CLINICAL COMPUTING PLC HALF YEAR RESULTS FOR THE SIX MONTHS TO 30 JUNE 2010

Transcription

1 CLINICAL COMPUTING PLC HALF YEAR RESULTS FOR THE SIX MONTHS TO 30 JUNE 2010 Clinical Computing Plc ( the Group ), the international developer of clinical information systems for the healthcare market and developer of programme management software, announces its Interim Results for the six ended 30 June The Group trades through four operating subsidiaries: Clinical Computing UK Limited in the United Kingdom and Europe, Clinical Computing Inc. in the United States, Clinical Computing Pty Limited in Australia and Hydra Management Limited ( Hydra ) in the United Kingdom. Financial Highlights Total revenue of 1,517,767 (H1 2009: 1,528,439) Recurring maintenance revenues decreased 5.8% to 833,675 (H1 2009: 884,969) Operating costs decreased 8.9% to 1,606,367 (H1 2009: 1,762,795) Loss from operations reduced to 88,600 (H1 2009: 234,356) R&D tax credit of 240,377 (H1 2009: 394,183) Profit after tax of 144,185 (H1 2009: profit of 154,550) Earnings per share of 0.1p (H1 2009: earnings 0.1p) EBITDA positive 3,877 (H1 2009: negative 145,405) Positive cash flow from operating activities 282,345 (H1: 2009 negative 36,669) Operational Highlights First US clinicalvision V hosted contract secured First French-Canadian clinicalvision V site goes live Two NHS Trusts signed contracts for clinicalvision V Seven implementations of clinicalvision V underway and anticipating one go-live per month for remainder of new contracts signed by Hydra business Strong customer loyalty with majority of orders placed from existing Hydra customers Successful Launch of Hydra Manager V7 at Hydra User Group Outlook Chairman Howard Kitchner, commenting on the Group outlook, said: On the back of positive operating cash flow, positive EBITDA and after tax profitability the Group s balance sheet continues to strengthen organically. The two operating subsidiaries are positioned to continue to deliver improving operating results. The Hydra business backlog is relatively strong for the near term and the Clinical business is positioned to expand from its footprint of clinicalvision V reference customers. Contacts: Joe Marlovits, Chief Executive Clinical Computing Plc Simon Sacerdoti Cairn Financial Advisers LLP Nominated Adviser

2 CHAIRMAN S STATEMENT Introduction We are pleased to report our interim results for the six month period to 30 June The Group continues its recent positive financial trends with respect to operating results, profitability and operating cash flow. These positive trends result from several successful product enhancements across both business units. We now have reference accounts for clinicalvision V in the US, UK, Canada and French speaking Canada; additionally Hydra has recently launched version 7.0 of Hydra Manager, which increases the planning functionality of this industry leading application. During the six month period Clinical has won three new contracts and Hydra has won 11 new contracts. Although revenues are relatively flat when compared to last year we have reduced our operating costs following the completion of clinicalvision V and are pleased to report a continued reduction in operating losses and a profit after tax of 144,185. Clinical business During the period under review we are pleased to report two firsts for the business: we have secured our first US clinicalvision V hosted contract with a hospital-based customer and have completed the implementation of the first French-Canadian version of clinicalvision. In addition we have secured two clinicalvision V contracts with NHS customers one of which is a new customer for the business. The business is now managing seven concurrent implementations for clinicalvision and we are anticipating one go-live per month for the remainder of the year. Following the establishment of reference sites in our key markets we are actively involved in several regional tenders spread across Australia, UK and the US which we believe will be decided in the second half of Additionally we are working to capitalise on the footprint we have developed in the Canadian market. Since the release of clinicalvision V we have been reducing our overall investment in research and development and for the period under review we are reporting a six month cost run-rate reduction of 15.7%. The reduction in costs has resulted in an improvement in operating performance of the business and we are reporting a business line operating loss of 81,538 (H1 2009: 143,896). During the period under review we have seen a reduction in maintenance revenue when compared to the prior year, however, we expect this trend to reverse in the second half as we manage the above noted clinicalvision contracts through to go-live and transition these accounts to maintenance contracts. Hydra business During the period under review we are pleased to report a 52.3% increase in revenue to 442,870 (H1 2009: 290,870). The business has won a number of new contracts in the period with public sector bodies, local authorities, nationalised businesses and emergency services providers. In addition a number of blue chip private sector businesses have chosen Hydra in competitive bid

3 situations. These organisations cover a range of sectors and include insurance, marketing, software and entertainment. The depth and breadth of features and stability of the Hydra Software combined with fast implementation times have proved to be key reasons why customers have been selecting Hydra over other alternatives. During the period the business also launched its V7 version of the product at its Annual User Group Forum. Extensive market research was used as part of the design of V7 resulting in enhanced planning features and reporting capabilities. There has been strong interest in the new version which is due for release in the fourth quarter of this year. The Hydra Manager application assists organisations in improving efficiencies and delivering against budget and automatically produces key information regarding the performance of portfolios, projects and resources. In the current economic climate businesses are seeking efficiency improvements and Hydra Manager is a key tool in managing the delivery of these improvements. The combination of the market, product strengths and short payback period has contributed to the revenue growth and profits generated by Hydra in the period. Hydra operating profit was 78,851 (2009 H1: loss 8,693). Financial results Group revenue of 1,517,767 was consistent with the amount reported for the same period in the prior year (H1 2009: 1,528,439). The revenue mix by business was: 70.8% Clinical business or revenues of 1,074,897 (H1 2009: 1,237,569 and 81%) 29.2% Hydra business or revenues of 442,870 (H1 2009: 290,870 and 19%). Recurring maintenance revenues accounted for 54.9% (H1 2009: 57.9%) of our total revenues and decreased 5.8% to 833,675 (H1 2009: 884,969). The decrease in maintenance revenues is attributed to the Clinical business s Proton customers not renewing maintenance contracts at the same rate as prior years. Proton has been superseded by clinicalvision V and we are actively working to upgrade this customer base. The Group s operating costs continue to decrease as we adjust our operating structure away from research and development. Total operating costs have decreased 8.9% to 1,606,367 (H1 2009: 1,762,795). We anticipate a further decline to operating costs during the second half of The operating costs are attributed to business unit as follows: 72.0% Clinical business or 1,156,435 (H1 2009: 1,381,465 and 78.4%) 22.7% Hydra business or 364,019 (H1 2009: 299,563 and 17%) 5.3% Parent company costs were 85,913 (H1 2009: 81,767 and 4.6%). Loss from operations improved to 88,600 (H1 2009: loss 234,356) and are shown below by business line: Clinical business operating loss 81,538 (H1 2009: loss 143,896) Hydra business operating profit 78,851 (H1 2009: loss 8,693) Parent Company operating loss 85,913 (H1 2009: loss 81,767)

4 As in prior years the Group continues to develop its core technologies: clinicalvision and Hydra Manager. This development effort has resulted in the Group receiving R&D tax credits under the United Kingdom R&D tax credit regime. For the year under review the Group has received 240,377 of tax credits for research and development activities undertaken in 2009 (H1 2009: R&D tax credit of 394,183 for research and development undertaken in 2008, 2007 and 2006). The Group is reporting a profit after tax of 144,185 for the period (H1 2009: profit 154,550). Earnings per share for the period under review are 0.1p (H1 2009: earnings per share of 0.1p). EBITDA for the first half 2010 was a positive 3,877 compared to a negative 145,504 in the first half of The non-cash charge for depreciation and amortisation for the first half of 2010 was 92,477 (H1 2009: 88,951). This is the second consecutive six month period in which the Group has reported positive EBITDA. Likewise, we are also reporting the second consecutive six month period of positive cash flow from operating activities. Operating cash flows were 282,345 for the period under review (H1 2009: negative 36,669) and were a positive 256,171 in the second half of During the twelve month period ending 30 June 2010 the Group increased its borrowings by 52,220. The Group s debt facilities amount to 930,000, of which 734,687 was drawn at 30 June Consequently at 30 June 2010 there were undrawn facilities of 195,313, in addition to the cash balance of 847,859. Given the above cash resources, the Group s operational performance and order book, and its forecasts and projections, it should be able to operate within the level of the above noted facilities. As a consequence, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Outlook On the back of positive operating cash flow, positive EBITDA and after tax profitability the Group s balance sheet continues to strengthen organically. The two operating subsidiaries are positioned to continue to deliver improving operating results. The Hydra business backlog is relatively strong for the near term and the Clinical business is positioned to expand from its footprint of clinicalvision V reference customers. Against this, and balanced against general market conditions, we are cautiously optimistic that we will sustain our recent positive financial trends. Howard Kitchner Chairman 13 August 2010 Unaudited condensed consolidated income statement Six ended 30 June 2010 Six Six year ended ended ended

5 Continuing operations 30 June June December 2009 Total revenue (Note 3) 1,517,767 1,528,439 3,179,365 Cost of sales (365,956) (366,532) (805,487) Gross profit 1,151,811 1,161,907 2,373,878 Distribution costs (155,132) (141,004) (330,578) Administrative expenses Research and development (654,947) (758,012) (1,341,838) Other (430,332) (497,247) (921,147) Total administrative expenses (1,085,279) (1,255,259) (2,262,985) Loss from operations (88,600) (234,356) (219,685) Finance income 101 1,327 1,506 Finance expense (7,693) (6,604) (14,453) Loss before tax (96,192) (239,633) (232,632) Income tax credit (Note 4) 240, , , Profit for the period attributable to equity holders of the company 144, , , Basic earnings per share (Note 5) 0.1p 0.1p 0.2p Diluted earnings per share (Note 5) 0.1p The notes form part of this condensed financial information p p Unaudited condensed consolidated statement of comprehensive income Six ended 30 June 2010 Six Six Year ended Ended Ended 30 June June December 2009 Profit for the period 144, , ,394 Exchange differences on translating foreign operations (37,333) 19,621 (22,521) Total comprehensive income for the period 106, , ,

6 The notes form part of this condensed financial information. Unaudited condensed consolidated statement of financial position 30 June June 30 June 31 December Non-current assets Intangible assets 257, , ,426 Goodwill 157, , ,658 Property, plant and equipment 60,485 94,861 78, , , , Current assets Trade and other receivables 530, , ,574 Cash and cash equivalents 847, , , ,378, ,796 1,001, Total assets 1,854,303 1,601,275 1,547, Current liabilities Trade and other payables (1,278,011) (1,239,456) (1,103,626) Bank loans (734,687) (682,467) (726,664) (2,012,6998) (1,921,923) (1,830,290) Net liabilities (158,395) (320,648) (282,959) Equity Share capital 2,433,251 2,433,251 2,433,251 Share premium account 7,750,957 7,750,957 7,750,957 Share option reserve 142, , ,681

7 Translation reserve (31,710) 47,765 5,623 Retained earnings (10,453,286) (10,663,315) (10,597,471) Shareholders funds - deficit (Note 6) (158,395) (320,648) (282,959) The notes form part of this condensed financial information. Unaudited condensed consolidated statement of cash flow Six ended 30 June 2010 Six Six year ended ended ended 30 June June December 2009 Net cash from operating activities (Note 7) 282,345 (36,669) 219,502 Investing activities Interest received 101 1,327 1,506 Purchases of property, plant and equipment (2,676) (4,042) (12,203) Net cash used in investing activities (2,575) (2,715) (10,697) Financing activities Increase in bank loan 8,023 9,712 53, Net cash from financing activities 8,023 9,712 53, Net increase/(decrease) in cash and cash equivalents 287,793 (29,672) 262,714 Cash and cash equivalents at beginning of period 551, , ,188 Effect of foreign exchange rate changes 8,662 (8,722) (10,498) Cash and cash equivalents at end of period 847, , , The notes form part of this condensed financial information.

8 NOTES: 1. Basis of preparation The accounting policies applied in the unaudited 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 The unaudited financial statements have been prepared using accounting policies consistent in all material respects with those applied in the Group s Annual Report for the year ended 31 December 2009 and consistent with those that will be applied during the year ended 31 December 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 The Group is marginally loss making 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 435 of the Companies Act Statutory accounts for the year ended 31 December 2009 have been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain a statement under section 498 of the Companies Act Business and geographic segments year ended ended ended 30 June 30 June 31 December Revenue by segment Clinical business UK 406, , ,916 Clinical business USA 627, ,713 1,747,973 Clinical business Australia 40,915 33,188 77,465 Hydra business 442, , , ,517,767 1,528,439 3,179, Revenue year Ended Ended Ended

9 30 June 30 June 31 December Revenue by type Software licences 506, ,872 1,016,954 Maintenance 833, ,969 1,716,862 Services and other revenue 177, , , Revenue 1,517,767 1,528,439 3,179, Tax The tax credits of 240,377 for the first half 2010 were derived from activities under taken in The tax credits of 394,183 for the half year ended 30 June 2009 included credits for R&D undertaken in 2006 and 2007 of 192,970 and tax credits for R&D undertaken in 2008 of 201,213. The Group accounts for research and development tax credits when there is sufficient certainty over receipt of the amounts involved, which is generally, when the claim has been filed with the applicable tax authority. 5. Earnings per share The calculation of the basic and diluted earnings per share is based on the following data: year ended ended ended 30 June 30 June 31 December Earnings for the purposes of basic and diluted earnings per share 144, , , Number Number Number Weighted average number of ordinary shares used in basic earnings per share calculation 110,883, ,883, ,883,694 Dilutive share options - 467,831 1,149, Weighted average number of shares used in diluted earnings per share calculation 110,883, ,351, ,033, Unaudited condensed consolidated statement of changes in equity

10 Share Share Share option Translation Retained Shareholders capital premium reserve reserve losses funds At 31 December ,433,251 7,750,957 97,588 28,144 (10,817,865) (507,925) Share options , ,093 Translation of foreign operations (22,521) - (22,521) Profit for the year , , At 31 December ,433,251 7,750, ,681 5,623 (10,597,471) (282,959) Share options , ,712 Translation of foreign operations (37,333) - (37,333) Profit for the period , , At 30 June ,433,251 7,750, ,393 (31,710) (10,453,286) (158,395) Share Share Share option Translation Retained Shareholders capital premium reserve reserve losses funds At 31 December ,433,251 7,750,957 97,588 28,144 (10,817,865) (507,925) Share options , ,106 Translation of foreign operations ,621-19,621 Profit for the period , , At 30 June ,433,251 7,750, ,694 47,765 (10,663,315) (320,648) Reconciliation of operating loss to operating cash flows year ended ended ended 30 June June December 2009 Loss from operations (88,600) (234,356) (219,685)

11 Adjustments for: Depreciation of property, plant and equipment 22,783 28,338 54,527 Share option charges 17,712 13,106 27,093 Amortisation of intangible assets 51,982 47, , Operating cash flows before movements in working capital (3,877) (145,405) (34,025) Increase in receivables (85,691) (64,405) (23,828) Increase/(decrease) in payables 131,475 (15,225) (161,218) Cash generated/(used) by operations 41,907 (223,035) (219,071) Tax credits received 240, , ,026 Interest paid (7,693) (6,604) (14,453) Net cash inflow/(outflow) from operating activities 282, (36,669) ,