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Summarised Financial Results For The Year Ended 31 August 2018 And Dividend Announcement
PREMIER FISHING AND BRANDS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1998/018598/06
Share code: PFB and ISIN: ZAE000247516
("PFB" or "the Company" or "the Group" or "Premier")
Summarised audited condensed consolidated annual financial results for the year ended 31 August 2018
GROUP PROFILE
Premier Fishing and Brands Limited through its subsidiaries operates a vertically integrated fishing business which specialises in the harvesting,
processing and marketing of fish and fish-related products. The Group holds medium to long-term fishing rights in squid, lobster, small pelagics,
hake deep-sea trawl, hake longline, horse mackerel, swordfish and tuna. The Group also owns an abalone farm and invests in organic fertilisers through
the "Seagro" range of products.
Highlights compared to the prior year:
- Revenue increased by 20% from R411 million to R491 million.
- Operating profit increased by 41% from R65 million to R92 million.
- Profit after tax increased by 40% from R68 million to R95 million.
- The acquisition of a 50.31% shareholding in Talhado Fishing Enterprises Proprietary Limited ("Talhado").
- Cash generated from operations increased by 128% from R40 million to R91 million.
- Gross dividends of 25 cents per share declared to shareholders (2017: 15 cents per share).
The Group delivered a good performance for the year with revenue increasing by 20% and profit after tax increasing by 40% from the prior
year.
Cash generated from operations increased by 128%, from R40 million to R91 million from the prior year.
The good performance was as a result of strong earnings in the squid and lobster divisions of the business.
Our abalone business has produced results in line with management’s expectations while we focus on our expansion plans with increased performance expected to
be achieved during the 2019/2020 financial year when expansion is completed and pipeline fully secured.
Headline earnings per share ("HEPS") decreased by 9% from the prior year as a result of the weighted average number of shares ("WANOS") used in the calculation of
HEPS for the year ended 31 August 2018. For the 2018 financial year end, the WANOS is 260 000 000 shares, compared to a WANOS of 201 660 000 for the year ended 31 August 2017,
as a result of the listing of Premier on 3 March 2017.
Summarised Audited Condensed Consolidated Statement of Comprehensive Income
For the year ended 31 August 2018
Audited Audited Change
Year ended Year ended %
31 August 2018 31 August 2017
R’000 R’000
Revenue 490 870 410 733 20
Cost of sales (280 651) (230 586) 22
Gross profit 210 219 180 147 17
Other operating income 19 523 1 249 1 463
Other operating expenses (138 161) (116 245) 19
Operating profit 91 581 65 151 41
Investment revenue 40 975 33 015 24
Finance costs (3 543) (3 323) 7
Profit before taxation 129 013 94 843 36
Taxation (33 672) (26 743) 26
Profit for the year 95 341 68 100 40
Total comprehensive income for the year 95 341 68 100 40
Profit after tax attributable to :
Shareholders of Premier 81 858 68 100 20
Non-controlling interests 13 483 - 100
Profit for the year 95 341 68 100 40
Basic and diluted earnings per share (cents) 31.48 33.77 (7)
Headline and diluted headline earnings per share (cents) 31.60 34.59 (9)
Weighted average number of shares 260 000 201 660
Summarised Condensed Consolidated Statement of Financial Position
as at 31 August 2018
Audited as at Audited as at
31 August 2018 31 August 2017
R’000 R’000
ASSETS
Non-Current Assets 509 625 230 157
Property, plant and equipment 310 242 130 107
Goodwill 70 129 18 165
Intangible assets 39 550 62
Loans to Group companies 89 618 81 758
Deferred tax 86 65
Current Assets 599 460 730 806
Inventories 48 528 43 083
Trade and other receivables 128 643 89 620
Other financial assets 3 424 1 707
Current tax receivable 264 154
Biological assets 68 021 54 323
Cash and cash equivalents 350 580 541 919
Total Assets 1 109 085 960 963
EQUITY AND LIABILITIES
Stated Capital 507 517 507 517
Reserves 8 014 8 014
Retained income 298 424 255 566
Equity attributable to shareholders of Premier 813 955 771 097
Non-controlling interests 48 481 -
Total equity 862 436 771 097
Non-Current Liabilities 116 134 82 310
Other financial liabilities 4 663 7 651
Operating lease liability 333 1 243
Post-employment medical costs 984 1 075
Deferred tax 110 154 72 341
Current Liabilities 130 515 107 556
Trade and other payables 89 937 55 455
Other financial liabilities 6 712 3 419
Current tax payable 19 186 21 752
Provisions 14 680 8 944
Bank overdraft - 17 986
Total liabilities 246 649 189 866
Total Equity and Liabilities 1 109 085 960 963
Net asset value per share (cents) 331.71 296.58
Net tangible asset value (cents) 289.52 289.57
Summarised Condensed Consolidated Statement of Changes in Equity
For the year ended 31 August 2018
Audited Audited
Year ended Year ended
R’000 R’000
31 August 2018 31 August 2017
Balance at the beginning of the year 771 097 225 480
Non-controlling interests arising on acquisition of Talhado 50 662 -
Acquisition of additional shares from non-controlling interests in subsidiaries of Talhado (15 664) -
Profit for the year attributable to shareholders of Premier 81 858 68 100
Profit for the year attributable to non-controlling interests 13 483 -
Issue of shares - 507 517
Dividends (39 000) (30 000)
Balance at the end of the year 862 436 771 097
Comprising of:
Stated capital 507 517 507 517
Reserves 8 014 8 014
Retained income 298 424 255 566
Non-controlling interests 48 481 -
Total equity 862 436 771 097
Summarised Condensed Consolidated Statement of Cash Flows
For the year ended 31 August 2018
Audited Audited
Year ended 31 Year ended
31 August 2018 31 August 2017
R’000 R’000
Cash flows from operations 91 187 40 094
Interest income 29 448 17 446
Finance costs (3 543) (3 323)
Tax paid (54 820) (12 659)
Net cash from operating activities 62 272 41 558
Cash flows from investing activities
Purchases of property, plant and equipment to sustain operations (28 837) (14 066)
Purchases of property, plant and equipment to expand operations (86 803) (7 995)
Purchases of biological assets (520) -
Purchases of intangible assets (1 862) (27)
Business combinations (61 239) -
Acquisition of additional shares from non-controlling interests in subsidiaries of Talhado (15 664) -
Loans advanced to Group companies (58 721) (21 485)
Loans to Group companies repaid 60 720 -
Loans from Group companies repaid - (1 478)
Financial assets advanced (341) (641)
Net cash to investing activities (193 267) (45 692)
Cash flows from financing activities
Proceeds on share issue - 526 500
Share issue costs - (18 983)
Proceeds from other financial liabilities 942 -
Repayment of other financial liabilities (4 300) (2 966)
Dividends paid (39 000) -
Net cash (to) from financing activities (42 358) 504 551
Net increase in cash and cash equivalents (173 353) 500 417
Cash at the beginning of the year 523 933 23 516
Net cash and cash equivalents at end of the year 350 580 523 933
1. BASIS OF PREPARATION
The summarised consolidated annual financial statements were prepared in accordance with the JSE Limited Listings Requirements ("JSE") for provisional reports and the requirements
of the Companies Act, 2008 (No. 71 of 2008), as amended. The JSE requires provisional reports to be prepared in accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board, the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and IAS 34 - Interim Financial Reporting. The accounting policies applied in the preparation
of the summarised consolidated financial statements are in line with IFRS and are consistent with the accounting policies applied in the preparation of the previous consolidated annual
financial statements. This announcement does not include the information required pursuant to paragraph 16A(j) of IAS 34.
The summarised consolidated annual financial statements were prepared under the supervision of the group chief financial officer, Isaiah Tatenda Bundo, CA(SA).
This summarised report is extracted from the audited consolidated financial statements, but is not itself audited. The consolidated annual financial statements were audited by the Group's external
auditors, BDO Cape Inc., who expressed an unmodified opinion thereon. The audited consolidated annual financial statements and the auditor's report thereon are available for inspection at the Company's
registered office and on the Company's website: www.premierfishing.co.za. The auditor's report does not necessarily report on all of the information contained in this announcement. Shareholders are
therefore advised that in order to obtain a full understanding of the nature of the auditor's engagement they should obtain a copy of the auditor's report together with the accompanying financial
information from the Company's registered office. The directors take full responsibility for the preparation of the summarised consolidated annual financial statements which has been extracted without
adjustment from the underlying audited consolidated annual financial statements.
Any reference to future financial performance included in this announcement is the responsibility of the directors and has not been reviewed or reported by the Company's auditors.
2. Segmental Analysis
Revenue Audited Audited
Year ended Year ended
31 August 2018 31 August 2017
R’000 R’000
Lobster 202 318 190 589
Pelagics 62 904 80 778
Hake 31 492 31 210
Squid 128 169 34 428
Abalone 31 291 36 186
Horse mackerel 879 -
Cold storage 10 453 9 555
Seagro 5 790 5 174
Processing and marketing 23 486 26 909
Total segmental revenue 496 782 414 829
Less inter segmental sales (5 912) (4 096)
Total revenue 490 870 410 733
Segmental profit
Lobster 53 941 52 106
Pelagics 16 379 23 636
Hake 8 893 12 013
Squid 58 018 10 916
Abalone 12 175 13 241
Horse mackerel 879 -
Cold storage 359 332
Seagro 1 193 1 013
Processing and marketing 5 503 6 996
Total segmental profit 157 340 120 253
Administration and support services (78 937) (61 255)
Fair value gains on biological assets 13 178 6 153
Interest income 40 975 33 015
Finance costs (3 543) (3 323)
Total 129 013 94 843
Segmental assets
Lobster 77 566 75 140
Pelagics 103 806 94 743
Hake 11 457 15 935
Squid 220 602 10 701
Abalone 190 774 84 216
Cold store 839 628
Seagro 3 193 6 181
Processing and marketing 19 522 35 358
Administration and support services 481 240 637 996
Total segmental assets 1 108 999 960 898
Unallocated 86 65
Consolidated total assets 1 109 085 960 963
Segmental liabilities
Lobster 15 877 12 820
Pelagics 11 600 11 258
Hake 5 348 4 757
Squid 25 665 7 124
Abalone 16 290 6 478
Processing and marketing 14 980 14 158
Administration and support services 46 736 60 929
Total segmental liabilities 136 495 117 524
Unallocated 110 154 72 341
Consolidated total liabilities 246 649 189 865
Revenue per region
Europe 154 998 60 232
United States of America 128 058 118 801
Far East 107 934 110 029
South Africa 99 880 121 671
Total 490 870 410 733
3. OPERATING ITEMS
Operating profit for the year is stated after accounting for the following: Audited Audited
Year ended Year ended
31 August 2018 31 August 2017
R’000 R’000
Management fee expense 4 711 12 480
Loss on disposal of property, plant and equipment 409 2 295
Loan written off - 397
Loss on exchange differences - 2 979
Profit on exchange differences 1 797 -
Amortisation of intangible assets 2 642 6
Depreciation of property, plant and equipment 14 843 14 255
Fair value gain on biological assets 13 178 6 153
4. HEADLINE EARNINGS
Earnings attributable to owners of Premier 81 858 68 100
Adjusted for:
Effect of loss on disposal of property, plant and equipment gross of tax 409 2 295
Taxation effect (115) (643)
Headline earnings 82 152 69 752
Weighted average number of shares 260 000 201 660
Headline and diluted headline earnings per share (cents) 31.60 34.59
5. SIGNIFICANT EVENTS AND TRANSACTIONS
(i) BUSINESS COMBINATIONS
The Group acquired the squid fishing rights, brand and related assets of Talhado for a consideration of R89 million in order to enhance the Group's footprint in the squid sector. The
purchase agreement had an effective date of acquisition of 30 November 2017. However, in terms of IFRS 3, Business Combinations, the date of acquisition has been determined as the 9th of
May 2018. The fair value of the acquired fishing rights, brand and assets are provisional upon the fair value determination of the fishing rights and the Talhado brand. The provisional fair
values of the identifiable assets and liabilities are shown below:
Property, plant and equipment 78 987
Intangible assets 40 268
Inventories 25 815
Trade and other receivables 25 292
Other financial assets 1 511
Current tax payable (19 871)
Cash and cash equivalents 28 084
Other financial liabilities (10 302)
Deferred tax (35 888)
Trade and other payables (31 132)
Provisions (9 736)
Dividends payable (5 007)
Total identifiable net assets 88 021
Non-controlling interests (50 662)
Goodwill 51 964
Total purchase consideration 89 323
Net cash outflow on acquisition date:
Cash consideration paid 89 323
Cash acquired (28 084)
Net cash outflow on acquisition 61 239
The interest accrued on the purchase consideration amounting to R3 964 767 was included as part of the purchase consideration, was measured at fair value. All other acquisition
related costs amounting to R1 790 052 have been expensed and are included in operating expenses in comprehensive income.
Revenue of R80 million and profit of R29 million of Talhado has been included in the Group's results since the date of acquisition being 9th May 2018.
Had the business combination taken place at the beginning of the reporting year, namely 1 September 2017, the revenue for the Group would have been R683 million and profit after tax for
the Group would have been R134 million.
ii) Non-controlling interest
Non-controlling interest, which is a present ownership interest, and entitle the holders to a proportionate share of the entity’s net assets in the event of liquidation, is measured at the
present ownership interests proportionate share of the acquiree's identifiable net assets.
iii) Goodwill
Goodwill recognised at acquisition, relates to the expected growth and cost synergies which cannot be separately recognised as an intangible asset.
(ii) EXPANSION OF THE ABALONE FARM
During the current reporting period, the carrying value of plant and machinery increased from R39 million to R61 million as a result of the abalone farm expansion. Furthermore, assets under
construction increased to R30 million compared to R5 million in the prior year.
6. PRO FORMA FINANCIAL INFORMATION
The effective date of the Talhado acquisition transaction is 30 November 2017, however in terms of IFRS 3, Business Combinations, the date of acquisition is 9 May 2018. As a result, the
summarised provisional consolidated annual financial results for the year ended 31 August 2018 do not include the results of Talhado for the 5 months and 8 days from 1 December 2017 to 8 May
2018.
Pro forma results have been prepared for illustrative purposes only, in order to provide information relating to the impact of the Talhado acquisition on revenue, operating profit, profit
before tax and profit after tax for the year ended 31 August 2018, if the results of Talhado had been consolidated in Premier’s Group results from 1 December 2017, in order to show the
growth in Premier in relation to the acquisition of Talhado. Because of its nature the pro forma financial information may not fairly present Premier’s financial position, changes in equity,
results of operations and cash flows.
The pro forma financial effects are presented in accordance with the JSE Listings Requirements, the Guide on Pro Forma Financial Information issued by SAICA and the measurement and
recognition requirements of International Financial Reporting Standards. The accounting policies applied in quantifying pro forma adjustments are consistent with Premier’s accounting
policies at 31 August 2018. The pro forma results are the responsibility of the Board of directors. An assurance report (in terms of ISAE 3420: Assurance Engagements to Report on the Compilation of
Pro Forma Financial Information) has been issued by the Group’s auditors in respect of the pro forma financial information included in this announcement. The assurance report is available
for inspection at the registered office of the Company.
Pro forma results for the year ended 31 August 2018.
Pro forma
Year ended Year ended Growth %
31 August 2018 31 August 2017
R’000 R’000
Revenue 581 577 410 733 42%
Operating profit 142 493 65 151 119%
Profit before tax 178 216 94 843 88%
Profit for the year 131 522 68 100 93%
Pro forma results for the year ended 31 August 2018.
Premier audited Talhado unaudited Premier pro forma
for the year ended for the 5 months and 8 days ended after the inclusion of Talhado for the
31 August 2018(1) 8 May 2018(2) 5 months and 8 days ended 8 May 2018(3)
R’000 R’000 R’000
Revenue 490 870 90 707 581 577
Operating profit 91 581 50 912 142 493
Profit before tax 129 013 49 203 178 216
Profit for the year 95 341 36 181 131 522
1. The column titled "Premier audited for the year ended 31 August 2018" represents the provisional audited results for Premier Group for the year ended 31 August 2018.
2. The column titled "Talhado unaudited for the 5 months and 8 days ended 8 May 2018" represents the unaudited results for Talhado for the 5 months and 8 days ended 8 May 2018,
extracted from the Talhado audited financial statements for the year ended 31 August 2018 without adjustment, that would have been consolidated had the conditions precedent
been met prior to 8 May 2018.
3. The column titled "Premier pro forma after the inclusion of Talhado for the 5 months and 8 days ended 8 May 2018" represents the Premier Group pro forma results after the
adjustments if Talhado had been consolidated.
All pro forma adjustments will have a continuing effect on the financial results of Premier.
REVIEW OF OPERATIONS
Lobster
The 2018 total allowable catch ("TAC") for south coast rock lobster ("SCRL") is 335 tons up by 1% from the prior year TAC of 331 tons. The quota which is available to Premier is 135 tons
(2017: 133 tons).
The 2018 TAC for west coast rock lobster ("WCRL") remained unchanged from the prior year at 1 924 tons however the offshore allocation decreased from 1 204 tons to 995 tons. The quota
which is available to Premier is 64 tons (2017: 87 tons). The total WCRL contracted quota acquired for 2018 is 101 tons (2017: 96 tons). WCRL contribution to revenue and profits of the Group
is less than 15%.
The Group experienced increased landings due to good catch rates for the lobster division as well as bigger size mix for SCRL. The bigger size mix resulted in the Group achieving an increase
of 3% in US dollar pricing for SCRL as compared to the prior period. The increased landings also resulted in increased sales volumes for the division as compared to the prior period. The good
catch rates, increased market prices and volumes resulted in the division maintaining its margin despite the strengthening of the Rand against the dollar in the first half of the financial year.
Small pelagics
The Group’s 2018 quota allocation for Pilchards is 4 396 tons (2017: 3 383 tons). The catch rates for pilchards was lower than that of the prior year, industry wide resulting in lower landed and
sales volumes of Pilchards in the current year. Industrial fish catch rates were the same as those experienced in the prior year. The lower landings and sales volumes for Pilchards resulted in
lower revenues and operating profits for the division in the current year.
Squid
The acquisition of Talhado resulted in the increase in fishing rights and the number of fishing vessels utilised for squid from 4 vessels in the prior year to 22 vessels in the current year. The squid
industry experienced exceptional catch rates in the current period. The landed volumes and sales volumes for the division were more than double those of the prior period. The market for
South African squid remained stable despite the significant increase in landed volumes and the Euro sales prices achieved by the Group were the same as the prior period. The exceptional
catch rates, increased sales volumes and consolidation of Talhado from 9 May resulted in an increase of 431% in operating profits of the division.
Revenue of R80 million and profit after tax of R29 million has been consolidated from Talhado for the year ended 31 August 2018.
Hake
The 2018 TAC for hake is 133 119 tons. The quota which is available to the Group is 700 tons. The Group’s hake quota is caught, processed and marketed through a joint operation with Blue
Continental Products (Pty) Ltd ("BCP") Hake. The catch rates for the division were similar to those of the prior period and the division also experienced a bigger size mix for its catches.
There were unexpected major repairs and maintenance work done to the fishing vessel due to a breakdown which resulted in operating profits for this division being lower than the prior year.
Abalone
The Group commenced with construction of the expansion of the abalone farm. 40 tons of additional animal rearing capacity have been added to date and construction is anticipated to be
completed by the end of Quarter 1 in 2019. The division is currently focused on increasing its spat ("Baby Abalone") production and stock holding in preparation for the farm is expansion. Sales
volumes for the period were less than those of the prior period as the Group is growing out the animals to a bigger size for the market. Sales volumes are expected to increase once
construction at the farm has been completed. The stock value increased by 25% from the prior year and this volume will be realised in the coming financial years. It is the Group’s intention
to increase the stock value in line with the abalone expansion plans.
Horse Mackerel
The Group was awarded a horse mackerel quota of 800 tons during the FRAP2015/2016 process. The Group’s horse mackerel quota is caught, processed and marketed by Desert Diamond
Fishing (Pty) Ltd. 100% of the quota was caught during the current period.
Seagro
Seagro is an organic fertiliser produced from Fish Oil which is a by-product of the Fishmeal making process. There was an increased availability of fish Oil in the current period which resulted
in production of Seagro and increased sales volumes as compared to the prior period. The increased sales volumes in the current period resulted in increased profitability compared to the
prior period.
Processing and marketing
The total WCRL contracted quota acquired for 2018 is 101 tons (2017: 96 tons). The total Wild Abalone contracted quota acquired for 2018 is 31 tons (2017: 30 tons). The quota holders
landed their full quota allocations in the current financial year. Revenue and operating profits is lower than that of the prior year due to the strengthening of the Rand against the USD
in the first half of the financial year.
Events after the reporting period
A final gross dividend of 25 cents per share has been declared after the reporting period but before the financial statements were authorised for issue.
Furthermore, the directors are not aware of any other material facts or circumstances which occurred between the statement of financial position date and the date of this report that would
require any adjustments to the annual financial statements.
7. DIVIDENDS
R’000 R’000
Dividend declared after reporting date* 65 000 39 000
Dividends per share (cents) 25 15
*These dividends were declared subsequent to the respective annual financial year-ends.
CASH DIVIDEND DECLARATION
The Board of directors are pleased to announce that it has approved and declared a gross final dividend of 25 cents per share for the year ended 31 August
2018 from income reserves. The final dividend amount, net of South African dividend tax of 20% which equates to 5 cents per share and is therefore a net
20 cents per share for those shareholders that are not exempt from dividend tax.
The number of ordinary shares in issue at the declaration date is 260 000 000 and the income tax number of the Company is 9246036033.
The salient dates of the dividend distribution are as follows:
Gross dividend (cents per share) 25.00
Dividend net of dividend withholding tax (cents per share) 20.00
Announcement date Tuesday, 30 October 2018
Last day to trade cum dividend Tuesday, 20 November 2018
Trading ex-dividend commences Wednesday, 21 November 2018
Record date Friday, 23 November 2018
Date of payment Monday, 26 November 2018
Share certificates may not be dematerialised between Wednesday, 21 November 2018 and Friday, 23 November 2018, both days inclusive.
Future Prospects
The Group continues to focus on the expansion of its Abalone farm, additional acquisitions and increasing the diversification of its product basket. The Group expects an increased
contribution to the operational performance of the Group resulting from the acquisition of Talhado, which includes synergies as a result of cost savings.
DIRECTORATE AND STATUTORY INFORMATION
Directors: Reverend Dr Vukile Mehana (chairman) #*, Khalid Abdulla (Non-executive deputy chairman)#*, Mogamat Samir Saban (chief executive officer) *,Isaiah Tatenda Bundo *,
Rushaan Isaacs*, Salim Young #*,Cherie Felicity Hendricks#*, Aziza Amod#*, Rosemary Mosia #*, Clifford van der Venter #*, Advocate Dr. Ngoako Ramatlholdi#* and
Sebenzile Patrick Mngconkola#*
* Executive directors
#* Non-executive directors
Registered office: Quay 7, East Pier, V & A Waterfront, Cape Town, 8001
Auditor: BDO Cape Inc.
Company Secretary: Wazeer Moosa
Quay 7, East Pier, V & A Waterfront, Cape Town, 8001
wazeerm@premfish.co.za
Sponsor: PSG Capital Proprietary Limited
Transfer secretaries: Link Market Services South Africa (Pty) Ltd
Rennie House, 13th Floor, 19 Ameshoff Street, Braamfontein, Johannesburg 2000
Postal address: PO Box 4844, Johannesburg, 2000
Telephone: +27 11 713 0800
Telefax: +27 86 674 4381
Website: www.linkmarketservices.co.za
Cape Town
30 October 2018
Date: 30/10/2018 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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