TIDMVLG

RNS Number : 4163T

Venture Life Group PLC

25 March 2021

25 March 2021

VENTURE LIFE GROUP PLC

("Venture Life" "VLG" or the "Group")

Final Results

Record revenues and profit, amidst unprecedented global circumstances

Venture Life (AIM: VLG), a leader in developing, manufacturing and commercialising products for the international self-care market, announces its audited results for the year ended 31 December 2020.

Financial highlights:

   --    Revenues increased +49% to GBP30.1 million (2019: GBP20.2million) 
   --    Gross profit increased +61% to GBP12.9 million (2019: GBP8.0 million) 
   --    Gross margin percentage increased to 42.7% (2019: 39.6%) 
   --    Adjusted EBITDA1 increased +105% to GBP6.1 million 2019: GBP3.0 million) 
   --    Profit after tax (PAT) increased +162% to GBP2.4 million (2019: GBP0.9 million) 
   --    Earnings per share increased +154% to 2.74p (2019: 1.08p) 
   --    Operating cashflow before movements in working capital GBP6.7 million (2019: GBP3.0million) 
   --    Cash at period end of GBP42.1 million (31 Dec 2019: GBP10.7 million) 
   --      Placing and open offer raised GBP34.1 million net of expenses during Q4 2020 

Commercial highlights:

-- 17 new distribution agreements signed on key brands, including 4 new markets for the Dentyl brand

   --      12 new in-market products launches 
   --      Dentyl brand exhibited strong growth; up +80% year-on-year, driven by both the UK and China 
   --      Dentyl was the fastest growing mouthwash brand in the UK in Q4 20202 
   --      New Dentyl launches in Boots, Alliance Healthcare, B&M and Bodycare stores 
   --      New Dentyl formulations launched in Sainsbury's, Superdrug and Savers 

-- Inclusion of Dentyl in Cardiff University's independently published in-vitro study, showing strong results

-- UltraDEX now market leader within UK Halitosis mouthwash segment, overtaking its nearest rival CB122

Jerry Randall, Chief Executive Officer of Venture Life, commented:

"I am delighted to report that 2020 was an exceptional year for Venture Life, achieving 49% growth in revenues and over 100% growth on EBITDA, amidst unprecedented global circumstances. The whole team has reacted and adapted incredibly well to the pandemic, despite the constraints it has placed on the business. In particular, the team at our development and manufacturing plant in Italy maintained production output continuously throughout 2020 and continues to do so to date in 2021. I am delighted that shipments to our Chinese customer for Dentyl have already resumed this year. I extend my heartfelt thanks to every single person at Venture Life for this incredible achievement. In addition during 2020, we significantly increased capacity at our factory, which will enable us to accommodate significant new organic growth and acquisitions in the future.

And at the end of 2020, we raised GBP34.1 million net of expenses for acquisitions from existing and new shareholders and I would like to thank them for their support. We expect to use this funding to make earnings enhancing acquisitions and grow profitability utilising the newly created capacity in our operating structure. 2020 was an outstanding year of performance for the business, and despite the first quarter of 2021 seeing most markets in lockdown, we look forward to 2021 with confidence ."

For further information, please contact:

Venture Life Group PLC +44 (0) 1344 578004

Jerry Randall, Chief Executive Officer

Andrew Waters, Chief Financial Officer

   Cenkos Securities plc (Nomad and Joint Broker)                             +44 (0) 20 7397 8900 

Stephen Keys / Camilla Hume (Corporate Finance)

Russell Kerr / Michael Johnson (Sales)

N+1 Singer (Joint Broker)

   Shaun Dobson / Carlo Spingardi (Corporate Finance)                    +44 (0) 20 7496 3000 

Jonathan Dighe (Sales)

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, The Netherlands and Italy, the Group's product portfolio includes some key products such as the UltraDEX and Dentyl oral care product ranges, food supplements for maintaining brain function, medical devices for women's intimate healthcare and fungal infections and proctology.

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 Development & Manufacturing business in Italy, Biokosmes, the Group also provides development and manufacturing services to companies for consumer healthcare products, primarily medical devices.

Chair's Statement

2020 has been an exceptional year for the Venture Life Group, achieving 49% growth in revenues and 105% growth on adjusted EBITDA, amidst unprecedented global circumstances. It became a year that tested businesses and people.

The Group began 2020 with good momentum from 2019, a strong order book and demand across its business. As the COVID-19 virus spread to Europe, it put substantial strain on each of the operations of our business, as lockdowns began and governments started closing down sectors of their economies.

Biokosmes S.r.l, our development and manufacturing facility, is based in Northern Lombardy and bore the initial impact from the virus as it reached Europe, in the first quarter. However, our fantastic team in Italy quickly adapted to the situation, immediately instigating COVID-safe working procedures to protect employees and the business. At the request of the local government in Northern Lombardy, we very quickly began manufacturing hand sanitising gel for the local hospitals and pharmacies that were unable to source it due to the significant increase in demand for this type of product. Initially this was provided by us free of charge to the health authorities but latterly is now a new revenue stream that contributed to revenues in 2020.

The rapid COVID-19 precautions taken by the team in Italy, along with the production of the hand sanitising gel meant that when Italy reached its most stringent lockdown in the first half of 2020, with the vast majority of businesses being forced to close, our facility in Northern Lombardy was classified as an essential business and therefore remained open. This has also been the case in the second half of 2020, and remains the case today. As a result, we continued to supply our customers through this difficult time. Our offices in the UK and The Netherlands also had to move to COVID-safe working and continued to be fully operational through all of 2020.

On behalf of the whole Board, I extend our gratitude to all of our employees for the tremendous effort they made in 2020, keeping our business fully open, our people safe and our customers supplied. It was an incredible achievement.

For a fifth consecutive year, we were included as one of the companies listed in the London Stock Exchange's publication '1000 Companies to Inspire Britain' - a publication that recognises businesses across the UK that outperform their peers. This is strong testament to the dynamic team we have at Venture Life.

The pandemic brought many challenges alongside that of remaining operational, such as supply chains becoming stretched as cash dried up. There is no doubt that having a strong balance sheet helped us to overcome this. Many suppliers were restricting the supply of raw materials to those customers who could pay up front, and our strong cash position enabled us to ensure the continued sourcing of raw materials to meet customer orders. This has resulted in an increased inventory position for us during the year and at the year-end, but this inventory readily converts into revenues and subsequently cash as we manufacture the finished goods. This increased inventory allows us to ensure customer supply continues uninterrupted.

As we previously did twice in 2019, we built UK inventory levels at the back end of 2020 to ensure that we covered the risk of border disruption through the Brexit process at the end of 2020. As it has transpired, a Brexit deal was achieved and congestion at the UK border has been limited, and increases in border administration being comfortably managed by our team, so in 2021, we will be able to return our UK stock levels to normal. In 2020, UK revenues only represented 16% of our overall Group revenues, and so for the rest of our business, Brexit has not caused any issues with our products being delivered to customers around the globe from Italy.

The PharmaSource BV business we acquired in January 2020 has been well integrated into the Group, and we expect to begin manufacturing the products at Biokosmes during the first half of 2021. This will mark the complete integration of PharmaSource into the Group. This business performed very well in 2020 and we have started to achieve synergies in line with our expectations.

During 2020, we increased our investment in our manufacturing capability to ensure we keep a deep bow-wave of capacity ahead of the business as revenues continue to grow. With the exceptional growth seen at the start of the year, and mindful of our ambition to continue to acquire interesting products, we invested GBP1.2 million (2019: GBP0.4 million), significantly increasing our production capacity. This included investment directly in filling machinery as well as the associated infrastructure.

Acquisitions will continue to feature in the growth of the Group and at the end of 2020 we achieved a significant step towards our future growth by raising GBP34.1 million (net of expenses) to acquire further products for the Group. This significant placing and open offer meant we finished the year with GBP42.1 million of gross cash in the balance sheet, GBP35.5 million net cash excluding Finance Leases. This cash, in conjunction with additional modest debt facilities, gives us significant strength to continue to acquire interesting assets that we can leverage through our operating capabilities. We are continually reviewing opportunities in the market place and we expect to complete on some of these during 2021. The deployment of this cash in profitable product assets is expected to significantly increase the profitability of the Group in the future.

The placing in December 2020 was supported by our existing institutional shareholders, but also saw a number of notable new institutional shareholders, and on behalf of the Board, I thank both new and existing shareholders for their support in this capital raise. Also, I would like to thank our fantastic employees across the Group for their incredible hard work, commitment and tenacity this year, dealing with incredibly difficult circumstances. I am sure we have an exciting year ahead.

Dr Lynn Drummond

Non-Executive Chair

24 March 2021

Chief Executive Officer's Statement

Operating review

The Group delivered exceptional results for 2020 with all measures of financial performance significantly ahead of 2019 and ahead of expectations at the start of 2020.

These excellent results were achieved against the backdrop of the COVID-19 pandemic and the limitations and restrictions that it brought with it. The Group has spent recent years building a vertically integrated operating base that is highly leverageable, upon which it is capable of significantly increasing revenues and profitability in the future. Since entering the public markets in 2014, the Group has achieved a compound annual revenue growth rate of 27% (up to and including 2020), which has come from a combination of organic and acquired growth. In 2016, 2018 and 2020, the Group acquired interesting assets that it could leverage with its operational base, and each of these assets has shown meaningful growth in revenues and profitability since acquisition. This strategy will continue to form the basis of future growth, making selective earnings enhancing acquisitions to utilise capacity and improve margins, alongside organic growth from our consolidated business. The funds raised in December 2020, complemented by a sensible amount of debt, will be deployed to acquire carefully selected earnings enhancing product assets which we expect will allow the Group to significantly increase its revenues and profitability in future years, as it becomes a recognised player in the consumer healthcare space.

The results for this year would have been noteworthy in any event, but given they have been delivered during the COVID-19 pandemic of 2020, they are even more remarkable. The team across the whole business has been outstanding in their response and perseverance through these incredibly difficult times, particularly in Biokosmes where the plant was kept fully operational at all times, even at the height of the severest lockdown measures in early March. I must give my heartfelt thanks and appreciation to every single member of our dedicated, knowledgeable and hard-working team, who kept our business operating through this storm, and continues to do so.

It is in times like these that the robustness of a business is tested, to see if it can cope with and react to adverse changes in its operating environment, and the Group demonstrated this in abundance during 2020. The simple requirement to do our day-to-day job became difficult in an environment where our priority is to keep employees safe and protect them from the virus. We came into 2020 with significant new business that had been put in place in the previous year, and this was already driving activity in Q1 2020 before the pandemic struck. New initiatives in the UK with our key brands, Dentyl and UltraDEX, were beginning, as well as orders from our Chinese oral care partner, as they saw strong interest and sell out in our oral care product Dentyl before the pandemic hit. The addition of PharmaSource brought exciting new products and customers, along with a strongly performing Dutch business. The Customer Brands business based out of Biokosmes in Italy also had a record order book coming into the year and has generated good new business for 2020 from new and existing customers.

This activity was then supplemented even further by the launch of the new DISINPLUS brand in March 2020, a newly developed hand sanitising gel, launched in response to COVID-19. The team at Biokosmes was able to react incredibly quickly and within 11 days from the request for help from the local government in Italy, was producing the hand gel to supply local hospitals and pharmacies, to enable them to continue to treat COVID-19 patients. This speed and flexibility is a fundamental quality of both our team and our business.

Revenues for the year of GBP30.1 million were split 50% for the Venture Life brands (2019:33%) and 50% for Customer brands (2019: 67%), although both parts of the business grew during the year. The Venture Life Brands generated revenues of GBP14.9 million (2019: GBP6.7 million), and were driven by growth, both in UK and China, of our Dentyl and UltraDEX brands, up 33% to GBP7.3 million combined (2019: GBP5.5 million); the addition of the DISINPLUS range of GBP3.6 million (2019: GBPnil), and finally the addition of PharmaSource BV acquired in January 2020, which brought revenues of GBP2.8 million (2019: GBPnil). The Customer Brands business also grew well, delivering revenues of GBP15.2 million (2019: GBP13.5 million), driven by new business from some key existing customers as well as from new customers.

Despite this overall growth in revenues and profitability, the Group was impacted negatively by COVID-19 in terms of:

   --    Delays in orders and launches of products by international partners; 
   --    Impact on UK retail sell-out due to the High Street being impacted during lockdown; 
   --    Additional costs incurred operating in a COVID-safe way. 

Whilst there was a significant switch during the lockdown periods from customers buying in store to online, this did not mitigate the lower shop footfall. Despite this, our Dentyl brand in the UK delivered strong growth, where as UltraDEX suffered more from the slowdown seen in Boots, as it is weighted heavily with this retailer.

The operational leverage that we have built is evident in the results, with the material growth in gross margin, adjusted EBITDA (before exceptional items and share based payments) and earnings. By the end of the year we had invested significantly in the plant and generated significant free capacity, estimated at 49% in unit terms, for future growth to be accommodated, plus options for further expansion. Increasing revenues through the plant brings gross margin enhancement as fixed costs are spread over more production, meaning we expect a long-term improvement in gross and net margin as we grow revenues.

Despite the significant growth in revenues, we continue to keep tight control of costs, and aside from the one off costs associated with COVID-19 and with the PharmaSource acquisition as well as the additional PharmaSource cost base, our overheads only increased GBP0.4 million in the year compared to 2019. This has resulted in earnings per share of 2.74p, a significant increase of 154% over 2019.

Venture Life Brands

UltraDEX

Revenues for UltraDEX fell 4% to GBP3.0 million (2019: GBP3.2 million) throughout 2020. A fall in the UK revenues GBP0.4 million to GBP2.2 million was offset by a rise of GBP0.2 million in the rest of the world. UK sales were adversely affected as COVID-19 impacted the High Street in particular (Health and Beauty Channel - Boots and Superdrug) - this impact was especially felt in H1 during the first lockdown, as UK sales fell by 20% in H1 2020 compared to H1 2019. However, sales in the UK have recovered somewhat in the second half and whilst they are not yet back to the levels pre-COVID, the decline eased to 6% in H2, hence a decline across the full year of 14%.

We did however see rapid growth through the Online Channel, which was to be expected: sales of UltraDEX on Amazon increased by +98% year-on-year.

Despite the impact of COVID-19 in the UK, UltraDEX overtook CB12 (Mylan brand) to become the UK's biggest mouthwash brand for Halitosis based on Value Share for the first time in 8 years (source: Nielsen, Retail Value Sales, 52 w/e Nov-20). Furthermore, UltraDEX successfully retained all of its distribution throughout 2020 despite the challenges it faced, and this is important as we move into 2021.

In the UK, social media following increased on both Facebook and Instagram by c. 273% and our media campaign impressions increased by 114% throughout 2020.

Internationally, UltraDEX is now partnered in 15 markets.

Dentyl

Revenues for Dentyl rose 80% to GBP4.3 million (2019: GBP2.4 million). In the UK, Dentyl performed exceptionally well through the pandemic with revenues up 33% to GBP2.6 million (2019: GBP2.0 million) - the brand saw modest growth in H1 2020 of +10% compared to the same period the prior year, but that growth significantly increased to +60% in H2 2020 compared the same period the prior year, due to a number of reasons.

Throughout 2020, Dentyl over indexed in supermarkets, meaning a greater percentage of Dentyl was sold in supermarkets compared to the Health and Beauty Channel on the UK High Street, and thus fared much better throughout the pandemic, as supermarkets were less affected versus the UK High Street. At the same time, a number of new initiatives also came to fruition, helping to fuel growth.

In H2 2020, Boots launched Dentyl into 800 of its largest stores and on Boots.com; although this distribution represents approximately a third of their stores, the weighted distribution is 78%. Alliance Healthcare (the wholesale arm of Boots UK) also launched Dentyl, which will ensure greater access to independent pharmacies across the UK moving forward (approximately 35% of pharmacies order exclusively through Alliance Healthcare).

Dentyl expanded its UK distribution by launching in some key Value Retailers - B&M stores (one of the fastest growing retailers in the UK) and Bodycare.

We also saw new products developed in-house at our manufacturing facility come to market. In October, we launched the new Dentyl Editions (namely, Dentyl Unicorn and Dentyl Mermaid) into AS Watsons stores. During Q4, Dentyl Unicorn launched in all Superdrug stores (c.800 stores) and quickly became the bestselling Dentyl variant. In Savers, Dentyl Mermaid launched with full distribution (c. 500 stores). In November, we developed, tested and launched a new Dentyl sub-brand called Dentyl Fresh Protect in Sainsbury's; priced competitively, our intention is to target and attract consumers to the brand from the lower end, private label segment of the market.

Throughout 2020, we saw rapid growth through the Online Channel. Sales of Dentyl on Amazon increased by 648% year-on-year and Amazon has also confirmed the launch of the new Dentyl Editions in Q1 2021.

Finally, we announced the inclusion of Dentyl mouthwash in Cardiff University's independent in-vitro study that was published independently in November 2020. Results showed that CPC technology (Dentyl's key ingredient) inactivated SARS-CoV-2 completely within a 30 second exposure in a lab setting.

Further to this, t he multi-centre in-vivo clinical study being conducted by Cardiff University involving both Dentyl and a newly developed UltraDEX CPC-MAX mouthwash is now nearing completion of patient recruitment. The data is being analysed and will be submitted for publication and independently peer-reviewed. We will update the market with the findings in due course, once the study has been published.

Internationally, we also saw the brand perform well, with revenues increasing 308% to GBP1.6 million (2019: GBP0.4 million) primarily down to sales to our Chinese partner. Our partner in China suffered like so many businesses having to shut down during the pandemic, then restart its business in the autumn after the lockdown ended. The stock we shipped to them towards the end of the first half of the year only arrived in China in late September, again due to COVID related delays in shipping, and so that stock started to sell in Q4 only. We did not ship any product to China in H2, but we have begun shipping product to China in Q1 2021.

We saw 4 new launches for Dentyl internationally, including Portugal, UAE, Singapore and Dentyl Fresh Breath Beads in Jordan.

Other Brands

Excluding UltraDEX and Dentyl, the other Venture Life Brands within the international division grew by +11%, due to continued steady growth on Procto-eze and Myco Clear in particular. Overall, we saw 17 long-term distribution agreements completed throughout 2020, as interest remains high on both the Venture Life Brands and the newly acquired PharmaSource products. Agreements were reached on Myco Clear (nail fungus), Procto-eze (Haemorrhoids), DISINPLUS (hand sanitising gel) and also wart products. We continue to identify key target companies for all our products, including these smaller brands throughout 2021.

DISINPLUS

This brand was newly created in 2020 in response to the demand for hand sanitising gel that arose due to the pandemic. Sales for the whole year were GBP3.6 million, of which GBP1.5 million was in the UK. There were no sales of this product in 2019.

The product itself was originally made by Biokosmes in 2004 at the time of the SARS Bird Flu outbreak. In the spring of 2020 when the virus gripped Northern Lombardy, the local government approached Biokosmes to ask if they could make such a hand gel - local hospitals could not find any supplies and without it they could not admit any more patients, similarly for local pharmacies. Within 11 days of this request being received, Biokosmes was making its first batch - initially this was supplied free of charge, and subsequently this supply continues and is paid for by the Italian Government. Biokosmes was highlighted and praised throughout the Italian media and this generated a significant level of enquiries for the hand gel from commercial sources (for example, grocery chains, pharmacies and distributors to retail). As a result, the brand name DISINPLUS was created and a suite of 8 products were developed and are now marketed. Sales in the first half were very significant, at GBP3.2 million, as there was significant demand due to hand gel shortages. This included GBP1.5 million of sales to ASDA in the UK. In the second half of the year, the significant stocking into the channel in many countries caused a hiatus in sales of the gel for the Group, but later in H2 they returned, albeit, at much lower levels.

PharmaSource

Revenue for the full year 2020 was EUR3.2m (GBP2.80m) representing a growth of 20% over the previous year before the business was acquired (unaudited revenues for the 12 months to 31 December 2019 were EUR2.6m (GBP2.3m at an exchange rate of EUR1.124/GBP1.0). The acquisition of PharmaSource BV completed on 24 January 2020, therefore just over 11 months of trading is consolidated into the Group results for 2020 in the amount of EUR3.1m (GBP2.76m).

The integration process of both commercial and finance operations has been completed smoothly and good commercial progress has been made since acquisition. We saw good sales growth in both the UK and The Netherlands in 2020 - two new products were launched with our Dutch partner Perrigo, we launched a woman's intimate product with a Dutch retail chain called 'DA', which operates 200 stores in The Netherlands, we partnered with Lloyds Pharmacy in the UK with the Wart and Verruca pen and we signed a five-year agreement with a new partner in the UK. Furthermore, we completed 6 new agreements with partners outside of these core markets, which confirms there is significant interest in these newly acquired products from PharmaSource.

Finally, 2020 saw the successful completion of technical audits carried out by the relevant notified bodies on the nail fungal pen, wart pen, wart plasters and BV gel. The next regulatory audits will be May 2022.

Customer Brands

Revenues from Customer Brands rose by 12% to GBP15.2 million (2019: GBP13.5 million). This was driven by a combination of new business from both new customers and existing customers. Notably in the period, we began as a second manufacturer for the Kelocote brand for Alliance Pharma, one of our key customers. Production of this only began in Q4 of 2020 and will continue in 2021. The growth in revenue was attenuated by some customers who were adversely affected by COVID-19, delaying launches or orders, and this was also witnessed with some international customers of the Venture Life Brands. As we emerge from the pandemic in 2021, we would hope to see these customers return to the previous expected level of sales.

Operating Leverage and Capacity

A key part of revenues delivered by the Group is from the development and manufacturing capability that we have at Biokosmes. This facility manufactures the vast majority of the products that the Group sells, exceptions being NeuroAge, Dentyl Fresh Breath Beads and currently the products from PharmaSource, although we expect PharmaSource products will come into the factory in 2021. With the strong growth experienced and our further ambition, we invested significantly during 2020 to materially increase the manufacturing capacity at Biokosmes. This investment totalled GBP1.2 million during the year, and has increased our approximate capacity for production from 33 million units per annum to 55 million units per annum by the end of 2020. The investment went towards three new filling lines, infrastructure modifications and fire safety protection for increased throughput. This also included a reorganisation of the warehousing facilities and the storage of packaging materials.

The Group now has significant capacity for growth, which will accommodate both organic and acquired growth. Beyond this, the Group has the opportunity to expand production further through increasing the footprint of the current factory and leasing further nearby buildings to continue capacity expansion if required, beyond the current 55 million pieces.

Capital Raise

In December, the Group undertook an institutional placing and open offer, raising gross proceeds of GBP36.0 million (GBP34.1 million after expenses), at a price of 90 pence per share. This money will be supplemented by sensible levels of debt and will be used to make selective earnings enhancing acquisitions that meet the Group's strict criteria, in order to grow the revenues and the profitability of the group. Participants in the placing included both existing and new institutional shareholders. Of the total gross proceeds, GBP34.0 million was raised via the placing and GBP2.0 million via an open offer to existing shareholders.

Summary & Outlook

In this quite extraordinary year where the whole world has been affected by the COVID-19 virus, the Group has demonstrated its resilience and its robust business model to deliver outstanding growth, at a time when many businesses have seen a substantial contraction or even a halt to their operations, and this was despite experiencing delays from a number of our UK and international customers due to COVID-19.

During this difficult year, we were also able to acquire and successfully integrate the PharmaSource business into the Group and deliver continued growth from that business throughout 2020.

The team within Venture Life has shown it can adapt and prosper in a changing and challenging environment, and continue to provide the service and products to its customers around the world. I would like to thank the entire team, and in particular the team at Biokosmes, for their hard work and perseverance during the year, dealing with the significant challenges thrown up by COVID-19 and ensuring that our business continued uninterrupted. I would like to welcome the PharmaSource team into the Venture Life family and look forward to more success in 2021. I would also like to thank our customers and suppliers for their continued support and work with us during this difficult time. Finally, thank you to our shareholders, existing and new, for their on-going support of both our team and our vision.

The end of 2020 and the start of 2021 saw another extended period of lockdown across the markets in which we operate, similar to that seen in the first half of 2020, and in 2021 the Group will seek to consolidate the growth seen in 2020. Then through the application of its free cash to selected earnings enhancing acquisitions the Group expects to continue to deliver acquisitive growth, and as markets begin to ease out of lock down, also deliver organic growth. I expect growth in revenues to deliver growth in earnings and I look forward to updating shareholders during what is sure to be an exciting 2021 for Venture Life.

Jerry Randall

Chief Executive Officer

24 March 2021

Financial Review

The Group delivered a very positive set of results for the year as the execution of the Buy and Build strategy continued, leading to the progression of greater revenues through the infrastructure. Gross Profit increased both commensurately with sales growth plus a noteworthy margin improvement and, through the impact of leverage against a relatively fixed operating cost base, led to all other profitability measures (adjusted-EBITDA, operating profit, pre-tax profit and post-tax profit) increasing substantially as did all measures of operational cash flow.

Statement of Comprehensive Income

The Group reported 2020 revenues of GBP30.1 million, an increase of 49% over the GBP20.2 million reported in 2019. The Group comprises of two segments: Venture Life Brands and Customer Brands. The Venture Life Brands business reported strong growth of 123% to GBP14.9 million (2019: GBP6.7 million). The Dentyl brand grew by 80% to GBP4.3 million in 2020 (2019: GBP2.4 million) reflecting a strong UK performance where the brand benefitted from new listings and a positive response to some independently published in-vitro data by Cardiff University, as well as the onset of higher sales to China per the new agreement entered into with the distribution partner in April 2020. UltraDEX net sales declined 4% to GBP3.0 million in 2020 (2019: GBP3.2 million) as declines in the UK arising from periods of lockdown outweighed some significant improvement in sales to some international partners. As a consequence of the COVID-19 setting, the Group developed a range of hand sanitiser gels (HSGs) and established a new business unit which delivered GBP3.6m in net sales and accounted for 18% of the total Group sales growth. The PharmaSource business, acquired on 24th January 2020, delivered ahead of our expectations in the amount of GBP2.8m net sales and accounted for 14% of the total Group sales growth. Sales of the Group's other branded products grew 11% reflecting a blend of increasing geographic footprint coupled with volume growth and some distributor churn.

The Customer Brands business reported revenues (excluding intercompany sales) of GBP15.2 million, an increase of 12% from 2019. As well as developing and manufacturing the majority of the Venture Life brands, this part of the business is also focused on the development and manufacture of products on behalf of third parties to be sold under their brands and the growth is partly attributable to newly launched assets. As a result of the timings of both the hand sanitiser gel business and the sales to China, the revenue in 2020 was phased 56% in the first half of 2020 and 44% in the second half in contrast to prior years, which had typically experienced higher revenues in the second half.

The Group generated gross profit of GBP12.8 million representing a gross margin of 42.7%, which compared favourably to a gross margin of 39.6% for 2019. This notable improvement due to several factors including:

(a) favourable mix variances arising from inclusion of PharmaSource products at higher average margin;

(b) favourable mix variances arising from the higher portion of revenues arising from Venture Life Brands, and;

(c) factory volume/efficiency variances, this being a clear demonstration of one of the strategies of the group to increase factory throughput and deliver leverage against those factory cost components that are relatively more fixed.

The Euro fluctuated against Sterling a little during 2020 with a net strengthening in the region of 5% which had an overall small positive impact on the reported operating profit of the Group as most of the Group's gross margins were euro denominated.

Administrative expenses increased in the period to GBP9.3 million from GBP6.7 million in 2019, an increase of GBP2.6 million. Of this increase, GBP0.5 million related to the inclusion of PharmaSource operations, GBP0.9m comprised higher non-cash costs of amortisation, depreciation & share-based payments arising from the PharmaSource acquisition, higher factory capital investment for growth and new stock option issuances in January 2020, and the remaining increase of GBP1.2 million included additional COVID-19 costs of GBP0.5 million and an increase in debtor provision of GBP0.4 million to yield a balance of GBP0.3 million reflecting inflationary increases on base expenditures. Exceptional costs of GBP167,000 (2019: GBP208,000) related to legal and professional fees incurred in the completion of the acquisition of the PharmaSource BV business (acquired on 24 January 2020), as well as due diligence activities conducted in the year on prospective acquisition targets.

Operating profit was GBP3.6 million (2019: GBP1.3 million) with the profit before tax for the Group of GBP3.3 million (2019: GBP1.4 million). The Group reported profit after tax of GBP2.4 million (2019: profit of GBP0.9 million).

Finance costs were GBP0.3 million (2019: credit of GBP0.1 million) and comprised interest payable on an expanded portfolio of euro loans coupled with foreign exchange losses arising principally upon settlement of the deferred euro-denominated consideration payments for the acquired PharmaSource business during a year of sterling depreciation.

These translated into basic earnings per share of 2.74 pence (2019: 1.08 pence), with the improvement in business performance generating enhanced shareholder value. The number of shares in issue as at 31 December 2020 was 125,831,530. (31 December 2019: 83,712,106) and the weighted average number during 2020 was 86,402,007 (2019: 83,712,106).

The pace of growth of business across the year, coupled with stock building for Brexit and COVID-19 restrictions, inevitably resulted in a significant flux of funds into working capital in the amount of GBP3.1 million (2019: GBP(0.1) million) and as a result of this the net cash from operating activities was GBP2.7 million in 2020 (2019: GBP2.4 million). Cash used in investing activities amounted to GBP7.5 million (2019 GBP1.1 million) and comprised the purchase consideration for the acquisition of PharmaSource BV of GBP5.5 million, GBP1.2 million of capital investment into the Italian factory and GBP0.8 million of capitalised development. Net cash from financing activities was GBP36.3 million (2019 GBP0.1 million) and comprised the 2020 4th quarter placement and open offer proceeds of GBP34.1 million (comprising GBP36.0 million of gross proceeds less GBP1.9 million of transaction expenses), GBP0.9 million from the successful exercise of staff stock options and the inclusion of three new Euro loans in the amount of EUR3.5 million less scheduled Euro loan repayments of EUR0.9 million together with revolving invoice financing drawdowns and repayments of GBP2.3 million and GBP2.6 million respectively. Overall cash and cash equivalents increased during the year by GBP31.4million (2019 an increase of GBP1.4 million). Cash and cash equivalents less interest bearing borrowings increased during the year from GBP3.7 million at the start of the year to GBP30.9 million at the end of the year.

Statement of Financial Position

Intangible non-current assets increased by GBP6.3 million in the year and comprised the acquisition of the PharmaSource intangible assets in January 2020 (GBP5.5 million), capitalised development costs of GBP0.7 million and continuing investment in patents and trademarks of GBP0.1 million, partially offset by ongoing amortisation and including a substantial fx gain on euro denominated assets arising as a result of retranslating the goodwill and other intangible assets of the foreign operations at the closing spot rate, as discussed in note 11 Prior period adjustment, affecting the goodwill and fair value of other intangible assets acquired in 2014 as part of the acquisition of Biokosmes S.r.l. Capitalised development costs are carried in the amount of GBP2.0 million and reflect the recent peaking in workflow assisting our customers with formulation upgrades and changes to the Medical Device regulations arising in 2020. Whilst consuming cash, this investment continues to be value-enhancing through strengthening relationships with our customer base.

Property, plant and equipment increased by GBP2.9 million reflecting significant net additions in factory equipment of GBP1.2 million as part of the expansion programme plus a technical IFRS16 net addition of GBP2.5 million recognising the extension of the factory lease through to 2031 offset by ongoing depreciation and including a small fx gain on euro denominated assets.

Inventory increased by 75% versus 2019. This was intentional in order to build stocks of finished goods as part of the Group's BREXIT contingency plans to ensure strong levels of inventory in UK warehouse facilities ahead of the BREXIT date of 31st December 2020 coupled with an increase in raw materials inventories to ensure uninterrupted ongoing production during the pandemic. Trade receivables and trade payables grew at rates of approximately 20% and 30% respectively, which remained broadly commensurate with the rate of sales growth when reflecting the phasing of the sales in 2020 compared with 2019.

Cash and debt

-- Cash and cash equivalents at the year-end totalled GBP42.1 million (2019: GBP10.7 million) having been boosted during the fourth quarter by the successful Placing and Open offer which netted GBP34.1 million. Net cash inflow during 2020 amounted to GBP31.4 million with the increase in cash balances accounted for as follows:

-- Operating cash flow before tax payments and movements in working capital - inflow of GBP6.7 million

-- Changes in working capital comprising inventory build, debtor build less creditor build - outflow of GBP3.1 million;

   --    Tax payments and Finance costs - outflow of GBP0.9 million 
   --    Acquisition of PharmaSource BV - outflow of GBP5.5 million 

-- Investment in manufacturing facility equipment (GBP1.2 million) and intangible development assets (GBP0.8 million)- outflow of GBP2.0 million

-- Raising of Equity - inflow of GBP35.0 million (including GBP34.1 million via Placing and Open Offer and GBP0.9 million through stock option exercises)

-- Drawdown of Financing (GBP5.4 million) less repayments and Finance lease repayments (GBP4.2 million) - inflow of GBP1.2 million

Net cash, excluding finance lease obligations, increased from GBP6.3 million as at 31 December 2019 to GBP35.5 million as at 31 December 2020.

The Group is financed by a range of largely Euro denominated interest-bearing loans of varying maturities, comprising of invoice financing and unsecured bank loans. Total debt increased from GBP7.0 million to GBP11.2 million and reflects the inclusion of additional EUR3.5 million of Italian euro denominated loans from Banco Popolare Milano S.r.l and Banco Unicredito S.r.l less on-going repayments of EUR0.9 million, a small net repayment of our invoice financing facility and the technical IFRS16 inclusion of a GBP2.5 million debt component of the Italian factory finance lease extension.

Given the net cash position at the year end, the Group is extremely comfortable with the level of debt in the business, which is being used to finance growth and investment. The Directors have prepared detailed forecasts looking beyond 12 months from the date of these financial statements and expect the Group to continue to operate profitably in the foreseeable future, generate positive operating cashflows and comfortably meet all scheduled loan repayments as they fall due.

Taking everything into account this has been a strong year for the business, which has experienced very strong organic growth, as well as completed the acquisition of PharmaSource BV, its latest addition. The Group has delivered a robust performance in 2020 with strong and growing operating profit, pre-tax profit, post-tax profit and operating cashflow. The start of 2021 has been positive with continuing momentum to the sales and a solid order book. The Group continues to manage the impact of COVID-19 on the business and the uncertainty that this might bring. Following analysis and consideration of even an extreme worst-case scenario, the directors believe that the Group has sufficient resources to continue in operational existence for the foreseeable future and to comfortably make scheduled loan repayments as they fall due. The Directors therefore conclude that the Going Concern basis remains the appropriate basis upon which to prepare the Group's financial statements.

Andrew Waters

Chief Financial Officer

24 March 2021

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2020

Company number 05651130

 
                                                               Year ended   Year ended 
                                                               31 December  31 December 
                                                               2020         2019 
                                                        Notes  GBP'000      GBP'000 
------------------------------------------------------  -----  -----------  ----------- 
                                                                            Restated 
------------------------------------------------------  -----  -----------  ----------- 
Revenue                                                 2      30,076       20,206 
Cost of sales                                                  (17,229)     (12,203) 
------------------------------------------------------  -----  -----------  ----------- 
Gross profit                                                   12,847       8,003 
Administrative expenses 
Operating expenses                                             (7,980)      (6,071) 
Impairment losses of financial assets                          (405)        (30) 
Amortisation of intangible assets                              (909)        (579) 
------------------------------------------------------  -----  -----------  ----------- 
Total administrative expenses                                  (9,294)      (6,680) 
Other income                                                   169          163 
------------------------------------------------------  -----  -----------  ----------- 
Operating profit before exceptional items                      3,722        1,486 
Exceptional costs                                       3      (167)        (208) 
------------------------------------------------------  -----  -----------  ----------- 
Operating profit                                               3,555        1,278 
Finance income                                                 54           152 
Finance costs                                                  (333)        (68) 
------------------------------------------------------  -----  -----------  ----------- 
Profit before tax                                              3,276        1,362 
Tax                                                     4      (908)        (458) 
------------------------------------------------------  -----  -----------  ----------- 
Profit/(loss) for the year                                     2,368        904 
Other comprehensive income which will not 
 be subsequently reclassified to the income 
 statement 
Other comprehensive income which will be subsequently 
 reclassified to the income statement                          1,284        (775) 
------------------------------------------------------  -----  -----------  ----------- 
Total comprehensive profit / (loss) for the 
 year attributable to equity holders of the 
 parent                                                        3,652        129 
------------------------------------------------------  -----  -----------  ----------- 
 

*see note 11 for more information on the prior period adjustment.

All of the profit and the total comprehensive income for the year is attributable to equity holders of the parent.

 
                                             Year ended   Year ended 
                                             31 December  31 December 
                                             2020         2019 
------------------------------------------   -----------  ----------- 
Profit/(loss) per share 
Basic profit / (loss) per share (pence)     52,74         1.08 
Diluted profit / (loss) per share (pence)   52.53         1.01 
------------------------------------------   -----------  ----------- 
 

Consolidated Statement of Financial Position

at 31 December 2020

Company number 05651130

 
                                             At 31 December  At 31 December  At January 
                                             2020            2019            2019 
                                       Note  GBP'000         GBP'000         GBP'000 
-------------------------------------  ----  --------------  --------------  ---------- 
                                                             Restated        Restated 
-------------------------------------  ----  --------------  --------------  ---------- 
Assets 
Non-current assets 
Intangible assets                      7     27,024          20,914          21,209 
Property, plant and equipment                7,018           4,152           4,591 
-------------------------------------  ----  --------------  --------------  ---------- 
                                             34,042          25,066          25,800 
-------------------------------------  ----  --------------  --------------  ---------- 
Current assets 
Inventories                                  8,886           5,082           3,869 
Trade and other receivables                  7,653           6,363           7,020 
Cash and cash equivalents              8     42,095          10,710          9,623 
-------------------------------------  ----  --------------  --------------  ---------- 
                                             58,634          22,155          20,512 
-------------------------------------  ----  --------------  --------------  ---------- 
Total assets                                 92,676          47,221          46,312 
-------------------------------------  ----  --------------  --------------  ---------- 
Equity and liabilities 
Capital and reserves 
Share capital                          9     377             251             251 
Share premium account                  9     65,738          30,824          30,824 
Merger reserve                         9     7,656           7,656           7,656 
Foreign currency translation reserve         1,429           145             919 
Share-based payments reserve                 660             624             609 
Retained earnings                            (3,751)         (6,492)         (7,512) 
-------------------------------------  ----  --------------  --------------  ---------- 
Total equity attributable to equity 
 holders of the parent                       72,109          33,008          32,747 
-------------------------------------  ----  --------------  --------------  ---------- 
Liabilities 
Current liabilities 
Trade and other payables                     7,108           5,491           4,868 
Taxation                                     433             218             - 
Interest-bearing borrowings            10    2,457           2,434           1,911 
                                             9,998           8,143           6,779 
-------------------------------------  ----  --------------  --------------  ---------- 
Non-current liabilities 
Interest-bearing borrowings            10    8,721           4,591           5,157 
Statutory employment provision               1,201           1,058           1,062 
Deferred tax liability                       647             421             567 
-------------------------------------  ----  --------------  --------------  ---------- 
                                             10,569          6,070           6,786 
-------------------------------------  ----  --------------  --------------  ---------- 
Total liabilities                            20,567          14,213          13,565 
-------------------------------------  ----  --------------  --------------  ---------- 
Total equity and liabilities                 92,676          47,221          46,312 
-------------------------------------  ----  --------------  --------------  ---------- 
 

Consolidated Statement of Changes in Equity

for the year ended 31 December 2020

 
                                                                   Foreign 
                                  Share               Convertible  currency     Share-based 
                         Share     premium  Merger    bond         translation  payments     Retained  Total 
                         capital  account    reserve  reserve      reserve       Reserve     earnings  equity 
                         GBP'000  GBP'000   GBP'000   'GBP'000     GBP'000      GBP'000      GBP'000   GBP'000 
-----------------------  -------  --------  --------  -----------  -----------  -----------  --------  ------- 
Balance at 1 January 
 2019 as previously 
 reported                251      30,824    7,656     -            252          609          (7,512)   32,080 
Change in accounting 
 policy                  -        -         -         -            667          -            -         667 
Restated balance 
 at 
 1 January 2019          251      30,824    7,656     -            919          609          (7,512)   32,747 
Profit for the year      -        -         -         -            -            -            904       904 
Foreign exchange 
 on translation          -        -         -         -            (775)        -            -         (775) 
-----------------------  -------  --------  --------  -----------  -----------  -----------  --------  ------- 
Total comprehensive 
 income (restated)       -        -         -         -            (775)        -            904       129 
Share Options Charge     -        -         -         -            -            131          -         131 
Share Options charge 
 recycling per IFRS2     -        -         -         -            -            (115)        115       - 
Transactions with 
 shareholders           -         -         -         -            -            16           115       131 
----------------------  --------  --------  --------  -----------  -----------  -----------  --------  ------- 
Restated balance 
 at 
 1 January 2020          251      30,824    7,656     -            145          624          (6,492)   33,008 
Profit for the year      -        -         -         -            -            -            2,368     2,368 
Foreign exchange 
 on translation          -        -         -         -            1,284        -            -         1,284 
-----------------------  -------  --------  --------  -----------  -----------  -----------  --------  ------- 
Total comprehensive 
 income                  -        -         -         -            1,284        -            2,368     3,652 
-----------------------  -------  --------  --------  -----------  -----------  -----------  --------  ------- 
Share options charge     -        -         -         -            -            409          -         409 
Share options IFRS2 
 recycling               -        -         -         -            -            (373)        373       - 
Contributions of 
 Equity, net 
 of transaction costs    126      34,914    -         -            -            -            -         35,040 
-----------------------  -------  --------  --------  -----------  -----------  -----------  --------  ------- 
Transactions with 
 shareholders            126      34,914    -         -            -            36           373       35,449 
-----------------------  -------  --------  --------  -----------  -----------  -----------  --------  ------- 
Balance at 31 
 December 2020           377      65,738    7,656     -            1,429        660          (3,751)   72,109 
-----------------------  -------  --------  --------  -----------  -----------  -----------  --------  ------- 
 
 

As at 31st December 2020 the parent entity has lacked distributable reserves and is accordingly not in a position to declare any dividend.

During the year the third Tranche of the management long term incentive matured but did not meet its vesting conditions. The accumulated provision within the Share Based Payments reserve of GBP129,000 was discharged and recycled into retained earnings in accordance with IFRS2. In addition, a number of employee stock option contracts were successfully exercised during the year and the respective accumulated provision within the Share Based Payments reserve of GBP244,000 was similarly discharged and recycled into retained earnings in accordance with IFRS2.

Consolidated Statement of Cash Flows

for the year ended 31 December 2020

 
                                                     Year ended   Year ended 
                                                     31 December  31 December 
                                                     2020         2019 
                                                     GBP'000      GBP'000 
---------------------------------------------------  -----------  ----------- 
Cash flow from operating activities 
Profit before tax                                    3,276        1,362 
Finance (income) / expense                           279          (84) 
---------------------------------------------------  -----------  ----------- 
Operating profit                                     3,555        1,278 
Adjustments for: 
- Depreciation of property, plant and equipment      1,081        786 
- Impairment losses of financial assets              405          30 
- Amortisation of intangible assets                  909          579 
- Disposal of capitalised development cost           345          147 
- Share-based payment expense                        409          131 
---------------------------------------------------  -----------  ----------- 
Operating cash flow before movements in working 
 capital                                             6,704        2,951 
Increase in inventories                              (3,294)      (1,373) 
Increase in trade and other receivables              (1,161)      (265) 
Increase/(decrease) in trade and other payables      1,403        1,507 
---------------------------------------------------  -----------  ----------- 
Cash generated from operations                       3,652        2,820 
---------------------------------------------------  -----------  ----------- 
Finance Cost                                         (50)         32 
Tax paid                                             (896)        (412) 
Net Cash from operating activities:                  2,706        2,440 
Cash flow from investing activities: 
Acquisition of subsidiaries - net of cash acquired   (5,465)      - 
Purchases of property, plant and equipment           (1,248)      (388) 
Expenditure in respect of intangible assets          (821)        (757) 
Net cash used in investing activities                (7,534)      (1,145) 
---------------------------------------------------  -----------  ----------- 
Cash flow from financing activities: 
Proceeds from issuance of ordinary shares            36,997       - 
Transaction costs incurred from issue of ordinary 
 shares                                              (1,957)      - 
Drawdown of interest-bearing borrowings              5,428        3,784 
Repayment of interest-bearing borrowings             (3,433)      (3,088) 
Leasing obligation repayments                        (764)        (585) 
Net cash from financing activities                   36,271       111 
---------------------------------------------------  -----------  ----------- 
Net increase in cash and cash equivalents            31,443       1,406 
Net foreign exchange difference                      (58)         (319) 
Cash and cash equivalents at beginning of period     10,710       9,623 
---------------------------------------------------  -----------  ----------- 
Cash and cash equivalents at end of period           42,095       10,710 
---------------------------------------------------  -----------  ----------- 
 

Notes to the Consolidated Statements

for the year ended 31 December 2020

1. Basis of the announcement

The nancial information of the Group set out above does not constitute statutory accounts for the purposes of Section 435 of the Companies Act 2006. The nancial information for the year ended 31 December 2020 has been extracted from the Group's audited nancial statements which were approved by the Board of directors on 24(th) March 2021 and delivered to the Registrar of Companies for England and Wales following the Company's 2020 Annual General Meeting.

The nancial information for the year ended 31 December 2020 has been extracted from the Group's nancial statements for that period. The report of the auditor on the 2020 nancial statements was unquali ed, did not include any references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006.

Whilst the nancial information included in this preliminary announcement has been prepared in accordance with 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, this announcement does not itself contain su cient information to comply with those IFRSs. This nancial information has been prepared in accordance with the accounting policies set out in the 2020 Report and Accounts and updated for new standards adopted in the current year.

Items included in the nancial information of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated nancial information is presented in UK sterling (GBP), which is the Group's presentational currency.

The Company is a public limited company incorporated and domiciled in England & Wales and whose shares are quoted on AIM, a market operated by The London Stock Exchange.

The principal activity of Venture Life Group plc and its subsidiaries is the development and commercialisation of healthcare products, including food supplements, medical devices and dermo-cosmetics for the ageing population, and the manufacture of a range of topical products for the healthcare and cosmetics

2.1 Segment revenue and results

The following is an analysis of the Group's revenue and results by reportable segment.

 
                                        Venture 
                                         Life      Customer    Consolidated 
                                        Brands   Brands      Group 
                                        GBP'000  GBP'000     GBP'000 
--------------------------------------  -------  ----------  -------------- 
Year ended 31 December 2020 
Revenue 
Sale of goods                           14,910   20,854      35,764 
Sale of services                        -        672         672 
Intercompany sales elimination          -        (6,360)     (6,360) 
--------------------------------------  -------  ----------  -------------- 
Total external revenue                  14,910   15,166      30,076 
--------------------------------------  -------  ----------  -------------- 
Results 
Operating profit before exceptional 
 items 
 and excluding central administrative 
 costs                                  4,551    3,060       7,611 
--------------------------------------  -------  ----------  -------------- 
 
 
  Year ended 31 December 2019 
Revenue 
Sale of goods                           6,699    15,088      21,787 
Sale of services                        -        420         420 
Intercompany sales elimination          -        (2,001)     (2,001) 
--------------------------------------  -------  ----------  -------------- 
Total external revenue                  6,699    13,507      20,206 
--------------------------------------  -------  ----------  -------------- 
Results 
Operating profit before exceptional 
 items 
 and excluding central administrative 
 costs                                  626      2,827       3,453 
--------------------------------------  -------  ----------  -------------- 
 

All revenue of the Group is recognised at point in time as determined by IFRS15.

The reconciliation of segmental operating profit to the Group's profit before tax is as follows:

 
                                                          Year ended    Year ended 
                                                           31 December   31 December 
                                                          2020          2019 
                                                          GBP'000       GBP'000 
--------------------------------------------------------  ------------  ------------ 
Operating profit before exceptional items and excluding 
 central administrative costs                             7,611         3,453 
Exceptional items                                         (167)         (208) 
Central administrative costs                              (3,889)       (1,967) 
Finance income / (costs)                                  (279)         84 
--------------------------------------------------------  ------------  ------------ 
Profit before tax                                         3,276         1,362 
--------------------------------------------------------  ------------  ------------ 
 

One customer generated revenue of GBP5,449,000 which accounted for 10% or more of total revenue (2019: one customer generated revenue of GBP4,083,000 which accounted for 10% or more of total revenue).

2.2 Segmental assets and liabilities

 
                                 At 31 December  At 31 December 
                                 2020            2019 
                                 GBP'000         GBP'000 
-------------------------------  --------------  -------------- 
Assets 
Brands                           2,695           16,148 
Development and Manufacturing    31,379          26,897 
Group consolidated assets        38,603          4,176 
-------------------------------  --------------  -------------- 
Consolidated total assets        92,676          47,221 
-------------------------------  --------------  -------------- 
Liabilities 
Brands                           7,685           4,035 
Development and Manufacturing    12,176          9,737 
Group consolidated liabilities   706             441 
-------------------------------  --------------  -------------- 
Consolidated total liabilities   20,567          14,213 
-------------------------------  --------------  -------------- 
 

2.3 Other segmental information

 
                                Depreciation  Additions 
                                               to 
                                and           non-current 
                                amortisation   assets 
                                GBP'000       GBP'000 
------------------------------  ------------  ----------- 
Year ended 31 December 2020 
Brands                          120           5,465 
Development and Manufacturing   1,471         2,069 
Central administration          390           - 
------------------------------  ------------  ----------- 
                                1,990         7,534 
------------------------------  ------------  ----------- 
Year ended 31 December 2019 
Brands                          153           64 
Development and Manufacturing   1,076         1,003 
Central administration          136           - 
------------------------------  ------------  ----------- 
                                1,365         1,067 
------------------------------  ------------  ----------- 
 

2.4 Geographical information

The Group's revenue from external customers by geographical location of customer is detailed below:

 
                    Year ended   Year ended 
                    31 December  31 December 
                    2020         2019 
                    GBP'000      GBP'000 
------------------  -----------  ----------- 
Revenue 
UK                  11,135       7,615 
Italy               9,801        6,279 
Switzerland         2,638        2,987 
Germany             1,352        174 
Netherlands         1,185        510 
Rest of Europe      1,234        1,554 
China               2,329        547 
Rest of the World   402          540 
------------------  -----------  ----------- 
Total revenue       30,076       20,206 
------------------  -----------  ----------- 
 

3. Exceptional costs

 
                                                            Year ended   Year ended 
                                                            31 December  31 December 
                                                            2020         2019 
                                                            GBP'000      GBP'000 
----------------------------------------------------------  -----------  ----------- 
Costs incurred in the acquisition of PharmaSource 
 BV                                                         90           112 
----------------------------------------------------------  -----------  ----------- 
Costs incurred in due diligence pertaining to prospective 
 acquisitions                                               77           96 
----------------------------------------------------------  -----------  ----------- 
Total exceptional costs                                     167          208 
----------------------------------------------------------  -----------  ----------- 
 

During the period the Group incurred legal and professional fees in relation to prospective acquisitions including the PharmaSource BV acquisition, which was completed shortly after the year-end.

4. Income tax expense

 
                                                    Year ended   Year ended 
                                                    31 December  31 December 
                                                    2020         2019 
                                                    GBP'000      GBP'000 
--------------------------------------------------  -----------  ----------- 
Current tax: 
Current tax on profits for the year                 1,184        627 
Adjustments in respect of earlier years             (209)        (30) 
--------------------------------------------------  -----------  ----------- 
Total current tax expense                           975          597 
--------------------------------------------------  -----------  ----------- 
Deferred tax: 
Origination and reversal of temporary differences   (67)         (139) 
--------------------------------------------------  -----------  ----------- 
Total deferred tax expense                          (67)         (139) 
--------------------------------------------------  -----------  ----------- 
Total income tax expense                            908          458 
--------------------------------------------------  -----------  ----------- 
 

Tax on the Group's profit/(loss) before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits and losses of the consolidated entities as follows:

 
                                                        Year ended   Year ended 
                                                        31 December  31 December 
                                                        2020         2019 
                                                        GBP'000      GBP'000 
------------------------------------------------------  -----------  ----------- 
Profit/(loss) before tax                                3,276        1,362 
Profit/(loss) before taxation multiplied by the local 
 tax rate of 19% (2018: 19%)                            622          259 
(Income) / Expenses not deductible for tax purposes     118          73 
Change in recognised deferred tax liability             -            (139) 
Change in unrecognised deferred tax asset               103          100 
Higher rate on foreign taxes                            65           165 
------------------------------------------------------  -----------  ----------- 
Income tax charge                                       908          458 
------------------------------------------------------  -----------  ----------- 
 

In the Spring Budget 2020, the UK Government announced that from 1 April 2020 the corporation tax rate would remain at 19% (rather than reducing to 17%, as previously enacted). This new law was substantively enacted on 17 March 2020. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements. In the Spring Budget 2021 the UK Government announced that from 1 April 2023 the corporation tax rate would rise to 25% on all profits in excess of GBP250,000. The standard corporation tax rate in Italy is 24% and there is in addition a regional production tax of 3.9%. Corporation tax rates in the Netherlands are 25% on profits in excess of EUR200,000 and 19% on profits below this threshold. A previously announced plan to lower the 25% rate in 2021 has been cancelled and the corporation tax rate going forward will remain at 25%.

As at the reporting date, the Group has unused tax losses of GBP10,900,000 (2019: GBP10,259,000) available for offset against future profits generated in the UK. No deferred tax asset has been recognised in respect of these losses due to the uncertainty of its recoverability.

The tax charge of the Group is driven by tax paid on the profits of Biokosmes S.r.l and Nelie BV, offset by the release of deferred tax liabilities generated on the acquisition of Biokosmes, Periproducts and Dentyl businesses. In 2020 the effective tax rate of Biokosmes was 17% (2019: 22%) and the effective tax rate of Nelie BV was 22% (2019: 23%).

5. Earnings per share

A reconciliation of the weighted average number of ordinary shares used in the measures is given below:

 
                              Year ended   Year ended 
                              31 December  31 December 
                              2020         2019 
                              Number       Number 
----------------------------  -----------  ----------- 
For basic EPS calculation     86,402,007   83,712,106 
----------------------------  -----------  ----------- 
For diluted EPS calculation   93,416,888   89,254,313 
----------------------------  -----------  ----------- 
 

The dilution reflects the inclusion of the options and LTIPs that have been issued, amounting to 6,460,766 stock options and 554,115 LTIPs.

A reconciliation of the earnings used in the different measures is given below:

 
                                        GBP'000  GBP'000 
--------------------------------------  -------  ------- 
For basic and diluted EPS calculation   2,368    904 
--------------------------------------  -------  ------- 
Add back: Amortisation                  909      579 
--------------------------------------  -------  ------- 
Add back: Exceptional costs             167      208 
--------------------------------------  -------  ------- 
Add back: Share based payments          409      131 
--------------------------------------  -------  ------- 
For adjusted EPS calculation(1)         3,853    1,822 
--------------------------------------  -------  ------- 
 

1 Adjusted EPS is profit/(loss) after tax excluding amortisation, exceptional costs and share-based payments.

The resulting EPS measures are:

 
                                   Pence  Pence 
---------------------------------  -----  ----- 
Basic EPS calculation              2.74   1.08 
---------------------------------  -----  ----- 
Diluted EPS calculation            2.53   1.01 
---------------------------------  -----  ----- 
Adjusted EPS calculation(1)        4,46   2.18 
---------------------------------  -----  ----- 
Adjusted Diluted EPS calculation   4.12   2.04 
---------------------------------  -----  ----- 
 

6. Dividends

Amounts recognised as distributions to equity holders in the period:

 
                Year ended   Year ended 
                31 December  31 December 
                2020         2019 
                GBP'000      GBP'000 
--------------  -----------  ----------- 
Final dividend  -            - 
--------------  -----------  ----------- 
 

The Directors do not recommend the payment of a dividend (2019: GBP nil pence per share).

7. Intangible assets

 
                                                                           Other 
                           Development             Patents                 intangible 
                                                    and 
                           Costs         Brands    Trademarks   Goodwill   assets       Total 
                           GBP'000       GBP'000   GBP'000      GBP'000    GBP'000      GBP'000 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Cost or valuation: 
                          ------------  --------  -----------  ---------  -----------  -------- 
 At 1 January 2019, 
  as previously 
  reported                 2,712         1,089     996          16,233     2,819        23,849 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Change in accounting 
  policy*                  (32)          -         (5)          629        128          720 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Restated at 1 
  January 2019             2,680         1,089     991          16,862     2,947        24,569 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Additions                 872           -         106          -          -            978 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Disposals                 (147)         -                      -          -            (147) 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Foreign exchange          (125)         -         (81)         (445)      (91)         (742) 
                          ------------  --------  -----------  ---------  -----------  -------- 
 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                 739           -         82           -          -            821 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Disposals                 (345)         -         (182)        -          -            (527) 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Foreign exchange          170           -         41           784        174          1,169 
                          ------------  --------  -----------  ---------  -----------  -------- 
 At 31 December 
  2020                     3,844         1,089     1,374        21,277     4,070        31,654 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Amortisation: 
                          ------------  --------  -----------  ---------  -----------  -------- 
 At 1 January 2019, 
  as previously 
  reported                 1,223         -         662          -          1,423        3,307 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Change in accounting 
  policy*                  27            -         (56)         -          82           53 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Restated at 1 
  January 2019             1,250         -         606          -          1,505        3,361 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Charge for the 
  year                     246           -         178          -          155          579 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Foreign exchange          (58)          -         (81)         -          (57)         (196) 
                          ------------  --------  -----------  ---------  -----------  -------- 
 At 1 January 2020 
  (restated*)              1,438         -         703          -          1,603        3,744 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Charge for the 
  year                     323           -         213          -          373          909 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Disposals                 -             -         (182)        -          -            (182) 
                          ------------  --------  -----------  ---------  -----------  -------- 
 Foreign exchange          76            -         6            -          77           159 
                          ------------  --------  -----------  ---------  -----------  -------- 
 At 31 December 
  2020                     1,837         -         740          -          2,053        4,630 
                          ------------  --------  -----------  ---------  -----------  -------- 
 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 
                          ------------  --------  -----------  ---------  -----------  -------- 
 

*See note 11 for further information on change in policy

During 2020 amortisation of GBP323,000 was charged on all capitalised development assets (2019 GBP246,000);

All trademark, licence and patent renewals are amortised over their estimated useful lives, which is between five and ten years. All amortisation has been charged to administrative expenses in the Statement of Comprehensive Income.

Other intangible assets currently comprise customer relationships and product formulations acquired through the acquisition of Biokosmes Srl. and customer relationships acquired through the acquisitions of Periproducts, the Dentyl brand and the Pharmasource group. These assets were recognised at their fair value at the date of acquisition and were being amortised over a period of between five and ten years. The weighted average remaining amortisation period for other intangible assets is 4.9 years (2019: 4.4 years)

Assets with indefinite economic lives as well as associated assets with finite economic lives are tested for impairment at least annually or more frequently if there are indicators that amounts might be impaired. The impairment review involves determining the recoverable amount of the relevant cash-generating unit, which corresponds to the higher of the fair value less costs to sell or its value in use.

The key assumptions used in relation to the Biokosmes (Customer Brands CGU), Periproducts, the Dentyl brand and PharmaSource group (part of the Venture Life Brands CGU) impairment review are as follows:

-- The estimates of profit before tax for the three years to 31 December 2023 are based on management forecasts of the Biokosmes, Periproducts, the Dentyl brand and PharmaSource group businesses, with subsequent years growth forecasted at -2-3%, 0-2% and 0-1% respectively. Management consider 2-3%, 0-2% and 0-1% conservative growth rates for these businesses, but reflective of the operating sectors of the businesses. During 2020, Biokosmes net sales growth was in excess of 10% due to broad organic growth, Periproduct's main asset (UltraDEX) net sales declined by 4% partly due to the consequence of COVID-19 lockdown in the UK oral care market, the Dentyl brand grew by 80% due to development of sales to China and the full-year PharmSource group net sales grew by 20% due to broad organic growth.

-- The Group has applied a discount rate to the future cash flows of Biokosmes for five years, with a terminal value reflecting future years. The rate is based upon the Group WACC of 12.4% and adjusted for specific segment, country and currency risk and then converted onto a pre-tax basis. The resulting rate is relatively high and is derived from CAPM theory based upon a relatively high equity risk premium applied to a low-geared Company. These assumptions generate a significant headroom over the assets of the business held at the balance sheet date. The Biokosmes factory has remained open throughout 2020 and in the current year-to-date and has not been impacted by COVID-19 despite the country undergoing periods of regional and national lockdown.

-- The Group has applied a discount rate to the future cash flows of Periproducts Ltd, the Dentyl brand and the PharmaSource group for five years including a terminal value. The rate is based upon the Group WACC of 12.4% and adjusted for specific segment, country and currency risk and then converted onto a pre-tax basis. These assumptions generate a significant headroom over the assets of the business held at the balance sheet date.

-- These above impairment assessments of Biokosmes SRL, Periproducts Ltd, the Dentyl brand and the PharmaSource group have included assessment of all elements of intangible value regardless of whether their economic lives are finite or indefinite, and include Customer Relationships, acquired formulations, acquired Trademarks and Goodwill.

Intangible assets with indefinite useful lives allocated to operating segments

 
 
 
                                      Year ended     Year ended 31 December 
                                       31 December    2019 
                                       2020 
                                      GBP'000        GBP'000 
            -----------------------  -------------  ----------------------- 
 Goodwill    PeriProducts Ltd         3,337          3,337 
            -----------------------  -------------  ----------------------- 
  Dentyl                              3.100          3,100 
 ----------------------------------  -------------  ----------------------- 
             Pharmasource BV          4.340          - 
            -----------------------  -------------  ----------------------- 
  Venture Life Brands 
   Total                              10,777         6,437 
 ----------------------------------  -------------  ----------------------- 
 
  Biokosmes srl                       10,500         9,980 
 ----------------------------------  -------------  ----------------------- 
  Customer Brands Total               10,500         9,980 
 ----------------------------------  -------------  ----------------------- 
 
 Brands      PeriProducts Ltd         -              - 
            -----------------------  -------------  ----------------------- 
 Dentyl      Dentyl                   1,089          1,089 
            -----------------------  -------------  ----------------------- 
             Pharmasource BV          -              - 
            -----------------------  -------------  ----------------------- 
  Venture Life Brands 
   Total                              1,089          1,089 
 ----------------------------------  -------------  ----------------------- 
 
  Biokosmes srl                       -              - 
 ----------------------------------  -------------  ----------------------- 
  Customer Brands Total               -              - 
 ----------------------------------  -------------  ----------------------- 
 

The recoverable amount of each segment was determined based on value-in-use calculations, covering a detailed three-year forecast, followed by an extrapolation of expected cash flows for the remaining useful lives using a declining growth rate determined by management. The present value of the expected cash flows of each segment is determined by applying a suitable discount rate reflecting current market assessments of the time value of money and risks specific to the segment.

Recoverable amount of each operating segment

 
 
 
                              Year           Year ended 
                               ended          31 December 
                               31 December    2019 
                               2020 
                              GBP'000        GBP'000 
                             -------------  ------------- 
 PeriProducts Ltd             6,290          6,130 
                             -------------  ------------- 
 DentylDentyl                 5,930          5,175 
                             -------------  ------------- 
 Pharmasource BV              8,659          - 
                             -------------  ------------- 
 Venture Life Brands Total    20,879         11,305 
                             -------------  ------------- 
 
 Biokosmes srl                13,691         21,476 
                             -------------  ------------- 
 Customer Brands              13,691         21,476 
                             -------------  ------------- 
 
 

These assumptions are subjective and provide key sources of estimation uncertainty, specifically in relation to growth assumptions, future cashflows and the determination of discount rates. The actual results may vary and accordingly may cause adjustments to the Group's valuation in future financial years. Sensitivity analysis has been performed on the impairment review and indicate sufficient headroom in the event of reasonably possible changes in key assumptions are unlikely to result in an impairment for intangibles.

7A. Business Combinations

On 24th January 2020 the Company completed the acquisition of 100% of the equity instruments of Nelie BV and wholly-owned subsidiaries PharmaSource BV and MD Manufacturing BV, a group of companies based in the Netherlands engaged in the supply of antifungal and related products to European customers and trading under the name of "PharmaSource". The acquisition consideration was EUR6.5 million, comprising EUR0.25 million net working capital at completion, EUR1.7 million in intangible assets (principally customer relationships, distribution agreements and Trademarks), EUR0.3 million deferred tax provision and a balance of EUR4.8 million as goodwill. The magnitude of the goodwill reflects the future value that the Group can unlock from this business acquisition through (a.) the trading of these acquired products into its network of existing Venture Life Brand customers, (b.) value creation through the transitioning of manufacturing in-house and (c.) value creation through the application of the Group' internal R&D resources to broaden the product range. The acquisition consideration of EUR6.5 million was paid entirely in cash of which EUR5.3 million was paid at completion, EUR1.0m within 45 days of completion and the balance of EUR0.5 million within 270 days of completion. The acquisition was funded through the Company's own resources.

PharmaSource products are anti-fungal in nature and feature a unique trademark protected delivery system in the form of a pen. The Group acquired the business to expand its portfolio into anti-fungal products and to broaden its customer base, especially across Europe. The inclusion of this additional business into its portfolio increased the leverage of its trading infrastructure and contributed to the overall improvement in profitability. The acquisition has been accounted for under IFRS 3 as a business combination. The Consolidated Financial Statements to 2020 include the results of the PharmaSource business for the period from 24(th) January 2020 to 31(st) December 2020.

The fair values of the identifiable assets and liabilities of the PharmaSource business as at the date of acquisition were:

 
                                                  Fair Value   Fair Value 
                                                   EUR'000      GBP'000 
 Assets 
                                                 -----------  ----------- 
 Non-current Assets 
                                                 -----------  ----------- 
 Customer Relationships *                         551          465 
                                                 -----------  ----------- 
 Distribution Agreements *                        682          575 
                                                 -----------  ----------- 
 Trademarks *                                     494          417 
                                                 -----------  ----------- 
 Current Assets 
                                                 -----------  ----------- 
 Inventories                                      314          265 
                                                 -----------  ----------- 
 Trade & other receivables                        189          159 
                                                 -----------  ----------- 
 Cash and cash equivalents                        319          269 
                                                 -----------  ----------- 
 Total Assets                                     2,549        2,150 
                                                 -----------  ----------- 
 Trade & other payables                           257          215 
                                                 -----------  ----------- 
 Current Liabilities                              257          215 
                                                 -----------  ----------- 
 Non-current Liabilities 
                                                 -----------  ----------- 
 Deferred Tax                                     328          277 
                                                 -----------  ----------- 
 Total Net Assets                                 1,964        1,658 
                                                 -----------  ----------- 
 Net Assets acquired                              1,964        1,658 
                                                 -----------  ----------- 
 Goodwill                                         4,831        4,076 
                                                 -----------  ----------- 
 Total Consideration                              6,795        5,734 
                                                 -----------  ----------- 
 
 Satisfied by 
                                                 -----------  ----------- 
 Cash paid at completion                          5,294        4,467 
                                                 -----------  ----------- 
 Cash paid within 45 days of completion           976          822 
                                                 -----------  ----------- 
 Cash to be paid within 270 days of completion    525          445 
                                                 -----------  ----------- 
 Total Consideration                              6,795        5,734 
                                                 -----------  ----------- 
 

* Intangible assets identified as part of the Pharmasource BV acquisition.

Revenue and profit impact of the acquisition

PharmaSource was acquired on 24(th) January 2020. It generated net revenues of GBP2.8 million and operating profit before exceptional items of GBP0.9 million in the period from 24(th) January 2020 to 31(st) December 2020. Had the business been acquired from 1(st) January 2020 it would have contributed GBP2.8 million in net

revenues and   operating profit before exceptional items of GBP0.9 million. 

8. Cash and Cash Equivalents

 
                                                 At 31 December  At 31 December 
                                                 2020            2019 
                                                 GBP'000         GBP'000 
-----------------------------------------------  --------------  -------------- 
Current 
Available cash and cash equivalents              42,095          5,159 
Committed cash for acquisition of PharmaSource 
 post 31 December 2019                           -               5,551 
Cash and Cash equivalents                        42,095          10,710 
-----------------------------------------------  --------------  -------------- 
 

The Group holds sterling, Chinese renminbi and euro denominated balances in the UK. The Group's subsidiaries hold US dollar, yen and euro accounts in Italy and a Swiss franc account in Switzerland.

The Directors consider that the carrying value of cash and cash equivalents approximates their fair value.

9. Share capital and share premium

Share capital

All shares are authorised, issued and fully paid. The Group has one class of ordinary shares which carry no fixed income.

 
                      Ordinary     Ordinary 
                       shares       shares      Share    Merger 
                       of           of 
                      0.3p each    0.3p each  Premium  reserve 
                      Number       GBP        GBP'000  GBP'000 
--------------------  -----------  ---------  -------  -------- 
At 31 December 2020   125,831,530  377,495    65,738   7,656 
--------------------  -----------  ---------  -------  -------- 
At 31 December 2019   83,712,106   251,136    30,824   7,656 
--------------------  -----------  ---------  -------  -------- 
 

The Company issued 42,119,424 new shares during the year for consideration of GBP36,997,000 (nil new shares issued during 2019).

This issuance included 2,070,674 shares arising from the exercise of staff share options.

The Group operates a Long-Term Incentive Plan. Up to the balance sheet date, there have been four awards under this plan, in which Executive Directors and senior management of the Group participate. During 2020, one of the awards matured but failed to meet vesting conditions. Further details are included in the Directors' Remuneration Report.

10. Interest-bearing borrowings

 
                                             At            At 
                                             31 December   31 December 
                                             2020          2019 
                                             GBP'000       GBP'000 
                                            ------------  ------------ 
 Current 
                                            ------------  ------------ 
 Invoice financing                           888           1,184 
                                            ------------  ------------ 
 Leasing obligations                         477           512 
                                            ------------  ------------ 
 Unsecured bank loans due within one year    1,092         738 
                                            ------------  ------------ 
 Total                                       2,457         2,434 
                                            ------------  ------------ 
 Non-current 
                                            ------------  ------------ 
 Leasing obligations                         4,085         2,139 
                                            ------------  ------------ 
 Unsecured bank loans due after one year     4,636         2,452 
                                            ------------  ------------ 
 Total                                       8,721         4,591 
                                            ------------  ------------ 
 

All bank loans are held by the Group's Italian subsidiaries. During 2020 three new bank loans in the amount of EUR3.5 million were secured from BPM SPA and Unicredito with expiry dates of June 2025, November 2025 and June 2026 respectively. Invoice financing includes the Italian RiBa (or "Ricevuta Bancaria") facility which is a short-term facility. The balance shown above of GBP888,000 (2019: GBP1,184,000) reflects the amount that had been settled in Biokosmes' account under RiBa and drawn against invoices in the UK as at the reporting date.

All of the above bank loans and the RiBa invoice financing balance bear interest at variable rates.

A summary showing the contractual repayment of interest-bearing borrowings is shown below:

 
                                             At 31                               At 31 
                                              December                            December 
                                              2020                                2019 
                               Leasing                             Leasing 
                               obligations   Other       2020      obligations   Other       2019 
                               GBP'000       GBP'000     GBP'000   GBP'000       GBP'000     GBP'000 
                              ------------  ----------  --------  ------------  ----------  -------- 
 Amounts and timing of debt 
  repayable 
                              ------------  ----------  --------  ------------  ----------  -------- 
 Within 1 year                 523           2,052       2,575     523           1,974       2,497 
                              ------------  ----------  --------  ------------  ----------  -------- 
 1-2 years                     473           1,508       1,981     491           766         1,257 
                              ------------  ----------  --------  ------------  ----------  -------- 
 2-3 years                     447           1,352       1,799     444           757         1,201 
                              ------------  ----------  --------  ------------  ----------  -------- 
 3-4 years                     448           1,167       1,615     422           644         1,066 
                              ------------  ----------  --------  ------------  ----------  -------- 
 4-5 years                     447           638         1,085     422           463         885 
                              ------------  ----------  --------  ------------  ----------  -------- 
 After more than 5 years       2,471         90          2,561     414           7           421 
                              ------------  ----------  --------  ------------  ----------  -------- 
 Total                         4,809         6,807       11,616    2,716         4,611       7,327 
                              ------------  ----------  --------  ------------  ----------  -------- 
 

The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the liabilities at the reporting date.

Net debt reconciliation

 
                                              Liabilities                 Other 
                                                     from                assets 
                                                Financing 
                                               activities 
                                                                                    Net Cash 
                                                                                           / 
                                 Borrowings        Leases   Sub-Total      Cash   (Net Debt) 
                                -----------  ------------  ----------  --------  ----------- 
 Net cash at 01 January 2019          3,842         3,226       7,068     9,623        2,555 
                                -----------  ------------  ----------  --------  ----------- 
 Net cashflow                             -             -           -     1,406        1,406 
                                -----------  ------------  ----------  --------  ----------- 
 Finance lease repayments                 -         (585)       (585)         -          585 
                                -----------  ------------  ----------  --------  ----------- 
 Drawdown                             3,784             -       3,784         -      (3,784) 
                                -----------  ------------  ----------  --------  ----------- 
 (Repayments)                       (3,088)             -     (3,088)         -        3,088 
                                -----------  ------------  ----------  --------  ----------- 
 Foreign exchange movements           (164)            10       (154)     (319)        (165) 
                                -----------  ------------  ----------  --------  ----------- 
 Net cash at 31 December 2019         4,374         2,651       7,025    10,710        3,685 
                                -----------  ------------  ----------  --------  ----------- 
 Net cashflow                             -             -           -    31,443       31,443 
                                -----------  ------------  ----------  --------  ----------- 
 Finance lease repayments                 -         (764)       (764)         -          764 
                                -----------  ------------  ----------  --------  ----------- 
 Interest on Leases                       -            33          33                   (33) 
                                -----------  ------------  ----------  --------  ----------- 
 Drawdown                             5,428         2,510       7,938         -      (7,938) 
                                -----------  ------------  ----------  --------  ----------- 
 (Repayments)                       (3,433)             -     (3,433)         -        3,433 
                                -----------  ------------  ----------  --------  ----------- 
 Foreign exchange movements             247           132         379      (58)        (437) 
                                -----------  ------------  ----------  --------  ----------- 
 Net cash at 31 December 2020         6,616         4,562      11,178    42,095       30,917 
                                -----------  ------------  ----------  --------  ----------- 
 

Lease liability

In 2017 the Group adopted IFRS 16 which means that lease contracts that have previously been recognised as operating leases are now being recognised as finance leases. In the Statements of Financial Position additional lease liabilities at 31 December 2020 of GBP4,562,000 (2019: GBP2,651,000) and right-of-use assets of GBP4,520,000 (2019: GBP2,615,000) are recognised, giving a net liability position of GBP42,000 (2019: GBP36,000).

11. Prior Period Adjustment

During 2020 the Group made a change to 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.

See note 7 for further information

The following tables summarise the impacts on the Group's consolidated financial statements.

   a)    Consolidated statement of financial position (extract) 

At 1 January 2019

 
                                               Impact of prior period adjustment 
                                         As previously   Adjustments        As restated 
                                              reported 
                                               GBP'000       GBP'000            GBP'000 
 Assets 
 Non-current assets 
                                        --------------  ------------  ----------------- 
 Intangible assets                              20,542           667             21,209 
                                        --------------  ------------  ----------------- 
 Property, plant and equipment                   4,591             -              4,591 
                                        --------------  ------------  ----------------- 
                                                25,133           667             25,800 
                                        --------------  ------------  ----------------- 
 
 Current assets                                 20,512             -             20,512 
                                        --------------  ------------  ----------------- 
 Total assets                                   45,645           667             46,312 
                                        --------------  ------------  ----------------- 
 
 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              252           667                919 
                                        --------------  ------------  ----------------- 
 Share-based payments reserve                      609             -                609 
                                        --------------  ------------  ----------------- 
 Retained earnings                             (7,512)             -            (7,512) 
                                        --------------  ------------  ----------------- 
 Total equity attributable to equity 
  holders of the parent                         32,080           667             32,747 
                                        --------------  ------------  ----------------- 
 
 Liabilities 
                                        --------------  ------------  ----------------- 
 Current liabilities                             6,779             -              6,779 
                                        --------------  ------------  ----------------- 
 Non-current liabilities                         6,786             -              6,786 
                                        --------------  ------------  ----------------- 
 Total liabilities                              13,565             -             13,565 
                                        --------------  ------------  ----------------- 
 Total equity and liabilities                   45,645           667             46,312 
                                        --------------  ------------  ----------------- 
 

At 31 December 2019

 
                                             Impact of prior period adjustment 
                                         As previously   Adjustments   As restated 
                                              reported 
                                               GBP'000       GBP'000       GBP'000 
 Assets 
 Non-current assets 
                                        --------------  ------------  ------------ 
 Intangible assets                              20,722           192        20,914 
                                        --------------  ------------  ------------ 
 Property, plant and equipment                   4,152             -         4,152 
                                        --------------  ------------  ------------ 
                                                24,874           192        25,066 
                                        --------------  ------------  ------------ 
 
 Current assets                                 22,155             -        22,155 
                                        --------------  ------------  ------------ 
 Total assets                                   47,029           192        47,221 
                                        --------------  ------------  ------------ 
 
 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             (47)           192           145 
                                        --------------  ------------  ------------ 
 Share-based payments reserve                      624             -           624 
                                        --------------  ------------  ------------ 
 Retained earnings                             (6,492)             -       (6,492) 
                                        --------------  ------------  ------------ 
 Total equity attributable to equity 
  holders of the parent                         32,816           192        33,008 
                                        --------------  ------------  ------------ 
 
 Liabilities 
                                        --------------  ------------  ------------ 
 Current liabilities                             8,143             -         8,143 
                                        --------------  ------------  ------------ 
 Non-current liabilities                         6,070             -         6,070 
                                        --------------  ------------  ------------ 
 Total liabilities                              14,213             -        14,213 
                                        --------------  ------------  ------------ 
 Total equity and liabilities                   47,029           192        47,221 
                                        --------------  ------------  ------------ 
 
   b)    Consolidated Statement of Comprehensive Income (extract) 

For the year ended 31 December 2019

 
                                             Impact of prior period adjustment 
                                         As previously   Adjustments   As restated 
                                              reported 
                                               GBP'000       GBP'000       GBP'000 
 
 Profit for the year                               904             -           904 
                                        --------------  ------------  ------------ 
 Other comprehensive income: 
                                        --------------  ------------  ------------ 
 Items that will be reclassified 
  subsequently to profit or loss 
                                        --------------  ------------  ------------ 
 Foreign exchange gain / (loss) on 
  translation of subsidiaries                    (300)         (475)         (775) 
                                        --------------  ------------  ------------ 
 Total comprehensive profit for the 
  year attributable to equity holders 
  of the parent                                    604         (475)           129 
                                        --------------  ------------  ------------ 
 

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 year ended 31 December 2019.

   12.          2020 Annual Report and Accounts and 2021 Annual General Meeting 

The Group's Annual Report and Accounts for the year ended 31 December 2020 will be posted to shareholders in April 2021. It will be available on the Company's website ( http://www.venture-life.com/investor-relations/results-reports-and-presentations/ ) from 11.00am on 9(th) April 2021. The Annual General Meeting of Venture Life Group plc will be held on 20 May 2020 at 10.30am and the location and format will be communicated in due course and will proceed with due regard to the government's restrictions in place pertaining to COVID-19. A notice of meeting will be sent to shareholders with the Annual Report and Accounts ( http://www.venture-life.com/investor-relations/shareholder-company-documents/ ) and a copy will be available on the Company's website in due course.

   [1]   Adjusted for share based payments and exceptional items 
   [2]   Source: Nielsen, Retail Value Sales, 52 w/e December 2020 

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