Voyager Life PLC - Half-year Report

16 December 2022

Voyager Life plc

("Voyager" or the "Company") 

Unaudited Interim Results for the six months ended 30 September 2022

The unaudited interim results of Voyager Life plc ("Voyager" or the "Company"), the vertically integrated CBD company, for the six months ended 30 September 2022 are presented below.

Highlights:

Operational:

·    Retail - 67 formulated products and 270 total SKUs (stock keeping unit) available across website and stores - Voyager products sold from Cornwall to Shetland as well as in Europe

·    Manufacturing - completed or ongoing orders for 9 customers by VoyagerCann with an extensive pipeline of near term prospects

·    Launch of the UK's only CBD Refillery

·    Expansion of Ascend Skincare's beauty range to 9 products

·    Acquisition of a CBD extraction and manufacturing facility in Poland

Financial:

·    Revenue from 1 April to 30 September 2022 of £135,000 (£59,000 in the period to 30 September 2021)

·    Cash balance as at 30 September 2022 of £1,038,000 with no debt

·    Inventory of £130,000 (at cost price)

·    Subscription for new ordinary shares to raise £547,000

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

Nick Tulloch:  nick@voyagerlife.uk  / +44 (0) 1738 317 693

Cairn Financial Advisers LLP (AQSE Corporate Adviser)

Liam Murray or Ludovico Lazzaretti:  +44 (0) 20 7213 0880

Chairman's Statement

It is a pleasure to report Voyager's interim results.  As investors will read in our Chief Executive's report, we continue to make progress on several fronts as we become a diverse and successful CBD manufacturer and retailer.  In many ways though, the figures presented today do not adequately represent our progress this year and it is our acquisition of a CBD extraction and manufacturing facility, also announced today, which really defines Voyager as we move into 2023. 

As we first announced in the publication of our annual report in August 2022, the Company has been examining potential consolidation and partnership opportunities.  Merger and acquisition activity in the UK CBD sector has developed during 2022 and we expect this to continue.  With our strong balance sheet and management team, we received several enquiries as well as exploring a number of other opportunities.  One such opportunity was the potential acquisition of the business and assets of Tree of Life UK Limited from the administrators which we ultimately concluded was not an acquisition that the Company should pursue. 

Outside of that opportunity, we actively examined acquisitions of businesses that in some cases are far larger than Voyager as well as smaller brands or individual products that may be accretive to our current range.  Our acquisition of the Polish CBD extraction and manufacturing facility reflects our expectation of continued growth in the CBD industry and our decision to increase our focus on the service side, helping business customers with their formulations, manufacturing and accreditations.

The UK Autumn Statement in November 2022 was predictably tough with widely heralded tax rises and spending cuts being confirmed.  In a package of what many people will see as bringing in a far more austere backdrop to our financial planning, it is hard to see many silver linings but the reduction in the capital gains tax thresholds will presumably encourage investors to seek out more tax efficient homes for their money.  EIS and VCT qualifying companies may be beneficiaries in the coming months as well as those investments which sit outside of the inheritance tax regime.  This should hopefully in time enhance the appeal of many trading companies, including Voyager, listed on stock exchanges such as Aquis.

We have been clear from the outset that we will set the bar high on corporate governance and customer service and we continue to adhere to the high standards that we expect of ourselves.  The first two years since we commenced operations in November 2020 have seen us develop into one of the more recognised CBD companies in the UK.  With the vertically integrated platform we have created, which is now pan-European, the coming year should hold even more opportunity for us and I look forward to reporting our progress during the year.

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

Eric Boyle

Chairman

16 December 2022

Chief Executive Officer's Review

Voyager has developed a multi-revenue strategy through four primary sources:

·    Online sales

·    Sales through third party stores

·    Sales through our three own stores

·    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 2022 has been weighted towards our own brands with online sales accounting for 13 per cent., our own stores (and sales at trade fairs) 78 per cent. and trade customers and VoyagerCann with 9 per cent..  However, our businesses are still developing and we have seen a significant change since the period end with recorded sales at VoyagerCann accelerating since the period end.

By their nature, white label and, in particular, private label (i.e. customised) manufacturing contracts have a longer lead time than other parts of our business.  Customers may take their time - just as we do - in ensuring that the product and packaging design is exactly as they want it to be.  We also assist customers in all accreditation and product testing that may be necessary - an important part of each order but also time consuming.  Our policy is not to recognise revenue until an order has been completed and delivered and, consequently, some of the revenue that we will be reporting in October and November is derived from contracts won and substantively performed in the period under review.

We expect this profile to continue as VoyagerCann's order book continues to grow.  We have recently completed a first order for a customer with significant sales on Amazon and are working on prospective orders with customers who sell through national chains of health stores and supermarkets.  As VoyagerCann establishes itself as a recognised manufacturer of topical CBD products, we know that repeat orders from customers in these categories represent a very significant upside for the Company.  In the past, we have quoted VoyagerCann's order book based on certain metrics.  These same metrics would suggest a seven-figure order book.  However, we know that lead times can be long and customers are apt to change their minds so we take a conservative approach to equating enquiries with future revenue streams.  Nevertheless, our current and prospective orders span the UK and stretch from Switzerland to the United States underpinning the confidence we have in our model.  The incorporation of CBD extraction and European manufacturing into our model should provide further scope for growth.

VoyagerCann is yet to celebrate its first birthday but is already forging a reputation in the industry.  It is particularly interesting to us that customers who first enquired some months ago are now returning to place firm orders.  We know we are not alone in providing manufacturing services for topical CBD products but our model of offering a "one-stop-shop" or turnkey suite of services to customers (manufacturing, packaging, accreditation, testing and fulfilment) alongside our commitment to quality and service is proving to be appealing.  With our new ability to manufacture the same products in both the UK and the EU, we expect our appeal to larger customers will grow over time and the scale in particular of our new facility in Poland increases our manufacturing capacity.

Our Chairman has spoken about consolidation across the CBD sector and the success of VoyagerCann, even at this early stage of its operations, has to some extent redefined our thinking on the industry.  In the words of Mark Twain: "During the gold rush it's a good time to be in the pick and shovel business".  Although the investor experience of CBD has been disappointing, consumer appetite continues to advance with Graphical Research estimating growth in CBD product demand across Europe at 33.5 per cent. per annum.  As much as we have confidence in our own brands and product range, we are now well positioned to be a service provider to the CBD industry meaning that we are now directly exposed to the growth of the wider market and not just our own products.

Within our own brand, our pet products continue to attract considerable interest and this category remains our best-selling product by unit sales.  We further expanded this range over the summer to include daily hemp treats, a product we developed based on feedback from customers.  We expect our pet range to continue to lead sales of our own brands into next year and our first overseas stockists in this category (in France and Ireland) are particularly satisfying.

Elsewhere in our range, our eczema and psoriasis cream and cooling cream are worthy of particular mention.  Both have been popular, particularly through in-store sales, and we have reformulated both during the period.  Following customer feedback, our eczema and psoriasis cream is now available in two sizes, including a convenient 50ml travel size, and our cooling cream is also now available in a smaller, more convenient size of 50ml.

As previously reported, our in-house development structure enables us to develop new products on low production volumes, thereby preserving our working capital.  We have consequently built one of the largest product ranges in the UK CBD industry with 67 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 over 100 retail stores stretching between Cornwall and Shetland and we also have a small number of overseas stockists in France and Ireland.  We have partnered with several well-known distributors including CLF, The Range and Thompson and Morgan and we are in discussions with two major chains of pet retailers, one in the UK and the other in continental Europe.

At the start of May, and as the Company expanded, we moved out of our serviced office and nearby storage facility to consolidate all of our operations in a single building in Perth, Scotland.  In September we expanded further, taking a lease of the remainder of the same building and constructing a laboratory at one end of it.  We now have approximately 3,500 square feet comprising office space, meeting rooms, storage and production facilities. We have commenced paying rent at our St Andrews and Dundee stores after the expiry of the rent free and prepayment periods.  Rent at our store in Edinburgh has been prepaid until 31 December 2022.  The Scottish government's support for retail premises through reduced business rates came to an end in June but, until then, all of our premises had benefited from this.

We employ 23 people of which 10 are based in our head office in Perth and the remainder work in our stores.  We continue to apply for, and receive, employer support from local governments.  This support is not as prevalent as it was during the Covid pandemic but nevertheless two members of staff were supported in this way at the end of the period.

Like other businesses in the UK and around the world, we are experiencing higher costs due to inflation and supply constraints.  The most significant increase has been in our utility bills and we have put in place measures to manage our usage of gas and electricity as far as possible.  Prices of raw materials and packaging have, for the most part, been stable and we have been able to offset increases in certain ingredients by sourcing our single most expensive ingredient, namely CBD, at better prices whilst not compromising on quality.  We have also adopted a policy of purchasing in bulk to secure quantity discounts.  Although this has greater near term cash demands, we have the storage space and the balance sheet to fund this strategy.  Over time, we hope to see benefits to our margins.

The retail price of CBD products has been flat to falling.  There are two main reasons for this.  The global supply of hemp remains abundant thereby keeping the price of CBD isolate low by historic standards.  Secondly, many CBD suppliers have experienced financial difficulties and so discounting remains commonplace.  Against this backdrop, Voyager has maintained consistent pricing of our products.  We operate the occasional sale or promotion but our long term strategy is to focus on supplying high quality products at fair prices.  In the coming months, we will examine potential techniques to reduce our headline prices whilst not compromising margins.

In the meantime, we are responding to customer demand for CBD at lower price points and in June we launched a range of refillable CBD products with a new "CBD Refillery" available at each of our stores and online.  The refillable range comprises eight products - two shampoos, two conditioners and four hand and body washes.  Customers can opt for either a 250ml or 500ml bottle with all products in the range retailing at under £10.  We are not aware of any other UK CBD companies who offer a refillable service for CBD products and it is our fully integrated business structure of both operating our own stores as well as manufacturing our own products that has made this initiative possible.  We intend to add further environmentally friendly products to our range at sub-£10 retail prices.

Voyager continues to develop rapidly and we have accomplished a great deal since founding the business in 2020.  We have an extensive product range, a growing network of distribution contracts, three of our own stores, increasing brand recognition and, maybe most importantly, a manufacturing capability that is attracting international attention - and all of that before today's significant acquisition and expansion into Poland.  We have always said that we should be judged on revenue and, in this regard, we know we have much more to do.  However, our prospective customer base is both wide and growing and so there is every reason to be optimistic about the future.

Nick Tulloch

CEO

16 December 2022

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 as well as the period from incorporation on 12 November 2020 to 31 March 2021.

The Company achieved sales in the six-month period to 30 September 2022 of £135,000, an increase of 129 per cent. over the same period last year.  Gross margins improved from 39 per cent. last year to 44 per cent. and the Directors' view is that this level is sustainable.

Monthly overheads, which exclude all product manufacturing and delivery costs, were a little under £85,000 at the end of the period.  The Company's expenditure during these six months reflects both its office expansion and development of our laboratory.  Consistent with Voyager's usual conservative approach, this growth has been cautious: monthly rent in Perth is £2,765 and much of the laboratory equipment was sourced second hand (supplementing what was acquired with the Cannafull acquisition last year).

Several acquisition opportunities were investigated during the period.  For the most part, the Company conducted its own due diligence and none of these investigations reached a stage where professional advisors were necessary.  The exception was the potential acquisition of the business and assets of Tree of Life UK Limited from its administrators.  Although the Directors ultimately concluded that this was not an acquisition that the Company should pursue, the Company did incur some professional fees.

As stated above, two Voyager employees were supported by government grants at the end of the period, with support for other members of staff reaching its conclusion during the period.  The Company was also the recipient of a further Digital Boost grant of £375 which comprised matched funding for certain IT expenditure including computer equipment and a move to a new telephone system. The Company recognises these funds as other income (being £4,000 during the period).

The Company made a loss before tax for the period of £511,466. These results include accrued share option costs of £23,857 although no new options were granted.  The period under review saw the Company expand its headcount to 25 (reduced to 23 as at 12 December 2022), move into a larger head office, and construct a more comprehensive manufacturing facility.  Considerable investment was also made into expanding the product range which comprises time and materials, packaging, accreditation and testing costs.

Voyager maintains a strong balance sheet with cash and inventory of almost £1.2 million as at 30 September 2022.  The Company has no loans and is financed entirely from the issue of share capital for cash.  The Company had cash reserves held in bank accounts totalling £1,038,258 at 30 September 2022.

Cash balances reflect the pre-payment of rent in Edinburgh through to 31 December 2022.

The Company has experienced one bad debt amounting to £2,500 (of which £1,500 was provided for in the last financial year) and related to a manufacturing contract for another CBD business which has ceased trading.  Voyager is examining its options including the merits of lodging a claim with the liquidators.

In accordance with IFRS 16, with regard to accounting for leases, finance lease liabilities of £670,540 have been recognised in respect of the lease of the Company's stores at the period end.

The Company is also preparing a claim for R&D tax credits for the development of certain of its product range during the financial year ended 31 March 2022.

Outlook

The Company's primary focus is on revenue generation and objectives in the coming months include:

·    Further advancing VoyagerCann.  With the progress made in such a short space of time and the breadth of enquiries coming, including from international customers, this division has become the Company's near term focus and further investment, predominantly in time, will be made to develop this manufacturing capability which now incorporates both the UK and continental Europe.

·    Continued development of the Company's network of trade partners.  The Voyager team attended several trade fairs and conferences during 2022 to boost the Company's profile.  Further events are planned for 2023 but more focus is required on the areas that have seen the most success, namely white label manufacturing, beauty and pet care.  With our more international outlook, we expect to attend events in both the UK and Europe.

·    Ongoing development of its online presence.  To date, Voyager's B2C retail strategy has concentrated on developing its St Andrews, Edinburgh and Dundee stores.  The Company expects further progress to be made here but management time is now focused on improving online sales.  External SEO and web development consultants have conducted a review of Voyager's websites and the team are in the process of implementing certain improvements. There is, as yet, no commitment to increase spending on an SEO strategy although the Directors are conducting a cost-benefit analysis to assess the merits of further marketing spend online.

The Directors recognise that, although growing strongly, the CBD market in the UK and overseas remains highly competitive and, furthermore, that the competition is not always on a level playing field with several companies continuing to sell sub-standard products and make unsubstantiated health claims.  However, it is for this reason that the Directors remain confident in Voyager's strategy.  As the market continues to grow and customers become better informed and more discerning, they believe that responsible and trusted businesses like Voyager will continue to thrive.

Unaudited Consolidated Statement of Comprehensive Income

for the six months ended 30 September 2022

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

Unaudited Consolidated Statement of Financial Position

at 30 September 2022

Unaudited Consolidated Cash Flow Statement

for the six months ended 30 September 2022

Unaudited Consolidated Statement of Changes in Equity

for the six months ended 30 September 2022

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

Notes to the Interim Results

for the six months ended 30 September 2022

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:

3.    Segmental information

Revenue

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

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 2022 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 2022, as presented for the purpose of the Admission Document.