huon aquaculture group limited abn 79 114 456 781 preliminary final report for the year ended 30 ...

106 Pages·2016·3.01 MB·English

HUON AQUACULTURE GROUP LIMITED ABN 79 114 456 781
PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2016
APPENDIX 4E – GIVEN TO ASX UNDER LISTING RULE 4.3A
1. DETAILS OF THE REPORTING PERIOD
Reporting period: For the year ended 30 June 2016
Previous corresponding period: For the year ended 30 June 2015
2. RESULTS FOR ANNOUNCEMENT TO THE MARKET
Up/(down) Amount
$’000 % change $’000
Revenue from ordinary activities 42,013 21.91% 233,743
Profit from ordinary activities after tax for the period attributable to members (13,176) (79.36)% 3,427
Net Profit for the period attributable to members (13,176) (79.36)% 3,427
3. DIVIDENDS AND DISTRIBUTIONS
Amount Franked amount
Dividends per security per security per security
Final dividend None nil
Interim dividend None nil
Record date for determining entitlements to dividends
• Final dividend Not applicable
• Interim dividend Not applicable
Dividend payment date
• Final dividend Not applicable
• Interim dividend Not applicable
Brief explanation of any of the figures reported above necessary to enable the figures to be understood: Refer to the Directors’
Report within the attached Financial Report
4. NET TANGIBLE ASSETS PER SECURITY
2016 2015
Net tangible assets per security $2.84 $3.09
5. OTHER INFORMATION
This report is based on, and should be read in conjunction with the attached audited Financial Report.
Details of entities over which control has been gained or lost during the period: None
Details of associates and joint venture entities: None
Details of any dividend or distribution reinvestment plans in operation: None
Any other information required pursuant to ASX Listing Rule 4.3A not contained in this Appendix 4E is found in the attached
Financial Report.
Attachement A
HUON AQUACULTURE GROUP LIMITED ABN 79 114 456 781
ANNUAL REPORT 30 JUNE 2016
MANAGING
SUSTAINABLE GROWTH
HUON AQUACULTURE GROUP LIMITED
ANNUAL REPORT 2016
HUON IS A VERTICALLY INTEGRATED
AUSTRALIAN AQUACULTURE COMPANY.
ACTIVE RISK MANAGEMENT,
TOGETHER WITH A COMMITMENT
TO SHAREHOLDER VALUE WILL DRIVE
SUSTAINABLE LONG-TERM GROWTH.
Contents
02 Chairman’s Message
10 Managing Director’s Review
15 Financial Summary
18 Board of Directors
21 Directors’ Report
37 Corporate Governance Statement
44 Financial Statements
Annual General Meeting
49 Notes to the Financial Statements
94 Director’s Declaration The 2016 Annual General Meeting
95 Independent Auditor’s Report of Huon Aquaculture Group Limited
97 Shareholder Information will be held at The Henry Jones Art Hotel
99 Glossary 25 Hunter St, Hobart,
101 Corporate Directory November 30, 2016.
WE PROUDLY PRODUCE
THE WORLD’S MOST LOVED
TASMANIAN SALMON
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Huon Aquaculture Group Limited Annual Report 2016
CHAIRMAN’S MESSAGE
– Actively managing risk
– Delivering on our commitment to invest in the business
– Driving sustainable, long term growth
Since listing on the ASX in 2014, Huon Aquaculture Group Limited (Huon)
has been implementing a program of transformational change, with the dual
objectives of securing our long-term sustainable profitability and of actively
managing risk.
Business Performance lower margin export market which, together
with increased costs associated with freight,
In late 2015/early 2016 we experienced one of
adversely impacted margins.
the most severe El Niño events on record. Huon
was well prepared, having taken the decision The fair value adjustment of biological assets
to bring forward the salmon harvest to avoid declined by $1.50 million as a result of reduced
the negative impacts on fish health and growth fish biomass, but reflects the improved pricing
that arise from leaving large salmon in rapidly conditions and channel mix.
warming waters. This adversely impacted Huon’s Importantly, during FY2016 the Company
profitability for the 2016 Financial Year (FY2016) continued to invest in its capital assets as part of
but was necessary in order to provide a solid its Controlled Growth Strategy (CGS) including
platform for the future – one that is underpinned a state of the art hatchery at Forest Home
Peter Margin by an unrelenting focus on fish husbandry, (Judbury, Tasmania), patented seal proof pens,
Chairman product quality and a robust risk management feed barges and mooring systems. This recognises
framework. that operational efficiency, along with product
Creating a safer working environment for our quality and security, will be the key drivers of
people makes safety the top priority at all our sites. this Company’s future competitive advantage.
The “Safety First” culture at Huon has been pivotal The balance sheet remains strong at the end
in achieving a significant improvement in our of FY2016 and while gearing increased due to
safety record over the past year. During that time the implementation of the CGS and associated
the Lost Time Injury Frequency Rate (LTIFR) fell by capital expenditure commitments, it remains
74% from 27 to 7. comfortable at 24.8% (net debt/net assets).
As we look ahead, both Board and Management
are very confident that the Company is well placed Strategy
to improve its profitability this year and beyond.
Over the past three years we have significantly The strategic focus for Huon during the past two
strengthened the business through a major capital years has been the implementation of the CGS.
expenditure programme and in 2016 the market I am pleased to report this had been completed
fundamentals for salmon sales globally have by the end of FY2016 and is expected to improve
moved from one of over to under supply for the efficiency, reduce earnings volatility and lower the
first time in many years. Company’s risk profile over time.
Huon recorded strong sales revenue for FY2016 The CGS improves and strengthens each stage
of 233.74 million, up 22% on the previous of our production process including our ability to
comparable period (pcp). However Operating respond quickly to extreme weather events and
EBITDA reduced from $40.45 million to other risks. The full benefits of our CGS investment
$26.45 million. The Company recorded a statutory should accrue from FY2018.
net profit after tax of $3.43 million, a decline from Earlier this year our Managing Director Peter
the $16.60 million profit reported for the pcp. Bender delivered an investor presentation
While the accelerated harvest program resulted entitled ‘Making Your Own Luck’. As Peter noted,
in a record increase in annual revenue, the chance does not drive success in the aquaculture
increased tonnages of fish that had to be sold business. Huon is ‘making its own luck’ by
into the market in the first half of FY2016 created getting the production basics right and creating
downward pressure on average pricing. This opportunities through technical and market
was accentuated by the fact that the majority innovation, including strategic geographical and
of this additional stock was sold through the species diversification.
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The Huon three pillar business strategy
Growing Growing production and Growing safety
the market operational efficiency and sustainability
The Asia Pacific region is a market that offers International prices rose sharply through the
considerable potential for our products, particularly first half of calendar 2016 as the available supply
now that there is a world-wide shortage of supply of high quality salmon products fell short of the
and Australia has a competitive advantage in steady growth in demand. While Huon’s FY2017
terms of its geographic location. We will continue profitability will benefit significantly from this
to take advantage of the growing demand for improvement in pricing, the impact of El Niño
high quality fish products from China and other will continue to be felt through the business until
Asian economies. Concurrently, management is the 2015 Year Class concludes harvest in early
investigating opportunities for diversification into calendar 2017. We anticipate further growth in
other fish species such as Kingfish. profit in FY2018, the first year in which Huon’s
production will reflect a full cycle, from egg to
Both of these initiatives are consistent with Huon’s
harvest, on the platform created by the CGS.
stated objectives of producing sustainable earnings
growth with reduced year-on-year fluctuation. Longer term Huon is pursuing initiatives to take
maximum advantage of the growing demand for
The Company is well-placed to take advantage of
salmon, including increasing our retail presence
rising demand for high quality salmon products,
and continuing to focus on our key wholesale
estimated to be around 5-7% p.a. globally if the
markets and product innovation to increase market
market wasn’t supply constrained. The Australian
share domestically.
salmon market is predicted to grow at around
10% p.a. over the next five years.
Conclusion
In summary, the Company’s business strategy
continues to be supported by three pillars: I have been privileged to lead the Board in the first
– Grow the market through increased two years as a listed company and I acknowledge
consumption, better channel mix and my fellow Directors for the extensive business
enhancement of sales and brand value; and financial management skills that they have
– Build production and enhance operational brought to all our deliberations during that time.
efficiency as a result of investment made On 30 August 2016 I will retire from the Huon
via the CGS program and marine lease Board to take up a full-time Executive Chairman
optimisation; and role at a regional beverage company. Neil Kearney,
– Safely and sustainably developing our who has served on the Huon Board since listing in
people, including the universal adoption 2014, will take over as Chairman. Mr Tony Dynon
of the Company’s Safety First program will fill the casual vacancy created by my retirement,
and the adoption of a culture of continuous bringing valuable expertise in marketing, stock
improvement. feed management, finance and strategy to the
Board from his senior management roles in the
food and beverage sector.
Capital Management
On behalf of the Board I wish to thank
The challenging operating environment
our customers, suppliers, employees, local
experienced over the past year combined with
communities and our shareholders for their
our commitment to complete the final stage
support. Your Directors are confident that Huon’s
of implementation of the CGS has required
business strategy is sound and that the Company’s
increased focus on retaining cash within the
approach to risk management, together with a
business. As a result the Board has determined
long-term commitment to building sustainable
not to declare a dividend for FY2016.
revenue and earnings, can secure the Company’s
future and reward shareholders’ confidence
Outlook and Strategic Focus in Huon.
The Board is confident that the successful
implementation of the CGS program, on
time and on budget, has enhanced Huon’s
competitive position and placed the Company
on a surer footing both to execute its business
strategy and to continually improve its
environmental performance. Peter Margin, Chairman
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Huon Aquaculture Group Limited Annual Report 2016
THE LIFECYCLE OF A HUON SALMON IS TWO TO
THREE YEARS AND AT EACH STAGE THE COMPANY’S
OPERATIONS ARE UNDERPINNED BY A COMMITMENT
TO THE HIGHEST LEVEL OF ANIMAL HUSBANDRY,
ENVIRONMENTAL MANAGEMENT AND QUALITY.
Hatcheries Marine Farms Harvesting Processing Market
Selective Feeding Fallowing Value Added
Breeding Processing
Program
Maintenance
Fish Lighting
Husbandry
Net Bathing Predator
Management Control
Huon’s Controlled Growth Strategy drives
innovation and improvement at each stage
of the production process, supported by our
experienced and highly trained workforce.
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SUSTAINABILITY
THROUGH INNOVATION
Huon has a reputation for leading innovation across all areas of our operations,
supported by a highly skilled workforce. Continued innovation in technology and
farming practices strengthens our competitive advantage.
Hatcheries Marine Farms
Hatcheries allow Huon to mimic the Huon has been the first salmon The pens provide enhanced protection
natural life cycle of salmon, synchronising producer to roll out 168m and 240m from predators, particularly seals,
batches of salmon to go to sea at circumference Fortress Pens to all through a unique design that prevents
different times of the year, enabling the its sites, making a safer, healthier them from entering the pens and
supply of fresh healthy fish all year round. environment for fish and a safer working becoming trapped.
Located throughout Tasmania, they allow environment for Huon employees.
Innovative net cleaning technology has
Huon to take advantage of different
Fortress Pens are allowing Huon to been an essential part of the rollout and
water and environmental conditions and
move farming to offshore sites such as the pens have won two safety awards.
maintain high standards of biosecurity.
Storm Bay, where water flow is higher
The new Huon owned Forest Home and temperature fluctuations lower.
hatchery produces larger smolt,
meaning less grow out time at sea.
Feeding Fish Husbandry Processing
High tech feed barges feed fish more Huon’s well-boat now conducts all The Parramatta Creek processing
efficiently, using pellet recognition freshwater bathing of salmon, doing facility is one of the most advanced in
software and a Huon designed away with the need to bathe fish in the World, ensuring the fish are as fresh
spreader, ensuring fish are fed to liners, reducing the stress on the salmon as possible when they go to market.
appetite and substantially reducing and reducing the impact on nearby
With the addition of the Product
waste. The barges carry up to communities. Highly efficient, it recycles
Innovation Centre and Smokehouse,
320 tonnes of feed to feed all pens fresh water and is also used to transport
in 2015, the Company is able to
on a grid at the same time. smolt to sea, and fish to harvest.
achieve new standards in quality in
its value added range.
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Huon Aquaculture Group Limited Annual Report 2016
MANAGING SUSTAINABLE
ENVIRONMENTS
Huon Aquaculture is building sustainable long term revenues by
actively and expertly managing the risks inherent in aquaculture.
The Huon Method promotes healthy fish, keeps the impact on the
surrounding environment and local communities to a minimum
and ensures that the business remains strong.
Agricultural Risk Wildlife
Reducing the threat of disease Reducing interactions
with seals and birds
The Huon Method: Careful site
management, strong biosecurity and good The Huon Method: Fortress Pens substantially
husbandry practices throughout the salmon reduce the risk to the fish from seals and birds
lifecycle keeps disease to a minimum. and protect wildlife by preventing them gaining
Huon’s low stocking densities and offshore access both above and below the water line.
pens maintain water quality and allow Huon’s environmental management team works
the fish to thrive and grow more quickly. closely with the Tasmanian Department of
Freshwater bathing of the fish on site with Primary Industries, Parks, Water and Environment
the well-boat keeps amoebic gill disease to monitor and record seal interactions.
(AGD) at bay and reduces fish stress.
Industry Partnerships: Huon maximises Safety Risk
salmon growth efficiencies by participating
in the Salmon Industry’s ‘Selective Breeding Keeping our people safe
Program’, this delivers reduced bathing, is Huon’s highest priority
lower feed conversion ratios and improved
fish growth due to more resistance to AGD. The Huon Method: Huon’s dedicated safety
team manages and monitors all aspects of
employee’s safety at work. The Company has
Environmental Risk elected health and safety representatives at
all sites. All staff, including Board members,
Managing the business for have undertaken safety culture training.
weather variations and Huon’s Fortress pens and the well-boat provide a
impact on the surrounding safer working platform.
environment and communities
The Huon Method: Carefully managing Market Risk
the harvest schedule in response to
environmental conditions minimises the Staying on top of the competition
risk to the harvest and ensures earnings and consumer preferences The new Fortress Pens
are maximised in given market conditions. in Hideaway Bay.
The Huon Method: The cutting edge
The move to offshore pens reduces the risk
Parramatta Creek Smokehouse and Product
to the local environment and reduces noise
Innovation Centre in Northern Tasmania
and visual impact on local communities.
promotes our retail capability and capacity.
Technologically advanced feed barges
New products are targeted at import
deliver feed efficiently and reduce waste.
replacement.
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