Ergomed

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TRANSFORMING 
DRUG 
DEVELOPMENT

Ergomed plc
Annual Report and Accounts 2016

 
 
 
 
 
 
FOUNDED IN 1997, ERGOMED PLC IS 
A UK COMPANY, DEDICATED  
TO THE PROVISION OF SPECIALISED 
SERVICES TO THE PHARMACEUTICAL 
INDUSTRY AND THE DEVELOPMENT OF 
NEW DRUGS. ERGOMED CURRENTLY 
OPERATES IN 56 COUNTRIES.

Ergomed provides clinical development, trial management and pharmacovigilance 
services to over 100 clients ranging from top 10 pharmaceutical and generics 
companies to small and mid-sized drug development companies. Ergomed 
successfully manages clinical development from Phase I through to late phase 
post–marketing programmes.

Ergomed has wide therapeutic expertise with a particular focus in oncology, 
neurology and immunology and the development of orphan drugs. Ergomed’s 
approach to clinical trials is differentiated from that of other providers by its 
innovative Study Site Management model and the use of Study Physician Teams. 
This results in a closer relationship between Ergomed and the physicians involved 
in clinical trials.

As well as providing high quality clinical development services, Ergomed is 
building a portfolio of co-development partnerships with pharmaceutical and 
biotech companies which share the risks and rewards of drug development. 
Ergomed leverages its expertise and services in return for carried interest in the 
drugs under development. Recently, Ergomed acquired a pipeline of proprietary 
development products for the treatment of surgical bleeding. For further 
information, visit: www.ergomedplc.com.

Strategic report
1  A year in review
2  Ergomed at a glance
8  Chairman’s statement
10  Chief Executive Officer’s review
12  Our strategy for
12  accelerated
12  growth
14  Strategy in action
16  Financial review
18  Principal risks and uncertainties

Governance
20  Board of Directors
22  Corporate governance statement
24  Directors’ remuneration report 

(Unaudited)
27  Directors’ report
29  Independent auditor’s report

Financial information
30  Consolidated income statement
31  Consolidated statement of 
comprehensive income
32  Consolidated balance sheet
33  Consolidated statement of changes 

in equity

34  Consolidated cash flow statement
35  Notes to the consolidated financial 

statements

71  Company balance sheet
72  Company statement of changes in 

equity

73  Company cash flow statement
74  Notes to the Company financial 

statements

90  Glossary

A year in review

2016

Financial highlights

Revenue

+30%
£39.2m

(2015: £30.2m)

Gross profit

+43%
£12.0m

(2015: £8.4m)

 – Research and development £1.0 million (2015: £nil)
 – Cash and cash equivalents of £4.4 million with zero debt 

(2015: £4.0 million)

 – EBITDA (adjusted)1 £3.0 million (2015: £3.4 million). EBITDA 
£1.6 million (2015: £2.8 million), reducing principally due to 
inclusion of Haemostatix R&D following its acquisition in 
May 2016

 – New services business won with an initial value of £42 million 

(2015: £28 million)

 – Backlog of signed contracts at 1 January 2017 £70 million  

(1 January 2016: £59 million)

2016 Revenue

£39.2m

£13.4m

£25.8m

  Clinical research services: 
£25.8 million, growth of 18% on PY
  Drug safety and medical information: 
£13.4 million, growth of 63% on PY

Corporate milestones

Revenue (£m)

 – An institutional placing raising gross proceeds of £9.2 million 

(May 2016)

 – Acquisition of Haemostatix, a company focused on 

developing innovative products for surgical bleeding based in 
Nottingham, UK (May 2016)

 – Acquisition of O+P and GASD, respectively CRO and 

biostatistics companies, both based in Germany (June 2016)
 – Acquisition of PharmInvent, a leading pharmacovigilance and 

regulatory services business based in Czech Republic 
(November 2016)

 – An agreement with Asarina AB for the co-development of 
sepranolone for the treatment of PMDD (November 2016)

40

30

20

10

0

39.2

30.2

21.2

2014

2015

2016

Post period end highlights

Services EBITDA (adjusted) (£m)

 – Announcement of positive Phase II results of lorediplon for 

insomnia, under our co-development partnership with Ferrer 
(February 2017)

 – Enrolment of first patient in Phase IIb study of PeproStat™,  

our wholly-owned product and first to come from the 
Haemostatix pipeline (April 2017)

Note:
1.  Adjustments are made to EBITDA for share-based payment charge, deferred 

consideration for acquisition, write-back of deferred consideration for acquisition, 
acquisition costs and exceptional items.

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4.1

3.0*

2.4

2014

2015

2016

*  Post-R&D EBITDA 2016

 Research and development 

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2

Ergomed at a glance

OUR SERVICES

Clinical research services
Ergomed provides clinical 
development services to over  
60 clients ranging from top 10 
pharmaceutical companies to small 
and mid-sized drug development 
companies. Ergomed successfully 
manages clinical development from 
Phase I through to late phase post-
marketing programmes. O+P and 
GASD were acquired in June 2016.

£25.8m
+18%

Clinical research services revenue

Drug safety and medical 
information
Established in 2008 and acquired by 
Ergomed in July 2014, PrimeVigilance 
is a pharmacovigilance (‘PV’) and 
Medical Information services company 
with an established international 
footprint and a heritage of excellence 
and leadership in the field of 
pharmacovigilance. PharmInvent  
was acquired in November 2016.

£13.4m
+63%

Drug safety and medical information 
revenue

2016 Revenue split

£39.2m

34.2%

65.8%

  Clinical research services: 
£25.8 million, growth of 18% on PY
  Drug safety and medical information: 
£13.4 million, growth of 63% on PY

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£39.2m
+30%

revenue

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Ergomed has 20 years’ experience working across 
the world in many therapeutic areas, with a 
particular expertise in oncology, neurology and 
immunology and the development of orphan 
drugs. Solutions are tailored to meet the 
requirements of individual clients and specific 
projects with an uncompromising commitment to 
quality standards.

Ergomed believes its approach to clinical trials is 
differentiated from other providers by its 
innovative Study Site Management model and the 
use of Study Physician Teams resulting in a closer 
relationship between Ergomed and the physicians 
involved in clinical trials.

As well as providing high quality clinical 
development services, Ergomed is building a 
portfolio of co-development partnerships with 
pharma and biotech companies which share the 
risks and rewards of drug development. Ergomed 
leverages its expertise and services in return for 
carried interest in the drugs under development.

O+P and GASD, a full-service CRO and 
biostatistics specialist respectively, were acquired 
in June 2016. These companies expanded 
Ergomed’s reach in the German speaking markets 
and brought specialist expertise into the Group.

300+

studies

50,000+

patients studied

56 

countries where we 
conduct clinical trials

The pharmacovigilance services offered by 
PrimeVigilance cover all the regulatory and 
scientific elements of PV required to obtain and 
maintain a product licence within Europe: 
 – EU Qualified Person
 – Risk Management Planning (‘RMP'), 
 – Compliant PV System with consistent Adverse 

Event data capture

 – Validated ARISg safety database
 – Robust Quality Management
 – Expedited reporting, preparation of PSURs, 
literature screening, signal detection and 
evaluation, benefit-risk assessment

 – Compliance auditing, support during crisis and 

various ad hoc assignments

 – Integrated international Medical Information 

service using AGInquirer database

PrimeVigilance operates from bases in Guildford, 
UK, Zagreb, Croatia, Belgrade, Serbia and this 
year has opened a fourth location in Boston, USA. 
PrimeVigilance is currently providing services 
across more than 100 countries to a range of 
international pharma, generic and biotech clients.

PharmInvent, a leading pharmacovigilance and 
regulatory services business, was acquired in 
November 2016. Combining PharmInvent’s proven 
expertise with PrimeVigilance creates one of the 
largest international specialist service providers in 
the highly regulated drug safety sector. The 
enlarged business will have a broad international 
client list offering significant opportunities to 
cross sell, as well as an expanded range of 
services to attract new customers. 

300+

employees

100+

customers

100+ 

countries covered

See our strategy on pages 12 to 15

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4

Ergomed at a glance

OUR PRODUCTS
CO-DEVELOPMENT

FIVE 

partners

SIX 

products

Ergomed has created a risk-sharing 
model whereby we offer to contribute 
to the cost of clinical trials through 
significantly reduced fees in return for 
a carried interest in any future revenues 
of the product, including out-licensing 
milestones and sales.

Ergomed leverages its experience and 
expertise in drug development to 
evaluate new opportunities. The 
Company has an active portfolio of six 
co-development programmes with five 
co-development partners:

Our diversified product pipeline 

Compound Partner

Next 
milestone

Pre-clinical Phase I

Phase II

Phase III

Partnership

AEZS 108 

Aeterna
Zentaris

1H 2017

Endometrial cancer

Multikine

CEL-SCI 

2018

Head & neck cancer

Lorediplon 

Ferrer 

1H 2017

Insomnia

Sevuparin 

Sepranolone 

Modus 
Therapeutics
Asarina 
Pharma

Multikine

CEL-SCI 

1H 2018

Sickle-Cell Disease

TBC

TBC

Premenstrual Dysphoric Disorder

Perianal warts

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5

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Status of Ergomed’s current partnerships

Grupo Ferrer Internacional, SA: 
Ergomed has partnered with Ferrer on lorediplon, a 
novel, longer acting non-BZD hypnotic drug that 
modulates the GABAa receptor. We were very 
pleased to announce that the primary and many of 
the secondary endpoints for phase II study were met, 
indicating that lorediplon was both safe and effective 
in insomnia patients. Ferrer is currently exploring the 
full data set and will initiate partnering activities. 
Whilst the product already has an Asian commercial 
partner, Ferrer will look to bring on board a 
commercial partner for US marketing and to support 
the ongoing clinical development. If Ferrer receive a 
payment at completion of this licensing deal, 
Ergomed will receive a share, along with a share 
of all future revenues received by Ferrer for the 
commercialisation of the product. 

Aeterna Zentaris Inc. 
(NASDAQ: AEZS; TSX: AEZ): 
Ergomed is working with Aeterna Zentaris on the 
Phase III pivotal study comparing zoptaerlin 
doxorubicin (‘Zoptrex™’) as second line therapy for 
locally-advanced, recurrent or metastatic 
endometrial cancer. In January 2017 Aeterna Zentaris 
announced completion of the study, with the 
required number of patient outcomes. We are 
currently in the process of collecting the final data 
points and the results of the study are expected to be 
announced in April 2017. If successful, the next step 
for this product would be registration. Aeterna 
Zentaris has entered into five marketing partnerships 
with Zoptrex for various territories in Asia, Israel, 
Australia and New Zealand. Ergomed has received a 
percentage of the upfront payments and will receive 
its share of further receipts accordingly to our 
revenue share agreement. 

CEL-SCI Corporation
(NYSE: CVM): 
Ergomed is working with CEL-SCI on the largest 
ever Phase III study in head and neck cancer with 
their lead product Multikine®. Having reached the 
recruitment target but observed a lower overall 
death rate, CEL-SCI decided to submit a protocol 
amendment to include additional patients into the 
study. During the review of the amendment, the 
FDA put the study on a partial clinical hold 
requesting additional information. CEL-SCI is in 
continuing dialogue with the FDA to try to resolve 
the questions posed and supply the FDA with 
supplemental information. Following a Type A 
meeting, on 8 February 2017, CEL-SCI announced 
that they were continuing with efforts to have the 
clinical hold released. 

CEL-SCI Corporation
(NYSE: CVM): 
Ergomed is also working with CEL-SCI on a Phase I 
study of Multikine® in peri-anal warts. With the 
ongoing discussions with the FDA regarding the 
head and neck cancer trial, CEL-SCI has 
temporarily suspended patient recruitment in the 
peri-anal warts study. All other activities, including 
pre-screening activities to identify potential 
subjects, are ongoing.

Modus Therapeutics AB 
(formerly Dilaforette AB): 
Ergomed is working with Modus Therapeutics on 
the Phase II study of sevuparin in patients with 
Sickle-Cell Disease (‘SCD') experiencing acute 
Vaso-Occlusive Crisis (‘VOC'). The first interim 
analysis was completed in November 2016 
demonstrating a good safety profile and the study 
enrolment was extended to adolescents. With this 
permission, Modus Therapeutics decided to adjust 
the statistical assumptions and include 150 
patients (up from 77) to give the study the 
strongest chance to reach a significant readout. It 
is planned that this recruitment target will be 
reached by first quarter 2018 with study results 
released thereafter. Modus Therapeutics is part of 
the Karolinska Development AB (STO: KDEV, 
‘Karolinska Development’) portfolio.

Asarina AB: 
In November 2016, Ergomed announced that it is 
working with Asarina on the Phase IIb study of 
sepranolone in Premenstrual Dysphoric Disorder 
(‘PMDD'), an extremely severe form of pre-
menstrual syndrome where women are, on a 
regular basis, unable to work or live a normal life 
for several days each menstrual cycle. 
Sepranolone, is a proprietary, first-in-class, 
endogenous, small molecule, that acts as a 
GABA-A modulating steroid antagonist (‘GAMSA') 
and is the first product developed exclusively for 
PMDD. The effect of sepranolone has been 
demonstrated in animal models of the disorder as 
well as in a validated human pharmaco-dynamic 
model used to evaluate target engagement of 
drugs that influence GABA mechanisms in the 
brain. We are currently preparing the study 
protocol and expect the first patients to be 
recruited in the second half of 2017 with the study 
completing in 2018. The study is expected to enrol 
235 patients in 14 sites across five countries. 
Asarina is also part of the Karolinska Development 
portfolio.

See our strategy on pages 12 to 15

 
 
 
 
 
 
 
 
6

Ergomed at a glance

OUR PRODUCTS
HAEMOSTATIX

$2.5bn

haemostat market

Ergomed acquired Nottingham based 
Haemostatix in May 2016 to access its 
proprietary technology and pipeline  
of two lead products, PeproStat™ and 
ReadyFlow™, for the surgical bleeding 
market. The Haemostatix acquisition 
represents a logical extension of  
its well established commitment to  
co-development, with the potential to 
generate significant shareholder value. 

Patented fibrinogen-binding peptide technology

Linker

Fibrinogen-binding 
peptide (GPRP)

Recombinant
albumin

Winner of the 2015 Emerging 
Technology competition

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$500m

combined PeproStat™ and 
ReadyFlow™ peak sales 
potential 

20

patients tested 
PeproStat™ in a  
Phase I clinical trial

1Q 2018

PeproStat™ is expected to 
report Phase IIb proof-of-
concept trial

Surgical bleeding and its markets

The surgical bleeding market is estimated to be 
worth approximately $2.5 billion and is growing at 
six per cent. per annum (Source: MedMarket 
Diligence). It is comprised of a variety of drugs 
and devices (‘haemostats’), some of which work 
simply by closing the wound to stop blood flow, 
thereby giving time for the body’s own clotting 
system to work. Other products supplement the 
body’s naturally occurring proteins and enzymes 
to promote clot formation. To address this broad 
market, Haemostatix has developed a platform 
technology which can generate different products 
to address the various segments, thereby 
accessing a significant portion of the total 
‘haemostat’ market.

The current blood clotting products on the market 
have a number of drawbacks:
 – Require preparation or reconstitution: they 

are typically either frozen or in powder form and 
therefore require preparation prior to use, which, 
in an acute situation, is an obvious disadvantage. 
Moreover, prior preparation can lead to wastage 
as bleeding is often unpredictable.

 – Slow speed of action: some are relatively 
ineffective or can take a long time to work.

 – Derived from blood: they are primarily derived 

from human donor blood or from animal sources, 
which have the theoretical risk of infection and a 
complex supply chain.

The Directors believe that the products under 
development by Haemostatix overcome these 
disadvantages. In addition, Haemostatix’s 
products are planned to have a low cost of 
production, potentially allowing a pricing 
advantage over some existing products. The 
Directors estimate the combined market potential 
for its two lead products to be $0.5 billion. 

The Haemostatix pipeline

PeproStat™
The Directors believe that the lead product, 
PeproStat™, a liquid haemostat, overcomes the major 
drawbacks of existing products; namely that the 
active pharmaceutical ingredient (‘API’) is 
manufactured from blood-free components, is 
formulated as a ready-to-use solution (applied with 
commercially available sponges) and acts rapidly. 

PeproStat™ has been evaluated in a Phase I clinical 
trial in 20 patients and showed that during surgery, 
95% of bleeding was stopped within three minutes, 
and on average in 1.4 minutes. This compares with 
the thrombins that are on the market and claim to 
stop bleeding in between three to six minutes. 

A Phase IIb study will repeat the Phase I trial 
described above in a larger population and in four 
different surgical indications. The Phase IIb trial,  
which will begin in early 2017, will be conducted in 
about 120 patients and is expected to report 
results in 1Q 2018.

ReadyFlow™
Haemostatix’s second product candidate, 
ReadyFlow™, is a ready-to-use, transparent, 
haemostatic gel that can be applied to bleeding 
sites where the surface is not accessible or uneven. 
ReadyFlow™ gel is pre-mixed with the potent 
peptide-based active and packaged in a pre-filled 
syringe. Unlike competing products, ReadyFlow™  
is transparent and manufactured from blood-free 
and animal-free components. ReadyFlow™ is 
expected to enter Phase I clinical trials in 2018.

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8

Chairman's statement

EXECUTING 
ON STRATEGY

Our results and numerous corporate milestones 
achieved in 2016 demonstrate Ergomed has built 
on the momentum gained in 2015. The Company 
is executing on the strategy laid out at IPO. The 
Board continues to look for opportunities to create 
significant shareholder value, be it acquisitions of 
complementary services businesses or expansion 
of our co-development portfolio. Ergomed is 
fortunate to have multiple avenues for driving 
growth and shareholder value. 

2016 Milestones

January

 – Stephen Stamp joins Board as 

Chief Financial Officer

May

 – Acquisition of Haemostatix Limited
 – Institutional Placing raises 

£9.2 million (gross)

June

 – Acquisition of O+P and GASD, two 

September

services companies based in 
Germany

 – Co-development partner Aeterna 
Zentaris announces two licensing 
deals for Zoptrex™

 – Ergomed completes recruitment of 

lorediplon trial

October

 – Co-development partner Aeterna 

November

Zentaris announces fourth 
licensing deal for Zoptrex™

 – Co-development agreement with 
Asarina for sepranolone in PMDD 
announced

 – Acquisition of PharmInvent, a 
leading pharmacovigilance 
company based in Czech Republic

Having served my term, I shall be stepping down 
as Chairman and retiring from the Board on 31 
March 2017. I would like to thank my colleagues on 
the Board, Ergomed’s employees and our advisers 
for their support over the last three years. I know 
Ergomed is in good hands under the chairmanship 
of my successor, Peter George and I wish him and 
Ergomed all the best.

Rolf Stahel
Chairman

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“The Company is 
executing on the 
strategy laid out at IPO.”

 
 
 
 
 
 
 
2016 Operational highlights: Solid progress

Acquired Haemostatix, raised £9.2 
million in institutional placing

Acquired O+P and GASD 

Opened US PrimeVigilance office in 
Boston, MA

Co-development partner Aeterna 
Zentaris announces two licensing deals

Ergomed completes recruitment of 
Phase IIa trial of lorediplon

Contract win validates strategic 
rationale for German acquisitions

Ergomed announces Co-Development 
agreement with Asarina AB 

Ergomed and Modus Therapeutics 
expand Sickle Cell Disease phase 2 
clinical study 

Ergomed strengthens PrimeVigilance 
through acquisition of PharmInvent 

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10

Chief Executive Officer’s review

DELIVERING ON 
MULTIPLE FRONTS

I am delighted to report on a 
transformational year for Ergomed. The 
Company exceeded its targets in terms of 
revenue and adjusted EBITDA, raised  
£9.2 million in an institutional placing, 
completed four acquisitions, of which O+P 
and GASD were acquired at the same 
time, and added another partnership to 
the co-development portfolio. 

Services – another year of 
good growth
New business won in 2016 of £42 
million, up 50% on 2015, drove overall 
Services revenue growth of 30%.
Services growth was powered by 
PrimeVigilance revenues which grew at 
63%, complemented by 18% growth 
from clinical research services. 
Excluding acquisitions, overall revenue 
growth was 27%.

In June 2016, we announced the 
acquisitions of O+P and GASD based in 
Cologne and Neuss, Germany 
respectively. O+P is a full service contract 
research organisation that has also 
developed a proprietary FDA compliant 
Electronic Data Capture (‘EDC') system 
called OPVERDI, which can be configured 
for individual trials on a multilingual basis. 
GASD offers data management, statistical 
analysis, biometric reporting and 
statistical consulting services for the 
pharmaceutical industry. In addition to a 
scalable EDC system and world-class 
biostatistics expertise, the acquisitions of 
O+P and GASD have brought greater 
access to the German speaking markets 
and have already resulted in several 
contract wins.

In November 2016, we announced the 
acquisition of PharmInvent based in 
Prague, Czech Republic. PharmInvent is 
led by an experienced, ex-regulatory 
agency team that offers drug safety and 
regulatory consultancy expertise. They 
also have an extensive network of 
international pharmacovigilance experts 
that provide advice and support on local 
product safety and offer integrated global 
support for pharma and generic 

Dr Miroslav Reljanović
Chief Executive Officer

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“… a transformational 
year for Ergomed…”

 
 
 
 
 
 
 
£9.2m

funds raised

FOUR

acquisitions 

£42m

new business won

£70m

order backlog

companies’ products. Combining 
PharmInvent’s proven expertise with 
PrimeVigilance creates one of the largest 
international specialist service providers in 
the highly regulated drug safety sector.
The enlarged business has a broad 
international client list offering significant 
opportunities to cross sell, as well as an 
expanded range of services to attract 
new customers.

Global demand for quality outsourced 
drug development and drug safety 
services remains strong and Ergomed 
continues to benefit from this trend. 
Ergomed ended 2016 with a total backlog 
of contracted work with a value to be 
invoiced in future years of approximately 
£70 million (2015: £59 million).

Products – Haemostatix and one more 
co-development partnership added
Ergomed is also in the distinct position 
of offering co-development 
partnerships and is committed to 
building its portfolio of co-development 
assets and delivering clinical data, 
thereby creating significant potential 
shareholder value in the next few years.

As part of our co-development 
business development activities, we 
identified what we believe to be a 
particularly promising opportunity in 
Haemostatix. With solid pre-clinical and 
clinical evidence and a low cost yet fast 

development programme, we believe 
Haemostatix offers a rare opportunity to 
capture the full value of the product 
potential with reasonable risk. We 
acquired Haemostatix in May 2016, at the 
same time raising £9.2 million via an 
institutional placing. Since then, we have 
been preparing PeproStat™, a liquid 
haemostat for a Phase IIb study and 
announced the start of the trial in March 
2017. We expect to complete recruitment 
around the end of the year with topline 
results available in the first quarter of 
2018. At the same time, ReadyFlow™, a 
flowable gel haemostat, is in formulation 
development and is expected to be 
Phase I ready by the first quarter of 2018.
With combined annual peak sales 
potential of up to $500 million, the Board 
believes the Haemostatix products have 
the capability to deliver very significant 
value to Ergomed shareholders not 
otherwise achievable in traditional 
co-development deals.

In November 2016 we signed a co- 
development agreement with Asarina 
AB for the Phase IIb clinical 
development of sepranolone as a 
targeted treatment for premenstrual 
dysphoric disorder (‘PMDD’). The 
co-development deal with Asarina is 
Ergomed’s second with a Karolinska 
Development spin-out company and 
brings the portfolio of co-development 
programmes to six in total.

Outlook
The current backlog of services contracts 
means Ergomed is well positioned to 
deliver its revenue targets for 2017, 
although the market for clinical research 
out-sourcing remains highly competitive.
Ergomed continues to seek focused 
acquisition opportunities to expand the 
services business. This expansion of our 
profitable service businesses remains the 
core component of Ergomed’s strategy 
and the Board is prioritising this initiative.

We are on track to progress the 
Haemostatix pipeline in 2017 with the start 
of the Phase IIb clinical trial of PeproStat™ 
and the pre-clinical development of 
ReadyFlow™. Our co-development 
business continues to gain traction as we 
seek more partnership opportunities to 
extend our diverse pipeline of 
development projects. Ergomed also 
anticipates further clinical updates from 
its existing partnership with the next 
inflexion point being pivotal Phase III data 
on Zoptrex™ from our co-development 
partner Aeterna Zentaris in April 2017.

Based on our £70 million backlog and the 
opportunities in front of us I think 2017 will 
be another exciting year for Ergomed.

Newsflow

2017

2018

 – Ferrer: Phase II insomnia results

 – Haemostatix: PeproStat™ Phase IIb start

 – Aeterna Zentaris: Zoptrex™ Phase III results

 – Asarina: sepranalone Phase IIb start

 – Haemostatix: PeproStat™ Phase IIb results 

 – Modus Therapeutics: Sevuparin Phase II top line results

 – Haemostatix: ReadyFlow™ Phase I ready

 – Haemostatix: PeproStat™ Phase III ready

Co-development deals – target two p.a.

Services acquisitions

PeproStat™/ReadyFlow™ out-licensing opportunities

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12

Our strategy for

ACCELERATED
GROWTH

G
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ACQUISITIONS 
strategic and selective

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Strategic priorities
The Board continually looks for 
opportunities to capitalise on 
Ergomed’s expertise with the 
following key components:

 – augment the organic growth of its services 
business with selective acquisitions to add 
complementary services and/or geographical 
coverage to the Company’s current offering; and

 – enhance the co-development portfolio by including 
deals which (a) mirror the existing investment risk 
profile but (b) in addition include deals which allow 
the Company to exercise greater control over both 
the development plan and monetisation of the 
product with the expectation of a greater share of 
the upside in return for bearing more of the 
development costs.

The Board is committed to pursuing both 
components of the growth strategy in parallel and 
maintaining a balance between services income  
and development costs.

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Strategy

Progress

Organic growth
Organic growth must be the foundation of any healthy 
company and is the primary focus of the Board. We 
constantly measure ourselves against prior period 
performance and against our peers and competitors. 

The market for out-sourced clinical research is 
relatively mature and is dominated by mainly large 
US-based companies. To compete, effectively, we 
must play to our strengths, including our innovative 
Study Site Management model, and utilise our Study 
Physician Group to competitive advantage.

The market for out-sourced pharmacovigilance and 
medical information, while smaller is less competitive. 
The combination of PrimeVigilance and PharmInvent 
makes a leading international independent 
pharmacovigilance and medical information provider.

See CEO statement on pages 10 and 11

Acquisitions – strategic and selective 
Services acquisitions are a key component of 
Ergomed’s growth strategy with an emphasis on:
 – Services and skills which complement our existing 

services offering. We can offer a broader 
(‘one-stop-shop’) suite of services to customers, 
reducing reliance on partners and expanding margins.

 – Geographical expansion. Although we have 

preferred subcontract providers in some markets, 
having our own presence in certain key markets 
ensures quality control, scalability and, again, 
enhanced margins.

See strategy in action on page 14

Product development/ 
Co-development partnerships
Ergomed has created a risk-sharing model whereby we 
offer to contribute to the cost of clinical trials through 
significantly reduced fees in return for a carried interest 
in any future revenues of the product, including 
out-licensing milestones and sales.

Ergomed leverages its experience and expertise in 
drug development to evaluate new opportunities. The 
Company has an active portfolio of six co-development 
programmes with five sponsor partners.

See strategy in action on page 15

Clinical research services

+18%

Ergomed

+7.5%

Industry

Drug safety and medical information

+63%

Ergomed

+17%

Industry

PharmInvent

Acquired in November 2016

O+P & GASD

Acquired in June 2016

Co-development due diligence process

Reviews
100 products reviewed

CDA/Due diligence
50 reviewed against  
additional criteria

Advanced negotiations
Comprehensive  
review of final 12

ASARINA

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14

Strategy in action

Revenues

+37% growth

5

4

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€4.1m

€3.0m

€2.0m

2014

2015

2016

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€4.1m revenue

Consideration of €4.8m 
plus up to €3.2m deferred

Ergomed strengthens 
PrimeVigilance with acquisition  
of European pharmacovigilance 
and regulatory services  
business, PharmInvent.

This acquisition is consistent with Ergomed’s 
stated strategy to grow its existing, profitable 
services businesses both organically and through 
bolt-on acquisitions. The transaction will expand 
and complement its existing pharmacovigilance 
division, PrimeVigilance.

PharmInvent is led by an experienced ex-regulatory 
agency team that offers drug safety and regulatory 
consultancy expertise. PharmInvent also has an 
extensive network of international pharmacovigilance 
experts that provide advice and support on both 
local product safety and offer integrated global 
support for pharmaceutical and generic companies’ 
products.

Combining PharmInvent’s proven expertise with 
PrimeVigilance creates one of the largest 
international specialist service providers in the highly 
regulated drug safety sector. The enlarged business 
will have a broad international client list offering 
significant opportunities to cross sell, as well as an 
expanded range of services to attract new 
customers. From this strong position Ergomed’s 
strategy is to actively expand the pharmacovigilance 
and regulatory division, especially in the US, thereby 
underpinning Ergomed’s planned growth of revenues 
and Group profitability.

ACQUISITION PHARMINVENT 
 
 
 
 
 
15

Strategy in action

CO-DEVELOPMENT 
PARTNERSHIPS
ASARINA

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$500m

Potential peak sales

Ergomed and Asarina entered into a 
co-development agreement for the 
Phase IIb clinical development of 
sepranolone as a targeted treatment 
for patients with premenstrual 
dysphoric disorder (‘PMDD’). 

Under the terms of the agreement, Ergomed will 
conduct Asarina’s multicentre, multinational, 
randomised Phase IIb clinical trial. The study is 
planned to start in 2017. Ergomed will co-invest into 
the trial in return for an equity stake in Asarina. 

PMDD is the most severe form of Premenstrual 
Syndrome, characterised by cyclic symptoms such as 
depression, anxiety, irritability, mood lability and loss 
of emotional control consistently occurring during 
the luteal part of the menstrual cycle with high 
impact on personal and professional life. 
Approximately 5% of all women will experience this 
disorder during their fertile years from the onset of 
menstruation till menopause. 

Asarina’s product candidate, sepranolone, is a 
proprietary, first-in-class, endogenous, small 
molecule, that acts as a GABA-A modulating 
steroid antagonist (‘GAMSA'). Sepranolone is the 
first product developed exclusively for PMDD. The 
effect of sepranolone has been demonstrated in 
animal models of the disorder as well as in a 
validated human pharmaco-dynamic model used 
to evaluate target engagement of drugs that 
influence GABA mechanisms in the brain. 

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16

Financial review

A YEAR OF 
STRONG RESULTS

Our mission

Building a profitable services business combined 
with sustainable product development for 
significant shareholder value.

Key performance indicators
The Directors consider the principal financial performance indicators of 
the Group to be:

Revenue
Gross profit
Research and development expenditure
EBITDA (adjusted)1
Cash and cash equivalents

2016 
£m

39.2
12.0
1.0
3.0
4.4

2015
£m

30.2
8.4
–
3.4
4.0

1  Please refer to note 38, which explains the adjustments to operating profit which 

result in adjusted EBITDA.

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The Directors consider the principal 
non-financial performance indicators of 
the Group to be:
 – The delivery of high quality services 
that continue to meet the highest 
industry standards as evidenced by 
internal and external quality audits. 
 – The development of new and/or the 

expansion of existing service offerings.
 – The expansion of the co-development 
portfolio with the addition of two new 
partnerships per year.

Condensed consolidated statement of 
comprehensive income 
Revenue for the year ended 31 December 
2016 was £39.2 million (2015: £30.2 
million), an increase of 30%, driven by  
63% growth in drug safety and medical 
information, complemented by 18% 
growth from clinical research services. 
Excluding the impact of acquisitions, 
revenues grew at 27%.

Gross profit was £12.0 million and gross 
margin was 31% (2015: gross profit £8.4 
million and gross margin 28%). Ergomed’s 
gross margin fluctuates compared to a 
traditional clinical research organisation 
(‘CRO') service provider as Ergomed 
operates a hybrid model working with 
customers on a normal full priced basis  
as well as working with co-development 
partners where Ergomed is carrying out 
clinical studies at reduced fees in return 
for carried interests in the partnered 
product. The mix of full service work to 
co-development work in any given period 
therefore impacts the gross profit and 
gross margin in that period.

Administration expenses were £10.5 
million (2015: £6.4 million), an increase  
of £4.1 million. Included in administrative 
expenses are increases in amortisation of 
acquired fair valued intangible assets of 
£0.2 million, share-based payment charge 
of £0.1 million, deferred consideration for 
acquisition of £0.7 million, acquisition 
costs of £0.3 million, exceptional items  
of £0.1 million offset by a write-back of 
deferred consideration for acquisition  
of £0.5 million. The increase in other 

 
 
 
 
 
 
 
17

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£39.2m
+30%

Revenue

£12.0m
+43%

Gross profit

administrative expenses of £3.1 million 
was driven by an additional £1.2 million  
of overhead in acquisitions, £0.7 million 
investments in improved corporate 
infrastructure, £0.3 million additional 
recruitment costs, £0.2 million increase  
in investor relations and public relations 
activities, £0.1 million increase in 
depreciation and £0.9 million provision for 
doubtful debts offset by foreign exchange 
gains of £0.4 million.

Research and development costs  
were £1.0 million (2015: £nil) relating to 
Haemostatix and included chemistry, 
manufacturing and controls (‘CMC') costs 
in preparation for a Phase IIb clinical trial 
of PeproStat™ and pre-clinical formulation 
development costs for ReadyFlow™.

Deferred consideration for achieving 
2016 financial targets of £0.7 million in 
respect of PharmInvent has been 
charged to profit and loss in the year 
because it is tied to the continued 
employment of the vendors.

The Company incurred acquisition costs 
totalling £0.6 million (2015: £0.3 million)  
in the year, primarily in respect of the 
Haemostatix, O+P and GASD and 
PharmInvent acquisitions. In addition,  
£0.2 million in respect of start-up costs for 
PrimeVigilance’s US office was recognised 
as an exceptional item.

Included in finance charges is £0.3 million 
relating to the unwinding of the discount 
applied to contingent consideration 
for Haemostatix.

The Group’s tax charge was reduced 
by an R&D tax credit of £0.2 million in 
the year.

Condensed consolidated balance sheet
As at 31 December 2016 total assets less 
total liabilities amounted to £34.6 million 
(2015: £16.9 million) including cash and 
cash equivalents of £4.4 million (2015: 
£4.0 million).

The principal movements in the 
Condensed consolidated balance sheet 
during the year were:
 – Acquisitions of Haemostatix, O+P and 
GASD and PharmInvent in May 2016, 
June 2016 and November 2016 
respectively and the associated 
goodwill of £5.5 million and intangible 
assets of £19.3 million.

 – Increase in trade and other receivables 
by £5.4 million reflecting higher trading 
levels and a £0.5 million increase in 
clinical trial inventory.

 – An increase in deferred consideration, 
after unwinding of discount, of £8.2 
million in respect of Haemostatix. 
Deferred consideration in respect of 
PharmInvent is recognised as incurred 
in the profit and loss account since it is 
tied to the continued employment by 
the vendors of that business.

 – An increase in deferred tax liability of 
£2.5 million, principally related to the 
acquisitions of Haemostatix, O+P and 
GASD and PharmInvent.

 – An increase in share premium, 

arising from the Institutional Placing, 
net of costs.

 – An increase in merger reserve, arising 
from the acquisitions of Haemostatix, 
O+P and GASD and PharmInvent.

Condensed consolidated cash 
flow statement
At present, the Group does not have any 
borrowings or long term debt apart 
from a few immaterial fixed asset 
finance leases.

Cash inflows from operating activities 
before changes in working capital in the 
year were £2.7 million (2015: £2.7 million). 
Changes in working capital included a 
£3.7 million increase in trade and other 
receivables, a £0.4 million increase in 
inventory and a £0.1 million decrease in 
trade and other payables.

Cash outflows from investing activities 
were £5.8 million including the 
acquisitions of Haemostatix, O+P and 
GASD and PharmInvent together with 
deferred consideration of £0.1 million 

for Sound Opinion, £0.4 million for the 
acquisition of tangible assets and 
£0.7 million for the acquisition of 
intangible assets.

The Group also paid taxation of £0.9 
million in 2016 (2015: £0.6 million).

Financial outlook
Ergomed’s Board has set the objective of 
remaining profitable and cash generative. 
This is being achieved by running 
profitable services businesses alongside a 
managed portfolio of drug co-
development partnerships where 
Ergomed contributes services at reduced 
prices in return for a carried interest in the 
potential commercial returns that may be 
generated in the future.

Ergomed currently had a strong 
contracted backlog of about £70 million 
at 1 January 2017. The overall trading 
environment for full service business is 
generally strong although still very 
competitive. Ergomed’s Board believes it 
can continue to generate further growth 
and profits from both the Clinical 
Research and PrimeVigilance/
PharmInvent businesses in 2017 and 
beyond whilst at the same time expanding 
the co-development portfolio on a 
selected basis.

Going concern
As at 31 December 2016 the Group had 
£4.4 million in cash or cash equivalents 
and a strong backlog of signed contracts. 
The Directors therefore expect Ergomed’s 
services business to remain both 
profitable and cash generative. Taking into 
account existing cash resources and, after 
due consideration of cash flow forecasts, 
the Directors are of the view that 
Ergomed will continue to have access to 
adequate resources to allow the Group to 
continue trading on normal terms of 
business for no less than 12 months from 
the date of signing of the financial 
statements and have therefore prepared 
the financial statements on a going 
concern basis.

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18

Principal risks and uncertainties

There are number of risks and uncertainties 
associated with the Group’s activities. The Board 
believes the following are the principal risks, 
along with the mitigation actions being pursued.

Competition
Ergomed’s competitors and potential 
competitors include companies which 
may have substantially greater 
resources than those of Ergomed. The 
additional financial transparency to 
which Ergomed is subject, now that  
it is a public company, may have the 
effect of increasing the number of 
competitors. Generally, the ability of 
Ergomed to win new business or repeat 
business from existing customers is a 
key risk and if the business development 
function fails to deliver new, profitable 
contracts then Ergomed’s profits and 
cash flows will suffer.

Dependency on 
pharmaceutical industry
A significant proportion of Ergomed’s 
current revenue results from 
expenditure by pharmaceutical and 
biotech businesses on research and 
development and regulatory 
compliance. If customers or potential 
customers in this sector were to:
 – reduce such expenditure, in 

particular by reducing the numbers 
of drugs put into clinical trials;

 – seek to retain work in-house rather 

than outsourcing it; and/or

 – consolidate through the vertical 

integration of their businesses and 
choose not to engage Ergomed then 
Ergomed’s business could be 
negatively impacted.

Legislation and regulation of the 
pharmaceutical and 
biotechnology industries
An element of Ergomed’s competitive 
advantage stems from its ability to 
navigate the strictly regulated medicinal 
products and clinical trial services 
approval processes, which are expensive, 
complex and demanding. If there were to 
be substantial relaxation of such 
processes, cross jurisdictional 
harmonisation or simplification of the 
legislative or regulatory framework, this 
could reduce the barriers to entry which 
prospective competitors face, thereby 
eroding part of the Group’s competitive 
advantage. If such a change were to 
occur, this may have a negative impact on 
Ergomed’s business opportunities. 
Conversely, any change to, or increase in 
the complexity of, legislative or regulatory 
requirements having the effect of 
preventing Ergomed operating in a 
particular country, or compliance with 
which would require significant 
expenditure on the part of Ergomed, 
could have a material adverse effect on 
Ergomed’s operations, profitability and 
financial performance.

Licences, approvals and compliance
Ergomed is dependent to a significant 
degree on certain licences and regulatory 
approvals. Non-compliance with those 
licences is likely to result in a warning from 
the relevant authority. However, in 
extreme cases, licences may be restricted 
or revoked, which could adversely affect 
Ergomed’s business, results of operations, 
financial condition and future prospects. 
More generally, Ergomed operates in an 
environment which is subject to detailed 
and complex regulation. This places a 
significant compliance burden on 
Ergomed, since any failure to achieve 
compliance could result in the termination 
of Ergomed’s contracts and in significant 
reputational damage as well as regulatory 
fines.

Customers, pricing and 
payment terms
Some of Ergomed’s customers may 
have substantial purchasing power and 
negotiating leverage. While Ergomed 
has historically been able to secure 
good contractual terms, there can be 
no assurance that it will continue to be 
able to do so in the future. In certain 
cases Ergomed may accept payment 
terms which impact adversely upon the 
revenue received by, the margins 
achieved by, and the cash flow of, 
Ergomed in any given period.

Dependence on a limited number of 
key clients
A significant proportion of the Group’s 
revenue is derived from a relatively 
small number of clients, although the 
identity of the top five clients has 
varied over the last three financial 
years. The percentage of the Group’s 
total invoiced revenue generated by  
the top five clients in the year ended  
31 December 2016 was 51.0%. The loss 
of any client or clients who represent  
a significant proportion of Ergomed’s 
revenue could have a negative impact 
on Ergomed’s operating results and 
cash flows.

Cancellation or delay of clinical trials 
by customers
The customers of Ergomed may cancel 
or delay proposed clinical trials either 
without notice or upon short notice. 
The cancellation or delay of a clinical 
trial may result in a risk of Ergomed 
having to reduce its staff overheads 
which could in turn have a negative 
impact on the Group’s profitability, 
albeit that the terms of Ergomed’s 
contracts seek to mitigate the impact 
of any such cancellation or delay by 
structuring standard study close down 
procedures with the customer.

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Foreign currency risk
A significant proportion of Ergomed’s 
business is carried out, and is intended 
to be carried out in the future, outside 
the UK and in the relevant local 
currency. To the extent that there are 
fluctuations in exchange rates outside 
any hedged positions that the Group 
may contract, this may have a material 
impact on Ergomed’s financial position 
or results of operations, as shown in 
Ergomed’s accounts. Ergomed 
manages this risk by seeking advice 
from specialist foreign currency 
brokers, regularly reviewing the 
geographical mix of its operational 
costs and also its currency revenue 
streams and by the inclusion of 
exchange rate reviews in its major 
commercial contracts.

Approved by the Board of Directors 
and signed on behalf of the Board.

S A Stamp
Director

Treasury policy and financial risk
The Group maintains a centralised 
treasury function, which operates 
under policies and guidelines approved 
by the Board. These cover funding, 
management of foreign exchange 
exposure and interest rate risk. The 
purpose is to manage the financial risks 
of the business and to secure the most 
cost-effective funding. The Group’s 
principal financial assets are bank 
balances and long term deposits, which 
are exposed to varying degrees to the 
following risks: liquidity risk, credit risk 
and foreign currency risk. The policy for 
managing these risks is outlined below:
 – liquidity risk – the Group maintains 
good relationships with its banks, 
financial institutions with high credit 
ratings, and its working capital 
requirements are anticipated via the 
forecasting and budgetary process; 
and

 – credit risk – the Group is mainly 

exposed to credit risk from its trade 
and other receivables, short term 
deposits and bank balances, and 
mitigates the risk by managing any 
exposure to a single institution.

An allowance for impairment is made 
where there is an identified loss event 
which, based on previous experience, is 
evidence of a reduction in the 
recoverability of the cash flows.

Management considers the above 
measures to be sufficient to control the 
credit risk exposure.

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20

Board of Directors

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1

Rolf Stahel 
Non-Executive Chairman

2

Dr Miroslav Reljanovic
Founder and Chief Executive Officer 

Rolf Stahel brings over 30 years’ experience in the global 
pharmaceutical industry. He led Shire Pharmaceuticals Group 
plc as Chief Executive Officer from 1994 to 2003, building 
Shire into a FTSE 100 Company. Rolf worked for 27 years with 
Wellcome plc in Switzerland, Italy, Thailand, Singapore and the 
UK. Rolf sits on the Advisory Board of Imperial Business School 
(Imperial College London). He has been non-executive Chairman 
of several companies including: Newron Pharmaceuticals; Cosmo 
Pharmaceuticals; PowderMed; and EUSA Pharma. He is currently 
Non-Executive Chairman of Connexios Life Sciences and Midatech. 
Rolf, a Swiss national, is a graduate in Business Studies (KSL, 
CH) and attended 97th AMP (Harvard). Rolf retired as Chairman 
and Director of Ergomed plc with effect from 31 March 2017.

Dr Miroslav Reljanovic is a medical doctor and a board-
certified neurologist. Whilst practicing as a physician in a 
large WHO Collaborating Centre in Zagreb, he was the clinical 
investigator in numerous Phase II and III studies in the field 
of neurology and a consultant to various pharmaceutical 
companies. In 1997 Miro founded Ergomed and he introduced 
the novel Study Site Coordination model as an intrinsic part 
of the conduct of clinical studies. Together with co-founder 
Elliot Brown, MB, MRCGP, FFPM, a well-known international 
expert in drug safety, Miro started PrimeVigilance in 2008, 
which soon became a leading specialist vendor of contracted 
pharmacovigilance services to the pharmaceutical industry.

3

Neil Clark
Chief Executive Officer - PrimeVigilance

4

Andrew Mackie
Chief Business Officer

Neil Clark joined Ergomed as Chief Financial Officer in January 
2009 and was promoted to Chief Executive Officer – PrimeVigilance 
in January 2016. Prior to joining Ergomed, Neil was Chief Executive 
Officer of CeNeS Pharmaceuticals plc, a UK biotech company listed 
in London. CeNeS was acquired by the German biotech company 
Paion in 2008. Neil joined CeNeS in 1997 when it was a venture 
capital backed private biotech company and later became Chief 
Financial Officer. CeNeS was listed in 1999 and Neil was appointed 
Chief Executive Officer in 2001. Prior to joining CeNeS, Neil worked 
for PWC in Cambridge, UK, for over 10 years on a variety of local, 
national and international assignments in audit, corporate finance 
and consultancy. Neil is a qualified chartered accountant (‘FCA’).
Neil ceased to be a Director with effect from 16 April 2017.

Andrew Mackie joined Ergomed as Chief Business Officer in 2015 
having worked with the Company as a consultant since 2004. 
He has been instrumental in developing the co-development 
business and negotiating the partnerships signed to date. Prior to 
joining Ergomed, Andrew worked in the Business Development 
group at Eli Lilly, having previously been Head of Life Sciences 
at IP Group and Head of Alliance Management at Antisoma. 
Prior to that, Andrew held a variety of R&D positions at Novartis, 
Sanofi and MDS. Andrew holds a BSc in biochemistry from 
Queen’s University (Canada), an LLB from the University of 
London and an MBA from the London Business School.

5

Stephen Stamp
Chief Financial Officer

6

Peter George
Non-Executive Director

Peter George joined Ergomed as a Non-Executive Director in May 
2014. Peter has over 20 years’ experience in the pharmaceutical 
services industry, most recently as Chief Executive Officer 
of Clinigen Group plc (AIM: ‘CLIN’), the global speciality 
pharmaceuticals and pharmaceutical services business. Peter 
stepped down as CEO of Clinigen in November 2106 but remains 
a non-executive director. Prior to Clinigen, he was CEO at Penn 
Pharma, having led a £67 million management company buy-out 
in 2007. Before this, Peter was executive Vice President for Wolters 
Kluwer Health with responsibility for Europe and Asia Pacific regions. 
Peter has also held roles as the Chief Operating Officer of Unilabs 
Clinical Trials International Limited, Head of Clinical Pathology in the 
Oxford region of the NHS and as Director of PharmaPatents Global.
Peter became Chairman of Ergomed plc with effect from 1 April 2017.

Stephen Stamp joined Ergomed as Chief Financial Officer in 
January 2016. Prior to joining Ergomed, Stephen worked in the 
US as Chief Financial Officer of AssureRx Health, Inc. Prior to that 
he was CFO of EZCORP, Inc and Chief Operating Officer and 
CFO at Xanodyne Pharmaceuticals, Inc. Before leaving for the 
US, Stephen was Group Finance Director of Shire plc and Regus 
Plc. Earlier in his career, Stephen was an investment banker with 
Lazard in London, advising mainly public companies on cross-
border M&A and corporate finance. Prior to Lazard, he worked for 
KPMG in London where he qualified as a Chartered Accountant. 
Stephen holds a BA (Econ) from The University of Manchester.

7

Christopher Collins
Non-Executive Director

Christopher was the CEO and a founding partner of Code 
Securities, a healthcare-focused advisory and broking firm, 
which was formed in 2003, acquired by Nomura in 2005 and 
continued as Nomura Code Securities until late 2013. Chris was 
previously head of the Life Sciences Group at WestLBPanmure, 
having founded that firm’s activities in the sector in 1993. He has 
advised companies at all stages of development on transactions 
including private financings, IPOs, secondary offerings and 
mergers and acquisitions. Prior to WestLBPanmure, Chris was 
Managing Director of Corporate Finance at Panmure Gordon, 
after eight years as a Director of Corporate Finance at Hoare 
Govett and nine years in corporate finance at Charterhouse 
Japhet. He has an MBA and read Biology at Sussex University.

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22

Corporate governance statement

Corporate governance
The Company is listed on the Alternative Investment Market (‘AIM') and is not required to comply with the provisions of the 
UK Corporate Governance Code 2010 (2010 Code), as set out in the Financial Services Authority Listing Rules. However, the 
Directors recognise the importance of sound corporate governance and intend to comply with the Corporate Governance 
Guidelines, to the extent appropriate for a company of its nature and size. The Corporate Governance Guidelines were 
devised by the Quoted Company Alliance (‘QCA’), in consultation with a number of significant institutional small company 
investors, as an alternative corporate governance code applicable to AIM companies. An alternative code was proposed 
because the QCA considers the 2010 Code to be inappropriate to many AIM companies. The Corporate Governance 
Guidelines state that: ‘‘The purpose of good corporate governance is to ensure that the company is managed in an efficient, 
effective and entrepreneurial manner for the benefit of all shareholders over the longer term.’’

The Board comprises a Chairman, four Executive Directors and two Non-Executive Directors. The Board meets regularly to 
consider strategy, performance and the framework of internal controls. To enable the Board to discharge its duties, the 
Directors receive appropriate and timely information. Briefing papers are distributed to the Directors in advance of Board 
meetings. The Directors have access to the advice and services of the Company Secretary and the Chief Financial Officer, 
who is responsible for ensuring that the Board procedures are followed and that applicable rules and regulations are 
complied with. In addition, procedures are in place to enable the Directors to obtain independent professional advice in the 
furtherance of their duties, if necessary, at the Company’s expense.

The Board considers Peter George and Christopher Collins to be independent Directors.

Board committees
The Company has Audit and Risk, Nomination, AIM Compliance and Remuneration Committees. The Audit and Risk 
Committee has Christopher Collins as Chairman, and has primary responsibility for monitoring the quality of internal 
controls, ensuring that the financial performance of the Company is properly measured and reported on and reviewing 
reports from the Company’s auditors relating to the Company’s accounting and internal controls, in all cases having due 
regard to the interests of shareholders. The Audit and Risk Committee meets at least twice a year. Peter George is the other 
member of the Audit and Risk Committee. The Nomination Committee identifies and nominates for the approval of the 
Board, candidates to fill Board vacancies as and when they arise. The Nomination Committee meets at least twice a year. 
Rolf Stahel was Chairman of the Nomination Committee until 31 March 2017. Miroslav Reljanovic, Peter George, Christopher 
Collins, and, until 16 April 2017, Neil Clark are the other members of the Nomination Committee. The Remuneration 
Committee has Peter George as Chairman, and reviews the performance of the Executive Directors and determine their 
terms and conditions of service, including their remuneration and the grant of options, having due regard to the interests of 
shareholders. The Remuneration Committee meets at least twice a year. Christopher Collins and, until 31 March 2017, Rolf 
Stahel are the other members of the Remuneration Committee.

The Company has established an AIM Compliance Committee to ensure that the Company is complying with the AIM Rules. 
In addition, the Committee assesses the Company’s Corporate Governance obligations every year. The AIM Compliance 
Committee is chaired by Christopher Collins and its other member is Peter George.

The Directors understand the importance of complying with the AIM Rules relating to Directors’ dealings and have 
established a share dealing code which is appropriate for an AIM listed company.

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Internal control and risk management
The Board acknowledges its responsibility for safeguarding the shareholders’ investments and the Group’s assets. In 
applying this principle, the Board recognises that it has overall responsibility for ensuring that the Group maintains a system 
of internal control that provides it with reasonable assurance regarding effective and efficient operations, internal financial 
control and compliance with laws and regulations. The system of internal control is designed to manage rather than 
eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance 
against material misstatement or loss.

Through the Audit and Risk Committee, the Directors have reviewed the effectiveness of the internal controls. Since 
admission to AIM in July 2014, management is continuing to invest significant time in further developing the Group’s internal 
control environment. The key features of the internal control system are described below:
 – control procedures and environment – the Group has an organisational structure with clearly drawn lines of 

accountability and authority. Employees are required to follow well-defined internal procedures and policies appropriate 
to the business and their position within the business and management promotes the highest levels of professionalism 
and ethical standards;

 – identification and evaluation of risks – the Group employs Executive Directors and senior management with the 

appropriate knowledge and experience required for a medical and scientific research group. Identification and evaluation 
of risk is a continuous process running in parallel with the significant organic growth of the Group;

 – risk register – senior management works with the Audit and Risk Committee to identify key risks facing the Group, any 

mitigating controls and persons responsible for reviewing and managing such risks. The risk register is reviewed 
periodically and updated and reviewed by the Board no less than annually;

 – financial information – the Group prepares detailed budgets and working capital forecasts annually. These are based 
upon the strategy of the Group and are approved by the Board. Detailed management accounts and working capital 
re-forecasts are reviewed at least quarterly for each Board meeting, with any variances from budget investigated 
thoroughly and a summary provided to the Board. Annual Reports, Preliminary Statements and Half-year Reports 
prepared by the Group are reviewed by the Audit and Risk Committee prior to approval by the Board;

 – monitoring – the Board monitors the activities of the Group through the supply of reports from various areas of the 

business as contained in the Board papers. The Executive Committee performs a more detailed review, taking corrective 
action if required; and

 – financial position and prospects memorandum – senior management works with the Audit and Risk Committee to 
produce a comprehensive review of risks and internal procedures to control financial reporting in compliance with 
ICAEW Technical Relate RECH 01/13 CFF. The memorandum is reviewed in detail and approved by the Board annually.

The Board, through the Audit and Risk Committee, reviews the effectiveness of the systems of internal control. Given the 
Group’s relative small size, the Board does not consider it either necessary or practical at present to have its own internal 
audit function. The Board continues to monitor the requirement to have an internal audit function.

Communication with shareholders
The Board attaches great importance to communication with both institutional and private shareholders. Regular communication is 
maintained with all shareholders through Company announcements, the Annual Report and Accounts, Preliminary Statements and 
Half-year Report. The Directors seek to build on a mutual understanding of objectives between the Company and its shareholders, 
especially considering the long term nature of the business. Institutional shareholders are in contact with the Directors through 
presentations and meetings to discuss issues and to give feedback regularly throughout the year. With private shareholders this is 
not always practical. The Board, therefore, intends to use the Company’s Annual General Meeting as the opportunity to meet 
private shareholders who are encouraged to attend, after which the Chief Executive Officer will give a presentation on the activities 
of the Group. Following the presentation there will be an opportunity to ask questions of Directors on a formal and informal basis 
and to discuss the development of the business.

The Company operates a website at www.ergomedplc.com. The website contains details of the Group and its activities, 
regulatory announcements and Company announcements, Annual Reports and Half-year Reports, and the Terms of 
Reference of the Audit and Risk Committee and of the Remuneration Committee.

Going concern
As disclosed in note 1 to the consolidated financial statements, having made relevant and appropriate enquiries, including 
consideration of the Company and Group current resources and working capital forecasts, the Directors have a reasonable 
expectation that, at the time of approving the financial statements, the Company has adequate resources to continue in 
operational existence for at least the next 12 months. Accordingly, the Board continues to adopt the going concern basis in 
preparing the financial statements.

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24

Directors’ remuneration report (Unaudited)

Ergomed has elected voluntarily to prepare an unaudited Directors’ remuneration report as set out below.

Remuneration policy overview
The aim of the remuneration policy is to encourage and reward superior performance by the Executive Directors and senior 
management, with performance being measured by reference to the achievement of corporate goals, strong financial 
performance and the delivery of value to shareholders.

The policy is designed to offer rewards that:
 – enable the Group to attract and retain the management talent it needs to ensure its success;
 – incentivise the achievement of the Group’s strategy and the delivery of sustainable long term performance of the Group 

by the executives; and

 – have flexibility to accommodate the changing needs of the Group as it grows and its strategy evolves.

Remuneration levels are benchmarked against a subset of companies in the UK life sciences and biotechnology sectors with 
the aim of achieving the following:
 – Base salary between average and upper quartile.
 – Performance-based bonus between average and upper quartile.
 – Share incentives industry average.
 – Total compensation between average and upper quartile.

The Remuneration Committee has established a policy that enables the Group to retain and motivate the Executive 
Directors and senior management appropriately while still maintaining a strong ‘pay-for-performance’ culture within the 
Group. The remuneration policy is reviewed by the Remuneration Committee on an annual basis to ensure that it is in line 
with the Group’s objectives and shareholders’ interests.

Executive Directors
Miroslav Reljanovic has a service agreement with Ergomed plc dated 14 July 2014, with continuous employment from 28 
September 2009. His appointment is terminable on six months’ notice by himself and 12 months by the Company.

Neil Clark had a service agreement with Ergomed plc dated 14 July 2014, with continuous employment from January 2009. 
His appointment is terminable on six months’ notice by himself and 12 months by the Company.

Andrew Mackie has a service agreement with Ergomed plc dated 1 July 2015. His appointment is terminable on six months’ 
notice by himself and 12 months by the Company.

Stephen Stamp has a service agreement with Ergomed plc dated 11 January 2016. His appointment is terminable on six 
months’ notice by himself and six months by the Company.

Non-Executive Directors
The Non-Executive Directors have entered into letters of appointment with the Company, with the Board determining any 
fees paid.

The Non-Executive Directors do not participate in the Group’s pension, bonus or option schemes. Rolf Stahel’s appointment 
was terminable on three months’ notice by either party. The other two Non-Executive appointments are terminable on one 
month’s notice by either party.

Remuneration
The Executive Directors, Miroslav Reljanovic, Neil Clark, Andrew Mackie and Stephen Stamp are entitled to receive base 
salary, travel allowance, employer pension contributions, share options and a discretionary performance-related bonus.

Salary
Base salaries are generally reviewed annually and effective from the beginning of January. The Remuneration Committee seeks to 
assess the market competitiveness of pay primarily in terms of total remuneration, with less emphasis on base salary.

Stephen Stamp’s salary was increased from £175,000 per annum to £200,000 per annum with effect from 1 July 2017.

Bonuses
The timing and amount of bonuses are decided by the Remuneration Committee with reference to the individual’s performance 
and contribution to the Group. The maximum bonus that can be earned by an Executive Director is 75% of base salary.

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Pensions
The Group does not operate a Group pension scheme. The Group pays an employer pension contribution of 10% of base 
salary to personal pension schemes established by the Executive Directors.

Directors’ remuneration
The Directors received the following remuneration during the year:

Name of Director

Rolf Stahel1
Miroslav Reljanovic
Neil Clark2
Andrew Mackie2
Stephen Stamp4
Chris Collins
Peter George

Name of Director

Rolf Stahel1
Miroslav Reljanovic
Neil Clark2
Andrew Mackie2,3
Chris Collins
Peter George

Fees & 
salary 
£000s

102
242
200
200
183
40
40

Fees & 
salary 
£000s

104
232
200
100
40
40

Benefits 
£000s

Annual 
bonus 
£000s

Pension 
£000s

–
–
4
1
–
–
–

–
–
–
–
–
–
–

–
–
20
20
18
–
–

Benefits 
£000s

Annual 
bonus 
£000s

Pension 
£000s

–
–
3
1
–
–

–
69
50
25
–
–

–
–
20
10
–
–

Total 
2016
£000s

100
242
224
221
201
40
40

Total 
2015
£000s

104
301
273
136
40
40

1.  The remuneration of Rolf Stahel includes consultancy fees of £52,000 paid to Chesyl Pharma Limited (2015: £54,000).
2.  Neil Clark and Andrew Mackie receive private medical insurance as a benefit.
3.  Andrew Mackie was appointed a Director on 1 July 2015.
4.  Stephen Stamp was appointed a Director on 11 January 2016.

Share options
The Company issues share options to the Directors and employees to reward performance, to encourage loyalty and to 
enable valued employees to share in the success of the Company.

Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire Ordinary Shares in 
the Company granted to or held by the Directors.

Prior to the IPO Ergomed had established an Unapproved Executive Share Option 2007 Scheme and the Rolf Stahel Option 
Agreement. A new share option scheme, the ‘Ergomed plc Long Term Incentive Plan’, was established immediately following 
the Company’s IPO in July 2014.

Ergomed has established three share option schemes:
i)  the Unapproved Executive Share Option Scheme 2007;
ii)  the Stahel Option Agreement; and
iii) the Ergomed plc Long Term Incentive Plan.

In addition, Neil Clark, Andrew Mackie and Stephen Stamp hold options over shares held by Miroslav Reljanovic.

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26

Directors’ remuneration report (Unaudited) continued

Options granted as at 31 December 2016

Name of Director

Date of grant

Options over new Ergomed shares:

Number of 
Ordinary Shares 
under option

Exercise price 
per Ordinary 
Share

Exercise 
period from

Exercise 
period to

Name of scheme

Rolf Stahel

18/4/2014

1,260,000

£1.60 18/04/2014 17/04/2024 Stahel Option Agreement

Neil Clark

31/12/2009

1,000,000

£0.01

31/12/2009

30/12/2019

24/12/2015

150,000

£1.69 03/06/2018

23/12/2025

Andrew Mackie

24/12/2015

125,000

£1.69 03/06/2018

23/12/2025

Stephen Stamp

11/01/2016

400,000

£0.01

10/01/2019

10/01/2026

Unapproved Share Option 
Scheme 2007
Ergomed plc Long Term 
Incentive Plan

Ergomed plc Long Term 
Incentive Plan

Ergomed plc Long Term 
Incentive Plan

Options over Ergomed shares owned by Miroslav Reljanovic:

Neil Clark

Andrew Mackie

Stephen Stamp

20/07/2015
20/07/2015

20/07/2015
20/07/2015

30/11/2016
30/11/2016

88,235
88,235

88,235
88,235

50,000
50,000

£0.01
£0.01

£0.01
£0.01

£0.01
£0.01

20/07/2015
20/07/2016

19/07/2025
19/07/2025

20/07/2015
20/07/2016

19/07/2025
19/07/2025

11/01/2017
11/01/2018

29/11/2025
29/11/2026

No options held by the Directors were exercised or lapsed during the year.

This report was approved by the Board of Directors on 26 April 2017 and signed on its behalf by

P George
Director, Chairman of the Remuneration Committee

N/A
N/A

N/A
N/A

N/A
N/A

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Directors’ report
For the year ended 31 December 2016

The Directors present their report and financial statements for the Company and Group for the year ended 31 December 2016.

Principal activities
Ergomed is a profitable global business providing drug development and safety services to the pharmaceutical industry and 
has a growing portfolio of co-development partnerships. It operates in over 56 countries.

Business review and key performance indicators
The Group’s results are set out in the Consolidated income statement on page 30 and are explained in the Financial review 
on pages 16 and 17. A detailed review of the business, its results and future direction is included in the Chief Executive 
Officer’s review on pages 10 and 11.

Capital structure
The Group is primarily financed through equity provided by its shareholders and cash generated from its profitable operations.

Dividends
The Directors do not recommend the payment of a dividend (2015: £nil).

Directors
The Directors of the Company who served during the year are as follows:
Rolf Stahel (resigned 31 March 2017)
Miroslav Reljanovic
Neil Clark (resigned 16 April 2017)
Andrew Mackie
Stephen Stamp (appointed 11 January 2016)
Christopher Collins
Peter George

At 31 December 2016, the Directors had the following beneficial interests in the Company’s shares:

Rolf Stahel
Miroslav Reljanovic
Neil Clark
Andrew Mackie
Stephen Stamp
Christopher Collins
Peter George

Number of shares

125,000
17,632,237
91,912
–
200,000
31,250
131,250

Percentage  
of total issued 
share capital

0.3%
43.5%
0.2%
–
0.5%
0.1%
0.3%

Biographical details of the Directors are set out on page 21.

Directors’ interests
The interests of Directors in the shares and options of the Company are set out above and in the Directors’ remuneration 
report on pages 24 to 26.

None of the Directors had a material interest at any time during the year in any contract of significance with the Group other 
than a service contract or an arm’s length commercial contract. See note 37 for all related party transactions. Information 
regarding Directors’ service contracts is given on page 24 within the Directors’ remuneration report.

Share capital
As at 31 December 2016, the issued share capital of the Company was:

Number of ordinary shares of £0.01 each (‘Ordinary Shares’) issued and fully paid up – 40,504,806 (2015: 28,750,000).

The closing market price of the Company’s ordinary shares at close of business on 29 December 2016, the last trading day 
of the year, was 155.85 pence.

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28

Directors’ report continued

The maximum share price during the period from 1 January 2016 through 31 December 2016, was 169.5 pence and the 
minimum price was 117 pence per share.

Auditor
Each of the persons who is a Director at the date of approval of this Annual Report confirms that:
 – so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and
 – the Director has taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit 

information and to establish that the Company’s auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006.

Deloitte LLP have expressed their willingness to continue in office as auditor and a resolution to re-appoint them will be 
proposed at the forthcoming Annual General Meeting.

Subsequent events
There were no subsequent events.

Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable 
law and regulations. Company law requires the Directors to prepare Group and Company financial statements for each 
financial year. The Directors are required by the AIM Rules of the London Stock Exchange to prepare Group financial 
statements in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the European Union 
(‘EU') and have elected under company law to prepare the Company financial statements in accordance with IFRSs as 
adopted by the EU.

The financial statements are required by law and IFRS adopted by the EU to present fairly the financial position of the 
Group and the Company and the financial performance of the Group. The Companies Act 2006 provides in relation to such 
financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are 
references to their achieving a fair presentation. Under company law the Directors must not approve the financial 
statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company 
and of the profit or loss of the Group for that period. In preparing each of the Group and Company financial statements, the 
Directors are required to:
 – select suitable accounting policies and then apply them consistently;
 – make judgements and estimates that are reasonable and prudent;
 – present information, including accounting policies, in a manner that provides relevant, reliable, comparable and 

understandable information;

 – state whether they have been prepared in accordance with applicable IFRSs as adopted by the EU; and
 – prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the 

Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s 
and the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and 
the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also 
responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the 
prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity 
of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial 
statements may differ from legislation in other jurisdictions.

We confirm that to the best of our knowledge:
 – the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair 
view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the 
consolidation taken as a whole;

 – the Strategic report includes a fair view of the development and performance of the business and the position of the 

Company and undertakings included in the consolidation taken as a whole, together with a description of the principal 
risks and uncertainties that they face; and

 – the Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide 

information necessary for shareholders to assess the Company’s performance, business model and strategy.

Approved by the Board of Directors and signed on behalf of the Board.

S Jurić
Company Secretary
26 April 2017

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Independent auditor’s report
To the members of Ergomed plc

We have audited the financial statements of Ergomed plc for the year ended 31 December 2016 which comprise the Consolidated 
income statement, the Consolidated statement of comprehensive income, the Consolidated and parent company balance sheets, 
the Consolidated and parent company statements of changes in equity, the Consolidated and parent company cash flow 
statements and the related notes 1 to 59. The financial reporting framework that has been applied in their preparation is applicable 
law and International Financial Reporting Standards (‘IFRSs’) as adopted by the European Union and, as regards the parent 
company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to 
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume 
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for 
the opinions we have formed.

Respective responsibilities of Directors and auditor
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for preparation of the financial 
statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the 
financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards 
require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable 
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an 
assessment of: whether the accounting policies are appropriate to the Group’s and the parent company’s circumstances and have 
been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; 
and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the 
Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is 
apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the 
audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements
In our opinion:
 – the financial statements give a true and fair view of the state of the Group’s and the parent company’s affairs as at 31 

December 2016 and of the Group’s profit for the year then ended;

 – the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
 – the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the 

European Union and as applied in accordance with the provisions of the Companies Act 2006; and

 – the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
 – the information given in the Strategic report and the Directors’ report for the financial year for which the financial 

statements are prepared is consistent with the financial statements; and

 – the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, 
we have not identified any material misstatements in the Strategic report and the Directors’ report. 

Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you 
if, in our opinion:
 – adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not 

been received from branches not visited by us; or

 – the parent company financial statements are not in agreement with the accounting records and returns; or
 – certain disclosures of Directors’ remuneration specified by law are not made; or
 – we have not received all the information and explanations we require for our audit.

Matthew Hall 
FCA, (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Chartered Accountants Statutory Auditor
Deloitte House, Station Place, Cambridge CB1 2FP

26 April 2017 

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30

Consolidated income statement
For the year ended 31 December 2016

Revenue
Cost of sales

Gross profit
Administrative expenses

Administrative expenses comprises:
Other administrative expenses
Amortisation of acquired fair valued intangible assets
Share-based payment charge
Deferred consideration for acquisition
Write-back of deferred consideration
Acquisition costs
Exceptional items

Research and development
Other operating income

Operating profit
Investment revenues
Finance costs

Profit before taxation
Taxation

Profit for the year

Earnings per share
Basic 

Diluted 

All activities in the current and prior period relate to continuing operations.

The notes on pages 35 to 70 form an integral part of these financial statements.

Notes

3, 4

2016 
£000s

2015
£000s

39,233
(27,239)

30,178
(21,808)

11,994
(10,483)

8,370
(6,379)

(8,323)
(771)
(398)
(690)
460
(584)
(177)

(1,040)
127

598
2
(274)

326
153

479

1.3p

1.3p

(5,186)
(596)
(288)
–
–
(272)
(37)

–
81

2,072
1
(1)

2,072
(520)

1,552

5.4p 

5.2p

15
30
34
33
7
8

9
10

12

5

13

13

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Consolidated statement of comprehensive income
For the year ended 31 December 2016

Profit for the year

Items that may be classified subsequently to profit or loss:
Exchange differences on translation of foreign operations

Other comprehensive income for the year net of tax

Total comprehensive income for the year

2016
£000s

479

680

680

1,159

2015
£000s

1,552

(244)

(244)

1,308

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32

Consolidated balance sheet
As at 31 December 2016

Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments
Deferred tax asset

Current assets
Trade and other receivables
Clinical trial inventory
Cash and cash equivalents

Total assets

Current liabilities
Borrowings
Trade and other payables
Deferred revenue
Current tax liability

Total current liabilities

Net current assets

Non-current liabilities
Borrowings
Deferred consideration
Deferred tax liability

Total liabilities

Net assets

Equity 
Share capital
Share premium account
Merger reserve
Share-based payment reserve
Translation reserve
Retained earnings

Total equity

The notes on pages 35 to 70 form an integral part of these financial statements.

The re-statement of the balance sheets for 2014 and 2015 are explained in note 1.

Approved by the Board of Directors and authorised for issue on 26 April 2017.

S A Stamp
Director

Company Registration No. 04081094

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2016
£000s

2015
Re-stated
£000s

2014
Re-stated 
£000s

Notes

14
15
16
18
19

20
21
22

23
24

23
25
19

26
27
28
29
29

12,285
19,842
717
271
1,448

7,488
2,819
335
183
365

7,282
2,927
185
39
323

34,563

11,190

10,756

14,958
450
4,424

19,832

9,528
–
3,974

6,343
–
4,576

13,502

10,919

54,395

24,692

21,675

(3)
(7,077)
(1,393)
(119)

(5)
(5,955)
(795)
(478)

(7)
(5,010)
(594)
(144)

(8,592)

(7,233)

(5,755)

11,240

6,269

5,164

(5)
(7,772)
(3,418)

(7)
–
(516)

(6)
–
(575)

(19,787)

(7,756)

(6,336)

34,608

16,936

15,339

406
17,957
10,264
1,048
143
4,790

288
9,361
2,981
650
(537)
4,193

288
9,361
2,981
362
(293)
2,640

34,608

16,936

15,339

 
 
 
 
 
 
Consolidated statement of changes in equity
For the year ended 31 December 2016

Balance at 31 December 2014
Correction of accounting treatment (note 1)

As re-stated
Profit for the year
Other comprehensive income for the year

Total comprehensive income for the year
Share-based payment charge for the year
Deferred tax credit taken directly to equity

Balance at 31 December 2015 (re-stated)
Profit for the year
Other comprehensive income for the year

Total comprehensive income for the year
Share issue during the year for cash (net of 

expenses)

Share issues during the year for non-cash 

consideration

Contingent share issue for non-cash 

consideration

Share-based payment charge for the year
Deferred tax credit taken directly to equity

Share 
capital 
£000s

288
–

288
–
–

–
–
–

288
–
–

–

66

51

1
–
–

Share 
premium 
account 
£000s

12,342
(2,981)

9,361
–
–

–
–
–

9,361
–
–

–

8,596

–

–
–
–

Merger 
reserve
£000s

–
2,981

2,981
–
–

–
–
–

2,981
–
–

–

–

7,144

139
–
–

Share-
based 
payment 
reserve
£000s

Translation 
reserve 
£000s

Retained 
earnings 
£000s

362
–

362
–
–

–
288
–

650
–
–

–

–

–

–
398
–

(293)
–

(293)
–
(244)

(244)
–
–

(537)
–
680

680

–

–

–
–
–

2,640
–

2,640
1,552
–

1,552
–
1

4,193
479
–

479

–

–

–
–
118

Total
£000s

15,339
–

15,339
1,552
(244)

1,308
288
1

16,936
479
680

1,159

8,662

7,195

140
398
118

Balance at 31 December 2016

406

17,957

10,264

1,048

143

4,790

34,608

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34

Consolidated cash flow statement
For the year ended 31 December 2016

Cash flows from operating activities
Profit before taxation
Adjustment for:
Amortisation and depreciation
(Gain)/loss on disposal of fixed assets
Share-based payment charge
Acquisition of shares for non-cash consideration
Exchange adjustments
Acquisition costs and deferred consideration
Write-back of deferred consideration
Investment revenues
Finance costs

Operating cash flow before changes in working capital and provisions
Increase in trade and other receivables
Increase in inventory
(Decrease)/increase in trade and other payables

Cash (utilised by)/generated from operations
Taxation paid

Net cash (outflow)/inflow from operating activities

Investing activities
Investment revenues received
Acquisition of intangible assets
Acquisition of property, plant and equipment
Investment in joint venture and other investments
Acquisition of subsidiaries, net of cash acquired
Receipts from sale of property, plant and equipment

Net cash outflow from investing activities

Financing activities
Issue of new shares
Expenses of fundraising
Finance costs paid
Increase in borrowings
Repayment of borrowings

Net cash inflow/(outflow) from financing activities

Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at start of the year

Cash and cash equivalents at end of year

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Notes

2016
£000s

2015
£000s

326

2,072

1,027
(2)
398
(54)
419
726
(415)
(2)
274

2,697
(3,667)
(405)
(58)

(1,433)
(941)

(2,374)

2
(705)
(404)
–
(4,755)
31

(5,831)

9,185
(523)
(2)
–
(5)

8,655

450
3,974

22

4,424

713
4
288
(142)
(251)
54
–
(1)
1

2,738
(2,898)
–
1,012

852
(588)

264

1
(285)
(270) 
(1)
(312)
2 

(865)

–
–
(1)
7
(7)

(1)

(602)
4,576

3,974

 
 
 
 
 
 
Notes to the consolidated financial statements
For the year ended 31 December 2016

1. Accounting policies
Ergomed plc and its wholly owned subsidiaries provide a full range of clinical trial planning, management and monitoring, as 
well as drug safety and medical information services. The Group has a worldwide presence with operations in the UK, 
Poland, Germany, Bosnia, Croatia, Serbia, Russia, Switzerland, Ukraine, Taiwan, the United Arab Emirates and the USA. 
Ergomed plc is a company incorporated and domiciled in the UK.

The Group financial statements were authorised for issue by the Board of Directors on 26 April 2017.

Basis of accounting
Consolidated financial statements
The financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRSs’) and 
the Companies Act 2006. The financial statements have also been prepared in accordance with IFRSs adopted by the 
European Union and therefore the Group financial statements comply with Article 4 of the EU IAS Regulation.

The financial statements have been prepared on the historical cost basis. The principal accounting policies are set out below.

Parent company financial statements
The Company financial statements have been produced in accordance with International Financial Reporting Standards, the 
Companies Act 2006 and under the historical cost convention.

Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the 
Company (its subsidiaries) made up to 31 December each year. Control is achieved when the Company:
 – has the power over the investee;
 – is exposed, or has rights, to variable return from its involvement with the investee; and
 – has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to 
one or more of the three elements of control listed above.

When the Company has less than a majority of the voting rights of an investee, it considers that it has power over the 
investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee 
unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting 
rights in an investee are sufficient to give it power, including:
 – the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
 – potential voting rights held by the Company, other vote holders or other parties;
 – rights arising from other contractual arrangements; and
 – any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the 
relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company 
loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in 
the Consolidated income statement from the date the Company gains control until the date when the Company ceases to 
control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company. Total 
comprehensive income of the subsidiaries is attributed to the owners of the Company.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transitions between the members of 
the Group are eliminated on consolidation.

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Notes to the consolidated financial statements continued
For the year ended 31 December 2016

1. Accounting policies continued
When the Group loses control of a subsidiary, the gain or loss on disposal recognised in profit or loss is calculated as the 
difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained 
interest and (ii) the previous carrying amount of the assets (including goodwill), less liabilities of the subsidiary and any 
non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary 
are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to 
profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any 
investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial 
recognition for subsequent accounting under IAS 39 Financial Instruments: Recognition and Measurement or, when 
applicable, the costs on initial recognition of an investment in an associate or jointly controlled entity.

Going concern
The financial statements have been prepared on the going concern basis, which assumes that the Group will have sufficient 
funds to continue in operational existence for the foreseeable future, being a period of no less than 12 months from the date 
of signing of the financial statements. The Directors have reviewed a cash flow forecast (‘the Forecast’) for the period 
ending 31 December 2018. The Forecast represents the Directors’ best estimate of the Group’s future performance and 
necessarily includes a number of assumptions, including the level of revenues, which are subject to inherent uncertainties. 
However, the Forecast demonstrates that the Directors have a reasonable expectation that the Group will be able to meet 
its liabilities as they fall due, for a period of at least 12 months from the date of approval of these financial statements.

On the basis of the above factors and, having made appropriate enquiries, the Directors have a reasonable expectation that 
the Company and Group have adequate resources to continue in operational existence for the foreseeable future. 
Accordingly, they continue to adopt the going concern basis in preparing these financial statements.

Compliance with accounting standards
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied 
in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

IFRS 9

IFRS 15

IFRS 16

IFRS 11 (amendments)

IAS 1 (amendments)

IAS 16 and IAS 38 (amendments)

Financial Instruments

Revenue from Contracts with Customers

Leases

Accounting for Acquisitions of Interests in Joint Operations

Disclosure Initiative

Clarification of Acceptable Methods of Depreciation and 
Amortisation

IAS 16 and IAS 41 (amendments)

Agriculture: Bearer Plants

IAS 27 (amendments)

IFRS 10 and IAS 28 (amendments)

Equity Method in Separate Financial Statements

Sale or Contribution of Assets between an Investor and its 
Associate or Joint Venture

IFRS 10, IFRS 12 and IAS 28 (amendments)

Investment Entities: Applying the Consolidation Exemption

Annual Improvements to IFRSs: 2012–2014 Cycle

Amendments to: IFRS 5 Non-current Assets Held for Sale and 
Discontinued Operations, IFRS 7 Financial Instruments: 
Disclosures, IAS 19 Employee Benefits and IAS 34 Interim 
Financial Reporting

The Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial 
statements of the Group in future periods, except that IFRS 9 will impact both the measurement and disclosures of financial 
instruments. IFRS 15 may have an impact on revenue recognition and related disclosures, and IFRS 16 will have an impact on 
the measurement and recognition of leases and related disclosures. Beyond the information above, it is not practicable to 
provide a reasonable estimate of the effect of IFRS 9, IFRS 15 and IFRS 16 until a detailed review has been completed.

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Re-statement of prior year Consolidated balance sheet
In July 2014, Ergomed plc acquired the entire issued share capital of PrimeVigilance Limited for consideration comprising 
£6,000,000 in cash, and 1,875,000 shares of £0.01 each, valued at £1.60 per share. The excess of share value over the 
nominal value of those shares was taken to the share premium account. However, under the Companies Act 2006, these 
amounts should have been posted to the merger reserve. An adjustment has been made to the Consolidated balance sheet 
as at 31 December 2014 and 31 December 2015. This adjustment has no impact on the net assets of the Group, the 
Consolidated income statement or the Consolidated cash flow statement. The impact on the Consolidated balance sheet is 
set out below.

2015 
Previously 
reported
£000s

Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments
Deferred tax asset

Current assets
Trade and other receivables
Cash and cash equivalents

Total assets

Current liabilities
Borrowings
Trade and other payables
Deferred revenue
Current tax liability

Total current liabilities

Net current assets

Non-current liabilities
Borrowings
Deferred tax liability

Total liabilities

Net assets

Equity
Share capital
Share premium account
Merger reserve
Share-based payment reserve
Translation reserve
Retained earnings

Total equity

7,488
2,819
335
183
365

11,190

9,528
3,974

13,502

24,692

(5)
(5,955)
(795)
(478)

(7,233)

6,269

(7)
(516)

(7,756)

16,936

288
12,342
–
650
(537)
4,193

16,936

Adjustment
£000s

2015
Re-stated
£000s

–
–
–
–
–

–

–
–

–

–

–
–
–
–

–

–

–
–

–

–

–
(2,981)
2,981
–
–
–

7,488
2,819
335
183
365

11,190

9,528
3,974

13,502

24,692

(5)
(5,955)
(795)
(478)

(7,233)

6,269

(7)
(516)

(7,756)

16,936

288
9,361
2,981
650
(537)
4,193

–

16,936

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Notes to the consolidated financial statements continued
For the year ended 31 December 2016

1. Accounting policies continued

Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments
Deferred tax asset

Current assets
Trade and other receivables
Cash and cash equivalents

Total assets

Current liabilities
Borrowings
Trade and other payables
Deferred revenue
Current tax liability

Total current liabilities

Net current assets

Non-current liabilities
Borrowings
Deferred tax liability

Total liabilities

Net assets

Equity
Share capital
Share premium account
Merger reserve
Share-based payment reserve
Translation reserve
Retained earnings

Total equity

2014
Previously 
reported
£000s

Adjustment 
£000s

2014
Re-stated
£000s

7,282
2,927
185
39
323

10,756

6,343
4,576

10,919

21,675

(7)
(5,010)
(594)
(144)

(5,755)

5,164

(6)
(575)

(6,336)

15,339

288
12,342
–
362
(293)
2,640

15,339

–
–
–
–
–

–

–
–

–

–

–
–
–
–

–

–

–
–

–

–

–
(2,981)
2,981
–
–
–

7,282
2,927
185
39
323

10,756

6,343
4,576

10,919

21,675

(7)
(5,010)
(594)
(144)

(5,755)

5,164

(6)
(575)

(6,336)

15,339

288
9,361
2,981
362
(293)
2,640

–

15,339

Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost less depreciation less any provision for impairment. Depreciation is 
provided on assets at rates calculated to write off the cost, less their estimated residual value, over their expected useful 
lives on the following bases:

Leasehold improvements 
Motor vehicles 
Computer equipment 
Fixtures and fittings 
Laboratory equipment 

2.5% straight line or over the remaining lease term, whichever is shorter
8.33 – 50% straight line
8.33 – 50% straight line
10 – 50% straight line
20% straight line

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Business combinations
Acquisitions of companies are accounted for in accordance with the principles of IFRS 3, as the Directors consider it reflects 
the economic substance of transactions.

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a 
business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets 
transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the 
Group in exchange for control of the acquiree. Deferred consideration in a business combination is measured at fair value, which is 
calculated as the sum of the acquisition-date fair values of assets expected to be transferred by the Group to the former owners of 
the acquiree and the equity interest to be issued by the Group in exchange for control of the acquiree. Acquisition-related costs are 
recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the 
acquisition date, except that:
 – deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and 

measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively; and

 – assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale 

and Discontinued Operations are measured in accordance with that Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests 
in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the 
acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the 
acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration 
transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held 
interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the 
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those 
provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are 
recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if 
known, would have affected the amounts recognised as of that date.

Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition 
date). Goodwill is measured as the excess of the fair value of the sum of the consideration transferred, the amount of any 
non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest (if any) in the 
entity over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill 
is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. 
Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when 
there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the 
carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to 
the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An 
impairment loss recognised for goodwill is not reversed in a subsequent period. An impairment loss recognised for goodwill 
is not reversed in a subsequent period.

The recoverable amount is the higher of the fair value less costs to sell, and the value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have
not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised
immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is
treated as a revaluation decrease.

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40

Notes to the consolidated financial statements continued
For the year ended 31 December 2016

1. Accounting policies continued
Investments
Investments are stated at cost less provision for impairment in value.

Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and 
accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives as 
follows:

Software 

20–30% straight line

The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any 
changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are 
acquired separately are carried at cost less accumulated impairment losses.

Costs associated with the development of computer software are initially capitalised at cost which includes the purchase 
price (net of any discounts and rebates) and other directly attributable costs of preparing the asset for its intended use. 
Direct expenditure, including employee costs, which enhances or extends the performance of computer software beyond 
its specifications and which can be reliably measured, is added to the original cost of the software. Costs associated with 
maintaining the computer software are recognised as an expense when incurred. 

The computer software under development is currently under construction and so no amortisation has been recognised in 
the current year. The asset will subsequently be carried at cost less accumulated amortisation and accumulated impairment 
losses. These costs will be amortised to profit or loss using the straight line method over their estimated useful lives of five 
years, once the asset is in use.

Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at 
their fair value at the acquisition date (which is regarded as their cost).

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less 
accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired 
separately, as follows.

Customer contract 
Customer relationships 
Brand 
Technology 
In-process R&D  

20% straight line
20% straight line
13.3% straight line
40% straight line
Not currently amortised

Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine 
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the 
recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does 
not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the 
cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, 
corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group 
of cash-generating units for which a reasonable and consistent allocation basis can be identified.

The recoverable amount is the higher of the fair value less costs to sell, and the value in use. In assessing value in use, the 
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market 
assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have 
not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying 
amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised 
immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is 
treated as a revaluation decrease.

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Financial instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes a party to the 
contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to 
the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair 
value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as 
appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial 
liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets
The Company classifies its financial assets in the following categories:
 – at fair value through profit or loss (‘FVTPL’)
 – loans and receivables
 – available-for-sale financial assets (‘AFS’)
 – held-to-maturity investments

The classification depends on the purpose for which the financial assets were acquired. Management determines the 
classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date.

Financial assets at fair value through profit or loss
This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or 
loss at inception. A financial asset is classified in this category if it was acquired principally for the purpose of selling it in the 
short term or if so designated by management. Financial instruments at fair value through profit and loss comprise of 
‘derivative financial instruments’. Assets in this category are classified as current assets, if they are either held for trading or 
are expected to be realised within 12 months of the balance sheet date.

Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an 
active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. 
These are classified as non-current assets. Loans and receivables comprise of ‘trade and other receivables’ and ‘cash and 
cash equivalents’ in the balance sheet.

Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial 
assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial 
recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For listed and unlisted equity investments classified as AFS, a significant or prolonged decline in the fair value of the 
security below its cost is considered to be objective evidence of impairment.

For all other financial assets, including redeemable notes classified as AFS and finance lease receivables, objective evidence 
of impairment could include:
 – significant financial difficulty of the issuer or counterparty; or
 – default or delinquency in interest or principal payments; or
 – it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually 
are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of 
receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed 
payments in the portfolio past the average credit period of 60 days, as well as observable changes in national or local 
economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the differences between the asset’s carrying 
amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the 
exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a 
trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of 
amounts previously written off are credited against the allowance account. Changes in the carrying amount of the 

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Notes to the consolidated financial statements continued
For the year ended 31 December 2016

allowance account are recognised in profit or loss.
1. Accounting policies continued
Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the 
contractual arrangement.

Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its 
liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is 
recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’.

Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest 
expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest 
expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash 
payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying 
amount on initial recognition.

Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.

Clinical trial inventory
Clinical trial inventory relates to clinical trial material to be used in the clinical development programmes of the Group. It is 
stated at cost and comprises direct material costs and, where applicable, direct labour costs and those overheads that have 
been incurred in bringing the inventories to their present location and condition.

Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short term highly liquid investments that 
are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for 
services provided in the normal course of business, net of discounts and estimated credit notes.

Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract based on 
time spent. Revenue is recognised when it is probable that economic benefits will flow to the Company.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

Operating profit
Operating profit is stated before investment income, finance costs and tax.

Taxation
The tax expense represents the sum of tax currently payable and deferred tax.

Taxable profit differs from net profit as reported in the income statement because it excludes items of income and 
expenditure that are taxable or deductible in other periods and it further excludes items that are never taxable or 
deductible.

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Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and 
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is 
accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all temporary differences 
and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which 
deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differences 
arise from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a 
transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax is calculated at the tax rates that are enacted or substantively enacted at the reporting date.

Foreign currency translation
The functional currency of the Company is the Euro, and the presentational currency is UK Sterling, meeting the 
requirements of shareholders. Monetary assets and liabilities denominated in foreign currencies are translated into Sterling 
at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at 
the date of the transaction. All differences are taken to the income statement.

The results and financial position of all the Group entities that have a functional currency different from the presentation 
currency are translated into the presentation currency as follows:
 – assets and liabilities for each balance sheet presented are translated at the closing rate at the reporting date;
 – income and expenses for each income statement are translated on a monthly basis at average exchange rates (unless this 
average is not a reasonable approximation of the exchange rates at the dates of the transactions, in which case income 
and expense items are translated at the exchange rates at the dates of the transactions); and

 – all resulting exchange differences are recognised directly in Other comprehensive income.

Pensions
The pension costs charged in the financial statements represent the contributions payable by the Company during the year 
in accordance with lAS 19.

Leasing and hire purchase commitments
Assets obtained under hire purchase contracts and finance leases are capitalised as tangible assets and depreciated over 
their useful lives. Obligations under such agreements are included in creditors net of the finance charge allocated to future 
periods. The finance element of the rental payment is charged to the income statement so as to produce a constant 
periodic rate of charge on the net obligation outstanding in each period.

Rentals payable under operating leases are charged against income on a straight line basis over the lease term.

Share-based payments
The Group operates an equity-settled share-based option scheme under which the Group receives services from employees 
in consideration for equity instruments (options) of the Company. The fair value of the employees’ services received in 
exchange for the grant of options is recognised as an expense. The total amount to be expensed is determined by reference 
to the fair value of the options granted, excluding the impact of any non-market service and performance vesting 
conditions. The total amount expensed is recognised over the vesting period, which is the period over which all the 
specified conditions are satisfied. At each balance sheet date, the entity revises its estimates of the number of options that 
are expected to vest based on the vesting conditions.

Exceptional items
Significant non-recurring transactions undertaken by the Group during the year are classified as exceptional items.

2. Critical accounting judgements and key sources of estimation and uncertainty
In the application of the Group’s accounting policies, which are described in note 1, the Directors are required to make 
judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent 
from other sources. The estimates and associated assumptions are based on historical experience and other factors that are 
considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are 
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the 
revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the Group’s accounting policies
The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), 
that the Directors have made in the process of applying the Group’s accounting policies and that have the most significant 
effect on the amounts recognised in the financial statements.

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44

Notes to the consolidated financial statements continued
For the year ended 31 December 2016

2. Critical accounting judgements and key sources of estimation and uncertainty continued
Revenue recognition
The amount of revenue to be recognised is based on, inter alia, management’s estimate of the fair value of the consideration 
received or receivable, the stage of completion and of the point in time at which management considers that it becomes 
probable that economic benefits will flow to the entity (as the outcome is not always certain at the inception of a contract).

Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period, that 
may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next 
financial year, are discussed below.

Bad debt provision
In determining the level of provisioning for bad debts, the Directors have considered the aging of trade receivables, and the 
payment history and financial position of debtors. The provision against trade receivables as at 31 December 2016 was 
£1,016,000 (2015: £233,000) (note 20).

Impairment of goodwill
Under IFRSs, goodwill is reviewed for impairment at least annually. Determining whether goodwill is impaired requires an 
estimation of the recoverable amount of the cash-generating units to which goodwill has been allocated. The calculation of 
the recoverable amount requires the entity to estimate the future cash flows expected to arise from the cash-generating 
unit and a suitable discount rate in order to determine whether the recoverable amount is greater than the carrying value. 
The carrying amount of goodwill and any impairment loss is disclosed in note 14.

Fair value measurements
Some of the Group’s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair 
value of an asset or a liability, the Group uses market-observable data to the extent it is available. Where Level 1 inputs are 
not available, the Group engages third party qualified valuers to perform the valuation. The Directors work closely with the 
qualified external valuers to establish the appropriate valuation techniques and inputs to the model.

The Group incurs share-based payment charges in relation to share options awards made in the current and prior periods. 
This charge is based on the fair value of such share options for financial reporting purposes. In estimating the fair value of a 
share-based payment, the Group engages third party qualified valuers to perform the valuation. The Directors work closely 
with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model.

3. Revenue
An analysis of the Group’s revenue is as follows:

Provision of clinical research services
Provision of drug safety and medical information services

Other operating income
Investment revenues

2016 
£000s

25,777
13,456

39,233
127
2

2015
£000s

21,906
8,272

30,178
81
1

39,362

30,260

The provision of clinical research services includes the revenues of O+P and GASD following their acquisition by the 
Company on 12 June 2016.

The provision of drug safety and medical information services includes the revenues of PharmInvent following its acquisition 
by the Company on 28 November 2016.

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4. Operating segments
Products and services from which reportable segments derive their revenues
Information reported to the Group’s Chief Executive Officer, who is the chief operating decision maker (‘CODM’), for the 
purpose of resource allocation and assessment of segment performance is focused on the Group operating as two business 
segments, being clinical research services (‘CRS’) and drug safety and medical information services (‘DS&MI’). All revenues 
arise from direct sales to customers. The segment information reported below all relates to continuing operations.

Geographical information
The Group’s revenue from external customers by geographical location is detailed below:

2016

UK
Rest of Europe, Middle East and Africa
North America
Asia
Australia

2015

UK
Rest of Europe, Middle East and Africa
North America
Asia
Australia

2016

Revenue

Third party sales
Intersegment sales and recharges

Total revenue

Revenue

Segment result
Research and development
Amortisation of acquired fair valued intangible assets
Share-based payment charge
Deferred consideration for acquisition
Write-back of deferred consideration for acquisition
Acquisition costs
Exceptional items

Operating profit
Investment revenues
Finance costs
Finance charge for deferred consideration for acquisition

Profit before tax
Tax

Profit after tax

Revenue from external customers

CRS 
£000s

3,330
15,590
6,490
367
–

DS&MI
£000s

4,746
4,461
4,018
27
204

Total
£000s

8,076
20,051
10,508
394
204

25,777

13,456

39,233

Revenue from external customers

CRS
£000s 

2,748
9,407
7,945
1,806
–

DS&MI
£000s

3,395
2,878
1,874
3
122

Total
£000s

6,143
12,285
9,819
1,809
122

21,906

8,272

30,178

CRS
£000s 

25,777
670

26,447

DS&MI
£000s

Eliminations 
£000s

13,456
2

13,458

–
(672)

(672)

CRS 
£000s

203

DS&MI
£000s

3,586

Eliminations 
£000s

9

Consolidated
total
£000s

39,233
–

39,233

Consolidated
total
£000s

3,798
(1,040)
(771)
(398)
(690)
460
(584)
(177)

598
2
(2)
(272)

326
153

479

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46

Notes to the consolidated financial statements continued
For the year ended 31 December 2016

4. Operating segments continued
2015

Revenue

Third party sales
Intersegment sales and recharges

Total revenue

Revenue

Segment result
Amortisation of acquired fair valued intangible assets
Share-based payment charge
Acquisition costs
Exceptional items

Operating profit
Investment revenues
Finance costs

Profit before tax
Tax

Profit after tax

CRS
£000s 

21,906
67

21,973

CRS 
£000s

1,165

DS&MI
£000s

8,272
9

8,281

DS&MI
£000s

2,102

Eliminations
£000s

Consolidated
total
£000s

–
(76)

(76)

30,178
–

30,178

Eliminations
£000s

(2)

Consolidated
total
£000s

3,265
(596)
(288)
(272)
(37)

2,072
1
(1)

2,072
(520)

1,552

The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 1. 
Segment profit represents the profit earned by each segment. This is the measure reported to the Group’s Chief Executive 
Officer for the purpose of resource allocation and assessment of segment performance.

Segment net assets

CRS
DS&MI

Consolidated total net assets

2016
£000s

16,489
18,119

2015
£000s

5,913
11,023

34,608

16,936

For the purposes of monitoring segment performance and allocating resources between segments, the Group’s Chief 
Executive Officer monitors the tangible, intangible and financial assets attributable to each segment. All assets are allocated 
to reportable segments. Goodwill has been allocated to reportable segments as described in note 14.

Other segment information

CRS
DS&MI

Depreciation and 
amortisation

Additions to non-current 
assets

2016
£000s

528
499

1,027

2015 
£000s

286
427

713

2016
£000s

705
404

1,109

2015
£000s

238
317

555

Information about major customers
In 2016, the Group had two customers that contributed 10% or more to the Group’s revenue. Revenues of approximately 
£5,479,000 and £4,771,000 were recognised from these customers respectively, all relating to the provision of clinical 
research services.

In 2015, the Group had two customers that contributed 10% or more to the Group’s revenue. Revenues of approximately 
£5,219,000 and £5,181,000 were recognised from these customers respectively for clinical research services.

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5. Profit for the year

Profit for the year is stated after charging/(crediting):
Depreciation of property, plant and equipment – owned
Depreciation of property, plant and equipment – leased
Amortisation of intangible assets

Depreciation and amortisation charges within Administrative expenses

Amortisation of acquired fair valued intangible assets
Exchange (gain)/loss
(Gain)/loss on disposals of property, plant and equipment
Staff costs (note 11)

6. Auditor’s remuneration
The analysis of the auditor’s remuneration is as follows:

Fees payable to the Company’s auditor and their associates for the audit of the Company’s annual 

accounts

Total audit fees

– Interim review

Total non-audit fees

2016
£000s

2015
£000s

231
5
20

256

771
(274)
(2)
11,839

105
5
7

117

596
115
4
7,546

2016 
£000s

2015
£000s

128

128

33

33

93

93

33

33

Fees payable to Deloitte LLP and their associates for non-audit services to the Company are not required to be disclosed 
because the consolidated financial statements are required to disclose such fees on a consolidated basis.

7. Acquisition costs

Acquisition of Sound Opinion
Acquisition of Haemostatix (note 32)
Acquisition of O+P and GASD (note 33)
Acquisition of PharmInvent (note 34)
Other M&A activities

8. Exceptional items

Establishment of Taiwan office
Establishment of PrimeVigilance US office

2016 
£000s

7
370
85
118
4

584

2016 
£000s

–
177

177

2015
£000s

54
–
–
–
218

272

2015
£000s

37
–

37

In line with the way the Board and chief operating decision maker review the business, large one-off exceptional costs 
related to the establishment of the subsidiaries in Taiwan and the US are shown as exceptional costs.

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48

Notes to the consolidated financial statements continued
For the year ended 31 December 2016

9. Investment revenues

Bank and other interest

10. Finance costs

Loan and other interest payable
Finance charge for deferred consideration for acquisition

2016
£000s

2

2016
£000s

(2)
(272)

(274)

2015
£000s

1

2015
£000s

(1)
–

(1)

The finance charge for deferred consideration for acquisition relates to the first payment of deferred consideration payable 
to the vendors of PharmInvent. The payment of deferred consideration for PharmInvent is conditional upon the vendors’ 
continuing employment by the Group and, in accordance with IFRS 3, is therefore recognised as a finance cost.

11. Employees
Number of employees
The average monthly number of persons employed by the Group (including Executive Directors and excluding Non-
Executive Directors) during the year was:

Administration 
Project staff
Management
Directors

Employment costs

Wages and salaries
Social security costs
Other pension costs (note 36)

2016
Number

2015
Number

52
296
18
4

370

2016
£000s

9,923
1,734
182

11,839

40
216
13
2

271

2015
£000s

6,546
882
118

7,546

Disclosures relating to key management personnel are included within the Directors’ remuneration report on pages 24 to 26.

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12. Taxation

Current tax
UK corporation tax (credit)/charge for the year
Overseas corporation tax
Adjustment in respect of prior years

Current tax (credit)/charge for the year
Deferred tax
Origination and reversal of timing differences
Effect of changes in tax rates

Total tax (credit)/charge for the year

2016
£000s

(181)
180
(16)

(17)

(40)
(96)

(153)

2015
£000s

349
308
13

670

(143)
(7)

520

Under IAS 12 Income Taxes, the amount of tax benefit that can be recognised in the income statement is limited by 
reference to the IFRS 2 share-based payment charge. The excess amount of tax benefit in respect of share options gives 
rise to a credit which has been recognised directly in equity, in addition to the amounts charged to the income statement 
and other comprehensive income, as follows:

2016
£000s

2015
£000s

Deferred tax
Change in estimated excess tax deductions related to share-based payments

Total income tax credit recognised directly in equity

(118)

(118)

(1)

(1)

The standard rate of tax for the year, based on the UK standard rate of corporation tax, is 20% (2015: 20.25%). The actual 
tax charges for the years differ from the standard rate for the reasons set out in the following reconciliation.

Profit on ordinary activities before taxation

Tax on profit on ordinary activities at blended standard rate of 20% (2015: 20.25%)
Non-deductible expenses
Additional allowable expenses
Timing differences arising in the year
R&D tax credit receivable
Adjustments to previous periods
Effect of different tax rates of subsidiaries operating in other jurisdictions
Difference due to change in rate of taxation
Increase/(utilisation) of tax losses
Translation effect

Tax (credit)/expense for the year

2016
£000s

326

65
449
(449)
(64)
(181)
(13)
(3)
(80)
144
(21)

(153)

2015
£000s

2,072

419
268
(91)
(155)
–
13
74
(7)
(8)
7

520

The Finance Act 2015, which provides for a reduction in the main rate of corporation tax from 20% to 19% effective from  
1 April 2016, and from 19% to 17% effective from 1 April 2017 was substantively enacted on 6 September 2016. These rate 
reductions have been reflected in the calculation of deferred tax at the balance sheet date.

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50

Notes to the consolidated financial statements continued
For the year ended 31 December 2016

13. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:

Earnings for the purposes of basic earnings per share being net profit attributable to owners 
of the Company
Effect of dilutive potential Ordinary Shares

Earnings for the purposes of diluted earnings per share

2016 
£000s

479
–

479

2016 
£000s

2015
£000s

1,552
–

1,552

2015
£000s

Number of shares
Weighted average number of Ordinary Shares for the purposes of basic earnings per share
Effect of dilutive potential Ordinary Shares
Share options

35,573,733 28,750,000

1,484,600

1,015,223

Weighted average number of Ordinary Shares for the purposes of diluted earnings per share

37,058,333

29,765,223

14. Goodwill

Cost
At 1 January 2015
Arising on acquisition of subsidiary 

At 1 January 2016
Arising on acquisition of subsidiaries (notes 32, 33 and 34)

At 31 December 2016

Accumulated impairment losses
At 1 January 2015, 1 January 2016 and 31 December 2016

Net book value
At 31 December 2016

At 31 December 2015

£000s

7,282
206

7,488
4,797

12,285

–

12,285

7,488

The goodwill arising during the year ended 31 December 2016 relates to the acquisitions of Haemostatix, O+P and GASD 
and PharmInvent on 24 May 2016, 12 June 2016 and 28 November 2016 respectively.

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Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (‘CGUs’) that are 
expected to benefit from that business combination. The carrying amount of goodwill had been allocated as follows:

Clinical research services
Ergomed Virtuoso
Haemostatix
O+P and GASD

Drug safety and medical information services
PrimeVigilance
Sound Opinion
PharmInvent

2016
£000s

2015
£000s

2014
£000s

455
2,086
487

3,028

6,827
206
2,224

9,257

455
–
–

455

6,827
206
–

7,033

455
–
–

455

6,827
–
–

6,827

12,285

7,488

7,282

The Group tests goodwill for impairment annually or more frequently if there are indications that goodwill might be 
impaired.

The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in 
use calculations are those regarding discount rates and growth rates.

Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of 
money and the risks specific to the CGUs. The growth rates are based on management’s estimates based on the Group’s 
planned organic expansion of its operations and broadened overall offering, and the increased demand for services. Profit 
margins included in the projections are based on industry standards.

The Group prepares cash flow forecasts derived from the most recent financial budgets approved by the Board for the next 
five years and extrapolates cash flows for the following five years based on a terminal growth rate of 2%, except for the
Ergomed Virtuoso Sarl CGU and the Haemostatix Limited CGU, both of the clinical research services (‘CRS’) segment. This 
rate does not exceed the average long term growth rate for the relevant markets. The Ergomed Virtuoso Sarl CGU 
extrapolates cash flows over the remaining life of the Customer Contract using a terminal growth rate of 0%. The 
Haemostatix Limited CGU extrapolates cash flows over the patent life of the In-process research and development using 
a terminal growth rate of 0%.

The post-tax rate used to discount the forecast cash flows from both the clinical research services (‘CRS’) and drug safety 
and medical information (‘DS&MI’) and research and development segments is 13.4%.

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Notes to the consolidated financial statements continued
For the year ended 31 December 2016

Software 
£000s

Customer 
contract 
£000s

Customer 
relationships 
£000s

Brand 
£000s

In-Process 
R&D
£000s

Technology
£000s

Total
£000s

15. Other intangible assets

Cost
At 1 January 2015
Acquired with subsidiary
Additions
Translation movement

At 31 December 2015
Acquired with subsidiaries (see notes 

32, 33 and 34)

Additions
Assets written-off
Re-allocation to tangible fixed assets
Translation movement

472
–
285
(6)

751

–
705
(18)
(2)
22

1,070
–
–
–

1,070

–
–
–
–
–

At 31 December 2016

1,458

1,070

Amortisation 
At 1 January 2015
Charge for the year
Amortisation cost of acquired fair 

valued intangible assets

Translation movement

At 31 December 2015
Charge for the year
Amortisation cost of acquired fair 

valued intangible assets

Assets written-off
Translation movement

At 31 December 2016

Net book value
At 31 December 2016

At 31 December 2015

109
7

–
(6)

110
20

–
(18)
17

129

1,329

641

267
–

214
–

481
–

214
–
–

695

375

589

1,480
210
–
–

1,690

1,487
–
–
–
–

3,177

148
–

321
–

469
–

398
–
–

867

2,310

1,221

460
–
–
–

460

–
–
–
–
–

–
–
–
–

–

15,200
–
–
–
–

460

15,200

31
–

61
–

92
–

61
–
–

153

307

368

–
–

–
–

–
–

–
–
–

–

15,200

–

–
–
–
–

–

419
–
–
–
–

419

–
–

–
–

–
–

98
–
–

98

321

–

3,482
210
285
(6)

3,971

17,106
705
(18)
(2)
22

21,784

555
7

596
(6)

1,152
20

771
(18)
17

1,942

19,842

2,819

The intangible assets acquired with subsidiary during 2015 relate to the acquisition of Sound Opinion on 26 May 2015.

The intangible assets acquired with subsidiary during 2016 relate to the acquisitions of Haemostatix, O+P and GASD and 
PharmInvent on 24 May 2016, 12 June 2016 and 28 November 2016 respectively.

Included within Software is software under development with an asset value of £1,125,000 (2015: £583,000). The software 
is currently still under construction and so no amortisation has been recognised in the current year.

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Leasehold 
improvements 
£000s

Fixtures 
and fittings
£000s

Motor vehicles 
£000s

Computer 
equipment 
£000s

Laboratory 
equipment 
£000s

16. Property, plant and equipment

Cost
At 1 January 2015
Additions
Acquired with subsidiary
Re-allocation
Disposals
Translation movement

At 31 December 2015
Additions
Acquired with subsidiaries (notes 32, 33 

and 34)

Re-allocation from Intangible assets
Disposals
Translation movement

At 31 December 2016

Depreciation 
At 1 January 2015
Charge for the year
Re-allocation
Disposals
Translation movement

At 31 December 2015
Charge for the year
Disposals
Translation movement

At 31 December 2016

Net book value
At 31 December 2016

At 31 December 2015

38
17
–
–
–
(2)

53
17

–
2
–
8

80

26
5
–
–
(1)

30
10
–
4

44

36

23

51
35
–
(2)
(1)
(2)

81
67

5
–
–
14

167

28
10
(2)
–
(1)

35
34
–
6

75

92

46

68
19
–
–
(14)
(5)

68
9

145
–
(2)
12

232

28
5
–
(9)
(2)

22
25
–
4

51

181

46

346
199
2
2
(3)
(11)

535
269

35
–
(52)
89

876

236
90
2
(3)
(10)

315
158
(25)
56

504

372

220

Included above are assets held under finance leases or hire purchase contracts as follows:

Net book value
At 31 December 2016

At 31 December 2015

Depreciation charge for the year
Year ended 31 December 2016

Year ended 31 December 2015

Total 
£000s

503
270
2
–
(18)
(20)

737
404

188
2
(54)
123

–
–
–
–
–
–

–
42

3
–
–
–

45

1,400

–
–
–
–
–

–
9
–
–

9

36

–

318
110
–
(12)
(14)

402
236
(25)
70

683

717

335

Motor 
vehicles 
£000s

32

33

5

5

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54

Notes to the consolidated financial statements continued
For the year ended 31 December 2016

17. Subsidiaries
The Ergomed Group consists of a parent company, Ergomed plc, incorporated in the UK, and a number of subsidiaries held 
directly and indirectly by Ergomed plc which operate and are incorporated around the world. Note 46 to the parent 
company’s separate financial statements lists details of the material interests in subsidiaries.

Information about the composition of the Group at the end of the reporting period is as follows:

Principal activity

Clinical research services
Clinical research services
Clinical research services
Clinical research services
Clinical research services
Clinical research services
Clinical research services
Clinical research services
Clinical research services
Clinical research services
Drug safety and medical information services
Drug safety and medical information services
Drug safety and medical information services
Drug safety and medical information services
Drug safety and medical information services
Research and development
Dormant

The registered offices of the Company’s subsidiaries are as follows:

Company

Registered address

Number of wholly owned 
subsidiaries

Place of incorporation and 
operation

2016

2015

Germany
Poland
Serbia
USA
Croatia
Russia
Bosnia
UAE
Switzerland
Taiwan
United Kingdom
Croatia
Serbia
USA
Czech Republic
United Kingdom
United Kingdom

3
1
1
1
1
1
1
1
1
1
2
1
1
1
2
1
1

1
1
1
1
1
1
1
1
1
1
2
1
–
–
–
–
1

Otto-Volger-Str. 9b, 65843 Sulzbach (Taunus), Germany
Kolowa 8, 30-134 Krakow, Poland
Avgusta Cesarca 18, 21 000 Novi Sad, Serbia
9901 IH-10W, Suite 800, 78230, San Antonio, TX, USA
Oreškovićeva 20a, 10 020 Zagreb, Croatia
125040, Moscow, 17 Skakovaya Street, Building 2, Office 2714, The Russian Federation
Zmaja od Bosne 7-7a, Sarajevo, Bosnia and Herzegovina
Dubai International Academic City, Premises 06, Floor: Ground, Building: 03, Dubai, UAE
18, Avenue Lois-Casai, 1209 Geneva, Switzerland
Fl. 2, No. 467, Sec.6, Zhongxiao E Rd., Nangang District, Taipei City 115, Taiwan
Venloer Str. 47-53, 50672 Cologne, Germany 
Am Konvent 8-10, D-41460 Neuss, Germany

Ergomed GmbH
Ergomed Sp. z o.o.
Ergomed d.o.o. Novi Sad
Ergomed Clinical Research Inc
Ergomed Istraživanja Zagreb d.o.o.
Ergomed Clinical Research LLC
Ergomed d.o.o. Sarajevo
Ergomed Clinical Research FZ-LLC
Ergomed Virtuoso Sarl
Ergomed Clinical Research Limited
Dr Oestreich + Partner GmbH
Gesellschaft für angewandte Statistik  
+ Datenanalyse mbH
PrimeVigilance Limited
PrimeVigilance Zagreb d.o.o.
PrimeVigilance d.o.o. Beograd
PrimeVigilance Inc
Sound Opinion Limited
European Pharminvent Services s.r.o. Prague 3 - Vinohrady, Slezska 856/74, 13000, Czech Republic
Prague 3 - Vinohrady, Slezska 856/74, 13000, Czech Republic
Pharminvent regulatory s.r.o.
BioCity Nottingham, Pennyfoot Street, Nottingham, NG1 1GF, UK
Haemostatix Limited
26-28 Frederick Sanger Road, Surrey Research Park, Guildford, Surrey, GU2 7YD, UK
Ergomed Clinical Research Limited

26-28 Frederick Sanger Road, Surrey Research Park, Guildford, Surrey, GU2 7YD, UK
Oreškovićeva 20a, 10 020 Zagreb, Croatia
Đorđa Stanojevića 14, Beograd – Novi Beograd, Serbia
Reservoir Place, 1601 Trapelo Road, Waltham, MA 02451, USA
26-28 Frederick Sanger Road, Surrey Research Park, Guildford, Surrey, GU2 7YD, UK

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18. Investments

Cost
At 1 January 2015
Additions
Translation movement

At 31 December 2015
Additions
Translation movement

At 31 December 2016

Provision for impairment
At 31 December 2015 and 31 December 2016

Net book value
At 31 December 2016

At 31 December 2015

Modus 
Therapeutics 
Holding AB
£000s

Ergomed 
Saudi 
Limited
£000s

–
142
2

144
54
30

228

–

228

144

39
–
–

39
–
4

43

–

43

39

Total
£000s

39
142
2

183
54
34

271

–

271

183

Modus Therapeutics Holding AB (formerly Dilaforette Holding AB)
Under the co-development agreement with Modus Therapeutics AB (formerly Dilaforette AB), the Group receives shares in 
Modus Therapeutics Holding AB in return for its contribution to the co-development programme. During the year, shares 
valued at £54,000 (2015: £142,000) were issued to the Group.

Ergomed Saudi Limited
On 22 July 2014, the Group invested £40,000 for a 50% holding in a joint venture in Saudi Arabia – ‘Ergomed Saudi Limited’. 
The operation is still in the set up phase and the asset is held at cost.

19. Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the 
current and prior reporting period.

Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so. The following is the 
analysis of the deferred tax balances (after offset) for financial reporting purposes:

Deferred tax assets

At 1 January 2015
Credit to profit or loss
Credit direct to equity
Translation movement

At 31 December 2015
Acquired with subsidiaries
Charge to profit or loss
Credit direct to equity

At 31 December 2016

Tax losses
£000s

Timing 
differences
£000s

323
46
1
(8)

362
1,015
(47)
118

–
3
–
–

3
–
(3)
–

–

Total
£000s

323
49
1
(8)

365
1,015
(50)
118

1,448

1,448

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Notes to the consolidated financial statements continued
For the year ended 31 December 2016

19. Deferred tax continued
Deferred tax liabilities

At 1 January 2015
Acquired with subsidiary
(Charge)/credit to profit or loss

At 31 December 2015
Acquired with subsidiaries
(Charge)/credit to profit or loss

At 31 December 2016

Deferred tax assets
Deferred tax liabilities

Net deferred tax liabilities

ACAs
£000s

(78)
–
(46)

(124)
–
(48)

Timing 
differences
£000s

(497)
(42)
147

(392)
(3,145)
291

Total
£000s

(575)
(42)
101

(516)
(3,145)
243

(172)

(3,246)

(3,418)

2016
£000s

1,448
(3,418)

(1,970)

2015
£000s

365
(516)

(151)

At 31 December 2016, the Group had unused tax losses of £5,731,000 (2015: £384,000) available for offset against future 
profits. A deferred tax asset has been recognised in respect of £5,731,000 (2015: £16,000) of such losses. No deferred tax 
asset has been recognised in respect of the remaining £nil (2015: £368,000) as it is not considered probable that there will 
be future profits available. Included in unrecognised tax losses are losses of £nil (2015: £77,000) that will expire in 2026. 
Other losses may be carried forward indefinitely.

20. Trade and other receivables

Trade receivables
Other receivables
Prepayments
Accrued income
Corporation tax receivable

2016
£000s

9,540
1,025
841
2,538
1,014

2015
£000s

6,412
381
376
1,989
370

14,958

9,528

Included in trade receivables are the following amounts that are past due at the reporting date by the following periods.

Less than 30 days overdue
31 to 60 days overdue
61 to 90 days overdue
More than 90 days overdue

Movement in the provision for doubtful debts.

Balance at the beginning of the year
Impairment losses recognised
Acquired with subsidiaries
Provision made during the year
Translation movements

Balance at the end of the year

2016
£000s

1,795
1,588
105
221

3,709

2016
£000s

233
(116)
3
855
41

1,016

2015
£000s

1,592
221
24
404

2,241

2015
£000s

200
–
–
45
(12)

233

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The carrying value of trade receivables approximates to their fair value at the balance sheet date.

The carrying values of the Group’s trade and other receivables are uncovered. The Group has not pledged as security any of 
the amounts included in receivables.

21. Clinical trial inventory

Clinical trial inventory

2016 
£000s

450

2015 
£000s

–

Clinical trial inventory relates to GMP material for use in the clinical development programmes of Haemostatix Limited.

22. Cash and cash equivalents

Cash at bank

2016 
£000s

2015 
£000s

4,424

3,974

The effective interest rate at the balance sheet date on cash at bank was 0.006% (2015: 0.021%).

The carrying amount of cash and cash equivalents approximates to their fair value at the balance sheet date and are 
denominated in the following currencies:

GBP
Euro
USD
Other

23. Borrowings

Secured borrowings at amortised cost
Finance leases
Borrowings within one year

Between one and two years
Between two and five years

Borrowings greater than one year

Totals

Finance leases are secured on the assets to which they relate.

24. Trade and other payables

Trade creditors
Amounts payable to related parties
Social security and other taxes
Other payables
Accruals

2016 
£000s

1,144
1,239
1,078
963

2015 
£000s

913
348
1,116
1,597

4,424

3,974

2016

2015

Capital 
£000s

Interest 
£000s

Capital 
£000s

Interest 
£000s

3

3
2

5

8

–

–
–

–

–

5

3
4

7

12

1

–
–

–

1

2016 
£000s

3,037
49
632
600
2,759

7,077

2015 
£000s

2,381
71
374
381
2,748

5,955

The carrying amount of the Group’s trade and other payables approximates to their fair value at the balance sheet date and 
are uncovered.

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Notes to the consolidated financial statements continued
For the year ended 31 December 2016

25. Deferred consideration

Deferred consideration

2016 
£000s

7,772

2015 
£000s

–

This amount relates to the fair value of the deferred consideration in relation to the acquisition of Haemostatix Limited. The 
carrying amount of the Company’s trade and other payables approximates to their fair value at the balance sheet date and 
are uncovered.

26. Share capital

Allotted, called up and fully paid
Ordinary shares of £0.01 each
Balance at 1 January
Shares issued during the year
Contingent shares for deferred consideration

Balance at 31 December

Allotted, called up and fully paid
Ordinary shares of £0.01 each
Balance at 1 January
Shares issued for cash during the year
Shares issued for non-cash consideration during the year
Contingent shares for deferred consideration

Balance at 31 December

2016 
No.

2015 
No.

28,750,000
11,754,806
94,618

40,599,424

28,750,000
–
–

28,750,000

2016 
£000s

2015 
£000s

288
66
51
1

406

288
–
–
–

288

During 2016, a total of 11,754,806 ordinary shares of £0.01 each (‘Ordinary Shares’) were issued, of which 6,560,850 were 
issued for cash in an institutional placing, 4,415,051 were issued as part consideration for Haemostatix, 138,329 were issued 
as part consideration for O+P and GASD and 640,576 were issued as part consideration for PharmInvent. In addition, a 
further 94,618 Ordinary Shares will be issued to part satisfy the first component of deferred consideration for PharmInvent.

27. Share premium account

Balance at 1 January (re-stated) (note 1)
Share issue for cash during the year
Expenses of share issue for cash during the year

Balance at 31 December

2016 
£000s

9,361
9,120
(524)

17,957

2015 
£000s

9,361
–
–

9,361

The share premium arising during 2016 related to the issue of 6,560,850 ordinary shares at a price of £1.40 per share on 24 
May 2016 in connection with an institutional placing. Expenses of £524,000 relating to the issue of shares were deducted 
from the Share premium account.

28. Merger reserve

Balance at 1 January (re-stated) (note 1)
Shares issued for non-cash consideration during the year
Contingent shares for deferred consideration

Balance at 31 December

2016 
£000s

2,981
7,144
139

10,264

2015 
£000s

2,981
–
–

2,981

The merger reserve arising during 2016 for non-cash consideration related to the issue of a total of 5,193,956 ordinary 

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shares of £0.01 each (‘Ordinary Shares’). Of these, 4,415,051 were issued at £1.40 per share as part consideration for 
Haemostatix, 138,329 were issued at £1.37 per share as part consideration for O+P and GASD and 640,576 were issued at 
£1.29 per share as part consideration for PharmInvent. 

In addition, an additional 94,618 Ordinary Shares will be issued at £1.48 per share to part satisfy the first component of 
deferred consideration for PharmInvent.

29. Reserves
The movements in reserves are shown in the Consolidated statement of changes in equity.

Share-based payment reserve
The corresponding credit associated with the charge for share options (note 30) is recognised as a credit to the share-
based payment reserve.

Translation reserve
The translation reserve records any exchange differences arising as a result of the translation of foreign currency equity 
balances and foreign currency non-monetary items.

30. Share-based payments
The Company operates three share option schemes:
 – the Ergomed plc Long Term Incentive Plan;
 – the Unapproved Executive Share Option Scheme 2007; and
 – an Unapproved Executive Share Option Agreement made with Rolf Stahel.

Ergomed plc Long Term Incentive Plan
The Ergomed plc Long Term Incentive Plan allows for the grant of options to both executives and all other Group 
employees, which may or may not be subject to performance criteria. It further provides for any options granted under its 
terms to be options that qualify under the Enterprise Management Incentives legislation (‘Qualifying EMI options’), as well 
as options that do not qualify (‘Unapproved options’).

Selected Directors and employees of the Group may be granted options under the Long Term Incentive Plan at the 
discretion of the Company’s Board of Directors or a duly authorised committee thereof (the ‘Committee’). Employees and 
Directors will be eligible to participate in the Long Term Incentive Plan as follows:

i)  Qualifying EMI options can be granted to an employee or Director of the Company (or a Group company) who commits 
at least 25 hours per week or, if less, at least 75% of his or her working time on the business of the Company (or Group 
company) and, at the grant date, does not either individually or together with his associates control more than 30% of 
the ordinary share capital of the Company.

ii)  Unapproved options can be granted to any employee (including an Executive Director) of a Group company.

Outstanding at the beginning of the year
Granted during the year
Lapsed during the year

Outstanding at the end of the year

Vested at the end of the year

Exercisable at the end of the year

2016

2015

Number of  

Weighted 
average  

Number of  

Weighted 
average  

share options

exercise price

share options

exercise price

1,353,000
835,000
(150,000)

2,038,000

–

–

1.64
0.56
1.625

1.20

–
1,368,000
(15,000)

1,353,000

–
1.64
1.625

1.64

–

–

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60

Notes to the consolidated financial statements continued
For the year ended 31 December 2016

30. Share-based payments continued
Options were valued using a Black-Scholes option pricing model, using the following inputs:

Award date

Fair value per share option
Share price
Exercise price
Volatility
Expected life
Expected dividends
Risk free rate

Award date

Fair value per share option
Share price
Exercise price
Volatility
Expected life
Expected dividends
Risk free rate

11 January 
2016

11 January 
2016

3 July 2016

3 July 2016

3 December 
2016

1.6327p 0.4226p
£1.693
£0.01
27%

0.1441p
£1.21
£1.39
27%
3 years 2.9 years
1.0%
0.23%

1.0%
0.7%

£1.693
£0.01
27%
3 years
1.0%
0.7%

£1.21
£0.01
28%

1.1791p 0.2493p
£1.43
£1.39
28%
1.7 years 2.5 years
1.0%
0.21%

1.0%
0.11%

3 June 
2015

24 December 
2015

44.68p
£1.625
£1.625
28%
5 years
0%
1.52%

42.38p
£1.660
£1.660
27%
5 years
0%
1.29%

Volatility was based upon the historical volatility for a basket of comparable listed companies measured over a period 
commensurate with the expected life of the grant.

Based on the calculation of the total fair value of the options granted, the Company recognised a total charge through the 
income statement of £331,000 related to equity-settled share-based payment transactions in the year ended 31 December 
2016 (2015: £95,000).

At 31 December 2016, the following unexercised share options to acquire Ordinary Shares were outstanding:

Year of grant

2015

2015

2016

2016

2016

2016

2016

Exercise period

Exercise price 
per share

2016 
No.

2015 
No.

03/06/2018 – 02/06/2025

1.625

928,000 1,078,000

03/06/2018 – 23/12/2025

11/01/2016 – 10/01/2026

11/01/2016 – 10/01/2026

03/07/2016 – 02/06/2026

03/07/2016 – 02/06/2026

03/12/2016 – 02/12/2026

1.69

0.01

0.01

1.39

0.01

1.39

275,000

275,000

200,000

200,000

185,000

100,000

150,000

–

–

–

–

–

The weighted average remaining life was eight years and ten months (2015: nine years and six months).

Unapproved Executive Share Option Scheme 2007
The Unapproved Executive Share Option Scheme 2007 is an unapproved equity-settled share option scheme for the benefit 
of employees. Grants are made at the discretion of the Board of Directors, or an authorised committee thereof.

Options are forfeited (even if already vested) if the employee ceases employment with the Company and can only be 
exercised upon a sale, listing or the passing of a resolution for the voluntary winding-up of the Company or making of an 
order for the compulsory winding up of the Company. The employee retains the options vested at the time of the cessation 
of the employee’s employment for a six month period. The movement on options in issue under these schemes is set out 
below:

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Outstanding at the beginning and end of the year

Vested at the end of the year

Exercisable at the end of the year

2016

2015

Number of 
share options

1,000,000

1,000,000

1,000,000

Weighted 
average 
exercise price

Number of 
share options

Weighted 
average 
exercise price

0.01

1,000,000

0.01

1,000,000

1,000,000

Based on the calculation of the total fair value of the options granted, the Company recognised a total charge through the 
income statement of £nil related to equity-settled share-based payment transactions in the year ended 31 December 2016 
(2015: £nil).

At 31 December 2016, the following unexercised share options to acquire Ordinary Shares were outstanding:

Year of grant

2009

Exercise period

per share

Exercise price  

2016 
No.

2015 
No.

31/01/2009 – 30/12/2019

0.01

1,000,000

1,000,000

The weighted average remaining life was three years (2015: four years).

Unapproved Executive Share Option Agreement made with Rolf Stahel
On 18 April 2014, an award of share options was made to Rolf Stahel under a separate option agreement. The award 
comprised options over 1,260,000 Ordinary Shares. The exercise of the options is linked to the timing of the Admission 
which has given rise to an exercise price of £1.60 per share. The option becomes exercisable in respect of one thirty-sixth of 
the options one month from the date of the share option agreement and on the same date in each subsequent calendar 
month over one thirty-sixth of the options.

Outstanding at the beginning of the year 
Granted during the year

Outstanding at the end of the year

Vested at the end of the year

Exercisable at the end of the year

2016

2015

Weighted 
average 
exercise price

1.60
–

1.60

Number of 
share options

1,260,000
–

1,260,000

1,120,000

1,120,000

Number of 
share options

1,260,000
–

1,260,000

700,000

700,000

Weighted 
average 
exercise price

1.60
–

1.60

Thirty-two thirty-sixths of the total amount of options awarded have vested by 31 December 2016, representing 1,120,000 
shares at an exercise price of £1.60. All unexercised options carry an exercise price of £1.60. The awards have a 10 year 
contractual life. At 31 December 2016, the awards therefore had a remaining contractual life of seven years and four months.

The options were valued using a Black-Scholes option pricing model, using the following inputs:

Award date

Fair value per share option
Share price
Exercise price
Volatility
Expected life
Expected dividends
Risk free rate

18 April 2014

47.79p
£1.60
£1.60
30%
5 years
0%
1.91%

Volatility was based upon the historical volatility for a basket of comparable listed companies measured over a period 
commensurate with the expected life of the grant.

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Notes to the consolidated financial statements continued
For the year ended 31 December 2016

30. Share-based payments continued
Based on the calculation of the total fair value of the options granted, the share-based remuneration expense in respect of 
equity-settled schemes is an amount of £67,000 (2015: £193,000). There are no outstanding liabilities.

At 31 December 2016, the following unexercised share options to acquire Ordinary Shares were outstanding:

Year of grant

2014

Exercise period

Exercise price 
per share

2016 
No.

2015 
No.

18/04/2014 – 17/04/2024

1.60 1,260,000 1,260,000

The weighted average remaining life was seven years and four months (2015: eight years and four months).

31. Financial instruments
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order 
to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to 
reduce the cost of capital.

Significant accounting policies
Details of the significant accounting policies and methods adopted (including the criteria for recognition, the basis of 
measurement and the bases for recognition of income and expenses) for each class of financial asset, financial liability and 
equity instrument are disclosed in note 1.

Categories of financial instruments

31 December 2016

Financial assets
Investments
Trade receivables
Other receivables
Accrued income
Cash and cash equivalents

Financial liabilities
Finance leases
Trade creditors
Amounts owed to related parties
Other payables
Accruals
Deferred consideration

Financial 
instruments at 
fair value 
through profit 
and loss 
£000s

Current 
financial 
liabilities at 
amortised 
cost 
£000s

Non-current 
financial 
liabilities at fair 
value through 
profit and loss 
£000s

Non-current 
financial 
liabilities at 
amortised 
cost 
£000s

Loans and 
receivables 
£000s

–
9,540
198
2,233
4,424

16,395

–
–
–
–
–

–

–
–
–
–
–
–

–

3
3,037
49
600
2,759

–

6,448

228
–
–
–
–

228

–
–
–
–
–
–

–

Carrying 
amount 
£000s

228
9,540
198
2,233
4,424

Fair value 
£000s

228
9,540
198
2,233
4,424

16,623

16,623

8
3,037
49
600
2,759
7,772

8
3,037
49
600
2,759
7,772

14,225

14,225

–
–
–
–
–

–

–
–
–
–
–
7,772

7,772

–
–
–
–
–

–

5
–
–
–
–
–

5

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Categories of financial instruments

31 December 2015

Financial assets
Investments
Trade receivables
Other receivables
Accrued income
Cash and cash equivalents

Financial liabilities
Finance leases
Trade creditors
Amounts owed to related parties
Other payables
Accruals

Financial 
instruments at 
fair value 
through profit 
and loss 
£000s

Current
 financial 
liabilities at 
amortised cost 
£000s

Non-current 
financial 
liabilities at 
amortised cost 
£000s

Loans and 
receivables 
£000s

Carrying 
amount 
£000s

Fair value 
£000s

144
–
–
–
–

144

–
–
–
–
–

–

–
6,412
141
740
3,974

11,267

–
–
–
–
–

–

–
–
–
–
–

–

5
2,381
71
381
2,748

5,586

–
–
–
–
–

–

7
–
–
–
–

7

144
6,412
141
740
3,974

11,411

12
2,381
71
381
2,748

5,593

144
6,412
141
740
3,974

11,411

12
2,381
71
381
2,748

5,593

The Group’s financial assets held for managing liquidity risk, being loans and receivables, which are considered to be readily 
saleable or are expected to generate cash inflows to meet cash outflows on financial liabilities within six months.

Financial risk management objectives
The Group’s Finance function provides services to the business, monitors and manages the financial risks relating to the 
operations of the Group. These risks include market risk (including currency risk), credit risk, liquidity risk and cash flow 
interest rate risk.

Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest 
rates (see below).

Foreign currency risk management
The Group undertakes transactions denominated in foreign currencies; consequently exposures to exchange rate 
fluctuations arise. Exchange rate exposures are managed by natural hedging in currency accounts, and the functional 
currency is the Euro. The carrying amounts of the Group’s financial assets and financial liabilities by currency at the 
reporting date are as follows:

Financial assets

GBP
Euro
USD
Other

Financial liabilities

GBP
Euro
USD
Other

2016 
£000s

2,487
6,396
5,797
1,943

16,623

2016 
£000s

9,026
4,032
170
997

14,225

2015 
£000s

2,094
2,145
5,126
2,046

11,411

2015 
£000s

886
3,875
249
583

5,593

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64

Notes to the consolidated financial statements continued
For the year ended 31 December 2016

31. Financial instruments continued
Foreign currency sensitivity analysis
The Group is mainly exposed to the Euro currency and the US Dollar currency. However as the Euro is the functional 
currency their exposure is less sensitive.

The following table details the Group’s sensitivity to a 10% increase and decrease in Sterling against the relevant foreign 
currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and 
represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis 
includes only outstanding foreign currency denominated monetary assets and liabilities and adjusts their translation at the 
period end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit and other 
equity and a negative number indicates a decrease in profit and other equity.

2016

Euro
USD
Other

2015

Euro
USD
Other

Strengthen 
+10% 
£000s

Weaken 
-10% 
£000s

(215)
(511)
(86)

(812)

263
625
105

993

Strengthen 
+10% 
£000s

Weaken 
-10% 
£000s

157
(443)
(133)

(419)

(192)
542
162

512

Interest rate risk management
The Group is exposed to the interest rate risks associated with its holdings of cash and cash equivalents and short term 
deposits and finance leases payable.

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which regularly monitors the Group’s 
short, medium and long term funding, and liquidity management requirements. The Group manages liquidity risk by 
maintaining adequate cash and cash equivalents and by continuously monitoring forecast and actual cash flows and 
matching the maturity profiles of financial assets and liabilities.

The impact on profit and other comprehensive income due to interest rate exposure is not considered significant, and no 
interest rate sensitivity has been performed.

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Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the 
Group. The Group has adopted a policy of only dealing with creditworthy counterparties. The Group assesses the 
creditworthiness of customers in advance of entering into any contract. During the life of a contract, the customer’s 
financial status is monitored as well as payment history. The Group does have some larger customer balances representing 
more than 15% of the trade receivables at a particular time, but these will be large profitable pharmaceutical companies with 
good credit ratings or smaller biotech companies with supportive shareholders and a history of successful fundraising, and 
this is not considered indicative of an increased credit risk. Credit information is supplied by independent rating agencies 
where appropriate and if available. Alternatively the Group uses other publicly available financial information and its own 
trading records to rate its major customers.

Trade receivables consist of a large number of customers, spread across diverse geographical areas. Ongoing credit 
evaluation is performed on the financial condition of accounts receivable.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by 
international credit rating agencies.

There has been no history of bad debts as the majority of its sales are to multinational pharmaceutical companies and as a 
consequence the Directors do not consider that the Group has a credit risk.

The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents 
the Group’s maximum exposure to credit risk as no collateral or other credit enhancements are held.

Liquidity and interest risk tables
The Group has no significant long term financial liabilities.

Fair value estimation
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair 
values. The fair value of long term trade receivables and payables is estimated by discounting the future contractual cash 
flows at the current market interest rate for the underlying currency of the transaction.

Fair value measurements
The financial instruments measured subsequent to initial recognition at fair value comprise investments. The fair value 
hierarchy of these assets is Level 2. The valuation technique is market value, based on the most recent investment price. The 
Group did not have any other financial instruments that are measured subsequent to initial recognition at fair value. An 
analysis of the fair value hierarchy has therefore not been presented.

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66

Notes to the consolidated financial statements continued
For the year ended 31 December 2016

32. Acquisition of subsidiary – Haemostatix
On 24 May 2016, Ergomed plc acquired 100% of the issued share capital of Haemostatix Limited (‘Haemostatix’), a research 
and development company based in Nottingham, UK developing novel products for the surgical bleeding market. The 
acquisition of Haemostatix enhances Ergomed’s portfolio of development products with the potential to generate 
significant shareholder value.

The amounts provisionally recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in 
the table below.

Intangible assets
Property, plant and equipment
Deferred tax asset

Total non-current assets

Trade and other debtors
Clinical trial inventory
Cash and equivalents

Current assets

Trade and other creditors
Deferred tax liability

Financial liabilities

Book values 
£000s

Fair value 
adjustments 
£000s

Final 
valuation 
£000s

15,200
4
1,015

15,200
–
1,015

16,215

16,219

–
–
–

–

164
45
63

272

–
4
–

4

164
45
63

272

(1,365)
–

–
(2,736)

(1,365)
(2,736)

(1,365)

(2,736)

(4,101)

Total identifiable net assets/(liabilities)
Goodwill

(1,089)
15,565

13,479
(13,479)

Total consideration

Satisfied by:
Cash
Equity
Deferred consideration

Total consideration

Net cash outflow arising on acquisition
Cash consideration
Less: cash and cash equivalent balances acquired
Transaction expenses (note 7)

14,476

800
6,181
7,495

14,476

800
(63)
370

1,107

–

–
–
–

–

–
–
–

–

12,390
2,086

14,476

800
6,181
7,495

14,476

800
(63)
370

1,107

The provisional fair value of intangible assets relates to the in-process research and development of PeproStat™ and 
ReadyFlow™. The provisional fair value of the financial assets includes receivables with a fair value of £164,000 and a gross 
contractual value of £164,000. The best estimate at acquisition date of the contractual cash flows not to be collected is £nil.

Goodwill is provisionally valued at £2,086,000. None of the goodwill is expected to be deductible for income tax purposes. 
Deferred consideration represents the fair valuation of the additional consideration payable, which could be an aggregate 
maximum of £20,000,000, subject to the future performance of the business.

Ergomed plc has a 12 month measurement period from the date of acquisition, and therefore the measurement period ends 
on 23 May 2017.

As a research and development company, Haemostatix is investing in its development portfolio and does not currently 
generate revenues. If the acquisition of Haemostatix had been completed on the first day of the financial year, Group revenues 
for the year ended 31 December 2016 would have been unchanged and Group profit would have been £1,082,000 lower.

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33. Acquisition of subsidiary – O+P and GASD
On 12 June 2016, Ergomed acquired 100% of the issued share capital of Dr Oestreich+ Partner GmbH (‘O+P’) and 
Gesellschaft für angewandte Statistik + Datenanalyse mbH (‘GASD’). O+P is a long established contract research 
organisation based in Cologne, Germany and GASD is a specialist data management and biostatistics company. The 
acquisition of O+P and GASD brings, among other things, a proprietary electronic data capture system and specialist 
biostatics expertise which can be deployed across the Ergomed global platform.

O+P and GASD were acquired as a single unit. The amounts provisionally recognised in relation to both entities in respect of 
the identifiable assets acquired and liabilities assumed are as set out in the table below.

Intangible assets
Property, plant and equipment

Total non-current assets

Trade and other debtors
Accrued income
Corporation tax receivable
Cash and equivalents

Current assets

Trade and other creditors
Tax payable
Deferred tax liability

Financial liabilities

Total identifiable net assets
Goodwill

Total consideration

Satisfied by:
Cash
Equity
Deferred consideration

Total consideration

Net cash outflow arising on acquisition
Cash consideration
Less: cash and cash equivalent balances acquired
Transaction expenses (note 7)

Book values 
£000s

Fair value 
adjustments 
£000s

Final 
valuation 
£000s

–
23

23

91
71
6
498

666

(218)
(2)
–

(220)

469
938

1,407

802
190
415

1,407

802
(498)
85

389

615
–

615

–
–
–
–

–

–
–
(164)

(164)

451
(451)

–

–
–
–

–

–
–
–

–

615
23

638

91
71
6
498

666

(218)
(2)
(164)

(384)

920
487

1,407

802
190
415

1,407

802
(498)
85

389

The provisional fair value of the financial assets includes receivables with a fair value of £91,000 and a gross contractual 
value of £91,000. The best estimate at acquisition date of the contractual cash flows not to be collected is £nil.

Goodwill is provisionally valued at £487,000 and is attributable to the synergies and the enhanced offering of the Ergomed 
Group following the acquisition. None of the goodwill is expected to be deductible for income tax purposes.

Deferred consideration represents the provisional fair valuation of the additional consideration payable which could be an 
aggregate maximum of £951,000, subject to the future performance of the business. This deferred consideration was 
written back during the year, giving rise to a credit through the profit and loss account of £460,000.

Ergomed plc has a 12 month measurement period from the date of acquisition, and therefore the measurement period ends 
on 11 June 2017.

If the acquisition of O+P and GASD had been completed on the first day of the financial year, Group revenues for the year 
ended 31 December 2016 would have been £381,000 higher and Group profit would have been £134,000 lower.

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68

Notes to the consolidated financial statements continued
For the year ended 31 December 2016

34. Acquisition of subsidiary – PharmInvent
On 28 November 2016, Ergomed acquired 100% of the issued share capital of European PharmInvent Services s.r.o. 
(‘PharmInvent’). PharmInvent offers a comprehensive range of pharmacovigilance and regulatory services to over 100 
clients in the global pharmaceutical industry. Pharmacovigilance services include an outsourced global network of 95 
Qualified Persons for Pharmacovigilance (‘QPPVs’) in 50 countries, case management, risk management, audit, training and 
consulting services on the establishment and maintenance of pharmacovigilance systems. Regulatory services include 
strategic advice on regulatory strategy, clinical trial and protocol design and medical writing of regulatory submissions.

The amounts provisionally recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in 
the table below.

Intangible assets
Property, plant and equipment

Total non-current assets

Trade and other debtors
Cash and equivalents

Current assets

Trade and other creditors
Tax payable
Deferred tax liability

Financial liabilities

Total identifiable net assets
Goodwill

Total consideration

Satisfied by:
Cash
Equity

Total consideration

Net cash outflow arising on acquisition
Cash consideration
Less: cash and cash equivalent balances acquired
Transaction expenses (note 7)

Book values 
£000s

Fair value 
adjustments 
£000s

Final 
valuation 
£000s

–
161

161

786
252

1,038

(300)
(45)
–

(345)

854
3,270

4,124

3,299
825

4,124

3,299
(252)
118

3,165

1,291
–

1,291

–
–

–

–
–
(245)

(245)

1,046
(1,046)

–

–
–

–

–
–
–

–

1,291
161

1,452

786
252

1,038

(300)
(45)
(245)

(590)

1,900
2,224

4,124

3,299
825

4,124

3,299
(252)
118

3,165

The provisional fair value of the financial assets includes receivables with a fair value of £786,000 and a gross contractual 
value of £786,000. The best estimate at acquisition date of the contractual cash flows not to be collected is £nil.

Goodwill is provisionally valued at £2,224,000 and is attributable to the enhanced offering of the Ergomed Group following 
the acquisition. None of the goodwill is expected to be deductible for income tax purposes.

In addition to the consideration identified above, deferred consideration is payable subject to the achievement of commercial 
milestones and conditional upon the continued employment of the vendors by the Company. In accordance with IFRS 3 – 
Business Combinations, such payments are charged through the profit and loss account when achieved. £690,000 has been 
charged through the profit and loss account in respect of milestones relating to the year ended 31 December 2016.

Ergomed plc has a 12 month measurement period from the date of acquisition, and therefore the measurement period ends 
on 27 November 2017.

If the acquisition of PharmInvent had been completed on the first day of the financial year, Group revenues for the year 
ended 31 December 2016 would have been £3,216,000 higher and Group profit would have been £593,000 higher.

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35. Financial commitments
At 31 December 2016 the Group was committed to making the following payments under non-cancellable operating leases 
which fall due as follows:

Within one year
Between two and five years

Land and buildings

Other

2016 
£000s

663
459

1,122

2015 
£000s

284
178

462

2016 
£000s

128
185

313

2015 
£000s

57
74

131

36. Pension costs
The Group makes contributions to defined contribution personal pension schemes of the employees. The pension cost 
represents contributions payable by the Group to the schemes and amounted to £182,000 (2015: £118,000). Contributions 
payable to the schemes at 31 December 2016 were £193,000 (2015: £123,000).

37. Related party transactions
Ergomed d.o.o., a company registered in Croatia, is under the control of Miroslav Reljanovic, who is a Director and 
shareholder of the Company. During the year the Company and its subsidiaries were charged £240,000 (2015: £160,000) 
by Ergomed d.o.o. and its subsidiaries in respect of clinical research costs and other administration. At 31 December 2016 a 
balance of £37,000 was owed by the Company and its subsidiaries to Ergomed d.o.o. in respect of these costs (2015: 
£57,000). In addition, during the year, the Group sold medical equipment to a subsidiary of Ergomed d.o.o. for £33,000 
(2015: £nil).

Chesyl Pharma Limited is a company owned by Rolf Stahel, who was a Director of the Company. During the year, the 
Company was charged consultancy fees of £52,000 (2015: £54,000) in relation to the services of Rolf Stahel, included in 
the remuneration paid to Rolf Stahel. At 31 December 2016, amounts payable to Chesyl Pharma in relation to such 
consultancy services and associated expenses were £12,000 (2015: £5,000).

All transactions with related parties take place on an arm’s length basis.

Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on 
consolidation and are not disclosed in this note.

38. EBITDA and EBITDA (adjusted)

Operating profit
Adjust for:
Depreciation and amortisation charges within Other administrative expenses
Amortisation of acquired fair valued intangible assets

EBITDA
Share-based payment charge
Deferred consideration for acquisition
Write-back of deferred consideration for acquisition
Acquisition costs
Exceptional items

EBITDA (adjusted)

2016 
£000s

598

256
771

1,625
398
690
(460)
584
177

3,014

2015
£000s

2,072

117
596

2,785
288
–
–
272
37

3,382

The adjustments to EBITDA are made to ensure that 2016 results and 2015 results are presented on a comparable basis.

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70

Notes to the consolidated financial statements continued
For the year ended 31 December 2016

39. Adjusted earnings per share

Earnings for the purposes of basic earnings per share being net profit attributable to owners  

of the Company

Effect of dilutive potential ordinary shares

Earnings for the purposes of diluted earnings per share

Adjust for:
Amortisation of acquired fair valued intangible assets
Share-based payment charge
Deferred consideration for acquisition
Write-back of deferred consideration for acquisition
Acquisition costs
Exceptional items

Adjusted earnings for the purposes of diluted earnings per share

Adjusted earnings per share
Basic 

Diluted 

40. Subsequent events
There were no subsequent events.

2016 
£000s

2015 
£000s

479
–

479

771
398
690
(460)
584
177

1,552
–

1,552

596
288
–
–
272
37

2,639

2,745

7.4p

7.1p

9.5p 

9.2p

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Company balance sheet
As at 31 December 2016

Non-current assets
Intangible assets
Property, plant and equipment
Investments
Deferred tax asset

Current assets
Trade and other receivables
Cash and cash equivalents

Total assets

Current liabilities
Trade and other payables
Deferred revenue

Total current liabilities

Net current assets

Non-current liabilities
Deferred consideration
Deferred tax liability

Total liabilities

Net assets

Equity 
Share capital
Share premium account
Merger reserve
Share-based payment reserve
Translation reserve
Retained earnings

Total equity

Note

44
45
46
47

48
49

2016 
£000s

2015
Re-stated 
£000s

2014
Re-stated
£000s

153
24
34,082
457

34,716

11,808
930

12,738

47,454

4
8
10,557
342

–
8
10,569
304

10,911

10,881

6,824
1,407

8,231

19,142

4,886
3,430

8,316

19,197

50

(7,524)
(1,260)

(5,945)
(773)

(5,138)
(586)

(8,784)

(6,718)

(5,724)

3,954

1,513

2,592

51
47

(7,772)
(5)

–
(2)

–
(1)

(16,561)

(6,720)

(5,725)

30,893

12,422

13,472

52
53
54
55
55

406
17,957
10,264
1,048
2,550
(1,332)

288
9,361
2,981
650
(1,046)
188

288
9,361
2,981
362
(235)
715

30,893

12,422

13,472

The notes on pages 74 to 89 form an integral part of these financial statements.

The re-statement of the balance sheets for 2014 and 2015 are explained in note 41.

As permitted by Section 408 of the Companies Act 2006 the Statement of comprehensive income of the parent company 
is not presented as part of these financial statements. The parent company’s loss after tax for the financial year was 
£1,638,000 (2015: £528,000).

Approved by the Board of Directors and authorised for issue on 26 April 2017. 

S A Stamp
Director
Company Registration No. 04081094

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72

Company statement of changes in equity
For the year ended 31 December 2016

Balance at 31 December 2014
Correction of accounting treatment (note 41)

As re-stated
Loss for the year
Other comprehensive income for the year

Total comprehensive income for the year
Share-based payment charge for the year
Deferred tax credit taken directly to equity

Balance at 31 December 2015 (re-stated)
Loss for the year
Other comprehensive income for the year

Total comprehensive income for the year
Share issue for cash (net of expenses) 

during the year

Share issues for non-cash consideration 

during the year

Contingent share issue for non-cash 

consideration

Share-based payment charge for the year
Deferred tax credit taken directly to equity

Share 
capital 
£000s

288
–

288
–
–

–
–
–

288
–
–

–

66

51

1
–
–

Share 
premium 
account 
£000s

12,342
(2,981)

9,361
–
–

–
–
–

9,361
–
–

–

8,596

–

–
–
–

Merger 
reserve
£000s

–
2,981

2,981
–
–

–
–
–

2,981
–
–

–

–

7,144

139
–
–

Share-
based 
payment 
reserve 
£000s

Translation 
reserve 
£000s

Retained 
earnings 
£000s

(235)
–

(235)
–
(811)

(811)
–
–

715
–

715
(528)
–

(528)
–
1

(1,046)
–
3,596

188
(1,638)
–

Total 
£000s

13,472
–

13,472
(528)
(811)

(1,339)
288
1

12,422
(1,638)
3,596

3,596

(1,638)

1,958

–

–

–
–
–

–

–

–
–
118

8,662

7,195

140
398
118

362
–

362
–
–

–
288
–

650
–
–

–

–

–

–
398
–

Balance at 31 December 2016

406

17,957

10,264

1,048

2,550

(1,332) 30,893

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Company cash flow statement
For the year ended 31 December 2016

Cash flows from operating activities
Loss before taxation
Adjustment for:
Amortisation and depreciation
Share-based payment charge
Exchange adjustments
Acquisition of shares for non-cash consideration
Write-back of deferred consideration
Acquisition costs and deferred consideration
Investment revenues
Finance costs

Operating cash flow before changes in working capital and provisions
Increase in trade and other receivables
Increase in trade and other payables

Cash utilised by operations
Taxation paid

Net cash outflow from operating activities

Investing activities
Acquisition of intangible assets
Acquisition of property, plant and equipment
Acquisition of subsidiaries

Net cash outflow from investing activities

Financing activities
Issue of new shares
Expenses of fundraising

Net cash inflow from financing activities

Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at start of the year

Cash and cash equivalents at end of year

Note

2016 
£000s

2015 
£000s

(1,581)

(563)

21
398
118
(54)
(415)
726
(1)
273

(515)
(4,938)
2,066

(3,387)
–

4
288
(198)
(142)
– 
54
–
–

(557)
(1,807)
914

(1,450)
(149)

(3,387)

(1,599)

(150)
(34)
(5,568)

(5,752)

9,185
(523)

8,662

(477)
1,407

(4)
(5)
(415)

(424)

–
–

–

(2,023)
3,430

49

930

1,407

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74

Notes to the Company financial statements
For the year ended 31 December 2016

41. Accounting policies
The separate financial statements of the Company are presented as required by the Companies Act 2006. As permitted by 
that Act, the separate financial statements have been prepared in accordance with International Financial Reporting 
Standards (‘IFRSs’) adopted by the European Union.

The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are the 
same as those set out in note 1 to the consolidated financial statements.

Re-statement of prior year Company balance sheet
In July 2014, Ergomed plc acquired the entire issued share capital of PrimeVigilance Limited for consideration comprising 
£6,000,000 in cash, and 1,875,000 shares of £0.01 each, valued at £1.60 per share. The excess of share value over the nominal 
value of those shares was taken to the share premium account. However, under the Companies Act 2006, these amounts should 
have been posted to the merger reserve. An adjustment has been made to the Company balance sheet as at 31 December 2014 
and 31 December 2015. This adjustment has no impact on the net assets of the Company, the Company income statement or the 
Company cash flow statement. The impact on the Company balance sheet is set out below.

2015
Previously 
reported
£000s

Adjustment 
£000s

2015
Re-stated
£000s

4
8
10,557
342

10,911

6,824
1,407

8,231

19,142

(5,945)
(773)

(6,718)

1,513

(2)

(6,720)

12,422

288
12,342
–
650
(1,046)
188

12,422

–
–
–
–

–

–
–

–

–

–
–

–

–

–

–

–

–
(2,981)
2,981
–
–
–

4
8
10,557
342

10,911

6,824
1,407

8,231

19,142

(5,945)
(773)

(6,718)

1,513

(2)

(6,720)

12,422

288
9,361
2,981
650
(1,046)
188

–

12,422

Non-current assets
Other intangible assets
Property, plant and equipment
Investments
Deferred tax asset

Current assets
Trade and other receivables
Cash and cash equivalents

Total assets

Current liabilities
Trade and other payables
Deferred revenue

Total current liabilities

Net current assets

Non-current liabilities
Deferred tax liability

Total liabilities

Net assets

Equity
Share capital
Share premium account
Merger reserve
Share-based payment reserve
Translation reserve
Retained earnings

Total equity

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Non-current assets
Property, plant and equipment
Investments
Deferred tax asset

Current assets
Trade and other receivables
Cash and cash equivalents

Total assets

Current liabilities
Trade and other payables
Deferred revenue

Total current liabilities

Net current assets

Non-current liabilities
Deferred tax liability

Total liabilities

Net assets

Equity
Share capital
Share premium account
Merger reserve
Share-based payment reserve
Translation reserve
Retained earnings

Total equity

2014
Previously 
reported
£000s

Adjustment 
£000s

2014
Re-stated
£000s

8
10,569
304

10,881

4,886
3,430

8,316

19,197

(5,138)
(586)

(5,724)

2,592

(1)

(5,725)

13,472

288
12,342
–
362
(235)
715

13,472

–
–
–

–

–
–

–

–

–
–

–

–

–

–

–

–
(2,981)
2,981
–
–
–

8
10,569
304

10,881

4,886
3,430

8,316

19,197

(5,138)
(586)

(5,724)

2,592

(1)

(5,725)

13,472

288
9,361
2,981
362
(235)
715

–

13,472

42. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company’s accounting policies, which are described in note 41, the Directors are required to make 
judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from 
other sources. The estimates and associated assumptions are based on historical experience and other factors that are 
considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are 
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the 
revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the Company’s accounting policies
The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), 
that the Directors have made in the process of applying the Company’s accounting policies and that have the most 
significant effect on the amounts recognised in the financial statements.

Revenue recognition
The amount of revenue to be recognised is based on, inter alia, management’s estimate of the fair value of the consideration 
received or receivable, the stage of completion and of the point in time at which management considers that it becomes 
probable that economic benefits will flow to the entity (as the outcome is not always certain at the inception of a contract).

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76

Notes to the Company financial statements continued
For the year ended 31 December 2016

42. Critical accounting judgements and key sources of estimation uncertainty continued
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period, that 
may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next 
financial year, are discussed below.

Bad debt provision
In determining the level of provisioning for bad debts, the Directors have considered the aging of trade receivables, and the 
payment history and financial position of debtors. The provision against trade receivables as at 31 December 2016 was 
£1,013,000 (2015: £188,000) (note 48).

Fair value measurements
Some of the Company’s liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of a 
liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the 
Company engages third party qualified valuers to perform the valuation. The Directors work closely with the qualified 
external valuers to establish the appropriate valuation techniques and inputs to the model.

The Company incurs share-based payment charges in relation to share options awards made in the current and prior 
periods. This charge is based on the fair value of such share options for financial reporting purposes. In estimating the fair 
value of a share-based payment, the Company engages third party qualified valuers to perform the valuation. The Directors 
work closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model.

43. Loss of the parent company
As permitted by Section 408 of the Companies Act 2006 the Statement of comprehensive income of the parent company 
is not presented as part of these financial statements. The parent company’s loss after tax for the financial year was 
£1,638,000 (2015: £528,000).

44. Intangible assets

Cost
At 1 January 2015
Translation movement
Additions

At 31 December 2015
Translation movement
Additions

At 31 December 2016

Amortisation 
At 1 January 2015
Translation movement

At 31 December 2015
Charge for the year
Translation movement

At 31 December 2016

Net book value
At 31 December 2016

At 31 December 2015

Intangible assets represent software currently in use by the business. 

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Software 
£000s

88
(10)
4

82
12
150

244

88
(10)

78
1
12

91

153

4

 
 
 
 
 
 
45. Property, plant and equipment

Cost
At 1 January 2015
Additions
Translation movement

At 31 December 2015
Additions
Translation movement

At 31 December 2016

Depreciation 
At 1 January 2015
Charge for the year
Translation movement

At 31 December 2015
Charge for the year
Translation movement

At 31 December 2016

Net book value
At 31 December 2016

At 31 December 2015

No assets in the above were held under finance leases or hire purchase contracts.

46. Investments

Cost
At 1 January 2015
Additions
Translation movement

At 31 December 2015
Additions
Translation movement

At 31 December 2016

Provision for impairment
At 31 December 2015 and 31 December 2016

Net book value
At 31 December 2016

At 31 December 2015

Fixtures 
and fittings 
£000s

Computer 
equipment 
£000s

Total 
£000s

1
–
–

1
18
1

20

1
–
–

1
12
–

13

7

–

23
4
(1)

26
16
5

47

15
4
(1)

18
8
4

30

17

8

24
4
(1)

27
34
6

67

16
4
(1)

19
20
4

43

24

8

Shares in 
subsidiary 
undertakings 
£000s

Modus 
Therapeutics 
Holding AB 
£000s

Ergomed 
Saudi 
Limited 
£000s

10,530
441
(597)

10,374
20,007
3,430

33,811

–
142
2

144
54
30

228

–

–

33,811

10,374

228

144

39
–
–

39
–
4

43

–

43

39

Total 
£000s

10,569
583
(595)

10,557
20,061
3,464

34,082

–

34,082

10,557

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78

Notes to the Company financial statements continued
For the year ended 31 December 2016

46. Investments continued
Subsidiary undertakings
The Company has direct interests in the following subsidiaries which are included in the consolidated financial statements:

Principal activity – clinical research services

Ergomed GmbH
Ergomed Spolka z o.o.
Ergomed d.o.o. Novi Sad
Ergomed Clinical Research Inc
Ergomed Istrazivanja Zagreb d.o.o.
Ergomed Clinical Research LLC
Ergomed d.o.o. Sarajevo
Ergomed Clinical Research FZ LLC
Ergomed Virtuoso Sarl
Ergomed Clinical Research Limited
Dr Oestreich + Partner GmbH1
Gesellschaft für angewandte Statistik + Datenanalyse mbH1

Principal activity – drug safety and medical information services

PrimeVigilance Limited
Sound Opinion Limited
European Pharminvent Services s.r.o.2

Principal activity – research and development

Haemostatix Limited3

Principal activity – dormant

Ergomed Clinical Research Limited

Place of incorporation  

and operation

Class

Holding

Germany
Poland
Serbia
USA
Croatia
Russia
Bosnia
UAE
Switzerland
Taiwan
Germany
Germany

Ordinary
Ordinary
Ordinary
None issued
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
None issued
None issued

100%
99%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

Place of incorporation  

and operation

United Kingdom
United Kingdom
Czech Republic

Class

Holding

Ordinary
Ordinary
None issued

100%
100%
100%

Place of incorporation  

and operation

Class

Holding

United Kingdom

Ordinary

100%

Place of incorporation  

and operation

Class

Holding

United Kingdom

Ordinary

100%

1  These companies were acquired by the Company on 12 June 2016 (note 33).
2  This company was acquired by the Company on 28 November 2016 (note 34).
3  This company was acquired by the Company on 24 May 2016 (note 32).

There are no significant restrictions on the ability of the Group to access or use assets and settle liabilities.

Modus Therapeutics Holding AB (formerly Dilaforette Holding AB)
Under the co-development agreement with Modus Therapeutics AB (formerly Dilaforette AB), the Group receives shares in 
Modus Therapeutics Holding AB in return for its contribution to the co-development programme. During the year, shares 
valued at £54,000 (2015: £142,000) were issued to the Company.

Ergomed Saudi Limited 
On 22 July 2014, the Group invested £40,000 for a 50% holding in a joint venture in Saudi Arabia – ‘Ergomed Saudi Limited’. 
The operation is still in the set up phase and the asset is held at cost.

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47. Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Company and movements thereon during 
the current and prior reporting period.

Deferred tax assets

At 1 January 2015
Credit to profit or loss
Credit direct to equity

At 31 December 2015
Credit to profit or loss
Credit direct to equity

At 31 December 2016

Deferred tax liabilities

1 January 2015
Charge to profit or loss

At 31 December 2015
Charge to profit or loss

At 31 December 2016

Tax losses 
£000s

Timing 
differences 
£000s

–
3
–

3
(3)
–

–

304
34
1

339
–
118

457

Total 
£000s

304
37
1

342
(3)
118

457

Timing 
differences 
£000s

(1)
(1)

(2)
(3)

(5)

Deferred tax assets and liabilities are offset where the Company has a legally enforceable right to do so. The following is the 
analysis of the deferred tax balances (after offset) for financial reporting purposes:

Deferred tax assets – Timing differences
Deferred tax assets – Recognised losses
Deferred tax liabilities – ACAs

Net deferred tax assets

48. Trade and other receivables

Trade receivables
Amounts receivable from Group companies
Other receivables
Prepayments
Accrued income
Corporation tax receivable

2016 
£000s

457
–
(5)

452

2015 
£000s

339
3
(2)

340

2016 
£000s

2015 
£000s

5,117
3,963
527
231
1,671
299

11,808

3,820
665
157
98
1,831
253

6,824

Included in trade receivables are the following amounts that are past due at the reporting date by the following periods.

Less than 30 days overdue
31 to 60 days overdue
61 to 90 days overdue
More than 90 days overdue

2016 
£000s

964
161
98
138

1,361

2015 
£000s

962
38
31
281

1,312

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80

Notes to the Company financial statements continued
For the year ended 31 December 2016

48. Trade and other receivables continued
Movement in the provision for doubtful debts.

Balance at the beginning of the year
Impairment losses recognised
Provision made during the year
Translation movement

Balance at the end of the year

2016 
£000s

188
(72)
856
41

1,013

2015 
£000s

200
–
–
(12)

188

The carrying value of the Company’s trade and other receivables are uncovered. The Company has not pledged as security 
any of the amounts included in receivables.

49. Cash and cash equivalents

Cash at bank

2016 
£000s

930

2015 
£000s

1,407

The carrying amount of cash and cash equivalents approximates to their fair values at the balance sheet date and are 
denominated in the following currencies:

GBP
Euro
USD
Other

50. Trade and other payables

Trade creditors
Amounts payable to related parties
Amounts payable to Group companies
Social security and other taxes
Other payables
Accruals

2016 
£000s

36
395
472
27

930

2016 
£000s

1,754
42
3,502
83
69
2,074

7,524

2015 
£000s

152
270
959
26

1,407

2015 
£000s

1,498
29
1,917
22
90
2,389

5,945

The carrying amount of the Company’s trade and other payables approximates to their fair value at the balance sheet date 
and are uncovered.

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51. Deferred consideration

Deferred consideration

2016 
£000s

7,772

2015 
£000s

–

This amount relates to the fair value of the deferred consideration in relation to the acquisition of Haemostatix Limited, 
being the Board’s best estimates based on discounted and risk adjusted forecasts.

52. Share capital

Allotted, called up and fully paid
Ordinary shares of £0.01 each
Balance at 1 January
Shares issued during the year
Contingent shares for deferred consideration

Balance at 31 December

Allotted, called up and fully paid
Ordinary shares of £0.01 each
Balance at 1 January
Shares issued for cash during the year
Shares issued for non-cash consideration during the year
Contingent shares for deferred consideration

Balance at 31 December

2016 
No.

2015 
No.

28,750,000
11,754,806
94,618

40,599,424

28,750,000
–
–

28,750,000

2016 
£000s

2015 
£000s

288
66
51
1

406

288
–
–
–

288

During 2016, a total of 11,754,806 ordinary shares of £0.01 each (‘Ordinary Shares’) were issued, of which 6,560,850 were 
issued for cash in an institutional placing, 4,415,051 were issued as part consideration for Haemostatix, 138,329 were issued 
as part consideration for O+P and GASD and 640,576 were issued as part consideration for PharmInvent. In addition, a 
further 94,618 Ordinary Shares will be issued to part satisfy the first component of deferred consideration for PharmInvent.

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82

Notes to the Company financial statements continued
For the year ended 31 December 2016

53. Share premium account

Balance at 1 January (re-stated) (note 41)
Share issue for cash during the year
Expenses of share issue during the year

Balance at 31 December

2016 
£000s

9,361
9,120
(524)

17,957

2015 
£000s

9,361
–
–

9,361

The share premium arising during 2016 related to the issue of 6,560,850 ordinary shares at a price of £1.40 per share on 24 
May 2016 in connection with an institutional placing. Expenses of £524,000 relating to the issue of shares were deducted 
from the share premium account.

54. Merger reserve

Balance at 1 January (re-stated) (note 41)
Shares issued for non-cash consideration during the year
Contingent shares for deferred consideration

Balance at 31 December

2016 
£000s

2,981
7,144
139

10,264

2015 
£000s

2,981
–
–

2,981

The merger reserve arising during 2016 for non-cash consideration related to the issue of a total of 5,193,956 ordinary 
shares of £0.01 each (‘Ordinary Shares’). Of these, 4,415,051 were issued at £1.40 per share as part consideration for 
Haemostatix, 138,329 were issued at £1.37 per share as part consideration for O+P and GASD and 640,576 were issued at 
£1.29 per share as part consideration for PharmInvent. 

In addition, an additional 94,618 Ordinary Shares will be issued at £1.48 per share to part satisfy the first component of 
deferred consideration for PharmInvent.

55. Reserves
The movements in reserves are shown in the Company statement of changes in equity.

Share-based payment reserve
The corresponding credit associated with the charge for share options (note 56) is recognised as a credit to the share-
based payment reserve.

Translation reserve
The translation reserve records any exchange differences arising as a result of the translation of foreign currency equity 
balances and foreign currency non-monetary items.

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56. Share-based payments
The Company operates three share option schemes:
 – the Ergomed plc Long Term Incentive Plan;
 – the Unapproved Executive Share Option Scheme 2007; and
 – an Unapproved Executive Share Option Agreement made with Rolf Stahel.

Ergomed plc Long Term Incentive Plan
The Ergomed plc Long Term Incentive Plan allows for the grant of options to both executives and all other Group 
employees, which may or may not be subject to performance criteria. It further provides for any options granted under its 
terms to be options that qualify under the Enterprise Management Incentives legislation (‘Qualifying EMI options’), as well 
as options that do not qualify (‘Unapproved options’).

Selected Directors and employees of the Group may be granted options under the Long Term Incentive Plan at the 
discretion of the Company’s Board of Directors or a duly authorised committee thereof (the ‘Committee’). Employees and 
Directors will be eligible to participate in the Long Term Incentive Plan as follows:

i)  Qualifying EMI options can be granted to an employee or Director of the Company (or a Group company) who commits 
at least 25 hours per week or, if less, at least 75% of his or her working time on the business of the Company (or Group 
company) and, at the grant date, does not either individually or together with his associates control more than 30% of 
the ordinary share capital of the Company.

ii)  Unapproved options can be granted to any employee (including an Executive Director) of a Group company.

Ergomed plc Long Term Incentive Plan

Outstanding at the beginning of the year
Granted during the year
Lapsed during the year

Outstanding at the end of the year

Vested at the end of the year

Exercisable at the end of the year

2016

2015

Number of  

Weighted 
average  

Number of  

Weighted 
average  

share options

exercise price

share options

exercise price

1,353,000
835,000
(150,000)

2,038,000

–

–

1.64
0.56
1.625

1.20

–
1,368,000
(15,000)

1,353,000

–
1.64
1.625

1.64

–

–

Options were valued using a Black-Scholes option pricing model, using the following inputs:

Award date

Fair value per share option
Share price
Exercise price
Volatility
Expected life
Expected dividends
Risk free rate

Award date

Fair value per share option
Share price
Exercise price
Volatility
Expected life
Expected dividends
Risk free rate

11 January 
2016

11 January 
2016

3 July 
2016

3 July 
2016

3 December 
2016

1.6327p
1.693
0.01
27%
3 years
1.0%
0.7%

0.4226p
1.693
0.01
27%
3 years
1.0%
0.7%

0.1441p
1.21
1.39
27%
2.9 years
1.0%
0.23%

1.1791p
1.21
0.01
28%
1.7 years
1.0%
0.11%

0.2493p
1.43
1.39
28%
2.5 years
1.0%
0.21%

3 June 
2015

24 December 
2015

44.68p
1.625
1.625
28%
5 years
0%
1.52%

42.38p
1.660
1.660
27%
5 years
0%
1.29%

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84

Notes to the Company financial statements continued
For the year ended 31 December 2016

56. Share-based payments continued 
Volatility was based upon the historical volatility for a basket of comparable listed companies measured over a period 
commensurate with the expected life of the grant.

Based on the calculation of the total fair value of the options granted, the Company recognised a total charge through the 
income statement of £331,000 related to equity-settled share-based payment transactions in the year ended 31 December 
2016 (2015: £95,000).

At 31 December 2016, the following unexercised share options to acquire Ordinary Shares were outstanding:

Year of grant

2015

2015

2016

2016

2016

Exercise period

Exercise price 
per share

2016 
No.

2015 
No.

03/06/2018 – 02/06/2025

1.625

928,000

1,078,000

03/06/2018 – 23/12/2025

11/01/2016 – 10/01/2026

11/01/2016 – 10/01/2026

03/07/2016 – 02/06/2026

1.69

0.01

0.01

1.39

275,000

275,000

200,000

200,000

185,000

–

–

–

The weighted average remaining life was eight years and ten months (2015: nine years and six months).

Unapproved Executive Share Option Scheme 2007
The Unapproved Executive Share Option Scheme 2007 is an unapproved equity-settled share option scheme for the benefit 
of employees. Grants are made at the discretion of the Board of Directors, or an authorised committee thereof.

Options are forfeited (even if already vested) if the employee ceases employment with the Company and can only be exercised 
upon a sale, listing or the passing of a resolution for the voluntary winding-up of the Company or making of an order for the 
compulsory winding up of the Company. The employee retains the options vested at the time of the cessation of the employee’s 
employment for a six month period. The movement on options in issue under these schemes is set out below:

Outstanding at the beginning and end of the year

Vested at the end of the year

Exercisable at the end of the year

2016

2015

Number of 
share options

1,000,000

1,000,000

1,000,000

Weighted 
average 
exercise price

Number of 
share options

Weighted 
average 
exercise price

0.01

1,000,000

0.01

1,000,000

1,000,000

Based on the calculation of the total fair value of the options granted, the Company recognised a total charge through the income 
statement of £nil related to equity-settled share-based payment transactions in the year ended 31 December 2016 (2015: £nil).

At 31 December 2016, the following unexercised share options to acquire Ordinary Shares were outstanding:

Year of grant

2009

Exercise period

per share

Exercise price  

2016 
No.

2015 
No.

31/12/2009 – 30/12/2019

0.01

1,000,000

1,000,000

The weighted average remaining life was three years (2015: four years).

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Unapproved Executive Share Option Agreement made with Rolf Stahel
On 18 April 2014, an award of share options was made to Rolf Stahel under a separate option agreement. The award 
comprised options over 1,260,000 Ordinary Shares. The exercise of the options is linked to the timing of the Admission 
which has given rise to an exercise price of £1.60 per share. The option becomes exercisable in respect of one thirty-sixth of 
the options one month from the date of the share option agreement and on the same date in each subsequent calendar 
month over one thirty-sixth of the options.

Outstanding at the beginning of the year 
Granted during the year

Outstanding at the end of the year

Vested at the end of the year

Exercisable at the end of the year

2016

2015

Weighted 
average 
exercise price

1.60
–

1.60

Number of 
share options

1,260,000
–

1,260,000

1,120,000

1,120,000

Number of 
share options

1,260,000
–

1,260,000

700,000

700,000

Weighted 
average 
exercise price

1.60
–

1.60

Thirty-two thirty-sixths of the total amount of options awarded have vested by 31 December 2016, representing 1,120,000 
shares at an exercise price of £1.60. All unexercised options carry an exercise price of £1.60. The awards have a 10 year 
contractual life. At 31 December 2016, the awards therefore had a remaining contractual life of seven years and four months.
The options were valued using a Black-Scholes option pricing model, using the following inputs:

Award date

Fair value per share option
Share price
Exercise price
Volatility
Expected life
Expected dividends
Risk free rate

18 April 
2014

47.79
£1.60
£1.60
30%
5 years
0%
1.91%

Volatility was based upon the historical volatility for a basket of comparable listed companies measured over a period 
commensurate with the expected life of the grant.

Based on the calculation of the total fair value of the options granted, the share-based remuneration expense in respect of 
equity-settled schemes is an amount of £67,000 (2015: £193,000). There are no outstanding liabilities.

At 31 December 2016, the following unexercised share options to acquire Ordinary Shares were outstanding:

Year of grant

2014

Exercise period

Exercise price 
per share

2016 
No.

2015 
No.

18/04/2014 – 17/04/2024

1.60

1,260,000

1,260,000

The weighted average remaining life was seven years and four months (2015: eight years and four months).

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86

Notes to the Company financial statements continued
For the year ended 31 December 2016

57. Financial instruments
Capital risk management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in 
order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to 
reduce the cost of capital.

Significant accounting policies
Details of the significant accounting policies and methods adopted (including the criteria for recognition, the basis of 
measurement and the bases for recognition of income and expenses) for each class of financial asset, financial liability and 
equity instrument are disclosed in note 1.

Financial 
instruments 
at fair value 
through 
profit and 
loss
£000s

228
–
–
–
–
–

228

–
–
–
–
–
–

–

Categories of financial instruments

31 December 2016

Financial assets
Investments
Trade receivables
Amounts receivable from Group companies
Other receivables
Accrued income
Cash and cash equivalents

Financial liabilities
Trade creditors
Amounts owed to related parties
Amounts owed to Group companies
Other payables
Accruals
Deferred consideration

31 December 2015

Financial assets
Investments
Trade receivables
Amounts receivable from Group companies
Other receivables
Accrued income
Cash and cash equivalents

Financial liabilities
Trade creditors
Amounts owed to related parties
Amounts owed to Group companies
Other payables
Accruals

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Loans and 
receivables 
£000s

–
5,117
3,963
54
1,366
930

11,430

Non-current 
financial 
liabilities at 
fair value 
through 
profit and 
loss 
£000s

Current 
financial 
liabilities at 
amortised 
cost 
£000s

–
–
–
–
–
–

–

–
–
–
–
–
–

–

1,754
42
3,502
69
2,074
–

7,441

–
–
–
–
–
–

–

–
–
–
–
–
7,772

7,772

Financial 
instruments 
at fair value 
through 
profit and 
loss 
£000s

Current 
financial 
liabilities at 
amortised 
cost 
£000s

Loans and 
receivables 
£000s

144
–
–
–
–
–

144

–
–
–
–
–

–

–
3,820
665
34
582
1,407

6,508

–
–
–
–
–
–

–

–
–
–
–
–

–

1,498
29
1,917
90
2,389

5,923

Carrying 
amount 
£000s

Fair value 
£000s

228
5,117
3,963
54
1,366
930

228
5,117
3,963
54
1,366
930

11,658

11,658

1,754
42
3,502
69
2,074
7,772

1,754
42
3,502
69
2,074
7,772

15,213

15,213

Carrying 
amount 
£000s

Fair value 
£000s

144
3,820
665
34
582
1,407

6,652

1,498
29
1,917
90
2,389

5,923

144
3,820
665
34
582
1,407

6,652

1,498
29
1,917
90
2,389

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87

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Categories of financial instruments
The Company’s financial assets held for managing liquidity risk, being loans and receivables, which are considered to be 
readily saleable or are expected to generate cash inflows to meet cash outflows on financial liabilities within six months.

Financial risk management objectives
The Company’s Finance function provides services to the business, monitors and manages the financial risks relating to the 
operations of the Company. These risks include market risk (including currency risk), credit risk, liquidity risk and cash flow 
interest rate risk.

Market risk
The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest 
rates (see below).

Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies; consequently exposures to exchange rate fluctuations 
arise. Exchange rate exposures are managed by natural hedging in currency accounts, and the functional currency is the Euro. 
The carrying amounts of the Company’s financial assets and financial liabilities by currency at the reporting date are as follows:

Financial assets

GBP
Euro
USD
Other

Financial liabilities

GBP
Euro
USD
Other

2016 
£000s

2,504
5,997
2,858
299

11,658

2016 
£000s

8,586
6,295
179
153

15,213

2015 
£000s

152
2,264
4,009
227

6,652

2015 
£000s

356
5,318
197
52

5,923

Foreign currency sensitivity analysis
The Company is mainly exposed to the Euro currency and the US Dollar currency. However as the Euro is the functional 
currency their exposure is less sensitive.

The following table details the Company’s sensitivity to a 10% increase and decrease in Sterling against the relevant foreign 
currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and 
represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis 
includes only outstanding foreign currency denominated monetary assets and liabilities and adjusts their translation at the 
period end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit and other 
equity and a negative number indicates a decrease in profit and other equity.

2016

Euro
USD
Other

2015

Euro
USD
Other

Strengthen 
+10% 
£000s

Weaken 
-10% 
£000s

27
(243)
(13)

(229)

(33)
298
16

281

Strengthen 
+10% 
£000s

Weaken 
-10% 
£000s

277
(346)
(16)

(85)

(339)
424
19

104

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88

Notes to the Company financial statements continued
For the year ended 31 December 2016

57. Financial instruments continued
Interest rate risk management
The Company is exposed to the interest rate risks associated with its holdings of cash and cash equivalents and short term deposits.

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which regularly monitors the 
Company’s short, medium and long term funding, and liquidity management requirements. The Company manages liquidity 
risk by maintaining adequate cash and cash equivalents and by continuously monitoring forecast and actual cash flows and 
matching the maturity profiles of financial assets and liabilities.

The impact on profit and other comprehensive income due to interest rate exposure is not considered significant, and no 
interest rate sensitivity has been performed.

Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. 
The Company has adopted a policy of only dealing with creditworthy counterparties. The Company assesses the creditworthiness 
of customers in advance of entering into any contract. During the life of a contract, the customer’s financial status is monitored as 
well as payment history. The Company does have some larger customer balances representing more than 15% of the trade 
receivables at a particular time, but these will be large profitable pharmaceutical companies with good credit ratings or smaller 
biotech companies with supportive shareholders and a history of successful fundraising, and this is not considered indicative of an 
increased credit risk. Credit information is supplied by independent rating agencies where appropriate and if available. Alternatively 
the Company uses other publicly available financial information and its own trading records to rate its major customers.

Trade receivables consist of a large number of customers, spread across diverse geographical areas. Ongoing credit evaluation is 
performed on the financial condition of accounts receivable.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international 
credit rating agencies.

There has been no history of bad debts as the majority of its sales are to multinational pharmaceutical companies and as a 
consequence the Directors do not consider that the Company has a credit risk.

The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the 
Company’s maximum exposure to credit risk as no collateral or other credit enhancements are held.

Liquidity and interest risk tables
The Company has no significant long term financial liabilities.

Fair value estimation
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The 
fair value of long term trade receivables and payables is estimated by discounting the future contractual cash flows at the current 
market interest rate for the underlying currency of the transaction.

Fair value measurements
The financial instruments measured subsequent to initial recognition at fair value comprise investments. The fair value hierarchy of 
these assets is Level 2. The valuation technique is market value, based on the most recent investment price. The Company did not 
have any other financial instruments that are measured subsequent to initial recognition at fair value. An analysis of the fair value 
hierarchy has therefore not been presented.

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58. Financial commitments
At 31 December 2016 the Company was committed to making the following payments under non-cancellable operating 
leases which fall due as follows:

Within one year
Between two and five years

Land and buildings

Other

2016 
£000s

2015 
£000s

2016 
£000s

2015 
£000s

35
–

35

–
–

–

4
–

4

7
5

12

59. Pension costs
The Company makes contributions to defined contribution personal pension schemes of the employees. The pension cost 
represents contributions payable by the Company to the schemes and amounted to £43,000 (2015: £35,000). 
Contributions payable to the schemes at 31 December 2016 were £25,000 (2015: £nil).

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90

Glossary

Adverse Reaction Information System 
(‘ARISg’)

a web-based adverse event software (developed by ARIS Global) that enables 
the collection, assessment and reporting of adverse event information to the 
global regulatory agencies

Approved Risk Evaluation and 
Mitigation Strategies (‘REMS’)

the FDA requires a REM strategy from manufacturers to ensure that the benefits 
of a drug outweigh its risks

Backlog

work contracted but yet to be completed

Clinical Research Organisation 
(‘CRO’)

a person or an organisation (commercial, academic or other) contracted by the 
Sponsor to perform one or more of a Sponsor’s trial-related duties and 
functions

Food and Drug Administration (‘FDA’)

the United States regulatory authority charged with, among other 
responsibilities, granting new drug approvals

Haemostat

a drug or device that is used to stop bleeding from surgical or traumatic wounds

Medical information services

the marketing authorisation holder must establish a scientific service in charge 
of information about the products being sold

Orphan drug

Peptide

a pharmaceutical product that has been developed to treat a rare medical 
condition, which itself is known as an orphan disease

a molecule composed of amino acids

Periodic safety update reports 
(‘PSURs’)

a pharmacovigilance document intended to provide an evaluation of the 
risk-benefit balance of a medicinal product. It is submitted by marketing 
authorisation holders at defined time points during the post-authorisation phase

Pharmacovigilance (‘PV’)

science and activities relating to the detection, assessment, understanding and 
prevention of adverse effects or any other medicine-related problem

Qualified Person Pharmacovigilance 
(‘QPPV’)

as part of the pharmacovigilance system, the marketing authorisation holder 
shall have permanently and continuously at its disposal an appropriately 
qualified person responsible for pharmacovigilance in the European Union

Risk-Management Plan (‘RMP’)

Sponsor

Study Site Management (‘SSM’)

a RMP includes information on a medicine’s safety profile, how its risks will be 
prevented or minimised in patients, plans for studies to build knowledge about 
the safety and efficacy of the drug, risk factors for side effects and measuring 
the effectiveness of risk-minimisation measures

an individual, company, institution or organisation which takes responsibility for 
the initiation, management and/or financing of a clinical trial

the Ergomed model of study site management which provides assistance to 
investigating physicians and site study co-ordinators with administrative and 
logistic aspects of the trial in order to maximise utilisation of resources

Study Physician Team (‘SPT’)

an Ergomed team engaged in feasibility, preparation and consultancy of those 
clinical studies that require medical consultancy support

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Ergomed plc

The Surrey Research Park
26 Frederick Sanger Road
Guildford
Surrey 
GU2 7YD 

www.ergomedplc.com