Welcome back, everyone, to Vox Markets. My name is Paul Hill, and by popular demand, I'm delighted again to be able to speak to CEO Jerry Randall of Venture Life, a leading consumer healthcare products firm. So welcome, Jerry. Hi, Paul. Nice to see you again. Thanks. Well, big congrats on this morning's positive first half results- Thank you. In-line, guidance for the rest of the year, with sales at the half year increasing more than 10% like-for-like to GBP 23.5 million. So really well done there. So maybe we can start, at that point. What's been sort of driving that top line growth? Sure, Paul, we've got two parts to our business, which is the Venture Life brands and then the customer brands business. So on the Venture Life brands, Balance Activ in particular, we have a good partner in Ireland. They started last year. That gross annualized, they've taken the gel and the pessary, so we're seeing the annualization of that now. Also, Asda and Tesco's increased their distribution of of Balance Activ. Again, the Again, the pessary, the gel, but also the multi-pack value packs. Internationally, we're seeing Bayer perform well, who's our partner on Balance Activ there. Energy, so the Lift product, that's been going well. We've got new listings there, but also good progress online as well with Amazon, so we're seeing that come through. I think on the customer brands, we've just seen quite a lot of new product development last year, which is now coming through into this year and seeing a bit of restocking from some of our customers there. So, across the board, it's been very good. Internationally, with the brands, a little bit more lumpy where the orders are, so a bit quieter in the first half, but you'll see that coming through much more strongly in the second half. And what's the split there between your own sort of brands and the third party or your customer brands? I mean, as you see in the release, it's 55% for the first half, but by the end of the year, it'll be up to nearly 60% Venture Life brands because we've got a much stronger second half in our Venture Life brand portfolio. Right. Okay. And I'm guessing we'll see some sort of like, operating leverage, some, some economies of scale coming through with margin, expansion, I guess, in that second half. we'll see obviously, you've seen already in the first half an improvement in our EBITDA margin percentage, as you go through, and that will improve in the second half as well. That operational leverage and fixed costs staying where they are and gross margin, coming through and increasing in pound note terms. Obviously, you start to see as well in the gross margin that we're still dealing with that sort of higher input costs that came through because obviously, we've been putting that into inventory for the last 6-9 months. That's starting to unwind, and we'll start to get the benefit of that coming through and the cheaper, cheaper cost of goods side coming through towards the back end of this half. Great, that would be, that'd be, that'd be marvellous. In terms of the, that top line growth of 10% plus, et cetera, how much just broadly is split between sort of price and volume? I'm guessing most of it is, is price, but I could be wrong. No, it's sort of the flip side. Most of it is volume, so there's. Is it? couple couple of percent there in price, but most of it's coming from, from volume. Fantastic. And, how is that, what sort of trading so far in Q3? I mean, obviously, it's still fairly early days in that, in the second half, but, how's that progressing in the sort of like, the picture of the order book and the visibility for the rest of the year? it's, it's good. I mean, we have, we have high visibility because the order book, order book's, higher than it was same time last year. August is a quiet month for us because we have a, the factory shuts down for a couple of weeks for maintenance and things. No, no, trade, trading line and, beginning to see products like UltraDEX, as you saw in the first half, picking up and continuing to pick up post-COVID. Good Venture Life outlook for the order book in the second half of the year. all positive. we'll, as always, every year, you've got to deliver. Everything has to go out the door by end of the year, but at the moment, all looks on target. What about the sort of new product launches? You talked about as you've got sort of like quite a few sort of new products going out the door sure. So 2023 has been a real focus on, organic growth and delivering. Because obviously with the increase in, interest rates and- Aversion to debt, we decided not to make any more acquisitions this year, but focus on the new products. So we've got new products in the women's health category, launching the Thrush cream, which is now launched alongside the bacterial vaginosis. Also, we're going into probiotics in that area as well. We've got a nice probiotic product. Launching some more cleansing products as well, so broadening that women's health. Energy, we've got our new Lift Activ Boost range that's launching, already started to launch actually in some of the retailers, and that's the sort of rather than just the glucose replacement for the diabetic patients, it's the everyday energy and vitamin supplement, and the retailers have really received that well. We're gonna even be launching that with our own first D2C website for that particular product, which will come out this week in fact. we're starting to branch out and try to claim more of that online market for ourself and build customers there. In a lot of areas, good new product development, putting to use what we do for our customer brands, customers, but developing our own pipeline. Baby Earol is launching this half of the year as well, specifically targeted towards the six months and older. That will give us triple sighting in Boots, so not only in the ENT section, but also in kids, but also in baby. Again, expanding those distribution points and expanding the customer base for the product. Great. I see as well the success of the online, sort of strategy, et cetera, it has come from obviously a small base. Can you just talk through how you'd see that over the next sort of like couple of years moving on? W hat happens with the online is, you obviously so when we sell through Amazon, you're getting a higher retail price, but you're making similar pound note margins- Because you're obviously contributing to that. So we see that continuing to build the percentage that we've got in Amazon, but now starting to launch our own D2C sites, and they'll be done on a brand-by-brand basis. What we're hoping to do is get better customer affinity, greater use of social media. We're using TikTok a lot and a number of those other platforms. But start to own more and more of those customers, and then allow them to get deeper into the product range, and own that sort of customer relationship more. Have you got to have sort of like a, one central warehouse to be able to handle the sort of the outgoings on online from your D2C, and sort of like re- any return? you're probably not gonna get too many returns, but just in case you do. We use the same warehouse for all of it, actually. So whether we're going to out to the retailers, or whether we're going through D2C or through Amazon, we use the same third-party warehouse that looks after that for us. We did have two, it's consolidating into one, and so it's all the same. They provide different services depending where you're selling. Brilliant, fantastic. And just in terms of sort of, your third party, well, your distributors and, from the actual channel. A lot of sort of like, consumer-facing brands, maybe not so much in, in the healthcare sector, but certainly across the whole patch, has been sort of destocking. Have you seen any of that at all? We haven't seen a significant impact to that. I mean, I'm sure there has been a bit. In fact, in our customer brands, as I mentioned earlier, we saw some customers buying more this year 'cause they were restocking from destocking previously. So not, not seeing significant amounts. We're increasing distribution points across our brand estate. So, that leads to an increase in revenues, not a decrease, but it wouldn't surprise me if you start to see it, back end of this year and into next year. It's only natural, and I think as retailers, we're going through that sort of can we get product kind of state over the last 18 months when supply chain was really disrupted. They probably built up a bit more inventory. So it wouldn't be surprising to see them, sort of tighten up a bit more over the next year. Well, it's good that, you haven't really sort of seen much, because it's certainly come through in many other channels, so that's obviously- shows you've got a quite a lot of sort of end-user demand there, I would've thought. I think also as well, it's probably a longer supply chain for us than perhaps in food or other areas. Sure. It takes a little bit longer for those things to get through, and, but I'm sure we'll see a bit of it in due course. . Just on a couple of areas that maybe haven't performed quite as well. You've got the dental mouthwash and China. What... How do you see that going forward, and is there any sort of actions to turn it around? Dentyl's really, is in a very competitive space, and obviously the big competitor in the room is Listerine there, and they've been very aggressive in their pricing policy. We've got a number of activities that are going on, particularly this autumn, to really go back to the basics of the efficacy of the product, the data that's behind it. We've got the Works campaign, where particularly with Dentyl, when you spit out after rinsing, you can see the bits of plaque that's there. We're focusing on that and also looking at claim structure as well and improving our claims. We've also been using quite a heavy promotion against those other competitors too, and that's starting to pay dividends. So it's a multi-strategy approach in the UK to, bring that... arrest that decline and bring it back into a more stable position. But very difficult when you've got a big gorilla in the room like Listerine, who are, - Being very aggressive. But, we're making progress, and, we've got some good campaigns and some good claims improvements you're gonna see over the coming months. China's still very, very difficult The market out there, still suffering. So we're reviewing that, partner situation at the moment because that's not performing for us as well as it should, and we're looking at some other initiatives. . Hopefully, you never know, you might be able to do D2C there directly from your website. we'll do it. You'd be the first sort of brand to sell direct to the Chinese, 'cause usually the other way around, isn't it? T o be fair, the analysts have taken anything from China out of any of our forward numbers, so any- of course. progress we make there is all upside. good. Now, you just touched, you touched on it earlier on, but the, the cash flow and the, the conversion and the, de-leveraging, et cetera. You just sort of like, expand a bit on that and what you're targeting for the year end, because I think you ended the half year with a leverage of, what was it? 1.47 times. Yes, that's right. that's right. Yes,. And when we present that, we're presenting what we, I think, what we call the SFA definition, which is what's in our financing- .D ocument. So it's a slightly more aggressive measure than the strict, 'cause it adjusts EBITDA for operating leases under IFRS 16, puts them back in again. But, we're targeting to get that down towards one by the end of the year. So we're gonna see, again, good cash generation in this second half. Another thing that's impacted this year is, we've talked about it before, the medical device regulations, which, are causing all medical devices to go through- A technical sort of transition. The deadline for that originally was May 2024 to have that transition made, but they've extended it now to May 2028, just because there's been difficulty getting through all the notified bodies. That's meant the expenditure we were planning to spend over EUR 1 million this year on that MDR conversion for the remainder of our products, we've got a few more years to— Right To spend. In fact, I think we're gonna spend over GBP 1 million. We're probably seeing a, GBP 750,000-GBP 1 million cash flow benefit this year from being able to spread that work out over the next three or four years. That'll again go towards getting our, net leverage down towards the, 1 point, down towards 1- . before the end of the year. T hen, I guess just pushing the... I mean, we're fairly close to the end of December anyway. You've got three months to go, but push the clock forward sort of 15 months towards the end of 2024, then effectively you'll be down probably... I don't- I'm just guessing, if you reduced it from 1.6 to 1- times in 2023, plus you've actually had some of the contingent consideration to pay out as well- Then you should be, you should be hitting around about 0.5 by the end of next year, I guess. I would expect that. 0.5 or lower. So, so there's been, obviously good cash generation moving out of the MDR, and that's all helped us to contribute to bring that lever- net leverage down, which I know investors and shareholders are- A bit nervous about at the moment. . No, absolutely. And just in terms of sort of the refinancing of the, of the facility with HSBC, given what happened obviously to SVB - In the U.K. sure. It's not actually due until July next year. But we've obviously got on the treadmill for that quite early, and our main intention obviously is to get in early and get it resolved, but the main intention is to improve the terms. Give us, give us better headroom and, hopefully better margins. So that's all in train, and that'll be dealt with relatively early. Good. And then just, you mentioned in the actual statement success, there is a natural sort of second half weighting To the actual business. Well, just for me, why, why is that? It can't. Is it seasonal or is it Christmas-oriented? No, a lot of it's historic because if you look at the, if you look at our business as a whole, about, a third is into the U.K., or just below a third, which is ordered on a weekly basis, whether it's through retailers or Amazon or what have you. And the other 70%, which is mix of customer brands and Venture Life brands, is with partners. And depending when we signed those partners, when they've launched their products, where their order patterns are. So it just has been that way through our partners and, arguably, when we're three or four times the size, it'll probably start to even out. We don't really have any products that are particularly seasonal. I mean, you could argue our own swim's a bit more popular in the summer, but it's quite- A small product. No, not really, it's just the way it is on a customer base and when they tend to order. Long term, maybe it'll even out, but at the moment, that's how it is. Good. Okay. I'm guessing with interest rates in the U.K. sort of like topping out and hopefully going down next year, you've actually seen the... You've seen sterling weaken. I mean, you'd be a clear beneficiary if interest rates came down because it's obviously the interest, but would you be also a beneficiary at all? Does a weaker sterling versus the U.S. dollar make any difference or? it does help a bit because, sort of dollar and the euro seems to be more aligned, and part of our RCF is euro-denominated as well, so we have a slightly beneficial rate there as well, and we're utilizing that money obviously in the U.K. and the Euroland. we'll be, there will be a slight beneficiary of that, I think, in the second half of the year. Good. It's always helpful. Brilliant. Okay. And then just finally on the news flow, when's the likeliest trading update? Would it be sort of like in January or maybe December or? our normal pattern would be to put a trading update out, excuse me, update out in January. Okay when we've finished there. So, you'll see that then. Between now and then, you're going to see more products launching out into the stores. I'd invite all of our- Interested investors and shareholders just to wander around the stores, the Boots, the Asdas, Tescos, Superdrug, people like that, where all our new products are launching. We've got a great new initiative with Superdrug, where they're gonna be putting up our whole women's health range on the top shelf in their 10 flagship stores, later this year. So, look out for that. As I say, no M&A, we're not planning to do anything on that front, this year. We'll assess it next year when we see what the trajectory is on the interest rates. But other than that, trading update in January, and just go in the stores- okay See what's up. Y our marketing director seems to be doing some fantastic initiatives, expanding the distribution there and driving that top line, and also launching new products. I mean, she, he or she must be very busy, I guess. I mean, it's a two-pronged approach because you've got the guys who are, sort of the team, excuse me, who are selling out into, the retailers. And, and, we've had a big initiative on the, on the pharmacies and the wholesalers this year as well, but also the marketing team who are, really behind the, the, the creativity. What we're doing well in marketing. So it's a team effort from both of those, but they've done a fantastic job and, continue to do so. . Well, keep up the great work, and look forward in touching base in January for the year-end trading update. So, well done, Jerry. . No, thanks very much, Paul, and a pleasure to talk, as always.