Half-year Report

Voyager Life PLC

08 December 2023

 

8 December 2023

Voyager Life plc

("Voyager" or the "Company") 

Unaudited Interim Results for the six months ended 30 September 2023

The unaudited interim results of Voyager Life plc ("Voyager" or the "Company"), the health and wellness group formulating, manufacturing and supplying high-quality cannabidiol (CBD), hemp seed oil and hemp-related products, for the six months ended 30 September 2023 are presented below.

Highlights:

Operational:

·    Pet care products stocked by two of the UK's leading pet retailers - Pets at Home (online) and Jollyes (in store and online)

·    Forthcoming listing of Voyager's products at Debenhams (online)

·    Commenced manufacturing products for one of the UK's best known CBD brands near the end of the period with three follow up orders subsequently received

·    Applying for ISO 22716:2007 accreditation and reapplying for approval to manufacture food supplements (following move to new premises in October 2023)

·    Awarded Best CBD Products Retailer 2023 - UK by Global Health & Pharma

·    Winner of Natural Pet Products Supplier of the Year 2023 in the Scottish Enterprise Awards

Financial:

·    Revenue from 1 April to 30 September 2023 of £165,000 (£135,000 in the period to 30 September 2022)

·    Gross margin of 39 per cent. for the half year (39 per cent. in the period to 30 September 2022)

·    Cash balance as at 30 September 2023 of £551,000

·    Inventory of £101,000 (comprising finished goods and raw materials)

This announcement contains inside information for the purposes of UK Market Abuse Regulation and has been arranged for release by Eric Boyle, Chairman.  The Directors of the Company accept responsibility for the content of this announcement.

Enquiries:

Voyager Life plc Nick Tulloch, CEO	Tel: [phone] http://voyagerlife.uk [e-mail]
Cairn Financial Advisers LLP (AQSE Corporate Adviser) Ludovico Lazzaretti/Liam Murray	Tel: [phone]
Stanford Capital Partners LLP (Broker) Patrick Claridge   Bob Pountney	[phone] [phone]

Chairman's Statement

I am pleased to present Voyager's interim results for the six-month period to 30 September 2023.  We have spoken in the past about the work we have done in creating a platform for growth and we are now seeing the fruits of our labours. Pets at Home and Jollyes are two new retailers to stock our products with Debenhams to follow shortly.  Jollyes has already re-ordered and we are at the beginning of our relationship with the other two.  As shareholders and investors will know, these are household names in the UK retail space and all discerning and experienced in selecting the brands that they are prepared to represent.  I congratulate all of the Voyager team in securing these contracts.

We have built our business to date by proving ourselves with smaller, independent retailers. Margins are higher but volumes are naturally lower and it is volumes, and the corresponding revenues, that we are targeting.  The scale of these new retail partnerships has the potential to take Voyager to an entirely new level and market position.  In securing them, we have demonstrated the importance of UK-made products which are manufactured to a high standard and can be supplied cost effectively and on time. We tick all of these boxes and the appeal of that is now beginning to show.

And we have had further successes.  For some time now, we have been manufacturing plant-based health & wellness products for other companies, primarily those with a focus on CBD.  Rather like our retail strategy, our initial customers were often smaller businesses but, during the period, we secured a contract with one of the UK's largest and best-known CBD brands to manufacture three new topical products.  Early signs are that the take up of these products is going well with two re-orders already received.  And, just as importantly, we will shortly begin manufacturing a fourth product for this customer, once again endorsing our customer service and product quality.

If these, and other contracts, continue to flourish then we can have every confidence that Voyager has the potential to accelerate its growth from here.  Our listing on Aquis, our EIS and VCT qualifying status and our multiple revenue stream business model positions us well.  It is no secret that investors in the wider CBD and cannabis sectors have contended with a number of disappointments over the past year or two but I am very much encouraged - and I hope our shareholders are too - with the very significant progress made by Voyager despite these industry headwinds.  We may not have the budget or financial resources of some of our larger competitors but shrewd financial management and a commitment to quality and integrity continues to serve us well.

Our latest investor presentation is available to download at https://voyagerlife.uk/investors/.

Eric Boyle

Chairman

8 December 2023

Chief Executive Officer's Review

During the period under review, we continued to operate our multi-revenue strategy through four primary sources:

1.    Online sales

2.    Sales through our three own stores in St Andrews, Dundee and Edinburgh

3.    Sales through third party stores

4.    White label and private label manufacturing for third parties (VoyagerCann)

The breakdown of our revenue across our four business lines during the six-month period to 30 September 2023 has been weighted towards our own stores (including sales at markets and trade fairs) at 56 per cent., trade customers and VoyagerCann sales combined at 36 per cent. and online sales accounting for 8 per cent.  As our chairman has reported, it is the middle category that has been the standout performer in the period and, with larger retail partners and manufacturing customers secured, is the best positioned for growth.

On 18 May 2023, the Company announced five potential new customers with whom we were negotiating and we characterised each, during the lifetime of the contract, as being capable of exceeding Voyager's revenue from last year (£284,000).  Of those, we have already been successful with one (the well-known CBD brand that we are now manufacturing for) whereas one is no longer possible (bulk supply of CBD isolate) following the termination of our venture in Poland.  The other three remain live opportunities and, alongside those, the potential we have with our new retail partners - and particularly Pets at Home - further underlines the opportunities we have in front of us.  The future of Voyager will be defined by our ability to win and service these larger contracts and we will keep shareholders updated on our progress.

We have built one of the largest product ranges in the UK CBD industry with 72 formulated products now available for sale under the Voyager and Ascend Skincare brands (and a far greater range through VoyagerCann).  Voyager products are available in retail stores across the UK and we also have a small number of overseas stockists in Europe.  Our growing range of retailers and distributors supplements the groups we have worked with throughout the period under review which includes CLF, The Range and Thompson and Morgan.

During the period, we terminated our proposed acquisition of a Polish manufacturing and extraction facility from Goodbody Health Limited ("Goodbody").  As announced on 16 December 2022, legal title to the facility was expected to pass following the conclusion of certain Polish registration requirements.  Legal advice received at the time from Goodbody's lawyer indicated that this process would be a formality, taking around two to three months, but in fact the decision was deferred on two occasions without any certainty of timing for conclusion.  The longstop date under the sale and purchase agreement with Goodbody, which had already been extended once, expired on 30 June 2023.

Regrettably it became apparent that we were some distance apart from Goodbody on terms for a further extension and the open-ended nature of the approval process was creating increasing uncertainty for our operations.

Relinquishing the facility was not a decision we took lightly but, as the Polish approval process continued to lengthen, it became apparent that the long-term interests of Voyager would not be served by continuing to operate that business without full ownership.  Looking back, we are confident we made the right decision.  The Polish approval process continued notwithstanding our termination with Goodbody and we were informed in September 2023 that the government authorities had still not arrived at a decision.

Although there has been a financial cost to us, both from professional fees on the transaction and some operating costs during the first six months of 2023, the unusual transaction structure unexpectedly gave us a near "risk free" opportunity to test our strategic objectives before fully committing to the purchase.  More importantly, it gave us exposure to European customers and methods of transporting our products across borders (perhaps not as straightforward as in other industries given our association with cannabis) and we have continued to build our international customer base since ending our arrangements with Goodbody.  Furthermore, return of the funds that were placed in escrow pursuant to the transaction has strengthened our balance sheet.

During October 2023, we moved into new premises, still based in Perth, Scotland.  The lease of our existing premises came to an end and the proposed terms for renewal did not, in our view, reflect good value.  Our new premises are a similar size but arguably a better shape and so a more productive use of space.  As before, all of our administrative, manufacturing and warehousing operations are under one roof and our new premises will see us save more than £1,000 per month in rent.  We further believe that our new building is more energy efficient so we expect further savings on energy bills.  Taking into account moving expenses and some limited costs of refurbishment, we anticipate payback from the move to our new premises in around four months.

Our new premises provides us with both an expanded manufacturing floor space and greater storage capacity. As we announced on 31 October 2023, this move has been the catalyst for the ISO 22716:2007 application, the international standard for Good Manufacturing Practice (GMP) for cosmetics with guidelines for the production, control, storage and shipment of cosmetic products.  Since commencing our manufacturing operations, we have always sought to be fully ISO 22716:2007 compliant as confirmation of this status is an important factor for many customers and work is now underway to achieve the full accreditation.

Alongside this, we sought and received approval from our local Scottish council to commence manufacturing of edible products (specifically CBD oils) to provide an extension of our existing skincare plant-based health & wellness range. The office move requires a re-application to be made but, with a superior facility, we do not expect this to be problematic.

With our ongoing investment in, and focus on, VoyagerCann, we decided to incorporate that business by renaming a dormant subsidiary (VoyagerCann Limited) and transferring our manufacturing and production business into it.  This has limited impact on our daily operations but evidences the independence of VoyagerCann to our customer base and assists in our housekeeping.  VoyagerCann is now home to all of our manufacturing processes, whereas Voyager Life plc operates our retail business and wholesales Voyager and Ascend Skincare branded products.

Update on industry regulations

October 2023 saw two regulatory interventions in the CBD industry.  Firstly, the FSA caused some surprise by updating its guidance on the recommended daily consumption of CBD, reducing its previous recommendation from 70mg to 10mg.  Although this brought widespread concern from both CBD companies as well as the trade bodies, we noted in our operations update in October 2023 that the FSA's statement is guidance only and is aimed primarily at long term high-dose CBD users.  There is no requirement at this time to alter labels or remove products from shelves. The core part of the FSA's recommendation is that people who regularly take high quantities of CBD should, periodically, take a break - a recommendation that we agree with.

We have seen no deterioration in our business since the FSA published its statement and, although it is our belief that regulation of ingestible CBD products will remain restrictive, we expect that this will encourage CBD companies, as well as other businesses seeking to incorporate CBD into their range, to focus on topical and skincare products - we are already observing initial indications of this trend.  With VoyagerCann being a specialist in topical and skincare products there is reason to believe that demand for third party manufacturing could rise in the coming months.

Less than two weeks after the FSA's statement, the UK Government issued its response to recommendations put to it by the ACMD (Advisory Council on the Misuse of Drugs).  The tone is different to the tightening of restrictions implied by the FSA and some of the key points are:

·    The Government is recognising consumer CBD products as a food and so are distinguished from the provisions of the Misuse of Drugs Act. 

·    The Government will permit 50 micrograms of each phytocannabinoid per serving (as compared to current legislation that limits THC content to 1 milligram per container).  What constitutes a serving has not yet been defined but it is understood that it may differ between products.

·    The Government supports the development of more accurate testing for controlled phytocannabinoids to allow testing capabilities to develop and be fully regulated.  Standardised protocols should be developed.

We welcomed this response and believe that as these recommendations become legislation it will allow a wider spectrum of CBD consumer products than currently available on the market. In particular, setting THC and other phytocannabinoid levels in finished products should address existing uncertainty and restrictions in both retail sales and the provision of financial services to the CBD industry.

Outlook

The Company's primary focus is on revenue generation and objectives in the coming months for our business lines are:

1.    Online sales.  We have seen an increase of our own brand sales online of more than three times since the summer of 2023 and we expect to build on this by increasing our focus on social media-led marketing strategies.

2.    Own stores.  It has been widely reported that high street sales in the UK have been under pressure and, to an extent, we have experienced this.  However, a combination of attainable pricing strategies, new initiatives and attendance at local markets and fairs has kept revenue in this division broadly flat for the first four months of the period before August and September 2023 saw some shortfall.   We have reduced staffing in this division to maintain margins.

3.    Trade sales. As noted above, our successes with Pets at Home and Jollyes underpin our operations here and importantly demonstrate to counterparties that we are capable of servicing large contracts across multiple locations.

4.    Contract manufacturing. VoyagerCann's website generates a steady flow of enquiries but we have recently updated it to showcase our widening capabilities.  Larger contracts and repeat contracts endorse our commitment to quality and customer service and our push for more accreditations and food manufacturing approval, we believe, will add to appeal to both new and existing customers.

We also continue to expect further consolidation in the CBD and cannabis industries with several opportunities being presented to us in recent weeks.  The fact that the market is growing fast is undeniable but competition remains significant with numerous active participants, particularly amongst retail brands.  As one of our shareholders recently put to me, CBD companies should be working together for mutual benefit and not "kicking sand in each other's eyes".  We support that sentiment and we will continue to explore opportunities for collaboration whenever we see it as being in the interests of our shareholders.

Nick Tulloch

CEO

8 December 2023

Financial Review

Voyager is a UK health and wellness company manufacturing, supplying and retailing high-quality plant-based health and wellness products with a particular focus on Cannabidiol (CBD), hemp seed oil and hemp-related products.

The Company was incorporated on 12 November 2020 and, on 30 June 2021, trading in its ordinary shares commenced on the Aquis Stock Exchange Growth Market.  The comparatives reflect the equivalent period from last year and for the year ended 31 March 2023.

The Company achieved sales in the six-month period to 30 September 2023 of £165,000, an increase of 22 per cent. over the same period last year.  Gross margins were consistent at 39 per cent. and the Directors' view is that this level is capable of improvement.  The driver of growth for the period was trade sales, up more than 4.5x compared to the same period last year and primarily driven by contract manufacturing for third parties.  This more than offset flat online sales and, as explained above, own store sales that dropped towards the end of the period in line with the wider UK retail sector.  Online sales were conversely lower at the start of the period before increasing considerably towards the end, a trend that has been maintained since.

As Voyager has previously explained, manufacturing contracts have a longer lead time than other parts of its business.  Customers may take their time in ensuring that the product and packaging design is exactly as they want it to be.  The Company also assist customers in all accreditation and product testing that may be necessary - an important part of each order but also time consuming.  Voyager's policy is not to recognise revenue until an order has been completed and delivered and, consequently, some of the revenue that it will be reporting in the second half of the 2024 financial year is derived from contracts won and substantively performed in the period under review.

Voyager continues to keep a tight rein on costs.  Despite inflationary pressures and its operations in Poland (described below), administrative expenses were only 2 per cent. above those incurred in the same period last year.  Excluding the costs of Poland, administrative expenses were approximately 8 per cent. lower.  Monthly overheads, which exclude all product manufacturing and delivery costs, were approximately £75,000 at the end of the period.  Voyager currently employs 21 people of which 10 are based in our head office in Perth and the remainder work in our stores. 

The Company received an employment grant from Dundee Council of £2,400 during the period and was also approved for a further grant of £3,000 to support it attendance at trade fairs.  This has not yet been claimed but is expected to be received during the second half of the Company's financial year.

The Company made a loss after tax for the period of £501,000. The now ended venture in Poland absorbed additional costs which the Directors estimate at approximately £60,000 for the period (including direct costs incurred in Poland, additional staffing in the UK and travel expenses).  Another significant contribution to the cost base was the audit fee for the year ended 31 March 2023.  At £60,000 this was a considerable increase on the previous year with around one quarter of the fee being attributed to Voyager's Polish operations.  Consequently the Company is accruing a high level of fees for the current year.

Voyager maintains a strong balance sheet with cash and inventory of almost £652,000 as at 30 September 2023.  The Company has no bank loans and is financed entirely from the issue of share capital for cash (although there is a small interest free loan of £16,380 taken out for the purchase of an electric car at the beginning of 2023).  The Company had cash reserves held in bank accounts totalling £551,000 at 30 September 2023.  Following an increase in inventories ahead of the Christmas sales period, cash reserves stood at £372,000 at 6 December 2023.  The Company continues to manage its working capital position carefully.

Voyager successfully applied for and was awarded an R & D tax credit of £27,488 for the financial year ending 31 March 2022 and currently is preparing a claim for R&D tax credits for the financial year ended 31 March 2023.

Unaudited Consolidated Statement of Comprehensive Income

for the six months ended 30 September 2023

	6 months to 30 September 2023 £'000	6 months to 30 September 2022          £'000	Year ended 31 March 2023 £'000
Revenue	165	135	284
Cost of sales	(100)	(75)	(158)
Gross profit	65	60	126
Administrative expenses	(586)	(573)	(1,237)
Other operating income	2	14	19
Operating loss	(519)	(499)	(1,092)
Net finance expense	(9)	(12)	(19)
IPO associated costs	-	-	-
Loss before tax	(528)	(511)	(1,111)
Taxation	27	-	-
Loss after tax	(501)	(511)	(1,111)
Earnings per share	(3.58p)	(5.53p)	(11.1p)

There was no other comprehensive income in the period.  All activities relate to continuing operations.

Unaudited Consolidated Statement of Financial Position

at 30 September 2023

	As at 30 September 2023 £'000	As at 30 September 2022 £'000	As at 31 March 2023 £'000
Non-current assets
Intangible assets	1	2	2
Tangible assets	46	47	55
Right-of-use assets	542	650	584
Trade and other receivables: falling due after one year	17	23	17
Total non-current assets	606	722	658
Current assets
Inventory	101	130	125
Trade and other receivables: falling due within one year	128	35	580
Cash and cash equivalents	551	1,038	490
Total current assets	780	1,203	1,195
Total assets	1,386	1,925	1,853
Current liabilities
Trade and other payables < 1 year	(240)	(212)	(177)
Non-current liabilities
Lease liabilities > 1 year	(530)	(582)	(559)
Total liabilities	(770)	(795)	(736)
Total net assets	616	1,130	1,117
Capital and reserves attributable to equity holders of the Company
Share capital	140	93	140
Share premium	2,004	1,508	2,004
Share based payments reserve	135	91	135
Retained earnings	(1,663)	(562)	(1,162)
Total Equity	616	1,130	1,117

Unaudited Consolidated Cash Flow Statement

for the six months ended 30 September 2023

		6 months to 30 September 2023 £'000	6 months to 30 September 2022 £'000	Year ended 31 March 2023 £'000
Cash flows from operating activities
Loss before tax		(528)	(511)	(1,111)
Adjustments for:
Depreciation of fixtures, fittings and equipment		13	10	22
Depreciation of right-of-use assets		42	43	84
Finance expense - interest on lease liabilities		11	12	19
Tax Received		27	-	-
Share based remuneration		-	24	68
		(435)	(422)	(918)
Increase in trade and other receivables		(48)	(14)	(53)
Increase in trade and other payables		63	64	48
Decrease in inventories		24	16	20
Cash used in operations		(396)	(356)	(903)
Investing activities
Purchase of tangible fixed assets		(3)	(1)	(19)
Purchase of Intangible Assets		-	-	-
Acquisition of Right of Use Assets Escrow Account		- 500	(2) -	- (500)
Net cash used in investing activities		497	(3)	(519)
Financing activities
Repayment of lease liabilities		(40)	(28)	(56)
Proceeds from issue of shares, net of issue costs		-	-	543
Net cash generated from financing activities		(40)	(28)	(487)
Net increase in cash and cash equivalents		61	(387)	(935)
Cash and cash equivalents at beginning of period		490	1,425	1,425
Exchange rate differences on cash and cash equivalents
Cash and cash equivalents at end of period		551	1,038	490

Unaudited Consolidated Statement of Changes in Equity

for the six months ended 30 September 2023

		Share capital		Share Premium		Share based Payments Reserve		Retained earnings		Total equity
		£'000		£'000		£'000		£'000		£'000
Balance 1 April 2022		93		1,508		67		(51)		1,617
Loss for the period		-		-		-		(1,111)		(1,111)
Total comprehensive income		-		-		-		(1,162)		506
Transactions with owners
Issue of shares		47		521		-		-		568
Share issue costs		-		(25)		-		-		(25)
Reserves transfer		-		-		-		-		-
Shares based remuneration		-		-		68		-		68
At 31 March 2023		140		2,004		135		(1,162)		1,117

		Share capital		Share Premium		Share based Payments Reserve		Retained earnings		Total equity
		£'000		£'000		£'000		£'000		£'000
Balance at 1 April 2023		140		2,004		135		(1,162)		1,117
Loss for the period		-		-		-		(501)		(501)
Total comprehensive income		-		-		-		(1,663)		616
Transactions with owners
Reserves transfer		-		-		-		-		-
Shares based remuneration		-		-		-		-		-
At 30 September 2023		140		2,004		135		(1,663)		616

The following describes the nature and purpose of each reserve within equity:

Reserve	Description and purpose
Share capital	Amount subscribed for share capital at the nominal value of £0.01 per ordinary share
Share premium	Amount subscribed for share capital in excess of nominal value, net of share issue costs
Shares to be issued	Amounts received in respect of shares to be issued
Equity reserve	Amounts recognised for share-based payment transactions including share options granted to employees and other parties
Retained earnings	Cumulative net gains and losses recognised in the consolidated statement of comprehensive income

Notes to the Interim Results

for the six months ended 30 September 2023

1.    Basis of preparation

This announcement has been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRS"), and with the Companies Act 2006 applicable to companies reporting under IFRS.

Going concern

The financial statements have been prepared on a going concern basis. In assessing whether the going concern assumption is appropriate, the Directors take into account all available information for the foreseeable future, in particular for the twelve months from the date of approval of the financial statements. This information includes management prepared cash flows forecasts, available sources of funding and consideration of how the global economic downturn may impact product launches and sales.

The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.

2.    Profit/(loss) per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares.

The number of ordinary shares of 1 pence each used in the calculation of earnings per share:

	6 months to 30 September 2023	6 months to 30 September 2022	Year ended 31 March 2023
Weighted average number of ordinary shares in issue	13,986,244	9,252,920	10,042,872

3.    Segmental information

Revenue

All revenue arises from the retail of products for the health and wellness market as follows:

	6 months to 30 September 2023 £'000	6 months to 30 September 2022 £'000	Year ended 31 March 2023 £'000
Revenue
Trade customers	62	12	57
Voyager stores	82	100	186
Online sales	13	18	41
Trade Fairs	8	5
Total	165	135	284

4.    Forward-looking statements

These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates, and projections about its industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not a guarantee of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The Company cautions security holders and prospective security holders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority. 

5.    Other information

The financial information in this report does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

The interim results for the six months ended 30 September 2023 are unaudited. The interim financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations as endorsed by the European Union. The same accounting policies, presentation and methods of computation have been followed in the preparation of these results as were applied in the Company's audited financial statements dated 31 March 2023, as presented for the purpose of the Admission Document. 

 

END