Ergomed Interim results 2022
27/09/2022 07:00
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RNS Number : 7156A Ergomed plc 27 September 2022
PRESS RELEASE
Interim results for the six months ended 30 June 2022
Strong H1 performance: resilience, sustainable high growth and positive
outlook
· Total revenue £69.9 million, up 24.8% over H1 2021
· Adjusted EBITDA £13.8 million, at 23.0% of Service Fee Revenue
· Total order book of £284.5 million, up 18.7% since 1 January
2022 and up 24.9% over H1 2021, underpins forward visibility
· ADAMAS acquisition completed and trading in line with
expectations
· Cash balance of £12.0 million (after £24.2 million net cash
purchase of ADAMAS) with available debt facilities increased to £80.0 million
· Trading in line with current market expectations
Guildford, UK - 27 September 2022: Ergomed plc (LSE: ERGO) ("Ergomed"' or the
"Company"), a company focused on providing specialised services to the global
pharmaceutical industry, announces its interim results for the six months
ended 30 June 2022.
Financial Summary
First First %
Half Half change
2022 2021
Figures in £ millions, unless otherwise stated
Total Revenue 69.9 56.0 24.8
Service Fee Revenue (Note 1) 59.8 47.6 25.6
Gross Profit 28.9 23.0 25.7
Gross Margin (%) 41.4% 41.1% 0.3 ppts
Gross Margin Service Fee (%) (Note 2) 48.4% 48.2% 0.2 ppts
Adjusted EBITDA (Note 3) 13.8 12.1 13.6
Cash at 30 June 12.0 24.6 (51.3)
Order book at 30 June 284.5 227.8 24.9
Basic adjusted earnings per share (pence) (Note 4) 20.4p 16.8p 21.4
Notes:
(1) Service Fee Revenue is defined as Total Revenue less Pass-through Revenue.
Pass-through Revenue is revenue earned with zero-margin.
(2) Gross Margin Service Fee (%) is defined as Service Fee Gross Profit
divided by Service Fee Revenue.
(3) Adjusted EBITDA is defined as operating profit for the period plus
depreciation and amortisation, share-based payment charge, and other income
and costs further detailed in Note 7 to the financial statements.
(4) Basic adjusted earnings per share is defined as basic earnings per share
after adjustment for certain income and costs detailed in Note 3 to the
financial statements.
Dr Miroslav Reljanović, Executive Chairman of Ergomed, said:
"Ergomed has delivered further significant strategic progress in H1 2022 with
continued strong organic growth, ongoing delivery of value from recent
acquisitions including ADAMAS, and further organic expansion into new
geographies of strategic importance. Alongside this, we have further
strengthened the Company's Board and leadership team, laying the foundations
for the next steps of our growth strategy. Ergomed has a robust and resilient
business model which is delivering a high level of sustainable growth at a
time of wider challenges in the global macro-environment. We look forward with
confidence to the rest of this year and beyond."
Key Financial Highlights
· Revenue of £69.9 million (H1 2021: £56.0 million) increased by
24.8% (up 20.0% in constant currency)
· Pharmacovigilance (PV) division delivered strong growth with
revenue up 23.4% (up 18.7% in constant currency) to £35.6 million (H1 2021:
£28.8 million)
· Clinical Research Services (CRO) division delivered strong growth
with revenue up 26.2% (up 21.4% in constant currency) to £34.3 million (H1
2021: £27.2 million)
· Gross profit up 25.7% to £28.9 million (H1 2021: £23.0 million)
· Adjusted EBITDA at 23% of Service Fee Revenue and up 13.6% to
£13.8 million (H1 2021: £12.1 million)
· Basic adjusted EPS up 21.4% to 20.4p (H1 2021: 16.8p)
· Cash and cash equivalents of £12.0 million after payment of
£24.2 million net cash for ADAMAS acquisition
Strategic & Operational Highlights
· Order book of £284.5 million future contracted revenue up 18.7%
in H1 2022 (31 December 2021: £239.7 million) and up 24.9% over H1 2021
· North America revenues up 24.7% to £44.3 million (H1 2021:
£35.5 million)
· Organic investment in complementary geographies, service
offerings, strategic leadership hires and technology
· Operational integration of ADAMAS into Ergomed's business well
advanced with further significant synergistic benefits expected
· Establishment of the Ergomed Rare Disease Innovation Centre
· Available debt facilities increased to £80.0 million
Webcast and conference call for analysts:
A webcast and conference call for analysts will be held at 9.30 am BST
today.
Webcast link:
https://www.lsegissuerservices.com/spark/Ergomed/events/750dcfbe-a928-4a7e-9d63-7e60bf93acdd
(https://www.lsegissuerservices.com/spark/Ergomed/events/750dcfbe-a928-4a7e-9d63-7e60bf93acdd)
Conference call registration:
https://cossprereg.btci.com/prereg/key.process?key=P9G9JY8F4
(https://cossprereg.btci.com/prereg/key.process?key=P9G9JY8F4)
Enquiries:
Ergomed plc Tel: +44 (0) 1483 402 975
Miroslav Reljanović (Executive Chairman)
Richard Barfield (Chief Financial Officer)
Keith Byrne (Senior Vice President, Capital Markets & Strategy)
Numis Tel: +44 (0) 20 7260 1000
Freddie Barnfield / Euan Brown (Nominated Adviser)
James Black (Broker)
Peel Hunt LLP (Joint Broker) Tel: +44 (0) 20 7418 8900
James Steel / Dr Christopher Golden
Consilium Strategic Communications Tel: +44 (0) 20 3709 5700
Chris Gardner / Matthew Neal ergomed@consilium-comms.com
Angela Gray
About Ergomed plc
Ergomed provides specialist services to the pharmaceutical industry spanning
all phases of clinical development, post-approval pharmacovigilance and
medical information. Ergomed's fast-growing services business includes an
industry-leading suite of specialist pharmacovigilance (PV) solutions,
integrated under the PrimeVigilance brand, a full range of high-quality
clinical research and trial management services under the Ergomed brand (CRO)
and mission-critical regulatory compliance and consulting services under the
ADAMAS brand. For further information, visit: http://ergomedplc.com
(http://ergomedplc.com) .
Forward-looking Statements
Certain statements contained within the announcement are forward-looking
statements and are based on current expectations, estimates and projections
about the potential results of Ergomed plc ("Ergomed") and the industry and
markets in which Ergomed operates, the Directors' beliefs and assumptions made
by the Directors. Words such as "expects", "anticipates", "should", "intends",
"plans", "believes", "seeks", "estimates", "projects", "pipeline" and
variations of such words and similar expressions are intended to identify such
forward-looking statements and expectations. These statements are not
guarantees of future performance or the ability to identify and consummate
investments and involve certain risks, uncertainties, outcomes of negotiations
and due diligence and assumptions that are difficult to predict, qualify or
quantify. Therefore, actual outcomes and results may differ materially from
what is expressed in such forward-looking statements or expectations. Among
the factors that could cause actual results to differ materially are: the
general economic climate, competition, interest rate levels, loss of key
personnel, the result of legal and commercial due diligence, the availability
of financing on acceptable terms and changes in the legal or regulatory
environment.
These forward-looking statements speak only as of the date of this
announcement. Ergomed expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statements
contained herein to reflect any change in Ergomed's expectations with regard
thereto, any new information or any change in events, conditions or
circumstances on which any such statements are based, unless required to do so
by law or any appropriate regulatory authority.
INTERIM MANAGEMENT REPORT
OPERATIONAL REVIEW
Introduction
Ergomed continued to make significant strategic progress in the first half of
2022, delivering a further period of robust operational and financial
performance. These results demonstrate Ergomed's resilient business model,
which has enabled us to continue to deliver strong growth and invest for the
future during a period of significantly more challenging macro-economic
circumstances. Alongside high organic revenue and adjusted EBITDA growth, the
Company achieved further growth through the acquisition of ADAMAS, acquired
with cash generated organically by the business. This strong financial
performance underlines the value of Ergomed's robust services model and the
strength of the Company's foundations for continued long-term growth.
Notwithstanding the wider macro-economic situation, the first half of 2022 saw
continuing favourable market dynamics within Ergomed's specialist areas of
rare disease, oncology, pharmacovigilance and GXP audit. The global
regulatory environment continues to evolve, with increasing legislation that
creates complexity and drives the need for specialised outsourcing. In both
clinical trials and pharmacovigilance, innovation and the adoption of digital
technologies are increasing, with added impetus for these trends driven by the
COVID-19 pandemic. Ergomed has continued to strengthen its position in its
chosen markets with ongoing organic investment in complementary geographies,
service offerings, strategic leadership hires and technology, to take
advantage of these favourable market trends and build for the future. This has
been further augmented by the addition to the Group of the ADAMAS business and
its strong brand. These operational improvements across the Group are
contributing to the increased order book and driving sustainable growth.
Financial summary
Ergomed reported a strong financial performance in the first half of 2022 with
total revenues of £69.9 million (H1 2021: £56.0 million), an increase of
24.8% (20.0% in constant currency). Service fee revenues of £59.8 million (H1
2021: £47.6 million) were up 25.6% (20.7% in constant currency) over H1 2021.
This increase in revenues was driven by a robust order book at the beginning
of 2022, combined with substantial levels of new business wins throughout the
first half. Revenue growth in North America continued and was up 24.7%
compared to H1 2021.
Adjusted EBITDA in H1 2022 was 23.0% of service fee revenues in the first half
of 2022 and was up 13.6% to £13.8 million compared to £12.1 million in H1
2021.
Cash generation in H1 2022 continued to be strong. After the payment of £24.2
million net cash on the ADAMAS acquisition, funded internally through organic
cash generation, cash and cash equivalents at 30 June 2022 was £12.0 million
(H1 2021: £24.6 million). The Company continues to be debt free with
available banking facilities of £80.0 million, comprising a £50.0 million
facility and an additional £30.0 million accordion, available to support
continued growth.
Operational summary
Ergomed had an excellent first half, demonstrating strong overall growth in
revenue underpinned by strong demand for its services across all areas of the
business.
Ergomed has continued to develop internationally to meet global demand for its
services in both the Clinical Research Services and PrimeVigilance divisions.
Growth in the US is continuing, with strong organic growth supported by recent
acquisitions with US presence, including ADAMAS. The Company's new operation
in Japan, the fourth largest pharmaceutical market in the world, is continuing
to grow, and recently opened subsidiaries to develop operational capabilities
in key European countries which have further bolstered international growth
and future prospects.
A strong business development performance saw net sales of new business for H1
2022 increase by 19.8% to £108.8 million (H1 2021: £90.8 million),
benefiting from continuing investment in business development in both the CRO
and PrimeVigilance businesses and the significantly strengthened US and
international presence. The order book continues to grow and reached £284.5
million at the end of H1 2022, up 18.7% from £239.7 million at 31 December
2021 and up 24.9% over H1 2021, providing excellent visibility of contracted
revenues into the second half of 2022 and beyond.
The increase in total revenues of 24.8% to £69.9 million (H1 2021: £56.0
million) was achieved with notable growth in both the PrimeVigilance and
Clinical Research Services businesses.
PrimeVigilance
Ergomed's pharmacovigilance (PV) business saw total revenue increase to £35.6
million in H1 2022 from £28.8 million in H1 2021, up by 23.4% (18.7% in
constant currency). Reported gross profit increased from £14.7 million to
£18.3 million, up 24.8%, whilst gross margin increased to 51.4% (H1 2021:
50.7%).
The significant increase in PrimeVigilance revenue in the first half of 2022
was driven by steady sales and repeat business, as the division continued to
demonstrate its long-term resilience and ability to generate sustained growth
during a time of macroeconomic challenges. Further substantial progress was
achieved in the development and deployment of proprietary automation
technology. PrimeVigilance also invested further in training and skills
development across its existing team, whilst continuing to attract senior
industry experts to join the business. These investments enabled
organisational improvements to further enhance efficiency and productivity.
Alongside this, client engagement through strategic partnerships and
governance oversight has continued to foster long-term alignment and
commitment to drive future growth. Service expansion has been attained through
a strategy of differentiated product focus, enabling delivery of tailored
solutions to meet the increasingly complex global pharmacovigilance
regulations.
Clinical Research Services (CRO)
Ergomed's CRO business saw total revenue increase to £34.3 million in H1 2022
from £27.2 million in H1 2021, up by 26.2% (21.4% in constant currency).
Reported gross profit increased by 27.2% to £10.6 million (H1 2021: £8.4
million) and service fee gross margin remained robust at 43.4% (H1 2021:
44.2%).
The CRO business has seen further robust growth in the first half of 2022,
including a number of major new contract awards. Ergomed's CRO business
recently celebrated 25 years since its foundation and has continued its long
tradition of specialism and innovation with the launch in February 2022 of the
Ergomed Rare Disease Innovation Centre, providing tailored and innovative
solutions for sponsors of rare disease drug development programmes.
M&A Activity
Ergomed completed the acquisition of ADAMAS, an international specialist
consultancy offering a full range of independent quality assurance services,
on 9 February 2022. The operational integration of ADAMAS into Ergomed's
business is well advanced, with further significant synergistic benefits
expected. The acquisition was completed using internally generated cash
resources. The Company continues to review acquisition opportunities to
further grow the CRO and PV businesses and deliver enhanced shareholder value,
in line with its disciplined M&A strategy.
Strengthening of the Board and senior leadership team
During the first half of 2022, John Dawson, CBE joined the Board as an
independent Non-Executive Director and Chair of the Audit Committee, and Anne
Whitaker joined as an independent Non-Executive Director. The Company has
continued to attract senior executives with highly relevant experience and
expertise in our areas of CRO and PV specialisation, with recent key
appointments in commercial leadership roles.
Current trading and outlook
Ergomed has delivered further significant strategic progress in H1 2022 with
continued strong organic growth, ongoing delivery of value from recent
acquisitions including ADAMAS, and further organic expansion into new
geographies of strategic importance. Alongside this, we have further
strengthened the Company's Board and leadership team, laying the foundations
for the next steps of our growth strategy. Ergomed has a robust and resilient
business model and is delivering a high level of sustainable growth at a time
of wider challenges in the global macro-environment. The Company is trading
in line with current market expectations and we look forward with confidence
to the rest of this year and beyond.
Dr Miroslav Reljanović
Executive Chairman
FINANCIAL REVIEW
The primary financial statements of Ergomed plc for the six months ended 30
June 2022 are presented later in this announcement along with the key
accounting policies, notes to the financial statements and the independent
review report from KPMG.
Key performance indicators
The Directors consider the principal financial performance indicators of the
Group to be:
£ million (unless stated otherwise) H1 2022 H1 2021
Total revenue 69.9 56.0
Gross profit 28.9 23.0
Gross margin % on service fee revenue 48.4% 48.2%
Profit after tax 7.3 6.6
Adjusted EBITDA (Note 7) 13.8 12.1
Cash and cash equivalents 12.0 24.6
Cash generated from operating activities 12.0 11.0
Basic adjusted earnings per share (Note 3) 20.4p 16.8p
Consolidated income statement
Total revenue on a reported basis for the six months ended 30 June 2022 was
£69.9 million (H1 2021: £56.0 million), an increase of 24.8% (20.0% on a
constant currency basis), driven by growth in the PV division (up 23.4%) and
the CRO division (up 26.2%), including revenues of £4.0 million in ADAMAS
acquired on 9 February 2022. Revenues in the key North American market grew by
24.7% to £44.3 million (H1 2021: £35.5 million).
Gross profit was £28.9 million and service fee gross margin was 48.4% (H1
2021: gross profit £23.0 million and service fee gross margin 48.2%), the
slightly higher gross margin percentage being an anticipated result of
favourable foreign exchange and underlying organic revenue growth. Selling,
general and administration expenses including acquisition related costs were
£20.2 million (H1 2021: £14.8 million). Research and development costs
expensed in the period were £0.05 million (H1 2021: £0.04 million).
Adjusted EBITDA increased by 13.6% to £13.8 million in H1 2022 from £12.1
million in H1 2021, with profit after tax up 10.3% at £7.3 million (H1 2021:
£6.6 million). Basic adjusted earnings per share was up 21.4% to 20.4p (H1
2021: 16.8p).
Consolidated balance sheet
Net assets increased by £7.9 million during the first half of 2022 and
amounted to £75.1 million at 30 June 2022 (31 December 2021: £67.2 million)
including net cash and cash equivalents of £12.0 million (31 December 2021:
£31.2 million).
Consolidated cash flow statement
At 30 June 2022, the Group's net cash balance was £12.0 million, after the
£24.2 million net cash purchase of ADAMAS in February 2022.
Cash generated from operating activities was £12.0 million (H1 2021: £11.0
million) before changes in working capital, representing 86.9% of adjusted
EBITDA in H1 2022. Ergomed has no debt and has increased its multi-currency
revolving credit facility (RCF) from £30.0 million to £80.0 million,
comprising a £50.0 million facility and an additional £30.0 million
accordion.
Net outflows from investing activities increased to £24.7 million (H1 2021:
£0.9 million) due to the £24.2 million net cash purchase of ADAMAS. Net
outflows on financing activities for the period of £1.0 million were
primarily related to lease costs and interest paid.
Richard Barfield
Chief Financial Officer
Independent Review Report to Ergomed plc
Conclusion
We have been engaged by the Ergomed plc ("the Entity" or "the Group") to
review the Entity's condensed set of consolidated financial statements in the
half-yearly financial report for the six months ended 30 June 2022 which
comprises condensed Consolidated Income Statement, condensed Consolidated
Statement of Comprehensive Income, condensed Consolidated Balance Sheet,
condensed Consolidated Statement of Changes in Equity, Consolidated Cash Flow
Statement a summary of significant accounting policies and other explanatory
notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of consolidated financial statements in the
half-yearly financial report for the six months ended 30 June 2022 is not
prepared, in all material respects in accordance with International Accounting
Standard 34 Interim Financial Reporting ("IAS 34") as contained in the UK
adopted International Accounting Standards and the AIM Rules.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK.
A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
We read the other information contained in the half-yearly financial report to
identify material inconsistencies with the information in the condensed set of
consolidated financial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the review. If we become
aware of any apparent material misstatements or inconsistencies we consider
the implications for our report.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Entity to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Entity will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the AIM Rules.
The directors are responsible for preparing the condensed set of consolidated
financial statements included in the half-yearly financial report in
accordance with IAS 34 as contained in the UK adopted International Accounting
Standards .
As disclosed in note 1, the annual financial statements of the Entity for the
year ended 31 December 2021 are prepared in accordance with UK-adopted
international accounting standards.
In preparing the condensed set of consolidated financial statements, the
directors are responsible for assessing the Entity's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend
to liquidate the Entity or to cease operations, or have no realistic
alternative but to do so.
Our responsibility
Our responsibility is to express to the Entity a conclusion on the condensed
set of consolidated financial statements in the half-yearly financial report
based on our review.
Our conclusion, including our conclusions relating to going concern, are based
on procedures that are less extensive than audit procedures, as described in
the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Entity in accordance with the terms of our
engagement. Our review has been undertaken so that we might state to the
Entity those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Entity for our review work, for
this report, or for the conclusions we have reached.
KPMG
26 September 2022
Chartered Accountants
1 Stokes Place
St Stephen's Green
Dublin 2,
Ireland.
Condensed Consolidated Income Statement
For the six months ended 30 June 2022
Note Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
REVENUE 2 69,917 56,042 118,581
Cost of sales (30,851) (24,671) (52,191)
Reimbursable expenses (10,139) (8,354) (18,028)
GROSS PROFIT 28,927 23,017 48,362
Selling, general and administrative expenses (20,163) (14,848) (34,877)
Selling, general and administrative expenses comprises:
Other selling, general and administrative expenses (17,363) (13,201) (27,736)
Amortisation of acquired intangible assets (1,404) (728) (1,599)
Share-based payment charge (557) (431) (817)
Contingent consideration for acquisitions - - (2,949)
Acquisition costs 6 (839) (488) (1,776)
Research and development expenses (47) (36) (130)
Net impairment reversal/(loss) on trade receivable and contract assets
287 (533) (324)
Other operating income 5 385 926 1,593
OPERATING PROFIT 9,389 8,526 14,624
Finance income - 1 1
Finance costs 4 (239) (213) (361)
PROFIT BEFORE TAXATION 9,150 8,314 14,264
Taxation 8 (1,836) (1,681) (1,590)
PROFIT FOR THE PERIOD 7,314 6,633 12,674
All activities in the current and prior periods relate to continuing
operations.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2022
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
OTHER COMPREHENSIVE INCOME
Profit for the period 7,314 6,633 12,674
Exchange differences on translation of foreign operations 2,121 (1,001) (682)
Other comprehensive income for the period net of tax 2,121 (1,001) (682)
Total comprehensive profit for the period 9,435 5,632 11,992
All activities in the current and prior periods relate to continuing
operations.
Note Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
EARNINGS PER SHARE 3
Basic 14.8p 13.6p 26.1p
Diluted 14.2p 13.0p 25.1p
Note Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
ADJUSTED EARNINGS PER SHARE 3
Basic 20.4p 16.8p 41.1p
Diluted 19.6p 16.1p 39.4p
ADJUSTED EBITDA 7 13,760 12,111 25,423
(Adjusted Earnings Before Interest, Tax, Depreciation and Amortisation)
Condensed Consolidated Balance Sheet
As at 30 June 2022
Unaudited Unaudited Audited
Note 30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
Non-current assets
Goodwill 9 41,076 25,646 23,903
Other intangible assets 10 16,910 7,683 7,653
Property, plant and equipment 1,974 1,957 1,966
Right-of-use assets 2,639 3,731 2,691
Deferred tax asset 6,999 5,343 9,433
69,598 44,360 45,646
Current assets
Trade and other receivables 11 30,653 21,966 25,143
Contract assets (accrued revenue) 9,198 4,268 3,958
Cash and cash equivalents 12 11,973 24,571 31,243
51,824 50,805 60,344
Total assets 121,422 95,165 105,990
Current liabilities
Lease liabilities (1,322) (1,338) (1,249)
Trade and other payables 13 (15,469) (13,082) (14,946)
Derivative Liability (783) (98) (261)
Contract liabilities (deferred revenue) (22,975) (15,489) (17,752)
Current tax liability (468) (1,676) (1,172)
(41,017) (31,683) (35,380)
Net current assets 10,807 19,122 24,964
Non-current liabilities
Lease liabilities (1,264) (2,429) (1,432)
Provisions (19) (19) (19)
Deferred tax liability (4,069) (2,101) (1,920)
(5,352) (4,549) (3,371)
Total liabilities (46,369) (36,232) (38,751)
Net assets 75,053 58,933 67,239
Equity
Share capital 14 499 490 493
Share premium account 711 116 545
Merger reserve 1,349 1,349 1,349
Share-based payment reserve 6,416 5,473 5,859
Translation reserve 2,054 (386) (67)
Retained earnings 64,024 51,891 59,060
Total equity 75,053 58,933 67,239
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2022
Share Share Merger reserve Share-based payment Translation Retained Total
capital premium reserve reserve earnings
account £000s
£000s
£000s £000s £000s £000s £000s
Balance at 1 January 2021 489 3 1,349 5,042 615 45,368 52,866
Profit for the period - - - - - 6,633 6,633
Other comprehensive income for the period - - - - (1,001) - (1,001)
Total comprehensive income for the period - - - - (1,001) 6,633 5,632
Shares issued on exercise of share options 1 113 - - - - 114
Equity-settled share-based payment charge - - - 431 - - 431
Deferred tax credit taken directly to equity - - - - - (110) (110)
Total transactions with shareholders in their capacity as shareholders 1 113 - 431 - (110) 435
Balance at 30 June 2021 490 116 1,349 5,473 (386) 51,891 58,933
Profit for the period - - - - - 6,041 6,041
Other comprehensive income for the period - - - - 319 - 319
Total comprehensive income for the period - - - - 319 6,041 6,360
Shares issued on exercise of share options 3 429 - - - - 432
Equity-settled share-based payment charge - - - 386 - - 386
Deferred tax credit taken directly to equity - - - - - 1,128 1,128
Total transactions with shareholders in their capacity as shareholders 3 429 - 386 - 1,128 1,946
Balance at 31 December 2021 493 545 1,349 5,859 (67) 59,060 67,239
Profit for the period - - - - - 7,314 7,314
Other comprehensive income for the period - - - - 2,121 - 2,121
Total comprehensive income for the period - - - - 2,121 7,314 9,435
Shares issued on exercise of share options 6 166 - - - - 172
Share-based payment charge - - - 557 - - 557
Deferred tax credit taken directly to equity - - - - - (2,350) (2,350)
Total transactions with shareholders in their capacity as shareholders 6 166 - 557 - (2,350) (1,621)
Balance at 30 June 2022 499 711 1,349 6,416 2,054 64,024 75,053
Condensed Consolidated Cash Flow Statement
For the six months ended 30 June 2022
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
Cash flows from operating activities
Profit for the period 7,314 6,633 12,674
Adjustment for:
Amortisation and depreciation 2,937 2,623 5,046
Profit on disposal of non-current assets (28) (145) (413)
Share-based payment charge 557 431 817
RDEC income (293) (559) (956)
Finance costs 239 213 361
Other non-cash movements (609) 162 (25)
Exceptional Items (Earn-out on acquisitions) - - 2,949
Tax expense 1,836 1,681 1,590
Operating cash flow before changes in working capital and provisions 11,953 11,039 22,043
Decrease/(increase) in trade, other receivables and accrued revenue (8,765) 1,672 367
(Decrease)/increase in trade, other payables and deferred revenue 4,536 (1,833) 217
(Decrease)/increase in provisions - (298) (298)
Cash generated from operating activities 7,724 10,580 22,329
Taxation paid (2,346) (2,059) (3,646)
Net cash from operating activities 5,378 8,521 18,683
Cash flows from investing activities
Finance income received - 1 1
Acquisition of intangible assets (124) (14) (30)
Acquisition of property, plant and equipment (344) (545) (953)
Proceeds from the sale of property, plant and equipment 6 14 103
Acquisition of subsidiaries, net of cash acquired (24,243) - -
Acquisition related earn-out paid - (318) (3,267)
Net cash used in investing activities (24,705) (862) (4,146)
Cash flows from financing activities
Proceeds from the issue of new ordinary shares 172 114 546
Finance costs paid (169) (105) (169)
Payment of lease liabilities (964) (1,607) (2,490)
Proceeds from borrowings 15,000 - -
Repayment of borrowings (15,000) - -
Net cash (used in)/from financing activities (961) (1,598) (2,113)
Net (decrease)/ increase in cash and cash equivalents (20,288) 6,061 12,424
Effect of foreign currency on cash balances 1,018 (484) (175)
Cash and cash equivalents at start of the period 31,243 18,994 18,944
Cash and cash equivalents at end of period 11,973 24,571 31,243
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2022
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated financial statements have been prepared in
accordance with the recognition and measurement requirements of International
Financial Reporting Standards (IFRS) and IFRIC interpretations issued by the
International Accounting Standards Board (IASB) adopted by the UK.
The condensed consolidated financial statements have been prepared in
accordance with International Accounting Standard 34 ("IAS 34") - Interim
Financial Reporting, and should be read in conjunction with the Group's last
annual consolidated financial statements as at and for the year ended 31
December 2021. Selected explanatory notes are included to explain events and
transactions that are significant to an understanding of the changes in the
Group's financial position and performance since the last annual financial
statements.
The condensed consolidated financial statements have been prepared under the
historical cost convention, except for the fair value of certain financial
instruments which are further detailed in note 16.
The same accounting policies, presentation and methods of computation have
been followed in these condensed consolidated financial statements as were
applied in the preparation of the Group's financial statements for the year
ended 31 December 2021.
These condensed consolidated financial statements do not comprise statutory
accounts within the meaning of section 434 of the Companies Act 2006. A copy
of the Group's audited statutory accounts for the year ended 31 December 2021
were approved by the Board of Directors and have been delivered to the
Registrar of Companies. The audit report on those accounts was unqualified,
did not draw attention to any matters by way of emphasis and did not contain
any statement under section 498(2) or (3) of the Companies Act 2006.
Risks and uncertainties
An outline of the key risks and uncertainties faced by the Group was described
in the Annual Report and Accounts 2021 which is available on the Company
website (www.ergomedplc.com). The principle risks were: Cancellation or delay
of clinical trials or projects by customers including as a result of COVID-19;
Lower contacted order book realisation of sales pipeline to contract;
significant regional or national event (pandemic, natural disaster, conflict
or terrorism; Quality and third party oversight ('TPO'); Information security;
Access to capital; Retention of senior and key employees; Dependence on a
limited number of key clients; and Data privacy.
Critical accounting judgements and key sources of estimation uncertainty
In preparing these interim financial statements, management has made
judgements and estimates that affect the application of accounting policies
and the reported amounts of assets and liabilities, income and expense.
The significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those described in the last annual financial statements and are
summarised below.
Source of estimation uncertainty Overview
Bad debt provision The Group had provisions against trade receivables at the period end of
£344,000 (2021: £627,000) which resulted in a credit to the Income Statement
in the period of £287,000 (2020: charge of £533,000).
Impairment of goodwill The impairment provision against goodwill at the period end was £2,143,000
(2021: £2,143,000) and related fully against the investment in Haemostatix
Limited. £nil (2021: £nil) was charged to the Income Statement in the
period.
Revenue from customer Revenue for CRO services is recognised based on the costs incurred on a
project as a proportion of total expected costs to determine a percentage of
contracts completion which is applied to the estimate of the transaction price. Given
the long-term nature and complexity of clinical trials, estimation is used to
determine the forecast costs to complete, which can impact the timing and
value of revenue recognised for the CRO business.
Going concern
The interim financial statements have been prepared on the going concern
basis, which assumes that the Group will have sufficient funds to continue in
operational existence for the foreseeable future, being a period of no less
than 12 months from the date these interim financial statements are approved.
The Directors have reviewed cash flow forecasts for the period through to 31
December 2025, which is derived from the 2022 Board approved budget and a
medium-term cash flow forecast through to 31 December 2025, which is an
extrapolation of the approved budget under multiple scenarios and growth
rates. The 2022 budget and medium‑term forecast represents the Directors'
best estimate of the Group's future performance and necessarily includes a
number of assumptions, including the level of revenues. The 2022 budget and
medium-term forecast demonstrate that the Directors have a reasonable
expectation that the Group will be able to meet its liabilities as they fall
due for a period of at least 12 months from the date these interim financial
statements are approved.
On the basis of the above factors and, having made appropriate enquiries, the
Directors have a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future. Accordingly,
they continue to adopt the going concern basis in preparing the interim
financial statements.
Business Combinations
Acquisitions of subsidiaries and businesses are accounted for using the
acquisition method. The consideration transferred on acquisition is the fair
value at the date of transaction for assets and liabilities transferred. All
acquisition related costs are expensed as incurred.
Goodwill arises as the excess of acquisition cost over the fair value of the
assets transferred at the date of transaction. Goodwill is reviewed for
impairment annually and is carried at cost less accumulated impairment losses.
Impairment losses are not reversed in subsequent periods.
Goodwill arising on the acquisition of a foreign operation, including any fair
value adjustments to the carrying amounts of assets or liabilities on the
acquisition, are treated as assets and liabilities of that foreign operation
in accordance with IAS 21 and as such are translated at the relevant foreign
exchange rate at the statement of financial position date.
2. REVENUE AND OPERATING SEGMENTS
The Group's revenue is disaggregated by geographical market and major service
lines:
30 June 2022 Geographical market and major service lines
CRO services PV services Total services
£000s
£000s £000s
Geographical market by client location
UK 6,046 4,021 10,067
Rest of Europe, Middle East and Africa 6,180 6,470 12,650
North America 20,231 24,026 44,257
Asia 1,868 935 2,803
Australia 4 136 140
34,329 35,588 69,917
30 June 2021 Geographical market and major service lines
CRO services PV services Total services
£000s
£000s £000s
Geographical market by client location
UK 2,444 4,534 6,978
Rest of Europe, Middle East and Africa 4,058 6,243 10,301
North America 18,843 16,661 35,504
Asia 1,860 1,399 3,259
Australia - - -
27,205 28,837 56,042
31 December 2021 Geographical market and major service lines
CRO services PV services Total services
£000s
£000s £000s
Geographical market by client location
UK 5,415 8,785 14,200
Rest of Europe, Middle East and Africa 9,585 12,981 22,566
North America 38,388 36,028 74,416
Asia 4,687 2,532 7,219
Australia 2 178 180
58,077 60,504 118,581
Operating segments
Information reported to the Company's Board, which is the chief operating
decision maker ('CODM'), for the purpose of resource allocation and assessment
of segment performance, is focused on the Group operating as two business
segments, being Clinical Research Services ('CRO') and Pharmacovigilance
('PV'). All revenues arise from direct sales to customers. The segment
information reported below all relates to continuing operations. Following the
acquisition of ADAMAS by the Group in February 2022, the associated revenues
have been allocated between CRO and PV based on the nature of the revenues
generated.
The accounting policies of the reportable segments are the same as the Group's
accounting policies. Segment profit represents the gross profit earned by each
segment. Other amounts, including selling, general and administration expenses
were not allocated to a segment. This was the measure reported to the CODM for
the purpose of resource allocation and assessment of segment performance.
30 June 2022 CRO PV Consolidated
£000s £000s total
£000s
Segment revenues 34,329 35,588 69,917
Cost of sales (13,830) (17,021) (30,851)
Reimbursable expenses (9,858) (281) (10,139)
Segment gross profit 10,641 18,286 28,927
Selling, general and administration expenses (20,163)
Selling, general and administration expenses comprises:
Other selling, general and administration expenses (17,363)
Amortisation of acquired fair valued intangible assets (1,404)
Share-based payment charge (557)
Acquisition costs (839)
Research and development expenses (47)
Net impairment reversal/(loss) on trade receivable and contract assets 287
Other operating income 385
Operating profit 9,389
Finance income -
Finance costs (239)
Profit before tax 9,150
30 June 2021 CRO PV Consolidated
£000s £000s total
£000s
Segment revenues 27,205 28,837 56,042
Cost of sales (10,664) (14,007) (24,671)
Reimbursable expenses (8,176) (178) (8,354)
Segment gross profit 8,365 14,652 23,017
Selling, general and administration expenses (14,848)
Selling, general and administration expenses comprises:
Other selling, general and administration expenses (13,201)
Amortisation of acquired fair valued intangible assets (728)
Share-based payment charge (431)
Acquisition costs (488)
Research and development expenses (36)
Net impairment reversal/(loss) on trade receivable and contract assets (533)
Other operating income 926
Operating profit 8,526
Finance income 1
Finance costs (213)
Profit before tax 8,314
31 December 2021 CRO PV Consolidated
£000s £000s total
£000s
Segment revenues 58,077 60,504 118,581
Cost of sales (22,906) (29,285) (52,191)
Reimbursable expenses (17,621) (407) (18,028)
Segment gross profit 17,550 30,812 48,362
Selling, general and administration expenses (34,877)
Selling, general and administration expenses comprises:
Other selling, general and administration expenses (27,736)
Amortisation of acquired fair valued intangible assets (1,599)
Share-based payment charge (817)
Contingent consideration for acquisitions (2,949)
Acquisition costs (1,776)
Research and development expenses (130)
Net impairment reversal/(loss) on trade receivable and contract assets (324)
Other operating income 1,593
Operating profit 14,624
Finance income 1
Finance costs (361)
Profit before tax 14,264
Segment net assets
30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
CRO 34,939 27,609 28,531
PV 40,114 31,324 38,708
Consolidated total net assets 75,053 58,933 67,239
3. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is based on the
following data:
Unaudited Unaudited Unaudited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
EARNINGS
Earnings for the purposes of basic and diluted earnings per share being net
profit attributable to owners of the Company
7,314 6,633 12,674
Adjustments to earnings:
Amortisation of acquired fair valued intangible assets 1,404 728 1,605
Share-based payment charge 557 431 817
Acquisition costs (note 6) 839 488 1,776
Acquisition-related contingent consideration - - 2,949
Pay in lieu and non-compete compensation 38 45 211
Tax effect of adjusting items (66) (101) (102)
Adjusted earnings for the purposes of basic and diluted earnings per share 10,086 8,224 19,930
No. No. No.
NUMBER OF SHARES
Weighted average number of shares for the purposes of basic earnings per share 49,520,505 48,910,834 48,466,740
Dilution effect of:
Share options 1,822,690 2,293,726 2,102,588
Weighted average number of shares for the purposes of diluted earnings per
share
51,343,195 51,204,560 50,569,328
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
EARNINGS PER SHARE
Basic 14.8p 13.6p 26.1p
Diluted 14.2p 13.0p 25.1p
ADJUSTED EARNINGS PER SHARE
Basic 20.4p 16.8p 41.1p
Diluted 19.6p 16.1p 39.4p
4. FINANCE COSTS
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
Interest on lease liabilities 70 108 191
Other Interest payable 169 105 170
239 213 361
5. OTHER OPERATING INCOME
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
Foreign grant income 78 298 629
RDEC income 293 559 956
Other income 14 69 8
385 926 1,593
6. ACQUISITION COSTS
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
Acquisition of ADAMAS 700 - 240
Acquisition of MedSource - 327 406
Aborted and other acquisition costs 139 161 1,130
839 488 1,776
7. EBITDA and Adjusted EBITDA
Unaudited Unaudited Unaudited
Six months Six months Year
ended ended ended
30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
Operating profit 9,389 8,526 14,624
Adjusted for:
Depreciation and amortisation charges within Other selling, general &
administration expenses
1,533 1,895 3,447
Amortisation of acquired fair valued intangible assets
1,404 728 1,599
EBITDA 12,326 11,149 19,670
Adjusted for:
Share-based payment charge 557 431 817
Acquisition related contingent compensation - - 2,949
Acquisition costs (note 6) 839 488 1,776
Pay in lieu and non-compete compensation 38 43 211
Adjusted EBITDA 13,760 12,111 25,423
The Directors make certain adjustments to EBITDA to derive Adjusted EBITDA,
which they consider are more reflective of the Group's underlying trading
performance, enabling comparisons to be made with prior periods.
8. INCOME TAX EXPENSE
Income tax expense is recognised at an amount determined by multiplying the
profit before tax for the interim reporting period by management's best
estimate of the weighted-average annual income tax rate, adjusted for the tax
effect of certain items recognised in full in the interim period. As such, the
effective tax rate in the interim financial statements may differ from
management's estimate of the effective tax rate for the annual financial
statements.
The Group's consolidated effective tax rate in respect of continuing
operations for the six months ended 30 June 2022 was 20.1% (six months ended
30 June 2021: 20.2%).
9. GOODWILL
Reconciliation of carrying amount: Total
£000s
Balance at 1 January 2022 23,903
Arising on business combinations 15,820
Translation movement 1,353
Balance at 30 June 2022 41,076
As at 30 June 2022, the Group performed an assessment to identify indicators
of impairment relating to goodwill allocated to cash generating units (CGUs).
This included a review of internal and external indicators of impairment
including considering the year-to-date performance of the relevant CGUs and
any changes in key assumptions. The outcome of this assessment was that there
were no indications of impairment which could reasonably be expected to
eliminate the headroom computed at 31 December 2021. As a result of this
assessment no impairment charges were recorded in the first half of 2022
(2021: first half £nil; full-year £nil).
A full detailed impairment review will be conducted on all CGUs at 31 December
2022.
10. OTHER INTANGIBLE ASSETS
Total
£000s
Cost
At 1 January 2022 33,943
Acquisitions through business combinations 10,106
Additions 124
Disposals -
Translation movement 895
At 30 June 2022 45,068
Amortisation
At 1 January 2022 26,290
Charge for the period 1,673
Disposals -
Translation movement 195
At 30 June 2022 28,158
Net Book Value
At 30 June 2022 16,910
At 31 December 2021 7,653
At 30 June 2021 7,683
11. TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited
30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
Trade receivables 25,265 18,900 20,234
Other receivables 1,451 834 869
Derivative asset - Foreign currency forward contracts 15 13 -
Prepayments 1,884 1,572 1,818
Corporation tax receivable 2,038 647 2,222
30,653 21,966 25,143
Trade receivables is recorded net of impairment losses of £344,000 (2021:
£627,000),
12. CASH AND CASH EQUIVALENTS AND BORROWINGS
On 1 February 2022, Ergomed plc drew down £15 million against the
multi-currency revolving credit facility ("RCF") available with the Company's
bankers, HSBC to part fund the acquisition of ADAMAS. The interest rate
payable on this borrowing was SONIA plus 2.1%. As at 30 June 2022 the entire
drawdown of £15 million was repaid and the full RCF is undrawn. On 22 July
2022 the Group has increased its multi-currency rolling credit facility (RCF)
from £30.0 million to £80.0 million, comprising a £50.0 million facility
with an additional £30.0 million accordion.
Unaudited Unaudited Audited
30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
Cash and cash equivalents 11,973 24,571 31,243
Borrowings - - -
Cash and cash equivalents net of borrowings 11,973 24,571 18,994
13. TRADE AND OTHER PAYABLES
Unaudited Unaudited Audited
30 June 2022 30 June 2021 31 December 2022
£000s £000s £000s
Trade payables 4,915 3,435 3,102
Amounts payable to related parties - 52 3
Social security and other taxes 1,356 859 1,302
Other payables 2,077 1,451 1,541
Customer advances - 247 47
Accruals 7,121 7,038 8,951
15,469 13,082 14,946
14. ORDINARY SHARE CAPITAL
£000s
Number
Ordinary shares of £0.01 each
Balance at 30 June 2021 48,955,339 490
Exercise of share options 338,290 3
Balance at 31 December 2021 49,293,629 493
Exercise of share options 586,400 6
Balance at 30 June 2022 49,880,029 499
15. ACQUISITION OF SUBSIDIARY - ADAMAS
On 9 February 2022, the Group acquired all of the issued share capital in
ADAMAS Consulting Group Limited and its subsidiaries ("ADAMAS"). The
acquisition has been completed for a cash consideration of £25.6 million,
representing an enterprise value of £24.2 million and cash acquired of £1.4
million. Ergomed Plc drew down on its £15.0 million on multi-currency rolling
credit facility ('RCF) on 1 February 2022 and utilised the funds and existing
Group cash reserves to fund the acquisition.
ADAMAS is an international specialist consultancy offering a full range of
independent quality assurance services and specialising in the audit of
pharmaceutical manufacturing processes, as well as auditing clinical trials
and pharmacovigilance systems.
In the period from 9 February 2022 to 30 June 2022, ADAMAS contributed revenue
of £4.0 million and profit of £0.1 million to the Group's results. If the
acquisition had occurred on 1 January 2022, management estimates that
consolidated revenue would have been £4.7 million, and profit for the period
would have been £0.1 million. In determining these amounts, management has
assumed that the fair value adjustments, determined provisionally, that arose
on the date of acquisition would have been the same if the acquisition had
occurred on 1 January 2022.
Identifiable assets acquired and liabilities assumed Provisional valuation
£000s
Intangible assets 10,106
Property, plant and equipment 19
Deferred tax assets 4
Trade and other receivables 1,876
Contract asset (accrued income) 233
Cash and equivalents 1,411
Trade and other payables (1,246)
Contract liability (deferred revenue) (14)
Taxation payable (121)
Deferred tax liability (2,434)
Total identifiable net assets 9,834
Goodwill 15,820
Total consideration 25,654
Satisfied by
Cash consideration 25,654
Total consideration 25,654
Net cash outflow arising on acquisition
Cash consideration 25,654
Less: cash and cash equivalent balances acquired (1,411)
Transaction expenses 940
25,183
Included within intangible assets are customer relationships of £8,630,000,
brand of £730,000 and contracted orderbook of £735,000 recognised on
acquisition. The Group incurred acquisition related costs of £240,000 related
to due diligence and legal activities in the year ended 31 December 2021 and
£700,000 in period to 30 June 2022. These costs have been included in
acquisition costs within selling and administrative expenses in the Group's
consolidated income statement.
The fair value of ADAMAS's intangible assets (customer relationships, brand
and contracted orderbook) has been measured provisionally, pending completion
of an independent valuation. The Group has a 12-month measurement period from
the date of acquisition ending on 9 February 2023.
16. FINANCIAL INSTRUMENTS
Categories of financial instruments
The following table shows the carrying amounts and fair values of financial
assets and financial liabilities at the reporting date.
30 June 2022 Carrying amount Fair value
Financial Financial Financial Financial Total Total
assets assets at liabilities at liabilities at £000s £000s
at fair value amortised amortised fair value
through cost cost through
profit and £000s £000s profit and
loss loss
£000s £000s
Financial assets
Equity investments - - - - - 38
Trade receivables - 25,265 - - 25,265 25,265
Contract assets (accrued revenue) - 9,198 - - 9,198 9,198
Other receivables - 1,451 - - 1,451 1,451
Derivative asset - Foreign currency forward contracts 15 - - - 15 15
Cash and cash equivalents - 11,973 - - 11,973 11,973
15 47,887 - - 47,902 47,940
Financial liabilities
Lease liabilities - - 2,586 - 2,586 2,586
Trade payables - - 4,915 - 4,915 4,915
Amounts payable to related parties - - - - - -
Other payables - - 2,077 - 2,077 2,077
Derivative liability - Foreign currency forward contracts - - - 783 783 783
Accruals - - 7,121 - 7,121 7,121
- - 16,699 783 17,482 17,482
30 June 2021 Carrying amount Fair value
Financial Financial Financial Financial Total Total
assets assets at liabilities at liabilities at £000s £000s
at fair value amortised amortised fair value
through cost cost through
profit and £000s £000s profit and
loss loss
£000s £000s
Financial assets
Equity investments - - - - - -
Trade receivables - 18,900 - - 18,900 18,900
Contract assets (accrued revenue) - 4,268 - - 4,268 4,268
Other receivables - 834 - - 834 834
Derivative asset - Foreign currency forward contracts 13 - - - 13 13
Cash and cash equivalents - 24,571 - - 24,571 24,571
13 48,573 - - 48,586 48,586
Financial liabilities
Lease liabilities - - 3,767 - 3,767 3,767
Trade payables - - 3,435 - 3,435 3,435
Amounts payable to related parties - - 52 - 52 52
Other payables - - 1,698 - 1,698 1,698
Derivative liability - Foreign currency forward contracts - - - 98 98 98
Accruals - - 7,038 - 7,038 7,038
- - 15,990 98 16,088 16,088
31 December 2021 Carrying amount Fair value
Financial Financial Financial Financial Total Total
assets assets at liabilities at liabilities at £000s £000s
at fair value amortised amortised fair value
through cost cost through
profit and £000s £000s profit and
loss loss
£000s £000s
Financial assets
Equity investments - - - - - 45
Trade receivables - 20,234 - - 20,171 20,171
Accrued revenue (contract asset) - 3,958 - - 3,958 3,958
Other receivables - 692 - - 692 692
Cash and cash equivalents - 31,243 - - 31,243 31,243
- 56,127 - - 56,064 56,109
Financial liabilities
Lease liabilities - - 2,681 - 2,681 2,681
Trade payables - - 3,102 - 3,102 3,102
Amounts payable to related parties - - 3 - 3 3
Other payables - - 1,587 - 1,587 1,587
Derivative liability - Foreign currency forward contracts - - - 261 261 261
Accruals - - 8,951 - 8,951 8,951
- - 16,324 261 16,585 16,585
Financial instruments measured at fair value
The financial instruments measured at fair value have been categorised within
the fair value hierarchy based on the valuation technique used to determine
fair value at the reporting date.
30 June 2022 30 June 2021 31 December 2021
£000s £000s £000s
Financial assets
Equity investments - Level 1 38 - 45
Equity investments - Level 3 - - -
Foreign currency forward contracts used for hedging - Level 2 15 13 -
Financial assets measured at fair value 53 13 45
Financial liabilities
Foreign currency forward contracts used for hedging - Level 2 783 98 261
Financial liabilities measured at fair value 783 98 261
Foreign currency forward contracts (Level 2)
The Group's foreign currency forward contracts are not traded in active
markets. These contracts have been fair valued using observable forward
exchange rates and interest rates corresponding to the maturity of the
contract. The effects of non-observable inputs are not significant for foreign
currency forward contracts.
Equity investments (Level 1 and 3)
Equity investments which are publicly quoted are measured based on the quoted
market price. Unlisted equity investments are measured based on the market
price of recent share issuances or, where not available, managements best
estimate of the realisable value of those investments. The level 1 investment
held as at 30 June 2021 related to Modus Therapeutics Holding AB, which was
transferred to level 1 on 20 July 2021 when the shares were listed on the
Nasdaq First North Growth Market. Given the lack of liquidity in Modus' stock,
management continue to hold the
value of the investment at £nil (the fair value at the reporting date was
£38,000). The Modus investment was fully impaired during prior financial
periods after the results of completed clinical trials in those periods were
published.
17. SUBSEQUENT EVENTS
On 22 July 2022 the Group has increased its multi-currency rolling credit
facility (RCF) from £30.0 million to £80.0 million, comprising a £50.0
million facility with an additional £30.0 million accordion.
There were no other material post balance sheet events between the balance
sheet date and the date of this
report.
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