RNS No 0756h
CLINICAL COMPUTING PLC
1 April 1999
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31 DECEMBER 1998
Chairman's and Chief Executive's Statement
The 1998 results show a net profit of #0.3 million for the year, which is a
similar level to 1997. Earnings per share are 1.1p.
We are growing our Group from its position as the leading provider of dialysis
software to that of a provider of state-of-the-art solutions across an entire
healthcare organisation. We are totally focussed on this challenging task.
We are taking a long-term view of the IT market for healthcare and are
continuing our investment in research and development to ensure that we have a
Group that is commercially sound for many years to come. Progress in the
development of the Clinical Vision product line during 1998 was slower than
anticipated which adversely impacted on sales and marketing. We have,
however, successfully managed the Group's cost structure so as to maintain
profitability during 1998.
During 1998 we completed the development of the Disease State Management
system (DSM). Joint marketing of the DSM system with Roche UK has already
commenced.
At the end of the year, we completed a distribution agreement with MicroScript
to market their interface engine. This is a high technology communications
product for the exchange of information between computer systems. The use of
MicroScript's product in conjunction with Clinical Vision will greatly reduce
the time and effort required for full system implementation by our customers.
The Group has a strong cash position and in fact in 1998 generated over #0.5
million of additional cash giving rise to a cash balance at the year end of
#2.3 million. During the year we spent #0.8 million on research and
development. We also spent further sums on completing the technical
infrastructure necessary in both our UK and US offices to build Clinical
Vision, our new suite of product solutions, and invested in new presentation
materials to support the marketing of Clinical Vision.
Our results for the first half of 1998 included #0.1 million attributable to a
non-recurring royalty payment received from Armstrong Healthcare Limited. The
results for the second half of 1998, while disappointing, were not unexpected
and had been anticipated in our interim report. Delays in completing Clinical
Vision resulted in several orders being postponed. We have, however, signed
our first two contracts for Clinical Vision products. These will provide us
with reference sites for the new product line.
As an IT company we are strongly aware of the issue of Year 2000 compliance.
We are pleased to report that our current products are Year 2000 compliant.
We do have, however, customers in the UK who operate self developed systems
based on our PROTON technology, and we have developed a consulting programme
to assist those customers in ensuring that the self developed portions of
their systems will be Year 2000 compliant. With regard to the Group's
in-house systems, Year 2000 compliance testing has been initiated in both the
UK and US offices and should be completed well before the end of this year.
As the leading supplier of dialysis information systems we are well positioned
with our current customers to provide them with other clinical information
systems. We have in development Clinical Vision products for Renal,
Transplant, Maternity, Oncology, Diabetes, and Disease Management
applications. Once completed, these should enable us to achieve rapid growth
in the new millennium.
In 1997 and 1998 considerable changes took place in the Group, in which we
focussed on profitability and cash control. During 1999 we will start to
launch our new product lines and expand into new markets. In the subsequent
years we should begin to reap the benefits of the investments that we are
making now.
The dedication and hard work of our employees should not go unmentioned.
Without their support and efforts we could not achieve our aims.
M Gordon J N Richardson
Chairman Chief Executive
Financial Review
For 1998 the Group's operating result was a profit of #0.2 million, a similar
level to last year. The net cash flow from operating activities was an inflow
of #0.5 million compared to an outflow of #0.5 million in the previous year.
Operating Results
Group turnover remained at the same level as last year at just over #3
million. The make-up of turnover was different to last year, however, as
maintenance revenues increased by 62 per cent. and software systems sales
decreased by 37 per cent. Total maintenance revenues accounted for just over
50 per cent. of this year's Group turnover. In the US, maintenance revenues
increased by 115 per cent. whilst software and services revenues decreased by
32 per cent. In the UK, maintenance revenues remained steady at last year's
level whilst software and services revenues decreased by 45 per cent.
Total costs for the Group were #2.9 million, a slight increase on last year's
level. Except for the recruitment of extra development staff during the year,
head count in the UK and in the US was held constant. The relocation of the
UK office at the start of 1998 resulted in some additional one-time operating
expenditure. Compared to the previous year expenditure on research and
development increased by 19 per cent. to #0.8 million, whilst distribution
costs decreased slightly and administrative expenses remained level.
Maintenance revenues are expected to remain at current levels for all of 1999.
The work in progress brought forward into 1999, combined with expected
maintenance revenues, provides the Group with a substantial proportion of its
budgeted revenues and cover towards its budgeted costs in 1999.
Capital Expenditure
In 1998 the Group spent approximately #0.17 million on upgrading the
infrastructure of its offices. About 45 per cent. of this was incurred by
fit-out and furnishing costs associated with the relocation of the UK office
and the remainder by new computer hardware and software purchases for both
offices.
Interest
The Group incurred only a small amount of lease interest charges in the year
and these are not expected to increase significantly in 1999. Interest income
to the amount of #0.13 million was earned on the Group's cash balances during
the year. 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 total cash balances of #1.8 million and ended
it with balances of over #2.3 million, achieving a net cash inflow of #0.5
million for the year.
Taxation
Within the Group there remain substantial tax losses for use against this and
future years' trading profits.
Foreign Currency
Approximately 75 per cent. of the Group's revenues are in US dollars and it
has a disproportionate amount of costs in UK sterling. Throughout 1998, the
pound remained strong against the US dollar in the range $1.63 to $1.70. The
accounts have been prepared using a year end exchange rate of #1 : $1.6638
(1997: $1.6454) and an average rate of #1 : $1.6574 (1996: $1.6401).
P Smart
Finance Director
Consolidated profit and loss account
for the year ended 31 December 1998
1998 1997
# #
Turnover 3,039,301 3,025,110
__________ __________
Cost of sales
Research and development (789,873) (666,492)
Other (833,087) (889,152)
__________ __________
(1,622,960) (1,555,644)
__________ __________
Gross profit 1,416,341 1,469,466
Distribution costs
(including sales and marketing) (460,378) (495,665)
Administrative expenses (804,342) (815,627)
__________ __________
(1,264,720) (1,311,292)
__________ __________
Operating profit 151,621 158,174
Net interest receivable 124,963 117,390
__________ __________
Profit on ordinary activities
before and after taxation 276,584 275,564
__________ __________
Basic and diluted earnings per share 1.1p 1.1p
__________ __________
All amounts relate to continuing operations.
Consolidated statement of total recognised gains and losses
for the year ended 31 December 1998
1998 1997
# #
Profit for the financial year 276,584 275,564
Gain (loss) on foreign
currency translation 9,810 (36,936)
__________ __________
Total recognised gains and
losses relating to the year 286,394 238,628
__________ __________
All amounts relate to continuing operations.
Consolidated balance sheet
31 December 1998
1998 1997
# #
Fixed Assets
Tangible assets 326,633 273,903
__________ __________
Current assets
Stocks 41,500 -
Debtors 1,066,726 1,533,861
Cash at bank and in hand (including
short term deposits) 2,331,897 1,796,098
__________ __________
3,440,123 3,329,959
__________ __________
Creditors: Amounts falling due
within one year
Deferred income (814,105) (854,918)
Other (328,326) (432,170)
__________ __________
(1,142,431) (1,287,088)
__________ __________
Net current assets 2,297,692 2,042,871
__________ __________
Total assets less current liabilities 2,624,325 2,316,774
Creditors: Amounts falling due
after more than one year (15,657) -
__________ __________
Net assets 2,608,668 2,316,774
__________ __________
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 (2,893,736) (3,185,630)
__________ __________
Shareholders' funds - all equity 2,608,668 2,316,774
__________ __________
Consolidated cash flow statement
for the year ended 31 December 1998
1998 1997
# #
Net cash inflow (outflow)
from operating activities 565,710 (513,178)
__________ __________
Returns on investments and
servicing of finance 124,963 117,390
Capital expenditure and
financial investment (158,111) (118,305)
__________ __________
(33,148) (915)
__________ __________
Cash inflow (outflow) before
management of liquid resources
and financing 532,562 (514,093)
Management of liquid resources (569,587) (1,493,101)
Financing (1,839) (9,183)
__________ __________
Decrease in cash in the year (38,864) (2,016,377)
__________ __________
All amounts relate to continuing operations.
NOTES
1. Segmental analysis
Turnover
An analysis of Group turnover by geographical region of origin is given below:
1998 1997
# #
UK 634,847 688,019
USA 2,353,624 2,281,507
Other 50,830 55,584
__________ __________
3,039,301 3,025,110
__________ __________
Turnover by destination is not materially different from that by origin.
The Directors consider that the Group operates in one class of business.
However, turnover is derived as follows:
1998 1997
# #
Software systems and upgrades 830,236 1,406,236
Maintenance support 1,541,372 949,077
Services 250,987 321,758
Hardware sales and upgrades 220,247 260,345
Other 96,459 87,694
Non-recurring royalty received from
Armstrong Healthcare Limited 100,000 -
_________ _________
3,039,301 3,025,110
_________ _________
Analyses by origin are as follows:
1998 1997
UK USA Total UK USA Total
and other and other
# # # # # #
Turnover 685,677 2,353,624 3,039,301 743,603 2,281,507 3,025,110
_______ _________ _________ ________ _________ _________
Operating
profit 49,382 102,239 151,621 144,769 13,405 158,174
_________ _________ _________ ________ _________ _________
Net assets
(liabilities) 3,403,174 (794,506) 2,608,668 3,248,646 (931,872) 2,316,774
_________ _________ _________ _________ _________ _________
2. Earnings per share
Basic earnings per share are based upon the profit attributable to
shareholders of #276,584 (1997: #275,564) and weighted average number of
shares in issue during the year of 25,080,310 (1997: 25,080,310).
Diluted earnings per share are based upon the profit attributable to
shareholders of #276,584 (1997: #275,564) and weighted average number of
shares in issue during the year of 25,426,926 (1997: 25,080,310), allowing for
the exercise of all outstanding share options.
3. Reconciliation of operating profit to operating cash flows
1998 1997
# #
Operating profit 151,621 158,174
Depreciation charge 128,625 110,878
(Profit) loss on sale of tangible
fixed assets (1,345) 621
(Increase) in stocks (41,500) -
Decrease (increase) in debtors 467,137 (961,753)
(Decrease) increase in creditors (138,828) 178,902
_________ _________
Net cash inflow (outflow) from
operating activities 565,710 (513,178)
_________ _________
4. Analysis of cash flows
1998 1997
# #
Returns on investments and
servicing of finance
Interest received 125,908 117,736
Interest element of finance lease rentals (945) (346)
________ _________
Net cash inflow 124,963 117,390
________ ________
Capital expenditure and financial investment
Purchase of tangible fixed assets (164,119) (129,704)
Sale of tangible fixed assets 6,008 11,399
_________ _________
Net cash outflow (158,111) (118,305)
_________ _________
Management of liquid resources
Short term deposits (569,587) (1,493,101)
_________ ___________
Net cash outflow (569,587) (1,493,101)
_________ ___________
Financing
Capital element of finance lease
rental payments (1,839) (9,183)
_________ _________
Net cash outflow (1,839) (9,183)
_________ _________
5. Analysis and reconciliation of net funds
1 January Other non Exchange 31 December
1998 Cashflow cash changes movement 1998
# # # # #
Cash in hand
and at bank
(including
overdraft) 297,457 (38,864) - 956 259,549
Finance leases - 1,839 (21,900) - (20,061)
_______ ________ ________ ______ _________
Net funds 297,457 (37,025) (21,900) 956 239,488
_______ ________ ________ ______ _________
1998 1997
# #
Decrease in cash in the year (38,864) (2,016,377)
Cash outflow from increase
in lease financing 1,839 9,183
_________ ___________
Change in net funds resulting
from cash flows (37,025) (2,007,194)
Exchange movement 956 3,249
New finance leases (21,900) -
_________ ___________
Movement in net funds in year (57,969) (2,003,945)
Net funds at 1 January 1998 297,457 2,301,402
_________ ___________
Net funds at 31 December 1998 239,488 297,457
_________ ___________
6. The financial information contained in this preliminary announcement
of audited results does not constitute the Group's statutory accounts for the
years ended 31 December 1998 or 31 December 1997. The accounts for the year
ended 31 December 1997 have been delivered to the Registrar of Companies.
The statutory accounts for the years ended 31 December 1998 and 1997
have been reported on by the company's auditors; the reports on these
accounts were unqualified and they did not contain any statement under section
237 (2) or (3) of the Companies Act 1985.
The accounts for the year ended 31 December 1998 are expected to be
posted to shareholders in due course and will be delivered to the Registrar of
Companies after they have been laid before the company in a general meeting on
6 May 1999.
Copies will also be available from the principal office of the company:
4 The Thameside Centre, Kew Bridge Road, Brentford, Middlesex, TW8 0HF.
END
FR AASAKKSKOOUR
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