Mareterram Records $3.4 Million Net Profit After Tax
Mareterram Limited (ASX: MTM) has reported a Net Profit After Tax of $3.4m for the half year eneded 31 December 2016, a 272% increase on the $1.98m loss recorded in H1 2016. The result was achieved on the back of revenue of $26.6m representing the first period of the prawn harvest under Mareterram's management. Management is currently planning for the next fishing season, which opens on March 16.
Sustainable Australian agribusiness Mareterram Limited (ASX: MTM) today announced its financial results for the half year ended 31 December 2016
HIGHLIGHTS
- Successful completion of first fishing season since acquisitions to create vertically integrated agribusiness;
- NPAT of $3.4 million, up from a loss of $1.98 million in 1HY2016;
- EBITDA of $4.3 million and Profit Before Tax of $3.7 million;
- Revenue of $26.6 million, up from $511,000 in 1HY2016;
- Prawn catch volumes down 23% (232 tonnes), prawn prices up 10% on long term averages;
- Scallop catch volumes up 53% (9 tonnes), scallop prices up 16%;
- Crab catch volumes up 29% (29 tonnes), crab prices static;
- Other seafood catch volumes up 10% (14 tonnes), other seafood prices static;
- 10-vessel trawl fleet refitted and well prepared for start of 2017 fishing season in March; and
- 11th vessel acquired to facilitate a continual refit programme.
Results Commentary
The 2016 fishing season was Mareterram’s first following the acquisition of its fleet of 10 trawl vessels operating in the Shark Bay Prawn Managed Fishery in Western Australia and fishing rights owned in perpetuity.
The fishing season ran from 3 April 2016 to 14 November 2016 with the majority of the Company’s revenues for the 2016 season realised in 1HY2017. As the Company was not fishing in 2015, the comparatives for 1HY2016 are not meaningful.
Mareterram managing director David Lock said the 1HY2017 results reflected progress in building the vertically integrated agribusiness and in operating the trawl fleet, a foundation asset along with the acquisition of the Craig Mostyn Group’s food service division.
“I’m pleased to report a solid set of results at a time when the fleet is well prepared for the start of the 2017 fishing season and Mareterram is focused on adding to its foundation assets,” he said.
Mareterram considers its fleet much better prepared for the 2017 fishing season, which opens on March 16, than it was in 2016 when there was a delay in settlement of the acquisition. During the period, the Company implemented a new vessel refit strategy in preparation for the 2017 season.
The Department of Fisheries has lifted Mareterram’s Total Allowable Catch (TAC) for scallops in 2017 to 55 tonnes, more than double last year’s TAC.
The 1HY2017 results include a $1.5 million write-back of an accrued earn out related to the purchase of the CMG food services division. The write-back occurred because that business as a stand-alone division did not meet the EBITDA threshold Mareterram set when it acquired the business.
The 1HY2017 results also included a deferred tax liability of $7.6 million arising from a recent reinterpretation of AASB112 by the International Accounting Standards Board, which changed the way indefinite life intangible assets (including fishing licences) are treated. The finalisation of accounting for the Business Combination of Nor-West Seafoods has resulted in a reduction of Mareterram’s net assets by $7.6 million to $23.735 million. It is important to note that this DTL will not directly result in cash outflow in the future.
Outlook
The management and Board of Mareterram remain focused on a major acquisition in line with the strategy to grow as a vertically integrated agribusiness. Acquisition of protein-based businesses, either sea or land based, remain a key part of this strategy.
Mareterram operates in a wild catch fishery off the coast of Western Australia and as such the prawns it catches are not affected by the detection of white spot disease in prawn farms in the Logan River region of Queensland.
The Department of Agriculture and Water Resources’ (DAWR) suspension on all raw prawns imports effective from 7 January 2017 until 7 July 2017 has led to speculation about increases in the price of Australian prawns.
The suspension means Australian caught prawns cannot be sent off-shore for processing and reimported to Australia. This applies to only a small portion of the Mareterram catch from 2016.
However, DAWR has issued several exemptions from the suspension and Mareterram is hopeful the secure, Australian Government-approved closed loop supply chain Mareterram employs in Thailand will be exempted in due course.
