Further to the good work done by nztx and others, I decided to crunch some numbers.
My concerns (as others have also mentioned):
- Insiders cashing out
- Involvement of private equity
- large Intangible Assets (note some of this INCLUDES capitalised costs. Per the supplementary notes on the Companies Office website, where people costs go up partly due to less capitalised costs)
- Negative NTA
- High P/E
- Massive current liabilities versus current assets with no cash in the bank (as nztx says, what are the dividends being paid from?)
- The numbers are hard work; they being clever clogs working in millions has resulted in a myriad of rounding differences
- Is it $16m or $17m in dividends being paid out on the FY22 results? One document says $16m but 242m shares at 7c per share is $17m. This feels sloppy.
- Also of concern is they leave some marketing costs in COGS. Freebies fall into COGS when they really should be taken out and disclosed under marketing, otherwise margin reporting becomes distorted.
- Forecast cashflow statement has been prepared on a GST exclusive basis. This feels naïve.
- massive variable cost savings to be achieved to land on FY22 NPAT numbers:
- COGS per meal to reduce 6.1% in FY22 from $66.33/meal to $62.27 (2020 was $69.90)
- Assembly per meal to reduce 0.8% in FY22 from $14.42/meal to $14.30 (2020 was $15.20)
- Distribution per meal to reduce 2.9% in FY22 from $11.99/meal to $11.64 (2020 was $11.52) - hard to see how reductions are achieved with a contract with NZ Post locked in for 5 years
- Total reduction in variable costs of $4.53/meal in FY22 for a saving of $6.8m (yes you read that right) - I will believe this when I see it.
- Average Sale Price per meal dropped in FY19 and FY20. The forecast prices for FY21 and FY22 are back to where they were in 2018.
- Whilst there was a boost in volumes due to the COVID lockdown, where is the momentum into FY22 that we are seeing in other retail sectors?
- External marketing A&P costs were reduced from $5.9m in FY19 to $3.7 in FY20. This reduction exceeded the increase in reported NPAT. This is typical of private equity organisations to cut marketing spend to shore up profits, but at what long term cost to the business? Given the spend is forecast to increase $0.8m in FY21 this effect may be somewhat mitigated, when combined with publicity surrounding the float.
Some numbers if others want to pick over them:
My Food Bag |
FY18 |
FY19 |
FY20 |
FY21 |
FY22 |
$ Change |
% Change |
|
|
|
|
|
|
|
|
Meals Delivered |
1,200,953 |
1,244,187 |
1,250,408 |
1,525,765 |
1,503,226 |
|
-1.5% |
Volume Change |
|
3.6% |
0.5% |
22.0% |
-1.5% |
|
|
|
|
|
|
|
|
|
|
Average Price |
$124.07 |
$123.21 |
$122.60 |
$124.20 |
$124.00 |
-$0.20 |
-0.2% |
Price Change |
|
-0.7% |
-0.5% |
1.3% |
-0.2% |
|
|
|
|
|
|
|
|
|
|
Revenues $m |
$149.0 |
$153.3 |
$153.3 |
$189.5 |
$186.4 |
-$3.1 |
-1.6% |
|
|
|
|
|
|
|
|
Cost of Sales |
$83.6 |
$84.8 |
$87.4 |
$101.2 |
$93.6 |
-$7.6 |
-7.5% |
Gross Margin |
$65.4 |
$68.5 |
$65.9 |
$88.3 |
$92.8 |
$4.5 |
5.1% |
GM % |
43.9% |
44.7% |
43.0% |
46.6% |
49.8% |
|
|
|
|
|
|
|
|
|
|
Assembly |
$19.6 |
$20.3 |
$19.0 |
$22.0 |
$21.5 |
-$0.5 |
-2.3% |
Distribution |
$15.9 |
$15.8 |
$14.4 |
$18.3 |
$17.5 |
-$0.8 |
-4.4% |
Marketing |
$5.9 |
$5.9 |
$3.7 |
$4.5 |
$4.8 |
$0.3 |
6.7% |
Overheads |
$12.5 |
$13.8 |
$12.0 |
$14.5 |
$14.7 |
$0.2 |
1.4% |
Adj. |
|
-$0.8 |
-$0.1 |
|
$0.1 |
|
|
Operating EBITDA |
$11.5 |
$13.5 |
$16.9 |
$29.0 |
$34.2 |
$5.2 |
17.9% |
|
|
|
|
|
|
|
|
Depreciation & Amort. |
$3.3 |
$2.3 |
$4.3 |
$5.2 |
$5.3 |
$0.1 |
1.9% |
Interest |
$1.4 |
$1.2 |
$1.3 |
$1.8 |
$1.0 |
-$0.8 |
-44.4% |
Restructure |
|
|
|
$14.6 |
|
-$14.6 |
|
NPBT |
$6.8 |
$10.0 |
$11.3 |
$7.4 |
$27.9 |
$20.5 |
277.0% |
|
|
|
|
|
|
|
|
Tax |
$1.8 |
$2.8 |
$3.1 |
$6.6 |
$7.8 |
$1.2 |
18.2% |
NPAT |
$5.0 |
$7.2 |
$8.2 |
$0.8 |
$20.1 |
$19.3 |
2412.5% |
|
|
|
|
|
|
|
|
|
|
|
|
FY21 |
FY22 |
|
|
Shares (m) |
|
|
|
242.4 |
242.4 |
|
|
Earnings per Share |
|
|
|
$0.00 |
$0.08 |
|
|
PE Ratio @ $1.85 |
|
|
|
560.6 |
22.3 |
|
|
Normalised Ratio @ $1.85 |
|
|
|
29.1 |
22.3 |
|
|
|
|
|
|
|
|
|
|
Dividends $m |
|
|
|
|
$17.0 |
|
|
Dividend per Share |
|
|
|
|
$0.07 |
|
|
Yield @ $1.85 - Nett |
|
|
|
|
3.8% |
|
|
Yield @ $1.85 - Pre-tax (33%) |
|
|
|
|
5.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY20 |
FY21 |
FY22 |
|
|
Equity |
|
|
$58.2 |
$52.7 |
$66.4 |
|
|
|
|
|
|
|
|
|
|
Receivables |
|
|
|
$1.2 |
$1.2 |
|
|
Inventory |
|
|
|
$0.8 |
$1.5 |
|
|
Others |
|
|
|
$0.9 |
$1.1 |
|
|
Current Assets |
|
|
|
$2.9 |
$3.8 |
|
|
|
|
|
|
|
|
|
|
Fixed Assets |
|
|
|
$3.2 |
$3.6 |
|
|
Intangible Assets |
|
|
|
$85.9 |
$85.4 |
|
|
IFRS Junk |
|
|
|
$8.8 |
$6.3 |
|
|
Non Current Assets |
|
|
|
$97.9 |
$95.3 |
|
|
Total Assets |
|
|
|
$100.8 |
$99.1 |
|
|
|
|
|
|
|
|
|
|
Payables |
|
|
|
$11.1 |
$8.7 |
|
|
Deferred Revenue |
|
|
|
$3.5 |
$4.0 |
|
|
Tax |
|
|
|
$0.8 |
$4.9 |
|
|
Others |
|
|
|
$1.3 |
$1.1 |
|
|
IFRS Junk |
|
|
|
$2.9 |
$2.4 |
|
|
Current Liabilities |
|
|
|
$19.6 |
$21.1 |
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
|
$16.2 |
$1.3 |
|
|
Provisions |
|
|
|
$0.3 |
$0.3 |
|
|
Deferred Tax |
|
|
|
$4.5 |
$4.5 |
|
|
IFRS Junk |
|
|
|
$7.5 |
$5.5 |
|
|
Non Current Liabilities |
|
|
|
$28.5 |
$11.6 |
|
|
Total Liabilities |
|
|
|
$48.1 |
$32.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY21 |
FY22 |
|
|
Current Assets / Current Liabilities |
|
|
|
0.15 |
0.18 |
|
|
Debt/Equity |
|
|
|
0.91 |
0.49 |
|
|
NTA $m |
|
|
|
-$31.6 |
-$17.4 |
|
|
NTA/Share |
|
|
|
-$0.13 |
-$0.07 |
|
|
Return on Equity |
|
|
|
1.4% |
38.1% |
|
|
Return on Equity Adj. |
|
|
|
26.5% |
38.1% |
|
|
|
|
|
|
|
|
|
|
|
FY18 |
FY19 |
FY20 |
FY21 |
FY22 |
|
|
COGS/Meal |
$69.61 |
$68.16 |
$69.90 |
$66.33 |
$62.27 |
|
|
Cost Change |
|
-2.1% |
2.6% |
-5.1% |
-6.1% |
|
|
|
|
|
|
|
|
|
|
Assembly/Meal |
$16.32 |
$16.32 |
$15.20 |
$14.42 |
$14.30 |
|
|
Cost Change |
|
0.0% |
-6.9% |
-5.1% |
-0.8% |
|
|
|
|
|
|
|
|
|
|
Distribution/Meal |
$13.24 |
$12.70 |
$11.52 |
$11.99 |
$11.64 |
|
|
Cost Change |
|
-4.1% |
-9.3% |
4.1% |
-2.9% |
|
|
EDIT P.S. I forgot to mention that given the values are disclosed in millions to 1 decimal place, the actual costs per meal can vary by up to $0.05m or 3.3c per meal - with a total possible distortion of plus or minus 10c per meal in any 1 year for the cost per meal. The maximum variation will be +/-$150k so the $6.8m savings is not far off their workings.