Final Results

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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