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Sealord auditor earmarks funding as potential bogey amid decline in profit

Friday 15th January 2010

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Sealord Group, the fishing company owned by Aotearoa Fisheries and Japan’s Nippon Suisan Kaisha, had its funding lines flagged by the auditor of its annual financial statement, with almost $173 million falling due in June this year.

The company posted a 6.1% fall in net profit to $22.8 million for the 12 months ended June 30, 2009, according to parent company Kura Ltd.’s annual report, filed with the Companies Office at the start of this month.

Still, revenue gained 5.2% to $584.9 million from the previous year, though lagged behind costs which rose 7.1% to $484.4 million.  

Sealord boosted its bank loans to $188.2 million as at June 30 from $149.1 million a year earlier. Its facilities of $172.9 million with HSBC, ANZ and Rabobank are due to expire on June 30 this year, though the company’s report said it anticipates this will be renewed “well before” this date.  

“The group is reliant on the continued financial support of the banks to extend financing on the relevant roll over date,” the company said in a note entitled Going Concern.

“To date the banks have not given any indication that they will call their debt or not extend their funding.” 

Still, auditor Ernst & Young flagged a “fundamental uncertainty” in its report, saying the validity of the company trading as a going concern “depends upon future funding being available.” 

Sealord director and chief executive of shareholder Aotearoa Fisheries, Jeremy Fleming, declined to comment, citing AFL’s upcoming annual meeting.  

The fisheries company slashed 130 jobs last year as it restructured its Nelson processing factory, and shed 323 jobs at its mussel factory a year earlier in another restructure.

Restructuring costs almost doubled to $10.6 million for the 12 months through June 2009 from $5.7 million a year earlier, though this was offset by cheaper wage costs of $80.7 million from $88.7 million in 2008.  

The company kept its dividend at 4.03 cents a share.

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