Good afternoon and welcome to the Venture Life Group PLC Interim Results Investor presentation. Throughout the recorded presentation, investors will be in listen-only mode. Questions are encouraged, and they can be submitted at any time using 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 received 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 would like to submit the following poll, and I would now like to hand you over to CEO Jerry Randall. Good afternoon to you.
Good afternoon. Thank you, everybody, for joining us at our Interim Results presentation. I'm Jerry Randall, CEO of the business. On my right, I've got Danny Wells, who's our CFO, and on my left, I've got Kate Bache. Kate was one of the co-founders of the Health & Her business that we acquired last year. Kate's now going to be joining us on the board of Venture Life from the 1st of November and is in charge now of marketing and innovation, and Kate will be talking to you about the brands and the marketing initiatives we have a bit later. So we're very happy to present our Interim Results. That's for the period to the end of June 2025. I'm going to take you through a few of the highlights, both financial and operational.
Danny's going to then go into a little bit more detail on the financials, and I'll say Kate will then talk a bit more about the key brands, what we've been doing, and what to expect in the future periods. So just to be clear, these revenues that you see and these numbers relate to our continuing operations. So in July, we disposed of our CDMO business and some minor brands. That's the Biokosmes business in Italy, Rolf Kullgren business in Sweden, some minor brands such as Procto-eze, MycoClear that some of you may recognize. And we're also in the process of divesting of our oral care brands. So those are also excluded from the figures that you see here in continuing operations. So on a like-for-like basis, we had just over 12% growth in revenue.
On a reported basis, 43% because we acquired Health & Her towards the back end of 2024, and so there wasn't much of their revenue in our business in 2024, but we've got a full contribution in 2025. But adjusting for that, like I said, on a like-for-like basis, 12% organic growth, gross margin increased by nearly one percentage point, adjusted EBITDA up to GBP 1.8 million. Free cash flow before exceptional was similar to last year, but Danny will talk through why that is, and having disposed of our CDMO operations in July, which is post the end of this period, we received about EUR 65 million in cash. We paid down the drawn facility that we had on our RCF at the moment. We still retain the facility, and again, we'll talk about that later.
At the end of September, so that's from yesterday, we sat on net cash of GBP 34 million. So, as I said, we completed the CDMO divestment. We are actively marketing the oral care brands for sale. We have got some new board appointments. As I mentioned earlier, Kate is going to be joining us on the board from the 1st of November. We have also appointed a gentleman called Peter Jackson, who will be our Chief Digital and Technology Officer, joining us from the 1st of December. That is really integral to our strategy to have integrated digital and AI capabilities. The final thing, really, on post-period end, we have now integrated the Health & Her team into Venture Life. So the teams are all now merged together with good verticals. We have got also the other co-founder for Health & Her, Gervase Fay.
He's not with us today, but Gervase is now in charge of strategic customer relationships, and she'll be helping to grow this forward with our key retailers, particularly the likes of Holland & Barrett, Boots, Superdrug, Swanson, and CVS in the US. So now I'll hand over to Danny, who will give you a bit more detail on the financial headlines.
So as Jerry said, group revenues increased in the first half of this year up 43% to GBP 15.4 million. That, of course, includes the new contribution from the recently acquired Health & Her business at the end of last year. We acquired that on 8th of November last year. That contributed GBP 4 million of revenues to the first six months of this year. So on a pro forma basis, the organic growth of the business was 12.5%. And that growth, importantly, is coming from both our UK consumer brands business, but also our international partners as well.
Broadly, 13% growth in the UK, 11% growth on the international business. Gross profit of the group was up 49.9% on the revenue growth, up to GBP 6.6 million versus GBP 4.4 million in gross profit in the previous year, and a gross margin improvement with that up to 43.1% versus 41.2% the year before.
Of course, again, inclusion of Health & Her in the prior numbers to show that on a pro forma basis is important to understand. The marginality of those products is around 10-12 percentage points higher than the sort of blended average of the Venture Life other brands. That's had an impact on pushing up our reported margins, but on a pro forma basis, broadly in line with where we were this time last year. Marketing costs, you'll have heard us talk a lot over the last year's 18 months around our investment in marketing, strategic investment to raise brand awareness, track the right promotions in store, drive the online sales. That's gone up to 10.5% in the first half of this year versus 5.6% for the same six months last year. Important to understand, again, is that that 10.5% is against overall group revenues.
Now, parts of our revenues are not supported by marketing costs. So for example, our international partners, some of the distributors, and some of our oncology support products, we don't put direct marketing into those channels. So when you strip that out, the revenue, and just look at marketing against the brands we're supporting, that's around 14.5% of the revenues from those brands is going back into marketing activities to drive that strong top-line growth. And again, just to put that on a pro forma basis, that 14.5% compares to around 10% last year because the Health & Her business were already supporting those brands quite heavily compared relatively speaking to the other Venture Life brands. So on a pro forma basis, marketing investment is about 10% last year, going up to 14.5% this year.
Really, that extra 4.5% against the pro forma, that's the additional investment we're making in the other Venture Life brands, Balance Activ, Lift, Earol. We'll talk later on in the slides around the growth we're getting and the returns we're seeing from that. It's still early days. Adjusted EBITDA was up 32.6% to GBP 1.8 million in the first half against reported GBP 1.4 million the year before. Adjusted EBITDA margin slightly down to 11.6% in the first half against 12.6% last year. That's really reflecting the increase in the marketing spend we're currently putting in to drive that top-line growth. There's always going to be a lag effect on that investment because we're putting in efforts to raise awareness of our brands. That's not an immediate impact. It's a gradual piece of work to increase the sell-out rate in our stores.
We've got a lot of focus as a board and as a management team on how we ensure that we maximise that sell-out across all of our brands in both the U.K. and internationally over the coming years. So that's an area we're investing in now. It's had a drag on percentage margins in the first half, but it will help us deliver stronger marginality going forward as we get that revenue acceleration continue to come through at higher gross margin accretion as well on the brands we're focused on growing. Free cash flow, Jerry mentioned earlier that it was about stable in terms of positioning for us the first half of last year, but on a reported basis, free cash flow was down to GBP 1.5 million for the first half against GBP 2.1 million reported in the prior year.
We had around GBP 700,000 of cash exceptional costs that went out in the first half of the year, so as a lot of you will know, we're already implementing rather an ERP system right now, Microsoft Dynamics. We've been investing in that since the end of last year. We're on target to go live with that at the end of this year, but that's been a big investment, and so that cash exceptional going out of the business in the first half, that's what's driven down the reported free cash flow to 1.5 against the prior. Otherwise, it would have been more stable, drawn funds against the revolving credit facility, so we paid those down in full on 7th of August, so as we sit here today, we have no debt in the business.
We had, at 30th of June, we still had the RCF facility in place, and we had drawn funds against it, but we received the proceeds on the divestment of our manufacturing operations and non-core brands back in the end of July. So a couple of weeks later, we paid down the debt. So as we sit here today, we're sitting on net cash position of about GBP 34 million. And important to highlight is that we've still got that RCF facility. So that gives us access to GBP 30 million of funds subject to 2.5 times EBITDA on the trading business for whatever we want to acquire. We'll talk about M&A later. Plus, we've got a further GBP 20 million accordion facility. So the GBP 20 and the GBP 30, we've got GBP 50 of funding access available to us, plus GBP 34 cash in bank.
We are sitting on a good GBP 84-85 million of cash of firepower for our acquisition plans. We will talk more about that shortly. I think I have already mentioned about Health & Her, so we will skip on to the next slide. I will provide an overview of the brands. Thanks, Jerry. Just so later on in the deck, Kate will talk in more detail to the performance of the individual brands, the drivers within those. But just as an overarching view, the brands grew by 12.5% on revenues profile versus this time last year. The women's intimate health and hormone health parts of the business grew most strongly. Women's intimate health, that includes our Balance Activ brand, grew by 24% in the first half. And again, that was driven by U.K. and international combined.
The UK business was up 13%, really reflecting new product development, increased distribution in the stores, rate of sale improvements because of our focus on sell-out and rate of sale. Then in the international business for women's health, we launched into Italy first orders into a new strategic partner, Cooper Consumer Health. We've launched a bacterial vaginosis product under Cooper's brand, and that's part of the line for women's intimate health. Hormone health, that is the brands we acquired at the end of last year. That's the Health & Her and now Health & Him brand, which has been launched since the acquisition. Those revenues were up 38% year on year on a pro forma basis. That represents about 35% on the Health & Her brands.
The balance of growth coming from the newly launched Health & Him product, which launched at the very end of last year and has incremental revenues this year. Energy management, as you were seeing in red in the P&L, some of you, the down year on year, after three years of being growing 30% year on year, we had an issue with NHS at the start of the year where NHS were going through a reset of their ordering platform. During that transition for six weeks, we were taken off that system as an error. It wasn't an intentional error, and it caused us to lose meaningful revenues in the first part of the year. We've since rectified that during Q1, but its revenues were unable to recover through that channel as the demand would have gone to other products and people who needed it.
At that time, we sweep up some of it through our GlucoGel product, but that has had a negative impact on the first half of the year, which we weren't expecting on the Lift brand. So as we look at the year to go and our future plans for Lift, we're very confident of recovering that position strongly and getting back to the double-digit growth levels that we've seen over the last three years. And we've got a huge level of new product development pipeline coming through, and Kate might touch on some of that later. Ear, nose, and throat. Overall, as a division, it was down 11%, but within the UK, there's two parts to this. It's around GBP 6 million in revenues on the Earol brand, GBP 3 million in the UK, broadly GBP 3 million internationally.
In the UK, the brand was up 15% year on year, having grown around 8% over the last three years, so real step up in our UK growth, again, driven by the focus on gaining new distribution, raising rate of sale, getting the right position in the stores. Internationally, where the product is partnered, we don't control the timing of those orders, and those order patterns can be heavily skewed against H1, H2 revenues, so what we've seen is that lower orders in the first half of this year against the same time last year, but we've got great visibility over the second half of the year, so we expect those revenues internationally to recover significantly in the second half, and we'll see high single-digit growth overall from the year-old brand by the end of this year when you combine UK and international.
And finally, oncology support coming off a low base. These are all fully partnered products, Pomi-T and Gelclair. Revenues in the first half of last year were very small. Again, order patterns are driven by our customers, and their revenues here went from about 100 to 300. So the 200% growth is off a very low base.
Thanks, Danny. So let's just refresh our business model and our strategy. Clearly, what's changed from where we were a year ago is that all of our manufacturing and development work is now external. So we still have a lot of business with the Biokosmes and the Rolf Kullgren facilities that we divested of. We have a long-term 10-year manufacturing agreement with them, but also with the other facilities within the industrial group that acquired them. And they have five other facilities focused quite heavily on food supplements and probiotics. So we're expecting to do more work with them. In fact, they've already started making some of our Lift glucose products. So our development manufacturing partners, they're still the same ones, effectively, as you had before, but they're external. But we're still working closely with the team that used to be part of Venture Life Group.
Our strategy is really into those key pillars you see on the left-hand side of the page, so in no particular order, but acquiring and transforming core brands that have a clear runway for profitable growth, the divestment of the CDMO business and the non-core brands, along with our revolving credit facility, gives us significant firepower to acquire interesting assets or businesses into the group. We're looking for businesses that will have good marginality, improve our overall growth and EBITDA margins, and be complementary cash refilling, white space filling products or brands for us, and we'll keep you updated as each time we report, but we have a good active program of assets to look at. And we recruited our head of M&A, who joined us in July, and he's now a dedicated resource to take that forward. To have a number one brand mindset.
So a number of our products are number one in their space already or number two, but it's really important that we have a brand mindset that we have a number one position for our products. And that helps us to both grow the category, to grow that segment, but also to penetrate more into that segment. Omnichannel is really important for us, and that means that we have an omnichannel go-to-market strategy where shoppers shop. So we have to be where the shopper will shop. And that could be in high street grocery, could be in pharmacy, e-commerce, or with international partners. So it's important we're in all those places. The biggest shopper for our products is sort of mom who shops for the children, herself, her husband, the rest of the family. But it's important that we have our products in the locations where the shoppers are shopping.
Next pillar is to have integrated digital capabilities and advanced AI. That's really important. And I mentioned earlier the appointment of Peter Jackson to our board later this year will bring that skill set of aligning IT strategy with our business strategy and helping us to power growth using those integrated digital capabilities. And finally, retaining our core entrepreneurial competencies. That's what's brought us to this point. It's about agility. It's about seeing the opportunity, following the opportunity, being fleet afoot. And we will continue to do that with the way our teams are organized, the way people are given responsibility and accountability to grow their parts of the business. So what we've done really is to simplify our business and become the partner of choice for proactive, healthy longevity or healthspan.
Healthspan is the period of your life where you live a full healthy life as opposed to a lifespan which is entirely your life, and proactive healthy longevity is about giving our consumers products that help them to extend that healthy lifespan that they have, so what we've done is we've evolved into a purely brand platform that brings higher margins into the business and brand equity, of course. We can invest in our power brands with the funds that we've raised and the cash flow that we develop. We're going to innovate and Kate now heads up innovation within the business because that was part of the business, part of the sort of development that was dealt with in Biokosmes before we disposed of it.
And we're looking to grow in key markets, which is for us the U.K., where circa two-thirds of our business is now, the EU, and the U.S. As I mentioned, these are our five strategic pillars. I won't run through these again, but we have a project within the business that has the key sort of senior management and middle management in driving each of these strategic pillars along with 90-day segments and then 14-day sprints in those 90-day segments to develop each of these pillars and to drive the business forward. So prevention and treatment products, which improve healthspan, is our focus. And we want to help the healthspan of all these people you see here. And in doing so, develop and organically grow and innovate within our current brands and products, but also to buy products and assets that have a strong runway for profitable growth.
In terms of corporate development, we've mentioned a number of these things already, but we've looked to simplify our structures to go forward. Obviously, divesting of our CDMO businesses brings some simplification. We've been streamlining the number of entities we have within the business, and that helps to simplify reporting and complexity in operations. The new ERP system, which Danny mentioned, will be completed by the end of this year, which has been an enormous project and a real piece of work for our team, obviously in finance, but across all the business, and that's going to deliver real value and improvements for us. Divesting the CDMO, the Rolf Kullgren divestment is underway. We expect to complete that by the end of the year. We've retained our RCF. We've strengthened the board through some executive appointments, so we also have a new full-time company secretary, Louise McCarthy, who's joined us.
The management team also has been strengthened with a number of new appointments, particularly in areas where they were dealt with within the Italian business that we've divested of. So particularly procurement, also areas of digital marketing, M&A, sales, commercial, and those functions and regulatory also. Those functions will be bolstered and invested in. It's a period for us where we're obviously got significant funds for investing in growth, not only in marketing and M&A, also in innovation, and also in teams to make sure we can deliver these aspirations that we have. Finally, on M&A strategy, we're looking to buy in complementary categories or adjacencies. Women's health, men's health is key categories for us. We see a lot of white space in the area.
We're certainly a leader in the menopause space for the health and the business, and we're broadening that out to wider areas. But there's lots of opportunity where we think we can add additional products or additional businesses where we can use our skill set, our capabilities, whether it be in distribution, innovation, marketing, digital marketing, and so forth to grow the business forward. And we're looking for acquisitions which will enhance our margins both at a gross level and at an EBITDA level. Sensible pricing and asset purchases would be preferred. We've been working on a long list. What we do is to look in the space. We walk around the stores. We look at other products. We look at other businesses. And we identify products, areas, ideas that could be interesting for us, analyze those.
And then we look to start interacting with those companies and targets to see whether there's an interest in a transaction. So simply watch this space. We'll be progressing that going forward. And we're looking forward to bringing some exciting news on that as we go forward. And now I'm going to hand over to Kate, who's our Head of Marketing and Innovation, to talk through the key brands and what's been happening in the first half and what to look out for in the future.
Thank you, Jerry. Yeah, so starting with our hormonal health portfolio, which encompasses Health & Her, Health & Him, some fantastic growth that we're really pleased with this year. The first half, so 38% growth across the board. And that includes 35% growth on the Health & Her brand. Health & Him, just as a reminder, was only launched in October 2024. A lot of this growth is coming from distribution point gains. So the CVS expansion in April that came about added another 15,000 distribution points. So really exciting expansion in that particular retailer. But we've also been expanding distribution in the U.K. through both core brands, core range, which has extended the distribution thanks to organic growth, but also a new range of multi-vitamins under the Health & Her brand, including two quite breakthrough innovations which support women taking exogenous hormones.
The other interesting development on the marketing side of things, marketing highlights includes some advertisements next to the Oprah Winfrey documentary and also expanding some of our marketing levers into YouTube and into also menopause podcasts and testing these. So get some nice growth out of those particular levers. Looking into half two, we continue with this theme of innovation and distribution growth thanks to our launch of a new reproductive health range. This encompasses fertility and conception for men and women and both brands, a pregnancy supplement and new mum supplements and a vegan omega. We've also already launched a prostate support product called Prostagarden, another Health & Him brand. And we're also looking to launch an intimate bio range very shortly too.
And this will be accompanied by vaginal health tracker that we have in our app, which will again support with innovation and insights across the whole women's health portfolio within Venture Life Group. Sorry, other marketing activities include a sponsorship of a menopause documentary in the U.S., which we're also potentially airing in the U.K., and also a lot of activity in the U.S. trying to further grow the brand awareness out there and support CVS in the activities of the brand in that particular market. Moving on to Balance Activ. Again, some really fantastic growth on this brand in the first half. Innovation being a theme again, we had some fantastic new products that were launched in the last couple of years that are really starting to come into their own with distribution expansions.
They include the Thrush product and also the Intimate Soothing Gel, sorry, Intimate Soothing Cream. That's really driving fantastic growth across our grocery channel and online as well through optimized marketing and doing some further digital marketing in that channel. We have also entered into some menopause fixtures with two of our customers with some mixed results and a relatively small test in those markets at the moment. We're assessing the effectiveness of that strategy at the moment and looking to see how that will evolve over the coming year. In the second half, we continue to focus very much on innovation and looking at building out that pipeline over the next few years. We can see that the brand has the capability to stretch into new therapeutic areas.
We're also building out the website to ensure that we have the e-commerce elements on the website, capitalizing on the great traffic that we have coming to the symptom tool on the Balance Activ website, but also starting to gather a larger database there and do some further digital marketing activities. In addition to that, we also have a new retailer coming on board in the next few months. Really looking forward to an extension of distribution points in that retailer. Yeah, that should really bolster the distribution across the board. Moving on to our energy portfolio, which encompasses Lift and GlucoGel. Some really good growth on the online channels here. As Danny said, we had an issue on the NHS platform earlier on in the year, but some of that has been regained through the online channel.
GlucoGel has also launched onto Amazon with some fantastic growth. We see this as a really good supportive brand, particularly used by caregivers of type 1 diabetics, and that's growing really, really well. We're continuing this theme of expanding our digital marketing presence, testing, and seeing which methods are working best across the brands. We've seen some really good results with those activities so far in the year. Finally, we're also working out the perfect placement of this brand within our retail customers, and there's some very exciting results of early tests in terms of placing this product in the supplement aisle, so we'll be looking to expand that with our customers going forward.
In the second half, we are really trying to double down on our healthcare professional recommendation, capitalizing on this nice recommendation and diabetic nurses and GPs having access to it to prescribe, but also to recommend. So we're working on a large marketing campaign in that area. Also leveraging that digital marketing capability from the Health & Her team and expanding out some of the non-paid channels, particularly email marketing database growth to get obviously some of those non-paid free opportunities to connect and promote the products to our customers. And finally, continuing to work on our shopper strategy and working with retail to ensure that those kind of four P's for the brand are working really hard for us in store. Finally, looking at Earol. Again, as Danny mentioned, some lovely growth here in the U.K. in the first half.
This is thanks to, again, a running theme of some fantastic innovation that has been launched in prior years, which is having distribution extensions. And this includes our Baby Earol and the Almond Oil and aftercare products. We've seen an increase of 1,400 distribution points. Also working on this placement strategy again with retail. And we've seen some really nice organic growth within one retailer in particular. And we're also working very closely with retailers to support the shopper with the education at shelf in order to, we've successfully done that with promotions, and we're looking to roll that out as a permanent fixture and collaborate with our customers to really lead the way on that shopper marketing piece.
Looking at the second half, we again have another new listing into Holland & Barrett in quarter four, which is adding some significant distribution points and also expansion into the Health & Her products in Morrisons. So again, really great growth there with our grocers and health and beauty customers. We're also integrating some further healthcare professional messaging and communication education directly to our consumers. Also looking at the, as I said, all-around support and education of fixtures to help shoppers navigate the shelf inside the retailers that we're working with.
Great. Thanks very much, Kate. So what have we been doing for the last sort of six to nine months? Well, we've now presented Venture Life Group with a capital-like structure. We don't have to invest anymore in the CDMO and development operations. So that cash that we generate and we have, we can invest into the products, the brands, and growth of those. We're a brand-focused business that's with higher margins, higher price points, and that number one brand mindset, making sure that we can grow the categories, grow the products, and grow share of the market that we're in. Data-driven insights are really important. And one of the things that really impressed us about the Health & Her business was the depth of research data that that business had. And that data helps to design products. And innovation will fall out of that research on a regular basis.
So we're very keen to get that across all our brands, all our products, and make sure we use that insight to drive our relationships with strategic customers, helping them to grow their categories, to grow their footprint, and look at their stores and look at how they can best serve their customers. The omnichannel approach, as we've mentioned, that's really important. We're selling in all those channels now. In the U.K., it's important to remain there and make sure we're targeting shoppers there. The digital integration is very important. PurePlay, consumer healthcare, retaining our entrepreneurial skill set, our entrepreneurial mindset, and having a core geographic focus. So really just to finish up our presentation, we're now focused on that higher margin CHC landscape, which has historic exit multiples of 14 to 15 times EBITDA. We've got a strong net cash position, GBP 34 million now.
We'll also generate further cash from the divestment of our oral care business. We'll be generating cash as a business going forward. Good firepower in order to undertake the organic growth through A&P of our existing brands, but also to invest in some interesting acquisitions. What we've seen in the first half of the year is investment in increased A&P, as Danny's explained, has delivered good growth across our core brands. We see that continuing. We think there's a lot of headroom across each of those brands, both in terms of the positioning and the share within the market, but also growing that market and growing people into the brands. The RCF is there. It's a GBP 30 million committed, GBP 20 million accordion on top. Again, we will look to use that through our acquisition pipeline when we've used up the cash.
We'll keep any net debt to a sensible leverage of around one times. We think we can significantly scale the business both organically and acquisitively with those funds. We now have a clear strategic focus. We have excellent development and manufacturing partners with long-term manufacturing agreements. We expect to develop a lot of new products and new business with them. We will continue to invest in organic growth and make those acquisitions. That's the end of our sort of formal presentation. We're excited about the future. We've got a great team that are in place. We've had some good new appointments to the board. We've strengthened that. We've strengthened our senior management team. We've brought in some great talent from outside of the business as well.
That's really helped us to upscale our capabilities and get us ready for this substantial growth that we're looking forward to. With that, I'm going to finish the presentation. We have received a few questions. I'm very happy for us to go through and answer those now. I'll take the first one, which comes from Peter W., which says, "Given the apparent low valuation, do you think the company is vulnerable to a takeover bid?" Peter, it's a theme of a couple of questions. We spent the last two days with our institutional shareholders just updating on the business. They're all very happy with that. Yes, it is a low valuation. It's probably endemic of the small-cap market and the market in general, lower liquidity. We disposed of our CDMO business for 10-11 times historic EBITDA.
CDMO businesses are generally lower rated than branded businesses. So we know at the moment, based on the new Cavendish figures for our new financial year end in May, we're trading at just below four times EBITDA, obviously plus the cash. So that is very low. And we know for the sector in terms of transactional multiples, they're a lot higher. So to answer your question about takeover bid, I think we have a very supportive and strong shareholder base. And I think they would not allow us to be vulnerable to a silly takeover bid. So we're very confident that our supportive shareholders will be behind us in that. Second question from Peter W. is, "Assuming the directors believe the company is too cheap, will there be probable director buying?" Well, obviously, I can't forecast out things that might happen regarding director buying.
But I think, Peter, if you look back earlier in the year, the board substantially invested in the shares of the company, bought a lot of stock. I'm a significant shareholder myself already. Have I bought more. So yeah, we believe in the future of the company. And so we support that entirely. The next question I'm going to pass over to Danny, which is from Jeff J., says, "Profit margins are currently rather modest. How are you planning to improve this? What gives you the confidence that this will be successful?
Thanks, Jerry. So thanks, Jeff, for your question. I'm not clear which level of the P&L you're asking about on profitability. So I'll try and give you a wide covering answer. And of course, follow up with me afterwards if I don't answer your question directly. But I'll just tackle the bottom line profitability to begin with. PBT level, of course, what we've got is a large exceptional cost going through the P&L to invest in the implementation of the ERP systems. There's GBP 1 million of exceptionals in the first half of the year. They're non-recurring. And we've also got finance costs going through the P&L as we still have the debt up until 30th of June. So it's 1.6 in the year finance cost. So there's GBP 1.6 million of costs there, which is non-recurring going forward. We no longer have the debt.
The exceptionals are winding down because of the ERP implementations going in place. But I'll have to assume your question was more led to EBITDA, given that's what we were talking about on the slide. So yeah, I think first thing to point out is that the first half of the business historically has always been significantly lower margin than the full year of the business. The business has historically been very weighted towards the second half of the year, a 60%-40% split in favor of that second half. And that's where the international part of our business has much stronger revenue in H2. And what that does is it drives a leverage through our P&L because we've got incremental revenue, incremental gross profit coming through, but the fixed cost is there throughout the year. So you get a significantly stronger flow through to EBITDA.
At an EBITDA level, we would have been 23% margins in 2024, so the 11.6% you've seen for the first half of this year really isn't representative of the annual view of the business, but I will touch base on the word seasonality because you'll have seen we've announced a year-end extension to up to 31st of May, so we're changing our year-end now, and really just to explain some of the rationale for that, because it's linked to the question and the explanation of this answer, is that we historically had our largest revenues by far in Q4 of the calendar year every year since I've been involved in the business, and what we see is that the largest revenue is actually in December each year, which is also the shortest month for operating, less time to book logistics, book couriers, more expensive to do all of this.
You actually get a big rush to try and deliver the revenues in that timeframe. That's not helpful when our biggest part of our revenues are linked to our retailers restocking for the new year. A lot of our retail customers, brick and mortar, this is related to less so on our DTC business, which isn't affected by stocking. We see them restocking for New Year, New Year, health promotions, campaigns. There's a hard push on those pro-activities. We see our retailer stock up in the Q4, the year prior to coming back up to Christmas. By changing the year and moving out to a May year-end going forward, it'll help us smooth out that seasonality and revenue impact in the business. We don't have that lower percentage EBITDA in the first half and a really strong second half.
It's more a flat in terms of the average or normalized trading on the business. I think that's a key point. To answer your question more in depth, I appreciate this is quite a big answer, but I think it's quite a big question. Is that, yeah, what are we doing about driving margins going forward? We're doing a lot of things, Jeff. First thing to say is that we've got strong pricing power on our key brands, the brands that we still have in the business. We've sold off the brands that were not core to our business. We've been putting through price increases on those brands to reflect the price disparity between us and our main competitors. We see huge opportunity there. I mean, Balance Activ is probably the best example I can give.
Our main competitor is Balance Activ, and that's selling at GBP 15 RRP. Our product was selling at around GBP 8.50 RRP up until this year, so we put price increases through our retail customers and pharmacy in H1 2025. We'll take the RRP up above GBP 10, and that's just the first step of closing that gap between us and our main competitor, so there's a huge amount of opportunity because we've got the power on the brands. We're doing something about it. What you've seen in the first half of the year is that we've done that during the first half,
so we don't have the full benefit coming through the P&L either, and also we need to make sure we complete that price increase exercise across all of our brands and all of the channels within there, and that includes our Amazon business, so that's something that's in progress.
That's step one. I think the second thing to highlight is around the, if you look at our marketing spend, we've been talking about how we've increased that today. We're not just increasing marketing spend to drive top-line growth. We're also increasing it to focus on driving our gross margin higher as well, focusing on investing in the brands with the highest growth opportunity that drive the highest percentage margin improvement for us as well. So to give you a good example, our objective through this investment in marketing is, while we're increasing our marketing 3% versus where we've been historically, it's driving a 5 percentage point gross margin improvement over the short term. That's our plan.
Taking a net of 2% input to our margin improvement, net of that marketing investment, so you see stronger top-line growth than we have historically, a higher gross margin pushing from 45%- 50% over the next couple of years. That's our plan. And investing 3% of that back into marketing to deliver a 2 percentage point increase into the bottom line. And ultimately, do I feel confident that we're doing it to do it and convicting on it? Well, yes, we're absolutely already doing it. We've launched new products through the first half of this year. You've seen Kate talk about all the other product launches we've got planned for the second half of this year. And that's across each of the brands. And that's just the beginning of the pipeline. We've invested in the team in innovation, in branding, in digital marketing, head of product.
We've got all of the team in place in the infrastructure under Kate's team now to go and drive that innovation forward, deliver that gross marginality improvement. We're targeting as a threshold, minimum 60% gross margin on our brands going forward. When we sign off any new product launches, we're already doing that. These are good examples, I think, that show you we're aware. We want to drive forward the margin of the business. We want to get gross margins well above 50% over the next three years. These are examples of what we're doing. I think the overarching one to add into that is the M&A piece that Jerry was talking about earlier. When we look at what the financial criteria is for those, we want to be getting brands in our assets that are 60% gross margin, delivering 30% minimum EBITDA contributions.
That's allowing significant for gross to net on marketing spend and operating costs associated with it. So these are key things we are doing already. We've been working on it for a while. We're continuing to work on them. So we've got a lot of conviction around our plan and how we're going to improve the overall annualized margins to the group up over 25% in the next three years.
Great. Thank you, Danny. Very comprehensive answer. I've got a question now from James, switching to three parts. I'll read out the first part and I'll ask Kate to cover that, and then I'll pick up the other two. So hi, Jerry, Daniel, Kate. Hope that you are well. Congratulations on the results and the strategy change. Thank you, James. I have three questions. First one, what risks to competition do the power brands face from new entrants, potentially with better scientific labeling or results entering the market? Thank you.
Yes, there's kind of an answer of two parts here. I think the first two brands, which are more of the supplement brands. So we have Health & Her, well, and Health & Him, plus the Lift brands. So there is definitely some activity going on in the kind of female health space and supplementation. Lots of new entrants coming in. I think the brand is in a good position with its proposition, especially having the app alongside the product, which is the number one app, a menopause app recommended by ORCHA, which is an independent body that creates a formulary of health apps for GPs. But we also have a program of constantly looking at improving our claims. We have the number one perimenopause claim, a number one perimenopause brand claim across our entire portfolio.
We continue to look at new technologies, new ingredients where we can enhance the claims across the board. That also follows through in our innovation pipeline as well. On the side of Lift, which is also another supplement, we have this fantastic kind of barrier to entry around this healthcare professional recommendation, which is really entrenched in the brand and has been for the last decade. We're really seeing the benefits of that coming through in terms of organic growth. In the prior years, obviously, we had a small hiccup this year, but in the prior years, we've had some fantastic CAGR results. There is, again, the healthcare professional recommendation education really gives us that enhanced position in the market. We see that as we're continuing to drive that particular activity, as I mentioned, to educate healthcare professionals and double down on that marketing opportunity.
Again, we are constantly looking at innovation, ingredients, and claims. We actually have a suite of claims that we're going to be rolling out in the coming year on the brands. Again, some of those trust factors. And we're keeping a very close eye on it. So yeah, I think on the supplement side, some interesting kind of dynamics to some extent protect us from those new entrants. On the other side of the coin, we have Earol and Balance Activ, which are both type two medical device products within the core of the range. And that drives a barrier to entry naturally because it's very expensive and takes a long time to develop the technical file, which has all of the clinical evidence behind the products, and to also maintain that. So that is definitely a key barrier to entry.
That being said, we are also, again, always looking at claims where we can stretch the claims in the technical file, which only strengthens that position in the market for key areas like bacterial vaginosis and seeing how we can expand that into other need states. And we're also looking at new ingredients and other opportunities where we can get that edge and first move advantage into new therapeutic areas. And we have a couple of those that we're looking at that are very exciting at the moment for the coming year. So yeah, I think we feel like we're in a very strong position on that brand. And similarly with Earol as well, we obviously provide these technical files into other brands. And that just demonstrates the strength of that technical file and the clinical data that we have behind it.
And again, we're always looking to stretch and improve those technical files and also expand those as well. So I think on those two brands in particular, we're in a very strong position.
Great. Thanks, Kate. James, his second question was, does the buyback indicate that you may struggle to find a suitable acquisition? Well, James, no, that's not the case. We had quite a lot of feedback once we divested of the CDMO operations with all that cash on the balance sheet about returning cash to shareholders. That ranged from special dividends to tender offers to share buyback. We think the best way to grow shareholder value is to invest this capital in organic growth and acquisitive growth of the business. That said, at the moment, the way the market is, we're currently valued on a multiple of EBITDA below the range that we would look to buy interesting products into the business, which we think is still a sensible range.
So from our perspective there, the shares are cheap, and therefore the buyback program is to buy shares back in the company at a level that's, as I say, a rating lower than we would look to buy other acquisitions. At the point, the share price then becomes higher than that rating, and therefore it's better for us to invest in the future with other assets, then we'll do that. But yeah, the buyback does not indicate a lack of suitable acquisitions. You've got plenty that we're looking at. The third point from James is you state that the shares are undervalued. What price do you think they should be at? Well, as you mentioned at the back end of the presentation, exit multiples in our sector averaging between 14 and 15 times EBITDA over the last, I think, five or 10 years.
So that depends on your marginality, your growth rates, etc. But if you look at us and the new Cavendish guidance, we're running at a rate between seven and eight million GBP EBITDA a year, even on a ten times multiple, and adding on the cash, it's putting us up towards GBP 1 a share. So you can do those calculations yourself. But clearly, the market and the way it's working, short-term liquidity is hampering not only us, but many share prices at the moment where value is not being reflected, in my view, because there's not liquidity in the market for investment. So we're very confident in the long term, either as the market recovers or as we transact off the market one day, there'll be good value for shareholders at the right multiples. The next question, which is from Peter W.
says, hearing the presentation comments, would it be fair to expect imminent news on a decent-sized acquisition? I think what I've said on that, Peter, is don't expect anything imminent on an M&A acquisition over the next couple of months. These things are not quick. It's really important for us to properly assess the businesses we're looking at, see if it's something that can work for us, see if it's a price that can work. So that process is ongoing. We have dedicated resource. So just watch this space, but don't expect to see anything in the next month or so. Next question from Dean B., Monetary-wise, what is allocated to a share buyback? Well, what we've allocated, Dean, is a maximum of the authority that's been granted to us at the last AGM, which is 10% of the issued share capital, which is just over 12 million shares.
What we pay out in cash terms will depend upon what the share price is when we buy the back. At current price, it's about GBP 7 million.
But it's important to highlight that we've not committed to that. That's just giving us the flexibility against what the authority allows us and taking that out to the 31st of July, running up to the next AGM. So the flexibility is there, but our commitment will be based around how the share price moves, what our M&A plans look like, and we'll take that as it comes in that timeframe.
Yeah, thanks, Danny. The next question is from Roger H. He says, do you believe you have the right quality of advisors rather than just shovel sellers? Do they have value? Roger, I mean, it's something as a management team, as a board, we frequently discuss. If we didn't think any of our advisors were the right advisors, we would change them. So I think hopefully that comment speaks for itself. Our Chairman, Paul, has given us a nice supportive comment. Thanks, Paul. I won't read it out, but thank you for that. The next question. I've got something there. Excuse me, do you mean something?
Yeah. Sorry, something's popped up on the screen. Right, I've got that now. Our next question comes from Mark H. Is there a focus on the U.S., the largest consumer market in the world? Yeah, I've talked to a lot. I'll ask Kate to answer this question.
Yes, absolutely. So we're leading the way with the Health & Her brand initially. We've had some fantastic growth in this market already under this brand, starting off with Amazon and really getting some traction there. That's enabled us to enter bricks and mortar initially with The Vitamin Shoppe into 800 stores. That was in 2024. And since then, we've obviously expanded our distribution in CVS into a significant number of stores. So yes, we are absolutely putting a huge amount of effort behind that brand. And then also taking those learnings and adapting that across to our other brands in particular, Balance Activ, which is already present in that market on Amazon and also Lift. So there is certainly a lot of opportunity, but also a lot of work to do. But it is definitely a big focus of ours.
That's great. We've got a few more questions, which we'll carry on going through. From Dean B., what percentage of Health & Her is on subscription basis? Again, I'll ask Kate to pick this point up.
Yeah, I can't disclose exact numbers, but I can tell you that there is more than half of the sales online in Health & Her are coming from subscription, and they're growing steadily and nicely. Obviously, being a supplement brand, we have that lovely compound growth that we can get from subscriptions. And because the brand and the products have such fantastic social proof and reviews, we do benefit hugely from that word of mouth and then obviously people coming back and repeat purchasing. So it's, again, something we're really focused on. And Apple also supports with that loyalty as well in offering women that kind of free digital support to track how they're feeling and periods and triggers and so on. So it is a big focus of ours to ensure that we get that really, really strong loyalty, and subscription is a big part of that.
That's great. Another question from Dean B., which I'll ask Danny to answer. Is the cash in the bank earning a fair amount of interest?
Yeah, we're earning just over 4% on the bank. So we've got money tied up in 90-day accounts, 30-day accounts. And to maximize the interest rate we can get on that cash sitting there. So it's working for us. We're generating around GBP 1.5 million of interest income on that in effect based on the cash that's in there plus the free cash flow gen of the business. So we'll put that to work on an acquisition, no doubt. But in the meantime, we're generating a nice 4% on it.
Thanks, Danny. Another question from Roger H. How and why do you expect to be able to attract really interesting prospects? I think, Roger, you're referring to M&A prospects, and I think from what's important for M&A, we start from the point of view of, does it work for us? Does it fit our criteria? Does it fit in the right space? Can we grow and develop what we buy? Because we're not looking to buy things to sit on them. We're looking to buy things to grow them. So what are the levers that we can pull to get into growth, then at that point, it's how can we make that interesting for the vendor? Is it the case that it's a brand that they have, they're not focusing on? Therefore, they're realizing cash they can recycle into other brands.
Is it a company that cannot attract development capital because the capital markets for particularly smaller brand companies are not good at the moment? So there are many reasons. I mean, as I'm sure you know, Roger, deals to work for both sides. There has to be benefits in it for both sides. And M&A is an art backed by science. And so the art is in making a transaction that works for both sides. And that can happen not making something that's too difficult to transact or too complicated. Another question from Dean B.,, which I'll obviously ask Kate to answer, which is, what excites Kate most about VLG over the next 12 months?
Great question. I think for me, it's the investment in both the team, but also the marketing and innovation that goes with that, so we have, as the team have said already, we've recruited some fantastic talent within the business, and we also are bringing the talent that already exists with the Venture Life Group and Health & Her together, and I think the structure that we have in place now is really fantastic in a fantastic position with a lot of talent, and that's shifting a lot of focus into innovation, digital marketing, and also utilizing the research that we have on the Health & Her side.
I think it's that ambition as a group to use that and bring those kind of best-in-class behaviors from both sides of the business together, but also having that financial backing to go deliver and execute that in a really positive way. Yeah, I feel like there is already great momentum, and it feels like a lot more momentum to come. That's what really excites me.
Great. Thanks, Kate. And just the final question before I sum up from David W. So can today's presentation be posted on the Venture Life website? Yes, David, all of our results presentations get posted onto the website. So that will happen. And really, for me, just before we close and sum up, thank you very much for watching our presentation. It excites us all the time when we talk about the business. We've been through a real transitional period, and we will continue to go through that over the coming months. I think this all happens because of the team we have, the people we have, and the way they deliver and grow and work for the business. They're enthused, they're energetic, clever people, and we recruit them and ask them to do what they're good at. And that's how we work as a collaborative basis.
I agree with Kate. I think the innovation sort of horizon for us is fantastic. There's lots of white space in the categories where we operate, which is fantastic. We have fantastic relationships with our key strategic retailers. And as I mentioned earlier, Gervase, who's the other co-founder of Health & Her, now focuses on strategic growth initiatives with those big retailers. And that's all about giving them insight, giving them category thoughts, giving them category ideas, and helping them to grow the category as well. I think some of the key categories we work in, particularly women's health and men's health, retailers and the public are crying out for more and more in this area. So we're riding a good place in the market where we can support the retailers with their support for us to put the products in the right place for the shopper.
I think we've got substantial firepower. The cash position is fantastic. We've got plenty of cash to grow and develop. But what's really important is that increased spend in marketing. We're making sure we test that, and we can look at ROI on that every step of the way to make sure we're getting the best bang for every sort of buck we spend and making sure those investments in marketing, advertising, promotion, delivering the returns we want and getting what we have. Kate mentioned, for example, making these sort of documentaries for TV or being involved in these documentaries, very low cost now, but can give substantial increments in sales on the back of those. I think the white space that's available for us, market share opportunities there, is fantastic. I think the digital side of our business has got considerable legs.
I mean, Peter Jackson coming into the business is going to help us to exploit that incredibly. So we're excited and energized as a business. You see a great product range in front of us. Fantastic team. It's the team that delivers this. We're part of that team, but it's all the people who are sat around this table, supportive board, supportive shareholders. Yeah, and it's a very exciting time for the business. I think one of the most exciting times that we've been. And yeah, the shares are undervalued, but our job's to grow the business and drive the business. And we'll carry on doing that. And I'm absolutely sure full value will follow. So again, thank you for joining us. Thanks, Danny. Thanks, Kate, for your input, and yeah, look forward to speaking to you next time.
Fantastic. Jerry, Daniel, Kate, thank you very much indeed for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the board 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 would like to thank you for attending today's presentation and good afternoon to you all.