ASX Announcement: 30 October 2017 TasFoods Limited Business...

ASX Announcement: 30 October 2017
TasFoods Limited Business Update and Appendix 4C for the quarter ended 30 September 2017 TasFoods Limited (TasFoods), producer of premium Tasmanian food products, is pleased to submit its Business Update and Appendix 4C Cash Flow Statement for the quarter ended 30 September 2017 (Q3 2017).

Business Update:
Throughout the quarter, TasFoods continued building a stable of high-value food brands that capitalise on the natural attributes of the Tasmanian agricultural environment.
The strategy was progressed in Q3 2017 with the announcement that TasFoods had entered into a Business Purchase Agreement to acquire the assets of Pyengana Dairy. The acquisition was completed in early October 2017 (Q4 2017).

Pyengana Dairy is a leading Australian producer of traditional cloth-matured cheddar cheese. It also produces fresh bottled milk under the Real Milk brand, which is supplied to major retail chains, independent retail outlets and cafes across Tasmania.

The acquisition of Pyengana will deliver synergies within the TasFoods Group due to the complementary nature of its products with existing Meander Valley Dairy products and distribution networks.

Other achievements during the Q3 2017 include:
Expansion of distribution – Nichols Ethical Free Range chicken distribution expanded into Victoria and distribution of Robur Farm Dairy goat milk products expanded into Victoria and New South Wales.
Recognition of premium quality – Robur Farm Dairy’s wasabi chev and goat milk were awarded gold medals in the Royal Adelaide Show. Meander Valley Dairy’s commitment to quality was further recognised at the Hobart Fine Food Awards, receiving gold in the dairy product category and also being awarded the Richard Langdon award for best in show for its double cream product.

Growth of goat herd – the kidding season at Robur Farm commenced during the quarter with 355 kids, 180 of which are female doelings, being born. These doelings will form part of the milking herd in 2019 and will provide greater access to quality milk supply. The number of kids will increase in Q4 2017 as there are still 285 goats to kid.

Export accreditation – Meander Valley Dairy factory finalised an export accreditation for its Launceston factory.

Quarterly Cash Flow:
Key results from the Q3 2017 quarterly cash flow include:
• Consistent growth of sales revenue with sales revenue (unaudited) for the quarter, 4% higher than Q2 2017 and 10% higher than the prior year comparative period of Q3 2016;

• Cash receipts from customers for the quarter were $7.2 million, 4% greater than Q3 2016 and consistent with Q2 2017;

• The closing cash balance as at 30 September 2017 was $9 million;

• Production and manufacturing costs were consistent with Q2 2017, while staffing expenditure declined by 6% in comparison to Q2 2017. Targeted expenditure reductions within the Group are continuing, as a result of increased automation within the production facilities and efficiency improvements;

• Administrative and corporate costs rose to $0.7 million in the quarter due to the payment of the annual insurance premiums for the TasFoods Group; and

• Cash outflows of $0.77 million associated with expenditure on investment activities include final payments for the second greenhouse at Shima Wasabi, which was completed on time and on budget at the end of Q2 2017, and infrastructure and equipment upgrades to increase efficiency and productivity.

Outlook:
During the final quarter of 2017, TasFoods will continue its focus on delivering revenue growth and creating operational efficiencies. This will be done in conjunction with maintaining product quality at a standard expected of its premium Tasmanian products.

Specific areas of focus for Q4 2017 will be:
• Completing the acquisition of Pyengana Dairy and integrating its operations into the TasFoods Group structure to deliver identified synergies, while ensuring product quality is maintained and customer orders are fulfilled;

• Continuing growth of revenue through the expansion of the distribution channels and market presence of Nichols Ethical Free-Range chicken, Robur Farm Dairy and Shima Wasabi products in markets outside Tasmania;

• Growing revenue by expanding the product range offering of existing brands to existing and new customers; and

• Continuing investment in mechanisation of our food processing facilities to deliver production efficiencies.

All seems very good to me.

DYOR GLTAH
Rubi