23 January 2024

Ocean Harvest Technology Group plc

("OHT", the "Company", or the "Group")

Trading Update, Board Changes and New Hires

Ocean Harvest Technology Group Plc (AIM: OHT), a leading researcher, developer and supplier of proprietary blended seaweed products as functional additives for the global animal feed industry, gives a trading update for the year to 31 December 2023 and announces new hires and changes to the Board of Directors.

Highlights

·      The Company continues to lead the way in the commercialisation of highly functional blended seaweed ingredients in the global animal nutrition sector

·      OHT expects to report results in line with expectations for the year ended 31 December 2023, with reported revenues of ?3.4m (2022: ?3.0m). The sales of OHT's proprietary blended seaweed ingredient, OceanFeed^TM, is expected to grow circa 29% year on year.

·      Continued improvement in gross margins in H2 with full year gross margin expected to be over 37% (2022:31%).  

·      Continued high value customer wins in H2 with first penetration into the Indian market and product registration in Brazil

·      The outlook for 2024 remains strong with significant sales growth expected from a number of channels

Trading Update

We are pleased to report that OHT's trading was in line with expectations for the second half of 2023. The Company made good progress in H2, delivering first time sales to the very substantial market of India and achieved successful product registration in Brazil, which opens further growth opportunities for 2024.

The Company expects to report total revenue in line with expectations of ?3.4m.  Of this we expect product revenue to be circa ?3.0m, with the sales of OHT's proprietary and higher margin OceanFeed^TM blended seaweed products growing almost 30% year on year and the sales of single seaweed species being roughly flat.  As a result, the Company saw a continued improvement in gross margins in H2.  Whilst our focus is on maximizing revenue from the sales of OceanFeed^TM, which our trial data shows delivers superior performance for our customers, single seaweed sales are helpful in enabling the company to scale its seaweed supply chain and can be useful in gaining access to new customers for future blended product sales.

The full year numbers are still subject to audit and the Company expects to announce its audited full year results in late March.

Outlook

The Company reiterates its strong outlook for 2024 with revenue growth to be driven from a number of channels:

·      the solid revenue base provided by long standing, repeat OceanFeed^TM customers. The Company is yet to lose a material OceanFeed^TM customer due to strength of its product offering

·      growth from 15 customers won in 2023 that are increasing their usage of OceanFeed^TM and are expected to use the product for the full year in 2024

·      growth from existing customers who have trialled or are trialling OceanFeed^TM products for additional applications within their business

·      growth from new customers trialling the product for applications for which OHT has already demonstrated efficacy.

·      ongoing demand from customers demanding single seaweed products

OHT expects approximately three quarters of 2024 revenue to come from customers already using its products and that the balance will come primarily from sales to new customers focused on the swine and poultry markets where OceanFeed^TM is most widely used and where our trial data is strongest. Through its R&D program the Company is seeking additional data that can help further penetrate its other markets such as bovine, aqua and pet, but we expect the growth in these areas to come in 2025 and beyond.

The Company has observed some impacts in shipping schedules and pricing as a result of the widely reported Red Sea disruption.  However, there was no material impact from this on 2023 trading and, with under 10% of our raw materials and under 25% of our finished products usually travelling through the Red Sea, it does not impact OHT's current outlook for 2024.

With an improved outlook for its seaweed supply chain and more efficient capacity expansion options, the Company has an improved outlook for working capital and cash usage which it will detail with the full year results.

New Hires and Management Changes

Hadden Graham, the group's Chief Commercial Officer, has communicated his desire to retire during 2024.  Hadden will remain employed by OHT until the end of June to assist with transition arrangements and will then become a consultant to OHT on an ongoing basis. Given he will be leaving his full-time executive position he will not seek re-election as a Director at the next AGM.  Hadden has enjoyed a distinguished career in the animal feed sector for over 30 years and has brought his considerable experience and contacts to OHT and will continue to help the Company with its development during the transition period through 2024.  We are very grateful for Hadden's contribution, wish him well in his retirement and thank him for his ongoing support of OHT.

Nico Stein has been appointed as the Chief Commercial Officer from 1 February.  Nico has over 20 years of experience in sales, commercial and operational management experience in animal nutrition, feed & food additives and pet food.  He has held senior commercial roles in leading companies in the industry including Anpario, Biomin and Nestle.

Chris Scott has, as previously announced, been appointed as CFO and commenced employment with OHT on 15 January. He joins OHT from FrieslandCampina, a dairy co-operative and consumer food manufacturer, where he was the Finance Director for UK & Ireland. Prior to that he held various senior finance positions including at the leading multinational Kimberly-Clark UK. Chris has been appointed as a Director of the Company on 19 January.

Tom Onions, who has been a Non Executive Director of OHT since 2015, will not stand for re-election at the next AGM. Tom has played a valuable role for OHT as a Director whilst it was a private company, through the IPO process and during its inaugural year as a publicly listed company. The Company wishes to thank him for his contribution to the business and wish him all the best with his future business endeavours.

Mark Williams, CEO of OHT, commented:

"We are pleased with the resilient trading performance of the Company in late 2023, in particular that the sales of our proprietary blended OceanFeed^TM product grew almost 30%. This has helped us to grow our gross margin to over 37% for the year. 

OHT is well placed for the year ahead and will continue to deliver on growing its customer base, investing in R&D and building its supply chain to extend our position as the leading provider of blended seaweed additives to the animal feed industry.  We look forward to significant progress in 2024 and will provide a further update with our full year results"

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The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU No. 596/2014) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Notes to Editors

Ocean Harvest Technology Group plc is a global leader in the development and commercialisation of value adding proprietary products from blending multiple species of seaweed. The Company provides a range of natural additives focused on improving animal performance and the sustainability of the feed chain, through its unique and proven proprietary seaweed blends. The Company sources its seaweed globally, utilising sustainable and socially responsible harvesting of largely wild blooming seaweed species.  Its products are produced in its facility in Vietnam and sold into the $40bn animal feed additive sector in multiple markets across the world.

For more information, please visit www.oceanharvesttechnology.com.