Extracted from Annual Report 2010
Dear Valued Investors,
On behalf of your Board of Directors ("Board"), I am pleased to deliver the annual report for PARD for the financial year ended 28 September 2010 ("FY2010").
The Group has been able to achieve steady growth over the past decade, bolstered by stable earnings from its frozen fish supply chain management division and strong growth from its fishing division. In FY2010, PARD delivered a combination of continuous growth and increased profitability. Gross profit grew by 18.1% from HK$1,549.8 million to HK$1,830.0 million, while net profit grew by 10.5% from HK$996.4 million to HK$1,101.2 million. With our continued focus on enhancing efficiency, the Group's gross margin and net margin improved to 24.6% and 14.8% respectively.
The Board of Directors has recommended a first and final dividend of 1.38 Singapore cents per share (FY2009: 0.60 Singapore cent). This amounts to a total dividend payout of HK$256.4 million, compared to HK$92.6 million in FY2009. Shareholders will also be offered the option of receiving their dividend in the form of new shares.
Operations review
During the year, the Group maintained its strategy of building market share in existing markets, and penetrating new markets to access plentiful but underutilised fish resources. Our fishing division increased its fishing quota share in the North of Peru to 6.05% and in the South of Peru to 10.91% through acquisitions of 2 Peruvian fishing companies in May 2010. This will enable the division to increase its production volume of fishmeal and fishoil in the coming year. Also, FY2010 has been our first full-year of fishing operations in the South Pacific. During the year, the Group also expanded its presence in Africa, an increasingly important market to the Group both from a sales and supply perspective.
A high priority in FY2010 has been to improve operational efficiencies and utilisation, enabling both the frozen fish SCM and fishing businesses to achieve lower operating costs and higher fleet utilisation during the year. The frozen fish SCM division acquired two additional transportation vessels, each able to carry 7,500 tonnes of cargo per voyage. With the deployment of additional vessels, we are able to lower per unit cost of transportation and reduce our reliance on third party chartered vessels, enhancing delivery efficiency.
Meanwhile, the Group's fishing division saw success from its South Pacific operating model during the year, which enabled the fleet to operate more efficiently with lower crew costs and reduced energy use. In Peru, we were also able to reduce operating costs and improve utilisation in our fishmeal operations by closing 2 fishmeal plants and reducing the number of vessels in operation. The North Pacific operations also benefited from higher operating efficiencies through streamlining the number of vessels in operation.
Our strategic acquisitions in Peru as well as China Fishery's US$150 million placement to the Carlyle Group during the year have placed the Group in a better position than ever to capitalise on positive market opportunities and to deliver sustained profitability for the financial year ahead.
Outlook and Prospects
The Group remains positive on the market outlook as global demand for fish continues to grow in line with rising affluence, increasing population and rising health consciousness against a backdrop of limited supply. FY2010 was a year of improved profit margins and the Group is optimistic about the growth potential of both its fishing business and frozen fish SCM business for FY2011.
According to the Food and Agriculture Organisation (FAO), global demand for seafood will continue to outpace the growth in supply. The FAO also expects total per capita consumption of fish in the People's Republic of China ("PRC") to rise by 30% between now and 2030. This bodes well for the Group, given that the PRC continues to be our most significant market by revenue contribution. Amidst a limited supply of wild catch, this rising demand points to a steady rise in fish prices in the long run.
While global demand continue to look promising, cost management remains important and PARD will continue to pay keen attention to efficiency improvement. During the South Pacific non-fishing season, the Group plans to keep its South Pacific fleet fully deployed in Mauritania, a rich fishing ground in West Africa, to catch sardines and horse mackerel. The Group also plans to upgrade its North Pacific fishing fleet and continue to streamline its Peruvian fishing fleet and fishmeal processing plants to augment efficiency gains.
At PARD, we remain strategically focused on being the leading global supply chain manager and developer of quality and sustainable fish resources and are committed to continuous improvement of our business capabilities.
Acknowledgement
I would like to express my sincere thanks to my fellow Directors for their invaluable guidance and commitment in 2010.
Finally, on behalf of the Board, I would like to extend my gratitude to our shareholders, customers, business partners, advisers and bankers for their ongoing support, and in particular to our employees, for their contributions and diligence over the past year. With your continued support, we look forward to delivering another year of healthy growth.
Ng Joo Siang