SeaDragon sees 60% boost in 2016 sales, positive earnings

SeaDragon predicts 60% boost in 2016 sales to generate positive earnings

By Paul McBeth

July 28 (BusinessDesk) - SeaDragon, which this month announced plans for a deeply discounted rights issue, expects annual sales to rise 60 percent in 2016, helping generate positive pretax earnings.

The Nelson-based company forecasts revenue of $10.1 million in the year ending March 31, 2016, up from $6.3 million a year earlier, and expects earnings before interest, tax, depreciation, and amortisation of $144,000, compared to an Ebitda-loss of $2.2 million in 2015, it said in a statement.

The forecast relies on SeaDragon completing its Omega-3 facility this calendar year, building a fractionation plant by July 2016 to make higher value products, the exchange rate remaining at about 70 US cents, gross margin staying largely unchanged and the company's ability to raise new funds, it said.

Earlier this month, SeaDragon announced plans to raise $5 million through a discounted rights issue and private placement to help fund the Nelson refinery, which has gone over budget and stretched the company's balance sheet. That was in addition to a $2.5 million convertible loan from cornerstone shareholder BioScience Managers.

The pick-up in sales is expected to generate positive operational cash flow in the 2016 financial year, with the capital injections and $3 million of additional bank funding covering the $7.5 million cost of building the factory.

SeaDragon shares were unchanged at 1.3 cents, and have slumped 41 percent this year. That compares to a 2.3 percent increase in the S&P/NZX All Index over the same period.

(BusinessDesk)

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