30 Sep 2014 07:00
30 September 2014
Venn Life Sciences Holdings Plc
("Venn" or the "Company")
Half Yearly Report
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 2014.
Financial Highlights
· Revenue of €1.512m (H1 2013: €1.142m)
· EBITDA loss of €0.911m (H1 2013: €0.691m)
· Loss before tax of €0.987m (H1 2013: €0.716m)
· Cash and cash equivalents of €0.317m (30 June 2013: €1.307m)
· Balance sheet strengthened by Placing of £1m
· As at 29 September 2014, the Company's cash and cash equivalents stand at approximately €0.96m
Operational Highlights
· Step change in contract scale and value as shown by proposals pipeline and €3m contract win (May 2014)
· Acquisition of assets of Evocutis PLC and investment to support development of opportunities in this area
· Integration of acquired offices in Germany and Northern Ireland
Post period end
· Further international contract secured for €2.4m commencing September 2014
· Acquisition of Cardinal Systems France adds to service capabilities for further international contract wins
· Successful re-activation of Labskin manufacturing in anticipation of initial sales in Q4 2014
· Securing strategic direct investment of €800,000 into InnoVenn
Commenting on the Group's outlook, David Evans, Non-Executive Chairman of Venn, said:
"In the final quarter of this year we can expect to see the profit and cash flow benefit of our recent international contract wins. This is a hugely positive step for our business and the achievement of the first stage of our longer term plans.
"Our next objective is to secure further business assets to deliver a level of critical mass that will establish the business as a significant medium sized European CRO, which will in turn put the business in a strong position to grow further. I am also pleased with the progress we have made with InnoVenn. The additional direct investment will ensure that this can grow independently of the CRO business.
"It has been very hard work to date and we have more ahead of us in order to achieve our key growth milestones. In the short term these are to deliver on our contract successes, to secure more work and to grow the business to the next level. I am confident we can get there."
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 |
Zeus Capital (Nominated Adviser and Broker) | |
Ross Andrews/Andrew Jones (Corporate Finance) | Tel: +44(0)161 831 1512 |
Dominic Wilson (Institutional Sales) | Tel: +44(0)20 7533 7721 |
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 we committed to building, through a combination of acquisition and organic growth, a CRO capable of winning and servicing high value multi-centred, international contracts. Positioning the business to compete in the international arena has required considerable investment, principally in building a capable resource base in key locations. I am pleased with the capabilities developed since Admission and satisfied that this is now driving key high value contract wins.
Financial Results
Fee income for the first six months of 2014 was €1.512m, up 32% on the first six months of 2013 (H1 2013: €1,142). EBITDA deficit for the period was €0.911m compared to €0.704m for the first half of 2013. During the six months to 30 June 2014 we invested €200,000 in InnoVenn Skin Science and incurred non-recurring CRO costs of €170,000 all of which have been expensed to the profit and loss account.
Securing €5.4m in two new contracts since May 2014 has been significant for the business, both financially and operationally. As a result of these contracts we have moved from a position of excess resource capacity to full utilisation. These contracts are milestone based with up-front payments, that coupled with existing cash resources enables us to manage working capital more smoothly and efficiently.
Operational Review
The decision to acquire capabilities in Germany and Northern Ireland was an important factor in securing higher value international business in H1. The acquisition of additional service capabilities (Biometry and IRS), and associated clients, in July of this year, will be instrumental in securing new contract wins.
The integration of newly acquired capabilities in Germany and Northern Ireland has been successful and in recent months we have managed to grow both locations with new hires and new contracts. We have successfully adopted a functional group wide approach to structure and integration, as opposed to regional, and we believe this gives us a solid basis for further expansion.
Business development remains a key area for focus and investment. The industry sales cycle (from contact to contract) remains on average six to nine months. Having secured some significant recent wins it is incumbent on us to re-double our efforts to ensure we get momentum and sustained growth. The CRO industry continues to deliver impressive double digit growth and signs are this will continue for the foreseeable future.
In February 2014, we acquired certain assets of Evocutis plc. Since acquisition we have made considerable progress in establishing the necessary resources and infrastructure to successfully commercialise the technology portfolio. We have established new laboratory facilities at DEFRA in York, re-established product manufacturing in advance of initial sales in Q4, and engaged with our potential client base. We have decided to facilitate a direct strategic investment into InnoVenn to give it life, independent of our CRO business, and to ensure the programme is fully funded through to commercialisation.
New Developments and Outlook
Despite significant financial progress since May 2014 the business remains in many respects, subscale. To deliver on our original vision of a pan European mid-sized CRO further consolidation will be required and to this end the Company is continuing to actively seek and consider merger candidates which would give the combined business full European coverage and capability.
We have decided to facilitate a strategic external investment in the sum of €800k into InnoVenn. This external investment results in a significant increase in the value of our investment in InnoVenn since March 2014, and leaves InnoVenn well-funded to deliver on the full potential of the technology portfolio.
In the final quarter of this year we can expect to see the profit and cash flow benefit of our recent international contract wins. This is a hugely positive step for our business and the achievement of the first stage of our longer term plans.
It has been very hard work to date and we have more ahead of us in order to achieve our key growth milestones. In the short term these are to deliver on our contract successes, to secure more work and to grow the business to the next level. I am confident we can get there.
David Evans
Chairman
30 September 2014
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2014
Unaudited | Unaudited | Audited | ||||
6 months ended | 6 months ended | Year ended | ||||
30 June | 30 June | 31 December | ||||
2014 | 2013 | 2013 | ||||
€'000 | €'000 | €'000 | ||||
Continuing operations | ||||||
Revenue | 1,512 | 1,142 | 2,035 | |||
Administrative expenses | (2,469) | (1,846) | (3,829) | |||
Operating loss | (957) | (704) | (1,794) | |||
Depreciation and amortisation | (26) | (13) | (32) | |||
Exceptional items | (20) | - | (117) | |||
EBITDA before exceptional items | (911) | (691) | (1,645) | |||
Finance income | 1 | 7 | 12 | |||
Finance costs | (31) | (19) | (41) | |||
Loss before income tax | (987) | (716) | (1,823) | |||
Income tax credit/(charge) | 1 | (16) | 23 | |||
Loss for the period | (986) | (732) | (1,800) | |||
Currency translation differences | 16 | - | (8) | |||
Total comprehensive loss for the period | (970) | (732) | (1,808) | |||
Loss per ordinary share | € | € | € | |||
Basic and diluted | (0.04) | (0.04) | (0.09) | |||
Consolidated Statement of Financial Position
As at 30 June 2014
Unaudited | Unaudited | Audited | ||||
As at | As at | As at | ||||
30 June | 30 June | 31 December | ||||
2014 | 2013 | 2013 | ||||
€'000 | €'000 | €'000 | ||||
Assets | ||||||
Non-current assets | ||||||
Property, plant and equipment | 71 | 51 | 53 | |||
Intangible assets | 1,895 | 836 | 1,039 | |||
Investments | 31 | 60 | 31 | |||
Total non-current assets | 1,997 | 947 | 1,123 | |||
Current assets | ||||||
Trade and other receivables | 1,079 | 686 | 656 | |||
Income tax recoverable | 29 | - | 52 | |||
Cash and cash equivalents | 317 | 1,307 | 541 | |||
Total current assets | 1,425 | 1,993 | 1,249 | |||
Total assets | 3,422 | 2,940 | 2,372 | |||
Equity attributable to owners | ||||||
Share capital | 112 | 102 | 102 | |||
Share premium account | 5,443 | 3,431 | 3,431 | |||
Group re-organisation reserve | (541) | (541) | (541) | |||
Reverse acquisition reserve | 45 | 45 | 45 | |||
Foreign currency reserves | 8 | - | (8) | |||
Retained earnings | (3,294) | (1,240) | (2,308) | |||
Total equity | 1,773 | 1,797 | 721 | |||
Liabilities | ||||||
Non-current liabilities | ||||||
Deferred consideration | 55 | - | 54 | |||
Total non-current liabilities | 55 | - | 54 | |||
Current liabilities | ||||||
Trade and other payables | 1,293 | 820 | 1,178 | |||
Deferred taxation | 16 | 6 | 17 | |||
Deferred consideration | 87 | - | 77 | |||
Borrowings | 198 | 317 | 325 | |||
Total current liabilities | 1,594 | 1,143 | 1,597 | |||
Total liabilities | 1,649 | 1,143 | 1,651 | |||
Total equity and liabilities | 3,422 | 2,940 | 2,372 |
Consolidated Statement of Cash Flows
For the year ended 30 June 2014
Unaudited | Unaudited | Audited | ||
6 months ended | 6 months ended | Year ended | ||
30 June | 30 June | 31 December | ||
2014 | 2013 | 2013 | ||
€'000 | €'000 | €'000 | ||
Cash Flow from operating activities | ||||
Loss before income tax | (987) | (716) | (1,823) | |
Adjustments: | ||||
- Depreciation | 26 | 13 | 32 | |
- Foreign currency movement | 2 | 112 | 70 | |
- Net finance costs | 30 | 12 | 29 | |
Changes in working capital | ||||
- Trade and other receivables | (423) | (93) | 97 | |
- Trade and other payables | 115 | (392) | (209) | |
Cash used in by operations | (1,237) | (1,064) | (1,804) | |
Interest paid | (18) | (19) | (39) | |
Income tax received/(paid) | 23 | (2) | (16) | |
Net cash used in by operating activities | (1,232) | (1,085) | (1,859) | |
Cash flow from investing activities | ||||
Acquisition of subsidiaries, net of cash acquired | - | - | (54) | |
Purchase of property, plant and equipment (PPE) | (40) | (17) | (31) | |
Purchase of investments | - | (29) | ||
Interest received | 1 | 7 | 12 | |
Net cash used in investing activities | (39) | (39) | (73) | |
Cash flow from financing activities | ||||
Proceeds from issuance of ordinary shares | 1,169 | - | - | |
Repayments on borrowings | - | (362) | (362) | |
Net cash generated/(used in) by financing activities | 1,169 | (362) | (362) | |
Net decrease in cash and cash equivalents | (102) | (1,486) | (2,294) | |
Cash and cash equivalents at beginning of year | 216 | 2,588 | 2,588 | |
Exchange loss on cash and cash equivalents | 5 | (112) | (78) | |
Cash and cash equivalents at end of year | 119 | 990 | 216 |
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 | ||
2014 | 2013 | 2013 | ||
€'000 | €'000 | €'000 | ||
Cash and cash equivalents | 317 | 1307 | 541 | |
Bank overdrafts | (198) | (317) | (325) | |
Cash and cash equivalents | 119 | 990 | 216 | |
Consolidated Statement of Changes in Shareholders' Equity
|
Share capital |
Share premium | Group re-organisation reserve | Reverse acquisition reserve | Foreign currency reserve |
Retained earnings |
Total |
€'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |
At 1 January 2013 | 102 | 3,431 | (541) | 45 | - | (508) | 2,529 |
Changes in equity for 6 months ended 30 June 2013 | |||||||
Total comprehensive loss for the period | - | - | - | - | - | (732) | (732) |
At 30 June 2013 | 102 | 3,431 | (541) | 45 | - | (1,240) | 1,797 |
Changes in equity for 6 months ended 31 December 2013 | |||||||
Total loss for the period | - | - | - | - | - | (1,068) | (1,068) |
Currency translation differences | - | - | - | - | (8) | - | (8) |
Total comprehensive loss for the period | - | - | - | - | (8) | (1,068) | (1,076) |
At 31 December 2013 | 102 | 3,431 | (541) | 45 | (8) | (2,308) | 721 |
Changes in equity for 6 months ended 30 June 2014 | |||||||
Total loss for the period | - | - | - | - | - | (986) | (986) |
Currency translation differences | - | - | - | - | 16 | - | 16 |
Total comprehensive loss for the period | - | - | - | - | 16 | (986) | (970) |
Proceeds from shares issued (net of expenses) | 10 | 2,012 | - | - | - | - | 2,022 |
At 30 June 2014 | 112 | 5,443 | (541) | 45 | 8 | (3,294) | 1,773 |
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 4 Lombard Street, London, EC3V 9HD.
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 2013 and which will form the basis of the 2014 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 2013 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 2014 and 30 June 2013 is unaudited and the twelve months to 31 December 2013 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 | |||
2014 | 2013 | 2013 | |||
Loss attributable to equity holders of the Company (€'000) | 1,001 | 732 | 1,800 | ||
Weighted average number of Ordinary Shares in issue | 25,126,212 | 20,099,994 | 20,099,994 | ||
Basic loss per share | €0.04 | €0.04 | €0.09 |
(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.