RNS Number:6791N
Patientline PLC
12 December 2006
Press Release Patientline plc
Thames Valley Court
183-187 Bath Rd
Slough SL1 4AA UK
Tel: +44 (0) 1753 896000
Fax: +44 (0) 1753 896153
www.patientline.co.uk
Patientline plc
Announcement of interim results for the six months ended 29 September 2006
Financial Highlights
* Revenue was #25.1 million (2005 #26.4 million)
* EBITDA before exceptional items was #6.8 million (2005 #9.2 million)
* Operating loss before exceptional items was #3.7 million (2005 #2.2 million)
* Cash inflow before financing activities was #5.0 million (2005 #6.9 million outflow)
* Net borrowings were #84.6 million (2005 #84.3 million)
* Revenues per terminal per day declined by 4.7% to #1.62 impacted by ward
closures
Operating Highlights
* Business plan and direction of the business is now decided - a focus on the UK
business
- Loss making US operations being closed
- In early stage discussions regarding Continental Europe operations
* Introduction of a range of innovative services and packages to drive up
terminal revenues
* Substantial focus on improving system uptime and enhancing service levels
* Negotiations with Department of Health unresolved, despite the efforts of
Patientline
Period to Period to
29 Sep 2006 23 Sep 2005
As restated
#m #m
Revenue 25.1 26.4 - 5%
EBITDA - before exceptional items 6.8 9.2 - 25%
Operating loss - before exceptional items (3.7) (2.2) + 69%
Operating loss (5.3) (2.2) +142%
Cash inflow/(outflow) before financing activities 5.0 (6.9) -
Net borrowings (84.6) (84.3) -
Pence Pence
Loss per share (9.9) (5.9) + 68%
Commenting on the interim results, Geoff White, Chairman of Patientline, said:
'This has been a difficult period for the Company and the outlook remains
challenging. However, we have embarked on a business recovery plan which is now
being implemented.
The most important issue facing the business is the discussions with the
Department of Health about reducing call charges. It is disappointing that these
discussions have taken much longer to resolve than expected. Patientline has
long wanted to reduce incoming telephone call charges; we are making every
effort to resolve this difficult issue as soon as possible for the benefit
of patients and all stakeholders.'
Enquiries
Patientline plc 0845 414 6000 Tulchan Communications 020 7353 4200
Geoff White, Chairman Andrew Honnor
Phil Dennis, Finance Director Stephen Malthouse
Chairman's Statement
Performance
Revenue for the period disappointingly declined to #25.1m (2005 #26.4m).
Excluding the impact of exceptional charges in the period, this resulted in
EBITDA of #6.8m (2005 #9.2m) and an operating loss of #3.7m (2005 loss #2.2m).
Encouragingly net cash inflows, before financing activities, improved to #5.0m
(2005 outflow #6.9m). Net borrowings at the half year end, after loan repayments
and payment of #3.2m of interest charges, were #84.6m (2005 #84.3m).
UK
Revenues per terminal per day declined by 4.7% to #1.62 (2005 #1.70). Revenue
generated from the bedside was marginally higher than the levels earned last
year but revenue from incoming calls has fallen by circa 10%. This performance
should be considered against a background of ward closures, which our site
records indicate have reduced our income by circa 5% compared with the same
period last year. I refer to the actions that we have taken to address this in
my comments on strategy detailed below.
Substantial time and additional funds have been directed to improving system
uptime and enhancing service levels, a focus that will continue in the second
half. In the first half we increased expenditure in this area from #1.6m to #2.8m.
Excluding exceptional costs and expenditure on repairs and maintenance, costs
for the period were reduced by about #1.2m.
Department of Health
Formal discussions have been in progress with the Department of Health (DH)
since January 2006. At that time, Ofcom wrote to the Secretary of State for
Health to recommend that the DH entered into discussions with the industry to
find a solution to the high prices charged for incoming calls.
These discussions, which were initially scheduled to be concluded by June, were
rescheduled by the DH for completion by December. The DH has recently advised
us that a further delay is now likely. The Company has made every effort to
provide the necessary information to the DH to allow a solution to be found,
including an analysis of the services provided for which it currently does not
make a charge.
There have been no substantive discussions for many weeks and we have expressed
our frustration to the DH. We have formally requested that discussions
re-commence as a matter of urgency to achieve a speedy resolution, which is
important not just to our stakeholders, but also to patients and their friends
and relatives, all of whom deserve better.
Shareholders should be aware that incoming calls generate about 50% of revenue
for the UK business. To reduce incoming call tariffs, which Ofcom concluded are
the result of Government policy, without a fundamental change in the current
contractual structure, would be damaging to the Group. Indeed the Health Select
Committee, which reported to Parliament in July, stated "It is an utter waste
for these units, which could contribute significantly to the transfer of
information within hospitals, to be used as little more than glorified
telephones and televisions. If the NHS cannot make use of the additional
services in the near future, the Department should pay the difference in cost
between the standard rate and the amount charged by the companies. Patients'
relatives and friends should not be penalised for the Department's failings."
Strategy for Recovery
Patientline is a complex and diverse business facing issues such as the delicacy
of charging hospital patients for services, reduced patient treatment times,
closures of wards, the use of mobile phones and a reluctance of hospitals to
invest in its systems because of budget restrictions, all of which are set
against the background of a negative high profile image.
Many of these challenges have been made more difficult by disappointing service
levels. The new management team is under no illusions about the magnitude of the
task which it faces. Ward closures alone, based on our site information, have
reduced income by an estimated #50,000 per week compared with last year. At the
same time the delayed conclusion of the DH's review into the industry has meant
that we have been unable to reduce incoming call charges.
Irrespective of any settlement with the DH, actions need to be taken to improve
the service the Company offers to its customers, to enhance income and to
improve efficiency. Since my appointment, last April, we have taken a three
stage approach to addressing the issues. Stage one is to assess the business and
to identify its strengths and weaknesses, opportunities and threats. Stage two
is to develop a strategy and business plan and stage three is to implement that
plan.
Stage one is complete. We found a business which lacked vision, which had no
clear plan to tackle the enormous challenges that it faced and was bogged down
by bureaucracy and overwhelmed with debt. It had a team of excellent dedicated
employees but inevitably their morale was low, they felt that they had no
leadership and no direction.
Stage two is virtually complete but nevertheless this has not delayed
implementation of the major elements of the plan that have already been
finalised.
Stage three has begun. We have focused on the UK operations and have introduced
a revenue and cost driven approach to replace the land grab strategy of the
previous regime. We are preparing the business for the next phase of its
development and, whilst many of the actions have not yet had a chance to impact
on performance, a considerable amount of activity has already taken place
including:
Operational
* The closure of the loss making US company.
* The UK company, each department, each manager, each site and every employee
has been given targets which they are expected to achieve by an agreed date.
* Head office staff will have to work within the hospital environment on a
regular basis so that they can appreciate the service that the Company is
offering to its customers and the challenges faced by our on site employees.
Income Generation
* We are conducting trials of service bundles, which offer our customers
unlimited outgoing calls to UK land lines, TV, radio, internet and games
for an inclusive daily payment.
* We have improved the package that notifies friends and family when a
loved one is in hospital and encourages them to phone the patient.
* We are working with NHS Innovations to present every patient with an
introductory video that provides them with essential information about
their stay and treatment. If this is successful then it underwrites the
case for using our medium for advertising.
* We have over 6 million patients per annum looking at our screens and we
are promoting this to generate advertising revenues.
* We have recognised that the most important part of our business is the
interface with the customer and we are training our employees to offer a
better service and to promote our products. It is likely that we will
increase the number of staff that we employ within selected hospitals.
* We have introduced a performance commission to encourage our hospital
based employees to sell our services.
* In addition to enhancing income from patients, we are exploring all other
opportunities for earning revenue from our system including, as mentioned
above, advertising and introductory video to patients, as well as
electronic meal ordering, translation services and introducing our own
web portal.
Cost Reduction
* We have streamlined operations, reducing the number of employees at head
office by about 30% and have taken out one complete layer of ineffective
management in the field. Not only does this reduce cost but it shortens the
decision making process.
We are targeting low contribution hospitals and will consider withdrawing
the service and re-deploying the equipment unless a revised commercial
arrangement can be reached.
* We are focussing on ensuring that our equipment and software are reliable.
* We are reviewing the procedures within our call centre.
The extent of the task should not be underestimated. To fully implement the plan
and to achieve a turnaround of the business will take at least eighteen months.
Exceptional Charge
An exceptional charge of #1.6m (2005 #nil) was recognised in the period,
comprising #0.7m for the write down in US inventory, #0.3m for severance of US
staff, #0.1m for the impairment of US non current assets, #0.2m for costs
arising from the head office redundancy programme and #0.3m resulting from
actions taken to clear the backlog of repairs to bedside systems.
Overseas Operations
We announced on 1 November that we had decided to withdraw from our operations
in the USA. The business made an operating loss of #1.5m in the year ended 31
March 2006 and an operating loss, before exceptional charges, of #0.6m in the
first half of the current year. In our opinion, there was no prospect of the
business becoming profitable in the near future and efforts to sell the
operation proved unsuccessful.
Our Continental European operations produced sales of #3.4m (2005 #3.1m) and
EBITDA of #823k (2005 #899k). We are in discussions with an interested party
which may lead to a sale of the business. If these talks prove to be successful
then we would expect to make a further announcement in the New Year.
Investment
During the period we spent #2.3m (2005 #16.7m) on the purchase of equipment, a
high proportion of which was committed in the previous year. Our new strategy is
to concentrate on obtaining maximum revenue from our existing installed estate
and the level of capital expenditure at hospitals in the future will remain low.
The only investment opportunities which will be considered are those which
generate a rapid payback.
Banking Arrangements
On 11 December 2006, a revised bank facility was agreed with the Company's
syndicate of lenders. In addition to a modified repayment profile whereby
substantially all capital repayments have been deferred until after April 2008,
the new facility does not require any tests of financial covenants until 31
March 2008. In return, a fee equivalent to 10% of the Group's market
capitalisation is payable to the Company's lenders. This fee is payable in cash
or, at the Company's discretion, by way of shares which would require
shareholder approval. Details of this fee arrangement are contained in Note 10
to the interim report together with further information on the modified
facility. The revised banking arrangements provide the Group with secure funding
until March 2008, but will need to be renegotiated subject to the outcome of
discussions with the DH and to give twelve months working capital adequacy prior
to publication of the Report and Accounts for the current financial year.
Board
Since the AGM Colin Babb has left the Board. Colin was appointed in February
2006 and I should like to thank him for his hard work and to wish him well in
the future.
Prospects
The outlook for the Group is challenging but as I have outlined above we are
well advanced with a comprehensive business plan which we will implement. The
discussions with the Department of Health are critical to this plan and will
have a substantial impact on the future shape of the Group.
I appreciate that this is a frustrating period for shareholders and the Board
would like to thank you for your support.
Geoff White
Chairman
12 December 2006
Group Income Statement - unaudited
Period ended 29 September 2006
Pre-exceptional Exceptional Total
items items
Notes #'000 #'000 #'000
Revenue 2 25,053 - 25,053
Staff costs (10,166) (495) (10,661)
Telecoms and other (2,109) - (2,109)
service related costs
Infrastructure support costs (3,234) (295) (3,529)
Changes in inventories of
finished goods 57 (748) (691)
Raw material and consumables used (546) - (546)
Other operating expenses (2,217) - (2,217)
EBITDA 2,3 6,838 (1,538) 5,300
Depreciation and amortisation (10,534) - (10,534)
Exceptional impairment of
non-current assets 3 - (56) (56)
Operating loss 2 (3,696) (1,594) (5,290)
Finance costs (3,824) - (3,824)
Loss before taxation (7,520) (1,594) (9,114)
Taxation 4 (38) - (38)
Retained loss for the period (7,558) (1,594) (9,152)
attributable to equity shareholders
Pence
Earnings per share 5
Loss per share - basic and diluted (9.9)
Group Income Statement - unaudited
Period ended 23 September 2005 Year ended 31 March 2006
As restated As restated
Pre-exceptional Exceptional Total Pre-exceptional Exceptional Total
items items items items
Notes #'000 #'000 #'000 #'000 #'000 #'000
Revenue 2 26,402 - 26,402 55,408 - 55,408
Staff costs (10,477) - (10,477) (22,035) (184) (22,219)
Telecoms and other service
related costs (2,172) - (2,172) (4,975) - (4,975)
Infrastructure
support costs (1,840) - (1,840) (4,006) - (4,006)
Changes in inventories
of finished goods (18) - (18) 207 - 207
Raw material and
consumables used (763) - (763) (1,269) (500) (1,769)
Other operating
expenses (1,964) - (1,964) (4,019) (518) (4,537)
EBITDA 2,3 9,168 - 9,168 19,311 (1,202) 18,109
Depreciation
and
amortisation (11,355) - (11,355) (23,404) - (23,404)
Exceptional
impairment of
non-current assets 3 - - - - (12,209) (12,209)
Operating loss 2 (2,187) - (2,187) (4,093) (13,411) (17,504)
Finance costs (3,210) - (3,210) (7,215) - (7,215)
Loss before taxation (5,397) - (5,397) (11,308) (13,411) (24,719)
Taxation 4 (22) - (22) (215) - (215)
Retained loss for
the period attributable
to equity shareholders (5,419) - (5,419) (11,523) (13,411) (24,934)
Pence Pence
Earnings per share 5
Loss per share - basic and diluted (5.9) (27.0)
Group Balance Sheet - unaudited
Notes As at As at As at
29 Sep 2006 23 Sep 2005 31 Mar 2006
As restated
#'000 #'000 #'000
ASSETS
Non-current assets
Property, plant and equipment 83,019 110,190 90,959
Goodwill 4,867 5,250 5,054
Other intangible assets 896 2,499 1,563
88,782 117,939 97,576
Current assets
Inventories 331 797 1,022
Trade and other receivables 3,738 5,406 4,220
Cash and cash equivalents 6 1,850 4,395 1,806
5,919 10,598 7,048
TOTAL ASSETS 94,701 128,537 104,624
LIABILITIES
Current liabilities
Borrowings 6, 10 6,101 88,731 3,032
Derivative financial instruments - 2,156 -
Trade and other payables 11,670 14,077 11,273
Current tax liabilities 165 135 195
17,936 105,099 14,500
Non-current liabilities
Borrowings 6, 10 80,388 - 84,494
Derivative financial instruments 993 - 1,513
81,381 - 86,007
Total liabilities 99,317 105,099 100,507
SHAREHOLDERS' EQUITY
Share capital 4,623 4,623 4,623
Share premium account 76,882 76,882 76,882
Other reserves (218) (831) (637)
Retained earnings (85,903) (57,236) (76,751)
Total shareholders'
(deficit)/equity 7 (4,616) 23,438 4,117
TOTAL SHAREHOLDERS' (DEFICIT)/
EQUITY AND LIABILITIES 94,701 128,537 104,624
Group Cash Flow Statement - unaudited
Notes Period ended Period ended Year ended
29 Sep 2006 23 Sep 2005 31 Mar 2006
#'000 #'000 #'000
Cash flows from operating activities
Cash generated from operations 8 7,432 10,716 20,925
Tax paid (68) (248) (381)
Net cash flows from operating activities 7,364 10,468 20,544
Cash flows from investing activities
Acquisition of businesses
(net of cash acquired) - (189) (238)
Purchase of property,
plant and equipment (2,276) (16,653) (24,035)
Expenditure on product
development (43) (521) (1,122)
Net cash flows from
investing activities (2,319) (17,363) (25,395)
Cash flows from financing activities
(Decrease)/increase in borrowings
(net of debt issue costs) (1,521) 8,000 7,227
Net interest paid (3,211) (1,665) (5,300)
Payments in respect ofderivative
financial instruments (269) (248) (473)
Net cash flows from
financing activities (5,001) 6,087 1,454
Increase/(decrease) in cash and
cash equivalents for the period 44 (808) (3,397)
Cash and cash equivalents
at start of period 1,806 5,203 5,203
Cash and cash equivalents
at end of period 6 1,850 4,395 1,806
Statement of Group Total Recognised Income and Expense - unaudited
Period ended Period ended Year ended
29 Sep 2006 23 Sep 2005 31 Mar 2006
As restated
#'000 #'000 #'000
Loss for the period (9,152) (5,419) (24,934)
Cash flow hedges - effective portion
of changes in fair value 346 (775) (336)
Exchange differences on foreign
currency net investments of the Group 53 94 (14)
Income and expense recognised directly
in equity 399 (681) (350)
Total recognised income and expense
for the period attributable to equity
shareholders (8,753) (6,100) (25,284)
Total recognised income and expense
for the period attributable to equity
shareholders (8,753) (6,100) (25,284)
Restatement for the
effects of IAS 32 and - (307) (307)
(8,753) (6,407) (25,591)
Notes to the Interim Report
1 Basis of preparation
The Group's interim financial statements for the six months ended 29 September
2006 were authorised for issue by the Board of Directors on 11 December 2006.
Patientline plc prepares its Annual Report and Accounts on the basis of IFRS as
adopted for use by the EU. The financial information presented in this Interim
Report has been prepared in accordance with the accounting policies expected to
be used in preparing the 2007 Annual Report and Accounts which do not differ
significantly from those used in the preparation of the 2006 Annual Report and
Accounts.
The comparative financial information for the period ended 23 September 2005 and
the year ended 31 March 2006 has been extracted from the published financial
statements of Patientline plc with the exception of the item noted below. The
income statement format has been changed from an expenses by function to an
expenses by nature format which provides enhanced disclosure of the Group's
expenses. In addition, certain prior period amounts have been reclassified to
conform to the presentation as set out in the Annual Report and Accounts 2006.
These adjustments are presentational and, with the exception of the item noted
below in respect of a lease incentive, have no impact on the results or net
assets of the Group as previously reported.
Following the release of the financial statements for the period ended 23
September 2005 a further IFRS transition adjustment was identified in respect of
the treatment of a lease incentive. Reflecting this adjustment in the financial
statements for the period ended 23 September 2005 has resulted in an increased
lease expense of #69,000 for the period and an increase in trade and other
payables within the balance sheet of #301,000, with a corresponding reduction in
shareholders' funds. Note 28 to the financial statements for the year ended 31
March 2006 provides further detail in respect of the treatment of lease
incentives under IFRS and UK GAAP.
The consolidated interim financial information does not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985. These
interim results are unaudited but have been reviewed by the Group's auditors.
The statutory accounts for the year ended 31 March 2006 have been reported on by
the Group's auditors and delivered to the registrar of companies. The report of
the auditors was unqualified and did not contain the statements under section
237(2) or (3) of the Companies Act 1985.
The results and cash flows of overseas subsidiaries are translated into Sterling
using average rates of exchange for the period. The principal rates were as
follows:
Period ended Period ended Year ended
29 Sep 2006 23 Sep 2005 31 Mar 2006
Average
Euro 1.46 1.47 1.47
US Dollar 1.85 1.83 1.79
Closing
Euro 1.48 1.47 1.43
US Dollar 1.88 1.79 1.73
Notes to the Interim Report (continued)
2 Segmental analysis
For management purposes, the Group is currently organised into three
geographical divisions, the United Kingdom, Rest of Europe and North America.
These divisions are the basis on which the Group reports its primary segment
information. The Directors consider the business and geographical segments to be
identical and therefore segmental analysis is disclosed for the primary segment
only.
See notes 3 and 9 for further information in respect of the North American and
Rest of Europe business segments.
Period ended 29 Sep 2006
Segment United Kingdom Rest of Europe North America Total
#'000 #'000 #'000 #'000
Revenue 21,581 3,424 48 25,053
EBITDA pre-exceptional items 6,555 823 (540) 6,838
Operating (loss)/profit
pre-exceptional items (3,222) 118 (592) (3,696)
Exceptional items (485) - (1,109) (1,594)
Operating (loss)/profit (3,707) 118 (1,701) (5,290)
Finance costs (3,824)
Pre-tax loss for the period (9,114)
Taxation (38)
Loss for the period
from continuing operations (9,152)
Period ended 23 Sep 2005
Segment United Kingdom Rest of Europe North America Total
#'000 #'000 #'000 #'000
Revenue 22,786 3,149 467 26,402
EBITDA
pre-exceptional items 8,625 899 (356) 9,168
Operating (loss)/profit
pre-exceptional items (2,189) 358 (356) (2,187)
Exceptional items - - - -
Operating (loss)/profit (2,189) 358 (356) (2,187)
Finance costs (3,210)
Pre-tax loss for the period (5,397)
Taxation (22)
Loss for the period
from continuing operations (5,419)
Year ended 31 Mar 2006
Segment United Kingdom Rest of Europe North America Total
#'000 #'000 #'000 #'000
Revenue 47,775 6,848 785 55,408
EBITDA
pre-exceptional items 18,395 2,376 (1,460) 19,311
Operating (loss)/profit
pre-exceptional items (3,747) 1,118 (1,464) (4,093)
Exceptional items (13,411) - - (13,411)
Operating (loss)/profit (17,158) 1,118 (1,464) (17,504)
Finance costs (7,215)
Pre-tax loss for the year (24,719)
Taxation (215)
Loss for the year
from continuing operations (24,934)
3 Exceptional items
Period ended Period ended Year ended
29 Sep 2006 23 Sep 2005 31 Mar 2006
#'000 #'000 #'000
North American costs
Staff costs 305 - -
Changes in inventories
of finished goods 748 - -
UK restructuring and repair and
maintenance costs
Staff costs 190 - -
Infrastructure support
costs 295 - -
UK costs associated with Ofcom, EGM
and other charges Staff costs - - 184
Raw materials and consumables used - - 500
Other operating expenses - - 518
1,538 - 1,202
Impairment of non-current assets
North America 56 - -
UK - - 12,209
56 - 12,209
1,594 - 13,411
North American costs
An exceptional expense of #1.1 million has been recognised in the period ended
29 September 2006 in respect of the North American business, being #0.7 million
for the write down of US inventory to net realisable value, #0.3 million for
staff costs, and #0.1 million impairment of non-current assets.
UK restructuring and repair and maintenance costs
A charge of #0.2 million was recognised in the period following the head office
redundancy programme implemented in July 2006. A further charge of #0.3 million
arose during the period resulting from actions taken to clear a backlog of
repairs to bedside systems.
Notes to the Interim Report (continued)
3 Exceptional items (continued)
Impairment of UK non-current assets
In the year ended 31 March 2006 the Group recognised a #12.2 million impairment
of UK non-current assets reflecting the UK market environment.
During the period ended 29 September 2006 the UK market environment continued to
be challenging. Impairment testing performed in respect of the period end
indicated that an impairment totalling #1.6 million was required for a number of
cash generating units; however this impairment was offset by a #1.7 million
reversal of impairment provisions at a number of other cash generating units
where the outlook had improved over that anticipated at the year end. The net
impact of these items was not material and hence no net impairment charge or
reversal was reflected in the period ended 29 September 2006.
4 Taxation
The tax charge for the period has been based on the estimated effective tax rate
for the full year. Deferred tax assets arising from accelerated capital
allowances and trading losses have not been recognised on the basis that their
future economic benefit is uncertain.
5 Loss per share
The calculation of loss per share is based on losses of #9.2 million (2005: #5.4
million) and 92.5 million shares (2005: 92.5 million), being a daily average of
shares in issue during the period. The share options are considered non-dilutive
due to the loss in the period.
6 Net borrowings - analysis of movement in net borrowings
Period to 29 Sep 2006 At Cash flow Non-cash At
1 April 2006 changes 29 Sep 2006
#'000 #'000 #'000 #'000
Cash at bank and in hand 1,806 44 - 1,850
Borrowings - current (3,032) 1,000 (4,069) (6,101)
Borrowings - non-current (84,494) 521 3,585 (80,388)
Total (85,720) 1,565 (484) (84,639)
Period to 23 Sep 2005 At Cash flow Non-cash At
26 Mar 2005 changes 23 Sep 2005
#'000 #'000 #'000 #'000
Cash at bank and in hand 5,203 (808) - 4,395
Borrowings - current - - (88,731) (88,731)
Borrowings - non-current (80,560) (8,000) 88,560 -
Total (75,357) (8,808) (171) (84,336)
7 Reconciliation of movements in equity
Share Share Translation Hedging Share-based Investment Capital Other Retained Total
capital premium reserve reserve payment in own redemption reserves earnings equity
reserve shares reserve - total
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Balance at 26
March 2005 4,623 76,882 (28) - 220 (135) 1 58 (51,817) 29,746
Adjustments
in respect of
adoption of
IAS 32 and
IAS 39 on 26
March 2005 - - - (307) - - - (307) - (307)
Balance at 26
March 2005 4,623 76,882 (28) (307) 220 (135) 1 (249) (51,817) 29,439
Total
recognised
income and
expense - - 94 (775) - - - (681) (5,419) (6,100)
Equity
settled
share-based
payment
transactions - - - - 144 (45) - 99 - 99
Balance at 23
Sept 2005 4,623 76,882 66 (1,082) 364 (180) 1 (831) (57,236) 23,438
Total
recognised
income and
expense - - (108) 439 - - - 331 (19,515)(19,184)
Equity
settled
share-based
payment
transactions - - - - (99) (38) - (137) - (137)
Balance at 31
March 2006 4,623 76,882 (42) (643) 265 (218) 1 (637) (76,751) 4,117
Total
recognised
income and
expense - - 53 346 - - - 399 (9,152) (8,753)
Equity
settled
share-based
payment
transactions - - - - 48 (28) - 20 - 20
Balance at 29
Sept 2006 4,623 76,882 11 (297) 313 (246) 1 (218) (85,903) (4,616)
8 Cash generated from operations
Period ended Period ended Year ended
29 Sep 2006 23 Sep 2005 31 Mar 2006
As restated
#'000 #'000 #'000
Loss for the period (9,152) (5,419) (24,934)
Depreciation and other non-cash
items:
Depreciation 10,297 10,705 22,334
Amortisation 237 650 1,070
Impairment of
non-current assets 56 - 12,209
Loss on disposal of
non-current assets 23 - 167
Share-based payments 20 99 (38)
Movement in other
reserves 53 94 (14)
Decrease in operating
receivables 966 1,388 2,574
Decrease/(increase) in
inventories 691 18 (207)
Increase/(decrease) in
operating payables 379 (51) 334
Finance costs 3,824 3,210 7,215
Taxation 38 22 215
Cash generated from
operations 7,432 10,716 20,925
Notes to the Interim Report (continued)
9 Post balance sheet events
Closure of the North American operation
On 1 November 2006 the closure of the North American operation was announced. It
is anticipated that this business will cease operation by 31 December 2006 and
will be disclosed as discontinued in the results for the year ending 30 March
2007.
Anticipated sale of the Dutch business
Discussions are being held with an interested party which may lead to the sale
of the Dutch business. Given the status of the sale process at 29 September 2006,
the business did not meet the criteria to be 'held for sale' at this date.
It is anticipated that the sale will be completed by 30 March 2007 and that the
sale is considered to be highly probable under the definitions set out in
IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations.
Details of the sale will be announced once due diligence and any subsequent
negotiations have been completed.
10 Banking facilities
On 29 November 2004 a bank facility was agreed, comprising a committed facility
of #105 million with a further #5 million working capital facility. These
facilities were subsequently revised on 28 November 2005 to provide a term loan
facility of #75 million, a #15.5 million multi-currency revolving credit
facility and a #5 million overdraft facility. As noted in the financial
statements for the year ended 31 March 2006, these facilities were subsequently
renegotiated during November and December 2006.
On 11 December 2006 a revised bank facility was agreed comprising a term loan
facility of #73 million, a #15.5 million multi-currency revolving credit
facility and a #5 million overdraft facility. The facility repayment profile has
been modified to defer substantially all capital repayments until after April
2008 and the financial covenants modified such that no tests of financial
covenants are required until 31 March 2008.
As part of the revised facility, and as consideration for both the deferment of
capital repayments and modification of financial covenants, a fee equivalent to
10% of the market capitalisation of Patientline plc's equity is payable to the
Company's lenders on or before 31 March 2011. The fee is payable in cash or, at
the Company's discretion, may be satisfied in fully paid ordinary shares of
Patientline plc. Between 31 March 2008 and 31 March 2011 the exact repayment
date is at the discretion of the Company's lenders. The Company may elect to
settle the fee prior to 31 March 2008, but if it does so, the fee can only be
settled in shares.
The covenants within the revised bank facilities require that, in the event of
receipt of any monies from the Department of Health in compensation for the
reduction of incoming call charges, the bank facilities will be subject to
renegotiation on terms acceptable to all parties within 30 days of the receipt
of these monies. The revised bank facilities provide the Company with secure
funding until 31 March 2008, but will need to be renegotiated prior to the
approval by the Directors of the Report and Accounts for the current financial
year. This will be subject to the outcome of the discussions with the Department
of Health.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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