VENTURE LIFE GROUP PLC. ( Venture Life or the Group ) Unaudited interim results for the six months ended 30 June 2014

Transcription

1 VENTURE LIFE GROUP PLC ( Venture Life or the Group ) Unaudited interim results for the six months 30 June 2014 Building the platform for growth, momentum increasing Bracknell, UK 29 September 2014: Venture Life Group plc (AIM: VLG), the international consumer products group addressing the self-care needs of the ageing population, presents its unaudited interim results for the six months 30 June Financial highlights: Successful fundraising of 4.2 million, net of expenses, and admission to AIM Acquisition of Biokosmes S.r.l, an Italian development and manufacturing business, for 12.8m settled by 3.5 million in cash, together with shares and loan notes Revenues increased to 3.1 million (H1 2013: 0.27 million), including the impact of Biokosmes for three months EBITDA loss reduced to 0.2 million (H1 2013: loss of 0.34 million) Cash at 30 June 2014: 0.5 million (31 December 2013: 0.45 million, 30 June 2013: 1.1 million) Commercial highlights: Nine long-term product distribution agreements signed with partners Manufacturing equipment upgraded and the commercial team expanded Seven new products added to the Brands portfolio - five medical devices and two food supplements New product development moved to Biokosmes Post-period end highlights: Six long-term product distribution agreements signed Commenting on the results, Jerry Randall, Chief Executive Officer of Venture Life, said: The Group has made solid progress against its strategic objectives with the acquisition of Biokosmes, the successful fundraising and admission to AIM, and continued business development wins. Since the start of the year, we have signed 15 new distribution agreements and have added five new medical devices and two new food supplements to our Brands portfolio. We are building momentum in each part of the business and are seeing encouraging evidence of growth for 2015 and beyond. For further information please contact: Venture Life Group PLC Jerry Randall, Chief Executive Officer James Hunter, Chief Financial Officer +44 (0) WG Partners (Broker) Jonathan Gosling, Claes Spång +44 (0) Charles Stanley Securities (Nominated Adviser) Phil Davies +44 (0)

2 Square1 Consulting David Bick, Mark Longson +44 (0) JW Communications Julia Wilson +44 (0)

3 Non-executive Chair s and Chief Executive s Statement Overview The first half of 2014 was significant for Venture Life Group, with the fundraising of 4.2 million, net of expenses, the admission to AIM and the acquisition of Biokosmes, for cash of 3.5 million, in addition to shares and loan notes. The Group now employs 70 people between its offices and facilities in Bracknell, UK and Lecco, Italy, and has customers in over 50 countries around the globe. The Group also has its own in-house development and manufacturing facilities in Italy for topical products and has a strong and growing team in the UK commercialising the products developed by the Group to address the self-care needs of the ageing population. Through the investment in the Group over the last six months, we have established a solid platform for strong growth in 2015 and beyond, with the opportunity to increase significantly the revenues of the business without significant increase in our overhead costs. Commercial review - Brands The Group made solid progress in the first six months of 2014 and we are pleased to report increasing momentum in revenues across the business over the last few months, which will be seen in H and into In our Brands business we are seeing increased interest amongst international distributors in our range of self-care products, and this is translating into long-term distribution agreements with highly regarded companies such as Valeant and Hikma. In the six month period to June 2014 we signed several new long-term distribution agreements on a number of products: Ten year exclusive deal with DEEF Pharma, a new partner, to distribute Immobilice, Guma-eze, Baby Guma-eze and Procto-eze in Saudi Arabia; Ten year exclusive deal with GM BAY, a new partner, to distribute ZipClear and Calm-eze in Turkey; Ten year exclusive deal with an undisclosed new partner to distribute Benecol 1 in food supplement form in an undisclosed territory; and Ten year exclusive deal with MedMen, an existing partner, to distribute NeuroAge Sleep and NeuroAge NRG in Romania and Moldova. This impetus has continued and, since the period end, we have also concluded the following new long-term distribution deals: Ten year exclusive deal with Valeant, a new partner, to distribute Procto-eze Cream in six European markets, including Germany; Ten year exclusive deal with SymPhar, a new partner, to distribute Procto-eze Cream in Poland; Ten year exclusive deal with Lyfis, a new partner, to distribute Procto-eze Cream and Procto-eze Foam Cleanser in Iceland; Ten year exclusive deal with DeltaPharma, a new partner, to distribute Original Bioscalin in Albania; and Ten year exclusive deal with Elpen, an existing partner, to distribute NeuroAge Sleep and NeuroAge NRG in Greece. 1 Benecol is a registered trademark of Raisio plc.

4 The increase in commercial activity and the number of signed distribution agreements reflect the investment the Group has made in business development resource with the appointment of two new business development directors in the UK who have already have made a significant contribution to the business. The commercial lifecycle for partnering means that the Group will usually first generate revenue from an agreement with a distribution partner in the EU in 6-9 months, as we automatically register all products in the EU. However, this period may be longer outside the EU where we have to pursue a registration process for each of our products. The Group has also added seven new products to the Brands portfolio since March 2014, including: Procto-eze - a clinically-tested Class III medical device which helps relieve the discomfort caused by haemorrhoids; Guma-eze a Class I medical device in gel form formulated to ease gum soreness and discomfort caused by dentures and adult braces; Immobilice - a clinically-tested Class I medical device in spray and shampoo form which help eliminate head lice; ZipClear - a Class I medical device that helps to relieve symptoms associated with herpes simplex virus type 1 (cold sores); NeuroAge NRG a food supplement that as well as maintaining brain function has been specially formulated to maintain alertness; and NeuroAge Sleep - a food supplement that as well as maintaining brain function helps to promote sleep and reduce the time taken to fall asleep. Our portfolio of branded products now totals 14, and we have a range of skin-care products under our Lubatti brand. We regularly review our product portfolio and new product development pipeline to ensure that our product offering is continuing to meet customer needs. As part of this review we consider whether there are third party-owned products already on or near to the market that we would like to bring into the Group, as well as consider whether any of our own products could be more successfully commercialised by another party. Although we have signed a number of distribution agreements already this year, we are confident that with continued hard work we will increase the distribution of our products, and consequently the long-term revenue opportunities. We are investing in building strong relationships with our existing distribution partners to ensure that we are providing high levels of customer service, and so that we are well-positioned to benefit from cross-selling opportunities involving our current product range as well as new products in our development pipeline. There are also a significant number of territories where our products are not distributed and we are aiming for every one of our products to be sold in at least 30 countries. We are continuing to make progress on discussions for partnering our food supplement under the Benecol brand, and towards launching a number of the Group s products into China where we remain on course to conclude a deal and ship first products in H

5 Following the inspection and approval of the Biokosmes facility by the Brazilian government s National Health Surveillance Agency (ANVISA) in February 2014, we have recently appointed an agent in Brazil to access the market for our products in Brazil. In the US market our food supplements, dermatology products and medical devices are currently going through the notification and registration process with the Food and Drug Administration (FDA). We look forward to updating shareholders on progress on all these opportunities in due course. Commercial review - Manufacturing On 27 March 2014, the Group acquired Biokosmes, an established development and manufacturing business for topical products (liquids, creams, and gels). Founded some 30 years ago, Biokosmes specialises in the development and manufacturing of topical medical devices and cosmetics and has an enviable reputation for quality and customer service. We are pleased with the progress of the integration of Biokosmes into the Group, and we are already seeing a number of the expected benefits of the acquisition beginning to materialise. Biokosmes now manufactures 11 of the Group s 14 branded products, as well as the entire Lubatti skin-care range, and we anticipate the increasing demand for the Group s branded products manufactured by Biokosmes to contribute to an increase in the Group s manufacturing margins in the future. The facility, based in Lecco, provides significant opportunity for expansion. In 2013 the factory produced 12.8 million units and, with increased utilisation, capacity can be increased to 16 million units per annum to accommodate the planned growth in sales of the Group s branded and unbranded topical products, and with limited investment to as much as 25 million units per annum. A significant proportion of Biokosmes s cost base is fixed and we would expect the planned volume increases in future years to improve the Group s gross profit margins. We have already initiated the investment programme by installing a nine tonne blending vessel which will provide an increase in mixing capacity and a reduction in the batch cost. The facility was also inspected during H and approved for manufacturing by ANVISA and the FDA, enabling the Group to benefit from the supply of its products to key markets in North America and South America. In line with our strategy, the acquisition has enabled the Group to improve its new product development processes. Rapid and safe development of effective products is a critical success factor for the Group and all but two of our current branded products have been developed internally. As announced in August 2014, we have consolidated our new product development function in our facility in Italy. The local team have extensive experience of developing new products and we expect this move to increase our speed to market and, at the same time, improve the quality of our new product development process. We have a significant pipeline of development products to bring to market, in areas including cardiovascular health, neurology, and women s health, and we look forward to updating shareholders on the progress of these products in due course. Financial review During the period under review, the Group undertook a successful fundraising of 4.2 million, net of expenses, 3.5 million of which was used in part consideration for the acquisition of Biokosmes. The details of this acquisition are shown in Note 10 to the unaudited financial statements, and Note 10 also shows a pro forma income statement to help shareholders understand the impact of the acquisition. Biokosmes is now referred to as the Group s Manufacturing segment when reporting by segment.

6 Statement of comprehensive income Headline revenue in the period increased from 0.27 million in H to 3.1 million in H whilst the enlarged Group pro forma 1 revenues were 5.0 million for the period compared with 6.1 million for H After a record performance in 2013 which we recognised would provide challenges to our 2014 comparatives, revenues at Biokosmes were slower than expected in Q1 but picked up strongly in Q2. Revenues in June 2014 were the highest ever recorded by Biokosmes in a single month. Revenue from Venture Life s branded products business (referred to as our Brands business for segmental reporting purposes) was 0.13 million (H1 2013: 0.27 million). We are expecting variability in reported revenue between periods in the early years of distribution agreements as there is considerable variability in the time it takes distribution partners to register products, educate their sales force and achieve sell-in to pharmacies. However, as we continue to sign more agreements, the frequency and volume of orders will increase and consequently variability in our reported revenues between periods is expected to reduce. Sterling was much stronger in H compared with H and this has negatively impacted reported revenues by some 2-3%. Gross margins in the Brands business increased to 51% compared with 33% in H when margins had been adversely impacted by a one-off cost. Gross margins in the Manufacturing business were 33% compared with 34% in H reflecting the impact of the fixed manufacturing cost base on lower revenue. Future planned increases in throughput are expected to improve this margin. EBITDA 2 for the period improved from a loss of 0.34 million in H to a loss of 0.20 million in H reflecting the contribution made by Manufacturing following the Biokosmes acquisition. On an enlarged Group pro forma basis EBITDA was a loss of 0.08 million in H compared with a profit of 1.0 million in H with reduced revenues and an increase in selling and administrative costs explaining this. In particular, we have invested in business development and customer service ahead of revenue in order to drive the growth of the Group and, after a record year in 2013, and a period of consolidation in 2014 we expect our Manufacturing business to resume its growth in 2015 and beyond. Loss per share was (2.8p) (H1 2013: (2.7p)). Statement of financial position and cash flow Net assets increased to 11.6 million (30 June 2013: 0.8 million, 31 December 2013: 0.56 million), owing largely to the Biokosmes acquisition. Net assets included cash and cash equivalents of 0.51 million (30 June 2013: 1.1 million, 31 December 2013: 0.45 million). Total debt stood at 3.0 million (30 June 2013: 0.33 million, 31 December 2013: 0.35 million), the increase reflecting the debt acquired with the Biokosmes acquisition and the convertible loan notes issued to the vendors of Biokosmes as part of the total consideration. We expect trading to be broadly cash neutral during the second half of this year. 1 Pro forma as if Biokosmes had been wholly owned by the Venture Life Group for the whole period under review 2 Earnings before interest, tax, depreciation, and amortisation and share-based payments

7 Outlook With 15 new distribution agreements signed in the year to date and a strong order book, we are expecting significantly stronger underlying revenues in H In addition, in 2013 there was a 60/40 split in H1 vs H2 revenues at Biokosmes, but we expect this split to be a little less pronounced this year. Taken together, we expect a continued improvement of the business in the second half of the year and into The acquisition of Biokosmes and the placing and admission to AIM were significant milestones in the development of the Group. They have provided a scalable platform for growth that will enable and support the further development and commercialisation of our product portfolio. We operate in a sector that is rapidly growing as the ageing population looks to improve their quality of life and we remain confident of strong growth in the years ahead. Lynn Drummond Non-executive Chair Jerry Randall - Chief Executive Officer

8 Unaudited Interim Condensed Consolidated Statement of Comprehensive Income For the six months 30 June 2014 Note 30 June June 2013 Year 31 December 2013 (Audited) Revenue 4 3, Cost of sales (1,913) (184) (301) Gross profit 1, Other income Administrative expenses (1,719) (501) (1,178) Exceptional expenses 5 (80) - (105) Operating loss (547) (411) (1,098) Finance income 88-1 Finance costs (23) (6) (25) Loss before tax (482) (417) (1,122) Tax 6 (105) - 41 Loss for the period attributable to the equity shareholders of the parent Other comprehensive expense attributable to the equity shareholders of the parent Total comprehensive income for the period attributable to equity shareholders of the parent (587) (417) (1,081) 7 (587) - - (1,174) (417) (1,081) Basic and diluted loss per share (pence per share) attributable to equity shareholders of the parent 8 (2.8) (2.7) (6.7)

9 Unaudited Interim Condensed Consolidated Statement of Financial Position As at 30 June 2014 Note 30 June June December 2013 (Audited) Assets: Non-current assets Intangible assets 12, Property, plant and equipment Available for sale financial assets , Current assets Inventories 2, Trade and other receivables 3, Unpaid share capital Cash and cash equivalents 511 1, Total current assets 6,090 1,330 1,501 Total assets 19,643 1,697 1,999 Equity and liabilities: Capital and reserves Share capital Share premium account 11 14,983 2,530 2,668 Merger reserve Convertible loan note reserve Share-based payment reserve Foreign currency translation reserve (587) - - Retained earnings (3,188) (1,925) (2,589) Total equity attributable to equity holders of the parent 11, Liabilities Non-current liabilities Interest bearing borrowings 1, Deferred licence provision Convertible loan notes 1, Employee liability provision Other provisions Deferred tax , Current liabilities Trade and other payables 3, ,051 Interest bearing borrowings Deferred licence provision Taxation Convertible loan notes , ,109 Total liabilities 8, ,442 Total equity and liabilities 19,643 1,697 1,999

10 Unaudited Interim Condensed Consolidated Statement of Changes in Equity attributable to the equity shareholders of the parent As at 30 June 2014 Share capital 000 Share premium account 000 Other reserve 000 Convertible loan note reserve 000 Sharebased payment reserve 000 Foreign currency translation reserve 000 Retained earnings 000 Total equity 000 Balance at 1 January , (1,508) 127 Comprehensive income: Total comprehensive income for the period (417) (417) Transactions with shareholders: Issue of share capital 1 1, ,024 Issue of convertible loan notes Share option charge Balance at 30 June , (1,925) 813 Comprehensive income: Total comprehensive income for the period (664) (664) Transactions with shareholders: Issue of share capital Bonus issue 49 (49) Issue of convertible loans Share option charge Share settled liability Balance at 31 December 2013 (Audited) 51 2, (2,589) 557 Comprehensive income: Profit for the period (587) (587) Other comprehensive income (587) - (587) Total comprehensive income (587) (587) (1,174) Transactions with shareholders: Issue of share capital 39 12,315 - (39) (150) ,165 Share option charge Dividend paid (12) (12) Balance at 30 June , (587) (3,188) 11,625

11 Unaudited Interim Condensed Consolidated Statement of Cash Flows For the six months 30 June June June 2013 Year 31 December 2013 (Audited) Cash flow from operating activities: Loss before tax (482) (417) (1,122) Finance income (88) - (1) Finance cost Operating loss (547) (411) (1,098) Adjustments for: - Depreciation of property, plant and equipment - Amortisation of intangible assets Impairment of Available-for-sale assets Gain on sale of intangible assets (8) Movement in other provisions Share-based payment expense Operating cash flow before movements in working capital (219) (341) (927) (Increase)/decrease in deferred consideration (3) 9 (2) Interest paid (75) - (25) Taxation paid (63) - - Decrease/(increase) in inventories (68) (Increase)/decrease in trade and other receivables (128) (28) (711) (Decrease)/increase in trade and other payables (650) (16) 698 Net cash used in operating activities (1,000) (356) (1,035) Cash flow from investing activities: Interest received 88-1 Proceeds on disposal of intangible assets Acquisition of subsidiary - net cash acquired Purchases of property, plant and equipment (77) (1) (7) Purchases of intangible assets (167) (15) (140) Purchases of Available-for-sale financial assets - - (31) Net cash generated/(used) by investing activities 552 (16) (177) Cash flow from financing activities: Proceeds from issue of ordinary shares 1, ,211 Transaction costs of issue of shares (1,211) - - Movements in interest bearing borrowings (128) - - Proceeds from issue of convertible loans Dividends paid (12) (6) (5) Net cash from financing activities 538 1,357 1,581 Net increase in cash and cash equivalents Net foreign exchange difference (32) - - Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 511 1,

12 Notes to the unaudited financial statements of Venture Life Group plc For the six months to 30 June Corporate information The Interim Condensed Consolidated Financial Statements of Venture Life Group plc and its subsidiaries (collectively, the Group) for the six months 30 June 2014 were approved and authorised for issue in accordance with a resolution of the directors on 26 th September Venture Life Group plc (the Company) is domiciled and incorporated in United Kingdom, and is a public company whose shares are publicly traded. The Group s principal activities are the development, manufacture and distribution of healthcare and dermatology products. 2. Basis of preparation The interim condensed consolidated financial statements for the half-year 30 June 2014 have been prepared in accordance with IAS 34, Interim financial reporting as adopted by the European Union. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group s annual financial statements for the year 31 December 2013 which have been prepared in accordance with IFRSs as adopted by the European Union. The financial information contained in this interim report and accounts, which is unaudited, does not constitute statutory accounts in accordance with the Companies Act The financial information for the year 31 December 2013 is extracted from the statutory accounts for that year which have been delivered to the Registrar of companies and on which the auditor issued an unqualified opinion that did not include an emphasis of matter reference or statement made under section 498(2) or (3) of the Companies Act Accounting policies The accounting policies adopted in the preparation of the Interim Condensed Consolidated Financial Statements are consistent with those followed in the preparation of the Group s Consolidated Financial Statements for the year 31 December In addition the Group has implemented the following new accounting policies: a) Foreign currency Financial statements of foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated into sterling at exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated into sterling at rates approximating to the exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on retranslation are recognised directly in the translation reserve. b) Goodwill As previously discussed, business combinations are accounted for by applying the purchase method. Goodwill represents amounts arising on the acquisition of subsidiary undertakings and associates. Goodwill represents the difference between the cost of the acquisition and the fair value of the identifiable assets, including intangible assets, liabilities and contingent liabilities acquired. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is tested annually for impairment. c) Intangible assets Initial recognition Intangible assets acquired as a result of a business combination are initially recognised at their fair value in accordance with IFRS3 Business Combinations. Amortisation Intangible assets are amortised in a manner calculated to write off the cost, on a straight-line basis, over the effective life of the asset. In determining the appropriate life of the asset, consideration is given to the expected cash generating life of the asset. In the event that an intangible asset is no longer used or is abandoned, the balance of unamortised expenditure is written off immediately.

13 Notes to the unaudited financial statements of Venture Life Group plc For the six months to 30 June Accounting policies (continued) The effective life of each new class of intangible asset acquired during the acquisition is determined as follows: Customer relationships - expected cash-generating life of underlying manufacturing contracts Product formulations - expected cash-generating life of the particular product formulation. The following useful economic lives are applied: Customer relationships: 5 years Product formulations: 5 years d) New standards and interpretations The Group has adopted the following new standards and interpretations which are effective as of 1 January 2014: Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) IAS 39, Financial Instruments: Recognition and Measurement IAS 36, Impairment of Assets IAS 32, Offsetting Financial Assets and Financial Liabilities These amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under IFRS 10 Consolidated Financial Statements. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. These amendments have no impact to the Group, since none of the entities in the Group qualifies to be an investment entity under IFRS 10. These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. These amendments have no impact to the Group as the Group does not have any derivatives instruments. These amendments remove the unint consequences of IFRS 13 Fair Value Measurement on the disclosures required under IAS 36 Impairment of Assets. In addition, these amendments require disclosure of the recoverable amounts for the assets or cash-generating units (CGUs) for which an impairment loss has been recognised or reversed during the period. The Group early adopted these disclosure requirements in the annual consolidated financial statements for the year 31 December These amendments clarify the meaning of currently has a legally enforceable right to set-off and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting. These amendments have no impact on the Group. There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Consolidated Financial Statements of Venture Life Group Plc. 4. Segmental Information Management has determined the operating segments based on the reports reviewed by the Group Board of Directors (Chief Operating Decision Maker) that are used to make strategic decisions. The Board considers the business from a line-of-service perspective and uses operating profit/(loss) as its profit measure. The operating profit of operating segments is prepared on the same basis as the Group s accounting operating profit. In the annual financial statements for the year 31 December 2013 the operations of the Group were segmented as Sales of cosmetics and Sales of healthcare products. Following the acquisition of Biokosmes S.r.l the operations of the Group are now segmented as Brands, which includes sales of healthcare and cosmetic products under distribution agreements, and Manufacturing.

14 Notes to the unaudited financial statements of Venture Life Group plc For the six months to 30 June Segment Revenue and Results The following is an analysis of the Group s revenue and results by reportable segment. Consolidated Brands Manufacturing Eliminations Group to 30 June 2014 Revenue External sales 133 3,013-3,146 Inter-segment sales - 48 (48) - Total revenue 133 3,061 (48) 3,146 Results Operating (loss)/profit (591) (31) Brands Manufacturing Eliminations Consolidated Group to 30 June 2013 Revenue External sales Total revenue Results Operating loss (397) - - (397) Year to 31 December 2013 Revenue External sales Total revenue Results Operating loss (706) - - (706) Inter-segment sales are charged at commercial rates. The reconciliation of segmental operating loss to the Group's loss before tax is as follows: 30 June June 2013 Year 31 December Operating loss (31) (397) (706) Central administrative costs (516) (14) (392) Operating loss (547) (411) (1,098) Net finance income/(costs) 65 (6) (24) Loss before tax (482) (417) (1,122)

15 Notes to the unaudited financial statements of Venture Life Group plc For the six months to 30 June Exceptional items 30 June June 2013 Year 31 December 2013 (Audited) Costs incurred in acquisition of Biokosmes (57) - (105) Impairment of available for sale investments (a) (31) - - Gains on sales of trademarks (b) (105) (a) In July 2014 the Directors were advised by the management of G2S Cosmetics SAS that G2S Cosmetics SAS was likely to be declared insolvent. As a result of this the Directors are uncertain that any part of the investment will be recovered and so the investment has been impaired in full. (b) During the period the Group entered into a sale agreement for the Bioscal trademark for the USA and Canadian territories. These trademarks were acquired along with the Bioscalin trademarks which the Group holds for the USA and Canada and thus were not part of the key marketing strategy of the Group in those territories. 6. Taxation The Group calculates the period income tax expense using the tax rate that would be applicable to the expected total annual earnings. The major components of income tax expense in the Interim Condensed Statement of Comprehensive Income: 30 June June 2013 Year 31 December 2013 (Audited) Income taxes Brands Current income tax (41) Deferred income tax expense related to origination and reversal of timing differences (93) - - Income tax expense recognised in statement of comprehensive income (41) The Group has not recognised the deferred tax asset on losses made by the Brands segment as it is not currently certain that there will be sufficient taxable profits against which to offset such losses. At the period end the estimated tax losses amounted to 3,409,000 (30 June 2013: 1,721,000; 31 December 2013: 2,436,000) 7. Other comprehensive income Other comprehensive income represents the foreign exchange difference on the net investment in Biokosmes, the functional currency of which is Euros, that is shown as a movement in the foreign currency translation reserve between the date of acquisition of Biokosmes S.r.l, when the GBP/EUR rate was 1/1.193 and the balance sheet date rate of 1/1.249, and is an amount that may subsequently be reclassified to profit and loss.

16 Notes to the unaudited financial statements of Venture Life Group plc For the six months to 30 June Loss per share 30 June June 2013 Year 31 December 2013 (Audited) Weighted average number of ordinary shares in issue 21,135,209 16,054,683 16,118,556 Loss attributable to equity holders of the Company ( 000) (587) (417) (1,081) Basic and diluted loss per share (pence) (2.8) (2.7) (6.7) At 30 June 2014 there were 3,792,440 options outstanding (30 June 2013: 1,641,400 options outstanding; 31 December 2013: 3,842,440 options outstanding). The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share are identical to those used for basic earnings per share. This is because the exercise of share options would have the effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of IAS Dividends Amounts recognised as distributions to equity holders in the period: 30 June June Final dividend Business combinations On 27 March 2014, the Company completed the acquisition of 100% of the share capital of Biokosmes S.r.l, an unlisted company based in Italy that specialises in the development and manufacture of topical medical device and cosmetic products. The initial consideration paid to the vendors of Biokosmes at the time of the acquisition amounted to 3.5 million in cash, 1.67 million 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 was issued to the vendors on 6 June 2014 on the basis that the audited EBITDA achieved by Biokosmes in the financial year 31 December 2013 amounted to 1.62 million. The Group acquired Biokosmes because it expands its existing product portfolio and as an established manufacturer of high-quality topical products it secures a key element of the supply chain. The acquisition has been accounted for using the acquisition method. The Interim Condensed Consolidated Financial Statements include the results of Biokosmes for the period 27 March 2014 to 30 June 2014.

17 Notes to the unaudited financial statements of Venture Life Group plc For the six months to 30 June Business combinations (continued) The fair values of the identifiable assets and liabilities of Biokosmes as at the date of acquisition were: Fair Value m ASSETS Non-current assets: Product formulations 0.8 Customer relationships 2.0 Property, plant & equipment 1.0 Current assets: Inventories 2.0 Trade and other receivables 2.5 Cash and cash equivalents 0.7 Total assets 9.0 LIABILITIES Current liabilities: Trade and other payables (2.9) Current portion of borrowings (1.0) Non-current liabilities: Borrowings (0.8) Employee liability provisions (0.5) Deferred tax liabilities (0.8) Total liabilities (6.0) Net assets acquired 3.0 Goodwill 9.8 Total consideration 12.8 Satisfied by: Shares issued to vendors and sold at the time of admission to AIM to realise cash 3.5 Convertible loan note issued 1.7 Initial shares issued to vendors 1.5 Further shares issued to vendors 6.1 Total consideration 12.8 Cash flows from business combination Cash and cash equivalents included in undertaking acquired 0.7 Cash consideration paid - Net cash inflow arising on acquisition and in cash flow statement 0.7 The Company is currently still in the process of determining the fair value of the assets and liabilities acquired and the values provided in this note are therefore provisional. The Company expects to complete the final determination of fair values shortly.

18 Notes to the unaudited financial statements of Venture Life Group plc For the six months to 30 June Business combinations (continued) Revenue and profit impact of acquisitions Biokosmes contributed revenues of 3,013,000 and operating profit before acquisition adjustments and reorganisation costs of 560,000 in the period from the date of acquisition to 30 June Set out below is a pro forma Income Statement which has been prepared as if the acquisition had taken place on 1 January 2013, the first day of the reporting period under review: 30 June June 2013 Year 31 December Revenue 4,973 6,128 10,469 Cost of sales (3,293) (4,004) 1 (6,846) 1 Gross profit 1,680 2,124 3,623 Gross margin 34% 35% 35% Other income Administrative expenses (2,099) (1,397) 1 (3,007) 1 Exceptional items (80) (4) 9 Operating (loss)/profit (464) Finance income 88-1 Finance costs (28) (35) (82) (Loss)/profit before tax (404) Tax (146) (478) (261) (Loss)/profit for the period (550) Share capital and share premium Share capital Ordinary shares of 0.3p each Ordinary Shares Share premium No At 1 January ,494, ,507 Share issue 2,274, ,023 Unaudited at 30 June ,768, ,530 Share issue 193, Bonus issue - 49 (49) Audited at 1 January ,961, ,668 Share issue 12,942, ,526 Transaction costs of issue of shares - - (1,211) Unaudited at 30 June ,903, ,983 1 adjusted for the reclassification of certain expense items to bring into line with Group policies.

19 Notes to the unaudited financial statements of Venture Life Group plc For the six months to 30 June Share capital and share premium (continued) The Company issued bonus shares on 29 July 2013 at a ratio of 29 new shares for each one share held. The ordinary shares were further consolidated and sub-divided on 16 December 2013 resulting in a change to the nominal value of the ordinary shares from 1p to 0.3p. The disclosures above reflect these changes to the share capital of the Company. During the six month period to 30 June 2014 the following share issues were undertaken: On 27 March 2014 the Company issued 821,421 ordinary 0.3p shares following the conversion of previously issued convertible loan notes, with a nominal value of 375,000, into equity. 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. On 28 March 2014 the Company issued 1,358,185 ordinary 0.3p shares for 1.09 each pursuant to the acquisition of Biokosmes S.r.l. On 28 March 2014 the Company issued 4,954,585 ordinary 0.3p shares at 1.09 each as part of the admission to trading on the Alternative Investment Market of the London Stock Exchange. On 6 June 2014 the Company issued 5,639,393 ordinary 0.3p shares at 1.09 being the final consideration for the acquisition of Biokosmes S.r.l. 12. Related party transactions The following transactions with related parties are considered by the Directors to be significant for the interpretation of the Interim Condensed Financial Statements for the six month period to 30 June 2014 and 30 June 2013 and the balances with related parties at 30 June 2014 and 31 December 2013: (a) Director emoluments The following amounts were paid to the executive Directors and Non-Executive Directors 30 June June 2013 Year 31 December 2013 (Audited) Aggregate emoluments Share based payments (b) Other transactions with Directors Total dividends paid to Directors in the period amounted to 5,000 (2013: nil) Interest totalling 1,000 (2013: 3,000) was paid during the period on the 7.5% convertible loan notes with a nominal value of 55,000 as issued to certain directors in April These loan notes were all converted into equity prior to the Admission to AIM. The Company issued 3% convertible loan notes with a nominal amount of 1,676,000 to the vendors of Biokosmes including Lodovico Gianluca Braguti, a Director of the Company. Mr Braguti s interest in the convertible loan notes amounted to 1,659,000. Interest amounting to 13,000 has accrued on the loan notes during the period and is still payable at the period end. Interest is payable on the loan notes in October and April each year. During the period from acquisition of Biokosmes S.r.l to 30 June 2014 property rental costs amounting to 112,000 were charged to Biokosmes S.r.l by Biokosmes Imm.re S.r.l, a company owned and controlled by Ludovico Gianluca Braguti. At period end an amount of 754,000 was owed to Biokosmes Imm.re S.r.l for the accumulated property rental costs.

20 Notes to the unaudited financial statements of Venture Life Group plc For the six months to 30 June Financial instruments Set out below is an overview of financial instruments, other than cash and short-term deposits, held by the Group as at: 30 June June December 2013 Loans and receivables Available -for-sale Loans and receivables Available -for-sale Loans and receivables Available -for-sale Financial assets: Trade and other receivables (excl. prepayments) 3, Available-for-sale investments: Unquoted equity Total 3, Total current 3, Total non-current Financial liabilities at amortised cost Available -for-sale Financial liabilities at amortised cost Available -for-sale Financial liabilities at amortised cost Available -for-sale Financial liabilities: Non-current interest bearing loans and borrowings: Obligations under finance Secured bank loans 1, % convertible loan notes (excl. equity element) % Convertible loan notes - 1, (excl. equity element) Other non-current loans: Deferred licence provision Trade and other payables - 3, (excl. deferred revenue) Current interest bearing loans and borrowings: Obligations under finance Bank loans % convertible loan notes (excl. equity element) 3% convertible loan notes Other current loans: Deferred licence provision Total 6, ,023 - Total current 3, Total non-current 2,

21 Notes to the unaudited financial statements of Venture Life Group plc For the six months to 30 June 2014 The Available-for-sale investment in unquoted shares is the only financial instrument that is measured at fair value and is based on level 3 valuation assumptions. The carrying value of other financial assets and liabilities is a fair approximation of their fair values. 14. Post balance sheet events In July 2014 the Directors were advised by the management of G2S Cosmetics SAS that G2S Cosmetics SAS was likely to be declared insolvent. As a result of this the Directors are uncertain that any part of the investment will be recovered and so the investment has been fully impaired in the period 30 June 2014.