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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Clinphone | LSE:CNP | London | Ordinary Share | GB00B0ZL4M73 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 134.25 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
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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