Trading Statement

Marketing investment delivering returns for VLG Brands, strong second half margin and Adjusted EBITDA broadly in line with management expectations

Venture Life (AIM: VLG), a leader in developing, manufacturing and commercialising products for the self-care market, announces a trading update for the year ended 31 December 2024 ("FY24"). The Company expects to publish its results for FY24 in late April 2024.

Trading overview

Following the acquisition of Health and Her Limited (the "Acquisition") on 8 November 2024 the Group delivered FY24 revenues of c.£51.8m (2023: £51.4m), up 1% over the previous year and up 3% at constant exchange rates ("CER"). Revenues from VLG Brands were c.£34.0m (2023: £30.5m), up 11% over the previous year and accounted for 66% of overall sales (2023: 59%). Revenues from Customer Brands were c.£17.8m (2023: £20.9m) down 15% over the previous year (13% at CER) with de-stocking from a number of key customers resulting in some order re-balancing into the beginning of 2025.

Integration of the Acquisition is progressing well and the new product range contributed revenues of c.£0.8m in the period. On a proforma1 basis VLG Brands revenues were up 9% including the Acquisition.

Second half gross margins performed strongly at c.45% (H1 FY23: 40.9%) on a greater weighting of revenues from the higher margin VLG Brands, impact of customer price increases and internalisation of manufacturing for Earol. Supplier consolidation intiatives led to operational costs lowering within the underlying business in the second half although overall operating costs increased slightly due to impact from the acquisition. The Group expects to report FY24 Gross Margin of c.42% (2023: 39.2%) and Adjusted EBITDA2 of c.£11.3m (FY 23: £11.6m), subject to audit.

Cash and debt

Stable free cash flow3 generation of c.£5.4m (2023: £4.8m) was up 12% over the previous year and Group net leverage4 increased to 1.7x (Dec-23: 1.3x) resulting from debt drawn to support the Acquisition. Net debt at 31 December was slightly higher than anticipated due primarily to timing of revenues. Post period-end net leverage has reduced to c.1.6x.

Outlook

The Acquisition is performing well and beginning to deliver the identified revenue and operating synergies, including confirmation of new listings for existing VLG Brands from Q2 FY25 into the acquired customer base. The introduction of Health and Her's products means that VLG's Brands now have distribution points across all of the major retailers in the UK market and enables opportunity for further marketing investment to fuel sustainable and profitable growth. The Acquisition is expected to deliver rapid growth and add at least £1m of EBITDA to the Group in 2025.

As previously noted, the Group has increased its investment in marketing activities and is pleased with the returns achieved to date. Excluding the new Acquisition, sales of VLG's Brands within the UK delivered growth of 12% to £20.3m (2023: £18.1m) in FY24. Further, the outlook for Customer Brands has been strengthened by new business initiatives progressed during the last year which will bring in revenues from new customers and reduce reliance on key existing customers.

With the initiatives embedded, uplift from the Aquisition and continued focus in sales and marketing activities for the VLG Brands, the Board is positive about the year ahead and looks forward to reporting on continued progress.

Jerry Randall, Chief Executive Officer, commented: "I am pleased to see the Group finish 2024 with Adjusted EBITDA broadly in line with our expectations, with the increased spending on the marketing of our VLG Brands delivering good growth in challenging market conditions and compensating for weaker Customer Brands. After a strong 2023, Customer Brands was lower year on year where we saw some unexpected destocking from a few customers and movement of orders into 2025. The acquisition of Health & Her has been an excellent addition to the VLG Brands portfolio, broadening our ever increasing presence in the fast growing Women's Health space, and also being accretive to gross margin. Despite the current economic environment putting pressure on the consumer space, with the embedding of the recent acquisition and continued investment in our VLG Brands we are extremely positive for the outlook for growth in both our revenues and profitability in 2025."

1 Proforma basis i.e. if the acquisition had been in place for the whole of the current and prior period.

2 Adjusted EBITDA is EBITDA before deduction of exceptional items and share-based payments.

3 Free cash flow calculated before deduction of interest payable.

4 Group net leverage calculated as net debt (excl. finance leases) and using Adjusted EBITDA2 on a trailing 12-month basis.