Share Name Share Symbol Market Type Share ISIN Share Description
Venn Life LSE:VENN London Ordinary Share GB00B9275X97 ORD 0.1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 21.75p 21.50p 22.00p 21.75p 21.75p 21.75p 0 08:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Pharmaceuticals & Biotechnology 8.4 -0.2 0.0 611.0 13.10

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Date Time Title Posts
20/10/201618:44one to follow for great potential is VENN644
24/3/201619:04Venn Life Sciences......rapid growth and potential !294

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Venn Life Daily Update: Venn Life is listed in the Pharmaceuticals & Biotechnology sector of the London Stock Exchange with ticker VENN. The last closing price for Venn Life was 21.75p.
Venn Life has a 4 week average price of 23.88p and a 12 week average price of 26.98p.
The 1 year high share price is 31.13p while the 1 year low share price is currently 17.75p.
There are currently 60,239,263 shares in issue and the average daily traded volume is 67,407 shares. The market capitalisation of Venn Life is £13,102,039.70.
adamb1978: My very belated notes from the management presentation last week: - management team: CEO came across as very credible. My fear was that, given the sector and size of the company, he would be quite spivvy and unreliable. He actually came across as the opposite of that - someone who wouldn't just think twice about things....more think about a dozen times and quite cautious! The CFO was quite young and I didn't think explained answers well - he seemed to know what he wanted to say, but just couldn't get it out. This is a small co though, so a stellar CFo would be a surprise - Financials: rule of thumb in the industry is €100k revenue per employee, which means that these can make €20m revenue with their 200 people. Also industry rule of thumb is 15% EBITDA margin is good (checking one comp - Quintiles - this appears to be very achievable). On this basis they should be able to make €3m EBITDA and given that there is little int, tax or D&A, implies EPS of perhaps 4p - Q1 this year was weak - largely as a result of new employees coming on board and therefore taking a while to generate run-rate revenue. Hence why turnover was nearer €9m than €10m in H1 - M&A: looking at smaller targets in Eastern Europe - 25-30 people. So €2.5m - €3m additional revenue and presumably at higher margin given lower cost. The implication was that they're already in discussions with a couple targets so I'd expect to hear something about this in the coming months. Using a similar multiple to VENN, this implies €2m cost, though poss lower price given location and scale of targets, so maybe €1m - €2m price? He was adamant that they could fund this from cash resources, and they do have €2.6m net cash - Working cap spike in June: attributable to a large customer taking a long time to pay. Customers are generally much larger so he said that they pretty much always do pay, but sometimes it takes longer than ideal. Typical level is 10% - 12% of turnover (I haven't checked this) - Innovenn spin-out: exactly as announced this morning. VENN shareholders get a 30% stake in a listed combination with these other assets and then raising capital from third parties. Personally I'm viewing this as blue-sky upside, but it does have the immediate benefit of making VENN more profitable - H2 started well. I asked a question about KPIs and utilisation rates. CFo said that Jul and Aug utilisation rates were higher than the 70% rate which represented a decent level. So my figures: - as above, for 2017 market forecasts of £16m and 2.36p EPS look very, very light - for 2016, market forecasts are £14m and 2.27p from what I can see. The £14m certainly looks light based on the logic above. For the bottom line, you need to adjust for Innovenn costs which would now be presented as discontinued operations so actually H1 from continuing ops would have been profitable, perhaps 0.2p EPS. For H2, simplistically assume €10m revenue and €9m opex so €1m EBIT (=PBT=net inc). E1m net income is around 1.3p - 1.4p EPS and then you need to adjust out the Innovenn costs which get you to around 1.6p - 1.7p. Therefore I can see how this year comes in somewhere close to 2p, and if utilisation rates are higher then you could see how you get to 2.5p (e.g. by t/o being say €500k higher). I expect the company to manage down expectations for the year slightly to nearer 2p but whatever you pick, the PE is no more than very low double digits. Upside from this over the long-term comes from: - the continued buy and build strategy which in this industry should be possible. Some basic figures suggest that a small acquisition could easily increase EPS by say 0.5p, so put say 5p - 8p on the share price - there's a few global large cos in the industry which could gobble VENN up easily - the Kinesis acquisition large year seems highly complimentary - the Innovenn spin-out is blue sky upside. The presentation I found very reassuring and if you look forwards to 2017, this feels very very cheap (6x PE?). I believe this is an accurate summary - happy to answer any questions! Cheers Adam
rivaldo: ID, it really isn't - just over £50k of trades have sent the share price up 1.62p already today. This is still only a £14m m/cap company. The share price could be back at 30p in a jiffy - or more - with a little more buying and a press mention or two on the Innovenn spin-off.
yump: So all these negative posts are because of the business itself... or the share price drop ? ie. who is really in control of your reactions ?
timbo003: There were approximately 20 attendees at the meeting last night which included around 10-12 private investors, Tony Richardson (Venn CEO), Jonathan Hartshorn (Venn CFO), Anna and Leanne from Walbrook and a few folk from some city brokers (Shard, Beaufort and possibly others). The Walbrook events at the Rocket Bar tend to be fairly informal with lots of questions asked during the presentations which is a good format given that the venue is a licenced bar. TR’s presentation was basically an overview of the company’s origins, its current business and its future strategy. As is often the case, it was the Q&As that helped reveal the most interesting nuggets, the majority of which I have detailed below (in no particular order): The Innovenn division is currently loss making, when the Innovenn technology was acquired from Evocutis plc in 2014 (for £210k) it was hoped that it might add value to the business and hence to the share price, this has not occurred so the decision has been taken to divest this part of the business. Venn have investigated a number of disposal routes and they are now actively pursuing one of these options (a spin out). If all goes according to plan it sounds like we may hear something in the next couple of months or so and shareholders would own shares in the new spin out. The two analysts that currently cover Venn attribute zero value to Innovenn. Should the spin out go ahead a value would be attributable to the spin out shares and Venn would be free from a loss making division, this should have a positive effect on profits and hopefully have a knock on effect on the share price. Venn’s biggest clients are largish US biotechs who wish to conduct small to medium size clinicals in Europe. Venn do have Big Pharma clients but they tend to use Venn for small discrete programs of work. Big Pharma tend to select big CROs for their large phase III studies as they are the only ones with the scale and capabilities. There are no immediate plans to expand geographically outside of Europe, although Venn may consider one or more small bolt on acquisitions for Eastern Europe where they are under-represented. Some US based clients have indicated that it would be useful if Venn had some US presence, so they may acquire a small business in the US or increase headcount modestly to give themselves some local US capabilities. Small acquisitions may not ncessarily be funded through the issue of equity and may be financed with debt. In response to a question on future placings, TR did say that if there were to be another equity raise, they would look at ways to include an open offer with any institutional placing. Venn do not have a dedicated phase I unit (which would require considerable Cap-Ex) and they do not have capabilities to conduct large multi country Phase III studies for large Pharma, so they will stick to what they do best, i.e. small phase II and phase III studies. In response to a question on how are PIs supposed to know what market expectations were for the company, we were told that Venn were currently covered by two different brokers and that they do not intend to commission paid for research from service providers such as Hardman or Equity Development. If shareholders gave TR/JH their contact details they would ensure that they were on the distribution lists for research updates. The last acquisition was Kinesis, this was a complementary business as Kinesis was focused on early stage clinical development activities, whereas the existing Venn business was later stage, since the acquisition there was been considerable cross selling of services between the two businesses. There were some staff losses following the Kinesis acquisition, but this is often the case when a privately held CRO is acquired, some staff feel a loyalty to the old owner and do not feel comfortable moving across. The rates charged to clients for contracts on a time and materials basis are between 80Eur/hr /person and 250 Eur/hour/person, with the rate depending on the level of expertise of the staff involved. The effect of Brexit has been fairly neutral so far, although we don’t know what will happen from a regulatory perspective and no one knows where EMA will be located (currently it’s in Canary Wharf). Ireland should be a winner as far as the Pharma industry is concerned (assuming Brexit goes ahead) as it will be the only remaining English speaking country in the EU. The current potential pipeline of projects is around 20m Euro, which is a lower figure if you risk adjust, although 50% of next year’s forecast revenue (forecast around £18m) is in the bag. If a Client puts a project out to tender they may typically approach 3 CROs. Venn’s current hit rate for tendered contracts is around 1 in every 2 (to 2.5) which is an improvement from a year or so ago when it was more like 1 in every 3. After the official close of the meeting it was a free bar and canapes so like most other attendees, I was in no rush to leave so opted to hang around for another hour or so just shooting the breeze. (Please feel free to copy or plagiarise on iii, LSE or wherever)
mulligut: Agree completely with yump. Directors who are driving share price trends like this deserve to be rewarded for the value increase. One days drop and then someone demanding that they acquire shares, merely to prop up a bad business model is justified. But as much of the institutions are EIS and VCT there are times when an exit on the news is warranted and nothing management, nor a good business model, can do will stop a heavy selling shareholder drive the price lower. If you follow this share you will see that drops like this are a buying opportunity. I buy the last week, every month, in small volume and took the drop to increase this months number of shares I was due to purchase by 20%. So Happy days as far as I am concerned. You just can't please everyone
yump: On the chart at the top of this thread, I can count roughly 20 instances of share price movements of the same order as yesterdays. So currently no significance at all imo.
yump: Some investors probably should not buy businesses close to making a clean profit, because the timetable for that could be out by a fair bit. The day I find out that any directors are buying to prop up the share price is the day I will sell my entire holding. Fortunately most directors only buy their own shares as a long term investment at prices that are not critical to the odd few % here and there. ie. bottoms in stocks that have had a shock but are expected to recover - sometimes get a selection of director buys I hope the Venn directors are more concerned with simply running and growing their business - that's what I'm invested for.
adamb1978: Will have a look at buying more once I've been to the presentation later on (one of the unusually times when these things tie in with a trip in to town). Share price reaction is a bit surprising - turnover is well-ahead of guidance, growing fast and stripping out the Innovenn losses it would be profitable. It also doesnt feel like there's any value being attributed in the share price to Innovenn, so selling it and investing in the core business would make a lot of sense, particularly given some investors get nervous about investing in a £15m market cap co. The valuation still seems compelling to me - company has an enterprise value of £13m, despite sales approaching £20m and growing fast and on the cusp of profitability
adamb1978: Have been through these for the first time over the last couple days and it feels as though Innovenn is effectively coming for free given that the CRO business more than justifies the share price on its own. Does anyone have a view on what Innovenn might be worth on a stand-alone basis if sold or spun-off? Thanks Adam
paleje: I wondered about that too, they don't mention it at all but in their June note they state a target of 43p which definitely didn't include anything for the Innoven spin-off. The link for it is now directed at the 03 Aug note but the content was pasted on here and I've copied it below, the last para is the one. Would they have added 5p based on that last contract announcement, I wouldn't have thought so but then again it plus the possible Innoven spin-off would surely come to more than that. I'm veering towards the 'more to come' side. June article:- This was on 3i's website, numbers as mentioned above but I hadn't seen the last para before about the share price, if it's already been posted sorry:- REISSUED 2015E is replaced with 2015A – ALL NUMBERS REMAIN UNCHANGED. The growing European Contract Research Organisation (CRO) has reported final results for the year to December 2015. Revenue growth of 135% to €11.47m exceeded our already upgraded revenue forecast of €11.2m. Underlying Group EBITDA showed a €1.9m swing from a €1.53m loss to a profit of €0.39m vs our forecast of €0.49m. We attribute this shortfall to development costs at Innovenn. EBITDA attributable to the CRO business was €0.8m. Depreciation and amortisation charges were €0.46m vs our expectation of €0.22m. The company underwent a step change in scale via the acquisition of Kinesis in Q4 which we understand contributed circa 12% to FY revenues owing to the short period under ownership. With €4.4m revenue booked in Q1 vs €2m in Q1 2015, and the commencement of successful cross selling of services across the enlarged client base, we have confidence in our €17m FY2016 revenue forecast, growth of 48% which we forecast to result in a more than fourfold jump in underlying EBITDA to €1.75m and an adjusted profit of €1.6m equating to adjusted EPS of €0.027c reaching €0.032c by 2018. There is however scope for faster revenue growth and greater margin progression. The company finished the year with cash balances of €3.8m, a strong base from which to negotiate potential acquisition opportunities in Central and Eastern Europe that are being explored as well as selective organic expansion into other areas. Innovenn, Venn’s innovation division, has made good progress with both Labskin and Clarogel through their development phases. These are currently being commercialised. Venn intends to reposition this business such that it has an independent footing, its own source of funding and a value that can be clearly established. The shares are on an adjusted PE multiple of 12.4x for 2016. Innovenn made an EBITDA loss this year of €0.44m. If we simply add back a similar figure to our forecast for next year this puts the company on a sub 10x PE rating, as if it were the CRO business on its own. Even at a share price of 43p (74% above the current share price) this rating is only at 16x these pro-forma earnings broadly in line at the sector, and does not take into account any separate value for Innovenn which has two differentiated market ready integumentary products targeting growing markets.
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