Venture Life : 2023 Interim Results

25 September 2023

VENTURE LIFE GROUP PLC

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

Unaudited interim results for the six months ended 30 June 2023

Venture Life (AIM: VLG), a leader in developing, manufacturing and commercialising products for the international self-care market, is pleased to announce its interim results for the six months ended 30 June 2023 (the "Period"). The Group has delivered another half year of growth and development across the whole business, along with the integration of the HL Healthcare business acquired in late 2022. Strong cash generation has been a theme of the first half, reducing Group net leverage1 to 1.47x, from 1.65x at 31 December 2022, with the contingent consideration of £3.0m for the acquisition of HL Healthcare ("HLH") paid in full during the period.

Financial Highlights

• Group revenue increased 24.5% to £23.5m (H1 22: £18.9m)
• Adjusted EBITDA3* up 33.4% to £4.4m (H1 22: £3.3m) and adjusted EBITDA3* margin up 1.3% to 18.9%
  (H1 22: 17.6%)
• Operating profit before amortisation and exceptional items* up 40.9% to £3.3m (H1 22: 2.4m)
• Loss before tax increased to £1.3m (H1 22: £0.2m) as anticipated, reflecting higher amortisation and finance costs versus the comparative period
• Cash from operations up 131% to £4.1m (H1 22: £1.8m) and free cashflow of £2.6m (H1 22: £0.5m)
• Underlying cash from operations* up 159% to £4.8m (H1 22: £1.8m) and improved cash conversion*
  of 108% (H1 22: 56%)
• Net debt reduced to £15.3m with Group net leverage1 commensurately reduced to 1.47x (31 Dec 2022: 1.65x)

Operating Highlights

• H1 revenues comprised growth from both the VLG Brands and Customer Brands with revenue growth in customer brands being particularly strong. On a proforma2 basis revenue was 10.4% ahead of the previous year
• Continued strong performance of Balance Activ and Lift Brands, achieving revenue growth of 24% and 16% respectively
• 17 new listings secured with major retailers for Balance Activ, Lift and Earol, plus progress on digital transformation; online sales were 69% ahead of the previous year at £1.6m (H1 22: £0.9m)

Jerry Randall, CEO of Venture Life Group plc commented: "I am delighted with performance of the business over this first half, with strong growth contributions, in particular from our Customer Brands, as well as from Balance Activ and Lift, in the VLG Brands portfolio. The acquisitions we made in 2021 and 2022 are now fully integrated and delivering good organic growth, and as expected, we will be launching newly developed products in the second half of the year and increasing our distribution points in the UK, which will both contribute to the expected stronger revenues in H2. We have delivered good cash conversion and seen a meaningful reduction in our debt position, having now paid the full contingent consideration for the acquisition of HLH in the first half. We expect strong cash

generation to continue through the second half and will maintain our focus on cost savings to further reduce our net leverage1. I send out a big thanks again to all our hard working, dedicated and innovative team across the Group for continuing to grow our business in challenging times."

• The performance of the Group is assessed using Alternative Performance Measures ("APMs"), which are measures that are not defined under IFRS but are used by management to monitor ongoing business performance against both shorter term budgets and forecasts and against the Group's longer term strategic plans. APMs are defined in note 16.

1. Group net leverage calculated as net debt (excl. finance leases) and using proforma1 Adjusted EBITDA3 on a trailing 12-month basis.
2. Proforma basis i.e. if the acquisition had been in place for the whole of the prior period.
3. Adjusted EBITDA for Group net leverage is EBITDA after deduction of finance lease costs and before deduction of exceptional items (see note 6) and share based payments (see note 16 for reconciliation)

Investor Meets Presentation

A live presentation relating to the 2023 Interim Results via Investor Meet Company will be provided on 27 September 2023 at 11:00am BST. The presentation is open to all existing and potential shareholders. Investors

The Company also announces that its Nominated Adviser and Broker has changed its name to Cavendish Securities plc ("Cavendish") following completion of its own merger.

The Company also announces that Cavendish will act as Nominated Adviser and sole corporate broker with immediate effect.

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 Activ range in the area of women's intimate healthcare, the Lift and Glucogel product ranges for hypoglycaemia, Gelclair and Pomi-T for oncology support, Earol for ear wax removal, 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.

Trading Performance

Overview

Group revenues for the period grew by 24.4% to £23.5m and on a proforma1 basis revenue was 10.4% ahead of H1 2022, comprising growth from both the VLG brands and Customer brands. Excluding the newly acquired HLH, revenue performance elsewhere in the Group was 11.4% ahead of the same period last year. Traditionally the VLG Brand revenues are weighted more towards the second half (2022: H1 44%, H2 56%), and we expect this to be the case in the second half of 2023 which is also expected to benefit from the impact of new distribution gains and the launch of several newly developed products.

Venture Life Brands

VLG Brands delivered revenues of £12.9m (H1 22: £10.1m), a growth of 27% over the previous period and

accounted for 55% of first half revenues (H1 22: 53%). VLG Brands include the acquisition of HLH on 30 November

2022 which delivered revenues of £2.4m during the period (H1 22: £2.4m). HLH's main product is Earol which

contributes c.95% of the sales and achieved revenues of £2.3m in the period (H1 22: £2.2m), a growth of 6.1% over the previous period on a proforma2 basis.

On a proforma1 basis, revenue from VLG Brands was 3.5% ahead of the same period the previous year; within this portfolio the Balance Activ and Lift brands have continued to perform strongly, achieving revenue growth of 24%

and 16% respectively during the period. Revenues for the VLG Brands are expected to show stronger growth in the second half consistent with previous years.

The Group's focus for 2023 is driving organic growth through the dual approach of distribution gains and new product development. The Group's extensive research and development capability, coupled with significant capacity in its manufacturing operations, means it is well positioned to rapidly innovative and develop efficacious new products for its VLG Brand portfolio. The second half of 2023 will see the market entry for some of these new products and the Group has a program to continue this innovation program over the coming years.

Energy Management

Energy management (LIFT & Glucogel) grew by 4% to £3.3m (H1 22: £3.2m). These products are predominantly sold in the UK & Eire and the main component of this first half growth has been the impact of the increased listing of Lift in Eire through our distributor there. As with most of our VLG Brands, we are increasing our online revenues through Amazon at this time, and although small, we saw growth in the Lift online revenues in both the UK and USA driven by advertising investment and listing optimisation.

Lift revenues for the first half were £2.3m (H1 22: £2.0m) and Glucogel revenues £1.0m (H1 22: £1.0m). The second half of the year is expected to deliver more growth for Lift as several newly developed products will be launching in both the off-line and on-line settings. Extension of the Lift brand with these new products will allow us to broaden the offering and bring new users into the brand, as well as extend our points of distribution.

Women's Health

Revenues for the Balance Activ brand grew 24% to £2.9m (H1 22: £2.3m). Revenues from this brand were split

£1.2m (H1 22: £1.1m) in UK & EU direct to retail and online, and £1.7m (H1 22: £1.2m) internationally with our distribution partners.

Growth in the UK & EU retail and online has been driven by several initiatives. The launch of a 14 tube multipack (compared to the usual 7 tube pack) of the Balance Activ gel has allowed us to attract value shoppers at a time when cost of living pressures have been increasing. Performance in the grocery channel has also been good, with both the BV gel and pessary in growth, and the launch of our newly developed Thrush cream in the first outlets.

Internationally our partners have performed well, with increased geographic distribution contributing to growth. Revenues with partners rose 33% to £1.7m (H1 22: £1.2m). The launch of the Balance Activ gel in Brazil with our partner contributed to revenue growth in the first half.

Ear, Nose & Throat

Revenues for the brands in this area were £2.4m (H1 22: £nil) and arose from the HL Healthcare Limited business, acquired on 30 November 2022. Products in this portfolio are Earol, Earol Swim and Sterinase.

Earol accounts for the vast majority of revenues (and includes sales under the brand name Vaxol in certain European territories) and was £2.2m in the first half of 2023. On a like for like basis in 2022, revenues were £2.1m, so H1 2023 was 6% ahead of the H1 2022 revenues. This growth has been driven more on the international side than in the UK. New points of distribution and the launch of the product on Amazon is expected to contribute to growth in the UK in H2, with new product development also being launched in H2 2023.

Earol Swim revenues were £0.2m vs £0.2m on a like for like basis in H1 2022.

Oncology Support

Revenues for the brands in this area were up 42% to £1.2m (H1 22: £0.9m), driven by growth of Gelclair, with

revenues three times higher than for the same period in 2022 at £1.0m (H1 22: £0.3m). This brand is sold entirely through partners, and as indicated when we acquired this brand, timing of revenues can be variable and growth is dependent, to a large extent, on geographic expansion. Integration into the Group from the previous owner, coupled with the MDR process meant revenues in H1 2022 were lower than historically seen for the products, and revenues in H1 2023 are more reflective of the normal level of business. New agreements signed in 2022 are expected to continue to contribute to growth in the second half.

Pomi T revenues were lower in the first half of 2023 at £0.1m (H1 22: £0.5m) due to the timing of delivery of orders. H2 revenues are expected to be significantly higher based on the order book in hand for this product. With only a small number of current partners, activity is ongoing to increase the geographic penetration of this brand, as well as areas of new product development.

Oral care

Revenues for the oral care brands were down 16% at £2.0m compared to the same period last year (H1 22: £2.4 m). Whilst Ultradex revenues grew in the period there was an overall revenue reduction in this sector driven by lower Dentyl revenues, emanating from the combination of poor performance by our Chinese partner and aggressive promotion of competitor brands during the Period.

Revenues for UltraDEX were 16% higher at £1.1m (H1 22: £0.9m), as we see a continued return to usage of the product post lockdowns with the growth being driven primarily by our online sales through Amazon.

Dentyl revenue, by comparison, was down 9% in the UK, to £0.9m (H1 22: £1.0m) as a result of aggressive promotion from the big competitors, such as Listerine. Internationally we currently only have one partner for Dentyl, Samarkand in China, and we have recorded no sales to them in the first half of 2023 (H1 22: £0.3m), as they have performed poorly with the product, and this is under review. Elsewhere within the International business, other oral care revenues from non-core products were £0.1m (H1 22: £0.2m).

Digital

Direct online sales (through Amazon) increased 69% to £1.6m (H1 22: £0.9m), as a result of strong growth by a number of our brands, including Balance Activ and Lift, and included the launch of Balance Activ through Amazon Germany, the largest Amazon market in the EU. As a result of this growth, online sales represented 12.3% of the Venture Life Brands revenues in H1 2023, compared to 9.7% in H1 2022.

We expect to see further progress in online revenues in the second half, as we extend our online presence, including the launch of Earol on Amazon and further European roll out of Balance Activ across the Amazon platform.

Customer Brands

The Customer Brands business had a strong first half with revenue increasing 20% to £10.6m (H1 22: £8.8m). This growth was delivered mainly from existing customers and included £1.2m of revenues from newly developed products that completed development in 2022. This shows the strength of the in-house development expertise we have within our Italian facility, which has also developed a number of new products for the Venture Life Brands which will be launching in H2 2023 and beyond. The balance of growth came from the existing customers growing their own sales and showing that demand remains strong in the consumer health space.

Operational developments

Operationally we have worked in the first half to bolster the team to manage the growing business. This included the appointment of Fabio Perego as Group Operations Director, and General Manager of both the Biokosmes manufacturing facility in Italy and the Rolf Kullgren manufacturing facility in Sweden. Fabio has extensive experience in the Contract Development and Manufacturing Organisation space, and in particular, in medical devices, and will be responsible for the harmonisation of the two facilities and the maximisation of efficiencies in production at the two sites.

Innovation and the Medical device Directive

At our Biokosmes development facility we have a deep technical department covering research, innovation, development, regulatory and quality assurance. With our own quality management systems in place across the business (in Italy, Sweden, The Netherlands and the UK) we are strongly positioned to develop and manufacture new products for both the Venture Life and Customer Brands business units. We have seen this already in the Customer Brands business in the first half, and will see this impact also in the Venture Life Brands in the second half, with the launch of a number of new products in UK retailers including:

• Baby Earol
• Lift Energy Boost Range
• Balance Activ cleansing range
• Balance Activ Thrush cream
• Women's Intimate Health probiotic range

During 2023 and into 2024 it is our intention to focus resource on the expansion of our revenues through new product development and organic growth, and further capitalising on the brands and products we have acquired over recent years.

The transition from the Medical Device Directive (MDD) to the Medical Device Regulations (MDR) continues. However, an extension to the deadline to transfer products has been recently announced, and now products can continue to be sold under their MDD certificates until May 2028 (previously May 2024), which means that the timing to complete new MDR registrations has become more relaxed with 4 additional years to achieve this. As a result, we have slowed down the registration process for the remaining technical files that we have not yet registered under MDR, to alleviate pressure in the approval system. This will also have an added benefit that the costs to undertake these new registrations (in excess of €1 million across all our files) can be spread over the next 4 and a half years rather than the next 12 months. This will free up more cash flow to further reduce our net leverage1.

Sustainable Life

Our progress in the pursuit of our sustainability goals continued to be strong in the first half. We were delighted to bolster the ESG team in February 2023, with the appointment of Emma Caprini, a dedicated executive in the ESG team in Italy. Objectives for ESG in 2023 are:

• Obtaining BCorp status for our Biokosmes manufacturing facility - this will also be a test run of the process for obtaining BCorp for the whole Group in 2024.
• Assessing the carbon footprint of our Biokosmes manufacturing facility and designing the net zero
  2050 plan for the facility - this will also be a test run of the process for obtaining carbon footprint and net zero plan for the whole Group in 2024.
• Undertaking the life cycle analysis for three of Venture Life Brands - Dentyl, UltraDEX and Balance Activ.

We are on target to complete these objectives by the end of 2023.

Post period end, we have been awarded the Ecovadis Silver Sustainability Rating at our Biokosmes facility. Ecovadis is world's largest and most reliable provider of corporate sustainability assessments and has more than 90,000 companies assessed in 175 countries in over 200 industries. Many of our customers look to this assessment to understand our commitment to sustainability. This Silver Sustainability Rating places us in the top 25% of companies assessed. Last year we were awarded the Bronze Award and it is as a result of numerous improvements around the facility and hard work by the whole team that we achieved this improved rating.

Profit and loss account

The Group delivered Adjusted EBITDA1 of £4.4m for the six-month period, an increase of 33% over the £3.3m reported in the previous year and at an improved margin of 18.9% (H1 22: 17.6%).

The inflationary environment has been challenging over the last three years but we have continued to see this plateau gradually over the course of 2023. Raw materials and packaging, which had been procured at inflated prices during the height of the supply chain issues in the prior year, have now unwound through cost of goods sold.

Our teams have worked hard to mitigate the financial impact, delivering production efficiencies and extending our supplier network to increase the number of alternative supply options available. Costs have been passed onto customers only where it has been possible to do so. As there is a lag effect between these costs being incurred and being passed onto customers, we expect to see a positive impact on margins in the second half of 2023.

In addition, the first half of 2023 has absorbed the impact of fair value adjustments on inventory acquired as part of the HLH acquisition which inflated the cost of goods sold and this inventory has been sold in full during the period.

The net impact of these factors resulted in an overall decline in gross margin by 350 basis points (bp) to 37.1% (H1 22: 40.6%) and a 14% increase in gross profit to £8.7m (H1 22: £7.7m),in line management's expectations and is expected to improve in the second half of the year.

Our vertically integrated business model enables newly acquired brands to be integrated profitably within the existing infrastructure. Operating costs (defined as operating expenses less depreciation) were in line with the previous year at £4.5m (H1 22: £4.5m) and as a % of revenue reduced by 450bp to 19.1% (H1 22: 23.6%) which highlights the Group's ability to deliver significant operational gearing benefit.

Operating profit before amortisation and exceptional items increased by 40.9% to £3.3m (H1 22: £2.4m) reflecting the pull through effect of the EBITDA improvement which was offset partially by an £0.2m increase in depreciation charges to £1.0m (H1 22: £0.9m).

As disclosed in the 2022 full year results, there was a material uncertainty around the impairment assessment of Dentyl due to an unknown speed of recovery from our partner in China. This position has not changed since last year and coupled with a decline in the UK performance, has resulted in an impairment of £0.4m being recognised against the Dentyl brand during the period. The carrying value of the attributable intangible assets is now £3.8m at 30 June 2023 (30-Jun-22: £4.3m). The Group is actively seeking new opportunities for the brand internationally,

3 Adjusted EBITDA for Group net leverage is EBITDA after deduction of finance lease costs and before deduction of exceptional items (see note 6) and share based payments (see note 16 for reconciliation)

Unaudited Interim Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2023