Final Results

RNS Number : 3521O
Venn Life Sciences Holdings PLC
17 May 2018
 

 

 

17 May 2018

Venn Life Sciences Holdings Plc

("Venn", "Venn Life Sciences" or the "Company")

 

Preliminary Final Results for the year ended 31 December 2017

 

Venn Life Sciences (AIM: VENN), an Integrated Drug Development Partner offering a combination of drug development expertise and clinical trial design and management to pharmaceutical, biotechnology and medical device clients, announces its audited results for the year ended 31 December 2017.

 

Financial Highlights

 

·     Total income was €17.8m (2016: €18.2m)

·      EBITDA (before exceptional items) of €1.0m (2016: €0.4m)

·      Operating profit of €0.1m (2016: Loss €0.6m)

·     Loss for the year after tax of €1.5m (2016: profit of €0.6m) after a charge of €1.7m (2016: €0.4m) being share of losses and investment write-down on Integumen PLC in 2017

·     Cash and cash equivalents of €1.2m as at 31 December 2017 (2016: €3.5m)

Operational Highlights

 

·     Continued progress on key systems infrastructure implementation and operational efficiency delivering improvements in operating margins

·     Strategic review concluded that following a period of investment and operational consolidation, the Company would look to identify both organic and in-organic growth opportunities

·     Key project milestones achieved leading to client endorsements and increased repeat business 

·     Strengthening of the Board and operations with the appointment of Christian Milla as Chief Operating Officer as well as new leadership hires in Information Technology and Quality Assurance

·     Finalisation of Kinesis acquisition with no further consideration payable

 

Post period-end

·     Retirement of Jonathan Hartshorn as Chief Financial Officer

·     Acquisition of minority interest in VLS France

·     Dilution of stake in Integumen PLC to below associate threshold

 

Commenting on the Group's outlook, Tony Richardson, CEO of Venn, said: "During 2017 our focus has been on the delivered improved underlying EBITDA in the business through improved operational efficiencies. Additional investment in systems means that we now have both the expertise and infrastructure to profitably execute new business in scale and our focus is now on the generation of new business opportunities. We have invested significantly in business development and engaged creatively with clients to develop deeper, longer lasting partnerships and our pipeline of opportunities is healthy. We continue to see an increasing number of opportunities that require the full range of services now on offer in Venn. Continued strong investment in the biotech sector and the clear emergence of virtual drug companies both represent a significant opportunity for Venn. Our size, flexibility, deep expertise and breadth of service capability leaves us well positioned to benefit from this shift in the drug development landscape."

 

 

 

Enquiries:

 

 

Fergal Meegan/Matthew de Vere White (Corporate Finance)


 

 

 

 

 

 

Chairman's Statement

For the year ended 31 December 2017

 

Dear Fellow Shareholder,

 

I am pleased to report that 2017 has been another year of progress for Venn, delivering improved EBITDA and a differentiated positioning for the business that we believe will drive sustainable order book growth. The completion of certain key integration initiatives during 2017 has delivered a strong common identity across all service lines and facilitated the generation of new opportunities utilising the full spectrum of services on offer in Venn. We continue to invest in knowledge development in order to increase our value-add for clients and secure longer lasting relationships. 

 

We have underpinned our initiatives on integration and business positioning with a significant investment in business development and marketing, adding experienced new business professionals with proven track records and supporting them with additional lead generation resources. Our plan includes the broadening of our revenue base and delivering a better balanced book of business. I am pleased to report that we are making progress in this regard with the progression of certain smaller accounts to key account status. 

 

During the year we completed a strategic review of growth options for the business and concluded that it makes sense to better leverage the infrastructure we have, through delivering both organic and inorganic business growth. We will look at inorganic opportunities that extend both our footprint and service lines, consistent with our objective of positioning the business as full service and full coverage in Europe.    

 

Allan Wood

Chairman

17 May 2018

 

 

 

Chief Executive's Statement

For the year ended 31 December 2017

Dear Fellow Shareholder,

 

Results and Commentary

 

Total income for the full year was €17.8m (2016: €18.2m). The revenue mix remained similar year on year across the two principal service lines in the business. Early Development Services (EDS) delivered revenues of €6m and Clinical Research Services (CRS) delivered revenues of €11.8m. EBITDA before exceptional charges was €1.0m (2016: €0.4m). Improved EDBITDA was driven principally by greater operational efficiency resulting in improved project margins. We expect that increased billable resources and continued improvements in operational efficiency will drive further growth in EBITDA during 2018. Exceptional charges have been minimised at €0.03m (2016: €0.1m).  The consolidated balance sheet as at 31 December 2017 had gross assets of €12.2m (2016: €14.7m), €1.2m (2016: €3.5m) of which was represented by cash and cash equivalents.

 

Group operating profit for the year was €0.1m (2016: loss €0.6m). Loss after tax was €1.5m (2016: Loss €0.7m) accounted for by our share of losses in Integumen plc and a write down to market value in the carrying value of our investment. The combined share of losses and investment write down was €1.7m (2016: €0.36m). In future periods we will mark this investment to market.

 

We continue to see benefits and opportunities from the integration of EDS and CRS and have secured projects spanning all service areas of the business. We have strengthened our business development team and now have a fully integrated offering with a common Venn identity.

 

We are focussed on deepening our connections and engagement with our clients offering higher value adding consulting in the early days of the engagement resulting in committed, longer lasting relationships. There are clear opportunities with a number of clients to develop a genuine partner relationship. In recent months we have participated in consortia focussed on collaborative drug development initiatives. This approach supports an innovative business model moving from transactional relations with our clients to R&D partnerships supported by our unique drug development capabilities.

 

Anthony Richardson

Chief Executive Officer

17 May 2017

 

 

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2017



2017


2016



€'000


€'000

Continuing operations





Revenue


17,405


17,909

Direct Project and Administrative Costs


(17,763)


(18,805)

Other operating income


410


335

Operating profit/(loss)


52


(561)

  Depreciation


(99)


(133)

  Amortisation


(792)


(689)

  Exceptional items


(25)


(125)

EBITDA before exceptional items


968


386

Finance income


-


12

Finance costs


-


-

Share of loss of investments accounted for using the equity method


(923)



Impairment of fixed asset investments


(794)


(364)

Profit/(loss) before income tax


(1,665)


(913)

Income tax credit


127


169

Profit/(loss) for the year from continuing operations


(1,538)


(744)

Discontinued operations





Profit for the year from discontinued operations


-


1,295

Profit/(loss) for the year


(1,538)


551

Profit for the year is attributable to:





Owners of the parent


(1,538)


532

Non-controlling interests


-


19



(1,538)


551

Other comprehensive income





Currency translation differences


60


(36)

Total comprehensive gain/(loss) for the year


(1,478)


515

Total comprehensive gain/(loss) for the year is attributable to:





Owners of the parent


(1,478)


496

Non-controlling interests


-


19



(1,478)


515

Total comprehensive gain/(loss) for the year attributable to owners of the parent arises from:





Continuing operations


(1,478)


(799)

Discontinued operations


-


1,295



(1,478)


496






Earnings per share from continuing and discontinued operations attributable to owners of the parent during the year





Basic profit/(loss) per ordinary share





From continuing operations


(2.55c)


(1.26c)

From discontinued operations


-


2.14c

From profit/(loss) for the year


(2.55c)


0.88c






Diluted profit/(loss) per ordinary share





From continuing operations


(2.35c)


(1.14)

From discontinued operations


-


1.93c

From profit/(loss) for the year


(2.35c)


0.79c

 

 

 

Consolidated and Company's Statement of Financial Position

As at 31 December 2017



Group

Group

Company

Company



2017

2016

2017

2016



€'000

€'000

€'000

€'000

Assets






Non-current assets






Property, plant and equipment


312

191

-

-

Intangible assets


4,034

4,499

-

-

Investments in subsidiaries


-

-

7,778

7,908

Assets held for sale


680




Investments


31

2,038

31

31

Total non-current assets


5,057

6,728

7,809

7,939







Current assets






Trade and other receivables


5,874

4,402

8,960

8,664

Income tax recoverable


107

43

-

-

Cash and cash equivalents


1,175

3,541

15

206

Total current assets


7,156

7,986

8,975

8,870

Total assets


12,213

14,714

16,784

16,809







Equity attributable to owners






Share capital


155

155

155

155

Share premium account


14,026

14,026

14,026

14,026

Group re-organisation reserve


(541)

(541)

-

-

Merger relief reserve


-

-

3,531

3,531

Reverse acquisition reserve


45

45

-

-

Foreign currency reserves


(48)

13

-

-

Share option reserve


-

28

-

28

Retained earnings


(4,882)

(3,294)

(1,312)

(1,824)



8,755

10,432

16,400

15,916

Non-controlling interest


-

-

-

-

Total equity


8,755

10,432

16,400

15,916







Liabilities






Non-current liabilities






Borrowings


-

25

-

-

Total non-current liabilities


-

25

-

-







Current liabilities






Trade and other payables


2,999

3,661

384

893

Deferred taxation


434

561

-

-

Deferred consideration


-

-

-

-

Borrowings


25

35

-

-

Total current liabilities


3,458

4,257

384

893

Total liabilities


3,458

4,282

384

893

Total equity and liabilities


12,213

14,714

16,784

16,809

 

 

 

 

Consolidated and Company's Statement of Cash Flows

For the year ended 31 December 2017



Group

Group

Company

Company



2017

2016

2017

2016


Notes

€'000

€'000

€'000

€'000

Cash Flow from operating activities






Continuing operations






Cash used in operations


(1,255)

(219)

(321)

(377)

Income tax received/(paid)


(64)

38

-

-

Net cash used in operating activities


(1,319)

181

(321)

(377)







Cash flow from investing activities






Investment in associate


(465)

-

-

-

Purchase of intellectual property


(327)

(79)

(7)

-

Purchase of property, plant and equipment


(220)

-

-

-

Refund of Escrow


-

-

137

-

Interest received


-

12

-

-

Net cash used in investing activities


(1,012)

(67)

130

-







Cash flow from financing activities






Proceeds from issuance of ordinary shares


-

15

-

30

Repayments on borrowings


(35)

(27)

-

-

Net cash generated by financing activities


(35)

(12)

-

30







Net increase/ (decrease) in cash and cash equivalents


(2,366)

 (260)

(191)

 (347)

Cash and cash equivalents at beginning of year


3,541

 3,798

206

 554

Exchange losses on cash and cash equivalents


-

3

-

1

Cash and cash equivalents at end of year


1,175

3,541

15

206

 

 

 

Consolidated and Company's Statement of Changes in Shareholders' Equity

 

 

Group




 

 






 

 

 

 

 

Share capital

 

Share

premium

Re-organisation

 & Reverse acquisition reserve

Share Option reserve

 

Foreign currency reserve

 

Retained

earnings

 

 

Total

 

 

Non-controlling interests

 

 

Total

 


€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

 

At 1 January 2016

155

14,011

(496)

13

49

(3,826)

9,906

327

10,233

 

Changes in equity for the year

ended 31 December 2016










 

Profit/ (Loss) for the year

-

-

-

-

-

532

532

(327)

205

 

Currency translation

differences

-

-

-

-

(36)

-

(36)

-

(36)

 

Total comprehensive profit

/(loss) for the year

-

-

-

-

(36)

532

496

(327)

169

 

Transactions with the owners










 

Shares issued

-

15

-

-

-

-

15

-

15

 

Options issued

-

-

-

15

-

-

15

-

15

 

Total contributions by and

distributions to owners

-

15

-

15

-

-

30

-

30

 

At 31 December 2016

155

14,026

(496)

28

13

(3,294)

10,432

-

10,432

 

Changes in equity for the year

ended 31 December 2017










 

Profit/ (Loss) for the year

-

-

-

-

-

(1,538)

(1,538)

(-)

(1,538)

 

Prior year adjustment






(78)

(78)


(78)

 

Currency translation

differences

-

-

-

-

(61)

-

(61)

-

(61)

 

Total comprehensive profit

/(loss) for the year

-

-

-

-

(61)

(1,616)

(1,677)

(-)

(1,677)

 

Transactions with the owners










 

Shares issued

-

-

-

-

-

-

-

-

-

 

Share option provision reversed

-

-

-

(28)

-

28

(-)

-

(-)

 

Total contributions by and

distributions to owners

-

-

-

-

-

-

-

-

-

 

At 31 December 2017

155

14,026

(496)

-

(48)

(4,882)

8,755

(-)

8,755








Company

 

Share capital

Share

premium

Share

Option reserve

Merger relief reserve

Retained

earnings

 

Total


€'000

€'000

€'000

€'000

€'000

€'000

As at 1 January 2016

155

14,011

13

3,531

(2,351)

15,359

Changes in equity for the year ended

31 December  2015







Total comprehensive loss for the year

-

-

-

-

527

527

Issued in year

-

15

15

-

-

30

At 31 December 2016

155

14,026

28

3,531

(1,824)

15,916

Changes in equity for the year ended

31 December 2017







Total comprehensive gain for the year

-

-

(28)

-

512

484

Issued in year

-

-

-

-

-

-

At 31 December 2017

155

14,026

-

3,531

(1,340)

16,372

 

 

 

 

1. General information

 

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. On 18 January 2016, the company also listed on the ESM market of the Irish Stock Exchange. The address of the registered office is 1 Berkeley Street, London, W1J 8DJ.

 

The principal activity of the Group is that of a Clinical Research Organisation providing a suite of consulting and clinical trial services to pharmaceutical, biotechnology and medical device organisations. The Group has a presence in the UK, Ireland, France, Netherlands, Germany and Singapore.

 

The financial statements are presented in Euros, the currency of the primary economic environment in which the Group's trading companies operate. The Group comprises Venn Life Sciences Holdings Plc and its subsidiary companies.

 

The registered number of the Company is 07514939.

 

2. Exceptional items

 

Included within Administrative expenses are exceptional items as shown below:



2017

2016



€'000

€'000

Exceptional items includes:




- Transaction costs relating to business combinations and acquisitions


25

79

- office relocation


-

46

Total exceptional items


25

125

 

 

3. Finance income and costs


2017

2016


€'000

€'000

Interest expense:



- Bank borrowings

-

-

- Interest on other loans

-

-

Finance costs

-

-

Finance income



- Interest income on cash and short-term deposits

-

12

Finance income

-

12

Net finance costs

-

12

 

 

 

 

4. Income tax expense


2017

2016

Group

€'000

€'000

Current tax:



Current tax for the year

-

(38)

Overprovision of prior year tax charge

(127)


Total current tax (credit)/charge

(127)

(38)




Deferred tax:



Origination and reversal of temporary differences

-

(131)

Total deferred tax

-

(131)

Income tax (credit)/charge

(127)

(169)

 

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:




 

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

 

 


 

 

5. 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.

 

(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.

 

Weighted average number of shares used as the denominator

 


2017

2016

Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share

60,284,263

60,264,907

Adjustments for calculation of diluted earnings per share:



Options

4,985,288

3,675,000

Warrants

  166,000

166,000

Total

65,436,117

64,106,573

 

 

 

 

 

 

6. Intangible fixed assets

Group

 

Customer relationships

€'000

Trade secrets

€'000

Goodwill

€'000

Intellectual Property Rights

€'000

Workforce

€'000

Total

€'000

Cost







At 1 January 2016

1,639

712

1,400

740

1,449

5,940

Addition

-

29

440

-

-

469

Exchange differences

(5)

(6)

(22)

(57)

-

(90)

On Disposal

-

-

-

(683)

-

(683)

At 31 December 2016

1,634

735

1,818

-

1,449

5,636








Amortisation

 







At 1 January 2016

258

104


54

86

502

Charge for year

328

71

-

-

290

689

Disposal of subsidiary

-

-

-

(54)

-

(54)

At 31 December 2016

586

175

-

-

376

1,137








Net book value







At 31 December 2016

1,048

560

1,818

-

1,073

4,499








Cost







At 1 January 2017

1,634

735

1,818

-

1,449

5,636

Addition

-

-

-

360


360

Exchange differences

2

(2)

(3)

-

1

(2)

On disposal

-

(28)

-

-

-

(28)

At 31 December 2017

1,636

705

1,815

360

1,450

5,966








Amortisation







At 1 January 2016

586

175

-

-

376

1,137

Charge for the year

327

71

-

105

292

792

On disposal of subsidiary

-

-

-

-

-

-

At 31 December 2017

913

246

-

105

668

1,932








Net book value







At 31 December 2017

723

459

1,815

255

782

4,034








 

No amortisation charge has been charged on the goodwill in the income statement (2016 - €nil).

 

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


2017

2016


€'000

€'000

CRO

1,815

1,818

Total

1,815

1,818

 

Goodwill is tested for impairment at the balance sheet date. The recoverable amount of goodwill at 31 December 2017 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 forecast approved by management for the next three years were used followed by an extrapolation of expected cash flows at a constant growth rate for a further two years. 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 2017 were as follows:



%

Longer-term growth rate (after 2019)


5

Discount rate


20

 

The Group has been loss making for the last 6 years and in 2014 the Directors transformed the infrastructure and capabilities of the Group in order to work as a 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.

 

The Company has no intangible assets.

 

7. Investments in associates

Company

2017

2016

Shares in associated undertakings

'000

'000

At 1 January

2,007

-

Additions

465

2,371

Share of losses

(923)

(364)

Impairment

(869)

            -

At 31 December 2017

680

2,007

 

 

On 24 October 2016 the Company's wholly owned subsidiary Venn Life Sciences Limited acquired a 41.51% holding in Integumen Limited, as consideration for the disposal of its holding in Innovenn UK Limited.

 

After the  IPO of Integumen Plc on 5th April 2017, Venn Life Sciences invested an additional €465k to offset dilution of the original stake post IPO down to 25.59%.  The stake was further diluted to 22.19% after a round 2 investment in which  Venn Life Sciences did not participate .

 

The final valuation of the Integument Plc investment of €680k was determined based on the market price as at 31 December 2017.

 

The group has no other associates.

 

                                

Name of Company                                             Note   Proportion Held     Class of Shareholding           Nature of Business

Integumen Limited                                                     1            22.19% (indirect)   Ordinary                      Human Surface Science

 

 

Notes

1.     Incorporated and registered in England and Wales.

 

 

 

 

8. Cash used in operations


Group

Group

Company

Company


2017

2016

2017

2016


€'000

€'000

€'000

€'000

(Loss)/Profit before income tax

(1,665)

(913)

484

565

Discontinued operations

-

1,295

-

-

Adjustments for:





- Depreciation and amortisation

891

822

-

-

- Foreign currency translation of net assets

(61)

134

-

(38)

- Exceptional Item

25

79

-

137

- Net finance costs

-

(12)

-

-

- Share options charge

(28)

15

-

-

- Share in associated undertakings

923

(364)

-

-

Changes in working capital





- Financial assets

794

(2,007)

-

-

- Trade and other receivables

(1,424)

1,289

(296)

(967)

- Trade and other payables

(662)

(557)

(509)

(74)

Net cash used in operations

(1,255)

(219)

(321)

(377)

 

 

9. Post balance sheet events

 

An additional 11.0% of the shares in Venn Life Sciences (France) S.A.S  were purchased with effect from 1 January 2018, bringing the total proportion of shares held in that company to 100%. 277,550 Shares in Venn Life Sciences Holdings Plc were issued in consideration for the purchase

 

The percentage holding in Integumen PLC fell from 22.19% to 18.89%  on 6 January 2018 as a result of Integumen PLC issuing new shares.

 

 

10. Annual Report and Accounts

 

Copies of the audited Annual Report and Accounts for the year ended 31 December 2017 will be posted to shareholders 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
 
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