Revenue up 48% to 19,269Profit/(Loss) from ordinary activities...

Revenue up 48% to 19,269
Profit/(Loss) from ordinary activities after tax attributable down -112% to (14,164)
to members.
Net Profit/(Loss) for the period attributable to members. down -112% to (14,164)
Net tangible asset backing per ordinary share down 24% to $ 0.24
Dividends. cents/share Nil
Amount per security
HALF-YEAR ENDED 31 DECEMBER 2009
(Comparative figures being the half-year ended 31 December 2008)
CLEAN SEAS TUNA LIMITED
ABN 61 094 380 435
APPENDIX 4D STATEMENT - HALF YEAR REPORT
RESULTS FOR ANNOUNCEMENT TO THE MARKET
Record date for determining entitlements to dividends.
This report is all the half year information provided to the Australian Securities Exchange under listing rule
4.2A. The report also satisfies the half year reporting requirements of the Corporations Act 2001.
This half year financial report should be read in conjunction with the 2009 annual financial report.
No dividend declared
Details of the Groups performance for the first six months of FY 2010 are attached to this notice.
26 February 2010
Company Announcements
Australian Securities Exchange Ltd
Half-Year Results Announcement for Period to 31 December 2009 post Audit
Review
The companys loss post tax for the 6 months to 31 December 2009 was $14.2
million compared to a post tax loss of $6.7 million to 31 December 2008.
The worse than anticipated result has largely arisen as a consequence of the
difficulties of the yellowtail kingfish business and the company taking positive steps
to scale back those operations to a profitable and long term sustainable business.
Over the past few months, executive management has been conducting a bottom up
review of the business and has formulated a strategy to bring more rigour, discipline
and accountability to the enterprise. As a result, the board is looking at various
options. A restructure of the kingfish business is pending. The board has made the
decision to devote much greater resources to the companys core business, tuna.
OVERVIEW OF RESULTS 1HFY2010
1) Southern Bluefin Tuna (SBT) Business
A) Spawning
The commencement of SBT spawning was successfully brought forward by
some two months over the prior season. This is considered a major
advancement by the science community around the world. Spawning
commenced on 14 January 2010 and intermittent spawning events occurred
over the next month. At present, the broodstock are showing positive courting
behaviour and may recommence spawning in March as in previous years.
Fertilised eggs were successfully transferred into the Arno Bay kingfish
hatchery which had been modified for SBT fingerling production pending
completion of the companys new $6.5 million recirculating larval rearing
system. Stage one of this system has been commissioned and live kingfish
larvae were fed to SBT larvae as planned. Stage two (SBT larval production
in recirculated tanks) will be completed and trialled ready for next seasons
SBT production run scheduled for January 2011. This purpose designed
recirculation facility will incorporate a wide range of bacterial, temperature and
water quality control parameters which in turn will materially lessen the risk of
hatchery operational problems.
Fertilised SBT eggs were also transferred to SARDIs facility at West Beach
for continuing larval rearing trials and the preliminary assessment of the
SARDI trials is that they have been successful and achieved their objectives.
The program to date has raised new challenges and the oldest fingerlings
survived to 38 days old and were actively feeding on live feed. This year the
company was successful in feeding the larvae their first live feeds, whereas in
the previous year this was a significant hurdle. The larval rearing staff are
currently conducting a detailed review of the season to date and are working
to further refine procedures and programmes before the next spawning.
B) SBT Feed Trials
A key component of this years SBT R&D program is the further development
of weaning and juvenile pelletised feeds which are required for
commercialisation. The company purchased tuna quota and is growing out
some 70 tonnes of premium quality SBT and it is conducting pelletised feed
trials with two commercial feed companies. Overall, the feed trials are
progressing well and the company anticipates having over 100 tonne of pellet
fed catch and grow tuna to market in 1HFY11.
C) Kinki University Relationship
Senior professors from Kinki University spent time in the Arno Bay facility last
week as part of the on-going research and development relationship. The
company is pleased to announce that an in principle agreement has been
reached to formulate a commercialisation agreement between Kinki University
and Clean Seas Tuna Ltd. This is a significant step forward in the relationship
as previously the agreement was limited to research and development only.
D) Research Partners
In addition to Kinki University, the company continues to draw on the
experiences of their key research partners Seafood CRC, FRDC, SARDI and
the University of the Sunshine Coast.
2) Kingfish and Mulloway Division
Key operating focus for the half year was a strategy to reduce overall
inventory levels, to clear slow moving frozen product and to enable kingfish
business profitability, consequently:-
Sales volume was 75% up on 1HFY2009 with domestic sales up
51% and exports up 103%, although farmgate revenue was only
up a net 48% to $13 million. A further write-down in inventory
and losses on sales of fish destined for fresh markets converted
and sold as value added and frozen product of $1.4 million post
tax.
Marketing spend was substantially greater than last year ($0.7
million post tax) in order to increase sales volumes and to
establish the new value added product range owing to the
previous over production issues. The strong Australian dollar
has severely impacted sales in Europe and the USA and has
detrimentally affected farmgate revenues. This half-year result
includes an unfavourable foreign exchange impact of $0.8
million on our farmgate returns compared to the same period last
year.
Overall the companys inventory has been reduced by 1,831
tonnes compared to 30/06/09, whole fish equivalent. This
reduction in tonnage is due to three factors:-
i) Aggressive sell down as above;
ii) A cut in CY2010 of fingerling production to some 700,000;
and
iii) Lower growth and unanticipated fish losses on grading
and harvesting.
It is estimated that these factors contributed $6.1 million (post
tax) to the first half-year loss compared to the same period last
year.
Of the factors listed above, the largest contributor was poor
growth and stock losses verified on grading and harvesting. The
poor growth is attributable to the new feeding regime
implemented in July 2009. This regime is being progressively
refined, and will lead to improved FCRs and acceptable growth
rates in 2HFY2010.
OUTLOOK FOR 2HFY2010
A) Kingfish Business
The following steps have been undertaken to turnaround the kingfish
business:-
A detailed review of the companys strategy, direction and vision
has been undertaken in February 2010 and a restructure of the
kingfish business is underway.
A full review of the marine operations, stocking levels and fingerling
intake timing has been undertaken resulting in a reduction in
kingfish intake numbers and improved use of existing grow-out
resources. Significant reductions in production costs are
anticipated over the next half year as the full benefit of the revised
feeding regime, automated feeding equipment, anti-foulant net
treatment, fallowing and centralised automated harvesting are
realised. A permit has been received to trial anti-foulant on many of
the companys nets and if the trial is successful, nets may only need
to be changed once per annum rather than the summer cycle of
every 10 days and this should result in savings in operating costs of
some millions of dollars per annum.
A policy has been implemented to grade and count fingerlings in the
first winter following their transfer to sea cages to detect early
mortalities earlier in the inventory management cycle.
A full review of the companys marketing strategy is underway and
excess inventory has now been largely cleared and/or adequately
provided for and price increases have already been implemented in
Europe, the USA and Australia, bringing an end to loss leading
sales.
The company owns more than the required infrastructure for the
cost effective production of the revised 2,500 3,000 tonnes of
annual kingfish production. Surplus plant and equipment,
principally nets and vessels, will be transferred to the tuna division.
There is no substantial capital expenditure required in the short
term.
The company has undertaken a major review of its fish processors
and with the reduced production targets, production can be
adequately serviced by two processing works. A tender process
has been undertaken and a reduction in processing contract prices
has been achieved. These reductions have been complemented by
savings in freight and packaging costs.
B) SBT Business
The cut back in SBT quota for the Australian industry by ~24% is a timely
reminder of the role the company will play in helping to protect a dwindling
natural resource by providing consumers with a sustainable alternative to
wild catch tuna. Sustainable aquaculture produce is growing in demand
and this company is well placed to be able to deliver a unique and
specialised product to consumers the world over. Following the reduction
in SBT quota, the company is waiting with interest for the Convention on
International Trade in Endangered Species (CITES) vote regarding the
Northern Bluefin Tuna in March 2010. The European Commission has
announced that it will put forward a proposal to its member states to
include Atlantic Bluefin Tuna under CITES and ban fishing thereof.
Given the nature of research and development, it is not possible to predict
the rate of progress that will be achieved with the commercialisation by
the company of the closure of the SBT lifecycle. Directors are confident,
however, given the lessons learnt from the current spawning, that
substantial progress will be achieved in 2HFY2010 in all key areas of this
breakthrough industry.
C) Gearing
The company is debt free following significant capital raisings in
1HFY2010, and is now well placed to take appropriate advantage of the
many opportunities available for premium species aquaculture production
in Australia.
Clifford Ashby
Managing Director
26 February 2010