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Ergomed sees strong rise in backlog of contracted revenue

2017 saw a continued strong performance for Ergomed in the services business and particularly in the Drug Safety and Medical Information business, said company chairman, Peter George

World of pharmaceuticals
2018 will see a greater focus on the services business

Ergomed Plc (LON:ERGO), which provides specialist services to the pharmaceutical industry, enjoyed another year of strong growth in its service business in 2017.

Year-on-year net service revenue growth of 36% to £39.6mln from £29.2mln in 2016 drove a 21% increase in group revenue to £47.6mln from £39.2mln.

READ Ergomed unveils €5.7mln acquisition of Dutch-based PSR Group, part-funded by £2.9mln placing

Much of the surge in net service revenue growth was down to a 68% increase in revenue from Drug Safety and Medical Information, complemented by a 9% growth in revenue from Clinical Research Services.

During the year, the group acquired PSR group, a niche contract research organisation (CRO) specialising in orphan drug development; excluding revenue from acquisitions, net service revenue grew 18% year-on-year.

The backlog of contracted revenue at the beginning of 2018 had risen to £88mln from £70mln a year earlier after the value of new contracts won in 2017 rose 29% to £54mln from £42mln in 2016.

The group took a paper-based hit of £2.88mln on the revaluation of the deferred consideration for acquisitions, while research and development costs rose to £2.69mln from £1.25mln the year before, which mean the loss before tax widened to £4.44mln from £223,000.

Adjusted underlying earnings (Ebitda) were unchanged from a restated 2016 Ebitda of £2.8mln; the unadjusted figure was a loss of £2.3mln versus a restated positive outcome in 2016 of £1.1mln.

The debt-free company ended 2017 with cash and cash equivalents of £3.2mln, down from £4.4mln in 2016.

"It has been another very strong year for our pharmacovigilance business which continues to outperform a fast-growing market. Our offering is now integrated under the PrimeVigilance brand and our aim is to become a leading global provider of pharmacovigilance services by 2020,” said Stephen Stamp, the chief executive officer of Ergomed.

“Our acquisition of PSR added to our strength as a CRO in orphan diseases and we see the opportunity for Ergomed to take a leadership position in a growing sector where our unique offering positions us well for growth,” Stamp added.

"We have an excellent platform on which to build our PrimeVigilance and specialist CRO services, both organically and through strategic acquisitions, to add geographic coverage and complementary skills and services. We have started the year in a position of strength, with a strong order book backlog and, going forwards, our focus is to maximise the potential of our profitable services businesses and execute on our refined strategy towards global leadership in these attractive markets," Stamp said.

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Price: 430 GBX

AIM:ERGO
Market: AIM
Market Cap: £205.36 m
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