Saturday 29 November 2014
Publication: The Advertiser
Journalist: Valerina Changarathil
THE waters have run deep for a quarter of a century for Adelaide marine transport company SeaLink. Now there is fresh momentum and capacity to ride the growth wave through acquisitions. Managing director Jeff Ellison has steered this ship for 17 out of the past 25 years, transforming it from a two-boat Kangaroo Island ferry operator to a publicly listed national tourism and transport business spanning four states with 26 vessels to its name.
“The construction of our first Sealion ferry to KI in 1998 was the game changer,” Mr Ellison says. “Built at a cost of $9 million then, that ferry changed the perspective of how to get to KI. I remember the head of Ports Corporation saying ‘it’s risky, why do you want to do it’.
“I think we believed there was a lot greater potential to grow the tourism markets.” The company, which listed on the Australian Securities Exchange in October 2013, transports more than 3 million passengers a year in SA, NSW, Queensland and the NT.
It clocked up $110 million in sales in 2013-14 and now employs 600 staff across all locations. The South Australia headquartered company has almost doubled its market capitalisation to $150 million since its listing in October last year and its share price has grown more than 57 per cent in that time.
SeaLink has its genesis in a family-owned business called Philanderer, which was bought by Malaysian company Mbf and renamed Kangaroo Island SeaLink in 1989.
In 1996, a group of South Australian investors and employees, including Mr Ellison, bought the loss-making business back into local ownership. Some of those early believers still control about 35 per cent of SeaLink’s 77 million shares. “We are a tightly held company, which is a bit of a challenge for us. That’s a bit of an issue because of liquidity reasons. “We could go and issue more shares but we don’t need the money at the moment. We need to find something to buy and then we’d raise more money and issue new shares.” “Our plan is to grow the business through acquisitions.
“We’ll fund that through bank debt and issue new shares to new investors. “We have got capacity to go and borrow from the bank and stay well within our gearing ratios.” SeaLink reported a net debt of $9 million at the end of June, which equates to a gearing (net debt/equity) ratio of 17 per cent, giving it greater borrowing capacity.
It’s pretty clear Sydney – the company’s fastest growing market – is a focus. A decision on a new ferry contract from Manly to Circular Quay is expected before Christmas but more plans are afoot. “We probably have a good chance but we have a strategy around if we don’t win it, where we will expand our business in commuter services,” he says. “If we don’t win it, we’ll have enough vessels to expand.” Mr Ellison said the ideal situation would be to buy a ferry operation going to a tourism destination.
“What we actually do well is we take a transport business and introduce tourism to it. The strategy is to have 50 per cent of our business coming from commuters, freight and transport and 50 from tourism.”
“The thinking is the transport market is very secure in a recession so we still have that business protection and tourism is where the growth is.”
SeaLink is the sole operator of passenger and freight services to Kangaroo Island. It has expanded to provide passenger and tourist ferry services in Queensland (Townsville to Magnetic Island, Townsville to Palm Island)and in the NT (Darwin to Tiwi Islands and Darwin to Mandorah) through acquisitions. The company also operates the popular Captain Cook Cruises business on Sydney Harbour and a paddlewheeler which provides cruises along the River Murray, SA.
Mr Ellison describes SeaLink as a serious business with long-term potential given the expected tourism boom linked to a growing number of Asian visitors, especially from China. “With our packaged tourism services, including tours and accommodation deals, we have a compelling offering,” he says.
That offering is likely to be masterminded from SA at least for the next few years. “As long as I am actually here, we’ll stay in South Australia,” he says. “I think we will always have our base here. “From a business perspective, there are terrific connections to all our destinations.” Mr Ellison is contracted to be managing director until 2018, the same year the lease on SeaLink’s office on the corner of King William St and South Tce expires.
This property was recently sold to a private investor for $6.5 million by Teriga, a private entity owned by SeaLink’s four directors and shareholders, Mr Ellison, chairman Giuliano Ursini and directors Chris Smerdon and Frederick Mann.
Mr Ellison and some staff also occupy office space at 431 King William St.
BY THE NUMBERS ■ 7m shares on issue ■ $150m market capitalisation ■ $7m profit in FY14 ■ 3m passengers in SA, NSW, QLD & NT ■ 600-plus staff■ 26 vessels
For more information please call:
Carla Schaefer, Investor Relations, SeaLink Travel Group 08 8202 8619 or 0409 101 188