Venture Life Group Plc · LSE:VLG
Venture Life — H1 2017 Earnings Presentation
37 slides from Venture Life's earnings presentation, September 2017
Slide 1: Venture Life Group plc Interim Results
Venture Life Group plc Interim Results 6 months ended 30th June 2017 September 2017
Slide 2: H1 2017 Highlights
H1 2017 Highlights • Revenues 28% to £7.8m v H1 2016 • EBITDA to £0.3m (2016: £0.1m) 10 Group revenue £m 7.8 8 • Cash at 30th June 2017 of £1.3m 6 6.1 4.4 4 3.1 • 4 new long term international partnerships (4 2 more post period end) - H1 2014 H1 2015 H1 2016 H1 2017 • Lubatti in market sales in Chin
Slide 3: Financial Highlights
Financial Highlights • Continued growth and investment in the future Group Consolidated H1 2017 H1 2016 YOY % £'000 £'000 Revenue 7,811 6,121 28% Gross profit 2,857 2,253 27% EBITDA 265 116 >100% LBT (572) (854) (33%) Adjusted LPS (0.31) (0.80) >100% Cash in bank 1,300 2,000 (35%) -2-
Slide 4: About Venture Life
About Venture Life • International consumer self care group, marketed products, growing partner base and strong product pipeline • Addressing the needs of the ageing population • Over 80+ marketing partners in over 40+ countries -3- Acquisition 30-year exclusive Admission of Biokosmes Srl, an distri
Slide 5: Venture Life management team
Venture Life management team Jerry Randall • Experienced executive director in international healthcare for over 15 years Chief Executive Officer • Extensive experience in licensing, M&A, fund raising and capital markets • Co-founder of Sinclair Pharma which grew from £1m to £30m revenues • Co-found
Slide 6: The market opportunity
The market opportunity Healthcare budgets are under increasing pressure Self-medication market annual change 2014-153 NHS financial analysis1 UK 2.27% Austria 3.59% Italy 3.80% £4.3bn 66% £14.9bn Romania 4.15% USA 4.33% Norway 5.18% Belgium 6.12% Net deficit of NHS Percentage of Savings the NHS Fran
Slide 7: Global distribution network
Global distribution network Benecol UltraDEX UltraDEX UltraDEX UltraDEX UltraDEX UltraDEX Benecol Countries where products sold or partnered Myco Clear Countries where no products sold or UltraDEX partnered Myco Clear Countries where products launched signed/to be launched “Venture Life’s reach exte
Slide 8: Brand portfolio
Brand portfolio Hair Loss Hemorrhoids Cholesterol Brain Function & Memory Ageing Oral Health Women’s Intimate Nail Fungal Health Rosacea
Slide 9: Revenues H1 2017
Revenues H1 2017 • Revenues 28% H1 Revenues - 2016 and 2017(£m) VLG - H1 2017 revenue split H1 2017 revenue 7.8m Customer own brands 22% 1.2m 78% VLG Brands VLG brands 0.5m H1 2016 revenue 0 6.1m Customer own brands 4.0 5.0 6.0 7.0 8.0 £m -8-
Slide 10: Administrative Expenses
Administrative Expenses • Administrative Expenses continue to fall as a % of Group Revenue reflecting operational efficiencies Total administrative expenses as a % of Group revenue 55% 60% 44% 41% 50% 40% 30% 20% 10% 0% H1 2015 H1 2016 H1 2017 -9-
Slide 11: EBITDA waterfall
EBITDA waterfall • Increase in EBITDA >100% as overheads continue to fall as a % of revenue • Investment made in manufacturing business in anticipation of growing volumes • Platform in place to accommodate organic and acquisitive growth H1 EBITDA - 2016 and 2017(£m) H1 2017 EBITDA 0.3m Customer own
Slide 12: Cashflow
Cashflow • Closing cash at normal operating levels, post working capital adjustments at 2016 year end H1 2017 cash flow (£m) 31 Dec 2016 opening cash 2.0m Operating cash flow 0.1m Working capital (0.5m) Investment (0.3m) 30 Jun 2017 closing cash 1.3m 0.0 1.0 2.0 £m - 11 -
Slide 13: Commercial Update
Commercial Update
Slide 14: Commercial Update H1 Highlights
Commercial Update Venture Life Group Brands H1 International Markets UK Market Post-period end Highlights § 4 new long term § Gross sales in H1 § July – highest sell out distribution agreements 2017 +9% vs. LY for Lubatti brand in signed China since launch § Secured new § 6 new product launches, dis
Slide 15: UltraDEX Marketing investment
UltraDEX Marketing investment Multi-channel approach – Invested in TV, radio, digital, social, innovation…. • Brand awareness – TV advertising, tube cards and platform posters on London Underground, 25k branded cups in coffee shops • Online – website re-launch - traffic increase from 1,600 users per
Slide 16: UltraDEX sales UK
UltraDEX sales UK • June – marketing and promotional activity in place • UltraDEX outperforming closest competitor CB12 and the category on both a 52 and 4 w/e basis • Boots oral care category in slight decline in 52 w/e basis • The Breath Co. also had promotion running but offered a deeper discount
Slide 17: Distribution: Focus on new channels
Distribution Focus on new channels No.1 Spray in • UltraDEX Mouth Spray – product is well suited to the Convenience channel • Clip-strips – focus given to motorway service areas across the UK • Scalable – potential to increase distribution – total Convenience estate has 39k outlets
Slide 18: International: UltraDEX is now partnered in 12 territories
International UltraDEX is now partnered in 12 territories • UltraDEX is now partnered in 12 territories – all with strong partners and the right strategic fit for the brand • Presence in the EU – UK/Eire, Portugal, Spain, Italy, Denmark, Norway, Finland, Sweden – markets outside the EU include Canad
Slide 19: China update
China update • Sales trend positive, with July being highest ‘sell out’ – emphasis on hero product • July 2017 vs. July 2016 – 466% increase in sell out • Re-orders received throughout H1 2017 • Lubatti now distributed in 2,000 Gialen stores Lubatti sell-out in China (RMB) Jul-16 Aug-16 Sep-16 Oct-1
Slide 20: Other commercial updates
Other commercial updates Clinical Studies Programme Clinical study on aesthetics of nail – completed Q3 Myco Clear ‘17 Clinical study on efficacy – to be completed Q4 ‘18 Clinical study on short term memory, concentration, NeuroAge attention – to be completed Q2 ‘18 Better supported products Procto-
Slide 21: Brands Summary
Summary New international Growth in China deals New product Clinical studies launches Brands underway Growth on UltraDEX Pipeline being developed - 20 -
Slide 22: Own Label Brands H1 Highlights
Own Label Brands H1 Existing customers New customers Development Highlights § Almiral nail lacquer § New partnership with § 2 new CE mark launched in Japan Menarini – products approvals Record start to launch § 82% of revenues from revenues top 10 customers § Discussions ongoing § Clinical studies u
Slide 23: UltraDEX
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Slide 24: UltraDEX case study
Case study 1. Sales 4. Marketing 2. UK Distribution UltraDEX 5. Manufacturing 3. International progress 6. Summary - 23 -
Slide 25: Sales growth – historic H1 gross sales
1. Sales growth – historic H1 gross sales • Stabilised decline, brand in growth in June 2017, despite being in fewer stores compared to June 2015 • More effective results, similar marketing spend £1,650,000 UltraDEX Gross Sales* +9 % Acquisition by VLG £1,600,000 14.0k points of £1,550,000 distribut
Slide 26: UltraDEX distribution update
2. UltraDEX distribution update UltraDEX distribution update Total points of distribution (Oct ‘17) = 14,829 – at its highest level Net change in points of distribution since July 2017 Distribution +1,869 +780 +1,002 +79 SKU’s +5 +1 +3 +1 +7 +7 Wash 1l Original Wash 1l Mint Wash 500ml Sensitive Wash
Slide 27: International markets
3. International markets THEN • Limited footprint in EU • Limited outside UK – Portugal, Finland, Eire, Belgium • Revenues very small pre-acquisition NOW • UltraDEX is now partnered in 12 territories – all with strong partners and the right strategic fit for the brand • Stronger presence in the EU –
Slide 28: Marketing
4. Marketing THEN: Pre 2012 Advertising campaign • Poor campaigns - text heavy, poor communication • Trivalising condition • Positioning not clear ultraEFFECTIVE ultraCONFIDENT ultraDEX NOW: 2016 Advertising 12 HOUR FRESH BREATH campaign • Eliminates bad breath instantly • Protects teeth & gums • Fr
Slide 29: Marketing: Packaging re-design & new sizes
4. Marketing Packaging re-design & new sizes THEN: Old packaging NOW: New packaging • Messages – too many, unclear what each product is for, no • Positioning – clear 12 hour fresh breath message, new differentiation between packs colours makes it easier for shoppers to find the product they want (an
Slide 30: Manufacturing
5. Manufacturing THEN: NOW: Manufacturing outsourced Manufacturing in-house Poor service levels Excellent service levels Inflexible - No investment Innovation & timing Capacity – platform for Out of stock situations growth Internalised profit Costly production margin High working capital Lower worki
Slide 31: Summary and outlook
Summary and outlook • Group revenues up 28% in H1 2017, growth across all business expected for the full year • Group EBITDA H1 2017 has grown despite heavy UltraDEX advertising • Marketing initiatives for UltraDEX have reversed trend of falling sales • New partners appointed on UltraDEX, will grow
Slide 32: Appendices
Appendices
Slide 33: Shareholder register
Shareholder register Mr Gianluca Braguti (Director) 19.2% J O Hambro 12.0% Mr Jerry Randall (Director) and associated holdings 10.7% Aviva plc 9.6% Dr Michael Flynn and associated holdings 8.0% Quilter Cheviot Limited 7.0% Mrs Sharon Collins (Director) 4.3% Mr Anthony Ahearne and associated holdings
Slide 34: Biokosmes Top Customers by Revenue H1 2017
Biokosmes Top 10 Customers by Revenue H1 2017 £ 1,750,000 1,500,000 1,250,000 1,000,000 750,000 500,000 250,000 0 82% of Biokosmes Revenue in H1 2017 came from 10 Customers (excluding Intercompany sales) - 33 -
Slide 35: Reported Group income statement
Reported Group income statement All amounts expressed as £’000 under IFRS 6 months ended 6 months ended 30 June 2017 30 June 2016 Revenue 7,811 6,121 Cost of sales (4,954) (3,868) Gross profit 2,857 2.253 Gross margin 37% 37% Administrative expenses (2,761) (2,263) Amortisation of intangibles (446)
Slide 36: Reported Group balance sheet
Reported Group balance sheet £’000 30 June 2017 31 December 2016 Fixed assets Intangibles 16,053 16,272 Property, plant & equipment 1,383 1,279 Fixed assets - total 17,436 17,551 Current assets Inventories 3,436 3,141 Trade and other receivables 4,984 4,656 Cash and cash equivalents 1,323 1,998 Curr
Slide 37: Cash/debt position
Cash/debt position £’000 30 June 2017 31 December 2016 Change Cash at bank and in hand 1,323 1,998 (675) RiBa and HSBC (invoice financing) (712) (629) (83) Unsecured bank loans < 1 year (58) (58) - Unsecured bank loans > 1 year (2,596) (2,586) (10) Vendor loan notes (1,805) (1,754) (51) Issue of con