27 Sep 2013 07:00
Venn Life Sciences Holdings Plc
("Venn" or the "Company")
Interim Results for 6 months ended 30 June 2013
Venn Life Sciences (AIM: VENN), a growing Clinical Research Organisation (CRO) providing clinical trial management and resourcing solutions to pharmaceutical, biotechnology and medical device clients, announces its unaudited interim results for the six months ended 30 June 2013.
Financial Highlights
· Revenue of €1.142m (H1 2012: €1.140m)
· EBITDA of €0.691m loss (H1 2012: €0.360m loss)
- investment in business development, acquisition screening and co-development opportunities
- costs of €457,000 expensed to the Income Statement
· Loss before tax of €0.716m (H1 2012: €0.390m)
· Cash and cash equivalents of €1.307m (as at 30 June 2012: €0.068m)
Operational Highlights
· Step change in number of acquisitions identified and evaluated
· Investment in operations in Russia, UK and Europe, in preparation for growth
· In-licensing of new technologies through innovative division InnoVenn
· Key appointments in the areas of business development and clinical operations
Post period end
· Advanced negotiations with German based CRO underpinning growth in key European markets
· Significant increase in proposals pipeline to €9.3m - with focus on converting proposals to wins
· Master service agreement signed with a leading global biopharmaceutical company
Commenting on the Group's outlook, David Evans, Non-Executive Chairman of Venn, said:
"Venn is on course to deliver on its strategy of becoming a leading mid-sized European CRO. Recognising the need to invest in business development, acquisitions and innovation, Venn has focused in the first six months of 2013 on nurturing a formula that has shown a significant increase in their pipeline across all their offices. The results of this will be reflected over the latter half of 2013, as the pace of business increases in line with geographic coverage and innovative technologies."
Enquiries:
Venn Life Sciences Holdings Plc | |
David Evans, Non-Executive Chairman | Tel: +44(0)7980 541 893 |
Tony Richardson, Chief Executive Officer | Tel: +353 154 99 341 |
Paul Foulger, Finance Director | Tel: +44 (0)20 7245 1100 |
Zeus Capital (Nominated Adviser and Broker) | |
Ross Andrews/Andrew Jones(Corporate Finance) | Tel: +44(0)161 831 1512 |
John Goold (Institutional Sales) | Tel: +44(0)20 7533 7716 |
Walbrook PR Ltd | Tel: +44(0)20 7933 8787 or venn@walbrookpr.com |
Paul McManus | Mob: +44(0)7980 541 893 |
Lianne Cawthorne | Mob: +44(0)7584 391 303 |
Chairman's Statement
Dear Fellow Shareholder,
Following the company's admission to AIM in December 2012, the first six months of 2013 saw Venn deliver on its commitment to invest in key areas of its business:
- the development of an M&A pipeline,
- new management and improved facilities, in readiness for organic growth; and
- the identification of technology opportunities for InnoVenn.
I am pleased to report that we now have concrete developments that underpin these investment decisions.
Financial Results
Fee income for the first six months of 2013 was €1.142m, broadly in line with the first six months of the previous year (H1 2012: €1.140m). As outlined in our AIM admission document, we committed to invest significantly in key areas to enable us to execute our strategy. During the six months we invested €275,000 in a new facility in the UK, €104,000 on M&A identification and screening, and €78,000 on co-development technology assessment. All of these items were expensed during the six month period and contributed to the EBITDA deficit for the period of €691,000 (H1 2012: €0.360m loss). We are comfortable with our cash position, which currently sits at £1.307m at the period end (as at 30 June 2012: €0.068m).
Operational Review
Significant progress has been made across all areas of our business. We began this year with a theory that the smaller end of the CRO market was ripe for consolidation and a proposition that we have the capability to execute value-adding transactions as a means of accelerating our company's growth. We are satisfied as a group that our theory is valid. In the last six months we have identified and evaluated eighteen acquisition opportunities that fit our criteria and we believe that we will be able to establish solid relationships with several of these businesses either through acquisition or partnering. I will return to this later in my statement.
Much of the first half was also focussed on ensuring the building blocks were in place to ensure we delivered organic growth across the group and provided the best possible platform to integrate new acquisitions. Following the establishment of Venn Russia in February 2013, the Company announced in April the opening of an additional office in the UK and we have invested in this team during the period. The investment in our UK facility referenced above, is largely a commitment to business development. Typical sales cycles in the CRO industry are 6 to 9 months and we are now seeing the benefits of this investment.
This investment in preparing ourselves for organic growth has paid off and we currently have proposals to clients with a combined value of €9.3m, which is at the highest level it has ever been and historical trends indicate that we should win over 60% of these proposals; this would significantly transform our underlying business. Our two largest proposals are for €2.5m and €1.5m respectively and I am pleased to see as our critical mass grows we are able to pitch for business at this level. Our operational teams are now focussed on converting proposals to wins and I believe they are very well positioned to achieve this.
We also stated in our Admission Document that there is an opportunity for Venn, through co-development initiatives to share in future revenue streams associated with IP development and sale or out-licensing particularly within the medical device arena. In May we announced the launch of InnoVenn, our new innovation division set up to focus on these co-development opportunities. We were also very pleased to announce our first co-development initiative, a joint venture with two Irish biomedical companies to develop the next generation biodegradable human implants, to replace titanium in orthopaedic surgery. This is still in very early stages but we are happy with the progress made so far. We are in continuing discussions regarding additional co-development initiatives and we hope to update shareholders shortly.
New developments and Outlook
I am pleased to report that we are now in advanced negotiations with a German based CRO business which, if concluded, will not only add significant revenues and profits to Venn's organically growing business, but also a wealth of management and clinical experience in new therapeutic areas. We hope to complete this acquisition, which also comes with a well-developed pipeline of opportunities, by the end of October.
Finally, and most importantly, there is a growing pipeline of new business proposals underpinned by the signing of key master service arrangements (MSAs) with existing clients. We are particularly pleased with the signing of a new MSA with a leading global biopharmaceutical company, and we expect them to become a key client for Venn as this relationship develops.
The key objectives for the second half-year include the conversion of new and existing proposals into business wins and the achievement of month-on-month profitability. In addition the Company expects to complete identified value adding acquisitions in key locations. The enhanced international coverage and deeper service capability can only serve to improve our prospects of new business wins and the achievement of sustainable profitability, adding to the potential organic growth we are seeing from our existing business.
David Evans
Chairman
26 September 2013
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2013
Unaudited | Unaudited | Audited | ||||
6 months ended | 6 months ended | Year ended | ||||
30 June | 30 June | 31 December | ||||
2013 | 2012 | 2012 | ||||
€'000 | €'000 | €'000 | ||||
Continuing operations | ||||||
Revenue | 1,142 | 1,140 | 2,680 | |||
Administrative expenses | (1,906) | (1,520) | (3,804) | |||
Other operating income | 60 | - | - | |||
Operating loss | (704) | (380) | (1,124) | |||
Depreciation and amortisation | (13) | (20) | (43) | |||
Exceptional items | - | - | (556) | |||
EBITDA before exceptional items | (691) | (360) | (525) | |||
Finance income | 7 | 2 | 3 | |||
Finance costs | (19) | (12) | (29) | |||
Loss before income tax | (716) | (390) | (1,150) | |||
Income tax charge | (16) | 10 | (22) | |||
Loss for the period | (732) | (380) | (1,172) | |||
Total comprehensive loss for the period | (732) | (380) | (1,172) | |||
Loss per ordinary share | € | € | € | |||
Basic and diluted | (0.03) | (0.04) | (0.12) | |||
Consolidated Statement of Financial Position
As at 30 June 2013
Unaudited | Unaudited | Audited | ||||
As at | As at | As at | ||||
30 June | 30 June | 31 December | ||||
2013 | 2012 | 2012 | ||||
€'000 | €'000 | €'000 | ||||
Assets | ||||||
Non-current assets | ||||||
Property, plant and equipment | 51 | 64 | 47 | |||
Intangible assets | 836 | 836 | 836 | |||
Investments | 60 | - | 31 | |||
Total non-current assets | 947 | 900 | 914 | |||
Current assets | ||||||
Trade and other receivables | 686 | 500 | 593 | |||
Income tax recoverable | - | 46 | 14 | |||
Cash and cash equivalents | 1,307 | 68 | 2,876 | |||
Total current assets | 1,993 | 614 | 3,483 | |||
Total assets | 2,940 | 1,514 | 4,397 | |||
Equity attributable to owners | ||||||
Share capital | 102 | 2 | 102 | |||
Share premium account | 3,431 | - | 3,431 | |||
Group re-organisation reserve | (541) | (541) | (541) | |||
Reverse acquisition reserve | 45 | - | 45 | |||
Retained earnings | (1,240) | 284 | (508) | |||
Total equity | 1,797 | (255) | 2,529 | |||
Liabilities | ||||||
Non-current liabilities | ||||||
Borrowings | - | - | 297 | |||
Total non-current liabilities | - | - | 297 | |||
Current liabilities | ||||||
Trade and other payables | 820 | 1,385 | 1,212 | |||
Deferred taxation | 6 | 8 | 6 | |||
Borrowings | 317 | 376 | 353 | |||
Total current liabilities | 1,143 | 1,769 | 1,571 | |||
Total liabilities | 1,143 | 1,769 | 1,868 | |||
Total equity and liabilities | 2,940 | 1,514 | 4,397 |
Consolidated Statement of Cash Flows
For the six months ended 30 June 2013
Unaudited | Unaudited | Audited | ||
6 months ended | 6 months ended | Year ended | ||
30 June | 30 June | 31 December | ||
2013 | 2012 | 2012 | ||
€'000 | €'000 | €'000 | ||
Cash Flow from operating activities | ||||
Loss before income tax | (716) | (390) | (1,150) | |
Adjustments: | ||||
- Depreciation | 13 | 20 | 43 | |
- Deemed reverse acquisition costs | - | - | 326 | |
- Loss on disposal of PPE | - | 14 | 14 | |
- Foreign currency movement | 112 | - | - | |
- Net finance costs | 12 | 10 | 26 | |
Changes in working capital | ||||
- Trade and other receivables | (93) | 526 | 488 | |
- Trade and other payables | (392) | (287) | (540) | |
Cash used in operations | (1,064) | (107) | (793) | |
Interest paid | (19) | (12) | (29) | |
Income tax paid | (2) | (15) | (17) | |
Net cash used in operating activities | (1,085) | (134) | (839) | |
Cash flow from investing activities | ||||
Acquisition of subsidiaries, net of cash acquired | - | - | 436 | |
Purchase of property, plant and equipment (PPE) | (17) | (12) | (18) | |
Proceeds from sale of PPE | - | 5 | 5 | |
Purchase of investments | (29) | - | - | |
Proceeds from sale of investments | - | - | 31 | |
Interest received | 7 | 2 | 3 | |
Net cash used in investing activities | (39) | (5) | 457 | |
Cash flow from financing activities | ||||
Proceeds from issuance of ordinary shares | - | - | 2,777 | |
New bank loans | - | - | 381 | |
Repayments on borrowings | (362) | - | (19) | |
Net cash (used in)/generated by financing activities | (362) | - | 3,139 | |
Net (decrease)/increase in cash and cash equivalents | (1,486) | (139) | 2,757 | |
Cash and cash equivalents at beginning of year | 2,588 | (169) | (169) | |
Exchange loss on cash and cash equivalents | (112) | - | - | |
Cash and cash equivalents at end of year | 990 | (308) | 2,588 |
Cash and cash equivalents include the following for the purposes of the statement of cash flows:
Unaudited | Unaudited | Audited | ||
6 months ended | 6 months ended | Year ended | ||
30 June | 30 June | 31 December | ||
2013 | 2012 | 2012 | ||
€'000 | €'000 | €'000 | ||
Cash and cash equivalents | 1,307 | 68 | 2,876 | |
Bank overdrafts | (317) | (376) | (288) | |
Cash and cash equivalents | 990 | (308) | 2,588 | |
Consolidated Statement of Changes in Shareholders' Equity
|
Share capital |
Share premium | Group re-organisation reserve | Reverse acquisition reserve |
Retained earnings |
Total |
€'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |
At 1 January 2012 | 2 | - | (541) | - | 664 | 125 |
Changes in equity for 6 months ended 30 June 2012 | ||||||
Total comprehensive profit for the period | - | - | - | - | (380) | (380) |
At 30 June 2012 | 2 | - | (541) | - | 284 | (255) |
Changes in equity for 6 months ended 31 December 2012 | ||||||
Total comprehensive loss for the period | - | - | - | - | (792) | (792) |
Share capital and share premium as recognised as reverse acquisition | 90 | 664 | - | 45 | - | 799 |
Proceeds from share issue (net of expenses) | 10 | 2,767 | - | - | - | 2,777 |
At 31 December 2012 | 102 | 3,431 | (541) | 45 | (508) | 2,529 |
Changes in equity for 6 months ended 30 June 2013 | ||||||
Total comprehensive profit for the period | - | - | - | - | (732) | (732) |
At 30 June 2013 | 102 | 3,431 | (541) | 45 | (1,240) | 1,797 |
NOTES FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
1. General information and basis of presentation
Venn Life Sciences Holdings Plc is a company incorporated in England and Wales. The Company is a public limited company listed on the AIM market of the London Stock Exchange. The address of the registered office is 14 Kinnerton Place South, London, SW1X 8EH.
The Group's principal activity continues to be that of a Clinical Research Organisation (CRO) providing a suite of consulting and clinical trial services to pharmaceutical, biotechnology and medical device organisations.
The financial information in these interim results is that of the holding company and all of its subsidiaries. It has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards as adopted for use in the EU (IFRSs). The accounting policies applied by the Group in this financial information are the same as those applied by the Group in its financial statements for the year ended 31 December 2012 and which will form the basis of the 2013 financial statements except for a number of new and amended standards which have become effective since the beginning of the previous financial year. These new and amended standards are not expected to materially affect the Group.
The financial information presented herein does not constitute full statutory accounts under Section 434 of the Companies Act 2006 and was not subject to a formal review by the auditors. The financial information in respect of the year ended 31 December 2012 has been extracted from the statutory accounts which have been delivered to the Registrar of Companies. The Group's Independent Auditor's report on those accounts was unqualified, did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006. The financial information for the half years ended 30 June 2013 and 30 June 2012 is unaudited and the twelve months to 31 December 2012 is audited.
2. Loss per share
(a) Basic
Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of Ordinary Shares in issue during the period.
Unaudited | Unaudited | Audited | |||
6 months ended | 6 months ended | Year ended | |||
30 June | 30 June | 31 December | |||
2013 | 2012 | 2012 | |||
Loss attributable to equity holders of the Company (€'000) | 732 | 380 | 1,172 | ||
Weighted average number of Ordinary Shares in issue | 29,099,994 | 9,600,000 | 10,116,393 | ||
Basic loss per share | €0.03 | €0.04 | €0.12 |
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of Ordinary Shares outstanding to assume conversion of all dilutive potential ordinary Shares. No share options or warrants outstanding at period end were dilutive and all such potential ordinary shares are therefore excluded from the weighted average number of ordinary shares for the purposes of calculating diluted earnings per share.
3. Dividends
There were no dividends provided or paid during the six months.
4. Press
A copy of this announcement is available from the Company's website, being www.vennlifesciences.com. If you would like to receive a hard copy of the interim report please contact the Venn Life Sciences Holdings Plc offices on +31 (0) 524 712 456 to request a copy.