A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the Group in the next reporting period and the next 12 months
The abalone industry is at the moment at the low end of the cycle as a result of the recent wave of austerity measures implemented by the central government. Abalones, like other luxury consumer goods, are more severely affected by these measures. Demands by sea farmers for juvenile abalones to grow out as well as live abalones for the consumer market have been depressed and prices have weakened. This trend is expected to continue at least for the rest of the year.
While the Group has a successful breeding season as reported in 1Q 2013, the many juveniles raised did not sell well as planned in 2Q 2013 due to poor demands. Given the current overcast on the industry, the Group could only select the better 250 million juveniles for further growth without putting more pressures on tank capacity and funding while culling the rest. To better utilize the available funds and farm resources, the GM and CFO were tasked to review and submit the latest 12 - 24 months rolling sales plan and cash flow forecast so that the Group can re-look at its current strategy and make modifications where necessary.
With the industry at its worst performance, consolidation is bound to happen and this can be viewed as an opportunity to profit for those enterprises that survive this episode.
To augment operations and for top management as well as the Board to have a better grip of the business with greater transparency and information flow, the Group has identified a Chief Operating Officer and a Chief Risk Officer to be based in China as necessary positions to have. The candidates will soon be announced.
Following the AGM of the Company on 31 July and changes to directors at the Board level, the Group was notified of substantial and abnormal mortalities in the few days after the AGM. The details of this sudden trigger of events were announced via SGXNet on 11 August 2013. The Company is vigorously investigating into the cause and current situation of this event and trying to verify the information relayed up to this point to the Board. The Group will make timely announcements to update shareholders on this adverse matter as and when appropriate.
