REG - Venture Life Group - Interim Results
30/09/2024 07:00
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RNS Number : 1179G Venture Life Group PLC 30 September 2024
30 September 2024
VENTURE LIFE GROUP PLC
("Venture Life", "VLG" or the "Group")
Unaudited interim results for the six months ended 30 June 2024
Venture Life (AIM: VLG), a leader in developing, manufacturing and
commercialising products for the international self-care market, is pleased to
announce its interim results for the six months ended 30 June 2024 (the
"Period"). The Group delivered solid cash generation and has achieved strong
organic growth across its own brands.
Financial Headlines
· Group revenues in line with previous period at £23.5m (H1 23:
£23.5m) and delivered 8% growth from VLG's own brands
· Gross margin increased 90bp to 38.1% (H1 23: 37.2%) reflecting
the greater sales composition of higher margin VLG Brands
· Adjusted EBITDA(2) decreased 18.4% to £3.6m (H1 23: £4.4m), in
line with management's expectations for H1 24, due primarily to increased
marketing expenditure which is anticipated to deliver returns from H2 24
· Net cash from operations increased 58% to £5.8m (H1 23: £3.7m)
and free cashflow(3) increased 69% to £4.3m (H1 23: £2.6m)
· Net debt(4) reduced to £10.5m and Group net leverage(1) reduced
to 1.09x (31 Dec 2023: 1.30x)
Post period end
· Agreement in principle reached with a significant OTC player in
Europe for the licensing and supply of products to a leading brand in Women's
Health launching Q1 2025
· New collaboration signed with an existing blue chip customer for
the exclusive development of new innovative products which further consolidate
the Group's position within the Women's Health category
· Ongoing development of strategic investment opportunities for
margin enhancing and complimentary M&A progressing well
Outlook
· VLG's Brands continue to gain momentum in the UK following
distribution gains and the Group's order book provides clear visibility over
revenue from International partners. Significantly, the order book composition
for the remainder of the current year is weighted further towards the higher
margin VLG Brands and supports an anticipated gross margin improvement over
that delivered in the first half.
· The Board is pleased with the progress made in unlocking
significant opportunities which have extended VLG's footprint across UK
distribution channels and new partners within Europe and the US. These
developments, together with a tight control on operating costs underpin the
Board's confidence in meeting management's expectations for the full year.
Jerry Randall, CEO of Venture Life Group plc commented: "I am pleased with
growth of VLG's Brands in the UK where we have launched some great new
products over the last year and continued to grow our distribution points on
the back of new listings, most significantly across our core brands. The
increased investment in marketing activities and strengthening of
relationships with major retailers is delivering evident results and has put
us well placed to build-out further both in the UK and Europe. Our innovation
team continue to develop and deliver a pipeline of relevant consumer focused
products to enhance our offering for years to come. As previously noted we
intentionally increased marketing expenditure during the period which, as
anticipated, impacted H1 performance, the benefits of this increased spend
have started to be delivered with 56 new listings achieved since the beginning
of the year, including 24 new listings which go live during H2 24. Further, we
have taken steps to internalise production of the recently acquired Earol
brand and have begun manufacturing these products from Biokosmes during H2
which supports gross margin improvement. As such, and as a result of the
progress made against these initiatives and the ability to rationalise certain
costs in the business the Board remains confident in the Group's ability to
achieve management's expectations for the full year and to continue the
Groups' growth trajectory into 2025."
* The performance of the Group is assessed using Alternative Performance
Measures ("APMs"), which are measures that are not defined under IFRS but are
used by management to monitor ongoing business performance against both
shorter term budgets and forecasts and against the Group's longer term
strategic plans. APMs are defined in note 16.
(1) Group net leverage calculated as net debt (excl. finance leases) and
Adjusted EBITDA(2) on a trailing 12-month basis.
(2) Adjusted EBITDA for Group net leverage is EBITDA after deduction of
finance lease costs and before deduction of exceptional items (see note 6) and
share based payments (see note 16a for reconciliation) - the term applies
throughout this report.
(3) Free cashflow calculated as net cash generated from operating activities
less capital expenditure and financial lease payments (see note 16c for
reconciliation)
(4) Net debt calculated as gross debt (excl.finance leases) less cash (see
note16d for reconciliation)
Investor Meets Presentation
A live presentation relating to the 2024 Interim Results via Investor Meet
Company will be provided on 2 October 2024 at 14:00pm BST. The presentation is
open to all existing and potential shareholders. Investors can sign up to
Investor Meet Company for free and add to meet Venture Life Group plc via:
https://www.investormeetcompany.com/venture-life-group-plc/register-investor
(https://www.investormeetcompany.com/venture-life-group-plc/register-investor)
Investors who already follow Venture Life Group plc on the Investor Meet
Company platform will automatically be invited.
For further information, please contact:
Venture Life Group PLC +44 (0) 1344 578004
Jerry Randall, Chief Executive Officer
Daniel Wells, Chief Financial Officer
Cavendish Capital Markets Limited (Nomad and Broker) +44 (0) 20 7397 8900
Michael Johnson (Sales)
Stephen Keys / Camilla Hume (Corporate Finance)
About Venture Life (www.venture-life.com (http://www.venture-life.com) )
Venture Life is an international consumer self-care company focused on
developing, manufacturing and commercialising products for the global
self-care market. With operations in the UK, Italy, The Netherlands and
Sweden, the Group's product portfolio includes some key products such as the
UltraDEX and Dentyl oral care product ranges, the Balance Activ range in the
area of women's intimate healthcare, the Lift and Glucogel product ranges for
hypoglycaemia, Gelclair and Pomi-T for oncology support, Earol for ear wax
removal, products for fungal infections and proctology, and dermo-cosmetics
for addressing the signs of ageing. Its products are sold in over 90 countries
worldwide.
The products, which are typically recommended by pharmacists or healthcare
practitioners, are available primarily through pharmacies and grocery
multiples. In the UK and The Netherlands these are supplied direct by the
Company to retailers, elsewhere they are supplied by the Group's international
distribution partners.
Through its two Development & Manufacturing operations in Italy and
Sweden, the Group also provides development and manufacturing services to
companies in the medical devices and cosmetic sectors.
Trading Performance
Overview
Group revenues for the first half were £23.5m in line with the first half of
the prior period (H1 23: £ 23.5m). We saw growth in the VLG Brands
benefitting from progress achieved in 2023, mitigated by lower Customer Brands
revenues as they returned to more normal levels after exceptional revenues in
H1 23 driven by some customers increasing stock levels.
Underlying this was overall growth of 8% on the Venture Life Brands to £12.9
million (H1 23: £12.0m), and Private Label 10% to £1.0m (H1 23: £0.9
million), whilst Customer Brands was 9% lower, as expected, at £9.6m (H1 23:
£10.6m). The full year impact of listing gains made in the UK in the second
half of 2023 contributed to UK & EU Retail and online revenues growing by
16%, mitigated by International VLG Brands falling 7% due to the H2 phasing of
Gelclair revenues. The previously communicated increased investment in VLG
Brands in the UK during the first half of 2024 is expected to start to deliver
returns during the second half of 2024 as new listings continue to go-live
throughout H2.
Our investment in new product development ("NPD") and innovation continues to
positively impact the Group's revenues, with £0.9m (H1 23: £1.3m) of first
half revenues being generated by products newly developed in 2023 and of this
NPD from VLG Brands accounted for £0.5m (H1 23: £0.1m).
As detailed in our 2023 results update, Customer Brands saw unusually high
growth in the first half of 2023 due to some customers rebuilding stock levels
after the supply chain pressures of 2022. So, and as anticipated, we saw lower
revenues in the first half of 2024 resulting in a more normalised level of
revenues from Customer Brands.
Revenue £'m Unaudited six months ended 30-Jun-24 Actual 30-Jun-23 Actual Growth Vs 2023
Balance Activ 3.3 2.9 14%
Lift 3.1 2.3 35%
Earol 2.8 2.3 22%
Ultradex 1.3 1.1 18%
Gelclair 0.2 1.0 (79%)
Glucogel 1.1 1.0 10%
Dentyl 0.7 0.9 (22%)
Pomi-T 0.0 0.1 (100%)
Other 0.4 0.4 1%
Sub-Total VLG Brands (before private label) 12.9 12.0 8%
Private label 1.0 0.9 10%
Total VLG Brands 13.9 12.9 8%
Customer Brands 9.6 10.6 (9%)
Grand Total 23.5 23.5 0%
Venture Life Brands
VLG Brand revenues (excl. private label) of £12.9m were 8% ahead of the prior
period (H1 23: £12.0m). Revenues in the UK & EU retail and online grew
16% to £8.7m (H1 23: £7.5m) driven by the annualisation of new listings
achieved during 2023, with our 3 core brands (Balance Activ, Lift and Earol
all in growth), and by revenues from newly launched products developed in
2023. Internationally, although again these three core brands were all in
growth, the phasing of orders on Gelclair meant International VLG Brands were
7% lower at £4.2m (H1 23: £4.5m). Excluding the Gelclair sales,
International VLG Brands grew 14% to £4.0m (H1 23: £3.5m).
The Group continues to focus on organic growth of its VLG Brands from
distribution gains, new product development and increased consumer purchasing
through the impact of our increased advertising investment. The extensive
experience and expertise within our innovation team, coupled with
manufacturing capacity, will enable us to continue to drive the growth of our
VLG Brands delivering innovative need state products into the market.
VLG Brands Revenue £'m 30-Jun-24 Actual 30-Jun-23 Actual Growth Vs 2023
Unaudited six months ended
Energy Management 4.2 3.3 27%
Women's Health 3.3 2.9 14%
Ear, Nose & Throat 2.9 2.4 21%
Oral Care 2.0 2.0 1%
Oncology Support 0.2 1.2 (83%)
Footcare 1.0 0.8 25%
Other 0.3 0.3 1%
Total 13.9 12.9 8%
Energy Management
Energy Management (Lift and Glucogel) continued the momentum built in 2023 and
delivered growth of 27% over the prior period to £4.2m (H1 23: £3.3m),
driven primarily by Lift. The brand continues to grow well, with sales through
Amazon and our partner in Eire driving this, and we have seen growth also
through the pharmacy channel. It is an ideal product for subscribe and save
through Amazon, and very receptive to digital activation. Glucogel is now also
available through the Amazon platform adding to the overall positive position.
Lift revenues for the first half were 35% higher than the prior period at
£3.1m (H1 23: £2.3m), and Glucogel revenues were 10% higher than the prior
period at £1.1m (H1 23: £1.0m). Our investment in new products has also
positively impacted the Lift brand, with the launch of the Active Energy Boost
tablets in the second half of 2023 and the launch of several new shot flavours
in 2024.
Women's Health
Revenues for the Balance Activ brand grew by 14% overall to £3.3m (H1 23:
£2.9m), of which £1.5m was in the UK & EU direct to retailers and online
(H1 23: £1.3m) and £1.8m (H1 23: £1.6m) through our international
distribution partners.
The new Thrush Cream product launched in late 2023 has seen positive traction
in the first half and has contributed to the growth, but the growth seen is
below our expectations as new listings have come on line more slowly. Despite
encountering market challenges in the UK impacting all products in this space,
Balance Activ bacterial vaginosis products have still grown in market share,
notwithstanding aggressive marketing and promotion by some competitors.
Another positive for VLG has been the increased focus by retailers on the
menopause space as we will be launching our own new menopause range and this
will happen in Q1 2025.
Ear, Nose & Throat
Revenues from this segment grew 21% to £2.9 million (H1 23: £2.4m), which
was split as to £1.3m (H1 23: £1.1m) in UK & EU direct to retailers and
online, and £1.6m (H1 23: £1.3m) through our international distribution
partners. With the exception of £0.1m (H1 23: £0.0m) of revenues for the
Sterinase products, the rest of the revenues in this segment are from the
Earol products. A change in ownership of our Scandinavian partner has meant
slightly slower progress in 2024 for that market, but we expect a better
position in 2025 as the transfer to new owners is embedded.
The new Baby Earol product was launched at the end of 2023 and has contributed
to growth in the first half in the UK, although its growth has been lower than
expected as penetration into the retailers has taken longer. The Earol
products have been listed on Amazon in 2023 and continue to see positive
progress with these in 2024.
Earol Swim contributed revenues of £0.1m (H1 23: £0.0m) and sells only in
the UK currently, but we are undertaking work to make this available outside
of the UK in future years.
Oncology Support
These products (Gleclair, Pomi T and Xonrid) are currently sold entirely
through distribution partners both in the UK and internationally, and revenues
are dictated by rather lumpy order patterns from partners. These assets were
acquired in 2021, and the previous owner continued to act as the legal
manufacturer for Geclair and Xonrid (releasing product and other activities on
behalf of VLG) until the end of 2023, when MDR approval was expected, at which
time VLG was expected to become legal manufacturer. The previous owner was not
prepared to carry on this activity after the end of 2023. The exact timing of
the MDR approval was not certain so in advance of the change, customers
ordered extra stock in 2023 to cover the first half of 2024 until VLG was able
to release the product. Consequently, it was expected that revenues from
Gelclair and Xonrid in H1 2024, which were £0.2m (H1 23: £1.2m), would be
much lower than in the prior period. Revenues for Pomi T were £0.0m (H1 23:
£0.1m) as there are only a small number of partners for this product and they
historically have taken their stock in the second half of the year. We expect
revenues for these three products to be much higher in the second half of
2024.
Oral care
Overall Oral care revenues were the same as the prior period at £2.0m (H1 23:
£2.0m), but the split between UltraDEX and Dentyl differs. UltraDEX continues
to recover well from the reduction seen during COVID, when the revenues were
hit as people were not going out, either socially or for work. UltraDEX is
proving to be very responsive to promotional activity and is performing well
both online and offline. Dentyl revenues are lower than the prior period as
the product was delisted by Superdrug in the second half of 2023. However,
initiatives in 2024 are driving growth from the brand, including advertising
and promotion in Amazon and Boots, and the launch in Q2 of new labelling with
additional claims around efficacy to compete better with the lead products in
the space.
Digital
Revenues from Amazon continue to grow strongly in the first half, up 50% to
£2.5m (H1 23: £1.6m), driven by strong advertising activities and increasing
the number of our brands listed on the platform. Earol was listed on Amazon
for the first time in the second half of 2023 and has contributed to Amazon
revenues in the first half of 2024. We continue to see strong growth from Lift
on the Amazon platform, where it is proving to be responsive to digital
activation and the 'subscribe and save' model. We also listed Glucogel on
Amazon for the first time in H1 2024 and have seen good traction for the
product without cannibalising other channels.
Customer Brands
As expected, Customer Brands revenues were 9% lower in the first half at
£9.6m (H1 23: £10.6m). Customer Brands had a stronger than usual performance
in the first half of 2023 where revenues grew 20% over the prior period, as a
number of larger customers bought stock ahead for the year after the general
supply chain issues in H2 2022, and this evened out across the year with 2023
revenues in line with 2022 revenues. Within the Customer Brands business we
are heavily reliant on our customers making a success of their brands, there
is little we can do to influence this other than manufacture high quality
products on time and deliver excellent service.
We do continue to attract new business into this division in order to build on
the underlying revenue and customer base, and to seek to protect us when
customers' brands do not perform. It is also normal for the products of our
customers to have their own life cycles where the customer will want to
refresh a brand or product range from time to time. We also use our internal
expertise to develop new products for customers, existing and new. In the
first half of the year, we generated revenues of £0.4m (H1 23: £1.2m) from
new products we developed for customers in 2023. We have attracted a number of
new customers into our business in 2023 and 2024, from whom we are starting to
generate revenues. Continued investment in our development and manufacturing
facilities has always been a feature of the business, enabling us to attract
new business.
Operational developments
It is important that we continue to optimise our business operations to ensure
we maximise profitability and efficiency by many means:
· Internalisation of manufacturing. During Q2 & Q3 2024 we have
invested to internalise the manufacture of the Earol products we acquired late
in 2022. We are pleased that this has been achieved with manufacture of
product commencing in August and deliveries in September. This move will
enhance our profitability and reduce our working capital requirement for this
product.
· Warehouse rationalisation. At the start of 2024 we combined our
UK third party warehousing into one supplier, which has helped to reduce stock
levels, improve efficiency and benefit cashflows.
· Continual improvement and enhancement of reporting. As we have
grown, the reporting requirements of the Group have grown, and we are now
embarking on a project to improve and harmonise our systems across the Group
with a new ERP system. Work has already begun on this project, and will
continue into 2025, and we expect the new system to be fully operational by
2026.
Through acquisitions we have acquired a number of legal entities which through
operational integration have become needless for the future. Over the coming
months and years, we will seek to rationalise the number of entities within
the Group in order to save unnecessary costs, simplify regulatory requirements
and improve efficiency.
Innovation and the Medical device Directive
Innovation continues to sit at the heart of our new product development. As
outlined in previous years, we continue to build revenues and brands with
insightful innovation and new product development. In particular in the first
half of 2024 we have:
· Developed new more sustainable packaging solution for a number of
our products, including UltraDEX.
· Developed a menopause range of products and we are currently
engaged in discussions with retailers to launch in early 2025.
· Developed a number of new products in the Customer Brands
business.
We continue to progress our 30 technical files through the transition from
regulation under the Medical Device Directive (MDD) to the new Medical Device
Regulations (MDR). With the MDD extensions all in place, we can continue to
sell our products registered under MDD until May 2028. This allows us more
time to achieve the transition to MDR, thus spreading the cost. We have
already successfully achieved approval on some of our products under the more
rigorous MDR, including Gelclair, and there is no doubt that attaining this
approval for products will make them more attractive and potentially more
valuable as many products are likely to fail to get approval under the new
regulations.
Sustainable Life
Sustainability is fundamental to the Group's business, and we continually work
towards reducing the impact we have on the environment and improving the
sustainability of our operations. In 2023 we focused on gathering data on our
Biokosmes facilty in Italy in order to understand our carbon footprint at that
site, and the life cycle analysis of our key brands. In 2024 we are utilising
this data to work on our net zero plan for the facility, and at the same time
gather the data for achieving this for the rest of the Group.
Post period-end the Biokosmes facility was again awarded the Silver Ecovadis
sustainability rating based on its most recent assessment, which means the
Group is in the top 15% of companies assessed. This is a tremendous
achievement for the site, as the hurdle required to attain each level rises
each year as the population of companies assessed improves its sustainability.
Profit and loss account
Revenues were in line with the previous period at £23.5m with a greater
weight from VLG Brands which accounted for 59% of overall Group revenue in the
period (H1 23: 55%). The greater sales composition of these higher margin VLG
Brands supported a gross margin improvement of 90bp to 38.1% (H1 23: 37.2%)
(H1 22: 40.6%) aided by customer price increases implemented in late 2023 and
easing of inflationary pressures on supply.
Whilst the Group benefits of the above factors, marginality remains below the
levels from a couple of years ago and getting back to these levels is
restricted by the rapid growth in direct to consumer ("DTC") online revenue to
£2.5m in H1 24 (H1 23: £1.6m) (H1 22: £0.9m). These revenues warrant a
higher selling price per unit but deliver a lower percentage gross margin than
equivalent B2B selling as there are additional fulfilment costs to realise
each sale. Sales through the DTC channel achieve gross margins of approx.
1500bp lower than B2B selling, although the absolute profit after marketing
costs derives similar EBITDA. The continued growth in online selling has
strengthened the Group's ability to improve marginality of these sales at all
levels of the P&L through offering multi-pack options which generate
fulfilment cost efficiencies, organic sales improvement which drive
advertising cost efficiencies plus tightly controlled pricing uplifts.
Operating expenditure increased to £6.6m (H1 23: £5.5m) including
depreciation charges of £1.1m (H1 23: £1.0m). Net of depreciation charges,
operating expenditure increased 21% to £5.5m (H1 23: £4.5m). As referred to
in our July trading update, the Group has increased its marketing expenditure
within the UK and this spend was up by more than 90% to £0.9m against the
comparative period (H1 23: £0.5m). In relative terms the spend for the first
six months of the current year represented 10.3% of VLG Brands revenue in the
UK/EU retail channels (H1 23: 6.7%) although as this spend is weighted towards
our core brands it can be as much as 15-17% of revenue on highest performing
products. The marketing investment is delivering an accelerated growth rate
on the VLG Brands in these channels (H1 24: 16%) (H1 23: 3%). The key areas of
the additional investment are set out below:
· Fixed spend with retailers to run in-store promotions which
provide better shelf placement for our brands and help to strengthen
partnerships with mainstream retailers. This investment is already producing
results with a significant number of new product listings confirmed to launch
in UK retail throughout 2024 which will annualise next year.
· Brand awareness using smart digital marketing activities i.e.
social media which provides reach to millions of potential consumers in cost
effective ways.
· Online advertising enabling continuation of our roll-out of
existing and new products across Amazon in the UK and more widely into the EU
and US. VLG's model applies high up-front investment into these channels with
an initial low sales return and break-even position achieved, after approx. 12
months we see this become profitable as sales grow quickly and advertising
efficiencies are obtained.
Other administrative costs increased by £0.6m (15%) and included the
annualisation of prior year investment into the Group's commercial function
(£0.3m). Net R&D costs of £0.2m were in line with the prior period (H1
23: £0.2m).
The Group delivered Adjusted EBITDA of £3.6m for the six-month period, a
decrease of 18.4% over the £4.4m reported in the previous year and at a
reduced margin of 15.4% (H1 23: 18.9%).
Exceptional items amounted to £0.4m (H1 23: £0.2m) and comprised various
operational restructure activities including redundancy costs associated with
the closure of our offices in The Netherlands, plus external advisor fees in
connection with entity consolidation projects and prospective M&A
expenditure.
Amortisation of £2.3m (H1 23: £2.3m) was in line with the prior period and
depreciation of £1.1m (H1 23: £1.0m) was slightly higher allowing additional
right of use assets associated with extension of warehousing agreements in the
UK.
Finance costs of £1.4m were lower than the prior period (H1 23: £1.7m)
reflecting reduced interest charges on the Group's revolving credit facility
("RCF") which fell to £0.7m (H1 23: £0.8m) and a reduction in net exchange
losses to £0.3m (H1 23: £0.7m). Other non-cash finance costs amounting to
£0.4m (H1 23: £0.2m) were slightly higher than the prior period due to
recognition of losses on modification of the RCF upon renewal on 9 April 2024
which has been extended for a further four years.
Net of the increase in amortisation, impairment, finance costs and reduction
in exceptional costs, the loss before tax for the period increased to £1.6m
(H1 23: £1.3m). Tax of £0.0m (H1 23: £0.2m) comprised a current income tax
charge of £0.5m (H1 23: £0.6m) partial offset by unwind of deferred tax
balances £0.4m (H1 23: £0.4m), resulting in a net loss of £1.7m (H1 23:
£1.5m).
Cash and debt
Net cash from operating activities increased 58% to £5.8m (H1 23: £3.7m) and
benefitted from a working capital improvement of £3.3m arising primarily on
normalisation of trade payables. The comparative period had been adversely
affected by significant supplier payments relating to inventory build-up at
the end of the preceding year.
Free cash flow increased 69% to £4.3m (H1 23: £2.6m) and was used to drive a
net debt reduction of £3.2m to £10.5m at 30 June 2024 (31-Dec-23: £13.7m)
and for servicing debt. Finance costs payable during the period included RCF
interest of £0.5m (H1 23: £0.7m) and one-off fees of £0.4m (H1 23: nil) for
extending this facility out for a further four years.
Group net leverage(1) reduced to 1.09x at the period end (31-Dec-23: 1.30x).
Current trading and outlook
Performance of the VLG Brands has continued to gain momentum in the UK on the
back of distribution gains and the Group's order book provides clear
visibility over revenues of these products from our International partners.
Significantly, the order book composition for the remainder of the current
year is weighted further towards the higher margin VLG Brands than at the same
point in previous years and supports an anticipated gross margin improvement
over that delivered in the first half.
In the Customer Brands' business we have seen de-stocking evident from a small
number of key customers, although it is not anticipated that this will have a
material impact and the outlook for 2025 is becoming increasingly positive.
We are pleased to announce that an agreement in principle has been reached to
license and supply products for a leading brand in Women's Health with a
significant OTC player in Europe which will launch in Q1 2025. Further, our
expertise in developing innovative products continues to achieve results and
has led to a new collaboration with an existing blue chip customer, to
exclusively develop a range of products which further extend the Group's
growing prominence within Women's Health. Discussions over private label
opportunities continue to gain good traction, although the timing of these
launches will be slightly later than expected and impacting in 2025 not 2024.
As alluded to in the July trading update, the Group is also actively pursuing
a number of margin enhancing and complimentary M&A opportunities which are
progressing well.
The Board is pleased with the progress made in unlocking a number of
significant opportunities which have extended VLG's footprint across UK
distribution channels and new partners within Europe and the US. These
developments, together with a tight control on operating costs underpin the
Board's confidence in meeting management's expectations for the full year.
Jerry
Randall
Daniel Wells
Chief Executive
Officer
Chief Financial Officer
30 September
2024
30 September 2024
Unaudited Interim Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2024
Note Six months ended Six months ended Year
ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Revenue 4 23,454 23,454 51,410
Cost of sales (14,512) (14,733) (31,260)
Gross profit 8,942 8,721 20,150
Operating expenses (6,603) (5,496) (11,189)
Impairment (loss)/gain of financial assets (18) 1 101
Amortisation of intangible assets 5 (2,260) (2,321) (4,516)
Impairment of intangible assets - (389) (760)
Total administrative expenses (8,881) (8,205) (16,364)
Other income 40 84 142
Operating profit before exceptional items 101 600 3,928
Exceptional items 6 (357) (217) (639)
Operating (loss)/profit (256) 383 3,289
Finance income - - 15
Finance costs 7 (1,385) (1,716) (2,181)
(Loss)/Profit before tax (1,641) (1,333) 1,123
Tax 8 (46) (175) (202)
(Loss)/Profit for the period attributable to the equity shareholders of the (1,687) (1,508) 921
parent
Other comprehensive loss which may be subsequently reclassified to the income 9 (392) (345) (551)
statement
Total comprehensive (loss)/profit for the period attributable to equity (2,079) (1,853) 370
shareholders of the parent
Basic (loss)/profit per share (pence) attributable to equity shareholders of 10 (1.33) (1.19) 0.73
the parent
Diluted basic (loss)/profit per share (pence) attributable to equity 10 (1.33) (1.19) 0.68
shareholders of the parent
Unaudited Interim Condensed Consolidated Statement of Financial Position
As at 30 June 2024
Note 30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
ASSETS £'000 £'000 £'000
Non-current assets
Intangible assets 11 72,567 75,846 74,612
Property, plant and equipment 12 9,781 9,006 10,194
Deferred tax 8 2,538 2,457 2,530
84,886 87,309 87,336
Current assets
Inventories 10,571 12,666 10,332
Trade and other receivables 13,214 13,034 16,205
Cash and cash equivalents 5,575 3,658 5,622
29,360 29,358 32,159
TOTAL ASSETS 114,246 116,667 119,495
EQUITY & LIABILITIES
Capital and reserves
Share capital 13 380 379 379
Share premium account 13 65,960 65,960 65,960
Merger reserve 13 7,656 7,656 7,656
Foreign currency translation reserve 622 1,220 1,014
Share-based payment reserve 1,151 932 1,034
Retained earnings (1,436) (2,221) 211
Total equity attributable to equity holders of the parent 74,333 73,926 76,254
LIABILITIES
Current liabilities
Trade and other payables 9,562 8,973 9,066
Taxation 183 1,055 269
Interest bearing borrowings - Invoice financing - - 616
Interest bearing borrowings - Leasing obligations 1,139 761 1,044
Interest bearing borrowings - Bank loans - - 16,467
Interest bearing borrowings - Subordinated loan note (Deferred consideration) 2,329 - 2,215
13,213 10,789 29,677
Non-current liabilities
Interest bearing borrowings - Bank loans 13,796 16,898 -
Interest bearing borrowings - Leasing obligations 3,882 3,257 4,050
Interest bearing borrowings - Subordinated loan (deferred consideration) - 2,106 -
Statutory employment provision 1,495 1,413 1,544
Deferred tax liability 8 7,527 8,278 7,970
26,700 31,952 13,564
TOTAL LIABILITIES 39,913 42,741 43,241
TOTAL EQUITY & LIABILITIES 114,246 116,667 119,495
Unaudited Interim Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2024
Share capital Share premium account Merger reserve Foreign currency translation reserve Share-based payment reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2023 (Audited) 379 65,960 7,656 1,565 812 (713) 75,659
Loss for the period - - - - - (1,508) (1,508)
Foreign exchange for period - - - (345) - - (345)
Total comprehensive income - - - (345) - (1,508) (1,853)
Share options charge - - - - 120 - 120
Transactions with Shareholders - - - - 120 - 120
Balance at 30 June 2023 (Unaudited) 379 65,960 7,656 1,220 932 (2,221) 73,926
Profit for the period - - - - - 2,429 2,429
Foreign exchange for period - - - (206) - - (206)
Total comprehensive income - - - (206) - 2,429 2,223
Share options charge - - - - 105 - 105
Share options charge recycling - - - - (3) 3 -
Transactions with Shareholders - - - - 102 3 105
Balance at 30 December 2023 (Audited) 379 65,960 7,656 1,014 1,034 211 76,254
Loss for the period - - - - - (1,687) (1,687)
Foreign exchange for period - - - (392) - - (392)
Total comprehensive income - - - (392) - (1,687) (2,079)
Share options charge - - - - 157 - 157
Share options charge recycling - - - - (40) 40 -
Contributions of equity, 1 - - - - - 1
net of transaction costs
Transactions with Shareholders 1 - - - 117 40 158
Balance at 30 June 2024 (Unaudited) 380 65,960 7,656 622 1,151 (1,436) 74,333
Unaudited Interim Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2024
Six months Six months Year ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Cash flow from operating activities:
(Loss)/profit before tax (1,641) (1,333) 1,123
Finance cost 1,385 1,716 2,166
Operating (loss)/profit (256) 383 3,289
Adjustments for:
- Depreciation of property, plant and equipment 1,105 1,006 2,128
- Impairment losses of financial assets 18 (1) (101)
- Amortisation of intangible assets 2,260 2,321 4,516
- Impairment of intangible assets - 389 760
- (profit)/Loss on disposal of non-current assets (7) - 23
- Share-based payment expense 157 120 225
Operating cash flow before movements in working capital 3,277 4,218 10,840
(Increase)/decrease in inventories (397) (952) 1,481
Decrease in trade and other receivables 2,747 3,096 104
Increase/(decrease) in trade and other payables 824 (2,296) (2,590)
Cash generated by operating activities 6,451 4,066 9,835
Tax paid (622) (370) (1,615)
Tax receipt - - -
Net cash from operating activities 5,829 3,696 8,220
Cash flow from investing activities:
Acquisition of subsidiaries, net of cash acquired - (2,933) (2,933)
Purchases of property, plant and equipment (312) (242) (820)
Expenditure in respect of intangible assets (622) (414) (1,587)
Net cash used by investing activities (934) (3,589) (5,340)
Cash flow from financing activities:
Net proceeds from issuance of ordinary shares - - -
Drawdown in interest-bearing borrowings - 1,838 3,165
Repayment of interest-bearing borrowings (3,203) (2,276) (3,581)
Leasing obligation repayments (579) (479) (999)
Interest paid (1,069) (755) (1,391)
Net cash from financing activities (4,851) (1,672) (2,806)
Net (decrease)/increase in cash and cash equivalents 44 (1,565) 74
Net foreign exchange difference (91) (408) (83)
Cash and cash equivalents at beginning of period 5,622 5,631 5,631
Cash and cash equivalents at end of period 5,575 3,658 5,622
Notes to the Unaudited Interim Condensed Consolidated Financial Statements for the six months ended 30 June 2024
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 2024 ("the Interim Financial Statements") were approved and authorised
for issue in accordance with a resolution of the directors on 30 September
2024.
Venture Life Group plc ("the Company") is domiciled and incorporated in the
United Kingdom, and is a public company whose shares are publicly traded on
AIM. The Group's principal activities are the development, manufacture and
distribution of healthcare and dermatology products.
2. Basis of preparation
The interim financial information in this report has been prepared using
accounting policies consistent with International Financial Reporting
Standards ("IFRS") as adopted by the UK within the meaning of section 343 of
the companies act 2006. IFRS is subject to amendment and interpretation by the
International Accounting Standards Board (IASB) and the IFRS Interpretations
Committee (IFRIC) and there is an ongoing process of review and endorsement by
the UK Endorsement Board. The financial information has been prepared based on
IFRS that the Directors expect to be adopted by the UK and applicable as at 31
December 2024. The Group has chosen not to adopt IAS 34 "Interim Financial
Statements" in preparing the interim financial information.
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
2023 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 and did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or (3) of the
Act.
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
Consolidated Financial Statements for the year ended 31 December 2023.
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 and sterling/SEK rates used in the Interim
Financial Statements and prior reporting periods are as follows:
Sterling/euro exchange rates Six months Six months Year ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
Average exchange rate for period 1.170 1.141 1.150
Exchange rate at the period end 1.180 1.163 1.153
Sterling/SEK exchange rates Six months Six months Year ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
Average exchange rate for period 13.324 12.926 13.187
Exchange rate at the period end 13.393 13.710 12.830
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) before
exceptional items (see note 6). In line with the 2023 Consolidated Financial
Statements, the operations of the Group are segmented as VLG Brands, which
includes sales of healthcare and skin care products under distribution
agreements and direct to UK retailers, and Customer Brands, which includes
development and manufacturing.
The following is an analysis of the Group's revenue and results by reportable
segment.
VLG Brands Customer Brands Eliminations Consolidated Group
£'000 £'000 £'000 £'000
Six months to 30 June 2024
Revenue
External Sales 13,819 9,635 - 23,454
Inter-segment sales 613 1,911 (2,524) -
Total revenue 14,432 11,546 (2,524) 23,454
Results
Operating (loss)/profit before exceptional items and excluding central 1,401 1,195 - 2,596
administrative costs
VLG Brands Customer Brands Eliminations Consolidated Group
£'000 £'000 £'000 £'000
Six months to 30 June 2023
Revenue
External Sales 12,875 10,579 - 23,454
Inter-segment sales 683 3,637 (4,320) -
Total revenue 13,558 14,216 (4,320) 23,454
Results
Operating (loss)/profit before exceptional items and excluding central 1,097 1,752 - 2,849
administrative costs*
VLG Brands Customer Brands Eliminations Consolidated Group
£'000 £'000 £'000 £'000
Twelve months to 31 December 2023
Revenue
External sales 30,727 20,684 - 51,411
Inter-segment sales 1,902 6,647 (8,549) -
Total revenue 32,629 27,331 (8,549) 51,411
Results
Operating profit before exceptional items and excluding central administrative 5,316 3,502 - 8,818
costs
*Prior year figures have been re-analysed for the six months ended 30 June
2023 due to an error.
Six months Six months Year ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Operating profit before exceptional items and excluding central administrative 2,596 2,849 8,818
costs
Central administrative costs (2,495) (2,249) (4,890)
Exceptional expenses (357) (217) (639)
Operating (loss)/profit (256) 383 3,289
Net finance cost (1,385) (1,716) (2,166)
(Loss)/profit before tax (1,641) (1,333) 1,123
,
5. Amortisation of intangible assets
Six months Six months Year ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
Amortisation of: £'000 £'000 £'000
Acquired intangible assets (791) (794) (1,586)
Patents, trademarks and other intangible assets (891) (1,189) (2,061)
Capitalised development costs (578) (338) (869)
(2,260) (2,321) (4,516)
6. Exceptional items
Six months Six months Year ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Prospective M&A costs (110) - (86)
Integration of acquisitions (89) (160) (277)
Restructuring costs (158) (57) (276)
(357) (217) (639)
The Group treats costs as exceptional items where their frequency and nature
warrant being separately classified. In the six-month period to 30 June 2024,
the Group incurred restructuring costs of £158,000 primarily owing to
redundancy costs and legal fees associated with the closure of the Group's
offices in The Netherlands. Costs of £89,000 were incurred in relation to
completing integration of prior year acquisitions including external advisor
fees in respect of entity rationalisation activities. Other exceptional costs
comprised £110,000 incurred in relation to ongoing prospective M&A
activities.
7. Finance costs
Six months Six months Year ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
On loans and overdrafts 721 802 1,613
Loss on non-substantial modification of Revolving Credit Facility 151 - -
Amortised finance issue costs 115 183 199
Interest on lease liabilities 100 34 72
Net exchange difference 298 697 297
1,385 1,716 2,181
8. Taxation
The Group calculates the income tax expense for the period using the tax rate
that would be applicable to the earnings in the six months to 30 June 2024.
The major components of income tax expense in the Interim Condensed Statement
of Comprehensive Income are as follows:
Six months Six months Year ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Current income tax (487) (599) (1,013)
Deferred income tax expense related to origination and reversal of timing 441 424 811
differences
Income tax (expense)/credit recognised in statement of comprehensive income (46) (175) (202)
The current income tax expense is based on the profits of the businesses based
in Italy and Netherlands. The UK based businesses have utilised tax losses and
thus have no current income tax expense.
At the period end, the estimated tax losses amounted to £9,469,000 (30 June
2023: £9,867,000; 31 December 2023: £9,469,000).
9. Other comprehensive income/(expense)
Other comprehensive income/(expense) represents the foreign exchange
difference on the translation of the assets, liabilities and reserves of
Biokosmes and PharmaSource which have functional currencies of Euros and the
Swedish entities which have functional currencies in Swedish Krona (SEK). 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 2024 of 1.180 (at 31 December 2023 of 1.153 and at
30 June 2023 of 1.163) together with the same computation for PharmaSource BV
between the date of acquisition when the GBP/EUR rate was 1.185 and the
balance sheet date rate at 30 June 2024 of 1.180. The movement for Sweden is
shown in the foreign currency translation reserve between the date of
acquisition of BBI Healthcare, when the GBP/SEK rate was 11.742 and the
balance sheet date rate at 30 June 2024 of 13.393 (at 31 December 2023 of
12.830 and at 30 June 2023 of 13.710). The result is an amount that may
subsequently be reclassified to profit and loss.
10. Earnings per share
Six months Six months Year ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
Weighted average number of ordinary shares in issue 126,529,587 126,498,197 126,498,197
(Loss)/profit attributable to equity holders of (1,687) (1,508) 921
the Company (£'000)
Basic (loss)/profit per share (pence) (1.33) (1.19) 0.73
Diluted (loss)/profit per share (pence) (1.33) (1.19) 0.68
Adjusted profit per share (pence) 0.40 0.91 5.58
Diluted adjusted profit per share (pence) 0.37 0.86 5.21
Adjusted earnings per share is profit after tax excluding amortisation,
exceptional items and share based payments. Diluted adjusted earnings per
share is profit after tax excluding amortisation, exceptional items and share
based payments, diluted by the inclusion of 10,194,015 stock options and
404,599 long-term incentive plan awards ("LTIP's"). Including this dilution,
the weighted average number of ordinary shares for the diluted EPS calculation
is 137,128,201 (30 June 2023: 133,506,827; 31 December 2023: 133,635,025)
shares.
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.
11. Intangible assets
At the reporting date the Goodwill generated from the acquisitions of
Biokosmes Srl in March 2014, Periproducts Limited in March 2016, Dentyl in
August 2018, PharmaSource BV in 2020, BBI Healthcare in June 2021, Helsinn in
August 2021 and HL Healthcare in November 2022 accounted for £38.3m of the
intangible assets of the Group (£38.6m at 31 December 2023). There was no
impairment of Goodwill in the reporting period (6 months to June 2023:
£389,000). There was a total impairment of Goodwill of £760,000 in the 12
months to 31 December 2023.
Development Costs Brands Patents and Trademarks Goodwill Other Intangible Assets Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost or valuation:
At 1 January 2023 5,119 29,375 1,059 39,652 13,523 88,728
Additions 411 - 3 - - 414
Disposals - - - - - -
Foreign exchange (182) - (20) (428) (94) (724)
At 30 June 2023 5,348 29,375 1,042 39,224 13,429 88,418
Additions 966 - 207 - - 1,173
Disposals (22) - - - - (22)
Foreign exchange 98 - 5 123 26 252
At 31 December 2023 6,390 29,375 1,254 39,347 13,455 89,821
Additions 611 - 11 622
Foreign exchange (164) - (16) (328) (71) (579)
At 30 June 2024 6,837 29,375 1,249 39,019 13,384 89,864
Amortisation:
At 1 January 2023 2,780 2,344 693 - 4,217 10,034
Charge for the period 338 1,115 74 - 794 2,321
Impairment charge - - - 389 - 389
Foreign exchange (89) - (12) - (71) (172)
At 30 June 2023 3,029 3,459 755 389 4,940 12,572
Charge for the period 531 802 70 - 792 2,195
Impairment charge - - - 371 - 371
Foreign exchange 44 3 2 22 71
At 31 December 2023 3,604 4,261 828 762 5,754 15,209
Charge for the period 578 803 88 791 2,260
Foreign exchange (91) - (11) (9) (61) (172)
At 30 June 2024 4,091 5064 905 753 6,484 17,297
Carrying amount:
At 31 December 2023 2,786 25,114 426 38,585 7,701 74,612
At 30 June 2023 2,319 25,916 287 38,835 8,489 75,846
At 30 June 2024 2,746 24,311 344 38,266 6,900 72,567
12. Property, Plant & Equipment
The carrying value of property, plant & equipment at 30 June 2024
increased to £9.8m compared to prior year (30 June 2023: £9.0m).
Plant & Equipment Other Equipment Land & Buildings Right of Use Assets Total
£'000 £'000 £'000 £'000 £'000
Cost or valuation:
At 1 January 2023 6,639 279 1,430 7,839 16,187
Additions 215 12 15 34 276
Disposals (202) (2) - - (204)
Foreign exchange (456) (8) (97) (207) (768)
At 30 June 2023 6,196 281 1,348 7,666 15,491
Additions 550 28 - 1,568 2,146
Disposals (9) (2) - - (11)
Foreign exchange 286 3 74 59 422
At 31 December 2023 7,023 310 1,422 9,293 18,048
Additions 299 13 - 774 1,086
Disposals - (12) - (481) (493)
Foreign exchange (281) (7) (48) (195) (531)
At 30 June 2024 7,041 304 1,374 9,391 18,110
Depreciation:
At 1 January 2023 2,565 175 132 3,225 6,097
Charge for the period 420 16 49 521 1,006
Disposals (202) (2) - - (204)
Foreign exchange (271) (4) (40) (99) (414)
At 30 June 2023 2,512 185 141 3,647 6,485
Charge for the period 446 21 48 607 1,122
Disposals (8) (2) - - (10)
Foreign exchange 191 1 33 32 257
At 31 December 2023 3,141 205 222 4,286 7,854
Charge for the period 428 23 43 611 1,105
Disposals (12) - - (323) (335)
Foreign exchange (174) (4) (23) (94) (295)
At 30 June 2024 3,383 224 242 4,480 8,329
Carrying amount:
At 31 December 2023 3,882 105 1,200 5,007 10,194
At 30 June 2023 3,684 96 1,207 4,019 9,006
At 30 June 2024 3,658 80 1,132 4,911 9,781
13. Share capital, share premium and merger reserve
Ordinary shares of 0.3p each Ordinary Share Merger
shares
premium
reserve
No. £'000 £'000 £'000
Audited at 31 December 2023 126,498,197 379 65,960 7,656
Unaudited at 30 June 2024 126,647,713 380 65,960 7,656
During the period 31 December 2023 to 30 June 2024 149,516 shares were issued
for total consideration £449.
14. 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 2024 and the balances
with related parties at 30 June 2024 and 30 June 2023:
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 £212,761 in the six months to 30 June 2024 (£218,964 in
the six months to 30 June 2023). At 30 June 2024, the Group owed Braguts' Real
Estate Srl £nil (£43,680 at 30 June 2023). Biokosmes Srl provided technical
services to Braguts'Real Estate in the six months to 30 June 2024 in the
amount of £80 (£243 in the six months to 30 June 2023). At 30 June 2024
Bragut's Real Estate owed to the Group £nil (£nil at 30 June 2023).
15. Financial instruments
Set out below is an overview of financial instruments held by the Group as at:
30-Jun-24 30-Jun-23 31-Dec-23
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) 12,993 12,993 12,785 12,785 15,615 15,615
Cash and cash equivalents 5,575 5,575 3,658 3,658 5,622 5,622
Total 18,568 18,568 16,443 16,443 21,237 21,237
30-Jun-23 30-Jun-23 31-Dec-23
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) 9,478 9,478 8,912 8,912 9,066 9,066
Lease obligations 5,021 5,021 4,018 4,018 5,094 5,094
Interest bearing 16,125 16,125 19,004 19,004 19,298 19,298
Total 30,624 30,624 31,934 31,934 33,458 33,458
(a) Trade and other receivables excludes prepayments.
(b) Trade and other payables excludes deferred revenue.
16. Alternative performance measures
The Group uses certain financial measures that are not defined or recognised
under IFRS. The Directors believe that these non-GAAP measures supplement GAAP
measures to help in providing a further understanding of the results of the
Group and are used as key performance indicators within the business to aid in
evaluating its current business performance. The measures can also aid in
comparability with other companies who use similar metrics. However, as the
measures are not defined by IFRS, other companies may calculate them
differently or may use such measures for different purposes to the Group.
Measure Definition Reconciliation to GAAP measure
EBITDA and Adjusted EBITDA Earnings before interest, tax, depreciation, amortisation and impairment Note a below
(EBITDA) and Adjusted EBITDA which is defined as EBITDA excluding share-based
payment charges and exceptional items.
Operating profit before amortisation and exceptional items Operating profit before amortisation and exceptional items. Note b below
Free cash flow Free cash flow is defined as net cash generated from operations less cash Note c below
payments made for leases and capital expenditure.
Net debt Net debt is defined as the Group's gross bank debt position net of cash. Note d below
Net leverage Net leverage calculated as net debt (excl. finance leases) and Adjusted EBITDA Note e below
on a trailing 12-month basis.
Adjusted earnings per share Adjusted earnings per share is profit after tax excluding amortisation Note f below
(excluding charged on Development costs), exceptional items and share based
payments.
Diluted adjusted earnings per share is profit after tax excluding amortisation
(excluding charged on Development costs), exceptional items and share based
payments, diluted by the inclusion of stock options and long-term incentive
plan awards
a) EBITDA and Adjusted EBITDA Six months Six months Year ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Operating (loss)/profit (256) 383 3,289
Add back:
Depreciation 1,105 1,006 2,128
Amortisation 2,260 2,321 4,516
Impairment charge - 389 760
EBITDA 3,109 4,099 10,693
Add back:
Share-based payment charge 157 120 225
Exceptional costs 357 217 639
Adjusted EBITDA 3,623 4,436 11,557
b) Operating profit before amortisation and exceptional items Six months Six months Year ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Operating (loss)/profit (256) 383 3,289
Add back:
Amortisation 2,260 2,321 4,516
Impairment charge - 389 760
Exceptional costs 357 217 639
Operating profit before amortisation and exceptional items 2,361 3,310 9,204
c) Reconciliation of free cash flow Six months Six months Year ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Net cash generated by operating activities 5,829 3,696 8,220
Capital expenditure (934) (656) (2,407)
Lease payments (579) (479) (999)
Free cash flow 4,316 2,561 4,814
d) Net debt / (cash) Six months Six months Year ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Cash and cash equivalents (5,575) (3,658) (5,622)
Interest bearing borrowings - Invoice financing - current - - 616
Interest bearing borrowings - Bank Loans - current - - 16,467
Interest bearing borrowings - Subordinated Loan (deferred consideration) - 2,329 - 2,215
current
Interest bearing borrowings - Bank Loans - non-current 13,796 16,898 -
Interest bearing borrowings - Subordinated Loan (deferred consideration) - - 2,106 -
non-current
Net debt (excl finance leases) 10,550 15,346 13,676
Interest bearing borrowings - Leasing obligations - current 1,139 761 1,044
Interest bearing borrowings - Leasing obligations - non-current 3,882 3,257 4,050
Net debt (incl finance leases) 15,571 19,364 18,770
e) Net leverage Six months Six months Year ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Net debt (excl finance leases) 10,550 15,346 13,676
Adjusted EBITDA 3,623 4,436 11,557
Adjustment to increase adjusted EBITDA to trailing 12 month basis - as 7,121 5,637 -
reported
Adjustment to include mid year acquisition on trailing 12 month basis - 1,391 -
12 month trailing adjusted EBITDA 10,744 11,464 11,557
deduct:
Lease payments for 12 month period (1,099) (1,041) (999)
Adjusted EBITDA for net leverage 9,645 10,423 10,558
Net leverage 1.09x 1.47x 1.30x
f) Adjusted earnings per share Six months Six months Year ended
30-Jun-24 30-Jun-23 31-Dec-23
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
(Loss)/Profit for the period attributable to the equity shareholders of the (1,687) (1,508) 921
parent
Amortisation (excluding charged on Development costs) 1,682 1,983 3,647
Exceptional costs 357 217 639
Share-based payment charge 157 120 225
Adjusted Earnings 509 812 5,432
Weighted average number of ordinary shares in issue 126,529,587 126,498,197 126,498,197
Adjusted profit per share (pence) 0.40 0.64 4.29
Weighted average number of ordinary shares for the diluted EPS 137,128,201 133,506,827 133,635,025
Diluted adjusted profit per share (pence) 0.37 0.61 4.06
17. Post Balance Sheet Event
There are no post balance sheet events.
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