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0.7¢ halo food co. limited

Who is participating in the SPP?, page-168

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Kass93

199 Posts.

82

07/03/22

16:46

Post #: 60037907
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Originally posted by T.E.P.: ↑

"For me I am pretty much written this off due to the fact they are constantly buying business after business which isn't making money"

I'm not sure how you have arrived at that conclusion, SMX. If 12 months from now the Halo accounts show negative earnings, then you can make that claim, but at this stage, your comment is misleading and incorrect. THM is evidently a profitable business. It was profitable in its early years of operation (2010 to 2016), unprofitable for a short period once private equity took the reins (2017 to 2018) and then profitable again once Rhian re-took control from 2019 to the present. Most importantly, earnings per share will rise with this transaction.

The below analysis incorporates THM financials in the FY22 result.

Information below from Peloton:
Proceeds from the Placement,SPP and Debt Facility are intended to primarily be used toprovide the company with funds to complete the acquisition and support its growth initiatives, including:
Acquisition funding for The Healthy Mummy (THM)
Refinance of Existing Debt Facility
Working Capital and Growth initiatives
Transaction costs.

Ultimately the proceeds will placeHalo Foodsin a strong position for growth and growing positive EBITDA as it has demonstrated over the last 9 months, recording normalised EBITDA of $1.6m for the 9 months to 31 December 2021.Moving forward the company will capitalise on substantial cross-sell opportunities between Halo and THM brands, along with the integration of The Healthy Mummy’s high margin subscription digital product offering to transform Halo sales mix and profitability.

In discussions with the company, we believe there are additional positive factors to consider:

In summary
Providesaccess to valuable and high margin direct to consumer digital distribution channels,with the ability to cross sell Halo’s products through those channels
Introduceshigh margin recurring digital subscription-based revenueto Halo
Halo will manufacture in-house the Healthy Mummy’s products, this is anticipated to be $4-5m per annum of workcreating approximately $800k synergies for the benefit of Halo Food Co
Healthy Mummy is aprofitable and cash generative business, recorded $4.1m EBITDA as at 30 June 2021 and is on track to record more than $5.0m by June 2022. This EBITDA will be recorded in Halo’s financial results from the time of completion of the transaction
Transforms Halo’s branded sales overnight from 10% of the sales mix to c.40%
THM hasa large social media following(1.9m Facebook followers, 220k Instagram followers and an engaged community of 600k mums)for which to market both THM and Halo brands to
Complementary distribution channels across supermarket, petrol & convenience, specialty, pharmacy, online & social
The Healthy Mummyis a fast-growing, profitable and cash generative business, in FY21, THM recorded revenue of~$21 million and normalised EBITDA of $4 million.

The highly strategic acquisition to deliver combined revenue of ~$84 million and normalised EBITDA of ~$5.7 million (on a historic basis) to the Company pre-synergies and $800k in synergies expected to be realised from the manufacture of THM products in-house at Halo’s existing manufacturing facilities

Taking into account Halo Food Co’s current EBITDA run rate of the last 9 months the consolidated EBITDA is expected by ~$7.5m

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They said the same thing about the omniblend acquisition being highly profitable with cross synergy savings etc. What happened since? Shareprice dropping to record lows. Shareholders lost trust in management and who could blame them?
HLF Price at posting: 7.9¢ Sentiment: None Disclosure: Not Held
5 Upvote

1 Great analysis

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