Sea Harvest Group announces its interim results and the acquisition of Ladismith Cheese

28 August 2018

Sea Harvest Group announces its interim results and the acquisition of Ladismith Cheese Press Release – 28 August 2018

Sea Harvest Group today released its interim set of results for the period ended 30 June 2018 and announced that its wholly-owned subsidiary, Cape Harvest Food Group Proprietary Limited (Cape Harvest), has concluded a share purchase agreement of R527 million to acquire the entire issued share capital of Ladismith Cheese Company Proprietary Limited (“Ladismith Cheese”), based in the Western Cape.

Sea Harvest Group reported revenue of R1.004bn, down 5% from the corresponding period in 2017 impacted by the reduction in the total allowable catch (TAC) in South Africa, and the delayed start to the prawn fishing season in Australia. Gross profit increased by 4% to R367.7m for the period and the gross profit margin improved by 3% to 36.6%, benefitting from further efficiency gains across both the fleet and factory operations and an increase in higher margin export sales volumes. Headline earnings of R111.3m improved slightly by 1% over 2017, impacted by costs incurred for the Viking transaction and the performance of Mareterram, due to the late start of the prawn season.

Sea Harvest Group generated R195 million in cash from operations before changes in working capital and the utilisation of R130m in investing activities during the period under review, ending the period with R321m of cash on hand.

Sea Harvest Group CEO, Felix Ratheb, says the group’s key focus for the 6-month period in review was continuing to drive its strategic deliverables of organic and acquisitive growth. “The Harvest Mzansi joined our fleet in April 2018, and our factory optimisation project concludes in Q4 this year. These initiatives should assist us in delivering margin enhancement. In support of our acquisitive goals the Group’s strategy is to invest in fishing and complementary sectors of the South African food and agricultural industry which exhibit strong fundamentals, growth and where the Group is able to leverage its core competencies and strengths. The recent completion of the Viking Fishing and Aquaculture transaction and now the acquisition of Ladismith Cheese is in line with our strategic objectives, with both these transactions meeting our investment criteria.”

Ratheb went on to add, “Ladismith Cheese exhibits strong fundamentals. It is a profitable, branded fast moving consumer goods food manufacturer of significant scale in the food and agricultural sector. It has a long track record, strong national brand and a proven management team. In our opinion, the dairy sector is expected to experience continued growing demand for cheese and butter in response to consumer dietary changes towards natural fat products.” The Ladismith acquisition will be funded from available cash and/or facilities and/or a potential vendor consideration placing and is subject to such other terms and conditions as are considered typical for a transaction of this nature.

Fred Robertson, Chairperson of the Group’s majority shareholder, Brimstone, states that, “The acquisition of Ladismith Cheese will provide Sea Harvest, through its wholly-owned subsidiary company, Cape Harvest, with an ideal platform from which to build on in the dairy sector through the development and acquisition of additional dairy and allied beverage products.”

Ratheb states that the group retains a positive outlook as global demand for high-value, sustainable certified wild-caught seafood remains high and this will continue to drive higher margin export growth. “We expect to see significant benefit from the complementary nature of the Viking fishing business and our diversification into aquaculture and complementary sectors of the South African food and agricultural sectors,” he concluded.

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