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Sealegs Speeding Towards Break-Even Point

Sealegs Speeding Towards Break-Even Point

Auckland, 16 April 2008: Listed marine company Sealegs Corporation (NZX: SLG) expects a break-even operating result for the financial year when it posts its full year result next month.

Sealegs CEO David McKee Wright says the expected result, based on record revenue of almost $10 million, “will be a significant milestone for a company which shipped its first amphibious rigid inflatable boat to a customer just four years ago in May 2004.”

While the final numbers are still being audited, Mr McKee Wright believes they “will signify a major step forward in the Sealegs strategic plan. An early stage critical mass has been achieved which will establish financial benchmarks for the future of the company as it looks to exploit production efficiencies.”

Last month Sealegs announced it had taken possession of a second manufacturing facility of around 10,000 sq ft in Albany to expand the production capability for its amphibious boats. The new facility less than 1km from the new 20,000 sq ft manufacturing plant it moved into in May 2007 will be responsible for fabrication - the cutting and welding of aluminium hulls and components.

Mr McKee Wright says that during the last 12 months Sealegs shipped 122 amphibious boats, up 90% on the previous 12 months and that last month a record 18 boats were despatched to customers.

He points out the only negative aspect of the pending result is the prospect that it will be “adversely affected by the accounting treatment of staff share options under the newly adopted International Financial Reporting Standards (IFRS). We are working to quantify exactly what effect the new standards will have on the final result, but it is likely to be materially affected,” he says.

“The predominant issue caused by IFRS revolves around the valuation of the management and staff option plan approved at the last AGM.”

Mr McKee Wright says “I appreciate why IFRS was introduced but to be forced to recognise an expense based on a high option valuation which will affect the profit reporting of the company for the next five years is extremely disappointing. Sealegs has worked very hard to get into a position where it can report a profit, and it’s a pity the accounting treatment of staff share options under the new IFRIS standards will have such a large effect on this and future year’s results.”

Sealegs Corporation Limited, which reported under NZ Equivalents to International Financial Reporting Standards (NZ IFRS’s) in their 30 September 2007 interim financial statements, expects to post its Full Year result later next month.


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