Interim Results

Clinical Computing PLC 06 August 2003 CLINICAL COMPUTING Plc 2003 INTERIM RESULTS Clinical Computing Plc ('the Group'), the international developer of clinical information systems for the healthcare market, announces Interim Results for the six months ended 30 June 2003. The Group trades through two operating subsidiaries: Clinical Computing UK, Ltd. in the United Kingdom and Europe and Clinical Computing, Inc. in the United States. Introduction • CV4 now in use with five US customers. • First UK customer due to go live later this month. • Prospects to develop further applications using CV4's dynamic architecture. • Approximately £2.6m Placing and Open Offer, underwritten by Investec Bank (UK) Limited. Financial Overview • Turnover up 3% to £1.15m (2002: £1.11m) - 80 per cent of turnover derived from the US. - Turnover negatively impacted by weaker dollar in the period. - Increase attributed to new customers going live. • Gross profit on turnover increased to 60 per cent at end of first half 2003. • Distribution costs down 18 per cent, admin costs down 8 per cent. • Operating loss of £397,000 (2002: loss £598,000). • Loss per share of 1.6p (2002: loss 2.4p) • No borrowings. • Fund raising strengthens the balance sheet, provides working capital for expansion. Business Review • Installation and training teams in place to support future sales. • 90 legacy customers as potential candidates for CV4. • Actively pursuing 15 open bids. • Product expansion planned for CV4 in addition to renal and transportation applications. Outlook In his statement to shareholders, Howard Kitchner, Chairman said: 'The Directors believe that new deals in progress are predicated on the Group providing potential customers with confidence in the Group's financial position, which they believe that the Placing and the Open Offer will provide. Our goal in the short term is to capitalise on our existing relationships in the renal market and to work in partnership with leading healthcare institutions in the US and UK to expand the specialties supported by CV4. The Directors view the Group's future prospects with confidence.' For further information, please contact: Jack Richardson, Chief Executive, Clinical Computing Plc Tel: 001 513 651 3803 Joe Marlovits, Finance Director, Clinical Computing Plc Tel: 020 8380 4400 Paul McManus/Peter Binns, Binns & Co PR Ltd Tel: 020 7786 9600 Chairman's Statement Introduction I am pleased to report that Clinical Vision 4.0 ('CV4') is now being used by five customers in the USA, and that our first UK customer is due to go live later this month. CV4 was developed as a generic clinical information system by the Group, based on its cumulative expertise serving both the USA and UK clinical healthcare markets. Its dynamic framework architecture permits our staff to generate new applications from the system's core package. The first customers live on the system have all deployed the renal application. We are now in discussions with customers and prospects to develop further clinical applications for CV4. Your Directors believe that the Group is at a stage where a further injection of capital will enable it to exploit market opportunities available with the CV4 technology. Accordingly, the Company has entered into an agreement with Investec Bank (UK) Limited, who have committed to underwrite a placing and open offer to raise approximately £2.2 million, net of expenses. Net proceeds from this transaction will initially be held on deposit to strengthen the balance sheet and will provide general working capital to support our immediate goals of securing further sales of the renal application and further expansion of clinical applications supported by the CV4 framework. Trading Results Turnover when compared to the same period in the prior year increased 3 per cent. to £1,150,000 (2002: £1,117,000). As the majority of Group turnover is derived from our US subsidiary (80 per cent.), consolidated turnover was negatively impacted by the weakening of the dollar compared to sterling during the period under review. Assuming a constant exchange rate, turnover would have increased 12 per cent. This increase in revenue is attributed to the Clinical Vision product line as 5 customers went live in the first half of 2003. Gross profit improved from 57 per cent. of turnover in the first half of 2002 to 60 per cent. at the end of the first half 2003, and our installation and training teams are now in place to support future contract wins. Distribution costs have decreased 18 per cent. to £276,000 (2002: £325,000) and much of this decrease is attributed to the fact that 77 per cent. of our sales costs are incurred in the US dollar and the decrease is attributed to the weakening of the dollar against sterling during the period under review. Administrative costs have also decreased 8 per cent., primarily due to reduced investment in product development. The Group's operating loss of £397,000 compares favourably to the loss incurred in the first half of the prior year (2002: £531,000). The Group had no outstanding borrowings during the period under review, but is reporting net interest payable of £30,000 (2002: payable £67,000), which represents the foreign exchange movement of certain inter--Group debtor balances that are fixed in US dollar and not settled at the end of the period. These balances are deemed financing items for reporting purposes. The loss on ordinary activities for the period under review was £397,000 (2002: loss £598,000). The loss per share was 1.6p (2002: loss 2.4p). Outlook We continue to actively market CV4 to both legacy customers and new prospects, and we have approximately 90 legacy customers that we believe provide a pool of potential customers for CV4. We are now pursuing 15 open bids, which include both new and legacy customers, one of which would be a significant transaction. As always, the success and timing of converting pipeline to sales are subject to normal business risk. Discussions are also taking place with several potential customers to add new applications to the CV4 technology on top of our renal and transplantation applications. The Directors believe that several of these deals are predicated on the Group providing these potential customers with confidence in the financial position of the Group, which they believe that the Placing and the Open Offer will achieve. Our goal in the short term is to capitalise on our existing relationships in the renal market and to work in partnership with leading healthcare institutions in the US and UK to expand the specialities supported by CV4. The Directors view the Group's future prospects with confidence. Howard Kitchner Chairman 5 August 2003 Unaudited Consolidated Profit and Loss Account Six months ended 30 June 2003 Six months Six months Year ended ended ended 30 June 30 June 31 December 2003 2002 2002 (as restated) £'000 £'000 £'000 Turnover (Note 2) 1,150 1,117 2,392 ---------- --------- --------- Cost of sales (462) (478) (979) ---------- ---------- ---------- Gross profit 688 639 1,413 Distribution costs (276) (325) (626) Administrative expenses Development costs (404) (496) (912) Other (375) (349) (734) Total (779) (845) (1,646) ---------- ---------- ---------- Operating loss (367) (531) (859) Net interest payable (30) (67) (124) ---------- ---------- ---------- Loss on ordinary activities before taxation (397) (598) (983) Tax credit on loss on ordinary activities - - 28 Loss on ordinary activities before and after taxation and retained loss (397) (598) (955) ---------- ---------- ---------- Basic and diluted loss per share (Note 3) (1.6p) (2.4p) (3.8p) ----------- ---------- ----------- All amounts relate to continuing operations. The comparative figures have been restated to reclassify billed expenses from cost of sales to turnover as described in note 1. Unaudited Consolidated Statement of Total Recognised Gains and Losses Six months ended 30 June 2003 Six months Six months Year ended ended ended 30 June 30 June 31 December 2002 2003 2002 £'000 £'000 £'000 Loss for the period (397) (598) (956) Gain on foreign currency translation 28 77 128 ---------- ---------- ---------- Total recognised gains and losses (369) (521) (828) ---------- ---------- ---------- Unaudited Consolidated Balance Sheet 30 June 2003 30 June 30 June 31 December 2003 2002 2002 £'000 £'000 £'000 Tangible fixed assets 141 207 169 ---------- ---------- ---------- Current assets Debtors 440 507 534 Cash at bank and in hand 195 1,024 488 ---------- ---------- ---------- 635 1,531 1,022 ---------- ---------- ---------- Creditors: Amounts falling due within one year Deferred income (623) (897) (576) Other creditors (140) (153) (233) Total (763) (1,050) (809) ---------- ---------- ---------- Net current (liabilities) assets (128) 481 213 ---------- ---------- ---------- Net assets 13 688 382 ---------- ---------- ---------- Capital and reserves Called up share capital 1,254 1,254 1,254 Share premium account 4,248 4,248 4,248 Profit and loss account (5,489) (4,814) (5,120) ---------- ---------- ---------- Equity shareholders' funds 13 688 382 ---------- ---------- ---------- Unaudited Consolidated Cash Flow Statement Six months ended 30 June 2003 Six months Six months Year ended ended ended 30 June 30 June 31 December 2003 2002 2002 £'000 £'000 £'000 Net cash outflow from operating activities (Note 4) (265) (537) (1,044) Returns on investments 2 18 28 Capital expenditure (19) (15) (42) ---------- ---------- ---------- (17) 3 (14) ---------- ---------- ---------- Cash outflow before management of liquid resources (282) (534) (1,058) Management of liquid resources 243 463 1,060 ---------- ---------- ---------- (Decrease) increase in cash (39) (71) 2 ---------- ---------- ---------- Reconciliation of net cash flow to movement in net funds Six months ended 30 June 2003 Six months Six months Year ended ended ended 30 June 30 June 31 December 2003 2002 2002 £'000 £'000 £'000 (Decrease) increase in cash in the period (39) (71) 2 ---------- ---------- ---------- Cash (outflow) from movement in liquid resources (243) (463) (1,060) ---------- ---------- ---------- Change in net funds resulting from cash flows (282) (534) (1,058) Exchange movement (11) (19) (31) ---------- ---------- ---------- Movement of net funds in the period (293) (553) (1,089) Net funds at beginning of period 488 1,577 1,577 ---------- ---------- ---------- Net funds at end of period 195 1,024 488 ---------- ---------- ---------- Notes: 1. Basis of preparation This interim report was approved by the board of directors on 5 August 2003 and follows the accounting policies adopted in the 2002 Annual Report. The Group has a deferred tax asset overall, principally in relation to tax losses, which has not been recognised following an assessment of the likelihood of recovery. The comparatives for the six months ended 30 June 2002 have been restated to reclassify billable expenses of £15,000 in turnover rather than as a reduction of cost of sales. The financial information contained in this interim report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985 and should be read in conjunction with the 2002 Annual Report. The comparative financial information is based on the interim results for the six months ended 30 June 2002. The financial information for the year ended 31 December 2002 is an abridged statement from the group's accounts at that date which have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain a statement under section 237(2) or 237(3) of the Companies Act 1985. Going Concern The Company requires further funding to enable it to exploit the development of its new product and for ongoing working capital purposes and is seeking to raise up to £2.2million in additional funds net of costs by way of an underwritten placing and open offer to shareholders. The funding is subject to shareholder approval which is of its nature uncertain at this time. This interim financial information is prepared on a going concern basis on the assumption that such approval will be obtained. Copies of this interim report will be sent to shareholders and are available from the Company's head office at 2 Kew Bridge Road, Brentford, Middlesex, TW8 OJF. 2. Segmental analysis Six months Six months Year ended ended ended 30 June 30 June 31 December 2003 2002 2002 £'000 £'000 £'000 Turnover by source UK 203 155 317 USA 909 898 1,941 Other 38 64 134 --------- --------- --------- 1,150 1,117 2,392 --------- --------- --------- Turnover by destination is not materially different from that by source. Six months Six months Year ended Ended ended 30 June 30 June 31 December 2003 2002 2002 £'000 £'000 £'000 Turnover by business type Software licenses 427 321 790 Services 104 93 269 Hardware sales - 7 2 Maintenance 605 681 1,294 Other 14 15 37 ---------- ---------- ---------- 1,150 1,117 2,392 ---------- ----------- ---------- 3. Basic loss per share has been calculated on the basis of the weighted average number of shares in issue, being 25,080,310 for the six months ended 30 June 2003, six months ended 30 June 2002, and for the year ended 31 December 2002. 4. Reconciliation of operating loss to operating cash flows Six months Six months Year ended ended ended 30 June 30 June 31 December 2003 2002 2002 £'000 £'000 £'000 Operating loss (367) (531) (859) Depreciation charge 44 62 120 (Increase) decrease in debtors 80 (116) (130) Increase (decrease) in creditors (22) 48 (175) --------- -------- ------- Net cash outflow from operating activities (265) (537) (1,044) ---------- ---------- ---------- The comparative figures have been restated as described in note 1. 5. Analysis and reconciliation of net funds 31 December Cash Exchange 30 June 2002 flow movement 2003 £'000 £'000 £'000 £'000 Cash 120 (39) (2) 79 Short term deposits 368 (243) (9) 116 ---------- --------- ---------- ---------- Net funds (cash at bank and in hand) 488 (282) (11) 195 ---------- --------- ---------- ---------- INDEPENDENT REVIEW REPORT TO CLINICAL COMPUTING PLC Introduction We have been instructed by the company to review the financial information for the six months ended 30 June 2003, which comprises the consolidated profit and loss account, the consolidated balance sheet, the consolidated statement of total recognised gains and losses, the consolidated cash flow statement, the reconciliation of net cash flow to movement in net funds and related notes 1 to 5. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with Bulletin 1999/4 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom auditing standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Going Concern In arriving at our review conclusion we have considered the adequacy of disclosures in note 1 concerning the Company's requirement for further funding which it is seeking by way of an underwritten placing and open offer to shareholders which is subject to shareholder approval. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2003. Deloitte & Touche LLP Chartered Accountants Registered Auditors London 5 August 2003 This information is provided by RNS The company news service from the London Stock Exchange

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