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EZZ LIFE FPO [EZZ]$0.84

EZZ delivers strong FY2022 cash flow result despite tough start

By Louis Allen

EZZ Life Science (ASX: EZZ) has announced that despite a challenging start, it enjoyed a strong finish to the financial year

EZZ Life Science closed out FY2022 with a strong cash position of $10.5 million – up 18% on the previous corresponding period.

ending June (FY2022) – placing it in a robust financial position for future growth.

The genomic life science company said it had seen a “rapid recovery” in H2 FY2022 compared to H1 FY2021.

FY2022 revenue in Australia and New Zealand grew despite the global challenges – improving from 54% in FY2021 to 63% of total revenue in FY2022.

For FY2022, operating cash flow increased 7.5-times from $253,533 in FY2021 to $1,901,731 in FY2022.

This was largely due to decreased advertising and marketing expenditure on the Tmall platform, as well as the reduced payments to suppliers associated with the fall in the sales of the EAORON branded products.

EZZ’s challenges came from international markets, notably China, due COVID-19 lockdowns, as well as Alibaba being penalised, which saw the company’s sales drop to 37% in FY2022 from 46% the year prior.

Although, EZZ’s revenue made a rapid recovery in the second half, it ultimately dropped 33% from the previous year to $15 million with its total normalised earnings before interest, taxes, depreciation, and amortisation (EBITDA) sitting at $1.77 million for FY2022.

Sales revenue in the second half increased 24% on the corresponding period in FY2021, as well as 96% compared to the first half of FY2022.

Mixed results across Asia markets
EZZ’s revenue from Tmall Global contributed towards 15% of total revenue in FY2022, totalling $2.3 million. This was a drop from 43% of total revenue in FY2021 from China’s largest cross-border B2C online marketplace.

This was largely attributed to Alibaba Group Holdings Limited being penalised by market regulators as China ramped up antitrust scrutiny efforts in the technology sector in 2021.

The decrease in revenue through Tmall Global in H1 FY2022 was progressively recovered in H2 FY2022.

In Q4 FY2022, EZZ launched its launched a cross-border e-commerce store on Douyin, mainland China’s version of TikTok, with revenue growth from it exceeding management’s expectations within the first month of operation.

The New South Wales-based company remains optimistic Douyin will become another key e-commerce platform along with Tmall Global, reducing the dependence on single e-commerce platform in China’s market.

New product range
Throughout FY2022, EZZ expanded its offerings by introducing seven new products, with three of the products contributing to 16% of total revenue for the period. Four of the products were launched at the end of 2022.

The company’s L-Lysine growth capsule was introduced in July 2021 and has shown promising signs, with successful high margin product which contributed 27% to the revenue from EZZ branded products.

Cash position
The company ended the financial year in a strong cash position of $10.5 million, an 18% increase from 30 June 2021.

It also capped off the year with a balance sheet containing no debt, other than lease liabilities to allow for the flexibility to act when opportunities come about going forward.

EZZ was founded in 2019, and focuses on investing in the future of consumer health through promoting its products and distributing them through e-commerce platforms across Australia, New Zealand, China – expanding worldwide.

 

 

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