REG - Venture Life Group - Final Results
17/05/2022 07:00
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RNS Number : 6900L Venture Life Group PLC 17 May 2022
17 May 2022
VENTURE LIFE GROUP PLC
("Venture Life", "VLG" or the "Group")
Final Results
Venture Life (AIM: VLG), a leader in developing, manufacturing and
commercialising products for the international self-care market, announces its
audited results for the year ended 31 December 2021.
Financial Highlights
· Revenues + 9% to £32.8 million (2020: £30.1 million) or +11% on a
constant currency basis
· Gross margin £13.0 million (2020: £12.8 million), gross margin
percentage 39.6% (2020: 42.7%)
· Adjusted EBITDA 1 +8% to £6.6million (2020: £6.1 million)
· H2 revenues +36% to £18.9 million compared to H1 revenues
· H2 adjusted EBITDA1 147% to £4.7 million compared to H1 adjusted
EBITDA1
· Profit before tax, amortisation and exceptional items £4.6 million
(2020: £4.4 million)
· Profit after tax stayed flat year on year at £2.4 million (2020:
£2.4 million)
· Adjusted earnings per share 2 4.94p (2020: 4.46p)
· Operating cash flow before movements in working capital £5.1 million
(2020: £6.7 million)
· Cash at 31 December 2021 £5.2 million (2020: £42.1 million)
Commercial Highlights
Group
· Two immediately earnings enhancing acquisitions, now integrated and
fully deploying funds raised in late 2020
· Revolving Credit Facility (RCF) in place for up to £50 million,
giving significant firepower for further earnings accretive M&A
· Extended agreement with Bayer Consumer Care AG for BV gel and BV
pessary, a range of women's intimate healthcare products
· 11 new long-term distributions agreements signed
· 18 in-market product launches through our international partners
· 7 approved product registrations, with 12 on-going
Acquisition of BBI Healthcare Limited, 4 June 2021:
· Three new brands and two new therapy areas: women's health and
diabetes management
· Significant partner acquired in women's health - Bayer Consumer Care
AG ('Bayer')
· Immediate cost synergies realised
· Significant excess manufacturing capacity in Sweden
· Profitable, with good growth opportunities
Acquisition of Helsinn Integrative Care Portfolio, 6 August 2021
· 3 new brands and new therapy area of oncology support
· Profitable portfolio, with good growth opportunities
· 33 newly acquired partners, spanning 56 countries
· Geographic extension opportunities
Post period end
· New exclusive Chinese distributor appointed for oral care brands,
Dentyl and UltraDEX; this 5-year agreement commenced 6(th) January 2022 and
runs until 2027
· Clinical trial peer-reviewed and published by Cardiff University in
the Journal of Lipid Research, concluding that the CPC-based mouthwash tested
showed the inactivation of SARS-CoV-2 in the saliva for up to 1 hour
· Net debt reduction arising from cash collection following strong Q4
revenue
· Despite a challenging first quarter, we benefit from a strong order
book and the growth being achieved from recent acquisitions
Jerry Randall, CEO of Venture Life Group plc commented: "2021 saw a year of
significant growth for the Group, despite the challenges we faced. We are
delighted to have completed two immediately earnings enhancing acquisitions
that are now both integrated into the Group and performing well, and both
showing growth over 2020.
Whilst we have seen a material impact on the Group's results from the
acquisitions, for the part of the year we owned them, 2022 will see the full
year effect of these. The strategy of raising the cash in advance has, I
believe, proved to be a good one, enabling us to access and complete both of
these acquisitions within just 8 months of raising the cash; I thank each and
every one of our shareholders who supported us in that fund raise. The £50
million RCF facility we also have in hand now will enable us to continue such
progress in a non-dilutive manner in the near term.
The issues with supply chain are well documented across the globe and we were
impacted by these significantly in 2021, eroding margin and causing continual
headaches for us ensuring certainty of supply for raw materials and packaging.
These supply chain challenges persist, and we have instigated customer price
rises and other measures going forward to mitigate these where possible. I
must highly commend our purchasing and logistics teams, who have been battling
this all year, and who continue to do so, and who have worked tirelessly to
minimise cost increases and manage the extended lead times we are seeing.
We continued to see the impact of COVID on our customers, in particular in the
first half of 2021, but we are now beginning to see the green shoots of
recovery with these customers. I am very pleased that we have been able to
appoint a new distributor for our China business, Samarkand Global plc, and we
look forward to returning the Chinese market to a significant contributor to
the Group going forward.
2021 has been a transformational year for the Group, significantly increasing
its size and operation, now having a second manufacturing facility, based in
Sweden. I welcome all the people from BBI that joined the Group, and who have
already contributed significantly to the business in our hands. I welcome
Danny Wells as our new CFO, who took up post in December after joining as part
of the BBI acquisition. Danny has already made a positive impact on the
business. I also welcome Paul McGreevy as our new Chair, as announced today,
who will bring his wealth of experience to our Board. In turn, I would like to
extend our deep thanks to Dr Lynn Drummond, who steps down as Chair today, for
all that she has done for the Company since joining our Board in 2013, prior
to our flotation on AIM, and in particular for her wise counsel as we have
grown the business to where it is today. I offer my thanks again to every
single member of the Venture Life Group, for their hard work and dedication
through 2021, to keep the business growing and developing, and delivering our
customers' requirements. We enter 2022 with an order book comfortably ahead of
that at the same time last year, on a like for like basis, (taking account of
the acquired businesses), which gives us confidence for the year ahead in how
our customers will be performing. The supply chain issues have continued into
2022, and with the current situation are likely to persisit through this year,
but I am confident our team is well placed to manage the ever changing
situation to the best of its ability."
For further information, please contact:
Venture Life Group PLC
+44 (0) 1344 578004
Jerry Randall, Chief Executive Officer
Daniel Wells, Chief Financial Officer
Cenkos Securities plc (Nomad and Joint
Broker)
+44 (0) 20 7397 8900
Stephen Keys / Camilla Hume (Corporate Finance)
Russell Kerr / Michael Johnson (Sales)
Singer Capital Markets (Joint Broker)
Shaun Dobson / Alaina Wong (Corporate Finance)
+44 (0) 20
74963000
Jonathan Dighe (Sales)
About Venture Life (www.venture-life.com (http://www.venture-life.com/) )
Venture Life is an international consumer self-care company focused on
developing, manufacturingand commercialising products for the global self-care
market. With operations in the UK, Italy, The Netherlands and Sweden, the
Group's product portfolio includes some key products such as the UltraDEX and
Dentyl oral care product ranges, the Balance Activ range in the area of
women's intimate healthcare, the Lift and Glucogel product ranges for
hypoglycaemia, Gelclair and Pomi-T for oncology support, products for fungal
infections and proctology, and dermo-cosmetics for addressing the signs of
ageing. Its products are sold in over 90 countries worldwide.
The products, which are typically recommended by pharmacists or healthcare
practitioners, are available primarily through pharmacies and grocery
multiples. In the UK and The Netherlands these are supplied direct by the
company to retailers, elsewhere they are supplied by the Group's international
distribution partners.
Through its two Development & Manufacturing operations in Italy and
Sweden, the Group also provides development and manufacturing services to
companies in the medical devices and cosmetic sectors.
Chair's Statement
2021 has seen a year of continued progress in the Venture Life Group, despite
the impact of many COVID related factors. Whilst we experienced our customers
feeling the impact of COVID, affecting revenues and product mix, and input
costs rising significantly, we still saw growth in revenues and adjusted
EBITDA. Input costs and product mix negatively affected gross margin, but the
two acquisitions we made during the year carried higher gross margins which
went some way to mitigate these negative gross margin impacts of input costs.
The Group proved to be resilient in these difficult times and continued to
build its presence with two immediately earnings enhancing acquisitions in the
year. I must give my congratulations and thanks to the whole team who both
acquired and integrated these businesses in the year yet at the same time,
ensuring business continuity - a substantial achievement against the backdrop
of the continuing challenges of COVID.
BBI Healthcare Limited (BBI) was acquired in June 2021 and brought an
immediately earnings enhancing business and three exciting new brands. At the
time of raising the funds in late 2020 from shareholders, this opportunity was
not even in play for us, but within 6 months of closing the fund raise we had
executed and won a tough competitive auction process for this valued asset.
With exciting growing brands, only at the start of their geographic
exploitation, and in two of the most interesting self-care categories (women's
health and diabetes), I am certain this will prove to be a very valuable
acquisition for the Group.
The Helsinn Integrative Care Portfolio (HICP) that we acquired in August also
brought some interesting brands ready for further exploitation. This
immediately earnings enhancing opportunistic acquisition has brought us into
another interesting and underserved self-care category, that of oncology
support where products will be acquired primarily by the patient to deal with
the very difficult side effects of oncology treatment through pharmacies and
grocery multiples..
These acquisitions have now been successfully integrated into the Group, and
we have already seen the benefit of expected synergies and the higher gross
margins within the Group. Related to the BBIH acquisition, the extremely
high-quality manufacturing operations at the Gnesta site in Sweden are now
under the umbrella of our technical team in Italy, working to deliver
synergies between and harmonisation of the two facilities. During the year, we
also put in place a £50 million revolving credit facility with our main
banker, Santander Group, alongside Silicon Valley Bank. This facility will
enable us to continue with our acquisition strategy without recourse to
additional equity from shareholders and was largely undeployed as at the end
of the financial year (£9.0 million funds drawn). With projects under review,
we are confident that this will allow us to add more immediately earnings
enhancing brands to our business in 2022 and beyond, as there continues to be
interesting opportunities available.
During the first year of the pandemic (2020), the Group benefitted from some
significant revenue items that did not repeat in 2021. The initiation of the
hand sanitiser gel (HSG) manufacture, whilst helping the Lombardy health
authorities as COVID hit hard in 2020, also provided significant one-off
opportunistic revenues and margin to the Group, showing how the business can
be reactive as well as proactive. Our Chinese partner performed very well at
the back end of 2019 and early in 2020, but was impacted by the pandemic to
such an extent, that in late December 2020 we had to take the step to
terminate the relationship with them and appoint a new partner for China,
Samarkand Global plc. Our previous partner in China proved that our products
sell very well in China when marketed properly, and we are confident our new
partner will succeed in China with our oral care brands. As a UK based
business with operations in China, our interactions with them are much more
straightforward than dealing directly with a Chinese partner.
Our Venture Life Brands (VLG Brands) continued to be resilient in 2021, and in
particular oral care brands performing well in the UK market in relation to
their peers in the recovery from the COVID pandemic. The new brands recently
acquired are also performing extremely well and already our team have
increased the presence of these products through extending existing
partnerships and striking new partner distribution agreements. Also, our
Customer Brands revenues remained resilient during the period: weaker
performance from some of our partners being negatively affected by COVID was
mitigated by new business from both new and existing partners. The challenges
of operating manufacturing facilities under COVID lockdowns have been managed
superbly by the teams at Biokosmes and Gnesta, and I give particular thanks to
the teams there which ensured we had no interruption to production at any
time.
The challenges presented in 2021 by COVID caused us to deliver weaker
performance than we had expected to at the outset. Despite the weak first half
of the year, we generated revenues in the second half of the year of £18.9
million (36% increase over H1) and adjusted EBITDA of £4.7 million (147%
increase over H1), reflecting the positive impact of the acquisitions on our
trading and showing the scale of the business going forward into 2022, where
we will see a full year impact of these acquisitions. We ended the year with
full year revenue and adjusted EBITDA growth of 9% and 8% respectively, a much
broader brand portfolio, and increased manufacturing operations and capacity.
On a proforma basis (assuming BBI and HICP had been part of the business for
the whole year) our revenues would have been £37.8 million. Looking into
2022, we expect to see continued organic growth within the portfolio, a
significant part of which will be coming from our 2021 acquisitions, which we
also expect to supplement with immediately earnings enhancing acquisitions,
giving the Board every confidence for the year ahead.
I would like to take this opportunity to thank our fantastic team at Venture
Life, who have again proven to be diligent, resilient, hardworking and
creative in the face of challenging times. It has been a pleasure to welcome
the BBI team into the Group, and they have already made a significant
contribution to the business, including Danny Wells, who is now our new Chief
Financial Officer. The Board offers its thanks to Andrew Waters, our outgoing
CFO, for his time at Venture Life, and wish him every success for the future.
Finally, I would like thank the shareholders who have continued to support us
through this challenging year, and we look forward to sharing the progress of
2022 with you all as we move through this year.
Dr Lynn Drummond
Non-executive Chair
16 May 2022
Chief Executive Officer's Statement
Operating review
This year saw significant growth in the Group as we made two immediately
earnings enhancing acquisitions in the summer, fully utilising the cash we
raised from shareholders within an 8-month timeframe. The target of both
acquisitions was to bring in interesting, complementary brands and products
that could successfully leverage the operational capacity and distribution
capability of the Group. The integration of these two businesses has proceeded
to plan in the second half of the year, with the products and the BBI
team/operations now fully integrated within the Group. These two acquisitions
have contributed £8.4 million of partial year revenues into the total Group
revenues of £32.8 million for 2021, and will contribute a full year of
revenues in 2022. The team has already locked in the anticipated cost
synergies and made significant progress in the further commercialisation of
the brands.
Against this strong acquisitive growth, the Group saw a reduction in legacy
revenues, substantially driven by COVID; despite this, the Group delivered 9%
growth in revenues to £32.8 million (2020: £30.1 million) in the year, +11%
on a constant currency basis. The reductions in revenue came from a reduction
in sales to partners who were impacted by COVID (either through lower sell out
in 2021 or due to running down higher than normal inventory levels at the
start of 2021), and from a reduced level of hand sanitiser gel (HSG) sales,
which had given us a significant one-off benefit in 2020.
Due to the acquisition of BBI and HICP, the second half of the year saw
revenues from VLG brands exceed 50% of the overall revenue of the Group for
the first time. Full year revenues from VLG Brands were £17.9 million (2020:
£14.9 million), and from Customer Brands £14.8 million (2020: £15.2
million). Revenues from VLG Brands represented 66% of overall revenues in the
second half of 2021 (vs. 42% in the second half of 2020), reflecting the
impact of the acquisitions, delivering an overall share of 54% for the whole
of 2021, compared to 49% in 2020, which included a a significant amount for
HSG. With organic growth on the higher margin VLG Brands expected to exceed
that of our Customer Brands, coupled with continued selective brand
acquisitions, we would expect the higher margin VLG Brand revenues to continue
to increase as a percentage of overall revenues, which would precipitate a
continued improvement in the gross margin going forward.
A large contributor of the reduction in VLG Brand revenues was our Chinese
partner, which covers both Dentyl and UltraDEX. Sales to this partner totalled
£0.3 million in 2021, compared to £2.4 million in 2020. Due to the
underperformance seen in 2021 and their failure to recover, we terminated with
this agreement late December 2021 and signed a new agreement with Samarkand
Global plc early January 2022.
Gross margin for the year of £13.0 million was at a very similar level to the
previous year (2020: £12.8 million). The gross margin percentage was lower at
39.6% (2020: 42.7%) due to a combination of factors:
- Increased supply prices
- Increased inbound transportation costs
- Non-repeat of high margin Hand Sanitizer Gel (HSG)
- Product mix
The overall impact of these factors contributed a reduction of 6.1% in the
gross margin for the Group, compared to that seen in 2020. Increased supply
prices represented 1.2% of the reduction, increased inbound transport costs
caused a reduction of 0.4%, non-repeated highly profitable HSG sales
attributed 3.5% and the balance coming from other product mix sales.
The increased supply prices and transport costs have been widely reported
globally and have affected our business, as with many. We experienced these
issues in 2021 and they are persisting in 2022. There are challenges around
price, availability and delivery lead times of raw materials and packaging,
that our team have to manage daily. Significant increased energy prices affect
operational costs and supplier component and material costs, with inflationary
pressure and logistic challenges. The Group is using mitigation strategies,
passing on price increases where possible, securing continuity of supply and
fixing prices within the supply base as well as sourcing alternative
suppliers. The recent Ukraine crisis has also affected supplies of some raw
materials from those impacted territories directly and in secondary
derivatives.
The previous financial year benefitted from £3.6 million of HSG sales,
compared to only £0.2 million in 2021. These revenues in 2020 were at a high
margin as it was completely demand driven; we witnessed very significant
immediate demand as there was a significant shortage of supply. The gross
margin earned on these revenues in 2020 amounted to £2.1 million
(representing 58%) which included the positive impact on other products
arising from increased throughput. Without the revenue and margin from HSG in
2020, the Group gross margin for 2020 would have been 40.4%.
In the second half of the year however, the impact of the acquired businesses
and growth in revenues lifted gross margin to 42.4%, being more representative
of the business going forward. The overall 3.1% reduction in gross margin to
39.6% (2020: 42.7%) reflects the adverse impact of supply chain pressures and
product mix as outlined (6.1%) offset by the positive impact of M&A
activity (3.0%).
The Group generated adjusted EBITDA of £6.6 million for the year (2020: £6.1
million), an increase of 8% over the previous year. Despite higher revenues,
the challenges on gross margin percentage meant minimal increase in the gross
margin earned in the year compared to 2020, and tight cost control has helped
to deliver adjusted EBITDA margin of 20%. It is expected that this percentage
margin will increase in 2022 and beyond as we see the full year effect of the
BBI & HHIC acquisitions alongside organic growth.
Acquisitions
During the year, the Group made two immediately earnings enhancing
acquisitions, utilising the funds raised (£34.1 million) from shareholders in
December 2020, which have positively impacted the results of the Group in
2022.
BBI Healthcare Limited
BBI was acquired for £35 million (with a possible additional deferred payment
of £1 million), on 4(th) June 2021. Headquartered in the UK, the business
also had its own dedicated manufacturing facility in Gnesta, Sweden, which
manufactures its Balance Activ(Ò) product for bacterial vaginosis. The
acquisition was immediately earnings enhancing for the Group, and brought
strong brands, products and customers in the areas of women's intimate health
and diabetes support. In the year ended 31(st) December 2020, the business
produced revenues of £10.3 million and adjusted EBITDA of £2.5 million. The
business experienced strong growth in 2020 and this continued in 2021 and is
set to continue into 2022.
In the area of women's intimate health, the key brand of the business is
Balance Activ for the treatment of bacterial vaginosis - the Balance Activ
brand is sold in the UK, The Netherlands and Austria only, mainly in the gel
form, and is the number one brand on Amazon for the treatment of bacterial
vaginosis. The product is also sold under partner brands in some international
territories, the most notable of which is through the partner Bayer Consumer
Care AG. This agreement covers both the gel and pessary format, spans 51
countries and extends until 2030.
The acquisition also brought two brands in the area of diabetes support.
Glucogel is a thick gel, sold mainly under prescription, to support diabetics
when they experience low blood sugar. This product has been on the market
almost 40 years and is sold only in the UK to date. Lift is a more consumer
facing product to again provide glucose supplementation. Sold as chewable
tablets or a juice shot, this provides a measured dose of glucose to support
diabetic patients with low blood sugar. The product was launched in 2008 and
is sold mainly in the UK/Ireland and through some smaller distributors across
Europe.
Helsinn Integrative Care Portfolio (HICP)
The HICP was acquired on 6th August 2021 for a total price of CHF5.0 million
(£4.8 million), 50% was paid on 6(th) August 2021, and the balance is due on
6(th) August 2022. There are no performance criteria attached to the second
payment, it is merely deferred for 12 months after completion. In the year
ended 31(st) December 2020, the portfolio produced revenues of CHF3.6 million
(£2.9 million). The trading for 2020 was impacted by Covid and the reduction
of cancer treatments being administered, but there is significant potential
for growth from this point, which we saw in 2021.
The portfolio comprised three on-market products in the area of oncology
support:
- Gelclair - a muco-adhesive oral rinse gel used for the management of
painful symptoms of oral mucositis (side effect of some cancer therapies).
Gelclair is a registered medical device and is currently partnered in 34
countries;
- Pomi-T - a Polyphenol rich mix of wholefoods used for the management
of prostate specific antigen (PSA) levels in prostate cancer. Pomi-T is a
registered food supplement and is currently partnered in 22 markets; and
- Xonrid - a Hyaluronic acid based topical gel used for the prevention
and treatment of radiation induced dermatitis. Xonrid is a registered medical
device and currently partnered in 22 countries.
Venture Life Group (VLG) Brands
Oral Care - UltraDEX and Dentyl
Revenues for UltraDEX fell 20% to £2.5 million (2020: £3.1 million)
throughout 2021, which was mainly due to the underperformance in China and the
continuation of the pandemic. The decline was not as steep in the UK, with a
7%/£0.2 million decline year-on-year. Across all retailers in the UK,
UltraDEX saw a 7% growth year-on-year in EPOS sell out, despite our revenues
into retailers being in decline by 7%, due to high stock levels in retailers
at the end of 2020.
Despite the oral care market declining in the UK by 3.4%/£5 million 3 ,
UltraDEX improved its position from number 7 in the total oral care market to
number 6, ahead of AquaFresh. 2022, UltraDEX also became the market leader
within the halitosis sub-category, taking 4% market share from its nearest
rival CB12 (Mylan owned). As we move into 2022, we feel confident the brand
has stabilised and we should see signs of recovery as we move through 2022.
Revenues for Dentyl in the UK were slightly ahead of previous year at £2.5
million (2020: £2.4 million). Dentyl is now the number 4 in the UK market,
with only Listerine, Colgate and Corsodyl ahead of it. Due to the increased
costs affecting this brand in particular throughout H2 2021, a cost price
increase was introduced and became effective January 1(st) January 2022. This
will help to mitigate the escalating costs seen in 2021.
Including China, overall revenues for Dentyl fell by 33% to £2.8 million
(2020: £4.2 million), our Chinese partner being responsible for the vast
majority of this reduction; the underperformance of our Chinese partner has
been well-documented, and this partner was terminated in December 2021. In
January 2022, we appointed a new partner - Samarkand Global plc.
Cardiff University completed their clinical study on Dentyl and it was
published as a pre-print on the Medrxiv website; we announced this to the
market on 21(st) February 2022. Further to this, on 19(th) April 2022, it was
finally independently peer-reviewed and published in the Journal of Lipid
Research, concluding that the CPC based mouthwash tested showed the
inactivation of SARS-CoV-2 in the saliva for up to 1 hour.
Women's Intimate Health - Balance Activ
On a proforma basis (that is considering the full year revenues for 2021, not
just those since acquisition), revenues for Balance Activ in the UK grew by
33% to £2.2 million (2020: £1.7 million), which was largely driven by Amazon
sales. The UK Women's Intimate Health market saw a +2% growth with a retail
market value of £45.6 million in 2021 vs. 2020 4 . Of this, the BV
sub-category is worth £5.4 million and Balance Activ currently holds 35%
market share of this sub-category.
On a global basis, the product/brand grew by 0.8% to £5.1 million (2020:
£5.1 million). Outside the UK, the product is partnered in 64 countries,
although only sold currently in 34 countries, and its largest partner is Bayer
Consumer Care AG. In July 2021, the BV gel received registration approval in
Brazil from ANVISA, its regulatory body and the product will launch in H2
2022. In addition, there were 11 partner launches of the product in 2021,
with 8 more expected in Q1 2022.
We believe there are growth opportunities not only within the UK under the
Balance Activ brand, but also geographic expansion opportunities across key
markets globally, and the team remain focussed on these opportunities moving
into 2022.
Women's Health - Fertility Gel
A newly developed Fertility Gel was acquired as part of BBI Healthcare and
this gel launched in the UK market in Q3 2021 under our partners' brand.
Launch into other markets such as France and Germany will be dependent on
sales progression and success seen in the UK.
Diabetes Management - Glucogel and Lift
We acquired two brands within the diabetic management category - Glucogel and
Lift. On a proforma basis, revenue for both brands together grew by 19% to
£5.2 million (2020: £4.3 million), which was largely driven by Lift.
Available in UK pharmacies, health and beauty and grocery channels as well as
online, this provides a convenient solution for those patients experiencing
hypoglycaemia. There are almost 5 million diabetic patients in the UK 5 ,
with 850,000 people currently living with undiagnosed type 2 diabetes, and
this figure is only set to grow.
In addition, Glucogel is currently the number 1 prescribed product for
treating hypoglycaemia and is positioned towards more serious attacks.
Revenues grew by 6% in 2021 on a proforma basis to £2.1 million, and this
business is expected to remain steady as we move into 2022.
Oncology Support - Gelclair and Pomi-T
As part of the HICP acquisition, we now have 2 key brands that sit within
oncology support - Gelclair and Pomi-T. On a proforma basis, Gelclair revenues
grew by 27% to £1.4 million (2020: £1.1 million) and this growth was helped
by the recovery of some cancer treatments as COVID receded somewhat in 2021.
It is partnered in 34 markets globally, with some key markets to be targeted,
e.g., USA, Brazil and Canada, as well as key EU markets in 2022. Q4 2021 saw
the launch of Gelclair in Japan through our partner Terumo.
On a proforma basis, Pomi-T revenues stayed flat at £1.4 million (2020: £1.4
million). In 2021, with only active partners in 5 markets, we see an
opportunity for geographic expansion. In Q4 2021, a new long-term distribution
agreement was concluded for Pomi-T in Germany, with other discussions
underway.
Nail & Foot Care Portfolio
Revenues for the full year 2021 were £2.5 million (2020: £2.5 million), so
consistent with the prior year on a constant currency basis. This part of
the business was impacted by lockdowns early in 2021 and then again in
December 2021, as The Netherlands re-entered lockdown. In 2021, the
manufacturing transfer of all the ex-PharmaSource liquid products to our own
manufacturing facility completed, which has meant greater control over the
whole purchasing and manufacturing process. We saw a number of new launches
in 2021, however, these were offset by a slightly weaker performance in Europe
with some key partners, mainly down due to COVID.
Across the whole VLG brands portfolio, there were 11 new, long-term
distribution agreements signed in 2021 (including those of Bayer Consumer Care
AG previously announced), some of which impacted in 2021, and some that will
impact positively in 2022. We saw 18 in-market product launches by our
partners in various countries throughout 2021, with 7 approved registrations
and a further 12 on-going registrations at present.
Customer Brands
Revenues from Customer Brands slightly reduced by 2.6% to £14.8 million
(2020: £15.2 million) due to the reclassification of revenues on the HICP
assets post-acquisition from Customer Brands to VLG Brands. Aside from this
factor, the customer revenues remained flat year-on-year. We saw revenue
growth from some new and existing partners, but also some revenue reductions
from some partners underperforming for us in the year, either as a result of
reduced sell out or due to de-stocking higher than normal inventory levels at
the start of the year. In 2020, we saw partners generally continuing to buy
from us at the same level as in previous years, as despite lower sell out (due
to lockdowns), they wanted to ensure they would not run out of inventory due
to supply chain interruptions that were seen in the first COVID pandemic. This
left a number of partners with higher-than-normal inventory levels at the end
of 2020, and given the on-going lockdowns seen at the start of 2021 across
Europe in particular, it meant some of our partners did not purchase as much
from us in 2021.
Operating Leverage and Capacity
84% of the revenues delivered by the Group are manufactured at our own
development and manufacturing facilities that we have within the Group. The
newly acquired Lift and Glucogel products (from the BBI acquisition) and a
handful of smaller products are currently made externally. Our expertise as a
Group is in the manufacture of liquids, creams and gels, from 3ml to 1 litre
capacity. One of the Group's very valuable areas of expertise is in the
manufacture of the medical devices, a regulatory category below that of drugs
- it is, however, still subject to rigorous regulation. In addition we also
manufacture products registered as a cosmetic. The facilities have been
frequently inspected by regulatory authorities internationally , and products
made at the Group's facilities are approved to ship into over 90 countries
worldwide.
Our Italian facility, Biokosmes Srl, based in Bosisio Parini, north of Milan,
develops and manufactures most of the internally manufactured products, and
our second site at Gnesta, Sweden, which was part of the BBI acquisition,
manufactures the bacterial vaginosis gel. Both of these facilities are
certified to ISO 13485 for medical devices, a key part of the Group's
expertise. We invested significantly during 2020 to materially increase the
manufacturing capacity at Biokosmes, and this increased our approximate
capacity for production to 55 million units per annum - in 2021, we
manufactured 25 million units, leaving 55% spare capacity.
At the Gnesta site, we produced 13 million tubes of BV out of a total capacity
of 75 million tubes. There is significant capacity available to utilise the
highly automated, efficient equipment at Gnesta for manufacturing other
products in the same format (long neck tubes), and we are currently evaluating
with a number of potential new customers for this.
The Group now has significant capacity for growth, which accommodates both
organic and acquired growth. Beyond this, the Group has the opportunity to
expand production further through:
- increasing the footprint of the current factory in Italy and leasing
further nearby buildings to continue capacity expansion if required, beyond
the current 55 million pieces per annum, and
- utilising the significant free space at the Gnesta plant to provide
additional capacity for manufacturing liquid products, on top of the 75
million capacity of the existing equipment.
Increasing the volumes through the facilities will generate additional
revenues, which is not expected to require significant additional indirect
costs to produce, and so the majority of incremental gross margin generated
would fall through to the bottom line.
Revolving Credit Facility (RCF)
In August 2021, the Group entered into a RCF with its main bank, Santander
Group, alongside Silicon Valley Bank. This facility has an initial approval
for £30 million draw, with an accordion facility for a further £20 million
subject to the banks' ratification. The facility runs for an initial term of
three years and attracts interest of 2.5% above SONIA. There are no capital
repayments required during the term. The facility drawdown is limited to a
gross amount 2.5 times the trailing adjusted EBITDA of the Group (also
adjusted for IFRS16 charges), plus 2.5 times the trailing adjusted EBITDA of
any target we are using the facility to acquire. With net £9.0 million drawn
at 31(st) December 2021 and an outstanding liability of £8.5 million, which
has been used to pay down all other debt in the Group (Italian debt) and the
first payment for HICP, we expect this facility to reduce as we go forward
through cash generation, before any further acquisitions.
We put the facility in place to utilise the cash generative nature of the
business to help fund future acquisitions without the dilutive effect of an
equity raise. The Group is actively reviewing a number of immediately earnings
enhancing acquisitions that it could make utilising this facility.
Focus on Sustainability
As a business that has already undertaken many initiatives to improve its
sustainability and reduce the impact of its operations on the environment,
during the year we formed an ESG Committee to focus and develop our drive
towards increased sustainability. The committee includes members from the
Group Board and employees from the business, and will engage with all key
stakeholders in this process - our aim is to become a trusted, responsible and
sustainable business.
Our 5 step approach over the next twelve months will be:
· Form and develop our ESG leadership team from a diverse and accurate
representation of our stakeholders.
· Consult with stakeholders to understand and align expectations in
being a trusted, responsible and sustainable business.
· Following the stakeholder consultation, identify our pritority goals
and ensure alignment to the SDGs.
· Creating our KPIs, their baseline and measurement methods against
which to track progress.
· Regular reporting and transparency of progress to all our
stakeholders.
As outlined within our ESG strategy, as a business we already undertake many
initiatives towards our goal to become a trusted, responsible and sustainable
business, and we look forward to engaging with and informing all our
stakeholders on our progress against this objective in the future.
Summary & Outlook
As already highlighted, 2021 presented challenges to the Group, due to the
impact of Covid. This pandemic impacted the performance of certain partners as
well as our own customers, and caused severe disruption to supply chain and
logistics, in terms of both time and money. The whole team has worked
tirelessly to minimise the impact of these on the business during the year.
The two earnings enhancing acquisitions in the Summer contributed
significantly to the second half revenues, which were 36% ahead of the first
half revenues, and which had a commensurate impact on gross margin and
adjusted EBITDA in the second half, with adjusted EBITDA being 147% higher in
the second half compared to the first half. The operational leverage of the
Group and the great concentration of higher margin VLG Brands in the Group
have contributed to higher gross margins in the second half, to mitigate some
of the impact on gross margin seen through the year.
We have seen an encouraging start to 2022, with the current order book
comfortably ahead of the same time last year on a like for like basis,
including the acquired businesses. This reflects growth in the underlying
business plus the effect of customers supporting us by ordering further
forward to help manage supply chain disruption and secure stock, which gives
us greater visibility of revenues. Good commercial progress has already been
made in 2022 to date, including the appointment of our new partner for the
Chinese market, and customer price increases being put in place to further
mitigate the cost increases seen in 2021. The supply chain issues experienced
in 2021 are expected to continue for some time for all businesses, and we have
put in place strategies and procedures with both our suppliers and customers
to address these. However, the current level of supply chain disruption is
unprecedented and cannot be underestimated; our supply chain team is reacting
daily to its changes. I would like to thank the whole team at Venture Life for
all their hard work and dedication through this very difficult year, and also
those shareholders who continued to support us despite the challenges we
faced.
Having made some very good immediately earnings enhancing acquisitions and
worked hard to mitigate difficult trading factors seen in 2021, we have a much
stronger consolidated business going into 2022, evidenced by the stronger
order book, with a much higher proportion of high margin VLG Brands, and the
significantly increased revenues and profit in the second half. This growth in
size, along with plenty of internal manufacturing capacity available, and
coupled with our partners' growing confidence coming out of Covid, gives us a
solid foundation for future organic growth. The operational priorites for the
Group in 2022 are:
· To invest in and drive organic growth of our VLG Brands, with our
partners and through innovation;
· To continue to manage the supply chain disruption to minimise impact
on our customers and our profitability;
· To develop and progress our ESG agenda towards becoming a more
trusted, responsible and sustainable business; and
· To consider opportunities for selective earnings enhancing
acquisitions, utilising the substantially undeployed RCF.
Jerry Randall
Chief Executive Officer
16 May 2022
Financial Review
Chief Financial Officer's Statement
The Group delivered another year of revenue and EBITDA growth as it continued
to execute its Buy and Build strategy through the acquisition of the BBI
Healthcare business and the HICP assets plus growth in the core business
(excluding sales of hand sanitiser gel and sales to China). The impact of the
acquisitions has seen revenues from higher margin generating VLG Brands exceed
50% of overall revenue of the Group for the first time and a gross margin %
improvement of 2.0ppts in the second half of the year (excluding HSG).
Momentum is building post acquisitions as demonstrated by Q4 revenues 59%
above that in Q3 driven by a full quarter of revenues from the newly enlarged
Group.
Statement of Comprehensive Income
The Group reported 2021 revenues of £32.8 million, an increase of 9% over the
£30.1 million reported in 2020. The Group comprises of two segments: Venture
Life Brands and Customer Brands. The Venture Life Brands business reported
strong growth of 21.6% to £18.0 million (2020: £14.9 million) driven by the
in-year impact of new acqusiitons. The BBI Healthcare business acquired on 4
June 2021 and Helsinn Healthcare assets acquired on 6 August 2021 delivered
£6.5 million and £1.9 million of revenue respectively for the period
post-acquisition.
Sales of the Group's other branded products reduced to £9.4m (2020: £14.7m),
which was largely attributable to non-repeated hand sanitzer gel sales (£3.4
million net impact) and under-performance of the previous partner for China
(£2.1 million net impact). As such, excluding these adverse impacts, the
underlying performance of the rest of the portfolio achieved growth of £0.2m
/ 1.4%.
The Customer Brands business reported revenues (excluding intercompany sales)
of £14.8 million, a reduction of 2.5% versus 2020. The reported revenue
excludes sales of £0.5m related to Helsinn Healthcare, which were accounted
for as intercompany sales post acquisition. On a like for like basis, the
Customer Brands business remained flat year-on-year. As well as developing and
manufacturing the majority of the Venture Life brands, this part of the
business is also focused on the development and manufacture of products on
behalf of third parties, sold under their brands.
Results for the year
2021 2020 Change
£'000 £'000 %
Revenue 32,762 30,076 8.9%
Gross profit 12,958 12,847 0.9%
Gross profit margin 39.6% 42.7%
Amortisation (2,287) (909)
Other income 338 169
Exceptional costs (1,331) (167)
Operating profit 1,371 3,555 (61.4%)
Operating profit margin 4.2% 11.8%
Net Finance expense (425) (279)
Profit before tax 946 3,276 (71.1%)
Tax 1,456 (908)
Profit for the year 2,402 2,368 1.4%
Earnings Per Share
Basic / pence 1.91 2.74
Diluted / pence 1.79 2.53
Adjusted / pence 4.94 4.46
Annual dividend per share / pence - -
Net cash at end of period / £000s (7,494) 30,917
Gross margin for the year of £13.0 million was at a very similar level to the
previous year (2020: £12.8 million) although the gross margin percentage was
lower at 39.6% (2020: 42.7%) due to a combination of increased supply prices,
increased inbound transportation costs, product mix and non-repeat of high
margin hand sanitiser gel sales. The overall impact of these factors
contributed a reduction of 6.1% in the gross margin for the Group, compared to
that seen in 2020 which was partially mitigated by the positive in-year impact
from margin accretive M&A activity of 3.0%.
The Euro weakened against Sterling by 3.1% during 2021 (based on average FX
rate), which had an overall negative impact on the reported revenue and
operating profit of the Group as most of the Group's gross margins continue to
be Euro denominated.
Administrative expenses increased in the period to £10.6 million from £9.3
million in 2020, an increase of £1.3 million. Of this increase, £1.0 million
related to the inclusion of the BBI Healthcare operation, £1.7m comprised
higher non-cash costs of amortisation and depreciation arising from new
acquisitions, offset by a reduction in net R&D expenditure of £0.3
million and a favourable movement in the required level of debtor provisions
being £0.5 million. The remaining reduction of £0.6 million reduction was
due to the non-repeat of bonus payments made in 2020.
Adjusted EBITDA (as defined by EBITDA excluding share based payments and
exceptional items) increased 8.2% to £6.6 million (2020: £6.1 million) at a
margin of 20.2% (2020: 20.3%). Second half adjusted EBITDA of £4.7m (margin
24.9%) was 147% up on that achieved in the first half of the year and 79% up
on the second half of the previous year.
Exceptional costs of £1.3 million (2020: £0.2 million) significantly
increased due to the incurrence of legal and professional fees plus stamp duty
and warranty insurance associated with the completion of the acquisition of
BBI Healthcare (acquired on 4 June 2021) and to a much lesser extent, the
Helsinn brands (acquired on 6 August 2021), as well as subsequent integration
costs post completion.
Operating profit was £1.4 million (2020: £3.6 million) with the profit
before tax for the Group of £0.9 million (2020: £3.3 million). The decline
in operating profit compared to the growth in adjusted EBITDA is as a result
of higher amortisation and depreciation charges plus the significant increase
in exceptional costs as outlined above.
The Group reported profit after tax of £2.4 million (2020: profit of £2.4
million). Finance costs were £0.5 million (2020: £0.3 million) and comprised
interest payable on the portfolio of euro loans up until closure, coupled with
interest on the Group's new revolving credit facility entered in June 2021.
These translated into adjusted earnings per share (defined as earnings per
share before amortisation, share based payments and exceptional items) of 4.94
pence (2020: 4.46 pence), with the improvement in business performance
generating enhanced shareholder value. The number of shares in issue as at 31
December 2021 was 125,831,530. (31 December 2020: 125,831,530) and the
weighted average number during 2021 was 125,831,530 (2019: 86,402,007).
The ongoing growth of the business and strong levels of Q4 customer billing
resulted in a negative flux to working capital in the amount of £3.2 million
(2020: £3.3) million). Cash generated from operations was £2.0 million
(2020: £3.7 million). Cash used in investing activities amounted to £39.2
million (2020: £7.5 million) and comprised the purchase consideration for the
acquisition of BBI Healthcare of £35.9 million and Helsinn Healthcare £2.4m,
£2.9 million of capital investment into the manufacturing facilities in Italy
and Sweden, plus £0.4 million of capitalised development costs. Net cash from
financing activities was £1.5 million (2020: £36.2 million) and comprised
the drawdown of interest bearing borrowings from the Group's new revolving
credit facility, less repayments which included the settlement of euro loans
in Italy. Overall cash and cash equivalents reduced during the year by
£36.9million (2020 an increase of £31.4 million).
Statement of Financial Position
Non-current assets including goodwill increased by £43.1 million during the
year to £77.2 million.
Intangible non-current assets increased by £38.1 million in the year and
comprised the acquisition of BBI Healthcare (£36.0 million) and the Helsinn
Healthcare assets (£5.0 million) plus capitalised development costs of £0.5
million, partially offset by ongoing amortisation and FX losses arising as a
result of retranslating intangible assets of the foreign operations at the
closing spot rate. Capitalised development costs are carried in the amount of
£1.9 million (2020: £2.0 million) and reflect workflows related to assisting
our customers with formulation upgrades and changes to the Medical Device
regulations.
Property, plant and equipment increased by £2.7 million being the investment
in factory equipment of £1.2 million as part of the Biokosmes expansion
programme, plus the new production facility and machinery in Gnesta which were
acquired with BBI Healthcare £1.5 million, offset by ongoing depreciation and
FX losses on euro denominated assets.
Inventory increased by 1.5% versus 2020, which includes inventory from the
acquisition of BBI Healthcare (£1.2 million) which was offset by the expected
favourable flux from unwinding of raw materials and finished goods in the UK
and Italy following the stock build in the previous year as part of the
Group's contingency plan fro BREXIT and Covid-19. Trade receivables increased
to £10.7 million (2020: £6.7 million) reflecting strong Q4 billing which
included the full impact of new acquisitions. Trade payables grew 7.6% again
driven by the impact of new acquisitions.
Cash and debt
Cash and cash equivalents at the year-end totalled £5.2 million (2020: £42.1
million) with significant funds used during the year for investing activities.
Net cash outflow during 2021 amounted to £36.9 million with the decrease in
cash balances accounted for as follows:
· Operating cash flow before tax and movements in working capital -
inflow of £5.1 million
· Changes in working capital driven by debtor build post acquisition -
outflow of £3.2 million
· Tax payments - outflow of £1.4 million
· Acquisition of BBIH and HICP - outflow of £35.9 million (excluding
PPE)
· Investment in PPE (£0.4 million), intangible development assets
(£0.5 million) and intangibles acquired through business combination (£2.4
million) - outflow of £3.3 million
· Drawdown of Financing (£16.3 million) less repayments and Finance
lease repayments (£14.8 million) - inflow of £1.5 million
Cash flow and net cash
2021 2020
£'000 £'000
Operating cash flow before movements in working capital 5,135 6,704
Change in working capital (3,179) (3,052)
Cash generated from operations 1,956 3,652
Income taxes paid (1,355) (896)
Net cash from operating activities 601 2,756
Cash outflow from investing activities - acquisitions (35,917) (5,465)
Cash outflow from investing activities - additions (3,262) (2,069)
Cash inflow from financing activities - equity raise - 35,040
Cash inflow from financing activities - other financing 1,502 1,181
Increase in cash and cash equivalents (37,076) 31,443
Cash and cash equivalents at beginning of year 42,095 10,710
Effect of foreign exchange rates 216 (58)
Cash and cash equivalents at end of year 5,235 42,095
Net debt, excluding finance lease obligations was £3.2m as at 31 December
2021 (2020: Net cash £35.5 million). The Group is financed by a revolving
credit facility, secured against the assets and profits of most subsidiaries
within the group and with expiry in June 2024. This facility was established
during 2021 in the committed sum of £30.0 million of which £4.0 million and
€6.0 million has been drawn at 31st December 2021. The revolving credit
facility bears interest at a fixed rate of 2.5% plus SONIA on drawn funds as
well as commitment interest at the rate of 1.0% plus SONIA on the balance of
undrawn funds up to the facility limit.
The balance sheet remains strong and the Group has access to low cost debt
finance to progress the development of its business, continue to invest in its
manufacturing capability and further deliver on its acquisition strategy. The
Directors have prepared detailed forecasts looking beyond 12 months from the
date of these financial statements which have been stress tested and show that
the Group can continue to operate profitably in the foreseeable future with
positive cashflow generation. The Directors therefore conclude that the Going
Concern basis remains the appropriate basis upon which to prepare the Group's
financial statements.
Against a challenging backdrop from global supply chain pressures and the
Covid-19 pandemic, 2021 has been an important year for the business which saw
the Group deliver another year of revenue and profit growth as well as the
successful integration of two acquisitions including its largest ever
acquisition in that of BBI Healtchare. Whilst the current level of supply
chain disruption is unprecedented and creates uncertainty, the Group looks
forward to the year ahead with a greater platform established from a wider
product portfolio, additional manufacturing capability and a strengthened
operating team. The momentum in the second half of the year is a strong
indicator of the run-rate from the newly enlarged Group, reflecting the full
year impact of acquisitions and cost synergies realised.
Daniel Wells
Chief Financial Officer
16 May 2022
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2021
Company number 05651130
Year ended Year ended
31 December 31 December
2021 2020
Notes £'000 £'000
Revenue 2 32,762 30,076
Cost of sales (19,804) (17,229)
Gross profit 12,958 12,847
Administrative expenses
Operating expenses (8,441) (7,980)
Impairment losses of financial assets 134 (405)
Amortisation of intangible assets (2,287) (909)
Total administrative expenses (10,594) (9,294)
Other income 338 169
Operating profit before exceptional items 2,702 3,722
Exceptional costs 3 (1,331) (167)
Operating profit 1,371 3,555
Finance income 89 54
Finance costs (514) (333)
Profit before tax 946 3,276
Tax 4 1,456 (908)
Profit for the year 2,402 2,368
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss
Foreign exchange gain / (loss) on translation of subsidiaries (1,543) 1,284
Total comprehensive profit for the year attributable to equity holders of the 859 3,652
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
2021 2020
Profit per share
Basic profit per share (pence) 5 1.91 2.74
Diluted profit per share (pence) 5 1.79 2.53
Consolidated Statement of Financial Position
at 31 December 2021
Company number 05651130
At 31 December At 31 December
2021 2020
Notes £'000 £'000
Assets
Non-current assets
Intangible assets 7,8 65,079 27,024
Property, plant and equipment 9,737 7,018
Deferred Tax 2,349 -
77,165 34,042
Current assets
Inventories 9,019 8,886
Trade and other receivables 12,212 7,653
Cash and cash equivalents 9 5,235 42,095
26,466 58,634
Total assets 103,631 92,676
Equity and liabilities
Capital and reserves
Share capital 10 377 377
Share premium account 10 65,738 65,738
Merger reserve 10 7,656 7,656
Foreign currency translation reserve (114) 1,429
Share-based payments reserve 856 660
Retained earnings (1,349) (3,751)
Total equity attributable to equity holders of the parent 73,164 72,109
Liabilities
Current liabilities
Trade and other payables 9,717 7,108
Taxation 188 433
Interest-bearing borrowings 11 620 2,457
10,525 9,998
Non-current liabilities
Interest-bearing borrowings 11 12,109 8,721
Statutory employment provision 1,236 1,201
Deferred tax liability 6,597 647
19,942 10,569
Total liabilities 30,467 20,567
Total equity and liabilities 103,631 92,676
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
Foreign
Share currency Share-based
Share Premium Merger translation Payments Retained Total
Capital account reserve reserve Reserve earnings Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2020 251 30,824 7,656 145 624 (6,492) 33,008
Profit for the year - - - - - 2,368 2,368
Foreign exchange
on translation - - - 1,284 - - 1,284
Total comprehensive income - - - 1,284 - 2,368 3,652
Share-based payments charge - - - - 409 - 409
Share-based payments charge recycling
- - - - (373) 373 -
Contributions of equity, net of transaction costs 126 34,914 - - - - 35,040
Transactions with
Shareholders 126 34,914 - - 36 373 35,449
Balance at
1 January 2021 377 65,738 7,656 1,429 660 (3,751) 72,109
Profit for the year - - - - - 2,402 2,402
Foreign exchange
on translation - - - (1,543) - - (1,543)
Total comprehensive income - - - (1,543) - 2,402 859
Share-based payments charge - - - - 196 - 196
Share options charge
Recycling - - - - - - -
Transactions with
Shareholders - - - - 196 - 196
Balance at
31 December 2021 377 65,738 7,656 (114) 856 (1,349) 73,164
As at 31st December 2021 the parent entity has lacked distributable reserves
and is accordingly not in a position to declare any dividend.
Consolidated Statement of Cash Flows
for the year ended 31 December 2021
Year ended Year ended
31 December 31 December
2021 2020
£'000 £'000
Cash flow from operating activities
Profit before tax 946 3,276
Finance (income)/expense 425 279
Operating profit 1,371 3,555
Adjustments for:
- Depreciation of property, plant and equipment 1,415 1,081
- Impairment losses of financial assets (134) 405
- Amortisation of intangible assets 2,287 909
- Loss on disposal of non-current assets - 345
- Share-based payment expense 196 409
Operating cash flow before movements in working capital 5,135 6,704
(Increase) / decrease in inventories 718 (3,294)
(Increase) in trade and other receivables (2,989) (1,161)
Increase / (decrease) in trade and other payables (908) 1,403
Cash generated from operations 1,956 3,652
- Tax paid (1,472) (896)
- Tax receipt 117 -
Net cash from operating activities 601 2,756
Cash flow from investing activities:
Acquisition of subsidiaries, net of cash acquired (35,917) (5,465)
Purchases of property, plant and equipment (371) (1,248)
Expenditure in respect of intangible assets (2,891) (821)
Net cash used in investing activities (39,179) (7,534)
Cash flow from financing activities:
Proceeds from issuance of ordinary shares - 36,997
Transaction costs incurred from issue of ordinary shares - (1,957)
Drawdown of interest-bearing borrowings 16,336 5,428
Repayment of interest-bearing borrowings (13,614) (3,433)
Leasing obligation repayments (728) (764)
Interest paid (492) (50)
Net cash from financing activities 1,502 36,221
Net increase in cash and cash equivalents (37,076) 31,443
Net foreign exchange difference 216 (58)
Cash and cash equivalents at beginning of period 42,095 10,710
Cash and cash equivalents at end of period 5,235 42,095
Notes to the Consolidated Statements
for the year ended 31 December 2021
1. Basis of the announcement
The 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 2021 has
been extracted from the Group's audited financial statements which were
approved by the Board of directors on 16 May 2022 and delivered to the
Registrar of Companies for England and Wales following the Company's 2021
Annual General Meeting.
The financial information for the year ended 31 December 2021 has been
extracted from the Group's financial statements for that period. The report
of the auditor on the 2021 financial statements was unmodified, did not
include any references to any matters to which the auditors drew attention by
way of emphasis without qualifying their report and did not contain a
statement under Section 498(2) or Section 498(3) of the Companies Act 2006.
On 31 December 2020, IFRS as adopted by the European Union at that date was
brought into UK law and became UK adopted international accounting standards,
with future changes being subject to endorsement by the UK Endorsement Board.
The Group transitioned to UK adopted international accounting standards in its
consolidated financial statements on 1 January 2021. There was no impact or
changes in accounting policies from the transition.
Whilst the 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 2021 Report and Accounts and updated for
new standards adopted in the current year.
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 2021
Revenue
Sale of goods 17,972 19,047 37,019
Sale of services - - -
Intercompany sales elimination - (4,257) (4,257)
Total external revenue 17,972 14,790 32,762
Results
Operating profit before exceptional items and excluding central administrative 4,255 1,812 6,067
costs
Year ended 31 December 2020
Revenue
Sale of goods 14,910 20,854 35,764
Sale of services - 672 672
Intercompany sales elimination - (6,360) (6,360)
Total external revenue 14,910 15,166 30,076
Results
Operating profit before exceptional items and excluding central administrative 4,551 3,060 7,611
costs
All revenue of the Group is recognised at a point in time with the exception
of the supply of services which is recognised over time in accordance with
IFRS 15.
The reconciliation of segmental operating profit to the Group's profit before
tax is as follows:
Year ended Year ended
31 December 31 December
2021 2020
£'000 £'000
Operating profit before exceptional items and excluding central administrative 6,067 7,611
costs
Exceptional items (1,331) (167)
Central administrative costs (3,365) (3,889)
Finance income / (costs) (425) (279)
Profit before tax 946 3,276
One customer generated revenue of £4,383,290 which accounted for 10% or more
of total revenue (2020: one customer generated revenue of £5,449,000 which
accounted for 10% or more of total revenue).
2.2 Segmental assets and liabilities
At At
31 December 31 December
2021 2020
£'000 £'000
Assets
Venture Life Brands 71,785 22,695
Customer Brands 28,783 31,379
Central Group assets 3,063 38,602
Consolidated total assets 103,631 92,676
Liabilities
Venture Life Brands 13,500 7,685
Customer Brands 10,976 12,176
Central Group liabilities 5,991 706
Consolidated total liabilities 30,467 20,567
2.3 Other segmental information
Depreciation Addition to
and non-current
Amortisation Assets
£'000 £'000
Year ended 31 December 2021
Venture Life Brands 2,868 44,038
Customer Brands 445 564
Central administration 389 -
3,702 44,602
Year ended 31 December 2020
Venture Life Brands 129 5,465
Customer Brands 1,471 2,069
Central administration 390 -
1,990 7,534
2.4 Geographical information
The Group's revenue from external customers by geographical location of
customer is detailed below:
Year ended Year ended
31 December 31 December
2021 2020
£'000 £'000
Revenue
UK 15,888 11,135
Italy 8,882 9,801
Switzerland 1,842 2,638
Germany 951 1,352
Netherlands 658 1,185
Rest of Europe 2,904 1,234
China 273 2,329
Rest of the World 1,364 402
Total revenue 32,762 30,076
3. Exceptional items
Year ended Year ended
31 December 31 December
2021 2020
£'000 £'000
Costs incurred in the acquisition of BBI Healthcare Ltd and Helsinn brands 964 77
Costs incurred in the acquisition of the PharmaSource BV business (completed - 90
24 January 2020)
Integration of acquisitions 261 -
Other 106 -
Total exceptional items 1,331 167
During the period the Group incurred legal and professional fees in relation
to the acquisition of BBI Healthcare Ltd, which was completed during the year
as well as the acquisition of a basket of brands from Helsinn Pharma as well
as further works in relation to prospective acquisitions.
4. Income tax expense
Year ended Year ended
31 December 31 December
2021 2020
£'000 £'000
Current tax:
Current tax on profits for the year 665 1,184
Adjustments in respect of earlier years 99 (209)
Total current tax expense 764 975
Deferred tax:
Origination and reversal of temporary differences (2,220) (67)
Total deferred tax credit (2,220) (67)
Total income tax credit (1,456) 908
Tax on the Group's profit/(loss) before tax differs from the theoretical
amount that would arise using the weighted average tax rate applicable to
profits and losses of the consolidated entities as follows:
Year ended Year ended
31 December 31 December
2021 2020
£'000 £'000
Profit before tax 946 3,276
Profit before taxation multiplied by the local tax rate of 19% (2019: 19%) 180 622
Expenses not deductible for tax purposes 15 118
Change in recognised deferred tax liability 51 -
Change in unrecognised deferred tax asset (2,183) 103
Current year losses for which no deferred tax asset has been recognised 166 -
Utilised losses (213) -
Previously recognised deferred tax 174 -
Other adjustments 65 -
Higher rate on foreign taxes 190 65
Adjustments for current tax of prior periods 99 -
Income tax charge (1,456) 908
In the Spring Budget 2021, the UK Government announced that from 1 April 2023
the corporation tax rate would rise from 19% to 25% on all profits in excess
of £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% on profits in excess of €200,000 and 19% on profits below this
threshold. Corporation tax rates in the Sweden are 20.6%. Deferred taxes at
the balance sheet date have been measured using these enacted tax rates and
reflected in these financial statements.
As at the reporting date, the Group has unused tax losses of £9,038,000
(2020: £10,900,000) available for offset against future profits generated in
the UK. A deferred tax asset has been recognised on the losses which the
company considers will be utilised against future profits in the UK however,
there remain losses of £410,000 which a deferred tax asset has not be
recognised on due to the uncertainty of their recoverability.
The tax charge of the Group is mainly driven by tax paid on the profits of
Biokosmes S.r.l, PharmaSource B.V, Nelie B.V. and Rolf Kullgren A.B. The group
has also recognised the deferred tax asset in relation to losses carried
forward in the UK entities and this has been partly offset by the release of
deferred tax liabilities generated on the acquisition of the BBI Healthcare
Group and the Helsinn business in the current year and Biokosmes, Periproducts
and Dentyl businesses in prior years.
5. Earnings per share
Year ended Year ended
31 December 31 December
2021 2020
Number Number
For basic EPS calculation 125,831,530 86,402,007
For diluted EPS calculation 133,819,347 93,416,888
The dilution reflects the inclusion of the options and LTIPs that have been
issued, amounting to 7,433,702 stock options and 554,115 LTIPs per Note
23.
A reconciliation of the earnings used in the different measures is given
below:
£'000 £'000
For basic and diluted EPS calculation 2,402 2,368
Add back: Amortisation 2,287 909
Add back: Exceptional costs 1,331 167
Add back: Share based Payments 196 409
For adjusted EPS calculation 1 6,216 3,853
1 Adjusted EPS is profit after tax excluding amortisation, exceptional costs
and share-based payments.
The resulting EPS measures are:
Pence Pence
Basic EPS calculation 1.91 2.74
Diluted EPS calculation 1.79 2.53
Adjusted EPS calculation 1 4.94 4.46
Adjusted diluted EPS calculation 4.65 4.12
6. Dividends
Amounts recognised as distributions to equity holders in the period:
Year ended Year ended
31 December 31 December
2021 2020
£'000 £'000
Final dividend - -
The Directors do not recommend the payment of a dividend (2020: £ nil pence
per share).
7. 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 2020 3,280 1,089 1,016 16,417 2,856 24,658
Acquired through business combinations - - 417 4,076 1,040 5,533
Additions 739 - 82 - - 821
Disposals (345) - (182) - - (527)
Foreign exchange movements 170 - 41 784 174 1,169
At 1 January 2021 3,844 1,089 1,374 21,277 4,070 31,654
Acquired through business combinations - 19,004 - 15,177 6,870 41,051
Additions 470 43 513
Disposals (1) (396) (397)
Foreign exchange movements (264) (42) (971) (213) (1,490)
At 31 December 2021 4,049 20,093 979 35,483 10,727 71,331
Amortisation:
At 1 January 2020 1,438 - 703 - 1,603 3,744
Charge for the year 323 - 213 - 373 909
Disposals - - (182) - - (182)
Foreign exchange movements 76 - 6 - 77 159
At 1 January 2021 1,837 - 740 - 2,053 4,630
Charge for the year 408 822 180 877 2,287
Disposals (1) (396) (397)
Foreign exchange movements (132) (13) (123) (268)
At 31 December 2021 2,112 822 511 - 2,807 6,252
Carrying amount:
At 31 December 2020 2,007 1,089 634 21,277 2,017 27,024
At 31 December 2021 1,937 19,271 468 35,483 7,920 65,079
All Capitalised development costs are amortised over their estimated useful
lives, which is five years. All amortisation has been charged to
administrative expenses in the Statement of Comprehensive Income.
All trademark, licence and patent renewals are amortised over their estimated
useful lives, which is between five and ten years. All amortisation has been
charged to administrative expenses in the Statement of Comprehensive Income.
Other intangible assets currently comprise customer relationships and product
formulations acquired through the acquisition of Biokosmes Srl. and customer
relationships acquired through the acquisitions of Periproducts, the Dentyl
brand, the Pharmasource group, BBI Healthcare Ltd and the Helsinn Brands.
These assets were recognised at their fair value at the date of acquisition
and were being amortised over a period of between five and ten years. The
weighted average remaining amortisation period for other intangible assets is
7.1 years (2020: 4.9 years)
Assets with indefinite economic lives as well as associated assets with finite
economic lives are tested for impairment at least annually or more frequently
if there are indicators that amounts might be impaired. The impairment review
involves determining the recoverable amount of the relevant cash-generating
unit, which corresponds to the higher of the fair value less costs to sell or
its value in use.
The key assumptions used in relation to the Biokosmes (Customer Brands
comprising one CGU), Periproducts, the Dentyl brand, Pharmasource group, BBI
Healthcare Ltd and the Helsinn brands (part of the Venture Life Brands
comprising five CGU's) impairment review are as follows:
• The estimates of profit before tax for the three years to 31
December 2024 are based on management forecasts of the Biokosmes,
Periproducts, the Dentyl brand, the Pharmasource group, BBI Healthcare Ltd and
the Helsinn brand businesses, with subsequent years growth forecasted at
CAGR's of 6.2%, 13.9%, 20.5%, 2.1%, 15.3% and 4.3% respectively. Management
have applied risk adjustments to the forecasts and consider these to be
conservative growth rates for these businesses which are reflective of the
operating sectors. During the year a new partner was secured for the Chinese
market and for new agreements were secured with other international partners
which have a material uplift impact on the future sales forecast for
Periproducts Ltd, the Dentyl brands and BBI Healthcare Ltd.
· During 2021, Biokosmes net sales growth was negative 3% due the
acquisition of HelsinnHealthcare assets which is accounted for in separate
parts of the Group post acquisition (on a like for like basis net sales growth
was 2%), Periproduct's main asset (UltraDEX) net sales declined by 20% due to
the termination of the previous Chinese partner, Dentyl brand grew by 3%, the
Pharmsource group net sales remained flat, BBI healthcare Ltd net sales grew
by 8.4% and the sales of Helsinn brands grew by 10.8%.
• The Group has applied a discount rate to the future cash flows of
Biokosmes for five years, with a terminal value reflecting future years. The
rate is based upon the Group WACC of 12.6% and adjusted for specific segment,
country and currency risk and then converted onto a pre-tax basis to derive a
rate of 19.0%. These assumptions generate a significant headroom of £4.2m
over the assets of the business held at the balance sheet date. The Biokosmes
factory has remained open throughout 2021 and in the current year-to-date and
has not been impacted by Covid-19. Sensitivity analysis has been performed by
increasing the pre-tax WACC by 0.5ppt which shows that headroom remains.
· The Group has applied a discount rate to the future cash flows of
Periproducts Ltd for five years including a terminal value. The rate is based
upon the Group WACC of 12.6% and adjusted for specific segment, country and
currency risk and then converted onto a pre-tax basis to derive a rate of
16.6%. These assumptions generate comfortable headroom over the assets of the
business held at the balance sheet date. The impairment assessment of
Periproducts Ltd includes a material uplift from the inclusion of the newly
secured Chinese partner which has been risk adjusted by 50%. Sensitivity
analysis has been performed by increasing the pre-tax WACC by 0.5ppt which
shows that headroom remains.
· The Group has applied a discount rate to the future cash flows of
the Dentyl brand for five years including a terminal value. The rate is based
upon the Group WACC of 12.6% and adjusted for specific segment, country and
currency risk and then converted onto a pre-tax basis to derive a rate of
16.0%. These assumptions generate comfortable headroom of £0.9m over the
assets of the business held at the balance sheet date. The impairment
assessment of the Dentyl brand includes a material uplift from the inclusion
of the newly secured Chinese partner which has been risk adjusted by 50%.
Sensitivity analysis has been performed by increasing the pre-tax WACC by
0.5ppt which shows that headroom remains.
• The Group has applied a discount rate to the future cash flows of
the Pharmasource group for five years including a terminal value. The rate is
based upon the Group WACC of 12.6% and adjusted for specific segment, country
and currency risk and then converted onto a pre-tax basis to derive a rate of
12.9%. These assumptions generate comfortable headroom of £2.2m over the
assets of the business held at the balance sheet date. Sensitivity analysis
has been performed by increasing the pre-tax WACC by 0.5ppt which shows that
headroom remains.
· The Group has applied a discount rate to the future cash flows of BBI
Healthcare Ltd for five years including a terminal value. The rate is based
upon the Group WACC of 12.6% and adjusted for specific segment, country and
currency risk and then converted onto a pre-tax basis to derive a rate of
15.4%. These assumptions generate a headroom of £1.2m over the assets of the
business held at the balance sheet date. The impairment assessment of BBI
Healthcare Ltd includes a material uplift from new customer agreements secured
during the year which have been risk adjusted by 25%. Sensitivity analysis has
been performed by increasing the pre-tax WACC by 0.5ppt which shows that
headroom remains.
· The Group has applied a discount rate to the future cash flows of the
Helsinn brands for five years including a terminal value. The rate is based
upon the Group WACC of 12.6% and adjusted for specific segment, country and
currency risk and then converted onto a pre-tax basis to derive a rate of
16.6%. These assumptions generate comfortable headroom of £1.5m over the
assets of the business held at the balance sheet date. Sensitivity analysis
has been performed by increasing the pre-tax WACC by 0.5ppt which shows that
headroom remains.
· The above impairment assessments of Biokosmes SRL, Periproducts Ltd,
the Dentyl brand, the Pharmasource group, BBI Healthcare Ltd and the Helsinn
brands have included assessment of all elements of intangible value regardless
of whether their economic lives are finite or indefinite, and include Customer
Relationships, acquired formulations, acquired Trademarks and Goodwill.
Intangible assets with indefinite useful lives allocated to operating segments
Year ended 31 December 2021 Year ended 31 December 2020
£'000 £'000
Goodwill PeriProducts Ltd 3,337 3,337
Dentyl 3,100 3,100
Pharmasource BV 4,057 4,340
BBI Healthcare Ltd 13,252 -
The Helsinn brands 1,925 -
Venture Life Brands Total 25,671 10,777
Biokosmes srl 9,812 10,500
BBI Healthcare Ltd - -
Customer Brands Total 9,812 10,500
Total 35,483 21,277
Brands PeriProducts Ltd - -
Dentyl 1,089 1,089
Pharmasource BV - -
BBI Healthcare Ltd -
The Helsinn brands 2,010 -
Venture Life Brands Total 3,099 1,089
Biokosmes srl - -
BBI Healthcare Ltd - -
Customer Brands Total - -
Total 3,099 1,089
The recoverable amount of each segment was determined based on value-in-use
calculations, covering a detailed three-year forecast, followed by an
extrapolation of expected cash flows for the remaining useful lives using a
declining growth rate determined by management. The present value of the
expected cash flows of each segment is determined by applying a suitable
discount rate reflecting current market assessments of the time value of money
and risks specific to the segment.
Year ended 31 December 2021 Year ended 31 December 2020
£'000 £'000
PeriProducts Ltd 5,958 6,290
DentylDentyl 5,262 5,930
Pharmasource BV 7,332 8,659
BBI Healthcare Ltd 36,981 -
The Helsinn brands 6,433 -
Venture Life Brands Total 61,966 20,879
Biokosmes srl 14,435 13,691
Customer Brands 14,435 13,691
These assumptions are subjective and provide key sources of estimation
uncertainty, specifically in relation to growth assumptions, future cashflows
and the determination of discount rates. The actual results may vary and
accordingly may cause adjustments to the Group's valuation in future financial
years. Sensitivity analysis has been performed on the impairment review and
indicate sufficient headroom in the event of reasonably possible changes in
key assumptions are unlikely to result in an impairment for intangibles.
8a. Business combinations
On 4th June 2021 the Company completed the acquisition of 100% of the equity
of BBI Healthcare Ltd and wholly-owned subsidiaries Rolf Kullgren AB, BBI
Healthcare Holdings AB and Kullgren Holdings AB, a group of companies based in
the UK and Sweden engaged in the supply of women's health and energy
management related products to global customers and trading under the name of
"BBI Healthcare". The acquisition consideration was £37.1 million,
comprising £3.1 million net working capital at completion, £22.8 million in
intangible assets (principally customer relationships, distribution agreements
and Trademarks), £3.6 million tangible fixed assets (principally building and
machinery in Sweden), £5.4 million deferred tax provision and a balance of
£13.7 million as goodwill. The magnitude of the goodwill reflects the future
value that the Group can unlock from this business acquisition through (a.)
the trading of these acquired products into its network of existing Venture
Life Brand customers, (b.) value creation through the application of the
Group' internal R&D resources to broaden the product range. The
acquisition consideration of £37.1m million was paid in cash at completion.
The acquisition was funded through the Company's equity raise in 2020.
The acquisition of BBI Healthcare introduces additional strong brands and
products into the Group and customers in the areas of women's intimate health
and diabetes support. The Group acquired the business to further strengthen
the product portfolio and pursue opportunities within existing and new global
markets. The inclusion of this additional business into its portfolio
increased the leverage of its trading infrastructure and contributed to the
overall improvement in profitability. The acquisition has been accounted for
under IFRS 3 as a business combination. The Consolidated Financial Statements
to 2021 include the results of the BBI Healthcare business for the period from
4(th) June 2021 to 31(st) December 2021.
The fair values of the identifiable assets and liabilities of the BBI
Healthcare business as at the date of acquisition were:
Acquisition of BBI Healthcare Ltd on 4th June 2021 Book value Fair Value Adjustments Fair Value
£'000s £'000s £'000s
Assets
Non-current assets 8,099 18,320 26,419
Licenses, Trademarks, Intellectual Property, Capitalised development 696 (696)
Goodwill (within BBI Healthcare Ltd) 4,399 (4,399)
Brands * - 16,994 16,994
Distribution Agreements * - 5,788 5,788
Tangible Fixed Assets 2,977 633 3,610
Deferred Tax Asset 27 - 27
Current Assets 4,088 - 4,088
Inventories 1,293 - 1,293
Trade Receivables 1,374 - 1,374
Other Receivables 213 - 213
Cash 1,208 1,208
Total assets 12,187 18,320 30,507
Current liabilities (1,021) - (1,021)
Trade payables (946) - (946)
Other payables (75) - (75)
Non-current liabilities (9,676) 4,063 (5,613)
Borrowings (9,676) 9,676 -
Deferred tax (5,613) (5,613)
Total net assets 1,490 22,383 23,873
Net Assets acquired 23,873
Goodwill 13,252
Total consideration 37,125
* Intangible assets identified as part of the BBI Healthcare acquisition.
BBI Healthcare was acquired on 4 June 2021. It generated net revenues of £6.5
million and adjusted EBITDA of £2.1 million in the period from acquisiton to
31 December 2021.
8b. Business combinations
On 6th August 2021 the Company completed the acquisition of a basket of brands
from Helsinn Pharma, a company based in Switzerland engaged in the supply of
oncology related products to European customers and trading under the name of
"Helsinn". The acquisition consideration was £4.8 million, comprising £3.1
million in intangible assets (principally customer relationships, distribution
agreements and Trademarks), £0.3 million deferred tax provision and a balance
of £2.0 million as goodwill. The magnitude of the goodwill reflects the
future value that the Group can unlock from this business acquisition through
(a.) the trading of these acquired products into its network of existing
Venture Life Brand customers, (b.) value creation through the transitioning of
manufacturing in-house and (c.) value creation through the application of the
Group' internal R&D resources to broaden the product range. The
acquisition consideration of £4.8 million was paid in cash of £2.4 million
at completion and the balance of £2.4 million at twelve months after
completion. The acquisition was funded through the Company's RCF.
The Helsinn brands acquisition expands the company product portfolio into
oncology support and further broadens its customer base, especially across
Europe. The Group acquired the brands to further strengthen the product
portfolio and pursue identified expansion opportunities in key markets across
Europe, USA and Asia. The inclusion of this additional business into its
portfolio increased the leverage of its trading infrastructure and contributed
to the overall improvement in profitability. The acquisition has been
accounted for under IFRS 3 as a business combination. The Consolidated
Financial Statements to 2021 include the results of the Helsinn brands for the
period from 6(th) August 2021 to 31(st) December 2021.
The fair values of the identifiable assets and liabilities of the Helsinn
business as at the date of acquisition were:
Fair Value Fair Value
CHF'000 £'000
Assets
Non-current Assets
Customer Relationships * 1,365 1,082
Brands * 2,536 2,010
Non-current liabilities
Deferred taxation (329) (261)
Total Net Assets 3,572 2,831
Net Assets acquired 3,572 2,831
Goodwill 2,428 1,925
Total Consideration 6,000 4,756
Satisfied by
Cash paid at completion 3,000 2,378
Cash to be paid 365 days from completion 3,000 2,378
Total Consideration 6,000 4,756
* Intangible assets identified as part of the Helsinn acquisition.
The Helsinn business was acquired on 6 August 2021. It generated net revenues
of £1.9 million in the period from acquisiton to 31 December 2021.
9. Cash and cash equivalents
At At
31 December 31 December
2021 2020
£'000 £'000
Available Cash and cash equivalents 5,235 42,095
The Group holds sterling, Chinese renminbi and euro denominated balances in
the UK. The Group's subsidiaries hold US dollar, yen and euro accounts in
Italy, euro accounts in the Netherlands, a Swiss franc account in Switzerland
and Swedish Krona account in Sweden.
The Directors consider that the carrying value of cash and cash equivalents
approximates their fair value.
10. Share capital and share premium
All shares are authorised, issued and fully paid. The Group has one class of Ordinary Ordinary
ordinary shares which have full voting rights, no preferences and no
restrictions attached.
shares of shares of Share Merger
0.3p each 0.3p each premium Reserve
Number £ £'000 £'000
At 31 December 2021 125,831,530 377,495 65,738 7,656
At 31 December 2020 125,831,530 377,495 65,738 7,656
The Company issued no new shares during 2021. (42,119,424 new shares were
issued during 2020 for consideration of £36,997,000).
The Group operates a Long-Term Incentive Plan. Up to the balance sheet date,
there have been four awards under this plan, in which Executive Directors and
senior management of the Group participate. During 2021, one of the awards
matured and met the vesting conditions.
11. Interest-bearing borrowings
At At
31 December 31 December
2021 2020
£'000 £'000
Current
Invoice financing - 888
Leasing obligations 620 477
Unsecured bank loans due within one year - 1,092
Total 620 2,457
Non-current
Leasing obligations 3,626 4,085
Unsecured bank loans due after one year - 4,636
Secured bank loans due after one year 8,483 -
Total 12,109 8,721
All bank loans are held jointly by Santander Bank and Silicon Valley Bank and
comprise the Group's revolving credit facility, secured against the assets and
profits of most subsidiaries within the group and with expiry in June 2024.
This facility was established during 2021 in the committed sum of £30.0
million of which £4.0 million and €6.0 million has been drawn at 31st
December 2021. (The prior year borrowing comprised loans from several
Italian banks which were all repaid in full during 2021 pursuant to the
revolving credit facility). Invoice financing includes the Italian RiBa (or
"Ricevuta Bancaria") facility which is a short-term facility. The balance
shown above of £nil (2020: £888,000) reflects the amount that had been
settled in Biokosmes' account under RiBa and drawn against invoices in the UK
as at the reporting date.
The revolving credit facility bears interest at a fixed rate of 2.5% plus
SONIA on drawn funds as well as commitment interest at the rate of 1.0% plus
SONIA on the balance of undrawn funds up to the facility limit. The RiBa
invoice financing balance bears interest at variable rates.
A summary showing the utilisation of the revolving credit facility shown
below:
2021 2021 2021 2020 2020 2020
GBP EUR All GBP EUR All
£'000 £'000 £'000 £'000 £'000 £'000
Opening Balance at 1(st) January - - - - - -
Drawdown 9,500 5,884 15,384 - - -
Repayments (5,500) (818) (6,318) - - -
Impact of foreign exchange - (27) (27) - - -
Closing Balance at 31(st) December 4,000 5,039 9,039 - - -
A summary showing the utilisation of the RIBa invoice financing is shown
below:
2021 2020
£'000 £'000
Opening Balance at 1(st) January 888 1,184
Drawdown 953 2,314
Repayments (1,804) (2,668)
Impact of foreign exchange (37) 58
Closing Balance at 31(st) December - 888
A summary showing the contractual repayment of interest-bearing borrowings is
shown below:
At 31 December 2021 At 31 December 2020
Leasing Leasing
obligations Other 2021 obligations Other 2020
£'000 £'000 £'000 £'000 £'000 £'000
Amounts and timing of debt repayable
Within 1 year 660 433 1,093 523 2,052 2,575
1-2 years 633 435 1,068 473 1,508 1,981
2-3 years 419 9,284 9,703 447 1,352 1,799
3-4 years 418 - 418 448 1,167 1,615
4-5 years 410 - 410 447 638 1,085
After more than 5 years 1,899 - 1,899 2,471 90 2,561
Total 4,439 10,152 14,591 4,809 6,807 11,616
The above amounts reflect the contractual undiscounted cash flows, which may
differ to the carrying values of the liabilities at the reporting date.
Net debt reconciliation
Liabilities from Financing activities Other assets
Net Cash /
Borrowings Leases Sub-Total Cash (Net Debt)
Net cash at 01 January 2020 4,374 2,651 7,025 10,710 3,685
Net cashflow - - - 31,443 31,443
Finance lease repayments - (764) (764) - 764
Interest on Leases - 33 33 - (33)
Drawdown 5,428 2,510 7,938 - (7,938)
(Repayments) (3,433) - (3,433) - 3,433
Foreign exchange movements 247 132 379 (58) (437)
Net cash at 31 December 2020 6,616 4,562 11,178 42,095 30,917
Net cashflow - - - (37,076) (37,076)
Finance lease repayments - (728) (728) - 728
Fees and interest (556) - (556) - 556
Drawdown 16,336 733 17,069 - (17,069)
(Repayments) (13,614) - (13,614) - 13,614
Foreign exchange movements (299) (321) (620) 216 836
Net cash at 31 December 2021 8,483 4,246 12,729 5,235 (7,494)
Lease liability
In 2017 the Group adopted IFRS 16 which means that lease contracts that have
previously been recognised as operating leases are now being recognised as
finance leases. In the Statements of Financial Position additional lease
liabilities at 31 December 2021 of £4,246,000 (2020: £4,562,000) and
right-of-use assets of £4,239,000 (2020: £4,520,000) are recognised, giving
a net liability position of £7,000 (2020: £42,000).
1 Adjusted EBITDA is EBITDA before deduction of exceptional items and share
based payments
2 Adjusted earnings per share is profit after tax excluding amortisation,
exceptional items and share-based payments
3 Source: Nielsen, Retail Value Sales, All Outlets, MAT Dec 21 vs. Prior
Year
4 Source: Nielsen, Retail Value Sales, All Outlets, MAT Dec 21 vs. Prior
Year
5 Source:
https://www.diabetes.org.uk/professionals/position-statements-reports/statistics
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