In terms of assets there has clearly been a value hit to the Bellamy’s brand, intellectual property management and supply chain contacts.
Last August the stockmarket valued the company at $1.5 billion and just before it removed itself from the lists it was worth closer to $600 million.
Company insiders insist the situation is not nearly as bad as naysayers suggest and the move by 14 per cent shareholder Black Prince to roll the board is reported to be in support of chief executive Laura McBain.
Chair Rob Wooley is safe for the moment, although comments attributed to founding shareholder Jan Cameron suggest that is just until another company can be found.
Wooley was instrumental in forming the company back in 2007 when Tasmanian Foods was created with investments from Cameron, GPG and others.
With revenues of $244m the company at most accounts for 20 per cent of Bega’s $1.2bn in revenues so insiders claim Bega’s Barry Irvin and Fonterra are not likely to put the company under because it is a valuable customer.
That is true to a point — no-one wants to put the company under — but at the same time Bega and Fonterra, who both have take or pay contracts with Bellamy’s, are not going to hand the company a ‘get out of jail free’ card.
At the end of last financial year the company had net debt of $32.2m and cash on hand increased by $300,000 to $32.3m.
It markets itself as a listed organic dairy producer but imports all its product from Europe and New Zealand and is supplied infant formula from Bega and Fonterra.
Its export licences to China come from secondary sources so you may ask, just what is someone buying when they buy Bellamy’s?
The company has an extensive sales network, claims to own 50 per cent of the chemist baby food market in Australia with space on all the supermarket shelves and multiple distribution points in Asia.
In short it is a marketing story with a challenging short-term outlook as the China rule changes work through the market.
Morgan’s analyst Belinda Moore thinks cash on hand will fall from $32.3m to $12.7m by year’s end, with $5.5m in negative operating cash flow.
Negative working capital will increase from $37.9m last year to $39.6m and stay in the red for the forecast period.
Every company makes mistakes. This one was on a fancy multiple and loaded with blue sky and its main asset is an ability to market product, which has taken a hit.
Source: TheAustralian
Link: http://www.theaustralian.com.au/business/opinion/john-durie/just-what-are-bellamys-investors-buying/news-story/1fed4d5712ddc67d814008e3a77d0354