Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697768856855.pdf (Fiji)
PACIFIC FISHING COMPANY 2015 ANNUAL REPORT Chairman’s Report The Pacific Fishing Company (“PAFCO”) is the mainstay of the economy of Ovalau.

As the largest provider of employment on the island, with the Government of Fiji as the majority shareholder, PAFCO is the Government’s fiscal ‘front-line’ in the province providing immense contribution to the social and economic development of the island and in the maritime province of Lomaiviti.
Government expects PAFCO to remain in Levuka and provide employment to the people of Ovalau and Lomaiviti, and to continue to earn foreign exchange and to operate without sustaining a loss.

The 2015 financial year has been full of challenges – the inconsistent supply of Tuna has been an ongoing concern and this hampered the operations.

The slight profit level achieved in the financial year is a result of the commitment and dedication of the management, staff and the employees.
PAFCO continues to embrace its existing business arrangements with established international players in the global tuna industry.

PAFCO received a Government Loan of $9M dollars in the 2015 national budget – the allocation was for the construction of new 4000Metric Tonnes Cold Storage.

The construction works are in progress and, barring any further delays due to elements beyond the control of PAFCO and the contractor, completion is targeted to be in mid 2016.
PAFCO has also secured a $10.5M note funding from Bumble Bee Foods – this note funding has been allocated to funding the balance of the Cold Storage project and also for the factory upgrade works that were identified during the structural analysis that was conducted in 2014.

Refurbishment works will also be funded by a loan from ANZ Bank.

During the financial year, PAFCO negotiated a better deal with the ANZ and transferred its banking needs from Westpac to ANZ.
PAFCO also secured a new Government Guarantee for $11.3M.

Breakdown Amount ($) Amount ($) Fund part of the refurbishment works required Refinance and Update Loans from WESTPAC: 6,000,000 5,320,241 Overdraft 3,000,000 Facilitate Insurance Premium payments 1,000,000 Establish Bank Guarantees/Bonds 1,000,000 Refinance existing debt with Westpac Banking Corporation 320,241 Total 11,320,241 Ikbal Jannif, Chairperson.
1 PACIFIC FISHING COMPANY 2015 ANNUAL REPORT Chief Executive Officers Report “Profitability is coming from productivity, efficiency, management, austerity and the way to manage the business”- Carlos Slim 2015, though very challenging, was a productive year for PAFCO.

We slightly grew our business, increased our profit and advanced key strategic initiatives which enabled us to improve our competitiveness and create value for shareholders.
We aim to continuously enhance and progress our organisation in order to improve the operational excellence, increase efficiency and create a competitive advantage.

A number of major Capital Projects have been undertaken during the year.
 Construction of a new 4000 Metric Tonne cold storage facility- in progress  Upgrade of the forklift fleet  Upgrade of the plant flooring  Upgrade of the plate freezer cooling system  Fishmeal Plant upgrade PAFCO is a strong manufacturing company with excellent opportunities for growth.

Our strategy is clear and well understood and our customers appreciate the knowledge, expertise and commitment of our people.
The company holds great pride in being the “home of Sunbell” Performance In 2015, we measured ourselves against some key financial and operational objectives.

In doing so, we enabled creating sustainable, longer term shareholder value.

Our sound investment in some assets led to an improvement in the financial indicators.

The Return on Equity has shown an improvement.

PAFCO History Pacific Fishing Company has been in existence for over 50 years.
PAFCO’s operations began in the mid 1950s as a joint venture between the Fiji Government and the Japan Ministry of Trade and Commerce.

It was incorporated in 1963 as a private company and continued as such until the Government of Fiji acquired almost full ownership in 1987 from the Japanese company C. Itoh.

The Government of Fiji now holds 99.6% of issued capital with 0.4% held by private shareholders.

Currently the company has a Chairman and 2 directors.
The principal activities of the company are loin processing for export, and tuna canning for local and overseas markets.

The processing plant is based in Levuka, Ovalau with the executive headquarters located in Suva.

PAFCO signed a 7-year tuna loining processing agreement in 2002 with Bumble Bee Foods, following the successful operation of the initial loin processing agreement with Bumble Bee Foods from 1998.

The agreement has since been extended twice, with the current extension valid until March 2017.
PAFCO and Bumble Bee are now in the process of discussions to extend the processing agreement for a further 10 year period.

PACIFIC FISHING COMPANY 2015 ANNUAL REPORT PAFCO Operations PAFCO processes whole round tuna into cooked frozen tuna loins, and produces canned products.

The cooked tuna loins are vacuum-packed, sealed, frozen and palletized.

The process involves initial receipt of raw fish into cold storage that operates at around -22 degrees Centigrade.
The whole round fish are dispatched to the thawing area to be thawed evenly.

This process takes between 8 to 10 hours depending on the size of the fish.

The fish is then gutted and washed before being cooked using steam.

The fish is cooled before being moved to the cleaning tables.

At the cleaning table the fish is skinned, de-boned and carefully loined for further packaging and refrigeration prior to shipment.

Fish-flakes and pieces are collected and further processed for local canning.
Loin processing is labour intensive and most often carried out in low labour-cost areas.

Loin cleaning and throughput per cleaner is critical and is highly dependent on the quality objective and the productivity of the cleaners as well as the species of tuna, size of Tuna and experience of the cleaners.

Percentage yield is based on the amount of usable tuna meat recovered from the tuna processing.
The wastage from the processing operation (guts, skin, bones, heads, tails) are sent to the fish meal plant where fish oil is first extracted before the remains are dried and converted to fish meal.

PAFCO is a relatively large organization by Fijian standards.

The production process is relatively complicated and time consuming.

Accordingly, a number of key skilled employees are required.

PAFCO’s main production facility is located in Levuka, on the island of Ovalau, about 60 nautical miles from Suva.
Ovalau and the surrounding islands have a population of about 9,000 and the majority of the workforce comes from this area.

Corporate Statements These have been developed after extensive consultation with management and staff representatives Core Business PAFCO’s Core Business: PAFCO’s core business is loining of Tuna for Bumble Bee Foods.

The secondary component of PAFCO’s operations are canning, fishmeal production, and fish oil extraction by a third party.
PAFCO Core Business in 5 years: PAFCO’s core business will continue to be “loining of tuna”.

However, the client base will be broadened.

The expanded/broadened operations could also include more value adding, increased canning, expanded product range, and canning for Bumble Bee Foods.
The fishmeal production and fish oil extraction will continue PACIFIC FISHING COMPANY 2015 ANNUAL REPORT PAFCO Vision A competitive producer and growing exporter of quality tuna products Mission To achieve our vision we will:  Become the most efficient producer of quality tuna products,  Provide a safe and healthy workplace and comply with local & international regulatory standards,  Ensure that our activities are environmentally friendly and sustainable,  Remain an equal opportunity employer in Ovalau and the Lomaiviti province.
Slogan ‘PAFCO, the home of Sunbell’ Values Integrity and Fairness 1.

Accountability and Transparency 2.

3.

Customer Focused 4.

People Focused 5.

Safety and Security Conscious 6.

Doing the Right Thing 7.

Consideration of all stakeholders Corporate Social Responsibility PAFCO, being the premier industry on the island of Ovalau, recognizes and accepts that our social, environmental and ethical conduct has an important impact on the community.
The company is relied upon by the local populace to assist and contribute to socio economic development beyond its statutory role and obligations.

PAFCO therefore, takes a serious approach on its social responsibilities to our employees, the local communities and the environment whilst maintaining clear focus on its strategic business objectives and statutory obligations.

Capital Based Growth PAFCO will invest substantially in the development and maintenance of its infrastructure, plant and equipment.
This will not only allow PAFCO to increase capacity but also to improve efficiency.

The new labelling machine is a perfect example of this as it has replaced a 45 year old machine and improved efficiency significantly.

The new machine can do between 250 to 300 cans per minute, compared to the old machine which could only do up to 100 cans per minute.

Capacity Based Growth The local demand for PAFCO canned products is in excess of the current level of supply.
There is substantial amount of additional cans that PAFCO can produce which can easily be sold within Fiji.

Hence, PAFCO on an annual basis intends to invest more funds into purchasing more Tuna that will be used for the production of canned Tuna products for local sales.

PACIFIC FISHING COMPANY 2015 ANNUAL REPORT Financial Strategies PAFCO has secured the required funding for the capital works.
The funds for the additional raw Tuna that will be processed into local cans will be sourced from the cash flow.

The Company has secured a Government guaranteed loan at concessionary rates and has also secured a loan from its Bankers.

A Funding Facility with Bumble Bee Foods is also available.

The facility from Bumble Bee Foods is interest free.
PAFCO has managed its relationship with the major customers - Bumble Bee Foods, its largest shareholder, the Fiji Government - and this is reflected by the assistance received by PAFCO from both parties for their capital works funding.

When issues do arise, they are openly discussed and resolved as soon as possible.
Board of Directors Chairperson Director Director Senior Management Chief Executive Officer Financial Controller and Company Secretary Human Resources Manager Production Manager Raw Materials and Logistics Manager Assistant QC Manager Automotive Manager Maintenance Manager - - - - - - - - - - - Mr. Ikbal Jannif Ratu Etonia Seru Mr. Bhupendra Kumar Bhan Pratap Singh Arveen Aklesh Chand Tavite Racumu Ashok Kumar Raj Thomas McGoon Vasiti Komainalovo Jagbir Singh Ronaldo Yambao PACIFIC FISHING COMPANY 2015 ANNUAL REPORT Current Trends Bumble Bee Fish Processed & Loins Produced e n n o T c i r t e M 30000 25000 20000 15000 10000 5000 0 s n o t r a C 350,000 300,000 250,000 200,000 150,000 100,000 50,000 - BB Fish Processed Loins produced Cartons Produced 2010 2011 2012 2013 2014 2015 Year Canned Tuna Produced 2010 2011 2012 2013 2014 2015 Year PACIFIC FISHING COMPANY 2015 ANNUAL REPORT Income and Expense s n o i l l i M $35 $30 $25 $20 $15 $10 $5 $0 2010 2011 2012 2013 2014 2015 Year Total Income Total Expenses Return on Assets & Return on Equity e g a t n e c r e P 10.00% 5.00% 0.00% -5.00% -10.00% -15.00% -20.00% -25.00% -30.00% 2010 2011 2012 2013 2014 2015 Year Return on Assets Return on Equity Ground Breaking Ceremony for New Cold Storage The ground breaking ceremony was held on the 18th November, 2015.
Director and Tui Levuka Ratu Etonia Seru officiated as the chief guest at the function.

Representatives from Bumble Bee Foods and other guests were present at the site to witness and take part in the important event.

PACIFIC FISHING COMPANY 2015 ANNUAL REPORT Ground Breaking Ceremony for New Cold Storage The ground breaking ceremony was held on the 18th November, 2015.

Director and Tui Levuka Ratu Etonia Seru officiated as the chief guest at the function.
Representatives from Bumble Bee Foods and other guests were present at the site to witness and take part in the important event.
PACIFIC FISHING COMPANY 2015 ANNUAL REPORT PACIFIC FISHING COMPANY 2015 ANNUAL REPORT Measure Sales 2015 Performance Framework Definition Target Achieved Total $ value of sales $31,011,883 $31,317,974 Loin Processing Fee $ Value $15,373,957 $16,451,942 Canned Product (Cases) $ Value $13,212,900 $12,239,340 EBIT Margin EBIT / Total Revenue Expense to revenue Exps / Revenue 3.67% 96.33% 5.89% 94.62% Net Profit(NPAT) Revenue less expenses $910,302 $1,320,874 NPAT Margin Return on Assets Return on Equity NPAT/Total Revenue Net Profit / Total Average Assets Net Profit/Total Equity 2.94% 2.76% 4.77% 4.22% 3.17% 6.84% Cost of Production (COP) All production exps $27,413,463 $27,859,627 COP Margin COP/ Total Revenue 89% 88.96% Operational Throughput Overall Tonnes Processed 21,281 21,278 Albacore Cases Compliance Tonnes Processed Cases Produced Audits 20,000 277,000 95% 20,404 250,375 98% Plant reliability (Uptime) Possible vs actual 98.0% 99.0% Operational audits Ratings or scores from Audits 96.50% 98% Market Share Growth To be established 55% PACIFIC FISHING COMPANY 2015 ANNUAL REPORT PACIFIC FISHING COMPANY LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 CONTENTS Table of Contents Directors’ Report Statement by Directors Independent Audit Report Statement of Comprehensive Income Statement of Changes in Equity Statement of Financial Position Statement of Cash Flow Notes to the Financial Statements Detailed Statement of Comprehensive Income 1 PAGE NO 1 2 - 3 4 5 - - 29 31 - 32 PACIFIC FISHING COMPANY 2015 ANNUAL REPORT 2 PACIFIC FISHING COMPANY 2015 ANNUAL REPORT 3 PACIFIC FISHING COMPANY 2015 ANNUAL REPORT 4 PACIFIC FISHING COMPANY 2015 ANNUAL REPORT 5 PACIFIC FISHING COMPANY 2015 ANNUAL REPORT 6 PACIFIC FISHING COMPANY 2015 ANNUAL REPORT 7 PACIFIC FISHING COMPANY 2015 ANNUAL REPORT 8 PACIFIC FISHING COMPANY 2015 ANNUAL REPORT 9 PACIFIC FISHING COMPANY 2015 ANNUAL REPORT 10 PACIFIC FISHING COMPANY 2015 ANNUAL REPORT 11 PACIFIC FISHING COMPANY 2015 ANNUAL REPORT 12 PACIFIC FISHING COMPANY
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