Ocean Grown Abalone Limited (ASX: OGA) develops and produces abalone. The Company grows and feeds abalone by building artificial abalone ranches. OGA operates in the regions of Australia.
The company, today on 22 March 2019, has come out with an update on the allegations that have been put on it by 888 Abalone Pty Ltd (888 Abalone) regarding the companyâs anticipation of breaching a Supply Agreement with 888 Abalone.
On 20 March 2019, the company had received a letter from lawyers representing 888 Abalone alleging it's conduct in announcing that it is taking steps to examine options for the future development of an onshore abalone hatchery and grow out facility, constitutes an anticipatory breach of the Supply Agreement.
The company has obtained preliminary legal advice on the allegations made by 888 Abalone, and considers the charges by 888 Abalone to be without foundation, and has instructed its lawyers to respond to 888 Abalone accordingly. The company intends to continue to comply with all of its contractual obligations under the terms of the Supply Agreement and to continue with its negotiations and studies as outlined in the announcement dated 27 February 2019.
On the financial performance front, the company has lately released its results for the six months to December 2018. The operating profit before tax for the half year was $1,125,461 compared to a loss of ($1,420,548) in H1FY18. The improvement in profits was primarily due to an increase of $3,083,513 in fair value of the biomass and total weight to 211 tonnes, an increase of 80.4 tonnes in commercial grade abalone above 90 mm. Diving, vessels and operating expenses reduced by $341,801 as the business moved from a construction phase into an operating phase. Corporate and administrative costs decreased by $153,809 to $501,542 while selling, and distribution costs increased by $79,225, as the company increased its selling and marketing activities.
The Board and management are focused on further increases in revenue and are well placed to achieve this goal with the strong biomass. This will also support sales growth aspirations, brand development and market expansion, particularly in Asia. The company looks forward to the completion of the new processing facility by June 2019. This will provide the Company with further value-adding product opportunities, increased efficiencies in operations and the ability to meet future harvesting volume increases that are currently constrained by existing facilities. The Company continues to expand and optimise existing processes to increase production. The Company will also focus on growth in other value-adding areas within the abalone industry.
On the price-performance front, the stock has posted the YTD return of 33.33%. The company also has posted returns of 28.57% over the past three months. At the time of writing (22 March 2019 AEST 04:00 PM), the stock of the company was trading at a price of A$ 0.17, down by 5.556% during the dayâs trade with a market capitalisation of ~A$ 31.34 Mn. The stock opened the day at A$ 0.165 reached the intraday high of $ 0.170 and touched an intraday low of $ 0.160, with daily volume of ~ 265,919. It had a 52-week high price of $ 0.220 and a 52 weeks low price of $ 0.120, with an average volume of, 89,938 approximately.
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