Thursday 18th November 2021
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The first half year (HY22) has seen a continued focus on growing revenue from the BLIS PROBIOTICS™ range and on positioning the Company for future growth. Undoubtedly the main highlight during this period is the completion of a long-term strategic partnership with Probi, establishing a license agreement to drive future revenue and R&D collaboration opportunities.
Key revenue initiatives include the launch of the BLIS PROBIOTICS™ range into Canada and the launch of the Live Probiotic Hydration Serum under the new Unconditional Skincare Co brand. These initiatives highlight our ability to bring unique probiotic propositions to market.
Our focus continues to be growing our Blis branded range of products to complement our ingredient sales, which by their nature can be more variable. Growing our Blis branded range increases our direct connection with the end consumer.
COVID-19 continues to present short term challenges for the business and HY22 was significantly impacted by lower ingredient revenue, particularly in the USA market. Revenue from ingredient sales was down by 51%, which was primarily due to a 79% reduction in the USA ingredient business. This reduction was offset in part by a 37% increase in revenue from the BLIS PROBIOTICS™ range. Overall revenue was down by 33% to $3.9m.
The reduction in revenue from the ingredient business is consistent with reported results from other global probiotics companies. In the early stages of the covid pandemic, it is now apparent that our customer base actively built inventories in order to respond to the pandemic. We also saw several new online customers enter the market. In HY22 however we have seen a reset with customers tightly managing stock holdings in response to weaker and more uncertain market conditions. Customers are also moving to a more “just in time’’ reorder schedule to reduce market risk.
Total expenses for the business were up 24% compared with the same period last year (HY21) as we invested in new roles to build capability across the company, invested in new market development and R&D to support our long-term priorities.
The decline in revenue and increased investment in launch activities has resulted in an EBITDA deficit of $1.5m, a net deficit for the period of $1.8m and net operating cash outflows of $1.4m. The cash issue of shares to Probi in July introduced $9.2m of cash, resulting in cash balances held at the end of September 2021 to $9.6m, also strengthening closing equity to $13.0m.
We remain optimistic that new revenue streams we have established will provide growth into the future, however the rate of growth will be subject to global market conditions impacted by the COVID-19 pandemic.
We expect to see a stabilisation of our ingredient sales as we move into the northern hemisphere winter and the uncertain trading conditions stabilise returning our existing business to growth.
We have made a strong start to the Probi relationship having trained the Probi sales team and transferred technical knowledge to facilitate their customer engagement and ultimately production of our products. Our outlook for this relationship remains extremely positive and we expect royalty revenues to commence in the new financial year, FY23.
Guidance is for full year revenue to be between $8.6m and $9.1m with an EBITDA deficit in the range of $2.3m to $2.7m.
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