TIDMVLG
RNS Number : 2432V
Venture Life Group PLC
04 April 2023
4 April 2023
VENTURE LIFE GROUP PLC
("Venture Life", "VLG" or the "Group")
Final Results for year ended 31 December 2022
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 2022.
Financial Headlines
-- Revenues increased 34.2% to GBP44.0m (2021: GBP32.8m), +17.1%
on a proforma(1) basis (2021 proforma GBP37.6m).
-- Gross profit increased 36.3% to GBP17.7m (2021: GBP13.0m).
-- Adjusted EBITDA(2) increased 35.8% to GBP9.0m (2021: GBP6.6m).
-- Operating profit before exceptional items increased 29.7% to GBP3.5m (2021: GBP2.7m).
-- Adjusted profit before tax(6) increased to GBP5.5m (2021:
GBP4.6m) and Profit before tax decreased to GBP0.7m (2021:
GBP0.9m)
-- Cash generated from operations increased to GBP6.2m (2021: GBP2.0m).
-- Group net leverage(3) at period end was 1.4x net debt(5) to Adjusted EBITDA(2) (2021: 0.4x).
Commercial Headlines
Group:
-- 12 new long-term international distribution agreements signed.
-- 16 new in-market product launches through our international partners.
-- 3 new approved product registrations.
-- Order book at period end was +114% ahead of the same point in previous year.
-- VLG Brands accounted for 57.4% of overall Group revenue on a
proforma basis, including the new HL Healthcare Limited acquisition
(2021: 54.8%).
Acquisition of HL Healthcare Limited on 30 November 2022:
-- Three new products in a new therapy area for VLG: Ear, Nose and Throat management.
-- Acquisition of the highly cash generative Earol brand.
Post period end:
-- 15 partner product launches across seven countries.
-- Registration for Gelclair obtained in Brazil.
-- Current trading tracking ahead of previous year and in line with management's expectation.
-- Group net leverage reduction to 1.3x as at 28 February (31 Dec 2022: 1.4x).
-- Strong order book providing good visibility over first half revenues.
(1) Proforma basis i.e. if the acquisitions had been in place
for the whole of the prior year
(2) Adjusted EBITDA is EBITDA before deduction of exceptional
items and share based payments. This term is applied throughout the
document.
(3) Group net leverage calculated as net debt (excluding finance
leases) and using proforma Adjusted EBITDA on a trailing 12-month
basis
(4) Adjusted earnings per share is profit after tax excluding
amortisation, exceptional items and share-based payments
(5) Net debt calculated as gross debt excl. finance leases and
deferred contingent consideration on acquisitions, less cash &
cash equivalents. This term is applied throughout the document.
(6) Adjusted profit before tax is profit before tax excluding
amortisation and exceptional items (see note 3 for breakdown of
exceptional items)
Jerry Randall, CEO of Venture Life commented: "I am delighted
that the whole team at Venture Life has delivered strong growth in
both revenue and adjusted EBITDA, ahead of market expectations.
This has been achieved in very challenging trading conditions and,
in particular, our Italian procurement team has managed the
extremely difficult supply chain issues ensuring that our
production facilities continued to run unhindered. Whilst these
challenges have not disappeared, they have begun to reduce and we
remain confident in our ability to manage these going forward. The
commercial teams also delivered growth in the face of market
headwinds with Customer Brands delivering exceptional performance,
with sales growth 41% ahead of last year. The year finished with
another immediately earnings enhancing acquisition, HL Healthcare,
which brings another suite of excellent niche products into our
portfolio, which we can leverage with all our usual levers. We have
welcomed both Paul McGreevy and Mark Adams to our Board, who have
both brought excellent experience, expertise and insight to our
Board. The launch of our Sustainable Life initiative in the year
has significantly boosted our drive to sustainability and our
target to be net zero by 2030. With the momentum from a strong 2022
also continuing into 2023, we remain cautiously optimistic about
the outlook for the year."
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, manufacturing and commercialising products
for the global self-care market. With operations in the UK, Italy,
The Netherlands and Sweden, the Group's product portfolio includes
some key products such as the UltraDEX and Dentyl oral care product
ranges, the Balance 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, Earol for ear wax
removal, 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.
Chairman's Statement
I'm delighted for our investors and the team at Venture Life
that we have delivered results ahead of market expectations.
Difficulties in supply chain, challenges of the Ukraine conflict,
spiralling energy costs and consumer economic pressures have been
proactively managed to ensure security of supply and delivery of
the highest quality.
External stresses have demonstrated the robustness and
resilience of our business, the competence and professionalism of
our teams and the advantage of a vertically integrated model.
Agility in our manufacturing centres and the support of our
customers has enabled a strong year for ourselves and our partners,
and I would like to take the opportunity to thank the entire team
at VLG for their unwavering dedication, and our customers for their
significant support.
Customers ordered further ahead and enabled effective purchasing
in securing materials during this challenging period. Whilst this
resulted in carrying higher levels of inventory, this is against a
secured order book and the inventory will convert to revenue.
Having delivered like for like proforma(1) revenue growth of 17.1%
in 2022, there is of course a natural increase in working capital
requirements on top of this exceptional inventory investment.
There are significant changes in Medical Device Regulations
(MDR) which have been effectively managed, and have become a
further differentiator for the Group due to the strength of our
regulatory teams. We continue to invest in automation with rising
labour costs and also to meet the increased demands of our
production efficiencies, with a significantly enhanced focus on our
ESG objectives.
The BBI and oncology support brands acquired in 2021 are now
fully integrated and showing growth with substantial distribution
agreements at the end of the year. Similarly, we have confidence in
the growth potential of the Earol brand acquisition in 2022 and the
opportunities for brand distribution and product development.
In the latter part of the year, we were joined by Mark Adams as
an Non-Executive Director. Mark has extensive public company
experience, also in the areas of M&A and finance, and has
become Chair of the Audit Committee. Mark has already demonstrated
his value and experience as part of the Board. Mark replaced Peter
Bream, who has been a Non-Executive Director of the business for 7
years. The Board gives its thanks to Peter for his time with the
Group and wishes him well for the future.
I would also like to take the opportunity to thank our
shareholders for their continuing support of the business and the
valuable insights and constructive challenge they provide.
We enter 2023 with a strong order book and good momentum. Our
focus for 2023 will be the organic growth of our Brands, where I
believe we have significant opportunity to expand their presence
and value. This continued growth track is expected to result in
stronger Adjusted EBITDA margins and cash generation, which will
drive down our net debt and strengthen the balance sheet further.
The Board remains cautiously optimistic about the outlook for the
year ahead.
Paul McGreevy
Non-executive Chair
3 April 2023
Chief Executive Officer's Statement
Operating review
2022 delivered another year of organic growth for the Company
and in which the Group benefited from the full year impact of
earnings enhancing acquisitions made in 2021. This growth was
achieved against a backdrop of another twelve months of challenging
market conditions. The challenges presented to our supply chain
were met with vigour and enthusiasm by the whole team,
demonstrating remarkable resilience. The Group delivered better
than expected revenue growth of 34% over 2021 to GBP44.0 million
(2021: GBP32.8 million), 17% on a like for like proforma basis, and
the business saw growth in its own Venture Life Brands as well as
our Customer Brands. This growth in revenue delivered strong growth
in both gross profit and Adjusted EBITDA.
Venture Life Brand revenues grew 29% to GBP23.1 million (2021:
GBP17.9 million) and, on a like for like proforma basis, growth was
2% and predominantly came from the products acquired in 2021. The
oral care brands were weaker than expected in 2022, mainly due to
lost revenue during the negotiation of customer price increases in
the UK in H1, although UK revenues did pick up in the rest of the
year but not enough to offset the decrease.
Customer Brand revenues had exceptional growth of 41% to GBP20.8
million (2021: GBP14.8 million). This growth was a combination of
increased consumer end-user demand, as well as partners' increasing
their stock levels back to normal levels to ensure business
continuity. We think part of this growth was driven by re-stocking
that we would not expect to repeat in 2023.
Venture Life Brands represented 53% of the overall Group
revenues in the year (2021: 55%), despite the 29% increase in
revenues, due to the 41% growth in Customer Brand revenues.
However, on a run-rate basis, reflecting the impact of the Earol
acquisition, Venture Life Brands currently represent 57% of overall
Group revenues, and we expect this percentage to grow through
2023.
The order book as at 31 December 2022 was 114% ahead of that at
the same time in the prior year. This increase reflects both growth
in underlying sell out of our customers' products, but also our
customers ordering further ahead to ensure that they can receive
their product. Supply chain disruptions still persist, and we
continue to order our raw materials and packaging further out than
historically, to both lock in prices and ensure supply.
Acquisition of HL Healthcare Limited
On 30 November 2022, we acquired the entire issued share capital
of HL, for a total consideration of GBP13.0 million. This
consideration comprised:
-- GBP8.0 million in cash on 30 November 2022, funded by drawing down on the Group's RCF.
-- GBP2.0 million by way of a fully sub-ordinated loan note,
which is redeemable on the second anniversary following completion
and accrues interest at SONIA plus 5.0%.
-- Up to a further GBP3.0 million based on the performance of
the acquired business in the year ending 31 March 2023.
In the year ended 31 March 2022, HL delivered revenues of GBP4.5
million and EBITDA of GBP1.7 million.
HL was a small virtually run business with only 2 employees,
owning assets related to three products:
-- Earol - an olive oil based spray, which is used to help remove excess and unwanted earwax.
-- Earol Swim - an olive oil based spray also containing Teatree
oil, to help protect ears from bacteria when swimming.
-- Sterinase - a saline based spray to help in the relief of nasal congestion.
The vast majority of revenues in the year ended 31 March 2022
(93%) relate to the sales of Earol (also sold under the brand name
Vaxol outside of the UK, by certain customers to whom HL
distributes). The revenues of Earol Swim and Sterinase represented
3% and 4%, respectively, of HL sales in the year ended 31 March
2022.
Earol is registered as a Medical Device (originally under the
Medical Device Directive but now under the new Medical Device
Regulations); fitted with a metered dose spray nozzle, and with a
patented delivery system, the oil mix can be sprayed into the ear
to naturally soften, break up and loosen earwax, either on a
regular prophylactic basis or in advance of ear wax removal by
audiologists. Sold in the UK, Scandinavia and a small number of
other territories, the Group expects to leverage its operating and
commercial position to increase revenues and margins for the brand
and introduce product innovation through new product
development.
Currently Earol is sold in the UK through major pharmacy and
grocery retailers, but is receiving increasing prominence in
independent pharmacies where it is recommended by pharmacists to
patients for the removal of earwax.
The integration of HL into the Group has begun, being
substantially complete for commercial operations. The integration
into the technical and manufacturing part of the business is
ongoing. The Group sees substantial upside opportunity for
international expansion into new territories, brand revitalisation,
expansion of listings in the UK and new product development
ideas.
Venture Life Brands
The VLG Brand revenues grew 29% to GBP23.1 million (2021:
GBP17.9 million) and, on a like for like proforma basis, growth was
2%. Revenues from the VLG brands comprised:
VLG Brands FY22 FY21 FY21 % vs FY21 % vs FY21
Revenue Actual Actual Proforma Reported Proforma
GBP'm
Balance
Activ 5.5 3.4 5.1 63% 8%
-------- -------- ---------- ---------- ----------
Lift 4.2 1.7 3.1 147% 36%
-------- -------- ---------- ---------- ----------
Glucogel 2.2 1.4 2.1 54% 4%
-------- -------- ---------- ---------- ----------
Dentyl 2.1 2.8 2.8 (25%) (25%)
-------- -------- ---------- ---------- ----------
Ultradex 2.1 2.4 2.4 (13%) (13%)
-------- -------- ---------- ---------- ----------
Footcare 1.9 2.6 2.6 (25%) (25%)
-------- -------- ---------- ---------- ----------
Gelclair 1.4 1.5 1.5 (10%) (9%)
-------- -------- ---------- ---------- ----------
Pomi-T 1.3 0.6 1.3 104% (2%)
-------- -------- ---------- ---------- ----------
Proctoeze 0.9 0.5 0.5 86% 86%
-------- -------- ---------- ---------- ----------
Earol 0.2 - 0.2 100% (6%)
-------- -------- ---------- ---------- ----------
Other 1.4 1.0 1.2 34% 15%
-------- -------- ---------- ---------- ----------
Total 23.1 17.9 22.7 29% 2%
-------- -------- ---------- ---------- ----------
The ex-BBI brands, Balance Activ, Lift and Glucogel all showed
very strong growth in the period of 83% to GBP11.9 million (2021:
GBP6.5 million). On a like for like basis, growth of these brands
was 16%.
Gelclair and Pomi-T were relatively flat during 2022 due to
order phasing, however, also during this time the groundwork was
being prepared to license these acquired products out in key
territories such as Brazil and Canada; as a result, we expect to
see the positive revenue impact of newly signed long-term
agreements in 2023.
The oral care products had a more difficult time in 2022, in
particular Dentyl in the UK, where the imposition of price
increases on 1 January 2022 on our customers caused a reduction of
orders while they ran inventories down and resisted the price
increases. However, as the first quarter came to a close, they
began to re-order at the new price, but the lost Q1 sales were not
recovered in the year. Internationally, the exposure of the oral
care products is limited, with partners in a handful of
countries.
As our brands grow, the digital space is becoming increasingly
important, and in particular, Amazon continues to be a very
significant customer for the Group. In 2022, the Group launched
Balance Activ on the Amazon platform in Germany, its first online
market in the EU. The launch is in a nascent stage and the product
is gaining good traction as brand awareness grows and so too the
number of customer reviews. 2023 will further see the roll out of
Balance Activ into other key EU countries, e.g., France, Spain and
Italy and once consolidated, we will look to build on this
expansion with other products. As well as using Amazon as our main
e-commerce platform, all of our UK advertising and promotion is
digital, as this remains the most efficient way to reach our target
audience.
Footcare was lower than 2021 by 25% due to the loss of a partner
in 2022 in Germany, where a change of ownership has caused a change
in direction and a movement away from our product; as a result, we
will look to replace this partner in 2023. Procto-eze had a very
strong year with revenues of GBP0.9 million (2021: GBP0.5 million);
this was mainly due to the continued success our partner is having
in Austria, as well as other partners holding more inventory to
ensure continued supply in these difficult times.
New contracts in key markets are also improving the
international position for the Group, capitalising on the acquired
products and confirming that our M&A strategy is working.
Balance Active (Revenue GBP5.5 million, +63%, LFL 8%)
Revenues for Balance Activ grew 63% to GBP5.5 million (2021:
GBP3.4 million) on a reported basis, 8% on a like for like proforma
basis. The revenues in the UK grew 53% to GBP2.2 million (2021:
GBP1.5 million) on a reported basis, 0.4% on a proforma like for
like basis.
In the UK, sales were impacted due to an issue with the Amazon
Buy Box listing, which caused loss of sales to competitors for some
weeks, but this was rectified by H2 and sales picked up back to
normal levels. Distribution of the Balance Activ pessary was
extended in two key grocery retailers, giving the product further
reach in these key stores. In Q4 2022, new products were developed
(Balance Activ Gel 14 pack, Thrush Cream and an Intimate Daily
Foaming Wash) and launched in key UK retailers, and we also
launched the entire Balance Activ range in Ireland via our existing
partner. We will see the full impact of these in 2023.
Internationally, the revenues for Balance Activ (under both the
Balance Activ brand and our partners' brands) grew 71% to GBP3.3
million (2021: GBP1.9 million), 14% on a like for like proforma
basis. This growth benefited from new market launches, including
Brazil.
In Q1 2022, we decided to withdraw availability of the product
to our partner in the Russian and Belarussian markets as a result
of the Ukraine conflict. This took approximately GBP0.5 million of
revenues out of our expected 2022 numbers; without this unexpected
reduction, the brand internationally would have grown 32% on a like
for like basis.
Outside of the UK, the product is mostly sold through a number
of distribution partners. During H2 2022, Balance Activ was also
launched on Amazon in Germany, and 2023 will see the launch roll
out into France, Spain and Italy via the Amazon platform.
Innovation remains a key part of this product portfolio and
further new product development is underway with intended launches
in H2 2023 and H1 2024.
Lift (Revenues GBP4.2 million, +147%, LFL 36%)
Revenues of Lift grew 147% to GBP4.2 million (2021: GBP1.7
million), 36% on a like for like proforma basis. GBP4.0 million of
the revenues for this brand were generated in the UK and Ireland
(2021: GBP1.6 million; GBP2.9 million on a like for like proforma
basis).
The increased revenues of GBP1.1 million over the like for like
proforma revenues for 2021 were due to a number of reasons: 1)
increasing level of sales within the independent pharmacy channel,
due to the recommendation by health care practitioners to diabetic
patients post-COVID; 2) the rebound of sales on the High Street and
in Grocery Retailers post-COVID as more usage occasions present
themselves; and 3) the launch in Ireland with a new distribution
partner - this 5 year agreement has minimum contractual obligations
over this 5 year period.
This momentum has continued into 2023, which will seenew
products into the Lift portfolio, as well as expansion into new
related areas.
Earol, Earol Swim, Sterinase (Revenue GBP0.2 million, 2021
GBPnil)
Following the acquisition, these products only contributed one
month's revenue of GBP0.2 million to the overall Group revenues for
the year. In the year ended 31 March 2022, total revenues for these
brands comprised GBP4.2 million, GBP0.1 million and GBP0.2 million
respectively and comprised GBP2.2 million (50.1%) in the UK and
GBP2.3 million (51.1%) outside of the UK.
Integration into the Venture Life Group has begun, and new
marketing initiatives and new product development ideas are
currently being explored.
Gelclair, Xonrid & Pomi-T (Revenue GBP2.8 million, LFL
-3%)
These three oncology support products were acquired from Helsinn
SA in August 2021, and all of these products are sold solely
through distribution partners into the Hospital and Pharmacy
channels. In 2022, good progress was made and a number of new
long-term distribution agreements were signed, including Gelclair
in Brazil, Canada and Vietnam and Pomi-T in Germany. A positive
revenue impact is expected to be felt in 2023.
Some significant markets remain empty for these products,
including the USA and some key European markets, as well as the Far
East, and the business development team continues to progress
discussions with potential new partners. The return to pre-COVID
levels of oncology treatments is also expected to increase revenues
for these brands in 2023.
Other VLG Brands (Revenue GBP10.4 million)
The revenues from the other VLG brands during the year were
level overall, but there were two significant movements within the
portfolio. Procto-eze did exceptionally well and delivered growth
of 86% to GBP0.9 million, as a result of some partners increasing
inventory levels to ensure business continuity during the supply
chain disruption; whilst we don't expect this same level to be
repeated in 2023, it will normalise in 2024. Against this, we lost
ground on the fungal nail product revenues, where our main European
partner in Germany stopped selling the product - we are in the
process of identifying a new partner for this product in Germany as
well as other markets.
In addition, there were 12 new distribution agreements signed in
2022. In general, there remains a good level of interest in our
products and brands and we remain confident that further long-term
licensing agreements can be delivered in 2023 and beyond.
Customer Brands (Revenue GBP20.8 million, +41% LFL)
Customer Brands delivered an exceptional year of 41% growth in
revenues, delivered by a combination of both existing and new
customers. In 2021, we had seen an element of de-stocking: in 2020
customers generally continued buying product from us at their
pre-COVID levels, despite falling consumer demand due to Covid,
concerned that the supply chain would be disrupted and they did not
want to be out of stock. This resulted in higher levels of
inventory with our customers at the end of 2020, which resulted in
the de-stocking in 2021. In 2022, customers have returned to their
normal levels of purchasing and inventory, and in addition we have
seen growth in orders from a number of customers due to good sell
out in their relevant markets. We did see some increasing of
inventories in the customer base which is reflected in the 2022
revenues, which will not repeat in 2023, but even without this the
Customer Brands saw growth of over 30% in the year over 2021.
The business development team in the Customer Brands business
continue to generate new leads and interest in our offering to
these type of customers where we can provide the service from
concept, through innovation, development and registration, to full
scale production of products, registered as either Medical Devices
or cosmetics. This full-service offering continues to attract
interest from both new and existing customers, and during 2022 we
began to see more enquiries from such customers where existing
contract manufacturing suppliers have not been able to manage the
supply chain as well as us, and therefore they want to move to a
more reliable supplier.
In addition to this revenue growth, we have seen a substantial
increase on the order book. This applies to both Customer Brands
and VLG Brands. The overall order book at 31 December 2022 was 114%
higher than at 31 December 2021. This increased order book has
arisen from both growth in revenues from increasing customer
demand, as well as customers ordering further ahead than in
previous years, at our request, to ensure that we can obtain raw
materials and packaging in time and also lock in the price of
components. Whilst the supply chain is improving, with some costs
starting to fall and some availability improving, it still has a
long way to go to be anywhere near the pre-Covid position, and we
will continue to monitor the situation and be proactive. Customers
ordering further ahead does not accelerate the timing of the
revenues, but it does give us much greater visibility than before
over future revenues.
Operating leverage and capacity
In 2022, we saw a significant increase in production volumes to
33 million pieces (2021: 29 million) which drove our growth in
revenues. Despite this, we still have capacity for growth at both
of our facilities. Our development and manufacturing expertise and
capacity is fundamental to the operation and growth of the
business.
The development team have circa 10-15 active projects running at
any one time, from full development of a completely new Medical
Device to flavour/colour/component changes to existing
formulations. The development knowledge has also been invaluable
over the last two years in supporting the procurement team to
identify alternative sources of materials and packaging where
existing supply has been unavailable or rapidly increasing in
price. In conjunction with price increases to customers, this
support has enabled us to minimise the impact of supply chain
disruption on our input prices and move rapidly when needed on
this.
Our factory in Italy, Biokosmes Srl, manufactures 69% of our
products, operating with 6 turbo mixers and 13 filling lines. There
is plenty of bulk mixing capacity, less so on the filling lines,
but we have capacity at Biokosmes to insert more filling lines as
needed, with modest capital investment. The machines at Biokosmes
are mainly semi-automatic, and in the coming years we will look to
automate this equipment more to combat rising labour costs.
Currently, we use a significant number of external contract
labourers to manage peaks and troughs in production within the
facility, but it is expected with increasing automation, we will
require increasingly less of this expensive resource.
Our site at Gnesta near Stockholm, Rolf Kullgren AB,
manufactures products for the Women's Intimate Health portfolio -
Balance Activ. This facility has a fully automated filling line
that can fill tubes at 2-3 times the speed of our lines in
Biokosmes, but at the moment is running only at 20% of its
available capacity. This level of volume will grow as the Balance
Activ brands grow, but we are also actively searching for
additional new products to manufacture at this facility and have
active projects in discussion.
In 2022, we also invested in our financial team by increasing
resource and implementing new processes, and this has enhanced the
quality and value of the reporting within the business. This
enhanced function now has the capability to identify many more
opportunities for value re-engineering and energy/cost saving
initiatives across the Group, vital at a times of high inflation
and input prices.
Sustainable Life
During 2022, we launched our Sustainable Life project, our Group
wide initiative to become a more trusted, responsible and
sustainable business. Whilst we were already undertaking many
initiatives separately around this Group, we have now united the
Group efforts to co-ordinate this project on a Group wide
basis.
We have built our own internal team for this project, led by one
of our long-term employees Ennio Schiro, based in our Biokosmes
facility. Ennio is an experienced member of our Quality Assurance
team, and has a passion to continually improve the sustainability
of our business. Ennio is supported by various members round the
Group in building out and developing the initiatives across the
business.
In 2022, we undertook stakeholder research to identify our 6
priority Sustainable Development Goals.
In common with the United Nations directives on sustainability,
it is our target as a Group to achieve net zero carbon emissions by
2030, and in 2023 we will be working to establish our carbon
footprint and, in consultation with expert advisers, design our net
zero plan, which will form the basis of our progression to net zero
by 2030.
To date, we have already achieved some tremendous steps on this
journey:
-- A reduction of carbon emissions on transportation of product
from the factory by 77% in 2022 compared to 2021, principally by
significantly increasing the use of rail transport.
-- A reduction of the amount of heating and power in Q3 2022 of
23% compared to the same period in 2021, through a reduction in
factory temperature by 1 degree Celsius.
-- 50% of staff in Italy registered on the Government sponsored
Work Health promotion project.
Key activities during 2023 for the Sustainable Life team will be
numerous. The initial focus will be at our Biokosmes site, where by
far the largest part of our operations site. The work will then
roll out to our other locations in subsequent years:
-- Undertaking the life cycle analysis on a number of our key brand products.
-- Assessing the carbon footprint of the Bioskosmes plant. The
assessment of Gnesta and the rest of the Group will be undertaken
in the subsequent year.
-- Undertaking the process to become B Corp certified at
Biokosmes, and then also to roll this out across the Group in
subsequent years.
-- Undertake the Ecovadis certification process again at
Biokosmes - in 2021 we were awarded bronze accreditation.
We have an exceptional team of people within the Group, who have
performed to an outstanding level in 2022. Our team continues to
grow, and setting the right culture as well as identifying and
developing our values is becoming more and more important to our
business. We commenced a number of initiatives in the second half
of the year with our people to assess and understand the culture of
the business and identify areas of improvement. This will be a
continuing theme into 2023 and beyond, as part of our Sustainable
Life project, as well as establishing with the team the values that
the Group subscribe to in our path forward.
Outlook
2022 has been a very rewarding year of growth for VLG. The full
year effect of the acquisitions made in 2021 has contributed very
positively to the overall growth of the Group, wit h those acquired
assets also being in growth themselves.
The supply chain has continued to be one of the largest areas of
challenge for the Group, where the impact of the Ukraine conflict
at the start of 2022 compounded the already very difficult supply
chain environment as a result of Covid. The first half of 2022 saw
the most difficult part of the year for supply chain, with issues
in terms of both availability and price arising on a daily basis,
combined with the impact of rapidly increasing energy prices. The
second half of the year saw the start of an improving situation for
supply chain which has continued into 2023, where we are now seeing
some downward movement in price and improving availability.
Similarly, energy prices seem not to have risen as high as expected
6 months ago.
This all sets a backdrop for a period where we expect to see
margins under less pressure, and where we expect that customers
will still maintain their long look-forward on ordering.
We have started the year with an order book more than double the
size of that at the same time last year, which reflects the
continued growth and much greater visibility of forward revenues.
2023 is expected to see a year of continued organic growth, with
many initiatives in terms of market penetration and new product
development. Increasing volumes, easing supply chain pressures and
the full year impact of the Earol acquisition are expected to
improve gross margin again in 2023, despite the cost pressures that
remain. The business remains focussed on the dual objective of
profitable organic growth, hand in hand with improved
sustainability, and the Board looks forward with confidence to the
year ahead.
Jerry Randall
Chief Executive Officer
3 April 2023
Financial Review
Statement of Comprehensive Income
The Group reported 2022 revenues of GBP44.0 million, an increase
of 34% over the GBP32.8 million reported in 2021. The Group
comprises of two segments: Venture Life Brands and Customer
Brands.
The Venture Life Brands business reported growth of 28.8% to
GBP23.1 million (2021: GBP17.9 million) which was driven by the
full-year impact of the acquisitions made in the previous year. The
Venture Life brands part of the business includes brands which are
owned by Venture Life, including the HL Healthcare business
acquired on 30 November 2022 which delivered revenue of GBP0.2
million for the period post-acquisition.
The Customer Brands business reported revenues of GBP20.8
million, an improvement of 40.7% versus 2021. 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.
2022 2021 Change
GBP'000 GBP'000 %
-------------------------------------------- ---- -------- -------- --------
Revenue 43,980 32,762 34.2%
Gross profit 17,665 12,958 36.3%
Gross profit margin 40.2% 39.6%
Amortisation (3,564) (2,287)
Other income 151 338
-------------------------------------------------- -------- -------- --------
Operating profit before exceptional items 3,505 2,702 29.7%
Operating profit margin 8.0% 8.2%
Exceptional costs (1,278) (1,331)
-------------------------------------------------- -------- -------- --------
Operating profit 2,227 1,371 62.4%
Net Finance expense (1,521) (425)
-------------------------------------------------- -------- -------- --------
Profit before tax 706 946 (25.4)%
Tax (186) 1,456
-------------------------------------------------- -------- -------- --------
Profit for the year 520 2,402 (78.4%)
-------------------------------------------------- -------- -------- --------
2022 2021 Change
GBP'000 GBP'000 %
------------------------------------------- -------- -------- -------
Operating profit before exceptional items 3,505 2,702 29.7%
Depreciation 1,821 1,415
Amortisation 3,564 2,287
Share-based payments charge 72 196
-------------------------------------------- -------- -------- -------
Adjusted EBITDA 8,962 6,600 35.8%
-------------------------------------------- -------- -------- -------
Gross profit for the year of GBP17.7 million increased 36.3%
versus the previous year (2021: GBP13.0 million) and achieved a
slight improvement in the gross margin percentage to 40.2% (2021:
39.6%).
The gross profit improvement was driven by higher revenues and
whilst the overall revenue growth was pleasing to see, the mix was
skewed more than expected towards the Customer Brands business due
to an exceptional performance during the year. This resulted in a
slightly lower gross margin percentage than expected at 40.2%
(2021: 39.6%). Pressure continued on gross margin throughout 2022,
as the supply chain continued to be very challenging, in terms of
both price and availability. Lockdowns in China particularly
impacted the supply of certain raw materials and packaging into
Europe, as production ceased and also shipping channels were
brought to a standstill.
Across the year we saw a reduction of 2.2ppts in our gross
margin due to the impact of cost increases. We were able to
mitigate the majority of this through the application of price
increases to our customers, which recovered 1.7ppts of the cost
impact that was seen. Increasing energy prices during the year
caused a reduction of 0.5ppts in our gross margin, increases that
we have not been able to pass on to customers as there was strong
resistance. However, we are already seeing energy prices fall in Q1
2023, not back to anywhere near pre-2020 levels, but to lower than
we had anticipated. We continue to explore alternative and green
energy sources to improve margin and our carbon footprint. The full
year impact of previous year acquisitions had a positive effect of
3.2ppts on the gross margin percentage as these products (Balance
Activ, Lift, Glucogel, Gelclair and Pomi-T) generate a higher
margin than Venture Life's more established portfolio but this was
offset by the higher than expected mix element from the lower
margin customer brands which diluted the gross margin by a further
1.6ppts, resulting in an overall gross margin of 40.2%, an
improvement of 0.6ppts over the previous year.
The Euro strengthened against Sterling by 0.8% during 2022
(based on average FX rates), which had an overall positive 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 GBP14.3
million from GBP10.6 million in 2021, an increase of GBP3.7 million
comprising higher non-cash costs of amortisation GBP1.3 million and
depreciation GBP0.4 million as well as GBP0.7 million of additional
administrative costs arising from the full year impact of the
previous year acquisitions. The balance of other cost increases
amounting to GBP1.3 million reflected increased marketing
expenditure of GBP0.5 million and an investment of GBP0.8 million
in general administration costs to further strengthen our teams
across the functions of commercial, finance and supply chain.
Tight control of our cost base ensured that the additional gross
margin passed through the P&L and we were able to deliver an
adjusted EBITDA slightly ahead of market expectations at GBP9.0
million, an increase of 35.8% over the prior year (2021: GBP6.6
million) at a margin of 20.4% (2021: 20.1%).
Exceptional costs of GBP1.3 million (2021: GBP1.3 million) were
in line with the previous year and reflected legal and professional
fees associated with the acquisition of HL Healthcare as well as
integration costs incurred during the year in relation to the
previous year acquisitions plus the acquisition of HL Healthcare on
30 November 2022.
Operating profit was GBP2.2 million (2021: GBP1.4 million) with
the profit before tax for the Group of GBP0.7 million (2021: GBP0.9
million). The delta between operating profit and profit before tax
is attributable to finance costs which increased to GBP1.5 million
(2021: GBP0.4 million). The increased finance costs of GBP1.1
million includes an increase of GBP0.4 million comprising
additional interest payable on the Group's revolving credit
facility which accrues at SONIA +2.5%, plus GBP0.3 million of
non-cash cost arising from balance sheet timing due to effective
interest rate adjustments and GBP0.4 million of FX impact
attributable to EUR borrowings. The Group reported profit after tax
of GBP0.5 million (2021: GBP2.4 million) which translated into
adjusted earnings per share(7) of 4.30 pence (2021: 4.94
pence).
Statement of Financial Position
2022 2021
GBP'000 GBP'000
-------------------------------- -------- --------
Intangible assets 78,694 65,079
Property, plant and equipment 10,090 9,737
Deferred Tax 2,443 2,349
Non-Current Assets 91,227 77,165
--------------------------------- -------- --------
Inventories 11,998 9,019
Trade and other receivables 16,433 12,212
Cash and cash equivalents 5,631 5,235
Current Assets 34,062 26,466
--------------------------------- -------- --------
Trade and other payables 11,725 9,717
Taxation 891 188
Interest-bearing borrowings 3,867 620
Current Liabilities 16,483 10,525
--------------------------------- -------- --------
Interest-bearing borrowings 22,979 12,109
Statutory employment provision 1,461 1,236
Deferred tax liability 8,707 6,597
Non-Current Liabilities 33,147 19,942
--------------------------------- -------- --------
Net Assets / (Liabilities) 75,659 73,164
--------------------------------- -------- --------
Non-current assets including goodwill, increased by GBP14.1
million during the year to GBP91.2 million (2021: GBP77.2 million)
which was driven by the acquisition of HL Healthcare Limited on 30
November 2022 for a consideration of GBP13.0 million.
Inventory increased by 33.0% to GBP12.0 million versus 2021,
reflecting the Group's continued focus on ensuring supply of input
materials and thus maintaining production at our facilities. The
inventory build also reflected the strength of the Group's order
book which ended the year 114% ahead of the same point in the
previous year.
Trade and other receivables increased by 34.5% to GBP16.4
million (2021: GBP12.2 million) and Trade and other payables grew
20.6% to GBP11.7 million, with the movements being reflective of
the growth of the business.
Cash and net debt
Net cash from operating activities increased to GBP5.6 million
(2021: GBP0.6 million) which included outflows for cash exceptional
items amounting to GBP0.5 million. Adding back these cash
exceptional items increases the underlying net cash generated from
operating activities to GBP6.1 million.
Operating cash conversion, calculated as net cash from operating
activities excluding cash exceptional items as a proportion of
Adjusted EBITDA, increased to 69.0% (2021: 29.6%).
During the year, there was a negative working capital outflow of
GBP1.4 million (2021: GBP3.2 million negative) reflecting the
growth of the business, timing of revenues and a significant
inventory build of GBP3.0 million. Inventory build out was a vital
investment protecting against rising input prices and ensuring
supply and hence delivery of customer orders.
Cash used in investing activities amounted to GBP11.7 million
(2021: GBP39.6 million) and comprised outflows of GBP9.9 million
for the acqusiiton of subsidiaries of HL Healthcare Limited on 30
November 2022 and the final payment for the Helsinn brands acquired
in the previous year, plus GBP0.9 million of capital investment
into the manufacturing facilities in Italy and Sweden, plus GBP0.9
million of intangibles development costs.
Net cash from financing activities amounted to GBP6.9 million
(2021: GBP1.5 million) and comprised GBP8.3 million of net drawdown
on interest bearing borrowings from the Group's revolving credit
facility, plus proceeds raised from share issuance of GBP0.2
million, less leasing obligation repayments of GBP0.9 million and
associated interest thereon.
2022 2021
GBP'000 GBP'000
Operating cash flow before movements in working capital 7,544 5,135
Change in working capital (1,357) (3,179)
Cash generated from operations 6,187 1,956
Income taxes paid (621) (1,355)
Net cash from operating activities 5,566 601
Cash outflow from investing activities - acquisitions (9,860) (35,917)
Cash outflow from investing activities - additions (1,828) (3,262)
Cash inflow from financing activities - equity raise 224 -
Cash inflow from financing activities - other financing 6,698 1,502
Increase in cash and cash equivalents 800 (37,076)
Cash and cash equivalents at beginning of year 5,235 42,095
Effect of foreign exchange rates (404) 216
Cash and cash equivalents at end of year 5,631 5,235
---------------------------------------------------------- -------- ---------
Net debt, excluding finance lease obligations was GBP16.6
million at 31 December 2022 (2021: Net debt GBP3.2 million on the
same basis). The increase in the net debt position derived
principally from the payments made for acquisitions during 2022;
the second and final instalment of the consideration for the
acquisition of Gelclair, Pomi-T and Xonrid from Helsinn SA in 2021
of GBP2.2 million; and the payment of the first part of the
consideration for the acquisition of HL Healthcare Limited ("HL")
(including the Earol products) of GBP10.0 million which includes
GBP2.0 million of loan notes. Also included in net debt is deferred
contingent consideration of up to a maximum of GBP3.0 million for
the acquisition of HL, which is dependent on the trading results of
HL for the year ended 31 March 2023 and would become payable during
2023.
This net debt figure of GBP16.6 million represents an adjusted
EBITDA (including the last 12 months for HL) to net debt (excluding
IFRS 16 finance leases) leverage of 1.4x at 31 December 2022. Cash
generation during 2023 is expected to reduce this to 1.0x or lower
by the end of 2023. With an overall available RCF facility of GBP30
million (plus GBP20 million accordion), including an adjusted
EBITDA to gross debt leverage limit of 2.5x, the Group retains
access to meaningful funding.
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
GBP17.3 million had been drawn at 31 December 2022. The revolving
credit facility bears interest at a fixed rate of 2.5% plus SONIA
on drawn funds as well as a commitment fee at the rate of 1.0% on
the balance of undrawn funds up to the facility limit.
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 and stay within the existing lending facilities as set
out in the going concern note of the annual report. The Directors
therefore conclude that the Going Concern basis remains the
appropriate basis upon which to prepare the Group's financial
statements.
Daniel Wells
Chief Financial Officer
3 April 2023
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
Company number 05651130
Year ended Year ended
31 December 31 December
2022 2021
Notes GBP'000 GBP'000
------ ------------ ------------
Revenue 5 43,980 32,762
------ ------------ ------------
Cost of sales (26,315) (19,804)
------ ------------ ------------
Gross profit 17,665 12,958
------ ------------ ------------
Administrative expenses
------ ------------ ------------
Operating expenses (10,927) (8,441)
------ ------------ ------------
Impairment losses of financial assets 18 180 134
------ ------------ ------------
Amortisation of intangible assets 15 (3,564) (2,287)
------ ------------ ------------
Total administrative expenses (14,311) (10,594)
------ ------------ ------------
Other income 151 338
------ ------------ ------------
Operating profit before exceptional items 3,505 2,702
------ ------------ ------------
Exceptional costs 6 (1,278) (1,331)
------ ------------ ------------
Operating profit 7 2,227 1,371
------ ------------ ------------
Finance income 1 89
------ ------------ ------------
Finance costs (1,522) (514)
------ ------------ ------------
Profit before tax 706 946
------ ------------ ------------
Tax 10 (186) 1,456
------ ------------ ------------
Profit for the year 520 2,402
------ ------------ ------------
Other comprehensive income:
------ ------------ ------------
Items that will be reclassified subsequently to profit or loss
------ ------------ ------------
Foreign exchange gain / (loss) on translation of subsidiaries 1,679 (1,543)
------ ------------ ------------
Total comprehensive profit for the year attributable to equity holders of the
parent 2,199 859
------ ------------ ------------
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
2022 2021
--- ------------ ------------
Profit per share
--- ------------ ------------
Basic profit / (loss) per share (pence) 12 0.41 1.91
--- ------------ ------------
Diluted profit / (loss) per share (pence) 12 0.39 1.79
--- ------------ ------------
Consolidated Statement of Financial Position
at 31 December 2022
Company number 05651130
At 31 December At 31 December
2022 2021
Notes GBP'000 GBP'000
------- --------------- ---------------
Assets
------- --------------- ---------------
Non-current assets
------- --------------- ---------------
Intangible assets 14, 15 78,694 65,079
------- --------------- ---------------
Property, plant and equipment 16 10,090 9,737
------- --------------- ---------------
Deferred Tax 2,443 2,349
------- --------------- ---------------
91,227 77,165
------- --------------- ---------------
Current assets
------- --------------- ---------------
Inventories 17 11,998 9,019
------- --------------- ---------------
Trade and other receivables 18 16,433 12,212
------- --------------- ---------------
Cash and cash equivalents 19 5,631 5,235
------- --------------- ---------------
34,062 26,466
------- --------------- ---------------
Total assets 125,289 103,631
------- --------------- ---------------
Equity and liabilities
------- --------------- ---------------
Capital and reserves
------- --------------- ---------------
Share capital 20 379 377
------- --------------- ---------------
Share premium account 20 65,960 65,738
------- --------------- ---------------
Merger reserve 21 7,656 7,656
------- --------------- ---------------
Foreign currency translation reserve 22 1,565 (114)
------- --------------- ---------------
Share-based payments reserve 23 812 856
------- --------------- ---------------
Retained earnings 24 (713) (1,349)
------- --------------- ---------------
Total equity attributable to equity holders of the parent 75,659 73,164
------- --------------- ---------------
Liabilities
------- --------------- ---------------
Current liabilities
------- --------------- ---------------
Trade and other payables 25 11,725 9,717
------- --------------- ---------------
Taxation 891 188
------- --------------- ---------------
Interest-bearing borrowings 26 3,867 620
------- --------------- ---------------
16,483 10,525
------- --------------- ---------------
Non-current liabilities
------- --------------- ---------------
Interest-bearing borrowings 26 22,979 12,109
------- --------------- ---------------
Statutory employment provision 27 1,461 1,236
------- --------------- ---------------
Deferred tax liability 11 8,707 6,597
------- --------------- ---------------
33,147 19,942
------- --------------- ---------------
Total liabilities 49,630 30,467
------- --------------- ---------------
Total equity and liabilities 125,289 103,631
------- --------------- ---------------
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
Company number 05651130
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 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
-------- -------- -------- ------------ ------------ --------- --------
Transactions with
Shareholders - - - - 196 - 196
-------- -------- -------- ------------ ------------ --------- --------
Balance at
1 January 2022 377 65,738 7,656 (114) 856 (1,349) 73,164
-------- -------- -------- ------------ ------------ --------- --------
Profit for the year - - - - - 520 520
-------- -------- -------- ------------ ------------ --------- --------
Foreign exchange
on translation - - - 1,679 - - 1,679
-------- -------- -------- ------------ ------------ --------- --------
Total comprehensive income - - - 1,679 - 520 2,199
-------- -------- -------- ------------ ------------ --------- --------
Share-based payments charge - - - - 72 - 72
-------- -------- -------- ------------ ------------ --------- --------
Share-based payments charge recycling - - - - (116) 116 -
-------- -------- -------- ------------ ------------ --------- --------
Contributions of equity, net of
transaction costs 2 222 - - - - 224
Transactions with
Shareholders 2 222 - - (44) 116 296
-------- -------- -------- ------------ ------------ --------- --------
Balance at
31 December 2022 379 65,960 7,656 1,565 812 (713) 75,659
-------- -------- -------- ------------ ------------ --------- --------
Consolidated Statement of Cash Flows
for the year ended 31 December 2022
Company number 05651130
Year ended Year ended
31 December 31 December
2022 2021
Notes GBP'000 GBP'000
------ ------------ ------------
Cash flow from operating activities
------ ------------ ------------
Profit before tax 706 946
------ ------------ ------------
Finance (income)/expense 1,521 425
------ ------------ ------------
Operating profit 2,227 1,371
------ ------------ ------------
Adjustments for:
------ ------------ ------------
- Depreciation of property, plant and equipment 16 1,821 1,415
------ ------------ ------------
- Impairment gains of financial assets 18 (180) (134)
------ ------------ ------------
- Amortisation of intangible assets 15 3,564 2,287
------ ------------ ------------
- Loss on disposal of non-current assets 15 40 -
------ ------------ ------------
- Share-based payment expense 72 196
------ ------------ ------------
Operating cash flow before movements in working capital 7,544 5,135
------ ------------ ------------
(Increase) / decrease in inventories (2,329) 718
------ ------------ ------------
(Increase) in trade and other receivables (2,517) (2,989)
------ ------------ ------------
Increase / (decrease) in trade and other payables 3,489 (908)
------ ------------ ------------
Cash generated from operations 6,187 1,956
------ ------------ ------------
- Tax paid (674) (1,472)
------ ------------ ------------
- Tax receipt 53 117
------ ------------ ------------
Net cash from operating activities 5,566 601
------ ------------ ------------
Cash flow from investing activities:
------ ------------ ------------
Acquisition of subsidiaries, net of cash acquired 14 (7,482) (35,917)
------ ------------ ------------
Purchases of property, plant and equipment 16 (860) (371)
------ ------------ ------------
Expenditure in respect of intangible assets 15 (3,346) (2,891)
------ ------------ ------------
Net cash used in investing activities (11,688) (39,179)
------ ------------ ------------
Cash flow from financing activities:
------ ------------ ------------
Proceeds from issuance of ordinary shares 20 224 -
------ ------------ ------------
Drawdown of interest-bearing borrowings 26 14,985 16,336
------ ------------ ------------
Repayment of interest-bearing borrowings 26 (6,728) (13,614)
------ ------------ ------------
Leasing obligation repayments 26 (922) (728)
------ ------------ ------------
Interest paid (637) (492)
------ ------------ ------------
Net cash from financing activities 6,922 1,502
------ ------------ ------------
Net (decrease) / increase in cash and cash equivalents 800 (37,076)
------ ------------ ------------
Net foreign exchange difference (404) 216
------ ------------ ------------
Cash and cash equivalents at beginning of period 5,235 42,095
------ ------------ ------------
Cash and cash equivalents at end of period 19 5,631 5,235
------ ------------ ------------
Notes to the Consolidated Statements
for the year ended 31 December 2022
Company number 05651130
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 2022 has been extracted from the Group's audited
nancial statements which were approved by the Board of directors on
3 April 2022 and delivered to the Registrar of Companies for
England and Wales following the Company's 2022 Annual General
Meeting.
The nancial information for the year ended 31 December 2022 has
been extracted from the Group's nancial statements for that period.
The report of the auditor on the 2022 nancial statements was
unmodified and the auditors drew attention by way of emphasis to
note 15 of the financial statements (see note 6 of this
announcement) which explains, for the Dentyl brand, the
international growth included as part of the annual impairment
review is reliant on an existing partner in China placing orders
for at least 65% of the agreed purchase predictions from 2024. The
ultimate outcome of this matter is not certain, and the financial
statements do not reflect any impairment that might be required
against the Dentyl brand should the orders not be placed. The
auditors opinion is not modified in respect of this matter.
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 2022 Report and
Accounts.
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 2022
-------- --------- -------------
Revenue
-------- --------- -------------
Sale of goods 24,579 25,621 50,200
-------- --------- -------------
Intercompany sales elimination (1,444) (4,776) (6,220)
-------- --------- -------------
Total external revenue 23,135 20,845 43,980
-------- --------- -------------
Results
-------- --------- -------------
Operating profit before exceptional items and excluding
central administrative costs 3,799 3,674 7,473
-------- --------- -------------
Year ended 31 December 2021
-------- --------- -------------
Revenue
-------- --------- -------------
Sale of goods * 18,853 19,070 37,923
-------- --------- -------------
Intercompany sales elimination* (881) (4,280) (5,161)
-------- --------- -------------
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
-------- --------- -------------
* Prior year figures have been re-presented to reflect the sales
of goods and intercompany sales elimination. External revenues are
unchanged.
The reconciliation of segmental operating profit to the Group's
profit before tax is as follows:
Year ended Year ended
31 December 31 December
2022 2021
------------ ------------
GBP'000 GBP'000
------------ ------------
Operating profit before exceptional items and excluding central administrative costs 7,473 6,067
------------ ------------
Exceptional items (1,278) (1,331)
------------ ------------
Central administrative costs (3,968) (3,365)
------------ ------------
Finance income / (costs) (1,521) (425)
------------ ------------
Profit before tax 706 946
------------ ------------
One customer generated revenue of GBP8,327,607 which accounted
for 10% or more of total revenue (2021: one customer generated
revenue of GBP4,383,290 which accounted for 10% or more of total
revenue).
2.2 Segmental assets and liabilities
At At
31 December 31 December
2022 2021
GBP'000 GBP'000
------------ ------------
Assets
------------ ------------
Venture Life Brands 102,295 71,785
------------ ------------
Customer Brands 22,149 28,783
------------ ------------
Central Group assets 845 3,063
------------ ------------
Consolidated total assets 125,289 103,631
------------ ------------
Liabilities
------------ ------------
Venture Life Brands 19,669 13,500
------------ ------------
Customer Brands 10,839 10,976
------------ ------------
Central Group liabilities 19,122 5,991
------------ ------------
Consolidated total liabilities 49,630 30,467
------------ ------------
2.3 Other segmental information
Depreciation Addition
to
and non-current
amortisation assets
GBP'000 GBP'000
------------- ------------
Year ended 31 December 2022
------------- ------------
Venture Life Brands 4,838 17,381
------------- ------------
Customer Brands 490 811
------------- ------------
Central administration 57 -
------------- ------------
5,385 18,192
------------- ------------
Year ended 31 December 2021
------------- ------------
Venture Life Brands 2,868 44,038
------------- ------------
Customer Brands 445 564
------------- ------------
Central administration 389 -
------------- ------------
3,702 44,602
------------- ------------
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
2022 2021
GBP'000 GBP'000
------------ ------------
Revenue
------------ ------------
UK 20,338 15,888
------------ ------------
Italy 13,000 8,882
------------ ------------
Switzerland 1,830 1,842
------------ ------------
Germany 485 951
------------ ------------
Netherlands 1,391 658
------------ ------------
Rest of Europe 3,469 2,444
------------ ------------
USA 477 266
------------ ------------
Ireland 1,297 460
------------ ------------
Rest of the World 1,693 1,371
------------ ------------
Total revenue * 43,980 32,762
------------ ------------
* Prior year figures reanalysed to expand geographical analysis
in line with current and future trading
3. Exceptional items
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
------------ ------------
Costs incurred in the acquisition of HL Healthcare Ltd 860 -
------------ ------------
Costs incurred in the Acquisition of BBI Healthcare Limited and Helsinn portfolio of
assets - 964
------------ ------------
Integration of acquisitions 202 261
------------ ------------
Restructure 216 106
------------ ------------
Total exceptional items 1,278 1,331
------------ ------------
During the period the Group incurred legal and professional fees
in relation to the acquisition of HL Healthcare Ltd plus associated
integration costs, as well as further integration costs in relation
to the previous year acquisitions of BBI Healthcare Ltd and Helsinn
portfolio of assets. Other exceptional items related to
restructuring costs.
4. Income tax expense
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
------------ ------------
Current tax:
------------ ------------
Current tax on profits for the year 1,195 665
------------ ------------
Adjustments in respect of earlier years 11 99
------------ ------------
Total current tax expense 1,206 764
------------ ------------
Deferred tax:
------------ ------------
Origination and reversal of temporary differences (1,020) (2,220)
------------ ------------
Total deferred tax credit (1,020) (2,220)
------------ ------------
Total income tax charge / (credit) 186 (1,456)
------------ ------------
Tax on the Group's profit 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
2022 2021
GBP'000 GBP'000
------------ ------------
Profit before tax 706 946
------------ ------------
Profit before taxation multiplied by the local tax rate of 19% (2021: 19%) 134 180
------------ ------------
Expenses not deductible for tax purposes 166 15
------------ ------------
Change in recognised deferred tax liability - 51
------------ ------------
Change in unrecognised deferred tax asset - (2,183)
------------ ------------
Current year losses for which no deferred tax asset has been recognised 117 166
------------ ------------
Utilised losses (112) (213)
------------ ------------
Previously recognised deferred tax - 174
------------ ------------
Other adjustments - 65
------------ ------------
Re-measurement of deferred tax balances (281) -
------------ ------------
Higher rate on foreign taxes 151 190
------------ ------------
Adjustments for current tax of prior periods 11 99
------------ ------------
Income tax charge 186 (1,456)
------------ ------------
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 25.8% on profits in
excess of EUR395,000 and 15% 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
GBP9,867,000 (2021: GBP9,938,000) 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 GBP435,000 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 Srl and PharmaSource B.V as profits from the
UK entities are group relieved against current year and prior year
losses within the UK Group. The Group recognises a deferred tax
asset in relation to losses carried forward in the UK entities as
the performance of these entities is expected to become more
profitable in future following the integration of previous year
acquisitions and new distribution agreements secured and
consequently the deferred tax asset has reduced during the year.
The deferred tax liabilities generated on the acquisition of HL
Healthcare Ltd in the current year and previous years are released
to the income statement over time.
5. Earnings per share
A reconciliation of the weighted average number of ordinary
shares used in the measures is given below:
Year ended Year ended
31 December 31 December
2022 2021
Number Number
------------ ------------
For basic EPS calculation 126,257,101 125,831,530
------------ ------------
For diluted EPS calculation 133,393,929 133,819,347
------------ ------------
The dilution reflects the inclusion of the options and LTIPs
that have been issued, amounting to 6,582,713 stock options and
554,115 LTIPs.
A reconciliation of the earnings used in the different measures
is given below:
Year ended Year
31 December ended
2022 GBP'000 31
December
2021
GBP'000
For basic and diluted EPS calculation 520 2,402
-------------- ----------
Add back: Amortisation 3,564 2,287
-------------- ----------
Add back: Exceptional costs 1,278 1,331
-------------- ----------
Add back: Share based Payments 72 196
-------------- ----------
For adjusted EPS calculation 5,434 6,216
-------------- ----------
The resulting EPS measures are:
Year ended Year
31 December ended
2022 Pence 31
December
2021
Pence
Basic EPS 0.41 1.91
------------- ----------
Diluted EPS 0.39 1.79
------------- ----------
Adjusted EPS 4.30 4.94
------------- ----------
Adjusted diluted EPS 4.07 4.65
------------- ----------
6. 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 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
------------ -------- ----------- --------- ----------- --------
Acquired through business
combinations - 9,282 - 3,407 2,628 15,317
------------ -------- ----------- --------- ----------- --------
Additions 923 45 - 968
------------ -------- ----------- --------- ----------- --------
Disposals (84) - - (84)
------------ -------- ----------- --------- ----------- --------
Foreign exchange movements 231 35 762 168 1,196
------------ -------- ----------- --------- ----------- --------
At 31 December 2022 5,119 29,375 1,059 39,652 13,523 88,728
------------ -------- ----------- --------- ----------- --------
Amortisation:
------------ -------- ----------- --------- ----------- --------
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
------------ -------- ----------- --------- ----------- --------
Charge for the year 585 1,522 164 1,293 3,564
------------ -------- ----------- --------- ----------- --------
Disposals (46) - - (46)
------------ -------- ----------- --------- ----------- --------
Foreign exchange movements 129 18 117 264
------------ -------- ----------- --------- ----------- --------
At 31 December 2022 2,780 2,344 693 - 4,217 10,034
------------ -------- ----------- --------- ----------- --------
Carrying amount:
------------ -------- ----------- --------- ----------- --------
At 31 December 2021 1,937 19,271 468 35,483 7,920 65,079
------------ -------- ----------- --------- ----------- --------
At 31 December 2022 2,339 27,031 366 39,652 9,306 78,694
------------ -------- ----------- --------- ----------- --------
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, the Helsinn Brands and HL
Healthcare Ltd. 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 5.9 years (2021:
7.1 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, the Helsinn brands and HL
Healthcare Ltd (part of the Venture Life Brands comprising six
CGU's) impairment review are outlined below:
Biokosmes SRL
-- In 2022, Biokosmes Srl achieved 34.0% revenue growth over the
previous year with an EBIT (Earnings before interest and tax)
improvement of 5.8%. The assets of the business increased
significantly during the year due to an inventory build of GBP2.5m
which was made in order to secure supply of key raw materials and
packaging in light of a challenging supply chain backdrop.
Management have forecasted revenue growth of CAGR 6.6% for the
three years ending 31 December 2025.
-- The Group has applied a discount rate to the future cash
flows of Biokosmes for five years, with a terminal value reflecting
future years. The rate is based upon the Group WACC of 12.4% and
adjusted for specific segment, country and currency risk and then
converted onto a pre-tax basis to derive a rate of 19.0%. These
assumptions generate a headroom of GBP1.5m over the assets of the
business held at the balance sheet date. The level of headroom
would have been significantly higher if not for the level of the
inventory build described.
-- An increase in the Group WACC rate by 0.65ppt would have
resulted in no headroom over the assets of the business held at the
balance sheet date.
Periproducts Ltd
-- In 2022, Periproducts Ltd revenue declined 2.2% versus the
previous year with an EBIT improvement of 0.4%. Management have
forecasted UK revenue growth of CAGR 6.5% and international revenue
growth of CAGR 180.0% for the three years ending 31 December
2025.
-- The growth in the international forecast is compared against
a base of less than GBP0.05m revenue delivered in 2022.
Approximately half of the forecasted revenue improvement, amounting
to GBP0.3m annual revenue is due to materialise from existing EU
based distribution partners where orders have already been placed
for 2023. The other half of the forecasted revenue improvement,
amounting to GBP0.3m annual revenue is reliant on the performance
of Venture Life's existing partner in China recovering order
volumes to 50% of the minimum purchase obligations set out in our
agreement and it has been assumed that no orders will be placed
until 2024 at the earliest.
-- The Group has applied a discount rate to the future cash
flows of Periproducts for five years, with a terminal value
reflecting future years. The rate is based upon the Group WACC of
12.4% and adjusted for specific segment, country and currency risk
and then converted onto a pre-tax basis to derive a rate of 15.9%.
These assumptions generate a significant headroom of GBP2.9m over
the assets of the business held at the balance sheet date.
-- An increase in the Group WACC rate by 7.2ppt would have
resulted in no headroom over the assets of the business held at the
balance sheet date.
-- Sensitivity analysis has been performed to exclude any future
revenues from the China partner and shows that the future cashflows
still generate a headroom of GBP2.1m over the assets of the
business held at the balance sheet date.
Dentyl Brand
-- In 2022, revenues from the Dentyl brand declined 15.7% versus the previous year following the implementation of a customer price increase in the UK. Management have forecasted UK revenue growth of CAGR 10.3% and international revenue growth of CAGR 98.4% for the three years ending 31 December 2025.
-- The growth in the international forecast is reliant on the
performance of Venture Life's existing partner in China recovering
order volumes to 65% of the minimum purchase obligations set out in
our agreement and it has been assumed that no orders will be placed
until 2024 at the earliest. There is a material uncertainty around
when the Chinese economy will recover back to the levels that
existed prior to the Covid-19 pandemic. This uncertainty directly
impacts our distribution partner for oral care products in this
market and the level of growth rates in future.
-- The Group has applied a discount rate to the future cash
flows of the Dentyl Brand for five years, with a terminal value
reflecting future years. The rate is based upon the Group WACC of
12.4% and adjusted for specific segment, country and currency risk
and then converted onto a pre-tax basis to derive a rate of 15.9%.
These assumptions generate a significant headroom of GBP0.8m over
the assets of the business held at the balance sheet date.
-- An increase in the Group WACC rate by 3.7ppt would have
resulted in no headroom over the assets of the business held at the
balance sheet date.
-- Sensitivity analysis has been performed on scenarios to
further reduce revenues from the China partner to 33% of the
minimum purchase obligations in the agreement which shows that the
future cashflows would result in an impairment of GBP0.6m arising.
In a scenario where no further revenues were generated from the
China partner, this would result in a significant impairment. Under
either scenario, the Group would seek to mitigate this impact and
the Directors are satisfied that the forecasts included in the
original impairment assessment already apply a cautious
approach.
Pharmasource BV
-- In 2022, revenues from the Pharmasource Group declined 21.9%
versus the previous year due primarily to the loss of a key
distribution partner in Germany. Management have forecasted revenue
growth of CAGR 10.9% for the three years ending 31 December 2025.
The forecasted growth is reliant on finding a replacement partner
for the German market on or before 1 January 2024. Excluding the
revenue to be secured from a replacement partner, the forecasted
revenue growth applied is a CAGR of 2.9% over the period.
-- The Group has applied a discount rate to the future cash
flows of the Pharmasource Group for five years, with a terminal
value reflecting future years. The rate is based upon the Group
WACC of 12.4% and adjusted for specific segment, country and
currency risk and then converted onto a pre-tax basis to derive a
rate of 14.5%. These assumptions generate a significant headroom of
GBP1.8m over the assets of the business held at the balance sheet
date.
-- An increase in the Group WACC rate by 2.3ppt would have
resulted in no headroom over the assets of the business held at the
balance sheet date.
-- Sensitivity analysis has been performed to model a scenario
whereby no replacement partner is secured to replace the revenue
lost from the previous partner in the German market and shows that
the future cashflows would result in an impairment of GBP0.2m
arising.
BBI Healthcare Ltd
-- In 2022, BBI Healthcare Ltd achieved 16.1% revenue growth on
a pro-forma(1) basis versus the previous year with an EBIT
improvement of 1.3%. Management have forecasted revenue growth of
CAGR 14.1% for the three years ending 31 December 2025.
-- The level of projected growth is underpinned by key license
and supply agreements and in particular the Groups' key women's
health partner Bayer Consumer Care AG which provides revenue
visibility in significant excess of the forecasts applied within
the impairment assessment.
-- The Group has applied a discount rate to the future cash
flows of BBI Healthcare Ltd for five years, with a terminal value
reflecting future years. The rate is based upon the Group WACC of
12.4% and adjusted for specific segment, country and currency risk
and then converted onto a pre-tax basis to derive a rate of 15.9%.
These assumptions generate a significant headroom of GBP0.8m over
the assets of the business held at the balance sheet date.
-- An increase in the Group WACC rate by 0.2ppt would have
resulted in no headroom over the assets of the business held at the
balance sheet date.
-- Sensitivity analysis has been performed to reduce revenues of
the UK business by 5.0% and shows that the future cashflows could
result in an impairment of GBP1.0m arising. Management are of the
view that there are significant upsides from existing customer
agreements which would prevent this in reality and can be used to
support a significant forecast improvement.
Helsinn Brands
-- In 2022, revenues from the Helsinn brands declined 24.8% on a
pro-forma(1) basis versus the previous year reflecting the loss of
a key US distribution partner prior to the acquisition of the brand
by Venture Life in August 2021. Management have forecasted revenue
growth of CAGR 17.5% for the three years ending 31 December
2025.
-- The level of projected growth is underpinned by newly secured
customer agreements in Brazil and Canada during 2022 which become
effective from 2023.
-- The Group has applied a discount rate to the future cash
flows of the Helsinn brands for five years, with a terminal value
reflecting future years. The rate is based upon the Group WACC of
12.4% and adjusted for specific segment, country and currency risk
and then converted onto a pre-tax basis to derive a rate of 15.9%.
These assumptions generate a significant headroom of GBP7.3m over
the assets of the business held at the balance sheet date.
-- An increase in the Group WACC rate by 13.2ppt would have
resulted in no headroom over the assets of the business held at the
balance sheet date.
-- Sensitivity analysis has been performed to reduce revenues
from the new agreements by 50% as a prudent scenario and shows that
the future cashflows still generate a significant headroom of
GBP5.8m over the assets of the business held at the balance sheet
date.
HL Healthcare Ltd (acquired 30 November 2022)
-- In 2022, revenues from HL Healthcare Ltd increased 8.7% on
pro-forma(1) basis versus the previous year. Management have
forecasted revenue growth of CAGR 5.3% for the three years ending
31 December 2025.
-- The Group has applied a discount rate to the future cash
flows of HL Healthcare Ltd for five years, with a terminal value
reflecting future years. The rate is based upon the Group WACC of
12.4% and adjusted for specific segment, country and currency risk
and then converted onto a pre-tax basis to derive a rate of 15.9%.
These assumptions generate a significant headroom of GBP7.6m over
the assets of the business held at the balance sheet date.
The above impairment assessments of Biokosmes SRL, Periproducts
Ltd, the Dentyl brand, the Pharmasource group, BBI Healthcare Ltd,
the Helsinn brands and HL Healthcare Ltd 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 2022 Year ended 31 December 2021
GBP'000 GBP'000
--------------------------- ---------------------------- ----------------------------
Goodwill PeriProducts Ltd 3,337 3,337
--------------------------- ---------------------------- ----------------------------
Dentyl 3,100 3,100
-------------------------------------- ---------------------------- ----------------------------
Pharmasource BV 4,279 4,057
-------------------------------------- ---------------------------- ----------------------------
BBI Healthcare Ltd 13,252 13,252
-------------------------------------- ---------------------------- ----------------------------
The Helsinn brands 1,925 1,925
-------------------------------------- ---------------------------- ----------------------------
HL Healthcare Ltd 3,406 -
--------------------------- ---------------------------- ----------------------------
Venture Life Brands Total 29,299 25,671
-------------------------------------- ---------------------------- ----------------------------
Biokosmes srl 10,351 9,812
-------------------------------------- ---------------------------- ----------------------------
Customer Brands Total 10,351 9,812
-------------------------------------- ---------------------------- ----------------------------
Total 39,652 35,483
-------------------------------------- ---------------------------- ----------------------------
Brands
--------------------------- ---------------------------- ----------------------------
Dentyl - 1,089
-------------------------------------- ---------------------------- ----------------------------
The Helsinn brands 2,010 2,010
-------------------------------------- ---------------------------- ----------------------------
Venture Life Brands Total 2,010 3,099
-------------------------------------- ---------------------------- ----------------------------
Customer Brands Total - -
--------------------------- ---------------------------- ----------------------------
Total 2,010 3,099
-------------------------------------- ---------------------------- ----------------------------
The recoverable amount of each segment was determined based on
value-in-use calculations, covering a detailed three-year forecast,
followed by an extrapolation of expected cash flows for the
remaining useful lives using a declining growth rate determined by
management. The present value of the expected cash flows of each
segment is determined by applying a suitable discount rate
reflecting current market assessments of the time value of money
and risks specific to the segment.
Recoverable amount of each operating segment:
Year ended 31 December 2022 Year ended 31 December 2021
GBP'000 GBP'000
---------------------------- ----------------------------
PeriProducts Ltd 7,719 5,958
---------------------------- ----------------------------
Dentyl 6,370 5,262
---------------------------- ----------------------------
Pharmasource BV 9,509 7,332
---------------------------- ----------------------------
BBI Healthcare Ltd 36,553 36,981
---------------------------- ----------------------------
The Helsinn brands 12,749 6,433
---------------------------- ----------------------------
HL Healthcare Ltd 20,735 -
---------------------------- ----------------------------
Venture Life Brands Total 93,635 61,966
---------------------------- ----------------------------
Biokosmes srl 28,501 14,435
---------------------------- ----------------------------
Customer Brands 28,501 14,435
---------------------------- ----------------------------
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. In particular, there is a material uncertainty around when
the Chinese economy will recover back to the levels that existed
prior to the Covid-19 pandemic which directly impacts on the
impairment review of the Dentyl brand. 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
of all other operating segments and indicate sufficient headroom in
the event of reasonably possible changes in key assumptions and
these are unlikely to result in an impairment.
7. Business combinations
On 30 November 2022 the Company completed the acquisition of
100% of the equity of HL Healthcare Ltd, a UK based company engaged
in the supply of ear, nose and throat products to customers in the
UK and international partners. The acquisition consideration was
GBP13.0 million, comprising GBP8.0 million payment on day one,
GBP2.0 million by way of a fully sub-ordinated loan note which is
redeemable on the second anniversary following completion and
accrues interest at SONIA plus 5.0%, plus up to a further GBP3.0
million based on the performance of the acquired business in the
year ending 31 March 2023. 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, and (b) value creation
through the application of the Group's internal R&D resources
to broaden the product range.
The acquisition of HL Healthcare introduces additional strong
brands and products into the Group and customers in the areas of
ear, nose and throat care. 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 increases the leverage of
its trading infrastructure. The acquisition has been accounted for
under IFRS 3 as a business combination. The Consolidated Financial
Statements for 2022 include the results of the HL Healthcare
business for the period from 1 December 2022 to 31 December
2022.
The fair values of the identifiable assets and liabilities of
the HL Healthcare business as at the date of acquisition were:
Acquisition of HL Healthcare Ltd on 30 November 2022 Book value Fair value adjustments Fair value
GBP'000 GBP'000 GBP'000
---------- ---------------------- ----------
Assets
---------- ---------------------- ----------
Non - current assets
---------- ---------------------- ----------
Licenses, Trademarks, Intellectual Property 75 (75) -
---------- ---------------------- ----------
Brands * - 9,282 9,282
---------- ---------------------- ----------
Customer relationships * - 2,628 2,628
---------- ---------------------- ----------
Tangible Fixed Assets 13 - 13
---------- ---------------------- ----------
88 11,835 11,923
---------- ---------------------- ----------
Current Assets
---------- ---------------------- ----------
Inventories 135 101 236
---------- ---------------------- ----------
Trade Receivables 1,066 - 1,066
---------- ---------------------- ----------
Other Receivables 45 - 45
---------- ---------------------- ----------
Cash 2,439 - 2,439
---------- ---------------------- ----------
3,685 101 3,786
---------- ---------------------- ----------
Total assets 3,773 11,936 15,709
---------- ---------------------- ----------
Current liabilities
---------- ---------------------- ----------
Trade payables 574 - 574
---------- ---------------------- ----------
Other payables 382 - 382
---------- ---------------------- ----------
956 - 956
---------- ---------------------- ----------
Non-current liabilities
---------- ---------------------- ----------
D eferre d tax - 2,976 2,976
---------- ---------------------- ----------
- 2,976 2,976
---------- ---------------------- ----------
Total net assets 2,817 8,960 11,777
---------- ---------------------- ----------
Net Assets acquired 11,777
---------- ---------------------- ----------
Goodwill 3,407
---------- ---------------------- ----------
Total consideration 15,184
---------- ---------------------- ----------
* Intangible assets identified as part of the HL Healthcare
acquisition.
HL Healthcare was acquired on 30 November 2022. It generated
revenues of GBP0.2 million and adjusted EBITDA of GBP0.1 million in
the period from acquisition to 31 December 2022. HL Healthcare
generated revenues of GBP5.0 million and adjusted EBITDA of GBP2.0
million for the twelve months ended 31 December 2022.
8. Cash and cash equivalents
At At
31 December 31 December
2022 2021
GBP'000 GBP'000
------------ ------------
Available Cash and cash equivalents 5,631 5,235
------------ ------------
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.
9. Share capital and share premium
All shares are authorised, issued and fully
paid. The Group has one class of ordinary
shares which have full voting rights, no preferences
and no restrictions attached. Ordinary Ordinary
shares shares Share Merger
of of
0.3p each 0.3p each premium reserve
Number GBP GBP'000 GBP'000
------------ ----------- -------- --------
At 31 December 2022 126,498,197 379,495 65,960 7,656
------------ ----------- -------- --------
At 31 December 2021 125,831,530 377,495 65,738 7,656
------------ ----------- -------- --------
The Company issued 666,667 new shares during 2022 for total
consideration of GBP224,667 (no new shares were issued during
2021).
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.
10. Interest-bearing borrowings
At At
31 December 31 December
2022 2021
GBP'000 GBP'000
------------ ------------
Current
------------ ------------
Invoice financing - -
------------ ------------
Leasing obligations 920 620
------------ ------------
Deferred contingent consideration 2,947 -
------------ ------------
Total 3,867 620
------------ ------------
Non-current
------------ ------------
Leasing obligations 3,651 3,626
------------ ------------
Secured bank loans due after one year 17,314 8,483
------------ ------------
Subordinated loan note (Deferred consideration) 2,014 -
------------ ------------
Total 22,979 12,109
------------ ------------
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 GBP17.3 million has been drawn at 31 December 2022 (31
December 2021: GBP8.5 million). Invoice financing includes the
Italian RiBa (or "Ricevuta Bancaria") facility which is a
short-term facility. The balance shown above of GBPnil (2021:
GBPnil) 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 fees at the
rate of 1.0% 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:
2022 2022 2022 2021 2021 2021
GBP EUR All GBP EUR All
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening balance at 1 January 4,000 5,039 9,039 - - -
--------- --------- --------- --------- --------- ---------
Drawdown 10,400 4,585 14,985 9,500 5,884 15,384
--------- --------- --------- --------- --------- ---------
Repayments (2,500) (4,228) (6,728) (5,500) (818) (6,318)
--------- --------- --------- --------- --------- ---------
Impact of foreign exchange - 361 361 - (27) (27)
--------- --------- --------- --------- --------- ---------
Closing balance at 31
December 11,900 5,757 17,657 4,000 5,039 9,039
--------- --------- --------- --------- --------- ---------
A summary showing the utilisation of the RIBa invoice financing
is shown below:
2022 2021
GBP'000 GBP'000
Opening Balance at 1 January - 888
---------- ---------
Drawdown - 953
---------- ---------
Repayments - (1,804)
---------- ---------
Impact of foreign exchange - (37)
---------- ---------
Closing Balance at 31 December - -
---------- ---------
A summary showing the contractual repayment of interest-bearing
borrowings is shown below:
At 31 At 31
December December
2022 2021
Leasing Leasing
obligations Other 2022 obligations Other 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ---------- -------- ------------ ---------- --------
Amounts and timing of debt
repayable
------------ ---------- -------- ------------ ---------- --------
Within 1 year 985 5,250 6,235 660 433 1,093
------------ ---------- -------- ------------ ---------- --------
1-2 years 665 17,736 18,401 633 435 1,068
------------ ---------- -------- ------------ ---------- --------
2-3 years 613 - 613 419 9,284 9,703
------------ ---------- -------- ------------ ---------- --------
3-4 years 503 - 503 418 - 418
------------ ---------- -------- ------------ ---------- --------
4-5 years 432 - 432 410 - 410
------------ ---------- -------- ------------ ---------- --------
After more than 5 years 1,595 - 1,595 1,899 - 1,899
------------ ---------- -------- ------------ ---------- --------
Total 4,793 22,986 27,779 4,439 10,152 14,591
------------ ---------- -------- ------------ ---------- --------
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 1 January 2021 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 / (debt) at 31 December
2021 8,483 4,246 12,729 5,235 (7,494)
----------- ------- ---------- --------- -----------
Net cashflow - - - 800 800
----------- ------- ---------- --------- -----------
Finance lease repayments - (922) (922) - 922
----------- ------- ---------- --------- -----------
Fees and interest 240 - 240 - (240)
----------- ------- ---------- --------- -----------
Drawdown 14,985 1,034 16,019 - (16,019)
----------- ------- ---------- --------- -----------
(Repayments) (6,728) - (6,728) - 6,728
----------- ------- ---------- --------- -----------
Deferred consideration arising
on business combination 4,933 - 4,933 - (4,933)
----------- ------- ---------- --------- -----------
Foreign exchange movements 362 213 575 (404) (979)
----------- ------- ---------- --------- -----------
Net cash / (debt) at 31 December
2022 22,275 4,571 26,846 5,631 (21,215)
----------- ------- ---------- --------- -----------
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 2022
of GBP4,571,000 (2021: GBP4,246,000) and right-of-use assets of
GBP4,614,000 (2021: GBP4,239,000) are recognised, giving a net
liability position of GBP43,000 (2021: GBP7,000).
(1) Proforma basis i.e., if the acquisitions had been in place
for the whole of the prior year
(2) Adjusted EBITDA is EBITDA before deduction of exceptional
items and share based payments
(3) Group net leverage calculated as net debt (excluding finance
leases) and using proforma Adjusted EBITDA on a trailing 12-month
basis
(4) Adjusted earnings per share is profit after tax excluding
amortisation, exceptional items and share-based payments
(5) Net debt calculated as gross debt excl. finance leases and
deferred contingent consideration on acquisitions, less cash &
cash equivalents
(6) Adjusted profit before tax is profit before tax excluding
amortisation and exceptional items (see note 3 for breakdown of
exceptional items)
7 Adjusted earnings per share is profit after tax excluding
amortisation, exceptional items and share-based payments
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END
FR SSDEEDEDSEIL
(END) Dow Jones Newswires
April 04, 2023 02:00 ET (06:00 GMT)
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