PLUS Admission Announcement

 

Established in 2007 as a holding company, DXS International plc owns its trading subsidiary DXS (UK) Ltd (trading since 2002), which has developed and distributes the Company's proprietary information publishing software and content solution service to healthcare professionals in the UK.

 

The complete service solution package known as DXS supplies up to date information to doctors, nurses, and pharmacists about medical conditions, the currently available treatments, drugs, hospital and treatment centre facilities and capabilities, as well as a comprehensive range of information that can be printed out to help educate patients.

 

The DXS service solution is installed at GP practices, retail pharmacies and hospitals, integrated into electronic patient record systems, enabling doctors to view the latest research relating to an individual patient's medical condition, available treatments, and view the different drugs available, all during the patient encounter. This influential position is attractive to healthcare stakeholders such as Health Authorities, Drug Companies, and Healthcare Service Providers, all with a desire to steer their spend in a particular direction.

 

DXS International plc is currently in the process of duplicating its successful UK business model. 

 

 

DXS is currently used by 20,000 GPs (the company has access to approximately 50% of all UK general practitioners), 14,000 nurses and 2,200 retail pharmacies in the UK, with a further 7,000 to be installed within the next 12 to 24 months. The UK generates £1 million p.a., with growth potential in the primary care, secondary care and retail pharmacy markets. 

 

The Company achieved this by securing software integration agreements, which directly introduced the DXS knowledge solution into the workflow of the healthcare providers' Electronic Patient Record systems. The distributors of these EPR systems include Healthy, Seetec, Microtest, iSOFT, InPS and Cegedim Rx.  Many of the world's leading pharmaceutical companies now recognise the DXS system benefits and DXS pharma clients include Pfizer, Eli Lilly,Boehringer Ingelheim and Reckitt Benckiser.

 

The first advertising sale from a "non pharma" source has been secured. This is to promote MRI scanning facilities throughout the UK. 

 

Spain

Distribution to Spain is being undertaken by a venture involving a Spanish partner,,, a medical publisher who currently operate in the pharma and primary care sectors. 

Mexico

DXS, together with two consulting companies operating in the healthcare sector, Virtuamedic and Milk Media, have begun the distribution and advertising sales in Mexico.

 

DXS has secured the services of a healthcare publisher with a brief to focus on the primary care market to conduct the R&D in Italy. The Italian product is in progress and discussions have begun with a prospective EPR partner.

 

Although by international standards South Africa is a small market in terms of size and revenue, Johnnic Communications, a ZAR 4.5bn publisher, has taken an exclusive licence to market DXS as its sole electronic publishing solution for its healthcare publishing business in South African. The Netcare hospital group have requested the DXS system to be integrated into their new SAP HIS system.

 

Principal competitors in the clinical and drug information market are Reed Elsevier, Wolters Kluwer, First DataBank (a subsidiary of the Hearst Corporation), Micromedex (a Thomson Corporation company), UpToDate and ePocrates. The remainder of the competition stems from small, specialised providers of drug or clinical information. Traditionally, due to the complexity of medicine, the main consumers of medical information have sourced their content from a range of specialist content providers. Consequently, no single content publisher could claim to dominate the market. However, since evidence is now strong that new-generation CDS systems have real benefits and are in strong demand, it is likely that competitors are all involved in urgent efforts to provide fully integrated solutions. This said, DXS has a significant competitive advantage.

 

While it is possible that a competitor may seek to attack DXS's position, the Directors believe that the technological lead is such that competitors are more likely to seek to acquire the Company rather than attack it. 

 

The DXS system has taken over six years of continuous development, undertaken by the Digihealth team in SA at a total cost of some £3.7m. The intellectual property, which resides in Digihealth, has been exclusively licensed to the company which holds the worldwide rights, at £12,000 p.m.  The licence is for an indefinite term and the Company has the option to acquire the Intellectual Property outright for the principal sum of £1m. This option is exercisable by the Company for a 5 year period, due to expire on 16 July 2012.

 

DXS International plc was incorporated in June 2007 as a holding company and has not yet completed its first trading year.  The results for DXS (UK) Ltd, the Company's trading subsidiary are set out in Part V. A pro-forma Group balance sheet is also set out in Part V.  The trading performance of DXS (UK) Limited, which excludes trading activity in South Africa which was undertaken by a separate company and will now be included in the Group, is summarised as follows:

 

	2006	2007	2008
Profit & Loss Account			(10 months)
For the years ended 30 June
And 10 months to 30 April 08	£	£	£
Turnover	1,002,354	918,102	826,699
	-----------	-----------	-----------
Gross profit	329,042	563,200	523,129
	-----------	-----------	-----------
Operating Loss	(831,917)	(42,360)	35,782
Loan obligation waived	0	1,250,073	0
	-----------	-----------	-----------
Profit/(loss) on ordinary Activities before interest	(831,917)	1,207,713	36,782
	-----------	-----------	-----------
Profit/(loss) on ordinary Activities before taxation	(856,708)	1,191,628	32,502
	-----------	-----------	-----------

The results cover a period during which the DXS product offering has been developed.

 

The core business of the Company is stable with the potential for steady growth. The current period is up on the equivalent period in the preceding year.  One key growth area is the retail pharmacy sector, which is expected to generate significant additional revenues when fully rolled out.  In addition, the Company is capitalising on the global healthcare growth opportunities by expanding internationally. This is anticipated to generate an additional £400,000 revenue in the next twelve months.

 

Building on the current foundations in place and growth into new territories, the Company has a target of £9.5 million turnover in three years with profits in excess of £3 million. To achieve this, the Company will need to reach 90,000 GPs, 9,000 Retail Pharmacies and 400 hospitals. This represents accessing 1.1%, 1.5% and 0.8% respectively of these markets globally. The Company has already achieved 22% of its GP target and 25% of the Retail Pharmacy market.

 

Following an extensive reconstruction of the original DXS group, the Company undertook a private placings which raised a gross amount of £619,000 before costs.

 

The Directors of the Company are:  

 

Bob Sutcliffe is a Chartered Accountant who has strong financial and leadership skills, developed in both public and private sectors. His roles have included Finance Director, Commercial Director, Managing Director, Chief Executive and Chairman. More recently he has used his experience as an interim executive, managing change processes and turnaround.

 

David is the founder of DXS. An entrepreneur by nature, David has initiated a number of businesses in the information, technology and communication (ITC) sector. He was a founding member of the Future Group (Pty) Ltd., a diverse South African communication group with range of media subsidiaries and holdings. David was a prominent member of the management team that grew the company from 10 to 200 employees over a four year period. For the past 7 years, David has dedicated himself to building DXS.

 

John has a BSc degree from California State University in Northridge and a Masters degree in Business Administration from St Thomas University in Minnesota.  With extensive experience in healthcare technology and content distribution globally, John heads up DXS' international business development.

 

Following his various Sales Management roles, Steven joined DXS at its inception. Steven trained in the life sciences, is a holder of the CIM Professional Post-graduate Diploma in Marketing and Pharma Mini-MBA, and manages the UK business.  Steven has built DXS UK from zero to where it is today, including relationships with clinical system suppliers, content providers and all the UK revenue.  Steven brings significant experience in pharmaceutical promotion and electronic media to the DXS group

 

The Directors intend, where practicable for a company of its size and nature, to comply with the Combined Code; however, due to the size of the Group and the number of its employees, the Directors acknowledge certain provisions of the Combined Code will not be immediately adhered to, and perhaps never.

 

The Directors have established terms of reference for both audit and remuneration committees. The audit committee, chaired by Mr Sutcliffe, has primary responsibility for monitoring the quality of internal control and ensuring that the financial performance of the Company is properly measured and reported on and for reviewing reports from the Company's auditors relating to the Company's accounting and internal controls. The remuneration committee, chaired by Mr Sutcliffe, determines the terms and conditions of service, including the remuneration and grant of options to executive Directors and management under any future share option schemes and arrangements adopted by the Company.

 

The Company has adopted a code of directors' dealings appropriate for a company whose shares are admitted to trading on the PLUS-quoted market and will take all reasonable steps to ensure compliance by the Directors and any relevant individuals. The form of this code is substantially the same as the Model Code on share dealings contained in Annex 1 to Chapter 9 of the Listing Rules issued by the Financial Services Authority.

 

The Company has undertaken to enter into appropriate arrangements with Hugin (UK) Limited, a Primary Information Provider approved by the Financial Services Authority to disseminate regulatory information to the market.  This information is currently distributed by Bloomberg, Thomson Financial, Reuters, Telekurs, ADVFN and FT Interactive Data Europe.  It is also available to private investors through the Internet at www.plusmarketsgroup.com and via other licensed Internet vendors.

  

The Company has applied for and received confirmation from HM Revenue & Customs that it is a qualifying company for the purposes of the Enterprise Investment Scheme. The benefits of investing under the Enterprise Investment Scheme are set out in Part 6 of this Document.

 

The Company intends to adopt a management incentive share option scheme and to grant options under the scheme to recruit/retain/reward directors and key staff. It is proposed to grant options up to 15% of the ordinary issued share capital.  Any such scheme will be put before shareholders in general meeting prior to adoption. 

 

In the opinion of the Directors having made due and careful enquires the Group will have sufficient working capital for its present requirements for the next 12 months from the date of Admission. 

 

The Directors have no stated policy of the distribution of net earnings but intend to develop a policy commensurate with the performance of the Company.

 

Market Statisticson Admission

	Ordinary Shares of  GBP 0.0033 each
	£	Number
Authorised:	£200,000	60,606,060
Issued:	£76,306	23,123,181
	Preference Shares of £1 each
Authorised:	£50,000
Issued:	Nil

 

The interests of each Director and those of any person connected with them within the meaning of section 252 of the Companies Act 2006 ("Connected Person"), all of which are beneficial (except as noted below), in the share capital of the Company and the existence of which is known or could with reasonable diligence be ascertained by the Director as at 14th February  2008 are as follows:

 

	On Admission
	Ordinary Shares	%
David Immelman	3,605,174	15.59
Steven Bauer	386,368	1.67
John Abeln	623,126	2.69
Robert Sutcliffe	0	0%

     

In addition to the above, the following persons are interested (within the meaning of section 820 of the Companies Act 2006) directly and indirectly in 3 per cent of the issued share capital of the Company before admission:

 

Allottee	On Admission
	Ordinary Shares	%
R Holland	4,689,729	20.28
City & Merchant Equities Limited as nominee *1	3,604,269	15.59
S Greyvenstein	1,943,647	8.41
Cycnus Limited *2	1,201,923	5.20

 

*1 A South African investor is entitled to subscribe for shares in the Company as a result of the agreement to acquire DXS (UK) Limited, but is disputing ownership of its shares with a third party.  It is entitled to 3,604,269 shares in the Company but has not yet paid or taken them up.  In order to preserve the entitlement, the Company has issued shares totalling 3,604,269 to City & Merchant equities as nominee, pending the resolution of this dispute.  These shares will be cancelled if the dispute is not resolved.  The figures above include these shares. 

 

*2  Cycnus Limited is a trust company which is managed on a discretionary basis by Trustcorp Services Limited, a company authorised by the States of Jersey.  The fund is a discretionary trust wilth charitable aims including the provision of scholarships in Africa.

 

Save as disclosed above, no Director has any interest in or option over the share capital or loan capital of the Company or any of its subsidiaries nor does any person connected with the Directors or Senior Managers (within the meaning of section 252 of the Companies Act 2006) have any such interests, whether beneficial or non-beneficial.

 

The Directors have held the following directorships and/or been a partner in the following partnerships within the five years prior to the date of this document:

 

Current Directorships/partnerships:	Previous Directorships/partnerships over the last five years:
DXS International plc DXS (UK) Limited DXS Services Limited Digihealth (PTY) Limited	None

 

Current Directorships/partnerships:	Previous Directorships/partnerships over the last five years:
DXS International plc DXS (UK) Limited	None

 

John Abeln

Current Directorships/partnerships:	Previous Directorships/partnerships over the last five years:
DXS International plc	None

 

Current Directorships/partnerships:	Previous Directorships/partnerships over the last five years:
DXS International plc Beechwood Management Services Limited	The Brewton Group Limited Euro Parking Collection plc Show Presentation Services Limited ATS Technirent Limited Hire It Limited VFG plc (in administration)

 

Mr David Immelman was sequestrated in South Africa in 1985 and subsequently discharged.  Mr Robert Sutcliffe was a director of VFG plc, representing the institutional investor, which was placed in to administration in December 2002.

 

An investment in the Company may not be suitable for all recipients of this document.  Accordingly, investors are strongly advised to consult an investment adviser authorised under the Financial Services and Markets Act 2000.

General Risks

 

An investment in the Ordinary Shares is subject to a number of risks. Accordingly, prospective investors should consider carefully the risks attaching to the Company prior to making any investment decision.

 

The Company is not currently listed on a market and therefore it may be difficult for an investor to realise his investment and he may receive less than the amount paid for it and, as such, the Ordinary Shares should not be considered suitable as a short term investment. Investment in unquoted shares carries a higher degree of risk than an investment in shares quoted on the Official List.

 

Investors must be prepared to take a medium to long-term view of their investment. Substantial movement in the price of shares should not be expected until sufficient time has elapsed for the Company to demonstrate its ability to achieve its projections.

 

In addition to the other relevant information available to investors, the Directors consider the following risk factors to be of particular relevance to the Company's activities and to any investment in the Company. It should be noted that this list is not exhaustive and that other risk factors may apply.

 

Operating History.  Although the management is experienced, the Company has a short trading history in this marketplace upon which an evaluation of the Company and its prospects can be based. The Company's business must also be considered in light of the risks, expenses and problems frequently encountered by companies at an early stage of development.  Failure to achieve predicted quantities of DXS contracts and slower development of additional revenue streams such as advertising may result in revenues growing more slowly than anticipated.

 

Ability to Generate Revenues.  The business, while operating for the past six years, is at an early stage of revenue generation and as a result, aspects of its business strategy are not proven. At this stage the company cannot with certainty say that it will penetrate the Secondary Care market segment to the extent it has illustrative projections. Nor, can it with certainty predict it will achieve the penetration and critical mass required in the Primary Care segment overseas to attract the extent of promotional or advertising revenues upon which its revenue projections are based. Further, even if the Company is able to generate a sufficient number of hospital contracts as well as the required penetration in the Primary Care segment, the value and profitability of those contracts may not be sufficient to ensure the long-term well-being of the Company's international business strategy.

 

Competition. The Company currently has no direct competitors.  However, medical publishing world-wide is a substantial activity and it is possible that a larger and better funded competitor may seek to attack DXS's market position.

 

Forward-looking Statements. Certain statements in this Document may constitute forward-looking statements relating to such matters as projected financial performance, business prospects, new products, services and similar matters.  A variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements.

 

Dependence on Amount Raised. The Offer for Subscription dated 28 February raised a total of £171,000( before costs - certain professional advisers have received ordinary shares in the company in lieu of fees).  As a result, the Company has partially scaled back its business plan until further funding is made available.  The Company is seeking further finance from equity, loan finance and grant funding as alternatives in order to implement its plans in full.  

 

 

 

 

The Admission Document and Offer for Subscription (now closed) is available from City & Merchant Corporate Finance Limited, Warnford Court, Throgmorton Street, London, EC2N 2AT

 

The Principal Investor Relations Contact is David Immelman, the Chief Executive of the Company.

 

The Directors of DXS International plc take responsibility for this announcement.

 

David Immelman, DXS International plc

Unit 1 Abbey Business Park, Monks Walk, Farnham, Surrey, GU9 8HT,

T: 01252 719800,

 

Tim Lyle, PLUS Corporate Adviser

City & Merchant Corporate Finance Limited,

Warnford Court, Throgmorton Street, London, EC2N 2AT

T: 020 7101 7676

E: enquiries@cityandmerchant.com