RNS Number : 9309Z

Venture Life Group PLC

24 September 2020

24 September 2020


("Venture Life" or the "Group")

Unaudited interim results for the six months ended 30 June 2020

Venture Life Group plc (AIM: VLG), a leader in developing, manufacturing and commercialising products for the

self-care market, presents   its unaudited interim results for the six months ended 30 June 2020. 

Financial highlights:

   --      Revenues increased 80% to GBP16.9 million (H1 2019: GBP9.4 million) 
   --      Of this revenue growth 65% was organic, and 15% was through the acquisition of PharmaSource 
   --      Venture Life Brands represented 53% of revenues (H1 2019: 30%) resulting in higher margins 
   --      Gross profit increased 97% to GBP6.9 million (H1 2019: GBP3.5 million) 

-- Adjusted EBITDA (1) increased 368% to GBP3.5 million (H1 2019: GBP0.7 million) implying an EBITDA margin of 21%

-- Profit before tax, amortisation and exceptional items increased nine-fold to GBP2.7 million (H1 2019: GBP0.3 million)

   --      Adjusted profit per share (2)   of 2.85p (H1 2019: 0.15p) 

-- Cash at period end of GBP6.6 million (31 December 2019: GBP10.7 million) primarily reflecting payments for the acquisition of PharmaSource and inventory build as a response to COVID-19

Commercial highlights:

-- The whole business, including Venture Life's manufacturing facility in Italy was kept operational throughout the COVID-19 lockdown

-- New 15-year exclusive distribution agreement signed with the Group's oral care partner in China, with minimum purchase obligations of EUR168 million

-- Revenues of GBP2.3 million delivered via our oral care partner in China (H1 2019: GBPnil), with a strong order book for H2 2020

   --      UltraDEX became the UK's market leader for Halitosis Mouthwash by market share 
   --      Eight new long-term exclusive distribution agreements signed 
   --      11 new development and manufacturing agreements signed 
   --      Acquisition of PharmaSource BV, integration on track 
   --      Appointed as second manufacturer of Alliance Pharma's key brand Kelo-cote 

-- Developed new business unit producing our brand DISINPLUS hand sanitising gel and anti-bacterial line

   --      1 million units of hand sanitising gel sold to ASDA in UK 

Post-period end highlights:

   --      Boots to launch Dentyl in H2 2020 
   --      New Unicorn and Mermaid Dentyl editions launching in UK 
   --      New Dentyl toothpaste to launch in UK and internationally 
   --      Lloyds Pharmacy to launch newly acquired PharmaSource fungal nail products in the UK 
   --      Dutch retailer DA to launch new products in the Netherlands 
   --      Three new long-term exclusive distribution agreements signed 

-- Dentyl Dual Action mouthwash participating in independent clinical study at Cardiff University on patients affected with COVID-19

1 Adjusted EBITDA is EBITDA before share-based payments and exceptional items

2 Adjusted profit per share is profit after tax excluding amortisation, exceptional items and share-based payments.

Jerry Randall, Chief Executive Officer of Venture Life, commented: "The first half of 2020 has seen an exceptional performance from our business, despite the significantly challenging global circumstances faced by the world due to COVID-19.

80% revenue growth and five-fold EBITDA growth delivered at such a time is a result of the incredibly committed and hard-working people we have within the business, who continued to work tirelessly throughout this time. I pay particular tribute to our employees at our operations in North Lombardy, Italy, who not only kept the plant operational but also rapidly launched our DISINPLUS hand sanitising gel range.

The significant new deal with our Chinese oral care partner adds substantial long-term value to the business and has already had a positive impact on our H1 results. Despite the challenging environment the rest of the business continues to trade well, and I am particularly pleased with the smooth integration of our latest acquisition, PharmaSource, which is also on track to achieve its growth targets in 2020; we are already benefiting from a number of synergies from this acquisition.

Despite the current challenges, Venture Life has delivered an exceptional first half result with a strong order book ahead, and we approach the future 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 / Cameron MacRitchie (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)

Non-Executive Chair's and Chief Executive Officer's Statement


The Group is pleased to report substantial progress across all areas of the business, despite the global impact of COVID-19. In the first half of 2020, revenues grew by 80% to GBP16.9 million (H1 2019: GBP9.4 million) , with even stronger EBITDA growth, seeing a five-fold increase over H1 2019 to GBP3.5 million (H1 2019: GBP0.7 million) and ahead of the full year EBITDA of GBP3.0 million for 2019. H1 2020 also generated a substantial turnaround in the profit after tax position, delivering profit after tax of GBP1.6 million compared to a loss of GBP0.4 million in H1 2019.

The Group's operations continued throughout the COVID-19 lockdown in the three countries of operation from March to July 2020 and, most notably, the operations at the Development and Manufacturing facility in Northern Lombardy, Italy, which was the first area heavily impacted by the virus in Europe. The employees of the entire Group worked tirelessly to maintain operations, particularly in Italy where the vast majority of the Group's products are manufactured. In very difficult and testing circumstances, we thank every employee for their commitment and dedication to support their colleagues and the business.

The top priority for management was to ensure that employees were protected and kept safe at all times, which included extensive use of personal protective equipment, temperature monitoring throughout the day, split shift patterns, rigorous cleansing routines and the exclusion of external visitors. These efforts enabled us to protect our staff, maintain production and ensure the continued delivery of our customers' products. Furthermore, as a result of requests from local Italian Health Authorities, and with rapid and insightful actions of our team, we began producing hand sanitising gel (HSG) to supply to local hospitals and pharmacies overwhelmed by the impact of the virus in the early days of March. Initially supplied free, this production enabled hospitals and pharmacies to continue to receive and treat patients.

We rapidly developed our own brand of HSG, called DISINPLUS, and have now expanded the range to include eight products including anti-bacterial surface spray, and these have been successfully sold to many customers in the UK, Italy and the rest of Europe, as detailed later.

Revenues for the Venture Life Brands business were GBP9.4 million (H1 2019: GBP2.8 million) an increase of 233% over the prior year, or excluding the acquired revenues of PharmaSource revenues were GBP7.9 million, an increase of 182% over the prior year on a like-for-like basis. We saw a small fall in the UK retail channel due to lockdown, and some orders being delayed by international partners for the same reasons. Despite this international sales in the first half of 2020 overall were significantly higher than in H1 2019, and were boosted by strong sales to our Chinese oral care partner and of the new DISINPLUS HSG products. Revenues from the Customer Brands business grew 15% to GBP7.5 million (H1 2019: GBP6.6 million). We have seen a delay of some orders from a small number of customers due to COVID-19, but overall we have seen good growth across the business.

Whilst we experienced the strong positive impact of the HSG sales in the first half of 2020, we also experienced some reductions in expected revenues both in the UK and with our international partners as a result of the COVID-19 pandemic, as well as incurring some additional costs. We expect our HSG sales to continue into 2021 and beyond, albeit at lower levels than in 2020, and we expect to benefit from the short-term entrants to this market, which capitalised on peak demand with low quality products, beginning to fade. The peak HSG sales in Q2 2020 balanced delayed business and costs in other areas, and we expect overall Group revenues in 2021 and beyond to remain robust, as any reduced level of HSG sales is balanced by the return of higher levels of UK and international sales.

The increased revenue growth, combined with our current product offering, has also improved the Group's gross profit margin, which rose to 41%, up from 37% in the first half of 2019.

We experienced an increase to our cost base due to the inclusion of the PharmaSource business, some one-off costs associated with the COVID-19 pandemic, and in IFRS related non-cash charges as a result of our larger revenues and share based payments. However, the majority of the additional gross margin generated over the first half of 2020 flowed through to EBITDA, delivering a five-fold increase in EBITDA to GBP3.5 million compared to the first half of 2019 at GBP0.7 million. The Group maintained a healthy cash balance of GBP6.6 million at 30(th) June 2020, only GBP4.1 million below the level at 31(st) December 2019 (GBP10.7 million), despite paying EUR6.5 million for PharmaSource in H1 2020, and increasing inventory levels by approximately GBP2 million by 30(th) June 2020 to ensure customers continue to be securely supplied during the pandemic. Excluding any further bolt-on acquisitions, we still expect to have a good net cash position at the end of the year. There is no doubt having a strong balance sheet helped us to secure key raw materials and supplies during the pandemic, at a time where supply chains were giving priority to those who guaranteed quick payment.

The rapid increase in revenues during this first half has also led us to invest earlier in our manufacturing capacity to ensure we have a strong capacity at our site in Italy. During 2020, we will be investing up to EUR1.5 million in the Development and Manufacturing facility to increase capacity to 55 million units per annum by the end of the year, which is 15 million units ahead of our original plan for 2020. With this new investment, and even given the significant revenue growth expected for 2020, we still expect to have over 40% capacity at our development and manufacturing facility at the end of 2020, with more options for further incremental capacity increase available to us which we can comfortably fund ourselves.

We continue to review strategic bolt-on M&A opportunities, which are available at this time. Being in a net cash position and with the opportunity to receive more debt funding, the Group will continue to look for suitable earnings accretive acquisitions that will make use of its significant operational leverage. The use of low cost debt is attractive for suitably priced cash generative assets, but the Group will ensure it does not over-leverage its balance sheet, and will ensure it retains a net debt (excluding finance leases) to EBITDA ratio of 2 or less.

The PharmaSource acquisition that completed on 24(th) January 2020 is substantially integrated within the Group already. All commercial operations are fully integrated, along with the majority of administrative functions. The transfer of manufacturing from external contractors into our Biokosmes facility is ongoing and expected to be complete by the end of 2020, such that production can commence during 2021.

Venture Life Brands

The Venture Life brands business' revenues for the first half of 2020 were GBP9.4 million (H1 2019: GBP2.8 million), a 233% increase over first half of 2019. Revenues for the first half of 2020 comprise GBP3.7 million (H1 2019: GBP2.4 million) in the UK, and GBP5.7million (H1 2019: GBP0.5 million) internationally.


UltraDEX revenues for the first half of 2020 rose by 25% to GBP1.7 million. This comprised UK revenues of GBP1.0 million, down by 20% compared to H1 2019 (GBP1.3 million), and international revenues of GBP0.7 million, up five-fold over H1 2019 (GBP0.1 million). UK revenues were affected by the lockdown period for COVID-19, which saw a decrease in footfall in the pharmacy channel, Boots being the worst affected, despite growth in the retail grocery and online channels, as shoppers looked to buy all their shopping from the grocery multiples due to lockdown shopping restrictions. The spray was one of the affected products, due to its on-the-go positioning, as this is often an impulse purchase and with fewer people in stores, this meant less sales. The sales of the core mouthwash product initially rose with stockpiling purchases in April and May, but then slowed in the proceeding months. However, since the end of the first half, sales have continued to improve.

Given the challenging market conditions in the UK during H1 2020, it was pleasing to see that UltraDEX in the UK has continued to take market share from its competitors, and is now the largest brand in the medicated fresh breath mouthwash category in the UK. In the 12 weeks to the end of June 2020, it achieved a 49%(1) market share of the medicated fresh breath mouthwash category compared to 37% in the same period two years ago. In that same time, its main competitor has fallen from a 51% market share to 43% market share, demonstrating the strength of UltraDEX as a brand, and its multi-channel approach in the UK market.

Internationally, we have seen growth in UltraDEX sales with various existing and new partners, as we continue to grow the geographical footprint of the brand, and have good orders on hand for H2 2020.


(1) Source: Nielsen data


Dentyl revenues for the first half of 2020 rose by 161% to GBP2.8 million (H1 2019: GBP1.1m). This comprised of UK revenues of GBP1.2 million (H1 2019 GBP1.1m), and international revenues of GBP1.6 million (H1 2019: GBPnil), which was predominantly to our oral care partner in China.

In the UK, revenues for Dentyl were less affected throughout lockdown than UltraDEX, reflecting its current listing, which is weighted more in grocery multiples than pharmacies, and we achieved a number of positive results for the product in the retail channel. During the first half, Dentyl launched for the first time in some new smaller retailers. In the second half, there will be a number of new initiatives for the brand, including:

-- The new Dentyl Mermaid and Unicorn versions will be launched in the UK, in Superdrug and Lloyds Pharmacy amongst others. These will also be launched by our partner in China;

-- Boots have agreed to launch Dentyl in 800 of their key stores (November), which signals the return to this retailer for the first time in four years; and

   --    The new Dentyl toothpaste will be launched in the UK. 

Following the transfer of manufacturing to our facility in Italy during 2019, from external contract manufacturers, the packaging problem experienced by our Chinese partner was rectified. As a result, our partner relaunched the marketing of the brand in China and placed significant orders with us in the early months of the year. We received almost EUR4.0 million orders for Dentyl, for delivery in 2020. The hiatus during the lockdown in China caused a delay in sell out of the product but now online channels are moving back toward pre COVID-19 levels and marketing has recommenced.

During the last 12 months, we have developed some line extensions for this Dentyl brand:

-- A Dentyl Mermaid and Unicorn version of the bi-phase mouthwash, which is targeted towards the younger consumer; and

-- Three toothpastes designed to partner the three core mouthwash flavours of Fresh Clove, Smooth Mint and Icy Cherry.

Post-period end, we were delighted to report that we are supporting a clinical study being undertaken by the University of Cardiff to investigate the potential of OTC mouthwashes such as Dentyl, to reduce the viral load (amount of virus in patients' saliva) in those patients affected with COVID-19. We are supporting this valuable study both financially and with product. Initial research raised the possibility that cetylpyridinium chloride (CPC) could be used to help reduce transmission of enveloped viruses such as SARS-CoV2 (COVID-19), but that more research was needed to test this idea. The clinical study aims to investigate if OTC mouthwashes such as Dentyl can reduce the viral load in the mouth and therefore help to reduce the possible transmission of COVID-19. Initiated to support dentists safely treating patients at this time, this could have wider reaching value in the fight against COVID-19. Our Dentyl product contains CPC as its main active ingredient.

The study started in late August 2020 and the results are expected to be published within six months.

Hand sanitising gel (HSG) - DISINPLUS

At the start of the lockdown, there was a significant shortage of HSG in the Lombardy region of Italy, as became the case globally. Local government in Lombardy contacted us to ask if we could produce a HSG because, as the pandemic took hold in the region, hospitals and pharmacies were not able to source it and this was preventing the hospitals admitting new patients.

In 2004 and before becoming part of the Group, Biokosmes independently developed and manufactured HSG at the time of the SARS epidemic; we were, therefore, able to start production of the formulation within 11 days. Initially, we supplied HSG to hospitals in Lecco and Sondrio, and local pharmacies in Northern Lombardy, free of charge. Then as the Italian Government provided investment into the health system, we sold HSG to them. However, at the same time there was strong demand from retailers in short-supply of HSG, so we began to increase production using an existing filling line.

The efforts of the team at Biokosmes gained local and national news coverage, and also helped establish our position as an essential supplier. This was important as at the most severe stage of lockdown in Italy, all but 'essential' businesses in Italy were ordered to close. Our production facility was allowed to remain open, not only to produce HSG but also to fulfil all other customer orders. We created our own brand around this sanitising gel product, called DISINPLUS, and this was our largest brand by revenue in the first half of 2020, delivering GBP3.2 million of revenues. Whilst we do expect the demand for HSG to continue, we do not expect the second half of the year to replicate the revenues in the first half, as there was clearly a demand peak in Q2 2020 when the pandemic hit Europe. However, we do expect to continue to generate revenues from this brand in the coming years, and we have expanded the range to eight products now, including anti-bacterial sprays. We created this new brand at minimal initial cost and limited on-going costs will be required to support the business.

As the demand for HSG became very high all across Europe, we decided to acquire a new filling line on short notice at a cost of EUR110,000. This machine increased production capacity to 1 million pieces of 100ml HSG per month. Such was the demand at this time, we achieved full payback on the machine within one week due to the additional production capability. We set up a specific division to handle the commercialisation of HSG, and began supplying retailers in Italy, UK and other countries. Notably we secured an agreement in the UK with ASDA to supply 1 million pieces of 100ml HSG, all of which was supplied in H1 2020. The relationships we have now established directly with Italian retailers through this initiative has allowed us to initiate discussion with these retailers regarding other Group products.

Venture Life - other brands/products

We signed a total of eight new long-term distribution agreements in H1 2020, across brands including Dentyl, UltraDEX, Myco Clear, Procto-eze Plus and the newly acquired PharmaSource nail fungal products. Post period end, we signed a further three distribution agreements. As we progress into H2 2020 we expect to see more partners coming on board.

Customer Brands

Customer brand revenues in the first half grew by 15% to GBP7.5 million (H1 2019: GBP6.6 million). This was driven across a range of customers. We saw a number of customers lower their expectations, and hence orders, for the year due to COVID-19, however this was offset by businesses continuing to progress positively and even place orders earlier to ensure that they would receive supply of product later in the year.

During the period, we signed 11 new development and manufacturing agreements for customer brands which are expected to generate future revenues, including products being developed under the new Medical Device Regulations (MDR). The new MDR was due to come into force on 1(st) May 2020 but, due to the impact of COVID-19, the implementation has been delayed until May 2021. Nevertheless, we were on track to complete all necessary works to meet the May 2020 deadline.

During the period, we were appointed as second manufacturer to Alliance Pharma plc for Kelo-cote, their largest product by revenue. None of this product was produced in the first half, but we have significant orders in hand for production in H2 2020.

Post-period end, we have continued to attract more new business to this division which will bring new additional revenues in 2021 and beyond, which we will provide an update on in due course.

Production facilities

Due to the significant increase in orders and revenues in 2020, we have accelerated the investment plan at the facility in Italy, and propose to invest up to EUR1.5 million this year in order to take capacity at the facility to 55 million units per year by the end of 2020. This will ensure we still retain significant capacity for future growth in production from both organic and acquired growth. This investment had already begun in the first half, with the movement of secondary packaging operation moved to an external facility, that we rent. This has created additional space internally that will be used for filling lines to increase throughput. During the first half, we acquired two further filling lines, as well as undertaking additional capacity upgrades to essential plant services including water supply and fire safety. In addition to the new line for HSG, we acquired a second filling line for pen products such as the products developed by PharmaSource and the UltraDEX spray.

Further investment in capacity growth will continue in the second half of the year as mentioned earlier, but despite this, we still expect to be in a better net cash position by the end of the year.


We completed the acquisition of PharmaSource BV on 24(th) January 2020, and results from this acquisition are included in our consolidated accounts from that date. PharmaSource was founded in 2011; it developed and then commercialised a series of medical devices to treat fungal nail infections and warts, and also a number of products for women's health and mouth ulceration. Unaudited revenues for the business for the year ended 31(st) December 2019 were EUR2.6 million, and profit before tax was EUR0.9 million. The business grew revenues by 25% in 2019 and is on track to achieve revenue growth of 20% in 2020, prior to any synergies with Venture Life. The acquisition cost of the business was EUR6.5 million in cash, the majority of which was paid in H1 2020. The acquisition was funded out of our own cash reserves, supplemented by additional term debt from Banco Popolare Milano Srl, as detailed in the below.

The business employs six staff and is based in Breda, in The Netherlands. The acquisition was immediately earnings enhancing and brought with it access to key pharmacy retailers in the Netherlands, including Kruidvat BV, as well as international revenues in the UK (through Superdrug) and Germany.

The rationale for the acquisition of this fast growing and profitable business is:

   --    to enhance Group profitability; 
   --    to acquire a number of high-quality medical device products to enhance our Group's portfolio; 

-- to gain access to their existing customer relationships in The Netherlands through the pharmacy channel, in particular with Kruidvat. We hope to direct our existing products through this channel as well; and

-- to expand our geographical footprint and enter a territory which has similar characteristics to the UK and where key account management can be used to access the larger part of the pharmacy and grocery multiple markets through key retailers.

As well as acquiring the valuable business, we expect to enhance value for our shareholders through the following synergies:

-- Distributing more of our existing brands/products through PharmaSource's existing customers in The Netherlands and abroad;

-- Expand the geographic footprint of the existing PharmaSource products through our own business development team;

   --    Undertake new product development to broaden PharmaSource's current portfolio; and 

-- Enhance margins on the acquired revenues by transferring the manufacture of the substantial part of the products into Biokosmes, where we will also aim to reduce the working capital needed.

The team at PharmaSource is an excellent, professional team, that have now become part of the Group. Of the two founders, one left the business as planned in July 2020, the other, Lieke van de Haterd, has remained and is committed to the business, and has now taken a Group role as Head of New Product Development.


The first half of this year brought very unexpected circumstances that the world has had to rapidly adapt to. Through agile and skilled management, Venture Life managed to not only remain fully operational, but has also produced substantial growth in this very challenging environment. It is very difficult to anticipate how the autumn will unfold with COVID-19, but it is likely there will continue to be widespread disruption arising from the virus, particularly as we move into winter in the Northern Hemisphere. We are confident that through the measures taken to protect its business, Venture Life is in a strong position to weather any further disruption, and continue to develop its profitable and cash generative business.

Whilst the market conditions for retailers remains challenging, we believe Venture Life has the brands, products and expertise to continue to perform strongly. The Group has been set up to have a number of products in a range of therapeutic areas, sold in a number of geographies, in order to minimise risk. The operational leverage developed by the Group over recent years ensures that the majority of the gross margin from incremental revenues (organic or acquired) will flow through to bottom-line profitability and cash flow. This means we expect profitability will accelerate at a higher rate than revenues.

We continue to review opportunities for selective earnings enhancing bolt on acquisitions, and the current economic environment means that it is likely that the flow of these increases. We have cash on the balance sheet and access to debt finance to make a number of smaller, bolt on acquisitions without any recourse to raise more equity capital at this time. We have a strong track record of executing these acquisitions and rapidly and successfully integrating them into the Group.

We have demonstrated the strength and resilience of our business through the first half of this year through the worst economic downturn the global economy has seen for decades. Our team, our customers and our suppliers have all been integral to this. We are well resourced and capitalised to deal with any continuance of the COVID-19 pandemic and look forward to the rest of the year with confidence.

Financial Review

Statement of comprehensive income

The first half of 2020 has proven to be very positive for Venture Life.

Group revenue for the six-month period was GBP16.9 million, an increase of 80% on the GBP9.4 million reported for the same period in 2019. The growth had three main drivers comprising:

a. 15 % from the acquired revenues of GBP1.4 million following the acquisition of PharmaSource BV on 24(th) January 2020 ;

b. 55 % from higher sales of VLG Brands including through our new Chinese partner, and new sales arising from HSG products ; and

   c.   10 % from strong growth across our Customer Brands business. 

Against this outstanding growth, the business experienced a small decline of GBP0.1 million in the sales of UK Brands as a consequence of the lockdown during Q2 2020, which impacted a portion of our sales that comprise of impulse/on-the-go purchases.

As a result of these dynamics, the revenues of the VLG Branded segment of the Group exceeded those of the Customer Brand segment.

The Group generated gross profit of GBP6.9 million representing a gross margin of 41%, compared to 37% for the same period in 2019. This notable improvement was a blend of several factors including:

a. favourable mix variances arising from the inclusion of PharmaSource products at a higher average margin ;

b. favourable mix variances arising from the higher portion of revenues arising from VLG Branded products ; and

c. factory volume/efficiency variances, a clear benefit of the Group's strategy to increase factory throughput.

Administrative expenses increased in the period to GBP4.6 million from GBP3.6 million in H1 2019. Of this overall increase, GBP0.2 million related to the inclusion of PharmaSource operations and GBP0.4 million related to higher non-cash costs of amortisation, depreciation and share-based payments (which arose from the PharmaSource acquisition), higher factory capital investment for growth and new stock option issuances in January 2020. The remaining increase of GBP0.4 million primarily arose due to one off costs/ changes associated with COVID-19 and some staff cost increases.

H1 2020 generated a positive adjusted EBITDA of GBP3.5 million, up five-fold compared to H1 2019 of GBP0.7 million. The profit after tax was GBP1.6 million (H1 2019: loss of GBP0.4 million). Profit per share was 1.86p (H1 2019: loss of 0.45p). The adjusted profit per share was 2.85p compared to an adjusted profit per share of 0.15p in H1 2019.

The pace of growth of business across the six months inevitably resulted in a significant increase of funds into working capital in the amount of GBP2.4 million and as a result, the net cash from operations was GBP1.0 million in H1 2020 (H1 2019: GBP1.3 million). Cash used in investing activities amounted to GBP6.6 million (H1 2019 GBP0.4 million) and comprised the majority of the purchase consideration for the acquisition of PharmaSource BV (GBP5.5 million) plus some significant capital investment into the Italian factory. Net cash from financing activities was GBP1.0 million (H1 2019 GBP0.5 million) as the Group established another Italian loan of EUR1.5 million at an attractive interest rate. Overall cashflow over the period declined by GBP4.6 million (H1 2019 Increase of GBP1.3 million), reducing net cash from GBP3.4 million to GBP1.6 million net debt, including Finance Leases (or a decline from GBP6.4 million to GBP0.8 million excluding Finance Leases).

Non-current assets increased by GBP6.0 million in the period, reflecting the acquisition of the PharmaSource business in January 2020 and the significant investment in factory equipment underway as part of the plans to expand production capacity well ahead of the current forecast demand. Total debt increased slightly from GBP7.5 million to GBP8.2 million and reflects the inclusion of the additional EUR1.5 million Italian loan from Banco Popolare Milano srl less on-going repayments.

This has been a strong six-month period for the business, which has experienced very strong organic growth as well as completed the acquisition of PharmaSource BV. Operating cashflows have carefully managed the impact of the increased growth rate, which has inevitably resulted in a significant flux of funds into working capital. The balance sheet remains strong and the Group has ample cash resources and availability to progress the development of its business, continue to invest in its manufacturing capacity and deliver on its acquisition strategy.

Unaudited Interim Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2020

                                                     Six months    Six months     Year ended 
                                                          ended         ended    31 December 
                                                        30 June       30 June           2019 
                                             Note          2020          2019 
                                                    (Unaudited)   (Unaudited)      (Audited) 
                                                        GBP'000       GBP'000        GBP'000 
 Revenue                                     4.1         16,897         9,394         20,206 
 Cost of sales                                          (9,986)       (5,891)       (12,203) 
                                                   ------------  ------------  ------------- 
 Gross profit                                             6,911         3,503          8,003 
 Operating expenses                                     (4,063)       (3,217)        (6,101) 
 Amortisation of intangible assets           5            (497)         (338)          (579) 
                                                   ------------  ------------  ------------- 
 Total administrative expenses                          (4,560)       (3,555)        (6,680) 
 Other income                                                23            41            163 
 Operating profit/(loss) before 
  exceptional items                                       2,374          (11)          1,486 
                                                   ------------  ------------  ------------- 
 Exceptional items                           6             (94)          (90)          (208) 
 Operating profit/(loss)                                  2,280         (101)          1,278 
                                                   ------------  ------------  ------------- 
 Finance costs                                            (165)          (17)             84 
 Profit/(loss) before tax                                 2,115         (118)          1,362 
                                                   ------------  ------------  ------------- 
 Tax                                         7            (562)         (255)          (458) 
 Profit/(loss) for the period 
  attributable to the equity shareholders 
  of the parent                                           1,553         (374)            904 
                                                   ------------  ------------  ------------- 
 Other comprehensive income/(loss) 
  which may be subsequently reclassified 
  to the income statement                    8              562             -          (300) 
 Total comprehensive profit/loss 
  for the period attributable 
  to equity shareholders of the 
  parent                                                  2,115         (374)            604 
                                                   ------------  ------------  ------------- 
 Basic profit/(loss) per share 
  (pence) attributable to equity 
  shareholders of the parent                 9             1.86        (0.45)           1.08 
 Diluted Basic profit/(loss) 
  per share (pence) attributable 
  to equity shareholders of the 
  parent                                     9             1.65        (0.45)           1.01 
 Adjusted profit per share                   9             2.85          0.15           2.18 
 Diluted Adjusted profit per 
  share                                      9             2.54          0.14           2.04 

Unaudited Interim Condensed Consolidated Statement of Financial Position

As at 30 June 2020

                                   Note       30 June       30 June   31 December 
                                                 2020          2019          2019 
                                          (Unaudited)   (Unaudited)     (Audited) 
 ASSETS                                       GBP'000       GBP'000       GBP'000 
 Non-current assets 
 Intangible assets                 11          26,261        20,486        20,722 
 Property, plant and equipment                  4,618         4,394         4,152 
                                               30,879        24,880        24,874 
                                         ------------  ------------  ------------ 
 Current assets 
 Inventories                                    7,058         4,326         5,082 
 Trade and other receivables                   10,015         6,345         6,363 
 Cash and cash equivalents                      6,641        10,932        10,710 
                                         ------------  ------------  ------------ 
                                               23,714        21,603        22,155 
                                         ------------  ------------  ------------ 
 TOTAL ASSETS                                  54,593        46,483        47,029 
                                         ------------  ------------  ------------ 
 Capital and reserves 
 Share capital                     12             251           251           251 
 Share premium account             12          30,824        30,824        30,824 
 Merger reserve                    12           7,656         7,656         7,656 
 Convertible bond reserve                           -             -             - 
 Foreign currency translation 
  reserve                                         515           252          (47) 
 Share-based payment reserve                      864           678           624 
 Retained earnings                            (4,921)       (7,886)       (6,492) 
                                         ------------  ------------ 
 Total equity attributable 
  to equity holders of the 
  parent                                       35,189        31,775        32,816 
                                         ------------  ------------  ------------ 
 Current liabilities 
 Trade and other payables                       8,685         5,364         5,491 
 Taxation                                         759           255           218 
 Interest bearing borrowings 
  - Bank Loans                                    792             -           738 
 Interest bearing borrowings 
  - Receivables Finance                         1,453         1.136         1,184 
 Interest bearing borrowings 
  - Leasing Obligations                           491           590           512 
                                         ------------  ------------  ------------ 
                                               12,180         6,755         8,143 
                                         ------------  ------------  ------------ 
 Non-current liabilities 
 Interest bearing borrowings 
  - Bank Loans                                  3,586         3,406         2,452 
 Interest bearing borrowings 
  - Leasing Obligations                         1,914         2,394         2,139 
 Statutory employment provision                 1,034           994         1,058 
 Deferred tax liability                           690           569           421 
                                         ------------  ------------  ------------ 
                                                7,224         7,953         6,071 
                                         ------------  ------------  ------------ 
 Total liabilities                             19,404        14,708        14,213 
                                         ------------  ------------  ------------ 
 TOTAL EQUITY & LIABILITIES                    54,593        46,483        47,029 
                                         ------------  ------------  ------------ 

Unaudited Interim Condensed Consolidated Statement of Changes in Equity

As at 30 June 2020

                                    Share                 currency  Share-based 
                        Share     premium      Merger  translation      payment    Retained        Total 
                      capital     account     reserve      reserve      reserve    earnings       equity 
                      GBP'000     GBP'000     GBP'000      GBP'000      GBP'000     GBP'000      GBP'000 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
Balance at 1 
 January 2019 
 (Audited)                251      30,824       7,656          252          609     (7,512)       32,080 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
Loss for the 
 period                     -           -           -            -            -       (374)        (374) 
Foreign exchange            -           -           -            -            -           -            - 
for period 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
 income/(expense)           -           -           -            -            -       (374)        (374) 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
Share options 
 charge                     -           -           -            -           69           -           69 
Dividends                   -           -           -            -            -           -            - 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
Transactions with 
 Shareholders               -           -           -            -           69           -           69 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
Balance at 30 
 June 2019 
 (Unaudited)              251      30,824       7,656          252          678     (7,886)       31,775 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
 Profit for the 
 period                     -           -           -            -            -       1,278        1,278 
Foreign exchange 
 for period                 -           -           -        (300)            -           -        (300) 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
 income                     -           -           -        (300)            -       1,278          978 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
Share options 
 charge                     -           -           -            -           62           -           62 
Share options 
 recycling per 
 IFRS2                                                                    (115)         115 
Dividend                    -           -           -            -            -           -            - 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
Transactions with 
 Shareholders               -           -           -            -         (53)         115           62 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
Balance at 31 
 December 2019 
 (Audited)                251      30,824       7,656         (47)          624     (6,492)       32,816 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
Profit for the 
 period                     -           -           -            -            -       1,553        1,553 
Foreign exchange 
 for period                 -           -           -          562            -           -          562 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
 income                     -           -           -            -            -       1,553        2,115 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
Share options 
 charge                     -           -           -            -          240           -          240 
Dividends                   -           -           -            -            -           -            - 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
Transactions with 
 Shareholders                                                               240                      240 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 
Balance at 30 
 June 2020 
 (Unaudited)              251      30,824       7,656          515          864     (4,921)       35,189 
                   ----------  ----------  ----------  -----------  -----------  ----------  ----------- 

Unaudited Interim Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2020

                                                 Six months          Six months          Year ended 
                                                      ended               ended 
                                                    30 June             30 June         31 December 
                                                       2020                2019                2019 
                                                (Unaudited)         (Unaudited)           (Audited) 
                                                    GBP'000             GBP'000             GBP'000 
 Cash flow from operating activities: 
 Profit/(loss) before tax                             2,115               (119)               1,362 
 Finance cost                                           165                  17                (84) 
 Operating profit/(loss)                              2,280               (102)               1,278 
 Adjustments for: 
   - Depreciation of property, plant 
    and equipment                                       386                 352                 786 
   - Amortisation of intangible assets                  497                 338                 579 
   - Finance costs                                     (15)                (17)                  32 
   - Disposal of capitalised development 
    costs                                                 -                   -                 147 
   - Share-based payment expense                        240                  69                 131 
                                              -------------       -------------       ------------- 
 Operating cash flow before movements 
  in working capital                                  3,388                 641               2,953 
 Taxation (paid)                                          -                   -               (412) 
 (Increase) in inventories                          (1,975)               (457)             (1,373) 
 ( Increase) in trade and other receivables         (3,652)                 675               (235) 
 Increase in trade and other payables                 3,194                 428               1,507 
                                              -------------       -------------       ------------- 
 Net cash generated by operating activities             954               1,286               2,441 
                                              -------------       -------------       ------------- 
 Cash flow from investing activities: 
 Acquisition of PharmaSource Business               (5,523)                   -                   - 
 Purchases of property, plant and 
  equipment                                           (726)               (155)               (388) 
 Development expenditure in respect 
  of intangible assets                                (376)               (282)               (757) 
 Net cash used by investing activities              (6,625)               (437)             (1,145) 
                                              -------------       -------------       ------------- 
 Cash flow from financing activities: 
 Net proceeds from issuance of ordinary 
  shares                                                  -                   -                   - 
 Drawdown in interest-bearing borrowings              1,282                 701                 696 
 Leasing obligation repayments                        (246)               (242)               (585) 
 Dividends paid                                           -                   -                   - 
                                              -------------       ------------- 
 Net cash from financing activities                   1,036                 459                 111 
                                              -------------       -------------       ------------- 
 Net increase in cash and cash equivalents          (4,635)               1,308               1,406 
 Net foreign exchange difference                        566                   1               (319) 
 Cash and cash equivalents at beginning 
  of period                                          10,710               9,623               9,623 
                                              -------------       -------------       ------------- 
 Cash and cash equivalents at end 
  of period                                           6,641              10,932              10,710 
                                              -------------       -------------       ------------- 

Notes to the Unaudited Interim Condensed Consolidated Financial Statements for the six months ended 30 June 2020

   1.            Corporate information 

The Interim Condensed Consolidated Financial Statements of Venture Life Group plc and its subsidiaries (collectively, the Group) for the six months ended 30 June 2020 ("the Interim Financial Statements") were approved and authorised for issue in accordance with a resolution of the directors on 22 September 2020.

Venture Life Group plc ("the Company") is domiciled and incorporated in the United Kingdom, and is a public company whose shares are publicly traded. The Group's principal activities are the development, manufacture and distribution of healthcare and dermatology products.

   2.            Basis of preparation 

The Interim Financial Statements have been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the European Union. The Interim Financial Statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's Consolidated Financial Statements for the year ended 31 December 2019 ("the 2019 Consolidated Financial Statements") which have been prepared in accordance with IFRS as adopted by the European Union.

The financial information contained in the Interim Financial Statements, which are unaudited, does not constitute statutory accounts in accordance with the Companies Act 2006. The financial information for the year ended 31 December 2019 is extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies and on which the auditor issued an unqualified opinion that did not include an emphasis of matter reference or statement made under section 498(2) or (3) of the Companies Act 2006.

   3.            Accounting policies 

The accounting policies adopted in the preparation of the Interim Financial Statements are consistent with those followed in the preparation of the 2019 Consolidated Financial Statements.

Foreign currencies

The assets and liabilities of foreign operations are translated into sterling at exchange rates ruling at the balance sheet date. Revenues generated and expenses incurred in currencies other than sterling are translated into sterling at rates approximating to the exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on retranslation of assets and liabilities of foreign operations are recognised directly in the foreign currency translation reserve.

The sterling/euro exchange rates used in the Interim Financial Statements and prior reporting periods are as follows:

                                     Six months      Six months     Year ended 
                                          ended           ended    31 December 
 Sterling/euro exchange rates      30 June 2020    30 June 2019           2019 
 Average exchange rate for 
  period                                  1.138           1.140          1.140 
 Exchange rate at the period 
  end                                     1.096           1.140          1.171 
   4.            Segmental Information 

Management has determined the operating segments based on the reports reviewed by the Group Board of Directors (Chief Operating Decision Maker) that are used to make strategic decisions. The Board considers the business from a line-of-service perspective and uses operating profit/(loss) as its profit measure. The operating profit/(loss) of operating segments is prepared on the same basis as the Group's accounting operating profit/(loss).

In line with the 2019 Consolidated Financial Statements, the operations of the Group are segmented as Brands, which includes sales of healthcare and skin care products under distribution agreements and direct to UK retailers, and Development and Manufacturing. The results of the recently acquired PharmaSource business are included within the Brands segment.

   4.1          Segment Revenue and Results 

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

                                                            Development                  Consolidated 
                                            Brands    and Manufacturing   Eliminations          Group 
                                           GBP'000              GBP'000        GBP'000        GBP'000 
 Six months to 30 June 2020 
 External sales                              9,350                7,547              -         16,897 
 Inter-segment sales                             -                4,223        (4,223)              - 
                                          --------  -------------------  -------------  ------------- 
 Total revenue                               9,350               11,769        (4,223)         16,897 
                                          --------  -------------------  -------------  ------------- 
 Operating profit before 
  exceptional items and excluding 
  central administrative costs               2,002                1,915              -          3,917 
                                          --------  -------------------  -------------  ------------- 
                                                            Development                  Consolidated 
                                            Brands    and Manufacturing   Eliminations          Group 
                                           GBP'000              GBP'000        GBP'000        GBP'000 
 Six months to 30 June 2019 
 External sales                              2,786                6,608              -          9,394 
 Inter-segment sales                             -                  680          (680)              - 
                                          --------  -------------------  -------------  ------------- 
 Total revenue                               2,786                7,288          (680)          9,394 
                                          --------  -------------------  -------------  ------------- 
 Operating profit before 
  exceptional items and excluding 
  central administrative costs                 109                  860              -            969 
                                          --------  -------------------  -------------  ------------- 
                                                       Development                  Consolidated 
                                       Brands    and Manufacturing   Eliminations          Group 
 Year to 31 December 2019             GBP'000              GBP'000        GBP'000        GBP'000 
  External sales                        6,699               13,507              -         20,206 
 Inter-segment sales                        -                2,001        (2,001)              - 
                                     --------  -------------------  -------------  ------------- 
 Total revenue                          6,699               15,508        (2,001)         20,206 
                                     --------  -------------------  -------------  ------------- 
 Operating profit before 
  exceptional items and excluding 
  central administrative 
  costs                                   626                2,827              -          3,453 
                                     --------  -------------------  -------------  ------------- 

The reconciliation of segmental operating profit to the Group's operating profit/(loss) before exceptional items excluding central administrative costs is as follows:

                                                     Six months        Six months         Year ended 
                                                        30 June             ended        31 December 
                                                    (Unaudited)           30 June               2019 
                                                                      (Unaudited)          (Audited) 
                                                        GBP'000           GBP'000            GBP'000 
Operating profit before exceptional 
 items and excluding central administrative 
 costs                                                    3,917               969              3,453 
Central administrative costs                            (1,543)             (980)            (1,967) 
Exceptional expenses                                       (94)              (90)              (208) 
Operating profit/(loss)                                   2,280             (101)              1,278 
Net finance cost                                          (165)              (17)               (84) 
                                                   ------------      ------------      ------------- 
Profit/(loss) before tax                                  2,115             (118)              1,362 
                                                   ------------      ------------      ------------- 
   5.            Amortisation of intangible assets 
                                                       Six months                Six months         Year ended 
                                                          30 June                     ended        31 December 
                                                      (Unaudited)                   30 June               2019 
                                                                                (Unaudited)          (Audited) 
Amortisation of:                                          GBP'000                   GBP'000            GBP'000 
Acquired intangible assets                                  (255)                      (77)              (155) 
Patents, trademarks and other intangible 
 assets                                                      (82)                      (75)              (177) 
Capitalised development costs                               (160)                     (186)              (246) 
                                                     ------------              ------------      ------------- 
                                                            (497)                     (338)              (579) 
                                                     ------------              ------------      ------------- 
   6.            Exceptional items 
                                             Six months                Six months         Year ended 
                                                30 June                     ended        31 December 
                                            (Unaudited)                   30 June               2019 
                                                                      (Unaudited)          (Audited) 
                                                GBP'000                   GBP'000            GBP'000 
Costs incurred in acquisitions                     (94)                      (90)              (208) 
Total exceptional items                            (94)                      (90)              (208) 
                                           ------------              ------------      ------------- 

Exceptional items in the period related to fees incurred in the exploration of acquisition opportunities.

   7.            Taxation 

The Group calculates the income tax expense for the period using the tax rate that would be applicable to the expected total annual earnings. The major components of income tax expense in the Interim Condensed Statement of Comprehensive Income are as follows:

                                               Six months        Six months         Year ended 
                                                    ended             ended        31 December 
                                             30 June 2020           30 June               2019 
                                              (Unaudited)       (Unaudited)          (Audited) 
                                                  GBP'000           GBP'000            GBP'000 
Current income tax                                    562               255                597 
Deferred income tax expense related 
 to origination and reversal of 
 timing differences                                     -                 -              (139) 
                                           --------------      ------------      ------------- 
Income tax expense recognised 
 in statement of comprehensive 
 income                                               562               255                458 
                                           --------------      ------------      ------------- 

The current income tax expense is based on the profits of the Development and Manufacturing business based in Italy, the PharmaSource business in the Netherlands and the UK based businesses. The UK based businesses on a combined basis have converted in the current year to profitability and are now able to begin to utilise the sizeable tax losses that have been generated in prior years. Consequently there are no UK income tax charges owing in respect of trading for the first six months to 30 June 2020. (The Group had previously not recognised the deferred tax asset on losses made by the UK based businesses as it had not been certain when there would be sufficient taxable profits against which to offset such losses.)

At the period end the estimated tax losses amounted to GBP9,842,000 (30 June 2019: GBP9,888,000; 31 December 2019: GBP10,259,000). This reduction in tax losses at 30(th) June 2020 illustrates the utilisation

   8.            Other comprehensive income/(expense) 

Other comprehensive income/(expense) represents the foreign exchange difference on the translation of the assets, liabilities and reserves of Biokosmes and PharmaSource which have functional currencies of Euros. The movement is shown in the foreign currency translation reserve between the date of acquisition of Biokosmes, when the GBP/EUR rate was 1.193 and the balance sheet date rate at 30 June 2020 of 1.096 (at 31 December 2019 of 1.171 and at 30 June 2019 of 1.14) together with the same computation for PharmaSource BV between the date of acquisition when the GBP/EUR rate was 1.185 and the balance sheet date rate at 30(th) June 2020 of 1.096. The result is an amount that may subsequently be reclassified to profit and loss.

   9.            Earnings per share 
                                          Six months   Six months    Year ended 
                                               ended        ended   30 December 
                                        30 June 2020      30 June          2019 
                                         (Unaudited)  (Unaudited)     (Audited) 
Weighted average number of ordinary 
 shares in issue                          83,712,106   83,712,106    83,712,106 
(Loss)/Profit attributable to 
 equity holders of 
 the Company (GBP'000)                         1,553        (374)           604 
Basic profit/(loss) per share 
 (pence)                                        1.86       (0.45)          1.08 
Diluted profit/(loss) per share 
 (pence)                                        1.65       (0.45)          1.01 
Adjusted profit per share (pence)               2.85         0.15          2.18 
Diluted Adjusted profit per share 
 (pence)                                        2.54         0.14          2.04 

In circumstances where the Basic and Adjusted results per share attributable to ordinary shareholders are a loss then the respective diluted figures are identical to the undiluted figures . This is because the exercise of share options would have the effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of IAS 33.

   10.          Dividends 

Amounts recognised as distributions to equity holders in the period:

                        Six months         Six months         Year ended 
                             ended              ended        31 December 
                      30 June 2020       30 June 2019          (Audited) 
                       (Unaudited)        (Unaudited) 
                           GBP'000            GBP'000            GBP'000 
Final dividend                   -                  -                  - 
                    --------------      -------------      ------------- 
   11.          Intangible assets 

The intangible assets of the group at 30(th) June 2020 were GBP26.3 million (31 December 2019: GBP20.7 million) comprising goodwill, development costs, patents and trademarks & customer relationships. This sum includes GBP5.5 million in respect of the 2020 acquisition of PharmaSource BV (comprising GBP4.1 million goodwill, GBP1.0 million customer & distributor relationships and GBP0.4 million trademarks).

At the reporting date the Goodwill generated from the acquisitions of Biokosmes Srl in March 2014, Periproducts Limited in March 2016, Dentyl in August 2018 and PharmaSource BV in January 2020 accounted for GBP20.3 million of the intangible assets of the Group (GBP16.2 million at 31 December 2019). There were no impairments of goodwill during this time (6 months to June 2019: GBP Nil).

In January 2020 the Company completed the acquisition of PharmaSource BV.* The acquisition consideration was EUR6.5 million (GBP5.7 million), comprising GBP1.6 million for the net assets (representing GBP1.4 million in customer relationships, distribution agreements and trademarks and GBP0.2 million in cash and working capital) and GBP4.1 million as goodwill. The majority of the acquisition consideration was paid during the first half of 2020 in cash and a small retained sum of GBP0.2 million remains payable at 30(th) June 2020. The acquisition was funded from the Company's cash resources supplemented by the additional EUR1.5 million loan from Banco Popolare Milano srl.

PharmaSource markets and sells a range of consumer products for the treatment of Fungal Nail infections. The Group acquired the business to expand both its product portfolio and its customer base. The Group expects that the inclusion of this business into its portfolio will increase the leverage of its trading infrastructure and generate improved profitability. The acquisition has been accounted for under IFRS 3 as a business combination. The Consolidated Financial Statements include the results of trading of PharmaSource for the period from 24(th) January 2020 to 30(th) June 2020.

* The acquisition of the PharmaSource business was achieved by acquiring Nelie BV, a private company incorporated and operating in the Netherlands which owned 100% of the share capital of PharmaSource BV. As at 30(th) June 2020 the Group continues to own 100% of the share capital of Nelie BV and hence 100% of the share capital of PharmaSource BV.

Acquisition of PharmaSource BV on 24(th) January    Fair value 
Non-current assets 
Customer Relations *                                       465 
Distribution Agreements *                                  575 
Trademarks *                                               417 
Current Assets 
Inventories                                                265 
Trade Receivables                                          159 
Cash                                                       269 
Total assets                                             2,151 
Current liabilities 
Trade payables                                           (216) 
Non-current liabilities 
Deferred tax                                             (277) 
Total net assets                                         1,658 
Net Assets acquired                                      1,658 
Goodwill                                                 4,076 
Total Consideration                                      5,734 
Satisfied by: 
Cash paid at completion                                  4,198 
Cash paid 90 - 120 days after completion                 1,325 
Cash payable at 180 days after completion                  211 
--------------------------------------------------  ---------- 

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

Revenue and profit impact of the acquisition

PharmaSource contributed group revenues of GBP1.4 million and operating profit before exceptional items and management charges of GBP0.5 million in the period from 24(th) January 2020 to 30(th) June 2020. If the acquisition had taken place on 1 January 2020, the first day of the reporting period under review, total Group revenue and operational profit before exceptional items and management charges for the period arising from PharmaSource would have been GBP1.5 million and GBP0.5 million respectively.

Primarily as a result of the acquisition of PharmaSource BV on 24(th) January 2020 the carrying value of the Group's intangible assets has risen from GBP20.5 million at 30(th) June 2019 to GBP26.3 million at 30(th) June 2020. GBP20.3 million of this total comprises Goodwill (GBP16.2 million at 30(th) June 2019)

                            Development     Brands           Patents    Goodwill         Other       Total 
                                  costs               and Trademarks                intangible 
                                GBP'000    GBP'000           GBP'000     GBP'000       GBP'000     GBP'000 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Cost or valuation: 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   At 1 January 2019              2,712      1,089               996      16,233         2,819      23,849 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Additions                        235          -               106           -             -         341 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Disposals                          -          -                 -           -             -           - 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Foreign exchange               (101)          -                 -           -          (10)       (111) 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   At 30 June 2019                2,846      1,089             1,102      16,233         2,809      24,079 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Additions                        637          -                 -           -             -         637 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Disposals                      (147)          -                             -             -       (147) 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Foreign exchange                  30          -                 -           -            10          40 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   At 31 December 2019            3,366      1,089             1,102      16,233         2,819      24,609 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Additions                        279          -               504       4,076         1,040       5,899 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Disposals                          -          -                             -             -           - 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Foreign exchange                  79          -                22           -            36         137 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   At 30 June 2020                3,724      1,089             1,628      20,309         3,895      30,645 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Amortisation:                                                                                         - 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   At 1 January 2019              1,223          -               662           -         1,422       3,307 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Charge for the period            148          -                69           -            68         285 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Foreign exchange                   -          -                 -           -             -           - 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   At 30 June 2019                1,371          -               731           -         1,490       3,592 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Charge for the period             98          -               108           -            88         294 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Disposals                          -          -                 -           -             -           - 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Foreign exchange                   -          -                 -           -             1           1 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   At 31 December 2019            1,469          -               839           -         1,579       3,887 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Charge for the period            182          -                92           -           223         497 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Disposals                          -          -                 -           -             -           - 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Foreign exchange                   -          -                 -           -             -           - 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   At 30 June 2020                1,651          -               931           -         1,802       4,384 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   Carrying amount:                                                                                      - 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   At 31 December 2018            1,489      1,089               334      16,233         1,397      20,542 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   At 31 December 2019            1,897      1,089               263      16,233         1,240      20,722 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   At 30 June 2019                1,475      1,089               371      16,233         1,319      20,487 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   At 30 June 2020                2,073      1,089               697      20,309         2,093      26,261 
                           ------------  ---------  ----------------  ----------  ------------  ---------- 
   12.          Share capital and share premium 
                                    Ordinary  Ordinary     Share    Merger 
                                   shares of    Shares   premium   reserve 
                                   0.3p each 
                                         No.   GBP'000   GBP'000   GBP'000 
Audited at 31 December 2019 
 and Unaudited at 30 June 2020    83,712,106       251    30,824     7,656 
                                  ----------  --------  --------  -------- 

There were no movements in share capital or share premium between 31 December 2019 and 30 June 2020.

   13.           Related party transactions 

The following transactions with related parties are considered by the Directors to be significant for the interpretation of the Interim Condensed Financial Statements for the six-month period to 30 June 2020 and the balances with related parties at 30 June 2020 and 31 December 2019:

Under the terms of the Share Purchase Agreement dated 28 November 2013 and signed between the Company and the vendors of Biokosmes, one of whom was Gianluca Braguti, the vendors agreed to indemnify the Company in full for any net liability arising from certain litigation cases which had not settled at the time of completion of the acquisition on 27 March 2014. At the period end the amount due to the Company under the indemnity totalled EUR55,815, of which Gianluca Braguti's liability is EUR55,815. All litigation cases have now been settled.

Key transactions with other related parties

Braguts' Real Estate Srl (formally known as Biokosmes Immobiliare Srl), a company 100% owned by Gianluca Braguti a director and shareholder of the Group provided property lease services to the Development and Manufacturing business totalling EUR230,000 in the six months to 30 June 2020 (EUR230,000 in the six months to 30 June 2019). At 30 June 2020, the Group owed Braguts' Real Estate Srl EUR115,000 (EUR297,000 at 31 December 2019).

   14.                  Financial instruments 

Set out below is an overview of financial instruments held by the Group as at:

                                    30 June 2020                   30 June 2019               31 December 2018 
                                                  -----------------------------  ----------------------------- 
                      Loans and  Total financial     Loans and  Total financial     Loans and  Total financial 
                    receivables           assets   receivables           assets   receivables           assets 
                        GBP'000          GBP'000       GBP'000          GBP'000       GBP'000          GBP'000 
Financial assets: 
Trade and other 
 (a)                     10,015           10,015         6,345            6,345         6,868            6,868 
Cash and cash 
 equivalents              6,641            6,641        10,932           10,932         9,623            9,623 
Total                    16,656           16,656        17,277           17,277        16,491           16,491 
                   ------------  ---------------  ------------  ---------------  ------------  --------------- 
                                30 June 2020                 30 June 2019             31 December 2018 
                 ---------------------------  ---------------------------  --------------------------- 
                 Liabilities           Total  Liabilities           Total  Liabilities           Total 
                  (amortised       financial   (amortised       financial   (amortised       financial 
                       cost)     liabilities        cost)     liabilities        cost)     liabilities 
                     GBP'000         GBP'000      GBP'000         GBP'000      GBP'000         GBP'000 
Trade and other 
 payables (b)          9,444           9,444        5,636           5,636        5,107           5,107 
 obligations           2,405           2,405        2,984           2,984        3,226           3,226 
 debt                  5,831           5,831        4,543           4,543        3,842           3,842 
                 -----------  --------------  -----------  --------------  -----------  -------------- 
Total                 17,680          17,680       13,162          13,162       12,175          12,175 
                 -----------  --------------  -----------  --------------  -----------  -------------- 

(a) Trade and other receivables excludes prepayments

(b) Trade and other payables excludes deferred revenue

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(END) Dow Jones Newswires

September 24, 2020 02:00 ET (06:00 GMT)