Dear Shareholder,
At the end of July 2013 I gave a shareholder update, and this seems an appropriate time of year to update shareholders again on the progress that DXS has made since that time.
You may have realised from our regulatory announcements over the last 12 months that DXS continues to make a significant entry into the UK healthcare market. A lot of effort from DXS' Directors and Staff over the last 15 months culminated in the successful conclusion of the Company's application for Lot1 approval under the new GP Systems of Choice ("GPSoC"), part of the NHS' overall procurement structure, which was announced on March 28th of this year.
Introduced back in 2007, GPSoC is a scheme through which the NHS funds the provision of Clinical Systems to General Practitioner (GP) practices in England. The new GPSoC2 scheme, effective from 1st April 2014, was extended to include "Subsidiary Suppliers" of various IT systems. DXS is pleased to announce that it has successfully won a bid as an approved subsidiary supplier of Clinical Decision Support to the NHS in England for GPSoC2. This tender award is expected to run until December 2016, but also envisages an extension for a further two years from that date.
All GPSoC2 winners are required to meet a minimum set of requirements and are expected to evolve during the life of the contract. Thus, DXS has spent the past period putting in place the resources and systems to bring the company to the required levels conformance. One key area of conformance is the interface with the various GP Clinical Systems. DXS is well positioned due to existing integrations with the Clinical Systems provided by EMIS, INPS and Microtest and is delighted to announce that we recently signed a contract with TPP and have now completed the integration with their clinical system, giving us access to 100% of the GP systems in the UK.
The UK primary care sector consists of c 10,000 GP practices, 40,000 GP's and now 212 CCG's (Clinical Commissioning Groups) in England and approximately 50 health boards in Scotland and Wales. Whilst the cost of the NHS in the UK in 2013/14 will be £107billion, an annual budget in excess of £70 billion is now controlled by the CCG's. Importantly the CCG's have been tasked with finding savings of up to £20 billion by 2015, monies that will be re-invested within the service so that it can deliver year-on-year quality improvements. These savings will be kept in NHS budgets.
On 31st December 2013 in our half yearly financial report, it was announced that DXS had then signed up 17 of the 212 CCG's (representing over 700 medical practices). Today we can announce that the numbers of CCG's signed up has risen to 22, with the number of medical practices signed has moved up to over 1,000. With the gaining of the GPSoC2 award being announced back at the end of March this year, DXS are putting maximum efforts in to sign further CCG's now that much of the funding uncertainty is out of the way for them as they manage their budgets efficiently and proactively.
The main appeal to CCGs for investing in the DXS Point of Care Clinical Decision Support Solution is saving costs with improved quality of care. This is achieved by enabling each CCG to deliver their "Best Evidence Medicine" (Care Pathways, Referral Guidance, Prescribing Guidance, Directories of Services and Patient Education) to their GPs, Nurses and Practice Staff in the workflow and during the patient consultation - at the point of decision.
The healthcare market demands innovation and DXS has many new modules to our existing Point of Care Solution at varying stages in the pipeline, all aimed at achieving reduced cost and improved quality of care. Our policy is also one of where possible to partner with innovative solutions/services that we can leverage off our existing footprint. One area of focus is chronic disease. For example, Diabetes alone consumes 10% of the UK healthcare budget and here we are working with a consortium of UK clinicians to deliver a Personalised Care Pathway Solution which we hope to launch in 2015.
We are obviously thrilled that the Health and Social Care Information Centre has created this opportunity for smaller innovative companies like ourselves to enter the mainstream network to provide solutions for enhanced healthcare efficiency. I would like to stress that we have an excellent relationship with our clients, both at CCG and medical practice level, our service has so far been entirely "sticky", in that once signed DXS has not lost a single CCG nor medical centre, and we anticipate this to continue in the foreseeable future, such is the time- and cost-efficiency of our market leading system.
In terms of our cash raising and cash deployment this year, we launched an entitlement and open offer for shares in DXS International plc in November 2013 through to January 2014. Prior to this DXS International plc had been able to reduce its issued share capital by over 3.3million shares, resulting in an improvement of over 11% in the value of each shareholder's holding in the Company. Following this the Directors decided to issue 3.1 million shares to support the bid for Lot 1, increase our staffing and to take advantage of enhanced business prospects. The Offer was oversubscribed. And we thank both our new and existing investors who have supported the Company by participating in this placing. This level of support demonstrates a significant vote of confidence in our business model and prospects.
I have put on record already, but I would particularly like to take this opportunity to thank all of our staff, and in particular the core DXS Team, for their incredible and untiring effort in delivering a superlative submission under a very demanding timetable, this takes our Company to a new level in working for the best interests of GPSoC and the NHS. The management will leave no stone unturned to increase the cost-effectiveness of our product for CCG's and medical practitioners and add meaningful value for shareholders in 2014 and beyond.
Finally it should not escape shareholders notice, but the audited profit for the year ending 30th April 2013 came in at £225,000, up three times on the previous year. For the financial year to 30th April 2014, we have the one-off cost of the GPSoC submission to contend which will reduce profitability for the year but the benefits are already apparent with turnover up by 10% in three months since the year end.
We have already increased resources in sales, marketing, content, coding, support and training in anticipation of our new (and existing) client base. These are exciting times indeed for DXS International.
Yours sincerely,
David Immelman
Chief Executive
Contact Information:
Wrecclesham House
Wrecclesham Road
Farnham
Surrey
GU10 4PS
Tel: 01252 719800
Website: www.dxs-systems.com