TIDMERGO
RNS Number : 7156A
Ergomed plc
27 September 2022
PRESS RELEASE
Interim results for the six months ended 30 June 2022
Strong H1 performance: resilience, sustainable high growth and
positive outlook
-- Total revenue GBP69.9 million, up 24.8% over H1 2021
-- Adjusted EBITDA GBP13.8 million, at 23.0% of Service Fee Revenue
-- Total order book of GBP284.5 million, up 18.7% since 1
January 2022 and up 24.9% over H1 2021, underpins forward
visibility
-- ADAMAS acquisition completed and trading in line with expectations
-- Cash balance of GBP12.0 million (after GBP24.2 million net
cash purchase of ADAMAS) with available debt facilities increased
to GBP80.0 million
-- Trading in line with current market expectations
Guildford, UK - 27 September 2022 : Ergomed plc (LSE: ERGO)
("Ergomed"' or the "Company"), a company focused on providing
specialised services to the global pharmaceutical industry,
announces its interim results for the six months ended 30 June
2022.
Financial Summary
Figures in GBP millions, unless First First %
otherwise stated Half Half change
2022 2021
Total Revenue 69.9 56.0 24.8
Service Fee Revenue (Note 1) 59.8 47.6 25.6
Gross Profit 28.9 23.0 25.7
Gross Margin (%) 41.4% 41.1% 0.3
ppts
Gross Margin Service Fee (%) 48.4% 48.2% 0.2
(Note 2) ppts
Adjusted EBITDA (Note 3) 13.8 12.1 13.6
Cash at 30 June 12.0 24.6 (51.3)
Order book at 30 June 284.5 227.8 24.9
Basic adjusted earnings per
share (pence) (Note 4) 20.4p 16.8p 21.4
---------------------------------- -------- --- -------- --- --------
Notes :
(1) Service Fee Revenue is defined as Total Revenue less
Pass-through Revenue. Pass-through Revenue is revenue earned with
zero-margin.
(2) Gross Margin Service Fee (%) is defined as Service Fee Gross
Profit divided by Service Fee Revenue.
(3) Adjusted EBITDA is defined as operating profit for the
period plus depreciation and amortisation, share-based payment
charge, and other income and costs further detailed in Note 7 to
the financial statements.
(4) Basic adjusted earnings per share is defined as basic
earnings per share after adjustment for certain income and costs
detailed in Note 3 to the financial statements.
Dr Miroslav Reljanović, Executive Chairman of Ergomed, said:
"Ergomed has delivered further significant strategic progress in
H1 2022 with continued strong organic growth, ongoing delivery of
value from recent acquisitions including ADAMAS, and further
organic expansion into new geographies of strategic importance.
Alongside this, we have further strengthened the Company's Board
and leadership team, laying the foundations for the next steps of
our growth strategy. Ergomed has a robust and resilient business
model which is delivering a high level of sustainable growth at a
time of wider challenges in the global macro-environment. We look
forward with confidence to the rest of this year and beyond."
Key Financial Highlights
-- Revenue of GBP69.9 million (H1 2021: GBP56.0 million)
increased by 24.8% (up 20.0% in constant currency)
-- Pharmacovigilance (PV) division delivered strong growth with
revenue up 23.4% (up 18.7% in constant currency) to GBP35.6 million
(H1 2021: GBP28.8 million)
-- Clinical Research Services (CRO) division delivered strong
growth with revenue up 26.2% (up 21.4% in constant currency) to
GBP34.3 million (H1 2021: GBP27.2 million)
-- Gross profit up 25.7% to GBP28.9 million (H1 2021: GBP23.0 million)
-- Adjusted EBITDA at 23% of Service Fee Revenue and up 13.6% to
GBP13.8 million (H1 2021: GBP12.1 million)
-- Basic adjusted EPS up 21.4% to 20.4p (H1 2021: 16.8p)
-- Cash and cash equivalents of GBP12.0 million after payment of
GBP24.2 million net cash for ADAMAS acquisition
Strategic & Operational Highlights
-- Order book of GBP284.5 million future contracted revenue up
18.7% in H1 2022 (31 December 2021: GBP239.7 million) and up 24.9%
over H1 2021
-- North America revenues up 24.7% to GBP44.3 million (H1 2021: GBP35.5 million)
-- Organic investment in complementary geographies, service
offerings, strategic leadership hires and technology
-- Operational integration of ADAMAS into Ergomed's business
well advanced with further significant synergistic benefits
expected
-- Establishment of the Ergomed Rare Disease Innovation Centre
-- Available debt facilities increased to GBP80.0 million
Webcast and conference call for analysts:
A webcast and conference call for analysts will be held at 9.30
am BST today.
Webcast link:
https://www.lsegissuerservices.com/spark/Ergomed/events/750dcfbe-a928-4a7e-9d63-7e60bf93acdd
Conference call registration:
https://cossprereg.btci.com/prereg/key.process?key=P9G9JY8F4
Enquiries:
Ergomed plc Tel: +44 (0) 1483 402
975
Miroslav Reljanović (Executive
Chairman)
Richard Barfield (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 LLP (Joint Broker) Tel: +44 (0) 20 7418
James Steel / Dr Christopher Golden 89 00
Consilium Strategic Communications Tel: +44 (0) 20 3709
5700
Chris Gardner / Matthew Neal ergomed@consilium-comms.com
Angela Gray
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 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 REVIEW
Introduction
Ergomed continued to make significant strategic progress in the
first half of 2022, delivering a further period of robust
operational and financial performance. These results demonstrate
Ergomed's resilient business model, which has enabled us to
continue to deliver strong growth and invest for the future during
a period of significantly more challenging macro-economic
circumstances. Alongside high organic revenue and adjusted EBITDA
growth, the Company achieved further growth through the acquisition
of ADAMAS, acquired with cash generated organically by the
business. This strong financial performance underlines the value of
Ergomed's robust services model and the strength of the Company's
foundations for continued long-term growth.
Notwithstanding the wider macro-economic situation, the first
half of 2022 saw continuing favourable market dynamics within
Ergomed's specialist areas of rare disease, oncology,
pharmacovigilance and GXP audit. The global regulatory environment
continues to evolve, with increasing legislation that creates
complexity and drives the need for specialised outsourcing. In both
clinical trials and pharmacovigilance, innovation and the adoption
of digital technologies are increasing, with added impetus for
these trends driven by the COVID-19 pandemic. Ergomed has continued
to strengthen its position in its chosen markets with ongoing
organic investment in complementary geographies, service offerings,
strategic leadership hires and technology, to take advantage of
these favourable market trends and build for the future. This has
been further augmented by the addition to the Group of the ADAMAS
business and its strong brand. These operational improvements
across the Group are contributing to the increased order book and
driving sustainable growth.
Financial summary
Ergomed reported a strong financial performance in the first
half of 2022 with total revenues of GBP69.9 million (H1 2021:
GBP56.0 million), an increase of 24.8% (20.0% in constant
currency). Service fee revenues of GBP59.8 million (H1 2021:
GBP47.6 million) were up 25.6% (20.7% in constant currency) over H1
2021. This increase in revenues was driven by a robust order book
at the beginning of 2022, combined with substantial levels of new
business wins throughout the first half. Revenue growth in North
America continued and was up 24.7% compared to H1 2021.
Adjusted EBITDA in H1 2022 was 23.0% of service fee revenues in
the first half of 2022 and was up 13.6% to GBP13.8 million compared
to GBP12.1 million in H1 2021.
Cash generation in H1 2022 continued to be strong. After the
payment of GBP24.2 million net cash on the ADAMAS acquisition,
funded internally through organic cash generation, cash and cash
equivalents at 30 June 2022 was GBP12.0 million (H1 2021: GBP24.6
million). The Company continues to be debt free with available
banking facilities of GBP80.0 million, comprising a GBP50.0 million
facility and an additional GBP30.0 million accordion, available to
support continued growth.
Operational summary
Ergomed had an excellent first half, demonstrating strong
overall growth in revenue underpinned by strong demand for its
services across all areas of the business.
Ergomed has continued to develop internationally to meet global
demand for its services in both the Clinical Research Services and
PrimeVigilance divisions. Growth in the US is continuing, with
strong organic growth supported by recent acquisitions with US
presence, including ADAMAS. The Company's new operation in Japan,
the fourth largest pharmaceutical market in the world, is
continuing to grow, and recently opened subsidiaries to develop
operational capabilities in key European countries which have
further bolstered international growth and future prospects.
A strong business development performance saw net sales of new
business for H1 2022 increase by 19.8% to GBP108.8 million (H1
2021: GBP90.8 million), benefiting from continuing investment in
business development in both the CRO and PrimeVigilance businesses
and the significantly strengthened US and international presence.
The order book continues to grow and reached GBP284.5 million at
the end of H1 2022, up 18.7% from GBP239.7 million at 31 December
2021 and up 24.9% over H1 2021, providing excellent visibility of
contracted revenues into the second half of 2022 and beyond.
The increase in total revenues of 24.8% to GBP69.9 million (H1
2021: GBP56.0 million) was achieved with notable growth in both the
PrimeVigilance and Clinical Research Services businesses.
PrimeVigilance
Ergomed's pharmacovigilance (PV) business saw total revenue
increase to GBP35.6 million in H1 2022 from GBP28.8 million in H1
2021, up by 23.4% (18.7% in constant currency). Reported gross
profit increased from GBP14.7 million to GBP18.3 million, up 24.8%,
whilst gross margin increased to 51.4% (H1 2021: 50.7%).
The significant increase in PrimeVigilance revenue in the first
half of 2022 was driven by steady sales and repeat business, as the
division continued to demonstrate its long-term resilience and
ability to generate sustained growth during a time of macroeconomic
challenges. Further substantial progress was achieved in the
development and deployment of proprietary automation technology.
PrimeVigilance also invested further in training and skills
development across its existing team, whilst continuing to attract
senior industry experts to join the business. These investments
enabled organisational improvements to further enhance efficiency
and productivity.
Alongside this, client engagement through strategic partnerships
and governance oversight has continued to foster long-term
alignment and commitment to drive future growth. Service expansion
has been attained through a strategy of differentiated product
focus, enabling delivery of tailored solutions to meet the
increasingly complex global pharmacovigilance regulations.
Clinical Research Services (CRO)
Ergomed's CRO business saw total revenue increase to GBP34.3
million in H1 2022 from GBP27.2 million in H1 2021, up by 26.2%
(21.4% in constant currency). Reported gross profit increased by
27.2% to GBP10.6 million (H1 2021: GBP8.4 million) and service fee
gross margin remained robust at 43.4% (H1 2021: 44.2%).
The CRO business has seen further robust growth in the first
half of 2022, including a number of major new contract awards.
Ergomed's CRO business recently celebrated 25 years since its
foundation and has continued its long tradition of specialism and
innovation with the launch in February 2022 of the Ergomed Rare
Disease Innovation Centre, providing tailored and innovative
solutions for sponsors of rare disease drug development
programmes.
M&A Activity
Ergomed completed the acquisition of ADAMAS, an international
specialist consultancy offering a full range of independent quality
assurance services, on 9 February 2022. The operational integration
of ADAMAS into Ergomed's business is well advanced, with further
significant synergistic benefits expected. The acquisition was
completed using internally generated cash resources. The Company
continues to review acquisition opportunities to further grow the
CRO and PV businesses and deliver enhanced shareholder value, in
line with its disciplined M&A strategy.
Strengthening of the Board and senior leadership team
During the first half of 2022, John Dawson, CBE joined the Board
as an independent Non-Executive Director and Chair of the Audit
Committee, and Anne Whitaker joined as an independent Non-Executive
Director. The Company has continued to attract senior executives
with highly relevant experience and expertise in our areas of CRO
and PV specialisation, with recent key appointments in commercial
leadership roles.
Current trading and outlook
Ergomed has delivered further significant strategic progress in
H1 2022 with continued strong organic growth, ongoing delivery of
value from recent acquisitions including ADAMAS, and further
organic expansion into new geographies of strategic importance.
Alongside this, we have further strengthened the Company's Board
and leadership team, laying the foundations for the next steps of
our growth strategy. Ergomed has a robust and resilient business
model and is delivering a high level of sustainable growth at a
time of wider challenges in the global macro-environment. The
Company is trading in line with current market expectations and we
look forward with confidence to the rest of this year and
beyond.
Dr Miroslav Reljanović
Executive Chairman
FINANCIAL REVIEW
The primary financial statements of Ergomed plc for the six
months ended 30 June 2022 are presented later in this announcement
along with the key accounting policies, notes to the financial
statements and the independent review report from KPMG.
Key performance indicators
The Directors consider the principal financial performance
indicators of the Group to be:
GBP million (unless stated otherwise) H1 2022 H1 2021
------------------------------------------- --- -------- --------
Total revenue 69.9 56.0
Gross profit 28.9 23.0
Gross margin % on service fee revenue 48.4% 48.2%
Profit after tax 7.3 6.6
Adjusted EBITDA (Note 7) 13.8 12.1
Cash and cash equivalents 12.0 24.6
Cash generated from operating activities 12.0 11.0
Basic adjusted earnings per share
(Note 3) 20.4p 16.8p
------------------------------------------------ -------- --------
Consolidated income statement
Total revenue on a reported basis for the six months ended 30
June 2022 was GBP69.9 million (H1 2021: GBP56.0 million), an
increase of 24.8% (20.0% on a constant currency basis), driven by
growth in the PV division (up 23.4%) and the CRO division (up
26.2%), including revenues of GBP4.0 million in ADAMAS acquired on
9 February 2022. Revenues in the key North American market grew by
24.7% to GBP44.3 million (H1 2021: GBP35.5 million).
Gross profit was GBP28.9 million and service fee gross margin
was 48.4% (H1 2021: gross profit GBP23.0 million and service fee
gross margin 48.2%), the slightly higher gross margin percentage
being an anticipated result of favourable foreign exchange and
underlying organic revenue growth. Selling, general and
administration expenses including acquisition related costs were
GBP20.2 million (H1 2021: GBP14.8 million). Research and
development costs expensed in the period were GBP0.05 million (H1
2021: GBP0.04 million).
Adjusted EBITDA increased by 13.6% to GBP13.8 million in H1 2022
from GBP12.1 million in H1 2021, with profit after tax up 10.3% at
GBP7.3 million (H1 2021: GBP6.6 million). Basic adjusted earnings
per share was up 21.4% to 20.4p (H1 2021: 16.8p).
Consolidated balance sheet
Net assets increased by GBP7.9 million during the first half of
2022 and amounted to GBP75.1 million at 30 June 2022 (31 December
2021: GBP67.2 million) including net cash and cash equivalents of
GBP12.0 million (31 December 2021: GBP31.2 million).
Consolidated cash flow statement
At 30 June 2022, the Group's net cash balance was GBP12.0
million, after the GBP24.2 million net cash purchase of ADAMAS in
February 2022.
Cash generated from operating activities was GBP12.0 million (H1
2021: GBP11.0 million) before changes in working capital,
representing 86.9% of adjusted EBITDA in H1 2022. Ergomed has no
debt and has increased its multi-currency revolving credit facility
(RCF) from GBP30.0 million to GBP80.0 million, comprising a GBP50.0
million facility and an additional GBP30.0 million accordion.
Net outflows from investing activities increased to GBP24.7
million (H1 2021: GBP0.9 million) due to the GBP24.2 million net
cash purchase of ADAMAS. Net outflows on financing activities for
the period of GBP1.0 million were primarily related to lease costs
and interest paid.
Richard Barfield
Chief Financial Officer
Independent Review Report to Ergomed plc
Conclusion
We have been engaged by the Ergomed plc ("the Entity" or "the
Group") to review the Entity's condensed set of consolidated
financial statements in the half-yearly financial report for the
six months ended 30 June 2022 which comprises condensed
Consolidated Income Statement, condensed Consolidated Statement of
Comprehensive Income, condensed Consolidated Balance Sheet,
condensed Consolidated Statement of Changes in Equity, Consolidated
Cash Flow Statement a summary of significant accounting policies
and other explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of consolidated
financial statements in the half-yearly financial report for the
six months ended 30 June 2022 is not prepared, in all material
respects in accordance with International Accounting Standard 34
Interim Financial Reporting ("IAS 34") as contained in the UK
adopted International Accounting Standards and the AIM Rules.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity ("ISRE (UK) 2410") issued for use in the UK. A review of
interim financial information consists of making enquiries,
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
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.
We read the other information contained in the half-yearly
financial report to identify material inconsistencies with the
information in the condensed set of consolidated financial
statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the review. If
we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention that causes us to believe that the directors have
inappropriately adopted the going concern basis of accounting, or
that the directors have identified material uncertainties relating
to going concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the Entity to cease to continue as a going
concern, and the above conclusions are not a guarantee that the
Entity will continue in operation.
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.
The directors are responsible for preparing the condensed set of
consolidated financial statements included in the half-yearly
financial report in accordance with IAS 34 as contained in the UK
adopted International Accounting Standards .
As disclosed in note 1, the annual financial statements of the
Entity for the year ended 31 December 2021 are prepared in
accordance with UK-adopted international accounting standards.
In preparing the condensed set of consolidated financial
statements, the directors are responsible for assessing the
Entity's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the Entity or to cease operations, or have no realistic
alternative but to do so.
Our responsibility
Our responsibility is to express to the Entity a conclusion on
the condensed set of consolidated financial statements in the
half-yearly financial report based on our review.
Our conclusion, including our conclusions relating to going
concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion section of
this report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Entity in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the Entity those matters we are required to state to
it in this 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 Entity for our review work, for this report,
or for the conclusions we have reached.
KPMG 26 September 2022
Chartered Accountants
1 Stokes Place
St Stephen's Green
Dublin 2,
Ireland.
Condensed Consolidated Income Statement
For the six months ended 30 June 2022
Note Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 31 December
2021 2021
GBP000s
GBP000s GBP000s
REVENUE 2 69,917 56,042 118,581
Cost of sales (30,851) (24,671) (52,191)
Reimbursable expenses (10,139) (8,354) (18,028)
GROSS PROFIT 28,927 23,017 48,362
Selling, general and administrative
expenses (20,163) (14,848) (34,877)
Selling, general and administrative
expenses comprises:
Other selling, general and administrative
expenses (17,363) (13,201) (27,736)
Amortisation of acquired intangible
assets (1,404) (728) (1,599)
Share-based payment charge (557) (431) (817)
Contingent consideration for
acquisitions - - (2,949)
Acquisition costs 6 (839) (488) (1,776)
--------------------------------------------- ---- ------------- ----------- ------------
Research and development expenses (47) (36) (130)
Net impairment reversal/(loss)
on trade receivable and contract
assets 287 (533) (324)
Other operating income 5 385 926 1,593
OPERATING PROFIT 9,389 8,526 14,624
Finance income - 1 1
Finance costs 4 (239) (213) (361)
PROFIT BEFORE TAXATION 9,150 8,314 14,264
Taxation 8 (1,836) (1,681) (1,590)
PROFIT FOR THE PERIOD 7,314 6,633 12,674
All activities in the current and prior periods relate to
continuing operations.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2022
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December
2021
GBP000s GBP000s
GBP000s
OTHER COMPREHENSIVE INCOME
Profit for the period 7,314 6,633 12,674
Exchange differences on translation
of foreign operations 2,121 (1,001) (682)
Other comprehensive income for
the period net of tax 2,121 (1,001) (682)
Total comprehensive profit for
the period 9,435 5,632 11,992
All activities in the current and prior periods relate to
continuing operations.
Note Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December
2021
GBP000s GBP000s
GBP000s
EARNINGS PER SHARE 3
Basic 14.8p 13.6p 26.1p
Diluted 14.2p 13.0p 25.1p
Note Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December
2021
GBP000s GBP000s
GBP000s
ADJUSTED EARNINGS PER SHARE 3
Basic 20.4p 16.8p 41.1p
Diluted 19.6p 16.1p 39.4p
ADJUSTED EBITDA
(Adjusted Earnings Before Interest,
Tax, Depreciation and Amortisation) 713,760 12,111 25,423
Condensed Consolidated Balance Sheet
As at 30 June 2022
Unaudited Unaudited Audited
Note 30 June 2022 30 June 2021 31 December
2021
GBP000s GBP000s
GBP000s
Non-current assets
Goodwill 9 41,076 25,646 23,903
Other intangible assets 10 16,910 7,683 7,653
Property, plant and equipment 1,974 1,957 1,966
Right-of-use assets 2,639 3,731 2,691
Deferred tax asset 6,999 5,343 9,433
69,598 44,360 45,646
Current assets
Trade and other receivables 11 30,653 21,966 25,143
Contract assets (accrued revenue) 9,198 4,268 3,958
Cash and cash equivalents 12 11,973 24,571 31,243
51,824 50,805 60,344
Total assets 121,422 95,165 105,990
Current liabilities
Lease liabilities (1,322) (1,338) (1,249)
Trade and other payables 13 (15,469) (13,082) (14,946)
Derivative Liability (783) (98) (261)
Contract liabilities (deferred
revenue) (22,975) (15,489) (17,752)
Current tax liability (468) (1,676) (1,172)
(41,017) (31,683) (35,380)
Net current assets 10,807 19,122 24,964
Non-current liabilities
Lease liabilities (1,264) (2,429) (1,432)
Provisions (19) (19) (19)
Deferred tax liability (4,069) (2,101) (1,920)
(5,352) (4,549) (3,371)
Total liabilities (46,369) (36,232) (38,751)
Net assets 75,053 58,933 67,239
Equity
Share capital 14 499 490 493
Share premium account 711 116 545
Merger reserve 1,349 1,349 1,349
Share-based payment reserve 6,416 5,473 5,859
Translation reserve 2,054 (386) (67)
Retained earnings 64,024 51,891 59,060
Total equity 75,053 58,933 67,239
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2022
Share Share Merger Share-based Translation Retained Total
capital premium reserve payment reserve earnings
account reserve
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 period - - - - - 6,633 6,633
Other comprehensive income
for the period - - - - (1,001) - (1,001)
Total comprehensive income
for the period - - - - (1,001) 6,633 5,632
Shares issued on exercise
of share options 1 113 - - - - 114
Equity-settled share-based
payment charge - - - 431 - - 431
Deferred tax credit taken
directly to equity - - - - - (110) (110)
Total transactions with shareholders
in their capacity as shareholders 1 113 - 431 - (110) 435
Balance at 30 June 2021 490 116 1,349 5,473 (386) 51,891 58,933
Profit for the period - - - - - 6,041 6,041
Other comprehensive income
for the period - - - - 319 - 319
Total comprehensive income
for the period - - - - 319 6,041 6,360
Shares issued on exercise
of share options 3 429 - - - - 432
Equity-settled share-based
payment charge - - - 386 - - 386
Deferred tax credit taken
directly to equity - - - - - 1,128 1,128
Total transactions with shareholders
in their capacity as shareholders 3 429 - 386 - 1,128 1,946
Balance at 31 December 2021 493 545 1,349 5,859 (67) 59,060 67,239
Profit for the period - - - - - 7,314 7,314
Other comprehensive income
for the period - - - - 2,121 - 2,121
Total comprehensive income
for the period - - - - 2,121 7,314 9,435
Shares issued on exercise
of share options 6 166 - - - - 172
Share-based payment charge - - - 557 - - 557
Deferred tax credit taken
directly to equity - - - - - (2,350) (2,350)
Total transactions with shareholders
in their capacity as shareholders 6 166 - 557 - (2,350) (1,621)
Balance at 30 June 2022 499 711 1,349 6,416 2,054 64,024 75,053
Condensed Consolidated Cash Flow Statement
For the six months ended 30 June 2022
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December
2021
GBP000s GBP000s
GBP000s
Cash flows from operating activities
Profit for the period 7,314 6,633 12,674
Adjustment for:
Amortisation and depreciation 2,937 2,623 5,046
Profit on disposal of non-current
assets (28) (145) (413)
Share-based payment charge 557 431 817
RDEC income (293) (559) (956)
Finance costs 239 213 361
Other non-cash movements (609) 162 (25)
Exceptional Items (Earn-out on acquisitions) - - 2,949
Tax expense 1,836 1,681 1,590
Operating cash flow before changes
in working capital and provisions 11,953 11,039 22,043
Decrease/(increase) in trade, other
receivables and accrued revenue (8,765) 1,672 367
(Decrease)/increase in trade, other
payables and deferred revenue 4,536 (1,833) 217
(Decrease)/increase in provisions - (298) (298)
Cash generated from operating activities 7,724 10,580 22,329
Taxation paid (2,346) (2,059) (3,646)
Net cash from operating activities 5,378 8,521 18,683
Cash flows from investing activities
Finance income received - 1 1
Acquisition of intangible assets (124) (14) (30)
Acquisition of property, plant and
equipment (344) (545) (953)
Proceeds from the sale of property,
plant and equipment 6 14 103
Acquisition of subsidiaries, net
of cash acquired (24,243) - -
Acquisition related earn-out paid - (318) (3,267)
Net cash used in investing activities (24,705) (862) (4,146)
Cash flows from financing activities
Proceeds from the issue of new ordinary
shares 172 114 546
Finance costs paid (169) (105) (169)
Payment of lease liabilities (964) (1,607) (2,490)
Proceeds from borrowings 15,000 - -
Repayment of borrowings (15,000) - -
Net cash (used in)/from financing
activities (961) (1,598) (2,113)
Net (decrease)/ increase in cash
and cash equivalents (20,288) 6,061 12,424
Effect of foreign currency on cash
balances 1,018 (484) (175)
Cash and cash equivalents at start
of the period 31,243 18,994 18,944
Cash and cash equivalents at end
of period 11,973 24,571 31,243
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2022
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated financial statements have been
prepared in accordance with the recognition and measurement
requirements of International Financial Reporting Standards (IFRS)
and IFRIC interpretations issued by the International Accounting
Standards Board (IASB) adopted by the UK.
The condensed consolidated financial statements have been
prepared in accordance with International Accounting Standard 34
("IAS 34") - Interim Financial Reporting, and should be read in
conjunction with the Group's last annual consolidated financial
statements as at and for the year ended 31 December 2021. Selected
explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in the
Group's financial position and performance since the last annual
financial statements.
The condensed consolidated financial statements have been
prepared under the historical cost convention, except for the fair
value of certain financial instruments which are further detailed
in note 16.
The same accounting policies, presentation and methods of
computation have been followed in these condensed consolidated
financial statements as were applied in the preparation of the
Group's financial statements for the year ended 31 December
2021.
These condensed consolidated financial statements do not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006. A copy of the Group's audited statutory
accounts for the year ended 31 December 2021 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.
Risks and uncertainties
An outline of the key risks and uncertainties faced by the Group
was described in the Annual Report and Accounts 2021 which is
available on the Company website (www.ergomedplc.com). The
principle risks were: Cancellation or delay of clinical trials or
projects by customers including as a result of COVID-19; Lower
contacted order book realisation of sales pipeline to contract;
significant regional or national event (pandemic, natural disaster,
conflict or terrorism; Quality and third party oversight ('TPO');
Information security; Access to capital; Retention of senior and
key employees; Dependence on a limited number of key clients; and
Data privacy.
Critical accounting judgements and key sources of estimation
uncertainty
In preparing these interim financial statements, management has
made judgements and estimates that affect the application of
accounting policies and the reported amounts of assets and
liabilities, income and expense.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those described in the last annual
financial statements and are summarised below.
Source of estimation
uncertainty Overview
-------------------- ----------------------------------------------------------
Bad debt provision The Group had provisions against trade receivables at
the period end of GBP344,000 (2021: GBP627,000) which
resulted in a credit to the Income Statement in the
period of GBP287,000 (2020: charge of GBP533,000).
-------------------- ----------------------------------------------------------
Impairment of The impairment provision against goodwill at the period
goodwill end was GBP2,143,000 (2021: GBP2,143,000) and related
fully against the investment in Haemostatix Limited.
GBPnil (2021: GBPnil) was charged to the Income Statement
in the period.
-------------------- ----------------------------------------------------------
Revenue from Revenue for CRO services is recognised based on the
customer costs incurred on a project as a proportion of total
contracts expected costs to determine a percentage of completion
which is applied to the estimate of the transaction
price. Given the long-term nature and complexity of
clinical trials, estimation is used to determine the
forecast costs to complete, which can impact the timing
and value of revenue recognised for the CRO business.
-------------------- ----------------------------------------------------------
Going concern
The interim financial statements have been prepared on the going
concern basis, which assumes that the Group 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
these interim financial statements are approved. The Directors have
reviewed cash flow forecasts for the period through to 31 December
2025, which is derived from the 2022 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 2022 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 2022 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 these interim financial statements are approved.
On the basis of the above factors and, having made appropriate
enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the interim financial
statements.
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.
2. REVENUE AND OPERATING SEGMENTS
The Group's revenue is disaggregated by geographical market and
major service lines:
30 June 2022 Geographical market and major service lines
CRO services PV services Total services
GBP000s GBP000s GBP000s
Geographical market by client
location
UK 6,046 4,021 10,067
Rest of Europe, Middle East and
Africa 6,180 6,470 12,650
North America 20,231 24,026 44,257
Asia 1,868 935 2,803
Australia 4 136 140
34,329 35,588 69,917
30 June 2021 Geographical market and major service lines
CRO services PV services Total services
GBP000s GBP000s GBP000s
Geographical market by client
location
UK 2,444 4,534 6,978
Rest of Europe, Middle East and
Africa 4,058 6,243 10,301
North America 18,843 16,661 35,504
Asia 1,860 1,399 3,259
Australia - - -
27,205 28,837 56,042
31 December 2021 Geographical market and major service lines
CRO services PV services Total services
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 4,687 2,532 7,219
Australia 2 178 180
58,077 60,504 118,581
Operating segments
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. Following the
acquisition of ADAMAS by the Group in February 2022, the associated
revenues have been allocated between CRO and PV based on the nature
of the revenues generated.
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.
Consolidated
CRO PV total
30 June 2022 GBP000s GBP000s GBP000s
------------------------------------------ -------- -------- ------------
Segment revenues 34,329 35,588 69,917
Cost of sales (13,830) (17,021) (30,851)
------------------------------------------ -------- -------- ------------
Reimbursable expenses (9,858) (281) (10,139)
------------------------------------------ -------- -------- ------------
Segment gross profit 10,641 18,286 28,927
------------------------------------------ -------- -------- ------------
Selling, general and administration
expenses (20,163)
------------------------------------------ -------- -------- ------------
Selling, general and administration
expenses comprises:
------------------------------------------ ------------
Other selling, general and administration
expenses (17,363)
------------------------------------------ ------------
Amortisation of acquired fair valued
intangible assets (1,404)
------------------------------------------ ------------
Share-based payment charge (557)
------------------------------------------ ------------
Acquisition costs (839)
------------------------------------------ -------- -------- ------------
Research and development expenses (47)
Net impairment reversal/(loss) on trade
receivable and contract assets 287
------------------------------------------ -------- -------- ------------
Other operating income 385
------------------------------------------ -------- -------- ------------
Operating profit 9,389
Finance income -
Finance costs (239)
------------------------------------------ -------- -------- ------------
Profit before tax 9,150
------------------------------------------ -------- -------- ------------
Consolidated
CRO PV total
30 June 2021 GBP000s GBP000s GBP000s
------------------------------------------ -------- -------- ------------
Segment revenues 27,205 28,837 56,042
Cost of sales (10,664) (14,007) (24,671)
------------------------------------------ -------- -------- ------------
Reimbursable expenses (8,176) (178) (8,354)
------------------------------------------ -------- -------- ------------
Segment gross profit 8,365 14,652 23,017
------------------------------------------ -------- -------- ------------
Selling, general and administration
expenses (14,848)
------------------------------------------ -------- -------- ------------
Selling, general and administration
expenses comprises:
------------------------------------------ ------------
Other selling, general and administration
expenses (13,201)
------------------------------------------ ------------
Amortisation of acquired fair valued
intangible assets (728)
------------------------------------------ ------------
Share-based payment charge (431)
------------------------------------------ ------------
Acquisition costs (488)
------------------------------------------ -------- -------- ------------
Research and development expenses (36)
------------------------------------------ -------- -------- ------------
Net impairment reversal/(loss) on trade
receivable and contract assets (533)
------------------------------------------ -------- -------- ------------
Other operating income 926
------------------------------------------ -------- -------- ------------
Operating profit 8,526
Finance income 1
Finance costs (213)
------------------------------------------ -------- -------- ------------
Profit before tax 8,314
------------------------------------------ -------- -------- ------------
Consolidated
CRO PV total
31 December 2021 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 (34,877)
------------------------------------------ -------- -------- ------------
Selling, general and administration
expenses comprises:
------------------------------------------ ------------
Other selling, general and administration
expenses (27,736)
------------------------------------------ ------------
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)
Net impairment reversal/(loss) on trade
receivable and contract assets (324)
------------------------------------------ -------- -------- ------------
Other operating income 1,593
------------------------------------------ -------- -------- ------------
Operating profit 14,624
Finance income 1
Finance costs (361)
------------------------------------------ -------- -------- ------------
Profit before tax 14,264
------------------------------------------ -------- -------- ------------
Segment net assets
31 December
30 June 2022 30 June 2021 2021
GBP000s GBP000s GBP000s
------------------------------ ------------ ------------ -----------
CRO 34,939 27,609 28,531
------------------------------ ------------ ------------ -----------
PV 40,114 31,324 38,708
------------------------------ ------------ ------------ -----------
Consolidated total net assets 75,053 58,933 67,239
------------------------------ ------------ ------------ -----------
3. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is
based on the following data:
Unaudited Unaudited Unaudited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December
2021
GBP000s GBP000s
GBP000s
EARNINGS
Earnings for the purposes of
basic and diluted earnings per
share being net profit attributable
to owners of the Company 7,314 6,633 12,674
Adjustments to earnings:
Amortisation of acquired fair
valued intangible assets 1,404 728 1,605
Share-based payment charge 557 431 817
Acquisition costs (note 6) 839 488 1,776
Acquisition-related contingent
consideration - - 2,949
Pay in lieu and non-compete compensation 38 45 211
Tax effect of adjusting items (66) (101) (102)
Adjusted earnings for the purposes
of basic and diluted earnings
per share 10,086 8,224 19,930
No. No. No.
NUMBER OF SHARES
Weighted average number of shares
for the purposes of basic earnings
per share 49,520,505 48,910,834 48,466,740
Dilution effect of:
Share options 1,822,690 2,293,726 2,102,588
Weighted average number of shares
for the purposes of diluted earnings
per share 51,343,195 51,204,560 50,569,328
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December
2021
GBP000s GBP000s
GBP000s
EARNINGS PER SHARE
Basic 14.8p 13.6p 26.1p
Diluted 14.2p 13.0p 25.1p
ADJUSTED EARNINGS PER SHARE
Basic 20.4p 16.8p 41.1p
Diluted 19.6p 16.1p 39.4p
4. FINANCE COSTS
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December
GBP000s GBP000s 2021
GBP000s
Interest on lease liabilities 70 108 191
Other Interest payable 169 105 170
239 213 361
5. OTHER OPERATING INCOME
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December
GBP000s GBP000s 2021
GBP000s
Foreign grant income 78 298 629
RDEC income 293 559 956
Other income 14 69 8
385 926 1,593
6. ACQUISITION COSTS
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December
2021
GBP000s GBP000s GBP000s
Acquisition of ADAMAS 700 - 240
Acquisition of MedSource - 327 406
Aborted and other acquisition
costs 139 161 1,130
839 488 1,776
7. EBITDA and Adjusted EBITDA
Unaudited Unaudited Unaudited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December
2021
GBP000s GBP000s GBP000s
Operating profit 9,389 8,526 14,624
Adjusted for:
Depreciation and amortisation
charges within Other selling,
general & administration expenses 1,533 1,895 3,447
Amortisation of acquired fair
valued intangible assets 1,404 728 1,599
EBITDA 12,326 11,149 19,670
Adjusted for:
Share-based payment charge 557 431 817
Acquisition related contingent
compensation - - 2,949
Acquisition costs (note 6) 839 488 1,776
Pay in lieu and non-compete compensation 38 43 211
Adjusted EBITDA 13,760 12,111 25,423
The Directors make certain adjustments to EBITDA to derive
Adjusted EBITDA, which they consider are more reflective of the
Group's underlying trading performance, enabling comparisons to be
made with prior periods.
8. INCOME TAX EXPENSE
Income tax expense is recognised at an amount determined by
multiplying the profit before tax for the interim reporting period
by management's best estimate of the weighted-average annual income
tax rate, adjusted for the tax effect of certain items recognised
in full in the interim period. As such, the effective tax rate in
the interim financial statements may differ from management's
estimate of the effective tax rate for the annual financial
statements.
The Group's consolidated effective tax rate in respect of
continuing operations for the six months ended 30 June 2022 was
20.1% (six months ended 30 June 2021: 20.2%).
9. GOODWILL
Reconciliation of carrying amount: Total
GBP000s
Balance at 1 January 2022 23,903
Arising on business combinations 15,820
Translation movement 1,353
Balance at 30 June 2022 41,076
As at 30 June 2022, the Group performed an assessment to
identify indicators of impairment relating to goodwill allocated to
cash generating units (CGUs). This included a review of internal
and external indicators of impairment including considering the
year-to-date performance of the relevant CGUs and any changes in
key assumptions. The outcome of this assessment was that there were
no indications of impairment which could reasonably be expected to
eliminate the headroom computed at 31 December 2021. As a result of
this assessment no impairment charges were recorded in the first
half of 2022 (2021: first half GBPnil; full-year GBPnil).
A full detailed impairment review will be conducted on all CGUs
at 31 December 2022.
10. OTHER INTANGIBLE ASSETS
Total
GBP000s
Cost
At 1 January 2022 33,943
Acquisitions through business combinations 10,106
Additions 124
Disposals -
Translation movement 895
At 30 June 2022 45,068
Amortisation
At 1 January 2022 26,290
Charge for the period 1,673
Disposals -
Translation movement 195
At 30 June 2022 28,158
Net Book Value
At 30 June 2022 16,910
At 31 December 2021 7,653
At 30 June 2021 7,683
11. TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited
30 June 2022 30 June 2021 31 December
GBP000s GBP000s 2021
GBP000s
Trade receivables 25,265 18,900 20,234
Other receivables 1,451 834 869
Derivative asset - Foreign currency
forward contracts 15 13 -
Prepayments 1,884 1,572 1,818
Corporation tax receivable 2,038 647 2,222
30,653 21,966 25,143
Trade receivables is recorded net of impairment losses of
GBP344,000 (2021: GBP627,000),
12. CASH AND CASH EQUIVALENTS AND BORROWINGS
On 1 February 2022, Ergomed plc drew down GBP15 million against
the multi-currency revolving credit facility ("RCF") available with
the Company's bankers, HSBC to part fund the acquisition of ADAMAS.
The interest rate payable on this borrowing was SONIA plus 2.1%. As
at 30 June 2022 the entire drawdown of GBP15 million was repaid and
the full RCF is undrawn. On 22 July 2022 the Group has increased
its multi-currency rolling credit facility (RCF) from GBP30.0
million to GBP80.0 million, comprising a GBP50.0 million facility
with an additional GBP30.0 million accordion.
Unaudited Unaudited Audited
30 June 2022 30 June 2021 31 December
GBP000s GBP000s 2021
GBP000s
Cash and cash equivalents 11,973 24,571 31,243
Borrowings - - -
Cash and cash equivalents net
of borrowings 11,973 24,571 18,994
13. TRADE AND OTHER PAYABLES
Unaudited Unaudited Audited
30 June 2022 30 June 2021 31 December
GBP000s GBP000s 2022
GBP000s
Trade payables 4,915 3,435 3,102
Amounts payable to related parties - 52 3
Social security and other taxes 1,356 859 1,302
Other payables 2,077 1,451 1,541
Customer advances - 247 47
Accruals 7,121 7,038 8,951
15,469 13,082 14,946
14. ORDINARY SHARE CAPITAL
Number GBP000s
Ordinary shares of GBP0.01 each
Balance at 30 June 2021 48,955,339 490
Exercise of share options 338,290 3
Balance at 31 December 2021 49,293,629 493
Exercise of share options 586,400 6
Balance at 30 June 2022 49,880,029 499
15. ACQUISITION OF SUBSIDIARY - ADAMAS
On 9 February 2022, the Group acquired all of 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 rolling 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 30 June 2022, ADAMAS
contributed revenue of GBP4.0 million and profit of GBP0.1 million
to the Group's results. If the acquisition had occurred on 1
January 2022, management estimates that consolidated revenue would
have been GBP4.7 million, and profit for the period would have been
GBP0.1 million. In determining these amounts, management has
assumed that the fair value adjustments, determined provisionally,
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 Provisional
valuation
GBP000s
Intangible assets 10,106
Property, plant and equipment 19
Deferred tax assets 4
Trade and other receivables 1,876
Contract asset (accrued income) 233
Cash and equivalents 1,411
Trade and other payables (1,246)
Contract liability (deferred revenue) (14)
Taxation payable (121)
Deferred tax liability (2,434)
Total identifiable net assets 9,834
Goodwill 15,820
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 940
25,183
Included within intangible assets are customer relationships of
GBP8,630,000, brand of GBP730,000 and contracted orderbook of
GBP735,000 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
GBP700,000 in period to 30 June 2022. These costs have been
included in acquisition costs within selling and administrative
expenses in the Group's consolidated income statement.
The fair value of ADAMAS's intangible assets (customer
relationships, brand and contracted orderbook) has been measured
provisionally, pending completion of an independent valuation. The
Group has a 12-month measurement period from the date of
acquisition ending on 9 February 2023.
16. FINANCIAL INSTRUMENTS
Categories of financial instruments
The following table shows the carrying amounts and fair values
of financial assets and financial liabilities at the reporting
date.
Carrying amount Fair value
------------------------------------ ----------------------------------------------------------- ----------
Financial Financial
assets liabilities
at fair at
value Financial Financial fair value
through assets liabilities through
profit at at profit
and amortised amortised and
loss cost cost loss Total Total
30 June 2022 GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
------------------------------------ --------- ---------- ------------ ------------ -------- ----------
Financial assets
Equity investments - - - - - 38
Trade receivables - 25,265 - - 25,265 25,265
Contract assets (accrued revenue) - 9,198 - - 9,198 9,198
Other receivables - 1,451 - - 1,451 1,451
------------------------------------ --------- ---------- ------------ ------------ -------- ----------
Derivative asset - Foreign currency
forward contracts 15 - - - 15 15
------------------------------------ --------- ---------- ------------ ------------ -------- ----------
Cash and cash equivalents - 11,973 - - 11,973 11,973
------------------------------------ --------- ---------- ------------ ------------ -------- ----------
15 47,887 - - 47,902 47,940
------------------------------------ --------- ---------- ------------ ------------ -------- ----------
Financial liabilities
Lease liabilities - - 2,586 - 2,586 2,586
Trade payables - - 4,915 - 4,915 4,915
Amounts payable to related parties - - - - - -
Other payables - - 2,077 - 2,077 2,077
Derivative liability - Foreign
currency forward contracts - - - 783 783 783
Accruals - - 7,121 - 7,121 7,121
------------------------------------ --------- ---------- ------------ ------------ -------- ----------
- - 16,699 783 17,482 17,482
------------------------------------ --------- ---------- ------------ ------------ -------- ----------
Carrying amount Fair value
---------------------------------- ----------------------------------------------------------- ----------
Financial Financial
assets liabilities
at fair at
value Financial Financial fair value
through assets liabilities through
profit at at profit
and amortised amortised and
loss cost cost loss Total Total
30 June 2021 GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
---------------------------------- --------- ---------- ------------ ------------ -------- ----------
Financial assets
Equity investments - - - - - -
Trade receivables - 18,900 - - 18,900 18,900
Contract assets (accrued revenue) - 4,268 - - 4,268 4,268
Other receivables - 834 - - 834 834
---------------------------------- --------- ---------- ------------ ------------ -------- ----------
Derivative asset - Foreign
currency forward contracts 13 - - - 13 13
---------------------------------- --------- ---------- ------------ ------------ -------- ----------
Cash and cash equivalents - 24,571 - - 24,571 24,571
---------------------------------- --------- ---------- ------------ ------------ -------- ----------
13 48,573 - - 48,586 48,586
---------------------------------- --------- ---------- ------------ ------------ -------- ----------
Financial liabilities
Lease liabilities - - 3,767 - 3,767 3,767
Trade payables - - 3,435 - 3,435 3,435
Amounts payable to related
parties - - 52 - 52 52
Other payables - - 1,698 - 1,698 1,698
Derivative liability - Foreign
currency forward contracts - - - 98 98 98
Accruals - - 7,038 - 7,038 7,038
---------------------------------- --------- ---------- ------------ ------------ -------- ----------
- - 15,990 98 16,088 16,088
---------------------------------- --------- ---------- ------------ ------------ -------- ----------
Carrying amount Fair value
------------------------------- ----------------------------------------------------------- ----------
Financial Financial
assets liabilities
at fair at
value Financial Financial fair value
through assets liabilities through
profit at at profit
and amortised amortised and
loss cost cost loss Total Total
31 December 2021 GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
------------------------------- --------- ---------- ------------ ------------ -------- ----------
Financial assets
Equity investments - - - - - 45
Trade receivables - 20,234 - - 20,171 20,171
Accrued revenue (contract
asset) - 3,958 - - 3,958 3,958
Other receivables - 692 - - 692 692
------------------------------- --------- ---------- ------------ ------------ -------- ----------
Cash and cash equivalents - 31,243 - - 31,243 31,243
------------------------------- --------- ---------- ------------ ------------ -------- ----------
- 56,127 - - 56,064 56,109
------------------------------- --------- ---------- ------------ ------------ -------- ----------
Financial liabilities
Lease liabilities - - 2,681 - 2,681 2,681
Trade payables - - 3,102 - 3,102 3,102
Amounts payable to related
parties - - 3 - 3 3
Other payables - - 1,587 - 1,587 1,587
Derivative liability - Foreign
currency forward contracts - - - 261 261 261
Accruals - - 8,951 - 8,951 8,951
------------------------------- --------- ---------- ------------ ------------ -------- ----------
- - 16,324 261 16,585 16,585
------------------------------- --------- ---------- ------------ ------------ -------- ----------
Financial instruments measured at fair value
The financial instruments measured at fair value have been
categorised within the fair value hierarchy based on the valuation
technique used to determine fair value at the reporting date.
30 June 31 December
2022 30 June 2021 2021
GBP000s GBP000s GBP000s
----------------------------------- -------- ------------ -----------
Financial assets
Equity investments - Level 1 38 - 45
Equity investments - Level 3 - - -
Foreign currency forward contracts
used for hedging - Level 2 15 13 -
----------------------------------- -------- ------------ -----------
Financial assets measured at fair
value 53 13 45
----------------------------------- -------- ------------ -----------
Financial liabilities
Foreign currency forward contracts
used for hedging - Level 2 783 98 261
Financial liabilities measured at
fair value 783 98 261
----------------------------------- -------- ------------ -----------
Foreign currency forward contracts (Level 2)
The Group's foreign currency forward contracts are not traded in
active markets. These contracts have been fair valued using
observable forward exchange rates and interest rates corresponding
to the maturity of the contract. The effects of non-observable
inputs are not significant for foreign currency forward
contracts.
Equity investments (Level 1 and 3)
Equity investments which are publicly quoted are measured based
on the quoted market price. Unlisted equity investments are
measured based on the market price of recent share issuances or,
where not available, managements best estimate of the realisable
value of those investments. The level 1 investment held as at 30
June 2021 related to Modus Therapeutics Holding AB, which was
transferred to level 1 on 20 July 2021 when the shares were listed
on the Nasdaq First North Growth Market. Given the lack of
liquidity in Modus' stock, management continue to hold the
value of the investment at GBPnil (the fair value at the
reporting date was GBP38,000). The Modus investment was fully
impaired during prior financial periods after the results of
completed clinical trials in those periods were published.
17. SUBSEQUENT EVENTS
On 22 July 2022 the Group has increased its multi-currency
rolling credit facility (RCF) from GBP30.0 million to GBP80.0
million, comprising a GBP50.0 million facility with an additional
GBP30.0 million accordion.
There were no other material post balance sheet events between
the balance sheet date and the date of this
report.
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END
IR EAENKALEAEAA
(END) Dow Jones Newswires
September 27, 2022 02:01 ET (06:01 GMT)
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