Today management have released the HY results for FY21 and at first glance.... ouch.
Revenue down 69% and profit down 93%.
This is not totally unexpected as management have been pretty open and forth coming about how severely they have been impacted by the Covid lockdowns and travel essentially non-existant for most of the world.
However whilst sales have been slow the have been busy increasing inventories and upgrading the facilites to increase ZincClear capaicty to 5000MT per annum. The have also developed of 15 new dispersions and installed a production line to produce 250M tubes for direct and whitelabel sales. These prodcution upgrades were all funded via current cashflows which makes the 93% drop in profit worse then it is in reality.
Still a quality company with quality managment that have plenty of skin in the game with the vision to increase capacity in anticipation of the world returning to some type of normal.
27 November 2020
COVID-19 Sales Update
The Board has been informed by our US distributor that over 50% of its original 180T stock holdings in XP powder has been sold in the past 4 months. Also, the distributorwill start ordering new stocks of dispersions in December.New orders for Europe are down 55% based on the previous corresponding 5 months to November 30, as a consequence of restrictions relating to the second and third waves in ourkeyoverseas marketswe do anticipate only a small profit result for the first half FY21.
Based on feedback from our distributors, and the anticipated licence approval from the TGA,in February/March 2021,to manufacture and supply bulk intermediate sunscreens and finished bulk sunscreens for manufacturers,who lack the necessary equipment to manufacture sunscreens using our ZinClear XP powders and dispersions,to test their respective markets.
We are optimistic of a much improved profit result for the second half FY21.ANO already has stock in US and Europe to meet the anticipated increase in demand for products, with further shipments to continue throughout December.
4th September 2020: https://dumilecapital.com/2020/09/04/ano-dont-fight-the-lev/
"The blackout period is over and Lev Mizikovsky is back in the market for ANO shares. How deep are his pockets and what’s his end game?"
It appears pandemic-related headwinds for sunscreen are receding.
positive look through from Banana Boat / Edgewell which bodes well for ANO's recovery in FY21/22.
a bullish report on ANO's prospects
This may not be that significant, as I do not know what volume of product Ethical Zinc sell, but I do know it uses ANO Zinclear product.
10-July-2020: Lev's still buying ANO on-market.
I'm not an ANO shareholder any more, for reasons I gave here at the time I sold, but I do occasionally notice these announcements from them. You can't question Lev's commitment to ANO.
Sat 18-Apr-2020: Just on @Hackenbacker's "Management" straw about the Ausbiz podcast - here's the link:
That should automatically start playing the latest episode (from Thursday 16 April) which starts off with Julia Lee and Mark Moreland discussing Kogan (KGN). RFT is the 4th stock discussed and that begins at around the 17:30 mark. ANO is the 6th stock discussed and that discussion begins at around the 24 minute mark.
Neither analyst recommends ANO, but Mark's comments are indeed worth listening to, because TeamInvest have looked very closely at ANO, and he clearly explains why despite their obvious potential, they are not suited to being a listed company, because of the way they are run. Mark mentions that one of ANO's directors is actually a member of TeamInvest, but he doesn't disclose which one. Despite that link, as a group (team), they (TeamInvest, who Mark represents) have voted ANO down as NOT being an attractive investment opportunity. Many of TeamInvest's members are either business owners or ex-owners or ex-managers of businesses themselves and they do focus quite a lot on the quality of management of companies when deciding whether a company would make a suitable and attractive investment. Mark suggests that ANO does tick a lot of boxes, including excellent earnings growth, superb industry positioning (being in exactly the right place at the right time), and more, but TI failed them purely on management quality and governance issues, and he gives examples of where they have had concerns.
Julia Lee didn't have much to say, except that their latest announcement fiasco (about the new product patent that might be able to inhibit the replication of COVID-19 in the mouth) was bizarre and that ANO had lost a lot of credibility as a result of that. Howard Coleman and Mark Moreland's TeamInvest however had failed ANO before that episode, based on previous issues and behaviours. Not sure if many people are aware, but our own Strawman used to be a member and spokesperson (representative in the media - on TV) for TeamInvest back before the MF days. While I'm not personally a member of TeamInvest - mostly due to the high financial cost of being a member - I do respect their opinions. They base much of their investing philosophy and process on Warren Buffett's and Ben Graham's pearls of wisdom and beliefs, and their approach is much more in that Value Investing camp rather than so-called "Growth Investing" where valuations and price are less important. You can get an insight into how that plays out by continuing to listen to the podcast when they discuss Blackmores. They don't get every call right, but they manage to screen out a lot of companies that carry higher levels of risk, which is the way I look at ANO.
ANO may multibag - and I hope for the true believers who hold them that they do - but the risk/reward equation is not attractive to me any more. I want to have a greater level of faith and trust in management and that they have sufficient regard and respect for ordinary retail shareholders. All shareholders are part-owners of the business. Regular trading suspensions, questionable announcements, and threatening to move your primary listing to the NASDAQ in the USA is NOT (in my opinion) in the best interests of ordinary retail shareholders. And that doesn't even touch the related party transactions, the auditor concerns, and other governance concerns. GLTAH, but they're not for me.
If you are unable to play the video without signing up, you may have more luck if you google various combinations of Ausbiz The Call and Advance Nanotek (or ANO), which is how I found it and watched it the first time. I've since signed up for regular emails from them.
01-Apr-2018: 9:37am: ANO: Suspension Update
The war continues...
I have updated my valuation for ANO, slashing my TP, and explaining why I'm going to sell as soon as they begin trading again (assuming they begin trading again)...
27-Mar-2020: From the ASX (at 5:03pm, after the market closed): Continued Suspension from Official Quotation
In this update from the ASX (link above), they explain why they consider that a continuation of ANO's suspension from trading is appropriate. They include the query letter that they sent to ANO regarding their draft announcement regarding their new patent for various oral care products that may use various combinations (compositions) of "at least one zinc compound or at least one zinc salt and hinokitiol or a salt thereof". The ASX also include ANO's response (reply) to that query letter, and it's not hard to understand why the ASX regarded the ANO reply as lacking in detail and not adequately addressing all of the questions that the ASX had asked.
Just one example:
"Please advise whether ANO has received any legal advice regarding the statement in the Draft Announcement that: “The initial sales are contemplated on the Amazon EU platform as no regulatory approvals are needed.” If it has, please provide a copy of the advice (not for release to the market). If it has not, please explain its basis for making this statement."
Hmmm. Perhaps they didn't read the whole question?
The ASX felt that they needed to release this announcement (link above) in response to ANO releasing their ANO Business Update announcement the previous day (2:20pm on 26-Mar-2020) in which they do make assertions about the ASX that the ASX clearly felt they needed to address.
Apart from the spelling and punctuation errors in the last line of ANO's response to the ASX - "The balance of information sort by the ASX is in the opinion of the Board is not material." - ...the wording is dismissive and provocative. I think they'll find that they won't get out of this trading suspension until they provide satisfactory answers to the ASX and let the ASX decided what is and is not material.
Another fine mess they've got themselves into. Such promising tech, and such a badly run company - from a communications and regulatory compliance point of view.
26-Mar-2020: ANO Business Update
ANO Business Update
ANO continues to produce zinc oxide and one of our large customers in the US has reconfirmed their prior orders for 80 MT plus for April, May and June. We are sending additional final products (powder and dispersions) to the US and Europe and will continue to do this on a weekly basis. Despite two countries temporarily closing production facilities, we have raw material in stock and in transit and have placed additional orders from our supplier in a third country. We will have sufficient raw materials to meet future zinc oxide orders well into the next year if current trends persist.
We have today received two new orders from Merck which doubles their orders for calendar 2020 to $3.2 million. Again, we have placed significant orders for raw materials and are investing in spare parts to ensure we have continuous supply of Alusion to Merck over the next 12 months.
Zinc Gluconate Production
ANO is looking into the production of zinc gluconate with lab trials about to start. Given the current worldwide shortage, ANO will look to distribute this product to Europe, where no TGA approvals are required, as soon as possible.
COVID-19 – Remote Setup
Software has been installed successfully by SenterpriSys Limited to allow key functions within the business to be completed by staff from home if required.
Collection House Limited (“CLH”) & ASX
Many of our shareholders may be unaware that our Chairman is currently in court with the ASX and CLH as a result of the ASX publishing a market release for CLH which was defamatory towards our Chairman. Further, CLH remains voluntary suspended. More concerning is that the issues raised by our Chairman appear to be the reasons CLH has extended its voluntary suspension for now 2 months.
ANO believes this is in part one of the reasons we are having difficulties and delays with the ASX at present.
In addition, we confirm to the market that the ASX have raised rumours in regards to margin calls by Directors on Wednesday morning, 18 March 2020. The Board confirms to all shareholders that there are no margin loans in place by any Director.
Update on Suspension
It is astonishing that the ASX would seek to impose forced suspension of ANO’s shares for what can only be understood to be a result of the brevity of some responses (which were in the Board’s view the appropriate factual responses to ASX’s questions). The ASX has offered no clarification as to why the brevity is not acceptable to them nor have they tried to reframe their questions to elicit a different answer.
So, shareholders are aware, some of the questions raised by the ASX were technical in nature and in, the Board’s view, only capable of answer by reference to the patent and the scientific papers referred to therein. It is not appropriate for the Company to attempt to summarise for the ASX matters of such a technical and scientific nature, at the risk of being accused of not effectively summarising the matter. The only appropriate response in the Board’s view is to direct the ASX to the source documents where all the technical detail is available. Of course, this is the Company’s best guess at the ASX’s concerns as it has to date not offered any additional guidance on which responses are deficient or why.
In light of the current situation between our Company and the ASX, and given 70% of our sales are in the US and our market capitalisation is in excess of $200 million, the Board is going to investigate listing on NASDAQ. We apologise to our shareholders and the Board will attempt to resubmit our announcement to have our suspension lifted as soon as possible.
Geoff Acton (B.Com CA)
--- ends ---