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Ergomed's year of exceptional growth and clinical success overshadowed by foreign exchange adjustments

Last-minute adjustments to 2017's earnings and R&D expenses have somewhat taken the shine off what was an excellent year for Ergomed

Foreign exchange quotes
Ergomed suffered FX losses arising from the translation of foreign currency-denominated balance sheet assets & liabilities

Foreign currency movements have put a dent in the earnings of pharma services provider Ergomed Plc (LON:ERGO), spoiling “a year of exceptional growth”.

Adjusted underlying earnings (EBITDA) before research & development (R&D) for 2017 are expected to be around £600,000 below the current market consensus of £6mln, primarily due to foreign exchange losses arising from the translation of foreign currency-denominated balance sheet assets and liabilities.

READ: Ergomed raises £3.9mln as it looks to develop its PrimeVigilance business

In addition, R&D expense is expected to be £300,000 higher than the current market consensus, primarily due to faster than anticipated completion of the PeproStat Phase II trial.

Combined, these factors result in expected post-R&D adjusted Ebitda being roughly £900,000 lower than current market consensus.

The board said it had only just become aware of these adjustments as the company has finalised its 2017 accounts in preparation for the year-end audit, which itself was delayed as the company implemented a new finance system earlier this year.

The company still expects 2017 revenue to be up 21% year-on-year at around £39mln, while expectations for 2018 revenue and Ebitda remain unchanged.

The group ended 2017 with an order backlog of £88mln of contracted future work, up from £70mln at the end of 2017.

"2017 has been a year of exceptional growth and clinical success and it is unfortunate that these late adjustments have just come to light. We believe that our re-focused strategy to take leadership positions in pharmacovigilance and orphan drug development services will take us to the next level. Recent investment in systems will support that growth, most of which remains in front of us," said Stephen Stamp, the chief executive officer of Ergomed.

Shares in Ergomed were down 15p at 194p on the news.

Quick facts: Ergomed PLC

Price: 800 GBX

Market: AIM
Market Cap: £387.3 m

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