Calculus Vct Regulatory News (CLC)

27 Apr 2006 07:02

Clinical Computing PLC27 April 2006 CLINICAL COMPUTING PLC 2005 PRELIMINARY RESULTS Clinical Computing Plc (the "Company" or "Group"), the international developerof clinical information systems for the healthcare market, announces PreliminaryResults for the year ended 31 December 2005. The Group trades through threeoperating subsidiaries: Clinical Computing UK, Ltd. in the United Kingdom andEurope, Clinical Computing, Inc. in the United States and Clinical Computing PtyLimited in Australia. The results are reported under IFRS with 2004 comparisonsrestated accordingly. Financial Overview • Revenue of £1.66m (2004: £1.76m) - 76.0% from the US (2004: 78.3%) • Operating costs increased 10.8% to £3.2m (2004: £2.9m) • Non-recurring restructuring charges £0.3m included in operating costs (96.6% of cost increase) • Loss on ordinary activities after taxation £1.38m (2004: £0.77m) • Loss per share (basic and diluted): 4.4p (2004: loss 2.4p) • Cash balance of £0.17m as at 31 December 2005 with an additional unutilised debt facility of £0.5m available. Facility increased to £0.8m in April 2006 and available to October 2007 Business Review • Clinical Vision 4 ("CV4") flagship product "live" with 13 customers (2004: 8) • Five CV4 implementations underway • Purchase order secured from NHS customer (contract pending) • 100 customers under maintenance agreements for all products (2004: 100) • Senior Management appointments. Outlook and Prospects Chairman Howard Kitchner, commenting on the Group outlook, said: "The Group currently has five customer implementations underway and a furthercommitment secured via a purchase order, and subject to contract. Our focus continues to be on leveraging our CV4 technology by expanding theclinical applications which we provide on this technology. Industry trendsindicate that clinically focused products comprise a growing market segment ofthe health IT market place. In both the US and UK markets the decision cycles regarding the purchase of aclinical information system continue to take more than twelve months. Near termopportunities exist in both the US and UK markets and we look to leverage ourgrowing US customer base and capitalise on follow-on activity in the UK. TheGroup is actively exploring partnership opportunities that would enhance thelikelihood of reducing the decision cycles it has historically experienced. The new management team is single mindedly focused on delivering our businessplan. In support of this plan I as well as two other shareholders have assistedthe Company in securing an £800,000 credit facility to provide the cashresources to see through the plan and deliver the contract opportunitiescurrently being pursued. I look forward to reporting contract wins in thecoming months." Contacts:Joe Marlovits, Chief Executive 020 8747 8744Peter Binns/Paul McManus Binns & Co PR Ltd 020 7786 9600 Chairman's Statement Introduction Clinical Vision 4 ("CV4"), our flagship clinical information system is live with13 customers using the renal medicine application and five implementations areunderway in the first half of 2006. CV4 was developed as a generic informationsystem capable of supporting multiple clinical specialties for the purposes ofproviding a robust patient-oriented health record. Our strategy remains toleverage the CV4 technology into other clinical modalities, capitalizing on theCompany's leadership position in renal medicine. We remain committed toproviding a point of care clinical information system that meets the needs ofthe clinicians responsible for patient care, as well as the business and ITneeds of healthcare entities responsible for supporting clinical best practicein a budget constrained environment. The second half of 2005 saw delays in moving our identified pipeline of CV4customers through to license agreements. In our half-year announcement we noteda new contract total of £1,100,000 was won in the period to September. TheGroup did not secure any further CV4 contracts during the second half of 2005.However, the Group's pipeline of potential business continues to include severalsignificant opportunities. Results Results for the year under review reflect a delay in beginning theimplementations of several license agreements won during the year, as well as anincrease in costs due to non-recurring costs related to changes in themanagement structure of the Group and our UK operations. Turnover for the yearwas £1,655,806 (2004: £1,757,997) a reduction of 5.8 per cent which primarilyreflects a decrease in our US based business. Results from operations included aone time non-recurring charge for restructuring of £301,938 producing a loss of£1,561,242 (2004: £1,146,542). Loss on ordinary activities after taxation was£1,379,565 (2004: loss £772,513). The loss per share was 4.4p (2004: loss2.4p). Management changes During the year under review, John Lowry was appointed as Chief ExecutiveOfficer. John undertook a strategic review of the business which resulted in arestructuring of the management team including the appointment of Joel Tatham asdirector of Product Management and recruiting Tim Brennan, as director ofProduct Development. Project delivery and customer support was consolidatedunder Doug Colyer, the director of customer services. In January 2006 PaulHelliwell joined the management team as the UK sales director. Having completed his strategic review and the management appointments, John isnow a consultant to the Company. Effective 27 April 2006, the board ofdirectors have appointed Joe Marlovits as Chief Executive to replace John and apermanent Finance Director is now being recruited to assume Joe's previousresponsibilities. Geographic markets and risk UK healthcare market The Company's Proton(TM) product continues to be the de facto standard for renaldialysis information systems in the UK. The directors believe that the Group isbest positioned to successfully move this customer base to a new technology.The Group is developing a CV4 transition programme with selected NHS Trusts thathave been long term customers of the Company. In 2006, the Group received a purchase order for a renal system to beimplemented in an NHS Hospital in the North West of England, and will result ina new customer for the Group. Once CV4 is fully installed further follow-onactivity is expected. Despite the widely publicised cash constraints faced bymany NHS Trusts, the management team is actively working with leadingorganisations within and affiliated with the NHS to transition more NHScustomers to CV4. US healthcare market The US market continues to be our primary source of revenue and contractopportunities. The immediate opportunity for the Group in the US is to build onour customer base of healthcare organisations providing renal dialysis services.During the year under review five US customers completed their implementationsof CV4 and are now using the product to support patient care and improveoperational efficiencies. The US federal government is becoming involved in the electronic health recordinitiative, in a manner similar to the one being undertaken in the UK. Thecurrent purchasing environment is therefore subject to changing economic andpolitical influences, but it is expected that this influence will generateopportunities for the Group. Likewise, the US renal market experiencedsignificant consolidation over the last year and the fall-out from thisconsolidation may lead to new opportunities for the Group. At the present timeintegration of renal dialysis information systems with renal billing software isa growing market trend influencing purchasing decisions. Outlook The Group currently has five customer implementations underway and a furthercommitment secured via a purchase order, and subject to contract. Our focus continues to be on leveraging our CV4 technology by expanding theclinical applications which we provide on this technology. Industry trendsindicate that clinically focused products comprise a growing market segment ofthe health IT market place. In both the US and UK markets the decision cycles regarding the purchase of aclinical information system continue to take more than twelve months. Near termopportunities exist in both the US and UK markets and we look to leverage ourgrowing US customer base and capitalise on follow-on activity in the UK. TheGroup is actively exploring partnership opportunities that would enhance thelikelihood of reducing the decision cycles it has historically experienced. The new management team is single mindedly focused on delivering our businessplan. In support of this plan I as well as two other shareholders have assistedthe Company in securing an £800,000 credit facility to provide the cashresources to see through the plan and deliver the contract opportunitiescurrently being pursued. I look forward to reporting contract wins in thecoming months H KitchnerChairman27 April 2006 Finance Review Accounting standards This is the Group's first report under International Financial ReportingStandards ("IFRS") and the comparative prior year figures have been restatedaccordingly. The change to IFRS has not affected revenue recognition or cashflows of the Group. The board has reviewed the Group's development expenditureagainst IFRS capitalisation criteria and determined that the amount to becapitalised is nil and therefore all costs have been expensed. A reconciliationof the impact of this change in accounting standards to the 2004 results isincluded in the notes to the financial statements. Financial performance The Group's focus remains the development, sale and support of clinicalinformation systems, primarily for healthcare organisations specialising inrenal medicine. In addition to Clinical Vision 4(TM) the Group continues toderive revenue from support and maintenance contracts for its other products:PROTON(TM) , di-PROTON(TM), and RENLStar(TM). At the end of 2005 the Group had100 customers using one of its products (2004: 100). During the year under review the Group derived 76.0 per cent of its revenuesfrom the US market (2004: 78.3 per cent). Total revenue for the year of£1,655,806 decreased 5.8 per cent from the prior year. The decrease in revenuewas attributed to our dollar based revenue, where we recognised less licenserevenue in 2005 compared to 2004. The Group's operating costs for the year were £3,217,048 compared to £2,904,539,an increase of 10.8 per cent. The increase of £312,509 is largely attributableto non-recurring costs related to restructuring the management team and UKoperations totalling £301,938 (96.6 per cent). Operations generated a loss of £1,561,242 compared to an operating loss of£1,146,542 for 2004. The loss for the year after tax was £1,379,565 or 4.4p pershare (2004: £772,513 or 2.4p per share) Taxation 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 2004 on variouscomponents of the Clinical Vision 4 product. Under the terms of the currentUnited Kingdom r&d tax credit regime the Company was able to elect for a cashrefund on a percentage of its total r&d expenditure. A tax credit of £158,934has been reported in the year under review (2004: £324,882). Cash flow Net cash used to support operations during 2005 was £714,913 (2004: £868,652).The positive difference of £664,652 between the cash used to support operations(£714,913) and the loss for the year (£1,379,565) resulted primarily from theGroup increasing its deferred revenue by approximately £382,000 when compared tothe prior year which consists of cash collected in advance of revenuerecognition, £162,000 of cash related to the r&d tax receivable from 2004 whichwas collected in 2005 and £78,000 of accrued revenue from the end of 2004 whichwas collected in 2005. Foreign currency risk The Company has one major overseas trading subsidiary which is in the USA.Receipts and payments for this subsidiary are largely in the local currency, USdollars, and no hedge against the fluctuation between sterling and the dollar ismade. This subsidiary generated 76% of the Group's total revenue (£1,258,605)and 47% of its operating costs (£1,501,908) in its local currency. Any cashrequired to support this subsidiary during the year was provided by the Companyfrom its sterling cash balance. Additionally, the Company has a small subsidiary in Australia. Receipts andpayments are largely in the local currency and are not hedged. Any short fallin cash flow from this subsidiary was also provided by the Company from itssterling cash balance. Capital structure and finance The consolidated equity position at 31 December 2005 was a deficit of £579,750(2004: equity £786,797). The decrease is primarily due to the loss for theyear. The Company has an available un-drawn debt facility of £800,000 committedto 30 October 2007. This facility is provided by Brown Shipley, on normalcommercial terms, backed by personal guarantees of the Chairman and twoshareholders. Neither the Chairman nor the shareholders have receivedcompensation or any other benefits for providing such guarantees. However thedirectors believe that this facility, along with the annual maintenancecontracts and signed but unbilled contractual arrangements should provide thefinancial resources for the Group to pursue its current strategy. J Marlovits Chief Executive 27 April 2006 Clinical Computing PlcConsolidated Income StatementFor the year ended 31 December 2005 Notes 2005 2004 £ £Continuing Operations Revenue 2 1,655,806 1,757,997 Cost of sales (720,228) (780,219) __________ __________Gross profit 935,578 977,778 Distribution costs (496,194) (495,827) Administrative expenses Research and development (878,561) (803,442) Other (1,122,065) (825,051) Total administrative expenses (2,000,626) (1,628,493) __________ __________ Loss from operations (1,561,242) (1,146,542) Interest income 22,743 49,147 __________ __________Loss before tax (1,538,499) (1,097,395) Tax 158,934 324,882 __________ __________Loss for the year (1,379,565) (772,513) __________ __________ Basic and diluted loss per share 5 (4.4p) (2.4p) __________ __________ Clinical Computing PlcConsolidated Statement of Recognised Income and ExpenseFor the year ended 31 December 2005 Notes 2005 2004 £ £ Exchange difference on translation offoreign operations (40,722) 133,306Loss for the year (1,379,565) (772,513) __________ __________Total recognised income and expensefor the year (1,420,287) (639,207) __________ __________ Clinical Computing PlcConsolidated Balance Sheet31 December 2005 Notes 2005 2004 £ £ Non-current assetsProperty, plant and equipment 81,883 98,963 __________ __________Current assetsTrade and other receivables 345,977 524,618Cash and cash equivalents 173,010 875,731 __________ __________ 518,987 1,400,349 Total assets 600,870 1,499,312 __________ __________ Current liabilities Trade and other payables (1,180,620) (712,515) __________ __________Net current (liabilities) / assets (661,633) 687,834 __________ __________Net (liabilities) / assets (579,750) 786,797 _________ _________ EquityShare capital 1,576,768 1,576,768Share premium account 4 6,125,438 6,099,699Share option reserve 4 37,655 9,654Translation reserve 4 78,537 119,259Retained earnings 4 (8,398,148) (7,018,583) __________ __________ Total (deficit) / equity (579,750) 786,797 _________ _________ Clinical Computing PlcConsolidated Cash Flow StatementFor the year ended 31 December 2005 Notes 2005 2004 £ £ Net cash from operating activities 6 (714,913) (868,652) __________ __________Investing activitiesInterest received 22,743 49,147Purchases of property, plant and equipment (21,923) (48,856) __________ __________Net cash used in investing activities 820 291 __________ __________ Net decrease in cash and cash equivalents (714,093) (868,361) Cash and cash equivalents at beginningof year 875,731 1,749,977Effect of foreign exchange rate changes 11,372 (5,885) __________ __________Cash and cash equivalents at end of year 173,010 875,731 __________ __________ Clinical Computing PlcNotes 1. Basis of preparation The financial information set out in this preliminary announcement was approved by the board on 26 April 2006 and does not constitute the Company's statutory accounts for the years ended 31 December 2005 or 2004, but is derived from those accounts. The accounts for the year ended 31 December 2004 carry an unqualified audit report, do not contain a statement under section 237(2) or (3) of the Companies Act and have been delivered to the Registrar of Companies. The financial information contained in this preliminary announcement for the 2004 year has been restated following the implementation of International Financial Reporting Standards. The Group's 2005 Annual Report and Financial Statements are to be delivered to the Registrar of Companies following the Company's Annual General Meeting. The annual report for the year ended 31 December 2005 will be posted to shareholders in due course. Copies of the 2005 full annual report and accounts will also be available from the Company's registered office at 2 Kew Bridge Road, Brentford, Middlesex, TW8 OJF and on its web site www.ccl.com. The consolidated financial information for the year ended 31 December 2005 has been prepared in accordance with IFRS. The financial information included in this announcement has been extracted from the un-audited financial statements for the year ended 31 December 2005. The contents of this announcement have been agreed with the Company's auditors. The financial statements are prepared on a going concern basis, which assumes that the Company and the Group will continue to trade for the foreseeable future. The directors consider the going concern assumption to be appropriate for the following reasons: The Company and the Group have been loss making and cash negative at the operational level since undertaking the development of the CV4 technology, and all such research and development costs associated with this project have been expensed as incurred. During 2005 a new management structure was put in place to transition the Company's management team to a more commercial emphasis. Since this restructuring, numerous operational improvements have been adopted to enhance the future trading prospects of the Group. The management team submitted a trading and cash flow plan to the directors for the period to April 2007. The directors have accepted this plan which shows 82 per cent of the forecasted revenue for the period to be covered by contracts which were in place as of 31 March 2006. A further pipeline of opportunities beyond the forecasted revenue is actively being pursued by the management team. Although the management team's forecast shows improved trading conditions, inherently there can be no certainty that these forecasts will be achieved. Therefore and in further support of this plan, the Company has increased its borrowing facility with Brown Shipley to £800,000, effective 25 April 2006. This facility is available to the Company until 30 October 2007 and secured by personal guarantees of the Chairman and 2 other shareholders. Following a review of the management team's plan and taking account of the above borrowing facility, the directors have formed a judgment, at the time of approving the financial statements, that there is a reasonable expectation the Group and Company has adequate resources to continue in operational existence for the foreseeable future. A special resolution is being put forth at the Annual General Meeting to increase the borrowing powers of the directors so that the above debt facility can be fully utilised in accordance with the Company's Articles of Association. 2. RevenueAn analysis of the Group's revenue is as follows: Year Year ended ended 2005 2004 £ £ Software licenses 391,602 526,789Maintenance 1,116,399 1,081,672Services and other revenue 147,805 149,536 __________ __________Revenue 1,655,806 1,757,997 __________ __________ 3. Business and geographical segments For management and legal purposes, the Group has three operating companies.These companies are the basis on which the Group reports its primary segmentinformation. All the business operations provide software, maintenance andservices to the healthcare sector. There is no significant difference betweenrisk and return on the software and services offered and therefore there is onlyone business segment. Segmental information is presented below. Corporate US UK Australia UK Total £ £ £ £ £ 2005RevenueExternal Revenue 1,258,605 397,201 - - 1,655,806 __________ __________ ________ __________ __________Total Revenue 1,258,605 397,201 - - 1,655,806 __________ __________ _______ __________ __________ResultsOperating loss (239,969) (628,155) (71,371) (621,747) (1,561,242) __________ __________ ________ __________ __________Balance SheetAssets 278,395 539,007 8,255 (224,787) 600,870Liabilities (2,083,701) (2,739,965) (234,072) 3,877,118 (1,180,620)Other InformationCapital Expenditure 9,358 12,345 220 - 21,923Depreciation 34,495 7,470 49 3,929 45,943 Corporate US UK Australia UK Total £ £ £ £ £ 2004RevenueExternal Revenue 1,376,169 381,828 - - 1,757,997 __________ __________ ________ __________ __________Total Revenue 1,376,169 381,828 - - 1,757,997 __________ __________ ________ __________ __________ResultsOperating loss (168,732) (684,755) (47,771) (245,284) (1,146,542) __________ __________ ________ __________ __________Balance SheetAssets 366,208 540,710 2,166 590,228 1,499,312Liabilities (1,835,689) (2,189,795) (146,312) 3,459,281 (712,515)Other InformationCapital Expenditure 32,716 16,140 - - 48,856Depreciation 37,382 12,875 - 4,294 54,551 4. Equity - share premium, reserves and retained earnings Share premium Share option Translation Retained account reserve reserve earnings Total £ £ £ £ £At December 2004 as previouslyreported UK GAAP 6,099,699 - - (6,889,670) (789,971)Restatement on adoption of IFRS - 9,654 119,259 (128,913) - __________ __________ __________ __________ __________At 1 January 2005 6,099,699 9,654 119,259 (7,018,583) (789,971)Share options - 28,001 - - 28,001Exchange difference on translationof foreign operations - - (40,722) - (40,722)Recovery of expenses on issue ofequity shares made in prior year 25,739 - - - 25,739Retained loss for the year - - - (1,379,565) (1,379,565) __________ __________ __________ __________ __________At 31 December 2005 6,125,438 37,655 78,537 (8,398,148) (2,156,518) __________ __________ __________ __________ __________ 5. Loss per share The calculation of the basic and diluted earnings per share is based on thefollowing data: 2005 2004 £ £ Earnings Earnings for the purposes of basic and diluted earnings per share (1,379,565) (762,859) __________ __________ Number of shares Number NumberWeighted average number of ordinary shares for the purposes of basic and dilutedearnings per share 31,535,361 31,535,361 __________ __________ The calculations of basic and diluted losses per share are the same because theeffect of including share options would be anti-dilutive and are excluded fromthe calculation per IAS 33. 6. Notes to the cash flow statement 2005 2004 £ £Loss from operations (1,561,242) (1,146,542)Adjustments for:Depreciation of property, plant and equipment 45,943 54,551Share option charges 28,001 9,654 __________ __________Operating cash flows before movements in working capital (1,487,298) (1,082,337)Decrease / (Increase) in receivables 35,060 (52,092)Increase in payables 416,262 102,824 __________ __________Cash generated by operations (1,035,976) (1,031,605)Taxes received 321,063 162,753 __________ __________Net cash from operating activities (714,913) (868,852) __________ __________ 7. Explanation of transition to IFRS This is the first year that the Group has presented its financial statementsprepared in accordance with IFRS. The following disclosures are required in theyear of transition. The last financial statements under UK GAAP were for theyear ended 31 December 2004 and the date of transition to IFRS was therefore 1January 2004. There was no impact on the 1 January 2004 balance sheet fromtransitioning to IFRS and specifically no change to the equity from transitionto IFRS. An explanation of how the transition from UK GAAP to IFRS has affectedthe Company's financial position and financial performance is set out in thefollowing tables. Reconciliation of profit and loss for 2004 Effect of IFRS UK GAAP transition IFRS £'000 £'000 £'000 Revenue 1,757,997 - 1,757,997Cost of sales (780,219) - (780,219) __________ __________ __________Gross profit 977,778 - 977,778 Distribution costs (495,827) - (495,827)Administrative expensesResearch & development (803,442) - (803,442)Other (A) (815,397) (9,654) (825,051)Total administrative expenses (1,618,839) (9,654) (1,628,493) __________ __________ __________Loss from operations (1,136,888) (9,654) (1,146,542) Investment expense 49,147 - 49,147 __________ __________ __________Loss before tax (1,087,741) (9,654) (1,097,395)Tax 324,882 - 324,882 __________ __________ __________Loss for the year (762,859) (9,654) (772,513) __________ __________ __________Basic and diluted loss per share (2.4p) 0.0p (2.4p) __________ __________ __________ Reconciliation of equity at 31 December 2004 IFRS UK GAAP adjustments IFRS £'000 £'000 £'000 EquityShare capital 1,576,768 - 1,576,768Share premium account 6,099,699 - 6,099,699Share option reserve (A) - 9,654 9,654Translation reserves (B) - 119,259 119,259Retained earnings (A) (B) (6,889,670) (128,913) (7,018,583) __________ __________ __________Total equity 786,797 - 786,797 __________ __________ __________ (A)Share-based payments The group operates two share option schemes - the Approved and UnapprovedExecutive Share Option Schemes ('the Schemes'). Under UK GAAP, a charge was recorded only when an award had intrinsic value onthe date of grant. Historically, share options have only been issued with anexercise price equal to the prevailing market price on the grant date andtherefore a charge was not recorded under UK GAAP. IFRS 2 'Share-based Payment'requires that an expense is recognised in the income statement based on the fairvalue of an award on the date of grant and that this expense is then spread overthe option vesting period. The fair value of share options is measured using anoption-pricing model. The Black-Scholes model has been used to determine thefair value of options granted under the Schemes. The impact of adopting IFRS was to increase the share-based payments expense inthe income statement with a corresponding credit to equity. The charge underIFRS2 reflected in these statements is reflected in the tables above. (B)Translation reserves The translation reserve results from exchange gains and losses arising on thetranslation of the Group's net investment in its US and Australian operatingsubsidiaries. The foreign exchange impact of translating foreign operationssince 1 January 2004 is reflected in the table above showing the analysis of theimpact on the Balance Sheet at 31 December 2004. This information is provided by RNS The company news service from the London Stock Exchange