DXS INTERNATIONAL PLC
ANNUAL RESULTS
for the year ended 30 April 2019
The Board of DXS International plc (“the Company”), the NEX Growth Market quoted healthcare information and digital clinical decision support systems provider, is pleased to announce its audited Final Results for the year ended 30 April 2019.
We are proud that DXS was nominated as a NEX Exchange Company of the Year at the 2019 Small Cap Awards. This coupled with the positive response we are receiving for our new Long Term Care solutions pilots, into which we have been investing heavily, and the imminent launch of GPITF (new NHS contract) in January 2020 positions the company very well to achieve our goals shared at our last AGM.
Even against the backdrop of lack of sales activity within the NHS, caused mainly by changes to structures and the new funding contract in 2020, we have managed to continue to maintain revenue at a similar level to 2018. As last year we have achieved a profit, albeit at a reduced level of £85 000, even after investment into our new solutions of £1 143 000 for the year.
David Immelman (Chief Executive) commented:
“While our performance for the year has been less than we had hoped for, the game plan has not changed. It is simply taking longer than anticipated. However, our new solutions are looking as promising as we had expected and with new funding available for these new solutions in the UK and available for All Care underpinned by a bigger NHS budget the future looks good.
The Directors of DXS International plc accept responsibility for this announcement.
Contacts:
David Immelman 01252 719800
DXS International plc
www.dxs-systems.com
Corporate Advisor
City & Merchant 020 7101 7676
David Papworth
Notes to Editors
About DXS:
DXS International presents up to date treatment guidelines and recommendations, from Clinical Commissioning Groups and other trusted NHS sources, to doctors, nurses and pharmacists in their workflow and during the patient consultation. This effective clinical decision support ultimately translates to improved healthcare outcomes delivered more cost effectively and which should significantly contribute towards the NHS achieving its projected efficiency savings.
The following information is extracted from the DXS International plc audited accounts for the year ended 30 April 2019.
Chairman’s Report
Having been nominated as one of the NEX companies of the year we are pleased to announce that our new Long-Term Condition Expert solutions, presented at the 2018 AGM, are receiving an extremely positive response from our pilot sites. Despite these new solutions taking longer than anticipated to bring to market we have managed to maintain our revenue at a similar level as 2018 with a profit of £85 000. During the year the company was able to invest £1 143 000 into Research and Development. Obtaining accreditation for the new GPIT Futures, the successor to the current GPSoC2 central NHS funding which begins in January 2020 for our core solution, DXS Point of Care and for our three new solutions, has been a very high priority for the company this year. Thus, during the past 8 months we have restructured the business by reducing monthly costs by approximately £50 000, continued with our GPITF accreditation and remain on the path to achieve objectives shared with you at our AGM which primarily is increasing shareholder value. In summary, this is how we intend achieving this goal:
- Continuing with our strategy of building significant revenue over the next 4-5 years through our Expert Long-Term Care solutions into which we have been heavily investing for the past 5 years;
- By extending our market beyond Primary Care locally and expanding Internationally.
In the UK this strategy is underpinned by the NHS announcing its Long-Term Plan which is heavily focused on Long Term Conditions and in particular Cardio Vascular disease which is where the DXS Hypertension EXpertCare solution is positioned. In addition, in this plan the NHS states – “we now have a new and secure funding plan”.
The group continued with its investment policy into new solutions with over £1 million into R&D in the year. We remain confident that this is the correct strategy if we are to achieve the targets we are aiming for.
We thank all our shareholders for their continued support and confidence and offer you the opportunity to have a one on one with our CEO. Please feel free to email our CEO, David Immelman, to set up a call: david@dxs-systems.com
I take this opportunity to once again thank the DXS staff for their positive and pro-active contribution to the business. The company is well poised to exploit its significant developments and we look forward to one of the most exciting periods ahead.
Yours sincerely,
Bob Sutcliffe
Chairman
Report of the Directors
The directors present their annual report and the audited financial statements for the year ended 30 April 2019. The Chairman’s statement which is included in this report includes a review of the achievements of the Company, the trading performance, financial position and trading prospects.
Directors
The directors for the year were:
● B Sutcliffe – Chairman
● D Immelman – CEO
● S Bauer – COO
Principal Activities
The group's principal activities during the period were the development and distribution of clinical decision support to General Practitioners, Nurses and Retail Pharmacies in the United Kingdom. The commercial side included the licensing of DXS to various CCG's and the sale of e-detailing opportunities to the Pharmaceutical Industry.
Principal Risks
Failure to achieve predicted quantities of DXS contracts, and slower development of additional revenue streams may result in revenues growing more slowly than anticipated. These may be mitigated due to a more price and budget flexible GPSoC3 and accessing new markets (new centrally funded supplier contract) anticipated to go live in January 2020.
Financial Instruments
At this stage the group is not faced with risk relating to interest rates on loans, credit and liquidity.
Dividend
The Directors do not recommend a dividend.
Research and Development
The group continues to invest in research and development both locally and internationally and during this financial year has invested £1 143 000 into R&D for the introduction, continuation and completion of a number of new DXS solutions. These are mainly targeted at providing clinicians and patients with solutions to long term conditions. These products are aligned with the NHS strategy of “Connected Care” and the first turnkey hypertension solution is live.
Directors’ Responsibilities
The directors are responsible for preparing the financial statements for each financial year. The directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
● Select suitable accounting policies and apply them consistently.
● Make judgments and accounting estimates that are reasonable and prudent.
● State whether UK accounting principles have been followed subject to any material departures disclosed and explained in the financial statements and,
● Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in the business.
The directors are responsible for keeping proper accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company's auditors are aware of that information.
Approved by the board and signed on its behalf by:
D A Immelman
Director
12th September 2019
Strategic Report
Review of the company’s business
The company's profit after tax is £85 096 (2018- £148 821). The pre-tax Loss before tax amounts to £199 615 (2018- £46 152). The company has a credit of £284 711 for UK Corporation Tax (2018 - £194 973) for the year.
Turnover has been largely maintained allowing for a significant investment into R&D of £1 143 000. The profit for the year was affected by an increased writedown of carried R&D assets caused by a more cautious approach to capitalisation of R&D. The turnover was 1.8% less than that in 2018. This was mainly due to market changes within the healthcare sector. However with GPITF (GPIT Futures - GPSoC3) going live in January 2020, the NHS has stated in its long term plan released in January 2019 that it now has a new and secure funding plan. Coupled with the fact that the new GPITF central funding framework has been extended from England to the UK and from Primary Care to All Care, this opens new potential markets in the UK for DXS. Importantly it should be noted that with the current GPSoC2 framework agreement, DXS only has its core solution, DXS Point of Care centrally funded. However, in GPITF, an additional three new DXS solutions will be funded.
In line with our growth strategy we continue to invest in R&D to ensure that momentum on our Long Term Care solutions has been maintained. While going live with our pilots presented some initial teething problems, we are confident that we are now better positioned for a market launch in January 2020.
With the new NHS Long Term Plan aligned with our solutions the future in the UK looks promising. In addition we are receiving considerable interest from abroad.
Principal risks and uncertainties
The principal risk to the company in the UK is that the NHS dramatically changes its plans or cuts its budgets. However this seems unlikely as the NHS is moving to the centrally funded GPITF, (DXS is currently an approved supplier on GPSoC 2) and the NHS are committed to see this new initiative resolve current and previous problems. This includes improved budgets and pricing with far more flexibility for suppliers to operate within the framework.
In addition our plans for expansion outside of the UK mitigates this risk.
Analysis of Business during Year Ending April 2019
Revenue was marginally below expectations largely due to NHS changes and budget cuts. The staff headcount has been reduced resulting in reduced costs.
Financial KPI
Group Revenue £3 346 343 has decreased 1.8%. Definition: Total Group sales including distribution of clinical decision support to General Practitioners and the licensing of DXS to CCGs and healthcare publishers.
Underlying Group Profit After Tax has declined slightly. Definition: Underlying profit provides information on the underlying performance of the business adjusting for either income or charges which are both one off or significant.
Amortisation of deferred Research and Development expenditure in 2019 was £499 834 and in 2018 was £413 697.
Earnings Per Share 2019 0.2p, 2018 0.4p. Definition: Earnings per share is the underlying profit divided by the average number of ordinary shares in issue.
ROE 2019 4%, 2018 7%. Definition: Return on Equity (ROE) is the ratio of net profit of a company to its shareholders funds. It measures the profitability of a company by expressing its net profit as a percentage of its shareholders funds.
Approved by the board and signed on its behalf by:
D Immelman
Director
12th September 2019
FINANCIAL STATEMENTS
INCOME STATEMENT
Year ended 30 April 2019
| 2019 Continuing Operations | 2018 Continuing Operations | |||
| £ | £ | |||
| Turnover | 3,346,343 | 3,406,976 | ||
| Cost of Sales | (385,426) | (470,824) | ||
| _________ | _________ | |||
| Gross Profit | 2,960,917 | 2,936,152 | ||
| Administrative Costs | (2,568,074) | (2,506,575) | ||
| Depreciation and Amortisation | (530,292) | (445,267) | ||
| _________ | _________ | |||
| Operating Profit/(Loss) | (137,449) | (15,690) | ||
| Interest received and similar income | 221 | 9,329 | ||
| _________ | _________ | |||
| (137,228) | (6,361) | |||
| Interest payable and similar expenses | (62,387) | (39,791) | ||
| _________ | _________ | |||
| (Loss) on ordinary activities before taxation | (199,615) | (46,152) | ||
| Tax on (loss) ordinary activities | 284,711 | 194,973 | ||
| _________ | _________ | |||
| Profit for the period | 85,096 | 148,821 | ||
| ========= | ========= | |||
| Profit per share | ||||
| 0.2p | 0.4p | ||
| 0.2p | 0.3p | ||
| ========= | ========= |
Statement of Financial Position
Year ended 30 April 2019
| Group 2019 | Group 2018 | Company 2019 | Company 2018 | |
| £ | £ | £ | ||
| Fixed Assets | ||||
| Intangible Assets | 3,673,141 | 3,057,575 | - | - |
| Tangible Assets | 3,060 | 4,735 | - | - |
| Investments | 1,899,384 | 1,381,301 | ||
| _________ | _________ | _________ | _________ | |
| 3,676,201 | 3,062,310 | 1,899,384 | 1,381,301 | |
| _________ | _________ | _________ | _________ | |
| Current assets | ||||
| Debtors: amounts falling due within one year | 1,688,720 | 1,484,870 | 46,638 | 40,550 |
| Debtors: Amounts due after more than one year | - | 58,500 | - | - |
| Cash at bank and in hand | 55,242 | 140,012 | 41,344 | 1,728 |
| _________ | _________ | _________ | _________ | |
| 1,743,962 | 1,683,382 | 87,982 | 42,278 | |
| Creditors: amounts falling due within one year | 1,518,021 | (997,441) | (69,817) | (18,219) |
| _________ | _________ | _________ | _________ | |
| Net current assets | 225,941 | 685,941 | 18,165 | 24,059 |
| _________ | _________ | _________ | _________ | |
| Total assets less current liabilities | 3,902,142 | 3,748,251 | 1,917,549 | 1,405,360 |
| Creditors: | ||||
| Amounts falling due after more than one year | 464,951 | (467,098) | - | - |
| Accruals and Deferred income | (1,193,611 | (1,169,217) | - | - |
| _________ | _________ | _________ | _________ | |
| 2,243,580 | 2,039,783 | 1,917,549 | 1,405,360 | |
| ========= | ========= | ========= | ========= | |
| Capital and reserves | ||||
| Called up share capital | 116,099 | 110,174 | 116,099 | 110,174 |
| Share Premium account | 1,752,299 | 1,639,523 | 1,752,299 | 1,639,523 |
| Provision for costs of share option awards | 162,580 | 162,580 | 162,580 | 162,580 |
| Retained earnings | 212,602 | 127,506 | (113,429) | (506,917) |
| _________ | _________ | _________ | _________ | |
| 2,243,580 | 2,039,783 | 1,917,549 | 1,405,360 | |
| ========= | ========= | ========= | ||
Notes to the Financial Statements
Year ended 30 April 2019
1 Summary of significant accounting policies
(a) General information and basis of preparation.
DXS International PLC is a public company limited by shares incorporated in England and Wales. The address of the registered office is given in the company information on Page 1 of these financial statements.
The group's principal activities during the year were the development and distribution of clinical decision support to General Practitioners, Nurses and Retail Pharmacies in the United Kingdom and South Africa. The commercial side includes the licensing of DXS products to various CCG's, the sale of e- detailing opportunities to the pharmaceutical industry, the UK Primary Care sector and the licencing of DXS technology to healthcare publishers.
The financial statements have been prepared in accordance with applicable accounting standards including Financial Reporting Standard 102 Applicable in the UK and Republic of Ireland (FRS 102) and the Companies Act 2006. The financial statements have been prepared on a going concern basis under the historical cost convention. The financial statements are prepared in sterling which is the functional currency of the company.
The financial statements have been prepared on a going concern basis under the historical cost convention. This assumes that the group will continue in business for, at least, the next twelve months. Due to the nature and timing of the research and development undertaken by the company, the group may incur losses until the income streams from the "new" products are received.
The group has prepared a detailed business plan in respect of the next two years showing the time, costs and resources required to commercialise the products currently under development. The Directors believe that the new products will be significant in both the future sales and profits of the company. Indications from current third party trials have been positive regarding the functionality of the new products.
Since the year end, the group has arranged and received additional short term bank loans to ensure that the company has adequate financial resources to meet the anticipated trading obligations. The group has also identified certain suppliers who will allow extended short term credit facilities to the company.
In the opinion of the Directors the group has sufficient funding to continue as a going concern for at least twelve months from the date of approval of the financial statements.
Should the group be unable to continue trading, adjustments would have to be made to reduce the value of assets to their recoverable amounts and to provide for any further liabilities that might arise. The financial statements do not reflect any such adjustments.
The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented unless otherwise stated.
(b) Intangible assets
Intangible assets acquired separately from a business are capitalised at cost.
Research and development expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
Goodwill arising on business combinations is capitalised, classed as an asset on the balance sheet and amortised over its useful life. The period chosen for writing off goodwill is 20 years. The reason for choosing this period is because the directors believe that this is the period of time for the benefit to be received
Intangible assets are amortised over a straight line basis over their useful lives. The useful lives of intangible assets are as follows:
| Intangible type | Useful life | Reasons |
| Development expenditure | 5 years from the date that the specific product is completed and available for distribution | Period of time for benefit to be received |
Provision is made for any impairment.
(c) Tangible fixed assets
The company capitalises items purchased as Tangible Fixed Assets which have a cost in excess of £500.
Tangible fixed assets are stated at cost less accumulated depreciation.
Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost, less estimated residual value, of each asset on a systematic basis over its expected useful life as follows:
Plant and equipment 3-4 years straight line
(d) Debtors and creditors receivable/ payable within one year
Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the profit and loss account in other administration expenses
(e) Loans and borrowings
Loans and borrowings are initially recognised at the transaction price including transaction costs. Subsequently they are measured at amortised cost using an effective interest rate method, less impairment. If an arrangement constitutes a finance transaction it is measured at present value.
(f) Provisions
Provisions are recognised when the company has an obligation at the balance sheet date as a result of a past event. It is probable that an outflow of economic benefit will be required in settlement and the amount can be reliably estimated.
(g) Tax
Current tax represents the amount of tax payable or receivable in respect of the taxable profit for the current or past reporting periods. It is measured at the amount expected to be paid or recovered using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
(h) Turnover and other income
Turnover is measured at the fair value of the consideration received or receivable net of VAT and trade discounts. The policy adopted for the recognition of turnover is as follows –
Sale of services
Turnover is from the sale of opportunities to the pharmaceutical industry and the UK Primary Care sector and is recognised over the term of service contract and is apportioned on a time basis representing the delivery of the service.
Revenue received from the sale of “Documents” is recognised when invoiced. A provision for cost to complete the preparation of the Documents is made to ensure profit is not taken in advance.
(i) Foreign currency
Foreign currency transactions are initially recognised by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction.
Monetary assets and liabilities denominated in a foreign currency at the balance sheet date are translated using the closing rate
(j) Employee benefits
When employees have rendered service to the company, short term employee benefits to which the employees are entitled are recognised at the undiscounted amount expected to be paid in exchange for that service.
The company operates a defined contribution plan for the benefit of its employees. Contributions are expensed as they become payable.
(k) Leases
Rentals payable and receivable under operating leases are charged to the profit and loss account on a straight line basis over the period of the lease
(l) Share option Scheme Accounting Policy
The company recognised as an expense, the fair value of share options granted over their vesting period. The fair value is calculated by applying an option pricing model
Factors affecting the model are: expected volatility, exercise price, weighted average share price, option life and risk free interest rate. In respect of options granted by the company –
- use of the Black Scholes calculator as the option pricing model,
- calculated volatility using the Adam Greene Volatility method using an average share price of the previous 104 weeks
- the directors base their calculations on an option life of 2 years
(m) Key judgements and key accounting estimates
There are no Key judgements or Key Accounting estimates with a material effect on the carrying value of assets and liabilities.