Tassal Group Lim ited Results Presentation Half-Year 31 December 2007 (“H1 2008”) 27 February 2008 The follow ing slides should be read in conjunction w ith Tassal Group Lim ited’s Appendix 4D: Half Year Report lodged w ith the Australian Securities Exchange on 2 7 February 2 0 0 8 1
Agenda • Executive Sum m ary • Financial Highlights • Strategic I nitiatives • Priorities and Outlook 2
Executive Sum m ary • Normalised revenue of $82.3m (+ 12% on pcp) • Normalised gross contribution / gross margin + 21% on pcp • Normalised EBITDA of $16.9m (+ 11% on pcp) • Investment in marketing + $1.6m (111% ) on pcp • Normalised NPAT of $9.3m (+ 4% on pcp) • Interim dividend of 3.0c per share (+ 20% on pcp) "Norm alised" "Norm alised" H1 2 0 0 8 H1 2 0 0 7 % I ncrease ( $ '0 0 0 ) ( $ '0 0 0 ) Revenue ( from all sources) $ 8 2 ,2 8 7 $ 7 3 ,3 4 6 1 2 % EBI TDA $ 1 6 ,9 3 1 $ 1 5 ,2 5 5 1 1 % EBI T $ 1 5 ,9 0 4 $ 1 4 ,8 6 0 7 % Profit before incom e tax expense $ 1 3 ,1 7 5 $ 1 2 ,5 8 4 5 % I ncom e tax expense $ ( 3 ,8 7 0 ) $ ( 3 ,6 0 9 ) Net profit after incom e tax expense $ 9 ,3 0 5 $ 8 ,9 7 5 4 % Basic earnings per share ( cents) $ 0 .0 8 0 3 $ 0 .0 7 9 1 2 % 3
Executive Sum m ary From an operational perspective the follow ing achievem ents are notew orthy for H1 2 0 0 8 : � Hatchery – improved smolt size and performance – together with increased smolt numbers to sea, particularly “earlier” season smolt � Marine - improved fish husbandry practices = improved fish size and feed conversion rates – culminating in 15% improvement on live fish biomass year on year, with fish to be harvested in FY2009 22% up in live fish weight � Processing – automation focus = further improved value adding processing throughput and efficiencies � Sales and Marketing – Salmon is the “Superfood” – demonstrated by fresh hog sales increasing 18% in the domestic market and the continued achievement of premium returns – delivering 21% increase in normalised contribution margin 4
Executive Sum m ary Overall restructured and rebalanced the business w hile at the sam e tim e increasing the scale of the business on a sustainable basis, underpinned by: � further improving fish husbandry, biosecurity, environmental and risk management practices � Superior Gold acquisition � Petuna Smolt and Salmon Supply Agreement � Seafish Tasmania Waste Services Agreement 5
6 Financial Highlights
Financial Highlights "Norm alised" NPAT $ 9 .3 0 m illion ( + 4 % com pared to pcp) “Norm alised” results: "Normalised" "Normalised" "Normalised" "Normalised" “Normalised” results are presented to remove the H1 2008 H1 2008 H1 2007 H1 2007 % I ncrease % I ncrease impact of AASB 141 “Biological Assets” and to add ( $'000) ( $'000) ( $'000) ( $'000) back the non-recurring items. All analysts have modelled Tassal on this basis. Revenue ( from all sources) Revenue ( from all sources) $ $ 82,287 82,287 $ $ 73,346 73,346 12% 12% EBI TDA EBI TDA $ $ 16,931 16,931 $ $ 15,255 15,255 11% 11% Non-recurring items of $1.50 million were incurred in EBI T EBI T $ $ 15,904 15,904 $ $ 14,860 14,860 7% 7% H1 2008 ($1.06 million after tax) with H1 2008 Profit before income tax expense Profit before income tax expense $ $ 13,175 13,175 $ $ 12,584 12,584 5% 5% representing a period of restructuring and rebalancing Tassal’s underlying marine and processing operating I ncome tax expense I ncome tax expense $ $ (3,870) (3,870) $ $ ( 3,609) ( 3,609) infrastructure – with a number of these costs Net profit after income tax expense Net profit after income tax expense $ $ 9,305 9,305 $ $ 8,975 8,975 4% 4% obviously not recurring in FY2009 and beyond. Basic earnings per share ( cents) Basic earnings per share ( cents) $ $ 0.0803 0.0803 $ $ 0.0791 0.0791 2% 2% Current forecast of non-recurring items is $1.36 million after tax for FY2008. The non-recurring items can be summarised as follows: Pre-Tax Post-Tax Forecast Forecast $'000 $'000 H1 H2 FY2008 $'000 $'000 $'000 A-I FRS 11,973 8,454 Marine Net Negligence Claim 402 402 Agriculture - AASB 141 ( 302) ( 211) Marine Restructuring Costs 370 185 555 Non-Recurring I tems 1,504 1,062 Processing Restructuring Costs 732 240 972 Total Non Recurring I tems 1,504 425 1,929 "Normalised" 13,175 9,305 Tax ( 442) ( 125) ( 567) Tax Rate 29.39% Total Non Recurring I tems After Tax 1,062 300 1,362 7
Financial Highlights Statutory ( "A-I FRS") NPAT $ 8 .4 5 m illion ( -3 5 % com pared to pcp) Statutory Results: "A-I FRS" "A-I FRS" H1 2008 H1 2007 % I ncrease The magnitude of the EBITDA, EBIT, PBT & ( $'000) ( $'000) NPAT impact for biological assets for H1 2007 Revenue ( from all sources) $ 145,029 $ 127,579 14% was considered “one-off” as the impact was EBI TDA $ 15,729 $ 21,053 -25% the direct result of a strategy to build EBI T $ 14,702 $ 20,658 -29% processed inventory on hand to the required Profit before income tax expense $ 11,973 $ 18,382 -35% level to meet both future demand I ncome tax expense $ ( 3,519) $ ( 5,348) requirements and accompanying sales lead Net profit after income tax expense $ 8,454 $ 13,034 -35% times. Basic earnings per share ( cents) $ 0.0730 $ 0.1149 -36% The stock level at H1 2007 was considered satisfactory and that level was to effectively be FY2006 H1 2007 Profit I mpact FY2007 H1 208 Profit I mpact $'000 $'000 $'000 $'000 $'000 $'000 maintained ... accordingly, the comparable H1 2008 impact was negligible Processed I nventory 1,352 5,079 3,727 5,307 5,693 386 Biological Assets ( Live Fish) 7,072 9,809 2,737 10,267 10,183 (84) AASB 141 Value 8,424 14,888 6,464 15,574 15,876 302 Less Tax ( 1,939) (91) AASB 141 Value After Tax 4,525 211 8
Financial Highlights – Norm alised W aterfall Significant investment in additional marketing spend in H1 2008 over H1 2007 of $1.6 million - strategic focus was to accelerate growth of domestic market through both direct and indirect promotional support - spend was to underpin future domestic market growth and to "get set" for H2 2008. Gross margin actually increased by around 21% for H1 2008 over H1 2007. If marketing spend had been maintained at the same $/ Hog kg rate as H1 2007 (i.e. $0.23/ hog kg) then the normalised results would have been an NPAT of $10.45 million. Norm alised W aterfall 3 1 - Dec- 0 7 3 0 - Jun- 0 7 3 1 - Dec- 0 6 3 0 - Jun- 0 6 3 1 - Dec- 0 5 3 0 - Jun- 0 5 3 1 - Dec- 0 4 3 0 - Jun- 0 4 $ / H og Kg $ / Hog Kg $ / Hog Kg $ / Hog Kg $ / Hog Kg $ / Hog Kg $ / Hog Kg $ / Hog Kg Revenue $ 1 1 .7 0 $ 1 1 .6 8 $ 1 1 .6 7 $ 1 1 .6 3 $ 1 1 .2 4 $ 1 1 .8 5 $ 1 2 .3 6 $ 1 2 .8 1 Salm on Cost $ 4 .7 6 $ 4 .8 8 $ 4 .9 2 $ 5 .0 6 $ 5 .0 6 $ 5 .0 5 $ 5 .0 5 $ 5 .7 2 Third Party Contract ors $ 0 .1 5 $ 0 .2 6 $ 0 .3 9 Processing & Packaging $ 1 .6 5 $ 1 .7 7 $ 1 .8 2 $ 2 .6 1 $ 2 .6 2 $ 2 .8 7 $ 3 .0 9 $ 3 .1 5 Direct Selling $ 1 .5 8 $ 1 .3 6 $ 1 .2 7 $ 1 .1 7 $ 1 .2 0 $ 1 .5 7 $ 1 .7 4 $ 1 .6 5 Labour & Overheads $ 1 .1 5 $ 1 .1 1 $ 0 .8 7 $ 0 .8 1 $ 0 .6 1 $ 0 .9 5 $ 0 .9 8 $ 0 .8 9 EBI TDA $ 2 .4 1 $ 2 .3 1 $ 2 .4 1 $ 1 .9 8 $ 1 .7 5 $ 1 .4 1 $ 1 .5 0 $ 1 .4 0 Depreciat ion $ 0 .1 5 $ 0 .1 3 $ 0 .0 7 $ 0 .1 6 $ 0 .1 1 $ 0 .1 1 $ 0 .1 4 $ 0 .4 3 EBI T $ 2 .2 6 $ 2 .1 8 $ 2 .3 4 $ 1 .8 2 $ 1 .6 4 $ 1 .3 0 $ 1 .3 6 $ 0 .9 7 3 1 Decem ber 3 1 Decem ber Tassal Tassal 2 007 2 006 Salm on Cost Salm on Cost Sm olt Sm olt Feed Feed Marine Marine Third Party / Third Party / Operations Operations Contractors Contractors Revenue per HOG kg $ 11.67 kg Revenue per HOG kg $ 11.70 kg $ 0 .1 5 kg Processing & $ 0 .3 9 kg Processing & $ 4 .7 6 kg $ 4 .9 2 kg Packaging Packaging Marketing spend $ 0 .4 4 kg Marketing spend $ 0 .2 3 kg Direct Direct $ 1 .6 5 kg $ 1 .8 2 kg Breakdown Breakdown Selling Selling confidential confidential $ 1 .5 8 kg $ 1 .2 7 kg EBI TDA EBI TDA $ 1 .1 5 kg $ 0 .8 7 kg $ 2 .4 1 kg $ 2 .4 1 kg Labour & Labour & EBI T EBI T Overheads Overheads $ 0 .1 5 kg $ 0 .0 7 kg $ 2 .2 6 kg $ 2 .3 4 kg Dep ’n. Dep’n. 9
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