Interim Results
System C Healthcare plc
25 January 2006
System C Healthcare plc: Interim Results
System C Healthcare plc ("the Company"), a leading independent provider of IT
implementation solutions for the UK healthcare sector, announces its unaudited
results for the six months ended 30 November 2005.
Financial Summary
• Turnover £8.6m (2004: £8.8m)
• Profit before tax and exceptional items £0.6m (2004: £2.1m)
• Profit before tax £0.4m (2004: £1.7m)
• Basic earnings per share 0.79p (2004: 2.62p)
• Operating cash outflow £0.3m (2004: £1.3m inflow)
• Net cash £7.0m (2004: £3.8m net debt)
• Interim dividend of 0.11 pence per share declared (see note 18)
For further information please contact
Jim Horsburgh, Chairman, or Ian Denley, Chief Executive Tel: 01622 691616
Brian Hudspith or Emma Burdett, The Maitland Consultancy Tel: 020 7379 5151
Half-Year Review
Trading Results
Six months to Six months to Year ended 31
30 November 2005 30 November 2004 May 2005
(unaudited) (unaudited) (audited)
£000 £000 £000
------------ ------------ ------------
Turnover 8,581 8,843 18,228
Total operating
expenses before
exceptional items (1) (8,240) (6,736) (14,735)
------------ ------------ ------------
Operating
profit before
exceptional items 341 2,107 3,493
Exceptional items (191) (360) (986)
------------ ------------ ------------
Operating profit 150 1,747 2,507
Net interest 250 (37) 25
------------ ------------ ------------
Profit before tax 400 1,710 2,532
------------ ------------ ------------
Note 1: Relates to cost of sales plus administrative expenses before exceptional
items.
Turnover was £8.6m in the six months ended 30 November 2005 (2004: £8.8m), with
an operating profit before exceptional items of £0.3m (2004: £2.1m) which
delivered a profit before tax of £0.4m (2004: £1.7m).
Review of Activities
As indicated in our December trading statement, delays to the National Programme
for IT have seriously impacted turnover and profitability for the six months
ended 30 November 2005. These delays have mostly affected the Services component
of the Company's business with a decline in demand for time and materials work
on NHS projects. We have responded rapidly to this change in the market, and
have introduced a new range of fixed-price services which we are now starting to
deliver into our major Local Service Provider ("LSP") customers. An example of
this is the deployment of replacement patient administration systems at a number
of trusts in the Midlands and the East of England, for which System C is taking
complete responsibility and ownership. The services team have been associated
with 20 major new trust-wide projects over the period.
Outside the core implementation related activities with LSPs, we continue to win
contracts directly from NHS Trusts, with 14 new contracts in the period. We have
also recently won two deployment contracts with other third-party suppliers.
The product capability of the Company has benefited from the continued
investment during the period. Work has been undertaken to upgrade the MedWay
Electronic Patient Record system to connect to the NHS Connecting for Health
central Choose & Book system which allows general practitioners to book hospital
appointments for their patients online. MedWay achieved its certification for
Choose & Book compliance, and implementations of the new version are planned to
begin in the second half of the year. We have also successfully launched new
products in the HealthData Suite which provide data validation, reporting and
management information systems configured specifically to support the healthcare
sector. Seven new NHS hospital trust customers have been secured for such
products in the six months to 30 November 2005, with renewable licence fee
agreements for the provision of such solutions.
In addition to the increased awareness of the Company's capabilities, and a
broadening customer base, the financial position of the Company has been
strengthened considerably by the flotation on AIM in June which provided £8.5 m
of net cash for the business. The strengthening of the balance sheet to a
position of £7.0m net cash at 30 November 2005 (£3.8m net debt at 30 November
2004) is particularly important for the Company's future growth and positioning.
Earnings per share and Dividends
Basic earnings per share for the six months ended 30 November 2005 of 0.79 pence
per share (2004: 2.62 pence) is explained in note 9 below.
Reflecting the Board's confidence in the Company's prospects in the medium term
and beyond, an interim dividend of 0.11pence per ordinary share is declared in
line with our policy stated at the time of the Company's flotation on AIM last
June. This will be paid on 14 March to those shareholders on the register at the
close of business on 17 February 2006 (see note 18).
Prospects
During the first six months of the current financial year we maintained capacity
during a period of high opportunity. However, the slippage in the National
Programme has had a significant impact on the outcome of the current financial
year. Although prospects for the medium term remain good, the Company is
restructuring to maintain profitability against slower market conditions at
present. With trading conditions in the second half of the year likely to be
similar to those in the six months ended 30 November 2005, we intend to reduce
our operating cost base in the second half. We intend to ensure that the
annualised operating cost base is reduced by between approximately £1.5m to
£2.5m depending upon market conditions. This reduction will mainly impact the
financial year ending 31 May 2007.
However, the Company has made considerable progress in terms of its market
positioning, and we remain confident that the medium term outlook for healthcare
IT is positive. Accordingly, we intend to maintain our operational and
development capacity with a core level of direct staff remaining focused on
revenue generating and product development activities. In summary, the Company
has a strong balance sheet and is well positioned to benefit from any upturn in
the healthcare IT sector and generate significant profitability in the medium
term and beyond.
Ian Denley - Chief Executive
Jim Horsburgh - Chairman
25 January 2006
Profit and loss account for the six months ended 30 November 2005
Six months Six months
ended ended
30 November 30 November Year ended
2005 2004 31 May 2005
Note (unaudited) (unaudited) (audited)
£ £ £
---------- ----------- ----------
Turnover 3 8,580,971 8,842,818 18,228,185
Cost of sales 3 (4,134,987) (4,286,383) (8,757,318)
---------- ----------- ----------
Gross profit 3 4,445,984 4,556,435 9,470,867
---------- ----------- ----------
Administration
expenses - before 3 (4,104,984) (2,449,477) (5,978,204)
exceptional items
Administration
expenses - exceptional 3,4 (190,632) (359,522) (986,004)
items ---------- ----------- ----------
Administration
expenses - total (4,295,616) (2,808,999) (6,964,208)
---------- ----------- ----------
Operating profit 3 150,368 1,747,436 2,506,659
Interest receivable and
similar income 5 345,067 157,420 351,830
Interest payable and
similar charges 6 (95,011) (194,953) (326,914)
---------- ----------- ----------
Profit on ordinary activities
before taxation 400,424 1,709,903 2,531,575
Tax on profit on ordinary
activities 7 267,472 (136,315) (421,882)
---------- ----------- ----------
Profit for the financial
period 667,896 1,573,588 2,109,693
Dividends and appropriations 8 (12,796) (34,271) (66,742)
---------- ----------- ----------
Retained profit for the
financial period 655,100 1,539,317 2,042,951
---------- ----------- ----------
Earnings per share (as restated)
Basic 9 0.79 2.62 3.48
Diluted 9 0.77 2.31 3.08
---------- ----------- ----------
The results above relate entirely to continuing operations
The Company has no recognised gains and losses other than the results above and
therefore no separate statement of total recognised gains and losses has been
presented.
There is no difference between the profit on ordinary activities before taxation
and the results for the periods stated above and their historical cost
equivalents.
Details of the restatement in respect of the earnings per share figures are
given in note 2.
Balance sheet as at 30 November 2005
Six months Six months
ended ended
30 November 30 November Year ended
2005 2004 31 May 2005
Note (unaudited) (unaudited) (audited)
£ £ £
---------- ----------- ----------
Tangible fixed assets 1,563,697 1,962,656 2,017,883
---------- ----------- ----------
Debtors 10 8,358,017 8,425,059 8,318,821
Cash at bank and in hand 9,450,289 332,261 1,223,242
---------- ----------- ----------
Current assets 17,808,306 8,757,320 9,542,063
Creditors: amounts falling
due within one year 11 (3,525,544) (4,137,584) (4,314,872)
---------- ----------- ----------
Net current assets 14,282,762 4,619,736 5,227,191
---------- ----------- ----------
Total assets less
current liabilities 15,846,459 6,582,392 7,245,074
Creditors: amounts falling
due after more
than one year 12 (1,024,511) (1,996,668) (1,520,488)
Provisions for
liabilities and charges 13 (97,683) (90,497) (233,895)
---------- ----------- ----------
(1,122,194) (2,087,165) (1,754,383)
---------- ----------- ----------
Net assets 14,724,265 4,495,227 5,490,691
---------- ----------- ----------
Called up share capital 14 884,594 3,795,630 3,821,683
Share premium account 15 9,624,055 3,774,613 -
Capital redemption reserve 15 3,127,023 134 134
Special reserve 15 - - 1,308,496
Own shares held in trust 15 (1,235,381) - -
Profit and loss account 15 2,323,974 (3,075,150) 360,378
---------- ----------- ----------
Total shareholders' funds 16 14,724,265 4,495,227 5,490,691
---------- ----------- ----------
Represented by:
Equity shareholders' funds 15 14,724,265 950,937 1,909,093
Non-equity
shareholders' funds 15 - 3,544,290 3,581,598
---------- ----------- ----------
Total 14,724,265 4,495,227 5,490,691
---------- ----------- ----------
Cash flow statement for the six months ended 30 November 2005
Six months Six months
ended ended
30 November 30 November Year ended
2005 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
---------- ---------- ----------
Operating profit 150,368 1,747,436 2,506,659
Depreciation of tangible fixed assets 490,699 424,964 892,135
Loss on disposal of fixed assets - - 17,498
Exceptional charge on share options - 359,522 986,004
Movement in provisions (136,212) 49,700 54,536
Decrease in stocks - 7,902 7,902
Decrease/(increase) in debtors 207,306 (2,012,417) (2,177,636)
(Decrease)/increase in creditors (1,047,234) 740,583 1,923,589
---------- ---------- ----------
Net cash (outflow)/ inflow
from operating activities (335,073) 1,317,690 4,210,687
Returns on investments and servicing
of finance
Interest received 355,552 157,420 341,345
Interest paid (95,011) (194,953) (326,914)
Dividends paid to non-equity
preference shareholders (123) - -
---------- ---------- ----------
Net cash inflow/(outflow)from
returns on investments and
servicing of finance 260,418 (37,533) 14,431
Taxation - 105,638 105,638
Capital expenditure and financial
investment
Purchase of tangible assets (42,252) (372,972) (890,728)
---------- ---------- ----------
Cash outflow from capital
expenditure and financial
investment (42,252) (372,972) (890,728)
---------- ---------- ----------
Net cash outflow/(inflow)
before financing (116,907) 1,012,823 3,440,028
Financing
Issue of equity share capital 11,059,720 - 138,362
Issue costs (1,354,461) - -
Payments to acquire own
shares held in trust (1,235,381) - -
Redemption of non-equity
preference shares (71,000) - -
Net repayment of financing loans (457,049) (473,689) (912,502)
---------- ---------- ----------
Net cash inflow/(outflow)
from financing 7,941,829 (473,689) (774,140)
---------- ---------- ----------
Increase in cash 7,824,922 539,134 2,665,888
---------- ---------- ----------
Notes to interim report and accounts
1. Status of interim report and accounts
The interim report and accounts are unaudited but have been reviewed by the
auditors and their independent review report is set out on page 18. The interim
report and accounts are not full accounts within the meaning of section 240 of
the Companies Act 1985.
The figures for the year ended 31 May 2005 have been extracted from the audited
annual report and accounts that have been filed with the Registrar of Companies.
The audit report on that annual report and accounts was unqualified and did not
contain a statement under Section 237(2) or (3) of the Companies Act 1985.
2. Accounting policies
The interim report and accounts have been prepared using the accounting policies
to be applied in the annual report and accounts for the year ending 31 May 2006.
These are consistent with those included in the annual report and accounts for
the year ended 31 May 2005 with the exception of the effect, if any, on the
adoption of FRS 21, FRS 22 and UITF 38.
Adoption of FRS 21 "Events after the balance sheet date"
The adoption of FRS 21 has not had any material impact on the Company. There is
no prior period adjustment required for the six months ended 30 November 2004
and the year ended 31 May 2005 in respect of dividends as all the requisite
conditions required by FRS 21 had been satisfied.
Adoption of FRS 22 "Earnings per share"
FRS 22 "Earnings per share" has been adopted, which prohibits the presentation
of non-standard earnings per share measures on the face of the profit and loss
account.
Following the conversion of the Company's convertible participating preference
shares (note 14), and in accordance with the requirements of FRS 22, the
earnings per share figures for the year ended 31 May 2005 as previously reported
of 5.15p per share and 4.30p per share respectively have been restated to
include the number of additional ordinary shares arising on conversion in the
calculation of the weighted average number of ordinary shares in issue during
the period.
Adoption of UITF 38 "Accounting for ESOP Trusts"
The System C Healthcare plc Employee Benefit Trust has been accounting for in
accordance with UITF 38 which requires the shares held by the trust to be
deducted from shareholders' funds. Further details of the System C Healthcare
plc Employee Benefit Trust are given in note 15.
3. Segmental reporting
The Company's sole activity is the design, development and implementation of
computer hardware and software. The directors consider it appropriate to analyse
the results and financial position of the Company as given below:
Six months ended 30 November 2005
(unaudited)
Development
and shared
Products Services services Total
£ £ £ £
-------- -------- -------- --------
Turnover 1,896,429 6,684,542 - 8.580,971
Cost of sales (1,434,141) (2,700,846) - (4,134,987)
-------- -------- -------- --------
Gross profit/(loss) 462,288 3,983,696 - 4,445,984
Administration expenses
- before exceptional items (155,617) (1,381,262) (2,568,105) (4,104,984)
-------- -------- -------- --------
Administration expenses
- exceptional items - - (190,632) (190,632)
-------- -------- -------- --------
Operating profit/(loss) 306,671 2,602,434 (2,758,737) 150,368
Net interest 56,852 - 193,204 250,056
-------- -------- -------- --------
Profit/(loss) before tax 363,523 2,602,434 (2,565,533) 400,424
-------- -------- -------- --------
Net assets 3,120,584 2,656,883 8,946,798 14,724,265
-------- -------- -------- --------
Six months ended 30 November 2004
(unaudited)
Development
and shared
Products Services services Total
£ £ £ £
-------- -------- -------- --------
Turnover 1,110,055 7,732,763 - 8,842,818
Cost of sales (1,322,905) (2,963,478) - (4,286,383)
-------- -------- -------- --------
Gross profit/(loss) (212,850) 4,769,285 - 4,556,435
Administration expenses
- before exceptional items (129,075) (921,462) (1,398,940) (2,449,477)
-------- -------- -------- --------
Administration expenses
- exceptional items - - (359,522) (359,522)
-------- -------- -------- --------
Operating profit/(loss) (341,925) 3,847,823 (1,758,462) 1,747,436
Net interest 8,282 (36,483) (9,332) (37,533)
-------- -------- -------- --------
Profit/(loss) before tax (333,643) 3,811,340 (1,767,794) 1,709,903
-------- -------- -------- --------
Net assets 1,877,729 2,166,269 451,229 4,495,227
-------- -------- -------- --------
Year ended 31 May 2005
(unaudited)
Development
and shared
Products Services services Total
£ £ £ £
-------- -------- -------- --------
Turnover 2,966,764 15,261,421 - 18,228,185
Cost of sales (2,330,372) (6,426,946) - (8,757,318)
-------- -------- -------- --------
Gross profit/(loss) 636,392 8,834,475 - 9,470,867
Administration expenses
- before exceptional
items (272,981) (1,918,823) (3,786,400) (5,978,204)
Administration expenses
- exceptional items - - (986,004) (986,004)
-------- -------- -------- --------
Operating profit/(loss) 363,411 6,915,652 (4,772,404) 2,506,659
Net interest 72,316 (62,666) 15,266 24,916
-------- -------- -------- --------
Profit/(loss)before tax 435,727 6,852,986 (4,757,138) 2,531,575
-------- -------- -------- --------
Net assets 2,044,603 2,504,230 941,858 5,490,691
-------- -------- -------- --------
The Products segment relates to business where the Company contracts directly
with local NHS trusts and other clinical organisations.
The Services segment relates to the business where the Company is subcontracted
to perform work on behalf of other organisations where the end customer is also
either the NHS or other clinical organisations.
Development and shared services relates to the Company's central research and
development activities and support services provided to the Products and Service
segments.
There is no difference between the geographical origin and destination of
turnover, all of which arises in the United Kingdom.
4. Exceptional items
Six months Six months
ended ended
30 November 30 November Year ended
2005 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
----------- ---------- -----------
UITF 17 charge - 318,725 806,645
UITF 25 charge - 40,797 179,359
Flotation costs 190,632 - -
----------- ---------- -----------
Total 190,632 359,522 986,004
----------- ---------- -----------
UITF 17 and UITF 25 charges
The charges above arise on the re-pricing of certain share options on 10
November 2004, together with the issue of additional share options during the
year ended 31 May 2005.
Flotation costs
Such costs comprise amounts incurred in connection the Company's admission to
AIM which have not been set off against the share premium account.
5. Interest receivable and similar income
Six months Six months
ended ended
30 November 30 November Year ended
2005 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
----------- ---------- -----------
Bank interest receivable 195,154 1,379 20,458
Other interest receivable 149,913 156,041 331,372
----------- ---------- -----------
345,067 157,420 351,830
----------- ---------- -----------
6. Interest payable and similar charges
Six months Six months
ended ended
30 November 30 November Year ended
2005 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
----------- ---------- -----------
Interest payable on bank
loans and overdrafts 1,950 47,194 67,858
Interest on financing loans 93,061 147,759 259,056
----------- ---------- -----------
95,011 194,953 326,914
----------- ---------- -----------
7. Tax on profit on ordinary activities
(a) Analysis of tax (credit)/charge in the period
Six months Six months
ended ended
30 November 30 November Year ended
2005 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
----------- ---------- -----------
Analysis of charge in the period
Current tax
United Kingdom corporation
tax at 19% on profit for the period - 262 3,887
----------- ---------- -----------
Total current tax charge (note 7b) - 262 3,887
Deferred tax
Origination and reversal
of timing differences (267,472) 136,053 417,995
----------- ---------- -----------
Total deferred tax (credit)/charge (267,472) 136,053 417,995
----------- ---------- -----------
Tax on profit on ordinary activities (267,472) 136,315 421,882
----------- ---------- -----------
(b) Factors affecting the tax charge in the period
The tax for the period differs from the standard rate of corporation tax in the
UK (30% for six months ended 30 November 2004 and the year ended 31 May 2004 and
19% for the six months ended 30 November 2005). The differences are explained
below:
Six months Six months
ended ended
30 November 30 November Year ended
2005 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
----------- ---------- -----------
Profit on ordinary
activities before tax 400,424 1,709,903 2,531,575
Profit on ordinary
activities multiplied by
standard rate of corporation
tax in the UK of 30% 120,127 512,971 759,473
----------- ---------- -----------
Effects of:
Expenses not deductible
for tax purposes 7,673 11,798 35,797
Differences between capital
allowances and depreciation 23,390 29,285 51,543
Unutilised losses/(losses
utilised) 476,746 (633,229) (1,084,135)
Other timing differences (232,664) 96,904 243,280
Other permanent differences (395,272) - -
Net difference between
standard rate of tax and
small company rate - (17,467) (2,071)
----------- ---------- -----------
Total current tax charge
(note 7a) - 262 3,887
----------- ---------- -----------
8. Dividends and appropriations
Six months Six months
ended ended
30 November 30 November Year ended
2005 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
----------- ---------- -----------
Dividend appropriations on
£1 preference shares - 4 7
Dividends/dividend
appropriations on £1
convertible participating
preference shares 12,796 34,267 66,735
----------- ---------- -----------
12,796 34,271 66,742
----------- ---------- -----------
Dividends on the Company's convertible participating preference shares were
calculated on a basis to give a constant rate of charge on the nominal value of
such shares until their conversion immediately prior to the admission of the
Company's ordinary shares to AIM as described in note 14.
Please see note 18 in respect of the declaration of dividends after 30 November
2005.
9. Earnings per share
Six months ended Six months ended (as restated)
30 November 30 November Year ended
2005 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
----------- ---------- -----------
Retained profit for the
financial period 655,100 1,539,317 2,042,951
Adjustment (See note a) 12,796 34,267 66,735
----------- ---------- -----------
Retained profit for the
period adjusted for
appropriations of
dividends on non-equity
shares 667,896 1,573,584 2,109,686
Number Number Number
----------- ---------- -----------
Weighted average number
of ordinary shares used
for calculating basic
earning per share (see
note b) 84,509,607 59,774,032 60,568,411
Potentially dilutive
shares arising from
share options (see note c) 2,089,602 7,768,908 7,890,523
----------- ---------- -----------
Used for calculating
diluted earning per share 86,599,209 67,542,940 68,458,934
Pence Pence Pence
----------- ---------- -----------
Basic earnings per share 0.79 2.62 3.48
Diluted earnings per share 0.77 2.31 3.08
----------- ---------- -----------
Details of the restatement in respect of the earnings per share figures are
given in note 2.
Note a: Adjustment relates to non-equity dividend/dividend appropriations on the
Company's £1 convertible participating preference shares which were converted
into ordinary shares immediately prior to the admission of its ordinary shares
to AIM as described in note 14.
Note b: Includes number of shares arsing from conversion of the Company's £1
convertible participating preference shares which were converted into ordinary
shares immediately prior to the admission of its ordinary shares to AIM as
described in note 14.
Note c: For the six months ended 30 November 2004 and the year ended 31 May
2005, the share price used to determine the number of potentially dilutive
shares arising from share options was 54p per share - i.e. the price at the time
of admission to AIM. The average share price for the six months ended 30
November 2005 has been used to calculate the number of potentially dilutive
shares arising from share options in the period ended 30 November 2005.
10. Debtors
30 November 30 November
2005 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
---------- ----------- -----------
Amounts falling due within one year:
Trade debtors 1,987,458 3,898,282 3,399,174
Other debtors 70,748 4,055 28,705
Prepayments and accrued income 5,220,334 3,428,775 4,078,937
Deferred tax asset (see below) 1,079,477 1,093,947 812,005
---------- ----------- -----------
8,358,017 8,425,059 8,318,821
---------- ----------- -----------
Prepayments and accrued income as at 30 November 2005, 30 November 2004 and 31
May 2005 include amounts of £4,804,391, £3,089,484 and £3,592,329 in respect of
revenue that has been recognised by the Company but which had not been invoiced
to the customer as at the period end. The balance as at 30 November 2005
reflects an additional £232,000 recognised following a review by management with
the corresponding amount included in turnover for the six month period then
ended. Of the total amount of accrued income as at 30 November 2005, 30 November
2004 and 31 May 2005, £1,904,788, £1,224,009, and £1,923,372 respectively were
due after more than one year at the end of each of the financial periods.
Deferred tax asset
30 November 30 November
2005 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
---------- ----------- -----------
Balance at start of period 812,005 1,230,00 1,230,000
Credited/(charged) to the
profit and loss account (note 7a) 267,472 (136,05 (417,995)
---------- ----------- -----------
Balance at end of period 1,079,477 1,093,947 812,005
---------- ----------- -----------
30 November 30 November
2005 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
---------- ----------- -----------
Deferred tax recognised comprises:
Accelerated capital allowances (86,741) (132,388) (110,131)
Unutilised tax losses 1,153,802 1,127,631 677,056
Short term timing
differences - 95,618 241,994
Other 12,416 3,086 3,086
---------- ----------- -----------
Deferred tax asset (net) 1,079,477 1,093,947 812,005
---------- ----------- -----------
The Company had no unrecognised deferred tax as at the end of each of the
financial periods above
11. Creditors - Amounts falling due within one year
30 November 30 November
2005 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
---------- ----------- -----------
Bank loans and overdrafts 414,887 1,248,535 12,762
Financing loans 972,091 895,796 933,163
Trade creditors 266,672 347,935 736,030
Other taxation and social security 759,556 1,015,149 1,311,804
Proposed dividends - - 166,923
Corporation tax 4,796 1,171 4,796
Accruals and deferred income 1,107,542 628,998 1,149,394
---------- ----------- -----------
3,525,544 4,137,584 4,314,872
---------- ----------- -----------
12. Creditors - Amounts falling due after more than one year
30 November 30 November
2005 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
---------- ----------- -----------
Financing loans 1,024,511 1,996,668 1,520,488
---------- ----------- -----------
13. Provisions for liabilities and charges
30 November 30 November
2005 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
---------- ----------- -----------
Dilapidations provision 65,648 49,700 54,536
UITF 25 provision 32,035 40,797 179,359
---------- ----------- -----------
97,683 90,497 233,895
---------- ----------- -----------
14. Called up share capital
Authorised
30 November 2005 30 November 2004 31 May 2005
(unaudited) (unaudited) (audited)
Number £ Number £ Number £
-------- -------- -------- -------- -------- --------
1p ordinary shares 405,000,000 4,050,000 65,000,000 650,000 65,000,000 650,000
£1 convertible
participating
preference shares - - 3,400,000 3,400,000 3,400,000 3,400,000
£1 Preference shares - - 71,000 71,000 71,000 71,000
-------- -------- --------
At end of period 4,050,000 4,121,000 4,121,000
-------- -------- --------
Allotted, called up and fully paid
30 November 2005 30 November 2004 31 May 2005
(unaudited) (unaudited) (audited)
Number £ Number £ Number £
-------- -------- -------- -------- -------- --------
1p ordinary shares
At beginning
of period 38,863,080 388,631 38,863,080 388,631 38,863,080 388,631
Allotments in
period 49,596,279 495,963 - - 2,605,253 26,053
-------- -------- -------- -------- -------- --------
At end of period 88,459,359 884,594 38,683,080 388,631 41,468,333 414,684
-------- -------- -------- -------- -------- --------
£1 convertible
participating
preference shares
At beginning
of period 3,335,999 3,335,999 3,335,999 3,335,999 3,335,999 3,335,999
Conversion in
the period (3,335,999) (3,335,999) - - - -
-------- -------- -------- -------- -------- --------
At end of period - - 3,335,999 3,335,999 3,335,999 3,335,999
-------- -------- -------- -------- -------- --------
£1 Preference shares
At beginning
of period 71,000 71,000 71,000 71,000 71,000 71,000
Redemption in
the period (71,000) (71,000) - - - -
-------- -------- -------- -------- -------- --------
At end of period - - 71,000 71,000 71,000 71,000
-------- -------- -------- -------- -------- --------
Total share capital 884,594 3,795,630 3,821,683
-------- -------- --------
Changes to share capital prior to admission to AIM
Immediately prior to the first admission of the Company's ordinary shares to AIM
on 28 June 2005 each convertible participating preference share converted into
6.27 1p ordinary shares and 93.73 1p non-voting deferred shares. The cumulative
unpaid dividend of £179,596 on the Company's convertible participating
preference shares was also settled through this conversion mechanism and the
corresponding entry has been credited to the share premium account.
Immediately following the conversion the Company repurchased the non-voting
deferred shares for nil consideration, cancelled them and re-designated the
unissued non-voting deferred shares as 1p ordinary shares.
The Company's redeemable preference shares were redeemed at par, plus the
cumulative unpaid dividend, three business days after the admission of the
Company's ordinary shares to AIM.
Placing of shares and admission to AIM
The first tranche of the Company's 1p ordinary shares were admitted to trading
on AIM on 28 June 2005 following the placing of 7.2m such shares at a price of
54p per share. A second admission of 11.1m ordinary shares of 1p each occurred
on 29 June 2005 also at a placing price of 54p per share.
15. Share premium account and reserves
Share Capital Own shares
premium redemption Special held Profit and
account reserve reserve in trust loss account
£ £ £ £ £
--------- --------- --------- --------- ---------
As at 1 June 2004 3,774,613 134 - - (4,967,463)
Retained profit for
the period - - - - 1,539,317
Credit on appropriation
of non-equity dividends - - - - 34,271
UITF17 charge on repricing/
grant of share options - - - - 318,725
--------- --------- --------- --------- ---------
As at 30 November
2004 (unaudited) 3,774,613 134 - - (3,075,150)
--------- --------- --------- --------- ---------
Retained profit for
the period - - - - 503,634
Credit on appropriation
of non-equity dividends - - - - 32,471
UITF17 charge on grant
of share options - 487,920
Premium on 1p ordinary
shares issued 112,309 - - - -
Transfer on capital
reduction (see below) (3,886,922) - 864,522 - 3,022,400
Additional transfer
on capital reduction
(see below) - - 443,974 - (443,974)
Accrual for non-equity
dividends previously
appropriated - - - - (166,923)
--------- --------- --------- --------- ---------
As at 31 May 2005
(audited) - 134 1,308,496 - 360,378
--------- --------- --------- --------- ---------
Retained profit for
the period - - - - 655,100
Credit arising on
conversion of the
Company's £1 convertible
participating preference
shares - 3,126,889 - - -
Premium arising on
settlement of accrued
dividend (see note 14) 179,596 - - - -
Premium on 1p ordinary
shares issued 10,798,920 - - - -
Issue costs (1,354,461) - - - -
Release of special
reserve (see below) - - (1,308,496) - 1,308,496
Employee benefits
trust - - - 1,235,381 -
--------- --------- --------- --------- ---------
As at 30 November
2005 (unaudited) 9,624,055 3,127,033 - 1,235,381 2,323,974
--------- --------- --------- --------- ---------
Capital reduction and transfer of special reserve
An amount of £3,886,922 was standing to the credit of the Company's share
premium account as at 31 January 2005 representing the aggregate of premiums at
which shares of the Company have been issued. This amount could not be
distributed by way of dividend but, with the approval, by special resolution, of
the Company's shareholders in a general meeting and an order of confirmation of
the High Court, it would be available to eliminate the deficit on the Company's
profit and loss reserve, and hence enable the Company to re-register as a public
company in advance of its admission to AIM.
Accordingly, on 4 April 2005 the directors made an application to the Court to
reduce the amount standing to the credit of the share premium account of
£3,886,922 to £nil, which would result in the elimination of the deficit by the
transfer of £3,022,400 to the profit and loss account and £864,522 to a special
non-distributable reserve, in accordance with the instructions of the Court.
In order to obtain the requisite confirmation from the Court for the reduction
of the share premium account, the Company furnished the Court with the required
undertakings to provide assurance in respect of the protection of the interests
of the Company's creditors, which included the transfer of such profits earned
by the company between 1 February 2005 and the effective date of the capital
reduction to the afore-mentioned special reserve. Profits earned by the Company
during this period amount to £443,974.
The Court order specified that the Company would be able to reduce the amount
credited to the special reserve equivalent to any increase in its paid up share
capital or its share premium account arising from new consideration.
Accordingly, the Company transferred £1,308,496 from the special reserve to the
profit and loss reserve following the placing and admission of its ordinary
shares to AIM.
Own shares held in trust
The System C Healthcare plc Employee Benefit Trust (the "Trust") holds 2,287,741
ordinary shares of 1p each with a cost of £1,235,381 and a market value as at 30
November 2005 of £1,092,396. The Trust acquired these shares at 54p each on the
placing and admission of the Company's ordinary shares to AIM.
The Trust used the funds loaned to it by System C Healthcare plc to meet the
obligations under the various share option schemes that the Company operates.
Share options are granted to the employees at the discretion of the Company and
shares are awarded to employees by the Trust in accordance with the wishes of
System C Healthcare plc. The loan provided to the Trust will be repaid from the
proceeds payable by employees to exercise share options that have been granted
to them.
16. Reconciliation of movements in shareholders' funds
Six months ended Six months ended Year ended
30 November 2005 30 November 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
----------- ----------- ----------
Profit for the financial period 667,896 1,573,588 2,109,693
Dividends and appropriations (12,796) (34,271) (66,742)
----------- ----------- ----------
Retained profit for the
financial period 655,100 1,539,317 2,042,951
Credit arising on appropriation
in respect of non-equity shares - 34,271 66,742
Accrual for appropriated
non-equity dividends - - (166,923)
UITF 17 charge on grant of
share options - 318,725 806,645
Proceeds from equity
shares subscribed at par 260,800 - 26,053
Premium on new share capital
subscribed (net of issue costs) 9,624,055 - 112,309
Own shares held in trust (1,235,381) - -
Redemption of preference shares (71,000) - -
----------- ----------- ----------
Net increase in
shareholders' funds 9,233,574 1,892,313 2,887,777
Opening shareholders' funds 5,490,691 2,602,914 2,602,914
----------- ----------- ----------
Closing shareholders' funds 14,724,265 4,495,227 5,490,691
----------- ----------- ----------
Analysis of shareholders' funds 30 November 30 November 31 May 2005
2005 2004
(unaudited) (unaudited) (audited)
£ £ £
----------- ----------- ----------
Equity shareholders' funds 14,724,265 950,937 1,909,093
----------- ----------- ----------
- £1 preference shares - 71,000 71,000
----------- ----------- ----------
- Cumulative appropriations in
respect of £1 preference shares - 120 123
----------- ----------- ----------
71,120 71,123
- £1 convertible participating
preference shares - 3,335,999 3,335,999
----------- ----------- ----------
- Cumulative appropriations in
respect of £1 preference shares - 137,171 174,476
----------- ----------- ----------
- 3,473,170 3,510,475
----------- ----------- ----------
Non-equity shareholders' funds - 3,544,290 3,581,598
----------- ----------- ----------
Total shareholders' funds 14,724,265 4,495,227 5,490,691
----------- ----------- ----------
17. Analysis of net funds/(debt)
30 November 30 November
2005 2004 31 May 2005
(unaudited) (unaudited) (audited)
£ £ £
----------- ----------- ----------
Cash at bank and in hand 9,450,289 332,261 1,223,242
Bank overdraft (414,887) (1,248,535) (12,762)
----------- ----------- ----------
Net cash/(overdraft) 9,035,402 (916,274) 1,210,480
Financing loans due within
one year (972,091) (895,796) (933,163)
Financing loans due in
more than one year (1,024,511) (1,996,668) (1,520,488)
----------- ----------- ----------
Net funds/(debt) 7,038,800 (3,808,738) (1,243,171)
----------- ----------- ----------
18. Post balance sheet events
On 17 January 2006, the directors declared an interim dividend for the period
ended 30 November 2005 of 0.11p per ordinary share. This interim dividend has
not been reflected in the profit and loss account to 30 November 2005 in
accordance with the requirements of FRS 21 as the requisite approvals had not
been obtained at that date. The directors expect that the dividend will be paid
on 14 March 2006.
Independent review report to System C Healthcare plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 November 2005 which comprises the summarised profit and
loss account, summarised balance sheet information as at 30 November 2005,
summarised cash flow statement and the related notes. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the financial
information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the AIM rules.
The accounting policies are consistent with those that the directors intend to
use in the preparation of the next annual financial statements.
The maintenance and integrity of the System C Healthcare plc web site is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the interim report
since it was initially presented on the web site. Legislation in the United
Kingdom governing the preparation and dissemination of financial information may
differ from legislation in other jurisdictions.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of management and applying analytical
procedures to the financial information and underlying financial data and, based
thereon, assessing whether the disclosed accounting policies have been applied.
A review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than an
audit and therefore provides a lower level of assurance. Accordingly we do not
express an audit opinion on the financial information. This report, including
the conclusion, has been prepared for and only for the company for the purpose
of compliance with the AIM rules and for no other purpose. We do not, in
producing this report, accept or assume responsibility for any other purpose or
to any other person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 November 2005.
PricewaterhouseCoopers LLP
Chartered Accountants
Gatwick
25 January 2006
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