) |
Net cash used in financing activities | (502) | 9,234 | 9,182 |
Net (decrease)/increase in cash and cash equivalents | (1,635) | 1,311 | 3,893 |
Cash and cash equivalents at beginning of period | 18,596 | 14,703 | 14,703 |
Cash and cash equivalents at end of period | 16,961 | 16,014 | 18,596 |
This is a note to the Cash Flow statement and is not a primary statement.
Cash generated from operations
6 months ended | 6 months ended | Year ended | |
30 November | 30 November | 31 May | |
2010 | 2009 | 2010 | |
(unaudited) | (unaudited) | (audited) | |
£'000 | £'000 | £'000 | |
(Loss)/profit for the financial period | (348) | 2,252 | 4,289 |
Taxation | (335) | 592 | 1,072 |
Finance income | (139) | (132) | (267) |
Finance costs | 1 | 2 | 4 |
(Loss)/profit from operations | (821) | 2,714 | 5,098 |
Decrease/(increase) in trade and other receivables | 3,209 | (1,105) | (1,431) |
(Decrease)/increase in trade and other payables | (3,176) | 319 | 1,711 |
Net movement on provisions | (4) | 26 | (1) |
Share based payments charge | 170 | 91 | 228 |
Depreciation of property, plant and equipment | 157 | 140 | 299 |
Amortisation of intangible assets | 1,156 | 625 | 1,694 |
Loss on disposal of fixed assets | 1 | - | - |
Net cash inflow from operating activities | 692 | 2,810 | 7,598 |
Notes 1 to 12 form an integral part of this condensed consolidated half-yearly financial information.
Notes
1. General information
The Company is a public limited company incorporated and domiciled in the UK. The address of its registered office is Brenchley House, Week Street, Maidstone, Kent, ME14 1RF.
The Company has its primary listing on AIM, a market of that name operated by the London Stock Exchange, and is registered in England no. 1754990.
These condensed consolidated interim financial results were approved for issue by the Board of Directors on 25 January 2011.
These condensed consolidated interim financial results do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 May 2010 were approved by the Board of Directors on 24 September 2010 and delivered to the Registrar of Companies. The Report of the Auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.
These condensed consolidated interim financial results have been reviewed, not audited.
Forward looking statements
Certain statements in this half-yearly report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.
We undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
2. Basis of preparation
These condensed consolidated interim financial results for the half-year ended
30 November 2010 have been prepared in accordance with the AIM Rules for Companies and with IAS 34, 'Interim Financial Reporting' as adopted by the European Union. This interim condensed consolidated financial report should be read in conjunction with the annual financial statements for the year ended 31 May 2010, which have been prepared in accordance with IFRSs as adopted by the European Union.
These condensed consolidated interim financial statements have been prepared on a going-concern basis.
3. Accounting policies
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 May 2010, as described in those annual financial statements except as described below.
Adoption of new and revised standards
The following new standards and amendments to standards are mandatory for accounting periods beginning on or after 1 June 2010:
● IFRS 3 (revised), 'Business combinations', and consequential amendments to IAS 27, 'Consolidated and separate financial statements', IAS 28, 'Investments in associates', and IAS 31, 'Interests in joint ventures', are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009.
The revised standard continues to apply the acquisition method to business combinations but with some significant changes compared with IFRS 3. For example, all payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets. All acquisition-related costs are expensed.
As the Group has not made any business combinations in the period, IFRS 3 is not relevant for the period under review.
● The following interpretation to published standards is mandatory for accounting periods on or after 1 June 2010 but is not relevant to the Group's operations:
IFRIC 17, 'Distributions of non-cash assets to owners', effective for annual periods
beginning on or after 1 July 2009. This is not currently applicable to the Group, as it has not made any non-cash distributions.
IFRIC 18, 'Transfers of assets from customers', effective for transfer of assets received on or after 1 July 2009. This is not relevant to the Group, as it has not received any assets from customers.
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group
The following standards and amendments to existing standards have been published but the Group has not early adopted them:
IFRS 9 Financial instruments
IAS 24 (revised) Related party disclosures
IFRIC 19 Extinguishing financial liabilities with equity instruments
4. Segmental reporting
The Group's primary format for segmental reporting is business segment. As the business only has significant operations in the UK the Group does not have a secondary reporting format.
The segmental information is reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Board that makes strategic decisions.
6 months ended 30 November 2010 |
| ||||
Products | Services | Development and Shared Services | Total | ||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||
£000 | £000 | £000 | £000 | ||
Revenue | 7,363 | 5,896 | - | 13,259 | |
Profit/(loss) before tax | 3,234 | 1,522 | (5,439) | (683) | |
Total assets | 5,616 | 2,333 | 33,290 | 41,239 | |
6 months ended 30 November 2009 |
| ||||
Products | Services | Development and Shared Services | Total | ||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||
£000 | £000 | £000 | £000 | ||
Revenue | 8,772 | 9,566 | - | 18,338 | |
Profit/(loss) before tax | 3,341 | 4,782 | (5,279) | 2,844 | |
Total assets | 5,800 | 5,227 | 33,037 | 44,064 | |
Development and Shared Services includes all the corporate and development operations.
5. Capital expenditure
Six months ended 30 November 2010 | Intangible | Tangible | |
assets | assets | Total | |
(unaudited) | (unaudited) | (unaudited) | |
£000 | £000 | £000 | |
Opening net book amount 1 June 2010 | 6,117 | 665 | 6,782 |
Additions | 1,192 | 203 | 1,395 |
Depreciation and amortisation | (1,156) | (157) | (1,313) |
Disposals | - | (5) | (5) |
Closing net book amount 30 November 2010 | 6,153 | 706 | 6,859 |
The fixed asset additions primarily relate to the capitalisation of internally generated development costs (£1,156,000) and new computer equipment (£149,000).
Six months ended 30 November 2009 | Intangible | Tangible | ||
assets | assets | Total |
| |
(unaudited) | (unaudited) | (unaudited) |
| |
£000 | £000 | £000 |
| |
Opening net book amount 1 June 2009 | 3,046 | 380 | 3,426 |
|
Additions | 510 | 302 | 812 |
|
Acquisitions | 3,217 | 127 | 3,344 |
|
Depreciation and amortisation | (624) | (141) | (765) |
|
Closing net book amount 30 November 2009 | 6,149 | 668 | 6,817 |
|
The fixed asset additions primarily relate to the acquisition of Liquidlogic Limited (£3,217,000), capitalisation of internally generated development costs (£510,000) and new computer equipment (£249,000).
6. Share capital
The Group has 116,394,321 (2009: 115,005,126) ordinary 1p shares in issue with a nominal value of £1,164,000 (2009: £1,150,000).
During the six months to 30 November 2010 employees exercised 265,150 (2009: nil) share options with a nominal value of £3,000 (2009: £nil).
7. Income tax
The tax credit recognised is based on management estimates of the tax charge for the period (2009: £nil).
The tax credit has been calculated using the standard rate of UK Corporation Tax of 28% (2009: 28%).
8. (Loss)/earnings per share
(Loss)/earnings per share attributable to equity shareholders of the Company arises from continuing operations as follows:
Six months ended | Six months ended | ||
30 November | 30 November | ||
2010 | 2009 | ||
(unaudited) | (unaudited) | ||
(Loss)/earnings per share from continuing | |||
operations attributable to the equity of the Company | |||
- basic | (0.31)p | 2.24p | |
- diluted | (0.31)p | 2.19p | |
The calculation of earnings per share excludes 5,387,741 (2009: 5,387,741) ordinary shares held by The System C Healthcare plc Employee Benefit Trust in accordance with IAS 33 'Earnings per share'.
9. Dividends
A dividend of 0.50 pence per share (2009: 0.44) that related to the year ended 31 May 2010 and amounted to £554,000 was paid on 15 November 2010 (2009: £506,000)
In addition, the Directors propose an interim dividend of 0.25 pence per share payable on 21 March 2011 to shareholders who are on the register at 25 February 2011 (2009: 0.25 pence per share) This interim dividend amounting approximately to £280,000 has not been recognised as a liability in this half-yearly financial report.
10. Related party transactions
Key management compensation amounted to £706,000 for the six months to 30 November 2010 (2009 - £569,000).
Key management comprises individuals who sit on the board of System C and its subsidiaries.
Total costs in relation to key management, including the share-based payments charge, are as follows:
| Six months ended | Six months ended |
| 30 November 2010 | 30 November 2009 |
| (unaudited) | (unaudited) |
| £000 | £000 |
Salaries and other short-term benefits | 664 | 537 |
Pension | 42 | 32 |
Share-based payments | 170 | 91 |
| 876 | 660 |
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
11. Events occurring after the balance sheet date
Details of the interim dividend proposed are given in Note 9.
12. Risks and Uncertainties
The key risks and uncertainties are disclosed within the Chairman's report.
Statement of directors' responsibilities
The Directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union and the AIM Rules for Companies.
The Directors of System C Healthcare plc are listed in the System C Healthcare plc Annual Report for the year ended 31 May 2010. A list of current directors is maintained on the System C Healthcare plc website: www.systemc.com.
By Order of the Board
Name: Jim Horsburgh
Title: Chairman
Date: 25 January 2011
Independent Review Report to System C Healthcare plc
IntroductionWe have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30th November 2010, which comprises the income statement, balance sheet, statement of changes in equity, cash flow statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the company's annual financial statements.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the basis of preparation set out in note 2 International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union].
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the AIM Rules for Companies and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30th November 2010 is not prepared, in all material respects, in accordance with the basis of preparation set out in note 2 International Accounting Standard 34 as adopted by the European Union and the AIM Rules for Companies.
PricewaterhouseCoopers LLP
Chartered Accountants
25th January 2011Gatwick
RH6 ONT
(a) The maintenance and integrity of the System C Healthcare plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.