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Oceana names new auditors, issues strong trading update

Canned fish sales volumes for the third quarter were up 14.5%, with a 50% increase in more profitable local production

21 July 2022 - 12:47
Oceana chairperson Mustaq Brey says the appointment of Mazars will help restore confidence in its financial reporting. Stock photo.
Oceana chairperson Mustaq Brey says the appointment of Mazars will help restore confidence in its financial reporting. Stock photo.
Image: 123RF/Angel Luis Simon Martin

In a move expected to send a positive signal to the market after a public break-up with its previous auditors PwC, fishing group Oceana announced on Thursday it had appointed Mazars as its new auditors.

The JSE-listed company, which owns the Lucky Star canned fish brand, said the appointment, which is immediate, followed a tender process and was “made within the 40-day timeframe for the appointment of new auditors required by the JSE”.

Oceana chairperson Mustaq Brey said the appointment of Mazars would help restore confidence in its financial reporting, adding “Mazars is an internationally respected audit firm with a large and well-established business in SA”.

“We are confident that with this appointment we can provide shareholders and key stakeholders with assurance that financial reporting will continue to be impartial and rigorous.”

At the end of May, PwC resigned as auditors, which sent shockwaves through the market as it came on the heels of other challenges faced by Oceana in recent months, including a forensic probe related largely to accounting issues at its US business and an ongoing investigation by the Financial Sector Conduct Authority (FSCA) into whether it made false and misleading statements. Oceana also lost key executives earlier this year with the resignation of CEO Imraan Soomra, which came just a week after CFO Hajra Karrim was suspended in February. Early in June Oceana announced Karrim had been dismissed for “gross misconduct” but gave no further details.

The forensic probe by ENSafrica found no financial wrongdoing on the part of Oceana, but flagged certain “behavioural and conduct matters” in relation to some staff.

The FSCA probe is ongoing.

At the time of the announcement of PwC’s resignation, Oceana acknowledged a “strained relationship” with PwC, which had been its auditor since 2020, saying in a Sens announcement the auditing firm had resigned with immediate effect due “to their assessment of significant doubt as to whether there is objective and transparent communication between PwC and the board, which they assert constitutes a significant impairment of their independence”.

PwC said at the time it had “determined that we are unable to continue as auditor of the Oceana Group”. It could not provide further details because of client confidentiality.

Sasfin Securities chief global equities strategist David Shapiro said on Thursday the appointment of well-respected Mazars sent the right message to the market.

“This is not some firm they’ve picked up in some country district. The auditors would also have come with guarantees or undertakings for the company to address issues that led to the departure of the previous auditors and to make sure controls are in place.”

Shapiro said he was “pleased” by the development as the market “does not want scandals” to bring down companies such as Oceana, which has thousands of employees and has “historically been a good business going back many years”.

“You want them to do well, survive and continue their operations.”

At the same time as the announcement of new auditors, Oceana released a strong trading update for the nine months ended June 26 2022 that “confirmed the indications of the strong second-half recovery it had anticipated at its interim results”.

Canned fish sales volumes for the third quarter were 14.5% higher than in the comparative period, with “a 50% increase in more profitable local production”.

Oceana said its African fishmeal and fish-oil production volumes were 28% higher than in Q3 2021. “Sales volumes year-to-date are now in line with the prior period, having recovered from the impact of lower opening inventory levels.”

Its US operations were also faring well, with the group saying third quarter gulf menhaden landings were 83% higher than the comparative period. Gulf menhaden is a small ocean fish.

Shapiro said the update was positive, showing Oceana was “selling fish and trading is up”.

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