TIDMERGO
RNS Number : 6865T
Ergomed plc
21 March 2023
Preliminary results for the year ended 31 December 2022
Strong performance in 2022 with a robust platform to support
sustainable growth
Guildford, UK - 21 March 2023: Ergomed plc (LSE: ERGO)
('Ergomed' or the 'Company' or the 'Group'), a Company focused on
providing specialised services to the pharmaceutical industry,
today announces its Full Year Results for the year ended 31
December 2022.
Selected Financial Highlights
Figures in GBP millions, unless Full Full % change
otherwise stated Year Year
2022 2021
Total Revenue 145.3 118.6 22.5
Service Fee Revenue 124.0 100.0 24.0
Gross Profit 59.1 48.4 22.3
-0.1
Gross Margin (%) 40.7% 40.8% ppts
Adjusted EBITDA (Note 1) 28.4 25.4 11.5
Net cash at 31 December 19.1 31.2 -38.9
Order book at 31 December 295.0 239.7 23.1
Basic adjusted earnings per
share (pence) (Note 2) 42.6p 41.1p 3.6
--------------------------------- ------- ------- ---------
Notes :
(1) Adjusted EBITDA is defined as operating profit for the
period plus depreciation and amortisation, share-based payment
charge, acquisition related consideration and costs (Note 8 to the
financial statements).
(2) Basic adjusted earnings per share is defined as earnings per
share after adjustment for items referred to in Note 7 to the
financial statements.
Key Financial Highlights
-- Order book growth of 23% to a record GBP295.0 million.
-- Strong revenue growth of 23% to GBP145.3 million (up 15% in
constant currency) in line with market expectations.
-- Robust revenue growth of 23% in Clinical Research Services
(CRO) to GBP71.4 million (up 15% in constant currency). This
included service fee revenue growth of 27% to GBP50.8 million (up
19% in constant currency).
-- Continued strong growth in Pharmacovigilance (PV) revenues of
22% to GBP73.9 million in 2022 (up 14% in constant currency).
-- Adjusted EBITDA increased by 12% to GBP28.4 million in line
with market expectations, as the business continued to invest in
building a robust platform for sustainable future growth.
-- Cash and cash equivalents of GBP19.1 million as of 31
December 2022 (post the acquisition of ADAMAS) and debt free with
unutilised facilities of up to GBP80.0 million.
Key Operational & Strategic Highlights
-- Acquisition of ADAMAS completed in February 2022 for a net
cash consideration of GBP24.2 million. The business has been
successfully integrated and achieved its financial expectations for
2022.
-- Organic investment in complementary geographies, service offerings and technology.
-- North America revenues up 22% to GBP90.6 million, accounting for 62% of Group revenues.
-- Continued strengthening of the Board and Executive Management
Team with key appointments during 2022 including Michael Spiteri
transitioning to the role of Chief Transformation & Technology
Officer and, post the year end, the appointment of Jonathan Curtain
as CFO in February 2023, following the retirement of Richard
Barfield.
Dr Miroslav Reljanović, Executive Chairman of Ergomed, said:
"During 2022, Ergomed delivered another year of strong revenue
and EBITDA growth. The successful acquisition of ADAMAS further
endorsed our acquisition strategy and capabilities, and we remain
focused on delivering further organic and inorganic growth aligned
to our strategic priorities. We have continued to strengthen our
Board and executive management team, remain in a debt-free position
and our future is underpinned by a robust order book. As we look
ahead to 2023, demand for our services is high, and our focus
continues to be on operational excellence and delivering a market
leading service as a global provider of specialist pharmaceutical
services addressing unmet medical needs and patient safety."
Conference call for analysts:
A webcast and conference call for analysts will be held at
8:30am GMT today.
Webcast link:
https://www.lsegissuerservices.com/spark/Ergomed/events/94c90b44-391a-42ee-aa2a-d4107f100202
Conference call registration:
https://cossprereg.btci.com/prereg/key.process?key=PFRG8YXYJ
Enquiries:
Ergomed plc Tel: +44 (0) 1483 402 975
Miroslav Reljanović (Executive
Chairman)
Jonathan Curtain (Chief Financial
Officer)
Keith Byrne (Senior Vice President,
Capital Markets & Strategy)
Numis Tel: +44 (0) 20 7260 1000
Freddie Barnfield / Euan Brown (Nominated
Adviser)
James Black (Broker)
Peel Hunt (Joint Broker) Tel: +44 (0) 20 7418 8900
James Steel / Dr. Christopher Golden
Consilium Strategic Communications Tel: +44 (0) 20 3709 5700
Chris Gardner / Matthew Neal ergomed@consilium-comms.com
About Ergomed plc
Ergomed provides specialist services to the pharmaceutical
industry spanning all phases of clinical development, post-approval
pharmacovigilance and medical information. Ergomed's fast-growing
services business includes an industry-leading suite of specialist
pharmacovigilance (PV) solutions, integrated under the
PrimeVigilance brand, a full range of high-quality clinical
research and trial management services under the Ergomed brand
(CRO) and mission-critical regulatory compliance and consulting
services under the ADAMAS brand. For further information, visit:
http://ergomedplc.com .
Forward-Looking Statements
Certain statements contained within the announcement are
forward-looking statements and are based on current expectations,
estimates and projections about the potential returns of Ergomed
plc (Ergomed) and the industry and markets in which Ergomed
operates, the Directors' beliefs and assumptions made by the
Directors. Words such as "expects", "anticipates", "should",
"intends", "plans", "believes", "seeks", "estimates", "projects",
"pipeline" and variations of such words and similar expressions are
intended to identify such forward-looking statements and
expectations. These statements are not guarantees of future
performance or the ability to identify and consummate investments
and involve certain risks, uncertainties, outcomes of negotiations
and due diligence and assumptions that are difficult to predict,
qualify or quantify. Therefore, actual outcomes and results may
differ materially from what is expressed in such forward-looking
statements or expectations. Among the factors that could cause
actual results to differ materially are: the general economic
climate, competition, interest rate levels, loss of key personnel,
the result of legal and commercial due diligence, the availability
of financing on acceptable terms and changes in the legal or
regulatory environment.
These forward-looking statements speak only as of the date of
this announcement. Ergomed expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statements contained herein to reflect any change
in Ergomed's expectations with regard thereto, any new information
or any change in events, conditions or circumstances on which any
such statements are based, unless required to do so by law or any
appropriate regulatory authority.
Executive Chairman's Statement
25 years of operational and financial growth
2022 marked the 25(th) anniversary of Ergomed with another year
of strong operational and financial performance. The Company
continued to deliver on its growth strategy through organic growth,
geographical expansion and an effective acquisition strategy.
Financial Results
In 2022, Ergomed delivered another year of strong financial
results. Revenues for 2022 of GBP145.3 million were in line with
market expectations, an increase of 22.5% over the prior year.
Adjusted EBITDA was also in line with expectations at GBP28.4
million, a year-on-year increase of 11.5% from GBP25.4 million. In
addition, Ergomed's strong sales performance in 2022 resulted in an
order book of GBP295.0 million, up 23.1% from the beginning of the
year.
The acquisition of ADAMAS in February 2022 was immediately
accretive and supported the organic growth in the business over
2022. The Company increased its multi-currency revolving credit
facility in 2022 from GBP30.0 million to GBP80.0 million,
comprising a GBP50.0 million facility and an additional GBP30.0
million accordion. The Group remains debt free at year end with
these new facilities available to support continued expansion. This
robust financial performance positions the Company strongly to
continue to deliver its strategy in 2023 and beyond.
Delivery of Growth Strategy
Organic Growth
Ergomed continued to deliver on its growth strategy throughout
2022 through a combination of organic growth and M&A.
Organically, the Company has increased its order book, winning
awards from both new and existing clients, some of which have been
generated through cross-divisional selling opportunities by
continuing to focus on strong execution and operational delivery
and the benefits of our expanded geographical presence. In 2022,
new operations were opened in France, Italy, Romania, Portugal and
Ireland, helping clients to access our services on a global
level.
Operationally, the Company continues to focus on providing
specialist services to the pharmaceutical industry. The CRO
business specialises in the higher growth oncology and rare disease
areas and also offers clients a unique site support model focusing
on effective site management, efficient vendor management and
increased patient recruitment and retention.
The Company has continued to invest in technology to enhance its
digital capabilities and increase its service offering to our
client base. The investment in technology will continue into 2023
and beyond, with the strategic focus to continue to maximise the
potential of technology across the business. This will support our
transformation and continued growth, geographic expansion and cross
selling opportunities; combining best in class industry solutions
with our proprietary technologies to deliver innovative leading
solutions for our clients; and ensure that technology applications
are fit for purpose to drive operational efficiencies where
appropriate.
Acquisitive Growth
During 2022, Ergomed continued to execute a well-disciplined
M&A strategy, ensuring that any acquisitions are aligned with
the Company's vision and are complementary to its current service
offering.
In February 2022, Ergomed acquired ADAMAS Consulting Group
Limited. ADAMAS is a well-established, leading provider of
mission-critical regulatory compliance and consulting services to
the global pharmaceutical industry offering a full range of
independent quality assurance services and specialising in the
auditing of pharmaceutical manufacturing processes, as well as
auditing clinical trials and pharmacovigilance systems. ADAMAS has
over 100 active clients and has worked with over 700 pharmaceutical
companies including 40 of the 50 largest global pharma and biotech
companies.
This acquisition has enhanced our client offering and Ergomed's
global presence in the US, Europe and APAC. ADAMAS delivered a
strong financial performance in 2022 and we anticipate continued
growth in 2023 and beyond.
The Board continues to actively consider further acquisition
opportunities that will complement and strengthen the existing CRO
and PV service offerings and provide access to new customers and
geographies.
Board and Leadership Changes
During 2022, we welcomed two significant additions to Ergomed's
Board of Directors, John Dawson and Anne Whitaker, who bring with
them a wealth of international experience in the healthcare
industry and expert knowledge of the life science sector which will
be invaluable as the Group continues to grow.
In March 2022, John Dawson, CBE, joined the Ergomed Board as an
independent Non-Executive Director and Chair of the Audit &
Risk Committee. In December 2022, after nine months of serving on
the Board, John was appointed as Senior Independent Director. He is
a highly experienced and globally respected figure in the
healthcare and life sciences sector. John was most recently Chief
Executive Officer of Oxford Biomedica plc, widely recognised for
the successful delivery at unprecedented speed of the
Oxford/AstraZeneca COVID-19 vaccine.
In June 2022, Anne Whitaker joined the Ergomed Board as an
independent Non-Executive Director. Anne joined with extensive life
sciences industry experience, having worked across the
pharmaceutical, biotech and specialty pharma sectors for the last
thirty years in the US and internationally. Anne previously held a
number of senior executive roles at Sanofi, GlaxoSmithKline, Bausch
Health Company and Synta Pharmaceuticals, and most recently, she
held the position of Chief Executive Officer, and subsequently
Chairperson of Aerami Therapeutics, a private life science
company.
In November 2022, Michael Spiteri was appointed as Chief
Transformation and Technology Officer of Ergomed and simultaneously
stepped down as a Non-Executive Director. Michael's strong
understanding of the Company's strategy alongside his many years of
technology and transformation experience will drive development
across Ergomed's automation and digital learning capabilities.
Post year end, on 3 February 2023, Richard Barfield resigned as
Chief Financial Officer and a Director of the Board of Ergomed. We
would like to thank Richard for his invaluable contribution to the
Company and wish him all the best in his retirement.
Simultaneously on 3 February 2023, Jonathan Curtain was
appointed Chief Financial Officer and a Director of the Board of
Ergomed. Jonathan joined Ergomed in November 2022 as Deputy Chief
Financial Officer and has worked closely with Richard and the Board
of Directors during this time to ensure an organised and smooth
transition. Jonathan has over 13 years of life science industry
experience, most recently holding the position of Senior Vice
President of Corporate and Commercial Finance at ICON plc, a
leading global CRO company listed on NASDAQ. During his time at the
company, he played a key role in significant M&A transactions,
including debt and equity fundraising, commercial finance,
taxation, treasury, investor relations and overall financial
management. He is a Fellow of the Institute of Chartered
Accountants with over 20 years' experience since receiving his ACA
qualification at KPMG. His experience will continue to strengthen
Ergomed's leadership and help deliver on our global growth
strategy.
Summary
The continued operational and financial growth of Ergomed over
the past 25 years is a direct result of the hard-work, resilience
and commitment of all of our colleagues; the invaluable insight and
expertise of our Board of Directors and our strong and robust
business strategy. I would like to thank all Ergomed employees for
their contributions over this period.
Looking forward into 2023, with a strong orderbook and effective
strategy, Ergomed will continue to build on the robust operational
and financial platform built over the past 25 years.
Miroslav Reljanović
Executive Chairman
20 March 2023
Operational review
In 2022, there was strong operational and financial performance
across both the pharmacovigilance services and clinical research
services divisions. The successful integration of the ADAMAS
acquisition and continued geographical expansion has ensured the
Company has maintained strong growth throughout 2022.
PHARMACOVIGILANCE
Market Outlook
The increase of adverse events (AE) globally, due to disease
complexity and access to new sources of information through
enhanced technology, have necessitated new PV obligations. In
addition, developing regulations and globalisation are further
fuelling growth in the industry.
The increasing global requirement for PV services coupled with a
perpetual drive to improve drug safety through regulation,
continues to drive the transition towards specialist outsourced PV
providers and continued market growth. This, together with an
increasing demand for outsourced PV services, has been a consistent
driver of Ergomed's growth.
Financial Performance
The addition of a proportion of ADAMAS' revenues alongside
organic growth in PrimeVigilance saw revenues increase by GBP13.4
million from GBP60.5 million in 2021 to GBP73.9 million in 2022
(22.1% increase, 14.3% on a constant currency basis). Gross margins
continued to be strong for the PV business at 50.2% in 2022.
Management and Staff
With employees located across more than 20 countries, and
capabilities across 150+ countries, the business continues to
invest in talent acquisition across the globe. 85% of
PrimeVigilance's employees have a pharmacy or life science degree,
with over 60 physicians, 30+ in-house EU/ UK Qualified Persons for
Pharmacovigilance ('QPPVs') and more than 10 former Regulatory
agency inspectors and assessors.
The breadth and depth of staff and professionals supporting
PrimeVigilance are reflected in the quality of services provided.
Testament to this is PrimeVigilance's high customer renewal and
retention figures and the fact that PrimeVigilance participated in
over 290 regulatory inspections and audits, representing an
increase of more than 20% compared to the previous year including
successfully managed FDA and EMA inspections.
Technology Investment
In 2022, PrimeVigilance continued to upgrade its case management
and signal detection systems whilst deploying more regulatory
gateways to enhance the service offering to our client base.
Significant investment in PV technology and transformational
capabilities will continue into 2023.
Our focus in 2023 will be integrating the PrimeVigilance
solution components already delivered in 2022 and completing
additional solutions required to deliver the automation vision for
our pharmacovigilance business. The integration of our solutions
across data intake and safety data processing, combined with data
reporting and advanced analytics, will enable us to deliver a wide
range of benefits including increased throughput and reduction in
processing time, increased quality and accuracy across of data
management, driving efficiency and a reduction in manual effort,
improved regulatory reporting and an improved client value
proposition and competitiveness in the market.
Constantly evolving regulations, geographic expansion,
investment in technology and people, combined with high renewal
rates and strong client retention, mean that our pharmacovigilance
business is well placed to continue delivering its growth strategy
into 2023 and beyond.
CLINICAL RESEARCH SERVICES (CRO)
The CRO market has continued to experience significant expansion
with strong annual growth in oncology and rare disease research
expected to continue over the coming years. This specific growth in
Ergomed's core focus areas is underpinned by broader market trends,
including increased outsourcing penetration with growing demand for
specialised and bespoke clinical trial services.
Financial Performance
The addition of a proportion of ADAMAS' revenues, alongside
organic growth in CRO, saw revenues increase by GBP13.3 million
from GBP58.1 million in 2021 to GBP71.4 million in 2022 (22.9%
increase, 14.7% on a constant currency basis). This included a
service fee revenue increase of GBP10.9 million from GBP39.9
million to GBP50.8 million (27.3% increase, 18.9% on a constant
currency basis).
Oncology and Rare Disease Focus
Strong growth in the rare disease and oncology markets is
expected to outpace the wider CRO market over the medium-term as
oncology and rare disease trials are generally more complex and
have a higher level of unmet medical need. Furthermore, studies are
often confronted by challenges including low patient enrolment,
increased research costs and trial protocols with increased
study-related procedures. This helps to explain why oncology and
rare disease trials receive the highest levels of funding and makes
the case for outsourcing to CROs which are better positioned to
address these challenges. Ergomed's expertise and focus in these
specialist areas supports its CRO growth strategy and is evidenced
by the fact that over 80% of 2022 revenues related to oncology and
rare disease, where similarly specialist expertise is also
required.
The orphan drug market, which refers to drugs used to treat rare
diseases, is forecast to reach c. $24.2 billion by 2027, almost
doubling in size from 2020 and growing at a CAGR of c.+12% over the
forecast period. Ergomed has continued to strengthen relationships
with biopharmaceutical sponsor companies, patient advocacy groups,
technology innovators and service providers to accelerate rare
disease drug development.
Patient and Clinician Focus
Ergomed's unique and innovative site support model for clinical
trials focuses on patient advocacy whilst simultaneously reducing
the burden on trial physicians. Ergomed offers site management to
support sites in enhanced training, effective patient recruitment,
patient retention and providing solutions to logistical and
administrative complexities of clinical trials.
Ergomed's focus on oncology and rare disease is one of its core
strengths. Drug development for rare and orphan diseases is
challenging for many reasons, including complex biology, limited
knowledge of the history and progression of the disease and the
inherently small patient population available for clinical trials
who are usually geographically dispersed. Ergomed adopts a
patient-centric approach, working closely with patient advocacy
groups throughout development to fully understand patient and
caregiver needs. Greater patient engagement optimises clinical
study design, outcome measures and endpoint development and Ergomed
maintains a Patient Organisation Advisory Board, comprising
representatives of patient groups in the field of rare diseases
with a dedicated Patient Engagement Officer.
Business Development
Ergomed's consolidated order book maintained strong growth in
2022. The order book continues to highlight Ergomed's growing
presence in its key markets as well as the resilience of the
sectors in which it operates. In addition, it provides strong
visibility of revenue for 2023 and later years.
Outlook
Ergomed continued to make excellent progress in delivering its
growth strategy in 2022. The acquisition of ADAMAS broadened our
service offering and global presence to support the organic growth
in both our pharmacovigilance and CRO businesses.
Ergomed has started 2023 in a strong position and remains well
positioned for the year ahead and beyond. We remain focused on our
vision to achieve global leadership in specialised pharmaceutical
services addressing unmet medical needs and patient safety.
For and on behalf of the Board of Directors
Miroslav Reljanović
Executive Chairman
20 March 2023
Financial review
Robust 2022 financial performance provides a strong platform for
sustained future growth.
Ergomed delivered another strong financial performance in 2022.
The Group demonstrated its continued resilience throughout the year
with organic and acquisitive growth in both the CRO and PV
divisions, positioning Ergomed well for 2023.
The Group ended the 2022 financial year in a robust financial
position. The closing order book was at a record high level of
GBP295 million at 31 December 2022, underpinning the strength of
the Group and potential revenue growth for 2023 and beyond. The
acquisition of ADAMAS has expanded Ergomed's global reach in the
US, Europe and APAC, delivering growth in both the CRO and PV
divisions as well as broadening our service offering and client
relationships. Our strong cash conversion and substantial
unutilised bank facilities provide support for organic investment
and growth in future years, as well as enabling us to continue our
disciplined M&A strategy.
KPIs and APMs
Key Performance Indicators (KPIs)
The table below summarises the KPIs that management uses to
measure the financial performance of the Group.
GBP millions (unless otherwise stated) 2022 2021
--------------------------------------- ----- -----
Total revenue 145.3 118.6
--------------------------------------- ----- -----
CRO 71.4 58.1
PV 73.9 60.5
--------------------------------------- ----- -----
Gross profit 59.1 48.4
Gross margin 40.7% 40.8%
EBITDA 24.7 19.7
Adjusted EBITDA 28.4 25.4
Basic adjusted earnings per share 42.6p 41.1p
Cash generated from operations 23.6 22.0
Cash and cash equivalents 19.1 31.2
Order book 295.0 239.7
--------------------------------------- ----- -----
Alternative Performance Measures ('APMs')
In measuring and reporting financial information, management
reviews Alternative Performance Measures (APMs), such as EBITDA,
adjusted EBITDA and basic adjusted earnings per share, which are
not defined measures under financial reporting standards.
Management believes that these measures, when considered in
conjunction with defined financial reporting measures, provide
management and stakeholders with a broader understanding of the
performance of the business.
Operating profit is the financial reporting measure under IFRS
most comparable to EBITDA and adjusted EBITDA.
The Directors make certain adjustments to EBITDA to derive
adjusted EBITDA, which they consider more reflective of the Group's
underlying trading performance, enabling comparisons to be made
with prior periods. Certain adjustments include share-based
payments and associated tax charges, acquisition costs and pay in
lieu and non-compete compensation. These costs are cash costs but
are not considered as normal recurring trading items and therefore
are not included in adjusted EBITDA.
Operating profit is reconciled to EBITDA and adjusted 2022 2021
EBITDA as follows: GBP000's GBP000's
------------------------------------------------------- --------- ---------
Operating profit 18,873 14,624
------------------------------------------------------- --------- ---------
Adjusted for:
Depreciation and amortisation charges within 'Other
selling, general & administration expenses' 3,075 3,447
Amortisation of acquired fair valued intangible assets 2,763 1,599
------------------------------------------------------- --------- ---------
EBITDA 24,711 19,670
Adjusted for:
Share-based payment charge 1,049 817
Acquisition costs 1,669 1,776
Earn-out consideration - 2,949
Pay in lieu and non-compete compensation 927 211
Adjusted EBITDA 28,356 25,423
------------------------------------------------------- --------- ---------
Adjusted basic earnings per share is calculated on a similar
basis to basic earnings per share but uses a profit measure which,
like adjusted EBITDA, is adjusted for non-recurring trading items
(see note 8 of the financial statements).
Management reviews the Group's performance monthly on a constant
currency basis. Constant currency is calculated by restating 2022
performance using 2021 exchange rates for the relevant period.
Constant currency allows management to review underlying
performance without the impact of foreign exchange.
Growth
Ergomed's Clinical Research Services (CRO) and Pharmacovigilance
(PV) divisions have continued to demonstrate strong growth
throughout 2022. Bolstered by the acquisition of ADAMAS in February
2022, the Company continues to enhance its service offering and
geographical presence, resulting in a strong order book going into
2023 and giving the Company confidence for future years.
Revenues for 2022 were GBP145.3 million on a reported basis, an
increase of 22.5% over prior year (2021: GBP118.6 million), in line
with expectations (up 14.5% in constant currency). Gross profit
increased from GBP48.4 million in 2021 to GBP59.1 million in 2022
with gross margin maintained at 41% (2021: 41%) through resilient
and effective cost management in the period.
The CRO division saw total revenue increase by 22.9% from
GBP58.1 million in 2021 to GBP71.4 million in 2022 (up 14.7% in
constant currency). This included service fee revenue up 27.3% to
GBP50.8 million (2021: GBP39.9 million) (up 18.9% in constant
currency).
The PV division saw total revenue increase by 22.1% from GBP60.5
million in 2021 to GBP73.9 million in 2022 (up 14.3% in constant
currency).
The strong revenue growth and continued focus on profitability
resulted in adjusted EBITDA in line with expectations at GBP28.4
million, an increase of 11.5% over the prior year (2021: GBP25.4
million).
Financial Strength
The growth in revenue and profitability achieved during 2022 led
to strong cash generation at an operating level. Cash generated
from operations before changes in working capital and provisions
was GBP23.6 million, an increase of GBP1.6 million over the prior
year (2021: GBP22.0 million).
The Group's balance sheet continued to strengthen with net
assets increasing from GBP67.2 million as at 31 December 2021 to
GBP84.7 million at 31 December 2022. Cash and cash equivalents
decreased by GBP12.1 million to GBP19.1 million (2021: GBP31.2
million) following the cash payment of GBP24.2 million in February
2022 for the acquisition of ADAMAS. Excluding the one-off cash
payment, cash and cash equivalents increased by GBP12.1 million
from 2021 to 2022. The Group remained debt free at year end.
Outlook
Ergomed continued to make excellent progress in delivering its
growth strategy in 2022. The acquisition of ADAMAS broadened our
service offering and global presence to support the organic growth
in both our pharmacovigilance and CRO businesses. In 2023, Ergomed
remains focused on delivering our vision to achieve global
leadership in specialised pharmaceutical services addressing unmet
medical needs and patient safety.
Jonathan Curtain
Chief Financial Officer
20 March 2023
Consolidated income statement
For the year ended 31 December 2022
2022 2021
Notes GBP000s GBP000s
--------------------------------------------------- ----- -------- --------
2,
Revenue 3 145,262 118,581
Cost of sales (64,712) (52,191)
--------------------------------------------------- ----- -------- --------
Reimbursable expenses (21,405) (18,028)
--------------------------------------------------- ----- -------- --------
Gross profit 3 59,145 48,362
--------------------------------------------------- ----- -------- --------
Selling, general and administration expenses (41,506) (35,201)
--------------------------------------------------- ----- -------- --------
Selling, general and administration expenses
comprises:
--------------------------------------------------- --------
Other selling, general and administration expenses (36,072) (28,060)
--------------------------------------------------- ----- -------- --------
Amortisation of acquired fair valued intangible
assets (2,763) (1,599)
--------------------------------------------------- ----- -------- --------
Share-based payment charge (1,002) (817)
--------------------------------------------------- ----- -------- --------
Contingent consideration for acquisitions - (2,949)
--------------------------------------------------- ----- -------- --------
Acquisition costs 4 (1,669) (1,776)
--------------------------------------------------- ----- -------- --------
Research and development expenses (121) (130)
Other operating income 5 1,355 1,593
--------------------------------------------------- ----- -------- --------
Operating profit 18,873 14,624
Finance income - 1
Finance costs 6 (920) (361)
--------------------------------------------------- ----- -------- --------
Profit before taxation 17,953 14,264
--------------------------------------------------- ----- -------- --------
Income tax expense (2,971) (1,590)
--------------------------------------------------- ----- -------- --------
Profit for the year 14,982 12,674
--------------------------------------------------- ----- -------- --------
All activities in the current and prior period relate to
continuing operations.
Consolidated statement of comprehensive income
For the year ended 31 December 2022
2022 2021
Notes GBP000s GBP000s
-------------------------------------------- ------ -------- --------
Profit for the year 14,982 12,674
---------------------------------------------------- -------- --------
Items that may be classified subsequently
to profit or loss:
-------------------------------------------- ------ -------- --------
Foreign exchange differences on translation
of foreign operations 2,979 (682)
---------------------------------------------------- -------- --------
Other comprehensive (expense) for the year
net of tax 2,979 (682)
---------------------------------------------------- -------- --------
Total comprehensive income for the year 17,961 11,992
---------------------------------------------------- -------- --------
2022 2021
pence pence
------------------------- ------ ------
Earnings Per Share (EPS) 7
Basic 30.1 26.1
Diluted 29.2 25.1
------------------------- ------ ------
Unaudited
2022 2021
GBP000s GBP000s
------------------------------------------------------- -------- --------
ADJUSTED EBITDA
(Adjusted Earnings Before Interest, Tax, Depreciation
and Amortisation) 8 28,356 25,423
------------------------------------------------------- -------- --------
2022 2021
pence pence
------------------------------------------------------- -------- --------
Adjusted Earnings Per Share (Adjusted EPS) 7
Basic 42.6 41.1
Diluted 41.4 39.4
------------------------------------------------------- -------- --------
Profit or loss and each component of other comprehensive income
are attributable to the owners of the Company.
Consolidated balance sheet
As at 31 December 2022
2022 2021
Notes GBP000s GBP000s
------------------------------ ----- --------- --------
Non-current assets
Goodwill 9 41,404 23,903
Other intangible assets 10 15,844 7,653
Property, plant and equipment 2,466 1,966
Right-of-use assets 2,864 2,691
Deferred tax asset 8,530 9,433
------------------------------ ----- --------- --------
71,108 45,646
------------------------------ ----- --------- --------
Current assets
Trade and other receivables 11 34, 450 25,143
Contract assets 4,611 3,958
------------------------------ ----- --------- --------
Cash and cash equivalents 12 19,096 31,243
------------------------------ ----- --------- --------
Derivative assets 84 -
------------------------------ ----- --------- --------
58,241 60,344
------------------------------ ----- --------- --------
Total assets 129,349 105,990
------------------------------ ----- --------- --------
Current liabilities
Lease liabilities (1,236) (1,249)
Trade and other payables 13 (17, 640) (14,899)
Derivative liabilities (134) (261)
Contract liabilities (18,749) (17,799)
Current tax liability (1,134) (1,172)
------------------------------ ----- --------- --------
(38,893) (35,380)
------------------------------ ----- --------- --------
Net current assets 19,348 24,964
------------------------------ ----- --------- --------
Non-current liabilities
Lease liabilities (1,672) (1,432)
Provisions (144) (19)
------------------------------ ----- --------- --------
Deferred tax liability (3,891) (1,920)
------------------------------ ----- --------- --------
(5,707) (3,371)
------------------------------ ----- --------- --------
Total liabilities (44,600) (38,751)
------------------------------ ----- --------- --------
Net assets 84,749 67,239
------------------------------ ----- --------- --------
Equity
Share capital 14 503 493
Share premium account 1,007 545
Merger reserve 1,349 1,349
Share-based payment reserve 6,861 5,859
Translation reserve 2,912 (67)
Retained earnings 72,117 59,060
------------------------------ ----- --------- --------
Total equity 84,749 67,239
------------------------------ ----- --------- --------
Approved by the Board of Directors and authorised for issue on
20 March 2023.
Jonathan Curtain
Chief Financial Officer
Company Registration No. 04081094
Consolidated statement of changes in equity
For the year ended 31 December 2022
Share-
Share based
Share premium Merger payment Translation Retained Total
capital account reserve reserve reserve earnings equity
Notes GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Balance at 1 January 2021 489 3 1,349 5,042 615 45,368 52,866
Profit for the year - - - - - 12,674 12,674
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Other comprehensive expense
for the year - - - - (682) - (682)
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Total comprehensive income - - - - (682) 12,674 11,992
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Transactions with shareholders
Shares issued during the
year for cash 14 4 542 - - - - 546
Share-based payment charge
for the year - - - 817 - - 817
Deferred tax credit taken
directly to equity - - - - - 1,018 1,018
Total transactions with
shareholders 4 542 - 817 - 1,018 2,381
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Balance at 31 December
2021 493 545 1,349 5,859 (67) 59,060 67,239
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Profit for the year - - - - - 14,982 14,982
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Other comprehensive income
for the year - - - - 2,979 - 2,979
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Total comprehensive income - - - - 2,979 14,982 17,961
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Transactions with shareholders
Shares issued during the
year for cash 14 10 462 - - - - 472
Share-based payment charge
for the year - - - 1,002 - - 1,002
Deferred tax debit taken
directly to equity - - - - - (1,925) (1,925)
Total transactions with
shareholders 10 462 - 1,002 - (1,925) (451)
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Balance at 31 December
2022 503 1,007 1,349 6,861 2,912 72,117 84,749
------------------------------- ----- -------- -------- -------- -------- ----------- --------- --------
Consolidated cash flow statement
For the year ended 31 December 2022
2022 2021
Notes GBP000s GBP000s
-------------------------------------------------- ----- -------- --------
Cash flows from operating activities
Profit for the year 14,982 12,674
Adjustment for:
Amortisation and depreciation 5,838 5,046
Profit on disposal of non-current assets (109) (413)
Share-based payment charge 1,002 817
RDEC income 5 (698) (956)
Finance costs 6 920 361
Other non-cash movements (1, 275) (25)
Exceptional items (earn-out on acquisitions) - 2,949
Taxation expense 2,971 1,590
-------------------------------------------------- ----- -------- --------
Operating cash inflow before changes in working
capital and provisions 23,631 22,043
(Increase)/ decrease in trade, other receivables
and contract assets (6,605) 367
Increase in trade, other payables and contract
liabilities 1,378 217
Increase/ (decrease) in provisions 125 (298)
-------------------------------------------------- ----- -------- --------
Cash generated from operating activities 18,529 22,329
-------------------------------------------------- ----- -------- --------
Taxation paid (3,680) (3,646)
-------------------------------------------------- ----- -------- --------
Net cash inflow from operating activities 14,849 18,683
-------------------------------------------------- ----- -------- --------
Investing activities
Finance income received - 1
Acquisition of intangible assets 10 (634) (30)
Acquisition of property, plant and equipment (1,282) (953)
Proceeds from the sale of property, plant and
equipment 32 103
Proceeds on the disposal of equity investments 23 -
Acquisition of subsidiaries, net of cash acquired (24,243) -
Acquisition related earn-out paid - (3,267)
-------------------------------------------------- ----- -------- --------
Net cash outflow from investing activities (26,104) (4,146)
-------------------------------------------------- ----- -------- --------
Financing activities
Proceeds from the issue of new ordinary shares 14 472 546
Finance costs paid (761) (169)
Proceeds from borrowings 15,000 -
Repayment of borrowings (15,000) -
Payment of lease liabilities (2,084) (2,490)
-------------------------------------------------- ----- -------- --------
Net cash outflow from financing activities (2,373) (2,113)
-------------------------------------------------- ----- -------- --------
Net change in cash and cash equivalents (13,628) 12,424
Effect of foreign currency on cash balances 1,481 (175)
-------------------------------------------------- ----- -------- --------
Cash and cash equivalents at start of year 31,243 18,994
-------------------------------------------------- ----- -------- --------
Cash and cash equivalents at end of year 12 19,096 31,243
-------------------------------------------------- ----- -------- --------
Notes to the financial statements
For the year ended 31 December 2022
1. Basis of preparation
The consolidated financial statements of the Group have been
prepared on the going concern basis in accordance with UK-adopted
international accounting standards ("UK-adopted IFRS").
The consolidated financial statements have been prepared on a
historical cost basis except that the following assets and
liabilities are stated at their fair value: certain financial
assets and financial liabilities measured at fair value.
The same accounting policies, presentation and methods of
computation have been followed in these condensed financial
statements as were applied in the preparation of the Group's
financial statements for the year ended 31 December 2022.
The financial statements for 2021 have been delivered to the
Registrar of Companies and the 2022 financial statements will be
delivered after the Annual General Meeting on 22 June 2023.
The Auditor has reported on both sets of accounts without
qualification, did not draw attention to any matters by way of
emphasis without qualifying their report, and did not issue a
statement under Section 498(2) or 498(3) of the Companies Act
2006.
Going concern
The financial statements have been prepared on the going concern
basis, which assumes that the Group and Company will have
sufficient funds to continue in operational existence for the
foreseeable future, being a period of no less than 12 months from
the date of signing of the financial statements. The Directors have
reviewed a cash flow forecast for the period to 31 December 2025,
which is derived from the 2023 Board approved budget and a
medium-term cash flow forecast through to 31 December 2025, which
is an extrapolation of the approved budget under multiple scenarios
and growth rates. The 2023 budget and medium -- term forecast
represents the Directors' best estimate of the Group's future
performance and necessarily includes a number of assumptions,
including the level of revenues. The 2023 budget and medium-term
forecast demonstrate that the Directors have a reasonable
expectation that the Group will be able to meet its liabilities as
they fall due for a period of at least 12 months from the date of
approval of the financial statements
On the basis of the above factors and, having made appropriate
enquiries, the Directors have a reasonable expectation that the
Company and Group have adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they
continue to adopt the going concern basis in preparing these
financial statements.
2. Revenue
The Group's revenue is disaggregated by geographical market and
major service lines:
Geographical market and major service lines
2022
Major service lines
--------------------------------------- ----------------------------
CRO PV Total
GBP000s GBP000s GBP000s
--------------------------------------- -------- -------- --------
Geographical market by client location
UK 11,593 8,642 20,235
Rest of Europe, Middle East and Africa 14,537 14,726 29,263
North America 42,238 48,323 90,561
Asia & Australia 2,995 2,208 5,203
--------------------------------------- -------- -------- --------
71,363 73,899 145,262
--------------------------------------- -------- -------- --------
2021
Major service lines
--------------------------------------- ----------------------------
CRO PV Total
GBP000s GBP000s GBP000s
--------------------------------------- -------- -------- --------
Geographical market by client location
UK 5,415 8,785 14,200
Rest of Europe, Middle East and Africa 9,585 12,981 22,566
North America 38,388 36,028 74,416
Asia & Australia 4,689 2,710 7,399
--------------------------------------- -------- -------- --------
58,077 60,504 118,581
--------------------------------------- -------- -------- --------
3. Operating segments
Products and services from which reportable segments derive
their revenues
Information reported to the Company's Board, which is the chief
operating decision maker ('CODM'), for the purpose of resource
allocation and assessment of segment performance, is focused on the
Group operating as two business segments, being Clinical Research
Services ('CRO') and Pharmacovigilance ('PV'). All revenues arise
from direct sales to customers. The segment information reported
below all relates to continuing operations. Both CRO and PV
segments include the associated revenues of ADAMAS Consulting Group
Limited (ADAMAS) following its acquisition by the Group in the
year.
The accounting policies of the reportable segments are the same
as the Group's accounting policies. Segment profit represents the
gross profit earned by each segment. Other amounts, including
selling, general and administration expenses were not allocated to
a segment. This was the measure reported to the CODM for the
purpose of resource allocation and assessment of segment
performance.
2022
Consolidated
CRO PV total
GBP000s GBP000s GBP000s
------------------------------------------------ -------- -------- ------------
Segment revenues 71,363 73,899 145,262
Cost of sales (28,629) (36,083) (64,712)
------------------------------------------------ -------- -------- ------------
Reimbursable expenses (20,647) (758) (21,405)
------------------------------------------------ -------- -------- ------------
Segment gross profit 22,087 37,058 59,145
------------------------------------------------ -------- -------- ------------
Selling, general and administration expenses (41,506)
------------------------------------------------ -------- -------- ------------
Selling, general and administration expenses
comprises:
------------------------------------------------ ------------
Other selling, general and administration
expenses (36,072)
------------------------------------------------ ------------
Amortisation of acquired fair valued intangible
assets (2,763)
------------------------------------------------ ------------
Share-based payment charge (1,002)
------------------------------------------------ ------------
Contingent consideration for acquisitions -
------------------------------------------------ -------- -------- ------------
Acquisition costs (1,669)
------------------------------------------------ -------- -------- ------------
Research and development expenses (121)
Other operating income 1,355
------------------------------------------------ -------- -------- ------------
Operating profit 18,873
Finance income -
Finance costs (920)
------------------------------------------------ -------- -------- ------------
Profit before tax 17,953
------------------------------------------------ -------- -------- ------------
2021
Consolidated
CRO PV total
GBP000s GBP000s GBP000s
------------------------------------------------ -------- -------- ------------
Segment revenues 58,077 60,504 118,581
Cost of sales (22,906) (29,285) (52,191)
------------------------------------------------ -------- -------- ------------
Reimbursable expenses (17,621) (407) (18,028)
------------------------------------------------ -------- -------- ------------
Segment gross profit 17,550 30,812 48,362
------------------------------------------------ -------- -------- ------------
Selling, general and administration expenses (35,201)
------------------------------------------------ -------- -------- ------------
Selling, general and administration expenses
comprises:
------------------------------------------------ ------------
Other selling, general and administration
expenses (28,060)
------------------------------------------------ ------------
Amortisation of acquired fair valued intangible
assets (1,599)
------------------------------------------------ ------------
Share-based payment charge (817)
------------------------------------------------ ------------
Contingent consideration for acquisitions (2,949)
------------------------------------------------ -------- -------- ------------
Acquisition costs (1,776)
------------------------------------------------ -------- -------- ------------
Research and development expenses (130)
Other operating income 1,593
------------------------------------------------ -------- -------- ------------
Operating profit 14,624
Finance income 1
Finance costs (361)
------------------------------------------------ -------- -------- ------------
Profit before tax 14,264
------------------------------------------------ -------- -------- ------------
4. Acquisition costs
2022 2021
GBP000s GBP000s
------------------------------------ -------- --------
Acquisition of MedSource 79 406
------------------------------------ -------- --------
Acquisition of ADAMAS (note 15) 816 240
------------------------------------ -------- --------
Aborted and other acquisition costs 774 1,130
------------------------------------ -------- --------
1,669 1,776
------------------------------------ -------- --------
In line with Company strategy, Ergomed has considered a number
of potential acquisitions in 2022. During 2022, costs of GBP79,000
were incurred in relation to the acquisition of MedSource (2021:
GBP406,000) and GBP816,000 were incurred in relation to the
acquisition of ADAMAS (2021: GBP240,000). Additionally, Ergomed
incurred costs of GBP774,000 in relation to aborted acquisitions
(2021: GBP1,130,000).
5. Other operating income
Research and Development Expenditure Credit ('RDEC')
The Parent company and UK subsidiaries is eligible to claim tax
credits against certain R&D expenditure under the Research and
Development Expenditure Credit ('RDEC') scheme. During the year the
Group submitted claims in respect of the 2021 and 2022 financial
years and recognised the related profit and loss charge within
other operating income in the current financial year.
2022 2021
GBP000s GBP000s
--------------------- -------- --------
Foreign grant income 203 629
RDEC income 698 956
--------------------- -------- --------
Other income 454 8
--------------------- -------- --------
1,355 1,593
--------------------- -------- --------
6. Finance costs
2022 2021
GBP000s GBP000s
-------------------------------- -------- --------
Loan and other interest payable 455 170
-------------------------------- -------- --------
Interest on lease liabilities 158 191
-------------------------------- -------- --------
Other finance costs 307 -
-------------------------------- -------- --------
920 361
-------------------------------- -------- --------
7. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Earnings
2022 2021
GBP000s GBP000s
---------------------------------------------------- -------- --------
Profit for the purposes of earnings per share
- net profit attributable to owners of the Company 14,982 12,674
---------------------------------------------------- -------- --------
Adjust for:
Amortisation of acquired fair valued intangible
assets (note 10) 2,763 1,605
Share-based payment charge 1,049 817
Acquisition-related contingent consideration - 2,949
Acquisition costs (note 4) 1,669 1,776
Pay in lieu and non-compete compensation 927 211
Tax effect of adjusting items (176) (102)
---------------------------------------------------- -------- --------
Adjusted earnings for the purposes of adjusted
earnings per share (unaudited) 21,214 19,930
---------------------------------------------------- -------- --------
Number of shares
2022 2021
Number Number
------------------------------------------------ ---------- ----------
Weighted average number of Ordinary Shares for
the purposes of basic earnings per share 49,775,107 48,466,740
------------------------------------------------ ---------- ----------
Incremental shares in respect of employee share
schemes 1,515,528 2,102,588
------------------------------------------------ ---------- ----------
Weighted average number of Ordinary Shares for
the purposes of diluted earnings per share 51,290,635 50,569,328
------------------------------------------------ ---------- ----------
Earnings per share (EPS)
2022 2021
pence pence
-------- ------ ------
Basic 30.1 26.1
-------- ------ ------
Diluted 29.2 25.1
-------- ------ ------
Adjusted earnings per share (Adjusted EPS)
2022 2021
Unaudited pence pence
---------- ------ ------
Basic 42.6 41.1
---------- ------ ------
Diluted 41.4 39.4
---------- ------ ------
8. EBITDA and Adjusted EBITDA
2022 2021
Unaudited GBP000's GBP000's
------------------------------------------------------- --------- ---------
Operating profit 18,873 14,624
------------------------------------------------------- --------- ---------
Adjusted for:
------------------------------------------------------- --------- ---------
Depreciation and amortisation charges within selling,
general & administration expenses 3,075 3,447
------------------------------------------------------- --------- ---------
Amortisation of acquired fair valued intangible
assets 2,763 1,599
------------------------------------------------------- --------- ---------
EBITDA 24,711 19,670
------------------------------------------------------- --------- ---------
Adjusted for:
------------------------------------------------------- --------- ---------
Share-based payment charge and associated taxes* 1,049 817
------------------------------------------------------- --------- ---------
Acquisition related contingent compensation - 2,949
------------------------------------------------------- --------- ---------
Acquisition costs (note 4) 1,669 1,776
------------------------------------------------------- --------- ---------
Pay in lieu and non-compete compensation 927 211
------------------------------------------------------- --------- ---------
Adjusted EBITDA 28,356 25,423
------------------------------------------------------- --------- ---------
*Includes GBP47,000 of employment tax expense incurred by the
Group in relation to share options exercised in the year.
9. Goodwill
Goodwill GBP000s
------------------------------------------------------- -------
Cost
------------------------------------------------------- -------
At 1 January 2021 26,748
------------------------------------------------------- -------
Fair value adjustment arising on business combinations (477)
------------------------------------------------------- -------
Translation movement (225)
------------------------------------------------------- -------
At 31 December 2021 26,046
Arising on business combinations 15,281
------------------------------------------------------- -------
Translation movement 1,680
------------------------------------------------------- -------
At 31 December 2022 43,547
------------------------------------------------------- -------
Impairment losses
------------------------------------------------------- -------
At 1 January 2021 and 2022 2,143
------------------------------------------------------- -------
At 31 December 2021 and 2022 2,143
Net book value
At 31 December 2022 41,404
------------------------------------------------------- -------
At 31 December 2021 23,903
------------------------------------------------------- -------
The Goodwill arising on business combinations during the year
ended 31 December 2022 relates to the acquisition of ADAMAS
Consulting Group Limited and its subsidiaries ("ADAMAS").
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash-generating units ('CGUs') that are
expected to benefit from that business combination. The carrying
amount of goodwill has been allocated as follows:
2022 2021
Cash-generating unit GBP000s GBP000s
--------------------- -------- --------
CRO 23,157 10,190
--------------------- -------- --------
PV 18,247 13,713
--------------------- -------- --------
41,404 23,903
--------------------- -------- --------
10. Other intangible assets
Customer Customer In-process
Software contracts relationships Brands R&D Technology Total
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
Cost
At 1 January 2021 4,140 2,974 9,321 1,722 15,200 419 33,776
IFRS 3 revaluation - 90 240 38 - - 368
Additions 30 - - - - - 30
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
Disposals (211) - - - - - (211)
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
Translation movement (7) 6 2 (21) - - (20)
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
At 31 December
2021 3,952 3,070 9,563 1,739 15,200 419 33,943
Acquisitions 10 723 8,541 738 - - 10,012
Additions 634 - - - - - 634
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
Translation movement 15 151 705 114 - - 985
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
At 31 December
2022 4,611 3,944 18,809 2,591 15,200 419 45,574
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
Amortisation
At 1 January 2021 2,651 1,811 3,534 543 15,200 419 24,158
Charge for the
year 577 425 906 267 - - 2175
Translation movement (6) (5) (20) (12) - - (43)
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
At 31 December
2021 3,222 2,231 4,420 798 15,200 419 26,290
Charge for the
year 391 1,089 1,195 442 - - 3,117
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
Translation movement 7 94 182 40 - - 323
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
At 31 December
2022 3,620 3,414 5,797 1,280 15,200 419 29,730
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
Net book value
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
At 31 December
2022 991 530 13,012 1,311 - - 15,844
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
At 31 December
2021 730 839 5,143 941 - - 7,653
--------------------- -------- ---------- -------------- -------- ---------- ---------- --------
11. Trade and other receivables
2022 2021
GBP000s GBP000s
--------------------------- -------- --------
Trade receivables 28,006 20,234
Other receivables 970 869
Prepayments 2,971 1,818
--------------------------- -------- --------
Corporation tax receivable 2,503 2,222
--------------------------- -------- --------
34,450 25,143
--------------------------- -------- --------
12. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term
deposits.
2022 2021
GBP000s GBP000s
-------- --------
Cash at bank 19,096 31,243
------------- -------- --------
The carrying amount of cash and cash equivalents approximates
to their fair value at the reporting date and are 2022 2021
denominated in the following currencies: GBP000s GBP000s
-------------------------------------------------------------- -------- --------
GBP 5,834 15,083
Euro 2,437 3,118
USD 8,483 11,757
-------------------------------------------------------------- -------- --------
Other 2,342 1,285
-------------------------------------------------------------- -------- --------
19,096 31,243
-------------------------------------------------------------- -------- --------
13. Trade and other payables
2022 2021
GBP000s GBP000s
----------------------------------- -------- --------
Trade payables 6,507 3,102
Amounts payable to related parties - 3
Social security and other taxes 2,122 1,302
Other payables 1,564 1,541
Accruals 7,447 8,951
----------------------------------- -------- --------
17,640 14,899
----------------------------------- -------- --------
14. Ordinary share capital
Group and Company
2022 2021
--------------------------------- ------------------- -------------------
Number GBP000s Number GBP000s
--------------------------------- ---------- ------- ---------- -------
Ordinary shares of GBP0.01 each
At 1 January 49,293,629 493 48,719,526 487
Exercise of share options 1,007,176 10 418,545 4
--------------------------------- ---------- ------- ---------- -------
Shares to be issued for non-cash
consideration - - 155,558 2
--------------------------------- ---------- ------- ---------- -------
At 31 December 50,300,805 503 49,263,629 493
--------------------------------- ---------- ------- ---------- -------
15. Acquisition of subsidiary - ADAMAS
On 9 February 2022, the Group acquired all the issued share
capital in ADAMAS Consulting Group Limited and its subsidiaries
("ADAMAS"). The acquisition has been completed for a cash
consideration of GBP25.6 million, representing an enterprise value
of GBP24.2 million and cash acquired of GBP1.4 million. Ergomed Plc
drew down on its GBP15.0 million on multi-currency revolving credit
facility ('RCF) on 1 February 2022 and utilised the funds and
existing Group cash reserves to fund the acquisition.
ADAMAS is an international specialist consultancy offering a
full range of independent quality assurance services and
specialising in the audit of pharmaceutical manufacturing
processes, as well as auditing clinical trials and
pharmacovigilance systems.
In the period from 9 February 2022 to 31 December 2022, ADAMAS
contributed revenue of GBP10.2 million and profit of GBP1.0 million
to the Group's results. If the acquisition had occurred on 1
January 2022, management estimates that consolidated revenue would
have been GBP10.8 million, and profit for the period would have
been GBP1.0 million.
In determining these amounts, management has assumed that the
fair value adjustments, that arose on the date of acquisition would
have been the same if the acquisition had occurred on 1 January
2022.
Identifiable assets acquired and liabilities assumed Fair Value
GBP000s
----------------------------------------------------- ----------
Intangible assets 10,013
Property, plant and equipment 19
Deferred tax assets 3
Trade and other receivables 1,864
Contract assets 233
Cash and equivalents 1,411
Trade and other payables (1,252)
Contract liabilities (14)
Taxation payable (32)
Deferred tax liability (2,412)
Total identifiable net assets 9,833
Goodwill 15,821
Total consideration 25,654
Satisfied by
Cash consideration 25,654
Total consideration 25,654
==========
Net cash outflow arising on acquisition
Cash consideration 25,654
Less: cash and cash equivalent
balances acquired (1,411)
Transaction expenses 1,056
----------
25,299
==========
Included within intangible assets are customer relationships of
GBP8,541,000, brand of GBP738,000 and contracted order book of
GBP723,000 were recognised on acquisition. The Group incurred
acquisition related costs of GBP240,000 related to due diligence
and legal activities in the year ended 31 December 2021 and
GBP816,000 in the year ended 31 December 2022. These costs have
been included in acquisition costs within selling and
administrative expenses in the Group's consolidated income
statement.
On 30 June 2022, the purchase price allocation (PPA) was
prepared on a provisional basis in accordance with IFRS 3. During
the measurement period the Group finalised the independent
valuation of the intangible assets (customer relationships, brand
and contracted orderbook) recognised on acquisition, the
measurement of deferred tax liabilities and the audit of the
acquired balance sheet. Adjustments were made to the provisional
PPA, which was disclosed in the Group's condensed consolidated
financial statements for the six months ended 30 June 2022
resulting in, a decrease in the fair value of intangibles assets
recognised on acquisition of GBP93,000, an increase in Goodwill of
GBP1,000, a decrease in the deferred tax liability of GBP22,000 and
an increase in the acquired net assets of GBP70,000
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MSCSEISMFEDSEDD
(END) Dow Jones Newswires
March 21, 2023 03:00 ET (07:00 GMT)
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