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SEA HARVEST GROUP LIMITED - Unaudited Interim results for the six months ended 30 June 2017

Release Date: 23/08/2017 07:05
Code(s): SHG     PDF:  
Wrap Text
Unaudited Interim results for the six months ended 30 June 2017

Sea Harvest Group Limited  
(Formerly Sea Harvest Holdings Proprietary Limited)
(Incorporated in the Republic of South Africa)
Registration number: 2008/001066/06
JSE Code: SHG 
ISIN: ZAE000240198
"Sea Harvest" or "the Company" or "the Group"

Unaudited Interim results
for the six months ended 30 June 2017

Commentary

Key performance indicators

       Year ended                                               Six months ended   Six months ended
 31 December 2016                                                   30 June 2017       30 June 2016
            R'000                                                          R'000              R'000
        1,931,979    Revenue                                           1,056,961            844,515
              59%    International revenue mix (%)                           61%                54%
          605,458    Gross profit                                        353,515            270,282
            31.3%    Gross profit margin (%)                               33.4%              32.0%
                     Profit before net finance costs and
          250,188    taxation (EBIT)                                     205,597             83,253
            12.9%    EBIT margin (%)                                       19.5%               9.9%
          131,514    Profit for the period                               135,888             36,943
             86.1    Earnings per share (cents)                             67.0               26.1
           80,142    Headline earnings                                   110,664             34,874
             56.6    Headline earnings per share (cents)                    56.6               24.6
             60.9    Net asset value per share (cents)                     531.9               24.7
            365.6    Adjusted net asset value per share (cents) (1)        531.9              148.2
            16.19    ZAR: Euro average exchange rate (2)                   14.29              17.12
            10.98    ZAR: AUD average exchange rate (2)                    10.06              11.29
                -    Closing share price (cents)                           1,370                  -

(1) Prior period shares in issue adjusted for 1:6 share consolidation
(2) Average spot exchange rate at which sales were recorded.

Trading and financial performance

The period was dominated by the successful listing on the JSE of Sea Harvest Group Limited on 23 March
2017. The Group issued 106,333,334 shares at a price of R12.50 per share, raising R1.329 billion of capital.
The Company's shares have traded positively since listing, ending the period 9% up at R13.70 per share.

Sea Harvest delivered headline earnings of R111 million for the six months to 30 June 2017 (2016: R35 million),
up 217% on the same period last year, benefiting from the improved performance of its South African
operations as a result of investments in both fleet and land-based operations; continued strong global
demand for Cape Hake; the acquisition of a controlling interest in ASX listed Mareterram in July 2016; and
the deleveraging effect on the balance sheet post listing the Group on the JSE.

Sea Harvest acquired an initial stake of 19.9% in Mareterram Limited in January 2016 and during the six
months ended 30 June 2016 Mareterram was accounted for as an associate. In July 2016, Sea Harvest
acquired a controlling stake in Mareterram and it was consolidated into the Group's results. 
The comparability of the financial information for six months ended 30 June 2017 with the same period in
2016 is impacted by the consolidation of Mareterram into the Group with effect from 1 July 2016.

Group revenue for the period increased by 25% to R1.06 billion compared to the same period last
year (2016: R845 million).

The Rand strengthened by 16% in the period compared with the same period last year, which impacted 
South African operations' revenue. However this was offset by firm pricing and strong demand across all 
channels and markets, resulting in South African operations revenue decreasing marginally by 2%. 
Sales volumes were in line with the same period last year, after a 5% quota reduction.

South African operations' export  volumes increased by 11% and export volume mix grew to 43% from 39% in 
the same period last year, as the business continued to focus on higher margin sales. Export revenue 
increased by 3% after a 16% strengthening of the Rand across the currencies in which Sea Harvest trades.

Revenue from Mareterram, which was consolidated from July 2016, contributed R227 million to the Group's revenue 
for the period. Mareterram's revenue for the period increased by 42% compared to the first half of 2016, which 
was its first six months of trading since listing on the ASX in January 2016, driven by volume growth and 
favourable pricing.

The Group delivered gross profit of R354 million for the period (2016: R270 million) and the gross profit margin  
improved to 33% (2016: 32%), despite the impact of the stronger Rand. The South African operations contributed 
R291 million to gross profit. The expansion in gross profit margin was driven by efficiency improvements as a result 
of the investments in factory freezer vessel capacity and land-based factory efficiency improvements, together with 
higher export volumes and price increases across the board, which buffered the impact of the stronger Rand. Mareterram 
contributed R63 million to gross profit, with a gross profit margin of 28%.

Other operating income of R44 million (2016: R5 million) includes a R30 million foreign exchange hedge gain and a 
R14 million fair value gain.

Group operating expenses for the period increased by 9% from R198 million in 2016 to R216 million in 2017. 
This increase included once-off costs of R18 million relating to the restructuring of the Group and the 
listing on the JSE.

The Group delivered EBIT of R206 million during the period (2016: R83 million), an increase of 147% over 2016,  
and an EBIT margin of 19.5% (2016: 9.9%). Mareterram contributed R13 million to EBIT for the period. 
In addition, Group  EBIT for the period included a R23 million gain on the disposal of Sea Harvest's 49.81% 
interest in a joint venture on 1 January 2017.

The Group reported earnings per share (EPS) of 67.0 cents (2016: 26.1 cents) and headline earnings per share (HEPS) 
of 56.6 cents (2016: 24.6 cents), an increase of 157% and 130% respectively, with both measures benefiting from the improved
operating performance of the South African operation and the inclusion of Mareterram's result.

The weighted average number of shares (WANOS) for the period used for the calculation of EPS and HEPS is 195,379,525 and there 
were 239,973,603 shares (excluding treasury shares) in issue at the reporting date. At the beginning of the period, there were 
849,242,000 shares (excluding treasury shares) in issue. During the period, there was a 1:6 share consolidation and 3,500,000 
shares (excluding treasury shares) were repurchased. On 23 March 2017, the Group listed on the JSE and 101,933,269 shares 
(excluding treasury shares) were issued.

Cash flow and financial position

Group cash generated from operations for the period of R142  million, was 8% higher than the prior year, with the improved operating
performance being partly offset by higher levels of working capital. The Group utilised R48 million in investing activities relating 
to the acquisition of property, plant and equipment during the period. At the end of the period the group had a positive cash 
balance of R316 million.

Following the listing and capital raise, the Group is well capitalised. All preference share capital, including accrued dividends, 
shareholder loans and third party debt in the South African operations were settled at listing.

To supplement the cash on hand, Sea Harvest has concluded a revolving credit facility, the proceeds of which are earmarked for 
internal projects and acquisitions in South Africa and Australia.

Dividends
No interim dividend is declared or proposed for the six months ended 30 June 2017.

Outlook
International demand continues to be strong for high value wild caught species such as Cape Hake and Shark Bay Prawns. The Rand has 
weakened compared to the average for the first half of the year and the hedges in place for the second half of the year are more 
favourable than the first half of the year. Local market volumes have declined as a result of a stagnant economic environment, 
but this is expected to be offset by continued inflation in the category due to limited supply.

Revenue from Mareterram in the second half of the year is expected to be higher than the first half of the
year due to the seasonal nature of the business.

All bank debt and shareholder loans within the South African operations were settled on listing and as a
result, finance costs in the second half of the year are expected to reduce considerably, unless cash on
hand and available facilities are utilised to fund growth.

There is a good pipeline of organic growth projects. The Group has announced the acquisition of a
new freezer trawler (M.V.  Therney) from listed Icelandic Fishing Company, HB Grandi, for $13.5  million.
The M.V. Therney was built in the Sterkoder yard in Norway, and is a sister vessel to the Harvest Atlantic
Peace which was acquired by Sea Harvest in 2014. Delivery of the vessel is expected in mid-November this
year, at a total cost of R250 million, and is anticipated to commence fishing in April/May 2018.

On behalf of the board

F Robertson         F Ratheb
Chairman            Chief Executive Officer

Cape Town
23 August 2017

CONDENSED CONSOLIDATED STATEMENT
OF PROFIT OR LOSS
for the six months ended 30 June 2017

 Audited Year                                                     Unaudited          Unaudited
        ended                                              six months ended   six months ended
  31 December                                                       30 June            30 June
         2016                                                          2017               2016
        R'000                                                         R'000              R'000
    1,931,979   Revenue                                           1,056,961            844,515
  (1,326,521)   Cost of sales                                     (703,446)          (574,233)
      605,458   Gross profit                                        353,515            270,282
       31,607   Other operating income                               43,899              5,141
    (111,704)   Selling and distribution expenses                  (62,301)           (50,023)
     (13,372)   Marketing expenses                                  (6,662)            (5,405)
    (314,810)   Other operating expenses                          (147,009)          (142,564)
                Operating profit before joint venture
     197,179    and associate profit                                181,442             77,431
                Share of profit of joint venture
      13,369    and associate                                         1,000              5,822
                Gain on the disposal of interest in
           -    joint venture                                        23,155                  -
                Gain on remeasurement of previously held
      39,640    interest in subsidiary                                    -                  -
                Profit before net finance costs
     250,188    and taxation                                        205,597             83,253
       2,075    Investment income                                     5,862                516
    (77,892)    Finance costs                                      (30,045)           (30,020)
     174,371    Net profit before taxation                          181,414             53,749
    (42,857)    Taxation                                           (45,526)           (16,806)
     131,514    Profit for the period                               135,888             36,943
                Profit for the period attributable to:                                       
     121,876    Shareholders of Sea Harvest Group Limited           130,955             36,943
       9,638    Non-controlling interest                              4,933                  -
     131,514                                                        135,888             36,943
                Earnings per share (cents)                                                   
        86.1    - Basic                                                67.0               26.1
        75.1    - Diluted                                              66.1               22.8

CONDENSED CONSOLIDATED STATEMENT OF OTHER
COMPREHENSIVE INCOME
for the six months ended 30 June 2017

Audited Year                                                      Unaudited          Unaudited
       ended                                               six months ended   six months ended
 31 December                                                        30 June            30 June
        2016                                                           2017               2016
       R'000                                                          R'000              R'000
     131,514    Profit for the period                               135,888             36,943
                Other comprehensive income                                                    
                Items that may be reclassified subsequently
                to profit or loss:                                                            
      94,728    Movement on cash flow hedging reserve              (17,917)             47,041
    (44,361)    Exchange differences on foreign operations            7,382                  -
                Other comprehensive (loss)/income, net
      50,367    of tax                                             (10,535)             47,041
                Total comprehensive income for
     181,881    the period                                          125,353             83,984
                Total comprehensive income/(loss)
                attributable to:                                                              
     186,670    Shareholders of Sea Harvest Group Limited           119,050             83,984
     (4,789)    Non-controlling interest                              6,303                  -
     181,881                                                        125,353             83,984

CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As at 30 June 2017

     Audited                                                      Unaudited          Unaudited
 31 December                                                        30 June            30 June
        2016                                                           2017               2016
       R'000                                              Notes       R'000              R'000
                ASSETS                                                                         
                Property, plant, equipment
     541,513    and vehicles                                        531,180            449,522
     359,346    Intangible assets                                   363,742             84,441
     104,224    Goodwill                                            106,001                  -
      21,845    Investment in joint venture                               -             13,953
           -    Investment in associate                                   -             54,542
      25,264    Available-for-sale investment                 4      25,264             25,264
       1,233    Financial assets                              4      13,953                  -
       4,389    Loans to related parties                      5      70,501              4,357
      33,545    Deferred tax assets                                  50,313                  -
   1,091,359    Non-current assets                                1,160,954            632,079
     291,758    Inventories                                         324,982            174,069
     282,750    Trade and other receivables                         359,280            274,694
      46,629    Financial assets                              4      27,687                  -
       6,370    Tax assets                                                -                  -
     154,404    Cash and bank balances                              316,222            129,377
     781,911    Current assets                                    1,028,171            578,140

   1,873,270    TOTAL ASSETS                                      2,189,125          1,210,219

                EQUITY AND LIABILITIES                                                        
        849     Stated capital                               6    1,295,771                849
    368,409     Preference share capital and premium                      -            168,409
          -     FSP reserve                                        (55,000)                  -
     17,309     Revaluation reserve                                  17,309             17,309
     22,079     Cash flow hedging reserve                             5,264           (25,539)
      6,507     Share-based payment reserve                         (5,203)                  -
   (29,865)     Foreign currency translation reserve               (24,956)                  -
    132,116     Retained earnings                                    43,302             48,740
                Attributable to shareholders of Sea
    517,404     Harvest Group Limited                             1,276,487            209,768
    137,687     Non-controlling interest                            138,636              4,428
    655,091     Capital and reserves                              1,415,123            214,196
                Long-term
    371,917     interest-bearing borrowings                         121,398            285,648
     54,664     Loans from related parties                   5            -             54,664
     31,209     Employee related liabilities                         26,703             25,427
     13,733     Deferred grant income                                12,920             14,778
     82,450     Financial liabilities                        4       61,267                  -
    133,410     Deferred tax liabilities                            123,117             94,589
    135,404     Shareholders for dividends                                -            123,526
    822,787     Non-current liabilities                             345,405            598,632
                Short-term interest
     52,536     bearing borrowings                                   72,150             41,931
    291 568     Trade and other payables                            310,695            277,129
      1,551     Short-term deferred grant income                      1,581              1,555
     21,121     Financial liabilities                        4       22,548             53,862
     17,843     Short-term provisions                                     -              5,725
      2,431     Short-term shareholders for dividends                     -                  -
      8,342     Tax liabilities                                      21,623             17,189
    395,392     Current liabilities                                 428,597            397,391

  1,873,270     TOTAL EQUITY AND LIABILITIES                      2,189,125          1,210,219
       60.9     NAV per share (cents)                                 531.9               24.7
                Net shares in issue at end of
    849,242     period (000's)                                      239,974            849,242
   365.6(1)     Adjusted NAV per share (cents) (1)                    531.9           148.2(1)                                                                     
                Adjusted shares in issue at end of
 141,540(1)     period (000's) (1)                                  239,974         141,540(1)

(1) Prior period shares in issue adjusted for 1:6 share consolidation.

CONDENSED CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
for the six months ended 30 June 2017

Audited Year                                                      Unaudited         Unaudited
       ended                                               six months ended  six months ended
 31 December                                                        30 June           30 June
        2016                                                           2017              2016
       R'000                                                          R'000             R'000
     130,092    Balance at the beginning of the period              655,091           130,092
                Attributable to:                                                             
     130,092    Shareholders of Sea Harvest Group Limited           517,404           130,092
           -    Non-controlling interests                           137,687                 -
                Total comprehensive income for the period
                attributable to shareholders of Sea Harvest
     186,670    Group Limited                                       119,050            83,984
     121,876    Profit for the period                               130,955            36,943
                Movements in other items of
      64,794    comprehensive income, net of tax                   (11,905)            47,041
                Movements attributable to shareholders of
                Sea Harvest Group Limited                                                    
           -    Shares issued (1)                                 1,294,943                 -
           -    Shares repurchased (2)                             (51,450)                 -
           -    Recognition of FSP reserve (3)                     (55,000)                 -
     200,000    Preference shares issued                                  -                 -
           -    Redemption of preference shares (4)               (368,409)                 -
                Distributions to participants of
           -    share trusts (5)                                  (167,321)                 -
     (4,308)    Recognition of treasury shares                            -           (4,308)
                Recognition of share option liability
     (1,557)    directly in equity                                        -                 -
       6,507    Share-based payment expense                          10,403                 -
                Reclassification of share-based
           -    payment reserve (6)                                (23,133)                 -
                Movement attributable to
     137,687    non-controlling interests                               949             4,428
     655,091    Balance at the end of the period                  1,415,123           214,196

(1) Following the listing on 23 March 2017, Sea Harvest successfully placed 101,933,269 ordinary shares
    (excluding shares referred to in footnote 3) at a price of R12.50 per share. Listing costs of R34 million
    were charged against equity.
(2) 100% of the ordinary shares held by The New Sea Harvest Management Investment Trust were
    repurchased and cancelled.
(3) 4,400,065 ordinary shares were awarded to key Sea Harvest employees in terms of a long-term
    Forfeitable Share Plan ("FSP") incentive scheme and R55 million representing the market value of the
    shares was debited to a reserve and credited to stated capital.
(4) During the period, Sea Harvest redeemed all of the issued B and C redeemable preference shares,
    including all accrued preference dividends, all of which were held by Brimco Proprietary Limited.
(5) In accordance with the repurchase and amendment agreements entered into during the period, 75%
    of the ordinary shares held by The Sea Harvest Management Investment Trust No.2 and 50% of the
    ordinary shares held by The Sea Harvest Employee Share Trust, both controlled entities of the Group,
    were repurchased and cancelled.
(6) During the period, The Sea Harvest Management Investment Trust No.2 and The Sea Harvest
    Employee Share Trust were reclassified from equity-settled share-based payment schemes to
    cash-settled share-based payment schemes. The IFRS 2 calculated liability was raised and debited to
    the equity-settled share-based payment reserve at the reclassification date.

CONDENSED CONSOLIDATED STATEMENT
OF CASH FLOWS
for the six months ended 30 June 2017

 Audited Year                                                      Unaudited         Unaudited
        ended                                               six months ended  six months ended
  31 December                                                        30 June           30 June
         2016                                                           2017              2016
        R'000                                                          R'000             R'000
                Operating activities                                                          
      131,514   Profit for the period                                135,888            36,943
      185,901   Adjustments for non-cash and other items              93,190            95,173
                Operating cash flows before movements in
      317,415   working capital                                      229,078           132,116
     (20,577)   Increase in inventories                             (31,627)           (5,162)
                (Increase)/decrease in trade
       32,252   and other receivables                               (74,873)          (35,263)
                Increase/(decrease) in trade
        (672)   and other payables                                    19,745            39,830
      328,418   Cash generated from operations                       142,323           131,521
        2,075   Interest received                                      5,862               516
     (50,943)   Interest paid                                       (21,177)          (14,933)
     (30,310)   Income taxes paid                                   (44,142)                 -
                Net cash generated from
      249,240   operating activities                                  82,866           117,104
                Investing activities                                                          
    (195,990)   Acquisition of investment in subsidiary                    -                 -
                Proceeds on disposal of property, plant,
        3,830   equipment and vehicles                                     -             3,830
                Acquisition of property, plant, equipment
    (107,449)   and vehicles                                        (48,386)          (55,154)
      (3,164)   Acquisition of intangible assets                     (1,494)                 -
    (302,773)   Net cash utilised by investing activities           (49,880)          (51,324)

  Audited Year                                                     Unaudited         Unaudited
        ended                                               six months ended  six months ended
  31 December                                                        30 June           30 June
         2016                                                           2017              2016
        R'000                                                          R'000             R'000
                Financing activities                                                          
            -   Shares issued                                      1,239,943                 -
            -   Shares repurchased                                  (51,450)                 -
                Proceeds on the issue of C class
      200,000   preference shares                                          -                 -
                Redemption of B and C preference
            -   share capital                                      (368,409)                 -
                Repayment of B and C
            -   preference dividends                               (144,269)                 -
     (55,806)   Repayment of borrowings                            (301,478)          (10,375)
            -   Borrowings raised                                     67,886                 -
     (12,519)   Payments of financial liabilities                   (25,284)                 -
            -   Distributions to participants of share trusts      (167,321)           (2,446)
                Amounts (advanced) and/or (repaid)
         (103)  to related parties                                 (120,776)                 -
                Net cash generated from/(utilised by)
      131,572   financing activities                                 128,842          (12,821)
       78,039   Net increase in cash and cash equivalents            161,828            52,959
                Cash and cash equivalents at the beginning
       76,418   of the period                                        154,404            76,418
                Effects of exchange rates on the balance of
         (53)   cash held in foreign operations                         (10)                 -
                Cash and cash equivalents at the end 
      154,404   of the period                                        316,222           129,377

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
for the six months ended 30 June 2017

1. BASIS OF PREPARATION
   The condensed consolidated interim financial statements have been prepared in accordance with
   International Financial Reporting Standards, IAS 34: Interim Financial Reporting, the SAICA Financial
   Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting
   Pronouncements as issued by the Financial Reporting Standards Council, the Listings Requirements
   of the JSE Limited and the requirements of the Companies Act of South Africa, No.  71 of 2008.
   The report has been prepared using accounting policies that comply with International Financial
   Reporting Standards which are consistent with those applied in the financial statements for the
   year ended 31 December 2016. The condensed financial information has been prepared under the
   supervision of the Chief Financial Officer, JP de Freitas CA(SA).

   The information has not been audited or reviewed by the Group's auditors, Deloitte & Touche.

2. DETERMINATION OF HEADLINE EARNINGS

   Audited Year                                                       Unaudited          Unaudited
          ended                                                six months ended   six months ended
    31 December                                                         30 June            30 June
           2016                                                            2017               2016
          R'000                                                           R'000              R'000
                     Profit for the period attributable
                     to shareholders of Sea Harvest
        121,876      Group Limited                                      130,955             36,943
                     Loss/(profit) on disposal of property,
        (2,992)      plant, equipment and vehicles                          408            (2,874)
                     Impairment of property, plant,
              -      equipment and vehicles                               1,230                  -
                     Reversal of impairment of property,
              -      plant, equipment and vehicles                        (436)                  -
                     Gain on remeasurement of previously
       (39,640)      held interest in subsidiary                              -                  -
                     Realised profit on disposal of interest
              -      in joint venture                                  (23,155)                  -
            898      Total tax effects of adjustments                     1,662                805
         80,142      Headline earnings for the period                   110 664             34,874
                     Weighted average number of shares
                     on which earnings and headline
        141,540      earning per share is based (000's)                 195,379            141,540
                     Weighted average number of shares
                     on which diluted earnings and
                     diluted headline earnings per share is
        162,400      based (000's)                                      198,154            162,400
                     Headline earnings per share (cents)                                          
           56.6      - Basic                                               56.6               24.6
           49.3      - Diluted                                             55.8               21.5

   Audited Year                                                       Unaudited          Unaudited
          ended                                                six months ended   six months ended
    31 December                                                         30 June            30 June
           2016                                                            2017               2016
          R'000                                                           R'000              R'000
                  3. SEGMENTAL RESULTS                                                            
                     The Groups' reportable segments
                     under IFRS 8: Operating Segments,
                     are the South African operations and the
                     Australian operations.                                                        
                     Segment revenue from
                     external customers                                                            
      1,652,236      SA Operations (1)                                  829,890            844,515
        279,743      Australia Operations                               227,071                  -
      1,931,979      Total revenue                                    1,056,961            844,515
                     Segment profit from operations                                                
        171,250      SA Operations                                      169,836             77,431
         25,929      Australia Operations                                11,606                  -
                     Operating profit before joint venture
        197,179      and associate profits                              181,442             77,431
                     Gain on the disposal of interest in
              -      joint venture                                       23,155                  -
                     Gain on remeasurement of previously
         39,640      held interest in subsidiary                              -                  -
                     Share of profits of joint venture
         13,369      and associate                                        1,000              5,822
          2,075      Investment income                                    5,862                516
       (77,892)      Finance costs                                     (30,045)           (30,020)
        174,371      Net profit before taxation                         181,414             53,749
                     Total assets                                                                  
      1,183,021      SA Operations                                    1,677,271          1,210,219
        690,249      Australia Operations                               511,854                  -
      1,873,270                                                       2,189,125          1,210,219
                     Total liabilities                                                             
        945,267      SA Operations                                      430,746            996,023
        272,912      Australia Operations                               343,256                  -
      1,218,179                                                         774,002            996,023
                                                                                                             
  (1) Revenue excludes intra-segmental revenue of R18,2 million in SA Operations and inter-segmental revenue of 
      R47,8 million which are eliminated on consolidation.

   Audited Year                                                       Unaudited          Unaudited
          ended                                                six months ended   six months ended
    31 December                                                         30 June            30 June
           2016                                                            2017               2016
          R'000                                                           R'000              R'000
                 4. FINANCIAL ASSETS
                    AND LIABILITIES                                                               
         47,862     Financial derivative assets                          41,640                  -
          1,233     Non-current portion of financial assets              13,953                  -
         46,629     Current portion of financial assets                  27,687                  -

                    Other financial asset                                                         
         25,264     Available-for-sale investment                        25,264             25,264
          2,698     Financial derivative liabilities                          -             53,862
                    Current portion of liabilities held at fair 
                    
          2,698     value through profit or loss                              -                  -
              -     Current portion of financial liabilities                  -             53,862

                    Other financial liability                                                     
        100,873     Fishing licence liability                            83,815                  -
         82,450     Non-current portion of fishing licence liability     61,267                  -
         18,423     Current portion of fishing licence liability         22,548                  -

  Financial derivative assets and liabilities
  Financial assets and liabilities arise from hedging contracts entered into by the Group for the purpose
  of minimising the Group's exposure to foreign currency volatility. Hedging contracts are regarded as
  level 2 financial instruments for fair value measurement purposes. Level 2 fair value measurements are
  those derived from inputs that are observable for the asset or liability, either directly (i.e. as prices) or
  indirectly (i.e. derived from prices).
  
  Call option derivative
  Included in non-current financial assets is a call option, entered into on 1 January 2017, to acquire
  100% of the shareholding in Vuna Fishing Company Proprietary Limited from Vuna Fishing Group
  Proprietary Limited. The fair value was independently determined by an expert by using the Black-Scholes 
  option pricing model. The call option financial asset has been classified as a non-current asset at 
  30 June 2017 due to the expected exercise date thereof exceeding 12 months from the reporting date. The call option
  disclosed in financial assets is regarded as a level 3 financial instrument for fair value measurement
  purposes. Level 3 fair value measurements are those derived from valuation techniques that include
  inputs for the asset or liability that are not based on observable market data (unobservable inputs).
  
  Available-for-sale investment
  The Group holds 10% of the ordinary share capital of Desert Diamond Fishing Proprietary Limited, a company
  involved in the fishing and fishing processing industries. The directors of the Group do not consider
  that the Group is able to exercise significant influence over Desert Diamond Fishing Proprietary Limited.
  
  The Group reassesses the valuation of the available-for-sale investment annually, by using an asset
  valuation method performed by an independent valuator.
  
  The available-for-sale investment is regarded as a level 3 financial instrument. Level 3 fair value
  measurements are those derived from valuation techniques that include inputs for the asset or liability
  that are not based on observable market data (unobservable inputs).
  
  Other financial liabilities
  The fishing licence liabilities relate to the Shark Bay Prawn Managed Fishery Voluntary Fisheries
  Adjustment Scheme ("VFAS"). The VFAS operates from 12 November 2010 until 1 July 2021.
  Mareterram owns ten fishing licences in the Shark Bay region. The liabilities shown represent present
  values discounted at the 5 year Australian Corporate Bond rate. Fishing licence liabilities are carried
  at amortised cost.

  Audited Year                                                     Unaudited          Unaudited
         ended                                              six months ended   six months ended
   31 December                                                       30 June            30 June
          2016                                                          2017               2016
         R'000                                                         R'000              R'000
                 5. RELATED PARTY LOANS                                                       
                    Loans to related parties                                                   
                    Vuna Fishing Company
             -      Proprietary Limited (1)                           27,420                  -
             -      Vuna Fishing Group Proprietary Limited (2)        43,081                  -
                    The New Sea Harvest Management
         4,389      Investment Trust                                       -              4,357
         4,389      Total                                             70,501              4,357
                    Loans from related parties                                                 
        54,664      Brimco Proprietary Limited                             -             54,664
        54,664                                                             -             54,664

  (1) The Group extended a loan of R27 million to Vuna Fishing Company Proprietary Limited.
  (2) On 1 January 2017, the Group sold its 49.81% interest in Vuna Fishing Company Proprietary Limited 
      to Vuna Fishing Group Proprietary Limited a company controlled by Brimstone Investment Corporation Limited.

 Audited Year                                                      Unaudited          Unaudited
        ended                                               six months ended   six months ended
  31 December                                                        30 June            30 June
         2016                                                           2017               2016
                6. STATED CAPITAL (number)                                                    
                   In issue (number)                                                           
  974,402,360      Ordinary shares                               251,362,907        974,402,360
(125,160,360)      Held as treasury shares                      (11,389,304)      (125,160,360)
  849,242,000                                                    239,973,603        849,242,000
                   Weighted average number of shares on
                   which earnings and headline earnings
  141,540,333      per share is based:                           195,379,525        141,540,333
                   Weighted average number of shares
                   on which diluted earnings and diluted
  162,400,393      headline earnings per share is based:         198,154,129        162,400,393
                   Reconciliation of weighted average
                   number of shares used in the calculation
                   of basic and diluted earnings per share
                   and headline earnings and diluted
                   headline earnings per share:                                                
  141,540,333      Basic                                         195,379,525        141,540,333
   20,860,060      Dilutive instruments                            2,774,604         20,860,060
  162,400,393      Diluted                                       198,154,129        162,400,393

  The following share movements occurred during the period under review:

                                             Total Shares In    Less Treasury  Total Net Shares
                                                       Issue           Shares          In Issue
    Opening balance                              974,402,360      125,160,360       849,242,000
    Share consolidation —
    15 February 2017 (1:6)                     (812,001,966)    (104,300,300)     (701,701,666)
    Shares repurchased                          (17,370,821)     (13,870,821)       (3,500,000)
    Shares issued                                106,333,334        4,400,065       101,933,269
    Closing balance                              251,362,907       11,389,304       239,973,603

7. SHARE-BASED PAYMENTS
   The Group has two controlled trusts which have been established as vehicles through which certain
   executives, senior management and employees have made an investment in or acquired an economic
   exposure to an investment in shares in the Group. During the six months ended 30 June 2017, The
   Sea Harvest Management Investment Trust No. 2 and The Sea Harvest Employee Share Trust share
   incentive schemes were reclassified from equity-settled share-based payment schemes to cash-settled
   share-based payment schemes.
  
   On 23 March 2017, the Group established a forfeitable share plan. In terms of the forfeitable share
   plan, executive directors and senior managers will be awarded performance shares in the Group.
   The performance shares are linked to a requirement of continued employment over the prescribed
   period, the Group's performance and strategic, individual performance conditions which have to be
   met. Shares are granted to participants for no consideration. These shares participate in dividends and
   shareholder rights from grant date. The scheme is accounted for as an equity-settled share scheme.
   
                                                    The Sea Harvest    The Sea Harvest                 
                                              Management Investment     Employee Share       Forfeitable
                                                        Trust No. 2              Trust        share plan
   Grant date                                         31 March 2014      31 March 2014     23 March 2017
   Number of shares granted                               8,257,898          4,258,138         4,400,065
   Fair value of shares at grant date (R)                 8,788,000          5,155,000        46,283,566
   Expiry date                                        31 March 2022      31 March 2022     23 March 2020
                                                                                             Service and
   Vesting conditions                                       Service            Service       Performance
   
                                                    The Sea Harvest    The Sea Harvest                 
                                              Management Investment     Employee Share       Forfeitable
                                                        Trust No. 2              Trust        share plan
   Number of shares held at the
   beginning of the period                               82,578,980         42,581,380                 -
   Share consolidation —
   15 February 2017 (1:6)                              (68,815,817)       (35,484,483)                 -
   Shares repurchased                                  (10,322,373)        (3,548,448)                 -
   Granted                                                        -                  -         4,400,065
   Number of shares held
   at the end of the period                               3,440,790          3,548,449         4,400,065
   
   Effect on financial statements                                 R                  R                 R
   Share-based payment expense
   for the period                                         3,568,404          1,769,347         5,590,181
   Liability for cash-settled
   share-based payments                                  13,012,744          8,389,323                 -
   Equity-settled share-based
   payment reserve                                      (5,348,791)        (4,845,338)         5,590,181

CORPORATE INFORMATION

Registered address:     The Boulevard Office Park
                        1st Floor, Block C
                        Searle Street
                        Woodstock
                        Cape Town
                        7925
                        South Africa

Directors:              F Robertson * (Chairperson)
                        BM Rapiya **
                        WA Hanekom *
                        L Penzhorn *
                        MI Khan * 
                        T Moodley ***
                        F Ratheb (Chief Executive Officer)
                        JP de Freitas (Chief Financial Officer)
                        Mo Brey (Chief Investment Officer)
                         
                        * Non-Executive
                        ** Lead Independent Non-Executive
                        *** Non-Executive Alternative
                        
                        There have been no changes to the board of directors since the listing.
                         
Company Secretary:      Nana Aston
                         
Transfer Secretary:     Computershare Investor Services Proprietary Limited
                        15 Biermann Avenue, Rosebank, 2196

                         
Sponsor:                The Standard Bank of South Africa Limited
                         
Auditors:               Deloitte & Touche

Cape Town
23 August 2017


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