New Zealand Coastal Seafoods reports a sharp reduction in losses following the closure of its New Zealand operations and reveals promising initial fishing results in the Coral Sea. The company is actively exploring commercial opportunities for its Coral Sea Fishery permits and a potential acquisition to boost future revenues.
- Closure of New Zealand operations reduces net loss to $108,109 in FY24
- Successful initial explorational fishing trips in the Coral Sea by vessel Cody Star
- Company investigating commercialisation opportunities for Coral Sea Fishery permits
- Potential acquisition under consideration to enhance revenue streams
- Cash position supported by controlled expenses and available financing facilities
Operational Shift and Financial Improvement
New Zealand Coastal Seafoods Limited (ASX: NZS) has reported a significant turnaround in its financial performance for the year ended 30 June 2024, with net losses narrowing dramatically to $108,109 from $2.62 million the previous year. This improvement follows the strategic closure of its New Zealand subsidiary, a move aimed at stemming ongoing losses that had persisted since 2019.
The liquidation of the New Zealand operations was conducted transparently and without anticipated future liabilities, allowing the group to strengthen its net asset position to $1.28 million. This decisive action underscores the company's commitment to prudent financial management amid challenging market conditions.
Promising Coral Sea Explorations
On the operational front, the vessel Cody Star has completed its initial explorational fishing trips in the Coral Sea, yielding highly encouraging results. The company confirmed substantial fish stocks, including prized species such as Coral Trout, Bar Cod, and Flame-Tail Snapper, within the vast Coral Sea Fishery (CSF) area spanning nearly 990,000 square kilometres.
These early explorations have only covered a fraction of the CSF, suggesting considerable untapped potential. The company is now focused on further exploration and mapping to fully realise the value of its CSF permits, which are considered valuable assets in the premium seafood market.
Strategic Commercialisation and Growth Prospects
New Zealand Coastal Seafoods is actively investigating various pathways to commercialise its Coral Sea Fishery permits. This includes exploring partnerships, licensing arrangements, or direct commercial fishing ventures to capitalise on the rich marine resources identified.
In parallel, the Board is evaluating a potential acquisition that aligns with the company’s core business and could generate substantial revenue and profit growth. While details remain confidential, this strategic move signals management’s intent to diversify and strengthen the company’s revenue base beyond its current operations.
Financial Position and Funding
Despite a net cash outflow from operating activities of $128,000 for the quarter ended 30 September 2024, the company maintains a cautious approach to expense management, preserving cash reserves. At quarter-end, cash and cash equivalents stood at $24,000, supplemented by $1 million in unused secured financing facilities, providing an estimated eight quarters of funding runway at current operating cash burn rates.
However, the company disclosed a delay in receiving $270,000 in committed funds from two sophisticated investors via a convertible note subscription, a development that will be closely monitored by the market.
Outlook
New Zealand Coastal Seafoods is positioned at a pivotal juncture. The successful initial Coral Sea explorations and the strategic closure of loss-making operations have set a foundation for potential growth. The coming months will be critical as the company advances its commercialisation efforts and evaluates acquisition opportunities, which could redefine its growth trajectory in the premium seafood sector.
Bottom Line?
NZS’s next moves on Coral Sea commercialisation and acquisition will be key to sustaining its turnaround momentum.
Questions in the middle?
- What specific commercialisation strategies will NZS pursue for its Coral Sea Fishery permits?
- How will the delayed investor funding impact short-term operational plans?
- What is the nature and scale of the potential acquisition under consideration?