Angel Seafood delivers a record result in the second half of 2020

Angel Seafood Holdings Ltd (ASX:AS1) reported a record sale of 5.1 million oysters in the six months ended on December 31, 2020, around 55 % higher than the comparable period in the previous year. The strong sales were driven by continued momentum from in the retail channel, supported by growing recognition of the company’s ability to guarantee continuous supply of its high-quality organic oysters and emerging brand presence. During the period the company reported a revenue of $3.8 million, up 52%, with underlying oyster process remaining steady. Operating costs during the period were 20% lower on a volume adjusted basis; reflecting the benefits of scale and productivity gains as the business has grown. Additionally, Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) grew 39% to $1.4 million, and profit after tax was up 74% to $0.7 million. “Record sales and a positive bottom-line result” Angel’s CEO and founder Zac Halman said: “The past six months have been a period of significant progress and development for Angel. “Despite the challenging trading conditions that continued over this period, we delivered record sales and a positive bottom-line result. “This is a fantastic outcome and demonstrates the underlying strength of our business and the continued demand for oysters. “I am particularly pleased with the momentum we have experienced in the retail channel and excited for future value this segment will present.” Investing in the pipeline Following continued sales momentum and the increase in finishing capacity to 12 million oysters per annum with the acquisition of water leases, Angel has been focused on growing its stock profile for the future, with a net investment of $380,000 made in spat purchases during the six months. Angel also procured and begun trials with spawnless triploid spat that would be available for sale during summer, extending the sales season to be year-round and potentially adding 10-15% to annual sales revenue. Farming operations are now focused on grading oysters and monitoring the condition of the oysters during spawning season. Three pillar growth strategy In November 2020, Angel launched a new growth strategy to support the next phase of growth which over time will see the company double its annual production capacity to 20 million oysters per annum through scale and innovation. Angel aims to achieve its growth ambitions through a 3-pillar plan focused on: Increasing production to maximise economies of scale and increase return on investment; Increasing productivity and efficiency through innovation; and Improving oyster pricing through premium brand positioning. Halman said: “In November we unveiled what the next phase of growth will look like for Angel. “Over time we will aim to double production capacity to meet the growing demand and improve our profitability. “We have already started the work towards these growth ambitions by acquiring additional water leases and launching a number of innovative farming methods to improve farming efficiencies.” Strong financial position In December, Angel successfully undertook a $4 million placement to enable the company to accelerate its growth plans. The placement was strongly supported by existing investors as well as new high quality institutional and sophisticated investors. The company also secured an increase of $1 million to its working capital facility with the National Australia Bank (NAB).  The funds raised via the placement, together with the additional working capital facility, further support the company’s financial position and allows Angel to fast-track its growth initiatives. The company’s liquidity increased significantly to $5.2 million as of 31 December 2020. Long-term growth The 2021 sales season is expected to start around March and Angel anticipates a sound supply of oyster sizes available to cater for restaurant and retail demand. Following an earlier than usual spawning season experienced in Coffin Bay, some stock has started regaining condition ahead of schedule, resulting in some sales in the first quarter, albeit at a reduced scale. The company is focused on progressing its growth strategy towards doubling production and improving profitability and will continue to build scale in its mulit-bay strategy, invest in industry leading farming methods and roll out initiatives that will strengthn the brand and support favourable pricing for Angel’s oysters. Halman said: “I am excited about the year ahead and look forward to continuing on our growth path.”