TIDMVLG

RNS Number : 6906M

Venture Life Group PLC

23 September 2021

23 September 2021

VENTURE LIFE GROUP PLC

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

Unaudited interim results for the six months ended 30 June 2021

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

self-care market, presents   its unaudited interim results for the six months ended 30 June 2021. 

Financial Highlights

   --    Revenues GBP13.9 million (2020: GBP16.9 million) 

-- Gross margin GBP4.9 million (2020: GBP6.9 million), gross margin percentage 35.6% (2020: 40.9%)

   --    Adjusted EBITDA[1] GBP1.9 million (2020: GBP3.5 million) 
   --    Profit before tax, amortisation and exceptional items GBP1.3 million (2020: GBP2.7 million) 
   --    Adjusted profit per share[2] 0.83p (2020: 2.85p) 
   --    Cash at 30 June 2021 GBP7.9 million (31 December 2020: GBP42.1 million) 

Commercial Highlights

Group

-- Two immediately earnings enhancing acquisitions (one post period-end), expected to bring significant growth in revenues and profitability and fully deploying funds raised in late 2020

-- Revolving Credit Facility (RCF) in place for up to GBP50 million giving significant firepower for further earnings accretive M&A

   --    Core business revenues (excluding China and Hand Sanitiser Gel) up 10% in first half of 2021 
   --    Continue to sign new deals and launch products 

Acquisition of BBI Healthcare Limited, 4 June 2021:

   --    Three new brands and therapy areas: women's health, hypoglycaemia and energy management 

-- Two significant acquired partners - Bayer Consumer Care AG, for women's health and Swiss Precision Diagnostics GmbH ('SPD')

   --    Immediate cost synergies realised 
   --    Significant free manufacturing capacity in Sweden 
   --    Profitable with good growth opportunities 

Acquisition of Helsinn Integrative Care Portfolio - post period end, 6 August 2021

   --    3 new brands and new therapy area of oncology support 
   --    Profitable portfolio 
   --    33 new partners in 56 countries 

-- Geographic extension opportunities plus New Product Development opportunities, particularly for Pomi-T

Jerry Randall, CEO of Venture Life Group plc commented: "I am very pleased to have completed two fantastic earnings enhancing acquisitions, utilising the money shareholders gave us at the end of 2020 for exactly the reason it was intended. It was particularly satisfying to close the BBI acquisition within 6 months of receiving the cash from shareholders given the challenges presented by the significant cross border aspects during COVID times when we were unable to travel. The fact that we managed to complete such a transaction in the timeframe is testament to the fantastic effort of all our team at Venture Life and their ability to assess and transact this deal in a smooth, effective and quick manner, whilst continuing to manage the existing business. The strategy of raising cash in advance has been vindicated as it enabled us to access this acquisition and I thank each and every one of our shareholders who supported us in that fund raise.

Integration is well underway for both acquisitions and we have already achieved a number of immediate cost synergies. The second half of the year will see the benefit of the impact of these two earnings enhancing acquisitions, with 2022 seeing the benefit of the full year effect and more synergies, as both of these exciting acquisitions are expected to add meaningfully to the revenues and profitability of the Group going forward.

The addition of the RCF is another excellent result for our team, giving us up to GBP50 million of non-dilutive firepower available to us for more earnings enhancing acquisitions and we continue to assess potential opportunities in this regard.

COVID has continued to impact our business, and to impact some customers more than others. We are, however, seeing an improving situation going forward. The disappointing performance by our Chinese partner is a demonstration of how COVID has impacted some of our customers, and this is something every business is affected by in some way at this time. As with all our customers we continue to support them through difficult times, to resolve the situation one way or another. The supply price increases that have impacted our first half gross margin are now beginning to be mitigated as we pass these costs on to customers. However, to still see continued growth in our core business (excluding China and HSG), and our current order book ahead of the same time last year on both an actual and like for like basis, underlines the resilience of our business in difficult times.

2021 has been another transformational year for the Group, operating in a difficult environment but still driving the business forward. I must express my thanks to the whole VLG team for continuing to do a fantastic job in these times, to drive the Group to being a much more substantial business in 2022 than it was at the start of 2021."

For further information, please contact:

 
 Venture Life Group PLC                               +44 (0) 1344 578004 
 Jerry Randall, Chief Executive Officer 
                                                       +44 (0) 20 7397 
  Cenkos Securities plc (Nomad and Joint Broker)        8900 
 Michael Johnson / Russell Kerr (Sales) 
  Stephen Keys / Camilla Hume (Corporate Finance) 
                                                       +44 (0) 20 7496 
  Singer Capital Markets (Joint Broker)                 3000 
 Jonathan Dighe (Sales) 
  Shaun Dobson / Alaina Wong (Corporate Finance) 
 
 
 

About Venture Life ( www.venture-life.com )

Venture Life is an international consumer self-care company focused on developing, manufacturing and commercialising products for the global self-care market. With operations in the UK, Italy, The Netherlands and Sweden, the Group's product portfolio includes some key products such as the UltraDEX and Dentyl oral care product ranges, the Balance Active range in the area of women's intimate healthcare, the Lift and Glucogel product ranges for hypoglycaemia, Gelclair and Pomi-T for oncology support, products for fungal infections and proctology, and dermo-cosmetics for addressing the signs of ageing. Its products are sold in over 90 countries worldwide.

The products, which are typically recommended by pharmacists or healthcare practitioners, are available primarily through pharmacies and grocery multiples. In the UK and The Netherlands these are supplied direct by the company to retailers, elsewhere they are supplied by the Group's international distribution partners.

Through its two Development & Manufacturing operations in Italy and Sweden, the Group also provides development and manufacturing services to companies in the medical devices and cosmetic sectors.

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

Overview

The first half of 2021 has seen the Group make the largest acquisition in its history, utilising the funds raised through the placing and open offer in December 2020. The subsequent closing of a Revolving Credit Facility (RCF) of up to GBP50 million at the end of the first half has added significant fire power, in addition to future surplus cash generation, to effect further earnings enhancing acquisitions to continue the growth trajectory of the business through the rest of 2021 and beyond. This trajectory continued further post period end with a second smaller acquisition.

The Group has employed a strategy of combining organic and acquisitive growth since listing on AIM in 2014, achieving a compound annual revenue growth rate of 27% from 2014 to 2020, despite this last year being the first year of the COVID 19 pandemic.

This strategy has focused on the dual revenue streams of those from VLG's own brands and those from products sold under customer brands, where the velocity and strength of customer brands generates meaningful revenues for the Group. Our development and manufacturing facility near Milan, Italy, produces the vast majority of all the Groups' products. Since 2014, we have invested in the facility, to keep a bow wave of capacity ahead of us to accommodate anticipated growth. The available capacity will enable the Group to deliver the growing revenues it sees from both organic and acquired growth.

The acquisitions made so far this year are expected to add materially to the Group's revenues and profitability in the second half of the year, as the revenues of the products are included in Group revenue, and we access immediately available cost synergies.

2021 has seen a continuation of the COVID 19 pandemic, which has impacted a number of our customers in this first half, and significantly impacted supply chain prices, as has been widely reported in many sectors. We are, however, seeing signs of recovery as the year progresses, as we harness the opportunity to pass price rises on to customers for new orders and we start to see a recovery in retail activity. Revenues in the first half of the year were GBP13.9 million, compared to GBP16.9 million for the first half of 2020 primarily as a result of lower hand sanitiser gel ("HSG") and a reduction in sales of Dentyl in China. The newly acquired BBI Healthcare Limited ("BBI") contributed revenues of GBP1.1 million in the period since acquisition to the end of June 2021.

Aside from the lower HSG and China revenues detailed below, and excluding the additional revenues contributed by BBI, the rest of the Group showed revenue growth of 10% in the first half of 2021 compared to the first half of 2020.

The largest part of the reduction in Group revenues compared to the same period in 2020 arose from the expected reduction in the revenues arising from Hand Sanitising Gel. In the first half of 2021, revenues for HSG were GBP0.1 million compared to GBP3.2 million, as a result of significant stockpiling built in 2020 as the pandemic took hold and have not yet unwound from retailers. Retailers still hold significant stocks of HSG and it is taking longer than expected for these to be utilised, and hence the reduction in revenues from HSG is H1 2021 was more than we expected at the start of the year. Nonetheless, we still expect to make some sales of HSG in the second half of the year albeit, given the stock holding situation in retailers, we expect H2 HSG sales to be at a level similar to that seen in the first half.

Sales by our Chinese partner were lower than anticipated, as they continue to struggle to recover from the impact of the pandemic, with sales only GBP0.2 million in the first half of 2021. They have however continued to pay down their debtor balance such that as at 30(th) June 2021 it stood at GBP0.4 million. Despite failing to meet the minimum purchase obligations under the long term agreement we signed with this partner in 2020, they still indicate to us that they expect to take all of the product orders we have on hand from them (placed in 2020) of EUR4.0 million. However, the timescales for taking delivery of the products under these orders have not been set out clearly by the partner, and so we continue to be in discussion with them to understand whether they are able to perform in accordance with the contract. At the same time, we are undertaking a review to ensure that our products are exploited in China to their full potential, but for prudence they have already been significantly downgraded in market guidance.

Notwithstanding the growth in our core business revenues, gross margin in the first half was impacted by various factors. These margin impacts, described below, are considered as transitory and we expect gross margin to be improved by the end of 2021, with a much better second half for gross margin. This has meant a significantly lower gross margin percentage in the first half of 2021, where we achieved gross margin of 35.6% compared to 40.9% in the first half of 2020. In comparison to 2020, the gross margin reduction has come from a number of factors:

-- Supply chain cost increases have been seen in the first half of 2021, as has been seen widely across many sectors, and have been higher than anticipated at the start of the year. As these came through, we have sought to pass these on to customers, and on the whole customers have been receptive to this. However, these price increases agreed with customers only impact new orders placed and not those already on hand, and so there is a transitional effect of supressing margin particularly in the first half, until the new orders come through. We expect the effect of agreed price increases with customers to positively impact margin in the second half of the year and into 2022 and beyond.

-- Increased stockholding cost for the higher level of inventory held for Brexit and COVID supply chain concerns. In order to ensure continuity of supply as the UK exited Europe, the Group held significantly higher levels of finished goods inventory in the UK at the end of 2020, in case there were issues with transport into the UK. Similarly in Italy, the Group has held higher than normal levels of raw materials and packaging stock to ensure that it can continue to supply customer orders and not be at risk to supply chain interruption, and also where possible to buy these inventories ahead of price increases. These costs will reduce as we seek to unwind the higher inventory levels through 2021 and into 2022.

-- Slightly lower overall levels of production activity (due to lower HSG and China sales) have an impact on the overall margin.

   --    The high level of high margin HSG sales in the first half of 2020 have not repeated in 2021. 

Whilst this impact on gross margin from supply price increases has been disappointing and higher than anticipated at the start of the year, we now have good visibility on this and the ability to pass this on to customers in a challenging retail environment. Also, the acquisitions made so far this year each have materially higher gross margins than the Group average and will add meaningfully to the gross margin percentage for the Group going forward.

The Group continues to keep overheads closely under control, and lower levels of COVID associated costs in the first half have mitigated some of the shortfall in gross margin, delivering adjusted EBITDA for the first half of the year of GBP1.9 million, lower than the GBP3.5 million in the first half of 2020, primarily as a result of lower revenues and gross margin.

Acquisitions

BBI

BBI Healthcare Limited ("BBI") was acquired on 4(th) June 2021 for an enterprise value of GBP35 million, with an additional GBP1 million deferred subject to achieving registration approval of a product in the USA. BBI is a consumer healthcare business with commercial operations in the UK and its own development and manufacturing facility in Sweden. It has products in three therapy areas:

-- Women's health: key product is Balance Activ, for the treatment of bacterial vaginosis ("BV"), the no.1 BV brand in the UK, by volume, and also other women's health products, e.g. a fertility gel. This provides a platform for women's health brands the Group can expand.

   --    Diabetes: Glucogel, the no.1 prescribed glucose gel in the UK 

-- Energy management/diabetic care: Lift, with dual positioning for sports performance and OTC management of hypoglycaemia

This acquisition has high strategic value for VLG, not only as a growing and profitable business in its own right coming into the Group and with meaningful cost and revenue synergies available, but also establishing VLG in the new high interest areas of Women's Health and Diabetes/Energy Management. BBI and its subsidiaries, previously headquartered in Crumlin, South Wales, has a manufacturing facility in Gnesta, Sweden and employed 21 people across the UK and Sweden. There is significant unused manufacturing capacity in the Gnesta facility currently.

The integration of the business is well advanced with a number of the immediate cost synergies already actioned, along with plans for maximising the synergies with the Group looking forward.

Post period end, we received ANVISA registration approval in Brazil for the BV Gel, and launch is expected in 2022. The online channel is also a key component within the business and as well as launching on Amazon in the UK in 2020, Balance Activ will launch on Amazon in Germany and a re-launch will take place on Amazon in the USA in early 2022.

In the UK, we are exploring the convenience sector for Lift, with opportunities already emerging.

Helsinn

The Acquisition comprises three on-market products within the area of oncology support, as well as all the associated IP and existing customer relationships in relation to the Brands.

The three on-market products are:

-- Gelclair - a muco-adhesive oral rinse gel used for the management of painful symptoms of oral mucositis (side effect of some cancer therapies). Gelclair is a registered medical device and is currently partnered in 38 countries;

-- Pomi-T - a Polyphenol rich mix of wholefoods used for the management of prostate specific antigen (PSA) levels in prostate cancer. Pomi-T is a registered food supplement and is currently partnered in 22 markets; and

-- XonRID - a Hyaluronic acid based topical gel used for the prevention and treatment of radiation induced dermatitis. Xonrid is a registered medical device and currently partnered in 21 countries.

Since the acquisition in early August 2021, integration of the business has been ongoing with all partners being contacted and transfer of the commercial operations into our UK team. It is very early days since the acquisition, but opportunities are now being explored in key markets such as the USA for the two key brands.

Venture Life Brands

Dentyl

Dentyl revenues for the first half of 2021 were adversely affected by the lack of China business, and so stood at GBP1.4m in H1 2021 compared to GBP2.8m in H1 2020.

Despite the extended lockdown challenges in the UK market in H1 2021, revenues were up 11% to GBP1.12m (H1 2020: GBP1.0m), which contributed to an overall 4% growth in our oral care brands in the UK market. In addition Dentyl remained the fastest growing brand in the oral care sector in the last 12 months ([3]) , ahead of other major brands such as Corsodyl, Colgate and Listerine.

H1 2021 saw new launches in some Value Retailers, such as Home Bargains and B&M Bargains, further extending our reach within all aspects of the UK market. In addition, we retained full distribution in ASDA, and they also launched the newly developed Dentyl Dual Action Unicorn Edition into 361 stores, despite ASDA cutting their current oral care range by 30% in the June range review. Ocado, an existing partner, is also expected to launch a new flavour variant in August.

As mentioned earlier, sales of Dentyl to our Chinese partner proved to be disappointing in H1 2021 compared to H1 2020 and compared to the Distribution Agreement signed in April 2020. Whilst supporting them as we would any partner, we are carefully reviewing our on-going business with them, and thus reviewing our options to ensure we realise the full value of the brand in China.

The in-vivo study at Cardiff University on Dentyl completed in April 2021 and is under peer-review and we await the results which we expect to be published shortly.

UltraDEX

UltraDEX revenues for the first half of 2021 stood at GBP1.02m (H1 2021: GBP1.72m). In the UK, UltraDEX was less affected by the extended lockdown and finished the first half of 2021 at GBP0.96m (H1 2020: GBP0.99m), a 3.3% decrease. During the period UltraDEX continued to take market share from its nearest competitors and is now the largest brand in the medicated fresh breath mouthwash category in the UK. In the 52 weeks to the end of July 2021, it reached a 52% market share of the category, compared to its main competitor CB12, which stood at 37% for the same period [4] .

Internationally UltraDEX revenues were affected also by the poor performance of our Chinese partner (same as for Dentyl) which took its first orders of UltraDEX in the first half of 2020, but as with Dentyl has not repeated this levels of sales in 2021.

PharmaSource

PharmaSource saw a 3.1% increase in H1 2021 to GBP1.48m (H1 2020: GBP1.43m), despite the extended lockdowns in The Netherlands. Integration is now completed, including the manufacturing transfer from a third party to our Italian facility. Despite not being able to travel to our offices in The Netherlands for over 1.5 years, the team remains committed to ending the year above 2020.

Venture Life - other brands/products

We signed a total of 6 new long term distribution agreements during H1 2021.

As mentioned, one key significant agreement was reached with Bayer Consumer Care AG following acquisition on the BV Gel product, extending the term until 2030 and adding a further 16 new territories, including Poland and Turkey - all major markets around the world are now included in this agreement, which stands at 49 territories in total. At the same time, we also added a further 39 new territories into the BV Pessary agreement, which included Brazil, France, Germany, Italy, Spain among others - all major markets around the world are now included, which stands at 51 territories in total.

Furthermore, H1 2021 saw our partners launch 11 new products in their respective markets, as well as 3 regulatory approvals granted and 14 new launch preparations underway in H2 2021 for a Q1 2022 launch.

Customer brands

The customer brands business delivered revenues in the first half of GBP8.5 million, an increase of 12% over the first half of 2020. As with the rest of the business we saw some partners recovering better than others from the COVID pandemic, but overall this part of the business delivered good growth. There were two significant pieces of new business that contributed to this growth:

-- A new dermatological line was developed for the Italian pharma business Alfasigma S.p.A in 2020 and production began in that year. The first half of 2021 saw a significant increase in our revenues for this range and this is set to continue in the second half.

-- An existing customer Italfarmaco S.p.A began a new piece of business with us in 2021 that has also positively impacted in the first half.

In addition we continue to attract and win new product development business for the EU, USA and other territories, in the areas of medical devices and cosmetics, and these items of new business will continue to deliver growth in our customer brands business.

Our Biokosmes facility in northern Lombardy manufactures the majority of our products, both customer and Venture Life brands, and the investments made in 2020 have given us meaningful spare capacity to continue to accommodate further revenue growth. Through the lockdown in the first half of 2021 the factory again continued to operate all the time, again a fantastic effort by all the team at Biokosmes.

Revolving Credit Facility

On 21(st) June 2021, the Group entered into a Revolving Credit Facility ("RCF") with Santander UK PLC and Silicon Valley Bank with available borrowing of up to GBP30 million and an incremental facility available of a further GBP20 million, subject to certain conditions, on the same terms as the RCF.

As at 30(th) June 2021, the amount drawn was GBP4 million, to replenish working capital cash reserves used in the acquisition of BBI. In the coming weeks another GBP4 million will be drawn, which together with surplus cash will be used to repay the GBP5.2 million of Italian bank loans, which is a condition of the RCF. The remainder of the facility will be kept available for future acquisitions, in addition to the future cash generated in the business moving forward.

Outlook

The first half of 2021 was a challenging trading environment for the Group, as another extended COVID lockdown affected customers and suppliers in many countries. Despite this, the Group saw growth in its core business revenues (excluding HSG and China) with the current order book ahead of the same time last year on an actual and like for like basis, and two immediately earnings acquisitions (one post period end). These acquisitions are expected to add materially to the revenues and profitability for 2021 and the future, as well as providing new therapy areas and products for the Group to expand and develop further. The acquistions bring significant opportunity for geographic expansion and new product development, as well as expanding the reach into the UK retailers.

From 2014 to 2020, the Group successfully achieved 27% CAGR in revenue through the dual strategy of organic and acquired growth, which has driven increasing profitability in the Group. The Group is well set for continued growth, as we expect the second half of the year to benefit from the consolidation of the recent acquisitions, and the full year effect will be seen in 2022 and beyond. VLG has significant capacity in its manufacturing operations to accommodate growth in revenue and has now added significant additional resources (substantially unused) with the RCF in place for further earnings enhancing acquisitions, all of which gives the Board great confidence about the future.

Financial Review

Statement of comprehensive income

Group revenue for the six-month period was GBP13.9 million, a decline of 18% on the GBP16.9 million reported for the same period in 2020. The movement had four main drivers comprising:

a. continuing growth and momentum from the core business (excluding sales of Hand Sanitiser products and sales to China);

b. inclusion of GBP1.1 million of acquired net sales pursuant to the acquisition of BBI Healthcare Ltd on 4(th) June 2021;

   c.     90% decline in sale of products to China impacted by Covid-19; 

d. 98% decline in sales of Hand Sanitiser Products, which was far greater than expected and due to significant inventories remaining in channels and other factors;

As a result of these dynamics, the revenues of the VLG Branded segment of the Group declined to less than those of the Customer Brand segment.

The Group generated gross profit of GBP4.9 million representing a gross margin of 35.6%, compared to 40.9% for the same period in 2020. This notable decline was a blend of several factors including:

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

b. unfavourable mix variances arising from the lower portion of revenues arising from VLG Branded products;

   c.     unfavourable factory volume variances due to the decline in overall sales volume; 

d. inclusion of higher storage costs arising as a result of the higher inventory levels which had arisen due to a blend of commercial reasons including the group's mechanic to hedge any supply disruption arising through Brexit;

e. some inflation in raw materials costs which have not yet been passed on via price adjustments to customers;

Administrative expenses decreased in the period to GBP4.5 million from GBP4.6 million in H1 2020. General savings of GBP0.2 million were offset by GBP0.1 million of new expenses relating to the inclusion of BBI Healthcare Ltd operations, and GBP0.2 million of higher non-cash costs of amortisation, depreciation and share-based payments (which arose from the BBI Healthcare Ltd acquisition and factory capital investment) were offset by a credit of GBP0.2 million representing the partial writing-back of the bad debt provision associated with our China distributor as the cash settlements and overall prognosis of the level of impairment of this receivable improved.

H1 2021 generated a positive adjusted EBITDA (defined as EBITDA excluding share-based payments and exceptional items) of GBP1.9 million, down 45% compared to H1 2020 of GBP3.5 million. The decline of adjusted EBITDA in the amount of GBP1.6 million versus H1 2020 is less than the decline in operating profit as a result of higher amortisation and depreciation charges in 2021, and this measure is stated before exceptional costs of GBP0.7 million (H1 2020 GBP0.1 million) which were high due to the significant progress on acquisitions during the first half of 2021. The loss after tax was GBP(0.5) million (H1 2020: profit of GBP1.6 million). Loss per share was (0.37)p (H1 2020: profit of 1.86p). The adjusted profit per share (defined as earnings per share before amortisation, share based payments and exceptional items) was 0.83p compared to an adjusted profit per share of 2.85p in H1 2020.

A negative working capital flux of GBP(1.7) million (negative flux GBP(2.4) million in 2020) arose across the six month period. This was principally driven by trade debtors in 2021 and reflects the overall increase in the Group's portfolio of business pursuant to the acquisition of BBI Healthcare Ltd on 4(th) June 2021. The anticipated favourable flux that was expected to arise as a result of an unwinding of the high inventory level had not yet happened by 30(th) June 2021 and like-for-like inventory levels remain unchanged versus 31(st) December 2020 plus the inclusion of GBP1.3 million of acquired inventory pursuant to the acquisition of BBI Healthcare Ltd.

Net cash from operations was GBP(0.9) million in H1 2021 (H1 2020: GBP1.0 million). Cash used in investing activities amounted to GBP36.4 million (H1 2020 GBP6.6 million) and comprised the purchase consideration for the acquisition of BBI Healthcare Ltd (GBP35.9 million) plus some ongoing capital investment into the Italian factory. Net cash from financing activities was GBP3.1 million (H1 2020 GBP1.0 million) as the Group made an initial GBP4.0 million net draw from its newly established a revolving credit facility ("RCF") as well as some partial repayments of existing Italian debt and advance settlement of RCF set-up fees. The RCF was established on 18(th) June 2021 across two banks and gives the Group access to GBP30 million of low-cost debt finance with an uncommitted option to extend this up to a total of GBP50 million. Overall cashflow over the period was an outflow of GBP34.2 million (H1 2020 outflow of GBP4.6 million) and net debt increased from GBP(1.6) million to GBP(6.0) million including Finance Leases (or declined from GBP0.8 million of net cash to GBP(1.2) million of net debt excluding Finance Leases).

Non-current assets including Goodwill increased by GBP40.1 million, reflecting the acquisition of BBI Healthcare Ltd in June 2021 and the significant investment in factory equipment underway as part of the plans to expand production capacity well ahead of the current forecast demand. Total debt increased from GBP8.2 million to GBP13.9 million and reflects the inclusion of the RCF, some extensions to factory and logistics centre finance leases less some repayments of Italian loans. The balance of Italian loans at 30th June 2021 amounted to GBP5.0 million and has been classified by the Group as short term to reflect the requirement to repay this in the near term and utilise the RCF as the source of debt financing.

This has been a positive six-month period for the business which has experienced elements of organic growth as well as completed the acquisition of BBI Healthcare Ltd whilst adapting and broadening the portfolio of business activities to accommodate the impacts of two lines of sales decline. The balance sheet remains strong and the Group has access to low-cost debt finance to progress the development of its business, continue to invest in its manufacturing capacity and further deliver on its acquisition strategy.

Unaudited Interim Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2021

 
                                                     Six months    Six months     Year ended 
                                                          ended         ended    31 December 
                                                        30 June       30 June           2020 
                                             Note          2021          2020 
                                                    (Unaudited)   (Unaudited)      (Audited) 
                                                        GBP'000       GBP'000        GBP'000 
 Revenue                                     4.1         13,866        16,897         30,076 
 Cost of sales                                          (8,927)       (9,986)       (17,229) 
                                                   ------------  ------------  ------------- 
 Gross profit                                             4,939         6,911         12,847 
 
 Operating expenses                                     (4,026)       (4,063)        (7,980) 
 Impairment losses of financial 
  assets                                                    162             -          (405) 
 Amortisation of intangible assets           5            (631)         (497)          (909) 
                                                   ------------  ------------  ------------- 
 Total administrative expenses                          (4,495)       (4,560)        (9,294) 
 
 Other income                                               122            23            169 
 
 Operating profit before exceptional 
  items                                                     566         2,374          3,722 
                                                   ------------  ------------  ------------- 
 
 Exceptional items                           6            (728)          (94)          (167) 
 
 Operating (loss)/profit                                  (162)         2,280          3,555 
                                                   ------------  ------------  ------------- 
 
 Finance income/(costs)                                     122         (165)          (279) 
 
 (Loss)/Profit before tax                                  (40)         2,115          3,276 
                                                   ------------  ------------  ------------- 
 
 Tax                                         7            (428)         (562)          (908) 
 
 (Loss)/Profit for the period 
  attributable to the equity shareholders 
  of the parent                                           (468)         1,553          2,368 
                                                   ------------  ------------  ------------- 
 
 Other comprehensive (loss)/income 
  which may be subsequently reclassified 
  to the income statement                    8          (1,219)         1,713          1,284 
 
 Total comprehensive (loss)/profit 
  for the period attributable 
  to equity shareholders of the 
  parent                                                (1,687)         3,266          3,652 
                                                   ------------  ------------  ------------- 
 
 Basic (loss)/profit per share 
  (pence) attributable to equity 
  shareholders of the parent                 9           (0.37)          1.86           2.74 
 Diluted basic (loss)/profit 
  per share (pence) attributable 
  to equity shareholders of the 
  parent                                     9           (0.37)          1.65           2.53 
 
 
 
 

Unaudited Interim Condensed Consolidated Statement of Financial Position

As at 30 June 2021

 
                                     Note       30 June             30 June   31 December 
                                                   2021    2020 (*Restated)          2020 
                                            (Unaudited)         (Unaudited)     (Audited) 
 ASSETS                                         GBP'000             GBP'000       GBP'000 
 Non-current assets 
 Intangible assets *                 11A         61,678              27,589        27,024 
 Property, plant and equipment       11B         10,634               4,618         7,018 
                                                 72,312              32,207        34,042 
                                           ------------  ------------------  ------------ 
 Current assets 
 Inventories                                      9,784               7,058         8,886 
 Trade and other receivables                     10,117              10,015         7,653 
 Cash and cash equivalents                        7,896               6,641        42,095 
                                           ------------  ------------------  ------------ 
                                                 27,797              23,714        58,634 
                                           ------------  ------------------  ------------ 
 TOTAL ASSETS                                   100,109              55,921        92,676 
                                           ------------  ------------------  ------------ 
 
 EQUITY & LIABILITIES 
 Capital and reserves 
 Share capital                       12             377                 251           377 
 Share premium account               12          65,738              30,824        65,738 
 Merger reserve                      12           7,656               7,656         7,656 
 Foreign currency translation 
  reserve *                                         210               1,858         1,429 
 Share-based payment reserve                        810                 864           660 
 Retained earnings                              (4,219)             (4,939)       (3,751) 
                                           ------------  ------------------ 
 Total equity attributable 
  to equity holders of the parent                70,572              36,514        72,109 
                                           ------------  ------------------  ------------ 
 
 LIABILITIES 
 Current liabilities 
 Trade and other payables                         7,921               8,688         7,108 
 Taxation                                           561                 759           433 
 Interest bearing borrowings 
  - Bank Loans                                    5,004                 792         1,092 
 Interest bearing borrowings 
  - Receivables Finance                             680               1,453           888 
 Interest bearing borrowings 
  - Leasing Obligations                             477                 491           477 
                                           ------------  ------------------  ------------ 
                                                 14,643              12,183         9,998 
                                           ------------  ------------------  ------------ 
 Non-current liabilities 
 Interest bearing borrowings 
  - Bank Loans                                    3,505               3,586         4,636 
 Interest bearing borrowings 
  - Leasing Obligations                           4,213               1,914         4,085 
 Statutory employment provision                   1,126               1,034         1,201 
 Deferred tax liability              7            6,050                 690           647 
                                           ------------  ------------------  ------------ 
                                                 14,894               7,224        10,569 
                                           ------------  ------------------  ------------ 
 TOTAL LIABILITIES                               29,537              19,407        20,567 
                                           ------------  ------------------  ------------ 
 TOTAL EQUITY & LIABILITIES                     100,109              55,921        92,676 
                                           ------------  ------------------  ------------ 
 
 * Restated in accordance with note 32 ("prior period adjustment") 
  of the 2020 financial statements. Please refer to note 16 for 
  further details. 
 

Unaudited Interim Condensed Consolidated Statement of Changes in Equity

As at 30 June 2021

 
                                                          Foreign 
                                  Share                  currency  Share-based 
                      Share     premium       Merger  translation      payment     Retained        Total 
                    capital     account      reserve      reserve      reserve     earnings       equity 
                    GBP'000     GBP'000      GBP'000      GBP'000      GBP'000      GBP'000      GBP'000 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
Restated 
 Balance at 1 
 January 2020 
 (Audited)              251      30,824        7,656          145          624      (6,492)       33,008 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
Profit for the 
 period                   -           -            -            -            -        1,553        1,553 
Foreign 
 exchange for 
 period                   -           -            -        1,713            -            -        1,713 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
Total 
 comprehensive 
 income                   -           -            -        1,713            -        1,553        3,266 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
Share options 
 charge                   -           -            -            -          240            -          240 
Dividends                 -           -            -            -            -            -            - 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
Transactions 
 with 
 Shareholders             -           -            -            -          240            -          240 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
Balance at 30 
 June 2020 
 (Unaudited)            251      30,824        7,656        1,858          864      (4,939)       36,514 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
 
 Profit for 
 the period               -           -            -            -            -          815          815 
Foreign 
 exchange for 
 period                   -           -            -        (429)            -            -        (429) 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
Total 
 comprehensive 
 income                   -           -            -        (429)            -          815          386 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
Share options 
 charge                   -           -            -            -          169            -          169 
Share options 
 recycling per 
 IFRS2                                                                   (373)          373            - 
Equity raise            126      34,914                                                           35,040 
Dividend                  -           -            -            -            -            -            - 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
Transactions 
 with 
 Shareholders           126      34,914            -            -        (204)          373       35,209 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
Balance at 31 
 December 2020 
 (Audited)              377      65,738        7,656        1,429          660      (3,751)       72,109 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
Loss for the 
 period                   -           -            -            -            -        (468)        (468) 
Foreign 
 exchange for 
 period                   -           -            -      (1,219)            -            -      (1,219) 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
Total 
 comprehensive 
 income                   -           -            -      (1,219)            -        (468)      (1,687) 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
Share options 
 charge                   -           -            -            -          150            -          150 
Dividends                 -           -            -            -            -            -            - 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
Transactions 
 with 
 Shareholders                                                              150                       150 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
Balance at 30 
 June 2021 
 (Unaudited)            377      65,738        7,656          210          810      (4,219)       70,572 
                -----------  ----------  -----------  -----------  -----------  -----------  ----------- 
 

Unaudited Interim Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2021

 
                                                 Six months          Six months          Year ended 
                                                      ended               ended 
                                                    30 June             30 June         31 December 
                                                       2021                2020                2020 
                                                (Unaudited)         (Unaudited)           (Audited) 
                                                    GBP'000             GBP'000             GBP'000 
 Cash flow from operating activities: 
 (Loss)/Profit before tax                              (40)               2,115               3,276 
 Finance cost                                         (122)                 165                 279 
 Operating (loss)/profit                              (162)               2,280               3,555 
 
 Adjustments for: 
   - Depreciation of property, plant 
    and equipment                                       593                 386               1,081 
   - Impairment losses of financial 
    assets                                            (162)                   -                 405 
   - Amortisation of intangible assets                  631                 497                 909 
   - Disposal of capitalised development 
    costs                                                 -                   -                 345 
   - Share-based payment expense                        150                 240                 409 
                                              -------------       -------------       ------------- 
 Operating cash flow before movements 
  in working capital                                  1,050               3,403               6,704 
 Decrease/(Increase) in inventories                     105             (1,975)             (3,294) 
 ( Increase) in trade and other receivables         (1,231)             (3,652)             (1,161) 
 Increase in trade and other payables                 (572)               3,194               1,403 
                                              -------------       -------------       ------------- 
 Cash generated by operating activities               (648)                 969               3,652 
 Finance Costs                                           53                (15)                (50) 
 Tax Paid                                             (293)                   -               (896) 
 Net cash from operating activities                   (888)                 954               2,706 
 
 Cash flow from investing activities: 
 Acquisition of BBI Healthcare Ltd                 (35,917)                   -                   - 
 Acquisition of PharmaSource Business                     -             (5,523)             (5,465) 
 Purchases of property, plant and 
  equipment                                           (217)               (726)             (1,248) 
 Expenditure in respect of intangible 
  assets                                              (218)               (376)               (821) 
 Net cash used by investing activities             (36,352)             (6,625)             (7,534) 
                                              -------------       -------------       ------------- 
 
 Cash flow from financing activities: 
 Net proceeds from issuance of ordinary 
  shares                                                  -                   -              36,997 
 Transaction costs incurred in issuance 
  of ordinary shares                                      -                   -             (1,957) 
 Drawdown in interest-bearing borrowings              3,647               1,282               5,428 
 Repayment of interest-bearing borrowings             (170)                   -             (3,433) 
 Leasing obligation repayments                        (402)               (246)               (764) 
 Dividends paid                                           -                   -                   - 
                                              -------------       ------------- 
 Net cash from financing activities                   3,075               1,036              36,271 
                                              -------------       -------------       ------------- 
 
 Net increase in cash and cash equivalents         (34,165)             (4,635)              31,443 
 Net foreign exchange difference                       (34)                 566                (58) 
 Cash and cash equivalents at beginning 
  of period                                          42,095              10,710              10,710 
                                              -------------       -------------       ------------- 
 Cash and cash equivalents at end 
  of period                                           7,896               6,641              42,095 
                                              -------------       -------------       ------------- 
 

Notes to the Unaudited Interim Condensed Consolidated Financial Statements for the six months ended 30 June 2021

   1.            Corporate information 

The Interim Condensed Consolidated Financial Statements of Venture Life Group plc and its subsidiaries (collectively, the Group) for the six months ended 30 June 2021 ("the Interim Financial Statements") were approved and authorised for issue in accordance with a resolution of the directors on 21 September 2021.

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

   2.            Basis of preparation 

The Interim Financial Statements have been prepared on a going concern basis under the historical cost convention and in accordance with the recognition and measurement principles of International Accounting Standards ("IASs") in conformity with the requirements of the Companies Act 2006, the International Financial Reporting Interpretations Committee ("IFRIC"), interpretations issued by the International Accounting Standards Boards ("IASB") that are effective or issued and adopted as at the time of preparing these financial statements, and in accordance with the provisions of the Companies Act 2006 that are relevant to companies that report under IFRSs.

The financial information contained in the Interim Financial Statements, which are unaudited, does not constitute statutory accounts in accordance with the Companies Act 2006. The financial information for the year ended 31 December 2020 is extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies and on which the auditor issued an unqualified opinion that did not include an emphasis of matter reference or statement made under section 498(2) or (3) of the Companies Act 2006.

   3.            Accounting policies 

The accounting policies adopted in the preparation of the Interim Financial Statements are consistent with those followed in the preparation of the 2020 Consolidated Financial Statements.

Foreign currencies

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

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

 
                                     Six months      Six months     Year ended 
                                          ended           ended    31 December 
 Sterling/euro exchange rates      30 June 2020    30 June 2020           2020 
 Average exchange rate for 
  period                                  1.155           1.138          1.124 
 Exchange rate at the period 
  end                                     1.164           1.096          1.113 
 
   4.            Segmental Information 

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

In line with the 2020 Consolidated Financial Statements, the operations of the Group are segmented as Brands, which includes sales of healthcare and skin care products under distribution agreements and direct to UK retailers, and Development and Manufacturing. The results of the recently acquired BBI Healthcare Ltd business are included and apportioned across both Brands and Development & Manufacturing segments.

   4.1          Segment Revenue and Results 

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

 
                                                            Development                  Consolidated 
                                            Brands    and Manufacturing   Eliminations          Group 
                                           GBP'000              GBP'000        GBP'000        GBP'000 
 Six months to 30 June 2021 
  Revenue 
 External sales                              4,931                8,935              -         13,866 
 Inter-segment sales                             -                1,622        (1,622)              - 
                                          --------  -------------------  -------------  ------------- 
 Total revenue                               4,931               10,557        (1,622)         13,866 
                                          --------  -------------------  -------------  ------------- 
 Results 
 Operating profit before 
  exceptional items and excluding 
  central administrative costs                 669                1,148              -          1,817 
                                          --------  -------------------  -------------  ------------- 
 
 
 
                                                            Development                  Consolidated 
                                            Brands    and Manufacturing   Eliminations          Group 
                                           GBP'000              GBP'000        GBP'000        GBP'000 
 Six months to 30 June 2020 
  Revenue 
 External sales                              9,350                7,547              -         16,897 
 Inter-segment sales                             -                4,223         (4223)              - 
                                          --------  -------------------  -------------  ------------- 
 Total revenue                               9,350               11,770         (4223)         16,897 
                                          --------  -------------------  -------------  ------------- 
 Results 
 Operating profit before 
  exceptional items and excluding 
  central administrative costs               2,002                1,915              -          3,917 
                                          --------  -------------------  -------------  ------------- 
 
 
 
                                                       Development                  Consolidated 
                                       Brands    and Manufacturing   Eliminations          Group 
 Year to 31 December 2020             GBP'000              GBP'000        GBP'000        GBP'000 
 Revenue 
  External sales                       14,910               15,166              -         30,076 
 Inter-segment sales                        -                6,360        (6,360)              - 
                                     --------  -------------------  -------------  ------------- 
 Total revenue                         14,910               21,526        (6,360)         30,076 
                                     --------  -------------------  -------------  ------------- 
 
 Results 
 Operating profit before 
  exceptional items and excluding 
  central administrative 
  costs                                 4,551                3,060              -          7,611 
                                     --------  -------------------  -------------  ------------- 
 

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

 
                                                     Six months        Six months         Year ended 
                                                          ended 
                                                        30 June             ended        31 December 
                                                           2021 
                                                    (Unaudited)           30 June               2020 
                                                                             2020 
                                                                      (Unaudited)          (Audited) 
                                                        GBP'000           GBP'000            GBP'000 
Operating profit before exceptional 
 items and excluding central administrative 
 costs                                                    1,817             3,917              7,611 
Central administrative costs                            (1,251)           (1,543)            (3,889) 
Exceptional expenses                                      (728)              (94)              (167) 
Operating (loss)/profit                                   (162)             2,280              3,555 
Net finance cost                                            122             (165)              (279) 
                                                   ------------      ------------      ------------- 
(Loss)/profit before tax                                   (40)             2,115              3,276 
                                                   ------------      ------------      ------------- 
 
   5.            Amortisation of intangible assets 
 
                                                       Six months                Six months         Year ended 
                                                            ended 
                                                          30 June                     ended        31 December 
                                                             2021 
                                                      (Unaudited)                   30 June               2020 
                                                                                       2020 
                                                                                (Unaudited)          (Audited) 
Amortisation of:                                          GBP'000                   GBP'000            GBP'000 
Acquired intangible assets                                  (401)                     (255)              (373) 
Patents, trademarks and other intangible 
 assets                                                      (48)                      (82)              (213) 
Capitalised development costs                               (182)                     (160)              (323) 
                                                     ------------              ------------      ------------- 
                                                            (631)                     (497)              (909) 
                                                     ------------              ------------      ------------- 
 
   6.            Exceptional items 
 
                                             Six months                Six months         Year ended 
                                                  ended 
                                                30 June                     ended        31 December 
                                                   2021 
                                            (Unaudited)                   30 June               2020 
                                                                             2020 
                                                                      (Unaudited)          (Audited) 
                                                GBP'000                   GBP'000            GBP'000 
Costs incurred in acquisitions                    (728)                      (94)              (167) 
Total exceptional items                           (728)                      (94)              (167) 
                                           ------------              ------------      ------------- 
 

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

   7.            Taxation 

The Group calculates the income tax expense for the period using the tax rate that would be applicable to the earnings in the six months to 30(th) June 2021. The major components of income tax expense in the Interim Condensed Statement of Comprehensive Income are as follows:

 
                                               Six months        Six months         Year ended 
                                                    ended             ended        31 December 
                                             30 June 2021           30 June               2020 
                                                                       2020 
                                              (Unaudited)       (Unaudited)          (Audited) 
                                                  GBP'000           GBP'000            GBP'000 
Current income tax                                    428               562                975 
Deferred income tax expense related 
 to origination and reversal of 
 timing differences                                     -                 -               (67) 
                                           --------------      ------------      ------------- 
Income tax expense recognised 
 in statement of comprehensive 
 income                                               428               562                908 
                                           --------------      ------------      ------------- 
 

The current income tax expense is based on the profits of the Development and Manufacturing business based in Italy, the PharmaSource business in the Netherlands and the UK based businesses. The UK based businesses on a combined basis are able to begin to utilise the sizeable tax losses that have been generated in prior years. Consequently there are no UK income tax charges owing in respect of trading for the first six months to 30 June 2021. (The Group had previously not recognised the deferred tax asset on losses made by the UK based businesses as it had not been certain when there would be sufficient taxable profits against which to offset such losses. This position will be reviewed at 31(st) December 2021) These financial statements do not at this time include the unwind of the GBP5.4 million deferred tax liability arising upon the acquisition of BBI Healthcare Ltd at 4(th) June 2021 which is estimated to amount to GBP38,000 at 30(th) June 2021. This will become included once the purchase price allocation of the acquisition consideration of BBI Healthcare Ltd has been finalised (see note 11A);

At the period end the estimated tax losses amounted to GBP10,900,000 (30 June 2020: GBP9,842,000; 31 December 2020: GBP10,900,000). This reduction in tax losses at 30(th) June 2021 illustrates the utilisation

   8.            Other comprehensive income/(expense) 

Other comprehensive income/(expense) represents the foreign exchange difference on the translation of the assets, liabilities and reserves of Biokosmes and PharmaSource which have functional currencies of Euros. The movement is shown in the foreign currency translation reserve between the date of acquisition of Biokosmes, when the GBP/EUR rate was 1.193 and the balance sheet date rate at 30 June 2021 of 1.164 (at 31 December 2020 of 1.113 and at 30 June 2019 of 1.091) together with the same computation for PharmaSource BV between the date of acquisition when the GBP/EUR rate was 1.185 and the balance sheet date rate at 30(th) June 2021 of 1.164. The result is an amount that may subsequently be reclassified to profit and loss.

   9.            Earnings per share 
 
                                          Six months   Six months    Year ended 
                                               ended        ended   30 December 
                                        30 June 2021      30 June          2020 
                                                             2020 
                                         (Unaudited)  (Unaudited)     (Audited) 
Weighted average number of ordinary 
 shares in issue                         125,831,530   83,712,106    86,402,007 
(Loss)/Profit attributable to 
 equity holders of 
 the Company (GBP'000)                         (468)        1,553         2,368 
Basic (loss)/profit per share 
 (pence)                                      (0.37)         1.86          2.74 
Diluted (loss)/profit per share 
 (pence)                                      (0.37)         1.65          2.53 
Adjusted profit per share (pence)               0.83         2.85          4.46 
Diluted Adjusted profit per share 
 (pence)                                        0.78         2.54          4.12 
 

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

   10.          Dividends 

Amounts recognised as distributions to equity holders in the period:

 
                        Six months         Six months         Year ended 
                             ended              ended        31 December 
                                                                    2020 
                      30 June 2021       30 June 2020          (Audited) 
                       (Unaudited)        (Unaudited) 
                           GBP'000            GBP'000            GBP'000 
Final dividend                   -                  -                  - 
                    --------------      -------------      ------------- 
 
   11A.          Intangible assets 

The intangible assets of the group at 30(th) June 2021 were GBP61.7 million (31 December 2020: GBP27.0 million) comprising goodwill, development costs, patents and trademarks & customer relationships. This sum includes GBP35.9 million in respect of the 2021 acquisition of BBI Healthcare Ltd (where an indicative purchase price allocation ("PPA") suggests GBP13.1 million goodwill, GBP17.0 million Brand assets and GBP5.8 million customer & distributor relationships. This PPA will be finalised prior to 31st December 2021) which may result in a different allocation of the purchase price between goodwill and other intangibles.

At the reporting date the Goodwill generated from the acquisitions of Biokosmes Srl in March 2014, Periproducts Limited in March 2016, Dentyl in August 2018, PharmaSource BV in 2020 and BBI Healthcare in June 2021 accounted for GBP33.7 million of the intangible assets of the Group (GBP21.3 million at 31 December 2020). There were no impairments of goodwill during this time (6 months to June 2020: GBP Nil).

 
                             Development      Brands           Patents    Goodwill         Other        Total 
                                   costs                and Trademarks                intangible 
                                                                                          assets 
                                 GBP'000     GBP'000           GBP'000     GBP'000       GBP'000      GBP'000 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Cost or valuation: 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   At 1 January 2020 
    (restated)                     3,280       1,089             1,016      16,417         2,856       24,658 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
 Acquired through 
  business combinations                -           -               417       4,076         1,040        5,533 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Additions                         279           -                87           -             -          366 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Disposals                           -           -                 -           -             -            - 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Foreign exchange                   79           -                22       1,014           158        1,273 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   At 30 June 2020                 3,638       1,089             1,542      21,507         4,054       31,830 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Additions                         460           -               (5)           -             -          455 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Disposals                       (345)           -             (182)           -             -        (527) 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Foreign exchange                   91           -                19       (230)            16        (104) 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   At 31 December 
    2020                           3,844       1,089             1,374      21,277         4,070       31,654 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Acquired through 
    business combinations              -      16,994                 -      13,128         5,788       35,910 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Additions                         182           -                36           -             -          218 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Disposals                         (1)           -             (389)           -             -        (390) 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Foreign exchange                (175)           -              (42)       (662)         (145)      (1,024) 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   At 30 June 2021                 3,850      18,083               979      33,743         9,713       66,368 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Amortisation:                                                                                            - 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   At 1 January 2020               1,438           -               703           -         1,603        3,744 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Charge for the 
    period                           182           -                92           -           223          497 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Disposals                           -                             -                         -            - 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Foreign exchange                                -                 -           -             -            - 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   At 30 June 2020                 1,620           -               795           -         1,826        4,241 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Charge for the 
    period                           141           -               121           -           150          412 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Disposals                           -           -             (182)           -             -        (182) 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Foreign exchange                   76           -                 6           -            77          159 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   At 31 December 
    2020                           1,837           -               740           -         2,053        4,630 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Charge for the 
    period                           185         101                92           -           253          631 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Disposals                         (1)           -             (389)           -             -        (390) 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   Foreign exchange                 (86)           -               (8)           -          (87)        (181) 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   At 30 June 2021                 1,935         101               435           -         2,219        4,690 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
 
   Carrying amount:                                                                                         - 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   At 31 December 
    2019                           1,842       1,089               313      16,417         1,253       20,914 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   At 31 December 
    2020                           2,007       1,089               634      21,277         2,017       27,024 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   At 30 June 2020                 2,018       1,089               747      21,507         2,228       27,589 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
   At 30 June 2021                 1,915      17,982               544      33,743         7,494       61,678 
                            ------------  ----------  ----------------  ----------  ------------  ----------- 
 
   11A.          Acquisition of BBI Healthcare Ltd on 4(th) June 2021 

In June 2021 the Company completed the acquisition of BBI Healthcare Ltd. The acquisition consideration was GBP37.1 million and an initial indicative purchase price allocation ("PPA") suggests GBP24.0 million for the net assets (representing GBP17.0 million in Brands, GBP5.8 million in customer relationships & distribution agreements, GBP3.6 million in land & buildings and GBP3.0 million in cash and working capital, offset by GBP5.4 million in deferred taxes) and GBP13.1 million as goodwill. The Goodwill represents additional value that the group expects to create through the trading of acquired products into the existing customer base of the group as well as the trading of existing brands into these acquired customers. All of the acquisition consideration was paid during June 2021 in cash, with GBP27.4 million being paid to the sellers of the business and GBP9.6 million being paid in settlement of debt financing within the acquired business. The acquisition was funded from the Company's cash resources supplemented by a GBP4.0 million drawdown from the group's Revolving Credit Facility with Santander Bank plc and Silicon Valley Bank. The PPA will be finalised before 31(st) December 2021.

 
Acquisition of BBI Healthcare Ltd on                     Book Value    Fair value  Fair value 
 4(th) June 2021                                                      Adjustments 
                                                           GBP'000s      GBP'000s    GBP'000s 
                                                         ----------  ------------  ---------- 
Assets 
                                                         ----------  ------------  ---------- 
Non-current assets                                            8,099        18,320      26,419 
                                                         ----------  ------------  ---------- 
Licenses, Trademarks, Intellectual Proprty,Capitalised 
 development                                                    696         (696)           - 
                                                         ----------  ------------  ---------- 
Goodwill (within BBI Healthcare Ltd)                          4,399       (4,399)           - 
                                                         ----------  ------------  ---------- 
Brands *                                                          -        16,994      16,994 
                                                         ----------  ------------  ---------- 
Distribution Agreements *                                         -         5,788       5,788 
                                                         ----------  ------------  ---------- 
Tangible Fixed Assets                                         2,977           633       3,610 
                                                         ----------  ------------  ---------- 
Deferred Tax Asset                                               27             -          27 
                                                         ----------  ------------  ---------- 
Current Assets                                                4,088             -       4,088 
                                                         ----------  ------------  ---------- 
Inventories                                                   1,293             -       1,293 
                                                         ----------  ------------  ---------- 
Trade Receivables                                             1,374             -       1,374 
                                                         ----------  ------------  ---------- 
Other Receivables                                               213             -         213 
                                                         ----------  ------------  ---------- 
Cash                                                          1,208             -       1,208 
                                                         ----------  ------------  ---------- 
Total assets                                                 12,187        18,320      30,507 
                                                         ----------  ------------  ---------- 
 
Current liabilities                                         (1,082)             -     (1,082) 
                                                         ----------  ------------  ---------- 
Trade payables                                              (1,007)             -     (1,007) 
                                                         ----------  ------------  ---------- 
Other payables                                                 (75)             -        (75) 
                                                         ----------  ------------  ---------- 
Non-current liabilities                                     (9,616)         4,188     (5,428) 
                                                         ----------  ------------  ---------- 
Borrowings                                                  (9,616)         9,616           - 
                                                         ----------  ------------  ---------- 
Deferred tax                                                      -       (5,428)     (5,428) 
                                                         ----------  ------------  ---------- 
Total net assets                                              1,489        22,508      23,998 
                                                         ----------  ------------  ---------- 
 
Net Assets acquired                                                                    23,997 
                                                         ----------  ------------  ---------- 
Goodwill                                                                               13,128 
                                                         ----------  ------------  ---------- 
Total Consideration                                                                    37,125 
                                                         ----------  ------------  ---------- 
 
Satisfied by: 
                                                         ----------  ------------  ---------- 
Cash paid at completion                                                                37,125 
                                                         ----------  ------------  ---------- 
 

* Intangible assets identified as part of the BBI Healthcare Ltd acquisition.

BBI Healthcare Ltd markets and sells a range of consumer products in the categories of Women's Healthcare and Glucose management. The Group acquired the business to expand both its product portfolio and its customer base. The Group expects that the inclusion of this business into its portfolio will increase the leverage of its trading infrastructure and generate improved profitability. The acquisition has been accounted for under IFRS 3 as a business combination. The Consolidated Financial Statements include the results of trading of BBI Healthcare Ltd for the period from 5(th) June 2021 to 30(th) June 2021.

Revenue and profit impact of the acquisition

BBI Healthcare Ltd contributed group revenues of GBP1.1 million and operating profit before exceptional items and management charges of GBP0.4 million in the period from 4(th) June 2021 to 30(th) June 2021. If the acquisition had taken place on 1 January 2021, the first day of the reporting period under review, total Group revenue and operational profit before exceptional items and management charges for the period arising from BBI Healthcare Ltd would have been GBP5.3 million and GBP0.6 million respectively.

   11B.          Tangible assets 

Primarily as a result of the extension of the Italian factory leases through to 2031 and the acquisition of BBI Healthcare Ltd on 4(th) June 2021 the carrying value of the Group's tangible assets has risen from GBP4.6 million at 30(th) June 2020 to GBP10.6 million at 30(th) June 2021. The main addition arising from the acquisition of BBI Healthcare Ltd was a manufacturing facility located in Sweden.

 
                               Plant &        Other      Right       Land &       Total 
                             Equipment    Equipment     of Use    Buildings 
                                                        Assets 
                               GBP'000      GBP'000    GBP'000      GBP'000     GBP'000 
                           -----------  -----------  ---------  -----------  ---------- 
   Cost or valuation: 
                           -----------  -----------  ---------  -----------  ---------- 
   At 1 January 2020             2,705           97      4,263            -       7,065 
                           -----------  -----------  ---------  -----------  ---------- 
   Additions                       708           18          -            -         726 
                           -----------  -----------  ---------  -----------  ---------- 
   Disposals                       (2)          (4)          -            -         (6) 
                           -----------  -----------  ---------  -----------  ---------- 
   Foreign exchange              (149)          108         82            -          41 
                           -----------  -----------  ---------  -----------  ---------- 
   At 30 June 2020               3,262          219      4,345            -       7,826 
                           -----------  -----------  ---------  -----------  ---------- 
   Additions                       505           17      2,510            -       3,032 
                           -----------  -----------  ---------  -----------  ---------- 
   Disposals                       (2)            -      (351)            -       (353) 
                           -----------  -----------  ---------  -----------  ---------- 
   Foreign exchange               (63)          (3)       (19)            -        (85) 
                           -----------  -----------  ---------  -----------  ---------- 
   At 31 December 2020           3,702          233      6,485            -      10,420 
                           -----------  -----------  ---------  -----------  ---------- 
     Acquired through 
      business 
      combinations               2,098            -          -        1,513       3,611 
                           -----------  -----------  ---------  -----------  ---------- 
   Additions                       205           12        729            -         946 
                           -----------  -----------  ---------  -----------  ---------- 
   Disposals                         -         (11)                       -        (11) 
                           -----------  -----------  ---------  -----------  ---------- 
   Foreign exchange              (175)         (10)      (308)          (4)       (497) 
                           -----------  -----------  ---------  -----------  ---------- 
   At 30 June 2021               5,830          224      6,906        1,509      14,469 
                           -----------  -----------  ---------  -----------  ---------- 
   Depreciation:                                                                      - 
                           -----------  -----------  ---------  -----------  ---------- 
   At 1 January 2020             1,174           91      1,648            -       2,913 
                           -----------  -----------  ---------  -----------  ---------- 
   Charge for the period           127           13        246            -         386 
                           -----------  -----------  ---------  -----------  ---------- 
   Disposals                       (2)          (4)          -            -         (6) 
                           -----------  -----------  ---------  -----------  ---------- 
   Foreign exchange              (190)           23         82            -        (85) 
                           -----------  -----------  ---------  -----------  ---------- 
   At 30 June 2020               1,109          123      1,976            -       3,208 
                           -----------  -----------  ---------  -----------  ---------- 
   Charge for the period           204           13        478            -         695 
                           -----------  -----------  ---------  -----------  ---------- 
   Disposals                       (2)            -      (351)            -       (353) 
                           -----------  -----------  ---------  -----------  ---------- 
   Foreign exchange                (8)          (2)      (138)            -       (148) 
                           -----------  -----------  ---------  -----------  ---------- 
   At 31 December 2020           1,303          134      1,965            -       3,402 
                           -----------  -----------  ---------  -----------  ---------- 
   Charge for the period           226           12        348            7         593 
                           -----------  -----------  ---------  -----------  ---------- 
   Disposals                         -         (11)          -            -        (11) 
                           -----------  -----------  ---------  -----------  ---------- 
   Foreign exchange               (58)          (5)       (84)          (2)       (149) 
                           -----------  -----------  ---------  -----------  ---------- 
   At 30 June 2021               1,471          130      2,229            5       3,835 
                           -----------  -----------  ---------  -----------  ---------- 
 
   Carrying amount:                                                                   - 
                           -----------  -----------  ---------  -----------  ---------- 
   At 31 December 2019           1,531            6      2,615            -       4,152 
                           -----------  -----------  ---------  -----------  ---------- 
   At 31 December 2020           2,399           99      4,520            -       7,018 
                           -----------  -----------  ---------  -----------  ---------- 
   At 30 June 2020               2,153           96      2,369            -       4,618 
                           -----------  -----------  ---------  -----------  ---------- 
   At 30 June 2021               4,359           94      4,677        1,504      10,634 
                           -----------  -----------  ---------  -----------  ---------- 
 
   12.          Share capital and share premium 
 
                                     Ordinary  Ordinary     Share    Merger 
                                    shares of    Shares   premium   reserve 
                                    0.3p each 
                                          No.   GBP'000   GBP'000   GBP'000 
Audited at 31 December 2020 
 and Unaudited at 30 June 2021    125,831,530       377    65,738     7,656 
                                  -----------  --------  --------  -------- 
 
 

There were no movements in share capital or share premium between 31 December 2020 and 30 June 2021.

   13.           Related party transactions 

The following transactions with related parties are considered by the Directors to be significant for the interpretation of the Interim Condensed Financial Statements for the six-month period to 30 June 2021 and the balances with related parties at 30 June 2021 and 31 December 2020:

Under the terms of the Share Purchase Agreement dated 28 November 2013 and signed between the Company and the vendors of Biokosmes, one of whom was Gianluca Braguti, the vendors agreed to indemnify the Company in full for any net liability arising from certain litigation cases which had not settled at the time of completion of the acquisition on 27 March 2014. At the period end the amount due to the Company under the indemnity totalled EUR102,713, of which Gianluca Braguti's liability is EUR102,713. All litigation cases have now been settled.

Key transactions with other related parties

Braguts' Real Estate Srl (formally known as Biokosmes Immobiliare Srl), a company 100% owned by Gianluca Braguti (a Director and shareholder of the Group) provided property lease services to the Development and Manufacturing business totalling EUR230,000 in the six months to 30 June 2021 (EUR230,000 in the six months to 30 June 2020). At 30 June 2021, the Group owed Braguts' Real Estate Srl EUR38,333 (EUR115,000 at 30 June 2020). Biokosmes Srl provided technical services to Braguts'Real Estate in the six months to 30 June 20201 in the amount of EUR 2.150 (EURnil in the six months to 30 June 2020). At 30 June 2021 Bragut's Real Estate owed to the Group EUR nil (EURnil at 30 June 2020).

   14.                  Financial instruments 

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

 
                                    30 June 2021                   30 June 2020               31 December 2020 
                                                  -----------------------------  ----------------------------- 
                      Loans and  Total financial     Loans and  Total financial     Loans and  Total financial 
                    receivables           assets   receivables           assets   receivables           assets 
                        GBP'000          GBP'000       GBP'000          GBP'000       GBP'000          GBP'000 
Financial assets: 
Trade and other 
 receivables 
 (a)                      9,386            9,386        10,015           10,015         7,342            7,342 
Cash and cash 
 equivalents              7,896            7,896         6,641            6,641        42,095           42,095 
Total                    17,282           17,282        16,656           16,656        49,437           49,437 
                   ------------  ---------------  ------------  ---------------  ------------  --------------- 
 
 
                                30 June 2021                 30 June 2020             31 December 2020 
                 ---------------------------  ---------------------------  --------------------------- 
                 Liabilities           Total  Liabilities           Total  Liabilities           Total 
                  (amortised       financial   (amortised       financial   (amortised       financial 
                       cost)     liabilities        cost)     liabilities        cost)     liabilities 
                     GBP'000         GBP'000      GBP'000         GBP'000      GBP'000         GBP'000 
Financial 
liabilities: 
Trade and other 
 payables (b)          8,829           8,829        9,444           9,444        6,875           6,875 
Leasing 
 obligations           4,690           4,690        2,405           2,405        4,562           4,562 
Interest 
 bearing 
 debt                  9,189           9,189        5,831           5,831        6,616           6,616 
                 -----------  --------------  -----------  --------------  -----------  -------------- 
Total                 22,708          22,708       17,680          17,680       18,053          18,053 
                 -----------  --------------  -----------  --------------  -----------  -------------- 
 
 

(a) Trade and other receivables excludes prepayments

(b) Trade and other payables excludes deferred revenue

   15.             Post Balance Sheet Event 

On 6(th) August 2021 the group announced that it had acquired a series of oncology support product assets from Helsinn Healthcare SA (the "Brands") for a total consideration of 6 million CHF (approximately GBP4.7 million) (the "Acquisition").

The Acquisition comprised three on-market products within the area of oncology support, as well as all the associated IP and existing customer relationships in relation to these Brands.

For the year ended 31 December 2020, these Brands generated gross profit of GBP1.3m on sales of GBP2.5m. Revenues for the 2020 financial year were impacted by the Covid pandemic which saw a reduction in oncology treatments due to lockdown, however, the group expects the revenues of the Brands to benefit from the reducing effects of the pandemic and the increase of oncology treatments back to pre-Covid levels.

The total consideration paid for the Acquisition amounted to 6 million CHF, 3 million CHF payable on completion and an unconditional 3 million CHF payment due 12 months post completion.

   16.             Prior Period Adjustment 

During 2020 the Group made a change to its accounting policy in respect of foreign currency translation of Goodwill and fair value adjustments arising on the acquisition of a foreign entity. The change is to treat Goodwill and fair value adjustments arising on the acquisition of a foreign entity as assets and liabilities of the foreign entity and translate them into GBP at the closing rate. The previous policy did not account for these adjustments correctly by treating them as assets and liabilities of the parent and translating them at the historic rate. The details of the impacts of these adjustments applied to the 2019 and 2020 financial statements are included in Note 32 to the 2020 Financials Statements.

The following tables summarise the impacts on the Group's consolidated financial statements at 30(th) June 2020.

   a)     Consolidated statement of financial position (extract) 
 
 At 30 June 2020                             Impact of prior period adjustment 
                                         As previously   Adjustments   As restated 
                                              reported       GBP'000       GBP'000 
                                               GBP'000 
 Assets 
 Non-current assets 
                                        --------------  ------------  ------------ 
 Intangible assets                              26,261         1,328        27,589 
                                        --------------  ------------  ------------ 
 Property, plant and equipment                   4,618             -         4,618 
                                        --------------  ------------  ------------ 
                                                30,879         1,328        32,207 
                                        --------------  ------------  ------------ 
 
 Current assets                                 23,714             -        23,714 
                                        --------------  ------------  ------------ 
 Total assets                                   54,593         1,328        55,921 
                                        --------------  ------------  ------------ 
 
 Equity and liabilities 
                                        --------------  ------------  ------------ 
 Capital and reserves 
                                        --------------  ------------  ------------ 
 Share capital                                     251             -           251 
                                        --------------  ------------  ------------ 
 Share premium account                          30,824             -        30,824 
                                        --------------  ------------  ------------ 
 Merger reserve                                  7,656             -         7,656 
                                        --------------  ------------  ------------ 
 Foreign currency translation reserve              530         1,328         1,858 
                                        --------------  ------------  ------------ 
 Share-based payments reserve                      864             -           864 
                                        --------------  ------------  ------------ 
 Retained earnings                             (4,939)             -       (4,939) 
                                        --------------  ------------  ------------ 
 Total equity attributable to equity 
  holders of the parent                         35,189         1,328        36,514 
                                        --------------  ------------  ------------ 
 
 Liabilities 
                                        --------------  ------------  ------------ 
 Current liabilities                            12,183             -        12,183 
                                        --------------  ------------  ------------ 
 Non-current liabilities                         7,224             -         7,224 
                                        --------------  ------------  ------------ 
 Total liabilities                              19,407             -        19,407 
                                        --------------  ------------  ------------ 
 Total equity and liabilities                   54,593         1,328        55,921 
                                        --------------  ------------  ------------ 
 
   a)     Consolidated Statement of Comprehensive Income (extract) 
 
 For the six months ended 30 June 2020               Impact of prior period adjustment 
                                                 As previously   Adjustments   As restated 
                                                      reported       GBP'000       GBP'000 
                                                       GBP'000 
 Profit for the period                                   1,553             -         1,553 
 Other comprehensive income:                                 - 
                                                --------------  ------------  ------------ 
 Items that will be reclassified subsequently 
  to profit or loss 
                                                --------------  ------------  ------------ 
 Foreign exchange gain / (loss) on 
  translation of subsidiaries *                            562         1,151         1,713 
                                                --------------  ------------  ------------ 
 Total comprehensive profit for the 
  period attributable to equity holders 
  of the parent                                          2,115         1,151         3,266 
                                                --------------  ------------  ------------ 
 

* The sum of GBP1,151,000 comprises the gain of GBP1,328,000 arising at 30(th) June 2020 less the gain recognised at 31(st) December 2019 in the amount of GBP192,000 and including an adjustment of GBP15,000. There is no impact on the Group's basic or diluted earnings per share and no impact on the total operating, investing or financing cash flows for the six months ended 30 June 2020.

[1] Adjusted EBITDA is EBITDA before deduction of exceptional items and share based payments

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

[3] Source: Nielsen, All Outlets, Mouthwash, Brand Value Sales % Change YoY, 52 wk w/e July 21

[4] Source: Nielsen, All Outlets, Mouthwash, Brand Value Sales % Change YoY, 52 wk w/e July 21

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