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Oceana - Reviewed Group Results and dividend declaration for the year ended 30
September 2006
OCEANA GROUP LIMITED
JSE Share Code: OCE
NSX Share Code: OCG
ISIN Number: ZAE000025284
Incorporated in the Republic of South Africa
(Registration Number 1939/001730/06)
REVIEWED GROUP RESULTS AND DIVIDEND DECLARATION FOR THE YEAR ENDED 30 SEPTEMBER
2006
The results of the group for the year ended 30 September 2006 are set out
herein.
This report has been prepared in compliance with International Accounting
Standard IAS 34 Interim Financial Reporting. The previous year"s figures, which
were prepared in accordance with South African Statements of Generally Accepted
Accounting Practice (SA GAAP), have been restated in accordance with IFRS.
The financial information has been reviewed by our auditors, Deloitte & Touche,
whose unmodified review opinion is available for inspection at the registered
office of the company.
Oceana Group Limited
Registered Office: 16th Floor Metropolitan Centre, 7 Coen Steytler Avenue,
Cape Town, 8001
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Limited, 70
Marshall Street, Johannesburg, 2001 (P O Box 61051, Marshalltown, 2107)
Sponsors:
South Africa: The Standard Bank of South Africa Limited
Namibia: Old Mutual Investment Services (Namibia) (Pty) Limited
Directors: MA Brey (Chairman), RA Williams (Vice Chairman),
AB Marshall* (Chief Executive Officer), N Dennis, NP Doyle, Z Fuphe,
RG Nicol*, S Pather, L Ruthilal (*Executive)
Company Secretary: JD Cole
CONDENSED GROUP INCOME STATEMENT
2006 2005
Reviewed Restated Change
Note R"000 R"000 %
Revenue 2,544,558 2,576,513 (1)
Operating profit before abnormal items 183,325 180,672 1
Abnormal items 2 (5,882) (27,830)
Operating profit 177,443 152,842 16
Dividends received 6,151 1
Net interest received 23,340 26,607
Profit before taxation 206,934 179,450 15
Taxation 70,088 64,541 9
Profit after taxation 136,846 114,909 19
Attributable to:
Shareholders of Oceana Group Limited 129,791 107,491 21
Outside shareholders in subsidiaries 7,055 7,418 (5)
136,846 114,909 19
Weighted average number of shares on
which earnings per share are based (000"s) 113,099 111,525
Adjusted weighted average number of shares
on which diluted earnings per share
are based (000"s) 113,426 112,246
Earnings per share (cents)
Basic 114.8 96.4 19
Diluted 114.4 95.8 19
Dividends per share (cents) 74.0 74.0 -
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
2006 2005
Reviewed Restated
R"000 R"000
Balance at the beginning of the year
as previously reported 863,190
IFRS adjustments (note 1) 4,632
Balance at the beginning of the year in
accordance with IFRS 916,344 867,822
Shares issued 9,377 14,420
Increase in treasury shares
held by share trust (177,763) (336)
Movement on foreign currency
translation reserve 19,140 (905)
Movement on share based payment reserve 2,613 3,709
Net profit for the year 136,846 114,909
Profit on sale of treasury shares 205 238
Dividends declared (87,932) (83,415)
Disposal of subsidiary - interest of
outside shareholders - (98)
Balance at the end of the year 818,830 916,344
Comprising:
Share capital and premium 101 55,480
Foreign currency translation reserve 23,018 3,878
Share based payment reserve 11,232 8,619
Capital redemption reserve 90 90
Distributable reserves 760,569 827,318
Outside shareholders interest 23,820 20,959
Total 818,830 916,344
CONDENSED GROUP BALANCE SHEET
2006 2005
Reviewed Restated
R"000 R"000
Assets
Non-current assets 511,305 396,072
Property, plant and equipment 316,457 285,052
Goodwill 21,911 18,302
Fishing rights and trademarks 40,109 34,537
Deferred taxation 12,850 15,256
Investments and loans 119,978 42,925
Current assets 826,327 1,080,990
Inventories 219,224 242,413
Accounts receivable 403,486 457,996
Non-current assets held for sale 4,950 -
Cash and cash equivalents 198,667 380,581
Total assets 1,337,632 1,477,062
Equity and liabilities
Capital and reserves
Share capital and premium 101 55,480
Foreign currency translation reserve 23,018 3,878
Share based payment reserve 11,232 8,619
Capital redemption reserve 90 90
Distributable reserves 760,569 827,318
Interest of own shareholders 795,010 895,385
Interest of outside shareholders 23,820 20,959
Total equity 818,830 916,344
Non-current liabilities 30,961 25,502
Liability for share based payments 1,087 -
Deferred taxation 29,874 25,502
Current liabilities 487,841 535,216
Accounts payable and provisions 415,895 437,830
Bank overdraft 71,946 97,386
Total equity and liabilities 1,337,632 1,447,062
Number of shares in issue net of treasury
shares (000"s) 101,493 112,104
Net asset value per ordinary share (cents) 783 799
Total liabilities excl deferred tax:
total equity (%) 60 58
Total borrowings:
interest of own shareholders (%) 9 11
CONDENSED GROUP CASH FLOW STATEMENT
2006 2005
Reviewed Restated
R"000 R"000
Cash flows from operating activities
Operating profit before abnormal items 183,325 180,672
Adjustment for non-cash items 60,777 63,898
Cash operating profit before working
capital changes 244,102 244,570
Working capital changes 50,606 33,989
Cash generated from operations 294,708 278,559
Interest and dividends received 34,650 29,048
Interest paid (5,159) (2,440)
Taxation paid (46,960) (62,366)
Dividends paid (86,034) (83,587)
Net cash inflow from operating activities 191,205 159,214
Cash outflow applied to investing activities (167,811) (16,119)
Capital expenditure (94,276) (46,072)
Proceeds on disposal of property, plant
and equipment 1,639 6,413
Net movement on loans and advances 12,789 8,975
Investment in preference shares (88,000) -
Disposal of business - 16,745
Other 37 (2,180)
Net cash flows (applied to) from financing
activities (174,894) 17,822
Proceeds from issue of share capital 9,377 14,420
Proceeds on sale of treasury shares 264 238
Acquisition of treasury shares by share trust (177,822) (336)
Short-term borrowings (repaid) raised (6,713) 3,500
Net (decrease) increase in cash and cash
equivalents (151,500) 160,917
Cash and cash equivalents at the beginning
of the year 283,195 117,455
Effect of exchange rate changes (4,974) 4,823
Cash and cash equivalents at the end of the year 126,721 283,195
GROUP SEGMENTAL REPORT
2006 2005
Reviewed Restated
R"000 R"000
Revenue
Inshore fishing 1,318,949 1,470,587
Midwater and deep-sea fishing 1,071,362 939,091
Commercial cold storage & logistics 154,247 166,835
Total 2,544,558 2,576,513
Operating profit before abnormal items
Inshore fishing 77,939 102,518
Midwater and deep-sea fishing 46,705 16,867
Commercial cold storage & logistics 58,681 61,287_
Total 183,325 180,672
Total assets
Inshore fishing 563,887 640,913
Midwater and deep-sea fishing 264,306 270,852
Commercial cold storage & logistics 177,944 126,535
Financing 318,645 423,506
1,324,782 1,461,806
Deferred taxation 12,850 15,256
Total 1,337,632 1,477,062
Total liabilities
Inshore fishing 278,909 335,015
Midwater and deep-sea fishing 90,756 60,655
Commercial cold storage & logistics 41,693 27,848
Financing 77,570 111,698
488,928 535,216
Deferred taxation 29,874 25,502
Total 518,802 560,718
RECONCILIATION OF SA GAAP TO IFRS (note 1)
1 October 30 Sept
2004 2005
R"000 R"000
Equity
Ordinary shareholders interest as
previously reported 848,613 890,894
IFRS adjustment:
Recalculation of depreciation of property,
plant and equipment, net of deferred taxation 4,828 4,491
Ordinary shareholders interest restated 853,441 895,385
Outside shareholders interest as previously
reported 14,577 21,192
IFRS adjustment:
Recalculation of depreciation of property,
plant and equipment, net of deferred taxation (196) (233)
Outside shareholders interest restated 14,381 20,959
Liabilities
Deferred taxation as previously reported 24,287 22,453
IFRS adjustment:
Taxation effect of temporary differences on
recalculation of depreciation of property,
plant and equipment 1,214 3,049
Deferred taxation restated 25,501 25,502
Assets
Property, plant and equipment as previously
reported 310,389 279,413
IFRS adjustment:
Recalculation of depreciation 6,330 5,639
Property, plant and equipment restated 316,719 285,052
Deferred taxation as previously reported 20,990 13,588
IFRS adjustment:
Taxation effect of temporary differences on
recalculation of depreciation of property, plant
and equipment (484) 1,668
Deferred taxation restated 20,506 15,256
Profit attributable to own shareholders
As previously reported 111,538
IFRS adjustments:
Recalculation of depreciation of property, plant
and equipment net of deferred taxation (338)
Cost of share based payments (3,709)
Restated 107,491
NOTES
2006 2005
Reviewed Restated
R"000 R"000
1. Accounting policies
The prior year annual financial statements were
prepared in accordance with SA GAAP. In
accordance with the Listings Requirements of
the JSE Limited, Oceana Group Limited has adopted
International Financial Reporting Standards
(IFRS) with effect from 1 October 2005, the
first transition date being 1 October 2004.
Comparative information for year ended 30
September 2005 has been restated using the same
accounting policies and methods as have been
applied in these condensed financial statements.
The disclosures required by IFRS 1 (First-time
Adoption of International Financial Reporting
Standards) showing the effects of the changes in
accounting policies from SA GAAP to IFRS are
presented under the heading "Reconciliation of
SA GAAP to IFRS".
The group"s transitional elections in terms
of IFRS 1 were as follows:
Property, plant and equipment were measured
at original cost. Revised estimates of
useful lives and residual values have been
applied to recalculate accumulated depreciation
in accordance with IAS 16.
Share-based payments. The provisions of
IFRS 2 have been applied only to share options
granted on or after 7 November 2002. Costs of
equity settled share-based payments are
recognised as an expense in the income state-
ment, with a corresponding credit to a share
based payment reserve included in equity.
Certain non-distributable reserves have been
transferred to distributable reserves in
accordance with IFRS 3.
2. Abnormal items
Surplus on disposal of property, plant
and equipment 450 2,364
Surplus on disposal of fishing rights 227 -
Profit on change of interest in
subsidiaries/joint ventures 283 7,288
Provision for improper use of
pension fund surplus (6,842) -
Provision for loans, staff retrenchment
and other closure costs in Namibian
whitefish business - (28,764)
Impairment loss on property, plant and
equipment in Namibian whitefish business - (5,580)
Impairment loss on other assets - (3,138)
Abnormal loss before taxation (5,882) (27,830)
Taxation thereon 1,954 162
Abnormal loss after taxation (3,928) (27,668)
2006 2005
Reviewed Restated
R"000 R"000
3. Determination of Headline Earnings
Profit after taxation attributable to
own shareholders 129,791 107,491
Adjusted for:
Net surplus on disposal of fixed property
and fishing rights (647) (2,364)
Net surplus on disposal of plant and equipment (176) (2,176)
Profit on change on interest in subsidiaries/
joint ventures (283) (7,103)
Insurance proceeds for damaged vessel (1,104) -
Provision for loans, staff retrenchment and
other closure costs in Namibian whitefish
business - 14,201
Impairment loss on property, plant and
equipment in Namibian whitefish business - 5,580
Impairment loss on other assets - 2,779
Headline earnings for the year 127,581 118,408
Number Number
of shares of shares
Weighted average number of shares on which
headline earnings per share are based (000"s) 113,099 111,525
Adjusted weighted average number of shares on
which diluted headline earnings per share
are based (000,s) 113,426 112,246
Cents Cents
Headline earnings per share
Basic 112.8 106.2
Diluted 112.5 105.5
4. Dividends
Estimated dividend declared after reporting date 59,881 66,141
Dividend on shares issued prior to last day to
trade 621
Actual dividend declared after reporting date 66,762
5. Supplementary information
R"000 R"000
Cost of sales 1,805,035 1,813,926
Depreciation 57,316 58,861
Operating lease charges 17,470 18,647
Foreign exchange profit (9,838) (2,075)
Capital expenditure 94,276 46,072
Expansion 62,456 2,643
Replacement 31,820 43,429
Capital commitments 63,144 96,925
Contracted 2,124 703
Approved 61,020 96,222
COMMENTS
Financial Results
In a very difficult year for the fishing industry due to poor fishing
conditions, the group achieved very pleasing results. Earnings per share for the
year ended 30 September 2006 increased by 19% compared to those of the previous
year which had included provision for the closure costs of the Namibian white
fish operations. Headline earnings per share were 6% above last year.
Group turnover decreased by 1% whilst operating profit before abnormal items
increased by 1%. Investment income increased on higher average net cash balances
due mainly to lower working capital requirements. The year end net cash balance
reduced to R126.7m as a result of the group"s funding of R265,8m of its black
economic empowerment transaction during September 2006.
A final unchanged dividend of 59.0 cents per share has been declared, which
together with the interim dividend of 15.0 cents, brings the total dividend for
the year to 74.0 cents per share (2005: 74.0 cents).
Review of operations
Inshore Fishing
The total allowable catch (TAC) for pilchard in 2006 is 204,000 tons (2005:
397,000 tons). Although pilchard landings directed for canned fish production
for the financial year were higher than last year, fish was only available on
the south and east coasts and a higher proportion was transported by road from
Mossel Bay to the cannery at St.Helena Bay. Higher fuel prices and the distance
from the fishing grounds impacted on the cost of production. The Namibian
pilchard TAC was set at 25,000 tons (2005: 25,000 tons) but no landings had been
made by financial year end.
Lucky Star sales volumes of canned fish on the domestic market decreased
significantly compared to the previous year due to the shortage of supply.
Glenryck Foods, the group"s canned fish business in the UK, performed well and
achieved increased sales volumes particularly in the tuna category.
Overall, profitability from canned fish was well below that of the previous
year.
Fish meal operations again showed a turnaround in the second half of the year
and achieved a break even result overall. Landings of anchovy and pilchard for
fish meal production were well below the previous year. Selling prices were
higher.
Lobster landings were well below the previous year due to a combination of a
reduced TAC, a permit requirement limiting catches to 76% of quota and rough sea
conditions in August and September. Turnover declined due to the reduced volumes
despite improved export prices. Profits were slightly above the previous year
due to lower costs.
Squid catches were higher than the previous year and export prices improved
resulting in a good contribution.
Midwater and Deep-sea Fishing
Selling prices for Namibian and South African horse mackerel were particularly
good in the first half of the year and were on average higher than the previous
year. Higher fuel prices impacted on fishing costs despite conversions to the
vessels to enable the use of cheaper fuel grades. Trading volumes and margins on
fish sourced from external fleets were lower. Overall, profitability from
midwater pelagic operations was significantly higher than the previous year.
Hake results continued to be affected by inconsistent catches and a large
proportion of small fish. However, sales realisations were higher and together
with reduced overhead costs resulted in acceptable earnings for the year.
The restructured tuna trading business recorded a profit after last year"s
losses despite competitive market conditions.
Cold Storage and Logistics
Average occupancy levels were high and in line with those of the previous year
however citrus volumes handled through the Maydon Wharf steri-fruit facility
were disappointing. The expansions at the Bayhead and Epping stores were
completed in August and are expected to benefit results in the coming year.
Profits improved marginally on the previous year.
Prior year results for the division included those of TRT Shipping Services
until date of its disposal on 1 July 2005.
Long-Term Fishing Rights
After a protracted application and appeal process, long-term commercial fishing
rights were allocated in all fisheries in which Oceana is active. Rights are for
periods of eight years (squid), ten years (west coast lobster and horse
mackerel) and fifteen years (small pelagic and trawl hake). Whilst its
allocations were reduced, Oceana now has the certainty and stability of long
term rights. Legal challenges have been brought by certain other applicants
regarding their allocations.
Black Economic Empowerment (BEE) Transaction
The BEE transaction announced in the circular to shareholders dated 31 August
2006 was duly approved by shareholders on 22 September 2006 and implemented on
28 September 2006.
Prospects
The finalisation of the long term rights process will present opportunities for
rationalisation and restructuring within the South African fishing industry.
With its strong balance sheet and secured BEE shareholding, Oceana is well
placed to participate in any consolidation.
Directorate
Ms Z Fuphe was appointed a director of the company with effect from 1 June 2006.
Mr BP Connellan resigned as a director with effect from 3 August 2006 and we
record our appreciation for his valuable contribution over many years.
On behalf of the board.
MA Brey AB Marshall
Chairman Chief Executive Officer
10 November 2006
DIVIDEND DECLARATION
Notice is hereby given that a final dividend No. 126 of 59.0 cents per share, in
respect of the year ended 30 September 2006, was declared on Friday 10 November
2006. Relevant dates are as follows:
Last day to trade cum dividend - Friday 5 January 2007
Commence trading ex dividend - Monday 8 January 2007
Record date - Friday 12 January 2007
Dividend payable - Monday 15 January 2007
Share certificates may not be dematerialised or rematerialised between
Monday 8 January 2007 and Friday 12 January 2007, both dates inclusive.
By order of the board
JD Cole Secretary
10 November 2006
Date: 10/11/2006 04:02:28 PM Supplied by www.sharenet.co.za
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