Monday 29th November 2021
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Me Today Limited (NZX: MEE ) has released its unaudited group results for the six months ended 30th September 2021.
The result includes ninety days trading of the King Honey business since acquisition on 30 June 2021 together with six months trading for the Me Today Group.
The result for the group records net sales of $2.4m and net loss before tax of $2.8m.
The company advised the market on the 23rd of September that the largest customer relationship for the King Honey business was the arrangement relating to the BEE+ Brand. In discussions with the BEE+ brand manager and channel owner, Me Today established that sales would be lower than expected due to the higher than anticipated inventory levels of BEE+ products in market in China.
Me Today has continued discussions with the Chinese channel partner in respect to future orders post their reports of a successful 11.11 trading period which consumed a significant amount of their inventory. However the group has not yet finalised forward orders for 2022. Given the uncertainty around timing of these orders the company now expects sales for the 2022 financial year for King Honey under the ownership of Me Today to be between $5m and $7m, which will create some cashflow pressure.
In order to lessen the cashflow impact, the company’s major shareholders MTL Securities Limited and the Jarvis Trust have agreed to invest additional cash of $6m through a share placement, conditional upon shareholder approval at a meeting to be held in February 2022. The shares will be issued at 8.8 cents per share, the same issue price for capital raised as part of the King Honey acquisition and reflecting their respective shareholdings. MTL Securities has agreed to contribute $3.75m and the Jarvis Trust $2.25m. It should be noted that there are no outstanding issues between the parties.
With the commitment to increased investment by Jarvis Trust, the board of Me Today has accepted a request to appoint a director to represent the trust’s interests. Accordingly, Richard Pearson will be appointed to the board effective immediately. Richard has many years of experience in various board roles and currently sits on the boards of Wellington Electricity, Envirowaste Limited, New Image Limited and Dominion Salt Limited. In addition Richard has many connections in Asia and China in particular. Richard will be a valued member of the board and he will be well placed to assist the business in delivering to its strategy of international growth.
It should also be noted that the King Honey business incurs a significant portion of its annual costs in the harvesting season from November through to April. Inventory is built up during this time, and at the conclusion of the current harvest, honey inventory is expected to be approximately $20m at wholesale value. Therefore while cash expenses are high a significant asset is being built.
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