REG - Ergomed plc - Unaudited Preliminary Results 2014 <Origin Href="QuoteRef">BALF.L</Origin> <Origin Href="QuoteRef">ERGO.L</Origin> - Part 2
25/03/2015 07:12
- Part 2: For the preceding part double click ID:nRSY3755Ia
Cash 6,000 - 6,000
Shares 3,000 - 3,000
Total consideration transferred 9,000 - 9,000
Net cash outflow arising on acquisition
Cash consideration 6,000 - 6,000
Less: cash and cash equivalent balances acquired (302) (100) (402)
5,698 (100) 5,598
The provisional fair value of the financial assets includes receivables with a
fair value of £698,000 and a gross contractual value of £698,000. The best
estimate at acquisition date of the contractual cash flows not to be collected
is £nil.
Goodwill is valued at £6,827,000 which arises from the excess of purchase
price of £9,000,000 over net assets of £2,173,000. None of the goodwill is
expected to be deductible for income tax purposes.
PrimeVigilance contributed £3,093,000 revenue and £352,000 to the Group's
profit for the period between the date of acquisition and the balance sheet
date.
If the acquisition of PrimeVigilance had been completed on the first day of
the financial year, group revenues for the period would have been £2,494,000
higher and group profit would have been £347,000 higher.
Expenses incurred in relation to the acquisition of £285,000 have been charged
as exceptional items in the Income Statement (note 3).
7. ACQUISITION OF SUBSIDIARY - ERGOMED VIRTUOSO SARL
On 30 September 2013, the Group acquired 100 per cent of the issued share
capital of Ergomed Virtuoso Sarl. Ergomed Virtuoso Sarl is a clinical research
company. Ergomed Virtuoso Sarl was acquired in order to obtain a profitable
clinical research business.
A provisional valuation was used for the purposes of assessing the transaction
for the statutory accounts for the year ended 31 December 2013. A subsequent
valuation exercise performed during the measurement period has re-valued the
identifiable assets acquired and liabilities assumed, and the amounts
recognised are as set out in the table below.
ProvisionalValuation£'000s Adjustments£'000s Finalvaluation£'000s
Intangible assets - 1,070 1,070
Total non current assets - 1,070 1,070
Trade and other debtors 180 - 180
Prepayments and accrued income 120 120
Cash and equivalents 891 - 891
Currentassets 1,191 - 1,191
Trade and other creditors (852) - (852)
Deferred tax liability - (193) (193)
Financial liabilities (852) (193) (1,045)
Total identifiable net assets 339 877 1,216
Goodwill 1,332 (877) 455
Total consideration 1,671 - 1,671
Satisfied by:
Cash 1,671 - 1,671
Total consideration transferred 1,671 - 1,671
Net cash outflow arising on acquisition
Cash consideration 1,671 - 1,671
Less: cash and cash equivalent balances acquired (891) - (891)
780 - 780
The fair value of the financial assets includes receivables with a fair value
of £180,000 and a gross contractual value of £180,000. The best estimate at
acquisition date of the contractual cash flows not to be collected is £nil.
Goodwill is valued at £455,000 which arises from the excess of purchase price
of £1,671,000 over net assets of £1,216,000. None of the goodwill is expected
to be deductible for income tax purposes.
Ergomed Virtuoso Sarl contributed £458,000 to revenue and £49,000 to the
Group's profit for the period between the date of acquisition and 31 December
2013.
8. RELATED PARTY TRANSACTIONS
PrimeVigilance Limited, a company of which Miroslav Reljanovic and Neil Clark
were shareholders and directors, was acquired by the Company for consideration
comprising cash and shares on 15 July 2014 (note 6). Dividends, which were
accrued at the time of acquisition, were subsequently paid to shareholders by
PrimeVigilance Limited, in the following period when it was a subsidiary of
the Company. Miroslav Reljanovic, who is a Director and shareholder of the
Company, was paid £3,809,000 in cash and issued 1,190,257 ordinary shares of
1p each in the Company in consideration for his shares in PrimeVigilance
Limited, and was paid an accrued dividend from PrimeVigilance Limited of
£194,250. Neil Clark, who is a Director of the Company, was paid £294,000 in
cash and issued 91,912 ordinary shares of 1p each in the Company for his
shares in PrimeVigilance Limited, and was paid an accrued dividend from
PrimeVigilance Limited of £15,000.
Ergomed d.o.o., a company registered in Croatia, is under the control of
Miroslav Reljanovic, who is a Director and shareholder of the Company. During
the year the Company was charged £619,000 (2013: £698,702) by Ergomed d.o.o.
in respect of clinical research costs, other administration and telephone
charges. At 31st December 2014 a balance of £14,000 was owed by the Company to
Ergomed d.o.o. in respect of these costs (2013: £133,000). The Company also
invoiced Ergomed d.o.o for loan interest of £nil (2013: £4,000) in relation to
a loan from the Company to Ergomed d.o.o.. The loan was repaid during the year
ended 31 December 2013.
Until 15 July 2014 the Company was under the same control as PrimeVigilance
Limited as Miroslav Reljanovic was the majority shareholder in both companies.
PrimeVigilance is a company registered in the UK but was not part of the same
group. At 15 July 2014 PrimeVigilance Limited was acquired, and is now wholly
owned, by the Company. During the period from 1 January 2014 to 15 July 2014,
the Company charged £41,000 (year ended 31 December 2013: £193,000) to
PrimeVigilance Limited in respect of administration and employee costs
incurred by the Company on behalf of PrimeVigilance Limited.
At 31 December 2014, the related party receivables in relation to
PrimeVigilance Limited were £nil (2013: £91,000). At 31 December 2014, the
related party payables in relation to PrimeVigilance Limited were £nil (2013:
£9,000).
All transactions with related parties take place on an arm's length basis.
9. Pro Forma Financial information - UNAUDITED AND UNREVIEWED
On 15 July 2014, Ergomed plc acquired the entire share capital of
PrimeVigilance Limited. The following Pro Forma financial information combines
the financial results of Ergomed plc and PrimeVigilance Limited prior to that
date for illustrative purposes. The results of PrimeVigilance Limited for the
year ended 31 December 2013 and the statement of financial position as at 31
December 2013 are based on the audited financial statements of that company.
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. In addition, the results of Ergomed
plc presented in this Pro Forma financial information are adjusted to remove
the profit margin charged by a related party in relation to services provided
to Ergomed plc, as such services will be provided from internal resources in
the period following the IPO. The Ergomed 2014 results in this Pro Forma
financial information are also adjusted for the non-recurring IPO costs of
£0.6m, a non-cash share option based payment charge of £0.3m and increased
amortisation charge of £0.4m associated with the intangible assets associated
with the two acquisitions of Ergomed Virtuoso and PrimeVigilance.
Pro Forma Consolidated Income Statement -2014
2014£000s Pre-acquisition results of PrimeVigilance£000s Pro Forma2014£000s
REVENUE 21,155 2,539 23,694
Cost of sales (15,245) (1,646) (18,691)
Gross profit 5,910 893 6,803
Administrative expenses (3,535) (543) (4,078)
Depreciation expense (72) (18) (90)
Other operating income 54 2 56
OPERATING PROFIT 2,357 334 2,691
Investment revenues - - -
Finance costs (2) - (2)
PROFIT BEFORE TAXATION 2,355 334 2,689
Taxation (330) (35) (365)
PROFIT FOR THE YEAR 2,025 299 2,324
EBITDA 2,429 352 2,781
The results of Ergomed plc are adjusted to remove the profit margin on
services provided by a related party, exceptional costs arising from the IPO
and acquisition of PrimeVigilance, share-based payment charge and amortisation
of acquired intangible assets.
Pro Forma Consolidated Income Statement - 2013
Year ended 31 December 2013
Adjusted Ergomed£000s Prime Vigilance£000s Pro Forma £000s
REVENUE 15,147* 4,085 19,232 *
Cost of sales (9,817) (2,328) (12,145)
Gross profit 5,330 1,757 7,087
Administrative expenses (3,082) (1,217) (4,299)
Depreciation expense (63) (23) (86)
Share options - (2) (2)
Other operating income 9 - 9
OPERATING PROFIT 2,194 515 2,709
Finance income 4 - 4
Finance costs (2) (1) (3)
PROFIT BEFORE TAXATION 2,196* 514 2,710
Taxation (287) (120) (407)
PROFIT FOR THE YEAR 1,909 394 2,303*
*The results of Ergomed plc are adjusted to remove the profit margin on
services provided by a related party. The results for Ergomed for 2013
included a non-recurring milestone payment received from a co-development
partner of £1.3m.
This information is provided by RNS
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