Tuesday, 25 September 2018


INTERIM: SEA: SeaDragon announces half year results

29 Nov 2017 15:29NZX

SeaDragon losses reduce as it builds Omega-3 sales
Sales progress is steady with 82 tonnes of Omega-3 product sold since March

o Sold 82 tonnes of refined Omega-3 tuna oil since March 2017
o Half-year revenue is $1.5 million from $3.1 million last year as
SeaDragon transitions to Omega-3 markets
o Half-year normalised EBITDA  losses of $2.2 million, narrower than
September guidance
o Half year net loss after tax improves to $2.7 million from $3.5
million in the prior year
o SeaDragon elects to draw down remaining $1 million loan note from
Comvita to lift working capital

New Zealand''s largest refiner and blender of high-quality fish oils SeaDragon
(NZX:SEA) today announced a narrowing in losses as it starts to establish its
presence in Omega-3 fish oil markets.

Revenue for the six months to 30 September 2017 reduced to $1.5 million from
$3.1 million the same time a year ago, although the composition of sales has
changed as the company has moved to establish its presence in Omega-3

Sales in the current half year are principally Omega-3 fish oils for trial
and commercial orders for new and existing customers, while the prior year''s
figures principally reflect the sales of legacy Omega-2 products.

Half-year normalised EBITDA losses narrowed 2.9% to $2.2 million from the
$2.3 million loss in the same period a year ago. Normalised EBITDA losses
were also slightly ahead of the guidance of $2.4 million to $2.7 million,
given at SeaDragon''s annual shareholders meeting held in September.

In the current period normalised EBITDA has been calculated including
inventory impairments, which are now treated as a normal part of the ongoing
business. If inventory impairments were excluded in the current period,
normalised EBITDA would have been largely unchanged on the prior year.

Operating costs continue to exceed sales, but SeaDragon continues to work
hard to achieve a breakeven position, which (as signalled at the AGM) will be
achieved when the company sells 600 to 700 tonnes of fully refined tuna oil
(at current market prices, exchange rates and costs) in a single 12-month

The half year net loss after tax for the year narrowed 24.2% to $2.7 million
from the $3.5 million loss in the same period of the prior year, when the
company was exiting Omega-2 markets.

SeaDragon Chairman Colin Groves said: "SeaDragon is beginning to establish a
position in Omega-3 markets. Since the start of the financial year we have
sold 82 tonnes of Omega-3 product to customers. We are working hard to secure
additional orders in the near future.

Sales momentum is obviously not as strong as the board or shareholders would
like, but we are confident the steps we are taking will set up SeaDragon for
the long term."

We believe that the Company has sufficient capital to achieve its immediate
growth plans as long as we deliver on sales expectations. As at 30 September
2017 SeaDragon had net cash on hand of $2.29 million.  The board has taken
the strategic decision to draw down the remaining $1 million available under
Comvita''s convertible loan note facility.

Mr Groves said "The draw down of the remaining $1 million gives us the
flexibility to build sufficient inventory ahead of anticipated large orders
and gives our customers greater assurance over order fulfilment. We are
fortunate to have the backing of shareholders such as Comvita who share our
vision for success in Omega-3 markets. The Board continues to monitor the
Company''s capital requirements on an ongoing basis."

Focus on sales

SeaDragon Chief Executive Dr Nevin Amos said a key focus of the last six
months had been to build awareness of SeaDragon''s capability among global
Omega-3 refiners and supplement manufacturers and to build sales:

"SeaDragon offers these customers a highly-agile plant that can provide fast
turn-around industrial-scale production runs that complement their large
mega-scale refineries. We are principally refining tuna oil which is valued
for its high concentrations of Omega-3 and DHA in particular.

We continue to maintain a dialogue with a further 29 potential customers, who
have either tested, or are testing, our oils and we are working to expand the
pipeline of potential customers.

Although we have achieved sales of 82 tonnes to globally significant
customers, progress is slower than we expected. As we indicated at the annual
shareholder meeting held in September, we estimate that the typical lag
between a customer indicating that they are interested in SeaDragon supply,
and making a commercial order, is 6 to 18 months."

SeaDragon is also making progress in building a sales pipeline in Europe,
where - until very recently - complex and changing standards and import
regulations had presented an insurmountable barrier.

SeaDragon continues to explore ways to migrate to the highest value niches of
Omega-3 markets. To this end, we have agreed with third parties to contract
manufacture ethyl esters and re-esterified tri-glycerides. We have also
negotiated a global exclusive license for manufacture and sale of tuna and
hoki liposomal powders and emulsions.

"These agreements, although unlikely to contribute to sales and earnings
materially in the short-term, are putting in place the elements that will
assist SeaDragon to grow over the long term," Dr Amos said.

Finally, SeaDragon remains confident the unrefined oil supply agreements in
place are sufficient to meet its supply requirements in the immediate future.


SeaDragon continues to make steady, but slower-than-expected, progress. It is
confident it is putting in place the foundations for sustained growth over
the long term.

"We continue to work with potential and existing customers to secure sales to
drive the company towards breaking even. We believe the additional capital
drawn down under the Comvita convertible loan facility will assist us to
achieve that goal," Mr Groves said.

"The final outcome for the year to 31 March 2018 is obviously linked to
securing new customers and making further sales to existing customers.
SeaDragon will update shareholders on its progress."

For further information, contact:

Colin Groves
Tel: +64 21 928 003

About SeaDragon: www.seadragon.co.nz
SeaDragon Limited (NZX:SEA) is New Zealand''s largest refiner and blender of
high-quality, internationally certified concentrated fish oils and fractions,
including Omega-3 oils. Our oils are sourced from fish caught in the clean
and pure waters around New Zealand, in the Southern Ocean, and elsewhere. We
have more than 20 years'' experience processing fish oils and we are
recognised for the quality and purity of our products. We supply health
supplement manufacturers around the world to meet the burgeoning demand for
pure, high-quality fish oils, which are scientifically proven to deliver
significant human health benefits such as lowering the risk of heart disease,
improving brain function and joint health. The majority of our supply is
End CA:00311147 For:SEA    Type:INTERIM    Time:2017-11-29 15:29:37
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