Final Results
Clinical Computing PLC
08 March 2004
For Immediate Release 8 March 2004
CLINICAL COMPUTING PLC
2003 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 2003. 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.
Financial Overview
* Turnover of £1.86m (2001: £2.39m) - 76% from the US (2002: 81%)
* Lower turnover due to purchasing decision delays by identified target
customers and the weak dollar
* Software maintenance and support contracts provided 64% of total turnover
(2002: 54%)
* Operating costs decreased 8% to £3.0m (2002: £3.25m)
* Loss on ordinary activities after taxation £1.24m (2002: £0.98m)
* Loss per share (basic and diluted): 4.5p (2002: 3.8p)
* R&D costs of £0.85m (2002: £0.91m) - mainly on new Clinical Vision 4
('CV4') product
Business Review
* CV4 'live' at seven customer sites
* Three more customers installing CV4 in current year
* Customers include large teaching hospitals, for-profit dialysis clinic and
healthcare organisations practising renal medicine and transplantation
* Successful placing and open offer raised - £2.2m (net)
* Cash balance of £1.75m
* 102 customers under maintenance contracts for other products and CV4 at
year end (2002: 106)
* Board changes
Outlook and Prospects
Chief Executive Jack Richardson, commenting on the Group outlook, said:
'In all of our selected geographic markets - the UK, US and Australasia - we
experienced growing interest in clinical information systems from clinicians and
administrators who are required to balance increasing patient expectations and
regulatory requirements with delivering cost effective treatments. Likewise,
healthcare organisations as well as governmental bodies are increasingly
interested in seeing efficiency gains from the use of management software in
medicine.
Our immediate focus is upon delivering the open bids we have identified, all of
which are with prospective purchasers practicing renal medicine. We have won two
contracts in the first two months of the current year and look to maintain this
rate throughout the year.
With reference sites in both the US and UK, your directors believe that the
Group is in a position to win more new business with CV4. For the current year
we continue to see our revenue growth being generated from the US renal dialysis
market where we currently have the majority of our reference sites and open
bids.'
Contacts:
Jack Richardson, Chief Executive +1 513 651 3803
Joe Marlovits, Finance Director 020 8747 8744
Peter Binns/Paul McManus Binns & Co PR Ltd 020 7786 9600
Chairman's and Chief Executive's Statement
Introduction
We are pleased to present our report for the year ended 31 December 2003.
At the time of the publication of our half-year results, five customers were
using Clinical Vision 4 ('CV4'). We now have seven customers using CV4 with a
further three customers currently implementing CV4. All 10 customers have
acquired CV4 to enhance their renal dialysis patient care. These customers are
primarily large teaching hospitals or for-profit dialysis clinics that require a
robust clinical information system. The Group developed CV4 as a generic
clinical information system based on its cumulative expertise serving the
clinical healthcare markets in the USA and UK. CV4 provides the Group with the
opportunity to move into other clinical modalities, leveraging its leadership
position in renal medicine and transplantation.
During the year under review we experienced significant delays in purchasing
decisions by target customers for CV4 in our primary geographic markets of the
USA and UK. In the UK, the deferral of purchasing decisions arose from
uncertainty over the government's National Programme for IT ('NPfIT'), which has
redefined the IT procurement process within the English National Health Service
('NHS'). The NHS is now divided into five clusters, each served by a Local
Service Provider ('LSP') for the purpose of implementing and integrating IT
solutions. Each of the five clusters now has a designated LSP, and we anticipate
that spending on clinical information systems will increase relative to recent
years. Initially, much of the investment under the NPfIT is expected to go to
improving infrastructure within the NHS, but your directors believe that
clinically focused products like CV4 will be needed to deliver the UK
government's goal of utilising technology to improve the healthcare system's
overall effectiveness. In the US market, some of the funding for renal medicine
comes from either the federal or state governments. During the second half of
2003, target customers in the US encountered a slow down in their expected cash
flow from government reimbursement programmes, and this resulted in the
postponement of capital acquisitions. We anticipate that these funding
constraints will not continue through 2004. During this calendar year, we have
already finalised two new contracts for CV4 from US customers one of which was
delayed from 2003 because of funding constraints.
During the second half of 2003, the Company also pursued open bids outside its
core market of renal medicine. This process highlighted the uniqueness of these
'non-renal' acute care modalities and through tailoring CV4 over time your
directors maintain their belief that the Company is positioned to exploit the
opportunities in these markets.
Placing and open offer
During the year under review, the Company completed a placing and open offer at
40p issuing 6,430,051 ordinary 5p shares and raising £2,163,713, net of expenses
and increasing the Company's allotted share capital by 26 per cent. The
directors subscribed for 11 per cent of the placing and open offer, which
diluted their overall ownership of the Company from 36 per cent to 31 per cent.
The net proceeds of this fundraising have enabled the Company to secure recent
contracts on more favourable terms, provided working capital to fund operations,
and provided our current prospects with confidence that the Company will be able
to honour long-term contract commitments.
At the time of the placing and open offer we were pursuing 15 open bids, where
we believed that we were one of two final vendors competing for the contract. To
date, of the 15 bids, three have been won, and one was lost. We continue active
dialogue with these prospects and are in on-going contract negotiations with
several at this time.
Trading results
As a result of delays in purchasing decisions by our identified target customers
in the second half of 2003, results for the year reflect a lower volume of
contracts won than expected. Turnover for the year of £1,858,828 (2002:
£2,391,565) produced an operating loss of £1,138,501 (2002: loss £858,610).
After net interest and taxes the loss for the year was £1,236,892 (2002: loss
£955,488). The loss per share was 4.5p (2002: loss per share 3.8p).
Operating review
The Group's turnover continues to be derived from the provision of software and
services in the area of clinical information solutions for healthcare
organisations, primarily those that specialise in renal medicine. For the year
ended 31 December 2003 the Group saw a reduction in turnover of 22 per cent when
compared to the same period in the previous year. The Group derived 75.6 per
cent (2002: 81.0 per cent) of its turnover from the USA and the weakening of the
dollar in the second half of 2003 reduced our overall turnover on a comparative
basis by six per cent. The remaining 16 per cent decrease was the result of less
licence and service work due to the delays in securing contracts noted above.
The Group's main source of revenue continues to be from maintenance contracts
for its software products: PROTON, di-PROTON, RENLStar and Clinical Vision
(versions 3 and 4). Turnover from maintenance and support contracts decreased
eight per cent when compared to the prior year and accounted for 63.8 per cent
of total turnover (2002: 54.1 per cent). This decrease is principally
attributable to the weakening of the US dollar. The Group had 102 customers
under maintenance contracts at the end of 2003 (2002: 106).
During the year under review operating costs were eight per cent lower than in
2002. The majority of this reduction (five per cent) was the result of
translation gains resulting from a weaker US dollar against Sterling than the
prior year. The balance of the savings (three per cent) is attributable to
moving our UK headquarters on more favourable lease terms and reducing our
average staff count by four people.
Cash flows
During the year under review the Group continued its investment in CV4 and the
majority of total development costs of £854,601 went into this product (2002:
£912,038). The Group started the year with cash resources of £488,089 and in
September added the net proceeds from the placing and open offer of £2,163,716.
During the year operations required cash of £994,236 (2002: £1,044,142). The
Group's ending cash balance (including short term deposits) at 31 December 2003
was £1,749,977.
Board changes
Mike Gordon and Conrad Venn, two of the Company's founding directors, have
decided to step down from the Board effective 5 March 2004. Mike previously
served as Chairman from 1997 to 2002. Mike, together with Conrad, our technical
director, led the product direction that has become CV4 and we thank them both
for their contributions. We are currently seeking a new non-executive director.
Market opportunity
In all of our selected geographic markets - the UK, US and Australasia - we
experienced growing interest in clinical information systems from clinicians and
administrators who are required to balance increasing patient expectations and
regulatory requirements with delivering cost effective treatments. Likewise,
healthcare organisations as well as governmental bodies are increasingly
interested in seeing efficiency gains from the use of management software in
medicine.
Today CV4 serves a niche market by providing renal healthcare workers with a
robust tool to manage their patients' records. Your directors believe that the
investment made in recent years has positioned the Group well to take advantage
of opportunities in the renal healthcare market, as well as other acute care
specialties.
Industry analysts are predicting that the compound annual spending growth on IT
from the hospital sector will be significant in our chosen geographic markets.
The Group's focus is to capitalise on these market trends, producing growth from
its core strength of renal medicine in the short term while looking to exploit
the CV4 technology in other medical areas over time.
Outlook
Our immediate focus is upon delivering the open bids we have identified, all of
which are with prospective purchasers practising renal medicine.
In addition to ongoing maintenance revenue, the Group currently has three CV4
contracts to deliver and a total order backlog in excess of £400,000. While in
prior years maintenance revenues have been a large percentage of total revenue
our focus throughout 2004 will be on securing new customers and increasing our
non-maintenance revenue. We have won two contracts in the first two months of
the current year and look to maintain this rate throughout the year.
With reference sites in both the US and UK, your directors believe that the
Group is in a position to win more new business with CV4. For the current year
we continue to see our revenue growth being generated from the US renal dialysis
market, where we currently have the majority of our reference sites and open
bids.
H Kitchner J Richardson
Chairman Chief Executive
5 March 2004
Consolidated Profit and Loss Account
For the year ended 31 December 2003
Notes 2003 2002
£ £
--------- --------- ------------
Turnover 2 1,858,828 2,391,565
Cost of sales (916,780) (978,536)
--------------- ---------------
Gross profit 942,048 1,413,029
Distribution costs (525,482) (625,484)
Administrative expenses
--------- ------------
Research & development (854,601) (912,038)
Other (700,466) (734,117)
--------- ------------
Total (1,555,067) (1,646,155)
-------------- --------------
Operating loss (1,138,501) (858,610)
Net interest payable (98,391) (124,394)
-------------- --------------
Loss on ordinary activities before
taxation (1,236,892) (983,004)
Tax credit on loss on ordinary
activities - 27,516
-------------- --------------
Loss on ordinary activities after
taxation and retained loss for the
financial year (1,236,892) (955,488)
-------------- --------------
Basic and diluted loss per share 3 4.5p) (3.8p)
-------------- --------------
All activities are derived from continuing operations.
Consolidated Statement of Total Recognised Gains and Losses
For the year ended 31 December 2003
Notes 2003 2002
£ £
---------- --------- -------------
Loss for the financial year (1,236,892) (955,488)
Gain on foreign currency
translation 133,306 127,968
-------------- --------------
Total recognised gains and losses
relating to the year (1,103,586) (827,520)
-------------- --------------
Consolidated Balance Sheet
31 December 2003
Notes 2003 2002
£ £
---------- --------- -------------
Fixed assets
Tangible assets 110,694 169,124
-------------- --------------
Current assets
Debtors 326,305 533,722
Cash at bank and in hand
(including short term deposits) 5 1,749,977 488,089
-------------- --------------
2,076,282 1,021,811
-------------- --------------
Creditors: amounts falling due
within one year (756,579) (809,015)
-------------- --------------
Net current assets 1,319,703 212,796
-------------- --------------
Total assets less current
liabilities 1,430,397 381,920
-------------- --------------
Capital and reserves
Called up share capital 1,576,768 1,254,016
Share premium account 6,099,699 4,248,388
Profit and loss account (6,246,070) (5,120,484)
-------------- --------------
Equity shareholders' funds 6 1,430,397 381,920
-------------- --------------
Consolidated Cash Flow Statement
For the year ended 31 December 2003
Notes 2003 2002
£ £
---------- --------- -------------
Net cash outflow from operating
activities 4 (994,236) (1,044,142)
Returns on investments and
servicing of finance 23,302 27,863
Capital expenditure (27,693) (41,957)
-------------- --------------
(4,391) (14,094)
-------------- --------------
Cash outflow before management of
liquid resources and financing (998,627) (1,058,236)
Management of liquid resources (1,310,072) 1,060,297
Financing 2,267,425 -
-------------- --------------
(Decrease) increase in cash in the
year (41,274) 2,061
-------------- --------------
Reconciliation of net cash flow to movement in net funds
For the year ended 31 December 2003
2003 2002
£ £
---------- ------------
(Decrease) increase in cash in the year (41,274) 2,061
Cash inflow (outflow) from movement in liquid
resources 1,310,072 (1,060,297)
-------------- --------------
Change in net funds resulting from cash
flows 1,268,798 (1,058,236)
Exchange movement (6,910) (30,627)
-------------- --------------
Movement in net funds in year 1,261,888 (1,088,863)
Net funds at beginning of year 488,089 1,576,952
-------------- --------------
Net funds at end of year 1,749,977 488,089
-------------- --------------
Notes:
1. Basis of preparation
The financial information set out in this preliminary announcement was
approved by the board on 5 March 2004 and does not constitute the company's
statutory accounts for the years ended 31 December 2003 or 2002, but is
derived from those accounts. Statutory accounts for 2002 have been
delivered to the Registrar of Companies and those for 2003 will be
delivered following the company's Annual General Meeting in due course. The
auditors have reported on those accounts; their reports were unqualified
and did not contain statements under s237(2) or (3) Companies Act 1985.
The financial information for the year ended 31 December 2003 has been
prepared in accordance with the accounting policies set out in the Group's
2002 annual report.
2. Segmental analysis
Turnover
An analysis of Group turnover by geographical region is
given below:
2003 2002
£ £
---------- ------------
UK 380,926 317,311
USA 1,404,396 1,940,252
Other 73,506 134,002
------------ -----------
1,858,828 2,391,565
------------ -----------
Turnover by destination is not materially different from that by origin.
The directors consider that the Group operates in one class of business.
However, turnover is derived as follows:
2003 2002
---------- ------------
Software licences 514,240 789,539
Maintenance 1,186,782 1,294,278
Services 137,811 269,249
Hardware sales - 1,783
Other 19,995 36,716
----------- ----------
1,858,828 2,391,565
----------- ----------
3. Basic loss per share is based upon the loss attributable to shareholders of
£1,236,892 (2002: loss of £955,488 and weighted average number of shares in
issue during the year of 27,235,423 (2002: 25,080,310).
Diluted loss per share is based upon the loss attributable to shareholders
of £1,236,892 (2002: loss of £955,488) and weighted average number of
shares in issue during the year of 27,256,048 (2002: 25,088,319), allowing
for the exercise of all outstanding share options.
4. Reconciliation of operating loss to operating cash flows
2003 2002
£ £
---------- ------------
Operating loss (1,138,501) (858,610)
Depreciation 76,552 120,086
Decrease (increase) in debtors 187,064 (129,872)
Decrease in creditors (97,351) (175,746)
Reversal of previously recognised share
option charge (22,000) -
-------------- --------------
Net cash outflow from operating
activities (994,236) (1,044,142)
-------------- --------------
5. Analysis and reconciliation of net funds
1 January Exchange 31 December
2003 Cash flow movement 2003
£ £ £ £
--------- --------- --------- ----------
Cash in hand and at
bank 119,503 (41,274) (902) 77,327
Short term deposits 368,586 1,310,072 (6,008) 1,672,650
-------------- -------------- -------------- --------------
Net funds 488,089 1,268,798 (6,910) 1,749,977
-------------- -------------- -------------- --------------
6. Reconciliation of movements in Group shareholders' funds
2003 2002
£ £
---------- ------------
Loss for the year (1,236,892) (955,488)
Gain on foreign currency translation 133,306 127,968
New shares issued 2,582,370 -
Expenses of share issue (408,307) -
Reversal of previously recognised share
option charge (22,000) -
-------------- --------------
Net addition (reduction) to
shareholders' funds 1,048,477 (827,520)
Opening shareholders' funds 381,920 1,209,440
-------------- --------------
Closing shareholders' funds 1,430,397 381,920
-------------- --------------
7. Copies 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 2 Kew Bridge Road, Brentford, Middlesex, TW8 OJF.
This information is provided by RNS
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