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Samherji significant net loss in Namibia and taxes paid

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Monday, August 10, 2020, 17:00 (GMT + 9)

Last week Samherji announced that the investigation into the company's operations in Namibia, conducted by Norwegian law firm Wikborg Rein, had been completed. The announcement outlined the next steps in the process. It was stated that Samherji would soon explain further the individual allegations that have been made against the company and its employees.

The Pro forma consolidated financial statements of companies affiliated with Samherji in Namibia for the years 2012-2018 have been finalized. Last year, serious allegations were made about the operations of the companies in question. For this reason, special efforts were made to perform an in-depth analysis of the companies accounts to investigate these allegations and give an accurate account of the business.

Samherji Heinaste trawler during transhipment in Namibia area

The revenues of subsidiaries in Namibia in the period 2012-2018 amounted to the equivalent of ISK 41.1 billion, and operating expenses were ISK 38.9 billion. Net loss for the period, adding depreciation, finance costs, income tax etc. amounted to ISK 950 million. When all operating expenses in Namibia were broken down exactly, it was revealed that 55% was paid to Namibian parties or ISK 21.4 billion at today's exchange rate. Samherji believes that this shows that one of the most serious allegations made against the company, about exploitation in Namibia, is not rooted in facts.

The most significant part of operating expenses during the period were salaries, payments to Namibian partners and quota fees to the Namibian government. Payments to joint ventures owned by Namibians, the Namibian government and other quota holders were 29.3% of total revenues, and these payments amounted to a total of ISK 12 billion. Quota fees and salaries during the period were 51% of domestic operating expenses. The most substantial part of operating costs outside Namibia was due to salaries paid to crew members, fuel, and charter and maintenance fees for vessels.

"The results show that the allegations that Samherji walked away from Namibia with large profits are grossly misleading. Serious accusations about exploitation in Namibia deeply affected our management. However, the financials show that payments to Namibian parties during the period amounted to over ISK 21 billion at today's exchange rate. We sincerely hope that the disclosure of this information will lead to factually accurate and fair reporting about the operations," says Björgólfur Jóhannsson, co-CEO of Samherji.

Samherji has always emphasized strongly that its subsidiaries fulfil their obligations regarding the payment of salaries, taxes and fees. The same applies to agreements with Namibian partners, including the Joint ventures. Disputes with the Joint ventures were resolved before Namibian courts, and their claims against Samherji were rejected. 

Through the years, companies within the Samherji group have had to lend working capital to subsidiaries in Namibia, and a substantial portion of the loans has not been repaid. All operations in Namibia were discontinued at the end of 2019, and the subsidiaries are under closure. The companies have not been liquidated, but it is anticipated that a significant part of the aforementioned loans will not be recovered.

Samherji summarized what the companies in Namibia paid in taxes to the Namibian treasury while they were in operation in the years 2012-2019. Total taxes paid by Samherji's companies in Namibia over the years, including income tax, employee taxes, export duties, import duties, and a number of other payments to the Namibian state, amounted to a total of ISK 4 billion at today's exchange rate. Income tax and employee taxes weigh the most, as these two items make up 66% of the total tax payments for the period.
Samherji also summarized what the Namibian companies paid the Namibian state for the utilization of catch quotas during the same period. Companies affiliated with Samherji were not allocated catch quotas but bought and leased them from others and then paid special levies to the state for their utilization. These levies amounted to a total of ISK 2.5 billion at today's exchange rate. These two items, total tax payments and levies for the utilization of catch quotas, are therefore a total of ISK 6.5 billion. If payments for the purchase and lease of catch quotas are included, the amount for catch quotas is significantly higher, or a total of ISK 12 billion, which was 29.3% of total revenues in Namibia. A substantial part of that amount went to state-owned institutions and companies.
As previously reported, companies related to Samherji paid a total of ISK 21.4 billion to Namibian parties in the period 2012-2018. This information is based on the Pro forma consolidated financial statements of Samherji's companies in Namibia, but figures for 2019 are not available. Samherji's management hopes that the publication of this information, on payments to Namibian parties and the Namibian treasury, will lead to fact-based reporting about the operations in Namibia.
"It is important to note that the tax payments, as well as other payments made to Namibian parties during the period, show that there is no basis for allegations about exploitation in Namibia, which affected us deeply," says Björgólfur Jóhannsson.
Companies affiliated with Samherji ceased operations in Namibia in 2019. In the coming weeks, Samherji will publish further information on its business activities in Namibia.

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