31/08/2016 - 10:03

Wellard misses prospectus targets

31/08/2016 - 10:03

Bookmark

Upgrade your subscription to use this feature.

Local businesswoman Sharon Warburton has resigned from the board of live cattle exporter Wellard, which has missed its prospectus forecasts on revenue, profit and margins to book a $23.3 million net loss.

Wellard misses prospectus targets

Local businesswoman Sharon Warburton has resigned from the board of live cattle exporter Wellard, which has missed its prospectus forecasts on revenue, profit and margins to book a $23.3 million net loss.

Stripping out share-based payments, transaction costs and other expenses associated with the company's float on the Australian share market in December 2015, Wellard made a pro-forma net profit of $14.8 million for the year to June 30.

Wellard had forecast a pro-forma net profit for 2016 of $46.4 million in its prospectus.

The biggest amounts dragging Wellard from pro forma profit of $14.8 million to statutory loss of $23.3 million were linked to the IPO, being: 

  • $18.6 million - one-off share issue by the pre-listed private holding company Wellard Group Holdings Pty Ltd at IPO and associated taxes to management
  • $8.2 million - one-off IPO listing costs
  • $7.6 million - adjustment to reflect the net interest expense reflecting the post IPO debt profile

Shares in Wellard were 5 cents, or 15.1 per cent, lower at 28 cents this morning, after emerging from an August 29 trading halt.

In a statement, Wellard also said Ms Warburton had resigned as a non-executive director of the company, while general counsel and company secretary Yasmin Broughton has also tendered her resignation.

Wellard acknowledges the contributions of Ms Warburton and Ms Broughton to the company and wishes them well in their future endeavours,” it said.

Managing director Mauro Balzarini said Wellard and its shareholders had endured a tough start to life on the Australian share market.

"A sharp reduction in cattle supply in Australia, combined with resultant record high cattle prices, significantly impacted the company's trading margins," he said.

"When combined with two vessel breakdowns and the delayed delivery of the M/V Ocean Shearer, it weighed heavily on our financial results."

Wellard said its gross margins was below prospectus forecast mostly because of unprecedented wet weather in northern Australia and a continued depletion in the Australian herd size.

This had significantly tightened the supply of Australia cattle and pushed up prices to record highs, which traditional South-East Asian customers were unwilling to accept.

Furthermore, the volumes of cattle sold were below prospectus forecast due to a delay in the commissioning of the transport vessel MV Ocean Shearer and mechanical failures on the MV Ocean Swagman and the MV Ocean Outback.

Crankshaft failures on the latter two meant that Wellard had to uses external vessels for several months.

On the positive side, Wellard made a $3.1 million gain from the depreciation of the Australian dollar against the US dollar.

Mr Balzarini said Wellard was now focused on getting through the current challenging livestock market landscape so that it could pursue opportunities when prices return to their normal trading range.

"That will be helped by entry of the M/V Ocean Shearer to Wellard's fleet which occurred in late FY2016 and the development of our South American operations," he said.

In 2016, Wellard shipped 424,972 head of slaughter, feeder and breeder cattle to customers in nine countries, and more than 23,000 sheep to customers in three countries.

It also shipped more than 6,600 tonnes of sheep meat to customers in more than 12 countries.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options