Final Results
RNS Number : 1260U
Clinical Computing PLC
11 May 2008
CLINICAL COMPUTING PLC
2007 PRELIMINARY RESULTS
Clinical Computing Plc ('Clinical Computing', the 'Company' or the 'Group'), the
international developer of clinical information systems for the healthcare
market, announces its preliminary results for the year ended 31 December 2007.
During 2007 the Group traded 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.
On 22 February 2008 Datanet Research Limited (a wholly owned dormant subsidiary
of Clinical Computing Plc) acquired the business and certain assets and
liabilities of Program Management Group Plc ('PMG'). The acquisition included
approximately 50 customer contracts and PMG's project management and resource
planning software. On the 28th February 2008 Datanet Research Limited changed
its name to Hydra Management Limited.
Financial Overview
· Revenue increased 5.2% to £1,875,083 (2006: £1,781,658)
· Operating costs consistent with prior year £2,717,112 (2006:
£2,725,385)
· Loss from operations reduced by 10.8% to £842,029 (2006: £943,727)
· Loss per share of 2.0p (2006: loss 2.6p)
Business Review
· Transferred listing from Official List to AIM
· Fundraising completed on AIM in November 2007 raising £1,810,000 to
advance development of Clinical Vision Web
· Secured reseller agreement with Gambro opening Canadian market
· Clinical Vision Web being tested by customers with view to go-live
later this year
Subsequent Events
· Acquisition of resource management software company completed
· Further fundraising in February 2008 of £545,000 to strengthen balance
sheet
Commenting on Outlook, Howard Kitchner, Chairman of Clinical Computing, said: 'The Group is at the early stages of an exciting partnership with a global medical technology company and together with our recent acquisition and expected release of our web based Clinical Vision solution entering the market in 2009 we hope to report decreasing operating losses in 2008 with a move to profitability in 2009.' Contacts: Clinical Computing plc http://www.ccl.com Joe Marlovits, Chief Executive 020 8747 8744 Dowgate Capital Advisers Limited 020 7492 4777 James Caithie / Simon Sacerdoti Chairman's and Chief Executive's Report Business overview We are pleased to report that the Company has had a number of significant accomplishments since the interim report was published in September 2007. Since then the Company has:
· Completed the process of moving its listing from the Official List to AIM
· Equity placing - raising £1,810,000 (before costs)
· Signed a reseller agreement with Gambro (a global medical technology
company)
· After the year end the Company completed the acquisition of the business
and certain assets and liabilities of the Programme Management Group Plc ('
PMG') and raised a further £545,000 of equity (before costs) to strengthen
the Group's balance sheet
Since listing on AIM in September 2007, the Company has completed two rounds of
financing raising £2,355,000 (before costs) and successfully completed an
acquisition of a UK based resource management software business based in Leeds.
The trade and certain assets and liabilities were of PMG were acquired, and the
business is now trading as Hydra Management Limited.
The PMG acquisition was undertaken by the Company to strengthen its UK revenue
opportunities. This acquisition adds a product portfolio which brings
approximately £400,000 of annual software maintenance revenues from
approximately 50 customers who are primarily UK based. The customer base using
the Hydra Management products are split between the governmental and corporate
sectors and there is opportunity to grow this customer base. £16,000 cash
consideration was paid upon completion of the acquisition with a further
deferred payment due based upon operating performance of the acquired entity.
The Company can settle the deferred obligation, which is based on a formula, at
its option over a period of seven years. In conjunction with this acquisition
the Company placed a further 17,440,000 shares at 3.25p raising £545,000 (before
costs) to support current sales efforts and to improve the Group's balance sheet
strength.
A previous fundraising was completed in November 2007, whereby the Company
placed 60,333,333 shares at 3p, raising £1,810,000 (before costs) to provide
working capital for the business primarily to support investment in staff to
accelerate development of Clinical Vision Web.
The Group has signed an exclusive reseller agreement covering the Canadian
kidney disease market with Gambro a global medical technology company. Under
the terms of this agreement, Gambro's Canadian sales team is now marketing
Clinical Vision to its customer base. This agreement follows on from work that
has been ongoing with Gambro's Australian subsidiary. The first Canadian
contract has been agreed and others are anticipated through 2008 and 2009.
Results
Trading performance is showing improving results with the Group reporting
increased revenues on a similar cost base when compared to the prior year.
Revenues for the year ending 2007 increased 5.2% to £1,875,083 (2006:
£1,781,658) and operating costs were practically unchanged at £2,717,112 (2006:
£2,725,385). Loss from operations reduced by 10.8% to £842,029 (2006:
£943,727). The loss for the year was 844,836 or a loss per share of 2.0p
(2006: loss £843,404 or 2.6p per share).
Strategy
The Group's strategy of developing software products for the management of
chronic disease is still its primary focus and we anticipate developing other
sales channels similar to the Gambro partnership to achieve growth in the
general chronic disease market.
In general the board believes that the healthcare and resource management
portfolios are both somewhat recession proof portfolios which should not be
significantly impacted by short term reductions in general corporate spending.
While both of our chosen markets present certain challenges, they are global in
nature and we are exploring partnership opportunities which will over time
position the Company's solutions beyond its current geographic boundaries. We
believe that expansion into new geographic markets will come via strategic
partners. We are now working with Gambro in Australia, Canada and New Zealand
and this relationship has the potential to sell the Clinical Vision product to
many other countries over time. To date the majority of revenues of the Group
have been generated from direct sales channels.
With respect to the Company's technical strategy, the directors continue to
believe that healthcare applications delivered directly via the internet is a
global healthcare trend which will continue. The Company continued its
development of the Clinical Vision Web product during the year and is now
working with customers to test this product outside of our development
environment.
Products and product development
During 2007 we continued to invest in product expansion and had a number of
research and development projects underway, including the development of
Clinical Vision Graft Vision an application for the UK market, which was
released in April 2007 and the continued development of the Clinical Vision Web
product.
The product development team is now focusing on an integration project for the
Web solution, which will support the Company's move into the wider Chronic
Kidney Disease as well as other chronic diseases.
Outlook
The Group is at the early stages of an exciting partnership with a global
medical technology company and together with our recent acquisition and expected
release of our web based Clinical Vision solution entering the market in 2009 we
hope to report decreasing operating losses in 2008 with a move to profitability
in 2009.
H Kitchner J Marlovits
Chairman Chief Executive
12 May 2008
Finance Review
Results for the year
The Group derived its revenue from approximately 85 healthcare organisations who
are licensing one of the following products: PROTON, di-PROTON, RENLStar and
CLINICAL VISION. Each of these products provides an electronic healthcare
application to manage Chronic Kidney Disease, with an emphasis on End Stage
Renal Disease.
Total revenues for the year ending 2007 increased 5.2% to £1,875,083 (2006:
£1,781,658). The majority of the Group's revenues continue to come from the US
market - 63.1% in 2007 (2006: 59.7%) and on like for like exchange rates
comparing revenues for 2007 and 2006 revenues increased 9.8%.
Maintenance revenue for the period was £1,110,675, or 59.2% of total revenues
(2006: £1,209,563 or 67.9%).
The Group's total operating costs for the year were practically unchanged at
£2,717,112 (2006: £2,725,385).
Operations generated a loss of £842,029 (2006: loss £943,727). The loss for the
year after tax was £844,836 or 2.0p per share (2006: loss £843,404 or 2.6p per
share).
Cash flow and debt
During the year cash spent to support operations was £768,868 (2006: £984,024).
In November the Company completed an equity fundraising, placing 60,333,333 1p
ordinary shares at 3p raising £1,810,000 (before expenses).
Following this fundraising the Company reduced the majority of its then
outstanding debt with Brown Shipley and is reporting cash outflow of £647,473
for debt reduction during the year. Outstanding debt at the end of the year is
£221,680 (2006: £869,153).
At 31 December 2007 the Company had two debt facilities available which in total
provide approximately £1,100,000 of working capital facilities with £221,680
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 of the chairman and two shareholders. A further
£100,000 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 2007 was a deficit of
£271,186 (2006: deficit £1,230,615). The positive change to the equity position
was improved following the Company's share placing noted above which raised
£1,810,000 of capital, before expenses. Offsetting this fundraising was the
loss for the year of £844,836.
Following approval at the Company's August 2007 EGM, the nominal value of the
Company's ordinary shares was changed from 5p to 1p. This change was undertaken
at a time when the Company shares were trading below its nominal value and
limited its ability to raise further equity. The effect of this change
sub-divided each then issued 5p share (33,110,361 5p shares) into one share of
1p ordinary and one deferred share of 4p. The 4p deferred shares do not trade,
have no value, no right to receive a dividend, no voting rights and are not
transferable (other than to the Company). No share certificates have been
issued in respect of the deferred shares.
Also at the August 2007 EGM the company increased its authorised ordinary share
capital to 167,558,556 1p ordinary shares by subdividing the authorised but
unissued 5p ordinary shares into five 1p ordinary shares and authorising
70,000,000 additional new ordinary 1p shares.
In February 2008, in conjunction with the acquisition of the PMG business, the
Company issued a further 17,440,000 shares at 3.25p raising an additional
£545,000 (before expenses) of capital for the Group.
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 three major projects: completing the UK transplant application, further
development and quality assurance testing of the Clinical Vision Web product and
a product update to the Clinical Vision 4 product suite. In April 2007 the Group
completed development of the UK transplant application and this product has now
been released to two customers. £62,435 of cost was capitalised as an intangible
asset for this product and an amortisation charge to the income statement of
£10,406 was made during the year (2006: nil).
The Clinical Vision Web project reached an appropriate stage whereby costs of
this project are now being capitalised as an intangible asset. This project is
still under development and has not yet been released to any customers and at
year end £146,076 has been recorded as an intangible asset.
Additionally, during the year the development team completed a product update
for Clinical Vision all costs with respect to this update were charged to the
income statement.
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 63.1% of the Group's total revenue (£1,063,614) and 32.5%
of its operating costs (£883,080) in US dollars. During the year this
subsidiary was cash generating.
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 generating.
The charge to the income statement for foreign currency transactions was £483
(2006: £24,474)
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
2006 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 £68,517 has been reported and received in 2007. A similar R&D claim
was made for activities undertaken in 2005 and settled in cash during 2006 for
£121,234.
S Gandhi
Finance Director
12 May 2008
Consolidated Income Statement
For the year ended 31 December 2007
Notes Unaudited Audited
2007 2006
£ £
Continuing Operations
Revenue 2 1,875,083 1,781,658
Cost of sales (741,453) (711,663)
__________ __________
Gross profit 1,133,630 1,069,995
Distribution costs (245,496) (371,830)
Administrative expenses
Research and development (890,434) (965,120)
Other (839,729) (676,772)
Total administrative expenses (1,730,163) (1,641,892)
__________ __________
Loss from operations (842,029) (943,727)
Finance income 6,220 2,565
Finance expense (77,544) (23,476)
__________ __________
Loss before tax (913,353) (964,638)
Income tax credit 68,517 121,234
__________ __________
Loss for the year attributable to equity holders of the
company
(844,836) (843,404)
__________ __________
Basic and diluted loss per share 5 (2.0p) (2.6p)
__________ __________
Consolidated Statement of Recognised Income and Expense
For the year ended 31 December 2007
Unaudited Audited
2007 2006
£ £
Loss for the year (844,836) (843,404)
Exchange difference on translation of
foreign operations 11,063 69,243
__________ __________
Total recognised income and expense
for the year (833,773) (774,161)
__________ __________
Consolidated Balance Sheet
As at 31 December 2007
Notes Unaudited Audited
2007 2006
£ £
Non-current assets
Intangible assets 198,105 29,360
Property, plant and equipment 137,871 146,141
__________ __________
335,976 175,501
__________ __________
Current assets
Trade and other receivables 361,253 353,001
Cash and cash equivalents 164,365 14,418
__________ __________
525,618 367,419
__________ __________
Total assets 861,594 542,920
__________ __________
Current liabilities
Trade and other payables (911,100) (904,382)
Bank loans (221,680) (869,153)
__________ __________
(1,132,780) (1,773,535)
__________ __________
Net liabilities (271,186) (1,230,615)
_________ _________
Equity
Share capital 4 2,258,851 1,655,518
Share premium account 4 7,326,133 6,149,063
Share option reserve 4 71,375 58,576
Translation reserve 4 158,843 147,780
Retained earnings 4 (10,086,388) (9,241,552)
__________ __________
Shareholders' funds - deficit (271,186) (1,230,615)
_________ _________
Consolidated Cash Flow Statement
For the year ended 31 December 2007
Notes Unaudited Audited
2007 2006
£ £
Net cash from operating activities 6 (768,868) (984,024)
__________ __________
Investing activities
Interest received 6,220 2,565
Expenditure on product development (179,151) (29,360)
Purchases of property, plant and equipment (40,643) (113,972)
__________ __________
Net cash used in investing activities (213,574) (140,767)
__________ __________
Financing activities
Proceeds from equity issue 1,810,000 102,375
Costs of equity issue (29,597) -
(Decrease) increase in bank loan (647,473) 869,153
__________ __________
Net cash from financing activities 1,132,930 971,528
__________ __________
Net increase (decrease) in cash and cash equivalents 150,488 (153,263)
Cash and cash equivalents at beginning
of year 14,418 173,010
Effect of foreign exchange rate changes (541) (5,329)
__________ __________
Cash and cash equivalents at end of year 164,365 14,418
__________ __________
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 2006.
The financial information set out in this preliminary announcement was
approved by the board on 12 May 2008 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 2007 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 2006 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 2007 will be
posted to shareholders in due course and will be available on the Company's
website simultaneously with posting.
2. Revenue
Unaudited Audited
An analysis of the Group's revenue is as follows: Year Year
ended ended
2007 2006
£ £
Software licenses 613,263 425,914
Maintenance 1,110,675 1,209,563
Services and other revenue 151,145 146,181
__________ __________
Revenue 1,875,083 1,781,658
__________ __________
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. The business operations provide
software, maintenance and services to the healthcare sector and 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
£ £ £ £ £
2007 - Unaudited
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
US UK Australia Unallocated Total
£ £ £ £ £
2006 - Audited
Revenue
Total Revenue 1,063,614 578,495 139,549 - 1,781,658
__________ __________ ________ __________ __________
Segment result
Operating loss (36,406) (788,082) 103,605 (222,844) (943,727)
__________ __________ ________ __________ __________
Finance income 2,565
Finance expense (23,476)
__________
Loss before tax (964,638)
Income tax credit 121,234
__________
Loss for the year attributable
to equity holders of the
company (843,404)
__________
Balance sheet
Segment assets 75,869 370,665 40,666 55,721 542,920
__________
Segment liabilities (413,564) (421,813) (528) (68,477) (904,382)
Current borrowings (869,153) (869,153)
__________
Total liabilities (1,773,535)
Other information
Capital Expenditure 11,176 132,156 - - 143,332
Depreciation 27,066 13,343 36 3,595 44,040
Amortisation - - - - -
4. Reconciliation of movements in equity - Unaudited
Share premium Share
Share account option Translation Retained Total
Capital reserve reserve earnings
£ £ £ £ £ £
At 1 January 2006 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
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)
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 - (29,597) - - - (29,597)
equity
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)
__________ __________ _________ __________ __________ __________
5. Loss per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Unaudited Audited
2007 2006
£ £
Earnings
Earnings for the purposes of basic and diluted earnings per share (844,836) (843,404)
__________ __________
Number of shares
Number Number
Weighted average number of ordinary shares for the purposes of basic and diluted
earnings per share
42,729,082 32,411,320
__________ __________
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
2007 2006
£ £
Loss from operations (842,029) (943,727)
Adjustments for:
Depreciation of property, plant and equipment 58,909 44,040
Amortisation of intangible assets 10,406 -
Share option charges 12,799 20,921
__________ __________
Operating cash flows before movements in working capital (759,915) (878,766)
(Increase) decrease in receivables (10,783) 1,208
Increase (decrease) in payables 10,857 (204,224)
__________ __________
Cash used by operations (759,841) (1,081,781)
Interest paid (77,544) (23,476)
Tax credit received 68,517 121,234
__________ __________
Net cash from operating activities (768,868) (984,024)
__________ __________
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