Preliminary Results

RNS Number : 2439R

Clinical Computing PLC

28 April 2009

 



For Release 7:00 am 28 April 2009

CLINICAL COMPUTING PLC

2008 PRELIMINARY RESULTS

Clinical Computing Plc (the 'Company' or the 'Group'), the international developer of clinical information systems and project and resource management software, announces its preliminary results for the year ended 31 December 2008. During 2008 the Group traded through four operating subsidiaries: Clinical Computing UK Limited in the United Kingdom and Europe, Clinical Computing, Inc. in the United States, Clinical Computing Pty Limited in Australia and Hydra Management Limited ('Hydra') from 22 February 2008 in the United Kingdom and Europe. 

Financial Overview

• Total revenue increased 50.7 per cent to £2,825,032 (2007: £1,875,083); mainly due to revenue relating to Hydra

• Recurring maintenance revenues increased by 36.5 per cent to £1,515,615 (2007:£1,110,675); mainly due to the acquisition of Hydra

• Operating costs increased 33.9 per cent to £3,637,376 (2007: £2,717,112) due to the acquisition of Hydra and costs incurred to complete clinicalvision V

• Loss from operations reduced to £812,344 (2007: £842,029)

• Loss for the year improved to £731,477 (2007: £844,836) 

• Loss per share of 1.0p (2007: 2.0p)

Business Review

• Clinicalvision V web-based clinical information system released in December 2008  

• Three clinicalvision V projects underway in the UK 

• First Canadian clinicalvision V implementation underway

• Group cost reduction completed in October - annualised savings of £300,000

• Hydra management added seven new customers since acquisition

• Group is expanding its service offering to included a hosting service for clinicalvision V which creates additional sales opportunities 

• Clinicalvision V application localised for use in eight countries 

• Headquarters moved to central London

Commenting on Outlook, Howard Kitchner, Chairman of Clinical Computing, said:

'The Group has continued to show improving results and a trend of increasing revenues over the past three years. Following the acquisition of Hydra, momentum from our exciting partnership with a global medical technology company and the release of the clinicalvision V product the Group has a solid foundation to continue to increase its revenues during the current year.'  

Contacts:
Clinical Computing plc	http://www.ccl.com
Joe Marlovits, Chief Executive	020 30067536
Dowgate Capital Advisers Limited	020 7492 4777
James Caithie / Simon Sacerdoti

Chairman's Statement 

Business overview 

We are pleased to report that the Group has had a number of significant accomplishments since the interim report was published in September 2008. Since then the Group has:

• Released its Clinical Vision Web product - clinicalvision V

• Secured three UK contracts totaling £193,000 for clinicalvision V

• Marketed its clinicalvision V product under the 'software as a service' model, in the US and Canada 

• Restructured its cost base 

• Moved its headquarters to central London  

Clinical business

The Group has been working on a development project to web-enable its established clinical vision applications. This project was undertaken with the objective of providing the Group with applications based on internet technologies, which are predicted by industry experts to lead a transformation in the healthcare computing industry. We announced that the first version of our web product was ready for market in eight geographic locations in December 2008. We believe that this technology will provide the Group with a platform from which to launch new products and product extensions for years to come.

Since the release of the clinicalvision V product we have secured contracts in Canada and the UK for clinicalvision V systems. The initial value of the UK contracts total £193,000 and the Group expects to complete these installations in 2009.  

Electronic patient records and medical record technology is capturing the headlines in the United States where the Obama administration has adopted a policy of investing in medical record technology over the coming years. This is a similar policy to the one that the UK government launched in 2004. Although the full details of the US plan will not be made available until the autumn of 2009, we believe that products like clinicalvision V will meet many of the requirements of the plan.    

Additionally, the release of clinicalvision V has opened up new opportunities for the Group as this product can be provided to customers at a lower total cost than previous releases.  The Group is now in a position to offer this product as part of a service, whereby it not only licenses the clinical application but also provides a secure and reliable communication infrastructure via the internet, with the customer only being responsible for personal computers, hand-held devices and an internet connection.

With the release of clinicalvision V the Company reviewed its current operating structure and undertook a re-organisation in October 2008 in which it re-aligned its support and delivery capabilities around this new technology. This has resulted in the elimination of approximately £300,000 of annual costs.

Hydra business 

The acquisition of certain business assets and liabilities relating to Hydra was completed in February 2008. The Hydra software assists organisations to deliver efficiencies in programme and resource management. Its planning capabilities and management information tools provide business controls for organisations managing multiple projects utilising shared resources. 

Prior to the acquisition, the Hydra business handled a wide range of products and bore a high cost base for product development, marketing and delivery of these products.

Under our management, the strategy is to focus on Hydra's core products, Hydra Manager and Personal, and to release new versions of these products in line with customer feedback and market requirements. We believe this has a number of advantages including focusing on Hydra's core strengths as well as being more cost effective in terms of implementation, development and sales expenditure. 

During the year investment was made in modernising the core Hydra products resulting in an improved user inter-face and enabling easier remote working in line with customers' working practice. This investment resulted in the release of Hydra 6.1 which was launched in February 2009.  

The current economic climate has resulted in organisations seeking to improve efficiencies through improved planning, resource management and timely management information. This should result in an increase in sales opportunities for the Hydra products.  

During the year under review Hydra won seven new customers and retained nearly all existing customers under maintenance agreements. As at 31 December 2008 there were over 50 organisations using the Hydra software.  

Results

Trading performance is improving with revenues up 50.7 per cent from the prior year to £2,825,032 (2007: £1,875,083). Revenues from the clinical software business were 69.1 per cent or £1,951,743 (2007: 100% and £1,875,083) and 30.9% or £873,289 from the programme management business (2007: nil).

Operating costs for the Group have increased 33.9 per cent from the prior year to £3,637,376 (2007: £2,717,112). Operating costs from the clinical business were 78.8 per cent or £2,866,508 (2007:100% and £2,717,112), 21.2% or £770,868 from the programme management business (2007: nil).

Loss from operations reduced by 3.5% to £812,344 (2007: £842,029). The loss for the year was £731,477 or a loss per share of 1.0p (2007: loss £844,836 or 2.0p per share); or an improvement of 13.4 per cent.

Products and product development

During 2008 we continued to invest in product expansion and had a number of research and development projects underway, including the development and release of clinicalvision V, our web-based product. This product was officially released on 18 December 2008 and all previous Clinical Vision customers will be migrated to this new product in due course. Clinicalvision V has specific customisation for eight countries and during 2009 our focus will be on expanding its geographic support as well as continuing to enhance its ability to rapidly exchange data with other medical devices and sources of patient information.    

Hydra has also completed a new release of its Hydra Management software product and during 2009 this upgrade will be made available to the customer base. Development efforts are underway to extend the capabilities of the product in the area of executive management information, which we believe will extend the target market for the Hydra portfolio.

In general the Group anticipates no significant increase in development costs from levels reported over the past year.  

Registered Office 

In November the Company moved its corporate headquarters to London and we are now located at Bracton House, 34-36 High Holborn, London WC1V 6AE.

Outlook

The Group has continued to show improving results and a trend of increasing revenues over the past three years. Following the acquisition of Hydra, momentum from our exciting partnership with a global medical technology company and the release of the clinicalvision V product the Group has a solid foundation to continue to increase its revenues during the current year.  

H Kitchner

Chairman

28 April 2009

Finance Review

Results for the year

The Group derived its revenue from approximately 82 healthcare organisations who are licensing one of the following products: PROTON, di-PROTON, RENLStar and CLINICAL VISION and 53 organisations using the Hydra project and resource management products.

Total revenues for 2008 increased 50.7 per cent to £2,825,032 (2007: £1,875,083). The revenues from the clinical business generated 69.1 per cent of the Group's revenues with the remaining 30.9 per cent coming from the Hydra business. The majority of the increase to revenues, for the Group, when comparing 2008 and 2007, was derived from the acquisition of the Hydra business. 

69.3 per cent of the pre-existing clinical business revenues were derived from the US market (2007: 63.1 per cent) and on like for like exchange rates the pre-existing clinical business revenues for 2008 and 2007 were relatively unchanged.   

Maintenance revenue for the year was £1,515,615 or 53.6% of total revenues (2007: £1,110,675 or 59.2%).  The majority of the increase in maintenance revenues is derived from the acquisition of Hydra. 

The Group's total operating costs for the year were £3,637,376 (2007: £2,717,112).    The costs for the pre-existing clinical business were 78.8 per cent of the total costs or £2,866,508 and the remaining 21.2 per cent of costs were incurred by Hydra.  

Operations generated a loss of £812,344 (2007: £842,029).  The loss of the year before tax improved 15.3 per cent to £773,386 (2007: £913,353). The loss for the year after tax was £731,477 or 1.0p per share (2007: £844,836 or 2.0p per share).  

Cash flow and debt

During the year cash spent to support operations was £742,523 (2007: £768,868).

In February 2008 the Company completed an equity fundraising, placing 17,440,000 1p ordinary shares at 3.125p raising £545,000 (before expenses).

The Group continues to use its working capital facility made available through Brown Shipley and is reporting an increase in borrowings to support operations of £451,075 during the year. Outstanding debt at the end of the year is £672,755 (2007: £221,680).

At 31 December 2008 the Group had two debt facilities available which in total provided approximately £1,133,000 of working capital facilities with £672,755 borrowed against these facilities. The larger of the two facilities (£1,000,000) is provided by Brown Shipley on normal commercial terms, and is backed by personal guarantees from the chairman and two shareholders. A further £133,000 facility ($200,000) is provided by Fifth Third Bank in the US and is secured by the assets of the Company.

Capital structure and finance

The Group's consolidated equity position at 31 December 2008 was a deficit of £507,925 (2007: £271,186). The change to the equity position was impacted primarily by the Company's share placing noted above which raised £545,000 of capital, before expenses. Offsetting this fundraising was the loss for the year of £731,477, and the translation loss on foreign subsidiaries of £130,699. 

The Company's current issued shares and total voting capital consists of 110,883,694 1p ordinary shares.  

Software development

During the year under review the development team primarily focused its efforts on two major projects: completing the clinicalvision V product and completing the Hydra Management 6.1 release. In December 2008 clinicalvision V was made generally available and the Hydra 6.1 release was made available in February 2009. £166,975 of our development costs were capitalised as an intangible asset for the clinicalvision V product during the year (2007: 146,076). The Group is reporting an amortisation charge of £15,609 during the year (2007: 10,406) for the clinical vision transplant application.  

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 US dollar is undertaken. This subsidiary generated 47.9% of the Group's total revenue or £1,351,826 and 25.4% of its operating costs or £924,480 in US dollars. During the year this subsidiary was cash generative.  

Additionally, the Company has a subsidiary in Australia. Receipts and payments are in the local currency and no hedging activity is undertaken. During the year this subsidiary was cash generative.

Administrative expenses are offset by positive effects of foreign currency transactions for the year of £83,072 (2007: charge of £483)

Taxation

The Company and all subsidiaries have sufficient tax losses such that no income tax expense has been recognised during the year. However, for the year under review, the Group, through its UK trading subsidiary, filed a research and development ('R&D') tax credit claim with respect to activities undertaken in 2007 on various components of the Clinical Vision product. An election was made, under the terms of the current United Kingdom R&D tax credit regime, for a percentage of the R&D expenditure to be settled in cash. A tax credit in the amount of £41,909 has been reported and received in 2008. A similar R&D claim was made for activities undertaken in 2006 and settled in cash during 2007 for £68,517.

Similar to prior years, an R&D tax credit /claim will be made for activities undertaken in 2008, but this amount will only be accounted for when received in 2009. 

J Marlovits 

Director

28 April 2009

Clinical Computing Plc

Consolidated Income Statement

For the year ended 31 December 2008

	Notes	Unaudited	Audited
		2008	2007
		£	£
Continuing Operations
Revenue
- Acquisitions		873,289	-
- Continuing		1,951,743	1,875,083
		__________	__________
	2	2,825,032	1,875,083
Cost of sales	8	(834,691)	(741,453)
		__________	__________
Gross profit		1,990,341	1,133,630
Distribution costs	8	(328,705)	(245,496)
Administrative expenses
Research and development	8	(1,444,404)	(890,434)
Other	8	(1,029,576)	(839,729)
Total administrative expenses	8	(2,473,980)	(1,730,163)
		__________	__________
Profit/(Loss) from operations
- Acquisitions		102,421	-
- Continuing		(914,765)	(842,209)
		__________	__________
Loss from operations		(812,344)	(842,029)
Finance income		66,489	6,220
Finance expense		(27,531)	(77,544)
		__________	__________
Loss before tax		(773,386)	(913,353)
Income tax credit		41,909	68,517
		__________	__________
Loss for the year attributable to equity holders of the company		(731,477)	(844,836)
		__________	__________
Basic and diluted loss per share	5	(1.0p)	(2.0p)
		__________	__________

Clinical Computing Plc

Consolidated Statement of Recognised Income and Expense

For the year ended 31 December 2008

		Unaudited	Audited
		2008	2007
		£	£
Loss for the year		(731,477)	(844,836)
Exchange difference on translation of  foreign operations		(130,699)	11,063
		__________	__________
Total recognised income and expense for the year		(862,176)	(833,773)
		__________	__________

Clinical Computing Plc

Consolidated Balance Sheet

As at 31 December 2008

	Notes	Unaudited	Audited
		2008	2007
		£	£
Non-current assets
Intangible assets		413,466	198,105
Goodwill	3	157,658	-
Property, plant and equipment		125,988	137,871
		__________	__________
		697,112	335,976
		__________	__________
Current assets
Trade and other receivables		437,149	361,253
Cash and cash equivalents		299,188	164,365
		__________	__________
		736,337	525,618
		__________	__________
Total assets		1,433,449	861,594
		__________	__________
Current liabilities
Trade and other payables		(1,268,619)	(911,100)
Borrowings		(672,755)	(221,680)
		__________	__________
		(1,941,374)	(1,132,780)
		__________	__________
Net liabilities		(507,925)	(271,186)
		_________	_________
Equity
Share capital	4	2,433,251	2,258,851
Share premium account	4	7,750,957	7,326,133
Share option reserve	4	97,588	71,375
Translation reserve	4	28,144	158,843
Retained earnings	4	(10,817,865)	(10,086,388)
		__________	__________
Shareholders' funds - deficit		(507,925)	(271,186)
		_________	_________

Clinical Computing Plc

Consolidated Cash Flow Statement

For the year ended 31 December 2008

	Notes	Unaudited	Audited
		2008	2007
		£	£
Net cash outflow from operating activities	6	(742,523)	(768,868)
		__________	__________
Investing activities
Interest received		66,489	6,220
Acquisition of business operations		(56,750)	-
Expenditure on intangible assets		(171,541)	(179,151)
Proceeds from sale of property, plant and equipment		606	-
Purchases of property, plant and equipment		(38,353)	(40,643)
		__________	__________
Net cash used in investing activities	8	(199,549)	(213,574)
		__________	__________
Financing activities
VAT recovery from equity issue		89,037	-
Proceeds from equity issue		545,000	1,810,000
Costs of equity issue		(34,813)	(29,597)
Increase / (decrease) in bank loan		451,075	(647,473)
		__________	__________
Net cash from financing activities	8	1,050,299	1,132,930
		__________	__________
Net increase in cash and cash equivalents		108,227	150,488
Cash and cash equivalents at beginning of year		164,365	14,418
Effect of foreign exchange rate changes		26,596	(541)
		__________	__________
Cash and cash equivalents at end of year		299,188	164,365
		__________	__________

Notes
1.	Basis of preparation The unaudited preliminary announcement has been prepared under the historical cost convention, on a going concern basis and consistent with applicable International Financial Reporting Standards and IFRIC interpretations ('IFRS') as adopted by the EU.   The preliminary announcement has been prepared on the basis of the same accounting policies as published in the statutory accounts for the year ended 31 December 2007.   The financial information set out in this preliminary announcement was approved by the board on 27 April 2009 and does not constitute statutory financial statements as defined by section 240 of the Companies Act 1985. The statutory accounts for the year ended 31 December 2008 have not yet been delivered to the Registrar of Companies and no audit report has yet been given on the statutory financials statements.   Statutory accounts for the year ended 31 December 2007 have been delivered to the Registrar of Companies. The audit report on these statutory accounts was unqualified and did not contain a statement either under section 237(2) or 237 (3) of the Companies Act. The Annual Report and Accounts for the year ended 31 December 2008 will be posted to shareholders in due course and will be available at the Company's registered office and on the Company's website simultaneously with posting.

2.  Revenue

An analysis of the Group's revenue is as follows:
	Unaudited	Audited
	2008	2007
	£	£
Software licenses	825,155	613,263
Maintenance	1,515,615	1,110,675
Services and other revenue	484,262	151,145
	__________	__________
Revenue	2,825,032	1,875,083
	__________	__________

3.   Goodwill - unaudited

The fair value of the assets relating to the acquisition of Hydra are set out below:

	Book value	Fair value adjustment	Fair value
	£	£	£
Property, plant and equipment	16,000	(16,000)	-
Intangible assets	-	60,000	60,000
Liabilities	(160,908)	-	(160,908)
	__________	__________	__________
Net assets acquired	(144,908)	44,000	(100,908)
	__________	__________	__________

Consideration
Cash consideration	(16,000)
Acquisition expenses	(40,750)
	__________
Total consideration	(56,750)
	__________
Goodwill	(157,658)
	_________

The acquisition of Hydra also involves an element of deferred consideration which is based on the earnings of the business through to the year ended 31 December 2015. Due to the inherent uncertainty in reasonably predicting results through to that period of time the directors do not believe it is appropriate at this time to record a liability for this deferred consideration.  

4. Reconciliation of movements in equity - Unaudited

	Share  Capital	Share premium  account	Share  option reserve	Translation  reserve	Retained earnings	Total
	£	£	£	£	£	£
At 1 January 2007	1,655,518	6,149,063	58,576	147,780	(9,241,552)	(1,230,615)
Share options	-	-	12,799	-	-	12,799
Exchange difference on translation of foreign operations	-	-	-	11,063	-	11,063
Issue of equity shares	603,333	1,206,667	-	-	-	1,810,000
Expenses from issue of equity		(29,597)				(29,597)
Loss for the year	-	-	-	-	(844,836)	(844,836)
	__________	__________	_________	__________	__________	__________
At 31 December 2007	2,258,851	7,326,133	71,375	158,843	(10,086,388)	(271,186)
Share options	-	-	26,213	-	-	26,213
Exchange difference on translation of foreign operations	-	-	-	(130,699)	-	(130,699)
Issue of equity shares	174,400	370,600	-	-	-	545,000
Expenses from issue of equity	-	(34,813)	-	-	-	(34,813)
Recovery of VAT		89,037				89,037
Loss for the year	-	-	-	-	(731,477)	(731,477)
	__________	__________	_________	__________	__________	__________
At 31 December 2008	2,433,251	7,750,957	97,588	28,144	(10,817,865)	(507,925)
	__________	__________	_________	__________	__________	__________

5. Loss per share

The calculation of the basic and diluted earnings per share is based on the following data:

	Unaudited	Audited
	2008	2007
	£	£
Loss
Loss for the purposes of basic and diluted loss per share	(731,477)	(844,836)
	__________	__________
Number of shares
	Number	Number
Weighted average number of ordinary shares for the purposes of basic and diluted loss per share	108,446,872	42,729,082
	__________	__________

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 

	Unaudited	Audited
	2008	2007
	£	£
Loss from operations	(812,344)	(842,029)
Adjustments for:
Depreciation of property, plant and equipment	58,780	58,909
Amortisation of intangible assets	16,180	10,406
Share option charges	26,213	12,799
	__________	__________
Operating cash flows before movements in working capital	(711,171)	(759,915)
(Increase) in receivables	(42,408)	(10,783)
(Decrease) / increase in payables	(3,322)	10,857
	__________	__________
Cash used by operations	(756,901)	(759,841)
Interest paid	(27,531)	(77,544)
Tax credit received	41,909	68,517
	__________	__________
Net cash from operating activities	(742,523)	(768,868)
	__________	__________

7. Business and geographical segments

For management and legal purposes, the Group consists of four operating companies and the parent company. These companies are the basis on which the Group reports its primary segment information. The business operations provide software, maintenance and services to the healthcare sector and for project and resource management there is no significant difference between risk and return on the software and services offered. Therefore there is only one business segment reported across geographic segments. The geographic segmental information presented below excludes any intra-group revenue or expense.

Segmental information is presented below:

	US	UK	Australia	Unallocated	Total
	£	£	£	£	£
2008 - Unaudited
Revenue
Total Revenue	1,351,826	1,441,797	31,409	-	2,825,032
	__________	__________	_______	__________	__________
Segment result
Operating profit / (loss)	427,346	(1,044,668)	14,956	(209,978)	(812,344)
	__________	__________	________	__________	__________
Finance income					66,489
Finance expense					(27,531)
					_________
Loss before tax					(773,386)
Income tax credit					41,909
					__________
Loss for the year attributable to equity holders of the company					(731,477)
					__________
Balance sheet
Segment assets	280,496	1,033,182	4,211	115,560	1,433,449
					_________
Segment liabilities	(476,558)	(712,960)	(2,026)	(77,075)	(1,268,619)
Current borrowings	-	-	-	(672,755)	(672,755)
					__________
Total liabilities					(1,941,374)
					__________
Other information
Capital Expenditure	27,219	182,675	-	-	209,894
Depreciation	23,554	35,226	-	-	58,780
Amortisation	-	16,180	-	-	16,180

	US	UK	Australia	Unallocated	Total
	£	£	£	£	£
2007 - Audited
Revenue
Total Revenue	1,182,404	641,351	51,328	-	1,875,083
	__________	__________	________	__________	__________
Segment result
Operating profit / (loss)	299,324	(824,335)	44,523	(361,541)	(842,029)
	__________	__________	________	__________	__________
Finance income					6,220
Finance expense					(77,544)
					__________
Loss before tax					(913,353)
Income tax credit					68,517
					__________
Loss for the year attributable to equity holders of the company					(844,836)
					__________
Balance sheet
Segment assets	172,791	464,450	40,545	183,808	861,594
					__________
Segment liabilities	(413,132)	(397,555)	(3,355)	(97,058)	(911,100)
Current borrowings	-	-	-	(221,680)	(221,680)
					__________
Total liabilities					(1,132,780)
					__________
Other information
Capital Expenditure	22,178	197,616	-	-	219,794
Depreciation	21,879	34,176	-	2,854	58,909
Amortisation	-	10,406	-	-	10,406

8. Continuing operations and acquisition disclosures 

The following information is provided for the Hydra acquisition and continuing operations from the clinical business. 

Notes to the consolidated income statement for continuing operations and acquisitions

	Unaudited	Unaudited	Unaudited
	Acquisition	Continuing  operations	Total 2008
	£	£	£
Cost of sales	(135,770)	(698,921)	(834,691)
	________	_________	__________
Distribution costs	(109,972)	(218,733)	(328,705)
	________	_________	__________
Administrative expenses
Research and development	(320,366)	(1,124,038)	(1,444,404)
Other	(204,760)	(824,816)	(1,029,576)
Total administrative expenses	(525,126)	(1,948,854)	(2,473,980)
	_________	__________	__________

Notes to the consolidated cash flow statement for continuing operations and acquisitions 

	Unaudited	Unaudited	Unaudited
	Acquisition	Continuing  operations	Total 2008
	£	£	£
Net cash inflow / (outflow) from operating activities	86,669	(829,192)	(742,523)
	________	_________	__________
Net cash used in investing activities	(60,967)	(138,582)	(199,549)
	________	_________	__________
Net cash from financing activities	-	1,050,299	1,050,299
	________	_________	__________

 

END

 

 

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