Interim Results

RNS Number : 0605P
Venn Life Sciences Holdings PLC
27 September 2013
 



Venn Life Sciences Holdings Plc

("Venn" or the "Company")

 

Interim Results for 6 months ended 30 June 2013

 

Venn Life Sciences (AIM: VENN), a growing Clinical Research Organisation (CRO) providing clinical trial management and resourcing solutions to pharmaceutical, biotechnology and medical device clients, announces its unaudited interim results for the six months ended 30 June 2013.

 

Financial Highlights

·     Revenue of €1.142m (H1 2012: €1.140m)

·       EBITDA of €0.691m loss (H1 2012: €0.360m loss)

-     investment in business development, acquisition screening and co-development opportunities

-     costs of €457,000 expensed to the Income Statement

·     Loss before tax of €0.716m (H1 2012: €0.390m)

·     Cash and cash equivalents of €1.307m (as at 30 June 2012: €0.068m)

 

Operational Highlights

·     Step change in number of acquisitions identified and evaluated

·     Investment in operations in Russia, UK and Europe, in preparation for growth

·     In-licensing of new technologies through innovative division InnoVenn

·     Key appointments in the areas of business development and clinical operations

 

Post period end

·     Advanced negotiations with German based CRO underpinning growth in key European markets

·     Significant increase in proposals pipeline to €9.3m - with focus on converting proposals to wins

·     Master service agreement signed with a leading global  biopharmaceutical company

 

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

"Venn is on course to deliver on its strategy of becoming a leading mid-sized European CRO. Recognising the need to invest in business development, acquisitions and innovation, Venn has focused in the first six months of 2013 on nurturing a formula that has shown a significant increase in their pipeline across all their offices. The results of this will be reflected over the latter half of 2013, as the pace of business increases in line with geographic coverage and innovative technologies."

 

Enquiries:

 

Venn Life Sciences Holdings Plc


David Evans, Non-Executive Chairman

Tel: +44(0)7980 541 893

Tony Richardson, Chief Executive Officer

Tel: +353 154 99 341

Paul Foulger, Finance Director

Tel: +44 (0)20 7245 1100



Zeus Capital (Nominated Adviser and Broker)


Ross Andrews/Andrew Jones(Corporate Finance)

Tel: +44(0)161 831 1512

John Goold (Institutional Sales)

Tel: +44(0)20 7533 7716



Walbrook PR Ltd

Tel: +44(0)20 7933 8787 or venn@walbrookpr.com

Paul McManus   

Mob: +44(0)7980 541 893

Lianne Cawthorne

Mob: +44(0)7584 391 303

 



 

Chairman's Statement

 

Dear Fellow Shareholder,

 

Following the company's admission to AIM in December 2012, the first six months of 2013 saw Venn deliver on its commitment to invest in key areas of its business:

-      the development of an M&A pipeline,

-      new management and improved facilities, in readiness for organic growth; and

-      the identification of technology opportunities for InnoVenn.

I am pleased to report that we now have concrete developments that underpin these investment decisions.

 

Financial Results

 

Fee income for the first six months of 2013 was €1.142m, broadly in line with the first six months of the previous year (H1 2012: €1.140m). As outlined in our AIM admission document, we committed to invest significantly in key areas to enable us to execute our strategy. During the six months we invested €275,000 in a new facility in the UK, €104,000 on M&A identification and screening, and €78,000 on co-development technology assessment. All of these items were expensed during the six month period and contributed to the EBITDA deficit for the period of €691,000 (H1 2012: €0.360m loss). We are comfortable with our cash position, which currently sits at £1.307m at the period end (as at 30 June 2012: €0.068m).

 

Operational Review

 

Significant progress has been made across all areas of our business. We began this year with a theory that the smaller end of the CRO market was ripe for consolidation and a proposition that we have the capability to execute value-adding transactions as a means of accelerating our company's growth. We are satisfied as a group that our theory is valid. In the last six months we have identified and evaluated eighteen acquisition opportunities that fit our criteria and we believe that we will be able to establish solid relationships with several of these businesses either through acquisition or partnering. I will return to this later in my statement.

 

Much of the first half was also focussed on ensuring the building blocks were in place to ensure we delivered organic growth across the group and provided the best possible platform to integrate new acquisitions. Following the establishment of Venn Russia in February 2013, the Company announced in April the opening of an additional office in the UK and we have invested in this team during the period. The investment in our UK facility referenced above, is largely a commitment to business development. Typical sales cycles in the CRO industry are 6 to 9 months and we are now seeing the benefits of this investment.

 

This investment in preparing ourselves for organic growth has paid off and we currently have proposals to clients with a combined value of €9.3m, which is at the highest level it has ever been and historical trends indicate that we should win over 60% of these proposals; this would significantly transform our underlying business. Our two largest proposals are for €2.5m and €1.5m respectively and I am pleased to see as our critical mass grows we are able to pitch for business at this level. Our operational teams are now focussed on converting proposals to wins and I believe they are very well positioned to achieve this.

 

We also stated in our Admission Document that there is an opportunity for Venn, through co-development initiatives to share in future revenue streams associated with IP development and sale or out-licensing particularly within the medical device arena. In May we announced the launch of InnoVenn, our new innovation division set up to focus on these co-development opportunities. We were also very pleased to announce our first co-development initiative, a joint venture with two Irish biomedical companies to develop the next generation biodegradable human implants, to replace titanium in orthopaedic surgery. This is still in very early stages but we are happy with the progress made so far. We are in continuing discussions regarding additional co-development initiatives and we hope to update shareholders shortly.

 

New developments and Outlook

 

I am pleased to report that we are now in advanced negotiations with a German based CRO business which, if concluded, will not only add significant revenues and profits to Venn's organically growing business, but also a wealth of management and clinical experience in new therapeutic areas. We hope to complete this acquisition, which also comes with a well-developed pipeline of opportunities, by the end of October.

 

Finally, and most importantly, there is a growing pipeline of new business proposals underpinned by the signing of key master service arrangements (MSAs) with existing clients. We are particularly pleased with the signing of a new MSA with a leading global biopharmaceutical company, and we expect them to become a key client for Venn as this relationship develops.

 

The key objectives for the second half-year include the conversion of new and existing proposals into business wins and the achievement of month-on-month profitability. In addition the Company expects to complete identified value adding acquisitions in key locations. The enhanced international coverage and deeper service capability can only serve to improve our prospects of new business wins and the achievement of sustainable profitability, adding to the potential organic growth we are seeing from our existing business.

 

 

David Evans

Chairman

26 September 2013

 



 

 

Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2013

 



Unaudited


Unaudited


Audited



6 months ended


6 months ended


Year ended



30 June


30 June


31 December



2013


2012


2012



€'000


€'000


€'000

Continuing operations







Revenue


1,142


1,140


2,680

Administrative expenses


(1,906)


(1,520)


(3,804)

Other operating income


60


-


-

Operating loss


(704)


(380)


(1,124)

  Depreciation and amortisation


(13)


(20)


(43)

  Exceptional items


-


-


(556)

EBITDA before exceptional items


(691)


(360)


(525)

Finance income


7


2


3

Finance costs


(19)


(12)


(29)

Loss before income tax

(716)


(390)


(1,150)

Income tax charge


(16)


10


(22)

Loss for the period


(732)


(380)


(1,172)

Total comprehensive loss for the period


(732)


(380)


(1,172)








Loss per ordinary share




Basic and diluted


(0.03)


(0.04)


(0.12)










 

Consolidated Statement of Financial Position

As at 30 June 2013

 



Unaudited


Unaudited


Audited



As at


As at


As at



30 June


30 June


31 December



2013


2012


2012



€'000


€'000


€'000

Assets







Non-current assets







Property, plant and equipment


51


64


47

Intangible assets


836


836


836

Investments


60


-


31

Total non-current assets


947


900


914








Current assets







Trade and other receivables


686


500


593

Income tax recoverable


-


46


14

Cash and cash equivalents


1,307


68


2,876

Total current assets


1,993


614


3,483

Total assets


2,940


1,514


4,397








Equity attributable to owners







Share capital


102


2


102

Share premium account


3,431


-


3,431

Group re-organisation reserve


(541)


(541)


(541)

Reverse acquisition reserve


45


-


45

Retained earnings


(1,240)


284


(508)

Total equity


1,797


(255)


2,529








Liabilities







Non-current liabilities







Borrowings


-


-


297

Total non-current liabilities


-


-


297








Current liabilities







Trade and other payables


820


1,385


1,212

Deferred taxation


6


8


6

Borrowings


317


376


353

Total current liabilities


1,143


1,769


1,571

Total liabilities


1,143


1,769


1,868

Total equity and liabilities


2,940


1,514


4,397

 



 

Consolidated Statement of Cash Flows

For the six months ended 30 June 2013



Unaudited

Unaudited

Audited



6 months ended

6 months ended

Year

ended



30 June

30 June

31 December



2013

2012

2012



€'000

€'000

€'000

Cash Flow from operating activities





Loss before income tax


(716)

(390)

(1,150)

Adjustments:





- Depreciation


13

20

43

- Deemed reverse acquisition costs


-

-

326

- Loss on disposal of PPE


-

14

14

- Foreign currency movement


112

-

-

- Net finance costs


12

10

26

Changes in working capital





- Trade and other receivables


(93)

526

488

- Trade and other payables


(392)

(287)

(540)

Cash used in operations


(1,064)

(107)

(793)

Interest paid


(19)

(12)

(29)

Income tax paid


(2)

(15)

(17)

Net cash used in operating activities


(1,085)

(134)

(839)






Cash flow from investing activities





Acquisition of subsidiaries, net of cash acquired


-

-

436

Purchase of property, plant and equipment (PPE)


(17)

(12)

(18)

Proceeds from sale of PPE


-

5

5

Purchase of investments


(29)

-

-

Proceeds from sale of investments


-

-

31

Interest received


7

2

3

Net cash used in investing activities


(39)

(5)

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


(1,486)

(139)

2,757

Cash and cash equivalents at beginning of year


2,588

(169)

(169)

Exchange loss on cash and cash equivalents


(112)

-

-

Cash and cash equivalents at end of year


990

(308)

2,588

 

 

 

Cash and cash equivalents include the following for the purposes of the statement of cash flows:

 



Unaudited

Unaudited

Audited



6 months ended

6 months ended

Year

ended



30 June

30 June

31 December



2013

2012

2012



€'000

€'000

€'000

Cash and cash equivalents


1,307

68

2,876

Bank overdrafts


(317)

(376)

(288)

Cash and cash equivalents


990

(308)

2,588








 

Consolidated Statement of Changes in Shareholders' Equity

 

 

 

 

Share

capital

 

Share

premium

Group re-organisation

reserve

Reverse acquisition reserve

 

Retained

earnings

 

 

Total


€'000

€'000

€'000

€'000

€'000

€'000

At 1 January 2012

2

-

(541)

-

664

125

Changes in equity for 6 months ended 30 June 2012







Total comprehensive profit for the period

-

-

-

-

(380)

(380)

At 30 June 2012

2

-

(541)

-

284

(255)

Changes in equity for 6 months ended 31

December 2012







Total comprehensive loss for the period

-

-

-

-

(792)

(792)

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 6 months ended 30 June 2013







Total comprehensive profit for the period

-

-

-

-

(732)

(732)

At 30 June 2013

102

3,431

(541)

45

(1,240)

1,797















 


NOTES FORMING PART OF THE INTERIM FINANCIAL STATEMENTS

 

1.              General information and basis of presentation

 

Venn Life Sciences Holdings Plc is a company incorporated in England and Wales. The Company is a public limited company listed on the AIM market of the London Stock Exchange. The address of the registered office is 14 Kinnerton Place South, London, SW1X 8EH.

 

The Group's principal activity continues to be that of a Clinical Research Organisation (CRO) providing a suite of consulting and clinical trial services to pharmaceutical, biotechnology and medical device organisations. 

 

The financial information in these interim results is that of the holding company and all of its subsidiaries. It has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards as adopted for use in the EU (IFRSs). The accounting policies applied by the Group in this financial information are the same as those applied by the Group in its financial statements for the year ended 31 December 2012 and which will form the basis of the 2013 financial statements except for a number of new and amended standards which have become effective since the beginning of the previous financial year. These new and amended standards are not expected to materially affect the Group.

The financial information presented herein does not constitute full statutory accounts under Section 434 of the Companies Act 2006 and was not subject to a formal review by the auditors. The financial information in respect of the year ended 31 December 2012 has been extracted from the statutory accounts which have been delivered to the Registrar of Companies. The Group's Independent Auditor's report on those accounts was unqualified, did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006. The financial information for the half years ended 30 June 2013 and 30 June 2012 is unaudited and the twelve months to 31 December 2012 is audited.

 

2. Loss per share

 

(a) Basic                                              

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of Ordinary Shares in issue during the period.

 


Unaudited


Unaudited


Audited


6 months ended


6 months ended


Year ended


30 June


30 June


31 December


2013


2012


2012

Loss attributable to equity holders of the Company (€'000)

732


380


1,172

Weighted average number of Ordinary Shares in issue

29,099,994


9,600,000


10,116,393

Basic loss per share

€0.03


€0.04


€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 period end were dilutive and all such potential ordinary shares are therefore excluded from the weighted average number of ordinary shares for the purposes of calculating diluted earnings per share. 

 

3.            Dividends

 

There were no dividends provided or paid during the six months.

 

4.            Press

                              

A copy of this announcement is available from the Company's website, being www.vennlifesciences.com.  If you would like to receive a hard copy of the interim report please contact the Venn Life Sciences Holdings  Plc offices on +31 (0) 524 712 456 to request a copy.

 


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