Calculus Vct Regulatory News (CLC)

14 Apr 2005 07:01

Clinical Computing PLC14 April 2005 For Release 7:00 am 14 April 2005 CLINICAL COMPUTING PLC 2004 PRELIMINARY RESULTS Clinical Computing Plc ("the Group"), the international developer of clinicalinformation systems for the healthcare market, announces Preliminary Results forthe year ended 31 December 2004. The Group trades through three operatingsubsidiaries: Clinical Computing UK, Ltd. in the United Kingdom and Europe,Clinical Computing, Inc. in the United States and Clinical Computing Pty Limitedin Australia. Financial Overview •Turnover of £1.76m (2003: £1.86m) - 78.3% from the US (2003: 75.61%) •Turnover on a constant currency basis between dollar and sterling increased 3.0% •Operating costs decreased 7.1% to £2.78m (2003: £3.0m) •R&D tax credits of £324,882 •Loss on ordinary activities after taxation £0.76m (2003: £1.24m) •Loss per share (basic and diluted): 2.4p (2003: loss 4.5p) Business Review •Clinical Vision 4 product "live" with 8 customers (2003: 7) •Clinical Vision 4 delivered and being implemented at 4 other customers •Largest order to date for Clinical Vision 4 was won in April 2005 (contract in excess of £350,000) €100 customers under maintenance agreements for all products (2003: 102) •Cash balance of £0.88m as at 31 December 2004 with an additional unutilised debt facility of £0.5m available •US based CEO steps down from Board to concentrate on US activities. UK based CEO in place to focus sales strategy Outlook and Prospects Chairman Howard Kitchner, commenting on the Group outlook, said: "Our strategy remains one of providing leading clinical information solutions inour chosen markets. We believe that industry trends indicate that clinicallyfocused products will be in demand in our primary geographic markets of the USand UK. We will continue to adapt to the changing landscape of healthcarepurchasing by focusing on partner relationships, and believe that changes to ourmanagement structure will provide a sharper emphasis on closing new business andwe look forward to reporting contract wins in the coming months." Contacts:Joe Marlovits, Finance Director 020 8747 8744Peter Binns/Paul McManus Binns & Co PR Ltd 020 7786 9600 Chairman's Statement Introduction Our latest clinical information system for the healthcare market, ClinicalVision 4 ("Clinical Vision") is live with eight customers using the renalmedicine application and implementations at four other customers are nearingcompletion. Clinical Vision was developed as a generic clinical informationsystem based on the Company's cumulative expertise serving the clinicalhealthcare markets in the USA and UK. The product provides the Group with theopportunity to move into other clinical modalities, leveraging its leadershipposition in renal medicine and transplantation. We remain committed to expandingthe capabilities of Clinical Vision and demonstrating that this product providesthe clinical functionality that our hospital based customers require insupporting their initiatives to improve staff efficiency and patient care, whileadopting a paperless working environment. 2004 continued to be a challenging year in moving our targeted customers forClinical Vision through to license agreements. In our half-year announcement westated that we had won six deals compared to only one in the previous year, allin the US. During the second half we experienced further delays in finalisinglicense agreements in both the US and UK markets and no further orders wereclosed. However, we did receive a down payment on our first Clinical Vision 4agreement outside the US and UK with a hospital in New Zealand and in April 2005we secured our largest contract to date for Clinical Vision, which was in excessof £350,000 from the US and is scheduled to be implemented in the current year.The Company continues to be in discussion directly with NHS Trusts as well askey suppliers within the National Programme for IT (the National Programme nowknown as 'Connecting for Health') to make Clinical Vision available to NHSclinicians. Geographic markets and risk UK healthcare market The Company remains enthusiastic about the UK healthcare market where we believethat current initiatives in healthcare computing within the NHS will lead theway that computerised medicine evolves in Europe. Purchasing decisions withrespect to specialist clinical systems like Clinical Vision continue to bedominated by the progress of the NHS National Programme for IT. Under thisinitiative the NHS is modernising technologies available to its medical staff,beginning with the national data spine, electronic bookings and electronicprescribing systems. This widely publicised £6 billion initiative has over thelast two years significantly delayed the decision making with respect toindividual NHS Trusts adopting new clinical information systems. This isprimarily due to uncertainty as to whether such systems will be funded centrallythrough the National Programme. US healthcare market The immediate opportunity for the Company in the US is for it to continuebuilding on our customer base of healthcare organisations providing renaldialysis services. During the year under review we secured six licenseagreements with such organisations, five of which were hospitals and one was afor-profit dialysis chain. I am pleased to report that in April 2005 we securedour largest contract to date for Clinical Vision. This contract, which is inexcess of £350,000, is to provide our renal dialysis application to a 12-chainfacility in the Midwest USA. The US healthcare industry is evolving in a similar manner as the UK. In the USthe federal government is becoming involved in the electronic health recordinitiative, in a manner similar to the one being led in the UK. The currentpurchasing environment is therefore subject to changing economic and politicalinfluences. The federal government, as well as individual state governments, caninfluence healthcare practices and the types of information systems purchased byhealthcare providers, as regulations and reimbursement for some categories ofcare may come from government sources. Our potential customers may respond tothese influences by further delaying the purchase of new information systems. Atthis time the Health Insurance Portability and Accounting Act of 1996 isdirectly impacting the industry by specifying standards to protect the securityand confidentiality of patient information. We continue to address these marketfactors with our development of the product but, much like the UK market, the USmarket is being influenced by macro events that previously had not had such aninfluence on our US customers' purchasing decisions. In general we believe that the US and UK healthcare markets are dominated byhealthcare organisations utilising legacy-based systems that rely on inefficientpaper-based processes and workflows. As a result, many of these organisationsare under a significant amount of pressure to invest in a complete electronicclinical information system like Clinical Vision. Adopting new technology willenable changes to current working practices that will improve the quality ofcare, increase patient safety, increase staff productivity and reduce the riskof medical errors. Management changes Following a review of the opportunities in the two main geographic markets, asnoted above, the board believes that a UK based Chief Executive Officer willbenefit the Company in exploiting the current opportunity that exists with theNHS and the National Programme. Jack Richardson, has stepped down from the boardof the Company, effective 14 April 2005 and will concentrate on the activitiesof the Group in the US. John Lowry has been appointed as Chief Executive Officerand will lead the Group's initiatives in exploiting its sales strategy. Results Results for the year reflect the market conditions described above that resultedin a lower number of new license agreements than expected. Turnover for the yearwas £1,757,997 (2003: £1,858,828) a reduction of 5.4 per cent which reflects adecrease in our sterling based business. Increases in our US dollar denominatedturnover for the year partially offset the continued decline of the dollar.Group turnover, using a constant currency basis, for the two years would haveincreased 3.0 per cent from 2003 to 2004. Results from operations produced aloss of £1,025,870 (2003: £1,138,501) an improvement of 9.9 per cent. Loss onordinary activities after taxation was £762,859 (2003: loss £1,236,892). Theloss per share was 2.4p (2003: loss 4.5p). Outlook Our strategy remains one of providing leading clinical information solutions inour chosen markets. We believe that industry trends indicate that clinicallyfocused products will be in demand in our primary geographic markets of the USand UK. We will continue to adapt to the changing landscape of healthcarepurchasing by focusing on partner relationships, and believe that changes to ourmanagement structure will provide a sharper emphasis on closing new business andwe look forward to reporting contract wins in the coming months. H KitchnerChairman13 April 2005 Finance review The Group's operations remain the development and support of clinicalinformation systems, primarily for healthcare organisations that specialise inrenal medicine. In addition to Clinical Vision 4 the Group continues to deriverevenue from support and maintenance contracts for its other products: PROTON,di-PROTON, and RENLStar. At the end of 2004 the Group had 100 customers usingone of these products (2003: 102). During the year under review the Group derived 78.3 per cent of its revenuesfrom the US market (2003: 75.6 per cent). Total turnover for the year of£1,757,997 decreased 5.4 per cent from the prior year. 72 per cent of thisdecrease was driven by the fall in our sterling based revenue. The remainderrelated to the US where despite growth, the decline of the US dollar compared tosterling, resulted in lower revenues. The Group's operating costs for the year were £2,783,867 compared to £2,997,329,a decrease of 7.1 per cent. This decrease is largely attributed to the decreasein our US dollar denominated costs as a result of the weaker dollar whencompared to the prior year. Operations generated a loss of £1,025,870 an improvement of 9.9 per centcompared to the prior year (2003: loss £1,138,501). Interest and taxation Net interest payable for the period was £61,871 (2003: £98,391). Interestpayable is the net of bank interest earned on short-term deposits, income of£49,147 (2003: £23,302) and the non-cash currency fluctuation on loans made bythe Company to its foreign subsidiaries generated a loss of £111,018 (2003: loss121,693). During the year under review the Group filed a research and development (r&d)tax credit claim with respect to r&d activities undertaken in 2002 and 2003 onvarious components of the Clinical Vision 4 product. Under the terms of thecurrent United Kingdom r&d tax credit regime the Company was able to elect for acash refund on a percentage of its total r&d expenditure. A tax credit of£324,882 has been reported in the year under review. The Company received£162,753 of this amount in November 2004 and the balance in March 2005. Cash flow Cash used to support the operations was £1,004,280 (2003: £994,236) andapproximated the operating loss before interest and tax of £1,025,870. The netcash outflow before financing was £841,236 (2003: £998,627), as a result ofreceiving a tax refund of £162,753 in November 2004. Cash including short-termdeposits at the end of the year was £875,731. Capital structure and finance Shareholders' fund at 31 December 2004 totalled £786,797 (2003: £1,430,397). Thedecrease is due to the loss for the year offset by the gain on translatingforeign subsidiaries as detailed in the consolidated statement of totalrecognised gains and losses. The Company has obtained a £500,000 Revolving Overdraft Facility with acommitted period of 18 months, ending 30 September 2006. This facility has beenprovided by Brown Shipley, on normal commercial terms, backed by guarantees ofthe Chairman and two shareholders. Neither the Chairman nor the shareholdershave received compensation or other benefits for providing such guarantees. Thisfacility, along with our cash resources, maintenance contracts and signed butunbilled license agreements provide the financial resources for the Board tocontinue to pursue its strategy. Accounting standards The Company will adopt International Financial Reporting Standards (IFRS) forthe year 2005 and thereafter. During the first half of 2005, the Company willrestate the 2004 results herein reported under UK GAAP with reconciliation toIFRS, thereby providing appropriate comparators. On 29 September, the companywill announce its interim results fully in accordance with IFRS. The adoption ofIFRS has some impact on the presentation of the primary financial statements butdoes not change the economics, risk profile or cash flow of the business. Foreign currency risk The Company has one major overseas trading subsidiary in the US. Receipts andpayments for this subsidiary are largely in the local currency, US dollars andwe do not hedge against the fluctuation between sterling and the dollar. The Group via this subsidiary generated 78% of the total turnover or £1,376,169and 53% of its costs or £1,474,432 in US dollars. The Company also has a small subsidiary in Australia. Receipts and payments arelargely in the local currency and are also not hedged. J Marlovits Finance Director13 April 2005 Clinical Computing Plc Consolidated Profit and Loss Account For the year ended 31 December 2004 Notes 2004 2003 £ £--------------------- --------- --------- ----------- Turnover 2 1,757,997 1,858,828 Cost of sales (780,219) (916,780) --------- ----------- Gross profit 977,778 942,048 Distribution costs (495,827) (525,482)Administrative expenses --------- -----------Research and development (803,442) (854,601)Other (704,379) (700,466) --------- -----------Total (1,507,821) (1,555,067) --------- ----------- Operating loss (1,025,870) (1,138,501) Net interest payable (61,871) (98,391) --------- -----------Loss on ordinary activities beforetaxation (1,087,741) (1,236,892) Tax credit on loss on ordinaryactivities 324,882 - --------- -----------Loss on ordinary activities aftertaxation and retained loss for thefinancial year (762,859) (1,236,892) --------- ----------- Basic and diluted loss per share 3 (2.4p) (4.5p) --------- ----------- All activities are derived from continuing operations. Clinical Computing Plc Consolidated Statement of Total Recognised Gains and Losses For the year ended 31 December 2004 Notes 2004 2003 £ £-------------------- ---------- --------- ---------- Loss for the financial year (762,859) (1,236,892)Gain on foreign currency translation 119,259 133,306 --------- ----------- Total recognised gains and lossesrelating to the year (643,600) (1,103,586) --------- ----------- Clinical Computing Plc Consolidated Balance Sheet 31 December 2004 Notes 2004 2003 £ £-------------------- ---------- --------- ----------- Fixed assets Tangible assets 98,963 110,694 --------- -----------Current assets Debtors 524,618 326,305Cash at bank and in hand (includingshort term deposits) 5 875,731 1,749,977 --------- ----------- 1,400,349 2,076,282 --------- -----------Creditors: amounts falling duewithin one year (712,515) (756,579) --------- -----------Net current assets 687,834 1,319,703 --------- ----------- Total assets less currentliabilities and net assets 786,797 1,430,397 --------- ----------- Capital and reserves Called up share capital 1,576,768 1,576,768Share premium account 6,099,699 6,099,699Profit and loss account (6,889,670) (6,246,070) --------- ----------- Equity shareholders' funds 6 786,797 1,430,397 --------- ----------- Clinical Computing Plc Consolidated Cash Flow Statement For the year ended 31 December 2004 Notes 2004 2003 £ £------------------- ---------- --------- ------------- Net cash outflow from operatingactivities 4 (1,004,280) (994,236) Returns on investments andservicing of finance 49,147 23,302Taxation 162,753Capital expenditure (48,856) (27,693) --------- ----------- 163,044 (4,391) --------- ----------- Cash outflow before management ofliquid resources and financing (841,236) (998,627) Management of liquid resources 888,941 (1,310,072)Financing (27,125) 2,267,425 --------- -----------Increase (decrease) in cash in theyear 20,580 (41,274) --------- ----------- Clinical Computing Plc Reconciliation of net cash flow to movement in net funds For the year ended 31 December 2004 2004 2003 £ £-------------------- ---------- ------------ Increase (decrease) in cash in the year 20,580 (41,274)Cash (outflow) inflow from movement inliquid resources (888,941) 1,310,072 --------- -----------Change in net funds resulting from cashflows (868,361) 1,268,798Exchange movement (5,885) (6,910) --------- ----------- Movement in net funds in year (874,246) 1,261,888Net funds at beginning of year 1,749,977 488,089 --------- ----------- Net funds at end of year 875,731 1,749,977 --------- ----------- Notes: 1. Basis of preparation The financial information set out in this preliminary announcement was approved by the board on 13 April 2005 and does not constitute the company's statutory accounts for the years ended 31 December 2004 or 2003, but is derived from those accounts. Statutory accounts for 2003 have been delivered to the Registrar of Companies and those for 2004 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 2004 has been prepared in accordance with the accounting policies set out in the Group's 2003 annual report. 2. Segmental analysis Turnover An analysis of Group turnover by geographical destination is given below: 2004 2003 £ £------------------- ---------- ------------UK 309,734 380,926USA 1,376,169 1,404,396Other 72,094 73,506 ----------- ------------ 1,757,997 1,858,828 ------------ ------------ Turnover by origin in the UK would include "Other" sales by destination and 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: 2004 2003 £ £ ------------------- ---------- ---------- ------------ Softwarelicences 526,789 514,240Maintenance 1,081,672 1,186,782Services 121,941 137,811Other 27,595 19,995 --------------- --------------- 1,757,997 1,858,828 --------------- --------------- - 3. Basic loss per share is based upon the loss attributable to shareholders of £762,859 (2003: loss of £1,236,892) and weighted average number of shares in issue during the year of 31,535,361 (2003: 27,235,423). For purposes of calculating diluted loss per share, the diluted loss attributable to shareholders and the weighted average number of shares are the same as the basic loss per share disclosed above. This is because share options would dilute the loss per ordinary share in issue and not provide a meaningful disclosure under the terms of Financial Reporting Standard No. 14. 4. Reconciliation of operating loss to operating cash flows 2004 2003 £ £ -------------------- ---------- ---------- ------------ Operating loss (1,025,870) (1,138,501)Depreciation 54,551 76,552(Increase) decreasein debtors (52,092) 187,064Increase (decrease)in creditors 19,131 (97,351)Reversal ofpreviouslyrecognised shareoption charge - (22,000) --------------- --------------- - -Net cash outflowfrom operatingactivities (1,004,280) (994,236) --------------- --------------- -- -- 5. Analysis and reconciliation of net funds 1 January Exchange 31 December 2004 Cash flow movement 2004 £ £ £ £ ------------ --------- --------- --------- ---------- Cash in handand at bank 77,327 20,580 (4,995) 92,912Short termdeposits 1,672,650 (888,941) (890) 782,819 -------------- -------------- -------------- --------------Net funds 1,749,977 (868,361) (5,885) 875,731 -------------- -------------- -------------- -------------- 6. Reconciliation of movements in Group shareholders' funds 2004 2003 £ £ -------------------- ---------- ---------- ------------ Loss for the year (762,859) (1,236,892)Gain on foreigncurrencytranslation 119,259 133,306New shares issued - 2,582,370Expenses of shareissue - (408,307)Reversal ofpreviouslyrecognised shareoption charge - (22,000) -------------- --------------Net (reduction)addition toshareholders' funds (643,600) 1,048,477Openingshareholders' funds 1,430,397 381,920 -------------- --------------Closingshareholders' funds 786,797 1,430,397 -------------- -------------- 7. Copies of the full annual report and accounts will be sent to shareholders in April, 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 The company news service from the London Stock Exchange