The following information has been extracted from the Company's audited accounts for the period to 30 April 2008.
CHAIRMAN'S STATEMENT
Introduction
The Company was incorporated on 12th July 2007 to complete the purchase of DXS UK Limited with an effective date of 30th June 2007. Former shareholders of the Jersey incorporated DXS company will be aware of the necessity for the reconstruction of the DXS business and I am pleased to report the successful transformation of DXS into a UK plc, properly funded with a positive balance sheet and excellent prospects. My thanks go to all the shareholders and loan providers for their co-operation during this process.
As part of the reorganisation, the Intellectual Property rights of the DXS system were returned to Digihealth our sister company in South Africa. I am pleased to confirm that we hold an exclusive world wide licence and are able to purchase the IPR from Digihealth for £1m, which compares favourably with the £12,000/month licence fee and the approximately £3.7m which it cost to create the IPR. However, under UK accounting rules we are not able to add this valuable asset to our balance sheet.
The core business of the Company has achieved breakeven with the potential for continuing steady growth with the current period 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 global healthcare growth opportunities by expanding internationally. To achieve our revenue targets over the next three years, the Company will need to reach 90,000 GPs, 9,000 Retail Pharmacies and 400 hospitals which 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.
Financial Overview
* Following an extensive reconstruction of the original DXS group, the Company has undertaken a number of fundraising rounds and raised £619,000 which has assisted the Company in funding the entrance into new markets, where content has been sourced, products built and pilot sites installed.
*During this 10 month trading period, the consolidated accounts show a trading loss of £334,508. Of this £299,000 was directly attributable to international expansion and an additional £120,000 was attributable to the IPR license cost. The core DXS business in the UK is now profitable which is attributable to an increase in revenue in the UK of 27% with a decrease in both cost of sales and operating costs as a percentage of sales.
Trading Overview
* The DXS Group's aim has been to prove our business model in the highly regulated UK healthcare market by taking the UK business into profit and then, while continuing to grow the UK market, to begin establishing DXS in international markets.
* With the DXS user base reaching a critical mass in the UK market, the move towards engaging the Primary Care Trusts is being implemented with the first such contract at procurement stage. Anticipation for revenue growth in this sector is high.
* The recently launched new version of the DXS technology platform has also enabled the "Services" revenue to be triggered. This is where specific auxiliary healthcare providers such as hospitals, consultants and complimentary providers can promote their products and services to a GP in their locality and relevant to the patient's condition. The first sales have been secured and revenue expectations in this sector are anticipated to be substantial.
* Outsourcing development, content management, IT support, customer support and a degree of administration to South Africa still remains very cost effective.
Key Performance Indicators
|
| |||
|
Key performance indicators |
June 2007
(12 months) |
April 2008
(10 months) |
% Change |
|
GP users |
15000 |
20000 |
33% |
|
Retail Pharmacies |
2000 |
2500 |
25% |
|
Revenue for 10 months (equivalent period in 2007) |
733,635 |
929,093 |
27% |
|
Revenue for period |
918,102 |
929,093 |
|
|
Shareholders Equity |
(£569,604) |
£22,375 |
|
Notes to Key Performance Indicators:
* GP Users are key to building revenue. Increasing numbers of users attract increased revenue opportunity, the reason that discussions are at procurement stage with the first Primary Care Trust (PCT).
* Retail Pharmacies are a new revenue source and critical mass is again of great value. Via its integration agreements with pharmacy dispensing vendors, DXS has access to approximately 70% of all retail pharmacies in the UK. Currently the product has been installed in 25% of pharmacies.
Research and Development.
The DXS system has taken over six years of continuous development, undertaken by the Digihealth team in South Africa 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 £1 million.
Outlook
A tremendous amount of effort has gone into preparing the foundations for the way forward. Overall the Group is in a good position to exploit the opportunities it has created and identified.
The UK offers tremendous growth potential while the new territories are hot on its heels in implementing the already proven business model.
I am grateful for the efforts of our employees, shareholders and advisors over a complex period at the end of which we are now well positioned to take advantage of the growth opportunities open to us.
Bob Sutcliffe
Chairman
The directors present their annual report and the audited financial statements for the 10 month period ended 30th April 2008. The Chairman's statement which is annexed to this report includes a comprehensive review of the achievements of the Company, the Group's trading performance, financial position, and trading prospects.
Principal Activities
The Group's principal activities during the period were the development and distribution of clinical decision support tools to GPs and Retail pharmacies in the United Kingdom underpinned by the sale of e-detailing opportunities to the pharmaceutical industry.
Business review
A review of the Group's trading during the period, including research and development activity is included in the Chairman's Statement on pages 4 & 5. The Group's loss for the 10 month period ended 30th April 2008 was £334,508. This included £299,000 which was directly attributable to international expansion. An additional £120,000 was attributable to the IPR licence cost. The core DXS business in the UK is now profitable.
Principal Risks
Failure to achieve predicted quantities of DXS contracts and slower development of additional revenue streams such as PCT take-up may result in revenues growing more slowly than anticipated. The business is at an early stage of revenue generation and as a result aspects of its business strategy, such as PCT's, are not proven. At this stage the company cannot with certainty say that it will penetrate this market segment to the extent it anticipates nor can it with certainty predict it will achieve the penetration and critical mass required in the overseas markets to attract the extent of promotional or advertising revenues upon which its revenue projections are based. Medical publishing world-wide is a substantial activity and it is possible that a larger and better funded competitor may seek to attack DXS' market position.
Financial Instruments. At this stage the Company is not faced with risk relating to interest rates on loans, credit and liquidity risk. The company does outsource a certain part of its research and development to South Africa and therefore, assuming a considerable strengthening of the ZAR could be faced with foreign exchange risks. Alternatively a weakening ZAR currency could be to the company's benefit. The Company's principal debtors are "blue chip" pharmaceuticals and thus this is not deemed to be a major risk.
Corporate Governance. 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.
Payment of Creditors. While the company does not follow any standard payment practice, the company has agreed terms of payment with the majority of its creditors.
Going Concern In the opinion of the Directors the Company will have sufficient working capital for its present requirements for the next 12 months from the date of approval of these accounts.
Dividend. The Directors have no stated policy for the distribution of net earnings but intend to develop a policy commensurate with the performance of the Company.
Research and Development. The Company has an ongoing program of R&D and during the past 10 months has invested £299,000 on research and development into international expansion.
Directors. The Directors at the date of this report are detailed on page 6. The interests of the Directors as at 30 April 2008 were:
|
Director |
Ordinary Shares |
|
B Sutcliffe |
- |
|
D Immelman |
3,605,174 |
|
S Bauer |
386,368 |
|
J Abeln |
623,126 |
Share Options, Incentives and further Issues of Shares. 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.
|
COMPANY NUMBER: 6311313 | ||||||||
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DXS INTERNATIONAL PLC | ||||||||
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CONSOLIDATED PROFIT AND LOSS ACCOUNT | ||||||||
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FOR THE PERIOD 12 JULY 2007 TO 30 APRIL 2008 | ||||||||
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2008 |
| ||
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Notes |
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£ |
| ||
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|
|
|
|
|
|
| ||
|
Turnover |
2 |
|
|
|
929,093 |
| ||
|
|
|
|
|
|
|
| ||
|
Cost of sales |
|
|
(315,298) |
| ||||
|
|
|
|
|
|
-------------- |
| ||
|
Gross profit |
|
|
613,795 |
| ||||
|
|
|
|
|
|
|
| ||
|
Administrative expenses |
3 |
|
|
|
(940,283) |
| ||
|
Other operating income |
|
|
|
|
1,366 |
| ||
|
|
|
|
|
|
-------------- |
| ||
|
Loss on ordinary activities before interest |
|
|
(325,122) |
| ||||
|
|
|
|
|
|
|
| ||
|
Interest payable and similar charges |
4 |
|
|
|
(9,227) |
| ||
|
|
|
|
|
|
-------------- |
| ||
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Loss on ordinary activities before taxation |
|
|
|
|
(334,349) |
| ||
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|
|
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| ||
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Tax on profit on ordinary activities |
6 |
|
|
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(159) |
| ||
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|
|
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|
-------------- |
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Loss for the period |
10 |
|
|
|
(334,508) |
| ||
|
|
|
|
|
|
-------------- |
| ||
|
|
|
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| ||
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|
|
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|
|
|
| ||
|
Loss per share - basic and fully diluted |
17 |
|
|
|
(2.2)p |
| ||
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|
-------------- |
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All amounts relate to continuing activities.
All recognised gains and losses are included in the profit and loss account.
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DXS INTERNATIONAL PLC | |||||||||||||||||
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BALANCE SHEET | |||||||||||||||||
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AS AT 30 APRIL 2008 | |||||||||||||||||
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Consolidated |
Company |
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30 April 2008 |
30 April 2008 |
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Notes |
£ |
£ |
£ |
£ |
| |||||||||
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|
|
| |||||||||
|
Fixed assets |
| ||||||||||||||||
|
Intangible assets |
7 |
|
549,913 |
|
- |
| |||||||||||
|
Tangible assets |
8 |
|
2,242 |
|
- |
| |||||||||||
|
Investments |
9 |
|
- |
|
82,860 |
| |||||||||||
|
|
|
|
-------------- |
|
-------------- |
| |||||||||||
|
|
|
|
552,155 |
|
82,860 |
| |||||||||||
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Current assets |
| ||||||||||||||||
|
Debtors |
10 |
282,798 |
|
15,339 |
|
| |||||||||||
|
Cash at bank and in hand |
73,169 |
|
45,649 |
|
| ||||||||||||
|
|
|
|
|
-------------- |
|
-------------- |
|
| |||||||||
|
|
|
|
|
355,967 |
|
60,988 |
|
| |||||||||
|
Creditors: amounts falling due within one year |
11 |
(721,213) |
|
(121,473) |
|
| |||||||||||
|
|
|
|
|
-------------- |
|
-------------- |
|
| |||||||||
|
Net current liabilities |
(365,246) |
|
(60,485) |
| |||||||||||||
|
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|
|
|
-------------- |
|
-------------- |
| |||||||||
|
Total assets less current liabilities |
186,909 |
|
22,375 |
| |||||||||||||
|
|
|
|
|
|
|
|
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| |||||||||
|
Creditors: amounts falling due after more than one year |
12 |
|
(164,534) |
|
- |
| |||||||||||
|
|
|
|
|
|
-------------- |
|
-------------- |
| |||||||||
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|
|
|
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|
22,375 |
|
22,375 |
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-------------- |
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-------------- |
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Capital and reserves |
| ||||||||||||||||
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Called up share capital |
18 |
|
74,981 |
|
74,981 |
| |||||||||||
|
Share premium account |
19 |
|
281,902 |
|
281,902 |
| |||||||||||
|
Profit and loss account |
19 |
|
(334,508) |
|
(334,508) |
| |||||||||||
|
|
|
|
|
|
-------------- |
|
-------------- |
| |||||||||
|
Equity shareholders' funds |
22,375 |
|
22,375 |
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-------------- |
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-------------- |
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Approved by the Board for issue on 28 July 2008 |
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D Immelman |
| ||||||||||||||||
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Director |
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|
DXS INTERNATIONAL PLC |
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NOTES TO THE FINANCIAL STATEMENTS |
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FOR THE PERIOD 12 JULY 2007 TO 30 APRIL 2008 |
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1 |
Accounting policies |
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1.1 |
Accounting convention |
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The financial statements are prepared under the historical cost convention and in accordance with applicable accounting standards. |
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1.2 |
Going Concern |
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The directors are required under Financial Reporting Standard 18 to consider and disclose any material uncertainties that may cast doubt on the ability of the company and group to pay its debts as they fall due.
Whilst the balance sheet shows net current liabilities, the group has secured the committed support of certain creditors and shareholders which enable it to continue to trade as a going concern. DXS (UK) Limited is now profitable and the group continues its fund raising activities in conjunction with obtaining a quotation on PLUS Markets in order to further exploit market opportunities.
The Group is not however dependent on the raising of additional funds to continue as a going concern. Accordingly the directors concern it appropriate to prepare the financial statements on a going concern basis. |
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1.3 |
Basis of consolidation |
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The group financial statements consolidate those of the company and its subsidiaries using the acquisition method of accounting. All companies within the group make up their accounts to the same date.
Results of subsidiary undertakings acquired during the financial period are included from the effective date on which control is acquired. The separable net assets of newly acquired subsidiary undertakings are incorporated into the financial statements on the basis of the fair value to the group as at the effective date.
Acquired goodwill is capitalised and amortised over its estimated useful life of 20 years. |
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1.4 |
Turnover |
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Turnover represents amounts receivable for services net of VAT and trade discounts. |
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1.5 |
Tangible fixed assets and depreciation |
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Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows: |
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Plant and equipment |
3-4 years straight line |
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Computer software |
2 years straight line |
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1.6 |
Foreign currency translation |
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Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to profit and loss account. |
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1.7 |
Taxation |
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The taxation charge in the profit and loss account is based on the taxable profits for the period at current rates of taxation and takes into account any provision for deferred taxation. |
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1.8 |
Deferred taxation |
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Deferred tax is provided in full on timing differences arising from the different treatment of items for accounting and taxation purposes, which are expected to reverse in the future, calculated at current tax rates, where deemed material. Deferred tax assets and liabilities are not discounted. |
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2 |
Turnover |
|
Group
2008 | ||||
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|
|
|
|
|
|
|
£ |
|
|
Turnover is attributable for the following geographical markets and arose in the UK: | ||||||
|
|
United Kingdom |
|
826,699 | ||||
|
|
Other EU countries |
|
12,733 | ||||
|
|
African territories |
|
89,661 | ||||
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|
-------------- | ||||
|
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|
|
929,093 | ||||
|
|
The Group's net assets are all in the UK |
-------------- | |||||
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3 |
Operating loss |
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Operating loss is stated after charging: | ||||||
|
|
Consultancy expenses |
|
433,099 | ||||
|
|
Operating leases |
|
17,000 | ||||
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Licence fees |
|
120,000 | ||||
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Auditors' remuneration - statutory audit |
|
20,000 | ||||
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Auditors' remuneration - financial reporting advisory services* |
|
12,000 | ||||
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Auditors' remuneration - services relating to corporate finance transactions entered into or proposed to be entered into by the company* |
|
35,000 | ||||
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Directors' emoluments |
|
85,600 | ||||
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-------------- |
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* This amount has been debited to the share premium account |
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Auditors' remuneration for statutory audit includes £10,000 for the parent company. |
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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