Abagold in red tide sales alert
The abalone farming venture warns shareholders it is still assessing red-tide impact
Unlisted abalone farming venture Abagold has warned shareholders it is still assessing the effect of a recent red-tide event close to its Hermanus facilities.
According to a recently released interim report, the red tide, which can contaminate sea life, had prompted the company to skip its interim dividend despite an 81% increase in operating cash flow to R37m in the six months to end December.
Writing in the interim report, Abagold chairman Hennie van der Merwe said it was regrettable the highly satisfactory and smooth ongoing performance of the company was "meaningfully disrupted" after the close of the interim period by the abalone farm being hit by the worst red tide in recorded history on the Western Cape coastline.
Van der Merwe said the red tide was exceptionally high in volume and density. "It impacted severely on abalone and lasted for several weeks during the latter part of January and the first weeks of February 2017."
He said that despite great efforts to battle the natural disaster, the company suffered substantial spat and abalone mortalities with the growth rate of surviving abalone also being negatively affected.
"This will have a significant negative impact on our ability to satisfy demand over the next six months," he said.
Abagold said it would only consider dividends again at the end of the financial year (to end June), after assessing the effect of the red tide event on spat and abalone mortalities, growth loss and reduced future growth as well as lower sales.
Van der Merwe said Abagold was not yet able to measure or estimate the full effect of the red tide accurately.
"This may only become possible over the next few months, and we will advise shareholders further once we have a better idea of the extent and impact of this event."