Ann: Trading Update, page-8

Sandalwood grower Quintis has dumped its earnings guidance, confessed it still has not shipped any wood to China this year, and slashed forecasts for product sales and new plantings.

It is also in discussions with "a number of parties" about a recapitalisation, it told the ASX on Tuesday in a trading update.

"A failure to negotiate and complete a transaction, given the company's current liquidity issues, is critical to the company's continued financial viability," it said in a separate statement.

The company also responded to questions posed by the ASX regarding its admission last month that the board and senior management did not know of the loss of a supply contract with Nestle's Galderma, despite its Santalis unit signing off on the termination.


It had not shipped any oil to Galderma since June 2015.

"Since June 2015, there have been ongoing discussions between Quintis' former managing director," the company said, referring to Frank Wilson, "Santalis' management and Galderma regarding the sales performance of the Benzac products and the marketing and distribution strategy of Galderma."

Santalis and Quintis were both aware Galderma was assessing its strategy, the company said.

"The current board and current senior management of Quintis now understand that Santalis' management became aware of Galderma's intention to terminate the supply contract on or around November 30, 2016." This was formalised the following month. The current board and management repeated that they were unaware of these events until May 9, 2017.

The former TFS has requested its shares remain halted from trading on the ASX until June 21. They have not traded since May 12 after a 72 per cent fall in one week triggered a wave of class action interest.

Further, it has given up on ever receiving $27.5 million owed from one Asia-based institutional plantation investor for a contract dating back to June 2015.

A forecast for sales of wood and oil products has been reduced to $25 million to $35 million, factoring in between zero and $8 million in sales to China if it can secure a new contract for timber before June 30. Its previous forecast was $45 million to $55 million.



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