Last checked at 
25 Sep 2008 07:00
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 | |
| ---------------- |