TIDMULT
RNS Number : 1005V
Ultrasis PLC
10 December 2013
Ultrasis plc
("Ultrasis" or the "Company")
Results for the year ended 31 July 2013
Ultrasis, the provider of interactive health care services,
announces its audited financial results for the year ended 31 July
2013:
-- Revenues of GBP977,000, a decrease from GBP1,069,000 in 2012
caused by the continued difficult trading conditions in the UK
market
-- Operating loss before exceptional costs decreased to
GBP1,238,000 (2012: GBP1,429,000)
-- Cash reserves of GBP734,000 (2012: GBP1,284,000)
-- New strategy implemented to grow the Company, both by
acquisition and organic growth
-- Acquisition of the wellness provider, Screenetics announced in October 2013
-- Unused loan financing facilities of GBP2,200,000
John Smith, CEO commented:
"I look forward to leading the Ultrasis Group at this exciting
time, the structural changes and acquisitions we are currently
making are only the start of our new strategy to create a Company
that helps people maintain, regain and improve their physical,
psychological and social wellbeing. I believe my clinical
background, leadership experience and absolute belief in our
products and services will enable me to transform the Company into
a profitable business and market leader."
Chairman's Report
As I predicted last year, 2012 was bound to be
a difficult year with our main UK market disrupted
by substantial changes in the NHS commissioning
process. International development took longer
to deliver income than we initially anticipated,
although the increasingly widespread enthusiasm
for "Beating the Blues" bodes well for the future.
So, this year's results are disappointing. Not
surprisingly, our response has been to review
comprehensively our strategy to take account
of new market conditions at home and abroad.
That strategy includes a review of our cost base
to align it more closely with revenues.
The welcome investment in the Company in early
2013 by Mr Paul Anthony Bell has enabled us to
focus our energy on shaping a much more aggressive
strategy to grow the Company, both by acquisition
and organic growth, also refreshing and adding
to our product suites and services.
In June, John Smith was appointed as Chief Executive
and the Board has tasked him with delivering
this strategy. The acquisition of the wellbeing
company, Screenetics, in September 2013 and the
assets of Step Success in November 2013 show
the strategy is on course. The recent announcement
that Screenetics, just six weeks after joining
the Ultrasis Group, has secured contracts which
will add approximately GBP2 million per annum
to Group revenues is early evidence that rapid
growth by acquisition is an attainable goal.
In October, shareholders gave the Board sufficient
authority to issue shares to enable the Company
to take advantage of future suitable acquisition
opportunities.
I believe that the growing reputation of Ultrasis'
wellbeing products, especially "Beating the Blues",
will be reflected in a revival of sales revenues
as markets increasingly appreciate the economic
and social benefits they deliver. With the growing
strength of our international relationships there
is an opportunity for the Ultrasis Group to become
a market leader in the delivery of health and
wellbeing services on a global basis.
The Board is looking forward to a constructive
year ahead as it pursues its goal of restoring
the Group to profitability.
Gerald Malone
Chairman
Chief Executives Report
The performance of the Company in 2013 fell well
short of expectations. The Company failed to
secure revenue growth and although cost cutting
initiatives were implemented which reduced the
operating loss before exceptional items to GBP1,238,000
from GBP1,429,000 in 2012, the loss for the year
transferred to reserves increased to GBP3,455,000
(2012: GBP3,406,000). There are three key reasons
for this disappointing outcome:
The NHS continued to be in a state of flux whilst
the new Clinical Commissioning Group ("CCG")
arrangements were established, delaying purchasing
decisions and it remained difficult to make sales
in this, our primary market.
Internationally we underestimated the time it
takes to break into new markets, especially in
the USA where our partnership venture with UPMC,
U Squared Interactive, continues to grow steadily,
but more slowly than expected.
Despite the excellent clinical evidence of our
products the technology platforms upon which
they are built is perceived now as dated by customers
and users. We have had insufficient resources
to invest in keeping them ahead of competitors'
offerings which has had an impact on sales.
We have also taken the prudent decision to write
down the value of the licence acquired with the
acquisition of Healthstar in 2006 to the English
Speaking Consumer market, This resulted in a
significant non cash charge to the Income Statement
of GBP1,965,000.
Turning to positive events, in February 2013
we secured significant investment and financial
support from Mr Paul Anthony Bell. This has enabled
the Company to pursue a strategy of growth through
acquisition that the Board believes will reverse
the decline in the Company's fortunes in the
next financial year.
In June 2013 I was delighted to be given the
opportunity to lead the Company and was immediately
charged with creating a strategy that will bring
about significant growth, so increasing shareholder
value.
Of course we need to learn lessons from the past,
but it is the future strategy of the Group that
deserves more scrutiny. To demonstrate and measure
the future performance, the Board has adopted
straightforward, transparent key performance
indicators (KPI's) which for 2013/14 are:
* Grow our customer base, both in the UK and
Internationally;
* Increase income and achieving profitability;
* Widen the range of services we provide;
* Develop new and innovative products and services;
* Increase the number of partners who distribute our
services;
* Form strategic partnerships with public, voluntary
and private sector partners to the mutual benefit of
the parties;
* Enhance our reputation for quality products and
services.
It is intended to deliver an aggressive and focused
approach to growing the business. A key component
will be the acquisition of companies which will
quickly enhance the Group's revenues and hasten
the return to profitability.
Already progress has been made, through the acquisition
of the wellness provider, Screenetics. The screening
and wellbeing market is poised for significant
growth; a point proven when within six weeks
of the acquisition three new contract wins were
announced by Screenetic's delivering forecast
additional Group income of GBP2 million per annum.
Screenetics is ahead of forecast sales for the
year and we are confident its growth will be
enhanced now that it is part of the Ultrasis
Group.
We have also added the assets of the Step Success
business to our Group. This is an exciting wellness
product which will integrate well into our existing
health manager program, allowing us to provide
a more complete solution for customers.
The Company is identifying further acquisition
opportunities that will add further products
and services to the Group. Our aim is to create
an eco-system of complementary businesses that
allows for both up-sell and cross-sell opportunities.
We believe there is significant potential in
direct-to-consumer market and it is our intention
to widen the range of the Company's products
and services in the next financial year. More
and more people are looking for ways to manage
their own health and wellbeing and we will be
innovating marketing techniques to increase uptake
of our services and widen awareness of The Wellness
Shop.
Technology improvements - especially the migration
of healthcare solutions to mobile platforms and
increasing reliance on e-health solutions to
curb cost, create new opportunities within healthcare,
in both the public and private sectors, to which
Ultrasis is increasingly well placed to respond.
The NHS remains a key customer and our recently
announced joint venture company with the NHS,
The Ki Group, will become the core sales vehicle
through which we will secure future public sector
contracts. Ki Group will begin to offer services
in partnership with the NHS from January 2014
and we are already engaged in discussions with
a number of CCGs on how we can help then to deliver
effective and affordable access to mental health
care for their patients.
During the past year the clinical and technology
teams at Ultrasis have been engaged in a "top
to bottom" redevelopment of Beating the Blues
so that it can be deployed through mobiles, tablets
and other devices, as well as through laptop
and desktop computers. Beating the Blues 2.0,
currently in the final stages of testing, will
initially go live in the USA early in the New
Year.
Achieving recognition on the National Register
of Evidence-based Programs and Practices by The
Substance Abuse and Mental Health Services Administration
is a significant achievement and has led to raised
awareness of Beating the Blues in the USA. We
are confident that this recognition, combined
with the introduction of Beating the Blues 2.0,
will lead to an increase in contracts in the
US in the coming year.
Conclusion
Changes already implemented and under way should
lead to a significant improvement on the results
achieved in the year ended 31 July 2013. Our
future focus, on becoming a healthcare company
with a broad product portfolio that helps people
to maintain, re-gain or improve their physical,
emotional and social health and wellbeing, will
not only open new commercial opportunities, but
mitigate the risks associated with being reliant
on one product for revenue delivery, which has
historically been our weakness.
Next year is about successfully achieving three
key objectives:
* Implementing the strategy agreed by the Board.
* Increased revenues, with a return to profitability.
* Looking to increase shareholder value through the
achievement of the above.
John Smith
Chief Executive
Financial Report
Revenues
The Group's had total recognised revenues of GBP977,000 (2012:
GBP1,069,000) of which GBP818,000 (2012: GBP866,000) was generated
in the UK and GBP159,000 (2012: GBP203,000) was generated revenue
internationally).
Total invoiced sales for the year were GBP742,000 compared to
GBP891,000 in 2012, reflective of the continued challenges in the
core UK NHS market.
Expenditure
Like for like operating costs for the year decreased by 11%% to
GBP2,195,000 from GBP2,471,000 in 2012, a result of cost cutting
initiatives continued during the year.
However the Group incurred GBP256,000 exceptional one off costs
related to payment in lieu of notice to Nigel Brabbins who resigned
from the Board in June 2013.
In addition, as part of the Board's annual review of the
carrying value of its intangible assets the Directors took the
prudent view to write down the value of the licence acquired with
the acquisition of Healthstar in 2006 to the English Speaking
Consumer market incurring, non-cash, charges to the Income
Statement of GBP1,965,000.
Results
Operating losses before exceptional items for the year were
GBP1,238,000; an improvement over the prior year's loss of
GBP1,429,000 and a result of the cost reduction initiatives started
during the prior year.
When taking the one-off charges to the Income Statement
associated with exceptional items the loss increased to
GBP3,451,000.
A loss of GBP3,451,000 was transferred to reserves (2012:
GBP3,401,000).
Research and Development Expenditure
The Group spent GBP9,000 on R&D during the year (2012:
GBP87,000) and capitalised GBP45,000 of development costs (2012:
GBP21,000).
Joint Venture
The Group's interest in its Joint Venture, USquared Interactive
is consolidated using the proportionate consolidation method. The
Group's consolidated balance sheet therefore includes GBP319,000 of
assets that it jointly controls (2012: GBP257,000) and GBP387,000
(2012: GBP169,000) of the liabilities for which it is jointly
responsible. The Group's consolidated income statement includes
GBP36,000 of income (2012: GBP7,000) and GBP139,000 of expenses
(2012: GBP235,000) being the Group's share of USquared
Interactive's loss for the year.
Cash
At the balance sheet date the Group had reduced cash reserves of
GBP734,000 (2012: GBP1,284,000) reflecting the impact on cash
reserves of the operating loss incurred during the year.
Deferred revenue
The Group had deferred revenue balances of GBP470,000
(GBP692,000) available for release to the income statement in
future periods.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE
INCOME
for the year ended 31 July 2013
2013 2012
Notes GBP'000 GBP'000
Revenue 977 1,069
Cost of sales (20) (27)
-------- --------
Gross profit 957 1,042
Operating expenses
Exceptional costs (2,195) (2,471)
Impairment of intangible
fixed assets 5 (1,965) -
Directors severance costs (256) -
-------- --------
Administrative expenses (4,416) (2,471)
Operating loss before exceptional
costs (1,238) (1,429)
Operating loss after exceptional
costs (3,459) (1,429)
Finance costs (1) (8)
Finance income 9 2
Loss before taxation (3,451) (1,435)
-------- --------
Taxation 3 - (1,966)
Loss for the year (3,451) (3,401)
-------- --------
Other comprehensive loss
Items that may be reclassified
subsequently to profit
or loss:
Exchange differences on
foreign currency net investments
in subsidiaries (4) (5)
Total comprehensive loss
for the year attributable
to equity holders of the
parent (3,455) (3,406)
======== ========
Loss per share:
Basic and diluted loss
per share (p) 4 (0.21) (0.23)
======== ========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended
31 July 2013
Share Share Share Capital Merger Translation Retained Total
capital premium option reduction reserve reserve losses
reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance
brought
forward 1,508 21,302 1,659 6,650 2,324 (6) (26,704) 6,733
1 August 2011
Foreign
exchange
translation
differences
on foreign
currency - - - - - (5) - (5)
Retained loss
for the year - - - - - - (3,401) (3,401)
--------------- ----------- ----------- ----------- ----------- ----------- ------------ ----------- ---------
Total
comprehensive
income for
the year - - - - - (5) (3,401) (3,406)
--------------- ----------- ----------- ----------- ----------- ----------- ------------ ----------- ---------
New shares
issued under
Share
Incentive
Plan 3 11 - - - - - 14
Movement on
share option
reserve - - 5 - - - - 5
=============== =========== =========== =========== =========== =========== ============ =========== =========
Balance
carried
forward 31
July 2012 1,511 21,313 1,664 6,650 2,324 (11) (30,105) 3,346
=============== =========== =========== =========== =========== =========== ============ =========== =========
Share Share Share Capital Merger Translation Retained Convertible Total
capital premium option reduction reserve reserve losses loan stock
GBP'000 GBP'000 reserve reserve GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
Balance
brought
forward 1,511 21,313 1,664 6,650 2,324 (11) (30,105) - 3,346
1 August
2012
Foreign
exchange
translation
differences
on foreign
currency - - - - - (4) - - (5)
Retained
loss for
the year - - - - - - (3,451) - (3,451)
Total
comprehensive
income
for the
year - - - - - (4) (3,451) - (3,455)
--------------- -------- -------- -------- ---------- --------- ------------ --------- ------------ ---------
New
convertible
loan stock
issued
during
year - - - - - - - 24 24
New shares
issued 198 388 - - - - - - 586
Movement
on share
option
reserve - - (665) - - - 680 - 15
=============== ======== ======== ======== ========== ========= ============ ========= ============ =========
Balance
carried
forward
31 July
2013 1,709 21,701 999 6,650 2,324 (15) (32,876) 24 515
=============== ======== ======== ======== ========== ========= ============ ========= ============ =========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 July
2013
31-Jul 31-Jul
Notes 2013 2012
GBP'000 GBP'000
Non-current assets
Intangible assets 5 613 2,687
Plant and equipment 29 36
Total non-current
assets 642 2,723
Current assets
Trade and other
receivables 303 425
Cash and cash
equivalents 734 1,284
--------- --------------
Total current
assets 1,037 1,709
Current liabilities
Trade and other
payables (1,164) (902)
--------- --------------
Total current
liabilities (903) (902)
Net current assets 134 807
Long term liabilities
Trade and other payables
due in more than one year (261) (184)
Net assets 515 3,346
========= ==============
Equity
Share capital 1,709 1,511
Share premium 21,701 21,313
Share option reserve 999 1,664
Capital reduction
reserve 6,650 6,650
Merger reserve 2,324 2,324
Translation reserve (16) (11)
Convertible loan 24 -
stock
Retained losses (32,876) (30,105)
515 3,346
========= ==============
CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 July
2013
Notes GBP'000 GBP'000
2013 2012
Cash used in operations
Operating loss (3,459) (1,429)
Share based payments 109 17
Depreciation charge 19 25
Amortisation and impairment
of intangible fixed assets 2,151 185
Decrease in receivables 122 650
Increase/(Decrease) in payables 78 (479)
Net cash used in operating
activities (980) (1,031)
Investing activities
Interest received - 2
Purchases of intangible fixed
asset (77) (21)
Purchases of plant and equipment (12) (14)
Net cash used in investing
activities (89) (33)
Financing activities
Interest paid (1) (2)
New shares issued 524 -
Net cash used in financing
activities 523 (2)
Net decrease in cash and cash
equivalents (545) (1,066)
Cash and cash equivalents
at beginning of period 1,284 2,368
Effects of exchange rate changes
on the balance of cash (5) (18)
held in foreign currencies
Cash and cash equivalents
at end of period 734 1,284
======== ========
Statement of accounting policies for the year ended 31 July
2013
1. Nature of financial information
The financial information set out in this announcement does not
comprise the Group's statutory accounts for the years ended 31 July
2013 or 31 July 2012.
The financial information has been extracted from the statutory
accounts of the Company for the years ended 31 July 2013 and 31
July 2012. The auditors reported on those accounts; their reports
for both years were unqualified but in the prior year they drew
attention to the basis of preparation of the financial
statements.
The statutory accounts for the year ended 31 July 2012 have been
delivered to the Registrar of Companies, whereas those for the year
ended 31 July 2013 were approved by the Board on 9 December 2013
and will be delivered to the Registrar of Companies once they have
been distributed to shareholders.
The financial information set out in this announcement has been
prepared on a basis consistent with the accounting policies for
year ended 31 July 2013 which were substantially unchanged from the
year ended 31 July 2012 and were disclosed in the Annual Report and
Accounts for that year.
(2) Segment information
Management has determined the operating segments by considering
the business from a geographic perspective. The Group's operations
are in two geographical segments, the United Kingdom and abroad.
These divisions are the business segments for which the Group
reports its segment information internally to the Board.
Management considers there to be one type of customer being
providers and/or users of physical and emotional wellbeing
technologies.
All inter-segment sales are transacted on an arm's length basis.
The results of each segment have been prepared using accounting
policies consistent with those of the Group as a whole.
Geographical
Segments
UK Rest of Unallocated TOTAL
the World
2013 2012 2013 2012 2013 2012 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
External Revenue: 818 866 159 203 - - 977 1,069
-------- -----------
Total Revenues 818 866 159 203 - - 977 1,069
Operating loss: (3,377) (1,122) (82) (307) - - (3,459) (1,429)
Finance costs - - - - (1) (8) (1) (8)
Finance income - - - - 9 2 9 2
(Loss)/Profit
before taxation (3,377) (1,122) (82) (307) 8 (6) (3,451) (1,435)
Taxation - (1,966) - - - - - (1,966)
(Loss)/Profit
for the period
from continuing
operations (3,377) (3,088) (82) (307) 8 (6) (3,451) (3,401)
Assets 778 3,064 167 84 734 1,284 1,679 4,432
Liabilities (775) (903) (389) (183) - - (1,164) (1,086)
Capital expenditure (31) (33) (58) - - - (89) (33)
Depreciation,
Amortisation
& Impairment (2,171) (210) - - - - (2,170) (210)
Share based
payments (109) (17) - - - - (109) (17)
During the year and the prior year no single customer
contributed more than 10% of the Group's revenue.
(3) Taxation
Tax charge
The tax charge for the period comprises:
2013 2012
GBP'000 GBP'000
Corporation tax - 7
Deferred tax - (1,973)
--------- --------
- (1,966)
--------------------------- --------
Factors Affecting Tax charge for the Current Year
The tax assessed for the year is higher/(lower) than that
resulting from applying the standard rate of corporation tax (24%).
The differences are explained below:
2013 2012
% %
Standard rate of tax applying to profits
on ordinary activities before tax 23.67 25.33
----- -----
Effect of:
Expenses not deductible for tax purposes - -
Reversal of deferred tax assets previously
recognised (13) (123)
Tax losses utilised - -
Tax losses not recognised (9) (22)
Research and development claims - -
Capital allowances for period greater than
depreciation (1) (3)
Impact of changes in future applicable
tax rates on deferred tax assets - (16)
Total tax charge/(credit) rate for the
year as a percentage of (loss)/profit - (139)
----- -----
Factors that may affect the future tax charge
Amounts of unprovided deferred tax assets are as follows:
2013 2012
Applicable tax rate 26% 26%
GBP'000 GBP'000
Trading losses and other losses 3,860 4,122
Capital losses 1,366 1,570
Depreciation in excess of capital
allowances 40 45
Fair value adjustments (348) (400)
4,918 5,337
-------- --------
On 22 June 2010 the Government announced its intention to
propose to Parliament a staggered reduction in the corporation tax
rate of 1% every year culminating in a rate of 24% for the tax year
2014/15. The 2011, 2012 and 2013 Budgets accelerated the reduction,
resulting in a rate of 24% from 1 April 2012 reducing to a rate of
21% for the tax year 2014/15 and 20% for the tax year 2015/16.
(4) Loss per share
Pence per share
2013 2012
-------- --------
Basic loss per share (0.21) (0.23)
Diluted loss per share (0.21) (0.23)
The calculation of diluted loss per share assumes conversion of
all potentially dilutive ordinary shares, all of which arise from
share options.
The calculations of earnings per share are based on the
following loss and numbers of shares, Basic and diluted are the
same are the shares are anti-dilutive:
Basic and diluted
------------------------------------
2013 2012
GBP'000 GBP'000
Loss for the financial year (3,451) (3,401)
Number Number
of shares of shares
2013 2012
Weighted average number of shares
for basic earnings per share: 1,613,147,408 1,508,952,463
Contingently issuable shares 39,785,714 1,733,333
---------------- ------------------
Weighted average number of shares
for diluted earnings per share: 1,652,933,122 1,510,685,796
---------------- ------------------
(5) Intangible assets
Retail Capitalised BtB Intellectual Total
product Development Intellectual Property
rights Costs Property of the
Licence Getfit
product
range
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 August
2011 2,485 796 168 216 3,665
Additions - 21 - - 21
At 31 July
2012 2,485 817 168 216 3,686
Amortisation
& Impairment
At 1 August
2011 396 374 24 20 814
Charge for
year 124 43 8 10 185
At 31 July
2012 520 417 32 30 999
-------------------- --------------------- --------------------- -------------------- --------------------
Net book
value 1,965 400 136 186 2,687
-------------------- --------------------- --------------------- -------------------- --------------------
Retail Capitalised BtB Intellectual Software Total
product Development Intellectual Property licences
rights Costs Property of the
Licence Getfit
product
range
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 August
2012 2,485 817 168 216 - 3,686
Additions - 45 - - 32 77
Disposals - (521) - - - (521)
At 31 July
2013 2,485 341 168 216 32 3,242
Amortisation
& Impairment
At 1 August
2012 520 417 32 30 - 999
Charge for
year - 168 8 10 - 186
Impairment
charge* 1,965 - - - - 1,965
Disposals - (521) - - - (521)
At 31 July
2013 2,485 64 40 40 - 2,629
Net book
value - 277 128 176 32 613
-------------------- --------------------- --------------------- -------------------- -------------------- --------
*As part of the Board's annual review of the carrying value of
its intangible assets the Directors took the prudent view to write
down the value of the licence acquired with the acquisition of
Healthstar in 2006 to the English Speaking Consumer market
incurring, non-cash, charges to the Income Statement of
GBP1,965,000. Recognising that market conditions have changed, the
board is of the view that there is no immediate prospect of
realising revenue from exploitation of the assets and accordingly,
writing down their value is the prudent course to take. This charge
was shown in the UK segment breakdown in Note 2.
(6) Annual Report and Accounts
Copies of the annual report and accounts for the year ended 31
July 2013 will be posted to shareholders in due course and will be
available to download from the Company's website,
www.ultrasisplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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