MG Kailis in the red after challenging year

FISHING and pearling group MG Kailis Holdings Pty Ltd slipped into the red in the past financial year after a combination of poor economic factors and isolated catchery issues hit the Fremantle-based company.

The group recorded a loss of $2.4 million for the year ending June 30, down from a $5.9 million profit the previous corresponding period.

A disappointing season at its Exmouth prawn fishery was highlighted by the company as a major reason for the loss, along with high fuel costs and the negative impact of the strong Australian dollar on its mainly export activities.

The result comes after a significant restructuring of the business in 2005-06 which resulted in big asset sell offs in core areas such as lobster and pearling to cut back debt and return the business to profitability.

But, MG Kailis chairman Tony Iannello remained positive in his report to shareholders, adding that earnings from operating activities were $4.4 million, down from $5.5 million.

Mr Iannello said the group had generated 7.8 million in cash from operations to fund new investments and increased net assets by $2.6 million to $155 million.

It held $12.1 million in cash at the end of 2007-08, compared to $4.5 million the previous year.

Sales revenue was down almost 16 per cent to $94.9 million from $112.7 million.

MG Kailis appears to have kept its working capital tighter in the past financial year, with trade and other receivables cut by more than half to $20 million from $45 million in 2006-07, resulting in a lower level of current assets, and trade creditors dropping by two-thirds to $13.2 million, from $39.9 million.

Inventories remained slightly higher at $30.9 million.

Total assets slipped to $177.4 million from $201.4 million, impacted mainly by the lower trade receivables and a $7 million drop in the intangible assets to $23.1 million, which was not offset by a $5 million rise in property plant and equipment to $38.9 million.

Intangible assets are various fishing and aquaculture licences as well as lobster pot entitlements, the value of which has dropped from $44.9 million in the two years from June 30 2006.