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Sealord Pushes Strong Year for Maori Fishing Co

NEW ZEALAND - Aotearoa Fisheries Limited performed strongly for the year ending 30 September 2006 and looks set to deliver a stronger result for the current financial year, the chairman of AFL Rob McLeod told shareholders at the annual meeting at Pipitea Marae in Thorndon, Wellington, today.

In the first full-year report for the company, AFL posted a net surplus for the year of $16.5 million, almost $2m higher than predicted and $3m above the previous year. AFL’s major investment, Sealord, of which AFL is a 50 percent shareholder, reported sales of more than $600m for the first time and the company returned to AFL a Net Profit after Tax of $12.3m.

Mr McLeod told shareholders that global demand had been strong during the year translating into good pricing for wetfish, lobster, eels and oysters – all key products for AFL businesses. It was also a solid year for abalone. “There are signs in the market place of a shortage of wild caught white fish species as many countries reduce quotas on key species, and this should provide opportunities for AFL,” he said.

The strong New Zealand dollar and surging oil prices were of major concern however the recent pullback in fuel prices was a welcome relief, he said.

Directors were very pleased with the Sealord result for the period ending 30 June 2006. Sealord posted a Net profit after tax of $24.8 million. This result was achieved through excellent sales and strong prices for many species.

“Sealord success has been driven by a strategy of expanding its global reach, targeting best value for its product and facilitating growth in purchasing supply,” Mr McLeod said.

A major initiative undertaken during the year was the purchase of a 35 percent shareholding in Denmark-based seafood and distribution company, Nordic Seafoods. This company has in excess of $NZ100m per annum in sales. Coupled with Sealord’s other European and United Kingdom operations, this company now has an interest in almost $NZ500m in European and UK sales. This is an extremely strong base from which to expand into emerging Eastern European countries.

Other key growth initiatives for Sealord were a $10m upgrade of the UK factory at Caistor and the purchase of the remaining 50 percent of Sealord’s farm servicing business Elaine Bay Aquaculture, which is now a wholly-owned Sealord business.

During the year Sealord launched a new joint venture mussel processing plant in Tauranga, which is jointly owned by Sealord, Sanford and Vela Fishing Ltd and the company invested $16m in a large parcel of quota including alfonsino and various inshore species.

Despite the global results, a number of significant negative issues had to be dealt with at home. Government driven costs are an unwelcome burden upon the seafood industry. Issues such as the extra week paid holidays, continually escalating compliance costs, ACC costs, wage rates on foreign charter vessels and the list goes on.

AFL believes Government decisions to close fishing areas through large marine reserves have not been based on science. Similarly, calls to ban deepwater trawling are based more on emotional arguments than science.

To find some way forward on this issue, AFL and Sealord were both involved in the industry initiative to set aside 31 percent of the EEZ from bottom trawl fishing. “It is disappointing that this bold and carefully designed conservation initiative has not received Government endorsement. However, it demonstrates the industry willingness to respond to issues and meet its legislative responsibilities through direct action,” Mr McLeod said.

A major concern that has continued through to the current financial year has been the lack of aquaculture development. “The changed legislation has not facilitated the level of development promised. In the two years since the legislation was amended, no new aquaculture management areas have been introduced. Gaining access to new areas under the new AMA provisions has turned out to be complex, protracted, risky and expensive,” Mr McLeod said.

“This has been a double disadvantage for Maori. Not only have we not been able to take advantage of global shellfish prices, but the full extent of the aquaculture settlement agreed between Maori and the Crown has not been delivered by the Government.”

Mr McLeod outlined to shareholders the AFL Business Plan for the 2006/07 financial year.

AFL is planning for a net surplus of $23.6m for the year ending 30 September 2007. “Having achieved a mix of a strong balance sheet and EBIT growth we are now well placed to consider investment opportunities to enhance the overall business,” Mr McLeod said.

“During the year we plan $4.4m in capital expenditure projects which include the purchase and conversion of our Awatoto site at Napier into a new lobster depot and the purchase of new additional waterspace for our oyster business,” he said.

AFL expects to realize more than $3.7m from the sale of its existing Napier site, and it will continue with a strategy of buying quota parcels complementary to its existing business.

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