27 September 2007
IMS Maxims Plc
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2007
Chairman's Statement
- Turnover up 32%
- 94% growth in operating profits
- Net debt reduced by �797,000
As we previously indicated, the increased level of interest in our products,
services and capabilities has impacted positively upon the company's turnover
in the year ended 31 March 2007. Turnover has grown by 32% to �5,033,000.
Despite our decision to cautiously increase our cost base in light of the
emerging opportunities this has resulted in an operating profit of �1,060,000
(up 94%). Our performance in delivering the three-year contract with British
Telecommunications ("BT") worth almost �5m for supply of IMS Clinical
Applications in Barking, Havering and Redbridge NHS Trust ("BHRT") has been a
major part of this improvement. Despite some delays in deployment of the
solution at the Trust, we believe that we have established a good working
relationship with BT, and already we see some evidence that this implementation
is generating interest from future prospective customers. Our greater activity
has resulted in an increase in working capital requirements, but we continue to
manage cash tightly, and have reduced our net debt by �797,000 in 2007.
The situation in our major market of the National Health Service ("NHS") has
evolved substantially in the past twelve months. While the major contracts
between Connecting for Health ("CfH") and the Local Service Providers ("LSPs")
remain in place, there has been significant change in the delivery plans to the
individual Trusts. These changes are not only due to continuing delays from
other software suppliers, but represent an acknowledgement by CfH that existing
arrangements may be insufficient to meet the future requirements and changing
NHS. As a result, CfH are currently planning to establish supplier framework
agreements - known as the Additional Supply Capability and Capacity ("ASCC") -
offering a wide range of IT goods and services, including clinical
applications, at national, regional and local levels. However, the ASCC
arrangements may unfold as simply a listing of suppliers, delays are likely,
and it is not envisaged that central funding will be made available to support
Trust purchases from ASCC listed suppliers.
Despite the downturn in business over the past five years, we have continued to
invest in refreshing and updating our product portfolio in the belief that the
NHS market would eventually move back to the purchase of the most suitable
products for the individual trusts, regardless of the LSP's original offerings.
The ASCC contracts may help in this regard by allowing NHS Trusts to purchase
our products more easily if we are successful in becoming an ASCC supplier.
In Ireland we have successfully deployed a major upgrade to our Patient
Administration System product. Despite some delays, this has been very well
received. Accordingly, we are hopeful that this will create the opportunity for
us to provide additional clinical products to our larger customers, either
directly or via the Health Service Executive.
Although these improvements in market conditions may not impact on our 2008
results, we continue to view the future with confidence.
David W MacDonald
Financial review
Introduction
Turnover for the year of �5,033,000 (2006: �3,827,000) produced an operating
profit of �1,060,000 (2006: �547,000). The group profit for the year after
interest and taxation was �215,000 (2006: �68,000).
During the year the group adopted FRS 20 Share Based Payments, which states
that the Profit & Loss Account should reflect the expense of options issued
over equity shares as measured at fair value. The group has issued options to
employees as part of their employment packages and has estimated the fair value
of these options using the Black Scholes model. The resultant expense is
charged to the profit and loss account in full as said options vest .A charge
for the year of �11,000 (2006: �13,000) has been taken to the profit and loss
account in respect of the estimated fair value of options issued to employees
and directors and a prior year adjustment has been made in respect of said
options relating to the period before 1 April 2006.
There are no exceptional items in the current year (2006: gain of �409,000).
Amortisation of goodwill amounted to �280,000 (2006: �279,000).
There was no charge to taxation for the year and tax losses available to offset
future profits are estimated at �5,800,000 (2006: �8,100,000).
The basic earnings per share for the year was 0.09p (2006: 0.03p).
Net liabilities of the group of �4,238,000 (2006: �5,541,000) include net
current liabilities of �277,000 (2006: �2,899,000).
During the year average headcount increased by 4% representing increased sales
activity and a low staff turnover. The group won a significant contract to sell
Rich Clinical Applications and met contractual implementation targets including
successfully implementing its Spinal Injuries solution.
Liquidity
The statement of cash flows illustrates that there was an increase in cash for
the year of �694,000 (2006: decrease of �537,000). This is stated after the
inflow of cash from operating activities of �472,000 (2006: inflow of �195,000)
and the outflow of cash for interest payments of �825,000 (2006: �509,000).
Going concern
After making enquiries, the directors have a reasonable expectation that the
group has adequate resources to continue in operational existence for the
foreseeable future.
Financial instruments
The group's principal financial instruments comprise long term loans, finance
leases, hire purchase contracts, preference shares, short term loans and cash.
The main purpose of these financial instruments is to raise finance for the
group's operations. The group has various other financial instruments such as
trade debtors and trade creditors that arise directly from its operations.
The group does not enter into derivative transactions (for example forward
currency contracts). It is, and has been throughout the year under review, the
group's policy that no trading in financial instruments shall be undertaken.
The main risks arising from the group's financial instruments are interest rate
risk, liquidity risk and foreign currency risk. The board has policies for
managing each of these risks and they are summarised below.
Interest rate risk
The group borrows in desired currencies at both fixed and floating rates of
interest. Finance lease receivables are held at fixed interest rates. The group
continues to monitor the interest profile to ensure that it is appropriate. The
group also invests in cash deposits at floating rate. The group's exposure to
interest fluctuations will continue to be monitored.
Liquidity risk
The group's objective is to maintain a balance between continuity of funding
and flexibility through the use of overdrafts, finance leases, preference
shares, hire purchase contracts and long term loans. Convertible loans have
been utilised during the period in response to the group's management of cash
flow requirements. Short-term flexibility is achieved by overdraft facilities
as well as short term loans.
Foreign currency risk
As a result of the significant investment in operations in Ireland, the group's
balance sheet can be affected by movements in the Euro/Sterling exchange rate.
Where possible the group seeks to mitigate the effect of this structural
currency exposure by borrowing in local currency.
The group also has transactional currency exposures. Such exposures arise from
sales or purchases by an operating unit in currencies other than the unit's
functional currency. It is not the group's policy to make use of derivatives.
On behalf of the board
Stephen Casey
Financial Director
Group profit and loss account
for the year ended 31 March 2007
Total Total
Restated
Notes 2007 2006
�000 �000
Group turnover 5,033 3,827
Cost of sales (120) (376)
----------- -----------
Gross profit 4,913 3,451
Selling and (678) (508)
distribution costs
Administrative (3,175) (2,396)
expenses
----------- -----------
Total operating 1,060 547
profit
Interest receivable 133 184
Interest payable and (979) (664)
similar charges
----------- -----------
Profit on ordinary 214 67
activities before
taxation
Tax on profit on - -
ordinary activities
----------- -----------
Profit on ordinary 214 67
activities after
taxation
Minority interests - 1 1
equity
----------- -----------
Profit for the 215 68
financial year
attributable to
members of the parent
company
--------- ---------
Basic and diluted 4 0.09p 0.03p
earnings per ordinary
share
Group Statement of Total Recognised Gains and Losses
2007 2006
Restated
�000 �000
Profit for the financial year attributable to 215 68
members of parent undertaking
Currency translation differences on foreign currency (91) (186)
net investments
----------- -----------
Total recognised gains and losses during the year 124 (118)
------ ------
Group Balance Sheet
at 31 March 2007
2007 2006
�000 �000
Fixed assets
Intangible assets 2,534 2,814
Tangible assets 31 40
----------- -----------
2,565 2,854
------ ------
Current assets
Stocks 1,524 -
Debtors: amounts falling due within one year 1,169 1,232
Debtors: amounts falling due within one year 1,778 2,298
----------- -----------
Total debtors 2,947 3,530
Cash at bank and in hand 816 159
------ ------
5,287 3,689
Creditors: amounts falling due within one year (5,564) (6,588)
------ ------
Net current liabilities (277) (2,899)
------ ------
Total assets less current liabilities 2,288 (45)
(6,483) (5,498)
Minority interests
Equity (43) (43)
------ ------
(4,238) (5,541)
----------- -----------
Capital and reserves
Called-up share capital 2,535 2,341
Share premium account 7,600 6,490
Merger reserve 3,600 3,600
Equity reserve 42 167
Profit and loss account (18,015) (18,139)
------- -------
(4,238) (5,541)
----------- -----------
Group Statement of Cash Flows
at 31 March 2007
2007 2006
Notes �000 �000
Net cash inflow / (outflow) from operating 3 472 195
activities
----------- -----------
Returns on investments and servicing of
finance
Interest paid (958) (690)
Interest and similar income received 133 184
Interest element of finance lease rental - (3)
payments
----------- -----------
(825) (509)
----------- -----------
Taxation - -
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (18) (6)
----------- -----------
(18) (6)
----------- -----------
Net cash outflow before financing (371) (320)
----------- -----------
Financing
Proceeds from issue of shares 34 -
Repayment of capital element of finance (6) (11)
lease rental payments
New long term loan 2,000 1,156
Repayment of capital element of long term (733) (1,236)
loan
Repayment of Median loan (230) -
Redemption of convertible debt - (126)
----------- -----------
Net cash inflow / (outflow) from financing 1,065 (217)
----------- -----------
Increase / (decrease) in cash 694 (537)
----------- -----------
Notes to the preliminary statement
1. The financial information in the preliminary statement of results does not
constitute statutory accounts within the meaning of section 240 of the
Companies Act 1985 (the "Act"). The financial information for the year
ended 31 March 2007 has been extracted from the statutory accounts for the
year ended 31 March 2007 upon which the auditor's opinion is unqualified.
Statutory accounts for the year ended 31 March 2007 will be delivered to
the Registrar of Companies following the Company's Annual General Meeting.
The policies have remained unchanged from the previous year apart from the
adoption of
FRS 20 Share Based Payments. This change is described in more detail below.
FRS 20 Share Based Payments
Under FRS20 the Group is required to recognise an expense, measured at fair
value at the date of grant, in respect of their employee share options plans,
share purchase plans and other share-based payments. Of these the Group
operates an employee share option plan. The options granted to all employees
and directors under the plan are measured at fair value at the date of grant
using the Black-Scholes model. The resulting cost of the options is amortised
as the options vest. A charge for the year of �11,000 (2006: �13,000) has been
taken to the profit and loss account in respect of the estimated fair value of
options issued to employees and directors and a prior year adjustment has been
made in respect of said options relating to the period before 1 April 2006.
2. Basis of preparation and going concern
The financial statements are prepared in accordance with applicable United
Kingdom accounting standards and under the historical cost convention.
The financial statements have been prepared on the going concern basis, which
assumes that the Group will continue to be able to meet its liabilities as they
fall due for the foreseeable future. In arriving at this conclusion the Board
has taken into account the fact that whilst the Group has net current
liabilities of �277,000 and net liabilities of �4.2m at 31 March 2007 these
amounts include �1.5m of deferred income which will be released to the profit
and loss account in 2007 at no cash cost to the Group.
3. Reconciliation of operating profit to net cash outflow from operating
activities:
2007 2006
Restated
�000 �000
Operating loprofitss 1,060 547
Depreciation 26 50
Amortisation of intangible fixed assets 280 279
Provision for share options 11 13
Exchange differences (89) (130)
Exceptional gain * (416)
Decrease/(increase) in operating debtors and 583 (92)
prepayments
(1,524) *
Increase in stocks and work in progress
Increase/(decrease) in operating creditors and 125 (56)
accruals
----------- -----------
Net cash outflow from operating activities 472 195
----------- -----------
4. Earnings per share
The basic profit per ordinary share is based on a profit of �215,000 (2006: �
68,000) and on a
weighted average number of shares in issue of 248,333,764 (2006: 234,063,332).
The diluted profit per ordinary share is based on a profit of �215,000 (2006: �
68,000) and on a weighted average number of shares in issue of 265,691,014
(2006: 253,480,582).
5. Reconciliation of net cash flow to movement in net debt
Group
2007 2006
Restated
�000 �000
Decrease in cash as per cash flow 694 (537)
statement
Repayment of capital element of 6 11
finance leases
Repayment of Median loan 230 *
New loans entered into (2,000) *
Repayment of capital element of 733 *
long term loan
Repayment of short term loan * 80
Issue of convertible debt (secured * 74
and unsecured)
----------- -----------
Change in net debt resulting from (337) (372)
cash flows
Other non-cash changes 1,134 (137)
----------- -----------
Movement in net debt 797 (509)
Net debt brought forward (8,673) (8,164)
----------- -----------
Net debt carried forward (7,876) (8,673)
----------- -----------
.
Copies of the Annual Report and Accounts for the year ended 31 March 2007 will
be posted to shareholders on 28 September 2007 and copies will also be
available from the Company's registered office.
Press Contact
IMS MAXIMS plc IMS MAXIMS plc
Sandymount Clara House
Station Road Glenageary Park
Woburn Sands Co. Dublin
MK17 8RR Ireland
Tel: 01908 588800 Tel: +353 1 284 0555
Fax: 01908 588819 Fax: +353 1 284 0829
END
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