Preliminary Results for the Year Ended 28 February 2007

Preliminary Results for the year ended 28 February 2007

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Strong year on year growth

Market continues its adoption of technology in clinical trials

26 April 2007 - ClinPhone plc, a leading specialist supplier of technology solutions to the clinical trials industry, announces its preliminary results for year ended 28 February 2007.

ClinPhone’s technology reduces the cost and duration of running clinical trials and improves the accuracy, integrity and consistency of data collected.

Operational Highlights
• Successful IPO in June 2006
• Acquisition and integration of DataLabs

• Continued development of new and innovative products
o Major functionality enhancements
o Three new products launched

• Licence revenues continue to grow as a proportion of total revenues
o A large EDC single trial licence win in February

• New offices opened in Australia, San Francisco and Boston
Financial Highlights
• Contracted orders up 22% to £43.7m (2006: £35.8m)
• Revenue up 27% to £43.1m (2006: £33.9m) despite impact of weakening of US dollar
• Normalised operating profit* up 18% to £6.8m (2006: £5.7m)
• Operating profit up 61% to £4.7m (2006: £2.9)
• Profit Before Tax £4.1m (2006: £0.9m)
• Strong operating cash conversion
• Earnings per share increased from (0.19)p to 5.12p
• Fully diluted adjusted earnings per share up 41% to 6.87p (2006: 4.86p)
Commenting on the results, Steve Kent, CEO, of ClinPhone said:

“This has been a highly successful year for ClinPhone with strong year on year growth as the market continues adoption of technology in clinical trials. The new products and enhancements we have introduced this year have helped support our position as the market leader in our industry and the acquisition of DataLabs has further broadened our product offering into the strategically important area of electronic capture of patient data.

“Although the future holds challenges, our strong products and services in a growing market mean we remain confident of delivering further growth.”

Normalised operating 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


ClinPhone plc
Steve Kent – Chief Executive Officer
Scott Brown - Chief Financial Officer
Phone: 0115 955 7333
Fax: 0115 840 6302

Financial Dynamics
Ben Brewerton
Anna Keeble
Phone : 0207 831 3113

Notes to editors
ClinPhone plc is a leading Clinical Technology Organisation (CTO) with a strong track record of innovation in the development of clinical trial management products.
Our product portfolio, consisting of software and services, is backed by continuous research and investment in the latest technologies, coupled with extensive in-depth clinical industry experience. Our products can stand-alone or they can be integrated to create a solution that spans the clinical trial lifecycle.

• Leading specialist provider of technology solutions to the clinical trials industry with experience in over 2,000 studies, in 90 countries and over 70 languages

• Trusted brand, leading technology, know how and deep industry knowledge create high barriers to entry

• Global scale – 16 of largest 20 pharmaceutical companies and 4 of the 5 largest CROs use ClinPhone

• Large and growing market, driven by increasing use of technology solutions within clinical trials

• High revenue visibility with strong track record of operating profit growth

• Opportunity to consolidate the emerging technology solutions market around the ClinPhone brand

Definitions

• Electronic Data Capture (EDC)
• Clinical Research Organisation (CRO)




Chairman’s Statement
ClinPhone is a leading specialist provider of technology solutions to the clinical trials industry. The market in which ClinPhone operates is large and growing, driven by the expanding use of technology and the increasing complexity of clinical trials. Traditionally, clinical trial data has been collected using paper based methods and the market has been slow to take advantage of new technology. ClinPhone’s technology reduces the cost and duration of running clinical trials and improves the accuracy, integrity and consistency of data collected.
This is ClinPhone’s maiden set of full year results since our listing on the London Stock Exchange in June last year. Just five months after this successful flotation, we also completed the £19.4 million acquisition of DataLabs Inc. (DataLabs). This acquisition supports the Company’s strategy to build and expand upon its very strong position in the clinical trials market.
The weakening dollar had a negative impact on ClinPhone’s results, even so revenues grew by 27%, statutory earnings per share turned positive and the fully diluted adjusted earnings per share grew by 41%. The Board is not recommending a dividend this year as we believe that with current prospects for growth, shareholders’ interests are best served by re-investing our profits in the business.
I am particularly pleased that in the past year I have been joined on the Board by two experienced non-Executive Directors. The Senior Independent Non-executive Director is Dr. Graeme Hart an orthopaedic surgeon who also serves on the boards of Corin Group plc, Neuropharm Group plc and Evolutec plc. The other new Director is Dr Keith Bragman who has previously held senior clinical management positions in UCB S.A., Quintiles, Hoffmann-la Roche and Bristol Myers International Corporation.
The Board believes that the Company’s strong offering of products and services together with its talented and committed employees provide a firm basis for confidence in the future prospects of Clinphone in a market which continues to show healthy growth and development.

Edwin Moses, Chairman
26 April 2007

Chief Executive Officer’s Review
Over the past year the clinical trials market has continued to change at a rapid pace. Our customers are increasingly adopting more of the functionality we can offer them, as a way of assisting them to speed up and improve the effectiveness of their drug development programmes. The Board believes our smaller competitors in the market have lacked the resources to develop their products or solutions and have struggled increasingly against ClinPhone and other more established competitors. ClinPhone has continued to develop and broaden its offering and the growth we have enjoyed this year is in part due to customer adoption of our newer products. We now have 159 customers including 16 of the top 20 pharmaceutical companies in the world, 4 of the top 5 clinical research organisations and many of the leading biotechnology companies.
Revenue for the year grew by 27% to £43.1m despite the US dollar substantially weakening during the year. At a constant exchange rate revenue growth was 30%. Normalised Operating Profit was up by 18% at £6.8m also significantly influenced by the weakening US dollar. Operating Profit and the resulting EPS has also shown a significant increase year on year. The bulk of this revenue came from the randomisation and trial supply management (RTSM) business which continues to grow well.
The listing in June enabled us to make the acquisition of DataLabs, a 55 employee company focusing on the important Electronic Data Capture (EDC) space within the market. This company has been successfully integrated with the rest of the Group, and has already benefited from the support and credibility that ClinPhone has been able to give its product set. I am encouraged by the early signs of growth in this business and look forward to its continuing success in 2007.

Chief Executive Officer’s Report (cont.)

We continue to focus our strategy on three key areas:

• Extend our coverage into the market to convert the outstanding 70% of paper based clinical trials;

• Increase licence sales as a percentage of total revenue; and

• Continue to bring new and innovative products to our customers.
Extend our coverage into the market
Our policy of locating sales and operating staff in offices near our clients is highly valued by them and helps us deliver our services to them. In the year ClinPhone opened new offices in Australia, San Francisco and Boston and the offices in Princeton and Chicago relocated to larger premises. We also acquired office space near Philadelphia and in Irvine, California with the acquisition of DataLabs. We will add further offices in 2007.
To cope with the growth in our revenue we hired an additional 134 people in the year, and with the addition of 55 DataLabs employees, this brings our total headcount to 737 people at the end of the year. The training our people receive gives them unique skills and through a combination of ensuring we pay competitive salaries and a strong binding culture, employee retention was maintained at over 90%.
We already know through extensive research that the industry recognises ClinPhone as delivering safe, accurate and reliable solutions to its customers. The main thrust of ClinPhone's future corporate marketing strategy is to ensure that the company builds on these core values and differentiates itself as the Clinical Technology Organisation (CTO) of choice through the promotion of progressive, proven and insightful characteristics. This will underpin the communications strategy and will be consistently applied across all elements of the marketing landscape. We launched a re-branding of the Company in the year; the “Because you have to get it right” logo reinforces the core values of our Company.
Increase licence sales as a percentage of total revenue
To maintain our growth it is essential that we increase the percentage of our revenue from licence sales. The acquisition of DataLabs which uses software licences to drive revenue will make a vital contribution going forward. This revenue tends to be irregular, as illustrated by a significant EDC trial licence awarded in the last week of the financial year by a leading Contract Research Organisation. In addition, a new version of our Clinical Trial Management Software (CTMS) product was released in April to wide market interest and it has enjoyed a very successful year with a number of substantial licences being awarded.
In the Randomisation and Trial Supply Management (RTSM) business a major contract was signed in the year with a top 10 pharmaceutical company to produce a customised system for them, this has been delivered successfully and will result in substantial ongoing revenue over the initial three years contract period.
Continue to bring new and innovative products to our customers
In 2006/2007, Research and Development investment was 7% of Company revenue. The Board are committed to increase the investment in this area to 13% in 2007/2008 as they believe it will significantly enhance shareholder value in the medium term. This investment is targeted at maintaining and improving the Group’s competitive position as well as protecting its intellectual property.
In May of last year, a new version of our development platform for RTSM called Synapse was released. This platform now has unrivalled functionality in the market and has allowed ClinPhone to bring a number of innovative services to our customers. Also launched last year was a new product called Drug Accountability this product helps customers to comply with regulation to provide the audit trail for the experimental medication produced for clinical trials.
The release of a new web version of CTMS provided customers with the ability to more effectively handle the regulatory, administrative and project management complexity of a clinical trial from the many remote locations used in today’s complex clinical trials.
Also in the year a new product to handle the complex messaging between systems used in clinical trials was released, this product called Connect is pivotal to our product strategy going forward and is again unique in the market.

Chief Executive Officer’s Report (cont.)

Business activity and key performance indicators
The revenue of ClinPhone is determined to a significant extent by the number of new trials hosted on our systems (Go-Lives), the average number of existing live trials, the average value per trial and the number of new licences implemented.
2007 2006
Number of Go-Lives 232 206
Average Number of Live Trials 464 411
Average Value per Trial (£’000) 171 138
Number of New Licences 14 5


The Number of Go-Lives increased by 13% year on year (2006: decrease of 1%) which is a key indicator of the increased activity underlying the service business. In December and January of this financial year unusual delays in the go-lives were experienced by the Group, however these were largely cleared in February.
The Average number of live trials grew by 13% (2006:14%). This level of activity supports the level of on-going revenue the Group receives from its services. It is expected to grow in line with the number of Go-Lives.
Average value per trial is defined as the total revenue that is budgeted at the beginning of a contract to be invoiced over the duration of a trial. The increase in Average value per trial is largely as a result of the increased size, duration and complexity of the trials and the increased number of services used per trial compared to previous years. This is in line with the market trends. The Group has positioned itself to take advantage of this increase in the size and complexity of clinical trials.

Outlook
In the immediate term the product innovations that have been made continue to make our products and services even more attractive to our customers. I also believe our customers will increasingly turn to companies that have the size and capability to deliver in a reliable and robust way the products and services that they need to bring improvements to their clinical development programmes.
In the longer term as functionality and connectivity improves, I am confident that the wide scale adoption of technology will significantly improve the success rate of clinical development programmes. ClinPhone is well placed to deliver on the potential that technology holds for the pharmaceutical industry.

Steve Kent, CEO
26 April 2007

Financial Review
Order book
Contracted orders and business authorisations, together the order book has grown by 18% to £59.6m (2006: £50.6m, 31%) but this growth has been depressed by the foreign exchange movements. The order book is stated at exchange rate as at the balance sheet dates. Using a constant exchange rate, the growth in the Order book was 27% over the last year.
In addition to the above, the Group had proposals outstanding as at the year end of in excess of £18.0 million (2006: £13.1 million). During the year the average win rate by value of these proposals was 44% (2006: 45%).
Operating profit
Operating profit after charging administrative expenses consisting primarily of the overhead functions of the Group, increased by 61% to £4.7million. Operating margin increased to 11% from 9% last year and included the following items.
Cost of Sales
The gross profit margin in 2007 of 60% is lower than the previous year of 62%. There are three primary factors that have contributed to this decline in margin:

• This financial year demand has been strong and management has accelerated recruitment to meet this demand and the anticipated further demand in subsequent periods. This change in cost base can be illustrated by the increase in head count during the year of 134 excluding the impact of the acquisition compared to an increase in head count of 80 in the previous year. The primary issue with new recruits is that it takes at least 6 months before the impact on productivity is felt.

• Margin decline has also been influenced by the sales mix being dependant upon the US Dollar.

• Other cost increases have also been experienced with the change in the complexity and sales mix of the products. With the increased activity in the electronic patient diaries product the Company has experienced an increase in translation and printing costs where this service requires very precise communication across a large number of languages.
Investment in leading technology and business know-how
The investment in Research and Development within the year represents 6% (2006: 5%) of revenue. Going forward, the Directors estimate that this will increase to approximately 13% of revenue. This investment is targeted at maintaining and improving the Group’s competitive position as well as enhancing its intellectual property.
Administrative Expenses
Administrative expense grew by 22% during the year to £21.5m. The majority of this cost increase was in variable costs such as marketing, however it does include the increased costs associated with being a listed company.
Amortisation of Acquired Intangibles
With the acquisition of DataLabs the Directors commissioned an independent expert review of the assets and liabilities acquired in order to determine the fair value of those assets so that the value could be recognized on the balance sheet as required by IFRS. Where those assets have resulted in intangible assets being recognized, the amortization that results from such assets is separately disclosed to aid in understanding the results. In future years this will continue to be separately disclosed.
Unrealised Gains and Losses on Foreign Exchange Instruments
Under IFRS, ClinPhone is required to recognise the unrealised gains and losses on the forward contracts it holds. The Group has a long-term policy of managing its foreign exchange exposure up to a maximum of 80% of the expected net US Dollar receipts typically twelve months in advance. These gains and losses may or may not be realised but must be recognised under IFRS.


Financial Review (continued)
Listing Associated Share Based Payments and Expenses
The Group is required to recognise the cost associated with the issuing of equity and equity based transactions. For the year ended 28 February 2007, the costs specifically identified on the face of the Consolidated Income Statement as listing associated share based payments and expenses relates only to the issue of equity associated with the float. All subsequent share option, long term incentive plans and equity issued in association with the acquisition have been recognised as an operating cost or capitalised on the balance sheet in accordance with IFRS and not separately identified.
Taxation
The tax charge for the Group is £1,166,000 (2006: £1,033,000), representing a lower than expected tax rate as compared to the standard underlying UK tax rate of 30%. The lower tax charge is mainly as a result of tax relief on the exercise of share options and deferred tax asset arising on share options not yet exercised.
All periods up to 28 February 2003 have been agreed with Her Majesty’s Revenue and Customs (HMRC). However, HMRC have opened an enquiry into the years ended 28 February 2004 and 28 February 2005 regarding the intra-group financing arrangements. The potential tax benefit of the intra-group financing is anticipated to be in the region of £350,000. The Group has not yet recognized these savings.
In addition, a further tax benefit of around £452,000 has been claimed in the tax computations for the years ended 28 February 2004 and 28 February 2005 (and with the potential for further claims in 2003, 2006 and 2007) for a Research and Development tax credit claim. HMRC have opened an enquiry into this claim. The Group has not yet recognised these savings.
Capital Structure
Net Debt
The Net Debt position being financial liabilities less Cash and cash equivalents of the Group has remained within the funding levels supported by the Group previously. The Net Debt balance has decreased from £17.1m at the end of the previous year to £10.2m. The main movements during the year being:
• the float which repaid a significant portion of the opening debt as that related primarily to the previous majority shareholders of the private company;
• the acquisition of DataLabs described above; and
• the movement in Working Capital and Cash generated from Operations.
Working Capital
The net working capital position of the Group increased during the year by £1.2m (2006: £1.0m) primarily due to a significant increase in the Trade and other receivables of £4.5m (2006: £3.2m). The acquired business of DataLabs contributed £1.0m to this increase. Offsetting this was a £2.5m (2006: £1.5m) increase in payables, of which £2.3m relate to the DataLabs acquisition.
Debtors days were 66 (2006: 63) while trade creditors days showed an improvement over the previous year to 32 days (2006: 23 days).
Cash Flow
Cash generated from Operations showed a significant improvement this year at £6.8m (2006: £4.9m) being 100% (2006: 85%)of the Operating Profit before gains and losses on foreign exchange instruments, listing associated share based payments and expenses and amortisation of acquired intangible assets.
Net Financing Costs
Net finance costs primarily relate to the cost of bank borrowings and pre listing loan note interest less interest received on short term bank balances. Included in the charge for the current year is interest of £495,000 in respect of loan notes and bank borrowings that were repaid at the time of the listing.

Scott Brown Chief Financial Officer
26 April 2007

2007 2006
£’000 £’000
Revenue 43,064 33,903
Cost of sales (17,120) (12,776)
Gross profit 25,944 21,127
Other income 317 -
Administrative expenses (21,523) (17,695)
Other expenses - (491)
Operating profit before gains and losses on foreign exchange instruments, listing associated share based payments and expenses and amortisation of acquired intangible assets 6,771 5,749
Amortisation of acquired intangible assets (939) -
Gains and losses on foreign exchange instruments 317 (491)
Listing associated share based payments and expenses (1,411) (2,317)
Operating profit 4,738 2,941
Finance income 142 104
Finance costs (794) (2,098)
Profit before taxation 4,086 947
Taxation (1,166) (1,033)
Profit/(loss) attributable to equity shareholders 2,920 (86)
Earnings/(loss) per share expressed in pence per share
- basic 5.12p (0.19)p
- diluted 4.92p (0.19)p


All of the Group’s trading activities relate to continuing operations.
Consolidated statement of recognised income and expense for the year ended 28 February
2007 2006
£’000 £’000
Profit/(loss) attributable to equity shareholders 2,920 (86)
Net exchange adjustment offset in reserves (169) 132
Total recognised income for the year 2,751 46


Consolidated balance sheet
As at 28 February 2007
2007 2006
£'000 £'000
Assets
Non-current assets
Goodwill 31,896 24,106
Intangible assets 19,378 2,854
Property, plant and equipment 3,822 2,683
Deferred tax assets 1,500 113
Long term receivables 923 -
57,519 29,756
Current assets
Inventories 246 210
Trade and other receivables 14,171 9,625
Financial assets
- derivative financial instruments 155 9
Deferred tax assets - 61
Cash and cash equivalents 1,700 2,783
16,272 12,688
Liabilities
Current liabilities
Financial liabilities
- borrowings (562) (750)
- finance leases (209) (99)
- derivative financial instruments (21) (167)
Trade and other payables (10,338) (7,826)
Current tax liabilities (1,275) (982)
(12,405) (9,824)
Net current assets 3,867 2,864
Non-current liabilities
Financial liabilities
- borrowings (10,807) (18,977)
- finance leases (314) (49)
Deferred tax liabilities (7,374) (93)
Other non-current liabilities - (964)
(18,495) (20,083)
Net assets 42,891 12,537
Shareholders’ equity
Share capital 664 100
Share premium reserve 24,270 -
Shares to be issued 1,611 -
Merger relief reserve 8,265 8,265
Reverse acquisition reserve (18,502) (18,502)
Retained earnings 26,583 22,674
Total equity 42,891 12,537

Consolidated cash flow statement
For the year ended 28 February 2007
2007 2006
£’000 £’000
Cash flows from operating activities
Cash generated from operations 6,769 4,908
Finance income received 142 100
Finance costs paid (675) (1,636)
Tax paid (1,931) (602)
Net cash from operating activities 4,305 2,770
Cash flows from investing activities
Purchase of business (11,898) -
Purchase of property, plant and equipment (1,695) (1,974)
Purchase of intangible assets (1,576) (1,159)
Net cash used in investing activities (15,169) (3,133)
Cash flows from financing activities
Net proceeds from issue of new bank loan and loan stocks 10,273 12,000
Proceeds from the issue of new share capital 18,840 -
Repayment of borrowings (18,553) (10,701)
Dividends paid (626) -
Net cash from financing activities 9,934 1,299
Effects of exchange rate changes (153) 20
Net (decrease) / increase in cash and cash equivalents (1,083) 956
Cash and cash equivalents at start of year 2,783 1,827
Cash and cash equivalents at end of year 1,700 2,783


1. Profit before taxation
The profit before taxation is stated after charging/(crediting):
2007 2006
£’000 £’000

Staff costs before share based payments
23,487
18,361
Amortisation of intangible assets (included in administrative expenses) 2,346 1,241
Depreciation of tangible fixed assets:
- owned 997 703
- under finance leases 126 86
Profit on disposal of property, plant and equipment 20 2
Operating lease rentals:
- plant and machinery 105 138
- other 1,016 1,103
Research and development expenditure 1,238 885
Payment received for termination of office lease - (238)
Repairs and maintenance expenditure on property, plant and equipment 219 302
Share based payment on ordinary activites 43 -
Trade receivables impairment 48 59
(Gain)/loss on forward exchange contracts at fair value through the income statement (317) 491
Listing associated share based payments and expenses 1,411 2,317


1. Profit before taxation (continued)
2007 2006
£000 £000
Total listing expenses 2,152 -
Listing expenses debited to share premium account (1,987) -
Listing expenses debited to profit and loss account 165 -
Share based payment charge 1,246 2,317
Listing associated share based payments and expenses 1,411 2,317

During the year the Group incurred costs of £2,152,000 arising in relation to the listing on the London Stock Exchange in June 2006 of which £165,000 was charged to the income statement.
The Group also incurred significant one off share based payment charges in 2007 and 2006 for options and ratchet shares issued whilst a private company which became exercisable or vested on a listing. Hence as a consequence of the listing on 23 June 2006, all the employee share options vested and became 2,808,196 options with exercise prices between 0.13p - 0.52p. Shares to cover all these options were transferred into the Employee Benefit Trust at par. In addition, pursuant to the ratchet share agreements with senior management, the executive management received a total of 5,459,767 shares and the chairman received 646,072 shares on listing.
The expense arising from share based transactions of £1,246,000 (2006: £2,317,000) is determined in two parts. There is a charge of £1,149,000 (2006: £2,317,000) relating to the existing share options and senior management share allocations in place at 28 February 2006 which is calculated on the same basis as stated in the accounts for the year ended 28 February 2006. The second charge is for the 322,700 Pre Float Options. These options issued in the period had an exercise price of £1.18 per share and were all exercised on 23 June 2006. The charge of £97,000 was calculated as the discount between the issue price and the exercise price.


2. Earnings/(loss) per share
Basic earnings / (loss) per share is calculated on the profit / (loss) attributable to equity shareholders by the weighted average number of ordinary shares in issue during the period. The weighted average number of shares for the year ended 28 February 2007 and 28 February 2006 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 earnings/ (loss) per share
2007 2006
Earnings Weighted
average
number of
shares Per share
amount
(pence) (Loss) Weighted
average
number of
shares Per share
amount
(pence)
£’000 ’000 £’000 ’000

Profit/(loss) attributable to ordinary shareholders 2,920 57,017 5.12p (86) 45,998 (0.19)p
Effect of dilutive securities
options 2,354 (0.20)p - -
Diluted EPS 2,920 59,371 4.92p (86) 45,998 (0.19)p
There is no impact on the diluted EPS for the year ended 28 February 2006 for the share options in existence as, due to losses, these options are anti-dilutive.
Adjusted earnings per share
2007 2006
Earnings/
(loss) Weighted
average
number of
shares Per share
amount
(pence) Earnings/
(loss) Weighted
average
number of
shares Per share
amount
(pence)
£’000 ’000 £’000 ’000
Profit/(loss) attributable to equity shareholders 2,920 57,017 5.12p (86) 45,998 (0.19)p
Gains and losses on foreign exchange instruments (317) (0.56)p 491 1.07p
Listing expenses 165 0.29p - -
Listing associated share based payments 1,245 2.18p 2,317 5.04p
Amortisation of acquired intangible assets 939 1.65p - -
Tax effect of adjustments (295) (0.52)p (350) (0.75)p
Adjusted EPS 4,657 57,017 8.16p 2,372 45,998 5.17p
Effect of dilutive securities
options 2,354 (0.32)p 2,408 (0.27)p
Diluted adjusted EPS 4,657 59,371 7.84p 2,372 48,406 4.90p
Fully diluted adjusted EPS 4,657 67,783 6.87p 2,372 48,806 4.86p
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.
The effect of options for the year ended 28 February 2006 is calculated using the share price on the date of listing.
Fully diluted adjusted EPS is calculated using all share capital capable of being issued at the year end.



3. Acquisitions
On 22 November 2006, the Group acquired 100% of the share capital of DataLabs. DataLabs provides enterprise-level software applications and related services for use in the clinical trials process. DataLabs contributed revenues of £1,206,000 and a loss before tax and interest of £1,421,000 to the Group for the period from 22 November 2006 to 28 February 2007.
The initial consideration was £16.1 million, with £10 million being satisfied in cash and £6.1 million being satisfied by the issue of 2,870,259 new ordinary shares of 1p each in ClinPhone plc.
Contingent consideration of up to a maximum of £11.6m is payable in cash or new ClinPhone shares, subject to DataLabs achieving certain revenue targets as at 30 June 2007. Deferred consideration of up to a maximum of £3.7m in cash and shares is payable subject to DataLabs meeting certain contractual obligations. Full details of the above transaction can be found on the Group’s website at www.clinphone.com.
The assets and liabilities as of 22 November 2006 arising from the acquisition are:
Provisional fair values Acquirees carrying amount
£’000 £’000
Intangible assets 17,566 911

Property, plant and equipment 656 656
Trade and other receivables – non current 871 1,498
Trade and other receivables - current 1,520 1,018
Trade and other payables - current (2,332) 1,665
Deferred tax (6,837) -
Net assets 11,444 5,748
Goodwill 7,941
Consideration 19,385

Satisfied by: £’000
Cash on acquisition 9,958
Shares on acquisition 6,122
Deferred payments – shares to be issued 1,611
Deferred payments - cash 362
Acquisition costs 1,332
Total consideration 19,385
The goodwill is attributable to the synergies expected to arise after the group’s acquisition of DataLabs and the deferred tax liability is in relation to intangible assets recognised on acquisition as there is no tax deduction available on these assets. The fair value of the shares issued of £2.19 is based on the agreed value in the acquisition document. The provisional nature of the fair values relates to the elements of the purchase consideration which will not be known until the earn out period is completed.





4. Cash generated from operations

2007 2006
£’000 £’000
Profit / (loss) attributable to equity shareholders 2,920 (86)
Adjustments for:
Tax 1,166 1,033
Finance income (142) (104)
Finance expense 794 2,098
Depreciation 1,115 789
Profit on disposal of property, plant and equipment 20 2
Amortisation of intangibles 2,346 1,241
Other non cash charges –share-based payments 1,289 2,317
Changes in working capital:
Increase in inventories (36) (100)
Increase in trade and other receivables (2,896) (2,862)
Increase in payables 193 580
Cash generated from operations 6,769 4,908

5. Other information
The consolidated financial statements of ClinPhone plc are prepared in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee interpretations, that are endorsed by the European Union and with those parts of the Companies Act 1985 applicable to those companies reporting under IFRS.

These results for the year to 28 February 2007 are extracts from the 2007 annual report and do not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985 (as amended).

The annual report for the year to 28 February 2007, on which the auditors have issued a report that does not contain a statement under section 237(2) or (3) of the Companies Act 1985, will be posted to shareholders by 9th May 2007 and will be delivered to the Registrar of Companies in due course. This information is also available on the Company’s investor relations web site at www.clinphone.com.