Who wants Cockatoo Ridge Wines?
It seems no one: the shares are trading at half a cent, some $2,500 worth of shares were traded yesterday, the market value is just $4 million; a tiddler.
The company has been swamped by the wine glut, drought, credit crunch and the now pricked boom in managed investment schemes.
Big losses have been taken, with asset impairment, debt problems and loan covenant breaches.
But judging from yesterday’s update, the company is fighting back.
It’s raised cash, cut debt, improved its cashflow and dropped the amount of unsold wine.
Directors said that operating losses continued in the second half as CKR reduced bulk inventory below cost.
"Permanent cost reductions saw the group generate positive EBITDA results in both May and June 2009, as CKR focuses efforts on developing the branded sales business
"May and June results are a reflection of the significant reduction in operating costs and management is budgeting a return to positive cashflow and operating profit before tax in the 2010 financial year.
"The company will continue to review the carrying value of all assets in conjunction with the group auditor. It is continuing its focus to reduce group debt in 2010.
"CKR successfully completed a share placement and SSPP during the half year raising approximately $2.2 million directed towards debt reduction and working capital,” CKR told the ASX.
The company indicated that it was one of the few groups to benefit from the spectacular collapse of the Great Southern MIS group.
"Recently, the Great Southern Group was placed in receivership. Great Southern comprised the significant element of the company’s onerous grape contracts and under the terms of the contracts these are now void."
The company said in January those contracts had cost it $2.7 million in the December half year.
"Since CKR’s first half results, management has focused on a number of initiatives aimed at maximising cashflows, reducing group debt and returning the branded wine business to profitability.
"Initiatives taken include: cost reductions exceeding $2 million annually have been achieved including staff reductions, permanent expenditure cuts and significant savings made in production, packaging, distribution and logistics, both contracted and non-contracted.
"The Board is continuing to look to improve returns on fixed assets including leasing the winery to third parties, potentially selling non-core assets including the winery and significantly reducing the inventory of bulk wine carried by the company.
"2009 vintage saw the company significantly reduce its crush down to approximately 4,500 tonnes (as management further aligned inventory requirements to packaged wine sales.)
"Progress has been made in reducing bulk wine inventory further to its commentary on this subject in its Appendix 4C lodged on 30 January 2009."
To date, 95% of the volume represented by the 2008 cancelled bulk wine transaction referred to in previous releases has been sold to both domestic and international customers.
“The remaining bulk inventory held at 30 June represents a mix of inventory required for packed product initiatives moving into 2010.
"Whilst difficult trading conditions remain a feature of the wine industry at present, new endeavours for export packaged products and the refocus of the company on its core “Cockatoo Ridge” brand has seen pleasing progress achieved in branded packaged sales this year."
In that January interim statement directors revealed gross revenue for the half-year halved to $9.55 million (2007: $18.49 million) made up of sales of bottled and bulk wine in both years, and other income.
Gross receipts from the sale of goods during the first six months in the main reflected a balanced mix of domestic and export packaged sales, the company told the ASX.
"Net cash from operating activities was marginally negative ($0.22 million) in the six months ended 31 December 2008.
"Net loss after impairment and tax was $53.17 million (2007: $4.01 million net profit after tax). At 31 December 2008, while the consolidated entity had net assets of $12.15 million and net tangible assets of $1.42 million post impairment, it was in breach of certain of its banking covenants.
"This resulted in some non-current liabilities being reclassified as current liabilities pursuant to the covenant terms and conditions in the facility documentation entered into between the “Cockatoo” group and its financier, GE Commercial Finance.
"Although the Group reduced its interest bearing debt from $23.9 million to $19.6 million over the six month period, improving its balance sheet, finance costs of $1.2 million were higher than these in the equivalent six month period in 2007/08 ($0.79 million)."
