28 September 2006
IMS Maxims Plc
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2006
Chairman's Statement
- Increased Turnover by 65%
- Return to Profit
- Positive cash flow from operating activities
As we expected a year ago, the increased level of interest in our products,
services and capabilities has impacted positively upon the company's turnover
in the year ended 31 March 2006. Specifically, the 65% increase in turnover reflects a
significant increase in sales orders, as well as some consultancy work for BT
in the London Local Service Providers (LSPs) region and Accenture in the
Eastern LSP region. Also, we have achieved an annual reduction in operating
expenses of over �1million and a decrease in our interest charges. As a result,
we are delighted to report a return to profit in 2006.
We remain committed to our core markets of hospitals in the UK and Ireland.
Within the NHS, as the delays from the LSPs in supplying acceptable solutions
to acute NHS trusts under the NPfIT have become more numerous, and as the
internal pressures on trusts to meet performance targets intensify, a number of
trusts have decided that they cannot wait any longer for new IT solutions.
These trusts have decided to meet their immediate needs by directly purchasing
products from the open market, whilst stating their intention to implement any
acceptable national solution in a few years time. Furthermore, it has now
become widely understood that the LSP product deliveries to acute trusts will
not provide the breadth of rich clinical functionality that was once expected
within any reasonable timescale. Consequently, an increasing number of these
acute trusts are now pursuing directly the purchase of such rich clinical
applications. This situation continues to provide an opportunity for your
company.
Our recently announcedthree year contract with BT (the LSP for the London area)
worth almost �5m for supply of four IMS clinical applications in Barking,
Havering and Redbridge NHS Trust (BHRT) is evidence of the above. This is the
largest single contract in our history and is a highly significant win for us.
It is also our first Connecting for Health (CfH) funded project, and is
material in ameliorating our financial situation. Moreover, our deliveries
against this contract are proceeding as scheduled and we can envisage a
situation whereby BHRT becomes a very good reference site for future
prospective customers.
However, the nature of the overall NHS market is such that there is a degree of
uncertainty and big changes usually do not occur rapidly. Therefore, it would
be unwise for us to anticipate signing similar contracts in the next six
months.
In Ireland, we have completed a major upgrade to our PAS product and this is
now being deployed to the first of our larger customers there. Initial reports
are very favourable and we expect that other customers will upgrade to the new
system in the coming months.
As a result of all of the above, we look forward to some further improvement in
your company's performance in the current year and we view the future with
renewed confidence.
D W MacDonald
Chairman
28 September 2006
Financial Review
Introduction
Turnover for the year of �3,827,000 (2005: �2,324,000) produced an operating
profit of �560,000 (2005: loss of �5,738,000). The group profit for the year
after interest and taxation was �80,000 (2005: loss of �6,516,000).
Exceptional items include an overall gain associated with the refinancing of
the business of �409,000. Amortisation of goodwill amounted to �279,000 (2005:
�279,000).
There was no charge to taxation for the year and tax losses available to offset
future profits are estimated at �8,100,000 (2005: �7,573,000).
The basic profit per share for the year was 0.03p (2005: loss per share of
4.3p).
Net liabilities of the group of �5,541,000 (2005: �5,436,000) include net
current liabilities of �2,899,000 (2005: �2,288,000).
Liquidity
The statement of cash flows illustrates that there was a decrease in cash for
the year of �537,000 (2005: increase of �620,000). This is stated after the
inflow of cash from operating activities of �195,000 (2005: outflow of �
1,470,000) and the outflow of cash for interest payments of �509,000 (2005: �
750,000).
Going concern
During the period the group was able to agree new repayment schedules which
combined with an operating profit, new finance received and cash generated by
sales revenue allows us to continue to meet our obligations going forward.
After making enquiries, the directors therefore have a reasonable expectation
that the group has adequate resources to continue in operational existence for
the foreseeable future.
Financial instruments
The group's principal financial instruments comprise long term loans, finance
leases, hire purchase contracts, preference shares, short term loans and
cash. The main purpose of these financial instruments is to raise finance for
the group's operations. The group has various other financial instruments such
as trade debtors and trade creditors that arise directly from its operations.
The group does not enter into derivative transactions (for example forward
currency contracts). It is, and has been throughout the year under review, the
group's policy that no trading in financial instruments shall be undertaken.
The main risks arising from the group's financial instruments are interest rate
risk, liquidity risk and foreign currency risk. The board has policies for
managing each of these risks and they are summarised below.
Interest rate risk
The group borrows in desired currencies at both fixed and floating rates of
interest. Finance lease receivables are held at fixed interest rates. The
group continues to monitor the interest profile to ensure that it is
appropriate. The group also invests in cash deposits at floating rate. The
group's exposure to interest fluctuations will continue to be monitored.
Liquidity risk
The group's objective is to maintain a balance between continuity of funding
and flexibility through the use of overdrafts, finance leases, preference
shares, hire purchase contracts and long term loans. Convertible loans have
been utilised during the period in response to the group's management of cash
flow requirements. Short-term flexibility is achieved by overdraft facilities
as well as short term loans.
Foreign currency risk
As a result of the significant investment in operations in Ireland, the group's
balance sheet can be affected by movements in the Euro/Sterling exchange rate.
Where possible the group seeks to mitigate the effect of this structural
currency exposure by borrowing in local currency.
The group also has transactional currency exposures. Such exposures arise from
sales or purchases by an operating unit in currencies other than the unit's
functional currency. It is not the group's policy to make use of derivatives.
On behalf of the board.
Stephen Casey
Financial Director
28 September 2006
Group profit and loss account
for the year ended 31 March
2006
Total Total
Restated
Notes 2006 2005
�000 �000
Group turnover 3,827 2,324
Cost of sales (376) (243)
----------- -----------
Gross profit 3,451 2,081
Selling and distribution costs (508) (946)
Administrative expenses (2,383) (6,873)
----------- -----------
Total operating profit / (loss) 560 (5,738)
Interest receivable 184 159
Interest payable and similar charges (664) (937)
----------- -----------
Profit / (loss) on ordinary activities
before taxation 80 (6,516)
Tax on profit on ordinary activities - -
----------- -----------
Profit / (loss) on ordinary activities
after taxation 80 (6,516)
Minority interests - equity 1 (4)
----------- -----------
Profit / (loss) for the financial year
attributable to members of the parent
company 81 (6,520)
--------- ---------
Basic and diluted profit / (loss) per
ordinary share 4 0.03p (4.3p)
Group Statement of Total Recognised Gains and Losses
2006 2005
Restated
�000 �000
Profit / (loss) for the financial year attributable to 81 (6,520)
members of parent undertaking
Exchange differences on retranslation of net assets of (186) (142)
subsidiary undertaking
----------- -----------
Total recognised gains and losses during the year (105) (6,662)
------ ------
Group Balance Sheet
at 31 March 2006
2006 2005
Restated
Notes �000 �000
Fixed assets
Intangible assets 2,814 3,093
Tangible assets 40 83
----------- -----------
2,854 3,176
------ ------
Current assets
Debtors: amounts falling due after more than one 1,232 1,686
year
Debtors: amounts falling due within one year 2,298 1,752
----------- -----------
Total debtors 3,530 3,438
Cash at bank and in hand 159 689
------ ------
3,689 4,127
Creditors: amounts falling due within one year
Other creditors (6,588) (6,289)
Convertible debt - (126)
------ ------
Total creditors: amounts falling due within one (6,588) (6,415)
year
------ ------
Net current liabilities (2,899) (2,288)
------ ------
Total assets less current liabilities (45) 888
Creditors: amounts falling due after more than 7 (5,453) (5,365)
one year
Convertible debt - (948)
------ ------
(5,498) (5,425)
Minority interests
Equity (43) (11)
------ ------
(5,541) (5,436)
----------- -----------
Capital and reserves
Called-up share capital 2,341 2,341
Share premium account 6,490 6,490
Merger reserve 3,600 3,600
Equity reserve 136 136
Profit and loss account (18,108) (18,003)
------- -------
(5,541) (5,436)
----------- -----------
Group Statement of Cash Flows
at 31 March 2006
2006 2005
Restated
Notes �000 �000
Net cash inflow / (outflow) from operating 3 195 (1,470)
activities
----------- -----------
Returns on investments and servicing of finance
Interest paid (690) (847)
Interest and similar income received 184 159
Interest element of finance lease rental payments (3) (10)
Convertible debt issue costs - (52)
----------- -----------
(509) (750)
----------- -----------
Taxation - -
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (6) (9)
----------- -----------
(6) (9)
----------- -----------
Acquisitions and disposals
Acquisition of minority shareholders interest - (35)
----------- -----------
Net cash outflow before financing (320) (2,264)
----------- -----------
Financing
Proceeds from issue of shares - 1,813
Share issue costs - (73)
Repayment of capital element of finance lease (11) (43)
rental payments
New long term loan 1,156 1,240
Repayment of capital element of long term loan (1,236) (1,044)
New loan from directors - 160
Repayment of short term loan to directors - (230)
Repayment of short term loan - (63)
Issue of convertible unsecured loan stock - 2,000
Redemption of convertible unsecured loan stock - (1,000)
Issue of convertible debt - 264
Redemption of convertible debt (126) (140)
----------- -----------
Net cash (outflow) / inflow from financing (217) 2,884
----------- -----------
(Decrease) / increase in cash (537) 620
----------- -----------
Notes to the preliminary statement
The financial information in the preliminary statement of results does not
constitute statutory accounts within the meaning of section 240 of the
Companies Act 1985 (the "Act"). The financial information for the year ended
31 March 2006 has been extracted from the statutory accounts for the year ended
31 March 2006 upon which the auditors opinion is unqualified. Statutory
accounts for the year ended 31 March 2006 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.
The policies have remained unchanged from the previous year apart from the
adoption of FRS 21 Events after the Balance Sheet date, and FRS 25 Financial
Instruments: disclosure and presentation. These changes are described in more
detail below.
FRS 21 Events after the Balance Sheet date (IAS10)
The adoption of FRS 21 has resulted in a change in accounting policy in respect
of proposed equity dividends. If the company declares dividends to the holders
of equity instruments after the balance sheet date, the company does not
recognize those dividends as a liability at the balance sheet date. The
aggregate amount of equity dividend proposed before approval of the financial
statements, which have not been shown as liabilities at the balance sheet date,
are disclosed in the notes to the financial statements. Previously, proposed
equity dividends were recorded as liabilities at the balance sheet date. There
has been no impact on these financial statements.
FRS 25 Financial Instruments: disclosure and presentation
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the entity
after deducting all of its financial liabilities.
Where the contractual obligations of financial instruments (including share
capital) are equivalent to a similar debt instrument, those financial
instruments are classed as financial liabilities. Financial liabilities are
presented as such in the balance sheet. Finance costs and gains or losses
relating to financial liabilities are included in the profit and loss account.
Finance costs are calculated so as to produce a constant rate of return on the
outstanding liability.
Where the contractual terms of share capital do not have any terms meeting the
definition of a financial liability then this is classed as an equity
instrument. Dividends and distributions relating to equity instruments are
debited direct to equity.
Compound instruments comprise both a liability and an equity component. At date
of issue, the fair value of the liability component is estimated using the
prevailing market interest rate for a similar debt instrument. The liability
component is accounted for as a financial liability. The residual is the
difference between the net proceeds of issue and the liability component (at
time of issue). The residual is the equity component, which is accounted for as
an equity instrument within equity reserves. The cumulative redeemable
preference shares in existence at 1 April 2005 and 31 March 2006 are compound
financial instruments.
The interest expense on the liability component is calculated applying the
effective interest rate for the liability component of the instrument. The
difference between this amount and any repayments is added to the carrying
amount of the liability in the balance sheet.
The implementation of this new accounting standard has required a restatement
of the prior year balance sheet and profit and loss account (see note 6).
2. Basis of preparation and going concern
The financial statements are prepared under the historical cost convention and
in accordance with applicable accounting standards.
The financial statements have been prepared on the going concern basis, which
assumes that the Group will continue to be able to meet its liabilities as they
fall due for the foreseeable future. In arriving at this conclusion the Board
has taken into account the fact that whilst the Group has net current
liabilities of around �2.9m and net liabilities of around �5.5m at 31 March
2006 these amounts include �0.9m of deferred income which will be released to
the profit and loss account in 2006/7 and �1.1m of redeemable preference shares
which were converted after the balance sheet date into ordinary equity share
capital at no cash cost to the Group. They have also considered the profits
reported in 2005/6, the cash flows that will accrue to the group from recent
contracts won whilst noting that operating expenses remain consistent with the
prior year. The Board believes that this will produce a net cash position that
can be comfortably accommodated within new financing facilities of up to �2m
recently negotiated.
3. Reconciliation of operating loss to net cash outflow from operating
activities:
2006 2005
Restated
�000 �000
Operating loss 560 (5,738)
Depreciation 50 59
Amortisation of intangible fixed assets 279 703
Write down of development costs - 2,705
Exchange differences (130) -
Exceptional gain (416) -
(Increase)/decrease in operating debtors and (92) 286
prepayments
Increase/(decrease) in operating creditors and accruals (56) 515
----------- -----------
Net cash outflow from operating activities 195 (1,470)
----------- ----------
Exceptional gain has been achieved due to the fact that during the year the
payment and interest profile of the secured loans was renegotiated with the
lender. This has led to benefits in respect of both the future repayment
profile and past and future interest charges which has been reflected in the
balance sheet classification of the debt and the current year profit and loss
account.
4. Profit / (loss) per share
The basic profit / (loss) per ordinary share is based on a profit of �81,000
(2005: loss �6,520,000) and on a weighted average number of shares in issue of
234,063,332 (2005: 152,637,031).
The diluted profit / (loss) per ordinary share is based on a profit of �81,000
(2005: loss �6,520,000) and on a weighted average number of shares in issue of
253,480,582 (2005: 152,637,031).
5 Reconciliation of net cash flow to movement in net debt
Group
2006 2005
Restated
�000 �000
Decrease in cash as per cash flow statement (537) 620
Repayment of capital element of finance leases 11 43
Issue costs paid on new loans - 52
New loans entered into 80 (196)
Repayment of short term loan - 63
Net directors loans - 70
Issue of convertible debt (secured and unsecured) 74 (1,124)
----------- -----------
Change in net debt resulting from cash flows (472) (472)
Other non-cash changes (137) (10)
----------- -----------
Movement in net debt (509) (482)
Net debt brought forward (8,164) (7,682)
----------- -----------
Net debt carried forward (8,673) (8,164)
----------- -----------
6 Prior year adjustment
All reserves, with the exception of the profit and loss account, are regarded
as non-distributable.
The movements in the year were as follows:
Restated
Share Profit Total
Share premium Merger Equity and loss shareholders'
Group capital account reserve reserve account funds
�000 �000 �000 �000 �000 �000
At 1 April 2004
- as previously reported 2,445 5,611 3,600 - (11,341) 315
Reclassification of (993) - - 136 - (857)
preference shares and
associated FRS 25 impact
1,452 5,611 3,600 136 (11,341) (542)
Exchange differences on - - - - (142) (142)
retranslation of net
assets of subsidiary
undertaking
Issue of ordinary shares 889 952 - - - 1,841
Share issue costs - (73) - - - (73)
Loss for the year - - - - (6,520) (6,520)
At 31 March 2005 2,341 6,490 3,600 136 (18,003) (5,436)
Exchange differences on - - - - (186) (186)
retranslation of net
assets of subsidiary
undertaking
Profit for the year - - - - 81 81
At 31 March 2006 2,341 6,490 3,600 136 (18,108) (5,541)
The 2005 loss after taxation of �6,376,000 has been restated as �6,516,000 in
accordance with the rules set out in FRS 25 in respect of dividends payable on
compound instruments.
7 Post Balance Sheet Events
On 5 July 2006 the Company issued 17,669,494 fully paid Ordinary Shares in the Company to redeem the 993,141 Convertible Cumulative
Preference Shares held.
Copies of the Annual Report and Accounts for the year ended 31 March 2006 will
be posted to shareholders on 28 September 2006 and copies will also be
available from the Company's registered office.
Press Contact
IMS MAXIMS plc IMS MAXIMS plc
Sandymount Clara House
Station Road Glenageary Park
Woburn Sands Co. Dublin
MK17 8RR Ireland
Tel: 01908 588800 Tel: +353 1 284 0555
Fax: 01908 588819 Fax: +353 1 284 0829
END
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