Certified organic and sustainable oyster producer Angel Seafood (ASX: AS1) has delivered the goods for the second time this calendar year, posting record sales of 3.2 million oysters and revenue of $2.5 million for the three months ending 30 June.
Sales for the quarter were up 50% on the previous corresponding period, while revenue was 54% higher, with a marginal increase in the average oyster price.
Cash receipts from customers totalled $2.8 million (up 67% on the previous period). Operating cash expenditure was $2.2 million and comprised stock purchases and costs relating to staffing, production, advertising and marketing, and finance.
Net operating cash flows were positive at $600,000, and the company closed the quarter with a cash balance of $2.5 million and liquidity of $4 million (including undrawn facilities).
Demand for Angel’s oysters from the restaurant sector remained strong during the June quarter before being impacted by COVID-19 lockdowns.
This is while demand from the retail sales channel continued to grow, facilitated by the availability of stock from Angel’s increased scale and stock biomass, as well as stock sourced under allied arrangements.
Ongoing investment in stock across Angel’s water leases along South Australia’s remote Eyre Peninsula saw biomass volumes increase 42% on the previous year to 532 tonnes.
This represents 30 million oysters on hand and positions the company well as the market heads into the warmer months.
Angel chief executive officer and founder Zac Halman said the operational investments had started to reap rewards.
“I am pleased that these investments have enabled [us] to grow our sales to match growing demand for our oysters,” he said.
“It was great to see a pickup in trade in the restaurant channel through most of the quarter, and we expect this demand to return once we get through the current lockdowns.”
Efficiencies and costs
Angel continued with several initiatives during the quarter to improve operating efficiencies and lower the cost of production.
The company continued its flipfarm trials with the first 30,000 square metres of flipfarms in the pristine waters of Coffin Bay, and a further 20,000sq m developed in nearby Cowell.
Bred in interconnected baskets that protect oysters from pests, predators and over-fouling, flipfarming reduces the need for human labour with basket chains that can be rapidly flipped and collected by a floating vehicle.
Both locations are now stocked and in operation.
“While some early productivity gains and labour efficiencies are apparent, further work is required to fully optimise our flipfarms,” Mr Halman said.
The summer oyster breeding trial, which commenced in December 2020, also continues to deliver strong survival rates with the crop on track for sale in early January.
Mr Halman said the oysters could extend Angel’s sales season from a current 10 months to the entire calendar year and boost annual sales by up to 15% with no additional capital expenditure.
Additionally, a successful trial outcome would strengthen Angel’s position within the market and guarantee a continuous supply over key festive periods including Chinese New Year and Valentine’s Day.
The subscription-based initiative gives members direct access to Angel’s oysters on a monthly basis, while creating a new high-value and recurring income stream for the company.
The initial phase of the roll-out is being trialled over three months with membership available to Angel’s shareholders and a select group of customers across Melbourne, Sydney and Adelaide.
“Feedback from our first deliveries has been positive and [we] will continue to refine the product offering and logistics alliances in preparation for a broader launch in spring,” Mr Halman said.
“Once operating at a commercial scale, we expect Hálo Club will generate a premium of up to 50% on comparative wholesale prices, in addition to cultivating brand loyalty and growing our retail channel.”
Also in June, Angel secured access to $50,000 in funding under the South Australian Government’s $2.2 million Global Expansion Program to further support its export aspirations.
The company was one of 20 businesses targeted for solid growth and potential to diversify or boost their presence in high-value markets such as South East Asia and the Middle East.
“The export of our premium organic oysters into [these] emerging markets is a significant part of our three-pillar growth strategy to increase scale and profitability,” Mr Halman said at the time.
“The [government] funding and assistance will help [us] to obtain professional services to gain insights into these markets and to establish new partnerships to accelerate our export efforts.”