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Ergomed confident of continued momentum after exceptional first half

"Ergomed has delivered exceptional progress both operationally and financially during the first half of the year,” said Miroslav Reljanović, the group's executive chairman

Ergomed PLC -

Ergomed PLC (LON:ERGO) saw its adjusted underlying earnings (EBITDA) surge by 40% year-on-year in the first half of 2020 and the company said it expects to see the momentum continue in the second half of the year, driven by demand for its pharmacovigilance (PV) and contract research organisation (CRO) services.

The group reported adjusted EBITDA of £9.1mln, up from £6.5mln in the same period of 2019, and profit before tax grew to £6.0mln from £4.1mln the previous year.

Total first-half revenue rose by 14.8% to £40.4mln from £35.2mln in the corresponding period of 2019, with service fee revenue up 25.9% - or 18.0% on a like-for-like basis, excluding Prime Vigilance USA, which was acquired in January 2020 - to £36.9mln.

The provider of specialist services to the pharmaceutical industry said its CRO arm had been adversely affected by restrictions imposed to combat the spread of the coronavirus (COVID-19), resulting in revenues easing to £14.3mln from £19.0mln the previous year.

The group said its order book continues to grow and it stood at £151.4mln at the end of June, 2020, up from £118.3mln a year earlier. Net cash at the halfway point of 2020 had risen to £14.1mln from £8.1mln as at the end of June 2019.

in the results statement, Miroslav Reljanović, the company's executive chairman said: "Ergomed has delivered exceptional progress both operationally and financially during the first half of the year, continuing to demonstrate our ability to drive sustained growth through a clear focus on our service model strategy,” 

“We responded robustly to the challenges of the COVID-19 pandemic with strong revenue and profit growth, a growing order book and sales momentum across the business. We will continue to invest for organic growth and efficiency, with a disciplined approach to strategic acquisition opportunities, and are firmly positioned to realise our potential as a leading global provider of specialist services to the pharmaceutical industry," he added.

The company noted that it is to request shareholder and court approval for a capital reduction, whereby the balance on the share premium account and other reserves will be used to eliminate the deficit on the retained earnings reserve.No decision has yet been made by the board on how the additional distributable reserves will be used but in theory, the move would increase the company’s ability to pay dividends or buy back shares.

The group also revealed that Lewis Cameron, the group’s chief operating officer has resigned with immediate effect for personal reasons related to the COVID-10 pandemic.

Quick facts: Ergomed PLC

Price: 930 GBX

AIM:ERGO
Market: AIM
Market Cap: £453.08 m
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