19th Sep 2018 12:26
LONDON (Alliance News) - Pharmaceutical services company Ergomed PLC said on Wednesday it swung to a loss for the first half of 2018 due to higher expenses and in spite of revenue growth.
For the six months to the end of June 30, Ergomed recorded a pretax loss of GBP2.8 million, compared with GBP478,000 pretax profit the year before. Administrative expenses rose to GBP10.3 million from GBP7.0 million.
The expenses rise was mainly attributed to overheads in PSR, first acquired in October 2017, and the expansion of Ergomed's business, particularly Pharmacovigilance in the US.
However, revenue grew by 10% to GBP25.3 million from GBP22.7 million, primarily through the maiden contribution from the PSR acquisition to net service fee revenue, which rose by 12%.
Ergomed saw a total backlog of signed contracts as at June 30 of GBP91.4 million, up 38% from GBP66.2 million the year before.
Although growth in the first half was hampered by delays in contracts, Ergomed expects to produce an improvement of GBP1.2 million in operating profit for the rest of 2018, with new contracts signed with an initial value of GBP16 million.
"The reasons for the disappointing first half were well documented in our trading statement at the end of June. Since then, the management team has addressed the company's cost base by terminating or re-negotiating vendor contracts and reducing headcount, with an emphasis on non-billable headcount. These measures are expected to have a positive net impact for the remainder of 2018 and an annualized benefit of around GBP4.0 million next year," said Chief Executive Officer Stephen Stamp.
Shares in Ergomed were down 0.4% at 160.30 pence on Wednesday.
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