INDUSTRY SNAPSHOT

Aquaculture in Australia
A snapshot of the key statistics and current industry performance in the aquaculture industry
in Australia.
November 2016
 KEY STATISTICS INDUSTRY SNAPSHOT
AQUACULTURE IN AUSTRALIA
Revenue
$1.0b The Aquaculture industry in Australia consists of operators who fish, trowel, breed and
farm fish, molluscs and crustaceans. The industry is in the mature phase of its life cycle,
with revenue growth slowing and becoming less volatile. Despite the mature phase of the
industry, demand for seafood is expected to grow due to the ongoing health consciousness
among consumers and higher disposable incomes in Australia. However, the increased
Profit
$122.5m pressures from imports will weaken the demand for local producers in Australia. Australia’s
signing of free-trade agreements, particularly in Asia, has increased the amount of
imported seafood in Australia further. Exports have decreased as a result of high supply in
overseas markets.

Annual growth
(2011-2016) 0.8% CURRENT INDUSTRY PERFORMANCE
The aquaculture industry has grown at a slower rate than expected over the last five years.
1. Domestic demand for seafood has increased over the past five years. This is primarily due to the rise in
disposable incomes allowing consumers to continue purchasing seafood products despite increasing

1.7%
Projected growth prices of seafood. The ongoing health consciousness of consumers has also supported the consumption
of seafood in Australia.
(2016-2021)
2. Although domestic consumption has increased, imports from Asia, particularly from China and Indonesia
have negatively affected demand from key downstream markets such as seafood processing and retail
markets.

3. A higher Australian dollar over much of the past five years has made exports less competitive in the
Exports
$28.3m global market. This has constrained the export earnings potential for the
industry.

4. The aquaculture industry is expected to grow at a faster rate over the next
five years despite the increased pressures from importers. The domestic
demand for seafood will continue due to rising disposable incomes and
health drivers of Australian consumers.
Number of
businesses 1,134 5. The pressures from imports are expected to continue over the next
five years.

Source: IBISWorld
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 RSM Industry Snapshot | Aquaculture in Australia

TRANSACTIONS
The key industry players have been involved in the following recent transactions:
ƒƒ In 2013, Western Australian Resources Limited (now Seafarm Operations Limited and a subsidiary of Seafarms Group Limited) which is involved in farming of prawn and
fish, acquired Seafarm Pty Ltd, an Australian based producer and distributor of seafood.
ƒƒ In 2013, Western Australian Resources Limited also acquired Marine Farms Ltd, an Australian company involved in commercial aquaculture of mahi mahi fish.
ƒƒ In 2014, Seafarms Group Limited acquired Coral Sea Farms Australia Pty Ltd, a company operating a saltwater prawn farm in Queensland, Australia.
ƒƒ In 2015, Tassal Group Limited acquired De Costi Seafoods (Holdings) Pty Ltd, an Australian company engaged in the wholesale and retail of frozen seafood.
A number of other industry payers have been active in merging and acquiring new aquaculture businesses, including:
ƒƒ In 2014, Craig Mostyn & Co Limited acquired Great Southern Waters Pty Ltd, a company involved in producing farmed abalone.
ƒƒ In 2015, Mareterram Limited acquired 100% of Australian based fishery business Nor-West Seafood.
ƒƒ In 2016, Sea Harvest (Pty) Limited, a South African based company acquired a further 40.05% of Mareterram Limited to increase its share holding to 55.89%.

Acquisitions
Announcement date Target Acquirer Stake acquired % Implied EV $m (AUD) EV/EBIT EV/EBITDA
09-Sep-13 Marine Farms Ltd Western Australian Resources Limited 100% 0.25 NA NA
20-Dec-13 Seafarms Pty Ltd Western Australian Resources Limited 100% 11.20 NA NA
30-Jun-14 Great Southern Waters Pty Ltd Craig Mostyn & Co. Pty Ltd 100% NA NA NA
10-Sep-14 Coral Sea Farms Australia Pty Ltd Seafarms Group Limited 100% 4.20 NA NA
01-Jul-15 De Costi Seafoods (Holdings) Pty Ltd Tassal Operations Pty Ltd 100% 50.00 NA NA
09-Jun-16 Nor-West Seafoods Pty Ltd Mareterram Limited 100% 20.00 NA NA
08-Apr-16 Mareterram Limited Sea Harvest (Pty) Limited 40.05% 51.31 29.1x 21.3x
N/A = not available Source: Capital IQ

ASX ACTIVITY
In the last five years, there was only one Initial Public Offering (IPO) on the Australian Securities Exchange (ASX) as the majority of the activity within the industry was related
to acquisitions and other capital raisings. Huon Aquaculture Limited listed on the ASX on 23 August 2014 with a $4.75 share price at IPO date. We note that Mareterram listed
on the ASX on 6 January 2016 via a backdoor listing.

Recent IPO activity

Company Listing date Proceeds raised Market cap at EV at listing Implied EV/ EV/EBITDA Price Date at Current price Share price
$m listing $m EBITDA at listing current 13 Oct 16 $ movement since
$m $ listing
Huon Aquaculture 23-Aug-14 124.66 415.00 390.00 7.2x 11.37x 4.75 3.13 (34%)
Group Limited
Mareterram Limited 06-Jan-16 18.00 26.97 31.45 4.84x (15.73x) 0.20 0.24 20%
Source: Capital IQ

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 RSM Industry Snapshot | Aquaculture in Australia

However, in the last couple of years there has been an increasing number of aquaculture companies looking to list on the ASX. There are currently two transactions in the
industry whereby aquaculture businesses are looking to list on the ASX. New Zealand fish farmer New Zealand King Salmon is intending to raise approximately $30 million
in new capital in an initial public offering by listing on both the New Zealand and Australian exchanges. Timpetra Resources Limited, an Australian listed company is currently
looking to acquire three aquaculture business in New South Wales. In order to fund the acquisition Timpetra is undertaking a capital raising of up to $10 million.

CAPITAL RAISING
Recent private placements and public offerings
In the last five years a number of key industry players including Seafarms, Huon and Clean Seas have raised capital through private placements and public offerings to fund
existing and expanding operations. A list of the recent capital raisings in the aquaculture industry is summarised in the following table:

Announcement date Target Type Number of shares (No.) Share price ($) Total ($)
23-Aug-16 Seafarms Group Limited Private Placement 122,382,079 0.09 11,014,387
07-Jul-15 Seafarms Group Limited Public Offering 85,714,286 0.07 6,000,000
07-Jul-15 Seafarms Group Limited Private Placement 146,275,666 0.07 9,507,920
02-Jun-14 Seafarms Group Limited Public Offering 201,266,922 0.05 10,063,346
04-Oct-13 Clean Seas Tuna Limited Public Offering 303,525,674 0.03 9,712,822
02-May-13 Clean Seas Tuna Limited Public Offering 50,187,745 0.01 602,253
21-May-13 Clean Seas Tuna Limited Public Offering 250,471,153 0.01 3,005,654
02-Nov-11 Clean Seas Tuna Limited Public Offering 20,268,750 0.08 1,621,500
07-Mar-11 Clean Seas Tuna Limited Private Placement 62,716,880 0.11 6,898,857
Source: Capital IQ

The funds raised by Seafarms have been used to fund Project Sea Dragon, a large scale prawn farm. Project Sea Dragon is a $1.45 billion project proposed for Legune Station,
on the border of the Northern Territory and Western Australia.

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 RSM Industry Snapshot | Aquaculture in Australia

TRADING MULTIPLES
ƒƒ Historical FY15 industry EV/EBITDA multiples ranged from 5.8x to 22.4x with an average of 11.8x.

ƒƒ Historical FY16 industry EV/EBITDA multiples ranged from 7.2x to 12.38x with an average of 9.8x.

ƒƒ The average forecast multiples of 7.4x for FY17, reflects the market’s expectations of earnings growth in the industry.

ƒƒ We note that the companies with negative earnings have been excluded from the average numbers included above. Seafarms had negative earnings in both FY15
and FY16, Clean Seas had negative earnings in FY16 and neither company’s had forecast earnings numbers.

Industry earning multiples

Industry earnings multiples
EV/EBITDA
25.0x
22.4x
Ave FY 2015: 11.8x
20.0x Ave FY 2016: 9.9x
Ave FY 2017 (forecast): 7.4x
15.0x
12.4x

10.0x
7.3x 7.3x 7.8x
7.1x
5.8x
5.0x

N/A N/A
0.0x
ASX:HUO ASX:CSS ASX:TGR

FY2015 FY2016 FY2017

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