Nutritional Growth Solutions Ltd. (ASX: NGS), a global nutrition company that creates scientifically formulated and clinically tested supplements to support growth development in children, is pleased to provide a business update for the quarter ending 30 June 2021 (Q2 FY21), along with its Appendix 4C quarterly cash flow report.Another quarter of record sales and cash receipts NGS has delivered another record quarter for sales and cash receipts, with momentum continuing to build. Unaudited revenue for Q2 FY21 was US$1,030k1 , up 90% on pcp, while cash receipts were
US$895k, up 24% on previous quarter. This result was driven by continued strength in US sales, as well as a strong take up in sales in Italy after the Company’s March launch.
Commenting on the Company’s progress during the quarter, Nutritional Growth Solutions CEO Liron Fendell said:
“It has been a quarter of continued growth for the Company as we gain momentum rolling out all aspects of our three-pillar growth strategy; new products, new territories, and new sales channels.”
“We launched the Healthy Height® nutrition bar in North America that is formulated with the same nutritional profile as the patented Healthy Height® shake range and is clinically proven to increase height in children aged between 3 and 9 years old by 13.8% – 34% in their annual growth.” “Our entry into Europe through the Italian market has started very well with Healthy Height® exceeding wholesale sales expectations since its debut in March. This shows the strength of our distribution strategy through Dicofarm to pharmacies and health food stores across Italy, highlighting the differentiation of our clinically tested product.”
“We are well placed to continue to deliver on our three-pillar strategy with the appointment of three senior hires since the reporting period to drive our next stage of growth, our partnership with NIG Nutritionals to produce our product and grow our presence in APAC, and our trademark approval in China that will open new doors to further develop relationships with reputable distributors, retail outlets and stockists.”
“I am also pleased to update that our planned clinical trials that were placed on hold due to the COVID19 pandemic have been given the green light to resume. Since the reporting period we have announced our upcoming clinical trial to test the effect of Healthy Height® on children being treated for ADHD with stimulant medication. This is the first of multiple clinical studies we have planned as we strive to find new ways our products can help even more children reach their potential.”
“I am excited for Nutritional Growth Solutions’ next stage of growth. We have a strong cash position, a refreshed team of highly skilled personnel, new territories to grow, new products to market, all underpinned by the drive to assist children around the world grow into the person they are meant to be.”
OPERATIONAL UPDATE
Milestone Healthy Height® rollout in Italy Since debuting in Italy, Nutritional Growth Solutions has received revenue from three purchase orders totalling US$508,000 from its exclusive distribution partner in the region, Dicofarm, who distributes Healthy Height® under the name “Dico Up” to pharmacies and health food stores, nationally. Sales to
consumers in Italy started in March 2021.
Italy was chosen as a launchpad into the European market due to the country’s large child population of 8.2 million under the age of 14.
Healthy Height® to be produced in New Zealand for China and Asia Pacific markets Healthy Height® is on track to be produced in New Zealand for the China and Asia Pacific markets following a binding Memorandum of Understanding (MoU) with dairy-based nutritional development company, NIG Nutritionals Limited (“NIG Nutritionals”).
NIG Nutritionals is well regarded in China for its high quality, local dairy supply chain and will manufacture under licence, package, and leverage its network to distribute and further commercialise Healthy Height® into China and possible new markets in the Asia Pacific region.
Healthy Height® Nutrition Bar Launched in North America
In May, the Healthy Height® nutrition bar was launched in North America. The new product is formulated with the same nutritional profile as the patented Healthy Height® shake range that is clinically proven to increase growth development in children aged between 3 and 9 years old by 13.8% – 34% in their annual growth and has been well received by customers with good order levels and positive feedback.
Trademark secured in China
In April, Nutritional Growth Solutions secured the right to the Healthy Daily Height® trademark in China. This allows NGS to register its brand in China under a Class 5 trademark which includes pharmaceuticals, dietary supplements and food for babies, enabling NGS to better protect and enforce its intellectual property rights against imitation products and develop relationships with reputable distributors, retail outlets and stockists.
The Healthy Daily Height® trademark ensures customers can shop confidently for the NGS’ patented range of nutritious shakes, knowing they are receiving genuine products that have been clinically tested and scientifically formulated with the highest quality ingredients.
Three senior hires to drive next stage of international growth
Post reporting period, NGS has appointed a President in North America, a Commercial Director for China and a Global Strategic Advisor to drive the Healthy Height® brand into its next stage of growth.
Pharmaceutical veteran, Mr Stephen Turner, has been appointed as President in North America to lead the company’s expansion into US retail and wholesale distribution. Mt Turner has previously worked for pharmaceutical companies SCOLR Pharma, PharmaCare and Strides Pharma.
Based in Australia, Ms Vicky Hou has been appointed as Commercial Director for China and will drive the Company’s sales and marketing efforts in the region. Ms Hou has previously worked for Bayer, Natures Care and GSK.
Also based in Australia, Ms Linda Luo has been appointed as Global Strategic Advisor and will implement the Company’s global strategic direction. Ms Luo has previously worked for The A2 Milk Company, Blackmores and Bellamy’s.
LOOKING AHEAD
Commenting on the Company’s priorities for the second half of the year, Ms Fendell said: “We have really strong momentum in North America, Italy and China and will continue to harness distribution networks that yield the best results for each particular region.”
“We are equally focused on the Asia Pacific. With new production capability being developed in New Zealand, we are confident we can win our first contracts in this region, which remains a large opportunity for us, with strong demand for our clinically proven products.”
“In addition to launching new products and tapping into new regions in the next 6-12 months, we also plan to focus on expanding our sales channels and distribution in the US and in China.”
FINANCIAL OVERVIEW
NGS achieved a record quarterly customer collection of US$859k, up 24% on the previous quarter.
Operating cash outflows of US$1.57 million for the quarter included:
• US$762K advertising and marketing;
• US$96K in research and development; and
• US$437K in product manufacturing and operating costs in response to increased actual and forecast demand.
• US$277K in other, general and administrative expenses.
The Company’s cash balance as at 30 June 2021 is US$2,688,000, providing flexibility for NGS to execute its growth plans.
Payments made to related parties and their associates shown in the Appendix 4C are as follows:
• Item 6.1 includes A$35k directors’ fees and A$136k payroll expenses
ASX Additional Information
Pursuant to ASX Listing Rule 4.7C.2, NGS provides the following comparison of its actual expenditure since admission to ASX (being 30 October 2020) against the total “use of funds” statement in its Prospectus dated 14 September 2020.
