HVIVO PLC — Earnings Release 2016

Mar 22, 2017

National Storage Mechanism | Additional information

You don't have Javascript enabled. For full functionality this page requires javascript to be enabled.

RNS Number : 1499A

Venn Life Sciences Holdings PLC

22 March 2017

22 March 2017

Venn Life Sciences Holdings Plc

("Venn" or the "Company")

Final Results for the year ended 31 December 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 audited final results for the year ended 31 December 2016.

Financial Highlights

·     57% growth in Total Income to €18.2m (2015: €11.6m)

·      EBITDA profit (before exceptionals and discontinued operations) of €0.39m (2015 as restated: €0.83m)

·     Profit for the year after tax of €0.55m (2015: loss of €0.20m)

·     Cash and cash equivalents of €3.4m at 31 December 2016 (31 December 2015: €3.8m)

·     Profit on divestment of Innovenn of €1.29m

Operational Highlights

·     Kinesis integration progressing well with cross-selling opportunities being delivered

·     Key project milestones achieved leading to client endorsements and increased repeat business 

·     Continued progress on systems infrastructure implementation delivering improvements in operating margins

·     Simplification of business with spin out of Innovenn

·     Board renewal -

o  Appointment of Allan Wood as Non-executive Chairman

o  Appointment of Mary Sheahan as Non-executive Director

o  Retirement of Kees Groen as Non-executive Director 

Post period-end

·     Strong momentum experienced in 2016 has continued into 2017 to date

·     Contract wins of €5.7m in January and February

Commenting on the Group's outlook, Tony Richardson, CEO of Venn, said:

"2016 has been another strong year for Venn with significantly increased revenue and improved profits after tax. We have started 2017 with a simplified business, purely focused on service delivery with a strong backlog and pipeline of new opportunities. The Venn Kinesis combination has been well received by clients and significantly differentiates us in our market place. With initial integration objectives achieved we now look forward to capitalising on our clear positioning. I would like to express my thanks to Kees Groen for his support and contribution during what was a critical transition year. The strong momentum enjoyed by the business in 2016 has continued into 2017 to date. In the first two months of 2017, we have secured new contracts valued at €5.7m and our pipeline of opportunities is healthy. We will continue to expand our geographical coverage and further develop emerging areas of specialism during 2017. Our industry sector continues to deliver good growth and clear opportunities exist for Venn to grow both organically and through acquisition."

Enquiries:

Venn Life Sciences Holdings Plc
Allan Wood, Non-Executive Chairman
Tony Richardson, Chief Executive Officer	Tel: +353 1 5499341
Davy (Nominated Adviser and Broker)
Fergal Meegan / Matthew de Vere White (Corporate Finance)		Tel: +353 1 679 6363
Orla Bolger (Corporate Broking)
Hybridan LLP (Co-Broker)	Tel: +44 (0)20 3764 2341
Claire Louise Noyce
Walbrook PR Ltd	Tel: +44(0)20 7933 8787

Chairman's Statement

For the year ended 31 December 2016

Dear Fellow Shareholder,

I am pleased to report that 2016 has been another year of significant progress for Venn, delivering strong revenue and order book growth. Our key priorities for 2016 included the integration of Kinesis with a particular focus on cross-selling initiatives across early and late phase and the ongoing implementation of key systems and process improvements to ensure our business is ready for future growth.

I am particularly pleased with how well the combined customer base has responded to the Kinesis acquisition and this has re-enforced our view that the move into early phase consulting would prove to be a sensible strategic step for Venn. 

The Venn team continue to deliver high quality work on challenging projects in cutting edge therapies and our back catalogue of valuable case studies continues to develop. This track record of successful execution will be particularly relevant as the business starts to develop and grow areas of specialism, ultimately making Venn a higher value business.

We have also recently bolstered the management team with key hires in the areas of Information Technology, Quality Assurance and Operations Support and we will continue to build our talent pool further as we move into the next phase of growth.

We continue to look for sensible opportunities for territorial growth in Europe consistent with our objective to develop Venn as a full service, full coverage organisation.

Finally, our decision to spin out Innovenn in 2016 has enabled management to singularly focus on Venn as a full service organisation and I believe in time that this clearer business positioning will benefit all of our stakeholders.

Allan Wood

Chairman

Chief Executive's Statement

For the year ended 31 December 2016

Dear Fellow Shareholder,

Results and Commentary

Total income for the full year was €18.2m (2015: €11.6m) representing a 57% increase year on year. The business delivered strong growth in revenues and order book across both its early and late phase businesses. EBITDA before exceptional charges was €0.39m (2015 of €0.83m as restated). Group profit after tax was €0.55m (2015 Loss €0.2m)  including a profit on disposal of Innovenn of €1.29m. The consolidated balance sheet as at 31 December 2016 had total net assets of €10.3m, €3.4m of which was represented by cash and cash equivalents (2015: €3.8m). Reported EBITDA for 2016 was adversely impacted by a bad debt write off in the amount of €236,000. This bad debt relates to a legacy amount irrecoverable from an earlier acquisition.  Also included are €100,000 of costs related to an acquisition opportunity that was not pursued to completion. There is an additional €25,000 relating to corporate reorganisaiton costs associated with simplifying the Group's structure and a further €134,000 relating to foreign exchange losses on reorganisation.

2016 was Kinesis's first full year as part of the Group. During the year, we initiated  a number of changes involving leadership renewal and business development.  We also delivered support function synergies, achieved initial cross-sales between the Venn and Kinesis client bases and grew the resource bases of the combined businesses. I continue to be impressed with the very significant knowledge base, flexibility and commitment of the Kinesis team and this coupled with a strong pipeline and some cost savings effective Q1 2017 will see a growing and improved profit contribution delivered by Kinesis in 2017 and beyond. 

During 2016 we won an increased number of mandates involving large scale, long term projects in the late phase part of our business. These wins have been a core priority for Venn as we grow, but the profile of these projects differs from our pipeline to date in terms of timing and workflow management. While it is a significant positive that we are winning larger projects, it is also the case that short term profitability can be affected due to the timing of project activity. We have worked diligently to ensure that we can couple these larger projects with multiple small projects to ensure a smoother workflow, more optimal resource utilisation and therefore greater profitability going into 2017.

Plans and Outlook

The strong momentum enjoyed by the business in 2016 has continued into 2017 to date.  In the first two months of 2017, we have secured new contracts valued at €5.7m and our pipeline of opportunities is healthy. We will continue to expand our geographical coverage and further develop emerging areas of specialism during 2017. Our industry sector continues to deliver good growth and clear opportunities exist for Venn to grow both organically and through acquisition.

Anthony Richardson

Chief Executive Officer

22 March 2017

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2016

		2016		2015 (restated)
	Notes	€'000		€'000
Continuing operations
Revenue		17,909		11,468
Direct Project and Administrative Costs		(18,805)		(11,404)
Other operating income		335		175
Operating profit/(loss)		(561)		239
Depreciation		(133)		(75)
Amortisation		(689)		(311)
Exceptional items		(125)		(209)
EBITDA before exceptional items		386		834
Finance income		12		2
Finance costs		-		(41)
Share of loss of investments accounted for using the equity method		(364)		-
Profit/(loss) before income tax		(913)		200
Income tax credit		169		60
Profit/(loss) for the year from continuing operations		(744)		260
Discontinued operations
Profit for the year from discontinued operations		1,295		(462)
Profit for the year		551		(202)
Profit for the year is attributable to:
Owners of the parent		532		15
Non-controlling interests		19		(217)
		551		(202)
Other comprehensive income
Currency translation differences		(36)		49
Total comprehensive gain for the year		515		(153)
Total comprehensive gain/(loss) for the year is attributable to:
Owners of the parent		496		64
Non-controlling interests		19		(217)
		515		(153)
Total comprehensive gain/(loss) for the year attributable to owners of the parent arises from:
Continuing operations		(799)		309
Discontinued operations		1,295		(245)
		496		64

Earnings per share from continuing and discontinued operations attributable to owners of the parent during the year
Basic profit/(loss) per ordinary share
From continuing operations	14	(1.26c)		0.04c
From discontinued operations	14	2.14c		-
From profit/(loss) for the year	14	0.88c		0.04c
Diluted profit/(loss) per ordinary share
From continuing operations	14	(1.14)		0.04c
From discontinued operations	14	1.93c		-
From profit/(loss) for the year	14	0.79c		0.04c

The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent Company income statement account.

The profit for the parent Company for the year was €527,000 (2015 - loss of €336,000).

Consolidated and Company's Statement of Financial Position

As at 31 December 2016

		Group	Group	Company	Company
		2016	2015	2016	2015
		€'000	€'000	€'000	€'000
Assets
Non-current assets
Property, plant and equipment		191	381	-	-
Intangible assets		4,059	5,437	-	-
Investments in subsidiaries		-	-	7,468	7,468
Investments		2,038	31	31	31
Total non-current assets		6,288	5,849	7,499	7,499
Current assets
Trade and other receivables		4,979	5,560	8,918	8,220
Income tax recoverable		43	23	-	-
Cash and cash equivalents		3,404	3,798	206	554
Total current assets		8,426	9,381	9,124	8,774
Total assets		14,714	15,230	16,623	16,273
Equity attributable to owners
Share capital		155	155	155	155
Share premium account		14,026	14,011	14,026	14,011
Group re-organisation reserve		(541)	(541)	-	-
Merger relief reserve		-	-	3,531	3,531
Reverse acquisition reserve		45	45	-	-
Foreign currency reserves		13	49	-	-
Share option reserve		28	13	28	13
Retained earnings		(3,294)	(3,826)	(1,687)	(2,351)
		10,432	9,906	16,053	15,361
Non-controlling interest		-	327	-	-
Total equity		10,432	10,233	16,053	15,361
Liabilities
Non-current liabilities
Borrowings		25	52	-	-
Total non-current liabilities		25	52	-	-
Current liabilities
Trade and other payables		3,661	4,218	570	912
Deferred taxation		561	692	-	-
Deferred consideration		-	-	-	-
Borrowings		35	35	-	-
Total current liabilities		4,257	4,945	570	912
Total liabilities		4,282	4,997	570	912
Total equity and liabilities		14,714	15,230	16,623	16,273

Consolidated and Company's Statement of Cash Flows

For the year ended 31 December 2016

		Group	Group	Company	Company
		2016	2015	2016	2015
		€'000	€'000	€'000	€'000
Cash Flow from operating activities
Continuing operations
Cash used in operations		(255)	(2,275)	(514)	(4,737)
Interest paid		-	-	-	-
Income tax received/(paid)		(89)	125	-	(31)
Net cash used in operating activities		(344)	(2,150)	(514)	(4,768)
Cash flow from investing activities
Acquisition of subsidiaries, net of cash acquired		-	(1,893)	-	-
Acquisition of investments		-	-	-	-
Exceptional costs		-	(209)	-	-
Purchase of property, plant and equipment		-	(713)	-	(3,036)
Payments for shares acquired		-	-	-	-
Interest received		-	-	-	-
Net cash used in investing activities		-	(2,815)	-	(3,036)
Cash flow from financing activities
Proceeds from issuance of ordinary shares		(29)	8,571	29	8,571
Payment of deferred consideration		-	(310)	-	(213)
Financing from non-controlling interests		-	-	-	-
Repayments on borrowings		(26)	(94)	-	-
Net cash generated by financing activities		(55)	8,167	29	8,358
Net increase/ (decrease) in cash and cash equivalents		(399)	3,202	(485)	554
Cash and cash equivalents at beginning of year		3,798	596	554	-
Exchange losses on cash and cash equivalents		5	-	1	-
Cash and cash equivalents at end of year		3,404	3,798	70	554

Consolidated and Company's Statement of Changes in Shareholders' Equity

Group
	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 the year ended 31 December 2015
Profit/ (Loss) for the year	-	-	-	-	-	15	15	(217)	(202)
Currency translation differences	-	-	-	-	49	-	49	-	49
Total comprehensive profit /(loss) for the year	-	-	-	-	49	15	64	(217)	(153)
Transactions with the owners
Shares issued	43	8,528	-	-	-	-	8,571	-	8,571
Options issued	-	-	-	13	-	-	13	-	13
Total contributions by and distributions to owners	43	8,528	-	-	-	-	8,584	-	8,584
At 31 December 2015	155	14,011	(496)	13	49	(3,826)	9,906	327	10,233
Changes in equity for the year ended 31 December 2016
Profit/ (Loss) for the year	-	-	-	-	-	532	532	(327)	205
Currency translation differences	-	-	-	-	(36)	-	(36)	-	(36)
Total comprehensive profit /(loss) for the year	-	-	-	-	(36)	532	496	(327)	169
Transactions with the owners
Shares issued	-	15	-	-	-	-	15	-	15
Options issued	-	-	-	15	-	-	15	-	15
Total contributions by and distributions to owners	-	15	-	15	-	-	30	-	30
At 31 December 2016	155	14,026	(496)	28	13	(3,294)	10,432	-	10,432

Company
	Share capital	Share premium	Share Option reserve	Merger relief reserve	Retained earnings	Total
	€'000	€'000	€'000	€'000	€'000	€'000
As at 1 January 2015	112	5,483	-	3,531	(2,015)	7,111
Changes in equity for the year ended 31 December  2015
Total comprehensive loss for the year	-	-	-	-	(336)	(336)
Issued in year	43	8,528	13	-	-	8,584
At 31 December 2015	155	14,011	13	3,531	(2,351)	15,359
Changes in equity for the year ended 31 December 2016
Total comprehensive gain for the year	-	-	-	--	664	664
Issued in year	-	15	15	-	-	30
At 31 December 2016	155	14,026	28	3,531	(1,687)	16,053

1. General information

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. On 18 January 2016, the company also listed on the ESM market of the Irish Stock Exchange. The address of the registered office is 1 Berkeley Street, London, W1J 8DJ.

The principal activity of the Group is that of a Clinical Research Organisation providing a suite of consulting and clinical trial services to pharmaceutical, biotechnology and medical device organisations. The Group has a presence in the UK, Ireland, France, Netherlands, Germany and Singapore.

The financial statements are presented in Euros, the currency of the primary economic environment in which the Group's trading companies operate. The Group comprises Venn Life Sciences Holdings Plc and its subsidiary companies.

The registered number of the Company is 07514939.

2. Segmental reporting

Management has determined the Group's operating segments based on the monthly management reports presented to the Chief Operating Decision Maker ('CODM'). The CODM is the Executive Directors and the monthly management reports are used by the Group to make strategic decisions and allocate resources.

The principal activity of the Group is that of a Clinical Research Organisation (CRO) providing a suite of consulting and clinical trial services to pharmaceutical, biotechnology and medical device organisations.  Prior to 2015, the CODM considered the Group's operating segments to be the individual countries of operation.  However, as the majority of the Group's contracts are now larger, multi-country contracts, pulling resources from many different locations, the CODM now considers this a single business unit.

Prior to 2016, the Group had an innovation division focussed on human skin technologies that was considered by the CODM as a separate segment. This division was sold to Integumen Limited during 2016 and is disclosed in the consolidated statement of comprehensive income as discontinued operations. As such, no comparatives are provided for 2016 in the segmental analysis.

Currently the key operating performance measures used by the CODM are Revenue and adjusted EBITDA (before exceptionals).

The segment information provided to the Board for the reportable segments for the year ended 31 December 2016 is as follows:

	2016	2016	2016	2015	2015	2015
	Venn	Innovenn	Total	Venn	Innovenn	Total
	€'000	€'000	€'000	€'000	€'000	€'000
Income statement
External revenue	18,244	-	18,244	11,643	6	11,649
Adjusted EBITDA	386	-	386	834	(446)	388
Exceptional items	(125)	-	(125)	(209)	-	(209)
EBITDA	261	-	261	625	(446)	179
Depreciation	(133)	-	(133)	(75)	(28)	(103)
Amortisation	(689)	-	(689)	(311)	(50)	(361)
Operating profit/(loss)	(561)	-	(561)	239	(524)	(285)
Net finance income/ (costs)	12	-	12	(39)	(3)	(42)
Retained profit/(loss) before tax	549	-	549	200	(527)	(327)
Segment assets
Intangibles, Goodwill,	4,059	-	4,059	4,743	693	5,436
PPE	191	-	191	223	158	381
Investments	2,038	-	2,038	31	-	31
Trade and other debtors	5,022	-	5,022	5,455	128	5,583
Inter segment debtors	-	-	-	999	-	999
Cash	3,404	-	3,404	3,768	30	3,798
Total assets	14,714	-	14,714	15,220	1,009	16,228
Segment liabilities
Operating liabilities	(4,222)	-	(4,222)	(4,737)	(174)	(4,911)
Inter segment liabilities	-	-	-	-	(999)	(999)
	(4,222)	-	(4,222)	(4,737)	(1,173)	(5,910)
Borrowings	(60)	-	(60)	(87)	-	(87)
Total liabilities	(4,282)	-	(4,282)	(4,824)	(1,173)	(5,997)

3. Exceptional items

Included within Administrative expenses are exceptional items as shown below:

		2016	2015
		€'000	€'000
Exceptional items includes:
- Transaction costs relating to business combinations and acquisitions		79	209
- office relocation		46	-
Total exceptional items		125	209

4. Finance income and costs

	2016	2015
	€'000	€'000
Interest expense:
- Bank borrowings	-	27
- Interest on other loans	-	17
Finance costs	-	44
Finance income
- Interest income on cash and short-term deposits	12	2
Finance income	12	2
Net finance income	(12)	42

5. Income tax expense

	2016	2015
Group	€'000	€'000
Current tax:
Current tax for the year	(38)	-
Tax refund (prior year)	-	(65)
Total current tax (credit)/charge	(38)	(65)
Deferred tax:
Origination and reversal of temporary differences	(131)	(60)
Total deferred tax	(131)	(60)
Income tax (credit)/charge	(169)	(125)

The tax on the Group's results before tax differs from the theoretical amount that would arise using the standard tax rate applicable to the profits of the consolidated entities as follows:

	2016	2015
	€'000	€'000
Loss before tax	(664)	(262)
Tax calculated at domestic tax rates applicable to UK standard rate of tax of 20% (2013 - 20%)	(183)	(52)
Tax effects of:
- Expenses not deductible for tax purposes	26	30
- Losses carried forward/(utilised)	118	(38)
Tax (credit)/charge	(38)	(60)

There are no tax effects on the items in the statement of comprehensive income.

6. 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 year.

	2016	2015
	€'000	€'000
Profit/(loss) from continuing operations attributable to equity holders of the Company	(763)	15
Profit from discontinued operations attributable to equity holders of the Company	1,295	-
Total	532	15
Weighted average number of Ordinary Shares in issue	60,429,946	41,261,849
Basic profit/ (loss) per share	0.88c	0.04c

(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.

Weighted average number of shares used as the denominator

	2016	2015
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share	60,429,946	41,261,849
Adjustments for calculation of diluted earnings per share:
Options	6,510,000	-
Warrants	166,000	-
Total	67,106,612	41,261,849

7. Intangible fixed assets

Group	Customer relationships €'000	Trade secrets €'000	Goodwill €'000	Intellectual Property Rights €'000	Workforce €'000	Total €'000
Cost
At 1 January 2015	605	709	1,320	224	104	2,962
Addition	-	-	-	525	-	525
Exchange differences	2	3	11	(9)	-	7
Adjustment (note 26)	-	-	(48)	-	-	(48)
On acquisition of subsidiary undertaking	1,032	-	117	-	1,345	2,494
At 31 December 2015	1,639	712	1,400	740	1,449	5,940
Amortisation
At 1 January 2015	95	33	-	5	9	142
Charge for the year	164	71	-	49	77	361
At 31 December 2015	259	104	-	54	86	503
Net book value
At 31 December 2015	1,380	608	1,400	685	1,363	5,437
Cost
At 1 January 2016	1,639	712	1,400	740	1,449	5,940
Addition	-	29	-	-	-	29
Exchange differences	(4)	(6)	(22)	(57)	-	(89)
On disposal of subsidiary	-	-	-	(683)	-	(683)
At 31 December 2016	1,635	735	1,378	-	1,449	5,197
Amortisation
At 1 January 2016	259	104	-	54	86	503
Charge for the year	328	71	-	-	290	689
On disposal of subsidiary	-	-	-	(54)	-	(54)
At 31 December 2016	587	175	-	-	376	1,138
Net book value
At 31 December 2016	1,048	560	1,378	-	1,073	4,059

No amortisation charge has been charged on the goodwill in the income statement (2015 - €nil).

On 24th October  2016 the group disposed of Innovenn UK Limited.

Goodwill is allocated to the Group's cash-generating units (CGU's) identified according to operating segment. An operating segment-level summary of the goodwill allocation is presented below.

	2016	2015
	€'000	€'000
CRO	1,378	1,400
Innovenn	-	-
Total	1,378	1,400

Goodwill is tested for impairment at the balance sheet date. The recoverable amount of goodwill at 31 December 2016 was assessed on the basis of value in use. As this exceeded carrying value no impairment loss was recognised.

The key assumptions in the calculation to assess value in use are the future revenues and the ability to generate future cash flows. The most recent financial results and forecast approved by management for the next three years were used followed by an extrapolation of expected cash flows at a constant growth rate for a further two years. The projected results were discounted at a rate which is a prudent evaluation of the pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the cash-generating units.

The key assumptions used for value in use calculations in 2016 were as follows:

		%
Longer-term growth rate (after 2019)		5
Discount rate		20

The Group has been loss making for the last 5 years and in 2014 the Directors transformed the infrastructure and capabilities of the Group in order to work as a Group in providing services to clinical research and development markets as one unit rather than separate units. This meant that the impairment review is prepared on the group basis rather than a single unit basis. The Directors have made significant estimates on future revenues and EBITDA growth over the next three years based on the Group's budgeted investment in recruiting key employees and marketing the services.

The Directors have performed a sensitivity analysis to assess the impact of downside risk of the key assumptions underpinning the projected results of the Group. The projections and associated headroom used for the group is sensitive to the EBITDA growth assumptions that have been applied. A 50% reduction in EBITDA growth; in the first five years of the management projections would not result in any impairment at the group level.

The Company has no intangible assets.

8. Investments in associates

Company	2016	2015
Shares in associated undertakings	€'000	€'000
Beginning and End of the year	-	-

On 24 October 2016 the Company's wholly owned subsidiary Venn Life Sciences Limited acquired a 41.51% holding in Integumen Limited, as consideration for the disposal of its holding in Innovenn UK Limited.

Integumen Limited has share capital consisting solely of ordinary shares, which are held directly by the Group; the country of incorporation and registration is also the principal place of business.

Integumen Limited is a private company and there is no quoted market price available for its shares.

The group has no other associates.

The Company has provided a guarantee for £819,453 debt held by Innovenn UK Limited at 31 December 2016. On 24 October 2015 Integumen acquired 100% of the share capital of Innovenn UK Limited.

Name of Company                                           Note   Proportion Held     Class of Shareholding   Nature of Business

Integumen Limited                                                   1            41.51% (indirect) Ordinary                      Human Surface Science

Notes

1.  Incorporated and registered in England and Wales.

Summarised financial information for Integumen Limited

Set out below is the summarised financial information for Integumen Limited. The information disclosed reflects the amounts presented in the financial statements of Integumen and not the group's share of those amounts. They have been amended to reflect adjustments made by the entity when using the equity method, including fair value adjustments and modifications for differences in accounting policy.

Summarised Balance Sheet	2016	2015
31 December	£'000	£'000
Total current assets	348	-
Total current liabilities	(1,564)	-
Total non-current assets	8,499	-
Total non-current liabilities	(635)	-
Net assets	6,648	-

Reconciliation to carrying amounts:	2016	2015
	£'000	£'000
Opening net assets 1 January	-	-
(Loss) for the period	(716)	-
Net assets acquired	(7,364)	-
Closing net assets	6,648	-
Group's share in %	41.51%	-
Group's share in £	2,768	-
Carrying amount	1,805	-

Summarised statement of comprehensive income	2016	2015
31 December	£'000	£'000
Revenue	11	-
Pre-tax loss from continuing operations	(716)	-
Post-tax loss from continuing operations	(716)	-
Total comprehensive expense	(716)	-

The group has included its share of the associate's total comprehensive expense, being €364,281 (2015 - nil) in the Consolidated Income Statement using the equity method.

9. Cash used in operations

	Group	Group	Company	Company
	2016	2015	2016	2015
	€'000	€'000	€'000	€'000
Loss before income tax	(550)	(327)	(702)	(336)
Adjustments for:
- (Gain)/Loss on Disposal of Non-current asset	(85)	-	-	-
- Depreciation and amortisation	822	464	-	-
- Release of escrow provision	136	-	-	-
- Foreign currency translation of net assets	134	(204)	(38)	(164)
- Exceptional Item	-	209	-	209
- Net finance costs	(12)	42	-	-
Changes in working capital
- Trade and other receivables	(146)	(3,463)	(1,104)	(4,688)
- Trade and other payables	(554)	1,004	(74)	242
Net cash used in operations	(255)	(2,275)	(514)	(4,737)

10. Discontinued Operations

Disposal of Innovenn

On 24 October 2016 the Company's wholly owned Subsidiary Venn Life Sciences Limited disposed of its 70% holding of Innovenn UK Limited, and its wholly owned subsidiary Innovenn Limited, to Integumen Limited, a newly incorporated UK organisation focussing on human surface science (the integumentary system). The total consideration of €3,544,268 was settled by the allotment of 3,057,557 ordinary shares of £1.00 each in the capital of Integumen Limited, at par credited as fully paid, representing a 41.51% holding. Financial information relating to the discontinued operation for the period to the date of disposal is set out below.

Prior to the transaction, the Subsidiary converted its loan to Innovenn of €1,392,623 into ordinary shares of £0.001 each of Innovenn, increasing its shareholding to 70% of the issued share capital of Innovenn.

After 31 December 2016, the consideration was adjusted to a fair value as at 24 October 2016 of €2,371,318, based upon the Directors opinion of the market value of the group's investment in Integumen Limited.

The financial performance and cash flow information presented are for the period ended 24 October 2016 (2016 column) and the year ended 2015.

	2016	2015
	€'000	€'000
Revenue	48	6
Expenses	(1,105)	(533)
Loss before tax	(1,057)	(527)
Tax	55	7
Loss after tax of discontinued operation	(1,002)	(520)
Gain on sale of the subsidiary after tax	2,297	-
Profit /(loss) from discontinued operation	1,295	(520)
Net cash inflow from operating activities	622	(821)
Net cash inflow from investing activities	151	851
Net cash outflow from financing activities	(406)	-
Net increase in cash generated by the subsidiary	367	30
Details of the sale of the subsidiary	2016	2015
	€'000	€'000
Consideration received:
Shares in Integumen Limited	3,544	-
Fair value adjustment	(1,173)	-
Total consideration	2,371	-
Carrying amount of net assets sold	74	-
Gain on sale before tax	2,297	-
Income tax expense on gain	-	-
Gain on sale after income tax	2,297	-

11. Annual Report and Accounts

Copies of the audited Annual Report and Accounts for the year ended 31 Deceber 2016 will be posted to shareholders shortly and may also be obtained from the Company's head office at 19 Railway Road, Dalkey, Dublin, Ireland

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR UAAORBVAOUUR