RNS Number:5397I
Patientline PLC
27 November 2007
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
For release at: 7.00am, 27 November 2007. A copy of this results announcement
will be available on the Patientline website at www.patientline.co.uk
Patientline plc
Announcement of the results for the half-year ended 28 September 2007
Financial Summary
* Revenue was #16.9 million (2006 #21.6 million)
* EBITDA before exceptional items was #3.0 million (2006 #6.6 million)
* Operating loss before exceptional items was #4.5 million (2006 #3.2
million)
* Cash outflow before financing activities was #1.2 million (2006 #5.0
million inflow)
* Net borrowings were #82.5 million (2006 #84.6 million)
Operating Summary
* Bed RPTPD was #0.63 (2006 #0.67)
* F&F RPTPD was #0.59 (2006 #0.85)
* Debt restructuring discussions ongoing
* PPRG report left little prospect of positive outcome
Continuing operations Period ended Period ended Change Change
28 Sep 2007 29 Sep 2006
#m #m #m %
-------------------------------------------------------------------------------
Revenue 16.9 21.6 (4.7) (22%)
EBITDA before
exceptional items 3.0 6.6 (3.6) (55%)
Operating loss
before
exceptional items (4.5) (3.2) (1.3) (41%)
Operating loss (11.2) (3.7) (7.5) (203%)
Cash
(outflow)/inflow
before financing
activities (1.2) 5.0 (6.2) (124%)
Net borrowings (82.5) (84.6) 2.1 2%
Pence Pence Pence %
Loss per share (16.6) (9.9) (6.7) (68%)
-------------------------------------------------------------------------------
Operating key performance indicators
BedRPTPD #0.63 #0.67 (#0.04) (6%)
F&FRPTPD #0.59 #0.85 (#0.26) (31%)
-------------------------------------------------------------------------------
Commenting on the half-year results, Geoff White, Chairman of Patientline, said:
"As we have previously stated our number one priority for this financial year is
to restructure our debt. This is an essential part of our turnaround process
and talks with our banking syndicate continue. However, shareholders should note
that it is uncertain as to whether any value will be attributable to the
ordinary shares in the restructuring.
"We have implemented a number of cost reduction initiatives and are currently
exploring numerous ways of expanding revenue streams. If the Company's
borrowings can be consensually restructured to a sustainable level, allowing the
business to address the price of incoming telephone calls, the Company does have
a future."
Enquiries
Patientline plc 0845 414 6000 Blythe Weigh Communications 020 7138 3206
Geoff White, Chairman Tim Blythe, Director
Nick Winks, Chief Executive Officer Paul Weigh, Director
Brent Marshall FInance Director David Murphy, Account Manager
Interim Management Report
Patientline plc presents its unaudited half-year results for the period ended 28
September 2007. Comparatives are based on the previous half-year to 29 September
2006 and represent continuing operations only.
This interim management report has been prepared solely to provide additional
information to shareholders as a body to assess the Company's strategies and the
potential for those strategies to succeed and it should not be relied upon by
any other party or for any other purpose.
The report may contain certain forward-looking statements with respect to the
financial condition, performance, results, strategy and objectives, operations
and businesses of the Group. By their nature these statements involve
uncertainty because they relate to future events and circumstances, which are
beyond the Group's control. As a result the Group's actual future financial
condition, performance and results may differ materially from the plans or
expectations in any forward-looking statement. The Company assumes no obligation
to update or revise any forward-looking statement resulting from new
information, future events or otherwise. Nothing in this interim management
report should be construed as a profit forecast.
This interim management report has been prepared for the Group as a whole and
therefore gives greater emphasis to those matters, which are significant to
Patientline plc and its subsidiary undertakings when viewed as a whole.
CHAIRMAN'S STATEMENT
Performance
Revenue for the period for continuing operations declined to #16.9m (2006:
#21.6m). Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA)
fell to #3.0m (2006: #6.1m) which resulted in an operating loss of #11.2m (2006:
#3.7m loss).
At the end of September the Company operated in 155 hospital sites and deployed
approximately 71,000 bedside units (BSUs), representing a decrease of 3.5% from
the beginning of the period.
Bedside revenue fell by 9.1% compared with the corresponding period last year.
Actions taken by the NHS such as reductions in bed occupancy, changes in medical
practices and a more relaxed attitude to the use of mobile phones in wards all
had a negative impact on the use of the Company's equipment. Mitigating actions
were introduced to improve the quality of a patient's stay in hospital, which
encourage greater use of the Company's equipment.
Friends and family revenue fell by a greater extent, 32.9%, compared with last
year. The adverse publicity arising from the April 2007 price increase to
outgoing call charges from 10p per minute to 26p per minute, re-focused
attention on the cost of incoming calls and accelerated the ongoing adverse
affect on this element of the Company's income. As explained in detail in my
statement at the year-end, there is a considerable amount of history relating to
the levels set for these calls much of which is related to lack of use by the
NHS of the full range of facilities which the Company's BSUs offer. At the start
of September 2007 Ofcom introduced a mandatory recorded message at the start of
calls to all 070 numbers warning users that they may incur charges of up to 50p
per minute, thus encouraging callers to terminate or shorten the call which has
had a further impact on revenue.
Department of Health (DH)
Following lengthy discussions with the DH lasting for over a year the DH
suggested the Company present its case to individual Trusts rather than to the
DH. It was decided, therefore, to write to every contracted Trust to determine
their appetite for purchasing the Company's equipment installed within their
sites. About twenty responses were received and these have been followed up with
meetings or correspondence but, to date, these discussions have not been
fruitful.
Balance Sheet
As we have previously stated our number one priority for this financial year is
to restructure our debt. This is an essential part of our turnaround process and
talks with our banking syndicate continue. However, shareholders should note
that it is uncertain as to whether any value will be attributable to the o
rdinary shares in the restructuring.
The Board has reviewed the impact of trading on the net assets of
Patientline plc, the holding company for the Group, and have concluded that they
have fallen to less than half of its called up share capital. As required by
s142 of the Companies Act 1985, the Board will shortly be convening a General
Meeting which will be held by 14 January 2008. This meeting will discuss the
steps that the Board have taken and propose to take to deal with the situation,
although much will be by way of update on the discussions with the banking
syndicate.
Outlook
Trading conditions have been very poor during the period with a further decline
in overall revenue of 22% compared with the same period last year. Whilst
mitigating actions have been taken, this has inevitably reduced EBITDA and
cashflow. We have implemented a number of cost reduction initiatives and are
currently exploring numerous ways of expanding revenue streams. If the Company's
borrowings can be consensually restructured to a sustainable level, allowing the
business to address the price of incoming telephone calls, the Company does have
a future. However, shareholders should note that it is uncertain as to whether
any value will be attributable to the ordinary shares in the restructuring.
Geoff White
Chairman
27 November 2007
Financial and Operating Performance Review
Key measures used to assess performance are revenue, EBITDA, cash flow before
financing activities and net borrowings.
FINANCIAL PERFORMANCE
-------------------------------------------------------------------------------
Period ended Period ended Change Change
28 Sep 2007 29 Sep 2006
#m #m #m %
-------------------------------------------------------------------------------
Revenue 16.9 21.6 (4.7) (22%)
EBITDA before
exceptional items 3.0 6.6 (3.6) (55%)
Operating loss
before
exceptional items (4.5) (3.2) (1.3) (41%)
Operating loss (11.2) (3.7) (7.5) (203%)
Cash
(outflow)/inflow
before financing
activities (1.2) 5.0 (6.2) (124%)
Net borrowings (82.5) (84.6) 2.1 2%
-------------------------------------------------------------------------------
Pence Pence Pence %
Loss per share (16.6) (9.9) (6.7) (68%)
-------------------------------------------------------------------------------
The decline in revenue was primarily due to acceleration in the decline in
incoming call revenues from friends and families arising from the adverse
publicity caused by the price changes announced in April 2007 and in particular
the increase in the outgoing call charge to 26 pence per minute. Historically,
the annual incoming call revenue decline experienced was c.11%, while this
period reports a 31% decline. On 8 August 2007, the price of outgoing calls was
reversed to 10 pence per minute and the minimum charge per call was lowered from
40 pence to 10 pence.
EBITDA before exceptional items is considered by the Board to be a useful
measure of the underlying profitability of the business and a more relevant
year-on-year comparator than operating profit. The fall in EBITDA over the prior
period of #3.6m to #3.0m reflects the decrease in turnover, partially offset by
lower operating costs at sites, together with lower telephony and raw material/
consumable costs arising from lower revenues and actual savings. Other operating
expenses increased compared to prior period due to increased advisory fees and
costs of outsourcing initiatives.
Net cash consumed by continuing operations was #0.9m (2006: net cash generated
#7.4m) reflecting lower EBITDA and movements in working capital requirements,
most significant of which were an increase in operating receivables of #1.2m
received shortly after the half-year end (2006: decrease #1.0m) and the pay down
of operating payables #3.4m (2006: increase in payables #0.4m). Net cash
invested in non-current assets was #0.3m (2006:#2.3m).
Total net borrowings decreased by #2.1m during the period to #82.5m. The
facility repayment profile now comprises a sterling term loan facility of
#65.2m, a multi-currency revolving credit facility of #15.5m and an ancillary
overdraft facility of #5m. The total facility provides up to #85.7m of
borrowings. The Company also gains the benefit of cash balances and working
capital items that arise directly from its operations.
OPERATIONAL PERFORMANCE
Key metrics underpinning cash flow generation include the average number of
installed BSUs, bedside revenue per terminal per day (BedRPTPD), friends and
family revenue per terminal per day (F&FRPTPD), spend per used terminal (SPUT)
and hospital costs (including costs for the customer care centres) as a
percentage of sales. The level of BedRPTPD and F&FRPTPD depends on several
factors including: bed occupancy, ward type, patient mix, maturity of the
installation, the range of services offered and length of patient stay. SPUT
measures the average spend for each patient that registers for our services.
Periods ending September 2007 2006 Change Change
-------------------------------------------------------------------------------
Average installed terminals - approximate 71,500 74,000 (2,500) (3%)
Period-end installed terminals - 71,000 73,600 (2,600) (4%)
approximate
BedRPTPD #0.63 #0.67 (#0.04) (6%)
F&FRPTPD #0.59 #0.85 (#0.26) (31%)
RPTPD #1.22 #1.52 (#0.30) (20%)
SPUT #4.35 #4.29 #0.06 1%
Hospital costs/sales 43% 36%
-------------------------------------------------------------------------------
At the end of September 2007, Patientline had 155 operational sites. The total
number of installed terminals at the period end was approximately 71,000, a
decrease of c.2,600 from the start of the period. We have continued our policy
of concentrating on the efficient operation of the installed estate, to drive up
margins and cash generation.
During the period ended September 2007, BedRPTPD was adversely affected by
actions undertaken by the NHS including reductions in bed occupancy, changes in
medical practices and changes in patient mix in NHS hospitals. This is believed
to have resulted in lower demand for Patientline's services. The price changes
of April 2007 re-focused attention on incoming call charges and together with
further increases in usage of mobile phones on wards, in violation of our
contracts with NHS Trusts (Concession Agreements), contributed to an
acceleration in the decline in F&FRPTPD and also the continuing decline in
BedRPTPD. F&FRPTPD suffered a further step down from 1 September 2007 of around
10%, following the imposition by Ofcom of a misleading pre-call message on
friends and family calling patients at the bedside.
Operational initiatives intended to counteract the negative effects of these
difficult trading conditions include financial target setting and those focused
on income generation include the introduction of an entertainment bundle to
stimulate demand and improvements to the package to notify friends and family of
a patient being hospitalised. More focused training for employees has enabled us
to offer a better service, to promote products and to sell the services more
effectively. Further initiatives are linked to generating higher non-patient
revenue such as taking advantage of advertising opportunities and exploring and
implementing other product offerings such as Electronic Patient Records (EPR),
Electronic Menu Ordering (EMO) and Patientline Tracker.
Cost reduction initiatives include further reductions to the number of head
office staff, reviewing call centre operations and the approach to repair and
maintenance expenditure and reducing capital expenditure. The objective remains
to continue to develop a more focused Company capable of delivering a first
class service for its customers at a reasonable price and to generate adequate
returns to shareholders.
BALANCE SHEET
Non current assets fell by #13.9m to #43.7m during the period, reflecting a
reduction in capital expenditure (#0.3m in the period to September 2007 compared
with #2.3m in the period to September 2006), charges for depreciation during the
period (#7.5m), and the impact of the impairment charge and reversal of #6.7m.
Until the debt is restructured, the Company's policy will be to concentrate on
maximising the use of the installed BSUs with further investment only taking
place where there is a compelling case to do so.
Shareholders' deficit at the end of the period was #43.1m after charging the
loss for the period of #15.3m.
KEY PARTNERS
Banks
As mentioned above we have maintained a close relationship with the Royal Bank
of Scotland (RBS), which has continued in its role as the lead bank in the
current syndicated facility of #85.7m. Other members of the syndicate are HBOS,
HSBC and IKB.
NHS
Under the terms of the Patient Power contracts, we work closely with the NHS
Trusts to ensure that we can continue to deliver an excellent service to
patients and staff. We also work closely with clinical and administrative staff
to develop and offer additional services including EMO, information services,
questionnaires and access to EPR. Though, take up of these services has been
very slow. Another offering to the NHS is 'Patientline Tracker' which enables
reporting on the movement of patients in order to analyse, contain and develop
strategies to combat hospital acquired infections such as MRSA and Clostridium
difficile.
Government
One of our key partners is the Government as represented by the Department of
Health (DH). In 2000 the Patient Power Programme was established in England,
within which Patientline invested c.#170m in facilitating a bedside
entertainment and telephony solution to patients together with a scalable
product capable of delivering key government initiatives such as nationwide EPR.
Patientline is reliant on services provided to patients as being the main
component of its revenue as the roll out of EPR is significantly behind schedule
and the NHS has not adopted paperless information management systems through
Patientline's BSUs. Services are delivered under contract between suppliers and
NHS Trusts. Extensive discussions have been held with the DH and more lately,
directly with NHS Trusts, to try to resolve the issue of the high charges for
incoming calls but have not been fruitful to date. As acknowledged by Ofcom
these charges arose from the necessity for the Company to earn an adequate
return on its investment installed at no charge to the NHS Trusts, the
Government or the taxpayer.
BANK DEBT AND BANKING ARRANGEMENTS
RBS has continued in its role as the lead bank in the current syndicated
facility of #85.7 million, the agreement for which was renegotiated in December
2006 and amended in June 2007. All members of the syndicate have been very
supportive throughout the period. The Company, with the support of its bankers,
is exploring ways in which some elements of the current debt might be
restructured. There was hope that the Patient Power Review Group established by
the DH might prove helpful in this regard but this avenue appears closed.
The primary objective of the Board is to restructure the debt to a sustainable
level.
PRINCIPAL RISKS AND UNCERTAINTIES
The Company follows a comprehensive risk assessment and management process,
which is reviewed by the Audit Committee and reported to the Board. This allows
risks to be evaluated according to probability and impact and suitable plans are
developed to manage these risks.
The key risks that have been identified are discussed below.
The Company is reliant on the continuing support of its lenders in respect of
the provision of funding for working capital and financing requirements
The Board is of the opinion that the current level of funding is unsustainable
and therefore has been discussing a restructure of this debt with the Company's
banking syndicate and other parties. The discussions are being conducted
alongside the discussions with the DH/Trusts and any detailed proposals
resulting from these discussions will be put to shareholders at an appropriate
time for their approval.
The Company operates in the healthcare and technology related markets that are
characterised by complex equipment and continuing technological advances
The Company is required to both maintain the performance, features and
reliability of its current products on a timely basis and to develop its
offering in response to technological advances. The Company's success depends on
its ability to maintain the current asset infrastructure in a cost effective
manner and to adapt to technological advances. Competing technologies such as
mobile phones have been prohibited in the wards of hospitals but well publicised
announcements dispelling the belief of mobile phones interfering with medical
equipment and therefore the relaxation of restrictions on their use has and will
continue to, adversely affect telephony revenues. The use of mobile phones is
also likely to become more prevalent as the telecom providers promote
increasingly competitive pricing packages, encompassing mobile and fixed
telephony and broadband access. Technological risk is reflected within
operations in the management of the repairs and maintenance process and the
associated expenditure. Other operational risks include the perception of value
for money amongst all customers as the appetite for premium rate telephony
changes.
As discussed above, in September 2007, Ofcom imposed a pre-call message on those
dialing into patients at the bedside, advising the callers of the maximum
possible charge they could receive. Our network carrier, BT, is seeking to
recover the cost of providing this message from November 2007. The Company is
disputing the charge, which if imposed will have a further detrimental impact on
our incoming call revenue.
The Company operates as a service provider to both NHS Trusts and NHS patients
The Company is vulnerable to changes in Government policy both in respect of
healthcare provision and in respect of funding. These policies affect the
Company in a number of ways, for example in the level of ward closures and
consequent access to revenue generating patients. Government policy has also
resulted in delays to the roll-out of the National Programme for IT and hence a
nominal uptake of EPR, resulting in a major component of the Company's original
business plan revenues providing little return on investment. Accordingly, the
Company is reliant on patients and friends and family of patients for the
majority of its revenue. The Company is reliant on individual NHS Trusts
complying with their obligations under their Concession Agreements with the
Company such as the prohibition on the use of mobile phones on wards. If
incoming call charges are not reduced, Ofcom may choose to re-open its
investigation, which concluded in January 2006 that the Company had not been
excessive in its charges for incoming calls. Changes in Government policy or in
funding may come about for reasons entirely unconnected with either the quality
or the effectiveness of the Company's services.
Operational risks are derived in part from the political and technological risks
detailed above. The impact of political influences on policy and funding are
reflected in various ways including the level of ward closures, the duration and
pattern of patient occupancies in hospitals and the degree to which the
restricted use of mobile phones by the bedside is enforced by the relevant NHS
trust. These activities in turn have the potential to impact levels of revenue.
Patient Power Licences have a three-year renewable term and the licences for all
providers expired on 27 February 2007. The DH has not renewed the licensing
arrangements. Patientline operates exclusive service agreements on long-term
contracts and these agreements are unaffected by the lapsing of the Patient
Power Licences. However, were the Company to seek to enter into new contracts
with new NHS Trusts the lapsing of the Patient Power Licences might make it more
difficult to enter into contracts that were on commercial terms consistent with
the Company's existing long-term contracts with hospitals.
Current operating results as an indication of future results
The Group's operating results may fluctuate significantly in the future due to a
variety of factors, many of which are outside of its control. Accordingly,
shareholders should not rely on comparisons with the Group's results to date as
an indication of future performance of the Group. Factors that may affect the
Group's operating results include changes to the operational management of the
NHS in which its services are provided, specifically increased levels of ward
closures, an increased incidence of mobile phone usage in hospitals, a downturn
in the UK economy, increased competition from competing technologies, an
increased level of costs including employment costs as the market in which the
Group operates improves, slower than expected take up by customers of its
services and changes to the statutory and regulatory regime in which it
operates. It is possible that, in the future, the Group's operating results will
fall below market expectations. If this occurs, the trading price of the
Ordinary Shares may decline further.
The majority of revenues continue to be derived from patients and their friends
and families
The enduring perception is that incoming call charges are high, together with
mobile phone usage, ward closures and changes in patient mix and length of stay,
all adversely impact revenue. However, revenues from incoming calls continue to
represent a major component of our total revenues and further actions are being
taken to address the decline in total RPTPD. To mitigate this risk, we continue
to explore and grow alternative sources of revenues from new products and
services for patients such as games, email and Internet, as well as products for
NHS Trusts. We believe that any outcome from the discussions with the DH and NHS
Trusts will impact on the longer-term prospects of Patientline.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
(a)the condensed set of financial statements has been prepared in accordance
with IAS 34;
(b)the interim management report includes fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and
(c)the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related party transactions and changes
therein).
By order of the Board
Geoff White, Chairman
Nick Winks, Chief Executive Officer
Brent Marshall, Finance Director
27 November 2007
Independent Report on Review of Financial Statements of Patientline plc
Introduction
We have been engaged by the Group to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 28
September 2007 which comprises the Group Income Statement, Group Balance Sheet,
Group Cash Flow Statement, the Statement of Group Total Recognised Income and
Expense and notes to the Half-Yearly Financial Report. We have read the other
information contained in the half-yearly financial report and considered whether
it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Directors' Responsibilities
The half-yearly financial 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 the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements 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.
Our Responsibility
Our responsibility is to express to the Group a conclusion on the condensed set
of financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 28 September 2007 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
Emphasis of Matter - Going Concern
During our review of the condensed financial statements, which is not qualified,
we have considered the adequacy of the disclosure made in note 1 to the
condensed financial statements concerning the Group's ability to continue as a
going concern. The Group incurred a net loss during the period of #15.3 million
and at 28 September 2007 the Group's total liabilities exceeded its total assets
by #43.1 million. These conditions, together with the other circumstances
explained in note 1, indicate the existence of a material uncertainty which may
cast significant doubt about the Group's ability to continue as a going concern.
The condensed financial statements do not include the adjustments that would
result if the Group was unable to continue as a going concern.
Tenon Audit Limited
Chartered Accountants
Charnwood House
Gregory Boulevard
Nottingham NG7 6NX
27 November 2007
Group Income Statement - unaudited
Period ended 28 September 2007
Pre-exceptional Exceptional Total
items items(Note 3)
#'000 #'000 #'000
-------------------------------------------------------------------------------
Continuing operations
Revenue 16,851 - 16,851
Staff costs (8,218) - (8,218)
Telecoms and other
service related costs (1,212) - (1,212)
Infrastructure support
costs (2,080) - (2,080)
Raw material and
consumables used (409) - (409)
Other operating expenses (1,960) - (1,960)
-------------------------------------------------------------------------------
EBITDA 2,972 - 2,972
Depreciation and
amortisation (7,503) - (7,503)
Impairment of non-current
assets - (6,676) (6,676)
-------------------------------------------------------------------------------
Operating loss (4,531) (6,676) (11,207)
Finance costs (4,112) - (4,112)
-------------------------------------------------------------------------------
Loss before taxation (8,643) (6,676) (15,319)
Taxation - - -
-------------------------------------------------------------------------------
Loss for the period
attributable to equity
shareholders (8,643) (6,676) (15,319)
-------------------------------------------------------------------------------
Earnings per share Pence
Loss per share - basic and diluted
- Continuing operations (16.6)
- Discontinued operations -
-------------------------------------------------------------------------------
Total loss per share (16.6)
-------------------------------------------------------------------------------
Group Income Statement - unaudited
Period ended 29 September 2006
Pre-exceptional Exceptional Total
items items
(Note 3) (Note 1)
#'000 #'000 #'000
-------------------------------------------------------------------------------
Continuing operations
Revenue 21,581 - 21,581
Staff costs (8,606) (190) (8,796)
Telecoms and other service
related costs (1,623) - (1,623)
Infrastructure support costs (2,994) (295) (3,289)
Raw material and consumables
used (450) - (450)
Other operating expenses (1,353) - (1,353)
-------------------------------------------------------------------------------
EBITDA 6,555 (485) 6,070
Depreciation and
amortisation (9,777) - (9,777)
Impairment of non-current - - -
assets
-------------------------------------------------------------------------------
Operating loss (3,222) (485) (3,707)
Finance costs (3,815) - (3,815)
-------------------------------------------------------------------------------
Loss before taxation and
discontinued operations (7,037) (485) (7,522)
Taxation - - -
-------------------------------------------------------------------------------
Loss after taxation before
discontinued operations for
the period (7,037) (485) (7,522)
Loss from discontinued
operations after taxation (521) (1,109) (1,630)
-------------------------------------------------------------------------------
Loss for the period
attributable to equity
shareholders (7,558) (1,594) (9,152)
-------------------------------------------------------------------------------
Pence
Earnings per share
Loss per share - basic and diluted
- Continuing operations (8.1)
- Discontinued operations (1.8)
-------------------------------------------------------------------------------
Total loss per share (9.9)
-------------------------------------------------------------------------------
Group Balance Sheet - unaudited
As at 28 September 2007
As at As at As at
28 Sept 2007 29 Sep 2006 30 Mar 2007
#'000 #'000 #'000
-------------------------------------------------------------------------------
ASSETS
Non-current assets
Property, plant and equipment 43,393 83,019 57,175
Goodwill 340 4,867 430
Other intangible assets - 896 -
-------------------------------------------------------------------------------
43,733 88,782 57,605
Current assets
Inventories 201 331 222
Trade and other receivables 3,537 3,738 2,357
Cash and cash equivalents 895 1,850 3,285
-------------------------------------------------------------------------------
4,633 5,919 5,864
-------------------------------------------------------------------------------
TOTAL ASSETS 48,366 94,701 63,469
===============================================================================
LIABILITIES
Current liabilities
Borrowings 33 6,101 56
Trade and other payables 7,774 11,670 10,777
Current tax liabilities - 165 -
-------------------------------------------------------------------------------
7,807 17,936 10,833
Non-current liabilities
Borrowings 83,407 80,388 80,120
Derivative financial instruments 268 993 290
-------------------------------------------------------------------------------
83,675 81,381 80,410
-------------------------------------------------------------------------------
Total liabilities 91,482 99,317 91,243
SHAREHOLDERS' DEFICIT
Share capital 4,623 4,623 4,623
Share premium account 76,882 76,882 76,882
Other reserves 568 (218) 591
Retained earnings (125,189) (85,903) (109,870)
-------------------------------------------------------------------------------
Total shareholders' deficit (43,116) (4,616) (27,774)
-------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' DEFICIT AND LIABILITIES 48,366 94,701 63,469
===============================================================================
Group Cash Flow Statement - unaudited
Period ended 28 September 2007
Period ended Period ended
28 Sep 29 Sep
2007 2006
#'000 #'000
-------------------------------------------------------------------------------
Cash flows from operating activities
Loss for the period before taxation -
continuing operations (15,319) (7,522)
Loss for the period before taxation -
discontinued operations - (1,630)
-------------------------------------------------------------------------------
Loss for the period before taxation (15,319) (9,152)
Depreciation and other non-cash items:
Depreciation 7,503 10,297
Amortisation 628 237
Impairment of non-current assets 8,639 56
Reversal of prior impairment of non-current
assets (1,963) -
Loss on disposal of non-current assets - 23
Share-based payments 58 20
Movement in other reserves (2) 53
(Increase)/decrease in operating receivables (1,180) 966
Decrease in inventories 21 691
(Decrease)/increase in operating payables (3,420) 379
Finance costs 4,112 3,824
-------------------------------------------------------------------------------
Cash (outflow)/inflow from operations (923) 7,394
Tax paid - (30)
Net cash flows from operating activities (923) 7,364
-------------------------------------------------------------------------------
(including net cash flows from discontinued
operating activities) - (788)
Cash flows from investing activities
Purchase of property, plant and equipment (307) (2,276)
Expenditure on product development - (43)
-------------------------------------------------------------------------------
Net cash flows from investing activities (307) (2,319)
-------------------------------------------------------------------------------
(including net cash flows from discontinued
investing activities) - 435
Cash flows from financing activities
Increase/(decrease) in borrowings (net of debt
issue costs) 2,735 (1,521)
Net interest paid (3,388) (3,211)
Payments in respect of derivative financial
instruments (507) (269)
-------------------------------------------------------------------------------
Net cash flows from financing activities (1,160) (5,001)
-------------------------------------------------------------------------------
(including net cash flows from discontinued - -
financing activities)
Decrease/(increase) in cash and cash
equivalents for the period (2,390) 44
Cash and cash equivalents at start of period 3,285 1,806
-------------------------------------------------------------------------------
Cash and cash equivalents at end of period 895 1,850
-------------------------------------------------------------------------------
Statement of Group Total Recognised Income and Expense - unaudited
Period ended 28 September 2007
Period ended Period ended
28 Sep 29 Sep
2007 2006
#'000 #'000
-------------------------------------------------------------------------------
Loss for the period (15,319) (9,152)
Cash flow hedges - effective portion of
changes in fair value (81) 346
Exchange differences on retranslation of
overseas net investments - 53
-------------------------------------------------------------------------------
Income and expense recognised directly in
equity (81) 399
-------------------------------------------------------------------------------
Group total recognised income and expense for
the period attributable to equity shareholders (15,400) (8,753)
-------------------------------------------------------------------------------
Notes forming part of the Half-Yearly Report
1 Basis of preparation and accounting policies
The Group's half-yearly financial statements for the period ended 28 September
2007 were authorised for issue by the Board of Directors on 27 November 2007.
Patientline plc is a public limited company incorporated and domiciled in
England and Wales and its ordinary shares are traded on the London Stock
Exchange.
The Group's half-yearly financial statements consolidate the financial
performance and position of those of the Company and its subsidiaries (together
referred to as the 'Group').
The Group's half-yearly financial information has been prepared and approved by
the Board in accordance with International Financial Reporting Standards as
adopted by the EU ('Adopted IFRS'). The financial information presented in this
Half-Yearly Report has been prepared in accordance with the accounting policies
expected to be used in preparing the 2008 Annual Report and Accounts which do
not differ significantly from those used in the preparation of the 2007 Annual
Report and Accounts.
The comparative financial information for the period ended 29 September 2006 and
the year ended 30 March 2007 has been extracted from the published financial
statements of Patientline plc with the exception of the item noted below. The
income statement and cashflow statement for the period ended 29 September 2006
have been analysed into continuing and discontinued operations to align with the
presentation with the 2007 Annual Report and Accounts.
The consolidated half-yearly financial information does not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985. These
half-yearly results are unaudited but have been reviewed by the Group's
auditors. The statutory accounts for the year ended 30 March 2007 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.
Going concern
The financial statements at 28 September 2007 show that the Group generated a
loss attributable to shareholders of #15.3 million (2006: #9.2 million loss)
from continuing operations and had net liabilities of #43.1 million (2006: #4.6
million). Net cash consumed by operations was #0.9 million (2006: generated #7.4
million).
Recent trading and the Board's latest 14-Quarter Plan clearly demonstrates that
the cash generated from the estate is not sufficient to service the current
levels of debt and cover operating costs and pre-existing operating liabilities.
Short-term working capital arrangements have been enacted to ensure sufficient
liquidity to continue in its debt restructuring discussions with the banking
syndicate. Whilst there can be no guarantee, the Board is confident of a
successful outcome of these debt restructuring discussions, which will deliver
an acceptable and sustainable level of debt and therefore have prepared this
half-yearly report on the basis that the Group continues as a going concern. The
condensed financial statements do not include the adjustments that would result
if the Group was unable to continue as a going concern.
Details of risks and uncertainties are discussed in the financial and operating
performance review.
2 Segmental analysis
The Group closed/disposed of its overseas operations in the year ended 30 March
2007 and so its continuing operations relate solely to the United Kingdom. In
prior periods, the Group was organised into three geographical divisions; the
United Kingdom, Rest of Europe and North America. These divisions were the basis
on which the Group reported its primary segment information. The Board
considered the business and geographical segments to be the same and therefore
segmental analysis was disclosed for the primary segment only.
Period ended 28 September 2007 Continuing
operations
-------------------------------------------------------------------------------
Segment United Kingdom
#'000
Revenue 16,851
EBITDA pre-exceptional items 2,972
Operating loss pre-exceptional items (4,531)
Exceptional items (6,676)
-------------------------------------------------------------------------------
Operating loss (11,207)
Finance costs (4,112)
-------------------------------------------------------------------------------
Pre-tax loss for the period (15,319)
Taxation -
-------------------------------------------------------------------------------
Loss for the period (15,319)
-------------------------------------------------------------------------------
Period ended 29 Continuing
September 2006 operations Discontinued operations
----------------------------- |-----------------||----------------------||-----|
Segment United Kingdom Rest of North Total
Europe America
#'000 #'000 #'000 #'000
----------------------------- |-----------------||----------------------||-----|
Revenue 21,581 3,424 48 3,472
EBITDA
pre-exceptional items 6,555 823 (540) 283
Operating (loss)/profit
pre-exceptional items (3,222) 118 (592) (474)
Exceptional items (485) - (1,109) (1109)
----------------------------- |-----------------||----------------------||-----|
Operating (loss)/profit (3,707) 118 (1,701)(1,583)
Finance costs (3,815) (9)
----------------------------- |-----------------||----------------------||-----|
Pre-tax loss for the period (7,522) (1,592)
Taxation - (38)
----------------------------- |-----------------||----------------------||-----|
Loss for the period (7,522) (1,630)
----------------------------- |-----------------||----------------------||-----|
3 Exceptional items
Exceptional items in the period are analysed as follows:
-------------------------------------------------------------------------------
Period ended Period ended
28 Sept 29 Sept
2007 2006
#'000 #'000
-------------------------------------------------------------------------------
Impairment of non-current assets
North America - impairment - 56
UK - impairment 8,639 -
UK - reversal of previous impairment (1,963) -
-------------------------------------------------------------------------------
UK - net impairment 6,676 -
-------------------------------------------------------------------------------
Total cost of impairment of non-current assets 6,676 56
UK restructuring and repair and maintenance costs
Staff costs - 190
Infrastructure support costs - 295
North American costs
Staff costs - 305
Changes in inventories of finished goods - 748
-------------------------------------------------------------------------------
Total costs of restructuring, repairs and
maintenance and inventory charges - 1,538
-------------------------------------------------------------------------------
Total exceptional items 6,676 1,594
-------------------------------------------------------------------------------
Analysed between:
Continuing operations - United Kingdom 6,676 485
Discontinued operations - North America - 1,109
-------------------------------------------------------------------------------
6,676 1,594
-------------------------------------------------------------------------------
Impairment of United Kingdom non-current assets
During the period ended 28 September 2007 the UK market environment continued to
be challenging. Impairment testing was performed at 28 September 2007. This
resulted in an impairment charge of #8.6 million in respect of a number of cash
generating units. A reversal of previous impairment charges of #2.0 million at
other cash generating units arose where the actual and forecast economic
performance had improved over that anticipated at the prior year-end.
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 Earnings per share
The calculation of basic and diluted earnings per share is based on the result
for the period divided by the daily average of the number of shares in issue
during the period. Diluted earnings per share is based on the same results but
with the number of shares increased, as appropriate, to reflect the daily
average effect of relevant share options granted but not yet exercised where
performance conditions have been met.
The calculation of the loss per ordinary share is based on losses of #15.3
million (2006: #9.2 million) and on a weighted average of 92.5 million (2006:
92.5 million) ordinary shares in issue during the period. The impact of
outstanding share options on earnings per share is not dilutive.
6 Analysis of movements in net borrowings
Period ended 28 September 2007
At Cash flow Non-cash At
1 Apr 2007 changes 28 Sep 2007
#'000 #'000 #'000 #'000
-------------------------------------------------------------------------------
Cash at bank and in hand 3,285 (2,390) - 895
Borrowings - current (56) 614 (591) (33)
Borrowings - non-current (80,120) (3,349) 62 (83,407)
-------------------------------------------------------------------------------
Total (76,891) (5,125) (529) (82,545)
-------------------------------------------------------------------------------
Period ended 29 September 2006
#'000 #'000
At Cash flow Non-cash At
1 Apr 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)
-------------------------------------------------------------------------------
7 Reconciliation of movements in equity
Share- Cap-
based Invest ital
Share Share Trans- Hedg- pay- -ment re- Ret- Total
capital prem- lation ing ment in own demp- ained equity
ium res- res- res- shares tion earn-
erve erve erve reserve ings
#'000 #'000 #'000 #'000 #'000 #'000 #'000
#'000 #'000
-------------------------------------------------------------------------------
Balance at
31 Mar 2006 4,623 76,882 (42) (643) 265 (218) 1(76,751) 4,117
Total
recognised
income and
expense - - 53 346 - - - (9,152) (8,753)
Equity
settled
share-based
payment
transactions - - - - 48 (28) - - 20
-------------------------------------------------------------------------------
Balance at
29 Sep 2006 4,623 76,882 11 (297) 313 (246) 1(85,903) (4,616)
-------------------------------------------------------------------------------
Total
recognised
income and
expense - - 107 529 - - -(24,085) (23,449)
Transfer to
retained
earnings on
disposal of
foreign
operation - - (118) - - - - 118 -
Equity
settled
share-based
payment
transactions - - - - 309 (18) - - 291
-------------------------------------------------------------------------------
Balance at
30 Mar 2007 4,623 76,882 - 232 622 (264) 1(109,870)(27,774)
-------------------------------------------------------------------------------
Total
recognised
income and
expense - - - (81) - - - (15,319)(15,400)
Equity
settled
share-based
payment
transactions - - - - 65 (7) - - 58
-------------------------------------------------------------------------------
Balance at
28 Sep 2007 4,623 76,882 - 151 687 (271) 1(125,189)(43,116)
-------------------------------------------------------------------------------
8 Related Party Transactions
Transactions between the Company and its subsidiaries (the Group), which are
related parties, are transacted on normal commercial arms length bases and have
been eliminated on consolidation and are not disclosed in this note.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FESFAMSWSEIF
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