Good afternoon ladies and gentlemen. It is my pleasure to welcome all shareholders – both growers and non-growers – to this third annual general meeting of Australia’s Oyster Coast Ltd and say what a pleasure it is to see you.
When the company was formed, nearly three years ago, the intent was to provide a commercial vehicle to enable growers to target export markets. That remains a major focus for the future but circumstances, and ultimately common sense, necessitated us concentrating first on the domestic market – to achieve critical mass, cover our costs, and gain expertise domestically that could then be applied overseas, probably in a different way from our initial export efforts.
I am pleased to advise shareholders that we are achieving our domestic objectives. We are now covering our costs. We have gained both market traction and reputation. We have introduced a level of marketing professionalism that has been absent in the past. And, most important of all, we are increasingly winning the respect of our grower shareholders which is being reflected in increasing oyster supplies to our company.
Last week we sold just over 11,000 doz oysters – our highest weekly sales volume yet achieved.
I have noted before that many growers initially sat on the fence and watched to see how the “new kid on the block” would perform. I understand that logic – I would probably have done the same if I were in a grower’s position.
Despite the goodwill which accompanied our formation, we presented as something of a leap of faith. For one thing, growers had established relationships which most would have been wary about severing – just in case we didn’t make it. For another, even though the rationale for the formation of the company was to enhance grower interests, a number of us were untested. And third, some past collective marketing attempts had not met with spectacular success, so scepticism may have been warranted on that score too.
Today, I think these reasons for caution have been comprehensively answered.
Demand for our product is steadily rising. In recent months, through winter, we could comfortably have sold an additional 3,000-5,000 doz in most weeks if supplies were available. Growers know that we have an outstanding management and marketing team, led by Mark Allsopp and Craig Smith. We are paying market prices. In addition, as we need constantly to stress, we meet the transport costs from farm to market, and the cost of bags, and we always pay growers every two weeks. And crucially, support from grower shareholders helps the company’s financial performance – and thereby, the prospects of future dividends and increasing share values.
We need even more grower support – and more product to market. What could be a more encouraging message?
This time last year, I announced the company’s intention to embark on a vertical integration strategy, via the acquisition of farming properties. At that time we had not worked out the precise form this would take, but we could already see supply shortages looming in Tasmania and South Australia, and demand running ahead of our capacity to meet it.
The response to this strategy from growers has generally been positive, although there have been isolated concerns that operating our own farms would mean less reliance on, or competition with, supplies from grower shareholders. I said then, and I repeat, the opposite is the case.
First, we have, as I’ve mentioned, struggled to obtain sufficient supply for most of this year. Operating our own farms underpins our supply security. But more importantly, being able to command larger, perhaps significantly larger, supplies strengthens our position in the marketplace, and helps to enhance the position of oysters on menus, from which everyone benefits. Aided by expanded scale, we want to become a price maker not a price taker.
We now own one farm – here at Wagonga – and are finalising purchase of another in the Shoalhaven. Negotiations remain active elsewhere. We are especially pleased that Gary Collison, one of the State’s finest growers, is keen to remain in an active management capacity at Shoalhaven for several years, while David Maidment is keen to take on a roving grower ambassador role. Later in the meeting we will screen a short video showcasing our new farms.
Associated with our vertical integration strategy, we are raising additional capital. A significant number of existing shareholders increased their investments in the company to the tune of about $1.5 million, which was gratifying.
Then we allocated bonus shares to existing shareholders at the ratio of 3 new shares for every 10 held. This was an important way of rewarding existing shareholders for their commitment at the outset when the company’s future was not assured – in other words, when the risk was greatest. Effectively, it means that initial shareholders now have 30 percent more shares that previously – or that the value of their initial shares has risen by 30 percent. This action demonstrates the company’s commitment to its shareholders.
The third phase in the capital raising program has been to approach potential external investors. As we expected, this has been a slow and somewhat tedious process. Mark, John Susman, Tony Curtis and/or I have given presentations to individuals and corporate entities, mainly in Sydney, Melbourne and Canberra. Most have endorsed what we are doing, even if for various reasons some have not, or have not yet, invested with us. These discussions continue and we remain optimistic that the company in its expanded form has a bright future.
During the 2016-17 financial year five additional growers became shareholders and we also welcomed seven new external shareholders. In addition, we issued modest quantities of shares to six of our employees under government-approved employee shareholding arrangements, as a reward for their hard work and commitment. We hope to do this each year.
Let me now turn to our recent performance and current operations.
Shareholders have received a copy of the 2016-17 audited annual accounts, the receival and consideration of which is an agenda item for this meeting. Last year, the company recorded a net loss of $241,000. This is slightly down on the $265,000 loss recorded the prior year. While obviously we are aiming to generate profits year-on-year, these losses were anticipated and reflect start-up costs as we built critical mass. At the end of the financial year, the balance sheet showed net assets of $1.9 million, after adjusting for accumulated losses.
Last financial year we marketed just over 200,000 doz oysters as the new management team settled into their stride. Our best trading month was March, while in three weeks in three different months sales exceeded 8,000 doz.
Our budget for the current year is more than double this – so quite ambitious. At the end of September we are running nicely ahead of budget. In the first quarter, we sold just on 100,000 doz – or half last year’s total. We exceeded 10,000 doz in one week in August, before supplies and the seasonal changeover constrained us. Last week, as I mentioned, we topped 11,000 doz. Mark will have more to say on our current operations.
Importantly, the marketing side of the company traded profitably in the first quarter. In addition, our Wagonga farm, which we owned for nearly two months of the quarter, also achieved a profit.
Our budget is to generate a profit for the full financial year and I look forward to reporting to you next year that we did so!
This year’s Narooma Oyster Festival, in May, was a great success and our company was pleased to co-ordinate several of the activities and assist individual growers display and sell their own oysters. 23,000 doz were sold on the day and a substantial group of journalists, assisted by Destination NSW, generated extensive positive publicity for the festival and the region.
Other notable successes during the year included:
• Darren Deeth’s win, with oysters submitted on his behalf by our company, of the NSW Delicious Produce award, a prestigious award voted on by leading chefs;
• an appearance on the Today Show by Sue McIntyre, Greg Carton and Pip and Dom Boyton;
• an appearance on Landline by Steve Feletti, featuring his oysters and matching wine; and
• just recently, the film Oyster, featuring Pip and Dom Boyton, winning the best environmental feature film at the Chesapeake Film Festival in the United States.
All these achievements help to build reputation for oysters and the region. We cannot have too many good news stories about our oysters and I look forward to further successes over the coming year.
Tourism numbers visiting Australia’s Oyster Coast, including visitors utilising the direct air services to Canberra Airport, are increasing. Early next year a second service, involving Qatar Airways, will commence services to Canberra Airport. The company is well plugged in to the economic development work being undertaken by the CBR Region Joint Organisation, which includes the Shires of Bega Valley and Eurobodalla.
At this year’s AGM, directors David Maidment and Tony Curtis are up for re-election. The remaining board members unanimously recommend their re-election. Brief biographical details were contained in the notice of meeting.
The past twelve months have been extremely busy for all concerned with Australia’s Oyster Coast. Our directors’ commitment of time and expertise is invaluable. I am most grateful to them as colleagues and for their determination to make our company a success. As I said earlier, our management, led by Mark Allsopp and Craig Smith is simply outstanding.
We have a growing team which includes Waite Derwent and Gerard Dennis ensuring the smooth flow of oysters through our Batemans Bay premises, Karen Maltby who handles the accounts and office administration, and Jason Nolte who manages our Wagonga farm. Without these people we would not have a business. I express my admiration and gratitude to them.
And finally I thank our shareholders for continuing, and in many cases increasing, their support for the company and its activities.
Overall, I think we can reflect on the past twelve months as a period of considerable achievement and consolidation which has set up the company for a successful future. The current financial year is crucial. We need to convert our efforts to date into tangible and sustainable profits. I am confident that we will do so.
10 November 2017