Final Results

Clinical Computing PLC 25 March 2002 For Immediate Release 25 March 2002 CLINICAL COMPUTING PLC 2001 PRELIMINARY RESULTS Clinical Computing PLC ('the Group'), the international developer of clinical information systems for the healthcare market, announces Preliminary Results for the year ended 31 December 2001. 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. Financial Overview • Turnover decreased marginally to £2.18m (2000: £2.26m) • Software maintenance and support contracts provided 62% of Group turnover (2000: 65%) • Operating loss of £1.47m (2000: loss £486,000) • Loss after tax (nil) of £1.37m (2000: loss £329,000) • Loss per share (basic and diluted): 5.5p (2000: loss 1.3p) • Sales and marketing costs increased to £748,000 (2000: £475,000) • Research and development costs increased to £1.08m (2000: £1.01m) • Cash position remains strong at £1.58m • 81% of turnover derived from the US (2000: 77%) Business Review • Three Clinical Vision reference sites installed • 5 additional Clinical Vision product contract gains in Q4 with software/ service value of £515k to be recognised in 2002 figures • Licensing arrangement with the University Hospital of Cincinnati to deliver four transplant applications, including modules for liver, kidney, heart and pancreas • The Group generated 95% of its turnover from its legacy products (PROTON, di-PROTON and RENLStar), the remaining 5% was derived from Clinical Vision • Development costs of Clinical Vision expected to wind down in 2002 • Board considers Group now has the capacity to facilitate growth without significant additions to costs of sales in 2002. Outlook and Prospects In his statement, Chairman Michael Gordon, commenting on the Group outlook, said: 'Group strategy remains clear: to continue to deliver leading clinical solutions in a growing number of specialities and on a more global basis. We believe the architecture of Clinical Vision, and customer relationships such as we are building with the Health Alliance, will make the strategy successful. We enter 2002 with a stable customer base for our legacy products and an order book of Clinical Vision contracts worth in excess of £750,000 at the end of 2001. We believe our contract gains in the US are creating market awareness for our new technology. We expect that European orders should start to filter in during the second half of 2002.' Contacts: Jack Richardson , Chief Executive +1 513 651 3803 Joe Marlovits, Finance Director 020 8380 4400 Peter Binns/Paul McManus Binns & Co PR Ltd 020 7786 9600 Chairman's Statement Introduction The Group's focus has continued to be the Clinical Vision product, which will provide a solution for multiple clinical departments, and further extend our established presence in both renal medicine and transplant markets. We are pleased to report we have installed three Clinical Vision reference sites and are beginning to see our sales and marketing programmes pay off. In the fourth quarter of 2001, we were awarded five additional Clinical Vision contracts, with a software and service value of £515,000, all of which we will recognise in the Group's accounts for the current financial year ending 31 December 2002. Earlier in the year we entered into a licensing arrangement with The University Hospital of Cincinnati to deliver four transplant applications, including modules for liver, kidney, heart and pancreas. The University Hospital is part of the Health Alliance, which comprises five hospitals all located in the greater Cincinnati area. This network of hospitals will soon serve as strategic sites for our US sales operations. The Group continues to sell and maintain its legacy products, and initial feedback from our reference sites and from the market indicates that Clinical Vision is well positioned for both our current markets and broader clinical markets. Trading Results Trading results for the year reflect our investment in resources to develop, market and deliver Clinical Vision. Total costs increased 23 per cent compared to the previous year to £3.69m (2000: £3.0m), while turnover of £2.18m (2000: £2.26m) declined by four per cent. For the year ended 31 December 2001, the Group reports a loss of £1.37m or 5.5p per share (2000: loss £329,000 and 1.3p per share, respectively). The Group's cash position at the end of the year was £1.58m (2000: £2.6m). Net outflows during the year were £1.02m (2000: £180,000). The increase in cash outflow compared to the previous financial year is due to the investment in the product development and business infrastructure needed for future Clinical Vision sales. Business Overview As in the previous year the Group's turnover was principally derived from its core market of renal medicine. The Group generated 95 per cent of its turnover from its legacy products: PROTON, di-PROTON and RENLStar. The remaining five percent was derived from Clinical Vision customers, all of whom were acquired in 2001. The Group continues to serve primarily two geographic markets: the UK and the US. 81 percent of turnover was derived from customers in the US (2000: 77 percent). Our core development effort remains in the UK whilst our main sales, marketing and customer management functions are based in the US. During the year we made a number of changes to personnel that will better equip us to sell and support Clinical Vision. Over the course of the year our average headcount increased by five full time staff to a total of 44 people. Research and Development Our legacy products have had a very long and successful life. Clinical Vision brings our product range into line with today's technologies. Its component-based, dynamic framework architecture is highly adaptable to evolving customer practice, and for generating new applications. It is not tied to any proprietary platform, and thus establishes Clinical Vision as a long-term market solution. The applications we are building in Clinical Vision take advantage of our legacy knowledge to meet the constantly growing needs of our customers. We are several months behind the initial development targets we established at the end of 2000. This has impacted the results for 2001 and may have an impact on 2002 results. However we remain focused on completing this development effort in 2002 and our recent experience indicates that Clinical Vision will be successful. Strategy and Prospects Group strategy remains clear: to continue to deliver leading clinical solutions in a growing number of specialities and on a more global basis. We believe the architecture of Clinical Vision, and customer relationships such as we are building with the Health Alliance, will make the strategy successful. We enter 2002 with a stable customer base for our legacy products and an order book of Clinical Vision contracts worth in excess of £750,000 at the end of 2001. We believe our contract gains in the US are creating market awareness for our new technology. We expect that European orders should start to filter in during the second half of 2002. Our plan is to keep costs contained having regard to our current cash resources and likely revenue streams until the main Clinical Vision development ends in the second half of 2002. Shareholder Value The Board is cognisant of the significant investment in time and money committed to developing Clinical Vision. The development of an advanced software product is a high-risk exercise. It should have a correspondingly high rate of return. We believe that by undertaking this development effort the best value will be provided to our shareholders over the medium to long term. We wish to acknowledge the hard work and commitment of the Group's employees in support of our strategy. Michael Gordon Chairman Financial Director's Statement Group Performance The Group's operations produced a loss of £1.47m (2000: loss £486,000) on turnover of £2.18m (2000: £2.26m). Group turnover for the year of £2.18m was down four per cent, compared with turnover in the previous year. Turnover from operations in the UK fell 21 per cent while in the US turnover has increased two per cent. Software maintenance and support contracts provided 62 per cent (2000: 65 per cent) of the Group's total turnover. Turnover from these maintenance and support contracts decreased seven per cent compared with the previous year, while the Group showed small turnover gains in the software systems and related services revenue when compared to the previous year. Total costs for the Group were £3.69m (2000: £3.0m), an increase of 23 per cent. Research and development costs were £1.08m for the year and have increased £71,000 or seven per cent from 2000. For the second consecutive year the Group has invested over £1 million in research and development and this continues to be our largest expense. All costs associated with research and development are written off to the profit and loss account as incurred. As our development of Clinical Vision is expected to wind down in 2002 these costs as a percentage of turnover and in absolute pounds are expected to be lower in 2002. Other costs included under the caption Cost of Sales represent costs associated with implementation and support services for our software products. Other costs increased £239,000 or 41 per cent when compared to the previous year as we added staff to support the installations of Clinical Vision. During 2001 we incurred certain installation costs while the corresponding revenue will be recognised in the Group's accounts for the year ending 31 December 2002.The Board considers that the Group now has the capacity to facilitate growth without significant additions to costs of sales in 2002. Distribution costs, which primarily consist of sales and marketing costs, have increased £273,000 or 57 per cent against the previous year. The results for 2001 show a full year of sales and marketing costs, whereas in the prior year the Group did not begin rebuilding this function until the fourth quarter. Administrative costs have increased £111,000 or 12 per cent when compared to the previous year and the increase reflects certain one-off costs incurred in 2001. Other operating income is derived from foreign currency transactions including the movement of funds between sterling and the US dollar. The decrease of £207,000 in other operating income for 2001 when compared to the prior year is the result of a decrease in the overall movement of funds and less volatility in exchange rate fluctuations between sterling and the US dollar. After the addition of net interest income of £95,000 (2000: £158,000), the loss on ordinary activities for the year was £1.37m (2000: loss £329,000). Loss per share was 5.5p (2000: loss 1.3p). Cash Flows The Group started the year with total cash balances of £2.6m and ended with a cash balance of £1.58m. The net cash outflow of £1.02m occurred rateably throughout the year. The Group has a cash balance at 31 December 2001 of £1.58m and contracts in hand which we expect to realise cash of £450,000, in 2002. This known cash flow together with our on-going maintenance and support agreements, which we believe are a growing revenue source, will provide the Group with the operating cash flow to continue with its current strategy of developing the Clinical Vision product. Foreign Currency and Interest Rates The Group's practice is not to hedge against transactions that occur in the functional currencies of its subsidiaries. These currencies are sterling and US dollar and no sales or expenses of significance occurred in any other currency. These accounts have been prepared using a year-end exchange rate of £1: $1.4515 (2000: $1.4938) and an average exchange rate for the year of £1: $1.4411 (2000: $1.5136). The Group did not incur any interest or finance charges during the year and invests excess cash in short term time deposits in both the US and UK. The Group does not hedge against any balance sheet currency translation risks. Taxation As in previous years both the UK and US operating companies retain substantial tax losses for use against future years' trading profits. Joe Marlovits Financial Director Clinical Computing Plc Consolidated Profit and Loss Account For the year ended 31 December 2001 2001 2000 £ £ Turnover 2,179,894 2,259,201 -------------- -------------- Cost of sales Research and development (1,084,704) (1,013,777) Other (824,161) (585,377) -------------- -------------- (1,908,865) (1,599,154) -------------- -------------- Gross profit 271,029 660,047 Distribution costs (including sales and marketing) (748,223) (475,458) Administrative expenses (1,033,100) (922,505) Other operating income 44,882 251,427 -------------- -------------- (1,736,441) (1,146,536) -------------- -------------- Operating loss (1,465,412) (486,489) Interest receivable and other finance charges (net) 95,478 157,816 -------------- -------------- Loss on ordinary activities before and after taxation, being the retained loss for the year (1,369,934) (328,673) -------------- -------------- Basic and diluted loss per share (5.5p) (1.3p) -------------- -------------- Clinical Computing Plc Consolidated Statement of Total Recognised Gains and Losses For the year ended 31 December 2001 2001 2000 £ £ Loss for the financial year (1,369,934) (328,673) Loss on foreign currency translation (25,327) (48,833) -------------- -------------- Total recognised gains and losses relating to the year (1,395,261) (377,506) -------------- -------------- Clinical Computing Plc Consolidated Balance Sheet 31 December 2001 2001 2000 £ £ Fixed assets Tangible assets 261,870 338,557 -------------- -------------- Current assets Stocks 1,500 41,500 Debtors 405,454 567,633 Cash at bank and in hand (including short 1,576,952 2,599,647 term deposits) -------------- -------------- 1,983,906 3,208,780 -------------- -------------- Creditors: Amounts falling due within one year Deferred income (760,201) (644,796) Other (276,135) (303,340) -------------- -------------- (1,036,336) (948,136) -------------- -------------- Net current assets 947,570 2,260,644 -------------- -------------- Net assets 1,209,440 2,599,201 -------------- -------------- 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 (4,292,964) (2,903,203) -------------- -------------- Shareholders' funds - all equity 1,209,440 2,599,201 -------------- -------------- Clinical Computing Plc Consolidated Cash Flow Statement For the year ended 31 December 2001 2001 2000 £ £ Net cash outflow from operating activities (1,068,560) (146,681) Returns on investments and servicing of 95,478 157,816 finance Capital expenditure (67,904) (132,911) -------------- -------------- 27,574 24,905 -------------- -------------- Cash outflow before management of liquid resources and financing (1,040,986) (121,776) Management of liquid resources 688,388 446,961 -------------- -------------- (Decrease) increase in cash in the year (352,598) 325,185 -------------- -------------- Clinical Computing Plc Reconciliation of net cash flow to movement in net funds For the year ended 31 December 2001 2001 2000 £ £ (Decrease) increase in cash in the period (including overdrafts) (351,050) 335,252 -------------- -------------- Cash outflow from movement in liquid resources (688,388) (446,961) -------------- -------------- Change in net funds resulting from cash flows (1,039,438) (111,709) Exchange movement 18,291 (72,149) -------------- -------------- Movement in net funds in year (1,021,147) (183,858) Net funds at beginning of year 2,598,099 2,781,957 -------------- -------------- Net funds at end of year 1,576,952 2,598,099 -------------- -------------- Notes: 1. The financial information for the year ended 31 December 2001 is unaudited and does not constitute statutory accounts. The auditors have not reported on the financial statements for the year ended 31 December 2001, nor have any such financial statements been delivered to the Registrar of Companies. The financial information for the year ended 31 December 2000 has been extracted from the full report and accounts for that year, which have been filed with the Registrar of Companies. The preliminary results have been prepared using accounting policies consistent with those adopted in the statutory accounts for the year ended 31 December 2000. 2. Basic loss per share is based upon the loss attributable to shareholders of £1,369,934 (2000: loss of £328,673) and weighted average number of shares in issue during the year of 25,080,310 (2000: 25,080,310). Diluted loss per share is based upon the loss attributable to shareholders of £1,369,934 (2000: loss of £328,673) and weighted average number of shares in issue during the year of 25,087,568 (2000: 25,321,638), allowing for the exercise of all outstanding share options. 3. Reconciliation of operating loss to operating cash flows 2001 2000 £ £ Operating loss (1,465,412) (486,489) Depreciation charge 149,515 153,960 Loss on disposal of fixed assets - 1,523 Decrease in debtors 167,684 211,548 Increase (decrease) in creditors 34,153 (32,723) Write down on stock 40,000 - Share options issued at a discount 5,500 5,500 -------------- -------------- Net cash outflow from operating activities (1,068,560) (146,681) -------------- -------------- 4. Analysis and reconciliation of net funds 1 January Cash Exchange 31 December 2001 flow movement 2001 £ £ £ £ Cash at bank and in hand 465,014 (352,598) 8,734 121,150 Overdraft (1,548) 1,548 - - Short term deposits 2,134,633 (688,388) 9,557 1,455,802 -------------- -------------- -------------- -------------- Net funds 2,598,099 (1,039,438) 18,291 1,576,952 -------------- -------------- -------------- -------------- 5. A copy of the full annual report and accounts will be sent to shareholders in March, and will also be available from the company's registered office at 4 Thameside Centre, Kew Bridge Road, Brentford, Middlesex, TW8 OHF. This information is provided by RNS The company news service from the London Stock Exchange

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