Final Results

RNS Number : 3584H
Venn Life Sciences Holdings PLC
16 May 2014
 



 

Venn Life Sciences Holdings Plc

("Venn" or the "Company" or the "Group")

 

Final results for the year ended 31 December 2013

 

Venn Life Sciences (AIM: VENN),  A growing Clinical Research Organisation (CRO)  providing clinical trial management solutions and resourcing solutions to pharmaceutical, biotechnology and medical device clients, announces its audited final results for the year ended 31 December 2013.

 

Financial Highlights

•      Revenue of €2.04m (2012 - €2.68m)

•      EBITDA loss (before exceptional items) of  €1.65m (2012 - €0.53m)

Continued Investment in geographic capability, strategic business development and innovation acquisition screening

•      Loss for the year of €1.8 (2012 - €1.17m)

•      Cash and cash equivalents of €0.54m (2012 - €2.88m)

 

Operational Highlights

•      Acquisition of Clinical Research operations in UK , Germany and commencement of operations in Russia facilitating Enterprise Level contract wins

•      Significantly stronger deal pipeline in excess of €11m inc. 3 multi-country Enterprise Level contracts (each over €1.5m)

•      Letters of Intent signed on two further European CRO acquisitions and commencement of formal due diligence

•      Launch of innovation division innoVenn, facilitating Intellectual Property acquisition and or co-development

•      Acquisition of the trading assets and associated Intellectual Property rights of Evocutis PLC

 

Post Period End

•      Continued increase in proposals pipeline to more than €12m - including an additional Enterprise contract

•      Enterprise level contract signed today worth in excess in €3m (see separate announcement)

•      Labskin technology development, manufacturing and customer engagement reactivated - sales expected later this year

•      Commencement of due diligence on one further potential CRO acquisition

•      Raised £1m in placing to support recent innoVenn initiatives

 

Commenting on the Group's outlook, David Evans, Non-Executive Chairman of Venn, said:

"Venn is continuing to make strong progress, both organically and via suitable acquisition, on its strategy of becoming a leading mid-sized agile European CRO with an acknowledged expertise in managing complex multi-country clinical trials. Venn's clear 2013 focus has been on building this type of capability in terms of geographic input, operating procedures and personnel and management experience and expertise.

 

"I am particularly encouraged by the significant progress in the scale and quality of our deal flow pipeline, where we are now seeing four Enterprise Level potential deals (multi country deals each in excess of €1.5m) in our approved contract pipeline. We are very pleased to announce that the largest of these 4 contracts was signed today. In addition, our commitment to acquiring or co-developing suitable innovative technology platforms via innoVenn, our dedicated innovation division, has borne fruit in the form of the completed acquisition of the intellectual property rights of Evocutis PLC."

 

Enquiries:

Venn Life Sciences Holdings Plc

www.vennlifesciences.com

David Evans, Non-Executive Chairman

Tel: +44 (0)7740 084 452

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 7727



Walbrook PR Ltd

Tel: +44 (0)20 7933 8780 or venn@walbrookpr.com

Paul McManus

Mob: +44 (0)7980 541 893

Lianne Cawthorne

Mob: +44 (0)7584 391 303

 

About Venn Life Sciences Limited:

Venn Life Sciences is a Clinical Research Organisation providing clinical trial management solutions and resourcing solutions to pharmaceutical, biotechnology and medical device organisations. With dedicated operations in France, Germany, the Netherlands, the UK and Ireland and Europe wide representation - Venn specialises in rapid deployment and management of multisite projects. Venn recently established an innovation division - InnoVenn - focused primarily on breakthrough development opportunities in Skin Science.



Chairman's Statement

 

Dear Fellow Shareholder,

 

2013 has been a transformative year for Venn both in terms of investment, acquisition and overall capability upgrade. Last year the board re-stated its commitment to delivering shareholder value throughout the development and growth of the core CRO business, and additional value through smart participation in successful medical technologies. Significant progress has been made on both of these fronts.

 

Upgrading the Clinical Trials Business

Following the listing of the company's shares in December 2012 management embarked on its plan to evolve Venn from a small regional clinical trials business, offering local single country support services, to an international Clinical Services support business with full multi-centred capability.

 

A key indicator of progress towards the achievement of this goal is, in the first instance, the extent to which the profile of the Clinical Trials business development pipeline has changed. We have now seen a consistent increase in total value terms, and a notable shift to what we categorise as Enterprise level deals - each more than €1.5m in value and all involving multiple countries. During 2013 we saw the emergence of the first of these deals and the latest pipeline features four Enterprise level multi-site contracts, one of which has been signed today

 

Positioning the business so that we can compete at this level has required a considerable investment during 2013 across all areas of the business including business development, systems infrastructure, quality and training. The emergence of these significantly higher value, higher tenure proposals within our qualified deal pipeline is clear evidence that this investment is beginning to pay off.

 

The existence of an integrated multi-country service capability is another essential ingredient critical to being invited to tender for Enterprise level contracts especially within the European marketplace. To address this opportunity, during 2013 Venn acquired two CRO's, one in Germany and one in Northern Ireland. The addition of these locations, coupled with the development of capabilities in Russia has opened a much greater market opportunity for Venn. 

 

It is our intention to continue this international capability expansion through further strategic acquisitions and suitable partnerships in 2014. Efficiently and effectively integrating these additional geographies into a seamless and agile Venn Clinical Services Network remains a clear on-going management focus.

 

Technology Acquisition and Development

In addition to the international expansion of our core Clinical Services capabilities, Venn is committed to generating shareholder value through the acceleration to market of carefully selected developed life science technologies.

 

2013 was a year in which we screened and evaluated a number of prospective opportunities and importantly the full cost of this assessment has been booked to P&L during the period.  We were pleased to announce in February our first technology initiative, the acquisition of certain assets and the associated Intellectual Property of Evocutis PLC. In the two months since acquisition considerable progress has been made towards re-activation of one of these assets - Labskin: a breakthrough skin substitute technology for skincare testing - in terms of manufacture and re-engagement with the customer base. We have re-located development and production to a new facility, engaged the necessary technology development expertise and expect to generate our first revenues from Labskin later this year.

 

Looking Forward

Overall considerable progress has been made during the company's first year as a public company. The core Clinical Services business capability to win higher value, higher tenure contracts have been elevated through investing in a significant upgrade in expertise, processes and wider European footprint.  Foundations have been laid for the addition of strong intellectual property to the asset base of the business and a move for our development services business into a higher value arena.

 

The conversion of the Enterprise value deal announced today and plus others that hope to complete should provide a solid platform for accelerated services revenue growth and the commencement of first technology revenues via the start of sales of the Labskin offering will mark another key milestone for Venn.

 

The board looks forward to a transformative second half of the year in 2014 with significant gains in revenue in the core Clinical Services business as we seek to achieve a critical mass of revenue. Additionally we anticipate initial technology driven revenues in the second six months and further value-enhancing deals being consummated.

 

David Evans

Executive Chairman



 

Chief Executive's Review

 

Our efforts in 2013 have been focused on transforming the infrastructure and capabilities of our business and transitioning it to a place where we can genuinely compete with a compelling and differentiated offer in a market that has become increasingly internationalised.

 

Critically we completed two Clinical Services acquisitions in December 2013, the financial benefits of which we will see in 2014 and beyond.  The addition of these new locations has enhanced our ability to credibly respond to multi-country tenders, which by their very nature are significantly higher value proposals than Venn has seen historically and where we expect a further growth in demand.

 

We classify these higher value (more than €1.5m), higher tenure, multi-country contracts as Enterprise level proposals and our 2013 and on-going focus is on building a pipeline of such Enterprise deals. We have been very pleased to announce the signing of such a deal today, details of which are contained within a separate announcement.

 

It is encouraging to note that a number of our current Enterprise level proposals are as a direct result of the expansion through acquisition into new territories. It is our intention during 2014 to complete further geographic and capability expansion through M&A and we are currently conducting diligence on specific opportunities.

 

In addition to improvements in our service offering we have successfully leveraged our network and core-skills within our group, to secure our first technology initiative and develop a pipeline of follow-on opportunities. I believe through the acquisition of the Labskin technology platform in particular and additional skin science, we have enhanced the asset base of our business in a very capital efficient manner.  We expect first revenue flows from Labskin later this year.

 

Results and Commentary

Service fee income for the full year amounted to €2.04m (2012 - €2.68m) and the reported EBITDA loss (before exceptional items) was €1.65m (2012 - €0.53m).  The consolidated Balance Sheet as at 31 December 2013 had total assets of €2.37m, €0.54m of which was represented by cash and cash equivalents.

 

Key areas of activity contributing to the loss for the year include: external acquisition transaction costs, internal M&A team costs, screening technology opportunities, significant investment in Enterprise level business development, systems and infrastructure. Investments made during the year were consistent with commitments made to shareholders on admission to the market. The results for 2013 include the costs associated with two acquisitions, completed in December. 2014 will see the benefit of the contribution from these acquired entities.

 

Encouragingly our first multi- country Enterprise level tender proposal was executed in 2013 and we have added another three Enterprise level proposals in the first half of 2014 with total Enterprise level proposals now accounting for 60% of our pipeline.

 

Plans and Outlook

The clinical research and development markets remain buoyant, underpinned by committed Pharma spending and a more vibrant biotechnology scene driven largely by better access to capital. We believe that investments made during 2013 leave us well positioned to benefit from this.

 

Management priorities remain both on the on-going build of a strong deal-flow pipeline featuring at least 50% of target revenue at the Enterprise level as well as the conversion of Enterprise level deals already in the pipeline.

 

We expect to complete further acquisition activity in 2014 ideally focussing on more transformational transactions that bring multiple geographies. We have solid evidence from our initial transactions of a strong correlation between geographical coverage and requests for proposals. We have letters of intent signed and due diligence ongoing on three acquisition opportunities.

 

Anthony Richardson

Chief Executive Officer



 

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2013

 



2013


2012


Notes

€'000


€'000

Continuing operations





Revenue

2

2,035


2,680

Administrative expenses

3

(3,829)


(3,804)

Operating loss


(1,794)


(1,124)

  Depreciation and amortisation


(32)


(43)

  Exceptional items

3

(117)


(556)

EBITDA before exceptional items

2

(1,645)


(525)

Finance income

4

12


3

Finance costs

4

(41)


(29)

Loss before income tax


(1,823)


(1,150)

Income tax charge

5

23


(22)

Loss for the year


(1,800)


(1,172)

Currency translation differences


(8)


-

Total comprehensive loss for the year


(1,808)


(1,172)






Loss per ordinary share

6


Basic and diluted


(0.09)


(0.12)






 


Consolidated Statement of Financial Position

As at 31 December 2013





2013

2012




 Notes

€'000

€'000

Assets






Non-current assets






Property, plant and equipment




53

47

Intangible assets



7

1,039

836

Investments




31

31

Total non-current assets




1,123

914







Current assets






Trade and other receivables




656

593

Income tax recoverable




52

14

Cash and cash equivalents




541

2,876

Total current assets




1,249

3,483

Total assets




2,372

4,397







Equity attributable to owners






Share capital




102

102

Share premium account




3,431

3,431

Group re-organisation reserve




(541)

(541)

Reverse acquisition reserve




45

45

Foreign currency reserves




(8)

-

Retained earnings




(2,308)

(508)

Total equity




721

2,529







Liabilities






Non-current liabilities






Deferred consideration




54

-

Borrowings




-

297

Total non-current liabilities




54

297







Current liabilities






Trade and other payables




1,178

1,212

Deferred taxation




17

6

Deferred consideration




77

-

Borrowings




325

353

Total current liabilities




1,597

1,571

Total liabilities




1,651

1,868

Total equity and liabilities




2,372

4,397

 



 

Consolidated Statement of Cash Flows

For the year ended 31 December 2013



2013

2012


Notes

€'000

€'000

Cash Flow from operating activities




Cash used in operations

8

(1,804)

(793)

Interest paid


(39)

(29)

Income tax paid


(16)

(17)

Net cash used in operating activities


(1,859)

(839)





Cash flow from investing activities




Acquisition of subsidiaries, net of cash acquired


(54)

436

Purchase of property, plant and equipment (PPE)


(31)

(18)

Proceeds from sale of PPE


-

5

Proceeds from sale of investments


-

31

Interest received


12

3

Net cash (used in)/generated by investing activities


(73)

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


(2,294)

2,757

Cash and cash equivalents at beginning of year


2,588

(169)

Exchange losses on cash and cash equivalents


(78)

-

Cash and cash equivalents at end of year


216

2,588





 

 

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 2012

2

-

(541)

-

-

664

125

Changes in equity for the year ended

31 December 2011








Total comprehensive loss for the year

-

-

-

-

-

(1,172)

(1,172)

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 the year ended

31 December 2013








Loss for the year

-

-

-

-

-

(1,800)

(1,800)

Currency translation differences

-

-

-

-

(8)

-

(8)

Total comprehensive loss for the year

-

-

-

-

(8)

(1,800)

(1,808)

At 31 December 2013

102

3,431

(541)

45

(8)

(2,308)

721

 



 

Notes to the final results

 

1. Basis of preparation

 

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.

This preliminary announcement is an extract from the consolidated financial statements of the Company for the year ended 31 December 2013 and comprises the Company and its subsidiaries. The consolidated financial statements were authorised for issuance on 16 May 2014.  The financial information set out below does not constitute the Company's statutory accounts for the years ended 31 December 2013 or 2012 within the meaning of Section 434 of the Companies Act 2006, but is derived from those accounts.  Statutory accounts for 2012 which were of the parent company only have been delivered to the Registrar of Companies and those for 2013 will be delivered soon before Companies House deadline. The auditors' reports on the statutory accounts for the years ended 31 December 2012 and 31 December 2013 were unqualified and do not contain statements under s498(2) or (3) Companies Act 2006.

 

This financial information has been prepared in accordance with the Group's accounting policies as disclosed in the financial statements for the year ended 31 December 2012 and International Financial Reporting Standards ("IFRSs") and International Financial Reporting Interpretations Committee (IFRIC) interpretations as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

 

Certain statements in this announcement constitute forward-looking statements. Any statement in this announcement that is not a statement of historical fact including, without limitation, those regarding the Company's future expectations, operations, financial performance, financial condition and business is a forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, amongst other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this announcement and the Company undertakes no obligation to update its view of such risks and uncertainties or to update the forward-looking statements contained herein. Nothing in this announcement should be construed as a profit forecast.

 

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company will publish its full financial statements for the year ended 31 December 2013 shortly and will be available on the Company's website at www.vennlifesciences.com and at the Company's head office 19 Railway Road, Dalkey, Dublin, Ireland. The Annual General Meeting will be held on Tuesday 24 June 2014.

 

2. Segmental reporting

Management has determined the Group's operating segments based on the monthly management reports presented to the Chief Operating Decision Maker ('CODM'). The CODM is the Executive Directors and the monthly management reports are used by the Group to make strategic decisions and allocate resources.

 

The principal activity of the Group is that of a Clinical Research Organisation (CRO) providing a suite of consulting and clinical trial services to pharmaceutical, biotechnology and medical device organisations.  This activity takes place across various countries, including France, Netherlands, United Kingdom, Ireland, and Russia and as such the Board considers the business primarily from a geographic perspective. Although not all the segments meet the quantitative thresholds required by IFRS 8, management has concluded that given the recent acquisitions, all segments should be maintained and reported, given the potential future growth of the segments.

 

The reportable segments derive their revenue primarily from the Group's principal activity.

 

Currently the key operating performance measures used by the CODM are Revenue and adjusted EBITDA.

 

The segment information provided to the Board for the reportable segments for the year ended 31 December 2013 is as follows:

 

2013

France

Netherlands

Other

Total


€'000

€'000

€'000

€'000

Income statement





External revenue

1,027

899

109

2,035

Adjusted EBITDA*

(16)

(102)

(1,527)

(1,645)

Exceptional costs

-

-

(117)

(117)

EBITDA

(16)

(102)

(1,644)

(1,762)

Depreciation

(3)

(8)

(21)

(32)

Operating profit

(19)

(110)

(1,665)

(1,794)

Net finance costs

(13)

-

(16)

(29)

Income tax

-

23

-

23

Retained loss

(32)

(87)

(1,681)

(1,800)






Segment assets





Operating assets

1,184

554

4,179

5,917

Inter segment assets

(241)

(322)

(3,523)

(4,086)

External operating assets

943

232

656

1,831

Cash and cash equivalents

-

33

508

541

Total assets

943

265

1,164

2,372






Segment liabilities





Operating liabilities

661

225

4,526

5,412

Inter segment liabilities

(275)

-

(3,811)

(4,086)

External operating liabilities

386

225

715

1,326

Borrowings

48

-

277

325

Total liabilities

434

225

992

1,651






Other segmental information





Non current assets - PPE

4

13

36

53

Non current assets - Intangibles

731

105

203

1,039



 

2012

France

Netherlands

Other

Total


€'000

€'000

€'000

€'000

Income statement





External revenue

1,621

1,059

-

2,680

Adjusted EBITDA*

(87)

148

(586)

(525)

Exceptional costs

(74)

(13)

(469)

(556)

EBITDA

(161)

135

(1,055)

(1,081)

Depreciation

(6)

(17)

(20)

(43)

Operating profit/(loss)

(167)

118

(1,075)

(1,124)

Net finance costs

(3)

3

(26)

(26)

Income tax

-

(22)

-

(22)

Retained profit/(loss)

(170)

99

(1,101)

(1,172)






Segment assets





Operating assets

1,151

595

266

2,012

Inter segment assets

(141)

(233)

(117)

(491)

External operating assets

1,010

362

149

1,521

Cash and cash equivalents

-

106

2,770

2,876

Total assets

1,010

468

2,919

4,397






Segment liabilities





Operating liabilities

554

178

977

1,709

Inter segment liabilities

(117)

-

(374)

(491)

External operating liabilities

437

178

603

1,218

Borrowings

90

-

560

650

Total liabilities

527

178

1,163

1,868






Other segmental information





Non current assets - PPE

7

21

19

47

Non current assets - Intangibles

731

105

-

836

 

 

* Adjusted EBITDA excludes exceptional costs.

 

Other primarily relates to the holding company and head office costs.

 

No more than 10% of the revenues have been derived from a single external customer in 2013 and 2012.

 



 

3. Exceptional items

Included within Administrative expenses are exceptional items as shown below:



2013

2012


Note

€'000

€'000

Exceptional items includes:




- Transaction costs relating to business combinations and listing

a

117

306

- Deemed reverse acquisition costs

b

-

326

- Inter-company balances written back

c

-

(76)

Total exceptional items


117

556

 

(a) Transaction costs relating to business combinations.

      The Group incurred acquisition expenses of £117,000 (2012 - €306,000) associated with the acquisitions of subsidiaries which are included within administrative expenses in the consolidated income statement.

(b) Deemed reverse acquisition costs is made up of the excess amount payable on the deemed acquisition consideration of the legal parent company over its fair net assets at the date of acquisition.

(c)  Inter-company balances written back relate to balances owed to the old Group of Venn Life Sciences Limited.

 

4. Finance income and costs



2013

2012



€'000

€'000

Interest expense:




- Bank borrowings


25

23

- Deferred consideration unwinding of discount


2

-

- Interest on other loans


14

6

Finance costs


41

29





Finance income




- Interest income on cash and short-term deposits


12

3

Finance income


12

3

Net finance costs


29

26

 

 

 



 

5. Income tax expense



2013

2012



€'000

€'000

Current tax:




Current tax for the year


(22)

24

Total current tax (credit)/charge


(22)

24





Deferred tax:




Origination and reversal of temporary differences


(1)

(2)

Total deferred tax


(1)

(2)

Income tax (credit)/charge


(23)

22

 

The tax on the Group's results before tax differs from the theoretical amount that would arise using the standard tax rate applicable to the profits of the consolidated entities as follows:



2013

2012



€'000

€'000

Loss before tax


(1,823)

(1,150)





Tax calculated at domestic tax rates applicable to UK standard rate of tax of 20% (2012: 21%)


(365)

(242)

Tax effects of:




- Expenses not deductible for tax purposes


34

112

- Losses carried forward/(utilised)


308

135

- Impact of different tax rates in other jurisdictions


-

17

Tax charge


(23)

22

 

There are no tax effects on the items in the statement of comprehensive income.

 

 

6. 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 year.



2013

2012



€'000

€'000





Loss attributable to equity holders of the Company


(1,800)

(1,172)





Weighted average number of Ordinary Shares in issue


20,099,994

10,116,393


 

 

 

Basic loss per share

 

(€ 0.09)

(€ 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 31 December 2013 or 31 December 2012 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.

 



 

7. Intangible fixed assets

 


Customer relationships

€'000

Trade secrets

€'000

Goodwill

€'000

Total

€'000

Cost and Net book value





At 1 January 2012 and 31 December 2012

-

-

836

836






Cost





At 1 January 2013

-

-

836

836

On acquisition of subsidiary undertaking (note 35)

24

37

144

205

At 31 December 2013

24

37

980

1,041






Amortisation





At 1 January 2013

-

-

-

-

Charge for the year

1

1

-

2

At 31 December 2013

1

1

-

2






Net book value





At 31 December 2013

23

36

980

1,039






 

No amortisation charge has been charged on the goodwill in the income statement.

Goodwill is allocated to the Group's cash-generating units (CGU's) identified according to geographic operating segment. An operating segment-level summary of the goodwill allocation is presented below.


2013

2012


€'000

€'000

France

731

731

Netherlands

105

105

UK

144

-

Total

980

836

 

Goodwill is tested for impairment at the balance sheet date. The recoverable amount of goodwill at 31 December 2013 was assessed on the basis of value in use. As this exceeded carrying value no impairment loss was recognised.

 

The key assumptions in the calculation to assess value in use are the future revenues and the ability to generate future cash flows. The most recent financial results and initial budgets approved by management for the next year were used and forecasts for two further years, followed by an extrapolation of expected cash flows at a constant growth rate of each unit. The projected results were discounted at a rate which is a prudent evaluation of the pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the cash-generating units.

 

The key assumptions used for value in use calculations in 2013 for all the units were as follows:


%

Longer-term growth rate (after 2015)

5

Discount rate

20

 

The group has been loss making for the last 3 years and in 2013 the Directors have transformed the infrastructure and capabilities of the group in order to work as group in providing services to clinical research and development markets as one unit rather than separate units. This meant that the impairment review is prepared on the group basis rather than a single unit basis. The Directors have made significant estimates on future revenues and EBITDA growth over the next three years based on the Group's budgeted investment in recruiting key employees and marketing the services.

 

The Directors have performed a sensitivity analysis to assess the impact of downside risk of the key assumptions underpinning the projected results of the Group. The projections and associated headroom used for the group is sensitive to the EBITDA growth assumptions that have been applied. A 50% reduction in EBITDA growth; in the first five years of the management projections would not result in any impairment at the group level.

 

8. Cash used in operations



2013

2012



€'000

€'000

Loss before income tax


(1,823)

(1,150)

Adjustments for:




- Depreciation


32

43

- Deemed reverse acquisition costs


-

326

- Foreign currency translation of net assets


70

-

- Loss on disposal of PPE


-

14

- Net finance costs / (income)


29

26

Changes in working capital




- Trade and other receivables


97

488

- Trade and other payables


(209)

(540)

Net cash used in operations


(1,804)

(793)

 

In the statement of cash flows, proceeds from the sale of property, plant and equipment comprise:



2013

2012



€'000

€'000

Net book amount


-

19

Loss on disposal of property, plant and equipment


-

(14)

Proceeds from disposal of property, plant and equipment


-

5

 

Non-cash transactions

The principal non-cash transactions relate to the issue of shares as consideration for the acquisition discussed in note 9.

 

9.         Business Combinations

Acquisition of Medevol Limited

On 9 December 2013, the Company acquired Medevol Limited, a CRO business based in Belfast, Northern Ireland, for a total maximum consideration of £670,000 (€803,000).

 

The goodwill of £121,000 (€144,000) arising from the acquisition is attributable to the expected future profitability of the acquired business and synergies expected to arrive from the incorporation of the business within the Group.

 



 

The following table summarises the consideration paid for Medevol Limited and the amounts of the assets acquired and liabilities assumed recognised at the acquisition date.


€'000

Fair value consideration at 9 December 2013


Cash

84

Deferred consideration

129

Total fair value consideration

213

Recognised amounts of identifiable assets acquired and liabilities assumed


Cash and cash equivalents

30

Property, plant and equipment

5

Customer relations -  included in intangibles 

24

Trade secrets - included in intangibles 

37

Trade and other receivables

160

Trade and other payables

(175)

Deferred tax liabilities

(12)

Total identifiable net assets

69

Goodwill

144

 

The additional deferred consideration arrangement requires the Company to pay the former owners of Medevol Limited a maximum additional consideration of £600,000 (€719,000). The additional consideration is linked to Profit before taxation over a period post acquisition. In the opinion of the Directors the full consideration will not be paid and hence an adjustment of €564,000 has been made to reduce the additional consideration to £129,000 (€155,000). The additional consideration has also been discounted to its net present value to £107,000 (€129,000) using a rate to reflect the time value of money. Unwind of the discount in the post-acquisition period totals £22,000 (€26,000) and has been included in the finance expense in the income statement (note 4).

 

The revenue included in the consolidated statement of comprehensive income since 9 December 2013 contributed by Medevol Limited was €18,000. Medevol Limited also contributed loss of €7,000 over the same period.  Had Medevol Limited had been consolidated from 1 January 2013, the consolidated statement of comprehensive income, would show revenue of €156,000 and profit of €40,000.

 

Medevol Limited changed its name to Venn Life Sciences (NI) Limited on 12 February 2014.

 

10.    Post balance sheet events

The following events have taken place since the year end:

 

(a) On 13 January 2014 the Company announced the acquisition of the trade and certain business assets and liabilities of CRM Clinical Trials GmbH, a German based Clinical Research Organisation for a total consideration of €0.6m satisfied by the issue of 1,962,583 new ordinary shares at the price of £0.26 per share in the Company.

 

(b) On 26 February 2014 the Company announced the acquisition of the intellectual property rights in Labskin™, SYN1113 and related equipment of Evocutis plc, for a consideration £210,000 satisfied by the issue of 864,706 new ordinary shares at a price of £0.24 per share in the Company.

 

(c) On 31 March 2014 the Company completed its fund raising of £1m by issuing 5,263,158 new ordinary shares at a price of £0.19 per share.

 

 

11.    Annual Report & Accounts

 

Copies of the audited Annual Report & Accounts for the year ended 31 December 2013 will be posted to shareholders on shortly and may also be obtained from the Company's head office at 19 Railway Road, Dalkey, Dublin, Ireland.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR UNAARSKAVAAR

Companies

Hvivo (HVO)
UK 100

Latest directors dealings