RNS No 6945n
CLINICAL COMPUTING PLC
7th April 1998
CLINICAL COMPUTING PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
Chairman's Statement
In 1997 the Group has accomplished important steps forward with the focus on
returning to profitability whilst at the same time planning for future growth.
There is now a strong management team in place with clear goals established
and I am confident we can look forward to continued expansion.
Financial performance
The 1997 results indicate the Group's potential. Profit for the year was #0.3
million which is a considerable improvement on the loss recorded in 1996 of
#2.1 million. This has been achieved through a 53% increase in turnover and
a 24% reduction in costs. Earnings per share are 1.1 pence.
Strategies
During 1997 a new executive management team was put in place under the
direction of our new CEO, Jack Richardson. Jack has a wealth of experience in
the management of healthcare information technology companies. There were
three key strategies decided by the Board and implemented by his team during
the year. First: the Group needed to concentrate completely on the business
of clinical systems software for which we are a leading provider. Second:
the Group had to return to profitability as rapidly as possible. Third: the
way forward in the longer term was to be based on development of new software
technology. The Group has followed closely these three strategies in 1997
and will continue to do so in 1998.
Our employees
I would like to take this opportunity to express my sincere appreciation to
each and every one of the Group's employees. Without all their hard work and
dedication it would not have been possible to achieve the successes that we
have in 1997. The Board recognises that the Group's most valuable asset is
its employees. We look forward to continued success because of their
dedication.
Future
The Group is now well positioned for growth based on the investments we are
continuing to make in our new technology. We are able to combine nearly 20
years of experience in developing clinical applications software with the
latest advances in client server technology and component based software
architecture. These developments are well timed to exploit the growing trend
for the introduction of computerised records in clinical medicine.
M Gordon
Chairman
Chief Executive's Statement
I am very pleased to report that the results for 1997 show a substantial
turnaround on the previous year. The Group has shown progress at all levels
and there is now a clear focus on profitability and long term growth. In 1997
we have invested significantly in our new technology and we look forward to
launching it in mid-1998.
Business Overview
1997 was a very challenging and rewarding year for Clinical Computing. We
began a re-engineering process, which has provided the foundation for turning
the company around and recording our first year of profitability since the
company was floated in 1994. Most importantly we recorded profits both in the
first and the second half of 1997. Overall the group reported a profit of
#0.3million for the year as compared to a loss of #2.1 million for 1996. The
US operations continue to expand and were largely responsible for the order
intake increasing 211%, turnover increasing 53% and annual maintenance support
fees increasing 35%. The UK operations held turnover steady while reducing
costs by 28%, and received the bulk of the investment in our new technology
platform.
Divestitures
We started 1997 by focussing on our core competencies and thus undertook the
divestment of our interests in the robotics activities carried out by
Armstrong Healthcare. The executive management team was restructured. This
streamlined our operations and put us in a better position to concentrate on
developing and selling clinical applications software in the healthcare
marketplace. Whilst we believed in the potential of Armstrong Healthcare's
products the cash investment required to make them successful would not have
allowed us to achieve profitability in 1997. We have retained a 10% interest
in Armstrong, however, and are entitled to a royalty of 5% on their future
sales.
Acquisitions
In June of 1997 we completed the transaction to acquire the RENLStar product
line from Gambro Healthcare in the US. RENLStar was our largest competitor in
the US dialysis marketplace. There are several significant aspects to this
acquisition. First; we gained an increased market share, 150 US Clinics.
Second; Gambro Healthcare will be assisting us with sales of our own di-PROTON
product line in North, South, and Central America. Third; we acquired
STARBill, a dialysis billing system, as part of the acquisition and this has
filled a gap in our suite of PROTON offerings. Full integration of the
RENLStar product line will soon be completed and we believe that this will
help us win more business among the smaller dialysis organisations in the US
by enabling us to offer them a more price competitive product.
Major development projects
Also in June of 1997 we signed an important development contract with Roche
Products Limited in the UK. This was to develop a Disease State Management
(DSM) system for renal transplants. The development process is now well
underway and the DSM product is scheduled for general release in the
marketplace in the third quarter of 1998. The development process combines
Roche's vast experience in clinical trials, with the expertise of select
hospital clinicians in defining the protocols, and the technical and product
development experience of our own in-house team of information technology
professionals. The agreement with Roche provides for joint marketing and
sales. This will significantly increase the sales and marketing effort by
leveraging the UK Roche sales force. The project will be marketed first in
the UK and discussions are underway for worldwide rollout.
Geographic expansion
In September 1997 we opened an office in New Zealand to focus on the
Australasian market. This is in response to the numerous inquiries that we
have been receiving from both Australian and New Zealand doctors and hospital
administrators at recent trade shows in both Europe and the US. We have now
established a pipeline of potential customers in this region and look forward
to seeing the results of this sales effort in 1998.
The future
Clinical Computing has become the market leader both in the UK and the US in
providing dialysis management software. The healthcare sector is one of the
largest consumers of information technology and this is a market that is
growing in size every year. We have invested heavily in creating a state of
the art technology platform to build our new products development in greatly
reduced time frames and greatly reduced costs. In the second quarter of 1998
we will begin development of these new products. They will utilise Microsoft's
ActiveX tm technology for healthcare. We believe that this will allow us to
capture as significant a market share of the other clinical specialty areas as
we already have with dialysis. Discussions are currently underway with
several major US hospitals and UK health service trusts to supply clinical
systems using this new technology.
Our vision is to provide our customers with a clinical records system that
tracks the patient's treatments throughout the entire continuum of care. This
will improve the clinical information provided to the care giver, will result
in an increased quality of care to the patient, and will lower the cost of
care through the use of real-time information from other specialties.
A tribute to our employees
As a result of our employees' efforts the Group is now positioned as the
leading provider worldwide of dialysis management software. We have also
launched products for Oncology, Transplant and Diabetes specialties. With
the advent of our new technology platform we fully expect to increase the
scope of our information technology solutions offered to the healthcare market
place. We received a record number of orders in 1997 and completed a record
number of implementations. Turnover was the highest that it has ever been.
Our greatest strength is the talents of our employees. Their achievements
this year have been outstanding.
J N Richardson
Chief Executive
Financial Review
The Group's operating result was a profit of #0.16 million, a significant
improvement on last year's operating loss of #1.78 million. During the
second half of the year we were able to maintain and grow the profit
established in the first half.
Operating results
Group turnover rose by #1.05 million to #3.03 million, an increase of 53%.
The majority of this growth was achieved in the US which reported increases in
all classes of turnover, notably 142% in maintenance support fees and 77% in
software systems sales. In the UK maintenance revenues remained level whilst
software and services revenues increased slightly.
Total costs were reduced to #2.87 million from #3.76 million, a decrease of
24%. This reduction was achieved by the disposal of Armstrong Healthcare
early in the year, and by cut-backs in staffing levels in the UK which
exceeded increases in staffing levels in the US. In addition the management
restructuring which took place at the beginning of the year resulted in
tighter controls on expenditure relating to travel and the use of professional
advisers. The decrease in research and development expenditure shown on the
consolidated profit and loss account occurs as a result of the disposal of
Armstrong Healthcare. Actual research and development expenditure for the
continuing operations remained at a similar level to 1996.
The Group has started 1998 with a record level of brought forward work in
progress. Only 20% of the Renal Care Group contract was credited to revenue
in 1997, the remainder will be credited in this year. Maintenance revenues
are increasing significantly in the US and should show growth of over 90% by
the year end. The large amount of work in progress combined with the
increase in maintenance revenues provides the Group with a good proportion of
budgetted revenues and cover of its budgetted costs.
Interest
The Group incurred negligible interest charges in the year as at present it
uses no hire purchase or finance lease facilities. Interest income to the
amount of #0.12 million was earned on its cash balances. The Group does not
enter into any speculative arrangements and aims to minimise financial risk
and maintain adequate liquidity for its day-to-day activities.
Cash flows
The Group started the year with cash balances of #2.34 million and ended it
with balances of #1.80 million. Settlement of expenses associated with the
prior year's share placing and the disposal of the Armstrong Healthcare
subsidiary used #0.27 million of funds in the first half of the year. In the
second half a further #0.18 million of funds were used to purchase capital
equipment for both the UK and US operations and for initial commitments to new
premises in the UK. From an operating perspective after excluding the above
items and payments to former Directors, the Group was cash neutral for the
year.
Taxation
Both the UK and US operating companies retain substantial tax losses for use
against this and future year's trading profits.
Foreign Currency
The Group earns a greater proportion of its revenues in US dollars and has a
disproportionate amount of costs in UK sterling. The pound remained strong
against the dollar in 1997 and this exposure has had the effect of reducing
operating profit by about 15% when compared to average exchange rates used in
prior years.
The accounts have been prepared using a year end exchange rate of #1:$1.6454
(1996: $1.7113) and an average rate of #1:$1.6401 (1996: $1.5711).
P Smart
Chief Financial Officer
Consolidated Profit and Loss Account
For the year ended 31 December 1997
1997 1996
# #
Turnover
Continuing operations 3,025,110 1,835,602
Discontinued operations - 144,088
________ ________
3,025,110 1,979,690
Cost of sales
Research and development 666,492 1,016,038
Other 889,152 653,868
_________ ________
(1,555,644) (1,669,906)
_________ ________
Gross profit 1,469,466 309,784
Distribution costs (including
sales and marketing) 495,665 578,068
Administrative expenses 815,627 1,513,499
_______ ________
(1,311,292) (2,091,567)
Operating profit/(loss)
Continuing operations 158,174 (1,309,675)
Discontinued operations - (472,108)
_______ _________
158,174 (1,781,783)
Loss on disposal of subsidiaries after
charging goodwill previously written
off to reserves - (327,649)
Net interest receivable 117,390 29,902
_______ _______
Profit/(loss) on ordinary activities
before and after taxation 275,564 (2,079,530)
_______ ________
Earnings/(loss) per share 1.1p (12.3p)
_______ ________
Discontinued operations are in respect of Abies Medical Information Systems
Limited, Abies Consulting Limited and Armstrong Healthcare Limited.
Consolidated Balance Sheet
31 December 1997
1997 1996
# #
Fixed asets
Intangible assets - 5,230
Tangible assets 273,903 263,080
_______ _______
273,903 268,310
_______ _______
Current assets
Debtors 1,533,861 572,108
Cash at bank and in hand (including
short term deposits) 1,796,098 2,335,203
_________ ________
3,329,959 2,907,311
_________ ________
Creditors: Amounts falling due within one year
Deferred income 854,918 460,868
Other 432,170 636,607
_________ ________
(1,287,088) (1,097,475)
_________ ________
Net current assets 2,042,871 1,809,836
_________ ________
_________ ________
Net assets 2,316,774 2,078,146
_________ ________
Capital and reserves
Called-up share capital 1,254,016 1,254,016
Share premium account 4,248,388 4,248,388
Profit and loss account (3,185,630) (3,424,258)
_________ ________
Shareholders' funds - all equity 2,316,774 2,078,146
_________ ________
Consolidated Cash Flow Statement
For the year ended 31 December 1997
1997 1996
# #
Net cash outflow from operating
activities (513,178) (1,084,287)
_________ ________
Returns on investments and
servicing of finance 117,390 29,902
Capital expenditure and financial
investment (118,305) (75,874)
Acquisitions and disposals - (9,818)
_________ ________
(915) (55,790)
_________ ________
Cash outflow before management
of liquid resources and financing (514,093) (1,140,077)
Management of liquid resources (1,493,101) -
Financing (9,183) 2,287,567
_________ ________
(Decrease)/increase in cash in
the year (2,016,377) 1,147,490
_________ ________
NOTES:
1. The preliminary results have been prepared under the historical cost
convention and in accordance with applicable accounting standards. The
group's accounting policies have been applied consistently throughout the
year and the preceding year.
2. Earnings/(loss) per share is based upon the profit/(loss) attributable to
shareholders of #275,564 (1996: #2,079,530 loss) and weighted average
number of shares in issue during the year of 25,080,310 (1996:
16,958,402).
3. The preliminary results have not been audited. The financial information
contained in the preliminary announcement of results does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985.
The financial information contained in the preliminary announcement of
results in respect of the year ended 31 December 1996 has been extracted
from the statutory accounts for that year. Those financial statements
received an unqualified auditors' report and have been filed with the
Registrar of Companies.
4. The 1997 Annual Report and Accounts will be posted to shareholders and
copies will be available at the registered office: 124/130 Seymour Place,
London W1H 6AA.
Further information may be obtained from:
Clinical Computing Plc, 0181 380 4400
Jack Richardson, 00 1 513 651 3803
END
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