RNS Number:4958G
ClinPhone plc
29 October 2007
ClinPhone plc
Interim Results for the six months ended 31 August 2007
29 October 2007 - ClinPhone plc ("ClinPhone" or the "Company"), a leading
specialist supplier of technology solutions to the clinical trials industry,
announces its interim results for the six months ended 31 August 2007.
ClinPhone's technology reduces the cost and duration of running clinical trials
and improves the accuracy, integrity and consistency of data collected.
6 Months to 31 August
2007 2006 Reported Growth at
Growth Constant
Currency
Order Book (#m) 51.3 50.1 2.5% 8.0%
Revenue (#m) 23.0 20.7 11.5% 18.1%
Normalised Profit (#'000)* 424 3,052 -
Operating (Loss) / Profit (#'000) (1,348) 2,179 -
Diluted EPS (p) (1.54) 2.40 -
Fully Diluted Adjusted EPS (p)** 0.21 2.53 -
Highlights
- Market continues its adoption of technology in clinical trials
o Increased proposal activity
o Electronic Data Capture ("EDC") market showing strong growth toward a
service based model; supporting the medium to long term goals
o Market showing interest in integrated solutions as the first step in
eClinical strategy
- Revenue increased by 11.5% (6 months to 31 August 2006: 32.0%) and,
with a constant currency, by18.1% (6 months to 31 August 2006: 32.0%)
- Despite the operational issues experienced in first half the Order
Book remains healthy at #51.3m (31 August 2006: #50.1m)
- Weakening US$: GBP exchange rate increased the operating loss by
#480,000 and reduced the normalised profit by #725,000
- Management has implemented a plan to address the operational issues
Steve Kent, Chief Executive of ClinPhone, said:
"This has been a challenging six months for ClinPhone, but it is testament to
the Company's market position, loyalty of its customers and quality of its
employees that the business has been so resilient. I am particularly grateful to
our employees for all their hard work.
"The demand for our products remains strong and the growth in the use of
technology in clinical trials will continue. Our ongoing investment in capacity,
quality and research and development will leave ClinPhone well placed to benefit
from this continuing growth."
A presentation and conference call for analysts will be held today at 9.30am at
the offices of Financial Dynamics, Holborn Gate, 26 Southampton Buildings,
London WC2A 1PB. Please call Gemma Cross-Brown for further details on
020 7269 7125.
ClinPhone plc Phone: +44 (0) 115 955 7333
Steve Kent - Chief Executive Officer
Scott Brown - Chief Financial Officer
Financial Dynamics Phone: +44 (0) 207 831 3113
David Yates / Ben Brewerton
* Normalised profit is the operating profit before gains and losses on foreign
exchange instruments, listing associated share based payments and expenses and
amortisation of acquired intangible assets.
**Fully diluted adjusted EPS is calculated using post tax normalised profit and
all share capital capable of being issued at the period end. It also removes the
tax effect of prior year research and development credits.
Interim Management Review
Overview
The first half of this financial year was a challenging one, with the Company
experiencing operational issues, as well as trend changes in the licensing
market and adverse foreign exchange movements. As previously announced, these
issues are expected to reduce full year revenue and gross profit margins to
below management's initial expectations. However, the underlying market activity
has remained strong with significant increases in proposal activity and good
growth in revenue. The Company has finished the period with #51.3m in the order
book and management has implemented a plan to rectify the operational issues and
to restore customer confidence.
The operational difficulties experienced in the 6 months to 31 August 2007
impacted the Company's Randomisation and Trial Supply Management services to
some customers. However, ClinPhone's back up processes and response ensured that
service was maintained. The causes of those issues have been rectified and
should not reoccur but the quality of service provided to some customers during
that period was affected. The consequence of this was a high level of
cancellations of contracted orders in the Order Book over June and July
amounting to 7.7% of the opening Order Book for the quarter of #52.4m. With the
issues that caused the high level of cancellations now resolved, management
anticipate cancellations returning to historic levels.
During the first half customers began to choose to buy ClinPhone EDC products as
a software service rather than licence the products. Revenue for these services
is recognised over the duration of the service provision rather than in a single
advance payment as occurs with a licence sale. The revenue expectations for EDC
during the current financial year have therefore been significantly reduced. In
addition, the EDC business is being integrated and further investment is being
made in service provision in the business to ensure that the capacity exists to
meet the demand in this growing market. Management believes it is unlikely that
the EDC acquisition, completed in November 2006, will be earnings enhancing in
its first year post acquisition. However, it continues to believe that the
strategic imperative and growth opportunity that this market represents when
this technology is combined with other ClinPhone technologies is a significant
and important one to the future of the Company.
Management is addressing the issues presented by these factors by restructuring
parts of the business, continuing the retraining of its sales teams and putting
in place the necessary measures to improve the efficiency of operations and
quality systems. These plans are designed to return the Company to historic
levels of profitability while maintaining the necessary capacity and development
activity to deliver the strategic plan.
As part of these plans management has restructured the organisation of the
Company in order to better align the human resources with the future of the
business. This has resulted in a non recurring cost of approximately #465,000.
The restructuring has primarily affected supporting roles and will not impact
the capacity or quality of the delivery of the Company's products and services.
Of these costs #355,000 and the consequent benefits will be recognised in the
second half. In addition, the senior management of the Company have taken an
average 13% reduction in salary for the remainder of the year.
Outlook
In the short-term, for the remainder of this financial year the Company will
focus upon the delivery of quality product and services to build a larger stable
base for further growth. With the restructuring measures now in place, we are
confident that this can be achieved and that our customer service can be
returned to its previous high levels.
Looking further out, demand for our products remains strong and we continue to
believe that the market for technology in clinical trials is a highly attractive
opportunity. Management is confident of a two tier strategy of investing in the
current capacity and quality of service delivery while also investing in the
research and development of a true eClinical integrated technology solution for
the future.
Operating Review
Order Book
Underlying market indicators have been strong with 599 proposals submitted in
the first half (6 months to 31 August 2006: 427) a growth of 40.3% over the
prior period. However, as previously announced, the high levels of
cancellations, a low conversion rate and foreign currency have affected the
order book. The order book as at 31 August 2007 was #51.3m (31 August 2006:
#50.1m) consisting of:
* #38.8m (31 August 2006: #36.7m) of signed contracts; and
* #12.5m (31 August 2006: #13.4m) of business authorisations.
While this represented growth of just 2.5% year on year, at constant exchange
rates this growth is 8.0%. The Company has also experienced a significant
increase in the reliance upon the Euro within the order book.
Revenue
Revenue has grown during the period by 11.5% compared with the result for the
same period last year. On a constant currency basis this growth was 18.1%, in
part due to the acquired activities.
The underlying activity of the Company to produce the service revenue showed
varying indicators, with the value per trial falling offset by a strong increase
in the number of live trials:
* Average value per trial: #131,000 (6 months to 31 August 2006: #174,000)
* No of go-lives: 118 (6 months to 31 August 2006: 106)
* Average no. of live studies: 527 (6 months to 31 August 2006: 441)
During the reporting period, 10 new licences were sold (6 months to 31 August
2006 5). The proportion of licence revenue has fallen to 4.4% (6 months to 31
August 2006: 4.8%) as explained by the current market trend discussed above.
Cost of Sales
The gross margin for the period of 56.3% is lower than the margin reported for
the same period last year of 59.0%. This decline was caused by three primary
factors:
* A fall in the revenue per direct full time employee of 5.1% due to lower
than expected growth during a period when the work force expanded by 31.3%.
This was undertaken to increase the capacity of the Company to deliver in an
expanding market. The profitability of such expansion was inhibited by the
operational difficulties explained above;
* The adverse currency movements; using constant exchange rates to compare
the two periods the deterioration in the underlying gross margin was 1.8%;
and
* The decline in the proportion of license revenue which is typically at
much higher margins.
Administrative Expenses
Administrative expenses for the 6 months to 31 August 2007 increased by 35.5%
from the same period in the prior year to #14,275,000. Of this 16.6% is due to
the amortisation of acquired intangible assets. The remainder of the increase
was due to increased business activity, the enhanced investment in research and
development and quality discussed below. As discussed above, this escalation of
costs has been addressed through a restructuring exercise that was completed in
October.
Investment in Quality
The events of the 6 months to 31 August 2007 have highlighted the importance of
the quality of the Company's service and the maintenance of customer confidence
in that quality. For this reason, management have further enhanced the quality
and internal control system.
During the period ClinPhone established a business process reengineering program
to improve the Company's processes in terms of both efficiency and effectiveness
by improving both cycle times and quality. This program will become part of the
Company's normal operations by which it improves customer service and
satisfaction as well as achieving higher levels of efficiency. The Company is
expecting these projects to start producing benefits in the first half of the
next financial year, although payback on this investment will not be achieved
until subsequent years.
Investment in Products
During the period ClinPhone invested a further #2,855,000 (6 months to 31 August
2006: #1,198,000) in Research and Development, representing an investment of
12.4% of revenue (6 months to 31 August 2006: 5.8%). Of this investment 36.2% (6
months to 31 August 2006: 35.7%) has been capitalised on the balance sheet. Key
areas of development have been enhancement of the platform and software to
improve functionality and progress of integration of the four major product
sets: Randomisation and Trial Supply Management (RTSM); Electronic Data Capture
(EDC); Electronic Patient Reported Outcomes (ePRO); and Clinical Trial
Management System (CTMS). This represents the first steps toward providing an
integrated eClinical solution.
Operating Loss
The operating profit before gains and losses on foreign exchange instruments,
listing associated share based payments and amortisation of acquired intangible
assets shows deterioration in the normalised profit margin from 14.8% for the
same period last financial year to 1.8% this period.
The most significant adjustment to reach the operating loss is the amortisation
of acquired intangibles of #1,748,000. This results from the accounting
treatment of the acquired activities in November 2006 and will reoccur in the
second half of the financial year.
Net Finance Costs
Net finance costs consist primarily of interest. The net cost of #325,000
compares with the previous periods charge of #371,000. The net debt as at 31
August 2007 was #9,477,000 (31 August 2006: net cash #1,417,000) implying that
the Company has an effective interest rate of 6.8%. The Company's bank remains
supportive of our position and management forecasts indicate that the Company
will comply with all debt covenants and repayment terms.
Scott Brown
By order of the Board
26 October 2007
Consolidated income statement
6 months to 31 6 Months to 31 Year to 28
August 2007 August 2006 February 2007
Unaudited Unaudited Audited
Note #'000 #'000 #'000
_____ _____ _____
Revenue 2 23,019 20,654 43,064
Cost of sales (10,068) (8,476) (17,120)
_____ _____ _____
Gross profit 12,951 12,178 25,944
Other (expenses) / income (24) 538 317
Administrative expenses (14,275) (10,537) (21,523)
_____ _____ _____
Operating profit before gains and losses on 424 3,052 6,771
foreign exchange instruments, listing associated
share based payments and expenses and
amortisation of acquired intangible assets
Amortisation of acquired intangible assets (1,748) - (939)
Listing associated share based payments and - (1,411) (1,411)
expenses
Gains and losses on foreign exchange instruments (24) 538 317
_____ _____ _____
Operating (loss) / profit 2 (1,348) 2,179 4,738
Finance income 116 105 142
Finance costs (441) (476) (794)
_____ _____ _____
(Loss) / profit before taxation (1,673) 1,808 4,086
Taxation 4 677 (521) (1,166)
_____ _____ _____
(Loss) / profit attributable to equity (996) 1,287 2,920
shareholders
_____ _____ _____
(Loss) / earnings per share expressed in pence
per share
- basic 3 (1.54)p 2.49p 5.12p
- diluted 3 (1.54)p 2.40p 4.92p
_____ _____ _____
All of the Group's trading activities relate to continuing operations. No
dividends have been approved in the period. In the six months to 31 August 2006
dividends of #131,000 were approved and #626,000 paid. These were dividends
arising from the shareholder agreements that existed prior to the listing on 23
June 2006.
Consolidated statement of recognised income and expense
6 months to 31 6 months to 31 Year to 28
August 2007 August 2006 February 2007
Unaudited Unaudited Audited
Note #'000 #'000 #'000
_____ _____ _____
(Loss) /profit attributable to equity (996) 1,287 2,920
shareholders
Net exchange adjustment offset in reserves 13 (177) (124) (169)
_____ _____ _____
Total recognised (expense) / income for the (1,173) 1,163 2,751
period
_____ _____ _____
Consolidated balance sheet
31 August 31 August Restated 28
2007 2006 February 2007
Unaudited Unaudited Audited
Note #'000 #'000 #'000
_____ _____ _____
Assets
Non-current assets
Goodwill 5 32,126 24,000 32,248
Intangible assets 5 17,340 2,591 19,063
Property, plant and equipment 5 3,853 2,493 3,822
Deferred tax assets 7 1,545 210 1,500
Trade and other receivables 453 - 923
_____ _____ _____
55,317 29,294 57,556
_____ _____ _____
Current assets
Inventories 199 110 246
Trade and other receivables 12,785 10,773 14,171
Financial assets
- derivative financial instruments 137 389 155
Cash and cash equivalents 1,772 3,369 1,700
_____ _____ _____
14,893 14,641 16,272
Liabilities
Current liabilities
Financial liabilities
- borrowings 6 (807) - (562)
- finance leases 6 (166) (90) (209)
- derivative financial instruments (27) - (21)
Trade and other payables (9,849) (6,730) (10,375)
Current tax liabilities - (697) (1,275)
_____ _____ _____
(10,849) (7,517) (12,442)
_____ _____ _____
Net current assets 4,044 7,124 3,830
_____ _____ _____
Non-current liabilities
Financial liabilities
- borrowings 6 (10,061) (1,853) (10,807)
- finance leases 6 (215) (9) (314)
Deferred tax liabilities 7 (7,204) - (7,374)
Other non-current liabilities - (901) -
_____ _____ _____
(17,480) (2,763) (18,495)
_____ _____ _____
Net assets 41,881 33,655 42,891
_____ _____ _____
Shareholders' equity
Share capital 8 664 636 664
Share premium account 13 24,270 18,304 24,270
Shares to be issued 13 1,611 - 1,611
Merger relief reserve 13 8,265 8,265 8,265
Reverse acquisition reserve 13 (18,502) (18,502) (18,502)
Retained earnings 13 25,573 24,952 26,583
_____ _____ _____
Total equity 13 41,881 33,655 42,891
_____ _____ _____
The comparatives at 28 February 2007 have been restated due to adjustments in
the fair values of assets acquired on the acquisition of DataLabs Inc as
detailed in note 5.Consolidated cash flow statement
6 Months to 6 Months to Year to 28
31 August 31 August February 2007
2007 2006 Audited
Unaudited Unaudited
Note #'000 #'000 #'000
_____ _____ _____
Cash flows from operating activities
Cash generated from operations 9 3,714 2,561 6,769
Finance income received 67 105 142
Finance costs paid (434) (476) (675)
Tax paid (737) (937) (1,931)
_____ _____ _____
Net cash from operating activities 2,610 1,253 4,305
_____ _____ _____
Cash flows from investing activities
Purchase of business (209) - (11,898)
Purchase of property, plant and equipment (843) (477) (1,695)
Purchase of intangible assets (1,034) (427) (1,576)
_____ _____ _____
Net cash used in investing activities (2,086) (904) (15,169)
_____ _____ _____
Cash flows from financing activities
Net proceeds from issue of new bank loan - - 10,273
Proceeds from the issue of new share capital - 18,840 18,840
Repayment of borrowings (340) (17,953) (18,553)
Dividends paid - (626) (626)
_____ _____ _____
Net cash from financing activities (340) 261 9,934
_____ _____ _____
Effects of exchange rate changes (112) (24) (153)
_____ _____ _____
Net increase in cash and cash equivalents 72 586 (1,083)
Cash and cash equivalents at start of period 1,700 2,783 2,783
_____ _____ _____
Cash and cash equivalents at end of period 1,772 3,369 1,700
_____ _____ _____
Notes to the Financial Statements
1 Basis of preparation
The Group's interim financial information consolidates ClinPhone plc (the
"Company") and its subsidiaries for the six month period ended 31 August 2007.
The interim report and accounts for the 6 months to 31 August 2007 and the
comparatives for the 6 months to 31 August 2006 are unaudited and do not
constitute statutory accounts within the meaning of section 240 of the Companies
Act 1985. The comparatives for the year to 28 February 2007 are derived from the
statutory accounts filed with the Registrar of Companies. The audit report on
the 2007 Annual Report and Financial Statements was unqualified and did not
contain a statement under section 237 of the Companies Act 1985.
The interim financial information for the 6 months to 31 August 2007 has been
prepared in accordance with the Disclosure and Transparency Rules of the
Financial Services Authority and with IAS 34 'Interim Financial Reporting' as
adopted by the European Union.
The accounting policies adopted are consistent with those in the annual
financial statements to 28 February 2007. These policies are expected to be
followed in the full financial statements for the year to 29 February 2008.
There have been no material changes to accounting estimates made at 28 February
2007.
New accounting standards and interpretations and their likely impact for the
year to 29 February 2008 are set out below:
IFRS 7 "Financial instruments: disclosures" is applicable to the year to 29
February 2008. This amendment to disclosure will have no effect on reported
results.
2 Segmental reporting
Primary reporting format - business segments
The Group operates with two distinct segments. These are licensing and services.
Services are the provision of interactive voice response, interactive web
response, randomisation and medication management, medication management
simulations and patient recruitment solutions, primarily to the pharmaceutical
industry, utilised in multinational clinical trials into new medicines.
Licensing covers royalty income when a third party is responsible for the
primary hosting of the product or service. Royalty fees are derived from
clinical trial management solutions that integrate a configurable system with a
third party's existing computer software and hardware platform.
6 Months to 31 6 months to 31 Year to 28
August 2007 August 2006 February 2007
Unaudited Unaudited Audited
#'000 #'000 #'000
_____ _____ _____
Revenue
Services 22,001 19,663 40,803
Licensing 1,018 991 2,261
_____ _____ _____
Total 23,019 20,654 43,064
_____ _____ _____
Segment operating (loss) / profit
Services 772 2,357 5,979
Licensing (186) 695 768
Unallocated costs (1,934) (873) (2,009)
_____ _____ _____
Total (1,348) 2,179 4,738
_____ _____ _____
Unallocated costs comprise of gains and losses on foreign exchange instruments
and the amortisation of acquired intangibles. Also included are share based
payment charges and listing expenses which were incurred prior to the listing
and therefore, the directors do not deem it appropriate to allocate these costs
to segments. In the second half of the year the allocation between segments of
the intangible assets recognised on the acquisition of DataLabs will be
finalised. Once completed the amortisation of acquired intangibles will be
allocated to the licensing and services segments.
Secondary reporting format - geographical segments
The Group manages its business segments on a global basis. The main operations
in the principal territories are Europe and the United States of America.
The sales analysis in the table below is based on the location of the operation
generating the revenue.
Revenue
6 Months to 31 6 months to 31 Year to 28
August 2007 August 2006 February 2007
Unaudited Unaudited Audited
#'000 #'000 #'000
_____ _____ _____
Europe 15,498 14,077 28,205
United States of America 14,113 12,936 27,912
_____ _____ _____
29,611 27,013 56,117
Less: Intra-segment revenue (6,592) (6,359) (13,053)
_____ _____ _____
Total 23,019 20,654 43,064
_____ _____ _____
3 (Loss) / earnings per share
Basic (loss) / earnings per share is calculated on the (loss) / profit
attributable to equity shareholders divided by the weighted average number of
ordinary shares in issue during the period. The weighted average number of
shares for the 6 months to 31 August 2006 and the year to 28 February 2007 have
been adjusted to reflect the bonus issues made on listing.
Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below:
Basic (loss) / earnings per share
6 months to 31 August 2007 Unaudited
(Loss) Weighted Per share
average amount
number of (pence)
shares
#'000 '000
_____ _____ _____
(Loss)/ profit attributable to ordinary shareholders (996) 64,521 (1.54)p
Effect of dilutive securities
- options - -
_____ _____ _____
Diluted EPS (996) 64,521 (1.54)p
_____ _____ _____
Basic (loss) / earnings per share
(continued from table above)
6 months to 31 August 2006 Unaudited
Earnings Weighted Per share
average amount
number of (pence)
shares
#'000 '000
_____ _____ _____
(Loss)/ profit attributable to ordinary shareholders 1,287 51,484 2.49p
Effect of dilutive securities
- options 2,147 (0.09)p
_____ _____ _____
Diluted EPS 1,287 53,631 2.40p
_____ _____ _____
Basic (loss) / earnings per share
(continued from table above)
Year to 28 February 2007 Audited
Earnings Weighted Per share
average amount
number of (pence)
shares
#'000 '000
_____ _____ _____
(Loss)/ profit attributable to ordinary shareholders 2,920 57,017 5.12p
Effect of dilutive securities
- options 2,354 (0.20)p
_____ _____ _____
Diluted EPS 2,920 59,371 4.92p
_____ _____ _____
There is no impact on the diluted EPS for the 6 months to 31 August 2007 for the
share options in existence as, due to losses, these options are anti - dilutive.
Adjusted earnings per share
6 months to 31 August 2007 Unaudited
(Loss) / earnings Weighted Per share
average amount
number of (pence)
shares
#'000 '000
_____ _____ _____
(Loss) / Profit (996) 64,521 (1.54)p
attributable to ordinary shareholders
Gains and losses on foreign exchange instruments 24 0.04p
Listing expenses - -
Listing associated share based payments - -
Amortisation of acquired intangible assets 1,748 2.71p
Tax effect of adjustments 14 0.02p
Effect of prior year research and development tax (651) (1.01)p
_____ _____ _____
Adjusted EPS 139 64,521 0.22p
_____ _____ _____
Effect of dilutive securities
- options 1,632 (0.01)p
_____ _____ _____
Diluted adjusted EPS 139 66,153 0.21p
_____ _____ _____
Fully Diluted adjusted EPS 139 67,783 0.21p
_____ _____ _____
Adjusted earnings per share
(continued from table above)
6 months to 31 August 2006 Unaudited
(Loss) / Weighted Per share
earnings average amount
number of (pence)
shares
#'000 '000
_____ _____ _____
(Loss) / Profit 1,287 51,484 2.49p
attributable to ordinary shareholders
Gains and losses on foreign exchange instruments (538) (1.04)p
Listing expenses 165 0.32p
Listing associated share based payments 1,246 2.42p
Amortisation of acquired intangible assets - -
Tax effect of adjustments (570) (1.11)p
Effect of prior year research and development tax - -
_____ _____ _____
Adjusted EPS 1,590 51,484 3.08p
_____ _____ _____
Effect of dilutive securities
- options 2,147 (0.12)p
_____ _____ _____
Diluted adjusted EPS 1,590 53,631 2.96p
_____ _____ _____
Fully Diluted adjusted EPS 1,590 62,878 2.53p
_____ _____ _____
Adjusted earnings per share
(continued from table above)
Restated Year to 28 February 2007 Audited
(Loss) / Weighted Per share
earnings average amount
number of (pence)
shares
#'000 '000
_____ _____ _____
(Loss) / Profit 2,920 57,017 5.12p
attributable to ordinary shareholders
Gains and losses on foreign exchange instruments (317) (0.56)p
Listing expenses 165 0.29p
Listing associated share based payments 1,246 2.18p
Amortisation of acquired intangible assets 939 1.65p
Tax effect of adjustments (856) (1.50)p
Effect of prior year research and development tax - -
_____ _____ _____
Adjusted EPS 4,097 57,017 7.18p
_____ _____ _____
Effect of dilutive securities
- options 2,354 (0.28)p
_____ _____ _____
Diluted adjusted EPS 4,097 59,371 6.90p
_____ _____ _____
Fully Diluted adjusted EPS 4,097 67,783 6.04p
_____ _____ _____
To understand the underlying trading performance, the directors consider it
appropriate to disclose earnings both before and after gains and losses on
financial instruments, amortisation of acquired intangible assets, listing
associated share based payments and expenses and prior year research and
development tax credits.
The tax effect of adjustments for the year to 28 February 2007 have been
restated as per the trading announcement on 31 July 2007.
Fully diluted adjusted EPS is calculated using all share capital capable of
being issued at the period end.
4 Taxation
The taxation credit in the 6 months to 31 August 2007 is based on the full year
estimated effective tax credit of 40.5% on the loss before taxation (2006: 28.8%
charge on the profit before taxation) for the year to 29 February 2008.
The overall credit is higher than the standard rate of corporation tax in the UK
mainly due to the additional research and development credits that have been
acknowledged by the UK tax authorities for the years from 28 February 2003.
5 Capital expenditure
Property, Plant and
Equipment
#'000
_____
Six months to 31 August 2006
Opening net book amount 1 March 2006 2,683
Additions 529
Disposals (35)
Depreciation (624)
Exchange differences (60)
_____
Closing net book amount 31 August 2006 2,493
_____
Six months to 31 August 2007
Opening net book amount 1 March 2007 3,822
Additions 843
Disposals (3)
Depreciation (771)
Exchange differences (38)
_____
Closing net book amount 31 August 2007 3,853
_____
At 31 August 2007 no further commitments had been made to purchase property,
plant and equipment.
Goodwill Intangible
assets
#'000 #'000
_____ _____
Six months to 31 August 2006
Opening net book amount 1 March 2006 24,106 2,854
Additions - 427
Amortisation - (690)
Exchange differences (106) -
_____ _____
Closing net book amount 31 August 2006 24,000 2,591
_____ _____
Six months to 31 August 2007
Opening net book amount 1 March 2007 - as previously reported 31,896 19,378
Adjustments to provisional value in period 352 (315)
_____ _____
Opening net book amount at 1 March 2007 - as restated 32,248 19,063
Additions - 1,034
Amortisation - (2,275)
Exchange differences (122) (482)
_____ _____
Closing net book amount 31 August 2007 32,126 17,340
_____ _____
The directors have reviewed goodwill and intangibles for impairment at 31 August
2007 and they are satisfied that there is no impairment. The DataLabs acquired
intangible asset values will remain provisional until 22 November 2007 as
elements of the purchase consideration will not be known until the earn out
period is completed.
6 Financial liabilities - borrowings
31 August 31 August 28 February
2007 2006 2007
Unaudited Unaudited Audited
#'000 #'000 #'000
_____ _____ _____
Current
Bank loans due within one year or on demand: Secured 807 - 562
Finance leases due within one year: Secured 166 90 209
_____ _____ _____
Total 973 90 771
_____ _____ _____
Non-current
Bank loans due after one year: Secured 10,061 1,853 10,807
Finance leases due after one year: Secured 215 9 314
_____ _____ _____
Total 10,276 1,862 11,121
_____ _____ _____
On 22 November 2006 ClinPhone plc extended its existing US dollar loan of
$3,520,000 by $5,418,000 to $8,938,000 of which $438,000 was repaid on 28
February 2007. This loan is repayable over a maximum of 65 months and interest
is charged at variable rates of up to 2.0% above LIBOR. At the same drawdown
date two additional loans were acquired totalling $14,100,000. These loans are
repayable over a maximum of 63 months and interest is charged at variable rates
between 1.25% and 1.75% above LIBOR.
Since 28 February 2007 there have been repayments on the dollar loans totalling
$400,000.
7 Deferred tax
Deferred tax is calculated in full on temporary differences under the liability
method using a tax rate of 28% for differences arising in the UK and 40% for
differences arising in the USA (2006: 30% and 40% respectively).
8 Called up share capital
31 August 31 August 28 February
2007 2006 2007
Unaudited Unaudited Audited
#'000 #'000 #'000
_____ _____ _____
Authorised
90,000,000 ordinary shares of 1p each 900 900 900
_____ _____ _____
Allotted, called up and fully paid
66,423,828 (31 August 2006: 63,553,569) ordinary shares of 1p each 664 636 664
_____ _____ _____
There have been no movements in share capital since the year end.
9 Cash generated from operations
6 Months to 6 Months to Year to 28
31 August 31 August February 2007
2007 2006
Unaudited Unaudited Audited
#'000 #'000 #'000
_____ _____ _____
(Loss) / profit attributable to equity shareholders (996) 1,287 2,920
Adjustments for:
Tax (677) 521 1,166
Finance income (116) (105) (142)
Finance costs 441 476 794
Depreciation 771 624 1,123
Profit on disposal of property, plant and equipment - 34 20
Amortisation of intangibles 2,275 690 2,346
Other non cash charges -share-based payments 163 1,246 1,289
Changes in working capital:
Decrease/ (increase) in inventories 47 100 (36)
Decrease / (increase) in trade and other receivables 2,208 (1,467) (2,896)
(Decrease) / increase in payables (402) (845) 185
_____ _____ _____
Cash generated from operations 3,714 2,561 6,769
_____ _____ _____
10 Post balance sheet events
In September the company implemented a restructuring programme, details of which
can be found in the Interim Management Review.
11 Seasonality
The business is not materially affected by seasonality.
12 Related party transactions
Dr J H W Engler and Dr N E Rotherham, who were directors of the Company until 2
June 2006, have an interest in the freehold of two office properties that are
leased to the group on an arms length basis. Both properties are leased on short
term leases totalling #32,500 for the 6 months to 31 August 2007 (6 months to
31 August 2006: #32,500). In addition Dr J H W Engler has an interest in a
further property let on an arms length basis to the group with a rent of #4,000
in the 6 months to 31 August 2007 (6 months to 31 August 2006: #4,000).
Mr M Dunfoy and Ms H Bryson were directors of the Company until 19 June 2006 and
were representatives on the board of investment funds managed by Montagu
Limited. The relevant funds are shareholders in the Company and in addition
there have been financing and other transactions with the bank (Montagu) and the
funds as noted below:
Directors' emoluments include monitoring fees of #Nil (6 months to 31 August
2006: #9,000).
On 15 December 2004, in the transaction whereby ClinPhone plc became the parent
company of the Group, ClinPhone plc issued #6,587,500 of Variable Rate Loan
Stock 2010. Interest charged in respect of the loan stock was #Nil (6 months to
31 August 2006: #96,000). Of this loan stock, #3,337,500 was repaid in July 2005
as part of the refinancing.
Repayment in full of the above loan occurred on 23 June 2006.
Mr Dibden was a director of the Company until 19 June 2006 and was a
representative on the board of investment funds managed by Hg Investment
Managers Limited and related companies. The relevant funds ("Hg Capital") are
shareholders and in addition there have been financing and other transactions
with Hg Investment Managers Limited and the funds as noted below:
Directors' emoluments include monitoring fees of #Nil (6 months to 31 August
2006 #9,000).
On 15 December 2004, in the transaction whereby ClinPhone plc became the parent
company of the Group, ClinPhone plc issued #6,587,500 of Variable Rate Loan
Stock 2010. Interest charged in respect of the loan stock was #Nil (6 months to
31 August 2006: #96,000). Of this loan stock, #3,337,500 was repaid in July 2005
as part of the refinancing.
Repayment in full of the above loan occurred on 23 June 2006.
Key management compensation amounted to #1,130,000 for the 6 months to 31 August
2007 (6 months to 31 August 2006 : #1,817,000).
13 Statement of changes in shareholders' equity
Share Share Shares to be Merger
capital premium issued relief
account reserve
#'000 #'000 #'000 #'000
_____ _____ _____ _____
At 1 March 2006 100 - - 8,265
Profit for the period - - - -
Dividends - - - -
Share-based payments - - - -
Exchange adjustments - - - -
Share issue 536 20,291 - -
Costs of share issue - (1,987) - -
_____ _____ _____ _____
At 31 August 2006 636 18,304 - 8,265
_____ _____ _____ _____
At 1 March 2006 100 - - 8,265
Profit for the year - - - -
Dividends - - - -
Share-based payments - - - -
Exchange adjustments - - - -
Share issue 564 26,257 - -
Shares to be issued - - 1,611 -
Costs of share issue - (1,987) - -
_____ _____ _____ _____
At 28 February 2007 664 24,270 1,611 8,265
Loss for the period - - - -
Share-based payments - - - -
Exchange adjustments - - - -
_____ _____ _____ _____
At 31 August 2007 664 24,270 1,611 8,265
_____ _____ _____ _____
(continued from table above)
Reverse Retained Translation Total
acquisition earnings reserve
reserve (retained
earnings)
#'000 #'000 #'000 #'000
_____ _____ _____ _____
At 1 March 2006 (18,502) 22,589 85 12,537
Profit for the period - 1,287 - 1,287
Dividends - (131) - (131)
Share-based payments - 1,246 - 1,246
Exchange adjustments - - (124) (124)
Share issue - - - 20,827
Costs of share issue - - - (1,987)
_____ _____ _____ _____
At 31 August 2006 (18,502) 24,991 (39) 33,655
_____ _____ _____ _____
At 1 March 2006 (18,502) 22,589 85 12,537
Profit for the year - 2,920 - 2,920
Dividends - (131) - (131)
Share-based payments - 1,289 - 1,289
Exchange adjustments - - (169) (169)
Share issue - - - 26,821
Shares to be issued - - - 1,611
Costs of share issue - - - (1,987)
_____ _____ _____ _____
At 28 February 2007 (18,502) 26,667 (84) 42,891
Loss for the period - (996) - (996)
Share-based payments - 163 - 163
Exchange adjustments - - (177) (177)
_____ _____ _____ _____
At 31 August 2007 (18,502) 25,834 (261) 41,881
_____ _____ _____ _____
Independent review report to ClinPhone plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 August 2007 which comprises the consolidated interim
balance sheet as at 31 August 2007 and the related consolidated interim
statements of income, cash flows and statement of recognised income and expense
for the six months then ended and related notes. We have read the other
information contained in the half-yearly report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of ClinPhone plc are
prepared in accordance with IFRSs as adopted by the European Union. The
financial information included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34, "Interim
Financial Reporting," as adopted by the European Union.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of management and applying analytical
procedures to the financial information and underlying financial data and, based
thereon, assessing whether the disclosed accounting policies have been applied.
A review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than an
audit and therefore provides a lower level of assurance. Accordingly we do not
express an audit opinion on the financial information. This report, including
the conclusion, has been prepared for and only for the company for the purpose
of the Disclosure and Transparency Rules of the Financial Services Authority and
for no other purpose. We do not, in producing this report, accept or assume
responsibility for any other purpose or to any other person to whom this report
is shown or into whose hands it may come save where expressly agreed by our
prior consent in writing.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 August 2007.
PricewaterhouseCoopers LLP
Chartered Accountants
East Midlands
26 October 2007
Notes:
(a) The maintenance and integrity of the ClinPhone plc web site is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the interim report
since it was initially presented on the web site.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other
jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PUGQWUUPMGCR
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