Bubs boardroom battle responsible for cost surge, company says
A massive blowout in costs at Bubs Australia was due to $17 million in marketing and travel expenses, as well as $2 million spent on legal fees and another $3.6 million outlay on consulting charges, the infant formula company’s annual report shows.
The board led by former King & Wood Mallesons partner Katrina Rathie, survived a push by the company’s founders to oust them, but at great cost. Other expenses, the report shows, included $3.5 million spent as part of getting approvals to export to the United States, and a $5.4 million increase in salaries and wages as a result of opening an office there and other resourcing to support the group’s growth strategies.
Bubs chairwoman Katrina Rathie kept her job despite a push from investors earlier this year. Janie Barrett
Bubs is embroiled in several legal disputes, including with its Chinese partner, its former CEO and executive chair, two other former employees as well as its former customers – Alice Trading and Willis Trading.
The company said the outcomes of these legal issues “cannot be predicted with certainty” but any pending claims, penalties and litigation would not have a material effect on the group’s financial performance.
Bubs posted a full year loss after tax of $108.4 million which included an impairment of intangibles and inventory in the 12 months to June 30. It extended the $10 million working capital facility with National Australia Bank, with expiry in September 2024. Net cash outflows from operating activities were $46.5 million, up from just $9.4 million a year ago.
Bubs, which has named Reg Weine as its new chief executive, warned investors that should its cash-flow forecasts not be achieved, there is a material uncertainty whether it will be able to
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