OnMarket Bidding Closed Aust. Nutrition & Sports Ltd ASX: AN1

Australian Nutrition & Sports Ltd IPO | ASX: AN1

Fixed Priced IPOType of Offer
12 Mar 19Offer Open
22 Mar 19Pay By
$0.20Price
Up to A$8 millionSize of Offer
$2,000 Minimum Investment
PAC PartnersLead Manager

 

The Australian Nutrition & Sports Ltd IPO has closed early via OnMarket.  Payments for applications are now due by 5pm, Friday 22 March (AEDT).

Introduction

Australian Nutrition & Sports Ltd (ASX: AN1) is an Australian based company, committed to developing, sourcing and marketing high quality Australian made milk formula and nutrition and wellness products for sale in China, Hong Kong and Australia. In the future they plan to expand into other Asian markets.

Currently focused on infant and adult milk formula products, protein based health and wellness nutritional products, ANS’s business model is to develop and brand its own high-quality products, and then to develop distribution channels for the profitable sale of the products. In doing this ANS currently intends to rely on a capital light business model by outsourcing the production of its products to various export accredited Australian third-party producers.

All of ANS’s nutrition and milk formula products are made in Australia at export quality and with all required export certifications. These certifications include the coveted China Certification and Accreditation Administration (CNCA) for the milk formula products. A number of the protein supplements are also approved by China Inspection and Quarantine (CIQ) for the import and sale of products in China.

The market segments in which ANS participates are both growing markets, with health and wellness being a growing industry, particularly in Asia. With the removal of the one child policy in the PRC, and the growing population and growing affluence of the population in Asia in general, ANS believes that the demand for premium nutrition and milk formula products from Australia will continue to grow.

ANS has successfully commercialised a number of products in the Hong Kong market with distributions agreements in places with leading pharmacy groups including Watsons and Mannings. In FY2018, ANS generated cash sales of $419,260, up 192% from FY2017 sales of $218,033.

 

Investment Highlights

  • Premium quality, health and nutrition products sourced and produced in Australia
  • Two complementary product categories, with a total of 23 nutrition products and 4 milk formula products
  • Targeting growing Chinese and South East Asian markets with increased focus on health and wellbeing
  • Third party agreements with accredited manufacturers that hold required accreditations and licences for import and sale of products into China (CNCA and CIQ approved)
  • Executed Agreements for the distribution of products with Watsons and Mannings, Hong Kong’s two largest chain of chemists
  • Commencing Infant Milk Powder sales into mainland China via domestic Chinese e-commerce channels such as KKSKY (www.kksky.com) and Jing Dong (www.JD.com)
  • Generated cash sales of $419k in FY2018, up 192% of FY2017 sales.
  • Board and management with significant experience in global distribution networks sales and marketing in Asia

    Offer Overview

    Australian Nutrition & Sports Limited is looking to raise up to $8 million via its IPO and will have an indicative market capitalisation of approximately $19.1 million at maximum subscription.  

    The proceeds of the IPO will be used to:

    • increase the sales and marketing budget to expand brand awareness to drive both direct and retail channel sales for ANS’s current commercialised products with a focus on export markets;
    • grow sales and brand presence in Hong Kong by continuing to add new customers to the network with a secondary focus to expand in other Asian markets in which the company already has a presence;
    • rebrand the nutrition and fitness product ranges;
    • invest upstream into IMF and protein manufacturers;
    • continue the commercialisation of the portfolio of product formulations;
    • Provide working capital; and
    • cover costs associated with an ASX-listed company, and other typical administration costs.

    Business Model

    Australian Nutrition & Sports Ltd’s business model is to develop and brand its own high-quality products for the market segments in which it operates, and then to develop distribution channels for the profitable sale of the products. In doing this the company currently intends to rely on a capital light business model by outsourcing the production of its products to various third-party producers.

    All of the company’s nutrition and milk formula products are made in Australia at export quality and with all required export certifications. Outsourcing the production of its products to third parties gives the company the advantage of requiring less capital intensity, and also de-risks the supply of products as it reduces the risk to the company that would be caused by the loss of regulatory accreditation of, or other manufacturing disruption at, a company owned production facility.

    ANS Australia executed a supply agreement with Nature One Dairy in October 2018 for the manufacture and supply of Infant and Adult products. As part of the agreement, NOD agrees to supply IMF and AMF products to ANS Australia from its CNCA approved facility in Melbourne.

    Products

    Australian Nutrition & Sports Ltd has a broad and diverse product range comprising two main product classes, being milk formula and nutrition products:

    Milk Formula

    Australian Nutrition and Sports Ltd offers a range of milk formula products with four commercialised products. Three of the products are developed specifically to address the different stages of infant growth as a nutritional alternative to breast milk for growing infants. All milk formula products meet stringent export regulations and are Australian made in National Association of Testing Authorities (NATA) accredited laboratories.

    Nutrition

    In addition to the extensive milk formula range, the company has a range of Australian-made, export quality nutrition products with all required certifications, including protein powders, protein shakes, protein bars and rapid energy gels.

     

    Business Strategy

    Execution of the brand marketing strategy "The ANSWER".

    The company will focus its initial marketing efforts on promoting its brand and increasing awareness of our existing product range, with a view to increasing sales through existing distributors and retailers, as well as growing its network of distributors and retailers in Australia and abroad.

    Continue China expansion

    The distribution of IMF and AMF products into China is undertaken currently via CBEC (Cross Border e-Commerce) sales channel. This sales channel is large, is expected to continue to grow and is the current primary sales channel that the company will focus on for the sale of its IMF and AMF products into China. The company additionally intends to explore opportunities to sell its AMF products offline through traditional retail channels in China.

    Improve Australian market presence

    The company’s nutrition and protein products are currently sold in Australia in gym and fitness centres with its IMF and AMF products sold in a small number of retail outlets. The company intends to undertake an expansion of its IMF and AMF products into retail stores Australia-wide

    Industry Overview

    In September 2016, the nutrition, health and wellness industry had an estimated global market size of US$570 billion. Key demand factors that have been observed by the company in the market are: population growth; growth in the middle classes (particularly in China); positive social trends regarding health and wellness; and governments willingness to implement initiatives to address public health and ageing populations. The key component of the company’s PBNM products is Australian sourced protein, which is ultimately sourced from cow milk.

    Australia has abundant pasture and other resources for production of dairy based products, making it well positioned to meet China’s growing demand for dairy and nutrition products.

    Management and Board

    Australian Nutrition & Sports Ltd is led by a highly experienced Board with skills in supply chain management, global distribution networks, sales and marketing in Asia.

    • Thomas Lashan - Managing Director and CEO, with more than 20 years experience in the health, wellness and fitness industry in Australia and China. In 2006, he founded the company based on insights gained in his lengthy career as a leading Personal Trainer and Life Coach in Melbourne. Mr Lashan personally led the expansion into Hong Kong and CHina.
    • Peter Reilly - Non-Executive Chairman, with more than 30 years’ experience as a senior executive with public and private companies, including being the managing director of Ausdoc Group Pty Ltd.
    • Alexander Molyneux - Non-Executive Director with more than 10 years’ experience as a financier and company director.  Mr Molyneux is currently Non-Executive Chairman of Argosy Minerals Ltd (ASX:AGY), Chairman of Tempus Resources Ltd (ASX:TMR), and Managing Director of Galena Mining Ltd (ASX:G1A).
    • Simon Fraser - Non-Executive Director, held executive positions with various FMCG organisations over the past 25+ years. This includes Proctor and Gamble where he has held several senior executive positions in Australia and in Asia over a 20-year career.

    Risks

    You are encouraged to read the Prospectus carefully as it contains detailed information about the Company and the Offer. Like all investments, an investment in the Company carries risk. As set out in Section 4 of the Prospectus, Australian Nutrition & Sports Limited is subject to a range of risks, including but not limited to business strategy and execution risk, limited history in the nutritional health and food products market, dependence on service providers and risks in ability to export food products to Asian markets.

     

    Section 734(6) disclosure: The issuer of the securities is Australian Nutrition & Sports Limited ACN 625 485 912. The securities to be issued are ordinary shares. The disclosure document for the offer can be obtained by clicking on the link above. The offers of the securities are made in, or accompanied by, a copy of the disclosure document. Investors should consider the disclosure document in deciding whether to acquire the securities. 

    OnMarket has a limited allocation. The offer may close early and the 'Pay By' dates may change. Bids over $10,000 may be scaled back more heavily. Duplicate bids under the same investment profile, investor name or residential address may be cancelled.

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    Aust. Nutrition & Sports Ltd
    Developing, sourcing and branding high quality Australian made milk formula and nutrition products

     

    Offer closed early via OnMarket.  Payments are now due by 5pm Friday 22 March.

     

    Australian Nutrition & Sports Ltd (ASX: AN1) is focussed on the development, branding and distribution of its own high-quality milk formula, health and wellness products for sale in Australia, China, Hong Kong, with plans to expand into further Asian markets over time.  Currently focused on infant and adult milk formula products,  protein-based health and wellness nutritional supplements, the company has successfully commercialised a number of products in Hong Kong with distribution through ~350 pharmacies. Expansion into the Chinese market is supported by production agreements with export approved Australian manufacturers.    

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    Up to A$8 millionSize of Offer
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    22 Mar 19Pay By