What's this - posted the other day on nzx
https://www.nzx.com/files/attachments/240298.pdf
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What's this - posted the other day on nzx
https://www.nzx.com/files/attachments/240298.pdf
Apologies for the delay - I only returned home an hour ago. I didn't get to Mount Cook but it was so cold in Dunedin I might as well have been on the mountain anyway. Those southerners are a hardy lot - saw several of them in the Octagon in shorts and t-shirts while I was bundled up in jacket, scarf and gloves.
I will complete my report and post it later tomorrow. Meantime - be assured that I found the meeting positive in tone and outlook and feel extremely confident that we're backing a winner. I spoke with several other shareholders who feel the same way.
I'm definitely not selling a single share and will buy more if the SP shows any sign of weakness over the coming months.
We will just assume that you use the word Octagon as a typically modest understatement for Mt Cook. I'm not actually that surprised that tough Mainlanders climb Mt Cook in just shorts and t-shirts. Impressive.
Yep, the southerlies does keep you northies away.....
I really should have walked the talk and bought a parcel of this 9 months ago....
The following is my take on the BLT AGM last Friday. Hope you find it interesting and reassuring.
The AGM was attended by about 50 shareholders.
At the start of the meeting a vote of thanks to Barry Richardson, (who attended the meeting in the audience) for his stewardship of the company and in particular for his skill at capital raising,was proposed by the chairman and passed with acclamation.
The chairman and CEO then basically reiterated the details released to the NZX the night before the meeting with most information being given by CEO Brian Watson during his presentation. Naturally, they were both upbeat about reporting a projected profit for theyear and Brian paid tribute to the work of Barry and the team for the company’s current position.
A few days prior to the event I emailed a list of questions about the company’s results and activities to Brian Watson. A number of the questions in my email were answered in last Thursday evening’s announcements. These included the quantum of the forecast FY17 profit, the first quarter sales and profit announcement, an outline of the vision for the company’s future and the direction in which product developmentis heading. Also, the matter of future capital requirements was addressed in the announcements but only to the extent that the board is reviewing the issue and no decision has been taken yet.
Brian advised that since joining the business in mid-February he had visited the company’s key markets and principal customers. He said he now has a good understanding of what the company is aboutand is optimistic about its prospects for the future.
He said last year’s product quality issue wasresolved to the satisfaction of the parties concerned and that the company has learnt plenty from the experience. As a consequence, key appointments have beenmade in the areas of quality assurance, product development and processimprovement. He also referred to last year’s appointment of a CFO – clearlythere are now sufficient beans coming in to count to justify that role!
The GRAS approval has resulted in heightened interest in Blis products from markets in Europe and Japan and this augurs well for the future. The company is reviewing its own manufacturingfacilities and those that are outsourced to ensure they can maintain growth and product quality. Fonterra was revealed as one of BLT’s outsourced manufacturers.
Overall, I felt Brian spoke very well and presented the company’s position and its prospects clearly and enthusiastically. He appears to be a very capable and confident leader and I believe he will be the right man to take the business to the next level.
At the conclusion of the formal part of the meeting thechairman sought questions from the floor. I asked a couple and also spoke toBrian Watson personally after the meeting.
CHINA: Asked about slow progress in China the chairman advised that the regulatory environment in that country hadchanged about four times in the past few years making it difficult to penetratethe market. Trials are ongoing and the company is expecting that anannouncement regarding China will be made in the last quarter of this year.
KEY RISKS:
I asked the chairman whether the Board hasidentified any key risks to the business such as competition in the market. Hereplied that the company maintains a risk register containing around 15 items that are reported on by management at each board meeting. Two principal areasthat are monitored particularly carefully are competition and regulatory risks.
He advised that competition is appearing from three companies in particular (he gave their names but unfortunately I wasn’t quick enough to record them). He said despite that, BLT is well placed to capitalise on its position and to prosper in the market.
Director Bevan Wallace also spoke to theissue of regulatory risk and said that this was the area that mostly contributed to the chairman staying awake at night. BLT needs to maintain awareness of not only the claims they make about their products but also those made by distributors and resellers. Also packaging and labelling of shipments for export are areas that need constant attention.
PRODUCT FOCUS:
Brian sees prospects for accelerated growththrough branded consumer products as the best and most profitable way forward butwithout limiting sales in other areas. Categorisation of the company’s productsis an issue in the pharmacy trade e.g. they are not cough & cold products – so hewould ultimately like to be able to market a range of Blis products in the same way as Thompsons or Blackmores do with their ranges.
TV ADS:
These will continue running through to the end of August to capitalise on the winter trade.
CLINICAL TRIALS:
The Porirua trial sponsored by the NZ Health Research Council is completed but the results cannot be shared untilt hey are published by the HRC.
SHARE CONSOLIDATION:
The company is aware of the negative "penny dreadful" perceptioncaused by the high volume of issued shares and the relatively low SP.Consolidating the shares would cost the company an NZX fee in the order of $30,000. The board feels there are better uses of company funds at present though the matter is not off the radar.
The company is commissioning an independent research report on BLT that will be released to the market when completed.
MARKETING/WEB SITE:
Brian said that a major makeover is planned for the company’s web site – including the Investor pages. He said that heintends to continue direct marketing of the company’s products online as wellas selling through pharmacies.
BLT IS AN EXPORTER:
80% of sales are from exports and this percentage will increase over time as existing markets are expanded and newones developed.
Attendees received a "goody" bag containing Blis products and were treated to an exceptional variety of finger food following the meeting. I ate your share!
SUMMARY:
Despite profits being forecast there is no prospect of dividends in the foreseeable future. In my view, I think further capital raising could well be a possibility but this would be a good thing if it is to develop facilities to bring more production in-house and to undertake more market expansion.
The business is being steadied with production capability and process improvement developed so there is a sound base from which growth can be accelerated over coming years.
Plenty of potential exists in current markets and new ones will be sought. Product development and innovation will continue with a focus on branded finished consumer goods (obviously where the margins are).
Overall, my perception is life is looking pretty good for BLT and itspatient shareholders.
Bonne chance to holders
Pierre
Thank you very much indeed for that, Pierre.
A few comments. Yes, I have seen others saying how hard it is to get into China because everything is always changing, not just BLT. Also, I note we have not been told of any plans for GRAS or supermarket level goods. Also, we have had some reference to the future, but nothing terribly specific at all, and no mention of anything in relation to 2017 which is only a few months away now.
Basically we have learnt in the last week that Blis is very upbeat and that they are now running a bottom line profit. But expectations for the future remain very vague - to me anyway.
However, all very good. It will be interesting to watch the market reaction over the next few months given that the next half report is only 3 or 4 months away.
......YES MANY THANKS FOR YOUR EFFORTS in attending on our behalf PIERRE and hope you enjoyed our share of the "goodies". Well summarized also and I take from your comments a generally positive vibe now hangs over the company.......great to hear. Im interested to hear that IN FACT we do have some competition in this select field.........I was of the impression we had it all to ourselves and were protected under specific patents.....is this NOT the case? Of course competition is not necessarily a bad thing and in fact could be taken as good news given the increased awareness it brings to ORAL PROBIOTICS (some here apparantly still dont get the point of difference with general probiotics)
Nice report Pierre. Thanks a lot.
It's important to read what I've written in conjunction with the CEO presentation released to the NZX on Thursday evening. They are building capability this year to position BLT for sustainable profitable growth.
They achieved growth across all markets in FY16 and are expecting to achieve more growth this year and in the future through branded finished goods.
They have told us they expect to achieve sales for FY17 in excess of $8m and profits of $700k+. I'm sure both of those forecasts will be relatively conservative so they can report an "out perform" result.
At the meeting they raised the spectre of competition as a risk to the business - but don't appear to be fazed by it. Nevertheless it would be a sound reason for not revealing too much detail about future plans.
The half year report in November will be interesting - and hopefully may contain some news about progress in China. More patience required!
Meantime the business has now traded profitably for two consecutive quarters and more to come. All good news compared with what we have had over the past years.