Half-year Report

RNS Number : 6906M

Venture Life Group PLC

23 September 2021

 

23 September 2021

VENTURE LIFE GROUP PLC

("Venture Life", "VLG" or the "Group")

Unaudited interim results for the six months ended 30 June 2021

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 2021.

Financial Highlights

· Revenues £13.9 million (2020: £16.9 million)

· Gross margin £4.9 million (2020: £6.9 million), gross margin percentage 35.6% (2020: 40.9%)

· Adjusted EBITDA[1] £1.9 million (2020: £3.5 million)

· Profit before tax, amortisation and exceptional items £1.3 million (2020: £2.7 million)

· Adjusted profit per share[2] 0.83p (2020: 2.85p)

· Cash at 30 June 2021 £7.9 million (31 December 2020: £42.1 million)

Commercial Highlights

Group

· Two immediately earnings enhancing acquisitions (one post period-end), expected to bring significant growth in revenues and profitability and fully deploying funds raised in late 2020

· Revolving Credit Facility (RCF) in place for up to £50 million giving significant firepower for further earnings accretive M&A

· Core business revenues (excluding China and Hand Sanitiser Gel) up 10% in first half of 2021

· Continue to sign new deals and launch products

Acquisition of BBI Healthcare Limited, 4 June 2021:

· Three new brands and therapy areas: women's health, hypoglycaemia and energy management

· Two significant acquired partners - Bayer Consumer Care AG, for women's health and Swiss Precision Diagnostics GmbH ('SPD')

· Immediate cost synergies realised

· Significant free manufacturing capacity in Sweden

· Profitable with good growth opportunities

Acquisition of Helsinn Integrative Care Portfolio - post period end, 6 August 2021

· 3 new brands and new therapy area of oncology support

· Profitable portfolio

· 33 new partners in 56 countries

· Geographic extension opportunities plus New Product Development opportunities, particularly for Pomi-T

Jerry Randall, CEO of Venture Life Group plc commented: "I am very pleased to have completed two fantastic earnings enhancing acquisitions, utilising the money shareholders gave us at the end of 2020 for exactly the reason it was intended. It was particularly satisfying to close the BBI acquisition within 6 months of receiving the cash from shareholders given the challenges presented by the significant cross border aspects during COVID times when we were unable to travel.  The fact that we managed to complete such a transaction in the timeframe is testament to the fantastic effort of all our team at Venture Life and their ability to assess and transact this deal in a smooth, effective and quick manner, whilst continuing to manage the existing business. The strategy of raising cash in advance has been vindicated as it enabled us to access this acquisition and I thank each and every one of our shareholders who supported us in that fund raise.

Integration is well underway for both acquisitions and we have already achieved a number of immediate cost synergies. The second half of the year will see the benefit of the impact of these two earnings enhancing acquisitions, with 2022 seeing the benefit of the full year effect and more synergies, as both of these exciting acquisitions are expected to add meaningfully to the revenues and profitability of the Group going forward.

The addition of the RCF is another excellent result for our team, giving us up to £50 million of non-dilutive firepower available to us for more earnings enhancing acquisitions and we continue to assess potential opportunities in this regard. 

COVID has continued to impact our business, and to impact some customers more than others. We are, however, seeing an improving situation going forward.  The disappointing performance by our Chinese partner is a demonstration of how COVID has impacted some of our customers, and this is something every business is affected by in some way at this time. As with all our customers we continue to support them through difficult times, to resolve the situation one way or another. The supply price increases that have impacted our first half gross margin are now beginning to be mitigated as we pass these costs on to customers. However, to still see continued growth in our core business (excluding China and HSG), and our current order book ahead of the same time last year on both an actual and like for like basis, underlines the resilience of our business in difficult times.

2021 has been another transformational year for the Group, operating in a difficult environment but still driving the business forward. I must express my thanks to the whole VLG team for continuing to do a fantastic job in these times, to drive the Group to being a much more substantial business in 2022 than it was at the start of 2021."

For further information, please contact:

Venture Life Group PLC		[phone]
Jerry Randall, Chief Executive Officer
Cenkos Securities plc (Nomad and Joint Broker)		[phone]
Michael Johnson / Russell Kerr (Sales) Stephen Keys / Camilla Hume (Corporate Finance)
Singer Capital Markets (Joint Broker)		[phone]
Jonathan Dighe (Sales) Shaun Dobson / Alaina Wong (Corporate Finance)

About Venture Life ( www.venture-life.com )

Venture Life is an international consumer self-care company focused on developing, manufacturing and commercialising products for the global self-care market. With operations in the UK, Italy, The Netherlands and Sweden, the Group's product portfolio includes some key products such as the UltraDEX and Dentyl oral care product ranges, the Balance Active range in the area of women's intimate healthcare, the Lift and Glucogel product ranges for hypoglycaemia, Gelclair and Pomi-T for oncology support, products for fungal infections and proctology, and dermo-cosmetics for addressing the signs of ageing. Its products are sold in over 90 countries worldwide.

The products, which are typically recommended by pharmacists or healthcare practitioners, are available primarily through pharmacies and grocery multiples. In the UK and The Netherlands these are supplied direct by the company to retailers, elsewhere they are supplied by the Group's international distribution partners. 

Through its two Development & Manufacturing operations in Italy and Sweden, the Group also provides development and manufacturing services to companies in the medical devices and cosmetic sectors.

Non-Executive Chair's and Chief Executive Officer's Statement

Overview

The first half of 2021 has seen the Group make the largest acquisition in its history, utilising the funds raised through the placing and open offer in December 2020. The subsequent closing of a Revolving Credit Facility (RCF) of up to £50 million at the end of the first half has added significant fire power, in addition to future surplus cash generation, to effect further earnings enhancing acquisitions to continue the growth trajectory of the business through the rest of 2021 and beyond. This trajectory continued further post period end with a second smaller acquisition.

The Group has employed a strategy of combining organic and acquisitive growth since listing on AIM in 2014, achieving a compound annual revenue growth rate of 27% from 2014 to 2020, despite this last year being the first year of the COVID 19 pandemic.

This strategy has focused on the dual revenue streams of those from VLG's own brands and those from products sold under customer brands, where the velocity and strength of customer brands generates meaningful revenues for the Group. Our development and manufacturing facility near Milan, Italy, produces the vast majority of all the Groups' products. Since 2014, we have invested in the facility, to keep a bow wave of capacity ahead of us to accommodate anticipated growth. The available capacity will enable the Group to deliver the growing revenues it sees from both organic and acquired growth.

The acquisitions made so far this year are expected to add materially to the Group's revenues and profitability in the second half of the year, as the revenues of the products are included in Group revenue, and we access immediately available cost synergies.

2021 has seen a continuation of the COVID 19 pandemic, which has impacted a number of our customers in this first half, and significantly impacted supply chain prices, as has been widely reported in many sectors. We are, however, seeing signs of recovery as the year progresses, as we harness the opportunity to pass price rises on to customers for new orders and we start to see a recovery in retail activity. Revenues in the first half of the year were £13.9 million, compared to £16.9 million for the first half of 2020 primarily as a result of lower hand sanitiser gel ("HSG") and a reduction in sales of Dentyl in China. The newly acquired BBI Healthcare Limited ("BBI") contributed revenues of £1.1 million in the period since acquisition to the end of June 2021.

Aside from the lower HSG and China revenues detailed below, and excluding the additional revenues contributed by BBI, the rest of the Group showed revenue growth of 10% in the first half of 2021 compared to the first half of 2020.

The largest part of the reduction in Group revenues compared to the same period in 2020 arose from the expected reduction in the revenues arising from Hand Sanitising Gel. In the first half of 2021, revenues for HSG were £0.1 million compared to £3.2 million, as a result of significant stockpiling built in 2020 as the pandemic took hold and have not yet unwound from retailers. Retailers still hold significant stocks of HSG and it is taking longer than expected for these to be utilised, and hence the reduction in revenues from HSG is H1 2021 was more than we expected at the start of the year. Nonetheless, we still expect to make some sales of HSG in the second half of the year albeit, given the stock holding situation in retailers, we expect H2 HSG sales to be at a level similar to that seen in the first half.

Sales by our Chinese partner were lower than anticipated, as they continue to struggle to recover from the impact of the pandemic, with sales only £0.2 million in the first half of 2021. They have however continued to pay down their debtor balance such that as at 30^th June 2021 it stood at £0.4 million.  Despite failing to meet the minimum purchase obligations under the long term agreement we signed with this partner in 2020, they still indicate to us that they expect to take all of the product orders we have on hand from them (placed in 2020) of €4.0 million. However, the timescales for taking delivery of the products under these orders have not been set out clearly by the partner, and so we continue to be in discussion with them to understand whether they are able to perform in accordance with the contract. At the same time, we are undertaking a review to ensure that our products are exploited in China to their full potential, but for prudence they have already been significantly downgraded in market guidance.

Notwithstanding the growth in our core business revenues, gross margin in the first half was impacted by various factors.  These margin impacts, described below, are considered as transitory and we expect gross margin to be improved by the end of 2021, with a much better second half for gross margin. This has meant a significantly lower gross margin percentage in the first half of 2021, where we achieved gross margin of 35.6% compared to 40.9% in the first half of 2020. In comparison to 2020, the gross margin reduction has come from a number of factors:

· Supply chain cost increases have been seen in the first half of 2021, as has been seen widely across many sectors, and have been higher than anticipated at the start of the year. As these came through, we have sought to pass these on to customers, and on the whole customers have been receptive to this. However, these price increases agreed with customers only impact new orders placed and not those already on hand, and so there is a transitional effect of supressing margin particularly in the first half, until the new orders come through. We expect the effect of agreed price increases with customers to positively impact margin in the second half of the year and into 2022 and beyond.

· Increased stockholding cost for the higher level of inventory held for Brexit and COVID supply chain concerns. In order to ensure continuity of supply as the UK exited Europe, the Group held significantly higher levels of finished goods inventory in the UK at the end of 2020, in case there were issues with transport into the UK. Similarly in Italy, the Group has held higher than normal levels of raw materials and packaging stock to ensure that it can continue to supply customer orders and not be at risk to supply chain interruption, and also where possible to buy these inventories ahead of price increases. These costs will reduce as we seek to unwind the higher inventory levels through 2021 and into 2022.

· Slightly lower overall levels of production activity (due to lower HSG and China sales) have an impact on the overall margin.

· The high level of high margin HSG sales in the first half of 2020 have not repeated in 2021.

Whilst this impact on gross margin from supply price increases has been disappointing and higher than anticipated at the start of the year, we now have good visibility on this and the ability to pass this on to customers in a challenging retail environment. Also, the acquisitions made so far this year each have materially higher gross margins than the Group average and will add meaningfully to the gross margin percentage for the Group going forward.

The Group continues to keep overheads closely under control, and lower levels of COVID associated costs in the first half have mitigated some of the shortfall in gross margin, delivering adjusted EBITDA for the first half of the year of £1.9 million, lower than the £3.5 million in the first half of 2020, primarily as a result of lower revenues and gross margin.

Acquisitions

BBI

BBI Healthcare Limited ("BBI") was acquired on 4^th June 2021 for an enterprise value of £35 million, with an additional £1 million deferred subject to achieving registration approval of a product in the USA. BBI is a consumer healthcare business with commercial operations in the UK and its own development and manufacturing facility in Sweden. It has products in three therapy areas:

· Women's health: key product is Balance Activ, for the treatment of bacterial vaginosis ("BV"), the no.1 BV brand in the UK, by volume, and also other women's health products, e.g. a fertility gel. This provides a platform for women's health brands the Group can expand.

· Diabetes: Glucogel, the no.1 prescribed glucose gel in the UK

· Energy management/diabetic care: Lift, with dual positioning for sports performance and OTC management of hypoglycaemia

This acquisition has high strategic value for VLG, not only as a growing and profitable business in its own right coming into the Group and with meaningful cost and revenue synergies available, but also establishing VLG in the new high interest areas of Women's Health and Diabetes/Energy Management. BBI and its subsidiaries, previously headquartered in Crumlin, South Wales, has a manufacturing facility in Gnesta, Sweden and employed 21 people across the UK and Sweden. There is significant unused manufacturing capacity in the Gnesta facility currently.

The integration of the business is well advanced with a number of the immediate cost synergies already actioned, along with plans for maximising the synergies with the Group looking forward.

Post period end, we received ANVISA registration approval in Brazil for the BV Gel, and launch is expected in 2022.  The online channel is also a key component within the business and as well as launching on Amazon in the UK in 2020, Balance Activ will launch on Amazon in Germany and a re-launch will take place on Amazon in the USA in early 2022.

In the UK, we are exploring the convenience sector for Lift, with opportunities already emerging.

Helsinn

The Acquisition comprises three on-market products within the area of oncology support, as well as all the associated IP and existing customer relationships in relation to the Brands.

The three on-market products are:

· Gelclair - a muco-adhesive oral rinse gel used for the management of painful symptoms of oral mucositis (side effect of some cancer therapies). Gelclair is a registered medical device and is currently partnered in 38 countries;

· Pomi-T - a Polyphenol rich mix of wholefoods used for the management of prostate specific antigen (PSA) levels in prostate cancer. Pomi-T is a registered food supplement and is currently partnered in 22 markets; and

· XonRID - a Hyaluronic acid based topical gel used for the prevention and treatment of radiation induced dermatitis. Xonrid is a registered medical device and currently partnered in 21 countries.

Since the acquisition in early August 2021, integration of the business has been ongoing with all partners being contacted and transfer of the commercial operations into our UK team. It is very early days since the acquisition, but opportunities are now being explored in key markets such as the USA for the two key brands.

Venture Life Brands

Dentyl

Dentyl revenues for the first half of 2021 were adversely affected by the lack of China business, and so stood at £1.4m in H1 2021 compared to £2.8m in H1 2020.

Despite the extended lockdown challenges in the UK market in H1 2021, revenues were up 11% to £1.12m (H1 2020: £1.0m), which contributed to an overall 4% growth in our oral care brands in the UK market.  In addition Dentyl remained the fastest growing brand in the oral care sector in the last 12 months ^[3] , ahead of other major brands such as Corsodyl, Colgate and Listerine.

H1 2021 saw new launches in some Value Retailers, such as Home Bargains and B&M Bargains, further extending our reach within all aspects of the UK market.  In addition, we retained full distribution in ASDA, and they also launched the newly developed Dentyl Dual Action Unicorn Edition into 361 stores, despite ASDA cutting their current oral care range by 30% in the June range review.  Ocado, an existing partner, is also expected to launch a new flavour variant in August.

As mentioned earlier, sales of Dentyl to our Chinese partner proved to be disappointing in H1 2021 compared to H1 2020 and compared to the Distribution Agreement signed in April 2020.   Whilst supporting them as we would any partner, we are carefully reviewing our on-going business with them, and thus reviewing our options to ensure we realise the full value of the brand in China.

The in-vivo study at Cardiff University on Dentyl completed in April 2021 and is under peer-review and we await the results which we expect  to be published shortly.

UltraDEX

UltraDEX revenues for the first half of 2021 stood at £1.02m (H1 2021: £1.72m). In the UK, UltraDEX was less affected by the extended lockdown and finished the first half of 2021 at £0.96m (H1 2020: £0.99m), a 3.3% decrease.  During the period UltraDEX continued to take market share from its nearest competitors and is now the largest brand in the medicated fresh breath mouthwash category in the UK.  In the 52 weeks to the end of July 2021, it reached a 52% market share of the category, compared to its main competitor CB12, which stood at 37% for the same period [4] .

Internationally UltraDEX revenues were affected also by the poor performance of our Chinese partner (same as for Dentyl) which took its first orders of UltraDEX in the first half of 2020, but as with Dentyl has not repeated this levels of sales in 2021.

PharmaSource

PharmaSource saw a 3.1% increase in H1 2021 to £1.48m (H1 2020: £1.43m), despite the extended lockdowns in The Netherlands.  Integration is now completed, including the manufacturing transfer from a third party to our Italian facility.  Despite not being able to travel to our offices in The Netherlands for over 1.5 years, the team remains committed to ending the year above 2020.

Venture Life - other brands/products

We signed a total of 6 new long term distribution agreements during H1 2021.

As mentioned, one key significant agreement was reached with Bayer Consumer Care AG following acquisition on the BV Gel product, extending the term until 2030 and adding a further 16 new territories, including Poland and Turkey - all major markets around the world are now included in this agreement, which stands at 49 territories in total.  At the same time, we also added a further 39 new territories into the BV Pessary agreement, which included Brazil, France, Germany, Italy, Spain among others - all major markets around the world are now included, which stands at 51 territories in total.

Furthermore, H1 2021 saw our partners launch 11 new products in their respective markets, as well as 3 regulatory approvals granted and 14 new launch preparations underway in H2 2021 for a Q1 2022 launch.

Customer brands

The customer brands business delivered revenues in the first half of £8.5 million, an increase of 12% over the first half of 2020. As with the rest of the business we saw some partners recovering better than others from the COVID pandemic, but overall this part of the business delivered good growth. There were two significant pieces of new business that contributed to this growth:

· A new dermatological line was developed for the Italian pharma business Alfasigma S.p.A in 2020 and production began in that year. The first half of 2021 saw a significant increase in our revenues for this range and this is set to continue in the second half.

· An existing customer Italfarmaco S.p.A began a new piece of business with us in 2021 that has also positively impacted in the first half.

In addition we continue to attract and win new product development business for the EU, USA and other territories, in the areas of medical devices and cosmetics, and these items of new business will continue to deliver growth in our customer brands business.

Our Biokosmes facility in northern Lombardy manufactures the majority of our products, both customer and Venture Life brands, and the investments made in 2020 have given us meaningful spare capacity to continue to accommodate further revenue growth. Through the lockdown in the first half of 2021 the factory again continued to operate all the time, again a fantastic effort by all the team at Biokosmes.

Revolving Credit Facility

On 21^st June 2021, the Group entered into a Revolving Credit Facility ("RCF") with Santander UK PLC and Silicon Valley Bank with available borrowing of up to £30 million and an incremental facility available of a further £20 million, subject to certain conditions, on the same terms as the RCF.

As at 30^th June 2021, the amount drawn was £4 million, to replenish working capital cash reserves used in the acquisition of BBI. In the coming weeks another £4 million will be drawn, which together with surplus cash will be used to repay the £5.2 million of Italian bank loans, which is a condition of the RCF.  The remainder of the facility will be kept available for future acquisitions, in addition to the future cash generated in the business moving forward.

Outlook

The first half of 2021 was a challenging trading environment for the Group, as another extended COVID lockdown affected customers and suppliers in many countries. Despite this, the Group saw growth in its core business revenues (excluding HSG and China) with the current order book ahead of the same time last year on an actual and like for like basis, and two immediately earnings acquisitions (one post period end). These acquisitions are expected to add materially to the revenues and profitability for 2021 and the future, as well as providing new therapy areas and products for the Group to expand and develop further. The acquistions bring significant opportunity for geographic expansion and new product development, as well as expanding the reach into the UK retailers.

From 2014 to 2020, the Group successfully achieved 27% CAGR in revenue through the dual strategy of organic and acquired growth, which has driven increasing profitability in the Group. The Group is well set for continued growth, as we expect the second half of the year to benefit from the consolidation of the recent acquisitions, and the full year effect will be seen in 2022 and beyond. VLG has significant capacity in its manufacturing operations to accommodate growth in revenue and has now added significant additional resources (substantially unused) with the RCF in place for further earnings enhancing acquisitions, all of which gives the Board great confidence about the future.

Financial Review

Statement of comprehensive income

Group revenue for the six-month period was £13.9 million, a decline of 18% on the £16.9 million   reported for the same period in 2020. The movement had four main drivers comprising:

a.  continuing growth and momentum from the core business (excluding sales of Hand Sanitiser products and sales to China);

b.  inclusion of £1.1 million of acquired net sales pursuant to the acquisition of BBI Healthcare Ltd on 4^th June 2021;

c.  90% decline in sale of products to China impacted by Covid-19;

d.  98% decline in sales of Hand Sanitiser Products, which was far greater than expected and due to significant inventories remaining in channels and other factors;

As a result of these dynamics, the revenues of the VLG Branded segment of the Group declined to less than those of the Customer Brand segment.

The Group generated gross profit of £4.9 million representing a gross margin of 35.6%, compared to 40.9% for the same period in 2020. This notable decline was a blend of several factors including:

a.  favourable mix variances arising from the inclusion of BBI Healthcare Ltd products at a higher average margin;

b.  unfavourable mix variances arising from the lower portion of revenues arising from VLG Branded products;

c.  unfavourable factory volume variances due to the decline in overall sales volume;

d.  inclusion of higher storage costs arising as a result of the higher inventory levels which had arisen due to a blend of commercial reasons including the group's mechanic to hedge any supply disruption arising through Brexit;

e.  some inflation in raw materials costs which have not yet been passed on via price adjustments to customers; 

Administrative expenses decreased in the period to £4.5 million from £4.6 million in H1 2020.  General savings of £0.2 million were offset by £0.1 million of new expenses relating to the inclusion of BBI Healthcare Ltd operations, and £0.2 million of higher non-cash costs of amortisation, depreciation and share-based payments (which arose from the BBI Healthcare Ltd acquisition and factory capital investment) were offset by a credit of £0.2 million representing the partial writing-back of the bad debt provision associated with our China distributor as the cash settlements and overall prognosis of the level of impairment of this receivable improved.

H1 2021 generated a positive adjusted EBITDA (defined as EBITDA excluding share-based payments and exceptional items) of £1.9 million, down 45% compared to H1 2020 of £3.5 million. The decline of adjusted EBITDA in the amount of £1.6 million versus H1 2020 is less than the decline in operating profit as a result of higher amortisation and depreciation charges in 2021, and this measure is stated before exceptional costs of £0.7 million (H1 2020 £0.1 million) which were high due to the significant progress on acquisitions during the first half of 2021.  The loss after tax was £(0.5) million (H1 2020: profit of £1.6 million). Loss per share was (0.37)p (H1 2020: profit of 1.86p). The adjusted profit per share (defined as earnings per share before amortisation, share based payments and exceptional items) was 0.83p compared to an adjusted profit per share of 2.85p in H1 2020.

A negative working capital flux of £(1.7) million (negative flux £(2.4) million in 2020) arose across the six month period. This was principally driven by trade debtors in 2021 and reflects the overall increase in the Group's portfolio of business pursuant to the acquisition of BBI Healthcare Ltd on 4^th June 2021.  The anticipated favourable flux that was expected to arise as a result of an unwinding of the high inventory level had not yet happened by 30^th June 2021 and like-for-like inventory levels remain unchanged versus 31^st December 2020 plus the inclusion of £1.3 million of acquired inventory pursuant to the acquisition of BBI Healthcare Ltd.

Net cash from operations was £(0.9) million in H1 2021 (H1 2020: £1.0 million). Cash used in investing activities amounted to £36.4 million (H1 2020 £6.6 million) and comprised the purchase consideration for the acquisition of BBI Healthcare Ltd (£35.9 million) plus some ongoing capital investment into the Italian factory. Net cash from financing activities was £3.1 million (H1 2020 £1.0 million) as the Group made an initial £4.0 million net draw from its newly established a revolving credit facility ("RCF") as well as some partial repayments of existing Italian debt and advance settlement of RCF set-up fees. The RCF was established on 18^th June 2021 across two banks and gives the Group access to £30 million of low-cost debt finance with an uncommitted option to extend this up to a total of £50 million. Overall cashflow over the period was an outflow of £34.2 million (H1 2020 outflow of £4.6 million) and net debt increased from £(1.6) million to £(6.0) million including Finance Leases (or declined from £0.8 million of net cash to £(1.2) million of net debt excluding Finance Leases).

Non-current assets including Goodwill increased by £40.1 million, reflecting the acquisition of BBI Healthcare Ltd in June 2021 and the significant investment in factory equipment underway as part of the plans to expand production capacity well ahead of the current forecast demand. Total debt increased from £8.2 million to £13.9 million and reflects the inclusion of the RCF, some extensions to factory and logistics centre finance leases less some repayments of Italian loans.  The balance of Italian loans at 30th June 2021 amounted to £5.0 million and has been classified by the Group as short term to reflect the requirement to repay this in the near term and utilise the RCF as the source of debt financing.

This has been a positive six-month period for the business which has experienced elements of organic growth as well as completed the acquisition of BBI Healthcare Ltd whilst adapting and broadening the portfolio of business activities to accommodate the impacts of two lines of sales decline. The balance sheet remains strong and the Group has access to low-cost debt finance to progress the development of its business, continue to invest in its manufacturing capacity and further deliver on its acquisition strategy. 

Unaudited Interim Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2021

	Note	Six months ended 30 June 2021		Six months ended 30 June 2020		Year ended 31 December 2020
		(Unaudited)		(Unaudited)		(Audited)
		£'000		£'000		£'000
Revenue	4.1	13,866		16,897		30,076
Cost of sales		(8,927)		(9,986)		(17,229)
Gross profit		4,939		6,911		12,847
Operating expenses		(4,026)		(4,063)		(7,980)
Impairment losses of financial assets		162		-		(405)
Amortisation of intangible assets	5	(631)		(497)		(909)
Total administrative expenses		(4,495)		(4,560)		(9,294)
Other income		122		23		169
Operating profit before exceptional items		566		2,374		3,722
Exceptional items	6	(728)		(94)		(167)
Operating (loss)/profit		(162)		2,280		3,555
Finance income/(costs)		122		(165)		(279)
(Loss)/Profit before tax		(40)		2,115		3,276
Tax	7	(428)		(562)		(908)
(Loss)/Profit for the period attributable to the equity shareholders of the parent		(468)		1,553		2,368
Other comprehensive (loss)/income which may be subsequently reclassified to the income statement	8	(1,219)		1,713		1,284
Total comprehensive (loss)/profit for the period attributable to equity shareholders of the parent		(1,687)		3,266		3,652
Basic (loss)/profit per share (pence) attributable to equity shareholders of the parent	9	(0.37)		1.86		2.74
Diluted basic (loss)/profit per share (pence) attributable to equity shareholders of the parent	9	(0.37)		1.65		2.53

Unaudited Interim Condensed Consolidated Statement of Financial Position

As at 30 June 2021

	Note	30 June 2021		30 June 2020 (*Restated)		31 December 2020
		(Unaudited)		(Unaudited)		(Audited)
ASSETS		£'000		£'000		£'000
Non-current assets
Intangible assets *	11A	61,678		27,589		27,024
Property, plant and equipment	11B	10,634		4,618		7,018
		72,312		32,207		34,042
Current assets
Inventories		9,784		7,058		8,886
Trade and other receivables		10,117		10,015		7,653
Cash and cash equivalents		7,896		6,641		42,095
		27,797		23,714		58,634
TOTAL ASSETS		100,109		55,921		92,676
EQUITY & LIABILITIES
Capital and reserves
Share capital	12	377		251		377
Share premium account	12	65,738		30,824		65,738
Merger reserve	12	7,656		7,656		7,656
Foreign currency translation reserve *		210		1,858		1,429
Share-based payment reserve		810		864		660
Retained earnings		(4,219)		(4,939)		(3,751)
Total equity attributable to equity holders of the parent		70,572		36,514		72,109
LIABILITIES
Current liabilities
Trade and other payables		7,921		8,688		7,108
Taxation		561		759		433
Interest bearing borrowings - Bank Loans		5,004		792		1,092
Interest bearing borrowings - Receivables Finance		680		1,453		888
Interest bearing borrowings - Leasing Obligations		477		491		477
		14,643		12,183		9,998
Non-current liabilities
Interest bearing borrowings - Bank Loans		3,505		3,586		4,636
Interest bearing borrowings - Leasing Obligations		4,213		1,914		4,085
Statutory employment provision		1,126		1,034		1,201
Deferred tax liability	7	6,050		690		647
		14,894		7,224		10,569
TOTAL LIABILITIES		29,537		19,407		20,567
TOTAL EQUITY & LIABILITIES		100,109		55,921		92,676
* Restated in accordance with note 32 ("prior period adjustment") of the 2020 financial statements.  Please refer to  note 16 for further details.

Unaudited Interim Condensed Consolidated Statement of Changes in Equity

As at 30 June 2021

	Share capital £'000		Share premium account £'000		Merger reserve £'000			Foreign currency translation reserve £'000		Share-based payment reserve £'000		Retained earnings £'000		Total equity £'000
Restated Balance at 1 January 2020 (Audited)	251		30,824		7,656			145		624		(6,492)		33,008
Profit for the period	-		-		-			-		-		1,553		1,553
Foreign exchange for period	-		-		-			1,713		-		-		1,713
Total comprehensive income	-		-		-			1,713		-		1,553		3,266
Share options charge	-		-		-			-		240		-		240
Dividends	-		-		-			-		-		-		-
Transactions with Shareholders	-		-		-			-		240		-		240
Balance at 30 June 2020 (Unaudited)	251		30,824		7,656			1,858		864		(4,939)		36,514
Profit for the period	-		-		-			-		-		815		815
Foreign exchange for period	-		-		-			(429)		-		-		(429)
Total comprehensive income	-		-		-			(429)		-		815		386
Share options charge	-		-		-			-		169		-		169
Share options recycling per IFRS2										(373)		373		-
Equity raise	126		34,914											35,040
Dividend	-		-		-			-		-		-		-
Transactions with Shareholders	126		34,914		-			-		(204)		373		35,209
Balance at 31 December 2020 (Audited)	377		65,738		7,656			1,429		660		(3,751)		72,109
Loss for the period	-		-		-			-		-		(468)		(468)
Foreign exchange for period	-		-		-			(1,219)		-		-		(1,219)
Total comprehensive income	-		-		-			(1,219)		-		(468)		(1,687)
Share options charge	-		-		-			-		150		-		150
Dividends	-		-		-			-		-		-		-
Transactions with Shareholders										150				150
Balance at 30 June 2021 (Unaudited)	377		65,738		7,656			210		810		(4,219)		70,572

Unaudited Interim Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2021

	Six months ended 30 June 2021 (Unaudited)		Six months ended 30 June 2020 (Unaudited)		Year ended 31 December 2020 (Audited)
	£'000		£'000		£'000
Cash flow from operating activities:
(Loss)/Profit before tax	(40)		2,115		3,276
Finance cost	(122)		165		279
Operating (loss)/profit	(162)		2,280		3,555
Adjustments for:
- Depreciation of property, plant and equipment	593		386		1,081
- Impairment losses of financial assets	(162)		-		405
- Amortisation of intangible assets	631		497		909
- Disposal of capitalised development costs	-		-		345
- Share-based payment expense	150		240		409
Operating cash flow before movements in working capital	1,050		3,403		6,704
Decrease/(Increase) in inventories	105		(1,975)		(3,294)
( Increase) in trade and other receivables	(1,231)		(3,652)		(1,161)
Increase in trade and other payables	(572)		3,194		1,403
Cash generated by operating activities	(648)		969		3,652
Finance Costs	53		(15)		(50)
Tax Paid	(293)		-		(896)
Net cash from operating activities	(888)		954		2,706
Cash flow from investing activities:
Acquisition of BBI Healthcare Ltd	(35,917)		-		-
Acquisition of PharmaSource Business	-		(5,523)		(5,465)
Purchases of property, plant and equipment	(217)		(726)		(1,248)
Expenditure in respect of intangible assets	(218)		(376)		(821)
Net cash used by investing activities	(36,352)		(6,625)		(7,534)
Cash flow from financing activities:
Net proceeds from issuance of ordinary shares	-		-		36,997
Transaction costs incurred in issuance of ordinary shares	-		-		(1,957)
Drawdown in interest-bearing borrowings	3,647		1,282		5,428
Repayment of interest-bearing borrowings	(170)		-		(3,433)
Leasing obligation repayments	(402)		(246)		(764)
Dividends paid	-		-		-
Net cash from financing activities	3,075		1,036		36,271
Net increase in cash and cash equivalents	(34,165)		(4,635)		31,443
Net foreign exchange difference	(34)		566		(58)
Cash and cash equivalents at beginning of period	42,095		10,710		10,710
Cash and cash equivalents at end of period	7,896		6,641		42,095

Notes to the Unaudited Interim Condensed Consolidated Financial Statements for the six months ended 30 June 2021

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 2021 ("the Interim Financial Statements") were approved and authorised for issue in accordance with a resolution of the directors on 21 September 2021.

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 on a going concern basis under the historical cost convention and in accordance with the recognition and measurement principles of International Accounting Standards ("IASs") in conformity with the requirements of the Companies Act 2006, the International Financial Reporting Interpretations Committee ("IFRIC"), interpretations issued by the International Accounting Standards Boards ("IASB") that are effective or issued and adopted as at the time of preparing these financial statements, and in accordance with the provisions of the Companies Act 2006 that are relevant to companies that report under IFRSs.

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 2020 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 2020 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 30 June 2020		Six months ended 30 June 2020		Year ended 31 December 2020
Average exchange rate for period		1.155		1.138		1.124
Exchange rate at the period end		1.164		1.096		1.113

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 2020 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.  The results of the recently acquired BBI Healthcare Ltd business are included and apportioned across both Brands and Development & Manufacturing segments.

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 2021 Revenue
External sales			4,931		8,935		-		13,866
Inter-segment sales			-		1,622		(1,622)		-
Total revenue			4,931		10,557		(1,622)		13,866
Results
Operating profit before exceptional items and excluding central administrative costs			669		1,148		-		1,817

		Brands			Development and Manufacturing		Eliminations		Consolidated Group
		£'000			£'000		£'000		£'000
Six months to 30 June 2020 Revenue
External sales			9,350		7,547		-		16,897
Inter-segment sales			-		4,223		(4223)		-
Total revenue			9,350		11,770		(4223)		16,897
Results
Operating profit before exceptional items and excluding central administrative costs			2,002		1,915		-		3,917

		Brands		Development and Manufacturing		Eliminations		Consolidated Group
Year to 31 December 2020		£'000		£'000		£'000		£'000
Revenue External sales		14,910		15,166		-		30,076
Inter-segment sales		-		6,360		(6,360)		-
Total revenue		14,910		21,526		(6,360)		30,076
Results
Operating profit before exceptional items and excluding central administrative costs		4,551		3,060		-		7,611

The reconciliation of segmental operating profit to the Group's operating profit/(loss) before exceptional items excluding central administrative costs is as follows:

		Six months ended 30 June 2021 (Unaudited)		Six months  ended 30 June 2020 (Unaudited)		Year ended 31 December 2020 (Audited)
		£'000		£'000		£'000
Operating profit before exceptional items and excluding central administrative costs		1,817		3,917		7,611
Central administrative costs		(1,251)		(1,543)		(3,889)
Exceptional expenses		(728)		(94)		(167)
Operating (loss)/profit		(162)		2,280		3,555
Net finance cost		122		(165)		(279)
(Loss)/profit before tax		(40)		2,115		3,276

5.  Amortisation of intangible assets

			Six months ended 30 June 2021 (Unaudited)				Six months  ended 30 June 2020 (Unaudited)		Year ended 31 December 2020 (Audited)
Amortisation of:			£'000				£'000		£'000
Acquired intangible assets			(401)				(255)		(373)
Patents, trademarks and other intangible assets			(48)				(82)		(213)
Capitalised development costs			(182)				(160)		(323)
			(631)				(497)		(909)

6.  Exceptional items

			Six months ended 30 June 2021 (Unaudited)				Six months  ended 30 June 2020 (Unaudited)		Year ended 31 December 2020 (Audited)
			£'000				£'000		£'000
Costs incurred in acquisitions			(728)				(94)		(167)
Total exceptional items			(728)				(94)		(167)

 

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 earnings in the six months to 30^th June 2021. The major components of income tax expense in the Interim Condensed Statement of Comprehensive Income are as follows:

		Six months ended 30 June 2021 (Unaudited)		Six months  ended 30 June 2020 (Unaudited)		Year ended 31 December 2020 (Audited)
		£'000		£'000		£'000
Current income tax		428		562		975
Deferred income tax expense related to origination and reversal of timing differences		-		-		(67)
Income tax expense recognised in statement of comprehensive income		428		562		908

The current income tax expense is based on the profits of the Development and Manufacturing business based in Italy, the PharmaSource business in the Netherlands and the UK based businesses.  The UK based businesses on a combined basis are able to begin to utilise the sizeable tax losses that have been generated in prior years.  Consequently there are no UK income tax charges owing in respect of trading for the first six months to 30 June 2021.  (The Group had previously not recognised the deferred tax asset on losses made by the UK based businesses as it had not been certain when there would be sufficient taxable profits against which to offset such losses.  This position will be reviewed at 31^st December 2021)  These financial statements do not at this time include the unwind of the £5.4 million deferred tax liability arising upon the acquisition of BBI Healthcare Ltd at 4^th June 2021 which is estimated to amount to £38,000 at 30^th June 2021.  This will become included once the purchase price allocation of the acquisition consideration of BBI Healthcare Ltd has been finalised (see note 11A); 

At the period end the estimated tax losses amounted to £10,900,000 (30 June 2020: £9,842,000; 31 December 2020: £10,900,000).  This reduction in tax losses at 30^th June 2021 illustrates the utilisation

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 and PharmaSource which have functional currencies 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 2021 of 1.164 (at 31 December 2020 of 1.113 and at 30 June 2019 of 1.091) 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^th June 2021 of 1.164.  The result is an amount that may subsequently be reclassified to profit and loss.

9.  Earnings per share

		Six months ended 30 June 2021		Six months  ended  30 June 2020		Year ended 30 December 2020
		(Unaudited)		(Unaudited)		(Audited)
Weighted average number of ordinary shares in issue		125,831,530		83,712,106		86,402,007
(Loss)/Profit attributable to equity holders of the Company (£'000)		(468)		1,553		2,368
Basic (loss)/profit per share (pence)		(0.37)		1.86		2.74
Diluted (loss)/profit per share (pence)		(0.37)		1.65		2.53
Adjusted profit per share (pence)		0.83		2.85		4.46
Diluted Adjusted profit per share (pence)		0.78		2.54		4.12

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 ended 30 June 2021 (Unaudited)		Six months ended 30 June 2020 (Unaudited)		Year ended  31 December 2020 (Audited)
		£'000		£'000		£'000
Final dividend		-		-		-

11A.  Intangible assets

The intangible assets of the group at 30^th June 2021 were £61.7 million (31 December 2020: £27.0 million) comprising goodwill, development costs, patents and trademarks & customer relationships.  This sum includes £35.9 million in respect of the 2021 acquisition of BBI Healthcare Ltd (where an indicative purchase price allocation ("PPA") suggests £13.1 million goodwill, £17.0 million Brand assets and £5.8 million customer & distributor relationships.  This PPA will be finalised prior to 31st December 2021) which may result in a different allocation of the purchase price between goodwill and other intangibles. 

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 and BBI Healthcare in June 2021 accounted for £33.7 million of the intangible assets of the Group (£21.3 million at 31 December 2020). There were no impairments of goodwill during this time (6 months to June 2020: £ Nil).

	Development costs	Brands	Patents and Trademarks	Goodwill	Other intangible  assets	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Cost or valuation:
At 1 January 2020 (restated)	3,280	1,089	1,016	16,417	2,856	24,658
Acquired through business combinations	-	-	417	4,076	1,040	5,533
Additions	279	-	87	-	-	366
Disposals	-	-	-	-	-	-
Foreign exchange	79	-	22	1,014	158	1,273
At 30 June 2020	3,638	1,089	1,542	21,507	4,054	31,830
Additions	460	-	(5)	-	-	455
Disposals	(345)	-	(182)	-	-	(527)
Foreign exchange	91	-	19	(230)	16	(104)
At 31 December 2020	3,844	1,089	1,374	21,277	4,070	31,654
Acquired through business combinations	-	16,994	-	13,128	5,788	35,910
Additions	182	-	36	-	-	218
Disposals	(1)	-	(389)	-	-	(390)
Foreign exchange	(175)	-	(42)	(662)	(145)	(1,024)
At 30 June 2021	3,850	18,083	979	33,743	9,713	66,368
Amortisation:						-
At 1 January 2020	1,438	-	703	-	1,603	3,744
Charge for the period	182	-	92	-	223	497
Disposals	-		-		-	-
Foreign exchange		-	-	-	-	-
At 30 June 2020	1,620	-	795	-	1,826	4,241
Charge for the period	141	-	121	-	150	412
Disposals	-	-	(182)	-	-	(182)
Foreign exchange	76	-	6	-	77	159
At 31 December 2020	1,837	-	740	-	2,053	4,630
Charge for the period	185	101	92	-	253	631
Disposals	(1)	-	(389)	-	-	(390)
Foreign exchange	(86)	-	(8)	-	(87)	(181)
At 30 June 2021	1,935	101	435	-	2,219	4,690
Carrying amount:						-
At 31 December 2019	1,842	1,089	313	16,417	1,253	20,914
At 31 December 2020	2,007	1,089	634	21,277	2,017	27,024
At 30 June 2020	2,018	1,089	747	21,507	2,228	27,589
At 30 June 2021	1,915	17,982	544	33,743	7,494	61,678

11A.  Acquisition of BBI Healthcare Ltd on 4^th June 2021

In June 2021 the Company completed the acquisition of BBI Healthcare Ltd.  The acquisition consideration was £37.1 million and an initial indicative purchase price allocation ("PPA") suggests £24.0 million for the net assets (representing £17.0 million in Brands, £5.8 million in customer relationships & distribution agreements, £3.6 million in land & buildings and £3.0 million in cash and working capital, offset by £5.4 million in deferred taxes) and £13.1 million as goodwill.  The Goodwill represents additional value that the group expects to create through the trading of acquired products into the existing customer base of the group as well as the trading of existing brands into these acquired customers.  All of the acquisition consideration was paid during June 2021 in cash, with £27.4 million being paid to the sellers of the business and £9.6 million being paid in settlement of debt financing within the acquired business.  The acquisition was funded from the Company's cash resources supplemented by a £4.0 million drawdown from the group's Revolving Credit Facility with Santander Bank plc and Silicon Valley Bank.  The PPA will be finalised before 31^st December 2021.

Acquisition of BBI Healthcare Ltd on 4th June 2021	Book Value	Fair value Adjustments	Fair value
	£'000s	£'000s	£'000s
Assets
Non-current assets	8,099	18,320	26,419
Licenses, Trademarks, Intellectual Proprty,Capitalised development	696	(696)	-
Goodwill (within BBI Healthcare Ltd)	4,399	(4,399)	-
Brands *	-	16,994	16,994
Distribution Agreements *	-	5,788	5,788
Tangible Fixed Assets	2,977	633	3,610
Deferred Tax Asset	27	-	27
Current Assets	4,088	-	4,088
Inventories	1,293	-	1,293
Trade Receivables	1,374	-	1,374
Other Receivables	213	-	213
Cash	1,208	-	1,208
Total assets	12,187	18,320	30,507
Current liabilities	(1,082)	-	(1,082)
Trade payables	(1,007)	-	(1,007)
Other payables	(75)	-	(75)
Non-current liabilities	(9,616)	4,188	(5,428)
Borrowings	(9,616)	9,616	-
Deferred tax	-	(5,428)	(5,428)
Total net assets	1,489	22,508	23,998
Net Assets acquired			23,997
Goodwill			13,128
Total Consideration			37,125
Satisfied by:
Cash paid at completion			37,125

* Intangible assets identified as part of the BBI Healthcare Ltd acquisition. 

BBI Healthcare Ltd markets and sells a range of consumer products in the categories of Women's Healthcare and Glucose management. The Group acquired the business to expand both its product portfolio and its customer base.  The Group expects that the inclusion of this business into its portfolio will increase the leverage of its trading infrastructure and generate improved profitability.  The acquisition has been accounted for under IFRS 3 as a business combination.  The Consolidated Financial Statements include the results of trading of BBI Healthcare Ltd for the period from 5^th June 2021 to 30^th June 2021.

Revenue and profit impact of the acquisition

BBI Healthcare Ltd contributed group revenues of £1.1 million and operating profit before exceptional items and management charges of £0.4 million in the period from 4^th June 2021 to 30^th June 2021. If the acquisition had taken place on 1 January 2021, the first day of the reporting period under review, total Group revenue and operational profit before exceptional items and management charges for the period arising from BBI Healthcare Ltd would have been £5.3 million and £0.6 million respectively.

 

11B.  Tangible assets

Primarily as a result of the extension of the Italian factory leases through to 2031 and the acquisition of BBI Healthcare Ltd on 4^th June 2021 the carrying value of the Group's tangible assets has risen from £4.6 million at 30^th June 2020 to £10.6 million at 30^th June 2021.  The main addition arising from the acquisition of BBI Healthcare Ltd was a manufacturing facility located in Sweden.

	Plant & Equipment	Other Equipment	Right of Use Assets	Land & Buildings	Total
	£'000	£'000	£'000	£'000	£'000
Cost or valuation:
At 1 January 2020	2,705	97	4,263	-	7,065
Additions	708	18	-	-	726
Disposals	(2)	(4)	-	-	(6)
Foreign exchange	(149)	108	82	-	41
At 30 June 2020	3,262	219	4,345	-	7,826
Additions	505	17	2,510	-	3,032
Disposals	(2)	-	(351)	-	(353)
Foreign exchange	(63)	(3)	(19)	-	(85)
At 31 December 2020	3,702	233	6,485	-	10,420
Acquired through business    combinations	2,098	-	-	1,513	3,611
Additions	205	12	729	-	946
Disposals	-	(11)		-	(11)
Foreign exchange	(175)	(10)	(308)	(4)	(497)
At 30 June 2021	5,830	224	6,906	1,509	14,469
Depreciation:					-
At 1 January 2020	1,174	91	1,648	-	2,913
Charge for the period	127	13	246	-	386
Disposals	(2)	(4)	-	-	(6)
Foreign exchange	(190)	23	82	-	(85)
At 30 June 2020	1,109	123	1,976	-	3,208
Charge for the period	204	13	478	-	695
Disposals	(2)	-	(351)	-	(353)
Foreign exchange	(8)	(2)	(138)	-	(148)
At 31 December 2020	1,303	134	1,965	-	3,402
Charge for the period	226	12	348	7	593
Disposals	-	(11)	-	-	(11)
Foreign exchange	(58)	(5)	(84)	(2)	(149)
At 30 June 2021	1,471	130	2,229	5	3,835
Carrying amount:					-
At 31 December 2019	1,531	6	2,615	-	4,152
At 31 December 2020	2,399	99	4,520	-	7,018
At 30 June 2020	2,153	96	2,369	-	4,618
At 30 June 2021	4,359	94	4,677	1,504	10,634

12.  Share capital and share premium

		Ordinary shares of 0.3p each		Ordinary Shares		Share premium		Merger reserve
		No.		£'000		£'000		£'000
Audited at 31 December 2020 and Unaudited at 30 June 2021		125,831,530		377		65,738		7,656

There were no movements in share capital or share premium between 31 December 2020 and 30 June 2021.

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 2021 and the balances with related parties at 30 June 2021 and 31 December 2020:

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 €102,713, of which Gianluca Braguti's liability is €102,713. All litigation cases have now been settled.

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 2021 (€230,000 in the six months to 30 June 2020). At 30 June 2021, the Group owed Braguts' Real Estate Srl €38,333 (€115,000 at 30 June 2020).Biokosmes Srl provided technical services to Braguts'Real Estate in the six months to 30 June 20201 in the amount of € 2.150 (€nil in the six months to 30 June 2020). At 30 June 2021 Bragut's Real Estate owed to the Group € nil (€nil at 30 June 2020).

14.   Financial instruments

Set out below is an overview of financial instruments held by the Group as at:

	30 June 2021				30 June 2020			31 December 2020
	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)	9,386		9,386		10,015	10,015		7,342		7,342
Cash and cash equivalents	7,896		7,896		6,641	6,641		42,095		42,095
Total	17,282		17,282		16,656	16,656		49,437		49,437

		30 June 2021					30 June 2020					31 December 2020
		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)		8,829		8,829			9,444		9,444			6,875		6,875
Leasing obligations		4,690		4,690			2,405		2,405			4,562		4,562
Interest bearing debt		9,189		9,189			5,831		5,831			6,616		6,616
Total		22,708		22,708			17,680		17,680			18,053		18,053

(a) Trade and other receivables excludes prepayments

(b) Trade and other payables excludes deferred revenue

 

 

15.  Post Balance Sheet Event

On 6^th August 2021 the group announced that it had acquired a series of oncology support product assets from Helsinn Healthcare SA (the "Brands") for a total consideration of 6 million CHF (approximately £4.7 million) (the "Acquisition"). 

The Acquisition comprised three on-market products within the area of oncology support, as well as all the associated IP and existing customer relationships in relation to these Brands.

For the year ended 31 December 2020, these Brands generated gross profit of £1.3m on sales of £2.5m. Revenues for the 2020 financial year were impacted by the Covid pandemic which saw a reduction in oncology treatments due to lockdown, however, the group expects the revenues of the Brands to benefit from the reducing effects of the pandemic and the increase of oncology treatments back to pre-Covid levels.

The total consideration paid for the Acquisition amounted to 6 million CHF, 3 million CHF payable on completion and an unconditional 3 million CHF payment due 12 months post completion. 

16.  Prior Period Adjustment

During 2020 the Group made a change to its accounting policy in respect of foreign currency translation of Goodwill and fair value adjustments arising on the acquisition of a foreign entity. The change is to treat Goodwill and fair value adjustments arising on the acquisition of a foreign entity as assets and liabilities of the foreign entity and translate them into GBP at the closing rate. The previous policy did not account for these adjustments correctly by treating them as assets and liabilities of the parent and translating them at the historic rate.  The details of the impacts of these adjustments applied to the 2019 and 2020 financial statements are included in Note 32 to the 2020 Financials Statements.

The following tables summarise the impacts on the Group's consolidated financial statements at 30^th June 2020.

a)  Consolidated statement of financial position (extract)

At 30 June 2020	Impact of prior period adjustment
	As previously reported £'000	Adjustments £'000	As restated £'000
Assets
Non-current assets
Intangible assets	26,261	1,328	27,589
Property, plant and equipment	4,618	-	4,618
	30,879	1,328	32,207
Current assets	23,714	-	23,714
Total assets	54,593	1,328	55,921
Equity and liabilities
Capital and reserves
Share capital	251	-	251
Share premium account	30,824	-	30,824
Merger reserve	7,656	-	7,656
Foreign currency translation reserve	530	1,328	1,858
Share-based payments reserve	864	-	864
Retained earnings	(4,939)	-	(4,939)
Total equity attributable to equity holders of the parent	35,189	1,328	36,514
Liabilities
Current liabilities	12,183	-	12,183
Non-current liabilities	7,224	-	7,224
Total liabilities	19,407	-	19,407
Total equity and liabilities	54,593	1,328	55,921

a)  Consolidated Statement of Comprehensive Income (extract)

For the six months ended 30 June 2020	Impact of prior period adjustment
	As previously reported £'000	Adjustments £'000	As restated £'000
Profit for the period	1,553	-	1,553
Other comprehensive income:	-
Items that will be reclassified subsequently to profit or loss
Foreign exchange gain / (loss) on translation of subsidiaries *	562	1,151	1,713
Total comprehensive profit for the period attributable to equity holders of the parent	2,115	1,151	3,266

* The sum of £1,151,000 comprises the gain of £1,328,000 arising at 30^th June 2020 less the gain recognised at 31^st December 2019 in the amount of £192,000 and including an adjustment of £15,000.  There is no impact on the Group's basic or diluted earnings per share and no impact on the total operating, investing or financing cash flows for the six months ended 30 June 2020.

 

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[1]Adjusted EBITDA is EBITDA before deduction of exceptional items and share based payments

[2]Adjusted profit per share is profit after tax excluding amortisation, exceptional items and share-based payments

[3] Source: Nielsen, All Outlets, Mouthwash, Brand Value Sales % Change YoY, 52 wk w/e July 21

[4] Source: Nielsen, All Outlets, Mouthwash, Brand Value Sales % Change YoY, 52 wk w/e July 21

 

END

 

 

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