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| Review of operations – Corporate Services continued |
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| Namibian fishing enterprise |
The business was significantly expanded in the second half of the year by a series of transactions that have increased our control over a bigger portion of fishing quotas. The effect is to foster price stability and mitigate some of the consequences of long-term pressure on Namibia’s fishing resources.
Bidvest increased its shareholding to 59% of Namsov, Namibia’s leading horse mackerel fishing business. Namsov continues to own a 75% stake in a monk-fish operation, Twafika Fishing Enterprises. The remainder of the equity is owned by our local trade union partners, Labour Investment Holdings. The status of Namsov Industrial Properties, a wholly owned Namsov subsidiary, is also unaffected by recent transactions.
The changes involve Namsea and a new joint venture. On May 21 2007, Namsov increased its 70% ownership of Namsea to 100%. Namsea focuses on pilchard fishing. The transaction resulted in full ownership of the Namsea subsidiary United Fishing Enterprises and its Atlantic Harvesters business unit (a horse mackerel quota-holder).
In January 2007, a shelf-company was acquired and rebranded as Trachurus Fishing. Subsequently, 49% of the new entity was sold to four smaller quota-holders, in effect creating a joint venture company while consolidating important horse mackerel concessions.
These transactions build on existing contractual arrangements and reinforce long-standing working relationships. The new structures respect legislative requirements that create strong linkages between quota control and vessel ownership while strengthening the overall market position of Namsov. Full acquisition of Namsea also ensured that 200 jobs were saved.
Revenue of N$454,0 million at the expanded business moved higher (2006: N$378,4 million) while trading profit of N$87,4 million (N$75,8 million) was also up. When the effects of the Namsea acquisition are stripped out, revenue of N$393,0 million was recorded while trading profit stood at N$75,7 million.
Flat performance is attributable in the main to continued pressure on Namibia’s fishing resource. The key measures in the fishing business – total allowable catches and quotas – are somewhat below last year’s figures.
A further challenge was created by constant fuel price increases as fuel accounts for 35% of our operating costs.
The record prices achieved for our catch, a key benefit of greater price stability on the back of quota consolidation, compensated for the reduction in quotas and catch rates.
Higher prices also reflect Namsov quality. We differentiate ourselves as Namibia’s most efficient fishing fleet and suppliers of the nation’s best quality horse mackerel.
This reputation is supported by continuing investment in our mid-water trawlers. Over four years, N$55 million has been invested on larger freezing capacity for our vessels while increasing the size of the stocker ponds and holding tanks. The use of flow ice ensures the fish is chilled just after it is caught and kept at low temperatures until being processed and frozen. The result is improved quality, optimum selling prices and entrenched status as Namibia’s preferred horse mackerel supplier.
The company’s social commitments are also a source of pride. Since 1990, Namsov has contributed N$17,5 million to community development, education, health and welfare in Namibia, an unsurpassed record for consistent social investment.
Our challenges relate to HIV/Aids, skills shortages, constant pressure on fish resources and the dearth of suitable vessels to augment our fleet.
We ensure Namibians account for 55% of our crews and give an industry lead in resource management, liaising closely with government on quotas and good fishing practice to protect young fish and those in the process of spawning.
In future, continued pressure on turnover is anticipated as we are committed to responsible management of the fish resource. We plan to increase efficiency while exploiting opportunities for expansion into Angolan waters. The full-year effect of Namsea’s pilchard-fishing operations will also be felt in 2008. Opportunities for aquaculture will be examined while the possibility of adding two more vessels to the fleet will be pursued, though it may mean going as far afield as the Ukraine. |
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