Northland Capital Partners View on the City - Venture Life Group

Proactive Published 20/07/2018

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SECTOR: HEALTHCARE

Venture Life Group (LON:VLG)

SECTOR – HEALTHCARE

RATING – BUY*

MARKET CAP – £15.3m

CURRENT PRICE – 41.5p#

TARGET PRICE – 100p

ANALYST – BARRY GIBB

Year-end Dec

2016A

2017A

2018E

2019E

Revenue (£m)

14.28

16.05

Under Review

EBITDA (£m)

0.80

1.86

Adj. pre-tax Profit (£m)

(1.11)

0.06

Adj. EPS (p)

(3.76)

(1.00)

DPS (p)

Net Cash/(Debt) (£m)

(5.15)

(6.32)

P/E (x)

Dividend yield (%)

EV/EBITDA (x)

26.0

11.7

SOURCE: Northland Capital Partners Limited estimates. #Priced at market close, *Northland Capital Partners Limited acts as Nomad and Joint Broker to Venture Life Group and therefore this information should be viewed as a Marketing Communication.

Placing, Proposed Acquisition and Notice of GM

NORTHLAND VIEW

Venture Life announced the conditional placing of up to 46,875,000 new Ordinary Shares at a price of 40p per share to raise approximately £18.75m (before expenses). Use of funds includes the proposed acquisition of the Dentyl Dual action mouthwash and BB Mints Business for £4.2 million payable in cash, and the proposed repayment of the Convertible Bonds and Biokosmes Vendor Loan Notes for approximately £3.7m in aggregate (resulting in an annualized reduction of interest expense for approximately £0.3m). The Placing Shares, which were subscribed by both existing and new shareholders, will represent approximately 56 per cent of the Enlarged Share Capital. A General Meeting has been called for 6th August.
The Acquisition is expected to be earnings enhancing in the first full financial year, while the additional funds raised will enable management to evaluate and react to further potential strategic M&A opportunities.
Dentyl is an every-day mouthwash, which derives 95% of its revenues from the UK and has listings in many of the major UK grocery and pharmacy outlets (excluding Boots) The BB Mints product is currently manufactured in Japan and packaged in Thailand by Thai Jintan Co. VLG is acquiring from the Vendor a distribution right to sell the BB Mints product in the UK (principally) as part of the Acquisition.

In line with management strategy, this action should reverse declining Brands sales, deliver revenue and margin growth, while significantly strengthening its balance sheet. Building on the success of the UltraDex acquisition, the Group’s operating platform has been repositioned in the anticipation of securing further growth opportunities for the future. As such, we believe this serves to reposition the company within the market, allowing it to be more opportunistic in its strategic direction.

COMPANY DESCRIPTION

Venture Life Group plc is a consumer healthcare company. The Group develops, manufactures, and commercialises self-care products which target the ageing population.