The Mozambican Tuna Company (EMATUM), set up in 2013 is Running At Heavy Loss.

tuna fishing Mozambican Tuna Company EMATUM

Maputo — The Mozambican Tuna Company (EMATUM), set up in 2013, is running at a heavy loss, according to the accounts for 2013 and 2014, published in the Mozambican media on Friday.

EMATUM became heavily indebted on the European bond market in mid-2013, in order to purchase 30 vessels from a French shipyard. In all, EMATUM issued loan certificates for 850 million US dollars.

Initially, EMATUM mandated the banks Credit Suisse and BNP Paribas to manage the sale of bonds worth 500 million dollars. Credit Suisse provided a loan to EMATUM for this sum in order to issue the bonds. The bonds carried an interest rate of 8.5 per cent.

The bond issue was oversubscribed and so a second bond issue, managed by Russian bank VBL Capital, raised a further 350 million dollars for EMATUM.

These loans were fully guaranteed by the Mozambican government, which must pay up in the event of EMATUM defaulting.

Questioned about the deal in parliament in late 2013, ministers were confident that EMATUM would become a profitable concern.

The then Fisheries Minister, Victor Borges, said a viability study had shown that the purchase of the fishing boats was economically viable.

From the second year of EMATUM’s operations onwards, the company would be able to pay for its own running costs and service its debt. Borges predicted that when the fleet is fully operational it will bring in revenue of 200 million dollars a year. “We want to assure you that the fiscal risk has been taken care of”, he told the deputies.

But the figures so far are not encouraging – although it should be noted that by December 2014 only a few of the boats had arrived.

The accounts show that in 2014 EMATUM made a loss of over 850.5 million meticais (about 24.9 million US dollars). The accumulated losses, from 2013 up to December 2014 were 1.17 billion meticais. EMATUM’s own funds were thus deeply in the red, at minus 1.16 billion meticais.

This situation clearly worried the independent auditor, Ernst & Young Ltd. In its report, it pointed out that the continuity of EMATUM’s operations “is strongly dependent on a capital structure duly supported by the shareholders and/or by financial institutions, as well as on profitable operations in the future”.

EMATUM’s notes to the accounts argued that the heavy losses are strongly influenced by expenditure related to the interest on the loan acquired to buy the fishing boats, The company had drawn up its 2014 financial statements “in accordance with the Principle of Continuity. This principle assumes that the company will continue to receive the support of its shareholders and the bank, and that it will make a profit in the future”.

The financial viability plan, approved by the company management, envisaged a positive cash flow that would guarantee the servicing of EMATUM’s debt.

The first boats received from France put out to sea twice in late 2014 on what the company describes as “experimental fishing expeditions”. The catch was sold in early 2015 – but it was sold at a loss of about 3.3 million meticais. EMATUM says this loss was because these initial fishing expeditions were “an initial and experimental phase”.

The company also blames much of the 2014 losses on the exchange rate of the metical against the US dollar. It claimed that 463.5 million meticais of the losses were due to “unfavourable net exchange differences, caused essentially by an exchange rate updating of the loan”.

Despite these sombre figures, EMATUM is upbeat about the future. It says the first nine fishing vessels arrived on time in 2014, and that it now employs 185 workers, of whom only nine are foreigners.

EMATUM expects the level of catches to grow gradually throughout 2015, as the rest of the ships arrive. Negotiations have been held with clients interested in buying tuna, and a table of prices for frozen tuna has been approved “which covers the costs of production”.

A message from EMATUM chairperson Antonio Carlos do Rosario, prefacing the report and accounts, states that the year 2014 “marked the end of doubts and speculation about the viability of the project”.

EMATUM’s ambition, he said, was to become “one of the largest tuna fishing companies in the world with an international profile”, and one of the few which “observes international parameters in catching, handling and processing fisheries produce”.

Rosario declared that EMATUM is committed to building a more prosperous Mozambique “contributing to an increase in employment, the training of Mozambican staff in using longline technology, and increasing fiscal revenue”

source: all africa

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