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Interim Results for the six months ended 30 November 2005

Investors | RNS Announcements | Interim Results for the six months ended 30 November 2005

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

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 30 November 2005

Six months to 30 November 2004

Year ended 31 May 2005

 

 

(unaudited)

(unaudited)

(audited)

 

 

£000

£000

£000

Turnover

8,581

8,843

18,228

Total operating expenses before exceptional items1

(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  

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