1st December 2022

VENTURE LIFE GROUP PLC

("Venture Life" "VLG" or the "Company")

Acquisition and trading update

Venture Life (AIM: VLG), a leader in developing, manufacturing and commercialising products for the self-care market, announces that is has acquired three new Ear-Nose-Throat ("ENT") brands (the "Brands") through the acquisition of the entire issued share capital of the UK based company, HL Healthcare Limited ("HL") for a total consideration of £13.0 million.

The total consideration of £13.0 million will be settled by an initial cash consideration of £8.0 million, £3.0 million contingent consideration based on revenue performance for the year ending 31 March 2023 and the issue of a £2.0 million subordinated loan note, due to mature in 2024. The cash consideration assumes HL is cash and debt free other than normalised working capital, and is subject to a completion accounts adjustment. The acquisition will be funded from VLG's existing cash resources and its revolving credit facility.

The Brands

The Brands, comprising of three approved ENT products (two registered medical device spray products and one registered cosmetic spray product) are:

·    An olive oil-based product with a patent protected spray delivery system for the reduction and removal of ear wax, sold under the trademarked brand names Earol, Vaxol and Audiol in different territories;

·    An olive oil-based product with a patent protected spray delivery system (plus some antibacterial components for the protection of the ear surfaces when swimming), sold under the trademarked brand name of EarolSwim; and

·    A saline product for nasal flushing sold under the trademarked brand name Sterinase.

The Brands are sold directly to wholesalers and retailers in the UK and to licensing partners internationally, through a distributor network across 23 countries located across Central and Eastern Europe, Canada, and parts of the Middle East.

HL is the legal manufacturer of the Brands, which are made by a UK third-party manufacturer. As part of this transaction, one employee will be retained, and the founder will be supporting the business post completion.

The largest of the Brands is Earol, which is a leading name in the ear wax removal market ("EWR") and is the #1 brand in the UK pharmacy and #2 brand in the UK grocery market for EWR. 

Earol has experienced significant growth over the last 4 to 5 years due to EWR and general ear care transitioning away from primary care to private audiology clinics. In the UK, The National Institute for Health and Care Excellence (NICE) has, for several years, recommended, on the British National Formulary, the use of olive oil and Earol spray, in particular, for the management and removal of ear wax.  In addition to this, an ageing population and technological advancements in hearing aids has increased the demand for EWR and prophylactic ear care. The Earol product is delivered with a patented single metered dose, contains only natural ingredients and is alcohol free, thus it has no direct impact on the functionality of hearing aids during use. International success has mainly been in Scandinavia, driven by many consumers suffering from dry skin conditions, which includes those of the ear canal.

For the year ended 31 March 2022, HL generated reported EBITDA of £1.7 million on revenues of £4.5 million. Net assets at 31 March 2022 were £1.7 million. Net profit after tax for the year was £1.4 million. For the period 2018 - 2022 (31 March YE), HL delivered revenue CAGR of 14.8% and current year trading is on-course to achieve further growth.

Trading Update

VLG has signed a new long term distribution agreement with Blau Farmaceutica ("Blau") in Brazil for the Gelclair product. The launch is scheduled for the first half of 2023. Blau is the number one pharmaceutical company in the non-retail market in Brazil, with more than 1,500 employees and revenue of c.£270 million (BRL1.4B).  Actively present in the Institutional & Specialty Care segments, Blau has more than 35 years' experience and has a well-established footprint in the main LATAM markets, including Argentina, Colombia, Chile, Ecuador, Peru and Uruguay.  Blau's expertise and complete line of Chemotherapy and Oncology Support Products offers an established platform to successfully market Gelclair in Brazil, in order to reach patients suffering from chemotherapy or radiotherapy induced Oral Mucositis. 

In addition, a new 5 year distribution agreement has been signed for Gelclair with a partner in Vietnam and a new 5 year distribution agreement has been signed for Balance Activ in Ireland, with the launch taking place in early 2023.

The Board remains confident that the Group is on track to deliver revenue and Adjusted EBITDA in line with market expectations. Further detail regarding the FY2022 trading performance and the outlook for FY2023 will be provided in the full year trading update in Q1 2023.

This announcement contains inside information.

Jerry Randall, CEO commented: "In line with our existing buy and build strategy, I am pleased to be further utilising our RCF in acquiring the Brands via this acquisition of HL. HL has performed extremely well and demand has risen despite the covid-19 pandemic and ongoing supply chain pressures. Earol is already approved under the new Medical Device Regulations (MDR), allowing us to focus on continuing this growth in the UK and Europe. VLG is well positioned to leverage its organisation to develop the Brands and their profitability, to continue this channel growth and, in particular, utilise both our UK retail and international distribution relationships. In addition to growth of the existing product portfolio, we have already identified several exciting new product development opportunities; following an anticipated swift integration, we look forward to exploiting the synergies and leveraging the opportunities these acquisitions bring".

Mark Llewellyn, HL Founder commented: "We at HL Healthcare Ltd are thrilled to join the Venture Life Group. At HL we have designed, developed and distributed the Earol, EarolSwim and Sterinase brands, which have brought significant clinical benefit to many consumers. It fills me with great pride to know that through VLG's professionalism, drive and ambition, as well as their well-developed consumer sales, marketing and distribution network, that the benefits of these products will be brought to a much broader and diverse consumer market".

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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 Venture Life 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, 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 VLG Group also provides development and manufacturing services to companies in the medical devices and cosmetic sectors.