TIDMERGO
RNS Number : 9653Q
Ergomed plc
18 September 2017
PRESS RELEASE
Unaudited Interim results for the six months ended 30 June
2017
Strong first half financial performance - net service revenues
up 53% and gross profit up 42%
Haemostatix programmes significantly advanced, PeproStat(TM)
Phase IIb study ahead of schedule
London, UK - 18 September 2017: Ergomed plc, ("Ergomed", the
"Company", AIM: ERGO) a company dedicated to the provision of
specialised services to the pharmaceutical industry and the
development of new drugs, today announces its interim results for
the six months ended 30 June 2017.
Commenting on the results, Dr Dan Weng, Chief Executive Officer
of Ergomed plc, said:
"It has been a solid first half for Ergomed and we are pleased
with both top-line growth and EBITDA for the period. We also had
important data read-outs from our co-development partners in the
half year and data from our own proprietary product PeproStat(TM)
is expected in the next few weeks. I am confident that Ergomed is
well positioned for further growth, both organic and through
acquisition, and of the benefits this will bring to our customers,
partners, employees and shareholders."
Financial highlights (unaudited)
-- Net service revenues(1) up 53% to GBP19.5 million (H1 2016: GBP12.7 million)
-- Total revenues up 31% to GBP22.9 million (H1 2016: GBP17.6 million)
-- Gross profit up 42% to GBP7.5 million (H1 2016: GBP5.3 million)
-- EBITDA GBP1.5 million (H1 2016: GBP1.2 million) (note 10)
-- Adjusted EBITDA (including adjustments for share-based
payment charge and acquisition costs) GBP1.8 million, the same as
H1 2016 after an additional GBP1.0 million R&D spend in the
half year (note 10)
-- Operating profit GBP0.7 million (H1 2016: GBP0.8 million)
-- Contribution in kind to co-development projects decreased to
GBP1.7 million in H1 2017 (H1 2016: GBP2.1 million)
Operational highlights
-- Service contracts with a value of GBP23 million (net of
co-development discounts) signed through 31 July 2017
-- Strong backlog of signed contracts of over GBP70 million at
31 July 2017 (31 July 2016: GBP60 million)
-- Peter George, former CEO of Clinigen Group plc and
non-executive director of Ergomed, appointed Chairman
-- Positive data from the Phase II trial of lorediplon in
insomnia of co-development partner, Ferrer
-- Co-development partner Aeterna Zentaris announced negative
results from the Phase III trial of Zoptrex in endometrial
cancer
Post period-end highlights
-- Dr Dan Weng appointed Chief Executive Officer, with Dr
Miroslav Reljanovic, founder and former CEO, becoming Executive
Vice Chairman
-- FDA lifted clinical hold on co-development partner CEL-SCI's
Phase III trial of Multikine(R) in head and neck cancer
-- PeproStat(TM) Phase IIb trial patient recruitment completed
in July, six months ahead of schedule. Data are expected around the
end of October 2017
(1) To align with industry practice, Ergomed is disclosing
reimbursement revenue and reimbursable expenses as part of total
revenues and separately from cost of sales, respectively. Net
service revenues exclude reimbursement revenues.
Enquiries:
Ergomed plc Tel: +44 (0)
1483 503205
Dan Weng (Chief Executive Officer)
Stephen Stamp (Chief Financial
Officer)
Numis Securities Limited Tel: +44 (0)
20 7260 1000
Michael Meade / Freddie Barnfield
(Nominated Adviser)
James Black (Joint Broker)
N+1 Singer Tel: +44 (0)
20 7496 3000
Alex Price (Joint Broker)
Consilium Strategic Communications Tel: +44 (0)
- for UK enquiries 20 3709 5700
Chris Gardner / Mary-Jane ergomed@consilium-comms.com
Elliott
Ivar Milligan / Philippa Gardner
MC Services - for Continental Tel: +49 211
European enquiries 5292 5222
Anne Hennecke
About Ergomed
Ergomed provides specialist services to the pharmaceutical
industry and develops drugs both wholly-owned and through
partnerships. Ergomed's fast-growing, profitable service offering
spans all phases of clinical development and post-approval
pharmacovigilance and medical information. Drawing on more than 20
years of expertise in drug development, Ergomed is also building a
growing portfolio of drug development partnerships and programmes,
including wholly-owned proprietary products for the treatment of
surgical bleeding. 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 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
Introduction
The Company's profitable services business includes the
provision of pre-approval and post-approval services to the
pharmaceutical and biotech industry. Services include all phases of
clinical research as well as post-marketing drug safety
surveillance and medical information through its subsidiaries
PrimeVigilance and PharmInvent.
Ergomed is also building a portfolio of development products by
providing in-kind clinical research services in return for minority
carried interests in its partners' development products. Ergomed
will receive a share of any future proceeds generated from the
commercialisation of the partnered drug asset. The Company's
product portfolio was enhanced with the acquisition of Haemostatix
in May 2016 which included two lead proprietary products for the
treatment of surgical bleeding.
Ergomed has continued to show progress in the first half of 2017
in both key components. The four acquisitions made in 2016 have
been successfully integrated and the Company expects a major value
inflexion point with the publication of data in the next few weeks
from the Phase IIb proof of concept trial of PeproStat(TM) in the
treatment of surgical bleeding. The Board remains confident about
opportunities for further growth, both organic and through
acquisition.
Services
Consolidated net service revenues for H1 2017 increased by 53%
to GBP19.5 million (H1 2016: GBP12.7 million). Consolidated net
service revenue includes GBP8.7 million from pre-approval clinical
research services (H1 2016: GBP7.2 million) and GBP10.7 million
from drug safety monitoring and medical information services (H1
2016: GBP5.5 million). Included in drug safety monitoring and
medical information services is PharmInvent revenues of GBP2.2
million (H1 2016: GBP nil). Organic growth of net service revenue
in H1 2017 compared with H1 2016 was 36%.
Revenues from clinical research services were impacted in H1
2017 by lower reimbursement revenue due to the stage of the
projects in progress.
A strong first half in drug safety monitoring and medical
information has seen PharmInvent, acquired in November 2016,
collaborating closely with PrimeVigilance and together, the two
companies have already won new business. Now under the common
leadership of Dr Jan Petracek, PrimeVigilance and PharmInvent are
expected to be fully integrated under a single brand in 2018.
O+P and GASD, acquired together in June 2016, have been merged
and co-located in Cologne, Germany. The merged company has been
re-named Ergomed Centre for Data management and Statistics (Ergomed
CDS) GmbH.
Overall demand for services remains robust with contracts with a
value of GBP23 million (net of co-development discounts) signed
through 31 July 2017. Backlog of signed contracts at 31 July 2017
was over GBP70 million.
With a track record of successful identification and integration
of acquisitions, the Company continues to pursue opportunities to
acquire services businesses which fulfil the criteria set out at
IPO; namely to become the global leader in pharmacovigilance
services, the leading CRO in orphan drug development and strengthen
its CRO network by filling in geographies and / or service
offerings.
Product development
Co-development
Ergomed shares in the upside potential of promising products by
contributing to the cost of clinical trials through significantly
reduced fees in return for a carried interest in any future
revenues of the product, including any out-licensing milestones and
product sales. The status of Ergomed's current partnerships is:
CEL-SCI (NYSE: CVM):
CEL-SCI's lead product Multikine(R) is an immunotherapeutic
agent (a mixture of cytokines including interleukins, interferons,
chemokines, and colony stimulating factors) being developed as a
potential first-line head and neck cancer therapy and has the
potential to be a first in class immunotherapy. Following a number
of discussions with the FDA, the clinical hold for Multikine(R) has
been lifted and the study is continuing as initially planned. The
study is now fully recruited and patients are being monitored in
the follow-up phase to look for the effect of the treatment on
overall patient survival.
Aeterna Zentaris Inc. (NASDAQ: AEZS; TSX: AEZ):
Zoptrex(TM) (zoptarelin doxorubicin) did not show a treatment
benefit over doxorubicin and the project has been terminated.
Ferrer:
Lorediplon is a novel, longer-acting non-benzodiazepine hypnotic
drug that modulates the GABAa receptor for the treatment of
insomnia. In February 2017, the Company announced the successful
outcome of the Phase II study which met the primary end-point and
many of the secondary end-points. Ferrer is now seeking
partnerships with other companies to continue the development of
the product.
Modus Therapeutics:
Sevuparin is an innovative, proprietary polysaccharide drug
which has potential to restore blood flow and prevent further
microvascular obstruction in patients with sickle-cell disease. The
study is recruiting well and has passed several data safety
monitoring committee reviews.
Asarina Pharma:
The launch of the collaboration with Asarina Pharma to develop
sepranolone, a therapy for pre-menstrual dysphoric disorder, is
underway with all the preparatory activities started to get the
Phase II study actively recruiting as soon as possible. It is
expected that the first patient will be dosed at the beginning of
next year.
Haemostatix
Haemostatix, acquired in May 2016, has seen both products for
the treatment of uncontrolled surgical bleeding progress in H1
2017. The CMC development of PeproStat(TM) and ReadyFlow(TM) has
significantly advanced, while the 169 patient Phase IIb proof of
concept trial of PeproStat(TM) in surgical bleeding completed
recruitment in July 2017, approximately six months ahead of
schedule. Results are expected at the end of October 2017. If
successful, this study could open up significant opportunities for
Ergomed, with a Phase III-ready asset which could reach the market
by 2020.
The second product, ReadyFlow(TM), has a preclinical development
programme agreed with the authorities and is proceeding in line
with expected plans. Dosing of the first patient is expected by
mid-2018.
Management
Upon Rolf Stahel's retirement from the Board on 31 March 2017,
Peter George was elected Chairman. As of 1 July 2017, Dr Dan Weng
was appointed Chief Executive Officer (CEO) of the Company and
joined the Board. Dr Miroslav Reljanovic, founder and former CEO,
assumed the role of Executive Vice Chairman. Neil Clark, former CEO
of PrimeVigilance, resigned from the Board in April 2017 but
remains a consultant and non-executive director of
PrimeVigilance.
Financial summary
Total revenues for H1 2017 increased by 31% to GBP22.9 million
(H1 2016: GBP17.6 million). Total revenues include revenue from
reimbursed costs. To align with industry practice, Ergomed is
disclosing reimbursement revenue and reimbursable expenses as part
of total revenues and separately from cost of sales, respectively.
Consolidated net service revenues, which exclude reimbursement
revenue, for H1 2017 increased by 53% to GBP19.5 million (H1 2016:
GBP12.7 million). Organic growth in net service revenue in H1 2017
compared with H1 2016 was 36%.
Gross profit increased by 42% to GBP7.5 million from GBP5.3
million in H1 2016. Gross margin, measured as gross profit as a
percentage of net service revenue, decreased to 39% from 42% in H1
2016, largely driven by a change in mix of contracts.
Administrative expenses increased by 30% to GBP5.7 million from
GBP4.4 million in H1 2016, driven by acquisitions in H2 2016,
expanded operations and strengthened management and corporate
infrastructure offset by lower M&A costs.
Research and development expenses were GBP1.1 million (H1 2016:
GBP0.1 million) and related to chemistry, manufacturing and
controls (CMC) costs for PeproStat(TM) and ReadyFlow(TM), external
costs related to the Phase IIb clinical trial of PeproStat(TM) and
the Haemostatix overhead. Haemostatix was acquired in May 2016.
EBITDA was GBP1.5 million (H1 2016: GBP1.2 million). Adjusted
EBITDA, which is adjusted for GBP0.3 million share-based payment
charge and non-recurring M&A costs was GBP1.8 million (H1 2016:
GBP1.8 million). Both EBITDA and adjusted EBITDA are stated after
research and development costs which increased by GBP1.0 million in
H1 2017 compared with H1 2016.
Operating profit was GBP0.7 million (H1 2016: GBP0.8
million).
Cash in hand as of 30 June 2017 was GBP2.4 million (30 June
2016: GBP9.9 million). Net cash outflow from operations was GBP1.3
million (H1 2016: GBP0.9 million outflow). Net cash outflow
included GBP2.5 million working capital outflows (H1 2016: GBP2.6
million outflow) including GBP2.0 million related to an increase in
receivables, of which the receivable from CEL-SCI was the largest
component. In August 2017, CEL-SCI issued 480,000 shares to Ergomed
which may be sold with the net proceeds reducing the receivable.
Investing activities included GBP0.3 million (H1 2016: GBP0.2
million) and GBP0.4 million (H1 2016: GBP0.2 million) investments
in tangible assets and software respectively.
Current trading and outlook
Overall, the Company has performed in line with expectations. As
experienced in H1 2017, clinical research services revenues for the
full year 2017 are expected to be impacted mainly by lower
reimbursement revenue due to the stage of projects in progress and
deferment of two trials by sponsors. In contrast, drug safety
monitoring and medical information services continues to exceed
expectations and is on track to deliver another year of
out-performance.
In line with strategy, the Company is actively evaluating
potential service business acquisitions that would increase
profitability and complement the current range of service offerings
and/or expand Ergomed's geographical coverage. The Company also has
a number of leads under discussion for additional co-development
partnerships and looks forward to the results of the PeproStat(TM)
trial in late October 2017.
In summary, the Board remains positive on the outlook for the
Company.
INDEPENT REVIEW REPORT TO ERGOMED PLC
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2017 which comprises the consolidated
income statement, the consolidated statement of comprehensive
income, the consolidated statement of financial position, the
consolidated statement of changes in equity, the consolidated cash
flow statement and related notes 1 to 10. We have read the other
information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
Company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the AIM Rules of the London Stock Exchange.
As disclosed in note 1 the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report have been prepared in
accordance with the accounting policies the Group intends to use in
preparing its next annual financial statements.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2017 is not prepared, in all material respects, in accordance
with accounting policies the group intends to use in preparing its
next annual financial statements and the AIM Rules of the London
Stock Exchange.
Deloitte LLP
Statutory Auditor
Cambridge, UK
18 September 2017
Condensed Consolidated Income Statement
For the six months ended 30 June 2017
Note Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000s GBP000s GBP000s
Net service revenue 19,476 12,715 29,224
Reimbursement revenue 3,431 4,838 10,009
REVENUE 2 22,907 17,553 39,233
Cost of sales (11,962) (7,438) (17,230)
Reimbursable expenses (3,431) (4,838) (10,009)
GROSS PROFIT 7,514 5,277 11,994
Administrative expenses (5,739) (4,429) (10,483)
------------------------- ---- ----------- ----------- ------------
Administrative expenses
comprises:
Other administrative
expenses (4,857) (3,566) (8,323)
Amortisation of
acquired intangible
assets (552) (307) (771)
Share-based payment
charge (278) (204) (398)
Deferred consideration
for acquisition - - (690)
Write-back of deferred
consideration - - 460
Acquisition costs 8 (52) (352) (584)
Exceptional items 9 - - (177)
------------------------- ---- ----------- ----------- ------------
Research and development (1,065) (102) (1,040)
Other operating
income 12 73 127
OPERATING PROFIT 722 819 598
Investment revenues 3 1 2
Finance costs (247) - (274)
PROFIT BEFORE TAXATION 478 820 326
Taxation (4) (184) 153
PROFIT FOR THE PERIOD 474 636 479
EARNINGS PER SHARE
Basic 3 1.2p 2.0p 1.3p
Diluted 3 1.1p 2.0p 1.3p
All activities in the current and prior period relate to
continuing operations.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2017
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000s GBP000s GBP000s
Profit for the period 474 636 479
Items that may be classified
subsequently to profit
or loss:
Exchange differences
on translation of foreign
operations 138 474 680
Other comprehensive
income for the period
net of tax 138 474 680
Total comprehensive
income for the period 612 1,110 1,159
Condensed Consolidated Statement of Financial Position
At 30 June 2017
Unaudited Unaudited Audited
Note 30 June 30 June 31 December
2017 2016 2016
GBP000s GBP000s GBP000s
Non-current assets
Goodwill 4 12,342 25,208 12,285
Other intangible
assets 19,662 2,703 19,842
Property, plant
and equipment 850 436 717
Investments 747 262 271
Deferred tax asset 1,725 375 1,448
35,326 28,984 34,563
Current assets
Trade and other
receivables 5 16,758 12,322 14,958
Inventory 6 695 67 450
Cash and cash equivalents 2,436 9,876 4,424
19,889 22,265 19,832
Total assets 55,215 51,249 54,395
Current liabilities
Borrowings (2) (2) (3)
Trade and other
payables 7 (6,619) (7,133) (7,077)
Deferred revenue (1,597) (1,155) (1,393)
Taxation (51) (148) (119)
Total current liabilities (8,269) (8,438) (8,592)
Net current assets 11,620 13,827 11,240
Non-current liabilities
Borrowings (5) (8) (5)
Deferred consideration
on acquisitions (7,993) (9,069) (7,772)
Deferred tax liability (3,306) (461) (3,418)
Total liabilities (19,573) (17,976) (19,787)
Net assets 35,642 33,273 34,608
Equity
Share capital 406 399 406
Share premium account 17,957 17,957 17,957
Merger reserve 10,264 9,307 10,264
Share option reserve 1,326 854 1,048
Translation reserve 281 (63) 143
Retained earnings 5,408 4,819 4,790
Total equity 35,642 33,273 34,608
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2017
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 2015* 288 9,361 2,981 650 (537) 4,193 16,936
Profit for the six month
period** - - - - - 636 636
Other comprehensive income
for the period** - - - - 474 - 474
Total comprehensive income
for the period** - - - - 474 636 1,110
Share-issue during the period
for cash (net of expenses)** 66 8,596 - - - - 8,662
Share-issues during the
period for non-cash consideration** 45 - 6,326 - - - 6,371
Share-based payment for
the period** - - - 204 - - 204
Deferred tax charge taken
directly to equity** - - - - - (10) (10)
Balance at 30 June 2016** 399 17,957 9,307 854 (63) 4,819 33,273
* Audited
** Unaudited
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2017
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
2015* 288 9,361 2,981 650 (537) 4,193 16,936
Profit for the year* - - - - - 479 479
Other comprehensive income
for the year* - - - - 680 - 680
Total comprehensive income
for the year* - - - - 680 479 1,159
Share-issue during the
period for cash (net of
expenses)* 66 8,596 - - - - 8,662
Share-issues during the
period for non-cash consideration* 51 - 7,144 - - - 7,195
Contingent share-issues
during the period for non-cash
consideration* 1 - 139 - - - 140
Share-based payment for
the year* - - - 398 - - 398
Deferred tax credit taken
directly to equity* - - - - - 118 118
Balance at 31 December
2016* 406 17,957 10,264 1,048 143 4,790 34,608
Profit for the six month
period** - - - - - 474 474
Other comprehensive income
for the period** - - - - 138 - 138
Total comprehensive income
for the period** - - - - 138 474 612
Share-based payment for
the period** - - - 278 - - 278
Deferred tax credit taken
directly to equity** - - - - - 144 144
Balance at 30 June 2017** 406 17,957 10,264 1,326 281 5,408 35,642
* Audited
** Unaudited
.
Condensed Consolidated Cash Flow Statement
For the six months ended 30 June 2017
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000s GBP000s GBP000s
Cash flows from operating
activities
Profit before taxation 478 820 326
Adjustment for:
Amortisation and depreciation 764 410 1,027
Loss on disposal of fixed
assets - (4) (2)
Share-based payment charge 278 204 398
Acquisition of shares
for non-cash consideration (463) (54) (54)
Exchange adjustments 70 339 419
Acquisition costs and
deferred consideration - 349 726
Write-back of deferred
consideration - - (415)
Investment revenues (3) (1) (2)
Finance costs 247 - 274
Operating cash flow before
changes in working capital
and provisions 1,371 2,063 2,697
Increase in trade and
other receivables (1,970) (2,659) (3,667)
Increase in inventory (245) (67) (405)
(Decrease)/increase in
trade and other payables (280) 132 (58)
Cash utilised in operations (1,124) (531) (1,433)
Taxation paid (186) (399) (941)
Net cash outflow from
operating activities (1,310) (930) (2,374)
Investing activities
Investment revenues received 3 1 2
Acquisition of property,
plant and equipment (308) (157) (705)
Acquisition of intangible
assets (375) (197) (404)
Acquisition of subsidiaries
including expenses of
acquisition - (1,505) (4,755)
Receipts from sale of
property, plant and equipment 4 31 31
Net cash outflow from
investing activities (676) (1,827) (5,831)
Financing activities
Issue of new shares - 9,185 9,185
Expenses of fundraising - (523) (523)
Finance costs paid - - (2)
Repayment of borrowings (2) (3) (5)
Net cash (outflow)/inflow
from financing activities (2) 8,659 8,655
Net (decrease)/increase
in cash and cash equivalents (1,988) 5,902 450
Cash and cash equivalents
at start of the period 4,424 3,974 3,974
Cash and cash equivalents
at end of period 2,436 9,876 4,424
Notes
1. GENERAL INFORMATION
This condensed 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 "Reimbursement revenue and
reimbursable expenses", the condensed interim financial statements
have been prepared using accounting policies and method of
computation consistent with those used in the audited statutory
financial statements for the year ended 31 December 2016 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 2017 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 2016 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 2017 Ergomed had cash resources of GBP2.4 million (30
June 2016: GBP9.9 million; 31 December 2016: GBP4.4 million).
Reimbursement revenue and reimbursable expenses
Reimbursable expenses are reflected in the Company's Condensed
Consolidated Income Statement as "Reimbursement revenue" in total
revenue and as "Reimbursable expenses" separately from cost of
sales as the Company is the primary obligor for these expenses
despite being reimbursed by its clients. Reimbursable expenses are
comprised primarily of payments to physicians (investigators) who
oversee clinical trials and travel expenses for our clinical
monitors and other employees. Costs for such activities are
recorded based upon payment requests or invoices that have been
received from third parties in the periods presented or accrued
based on patient recruitment. Reimbursed expenses may fluctuate
from period-to-period due, in part, to the lifecycle of contracts
that are in progress at a particular point in time. Service
revenues or revenues before reimbursements ("net service revenues")
include any margin earned on reimbursed expenses. When such an
expense is not reimbursed, they are classified as costs of sales on
the Condensed Consolidated Income Statement.
Risks and uncertainties
An outline of the key risks and uncertainties faced by the Group
was described in the Company's AIM Admission Document from July
2014 which is located in the Company website (www.ergomedplc.com)
in the Investors section. These risks include competition;
dependence on a small number of customers; legislation and
regulation of the pharmaceutical and biotechnology industries;
licensees, approvals and compliance; and the potential for
cancellation or delay of clinical studies by customers. 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 cashflow forecasts for the group,
detailing cash inflows and outflows for the period ending 31
December 2018. 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 2017.
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
statement of financial position date.
Adoption of new and revised standards
There are no new standards that have been issued but are not yet
effective for the financial year that are expected to have a
material impact on the Group.
2. REVENUE
Clinical Drug safety Total
research and medical revenue
services information
services
GBP000s GBP000s GBP000s
Six months ended 30 June
2017
Net service revenue** 8,747 10,729 19,476
Reimbursement revenue** 3,336 95 3,431
Revenue** 12,083 10,824 22,907
Six months ended 30 June
2016
Net service revenue** 7,238 5,477 12,715
Reimbursement revenue** 4,770 68 4,838
Revenue** 12,008 5,545 17,553
Year ended 31 December
2016
Net service revenue** 15,938 13,286 29,224
Reimbursement revenue** 9,839 170 10,009
Revenue* 25,777 13,456 39,233
* 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 30 June 31 December
2017 2016 2016
GBP000s GBP000s GBP000s
Earnings for the purposes
of basic earnings
per share being net
profit attributable
to
owners of the Company 474 636 479
Effect of dilutive potential - - -
ordinary shares
Earnings for the purposes
of diluted earnings
per share 474 636 479
No. No. No.
Number of shares
Weighted average number
of ordinary shares
for the purposes of
basic earnings per share 40,534,603 31,116,420 35,573,733
Effect of dilutive potential
ordinary shares
Share options 2,058,829 1,368,600 1,484,600
Weighted average number
of ordinary shares for
the purposes of diluted
earnings per share 42,593,432 32,485,020 37,058,333
4. GOODWILL
GBP000s
Cost
At 1 January 2016* 7,488
Arising on acquisition of subsidiaries** 17,720
At 30 June 2016** 25,208
GBP000s
Cost
At 1 January 2016* 7,488
Arising on acquisition of subsidiary* 4,797
At 31 December 2016* 12,285
Adjustment arising during measurement
period** 57
At 30 June 2017** 12,342
Accumulated impairment losses
1 January 2016*, 30 June 2016**, 31 December -
2016* and 30 June 2017**
Net book value
At 30 June 2017** 12,342
At 30 June 2016** 25,208
At 31 December 2016* 12,285
* Audited
** Unaudited
Goodwill in relation to the acquisition of Haemostatix was
increased by GBP58,000 during the period, following a re-assessment
of the deferred tax asset arising on the transaction.
Goodwill arising on acquisition of subsidiaries in the first
half of 2016 was based on initial valuations. Goodwill was
subsequently reduced upon identification of the associated
intangible assets once purchase price allocation was complete.
5. TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP000s GBP000s GBP000s
Trade receivables 11,179 8,358 9,540
Other receivables 1,191 485 1,025
Prepayments 792 483 841
Accrued income 2,753 2,774 2,538
Corporation tax receivable 843 222 1,014
16,758 12,322 14,958
6. INVENTORY
Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP000s GBP000s GBP000s
Clinical trial material 695 67 450
7. TRADE AND OTHER PAYABLES
Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP000s GBP000s GBP000s
Trade creditors 3,027 3,148 3,037
Amounts payable to related
parties 54 29 49
Social security and
other taxes 876 389 632
Other payables 785 432 600
Accruals 1,877 3,135 2,759
6,619 7,133 7,077
8. ACQUISITION COSTS
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000s GBP000s GBP000s
Acquisition of Sound
Opinion - 7 7
Acquisition of Haemostatix - 269 370
Acquisition of O+P &
GASD - 73 85
Acquisition of PharmInvent - - 118
Other M&A activities 52 3 4
52 352 584
9. EXCEPTIONAL ITEMS
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000s GBP000s GBP000s
Establishment of PrimeVigilance
US office - - 177
- - 177
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. In the full
year of 2016, these were directly related to the establishment of
the PrimeVigilance US office.
10. EBITDA and EBITDA (adjusted)
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000s GBP000s GBP000s
Operating profit 722 819 598
Adjust for:
Depreciation and amortisation
charges within Other
administrative expenses 212 103 256
Amortisation of acquired
intangible assets 552 307 771
EBITDA 1,486 1,229 1,625
Share-based payment charge 278 204 398
Deferred consideration
for acquisition - - 690
Write-back of deferred
consideration for acquisition - - (460)
Acquisition costs (note
8) 52 352 584
Exceptional items (note
9) - - 177
Adjusted EBITDA 1,816 1,785 3,014
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DGGDCXGBBGRR
(END) Dow Jones Newswires
September 18, 2017 02:01 ET (06:01 GMT)
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