TIDMVLG
RNS Number : 6900L
Venture Life Group PLC
17 May 2022
17 May 2022
VENTURE LIFE GROUP PLC
("Venture Life", "VLG" or the "Group")
Final Results
Venture Life (AIM: VLG), a leader in developing, manufacturing
and commercialising products for the international self-care
market, announces its audited results for the year ended 31
December 2021.
Financial Highlights
-- Revenues + 9% to GBP32.8 million (2020: GBP30.1 million) or +11% on a constant currency basis
-- Gross margin GBP13.0 million (2020: GBP12.8 million), gross
margin percentage 39.6% (2020: 42.7%)
-- Adjusted EBITDA[1] +8% to GBP6.6million (2020: GBP6.1 million)
-- H2 revenues +36% to GBP18.9 million compared to H1 revenues
-- H2 adjusted EBITDA1 147% to GBP4.7 million compared to H1 adjusted EBITDA1
-- Profit before tax, amortisation and exceptional items GBP4.6 million (2020: GBP4.4 million)
-- Profit after tax stayed flat year on year at GBP2.4 million (2020: GBP2.4 million)
-- Adjusted earnings per share[2] 4.94p (2020: 4.46p)
-- Operating cash flow before movements in working capital GBP5.1 million (2020: GBP6.7 million)
-- Cash at 31 December 2021 GBP5.2 million (2020: GBP42.1 million)
Commercial Highlights
Group
-- Two immediately earnings enhancing acquisitions, now
integrated 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
-- Extended agreement with Bayer Consumer Care AG for BV gel and
BV pessary, a range of women's intimate healthcare products
-- 11 new long-term distributions agreements signed
-- 18 in-market product launches through our international partners
-- 7 approved product registrations, with 12 on-going
Acquisition of BBI Healthcare Limited, 4 June 2021:
-- Three new brands and two new therapy areas: women's health and diabetes management
-- Significant partner acquired in women's health - Bayer Consumer Care AG ('Bayer')
-- Immediate cost synergies realised
-- Significant excess manufacturing capacity in Sweden
-- Profitable, with good growth opportunities
Acquisition of Helsinn Integrative Care Portfolio, 6 August
2021
-- 3 new brands and new therapy area of oncology support
-- Profitable portfolio, with good growth opportunities
-- 33 newly acquired partners, spanning 56 countries
-- Geographic extension opportunities
Post period end
-- New exclusive Chinese distributor appointed for oral care
brands, Dentyl and UltraDEX; this 5-year agreement commenced 6(th)
January 2022 and runs until 2027
-- Clinical trial peer-reviewed and published by Cardiff
University in the Journal of Lipid Research, concluding that the
CPC-based mouthwash tested showed the inactivation of SARS-CoV-2 in
the saliva for up to 1 hour
-- Net debt reduction arising from cash collection following strong Q4 revenue
-- Despite a challenging first quarter, we benefit from a strong
order book and the growth being achieved from recent
acquisitions
Jerry Randall, CEO of Venture Life Group plc commented: "2021
saw a year of significant growth for the Group, despite the
challenges we faced. We are delighted to have completed two
immediately earnings enhancing acquisitions that are now both
integrated into the Group and performing well, and both showing
growth over 2020.
Whilst we have seen a material impact on the Group's results
from the acquisitions, for the part of the year we owned them, 2022
will see the full year effect of these. The strategy of raising the
cash in advance has, I believe, proved to be a good one, enabling
us to access and complete both of these acquisitions within just 8
months of raising the cash; I thank each and every one of our
shareholders who supported us in that fund raise. The GBP50 million
RCF facility we also have in hand now will enable us to continue
such progress in a non-dilutive manner in the near term.
The issues with supply chain are well documented across the
globe and we were impacted by these significantly in 2021, eroding
margin and causing continual headaches for us ensuring certainty of
supply for raw materials and packaging. These supply chain
challenges persist, and we have instigated customer price rises and
other measures going forward to mitigate these where possible. I
must highly commend our purchasing and logistics teams, who have
been battling this all year, and who continue to do so, and who
have worked tirelessly to minimise cost increases and manage the
extended lead times we are seeing.
We continued to see the impact of COVID on our customers, in
particular in the first half of 2021, but we are now beginning to
see the green shoots of recovery with these customers. I am very
pleased that we have been able to appoint a new distributor for our
China business, Samarkand Global plc, and we look forward to
returning the Chinese market to a significant contributor to the
Group going forward.
2021 has been a transformational year for the Group,
significantly increasing its size and operation, now having a
second manufacturing facility, based in Sweden. I welcome all the
people from BBI that joined the Group, and who have already
contributed significantly to the business in our hands. I welcome
Danny Wells as our new CFO, who took up post in December after
joining as part of the BBI acquisition. Danny has already made a
positive impact on the business. I also welcome Paul McGreevy as
our new Chair, as announced today, who will bring his wealth of
experience to our Board. In turn, I would like to extend our deep
thanks to Dr Lynn Drummond, who steps down as Chair today, for all
that she has done for the Company since joining our Board in 2013,
prior to our flotation on AIM, and in particular for her wise
counsel as we have grown the business to where it is today. I offer
my thanks again to every single member of the Venture Life Group,
for their hard work and dedication through 2021, to keep the
business growing and developing, and delivering our customers'
requirements. We enter 2022 with an order book comfortably ahead of
that at the same time last year, on a like for like basis, (taking
account of the acquired businesses), which gives us confidence for
the year ahead in how our customers will be performing. The supply
chain issues have continued into 2022, and with the current
situation are likely to persisit through this year, but I am
confident our team is well placed to manage the ever changing
situation to the best of its ability."
For further information, please contact:
Venture Life Group PLC
+44 (0) 1344 578004
Jerry Randall, Chief Executive Officer
Daniel Wells, Chief Financial Officer
Cenkos Securities plc (Nomad and Joint Broker) +44 (0) 20 7397
8900
Stephen Keys / Camilla Hume (Corporate Finance)
Russell Kerr / Michael Johnson (Sales)
Singer Capital Markets (Joint Broker)
Shaun Dobson / Alaina Wong (Corporate Finance) +44 (0) 20
74963000
Jonathan Dighe (Sales)
About Venture Life ( www.venture-life.com )
Venture Life is an international consumer self-care company
focused on developing, manufacturingand 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 Activ 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.
Chair's Statement
2021 has seen a year of continued progress in the Venture Life
Group, despite the impact of many COVID related factors. Whilst we
experienced our customers feeling the impact of COVID, affecting
revenues and product mix, and input costs rising significantly, we
still saw growth in revenues and adjusted EBITDA. Input costs and
product mix negatively affected gross margin, but the two
acquisitions we made during the year carried higher gross margins
which went some way to mitigate these negative gross margin impacts
of input costs.
The Group proved to be resilient in these difficult times and
continued to build its presence with two immediately earnings
enhancing acquisitions in the year. I must give my congratulations
and thanks to the whole team who both acquired and integrated these
businesses in the year yet at the same time, ensuring business
continuity - a substantial achievement against the backdrop of the
continuing challenges of COVID.
BBI Healthcare Limited (BBI) was acquired in June 2021 and
brought an immediately earnings enhancing business and three
exciting new brands. At the time of raising the funds in late 2020
from shareholders, this opportunity was not even in play for us,
but within 6 months of closing the fund raise we had executed and
won a tough competitive auction process for this valued asset. With
exciting growing brands, only at the start of their geographic
exploitation, and in two of the most interesting self-care
categories (women's health and diabetes), I am certain this will
prove to be a very valuable acquisition for the Group.
The Helsinn Integrative Care Portfolio (HICP) that we acquired
in August also brought some interesting brands ready for further
exploitation. This immediately earnings enhancing opportunistic
acquisition has brought us into another interesting and underserved
self-care category, that of oncology support where products will be
acquired primarily by the patient to deal with the very difficult
side effects of oncology treatment through pharmacies and grocery
multiples..
These acquisitions have now been successfully integrated into
the Group, and we have already seen the benefit of expected
synergies and the higher gross margins within the Group. Related to
the BBIH acquisition, the extremely high-quality manufacturing
operations at the Gnesta site in Sweden are now under the umbrella
of our technical team in Italy, working to deliver synergies
between and harmonisation of the two facilities. During the year,
we also put in place a GBP50 million revolving credit facility with
our main banker, Santander Group, alongside Silicon Valley Bank.
This facility will enable us to continue with our acquisition
strategy without recourse to additional equity from shareholders
and was largely undeployed as at the end of the financial year
(GBP9.0 million funds drawn). With projects under review, we are
confident that this will allow us to add more immediately earnings
enhancing brands to our business in 2022 and beyond, as there
continues to be interesting opportunities available.
During the first year of the pandemic (2020), the Group
benefitted from some significant revenue items that did not repeat
in 2021. The initiation of the hand sanitiser gel (HSG)
manufacture, whilst helping the Lombardy health authorities as
COVID hit hard in 2020, also provided significant one-off
opportunistic revenues and margin to the Group, showing how the
business can be reactive as well as proactive. Our Chinese partner
performed very well at the back end of 2019 and early in 2020, but
was impacted by the pandemic to such an extent, that in late
December 2020 we had to take the step to terminate the relationship
with them and appoint a new partner for China, Samarkand Global
plc. Our previous partner in China proved that our products sell
very well in China when marketed properly, and we are confident our
new partner will succeed in China with our oral care brands. As a
UK based business with operations in China, our interactions with
them are much more straightforward than dealing directly with a
Chinese partner.
Our Venture Life Brands (VLG Brands) continued to be resilient
in 2021, and in particular oral care brands performing well in the
UK market in relation to their peers in the recovery from the COVID
pandemic. The new brands recently acquired are also performing
extremely well and already our team have increased the presence of
these products through extending existing partnerships and striking
new partner distribution agreements. Also, our Customer Brands
revenues remained resilient during the period: weaker performance
from some of our partners being negatively affected by COVID was
mitigated by new business from both new and existing partners. The
challenges of operating manufacturing facilities under COVID
lockdowns have been managed superbly by the teams at Biokosmes and
Gnesta, and I give particular thanks to the teams there which
ensured we had no interruption to production at any time.
The challenges presented in 2021 by COVID caused us to deliver
weaker performance than we had expected to at the outset. Despite
the weak first half of the year, we generated revenues in the
second half of the year of GBP18.9 million (36% increase over H1)
and adjusted EBITDA of GBP4.7 million (147% increase over H1),
reflecting the positive impact of the acquisitions on our trading
and showing the scale of the business going forward into 2022,
where we will see a full year impact of these acquisitions. We
ended the year with full year revenue and adjusted EBITDA growth of
9% and 8% respectively, a much broader brand portfolio, and
increased manufacturing operations and capacity. On a proforma
basis (assuming BBI and HICP had been part of the business for the
whole year) our revenues would have been GBP37.8 million. Looking
into 2022, we expect to see continued organic growth within the
portfolio, a significant part of which will be coming from our 2021
acquisitions, which we also expect to supplement with immediately
earnings enhancing acquisitions, giving the Board every confidence
for the year ahead.
I would like to take this opportunity to thank our fantastic
team at Venture Life, who have again proven to be diligent,
resilient, hardworking and creative in the face of challenging
times. It has been a pleasure to welcome the BBI team into the
Group, and they have already made a significant contribution to the
business, including Danny Wells, who is now our new Chief Financial
Officer. The Board offers its thanks to Andrew Waters, our outgoing
CFO, for his time at Venture Life, and wish him every success for
the future.
Finally, I would like thank the shareholders who have continued
to support us through this challenging year, and we look forward to
sharing the progress of 2022 with you all as we move through this
year.
Dr Lynn Drummond
Non-executive Chair
16 May 2022
Chief Executive Officer's Statement
Operating review
This year saw significant growth in the Group as we made two
immediately earnings enhancing acquisitions in the summer, fully
utilising the cash we raised from shareholders within an 8-month
timeframe. The target of both acquisitions was to bring in
interesting, complementary brands and products that could
successfully leverage the operational capacity and distribution
capability of the Group. The integration of these two businesses
has proceeded to plan in the second half of the year, with the
products and the BBI team/operations now fully integrated within
the Group. These two acquisitions have contributed GBP8.4 million
of partial year revenues into the total Group revenues of GBP32.8
million for 2021, and will contribute a full year of revenues in
2022. The team has already locked in the anticipated cost synergies
and made significant progress in the further commercialisation of
the brands.
Against this strong acquisitive growth, the Group saw a
reduction in legacy revenues, substantially driven by COVID;
despite this, the Group delivered 9% growth in revenues to GBP32.8
million (2020: GBP30.1 million) in the year, +11% on a constant
currency basis. The reductions in revenue came from a reduction in
sales to partners who were impacted by COVID (either through lower
sell out in 2021 or due to running down higher than normal
inventory levels at the start of 2021), and from a reduced level of
hand sanitiser gel (HSG) sales, which had given us a significant
one-off benefit in 2020.
Due to the acquisition of BBI and HICP, the second half of the
year saw revenues from VLG brands exceed 50% of the overall revenue
of the Group for the first time. Full year revenues from VLG Brands
were GBP17.9 million (2020: GBP14.9 million), and from Customer
Brands GBP14.8 million (2020: GBP15.2 million). Revenues from VLG
Brands represented 66% of overall revenues in the second half of
2021 (vs. 42% in the second half of 2020), reflecting the impact of
the acquisitions, delivering an overall share of 54% for the whole
of 2021, compared to 49% in 2020, which included a a significant
amount for HSG. With organic growth on the higher margin VLG Brands
expected to exceed that of our Customer Brands, coupled with
continued selective brand acquisitions, we would expect the higher
margin VLG Brand revenues to continue to increase as a percentage
of overall revenues, which would precipitate a continued
improvement in the gross margin going forward.
A large contributor of the reduction in VLG Brand revenues was
our Chinese partner, which covers both Dentyl and UltraDEX. Sales
to this partner totalled GBP0.3 million in 2021, compared to GBP2.4
million in 2020. Due to the underperformance seen in 2021 and their
failure to recover, we terminated with this agreement late December
2021 and signed a new agreement with Samarkand Global plc early
January 2022.
Gross margin for the year of GBP13.0 million was at a very
similar level to the previous year (2020: GBP12.8 million). The
gross margin percentage was lower at 39.6% (2020: 42.7%) due to a
combination of factors:
- Increased supply prices
- Increased inbound transportation costs
- Non-repeat of high margin Hand Sanitizer Gel (HSG)
- Product mix
The overall impact of these factors contributed a reduction of
6.1% in the gross margin for the Group, compared to that seen in
2020. Increased supply prices represented 1.2% of the reduction,
increased inbound transport costs caused a reduction of 0.4%,
non-repeated highly profitable HSG sales attributed 3.5% and the
balance coming from other product mix sales.
The increased supply prices and transport costs have been widely
reported globally and have affected our business, as with many. We
experienced these issues in 2021 and they are persisting in 2022.
There are challenges around price, availability and delivery lead
times of raw materials and packaging, that our team have to manage
daily. Significant increased energy prices affect operational costs
and supplier component and material costs, with inflationary
pressure and logistic challenges. The Group is using mitigation
strategies, passing on price increases where possible, securing
continuity of supply and fixing prices within the supply base as
well as sourcing alternative suppliers. The recent Ukraine crisis
has also affected supplies of some raw materials from those
impacted territories directly and in secondary derivatives.
The previous financial year benefitted from GBP3.6 million of
HSG sales, compared to only GBP0.2 million in 2021. These revenues
in 2020 were at a high margin as it was completely demand driven;
we witnessed very significant immediate demand as there was a
significant shortage of supply. The gross margin earned on these
revenues in 2020 amounted to GBP2.1 million (representing 58%)
which included the positive impact on other products arising from
increased throughput. Without the revenue and margin from HSG in
2020, the Group gross margin for 2020 would have been 40.4%.
In the second half of the year however, the impact of the
acquired businesses and growth in revenues lifted gross margin to
42.4%, being more representative of the business going forward. The
overall 3.1% reduction in gross margin to 39.6% (2020: 42.7%)
reflects the adverse impact of supply chain pressures and product
mix as outlined (6.1%) offset by the positive impact of M&A
activity (3.0%).
The Group generated adjusted EBITDA of GBP6.6 million for the
year (2020: GBP6.1 million), an increase of 8% over the previous
year. Despite higher revenues, the challenges on gross margin
percentage meant minimal increase in the gross margin earned in the
year compared to 2020, and tight cost control has helped to deliver
adjusted EBITDA margin of 20%. It is expected that this percentage
margin will increase in 2022 and beyond as we see the full year
effect of the BBI & HHIC acquisitions alongside organic
growth.
Acquisitions
During the year, the Group made two immediately earnings
enhancing acquisitions, utilising the funds raised (GBP34.1
million) from shareholders in December 2020, which have positively
impacted the results of the Group in 2022.
BBI Healthcare Limited
BBI was acquired for GBP35 million (with a possible additional
deferred payment of GBP1 million), on 4(th) June 2021.
Headquartered in the UK, the business also had its own dedicated
manufacturing facility in Gnesta, Sweden, which manufactures its
Balance Activ (Ò) product for bacterial vaginosis. The acquisition
was immediately earnings enhancing for the Group, and brought
strong brands, products and customers in the areas of women's
intimate health and diabetes support. In the year ended 31(st)
December 2020, the business produced revenues of GBP10.3 million
and adjusted EBITDA of GBP2.5 million. The business experienced
strong growth in 2020 and this continued in 2021 and is set to
continue into 2022.
In the area of women's intimate health, the key brand of the
business is Balance Activ for the treatment of bacterial vaginosis
- the Balance Activ brand is sold in the UK, The Netherlands and
Austria only, mainly in the gel form, and is the number one brand
on Amazon for the treatment of bacterial vaginosis. The product is
also sold under partner brands in some international territories,
the most notable of which is through the partner Bayer Consumer
Care AG. This agreement covers both the gel and pessary format,
spans 51 countries and extends until 2030.
The acquisition also brought two brands in the area of diabetes
support. Glucogel is a thick gel, sold mainly under prescription,
to support diabetics when they experience low blood sugar. This
product has been on the market almost 40 years and is sold only in
the UK to date. Lift is a more consumer facing product to again
provide glucose supplementation. Sold as chewable tablets or a
juice shot, this provides a measured dose of glucose to support
diabetic patients with low blood sugar. The product was launched in
2008 and is sold mainly in the UK/Ireland and through some smaller
distributors across Europe.
Helsinn Integrative Care Portfolio (HICP)
The HICP was acquired on 6th August 2021 for a total price of
CHF5.0 million (GBP4.8 million), 50% was paid on 6(th) August 2021,
and the balance is due on 6(th) August 2022. There are no
performance criteria attached to the second payment, it is merely
deferred for 12 months after completion. In the year ended 31(st)
December 2020, the portfolio produced revenues of CHF3.6 million
(GBP2.9 million). The trading for 2020 was impacted by Covid and
the reduction of cancer treatments being administered, but there is
significant potential for growth from this point, which we saw in
2021.
The portfolio comprised three on-market products in the area of
oncology support:
- 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 34 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 22
countries.
Venture Life Group (VLG) Brands
Oral Care - UltraDEX and Dentyl
Revenues for UltraDEX fell 20% to GBP2.5 million (2020: GBP3.1
million) throughout 2021, which was mainly due to the
underperformance in China and the continuation of the pandemic. The
decline was not as steep in the UK, with a 7%/GBP0.2 million
decline year-on-year. Across all retailers in the UK, UltraDEX saw
a 7% growth year-on-year in EPOS sell out, despite our revenues
into retailers being in decline by 7%, due to high stock levels in
retailers at the end of 2020.
Despite the oral care market declining in the UK by 3.4%/GBP5
million[3], UltraDEX improved its position from number 7 in the
total oral care market to number 6, ahead of AquaFresh. 2022,
UltraDEX also became the market leader within the halitosis
sub-category, taking 4% market share from its nearest rival CB12
(Mylan owned). As we move into 2022, we feel confident the brand
has stabilised and we should see signs of recovery as we move
through 2022.
Revenues for Dentyl in the UK were slightly ahead of previous
year at GBP2.5 million (2020: GBP2.4 million). Dentyl is now the
number 4 in the UK market, with only Listerine, Colgate and
Corsodyl ahead of it. Due to the increased costs affecting this
brand in particular throughout H2 2021, a cost price increase was
introduced and became effective January 1(st) January 2022. This
will help to mitigate the escalating costs seen in 2021.
Including China, overall revenues for Dentyl fell by 33% to
GBP2.8 million (2020: GBP4.2 million), our Chinese partner being
responsible for the vast majority of this reduction; the
underperformance of our Chinese partner has been well-documented,
and this partner was terminated in December 2021. In January 2022,
we appointed a new partner - Samarkand Global plc.
Cardiff University completed their clinical study on Dentyl and
it was published as a pre-print on the Medrxiv website; we
announced this to the market on 21(st) February 2022. Further to
this, on 19(th) April 2022, it was finally independently
peer-reviewed and published in the Journal of Lipid Research,
concluding that the CPC based mouthwash tested showed the
inactivation of SARS-CoV-2 in the saliva for up to 1 hour.
Women's Intimate Health - Balance Activ
On a proforma basis (that is considering the full year revenues
for 2021, not just those since acquisition), revenues for Balance
Activ in the UK grew by 33% to GBP2.2 million (2020: GBP1.7
million), which was largely driven by Amazon sales. The UK Women's
Intimate Health market saw a +2% growth with a retail market value
of GBP45.6 million in 2021 vs. 2020[4]. Of this, the BV
sub-category is worth GBP5.4 million and Balance Activ currently
holds 35% market share of this sub-category.
On a global basis, the product/brand grew by 0.8% to GBP5.1
million (2020: GBP5.1 million). Outside the UK, the product is
partnered in 64 countries, although only sold currently in 34
countries, and its largest partner is Bayer Consumer Care AG. In
July 2021, the BV gel received registration approval in Brazil from
ANVISA, its regulatory body and the product will launch in H2 2022.
In addition, there were 11 partner launches of the product in 2021,
with 8 more expected in Q1 2022.
We believe there are growth opportunities not only within the UK
under the Balance Activ brand, but also geographic expansion
opportunities across key markets globally, and the team remain
focussed on these opportunities moving into 2022.
Women's Health - Fertility Gel
A newly developed Fertility Gel was acquired as part of BBI
Healthcare and this gel launched in the UK market in Q3 2021 under
our partners' brand. Launch into other markets such as France and
Germany will be dependent on sales progression and success seen in
the UK.
Diabetes Management - Glucogel and Lift
We acquired two brands within the diabetic management category -
Glucogel and Lift. On a proforma basis, revenue for both brands
together grew by 19% to GBP5.2 million (2020: GBP4.3 million),
which was largely driven by Lift. Available in UK pharmacies,
health and beauty and grocery channels as well as online, this
provides a convenient solution for those patients experiencing
hypoglycaemia. There are almost 5 million diabetic patients in the
UK[5], with 850,000 people currently living with undiagnosed type 2
diabetes, and this figure is only set to grow.
In addition, Glucogel is currently the number 1 prescribed
product for treating hypoglycaemia and is positioned towards more
serious attacks. Revenues grew by 6% in 2021 on a proforma basis to
GBP2.1 million, and this business is expected to remain steady as
we move into 2022.
Oncology Support - Gelclair and Pomi-T
As part of the HICP acquisition, we now have 2 key brands that
sit within oncology support - Gelclair and Pomi-T. On a proforma
basis, Gelclair revenues grew by 27% to GBP1.4 million (2020:
GBP1.1 million) and this growth was helped by the recovery of some
cancer treatments as COVID receded somewhat in 2021. It is
partnered in 34 markets globally, with some key markets to be
targeted, e.g., USA, Brazil and Canada, as well as key EU markets
in 2022. Q4 2021 saw the launch of Gelclair in Japan through our
partner Terumo.
On a proforma basis, Pomi-T revenues stayed flat at GBP1.4
million (2020: GBP1.4 million). In 2021, with only active partners
in 5 markets, we see an opportunity for geographic expansion. In Q4
2021, a new long-term distribution agreement was concluded for
Pomi-T in Germany, with other discussions underway.
Nail & Foot Care Portfolio
Revenues for the full year 2021 were GBP2.5 million (2020:
GBP2.5 million), so consistent with the prior year on a constant
currency basis. This part of the business was impacted by lockdowns
early in 2021 and then again in December 2021, as The Netherlands
re-entered lockdown. In 2021, the manufacturing transfer of all the
ex-PharmaSource liquid products to our own manufacturing facility
completed, which has meant greater control over the whole
purchasing and manufacturing process. We saw a number of new
launches in 2021, however, these were offset by a slightly weaker
performance in Europe with some key partners, mainly down due to
COVID.
Across the whole VLG brands portfolio, there were 11 new,
long-term distribution agreements signed in 2021 (including those
of Bayer Consumer Care AG previously announced), some of which
impacted in 2021, and some that will impact positively in 2022. We
saw 18 in-market product launches by our partners in various
countries throughout 2021, with 7 approved registrations and a
further 12 on-going registrations at present.
Customer Brands
Revenues from Customer Brands slightly reduced by 2.6% to
GBP14.8 million (2020: GBP15.2 million) due to the reclassification
of revenues on the HICP assets post-acquisition from Customer
Brands to VLG Brands. Aside from this factor, the customer revenues
remained flat year-on-year. We saw revenue growth from some new and
existing partners, but also some revenue reductions from some
partners underperforming for us in the year, either as a result of
reduced sell out or due to de-stocking higher than normal inventory
levels at the start of the year. In 2020, we saw partners generally
continuing to buy from us at the same level as in previous years,
as despite lower sell out (due to lockdowns), they wanted to ensure
they would not run out of inventory due to supply chain
interruptions that were seen in the first COVID pandemic. This left
a number of partners with higher-than-normal inventory levels at
the end of 2020, and given the on-going lockdowns seen at the start
of 2021 across Europe in particular, it meant some of our partners
did not purchase as much from us in 2021.
Operating Leverage and Capacity
84% of the revenues delivered by the Group are manufactured at
our own development and manufacturing facilities that we have
within the Group. The newly acquired Lift and Glucogel products
(from the BBI acquisition) and a handful of smaller products are
currently made externally. Our expertise as a Group is in the
manufacture of liquids, creams and gels, from 3ml to 1 litre
capacity. One of the Group's very valuable areas of expertise is in
the manufacture of the medical devices, a regulatory category below
that of drugs - it is, however, still subject to rigorous
regulation. In addition we also manufacture products registered as
a cosmetic. The facilities have been frequently inspected by
regulatory authorities internationally , and products made at the
Group's facilities are approved to ship into over 90 countries
worldwide.
Our Italian facility, Biokosmes Srl, based in Bosisio Parini,
north of Milan, develops and manufactures most of the internally
manufactured products, and our second site at Gnesta, Sweden, which
was part of the BBI acquisition, manufactures the bacterial
vaginosis gel. Both of these facilities are certified to ISO 13485
for medical devices, a key part of the Group's expertise. We
invested significantly during 2020 to materially increase the
manufacturing capacity at Biokosmes, and this increased our
approximate capacity for production to 55 million units per annum -
in 2021, we manufactured 25 million units, leaving 55% spare
capacity.
At the Gnesta site, we produced 13 million tubes of BV out of a
total capacity of 75 million tubes. There is significant capacity
available to utilise the highly automated, efficient equipment at
Gnesta for manufacturing other products in the same format (long
neck tubes), and we are currently evaluating with a number of
potential new customers for this.
The Group now has significant capacity for growth, which
accommodates both organic and acquired growth. Beyond this, the
Group has the opportunity to expand production further through:
- increasing the footprint of the current factory in Italy and
leasing further nearby buildings to continue capacity expansion if
required, beyond the current 55 million pieces per annum, and
- utilising the significant free space at the Gnesta plant to
provide additional capacity for manufacturing liquid products, on
top of the 75 million capacity of the existing equipment.
Increasing the volumes through the facilities will generate
additional revenues, which is not expected to require significant
additional indirect costs to produce, and so the majority of
incremental gross margin generated would fall through to the bottom
line.
Revolving Credit Facility (RCF)
In August 2021, the Group entered into a RCF with its main bank,
Santander Group, alongside Silicon Valley Bank. This facility has
an initial approval for GBP30 million draw, with an accordion
facility for a further GBP20 million subject to the banks'
ratification. The facility runs for an initial term of three years
and attracts interest of 2.5% above SONIA. There are no capital
repayments required during the term. The facility drawdown is
limited to a gross amount 2.5 times the trailing adjusted EBITDA of
the Group (also adjusted for IFRS16 charges), plus 2.5 times the
trailing adjusted EBITDA of any target we are using the facility to
acquire. With net GBP9.0 million drawn at 31(st) December 2021 and
an outstanding liability of GBP8.5 million, which has been used to
pay down all other debt in the Group (Italian debt) and the first
payment for HICP, we expect this facility to reduce as we go
forward through cash generation, before any further
acquisitions.
We put the facility in place to utilise the cash generative
nature of the business to help fund future acquisitions without the
dilutive effect of an equity raise. The Group is actively reviewing
a number of immediately earnings enhancing acquisitions that it
could make utilising this facility.
Focus on Sustainability
As a business that has already undertaken many initiatives to
improve its sustainability and reduce the impact of its operations
on the environment, during the year we formed an ESG Committee to
focus and develop our drive towards increased sustainability. The
committee includes members from the Group Board and employees from
the business, and will engage with all key stakeholders in this
process - our aim is to become a trusted, responsible and
sustainable business.
Our 5 step approach over the next twelve months will be:
-- Form and develop our ESG leadership team from a diverse and
accurate representation of our stakeholders.
-- Consult with stakeholders to understand and align
expectations in being a trusted, responsible and sustainable
business.
-- Following the stakeholder consultation, identify our
pritority goals and ensure alignment to the SDGs.
-- Creating our KPIs, their baseline and measurement methods against which to track progress.
-- Regular reporting and transparency of progress to all our stakeholders.
As outlined within our ESG strategy, as a business we already
undertake many initiatives towards our goal to become a trusted,
responsible and sustainable business, and we look forward to
engaging with and informing all our stakeholders on our progress
against this objective in the future.
Summary & Outlook
As already highlighted, 2021 presented challenges to the Group,
due to the impact of Covid. This pandemic impacted the performance
of certain partners as well as our own customers, and caused severe
disruption to supply chain and logistics, in terms of both time and
money. The whole team has worked tirelessly to minimise the impact
of these on the business during the year. The two earnings
enhancing acquisitions in the Summer contributed significantly to
the second half revenues, which were 36% ahead of the first half
revenues, and which had a commensurate impact on gross margin and
adjusted EBITDA in the second half, with adjusted EBITDA being 147%
higher in the second half compared to the first half. The
operational leverage of the Group and the great concentration of
higher margin VLG Brands in the Group have contributed to higher
gross margins in the second half, to mitigate some of the impact on
gross margin seen through the year.
We have seen an encouraging start to 2022, with the current
order book comfortably ahead of the same time last year on a like
for like basis, including the acquired businesses. This reflects
growth in the underlying business plus the effect of customers
supporting us by ordering further forward to help manage supply
chain disruption and secure stock, which gives us greater
visibility of revenues. Good commercial progress has already been
made in 2022 to date, including the appointment of our new partner
for the Chinese market, and customer price increases being put in
place to further mitigate the cost increases seen in 2021. The
supply chain issues experienced in 2021 are expected to continue
for some time for all businesses, and we have put in place
strategies and procedures with both our suppliers and customers to
address these. However, the current level of supply chain
disruption is unprecedented and cannot be underestimated; our
supply chain team is reacting daily to its changes. I would like to
thank the whole team at Venture Life for all their hard work and
dedication through this very difficult year, and also those
shareholders who continued to support us despite the challenges we
faced.
Having made some very good immediately earnings enhancing
acquisitions and worked hard to mitigate difficult trading factors
seen in 2021, we have a much stronger consolidated business going
into 2022, evidenced by the stronger order book, with a much higher
proportion of high margin VLG Brands, and the significantly
increased revenues and profit in the second half. This growth in
size, along with plenty of internal manufacturing capacity
available, and coupled with our partners' growing confidence coming
out of Covid, gives us a solid foundation for future organic
growth. The operational priorites for the Group in 2022 are:
-- To invest in and drive organic growth of our VLG Brands, with
our partners and through innovation;
-- To continue to manage the supply chain disruption to minimise impact on our customers and our profitability;
-- To develop and progress our ESG agenda towards becoming a
more trusted, responsible and sustainable business; and
-- To consider opportunities for selective earnings enhancing
acquisitions, utilising the substantially undeployed RCF.
Jerry Randall
Chief Executive Officer
16 May 2022
Financial Review
Chief Financial Officer's Statement
The Group delivered another year of revenue and EBITDA growth as
it continued to execute its Buy and Build strategy through the
acquisition of the BBI Healthcare business and the HICP assets plus
growth in the core business (excluding sales of hand sanitiser gel
and sales to China). The impact of the acquisitions has seen
revenues from higher margin generating VLG Brands exceed 50% of
overall revenue of the Group for the first time and a gross margin
% improvement of 2.0ppts in the second half of the year (excluding
HSG). Momentum is building post acquisitions as demonstrated by Q4
revenues 59% above that in Q3 driven by a full quarter of revenues
from the newly enlarged Group.
Statement of Comprehensive Income
The Group reported 2021 revenues of GBP32.8 million, an increase
of 9% over the GBP30.1 million reported in 2020. The Group
comprises of two segments: Venture Life Brands and Customer Brands.
The Venture Life Brands business reported strong growth of 21.6% to
GBP18.0 million (2020: GBP14.9 million) driven by the in-year
impact of new acqusiitons. The BBI Healthcare business acquired on
4 June 2021 and Helsinn Healthcare assets acquired on 6 August 2021
delivered GBP6.5 million and GBP1.9 million of revenue respectively
for the period post-acquisition.
Sales of the Group's other branded products reduced to GBP9.4m
(2020: GBP14.7m), which was largely attributable to non-repeated
hand sanitzer gel sales (GBP3.4 million net impact) and
under-performance of the previous partner for China (GBP2.1 million
net impact). As such, excluding these adverse impacts, the
underlying performance of the rest of the portfolio achieved growth
of GBP0.2m / 1.4%.
The Customer Brands business reported revenues (excluding
intercompany sales) of GBP14.8 million, a reduction of 2.5% versus
2020. The reported revenue excludes sales of GBP0.5m related to
Helsinn Healthcare, which were accounted for as intercompany sales
post acquisition. On a like for like basis, the Customer Brands
business remained flat year-on-year. As well as developing and
manufacturing the majority of the Venture Life brands, this part of
the business is also focused on the development and manufacture of
products on behalf of third parties, sold under their brands.
Results for the year
2021 2020 Change
GBP'000 GBP'000 %
Revenue 32,762 30,076 8.9%
Gross profit 12,958 12,847 0.9%
Gross profit margin 39.6% 42.7%
Amortisation (2,287) (909)
Other income 338 169
Exceptional costs (1,331) (167)
Operating profit 1,371 3,555 (61.4%)
Operating profit margin 4.2% 11.8%
Net Finance expense (425) (279)
Profit before tax 946 3,276 (71.1%)
Tax 1,456 (908)
Profit for the year 2,402 2,368 1.4%
Earnings Per Share
Basic / pence 1.91 2.74
Diluted / pence 1.79 2.53
Adjusted / pence 4.94 4.46
Annual dividend per share / pence - -
Net cash at end of period / GBP000s (7,494) 30,917
Gross margin for the year of GBP13.0 million was at a very
similar level to the previous year (2020: GBP12.8 million) although
the gross margin percentage was lower at 39.6% (2020: 42.7%) due to
a combination of increased supply prices, increased inbound
transportation costs, product mix and non-repeat of high margin
hand sanitiser gel sales. The overall impact of these factors
contributed a reduction of 6.1% in the gross margin for the Group,
compared to that seen in 2020 which was partially mitigated by the
positive in-year impact from margin accretive M&A activity of
3.0%.
The Euro weakened against Sterling by 3.1% during 2021 (based on
average FX rate), which had an overall negative impact on the
reported revenue and operating profit of the Group as most of the
Group's gross margins continue to be Euro denominated.
Administrative expenses increased in the period to GBP10.6
million from GBP9.3 million in 2020, an increase of GBP1.3 million.
Of this increase, GBP1.0 million related to the inclusion of the
BBI Healthcare operation, GBP1.7m comprised higher non-cash costs
of amortisation and depreciation arising from new acquisitions,
offset by a reduction in net R&D expenditure of GBP0.3 million
and a favourable movement in the required level of debtor
provisions being GBP0.5 million. The remaining reduction of GBP0.6
million reduction was due to the non-repeat of bonus payments made
in 2020.
Adjusted EBITDA (as defined by EBITDA excluding share based
payments and exceptional items) increased 8.2% to GBP6.6 million
(2020: GBP6.1 million) at a margin of 20.2% (2020: 20.3%). Second
half adjusted EBITDA of GBP4.7m (margin 24.9%) was 147% up on that
achieved in the first half of the year and 79% up on the second
half of the previous year.
Exceptional costs of GBP1.3 million (2020: GBP0.2 million)
significantly increased due to the incurrence of legal and
professional fees plus stamp duty and warranty insurance associated
with the completion of the acquisition of BBI Healthcare (acquired
on 4 June 2021) and to a much lesser extent, the Helsinn brands
(acquired on 6 August 2021), as well as subsequent integration
costs post completion.
Operating profit was GBP1.4 million (2020: GBP3.6 million) with
the profit before tax for the Group of GBP0.9 million (2020: GBP3.3
million). The decline in operating profit compared to the growth in
adjusted EBITDA is as a result of higher amortisation and
depreciation charges plus the significant increase in exceptional
costs as outlined above.
The Group reported profit after tax of GBP2.4 million (2020:
profit of GBP2.4 million). Finance costs were GBP0.5 million (2020:
GBP0.3 million) and comprised interest payable on the portfolio of
euro loans up until closure, coupled with interest on the Group's
new revolving credit facility entered in June 2021.
These translated into adjusted earnings per share (defined as
earnings per share before amortisation, share based payments and
exceptional items) of 4.94 pence (2020: 4.46 pence), with the
improvement in business performance generating enhanced shareholder
value. The number of shares in issue as at 31 December 2021 was
125,831,530. (31 December 2020: 125,831,530) and the weighted
average number during 2021 was 125,831,530 (2019: 86,402,007).
The ongoing growth of the business and strong levels of Q4
customer billing resulted in a negative flux to working capital in
the amount of GBP3.2 million (2020: GBP3.3) million). Cash
generated from operations was GBP2.0 million (2020: GBP3.7
million). Cash used in investing activities amounted to GBP39.2
million (2020: GBP7.5 million) and comprised the purchase
consideration for the acquisition of BBI Healthcare of GBP35.9
million and Helsinn Healthcare GBP2.4m, GBP2.9 million of capital
investment into the manufacturing facilities in Italy and Sweden,
plus GBP0.4 million of capitalised development costs. Net cash from
financing activities was GBP1.5 million (2020: GBP36.2 million) and
comprised the drawdown of interest bearing borrowings from the
Group's new revolving credit facility, less repayments which
included the settlement of euro loans in Italy. Overall cash and
cash equivalents reduced during the year by GBP36.9million (2020 an
increase of GBP31.4 million).
Statement of Financial Position
Non-current assets including goodwill increased by GBP43.1
million during the year to GBP77.2 million.
Intangible non-current assets increased by GBP38.1 million in
the year and comprised the acquisition of BBI Healthcare (GBP36.0
million) and the Helsinn Healthcare assets (GBP5.0 million) plus
capitalised development costs of GBP0.5 million, partially offset
by ongoing amortisation and FX losses arising as a result of
retranslating intangible assets of the foreign operations at the
closing spot rate. Capitalised development costs are carried in the
amount of GBP1.9 million (2020: GBP2.0 million) and reflect
workflows related to assisting our customers with formulation
upgrades and changes to the Medical Device regulations.
Property, plant and equipment increased by GBP2.7 million being
the investment in factory equipment of GBP1.2 million as part of
the Biokosmes expansion programme, plus the new production facility
and machinery in Gnesta which were acquired with BBI Healthcare
GBP1.5 million, offset by ongoing depreciation and FX losses on
euro denominated assets.
Inventory increased by 1.5% versus 2020, which includes
inventory from the acquisition of BBI Healthcare (GBP1.2 million)
which was offset by the expected favourable flux from unwinding of
raw materials and finished goods in the UK and Italy following the
stock build in the previous year as part of the Group's contingency
plan fro BREXIT and Covid-19. Trade receivables increased to
GBP10.7 million (2020: GBP6.7 million) reflecting strong Q4 billing
which included the full impact of new acquisitions. Trade payables
grew 7.6% again driven by the impact of new acquisitions.
Cash and debt
Cash and cash equivalents at the year-end totalled GBP5.2
million (2020: GBP42.1 million) with significant funds used during
the year for investing activities. Net cash outflow during 2021
amounted to GBP36.9 million with the decrease in cash balances
accounted for as follows:
-- Operating cash flow before tax and movements in working capital - inflow of GBP5.1 million
-- Changes in working capital driven by debtor build post
acquisition - outflow of GBP3.2 million
-- Tax payments - outflow of GBP1.4 million
-- Acquisition of BBIH and HICP - outflow of GBP35.9 million (excluding PPE)
-- Investment in PPE (GBP0.4 million), intangible development
assets (GBP0.5 million) and intangibles acquired through business
combination (GBP2.4 million) - outflow of GBP3.3 million
-- Drawdown of Financing (GBP16.3 million) less repayments and
Finance lease repayments (GBP14.8 million) - inflow of GBP1.5
million
Cash flow and net cash
2021 2020
GBP'000 GBP'000
Operating cash flow before movements in working capital 5,135 6,704
Change in working capital (3,179) (3,052)
Cash generated from operations 1,956 3,652
Income taxes paid (1,355) (896)
Net cash from operating activities 601 2,756
Cash outflow from investing activities - acquisitions (35,917) (5,465)
Cash outflow from investing activities - additions (3,262) (2,069)
Cash inflow from financing activities - equity raise - 35,040
Cash inflow from financing activities - other financing 1,502 1,181
Increase in cash and cash equivalents (37,076) 31,443
Cash and cash equivalents at beginning of year 42,095 10,710
Effect of foreign exchange rates 216 (58)
Cash and cash equivalents at end of year 5,235 42,095
Net debt, excluding finance lease obligations was GBP3.2m as at
31 December 2021 (2020: Net cash GBP35.5 million). The Group is
financed by a revolving credit facility, secured against the assets
and profits of most subsidiaries within the group and with expiry
in June 2024. This facility was established during 2021 in the
committed sum of GBP30.0 million of which GBP4.0 million and EUR6.0
million has been drawn at 31st December 2021. The revolving credit
facility bears interest at a fixed rate of 2.5% plus SONIA on drawn
funds as well as commitment interest at the rate of 1.0% plus SONIA
on the balance of undrawn funds up to the facility limit.
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 capability and further
deliver on its acquisition strategy. The Directors have prepared
detailed forecasts looking beyond 12 months from the date of these
financial statements which have been stress tested and show that
the Group can continue to operate profitably in the foreseeable
future with positive cashflow generation. The Directors therefore
conclude that the Going Concern basis remains the appropriate basis
upon which to prepare the Group's financial statements.
Against a challenging backdrop from global supply chain
pressures and the Covid-19 pandemic, 2021 has been an important
year for the business which saw the Group deliver another year of
revenue and profit growth as well as the successful integration of
two acquisitions including its largest ever acquisition in that of
BBI Healtchare. Whilst the current level of supply chain disruption
is unprecedented and creates uncertainty, the Group looks forward
to the year ahead with a greater platform established from a wider
product portfolio, additional manufacturing capability and a
strengthened operating team. The momentum in the second half of the
year is a strong indicator of the run-rate from the newly enlarged
Group, reflecting the full year impact of acquisitions and cost
synergies realised.
Daniel Wells
Chief Financial Officer
16 May 2022
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2021
Company number 05651130
Year ended Year ended
31 December 31 December
2021 2020
Notes GBP'000 GBP'000
Revenue 2 32,762 30,076
Cost of sales (19,804) (17,229)
Gross profit 12,958 12,847
Administrative expenses
Operating expenses (8,441) (7,980)
Impairment losses of financial assets 134 (405)
Amortisation of intangible assets (2,287) (909)
Total administrative expenses (10,594) (9,294)
Other income 338 169
Operating profit before exceptional items 2,702 3,722
Exceptional costs 3 (1,331) (167)
Operating profit 1,371 3,555
Finance income 89 54
Finance costs (514) (333)
Profit before tax 946 3,276
Tax 4 1,456 (908)
Profit for the year 2,402 2,368
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss
Foreign exchange gain / (loss) on translation of subsidiaries (1,543) 1,284
Total comprehensive profit for the year attributable to equity holders of the parent 859 3,652
All of the profit and the total comprehensive income for the
year is attributable to equity holders of the parent.
Year ended Year ended
31 December 31 December
2021 2020
Profit per share
Basic profit per share (pence) 5 1.91 2.74
Diluted profit per share (pence) 5 1.79 2.53
Consolidated Statement of Financial Position
at 31 December 2021
Company number 05651130
At 31 December At 31 December
2021 2020
Notes GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 7,8 65,079 27,024
Property, plant and equipment 9,737 7,018
Deferred Tax 2,349 -
77,165 34,042
Current assets
Inventories 9,019 8,886
Trade and other receivables 12,212 7,653
Cash and cash equivalents 9 5,235 42,095
26,466 58,634
Total assets 103,631 92,676
Equity and liabilities
Capital and reserves
Share capital 10 377 377
Share premium account 10 65,738 65,738
Merger reserve 10 7,656 7,656
Foreign currency translation reserve (114) 1,429
Share-based payments reserve 856 660
Retained earnings (1,349) (3,751)
Total equity attributable to equity holders of the parent 73,164 72,109
Liabilities
Current liabilities
Trade and other payables 9,717 7,108
Taxation 188 433
Interest-bearing borrowings 11 620 2,457
10,525 9,998
Non-current liabilities
Interest-bearing borrowings 11 12,109 8,721
Statutory employment provision 1,236 1,201
Deferred tax liability 6,597 647
19,942 10,569
Total liabilities 30,467 20,567
Total equity and liabilities 103,631 92,676
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
Foreign
Share currency Share-based
Share Premium Merger translation Payments Retained Total
Capital account reserve reserve Reserve earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January 2020 251 30,824 7,656 145 624 (6,492) 33,008
Profit for the year - - - - - 2,368 2,368
Foreign exchange
on translation - - - 1,284 - - 1,284
Total comprehensive income - - - 1,284 - 2,368 3,652
Share-based payments charge - - - - 409 - 409
Share-based payments charge recycling - - - - (373) 373 -
Contributions of equity, net of transaction
costs 126 34,914 - - - - 35,040
Transactions with
Shareholders 126 34,914 - - 36 373 35,449
Balance at
1 January 2021 377 65,738 7,656 1,429 660 (3,751) 72,109
Profit for the year - - - - - 2,402 2,402
Foreign exchange
on translation - - - (1,543) - - (1,543)
Total comprehensive income - - - (1,543) - 2,402 859
Share-based payments charge - - - - 196 - 196
Share options charge
Recycling - - - - - - -
Transactions with
Shareholders - - - - 196 - 196
Balance at
31 December 2021 377 65,738 7,656 (114) 856 (1,349) 73,164
As at 31st December 2021 the parent entity has lacked
distributable reserves and is accordingly not in a position to
declare any dividend.
Consolidated Statement of Cash Flows
for the year ended 31 December 2021
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
Cash flow from operating activities
Profit before tax 946 3,276
Finance (income)/expense 425 279
Operating profit 1,371 3,555
Adjustments for:
- Depreciation of property, plant and equipment 1,415 1,081
- Impairment losses of financial assets (134) 405
- Amortisation of intangible assets 2,287 909
- Loss on disposal of non-current assets - 345
- Share-based payment expense 196 409
Operating cash flow before movements in working capital 5,135 6,704
(Increase) / decrease in inventories 718 (3,294)
(Increase) in trade and other receivables (2,989) (1,161)
Increase / (decrease) in trade and other payables (908) 1,403
Cash generated from operations 1,956 3,652
- Tax paid (1,472) (896)
- Tax receipt 117 -
Net cash from operating activities 601 2,756
Cash flow from investing activities:
Acquisition of subsidiaries, net of cash acquired (35,917) (5,465)
Purchases of property, plant and equipment (371) (1,248)
Expenditure in respect of intangible assets (2,891) (821)
Net cash used in investing activities (39,179) (7,534)
Cash flow from financing activities:
Proceeds from issuance of ordinary shares - 36,997
Transaction costs incurred from issue of ordinary shares - (1,957)
Drawdown of interest-bearing borrowings 16,336 5,428
Repayment of interest-bearing borrowings (13,614) (3,433)
Leasing obligation repayments (728) (764)
Interest paid (492) (50)
Net cash from financing activities 1,502 36,221
Net increase in cash and cash equivalents (37,076) 31,443
Net foreign exchange difference 216 (58)
Cash and cash equivalents at beginning of period 42,095 10,710
Cash and cash equivalents at end of period 5,235 42,095
Notes to the Consolidated Statements
for the year ended 31 December 2021
1. Basis of the announcement
The nancial information of the Group set out above does not
constitute statutory accounts for the purposes of Section 435 of
the Companies Act 2006. The nancial information for the year ended
31 December 2021 has been extracted from the Group's audited
nancial statements which were approved by the Board of directors on
16 May 2022 and delivered to the Registrar of Companies for England
and Wales following the Company's 2021 Annual General Meeting.
The nancial information for the year ended 31 December 2021 has
been extracted from the Group's nancial statements for that period.
The report of the auditor on the 2021 nancial statements was
unmodified, did not include any references to any matters to which
the auditors drew attention by way of emphasis without qualifying
their report and did not contain a statement under Section 498(2)
or Section 498(3) of the Companies Act 2006.
On 31 December 2020, IFRS as adopted by the European Union at
that date was brought into UK law and became UK adopted
international accounting standards, with future changes being
subject to endorsement by the UK Endorsement Board. The Group
transitioned to UK adopted international accounting standards in
its consolidated financial statements on 1 January 2021. There was
no impact or changes in accounting policies from the
transition.
Whilst the nancial information included in this preliminary
announcement has been prepared in accordance with UK adopted
international accounting standards, in conformity with the
requirements of the Companies Act 2006, that are relevant to
companies that report under these standards, this announcement does
not itself contain su cient information to comply with those
standards. This nancial information has been prepared in accordance
with the accounting policies set out in the 2021 Report and
Accounts and updated for new standards adopted in the current
year.
Items included in the nancial information of each of the Group's
entities are measured using the currency of the primary economic
environment in which the entity operates (the functional currency).
The consolidated nancial information is presented in UK sterling
(GBP), which is the Group's presentational currency.
The Company is a public limited company incorporated and
domiciled in England & Wales and whose shares are quoted on
AIM, a market operated by The London Stock Exchange.
The principal activity of Venture Life Group plc and its
subsidiaries is the development and commercialisation of healthcare
products, including food supplements, medical devices and
dermo-cosmetics for the ageing population, and the manufacture of a
range of topical products for the healthcare and cosmetics.
2.1 Segment revenue and results
The following is an analysis of the Group's revenue and results
by reportable segment:
Venture
Life Customer Consolidated
Brands Brands Group
GBP'000 GBP'000 GBP'000
Year ended 31 December 2021
Revenue
Sale of goods 17,972 19,047 37,019
Sale of services - - -
Intercompany sales elimination - (4,257) (4,257)
Total external revenue 17,972 14,790 32,762
Results
Operating profit before exceptional items and excluding
central administrative costs 4,255 1,812 6,067
Year ended 31 December 2020
Revenue
Sale of goods 14,910 20,854 35,764
Sale of services - 672 672
Intercompany sales elimination - (6,360) (6,360)
Total external revenue 14,910 15,166 30,076
Results
Operating profit before exceptional items and excluding
central administrative costs 4,551 3,060 7,611
All revenue of the Group is recognised at a point in time with
the exception of the supply of services which is recognised over
time in accordance with IFRS 15.
The reconciliation of segmental operating profit to the Group's
profit before tax is as follows:
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
Operating profit before exceptional items and excluding central administrative costs 6,067 7,611
Exceptional items (1,331) (167)
Central administrative costs (3,365) (3,889)
Finance income / (costs) (425) (279)
Profit before tax 946 3,276
One customer generated revenue of GBP4,383,290 which accounted
for 10% or more of total revenue (2020: one customer generated
revenue of GBP5,449,000 which accounted for 10% or more of total
revenue).
2.2 Segmental assets and liabilities
At At
31 December 31 December
2021 2020
GBP'000 GBP'000
Assets
Venture Life Brands 71,785 22,695
Customer Brands 28,783 31,379
Central Group assets 3,063 38,602
Consolidated total assets 103,631 92,676
Liabilities
Venture Life Brands 13,500 7,685
Customer Brands 10,976 12,176
Central Group liabilities 5,991 706
Consolidated total liabilities 30,467 20,567
2.3 Other segmental information
Depreciation Addition
to
and non-current
Amortisation Assets
GBP'000 GBP'000
Year ended 31 December 2021
Venture Life Brands 2,868 44,038
Customer Brands 445 564
Central administration 389 -
3,702 44,602
Year ended 31 December 2020
Venture Life Brands 129 5,465
Customer Brands 1,471 2,069
Central administration 390 -
1,990 7,534
2.4 Geographical information
The Group's revenue from external customers by geographical
location of customer is detailed below:
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
Revenue
UK 15,888 11,135
Italy 8,882 9,801
Switzerland 1,842 2,638
Germany 951 1,352
Netherlands 658 1,185
Rest of Europe 2,904 1,234
China 273 2,329
Rest of the World 1,364 402
Total revenue 32,762 30,076
3. Exceptional items
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
Costs incurred in the acquisition of BBI Healthcare Ltd and Helsinn brands 964 77
Costs incurred in the acquisition of the PharmaSource BV business (completed 24 January
2020) - 90
Integration of acquisitions 261 -
Other 106 -
Total exceptional items 1,331 167
During the period the Group incurred legal and professional fees
in relation to the acquisition of BBI Healthcare Ltd, which was
completed during the year as well as the acquisition of a basket of
brands from Helsinn Pharma as well as further works in relation to
prospective acquisitions.
4. Income tax expense
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
Current tax:
Current tax on profits for the year 665 1,184
Adjustments in respect of earlier years 99 (209)
Total current tax expense 764 975
Deferred tax:
Origination and reversal of temporary differences (2,220) (67)
Total deferred tax credit (2,220) (67)
Total income tax credit (1,456) 908
Tax on the Group's profit/(loss) before tax differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to profits and losses of the consolidated entities
as follows:
Year ended Year ended
31 December 31 December
2021 2020
GBP'000 GBP'000
Profit before tax 946 3,276
Profit before taxation multiplied by the local tax rate of 19% (2019: 19%) 180 622
Expenses not deductible for tax purposes 15 118
Change in recognised deferred tax liability 51 -
Change in unrecognised deferred tax asset (2,183) 103
Current year losses for which no deferred tax asset has been recognised 166 -
Utilised losses (213) -
Previously recognised deferred tax 174 -
Other adjustments 65 -
Higher rate on foreign taxes 190 65
Adjustments for current tax of prior periods 99 -
Income tax charge (1,456) 908
In the Spring Budget 2021, the UK Government announced that from
1 April 2023 the corporation tax rate would rise from 19% to 25% on
all profits in excess of GBP250,000. This new law was substantively
enacted on 24 May 2021. The standard corporation tax rate in Italy
is 24% and there is in addition a regional production tax of 3.9%.
Corporation tax rates in the Netherlands are 25% on profits in
excess of EUR200,000 and 19% on profits below this threshold.
Corporation tax rates in the Sweden are 20.6%. Deferred taxes at
the balance sheet date have been measured using these enacted tax
rates and reflected in these financial statements.
As at the reporting date, the Group has unused tax losses of
GBP9,038,000 (2020: GBP10,900,000) available for offset against
future profits generated in the UK. A deferred tax asset has been
recognised on the losses which the company considers will be
utilised against future profits in the UK however, there remain
losses of GBP410,000 which a deferred tax asset has not be
recognised on due to the uncertainty of their recoverability.
The tax charge of the Group is mainly driven by tax paid on the
profits of Biokosmes S.r.l, PharmaSource B.V, Nelie B.V. and Rolf
Kullgren A.B. The group has also recognised the deferred tax asset
in relation to losses carried forward in the UK entities and this
has been partly offset by the release of deferred tax liabilities
generated on the acquisition of the BBI Healthcare Group and the
Helsinn business in the current year and Biokosmes, Periproducts
and Dentyl businesses in prior years.
5. Earnings per share
Year ended Year ended
31 December 31 December
2021 2020
Number Number
For basic EPS calculation 125,831,530 86,402,007
For diluted EPS calculation 133,819,347 93,416,888
The dilution reflects the inclusion of the options and LTIPs
that have been issued, amounting to 7,433,702 stock options and
554,115 LTIPs per Note 23.
A reconciliation of the earnings used in the different measures
is given below:
GBP'000 GBP'000
For basic and diluted EPS calculation 2,402 2,368
Add back: Amortisation 2,287 909
Add back: Exceptional costs 1,331 167
Add back: Share based Payments 196 409
For adjusted EPS calculation 1 6,216 3,853
1 Adjusted EPS is profit after tax excluding amortisation,
exceptional costs and share-based payments.
The resulting EPS measures are:
Pence Pence
Basic EPS calculation 1.91 2.74
Diluted EPS calculation 1.79 2.53
Adjusted EPS calculation 1 4.94 4.46
Adjusted diluted EPS calculation 4.65 4.12
6. Dividends
Amounts recognised as distributions to equity holders in the
period:
Year ended Year
ended
31 December 31
December
2021 2020
GBP'000 GBP'000
Final dividend - -
The Directors do not recommend the payment of a dividend (2020:
GBP nil pence per share).
7. Intangible assets
Other
Development Patents intangible
and
Costs Brands Trademarks Goodwill assets Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost or valuation:
At 1 January 2020 3,280 1,089 1,016 16,417 2,856 24,658
Acquired through
business combinations - - 417 4,076 1,040 5,533
Additions 739 - 82 - - 821
Disposals (345) - (182) - - (527)
Foreign exchange
movements 170 - 41 784 174 1,169
At 1 January 2021 3,844 1,089 1,374 21,277 4,070 31,654
Acquired through
business combinations - 19,004 - 15,177 6,870 41,051
Additions 470 43 513
Disposals (1) (396) (397)
Foreign exchange
movements (264) (42) (971) (213) (1,490)
At 31 December
2021 4,049 20,093 979 35,483 10,727 71,331
Amortisation:
At 1 January 2020 1,438 - 703 - 1,603 3,744
Charge for the
year 323 - 213 - 373 909
Disposals - - (182) - - (182)
Foreign exchange
movements 76 - 6 - 77 159
At 1 January 2021 1,837 - 740 - 2,053 4,630
Charge for the
year 408 822 180 877 2,287
Disposals (1) (396) (397)
Foreign exchange
movements (132) (13) (123) (268)
At 31 December
2021 2,112 822 511 - 2,807 6,252
Carrying amount:
At 31 December
2020 2,007 1,089 634 21,277 2,017 27,024
At 31 December
2021 1,937 19,271 468 35,483 7,920 65,079
All Capitalised development costs are amortised over their
estimated useful lives, which is five years. All amortisation has
been charged to administrative expenses in the Statement of
Comprehensive Income.
All trademark, licence and patent renewals are amortised over
their estimated useful lives, which is between five and ten years.
All amortisation has been charged to administrative expenses in the
Statement of Comprehensive Income.
Other intangible assets currently comprise customer
relationships and product formulations acquired through the
acquisition of Biokosmes Srl. and customer relationships acquired
through the acquisitions of Periproducts, the Dentyl brand, the
Pharmasource group, BBI Healthcare Ltd and the Helsinn Brands.
These assets were recognised at their fair value at the date of
acquisition and were being amortised over a period of between five
and ten years. The weighted average remaining amortisation period
for other intangible assets is 7.1 years (2020: 4.9 years)
Assets with indefinite economic lives as well as associated
assets with finite economic lives are tested for impairment at
least annually or more frequently if there are indicators that
amounts might be impaired. The impairment review involves
determining the recoverable amount of the relevant cash-generating
unit, which corresponds to the higher of the fair value less costs
to sell or its value in use.
The key assumptions used in relation to the Biokosmes (Customer
Brands comprising one CGU), Periproducts, the Dentyl brand,
Pharmasource group, BBI Healthcare Ltd and the Helsinn brands (part
of the Venture Life Brands comprising five CGU's) impairment review
are as follows:
-- The estimates of profit before tax for the three years to 31
December 2024 are based on management forecasts of the Biokosmes,
Periproducts, the Dentyl brand, the Pharmasource group, BBI
Healthcare Ltd and the Helsinn brand businesses, with subsequent
years growth forecasted at CAGR's of 6.2%, 13.9%, 20.5%, 2.1%,
15.3% and 4.3% respectively. Management have applied risk
adjustments to the forecasts and consider these to be conservative
growth rates for these businesses which are reflective of the
operating sectors. During the year a new partner was secured for
the Chinese market and for new agreements were secured with other
international partners which have a material uplift impact on the
future sales forecast for Periproducts Ltd, the Dentyl brands and
BBI Healthcare Ltd.
-- During 2021, Biokosmes net sales growth was negative 3% due
the acquisition of HelsinnHealthcare assets which is accounted for
in separate parts of the Group post acquisition (on a like for like
basis net sales growth was 2%), Periproduct's main asset (UltraDEX)
net sales declined by 20% due to the termination of the previous
Chinese partner, Dentyl brand grew by 3%, the Pharmsource group net
sales remained flat, BBI healthcare Ltd net sales grew by 8.4% and
the sales of Helsinn brands grew by 10.8%.
-- The Group has applied a discount rate to the future cash
flows of Biokosmes for five years, with a terminal value reflecting
future years. The rate is based upon the Group WACC of 12.6% and
adjusted for specific segment, country and currency risk and then
converted onto a pre-tax basis to derive a rate of 19.0%. These
assumptions generate a significant headroom of GBP4.2m over the
assets of the business held at the balance sheet date. The
Biokosmes factory has remained open throughout 2021 and in the
current year-to-date and has not been impacted by Covid-19.
Sensitivity analysis has been performed by increasing the pre-tax
WACC by 0.5ppt which shows that headroom remains.
-- The Group has applied a discount rate to the future cash
flows of Periproducts Ltd for five years including a terminal
value. The rate is based upon the Group WACC of 12.6% and adjusted
for specific segment, country and currency risk and then converted
onto a pre-tax basis to derive a rate of 16.6%. These assumptions
generate comfortable headroom over the assets of the business held
at the balance sheet date. The impairment assessment of
Periproducts Ltd includes a material uplift from the inclusion of
the newly secured Chinese partner which has been risk adjusted by
50%. Sensitivity analysis has been performed by increasing the
pre-tax WACC by 0.5ppt which shows that headroom remains.
-- The Group has applied a discount rate to the future cash
flows of the Dentyl brand for five years including a terminal
value. The rate is based upon the Group WACC of 12.6% and adjusted
for specific segment, country and currency risk and then converted
onto a pre-tax basis to derive a rate of 16.0%. These assumptions
generate comfortable headroom of GBP0.9m over the assets of the
business held at the balance sheet date. The impairment assessment
of the Dentyl brand includes a material uplift from the inclusion
of the newly secured Chinese partner which has been risk adjusted
by 50%. Sensitivity analysis has been performed by increasing the
pre-tax WACC by 0.5ppt which shows that headroom remains.
-- The Group has applied a discount rate to the future cash
flows of the Pharmasource group for five years including a terminal
value. The rate is based upon the Group WACC of 12.6% and adjusted
for specific segment, country and currency risk and then converted
onto a pre-tax basis to derive a rate of 12.9%. These assumptions
generate comfortable headroom of GBP2.2m over the assets of the
business held at the balance sheet date. Sensitivity analysis has
been performed by increasing the pre-tax WACC by 0.5ppt which shows
that headroom remains.
-- The Group has applied a discount rate to the future cash
flows of BBI Healthcare Ltd for five years including a terminal
value. The rate is based upon the Group WACC of 12.6% and adjusted
for specific segment, country and currency risk and then converted
onto a pre-tax basis to derive a rate of 15.4%. These assumptions
generate a headroom of GBP1.2m over the assets of the business held
at the balance sheet date. The impairment assessment of BBI
Healthcare Ltd includes a material uplift from new customer
agreements secured during the year which have been risk adjusted by
25%. Sensitivity analysis has been performed by increasing the
pre-tax WACC by 0.5ppt which shows that headroom remains.
-- The Group has applied a discount rate to the future cash
flows of the Helsinn brands for five years including a terminal
value. The rate is based upon the Group WACC of 12.6% and adjusted
for specific segment, country and currency risk and then converted
onto a pre-tax basis to derive a rate of 16.6%. These assumptions
generate comfortable headroom of GBP1.5m over the assets of the
business held at the balance sheet date. Sensitivity analysis has
been performed by increasing the pre-tax WACC by 0.5ppt which shows
that headroom remains.
-- The above impairment assessments of Biokosmes SRL,
Periproducts Ltd, the Dentyl brand, the Pharmasource group, BBI
Healthcare Ltd and the Helsinn brands have included assessment of
all elements of intangible value regardless of whether their
economic lives are finite or indefinite, and include Customer
Relationships, acquired formulations, acquired Trademarks and
Goodwill.
Intangible assets with indefinite useful lives allocated to
operating segments
Year ended 31 December 2021 Year ended 31 December 2020
GBP'000 GBP'000
Goodwill PeriProducts Ltd 3,337 3,337
Dentyl 3,100 3,100
Pharmasource BV 4,057 4,340
BBI Healthcare Ltd 13,252 -
The Helsinn brands 1,925 -
Venture Life Brands Total 25,671 10,777
Biokosmes srl 9,812 10,500
BBI Healthcare Ltd - -
Customer Brands Total 9,812 10,500
Total 35,483 21,277
Brands PeriProducts Ltd - -
Dentyl 1,089 1,089
Pharmasource BV - -
BBI Healthcare Ltd -
The Helsinn brands 2,010 -
Venture Life Brands Total 3,099 1,089
Biokosmes srl - -
BBI Healthcare Ltd - -
Customer Brands Total - -
Total 3,099 1,089
The recoverable amount of each segment was determined based on
value-in-use calculations, covering a detailed three-year forecast,
followed by an extrapolation of expected cash flows for the
remaining useful lives using a declining growth rate determined by
management. The present value of the expected cash flows of each
segment is determined by applying a suitable discount rate
reflecting current market assessments of the time value of money
and risks specific to the segment.
Year ended 31 December 2021 Year ended 31 December 2020
GBP'000 GBP'000
PeriProducts Ltd 5,958 6,290
DentylDentyl 5,262 5,930
Pharmasource BV 7,332 8,659
BBI Healthcare Ltd 36,981 -
The Helsinn brands 6,433 -
Venture Life Brands Total 61,966 20,879
Biokosmes srl 14,435 13,691
Customer Brands 14,435 13,691
These assumptions are subjective and provide key sources of
estimation uncertainty, specifically in relation to growth
assumptions, future cashflows and the determination of discount
rates. The actual results may vary and accordingly may cause
adjustments to the Group's valuation in future financial years.
Sensitivity analysis has been performed on the impairment review
and indicate sufficient headroom in the event of reasonably
possible changes in key assumptions are unlikely to result in an
impairment for intangibles.
8a. Business combinations
On 4th June 2021 the Company completed the acquisition of 100%
of the equity of BBI Healthcare Ltd and wholly-owned subsidiaries
Rolf Kullgren AB, BBI Healthcare Holdings AB and Kullgren Holdings
AB, a group of companies based in the UK and Sweden engaged in the
supply of women's health and energy management related products to
global customers and trading under the name of "BBI Healthcare".
The acquisition consideration was GBP37.1 million, comprising
GBP3.1 million net working capital at completion, GBP22.8 million
in intangible assets (principally customer relationships,
distribution agreements and Trademarks), GBP3.6 million tangible
fixed assets (principally building and machinery in Sweden), GBP5.4
million deferred tax provision and a balance of GBP13.7 million as
goodwill. The magnitude of the goodwill reflects the future value
that the Group can unlock from this business acquisition through
(a.) the trading of these acquired products into its network of
existing Venture Life Brand customers, (b.) value creation through
the application of the Group' internal R&D resources to broaden
the product range. The acquisition consideration of GBP37.1m
million was paid in cash at completion. The acquisition was funded
through the Company's equity raise in 2020.
The acquisition of BBI Healthcare introduces additional strong
brands and products into the Group and customers in the areas of
women's intimate health and diabetes support. The Group acquired
the business to further strengthen the product portfolio and pursue
opportunities within existing and new global markets. The inclusion
of this additional business into its portfolio increased the
leverage of its trading infrastructure and contributed to the
overall improvement in profitability. The acquisition has been
accounted for under IFRS 3 as a business combination. The
Consolidated Financial Statements to 2021 include the results of
the BBI Healthcare business for the period from 4(th) June 2021 to
31(st) December 2021.
The fair values of the identifiable assets and liabilities of
the BBI Healthcare business as at the date of acquisition were:
Acquisition of BBI Healthcare Ltd on 4th June 2021 Book value Fair Value Adjustments Fair Value
GBP'000s GBP'000s GBP'000s
Assets
Non - current assets 8,099 18,320 26,419
Licenses, Trademarks, Intellectual Property, 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 (1,021) - (1,021)
Trade payables (946) - (946)
Other payables (75) - (75)
Non-current liabilities (9,676) 4,063 (5,613)
Borrowings (9,676) 9,676 -
D eferre d tax (5,613) (5,613)
Total net assets 1,490 22,383 23,873
Net Assets acquired 23,873
Goodwill 13,252
Total consideration 37,125
* Intangible assets identified as part of the BBI Healthcare
acquisition.
BBI Healthcare was acquired on 4 June 2021. It generated net
revenues of GBP6.5 million and adjusted EBITDA of GBP2.1 million in
the period from acquisiton to 31 December 2021.
8b. Business combinations
On 6th August 2021 the Company completed the acquisition of a
basket of brands from Helsinn Pharma, a company based in
Switzerland engaged in the supply of oncology related products to
European customers and trading under the name of "Helsinn". The
acquisition consideration was GBP4.8 million, comprising GBP3.1
million in intangible assets (principally customer relationships,
distribution agreements and Trademarks), GBP0.3 million deferred
tax provision and a balance of GBP2.0 million as goodwill. The
magnitude of the goodwill reflects the future value that the Group
can unlock from this business acquisition through (a.) the trading
of these acquired products into its network of existing Venture
Life Brand customers, (b.) value creation through the transitioning
of manufacturing in-house and (c.) value creation through the
application of the Group' internal R&D resources to broaden the
product range. The acquisition consideration of GBP4.8 million was
paid in cash of GBP2.4 million at completion and the balance of
GBP2.4 million at twelve months after completion. The acquisition
was funded through the Company's RCF.
The Helsinn brands acquisition expands the company product
portfolio into oncology support and further broadens its customer
base, especially across Europe. The Group acquired the brands to
further strengthen the product portfolio and pursue identified
expansion opportunities in key markets across Europe, USA and Asia.
The inclusion of this additional business into its portfolio
increased the leverage of its trading infrastructure and
contributed to the overall improvement in profitability. The
acquisition has been accounted for under IFRS 3 as a business
combination. The Consolidated Financial Statements to 2021 include
the results of the Helsinn brands for the period from 6(th) August
2021 to 31(st) December 2021.
The fair values of the identifiable assets and liabilities of
the Helsinn business as at the date of acquisition were:
Fair Value Fair Value
CHF'000 GBP'000
Assets
Non-current Assets
Customer Relationships * 1,365 1,082
Brands * 2,536 2,010
Non-current liabilities
Deferred taxation (329) (261)
Total Net Assets 3,572 2,831
Net Assets acquired 3,572 2,831
Goodwill 2,428 1,925
Total Consideration 6,000 4,756
Satisfied by
Cash paid at completion 3,000 2,378
Cash to be paid 365 days from completion 3,000 2,378
Total Consideration 6,000 4,756
* Intangible assets identified as part of the Helsinn
acquisition.
The Helsinn business was acquired on 6 August 2021. It generated
net revenues of GBP1.9 million in the period from acquisiton to 31
December 2021.
9. Cash and cash equivalents
At At
31 December 31 December
2021 2020
GBP'000 GBP'000
Available Cash and cash equivalents 5,235 42,095
The Group holds sterling, Chinese renminbi and euro denominated
balances in the UK. The Group's subsidiaries hold US dollar, yen
and euro accounts in Italy, euro accounts in the Netherlands, a
Swiss franc account in Switzerland and Swedish Krona account in
Sweden.
The Directors consider that the carrying value of cash and cash
equivalents approximates their fair value.
10. Share capital and share premium
All shares are authorised, issued and fully Ordinary Ordinary
paid. The Group has one class of ordinary
shares which have full voting rights, no preferences
and no restrictions attached.
shares shares Share Merger
of of
0.3p each 0.3p each premium Reserve
Number GBP GBP'000 GBP'000
At 31 December 2021 125,831,530 377,495 65,738 7,656
At 31 December 2020 125,831,530 377,495 65,738 7,656
The Company issued no new shares during 2021. (42,119,424 new
shares were issued during 2020 for consideration of
GBP36,997,000).
The Group operates a Long-Term Incentive Plan. Up to the balance
sheet date, there have been four awards under this plan, in which
Executive Directors and senior management of the Group participate.
During 2021, one of the awards matured and met the vesting
conditions.
11. Interest-bearing borrowings
At At
31 December 31 December
2021 2020
GBP'000 GBP'000
Current
Invoice financing - 888
Leasing obligations 620 477
Unsecured bank loans due within one year - 1,092
Total 620 2,457
Non-current
Leasing obligations 3,626 4,085
Unsecured bank loans due after one year - 4,636
Secured bank loans due after one year 8,483 -
Total 12,109 8,721
All bank loans are held jointly by Santander Bank and Silicon
Valley Bank and comprise the Group's revolving credit facility,
secured against the assets and profits of most subsidiaries within
the group and with expiry in June 2024. This facility was
established during 2021 in the committed sum of GBP30.0 million of
which GBP4.0 million and EUR6.0 million has been drawn at 31st
December 2021. (The prior year borrowing comprised loans from
several Italian banks which were all repaid in full during 2021
pursuant to the revolving credit facility). Invoice financing
includes the Italian RiBa (or "Ricevuta Bancaria") facility which
is a short-term facility. The balance shown above of GBPnil (2020:
GBP888,000) reflects the amount that had been settled in Biokosmes'
account under RiBa and drawn against invoices in the UK as at the
reporting date.
The revolving credit facility bears interest at a fixed rate of
2.5% plus SONIA on drawn funds as well as commitment interest at
the rate of 1.0% plus SONIA on the balance of undrawn funds up to
the facility limit. The RiBa invoice financing balance bears
interest at variable rates.
A summary showing the utilisation of the revolving credit
facility shown below:
2021 2021 2021 2020 2020 2020
GBP EUR All GBP EUR All
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening Balance at 1(st) January - - - - - -
Drawdown 9,500 5,884 15,384 - - -
Repayments (5,500) (818) (6,318) - - -
Impact of foreign exchange - (27) (27) - - -
Closing Balance at 31(st) December 4,000 5,039 9,039 - - -
A summary showing the utilisation of the RIBa invoice financing
is shown below:
2021 2020
GBP'000 GBP'000
Opening Balance at 1(st) January 888 1,184
Drawdown 953 2,314
Repayments (1,804) (2,668)
Impact of foreign exchange (37) 58
Closing Balance at 31(st) December - 888
A summary showing the contractual repayment of interest-bearing
borrowings is shown below:
At 31 At 31
December December
2021 2020
Leasing Leasing
obligations Other 2021 obligations Other 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Amounts and timing of debt
repayable
Within 1 year 660 433 1,093 523 2,052 2,575
1-2 years 633 435 1,068 473 1,508 1,981
2-3 years 419 9,284 9,703 447 1,352 1,799
3-4 years 418 - 418 448 1,167 1,615
4-5 years 410 - 410 447 638 1,085
After more than 5 years 1,899 - 1,899 2,471 90 2,561
Total 4,439 10,152 14,591 4,809 6,807 11,616
The above amounts reflect the contractual undiscounted cash
flows, which may differ to the carrying values of the liabilities
at the reporting date.
Net debt reconciliation
Liabilities from Financing Other
activities assets
Net Cash
/
Borrowings Leases Sub-Total Cash (Net Debt)
Net cash at 01 January 2020 4,374 2,651 7,025 10,710 3,685
Net cashflow - - - 31,443 31,443
Finance lease repayments - (764) (764) - 764
Interest on Leases - 33 33 - (33)
Drawdown 5,428 2,510 7,938 - (7,938)
(Repayments) (3,433) - (3,433) - 3,433
Foreign exchange movements 247 132 379 (58) (437)
Net cash at 31 December 2020 6,616 4,562 11,178 42,095 30,917
Net cashflow - - - (37,076) (37,076)
Finance lease repayments - (728) (728) - 728
Fees and interest (556) - (556) - 556
Drawdown 16,336 733 17,069 - (17,069)
(Repayments) (13,614) - (13,614) - 13,614
Foreign exchange movements (299) (321) (620) 216 836
Net cash at 31 December 2021 8,483 4,246 12,729 5,235 (7,494)
Lease liability
In 2017 the Group adopted IFRS 16 which means that lease
contracts that have previously been recognised as operating leases
are now being recognised as finance leases. In the Statements of
Financial Position additional lease liabilities at 31 December 2021
of GBP4,246,000 (2020: GBP4,562,000) and right-of-use assets of
GBP4,239,000 (2020: GBP4,520,000) are recognised, giving a net
liability position of GBP7,000 (2020: GBP42,000).
[1] Adjusted EBITDA is EBITDA before deduction of exceptional
items and share based payments
[2] Adjusted earnings per share is profit after tax excluding
amortisation, exceptional items and share-based payments
[3] Source: Nielsen, Retail Value Sales, All Outlets, MAT Dec 21
vs. Prior Year
[4] Source: Nielsen, Retail Value Sales, All Outlets, MAT Dec 21
vs. Prior Year
[5] Source:
https://www.diabetes.org.uk/professionals/position-statements-reports/statistics
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May 17, 2022 10:04 ET (14:04 GMT)
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