Tassal Group

Tassal Group

An hour into yesterday’s trading session, Australian salmon farming company Tassal Group (ASX: TGR) released a notice that Managing Director and Chief Executive Officer Mark Ryan had sold 200,000 shares on market. The sale quantity amounts to over half of the initial 360,378 ordinary shares held; however, Mr Ryan will continue to control the remaining 160,378 shares.

 

The aforementioned shares were acquired by Mr Ryan pursuant to the Company’s 2010 and 2011 Long Term Incentive Plans. The on-market shares were sold at an average price of $4.822 per share.

 

Tassal Salmon

The transaction has been attributed to Mr Ryan requiring a balance of his personal financial position, finalising a payment of income tax with respect to a previous issue of Tassal shares. In addition, Mr Ryan confirmed that he does not intend to further dispose of any Tassal shares. The director will continue his role in Tassal Group and is willing to participate in its future growth.

 

This event comes at a rather intriguing point in time, given the company’s relatively strong performance in the first half of the financial year (results were released on 14th February). More specifically, Tassal recorded operating NPAT growth of 22.3% to $31.7 million, whilst operating cash flow rose 96.3 per cent to $79.6 million. Such was the result of favourable salmon market dynamics and significant growth in salmon biomass and sales, with harvest rising 16.4 per cent to 21,710 hog tonnes and sales rising 21.7% to 20,578 hog tonnes. Moreover, prawns provided diversification and a long-term earnings runway.

 

This strengthened the company’s balance sheet and supported an increased dividend. Tassal Group declared an interim dividend of $0.09 per share (25% franked), payable on 29th March. The company trades ex-dividend on 14th March.

 

Upon the release of the report, Mr Ryan commented on Tassal’s positive outlook for 2019: “Growing operational returns, a strong balance sheet and healthy cash flows allows us to invest in strategic long-term opportunities to diversify and grow our business while delivering increasing returns for our shareholders. Tassal is in a very exciting position with a strong salmon business, strong De Costi Seafoods distribution business and attractive newly-acquired prawn business to be able to deliver another record result in FY19.”

 

Question marks are potentially being raised, given the timing of the share sale. What is the motivation to sell shares? Is the company able to continue its strong and sustainable growth? Are there some planned strategies or investments to be implemented? Perhaps only time will answer.

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