Announcement
HALFYR: SEA: SeaDragon releases 2013 Interim Report
08:30am
SEA
29/11/2013 08:30
HALFYR
REL: 0830 HRS SeaDragon Limited
HALFYR: SEA: SeaDragon releases 2013 Interim Report
SEA: Market Information
28 November 2013
SeaDragon releases 2013 Interim Report
SeaDragon has closed out a productive six months. Demand for our refined fish
oils continues to outstrip supply. We have made good progress advancing
plans for our new purpose-built refined fish oil plant south west of Nelson.
Excitement is building around the opportunities the new factory creates in
international markets.
Sales for the six months to 30 September 2013 were $2.08 million, a 113%
increase on the $977,000 recorded in the prior year by SeaDragon's
then-privately-owned main operating business SeaDragon Marine Oils Limited
("SDMO"). SeaDragon's operating profit for the six months ended 30 September
2013 was $219,000. This represents a sharp turnaround on the $211,000 loss
made in the prior six months ended in September 2012.
The transition of SDMO to the NZX just over a year ago and the associated
recapitalisation of the business is continuing to deliver on its promise. It
has lifted working capital to a level that has allowed us to fund more raw
material purchases, which has in turn allowed us to lift our sales
significantly.
SeaDragon's shark liver-derived Squalene products remain in high demand and
we now enjoy a $2 million order book. Squalene is a natural moisturiser used
in the cosmetics industry and is taken as a health supplement to boost
immunity and as a remedy for respiratory ailments.
Securing sufficient raw materials continues to be a key focus for the
business. Supply is improving as fishing vessel operators are beginning to
understand that SeaDragon can enhance the economics of their operations as we
can pay for material they have tended to discard as by-product and we now
have a diversified range of suppliers.
Profit from continuing operations for the six months rose to $219,000. It is
the first profit from continuing operations that SeaDragon's holding company
has achieved in more than 13 years and reverses last year's loss of $211,000.
The result was lifted by a $801,000 profit on SeaDragon's August sale of 10
million shares in Snakk Media. The sale represented 40% of the 25 million
Snakk shares and in early November, post balance date, we sold a further 10
million shares, reducing our holding to 5 million shares.
Despite making a handsome profit on the sale, we took a $2.7 million
impairment charge on the available-for-sale assets, to reflect the sale price
of 9c a share and the Snakk share price prevailing at balance date.
Snakk has never been core to our business and we believe the capital invested
in the company is better deployed leveraging our internationally-recognised
expertise in manufacturing high quality ingredients for health supplement
markets.
Our planned refined fish oil plant on the outskirts of Richmond, 20km from
Port Nelson is at the heart of our development ambitions and we are making
good progress preparing for its construction. In its first phase, the plant
is to be dedicated to the production of Omega-3 fish oil produced primarily
from Southern Ocean sourced Hoki. When completed, the factory will have the
capacity to produce annually 5000 tonnes of refined fish oil worth as much as
$50 million.
Worldwide demand for Omega-3 fish oil is growing rapidly, supported by a
compelling body of scientific literature on the human health benefits of
Omega-3 rich diets. SeaDragon expects its oils to attract a premium over the
anchovy oils that dominate world Omega-3 supply. This is due to international
recognition of SeaDragon's manufacturing expertise and the cachet of product
purity, sustainability, safety and integrity enjoyed by New Zealand-sourced
products.
A heads of agreement with the refined fish oil plant's prospective landlord
and a contract for the supply of equipment are close to completion. The
purpose-built plant supersedes plans to extend our existing Nayland Road
site, which would have limited SeaDragon's future development due to the
site's size and a shift in the land use in the surrounding suburb away from
light industry to retail and hospitality. In short, the new factory will
future proof the business.
In August we were gratified to receive support for our plans from New Zealand
Trade and Enterprise, which has committed $286,000 from its International
Growth Fund. The money will be used to develop our brand, assist our
development of new raw material sources and new markets and products. It will
also assist SeaDragon to overcome regulatory barriers.
Costs associated with preparations for the development of the new plant as
well as the costs of compliance with our NZX listing lifted general and
administration expenses for the Group to $884,000. Reflecting these costs as
well as the write down in the value of our Snakk investment, we recorded a
total comprehensive loss for the six month period of $2.47 million.
Our balance sheet remains strong and we are well positioned to fund our
growth aspirations. At 30 September 2013 our net borrowings were $493,000.
This debt was repaid using the proceeds of the most recent Snakk share sale.
Post balance date, we raised $2 million with a placement of shares to
Eligible Investors and the Board plans to undertake a Share Purchase Plan
shortly.
SeaDragon's success depends on the expertise and enthusiasm of its people. We
are well served by our team. In June we appointed New Zealand capital
markets veteran Tim Preston as a director. He replaced Donald Gibson, who
stepped down in June. Tim is assisting with the introduction of SeaDragon to
the wider investment community. We thank him, the rest of the board,
management and staff for their efforts over the period and their commitment
to the future of the business.
In the coming six months we expect to make continued progress on our refined
fish oil plant and continue to grow our presence in international markets.
SeaDragon is in good shape and we are looking to the future with optimism.
ENDS
For more information:
Contact
Ross Keeley
SeaDragon Chief Executive Officer
Telephone: 03 547 0336
About SeaDragon's refined fish oil plant:
SeaDragon's refined fish oil plant is to be built for a budgeted cost to the
Company of approximately $4m on the outskirts of Richmond, 20km southwest of
Port Nelson. When completed, the factory will have the capacity to produce in
excess of 5000 tonnes of refined fish oil. Construction is due to start in
the first quarter of 2014. SeaDragon will continue to produce Squalene at its
Nayland Road, Nelson site.
About SeaDragon www.seadragon.co.nz
SeaDragon (NZX:SEA) is Australasia's largest refiner and blender of
high-quality, internationally certified concentrated fish oils and fractions,
including Omega-3 oils. Our oils are sourced from fish caught in the clean
and pure waters around New Zealand, in the Southern Ocean, and elsewhere. We
have more than 20 years' experience processing fish oils and we are
recognised for the quality and purity of our products. We supply health
supplement manufacturers around the world to meet the burgeoning demand for
pure, high-quality fish oils, which are scientifically proven to deliver
significant human health benefits such as lowering the risk of heart disease,
improving brain function and joint health. The majority of our supply is
exported.
End CA:00244478 For:SEA Type:HALFYR Time:2013-11-29 08:30:12
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