Annual Financial Report
DXS INTERNATIONAL PLC
ANNUAL RESULTS for the
year ended 30 April 2020
The Board of DXS International plc (“the
Company”), the AQSE 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
2020.
Financial Highlights:
- Profit after tax rose nearly five-fold to £428,502, compared to
£85,096 in the previous year.
- Operating Profit of £308,423 (2019: Loss £137,228) achieved
mainly due to a reduction in overhead for completed projects.
- Turnover remained steady at £3,279,787 (2019: £3,346,343) in
spite of the unprecedented interruption to business as usual during
the last quarter of the financial year.
- New equity of over £1 million raised in February 2020 to be
applied to launch and ongoing development of new
solutions.
- Cash at bank £1,010,645 as of 30 April 2020.
Operational Highlights
- DXS’ Point of Care solution re-accredited for the new NHS
Digital Framework to receive central NHS funding.
- New Expert Hypertension solution, earmarked for UK and
International markets completed and ready for launch.
Current Trading Situation
Although the process continues, the current
public health situation has understandably delayed NHS
accreditation of our new products, as well as the planned launch of
our new Hypertension solutions. However, as the situation has begun
to normalise, we have restarted our ExpertCare pilot plans and
engagement with prospective pilot participants has to date been
very positive. We look forward to updating the market on this as
appropriate.
We are however pleased to announce that during
this lockdown period we were able to sustain our core revenue
stream, with only a marginal drop from the previous year, and
envisage revenue growth towards the end of this year. Even without
the funding the company remained cash positive.
We have used this period as an opportunity to
redirect our focus on bringing forward some solution development
initiatives for ExpertCare, MyVytalCare and CompleteCare that we
expect will reap rewards once the market normalises. These new
solutions will play an important role in helping clinicians manage
mounting chronic disease and patient backlogs created by the focus
on the current pandemic.
As an NHS accredited supplier, we were able to
conclude our agreement with NHS Digital for the new GPIT Futures
framework for our current solution, DXS Point of Care, which became
effective in April 2020.
We remain focused on our overall strategy of
building significant revenue through our Expert Long-Term Care
solutions, into which we have been heavily investing for the past
five years. We remain confident and optimistic about the future
growth of the business, and this is supported by our own organic
investment into its development of £904,503 during the year,
supported by new investors committing over £1 million in February
this year.
David Immelman (Chief Executive) commented:
“The Covid-19 pandemic brought with it a host of
new business challenges. In this regard I am proud to say that both
our management and staff are facing these new challenges with great
tenacity and resolve. Over the past months we have been able to
introduce seamless home working protocols and procedures with only
minimal disruption to productivity. Additionally, despite our
ongoing business continuity efforts we have been working hard at
laying the groundwork for our ISO 270001, ISO 22301 and ISO 2000
accreditation which we hope to achieve in the final quarter of the
year.
At the same time, we have been completing the
clinical and technical designs for the next version of our
ExpertCare Hypertension solution while also steering the solution
through the arduous Medicines and Healthcare products Regulatory
Agency (MHRA) assessment, as ExpertCare Hypertension is classed as
a medical device. This process is well advanced. I am convinced
that these efforts together will place us on an increasing sound
footing enabling us to deliver greater shareholder value in the
next period.”
The Directors of DXS International plc accept
responsibility for this announcement.
Contacts :
David
Immelman
01252 719800DXS International plcwww.dxs-systems.com
Corporate AdvisorCity &
Merchant
020 7101 7676David 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
2020.
Report of the Directors
The directors present their annual report and
the audited financial statements for the year ended 30 April 2020.
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.
The group continues to invest in research and
development both locally and internationally and during this
financial year has invested £904,503 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
hypertension solution, while delayed due to COVID-19, is market
ready.
Two other new products, also delayed, are
targeted to be launched to market during the course of the
year.
Subsequent to year end the company received a
COVID loan of £190,000.
Financial Instruments
The Directors believe that there is no material
risk arising in respect of interest rates on loans, credit and
liquidity.
Dividend
The Directors do not recommend a dividend.
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.
Directors’ Responsibilities to Auditors
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.
So far as the director is aware, there is no
relevant audit information of which the company’s auditor is
unaware.
Approved by the board and signed on its behalf
by:
D A ImmelmanDirector
15 July 2020
Strategic Report
Section 172 Report
Section 172 of the Companies Act requires that a
director of the company is managing in the best interests of all
stakeholders – Customers, Employees and Shareholders.
In the spirit of above, the Directors of DXS
International plc, strive to maintain a reputation for high but
fair standards in the best interest of its stakeholders.
Our primary focus is on our Customers and here
we regard our relationships and channels of communications of
paramount importance. We operate in a sensitive environment,
healthcare, and as such ensure that we meet all the standards
required by our Customers, such as Information Governance and
Clinical Safety. In addition, we are in the process of complying
with ISO which assures an overarching good governance approach to
all operations.
The Board is focused on delivering value for
Shareholders underpinned by motivated Employees delivering above
average delivery of solutions and service to Customers. In
achieving the foregoing, the company focuses on continued
innovation via a policy of research and development funded through
organic investment plus capital raises, as agreed at shareholder
meetings, and supported by clearly communicated vision and
direction.
In our communication to Shareholders the Board
is clear in terms of its short, medium and long-term strategy and
maintains an open-door approach to Shareholders seeking additional
clarity on any issue. The Board release notices on a regular basis
informing Shareholders of developments in areas of business
progress, non-confidential strategic decisions and any change to
company policy. Risks and opportunities are set out in this
strategic review.
The Group is small and while clear management
structures are in place all Employees, if required, have direct
access to the Executive Directors on a daily basis and, if
necessary, to the Chairman. The group retains HR services to ensure
the fair and equitable treatment of Employees. The company promotes
a policy of promoting from within supported by training and
mentorship. We encourage diverse thinking and recognise strengths
and contribution to the business. Finally, we recognise that as a
responsible organisation we identify and deliver on our social
responsibility.
Review of the company’s
business
The company's profit after tax is £428,502 (2019
- £85,096). The pre-tax Profit before tax amounts to £239,307 (2019
Loss (£199,615)). The company has a credit of £189,195 for UK
Corporation Tax (2019 credit- £284,711) for the year.
The profit after tax for the year was increased
by £343,406 allowing for a significant investment into R&D of
£904,503. Considering the overall impact of COVID-19, revenue
remained robust with only a marginal drop of 2.5% in revenue.
Being an accredited NHS solutions provider, DXS
has well-established business continuity and disaster recovery
protocols in place. These were triggered during the early stages of
the COVID-19 outbreak and at this point, all our staff with the
exception of one, both in the United Kingdom and South Africa are
successfully working from home and the company remains fully
operational.
Although the framework agreement for GPIT
Futures (the revised NHS Digital accredited supplier initiative)
was signed in March 2020, there are delays in moving onto the new
pricing plan which could increase revenue on the current user base
by approximately £200,000 p.a.
It should be noted that currently the recently
signed GPIT Futures framework agreement, only covers DXS’ core
solution, DXS Point of Care. There have been delays in completing
accreditation for the new DXS solutions where we expect three new
DXS solutions will be centrally funded.
Following a successful fundraise of more than £1
million in February 2020, our planned launch of our long-term
condition solution has been delayed due to the current pandemic. We
have utilised this time to add certain enhancements to these
solutions which we believe will increase the attractiveness of our
offering once the market reopens for business as usual.
Our strategy remains aligned with both the new
NHS Long Term Plan and opportunities 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.
This seems unlikely, particularly with the current pandemic
highlighting the need for clinicians to operate using digital
technologies. We are also confident that our new Hypertension
solution can play a significant role in assisting already
overloaded clinicians to manage patient backlogs as the situation
begins to normalise.
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 the launch of market ready new products once
the current situation normalises.
While the country is moving to easing of
restrictions, the impact of COVID-19 on business going forward
remains uncertain, and can impact the GPIT Futures accreditation of
our new solutions as well as a slower than anticipated access to
market of our new Hypertension solution.
In addition, our plans for expansion outside of
the UK mitigate this risk.
Analysis of Business during Year Ending
April 2020
While revenue was marginally below expectations
largely due to the unprecedented pandemic and business as usual
being put on hold, profit increased significantly by £316,406. This
was due to some projects being completed and related expenses being
rationalised resulting in reduced costs.
Financial KPI
- Group Revenue of £3,279,787 has decreased 2.5%. This was
largely due to the unprecedented pandemic and business as usual
being put on hold. Definition: Total Group sales including
distribution of clinical decision support to General Practitioners
and the licensing of DXS to CCGs and healthcare publishers.
Includes the sale of medicine education slots to the Pharmaceutical
industry.
- Underlying Group Profit After Tax increased by £316,406. This
was mainly due to a reduction in overhead for completed projects.
Definition: Underlying profit provides information on the
underlying performance of the business.
- Depreciation and amortisation of deferred Research and
Development expenditure in 2020 was £571,562 and in 2019 was
£530,292.
- Earnings Per Share 2020 1.1p, 2019 0.2p. Definition: Earnings
per share is the underlying profit divided by the weighted average
number of ordinary shares in issue.
- ROE 2020 16%, 2019 4%. 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 which include
share capital, share premium, provision for costs of share option
awards and retained earnings. Due to the significant share issue in
February 2020, the calculated ROE 2020 has excluded this
increase in share capital and share premium from the ROE
calculation as the directors believe that the results for the year
were unaffected by the proceeds of the share issue.
Approved by the board and signed on its behalf
by:
D ImmelmanDirector15 July
FINANCIAL STATEMENTS
INCOME STATEMENT
Year ended 30 April 2020
|
|
2020Continuing Operations |
|
2019Continuing
Operations |
|
|
|
|
|
|
|
£ |
|
£ |
Turnover |
|
3,279,787 |
|
3,346,343 |
Cost of Sales |
|
(318,424) |
|
(385,426) |
|
|
_________ |
|
_________ |
Gross Profit |
|
2,961,363 |
|
2,960,917 |
Administrative
Costs |
|
(2,085,776) |
|
(2,568,074) |
Depreciation and
Amortisation |
|
(571,562) |
|
(530,292) |
|
|
_________ |
|
_________ |
Operating
Profit/(Loss) |
|
304,025 |
|
(137,449) |
Interest received and similar
income |
|
4,398 |
|
221 |
|
|
_________ |
|
_________ |
|
|
308,423 |
|
(137,228) |
Interest payable and similar
expenses |
|
(69,116) |
|
(62,387) |
|
|
_________ |
|
_________ |
Profit/(Loss) on ordinary activities before
taxation |
|
239,307 |
|
(199,615) |
Tax on profit/loss ordinary
activities |
|
189,195 |
|
284,711 |
|
|
_________ |
|
_________ |
Profit for the
period |
|
428,502 |
|
85,096 |
|
|
========= |
|
========= |
Profit per
share |
|
|
|
|
- basic |
|
1.1p |
|
0.2p |
- fully diluted |
|
1.1p |
|
0.2p |
|
|
========= |
|
========= |
Statement of Other Comprehensive Income
Year ended 30 April 2020
|
|
2020£ |
|
2019£ |
|
|
|
|
|
Profit for the
year |
|
428,502 |
|
85,096 |
Other comprehensive income
Tax
on components of other comprehensive income |
- |
|
- |
|
|
_________ |
|
_________ |
Total comprehensive income
for the year |
428,502 |
|
85,096 |
|
|
========= |
|
========= |
Statement of Financial Position
Year ended 30 April 2020
|
Group 2020 |
Group 2019 |
Company 2020 |
Company 2019 |
|
|
£ |
£ |
£ |
Fixed
Assets |
|
|
|
|
Intangible
Assets |
4,007,411 |
3,673,141 |
- |
- |
Tangible Assets |
1,105 |
3,060 |
- |
- |
Investments |
- |
- |
2,010,500 |
1,899,384 |
|
_________ |
_________ |
_________ |
_________ |
|
4,008,516 |
3,676,201 |
2,010,500 |
1,899,384 |
|
_________ |
_________ |
_________ |
_________ |
Current
assets |
|
|
|
|
Debtors: amounts
falling due within one year |
759,405 |
1,688,720 |
91,051 |
46,638 |
Cash at bank and in
hand |
1,010,645 |
55,242 |
911,854 |
41,344 |
|
_________ |
_________ |
_________ |
_________ |
|
1,770,050 |
1,743,962 |
1,002,905 |
87,982 |
Creditors: amounts
falling due within one year |
(1,180,704) |
(1,518,021) |
(37,360) |
(69,817) |
|
_________ |
_________ |
_________ |
_________ |
Net current
assets |
589,346 |
225,941 |
965,545 |
18,165 |
|
_________ |
_________ |
_________ |
_________ |
|
|
|
|
|
Total assets less
current liabilities |
4,597,862 |
3,902,142 |
2,976,045 |
1,917,549 |
|
|
|
|
|
Creditors: |
|
|
|
|
Amounts falling due
after more than one year |
(376,289) |
(464,951) |
- |
- |
Deferred income |
(571,094) |
(1,193,611) |
- |
- |
|
_________ |
_________ |
_________ |
_________ |
|
3,650,479 |
2,243,580 |
2,976,045 |
1,917,549 |
|
========= |
========= |
========= |
========= |
Capital and
reserves |
|
|
|
|
Called up share
capital |
159,246 |
116,099 |
159,246 |
116,099 |
Share Premium |
2,676,321 |
1,752,299 |
2,676,321 |
1,752,299 |
Share option
reserve |
173,808 |
162,580 |
173,808 |
162,580 |
Retained
earnings |
641,104 |
212,602 |
(33,330) |
(113,429) |
|
_________ |
_________ |
_________ |
_________ |
Shareholders’
funds |
3,650,479 |
2,243,580 |
2,976,045 |
1,917,549 |
|
========= |
========= |
========= |
========= |
|
|
|
|
|
As permitted by Section 408 of the Companies Act 2006, the
Income Statement of the parent company is not presented as part of
these financial statements. The Company made a profit of £80,099
for the year (2019 Loss £393,488).
Notes to the Financial StatementsYear ended 30
April 2020
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, (Central Commissioning
Groups) 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.
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, other than
specific identifiable 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. Developed products are
for use within the NHS and other medical institutions within both
the UK and internationally. The Group is already a supplier of
services to the NHS.
Goodwill arising on business combinations is
capitalised, classed as an asset on the balance sheet and amortised
over its useful life. The period originally chosen for
writing off the current goodwill was 20 years because the directors
believed that this was the period of time for the benefit to be
received. Any future goodwill purchased will be amortised over a
period which the directors believe to be applicable to that
goodwill purchased.
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) Grants
Government Grants, including non - monetary
grants, shall not be recognised until there is reasonable assurance
that:
(a) the entity
will comply with the conditions attached to them; and
(b) the grants
will be received.
An entity shall recognise grants either based on
the performance model or the accrual model. This policy choice
shall be applied on a class-by-class basis.
(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.
(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 reserve 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.
The Group has used a level of judgement around
key assumptions on the technical feasibilty of products under
development, the consideration of the estimated useful lives of
these products and a degree of estimate in respect of the
capitalised attributable cost.
(n) Reduced disclosure
DXS International PLC meets the definition of a
qualifying company under FRS 102 paragraph 1.12(b) and has
therefore taken advantage of the disclosure exemption in relation
to the parent cash flow statement.
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