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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ergomed Plc | LSE:ERGO | London | Ordinary Share | GB00BN7ZCY67 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1,346.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2022 to Apr 2024
TIDMERGO
RNS Number : 6865T
Ergomed plc
21 March 2023
Preliminary results for the year ended 31 December 2022
Strong performance in 2022 with a robust platform to support sustainable growth
Guildford, UK - 21 March 2023: Ergomed plc (LSE: ERGO) ('Ergomed' or the 'Company' or the 'Group'), a Company focused on providing specialised services to the pharmaceutical industry, today announces its Full Year Results for the year ended 31 December 2022.
Selected Financial Highlights
Hot Features
Premium
Figures in GBP millions, unless Full Full % change
otherwise stated Year Year
2022 2021
Total Revenue 145.3 118.6 22.5
Service Fee Revenue 124.0 100.0 24.0
Gross Profit 59.1 48.4 22.3
-0.1
Gross Margin (%) 40.7% 40.8% ppts
Adjusted EBITDA (Note 1) 28.4 25.4 11.5
Net cash at 31 December 19.1 31.2 -38.9
Order book at 31 December 295.0 239.7 23.1
Basic adjusted earnings per
share (pence) (Note 2) 42.6p 41.1p 3.6
--------------------------------- ------- ------- ---------
Notes :
(1) Adjusted EBITDA is defined as operating profit for the period plus depreciation and amortisation, share-based payment charge, acquisition related consideration and costs (Note 8 to the financial statements).
(2) Basic adjusted earnings per share is defined as earnings per share after adjustment for items referred to in Note 7 to the financial statements.
Key Financial Highlights
-- Order book growth of 23% to a record GBP295.0 million.
-- Strong revenue growth of 23% to GBP145.3 million (up 15% in constant currency) in line with market expectations.
-- Robust revenue growth of 23% in Clinical Research Services (CRO) to GBP71.4 million (up 15% in constant currency). This included service fee revenue growth of 27% to GBP50.8 million (up 19% in constant currency).
-- Continued strong growth in Pharmacovigilance (PV) revenues of 22% to GBP73.9 million in 2022 (up 14% in constant currency).
-- Adjusted EBITDA increased by 12% to GBP28.4 million in line with market expectations, as the business continued to invest in building a robust platform for sustainable future growth.
-- Cash and cash equivalents of GBP19.1 million as of 31 December 2022 (post the acquisition of ADAMAS) and debt free with unutilised facilities of up to GBP80.0 million.
Key Operational & Strategic Highlights
-- Acquisition of ADAMAS completed in February 2022 for a net cash consideration of GBP24.2 million. The business has been successfully integrated and achieved its financial expectations for 2022.
-- Organic investment in complementary geographies, service offerings and technology. -- North America revenues up 22% to GBP90.6 million, accounting for 62% of Group revenues.
-- Continued strengthening of the Board and Executive Management Team with key appointments during 2022 including Michael Spiteri transitioning to the role of Chief Transformation & Technology Officer and, post the year end, the appointment of Jonathan Curtain as CFO in February 2023, following the retirement of Richard Barfield.
Dr Miroslav Reljanović, Executive Chairman of Ergomed, said:
"During 2022, Ergomed delivered another year of strong revenue and EBITDA growth. The successful acquisition of ADAMAS further endorsed our acquisition strategy and capabilities, and we remain focused on delivering further organic and inorganic growth aligned to our strategic priorities. We have continued to strengthen our Board and executive management team, remain in a debt-free position and our future is underpinned by a robust order book. As we look ahead to 2023, demand for our services is high, and our focus continues to be on operational excellence and delivering a market leading service as a global provider of specialist pharmaceutical services addressing unmet medical needs and patient safety."
Conference call for analysts:
A webcast and conference call for analysts will be held at 8:30am GMT today.
Webcast link: https://www.lsegissuerservices.com/spark/Ergomed/events/94c90b44-391a-42ee-aa2a-d4107f100202
Conference call registration: https://cossprereg.btci.com/prereg/key.process?key=PFRG8YXYJ
Enquiries:
Ergomed plc Tel: +44 (0) 1483 402 975 Miroslav Reljanović (Executive Chairman) Jonathan Curtain (Chief Financial Officer) Keith Byrne (Senior Vice President, Capital Markets & Strategy) Numis Tel: +44 (0) 20 7260 1000 Freddie Barnfield / Euan Brown (Nominated Adviser) James Black (Broker) Peel Hunt (Joint Broker) Tel: +44 (0) 20 7418 8900 James Steel / Dr. Christopher Golden Consilium Strategic Communications Tel: +44 (0) 20 3709 5700 Chris Gardner / Matthew Neal ergomed@consilium-comms.com
About Ergomed plc
Ergomed provides specialist services to the pharmaceutical industry spanning all phases of clinical development, post-approval pharmacovigilance and medical information. Ergomed's fast-growing services business includes an industry-leading suite of specialist pharmacovigilance (PV) solutions, integrated under the PrimeVigilance brand, a full range of high-quality clinical research and trial management services under the Ergomed brand (CRO) and mission-critical regulatory compliance and consulting services under the ADAMAS brand. For further information, visit: http://ergomedplc.com .
Forward-Looking Statements
Certain statements contained within the announcement are forward-looking statements and are based on current expectations, estimates and projections about the potential returns of Ergomed plc (Ergomed) and the industry and markets in which Ergomed operates, the Directors' beliefs and assumptions made by the Directors. Words such as "expects", "anticipates", "should", "intends", "plans", "believes", "seeks", "estimates", "projects", "pipeline" and variations of such words and similar expressions are intended to identify such forward-looking statements and expectations. These statements are not guarantees of future performance or the ability to identify and consummate investments and involve certain risks, uncertainties, outcomes of negotiations and due diligence and assumptions that are difficult to predict, qualify or quantify. Therefore, actual outcomes and results may differ materially from what is expressed in such forward-looking statements or expectations. Among the factors that could cause actual results to differ materially are: the general economic climate, competition, interest rate levels, loss of key personnel, the result of legal and commercial due diligence, the availability of financing on acceptable terms and changes in the legal or regulatory environment.
These forward-looking statements speak only as of the date of this announcement. Ergomed expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Ergomed's expectations with regard thereto, any new information or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by law or any appropriate regulatory authority.
Executive Chairman's Statement
25 years of operational and financial growth
2022 marked the 25(th) anniversary of Ergomed with another year of strong operational and financial performance. The Company continued to deliver on its growth strategy through organic growth, geographical expansion and an effective acquisition strategy.
Financial Results
In 2022, Ergomed delivered another year of strong financial results. Revenues for 2022 of GBP145.3 million were in line with market expectations, an increase of 22.5% over the prior year. Adjusted EBITDA was also in line with expectations at GBP28.4 million, a year-on-year increase of 11.5% from GBP25.4 million. In addition, Ergomed's strong sales performance in 2022 resulted in an order book of GBP295.0 million, up 23.1% from the beginning of the year.
The acquisition of ADAMAS in February 2022 was immediately accretive and supported the organic growth in the business over 2022. The Company increased its multi-currency revolving credit facility in 2022 from GBP30.0 million to GBP80.0 million, comprising a GBP50.0 million facility and an additional GBP30.0 million accordion. The Group remains debt free at year end with these new facilities available to support continued expansion. This robust financial performance positions the Company strongly to continue to deliver its strategy in 2023 and beyond.
Delivery of Growth Strategy
Organic Growth
Ergomed continued to deliver on its growth strategy throughout 2022 through a combination of organic growth and M&A. Organically, the Company has increased its order book, winning awards from both new and existing clients, some of which have been generated through cross-divisional selling opportunities by continuing to focus on strong execution and operational delivery and the benefits of our expanded geographical presence. In 2022, new operations were opened in France, Italy, Romania, Portugal and Ireland, helping clients to access our services on a global level.
Operationally, the Company continues to focus on providing specialist services to the pharmaceutical industry. The CRO business specialises in the higher growth oncology and rare disease areas and also offers clients a unique site support model focusing on effective site management, efficient vendor management and increased patient recruitment and retention.
The Company has continued to invest in technology to enhance its digital capabilities and increase its service offering to our client base. The investment in technology will continue into 2023 and beyond, with the strategic focus to continue to maximise the potential of technology across the business. This will support our transformation and continued growth, geographic expansion and cross selling opportunities; combining best in class industry solutions with our proprietary technologies to deliver innovative leading solutions for our clients; and ensure that technology applications are fit for purpose to drive operational efficiencies where appropriate.
Acquisitive Growth
During 2022, Ergomed continued to execute a well-disciplined M&A strategy, ensuring that any acquisitions are aligned with the Company's vision and are complementary to its current service offering.
In February 2022, Ergomed acquired ADAMAS Consulting Group Limited. ADAMAS is a well-established, leading provider of mission-critical regulatory compliance and consulting services to the global pharmaceutical industry offering a full range of independent quality assurance services and specialising in the auditing of pharmaceutical manufacturing processes, as well as auditing clinical trials and pharmacovigilance systems. ADAMAS has over 100 active clients and has worked with over 700 pharmaceutical companies including 40 of the 50 largest global pharma and biotech companies.
This acquisition has enhanced our client offering and Ergomed's global presence in the US, Europe and APAC. ADAMAS delivered a strong financial performance in 2022 and we anticipate continued growth in 2023 and beyond.
The Board continues to actively consider further acquisition opportunities that will complement and strengthen the existing CRO and PV service offerings and provide access to new customers and geographies.
Board and Leadership Changes
During 2022, we welcomed two significant additions to Ergomed's Board of Directors, John Dawson and Anne Whitaker, who bring with them a wealth of international experience in the healthcare industry and expert knowledge of the life science sector which will be invaluable as the Group continues to grow.
In March 2022, John Dawson, CBE, joined the Ergomed Board as an independent Non-Executive Director and Chair of the Audit & Risk Committee. In December 2022, after nine months of serving on the Board, John was appointed as Senior Independent Director. He is a highly experienced and globally respected figure in the healthcare and life sciences sector. John was most recently Chief Executive Officer of Oxford Biomedica plc, widely recognised for the successful delivery at unprecedented speed of the Oxford/AstraZeneca COVID-19 vaccine.
In June 2022, Anne Whitaker joined the Ergomed Board as an independent Non-Executive Director. Anne joined with extensive life sciences industry experience, having worked across the pharmaceutical, biotech and specialty pharma sectors for the last thirty years in the US and internationally. Anne previously held a number of senior executive roles at Sanofi, GlaxoSmithKline, Bausch Health Company and Synta Pharmaceuticals, and most recently, she held the position of Chief Executive Officer, and subsequently Chairperson of Aerami Therapeutics, a private life science company.
In November 2022, Michael Spiteri was appointed as Chief Transformation and Technology Officer of Ergomed and simultaneously stepped down as a Non-Executive Director. Michael's strong understanding of the Company's strategy alongside his many years of technology and transformation experience will drive development across Ergomed's automation and digital learning capabilities.
Post year end, on 3 February 2023, Richard Barfield resigned as Chief Financial Officer and a Director of the Board of Ergomed. We would like to thank Richard for his invaluable contribution to the Company and wish him all the best in his retirement.
Simultaneously on 3 February 2023, Jonathan Curtain was appointed Chief Financial Officer and a Director of the Board of Ergomed. Jonathan joined Ergomed in November 2022 as Deputy Chief Financial Officer and has worked closely with Richard and the Board of Directors during this time to ensure an organised and smooth transition. Jonathan has over 13 years of life science industry experience, most recently holding the position of Senior Vice President of Corporate and Commercial Finance at ICON plc, a leading global CRO company listed on NASDAQ. During his time at the company, he played a key role in significant M&A transactions, including debt and equity fundraising, commercial finance, taxation, treasury, investor relations and overall financial management. He is a Fellow of the Institute of Chartered Accountants with over 20 years' experience since receiving his ACA qualification at KPMG. His experience will continue to strengthen Ergomed's leadership and help deliver on our global growth strategy.
Summary
The continued operational and financial growth of Ergomed over the past 25 years is a direct result of the hard-work, resilience and commitment of all of our colleagues; the invaluable insight and expertise of our Board of Directors and our strong and robust business strategy. I would like to thank all Ergomed employees for their contributions over this period.
Looking forward into 2023, with a strong orderbook and effective strategy, Ergomed will continue to build on the robust operational and financial platform built over the past 25 years.
Miroslav Reljanović
Executive Chairman
20 March 2023
Operational review
In 2022, there was strong operational and financial performance across both the pharmacovigilance services and clinical research services divisions. The successful integration of the ADAMAS acquisition and continued geographical expansion has ensured the Company has maintained strong growth throughout 2022.
PHARMACOVIGILANCE
Market Outlook
The increase of adverse events (AE) globally, due to disease complexity and access to new sources of information through enhanced technology, have necessitated new PV obligations. In addition, developing regulations and globalisation are further fuelling growth in the industry.
The increasing global requirement for PV services coupled with a perpetual drive to improve drug safety through regulation, continues to drive the transition towards specialist outsourced PV providers and continued market growth. This, together with an increasing demand for outsourced PV services, has been a consistent driver of Ergomed's growth.
Financial Performance
The addition of a proportion of ADAMAS' revenues alongside organic growth in PrimeVigilance saw revenues increase by GBP13.4 million from GBP60.5 million in 2021 to GBP73.9 million in 2022 (22.1% increase, 14.3% on a constant currency basis). Gross margins continued to be strong for the PV business at 50.2% in 2022.
Management and Staff
With employees located across more than 20 countries, and capabilities across 150+ countries, the business continues to invest in talent acquisition across the globe. 85% of PrimeVigilance's employees have a pharmacy or life science degree, with over 60 physicians, 30+ in-house EU/ UK Qualified Persons for Pharmacovigilance ('QPPVs') and more than 10 former Regulatory agency inspectors and assessors.
The breadth and depth of staff and professionals supporting PrimeVigilance are reflected in the quality of services provided. Testament to this is PrimeVigilance's high customer renewal and retention figures and the fact that PrimeVigilance participated in over 290 regulatory inspections and audits, representing an increase of more than 20% compared to the previous year including successfully managed FDA and EMA inspections.
Technology Investment
In 2022, PrimeVigilance continued to upgrade its case management and signal detection systems whilst deploying more regulatory gateways to enhance the service offering to our client base. Significant investment in PV technology and transformational capabilities will continue into 2023.
Our focus in 2023 will be integrating the PrimeVigilance solution components already delivered in 2022 and completing additional solutions required to deliver the automation vision for our pharmacovigilance business. The integration of our solutions across data intake and safety data processing, combined with data reporting and advanced analytics, will enable us to deliver a wide range of benefits including increased throughput and reduction in processing time, increased quality and accuracy across of data management, driving efficiency and a reduction in manual effort, improved regulatory reporting and an improved client value proposition and competitiveness in the market.
Constantly evolving regulations, geographic expansion, investment in technology and people, combined with high renewal rates and strong client retention, mean that our pharmacovigilance business is well placed to continue delivering its growth strategy into 2023 and beyond.
CLINICAL RESEARCH SERVICES (CRO)
The CRO market has continued to experience significant expansion with strong annual growth in oncology and rare disease research expected to continue over the coming years. This specific growth in Ergomed's core focus areas is underpinned by broader market trends, including increased outsourcing penetration with growing demand for specialised and bespoke clinical trial services.
Financial Performance
The addition of a proportion of ADAMAS' revenues, alongside organic growth in CRO, saw revenues increase by GBP13.3 million from GBP58.1 million in 2021 to GBP71.4 million in 2022 (22.9% increase, 14.7% on a constant currency basis). This included a service fee revenue increase of GBP10.9 million from GBP39.9 million to GBP50.8 million (27.3% increase, 18.9% on a constant currency basis).
Oncology and Rare Disease Focus
Strong growth in the rare disease and oncology markets is expected to outpace the wider CRO market over the medium-term as oncology and rare disease trials are generally more complex and have a higher level of unmet medical need. Furthermore, studies are often confronted by challenges including low patient enrolment, increased research costs and trial protocols with increased study-related procedures. This helps to explain why oncology and rare disease trials receive the highest levels of funding and makes the case for outsourcing to CROs which are better positioned to address these challenges. Ergomed's expertise and focus in these specialist areas supports its CRO growth strategy and is evidenced by the fact that over 80% of 2022 revenues related to oncology and rare disease, where similarly specialist expertise is also required.
The orphan drug market, which refers to drugs used to treat rare diseases, is forecast to reach c. $24.2 billion by 2027, almost doubling in size from 2020 and growing at a CAGR of c.+12% over the forecast period. Ergomed has continued to strengthen relationships with biopharmaceutical sponsor companies, patient advocacy groups, technology innovators and service providers to accelerate rare disease drug development.
Patient and Clinician Focus
Ergomed's unique and innovative site support model for clinical trials focuses on patient advocacy whilst simultaneously reducing the burden on trial physicians. Ergomed offers site management to support sites in enhanced training, effective patient recruitment, patient retention and providing solutions to logistical and administrative complexities of clinical trials.
Ergomed's focus on oncology and rare disease is one of its core strengths. Drug development for rare and orphan diseases is challenging for many reasons, including complex biology, limited knowledge of the history and progression of the disease and the inherently small patient population available for clinical trials who are usually geographically dispersed. Ergomed adopts a patient-centric approach, working closely with patient advocacy groups throughout development to fully understand patient and caregiver needs. Greater patient engagement optimises clinical study design, outcome measures and endpoint development and Ergomed maintains a Patient Organisation Advisory Board, comprising representatives of patient groups in the field of rare diseases with a dedicated Patient Engagement Officer.
Business Development
Ergomed's consolidated order book maintained strong growth in 2022. The order book continues to highlight Ergomed's growing presence in its key markets as well as the resilience of the sectors in which it operates. In addition, it provides strong visibility of revenue for 2023 and later years.
Outlook
Ergomed continued to make excellent progress in delivering its growth strategy in 2022. The acquisition of ADAMAS broadened our service offering and global presence to support the organic growth in both our pharmacovigilance and CRO businesses.
Ergomed has started 2023 in a strong position and remains well positioned for the year ahead and beyond. We remain focused on our vision to achieve global leadership in specialised pharmaceutical services addressing unmet medical needs and patient safety.
For and on behalf of the Board of Directors
Miroslav Reljanović
Executive Chairman
20 March 2023
Financial review
Robust 2022 financial performance provides a strong platform for sustained future growth.
Ergomed delivered another strong financial performance in 2022. The Group demonstrated its continued resilience throughout the year with organic and acquisitive growth in both the CRO and PV divisions, positioning Ergomed well for 2023.
The Group ended the 2022 financial year in a robust financial position. The closing order book was at a record high level of GBP295 million at 31 December 2022, underpinning the strength of the Group and potential revenue growth for 2023 and beyond. The acquisition of ADAMAS has expanded Ergomed's global reach in the US, Europe and APAC, delivering growth in both the CRO and PV divisions as well as broadening our service offering and client relationships. Our strong cash conversion and substantial unutilised bank facilities provide support for organic investment and growth in future years, as well as enabling us to continue our disciplined M&A strategy.
KPIs and APMs
Key Performance Indicators (KPIs)
The table below summarises the KPIs that management uses to measure the financial performance of the Group.
GBP millions (unless otherwise stated) 2022 2021 --------------------------------------- ----- ----- Total revenue 145.3 118.6 --------------------------------------- ----- ----- CRO 71.4 58.1 PV 73.9 60.5 --------------------------------------- ----- ----- Gross profit 59.1 48.4 Gross margin 40.7% 40.8% EBITDA 24.7 19.7 Adjusted EBITDA 28.4 25.4 Basic adjusted earnings per share 42.6p 41.1p Cash generated from operations 23.6 22.0 Cash and cash equivalents 19.1 31.2 Order book 295.0 239.7 --------------------------------------- ----- -----
Alternative Performance Measures ('APMs')
In measuring and reporting financial information, management reviews Alternative Performance Measures (APMs), such as EBITDA, adjusted EBITDA and basic adjusted earnings per share, which are not defined measures under financial reporting standards. Management believes that these measures, when considered in conjunction with defined financial reporting measures, provide management and stakeholders with a broader understanding of the performance of the business.
Operating profit is the financial reporting measure under IFRS most comparable to EBITDA and adjusted EBITDA.
The Directors make certain adjustments to EBITDA to derive adjusted EBITDA, which they consider more reflective of the Group's underlying trading performance, enabling comparisons to be made with prior periods. Certain adjustments include share-based payments and associated tax charges, acquisition costs and pay in lieu and non-compete compensation. These costs are cash costs but are not considered as normal recurring trading items and therefore are not included in adjusted EBITDA.
Operating profit is reconciled to EBITDA and adjusted 2022 2021 EBITDA as follows: GBP000's GBP000's ------------------------------------------------------- --------- --------- Operating profit 18,873 14,624 ------------------------------------------------------- --------- --------- Adjusted for: Depreciation and amortisation charges within 'Other selling, general & administration expenses' 3,075 3,447 Amortisation of acquired fair valued intangible assets 2,763 1,599 ------------------------------------------------------- --------- --------- EBITDA 24,711 19,670 Adjusted for: Share-based payment charge 1,049 817 Acquisition costs 1,669 1,776 Earn-out consideration - 2,949 Pay in lieu and non-compete compensation 927 211 Adjusted EBITDA 28,356 25,423 ------------------------------------------------------- --------- ---------
Adjusted basic earnings per share is calculated on a similar basis to basic earnings per share but uses a profit measure which, like adjusted EBITDA, is adjusted for non-recurring trading items (see note 8 of the financial statements).
Management reviews the Group's performance monthly on a constant currency basis. Constant currency is calculated by restating 2022 performance using 2021 exchange rates for the relevant period. Constant currency allows management to review underlying performance without the impact of foreign exchange.
Growth
Ergomed's Clinical Research Services (CRO) and Pharmacovigilance (PV) divisions have continued to demonstrate strong growth throughout 2022. Bolstered by the acquisition of ADAMAS in February 2022, the Company continues to enhance its service offering and geographical presence, resulting in a strong order book going into 2023 and giving the Company confidence for future years.
Revenues for 2022 were GBP145.3 million on a reported basis, an increase of 22.5% over prior year (2021: GBP118.6 million), in line with expectations (up 14.5% in constant currency). Gross profit increased from GBP48.4 million in 2021 to GBP59.1 million in 2022 with gross margin maintained at 41% (2021: 41%) through resilient and effective cost management in the period.
The CRO division saw total revenue increase by 22.9% from GBP58.1 million in 2021 to GBP71.4 million in 2022 (up 14.7% in constant currency). This included service fee revenue up 27.3% to GBP50.8 million (2021: GBP39.9 million) (up 18.9% in constant currency).
The PV division saw total revenue increase by 22.1% from GBP60.5 million in 2021 to GBP73.9 million in 2022 (up 14.3% in constant currency).
The strong revenue growth and continued focus on profitability resulted in adjusted EBITDA in line with expectations at GBP28.4 million, an increase of 11.5% over the prior year (2021: GBP25.4 million).
Financial Strength
The growth in revenue and profitability achieved during 2022 led to strong cash generation at an operating level. Cash generated from operations before changes in working capital and provisions was GBP23.6 million, an increase of GBP1.6 million over the prior year (2021: GBP22.0 million).
The Group's balance sheet continued to strengthen with net assets increasing from GBP67.2 million as at 31 December 2021 to GBP84.7 million at 31 December 2022. Cash and cash equivalents decreased by GBP12.1 million to GBP19.1 million (2021: GBP31.2 million) following the cash payment of GBP24.2 million in February 2022 for the acquisition of ADAMAS. Excluding the one-off cash payment, cash and cash equivalents increased by GBP12.1 million from 2021 to 2022. The Group remained debt free at year end.
Outlook
Ergomed continued to make excellent progress in delivering its growth strategy in 2022. The acquisition of ADAMAS broadened our service offering and global presence to support the organic growth in both our pharmacovigilance and CRO businesses. In 2023, Ergomed remains focused on delivering our vision to achieve global leadership in specialised pharmaceutical services addressing unmet medical needs and patient safety.
Jonathan Curtain
Chief Financial Officer
20 March 2023
Consolidated income statement
For the year ended 31 December 2022
2022 2021
Notes GBP000s GBP000s
--------------------------------------------------- ----- -------- --------
2,
Revenue 3 145,262 118,581
Cost of sales (64,712) (52,191)
--------------------------------------------------- ----- -------- --------
Reimbursable expenses (21,405) (18,028)
--------------------------------------------------- ----- -------- --------
Gross profit 3 59,145 48,362
--------------------------------------------------- ----- -------- --------
Selling, general and administration expenses (41,506) (35,201)
--------------------------------------------------- ----- -------- --------
Selling, general and administration expenses
comprises:
--------------------------------------------------- --------
Other selling, general and administration expenses (36,072) (28,060)
--------------------------------------------------- ----- -------- --------
Amortisation of acquired fair valued intangible
assets (2,763) (1,599)
--------------------------------------------------- ----- -------- --------
Share-based payment charge (1,002) (817)
--------------------------------------------------- ----- -------- --------
Contingent consideration for acquisitions - (2,949)
--------------------------------------------------- ----- -------- --------
Acquisition costs 4 (1,669) (1,776)
--------------------------------------------------- ----- -------- --------
Research and development expenses (121) (130)
Other operating income 5 1,355 1,593
--------------------------------------------------- ----- -------- --------
Operating profit 18,873 14,624
Finance income - 1
Finance costs 6 (920) (361)
--------------------------------------------------- ----- -------- --------
Profit before taxation 17,953 14,264
--------------------------------------------------- ----- -------- --------
Income tax expense (2,971) (1,590)
--------------------------------------------------- ----- -------- --------
Profit for the year 14,982 12,674
--------------------------------------------------- ----- -------- --------
All activities in the current and prior period relate to continuing operations.
Consolidated statement of comprehensive income
For the year ended 31 December 2022
2022 2021
Notes GBP000s GBP000s
-------------------------------------------- ------ -------- --------
Profit for the year 14,982 12,674
---------------------------------------------------- -------- --------
Items that may be classified subsequently
to profit or loss:
-------------------------------------------- ------ -------- --------
Foreign exchange differences on translation
of foreign operations 2,979 (682)
---------------------------------------------------- -------- --------
Other comprehensive (expense) for the year
net of tax 2,979 (682)
---------------------------------------------------- -------- --------
Total comprehensive income for the year 17,961 11,992
---------------------------------------------------- -------- --------
2022 2021
pence pence
------------------------- ------ ------
Earnings Per Share (EPS) 7
Basic 30.1 26.1
Diluted 29.2 25.1
------------------------- ------ ------
Unaudited
2022 2021
GBP000s GBP000s
------------------------------------------------------- -------- --------
ADJUSTED EBITDA
(Adjusted Earnings Before Interest, Tax, Depreciation
and Amortisation) 8 28,356 25,423
------------------------------------------------------- -------- --------
2022 2021
pence pence
------------------------------------------------------- -------- --------
Adjusted Earnings Per Share (Adjusted EPS) 7
Basic 42.6 41.1
Diluted 41.4 39.4
------------------------------------------------------- -------- --------
Profit or loss and each component of other comprehensive income are attributable to the owners of the Company.
Consolidated balance sheet
As at 31 December 2022
2022 2021
Notes GBP000s GBP000s
------------------------------ ----- --------- --------
Non-current assets
Goodwill 9 41,404 23,903
Other intangible assets 10 15,844 7,653
Property, plant and equipment 2,466 1,966
Right-of-use assets 2,864 2,691
Deferred tax asset 8,530 9,433
------------------------------ ----- --------- --------
71,108 45,646
------------------------------ ----- --------- --------
Current assets
Trade and other receivables 11 34, 450 25,143
Contract assets 4,611 3,958
------------------------------ ----- --------- --------
Cash and cash equivalents 12 19,096 31,243
------------------------------ ----- --------- --------
Derivative assets 84 -
------------------------------ ----- --------- --------
58,241 60,344
------------------------------ ----- --------- --------
Total assets 129,349 105,990
------------------------------ ----- --------- --------
Current liabilities
Lease liabilities (1,236) (1,249)
Trade and other payables 13 (17, 640) (14,899)
Derivative liabilities (134) (261)
Contract liabilities (18,749) (17,799)
Current tax liability (1,134) (1,172)
------------------------------ ----- --------- --------
(38,893) (35,380)
------------------------------ ----- --------- --------
Net current assets 19,348 24,964
------------------------------ ----- --------- --------
Non-current liabilities
Lease liabilities (1,672) (1,432)
Provisions (144) (19)
------------------------------ ----- --------- --------
Deferred tax liability (3,891) (1,920)
------------------------------ ----- --------- --------
(5,707) (3,371)
------------------------------ ----- --------- --------
Total liabilities (44,600) (38,751)
------------------------------ ----- --------- --------
Net assets 84,749 67,239
------------------------------ ----- --------- --------
Equity
Share capital 14 503 493
Share premium account 1,007 545
Merger reserve 1,349 1,349
Share-based payment reserve 6,861 5,859
Translation reserve 2,912 (67)
Retained earnings 72,117 59,060
------------------------------ ----- --------- --------
Total equity 84,749 67,239
------------------------------ ----- --------- --------
Approved by the Board of Directors and authorised for issue on 20 March 2023.
Jonathan Curtain
Chief Financial Officer
Company Registration No. 04081094
Consolidated statement of changes in equity
For the year ended 31 December 2022
Share-
Share based
Share premium Merger payment Translation Retained Total
capital account reserve reserve reserve earnings equity
Notes GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Balance at 1 January 2021 489 3 1,349 5,042 615 45,368 52,866
Profit for the year - - - - - 12,674 12,674
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Other comprehensive expense
for the year - - - - (682) - (682)
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Total comprehensive income - - - - (682) 12,674 11,992
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Transactions with shareholders
Shares issued during the
year for cash 14 4 542 - - - - 546
Share-based payment charge
for the year - - - 817 - - 817
Deferred tax credit taken
directly to equity - - - - - 1,018 1,018
Total transactions with
shareholders 4 542 - 817 - 1,018 2,381
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Balance at 31 December
2021 493 545 1,349 5,859 (67) 59,060 67,239
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Profit for the year - - - - - 14,982 14,982
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Other comprehensive income
for the year - - - - 2,979 - 2,979
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Total comprehensive income - - - - 2,979 14,982 17,961
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Transactions with shareholders
Shares issued during the
year for cash 14 10 462 - - - - 472
Share-based payment charge
for the year - - - 1,002 - - 1,002
Deferred tax debit taken
directly to equity - - - - - (1,925) (1,925)
Total transactions with
shareholders 10 462 - 1,002 - (1,925) (451)
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Balance at 31 December
2022 503 1,007 1,349 6,861 2,912 72,117 84,749
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Consolidated cash flow statement
For the year ended 31 December 2022
2022 2021
Notes GBP000s GBP000s
-------------------------------------------------- ----- -------- --------
Cash flows from operating activities
Profit for the year 14,982 12,674
Adjustment for:
Amortisation and depreciation 5,838 5,046
Profit on disposal of non-current assets (109) (413)
Share-based payment charge 1,002 817
RDEC income 5 (698) (956)
Finance costs 6 920 361
Other non-cash movements (1, 275) (25)
Exceptional items (earn-out on acquisitions) - 2,949
Taxation expense 2,971 1,590
-------------------------------------------------- ----- -------- --------
Operating cash inflow before changes in working
capital and provisions 23,631 22,043
(Increase)/ decrease in trade, other receivables
and contract assets (6,605) 367
Increase in trade, other payables and contract
liabilities 1,378 217
Increase/ (decrease) in provisions 125 (298)
-------------------------------------------------- ----- -------- --------
Cash generated from operating activities 18,529 22,329
-------------------------------------------------- ----- -------- --------
Taxation paid (3,680) (3,646)
-------------------------------------------------- ----- -------- --------
Net cash inflow from operating activities 14,849 18,683
-------------------------------------------------- ----- -------- --------
Investing activities
Finance income received - 1
Acquisition of intangible assets 10 (634) (30)
Acquisition of property, plant and equipment (1,282) (953)
Proceeds from the sale of property, plant and
equipment 32 103
Proceeds on the disposal of equity investments 23 -
Acquisition of subsidiaries, net of cash acquired (24,243) -
Acquisition related earn-out paid - (3,267)
-------------------------------------------------- ----- -------- --------
Net cash outflow from investing activities (26,104) (4,146)
-------------------------------------------------- ----- -------- --------
Financing activities
Proceeds from the issue of new ordinary shares 14 472 546
Finance costs paid (761) (169)
Proceeds from borrowings 15,000 -
Repayment of borrowings (15,000) -
Payment of lease liabilities (2,084) (2,490)
-------------------------------------------------- ----- -------- --------
Net cash outflow from financing activities (2,373) (2,113)
-------------------------------------------------- ----- -------- --------
Net change in cash and cash equivalents (13,628) 12,424
Effect of foreign currency on cash balances 1,481 (175)
-------------------------------------------------- ----- -------- --------
Cash and cash equivalents at start of year 31,243 18,994
-------------------------------------------------- ----- -------- --------
Cash and cash equivalents at end of year 12 19,096 31,243
-------------------------------------------------- ----- -------- --------
Notes to the financial statements
For the year ended 31 December 2022
1. Basis of preparation
The consolidated financial statements of the Group have been prepared on the going concern basis in accordance with UK-adopted international accounting standards ("UK-adopted IFRS").
The consolidated financial statements have been prepared on a historical cost basis except that the following assets and liabilities are stated at their fair value: certain financial assets and financial liabilities measured at fair value.
The same accounting policies, presentation and methods of computation have been followed in these condensed financial statements as were applied in the preparation of the Group's financial statements for the year ended 31 December 2022.
The financial statements for 2021 have been delivered to the Registrar of Companies and the 2022 financial statements will be delivered after the Annual General Meeting on 22 June 2023.
The Auditor has reported on both sets of accounts without qualification, did not draw attention to any matters by way of emphasis without qualifying their report, and did not issue a statement under Section 498(2) or 498(3) of the Companies Act 2006.
Going concern
The financial statements have been prepared on the going concern basis, which assumes that the Group and Company will have sufficient funds to continue in operational existence for the foreseeable future, being a period of no less than 12 months from the date of signing of the financial statements. The Directors have reviewed a cash flow forecast for the period to 31 December 2025, which is derived from the 2023 Board approved budget and a medium-term cash flow forecast through to 31 December 2025, which is an extrapolation of the approved budget under multiple scenarios and growth rates. The 2023 budget and medium -- term forecast represents the Directors' best estimate of the Group's future performance and necessarily includes a number of assumptions, including the level of revenues. The 2023 budget and medium-term forecast demonstrate that the Directors have a reasonable expectation that the Group will be able to meet its liabilities as they fall due for a period of at least 12 months from the date of approval of the financial statements
On the basis of the above factors and, having made appropriate enquiries, the Directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing these financial statements.
2. Revenue
The Group's revenue is disaggregated by geographical market and major service lines:
Geographical market and major service lines
2022
Major service lines
--------------------------------------- ----------------------------
CRO PV Total
GBP000s GBP000s GBP000s
--------------------------------------- -------- -------- --------
Geographical market by client location
UK 11,593 8,642 20,235
Rest of Europe, Middle East and Africa 14,537 14,726 29,263
North America 42,238 48,323 90,561
Asia & Australia 2,995 2,208 5,203
--------------------------------------- -------- -------- --------
71,363 73,899 145,262
--------------------------------------- -------- -------- --------
2021
Major service lines
--------------------------------------- ----------------------------
CRO PV Total
GBP000s GBP000s GBP000s
--------------------------------------- -------- -------- --------
Geographical market by client location
UK 5,415 8,785 14,200
Rest of Europe, Middle East and Africa 9,585 12,981 22,566
North America 38,388 36,028 74,416
Asia & Australia 4,689 2,710 7,399
--------------------------------------- -------- -------- --------
58,077 60,504 118,581
--------------------------------------- -------- -------- --------
3. Operating segments
Products and services from which reportable segments derive their revenues
Information reported to the Company's Board, which is the chief operating decision maker ('CODM'), for the purpose of resource allocation and assessment of segment performance, is focused on the Group operating as two business segments, being Clinical Research Services ('CRO') and Pharmacovigilance ('PV'). All revenues arise from direct sales to customers. The segment information reported below all relates to continuing operations. Both CRO and PV segments include the associated revenues of ADAMAS Consulting Group Limited (ADAMAS) following its acquisition by the Group in the year.
The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment profit represents the gross profit earned by each segment. Other amounts, including selling, general and administration expenses were not allocated to a segment. This was the measure reported to the CODM for the purpose of resource allocation and assessment of segment performance.
2022
Consolidated
CRO PV total
GBP000s GBP000s GBP000s
------------------------------------------------ -------- -------- ------------
Segment revenues 71,363 73,899 145,262
Cost of sales (28,629) (36,083) (64,712)
------------------------------------------------ -------- -------- ------------
Reimbursable expenses (20,647) (758) (21,405)
------------------------------------------------ -------- -------- ------------
Segment gross profit 22,087 37,058 59,145
------------------------------------------------ -------- -------- ------------
Selling, general and administration expenses (41,506)
------------------------------------------------ -------- -------- ------------
Selling, general and administration expenses
comprises:
------------------------------------------------ ------------
Other selling, general and administration
expenses (36,072)
------------------------------------------------ ------------
Amortisation of acquired fair valued intangible
assets (2,763)
------------------------------------------------ ------------
Share-based payment charge (1,002)
------------------------------------------------ ------------
Contingent consideration for acquisitions -
------------------------------------------------ -------- -------- ------------
Acquisition costs (1,669)
------------------------------------------------ -------- -------- ------------
Research and development expenses (121)
Other operating income 1,355
------------------------------------------------ -------- -------- ------------
Operating profit 18,873
Finance income -
Finance costs (920)
------------------------------------------------ -------- -------- ------------
Profit before tax 17,953
------------------------------------------------ -------- -------- ------------
2021
Consolidated
CRO PV total
GBP000s GBP000s GBP000s
------------------------------------------------ -------- -------- ------------
Segment revenues 58,077 60,504 118,581
Cost of sales (22,906) (29,285) (52,191)
------------------------------------------------ -------- -------- ------------
Reimbursable expenses (17,621) (407) (18,028)
------------------------------------------------ -------- -------- ------------
Segment gross profit 17,550 30,812 48,362
------------------------------------------------ -------- -------- ------------
Selling, general and administration expenses (35,201)
------------------------------------------------ -------- -------- ------------
Selling, general and administration expenses
comprises:
------------------------------------------------ ------------
Other selling, general and administration
expenses (28,060)
------------------------------------------------ ------------
Amortisation of acquired fair valued intangible
assets (1,599)
------------------------------------------------ ------------
Share-based payment charge (817)
------------------------------------------------ ------------
Contingent consideration for acquisitions (2,949)
------------------------------------------------ -------- -------- ------------
Acquisition costs (1,776)
------------------------------------------------ -------- -------- ------------
Research and development expenses (130)
Other operating income 1,593
------------------------------------------------ -------- -------- ------------
Operating profit 14,624
Finance income 1
Finance costs (361)
------------------------------------------------ -------- -------- ------------
Profit before tax 14,264 ------------------------------------------------ -------- -------- ------------
4. Acquisition costs
2022 2021
GBP000s GBP000s
------------------------------------ -------- --------
Acquisition of MedSource 79 406
------------------------------------ -------- --------
Acquisition of ADAMAS (note 15) 816 240
------------------------------------ -------- --------
Aborted and other acquisition costs 774 1,130
------------------------------------ -------- --------
1,669 1,776
------------------------------------ -------- --------
In line with Company strategy, Ergomed has considered a number of potential acquisitions in 2022. During 2022, costs of GBP79,000 were incurred in relation to the acquisition of MedSource (2021: GBP406,000) and GBP816,000 were incurred in relation to the acquisition of ADAMAS (2021: GBP240,000). Additionally, Ergomed incurred costs of GBP774,000 in relation to aborted acquisitions (2021: GBP1,130,000).
5. Other operating income
Research and Development Expenditure Credit ('RDEC')
The Parent company and UK subsidiaries is eligible to claim tax credits against certain R&D expenditure under the Research and Development Expenditure Credit ('RDEC') scheme. During the year the Group submitted claims in respect of the 2021 and 2022 financial years and recognised the related profit and loss charge within other operating income in the current financial year.
2022 2021
GBP000s GBP000s
--------------------- -------- --------
Foreign grant income 203 629
RDEC income 698 956
--------------------- -------- --------
Other income 454 8
--------------------- -------- --------
1,355 1,593
--------------------- -------- --------
6. Finance costs
2022 2021
GBP000s GBP000s
-------------------------------- -------- --------
Loan and other interest payable 455 170
-------------------------------- -------- --------
Interest on lease liabilities 158 191
-------------------------------- -------- --------
Other finance costs 307 -
-------------------------------- -------- --------
920 361
-------------------------------- -------- --------
7. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings
2022 2021
GBP000s GBP000s
---------------------------------------------------- -------- --------
Profit for the purposes of earnings per share
- net profit attributable to owners of the Company 14,982 12,674
---------------------------------------------------- -------- --------
Adjust for:
Amortisation of acquired fair valued intangible
assets (note 10) 2,763 1,605
Share-based payment charge 1,049 817
Acquisition-related contingent consideration - 2,949
Acquisition costs (note 4) 1,669 1,776
Pay in lieu and non-compete compensation 927 211
Tax effect of adjusting items (176) (102)
---------------------------------------------------- -------- --------
Adjusted earnings for the purposes of adjusted
earnings per share (unaudited) 21,214 19,930
---------------------------------------------------- -------- --------
Number of shares
2022 2021
Number Number
------------------------------------------------ ---------- ----------
Weighted average number of Ordinary Shares for
the purposes of basic earnings per share 49,775,107 48,466,740
------------------------------------------------ ---------- ----------
Incremental shares in respect of employee share
schemes 1,515,528 2,102,588
------------------------------------------------ ---------- ----------
Weighted average number of Ordinary Shares for
the purposes of diluted earnings per share 51,290,635 50,569,328
------------------------------------------------ ---------- ----------
Earnings per share (EPS)
2022 2021
pence pence
-------- ------ ------
Basic 30.1 26.1
-------- ------ ------
Diluted 29.2 25.1
-------- ------ ------
Adjusted earnings per share (Adjusted EPS)
2022 2021
Unaudited pence pence
---------- ------ ------
Basic 42.6 41.1
---------- ------ ------
Diluted 41.4 39.4
---------- ------ ------
8. EBITDA and Adjusted EBITDA
2022 2021
Unaudited GBP000's GBP000's
------------------------------------------------------- --------- ---------
Operating profit 18,873 14,624
------------------------------------------------------- --------- ---------
Adjusted for:
------------------------------------------------------- --------- ---------
Depreciation and amortisation charges within selling,
general & administration expenses 3,075 3,447
------------------------------------------------------- --------- ---------
Amortisation of acquired fair valued intangible
assets 2,763 1,599
------------------------------------------------------- --------- ---------
EBITDA 24,711 19,670
------------------------------------------------------- --------- ---------
Adjusted for:
------------------------------------------------------- --------- ---------
Share-based payment charge and associated taxes* 1,049 817
------------------------------------------------------- --------- ---------
Acquisition related contingent compensation - 2,949
------------------------------------------------------- --------- ---------
Acquisition costs (note 4) 1,669 1,776
------------------------------------------------------- --------- ---------
Pay in lieu and non-compete compensation 927 211
------------------------------------------------------- --------- ---------
Adjusted EBITDA 28,356 25,423
------------------------------------------------------- --------- ---------
*Includes GBP47,000 of employment tax expense incurred by the Group in relation to share options exercised in the year.
9. Goodwill
Goodwill GBP000s ------------------------------------------------------- ------- Cost ------------------------------------------------------- ------- At 1 January 2021 26,748 ------------------------------------------------------- ------- Fair value adjustment arising on business combinations (477) ------------------------------------------------------- ------- Translation movement (225) ------------------------------------------------------- ------- At 31 December 2021 26,046 Arising on business combinations 15,281 ------------------------------------------------------- ------- Translation movement 1,680 ------------------------------------------------------- ------- At 31 December 2022 43,547 ------------------------------------------------------- ------- Impairment losses ------------------------------------------------------- ------- At 1 January 2021 and 2022 2,143 ------------------------------------------------------- ------- At 31 December 2021 and 2022 2,143 Net book value At 31 December 2022 41,404 ------------------------------------------------------- ------- At 31 December 2021 23,903 ------------------------------------------------------- -------
The Goodwill arising on business combinations during the year ended 31 December 2022 relates to the acquisition of ADAMAS Consulting Group Limited and its subsidiaries ("ADAMAS").
Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units ('CGUs') that are expected to benefit from that business combination. The carrying amount of goodwill has been allocated as follows:
2022 2021
Cash-generating unit GBP000s GBP000s
--------------------- -------- --------
CRO 23,157 10,190
--------------------- -------- --------
PV 18,247 13,713
--------------------- -------- --------
41,404 23,903
--------------------- -------- --------
10. Other intangible assets
Customer Customer In-process
Software contracts relationships Brands R&D Technology Total
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
Cost
At 1 January 2021 4,140 2,974 9,321 1,722 15,200 419 33,776
IFRS 3 revaluation - 90 240 38 - - 368
Additions 30 - - - - - 30
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
Disposals (211) - - - - - (211)
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
Translation movement (7) 6 2 (21) - - (20)
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
At 31 December
2021 3,952 3,070 9,563 1,739 15,200 419 33,943
Acquisitions 10 723 8,541 738 - - 10,012
Additions 634 - - - - - 634
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
Translation movement 15 151 705 114 - - 985
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
At 31 December
2022 4,611 3,944 18,809 2,591 15,200 419 45,574
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
Amortisation
At 1 January 2021 2,651 1,811 3,534 543 15,200 419 24,158
Charge for the
year 577 425 906 267 - - 2175
Translation movement (6) (5) (20) (12) - - (43)
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
At 31 December
2021 3,222 2,231 4,420 798 15,200 419 26,290
Charge for the
year 391 1,089 1,195 442 - - 3,117
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
Translation movement 7 94 182 40 - - 323
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
At 31 December
2022 3,620 3,414 5,797 1,280 15,200 419 29,730
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
Net book value
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
At 31 December
2022 991 530 13,012 1,311 - - 15,844
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
At 31 December
2021 730 839 5,143 941 - - 7,653
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
11. Trade and other receivables
2022 2021
GBP000s GBP000s
--------------------------- -------- --------
Trade receivables 28,006 20,234
Other receivables 970 869
Prepayments 2,971 1,818
--------------------------- -------- --------
Corporation tax receivable 2,503 2,222
--------------------------- -------- --------
34,450 25,143
--------------------------- -------- --------
12. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term deposits.
2022 2021
GBP000s GBP000s
-------- --------
Cash at bank 19,096 31,243
------------- -------- --------
The carrying amount of cash and cash equivalents approximates
to their fair value at the reporting date and are 2022 2021
denominated in the following currencies: GBP000s GBP000s
-------------------------------------------------------------- -------- --------
GBP 5,834 15,083
Euro 2,437 3,118
USD 8,483 11,757
-------------------------------------------------------------- -------- --------
Other 2,342 1,285
-------------------------------------------------------------- -------- --------
19,096 31,243
-------------------------------------------------------------- -------- --------
13. Trade and other payables
2022 2021
GBP000s GBP000s
----------------------------------- -------- --------
Trade payables 6,507 3,102
Amounts payable to related parties - 3
Social security and other taxes 2,122 1,302
Other payables 1,564 1,541
Accruals 7,447 8,951
----------------------------------- -------- --------
17,640 14,899
----------------------------------- -------- --------
14. Ordinary share capital
Group and Company
2022 2021
--------------------------------- ------------------- -------------------
Number GBP000s Number GBP000s
--------------------------------- ---------- ------- ---------- -------
Ordinary shares of GBP0.01 each
At 1 January 49,293,629 493 48,719,526 487
Exercise of share options 1,007,176 10 418,545 4
--------------------------------- ---------- ------- ---------- -------
Shares to be issued for non-cash
consideration - - 155,558 2
--------------------------------- ---------- ------- ---------- -------
At 31 December 50,300,805 503 49,263,629 493
--------------------------------- ---------- ------- ---------- -------
15. Acquisition of subsidiary - ADAMAS
On 9 February 2022, the Group acquired all the issued share capital in ADAMAS Consulting Group Limited and its subsidiaries ("ADAMAS"). The acquisition has been completed for a cash consideration of GBP25.6 million, representing an enterprise value of GBP24.2 million and cash acquired of GBP1.4 million. Ergomed Plc drew down on its GBP15.0 million on multi-currency revolving credit facility ('RCF) on 1 February 2022 and utilised the funds and existing Group cash reserves to fund the acquisition.
ADAMAS is an international specialist consultancy offering a full range of independent quality assurance services and specialising in the audit of pharmaceutical manufacturing processes, as well as auditing clinical trials and pharmacovigilance systems.
In the period from 9 February 2022 to 31 December 2022, ADAMAS contributed revenue of GBP10.2 million and profit of GBP1.0 million to the Group's results. If the acquisition had occurred on 1 January 2022, management estimates that consolidated revenue would have been GBP10.8 million, and profit for the period would have been GBP1.0 million.
In determining these amounts, management has assumed that the fair value adjustments, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January 2022.
Identifiable assets acquired and liabilities assumed Fair Value
GBP000s
----------------------------------------------------- ----------
Intangible assets 10,013
Property, plant and equipment 19
Deferred tax assets 3
Trade and other receivables 1,864
Contract assets 233
Cash and equivalents 1,411
Trade and other payables (1,252)
Contract liabilities (14)
Taxation payable (32)
Deferred tax liability (2,412)
Total identifiable net assets 9,833
Goodwill 15,821
Total consideration 25,654
Satisfied by
Cash consideration 25,654
Total consideration 25,654
==========
Net cash outflow arising on acquisition
Cash consideration 25,654
Less: cash and cash equivalent
balances acquired (1,411)
Transaction expenses 1,056
----------
25,299
==========
Included within intangible assets are customer relationships of GBP8,541,000, brand of GBP738,000 and contracted order book of GBP723,000 were recognised on acquisition. The Group incurred acquisition related costs of GBP240,000 related to due diligence and legal activities in the year ended 31 December 2021 and GBP816,000 in the year ended 31 December 2022. These costs have been included in acquisition costs within selling and administrative expenses in the Group's consolidated income statement.
On 30 June 2022, the purchase price allocation (PPA) was prepared on a provisional basis in accordance with IFRS 3. During the measurement period the Group finalised the independent valuation of the intangible assets (customer relationships, brand and contracted orderbook) recognised on acquisition, the measurement of deferred tax liabilities and the audit of the acquired balance sheet. Adjustments were made to the provisional PPA, which was disclosed in the Group's condensed consolidated financial statements for the six months ended 30 June 2022 resulting in, a decrease in the fair value of intangibles assets recognised on acquisition of GBP93,000, an increase in Goodwill of GBP1,000, a decrease in the deferred tax liability of GBP22,000 and an increase in the acquired net assets of GBP70,000
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