By Hilary Mare
SOUTH Africa’s Oceana Group says the performance of its group horse mackerel operations remain highly dependent on its ability to secure a larger quota in Namibia, at favourable prices.
This disclosure formed part of the Namibian Stock Exchange-listed entity’s latest financial results, for the first quarter of 2017.
Quota usage fees have increased by 16 percent, since 2015.
Oceana Group Limited Chief Executive Officer, Francois Kuttel, said that the company would continue to engage the government, in its quest for an affordable new quota allocation.
“We will continue to seek moderation in quota fees and we remain in constant dialogue with Namibian authorities. We are also in support of the drive by government to promote land-based processing in our operations,” he said
In 2017, the Namibian horse mackerel total allowable catch (TAC) increased by 1.5 percent, to 340 000 tons, from 335 000 tons in 2016.
The Ministry of Fisheries and Marine Resources made an initial allocation of 140 000 tons to the industry, giving 34.8 percent to existing right holders and the rest to new players. Oceana hopes to get a larger slice of the remaining quota, which is to be allocated imminently.
“Catch rates in Namibia are back in line with historical averages, following lower catch rates experienced in the first quarter, with the size mix having decreased marginally,” Kuttel said.
Minister of Fisheries and Marine Resources, Bernard Esau, recently encouraged existing rights holders to enhance job creation, particularly through value-addition, and advised them to pay their fair share of resources rent, for distribution to the rest of the economy.
“The fact that there are no weights attached to the criteria at this stage does not impede the requirement for right holders to submit data on criteria, such as employment. We encourage right holders to include workers as equity participants in their companies, and adopt the principle of co-determination in the management of fishing companies, and share in the profits or losses,” Esau said.
He said this will ensure that individual right holders are held accountable, against a more transparent performance-based system, as the current performance of the various 358 right holders cannot be justified.
According to first quarter results, the Ocean Group’s revenue, after adjusting for businesses sold during 2016, decreased by 9 percent to N$3.1 billion, from N$3.4 billion during the same period last year.
“This decline was mainly due to lower canned fish volumes and the effect of a stronger rand. US dollar revenue for 2017 was converted at an average exchange rate of R13.60/1 US dollar, compared to R15.10/ 1 US dollar for the comparable period,” the company noted.
“US dollar revenue growth of 14 percent was achieved in our US operations and export businesses in South Africa, Namibia and Angola, which together contributed US$100.2 million, compared to US$88.1 million during the same period in 2016,” the group said.
The 14 percent decrease in group operating profit before other operating items, to N$504 million, compared to last year’s figure of N$587 million, reflected the adverse movement in net foreign exchange, from a gain of N$69.9 million in 2016 to a loss of N$44.7 million, during the reporting period.
These movements were primarily due to the effects of forward exchange contracts, to cover the cost of imported frozen fish for the company’s canned fish business.
Despite the improvement in the average rate of forward cover to R14.05/1 US dollar from R14.75/1 US dollar in 2016, the volatility in the average spot rate over the period resulted in material movement in foreign exchange costs.
The net interest expense for the period, of R171 million, compared to the first quarter of 2016’s figure of R163 million, related to finance costs on additional working capital facilities and long-term borrowings.
The average interest rate for all debt is currently 7.21 percent, compared to 6.69 percent during the same period last year. Headline earnings for the period decreased by 16 percent, compared to the prior period. An interim dividend of 90 cents per share has been declared, compared to the prior year’s 112 cents per share). Commenting on its other subsidiaries, the company noted that fishmeal and fish oil prices are expected to remain under pressure in the short-term, following the recent announcement that the Peruvian fishing season anchovy quota allocation has been set at 2.8 million tons.
“Based on early season catches in South Africa, Angola and the US (Daybrook), we are optimistic that improved total landings across our fishmeal and oil operations will partially mitigate the effect of softer prices,” the company said.
Government is expected to implement the provisions of the Cabinet-commissioned study on quota fees soon, which was concluded some years ago.
The study, amongst a host of recommendations, also says that the management of fisheries in Namibia should be financed by the sector.
Confidente. Lifting the Lid. Copyright © 2015