WELLARD LIMITED For personal use only
Appendix 4D
WELLARD LIMITED
ABN 53 607 708 190
Half-Year Report
Results for announcement to the market for the half-year ended 31 December 2021
The information that is required by the Australian Securities Exchange Listing Rules is as follows:
- The reporting period is to 31 December 2021 and the previous corresponding period is to 31 December 2020.
- Results for announcement to the market:
Current | Change | Change | |||
from prior | from | ||||
period | |||||
period | prior period | ||||
US$'000 | US$'000 | % | |||
2.1 | Revenues from ordinary activities | 23,204 | 4,988 | 27.4 | |
2.2 | Profit/(loss) from ordinary activities after | 500 | 2,100 | 131.3 | |
tax attributable to members | |||||
2.3 | Net profit/(loss) for the period attributable | 500 | 2,100 | 131.3 | |
to members | |||||
2.4 | Dividends (distributions) | Nil | Nil | Nil | |
3. | Net tangible assets per security: | ||||
31 Dec 2021 | 31 Dec 2020 | ||||
US$ cents | US$ cents | ||||
3.1 | Net tangible assets per ordinary security | 8.0 | 7.2 | ||
- There were no entities over which control has been gained or lost during the period.
- No dividends were paid during the period.
- The Company does not have a dividend re-investment plan.
- The Company does not have any associates or joint venture entities.
The reviewed financial statements for the half-year ended 31 December 2021 are attached to this Appendix 4D.
For personal use only
M/V Ocean Drover unloading in Tianjin port, China on 23rd January 2022.
WELLARD LIMITED
ABN 53 607 708 190
INTERIM FINANCIAL REPORT
For the half-year ended 31 December 2021
For personal use only
Interim Financial Report
For the half-year ended 31 December 2021
Directors' Report
The Board of Directors of Wellard Limited (the Company or, together with the entities it controls, the Group) submits its financial report in respect of the half-year ended 31 December 2021.
The Directors of the Company in office during the half-year and at the date of this report are:
Name | Position | Appointed |
John Klepec | Executive Chairman | 3 August 2018 |
Philip Clausius | Non-Executive Director | 19 November 2015 |
Kanda Lu | Executive Director | 12 May 2017 |
John Stevenson | Non-Executive Director | 22 November 2019 |
The Company Secretary of the Company in office during the half-year and at the date of this report is Michael Silbert.
All amounts are presented in United States Dollars unless stated otherwise.
Review and Results from Continuing Operations
FOR HALF-YEAR ENDED 31 DECEMBER (US$'000) | 2021 | 2020 | Movement | |||
Revenue | 23,204 | 18,216 | 27.4% | | ||
Chartering1 | 23,116 | 17,998 | 28.4% | | ||
Other revenue | 88 | 218 | (59.6%) | | ||
Gross profit | 8,395 | 5,688 | 47.6% | | ||
General and Administrative expenses | (2,131) | (2,263) | (5.8%) | | ||
Other losses from trading and chartering activities | - | (8) | (100.0%) | | ||
EBITDA2 | 6,264 | 3,417 | 83.3% | | ||
Other (losses)/gains from other activities | (226) | 57 | (496.5%) | | ||
Depreciation and amortisation expenses | (5,078) | (4,484) | 13.2% | | ||
EBIT | 960 | (1,010) | 195.0% | | ||
Net finance costs | (457) | (588) | (22.3%) | | ||
Income tax expense | (3) | (2) | 50.0% | | ||
Profit/(loss) from continuing operations after tax | 500 | (1,600) | 131.3% | | ||
Profitability analysis | ||||||
Gross Profit margin | % | 36.2 | 31.2 | 16.0% | | |
Operating Profit margin | % | 27.0 | 18.8 | 43.6% | | |
Interest coverage3 | Times | 13.7 | 5.8 | 136.2% | | |
Net operating cashflow | US$'000 | 2,069 | 1,906 | 8.6% | | |
AS AT | 31 Dec 2021 | 30 June 2021 | Movement | |||
Balance Sheet analysis | ||||||
Current ratio | Times | 0.9 | 0.8 | 12.5% | | |
Net tangible assets | US$'000 | 42,590 | 41,808 | 1.9% | | |
Net tangible assets per security (US$) | Cps | 8.0 | 7.9 | 1.3% | | |
Net Debt4 | US$'000 | 6,370 | 7,283 | (12.5%) | | |
Debt to capital ratio5 | % | 19.7 | 24.4 | (19.3%) | | |
Ship loan to asset book value ratio | % | 19.9 | 25.5 | (22.0%) | |
- Chartering revenue refers to external chartering activity and excludes revenue arising from intercompany transactions.
- EBITDA equals profit/(loss) from continuing operations before income tax, less depreciation and amortisation expenses, less net finance costs, less other gains/(losses) arising from other activities and less impairment expenses.
- Interest coverage equals EBITDA divided by net finance costs.
- Net debt equals loans and borrowings less cash and cash equivalents.
- Debt to capital ratio equals loans and borrowings divided by total equity plus loans and borrowings.
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For personal use only
Interim Financial Report
For the half-year ended 31 December 2021
Financial Review
Unless otherwise stated, all amounts in this Interim Financial Report are presented in US$ whilst all comparisons are in relation to the previous corresponding period ("PCP").
Despite another challenging half-year, marked by a further decline in live cattle exports from northern Australia and the continuous increase in bunker fuel price, Wellard is reporting a net profit after tax of US$0.5 million for the half-yearended 31 December 2021 ("H1 FY22") (H1 FY21: net loss after tax of US$1.6 million), continuing last financial year's positive trend.
The result includes a non-cash depreciation and amortisation expense of US$5.1 million (H1 FY21: US$4.5 million), primarily relating to the depreciation of two of the Group's vessels (M/V Ocean Ute and M/V Ocean Drover) and including the depreciation of right-of-use assets (including the M/V Ocean Swagman) amounting to US$1.3 million (H1 FY21: US$1.4 million) arising from the application of AASB16 'Leases' from 1 July 2019.
Wellard recorded a 27.4% revenue increase to US$23.2 million (H1 FY21: US$18.2 million) as a result of effective commercial strategy and excellent fleet availability. The percentage of technical off-hiredays in H1 FY22 (4.9% or 27 days) was noticeably lower than in H1 FY21 (21.4%) when the M/V Ocean Ute spent 81 days off-hiredue to an extended dry dock. In absolute terms, Wellard's vessels recorded a cumulative 27 off-hiredays out of 552 available days during H1 FY22, compared to a cumulative 118 off-hiredays out of the 552 available days in H1 FY21. In H1 FY22, external chartering activities absorbed the total shipping capacity and represented 99.6% of the Group's revenue.
The efficient utilisation of available shipping capacity contributed to a continued gross profit margin improvement, which increased by 16.0% to 36.2% (H1 FY21: 31.2%). The COVID-19 pandemic continued to negatively impact our operations with regulatory restrictions and logistics challenges, requiring our vessels to incur more expensive and time-consuming deviations to complete crew changes in ports outside our trading routes. This also has an opportunity cost as it reduces the number of voyages a vessel can complete in the six months.
The general and administrative expenses marked a slight reduction of 5.8%, or US$0.1 million, in the first six months of FY2022, settling at US$2.1 million.
EBITDA from continuing operations - defined as earnings from continuing operations before the impact of income tax, depreciation and amortisation expenses, finance costs and excluding other gains or losses from other activities and impairment expenses - increased by US$2.8 million or 83.3% to US$6.3 million (H1 FY21: US$3.4 million) with a consequent increase of 43.6% in operating profit margin to 27.0% (H1 FY21: 18.8%).
Net finance costs recorded a further reduction of 22.3% or US$0.1 million in the first six months, falling to US$0.5 million (H1 FY21: US$0.6 million), which, coupled with a robust EBITDA, drove a significant interest coverage improvement to 13.7 times (H1 FY21: 5.8 times).
On 31 December 2021, net debt reduced by US$0.9 million to US$6.4 million (30 June 2021: US$7.3 million), and now
represents 19.7% (30 June 2021: 24.4%) of the Group's capital ratio while total ship debt represents 19.9% (30 June 2021: 25.5%) of the book value of the Group's shipping assets.
At the completion of the half-year, Wellard had cash and cash equivalents of US$4.4 million (30 June 2021: US$6.7 million) and maintained a US$4.0 million trade facility with a financial institution in Singapore to fund ship operating costs and foreign- exchange transactions, which as of 31 December 2021 was utilised for US$1.6 million. The Group also retains with the same financial institution a US$5.0 million facility for commodity swaps to hedge against bunker price swings, which was not utilised as of 31 December 2021, nor was it at 30 June 2021.
In early January 2022, and therefore subsequent to the relevant accounting period, Wellard announced that it had successfully resolved its arbitration proceedings in London against the Croatian Bank for Reconstruction and Development (Hrvatska banka za obnovu i razvitak, or "HBOR"). On 17 January 2022, Wellard received from HBOR the payment of US$12.0 million as a refund of our advance payments made together with interest in respect of the terminated contract for the building of a planned livestock vessel with Uljanik dd shipyard.
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For personal use only
Interim Financial Report
For the half-year ended 31 December 2021
Financial Review (continued)
Also, in late January 2022, Wellard agreed with Ruchira Ships Limited ("Ruchira") to defer the repurchase of the M/V Ocean Ute from the amended date of 25 January 2022 (the original date was 24 December 2021) to 30 June 2022. Additionally, Wellard has agreed with Ruchira to bring forward the repurchase of the M/V Ocean Drover to the same amended date as the M/V Ocean Ute, 30 June 2022 (original date was 16 December 2022). Documentation for these changes is being finalised.
The Group made all payments due under its working capital facility, ship financing facilities and lease agreements during the reporting period. The Group maintains a good working relationship with all financiers and remains in full compliance with all of its financial covenants.
Operational Review
During H1 FY22, Wellard loaded 11 external cattle voyages to the following destinations:
- 3 voyages from Australia to Southeast Asia;
- 4 voyages from New Zealand to North Asia;
- 2 voyages from Australia to North Asia; and
- 2 voyages from South America to North Asia.
Wellard had no reportable mortality incidents and recorded a total voyage success rate of 99.9%, delivering 82,249 animals. Its last reportable mortality incident was in December 2017.
All vessels were fully available during the half, however utilisation began to taper in December 2021 as cattle exports, and therefore demand for vessels, slowed further than the normal wet season decrease for the northern Australian feeder and slaughter cattle trade, and for breeder cattle orders from southern Australia and New Zealand.
There has been a significant fall in all Australian live cattle exports, from 1.01 million head in CY2020 to 771,000 in CY2021, a 24 per cent reduction.
Comparing H1 FY22 to H1 FY21, overall cattle exports (slaughter, breeder and feeder) from Australia fell even further, reducing by 27%, from 455,740 head to 334,417 head6.
In light of this challenging trading environment, Wellard was pleased that it was still able to record a US$0.5 million profit for the half. This was assisted by good vessel availability and Wellard's decision in the latter half of H2 FY21 to lock in forward- dated charters early in H1 FY22.
Breeder cattle exports from Australia to North Asia dropped by 38% Year on Year ("YoY"), from 62,051 head in H1 FY21 to 38,487 cattle in H1 FY22. This was in part driven by reduced supply of breeding heifers in Australia and better availability in New Zealand.
The restricted availability of cattle in northern Australia, combined with purchase prices which rendered the cattle largely uneconomic for Indonesia importers, prompted export numbers in that market in H1 FY22 to drop to 170,900 head. This was a relatively mild fall of 14% compared to other markets, as export numbers to Indonesia in the period were aided by the annual change in the date of the Islamic festival of Ramadan, a high consumption period, which prompted an increase in shipments in December so the cattle could be fed for 100 days prior to sale on or around April 2nd. Last year's Ramadan date required shipments in January 2021.
6 All Australian industry statistics provided by the Federal Department of Agriculture, Water & Environment.
Refer specifically tohttps://www.awe.gov.au/sites/default/files/documents/all-livestock-exports-2016-2021_0.xlsx
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Wellard Ltd. published this content on 21 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 February 2022 21:30:02 UTC.
