Interim Results

RNS Number : 2558E
Clinical Computing PLC
25 September 2008
 



CLINICAL COMPUTING PLC

2008 INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2008 


Clinical Computing Plc ('the Company'), the international developer of clinical information systems for the healthcare market and developer of programme management software, announces its Interim Results for the six months ended 30 June 2008. The Group trades through four operating subsidiaries: Clinical Computing UK, Ltd. in the United Kingdom and Europe, Clinical Computing, Inc. in the United States, Clinical Computing Pty Limited in Australia and Hydra Management Limited ('HML') in the United Kingdom


Business Overview 


  • Revenue increased 37 per cent to £1.406 million (2007: £1.025 million), this is mainly due to revenue relating to HML, which was acquired on 22 February 2008.

  • Recurring maintenance revenues increased by 23 per cent to £0.697 million (2007:£0.567 million) due to the acquisition of HML. 

  • First Clinical Vision order secured from a leading Pan-European renal care service provider.

  • New contracts from the NHS market have been slower than previously anticipated.

  • During the period the Group was appointed as a supplier to the NHS Framework Contract - ASCC (Additional Supply Capability and Capacity Frameworks). The ASCC Framework will provide NHS organisations with a more efficient route to procure IT systems and services from suppliers who have demonstrated their experience in the health sector. 

  • The cost base increased principally due to the addition of HML (HML operating costs £0.352 million).  

  • Loss from operations was £0.411 million (2007: £0.302 million).  

  • The Company issued 17,440,000 shares at 3.25p raising £545,000 before expenses to provide general working capital to the Group.

  • Clinical Vision Web product release scheduled by the end of the fourth quarter of 2008. 



Outlook 

Chairman Howard Kitchner, commenting on the Group outlook, said:


'Whilst good progress has made been in a number of areas including product development and establishing new sales channels, the NHS market continues to evolve slowly and causes uncertainty in predicting the timing of sales. However, the Group continues to pursue business in the UK and internationally while focusing on moving towards profitability in 2009.

 


Contacts:


Joe Marlovits, Chief Executive

Clinical Computing

www.ccl.com


020 8747 8744

James Caithie/Simon Sacerdoti

Dowgate Capital Advisers Limited - Nominated Adviser

020 7492 4777


Chairman's Statement


Introduction



We report our interim results for the six month period to 30th June 2008. 



Clinical business


During the period five Clinical Vision 4 customers achieved 'go live ' status including a London NHS Trust which we believe will provide us with a further UK based reference site to secure future NHS business. Additionally, during the period the Group was appointed as a supplier to the NHS Framework Contract - ASCC (Additional Supply Capability and Capacity Frameworks). The ASCC Framework will provide NHS organisations with a more efficient route to procure IT systems and services from suppliers who have demonstrated their experience in the health sector. The Group achieved this status directly (without being fronted by a larger partner) and believes this is a consequence of its strategy and product investment made in recent years. To date, direct revenue from the NHS market has been less than previously anticipated in our plans.


However, we have further strengthened our mid-term revenue opportunities for Clinical Vision with the addition of a Pan-European renal care service provider to our customer list and are anticipating revenues from its UK operations in the second half of 2008 and additional revenues into 2009. 


 With respect to product development, we are nearing completion of our first full release of our web based Clinical Vision solution and are anticipating a market release in the fourth quarter of 2008.


Acquisition of Hydra Management Limited ('HML')


On 22 February 2008 we completed the HML acquisition which has resulted in the Group adding approximately 50 more customers under annual maintenance contracts. Since acquisition, HML has generated revenue of £0.441 million and has traded at an operating profit of approximately £89,000. On the acquisition date, £16,000 was paid as cash consideration and an additional deferred payment will be due within seven years based upon operating performance or sale of the business. 


The acquisition resulted in goodwill arising of £0.864 million, of which approximately £0.624 million relates to deferred consideration. Goodwill has been based on estimates and due to the uncertainty caused by the short length of time we have been managing the business, may be subject to revisions of our accounting estimates in the full year accounts. A more detailed review will take place prior to the publication of our 2008 Annual Report when we would have had approximately 12 months ownership of the HML business. 


Financial overview 


Revenue increased 37 per cent to £1.406 million (2007:£1.025 million) due to revenue of £0.441 million from HML .Revenue from the clinical software business was lower in this period compared to the same period in 2007 due to reduced revenues from the UK market. Recurring maintenance revenues accounted for 50% (2007:55%) of our total revenues and increased 23 per cent to £0.697 million (2007:£0.567 million) due to the HML acquisition. 


The Group's cost base increased to £1.817 million (2007: £1.328 million), principally due to the addition of HML operating costs of £0.352 million .


Operations generated a loss of £0.411 million (2007: £0.302 million) and the loss for the period was £0.42 million or 0.4p per share (2007: £0.268 million or 0.8p per share)


Intangible assets increased £0.957 million from 31 December 2007 to £1.155 million, primarily due to goodwill arising on the HML acquisition of £0.864 million and £0.093 million net increase from capitalised software. 


The Group maintains two debt facilities which in total provide funding for working capital of £1.1 million, of which the £0.365 million was drawn at 30th June 2008.


The Group is now carrying a provision of £0.625 million related to the estimated deferred consideration arising on the acquisition of HML.


On 29 February 2008 the Company issued 17,440,000 shares at 3.25p raising £0.545 million (gross) before expenses to provide general working capital to the Group.



Outlook


Whilst good progress has made been in a number of areas including product development and establishing new sales channels, the NHS market continues to evolve slowly and causes uncertainty in predicting the timing of sales. However, the Group continues pursue business in the UK and internationally while focusing on moving towards profitability in 2009.



Howard Kitchner

Chairman

25 September 2008



Unaudited condensed consolidated income statement

Six months ended 30 June 2008




Audited


Six months

Six months

year


ended

ended

ended


30 June 2008

30 June 2007

31 December 2007


£

£

£

Continuing operations






   


- Acquisitions

440,599

-

-

Continuing

965,771

1,025,370

1,875,083


-----------------

----------------

---------------

Revenue (Note 3)

1,406,370

1,025,370

1,875,083

Cost of sales

(440,304)

(359,280)

(741,453)


--------------

--------------

-----------------

Gross profit

966,066

666,090

  1,133,630 






Distribution costs

(185,614)

(116,611)

(245,496)

Administrative expenses




Research & development

(668,410)

(475,102)

(890,434)

Other

(522,833)

(376,850)

(839,729)

Total administrative expenses

(1,191,243)

(851,952)

(1,730,163)


--------------

-------------

-----------------

Profit/(Loss) from operations




- Acquisitions

88,896

-

-

Continuing

(499,687)

(302,473)

(842,029)


-------------

---------------

-------------

Loss from operations

(410,791)

(302,473)

(842,029)





Finance income 

4,214

1,629

6,220

Finance costs

(13,106)

(35,617)

(77,544)


--------------

------------

-----------------

Loss before tax

(419,683)

(336,461)

(913,353)

Income tax credit (Note 4)

-

68,517

68,517


--------------

------------

-----------------

Loss for the period

(419,683)

(267,944)

(844,836)


--------------

------------

----------------

Basic and diluted loss per share (Note 5)

(0.4p)

--------------

(0.8p)

------------

(2.0p)

----------------


Unaudited condensed consolidated statement of recognised income and expense

Six months ended 30 June 2008





Audited


Six months

Six months

year


Ended

ended

ended


30 June 2008

30 June 2007

31 December 2007


£

£

£

Exchange differences on translation of foreign operations


(79)


9,827


11,063

Loss for the period

(419,683)

(267,944)

(844,836)


-------------

-------------

----------------

Total recognised expense for the period

(419,762)

(258,117)

(883,773)


-------------

-------------

----------------

Unaudited condensed consolidated balance sheet

30 June 2008





Audited

   

30 June

30 June

31 December


2008

2007

2007


£

£

£





Non-current assets




Intangibles (Note 8)  

1,155,600

59,834

198,105

Property, plant and equipment

151,546

139,770

137,871


---------------

---------------

------------


1,307,146

199,604

335,976

Current assets




Trade and other receivables

643,723

405,036

361,253

Cash and cash equivalents

242,723

195,883

164,365


---------------

---------------

------------


886,446

600,919

525,618


---------------

---------------

------------

Total assets

2,193,592

800,523

861,594


---------------

---------------

------------





Current liabilities




Trade and other payables

(1,371,520)

(949,528)

(911,100)

Bank loans

(365,196)

(1,334,185)

(221,680)


---------------

---------------

-------------


(1,736,716)

(2,283,713)

(1,132,780)


---------------

---------------

---------------

Long term liabilities - provisions (Note 8) 

(624,531)

-

  -






---------------

---------------

---------------

Net liabilities

(167,655)

(1,483,190)

(271,186)


---------------

---------------

-------------





Equity




Share capital

2,433,251

1,655,518

2,258,851

Share premium account

7,661,920

6,149,063

7,326,133

Share option reserve

84,481

64,118

71,375

Translation reserve

158,764

157,607

158,843

Retained earnings

(10,506,071)

(9,509,496)

(10,086,388)


---------------

---------------

-----------------





Shareholders' funds (Note 6)

(167,655)

(1,483,190)

(271,186)


--------------

--------------

------------



Unaudited condensed consolidated cash flow statement

Six months ended 30 June 2008





Audited


Six months

Six months

year


Ended

ended 

ended


30 June 

2008

30 June 

2007

31 December 

2007


£

£

£





Net cash from operating activities (Note 7)

(393,052)

(228,554)

(768,868)





Investing activities




Interest received

4,214

1,629

6,220

Acquisition of Hydra

(56,750)

-

-

Expenditure on product development

(100,908)

(33,075)

(179,151)

Proceeds from sale of fixed assets

566

-

-

Purchases of property, plant and equipment

(28,389)

(24,601)

(40,643)


---------------

---------------

--------------

Net cash used in investing activities

(181,267)

(56,047)

(213,574)


---------------

---------------

--------------





Financing activities




Proceeds from equity issue

545,000

465,032

1,810,000

Costs of equity issue

(34,813)

-

(29,597)

Increase / (decrease) in bank loan

143,516

-

(647,473)


---------------

---------------

---------------

Net cash from financing activities

653,703

465,032

1,132,930


---------------

---------------

---------------






Net increase in cash and cash equivalents


79,384


180,431


150,488





Cash and cash equivalents at beginning of period


164,365


14,418


14,418

Effect of foreign exchange rate changes

(1,026)

1,034

(541)


---------------

---------------

----------------





Cash and cash equivalents at end of period

242,723

195,883

164,365


---------------

---------------

---------------




NOTES:


1. Basis of preparation

The accounting policies applied in the un-audited condensed interim financial statements have been prepared in conformity with recognition and measurement principles required by International Financial Reporting Standards ('IFRS') in issue and as adopted by the European Union and are effective or are expected to be adopted and effective at 31 December 2008. The un-audited financial statements have been, prepared using accounting policies consistent in all material respects with those applied in the Groups Annual Report for the year ended 31 December 2007 and consistent with those that will be applied during the year ended 31 December 2008. The financial information provided herein should be read in connection with the Group's audited Consolidated Financial Statements and the notes thereto for the year ended 31 December 2007. 


The Group 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. Following a review of the above noted forecasts and taking into account available borrowing facilities, the directors have formed a judgement, at the time of approving this interim announcement, that there is reasonable expectation that the Group 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 2007, 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



Unaudited six months

Unaudited six months

Audited 

year



ended

ended

ended



30 June 

30 June 

31 December



2008

2007

2007



£

£

£


Revenue by segment





UK

773,853

414,947

641,351


USA

616,839

596,713

1,182,404


Australia

15,678

13,710

51,328



---------------

---------------

----------------



1,406,370

1,025,370

1,875,083



---------------

----------------

----------------



3.    Revenue  



Unaudited six months

Unaudited six months

Audited 

year



ended

ended

ended



30 June

30 June

31 December



2008

2007

2007



£

£

£


Revenue by type





Software licences

445,313

404,270

613,263


Services and other revenue

263,783

54,324

1,110,675


Maintenance

697,274

566,776

151,145



-------------

-------------

--------------



1,406,370

1,025,370

1,875,083



-------------

-------------

--------------



4.    Tax

The tax credit of £68,517 for the half year ended 30 June 2007 and year ended 31 December 2007 relates to a cash settlement of research and development credits claimed for work performed in 2006. Research and development tax credits settled in cash are accounted for when received from the applicable tax authority. The company has claimed for a research and development tax credit for work performed in 2007 and is anticipating that this claim will be settled and accounted for in the second half of 2008.



5.    Loss per share

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




Unaudited six months

Unaudited six months

Audited 

year



ended

ended

ended



30 June

30 June

31 December



2008

2007

2007



£

£

£


Loss for the purposes of basic and diluted loss 

(419,683)

(267,944)

(844,836)



---------------

---------------

-----------------








Number

Number

Number


Weighted average number of ordinary shares





for the purposes of basic and diluted loss per share


105,996,661


33,110,361


42,729,082



---------------

---------------

----------------







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 per IAS 33.  




6.    Unaudited Statement of changes in equity 





Share





Share

Share

Option

Translation

Accumulated 



capital

premium

Reserve

reserve

losses

Total









£

£

£

£

£

£

At 31 December 2007

2,258,851

7,326,133

71,375

158,843

(10,086,388)

(271,186)

Shares issued

174,400

335,787

-

-

-

510,187

Share options

-

-

13,106

-

-

13,106

Translation of foreign operations

-

-

-

-

-

-

-

-

-

-


Loss for the period

-

-

-

(79)


(419,683)

(419,762)


-------------

------------

-----------

-----------

--------------

---------------

At 30 June 2008

2,433,251

7,661,920

84,481

158,764

(10,506,071)

(167,655)


-------------

------------

----------

-----------

--------------

---------------




7.

Reconciliation of operating loss to operating cash flows



Unaudited six months

Unaudited six months

Audited

 year


ended

ended 

ended


30 June 

2008

30 June 

2007

31 December 

2007


£

£

£


Loss from operations

(410,791)


(302,473)

(842,029)

Adjustments for:




Depreciation of property, plant and equipment

37,552

30,211

58,909

Share option charge

13,106

5,542

12,799

Amortisation of capitalised R&D

7,804

2,601

10,406


--------------

----------------

----------------

Operating cash flows before movements in working capital

(352,329)

(264,119)

(759,915)

Increase in receivables

(279,886)

(52,068)

(10,783)

Increase in payables

252,269

54,733

10,857


--------------

----------------

-----------------

Cash used by operations

(379,946)

(261,454)

(759,841)

Taxes received  

-

68,517

68,517

Interest paid

(13,106)

(35,617)

(77,544)


---------------

----------------

-----------------

Net cash outflow from operating activities

(393,052)

(288,554)

(768,868)  



 

 8.    Acquisition of business undertaking



On 22 February 2008 the Group completed the acquisition of Hydra Management Limited. The goodwill arising from the acquisition is set out below. Goodwill has been based on estimates and due to the uncertainty caused by the short length of time we have been managing the business, may be subject to change. A more detailed review will take place prior to the publication of our 2008 Annual Report when we would have had approximately 12 months ownership of the business and more information to rely on.

 



Fair value



£

Net assets acquired






IPR, Property, plant and equipment 


76,000

Liabilities


(259,110)



----------------

Fair Value of Net Assets


(183,110)



----------------




Consideration



Cash consideration


16,000

Transaction expenses


40,750

Deferred consideration


624,531



--------------

Total consideration


681,281



--------------

Goodwill


864,391



--------------



The Cash Flows that resulted from the acquisition are set out below: 




£

Net cash from operating activities


192,053

Net cash used in investing activities


(59,213)

Net increase from financing activities


37,468



----------------

Cash and cash equivalents at end of period


170,308



----------------




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