Venture Life Regulatory News (VLG)

RNS

19 December 2019

Venture Life Group plc

("Venture Life" or the "Group")

Acquisition and trading update

Earnings enhancing acquisition of PharmaSource BV, an established Netherlands based development and distribution business

Trading update

Venture Life Group plc (AIM: VLG), a leader in developing, manufacturing and commercialising products for the international self-care market, announces the acquisition of PharmaSource BV, a Netherlands based development and distribution business, and provides a trading update for the year ending 31 December 2019.

Acquisition of PharmaSource BV

Venture Life announces that it has agreed to acquire the entire issued share capital of PharmaSource BV ("PharmaSource"), for an initial consideration of €5.23 million, and deferred contingent consideration of up to €1.27 million. These payments will be funded entirely from the Company's existing cash resources, and the acquisition is expected to be immediately earnings accretive. The acquisition is also subject to conditions and price adjustment for cash and debt.

PharmaSource owns a number of medical device products in key therapeutic areas including fungal nail infections, wart removal and women's health. These products are distributed both through retail pharmacies in the Netherlands and through key international distribution partners outside of the Netherlands, including the UK, Germany, the Nordics, Belgium and France. Strategically, this acquisition will enable the Company to broaden its product range and extend its global reach by providing additional retailers and distribution partners to its existing partner network.

PharmaSource is a growing business and revenues for the year ending 31 December 2019 are expected to be in excess of €2.5 million (2018: €1.8 million), with Profit Before Tax in excess of €0.9 million (2018: €0.5 million). It is expected to have gross assets of around £0.6 million at completion. PharmaSource owns various medical device registrations, for products marketed under several different brand names. Once the post-completion integration process gets underway, there are expected to be strong synergistic benefits of the acquisition for the Venture Life Group going forward, anticipated to enable the acquired business assets to continue to grow both revenues and profitability under our stewardship.

Completion of the acquisition is, among other matters, conditional on the receipt of some regulatory documentation from the Notified Body in relation to one of the PharmaSource products, which is expected to be received shortly.

Trading update

The Company also announces that it expects its revenues for the year ending 31 December 2019 to be at least £20 million and adjusted EBITDA to be at least £3.2 million, before non-recurring operating costs of approximately £0.2 million, principally relating to the restructuring of the Company's finance team. As mentioned in our half year results, our distribution partners in China experienced some difficulties, which impacted sales in the first half of 2019. Whilst the causes of this have been rectified, it has not been possible to catch up on orders fully from those partners in H2 2019, with a consequent knock-on effect to our expected full year performance. However, we expect orders from our Chinese distribution partners to grow in 2020. The Company already has an overall order book in hand for the first quarter of 2020 that is more than €1 million (and more than 40%) ahead of the same time last year. These factors, together with completion of the PharmaSource acquisition on an earnings accretive basis, provide an excellent platform for the Venture Life Group to continue to grow into 2020 and beyond.

Jerry Randall, CEO of Venture Life Group, said: "We are delighted to acquire this high quality, growing and profitable business, which gives us our first European footprint directly into the retailer market. Once completed, the acquisition should be immediately earnings enhancing for Venture Life, is being funded totally from our existing cash resources and will benefit from the operational leverage we can bring. The acquisition brings an excellent range of products and customer relationships to Venture Life, which we expect to be able to leverage through our existing products and relationships further. We see this as another excellent add-on to our existing business, that we can further grow and develop within our existing structure.

We expect to finish the year with revenues and profits ahead of 2018. Despite some one-off costs in the first half, we have been pleased with the performance of the wider Group, which has delivered good growth against a complex macro-economic backdrop. This performance, when enhanced by completion of this excellent acquisition opportunity on an earnings accretive basis in our profit and loss account for 2020, provides us with confidence for the year ahead, and makes us very well positioned for continued growth."

THIS ANNOUNCEMENT, INCLUDING THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

The information communicated within this announcement constitutes inside information under the Market Abuse Regulation (EU) No. 596/2014.

For further information, please contact:

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 both the UK and Italy, the Group's product portfolio includes some key products such as the UltraDEX and Dentyl oral care product ranges, food supplements for maintaining brain function, medical devices for women's intimate healthcare and proctology and dermo-cosmetics for addressing the signs of ageing.

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

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