Report

Venture Life Group: Visibility on brands rising with profits

Venture Life (VLG) combines innovation, product development, formulation and contract manufacturing expertise and an international partner distribution network across over 40 countries.

Results for 2016 show that VLG delivered on all KPIs, notably the successful launch of newly acquired UltraDEX brand, increasing branded revenues by 250%, helping VLG to exceed revenue expectations up 57% to £14.3m and providing a maiden EBITDA profit of £0.8m. The company is on track to deliver sustainable profitability in the short term as it continues to expand its range of higher margin branded products, an important step towards the further transformation of VLG into a company with higher brand visibility.


Expansion of the brand portfolio came through acquisition of strategic oral health range UltraDEX. VLG is well on the way to leveraging the established reputation of UltraDEX backed by efficacy and clinical evidence provides an entry point to form new distribution partnerships in additional territories across the brands portfolio. Initial distribution agreements were struck for Benecol 'once-a-day' liquid sachet in Turkey and Jordan, developed in-house at the Biokosmes site.


New Product Development is in full swing with 3 topical medical devices developed in house are due for launch in 2017: Myco-Clear to treat fungal nail infections, Photo-ALL for drug induced UVA sensitivity and Rosacalma a topical treatment for Rosacea reinforcing the portfolio of medical devices with differentiated products.


Financial highlights included 57% FY16 revenue growth to £14.3m, driven in part by a stronger Euro and with significant contribution from newly acquired UltraDEX range which boosted branded revenues by over 2.5x from £1.1m in FY15 to £3.8m. Strong growth in contracted manufacturing revenues from the Biokosmes site, up 31% in FY16, contributed to a maiden positive EBITDA of £0.8m in FY16.


Our DCF valuation of VLG is £46m equivalent to 124p/share, with no major changes to our underlying forecasts. We use an 11% WACC and 2% long term growth rate. The shares trade on an EV/2017 sales multiple of 1.2x which appears undemanding given the prospects of near term sustainable profitability and growing premium brand visibility.
Underlying
Venture Life Group

Venture Life Group is a holding company, engaged in the development and commercialisation of healthcare products. Co.'s products address healthcare issues from oral healthcare, women's intimate health, neurology, cardiovascular and dermatology. Co.'s products include UltraDEX, a product range for the treatment of halitosis. Co.'s other brands are: NeuroAge™, a food supplement indicated for short-term memory loss and cognitive function; Myco Clear™ , indicated for the management of onychomycosis; Rosa calma™, a range of three topical products that treats this inflammatory skin condition; and Procto-eze™ Plus, a range of medical devices and cosmetics for the treatment of haemorrhoids.

Provider
Equity Development
Equity Development

​Equity Development enables companies to become better understood and supported by investors. Since our launch in 1996 we have consistently focused on helping our clients improve their communication and relationships with both existing and potential shareholders. Our clients have come from a wide variety of sectors and domiciles, are both private and quoted and range in size from micro-cap to $multi-billions. We offer free access to company research notes written by experienced analysts. These notes include detailed forecasts, financial models and a fair value. We host regular Private Investor Forums at which investors have the opportunity to hear company directors present, and to ask questions. These are free to attend. We broadcast live Webinars with company management that include active Q&A. We also make the recordings available online. We arrange face to face meetings between private investors and company management. We are active users of Twitter, commenting daily on company news, share price moves, Directors’ Dealings, Equity Development Research Notes & Events.

Analysts
Emma Ulker

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