1300 304 460
 
Issue Price $0.20
Offer Amount (Min) $4,500,000
Offer Amount (Max) $8,000,000
Market Cap (Max) $30,816,955*
EV on Listing (Max)  $20,872,509
Bid Open Date 6/12/2018
Bid Closing Date 17/12/2018**
Listing Date 4/1/2019***
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* Ability to accept over subscriptions
** Peak's anticipated date of closing for new bids
*** Estimated date, subject to change without notice​​​​​
EXECUTIVE SUMMARY
✔ The Company operates in the US market, expected to grow to US$40B by 2023*

✔ Founder & CEO, Keith Cohn, has a proven track record of multiple successful exits including Vendare Media, which he founded and built into a business with over A$200M in revenue and 300 employees 

✔ Exceptional Board, comprising notable early stage investors in the Company with successful track records as investors and operators of prominent Australian and international companies 

✔ Backed by highly esteemed seed and venture capitalists

✔ Proven direct-to-consumer (D2C) subscription business segment that generated ~A$12M revenue in CY17, with improved unit economics that is ready for further scale via gifting and business development partnerships
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✔ Proof of concept for the business-to-business (B2B) business segment complete and exceeding internal expectations, indicating this will be a major growth driver in CY19 that will outpace a growing D2C business in early CY20 

✔ Omnichannel model will result in retail purchases in the B2B business segment driving subscriptions in the D2C business segment 

✔ Compelling valuation of less than 2x historical EV/revenue, with major growth anticipated in CY19, driven by the B2B business segment and a clear pathway to cash flow breakeven 

✔ Tight capital structure 
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​​​​​​* All data according to the National Confectioners Association 2017 annual report
COMPANY OVERVIEW
The Company operates a leading direct-to-consumer candy subscription service, i.e. the D2C business segment, delivering delicious, premium candies at exceptional value. This arm of the business generated US$8.4M in revenue and US$3.4M in gross profit in CY17. The Company will continue to balance the need win market share and scale top-line revenue against being profitable.

The Company recently rolled out its business-to-business (B2B) business segment in July 2018, selling its candies wholesale to specialty market retailers across the U.S. Significant traction has been achieved in this business segment and revenues are growing at a rapid pace, underpinned by tier one clients that are repurchasing frequently.

The D2C business segment has played an important role in the Company’s journey, allowing it to achieve economies of scale, optimise the B2B offering and reduce the risk of product obsolescence.
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It is highly likely that monthly revenues in the business segment will outpace a growing D2C business segment by early CY20. This is expected to in-turn drive demand in the D2C business segment as the ultimate retail customers in the B2B business segment are driven to the Company’s e-commerce subscription website

* All data according to the National Confectioners Association 2017 annual report
BOARD & ADVISORS
Mr. Keith
Cohn​​​​​
Executive Director, CEO & Founder​​​​​​​​
20+ years’ consumer industry experience, serial entrepreneur and start-up executive
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Founder & former CEO of Vendare Media, a leading adtech company with 300 employees and annual sales of ~A$200M
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​​​​​​Founder & former CEO of Bardon Advisors, a boutique adtech company that was acquired by Media Trust for A$30M

Former executive with Mattel, Hasbro and Equity Marketing where he was responsible for creating, growing and managing product lines which generated in excess of A$500M in revenue during his 10 years as a marketing executive
Mr. Robert
Hines​
Non-Executive Chairman
​​​​​​​Member of the Australian Institute for Company Directors since 1997, including serving on the AICD Board from 2000 to 2004
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Held a number of board positions since 2001, including chairman of Genetraks Ltd, group chairman of the CEO Circle, executive director of VeCommerce Ltd and nonexecutive director of Sportsbet Pty Ltd

A member of the advisory board of Griffith University from 2002 to 2004

Current positions include non-executive director of Donaco International Limited (ASX: DNA), chairman of the advisory board of Sportsbet Pty Ltd

​​​​​​​Previous executive positions include CEO of Racing Victoria Limited 2008-2012, CEO of Jupiters Limited from 2000-2005 and CEO of AWA Limited from 1997-2000
Mr. Zachry
Rosenberg
Non-Executive Director
​​​​​​​Founding partner of Capital Zed, a private growth capital investor, with significant minority investments in Australia, New Zealand, the US, Hong Kong and the United Kingdom
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Current board roles include Unleashed Software Limited (NZ), The Influential Network (US), Predictive Hire Pty Ltd (AU) and Intelledox Pty Ltd (AU), as well as a number of private investment companies and vehicles

Zac also serves as a board advisor to Bid Energy Limited (ASX: BID)

Previous roles include managing director and head of investment banking of Canaccord Genuity (Melbourne) from 2012-2015 and as MD / head of investment banking during 2009-2012 at Keefe, Bruyette & Woods (Hong Kong)
Mr. James
​​​​​​​Baillieu
Non-Executive Director
Served as senior vice president of business development at Aconex Limited (ASX: ACX) where he was an early investor and consultant
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Aconex was an ASX 200 listed company that was acquired by Oracle Corporation for US$1.6B in 2018

Currently non-executive chairman of Bid Energy Limited (ASX: BID)
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Spent more than seven years as a consultant with McKinsey & Co assisting businesses in Australia and internationally with strategy and operational improvement
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Previously a lawyer who practised in commercial law with Mallesons Stephen Jaques in the 1990s. Holds an LLB (first class honours) and BA from the University of Melbourne
Mr. Chi Kan
​​​​​​​Tang​​​
Non-Executive Director
Founding partner of Asia Summit Capital, a private equity firm focused on consumer growth and the technology sector in Indonesia and Southeast Asia
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Prior to this, Kan developed considerable experience in the online and landbase gaming industry with particular expertise in markets within the Asia-Pacific region
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In 2003, Kan co-founded AsianLogic Limited, a Hong Kong based gaming company. During his time at Asianlogic, he took on numerous senior roles and responsibilities from CFO in the early stages of the company growth, to Business Development Director and was promoted to Chief Operating Officer of Asianlogic from 2009 to 2014
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Kan has also launched a series of SMEs including multiple F&B, leisure and 7-Eleven franchises in Hong Kong and the Philippines
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Kan is a qualified Chartered Professional Accountant (CPA) and qualified Chartered Financial Analyst (CFA) and holds a Bachelor of Commerce from the University of Alberta
D2C BUSINESS SEGMENT -
SUBSCRIPTION BUSINESS
2015 - Proof of Concept

✔ Tested the business model to confirm all key components of a highly scalable business were present in order to validate the model and justify further investment 

2016 – 2017 - Build infrastructure & Validate Scalability 

✔ Built out top executive team, proprietary subscription platform, supply chain capabilities and quickly grew to 20,000+ recurring monthly members
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2018 (Q1 – Q3) - Focus on Unit Economics and a path to Profitability

✔ Increased average order value (AOV) by 20% & gross profit by 35% on a per shipment basis
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​​​​​​✔ Increased customer ROI & lifetime value despite 25% increase in customer acquisition costs
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✔ Lowered monthly cash burn on flat revenue due to all unit economic improvements
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Unit economics have consistently improved over time, allowing the business to achieve maximum impact at scale. Further opportunities exist to reduce COGS and improve margins via manufacturing automation.
Further growth opportunities in the D2C business segment exist by further scaling user acquisition as well as through the introduction of Amazon subscriptions (live in September 2018), gifting and corporate subscriptions. 

 
B2B BUSINESS SEGMENT -
WHOLESALE BUSINESS
Since July 2018, the Company has shipped or received orders for ~US$400,000 of product and ~US$600,00 in total commitments as part of the B2B business segment to 300 unique customers.

In mass market retailers such as supermarkets and petrol stations, candy is almost always seen at the checkout. Candy is a high turnover product, has high margins, doesn’t compete with core merchandise, adds incremental revenue to the customer’s purchase and has a 97% household penetration rate in the U.S.*
  
Operations of the Company’s B2B business segment were formally launched in July 2018. Since then, the Company has exceeded internal forecasts with just two full-time sales representatives.  
 
Importantly, over 50% of speciality market retailers have reordered product, demonstrating product sell-through. The Company anticipates that the revenues of the B2B business segment will exceed a growing D2C business segment on a monthly run rate in early CY20.
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* All data according to the National Confectioners Association 2017 annual report
FINANCIAL SUMMARY
After launching the D2C business segment in CY15, the Company tested acquiring customers online at scale. After achieving 20,000 recurring monthly subscribers, the focus turned towards improving unit economics (increasing AOV, customer retention and LTV) and gross margins while reducing monthly cash burn in CY18. 
 
The Company also allocated more capital towards the B2B business segment in 2018, which has grown considerably since commencement. The B2B business segment requires more inventory to be held on hand in anticipation of strong demand from large retail customers.  
 
This has resulted in capital being allocated away from customer acquisition in the D2C business segment in the short-term, in order to build key pillars for growth in the B2B business segment over the long-term
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Importantly, gross profit has leaped 20.5% YoY, holding the Company in good stead as revenue significantly scales in CY19 and beyond.
 
CAPITAL STRUCTURE
✔ The capital raising fees payable to the Lead Manager (Peak Asset Management) in relation to the pre-IPO capital raisings have been settled in equity in the Company, based on the same price at which the respective capital raisings were undertaken. These shares will be subject to mandatory escrow for 24 months from the Company’s admission to the ASX
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✔ The shares held by the Board will be subject to mandatory escrow for 24 months from the Company’s admission to the ASX
MORE INFORMATION
Prospectus
Presentation
Website
Click below to place your bid
• The issuer of the securities offered hereunder (Offer) is Candy Club Holdings Limited ACN 629 598 778, being a public company incorporated in Victoria, Australia (Company).
​​​​​​​• Investors may access an electronic copy of the Prospectus pursuant to which the Offer is made and the accompanying Application Form on the Company’s website www.candyclub.com.
• The Offer is made in, and accompanied by a copy of the Company’s Prospectus.
• Investors should consider the Prospectus in its entirety in deciding whether to apply for securities offered under the Offer.
• Investors who want to apply for securities offered under the Offer will need to complete the online Application Form or the Application Form accompanying the Prospectus.

The information described in this notice relates to the issue of new securities by the Issuer. A Prospectus for the issue of new securities is available and can be obtained from the Issuer’s website or by way of download from this website. The offer of securities will be made in, or accompanied by, a copy of the Prospectus. Nothing contained in this message and/or any attachment(s) constitutes a personal advice recommendation, solicitation or an offer to buy or sell any securities. Any recommendation or endorsement of this offer is general advice in nature and has not taken into account your personal circumstances or objectives. A person should consider the Prospectus in deciding whether to acquire the securities.

This notice does not constitute an offer or invitation in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. The Prospectus does not constitute an offer to sell, or a solicitation of any offer to buy, securities in the United States. The Prospectus has been prepared for publication in Australia and New Zealand only.
Copyright © 2018 Peak Asset Management
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