Venture Life : 2022 Interim Results

22 September 2022

VENTURE LIFE GROUP PLC

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

Unaudited interim results for the six months ended 30 June 2022

Strong trading in H1 demonstrating resilience of model and continued confidence in full year outlook

Venture Life Group plc (AIM: VLG), a leader in developing, manufacturing and commercialising products for the self- care market, presents its unaudited interim results for the six months ended 30 June 2022.

Financial Highlights

• Revenue growth of +36% to £18.9 million (2021: £13.9 million)
• Gross profit margin increased +55% to £7.7 million (2021: £4.9 million), gross margin percentage increased
  5.0 percentage points to 40.6% (2021: 35.6%)
• Adjusted EBITDA1 increased +74% to £3.3million (2021: £1.9 million), Adjusted EBITDA1 margin increased
  to 17.6% (2021: 14.0%)
• Operating profit £0.4 million (2021: loss of £0.2 million)
• Profit before tax, amortisation and exceptional items £1.7 million (2021: £1.3 million)
• Adjusted earnings per share2 1.43p (2021: 0.83p), Basic earnings per share (0.18)p (2021: (0.37)p
• Cash generated by operating activities of £1.8 million (2021: outflow £(0.6) million)

Commercial Highlights

• Significant organic revenue growth delivered within the recent acquisitions of BBIH and HICP at 10.2% and 5.5% respectively, representing an overall combined growth of 9.5% from these acquisitions (on a pro- forma3 basis)
• Six new deals signed, including new distribution partners for Pomi-T in The Netherlands and Singapore plus an additional partner for the Lift brand in Ireland.
• Three in-market product launches through existing blue-chip partners, including key launch in Brazil for BV treatment
• Increased distribution achieved in Asda (Balance Activ), wilko (Dentyl) and B&M (Dentyl)

Post period end

• Trading in line with management expectations and order book is c30% ahead of the same time last year on a like for like basis (excl. H1'23 orders)
• A new five year distribution agreement completed on Balance Activ in Austria
• Seven new in-market international product launches

1. Adjusted EBITDA is EBITDA before deduction of exceptional items (see note 6) and share based payments (see note 15 for reconciliation)
2. Adjusted earnings per share is profit after tax excluding amortisation, exceptional items (see note 6) and share-based payments
3. Pro-formabasis i.e. if the acquisitions had been in place for all of the prior year

Jerry Randall, CEO of Venture Life Group plc commented: "I am pleased to report these strong trading figures in the context of the challenging economic and trading environment we are currently experiencing and demonstrates the resilience of our business model in the face of these headwinds. I congratulate the whole Venture Life team for their outstanding agility, tenacity and commitment in this first half. The acquisitions we made in 2021 are now fully integrated into the business and have delivered growth as expected in the first half of the year, and have contributed to our improved gross margin percentage. Whilst operating cash conversion (before working capital movements) has been high (94% of adjusted EBITDA1), we have continued to invest in inventory to ensure we can supply our customers. The supply chain challenges experienced in 2021 have continued into 2022, in terms of both cost and availability, particularly impacted by the significant increase in energy prices. The support from our customers accepting the price increases that we have put through during the first half of the year has gone some way to mitigating the supply side cost increases. We have encouraged customers to order further ahead in order that we can guarantee supply, and I thank our customers for their proactivity in this. There is no doubt that the coming 12 months will continue to present challenges in the uncertain and volatile global environment, but it also provides opportunities for us, including the Group receiving many inbound enquiries from both existing and new customers who have been let down by their current suppliers, unable to supply in this challenging environment. We have traded well in the first half of the year, and the second half continues to progress in line with our expectations, and whilst we all face uncertainties on the coming months, the Group expects to deliver full year revenue and adjusted EBITDA1 in line with market expectations."

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 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, Gelclair and Pomi-T for oncology support, 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 Group also provides development and manufacturing services to companies in the medical devices and cosmetic sectors.

Non-Executive Chair's Statement

The Group has seen continued momentum from the second half of last year, delivering strong first half growth in revenue, gross margin and adjusted EBITDA1 against the comparative period not withstanding ongoing disruption within the supply chain. We are thankful for our exceptional people across our UK, Italy, Sweden and The Netherlands businesses, being proactive in meeting the challenges and the support of our customers. Whilst challenges remain, there are signs that these have now plateaued and are becoming more manageable.

The acquisitions of BBI Healthcare (BBIH) on 4 June 2021 and Helsinn (HICP) on 6 August 2021 are strong brands enabling value creation; they are continuing to perform well and have proven to be valuable additions to the Group which have both delivered first half growth and positively impacted gross margins, and we are confident in their continued growth.

Our principal manufacturing site of Biokosmes has met the increased customer demand, integrated our new acquisitions extremely well and demonstrated consistency in this higher output with capacity still available to continue our growth ambitions.

The combination of strength of our order book to date and investment in inventory to secure the delivery of it underpins our confidence in delivering full year results in line with market expectations.

The Group still has a significant level of undeployed funds from the Revolving Credit Facility that was put in place in June 2021, and we are continuing to actively review a number of brands with strong growth potential that could make use of this facility and build on the strong acquisitions already made.

Paul McGreevy

Non-executive Chair

22 September 2022

Chief Executive Officer's Statement

Operating review

The Group delivered an overall 36% growth in revenues to £18.9 million (2021: £13.9 million) in the first half. On a pro-forma basis, which assumes the acquisitions had been in place for all of the comparative period, overall Group revenues have increased £0.3m or 1.7% compared to the same period last year.

The recent acquisitions of BBIH and HICP contributed a significant £6.3 million to first half revenues and achieved growth of 9.5% over the same period last year on a pro-forma basis i.e. if the acquisitions had been in place since the start of the year.

Outside of these acquisitions, performance of the legacy revenues were akin H1 with 2021 at £12.6 million (H1 2021: £12.8 million). This revenue reflected growth of £0.4m / 4.6% in the customer brands business, offset by lower revenues in the VLG legacy brands of £0.6m / 14.3% in this first half as a result of lower international sales which will be more weighted towards the second half than in previous year. VLG legacy brands in the UK were broadly in line with the previous year.

The Group comprises two segments: Venture Life Brands and Customer Brands which respectively accounted for 52.8% and 47.2% of first half revenues.

The Venture Life Brands business reported revenues of £10.0 million (H1 2021: reported £4.9 million). The revenue increase of £5.1 million on a reported basis has been driven by the impact of the recent acquisitions which contributed an incremental £5.7 million during the period, offset partially by a decline in the legacy business of £0.6 million. On a pro-forma basis these brands held flat year on year (H1 2021: pro-forma £10.0 million).

The Customer Brands business reported first half revenues of £8.9 million, an increase of £0.4m / 4.6% over the previous year. As well as developing and manufacturing the majority of the Venture Life brands, this part of the business is also focused on the development and manufacture of products on behalf of third parties, sold under their brands.

In line with the Group's M&A strategy, the growth of the higher margin VLG Brands exceed that of our Customer Brands and has driven upwards the overall revenue contribution from our VLG Brands and in turn driven continued improvement in gross margin against the comparative H1 period. We expect this to increase going forward through organic growth and as the Group continues to explore selective brand acquisitions.

First half absolute Gross margin of £7.7 million increased £2.7 million / 55% over the previous year (H1 2021: £4.9

million) and delivered a significant gross margin percentage improvement of 5.0% to 40.6% (H1 2021: 35.6%). The positive step-up in gross margin percentage has been driven by the newly acquired brands of 6.2%, offset partially by an adverse 0.3% impact from further cost increases (net of customer price increase VLG has passed on) and an adverse product mix impact of 0.9% on the legacy business due to a higher proportion of revenues coming from lower margin customer brands than compared with the prior year.

The increased supply prices and transport costs have been widely reported globally and we have not been immune to this. We experienced these issues in 2021 and they are persisting in 2022. There are challenges around price, availability and delivery lead times of raw materials and packaging, that our team must manage daily. Significant increased energy prices affect operational costs and supplier component and material costs, with inflationary pressure and logistic challenges. The Group has continued to use mitigation strategies, passing on price increases where possible, securing continuity of supply and fixing prices within the supply base as well as sourcing alternative suppliers.

The Group generated adjusted EBITDA1 of £3.3 million for the year (2021: £1.9 million), an increase of 71.4% over the

previous year and delivered an Adjusted EBITDA1 margin of 17.6% (H1 2021: 14.0%). Operating profit increased to

£0.4 million (2021: Operating loss £ (0.2) million), an increase of £0.6 million against the comparative period.

Venture Life Group (VLG) Brands

Across the VLG Brands portfolio, since the beginning of the year there have been six new deals signed with our international partners including new partnerships in Germany, Netherlands and Singapore for Pomi-T, an additional partner for the Lift brand in Ireland and the deal with our new Chinese partner for oral care which was announced earlier this year. The online business has also been expanded into Germany with Balance Activ which launched in Q2 2022.

There have been three new in-market product launches by our partners in various countries including the launch of BV treatment in Brazil which was a key opportunity identified from the BBIH acquisition, and a further seven new launches that happened post period end.

Oral Care - UltraDEX and Dentyl

Overall oral care revenues fell 8% to £2.2 million (H1 2021: £2.4 million) through difficult market conditions in which the mouthwash category has seen a downturn and whilst a risk may persist for discretionary spend in this area, we feel that both brands are well positioned and well distributed within the market to weather any present or future challenges.

For Dentyl there was growth in sales through the value retailers with wilko, Savers and Home Bargains although this was offset by a weaker performance in grocery as consumers continue to migrate to the value retail channels as per recent market data (source: Nielsen). We believe that with our broad distribution base on Dentyl, the growth seen in value retailers and new launches into B&M that went live at the end of Q2, we are well placed to mitigate any downturn in this category resulting from changes in consumer discretionary spend at this time.

Within the international space, the launch of Dentyl in China through our new partner Samarkand plc was delayed by three months due to widespread lockdowns and although the goods have commenced selling in the local market, continued lockdowns remain a challenge. The development of these brands in this market will be monitored closely.

Looking forward, we are expecting a premium grocer to launch both Dentyl and UltraDex into their stores in Q4 of this year. We remain confident that with increased usage occasions coming through the latest data, coupled with the impact of distribution gains and increased range offered online, we will see a recovery in the second half revenue performance from these brands.

Women's Intimate Health - Balance Activ

On a global basis, Balance Activ delivered first half revenues of £2.2 million (H1 2021: pro-forma £2.5 million) a reduction of 9.4% versus the prior year. The performance against the comparative period has been adversely

impacted by the conflict between Russia and the Ukraine which resulted in revenue loss from the local distributor, further, revenues from the newly developed fertility gel product which were included in the prior year pro-forma have not repeated. Stripping out these adverse impacts, the Balance Activ brand has delivered growth of 5% on the rest of the business.

In the previous year, this brand grew 33% in the UK which had been driven mostly by the annualization (full year impact) of Amazon sales. Our teams have leveraged this online success and used it as a platform to target new distribution opportunities in the UK, with a major pharmacy chain confirming the listing of Balance Activ NPD later this year. We have also increased the range offered through online channels in UK and launched the brand online in Germany in Q2 2022. Due to these factors, we expect to see revenue growth in the second half of the year from the retail side of this business.

Outside the UK, Balance Activ is currently launched in 26 countries with its largest partner, from which we expect to see good growth over 2021 based on revenues to date and orders in hand. In July 2021, the BV gel received registration approval in Brazil from ANVISA, its regulatory body and the product will launch in H2 2022, the first shipment to this market was completed in Q1 2022. In total, there have been three in-market launches for this product in the first six months of 2022, and six new launches post term.

With the initiatives already undertaken in the UK, coupled with very visible second half revenues from our international partners, we expect to see a good out-turn for the rest of this year for this brand.

Diabetes Management - Glucogel and Lift

Last year we acquired two brands within the diabetic management category - Glucogel and Lift. On a proforma basis, revenue for both brands collectively grew by 28.9% to £3.2 million (H1 2021: £2.5 million), driven by Lift, which is performing well across all channels. The brand is performing particularly well online due to increased traffic and has seen higher brand loyalty compared to its competition in this space.

In addition, Glucogel remains as the number 1 prescribed product for treating hypoglycaemia and is positioned towards more serious attacks. Revenues grew by 0.2% in the first half of 2022 on a proforma basis to £1.1 million. These revenues are protected by equalization deals in place with key pharmacies and, as such, we expect the business to remain steady moving forward through the year.

Oncology Support - Gelclair, Pomi-T & Xonrid

On a proforma basis, revenues grew by 5% to £0.9 million (H1 2021: £0.8 million). Prior to the acquisition of these brands, opportunities had been identified in key target markets and we have made commercial progress with new partnerships signed for Pomi-T in Germany, The Netherlands and Singapore. In addition, advanced discussions are ongoing for Gelclair in USA, Brazil and Canada.

Nail & Foot Care Portfolio

Revenues for the first half were £0.9 million (H1 2021: £1.5 million). In The Netherlands, these products have delivered growth against the comparative period and the UK has remained flat. However, the international side of this business was impacted by the loss of a key distribution partner, and we are currently seeking new opportunities to replace these revenues. However, second half revenues are set to be significantly stronger and are underpinned by our order book.

Customer Brands

Revenues from Customer Brands increased by 5% to £8.9 million (H1 2021: £8.5 million) with growth coming from good performance of existing partners and new business gaining traction with key partners. The impact of customer stocking and destocking seen in the previous couple of years has levelled out and in turn we have seen customer ordering return to more normalised patterns.