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OCE - Oceana - Interim Report and Dividend Declaration for the six months ended
31 March 2011
OCEANA GROUP LIMITED
Incorporated in the Republic of South Africa
(Registration Number 1939/001730/06)
JSE Share Code: OCE
ISIN Number: ZAE000025284
NSX Share Code: OCG
("Oceana" or "the group" or "the company")
INTERIM REPORT AND DIVIDEND DECLARATION FOR THE SIX MONTHS ENDED 31 MARCH 2011
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited
six six Audited
months months
ended ended year
ended
31 March 31 March 30 Sept
2011 2010 Change 2010
Note R`000 R`000 % R`000
Revenue 1,765,427 1,526,401 16 3,423,219
Cost of sales 1,137,205 982,961 16 2,160,639
Gross profit 628,222 543,440 16 1,262,580
Sales and distribution 151,271 133,361 13 298,073
expenditure
Marketing expenditure 21,949 15,041 46 39,658
Overhead expenditure 234,083 195,085 20 426,780
Net foreign exchange loss 8,271 8,174 13,595
Operating profit before abnormal 212,648 191,779 11 484,474
items
Abnormal items 2 (19,239) (19,697)
Operating profit 212,648 172,540 23 464,777
Dividends received and accrued 7,458 6,846 9 13,532
Net interest received 2,815 877 221 721
Profit before taxation 222,921 180,263 24 479,030
Taxation 79,300 68,646 16 175,515
Profit after taxation 143,621 111,617 29 303,515
Other comprehensive income
Movement on foreign currency
translation reserve (987) (3,037) (3,541)
Movement on cash flow hedging 5,478 6,485 (75)
reserve
Other comprehensive income, net
of taxation 4,491 3,448 (3,616)
Total comprehensive income for 148,112 115,065 29 299,899
the period
Profit attributable to:
Shareholders of Oceana Group 138,920 106,671 30 294,424
Limited
Non-controlling interests 4,701 4,946 (5) 9,091
143,621 111,617 29 303,515
Total comprehensive income
attributable to:
Shareholders of Oceana Group 143,411 110,119 30 290,808
Limited
Non-controlling interests 4,701 4,946 (5) 9,091
148,112 115,065 29 299,899
Weighted average number of
shares on which earnings per 6 99,842 99,578 99,580
share is based (000`s)
Adjusted weighted average number
of shares on which diluted
earnings per share is based 106,524 104,981 104,923
(000`s)
Earnings per share (cents)
Basic 139.1 107.1 30 295.7
Diluted 130.4 101.6 28 280.6
37.0 33.0 12 208.0
Headline earnings per share
(cents)
Basic 139.2 126.4 10 315.2
Diluted 130.5 119.9 9 299.2
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 March 31 March 30 Sept
2011 2010 2010
R`000 R`000 R`000
Assets
Non-current assets 553,223 515,643 541,146
Property, plant and equipment 390,980 344,206 364,538
Trademark 16,008 16,286 16,183
Deferred taxation 9,561 7,694 8,528
Investments and loans 136,674 147,457 151,897
Current assets 1,218,186 1,181,426 1,302,083
Inventories 426,621 587,666 574,838
Accounts receivable 556,935 504,747 545,515
Cash and cash equivalents 234,630 89,013 181,730
Total assets 1,771,409 1,697,069 1,843,229
Equity and liabilities
Equity
Share capital and premium 24,904 23,065 23,129
Distributable reserves 1,127,045 1,007,928 1,162,803
Foreign currency translation reserve (7,047) (5,555) (6,059)
Cash flow hedging reserve (2,453) (1,371) (7,931)
Capital redemption reserve 130 130 130
Share-based payment reserve 44,829 34,696 40,058
Interest of own shareholders 1,187,408 1,058,893 1,212,130
Non-controlling interests 32,981 30,144 34,340
Total equity 1,220,389 1,089,037 1,246,470
Non-current liabilities 91,266 81,969 89,841
Liability for share-based payments 47,837 30,445 42,941
Deferred taxation 43,429 51,524 46,900
Current liabilities 459,754 526,063 506,918
Accounts payable and provisions 433,804 444,531 470,304
Bank overdrafts 25,950 81,532 36,614
Total equity and liabilities 1,771,409 1,697,069 1,843,229
Number of shares in issue net of
treasury shares (000`s) 99,876 99,687 99,692
Net asset value per ordinary share (cents) 1,189 1,062 1,216
Total liabilities excluding deferred
taxation: Total equity (%) 42 51 44
Total borrowings: Total equity(%) 2 7 3
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 March 31 March 30 Sept
2011 2010 2010
R`000 R`000 R`000
Balance at the beginning of the 1,246,470 1,125,696 1,125,696
period
Total comprehensive income for 148,112 115,065 299,899
the period
Profit after taxation 143,621 111,617 303,515
Movement on foreign currency
translation reserve (987) (3,037) (3,541)
Movement on cash flow hedging 5,478 6,485 (75)
reserve
Shares issued 1,775 6,428 6,429
Movement in treasury shares held
by share trusts 99 164
Recognition of share-based 4,812 2,705 8,117
payments
(Loss)/profit on sale of treasury (3) 5
shares
Dividends declared (180,780) (160,953) (193,840)
Balance at the end of the period 1,220,389 1,089,037 1,246,470
Comprising:
Share capital and premium 24,904 23,065 23,129
Distributable reserves 1,127,045 1,007,928 1,162,803
Foreign currency translation (7,047) (5,555) (6,059)
reserve
Cash flow hedging reserve (2,453) (1,371) (7,931)
Capital redemption reserve 130 130 130
Share-based payment reserve 44,829 34,696 40,058
Non-controlling interests 32,981 30,144 34,340
Balance at the end of the period 1,220,389 1,089,037 1,246,470
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 March 31 March 30 Sept
2011 2010 2010
R`000 R`000 R`000
Cash flows from operating
activities
Operating profit before abnormal 212,648 191,779 484,474
items
Adjustment for non-cash and other 42,825 41,193 101,092
items
Cash operating profit before
working 255,473 232,972 585,566
capital changes
Working capital changes 79,905 (168,028) (168,970)
Cash generated from operations 335,378 64,944 416,596
Interest and dividends received 25,532 3,826 6,639
Interest paid (1,885) (2,611) (5,497)
Taxation paid (63,375) (50,340) (166,234)
Dividends paid (180,719) (160,953) (193,840)
Cash inflow/(outflow) from
operating activities 114,931 (145,134) 57,664
Cash outflow from investing (57,709) (27,299) (87,937)
activities
Capital expenditure (59,601) (27,765) (91,852)
Proceeds on disposal of property,
plant and equipment 43 1,304 2,590
Net movement on loans and 1,849 (838) 1,534
advances
Acquisition of investment (209)
Cash inflow from financing 6,336 10,933 6,753
activities
Proceeds from issue of share 1,775 6,527 6,598
capital
Short-term borrowings raised 4,561 4,406 155
Net increase/(decrease) in cash
and cash equivalents 63,558 (161,500) (23,520)
Cash and cash equivalents at the
beginning of the period 145,116 168,970 168,970
Effect of exchange rate changes 6 11 (334)
Cash and cash equivalents at the
end of the period 208,680 7,481 145,116
CONDENSED GROUP OPERATING SEGMENTS REPORT
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 March 31 March 30 Sept
2011 2010 2010
R`000 R`000 R`000
Revenue
Inshore fishing 1,126,534 999,981 2,280,069
Midwater and deep-sea fishing 553,162 428,958 909,034
Commercial cold storage 85,731 97,462 234,116
Total 1,765,427 1,526,401 3,423,219
Operating profit before abnormal
items
Inshore fishing 44,910 67,790 211,060
Midwater and deep-sea fishing 156,068 99,893 196,993
Commercial cold storage 11,670 24,096 76,421
Total 212,648 191,779 484,474
Total assets
Inshore fishing 922,705 1,042,554 1,020,241
Midwater and deep-sea fishing 271,313 233,878 268,830
Commercial cold storage 196,526 176,472 212,003
Financing 371,304 236,471 333,627
1,761,848 1,689,375 1,834,701
Deferred taxation 9,561 7,694 8,528
Total 1,771,409 1,697,069 1,843,229
Total liabilities
Inshore fishing 273,223 302,193 313,428
Midwater and deep-sea fishing 172,150 123,731 146,132
Commercial cold storage 29,217 42,311 51,194
Financing 33,001 88,273 39,105
507,591 556,508 549,859
Deferred taxation 43,429 51,524 46,900
Total 551,020 608,032 596,759
NOTES
Basis of preparation
The condensed financial information has been prepared in accordance with the
framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS), the AC 500 standards as
issued by the Accounting Practices Board and in compliance with IAS 34:
Interim Financial Reporting. The report has been prepared using accounting
policies that comply with IFRS which are consistent with those applied in
the financial statements for the year ended 30 September 2010.
The results have not been audited or reviewed by the group`s auditors,
Deloitte & Touche.
Unaudited Unaudite
d
six six Audited
months months
ended ended year
ended
31 March 31 March 30 Sept
2011 2010 2010
R`000 R`000 R`000
Abnormal items
Goodwill impairment (19,279) (19,279)
Net surplus on disposal of property 40 14
Impairment charge on vessels and (432)
equipment
Abnormal loss before taxation (19,239) (19,697)
Taxation (132)
Abnormal loss after taxation (19,239) (19,829)
Determination of headline earnings
Profit after taxation attributable to own
shareholders 138,920 106,671 294,424
Adjusted for:
Net loss/(surplus) on disposal of
property, 62 (86) (497)
plant and equipment
Goodwill impairment 19,279 19,279
Impairment charge on vessels and equipment 432
Total tax effect of adjustments (18) 13 270
Headline earnings for the period 138,964 125,877 313,908
Dividends
Estimated dividend declared after
reporting 36,966 32,897 174,574
date
Dividend on shares issued prior to
last day 1 103
to trade
Actual dividend declared after 32,898 174,677
reporting date
Supplementary information
Depreciation 33,054 34,294 76,875
Operating lease charges 10,534 10,825 28,691
Capital expenditure 59,601 27,765 91,852
Expansion 17,960 30,233
Replacement 41,641 27,765 61,619
Budgeted capital commitments 100,196 118,208 169,540
Contracted 44,071 66,533 44,904
Not contracted 56,125 51,675 124,636
Number of Number Number
shares of of
shares shares
`000 `000 `000
Elimination of treasury shares
Weighted average number of shares in issue 119,132 118,894 118,895
Less: treasury shares held by share trusts (14,196) (14,222) (14,221)
Less: treasury shares held by subsidiary
company (5,094) (5,094) (5,094)
Weighted average number of shares on which
earnings per share and headline earnings
per share is based 99,842 99,578 99,580
The company received a summons from the Competition Commission in February
2010
pursuant to an investigation into the pelagic fishing industry which has
been
ongoing since July 2008. Oceana`s attorneys have undertaken an extensive
investigation into the business conduct at Oceana Brands, the subsidiary in
which
the group`s pelagic operations are held. The group has been cooperating
with the
Commission. The outcome of the investigation and summons remains uncertain
and
therefore the financial effect cannot be determined.
COMMENTS
Financial Results
Operating profit before abnormal items increased by 11% compared with the first
half of the previous year with the horse mackerel and canned fish business units
being the main areas contributing to the improvement.
Headline earnings per share for the six months rose by 10% and earnings per
share by 30%. The main reason for the differential in the increase in headline
earnings per share and earnings per share is that, in the prior year, earnings
were impacted by an impairment expense relating to goodwill arising on
acquisition of the Glenryck UK business in 2004 which was adjusted for purposes
of headline earnings.
An interim dividend of 37 cents per share has been declared (2010: 33 cents per
share).
Review of operations
Inshore Fishing
The 2011 Total Allowable Catch (TAC) for pilchard in South Africa is 90 000 tons
(2010: 90 000 tons). Pilchard landings to date to the cannery at St Helena Bay
were reasonable. The Namibian pilchard TAC for 2011 is 25 000 tons (2010: 25 000
tons) and fishing is expected to commence later in May. Canned fish sales
volumes on the domestic market were higher in response to significant
promotional activity in the initial months of the financial year. This was made
possible through the continued availability of product from both local and
offshore suppliers which has remained a key focus area for the business. Margins
benefitted from the strong rand exchange rate during the period under review.
The restructure of our canned fish operation in the United Kingdom was completed
and core products are now being supplied by Oceana Brands to a third party
distributor under the Glenryck brand.
Overall, profit from canned fish operations was above that for the same period
last year.
The initial anchovy A season TAC for 2011 is 247 500 tons (final A season TAC
for 2010: 453 183 tons). Landings of anchovy and red-eye herring for the season
to date have been poor resulting in lower fishmeal production. The low volumes
together with high maintenance and refurbishment costs resulted in a material
loss at the half year.
The TAC for west coast lobster was reduced to 2 286 tons (2010: 2 393 tons).
Quota available to Oceana for the current season amounts to 325 tons (2010: 348
tons). Catch rates were good and landings in line with those of last year with
less catch effort. Selling prices on average were higher in foreign currency
terms although turnover was adversely affected by a 6% stronger rand exchange
rate. Profit from lobster declined mainly due to lower sales volumes.
Squid catches from own vessels were in line with those of last year whilst
volumes handled on an agency basis were lower. Euro prices improved slightly,
but as for lobster, in rand terms the benefit was muted. Lower overall volumes
resulted in a decrease in profits when compared to the comparative period.
Turnover in the French fries business suffered due to competition from lower
priced imported product. This resulted in a decline in profit for the six
months.
Midwater and Deep-sea Fishing
The Namibian horse mackerel TAC increased to 310 000 tons (2010: 247 803 tons)
although an amount of 75 500 tons has not yet been allocated to quotaholders. In
South Africa the Maximum Precautionary Catch limit for directed catch remained
at 31 500 tons. Catches increased in Namibia and South Africa. The vessels
performed very well, benefitting from technology and efficiency improvements
made in the previous and current year which had the effect of reducing the catch
cost per ton. Conditions in our major markets remained firm and operating
margins improved as a result of the aforementioned factors. Volumes procured
from external fleets increased due to favourable market opportunities. Turnover
increased appreciably as a consequence of this trading activity and overall,
profit from horse mackerel was significantly higher.
The hake business showed an improvement on the comparative period which had been
affected by a vessel breakdown.
Cold Storage
Revenue declined at most of the division`s facilities as a result of lower
occupancy levels and throughput volumes. The reduction in demand was in respect
of both local and imported product. The expansion at our facility at City Deep,
Johannesburg was commissioned in February.
Directorate
On 31 December 2010, Mr M Fleming resigned from the board. On 10 February, Mr RA
Williams resigned and Mr PM Roux was appointed. Mrs ZBM Bassa was appointed to
the board on 01 April 2011.
Prospects
Generally, fishing conditions are expected to remain stable. Purse seine fishing
conditions for anchovy should improve in the winter months, weather permitting.
Higher fuel prices will impact fishing costs in the second half, particularly
midwater and deep-sea trawling.
Oceana`s export markets in Africa and the Far East are expected to be stable
whilst its European markets may show some improvement albeit off a low base.
Further volume increase is anticipated in the local market for canned fish.
The cold storage division anticipates improved fruit volumes to be handled this
export season compared to the previous year.
Group headline earnings for the full year are expected to exceed those of last
year. The forecast information has not been reviewed or audited by the company`s
auditors.
On behalf of the board
MA Brey FP Kuttel
Chairman Chief executive
officer
11 May 2011
DIVIDEND DECLARATION
Notice is hereby given that an interim dividend number 135 of 37 cents per
share, in respect of the year ending 30 September 2011, was declared on
Wednesday 11 May 2011. Relevant dates are as follows:
Last day to trade cum dividend - Friday 24 June 2011
Commence trading ex dividend - Monday 27 June 2011
Record date - Friday 1 July 2011
Dividend payable - Monday 4 July 2011
Share certificates may not be dematerialised or re-materialised between Monday,
27 June 2011 and Friday, 1 July 2011, both dates inclusive.
By order of the board
JD Cole
Company Secretary
11 May 2011
Directors:
MA Brey (Chairman), FP Kuttel (Chief Executive Officer), ZBM Bassa, PG de Beyer,
ABA Conrad*, PB Matlare, RG Nicol*, S Pather, PM Roux, NV Simamane, TJ Tapela
(*executive)
Company Secretary:
JD Cole
Registered Office:
16th Floor, Metropolitan Centre, 7 Coen Steytler Avenue, Cape Town 8001
Transfer Secretaries:
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
(P.O. Box 61051, Marshalltown, 2107)
Sponsor:
The Standard Bank of South Africa Limited
Date: 11/05/2011 16:00:04 Supplied by www.sharenet.co.za
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