Q1 2007 Interim Management Statement
ClinPhone plc, the leading provider of technology for clinical trials, today provides an Interim Management Statement for the quarter ended 31 May 2007.
Highlights
• Q1 revenues up 21% on constant currency basis; reported revenues up 14%
• Strong pipeline, with order book up 19% to £52.4 million
• £1.3 million R&D tax credit to be booked in current year
• Full year results expected at lower end of analysts’ expectations, impacted by dollar weakness and average lower order value in Q1
• Weighting of revenue and profit towards H2
Group revenues for the quarter were up 21% on a constant currency basis but continue to be significantly impacted by the US$:GBP exchange rate. On a reported basis, revenues were up 14%. In ClinPhone’s historic business (prior to the acquisition of Datalabs in November 2006), demand for clinical technology services continues to outstrip the ability of the market to supply it. Underlying proposal activity remains strong but the average order value has been impacted by the weakening of the US dollar and mix of business.
The forward pipeline of business continues to be strong and the order book has grown by 19% at constant exchange rates compared to the same quarter last year to reach a total of £52.4 million (Quarter ended 31 May 2006: £45.7 million). Included within this is a contract with a leading pharmaceutical company to deliver the first ever completely “responsive adaptive” clinical trial. The ability to adapt a clinical trial once commenced in response to real-time data, is one of the key benefits of using technology in clinical trials and is becoming increasingly important to the pharmaceutical industry.
Activity in the first quarter saw the Company add a further 71 trials to its systems (Quarter ended 31 May 2006: 65), increasing the average number of live trials to 527 for the quarter (Quarter ended 31 May 2006: 441). In addition to this, the Company has sold 10 licence contracts, mainly in its clinical trial project management software.
As indicated at the time of the acquisition of Datalabs, the timing of licence revenue realised from the Electronic Data Capture (EDC) product set continues to be difficult to predict, although ClinPhone is actively pursuing a number of sales opportunities. Activity has increased, with proposal activity growing strongly, two new EDC service framework agreements and an increasing number of new studies implemented during the quarter.
The EDC market continues to evolve and is now moving toward a service model which recognises revenue over the duration of the study, similar to ClinPhone’s historic business. The switch from a licence to a more services-based revenue model means that revenue is recognised over a longer period of time and will provide a recurring future revenue stream for the Company.
ClinPhone also reports today that it has agreed the calculation of research and development tax credits with Her Majesty’s Revenue and Customs, the effect of which will be to allow ClinPhone to book a £1.3 million tax credit in the current financial year. Tax is expected to be reduced by approximately £400,000 per annum in future years.
Taking into account the weakness of the dollar and the average lower order value during the year to date, and assuming that the US$:GBP exchange rate averages $1.95:£1 for the year, results for the full year are now expected to be at the lower end of analysts’ expectations, with a greater proportion of the year’s revenue and profit expected to fall in the second half.
Looking forward towards the remainder of the financial year, ClinPhone has a strong order book and the average value of orders is expected to revert to historic levels. With 70% of the clinical trials market still using paper based systems, demand for clinical technology services is expected to continue to exhibit strong growth. In order to address this rapidly growing market, ClinPhone is currently examining its business processes to ensure that it can supply the market in an orderly manner and maintain its leadership in the sector. Details of the results of this review will be announced at the time of the Company's interim results announcement in November.
Steve Kent, Chief Executive of ClinPhone, said:
“With the majority of our customers based in the US, ClinPhone has been significantly impacted by dollar weakness during the first quarter but the underlying outlook for our business remains very strong. Demand for our services exceeds our ability to supply and we are currently re-working our business processes to enable us to meet this fast-growing demand. The long-term outlook for ClinPhone is positive and we remain confident that the Company is well placed to serve its global customers in this rapidly expanding market.”
There will be a conference call for analysts at 8.30am today, 13 June 2007. Please Gemma Cross-Brown at Financial Dynamics on 020 7269 7125 for details.
Enquiries:
ClinPhone plc +44 (0) 115 955 7333
Steve Kent, Chief Executive Officer
Scott Brown, Chief Financial Officer
Financial Dynamics +44 (0) 20 7831 3113
David Yates
Ben Brewerton
About ClinPhone
ClinPhone plc is a specialist Clinical Technology Organization (CTO) working with the leading global biotech and pharmaceutical organizations. With its corporate headquarters in Nottingham, UK, ClinPhone is the largest and most accomplished CTO with experience in over 1950 clinical trials spanning 88 countries and 71 languages. The company’s solutions enable its clients to manage their clinical trials more effectively through the use of technology. Building on its telephone and web-based randomization and medication management expertise, ClinPhone can offer a wide range of innovative products covering all aspects of a clinical trial, including Electronic Patient Reported Outcomes (ePRO), Interactive Voice and Web Response (IVR and IWR), Patient Recruitment Solutions, Electronic Data Capture (EDC) and Clinical Trial Management Software (CTMS).
