NXT-listed Marlborough Wine Estates more than halves sales to related Asian distributor
NXT-listed winemaker Marlborough Wine Estates has more than halved its expected sales to a related party that's a major distribution channel in Asia.
The maker of O:Tu and Music Bay wine brands was told yesterday that Hong Kong-based Great Esprit Ltd, which is largely owned by an associate of MWE executive chairman James Jia, is likely to buy $1.3 million of bottled wine in the year ending June 30, less than half the $3 million minimum annual commitment signed in 2015. Great Esprit distributes wine in China and Hong Kong and was tasked with broadening that Asian footprint, and the deal was the basis for the bulk of MWE's forecast revenue when it listed on the NXT market last year.
"MWE advises that this will adversely affect the company's key operating milestone (KOM) target of international bottled wine sales revenue by more than 10 percent," chief executive Catherine Ma said in a statement. "MWE is currently working through the implications of GEL not meeting its minimum annual order requirements."
The winemaker tagged its distribution arrangements as a risk in its listing document, saying the bulk of its expected revenue was based on the supply agreement and that the termination or poor performance by the distributors "could have an adverse impact on access in particular markets".
MWE was targeting $3.2 million of international wine sales for the 2017 financial year under its key operating milestones, but will update that forecast by May 3 after reviewing the impact of Great Esprit not meeting its commitment.
In February, the company reported a net loss of $989,000 in the six months ended Dec. 31 on sales of $911,000.
MWE joined the NXT market in June last year in a compliance listing at 20 cents a share. The stock last traded at 30 cents.