Clean Seas Seafood : Quarterly Activities/Appendix 4C Cash Flow Report
CSS.AX
17th January 2022
For personal use only
Record Revenue, Volume, Receipts
Clean Seas Seafood Limited (ASX: CSS, OSE: CSS), global leader in full cycle breeding, production and sale of Yellowtail Kingfish, is pleased to provide its Appendix 4C and Quarterly Activities Report for Q2 FY22, provided under Listing Rules 4.7b and 4.7c.
Quarterly Activities
Clean Seas' strong sales growth has continued in Q2 FY22. After posting record sales in Q1 FY22, partly due to the final clearance of some frozen inventory, a new quarterly record revenue was set in Q2 FY22 on the back of unprecedented and broad demand for Kingfish globally. This has been achieved despite ongoing uncertainty and disruption to markets and supply chains, and highlights the continued growth in awareness and appetite for Yellowtail Kingfish globally.
In Australia, despite restaurant density limits being enforced, revenues for H1 FY22 were up 27% on the same period last year, and in Europe sales were up 79% versus the same period. In North America, where Clean Seas is benefitting from broader acceptance of its Kingfish versus the Japanese competition in Asian restaurants, premium sales are up 47% on pre-pandemic levels. This unprecedented demand has driven strong price growth, with revenue per kg up to A$16.06 in H1 FY22, and in Q2, with the sale of surplus inventory complete, revenue per kg was A$18.25.
Clean Seas' Q1 FY22 sales included support for a nationwide rollout of a number of retail products with Woolworths. Feedback received to date is that our Kingfish launch into retail is tracking along positively and in line with expectations and growth plans. Promotional programs will continue to drive sales and customer awareness.
Clean Seas Seafood Limited | ABN 61 094 380 435
7 Frederick Road, Royal Park SA 5014 | PO Box 3316, Port Adelaide SA 5015
Tel +61 1800 870 073 | www.cleanseas.com.au
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It is the Company's view that whilst the ongoing COVID-19 disruptions are likely to continue, management will retain its focus on inventory & working capital management along with its strategy of channel diversification which will complement and enhance Clean Seas' existing global restaurant and premium food service business.
H1 Sales Volumes Performance
Region (tonnes WWE)
H1 FY18
H1 FY19
H1 FY20
H1 FY21
H1 FY22
Australia
689
701
779
781
1,009
Europe
481
474
508
441
770
America
44
51
74
199
146
Asia
54
47
45
23
21
Total sales volumes
1,268
1,273
1,406
1,444
1,946
Group Revenue ($'000)
20,372
21,585
24,437
22,333
31,255
Revenue A$/k.g
16.07
16.96
17.38
15.47
16.06
Total sales volume for H1 FY22 of 1,946t was up 34% on H1 FY21 and 38% percent on H1 FY20, while revenue of A$31.3 million (unaudited) exceeded H1 FY21 and H1 FY20 by 40% and 28% respectively. For calendar year 2021, revenue was A$57.3 million, versus A$38.2 million for calendar year 2020.
Rolling 12 Month Sales (WWE) & Inventory Cover (months)
3,800
Sales
26.0
3,600
Months Cover
24.0
3,400
22.0
3,200
20.0
3,000
18.0
WWEt
2,800
months
2,600
16.0
2,400
14.0
2,200
12.0
2,000
Oct-20Nov-20Dec-20Jan-21
Aug-21Sep-21Oct-21Nov-21
10.0
Sep-20
Feb-21
Mar-21Apr-21May-21
Jun-21Jul-21
Dec-21
Clean Seas has successfully cleared all excess frozen inventory, and the harvest of high cost, surplus Year Class 18 and Year Class 19 biomass has been completed. At the end of H1 FY22, Clean Seas has maintained its target of 11 months of inventory cover. This optimisation of working capital will lead to reductions in carrying costs of inventory and the cost of production.
Demand for Clean Seas' premium ocean reared Yellowtail Kingfish continues to expand as awareness for the species develops around the world. Clean Seas remains committed to providing the market with the highest quality fish, a native species grown in its natural waters of the Spencer Gulf in South Australia, while also aiming to be the lowest cost and most sustainable producer of Yellowtail Kingfish globally.
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Appendix 4C Cash flows
For personal use only
The H1 FY22 operating activity result reflects another very strong quarter. Record cash receipts, combined with cost savings and the benefits of optimising working capital delivered record positive operating cash flows in H1 FY22 of A$6.0 million, an increase of A$8.6 million on H1 FY21, and of A$7.7 million on H1 FY20.
35,000
Half Year Cash receipts
Half Year Operating Cash flow
7,000
6,045
32,173
33,000
6,000
31,000
5,000
29,000
4,000
$'000
27,000
24,578
$'000
3,000
25,000
1,786
2,000
23,000
19,915
21,048
20,179
1,000
21,000
-
19,000
(1,000)
17,000
(2,000)
(1,693)
15,000
(3,000)
(1,890)
(2,531)
H1 FY18
H1 FY19
H1 FY20
H1 FY21
H1 FY22
H1 FY18
H1 FY19
H1 FY20
H1 FY21
H1 FY22
Cash flow summary ($'000)
H1 FY18
H1 FY19
H1 FY20
H1 FY21
H1 FY22
Receipts
19,915
21,048
24,578
20,179
32,173
Operating cash flow
1,786
(1,890)
(1,693)
(2,531)
6,045
Investing cash flow
(2,515)
(1,894)
(868)
(1,635)
(3,157)
Financing cash flow
16,063
(473)
(137)
(125)
(18,396)
Net increase / (decrease) in cash held
15,334
(4,256)
(2,698)
(4,291)
(15,508)
Cash receipts for H1 FY22 reached A$32.2 million, which exceeded H1 FY21 by A$12.0 million. Total cash receipts were ahead of pre-pandemic levels (H1 FY20) by A$7.6 million, which reflects the growing awareness of and demand for Yellowtail Kingfish globally.
Despite an increase in sales volumes by 34%, Clean Seas did not experience a similar increase in operating cash costs, due in part to the improvement in working capital, which has removed excess biomass and frozen inventory. Feed costs are expected to increase in Q3 and Q4 FY22 in line with the Company's peak growing season from October to May.
Capital investment was largely focused on scaling up the Whyalla Farm production capacity, and the first progress payment for the acquisition of a heavy vessel to support its growth ambitions (total investment $1.6 million). Once delivered to the Spencer Gulf in the coming months, this vessel will be capable of delivering up to 80t of feed in a single operation and support Clean Seas growth ambitions in the coming years.
Financing cash flow reflects the repayment of the Company's working capital facility debt, and the successful redemption of Clean Seas' Convertible Notes. Of the 15,403,907 Convertible Notes issued on or before 20 January 2020, a total of 8,854,562 were converted by Noteholders to Ordinary Shares, and the remaining 6,549,345 were redeemed by the Company for approximately A$6.6 million. The early redemption of the Convertible Notes will save the Company approximately A$600,000 in interest in FY22.
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As a result of the positive operating cash flows, Clean Seas was able to increase total net cash by A$3.7 million in H1 FY22.
Net Cash
Jun-21
Dec-21
Change
Cash at bank
30,072
14,564
(15,508)
Working capital facility
(9,471)
-
9,471
Senior debt facility
-
-
-
Asset finance facility
(2,287)
(2,041)
246
Convertible note debt
(9,551)
-
9,551
Total net cash
8,763
12,523
3,760
The Company has cash and unused working capital funding of A$26.6 million, plus an additional A$17.9 million of undrawn facilities to fund major capital works.
Production Update
The stocking of juvenile fish in the new full life-cycle Fitzgerald Bay (Whyalla) farm site has been completed and these Year Class 22 fish are performing well. This new location, which complements Clean Seas' existing farming locations in Port Lincoln and Arno Bay, increases the Company's total potential production capacity to 10,000t per annum.
Twelve months ago the Company experienced an increase in fish mortalities within the Boston Bay marine leases. Clean Seas identified a range of contributing factors and undertook multiple steps to mitigate the risk of further mortalities. Due to measures taken in early 2021 the Company was able to return fish health to normal levels and this trend has continued in H1 FY22 with mortalities trending below historical levels.
Clean Seas CEO, Rob Gratton said "Clean Seas Seafood has had another very strong quarter, and we are thrilled to once again report a record sales result. Demand and appreciation for our premium quality fish continues to expand globally, which is a testament to our successful diversification and our team's ability to highlight the quality, flexibility and provenance only achievable by growing a native species in its natural waters. Our ability to clear excess inventory and deliver a record positive cash flow has again supported the proving out of our financial model. Farming in our new full lifecycle location in Fitzgerald Bay and acquiring our new vessel highlights our ambition and optimism for the future of our fish".
Payments to related parties
Payments to related parties for the quarter included fees paid to Non-executive Directors of A$95k, contract services of A$72k and vessel hire and related expenses of A$556k paid to associates of Non- executive Directors. Vessel hire costs are expected to reduce upon delivery of the new heavy vessel noted above.
The Board notes that notwithstanding this result, the inherent operational risks in aquaculture may impact future results.
Authorised for release by the Board of Clean Seas Seafood Limited (ASX: CSS, OSE: CSS).
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About Clean Seas Seafood
For personal use only
Clean Seas Seafood is a fully integrated Australian Aquaculture business listed on the Australian Securities Exchange (ASX) and with a secondary listing on Euronext Growth Oslo (OSE) - the leading exchange for high growth seafood companies.
Clean Seas is the global leader in full cycle breeding, farming, processing and marketing of its Hiramasa or Yellowtail Kingfish (Seriola lalandi) and is renowned amongst leading chefs and restaurants around the world for its exceptional quality.
Clean Seas is recognised for innovation in its sustainable Yellowtail Kingfish farming and has become the largest producer of aquaculture Yellowtail Kingfish outside Japan.
Clean Seas is headquartered at its processing facility in Royal Park in Adelaide, South Australia while its hatchery is at Arno Bay and its fish farms are at Port Lincoln, Arno Bay and Fitzgerald Bay on the Eyre Peninsula of South Australia.
All volumes quoted are in Whole Weight Equivalents (WWE), unless otherwise specified.
For further information on Clean Seas Seafood, please contact:
Rob Gratton
Andrew Angus
CEO
Investor Relations
+61 434 148 979
+61 402 823 757
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Disclaimer
Clean Seas Seafood Limited published this content on 16 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 January 2022 22:24:02 UTC.