TIDMAVIA
RNS Number : 9807O
Avia Health Informatics PLC
18 October 2012
Avia Health Informatics Plc
("Avia" or the "Company")
Audited results for the year ended 31 March 2012
Avia Health Informatics Plc ("Avia" or the "Company") announces
its audited results for the year ended 31st March 2012. A copy of
the Company's annual report and accounts will shortly be posted to
shareholders and is available on the Company's website,
www.ahi-plc.com.
Summary:
Financial
-- Revenues of GBP2.3 million (2011: GBP2.1 million)
-- Gross margin of 29.6% (2011: 41%)
-- Focus on cost control with an annualised reduction of GBP400k in staff costs
-- Loss after Tax for the year of GBP0.67m (2011: GBP0.65m)
-- Net current liabilities of GBP497k at 31 March 2012
-- Net cash of GBP100k at 31 March 2012
Operational
-- PathFinderRF launched for Clinical Commissioning Groups ("CCG")
-- Successful piloting of Odyssey CareAssess in UK care homes
-- Odyssey FaceToFace launched in new emergency department and urgent care settings
-- Odyssey TeleAssess supplied to Swiss health insurance group
Enquiries:
Avia Health Informatics PLC +44 (0) 1494 618 503
Roger Lane-Smith, Non-Executive Chairman www.ahi-plc.com
Jeremy Dale, Chief Executive
Allenby Capital (Nominated Adviser +44 (0) 20 3328 5656
and Broker) www.allenbycapital.co.uk
Nick Naylor
Mark Connelly
CHAIRMAN'S REPORT
FOR THE YEAR ENDED 31 MARCH 2012
Introduction
The results for Avia Health Informatics plc ("Avia" or "the
Company") for the year ended 31st March 2012 are presented here.
The consolidated results for the year show turnover of GBP2.3
million (year ended 31 March 2011: GBP2.1 million), which resulted
in an operating loss of GBP0.7 million (2011: operating loss GBP0.5
million). The gross profit margin in the year was 30 per cent
(2011: 41 per cent). The loss per share for the year was 10.40
pence (2011: loss of 12.25 pence per year). The Company's cash
balance as at 31 March 2012 was GBP0.1 million (2011: GBP0.4
million).
Suspension
2011/12 was a very challenging year with sales activity below
expectation and insufficient control over expenditure. Following a
positive start to the year, sales activity unexpectedly
deteriorated in the latter part of Q1 and Q2. Sales of Odyssey
TeleAssess and Odyssey FirstAssess that had been anticipated in the
UK failed to materialise owing to changes in NHS policy and funding
and deployment issues in the prison sector. In addition, it became
increasingly clear that the Company's growth strategy lacked
sufficient market analysis and focus. In August 2011, trading in
the Company's shares was suspended following the revenue shortfall
impacting on the Company's financial position.
Staff across the Company demonstrated considerable commitment to
the Company's future and agreed to a salary deferment totalling
GBP200,000. The Executive Chairman took over direct responsibility
for managing UK and international sales activity from June 2011, as
well as operational activity for Plain Healthcare from September
2011. The Company shares were readmitted to AIM on the 1(st)
February 2012.
Company Strategy
Avia's strategy in 2011/12 was aimed at growing its business
through selling Odyssey clinical decision support hosted, web and
mobile applications and the PathFinderRF hosted solution, working
with UK and international partners and resellers to increase their
market penetration. Sales growth continues to be targeted through a
direct sales force and the engagement of resellers and added value
partners.
In June 2011 Avia's wholly owned subsidiary Plain Healthcare Ltd
("Plain") signed a contract with Nene Commissioning Group ("Nene")
in Northamptonshire to acquire the intellectual property rights
("IPR") to sell and manage future development of their PathFinder
software. PathFinderRF enables NHS Commissioning Groups and other
Primary Care Organisations to more effectively manage referral
decision making and documentation from GP surgeries to specialist
and community services. Consideration for the acquired IPR will be
paid solely in the form of sales royalties on the licences to use
the PathFinderRF software, on a decreasing sliding scale over a
five-year period. Avia will fund the continued development cost of
the software.
UK
A range of new software was launched during the year. This
included Odyssey CareAssess, designed as a hosted or locally
deployed service to meet the needs of nursing and residential care
homes. It enables both clinical and non-clinically trained staff to
offer care home residents high levels of care and support in the
event of illness or injury. A successful pilot with care homes in
Coventry demonstrated a substantially reduced level of referrals of
residents to GPs and emergency departments.
PathFinderRF was also launched. It is aimed at Clinical
Commissioning Groups (CCGs) to support improved quality and cost
savings through more effective GP referrals. Five CCGs purchased
PathFinderRF during Q4.
In addition, we continued to sell Odyssey TeleAssess, Odyssey
FacetoFace and Odyssey Reception to out of hours services and
walk-in centres, Odyssey FaceToFace to Emergency Departments and
Urgent Care Centres, and Odyssey FirstAssess to prisons.
International
Our strategy for international growth has been to identify and
work with distribution partners, technical partners who provide
interoperability with other health IT systems and strategic
partners that can provide access to global markets.
-- Odyssey TeleAssess supplied and implemented with a new health
insurance group client in Switzerland
-- Non-exclusive partnership agreement with K3 Healthcare / the
Institute of Remote Healthcare to promote the Odyssey software
range to providers of remote healthcare
-- New sales agent in Illinois, USA, to sell Odyssey CareAssess
software to nursing homes and assisted living facilities in the
United States
-- New Canadian reseller, The Stevens Company Limited, to sell the Odyssey range in Canada
Software Development
The Company has completed the development and launch of hosted
services, which allows global delivery of its clinical content. The
use of Service Orientated Architecture allows expansion of revenues
both from Odyssey and third party applications in all target
sectors. The Company has refined the delivery of the Odyssey
user-interface for use with iPad touchscreen technology to enhance
the mobility of the application.
The Odyssey clinical knowledge and business logic is now
available as a hosted service, enabling customers and users with
connectivity through the internet to utilise Odyssey clinical
content with a significant reduction in the cost of
deployment.Delivering the clinical knowledge via the Cloud
supported by Odyssey web services will enable our strategic
partners, resellers and end users to access the clinical knowledge
and business logic from any internet-connected location in the
world.
Board Changes
Nigel Leavy FCA relinquished his role as part time Finance
Director on 26th July 2011, becoming a Non-Executive Director. He
subsequently retired from the Board on 31(st) January 2012. The
Board wishes to thank Nigel for his services since the inception of
the Company.
On 17 August 2012, it was announced Barry Giddings, Executive
Chairman and Chief Executive, had stepped down from the Avia board
with immediate effect. It was also announced that I had agreed to
become Non-Executive Chairman and Jeremy Dale, Clinical Director,
had agreed to become Interim Chief Executive with both appointments
taking immediate effect. Further, it was announced that the Company
had commenced the search for a full-time Chief Executive and an
additional Non-Executive Director. I am pleased to announce the
appointment of Tim Morris, Managing Director of Plain Healthcare,
to the Avia Board as Operations Director and that the Board has
decided that Jeremy Dale will remain as Chief Executive.
Management
The management of the Company was restructured during 2011/12
with the creation of an Avia Management Team, but this was replaced
with a flatter and more focused management structure in August
2012:
Directors
-- Non-Executive Chairman Roger Lane-Smith
-- Chief Executive / Clinical Director Professor Jeremy Dale
(also Chairman and Clinical Director of Plain Healthcare)
-- Operations Director Tim Morris (also MD of Plain
Healthcare)
-- Non-executive director To be appointed
Senior Management
-- Financial Controller / Company Secretary: Paul Preece (also
Financial Director of Plain Healthcare)
In addition, following investment in the company by Advanced
Computer Software plc in September 2012 (see below) ACS has the
right to appoint a non-executive director to the Board at a time of
their choosing.
Funding
Net cash at 31 March was GBP0.1 million and the current cash
resources of the business remain constrained and as a result the
business remains subject to adverse trading swings. As a result of
the Company's cash position in August 2012, together the Company's
failed attempt to raise equity and/or debt funding in the short
term, it was announced on 4(th) September 2012 that ACS had made an
interest free loan to the company of GBP350K, for a term of three
years and convertible into 29.9% of the issued share capital
immediately following such conversion. At the time of announcement
I said that ""We are delighted to enter into the loan agreement
with ACS, a fast growing, well respected and substantial business
in the sector. The injection of capital into Avia will allow the
Company to trade through the short term working capital constraints
we have been experiencing and, following conversion of the loan, we
will have as our largest shareholder ACS, a business with
significant management expertise and financial stability - news
which should be welcomed positively by shareholders and existing
and potential customers alike."
Current Trading and Outlook
There are considerable opportunities for PathFinderRF and
Odyssey sales as Clinical Commissioning Groups become fully
established in England, but the NHS is in a transition period in
which IT purchasing decisions are being delayed. This has
restrained our UK business in 2012 during Q1 and Q2. However, we
anticipate much stronger growth in Q3 and Q4 of the current
financial year as CCGs gain their NHS authorisation.
The major investment that the Company has continued to make,
both in clinical and software development, is targeted at
innovative cost-effective hosted, web and mobile delivered software
solutions and applications in order to capitalise on new
opportunities as they present themselves in the future.
Staff
I would like to thank all my colleagues and staff for their
exceptional efforts and support during 2011 and 2012.
Roger Lane-Smith
Chairman
17 October 2012
CONSOLIDATED STATEMENT OF TOTAL COMREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2012
2,012 2,011
Notes GBP GBP
Revenue 2275607 2,097,504
Cost of sales (1,601,755) (1,230,315)
------------ ------------
GROSS PROFIT 673,852 867,189
Administrative expenses (1,339,709) (1,407,408)
------------ ------------
OPERATING LOSS (665,857) (540,219)
Finance income 5 159 241
LOSS BEFORE INCOME TAX 6 (665,698) (539,978)
Income tax 7 - (107,622)
------------ ------------
LOSS FOR THE YEAR AND
TOTAL COMOPREHENSIVE
INCOME (665,698) (647,600)
============ ============
Loss per share expressed
in pence per share: 8 (10.40) (12.25)
============ ============
Basic and diluted
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 MARCH 2012
2012 2011
Notes GBP GBP
ASSETS
NON-CURRENT ASSETS
Intangible assets 9 568,070 539,124
Property, plant and equipment 10 39,665 43,787
607,735 582,911
CURRENT ASSETS
Trade and other receivables 12 425,806 642,532
Cash and cash equivalents 13 99,853 366,423
525,659 1,008,955
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 14 632,138 348,378
Deferred income 390,312 466,846
1,022,450 815,224
NET CURRENT (LIABILITIES)/ASSETS (496,791) 193,731
NET ASSETS 110,944 776,642
SHAREHOLDERS' EQUITY
Called up share capital 16 124,185 124,185
Share premium 2,069,837 2,069,837
Reverse acquisition reserve 17 (1,795,277) (1,795,277)
Merger reserve 17 1,488,489 1,488,489
Retained earnings (1,776,290) (1,110,592)
TOTAL EQUITY 110,944 776,642
The financial statements were approved and authorised for issue
by the Board of Directors on 17 October 2012 and were signed on its
behalf by:
.................................................................
R. Lane-Smith - Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2012
Called up Profit
share and loss Share Other Total
capital account premium reserves equity
GBP GBP GBP GBP GBP
Balance at 31 March 2010 116,941 (462,992) 1,378,595 (306,788)
(725,756)
Loss and total comprehensive
income for the year - (647,600) - - (647,600)
Transactions with owners:
Issue of share capital 7,244 - 750,476 - 757,720
Share issue expenses - - (59,234) - (59,234)
Balance at 31 March 2011 124,185 (1,110,592) 2,069,837 (306,788)
776,642
Loss and total comprehensive
income for the year - (665,698) - - (665,698)
Balance at 31 March 2012 124,185 (1,776,290) 2,069,837 (306,788)
110,944
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2012
2012 2011
Notes GBP GBP
Cash flows from operating activities
Cash absorbed by operations 1 (103,831) (599,819)
Cash flows from investing activities
Purchase of intangible assets (145,485) (184,664)
Purchase of property, plant and equipment (17,413) (22,984)
Interest received 159 241
Net cash absorbed by investing activities (162,379)
(207,407)
Cash flows from financing activities
Proceeds from issue of share capital - 698,486
Net cash generated from financing activities - 698,486
Decrease in cash and cash equivalents (266,570) (108,740)
Cash and cash equivalents at
beginning of year 366,423 475,163
Cash and cash equivalents at
end of year 99,853 366,423
NOTES TO THE GROUP AND COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2012
1. RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM
OPERATIONS
Group Company
2012 2011 2012 2011
GBP GBP GBP GBP
Loss before income tax (665,698) (539,978) (535,901)
(1,177,827)
Depreciation 138,074 65,779 1,517 1,516
Finance income (159) (241) - -
Impairment of Inter-company receivable - - 41,038 800,000
(527,783) (474,440) (493,346) (376,311)
(Increase)/Decrease in trade
and other receivables 216,726 (68,802) 59,768 (290,464)
(Decrease)/Increase in trade, other
payables and deferred income 207,226 (56,577) 133,775
(66,267)
Cash absorbed by operations (103,831) (599,819) (299,803)
(733,042)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2012
1. GENERAL INFORMATION
Avia Health Informatics plc ("the Company") and its subsidiaries
(together "the Group") sells computer software based support,
maintenance, training and consultancy services to the healthcare
sector. The Company is domiciled in England and Wales and its
registered office address is 3 Noble Street, London EC2V 7EE. Its
head office is St Mary`s Court, Broadway, Old Amersham,
Buckinghamshire, HP7 0UT.
These financial statements are presented in Pounds Sterling
because that is the currency of the primary economic environment in
which the Company and Group operates.
Current background
The financial and trading condition of the Company during the
first 6 months of 2012 remained disappointing with sales below
forecast. Directors have deferred salaries since June 2012, and a
turnaround process was initiated in mid-August following Barry
Gidding's resignation from the Company. Measures were immediately
introduced to reduce the cost base of the Company by around GBP500K
per annum, and the Company's Roadmap and sales strategy were
substantially revised in order to place the entire focus of the
Company on near term sales growth. Also a restructuring of staff
from Avia to Plain has been undertaken to make Plain Healthcare the
operational arm of the Company; this will allow further economies
through avoiding duplication of activity between Avia and
Plain.
The loan agreed with Advanced Computer Software plc of
GBP350,000 in September 2012 has major strategic importance for the
Company, and reflects the synergy with ACS which in turn should
support the Company significantly improve its trading and liquidity
position.
Going concern and carrying value of the parent company's
investment in its subsidiary, Plain Healthcare Limited.
The financial statements are prepared on the going concern basis
which assumes the Group will have sufficient resources to enable it
to continue trading for the foreseeable future.
The directors have prepared forecast information for the period
to September 2013. The forecasts indicate that the Group's revenues
are expected to exceed costs due to 1) a reduction in development
and salary costs, and 2) maintaining contract renewals and 3)
increased sales, particularly from new products such as
PathfinderRF.
The Group's ability to continue as a going concern depends on
increasing its revenue over the second half of 2012 and the first
half of 2013. The main sales increase is projected to come from the
PathFinderRF product. It is anticipated that as Clinical
Commissioning Groups gain their authorisation from the NHS, there
will be increasing opportunities to close the significant
opportunities that are in the Company's sales pipeline. However,
there remains some uncertainty over the exact timescale at which
such new sales will be realised, and hence in the forecast it has
been assumed that these will occur in Q1 and Q2 of 2013, even
though it is anticipated that some may well be completed before
March 2013. The forecasts however highlight cash flow deficiencies
at certain points in the forecast period which the directors
believe will be managed through the deferral of payments due to
suppliers by negotiation. There is currently an on-going time to
pay arrangement with HMRC in respect of PAYE and national insurance
obligations.
The directors have considered the carrying value of the parent
company's investment in its subsidiary, Plain Healthcare Limited on
the basis they expect forecasts to be met and the business have a
long term future no provision for impairment has been made. However
as set out above there can be no certainty about these matters and
therefore the recoverability of the cost of investment.
1. GENERAL INFORMATION - continued
The financial statements do not include any adjustments that
would result from the Group being unable to continue as a going
concern. If it were unable to continue, adjustments would be
necessary to write down assets to their recoverable amounts,
provide for further liabilities that would arise and reclassify
non-current assets as current assets.
2. ACCOUNTING POLICIES
BASIS OF ACCOUNTING
These financial statements have been prepared in accordance with
International Financial Reporting Standards and IFRIC
interpretations and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS. The financial
statements have been prepared under the historical cost
convention.
Basis of consolidation and Reverse Acquisition
The combination of Avia Health Informatics Plc and Plain
Healthcare Limited has been accounted for as a reverse acquisition
as if Plain Healthcare Limited acquired Avia Health Informatics
plc. Although these Group financial statements have been issued in
the name of the legal parent, the Group's activity is in substance
a continuation of that of the legal subsidiary, Plain Healthcare
Limited, because after the transaction the former owners of Plain
Healthcare Limited gained control of the Group and of the legal
parent.
No profit and loss account is presented by the Company as
permitted by section 408 of the Companies Act.
Investments in subsidiaries
In the Company's Statement of Financial Position investments in
subsidiaries are recorded at cost less any provision for
impairment. Investments are recognised as an asset and reviewed for
impairment at least annually. Any impairment is recognised
immediately in profit or loss and is not subsequently reversed.
Revenue recognition
The Group sells rights to use its software products under an
inclusive licence and maintenance agreement. The fee received from
the customer entitles the user to use the software for a limited
period of time (typically one year) together with office hours
software support and maintenance and on-going updates to the
technical content of the software and any upgrades made to the
software functionality. An additional fee is rendered to those
customers requiring out of office hours support services. Revenue
from new licence software installations is recognised only once the
software has been delivered and installed to the satisfaction of
the customer.
The Group estimates the value of revenue attributable to
on-going support and upgrades by calculating the direct costs of
providing these services and adding a reasonable profit margin of
25%. This proportion of the fee received from the customer is
recognised on a straight line basis over the period covered by the
invoice to the customer with appropriate amounts being recognised
as deferred income. The balance of the fee received is recognised
immediately in income.
Fees generated for separate out of hours support contracts are
recognised on a straight line basis over the period covered by the
amounts invoiced to the customer. Consultancy services and training
are invoiced and recognised as and when performed. Amounts billed
in excess of revenue recognised are recorded as deferred revenue
and are included within current liabilities.
Property, plant and equipment
Plant and equipment is held at cost less accumulated
depreciation and any recognised impairment losses. Assets are
depreciated to their residual value at a rate of 33.33% using the
reducing balance method over their expected useful lives.
The gain or loss arising on the disposal or retirement of an
asset is determined as the difference between the sale proceeds and
the carrying amount of the asset, and is recognised in the income
statement.
Depreciation methods, useful lives and residual value are
reviewed at each accounting date.
Intangible assets
Research and development
Development activities involve a plan or design for the
production of new or substantially improved computer software.
Development expenditure is capitalised only if development costs
can be measured reliably, the software programme is technically and
commercially feasible, future economic benefits are probable and
the Group intends to have sufficient resources to complete the
development and to use, lease or sell the asset. The expenditure
capitalised includes only the cost of gross direct labour costs
that are directly attributable to preparing the asset for its
intended use. Other development expenditure is recognised in profit
or loss as incurred.
Subsequent expenditure is capitalised only when it increases the
future economic benefits embodied in the specific asset to which it
relates. All other expenditure, or internally generated goodwill
and brands, is recognised in profit or loss as incurred.
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
Capitalised development expenditure is amortised on a straight
line basis over the period in which it is anticipated that revenues
will be generated from the products produced. This is estimated to
be 5 years from the date the product is complete and available for
sale and is currently an industry sector norm.
2. ACCOUNTING POLICIES - continued
Impairment
At each balance sheet date, the Group reviews the carrying
amounts of its intangible assets to determine whether there is any
indication that those assets have suffered any impairment loss. If
any such indications exist, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss
(if any). Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a revalued
amount in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised as income immediately, unless the
relevant asset is carried at a revalued amount, in which case the
reversal of the impairment is recognised in equity.
Trade receivables
Trade receivables are classified as loans and receivables and
are initially recognised at fair value. They are subsequently
measured at their amortised cost using the effective interest
method less any provision for impairment. A provision for
impairment is made where there is objective evidence, (including
customers with financial difficulties or in default on payments),
that amounts will not be recovered in accordance with original
terms of the agreement. The carrying value of the receivable is
reduced through the use of an allowance account and any impairment
loss is recognised in profit or loss. Trade receivables are
determined to be past due if any portion of the receivable balance
is outstanding for more than 30 days. Interest is not charged on
past due accounts.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits.
Trade payables
Trade payables are not interest bearing and are recognised
initially at fair value and subsequently at amortised cost.
Equity instruments
Equity instruments issued by the Group are recorded as proceeds
received, net of direct issue costs.
Provisions
Provisions are recognised when the Group has a present
obligation as a result of a past event and it is probable that the
Group will be required to settle the obligation. If the effect is
material, provisions are determined by discounting the expected,
risk-adjusted, future cash flows at a pre-tax risk-free rate.
2. ACCOUNTING POLICIES - continued
Operating lease payments
Payments made under operating leases are charged to the income
statement on a straight-line basis over the lease term.
Net financing costs
Interest income and interest payable is recognised in profit or
loss as it accrues, using the effective interest method.
Defined contribution pension plans
Obligations for contributions to defined contribution pension
plans are recognised as expenses in the income statement as
incurred.
Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of ordinary shares and share
options are recognised as a deduction from equity net of any tax
effects.
Taxation
The tax expense as a charge or credit to profit or loss
represents the sum of the tax currently payable and deferred tax.
Tax is recognised in the income statement, except to the extent
that it relates to items recognised directly in equity, in which
case it is recognised in the statement of comprehensive income.
Current tax is based on taxable profit for the period, using tax
rates enacted or substantively enacted at the reporting date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the tax
profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that have been
enacted or substantively enacted by the reporting date and are
expected to apply in the period when the liability is settled or
the asset is realised. Deferred tax is charged or credited in the
income statement, except when it related to items charged or
credited directly to equity, in which case the deferred tax is also
dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Company intends to settle
its current tax assets and liabilities on a net basis.
Segmental reporting
A segment is a distinguishable component of the Group that is
engaged in providing services in a particular economic environment
which have different potentials for future development. The Group
currently operates in only one segment, though there is export
revenue, and the Company therefore classifies its operations as a
single segment.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Use of estimates and judgements
The preparation of financial information in conformity with IFRS
as adopted in the EU requires management to make judgements,
estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from the estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis and are based on historical experience and other factors,
including expectations of future events that may have a financial
impact on the entity and that are believed to be reasonable under
the circumstances. Revisions to accounting estimates are recognised
in the period in which the estimates are revised and any future
periods affected.
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are addressed in the notes below.
Developments expenditure and impairment of intangible assets
Intangible fixed assets comprise capitalised development
expenditure with a carrying value amounting to GBP568,070 (2011:
GBP539,124). The directors consider the expenditure capitalised
meets the recognition criteria since each project for which
expenditure is capitalised is assessed by the board before
expenditure is incurred.
Each year the Group assesses the recoverability of the amounts
capitalised by reviewing forecast sales of each product line. Where
this information is not available (for example where a product has
not yet been released on the market) other market data is
assessed.
The directors consider that for each product for which
expenditure has been capitalised, there is a reasonable certainty
that future profits will exceed the carrying value of the asset.
The accounts include an amortisation charge of GBP116,539 (2011:
GBP48,482), representing the planned 5 year write down of
capitalised costs relating to a product that is now being sold.
Deferred tax asset
The directors feel that given the delays experienced in the
generation of taxable profits they would wish to take a
conservative view and not reflect a deferred tax asset within the
balance sheet under review. The deferred tax asset not recognised
is GBP404,000 which relates to prior and current year.
Carrying value of investments in subsidiary undertakings
The shares of Plain Healthcare Limited are recorded in the
Parent Company's Statement of Financial Position at an amount of
GBP1,536,373 (2011: GBP1,536,373). Based on profit and cash flow
forecasts, the directors consider that the value of the shares
exceeds the carrying value recorded in the financial
statements.
The directors have considered discounted cash flow forecasts
over a period of ten years applying growth rates and a cost of
capital they consider to be appropriate.
4. EMPLOYEES AND DIRECTORS
2012 2011
GBP GBP
Wages and salaries 1,680,247 1,659,289
Social security costs 189,749 180,511
1,869,996 1,836,800
The average monthly number of employees during the year was as
follows:
2012 2011
Number Number
Development and sales 38 39
Administration 5 6
43 45
The remuneration of the directors of the parent company is set
out below;
2012 2011
GBP GBP
Directors' emoluments
B S Giddings 134,875 135,000
Nigel Leavy 15,750 39,750
Jeremy Dale 70,350 70,000
Roger Lane-Smith 15,075 15,000
At 31 March 2012 236,050 259,750
======== ========
The total cost of services provided by the directors of Avia
Health Informatics plc and Plain Healthcare Limited, who are
considered to be key management personnel is set out below;
2012 2011
GBP GBP
Remuneration of key management personnel 435,142 426,103
======== ========
The comparative figure for 2011 has been corrected to include
Employers National Insurance whereas the 2011 Financial Statements
showed the figure without Employers National Insurance.
There is no Group pension scheme in place for the benefit of the
directors.
5. NET FINANCE INCOME
2012 2011
GBP GBP
Finance income:
Deposit account interest 159 241
6. LOSS BEFORE INCOME TAX
The loss before income tax is stated after charging:
2012 2011
GBP GBP
Property rentals 57,373 24,458
Hire of plant and machinery - 662
Depreciation - owned assets 21,535 17,297
Amortisation - intangible assets 116,539 48,482
Auditors remuneration for audit service payable to Hazlewoods 15,250
-
Auditors remuneration for taxation services payable to Hazlewoods 3,750
-
Auditors remuneration for audit service payable to Baker Tilly 37,500
-
Auditors remuneration for consultancy service payable to Baker Tilly 1,500 24,926
The comparative figures have been restated as services relating
to the Baker Tilly audit in 2011 were not provided for as creditors
in the 2011 accounts and hence though they were disclosed as a cost
an actual cost was not included in the income statement. These
amounts are in fact reflected as a charge in the year ended 31
March 2012.
The property rentals comparative has also been restated to
reflect rentals chargeable to Avia in 2011 which had been omitted
in the previous year's note.
7. INCOME TAX
2012 2011
GBP GBP
Current tax:
UK corporation tax - -
Deferred tax:
Origination and reversal of temporary differences - 107,622
Total tax charge in income statement - 107,622
Factors affecting the tax charge
The tax assessed for the year is higher than the standard rate
of corporation tax in the UK. The difference is explained
below:
2012 2011
GBP GBP
Loss on ordinary activities before tax (665,698) (539,978)
Loss on ordinary activities
multiplied by the standard rate of corporation tax for small (133,140)
(113,395)
companies in the UK of 20% (2011: 21%)
Effects of:
Losses carried forward, not recognised as
a deferred tax asset 133,140 113,395
Arising from the reversal of a deferred
tax asset - 107,622
Total income tax charge - 107,622
8. LOSS PER SHARE
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
As there are no dilutive factors, earnings per share is
equivalent to the basic loss per share.
2012
Weighted
average
number Loss
Loss of per-share
GBP shares pence
Basic and Diluted EPS
Earnings attributable to ordinary
shareholders (665,698) 6,399,023 (10.40)
2011
Weighted
average
number Loss
Loss of per-share
GBP shares pence
Basic and Diluted EPS
Earnings attributable to ordinary
shareholders (647,600) 5,285,226 (12.25)
Since the end of the year a convertible loan was advanced to the
Company in the sum of GBP350,000. The loan is convertible into
shares equal to 29.9% of the issued share capital of the Company at
the option of the lender and are hence potentially dilutive.
9. INTANGIBLE ASSETS
Group
Development
expenditure
GBP
COST
At 1 April 2010 402,942
Additions 184,664
At 31 March 2011 587,606
Additions 145,485
At 31 March 2012 733,091
AMORTISATION
At 1 March 2011 48,482
Charge for 2012 116,539
At 31 March 2012 165,021
NET BOOK VALUE
At 31 March 2010 402,942
At 31 March 2011 539,124
At 31 March 2012 568,070
10. PROPERTY, PLANT AND EQUIPMENT
Group
Plant and
machinery
GBP
COST
At 31 March 2010 103,702
Additions 22,984
At 31 March 2011 126,686
Additions 17,413
At 31 March 2012 144,099
DEPRECIATION
At 31 March 2010 65,602
Charge for the year 17,297
At 31 March 2011 82,899
Charge for the year 21,535
At 31 March 2012 104,434
NET BOOK VALUE
At 31 March 2010 38,100
At 31 March 2011 43,787
At 31 March 2012 39,665
Company
Plant and
machinery
GBP
COST
At 31 March 2010 3,598
Additions 2,034
At 31 March 2011 5,632
Additions 3,250
At 31 March 2012 8,882
DEPRECIATION
At 31 March 2010 1,825
Charge for the year 1,516
At 31 March 2011 3,341
Charge for the year 1,517
At 31 March 2012 4,858
NET BOOK VALUE
At 31 March 2010 1,773
At 31 March 2011 2,291
At 31 March 2012 4,024
11. INVESTMENTS
Company
Shares in
group
undertakings
GBP
COST AND NET BOOK VALUE
At 31 March 2010 and 31 March 2011 and 31 March 2012
1,536,373
On 16 November 2009 the Company acquired 100 per cent of the
ordinary issued share capital of Plain Healthcare Limited for a net
cash consideration of GBP35,000 and the issue of 2,501,662 ordinary
shares of 0.5 pence each issued at a premium of 59.5 pence each.
The total consideration amounted to GBP1,536,373.
Plain Healthcare Limited is a company incorporated in England
and Wales. The nature of the business is that of the sale of
services in the primary health sector.
On 1 November 2010 the Company incorporated a new 100 per cent
owned subsidiary called Avia Health Informatics Inc.
Avia Health Informatics Inc is a corporation incorporated in
Delaware, USA. The nature of the business will that of the sale of
services in the primary health sector.
12. TRADE AND OTHER RECEIVABLES
Group Company
2012 2011 2012 2011
GBP GBP GBP GBP
Trade receivables 393,017 549,983 22,679 83,575
Amounts owed by group undertakings - - - 47,558
Other receivables 149 210 - 210
Prepayments and accrued income 32,640 92,339 32,106 24,248
425,806 642,532 54,785 155,591
13. CASH AND CASH EQUIVALENTS
Group Company
2012 2011 2012 2011
GBP GBP GBP GBP
Bank deposit account 99,853 366,423 36,954 340,007
14. TRADE AND OTHER PAYABLES
Group Company
2012 2011 2012 2011
GBP GBP GBP GBP
Trade payables 182,470 87,971 36,057 12,557
Social security and other
taxes 383,360 249,266 61,536 15,648
Other payables 1,921 1,921 - -
Accrued expenses 64,387 9,220 64,387 -
632,138 348,378 161,980 28,205
15. FINANCIAL INSTRUMENTS
The directors' objectives when managing capital are to safeguard
the Group's ability to continue as a going concern, and to maintain
a strong capital base to sustain future development of the
business. The Group's strategy remained unchanged during the year.
Capital resources have however been depleted significantly by
losses incurred during the last two years.
The Group's financial instruments comprise cash and cash
equivalents, trade and other receivables and trade payables.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's receivables from customers and bank balances.
Exposure to credit risk
The carrying of financial assets set out below represents the
maximum credit exposure. There are no commitments that could
increase this exposure to more than the carrying amounts. The Group
does not require collateral in respect of trade and other
receivables.
Given the nature of its customer base, being principally
government funded healthcare services, together with historical
experience, no provision for impairment has been made and no charge
made to the income statement in respect of irrecoverable amounts.
There is no significant concentration of credit risk.
The ageing of trade receivables, which are not impaired, at each
balance sheet date was:
2012 2011
GBP GBP
Not past due 219,593 344,337
Past due 0-30 days 155,110 3,037
Past due 31-90 days 1,035 191,251
Past due by more than 90 days 17,279 11,358
-------- --------
393,017 549,983
======== ========
No provision has been made against irrecoverable debtors.
Bank balances are held with the HSBC Bank Plc, Royal Bank of
Scotland Plc and Co-operative Bank Plc.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due.
The Group's approach to managing liquidity is to ensure that it
will always have sufficient liquidity to meet its liabilities when
due without incurring unacceptable losses or risking damage to the
Group's reputation by monitoring its daily cash position. All of
the Group's contractual maturities of financial liabilities are
repayable within 30 days.
The Group has incurred trading losses for the reasons set out in
earlier sections of this report, and has acted to reduce its cost
base and has entered into a convertible loan agreement with
Advanced Computer Software plc in order to maintain liquidity. In
addition, directors have deferred salaries between June and
September 2012. There remains significant pressure on liquidity
however, as explained in Note 1.
Market risk
Market risk is the risk that changes in market prices will
affect the Group's income or the value of its holdings of financial
instruments.
Foreign currency risk
The Group has no exposure to foreign currency risk.
Interest rate risk
At the reporting date the Group's interest rate profile of
interest-bearing financial instruments was:
2012 2011
Variable rate instruments GBP GBP
Cash and cash equivalents 99,853 366,423
Categories of financial assets and financial liabilities
Financial assets as set out in the table below fall within the
category defined by IAS39 as loans and receivables. Financial
liabilities fall within the category of financial liabilities
measured at amortised cost.
Fair values
The carrying value of trade and other payables and trade and
other receivables are assumed to approximate to their fair values
given their short-term nature.
The fair value of cash and cash equivalents is equivalent to its
carrying amount. The cash is repayable on demand.
The fair and carrying values for each class of financial assets
and financial liabilities is shown in the relevant notes.
GROUP
2012 2011
Financial assets GBP GBP
Trade receivables 393,017 549,983
Other receivables - 42,490
Cash and cash equivalents 99,853 366,423
492,870 958,896
======== ========
Financial assets exclude prepayments.
2012 2011
Financial liabilities GBP GBP
Trade payables 182,470 87,971
Accrued expenses 64,387 9,220
Other payables 1,921 1,921
-------- ------------
248,778 99,112
======== ============
Financial liabilities exclude social security and other
taxes.
COMPANY
2012 2011
Financial assets GBP GBP
Trade Receivables 22,679 83,575
Other receivables - 210
Amounts owed by group undertakings - 47,558
Cash and cash equivalents 36,954 340,007
59,633 471,350
======= ========
Financial assets exclude prepayments.
2012 2011
Financial liabilities GBP GBP
Trade payables 36,057 12,557
Other payables and accrued expenses 64,387 -
100,444 12,557
======== =======
Financial liabilities exclude social security and other
taxes.
15. DEFERRED TAX
Group
The group has unutilised tax losses in excess of accelerated
capital allowances of GBP2,020,000 of which GBP1,350,000 relate to
the Parent Company. As explained in Note 3 a deferred tax asset is
not recognised. The potential asset in the Group is GBP404,000
(2011: GBP302,000) of which GBP270,000 (2011:GBP177,000) relates to
the Parent Company.
16. CALLED UP SHARE CAPITAL
Allotted, issued and fully paid:
Number: Class: Nominal 2012 2011
value: GBP GBP
6,399,023 Ordinary 0.5p 31,995 31,995
312,507 Deferred 29.5p 92,190 92,190
124,185 124,185
The authorised share capital as at 31 March 2012 was 500,000,000
(2011: 500,000,000) ordinary shares of 0.5p each totalling
GBP2,500,000.
17. RESERVES
Other reserves
The merger reserve arises under section 612 of the Companies'
Act 2006 on the shares issued by the Company to acquire Plain
Healthcare Limited.
The reverse acquisition reserve relates to the reverse
acquisition between Plain Healthcare Limited and Avia Health
Informatics plc.
18. RELATED PARTY TRANSACTIONS
COMPANY
N Leavy was a director of both Avia Health Informatics PLC and
Advanced Fibreoptic Engineering Ltd (AFE). AFE supplied bookkeeping
and registered office services to Avia. Amounts charged were:
2012 2011
GBP GBP
Advanced Fibreoptic Engineering Ltd 5,400 23,335
Plain Healthcare Limited (formerly The Plain Software Company
Ltd)
As at 31 March 2012 the Company is owed GBP nil (2011: GBPnil)
from Plain Healthcare Limited. Interest was not charged on the loan
at 4% above the base lending rate of National Westminster Bank Plc
totalling GBPnil (2011: GBP12,007). Avia Health Informatics plc
became the legal parent of Plain Healthcare Limited on 16 November
2009 during the reverse acquisition.
19. LEASING AGREEMENTS
Minimum lease payments under non-cancellable operating leases
fall due as follows:
2012 2011
GBP GBP
Within one year 7,200 12,686
Between one and five years 32,628 32,794
39,828 45,480
Operating lease payments represent rentals payable by the Group
in respect of office premises.
The operating lease does not have any restrictions imposed
relating to dividends, debt or further leasing. The property lease
includes a requirement to return the leased property to the state
in which it was at the inception of the lease.
20. POST BALANCE SHEET EVENTS
In August 2012 B. Giddings left the Group and will be paid
GBP60,000 in total over 12 months in equal instalments as per the
terms of his agreement with the Company.
In September 2012 an interest free convertible loan was advanced
to the Company in the sum of GBP350,000 from Advanced Computer
Software Plc. The loan is convertible into shares equal to 29.9% of
the issued share capital of the Company at the option of the
lender. If the loan is not converted it is due for repayment in
full on 3(rd) September 2015.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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