BLT - Blis Technologies

[simla]

So the ice cream has been selling well (and it has) but at a loss. Obviously shareholders could do with someone actually discussing what's going on with sales generally.

And once again a statement from the Board that makes no words of encouragement. Obviously a statement like this could have been accompanied by news on other activities in order to provide better context for this particular statement. Once again we have a statement that some might expect to impact the share price and yet it is brief and full of questions. Why do they do that with these statements? I really wish I knew.

Why was it called "moving forward"? Did the ice cream create all that extra loss by itself, or is the rest of the business part of this? Did they move to the ice cream premises to save money and therefore close down the ice cream, or was it just that the ice cream lost money so they realised they could gain money by moving premises?

Clearly the matters contained in the statement are not good news, but they are lacking in context and I will wait for the next company report before reading too much into it, as these interim statements have not proved to be the best statements to react to. At this time last year, a statement might have been read to indicated the company was out of cash and would have to write off it's intellectual property.

If we are to take this statement as providing a balanced view of the company's situation - and actually nothing in it invites us to take that view - then the central conundrum of Blis remains front and centre. How come the stuff can sell so well here in NZ and yet overseas parties seemingly can't replicate that?

The company has shown itself to have a dedicated core of shareholders, and excellent products. I'm not going to blow with the wind on this, but others no doubt will be unhappy. They may treat Blis differently than when PEB recently announced a $3m half year loss, which statement was greeted with glee! Go figure.

(As a footnote, I will genuinely be gutted to lose access to the ice cream. There isn't an ice cream available that can touch it.)

[Nigel]

I will genuinely be gutted to lose access to the ice cream. There isn't an ice cream available that can touch it.)

They said they will still supply product under a license agreement, so hopefully Gourmet will still exist in another form, with K12 ice-cream remaining available. They seemed to be making progress in terms of distribution - maybe the Auckland trial wasn't a success. Disappointing, but makes sense in many ways - focussing on the core business. Let's just hope we see some strong revenue figures soon!

[CJ]

They said they will still supply product under a license agreement, so hopefully Gourmet will still exist in another form, with K12 ice-cream remaining available. They seemed to be making progress in terms of distribution - maybe the Auckland trial wasn't a success. Disappointing, but makes sense in many ways - focusing on the core business. Let's just hope we see some strong revenue figures soon!

Ideally they would have said that they are closing down the plant as they are licensing it to a much larger ice cream producer and part of the deal was a non compete clause.

I wonder when/if the licensing deals will be signed/announced.

[emearg]

My thoughts...

The good:
The capital burn stops.
POC is complete and considered successful. The criteria they apply may to determine success or failure may be different to that you or I would apply though...
Moving from a research facility to a commercial facility

The bad:
The decision to buy Gourmet. BLT stated the orginal owners had struggled because of lack of capital investment. I did wonder how on earth Blis were going to fix that considering their position! Obviously they can't so that was a very bad decision. They should have stayed as partners for the POC.
250k down the drain buying Gourmet
Additional funding wasted on building brands and developing products (which can be partially offset as it is product development and at least they got some revenue for their trouble)
They intend to continue under licence. That is nice. If/when it happens it can be upgraded to good news.
Tony Often wrote the release. Does this mean Barry is on the way out?
The increased loss.

Unknowns:
Insourcing of production. What production?

Given this announcement is all we have to go on I consider this rather bad news. It shows poor judgement and suggests the board and management aren't thinking as one.

[simla]

"The launch by Gourmet of the BLIS probiotic ice cream has however been a successful proof of concept and it is therefore intended to maintain supply under license.". You're quite right, Nigel. If that means they can continue as of now, then this actually qualifies as good news (but not for those made redundant, very very sorry indeed) as presumably the cost of manufacture goes down while revenue continues. But on what sort of margin, of course.

And, Emearg, you are quite right that this is a good news/bad news situation. (But I see absolutely no reason to think this is about our CEO, since you ask Emearg, as the interim statements always have directors' names on them as far as I can recall.)

The bad news is that the company continues to lose money, that they still don't seem to have the knack of speaking to shareholders in a consistently informative fashion with context, and that the ice cream company didn't make it as is. In particular, the bad news is that this implies the company still hasn't yet found a way to bust through the overseas inertia, although no statement is made about that.

But there is quite a bit of good news. As Nigel says, the probiotic food sales are enough to warrant continuing, which is crucially important news considering that GRAS sales are the planned centre piece of the company. Also, the management are very focused on adaptive change. They have kept the ice cream sales apparently but reduced costs on three fronts: ice cream manufacture, Blis manufacture, and accommodation. I presume the extended range of sales will continue too (Gourmet had introduced extra flavours presumably to capitalise on the brand's selling power.)

This statement reads negatively on first reading - "we're losing even more money and closing down some operations" - but is far more neutral on further reading - "we've lost money on the ice cream so far but have restructured it to capitalise on our investment from here on in". It could even be some good news if we just knew the context - "the first trial of GRAS sales has been very encouraging, and our plan remains on track even if overseas sales remain slow". Which is the fairer reading of this statement? Blowed if I know!

I will wait for the next company report before reading too much into this.

[simla]

You may be right, Sparky. But those of us who have been with BLT for a while are well used to it being a roller coaster. Total disaster can seem to have struck and yet the company has good news around the next corner. The difficult point for Blis shareholders is that this company point blank refuses to state the words "we are currently pleased" or "we are currently worried", as has been shown over some years now. Yet they continue to work very steadily towards their stated objective. It makes it very hard to know what to think as a BLT shareholder, but you get used to that just being the nature of this particular company. I'll wait and see what we hear next.

[neopoleII]

just had a look at the new premises on google earth. not much of a premises for an NZX listed company.
i wonder if our dear leader Doh! shareholder might own the building and collects premium rent.... in lew of a divi??
sorry .... just poking fun.

regarding the topical application of k12 that a poster mentioned..... this came up a few years back and i did some homework.
one of the main reasons men go bald quicker is that they dont dry their hair properly and therefore a bacteria forms in the hair folical and slowly kills the hair.
which is why men should also use a hairdryer to dry the scalp properly...... and a good rubdown after rain and sweat.
so..... k12 could be used to "cure" or retard baldness..... k12 seems to kill all bad bacterial.
imagine the sales volumes then!!!
any one wanting to do a test by rubbing their hair with ice cream for a year or two?

[CJ]

The problem is they announced this now, as opposed to at the next earnings announcement, because its a material impact on their business. And not in a good way.

The announcement had to be made now as a closure is always going to be considered material.

[simla]

any one wanting to do a test by rubbing their hair with ice cream for a year or two?

I don't understand, Neopole. That's what I've always done with the ice cream. What have you guys been doing with it?

[emearg]

"The launch by Gourmet of the BLIS probiotic ice cream has however been a successful proof of concept and it is therefore intended to maintain supply under license.". You're quite right, Nigel. If that means they can continue as of now, then this actually qualifies as good news (but not for those made redundant, very very sorry indeed) as presumably the cost of manufacture goes down while revenue continues. But on what sort of margin, of course.

So how are they going to manufacture it without any staff? I read it as they are shutting down Gourmet production. In fact they state it will cease!

So why on earth do you think revenue will continue?

Gourmet is toast but they are hoping somebody else will pick up K12 ice-cream manufacturing under licence. Maybe they can sell the brand? Maybe not...