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Bubs Australia Limited (ASX:BUB) produces packaged food products for the infants. The Company supplies organic baby food, milk formulas, cereals, and other nutritional products for babies. The companyâs customers base is primarily in Australia.
The company announced today that it had sold its 49.9% interest in dairy manufacturing joint venture Uphamgo Australia and other associated JV entities) back to the original Vendors of Nulac Foods Pty Ltd.
The joint ventures arose in the course of the Bubs Australiaâs acquisition of NuLac Foods Pty Ltd. Bubs continue to have ownership of the CapriLac® brand (and other brands in the NuLac Foods portfolio), and exclusive rights to the milk supply from the Vendorsâ farms in Australia and New Zealand, which it acquired from the buyers as part of the 2017 acquisition.
Mrs Kristy Carr, Bubs Australia Founder and Chief Executive said that being able to produce the goat infant milk formula in a single step at the Tatura facility is a significant step forward for the company. It will result in a fresher, better quality product without the need to first spray dry the milk to powder at the Uphamgo facility. As a result, the facility has become non-core to the companyâs requirements.
The sale was completed on 28 February 2019, with payment of the purchase price of $3.493 million deferred until February 2020. Under the Sale agreement, Bubs will be granted the first refusal if there is a sale of any interest in the dairy manufacturing facility before 19 December 2022.
For HY 2019, the Group achieved total revenue including other income of $19,567,560 and a loss after income tax of $8,826,965. The overall position includes certain transactions that are outside of the normal operations of the Group. These items are expense relating to the fair value movement of contingent consideration of $13.4 million payable to the Nulac Foods Vendors for future satisfaction of specific performance targets, recorded in employee costs given one of the KPIs relates to continued employment of Nulac Foods Vendors, an amount of $288,288 share-based payments relating to options issued in FY2018 and $240,681 worth of inventories written off relating to discontinued products.
The operating loss reflects the fact the business is still in a strong growth phase including the high costs of new product development, expenses related to expanding the domestic and China sales Channels and investing in systems and processes to improve the efficiency of the operations.
Recently, the company notified about getting into a long-term strategic supply partnership with Tatura Milk Industries, a 100% owned subsidiary of Bega Cheese Limited (ASX:BGA).
Now, letâs have a glance at the companyâs stock performance and the return it has posted in the last past few months. The stock of the company last traded at a price of $0.560, down by 5.085 % (as at 28 February 2019) with a market capitalisation of ~$ 262.45 million. The counter opened the day at $ 0.595 and reached the dayâs high of $ 0.625 and touched a dayâs low of $ 0.560 with a daily volume of ~6,655,862. The stock has generated a YTD return of 29.67% and posted returns of -20.27%, 29.67% and 32.58% over the past six months, three months and one- month period respectively. The company noted a 52-week high price of $ 1.055 and touched 52 weeks low of $0.355, with an average volume of ~ 1,662,986.
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