RNS Number:6251V
Clinical Computing PLC
27 April 2007
CLINICAL COMPUTING PLC
2006 PRELIMINARY RESULTS
Clinical Computing Plc (the "Company" or "Group"), the international developer
of clinical information systems for the healthcare market, announces Preliminary
Results for the year ended 31 December 2006. The Group trades through three
operating subsidiaries: Clinical Computing UK, Ltd. in the United Kingdom and
Europe, Clinical Computing, Inc. in the United States and Clinical Computing Pty
Limited in Australia.
Clinical Computing develops and licenses clinical management software for the
healthcare sector, specifically for use in long-term patient care management for
chronic kidney disease. Clinical Computing's information systems provide
electronic medical record systems that support integrated care practices. This
allows healthcare providers to manage more efficiently a patient's healthcare
treatment and to take preventative measures sooner.
Clinical Computing supplies clinical information systems to around 100
hospitals, healthcare organisations and dialysis providers around the world.
Financial Overview
* Revenue increased 7.6% to #1,781,658 (2005: #1,655,806)
* Operating costs decreased 15.3% to #2,725,385 (2005: #3,217,048)
* Loss from operations reduced by 39.6% to #943,727 (2005: #1,561,242)
* Loss per share of 2.6p (2005: loss 4.4p)
* Debt facility increased to #1,450,000 (#869,153 borrowed at 31
December 2006)
Business Review
* Restructuring programme well under way with central office for R&D
opened in Ipswich
* Quality assurance testing has begun on the Clinical Vision Web product
* Kidney and pancreatic transplant module for Clinical Vision 4 released
to UK market
* Nine Clinical Vision 4 implementations to go live in 2007
* Board changes
Commenting on Outlook, Howard Kitchner, Chairman of Clinical Computing, said:
"Having spent 2006 implementing our restructuring programme and developing the
Company's chronic kidney disease strategy, we believe that our product
development roadmap is aligned to our target markets.
We anticipate making further significant progress with our products and strategy
in the year ahead and in support of this I, as well as two other shareholders,
have assisted the Company in securing additional funding, whereby the Company
now has a debt facility of #1,450,000 (31 December 2006: #1,000,000), to ensure
that the Group has sufficient working capital.
I look forward to reporting continued progress in the year ahead as the Company
moves nine Clinical Vision implementations through to completion in 2007."
Contacts:
Clinical Computing plc http://www.ccl.com
Joe Marlovits, Chief Executive 020 8747 8744
Parkgreen Communications Ltd 020 7479 7933
Paul McManus 07980 541 893
paul.mcmanus@parkgreenmedia.com
Chairman's Statement
Introduction
The Group is continuing the positive momentum reported at the time of our 2006
interim results, which I attribute to the restructuring programme initiated by
the board in the second half of 2005. Under this plan, a significant
reorganisation of the product development team was initiated as well as a major
change to the product management processes utilised by the Group. This
restructuring culminated in December 2006 with the opening of an office in
Ipswich providing the Group with a base where it can concentrate on expanding
its product portfolio and delivering against the product roadmap.
I am pleased to report that on 25 April 2007 we have released the first Clinical
Vision 4 application under the direction of the new product management team.
This application (Clinical Vision 4 Graft Vision) supports transplant services
for both kidney and pancreas and complements the Clinical Vision 4 Renal Vision
application already licensed to our UK customers. We can now target the 24
major transplant centres in the UK with a module that provides seamless
integration between transplant and renal services.
The extension of Clinical Vision 4 into transplantation is consistent with our
strategy of extending our product portfolio from its current focus on End Stage
Renal Disease to offer a much broader and highly integrated Chronic Kidney
Disease (CKD) application. We are now actively marketing a technology upgrade
programme to UK PROTON users, initially targeting centres of CKD leadership.
Over time we believe that Clinical Vision 4 will support other chronic diseases
in addition to CKD such as diabetes and heart disease.
Results
Trading performance is showing improved results with the Group reporting
increased revenues and a lower cost base compared to the prior year. Revenues
for the year ended 2006 of #1,781,658 increased 7.6 % (2005: #1,655,806) and
total operating costs of #2,725,385 decreased 15.3% (2005: #3,217,048). Loss
from operations reduced 39.6% to #943,727 (2005: #1,561,242) and the loss for
the year was reduced 38.9% to #843,404 (2005: #1,379,565). The loss per share
was 2.6p (2005: loss 4.4p)
Strategy
As the US and UK populations continue to age, management of chronic diseases
will place increasing stress on the healthcare services. The Group's strategy
is to establish its Clinical Vision product as an interactive electronic medical
record solution for chronic disease. The Company's initial focus is the Chronic
Kidney Disease market where it has been an industry leader in End Stage Renal
Disease. The increase of chronic diseases is forcing fundamental changes to the
electronic healthcare record market. Better integration and more timely
clinical information sharing between primary and secondary care providers will
result in implementing preventative actions sooner in the care process thereby
reducing the overall cost of care. New care practices will evolve with respect
to chronic diseases, and information systems will be needed to deliver
information to more users across a healthcare system, including the patients.
To meet this challenge the Company is now quality assurance testing its latest
technology, Clinical Vision Web. This technology release will provide the
Company with the ability to support its strategic goals of delivering chronic
disease solutions supporting both early identification and management of chronic
disease.
Research and development
During 2006 we had a number of research and development projects underway,
including the development of Clinical Vision Graft Vision application for the UK
market, and the continued development of Clinical Vision Web.
The product development team is focusing on our Web solution, with most of our
effort focused on integration and user interface issues as we move the Company
into the wider CKD market. The significant domain knowledge that we have already
developed within our application portfolio will not need to be redeveloped for
Clinical Vision Web.
Board changes
Alfred Elbrick has retired from the board effective 27 April 2007 due to health
reasons. During Alfred's involvement with the Company he has served as the
chairman of both the remuneration and audit committees. I would like to thank
Alfred for his contributions to the Company and the board. Professor Stan
Newman will now be the chairman of both the audit and remuneration committees.
Outlook
Having spent 2006 implementing our restructuring programme and developing the
Company's chronic kidney disease strategy, we believe that our product
development roadmap is aligned to our target markets.
We anticipate making further significant progress with our products and strategy
in the year ahead and in support of this I, as well as two other shareholders,
have assisted the Company in securing additional funding, whereby the Company
now has a debt facility of #1,450,000 (31 December 2006: #1,000,000), to ensure
that the Group has sufficient working capital.
I look forward to reporting improving results in the year ahead as the Company
moves nine Clinical Vision implementations through to completion in 2007.
H Kitchner
Chairman
26 April 2007
Finance Review
Results for the year
The Group derives its revenue from approximately 100 healthcare organisations
who are licensing one of the following products: PROTON, di-PROTON, RENLStar and
CLINICAL VISION. Each of its products is marketed to healthcare organisations
managing patients with some stage of chronic kidney disease, primarily End Stage
Renal Disease.
During the year under review the Group's total revenues increased 7.6% to
#1,781,658 (2005: #1,655,806). 59.7% of its revenues were derived from the US
(2005: 76.0%) and the weakening dollar versus sterling during the year had a
negative impact on our revenues when compared to the prior year. Maintenance
revenue for the period was #1,209,563 or 67.9% of total revenues (2005:
#1,116,399 or 67.4%).
The Group's total operating costs for the year were #2,725,385 compared to
#3,217,048, a decrease of #491,663, which was largely due to non-recurring
restructuring costs incurred in 2005 of #301,938.
Operations generated a loss of #943,727 compared to #1,561,242 for 2005. The
loss for the year after tax was #843,404 or 2.6p per share (2005: #1,379,565 or
4.4p per share)
Cash flow and debt
During the year cash spent to support operations was #984,024 compared to
#714,913 for 2005.
In June 2006 the Company completed an equity fundraising of #102,375 under a
Private Issue of 1,575,000 new ordinary 5p shares at 6.5 pence per share
representing 4.99% of the ordinary shares then outstanding. The new shares were
admitted to trading on 12 June 2006 and following this transaction the Company
has 33,110,361 shares in issue. Also in June, at the AGM a resolution was
passed to increase the Company's borrowing capabilities, so that it could borrow
the full amount of the #1,000,000 facility available through Brown Shipley. At
the end of 2006 the Group had total borrowings against its credit facilities of
#869,153 (2005: nil).
Capital structure and finance
The consolidated equity position at 31 December 2006 was a deficit of #1,230,615
(2005: deficit #579,750). This increase is primarily due to the loss for the
year. The Company has an available debt facility of #1,450,000 in place until
30 October 2008, of which #450,000 is unused at the date of this announcement.
This facility is provided by Brown Shipley, on normal commercial terms, backed
by personal guarantees of the chairman and two shareholders. Neither the
chairman nor the shareholders have received compensation or any other benefits
for providing such guarantees. The directors believe that this facility, along
with the annual maintenance contracts and signed but unbilled contractual
arrangements should provide the financial resources for the Group to continue to
trade for the foreseeable future.
Software development
The Group has previously written off all software development costs to the
Income Statement. During the second half of 2006 the board determined that the
development of the transplant application qualified for capitalisation based on
the belief that its future recoverability can be reasonably regarded as assured
and technical feasibility and commercial viability can be demonstrated. In the
Board's view the UK transplant application (now known as Graft Vision) reached
this stage in the second half of 2006 and the Group is reporting an intangible
asset from software development for the first time. #29,360 has been
capitalised at the end of 2006 and no amount has been amortised during the year
as this module was only completed and released in April 2007.
Foreign currency risk
The company's US trading subsidiary trades in its local currency, the US dollar,
and no hedging activity between sterling and the dollar is made. This
subsidiary generated 59.7% of the Group's total revenue (#1,063,614) and 40.4%
of its operating costs (#1,100,020) in US dollars. Cash required to support
this subsidiary during the year was provided through the Group's sterling
resources.
Additionally, the company has a subsidiary in Australia. Receipts and payments
are in the local currency and no hedging activity is made. During the year this
subsidiary was cash generating.
Taxation
During the year under review, the Company's UK trading subsidiary filed a
research and development ("R&D") tax credit claim with respect to activities
undertaken in 2005 on various components of the Clinical Vision 4 product. An
election was made, under the terms of the current United Kingdom R&D tax credit
regime, for a percentage of the 2005 R&D expenditure to be settled in cash. A
tax credit of #121,234 has been reported and was received in 2006. A similar R&
D claim was made and settled in 2005 for #158,934.
J Marlovits
Chief Executive
26 April 2007
Clinical Computing Plc
Consolidated Income Statement
For the year ended 31 December 2006
Notes 2006 2005
# #
Continuing Operations
Revenue 2 1,781,658 1,655,806
Cost of sales (711,663) (720,228)
__________ __________
Gross profit 1,069,995 935,578
Distribution costs (371,830) (496,194)
Administrative expenses
Research and development (965,120) (878,561)
Other (676,772) (1,122,065)
Total administrative expenses (1,641,892) (2,000,626)
__________ __________
Loss from operations (943,727) (1,561,242)
Interest income 2,565 22,743
Interest expense (23,476) -
__________ __________
Loss before tax (964,638) (1,538,499)
Income tax 121,234 158,934
__________ __________
Loss for the year (843,404) (1,379,565)
__________ __________
Basic and diluted loss per share 5 (2.6p) (4.4p)
__________ __________
Clinical Computing Plc
Consolidated Statement of Recognised Income and Expense
For the year ended 31 December 2006
Notes 2006 2005
# #
Loss for the year (843,404) (1,379,565)
Exchange difference on translation of
foreign operations 69,243 (40,722)
__________ __________
Total recognised income and expense
for the year (774,161) (1,420,287)
__________ __________
Clinical Computing Plc
Consolidated Balance Sheet
As at 31 December 2006
Notes 2006 2005
# #
Non-current assets
Intangible assets 29,360 -
Property, plant and equipment 146,141 81,883
__________ __________
175,501 81,883
__________ __________
Current assets
Trade and other receivables 353,001 345,977
Cash and cash equivalents 14,418 173,010
__________ __________
367,419 518,987
__________ __________
Total assets 542,920 600,870
__________ __________
Current liabilities
Trade and other payables (904,382) (1,180,620)
Bank loans (869,153) -
__________ __________
(1,773,535) (1,180,620)
__________ __________
Net liabilities (1,230,615) (579,750)
_________ _________
Equity
Share capital 4 1,655,518 1,576,768
Share premium account 4 6,149,063 6,125,438
Share option reserve 4 58,576 37,655
Translation reserve 4 147,780 78,537
Retained earnings 4 (9,241,552) (8,398,148)
__________ __________
Shareholders' Funds (1,230,615) (579,750)
_________ _________
Clinical Computing Plc
Consolidated Cash Flow Statement
For the year ended 31 December 2006
Notes 2006 2005
# #
Net cash from operating activities 6 (984,024) (714,913)
__________ __________
Investing activities
Interest received 2,565 22,743
Expenditure on product development (29,360) -
Purchases of property, plant and equipment (113,972) (21,923)
__________ __________
Net cash used in investing activities (140,767) 820
__________ __________
Financing activities
Proceeds from equity issue 102,375 -
Increase in bank loan 869,153 -
__________ __________
Net cash from financing activities 971,528 -
__________ __________
Net decrease in cash and cash equivalents (153,263) (714,093)
Cash and cash equivalents at beginning
of year 173,010 875,731
Effect of foreign exchange rate changes (5,329) 11,372
__________ __________
Cash and cash equivalents at end of year 14,418 173,010
__________ __________
Clinical Computing Plc
Notes
1. Basis of preparation
The financial information set out in this preliminary announcement was approved by the board on 26
April 2007 and does not constitute statutory financial statements as defined by section 240 of the
Companies Act 1985. The results for the year ended 31 December 2006 and the balance sheet at that
date are extracted from the un-audited financial statements. The comparative financial
information is extracted from the statutory accounts for the year ended 31 December 2005 (on which
the auditors gave an unqualified opinion). The Group's 2006 Annual Report and Financial
Statements are to be delivered to the Registrar of Companies following the Company's Annual
General Meeting. The annual report for the year ended 31 December 2006 will be posted to
shareholders in due course.
The consolidated financial information for the year ended 31 December 2006 has been prepared on a
basis consistent with the previous year and in accordance with applicable IFRS as adopted by the
European Union. The financial statements are prepared under the historical cost convention.
The preparation of financial statements in conformity with generally accepted accounting
principles requires the use of estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting period.
Although these estimates are based on the Directors' best knowledge of current events and actions,
actual results ultimately may differ from those estimates.
The financial statements are prepared on a going concern basis, which assumes that the Company and
the Group will continue to trade for the foreseeable future. The directors consider the going
concern assumptions to be appropriate for the following reasons:
The Company and Group undertook a regeneration programme in 2005 which has now been completed.
Part of the regeneration programme has been a structuring of product management and product
development. The Group is now delivering new applications to the market place which are expected
to provide increased revenues. The management team has submitted a trading and cash flow plan to
the directors for the period through September 2008 and the directors have accepted this plan.
Although the management team's forecasts show improved trading conditions, inherently there can be
no certainty that these forecasts will be achieved. Therefore the directors have helped to secure
an extension to the current Brown Shipley credit facility. This facility has been extended until
30 October 2008 and secured by personal guarantees of the chairman and two other shareholders.
The directors have formed a judgment, at the time of approving the financial statements, that
there is a reasonable expectation that the group and company have adequate resources to continue
in operational existence for the foreseeable future.
2. Revenue
An analysis of the Group's revenue is as follows: Year Year
ended ended
2006 2005
# #
Software licenses 425,914 391,602
Maintenance 1,209,563 1,116,399
Services and other revenue 146,181 147,805
__________ __________
Revenue 1,781,658 1,655,806
__________ __________
3. Business and geographical segments
For management and legal purposes, the Group consists of three operating
companies and the parent company. These companies are the basis on which the
Group reports its primary segment information. All the business operations
provide software, maintenance and services to the healthcare sector. There is
no significant difference between risk and return on the software and services
offered and therefore there is only one business segment. Segmental information
presented below excluded any intra-group revenue or expense.
Segmental information is presented below.
Corporate
US UK Australia UK Total
# # # # #
2006
Revenue
Total Revenue 1,063,614 578,495 139,549 - 1,781,658
__________ __________ _______ __________ __________
Results
Operating (loss) / profit (36,406) (788,082) 103,605 (222,844) (943,727)
__________ __________ ________ __________ __________
Balance Sheet
Assets 75,869 370,665 40,666 55,721 542,920
Liabilities (413,564) (1,290,966) (528) (68,477) (1,773,535)
Other Information
Capital Expenditure 11,176 102,796 - - 113,972
Depreciation 27,066 13,343 36 3,595 44,040
Corporate
US UK Australia UK Total
# # # # #
2005
Revenue
Total Revenue 1,258,605 397,201 - - 1,655,806
__________ __________ ________ __________ __________
Results
Operating loss (239,969) (628,155) (71,371) (621,747) (1,561,242)
__________ __________ ________ __________ __________
Balance Sheet
Assets 278,395 539,007 8,255 (224,787) 600,870
Liabilities (2,083,701) (2,739,965) (234,072) 3,877,118 (1,180,620)
Other Information
Capital Expenditure 9,358 12,345 220 - 21,923
Depreciation 34,495 7,470 49 3,929 45,943
4. Reconciliation of movements in equity
Share premium Share
Share account option Translation Retained Total
Capital reserve reserve earnings
# # # # # #
At 1 January 2005 1,576,768 6,099,699 9,654 119,259 (7,018,853) 786,797)
Share options - - 28,001 - - 28,001
Exchange difference on
translation of foreign operations
- - - (40,722) - (40,722)
Recovery of expenses on issue of
equity shares made in prior year
- 25,739 - - - 25,739
Retained loss for the year - - - - (1,379,565) (1,379,565)
__________ __________ __________ __________ __________ __________
At 31 December 2005 1,576,768 6,125,438 37,655 78,537 (8,398,148) (579,750)
Share options - - 20,921 - - 20,921
Exchange difference on -
translation of foreign operations
- - 69,243 - 69,243
Issue of equity shares
78,750 23,625 - - - 102,375
Retained loss for the year - - - - (843,404) (843,404)
__________ __________ __________ __________ __________ __________
At 31 December 2006 1,655,518 6,149,063 58,576 147,780 (9,241,552) (1,230,615)
__________ __________ _________ __________ __________ __________
5. Loss per share
The calculation of the basic and diluted earnings per share is based on the
following data:
2006 2005
# #
Earnings
Earnings for the purposes of basic and diluted earnings per share (843,404) (1,379,565)
__________ __________
Number of shares
Number Number
Weighted average number of ordinary shares for the purposes of basic and diluted
earnings per share 32,411,320 31,535,361
__________ __________
The calculations of basic and diluted losses per share are the same because the
effect of including share options would be anti-dilutive and are excluded from
the calculation per IAS 33.
6. Notes to the cash flow statement
2006 2005
# #
Loss from operations (943,727) (1,561,242)
Adjustments for:
Depreciation of property, plant and equipment 44,040 45,943
Share option charges 20,921 28,001
__________ __________
Operating cash flows before movements in working capital (878,766) (1,487,298)
Decrease in receivables 1,208 (35,060)
(Decrease) / increase in payables (204,224) 416,262
__________ __________
Cash generated by operations (1,081,781) (1,035,976)
Interest paid (23,476) -
Taxes received 121,234 321,063
__________ __________
Net cash from operating activities (984,024) (714,913)
__________ __________
This information is provided by RNS
The company news service from the London Stock Exchange
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