REG - Venture Life Group - Half-year Report - Amendment
20/09/2019 07:05
For best results when printing this announcement, please click on link below:
http://pdf.reuters.com/htmlnews/htmlnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20190919:nRSS0377Na
RNS Number : 0377N
Venture Life Group PLC
20 September 2019
This announcement replaces RNS number 8813M issued on 19 September 2019,
correcting note 4.1. All other information in the announcement remains
unchanged.
19 September 2019
VENTURE LIFE GROUP PLC
("Venture Life" or the "Group")
Unaudited interim results for the six months ended 30 June 2019
Venture Life Group plc (AIM: VLG), a leader in developing, manufacturing and
commercialising products for the self-care market, presents its unaudited
interim results for the six months ended 30 June 2019.
Financial highlights:
• Revenues increased 14% to £9.4 million (H1 2018: £8.3 million)
• Gross profit increased 18% to £3.5 million (H1 2018: £3.0
million)
• Gross profit margin percentage increased to 37.3% (H1 2018:
36.0%)
• Increased investment in Dentyl marketing and new medical devices
• Adjusted EBITDA increased 5.5% to £0.7 million (H1 2018: £0.7
million)
• Profit before tax, amortisation and exceptional items increased
to £0.3 million (H1 2018: £0.1 million)
• Adjusted profit per share 1 of 0.04p (H1 2018: adjusted loss
of 0.3p)
• Net cash generated from operating activities of £1.3 million
(H1 2018: £0.2 million)
• Cash at period end of £10.9 million (31 December 2018: £9.6
million)
Commercial highlights:
· Lloyds Pharmacy to launch Dentyl in the UK
· Increased distribution of Dentyl in Superdrug
· BB Mints launch into Morrisons
· Launch of UltraDEX in ASDA grocery chain and Well Pharmacy, the
3(rd) largest pharmacy chain in the UK, behind Boots and Lloyds
· UltraDEX Whitening mouth rinse launched in Superdrug
· UltraDEX and Dentyl marketing campaigns launched to UK consumers
· 4 long-term development and manufacturing agreements completed
· 7 new international partnering agreements signed, including
Dentyl line extensions in China
· VLG's products launched with 11 international partners in H1 2019
Post-period end highlights:
· Long-term international agreement signed on Dentyl in France
· Venture Life Group plc was once again included in the 'London
Stock Exchange's 1000 Companies to Inspire Britain 2019' list, for the fourth
consecutive year
1 Adjusted profit per share is loss after tax excluding amortisation,
exceptional items and share-based payments.
Jerry Randall, Chief Executive Officer of Venture Life, commented: ''In the
first half of 2019 we saw revenue growth of 14% with strong cash generation
from operating activities of £1.3 million. Despite a challenging trading
environment, I am pleased with the Group's continued commercial progress,
particularly the seven new international partnering agreements signed, which
further expand the Venture Life footprint and reach. These agreements
include increased distribution of the Dentyl range in China as well as the
launch of UltraDEX in ASDA and Well Pharmacy, and the launch of Dentyl into
Lloyds Pharmacy in the UK. Traditionally, we enjoy a stronger second half and,
with a very healthy order book, we expect that to be the case this year.
Meanwhile, our development and manufacturing business has made positive
headway in the first half of 2019. Revenues grew 10% to £6.6 million with
four long-term agreements completed.
As the UK moves closer towards a possible Brexit at the end of October, we
have undertaken significant mitigation planning against associated risk and
remain well-prepared to manage possible disruptions to the business, including
ensuring there is adequate UK stock and good short-term supply. Despite the
challenges, Venture Life has a strong pipeline ahead and we approach the
future with confidence."
For further information, please contact:
Venture Life Group
PLC
Jerry Randall, Chief Executive
Officer
+44 (0) 1344 578004
Andrew Waters, Chief Financial Officer
Cenkos Securities Ltd (Nomad and Broker)
+44 (0) 20 7397 8900
Stephen Keys / Cameron MacRichie (Corporate Finance)
Russell Kerr / Michael Johnson (Sales)
Alma PR
+44 (0) 203 405
0208
Helena Bogle/ Hilary Buchanan / Jessica Joynson
venturelife@almapr.co.uk (mailto:venturelife@almapr.co.uk)
Non-Executive Chair's and Chief Executive Officer's Statement
Overview
The Group is pleased to report significant progress across all areas of the
business. In the first half of 2019, revenues grew by 14% to £9.4 million (H1
2018: £8.3 million), with improvements in EBITDA, profit before tax and
profit after tax. Significantly, there has been strong cash generation from
operating activities of £1.3 million (H1 2018: £0.2 million).
Revenues for the Venture Life brands business were £2.8 million, a 22%
increase on the first half of 2018, while revenues from the Development and
Manufacturing business, where we develop and manufacture products on behalf of
third parties, grew 10% to £6.6 million. The growth in the Venture Life
brands revenue has been driven by the impact of full year revenues from the
Dentyl brand, which was acquired by the Group in August 2018. The increased
revenue growth, combined with our current product offering, has also improved
the gross profit margin, which rose to 37.3%, up from 36.0% in the first half
of 2018. Increased investment in Dentyl marketing and higher investment in
product assets for the new medical device regulations offset this increased
gross margin, along with some one-off costs incurred within the period.
Revenues in the first half were ahead of last year, although they have been
lower than anticipated, primarily due to delayed orders from two of our
Chinese partners, as referenced in our 2018 Full Year Results, which did not
generate any revenue during the period, due to specific market reasons. Our
Chinese partner for Dentyl experienced some product packaging issues in the
first half of 2019 that affected its sell-through, and consequently delayed
new orders from Venture Life. However, we are pleased to report that these
issues have been resolved, sell out in China has resumed. Additionally, we
have signed new agreements with this partner on Dentyl Toothpaste and Dentyl
Fresh Breath Beads (formally BB Mints), the latter of which will start
contributing revenue in the second half of 2019 and we expect them to continue
to be important contributors to our revenues and profitability going forward.
Our Chinese partner for Lubatti bought a significant amount of stock in H1
2018 (£0.6 million); whilst there were no orders in H1 2019, we are beginning
to see new orders come through and there is further commitment to the brand as
we move into H2 and beyond. For some of their key brands, there has been a
strategic shift from off line to online stores exclusively, as footfall
declines and the rise in online sales has an ever greater impact; Lubatti is
one of these brands and is responding well to this new approach.
Even after taking account of these challenges, the Group had strong cash
generation in the first half and, consistent with prior years, has a strong
order book (35% higher than at the same point last year), meaning that we
expect to see second half revenues significantly higher than those in the
first half.
To ensure our product supply to the UK market remains uninterrupted, we
prepared ourselves for a possible Brexit impact in March 2019, which entailed
minor cost. We are preparing for a similar situation in October 2019, chiefly
by ensuring that there is adequate stock in the UK and that our international
manufacturers are able to continue supply in the short term. In the longer
term, with a major part of the Group's operations based in Italy and
distributing to multiple countries, we believe the operational impact of
Brexit will be limited. Even with the pressurised sales environment of the
UK grocery and high street retailers, we are pleased our UK brands continue to
have robust sales and hold their position.
Following on from the 2018 fundraise, we continue to review strategic M&A
opportunities. During the period we considered an opportunity for a
potentially transformational transaction for the Group in terms of size and
scope. As shareholders would expect, we conducted extensive due diligence
which, on this occasion, led us to ultimately decide not to proceed with this
transaction, with there being an exceptional cost of £90,000. We will update
shareholders on any future opportunities as appropriate.
Venture Life Brands
The Venture Life brands business revenues for the first half of 2019 were
£2.8 million, a 22% increase on first half of 2018. Of this, £2.4 million
came from UltraDEX and Dentyl in the UK, with the remainder from international
sales.
The two largest Venture Life brands are our oral care products - UltraDEX and
Dentyl, which are mainly sold in the UK.
UK - UltraDEX
UltraDEX revenues for the first half were £1.3 million (H1 2018: £1.4
million), outperforming the oral market generally, which, whilst still
declining, is expected to do so at slower rate in 2019. We believe that
UltraDEX's out-performance is a result of loyal customer retention, a premium,
well-developed product and our efforts to obtain new listings for the product.
Whilst the wider market conditions in the UK are expected to remain
challenging, taking these strengths together, we expect to outperform the UK
mouthwash market again in 2019.
Confirmation was received in H1 2019 that UltraDEX (both rinse and spray) will
launch in ASDA from September onwards, in addition to Well Pharmacy, the third
largest pharmacy chain in the UK. Superdrug has also confirmed they will
launch UltraDEX Spray both on and off-shelf as well as launch UltraDEX
Whitening. We believe these developments further demonstrate the strength of
our brands.
As well as there being many reasons to be satisfied with the brands
performance, this has to be balanced with one de-list of the brand in one of
our smaller grocer distributors and no repeat of the new product pipe fill
seen last year. With the oral care sector under pressure, it has been
difficult to gain new users into the new products in the consumer setting, and
the One-Go and Fresh Breath Kit will be delisted from two of the larger
pharmacy distributors from July 2019. Management have been quick to identify
better opportunities and the Fresh Breath Kit will instead be positioned
towards the dental channel, as this presents a practical solution for dental
practitioners and patients alike.
It is pleasing to report that Alliance (the wholesale arm of Walgreens Boots
Alliance) will launch UltraDEX Whitening later in 2019. There are also a
number of initiatives in place for the remainder of the year that we
anticipate will positively impact H2 2019. The new UltraDEX marketing campaign
began towards the end of the period, with a focus on sampling to drive trial
and purchase, and initiatives for increasing brand awareness via social media.
Further marketing initiatives are planned for H2 2019.
UK - Dentyl
Dentyl revenues were £1.1 million in the first half of 2019, in line with
management's expectations. The impact of order patterns before we acquired
the brand acquisition and legacy delists/one-offs seen in 2018 prior to the
acquisition continued to affect the business in the first half and are
expected to continue throughout 2019. However, we have seen some positive
gains in the UK market; a key pharmacy retailer increased distribution of
Dentyl in H1 2019 and ASDA increased distribution of the Dentyl Fresh Clove
during H1 2019. Additionally, Morrisons launched BB Mints and AAH, a pharmacy
wholesaler, agreed to list both Dentyl and BB Mints - with the latter paving
the way for Dentyl to be launched in pharmacies. Furthermore, Lloyds
pharmacy also launched Dentyl Smooth Mint and will promote Dentyl Fresh Clove
in store also.
International
The International Brands business delivered revenues of £0.5m during the
period (H1 2019: £0.9m), with the decline mainly due to the lack of orders
from our Chinese partner for Lubatti, as mentioned.
With the acquisition of Dentyl in August 2018, we also acquired a new partner
in China. As previously announced, there have been some issues with product
packaging, which have now been resolved. This has however impacted the
promotion of Dentyl in China during H1 2019, and the partner is now rebuilding
momentum through a fresh marketing approach. We expect orders of Dentyl
mouthwash to resume by the end of the year or early next year. We are pleased
to report that we have strengthened our relationship with our key partner and
new agreements were signed on Dentyl Fresh Breath Beads (previously BB Mints)
and Dentyl Toothpaste (to launch in 2020). We expect further newsflow from
this partner as we move into the second half of the year.
We have a strong order book for H2 2019, with seven new long-term distribution
agreements having been signed in H1 2019, and one post-period end, which will
have a positive impact on H2 2019 and beyond. Our first significant deal on
Dentyl was signed in France with our existing partner La Brosse et Dupont,
that will launch Dentyl into the mass market in Q1 2020. Dentyl is now
present in eight markets and interest remains strong.
Customer Brands
Development and Manufacturing
Our Development and Manufacturing business (Biokosmes) in Italy services both
our own Venture Life brands as well as our customer brands. We continue to
increase output through the plant, which in turn will utilise the operational
leverage we have and deliver increased profitability to the business.
The revenues for the customer brands business grew 10% to £6.6 million in the
first half of 2019, with growth coming from existing partners and new
partners. Some of the highlights include:
· A range of new products developed for Menarini in 2018, launched
in Italy in 2019. These products will begin to be launched internationally,
including Asia, and we are expecting to see growing revenues from this
partner.
· A new long-term agreement signed with Athena Cosmetics
Corporation in the US, to manufacture two products. First production will
commence from August 2019 and a second manufacturing order is expected before
the end of 2019.
· A new long-term agreement has been signed with AlfaSigma in
Italy, to develop and manufacture a new product. Development is due to finish
in October 2019, with first production confirmed by the end of 2019.
· A manufacturing order to produce a new product to be sold
by Italfarmaco in Chile, with potential to expand to further international
markets.
· Development and production of a new product for B3Glam, Italy, to
be sold in the US.
· Development has commenced for Logus Pharma in Italy, to produce a
Medical Device.
· A new long-term agreement with Italian pharmaceutical
company Giellepi S.P.A, to develop and manufacture a new Medical Device by
the end of 2019.
In addition, we have developed a new medical device - DermaRisOn® which
helps to restore the skin barrier and to prevent and treat various dermatitis,
irritations and skin inflammations. We are now promoting this product to
pharmaceutical partners in the international business arena.
Our Development and Manufacturing business has built an excellent reputation
within our industry for the development and manufacture of products for sale
globally, validated by the approvals from regulatory authorities in many
markets. This regulatory expertise allows Venture Life and our customers to
develop new products with the assurance that these can be sold in the major
global markets.
The recent changes in the regulatory rules for medical devices also represent
a significant opportunity for Venture Life. It is obligatory for customers to
undertake a review of their medical devices in order to ensure they comply
with new regulations. We are undertaking these reviews both for our own
products and customers' products, which will enhance the value for our
business in the future and we are investing heavily in 2019 in order to
maximise this opportunity. We believe that this new compliance will secure
significant future revenues for the Group.
In addition we have invested in the facility's product labeling capabilities.
We have implemented procedures, machinery and internal skills to be aligned
with new UDI (unique device identification) labeling requirements, to ensure
we offer the highest level of manufacturing expected by customers. The first
UDI operations have been successfully implemented and we expect new business
opportunities to arise from this investment.
Outlook
Whilst the market conditions for retailers in the UK remain challenging, we
believe that Venture Life has the brands and the expertise to continue to
perform strongly. The marketing initiatives that have been put in place are
expected to have an impact in the second half of the year, which is
traditionally our stronger period, and the Company is well set to capitalise
on opportunities and deliver a positive outcome for the year.
Financial Review
Statement of comprehensive income
Group revenue for the six-month period was £9.4 million, an increase of 14%
on the £8.3 million reported for the same period in 2018. The growth included
the Dentyl sales following the brand's acquisition during H2 2018. On a
like-for-like basis, Group revenue was flat in the six-month period compared
to the first six months of 2018.
The Venture Life Brands business, including Dentyl, increased 22%, with
revenues for the six-month period of £2.8 million compared to £2.3 million
reported in H1 2018.
The Development and Manufacturing business continued to represent the larger
proportion of Group revenue. Revenues were £6.6 million in H1 2019 compared
to £6.0 million for H1 2018 (up 10%) and reflecting different revenue phasing
compared to the prior year. The current manufacturing order book is well ahead
of the same period last year, and the Group expects a stronger H2 2019.
The Group generated gross profit of £3.5 million, representing a gross margin
of 37.3%. This compares to a gross margin of 36.0% for the same period in 2018
on a reported basis. This slight improvement was due to the counteracting
effects of cost increases for raw materials and other components offset by a
higher margin product mix.
Administrative expenses increased in the period to £3.6 million from £3.0
million in H1 2018 due to several factors, some of which were one-off,
including our marketing campaign for Dentyl in the UK. We have also incurred
higher R&D expenditures as a result of changes to the medical device
regulations. We will continue to have this higher level of R&D expenditure
in the second half of the year, however the Group will benefit from this
short-term cost through securing long-term future revenues for the Group. The
Group had some significant changes in the finance function at the start of
2019, which precipitated some one-off costs in the first half. Of the total
increase in administrative costs of £0.6 million, we estimate more than half
to be one-off in nature in 2019 with the balance representing small
administrative cost growth and investment in Dentyl marketing.
H1 2019 generated a positive adjusted EBITDA of £0.7 million, up 5.5%
compared to H1 2018 of £0.7 million.
The loss after tax remained slightly ahead of the prior year at £0.4m (H1
2018: loss of £0.5 million). Loss per share was 0.45p (H1 2018: loss of
1.35p).
The Adjusted profit per share was 0.15p compared to an adjusted loss per share
of 0.36p in H1 2018.
Unaudited Interim Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2019
Note Six months ended Six months ended Year ended
30 June 2019 30 June 2018 31 December
2018
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Revenue 4.1 9,394 8,260 18,770
Cost of sales (5,891) (5,284) (11,482)
Gross profit 3,503 2,977 7,288
Operating expenses (3,217) (2,727) (5,534)
Amortisation of intangible assets 5 (338) (277) (625)
Total administrative expenses (3,555) (3,004) (6,159)
Other income 41 27 94
Operating (loss)/profit before exceptional items (11) - 1,223
Exceptional items 6 (90) (54) (172)
Operating (loss)/profit (101) (54) 1,051
Finance costs (17) (223) (341)
(Loss)/profit before tax (118) (277) 710
Tax 7 (255) (221) (474)
(Loss)/Profit for the period attributable to the equity shareholders of the (374) (498) 236
parent
Other comprehensive (loss)/income which may be subsequently reclassified to 8 - (4) 18
the income statement
Total comprehensive (loss)/profit for the period attributable to equity (374) (502) 254
shareholders of the parent
Basic (loss)/profit per share (pence) attributable to equity shareholders of 9 (0.45) (1.35) 0.42
the parent
Diluted Basic (loss)/profit per share (pence) attributable to equity 9 (0.45) (1.35) 0.38
shareholders of the parent
Adjusted profit/(loss) per share 9 0.15 (0.36) 2.06
Diluted Adjusted profit /(loss) per share 9 0.14 (0.36) 1.83
Unaudited Interim Condensed Consolidated Statement of Financial Position
As at 30 June 2019
Note 30 June 2019 30 June 2018 31 December 2018
(Unaudited) (Unaudited) (Audited)
ASSETS £'000 £'000 £'000
Non-current assets
Intangible assets 11 20,486 16,131 20,542
Property, plant and equipment 4,394 4,811 4,591
24,880 20,942 25,133
Current assets
Inventories 4,326 4,327 3,869
Trade and other receivables 6,345 5,170 7,020
Cash and cash equivalents 10,932 1,496 9,623
21,603 10,993 20.512
TOTAL ASSETS 46,483 31,935 45,645
EQUITY & LIABILITIES
Capital and reserves
Share capital 12 251 111 251
Share premium account 12 30,824 13,289 30,824
Merger reserve 12 7,656 7,656 7,656
Convertible bond reserve - 109 -
Foreign currency translation reserve 252 230 252
Share-based payment reserve 678 586 609
Retained earnings (7,886) (8,224) (7,512)
Total equity attributable to equity holders of the parent 31,775 13,757 32,080
Liabilities
Current liabilities
Trade and other payables 5,364 4,794 4,868
Taxation 255 334 -
Interest bearing borrowings 1,136 2,063 1,911
Convertible bond - 1,847 -
Vendor loan notes - 71 -
6,755 9,109 6,779
Non-current liabilities
Interest bearing borrowings 6,390 6,039 5,157
Vendor loan notes - 1,740 -
Statutory employment provision 994 944 1,062
Deferred tax liability 569 346 567
7,953 9,069 6,786
Total liabilities 14,708 18,178 13,565
TOTAL EQUITY & LIABILITIES 46,483 31,935 45,645
Unaudited Interim Condensed Consolidated Statement of Changes in Equity
As at 30 June 2019
Share capital Share premium account Merger reserve Convertible bond reserve Foreign currency translation reserve Share-based payment reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 111 13,289 7,656 109 234 497 (7,711) 14,185
Impact of adoption of IFRS9 on opening balances - - - - - - (37) (37)
Balance at 1 January 2018 (Audited) 111 13,289 7,656 109 234 497 (7,748) 14,148
Loss for the period - - - - - - (461) (461)
Foreign exchange for period - - - - (4) - - (4)
Total comprehensive income/(expense) - - - - (4) - (498) (502)
Transactions with shareholders:
Share options charge - - - - - 89 - 89
Dividends - - - - - - (15) (15)
Balance at 30 June 2018 (Unaudited) 111 13,289 7,656 109 230 586 (8,224) 13,757
Profit for the period - - - - - - 712 712
Foreign exchange for period - - - - 22 - - 22
Total comprehensive income - - - - 22 - 712 734
Transactions with shareholders:
Issue of share capital 140 17,535 - - - - - 17,675
Repayment of Bond - - - (109) - - 14 (95)
Share options charge - - - - - 23 - 23
Dividend - - - - - - (14) (14)
Balance at 31 December 2018 (Audited) 251 30,824 7,656 - 252 609 (7,512) 32,080
Loss for the period - - - - - - (374) (374)
Foreign exchange for period - - - - - - - -
Total comprehensive (expense) - - - - - - (374) (374)
Transactions with shareholders:
Share options charge - - - - - 69 - 69
Dividends - - - - - - - -
Balance at 30 June 2019 (Unaudited) 251 30,824 7,656 - 252 678 (7,886) 31,775
Unaudited Interim Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2019
Six months ended Six months ended Year ended
30 June 2019 30 June 2018 31 December 2018
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Cash flow from operating activities:
(Loss)/profit before tax (119) (277) 710
Finance cost 17 223 341
Operating (loss)/profit (102) (54) 1,051
Adjustments for:
- Depreciation of property, plant and equipment 352 343 756
- Amortisation of intangible assets 338 277 625
- Finance costs (17) (162) (276)
- Disposal of capitalised development costs - - 148
- Share-based payment expense 69 89 112
Operating cash flow before movements in working capital 641 493 2,452
Taxation received/(paid) - - (565)
(Increase) in inventories (457) (766) (259)
Decrease/(Increase) in trade and other receivables 675 (38) (1,868)
Increase in trade and other payables 428 511 478
Net cash generated by operating activities 1,286 200 238
Cash flow from investing activities:
Acquisition of Dentyl Business - - (4,200)
Purchases of property, plant and equipment (155) (152) (271)
Development expenditure in respect of intangible assets (282) (233) (744)
Net cash used by investing activities (437) (385) (5,215)
Cash flow from financing activities:
Net proceeds from issuance of ordinary shares - - 17,675
Repaid Convertible Bond - - (1,900)
Repaid vendor loan note - - (1,790)
Repayment of deferred consideration - - (410)
Drawdown in interest-bearing borrowings 701 586 200
Leasing obligation repayments (242) (251) (528)
Dividends paid - (15) (14)
Net cash from financing activities 459 320 13,233
Net increase in cash and cash equivalents 1,308 135 8,256
Net foreign exchange difference 1 - 6
Cash and cash equivalents at beginning of period 9,623 1,361 1,361
Cash and cash equivalents at end of period 10,932 1,496 9,623
Notes to the Unaudited Interim Condensed Consolidated Financial Statements for the six months ended 30 June 2019
1. Corporate information
The Interim Condensed Consolidated Financial Statements of Venture Life Group
plc and its subsidiaries (collectively, the Group) for the six months ended 30
June 2019 ("the Interim Financial Statements") were approved and authorised
for issue in accordance with a resolution of the directors on 18 September
2019.
Venture Life Group plc ("the Company") is domiciled and incorporated in the
United Kingdom, and is a public company whose shares are publicly traded.
The Group's principal activities are the development, manufacture and
distribution of healthcare and dermatology products.
2. Basis of preparation
The Interim Financial Statements have been prepared in accordance with IAS 34,
'Interim financial reporting' as adopted by the European Union. The Interim
Financial Statements do not include all the information and disclosures
required in the annual financial statements, and should be read in conjunction
with the Group's Consolidated Financial Statements for the year ended 31
December 2018 ("the 2018 Consolidated Financial Statements") which have been
prepared in accordance with IFRS as adopted by the European Union.
The financial information contained in the Interim Financial Statements, which
are unaudited, does not constitute statutory accounts in accordance with the
Companies Act 2006. The financial information for the year ended 31 December
2018 is extracted from the statutory accounts for that year which have been
delivered to the Registrar of Companies and on which the auditor issued an
unqualified opinion that did not include an emphasis of matter reference or
statement made under section 498(2) or (3) of the Companies Act 2006.
3. Accounting policies
The accounting policies adopted in the preparation of the Interim Financial
Statements are consistent with those followed in the preparation of the 2018
Consolidated Financial Statements.
Foreign currencies
The assets and liabilities of foreign operations are translated into sterling
at exchange rates ruling at the balance sheet date. Revenues generated and
expenses incurred in currencies other than sterling are translated into
sterling at rates approximating to the exchange rates ruling at the dates of
the transactions. Foreign exchange differences arising on retranslation of
assets and liabilities of foreign operations are recognised directly in the
foreign currency translation reserve.
The sterling/euro exchange rates used in the Interim Financial Statements and
prior reporting periods are as follows:
Sterling/euro exchange rates Six months ended Six months ended Year ended
30 June 2019 30 June 2018 31 December 2018
Average exchange rate for the period 1.14 1.136 1.129
Exchange rate at the period end 1.14 1.129 1.121
4. Segmental Information
Management has determined the operating segments based on the reports reviewed
by the Group Board of Directors (Chief Operating Decision Maker) that are used
to make strategic decisions. The Board considers the business from a
line-of-service perspective and uses operating profit/(loss) as its profit
measure. The operating profit/(loss) of operating segments is prepared on the
same basis as the Group's accounting operating profit/(loss).
In line with the 2018 Consolidated Financial Statements, the operations of the
Group are segmented as Brands, which includes sales of healthcare and skin
care products under distribution agreements and direct to UK retailers, and
Development and Manufacturing.
4.1 Segment Revenue and Results
The following is an analysis of the Group's revenue and results by reportable
segment.
Brands Development and Manufacturing Eliminations Consolidated Group
£'000 £'000 £'000 £'000
Six months to 30 June 2019
Revenue
External sales 2,786 6,608 - 9,394
Inter-segment sales - 680 (680) -
Total revenue 2,786 7,288 (680) 9,394
Results
Operating (loss)/profit before exceptional items and excluding central 109 860 - 969
administrative costs
Brands Development and Manufacturing Eliminations Consolidated Group
£'000 £'000 £'000 £'000
Six months to 30 June 2018
Revenue
External sales 2,279 5,981 - 8,260
Inter-segment sales - 1,357 (1,357) -
Total revenue 2,279 7,338 (1,357) 8,260
Results
Operating (loss)/profit before exceptional items and excluding central (68) 842 - 774
administrative costs
Brands Development and Manufacturing Eliminations Consolidated Group
Year to 31 December 2018 £'000 £'000 £'000 £'000
Revenue 6,627 14,887 - 21,514
External sales
Inter-segment sales - (2,744) (2,744) (2,744)
Total revenue 6,627 12,143 (2,744) 18,770
Results
Operating profit before exceptional items and excluding central administrative 404 2,333 - 2,737
costs
The reconciliation of segmental operating loss to the Group's operating loss
before exceptional items excluding central administrative costs is as follows:
Six months ended Six months Year ended
30 June 2019
31 December
ended
(Unaudited)
30 June 2018 2018
(Unaudited) (Audited)
£'000 £'000 £'000
Operating profit before exceptional items and excluding central administrative 969 774 2,737
costs
Central administrative costs (980) (774) (1,514)
Exceptional expenses (90) (54) (172)
Operating (loss)/profit (101) (54) 1,051
Net finance cost (17) (223) (341)
(Loss)/profit before tax (118) (277) 710
5. Amortisation of intangible assets
Six months ended Six months Year ended
30 June 2019
31 December
ended
(Unaudited)
30 June 2018 2018
(Unaudited) (Audited)
Amortisation of: £'000 £'000 £'000
Acquired intangible assets (77) (151) (144)
Patents, trademarks and other intangible assets (75) (79) (162)
Capitalised development costs (186) (47) (319)
(338) (277) (625)
6. Exceptional items
Six months ended Six months Year ended
30 June 2019
31 December
ended
(Unaudited)
30 June 2018 2018
(Unaudited) (Audited)
£'000 £'000 £'000
Costs incurred in acquisitions (90) (54) (172)
Total exceptional items (90) (54) (172)
Exceptional items in the period related to fees incurred in the exploration of acquisition opportunities.
7. Taxation
The Group calculates the income tax expense for the period using the tax rate
that would be applicable to the expected total annual earnings. The major
components of income tax expense in the Interim Condensed Statement of
Comprehensive Income are as follows:
Six months Six months Year ended
31 December
ended ended
30 June 2019
30 June 2018 2018
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Current income tax 255 278 531
Deferred income tax expense related to origination and reversal of timing - (57) (57)
differences
Income tax expense recognised in statement of comprehensive income 255 221 474
The current income tax expense is based on the profits of the Development and
Manufacturing business based in Italy. The UK based businesses on a combined
basis are currently loss making and so there are no UK income tax charges due
in respect of trading for the first six months to 30 June 2019.
The Group has not recognised the deferred tax asset on losses made by the UK
based businesses on a combined basis as although management are expecting the
UK based businesses on a combined basis to become profitable, it is not
currently certain when there will be sufficient taxable profits against which
to offset such losses.
At the period end the estimated tax losses amounted to £9,888,000 (30 June
2018: £9,472,000; 31 December 2018: £9,257,000).
8. Other comprehensive income/(expense)
Other comprehensive income/(expense) represents the foreign exchange
difference on the translation of the assets, liabilities and reserves of
Biokosmes which has a functional currency of Euros. The movement is shown in
the foreign currency translation reserve between the date of acquisition of
Biokosmes, when the GBP/EUR rate was 1.193 and the balance sheet date rate at
30 June 2019 of 1.14 (at 31 December 2018 of 1.121 and at 30 June 2018 of
1.129) and is an amount that may subsequently be reclassified to profit and
loss.
9. Earnings per share
Six months Six months Year ended
ended ended 30 December
30 June 2019 30 June 2018 2018
(Unaudited) (Unaudited) (Audited)
Weighted average number of ordinary shares in issue 83,711,106 36,837,106 55,715,531
(Loss)/Profit attributable to equity holders of (374) (498) 254
the Company (£'000)
Basic (loss)/profit per share (pence) (0.45) (1.35) 0.42
Diluted (loss)/profit per share (pence) (0.45) (1.35) 0.38
Adjusted profit /(loss) per share (pence) 0.15 (0.36) 2.06
Diluted Adjusted profit /(loss) per share (pence) 0.14 (0.36) 1.83
In circumstances where the Basic and Adjusted results per share attributable
to ordinary shareholders are a loss then the respective diluted figures are
identical to the undiluted figures. This is because the exercise of share
options would have the effect of reducing the loss per ordinary share and is
therefore not dilutive under the terms of IAS 33.
10. Dividends
Amounts recognised as distributions to equity holders in the period:
Six months Six months Year ended
ended
ended 31 December 2018
30 June 2019
30 June 2018 (Audited)
(Unaudited)
(Unaudited)
£'000 £'000 £'000
Final dividend - 15 14
11. Intangible assets
The intangible assets of the group of £20.5 million (31 December 2018:
£16.1m) include goodwill, development costs, patents and trademarks and
customer relationships.
At the reporting date goodwill generated from the acquisitions of Biokosmes
Srl in March 2014 and Periproducts Limited in March 2016 accounted for £13.1
million of the intangible assets of the Group (£13.1 million at 31 December
2018). There were no movements in goodwill during the period (increase in
goodwill of £ Nil in the 6 months to June 2018), nor have there been any
impairment of goodwill during this time (6 months to June 2018: £ Nil).
12. Share capital and share premium
Ordinary shares of 0.3p each Ordinary Share Merger
Shares premium reserve
No. £'000 £'000 £'000
Audited at 31 December 2018 and Unaudited at 30 June 2019 83,712,106 251 30,824 7,656
There were no movements in share capital or share premium between 31 December
2018 and 30 June 2019.
13. Related party transactions
The following transactions with related parties are considered by the
Directors to be significant for the interpretation of the Interim Condensed
Financial Statements for the six-month period to 30 June 2019 and the balances
with related parties at 30 June 2019 and 31 December 2018:
Under the terms of the Share Purchase Agreement dated 28 November 2013 and
signed between the Company and the vendors of Biokosmes, one of whom was
Gianluca Braguti, the vendors agreed to indemnify the Company in full for any
net liability arising from certain litigation cases which had not settled at
the time of completion of the acquisition on 27 March 2014. At the period end
the amount due to the Company under the indemnity totalled €250,935, of
which Gianluca Braguti's liability is €248,426. Settlement of this liability
will be made when the final outstanding case is concluded.
Key transactions with other related parties
Braguts' Real Estate Srl (formally known as Biokosmes Immobiliare Srl), a
company 100% owned by Gianluca Braguti a director and shareholder of the Group
provided property lease services to the Development and Manufacturing business
totalling €230,000 in the six months to 30 June 2019 (€230,000 in the six
months to 30 June 2018). At 30 June 2019, the Group owed Braguts' Real Estate
Srl €297,000 (€297,000 at 31 December 2018).
14. Financial instruments
Set out below is an overview of financial instruments held by the Group as at:
30 June 2019 30 June 2018 31 December 2018
Loans and receivables Total financial assets Loans and receivables Total financial assets Loans and receivables Total financial assets
£'000 £'000 £'000 £'000 £'000 £'000
Financial assets:
Trade and other receivables (a) 6,345 6,345 5,055 5,055 6,868 6,868
Cash and cash equivalents 10,932 10,932 1,496 1,496 9,623 9,623
Total 17,277 17,277 6,551 6,551 16,491 16,491
30 June 2019 30 June 2018 31 December 2018
Liabilities (amortised cost) Total financial liabilities Liabilities (amortised cost) Total financial liabilities Liabilities (amortised cost) Total financial liabilities
£'000 £'000 £'000 £'000 £'000 £'000
Financial liabilities:
Trade and other payables (b) 5,636 5,636 4,794 4,794 5,107 5,107
Leasing obligations 2,984 2,984 3,470 3,470 3,226 3,226
Convertible bond - - 1,847 1,847 - -
Vendor loan notes - - 1,811 1,811 - -
Interest bearing debt 4,543 4,543 4,632 4,632 3,842 3,842
Total 13,162 13,162 16,554 16,554 12,175 12,175
(a) Trade and other receivables excludes prepayments
(b) Trade and other payables excludes deferred revenue
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
Recent news on Venture Life
See all newsREG - Venture Life Group - RCF in Place and New Partner in the USA
AnnouncementREG - Venture Life Group - Final Results for year ended 31 December 2023
AnnouncementREG - Venture Life Group - Notice of Results and Investor Presentation
AnnouncementREG - Venture Life Group - Holding(s) in Company
AnnouncementREG - Venture Life Group - Holding(s) in Company
Announcement