Venture Life (#VLG)
"Venture Life develops, manufactures and distributes products for the consumer self-care market"
VLG "want to become a leading global self-care branded products business."
Today I had a telephone conversation with Andrew Waters (CFO).
I had sent an email with questions and his call coincided with the HY update this morning.
VLG were very pleased with the revenue growth showing an 80% increase against H119 (65% organic and 15% acquired) to £16.9m. The reasons for the improved revenue were (a) PharmaSource (recent acquisition) performed well (b) the hand sanitiser business which provided a significant uplift to revenue and was also very opportune - I like that VLG were able to take advantage of this situation with their set-up and it signals to me that they may be able to take advantage of similar opportunities like this is the future, (c) the Chinese partnership deal worth 168m Euro over 10 years, (d) the rest of the business improved as well. So all areas doing well. VLG prospered as their Italian factory was deemed an essential business which was not the case for many competitors. Andrew says this puts VLG in a good position with their customers as they can be relied on when others can't.
I asked why no margin or profit figures were given? There is nothing untoward and they do not normally provide profit or margin at this stage. Furthermore he confirmed it is reasonable to assume by default that if no new numbers have been given that the latest upgraded forecasts of £30m rev (up 100% on 2019) and £6m EBITDA (up 120% on 2019), PBT of £3.8m and PAT of £3m (up 300%) stand. He says he "always takes a conservative position," which is not surprising for an CFO and good from an investor's viewpoint. He pointed out that the H1 revs of £16.9m accounted for more than half the FY forecast of £30m confirming his cautious approach. Other outlets for hand sanitiser are now open so there is more competition in this area and may result in a reduction in hand sanitiser revenue. Also a little weakness in sales to retail in H1.
I asked if the fixed costs are stable so that an increase in revenue would lead to a sharp increase in margin and profit? He agreed broadly as the costs of the factory and permanent staff remain the same.…
