REG - Venture Life Group - Acquisition and trading update

Venture LifeAnnouncement

01/12/2022 07:00

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RNS Number : 1756I  Venture Life Group PLC  01 December 2022

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".

 

For further information, please contact:

 

 Venture Life Group PLC                              +44 (0) 1344 578004
 Jerry Randall, Chief Executive Officer

 Daniel Wells, Chief Financial Officer

 Cenkos Securities plc (Nomad and Joint Broker)      +44 (0) 20 7397 8900
 Michael Johnson/Russell Kerr (Sales)

 Stephen Keys/Camilla Hume (Corporate Finance)

 Singer Capital markets (Joint Broker)               +44 (0) 20 7496 3000
 Jonathan Dighe (Sales)

 Shaun Dobson/Alaina Wong (Corporate Finance)

About Venture Life (www.venture-life.com (http://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.

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