Venture Life Group Plc Annual Report 2014

FY2014 Annual Report · Venture Life Group Plc

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Venture Life
Group plc
Annual Report
& Accounts
2014

Venture Life Group plc Annual Report & Accounts 2014

Venture Life Group plc

Improving
peoples’
lives

Venture Life is an international consumer self-care company
focused on developing, manufacturing and commercialising
products for the ageing population. The Group’s product
range includes medical devices (such as those for improving
minor aches and pains, and alleviating symptoms associated
with haemorrhoids and itchy skin), food supplements (such
as those for lowering cholesterol and improving brain
function), and dermo-cosmetics and cosmetics for addressing
the signs of skin-ageing. The products, which typically are
recommended by pharmacists or healthcare practitioners, are
available primarily through pharmacies in multiple countries
supplied by the Group’s international distribution partners.

Through its newly-acquired manufacturing company,
Biokosmes Srl, the Group also provides development and
manufacturing services to companies in the medical devices
and dermo-cosmetics sectors.

Contents

Overview
1
Highlights
2
Our Product Range
Our Business & Strategy 4
6
Product Distribution
New Product

Development
Chair’s Statement

7
8

Strategic Report
Chief Executive Officer’s

Statement
Financial Review
Principal Risks &
Uncertainties
Key Performance

Indicators

10
14

Governance
19
Directors & Advisers
20
Directors’ Biographies
Corporate Governance 22
24
Directors’ Report
Directors’ Remuneration

Report

Statement of Directors’

Responsibilities

Other Information
Shareholder Information

inside back cover

Financial Information
Independent Auditor’s

Report

Consolidated Statement
of Comprehensive
Income

Consolidated Statement
of Financial Position
Consolidated Statement

of Changes in Equity 32

Consolidated Statement

of Cash Flows

Notes to the Consolidated

Financial Statements 34

Parent Company Balance

Sheet

Notes to the Parent

Company Balance
Sheet

Venture Life Group plc Annual Report & Accounts 2014 1

Highlights

Financial Highlights

Commercial Highlights

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Revenue
£m

Gross Profit
£m

7.2

2.7

Acquisition and integration of
Biokosmes Srl (“Biokosmes”), an Italian
development and manufacturing
business.

Admission to the Alternative
Investment Market of the London
Stock Exchange (“AIM”).

£8.2 million (net of expenses) raised
during the period and year end cash of
£4.9 million (31 December 2013:
£0.45 million).

Revenues increased to £7.2 million
(2013: £0.49 million), including the
impact of Biokosmes for nine months.

Gross profits increased to £2.7 million
(2013: £0.19 million).

Loss before tax, amortisation and
exceptional costs reduced to
£0.59 million (2013: loss of
£0.96 million).

Seven new product registrations
completed covering eight territories.

Eight new consumer products added to
the portfolio.

Product distribution strengthened with
the signing of 17 new distribution
agreements.

Board strengthened with the
appointment of Ian Mackinnon, Non-
Executive Director and chair of Audit
Committee.

Post-period end Highlights

0.5

0.2

Long-term distribution agreement
signed with REC (a subsidiary of
Gialen), one of the largest Chinese
skincare and cosmetics retail chains, to
supply a range of skincare products.

Sale of certain dermatology trademarks
in certain countries to an existing
customer for an up-front payment,
sales-based milestone payments, and
guaranteed additional manufacturing
business, for which the first additional
order has already been received.

Strengthening of commercial team with
a further two new appointments.

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Venture Life Group plc Annual Report & Accounts 2014 2

Our Product Range
Venture Life has developed a range of products covering a
number of therapeutic areas. The products have all been
developed in-house and, with the exception of the Benecol®
brand and Dry-ezeTM, Venture Life owns the global distribution
rights to all the products.

Cardiovascular

Neurology

Skin, hair and eye care

Benecol®
Food supplement
What it addresses
LDL cholesterol
Product description
Benecol is clinically proven to
lower LDL cholesterol levels by
10% within 2-3 weeks.
How it works/mode of action
Benecol as a food supplement
contains a unique patented
ingredient, plant stanol ester,
which is proven to lower
cholesterol by partially blocking
the uptake of cholesterol in
the gut, so less gets absorbed
into the bloodstream.

Benecol is a registered trademark
of Raisio plc.

NeuroAgeTM
NeuroAge SleepTM
NeuroAge NRGTM
Food supplement
What it addresses
Cognitive health
Product description
NeuroAge helps by improving
mental alertness, cognitive
function and mental
performance in a healthy,
ageing brain. There are three
products within the NeuroAge
range, each tailored to meet
different needs.
How it works/mode of action
NeuroAge contains a
combination of effective
ingredients, designed to
support alertness, cognitive
function and mental
performance.

Lissio HaTM
Topical cosmetic
What it addresses
Fine lines & wrinkles
Product description
The Lissio Ha range offers a
complete collection of anti-
ageing products to address
age-related skin concerns.
How it works/mode of action
Lissio Ha has been clinically
proven for the management of
fine lines and deep wrinkles. It
contains a unique system
called ‘CronoActiveSystem’™
that delivers maximum benefits
over the short, medium and
long term.

Lissio LightTM
Topical cosmetic
What it addresses
Hyper-pigmentation
Product description
The Lissio Light range has
been formulated to treat skin
hyper-pigmentation, ageing
and loss of radiance.
How it works/mode of action
Using its triple action
formulation, Lissio Light
inhibits the production of
melanin, protects the skin
against free radicals and
improves the complexion of
the skin.

Skin, hair and eye care

Lissio PureTM
Topical cosmetic
What it addresses
Sensitive skin
Product description
The Lissio Pure range has
been developed for ageing,
sensitive skin.
How it works/mode of action
Lissio Pure focuses on
combating environmental
factors that contribute to skin
ageing while helping to control
pigmentation, skin hydration
and the appearance of fine
lines and wrinkles.

LubattiTM
Topical cosmetic
What it addresses
Skin appearance and
complexion
Product description
A range of luxury skincare
products designed to nourish,
hydrate, rejuvenate and protect
the skin.
How it works/mode of action
This wide range of products
works to improve the overall
condition and appearance of
the skin.

Original Bioscalin®
Topical cosmetic and
food supplement
What it addresses
Hair loss & scalp problems
Product description
Original Bioscalin is clinically
proven for the cosmetic
treatment and prevention of hair
loss and hair thinning.
How it works/mode of action
The unique collection of
ingredients, including Bioventin,
helps to improve speed of hair
growth, improve hydration,
improve the condition of the hair
as well as unclog hair follicles
for unhindered hair growth.

ZipClearTM
Medical Device Class I
What it addresses
Herpes simplex virus type 1
(cold sores)
Product description
ZipClear helps to relieve
symptoms associated with
herpes simplex type 1
(otherwise known as cold
sores) commonly appearing
around the mouth and lip area.
How it works/mode of action
ZipClear forms an invisible
barrier to protect and soothe
against any irritation and
burning sensation associated
with herpes. It may also
prevent the virus from
spreading.

Venture Life Group plc Annual Report & Accounts 2014 3

Our Product Range continued

Skin, hair and eye care

ImmobiliceTM
Medical Device Class I
What it addresses
Head lice
Product description
Immobilice has been formulated
to eliminate head lice, prevent
future infestation as well as
nourish and condition the hair.
Head lice are eliminated using
the oil spray, and the shampoo
helps to wash out the dead lice
and nits in the hair.
How it works/mode of action
Immobilice penetrates inside
the lice and eggs, blocking the
breathing apparatus and
causing suffocation. The oil
spray and shampoo also
create a strong repellent to
help prevent future infestation.

Calm-ezeTM
Medical Device Class I
What it addresses
Dry, itchy skin
Product description
Calm-eze is a non-greasy
emollient cream, formulated for
the management of dry, itchy
skin. Its triple action effect
helps soothe and calm itchy
skin as well as keep it
hydrated.
How it works/mode of action
Calm-eze is quickly absorbed
into the skin, providing relief
for the condition.

Dry-ezeTM
Medical Device Class IIa
What it addresses
Dry eyes
Product description
Dry-eze provides first line
management for the relief of
moderately irritated eyes
caused by dryness.
How it works/mode of action
Dry-eze provides lubrication to
the eye area, relieving it from
irritation, soreness or a gritty
sensation.

Pain management

Procto-ezeTM
Medical Device Class III
What it addresses
Anal irritation including
haemorrhoidal conditions
Product description
Procto-eze has been
formulated to deliver a high rate
of absorption and protection,
helping to relieve anal irritation.
There are two Procto-eze™
products in the range, a cream
and a cleanser, which are
recommended to be used
together.
How it works/mode of action
Procto-eze forms a hydro-lipid
film on the irritated area and
helps relieve discomfort.

Guma-ezeTM
Baby Guma-ezeTM
Medical Device Class I
What it addresses
Oral discomfort
Product description
Guma-eze is a gentle, soothing
and cooling gel formulated to
ease gum soreness and
discomfort caused by braces,
dentures or teething.
How it works/mode of action
Guma-eze provides a
protective film that helps
prevent further irritation on
sore gums, and helps relieve
discomfort.

Ox-ezeTM
Medical Device Class I
What it addresses
Aches and pains
Product description
Ox-eze helps relieve mild to
moderate aches and pains and
stiffness associated with minor
injuries and general wear and
tear.
How it works/mode of action
With the mechanical action of
massage, Ox-eze gives a
cooling, refreshing sensation
and helps to relieve painful and
stiff joints, muscular aches and
other minor injuries.

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Venture Life Group plc Annual Report & Accounts 2014 4

Our Business & Strategy
The Group’s objective is to grow Venture Life into a
leading integrated and international self-care products
business.

What is
self-care?

Who we are
and what we
do

In simple terms, self-care is
about people taking care of
themselves to live a healthy
life. With increased personal
responsibility comes improved
health and well-being and the

ability to better manage any
long-term conditions when
they do develop.

The self-care products
developed by Venture Life are
designed to help people look

after, and take responsibility for,
their own health. Our products
are sold in pharmacies without
prescription and they address a
wide range of health-care
issues.

Venture Life is an integrated
consumer self-care products
company. We develop,
manufacture and
commercialise products that
address healthcare issues of
the ageing population in
particular.

We generate revenue in two
ways. In our Brands business
based in the UK, we develop
and commercialise innovative
medical device, food
supplement and dermo-
cosmetic products. These
products are distributed
internationally through
distribution partners with
whom we have entered into

long-term, exclusive
arrangements, in turn, our
partner buys products from us
and sells them through their
own sales channels into
pharmacies in the territories
where they have been granted
exclusive rights.

In our Manufacturing
business based in Italy, the
majority of our revenue is
currently generated from
providing contract development
and manufacturing services to
third party over-the-counter
(OTC) healthcare products
companies. It also develops
and manufactures products for
our own Brands business. Our

Manufacturing business
specialises in topical products
(i.e. applied to the skin or
mucosa) such as creams, gels
and lotions and we currently
manufacture over 90 different
topical products for our various
customers.

We carry out extensive new

product development with a
view to strengthening our
product portfolio and widening
our partner offering. Our new
product development is led by
our team of development and
formulation specialists in Italy
working closely with the
commercial team in the UK.

Our objectives
and strategy

The Group’s objective is to
grow Venture Life into a
leading integrated international
self-care products business,

generating long-term and
sustainable profits to benefit all
stakeholders. The acquisition
of Biokosmes in 2014 was a

major step forward towards
achieving this objective.

Proportion of
total population
aged 60+
% Worldwide

2012

11% of total
population
aged 60+

2050

22% of total
population
aged 60+

Gender ratio
Males per 100 females
% Worldwide
Age 60+

Age 80+

100

Source: UN Department of Economic & Social Affairs Population Division

Male

Female

Male

Female

Venture Life Group plc Annual Report & Accounts 2014 5

Our Business & Strategy continued
We plan to achieve our objective through implementing
the strategies below.

Grow revenues
from existing
and new
distribution
partners

Grow revenues
from product
acquisition and
in-licensing

The Group’s own Brand
products are currently
partnered in more than 40
countries in total, although
most products are currently
partnered in only a handful of
countries. We see strong
potential for organic growth in
revenue coming both from
these existing distribution
partners, as products and
product ranges are registered
and launched, as well as from
the appointment of many more
partners in many more
countries. This will be

supported by Venture Life’s
continued product and
customer service excellence
and with relationships already
built, we expect that
introducing new products to
these partners will translate to
even stronger relationships and
revenue growth.

The Group will also continue

to identify and sign up new
partners for the distribution of
its existing and future product
portfolio. We are aiming for
each of the Group’s products
to be marketed in at least 30

Whilst the Group is developing
its own range of new products,
it recognises that there may be
times when the acquisition of
existing products delivers
superior economic returns.
Typically, the Group looks for
products whose market
position and distribution is
already established and where
such a product would

complement the Group’s
existing product portfolio. In
evaluating products to acquire
or in-license, the Group
assesses the sustainability of
existing cash flows of the
products and the opportunity
to build those cash flows
through wider product
distribution and margin
improvement through transfer

countries within five years of
first market launch.
Furthermore, some of
Biokosmes’s products are
currently sold in only a limited
number of countries under
other customer brands and we
believe that there are significant
expansion opportunities for
these products. The Group is
continuing to invest in
strengthening the business
development team across the
Group to help secure new
distribution agreements for new
countries.

of manufacturing into our own
facilities.

The funding requirement of

any such acquisitions would
be assessed on a case-by-
case basis and the funding
would be structured so as to
optimise earnings whilst at the
same time maintaining suitable
levels of financial gearing.

Develop
innovative
products

Improve
margins

The Group has an established,
proven system for rapidly
developing new products and
bringing them quickly to
market, at a relatively low cost.
The acquisition of Biokosmes
in March 2014 now gives the

Group the capability for
developing topical medical
device and cosmetic products
in-house and enables the
Group to innovate more
quickly and more cost-
effectively than working

entirely with external service
providers, as it did previously.

We have a pipeline of
exciting new products in
development, details of which
can be found on page 7.

We aim to improve our gross
margins across the business.
Our manufacturing facility has
largely fixed manufacturing
costs, so increased revenues

should naturally enhance gross
margin on all products
manufactured in-house.
Furthermore we expect that, as
our revenues grow, our own

purchasing position with
suppliers will be strengthened,
leading to reduced supply
costs and improved margins.

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Venture Life Group plc Annual Report & Accounts 2014 6

Product Distribution
We work with national and international pharmaceutical
companies under product distribution agreements for our
Brands products to be distributed into pharmacies in local
markets using their sales, marketing and distribution resource.

Global reach
Our expertise lies in product
development, manufacturing and
product commercialisation. We
undertake the first two entirely
ourselves. We commercialise our
products by partnering on a long-term
basis (typically ten years) with
pharmaceutical companies who also
specialise in consumer healthcare
(CHC) and have a pharmacy sales
force in the country. These partners
have the resources, expertise and
local ‘knowhow’ to distribute our
products successfully in their

territories and are entirely responsible
for all sales, marketing and
distribution in the territory.

Brands products are currently

partnered with 18 distribution partners
covering over 40 countries, with
products actually launched in 15
territories. Products manufactured by
Biokosmes are sold by their own
customers in over 40 countries,
illustrating the international appeal of
the products we develop and
manufacture.

Key

Countries in which Branded products
are partnered
Countries in which Manufacturing
products are distributed by its customers
Both

Some of our distribution partners

Valeant is a multi-national
pharmaceutical company
that develops and markets
prescription and non-
prescription products that
focus on dermatology, eye
health and other niche
therapeutic areas. Valeant
has approximately 15,000
employees worldwide and
recorded revenues of
$8.25 billion in 2014.

Hikma is a multi-national
pharmaceutical company that
manufactures branded and
non-branded generic and
in-licensed pharmaceutical
products. It is now listed 4th
in the pharmaceutical
company FTSE 250 rankings
and is the largest regional
pharmaceutical company in
the MENA region. In 2013 it
recorded group revenue
growth of 23% and employs
over 7,000 people.

Gialen is a substantial
privately-owned company
based in Guangzhou, China.
The company has over
10,000 employees operating
in 1,000 stores across
mainland China. Gialen is
currently undertaking a rapid
new store opening
programme and over
300,000 customers visit
their stores daily.

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Venture Life Group plc Annual Report & Accounts 2014 7

New Product Development
Developing innovative products which meet the evolving
needs of the ageing consumer will be critical to Venture
Life’s success. Whilst our existing product range has wide
appeal, we are always looking to fortify it with new products.

During 2014 we launched eight new products:

NeuroAge Sleep

to promote sleep and reduce the time taken to fall asleep

NeuroAge NRG

to help maintain mental alertness

Procto-eze

to help alleviate the symptoms associated with
haemorrhoids and anal irritation

Guma-eze (2 products) to help ease gum soreness and discomfort of the soft

Immobilice

ZipClear

tissues with the oral cavity

to eliminate head lice and eggs

to relieve symptoms associated with herpes simplex
type 1 (cold sores)

Benecol Capsules

for lowering LDL cholesterol in food supplement format

Our new products are characterised
by being:

> Consumer-facing and attractive to
distribution partners, pharmacies
and consumers;

> Safe, efficacious and satisfying
significant unmet or poorly met
market needs; and

> Supported by objective clinical
data, where appropriate, that
validate the Group’s products and
differentiate them from the
competition.

Our pipeline
Following a review of our product pipeline during 2014, and with an increased
focus on developing topical products, our 2015 product development pipeline is
primarily focused on health issues experienced by older women. As these
issues can be embarrassing or stigmatised, the demand for over-the-counter,
self-treatment products increases.

Our products are currently in their final phase of development, and we expect

there to be 4-6 topical products that will be marketed under one brand.

Beyond that, Venture Life also expects that the demand for products to treat

symptoms associated with diabetes will grow in correlation with the growing
diabetic population. Consequently, we are evaluating the opportunity for
developing a range of products to treat diabetes-related issues.

Product 1
Vaginal atrophy

Product 2
Bacterial vaginosis

Product 3
Candidiasis

Product 4
Intimate wash

Product 5
Hot flashes

Product 6
Menopausal acne

Product 7
Diabetes-related issues

Regulatory category

Formulation

Development complete

Medical device

Topical

H2 2015

Medical device

Topical

H2 2015

Medical device

Topical

H2 2015

Medical device

Topical

H2 2015

Medical device

Topical

H2 2015/H1 2016

Medical device

Topical

H2 2015/H1 2016

Medical device

Topical

Q4 2016

Development work on two new food supplements will be completed in late 2015
or early 2016 and we expect to commercialise these in 2016. One aims to help
maintain blood glucose control and the other targets endothelial health.

Venture Life Group plc Annual Report & Accounts 2014 8

Chair’s Statement

2014 was a landmark year for Venture Life,
continuing to build on the momentum from
2013 and before, and significantly increasing
the size and capability of the Group by
acquiring Biokosmes and joining AIM. The
fund-raisings of £8.2 million (net of
expenses) of new money into the Group
during the year has secured the financial
future of the Group.

Admission to AIM and acquisition
The Group’s admission to AIM was an
important milestone in its history, enabling it
to raise development capital for investing in
sales resource and in new products and,
importantly, to complete the acquisition of
Biokosmes, an established development and
manufacturing business based near Milan,
Italy. The Group is now an integrated self-
care products company, developing,
commercialising and manufacturing self-care
products for the ageing population.

The commercial operations of the Group
have grown significantly in 2014, due to both
the acquisition of Biokosmes and the growth
in revenues from our Brands business.

Long-term distribution deals
The Group has recently announced a major
long-term distribution contract with Gialen
in China, supplying a range of our products
to this important customer in one of the
largest countries in the world. This deal
exemplifies the nature of commercial
agreements we expect to be signing over the
coming months and years – material, long-
term contracts with established partners with
the expertise to build distribution of our
products in large territories. We will be
manufacturing all the products for this
contract in-house, further illustrating the
benefits of Biokosmes joining the Venture
Life Group.

Our strategy of focusing on the ageing
consumer, an ever-increasing demographic set
offering attractive market fundamentals, of
developing innovative self-care products with
strong scientific credentials, and of engaging
with well-established distribution partners to
ensure that our products receive support and
investment in territories across the world, is
beginning to deliver real momentum to the
business.

“

Our strategy
of focusing on
the ageing
consumer...
...is beginning
to deliver real
momentum to
the business.

NeuroAge Sleep – A line
extension to our successful
food supplement brand
NeuroAge, this product helps
promote sleep and the time
taken to fall asleep as well as
supporting cognitive function
and mental performance in
healthy individuals.

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Venture Life Group plc Annual Report & Accounts 2014 9

Chair’s Statement continued

Dividend
The Group intends to continue paying a
dividend and the Board will be proposing a
final dividend of 0.04p (2014: 0.04p) per
share for approval at this year’s Annual
General Meeting.

The future
Venture Life has achieved considerable
progress over the past twelve months and the
foundations are in place to support the
continued growth of the Group. We look to
the future with real confidence.

Dr Lynn Drummond
Non-Executive Chair
24 March 2015

Dr Lynn Drummond

Strong cash balances and
investment in top-line growth
The Group ended the year with a strong cash
balance of £4.9 million (2013: £0.5 million).
This capital will enable management to invest
across the business to ensure it is capitalising
on the growth opportunities in its markets as
well as meeting changing customer needs. We
expect the impact of this investment to be
seen in 2015 and particularly in 2016 and
beyond in the form of strong top-line
growth. In 2014 we saw strong year-on-year
revenue growth in the Brands business and
whilst Manufacturing’s revenue was down, as
expected, against a record year in 2013, we
expect growth to resume in 2015.

Board strengthened
Ian Mackinnon joined the Board in June
2014 as a Non-Executive Director and chair
of the Audit and Risk Committee. With a
background in manufacturing and
considerable financial and general
management experience, Ian has much to
bring to the Group and I welcome him to
Venture Life.

None of the progress in 2014 could have

been achieved without the hard work and
dedication of our staff across the Group and I
would like to take this opportunity of
thanking all our staff in the UK and Italy for
their hard work on behalf of our
shareholders.

Lubatti – Lubatti is a luxury
skincare brand, steeped in a
rich history and heritage, which
has been partnered with
Gialen, a large skincare and
cosmetics retailer in China, in a
30 year deal.

Venture Life Group plc Annual Report & Accounts 2014 10

Chief Executive Officer’s Statement

Venture Life made substantial progress in
2014. Whilst achieving organic growth in
both revenues and assets in the historic
Brands business, the acquisition of
Biokosmes and the fund-raising and IPO on
AIM provided the Group with a major step
forward towards becoming a fully integrated
and profitable business developing self-care
products for the ageing population. The
acquisition has delivered a material increase
in revenues to the Group and with
Biokosmes’s expertise in development and
manufacturing combined with Venture Life’s
market and commercialisation expertise, the
Group is poised for significant growth.
Moreover, having the manufacturing and
development operations in-house will greatly
enhance customer service and increase
efficiency in our development and
manufacturing offerings.

The Group delivered significant progress
against its targets from the IPO, expanding
its geographic partner base, developing and
launching new products and, following the
year-end, concluding its most significant
partnering deal so far, in China.

Already in 2015 the Group has seen
significant recruitment in the business
development and commercial team to exploit
our product assets.

The Brands business
Our Brands business is led from the UK
office, and develops and commercialises self-
care products that address the ‘quality of life’
healthcare needs of the ageing population.
The products take rapid and low-cost
regulatory routes to market, in the form of
medical devices, food supplements and
dermo-cosmetics, with the medical devices
and dermo-cosmetics being manufactured
in-house by our manufacturing business,
Biokosmes.

Our products cover a range of healthcare
needs such as supporting brain function and

memory, reducing cholesterol, relieving the
symptoms of haemorrhoids and age-related
skin conditions, and preventing hair loss and
hair thinning. They are distributed into
pharmacy channels in international territories
through product distribution agreements we
have with distribution partners.

During 2014, we signed 17 new

distribution agreements. Following the year-
end we also announced a major distribution
agreement with Gialen, a major Chinese
retailer of skincare products, with minimum
purchase obligations of RMB 371 million
(approximately £40 million1) over the 30 year
term of the agreement.

A number of the new agreements covered
the distribution rights to two new variants to
existing products developed by Venture Life,
namely NeuroAge Sleep and NeuroAge
NRG. The two new products were developed
in-house to support the existing NeuroAge
product and provide good examples of the
Group’s ability to respond to market demand
and produce new products over a short time-
frame and at relatively low cost.

The Brands product range now totals 15
products, covering a range of indications, and
includes five new product ranges developed
from the proprietary formulations library of
Biokosmes.

Following the acquisition of Biokosmes we

integrated the new product development
function into our Italian facility. On a low
cost base this facility aims to produce five
new products each year. The focus for 2015 is
the development of new products for the
treatment of women’s health issues associated
with ageing. Three of these are already in late
stage development and we expect two more
to be completed in the second half of 2015 to
allow for commercialisation later in 2015.
Work also continues on developing new
food supplement presentations for Benecol®.
2014 saw the first launch of our new Benecol
food supplement in capsule form. Benecol

Jerry Randall

1 At exchange rates prevailing at
the time of signing in January
2015 as the contract is priced in
RMB.

Benecol is a registered
trademark of Raisio plc.

Benecol – Benecol is clinically
proven to lower LDL
cholesterol by 10% within 1-2
weeks and Venture Life has
formulated the first capsule
presentation of Benecol. 2014
saw the launch of the product
into its first market.

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“

2014 saw strong
revenue growth
for our Brands
business.

Venture Life Group plc Annual Report & Accounts 2014 11

Chief Executive Officer’s Statement continued

products are proven to reduce low density
lipo-protein (LDL) cholesterol, and in
capsule form the product offers the consumer
portability, convenience and a long shelf life.

Our Benecol capsule product was

launched in Malta in December 2014, the
first territory where the food supplement in
capsule form is available alongside a
functional food version of Benecol that is
already well-established in the local market.
We also have a distribution agreement in
place for Benecol in a second territory where
the product is currently progressing through
registration, and we continue to progress
negotiations with partners in other territories.
One of the other highlights of 2014 was

signing a ten year exclusive distribution
agreement with Valeant, one of the world’s
leading pharmaceutical companies, to
distribute our product for haemorrhoids,
Procto-eze, in six European markets,
including Germany. This was the first
distribution agreement covering a major
European country and our product is now on
sale in Germany.

In total the Group currently has 41

distribution agreements in place covering the
15 branded products in 26 territories.

2014 saw strong revenue growth for our
Brands business. Revenue increased by 39%
from £0.49 million to £0.67 million, largely
driven by the signing of new distribution
agreements. We achieved gross margins on
these sales of 50%, a pleasing improvement
on 2013 and 2012 where we achieved gross
margins of 38% and 41% respectively.

The Manufacturing business
Our Manufacturing business is centred
around Biokosmes, the Italian development
and manufacturing business which joined the
Group in 2014 at the time of the IPO.

The Manufacturing business generates the

majority of its revenue from developing,
formulating and manufacturing topical
healthcare products for major international
healthcare companies, many of whom
operate in the medical devices and skincare
markets. It also manufactures medical devices
and skincare products for Venture Life’s
Brands business. We are beginning to see
strong synergies from the two business
segments working closely together, best
illustrated with the winning of the Gialen
supply contract for China where the product
and service offering of Brands and
Manufacturing working closely together
played a major part in helping secure the
contract.

Biokosmes currently manufactures over 90
products for more than 50 customers and the
products are sold in over 40 countries
worldwide. Biokosmes often plays a key role
in the product development and formulation
of new products for customers and often will
retain ownership of arising intellectual
property. It was this formulation ownership
that enabled the Brands business to launch
five new branded products which had been
previously developed by Biokosmes within
three months of Biokosmes joining the
Group.

There has been significant investment in

infrastructure at Biokosmes since it was
founded and further investment was made in
2014 with the use of proceeds of our IPO,
including the installation of a nine tonne
mixer. This new mixer will enable larger
batches of bulk material to be produced,
thereby reducing bulk processing times and
costs, and over time helping to improve
margins. We plan to make further modest

Lissio – The Lissio range has
three brands, Lissio HA
targeted for smoothing fine
lines and wrinkles, Lissio Pure
for sensitive skin and Lissio
Light for skin lightening. The
product is now partnered in
over 40 countries.

Venture Life Group plc Annual Report & Accounts 2014 12

Chief Executive Officer’s Statement continued

capital investment in 2015 in Manufacturing
to support our growth plans.

The Group’s new product development
efforts are now being led by the team in Italy,
drawing on their years of experience and
expertise of new product development and
formulation. From market research, input
from scientific advisers and feedback from
distribution partners, new products are
conceptualised by the development team in
Italy working closely with the UK
commercial team.

Market opportunity assessments are
carried out together with development
feasibility and costing before a decision is
made on developing a new product. We pride
ourselves on developing new products over
short time periods and for relatively low cost,
supporting the products and their channel
marketing with independent evidence of
product efficacy where appropriate.

From the date of acquisition on 27 March
2014, Biokosmes contributed revenues to the
Group in 2014 of £6.7 million (before
elimination of intercompany sales) at a gross
margin of 35%. Following a record year for
revenues in 2013, full year 2014
Manufacturing revenues were £8.5 million.
We expect revenue growth in the
Manufacturing business to resume in 2015.
There are some 65 employees working in
Manufacturing and we recently appointed a
new sales director, Marco Castelnovo, to
build sales from existing and new
Manufacturing clients.

Investment in business development
and sales
New products developed by the Group are
automatically registered by us within the EU,
meaning that product distribution
partnerships in the EU generally yield
revenues sooner than partnerships covering
territories outside the EU.

The team will focus in 2015 on the
European marketplace where our products
are already registered, and particularly on our
five main European markets of Germany,
France, Spain, Italy and the UK. We expect
this approach to bring our products to the
public more quickly than outside the EU
where registration timelines following the
signing of a distribution agreement tend to
be longer.

We are investing in the commercial side of

the business and have in 2015 already
recruited four new executives into our
business development team to accelerate the
partnering of our products. This will give us
five full-time executives partnering our
products, supported by a team of marketing
and alliance managers to service our partners
once a deal is signed. Our first appointment
of 2015, Jon Bouros, joined the Group earlier
this month as one of our business
development directors. We are investing
during 2015 to drive long-term and
sustainable top-line growth, and with the
effect of operational gearing we expect to see
the profitability of the Brands business grow
exponentially.

“We are investing

during 2015 to
drive long-term
and sustainable
top-line growth...

Procto-eze – Procto-eze is
currently available in two
forms – a cream and a
cleanser. It offers relief
from all forms of anal
discomfort including
haemorrhoids and its
safety, including for
pregnant women, is
supported by clinical data.

Venture Life Group plc Annual Report & Accounts 2014 13

Chief Executive Officer’s Statement continued

products where we can bring the
manufacturing in-house to help improve
further the manufacturing margin.

The end-user of our products, the ageing
consumer, is a growing market segment and
we expect the trend for self-care to continue
to grow.

The integration of Biokosmes within the

Group has progressed very positively and,
with all the manufacturing of the topical
Brands products now taking place at
Biokosmes, we are seeing improved gross
margins in our Brands business. We also plan
to have our own in-house development and
manufacturing facilities for food supplements
when the time is right.

Following the fund-raisings in 2014 we are

now well-capitalised with resources available
for investment and I am looking forward to a
period of sustained top- and bottom-line
growth in the coming years.

Finally I would like to take this

opportunity to thank all of our shareholders
who have supported the Group over the last
four years. We look forward to reporting
continued good progress in 2015.

Jerry Randall
Chief Executive Officer
24 March 2015

Outlook
The Group expects to achieve significant
growth over the coming years. The business is
highly scalable, not only in terms of wider
product distribution delivering increased
revenues, but also in terms of manufacturing
capacity. The commercial infrastructure has
been strengthened in 2015 and now is
capable of accelerating the rate of product
distribution agreements signed with
expectations for consequent revenue growth.
The manufacturing facility is running at less
than 50% of its potential capacity, with only
limited investment required to be operating
at its potential capacity.

The cost base of the commercial and
manufacturing operations is relatively fixed,
but is capable of accommodating a doubling
of revenues without significant cost increase
or investment. Over the last year Venture Life
has created this highly scalable operation that
will allow strong and sustainable revenue
growth for the business.

Whilst the weakening euro may make the

pricing of our products more attractive to
buyers outside the Eurozone, it may
negatively affect our reported numbers in
sterling. Nevertheless we are expecting 2015
to be a year of material top-line growth on a
like-for-like basis as the distribution
agreements signed to date begin to deliver
new revenues in addition to repeat business,
and as the positive impact of our investment
in business development resource begins to
be realised in both the Brands and
Manufacturing businesses.

We already have an attractive range of
products and will be investing in our exciting
portfolio of new products which are currently
in development. We will also be looking to
acquire products or technologies that
complement our existing product range and
where we can capitalise on our network of
distribution partners to generate incremental
sales. We will also prioritise the acquisition of

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NeuroAge NRG – This line
extension to our successful
food supplement brand
NeuroAge NRG supports
alertness and concentration as
well as aiding cognitive
functions and mental
performance in a healthy brain.

Venture Life Group plc Annual Report & Accounts 2014 14

Financial Review

James Hunter

The financial position of the Group
strengthened considerably during the year
and Venture Life ended 2014 in a strong
financial position. During 2014, the Group’s
shares were admitted to trading on AIM, a
total of £8.2 million (net of expenses) was
raised, and the Group completed the
acquisition of Biokosmes.

Statement of Comprehensive Income
Revenue for the year increased to £7.2 million
(2013: £0.49 million). This represents
£0.67 million from our Brands business and
£6.5 million of revenue (after elimination of
intercompany sales) from Biokosmes, our
Manufacturing business, for the nine months
from the date of its acquisition at the end of
March 2014.

Revenue from the Brands business
increased by 39% from £0.49 million in
2013 to £0.67 million in 2014. Of this,
£0.26 million resulted from distribution
agreements signed in 2014 and £0.41 million
from agreements signed prior to 2014. In
2014 eight of the Group’s products were sold,
compared with four in 2013, and to 12
different distribution partners compared with
eight in 2013. The improvement in gross
margin from 38% in 2013 to 50% in 2014
principally reflected the improvement in
margins arising from manufacturing a
significant proportion of products in-house.
We expect gross margins for the Brands
business to be nearer 45% in 2015, owing to
the product mix expected to be sold in 2015.

Revenue from Biokosmes, our

Manufacturing business, totalled £6.7 million
(before elimination of intercompany sales),
compared with £7.2 million for the same pre-
acquisition period in 2013, taking into
account currency movements. On a constant
currency basis, revenue would have been
£6.9 million, a decrease of 4% compared to
the same period in 2013. We expect growth
to resume in the Manufacturing business in

2015. Gross margins of 35% were achieved
in 2014 by Manufacturing.

Gross profit achieved at a Group level was

£2.7 million (2013: £0.19 million) at an
overall margin of 37% (2013: 38%). The
decrease at Group level reflects the impact of
the Manufacturing business on Group profit
where lower margins than in the Brands
business are typically achieved. We expect the
Group’s gross margin to improve in 2015 and
beyond as we increase revenue and as Brands
accounts for a greater share of Group gross
profit.

Administrative expenses, excluding
amortisation of intangible assets, totalled
£3.4 million (2013: £1.1 million). The
increase was due to a number of factors,
including reporting the additional overhead
from the newly-acquired Manufacturing
business, the investment made in business
development resource, and nine months of
costs related to operating as a company
quoted on AIM. The increase in the
amortisation charge to £0.5 million (2013:
£0.06 million) relates primarily to the
amortisation of intangible assets acquired
during 2014. These intangible assets are
customer relationships and product
formulations acquired with Biokosmes and
the assets are being amortised over a five year
period.

Exceptional costs of £0.45 million (2013:

£0.1 million) were recognised in the year.
This includes £0.4 million of costs relating to
the IPO which have has been treated as
exceptional IPO costs and charged to income
during the period. Total IPO and fund-
raising costs amounted to £1.4 million with
the balance of £1.0 million being offset
against the share premium account.

The loss before tax, amortisation and
exceptional costs in 2014 was £0.59 million
(2013: loss of £0.96 million). The loss after
tax for the year amounted to £1.57 million
(2013: loss of £1.1 million), representing a

Rectosellan – Rectosellan is
Valeant’s choice of brand name
for the Procto-eze product.
The indication, formulation and
mode of action are the same
as Procto-eze but re-branded
as Rectosellan, demonstrating
the Group’s flexible approach
to product commercialisation.

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“

The financial
position of
the Group
strengthened
considerably
during the year.

Venture Life Group plc Annual Report & Accounts 2014 15

Financial Review continued

loss per share of 6.01p (2013: loss per share
of 6.71p).

deposits so as to maintain liquidity of cash
resources for utilisation in operations.

Dividends
The Group paid a dividend in 2014 of
0.04 pence per share and is recommending a
dividend of 0.04 pence per share be paid to
shareholders in 2015.

James Hunter
Chief Financial Officer
24 March 2015

Statement of Financial Position
The acquisition of Biokosmes during 2014
had a material impact on the Group’s
Statement of Financial Position at the year
end. Intangible assets increased significantly
owing to the acquisition of intangibles and
generation of goodwill, as did the working
capital position of the Group. Goodwill
recognised represents the future economic
benefits arising from the acquisition of
Biokosmes that were not individually
identified and separately recognised at the
date of acquisition. Goodwill will be subject
to impairment testing at the relevant
reporting date.

Cash and debt
Cash resources comprise cash and cash
equivalents and amounted to £4.9 million at
year end (2013: £0.45 million). Net cash
inflow during the year was £4.4 million
(2013: inflow of £0.37 million), driven
principally by a fund-raising of £4.2 million
(net of expenses) at the time of the IPO in
March 2014 and a secondary fund-raising of
£4.0 million (net of expenses) in December
2014, offset by the £3.3 million cash element
of the consideration paid to the vendors of
Biokosmes.

Total interest-bearing debt also increased

during the year, from £0.35 million at
31 December 2013 to £3.9 million at
31 December 2014. The Group took
advantage of attractive financing offers in
Italy to refinance its Italian debt such that no
long-term debt is due to be repaid on the
Italian loans before 2017. The increase in the
convertible loan note balance arose from the
issue of loan notes to the vendors of
Biokosmes in part-consideration for the
acquisition of Biokosmes.

The Group has generally used short-term

Original Bioscalin – Original
Bioscalin helps to control hair
loss, promote new hair growth
and enhance overall hair
condition. The range is
supported by substantial
clinical data for its safety and
efficacy.

Venture Life Group plc Annual Report & Accounts 2014 16

Principal Risks & Uncertainties
The principal risks and uncertainties that could have an
adverse impact on the performance of the Group are
detailed below.

1. Sales volumes
being affected by a
reduction in demand

Changes in demand for the Group’s products
could be caused by a number of factors,
such as macro-economic factors,
competition from other products, or the
failure of a distribution partner to generate
adequate sales. The Group aims to manage

risk in this area by innovating with new
products, by maintaining close and
supportive relationships with its distribution
partners, and by seeking new distribution
partners in territories where the Group has
little or no representation.

2. Sales volumes
being affected by a
delay in regulatory
approval

The Group’s products are primarily approved
for use as functional cosmetics, food
supplements and Class I medical devices
that in certain regions, including Europe,
require pre-market notification, but not pre-
market authorisation or approval by the
relevant authorities. If the Group does not
comply with the regulatory requirements for
these products, the products may be
recalled and damage incurred to the relevant
brand and/or the Group which in turn could
affect the Group’s revenues.

In other regions of the world where the
Group either has distribution agreements in
place or is actively seeking to establish them,
the procedure for registering and having
products authorised may differ from that in
Europe. Other jurisdictions may require more
lengthy registration and authorisation
processes and the Group will be relying on its
distribution partners to carry out this work in a
timely manner. This in turn may lead to delays
in product launches in certain territories but
the Group works closely with its partners to
support them through the process.

3. Gross margins
being eroded by cost
price inflation

Increases in the cost of goods would erode
gross margins unless the Group was able to
pass on any such increases to its distribution
partners and customers. The Group aims to
manage risk in this area by entering supply

agreements with key suppliers which fix
prices for specific periods and/or which
agree the principles of any future price
increases.

4. Adverse foreign
exchange movements
affecting profitability

The Group currently invoices all its
customers in euros and the majority of the
Group’s cost of sales are denominated in
euros and thus the Group is currently not
unduly exposed to adverse movements in
the euro/sterling exchange rate in relation to
its gross profit. However, the Group’s
presentational currency is sterling and
therefore the reported gross profit will
depend on exchange rates prevailing during
the relevant financial period. The Group’s
administrative expenses arising in Italy
represent a material component of overall
Group administrative expenses. These
expenses are denominated in euros and
when reported on a consolidated basis, they
will be reported in the Group’s presentational
currency of sterling. Consequently, there may
be variability in the presented expenses
caused by variability in the sterling/euro
exchange rate.

The Group has agreed commercial terms

and pricing in the Gialen distribution
agreement using the Chinese Yuan and will
be invoicing Gialen in Yuan in accordance
with the terms of the agreement. The
agreement is currently material for the Group
and adverse movements in the value of the
Yuan against sterling could have an impact
on the expected profitability of this
agreement.

The Group actively monitors the principal

foreign exchange rates and will adopt
hedging strategies when it is felt to be
appropriate.

Where it is appropriate to do so, the Group

will present financial results on a constant
currency basis to enable shareholders to
compare the performance of the Group
between reporting periods with the impact of
strengthening or weakening sterling
eliminated.

Venture Life Group plc Annual Report & Accounts 2014 17

Principal Risks & Uncertainties continued

5. Financial Risk

5.1 Financial risk
management

5.2 Financial risk
factors

5.2.1 Market risk

5.2.2 Credit risk

5.2.3 Liquidity risk

5.2.4 Capital risk
management

The Group seeks to minimise its exposure to
financial risk through issue of its own equity
instruments and debt to fund operating and
investing activities. Where it is necessary to
utilise debt funding, the terms of the
financing is reviewed against future cash

flow expectations to ensure that there are
sufficient resources for the Group to meet its
obligations under the financing
arrangements. Further details relating to the
Group’s exposure to financial instrument
risks are provided in note 34.

The Group’s activities expose it to a variety
of financial risks: market risk, credit risk and
liquidity risk. The Group’s overall risk
management programme focuses on the
unpredictability of financial markets and
seeks to minimise potential adverse effects
on the Group’s financial performance.
Risk management is carried out by

management under policies approved by the

Directors. Management identifies and
evaluates financial risks in close co-
operation with the Group’s operating
segments. The Directors provide principles
for overall risk management, as well as
policies covering specific areas, such as
interest rate risk, non-derivative financial
instruments and investment of excess
liquidity.

Market risk is the risk of loss that may arise
from changes in market factors such as
interest rates and foreign exchange rates.
However, the Group’s revenues and cost of

goods sold are largely denominated in the
same currency (euro) which currently
provides a natural hedge against adverse
movements.

Credit risk is the financial loss to the Group if
a customer or counterparty to a financial
instrument fails to meet its contractual
obligation. Credit risk arises from the Group’s

cash and cash equivalents and receivables
balances. The Group mitigates its risk in this
area by actively monitoring the credit
worthiness of counterparties.

Liquidity risk is the risk that the Group will
not be able to meet its financial obligations
as they fall due. This risk relates to the
Group’s prudent liquidity risk management
and implies maintaining sufficient cash

reserves. Management monitors rolling
forecasts of the Group’s liquidity and cash
and cash equivalents on the basis of
expected cash flow.

The Group’s capital structure is comprised of
shareholders’ equity, debt in the form of loan
notes issued to the vendors of Biokosmes,
and unsecured commercial debt within
Biokosmes.

The Group’s objective when managing

capital is to maintain adequate financial
flexibility to preserve its ability to meet
financial obligations, both current and long
term. The capital structure of the Group is
managed and adjusted to reflect changes in
economic conditions.

The Group funds its expenditures on
commitments from existing cash and cash
equivalent balances, primarily received from
issuances of shareholders equity and loan
arrangements. There are no externally
imposed capital requirements.

Financing decisions are made by the

Directors based on forecasts of the expected
timing and level of capital and operating
expenditure required to meet the Group’s
commitments and development plans.

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Venture Life Group plc Annual Report & Accounts 2014 18

Key Performance Indicators
The Group uses a number of different key performance indicators (KPIs) across
the business to facilitate performance management. The Group uses a
combination of financial and operational KPIs and the principal financial KPIs used
to manage the Group’s performance during the year are set out below:

KPI

Description

2014

2013

Comment

Like-for-like
revenue
growth

Revenue growth excluding
revenue growth from
product acquisitions and
disposals, any milestone or
one-off licence fee
payments and currency
fluctuations.

39%

(45% on a
constant
currency basis)

66% The increase in revenues in

2014 reflects the increase
in the number of
distribution agreements
signed by the Group and by
repeat orders from
partners.

Revenue
growth

Growth in revenue between
reporting periods.

1,379% 66% The growth was driven in

part by the increase in like-
for-like sales but more
significantly by the
acquisition of Biokosmes.

Gross margin

Revenue less the cost of
sale, expressed as a % of
revenue.

37% 38% 2014 gross margin reflects

the impact of Biokosmes
gross margin from March
2014.

Other financial KPIs will be employed as the business evolves and will be reported upon accordingly. The Group also uses a number
of non-financial KPIs, including the number of new distribution agreements signed and new customer contracts secured, new
product development output, customer and partner satisfaction levels, staff retention levels, and capacity utilisation levels at
Biokosmes.

The strategic report is approved by the Board of Directors and signed on its behalf by,

Jerry Randall
Chief Executive Officer
24 March 2015

Venture Life Group plc Annual Report & Accounts 2014 19

Directors & Advisers

Directors
Dr Lynn Drummond Non-Executive Chair
Jerry Randall Chief Executive Officer
Sharon Collins Commercial Director
James Hunter Chief Financial Officer
Gianluca Braguti Manufacturing Director
John Sylvester Non-Executive Director
Ian Mackinnon Non-Executive Director

Registered Office
Venture House
2 Arlington Square
Bracknell
Berkshire
RG12 1WA

www.venture-life.com

Company Secretary
James Hunter

Company number
05651130

Nominated Adviser and Broker
Panmure Gordon and Co
One New Change
London
EC4M 9AF

Auditor
Grant Thornton UK LLP
1020 Eskdale Road
Winnersh
Wokingham
Berkshire
RG41 5TS

Solicitors
Simmons & Simmons LLP
CityPoint
One Ropemaker Street
London
EC2Y 9SS

Registrars
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU

Principal bankers
NatWest Commercial Banking
30 Market Place
Newbury
Berkshire
RG14 5GP

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Venture Life Group plc Annual Report & Accounts 2014 20

Directors’ Biographies

Dr Lynn Drummond
Non-Executive Chair
Lynn joined Venture Life as Non-
Executive Chair in November 2013.
Lynn has been non-executive
chairman of Infirst Healthcare
Limited since early 2013 and is also
a non-executive director of RPC
Group plc, Iron Therapeutic
Holding AG and Shield Holdings
AG. Previously Lynn spent 16 years
at Rothschild in London, most recently as a Managing Director
within the investment banking division, with a particular focus
on transactions within the healthcare sector. Prior to Rothschild,
Lynn worked in the Cabinet Office in London as Private
Secretary to the Chief Scientific Advisor.

Lynn holds a Bachelor of Science Degree in Chemistry from
the University of Glasgow and a PhD in Biochemistry from the
University of London. She is also a Fellow of the Royal Society
of Chemistry and a Fellow of the Royal Society of Edinburgh.
Lynn chairs the Group’s Nomination Committee and is a
member of the Audit and Risk and Remuneration Committees.

John Sylvester
Non-Executive Director
John Sylvester joined the Venture
Life board in November 2013.
John is currently the Chief
Commercial Officer for
Interventional Medicine at BTG plc,
following the £177 million
acquisition of Biocompatibles by
BTG. John joined Biocompatibles
in 2005, taking responsibility for
marketing, sales and business development, and was appointed
to the Board as an executive director in the same year. His career
covers a series of senior commercial roles for Rio Tinto Zinc plc,
ICI plc and English China Clays plc where he was Managing
Director prior to the acquisition by Imetal for £756 million.
Immediately before Biocompatibles John was with Baxter
Healthcare working out of their European HQ in Zurich where
he was VP Marketing for their European Medication delivery
business, a $750 million portfolio spanning both drugs and
medical devices.

John chairs the Group’s Remuneration Committee and is a
member of the Audit and Risk and Nomination Committees.

Ian Mackinnon
Non-Executive Director
Ian Mackinnon joined Venture Life
in June 2014. Between 2000 and
2013 Ian was Group Finance
Director and then Chief Executive
Officer of Swallowfield plc, a
leading supplier to global brands in
the cosmetics, personal care and
household goods sectors. Ian has
also held senior finance roles at
Invensys plc and Raychem Corporation.

Having graduated with a degree in Chemical Engineering, Ian

qualified as a chartered accountant and is a Fellow of the
Institute of Chartered Accountants of England and Wales.

Ian chairs the Group’s Audit and Risk Committee and is a
member of the Remuneration and Nomination Committees.

Venture Life Group plc Annual Report & Accounts 2014 21

Directors’ Biographies continued

Jerry Randall
Chief Executive Officer
Jerry co-founded Venture Life in
2010. From 2000 to 2009, Jerry was
CFO of Sinclair Pharma plc, an
international specialty pharma
business, now listed on the AIM
market in London. Sinclair was
founded in August 2000 when Jerry
completed the management buy-in
with Dr Michael Flynn.

Jerry enjoyed a career initially in corporate finance and was

involved in buy-ins and acted as adviser to both private and
quoted companies between 1993 and 2000, in capacities as
nominated advisor and in practice with KPMG. Jerry has been
involved in a number of flotations and transactions on the
Official List, Unlisted Securities Market and AIM, as well as
raising private equity. He qualified as a chartered accountant
with KPMG in 1990.

Sharon Collins
Commercial Director
Sharon co-founded Venture Life in
2010 with Jerry Randall. Sharon has
more than 15 years’ experience
within the healthcare industry,
predominately in marketing,
international sales and business
development roles. She worked for a
leading dental manufacturer for
eight years and launched many
products during this time.

Sharon worked for Sinclair Pharma plc for five years within
the International Business Development field and successfully
completed more than 35 international out-licensing deals during
a two year period. Sharon graduated in 1996 with a degree in
marketing and gained an MBA (with Distinction) in 2005.

James Hunter
Chief Financial Officer
James joined the Group in
September 2013 and was appointed
to the Board in October 2013. Prior
to joining Venture Life, James was
Finance Director at Proximagen
Group plc, an AIM-listed
biotechnology company. During his
eight years at Proximagen, James was
part of the management team that
led Proximagen through an IPO and admission to AIM,
undertook several company and product acquisitions, and
oversaw the acquisition of Proximagen by Upsher-Smith
Laboratories Inc. for £223 million in 2012.

Prior to Proximagen, James spent six years in the corporate
finance team at Ernst & Young where he worked in mergers and
acquisitions and corporate restructuring. James has an MBA
from Cranfield School of Management.

Gianluca Braguti
Manufacturing Director
Gianluca joined the Board in March
2014 following the acquisition by
Venture Life of Biokosmes, the
company he founded.

Gianluca began this career
working in his father’s pharmacy,
and then, after he graduated as a
pharmacist, continued working for
several years in the Milano
University cosmetic Research and Development department
researching cosmetic applications for raw materials used in
different fields.

In 1990 he started developing formulations for Italian
cosmetic brands mainly in the perfumery and pharmacy area
and started his contract manufacturing business, Biokosmes. In
1999 Biokosmes started developing and manufacturing medical
devices, selling predominantly in Europe. In 2002 Biokosmes
passed its first FDA inspection, and started exporting its
products to the US.

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Venture Life Group plc Annual Report & Accounts 2014 22

Corporate Governance

Introduction
The Board sets out below its policies and procedures in respect
of the Group’s corporate governance activities. The Board is
accountable to the Group’s shareholders for good corporate
governance and this statement describes how the principles of
corporate governance are applied to the Group.

The Board
The Board of Venture Life Group plc comprises three Non-
Executive Directors, one of whom chairs the Board, and four
Executive Directors. The roles of Chairman and Chief Executive
Officer are distinct and are held by different people to ensure a
clear division of responsibility. The role of the Non-Executive
Directors is to bring valuable judgment and insight to Board
deliberations and decisions. The Non-Executive Directors are
experienced and influential individuals whose blend of skills and
business experience contributes to the proper functioning of the
Board and its Committees, ensuring that matters are fully
debated and that no individual or group dominates the Board’s
decision-making processes.

All Directors have access to the advice and services of the
Company Secretary and are able in the course of their duties, if
necessary, to take independent professional advice at the
Company’s expense. Committees have access to such resources as
are required to fulfil their duties.

The Board receives regular reports detailing the progress of

the Group’s business, the Group’s financial position and
projections, as well as business development activities and
operational issues, together with any other material deemed
necessary for the Board to discharge its duties. The Chairman is
primarily responsible for the effective operation and chairing of
the Board and for ensuring that it receives appropriate
information to make informed judgements.

The Board has a formal schedule of matters reserved to it for

decision but otherwise delegates specific responsibilities to
Committees, as described below. The terms of reference of the
Committees are available on request from the Company
Secretary. The Board is responsible for decisions, and the review
and approval of key policies and decisions in respect of business
strategy and operations, board appointments, budgets, items of
substantial investment and acquisitions.

Board Committees
The Board has established an Audit and Risk Committee, a
Nomination Committee and a Remuneration Committee with
written terms of delegated responsibilities for each.

The Audit and Risk Committee
The Audit and Risk Committee was formed at the start of the
2014 financial year in anticipation of the Company’s admission
to AIM and was chaired by John Sylvester with Lynn
Drummond as the other member of the committee until June
2014. From June 2014, Ian Mackinnon chaired the committee
with John Sylvester and Lynn Drummond as the other members
of the committee.

The committee has responsibility for considering all matters
relating to financial controls and reporting, internal and external
audits, the scope and results of the audits, the independence and
objectivity of the auditors and keeping under review the
effectiveness of the Company’s internal controls and risk
management.

The Audit and Risk Committee is expected to meet at least

twice a year.

The Remuneration Committee
The Remuneration Committee is chaired by John Sylvester with
Lynn Drummond and Ian Mackinnon as the other members of
the committee.

The committee has responsibility for making

recommendations to the Board on the Company’s policy for
remuneration of senior executives, for reviewing the
performance of Executive Directors and senior management and
for determining, within agreed terms of reference, specific
remuneration packages for each of the Executive Directors and
members of senior management, including pensions rights, any
compensation payments and the implementation of executive
incentive schemes.

The Remuneration Committee meets at least once a year.
Further details of Directors’ remuneration are disclosed in the
Directors’ Remuneration Report.

The Nomination Committee
The Nomination Committee was formed at the start of the
2014 financial year in anticipation of the Company’s admission
to AIM and is chaired by Lynn Drummond with John Sylvester
and Ian Mackinnon as the other members of the committee.
The committee has responsibility for considering the size,
structure and composition of the Board, and the retirement and
appointment of Directors, and will make appropriate
recommendations to the Board about these matters. The
Nomination Committee is expected to meet at least once a year.

Attendance at Board meetings and committees
The Directors attended the following Board meetings and
Committee meetings during the year:

Director

Board

Remuneration

Audit

Dr L Drummond
Mr J Sylvester
Mr I Mackinnon1
Mr J Randall
Ms S Collins
Dr J Lucas2
Mr J Hunter
Mr G Braguti3

Total meetings held in
the year

9/9
8/9
5/5
9/9
8/9
5/6
9/9
5/7

2/2
2/2
1/1
–
–
–
–
–

4/4
3/4
2/2
–
–
–
–
–

1 Appointed to the Board on 16 June 2014
2 Resigned from the Board on 5 August 2014
3 Appointed to the Board on 24 March 2014

Under the Articles of Association all Directors must offer

themselves for re-election at least once every three years.
One-third of the Directors shall retire by rotation at every
Annual General Meeting. All Directors who retire by rotation
are eligible for reappointment.

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Venture Life Group plc Annual Report & Accounts 2014 23

Corporate Governance continued

Internal control and risk management
The Board has ultimate responsibility for the systems of risk
management and internal control maintained by the Group and
for reviewing its effectiveness.

The Board’s approach is designed to manage rather than
eliminate risk and can provide only reasonable and not absolute
assurance against material misstatement or loss. It operates with
principles and procedures designed to achieve the accountability
and control appropriate to the business.

The Group does not consider it necessary to have an internal

audit function due to the small size of the administrative
function. Instead there is a detailed director review and
authorisation of agreements and transactions. A comprehensive
budgeting process is completed once a year and is reviewed and
approved by the Board. The Group’s results, compared with the
budget, are reported to the Board on a regular basis and
discussed in detail.

The Group maintains appropriate insurance cover in respect
of actions taken against the Directors because of their roles, as
well as against material loss or claims against the Group. The
insured values and type of cover are comprehensively reviewed
on a periodic basis.

The principal features of the Group’s internal control system

are as follows:
> an organisational structure is in place with clearly drawn lines

of accountability and delegation of authority;

> Group employees are required to adhere to specified codes of

conduct, policies and procedures;

> financial results and key operational and financial

performance indicators are reported regularly throughout the
year and variances from plans and budgets are investigated
and reported;

> financial control protocols are in place to safeguard the assets

and maintain proper accounting records; and

> risk management is monitored on an on-going basis to
identify, quantify and manage risks facing the Group.

Shareholder relations
Venture Life aims to ensure a timely, open, comprehensive and
consistent flow of information to investors and the financial
community as a whole. By this approach we aim to help
investors understand the Group’s strategic objectives, its
activities and the progress it makes.

Shareholders are welcome to attend the Group’s Annual
General Meeting (“AGM”), where they have the opportunity to
meet the Board. All shareholders will have at least 21 days’
notice of the AGM at which the Directors will be available to
discuss aspects of the Group’s performance and answer questions
from shareholders. The Company also meets with its
institutional shareholders and analysts as appropriate and uses
the AGM to further encourage communication with
shareholders. In addition, the Company uses the Annual Report
and Accounts, Interim Statement and website to disseminate
information to shareholders.

The 2015 AGM will be held on 10 June 2015.

Going concern
As part of its going concern review the Directors have followed
the guidelines published by the Financial Reporting Council
entitled “Going Concern and Liquidity Risk Guidance for UK
Companies 2009”.

The Directors recognise that the Group has reported a loss for

the year ended 31 December 2014, as it did in the year ended
31 December 2013. The Directors have prepared detailed
financial forecasts and cash flows looking beyond 12 months
from the date of these financial statements with the acquisition
of Biokosmes and the growth of the Group’s Brands business
expected to enable the Group to move to profitability in the
foreseeable future. In developing these forecasts the Directors
have made assumptions based upon their view of the current and
future economic conditions that will prevail over the forecast
period, together with the current performance and prospects of
the Group’s operating segments.

On the basis of the above projections, the Directors are
confident that the Company and its Group have sufficient
working capital to honour all of its obligations to creditors as
and when they fall due. Accordingly, the Directors continue to
adopt the going concern basis in preparing the financial
statements.

Dr Lynn Drummond
Non-Executive Chair
24 March 2015

Venture Life Group plc Annual Report & Accounts 2014 24

Directors’ Report

There are a number of items required to be included in the
Directors’ Report, which are covered elsewhere in this annual
report. The following are covered in the Strategic Report:
> Principal activities
> Review of the business and future developments
> Principal risks and uncertainties including financial risk

management

> Key performance indicators

Financial statements
The Directors present their report and financial statements for
the Company and Group for the year ended 31 December 2014.

Principal activities
The principal activities of Venture Life Group plc and its
subsidiaries are the development and commercialisation of
healthcare products, including food supplements, medical
devices and dermo-cosmetics for the ageing population, the
development and commercialisation of cosmetic products, and
the manufacturing of a range of topical products for the
healthcare and cosmetic sectors.

New product development
Details of the Group’s new product development programmes
can be found on page 7. The accounting treatment in respect of
costs incurred in carrying out the new product development
programmes can be found in note 3.8 to the financial statements.

Political donations
The Group made no political donations in the year under review
(2013: £nil).

Results and dividends
The results for the year and the financial position at 31 December
2014 are shown in the Consolidated Statement of Comprehensive
Income on page 30 and the Consolidated Statement of Financial
Position on page 31. The Directors recommend the payment of
a dividend of 0.04p per share. The results of the Group for the
year are explained further in the Financial Review on pages 14-15.

Directors
The following Directors held office during the year and up to
the date of this report:

Dr Lynn Drummond
John Sylvester
Ian Mackinnon (appointed 16 June 2014)
Jerry Randall
Sharon Collins
John Lucas (resigned 5 August 2014)
James Hunter
Gianluca Braguti (appointed 24 March 2014)

Qualifying third-party indemnity provision is in place for the
benefit of all Directors of the Company.

External directorships
It is the Group’s policy that its Directors may take up other
directorships provided that such appointments do not conflict
with their employment with the Group. Individuals may retain
any remuneration received from such services. External
directorships held by the Directors who are in office as at the
date of this report are detailed below:

Dr Lynn Drummond is a director of RPC Group plc, Infirst
Healthcare Limited, Shield Holdings AG and Iron Therapeutic
Holding AG.

John Sylvester is a director of Biocompatibles International
Limited, Biocompatibles UK Limited, and Provensis Limited.

Jerry Sinclair is a director of Kinnier Dufort Design Limited,

Kinnier Dufort Limited, Avantis UK Limited, Hootie
Developments Limited and Stratton Ventures Limited.

Gianluca Braguti is a director of Immobiliare Cremasca di
Parati Lucia e C. S.a.s. (“socio accomandante”), Farmacia S.
Francesco dei dott. Braguti A. – L.G. S.n.c. (“socio
amministratore”), A. Erre & Co. Srl, Biogenico Worldwide Srl,
Biokosmes Immobiliare Srl, Delife Pharma Srl, and Grafco2 Srl.

Share capital
As at 31 December 2014, the authorised and issued share capital
of the Company was:

Number
of Ordinary
0.3p shares

Amount
£

Issued and fully paid up

34,403,534

103,210

The average market price of the Company’s ordinary shares at
close of business on 31 December 2014 was 95.6p.

The maximum share price during the period was 110p
(12 June 2014) and the minimum price was 80p per share
(1 October 2014).

Substantial share interests
At 23 March 2014, the Company had been advised or is aware
of the following interests, held directly or indirectly, of 3% or
more in the Company’s issued share capital:

Number
of shares

Percentage
holding

Mr Gianluca Braguti
J O Hambro
Mr Jerry Randall and
associated holdings
Aviva plc and its subsidiaries
Dr Michael Flynn and
associated holdings
Mr Andrew Sinclair and
associated holdings
Quilter Cheviot Limited
Mr Anthony Ahearne and
associated holdings
Ms Sharon Collins

6,947,602
4,000,000

3,922,129
3,422,018

2,904,543

2,145,943
1,858,000

1,683,069
1,384,166

20.19
11.63

11.40
9.95

8.44

6.24
5.40

4.89
4.02

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Venture Life Group plc Annual Report & Accounts 2014 25

Directors’ Report continued

Employees
The Group is committed to providing equal opportunities in
employment. All job applicants and employees receive equal
treatment regardless of sex, race, colour, age, and nationality or
ethnic origin.

The motivation of staff and the maintenance of an

environment where innovation and team working is encouraged
are seen as key objectives by the Board and all employees are
given the opportunity to participate in the Company’s share
option scheme. We promote internal communication of the
Group’s progress by means of regular meetings held with staff
where issues are discussed in an open manner.

The Board also recognises that a safe, secure and healthy
working environment contributes to productivity and improved
performance.

Principal risks and uncertainties
A summary of the principal risks and uncertainties and financial
risk management objectives and policies are set out on pages 16
to 17.

Future Developments
Future developments are discussed in the Strategic Report.

Environment
The Group is conscious of its responsibilities in respect of the
environment and follows a Group-wide environmental policy.
The Group disposes of its waste products through regulated
channels using reputable agents.

Statement as to disclosure of information to the
auditor
The Directors who were in office on the date of approval of
these financial statements have confirmed that, as far as they are
aware, there is no relevant audit information of which the
auditor is unaware. Each of the Directors have confirmed that
they have taken all the steps that they ought to have taken as
Directors in order to make themselves aware of any relevant
audit information and to establish that it has been
communicated to the auditor.

Appointment of auditor
Grant Thornton UK LLP were appointed as auditor during the
period to fill a casual vacancy in accordance with section 485 (3)
of the Companies Act 2006.

A resolution to reappoint Grant Thornton UK LLP will be

proposed at the 2015 AGM.

2015 Annual General Meeting
The 2015 AGM will be held on 10 June 2015, the business of
which is set out in the Notice of Annual General Meeting
enclosed with this report and available from the Company’s
website (www.venture-life.com).

On behalf of the Board,

Jerry Randall
Director
24 March 2015

Venture Life Group plc Annual Report & Accounts 2014 26

Directors’ Remuneration Report

This report sets out the remuneration policy adopted by the
Group in respect of the Executive and Non-Executive Directors.
Details of the members and meetings of the Remuneration
Committee are disclosed in the Corporate Governance Report.
The remuneration paid to the Directors in 2013 and 2014 is

included in note 8 of the Notes to the Consolidated Financial
Statements.

Remuneration policy overview
The aim of the remuneration policy of the Group is to
encourage and reward superior performance by executives with
performance overall being measured by reference to the
achievement of corporate goals, the Group’s financial
performance and the generation of acceptable total shareholder
returns.

The policy has been designed to:

> enable the Company to attract and retain the management

talent it needs to ensure its success;

> incentivise the achievement of the Company’s strategy and the

delivery of sustainable long-term performance of the
Company by the executives; and

> have flexibility that can accommodate the changing needs of

the Company as it grows and as its strategy evolves.

Executive service agreements
All Executive Directors (with the exception of Gianluca Braguti
who has a five year fixed term contract) have rolling service
contracts, details of which are summarised below:

Provision

Detailed terms

Contract dates

Notice period

Jerry Randall – 12 December 2013
Sharon Collins – 12 December 2013
James Hunter – 12 December 2013
Gianluca Braguti – 27 March 2014 for
five years until 28 March 2019

Jerry Randall, Sharon Collins and James
Hunter: Six months’ notice to be given by
the executive and thirty days by the
Company. In the event that the Company
terminates the executive’s employment
without Cause, then an amount equal to
50% of the employee’s salary is payable by
the Company.
Gianluca Braguti: no notice period.
However, under the terms of the
acquisition agreement signed between the
Company and the vendors of Biokosmes,
Gianluca Braguti has a contract as
Managing Director of Biokosmes for a
fixed five year term until 28 March 2019.
In the event that Gianluca Braguti is asked
to leave the Group as a Good Leaver he
would be entitled to receive his annual
salary until 28 March 2019.

Salary
The Committee assesses the market competitiveness of salaries
with reference to the salaries paid by AIM-listed and other
healthcare companies with a similar market capitalization to the
Group and it is intended that pay should be at or near the
median level.

Basic salaries are reviewed annually and if revised, the change

in salary takes effect from the start of the financial year.

Bonuses
The Board believes that bonuses are an important incentive for
executives to achieve the Group’s objectives, and as such should
represent a significant element of the total compensation awards
for the executives.

Following a review during 2014 of the previous bonus
arrangements, the Committee concluded that the bonus
arrangements should be changed, such that from 2015 all the
Executive Directors should participate in the same bonus scheme
and that achievement of bonuses should be aligned to the
achievement of the Group’s financial targets.

The bonus scheme being introduced for 2015 enables
executives to earn a bonus for achievement of financial targets
which have been set at a level perceived appropriate to provide
the necessary incentives. In the event of over- or under-
achievement of the Group financial performance against those
targets, appropriate adjustments may be made to the bonus
payable.

Long-term incentive plan
The Committee has recommended the introduction of a long-
term incentive plan for Executive Directors linked entirely to
generating long-term shareholder value. The plan is currently
being developed and the details will be announced in due
course.

Pensions
The Group contributes to the personal pension plans of certain
employees and Directors. Under the scheme, the Group and
employee will make contributions or the Group will make direct
contributions under a ‘salary sacrifice’ arrangement. The scheme
is open to Executive Directors and employees.

Share options
The Company issues share options to Directors and staff to
reward performance, to encourage loyalty and to enable valued
employees to share in the success of the Company.

In setting up the share option schemes, the Remuneration

Committee took into account the recommendations of
shareholder bodies on the number of options to issue, the
criteria for vesting and the desirability of granting share options
to Executive and Non-Executive Directors.

All employees are generally offered share options under the
Company’s EMI or Unapproved share option scheme after three
months’ service. Option awards for employees are recommended
by the Executive Directors and approved by the Remuneration
Committee.

Venture Life Group plc Annual Report & Accounts 2014 27

Directors’ Remuneration Report continued

The Directors hold the following share options:

Share option
scheme

EMI
EMI
Unapproved

EMI
EMI

Jerry Randall
Jerry Randall
Jerry Randall

Sharon Collins
Sharon Collins
Sharon Collins

James Hunter
James Hunter

Options
as at
31 December
2013

Options
granted
during
the year

Options
as at

31 December Date from which
exercisable

2014

Expiry date

Exercise
price

Performance
conditions

705,700
162,187
483,333

300,000
300,000

–
–
–

–
–

705,700
162,187
483,333

31 Dec 2012
01 Jul 2014
01 Jul 2014

31 Aug 2022
4 Nov 2023
4 Nov 2023

31 Dec 2012
01 Jul 2014
01 Jul 2014

31 Aug 2022
4 Nov 2023
4 Nov 2023

45p Non-market
41p Non-market
41p Non-market

300,000
300,000

9 Sep 2014
1 Nov 2015

4 Nov 2023
4 Nov 2023

82p Non-market
82p Non-market

No Directors exercised any options during the year.

Other benefits
Other benefits, such as death-in-service benefits, are provided to
certain Directors.

Non-Executive Directors
The Non-Executive Directors have entered into letters of
engagement with the Company, with the Board determining the
fees paid to the Non-Executive Directors. Non-Executive Directors
do not participate in the Group’s pension or bonus schemes in their
capacity as Non-Executive Directors. The appointments can be
terminated upon three months’ notice being given by either party.

On behalf of the Board,

John Sylvester
Chairman of the Remuneration Committee
24 March 2015

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Venture Life Group plc Annual Report & Accounts 2014 28

Statement of Directors’ Responsibilities

The Directors are responsible for keeping adequate

accounting records that are sufficient to show and explain the
Group’s and the Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
Group and the Company and enable them to ensure that the
financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and

integrity of the corporate and financial information included on
the Venture Life Group plc website. Legislation in the United
Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.

The Directors are responsible for preparing the Strategic Report,
the Directors’ Report, and the financial statements in accordance
with applicable law and regulations.

Company law requires the Directors to prepare Group and

Company Financial Statements for each financial year. The
Directors are required by the AIM Rules of the London Stock
Exchange to prepare Group financial statements in accordance
with International Financial Reporting Standards (“IFRS”) as
adopted by the European Union (“EU”) and have elected under
company law to prepare the Company financial statements in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards
and applicable law).

The Group financial statements are required by law and IFRS

adopted by the EU to present fairly the financial position and
performance of the Group. The Companies Act 2006 provides
in relation to such financial statements that references in the
relevant part of that Act to financial statements giving a true and
fair view are references to their achieving a fair presentation.
Under company law the Directors must not approve the
financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and the
Company and of the profit or loss of the Group.

In preparing each of the Group and Company financial

statements, the Directors are required to:
a) Select suitable accounting policies and then apply them

consistently.

b) Make judgements and accounting estimates that are

reasonable and prudent.

c) For the Group financial statements, state whether they have
been prepared in accordance with IFRS adopted by the EU
and for the Company financial statements state whether
applicable UK accounting standards have been followed
subject to any material departures disclosed in the Company
financial statements;

d) Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the
Company will continue in business.

Venture Life Group plc Annual Report & Accounts 2014 29

Independent Auditor’s Report
to the members of Venture Life Group plc

We have audited the financial statements of Venture Life Group plc
for the year ended 31 December 2014 which comprise the
Consolidated Statement of Financial Position and Parent
Company Balance Sheet, the Consolidated Statement of
Comprehensive Income, the Consolidated Statement of Cash
Flows, the Consolidated Statement of Changes in Equity, and
the related notes. The financial reporting framework that has
been applied in the preparation of the Group financial
statements is applicable law and International Financial
Reporting Standards (“IFRS”) as adopted by the European
Union. The financial reporting framework that has been applied
in the preparation of the parent Company financial statements is
applicable law and United Kingdom Accounting Standards
(United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the Company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we
might state to the Company’s members those matters we are
required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company and
the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.

Respective responsibilities of Directors and auditor
As explained more fully in the Statement of Directors’
Responsibilities set out on page 28, the Directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view. Our responsibility is
to audit and express an opinion on the financial statements in
accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to
comply with the Auditing Practices Board’s Ethical Standards for
Auditors.

Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is
provided on the Financial Reporting Council’s website at
www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements
In our opinion:
> the financial statements give a true and fair view of the state
of the Group’s and of the parent Company’s affairs as at
31 December 2014 and of the Group’s loss for the year then
ended;

> the Group financial statements have been properly prepared

in accordance with IFRSs as adopted by the European Union;
> the parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and

> the financial statements have been prepared in accordance

with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the
Companies Act 2006
In our opinion the information given in the Strategic Report
and Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial
statements.

Matters on which we are required to report by
exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
> adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been
received from branches not visited by us; or

> the parent Company financial statements are not in

agreement with the accounting records and returns; or

> certain disclosures of Directors’ remuneration specified by law

are not made; or

> we have not received all the information and explanations we

require for our audit.

Norman Armstrong
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Reading

24 March 2015

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Venture Life Group plc Annual Report & Accounts 2014 30

Consolidated Statement of Comprehensive Income
for the year ended 31 December 2014

Revenue
Cost of sales

Gross profit

Administrative expenses
Operating expenses
Amortisation of intangible assets

Total administrative expenses
Other income

Operating loss before exceptional items
Exceptional costs

Operating loss
Finance income
Finance costs

Loss before tax
Tax

Note

Loss for the year
Other comprehensive income which will not be subsequently reclassified to the income statement
Other comprehensive expense which will be subsequently reclassified to the income statement

Total comprehensive loss for the year attributable to equity holders of the parent

Year ended
31 December
2014
£’000

Year ended
31 December
2013
£’000

7,189
(4,535)

2,654

(3,373)
(508)

(3,881)
58

(1,169)
(449)

(1,618)
156
(81)

(1,543)
(27)

(1,570)
–
(85)

(1,655)

486
(301)

185

(1,122)
(56)

(1,178)
–

(993)
(105)

(1,098)
1
(25)

(1,122)
41

(1,081)
–
–

(1,081)

All of the loss and the total comprehensive income for the year is attributable to equity holders of the parent.

Loss per share
Basic and diluted loss per share (pence)

Year ended
31 December
2014

Year ended
31 December
2013

(6.01)

(6.71)

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Venture Life Group plc Annual Report & Accounts 2014 31

Consolidated Statement of Financial Position
at 31 December 2014

Assets
Non-current assets
Intangible assets
Property, plant and equipment
Available for sale financial assets

Current assets
Inventories
Trade and other receivables
Taxation
Cash and cash equivalents

Total assets

Equity and liabilities
Capital and reserves
Share capital
Share premium account
Merger reserve
Convertible loan note reserve
Foreign currency translation reserve
Share-based payment reserve
Retained earnings

Total equity attributable to equity holders of the parent

Liabilities
Current liabilities
Trade and other payables
Interest bearing borrowings
Deferred licence provision
Convertible loan notes

Non-current liabilities
Interest bearing borrowings
Deferred licence provision
Convertible loan notes
Employee severance provision
Deferred tax liability

Total liabilities

Total equity and liabilities

At
31 December
2014
£’000

At
31 December
2013
£’000

Notes

15
16
17

18
19

21
21
22
23
24
25
26

27
28
29
23

28
29
23
30
31

12,982
975
–

13,957

1,856
3,257
52
4,933

10,098

24,055

103
11,826
7,656
–
(85)
318
(4,171)

15,647

3,335
580
–
47

3,962

1,723
–
1,507
528
688

4,446

8,408

24,055

457
10
31

498

174
874
–
453

1,501

1,999

51
2,668
50
39
–
338
(2,589)

557

1,051
–
8
50

1,109

–
35
298
–
–

333

1,442

1,999

The financial statements on pages 30 to 59 were approved and authorised for issue by the Board on 24 March 2015 and signed on its
behalf by:

Jerry Randall
Director

James Hunter
Director

Venture Life Group plc Annual Report & Accounts 2014 32

Consolidated Statement of Changes in Equity
for the year ended 31 December 2014

Share
capital
£’000

Share
premium
account
£’000

Merger
reserve
£’000

Convertible
loan reserve
£’000

Foreign
currency
translation
reserve
£’000

Share-based
payment
reserve
£’000

Retained
earnings
£’000

Total equity
£’000

1
–

–
1
49
–
–
–

51
–

–

–
52

–
–
–

1,507
–

–
1,210
(49)
–
–
–

1,161

2,668
–

–

50
–

–
–
–
–
–
–

–

50
–

–

–
10,137

–
7,606

(979)
–
–

–
–
–

–
–

–
–
–
39
–
–

39
–

–

–
(39)

–
–
–

9,158

7,606

(39)

–
–

–
–
–
–
–
–

–

–
–

(85)

(85)
–

–
–
–

–

77
–

–
–
–
–
111
150

261

338
–

–

(1,508)
(1,081)

127
(1,081)

(1,081)
–
–
–
–
–

(1,081)
1,211
–
39
111
150

–

1,511

(2,589)
(1,570)

557
(1,570)

–

(85)

–
(150)

(1,570)
–

(1,655)
17,606

–
130
–

–
–
(12)

(979)
130
(12)

(20)

(12)

16,745

103

11,826

7,656

–

(85)

318

(4,171)

15,647

Balance at
1 January 2013
Loss for the year

Total comprehensive
income
Issue of share capital
Bonus issue
Issue of convertible loans
Share options charge
Share settled liability

Transactions with
shareholders

Balance at
1 January 2014
Loss for the year
Foreign exchange on
translation

Total comprehensive
expense
Issue of share capital
IPO and other fund-
raising costs recognised
through equity
Share options charge
Dividends

Transactions with
shareholders

Balance at
31 December 2014

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Venture Life Group plc Annual Report & Accounts 2014 33

Consolidated Statement of Cash Flows
for the year ended 31 December 2014

Cash flow from operating activities
Loss before tax
Finance income
Finance expense

Operating loss
Adjustments for:
– Depreciation of property, plant and equipment
– Amortisation of intangible assets
– Impairment of available for sale assets
– Gain on sale of intangible assets
– Gain arising from purchase of PermaPharm AG
– Finance cost
– Movement in other provisions
– Share-based payment expense

Operating cash flow before movements in working capital
Decrease in deferred consideration
Tax paid
Decrease/(increase) in inventories
Increase in trade and other receivables
(Decrease)/increase in trade and other payables

Net cash used in operating activities

Cash flow from investing activities:
Interest received
Proceeds on disposal of intangible assets
Acquisition of subsidiary – net cash acquired
Acquisition of subsidiary – net cash payment
Purchases of property, plant and equipment
Development expenditure in respect of intangible assets
Purchases of intangible assets
Proceeds on disposal of tangible asset
Purchases of available for sale financial assets

Net cash used in investing activities

Cash flow from financing activities:
Proceeds from issuance of ordinary shares
Transaction costs of issue of shares
Movements in interest bearing borrowings
Proceeds from issue of convertible loans
Dividends paid

Net cash from financing activities

Net increase in cash and cash equivalents
Net foreign exchange difference
Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Year ended
31 December
2014
£’000

Year ended
31 December
2013
£’000

(1,543)
(156)
81

(1,618)

139
508
36
(9)
(39)
(81)
(17)
130

(951)
(2)
(282)
197
(236)
(950)

(1,122)
(1)
25

(1,098)

4
56
–
–
–
(25)
–
111

(952)
(2)
–
(68)
(711)
698

(2,224)

(1,035)

156
9
776
(3,313)
(243)
(346)
(20)
3
–

(2,978)

9,630
(979)
1,088
–
(12)

9,727

4,525
(45)
453

4,933

1
–
–
–
(7)
–
(140)
–
(31)

(177)

1,211
–
–
375
(5)

1,581

369
–
84

453

Venture Life Group plc Annual Report & Accounts 2014 34

Notes to the Consolidated Financial Statements
for the year ended 31 December 2014

1. General information
Venture Life Group plc (“the Company”) was incorporated on
12 December 2005 and is domiciled in the UK, with its
registered office located at 2 Arlington Square, Downshire Way,
Bracknell, RG12 1WA. The Company is the holding company

for three wholly-owned UK subsidiaries, one wholly-owned
Italian subsidiary, Biokosmes Srl, and one wholly-owned Swiss
subsidiary PermaPharm AG (together with the Company “the
Group”).

2. Basis of preparation
The principal activity of Venture Life Group plc and its
subsidiaries is the development and commercialisation of
healthcare products, including food supplements, medical
devices and dermo-cosmetics for the ageing population, and the
manufacture of a range of topical products for the healthcare
and cosmetics sectors.

The financial statements have been prepared on a going
concern basis under the historical cost convention except for
certain financial instruments which are carried at fair value, and
in accordance with International Financial Reporting Standards
(“IFRS”) as adopted by the EU, the International Financial
Reporting Interpretations Committee (“IFRIC”) interpretations

issued by the International Accounting Standards Boards
(“IASB”) that are effective or issued and early adopted as at the
time of preparing these financial statements, and in accordance
with the provisions of the Companies Act 2006 that are relevant
to companies that report under IFRS.

The preparation of the Group’s financial statements requires

management to exercise its judgements in the process of
applying accounting policies. The areas involving a higher degree
of judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements, are disclosed
in note 3.22.

3. Summary of significant accounting policies
The principal accounting policies adopted are set out below.

3.1. Going concern
As part of its going concern review the Directors have followed
the guidelines published by the Financial Reporting Council
entitled “Going Concern and Liquidity Risk Guidance for UK
Companies 2009”.

The Directors recognise that the Group has reported a loss for

On the basis of the above projections, the Directors are
confident that the Company and its Group have sufficient
working capital to honour all of its obligations to creditors as and
when they fall due. Accordingly, the Directors continue to adopt
the going concern basis in preparing the financial statements.

3.2. Basis of consolidation
The Group financial statements consolidate those of the parent
Company and its subsidiaries as of 31 December 2014. All
subsidiaries have a reporting date of 31 December. All
transactions and balances between Group companies are
eliminated on consolidation, including unrealised gains and
losses between Group companies. Where unrealised losses on
intra-group asset sales are realised on consolidation, the
underlying asset is also tested for impairment from a group
perspective. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries
acquired or disposed of during the year are recognised from the
effective date of acquisition, or up to the effective date of
disposal, as applicable.

The Group attributes total comprehensive income or loss of
subsidiaries between owners of the parent and the controlling
interest based on their respective ownership interests.

3.3. Business combinations
Acquisitions of subsidiaries and businesses are accounted for
using the acquisition method. The consideration for each
acquisition is measured at the aggregate of the fair values (at the
date of exchange) of assets given, liabilities incurred or assumed
including contingent liabilities, and equity instruments issued by
the Group in exchange for control of the acquiree. Acquisition-
related costs are recognised in profit or loss as incurred.

Where applicable, the consideration for the acquisition includes

any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition-date fair value.
Subsequent changes in such fair values are adjusted against the cost
of acquisition where they qualify as measurement period
adjustments. All subsequent changes in the fair value of contingent
consideration classed as an asset or liability are accounted for in
accordance with relevant IFRSs. Changes in the fair value of
contingent consideration classified as equity are not recognised.

3.4. Foreign currencies
(a) Functional and presentational currency
Items included in the financial information of each of the
Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (“the
functional currency”). The consolidated financial information is
presented in UK sterling (£), which is the Group’s presentational
currency. The functional currency of the Company is also UK
sterling (£), which is the currency of the Company’s funding
arrangements and operating expenditure.

(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. At each reporting date, monetary assets and
liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing at that date. Foreign exchange
gains and losses resulting from such transactions are recognised
in profit or loss.

Non-monetary items carried at fair value that are

denominated in foreign currencies are translated at the rates
prevailing at the date when the fair value was determined. Non-
monetary items that are measured in terms of historical cost in a
foreign currency are not retranslated.

In the Group’s financial statements, all assets, liabilities and
transactions of Group entities with a functional currency other

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Venture Life Group plc Annual Report & Accounts 2014 35

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

3. Summary of significant accounting policies continued
than sterling are translated into sterling upon consolidation. The
functional currency of the entities in the Group has remained
unchanged during the period.

On consolidation, assets and liabilities have been translated
into sterling at the closing rate at the reporting date. Goodwill
and fair value adjustments arising on the acquisition of a foreign
entity are held at historical cost less accumulated impairment
losses. Income and expenses have been translated into sterling at
the average rate over the reporting period. Exchange differences
are charged or credited to other comprehensive income and
recognised in the currency translation reserve in equity. On
disposal of a foreign operation, the related cumulative
translation differences recognised in equity are reclassified to
profit or loss and are recognised as part of the gain or loss on
disposal.

3.5. Revenue recognition
a) Product sales
Revenue comprises the fair value of the consideration received or
receivable for the sale of goods in the ordinary course of the
Group’s activities. Revenue is shown net of value added tax,
returns, rebates and discounts and after eliminating sales within
the Group.

Revenue from the sale of goods is recognised when the Group

has transferred to the buyer or to the buyer’s agent, the
significant risks and rewards of ownership of the goods. The
transfer of risk and reward is typically at the point of customer
collection of goods or delivery of the goods by the Group to the
customer. Both the Brands segment and Manufacturing segment
currently recognise revenue from product sales.

b) Services rendered
Revenue represents the value of services provided to third-
parties. Revenue is derived from services related to the
development of new topical formulations for customers.
Services are generally provided through specific agreements, each
with a typical duration of two to four weeks. Revenue is shown
net of value added tax, rebates and discounts and after
eliminating sales within the Group.

Revenue from these services is recognised on a percentage to

completion basis. Percentage to completion is based on the
proportion of activity completed on a project as a proportion of
the entire project. Revenue is recognised so as to reflect the right
to consideration as contract activity progresses by reference to
the value of work performed. The amount by which revenue
exceeds payments on account is included in trade and other
receivables; to the extent that payments on account exceed
relevant revenue, the excess is included as deferred income.
Provisions for estimated losses, if any, on uncompleted contracts
are recognised in the period in which the likelihood of such
losses is determined.

The Manufacturing segment currently recognises revenue

from formulation and development services rendered.

c) Grant income
Grant income is recognised on a gross basis when received or
where there is reasonable assurance that the grant will be
received and all attached conditions will be complied with. A
grant relating to research and development is recognised as
income over the period necessary to match the grant on a
systematic basis to the costs that it is intended to compensate.

Grant income arising from the generation of electricity by the

Manufacturing segment through photo-voltaic panels installed
on the manufacturing facility roof is recognised as ‘Other
Income’.

The Manufacturing segment currently recognises revenue

from Grant income.

3.6. Exceptional costs
Items that are material because of their size or nature, and which
are non-recurring and whose significance is sufficient to warrant
separate disclosure and identification within the consolidated
financial statements are referred to as exceptional items. The
separate reporting of exceptional items helps to provide an
understanding of the Group’s underlying performance.

3.7. Property, plant and equipment
Equipment is stated at cost less accumulated depreciation and
any provision for impairment.

Cost includes the original purchase price of the asset and the
costs attributable to bringing the asset to its working condition
for its intended use. Depreciation is charged so as to write off
the costs of assets over their estimated useful lives, on the
following basis:

Office equipment over £500

Fixtures and fittings over £500

Manufacturing plant equipment

25%-50% per annum,
straight line

20%-50% per annum,
straight line

4%-50% per annum,
straight line

An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are expected
from its use.

The gain or loss arising on the disposal of an asset is

determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in profit or loss.

The assets’ residual values, useful lives and methods of

depreciation are all reviewed at each reporting date and adjusted
prospectively, if appropriate.

Depreciation for the year has been charged to administrative

expenses in the Statement of Comprehensive Income.

3.8. Internally-generated development intangible
assets
Expenditure on research activities is recognised as an expense in
the period in which it is incurred.

An internally-generated development intangible asset arising
from the Group’s product development is recognised if, and only
if, the Group can demonstrate all of the following:
> the technical feasibility of completing the intangible asset so

that it will be available for use or sale;

> its intention to complete the intangible asset and use or sell it;
> its ability to use or sell the intangible asset;
> how the intangible asset will generate probable future

economic benefits;

> the availability of adequate technical, financial and other

resources to complete the development and to use or sell the
intangible asset; and

> its ability to measure reliably the expenditure attributable to

the intangible asset during its development.

Where no internally-generated intangible asset can be

recognised, development expenditure is recognised as an expense
in the period in which it is incurred.

Internally-generated development intangible assets are

recognised at cost less accumulated amortisation and provisions for
impairment. Amortisation is provided on a straight-line basis over
the useful lives of the assets, commencing from the point where the
final marketable product is completed, at the following rates:

Development costs

20% per annum,
straight line

Venture Life Group plc Annual Report & Accounts 2014 36

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

3. Summary of significant accounting policies continued
3.9. Licences and trademarks intangible assets
Patents and trademarks are measured at purchase cost less
accumulated amortisation and provision for impairment.
Amortisation is provided on a straight-line basis over the
estimated useful lives of the assets ranging from 5-10 years.

Amortisation for the year has been charged to administrative

expenses in the Statement of Comprehensive Income.

3.10. Acquired intangible assets
The effective life of each new class of intangible asset acquired 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:
Product formulations:

five years
five years

3.11. Goodwill
Goodwill represents the future economic benefits arising from a
business combination that are not individually identified and
separately recognised. Goodwill is carried at cost less
accumulated impairment losses. Refer to note 3.12 for a
description of impairment testing.

3.12. Impairment of tangible and intangible assets
At each reporting date, the Group reviews the carrying amounts
of its assets, including those acquired in business combinations,
to determine whether there is any indication that those assets
have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any). Where the
asset does not generate cash flows that are independent from
other assets, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs. An intangible
asset, such as goodwill, with an indefinite useful life is tested for
impairment at least annually and whenever there is an indication
that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell

and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit)

is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an
expense immediately.

The Directors have carried out an impairment review of the
Group’s tangible and intangible assets as at the reporting date, as
is its normal practice. They have assessed the likely cash flows to
be generated by those assets and determined that they are stated
at fair value and that consequently no impairment is necessary.
See note 15 on intangible assets for further details.

3.13. Inventories
Inventories are stated at the lower of historical cost and net
realisable value. Costs comprise direct materials and, where
applicable, direct labour costs and those overheads that have
been incurred in bringing the inventories to their present
location and condition. Cost is calculated using the first in first
out method. Net realisable value represents the estimated selling
prices less all estimated costs of completion and costs to be
incurred in marketing, selling and distribution.

3.14. Financial instruments
Financial assets and financial liabilities are recognised in the
Group’s Statement of Financial Position when the Group
becomes party to the contractual provisions of the instrument.
Financial assets are de-recognised when the contracted rights to
the cash flows from the financial asset expire or when the
contracted rights to those assets are transferred. Financial
liabilities are de-recognised when the obligation specified in the
contract is discharged, cancelled or expired.

Financial assets
(a) Trade and other receivables
Trade and other receivables are recognised initially at fair value
and subsequently measured at amortised cost using the effective
interest method less provision for impairment. Appropriate
provisions for estimated irrecoverable amounts are recognised in
profit or loss when there is objective evidence that the assets are
impaired. The amount of the provision is the difference between
the carrying amount and the present value of estimated future
cash flows. Interest income is recognised by applying the
effective interest rate, except for short-term receivables when the
recognition of interest would be immaterial. Trade and other
receivables are classified in the financial instruments note 34 as
‘loans and receivables’.

(b) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand
deposits held on call with banks, and other short-term highly
liquid investments with original maturities of three months or
less that are readily convertible to a known amount of cash and
are subject to an insignificant risk of changes in value. Cash and
cash equivalents are classified in the financial instruments note
34 as ‘loans and receivables’.

(c) Equity instruments
Investments in equity instruments that are not key to achieving
the strategic objectives of the Group are recognised as Available
For Sale assets and are included at fair value less costs to sell with
any changes in fair value being recognised in equity through the
Statement of Changes in Equity.

Financial liabilities and equity
(a) Trade and other payables
Trade payables are initially measured at their fair value and are
subsequently measured at their amortised cost using the effective
interest rate method; this method allocates interest expense over
the relevant period by applying the ‘effective interest rate’ to the
carrying amount of the liability. Trade and other payables are
classified in the financial instruments note 34 as ‘other financial
liabilities’.

(b) Deferred licence provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it is
probable that the Group will be required to settle that
obligation, and a reliable estimate can be made of the amount of
the obligation.

The amount recognised as a provision is the best estimate of
the consideration required to settle the present obligation at the
reporting date, taking into account the risks and uncertainties
surrounding the obligation. Where a provision is measured using
the cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a

provision are expected to be recovered from a third party, a
receivable is recognised as an asset if it is virtually certain that
reimbursement will be received and the amount of the receivable
can be measured reliably.

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Venture Life Group plc Annual Report & Accounts 2014 37

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

3. Summary of significant accounting policies continued
(c) Convertible loan notes
The carrying value of the convertible loan notes is determined
with reference to the present value of the principal amount of
the loan note to be settled in the future, together with the
present value of the future interest payments to be made under
the terms of the loan note. The equity element of the Group’s
convertible loan notes issued in the year to 31 December 2014
was not considered material.

(d) Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are
recorded at the proceeds received, net of issue costs.

(e) Employee severance provision
Employee severance provision includes the liability for severance
indemnities related to employees of the Group’s Italian
subsidiary. The severance indemnity liability arises under Italian
law and is calculated with reference to each employee’s length of
service, employment category and remuneration. There is no
vesting period or funding requirement associated with the
liability. The liability recorded at the reporting date is based on
the aggregate amount that the employees of the Group’s Italian
subsidiary would be entitled to on termination of employment
for whatever reason.

3.15. Leases
Operating lease
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives
received from the lessor) are charged to profit or loss on a straight-
line basis over the period of the lease, except where another more
systematic basis is more representative of the time pattern in which
economic benefits from the lease asset are consumed.

3.16. Current and deferred tax
The tax expense represents the sum of the tax currently payable
and deferred tax.

(a) Current tax
The tax currently payable is based on taxable profit for the year.
Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense that
are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The Group’s liability
for current tax is calculated using tax rates that have been
enacted or substantively enacted by the reporting date.

(b) Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial information and the corresponding tax bases
used in the computation of taxable profit, and is accounted for
using the balance sheet liability method. Deferred tax liabilities
are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable
that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises from the
initial recognition of goodwill or from the initial recognition
(other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable profit
nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each

reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow

all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to

apply in the period when the liability is settled or the asset is
realised based on tax laws and rates that have been enacted or
substantively enacted at the reporting date. Deferred tax is
charged or credited in the income statement, except when it
relates to items charged or credited in other comprehensive
income, in which case the deferred tax is also dealt with in other
comprehensive income.

Deferred tax assets and liabilities are offset when there is a

legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle
its current tax assets and liabilities on a net basis.

3.17. Employee benefits
All employee benefit costs, notably holiday pay, bonuses and
contributions to personal pension plans are charged to the
Consolidated Statement of Comprehensive Income on an
accruals basis.

3.18. Pension contributions
The Group contributes to the personal pension plans of certain
employees. Contributions are charged to the Consolidated
Statement of Comprehensive Income as they become payable.

3.19. Share-based payments
The Company issues equity-settled share-based payments (share
options) to certain employees and others under which the Group
receives services as consideration for those equity instruments in
the Company. Equity-settled share-based payments are measured
at fair value at the date of grant by reference to the fair value of
the equity instruments granted. The fair value determined at the
grant date of equity-settled share-based payments is recognised
as an expense in the Group’s Statement of Comprehensive
Income over the vesting period on a straight-line basis, based on
the Group’s estimate of the number of instruments that will
eventually vest with a corresponding adjustment to equity. The
expected life used in the valuation is adjusted, based on
management’s best estimate, for the effect of non-transferability,
exercise restrictions, and behavioural considerations.

Non-vesting and market vesting conditions are taken into
account when estimating the fair value of the options at grant
date. Service and non-market vesting conditions are taken into
account by adjusting the number of options expected to vest at
each reporting date.

Options over the Company’s shares granted to employees of

subsidiaries are recognised as a capital contribution by the
Company to the subsidiaries.

When the options are exercised the Company issues new
shares. The proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value)
and share premium.

When an agreement is reached for the settlement of a fixed
liability for a fixed number of the Company’s shares (“Fixed for
Fixed”) the value of the liability is de-recognised and is
recognised in the share-based payments reserve at the date of the
agreement.

3.20. Fair value estimation of financial assets and
liabilities
The carrying value less impairment provision of trade receivables
and payables are assumed to approximate their fair values
because of the short-term nature of such assets.

Venture Life Group plc Annual Report & Accounts 2014 38

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

3. Summary of significant accounting policies continued
3.21. Equity, reserves and dividend payments
Share capital represents the nominal (par) value of shares that
have been issued.

Share premium includes any premiums received on issue of
share capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related
income tax benefits.

Other components of equity include the following reserves:
> merger reserve comprising the non-statutory premium arising

on shares issued as consideration for acquisition of
subsidiaries where merger relief under section 612 of the
Companies Act 2006 applies less subsequent realised losses
relating to those acquisitions

> convertible loan note reserve comprising the equity element

of convertible loan notes

> share-based payment reserve comprising cumulative amounts

charged in respect of employee share-based payment
arrangements which have not been settled by means of an
award of shares to the employee

> foreign currency translation reserve comprising all foreign
exchange differences arising from the translation of the
financial statements of foreign operations where their
functional currency is different to the Group’s presentation
currency
Retained earnings includes all current and prior period
retained profits. All transactions with owners of the parent are
recorded separately within equity. Dividend distributions
payable to equity shareholders are included in other liabilities
when the dividends have been approved in a general meeting
prior to the reporting date.

3.22. Critical accounting estimates and judgements
The preparation of these financial statements requires
management to make judgements and estimates that affect the
reported amounts of assets and liabilities at each reporting date
and the reported amounts of revenue during the reporting
periods. Actual results could differ from these estimates.
Information about such judgements and estimations are
contained in individual accounting policies. The key judgements
and sources of estimation uncertainty that could cause an
adjustment to be required to the carrying amount of asset or
liabilities within the next accounting period are outlined below:

a) Recoverability of internally-generated intangible assets
In each of the years represented in these financial statements,
there is a considerable balance relating to non-current assets –
patents and trademarks. The Group’s accounting policy covering
the potential impairment of intangible assets is covered in note
3.11 to these financial statements.

An impairment review of the Group’s patent and trademark
balances is undertaken at each year end. This review involves the
use of judgement to consider the future projected income
streams that will result from the ownership of the
aforementioned patents. The expected future cash flows are
modelled over the remaining useful life of the respective assets
and discounted present value in order to test for impairment. In
each of the years ended December 2013 and 2014, no
impairment charge was recognised as a result of these reviews.

b) Impairment of other non-financial assets
The Group conducts annual impairment reviews of assets, such
as goodwill, when events or changes in circumstances indicate
that their carrying amounts may not be recoverable, or in
accordance with the relevant accounting standards. An
impairment loss is recognised when the carrying amount of an
asset is higher than the greater of its net selling price or the value
in use. In determining the value in use, management assesses the
present value of the estimated future cash flows expected to arise

from the continuing use of the asset and from its disposal at the
end of its useful life. Estimates and judgments are applied in
determining these future cash flows and the discount rate. These
assumptions relate to future events and circumstances. The
actual results may vary, and may cause adjustments to the
Group’s assets in future financial years. Details of the estimates
and assumptions made in respect of the potential impairment of
goodwill are detailed in note 15 to the financial statements.

The Directors considered no impairment was necessary in
respect of goodwill recognised in the year ended 31 December
2014.

c) Share-based payment charge
During 2014, the Group issued share options to one employee.
There are certain non-market performance conditions attached
to the vesting of these options, with vesting taking place over the
three year period between 1 January 2015 and 31 December
2017. The Black-Scholes model is used to calculate the
appropriate expense.

The use of this model to calculate a charge involves using a
number of estimates and judgements to establish the appropriate
inputs to be entered into the model, covering areas such as the
use of an appropriate interest rate and dividend rate, exercise
restrictions and behavioural considerations. A significant
element of judgement is therefore involved in the calculation of
the charge.

d) Provisions
Where intangible assets are acquired on a deferred consideration
basis, the Directors analyse the terms of each agreement and
model the expected consideration payable in the future. This
involves the use of judgements by the Directors on expected
future product revenue streams and the timing of those revenue
streams, and the use of an appropriate discount rate.

Employee severance provisions are calculated with reference to

each employee’s length of service, employment category and
remuneration. The Directors have to make judgements on the
expected date of employment termination (for whatever reason)
in calculating a provision to represent the aggregate amount that
the employees of the Group’s Italian subsidiary would be entitled
to on termination of employment.

e) Fair values on acquisition
When acquiring a business, the Directors have to make
judgements and best estimates about the fair value of the assets,
liabilities and contingent liabilities acquired. These are estimated
regardless of whether or not they were recognised in the financial
statements of the subsidiary prior to acquisition. The valuation
of externally acquired assets such as products, data or
technologies requires judgements regarding the estimated future
cash outflows required to commercialise the asset(s) and the cash
inflows expected to arise from such commercialisation,
discounted at a suitable rate reflecting the time value of money
and the risks inherent in such activities.

The valuation of other acquired intangible assets such as
customer relationships and product formulations also requires
judgements regarding estimated future cash flows arising from
those established assets, discounted to reflect the time value of
money.

3.23. Segmental reporting
Operating segments are reported in a manner consistent with
the internal reporting provided to the Chief Operating Decision
Maker (“CODM”). The CODM, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Group Directors.

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Venture Life Group plc Annual Report & Accounts 2014 39

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

4. Accounting developments
a) New standards, amendments and interpretations issued and adopted
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)

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.

IAS 39, Financial Instruments:
Recognition and Measurement

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.

IAS 36, Impairment of Assets

These amendments remove the unintended 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 ended 31 December 2013.

IAS 32, Offsetting Financial Assets
and Financial Liabilities

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.
No accounting standards adopted in the year have had a significant impact upon the financial statements.

b) New standards, amendments and interpretations issued but not effective for the financial year beginning
1 January 2014 and not early adopted
The IASB and IFRIC have issued the following standards and interpretations with effective dates as noted below. The standards and
interpretations to existing standards are mandatory for the Group’s accounting periods beginning on or after 1 January 2015. The
group intends to adopt these standards when they become effective.

At the date of authorisation of these financial statements, certain new standards and amendments to existing standards have been
published by the IASB that are not yet effective, and have not been adopted early by the Group. Information on those expected to be
relevant to the Group’s financial statements is provided below.

Management anticipates that all relevant pronouncements will be adopted in the Group’s accounting policies for the first period
beginning after the effective date of the pronouncement. New standards, interpretations and amendments not either adopted or listed
below are not expected to have a material impact on the Group’s financial statements.

IFRS 9, Financial Instruments
(2014)

IFRS 15, Revenue from Contracts
with Customers

Amendments to IFRS 11, Joint
Arrangements

The IASB recently released IFRS 9 ‘Financial Instruments’ (2014), representing the
completion of its project to replace IAS 39 ‘Financial Instruments: Recognition and
Measurement’. The new standard introduces extensive changes to IAS 39’s guidance on the
classification and measurement of financial assets and introduces a new ‘expected credit loss’
model for the impairment of financial assets. IFRS 9 also provides new guidance on the
application of hedge accounting.

The Group’s management have yet to assess the impact of IFRS 9 on these consolidated
financial statements. The new standard is required to be applied for annual reporting periods
beginning on or after 1 January 2018.

IFRS 15 presents new requirements for the recognition of revenue, replacing IAS 18
‘Revenue’, IAS 11 ‘Construction Contracts’, and several revenue-related Interpretations.
The new standard establishes a control-based revenue recognition model and provides
additional guidance in many areas not covered in detail under existing IFRSs, including how
to account for arrangements with multiple performance obligations, variable pricing,
customer refund rights, supplier repurchase options, and other common complexities.
IFRS 15 is effective for reporting periods beginning on or after 1 January 2017. The
Group’s management have not yet assessed the impact of IFRS 15 on these consolidated
financial statements.

These amendments provide guidance on the accounting for acquisitions of interests in joint
operations constituting a business. The amendments require all such transactions to be
accounted for using the principles on business combinations accounting in IFRS 3 ‘Business
Combinations’ and other IFRSs except where those principles conflict with IFRS 11.
Acquisitions of interests in joint ventures are not impacted by this new guidance. The
amendments are effective for reporting periods beginning on or after 1 January 2016.

Venture Life Group plc Annual Report & Accounts 2014 40

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

4. Accounting developments continued
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the
Group.

It is expected that none of the above interpretations would have a material impact on these financial statements if applied.

5. Segmental information
IFRS 8, Operating Segments requires operating segments to be identified on the basis of internal reports about components of the
Group that are regularly reviewed by the Chief Operating Decision Maker (“CODM”) to allocate resources to the segments and to
assess their performance.

Management has determined the operating segments based on the reports reviewed by the Group Board of Directors (CODM)

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 ended 31 December 2013 the operations of the Group were segmented as Sales of
cosmetics and Sales of healthcare products. Following the acquisition of Biokosmes in March 2014 the operations of the Group are
now segmented as:
– Brands, which includes sales of branded healthcare and cosmetics products under distribution agreements, and
– Manufacturing, which includes sales of products and services under contract, development and manufacturing agreements.
Where appropriate, the comparative numbers for the year to 31 December 2013 have been reclassified to reflect this change.

5.1 Segment revenue and results
The following is an analysis of the Group’s revenue and results by reportable segment.

Year ended 31 December 2014
Revenue
Total revenue
Intercompany sales elimination

Total external revenue

Results
Operating (loss)/profit before exceptional items and excluding central
administrative costs

Year ended 31 December 2013
Revenue
External sales

Total revenue

Results
Operating loss before exceptional items and excluding central
administrative costs

Brands
£’000

Manufacturing
£’000

Consolidated
Group
£’000

675
–

675

6,738
(224)

6,514

7,413
(224)

7,189

(544)

999

455

486

(601)

–

486

(601)

The reconciliation of segmental operating loss to the Group’s loss before tax is as follows:

Operating profit/(loss) profit before exceptional items and excluding central administrative costs
Exceptional items
Central administrative costs
Finance income
Finance costs

Loss before tax

Year ended
31 December
2014
£’000

Year ended
31 December
2013
£’000

455
(449)
(1,624)
156
(81)

(1,543)

(601)
(105)
(392)
1
(25)

(1,122)

One customer generated revenue of £2,089,000 which accounted for 10% or more of total revenue (2013: four customers totalling
£354,000).

Venture Life Group plc Annual Report & Accounts 2014 41

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

5. Segmental information continued
5.2 Segmental assets and liabilities

Assets
Brands
Manufacturing
Unallocated assets

Consolidated total assets

Liabilities
Brands
Manufacturing
Unallocated assets

Consolidated total liabilities

5.3 Other segmental information

Year ended 31 December 2014
Brands
Manufacturing
Unallocated

Year ended 31 December 2013
Brands

5.4 Geographical information
The Group’s revenue from external customers by geographical location of customer is detailed below:

Revenue
UK
Europe (EEA)
Rest of the World

Total revenue

At
31 December
2014
£’000

At
31 December
2013
£’000

4,400
6,805
12,850

24,055

425
5,342
2,641

8,408

1,202
–
797

1,999

381
–
1,061

1,442

Depreciation
and amortisation
£’000

Additions to
non-current
assets
£’000

70
151
426

647

163
446
13,577

14,186

147

Year ended
31 December
2014
£’000

Year ended
31 December
2013
£’000

1,479
5,344
366

7,189

31
306
149

486

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Venture Life Group plc Annual Report & Accounts 2014 42

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

6. Exceptional items

Expense relating to admission to AIM (a)
Expense incurred in acquisition of Biokosmes (b)
Impairment of available for sale investments (c)
Gains on sales of trademarks (d)
Gain on purchase of PermaPharm AG

Year ended
31 December
2014
£’000

Year ended
31 December
2013
£’000

(404)
(57)
(36)
9
39

(449)

–
(105)
–
–
–

(105)

(a) On 28 March 2014 the shares in Venture Life Group plc were admitted to trading on AIM. The IPO raised gross proceeds of
£5.4 million through the issue of 4,954,585 new ordinary shares. However, significant non-recurring costs were incurred in
relation to the IPO and in a change to the treatment adopted in the Group’s Interim Results for the six months to 30 June 2014
announced on 29 September 2014, £404,000 of costs relating to the IPO and fund-raising have been expensed using the
allocations method (previously reported as a deduction to share premium). Total IPO costs amounted to £1,383,000. Of this,
£404,000 has been treated as exceptional IPO costs and charged to income during the period, with the balance of £979,000
being offset against the share premium account.

(b) The Company incurred professional services costs totalling £57,000 (2013: £105,000) during the year in respect of the

acquisition of Biokosmes. The share purchase agreement was finalised and signed in November 2013 with completion and
control obtained immediately prior to admission to AIM of Venture Life Group plc’s shares on 28 March 2014.

(c) In July 2014 the Directors had been advised by the management of G2S Cosmetics SAS that G2S Cosmetics SAS was likely to be
declared insolvent, although efforts would be made to sell the company as a going concern. In January 2015, the Group sold its
shareholding in G2S for €1 having determined that this represented the fair value of the shares. As a result of this the investment
has been impaired in full at the reporting date (£31,000).

Also in available for sale investments was an investment in Novo Galeno Srl. Whilst shares in the company are still held, the

Directors consider the company to have minimal current value and have impaired the investment fully (£5,000).

(d) During the period the Group entered into a sale agreement to dispose of the Bioscal trademark for the USA and Canadian

territories. These trademarks had been 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.

7. Operating loss
Operating loss for the year has been arrived at after charging/(crediting):

Depreciation of property, plant and equipment included in operating expenses
Amortisation of intangible assets included in administrative expenses
Research and development costs included in operating expenses
Operating lease rentals
Staff costs (note 8)
Former auditor’s remuneration
Current auditor’s remuneration
– Fees for the audit of the Company and Consolidated Financial Statements
– Fees for the audit of the Company’s subsidiaries
Net (credit)/charge from foreign currency transactions

Year ended
31 December
2014
£’000

Year ended
31 December
2013
£’000

139
508
352
319
3,405
5

24
18
(145)

4
56
48
33
738
–

27
10
20

Venture Life Group plc Annual Report & Accounts 2014 43

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

8. Employee information
The average numbers of staff including Executive Directors employed by the Group during the year are as shown below.

Year ended
31 December
2014
Number

Year ended
31 December
2013
Number

48
8
7
12

–
3
5
1

Year ended
31 December
2014
£’000

Year ended
31 December
2013
£’000

2,628
547
80
20
130

3,405

531
47
37
12
111

738

Total
£

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Product development and manufacturing
Sales and marketing
Directors
Administration

Their aggregate remuneration comprises:

Wages and salaries
Social security costs
Other pension costs
Other
Equity settled share-based payments

Directors’ remuneration 2014

Salary/fees
£

Bonus
£

Benefits
£

Total
£

Pension
contributions
£

Social
security
contributions
£

Executive Directors
Jerry Randall
Sharon Collins
James Hunter
John Lucas1
Gianluca Braguti2

Non-Executive Directors
Lynn Drummond
John Sylvester
Ian Mackinnon3

150,000
140,000
120,250
118,645
145,332

55,000
28,500
14,679

150,0004
50,0004
15,000
–
–

–
–
–

18,608
1,123
1,779
–
2,029

–
–
–

318,608
191,123
137,029
118,645
147,361

55,000
28,500
14,679

45,000
13,250
20,846
–
–

–
–
–

39,474
25,159
17,576
15,636
13,826

6,501
3,041
1,477

403,082
229,532
175,451
134,281
161,187

61,501
31,541
16,156

Total

772,406

215,000

23,539

1,010,945

79,096

122,690

1,212,731

1 Resigned as a director on 5 August 2014. The amount shown includes compensation for loss of office.
2 Appointed as a director on 24 March 2014. The amount shown covers the nine months to 31 December 2014.
3 Appointed as a director on 16 June 2014.
4 Mr Randall’s and Ms Collins’s bonuses were success-based bonuses, related entirely to the admission of the Group’s shares to

trading on the Alternative Investment Market and the fund-raising in March 2014.

The Executive Directors listed above and in office at the reporting date are considered to be key management of Group.

Venture Life Group plc Annual Report & Accounts 2014 44

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

8. Employee information continued
Directors’ remuneration 2013

Salary/fees
£

Bonus
£

Benefits
£

Total
£

Pension
contributions
£

Social security
contributions
£

Executive Directors
Jerry Randall
Sharon Collins
James Hunter1
John Lucas2

Non-Executive Directors
Lynn Drummond3
John Sylvester4
Michael Flynn5
Anthony Ahearne5
Andrew Sinclair5

135,000
102,500
33,666
29,167

6,276
3,423
41,000
2,750
–

15,000
15,000
9,231
6,666

10,126
1,313
–
–

–
–
–
–
–

160,126
118,813
42,897
35,833

6,276
3,423
41,000
2,750
–

24,000
10,250
–
1,458

–
–
–
–
–

11,291
15,554
5,654
4,589

772
430
–
–
–

Total
£

195,417
144,617
48,551
41,880

7,048
3,853
41,000
2,750
–

Total

353,782

45,897

11,439

411,118

35,708

38,290

485,116

Joined the Group on 9 September 2013.
Joined the Group on 2 September 2013.

2
3 Appointed as a director on 20 November 2013.
4 Appointed as a director on 5 November 2013.
5 Resigned as a director on 29 November 2013.

9. Pension costs and other post-retirement benefits
The Group does not operates its own pension scheme but makes contributions into the personal pension schemes of certain
employees. The pension charge represents contributions payable by the Group and amounted to £80,221 (2013: £37,104). At year
end an amount of £2,316 (2013: £435) was payable in respect of pension contributions charged during the year.

10. Income tax expense

Current tax:
Current tax on profits for the year
Adjustments in respect of earlier years

Total current tax expense

Deferred tax:
Origination and reversal of temporary differences

Total deferred tax expense

Total income tax charge/(credit)

Year ended
31 December
2014
£’000

Year ended
31 December
2013
£’000

216
(37)

179

(152)

–
(41)

(41)

–

(41)

Tax on the Group’s loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable
to profits and losses of the consolidated entities as follows:

Year ended
31 December
2014
£’000

Year ended
31 December
2013
£’000

Loss before tax
Loss before taxation multiplied by the local tax rate on a weighted basis
Expenses not deductible for tax purposes
Research and development tax credit from earlier years
Research and development tax credit for current year
Change in recognised deferred tax liability
Change in unrecognised deferred tax asset

Income tax charge/(credit)

(1,543)
(265)
237
(37)
(51)
(152)
295

(1,122)
(224)
–
(41)
–
–
224

(41)

There are no enacted or substantively enacted changes to the small profits tax rate.

As at the reporting date, the Group has unused tax losses of £3,429,000 (2013: £2,051,000) available for offset against future profits

generated in the UK. No deferred tax asset has been recognised in respect of these losses due to the uncertainty of its recoverability.

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Venture Life Group plc Annual Report & Accounts 2014 45

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

11. Deferred tax
Deferred taxes arising from temporary differences are summarised as follows:

Deferred tax (liabilities)/assets

Purchased goodwill
Other intangibles
Inventories
Trade and other receivables

At
1 January 2014
£’000

Recognised in
business
combination
£’000

Recognised in
profit and loss
£’000

At
31 December
2014
£’000

–
–
–
–

–

114
(892)
(77)
15

(840)

(7)
134
29
(4)

152

107
(758)
(48)
11

(688)

12. Earnings per share
A reconciliation of the weighted average number of ordinary shares used in the measures is given below:

For basic and diluted EPS calculation

A reconciliation of the earnings used in the different measures is given below:

For basic and diluted EPS calculation

The resulting EPS measures are:

Basic and diluted EPS calculation

Year ended
31 December
2014
Number

Year ended
31 December
2013
Number

26,130,167

16,118,556

£’000

(1,570)

(1,081)

Pence

(6.01)

Pence

(6.71)

The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the
diluted loss per ordinary share are identical to those used for basic loss per share. This is because the exercise of share options and
conversion of the convertible loan notes would have the effect of reducing the loss per ordinary share and is therefore not dilutive
under the terms of IAS 33.

13. Dividends
Amounts recognised as distributions to equity holders in the period:

Final dividend

Year ended
31 December
2014
£’000

Year ended
31 December
2013
£’000

–

The Directors recommend the payment of a dividend of 0.04p per share (2014: 0.04p per share) in 2015 and a resolution will be put
to shareholders at the 2015 Annual General Meeting.

14. Business combinations
Acquisition of Biokosmes Srl
On 27 March 2014, the Company completed the acquisition of 100% of the share capital of Biokosmes, a private company based in
Italy that specialises in the development and manufacture of topical medical device and cosmetic products, gaining control at that
date. The initial consideration paid to the vendors of Biokosmes at the time of the acquisition amounted to £3.5 million in cash
(£3.3 million after broker’s commission), £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
ended 31 December 2013 amounted to £1.62 million.

The Group acquired Biokosmes for a number of reasons. The product formulations acquired enabled Venture Life to expand its

existing product portfolio with healthcare products that were ready to be commercially exploited through the Group’s Brands
division. Biokosmes is also an established manufacturer of high-quality topical products and has built up strong customer
relationships over a period of time that the Group believes can be built upon to materially grow the Biokosmes business. With its own
manufacturing facility in house, the Group is now able to offer integrated product development and manufacturing solutions to
customers and offer high levels of customer service. Finally, the Group expects to generate enhanced margins through its Brands
business from selling products to customers that have been manufactured within the Group.

The acquisition has been accounted for using the acquisition method. The Group Consolidated Financial Statements include the

results of Biokosmes for the period 28 March 2014 to 31 December 2014.

Venture Life Group plc Annual Report & Accounts 2014 46

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

14. Business combinations continued
The fair values of the identifiable assets and liabilities of Biokosmes as at the date of acquisition were:

Assets
Non-current assets:
Product formulations
Customer relationships
Property, plant and equipment

Current assets:
Inventories
Trade and other receivables
Cash and cash equivalents

Total assets

Liabilities
Current liabilities:
Trade and other payables
Current portion of borrowings

Non-current liabilities:
Borrowings
Employee liability provisions
Deferred tax liabilities

Total liabilities

Net assets acquired

Goodwill

Total consideration

Satisfied by:
Cash
Convertible loan note issued
Initial shares issued to vendors
Further shares issued to vendors

Total consideration

Cash flows from business combination
Cash and cash equivalents included in undertaking acquired
Cash consideration paid

Net cash inflow arising on acquisition and in Consolidated Statement of Cash Flows

Fair value
£m

0.8
2.0
0.9

2.0
2.8
0.7

9.2

(3.1)
(1.0)

(0.8)
(0.5)
(0.8)

(6.2)

3.0

9.8

12.8

3.5
1.7
1.5
6.1

12.8

0.8
–

0.8

Fair value of consideration
Under IFRS 3, the fair value of the consideration paid is determined with reference to the fair value of the underlying instruments
used to settle the consideration. The consideration for the purchase of Biokosmes was settled through the issue of 10,218,866
ordinary 0.3p shares. Of these, 3,221,288 shares were redeemed for cash at the time of admission to produce £3.5 million of cash of
which £0.16 million was paid out in broker’s commission. A convertible loan note with a nominal value of €2.0 million and a
coupon rate of 3% per annum was also issued.

The shares of Venture Life Group plc were admitted to AIM at the time of the acquisition of Biokosmes and the fair value of the
new shares issued was deemed to be the issue price of all the new shares issued at the time of admission to AIM, being 109p per share.
Accordingly the fair value of the 10,218,866 0.3p shares was £11,138,564.

The value of the convertible loan was determined at the present value of future loan payments discounted at the yield from a

similar high yield bond such as the Bloomberg EUR High Yield Corporate bond with an effective yield of 3.99%.

The value of the convertible loan notes was determined with reference to the present value of the principal amount of the loan
note (€2.0 million) to be settled in the future, together with the present value of the future interest payments to be made under the
terms of the loan note. Accordingly, the convertible loan note is valued at £1.64 million.

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Venture Life Group plc Annual Report & Accounts 2014 47

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

14. Business combinations continued
The total fair value of the consideration is calculated as follows:

Fair value of new shares issued
Fair value of loan note issued

Total fair value

£m

11.14
1.64

12.78

Biokosmes contributed £1.0 million to the consolidated profit before tax for the nine months from 28 March 2014 to 31 December
2014.

If Biokosmes had been acquired on 1 January 2014, revenue of the Group for 2014 would have been £8.9 million. However, due
to lack of IFRS-specific data prior to the acquisition of Biokosmes, pro-forma profit or loss of the combined entity for the complete
2014 reporting period cannot be reliably determined.

Acquisition of PermaPharm AG
On 30 November 2014, the Company completed the acquisition of 100% of the share capital of PermaPharm AG, a private
company based in Switzerland. The Group and PermaPharm had previously entered a trademark licensing agreement in 2010 under
which the Group acquired from PermaPharm the rights to the Bioscalin trademark in certain countries. The Group acquired
PermaPharm in order to own outright the trademarks.

The consideration payable for the share capital of PermaPharm amounts to CHF109,515, representing the cash held by
PermaPharm at the date of acquisition (CHF116,015), less its liabilities (CHF6,500). As at 31 December 2014, consideration
payable to the vendors was due but still outstanding.

The acquisition has been accounted for using the acquisition method. The Group Consolidated Financial Statements include the

results of PermaPharm for the period 30 November 2014 to 31 December 2014.

The fair values of the identifiable assets and liabilities of PermaPharm as at the date of acquisition were:

Assets
Current assets:
Cash and cash equivalents

Total assets

Liabilities
Current liabilities:
Trade and other payables

Total liabilities

Net assets acquired

Satisfied by:
Cash payable to the vendors

Total consideration

Cash flows from business combination
Cash and cash equivalents included in undertaking acquired
Cash consideration paid at 31 December 2014

Net cash inflow arising on acquisition and in cash flow statement

Fair value
£’000

(4)

72
–

Fair value of consideration
Under IFRS 3, the fair value of the consideration paid is determined with reference to the fair value of the underlying instruments
used to settle the consideration. The consideration for the purchase of PermaPharm is due to be settled through the payment of
£72,000 in cash and the fair value of the consideration was therefore deemed to be £72,000.

PermaPharm recognised no revenue and incurred no material expense in the one month from 30 November 2014 to

31 December 2014 and therefore the Group’s revenue and profits were not affected by the acquisition.

If PermaPharm had been acquired on 1 January 2014, the Group would have incurred additional losses in the year to

31 December 2014 of £4,000. However, due to lack of IFRS-specific data prior to the acquisition of PermaPharm, pro-forma profit
or loss of the combined entity for the complete 2014 reporting period cannot be reliably determined.

Venture Life Group plc Annual Report & Accounts 2014 48

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

15. Intangible assets

Cost or valuation:
At 1 January 2013
Additions
Disposals

At 1 January 2014
Additions
Disposals
Foreign exchange

At 31 December 2014

Amortisation:
At 1 January 2013
Charge for the year

At 1 January 2014
Charge for the year

At 31 December 2014

Carrying amount:
At 31 December 2013

At 31 December 2014

Development
costs
£’000

Patents and
trademarks
£’000

Goodwill
£’000

Other intangible
assets
£’000

–
120
–

120
1,192
–
10

1,322

–
–

–
141

141

120

1,181

484
20
–

504
40
–
–

544

111
56

167
68

235

337

309

–
–
–

–
9,796
–
–

9,796

–
–

–

–
–
–

–
1,995
–
–

1,995

–
–

–
299

299

–

Total
£’000

484
140
–

624
13,023
–
10

13,657

111
56

167
508

675

457

9,796

1,696

12,982

Included within patents and trademarks is an amount for £207,221 (2013: £243,195) relating to a licence agreement between the
Group and PermaPharm entered into on 30 September 2010. As at 31 December 2014, this licence had a remaining amortisation
period of five years.

All other trademarks, licences and patents are amortised over their estimated useful lives, which is on average five years.
All amortisation has been charged to administrative expenses in the Statement of Comprehensive Income.
Other intangible assets currently comprise customer relationships and product formulations acquired through the acquisition of

Biokosmes. These assets were recognised at their fair value at the date of acquisition and are being amortised over a period of five
years.

Goodwill represents the future economic benefits arising from the acquisition of Biokosmes that are not individually identified and

separately recognised. To determine the value in use of the goodwill, the Directors have produced detailed monthly profit and loss
and cash flow forecasts for the three years ended December 2017 and produced annual estimates of profit after tax for the six year
period from 2018 to 2023 given the long-term and stable nature of the expected cash flows.

The key judgements used in relation to the impairment review are as follows:

– The estimates of profit after tax for Biokosmes for the three year period from 2015 to 2017 are based on the expectation that
Biokosmes will grow its revenues and profitability more quickly than in previous years. This is expected to be achieved in part
through increasing volumes and value of manufacturing orders being fulfilled for other Group companies, in part through excess
manufacturing capacity being utilised to generate improved gross margins, and in part through investment in new business
development resource and manufacturing capacity enabled through funding made available by the Group to Biokosmes.
– The estimates of profit after tax from 2018 onwards assume that Biokosmes is capable of achieving 5% per annum growth in
profit after tax, which the Directors estimate to be a conservative growth rate but appropriate given the nature of the contract
manufacturing industry of which Biokosmes is a part.

– The Group has applied a discount rate to the future cash flows of Biokosmes using a pre-tax weighted average cost of capital of

21%.
These estimates and judgments are subjective and relate to future events and circumstances. The actual results may vary, and

accordingly may cause adjustments to the Group’s valuation in future financial years.

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Venture Life Group plc Annual Report & Accounts 2014 49

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

16. Property, plant and equipment

Plant and
equipment
£’000

Other
equipment
£’000

Cost or valuation:
At 1 January 2013
Additions

At 1 January 2014
Additions
Disposals
Foreign exchange movements

At 31 December 2014

Depreciation:
At 1 January 2013
Charge for the year

At 1 January 2014
Charge for the year
Additions
Disposals
Foreign exchange movements

At 31 December 2014

Carrying amount:
At 31 December 2013

At 31 December 2014

–
–

–
1,102
(7)
(57)

1,038

–
–

–
121
–
(4)
(4)

113

–

925

14
7

21
61
–
(3)

7
4

11
18
–
–
–

All depreciation has been charged to administrative expenses in the Statement of Comprehensive Income.

17. Available for sale financial assets

Cost or valuation:
At 1 January 2014
Additions

At 31 December 2014

Accumulated impairment:
At 1 January 2014
Charge for the year

At 31 December 2014

Carrying amount:
At 31 December 2013

At 31 December 2014

Total
£’000

14
7

21
1,163
(7)
(60)

1,117

7
4

11
139
–
(4)
(4)

142

975

Unlisted
investments
£’000

31
5

–
(36)

(36)

–

The available for sale investments were acquired on 23 December 2013 for a consideration of €37,500 (£31,224). The Directors
became aware in July 2014 that G2S Cosmetics SAS, the subject of the investment, was likely to be declared insolvent, although
efforts would be made to sell the company as a going concern. In January 2015, the Group sold its shareholding in G2S for €1. As a
result of this the investment has been impaired in full at 31 December 2014.

Venture Life Group plc Annual Report & Accounts 2014 50

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

18. Inventories

Raw materials
Finished goods

Year ended
31 December
2014
£’000

Year ended
31 December
2013
£’000

1,130
726

1,856

86
88

174

An amount of £2,938,055 (2013: £44,408) was recognised in respect of expenditure on inventory in the Statement of
Comprehensive Income.

19. Trade and other receivables

Trade receivables
Prepayments and accrued income
Other tax recoverable
Other receivables

Contractual payment terms with the Group’s customers are typically 60-90 days.

At
31 December
2014
£’000

At
31 December
2013
£’000

2,807
72
65
313

3,257

82
674
41
77

874

The following is an analysis of trade receivables that are past due. These relate to a number of customers for whom there is no recent
history of defaults. The ageing analysis of these trade receivables is as follows:

At
31 December
2014
£’000

At
31 December
2013
£’000

31 to 60 days
60 to 90 days
90 to 120 days
> 120 days

Overdue trade receivables – gross
Provision for overdue receivables

Overdue trade receivables – net

108
43
67
142

360
(35)

325

–
8
–
1

9
–

The Directors consider that the carrying value of trade and other receivables represents their fair value. As at the reporting date, a
provision of £35,000 for overdue receivables has been made and is included in the carrying value of trade and other receivables (2013:
nil). In determining the recoverability of trade receivables the Group considers any change in the credit quality of the receivable from
the date credit was granted up to the reporting date. For details of the Group’s credit risk management policies, refer to note 34(d).
No allowance has been made against the overdue receivables based on historic default experience. The Group does not hold any
collateral as security for its trade and other receivables. The amounts of trade and other receivables denominated in currencies other
than pounds sterling are shown in note 34(c).

20. Cash and cash equivalents

Cash and cash equivalents

At
31 December
2014
£’000

At
31 December
2013
£’000

4,933

453

The Group holds sterling and euro denominated balances in the UK. The Group’s subsidiaries hold US dollar and euro accounts in
Italy and a Swiss franc account in Switzerland.

The Directors consider that the carrying value of cash and cash equivalents approximates their fair value. For details on the Group’s

credit risk management policies, refer to note 34(d).

The amounts of cash and cash equivalents denominated in currencies other than pounds sterling are shown in note 34(c).

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Venture Life Group plc Annual Report & Accounts 2014 51

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

21. Share capital and share premium
Share capital
All shares are authorised, issued and fully paid. The Group has one class of ordinary shares which carry no fixed income.

At 1 January 2013
Share issue
Bonus issue

At 1 January 2014
New shares issued for cash
New shares issued for acquisition

At 31 December 2014

Ordinary shares of
0.3p each

Number

Share
premium
£’000

14,494,000
2,467,424
–

16,961,424
10,444,532
6,997,578

1,450
807
48,627

50,884
31,333
20,993

1,507
1,210
(49)

2,668
9,158
–

34,403,534

103,210

11,826

Merger
reserve
£’000

50
–
–

50
–
7,606

7,656

The Company undertook a number of share issues during 2014:

New shares issued for cash
1. On 27 March 2014 the Company issued 821,421 ordinary 0.3p shares following the conversion of previously issued convertible

loan notes into equity. Details of the loan notes, which had a nominal value of £375,000, can be found in note 23.

2. 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.

3. On 28 March 2014 the Company issued six shares to The Orr Mackintosh Foundation Limited, a charitable organisation, following
the rounding down of individual shareholdings pursuant to the share capital reorganisation and of the Company’s share capital.
4. On 28 March 2014 the Company issued 4,954,579 ordinary 0.3p shares pursuant to a share placing at the time of the Company’s
admission of its shares to trading on AIM. Costs relating directly to the new issue of shares have been deducted from the share
premium account. Attributable IPO costs are allocated between share premium account and the statement of comprehensive
income in proportion to the number of shares created on admission.

5. On 3 December 2014 the Company issued 4,500,000 ordinary 0.3p shares pursuant to a share placing with two of the Company’s

existing shareholders.

New shares issued in business combination
6. On 28 March 2014 the Company issued 1,358,185 ordinary 0.3p shares pursuant to the acquisition of Biokosmes.
7. On 6 June 2014 the Company issued a further 5,639,393 ordinary 0.3p shares in the form of Additional Consideration Shares

pursuant to the acquisition of Biokosmes.
In a change to the treatment adopted in the Group’s Interim Results for the six months to 30 June 2014 announced on

29 September 2014, the excess over nominal value of shares issued to acquire Biokosmes of £7.6 million is reported in the merger
reserve (previously share premium).

22. Merger reserve
The merger reserve is also used where more than 90% of the shares in a subsidiary are acquired and the consideration includes the
issue of new shares by the Company, thereby attracting merger relief under the Companies Act 2006. The balance on the reserve of
£7,656,000 (2013: £50,000) has arisen through the acquisition of Venture Life Limited in 2010 (£50,000) and Biokosmes in March
2014 (£7,606,000).

23. Convertible loan notes and loan notes reserve
During the year to 31 December 2014 there were two transactions involving convertible loan notes:

Redemption of convertible loan notes
Loan notes previously issued in 2013 were convertible into ordinary shares of the Company at any time between 31 December 2013
and the notes settlement date, and automatically on the occurrence of certain events including the admission of the Company’s shares
to trading on a recognised stock exchange.

Therefore, shortly before admission of the Company’s shares to trading on AIM on 28 March 2014, the loan notes (with a

nominal value of £375,000) were converted into 821,421 ordinary 0.3p shares.

Issue of new convertible loan notes
Pursuant to the acquisition of Biokosmes in March 2014, the Company issued to the vendors of Biokosmes convertible loan notes
with a face value of €2.0 million and which paid an annual coupon of 3%. Under the terms of the loan notes, the loan notes are due
to be repaid in full in July 2016. If the Company defaults on repayment then the loan note holders may elect to defer repayment of
the loan notes or to receive a pre-determined number of new 0.3p shares in the Company.

Interest amounting to £12,000 has accrued on the loan notes during the period and is still payable at the period end. Interest is

payable on these loan notes in October and April each year.

Venture Life Group plc Annual Report & Accounts 2014 52

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

24. Foreign currency translation reserve
The Foreign currency reserve represents unrealised cumulative net gains and losses arising on the translation and consolidation of the
financial statements of the Group’s Italian subsidiary.

25. Share-based payments and share-based payments reserve
Share options are held by option holders in either the Venture Life Group plc Enterprise Management Incentive Share Option Plan
(“EMI Plan”) or under the Venture Life Group plc Unapproved Share Option Plan (“Unapproved Plan”). All options in both plans
are settled in equity when the options are exercised.

Options under both Plans vest according to time employed at Venture Life. Additionally some options granted under the EMI Plan

vest according to achievement of certain non-market performance targets.
The maximum term of options granted under both Plans is ten years.
The IFRS 2 share option charge for the year was £130,000 (2013: £111,000) and is included in administrative expenditure in the

Statement of Comprehensive Income.

The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and movements in, share options
during the year:

2014
Number

2014
WAEP (p)

2013
Number

2013
WAEP (p)

Total outstanding at beginning of the year
Granted during the year
Exercised
Forfeited

Total outstanding at 31 December

Exercisable at 31 December

3,842,440
116,972
–
(330,000)

3,629,412

2,073,417

56
109
–
73

1,566,400
2,276,040
–
–

3,842,440

1,000,935

45
60
–
–

The following table summarises information about the range of exercise prices for share options outstanding at 31 December:

Range of exercise prices
0p-49p
50p-99p
100p-149p

Total

2014
Number

2013
Number

2,852,440
660,000
116,972

3,629,412

2,932,440
910,000
–

3,842,440

At 31 December 2014, the weighted average remaining contractual life of options exercisable is 8.00 years (2013: 9.67 years).

The weighted average fair value of options granted in the year is 109p (2013: 56p).
The non-market performance conditions for all share options outstanding at 31 December 2014 and with a vesting date of

31 December 2014 or before have been achieved.

The share-based payment charge has been calculated using the Black-Scholes model to calculate the fair value of the share options
that vest according to non-market performance conditions. An appropriate valuation model has been used to calculate the fair value
of share options with market performance-related vesting. Disclosure of those valuation assumptions is not made on the basis that the
related charge is immaterial.

The inputs into the Black-Scholes model are as follows:

Weighted average share price (p)
Weighted average exercise price (p)
Weighted average expected volatility (%)
Weighted average expected life (years)
Weighted average risk free rate (%)
Expected dividends

2014

2013

96.5
109
22.4
4 years
1.50
0.004%

41
60
37.6
5-6 years
1.47
0.1%

a. The risk-free rate is based on the UK Gilt rate as at the grant date with a period to maturity commensurate with the expected term

of the relevant option tranche.

b. The fair value charge is spread evenly over the period between the grant of the option and the earliest exercise date.
c. The expected volatility is based on the historical volatility of similar companies share prices over the previous three years. The
expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations. The range of comparable companies has been reviewed for grants in the
current year resulting in the decrease in expected volatility.
The share-based payment reserve represents charges made to the Income Statement in respect of share-based payments under the

Group’s share-option schemes.

Venture Life Group plc Annual Report & Accounts 2014 53

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

26. Retained earnings
Retained earnings represents all other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.

27. Trade and other payables

Trade payables
Accruals and deferred income
Social security and other taxes
Loans from Directors
Other payables

At
31 December
2014
£’000

At
31 December
2013
£’000

1,659
1,196
83
–
397

3,335

421
569
24
4
33

1,051

Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs. They are non-interest bearing and
are normally settled on 60-day terms.

The Directors consider that the carrying value of trade and other payables approximates their fair value.
The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe and no

interest has been charged by any suppliers as a result of late payment of invoices during the year.

The amounts of trade and other payables denominated in currencies other than pounds sterling are shown in note 34(c).

28. Interest bearing borrowings

Current
RiBa financing
Finance lease
Unsecured bank loans due within one year

Non-current
Finance lease
Unsecured bank loans due after one year

At
31 December
2014
£’000

At
31 December
2013
£’000

208
4
368

580

1
1,722

1,723

–
–
–

–

–
–

–

All bank loans are held by the Group’s Italian wholly-owned subsidiary, Biokosmes. RiBa (or ‘Ricevuta Bancaria’) is a means of
payment settlement used on occasions by Biokosmes by which it entrusts one of its banks with responsibility for sending an instruction
to a participating Italian customer authorising the customer’s bank to settle an invoiced debt by an agreed due date. The balance shown
above of £208,000 reflects the amount that had been settled in Biokosmes’s account under RiBa as at the reporting date.

The bank debt repayable within one year is due to Banca Nazionale del Lavolo and is due to be repaid in April 2015. It is

unsecured and there are no covenants attaching to this loan.

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The finance lease was acquired with the Biokosmes acquisition during the year and is repayable by April 2016. A summary showing
the contractual repayment of interest bearing borrowings is shown below:

At
31 December
2014
£’000

At
31 December
2013
£’000

Amounts and timing of non-current debt repayable
Between 1 January 2016 and 31 December 2016
Between 1 January 2017 and 31 December 2017
Between 1 January 2018 and 31 December 2018
Between 1 January 2019 and 31 December 2019
Between 1 January 2020 and 31 December 2020

1
156
940
313
313

1,723

–
–
–
–
–

–

The long-term bank debt is held by Biokosmes and provided by Banca Intesa and UniCredit Bank, both in Italy. Repayment of this
debt is due to commence in 2017. These loans are unsecured. There are two covenants relating to these bank facilities, one of which
relates to a minimum level of net assets to be maintained by Biokosmes and the other which limits the level of dividend that may be
distributed by Biokosmes.

Venture Life Group plc Annual Report & Accounts 2014 54

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

28. Interest bearing borrowings continued

Analysis of net cash
Cash at bank and in hand
Balance on RiBa (invoice discounting with recourse)
Finance lease
Unsecured bank loans due within one year
Unsecured bank loans due after one year
Convertible loan notes (see note 23)

Net Cash

29. Deferred licence provision
Provisions relating to deferred consideration on the purchase of intangibles are due as follows:

Current
Non-current

Movements in the deferred licence provisions balance have occurred as follows:

At 1 January
Payments
Settled through share issue
Release of royalty obligation
Foreign exchange movements

At 31 December

At
31 December
2014
£’000

At
31 December
2013
£’000

4,933
(208)
(5)
(368)
(1,722)
(1,554)

1,076

453
–
–
–
–
(348)

105

At
31 December
2014
£’000

At
31 December
2013
£’000

–
–

–

2014
£’000

43
(2)
–
(39)
(2)

–

8
35

2013
£’000

195
(5)
(150)
–
3

The deferred licence provision related to a licence agreement between the Group and PermaPharm entered into on 30 September
2010 for the rights to certain Bioscalin products and their associated intellectual property. On 30 November 2014 the Group
acquired PermaPharm for a nominal sum. Following the acquisition the Group only has the obligation to pay royalties on sales of
Bioscalin products when sales of Bioscalin products are made.

As at 31 December 2014 the provision for deferred licence payments is nil (2013: £43,130)

30. Employee severance provision
Employee severance provision includes the liability for severance indemnities related to employees of the Group’s Italian subsidiary.
The severance indemnity liability arises under Italian law and is calculated with reference to each employee’s length of service,
employment category and remuneration. There is no vesting period or funding requirement associated with the liability. The liability
recorded at the reporting date is based on the aggregate amount that the employees of the Group’s Italian subsidiary would be entitled
to on termination of employment for whatever reason.

31. Deferred tax liability
A deferred tax liability has been recognised in respect of a deferred tax liability assumed as part of the acquisition of Biokosmes.

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Venture Life Group plc Annual Report & Accounts 2014 55

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

32. Operating lease arrangements
At the reporting date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating
leases, which fall due as follows:

At
31 December
2014
£’000

At
31 December
2013
£’000

Within one year
After one year and within five years

477
1,583

2,060

43
5

The operating lease payments are in respect of:
> The Group’s UK head office in Bracknell which is renewable on an annual basis in November each year and does not have any

contingent lease payments or restriction.

> The company car provided to the Group’s Chief Executive Officer. This lease has a two year term whereupon the leased asset is

required to be returned to the lessor.

> The Group’s Italian subsidiary has one operating location with attaching storage facility and a storage location in Lecco, near to

Milan. The operating location has a long-term rental agreement until November 2019. The rental obligation on the Lecco storage
location terminates in December 2015. Rental obligations on the storage location attaching to the operating location continue
until September 2020.

33. Contingent liabilities
In August 2010 and before Biokosmes became part of the Group, the Group entered into two manufacturing and licence agreements
with Biokosmes for the rights to certain skincare products. Under the terms of the two agreements the Group is required to pay
royalties to Biokosmes on sales of the products covered by the agreements, with the maximum royalties payable under the agreements
being €380,000. Since the Group is only obligated to pay royalties once the underlying products are sold no liability for future
royalties has historically been recognised.

Following the acquisition of Biokosmes in March 2014, the Group has been evaluating the relevance of this agreement and a

decision is expected to be taken in 2015 as to whether to terminate these agreements by mutual consent. In the meantime, the Group
continues not to recognise any liability until underlying products are sold and liabilities are created.

34. Financial instruments
The Group is exposed to the risks that arise from its use of financial instruments. This note describes the objectives, policies and
processes of the Group for managing those risks and the methods used to measure them.

a. Principal financial instruments
The principal financial instruments used by the Group from which financial instrument risk arises are as follows:
> Trade and other receivables (excluding prepayments).
> Cash and cash equivalents.
> Trade and other payables (excluding accruals and deferred revenue).
> Deferred licence provisions.
> Convertible loan notes.
> Interest bearing debt.

Details of financial instruments by category are set out below:

Financial assets
Loans and receivables:
Trade and other receivables
Cash and cash equivalents

Financial liabilities
Other financial liabilities:
Trade and other payables
Deferred licence provisions
Convertible loan notes and interest bearing debt

31 December
2014
£’000

31 December
2013
£’000

3,185
4,933

8,118

2,140
–
3,857

5,997

200
453

653

482
43
348

873

Venture Life Group plc Annual Report & Accounts 2014 56

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

34. Financial instruments continued
The 2014 carrying values of the principal financial instruments are derived in accordance with the related accounting policies as
follows:

Loans and
Designated other receivables
(amortised cost)
£’000

to FVTPL
£’000

Other liabilities
(amortised cost)
£’000

At 31 December 2014
Assets
Trade and other receivables
Cash and cash equivalents

Liabilities
Trade and other payables
Convertible loan notes and interest bearing debt

–
–

–

–
1,554

1,554

3,185
4,933

8,118

–
–

–

–
–

–

2,140
2,303

4,443

Total
£’000

3,185
4,933

8,118

2,140
3,857

5,997

Disclosures in respect of the Group’s financial risks are set out below:

b. Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk of foreign exchange fluctuations, credit risk and liquidity
risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group’s financial performance. The Group’s policies for financial risk management are outlined in the
section on Principal Risks and Uncertainties in the Strategic Report on pages 16 and 17.

c. Market risk
Foreign exchange risk
The Group is exposed to foreign exchange risk on sales, purchases, and translation of assets and liabilities that are in a currency other
than the functional currency of its operating units.

The carrying amount of the Group’s foreign currency denominated monetary assets and liabilities in euros, US dollars and Swiss

francs are shown below in the Group’s presentational currency, (£).

US$
£’000

CHF
£’000

At 31 December 2014

Assets
Trade and other receivables
Cash and cash equivalents

Liabilities
Trade and other payables
Convertible loan notes and interest bearing debt

Net position

At 31 December 2013

Assets
Trade and other receivables
Cash and cash equivalents

Liabilities
Deferred licence provisions
Trade and other payables

Net position

Euro
£’000

2,807
1,146

3,953

1,639
3,857

5,496

Total
£’000

2,807
1,222

4,029

1,693
3,857

5,550

(1,543)

(1,521)

–
76

–
–

–

CHF
£’000

Euro
£’000

Total
£’000

25
–

–
–

–

45
35

43
233

276

(196)

70
35

105

43
299

342

(237)

–
–

–

54
–

(54)

US$
£’000

–
–

–

–
66

(66)

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Venture Life Group plc Annual Report & Accounts 2014 57

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

34. Financial instruments continued
The following table details the Group’s sensitivity to a 10% increase and decrease in the foreign currencies used by the Group against
sterling. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents
management’s assessment of the reasonable possible change in foreign exchange rates. The sensitivity analysis includes only
outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% weakening or
strengthening of the foreign currencies against sterling.

Effect of foreign
currency
strengthening
£’000

Effect of foreign
currency
weakening
£’000

At 31 December 2014
Assets
Liabilities

At 31 December 2013
Assets
Liabilities

366
(504)

11
(34)

(366)
504

(11)
34

d. Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from customers and deposits with financial institutions. The Group’s
exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Group has an established credit
policy under which each new customer is analysed for creditworthiness before the Group’s standard payment and delivery terms and
conditions are offered. The Group’s review includes external ratings, and in some cases bank references.

An allowance for impairment is made when there is an identified loss event, which based on previous experience, is evidenced in

the recoverability of the cash flows. Management considers the above measures to be sufficient to control the credit risk exposure.
The Group gives careful consideration to which organisations it uses for its banking services in order to minimise credit risk. At
each reporting date, the Group had a significant concentration of cash held on deposit with certain banks in the United Kingdom. At
December 2014, the concentration of credit risk held with these banks was £3,767,902 (2013: £453,108).

The Group considers its credit risk by counterparty and geography.
At 31 December 2014, the Group was also owed £1,021,348 (2013: £68,387) from three (2013: four) of its major customers, the

balance being shown under trade receivables.

No impairment was made against any of the above amounts at any of the reporting dates.
The carrying amount of financial assets recorded represents the Group’s maximum exposure to credit risk without taking into
account the value of any collateral obtained. In the Director’s opinion there have been no impairments of financial assets in the
periods in this financial information.

No collateral is held by the Group in relation to any of its financial assets.

e. Interest rate risk
The Group’s principal interest-bearing assets are its cash balances.

The main principles governing the Group’s investment criteria are the security and liquidity of its investments before yield,

although the yield (or return) is also a consideration. The Group will also ensure:
i) that it has sufficient liquidity in its investments. For this purpose it will use its cash flow forecasts for determining the maximum

periods for which funds may prudently be committed; and

ii) that it maintains a policy covering both the categories of investment types in which it will invest, and the criteria for choosing

investment counterparty.

The interest rate risk profile of the Group’s financial assets, excluding trade and other receivables, as at 31 December 2014 was:

Sterling
Euro
Swiss franc

Total

Fixed rate

Floating rate

Total

2014
£’000

2013
£’000

–
–
–

–

–
–
–

–

2014
£’000

3,711
1,146
76

4,933

2013
£’000

418
35
–

453

2014
£’000

3,711
1,146
76

4,933

2013
£’000

418
35
–

453

Floating rate deposits in all currencies earn interest at prevailing bank rates.

f. Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to
managing liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or damage to the Group’s reputation.

The Directors manage liquidity risk by regularly reviewing the Group’s cash requirements by reference to short-term cash flow

forecasts and medium-term working capital projections prepared by management.

Venture Life Group plc Annual Report & Accounts 2014 58

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

34. Financial instruments continued
g. Maturity of financial assets and liabilities
All of the Group’s financial assets and financial liabilities at each reporting date are either payable or receivable within one year, with
the exception of the non-current interest-bearing borrowings as detailed in note 28.

h. Capital management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to
shareholders. The Group is funded by interest bearing borrowings, loan notes and equity comprising issued capital and retained
profits. The capital structure of the Group consists of cash and cash equivalents and equity, comprising issued capital and retained
profits. The Group has no externally imposed capital requirements, but maintains an efficient overall financing structure while
avoiding excessive leverage.

The amounts managed as capital by the Group for the reporting periods under review are summarised as follows:

At
31 December
2014
£’000

Total equity
Cash and cash equivalents

Capital

Total equity
Borrowings

Overall financing

Capital to overall financing ratio

15,647
(4,933)

10,714

15,647
3,857

19,504

0.55

At
31 December
2013
£’000

557
(453)

104

557
348

905

0.11

35. Related party transactions
The following transactions were carried out with related parties:

(a) Transactions with Directors
Total dividends paid to Directors in the year ending 31 December 2014 were £4,791 (2013: £nil).
Interest totalling £983 (2013: £2,584) was paid on convertible loan notes issued to Directors with a par value of £55,000.

There were no unsecured loans from Directors with a balance owing at year end (2013: £4,087).
Gianluca Braguti, a director and shareholder of the Group, was provided with services by the Group totalling £3,031. At

31 December 2014, Gianluca Braguti owed the Group £5,886.

Under the terms of the Share Purchase Agreement dated 28 November 2013 and signed between the Company and the vendors of

Biokosmes, one of whom was Gianluca Braguti, the vendors agreed to indemnify the Company in full for any net liability arising
from certain litigation cases which had not settled at the time of completion of the acquisition on 27 March 2014. At the year end
the amount due to the Company under the indemnity totalled €250,935, of which Gianluca Braguti’s liability is €248,426.

(b) Transactions with subsidiaries:
Venture Life Limited
During the year the Company charged Venture Life Limited £1,244,344 (2013: £339,420) for corporate services provided and
provided funding to Venture Life Limited totalling £3,996,063 (2013: £1,140,600). At the year end an amount of £7,903,651
(2013: £2,636,005) was due from Venture Life Limited.

Lubatti Limited
During the year the Company charged Lubatti Limited £90,000 (2013: £16,499) for corporate services provided and provided
funding to Lubatti Limited totalling £8,000 (2013: £43,201). At year end an amount of £471,197 (2013: £390,100) was due from
Lubatti Limited.

The Company did not have any transactions or balances with Tracey Malone Originals Limited or Soffto Lubatti Limited.

(c) Transactions between subsidiaries
Venture Life Limited and Lubatti Limited
During the year Venture Life Limited provided funding to Lubatti Limited totalling £5,000 (2013: £34,921). At the year end an
amount of £174,431 (2013: £169,524) was due to Venture Life Limited.

Lubatti Limited and Tracey Malone Originals Limited
During the year Tracey Malone Originals Limited charged Lubatti Limited nil (2013: £4,964) for the use of its product licences.
Lubatti Limited provided funding to Tracey Malone Originals Limited totalling nil (2013: £3,931). At the year end an amount of
£5,951 (2013: £5,551) was due to Lubatti Limited.

Venture Life Group plc Annual Report & Accounts 2014 59

Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2014

35. Related party transactions continued
(d) Transactions with other related parties
Services purchased from Avantis UK Limited totalled £nil (2013: £48,000). At 31 December 2014, the Group owed Avantis UK
Limited £nil (2013: £nil). Control of Avantis UK Limited is held by J Randall, a shareholder and director of the Company.

Services purchased from The Digital Bandit totalled £nil (2013: £1,700). At 31 December 2014, the Group owed The Digital
Bandit £nil (2013: £nil). Control of The Digital Bandit is held by a shareholder and relative of Dr M J Flynn, a former director of
the Company.

Services purchased from Dr M J Flynn a shareholder and former director of the Group for consultancy services totalled £4,420 of

exceptional IPO costs (2013: £38,250). At 31 December 2014, the Group owed Dr M J Flynn £nil (2013: £27,377).

Services purchased from Immobiliare Cremasca Di Parati Lucia e c. S.a.S, a company 15% owned by Gianluca Braguti, a director
and shareholder of the Group, totalled £nil. At 31 December 2014, the Group owed Immobiliare Cremasca Di Parati Lucia e c. S.a.S
£27,325.

Services purchased from Biokosmes Immobiliare Srl, a company 70% owned by Gianluca Braguti, a director and shareholder of

the Group, totalled £396,684. At 31 December 2014, the Group owed Biokosmes Immobiliare Srl £718,306.

Services purchased from Biogenico Srl, a company 43% owned by Gianluca Braguti, a director and shareholder of the Group,

totalled £39,507. At 31 December 2014, the Group owed Biogenico Srl £38,215. Services provided to Biogenico Srl totalled
£29,271. At 31 December 2014, Biogenico Srl owed the Group £11,731.

Services purchased from A. Erre, a company 10% owned by Gianluca Braguti, a director and shareholder of the Group who is also

a director of A. Erre, totalled £65,566. At 31 December 2014, the Group owed A. Erre £9,155.

Services purchased from BMG Pharma Srl, a company 15% owned by Gianluca Braguti, a director and shareholder of the Group,

totalled £37,694. At 31 December 2014, the Group owed BMG Pharma Srl £37,694. Services provided to BMG Pharma Srl,
totalled £374,308. At 31 December 2014, BMG Pharma Srl owed the Group £167,718.

Services provided to Delife Srl, a company 15% owned by Gianluca Braguti, a director and shareholder of the Group who is also a

director of Delife, totalled £83,295. At 31 December 2014, Delife Srl owed the Group £21,496.

Services provided to Farmacia San Francesco, a company of which Gianluca Braguti, a director and shareholder of the Group, is a

director, totalled £352. At 31 December 2014, Farmacia San Francesco owed the Group £nil.

36. Post balance sheet events
In January 2015 the Group disposed of its investment in the company G2S. The investment was fully provided for during 2014.

There were no other events after the balance sheet date.

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Venture Life Group plc Annual Report & Accounts 2014 60

Parent Company Balance Sheet
at 31 December 2014

Fixed assets
Investments

Current assets
Debtors
Cash at bank

Creditors
Amounts falling due within one year

Net current assets

Total assets less current liabilities

Creditors
Amounts falling due after one year

Net Assets

Capital and reserves
Called up share capital
Share premium account
Merger reserve
Convertible loan note reserve
Share-based payment reserve
Profit and loss account

Shareholders’ funds

At
31 December
2014
£’000

At
31 December
2013
£’000

Notes

10
11
11
11
11
11

13,261

8,469
46

8,515

(277)

8,238

21,499

(1,507)

19,992

103
11,826
7,656
–
318
89

19,992

743

3,429
78

3,507

(765)

2,742

3,485

(298)

3,187

51
2,668
50
39
338
41

3,187

The financial statements on pages 60 to 64 were approved and authorised for issue by the Board on 24 March 2015 and signed on its
behalf by:

Jerry Randall
Director

James Hunter
Director

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Venture Life Group plc Annual Report & Accounts 2014 61

Notes to the Parent Company Balance Sheet
for the year ended 31 December 2014

1. Basis of preparation
The Company Balance Sheet and related notes have been
prepared under the historical cost convention and in accordance
with the Companies Act 2006 and United Kingdom Generally
Accepted Accounting Practice (“UK GAAP”).

As permitted by s408 of the Companies Act 2006, the profit
and loss account of the Company is not presented in this Annual
Report. As permitted by FRS 1, Cash Flow Statements, no cash
flow statement for the Company has been included on the

grounds that the Group includes the Company in its own
published consolidated financial statements. The Company has
taken advantage of the exemption in FRS 8, Related Party
Disclosures not to disclose related party transactions with other
wholly-owned members of the Group.

These financial statements present information about the

Company as an individual undertaking and not about its Group.

2. Accounting policies
The following accounting policies have been applied consistently
in dealing with items which are considered material to the
Company’s financial statements:

a) Investment in subsidiary undertakings and
impairment review
Investments in subsidiary undertakings where the Company has
control are stated at cost less any provision for impairment.
Control is achieved where the Company has the power to govern
the financial and operating policies of an investee entity so as to
obtain benefits from its activities.

Investments are reviewed for impairment if events or changes
in circumstances indicate that the carrying amount may not be
recoverable. Impairments are calculated such that the carrying
value of the investment is the lower of its cost or recoverable
amount. Recoverable amount is the higher of its net realisable
value and its value in use.

b) Share-based payments
When share options are awarded to employees, the fair value of
the options at the date of grant is charged to the income
statement over the vesting period. Non-market vesting
conditions are taken into account by adjusting the number of
equity instruments expected to vest at each balance sheet date so
that, ultimately, the cumulative amount recognised over the
vesting period is based on the number of options that eventually
vest. Market vesting conditions are factored into the fair value of
the options granted. As long as all other vesting conditions are
satisfied, a charge is made irrespective of whether the market
vesting conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition.

Where the terms and conditions of options are modified

before they vest, the increase in fair value of the options,
measured immediately before and after the modification, is also
charged to the income statement over the remaining vesting
period.

Where equity instruments are granted to persons other than
employees, the income statement is charged with the fair value
of goods and services received.

In accordance with UITF 44, when the Company grants
options over equity instruments directly to the employees of a
subsidiary undertaking, the effect of the share-based payment, as
calculated in accordance with FRS 20, is capitalised as part of
the investment in the subsidiary as a capital contribution, with a
corresponding increase in equity.

c) Taxation
Corporation taxes are recorded on taxable profits at the current
rate.

Deferred tax is recognised, without discounting, in respect of
all timing differences between the treatment of certain items for
taxation and accounting purposes, which have arisen but not
reversed by the reporting date, except as required by FRS19 –
Deferred Taxation.

Deferred tax is measured at the rates that are expected to
apply in the period when the timing differences are expected to
reverse, based on the tax rates and law enacted or substantially
enacted at the reporting date.

Deferred tax assets are only recognised to the extent that the
company is certain that there will be sufficient taxable profits in the
future to absorb the reversal of the underlying timing differences.

d) Foreign currency
Assets and liabilities denominated in foreign currencies are
translated at the rate of exchange ruling at the reporting date.
Transactions in foreign currencies are recorded at the rate ruling
at the date of the transaction. All differences are
charged/credited to the profit and loss account.

e) Leases and hire purchase commitments
Rentals paid under operating leases are charged to income on a
straight line basis over the lease term.

3. Profit attributable to members of the parent Company
As permitted by s408 of the Companies Act 2006, the Company’s
profit and loss account has not been included in these financial
statements. The profit dealt with in the financial statements of the
parent Company was £60,000 (2013: profit – £47,000).

The current and former auditors’ remuneration in respect of
audit services provided to the Company is disclosed in note 7 of
the Notes to the Consolidated Financial Statements of the
Group.

4. Directors’ remuneration
Details of Directors’ remuneration are disclosed in note 8 to the Consolidated Financial Statements of the Group.

Venture Life Group plc Annual Report & Accounts 2014 62

Notes to the Parent Company Balance Sheet continued
for the year ended 31 December 2014

5. Prior year adjustment
In reviewing the treatment of the accounting for share premium
on acquisition of the Italian business in the current year, the
Directors have aligned the prior year accounting for share premium
that related to the Company’s investment in Venture Life Limited
in 2010. The changes that result from this are a reduction in the

Company’s investment in subsidiary undertakings and a reduction
in share premium. As at 31 December 2013 the adjustment
resulted in an increase in the Merger reserve of £50,000, a decrease
in the Share premium account of £262,000 and a decrease in
Investments of £212,000.

6. Investments

Cost
At 1 January 2013
Additions

At 1 January 2014
Additions
Disposals

At 31 December 2014

Accumulated Impairment
At 1 January 2013
Charge for the year

At 1 January 2014
Charged during the year

At 31 December 2014

Net book value
At 31 December 2013

At 31 December 2014

Investments in
subsidiary undertakings
Loan
£’000

Shares
£’000

Capital
contributions from
share-based
payments
£’000

Other
investments
£’000

263
–

263
(212)

51
12,942
–

12,993

–
–

–

12,993

–
390

390
–

390
–
(390)

–

–
–

–

390

–

41
230

271
–

271
–
(3)

268

–
–

–

271

268

–
31

31
–

31
–
–

–
–

–
(31)

(31)

–

Total
£’000

304
651

955
(212)

743
12,942
(393)

13,292

–
–

–
(31)

(31)

743

13,261

Venture Life Group plc has four UK subsidiary undertakings, Venture Life Limited (Company number 07186207), Lubatti Limited
(Company number 06704099), Tracey Malone Originals Limited (Company number 06703243) and Soffto Lubatti Limited
(Company number 08203367), which are all incorporated in England. It also has one Italian subsidiary and one Swiss subsidiary.

Name of subsidiary

Class of holding

Proportion held directly

Venture Life Limited
Lubatti Limited
Tracey Malone Originals Limited
Soffto Lubatti Limited (dormant)
Biokosmes Srl
PermaPharm AG

Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary

100%
100%
100%
100%
100%
100%

Location

UK
UK
UK
UK
Italy
Switzerland

During 2014, the Directors reviewed the accounting treatment of the investments made by the Company in Lubatti Limited, its
wholly-owned subsidiary and the holder of the rights to the Lubatti trademark. This followed the negotiations during 2014 and
subsequent distribution agreement signed in January 2015 between the Group and Gialen, a Chinese skincare retailer, under which
the Group, initially through Lubatti Limited, will be supplying Gialen with significant volumes of Lubatti branded product. In light
of the expected value of this contract and the likelihood that Lubatti Limited will be in a position to repay loans previously advanced
to it by the Company sooner than had been previously expected, the loans classified under Investments in 2013 have been reclassified
as intercompany loans in the Company’s balance sheet.

The other investment is made up of the acquisition of 33.57% holding in G2S Cosmetics SAS (company number B489533596)
which is incorporated in France. The Company does not have any control over that company and is not able to exercise significant
influence over its operations. In July 2014 the Directors had been advised by the management of G2S Cosmetics SAS that G2S
Cosmetics SAS was likely to be declared insolvent, although efforts would be made to sell the company as a going concern. In
January 2015, the Group sold its shareholding in G2S for €1 having determined that this represented the fair value of the shares. As a
result of this the investment of £31,000 has been impaired in full at the reporting date.

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Venture Life Group plc Annual Report & Accounts 2014 63

Notes to the Parent Company Balance Sheet continued
for the year ended 31 December 2014

7. Debtors

Amounts falling due within one year:
Other debtors
Prepayments and accrued income

Amounts falling due after more than one year:
Amounts owed by Group undertakings

Aggregate amounts

8. Creditors: amounts falling due within one year

Trade creditors
Other taxation and social security costs
Directors’ loans
Dividend payable
Accruals and deferred income
Convertible loan notes
Other payables

2014
£’000

68
27

8,374

8,469

2014
£’000

47
2
–
–
117
47
64

277

2013
£’000

63
730

793

2,636

3,429

2013
£’000

248
5
4
–
427
50
31

765

9. Convertible loan notes
Pursuant to the acquisition of Biokosmes in March 2014, the Company issued to the vendors of Biokosmes convertible loan notes
with a face value of €2.0 million and which paid an annual coupon of 3%. Under the terms of the loan notes, the loan notes are due
to be repaid in full by the Company in July 2016. If the Company defaults on repayment then the loan note holders may elect to
defer repayment of the loan notes or to receive a pre-determined number of new 0.3p shares in the Company.

Fair value of loan notes at date of issue
Interest charged
Foreign exchange movements

Fair value of loan notes at 31 December 2014

Current element of loan note liability
Non-current element of loan note liability

£’000

1,641
23
(110)

1,554

47
1,507

1,554

The interest expensed for the year is calculated by applying an effective interest rate of 3% from the date the loan notes were issued.
The liability is measured at amortised cost.

10. Share capital

Allotted, issued and fully paid:
34,403,534 (2013: 16,961,424) Ordinary shares of 0.3p each

2014
£’000

103

2013
£’000

The Company has removed the Authorised Share capital from its Memorandum and Articles of Association as allowed by the
Companies Act 2006.

Venture Life Group plc Annual Report & Accounts 2014 64

Notes to the Parent Company Balance Sheet continued
for the year ended 31 December 2014

11. Reconciliation of movement in reserves

Share premium
£’000

Merger reserve
£’000

Convertible loan
note reserve
£’000

Share-based
payment reserve
£’000

Profit and
loss account
£’000

Balance at 1 January 2013
Profit for the year
Share-based payments
Issue of convertible loan notes
Issue of share capital
Issue of bonus shares

Prior year adjustment

Balance at 31 December 2013
Profit for the year
Share-based payments
Issue of share capital
IPO and other fund-raising costs
recognised through equity
Dividends

1,769
–
–
–
1,210
(49)

2,930
(262)

2,668
–
–
10,137

(979)
–

–
–
–
–
–
–

–
50

50
–
–
7,606

–
–

Balance at 31 December 2014

11,826

7,656

12. Reconciliation of shareholders’ funds

–
–
–
39
–
–

39
–

39
–
–
(39)

–
–

–

77
–
261
–
–
–

338
–

338
–
130
(150)

–
–

318

(6)
47

–
–
–

41
–

41
60
–
–

–
(12)

Total
£’000

1,840
47
261
39
1,210
(49)

3,348
(212)

3,136
60
130
17,554

(979)
(12)

19,889

Profit for the year
Share-based payments
Issue of convertible loan notes
Issue of ordinary share capital
Dividends paid

Increase in shareholders’ funds for the year
Opening shareholders’ funds

Closing shareholders’ funds

2014
£’000

60
130
–
16,627
(12)

16,805
3,187

19,992

2013
£’000
As restated

47
261
39
1,211
–

1,558
1,629

3,187

13. Post balance sheet events
In January 2015 the Group disposed of its investment in the company G2S. The investment was fully provided for during 2014.

There were no other events after the balance sheet date.

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Venture Life Group plc Annual Report & Accounts 2014

Shareholder Information

Company contact details and registered office
Venture House
2 Arlington Square
Bracknell
Berkshire
RG12 1WA

Company Secretary
James Hunter

Share price information
The latest Venture Life share price can be obtained via a number
of financial information websites.
Venture Life’s London stock exchange code is VLG.

Shareholder enquiries
Enquiries concerning shareholdings, change of address or other
particulars, should be directed in the first instance to the
Company’s registrars:

Incorporated and registered in England and Wales with
No. 05651130

Website
Further information on the Group can be found on our website
at www.venture-life.com

Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU

Telephone: 0870 162 3100
(Calls cost 10p/minute plus network extras. Lines are open
8.30am-5.30pm Mon-Fri. If calling from outside the UK please
dial: +44 (0)20 8639 3399)

Investor relations
Any shareholders with enquiries regarding the Group are
welcome to contact James Hunter on +44 (0)1344 742 870.
Alternatively, they can e-mail their enquiry to
ir@venture-life.com.

Copies of this report are being sent to all shareholders.

Copies are also available at the registered office of the Company,
Venture House, Arlington Square, Bracknell, Berkshire
RG12 1WA.

Printed by Park Communications.

Printed on Evolution Satin 75.

Venture Life Group plc
Venture House
2 Arlington Square
Bracknell
Berkshire
RG12 1WA

T +44 (0) 1344 742 870
E info@venture-life.com
W www.venture-life.com