TIDMVLG
RNS Number : 0377N
Venture Life Group PLC
20 September 2019
This announcement replaces RNS number 8813M issued on 19
September 2019, correcting note 4.1. All other information in the
announcement remains unchanged.
19 September 2019
VENTURE LIFE GROUP PLC
("Venture Life" or the "Group")
Unaudited interim results for the six months ended 30 June
2019
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 2019.
Financial highlights:
-- Revenues increased 14% to GBP9.4 million (H1 2018: GBP8.3 million)
-- Gross profit increased 18% to GBP3.5 million (H1 2018: GBP3.0 million)
-- Gross profit margin percentage increased to 37.3% (H1 2018: 36.0%)
-- Increased investment in Dentyl marketing and new medical devices
-- Adjusted EBITDA increased 5.5% to GBP0.7 million (H1 2018: GBP0.7 million)
-- Profit before tax, amortisation and exceptional items
increased to GBP0.3 million (H1 2018: GBP0.1 million)
-- Adjusted profit per share[1] of 0.04p (H1 2018: adjusted loss of 0.3p)
-- Net cash generated from operating activities of GBP1.3 million (H1 2018: GBP0.2 million)
-- Cash at period end of GBP10.9 million (31 December 2018: GBP9.6 million)
Commercial highlights:
-- Lloyds Pharmacy to launch Dentyl in the UK
-- Increased distribution of Dentyl in Superdrug
-- BB Mints launch into Morrisons
-- Launch of UltraDEX in ASDA grocery chain and Well Pharmacy,
the 3(rd) largest pharmacy chain in the UK, behind Boots and
Lloyds
-- UltraDEX Whitening mouth rinse launched in Superdrug
-- UltraDEX and Dentyl marketing campaigns launched to UK consumers
-- 4 long-term development and manufacturing agreements completed
-- 7 new international partnering agreements signed, including Dentyl line extensions in China
-- VLG's products launched with 11 international partners in H1 2019
Post-period end highlights:
-- Long-term international agreement signed on Dentyl in France
-- Venture Life Group plc was once again included in the 'London
Stock Exchange's 1000 Companies to Inspire Britain 2019' list, for
the fourth consecutive year
[1]Adjusted profit per share is loss after tax excluding
amortisation, exceptional items and share-based payments.
Jerry Randall, Chief Executive Officer of Venture Life,
commented: "In the first half of 2019 we saw revenue growth of 14%
with strong cash generation from operating activities of GBP1.3
million. Despite a challenging trading environment, I am pleased
with the Group's continued commercial progress, particularly the
seven new international partnering agreements signed, which further
expand the Venture Life footprint and reach. These agreements
include increased distribution of the Dentyl range in China as well
as the launch of UltraDEX in ASDA and Well Pharmacy, and the launch
of Dentyl into Lloyds Pharmacy in the UK. Traditionally, we enjoy a
stronger second half and, with a very healthy order book, we expect
that to be the case this year.
Meanwhile, our development and manufacturing business has made
positive headway in the first half of 2019. Revenues grew 10% to
GBP6.6 million with four long-term agreements completed.
As the UK moves closer towards a possible Brexit at the end of
October, we have undertaken significant mitigation planning against
associated risk and remain well-prepared to manage possible
disruptions to the business, including ensuring there is adequate
UK stock and good short-term supply. Despite the challenges,
Venture Life has a strong pipeline ahead and we approach the future
with confidence."
For further information, please contact:
Venture Life Group PLC
Jerry Randall, Chief Executive Officer +44 (0) 1344 578004
Andrew Waters, Chief Financial Officer
Cenkos Securities Ltd (Nomad and Broker) +44 (0) 20 7397 8900
Stephen Keys / Cameron MacRichie (Corporate Finance)
Russell Kerr / Michael Johnson (Sales)
Alma PR +44 (0) 203 405 0208
Helena Bogle/ Hilary Buchanan / Jessica Joynson venturelife@almapr.co.uk
Non-Executive Chair's and Chief Executive Officer's
Statement
Overview
The Group is pleased to report significant progress across all
areas of the business. In the first half of 2019, revenues grew by
14% to GBP9.4 million (H1 2018: GBP8.3 million), with improvements
in EBITDA, profit before tax and profit after tax. Significantly,
there has been strong cash generation from operating activities of
GBP1.3 million (H1 2018: GBP0.2 million).
Revenues for the Venture Life brands business were GBP2.8
million, a 22% increase on the first half of 2018, while revenues
from the Development and Manufacturing business, where we develop
and manufacture products on behalf of third parties, grew 10% to
GBP6.6 million. The growth in the Venture Life brands revenue has
been driven by the impact of full year revenues from the Dentyl
brand, which was acquired by the Group in August 2018. The
increased revenue growth, combined with our current product
offering, has also improved the gross profit margin, which rose to
37.3%, up from 36.0% in the first half of 2018. Increased
investment in Dentyl marketing and higher investment in product
assets for the new medical device regulations offset this increased
gross margin, along with some one-off costs incurred within the
period.
Revenues in the first half were ahead of last year, although
they have been lower than anticipated, primarily due to delayed
orders from two of our Chinese partners, as referenced in our 2018
Full Year Results, which did not generate any revenue during the
period, due to specific market reasons. Our Chinese partner for
Dentyl experienced some product packaging issues in the first half
of 2019 that affected its sell-through, and consequently delayed
new orders from Venture Life. However, we are pleased to report
that these issues have been resolved, sell out in China has
resumed. Additionally, we have signed new agreements with this
partner on Dentyl Toothpaste and Dentyl Fresh Breath Beads
(formally BB Mints), the latter of which will start contributing
revenue in the second half of 2019 and we expect them to continue
to be important contributors to our revenues and profitability
going forward.
Our Chinese partner for Lubatti bought a significant amount of
stock in H1 2018 (GBP0.6 million); whilst there were no orders in
H1 2019, we are beginning to see new orders come through and there
is further commitment to the brand as we move into H2 and beyond.
For some of their key brands, there has been a strategic shift from
off line to online stores exclusively, as footfall declines and the
rise in online sales has an ever greater impact; Lubatti is one of
these brands and is responding well to this new approach.
Even after taking account of these challenges, the Group had
strong cash generation in the first half and, consistent with prior
years, has a strong order book (35% higher than at the same point
last year), meaning that we expect to see second half revenues
significantly higher than those in the first half.
To ensure our product supply to the UK market remains
uninterrupted, we prepared ourselves for a possible Brexit impact
in March 2019, which entailed minor cost. We are preparing for a
similar situation in October 2019, chiefly by ensuring that there
is adequate stock in the UK and that our international
manufacturers are able to continue supply in the short term. In the
longer term, with a major part of the Group's operations based in
Italy and distributing to multiple countries, we believe the
operational impact of Brexit will be limited. Even with the
pressurised sales environment of the UK grocery and high street
retailers, we are pleased our UK brands continue to have robust
sales and hold their position.
Following on from the 2018 fundraise, we continue to review
strategic M&A opportunities. During the period we considered an
opportunity for a potentially transformational transaction for the
Group in terms of size and scope. As shareholders would expect, we
conducted extensive due diligence which, on this occasion, led us
to ultimately decide not to proceed with this transaction, with
there being an exceptional cost of GBP90,000. We will update
shareholders on any future opportunities as appropriate.
Venture Life Brands
The Venture Life brands business revenues for the first half of
2019 were GBP2.8 million, a 22% increase on first half of 2018. Of
this, GBP2.4 million came from UltraDEX and Dentyl in the UK, with
the remainder from international sales.
The two largest Venture Life brands are our oral care products -
UltraDEX and Dentyl, which are mainly sold in the UK.
UK - UltraDEX
UltraDEX revenues for the first half were GBP1.3 million (H1
2018: GBP1.4 million), outperforming the oral market generally,
which, whilst still declining, is expected to do so at slower rate
in 2019. We believe that UltraDEX's out-performance is a result of
loyal customer retention, a premium, well-developed product and our
efforts to obtain new listings for the product. Whilst the wider
market conditions in the UK are expected to remain challenging,
taking these strengths together, we expect to outperform the UK
mouthwash market again in 2019.
Confirmation was received in H1 2019 that UltraDEX (both rinse
and spray) will launch in ASDA from September onwards, in addition
to Well Pharmacy, the third largest pharmacy chain in the UK.
Superdrug has also confirmed they will launch UltraDEX Spray both
on and off-shelf as well as launch UltraDEX Whitening. We believe
these developments further demonstrate the strength of our
brands.
As well as there being many reasons to be satisfied with the
brands performance, this has to be balanced with one de-list of the
brand in one of our smaller grocer distributors and no repeat of
the new product pipe fill seen last year. With the oral care sector
under pressure, it has been difficult to gain new users into the
new products in the consumer setting, and the One-Go and Fresh
Breath Kit will be delisted from two of the larger pharmacy
distributors from July 2019. Management have been quick to identify
better opportunities and the Fresh Breath Kit will instead be
positioned towards the dental channel, as this presents a practical
solution for dental practitioners and patients alike.
It is pleasing to report that Alliance (the wholesale arm of
Walgreens Boots Alliance) will launch UltraDEX Whitening later in
2019. There are also a number of initiatives in place for the
remainder of the year that we anticipate will positively impact H2
2019. The new UltraDEX marketing campaign began towards the end of
the period, with a focus on sampling to drive trial and purchase,
and initiatives for increasing brand awareness via social media.
Further marketing initiatives are planned for H2 2019.
UK - Dentyl
Dentyl revenues were GBP1.1 million in the first half of 2019,
in line with management's expectations. The impact of order
patterns before we acquired the brand acquisition and legacy
delists/one-offs seen in 2018 prior to the acquisition continued to
affect the business in the first half and are expected to continue
throughout 2019. However, we have seen some positive gains in the
UK market; a key pharmacy retailer increased distribution of Dentyl
in H1 2019 and ASDA increased distribution of the Dentyl Fresh
Clove during H1 2019. Additionally, Morrisons launched BB Mints and
AAH, a pharmacy wholesaler, agreed to list both Dentyl and BB Mints
- with the latter paving the way for Dentyl to be launched in
pharmacies. Furthermore, Lloyds pharmacy also launched Dentyl
Smooth Mint and will promote Dentyl Fresh Clove in store also.
International
The International Brands business delivered revenues of GBP0.5m
during the period (H1 2019: GBP0.9m), with the decline mainly due
to the lack of orders from our Chinese partner for Lubatti, as
mentioned.
With the acquisition of Dentyl in August 2018, we also acquired
a new partner in China. As previously announced, there have been
some issues with product packaging, which have now been resolved.
This has however impacted the promotion of Dentyl in China during
H1 2019, and the partner is now rebuilding momentum through a fresh
marketing approach. We expect orders of Dentyl mouthwash to resume
by the end of the year or early next year. We are pleased to report
that we have strengthened our relationship with our key partner and
new agreements were signed on Dentyl Fresh Breath Beads (previously
BB Mints) and Dentyl Toothpaste (to launch in 2020). We expect
further newsflow from this partner as we move into the second half
of the year.
We have a strong order book for H2 2019, with seven new
long-term distribution agreements having been signed in H1 2019,
and one post-period end, which will have a positive impact on H2
2019 and beyond. Our first significant deal on Dentyl was signed in
France with our existing partner La Brosse et Dupont, that will
launch Dentyl into the mass market in Q1 2020. Dentyl is now
present in eight markets and interest remains strong.
Customer Brands
Development and Manufacturing
Our Development and Manufacturing business (Biokosmes) in Italy
services both our own Venture Life brands as well as our customer
brands. We continue to increase output through the plant, which in
turn will utilise the operational leverage we have and deliver
increased profitability to the business.
The revenues for the customer brands business grew 10% to GBP6.6
million in the first half of 2019, with growth coming from existing
partners and new partners. Some of the highlights include:
-- A range of new products developed for Menarini in 2018,
launched in Italy in 2019. These products will begin to be launched
internationally, including Asia, and we are expecting to see
growing revenues from this partner.
-- A new long-term agreement signed with Athena Cosmetics
Corporation in the US, to manufacture two products. First
production will commence from August 2019 and a second
manufacturing order is expected before the end of 2019.
-- A new long-term agreement has been signed with AlfaSigma in
Italy, to develop and manufacture a new product. Development is due
to finish in October 2019, with first production confirmed by the
end of 2019.
-- A manufacturing order to produce a new product to be sold by
Italfarmaco in Chile, with potential to expand to further
international markets.
-- Development and production of a new product for B3Glam, Italy, to be sold in the US.
-- Development has commenced for Logus Pharma in Italy, to produce a Medical Device.
-- A new long-term agreement with Italian pharmaceutical company
Giellepi S.P.A, to develop and manufacture a new Medical Device by
the end of 2019.
In addition, we have developed a new medical device -
DermaRisOn(R) which helps to restore the skin barrier and to
prevent and treat various dermatitis, irritations and skin
inflammations. We are now promoting this product to pharmaceutical
partners in the international business arena.
Our Development and Manufacturing business has built an
excellent reputation within our industry for the development and
manufacture of products for sale globally, validated by the
approvals from regulatory authorities in many markets. This
regulatory expertise allows Venture Life and our customers to
develop new products with the assurance that these can be sold in
the major global markets.
The recent changes in the regulatory rules for medical devices
also represent a significant opportunity for Venture Life. It is
obligatory for customers to undertake a review of their medical
devices in order to ensure they comply with new regulations. We are
undertaking these reviews both for our own products and customers'
products, which will enhance the value for our business in the
future and we are investing heavily in 2019 in order to maximise
this opportunity. We believe that this new compliance will secure
significant future revenues for the Group.
In addition we have invested in the facility's product labeling
capabilities. We have implemented procedures, machinery and
internal skills to be aligned with new UDI (unique device
identification) labeling requirements, to ensure we offer the
highest level of manufacturing expected by customers. The first UDI
operations have been successfully implemented and we expect new
business opportunities to arise from this investment.
Outlook
Whilst the market conditions for retailers in the UK remain
challenging, we believe that Venture Life has the brands and the
expertise to continue to perform strongly. The marketing
initiatives that have been put in place are expected to have an
impact in the second half of the year, which is traditionally our
stronger period, and the Company is well set to capitalise on
opportunities and deliver a positive outcome for the year.
Financial Review
Statement of comprehensive income
Group revenue for the six-month period was GBP9.4 million, an
increase of 14% on the GBP8.3 million reported for the same period
in 2018. The growth included the Dentyl sales following the brand's
acquisition during H2 2018. On a like-for-like basis, Group revenue
was flat in the six-month period compared to the first six months
of 2018.
The Venture Life Brands business, including Dentyl, increased
22%, with revenues for the six-month period of GBP2.8 million
compared to GBP2.3 million reported in H1 2018.
The Development and Manufacturing business continued to
represent the larger proportion of Group revenue. Revenues were
GBP6.6 million in H1 2019 compared to GBP6.0 million for H1 2018
(up 10%) and reflecting different revenue phasing compared to the
prior year. The current manufacturing order book is well ahead of
the same period last year, and the Group expects a stronger H2
2019.
The Group generated gross profit of GBP3.5 million, representing
a gross margin of 37.3%. This compares to a gross margin of 36.0%
for the same period in 2018 on a reported basis. This slight
improvement was due to the counteracting effects of cost increases
for raw materials and other components offset by a higher margin
product mix.
Administrative expenses increased in the period to GBP3.6
million from GBP3.0 million in H1 2018 due to several factors, some
of which were one-off, including our marketing campaign for Dentyl
in the UK. We have also incurred higher R&D expenditures as a
result of changes to the medical device regulations. We will
continue to have this higher level of R&D expenditure in the
second half of the year, however the Group will benefit from this
short-term cost through securing long-term future revenues for the
Group. The Group had some significant changes in the finance
function at the start of 2019, which precipitated some one-off
costs in the first half. Of the total increase in administrative
costs of GBP0.6 million, we estimate more than half to be one-off
in nature in 2019 with the balance representing small
administrative cost growth and investment in Dentyl marketing.
H1 2019 generated a positive adjusted EBITDA of GBP0.7 million,
up 5.5% compared to H1 2018 of GBP0.7 million.
The loss after tax remained slightly ahead of the prior year at
GBP0.4m (H1 2018: loss of GBP0.5 million). Loss per share was 0.45p
(H1 2018: loss of 1.35p).
The Adjusted profit per share was 0.15p compared to an adjusted
loss per share of 0.36p in H1 2018.
Unaudited Interim Condensed Consolidated Statement of
Comprehensive Income
For the six months ended 30 June 2019
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2018
Note 2019 2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Revenue 4.1 9,394 8,260 18,770
Cost of sales (5,891) (5,284) (11,482)
------------ ------------ -------------
Gross profit 3,503 2,977 7,288
Operating expenses (3,217) (2,727) (5,534)
Amortisation of intangible assets 5 (338) (277) (625)
------------ ------------ -------------
Total administrative expenses (3,555) (3,004) (6,159)
Other income 41 27 94
Operating (loss)/profit before
exceptional items (11) - 1,223
------------ ------------ -------------
Exceptional items 6 (90) (54) (172)
Operating (loss)/profit (101) (54) 1,051
------------ ------------ -------------
Finance costs (17) (223) (341)
(Loss)/profit before tax (118) (277) 710
------------ ------------ -------------
Tax 7 (255) (221) (474)
(Loss)/Profit for the period
attributable to the equity shareholders
of the parent (374) (498) 236
------------ ------------ -------------
Other comprehensive (loss)/income
which may be subsequently reclassified
to the income statement 8 - (4) 18
Total comprehensive (loss)/profit
for the period attributable
to equity shareholders of the
parent (374) (502) 254
------------ ------------ -------------
Basic (loss)/profit per share
(pence) attributable to equity
shareholders of the parent 9 (0.45) (1.35) 0.42
Diluted Basic (loss)/profit
per share (pence) attributable
to equity shareholders of the
parent 9 (0.45) (1.35) 0.38
Adjusted profit/(loss) per share 9 0.15 (0.36) 2.06
Diluted Adjusted profit /(loss)
per share 9 0.14 (0.36) 1.83
Unaudited Interim Condensed Consolidated Statement of Financial
Position
As at 30 June 2019
Note 30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
ASSETS GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 11 20,486 16,131 20,542
Property, plant and equipment 4,394 4,811 4,591
24,880 20,942 25,133
------------ ------------ ------------
Current assets
Inventories 4,326 4,327 3,869
Trade and other receivables 6,345 5,170 7,020
Cash and cash equivalents 10,932 1,496 9,623
------------ ------------ ------------
21,603 10,993 20.512
------------ ------------ ------------
TOTAL ASSETS 46,483 31,935 45,645
------------ ------------ ------------
EQUITY & LIABILITIES
Capital and reserves
Share capital 12 251 111 251
Share premium account 12 30,824 13,289 30,824
Merger reserve 12 7,656 7,656 7,656
Convertible bond reserve - 109 -
Foreign currency translation
reserve 252 230 252
Share-based payment reserve 678 586 609
Retained earnings (7,886) (8,224) (7,512)
------------ ------------
Total equity attributable
to equity holders of the
parent 31,775 13,757 32,080
------------ ------------ ------------
Liabilities
Current liabilities
Trade and other payables 5,364 4,794 4,868
Taxation 255 334 -
Interest bearing borrowings 1,136 2,063 1,911
Convertible bond - 1,847 -
Vendor loan notes - 71 -
------------ ------------ ------------
6,755 9,109 6,779
------------ ------------ ------------
Non-current liabilities
Interest bearing borrowings 6,390 6,039 5,157
Vendor loan notes - 1,740 -
Statutory employment provision 994 944 1,062
Deferred tax liability 569 346 567
------------ ------------ ------------
7,953 9,069 6,786
------------ ------------ ------------
Total liabilities 14,708 18,178 13,565
------------ ------------ ------------
TOTAL EQUITY & LIABILITIES 46,483 31,935 45,645
------------ ------------ ------------
Unaudited Interim Condensed Consolidated Statement of Changes in
Equity
As at 30 June 2019
Foreign
Share Convertible currency Share-based
Share premium Merger bond translation payment Retained Total
capital account reserve reserve reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- ------- ------- ----------- ----------- ----------- -------- --------
Balance at 1
January 111 13,289 7,656 109 234 497 (7,711) 14,185
Impact of
adoption of
IFRS9 on opening
balances - - - - - - (37) (37)
Balance at 1
January 2018
(Audited) 111 13,289 7,656 109 234 497 (7,748) 14,148
-------- ------- ------- ----------- ----------- ----------- -------- --------
Loss for the
period - - - - - - (461) (461)
Foreign exchange
for period - - - - (4) - - (4)
-------- ------- ------- ----------- ----------- ----------- -------- --------
Total
comprehensive
income/(expense) - - - - (4) - (498) (502)
-------- ------- ------- ----------- ----------- ----------- -------- --------
Transactions with
shareholders:
Share options
charge - - - - - 89 - 89
Dividends - - - - - - (15) (15)
-------- ------- ------- ----------- ----------- ----------- -------- --------
Balance at 30
June 2018
(Unaudited) 111 13,289 7,656 109 230 586 (8,224) 13,757
-------- ------- ------- ----------- ----------- ----------- -------- --------
Profit for the
period - - - - - - 712 712
Foreign exchange
for period - - - - 22 - - 22
-------- ------- ------- ----------- ----------- ----------- -------- --------
Total
comprehensive
income - - - - 22 - 712 734
-------- ------- ------- ----------- ----------- ----------- -------- --------
Transactions with
shareholders:
Issue of share
capital 140 17,535 - - - - - 17,675
Repayment of Bond - - - (109) - - 14 (95)
Share options
charge - - - - - 23 - 23
Dividend - - - - - - (14) (14)
-------- ------- ------- ----------- ----------- ----------- -------- --------
Balance at 31
December 2018
(Audited) 251 30,824 7,656 - 252 609 (7,512) 32,080
-------- ------- ------- ----------- ----------- ----------- -------- --------
Loss for the
period - - - - - - (374) (374)
Foreign exchange - - - - - - - -
for period
-------- ------- ------- ----------- ----------- ----------- -------- --------
Total
comprehensive
(expense) - - - - - - (374) (374)
-------- ------- ------- ----------- ----------- ----------- -------- --------
Transactions with
shareholders:
Share options
charge - - - - - 69 - 69
Dividends - - - - - - - -
-------- ------- ------- ----------- ----------- ----------- -------- --------
Balance at 30
June 2019
(Unaudited) 251 30,824 7,656 - 252 678 (7,886) 31,775
-------- ------- ------- ----------- ----------- ----------- -------- --------
Unaudited Interim Condensed Consolidated Statement of Cash
Flows
For the six months ended 30 June 2019
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cash flow from operating activities:
(Loss)/profit before tax (119) (277) 710
Finance cost 17 223 341
Operating (loss)/profit (102) (54) 1,051
Adjustments for:
- Depreciation of property, plant
and equipment 352 343 756
- Amortisation of intangible assets 338 277 625
- Finance costs (17) (162) (276)
- Disposal of capitalised development
costs - - 148
- Share-based payment expense 69 89 112
------------- ------------- -------------
Operating cash flow before movements
in working capital 641 493 2,452
Taxation received/(paid) - - (565)
(Increase) in inventories (457) (766) (259)
Decrease/(Increase) in trade and
other receivables 675 (38) (1,868)
Increase in trade and other payables 428 511 478
------------- ------------- -------------
Net cash generated by operating activities 1,286 200 238
------------- ------------- -------------
Cash flow from investing activities:
Acquisition of Dentyl Business - - (4,200)
Purchases of property, plant and
equipment (155) (152) (271)
Development expenditure in respect
of intangible assets (282) (233) (744)
Net cash used by investing activities (437) (385) (5,215)
------------- ------------- -------------
Cash flow from financing activities:
Net proceeds from issuance of ordinary
shares - - 17,675
Repaid Convertible Bond - - (1,900)
Repaid vendor loan note - - (1,790)
Repayment of deferred consideration - - (410)
Drawdown in interest-bearing borrowings 701 586 200
Leasing obligation repayments (242) (251) (528)
Dividends paid - (15) (14)
------------- -------------
Net cash from financing activities 459 320 13,233
------------- ------------- -------------
Net increase in cash and cash equivalents 1,308 135 8,256
Net foreign exchange difference 1 - 6
Cash and cash equivalents at beginning
of period 9,623 1,361 1,361
------------- ------------- -------------
Cash and cash equivalents at end
of period 10,932 1,496 9,623
------------- ------------- -------------
Notes to the Unaudited Interim Condensed Consolidated Financial
Statements for the six months ended 30 June 2019
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 2019 ("the Interim
Financial Statements") were approved and authorised for issue in
accordance with a resolution of the directors on 18 September
2019.
Venture Life Group plc ("the Company") is domiciled and
incorporated in the United Kingdom, and is a public company whose
shares are publicly traded. The Group's principal activities are
the development, manufacture and distribution of healthcare and
dermatology products.
2. Basis of preparation
The Interim Financial Statements have been prepared in
accordance with IAS 34, 'Interim financial reporting' as adopted by
the European Union. The Interim Financial Statements do not include
all the information and disclosures required in the annual
financial statements, and should be read in conjunction with the
Group's Consolidated Financial Statements for the year ended 31
December 2018 ("the 2018 Consolidated Financial Statements") which
have been prepared in accordance with IFRS as adopted by the
European Union.
The financial information contained in the Interim Financial
Statements, which are unaudited, does not constitute statutory
accounts in accordance with the Companies Act 2006. The financial
information for the year ended 31 December 2018 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 2018 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 2019 30 June 2018 2018
Average exchange rate for
the period 1.14 1.136 1.129
Exchange rate at the period
end 1.14 1.129 1.121
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 2018 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.
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 2019
Revenue
External sales 2,786 6,608 - 9,394
Inter-segment sales - 680 (680) -
-------- ------------------- ------------- -------------
Total revenue 2,786 7,288 (680) 9,394
-------- ------------------- ------------- -------------
Results
Operating (loss)/profit
before exceptional items
and excluding central administrative
costs 109 860 - 969
-------- ------------------- ------------- -------------
Development Consolidated
Brands and Manufacturing Eliminations Group
GBP'000 GBP'000 GBP'000 GBP'000
Six months to 30 June 2018
Revenue
External sales 2,279 5,981 - 8,260
Inter-segment sales - 1,357 (1,357) -
-------- ------------------- ------------- -------------
Total revenue 2,279 7,338 (1,357) 8,260
-------- ------------------- ------------- -------------
Results
Operating (loss)/profit
before exceptional items
and excluding central administrative
costs (68) 842 - 774
-------- ------------------- ------------- -------------
Development Consolidated
Brands and Manufacturing Eliminations Group
Year to 31 December 2018 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 6,627 14,887 - 21,514
Inter-segment sales - (2,744) (2,744) (2,744)
-------- ------------------- ------------- -------------
Total revenue 6,627 12,143 (2,744) 18,770
-------- ------------------- ------------- -------------
Results
Operating profit before
exceptional items and excluding
central administrative
costs 404 2,333 - 2,737
-------- ------------------- ------------- -------------
The reconciliation of segmental operating loss to the Group's
operating loss before exceptional items excluding central
administrative costs is as follows:
Six months Six months Year ended
ended
30 June ended 31 December
2019
(Unaudited) 30 June 2018
2018
(Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Operating profit before exceptional
items and excluding central administrative
costs 969 774 2,737
Central administrative costs (980) (774) (1,514)
Exceptional expenses (90) (54) (172)
Operating (loss)/profit (101) (54) 1,051
Net finance cost (17) (223) (341)
------------ ------------ -------------
(Loss)/profit before tax (118) (277) 710
------------ ------------ -------------
5. Amortisation of intangible assets
Six months Six months Year ended
ended
30 June ended 31 December
2019
(Unaudited) 30 June 2018
2018
(Unaudited) (Audited)
Amortisation of: GBP'000 GBP'000 GBP'000
Acquired intangible assets (77) (151) (144)
Patents, trademarks and other intangible
assets (75) (79) (162)
Capitalised development costs (186) (47) (319)
------------ ------------ -------------
(338) (277) (625)
------------ ------------ -------------
6. Exceptional items
Six months Six months Year ended
ended
30 June ended 31 December
2019
(Unaudited) 30 June 2018
2018
(Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Costs incurred in acquisitions (90) (54) (172)
Total exceptional items (90) (54) (172)
------------ ------------ -------------
Exceptional items in the period related to fees incurred in the
exploration of acquisition opportunities.
7. Taxation
The Group calculates the income tax expense for the period using
the tax rate that would be applicable to the expected total annual
earnings. The major components of income tax expense in the Interim
Condensed Statement of Comprehensive Income are as follows:
Six months Six months Year ended
ended ended 31 December
30 June 2019 30 June 2018
2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Current income tax 255 278 531
Deferred income tax expense related
to origination and reversal of
timing differences - (57) (57)
-------------- ------------ -------------
Income tax expense recognised
in statement of comprehensive
income 255 221 474
-------------- ------------ -------------
The current income tax expense is based on the profits of the
Development and Manufacturing business based in Italy. The UK based
businesses on a combined basis are currently loss making and so
there are no UK income tax charges due in respect of trading for
the first six months to 30 June 2019.
The Group has not recognised the deferred tax asset on losses
made by the UK based businesses on a combined basis as although
management are expecting the UK based businesses on a combined
basis to become profitable, it is not currently certain when there
will be sufficient taxable profits against which to offset such
losses.
At the period end the estimated tax losses amounted to
GBP9,888,000 (30 June 2018: GBP9,472,000; 31 December 2018:
GBP9,257,000).
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 which has a functional currency 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 2019 of 1.14
(at 31 December 2018 of 1.121 and at 30 June 2018 of 1.129) and 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 2019 30 June 2018
2018
(Unaudited) (Unaudited) (Audited)
Weighted average number of ordinary
shares in issue 83,711,106 36,837,106 55,715,531
(Loss)/Profit attributable to
equity holders of
the Company (GBP'000) (374) (498) 254
Basic (loss)/profit per share
(pence) (0.45) (1.35) 0.42
Diluted (loss)/profit per share
(pence) (0.45) (1.35) 0.38
Adjusted profit /(loss) per share
(pence) 0.15 (0.36) 2.06
Diluted Adjusted profit /(loss)
per share (pence) 0.14 (0.36) 1.83
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
2018
30 June 2019 30 June 2018 (Audited)
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
Final dividend - 15 14
-------------- ------------- -------------
11. Intangible assets
The intangible assets of the group of GBP20.5 million (31
December 2018: GBP16.1m) include goodwill, development costs,
patents and trademarks and customer relationships.
At the reporting date goodwill generated from the acquisitions
of Biokosmes Srl in March 2014 and Periproducts Limited in March
2016 accounted for GBP13.1 million of the intangible assets of the
Group (GBP13.1 million at 31 December 2018). There were no
movements in goodwill during the period (increase in goodwill of
GBP Nil in the 6 months to June 2018), nor have there been any
impairment of goodwill during this time (6 months to June 2018: GBP
Nil).
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 2018
and Unaudited at 30 June 2019 83,712,106 251 30,824 7,656
---------- -------- -------- --------
There were no movements in share capital or share premium
between 31 December 2018 and 30 June 2019.
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 2019 and the balances with related parties at 30 June 2019
and 31 December 2018:
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
EUR250,935, of which Gianluca Braguti's liability is EUR248,426.
Settlement of this liability will be made when the final
outstanding case is concluded.
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 2019 (EUR230,000 in the six
months to 30 June 2018). At 30 June 2019, the Group owed Braguts'
Real Estate Srl EUR297,000 (EUR297,000 at 31 December 2018).
14. Financial instruments
Set out below is an overview of financial instruments held by
the Group as at:
30 June 2019 30 June 2018 31 December 2018
----------------------------- -----------------------------
Loans and Total financial Loans and Total financial Loans and Total financial
receivables assets receivables assets receivables assets
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets:
Trade and other
receivables
(a) 6,345 6,345 5,055 5,055 6,868 6,868
Cash and cash
equivalents 10,932 10,932 1,496 1,496 9,623 9,623
Total 17,277 17,277 6,551 6,551 16,491 16,491
------------ --------------- ------------ --------------- ------------ ---------------
30 June 2019 30 June 2018 31 December 2018
--------------------------- --------------------------- ---------------------------
Liabilities Total Liabilities Total Liabilities Total
(amortised financial (amortised financial (amortised financial
cost) liabilities cost) liabilities cost) liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial
liabilities:
Trade and other
payables (b) 5,636 5,636 4,794 4,794 5,107 5,107
Leasing
obligations 2,984 2,984 3,470 3,470 3,226 3,226
Convertible
bond - - 1,847 1,847 - -
Vendor loan
notes - - 1,811 1,811 - -
Interest
bearing
debt 4,543 4,543 4,632 4,632 3,842 3,842
----------- -------------- ----------- -------------- ----------- --------------
Total 13,162 13,162 16,554 16,554 12,175 12,175
----------- -------------- ----------- -------------- ----------- --------------
(a) Trade and other receivables excludes prepayments
(b) Trade and other payables excludes deferred revenue
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR DGGDCSGBBGCC
(END) Dow Jones Newswires
September 20, 2019 02:00 ET (06:00 GMT)
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