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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 2019 to Apr 2024
TIDMERGO
RNS Number : 5412N
Ergomed plc
25 September 2019
PRESS RELEASE
Interim results for the six months ended 30 June 2019
-- Revenue GBP35.2m (up 36.8%) -- Adjusted EBITDA GBP6.5m vs GBP0.0m in H1 2018 -- Backlog GBP118.3m (up 26.9%)
Guildford, UK - 25 September 2019: Ergomed plc, (LSE: ERGO) ('Ergomed' or the 'Company'), a company focused on providing specialised services to the global pharmaceutical industry, announces its unaudited interim results for the six months ended 30 June 2019.
Financial Summary
Hot Features
Premium
First First % change
Half Half 2018
Unaudited 2019
Figures in GBP millions, unless
otherwise stated
(Note
1)
---------------------------------- ------ ----------- ---------
Total Revenue 35.2 25.7 +36.8
Gross Profit 14.5 9.0 +61.4
Gross Margin (%) 41.2% 34.9% -
EBITDA (adjusted) (Note 2) 6.5 (0.0) -
Cash at 30 June 8.1 7.4 +9.7
Backlog at 30 June 118.3 93.2 +26.9
Basic earnings per share (pence) 7.8p (5.7)p -
---------------------------------- ------ ----------- ---------
Notes:
(1) First half 2018 originally reported under IAS 18 has been restated following the adoption of IFRS15 for the 2018 full year results.
(2) EBITDA (adjusted) is defined as profit before tax for the period plus finance costs, depreciation and amortization, share-based payment charge, acquisition related contingent consideration, change in fair value of contingent consideration, acquisition costs and exceptional items (Note 10 to the financial statements).
Dr Miroslav Reljanović, Executive Chairman of Ergomed, said:
"During the first half of 2019 Ergomed has taken further significant steps to fully focus on its services business model, execute its strategy to become a leading specialised CRO services business, and fulfil its future growth potential.
"We have strengthened the executive team and Board and further developed our differentiated offering in the clinical services marketplace both through the integration of previous acquisitions and through commercial integration. With an improved financial performance over the first half of 2019 and a strong backlog and H1 sales, Ergomed is now positioned for success through continued growth."
Key Financial Highlights
-- Revenue of GBP35.2 million, up 36.8% on a comparable IFRS 15 basis (H1 2018: GBP25.7 million)
-- EBITDA (adjusted) of GBP6.5 million (H1 2018: break-even GBP0.0 million) -- Basic EPS profit of 7.8 p (H1 2018: (5.7)p loss) -- Cash and cash equivalents of GBP8.1 million at 30 June 2019 (30 June 2018: GBP7.4 million)
-- Backlog of future contracted revenue GBP118.3 million, up 26.9% (30 June 2018: GBP93.2 million)
Operational Highlights (including post-period end)
Strengthening of the executive team and Board changes:
-- Richard Barfield, former CFO of Chiltern International, to the Board as Chief Financial Officer
-- Roy Ovel, formerly at ICON, Worldwide Clinical Trials and TFS, as Chief Commercial Officer
-- Dr Jim Esinhart, former CEO of Chiltern International, Rolf Soderstrom, former CFO of BTG plc and Ian Johnson, former Chairman of Bioquell plc, as Non-Executive Directors
-- Dr Jan Petracek has stepped down as Ergomed's Chief Operating Officer and Board Director, as well as CEO of PrimeVigilance; Jonathan West, previously Chief Business Officer of PrimeVigilance, takes on role of President of PrimeVigilance
-- Peter George to step down as Non-Executive Director (see separate announcement)
Meeting and conference call for analysts:
A briefing for analysts will be held at 11am BST on 25 September 2019 at the offices of Numis Securities Limited, 10 Paternoster Square, London, EC4M 7LT. Photo ID will be required for entry. There will be a simultaneous live conference call with Q&A.
Conference call details:
Participant dial-in: 0800 376 7922
International dial-in: +44 (0) 2071 928 000
Participant code: 1035098
Enquiries:
Ergomed plc Tel: +44 (0) 1483 402
975
Miroslav Reljanović (Executive Chairman)
Richard Barfield (Chief Financial Officer)
Numis Securities Limited Tel: +44 (0) 20 7260 1000
Freddie Barnfield / Huw Jeremy (Nominated
Adviser)
James Black (Broker)
Consilium Strategic Communications - for Tel: +44 (0) 20 3709 5700
UK enquiries
Chris Gardner / Sue Stuart ergomed@consilium-comms.com
Matthew Neal / Olivia Manser
MC Services - for Continental European Tel: +49 211 5292 5222
enquiries
Anne Hennecke
About Ergomed plc
Ergomed provides specialist services to the pharmaceutical industry spanning all phases of clinical trials, post-approval pharmacovigilance and medical information. Ergomed's fast-growing, profitable services business includes a full range of high-quality contract research and clinical trial management (CRO) services under the Ergomed brand together with an industry-leading suite of specialist pharmacovigilance (PV) solutions, integrated under the PrimeVigilance brand, and an internationally recognized specialist expertise in orphan drug development, under the PSR 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 results 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.
INTERIM MANAGEMENT REPORT
OPERATIONAL AND FINANCIAL REVIEW
Financial summary
During the first half of 2019, Ergomed delivered continued strong top-line growth and financial performance across the business. A strong backlog at the beginning of the year, combined with new business won in H1 2019, helped drive revenue to GBP35.2 million with growth of 36.8% on a comparable basis under IFRS 15 (2018: GBP25.7 million).
EBITDA (adjusted) for the first half of 2019 was GBP6.5 million (including GBP0.9 million positive impact of the new leasing standard IFRS 16) compared with a restated EBITDA (adjusted) break-even in H1 2018 (adjusted due to IFRS 15 implementation from previously reported GBP(0.4) million loss in H1 2018).
Operational summary
The CRO business performed strongly over the first half of 2019. Revenue increased by 39.9% to GBP19.0 million from GBP13.6 million (restated to IFRS 15) in H1 2018. The backlog was GBP66.2 million at 30 June 2019, an increase of 28.0% (30 June 2018: GBP51.7 million).
During the period, further substantial progress was made as a standalone pharmaceutical services provider across all phases of clinical development on a global basis. The significant increase in revenues was driven by the ongoing implementation of studies from the strong backlog with which we started 2019, as well as by significant new contract wins in the period, whilst headcount in the division remained flat. We made further progress in the integration of PSR, the orphan drug specialist CRO acquired in October 2017, and in the first half of 2019 around 45% of all revenues and new awards were in the areas of orphan drugs and rare diseases. We expect this integration process to be completed by 31 December 2019. At the same time, the CRO business also won sizeable new awards during the period in other important therapeutic areas, including haematology, oncology and diabetes.
Since the half year end, the momentum achieved in the first half has been maintained. In September 2019 we were awarded a substantial Phase III full service trial with 1,400 patients, utilising innovative trial management technologies. This three-year, GBP17 million revenue award with a leading European clinical-stage specialty biotech company provides further validation of Ergomed's ability to win global large-scale trials.
The Pharmacovigilance (PV) business, under the PrimeVigilance brand, also performed well over the first half of 2019. Revenue increased 33.2% to GBP16.1 million in H1 2019 from GBP12.1 million in H1 2018. Pharmacovigilance revenues are not impacted by IFRS 15. The backlog was GBP52.1 million at 30 June 2019, an increase of 25.5% (30 June 2018: GBP41.5 million).
Revenue growth was driven both by new clients won in H1 2019 and existing clients who awarded further contracts incrementally to our existing work. New awards were won across the range of our services including Pharmacovigilance, Medical Information and the QPPV Network. Due in part to automation and business efficiency improvements, our headcount in the division remained flat.
In H1 2019, PrimeVigilance established a new advanced safety database as well as new consultation services in pharmacovigilance automation, and grew its consultancy offering in pharmacoepidemiology and risk minimisation services. The integrations of both Harefield Pharmacovigilance, acquired in 2018, and the pharmacoepidemiology business of Mesama Consulting, transferred in 2018, were completed, significantly strengthening our offerings. New awards in the period included a multi-million pound contract with a large European pharmaceutical company for pharmacovigilance services, and several successes were achieved in cross-selling medical information and pharmacovigilance services.
Since the half year end, the PV business has continued to gain momentum, in particular by winning new contracts providing evidence of success with the long-term automation strategy. In August 2019, PV was awarded a new GBP4.8 million contract which includes market-leading case intake automation, as well as post-marketing consulting and GDPR compliance. This contract includes extensive work in the Asia Pacific region. The PV business has also recently won a number of smaller contracts with Asian-based pharma companies.
During H1 2019, in line with our previously stated strategy to develop Ergomed as a pharmaceutical services business and reduce our commitment to co-development projects, no new co-development partnerships were signed. We continue to seek a licensing or financial partner (or partners) for the Haemostatix products Peprostat and ReadyFlow, whilst seeking to minimize our ongoing R&D expense and protect our intellectual property interests.
Board and Senior Executive Changes
We have strengthened our management team and Board during 2019 with several key hires. Richard Barfield, former CFO of Chiltern International, joined as CFO in June 2019 bringing with him more than 25 years' international experience at CFO level. Roy Ovel, formerly at ICON, Worldwide Clinical Trials and TFS, joined in April 2019 as Chief Commercial Officer, with a remit to complete the commercial integration of the business. Sally Amanuel, formerly head of global regulatory at World Wide Clinical Trials, joined in June 2019 as Head of Regulatory and Clinical Delivery.
Dr Jim Esinhart, former CEO of Chiltern and recognized as a leading figure in the global contract research and pharmaceutical industry, joined as Non-Executive Director in July, as did Rolf Soderstrom, former CFO of BTG plc who will chair Ergomed's Audit and Risk Committee. Ian Johnson, former Executive Chairman of Bioquell plc, was appointed Non-Executive Director in August.
Dr Jan Petracek has stepped down as Ergomed's Chief Operating Officer and Board Director, as well as CEO of PrimeVigilance. Jonathan West, previously Chief Business Officer or PrimeVigilance, has taken on the role of President of PrimeVigilance.
As announced today, Peter George will step down as a Non-Executive Director with immediate effect to focus on his other business activities.
Current trading and outlook
A strong first half performance and contracted backlog of GBP118.3 million (30 June 2018: GBP93.2 million) underpin Ergomed's ability to deliver its targets for 2019 and create a firm foundation for continued growth. The second half of the year has started well and the Company is trading in line with expectations for the full year.
We have a highly differentiated platform in clinical services and are well positioned to deliver further organic growth as we continue to establish Ergomed as a leading integrated specialized mid-tier pharmaceutical services company.
Dr Miroslav Reljanović
Financial review
Key performance indicators
The Directors consider the principal financial performance indicators of the Group to be:
GBP million (unless stated otherwise) H1 2019 H1 2018
(re-stated)
--------------------------------------- ---- -------- -------------
Total Revenue 35.2 25.7
Gross profit 14.5 9.0
Gross margin % 41.2% 34.9%
EBITDA (adjusted) (Note 10) 6.5 (0.0)
Cash and cash equivalents 8.1 7.4
--------------------------------------------- -------- -------------
The Directors consider the principal non-financial performance indicators of the Group to be the delivery of high quality services that continue to meet the highest industry standards as evidenced by internal and external quality audits and the development or acquisition of new and/or the expansion of existing service offerings. Non-financial performance indicators are routinely reviewed by the Directors at Board meetings.
Adoption of IFRS 16 in 2019
From 1 January 2019 the Company has adopted IFRS 16 in relation to leases, predominantly for office premises. IFRS 16 requires the Company to recognise a lease liability and a corresponding right of use asset on the balance sheet. The lease liability and associated right of use asset at 30 June 2019 were GBP5.5 million and GBP5.4 million, respectively.
Additionally, under IFRS 16 the lease expense charged to the Income Statement is replaced with depreciation and interest charges relating to the right of use asset and lease liability, respectively. The impact on Net Income is broadly neutral, however these charges for depreciation and interest expense are excluded from the calculation of EBITDA in the six months ended 30 June 2019 whilst the lease expense in prior periods was included in the calculation of EBITDA. The adoption of IFRS 16 has, therefore, had a GBP0.9 million positive impact on reported EBITDA in the six months ended 30 June 2019 and is anticipated to have a GBP1.7 million positive impact on reported EBITDA for 2019 as a whole.
As prior years are not restated under the IFRS 16 methodology, for comparison purposes reference is made, where appropriate, to the financial results under the previous methodology to show the effect of IFRS 16 adoption.
Condensed consolidated statement of comprehensive income
Total revenue for the six months ended 30 June 2019 was GBP35.2 million (H1 2018: GBP25.7 million), an increase of 36.8%, driven by 39.9% growth from CRO services together with 33.2% growth in PV.
Gross profit was GBP14.5 million and gross margin was 41.2% (H1 2018: gross profit GBP9.0 million and gross margin 34.9%). Selling, general and administration expenses, including exceptional items and acquisition related costs were GBP9.2 million (H1 2018: GBP10.3 million). The potential risk of non-recoverability of certain trade receivables has been assessed and a provision for net impairment losses of GBP0.9million (H1 2018: GBPnil) has been made accordingly. There were no acquisition costs or exceptional items during the period. Research and development costs expensed in the period were GBP0.3million (H1 2018: GBP0.9 million) mainly relating to Peprostat and ReadyFlow.
EBITDA (adjusted) increased to GBP6.5 million in H1 2019 from break-even in H1 2018, with profit after tax of GBP3.6 million (H1 2018: loss of GBP(2.5) million). Basic earnings per share were 7.8p, up from (5.7)p loss per share in H1 2018.
Condensed consolidated balance sheet
Total assets less total liabilities increased by GBP5.0 million over the first half of 2019 and amounted to GBP33.4 million at 30 June 2019 (31 December 2018: GBP28.4 million) including cash and cash equivalents of GBP8.1 million (31 December 2018: GBP5.2 million).
The principal movements in the Condensed consolidated balance sheet in the first half of 2019 included an increase in property plant and equipment of GBP5.4 million relating mainly to the adoption of IFRS 16, an increase in cash and cash equivalents of GBP2.9 million, a decrease in trade and other payables of GBP2.0 million and an increase in borrowings of GBP3.9 million relating to the adoption of IFRS 16.
Condensed consolidated cash flow statement
The Group has no borrowings or long-term debt. At 30 June 2019, the Group's cash balance was GBP8.1 million (30 June 2018: GBP7.4 million, 31 December 2018: GBP5.2 million). Cash generated from operating activities increased to GBP3.3 million (H1 2018: GBP1.8 million) primarily due to the increased revenues and profitability of the business.
Net outflows from investing activities reduced to GBP1.3 million (H1 2018: GBP1.4 million) reflecting lower investment in office equipment and computer hardware. Inflows from financing activities for the period of GBP0.8 million mainly related to GBP0.9 million from share issues arising from share option exercises less GBP0.1 million for finance lease interest paid. Operating lease interest paid of GBP0.1 million related to the interest on the lease liability arising under IFRS 16, for which there is no comparative charge in H1 2018. The inflows from financing activities of GBP3.7 million for H1 2018 mainly related to a share placing in February 2018.
Going concern and medium-term viability
At 30 June 2019 the Group had GBP8.1 million in cash and cash equivalents and a backlog of GBP118.3 million of signed contracts. The Directors expect Ergomed's services businesses to be cash generative and, taking into account existing cash resources and after due consideration of cash flow forecasts, are of the view that the Group will continue to have access to adequate resources to allow it to continue trading on normal terms of business for no less than 12 months from the date of signing of the financial information for the six months ended 30 June 2019. The Directors have therefore prepared the financial information on a going concern basis.
The Board assesses the medium-term viability of the business periodically. In this regard, forecasts extending three years are considered appropriate because this matches the average contract duration of the PV business and, whilst CRO contracts can extend for longer periods, average duration is in line with that of the business and becomes less certain beyond that time. The Directors expect Ergomed's services business to continue to be cash generative.
INTERIM MANAGEMENT REPORT
FINANCIAL STATEMENTS AND NOTES
Consolidated Income Statement
For the six months ended 30 June 2019
Note Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2019 30 June 2018 31 December
(re-stated*) 2018
GBP000s GBP000s
GBP000s
REVENUE 2 35,179 25,724 54,112
Cost of sales (14,783) (13,208) (26,788)
Reimbursable expenses (5,907) (3,541) (8,070)
GROSS PROFIT 14,489 8,975 19,254
Selling, general and administrative
expenses (9,175) (10,288) (28,152)
------------------------------------ ---- ------------- ------------- ------------
Selling, general and administrative
expenses comprises:
Other selling, general and
administrative expenses (8,365) (8,745) (16,701)
Amortisation of intangible
assets arising from acquisitions (449) (677) (1,286)
Share-based payment charge (321) (359) (758)
Acquisition-related contingent
compensation (40) - (972)
Change in fair value of
contingent consideration
for acquisitions - - 233
Acquisition costs 8 - (66) (174)
Exceptional items 9 - (441) (8,494)
------------------------------------ ---- ------------- ------------- ------------
Research and development (306) (863) (1,578)
Net impairment losses on
financial contract assets (833) - (9)
Other operating income 19 16 39
OPERATING PROFIT/(LOSS) 4,194 (2,160) (10,446)
Investment income 3 4 23
Unrealised gains on equity
investments 73 - 277
Finance costs 4 (124) (303) (622)
PROFIT/(LOSS) BEFORE TAXATION 4,146 (2,459) (10,768)
Taxation 5 (537) (72) 1,788
PROFIT/(LOSS) FOR THE PERIOD 3,609 (2,531) (8,980)
EARNINGS/(LOSS) PER SHARE
Basic 3 7.8p (5.7)p (20.0)p
Diluted 3 7.5p (5.7)p (20.0)p
All activities in the current and prior period relate to continuing operations.
* Re-statements are explained in note 11
FINANCIAL STATEMENTS AND NOTES
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2019
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2019 30 June 2018 31 December
(re-stated) 2018
GBP000s GBP000s
GBP000s
Profit/(loss) for the period 3,609 (2,531) (8,980)
Items that may be classified
subsequently to profit or loss:
Exchange differences on translation
of foreign operations 240 13 120
Other comprehensive income
for the period net of tax 240 13 120
Total comprehensive income
for the period 3,849 (2,518) (8,860)
FINANCIAL STATEMENTS AND NOTES
Consolidated Balance Sheet
At 30 June 2019
Unaudited Unaudited Audited
Note 30 June 2019 30 June 2018 31 December
2018
(re-stated*)
GBP000s GBP000s GBP000s
Non-current assets
Goodwill 13,659 15,223 13,659
Other intangible assets 3,140 19,471 3,740
Property, plant and equipment 1,206 1,161 1,344
Right-of-use assets 5,393 - -
Equity investments at
fair value through profit
and loss 2,697 1,214 2,065
Deferred tax asset 979 1,651 581
27,074 38,720 21,389
Current assets
Trade and other receivables 6 15,623 11,716 16,429
Other current assets - 168 -
Accrued income 2,699 2,400 3,857
Current asset investments - 90 -
Cash and cash equivalents 8,128 7,406 5,189
26,450 21,780 25,475
Total assets 53,524 60,500 46,864
Current liabilities
Borrowings including
finance lease liabilities (1,642) (11) (6)
Trade and other payables 7 (8,955) (8,085) (10,989)
Contingent and deferred
consideration (61) (1,969) (119)
Deferred revenue (3,105) (2,665) (5,651)
Current tax liability (1,080) (196) (422)
Total current liabilities (14,843) (12,926) (17,187)
Net current assets 11,607 8,854 8,288
Non-current liabilities
Borrowings including
finance lease liabilities (3,921) (1) -
Provisions (377) - (216)
Contingent and deferred
consideration (541) (10,094) (544)
Deferred tax liability (427) (3,257) (554)
Total liabilities (20,109) (26,278) (18,501)
Net assets 33,415 34,222 28,363
Equity
Share capital 467 449 452
Share premium account 25,252 24,326 24,384
Merger reserve 11,088 11,008 11,088
Share-based payment reserve 3,751 3,033 3,430
Translation reserve 1,122 775 882
Retained earnings (8,265) (5,369) (11,873)
Total equity 33,415 34,222 28,363
* Re-statements are explained in note 11
FINANCIAL STATEMENTS AND NOTES
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2018
Share Share Merger Share Translation Retained Total
capital premium reserve option reserve earnings
account reserve
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 31 December 2017 * 428 20,616 11,008 2,674 762 (645) 34,843
Cumulative effect of adopting IFRS 15
net of tax * - - - - - (2,232) (2,232)
Balance at 1 January 2018 * 428 20,616 11,008 2,674 762 (2,877) 32,611
Loss for the six month period ** - - - - - (2,531) (2,531)
Other comprehensive income for the period
** - - - - 13 - 13
Total comprehensive income for the period
** - - - - 13 (2,531) (2,518)
Share-issue during the period for cash
(net of expenses) ** 21 3,710 - - - - 3,731
Share-based payment charge for the period
** - - - 359 - - 359
Deferred tax credit taken directly to
equity ** - - - - - 39 39
Total transactions with shareholders in
their capacity as shareholders ** 21 3,710 - 359 - 39 4,129
Balance at 30 June 2018 ** 449 24,326 11,008 3,033 775 (5,369) 34,222
* Audited
** Unaudited
FINANCIAL STATEMENTS AND NOTES
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2019
Share Share Merger Share Translation Retained Total
capital premium reserve option reserve earnings
account reserve
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
Balance at 31 December 2017 * 428 20,616 11,008 2,674 762 (645) 34,843
Cumulative effect of adopting IFRS 15
net of tax * - - - - - (2,232) (2,232)
Balance at 1 January 2018 * 428 20,616 11,008 2,674 762 (2,877) 32,611
Loss for the year * - - - - - (8,980) (8,980)
Other comprehensive income for the year
* - - - - 120 - 120
Total comprehensive income for the year
* - - - - 120 (8,980) (8,860)
Share-issue during the period for cash
(net of expenses) * 21 3,768 - - - - 3,789
Share-issues during the period for non-cash
consideration * 1 - 80 - - - 81
Contingent share-issues during the period
for non-cash consideration * 2 - - (2) - - -
Share-based payment charge for the year
* - - - 758 - - 758
Deferred tax credit taken directly to
equity * - - - - - (16) (16)
Total transactions with shareholders in
their capacity as shareholders * 24 3,768 80 756 - (16) 4,612
Balance at 31 December 2018 * 452 24,384 11,088 3,430 882 (11,873) 28,363
Profit for the period ** - - - - - 3,609 3,609
Other comprehensive income for the period
** - - - - 240 - 240
Total comprehensive income for the period
** - - - - 240 3,609 3,849
Share-issue during the period for cash
(net of expenses) * 15 868 - - - - 883
Share-based payment charge for the period
** - - - 321 - - 321
Deferred tax credit taken directly to
equity ** - - - - - (1) (1)
Total transactions with shareholders in
their capacity as shareholders ** 15 868 - 321 - (1) 1,203
Balance at 30 June 2019 ** 467 25,252 11,088 3,751 1,122 (8,265) 33,415
* Audited
** Unaudited
FINANCIAL STATEMENTS AND NOTES
Consolidated Cash Flow Statement
For the six months ended 30 June 2019
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2019 30 June 2018 31 December
(re-stated*) 2018
GBP000s GBP000s
GBP000s
Cash flows from operating activities
Profit/(loss) before taxation 4,146 (2,459) (10,768)
Adjustment for:
Amortisation and depreciation 1,926 1,248 2,534
Impairment of goodwill, intangibles
and other assets - - 18,222
Loss on disposal of fixed assets 2 5 33
Share-based payment charge 321 359 758
Equity investments in exchange
for services provided (567) (460) (1,054)
Change in fair value of contingent
consideration for acquisition - - (11,617)
Investment income (3) (4) (23)
Gains on fair-value of equity
investments (73) - (277)
Finance costs 124 303 622
Operating cash flow before changes
in working capital and provisions 5,876 (1,008) (1,570)
Decrease/(increase) in trade
and other receivables 1,831 3,989 (505)
Decrease/(increase) in other
current assets - 334 (248)
(Decrease)/increase in trade
and other payables (3,545) (2,011) 3,221
Lease payments (617) - -
Cash generated from operations 3,545 1,304 898
Taxation (paid)/received (269) 448 146
Net cash inflow from operating
activities 3,276 1,752 1,044
Investing activities
Investment income received 2 4 5
Acquisition of intangible assets (276) (302) (753)
Acquisition of property, plant
and equipment (143) (343) (834)
Receipts from sale of property,
plant and equipment 4 3 7
Acquisition of subsidiaries
net of cash acquired - - (410)
Acquisition related earn-out
paid (930) (751) (751)
Net cash outflow from investing
activities (1,343) (1,389) (2,736)
Financing activities
Issue of new shares 883 3,914 3,973
Expenses of fundraising - (183) (183)
Lease interest paid (123) - -
Finance costs paid (1) (2) (4)
Increase in borrowings 18 - -
Repayment of borrowings (4) (6) (12)
Net cash inflow from financing
activities 773 3,723 3,774
Net increase in cash and cash
equivalents 2,706 4,086 2,082
Effect of foreign currency on
cash balances 233 102 (111)
Cash and cash equivalents at
start of the period 5,189 3,218 3,218
Cash and cash equivalents at
end of period 8,128 7,406 5,189
* Re-statements are explained in note 11
FINANCIAL STATEMENTS AND NOTES
Notes
1. GENERAL INFORMATION
This consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.
Other than as described below under "IFRS 16, Leases", the interim financial statements have been prepared using accounting policies and methods of computation consistent with those used in the audited statutory financial statements for the year ended 31 December 2018 and International Reporting Standards (IFRSs) adopted for use in the European Union. While the financial information included in this interim statement has been compiled in accordance with the recognition and measurement principles of IFRSs, this announcement does not itself contain sufficient information to comply with IFRSs and does not comply with IAS 34.
The information for the six month period ended 30 June 2019 is unaudited, but reflects all normal adjustments which are, in the opinion of the Board, necessary to provide a fair statement of results and the Group's financial position for and as at the period presented.
Statutory accounts for the year ended 31 December 2018 were approved by the Board of Directors and have been delivered to the Registrar of Companies. The audit report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain any statement under section 498(2) or (3) of the Companies Act 2006.
At 30 June 2019 Ergomed had cash resources of GBP8.1 million (30 June 2018: GBP7.4 million; 31 December 2018: GBP5.2 million).
Risks and uncertainties
An outline of the key risks and uncertainties faced by the Group was described in the Company's Annual Report which is located on the Company website (www.ergomedplc.com) in the Investors section. These risks include competition; cancellation or delay of clinical studies by customers; foreign currency risk; dependency on pharmaceutical industry; legislation and regulation of the pharmaceutical and biotechnology industries; licenses, approvals and compliance; United Kingdom's exit from the European Union ('Brexit'); customers, pricing and payment terms; and dependence on a limited number of key clients. It is anticipated that the risk profile will not significantly change for the remainder of the year. Risk is an inherent part of doing business and the profitability and strong cash position of the Group, along with the growth profile of the business, leads the Directors to believe that the Group is well placed to manage business risks successfully.
Going concern
The Directors have considered cash flow forecasts for the group, detailing cash inflows and outflows for the period ending 31 December 2022. Based on their review of these forecasts and consideration of the economic environment in which the group operates, the Directors are satisfied that the Company has sufficient resources to continue in operation for the foreseeable future, being a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the financial information for the six months ended 30 June 2019.
Business Combinations
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred on acquisition is the fair value at the date of transaction for assets and liabilities transferred. All acquisition related costs are expensed as incurred.
Goodwill arises as the excess of acquisition cost over the fair value of the assets transferred at the date of transaction. Goodwill is reviewed for impairment annually and is carried at cost less accumulated impairment losses. Impairment losses are not reversed in subsequent periods.
Goodwill arising on the acquisition of a foreign operation, including any fair value adjustments to the carrying amounts of assets or liabilities on the acquisition, are treated as assets and liabilities of that foreign operation in accordance with IAS 21 and as such are translated at the relevant foreign exchange rate at the date of financial reporting.
ACCOUNTING STANDARDS ADOPTED IN THE PERIOD
IFRS 16, Leases ("IFRS 16")
On 1 January 2019, the Group adopted International Financial Reporting Standard ("IFRS") 16, Leases ("IFRS 16") using the modified retrospective approach. Therefore, the comparative financial information for the year ended 31 December 2018 has not been restated for the effect of this guidance and is prepared in accordance with the previous accounting guidance under IAS17.
At inception of a contract, the Group assess whether the arrangement is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. For lease contracts, the Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of a lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and any costs to restore the underlying asset, less any incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of future lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot readily be determined, the Group's incremental borrowing rate. Generally the Group uses its incremental borrowing rate.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in the future lease payments. When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in the profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group presents the right-of-use assets and the lease liability separately on the balance sheet.
The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases of equipment that have a term of less than 12 months or less and leases of low-value assets. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
The adoption of IFRS 16 has the following impact on the consolidated financial statements as at 30 June 2019:
-- A lease liability of approximately GBP6.1 million and corresponding lease assets have been recorded upon adoption.
-- Under IAS 17, the costs in respect of operating leases were charged to the income statement on a straight line basis over the lease term as a lease expense. Under IFRS 16, the cost in respect of leases are the depreciation of the right-of-use asset and an imputed interest charge arising on the lease liability. This may result in lease expenses being recognized sooner under IFRS 16 than under IAS17, however the impact is not anticipated to be material to the consolidated income statement.
-- Under IFRS 16, the lease expense is replaced by depreciation and interest charges, which will be excluded from our key performance metric, EBITDA. The impact of this is anticipated to be an improvement in EBITDA of approximately GBP1.7 million in 2019.
The impact of adopting IFRS 16 on the key financial statement line items within the consolidated income statement for the six months ended 30 June 2019 compared to amounts determined in accordance with the previous guidance, IAS 17, is as follows:
Under
As reported Adjustments IAS 17
GBP000s GBP000s GBP000s
REVENUE 35,179 - 35,179
GROSS PROFIT 14,489 - 14,489
RENTAL CHARGES FOR RIGHT-OF-USE ASSETS - (867) (867)
AMORTISATION OF RIGHT-OF-USE ASSETS 803 803 -
OPERATING PROFIT 4,194 (64) 4,130
FINANCE COSTS (124) 123 (1)
PROFIT BEFORE TAXATION 4,146 59 4,205
PROFIT FOR THE PERIOD 3,609 59 3,668
EARNINGS PER SHARE
Basic 7.8p 7.9p
Diluted 7.5p 7.6p
The impact of adopting IFRS 16 on the key financial statement line items within the balance sheet as at 1 January 2019 and 30 June 2019 is as follows:
As at 1 January 2019 As at 30 June 2019
As reported As reported
Under under under Under
IFRS 16 Adjustments IAS 17 IFRS 16 Adjustments IAS 17
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
Non-current assets 27,508 (6,119) 21,389 27,074 (5,393) 21,681
Current liabilities (18,603) 1,416 (17,187) (14,843) 1,559 (13,284)
Non-current liabilities (6,017) 4,703 (1,314) (5,266) 3,905 (1,361)
Net assets 28,363 - 28,363 33,415 71 33,486
2. REVENUE
CRO services PV services Total
revenue
GBP000s GBP000s GBP000s
Six months ended 30 June 2019 ** 19,030 16,149 35,179
Six months ended 30 June 2018 (re-stated)
** 13,604 12,120 25,724
Year ended 31 December 2018 * 26,580 27,532 54,112
* Audited
** Unaudited
3. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is based on the following data:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2019 30 June 2018 31 December
(re-stated) 2018
GBP000s GBP000s
GBP000s
Earnings/(loss) for the purposes
of basic earnings per share
being net profit attributable
to owners of the Company 3,609 (2,531) (8,980)
Earnings/(loss) for the purposes
of diluted earnings per share 3,609 (2,531) (8,980)
No. No. No.
Number of shares
Weighted average number of
ordinary shares for the purposes
of basic earnings per share 46,184,074 44,399,323 44,693,699
Effect of dilutive potential
ordinary shares
Share options 1,769,649 2,289,101 -
Shares to be issued in settlement
of contingent consideration 115,514 218,551 158,810
Weighted average number of
ordinary shares for the purposes
of diluted earnings per share 48,069,237 46,906,975 44,852,509
4. FINANCE COSTS
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2019 30 June 2018 31 December
GBP000s GBP000s 2018
GBP000s
Lease interest payable 123 - -
Other interest payable 1 2 3
Changes in the fair value of
contingent consideration - 301 619
124 303 622
5. TAXATION
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2019 30 June 2018 31 December
GBP000s GBP000s 2018
GBP000s
Current tax (1,065) (227) (28)
Deferred tax 528 155 1,816
(537) (72) 1,788
6. TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited
30 June 2019 30 June 2018 31 December
GBP000s GBP000s 2018
GBP000s
Trade receivables 11,235 8,984 11,735
Other receivables 2,331 1,387 2,437
Prepayments 1,134 1,035 1,225
Corporation tax receivable 923 310 1,032
15,623 11,716 16,429
7. TRADE AND OTHER PAYABLES
Unaudited Unaudited Audited
30 June 2019 30 June 2018 31 December
GBP000s GBP000s 2018
GBP000s
Trade creditors 2,933 3,855 4,379
Amounts payable to related parties
* 55 89 585
Social security and other taxes 414 564 724
Other payables 1,049 921 1,575
Customer advances 648 579 734
Accruals 3,856 2,077 2,992
8,955 8,085 10,989
* Amounts payable to related parties have credit terms of 30 days.
8. ACQUISITION COSTS
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2018 30 June 2018 31 December
2018
GBP000s GBP000s GBP000s
Acquisition of Harefield Pharmacovigilance - - 3
Acquisition of Pharmacovigilance
Services - - 7
Other M&A activities - 66 164
- 66 174
9. EXCEPTIONAL ITEMS
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2019 30 June 2018 31 December
2018
GBP000s GBP000s GBP000s
Establishment of pharmacoepidemiology
business - 185 356
Cost reduction programme - - 760
Business reorganisation - 256 557
Impairment of Haemostatix goodwill - - 2,143
Impairment of Haemostatix in process
R&D - - 15,200
Impairment of Haemostatix other
assets - - 834
Revaluation of Haemostatix contingent
consideration - - (11,617)
Onerous contract provision - - 216
Impairment of investment - - 45
- 441 8,494
In line with the way the Board and chief operating decision makers review the business, large one-off exceptional costs are separately identified and shown as exceptional costs.
10. EBITDA and EBITDA (adjusted)
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2019 30 June 2018 31 December
(re-stated) 2018
GBP000s GBP000s GBP000s
Operating profit/(loss) 4,194 (2,160) (10,446)
Adjust for:
Depreciation and amortisation
charges within Other selling,
general & administration expenses 1,477 571 1,248
Amortisation of acquired fair
valued intangible assets 449 677 1,286
EBITDA 6,120 (912) (7,912)
Share-based payment charge 321 359 758
Acquisition related contingent
compensation 40 - 972
Change in fair value of contingent
consideration for acquisitions - - (233)
Acquisition costs (note 8) - 66 174
Exceptional items (note 9) - 441 8,494
EBITDA (adjusted) 6,481 (46) 2,253
11. RE-STATEMENTS
The Balance Sheet as at 30 June 2018 and the Income Statement and Cash Flow Statement for the six months ended 30 June 2018, previously reported in accordance with IAS 18, are now re-stated in accordance with IFRS 15. The impact of the restatement for adoption of IFRS 15 on the Consolidated Balance Sheet as at 30 June 2018 and the Income Statement and Cash Flow Statement for the six months ended 30 June 2018 is set out below.
Re-statement of Consolidated Income Statement
For the six months ended 30 June 2018
Unaudited Unaudited
Six months Six months
ended ended
30 June 2018 Adjustment 30 June 2018
(re-stated)
GBP000s GBP000s GBP000s
Service revenue 21,797 3,927 25,724
Reimbursement revenue 3,541 (3,541) -
REVENUE 25,338 386 25,724
Cost of sales (13,208) - (13,208)
Reimbursable expenses (3,541) - (3,541)
GROSS PROFIT 8,589 386 8,975
Selling, general and administrative
expenses (10,288) - (10,288)
------------------------------------------ ------------- ------------ -------------
Selling, general and administrative
expenses comprises:
Other selling, general and administrative
expenses (8,745) - (8,745)
Amortisation of acquired fair
valued intangible assets (677) - (677)
Share-based payment charge (359) - (359)
Acquisition costs (66) - (66)
Exceptional items (441) - (441)
------------------------------------------ ------------- ------------ -------------
Research and development (863) - (863)
Other operating income 16 - 16
OPERATING LOSS (2,546) 386 (2,160)
Investment revenues 4 - 4
Finance costs (303) - (303)
LOSS BEFORE TAXATION (2,845) 386 (2,459)
Taxation (83) 11 (72)
LOSS FOR THE PERIOD (2,928) 397 (2,531)
LOSS PER SHARE
Basic (6.6)p (5.7)p
Diluted (6.6)p (5.7)p
Re-statement of Consolidated Balance Sheet
At 30 June 2018
Unaudited Unaudited
30 June 2018 Adjustment 30 June 2018
(re-stated)
GBP000s GBP000s GBP000s
Non-current assets
Goodwill 15,223 - 15,223
Other intangible assets 19,471 - 19,471
Property, plant and equipment 1,161 - 1,161
Investments 1,214 - 1,214
Deferred tax asset 1,651 - 1,651
38,720 - 38,720
Current assets
Trade and other receivables 11,716 - 11,716
Other current assets 168 - 168
Accrued revenue 2,782 (382) 2,400
Current asset investments 90 - 90
Cash and cash equivalents 7,406 - 7,406
22,162 (382) 21,780
Total assets 60,882 (382) 60,500
Current liabilities
Borrowings (11) - (11)
Trade and other payables (8,085) - (8,085)
Deferred consideration (1,969) - (1,969)
Deferred revenue (1,232) (1,433) (2,665)
Taxation (196) - (196)
Total current liabilities (11,493) (1,433) (12,926)
Net current assets 10,669 (1,815) 8,854
Non-current liabilities
Borrowings (1) - (1)
Deferred consideration (10,094) - (10,094)
Deferred tax liability (3,253) (4) (3,257)
Total liabilities (24,841) (1,437) (26,278)
Net assets 36,041 (1,819) 34,222
Equity
Share capital 449 - 449
Share premium account 24,326 - 24,326
Merger reserve 11,008 - 11,008
Share option reserve 3,033 - 3,033
Translation reserve 759 16 775
Retained earnings (3,534) (1,835) (5,369)
Total equity 36,041 (1,819) 34,222
Re-statement of Consolidated Cash Flow Statement
For the six months ended 30 June 2018
Unaudited Unaudited
Six months Six months
ended ended
30 June 2018 Adjustment 30 June 2018
(re-stated)
GBP000s GBP000s GBP000s
Cash flows from operating activities
Loss before taxation (2,845) 386 (2,459)
Adjustment for:
Amortisation and depreciation 1,248 - 1,248
Loss/(gain) on disposal of fixed
assets 5 - 5
Share-based payment charge 359 - 359
Equity investments in exchange
for services provided (460) - (460)
Investment income (4) - (4)
Finance costs 303 - 303
Operating cash flow before changes
in working capital and provisions (1,394) 386 (1,008)
Decrease/(increase) in trade
and other receivables 3,989 - 3,989
Decrease/(increase) in other
current assets 334 - 334
(Decrease)/increase in trade
and other payables (1,625) (386) (2,011)
Cash generated from/(utilised
in) operations 1,304 - 1,304
Taxation received/(paid) 448 - 448
Net cash inflow/(outflow) from operating activities 1,752 - 1,752 Investing activities Investment income received 4 - 4 Acquisition of intangible assets (302) - (302) Acquisition of property, plant and equipment (343) - (343) Receipts from sale of property, plant and equipment 3 - 3 Acquisition related earn-out paid (751) - (751) Net cash outflow from investing activities (1,389) - (1,389) Financing activities Issue of new shares 3,914 - 3,914 Expenses of fundraising (183) - (183) Finance costs paid (2) - (2) Repayment of borrowings (6) - (6) Net cash inflow/(outflow) from financing activities 3,723 - 3,723 Net increase/(decrease) in cash and cash equivalents 4,086 4,086 Effect of foreign currency on cash balances 102 - 102 Cash and cash equivalents at start of the period 3,218 - 3,218 Cash and cash equivalents at end of period 7,406 - 7,406
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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September 25, 2019 02:00 ET (06:00 GMT)
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