Revenue increase of 15% on comparable basis PrimeVigilance growth of 23% Orphan drug development strategy gaining momentum 37% of new business won in CRO is for orphan drugs Backlog increased 20% to £109 million underpinning 2019 targets Guildford, UK – 10 April 2019: Ergomed plc, (LSE: ERGO) (‘Ergomed’ or the ‘Company’), a company focused on […]
- Revenue increase of 15% on comparable basis
- PrimeVigilance growth of 23%
- Orphan drug development strategy gaining momentum
- 37% of new business won in CRO is for orphan drugs
- Backlog increased 20% to £109 million underpinning 2019 targets
Guildford, UK – 10 April 2019: Ergomed plc, (LSE: ERGO) (‘Ergomed’ or the ‘Company’), a company focused on providing specialised services to the pharmaceutical industry, today announces its unaudited Preliminary Results for the year ended 31 December 2018.
The Company adopted IFRS 15 with effect from 1 January 2018. Upon adoption, Ergomed elected to use the cumulative effect transition method meaning that the results of prior years are not restated under IFRS 15 methodology. For comparison purposes, therefore, reference is also made to IAS 18 and Note 1 to the unaudited Financial Statements which includes an analysis of adjustments required to reconcile these two accounting methodologies where appropriate in an effort to provide a clear picture of the impact of adoption.
Selected Financial Highlights
Figures in £ millions, unless otherwise stated
|Net Service Fee Revenue1||N/A||46.9||39.6|
|Gross Margin (%)||36%||37%||37%|
|Research & Development||(1.6)||(1.6)||(2.7)|
|Adjusted EBITDA (after exceptional and other items)2||2.3||3.1||2.8|
|Exceptional Items (net)||(8.5)||(8.5)||(0.1)|
|Cash and Cash Equivalents||5.2||5.2||3.2|
|Backlog at 31 December||109||106||88|
Note: EBITDA is defined as profit before tax for the period plus finance costs, depreciation and amortisation
Commenting on the results, Dr Miroslav Reljanović, Executive Chairman of Ergomed, said: “2018 saw us continue to deliver strong top-line growth and work hard to deliver a significantly improved financial performance in the second half.
“We are fully committed to our services strategy and confident in the opportunities for our pharmacovigilance business and in our orphan drug development emphasis. With our backlog at more than £109 million and the full benefits of the 2018 cost reduction programme, we believe we are well positioned to build on these foundations.”
Key Financial Highlights
- Revenue of £54.1 million, equivalent to £54.9 million under IAS 18, increased by 15% on a comparable basis (2017: £47.6 million).
- Pharmacovigilance total revenue growth of 23% to £27.5 million (2017: £22.5 million).
- EBITDA (adjusted)2 of £2.3 million, representing growth of 11% on an IAS 18 comparable basis.
- Unadjusted EBITDA loss of £7.9 million, which is £7.1 million on an IAS 18 equivalent (2017: loss of £2.3 million) after a £6.8 million charge including the full impairment of the Haemostatix business.
- Unadjusted EPS loss of 20.0p, equivalent to 18.1p under IAS 18 (2017: 11.0p), which includes the effect of impairment charges for the Haemostatix business.
- R&D expense of £1.6 million in 2018 (2017: £2.7 million) reflected costs incurred on pre-clinical studies, clinical trial product manufacture and licencing activities.
- Cash and cash equivalents of £5.2 million as at 31 December 2018 (31 December 2017: £3.2 million).
- Strong backlog of £109 million contracted revenue as of 31 December 2018 (31 December 2017: £90 million after £2 million IFRS 15 adoption adjustment).
- Net service fee revenues exclude reimbursement revenues.
- Adjustments are made to EBITDA for share-based payment charge, deferred consideration for acquisitions relating to post acquisition remuneration, revaluation of contingent consideration for acquisition, acquisition costs and exceptional items.
- 2017 income statement was restated to amend the classification of certain costs between cost of sales and selling, general and administration expenses (Note 15)
Operational and Other Highlights Including Post Year-End
- PrimeVigilance established as a leading PV services provider; bolt-on acquisitions support growth opportunity and expansion of offering.
- CRO orphan development strategy consolidated under PSR brand.
- Asarina Pharma AB, a co-development partner, completed a public offering and listing on the First North Exchange improving the liquidity of our investment, valued at £0.9 million.
- Dr Miroslav Reljanović elected Executive Chairman.
- Michael Spiteri appointed as an additional Non-Executive Director to help drive the digital transformation and automation strategy.
Adoption of IFRS 15 on Revenue Recognition
During 2018 Ergomed adopted IFRS 15 in relation to revenue recognition. Revenues in 2018 have been presented in accordance with IFRS 15. The comparative information has not been adjusted and therefore continues to be reported under IAS 18 – ‘Revenue Recognition’.
The impact of adoption on 1 January 2018 has been to reduce retained earnings by £2.2 million as, based on the portfolio of projects at that time, recognition of revenue under a percentage of completion methodology in accordance with IFRS 15 leads to a slower recognition of revenue than has been the case when reported under the previous standard IAS 18. Since revenue will be reported according to percentage of completion after the adoption date there is a corresponding increase in backlog of £2.2 million at 1 January 2018. Furthermore, reimbursement revenues are not presented separately under IFRS 15 because the reimbursement revenues and the services fees are accounted for on a combined basis.
Meeting and conference call for analysts:
A briefing for analysts will be held at 8:30am BST on 10th April at the offices of Numis Securities Ltd., 10 Paternoster Square, London, EC4M 7LT. Photo ID will be required for entry. There will be a simultaneous live conference call with Q&A.
Conference call details:
Participant dial-in: 0800 376 7922
International dial-in: +44 (0) 2071 928000
Participant code: 1982927
|Ergomed plc||Tel: +44 (0) 1483 402 975|
|Miroslav Reljanović (Executive Chairman)|
|Stuart Jackson (Chief Financial Officer)|
|Numis Securities Limited||Tel: +44 (0) 20 7260 1000|
|Freddie Barnfield / Huw Jeremy (Nominated Adviser)|
|James Black (Broker)|
|Consilium Strategic Communications – for UK enquiries||Tel: +44 (0) 20 3709 5700|
|Chris Gardner / Mary-Jane Elliottemail@example.com|
|Matthew Neal / Olivia Manser|
|MC Services – for Continental European enquiries||Tel: +49 211 5292 5222|
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, profitable services business includes an industry leading suite of specialist pharmacovigilance solutions, integrated under the PrimeVigilance brand, and a full range of high-quality contract research and trial management services under the Ergomed brand (CRO), and an internationally recognised specialist expertise in orphan drug development, under PSR. For further information, visit: https://ergomedplc.com.