Interim Results
Clinical Computing PLC
29 September 2006
CLINICAL COMPUTING PLC
2006 INTERIM RESULTS
Clinical Computing Plc ('the Company'), the international developer of clinical
information systems for the healthcare market, announces Interim Results for the
six months ended 30 June 2006. 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
• Revenue up 36% to £967,698 (2005: £710,332)
• Operating costs down 12% to £1,420,572 (June 2005: £1,621,498)
• Loss for the period before tax reduced by 48% to £464,112 (June 2005: loss
£895,582)
• Loss for the period £464,112 (June 2005: loss £736,648)
• Loss per share (basic and diluted): 1.5p (June 2005: loss 2.3p)
• Borrowed £292,594 at 30 June 2006 (from the £1,000,000 facility) to
support working capital
Business Review
• 21 customers under contract for Clinical Vision 4 (CV4) (2005:18)
• 8 implementations underway in second half
• 2 CV4 contracts secured from NHS Trusts
• Continued progress on web-enabling CV4 technology
• Staff restructuring nearing completion
• Progress in UK on upgrade proposition to move ProtonTM customers on to CV4
Outlook
Chairman Howard Kitchner, commenting on the Group Outlook, said:
'I believe that as we have now implemented the majority of our restructuring
plan, which we agreed over a year ago, your Company is stronger today than it
was a year ago and that it is capable of delivering improving results in line
with our plan.'
Contacts:
Joe Marlovits, Chief Executive, Clinical Computing 020 8747 8744
www.ccl.com
Paul McManus, Parkgreen Communications Ltd 020 7493 3713
07980 541 893
Chairman's Statement
Introduction
I am pleased to report that as we closed out the first half of 2006 the Company
had nearly completed the restructuring plan that began in the first half of 2005
(as highlighted in the 30 June 2005 Chairman's Statement). Under this plan the
management team has realigned its staff resources and commercial focus,
balancing the Group's emphasis equally between the US and Europe (primarily the
UK). Prior to this the Group's main focus was on the US renal dialysis market.
This transition has taken more than twelve months to implement, and your
directors believe that as we near completion of this transition that this
balanced focus will improve the Group's near term and long term prospects.
The restructuring plan called for several new full time positions to be created
to improve our operating performance. I can report that we have filled
positions in the following areas: product management, quality assurance and
product support. The individuals joining the Group bring management experience
from larger organisations and new skills that are expected to benefit our
operational performance going forward.
In the UK we are making significant progress on marketing our Clinical Vision 4
TM (CV4) transition programme to a selected number of the larger ProtonTM
customers. The management team continues to explore and evaluate potential
channel partnerships in other parts of Europe that could enhance our mid term
revenue opportunities.
Our development team continues to make steady progress on web-enabling the CV4
framework. This effort should have a favourable impact on 2007 and beyond.
As noted below the Group is reporting an increase in revenue for the period
under review when compared to the same period last year. This increase was
partially driven by the eight CV4 implementations that are currently active. We
have determined that our customers require more service from us to assist them
in moving an implementation through to go-live. Our strategy in the second
half is to increase the amount of professional services that we provide which we
believe will assist our customers in moving implementations to full use faster
which should result in recognising revenue sooner.
Trading Results
During the period under review, Group revenues increased 36 %, from £710,322 to
£967,698. The increase in revenue compared to the same period in the prior year
is attributed to software licenses for both CV4 and our legacy products,
primarily Proton. The Group continues to derive revenue from maintenance
contracts from approximately 100 healthcare organisations using one of its 4
product lines. Maintenance revenue for the period was £621,841 or 64% of total
revenue (2005: £540,345 or 76%).
Total operating costs decreased 12 % from £1,621,498 to £1,420,572. The
operating cost decrease is primarily attributed to staff costs which have fallen
compared to the prior year as we implemented our restructuring plan. As noted
above management continues to make strategic appointments according to our plan
and as at the date of this announcement had hired 11 new employees since the
beginning of the year. However, as we continue to re-align our resources we do
not expect the average headcount for 2006 to exceed the 2005 average of 40
staff.
The effect of the increase in revenue and decrease in costs resulted in the
Group's operating loss before tax being reduced by 48% to £464,112 (2005:
£895,582 loss).
The loss for the period after tax was £ 464,112 or 1.5p per share (2005:
£736,648 (see note 4) or 2.3p per share).
Clinical Vision 4
We now have 21 healthcare organisations under contract to use CV4. These 21
customers are spread over five countries and we are currently implementing a
French version of the renal application in Europe. As of the date of this
announcement we have 13 customers using CV4 with eight implementations currently
underway. During the period under review we have made several enhancements to
the clinical application including the addition of a more generic clinical
scheduling component. We are scheduled to implement a transplantation module
for both the kidney and pancreas during the second half of the year. These
application extensions to CV4 continue to expand the functionality of the system
for our core renal market as well as the general clinical healthcare market.
Cash Flows and Liquidity
In June the board of directors secured a £1,000,000 credit facility for the
Group's working capital needs through to September 2007. At the AGM in June a
resolution was passed to allow the Company to borrow against this facility and
at 30 June 2006 £292,594 has been used to support the Group. Also in June the
Company completed an equity fundraising of £102,375 under a Private Issue of
1,575,000 new ordinary 5p shares at 6.5 pence per share representing 4.99% of
the ordinary shares then outstanding. The new shares were admitted to trading
on 12 June 2006 and following this transaction the Company has 33,110,361 shares
in issue. During the period under review the Group's required £495,000 to
support its operations and it is likely that a similar amount will be required
in the second half of the year. The board regularly monitors the progress of
the contract pipeline and evaluates the likely timing of cash inflow from signed
and potential new contracts along with ongoing maintenance contracts against our
cost structure. At this time your directors believe that the £1,000,000 line of
credit provides the working capital support for the Group to continue to pursue
its business objectives and as of the date of this announcement has the
appropriate level of funding to continue as a going concern.
Outlook
The Group has a backlog of eight CV4 implementations and we are adding resources
to ensure the timely delivery of these contracts. This additional resource will
allow us to handle larger contracts in the future.
I believe that as we have now implemented the majority of our restructuring
plan, which we agreed over a year ago, your Company is stronger today than it
was a year ago and that it is capable of delivering improving results in line
with our plan.
Howard Kitchner
Chairman
28 September 2006
Unaudited consolidated income statement
Six months ended 30 June 2006
Six months Six months Year
ended ended ended
30 June 2006 30 June 2005 31 December 2005
£ £ £
Continuing operations
Revenue (Note 3) 967,698 710,322 1,655,806
Cost of sales (345,161) (368,064) (720,228)
-------------- -------------- -----------------
Gross profit 622,537 342,258 935,578
Distribution costs (211,659) (301,024) (496,194)
Administrative expenses
Research & development (471,308) (450,245) (878,561)
Other (392,444) (502,165) (1,122,065)
Total administrative expenses (863,752) (952,410) (2,000,626)
-------------- ------------- -----------------
Loss from operations (452,874) (911,176) (1,561,242)
Interest income 1,656 15,594 22,743
Finance costs (12,894) - -
-------------- ------------ -----------------
Loss before income tax (464,112) (895,582) (1,538,499)
Income tax (Note 4) - 158,934 158,934
-------------- ------------ -----------------
Loss for the period (464,112) (736,648) (1,379,565)
-------------- ------------ ----------------
Basic and diluted loss per share (Note 5) (1.5p) (2.3p) (4.4p)
-------------- ------------ ----------------
Unaudited consolidated statement of recognised income and expense
Six months ended 30 June 2006
Six months Six months Year
ended ended Ended
30 June 2006 30 June 2005 31 December 2005
£ £ £
Exchange differences on translation of foreign
operations
32,662 (23,770) (40,722)
Loss for the period (464,112) (736,648) (1,379,565)
------------- ------------- ----------------
Total recognised expense for the period (431,450) (760,418) (1,420,287)
------------- ------------- ----------------
Unaudited consolidated balance sheet
30 June 2006
30 June 30 June 31 December
2006 2005 2005
£ £ £
Non-current assets
Property, plant and equipment 74,378 90,780 81,883
--------------- --------------- -----------------
Current assets
Trade and other receivables 357,973 503,116 345,977
Cash and cash equivalents 54,878 391,566 173,010
--------------- --------------- -----------------
412,851 894,682 518,987
--------------- --------------- -----------------
Total assets 487,229 985,462 600,870
--------------- ---------------- -----------------
Current liabilities
Trade and other payables (1,090,650) (919,019) (1,180,620)
Bank overdrafts and loans (292,594) - -
--------------- --------------- -----------------
(1,383,244) (919,019) (1,180,620)
--------------- --------------- -----------------
Net current liabilities (970,393) (24,337) (661,633)
--------------- --------------- -----------------
Net (liabilities) / assets (896,015) 66,443 (579,750)
--------------- -------------- -----------------
Equity
Share capital 1,655,518 1,576,768 1,576,768
Share premium account 6,149,063 6,125,438 6,125,438
Share option reserve 50,465 23,979 37,655
Translation reserve 111,199 95,489 78,537
Retained earnings (8,862,260) (7,755,231) (8,398,148)
--------------- ---------------- -------------------
Total (deficit) / equity (Note 6) (896,015) 66,443 (579,750)
---------- ---------- ----------
Unaudited consolidated cash flow statement
Six months ended 30 June 2006
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
£ £ £
Net cash from operating activities (Note 7) (491,621) (491,589) (714,913)
Investing activities
Interest received 1,656 15,594 22,743
Purchases of property, plant and equipment (16,580) (10,367) (21,923)
--------------- ---------------- --------------
Net cash (used in) from investing activities (14,924) 5,227 820
--------------- --------------- --------------
Financing activities
New bank loans raised 292,594 - -
Proceeds from equity 102,375 - -
--------------- ---------------- ---------------
Net cash from financing activities 394,969 - -
--------------- ---------------- ---------------
Net decrease in cash and cash equivalents (111,576) (486,362) (714,093)
Cash and cash equivalents at beginning of period 173,010 875,731 875,731
Effect of foreign exchange rate changes (6,556) 2,197 11,372
--------------- ----------------- ----------------
Cash and cash equivalents at end of period 54,878 391,566 173,010
--------------- ----------------- ---------------
NOTES:
1. Basis of preparation
The accounting policies applied in the un-audited interim financial statements
have been prepared in conformity with recognition and measurement principles
required by International Financial Reporting Standards ('IFRS') and the Listing
Rules of the Financial Services Authority. The un-audited financial statements
have been prepared using accounting policies consistent in all material respects
with those applied in the Company's Annual Report for the year ended 31 December
2005 and consistent with those that will be applied during the year ended 31
December 2006. The financial information provided herein should be read in
connection with the company's audited Consolidated Financial Statements and the
notes thereto for the year ended 31 December 2005.
The Company continues to be loss making and cash negative at the operational
level. The directors continue to monitor management's forecasts for revenues,
costs and working capital needs on a regular basis. Although these projections
show improving trading conditions, inherently there can be no certainty that
these forecasts will be achieved. Supporting this plan is a £1,000,000 working
capital facility which is secured by personal guarantees of the Chairman and two
other shareholders. Following a review of the above noted forecasts and taking
into account the available borrowing facility, the directors have formed a
judgement, at the time of approving this interim announcement, that there is
reasonable expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future.
This interim report does not constitute statutory accounts of the group within
the meaning of section 240 of the Companies Act 1985. Statutory accounts for
the year ended 31 December 2005, have been filed with the Registrar of
Companies. The auditors' report on those accounts was unqualified and did not
contain a statement under section 237 of the Companies Act 1985.
2. Business and geographic segments
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
£ £ £
Revenue by segment
UK 305,108 200,404 397,201
USA 604,288 509,918 1,258,605
Australia 58,302 - -
--------------- ---------------- ----------------
967,698 710,322 1,655,806
--------------- ---------------- ----------------
3. Revenue
Six months Six months Year
ended ended Ended
30 June 30 June 31 December
2006 2005 2005
£ £ £
Revenue by type
Software licences 265,013 78,976 391,602
Services and other revenue 80,844 91,001 147,805
Maintenance 621,841 540,345 1,116,399
------------- ------------- --------------
967,698 710,322 1,655,806
------------- ------------- --------------
4. Tax
The tax credit of £158,934 for the six-month period ended 30 June 2005 and year
ended 31 December 2005 relates to a research and development claim for 2004. A
claim has been made for research and development efforts undertaken in 2005, but
no amount is included in this report.
5. Loss per share
The calculation of the basic and diluted loss per share is based on the
following data:
Six months Six months Year
ended ended Ended
30 June 30 June 31 December
2006 2005 2005
£ £ £
Loss for the purposes of basic and diluted loss (464,112) (736,648) (1,379,565)
--------------- -------------- -----------------
Number Number Number
Weighted average number of ordinary shares
For purposes of basic and diluted loss 31,700,692 31,535,361 31,535,361
--------------- -------------- ----------------
The calculation of basic and diluted loss per share is the same because the
effect of including share options would be anti-dilutive and are excluded from
the calculation.
6. Statement of changes in equity
Share
Share Share Option translation Retained
Capital Premium reserve Reserve loss Total
£ £ £ £ £ £
At 31 December 2005 1,576,768 6,125,438 37,655 78,537 (8,398,148) (579,750)
Share options - - 12,810 - - 12,810
Translation of foreign operations - - - 32,662 - 32,662
Issue of equity shares 78,750 23,625 - - - 102,375
Retained loss for the year - - - - (464,112) (464,112)
------------- ------------ ----------- ----------- -------------- -----------
At 30 June 2006 1,655,518 6,149,063 50,465 111,199 (8,862,260) (896,015)
------------- ------------ ----------- ----------- -------------- -----------
7. Reconciliation of operating loss to operating cash flows
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2006 2005 2005
£ £ £
Loss from operations (452,874) (911,176) (1,561,242)
Adjustments for:
Depreciation of property, plant and equipment 21,428 22,951 45,943
Share option charge 12,810 14,325 28,001
-------------- ---------------- ----------------
Operating cash flows before movements in working (418,636) (873,900) (1,487,298)
capital
(Increase) / decrease in receivables (7,779) 39,152 35,060
(Decrease) / increase in payables (52,312) 181,030 416,262
-------------- ---------------- -----------------
Cash used by operations (478,727) (653,718) (1,035,976)
Taxes received - 162,129 321,063
Interest paid (12,894) - -
--------------- ---------------- -----------------
Net cash from operating activities (491,621) (491,589) (714,913)
--------------- ---------------- ----------------
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 2006 which comprises the consolidated income
statement, the consolidated statement of recognised income and expense, the
consolidated balance sheet, the consolidated cash flow statement, and the
related notes. 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, including the conclusion, has been prepared for and only for the
company for the purpose of meeting the requirements of the Listing Rules of the
Financial Services Authority and for no other purpose. We do not, therefore in
producing this report, accept or assume responsibility for any other purpose or
to any other person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
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.
The accounting policies are consistent with those that the directors intend to
use in the next annual financial statements.
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 disclosed accounting policies 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 and therefore
provides a lower level of assurance. Accordingly, we do not express an audit
opinion on the financial information.
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 2006.
Baker Tilly
Chartered Accountants
28 September 2006
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