Half-year Report

RNS Number : 0101L

Venn Life Sciences Holdings PLC

28 September 2016

 

28 September 2016

Venn Life Sciences Holdings Plc

("Venn" or the "Company")

Interim Results for 6 months ended 30 June 2016

Venn Life Sciences (AIM: VENN), a growing Contract Research Organisation (CRO) providing drug development, 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 2016.

Financial Highlights

·     Revenue of €9.06m (H1 2015: €4.25m)

·      EBITDA profit of €0.40m (H1 2015: profit of €0.09m)

·     Operating Loss €0.033m (H1 2015: loss of €0.079m)

·     Cash and cash equivalents of €1.75m at 30^th June 2016 (€1.10m at 30th June 2015)

·     Cash and cash equivalents of €2.10m at 23^rd September 2016

Operational Highlights

·     Progress on Kinesis integration and initial cross sales achieved

·     Continued progress on systems infrastructure with resultant improvements in operating margins

·     Successful achievement of key project milestones leading to strong client endorsements and repeat business 

Post period-end

·     Strengthening of the board with the appointment of Allan Wood as non-Executive Chairman and Mary Sheahan as non-Executive Director

·     Continued positive progress on new business with €2.8m contract and preferred vendorship with big Pharma announced in August

·     The Company has entered into a process to sell its innovation division, Innovenn. This sale will represent the culmination of several months of effort to re-position Innovenn in such a way that will bring better clarity to the performance of the core business, and realise value from our investment in Innovenn.

Commenting on the Group's outlook, Allan Wood, non-Executive Chairman of Venn, said:

"The future divestment of Innovenn will have a positive impact on the Company's financial performance in the second half of this year. Importantly the disposal of this business, once achieved, will enable management to singularly focus on the growth of our core business. The addition of Kinesis into the Company has been well received by the market and we expect the second half of the year to see the benefits of this acquisition. Overall we continue to see opportunities for further growth, both organically and through M&A." 

Enquiries:

Venn Life Sciences Holdings Plc
Allan Wood, Non-Executive Chairman	Tel: [phone]
Tony Richardson, Chief Executive Officer	Tel: [phone]
Davy (Nominated Adviser and Broker)
Fergal Meegan / Matthew de Vere White (Corporate Finance)		Tel: [phone]
Orla Bolger (Corporate Broking)
Hybridan LLP (Co-Broker)	Tel: [phone]
Claire Louise Noyce
Walbrook PR Ltd	Tel: [phone] or [e-mail]
Paul McManus	Mob: [phone]
Lianne Cawthorne	Mob: [phone]

Chairman's Statement

Dear Shareholder,

The first half of 2016 has seen continued strong growth in sales and improved EBITDA. Management has focussed on two key areas in the six months: initiatives to improve operating margins and integration of the Kinesis business. These initiatives will continue throughout the full year. The future divestment of Innovenn represents a key development for the Company, offering potential future value for investors, whilst simplifying the current business and allowing greater focus on core areas of activity.

Financial Results

Fee income for the first six months of 2016 was €9.06m, up 113% on the first six months of 2015 (H1 2015: €4.25m). EBITDA profit for the period was €0.40m compared to EBITDA profit of €0.09m for the first half of 2015. With current cash reserves of €2.1m the business is well resourced to deliver on its growth plans.

As a group, we have continued to report strong growth in revenues and improved profitability. Having achieved reasonable business scale there is now a strong focus on operating efficiency and improved margins.

Operational Review

In October 2015 we acquired Kinesis Pharma b.v. Our focus in the first half of this year has been on business stability post-acquisition, cross selling initiatives and integration of certain support functions. The acquisition of Kinesis has been well received by the market and with a stable and talented team we can now move into the second phase of business integration and deliver sustainable business growth.

In our late phase business we have focussed our energies on operating profitability and the implementation of systems and processes to deliver higher operating margins. We continue to execute projects to a high standard and this has been reflected in the rate of referrals and repeat business.

We have extended our operating capabilities into the USA with the establishment of Venn Inc and the appointment of a VP of Operations USA. We currently have 13 people on the ground in the US and we will continue to cautiously build that base in line with client requirements.    

Board Changes

I am pleased to join the board of Venn at this exciting point in its development. I would like to thank Tony Richardson for managing both the Chair and CEO roles for the past nine months and look forward to working with Tony and the team. I would also like to welcome Mary Sheahan to the board. Mary's strong financial credentials and deep life science experience will be a valuable addition to the board.  

New Developments and Outlook

Overall I am pleased with the strong progress achieved in this half year. There is a strong pipeline of new opportunities going into the second half of the year and we continue to see an increase in the average size of project wins. We continue to look for earnings enhancing acquisition opportunities, particularly in Central and Eastern Europe. Completing the sale of Innovenn will facilitate a singular focus on the further development of the core business.  

Allan Wood

Chairman

28 September 2016

Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2016

		Unaudited		Unaudited		Audited
		6 months ended		6 months ended		Year ended
		30 June		30 June		31 December
		2016		2015 - restated		2015 - restated
		€'000		€'000		€'000
Continuing operations
Revenue		9,064		4,253		11,468
Administrative expenses		(9,097)		(4,174)		(11,229)
Operating profit/(loss)		(33)		(79)		239
Depreciation and amortisation		(435)		(173)		(386)
Exceptional items		-		-		(209)
EBITDA before exceptional items		402		94		834
Finance income		-		-		2
Finance costs		(33)		(41)		(41)
Profit/(loss) before income tax		(66)		(120)		200
Income tax credit/(charge)		-		-		118
Loss for the period from continuing operations		(66)		(120)		318
Discontinued Operations
Loss for the period from discontinued operations		(652)		(139)		(520)
Loss for the period		(718)		(259)		(202)
Profit/(loss attributable
Owners of the parent		(411)		(187)		15
Non-controlling interest		(307)		(72)		(217)
Loss for the year		(718)		(259)		(202)
Currency translation differences		(15)		39		49
Total comprehensive loss for the period		(733)		(220)		(153)
Earnings/(loss) per share from continuing and discontinued operations attributable to the owners of the parent during the period
Basic and diluted earnings/(loss) per share		€ Cent		€ Cent		€ Cent
From continuing operations		(0.1)		(0.4)		0.8
From discontinued operations		(0.6)		(0.2)		(0.7)

Consolidated Statement of Financial Position

As at 30 June 2016

		Unaudited		Unaudited		Audited
		As at		As at		As at
		30 June		30 June		31 December
		2016		2015		2015
		€'000		€'000		€'000
Assets
Non-current assets
Property, plant and equipment		196		196		381
Intangible assets		4,374		3,170		5,437
Available-for-sale Intangible assets		743
Investments		31		31		31
Total non-current assets		5,344		3,397		5,849
Current assets
Trade and other receivables		7,042		2,627		5,560
Income tax recoverable		100		-		23
Available-for-sale current assets		400		-		-
Cash and cash equivalents		1,748		1,096		3,798
Total current assets		9,290		3,723		9,381
Total assets		14,634		7,120		15,230
Equity attributable to owners
Share capital		155		127		155
Share premium account		14,011		8,073		14,011
Group re-organisation reserve		(541)		(541)		(541)
Reverse acquisition reserve		45		45		45
Foreign currency reserves		34		39		49
Share option reserve		45		-		13
Retained earnings		(4,237)		(4,030)		(3,826)
		9,512		3,713		9,906
Non-controlling interest		20		472		327
Total equity		9,532		4,185		10,233
Liabilities
Non-current liabilities
Borrowings		34		-		52
Total non-current liabilities		34		-		52
Current liabilities
Trade and other payables		4,130		2,456		4,218
Available-for-sale current liabilities		202		-		-
Deferred taxation		692		271		692
Deferred consideration		-		71		-
Borrowings		44		137		35
Total current liabilities		5,068		2,935		4,945
Total liabilities		5,102		2,935		4,997
Total equity and liabilities		14,634		7,120		15,230

Consolidated Statement of Cash Flows

For the 6 months ended 30 June 2016

		Unaudited	Unaudited	Audited
		6 months ended	6 months ended	Year ended
		30 June	30 June	31 December
		2016	2015	2015
		€'000	€'000	€'000
Cash Flow from operations
Loss before income tax including discontinued operations		(718)	(259)	(327)
Adjustments:
- Depreciation & Amortisation		489	176	464
- Foreign currency movement		89	(13)	(204)
- Exceptional Item		33	-	209
- Net finance costs		37	41	42
Changes in working capital
- Trade and other receivables		(1,859)	(530)	(3,463)
- Trade and other payables		145	(845)	1,004
Cash used in operations		(1,785)	(1,430)	(2,275)
Interest paid		(37)	(41)	-
Income tax received/(paid)		(77)	32	125
Net cash used in operating activities		(1,898)	(1,439)	(2,150)
Cash flow from investing activities
Acquisition of subsidiaries, net of cash acquired		-	-	(1,893)
Exceptional costs			-	(209)
Purchase of property, plant and equipment (PPE)		16	(506)	(713)
Net cash used in investing activities		16	(506)	(2,815)
Cash flow from financing activities
Proceeds from issuance of ordinary shares		-	2,605	8,571
Payment of deferred consideration		-	(142)	(310)
Repayments on borrowings		(9)	(46)	(94)
Net cash generated by financing activities		(9)	2,417	8,167
Net increase /(decrease) in cash and cash equivalents		(1,891)	472	3,202
Cash and cash equivalents at beginning of year		3,798	596	596
Exchange gain on cash and cash equivalents		(104)	28	-
Cash and cash equivalents at end of period		1,803	1,096	3,798

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
		2016	2015	2015
		€'000	€'000	€'000
Cash and cash equivalents		1,748	1,096	3,798
Discontinued Operations cash and cash equivalents		55	-	-
Cash and cash equivalents		1,803	1,096	3,798

Consolidated Statement of Changes in Shareholders' Equity

	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 2015	112	5,483	(496)	-	-	(3,841)	1,258	544	1,802
Changes in equity for 6 months ended 30 June 2015
Total loss for the period	-	-	-	-	-	(187)	(187)	(72)	(259)
Currency translation differences	-	-	-	-	39	-	(39)	-	(39)
Total comprehensive loss For the period	-	-	-	-	39	(187)	(148)	(72)	(220)
Transactions with the owners Shares issued	15	2,590	-	-	-	-	2,605	-	2,605
Total contributions by and distributions to owners	15	2,590	-	-	-	-	2,605	-	2,605
At 30 June 2015	127	8,073	(496)	-	39	(4,030)	3,713	472	4,185
Changes in equity for 6 months ended 31 December 2015
Total gain for the period	-	-	-	-	-	204	204	(145)	59
Currency translation differences	-	-	-	-	10	-	10	-	10
Total comprehensive gain for the period	-	-	-	-	10	204	214	(145)	69
Transactions with the owners Shares issued	28	5,938	-	-	-	-	5,966	-	5,966
Options issued	-	-	-	13	-	-	13	-	13
Total contributions by and distributions to owners	28	5,938	-	13	-	-	5,979	-	5,979
At 31 December 2015	155	14,011	(496)	13	49	(3,826)	9,906	327	10,233
Changes in equity for 6 months ended 30 June 2016
Total loss for the period	-	-	-	-	-	(411)	(411)	(307)	(718)
Currency translation differences	-	-	-	-	(15)	-	(15)	-	(15)
Total comprehensive loss for the period	-	-	-	-	(15)	(411)	(426)	(307)	(733)
Transactions with the owners Options issued	-	-	-	32	-	-	32	-	32
At 30 June 2016	155	14,011	(496)	45	34	(4,237)	9,512	20	9,532

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 4 Lombard Street, London, EC3V 9HD.

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 2015 and which will form the basis of the 2016 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 2015 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 2016 and 30 June 2015 is unaudited and the twelve months to 31 December 2015 is audited.

2. Earnings per share

(a) Basic                                              

Basic earnings 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
	2016		2015		2015
Profit/(loss) from continuing operations attributable to equity holders of the Company (€'000)	(66)		(120)		318
Loss from discontinued operations attributable to owners of the parent	(380)		(81)		(303)
Total	(446)		(201)		15
Weighted average number of Ordinary Shares in issue	60,246,433		33,733,046		41,261,849

(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 [phone] to request a copy.

 

END

 

 

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