TIDMVLG
RNS Number : 6906M
Venture Life Group PLC
23 September 2021
23 September 2021
VENTURE LIFE GROUP PLC
("Venture Life", "VLG" or the "Group")
Unaudited interim results for the six months ended 30 June
2021
Venture Life Group plc (AIM: VLG), a leader in developing,
manufacturing and commercialising products for the
self-care market, presents its unaudited interim results for the six months ended 30 June 2021.
Financial Highlights
-- Revenues GBP13.9 million (2020: GBP16.9 million)
-- Gross margin GBP4.9 million (2020: GBP6.9 million), gross
margin percentage 35.6% (2020: 40.9%)
-- Adjusted EBITDA[1] GBP1.9 million (2020: GBP3.5 million)
-- Profit before tax, amortisation and exceptional items GBP1.3 million (2020: GBP2.7 million)
-- Adjusted profit per share[2] 0.83p (2020: 2.85p)
-- Cash at 30 June 2021 GBP7.9 million (31 December 2020: GBP42.1 million)
Commercial Highlights
Group
-- Two immediately earnings enhancing acquisitions (one post
period-end), expected to bring significant growth in revenues and
profitability and fully deploying funds raised in late 2020
-- Revolving Credit Facility (RCF) in place for up to GBP50
million giving significant firepower for further earnings accretive
M&A
-- Core business revenues (excluding China and Hand Sanitiser Gel) up 10% in first half of 2021
-- Continue to sign new deals and launch products
Acquisition of BBI Healthcare Limited, 4 June 2021:
-- Three new brands and therapy areas: women's health, hypoglycaemia and energy management
-- Two significant acquired partners - Bayer Consumer Care AG,
for women's health and Swiss Precision Diagnostics GmbH ('SPD')
-- Immediate cost synergies realised
-- Significant free manufacturing capacity in Sweden
-- Profitable with good growth opportunities
Acquisition of Helsinn Integrative Care Portfolio - post period
end, 6 August 2021
-- 3 new brands and new therapy area of oncology support
-- Profitable portfolio
-- 33 new partners in 56 countries
-- Geographic extension opportunities plus New Product
Development opportunities, particularly for Pomi-T
Jerry Randall, CEO of Venture Life Group plc commented: "I am
very pleased to have completed two fantastic earnings enhancing
acquisitions, utilising the money shareholders gave us at the end
of 2020 for exactly the reason it was intended. It was particularly
satisfying to close the BBI acquisition within 6 months of
receiving the cash from shareholders given the challenges presented
by the significant cross border aspects during COVID times when we
were unable to travel. The fact that we managed to complete such a
transaction in the timeframe is testament to the fantastic effort
of all our team at Venture Life and their ability to assess and
transact this deal in a smooth, effective and quick manner, whilst
continuing to manage the existing business. The strategy of raising
cash in advance has been vindicated as it enabled us to access this
acquisition and I thank each and every one of our shareholders who
supported us in that fund raise.
Integration is well underway for both acquisitions and we have
already achieved a number of immediate cost synergies. The second
half of the year will see the benefit of the impact of these two
earnings enhancing acquisitions, with 2022 seeing the benefit of
the full year effect and more synergies, as both of these exciting
acquisitions are expected to add meaningfully to the revenues and
profitability of the Group going forward.
The addition of the RCF is another excellent result for our
team, giving us up to GBP50 million of non-dilutive firepower
available to us for more earnings enhancing acquisitions and we
continue to assess potential opportunities in this regard.
COVID has continued to impact our business, and to impact some
customers more than others. We are, however, seeing an improving
situation going forward. The disappointing performance by our
Chinese partner is a demonstration of how COVID has impacted some
of our customers, and this is something every business is affected
by in some way at this time. As with all our customers we continue
to support them through difficult times, to resolve the situation
one way or another. The supply price increases that have impacted
our first half gross margin are now beginning to be mitigated as we
pass these costs on to customers. However, to still see continued
growth in our core business (excluding China and HSG), and our
current order book ahead of the same time last year on both an
actual and like for like basis, underlines the resilience of our
business in difficult times.
2021 has been another transformational year for the Group,
operating in a difficult environment but still driving the business
forward. I must express my thanks to the whole VLG team for
continuing to do a fantastic job in these times, to drive the Group
to being a much more substantial business in 2022 than it was at
the start of 2021."
For further information, please contact:
Venture Life Group PLC +44 (0) 1344 578004
Jerry Randall, Chief Executive Officer
+44 (0) 20 7397
Cenkos Securities plc (Nomad and Joint Broker) 8900
Michael Johnson / Russell Kerr (Sales)
Stephen Keys / Camilla Hume (Corporate Finance)
+44 (0) 20 7496
Singer Capital Markets (Joint Broker) 3000
Jonathan Dighe (Sales)
Shaun Dobson / Alaina Wong (Corporate Finance)
About Venture Life ( www.venture-life.com )
Venture Life is an international consumer self-care company
focused on developing, manufacturing and commercialising products
for the global self-care market. With operations in the UK, Italy,
The Netherlands and Sweden, the Group's product portfolio includes
some key products such as the UltraDEX and Dentyl oral care product
ranges, the Balance Active range in the area of women's intimate
healthcare, the Lift and Glucogel product ranges for hypoglycaemia,
Gelclair and Pomi-T for oncology support, products for fungal
infections and proctology, and dermo-cosmetics for addressing the
signs of ageing. Its products are sold in over 90 countries
worldwide.
The products, which are typically recommended by pharmacists or
healthcare practitioners, are available primarily through
pharmacies and grocery multiples. In the UK and The Netherlands
these are supplied direct by the company to retailers, elsewhere
they are supplied by the Group's international distribution
partners.
Through its two Development & Manufacturing operations in
Italy and Sweden, the Group also provides development and
manufacturing services to companies in the medical devices and
cosmetic sectors.
Non-Executive Chair's and Chief Executive Officer's
Statement
Overview
The first half of 2021 has seen the Group make the largest
acquisition in its history, utilising the funds raised through the
placing and open offer in December 2020. The subsequent closing of
a Revolving Credit Facility (RCF) of up to GBP50 million at the end
of the first half has added significant fire power, in addition to
future surplus cash generation, to effect further earnings
enhancing acquisitions to continue the growth trajectory of the
business through the rest of 2021 and beyond. This trajectory
continued further post period end with a second smaller
acquisition.
The Group has employed a strategy of combining organic and
acquisitive growth since listing on AIM in 2014, achieving a
compound annual revenue growth rate of 27% from 2014 to 2020,
despite this last year being the first year of the COVID 19
pandemic.
This strategy has focused on the dual revenue streams of those
from VLG's own brands and those from products sold under customer
brands, where the velocity and strength of customer brands
generates meaningful revenues for the Group. Our development and
manufacturing facility near Milan, Italy, produces the vast
majority of all the Groups' products. Since 2014, we have invested
in the facility, to keep a bow wave of capacity ahead of us to
accommodate anticipated growth. The available capacity will enable
the Group to deliver the growing revenues it sees from both organic
and acquired growth.
The acquisitions made so far this year are expected to add
materially to the Group's revenues and profitability in the second
half of the year, as the revenues of the products are included in
Group revenue, and we access immediately available cost
synergies.
2021 has seen a continuation of the COVID 19 pandemic, which has
impacted a number of our customers in this first half, and
significantly impacted supply chain prices, as has been widely
reported in many sectors. We are, however, seeing signs of recovery
as the year progresses, as we harness the opportunity to pass price
rises on to customers for new orders and we start to see a recovery
in retail activity. Revenues in the first half of the year were
GBP13.9 million, compared to GBP16.9 million for the first half of
2020 primarily as a result of lower hand sanitiser gel ("HSG") and
a reduction in sales of Dentyl in China. The newly acquired BBI
Healthcare Limited ("BBI") contributed revenues of GBP1.1 million
in the period since acquisition to the end of June 2021.
Aside from the lower HSG and China revenues detailed below, and
excluding the additional revenues contributed by BBI, the rest of
the Group showed revenue growth of 10% in the first half of 2021
compared to the first half of 2020.
The largest part of the reduction in Group revenues compared to
the same period in 2020 arose from the expected reduction in the
revenues arising from Hand Sanitising Gel. In the first half of
2021, revenues for HSG were GBP0.1 million compared to GBP3.2
million, as a result of significant stockpiling built in 2020 as
the pandemic took hold and have not yet unwound from retailers.
Retailers still hold significant stocks of HSG and it is taking
longer than expected for these to be utilised, and hence the
reduction in revenues from HSG is H1 2021 was more than we expected
at the start of the year. Nonetheless, we still expect to make some
sales of HSG in the second half of the year albeit, given the stock
holding situation in retailers, we expect H2 HSG sales to be at a
level similar to that seen in the first half.
Sales by our Chinese partner were lower than anticipated, as
they continue to struggle to recover from the impact of the
pandemic, with sales only GBP0.2 million in the first half of 2021.
They have however continued to pay down their debtor balance such
that as at 30(th) June 2021 it stood at GBP0.4 million. Despite
failing to meet the minimum purchase obligations under the long
term agreement we signed with this partner in 2020, they still
indicate to us that they expect to take all of the product orders
we have on hand from them (placed in 2020) of EUR4.0 million.
However, the timescales for taking delivery of the products under
these orders have not been set out clearly by the partner, and so
we continue to be in discussion with them to understand whether
they are able to perform in accordance with the contract. At the
same time, we are undertaking a review to ensure that our products
are exploited in China to their full potential, but for prudence
they have already been significantly downgraded in market
guidance.
Notwithstanding the growth in our core business revenues, gross
margin in the first half was impacted by various factors. These
margin impacts, described below, are considered as transitory and
we expect gross margin to be improved by the end of 2021, with a
much better second half for gross margin. This has meant a
significantly lower gross margin percentage in the first half of
2021, where we achieved gross margin of 35.6% compared to 40.9% in
the first half of 2020. In comparison to 2020, the gross margin
reduction has come from a number of factors:
-- Supply chain cost increases have been seen in the first half
of 2021, as has been seen widely across many sectors, and have been
higher than anticipated at the start of the year. As these came
through, we have sought to pass these on to customers, and on the
whole customers have been receptive to this. However, these price
increases agreed with customers only impact new orders placed and
not those already on hand, and so there is a transitional effect of
supressing margin particularly in the first half, until the new
orders come through. We expect the effect of agreed price increases
with customers to positively impact margin in the second half of
the year and into 2022 and beyond.
-- Increased stockholding cost for the higher level of inventory
held for Brexit and COVID supply chain concerns. In order to ensure
continuity of supply as the UK exited Europe, the Group held
significantly higher levels of finished goods inventory in the UK
at the end of 2020, in case there were issues with transport into
the UK. Similarly in Italy, the Group has held higher than normal
levels of raw materials and packaging stock to ensure that it can
continue to supply customer orders and not be at risk to supply
chain interruption, and also where possible to buy these
inventories ahead of price increases. These costs will reduce as we
seek to unwind the higher inventory levels through 2021 and into
2022.
-- Slightly lower overall levels of production activity (due to
lower HSG and China sales) have an impact on the overall
margin.
-- The high level of high margin HSG sales in the first half of 2020 have not repeated in 2021.
Whilst this impact on gross margin from supply price increases
has been disappointing and higher than anticipated at the start of
the year, we now have good visibility on this and the ability to
pass this on to customers in a challenging retail environment.
Also, the acquisitions made so far this year each have materially
higher gross margins than the Group average and will add
meaningfully to the gross margin percentage for the Group going
forward.
The Group continues to keep overheads closely under control, and
lower levels of COVID associated costs in the first half have
mitigated some of the shortfall in gross margin, delivering
adjusted EBITDA for the first half of the year of GBP1.9 million,
lower than the GBP3.5 million in the first half of 2020, primarily
as a result of lower revenues and gross margin.
Acquisitions
BBI
BBI Healthcare Limited ("BBI") was acquired on 4(th) June 2021
for an enterprise value of GBP35 million, with an additional GBP1
million deferred subject to achieving registration approval of a
product in the USA. BBI is a consumer healthcare business with
commercial operations in the UK and its own development and
manufacturing facility in Sweden. It has products in three therapy
areas:
-- Women's health: key product is Balance Activ, for the
treatment of bacterial vaginosis ("BV"), the no.1 BV brand in the
UK, by volume, and also other women's health products, e.g. a
fertility gel. This provides a platform for women's health brands
the Group can expand.
-- Diabetes: Glucogel, the no.1 prescribed glucose gel in the UK
-- Energy management/diabetic care: Lift, with dual positioning
for sports performance and OTC management of hypoglycaemia
This acquisition has high strategic value for VLG, not only as a
growing and profitable business in its own right coming into the
Group and with meaningful cost and revenue synergies available, but
also establishing VLG in the new high interest areas of Women's
Health and Diabetes/Energy Management. BBI and its subsidiaries,
previously headquartered in Crumlin, South Wales, has a
manufacturing facility in Gnesta, Sweden and employed 21 people
across the UK and Sweden. There is significant unused manufacturing
capacity in the Gnesta facility currently.
The integration of the business is well advanced with a number
of the immediate cost synergies already actioned, along with plans
for maximising the synergies with the Group looking forward.
Post period end, we received ANVISA registration approval in
Brazil for the BV Gel, and launch is expected in 2022. The online
channel is also a key component within the business and as well as
launching on Amazon in the UK in 2020, Balance Activ will launch on
Amazon in Germany and a re-launch will take place on Amazon in the
USA in early 2022.
In the UK, we are exploring the convenience sector for Lift,
with opportunities already emerging.
Helsinn
The Acquisition comprises three on-market products within the
area of oncology support, as well as all the associated IP and
existing customer relationships in relation to the Brands.
The three on-market products are:
-- Gelclair - a muco-adhesive oral rinse gel used for the
management of painful symptoms of oral mucositis (side effect of
some cancer therapies). Gelclair is a registered medical device and
is currently partnered in 38 countries;
-- Pomi-T - a Polyphenol rich mix of wholefoods used for the
management of prostate specific antigen (PSA) levels in prostate
cancer. Pomi-T is a registered food supplement and is currently
partnered in 22 markets; and
-- XonRID - a Hyaluronic acid based topical gel used for the
prevention and treatment of radiation induced dermatitis. Xonrid is
a registered medical device and currently partnered in 21
countries.
Since the acquisition in early August 2021, integration of the
business has been ongoing with all partners being contacted and
transfer of the commercial operations into our UK team. It is very
early days since the acquisition, but opportunities are now being
explored in key markets such as the USA for the two key brands.
Venture Life Brands
Dentyl
Dentyl revenues for the first half of 2021 were adversely
affected by the lack of China business, and so stood at GBP1.4m in
H1 2021 compared to GBP2.8m in H1 2020.
Despite the extended lockdown challenges in the UK market in H1
2021, revenues were up 11% to GBP1.12m (H1 2020: GBP1.0m), which
contributed to an overall 4% growth in our oral care brands in the
UK market. In addition Dentyl remained the fastest growing brand in
the oral care sector in the last 12 months ([3]) , ahead of other
major brands such as Corsodyl, Colgate and Listerine.
H1 2021 saw new launches in some Value Retailers, such as Home
Bargains and B&M Bargains, further extending our reach within
all aspects of the UK market. In addition, we retained full
distribution in ASDA, and they also launched the newly developed
Dentyl Dual Action Unicorn Edition into 361 stores, despite ASDA
cutting their current oral care range by 30% in the June range
review. Ocado, an existing partner, is also expected to launch a
new flavour variant in August.
As mentioned earlier, sales of Dentyl to our Chinese partner
proved to be disappointing in H1 2021 compared to H1 2020 and
compared to the Distribution Agreement signed in April 2020. Whilst
supporting them as we would any partner, we are carefully reviewing
our on-going business with them, and thus reviewing our options to
ensure we realise the full value of the brand in China.
The in-vivo study at Cardiff University on Dentyl completed in
April 2021 and is under peer-review and we await the results which
we expect to be published shortly.
UltraDEX
UltraDEX revenues for the first half of 2021 stood at GBP1.02m
(H1 2021: GBP1.72m). In the UK, UltraDEX was less affected by the
extended lockdown and finished the first half of 2021 at GBP0.96m
(H1 2020: GBP0.99m), a 3.3% decrease. During the period UltraDEX
continued to take market share from its nearest competitors and is
now the largest brand in the medicated fresh breath mouthwash
category in the UK. In the 52 weeks to the end of July 2021, it
reached a 52% market share of the category, compared to its main
competitor CB12, which stood at 37% for the same period [4] .
Internationally UltraDEX revenues were affected also by the poor
performance of our Chinese partner (same as for Dentyl) which took
its first orders of UltraDEX in the first half of 2020, but as with
Dentyl has not repeated this levels of sales in 2021.
PharmaSource
PharmaSource saw a 3.1% increase in H1 2021 to GBP1.48m (H1
2020: GBP1.43m), despite the extended lockdowns in The Netherlands.
Integration is now completed, including the manufacturing transfer
from a third party to our Italian facility. Despite not being able
to travel to our offices in The Netherlands for over 1.5 years, the
team remains committed to ending the year above 2020.
Venture Life - other brands/products
We signed a total of 6 new long term distribution agreements
during H1 2021.
As mentioned, one key significant agreement was reached with
Bayer Consumer Care AG following acquisition on the BV Gel product,
extending the term until 2030 and adding a further 16 new
territories, including Poland and Turkey - all major markets around
the world are now included in this agreement, which stands at 49
territories in total. At the same time, we also added a further 39
new territories into the BV Pessary agreement, which included
Brazil, France, Germany, Italy, Spain among others - all major
markets around the world are now included, which stands at 51
territories in total.
Furthermore, H1 2021 saw our partners launch 11 new products in
their respective markets, as well as 3 regulatory approvals granted
and 14 new launch preparations underway in H2 2021 for a Q1 2022
launch.
Customer brands
The customer brands business delivered revenues in the first
half of GBP8.5 million, an increase of 12% over the first half of
2020. As with the rest of the business we saw some partners
recovering better than others from the COVID pandemic, but overall
this part of the business delivered good growth. There were two
significant pieces of new business that contributed to this
growth:
-- A new dermatological line was developed for the Italian
pharma business Alfasigma S.p.A in 2020 and production began in
that year. The first half of 2021 saw a significant increase in our
revenues for this range and this is set to continue in the second
half.
-- An existing customer Italfarmaco S.p.A began a new piece of
business with us in 2021 that has also positively impacted in the
first half.
In addition we continue to attract and win new product
development business for the EU, USA and other territories, in the
areas of medical devices and cosmetics, and these items of new
business will continue to deliver growth in our customer brands
business.
Our Biokosmes facility in northern Lombardy manufactures the
majority of our products, both customer and Venture Life brands,
and the investments made in 2020 have given us meaningful spare
capacity to continue to accommodate further revenue growth. Through
the lockdown in the first half of 2021 the factory again continued
to operate all the time, again a fantastic effort by all the team
at Biokosmes.
Revolving Credit Facility
On 21(st) June 2021, the Group entered into a Revolving Credit
Facility ("RCF") with Santander UK PLC and Silicon Valley Bank with
available borrowing of up to GBP30 million and an incremental
facility available of a further GBP20 million, subject to certain
conditions, on the same terms as the RCF.
As at 30(th) June 2021, the amount drawn was GBP4 million, to
replenish working capital cash reserves used in the acquisition of
BBI. In the coming weeks another GBP4 million will be drawn, which
together with surplus cash will be used to repay the GBP5.2 million
of Italian bank loans, which is a condition of the RCF. The
remainder of the facility will be kept available for future
acquisitions, in addition to the future cash generated in the
business moving forward.
Outlook
The first half of 2021 was a challenging trading environment for
the Group, as another extended COVID lockdown affected customers
and suppliers in many countries. Despite this, the Group saw growth
in its core business revenues (excluding HSG and China) with the
current order book ahead of the same time last year on an actual
and like for like basis, and two immediately earnings acquisitions
(one post period end). These acquisitions are expected to add
materially to the revenues and profitability for 2021 and the
future, as well as providing new therapy areas and products for the
Group to expand and develop further. The acquistions bring
significant opportunity for geographic expansion and new product
development, as well as expanding the reach into the UK
retailers.
From 2014 to 2020, the Group successfully achieved 27% CAGR in
revenue through the dual strategy of organic and acquired growth,
which has driven increasing profitability in the Group. The Group
is well set for continued growth, as we expect the second half of
the year to benefit from the consolidation of the recent
acquisitions, and the full year effect will be seen in 2022 and
beyond. VLG has significant capacity in its manufacturing
operations to accommodate growth in revenue and has now added
significant additional resources (substantially unused) with the
RCF in place for further earnings enhancing acquisitions, all of
which gives the Board great confidence about the future.
Financial Review
Statement of comprehensive income
Group revenue for the six-month period was GBP13.9 million, a
decline of 18% on the GBP16.9 million reported for the same period
in 2020. The movement had four main drivers comprising:
a. continuing growth and momentum from the core business
(excluding sales of Hand Sanitiser products and sales to
China);
b. inclusion of GBP1.1 million of acquired net sales pursuant to
the acquisition of BBI Healthcare Ltd on 4(th) June 2021;
c. 90% decline in sale of products to China impacted by Covid-19;
d. 98% decline in sales of Hand Sanitiser Products, which was
far greater than expected and due to significant inventories
remaining in channels and other factors;
As a result of these dynamics, the revenues of the VLG Branded
segment of the Group declined to less than those of the Customer
Brand segment.
The Group generated gross profit of GBP4.9 million representing
a gross margin of 35.6%, compared to 40.9% for the same period in
2020. This notable decline was a blend of several factors
including:
a. favourable mix variances arising from the inclusion of BBI
Healthcare Ltd products at a higher average margin;
b. unfavourable mix variances arising from the lower portion of
revenues arising from VLG Branded products;
c. unfavourable factory volume variances due to the decline in overall sales volume;
d. inclusion of higher storage costs arising as a result of the
higher inventory levels which had arisen due to a blend of
commercial reasons including the group's mechanic to hedge any
supply disruption arising through Brexit;
e. some inflation in raw materials costs which have not yet been
passed on via price adjustments to customers;
Administrative expenses decreased in the period to GBP4.5
million from GBP4.6 million in H1 2020. General savings of GBP0.2
million were offset by GBP0.1 million of new expenses relating to
the inclusion of BBI Healthcare Ltd operations, and GBP0.2 million
of higher non-cash costs of amortisation, depreciation and
share-based payments (which arose from the BBI Healthcare Ltd
acquisition and factory capital investment) were offset by a credit
of GBP0.2 million representing the partial writing-back of the bad
debt provision associated with our China distributor as the cash
settlements and overall prognosis of the level of impairment of
this receivable improved.
H1 2021 generated a positive adjusted EBITDA (defined as EBITDA
excluding share-based payments and exceptional items) of GBP1.9
million, down 45% compared to H1 2020 of GBP3.5 million. The
decline of adjusted EBITDA in the amount of GBP1.6 million versus
H1 2020 is less than the decline in operating profit as a result of
higher amortisation and depreciation charges in 2021, and this
measure is stated before exceptional costs of GBP0.7 million (H1
2020 GBP0.1 million) which were high due to the significant
progress on acquisitions during the first half of 2021. The loss
after tax was GBP(0.5) million (H1 2020: profit of GBP1.6 million).
Loss per share was (0.37)p (H1 2020: profit of 1.86p). The adjusted
profit per share (defined as earnings per share before
amortisation, share based payments and exceptional items) was 0.83p
compared to an adjusted profit per share of 2.85p in H1 2020.
A negative working capital flux of GBP(1.7) million (negative
flux GBP(2.4) million in 2020) arose across the six month period.
This was principally driven by trade debtors in 2021 and reflects
the overall increase in the Group's portfolio of business pursuant
to the acquisition of BBI Healthcare Ltd on 4(th) June 2021. The
anticipated favourable flux that was expected to arise as a result
of an unwinding of the high inventory level had not yet happened by
30(th) June 2021 and like-for-like inventory levels remain
unchanged versus 31(st) December 2020 plus the inclusion of GBP1.3
million of acquired inventory pursuant to the acquisition of BBI
Healthcare Ltd.
Net cash from operations was GBP(0.9) million in H1 2021 (H1
2020: GBP1.0 million). Cash used in investing activities amounted
to GBP36.4 million (H1 2020 GBP6.6 million) and comprised the
purchase consideration for the acquisition of BBI Healthcare Ltd
(GBP35.9 million) plus some ongoing capital investment into the
Italian factory. Net cash from financing activities was GBP3.1
million (H1 2020 GBP1.0 million) as the Group made an initial
GBP4.0 million net draw from its newly established a revolving
credit facility ("RCF") as well as some partial repayments of
existing Italian debt and advance settlement of RCF set-up fees.
The RCF was established on 18(th) June 2021 across two banks and
gives the Group access to GBP30 million of low-cost debt finance
with an uncommitted option to extend this up to a total of GBP50
million. Overall cashflow over the period was an outflow of GBP34.2
million (H1 2020 outflow of GBP4.6 million) and net debt increased
from GBP(1.6) million to GBP(6.0) million including Finance Leases
(or declined from GBP0.8 million of net cash to GBP(1.2) million of
net debt excluding Finance Leases).
Non-current assets including Goodwill increased by GBP40.1
million, reflecting the acquisition of BBI Healthcare Ltd in June
2021 and the significant investment in factory equipment underway
as part of the plans to expand production capacity well ahead of
the current forecast demand. Total debt increased from GBP8.2
million to GBP13.9 million and reflects the inclusion of the RCF,
some extensions to factory and logistics centre finance leases less
some repayments of Italian loans. The balance of Italian loans at
30th June 2021 amounted to GBP5.0 million and has been classified
by the Group as short term to reflect the requirement to repay this
in the near term and utilise the RCF as the source of debt
financing.
This has been a positive six-month period for the business which
has experienced elements of organic growth as well as completed the
acquisition of BBI Healthcare Ltd whilst adapting and broadening
the portfolio of business activities to accommodate the impacts of
two lines of sales decline. The balance sheet remains strong and
the Group has access to low-cost debt finance to progress the
development of its business, continue to invest in its
manufacturing capacity and further deliver on its acquisition
strategy.
Unaudited Interim Condensed Consolidated Statement of
Comprehensive Income
For the six months ended 30 June 2021
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2020
Note 2021 2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Revenue 4.1 13,866 16,897 30,076
Cost of sales (8,927) (9,986) (17,229)
------------ ------------ -------------
Gross profit 4,939 6,911 12,847
Operating expenses (4,026) (4,063) (7,980)
Impairment losses of financial
assets 162 - (405)
Amortisation of intangible assets 5 (631) (497) (909)
------------ ------------ -------------
Total administrative expenses (4,495) (4,560) (9,294)
Other income 122 23 169
Operating profit before exceptional
items 566 2,374 3,722
------------ ------------ -------------
Exceptional items 6 (728) (94) (167)
Operating (loss)/profit (162) 2,280 3,555
------------ ------------ -------------
Finance income/(costs) 122 (165) (279)
(Loss)/Profit before tax (40) 2,115 3,276
------------ ------------ -------------
Tax 7 (428) (562) (908)
(Loss)/Profit for the period
attributable to the equity shareholders
of the parent (468) 1,553 2,368
------------ ------------ -------------
Other comprehensive (loss)/income
which may be subsequently reclassified
to the income statement 8 (1,219) 1,713 1,284
Total comprehensive (loss)/profit
for the period attributable
to equity shareholders of the
parent (1,687) 3,266 3,652
------------ ------------ -------------
Basic (loss)/profit per share
(pence) attributable to equity
shareholders of the parent 9 (0.37) 1.86 2.74
Diluted basic (loss)/profit
per share (pence) attributable
to equity shareholders of the
parent 9 (0.37) 1.65 2.53
Unaudited Interim Condensed Consolidated Statement of Financial
Position
As at 30 June 2021
Note 30 June 30 June 31 December
2021 2020 (*Restated) 2020
(Unaudited) (Unaudited) (Audited)
ASSETS GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets * 11A 61,678 27,589 27,024
Property, plant and equipment 11B 10,634 4,618 7,018
72,312 32,207 34,042
------------ ------------------ ------------
Current assets
Inventories 9,784 7,058 8,886
Trade and other receivables 10,117 10,015 7,653
Cash and cash equivalents 7,896 6,641 42,095
------------ ------------------ ------------
27,797 23,714 58,634
------------ ------------------ ------------
TOTAL ASSETS 100,109 55,921 92,676
------------ ------------------ ------------
EQUITY & LIABILITIES
Capital and reserves
Share capital 12 377 251 377
Share premium account 12 65,738 30,824 65,738
Merger reserve 12 7,656 7,656 7,656
Foreign currency translation
reserve * 210 1,858 1,429
Share-based payment reserve 810 864 660
Retained earnings (4,219) (4,939) (3,751)
------------ ------------------
Total equity attributable
to equity holders of the parent 70,572 36,514 72,109
------------ ------------------ ------------
LIABILITIES
Current liabilities
Trade and other payables 7,921 8,688 7,108
Taxation 561 759 433
Interest bearing borrowings
- Bank Loans 5,004 792 1,092
Interest bearing borrowings
- Receivables Finance 680 1,453 888
Interest bearing borrowings
- Leasing Obligations 477 491 477
------------ ------------------ ------------
14,643 12,183 9,998
------------ ------------------ ------------
Non-current liabilities
Interest bearing borrowings
- Bank Loans 3,505 3,586 4,636
Interest bearing borrowings
- Leasing Obligations 4,213 1,914 4,085
Statutory employment provision 1,126 1,034 1,201
Deferred tax liability 7 6,050 690 647
------------ ------------------ ------------
14,894 7,224 10,569
------------ ------------------ ------------
TOTAL LIABILITIES 29,537 19,407 20,567
------------ ------------------ ------------
TOTAL EQUITY & LIABILITIES 100,109 55,921 92,676
------------ ------------------ ------------
* Restated in accordance with note 32 ("prior period adjustment")
of the 2020 financial statements. Please refer to note 16 for
further details.
Unaudited Interim Condensed Consolidated Statement of Changes in
Equity
As at 30 June 2021
Foreign
Share currency Share-based
Share premium Merger translation payment Retained Total
capital account reserve reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ---------- ----------- ----------- ----------- ----------- -----------
Restated
Balance at 1
January 2020
(Audited) 251 30,824 7,656 145 624 (6,492) 33,008
----------- ---------- ----------- ----------- ----------- ----------- -----------
Profit for the
period - - - - - 1,553 1,553
Foreign
exchange for
period - - - 1,713 - - 1,713
----------- ---------- ----------- ----------- ----------- ----------- -----------
Total
comprehensive
income - - - 1,713 - 1,553 3,266
----------- ---------- ----------- ----------- ----------- ----------- -----------
Share options
charge - - - - 240 - 240
Dividends - - - - - - -
----------- ---------- ----------- ----------- ----------- ----------- -----------
Transactions
with
Shareholders - - - - 240 - 240
----------- ---------- ----------- ----------- ----------- ----------- -----------
Balance at 30
June 2020
(Unaudited) 251 30,824 7,656 1,858 864 (4,939) 36,514
----------- ---------- ----------- ----------- ----------- ----------- -----------
Profit for
the period - - - - - 815 815
Foreign
exchange for
period - - - (429) - - (429)
----------- ---------- ----------- ----------- ----------- ----------- -----------
Total
comprehensive
income - - - (429) - 815 386
----------- ---------- ----------- ----------- ----------- ----------- -----------
Share options
charge - - - - 169 - 169
Share options
recycling per
IFRS2 (373) 373 -
Equity raise 126 34,914 35,040
Dividend - - - - - - -
----------- ---------- ----------- ----------- ----------- ----------- -----------
Transactions
with
Shareholders 126 34,914 - - (204) 373 35,209
----------- ---------- ----------- ----------- ----------- ----------- -----------
Balance at 31
December 2020
(Audited) 377 65,738 7,656 1,429 660 (3,751) 72,109
----------- ---------- ----------- ----------- ----------- ----------- -----------
Loss for the
period - - - - - (468) (468)
Foreign
exchange for
period - - - (1,219) - - (1,219)
----------- ---------- ----------- ----------- ----------- ----------- -----------
Total
comprehensive
income - - - (1,219) - (468) (1,687)
----------- ---------- ----------- ----------- ----------- ----------- -----------
Share options
charge - - - - 150 - 150
Dividends - - - - - - -
----------- ---------- ----------- ----------- ----------- ----------- -----------
Transactions
with
Shareholders 150 150
----------- ---------- ----------- ----------- ----------- ----------- -----------
Balance at 30
June 2021
(Unaudited) 377 65,738 7,656 210 810 (4,219) 70,572
----------- ---------- ----------- ----------- ----------- ----------- -----------
Unaudited Interim Condensed Consolidated Statement of Cash
Flows
For the six months ended 30 June 2021
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cash flow from operating activities:
(Loss)/Profit before tax (40) 2,115 3,276
Finance cost (122) 165 279
Operating (loss)/profit (162) 2,280 3,555
Adjustments for:
- Depreciation of property, plant
and equipment 593 386 1,081
- Impairment losses of financial
assets (162) - 405
- Amortisation of intangible assets 631 497 909
- Disposal of capitalised development
costs - - 345
- Share-based payment expense 150 240 409
------------- ------------- -------------
Operating cash flow before movements
in working capital 1,050 3,403 6,704
Decrease/(Increase) in inventories 105 (1,975) (3,294)
( Increase) in trade and other receivables (1,231) (3,652) (1,161)
Increase in trade and other payables (572) 3,194 1,403
------------- ------------- -------------
Cash generated by operating activities (648) 969 3,652
Finance Costs 53 (15) (50)
Tax Paid (293) - (896)
Net cash from operating activities (888) 954 2,706
Cash flow from investing activities:
Acquisition of BBI Healthcare Ltd (35,917) - -
Acquisition of PharmaSource Business - (5,523) (5,465)
Purchases of property, plant and
equipment (217) (726) (1,248)
Expenditure in respect of intangible
assets (218) (376) (821)
Net cash used by investing activities (36,352) (6,625) (7,534)
------------- ------------- -------------
Cash flow from financing activities:
Net proceeds from issuance of ordinary
shares - - 36,997
Transaction costs incurred in issuance
of ordinary shares - - (1,957)
Drawdown in interest-bearing borrowings 3,647 1,282 5,428
Repayment of interest-bearing borrowings (170) - (3,433)
Leasing obligation repayments (402) (246) (764)
Dividends paid - - -
------------- -------------
Net cash from financing activities 3,075 1,036 36,271
------------- ------------- -------------
Net increase in cash and cash equivalents (34,165) (4,635) 31,443
Net foreign exchange difference (34) 566 (58)
Cash and cash equivalents at beginning
of period 42,095 10,710 10,710
------------- ------------- -------------
Cash and cash equivalents at end
of period 7,896 6,641 42,095
------------- ------------- -------------
Notes to the Unaudited Interim Condensed Consolidated Financial
Statements for the six months ended 30 June 2021
1. Corporate information
The Interim Condensed Consolidated Financial Statements of
Venture Life Group plc and its subsidiaries (collectively, the
Group) for the six months ended 30 June 2021 ("the Interim
Financial Statements") were approved and authorised for issue in
accordance with a resolution of the directors on 21 September
2021.
Venture Life Group plc ("the Company") is domiciled and
incorporated in the United Kingdom, and is a public company whose
shares are publicly traded. The Group's principal activities are
the development, manufacture and distribution of healthcare and
dermatology products.
2. Basis of preparation
The Interim Financial Statements have been prepared on a going
concern basis under the historical cost convention and in
accordance with the recognition and measurement principles of
International Accounting Standards ("IASs") in conformity with the
requirements of the Companies Act 2006, the International Financial
Reporting Interpretations Committee ("IFRIC"), interpretations
issued by the International Accounting Standards Boards ("IASB")
that are effective or issued and adopted as at the time of
preparing these financial statements, and in accordance with the
provisions of the Companies Act 2006 that are relevant to companies
that report under IFRSs.
The financial information contained in the Interim Financial
Statements, which are unaudited, does not constitute statutory
accounts in accordance with the Companies Act 2006. The financial
information for the year ended 31 December 2020 is extracted from
the statutory accounts for that year which have been delivered to
the Registrar of Companies and on which the auditor issued an
unqualified opinion that did not include an emphasis of matter
reference or statement made under section 498(2) or (3) of the
Companies Act 2006.
3. Accounting policies
The accounting policies adopted in the preparation of the
Interim Financial Statements are consistent with those followed in
the preparation of the 2020 Consolidated Financial Statements.
Foreign currencies
The assets and liabilities of foreign operations are translated
into sterling at exchange rates ruling at the balance sheet date.
Revenues generated and expenses incurred in currencies other than
sterling are translated into sterling at rates approximating to the
exchange rates ruling at the dates of the transactions. Foreign
exchange differences arising on retranslation of assets and
liabilities of foreign operations are recognised directly in the
foreign currency translation reserve.
The sterling/euro exchange rates used in the Interim Financial
Statements and prior reporting periods are as follows:
Six months Six months Year ended
ended ended 31 December
Sterling/euro exchange rates 30 June 2020 30 June 2020 2020
Average exchange rate for
period 1.155 1.138 1.124
Exchange rate at the period
end 1.164 1.096 1.113
4. Segmental Information
Management has determined the operating segments based on the
reports reviewed by the Group Board of Directors (Chief Operating
Decision Maker) that are used to make strategic decisions. The
Board considers the business from a line-of-service perspective and
uses operating profit/(loss) as its profit measure. The operating
profit/(loss) of operating segments is prepared on the same basis
as the Group's accounting operating profit/(loss).
In line with the 2020 Consolidated Financial Statements, the
operations of the Group are segmented as Brands, which includes
sales of healthcare and skin care products under distribution
agreements and direct to UK retailers, and Development and
Manufacturing. The results of the recently acquired BBI Healthcare
Ltd business are included and apportioned across both Brands and
Development & Manufacturing segments.
4.1 Segment Revenue and Results
The following is an analysis of the Group's revenue and results
by reportable segment.
Development Consolidated
Brands and Manufacturing Eliminations Group
GBP'000 GBP'000 GBP'000 GBP'000
Six months to 30 June 2021
Revenue
External sales 4,931 8,935 - 13,866
Inter-segment sales - 1,622 (1,622) -
-------- ------------------- ------------- -------------
Total revenue 4,931 10,557 (1,622) 13,866
-------- ------------------- ------------- -------------
Results
Operating profit before
exceptional items and excluding
central administrative costs 669 1,148 - 1,817
-------- ------------------- ------------- -------------
Development Consolidated
Brands and Manufacturing Eliminations Group
GBP'000 GBP'000 GBP'000 GBP'000
Six months to 30 June 2020
Revenue
External sales 9,350 7,547 - 16,897
Inter-segment sales - 4,223 (4223) -
-------- ------------------- ------------- -------------
Total revenue 9,350 11,770 (4223) 16,897
-------- ------------------- ------------- -------------
Results
Operating profit before
exceptional items and excluding
central administrative costs 2,002 1,915 - 3,917
-------- ------------------- ------------- -------------
Development Consolidated
Brands and Manufacturing Eliminations Group
Year to 31 December 2020 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 14,910 15,166 - 30,076
Inter-segment sales - 6,360 (6,360) -
-------- ------------------- ------------- -------------
Total revenue 14,910 21,526 (6,360) 30,076
-------- ------------------- ------------- -------------
Results
Operating profit before
exceptional items and excluding
central administrative
costs 4,551 3,060 - 7,611
-------- ------------------- ------------- -------------
The reconciliation of segmental operating profit to the Group's
operating profit/(loss) before exceptional items excluding central
administrative costs is as follows:
Six months Six months Year ended
ended
30 June ended 31 December
2021
(Unaudited) 30 June 2020
2020
(Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Operating profit before exceptional
items and excluding central administrative
costs 1,817 3,917 7,611
Central administrative costs (1,251) (1,543) (3,889)
Exceptional expenses (728) (94) (167)
Operating (loss)/profit (162) 2,280 3,555
Net finance cost 122 (165) (279)
------------ ------------ -------------
(Loss)/profit before tax (40) 2,115 3,276
------------ ------------ -------------
5. Amortisation of intangible assets
Six months Six months Year ended
ended
30 June ended 31 December
2021
(Unaudited) 30 June 2020
2020
(Unaudited) (Audited)
Amortisation of: GBP'000 GBP'000 GBP'000
Acquired intangible assets (401) (255) (373)
Patents, trademarks and other intangible
assets (48) (82) (213)
Capitalised development costs (182) (160) (323)
------------ ------------ -------------
(631) (497) (909)
------------ ------------ -------------
6. Exceptional items
Six months Six months Year ended
ended
30 June ended 31 December
2021
(Unaudited) 30 June 2020
2020
(Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Costs incurred in acquisitions (728) (94) (167)
Total exceptional items (728) (94) (167)
------------ ------------ -------------
Exceptional items in the period related to fees incurred in the
exploration of acquisition opportunities.
7. Taxation
The Group calculates the income tax expense for the period using
the tax rate that would be applicable to the earnings in the six
months to 30(th) June 2021. The major components of income tax
expense in the Interim Condensed Statement of Comprehensive Income
are as follows:
Six months Six months Year ended
ended ended 31 December
30 June 2021 30 June 2020
2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Current income tax 428 562 975
Deferred income tax expense related
to origination and reversal of
timing differences - - (67)
-------------- ------------ -------------
Income tax expense recognised
in statement of comprehensive
income 428 562 908
-------------- ------------ -------------
The current income tax expense is based on the profits of the
Development and Manufacturing business based in Italy, the
PharmaSource business in the Netherlands and the UK based
businesses. The UK based businesses on a combined basis are able to
begin to utilise the sizeable tax losses that have been generated
in prior years. Consequently there are no UK income tax charges
owing in respect of trading for the first six months to 30 June
2021. (The Group had previously not recognised the deferred tax
asset on losses made by the UK based businesses as it had not been
certain when there would be sufficient taxable profits against
which to offset such losses. This position will be reviewed at
31(st) December 2021) These financial statements do not at this
time include the unwind of the GBP5.4 million deferred tax
liability arising upon the acquisition of BBI Healthcare Ltd at
4(th) June 2021 which is estimated to amount to GBP38,000 at 30(th)
June 2021. This will become included once the purchase price
allocation of the acquisition consideration of BBI Healthcare Ltd
has been finalised (see note 11A);
At the period end the estimated tax losses amounted to
GBP10,900,000 (30 June 2020: GBP9,842,000; 31 December 2020:
GBP10,900,000). This reduction in tax losses at 30(th) June 2021
illustrates the utilisation
8. Other comprehensive income/(expense)
Other comprehensive income/(expense) represents the foreign
exchange difference on the translation of the assets, liabilities
and reserves of Biokosmes and PharmaSource which have functional
currencies of Euros. The movement is shown in the foreign currency
translation reserve between the date of acquisition of Biokosmes,
when the GBP/EUR rate was 1.193 and the balance sheet date rate at
30 June 2021 of 1.164 (at 31 December 2020 of 1.113 and at 30 June
2019 of 1.091) together with the same computation for PharmaSource
BV between the date of acquisition when the GBP/EUR rate was 1.185
and the balance sheet date rate at 30(th) June 2021 of 1.164. The
result is an amount that may subsequently be reclassified to profit
and loss.
9. Earnings per share
Six months Six months Year ended
ended ended 30 December
30 June 2021 30 June 2020
2020
(Unaudited) (Unaudited) (Audited)
Weighted average number of ordinary
shares in issue 125,831,530 83,712,106 86,402,007
(Loss)/Profit attributable to
equity holders of
the Company (GBP'000) (468) 1,553 2,368
Basic (loss)/profit per share
(pence) (0.37) 1.86 2.74
Diluted (loss)/profit per share
(pence) (0.37) 1.65 2.53
Adjusted profit per share (pence) 0.83 2.85 4.46
Diluted Adjusted profit per share
(pence) 0.78 2.54 4.12
In circumstances where the Basic and Adjusted results per share
attributable to ordinary shareholders are a loss then the
respective diluted figures are identical to the undiluted figures .
This is because the exercise of share options would have the effect
of reducing the loss per ordinary share and is therefore not
dilutive under the terms of IAS 33.
10. Dividends
Amounts recognised as distributions to equity holders in the
period:
Six months Six months Year ended
ended ended 31 December
2020
30 June 2021 30 June 2020 (Audited)
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
Final dividend - - -
-------------- ------------- -------------
11A. Intangible assets
The intangible assets of the group at 30(th) June 2021 were
GBP61.7 million (31 December 2020: GBP27.0 million) comprising
goodwill, development costs, patents and trademarks & customer
relationships. This sum includes GBP35.9 million in respect of the
2021 acquisition of BBI Healthcare Ltd (where an indicative
purchase price allocation ("PPA") suggests GBP13.1 million
goodwill, GBP17.0 million Brand assets and GBP5.8 million customer
& distributor relationships. This PPA will be finalised prior
to 31st December 2021) which may result in a different allocation
of the purchase price between goodwill and other intangibles.
At the reporting date the Goodwill generated from the
acquisitions of Biokosmes Srl in March 2014, Periproducts Limited
in March 2016, Dentyl in August 2018, PharmaSource BV in 2020 and
BBI Healthcare in June 2021 accounted for GBP33.7 million of the
intangible assets of the Group (GBP21.3 million at 31 December
2020). There were no impairments of goodwill during this time (6
months to June 2020: GBP Nil).
Development Brands Patents Goodwill Other Total
costs and Trademarks intangible
assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ---------- ---------------- ---------- ------------ -----------
Cost or valuation:
------------ ---------- ---------------- ---------- ------------ -----------
At 1 January 2020
(restated) 3,280 1,089 1,016 16,417 2,856 24,658
------------ ---------- ---------------- ---------- ------------ -----------
Acquired through
business combinations - - 417 4,076 1,040 5,533
------------ ---------- ---------------- ---------- ------------ -----------
Additions 279 - 87 - - 366
------------ ---------- ---------------- ---------- ------------ -----------
Disposals - - - - - -
------------ ---------- ---------------- ---------- ------------ -----------
Foreign exchange 79 - 22 1,014 158 1,273
------------ ---------- ---------------- ---------- ------------ -----------
At 30 June 2020 3,638 1,089 1,542 21,507 4,054 31,830
------------ ---------- ---------------- ---------- ------------ -----------
Additions 460 - (5) - - 455
------------ ---------- ---------------- ---------- ------------ -----------
Disposals (345) - (182) - - (527)
------------ ---------- ---------------- ---------- ------------ -----------
Foreign exchange 91 - 19 (230) 16 (104)
------------ ---------- ---------------- ---------- ------------ -----------
At 31 December
2020 3,844 1,089 1,374 21,277 4,070 31,654
------------ ---------- ---------------- ---------- ------------ -----------
Acquired through
business combinations - 16,994 - 13,128 5,788 35,910
------------ ---------- ---------------- ---------- ------------ -----------
Additions 182 - 36 - - 218
------------ ---------- ---------------- ---------- ------------ -----------
Disposals (1) - (389) - - (390)
------------ ---------- ---------------- ---------- ------------ -----------
Foreign exchange (175) - (42) (662) (145) (1,024)
------------ ---------- ---------------- ---------- ------------ -----------
At 30 June 2021 3,850 18,083 979 33,743 9,713 66,368
------------ ---------- ---------------- ---------- ------------ -----------
Amortisation: -
------------ ---------- ---------------- ---------- ------------ -----------
At 1 January 2020 1,438 - 703 - 1,603 3,744
------------ ---------- ---------------- ---------- ------------ -----------
Charge for the
period 182 - 92 - 223 497
------------ ---------- ---------------- ---------- ------------ -----------
Disposals - - - -
------------ ---------- ---------------- ---------- ------------ -----------
Foreign exchange - - - - -
------------ ---------- ---------------- ---------- ------------ -----------
At 30 June 2020 1,620 - 795 - 1,826 4,241
------------ ---------- ---------------- ---------- ------------ -----------
Charge for the
period 141 - 121 - 150 412
------------ ---------- ---------------- ---------- ------------ -----------
Disposals - - (182) - - (182)
------------ ---------- ---------------- ---------- ------------ -----------
Foreign exchange 76 - 6 - 77 159
------------ ---------- ---------------- ---------- ------------ -----------
At 31 December
2020 1,837 - 740 - 2,053 4,630
------------ ---------- ---------------- ---------- ------------ -----------
Charge for the
period 185 101 92 - 253 631
------------ ---------- ---------------- ---------- ------------ -----------
Disposals (1) - (389) - - (390)
------------ ---------- ---------------- ---------- ------------ -----------
Foreign exchange (86) - (8) - (87) (181)
------------ ---------- ---------------- ---------- ------------ -----------
At 30 June 2021 1,935 101 435 - 2,219 4,690
------------ ---------- ---------------- ---------- ------------ -----------
Carrying amount: -
------------ ---------- ---------------- ---------- ------------ -----------
At 31 December
2019 1,842 1,089 313 16,417 1,253 20,914
------------ ---------- ---------------- ---------- ------------ -----------
At 31 December
2020 2,007 1,089 634 21,277 2,017 27,024
------------ ---------- ---------------- ---------- ------------ -----------
At 30 June 2020 2,018 1,089 747 21,507 2,228 27,589
------------ ---------- ---------------- ---------- ------------ -----------
At 30 June 2021 1,915 17,982 544 33,743 7,494 61,678
------------ ---------- ---------------- ---------- ------------ -----------
11A. Acquisition of BBI Healthcare Ltd on 4(th) June 2021
In June 2021 the Company completed the acquisition of BBI
Healthcare Ltd. The acquisition consideration was GBP37.1 million
and an initial indicative purchase price allocation ("PPA")
suggests GBP24.0 million for the net assets (representing GBP17.0
million in Brands, GBP5.8 million in customer relationships &
distribution agreements, GBP3.6 million in land & buildings and
GBP3.0 million in cash and working capital, offset by GBP5.4
million in deferred taxes) and GBP13.1 million as goodwill. The
Goodwill represents additional value that the group expects to
create through the trading of acquired products into the existing
customer base of the group as well as the trading of existing
brands into these acquired customers. All of the acquisition
consideration was paid during June 2021 in cash, with GBP27.4
million being paid to the sellers of the business and GBP9.6
million being paid in settlement of debt financing within the
acquired business. The acquisition was funded from the Company's
cash resources supplemented by a GBP4.0 million drawdown from the
group's Revolving Credit Facility with Santander Bank plc and
Silicon Valley Bank. The PPA will be finalised before 31(st)
December 2021.
Acquisition of BBI Healthcare Ltd on Book Value Fair value Fair value
4(th) June 2021 Adjustments
GBP'000s GBP'000s GBP'000s
---------- ------------ ----------
Assets
---------- ------------ ----------
Non-current assets 8,099 18,320 26,419
---------- ------------ ----------
Licenses, Trademarks, Intellectual Proprty,Capitalised
development 696 (696) -
---------- ------------ ----------
Goodwill (within BBI Healthcare Ltd) 4,399 (4,399) -
---------- ------------ ----------
Brands * - 16,994 16,994
---------- ------------ ----------
Distribution Agreements * - 5,788 5,788
---------- ------------ ----------
Tangible Fixed Assets 2,977 633 3,610
---------- ------------ ----------
Deferred Tax Asset 27 - 27
---------- ------------ ----------
Current Assets 4,088 - 4,088
---------- ------------ ----------
Inventories 1,293 - 1,293
---------- ------------ ----------
Trade Receivables 1,374 - 1,374
---------- ------------ ----------
Other Receivables 213 - 213
---------- ------------ ----------
Cash 1,208 - 1,208
---------- ------------ ----------
Total assets 12,187 18,320 30,507
---------- ------------ ----------
Current liabilities (1,082) - (1,082)
---------- ------------ ----------
Trade payables (1,007) - (1,007)
---------- ------------ ----------
Other payables (75) - (75)
---------- ------------ ----------
Non-current liabilities (9,616) 4,188 (5,428)
---------- ------------ ----------
Borrowings (9,616) 9,616 -
---------- ------------ ----------
Deferred tax - (5,428) (5,428)
---------- ------------ ----------
Total net assets 1,489 22,508 23,998
---------- ------------ ----------
Net Assets acquired 23,997
---------- ------------ ----------
Goodwill 13,128
---------- ------------ ----------
Total Consideration 37,125
---------- ------------ ----------
Satisfied by:
---------- ------------ ----------
Cash paid at completion 37,125
---------- ------------ ----------
* Intangible assets identified as part of the BBI Healthcare Ltd
acquisition.
BBI Healthcare Ltd markets and sells a range of consumer
products in the categories of Women's Healthcare and Glucose
management. The Group acquired the business to expand both its
product portfolio and its customer base. The Group expects that the
inclusion of this business into its portfolio will increase the
leverage of its trading infrastructure and generate improved
profitability. The acquisition has been accounted for under IFRS 3
as a business combination. The Consolidated Financial Statements
include the results of trading of BBI Healthcare Ltd for the period
from 5(th) June 2021 to 30(th) June 2021.
Revenue and profit impact of the acquisition
BBI Healthcare Ltd contributed group revenues of GBP1.1 million
and operating profit before exceptional items and management
charges of GBP0.4 million in the period from 4(th) June 2021 to
30(th) June 2021. If the acquisition had taken place on 1 January
2021, the first day of the reporting period under review, total
Group revenue and operational profit before exceptional items and
management charges for the period arising from BBI Healthcare Ltd
would have been GBP5.3 million and GBP0.6 million respectively.
11B. Tangible assets
Primarily as a result of the extension of the Italian factory
leases through to 2031 and the acquisition of BBI Healthcare Ltd on
4(th) June 2021 the carrying value of the Group's tangible assets
has risen from GBP4.6 million at 30(th) June 2020 to GBP10.6
million at 30(th) June 2021. The main addition arising from the
acquisition of BBI Healthcare Ltd was a manufacturing facility
located in Sweden.
Plant & Other Right Land & Total
Equipment Equipment of Use Buildings
Assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ----------- --------- ----------- ----------
Cost or valuation:
----------- ----------- --------- ----------- ----------
At 1 January 2020 2,705 97 4,263 - 7,065
----------- ----------- --------- ----------- ----------
Additions 708 18 - - 726
----------- ----------- --------- ----------- ----------
Disposals (2) (4) - - (6)
----------- ----------- --------- ----------- ----------
Foreign exchange (149) 108 82 - 41
----------- ----------- --------- ----------- ----------
At 30 June 2020 3,262 219 4,345 - 7,826
----------- ----------- --------- ----------- ----------
Additions 505 17 2,510 - 3,032
----------- ----------- --------- ----------- ----------
Disposals (2) - (351) - (353)
----------- ----------- --------- ----------- ----------
Foreign exchange (63) (3) (19) - (85)
----------- ----------- --------- ----------- ----------
At 31 December 2020 3,702 233 6,485 - 10,420
----------- ----------- --------- ----------- ----------
Acquired through
business
combinations 2,098 - - 1,513 3,611
----------- ----------- --------- ----------- ----------
Additions 205 12 729 - 946
----------- ----------- --------- ----------- ----------
Disposals - (11) - (11)
----------- ----------- --------- ----------- ----------
Foreign exchange (175) (10) (308) (4) (497)
----------- ----------- --------- ----------- ----------
At 30 June 2021 5,830 224 6,906 1,509 14,469
----------- ----------- --------- ----------- ----------
Depreciation: -
----------- ----------- --------- ----------- ----------
At 1 January 2020 1,174 91 1,648 - 2,913
----------- ----------- --------- ----------- ----------
Charge for the period 127 13 246 - 386
----------- ----------- --------- ----------- ----------
Disposals (2) (4) - - (6)
----------- ----------- --------- ----------- ----------
Foreign exchange (190) 23 82 - (85)
----------- ----------- --------- ----------- ----------
At 30 June 2020 1,109 123 1,976 - 3,208
----------- ----------- --------- ----------- ----------
Charge for the period 204 13 478 - 695
----------- ----------- --------- ----------- ----------
Disposals (2) - (351) - (353)
----------- ----------- --------- ----------- ----------
Foreign exchange (8) (2) (138) - (148)
----------- ----------- --------- ----------- ----------
At 31 December 2020 1,303 134 1,965 - 3,402
----------- ----------- --------- ----------- ----------
Charge for the period 226 12 348 7 593
----------- ----------- --------- ----------- ----------
Disposals - (11) - - (11)
----------- ----------- --------- ----------- ----------
Foreign exchange (58) (5) (84) (2) (149)
----------- ----------- --------- ----------- ----------
At 30 June 2021 1,471 130 2,229 5 3,835
----------- ----------- --------- ----------- ----------
Carrying amount: -
----------- ----------- --------- ----------- ----------
At 31 December 2019 1,531 6 2,615 - 4,152
----------- ----------- --------- ----------- ----------
At 31 December 2020 2,399 99 4,520 - 7,018
----------- ----------- --------- ----------- ----------
At 30 June 2020 2,153 96 2,369 - 4,618
----------- ----------- --------- ----------- ----------
At 30 June 2021 4,359 94 4,677 1,504 10,634
----------- ----------- --------- ----------- ----------
12. Share capital and share premium
Ordinary Ordinary Share Merger
shares of Shares premium reserve
0.3p each
No. GBP'000 GBP'000 GBP'000
Audited at 31 December 2020
and Unaudited at 30 June 2021 125,831,530 377 65,738 7,656
----------- -------- -------- --------
There were no movements in share capital or share premium
between 31 December 2020 and 30 June 2021.
13. Related party transactions
The following transactions with related parties are considered
by the Directors to be significant for the interpretation of the
Interim Condensed Financial Statements for the six-month period to
30 June 2021 and the balances with related parties at 30 June 2021
and 31 December 2020:
Under the terms of the Share Purchase Agreement dated 28
November 2013 and signed between the Company and the vendors of
Biokosmes, one of whom was Gianluca Braguti, the vendors agreed to
indemnify the Company in full for any net liability arising from
certain litigation cases which had not settled at the time of
completion of the acquisition on 27 March 2014. At the period end
the amount due to the Company under the indemnity totalled
EUR102,713, of which Gianluca Braguti's liability is EUR102,713.
All litigation cases have now been settled.
Key transactions with other related parties
Braguts' Real Estate Srl (formally known as Biokosmes
Immobiliare Srl), a company 100% owned by Gianluca Braguti (a
Director and shareholder of the Group) provided property lease
services to the Development and Manufacturing business totalling
EUR230,000 in the six months to 30 June 2021 (EUR230,000 in the six
months to 30 June 2020). At 30 June 2021, the Group owed Braguts'
Real Estate Srl EUR38,333 (EUR115,000 at 30 June 2020). Biokosmes
Srl provided technical services to Braguts'Real Estate in the six
months to 30 June 20201 in the amount of EUR 2.150 (EURnil in the
six months to 30 June 2020). At 30 June 2021 Bragut's Real Estate
owed to the Group EUR nil (EURnil at 30 June 2020).
14. Financial instruments
Set out below is an overview of financial instruments held by
the Group as at:
30 June 2021 30 June 2020 31 December 2020
----------------------------- -----------------------------
Loans and Total financial Loans and Total financial Loans and Total financial
receivables assets receivables assets receivables assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets:
Trade and other
receivables
(a) 9,386 9,386 10,015 10,015 7,342 7,342
Cash and cash
equivalents 7,896 7,896 6,641 6,641 42,095 42,095
Total 17,282 17,282 16,656 16,656 49,437 49,437
------------ --------------- ------------ --------------- ------------ ---------------
30 June 2021 30 June 2020 31 December 2020
--------------------------- --------------------------- ---------------------------
Liabilities Total Liabilities Total Liabilities Total
(amortised financial (amortised financial (amortised financial
cost) liabilities cost) liabilities cost) liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial
liabilities:
Trade and other
payables (b) 8,829 8,829 9,444 9,444 6,875 6,875
Leasing
obligations 4,690 4,690 2,405 2,405 4,562 4,562
Interest
bearing
debt 9,189 9,189 5,831 5,831 6,616 6,616
----------- -------------- ----------- -------------- ----------- --------------
Total 22,708 22,708 17,680 17,680 18,053 18,053
----------- -------------- ----------- -------------- ----------- --------------
(a) Trade and other receivables excludes prepayments
(b) Trade and other payables excludes deferred revenue
15. Post Balance Sheet Event
On 6(th) August 2021 the group announced that it had acquired a
series of oncology support product assets from Helsinn Healthcare
SA (the "Brands") for a total consideration of 6 million CHF
(approximately GBP4.7 million) (the "Acquisition").
The Acquisition comprised three on-market products within the
area of oncology support, as well as all the associated IP and
existing customer relationships in relation to these Brands.
For the year ended 31 December 2020, these Brands generated
gross profit of GBP1.3m on sales of GBP2.5m. Revenues for the 2020
financial year were impacted by the Covid pandemic which saw a
reduction in oncology treatments due to lockdown, however, the
group expects the revenues of the Brands to benefit from the
reducing effects of the pandemic and the increase of oncology
treatments back to pre-Covid levels.
The total consideration paid for the Acquisition amounted to 6
million CHF, 3 million CHF payable on completion and an
unconditional 3 million CHF payment due 12 months post
completion.
16. Prior Period Adjustment
During 2020 the Group made a change to its accounting policy in
respect of foreign currency translation of Goodwill and fair value
adjustments arising on the acquisition of a foreign entity. The
change is to treat Goodwill and fair value adjustments arising on
the acquisition of a foreign entity as assets and liabilities of
the foreign entity and translate them into GBP at the closing rate.
The previous policy did not account for these adjustments correctly
by treating them as assets and liabilities of the parent and
translating them at the historic rate. The details of the impacts
of these adjustments applied to the 2019 and 2020 financial
statements are included in Note 32 to the 2020 Financials
Statements.
The following tables summarise the impacts on the Group's
consolidated financial statements at 30(th) June 2020.
a) Consolidated statement of financial position (extract)
At 30 June 2020 Impact of prior period adjustment
As previously Adjustments As restated
reported GBP'000 GBP'000
GBP'000
Assets
Non-current assets
-------------- ------------ ------------
Intangible assets 26,261 1,328 27,589
-------------- ------------ ------------
Property, plant and equipment 4,618 - 4,618
-------------- ------------ ------------
30,879 1,328 32,207
-------------- ------------ ------------
Current assets 23,714 - 23,714
-------------- ------------ ------------
Total assets 54,593 1,328 55,921
-------------- ------------ ------------
Equity and liabilities
-------------- ------------ ------------
Capital and reserves
-------------- ------------ ------------
Share capital 251 - 251
-------------- ------------ ------------
Share premium account 30,824 - 30,824
-------------- ------------ ------------
Merger reserve 7,656 - 7,656
-------------- ------------ ------------
Foreign currency translation reserve 530 1,328 1,858
-------------- ------------ ------------
Share-based payments reserve 864 - 864
-------------- ------------ ------------
Retained earnings (4,939) - (4,939)
-------------- ------------ ------------
Total equity attributable to equity
holders of the parent 35,189 1,328 36,514
-------------- ------------ ------------
Liabilities
-------------- ------------ ------------
Current liabilities 12,183 - 12,183
-------------- ------------ ------------
Non-current liabilities 7,224 - 7,224
-------------- ------------ ------------
Total liabilities 19,407 - 19,407
-------------- ------------ ------------
Total equity and liabilities 54,593 1,328 55,921
-------------- ------------ ------------
a) Consolidated Statement of Comprehensive Income (extract)
For the six months ended 30 June 2020 Impact of prior period adjustment
As previously Adjustments As restated
reported GBP'000 GBP'000
GBP'000
Profit for the period 1,553 - 1,553
Other comprehensive income: -
-------------- ------------ ------------
Items that will be reclassified subsequently
to profit or loss
-------------- ------------ ------------
Foreign exchange gain / (loss) on
translation of subsidiaries * 562 1,151 1,713
-------------- ------------ ------------
Total comprehensive profit for the
period attributable to equity holders
of the parent 2,115 1,151 3,266
-------------- ------------ ------------
* The sum of GBP1,151,000 comprises the gain of GBP1,328,000
arising at 30(th) June 2020 less the gain recognised at 31(st)
December 2019 in the amount of GBP192,000 and including an
adjustment of GBP15,000. There is no impact on the Group's basic or
diluted earnings per share and no impact on the total operating,
investing or financing cash flows for the six months ended 30 June
2020.
[1] Adjusted EBITDA is EBITDA before deduction of exceptional
items and share based payments
[2] Adjusted profit per share is profit after tax excluding
amortisation, exceptional items and share-based payments
[3] Source: Nielsen, All Outlets, Mouthwash, Brand Value Sales %
Change YoY, 52 wk w/e July 21
[4] Source: Nielsen, All Outlets, Mouthwash, Brand Value Sales %
Change YoY, 52 wk w/e July 21
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END
IR FFFFVAVIFFIL
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September 23, 2021 02:00 ET (06:00 GMT)
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