Huon Aquaculture Group Limited Annual Report 2017 | Financial Summary | Key Financials

KEY FINANCIALS


Operational Performance   Sales Channel   Biological Assets   Cash Generation

Operational Performance



Six months ended30 Jun
2017
31 Dec
2016
30 Jun
2016
31 Dec
2015
Harvest volume HOG tt9,0719,377 8,17512,288
Revenue from operations$M126.0133.5 102.6131.1
Revenue $/HOG kg$/kg13.8914.24 12.5510.67
Cost of production$M(83.7)(101.3) (86.0)(105.3)
Cost of production $/HOG kg$/kg(9.23)(10.80) (10.52)(8.57)
Freight and distribution$M(5.8)(5.9) (6.0)(10.1)
Freight and distribution $/HOG kg$/kg(0.64)(0.63) (0.73)(0.82)
Operating EBITDA*$M36.526.4 10.715.8
Operating EBITDA $/HOG kg$/kg4.022.82 1.311.29
Margin%29.0%19.8% 10.4%12.1%
Fair value adjustment$M(12.4)31.6 6.1(7.6)


  • The recovery in salmon prices that began in late FY2016, continued to hold through FY2017 supporting the view that current pricing reflects a return to more normal market dynamics.
  • Improved feed performance combined with ideal growing conditions restored fish stock biomass levels despite the low starting biomass.
  • Average harvest weights improved as a result, and the cost of production per kg also benefited, reducing by 15% in the second half.
  • Processing efficiencies and lower freight costs also contributed, resulting in production and freight costs reducing 12% from $11.25 to $9.87/kg.

* Operating EBITDA excludes the impact of the Fair Value Adjustment of Biological Assets.

Sales Channel



Six months ended30 Jun
2017
31 Dec
2016
30 Jun
2016
31 Dec
2015
Wholesale HOG kgt6,0536,898 6,1276,517
Retail HOG kgt2,2042,104 886701
Export HOG kgt814375 1,1625,070
Total HOG kgt9,0719,377 8,17512,288
Wholesale % of revenue%69%75% 75%57%
Retail % of revenue%23%21% 13%8%
Export % of revenue%8%4% 12%35%
Wholesale $/HOG kg$/kg14.2814.54 12.6411.49
Retail $/HOG kg$/kg13.1713.30 14.6714.10
Export $/HOG kg$/kg12.8814.02 10.519.14


  • New retail sales contracts that commenced in FY2017 more than doubled sales into the retail segment from 10% to 22% providing much greater pricing and production certainty.
  • The wholesale market continues to be Huon's dominant segment and prices have remained consistent since late FY2016. We continue to see demand growth in the domestic channels, driving both retail and wholesale sales.
  • Export pricing has historically been weaker than that achieved in the domestic market however supply constraints globally saw this discount diminish. As supply pressure dropped in the first half, Huon increased exports to just under 10% of production in the second half.

Biological Assets



Six months ended30 Jun
2017
31 Dec
2016
30 Jun
2016
31 Dec
2015
Biological assets at fair value$M188.0190.3 147.2135.5
Fair value adjustment (FVA)$M48.560.9 29.423.3
Biological assets (excluding FVA)$M139.5129.4 117.8112.2
Total weight of live finfish at seat16,66317,078 12,07514,499
Biological asset value/kg (live)$/kg11.2811.14 12.199.35
Fair value adjustment/kg (live)$/kg2.913.57 2.431.61
Biological assets/kg (live) (excluding FVA)$/kg8.377.58 9.767.74
Number of fish (harvest)000's2,0371,936 2,0472,390
Sales volume (HOG kg)t9,0719,377 8,17512,288
Average HOG weightkg4.454.84 3.995.14
Average price/HOG kg (net sales)$/kg13.8914.24 12.5510.67
Net sales$M126.0133.5 102.6131.1


  • The $19.2m increase in the Fair Value Adjustment over FY2017 reflects the higher biomass level and improved pricing environment and altered channel mix compared to June 2016.
  • The fair value of biological assets increased by 28% (over pcp) to $188.0m while biomass at sea increased by 38% (over pcp). This reflects the proportion of fish at marketable size at reporting date having returned to more normal stock levels and brings the biological assets value per kg to $11.28.
  • Average harvest weight recovered strongly in the first half to 4.84kg from 3.99kg (2H2016). The seasonal fall in harvest weight during the second half is recovering as growth rates for the 2016 Year Class continue to perform strongly.
  • Biological assets per kg (excluding FVA) reduced by 14% (over pcp) to $8.37, a further indication that production costs are on a downward trend.

Cash Generation



Six months ended30 Jun
2017
31 Dec
2016
30 Jun
2016
31 Dec
2015
Operating EBITDA*$M36.526.4 10.715.8
Cash flow from operations$M33.120.9 (0.9)17.2
Add – net interest paid$M1.61.8 1.61.6
Add – tax paid/(refunded)
        – tax paid/(refunded)
$M (4.4)
Adjusted cash flow from operations$M34.722.7 0.714.4
EBITDA conversion%95%86% 7%91%
Capex$M22.312.7 14.330.2
Cash at end of period$M23.021.0 3.810.8


  • The uplift in profit together with close management of working capital resulted in operating cash flow of $54.0m, up from $16.3m (pcp).
  • EBITDA conversion averaged over 90% throughout the year, continuing to improve in the second half.
  • Huon spent $35.0m in capex on the continued expansion of marine farms in Storm Bay, marine fleet upgrades, and efficiency projects covering fish monitoring, feeding and processing facilities.
  • Net debt eased and gearing reduced to 15% at year end, but was positively impacted by the $17.6m Ridley payment held back (otherwise gearing would be 21%).

* Operating EBITDA excludes the impact of the Fair Value Adjustment of Biological Assets.



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