REG - Venture Life Group - Final Results for year ended 31 December 2022
04/04/2023 07:00
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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 £44.0m (2021: £32.8m), +17.1% on a
proforma(1) basis (2021 proforma £37.6m).
· Gross profit increased 36.3% to £17.7m (2021: £13.0m).
· Adjusted EBITDA(2) increased 35.8% to £9.0m (2021: £6.6m).
· Operating profit before exceptional items increased 29.7% to £3.5m
(2021: £2.7m).
· Adjusted profit before tax(6) increased to £5.5m (2021: £4.6m) and
Profit before tax decreased to £0.7m (2021: £0.9m)
· Cash generated from operations increased to £6.2m (2021: £2.0m).
· 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 (http://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 £44.0 million (2021: £32.8 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 £23.1 million (2021: £17.9 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 £20.8 million (2021:
£14.8 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 £13.0 million. This consideration comprised:
• £8.0 million in cash on 30 November 2022, funded by drawing
down on the Group's RCF.
• £2.0 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 £3.0 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 £4.5 million and
EBITDA of £1.7 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 £23.1 million (2021: £17.9 million) and,
on a like for like proforma basis, growth was 2%. Revenues from the VLG brands
comprised:
VLG Brands Revenue £'m FY22 FY21 FY21 % vs FY21 Reported % vs FY21 Proforma
Actual Actual Proforma
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 £11.9 million (2021: £6.5 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 £0.9
million (2021: £0.5 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 £5.5 million, +63%, LFL 8%)
Revenues for Balance Activ grew 63% to £5.5 million (2021: £3.4 million) on
a reported basis, 8% on a like for like proforma basis. The revenues in the UK
grew 53% to £2.2 million (2021: £1.5 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 £3.3 million (2021: £1.9
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 £0.5 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 £4.2 million, +147%, LFL 36%)
Revenues of Lift grew 147% to £4.2 million (2021: £1.7 million), 36% on a
like for like proforma basis. £4.0 million of the revenues for this brand
were generated in the UK and Ireland (2021: £1.6 million; £2.9 million on a
like for like proforma basis).
The increased revenues of £1.1 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 £0.2 million, 2021 £nil)
Following the acquisition, these products only contributed one month's revenue
of £0.2 million to the overall Group revenues for the year. In the year ended
31 March 2022, total revenues for these brands comprised £4.2 million, £0.1
million and £0.2 million respectively and comprised £2.2 million (50.1%) in
the UK and £2.3 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 £2.8 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 £10.4 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 £0.9 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 £20.8 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 £44.0 million, an increase of 34% over
the £32.8 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 £23.1 million
(2021: £17.9 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
£0.2 million for the period post-acquisition.
The Customer Brands business reported revenues of £20.8 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
£'000 £'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
£'000 £'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 £17.7 million increased 36.3% versus the
previous year (2021: £13.0 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 £14.3 million from £10.6
million in 2021, an increase of £3.7 million comprising higher non-cash costs
of amortisation £1.3 million and depreciation £0.4 million as well as £0.7
million of additional administrative costs arising from the full year impact
of the previous year acquisitions. The balance of other cost increases
amounting to £1.3 million reflected increased marketing expenditure of £0.5
million and an investment of £0.8 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 £9.0 million, an increase of 35.8% over the
prior year (2021: £6.6 million) at a margin of 20.4% (2021: 20.1%).
Exceptional costs of £1.3 million (2021: £1.3 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 £2.2 million (2021: £1.4 million) with the profit
before tax for the Group of £0.7 million (2021: £0.9 million). The delta
between operating profit and profit before tax is attributable to finance
costs which increased to £1.5 million (2021: £0.4 million). The increased
finance costs of £1.1 million includes an increase of £0.4 million
comprising additional interest payable on the Group's revolving credit
facility which accrues at SONIA +2.5%, plus £0.3 million of non-cash cost
arising from balance sheet timing due to effective interest rate adjustments
and £0.4 million of FX impact attributable to EUR borrowings. The Group
reported profit after tax of £0.5 million (2021: £2.4 million) which
translated into adjusted earnings per share(7) of 4.30 pence (2021: 4.94
pence).
Statement of Financial Position
2022 2021
£'000 £'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 £14.1 million during the
year to £91.2 million (2021: £77.2 million) which was driven by the
acquisition of HL Healthcare Limited on 30 November 2022 for a consideration
of £13.0 million.
Inventory increased by 33.0% to £12.0 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 £16.4 million (2021: £12.2
million) and Trade and other payables grew 20.6% to £11.7 million, with the
movements being reflective of the growth of the business.
Cash and net debt
Net cash from operating activities increased to £5.6 million (2021: £0.6
million) which included outflows for cash exceptional items amounting to £0.5
million. Adding back these cash exceptional items increases the underlying net
cash generated from operating activities to £6.1 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 £1.4 million
(2021: £3.2 million negative) reflecting the growth of the business, timing
of revenues and a significant inventory build of £3.0 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 £11.7 million (2021: £39.6
million) and comprised outflows of £9.9 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 £0.9
million of capital investment into the manufacturing facilities in Italy and
Sweden, plus £0.9 million of intangibles development costs.
Net cash from financing activities amounted to £6.9 million (2021: £1.5
million) and comprised £8.3 million of net drawdown on interest bearing
borrowings from the Group's revolving credit facility, plus proceeds raised
from share issuance of £0.2 million, less leasing obligation repayments of
£0.9 million and associated interest thereon.
2022 2021
£'000 £'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 £16.6 million at 31
December 2022 (2021: Net debt £3.2 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
£2.2 million; and the payment of the first part of the consideration for the
acquisition of HL Healthcare Limited ("HL") (including the Earol products) of
£10.0 million which includes £2.0 million of loan notes. Also included in
net debt is deferred contingent consideration of up to a maximum of £3.0
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 £16.6 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 £30 million (plus £20 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
£30.0 million of which £17.3 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 £'000 £'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 2,199 859
parent
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 £'000 £'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
£'000 £'000 £'000 £'000 £'000 £'000 £'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 £'000 £'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 financial information of the Group set out above does not constitute
statutory accounts for the purposes of Section 435 of the Companies Act
2006. The financial information for the year ended 31 December 2022 has
been extracted from the Group's audited financial 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 financial information for the year ended 31 December 2022 has been
extracted from the Group's financial statements for that period. The report
of the auditor on the 2022 financial 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 financial 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 sufficient information to comply with those standards.
This financial information has been prepared in accordance with the
accounting policies set out in the 2022 Report and Accounts.
Items included in the financial 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 financial
information is presented in UK sterling (£), 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
£'000 £'000 £'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 3,799 3,674 7,473
costs
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 4,255 1,812 6,067
costs
* 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
£'000 £'000
Operating profit before exceptional items and excluding central administrative 7,473 6,067
costs
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 £8,327,607 which accounted for 10% or more
of total revenue (2021: one customer generated revenue of £4,383,290 which
accounted for 10% or more of total revenue).
2.2 Segmental assets and liabilities
At At
31 December 31 December
2022 2021
£'000 £'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
£'000 £'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
£'000 £'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
£'000 £'000
Costs incurred in the acquisition of HL Healthcare Ltd 860 -
Costs incurred in the Acquisition of BBI Healthcare Limited and Helsinn - 964
portfolio of assets
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
£'000 £'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
£'000 £'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 £250,000. 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 €395,000 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 £9,867,000
(2021: £9,938,000) 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 £435,000 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 ended
31 December 31 December
2022 £'000 2021 £'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 ended
31 December 31 December
2022 Pence 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 and intangible
costs Brands trademarks Goodwill assets Total
£'000 £'000 £'000 £'000 £'000 £'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 £2.5m 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 £1.5m 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 £0.05m revenue delivered in 2022. Approximately half of the
forecasted revenue improvement, amounting to £0.3m 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 £0.3m 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
£2.9m 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 £2.1m 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
£0.8m 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 £0.6m 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 £1.8m 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 £0.2m 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
£0.8m 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 £1.0m 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
£7.3m 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 £5.8m 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
£7.6m 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
£'000 £'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
£'000 £'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 £13.0 million, comprising £8.0 million
payment on day one, £2.0 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 £3.0 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
£'000 £'000 £'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
Deferred 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 £0.2
million and adjusted EBITDA of £0.1 million in the period from acquisition to
31 December 2022. HL Healthcare generated revenues of £5.0 million and
adjusted EBITDA of £2.0 million for the twelve months ended 31 December 2022.
8. Cash and cash equivalents
At At
31 December 31 December
2022 2021
£'000 £'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 of shares of Share Merger
0.3p each 0.3p each premium reserve
Number £ £'000 £'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
£224,667 (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
£'000 £'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 £30.0
million of which £17.3 million has been drawn at 31 December 2022 (31
December 2021: £8.5 million). Invoice financing includes the Italian RiBa (or
"Ricevuta Bancaria") facility which is a short-term facility. The balance
shown above of £nil (2021: £nil) 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
£'000 £'000 £'000 £'000 £'000 £'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
£'000 £'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 December 2022 At 31 December 2021
Leasing Leasing
obligations Other 2022 obligations Other 2021
£'000 £'000 £'000 £'000 £'000 £'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 activities Other 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 £4,571,000 (2021: £4,246,000) and
right-of-use assets of £4,614,000 (2021: £4,239,000) are recognised, giving
a net liability position of £43,000 (2021: £7,000).
(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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