Interim Results

RNS Number : 9313S

Venn Life Sciences Holdings PLC

30 September 2014

 



30 September 2014

Venn Life Sciences Holdings Plc

("Venn" or the "Company")

Half Yearly Report

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 2014.

Financial Highlights

·     Revenue of €1.512m (H1 2013: €1.142m)

·      EBITDA loss of €0.911m (H1 2013: €0.691m)

·     Loss before tax of €0.987m (H1 2013: €0.716m)

·     Cash and cash equivalents of €0.317m (30 June 2013: €1.307m)

·     Balance sheet strengthened by Placing of £1m

·     As at 29 September 2014, the Company's cash and cash equivalents stand at approximately €0.96m

Operational Highlights

·     Step change in contract scale and value as shown by proposals pipeline and €3m contract win (May 2014)

·     Acquisition of assets of Evocutis PLC and investment to support development of opportunities in this area

·     Integration of acquired offices in Germany and Northern Ireland

Post period end

·     Further international contract secured for €2.4m commencing September 2014

·     Acquisition of Cardinal Systems France adds to service capabilities for further international contract wins

·     Successful re-activation of Labskin manufacturing in anticipation of initial sales in Q4 2014 

·     Securing strategic direct investment of €800,000 into InnoVenn

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

"In the final quarter of this year we can expect to see the profit and cash flow benefit of our recent international contract wins. This is a hugely positive step for our business and the achievement of the first stage of our longer term plans.

"Our next objective is to secure further business assets to deliver a level of critical mass that will establish the business as a significant medium sized European CRO, which will in turn put the business in a strong position to grow further. I am also pleased with the progress we have made with InnoVenn. The additional direct investment will ensure that this can grow independently of the CRO business.

"It has been very hard work to date and we have more ahead of us in order to achieve our key growth milestones. In the short term these are to deliver on our contract successes, to secure more work and to grow the business to the next level. I am confident we can get there." 

Venn Life Sciences Holdings Plc
David Evans, Non-Executive Chairman	Tel: [phone]
Tony Richardson, Chief Executive Officer	Tel: [phone]
Zeus Capital (Nominated Adviser and Broker)
Ross Andrews/Andrew Jones (Corporate Finance)	Tel: [phone]
Dominic Wilson (Institutional Sales)	Tel: [phone]
Walbrook PR Ltd	Tel: [phone] or [e-mail]
Paul McManus	Mob: [phone]
Lianne Cawthorne	Mob: [phone]

Chairman's Statement

Dear Fellow Shareholder,

Following the Company's admission to AIM in December 2012 we committed to building, through a combination of acquisition and organic growth, a CRO capable of winning and servicing high value multi-centred, international contracts. Positioning the business to compete in the international arena has required considerable investment, principally in building a capable resource base in key locations. I am pleased with the capabilities developed since Admission and satisfied that this is now driving key high value contract wins.    

Financial Results

Fee income for the first six months of 2014 was €1.512m, up 32% on the first six months of 2013 (H1 2013: €1,142). EBITDA deficit for the period was €0.911m compared to €0.704m for the first half of 2013. During the six months to 30 June 2014 we invested €200,000 in InnoVenn Skin Science and incurred non-recurring CRO costs of €170,000 all of which have been expensed to the profit and loss account.

Securing €5.4m in two new contracts since May 2014 has been significant for the business, both financially and operationally. As a result of these contracts we have moved from a position of excess resource capacity to full utilisation.  These contracts are milestone based with up-front payments, that coupled with existing cash resources enables us to manage working capital more smoothly and efficiently.

Operational Review

The decision to acquire capabilities in Germany and Northern Ireland was an important factor in securing higher value international business in H1. The acquisition of additional service capabilities (Biometry and IRS), and associated clients, in July of this year, will be instrumental in securing new contract wins.

The integration of newly acquired capabilities in Germany and Northern Ireland has been successful and in recent months we have managed to grow both locations with new hires and new contracts. We have successfully adopted a functional group wide approach to structure and integration, as opposed to regional, and we believe this gives us a solid basis for further expansion.

Business development remains a key area for focus and investment. The industry sales cycle (from contact to contract) remains on average six to nine months. Having secured some significant recent wins it is incumbent on us to re-double our efforts to ensure we get momentum and sustained growth. The CRO industry continues to deliver impressive double digit growth and signs are this will continue for the foreseeable future.

In February 2014, we acquired certain assets of Evocutis plc. Since acquisition we have made considerable progress in establishing the necessary resources and infrastructure to successfully commercialise the technology portfolio. We have established new laboratory facilities at DEFRA in York, re-established product manufacturing in advance of initial sales in Q4, and engaged with our potential client base. We have decided to facilitate a direct strategic investment into InnoVenn to give it life, independent of our CRO business, and to ensure the programme is fully funded through to commercialisation. 

New Developments and Outlook

Despite significant financial progress since May 2014 the business remains in many respects, subscale. To deliver on our original vision of a pan European mid-sized CRO further consolidation will be required and to this end the Company is continuing to actively seek and consider merger candidates which would give the combined business full European coverage and capability.

We have decided to facilitate a strategic external investment in the sum of €800k into InnoVenn. This external investment results in a significant increase in the value of our investment in InnoVenn since March 2014, and leaves InnoVenn well-funded to deliver on the full potential of the technology portfolio.

In the final quarter of this year we can expect to see the profit and cash flow benefit of our recent international contract wins. This is a hugely positive step for our business and the achievement of the first stage of our longer term plans.

It has been very hard work to date and we have more ahead of us in order to achieve our key growth milestones. In the short term these are to deliver on our contract successes, to secure more work and to grow the business to the next level. I am confident we can get there.

David Evans

Chairman

30 September 2014

Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2014

		Unaudited		Unaudited		Audited
		6 months ended		6 months ended		Year ended
		30 June		30 June		31 December
		2014		2013		2013
		€'000		€'000		€'000
Continuing operations
Revenue		1,512		1,142		2,035
Administrative expenses		(2,469)		(1,846)		(3,829)
Operating loss		(957)		(704)		(1,794)
Depreciation and amortisation		(26)		(13)		(32)
Exceptional items		(20)		-		(117)
EBITDA before exceptional items		(911)		(691)		(1,645)
Finance income		1		7		12
Finance costs		(31)		(19)		(41)
Loss before income tax		(987)		(716)		(1,823)
Income tax credit/(charge)		1		(16)		23
Loss for the period		(986)		(732)		(1,800)
Currency translation differences		16		-		(8)
Total comprehensive loss for the period		(970)		(732)		(1,808)
Loss per ordinary share		€		€		€
Basic and diluted		(0.04)		(0.04)		(0.09)

Consolidated Statement of Financial Position

As at 30 June 2014

		Unaudited		Unaudited		Audited
		As at		As at		As at
		30 June		30 June		31 December
		2014		2013		2013
		€'000		€'000		€'000
Assets
Non-current assets
Property, plant and equipment		71		51		53
Intangible assets		1,895		836		1,039
Investments		31		60		31
Total non-current assets		1,997		947		1,123
Current assets
Trade and other receivables		1,079		686		656
Income tax recoverable		29		-		52
Cash and cash equivalents		317		1,307		541
Total current assets		1,425		1,993		1,249
Total assets		3,422		2,940		2,372
Equity attributable to owners
Share capital		112		102		102
Share premium account		5,443		3,431		3,431
Group re-organisation reserve		(541)		(541)		(541)
Reverse acquisition reserve		45		45		45
Foreign currency reserves		8		-		(8)
Retained earnings		(3,294)		(1,240)		(2,308)
Total equity		1,773		1,797		721
Liabilities
Non-current liabilities
Deferred consideration		55		-		54
Total non-current liabilities		55		-		54
Current liabilities
Trade and other payables		1,293		820		1,178
Deferred taxation		16		6		17
Deferred consideration		87		-		77
Borrowings		198		317		325
Total current liabilities		1,594		1,143		1,597
Total liabilities		1,649		1,143		1,651
Total equity and liabilities		3,422		2,940		2,372

Consolidated Statement of Cash Flows

For the year ended 30 June 2014

		Unaudited	Unaudited	Audited
		6 months ended	6 months ended	Year ended
		30 June	30 June	31 December
		2014	2013	2013
		€'000	€'000	€'000
Cash Flow from operating activities
Loss before income tax		(987)	(716)	(1,823)
Adjustments:
- Depreciation		26	13	32
- Foreign currency movement		2	112	70
- Net finance costs		30	12	29
Changes in working capital
- Trade and other receivables		(423)	(93)	97
- Trade and other payables		115	(392)	(209)
Cash used in by operations		(1,237)	(1,064)	(1,804)
Interest paid		(18)	(19)	(39)
Income tax received/(paid)		23	(2)	(16)
Net cash used in by operating activities		(1,232)	(1,085)	(1,859)
Cash flow from investing activities
Acquisition of subsidiaries, net of cash acquired		-	-	(54)
Purchase of property, plant and equipment (PPE)		(40)	(17)	(31)
Purchase of investments		-	(29)
Interest received		1	7	12
Net cash used in investing activities		(39)	(39)	(73)
Cash flow from financing activities
Proceeds from issuance of ordinary shares		1,169	-	-
Repayments on borrowings		-	(362)	(362)
Net cash generated/(used in) by financing activities		1,169	(362)	(362)
Net decrease in cash and cash equivalents		(102)	(1,486)	(2,294)
Cash and cash equivalents at beginning of year		216	2,588	2,588
Exchange loss on cash and cash equivalents		5	(112)	(78)
Cash and cash equivalents at end of year		119	990	216

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
		2014	2013	2013
		€'000	€'000	€'000
Cash and cash equivalents		317	1307	541
Bank overdrafts		(198)	(317)	(325)
Cash and cash equivalents		119	990	216

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 2013	102	3,431	(541)	45	-	(508)	2,529
Changes in equity for 6 months ended 30 June 2013
Total comprehensive loss for the period	-	-	-	-	-	(732)	(732)
At 30 June 2013	102	3,431	(541)	45	-	(1,240)	1,797
Changes in equity for 6 months ended 31 December 2013
Total loss for the period	-	-	-	-	-	(1,068)	(1,068)
Currency translation differences	-	-	-	-	(8)	-	(8)
Total comprehensive loss for the period	-	-	-	-	(8)	(1,068)	(1,076)
At 31 December 2013	102	3,431	(541)	45	(8)	(2,308)	721
Changes in equity for 6 months ended 30 June 2014
Total loss for the period	-	-	-	-	-	(986)	(986)
Currency translation differences	-	-	-	-	16	-	16
Total comprehensive loss for the period	-	-	-	-	16	(986)	(970)
Proceeds from shares issued (net of expenses)	10	2,012	-	-	-	-	2,022
At 30 June 2014	112	5,443	(541)	45	8	(3,294)	1,773

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 2013 and which will form the basis of the 2014 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 2013 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 2014 and 30 June 2013 is unaudited and the twelve months to 31 December 2013 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
	2014		2013		2013
Loss attributable to equity holders of the Company (€'000)	1,001		732		1,800
Weighted average number of Ordinary Shares in issue	25,126,212		20,099,994		20,099,994
Basic loss per share	€0.04		€0.04		€0.09

(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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