Good afternoon, and welcome to the Venture Life Group investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press Send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Jerry Randall, CEO. Good afternoon, sir.
Good afternoon, and welcome everyone to our webinar. Just for the purposes of introduction, Jerry Randall, CEO, co-founder of the business, and next to me, Daniel Wells, CFO, joined us in 2021 when we acquired the BBI business. I'm really happy to present to you today. As you know, any questions that you put up, we'll definitely happily deal with those at the end. So, I'm very happy to present our 2023 results, and we'll start on the first slide. So, results for the year, our revenues were up just under 17% compared to the previous year. In November of 2022, we acquired a product called Earol through the acquisition of a company, HL Healthcare. And so we've also presented like-for-like figures here.
And so when you see the like-for-like reference in the numbers, that's assuming that we've had the Earol business for the whole of 2022, so it's showing you the true underlying growth. So underlying growth in revenues was 5.4% for the year, and that was driven by the Venture Life brands. Of that 5.4%, just over 1% came from price increases, and the balance was from volume growth. And as we go through the presentation, we'll give you a bit more detail on that. Adjusted EPS 5.2p up from 4.3 previous year. Free cash flow , GBP 4.8 million, up from 2.8. Danny, again, will go into more detail on these numbers as we go through the presentation.
Bottom left, Adjusted EBITDA was up 29% on a like-for-like basis, 7.5%, and what you're seeing is the effects of growing revenues, increasing revenues, generating more gross margin, and because of stable cost structures, that gross margin dropping through to EBITDA progression. Over the last 10 years, our compound annual growth rate across the whole business has been 24%. If we look at that across the two specific areas, so the Venture Life brands, which comprise 60% of our revenues, customer brands, 40%. So of the Venture Life brands, that's had a compound annual growth rate of 50% over that 10-year period, because that's a combination of acquisitions that we've made and also the further continued organic growth of those acquisitions after we've made them.
Customer brands has grown only organically, but that's grown at 13% a year on a compound annual growth rate. Our net leverage at the end of 2023 was 1.3 times, compared to 1.65 times the end of the previous year. But by the end of the first quarter in 2024, that had fallen to 1.15 times because of the significant cash generation in the first quarter. Danny will talk a bit more about the cash and the generation, and, how that's affected our net leverage in a later slide. I'm gonna cover now, just some of the sort of commercial highlights and how we've, delivered some of the growth so far.
Then we're gonna talk about each of the key product areas and how that growth has progressed and what's driven it. Then we'll go into the product areas a bit more, some of the developments, some of the key things we're looking at. And then Danny will also show some more detailed information on the financials as we go through. So starting here with commercial highlights. So these are some of the key things we've done on the Venture Life brand side, particularly to grow the business. We measure within our revenues, how much of the revenue comes from brand new products. So that's a product that's been introduced into the market or into a customer for the first time in the financial year.
So for 2023, 6% of our revenues were generated from new products launched during 2023. That was 18 new SKUs. Nine of those were in the Venture Life brands, and you can see them on the left-hand side of the page here, circled in the box, and I'll cover those brands as we go through later. But nine were also in the customer brands business, and where we've developed products for customers. We had a 9% increase in UK distribution points, so that excludes Dentyl. Dentyl had a delist during the year, so excluding that 9% growth. Although, we've received good news this week that Dentyl is now gonna be listed, extending listings in Morrisons retail, so mitigating that that delist that came before. We achieved 28 new listings across the UK retail estate.
We bolstered and invested in our sales team in the UK during 2023, and they've had fantastic results from getting new listings. So one new listing would be one new product in a chain, so it could be in Boots or Superdrug or Tesco, et cetera. Significant to our growth this year in revenues was the online revenue growth, up 41%, and we'll go through that in subsequent slides. But we've invested in our team and in our activities there, and that's yielded very good results, particularly across our key brands. I'll pass over to Danny now for the next slide, just to talk about the performance in each of the therapy areas.
So what we're looking at here is revenue growth of the group on a like-for-like basis. Now, the right-hand side of the slide, what we're showing is that 5.4% like-for-like year-on-year. And what you can see in the VL, under the VLG brands pillar, still to the right, is that all of that growth came from our brands, the VLG brands. These are the brands where we own the trademark, we're in control of the marketing spend, and we have those direct relationships with the end retailers. We still achieve growth in our customer brands business, albeit on a smaller level. Those of you who've been following us for a few years will know that that business grew 40% in the previous year in 2022. So we've consolidated on that growth.
Despite the small reported growth shown for the customer brands, that business actually outperformed projections during the year, so we're really pleased to have consolidated on the strong growth in the previous year. For the Venture Life brands, I'll talk from the left-hand side of the slide here to break down that 9.3% growth into our key therapy areas. The first rectangle on the screen on the left-hand side is highlighting our three highest growth opportunity categories. These are the categories where we have where we feel we have the most opportunity to grow out the performance of these brands through new product development. Firstly, so introducing new products to existing brands and growing out those portfolios, enabling them to get a better shelf positioning with key retailers.
Secondly, growing online with those brands, and we'll talk through UK online growth in a moment, and replicating that online expansion into new geographies, and also internationalization through distribution agreements as well, further into areas outside of the UK. So left-hand side, firstly, energy management. Energy management grew by 15% year-on-year. That business has gone from GBP 6.3 million to GBP 7.3 million of revenue in 2023, and all of that growth came from the Lift brand. So if I break down the two brands within that pillar, Glucogel is a prescribed product, which generates around GBP 2 million of revenue each year. That's a protected business, protected by equalization deals with pharmacies, long-term agreements. So the growth has come from the Lift brand, where we've been investing in our online activation and also internationalizing that brand as well.
So that GBP 1 million of growth has come from two key places. First part of that growth is from growing online in the UK. We've taken the Lift brand from being a GBP 900,000 revenue business in 2022 to GBP 1.4 million of revenue in 2023. So around 50% growth of the Lift brand online, and really, that's been achieved by focusing on our product positioning online, making sure we win the search page, being in the Amazon Buy Box , and ensuring that we've got good product positioning of Lift online there. The second half of the growth on the internationalization piece I mentioned, this has been achieved in Ireland. We acquired a new customer at the end of 2022 in Ireland. It's the Lift brand is an incremental product to that geography.
It wasn't there prior to this customer. We sell through the wholesalers. The wholesalers put it through into independent pharmacies, and we've seen that to be very successful. It's quickly that customer has quickly become one of the largest Lift customers within our group, and we hope that we can replicate that success in Ireland into new geographies as we move forward. But our focus was really U.K. online last year and also internationalizing into Ireland, and we'll talk more about the outlook for Lift later on in the slide deck. Women's Health next. So Women's Health grew by 10.7%, year-on-year. That's around GBP 600,000 of revenue growth, from GBP 5.9 million to GBP 6.5 million in revenue.
This business is split, about half of it through the UK and online within the UK, but also half of it internationally, where we have some key partners. If I talk to the international growth first, around GBP 300,000 of the overall GBP 600,000 growth came from one key international partner, whereby we have a long-standing agreement, long-term agreement, and we rolled the product out into new markets within that agreement during 2022, which then annualized in 2023. There's still a long way to go in that particular agreement, with further markets to be rolled out. So we expect to continue to grow the international business of the Women's Health products through that customer as we move forward. The other half of the growth on Balance Activ was, again, similar to Lift, achieved through online and some distribution gain.
I'll talk to the online piece first. The online piece grew around 17% year-on-year, so Lift brand went... Sorry, Balance Activ brand rather, went from GBP 1.1 million to GBP 1.3 million in revenue. Balance Activ had already been online for a longer period of time than the Lift brands. We established that brand on Amazon in the UK around 2 or 3 years ago, so we're still delivering good growth on that brand, whereas the Lift brand, which we grew exceptionally online last year by 50%, we had a real focus on getting that well matured on Amazon last year. So different stage in the life cycle on Amazon, but still growing on Amazon, importantly. And lastly, within the Women's Health section, and we'll talk about it later, about new product development.
We gained some new listings at the end of last year, where we've got small amounts of revenue in 2023. We'll annualize on those distribution gains moving into 2024. Last one of the three high growth categories for us, ENT, ear, nose, and throat. The key brand here is our Earol brand, which we acquired from HL Healthcare at the end of 2022. The growth shown, 6.5%, is on a like-for-like basis, so that business has grown to GBP 5.3 million of revenue last year from GBP 5 million in the year previous. That growth in particular has come from the online channel again.
So similar to Balance Activ and Lift, we have put these products onto Amazon through the Seller Central model, whereby we sell direct to the end consumer ourselves, and that gives us control in order to maximize on the advertising efficiency we get out of that channel. So we can already see post-year-end, that having launched that brand during the year, in September last year, we did GBP 250,000 revenue in 2023 on a run rate basis. That's up to around GBP 500,000 in revenue already. So growing quite quickly on Amazon and just following a similar path that Balance Activ and Lift have taken in the last couple of years, respectively. Moving on to oral care next. Oral care grew by 3.9%, so back into growth this year following a period of decline last year.
Oral care growth has come purely from the UK. We have no revenue from China in these numbers. China is not in our forecast either. I know those of you who have followed us in the past know that we had some large revenues from China a few years ago, but just to be clear, this is a predominantly UK business for oral care, and the growth came from UltraDEX. We remain in a position of number one in the halitosis category. Although we had a couple of delistings on Dentyl last year, we've been able to mitigate that in the first third of this year, as Jerry mentioned a moment ago. So pleasing to see that brand coming back into growth. We don't put as much advertising cost into our oral care brands as we do on our high-growth categories.
We've got them more in a maintenance mode because it's hard to compete with the likes of Listerine and Colgate, but we've got opportunities to make these brands significantly more profitable, and that's an area of focus for us at the moment. The next section is oncology. Oncology grew by 25% year-on-year, going from GBP 2.8 million in revenue up to GBP 3.5 million in revenue. These are partners-only brands. We've got no sales through retail chains. All of that growth from GBP 2.8 million to GBP 3.5 million came from the Gelclair brand. Gelclair, we have a BD team who are growing this brand internationally. We secured some new deals at the end of 2022 and during 2023, where we've had first-year orders from those customers, but those agreements haven't really matured yet.
So it's the start of revenues coming through from new business development activities, which we expand to grow out that Gelclair brand further. There is also some favorable order timing in 2023's numbers from a key customer, whereby we can see some years we get a couple of orders fall within one year, then the next year it might be a bit quieter, but it picks up again in the future year. So about half of the growth from Gelclair was from the BD activities, and half of it was more of a timing effect from certain order patterns. I'll just touch base on Pomi-T for a second because I think it's important to know that, you know, we see there's quite no growth I'm talking about today. I'm not talking about growth for the Pomi-T brand.
We see a big opportunity to grow out the Pomi-T brand in the UK, and we'll touch base on that later, but we'll see more of that come through in 2024. Foot care next. Foot care grew by 6.5%. This is a bit of a smaller part of our portfolio compared to the other brands I've been talking about. Foot care business was GBP 2 million in revenue last year from GBP 1.9 million the previous year. That growth was really coming through in the UK. Post-year end, we have secured a new deal for the foot care business internationally, which will grow that business by 10% from the numbers we saw last year.
So pleasing to see new international agreements coming through, and we hope to build that out further as part of a private label offering that we'll talk about later as well. Lastly, on this slide, dermatology. This is the smallest part of the VLG Brands portfolio by a long way. We do about GBP 1 million of revenue through three or four products within the dermatology category. One of those products is our Procto-R product, which again, has impact from cyclical order timing. Some years we get strong orders, two orders in one year. Next year, we can get quieter orders, and that's really what we saw in 2023, with some adverse revenue from that particular product due to that order timing impact.
But under the skin of the revenue and performance of this category, we also launched a new product called Rosacea Cream, which has grown significantly from around GBP 100,000 of revenue in 2022 to around GBP 350,000 of revenue in 2023. So some good things happening under the skin of the dermatology product. No pun intended there. I'll just touch base briefly on this slide. What we just wanted to show here is the composition of the VLG brands year-over-year. The top bar is just showing those seven key therapy areas that we've just been talking about and how much of our VLG brands they contribute to. And you can see that those three on the right-hand side, oral, Balance Activ, and Lift, where we've got the highest growth opportunity.
We're continuing to build those out, particularly Balance Activ, and Lift, as a core focus area for the growth group, high growth, and we'll expect to see the blue part of that bar, the oral bar, grow more in 2024 as we annualize on distribution gains that we've been working on at the end of last year.
Great. Thanks, Danny. Just gonna spend some time on each of the key brands and growth areas. Danny's talked through how the revenues have grown, what's driven, what's driven those. Starting with energy management, 15% growth, like for like, year- on- year, and 52% growth in online revenue, and Danny's talked about how we've been achieving that. That growth has come a lot through the Lift fast-acting glucose shots and the glucose chews, as you can see there, online sales. We launched our own e-commerce site in Lift during the course of the year. That's quite small at the moment, but we're using that particularly to focus on the new products we've developed into this portfolio. So you'll see the bottom right image in the middle set of product images. There's the four tubes there.
That's the Lift Active Energy range that we've launched, which includes vitamins and other items to be taken each day. So the other products so far are targeted just at people with diabetes, and it's targeted at measured dose glucose shots that they can take or chewable tablets if they have a hypoglycemic attack. The Lift Active Energy shots are chewables, excuse me, are targeted more at the general energy space. And we're using the D2C site particularly to help promote these, where we're starting to get a good level of subscription into those revenues. So those four new SKUs were launched during the course of the year in certain retailers.
We gained more market share post-launch, and you'll see, as noted on the slide, the new products were launched in Sainsbury's, and that represents 6.5% of the UK distribution, Lift at the moment. Social media have been going well. Some good campaigns there, and very happy with the growth of Lift. Moving on to women's health, and so Balance Activ range. When we acquired the Balance Activ range, it had the core products for the bacterial vaginosis gel, and pessaries, and the moisture gel. Those two products you can see in the central product pictures, it's the blue box and the green box. Since the acquisition, we've been building out the range, and in 2023, we launched 4 new products in this range.
You see them at the top, the pink product, for thrush cream, then two, cleansing products, in purple is a foam and some wipes, and then also our first, food supplement, Her Flora range with probiotics in this space. The thrush cream has been a very interesting product. This is a medical device, can treat, to treat thrush, and that was launched in Superdrug towards the end of November 2023, and in the early days, outstripped our rate of sale expectations quite significantly. We've now launched that in Tesco, the end of quarter one, and that will be going also into Boots, end of April, early May. We think that'll be a really real star product for us this year, being a medical device launched into that thrush space, alongside the bacterial vaginosis products in Balance Activ.
We are the UK number one. Balance Activ is the UK's number one BV treatment, and we grew distribution points 16% during the year, and that was the work of our commercial team, who did a fantastic job increasing that, getting the thrush cream in a comprehensive marketing strategy based on extensive research. We undertook a big piece of research just around the start of the year, which canvassed the opinion of 5,000 women on the women's intimate health area and their feelings. And that's really shaped a lot of our thoughts in terms of new product development and marketing and how we promote this product. Also exciting for us later in the year, we're gonna be launching a range of products under the menopause banner within Balance Activ. It's a big area of interest.
Lots of retailers are pushing quite hard to get products in for the menopause space. We have a number we've developed. They'll be launched in October during what is Menopause Month in the UK, and we see exciting growth opportunities in that area as well. Moving on to Earol. Danny's talked a bit about where the growth's come there. Obviously, the product just starting online in Amazon, GBP 200,000 of sales during 2023, and that will annualize to a significantly bigger figure during 2024. The product was only on sale in Boots as a retailer when we acquired it at the end of 2022. That's now in Tesco and other retailers, and obviously, as I said, now on Amazon. Launched a new product during the course of this year.
That's the Baby Earol , which is the product you see towards the middle of the product photos there. That's now approved for children and babies six months and upwards. So it gives us dual sighting in certain retailers as we're now in the children's space, as well as in the ENT. And also the Earol Swim product, which is a great product for protection if you're going swimming, and gives the ear some protection against the water that may come in. Launched in Tesco in August of 2023. That's got 20% of Earol's distribution points now, and we will begin to internalize some of the manufacturing for Earol in our plant in Italy during the course of this year.
team has done a great job in getting that prepared, and that will enable us to start internalizing some of that profitability. During the course of the year, which we did mention, I think at the interims, we were awarded the Most Valuable Products Award in the Natural Healthcare category. An award from Pharmacy Magazine. Very pleased to get that award for a great product in the space, and we'll be continuing to expand the Earol portfolio with other products going forward. We have some nice digital promotion going on at the moment. You'll see in the top right-hand corner one of our campaigns that's running, which is really sort of highlighting that you shouldn't stick anything inside your ear apart from Earol to help with the wax reduction, of course. Danny.
Moving on to an area which is, we've, we've decided to highlight more in the business is that of private label. So private label is where you sell a product to a, a retailer who has a retail outlet. So, you know, for example, Boots or Tesco or Superdrug, and they have that product under their own private label. So already to date, and in 2023, we generated GBP 2.4 million of revenue in this space for products that we already sell. So you'll see them in the bottom left-hand corner there, in the blue livery there, are some products we sell into Kruidvat, which is the, the largest pharmacy, chain in the Netherlands, part of the AS Watson Group .
In the green is the products we sell to Superdrug, also part of AS Watson, and then, the rosacea product there for Boots that you see. So these are products that are differentiated from our brands. They're not the same as our branded products, but they sell into the retailers. We sell them at a lower price because obviously they're not our brands. We don't have to provide any advertising or promotion because it's the retailer's brand. But in terms of percentage, EBITDA, marginality, they give us the same level of percentage marginality, as our branded products. So, really interesting revenue stream. We launched one particular new product in this range during 2023. You can see it on the right there. It's a treatment for rosacea, and that was launched under the Boots No7 Derm Solutions brand.
That achieved nearly GBP 300,000 of net sales in the first 4 months, and that will annualize, obviously, to a much bigger figure. We're also working with both Boots and Superdrug to develop more products for them in private label, and we see this as a strongly growing area of revenues for us going forward. We've got some points here regarding the operational improvement and developments within the business. So, I think as I might mentioned already, we've expanded and grown the marketing team and the commercial team. That's having a big impact on the growth in distribution points and in revenues, and being able to launch our new products developed into the UK. We will be doing some entity and group structure rationalization during the course of the year.
That's where we've made a number of acquisitions. We have certain group companies and structures which we can slim down and make more efficient, and that will bring us a cost saving going forward on an annual basis. We're introducing AI into the AI platforms into production to help us improve our production throughput. So that's improving yields, reducing scraps, improving overall production efficiency. And on MDR, this is the transfer of our products from the Medical Device Directive to the Medical Device Regulations. This has been ongoing for a number of years. Very significant piece of work for our team in Italy. They have been working very hard with the notified bodies. All of our products, we have 27 technical files in the group. All of our products are on track and running through this process.
We have plenty of time available. Some of our products have already achieved MDR compliance, and the team have done a fantastic job in moving that along. The deadline for the compliance of the new regulations has been moved out till 2028, so we have a bit more time to finish this. We spent quite a lot of money. We spent nearly GBP 1.5 million already on this. We have another GBP 1.5 million to spend, and that will be spent over the next two or three years to finish that process. We're very proud of our ESG progress in the business.
We have a team dedicated to that now based in Italy, and really pleased to announce that we received the B Corp certification for our Italian facility, the largest facility in the group, during 2023. We'll be continuing that process across the rest of the group, and our hope is that by the end of 2024, we'll have B Corp certification across the whole group. Also, we achieved an upgrade in the EcoVadis sustainability rating. This is an externally assessed rating that a lot of the retail customers who we deal with look to, to understand our commitment to sustainability and improvement. We were previously a bronze level award back in 2021. In 2022, we've been awarded silver, which is an improvement. It's a dynamic measure, so they, I think they measure approximately 75,000 companies around the world.
And as standards improve, so the hurdles for the relative awards go up. So if you don't change, you'll actually slip backwards in the ratings, but we've actually improved, and that's a real credit to the whole team and the business for those improvements. You see some of them listed out here, increasing solar power, reducing paper usage, water saving, et cetera, and that will carry on. We've assessed the carbon footprint at our Italian plant this year. We've looked at the life cycle analysis for some of our key products. That work will continue this year across the whole group, and by the end of this year, we'll be in a position to start drafting our net zero plan for sustainability going forward.
I'm going to hand back to Danny now, and he'll take you through some more of the financials in a bit more detail.
So talking from the top left-hand of this slide, you can see the continued upward revenue trajectory of the group over the last five years. Jerry talked at the start about the 10-year, 24% revenue CAGR. I think I just want to dive into a bit more detail about the VLG Brands impact within that growth. So between 2022 to 2023, we've talked about how VLG Brands was the key driver of that growth. If we just dive down into the box at the bottom left of this page, the orange bar represents the share of VLG Brands revenues as a proportion of our overall group revenues, and you can see that that's been gradually increasing over the last few years, and it stepped up again in 2023.
What's really important to highlight what about why we're doing this is that when we look at this business from an EBITDA contribution standpoint, the EBITDA contribution from our VLG brands is around 36-37%. That's defined as the gross profit from the sales of VLG brands, less the marketing cost that we put in there. So it's EBITDA contribution before any central overhead. That compares to around 22-23% on the customer brands part of the business. So really important that we continue to grow out that VLG brands business as part of our longer-term strategy, and that's part of our core focus over the next few years, to invest further in these brands that we own, that we can control the growth and destiny of where they go and internationalize them, because it's very profitable for us.
Coming back to the top of the slide, top middle, you can see that the gross profit follows a similar shape and trend to the revenue. Although there was some gross profit or gross margin, rather, dilution year on year, which I'll talk through in more detail on the next slide, as revenue grew 17% last year, gross profit in absolute terms grew 14%, and I'll explain the reasons for that small dilution on the next slide. But on the top right-hand side of this page, you can see how the EBITDA margin, both in pounds in absolute terms and in percentage terms, is progressing nicely over the time, over the timeframe. Last year, really pleasing to step up margin by 2%. That's really been achieved through getting gearing effect, positive gearing effect on our fixed costs. We're well invested in our overheads.
We've strengthened our commercial teams and our operating supply chain teams over the last year and a half, and, we're well placed to deliver and manage further growth rolling through the business without having to invest significant amounts in that fixed cost overhead I'm talking about. So we'd expect that with the volume growth and revenue growth of the group that we expect to deliver, we will see margin progression and leverage benefit come through more strongly as we move forward, and we expect to get to around 24%-25% over the next two years or so. Just of note on the OpEx itself, we do have inflationary costs.
Our inflation is about 5% impact on our cost base, but we were able to mitigate a large part of that during 2023 because we've undertaken some rationalization activities, as Jerry lightly touched on on the last slide. As we've grown through acquisitions, we've got multiple entities in our group and more processes than we need to. So by simplifying those and streamlining our operation, we'll make things more efficient for us in the future, and that's part of our plans to continue improving the margin at the bottom line. Moving to the bottom of this chart, bottom middle, cash gen from ops. You can see over the last five years, it's taken a bit of a funny shape, but the last two years, you can see that we're starting to get this back to a position of normality.
In 2023, we generated GBP 9.8 million of cash at a cash conversion of 85%. I think it's important to note here, excluding the impact of exceptional costs. When we do deals and then do complete an M&A, we incur a lot of deal fees to get those over the line, there are one-off costs in our business. When we did the HL acquisition at the end of 2022, all of those fees were incurred very late on in 2022 in our P&L, but we paid them out from a cash flow standpoint at the beginning of 2023. So you'll see our trade payables has come down significantly year-on-year, and part of that has been driven by this payment of exceptional fees related to doing M&A at the end of the previous year.
So that was around GBP 800,000 of outflow at the beginning of the year. So, and from an underlying standpoint, cash from ops was more like GBP 10.6 million at around a 90% conversion. And you can see on the bottom right of slide that our Adjusted EPS is up year-on-year. We expect to get that to around 8 pence per share through organic growth over the next couple of years, through conservative organic growth. We think we can build that out much more strongly through M&A and also, delivering the high end of our revenue ranges. So on this slide, I'd like to just break down into the margin points, in a bit more detail.
Left-hand side of the slide, what we're showing here is that at a gross margin level, the dotted orange line, gross margin's been broadly flat over the last five years, with a 1% reported decline in 2023, which I'll come back to in a minute. But as you can see, the EBITDA progression over that same time period is continuing to improve, and we expect that to improve further. I would like to highlight within the 39.3% gross margin for 2023, that Venture Life has applied a change of accounting impact. I do apologize to go through an accounting impact change within an investor presentation, but given that the size of the impact is meaningful, it's worth talking about. As the growth of our online business grew by 40 last year, the costs of serving our Amazon business have grown.
We are gaining that growth through direct to consumer selling, so we're selling online at a retail price point, so similar to the price you would pay in, say, a Boots or a Tesco for that product. So you get a higher sales price, then you incur commission costs with Amazon and fulfillment fees to deliver that sale. You actually deliver the same pound note profit that you would in a B2B sale. However, from a percentage margin standpoint, it's lower because of that higher selling price and also the extra cost to fulfill that sale. What we did during the year is we wanted to make sure we were accounting for our commissions right in that part of the business.
So previously, up until the end of 2022, those commissions were deducted from our gross revenue to get down to net revenue, so we had a lower net revenue. But in 2023, we've changed our accounting treatment to make sure we're applying best practice, and we've increased our revenue by about GBP 500,000 for the commissions, which were previously deducted by from revenue. So that's also cost... Sorry, that cost is now in our cost of sales as well. So our revenue's up by GBP 500,000, our cost of sales is up by GBP 500,000, and our gross profit is the same value as it was before, but that has a 0.5% impact on our gross margin year-on-year.
We've not restated the previous year's financials this, because the Amazon business wasn't large enough to warrant making that restatement of the prior year number. So in summary, on a like-for-like basis, when you take that 0.5% into account, our like-for-like gross margin went from 40.2% to 39.8%. So I'll explain the rest of that piece on the right-hand side of this slide now in the table. I won't talk through every point of this table, but I'll highlight two of the key ones, inventory management being probably the most prominent point to talk about. During the year, we made a decision to destroy stock that was slow-moving or no moving, left over from the hand sanitizer gel sales back in 2020.
So those of you, again, who followed our business for a few years know that we did a lot of sales that year, made a lot of margin from it. We've had some stock left over from that, which we've been slowly moving. It has no expiry date, so we didn't have all of that provided in previous years. And we decided that with the stock holding cost involved for continuing to keep that in our warehouses, it just wasn't worth it anymore when the market is saturated with this hand sanitizer gel. So we wrote all that off. We had it destroyed. That was a GBP 300,000 impact on our P&L in 2023, which is a 0.6% impact on our gross margin.
So that alone, if you add that back to the like-for-like margin figures I was talking about a moment ago, it actually puts our gross margin back into an underlying of 40.4%. And I think that's a key point to just take away from the slide, is that, you know, there's some, we've done some inventory health check this year. It's improved. Our actual underlying gross margin performance is improving in the business, which is what you would expect when we're continuing to grow out our VLG brand's revenue.
The last point I'll make on this slide, relevant to very identifiable one-off items, which won't repeat in the future, is that when we acquired the HL Healthcare business at the end of 2022, because of the accounting standards, we have to realize inventory that we acquire at a fair value, which means we put up our cost of sale on that inventory when it unwinds through the P&L. So we, we put it through at a higher cost of sale than it actually costs us to make, in simple terms, and that's had a 0.2% one-off impact again from selling through that inventory at the beginning of 2023. So these are non-repeat factors in our, in our gross margin performance for the year. Just to build a bit further on cash now, this is the last finance slide.
We've already talked about cash from ops earlier on and the impact of those exceptional cash inflows, which would have shown a stronger underlying cash gen performance. I'll just touch base on what's driving cash conversion improvement. There's probably two key things. One is that it's the impact of acquiring highly cash generative businesses and assets in recent years. But secondly, we've been simplifying our operating models and our order to cash cycle over the last couple of years, and more prominently of recent, through simplifying and reducing the number of our supply partners into one. So as an example, our distribution supply chain operation, we had three partners in the UK. We're moving that down to one partner.
So simplifying our operating models, enabling us to get a slicker order to cash cycle as well, which helps improve that cash conversion and cash collection ability, and all the ease around it. Free cash flow, just a word on that. Free cash flow, a really important number for us because that's the cash flow that's available to service our debts. That's grown up to GBP 4.8 million during the year. Again, on an underlying basis, that would have been 800K better because of those exceptional outflows. And as Jerry was mentioning earlier, we've been investing in our medical device upgrade from MDD to MDR. We spent around GBP 1 million on that in 2023. We don't need to keep spending that money in the future once we've completed this medical device upgrade.
So taking away these one-off impacts, such as the exceptionals and the medical device upgrade, free cash flow performance on an underlying basis is more around GBP 6.5 million, and that gives us continued confidence over our ability to pay down our debt and continue delivering the business. Just a word on leveraging. Net leverage came down from 1.65 times at the end of December 2022 to 1.3 times at the end of 2023. We wanted it to come down a bit further than that, but our year-end is very sensitive to timing of revenues and cash collection on those revenues. We always have a strong second half weighting to our business.
2023 was more weighted towards Q4 than we would have—I'd liked to have happened ideally, and that meant that we collected that cash in Q1 of 2024. So our net leverage has come down notably to 1.15 times post-period end as of the end of March. Last thing to say on this slide is, and we will be putting an RNS out on this tomorrow. It is covered within our statements, our results announcements, and nothing sensitive here, is that we've completed the refinance of our business. So we've extended our revolving credit facility for a period of 3 years at improved margin, and also a changing the covenant from gross leverage to net leverage, which is important for us because it gives us more headroom on our covenants and keeping down our leverage into a safe place.
Thanks, Danny. Just the slide to wrap up, really. So what we really talked about in 2023 is a year of, you know, good organic revenue growth, increasing distribution points in the UK, launching new products into the UK, improving the distribution of our products across there, growing online sales. NPD's been a big part of 2023. A lot of those new products have launched late in the year, so you start to see an annualization of those revenues into next year. Private label is a new stream of revenue. We have used private label, and we have made private label sales in the past, GBP 2.4 million in 2023. We're going to analyze those out in the future, so you'll see that revenue stream growing.
But, the team in Biokosmes in Italy, doing a fantastic job developing and bringing out new products for the private label, as well as for customer brands and for Venture Life brands. In fact, in the customer brands business in Italy, we've got a number of new customers who the business has brought in during 2023, and they'll start to impact revenues in 2024. We've got the continued margin improvement measures, which Danny's talked about. We continue to work on those. Net leverage has come down now to 1.15, end of Q1 2024. We expect that to keep coming down. Cash generation being quite important for us. I think just on the question of M&A, we get asked that quite a lot.
Are we still interested in M&A? How will we fund it? What would we, what we use to pay for that? So yes, we are still interested in M&A. We're sensitive to, shareholders' views, on net leverage. Obviously, at the moment, inflation is coming down, concerns about debt and net leverage are perhaps softening, but there is still, a relatively strong view about maintaining low levels of, of leverage. So we continue to review and be sensitive to that information. There are opportunities out there. There's, plenty of M&A targets we'd like to access, but, we're just being, you know, cognizant of our shareholders and what their feeling is about our, our debt levels. So, that's the end of our presentation.
We've got some questions that have been submitted, so we'll go through and answer the ones that we can at this point. So I'll read out the questions and then give you our answers. We may not be able to answer all the questions at this time, but any that we don't, we'll make sure we cover with the written answers as well later. First question was, "Do you intend on expanding by buying other companies? And if so, will it be via cash or shares?" Well, I think I've covered that a little bit. Yes, we are still interested in M&A.
With the share price where it is, we wouldn't contemplate issuing shares to raise capital or even to pay for an acquisition because the company is clearly seriously undervalued in current market conditions. And we have renewed our RCF, as Danny said, and we do have access to cash. And so we'll just be monitoring that carefully against the opportunities and the right rates of return, and we may use a bit more of our leverage for an acquisition. Next question we got is, "VLG's profits have been deeply impacted by exceptional costs, though the majority of these costs are set to repeat year on year, such as share-based payments, amortization, and impairment. Is that correct?" I'll ask Danny to cover that question.
Sure. Yeah. I think there's a few elements here. I'll try to be as brief as I can. Exceptional costs, exceptional by their nature and their size. We usually incur these when we do an M&A, complete an M&A. They are one-off in terms of deal fees to complete the deal, and then we have a post-period cost from integrating that brand or that business into our wider business. So, these are incurred only when we do an M&A, and we don't have these repeating in the future. But some of the other costs mentioned here are share-based payments and amortization. These are not exceptional. These are ongoing costs in our business. We like to share-based payment.
We want to make sure everyone in our business feels incentivized to stay in our business long term and give them some share option to be a part of that business. So we'll always have a share-based payment charge on our P&L. And the amortization profile, that's an ongoing cost as well. And so long as we're growing organically, we won't expect that amortization number to change in any drastic way. So we'll continue to amortize those brands over the remaining life. But what you will see is because you've got growing organic revenues and EBITDA from past acquisitions, no new deals coming in on an organic growth basis, you'll start to see that exceptional EBITDA growth flow down to profit before tax. So you start to see good margin improvement at the bottom of the P&L because the amortization stays flat where it is now.
The last point is the impairment, impairment one, that's a good call-out. We did impair two brands during the year. We impaired our Dentyl brands because we de-risked our forecasts from China. We took all of our China revenues out of the oral care brands. It's just been too uncertain for us over the last few years, and so we wanted to de-risk that asset. Secondly, in our Pharmasource business, the Pharmasource CGU, we also had an impairment there in 2023. Although incidentally, with new deals signed post-year end, had the deal been signed just a couple of weeks earlier, we would have been able to avoid an impairment on that brand. But it's good to have the new deal, but we did have these one-off impacts from impairment in 2023, which will not repeat in future.
Just a final note on CGUs and impairment, we've got good headroom on all of the other CGUs, so that is a real one-off along with the exceptionals.
Great. Thanks, Danny. Next question we've got is, will the surge in Lift brand sales continue without aggressive marketing in the crowded energy drinks sector? I think first thing to point out is we don't feel we compete in the energy drink sector. So historically, up until 2023, the Lift products, that's the shot, and the chewables, are directed entirely at people with diabetes. So it's a measured dose, glucose, so they can use that when they have a hypoglycemic episode. So we've launched the Active Energy products this year, that does go into the general sector.
These aren't particularly suitable for people with diabetes because they also contain vitamins and other additives, which if you're taking them, a number of glucose tablets during the day, you may run into a situation of exceeding your recommended daily allowance of those vitamins and such like. So that's going into the general energy market. We're not targeting drinks, we're not targeting gels, but we're using our D2C site that we launched this year to focus on getting this into the sort of Active Energy space, and therefore attract different customers to the ones who are having our normal Lift brand. So hopefully that covers that one there. Just, sorry, just to pick up about will we continue to grow without aggressive marketing?
So remembering what I said about the products, the vast majority of sales go to people with diabetes, and that will continue as we increase distribution. As you put those products out into Amazon in Europe and increase in the US, we'd expect to see continued growth in the Lift brand overall, and would expect to see the Active Energy products growing a bit more slowly as you build out new customers in that area. Next question we got is, do you reckon Earol, Lift, Dentyl all operate in crowded markets? Can you create differentiation with these brands? And how? Well, I think Earol and Lift obviously separate from Dentyl. Dentyl absolutely operates in a very competitive market space.
Its main competitor is Listerine, and the three big general mouthwash products control over 80% of the mouthwash market, and Dentyl only has 1.4%. So with Dentyl, we have to try and differentiate with claims, and smart digital campaigns, and also working on cost of goods improvement, so we can improve the margin coming from that. So that definitely is in a very competitive space. Earol, less so. Earol's in obviously earwax removal. It's the second biggest brand in the space. Otex is the biggest brand in treatments in the UK. They have a lot broader spectrum of treatments than Earol, but we are the number one oil spray products for wax removal in the UK.
Lift, I think on the diabetes side, that's in a less competitive space. Dextro is the competitor for Lift, but Lift has many advantages, particularly that it is measured dose, whereas Dextro isn't, so much, and it is frequently recommended by pharmacists and healthcare practitioners. So I think Earol and Lift, the diabetes are in, you know, are not in crowded marketplaces, but I think, Dentyl is. Next question: How will the extended deadline for MDR compliance affect the company's regulatory strategy and financial planning? And that's quite a simple one to answer. So the original deadline, when it first started back a while ago, was 2024, then it was extended to 2025. Impacted, obviously, COVID and economic factors. They allowed more time, and now it's been extended to 2028.
So our original plan was to be finished by 2025, and that involved us spending, you know, the majority of that remaining GBP 1.5 million in the next year. But now we've extended all the current MDD licenses out to 2028, so we now have until the end of 2028 to deal with that. So it means we'll spread that cost out over perhaps 2-3 years, the remaining GBP 1.5 million, rather than spending it in the next year to 18 months. What are the key markets and sectors you are targeting for expansion in 2024 and beyond? So, we're targeting, obviously, those three core areas that we've talked about. So that's women's health, and as we said before, we've got those new products we've just launched.
We've got the menopause range coming out later in the year. Lift, energy, diabetes, that's an area of focus for us. ENT, ear, nose, and throat, where we've got the Earol brand. Those are the particular sectors that we're interested in for growth and expansion going forward, particularly in the U.K. Internationally, we're looking to work those into a wider audience as well, along with particularly the oncology support products, which are doing very well there. And I think the final thing, as I mentioned already, would be private label, where we see a good opportunity for private label. I mean, if you look at consumer goods as a whole, in Europe, about a third of all consumer goods are private label. In the U.S., it's lower, it's 14%, in the Far East, it's only 6%.
So the European market, which in a consumer market, which consumer healthcare is a component, is does have a heavy weighting for private label, so we feel it important that we we access that. Next question. So how will you get more capacity in fill into the Swedish site? Would it be better to consolidate into Italy? Our Swedish site is running at not at full capacity. I mean, we run one shift there at the moment, and that's sufficient for the needs that we have, and we can run more shifts there if we need to. So at the moment, we're looking to get more business into that Swedish plant if we can. It'll utilize some of that capacity, and we continue to look for that opportunity at the moment. Excellent.
Next question: Is China now off the table? Well, as Danny explained, there's no revenues from China within our numbers now or going forward in the market forecast. What we're doing in this area is we're working through really good contacts and people within the business who have very good relationships with long-term successful commercial organizations in the APAC region to cover not only China, but also APAC. And in APAC, the main outside of China, that's Asia Pacific, the main countries you want to target are those fast-growing countries, and those are really around Indonesia, Philippines, and Vietnam. They're where the real growth in healthcare markets is.
So we're looking to find, companies, marketing support, distributors who can help us distribute all our brands, both into China and into those, regions. That needs to be a company, that's got track record, credibility, relationships with other European businesses that can help us, you know, firstly, in cross-border into China, as we first take products in. Secondly, in China, once we get registrations, and then in those three APAC countries in particular. So that work's ongoing. We're in discussion with some, you know, well-recommended, highly experienced organizations in the area with a view to picking one or two who can help us with partnering all of our products in that space.
So nothing in the forward numbers you'll see in the market, but we do expect revenues in APAC to pick up in the future as we, you know, settle that, settle that down. Next question is a question about private label. Who owns the formulation? Are there exclusivity terms to prevent you offering the formulations to others? We own the formulation in private label. It's all ours. There are formulations, and we don't have to give exclusivity of a particular formulation. The way, you know, we sell to retailers is we'll produce a product for them in their livery. That, in its own right, would give them the exclusivity, but we would be able to use similar formulations and products across different retailers if that's appropriate.
Next question is: Do you anticipate customer brands growing faster in 2024 versus 2023? I'll hand over to Danny to answer this one, as I've been answering all of these.
No problem. So, customer brands, we expect that that business will grow in a small way in 2024. We're actually working on a number of key opportunities within that part of the business on the development side. I won't be able to give the details around those, but our focus is on growing some big new projects and new products with those customers, both from existing customers and bringing new customers into our customer brands business, where we'll see a real strong pickup in 2025 from that part of the business. So what we'll see in 2024 is that that business will continue to hold its own, as it has been over the last couple of years, delivering to long-standing customers.
But, we'll see that continued higher growth from our VLG brands as part of the business, and that's the more profitable part of the business, as we said earlier.
Thanks, Danny. Next question: For your top three power brands, what do you think their market penetration is within the UK market and internationally, and what are your ambitions for increasing market share in your business planning horizon? So if we start with women's health, so Balance Activ, the main product there is the bacterial vaginosis gel, and that is the number one product for BV treatment in the UK. So we already have a market-leading position in that space. We'll continue to grow out the whole Balance Activ range by bringing other products. We've launched a thrush cream that will increase our penetration. We have no product in the thrush area now, so that will increase there. The overall UK market for women's intimate health is just under GBP 100 million, and the bacterial vaginosis is about 10% of that.
So, a big proportion of that will be thrush, of course, and we don't have a product in that area now. So we're now moving into that sector of the market, and then obviously into the cleansing and other areas. So, you know, we see the Balance Activ brand as a whole gaining traction in women's health. And as I say, the bacterial vaginosis product is already the number one product in the UK. Internationally, that product is sold by Bayer under the CanesBalance range. It's the bacterial vaginosis product, and obviously, Bayer is the market leader internationally in that space already. Lift, that's the number two in the market, the diabetes space to Dextro.
Dextro's got 2-3 times market share over Lift, but we see strong growth in Lift, as we've seen in 2023. We expect Lift to continue to grow and gain market share. Earol is the number one olive oil spray for earwax treatment in the UK. In terms of the overall ear landscape in the UK, Otex is the number one player, has a much wider portfolio, bigger products, but we are gaining market share in that space. Next question: where do you see M&A becoming a feature again? Oh, and lastly, congrats on a great year. Thanks for the congratulations.
Yes, I mean, M&A, I think we want to see that becoming a feature, as I've mentioned already, and particularly in those areas where we have the three power brands already. So that's where we'd focus in on building that out. Next question, which is one for you, Danny. Can second half 2023 pre-tax performance circa GBP 5.5 million be repeated for the whole of 2024, and if not, why not?
No, because the revenue weighting of the business is so weighted towards the second half of the year, that it's hard for us to repeat that level of pre-tax performance half-on-half. So, as you would have seen in our business historically, we have a much larger weighting of our revenue and profit comes in the second half of the year, and that was the case in 2023. We will still see some improvement in PBT because of the non-repeat of the things like the impairment we talked about earlier, and also non-repeat of those exceptional costs related to integration. But no, I wouldn't say that GBP 5.5 million is sustainable on both halves of the year as we move forward.
Okay. So I think, we've got time for just a few more questions. The next one is: Are you selling to all UK supermarkets, including discounters such as Lidl and Aldi? So we are selling pretty much to all of the main UK supermarkets. I think as I've mentioned earlier, we've, we had the news this week that, Dentyl will now, be listed in Morrisons also, which is a, a good win for the team. We have started to sell into the discounters and not Lidl and Aldi, but the likes of B&M, Home Bargains. Because over the last couple of years, with cost of living pressures, we have seen consumers buying more products within those spaces.
We do have differentiated products, the ones we sell in the discounters, compared to the ones that we sell in the health and beauty and grocery retailers. And we did, in the past, some time ago, sell some products, I think it's Lidl. They, in our space, they were running a what we call a WIG, which is a when it's gone, it's gone situation. So they take an order of stock, and when it's gone, they don't open again. So, but we've avoided those supermarkets generally, but as I say, we do all the main ones, Tesco, Sainsbury's, and Morrisons, Asda, et cetera, and some of the discounters. I think you'll see an increasing level of sales into the discounters as we grow out that channel.
Next question: How much CapEx are you budgeting to spend in 2024, and what will you be spending it on? Danny, I can want you to cover that.
Sure. So we're planning on spending around GBP 2 million on CapEx in the year we're in now. That will be less than what the brokers will have in their forecast, as we've allowed ourselves a bit of a buffer in that, given the whole medical device upgrade from MDD to MDR. That's up to us to a large extent, when we want to complete those projects, given the deadline extension to 2028. It's much more flexibility now over when we pull the levers to complete those technical file upgrades. So GBP 2 million is the top-line spend we would expect from CapEx this year. That breaks down roughly GBP 0.5 million on maintenance CapEx at our sites across Italy and Sweden, mainly Italy there, and around GBP 0.5 million in growth CapEx, particularly on investing in new machinery to help us internalize production.
So I don't know if Jerry mentioned earlier, but we'll be internalizing the production of our Earol product, which we acquired in 2022, bringing margin progression and margin improvement from doing that as well. So investing a small amount in that machinery, but to deliver a margin improvement that pays itself back within the first 12 months. The other half, so that's the tangible part of that CapEx spend. The other half is related to developing new products, the other GBP 1 million, developing new products. We spend around GBP 300,000-400,000 on that each year. NPD is a continued increasing focus for the group, so an area that we wish to continue investing in out of our facility in Italy.
Finally, that MDR upgrade, again, the medical devices, we should spend around GBP 700,000 this year on continuing to complete the technical file upgrades. Although, as I say, in the broker's note, there will be more expenditure allowed for that, because it's up to us when we pull the lever, and there's a bit of flexibility in that.
Perfect, Danny. The next question is: One of the interesting features of our company is the spare capacity in our facilities in Italy and Sweden, whereby increased activity means the overheads are more widely spread. How has the percentage use of your factories changed in 2023, and what do you expect for 2024? The percentage use of those factories increases, you know, simply pretty much as our revenue increases. You know, 80% of what we sell is made in our factory. So if our revenue grows, you know, 5% or 10%, then on balance, that's where we see utilization growing. As we go into 2024, you know, expecting, you know, high single- to double-digit growth, low double-digit growth, and that's what we'd expect to see in terms of the utilization going forward.
Sorry, just a couple more questions. What annual revenue growth rates may we expect from the private label segment? So, Cavendish, who published a research note, they've, they've got in the note GBP 1 million of additional revenues from private label in 2024, on top of the GBP 2.4 million that we did in 2023. And I think that level of increase is reasonable and relatively conservative for the coming years. The next question is, how much scope do you see to grow in the U.S. and the Brazilian markets? Yes, we see a lot of scope for that. I mean, obviously, moving to those markets brings regulatory work that needs to be done because whilst all our products are registered across Europe, as we move into those markets, the products need to be registered.
For Brazil, it's Anvisa, and for the U.S., obviously FDA, so they are target markets for us. We already sell some products through Amazon in the U.S., and we have a number of partners in South America. Notably, in 2023, our partner, Blausiegel, based in Brazil, was launching Gelclair there. And we started supplying product to them in 2023, and they're rolling out in 2024. So we see very good potential for sales in South America. That's. We have covered all the questions for you. I'm smiling 'cause our chairman sent us a compliment, who's obviously watching on the transmission.
Compliment.
Yeah, I think it's a compliment, Danny, but we'll spare everyone else's questions there. So, simply to finish, I'd just like to say thank you, everybody, for joining. I hope we've answered all your questions. You're always free to get in touch with us at the office in Bracknell if there's any more questions or you wanna visit us anywhere else. And I just wanna say thank you to the whole team at Venture Life, right from the bottom all the way to the top, because the results of 2023 were great results, continued growth, great progression, fantastic NPD work with our brands team, moving forward and supported by our development manufacturing. Challenging time still, we see, you know, supply chains pressures easing a bit now.
You know, we don't see the inflation that was there before. They won't go down, but they won't continue to go up at those crazy rates. So, you know, just from myself, Danny, and the board, thank everyone in the business for really fantastic hard work in 2023 and already in the first quarter of 2024. So it's a team game where, you know, everybody in the teams contributes to the success of the business and should be rightly proud. So thank you, everyone, for joining us, and hope you've found this informative. Look forward to speaking to you again.
Jerry, Daniel, thank you for updating investors today. Can I please ask investors not to close this session, as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Venture Life Group PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.