SeaDragon flags 'extremely disappointing' increase in forecast FY loss
By Pattrick Smellie
Nov. 9 (BusinessDesk) - Perpetual under-performer SeaDragon is warning its full-year operating loss could be more than double the guidance it gave in June as it struggles to meet new European product certification requirements for refined tuna oil used in infant formula.
"It is extremely disappointing that we continue to face significant complex certification and production specification issues across our supply chain," chairman Colin Groves said in a statement to the NZX. "Although we have overcome many issues the fact remains that we are not in a position to satisfy the global demand into this region."
Normalised earnings before interest, tax, depreciation and amortisation for the March year are now forecast to show an operating loss of between $4.8 million and $5 million, compared with $2 million to $2.8 million loss range given in guidance on June 8.
Revenue of between $6 million and $6.9 million is now forecast for the full year, compared with June guidance of $10 million and $14 million.
The loss before tax, previously flagged at between $3.6 million and $4.55 million, is now forecast at between $6.4 million and $6.6 million.
For the half-year to Sept 30, which the company will formally announce later this month, a normalised ebitda loss of $2.5 million is anticipated, compared to a $2.2 million loss a year earlier. Losses before tax will widen to $3.4 million, from $2.7 million last year, after revenue declined to $2.3 million from $2.4 million a year earlier.
Chief executive Nevin Amos said the European market access problems stem from regulatory and customer specification changes, which were "impacting all companies globally seeking access to the European market for infant formula".
The company was now reassessing its short-term business plan with a view to offering its Omega-3 oil processing facilities for use on a toll processing basis for "significant volumes of oil".
The company announced in June that it had negotiated $6 million of new funding from cornerstone shareholders BioScience Managers, Pescado Holdings, and Comvita. An independent valuation in July concluded the funding arrangements were unfair to non-associated shareholders but that the positives outweighed the negatives. In August, it announced a $14.9 million renounceable rights offer in which shareholders were invited to participate at a 10 percent premium.
SeaDragon's infrequently traded shares closed at two-tenths of a cent yesterday. The company listed on the NZX in October 2012 via reverse takeover undertaken by Claridge Capital, with the shares initially trading at 2.2 cents apiece.