Venture Life Regulatory News (VLG)

Venture Life Group plc

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

Final results for the year ended 31 December 2013

Set for sustainable growth

Bracknell, UK - 5 June 2014: Venture Life Group plc (AIM: VLG), the international consumer self-care group focused on developing, manufacturing and commercialising products for the ageing population, announces its audited results for the year ended 31 December 2013.

Highlights of the year

· Revenues increased 66% to £0.49m (2012: £0.29m)

· Gross profits up 55% to £0.19m (2012: £0.12m)

· Proposed dividend of 0.04p per share (2012: 0.04p per share)

· First launch in four markets of five products including NeuroAge™ and Lissio Ha™

· Fourteen distribution partner agreements signed

· Exclusive rights secured to use the Benecol® brand for certain food supplement forms in certain countries

Post-year end highlights

· Acquisition of Biokosmes S.r.l, an Italian development and manufacturing business

· Fund-raising of £5.4m (before expenses) completed

· Admission to the Alternative Investment Market (AIM) of the London Stock Exchange

· Five new products added to the portfolio

Commenting on the results, Jerry Randall, Chief Executive Officer of Venture Life said:

"The Group has made significant strides during the past eighteen months, culminating in the recent fundraising, admission to AIM, and acquisition of Biokosmes. These landmark events provide us with the platform for expansion and we expect to be announcing several new product distribution deals in the near term. We fully expect our business model to deliver sustainable revenue growth through 2014 and beyond as we continue to address the needs of the global self-care market.

We are also announcing today that the Company will shortly be issuing 5,639,393 new ordinary shares as additional, and final, consideration to the vendors of Biokosmes, reflecting the impressive financial performance of Biokosmes in 2013."

- Ends -

For further information please contact:

Venture Life Group PLC

Jerry Randall, Chief Executive Officer

James Hunter, Chief Financial Officer +44 (0) 1344 742870

WG Partners (Broker) Jonathan Gosling

Claes Spång +44 (0) 20 3693 1566

Charles Stanley Securities (Nominated Adviser) Phil Davies +44 (0) 20 7649 6000

Square1 Consulting

David Bick

Mark Longson +44 (0) 20 7929 5599

JW Communications

Julia Wilson +44 (0) 7818 430877

Notes to editors

About Venture Life

Venture Life is an international consumer self-care company focused on developing, manufacturing and commercializing products for the ageing population. The Group's product range and pipeline currently includes food supplements for lowering cholesterol and maintaining brain function, dermo-cosmetics for addressing the signs of ageing, and medical devices for improving minor aches and pains, dry eyes and itchy skin. The products, which typically are recommended by pharmacists or healthcare practitioners, are available primarily through pharmacies supplied by the Group's international distribution partners.

Through its manufacturing company, Biokosmes, the Group also provides development and manufacturing services to companies in the medical devices and cosmetic sectors.

The Group's own branded products are currently sold or partnered in over 40 countries and currently include:

· food supplements to maintain brain function and memory;

· dermo-cosmetics for addressing the signs of skin ageing and hair loss, and

· medical devices for improving conditions such as minor aches and pains, dry eyes and itchy skin.

The Company has a healthy development pipeline including products in areas such as diabetes, cardiovascular health, obesity, cognitive function and skin ageing. Products coming from the pipeline will be expected to have intellectual property protection and be supported by independent clinical evidence of efficacy.

Chief Executive's Statement

2013 was a landmark year for Venture Life, and the strong progress continued into 2014 with the fundraising, admission to AIM and acquisition of Biokosmes, which completed in March 2014. The events of this period have been transformational for the Group. At the start of 2013, Venture Life was a small, private UK company, with a handful of international partners. Today, it is an international Group listed on the AIM market in London, with operations in two countries, nearly 70 employees, its own development and manufacturing facility for topical products, and 75 international partners with products distributed in over 40 countries.

The current growth phase really began in the first half of 2013 when the Group raised capital and expanded its international presence, such that by the end of 2013 it had 22 distribution deals in place. In March 2013, Venture Life signed a very significant long-term deal with Raisio Group to develop and market Benecol® as a food supplement in certain countries, under the Benecol® brand and using the patented plant stanol ester ingredient. Benecol® food products are currently sold in 27 countries. We believe that Benecol® food supplements sold through the pharmacy channel would have huge market potential.

During the second half of 2013, the commercial operations grew with further product launches. Alongside this, we intensified our corporate activity with the initiation of the process to acquire and integrate with Biokosmes, based near Lecco, Italy, as well as preparation for the fundraising and listing of the Company's shares on AIM.

Our products

The Group now has a range of 'ready for market' products that address the deterioration in the function or appearance of the human body across a number of therapeutic areas, including neurology, dermatology, and cardiovascular. We also have a developing pipeline of innovative products that will complement the existing range and we are excited about the opportunities that these new products will present through 2015 and 2016. In addition, the acquisition of Biokosmes gives us access to a large portfolio of products that are available for international exploitation through our commercial team. We have already taken five of these formulations, branded them under the Venture Life umbrella, and signed our first distribution agreement covering four of these products. We recognise that our business will only be successful if we develop products for which there is demand, and some of the proceeds from the recent fundraising have been allocated to support our new product development efforts. We pride ourselves on the speed and cost-effectiveness of our product development process and we look forward to updating shareholders on the progress of our pipeline.

Distribution of our products

Our commercial strategy is centred around establishing strong relationships with key distributors in territories across the globe to provide us with a scalable business without the drain on resources of an in-territory sales team. Our distribution partners are generally well-established pharmaceutical companies, providing local knowledge critical for enabling timely product registrations (where required) and for enabling swift access to the pharmacy channel through their existing relationships with buyers and decision makers. In the three years since it was founded, Venture Life has signed 26 distribution agreements with 16 distribution partners covering more than 30 territories and 14 brands. Of these agreements, 14 were signed in 2013 but with our recent fundraising we have been able to strengthen our commercial team significantly and we expect the number of new distribution partners to increase commensurately.

During 2012 and 2013 we laid the foundations for potential commercial deals in China through developing relationships with a number of Chinese companies. We have been encouraged by the nature of our discussions and the apparent demand for Western products from the Chinese market, which the Group is well positioned to meet now that it has in-house development and manufacturing capabilities.

Events following the balance sheet date

On 28 March 2014, Venture Life completed its £5.4 million fundraising (£4.2 million net of expenses) and the admission of its shares to AIM. As well as funding new product development and the strengthening of the Group's commercial team, the fundraising enabled the Company to complete the acquisition of Biokosmes, an Italian product development and manufacturing business.

The integration with Biokosmes brings together Venture Life's expertise in new product development, brand management and commercialisation, and Biokosmes's expertise in topical product development and manufacturing. One of the attractions of the Biokosmes business is its extensive library of proprietary formulations, some of which we believe can be profitably commercialised, and I am pleased to report that the initial response from our distribution partners to the first five such products that we have rebranded and repositioned has been very encouraging. Other benefits that we are expecting from the integration include the opportunity to bring more of our new product development and formulation work in-house, thereby reducing the cost incurred and time taken to develop certain types of new product. Similarly, we expect sales growth and gross margin improvement to be realised in two key ways. Firstly, Biokosmes currently manufactures 13 topical products for Venture Life, so we now bring the Biokosmes margin on these into the Group, which we expect to improve gross margin and to help our price competitiveness. Secondly, the cost base of Biokosmes is predominantly fixed, so by putting increased production volumes through the facility, the overall margin on all products manufactured there should improve.

Outlook

We have entered 2014 very optimistic about the future. We have great ambitions for Venture Life and believe that we are well-positioned for an exciting future and strong growth through:

• our business model, where the significant costs of selling and marketing products around the globe are borne by our partners;

• the markets in which we operate, as the rapidly growing ageing population and the changing landscape of healthcare funding mean there is strong demand for consumer-facing products sold through the pharmacy channel;

• our own in-house topical development and manufacturing, with capacity to grow output significantly; and

• our commercially focused team of experienced and motivated people.

We have a clear strategy for growth and the fundraising, admission to AIM and acquisition of

Biokosmes demonstrate our ability to execute our strategy and build strong foundations for the future prosperity of your Company.

Jerry Randall

Chief Executive Officer

Financial review

Statement of Comprehensive Income

Revenue for the year increased by 66% to £0.49 million (2012: £0.29 million). The increase in revenue from 2012 is largely attributable to new products being launched through six new distributors. Gross profit of £0.19 million (2012: £0.12 million) represented a gross margin of 38% (2012: 41%). The slight deterioration in the year-on-year gross margin resulted from a one-off additional cost incurred in fulfilling a customer order but we do not anticipate a recurrence of such cost. But for the one-off cost, gross margin in 2013 would have been 43%.

All sales are invoiced by the Group and all costs of sales are invoiced to the Group in euros and converted to sterling equivalent at the date of invoice using the £/€ exchange rate prevailing at that date. The average £/€ exchange rate during 2013 was £1/€1.18 compared to £1/€1.23 in 2012. The strengthening of the euro against sterling in 2013 by an average 4.8% would typically have improved gross profits by a similar amount. However, the strengthening of sterling against the euro that has started in 2014 will, if maintained, negatively affect reported revenues although we would expect cost of sales and euro denominated administrative expenses to be similarly reduced.

Administrative expenses, including an exceptional item of £0.1 million, were £1.28 million (2012: £0.9 million). The increase resulted largely from the investment in senior staff recruited across the business and one-off costs incurred during the year in relation to the

Biokosmes acquisition which was agreed in November 2013 and completed in March 2014.

The loss after tax for the year amounted to £1.1 million (2012: £0.8 million), translating into a loss per share of 6.71p (2012: loss per share of 5.71p).

Statement of Financial Position

Total assets at the year-end were £2.0 million (2012: £0.69 million) with the principal movements during the year attributable to:

• an increase in intangible assets of £0.08 million (2012: decrease of £0.03 million), largely represented by an increase in development costs capitalised under IFRS;

• an increase in trade and other receivables of £0.75 million (2012: decrease of £0.03

• million), relating to costs incurred in relation to the fundraising and Admission to AIM

• which occurred after the period end and which will largely be offset against the Company's share premium account in 2014; and

• an increase in cash and cash equivalents of £0.37 million (2012: decrease of £0.01 million), following the issue of convertible loan notes and new shares.

The principal movements in Equity and Liabilities are accounted for as follows:

• an increase in share capital and share premium of £1.2 million (2012: increase of £0.53 million), following the issue of new shares in respect of new funds raised during the year;

• an increase in share based payment reserve of £0.26 million (2012: increase of £0.08 million), following the grant of share options during the year;

• a decrease in retained earnings of £1.1 million (2012: decrease of £0.8 million), reflecting the loss made by the Group during the year;

• a decrease in the deferred licence provision of £0.15m (2012: decrease of £0.03 million), reflecting a reduction in deferred consideration payable in respect of an acquired intangible asset;

• an increase in convertible loan notes and loan note reserves of £0.39 million (2012: nil), following the issue of convertible loan notes; and

• an increase in trade and other payables of £0.68 million (2012: increase of £0.15 million), relating to costs incurred in relation to the fundraising and Admission to AIM which occurred after the period end and which will largely be offset against the Company's share premium account in 2014.

Cash and treasury

Cash resources are made up of cash and cash equivalents, which include amounts on short-term deposits, and amounted to £0.45 million (2012: £0.08 million) at year end. Net cash inflow during the year was £0.37 million (2012: net outflow of £0.01 million).

The principal cash flows in the year were as follows:

Outflows:

• Operating cash outflow: £1.0 million (2012: £0.5 million).

• Purchases of intangible assets including capitalisation of development costs: £0.14 million (2012: £0.02 million).

Inflows:

• Issue of ordinary shares: £1.2 million (2012: £0.5 million).

• Issue of convertible loan notes: £0.38 million (2012: nil).

The Group has generally used short-term deposits so as to maintain liquidity of cash resources for utilisation in operations. The Group continues to monitor its treasury policy and position.

Dividends

The Group has historically paid a dividend and intends to continue doing so. The Board is recommending the payment of a dividend of 0.04 pence (2012: 0.04 pence) per share to shareholders on the register on 13 June 2014.

Events subsequent to the balance sheet date

On 27 March 2014, the Group completed the acquisition of Biokosmes. On 28 March 2014, the Group raised a total of £5.4 million (before expenses) through the issue of new shares and the Group's entire issued share capital was admitted to trading on the AIM market. The funds raised were used predominantly to fund the acquisition of Biokosmes and funds are also being applied to strengthen the Group's commercial team and new product development.

James Hunter

Chief Financial Officer

INCOME STATEMENT

All of the loss and the total comprehensive income for the year is attributable to equity holders of the parent.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED STATEMENT OF CASHFLOWS

Notes 

1. Basis of the announcement

The financial information of the Group set out above does not constitute statutory accounts for the purposes of Section 435 of the Companies Act 2006. The financial information for the year ended 31 December 2013 has been extracted from the Group's audited financial statements which were approved by the Board of directors on 4 June 2014 and will be delivered to the Registrar of Companies for England and Wales following the Company's 2014 AGM.

The financial information for the year ended 31 December 2012 has been extracted from the Group's audited financial statements for that period. The reports of the auditor on both these financial statements were unqualified, did not include any references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006.

Whilst the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ('IFRSs') as adopted by the European Union, this announcement does not itself contain sufficient information to comply with those IFRSs. This financial information has been prepared in accordance with the accounting policies set out in the December 2013 report and financial statements.

Items included in the financial information of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial information is presented in UK sterling (£), which is the Group's presentational currency.

The Company is a public limited company incorporated and domiciled in England & Wales and whose shares are quoted on AIM, a market operated by The London Stock Exchange.

2. Income tax expense

Tax on the Group's loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to losses of the consolidated entities as follows:

There are no enacted or substantively enacted changes to the small profits tax rate.

As at the balance sheet date, the Group has unused tax losses of £2,436,000 (2012: £1,428,000) available for offset against future profits. No deferred tax asset has been recognised in respect of these losses due to the uncertainty of its recoverability.

3. Earnings per share

The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted loss per ordinary share are identical to those used for basic loss per share. This is because the exercise of share options and conversion of the convertible loan notes would have the effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of IAS 33.

4. Dividends

Amounts recognised as distributions to equity holders in the period:

The directors recommend the payment of a dividend of 0.04p per share (2012: 0.04p per share).

5. Share capital and share premium

All shares are authorised, issued and fully paid.

The Group has one class of ordinary shares which carry no fixed income.

6. Post balance sheet events

On 28 March 2014 the ordinary 0.3p shares of the Company were admitted to trading on the Alternative Investment Market ("AIM") of the London Stock Exchange ("Admission") in connection with a fundraising of £5.4 million (before expenses) in respect of which the Company issued a further 4,954,585 shares.

Prior to Admission, the Company had committed to a number of share-based transactions which came into effect shortly before Admission:

1. On 27 March 2014 the Company issued 821,421 ordinary 0.3p shares following the conversion of previously issued convertible loan notes into equity. Details of the loan notes, which had a nominal value of £375,000, can be found in note 22 of the Financial Statements.

2. On 27 March 2014 the Company issued 168,526 ordinary 0.3p shares in respect of agreements it had entered into with suppliers for services that had been provided to the Company.

3. On 28 March 2014 the Company issued 1,358,185 ordinary 0.3p shares pursuant to the acquisition of Biokosmes as detailed below.

The total number of ordinary 0.3p shares in issue immediately following Admission was 24,264,141.

On 28 March 2014, the Company announced that it had completed the acquisition of 100% of the share capital of Biokosmes, an Italian company which develops and manufactures topical products, including cosmetics, dermo-cosmetics and medical devices.

Founded in 1983 and based north of Milan, Italy, Biokosmes provides product formulation, development and manufacturing services to over 60 customers, including Venture Life. The acquisition and integration of the two companies brings together Venture Life's expertise in brand and product development, and commercialisation, with Biokosmes's extensive knowledge and expertise in topical product development and manufacturing.

The initial consideration payable to the vendors of Biokosmes at the time of the acquisition amounted to €4.2m in cash, €2.0m in the form of a loan note convertible under certain circumstances into Venture Life Group plc ordinary 0.3p shares ("Shares"), and 1,358,185 Shares. Further consideration in the form of 5,639,393 new Shares will be issued shortly to the vendors on the basis that the audited EBITDA* achieved by Biokosmes in the financial year ended 31 December 2013 amounted to €1.944 million. Following the issue of these new Shares, the total number of Shares in issue will be 29,903,534.

Due to the limited time available between the acquisition and the approval of these financial statements, the Group is still in the process of finalising the list of identifiable assets and liabilities and establishing the fair values of those assets and liabilities acquired but it is anticipated that the fair value of the consideration paid over the book value of the net assets acquired will include customer relationships and goodwill representing the value attributable to new business and the assembled and trained workforce.

As at the date of acquisition, 27 March 2014, the net assets of Biokosmes, based on unaudited management accounts and reported under IFRS, amounted to £1.8 million (€2.2 million).

*Earnings before interest, tax, depreciation, amortisation and exceptional costs

7. 2013 Annual Report and Accounts and 2014 Annual General Meeting

The Group's Annual Report and Accounts for the year ended 31 December 2013 is being posted to shareholders on Friday 6 June 2014. It is available on the Company's website (http://www.venture-life.com/investor-relations) from 11.00am today. The Annual General Meeting of Venture Life Group plc will be held on Monday 30th June 2014 at 11.00am at the offices of Simmons & Simmons LLP, CityPoint, One Ropemaker Street, London EC2Y 9SS. A notice of meeting will be sent to shareholders with the Annual Report and Accounts and a copy will be available on the Company's website (http://www.venture-life.com/investor-relations) from 11.00am today.