Ann: AGM presentation Nov 2009 , page-3

Just got home and read the report and feel excited, we have a big couple of months coming up, wouldnt be suprised to see this being the best turnaround story in 2010.

Clean Seas Tuna – Annual general Meeting
30 November 2009
Chairman’s Address
Welcome to our Annual General Meeting
No doubt you have all read my chairman’s report and we could talk for hours about
the industry I have been part of for some 49 years, but I will give you a short
overview from my perspective. The last 12 months have been difficult in some areas,
but highly successful in others. On Kingfish, we have become victims of our own
success. We have proven to everyone, we can produce Kingfish, in any quantity we
desire.
We used kingfish as a surrogate species for Tuna and earlier this year had close to
5600 tonnes in our farms. That created a problem on the marketing side. I should take
much of the responsibility for this position as I wanted to prove to the shareholders
that we had the ability to grow large quantities of fish in the Spencer Gulf.
I thought I could bulldoze my way through any problem Port Lincoln style. But
marketing takes time and we were heavily overstocked and had an imbalance between
production and marketing but let me assure you, that it is being addressed rapidly to
give you some idea.3 years ago, we sold 8-10 tones of kingfish per week and our
target is now 100 tones per week and on a number of occasions, have achieved this
target.
We had many sceptics, who said we would not be able to produce such large
quantities of Kingfish. Well, we have proven that we can do it and are now on the
way to lifting our sales price.
Our strategy for the future is,
1) keep our production in tune with sales targets
2) get our marketing right
We know where we went wrong and have made adjustments, but make no mistake
and I give you no spin. We have created a major new seafood sector with massive
possibilities which in the future will show big rewards.
Southern Bluefin Tuna
With much pride can I announce our success with a world first, 35 days spawning
event, with Southern Bluefin in our Hatchery in Arno Bay. What many around the
world thought an impossibility, became a reality. We were stunned. Nobody thought
it could happen with such intensity and in such quantities so early in our onshore
systems. You may remember I said too many of you it is just a matter of time, a
foregone conclusion and a giant step into the future.
We have lifted the holy grail of Tuna propagation, and as some scientists stated, this
is as important as Armstrong’s first step on the moon and if we do our business right,
we have a billion dollars business in our hands. I don’t know if any of you saw the
article but two weeks ago the prestigious Time magazine of the US rated our company
in second place in the 50 Best and Most Important Inventions of the Year in the
World, just behind NASA’s Ares #1 Rocket and ahead of the 10 Million Dollar light
bulb. This goes to show, what Food Security means to the rest of the world, but
especially Tuna. We are on the right path and as I said before, if Clean Seas Tuna has
to run second to anybody it might as well be NASA.
We are close in all the assessments we made since going public and well focused. At
present we are working 24-7 on the second stage for our Tuna Hatchery, for the next
Tuna spawning cycle, which is very close. In an international press statement from
Kinki University just issued today, they have transferred 100,000 fingerlings from
their Hatchery to net cages. Kinki are our Research partners and we are happy with
their continuing success. History is being made, between Kinki, Clean Seas and a new
seafood sector is in the making.
Our own broodstock are looking superb and are expecting positive results with our
own spawning. I could tell you more but I won’t at this stage. What I can say however
is, we have cleared the major hurdles and obstacles and are now one of two operations
in the world to take the first step in the commercialisation of propagated Tuna.
The wild fish Tuna sectors around the world are under siege, from Governments and
Environmental organisations and we, with a little luck, have our destiny firmly in our
hands and will now concentrate to guide Clean Seas Tuna into a secure and profitable
future.
I also take this opportunity to thank my fellow Directors, for their help over the last
12 months, but especially our Hatchery staff who helped us become the first in the
world to complete a southern bluefin spawning cycle. Now we are on the way to take
the final step to commercialisation. I also like to thank my son Marcus Stehr for his
help. Marcus and I come from the wild fish Tuna business that needs 24 hours a day
commitment in operations it will be up to people like him to drive it hard into the
future.
All in all we have laid the foundation for a world class seafood business with huge
possibilities. It is up to Directors and Management to make it happen. I take this
opportunity to introduce our new Chairman elect John Ellis Flint
John Comes with blue-blood credentials, and doesn’t need much introduction from
me, except to say, he was Managing Director of Santos and knows how to create
Shareholder value on national and international levels. I am extremely happy John
will come on board as Chairman at our next Directors Meeting, and wish him well.
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CLEAN SEAS TUNA LIMITED
4TH ANNUAL GENERAL MEETING – 30 NOVEMBER 2009
Managing Director’s Report
Ladies and gentlemen, I join the welcomes already extended to you.
As Managing Director I am pleased to update you on our company’s progress over the last
12 months.
Operationally there are two aspects to our business Kingfish & Tuna.
We continue to increase our sales, volumes and market penetration of our Kingfish product
range and we are successfully bringing production and sales back into balance.
Most importantly we are well advanced with our Tuna lifecycle program and confidently
expect to commence at-sea grow out of Tuna fingerlings early in the New Year.
Your Board recognises the need for continuous improvement at all levels of the company
operations if we are to achieve our objective of becoming the Southern Hemisphere’s most
successful aquaculture company.
To this background, the Board, with the full support of the Stehr Family as the largest
shareholder and original promoters, have unanimously resolved to endorse the following key
personnel changes and appointments at a forthcoming board meeting:-
• My role is to become “Executive Director of Operations” which is all about production
and harvest, an area within the business that needs devoted and concentrated
attention to drive the profitability that we know is there, which will bring to realisation
the extraordinary achievements in the aquaculture sector that we have already made.
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• Clifford Ashby, will be running the company. I will report to him as the “Executive
Director of Operations”. Clifford has had 12 years experience as MD of a listed
Australian Agribusiness company and having worked with Clifford over the last six
months, I strongly support his appointment.
• John Ellice-Flint will be appointed “Independent Chair”. We are fortunate to have
John on the board as he has had a most distinguished career including eight years as
Chief Executive and Managing Director of Santos Ltd. We are all looking forward to
working with John, who I am sure will bring to the company the necessary rigour and
discipline that will be required as we move towards successful commercialisation of
Tuna.
After the formal part of today’s meeting, both Clifford and John will be introduced to you and
they will provide an overview of their relevant experience and commitment to our corporate
goals.
Turning now to my formal Managing Director’s operational summary as set out in your
company’s annual report, I wish to highlight the following:-
• The hatchery team achieved a continuous 35 day Tuna spawning from 12 March 2009
• Tuna fingerlings were successfully weaned and reared at the Arno Bay hatchery in onshore
tanks with the oldest of these fish now over 200 days old and approximately
2kg in weight – an exceptional result
• Shareholders, you will appreciate our anxiety to ensure a successful transfer from
hatchery to sea cages. The determining factor of “when” this will happen will be
when all the conditions are optimum. We must be certain when the time is right that
WE are ready. We must monitor closely every step of this process.
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• This season’s Tuna spawning is targeted for December and this should result in viable
Tuna fingerlings being transferred to ocean cages for grow out trials early in the new
year.
• Whilst we are still in the early phase - we have successfully spawned and hatched
juvenile Tuna. Clean Seas is understandably proud of these achievements, which were
recognised this month by Time Magazine as being the second ranked international
invention of 2009. The success achieved with our on-shore breeding facilities is timely
given recent global Tuna quota cuts.
• I would like to take this opportunity to express my appreciation for the effort and
support our Tuna program has received, not only from our employees but also from
our alliance Universities, Seafood CRC & FRDC - their input has been invaluable.
• We are currently constructing a major two stage expansion of our Tuna breeding
facility at Arno Bay. These Tuna fingerling rearing systems are being funded from the
current capital raisings. This will give us the capacity to increase this season’s
production grow out of 25,000 Tuna.
Turning now to Kingfish and Mulloway, I wish to elaborate on my statement further as
follows:-
• Kingfish and Mulloway were selected as surrogate species to enable Clean Seas to
build an internationally skilled aquaculture team capable of closing the Tuna lifecycle
and successfully commercialising the grow out of that species throughout the Spencer
Gulf of South Australia.
• We have been incredibly successful in producing high quality product, however our
capacity to produce high quality fish has not been matched by our sales and
marketing performance. This is now being vigorously addressed.
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• Whereas Mulloway has not proven to be a commercially viable species for Clean Seas,
Kingfish will ultimately prove to be a successful premium species for long term
sustainable aquaculture production. Growth rates and culinary excellence are key
attributes for a successful industry. From January, Australian consumers will be able to
access our quality product from their local Coles, IGA and Woolworth’s supermarkets,
in addition to enjoying it at premium restaurants throughout the world.
• The financial performance of our Kingfish/Mulloway division during last financial year
was not satisfactory. Hence our decision to exit Mulloway over this financial year and
to restore a profitable production/sales balance to the Kingfish division. We continue
to work on reducing our cost of production and increasing our price for premium
product.
�� Reducing this years Yellowtail Kingfish output from some 1.25 million to
some 1 million fingerlings
�� Changes to feeding regimes, stocking policies and utilisation of automated
feeding equipment. This has resulted in materially improved Food
Conversion Ratios and substantially lower feed costs
�� Under the direction of our Sales & Marketing team, we have strengthened
our distribution channels and product range. Sales for the first four months
of this financial year are upwards of 50% for the same period last year and
prices are progressively improving.
Overall, I am proud to have had the opportunity to be Clean Seas inaugural Managing
Director.
The time is now however for me to give my full 150% attention to that which I do best, and
that is – the management and direction of the operations of this enterprise on the ocean
and with the people who make the enterprise at sea.
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I also want to take this opportunity to thank my fellow Directors and all of the hard working
team at Clean Seas for their considerable efforts throughout what proved to be a most
difficult and challenging last. I have no doubt that with continuous change and improvement
Clean Seas will continue to grow the Kingfish & Tuna business.
Thank you Chairman.