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OCE - Oceana - Audited group results and dividend declaration for the year ended
30 September 2011 and further cautionary announcement
Oceana Group Limited
Incorporated in the Republic of South Africa
(Registration Number 1939/001730/06)
JSE Share Code: OCE
NSX Share Code: OCG
ISIN Number: ZAE000025284
("Oceana" or "the group" or "the company")
Audited group results and dividend declaration for the year ended 30 September
2011 and further cautionary announcement
Condensed group statement of comprehensive income
Audited Audited Change
year ended year
30 Sept ended
2011 30 Sept
2010
Note R`000 R`000 %
s
Revenue 3 657 196 3 423 219 7
Cost of sales 2 299 778 2 160 639 6
Gross profit 1 357 418 1 262 580 8
Sales and distribution expenditure 338 927 298 073 14
Marketing expenditure 44 389 39 658 12
Overhead expenditure 461 487 426 780 8
Net foreign exchange (profit)/loss (74) 13 595
Operating profit before abnormal 512 689 484 474 6
items
Abnormal items 2 (19 697)
Operating profit 512 689 464 777 10
Dividends received and accrued 13 141 13 532 (3)
Net interest received 9 813 721
Profit before taxation 535 643 479 030 12
Taxation 189 426 175 515 8
Profit after taxation 346 217 303 515 14
Other comprehensive income
Movement on foreign currency 3 512 (3 541)
translation reserve
Movement on cash flow hedging 9 853 (75)
reserve
Other comprehensive income, net of 13 365 (3 616)
taxation
Total comprehensive income for the 359 582 299 899 20
year
Profit after taxation attributable
to:
Shareholders of Oceana Group 333 170 294 424 13
Limited
Non-controlling interests 13 047 9 091 44
346 217 303 515 14
Total comprehensive income
attributable to:
Shareholders of Oceana Group 346 535 290 808 19
Limited
Non-controlling interests 13 047 9 091 44
359 582 299 899 20
Weighted average number of shares 6 99 868 99 580
on which earnings per share is
based (000`s)
Adjusted weighted average number 106 544 104 923
of shares on which diluted
earnings per share is based
(000`s)
Earnings per share (cents)
Basic 333.6 295.7 13
Diluted 312.7 280.6 11
Dividends per share (cents) 220.0 208.0 6
Headline earnings per share
(cents)
Basic 333.7 315.2 6
Diluted 312.7 299.2 5
Condensed group statement of financial position
Audited Audited
30 Sept 30 Sept
2011 2010
R`000 R`000
Assets
Non-current assets 600 373 541 146
Property, plant and equipment 415 623 364 538
Trademark 18 101 16 183
Deferred taxation 13 204 8 528
Investments and loans 153 445 151 897
Current assets 1 422 623 1 302 083
Inventories 489 850 574 838
Accounts receivable 536 913 545 515
Cash and cash equivalents 395 860 181 730
Total assets 2 022 996 1 843 229
Equity and liabilities
Equity
Share capital and premium 26 293 23 129
Foreign currency translation reserve (2 547) (6 059)
Capital redemption reserve 130 130
Cash flow hedging reserve 1 922 (7 931)
Share-based payment reserve 49 599 40 058
Distributable reserves 1 283 031 1 162 803
Interest of own shareholders 1 358 428 1 212 130
Non-controlling interests 40 923 34 340
Total equity 1 399 351 1 246 470
Non-current liabilities 95 363 89 841
Liability for share-based payments 53 694 42 941
Deferred taxation 41 669 46 900
Current liabilities 528 282 506 918
Accounts payable and provisions 516 966 470 304
Bank overdrafts 11 316 36 614
Total equity and liabilities 2 022 996 1 843 229
Number of shares in issue net of treasury 99 939 99 692
shares (000`s)
Net asset value per ordinary share (cents) 1 359 1 216
Total liabilities excluding deferred 42 44
taxation:
Total equity (%)
Total borrowings: Total equity (%) 1 3
Condensed group statement of changes in equity
Audited Audited
30 Sept 30 Sept
2011 2010
R`000 R`000
Balance at the beginning of the year 1 246 470 1 125 696
Total comprehensive income for the year 359 582 299 899
Profit after taxation 346 217 303 515
Movement on foreign currency translation 3 512 (3 541)
reserve
Movement on cash flow hedging reserve 9 853 (75)
Shares issued 2 524 6 429
Movement in treasury shares held by share 640 164
trusts
Recognition of share-based payments 9 628 8 117
(Loss)/profit on sale of treasury shares (52) 5
Additional non-controlling interest 552
arising on acquisition
Dividends declared (219 993) (193 840)
Balance at the end of the year 1 399 351 1 246 470
Comprising:
Share capital and premium 26 293 23 129
Foreign currency translation reserve (2 547) (6 059)
Capital redemption reserve 130 130
Cash flow hedging reserve 1 922 (7 931)
Share-based payment reserve 49 599 40 058
Distributable reserves 1 283 031 1 162 803
Non-controlling interests 40 923 34 340
Balance at the end of the year 1 399 351 1 246 470
Condensed group statement of cash flows
Audited Audited
30 Sept 30 Sept
2011 2010
R`000 R`000
Cash flows from operating activities
Operating profit before abnormal items 512 689 484 474
Adjustment for non-cash and other items 97 647 101 092
Cash operating profit before working 610 336 585 566
capital changes
Working capital changes 118 875 (168 970)
Cash generated from operations 729 211 416 596
Interest and dividends received 14 320 6 639
Interest paid (2 872) (5 497)
Taxation paid (169 132) (166 234)
Dividends paid (219 993) (193 840)
Cash inflow from operating activities 351 534 57 664
Cash outflow from investing activities (115 827) (87 937)
Capital expenditure (125 988) (91 852)
Proceeds on disposal of property, plant 460 2 590
and equipment
Net movement on loans and advances (12 870) 1 534
Acquisition of business (258)
Repayment received on preference share 22 829
investment
Acquisition of investment (209)
Cash inflow from financing activities 4 902 6 753
Proceeds from issue of share capital 3 112 6 598
Short-term borrowings raised 1 790 155
Net increase/(decrease) in cash and cash 240 609 (23 520)
equivalents
Cash and cash equivalents at the beginning 145 116 168 970
of the year
Effect of exchange rate changes (1 181) (334)
Cash and cash equivalents at the end of 384 544 145 116
the year
Condensed group operating segments report
Audited Audited
30 Sept 30 Sept
2011 2010
R`000 R`000
Revenue
Inshore fishing 2 268 296 2 280 069
Midwater and deep-sea fishing 1 170 907 909 034
Commercial cold storage 217 993 234 116
Total 3 657 196 3 423 219
Operating profit before abnormal items
Inshore fishing 185 160 211 060
Midwater and deep-sea fishing 273 795 196 993
Commercial cold storage 53 734 76 421
Total 512 689 484 474
Total assets
Inshore fishing 926 776 1 020 241
Midwater and deep-sea fishing 319 370 268 830
Commercial cold storage 214 342 212 003
Financing 549 304 333 627
2 009 792 1 834 701
Deferred taxation 13 204 8 528
Total 2 022 996 1 843 229
Total liabilities
Inshore fishing 310 232 313 428
Midwater and deep-sea fishing 212 653 146 132
Commercial cold storage 43 493 51 194
Financing 15 598 39 105
581 976 549 859
Deferred taxation 41 669 46 900
Total 623 645 596 759
NOTES
1. 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 the information as required by 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 condensed
financial information was prepared under the supervision of the group financial
director, RG Nicol CA(SA).
The auditors, Deloitte & Touche, have issued their opinion on the group
financial statements for the year ended 30 September 2011. The audit was
conducted in accordance with International Standards on Auditing. They have
issued an unmodified audit opinion. These summarised provisional financial
statements have been derived from the group financial statements and are
consistent in all material respects, with the group financial statements. A copy
of their audit report is available for inspection at the company`s registered
office. Any reference to future financial performance included in this
announcement, has not been reviewed or reported on by the company`s auditors.
Audited Audited
30 Sept 30 Sept
2011 2010
R`000 R`000
2. Abnormal items
Goodwill impairment (19 279)
Impairment charge on vessels and (432)
equipment
Net surplus on disposal of property 14
Abnormal loss before taxation (19 697)
Taxation (132)
Abnormal loss after taxation (19 829)
3. Determination of headline earnings
Profit after taxation attributable to 333 170 294 424
own shareholders
Adjusted for:
Net loss /(surplus) on disposal of 57 (497)
property, plant and equipment
Goodwill impairment 19 279
Impairment charge on vessels and 432
equipment
Total tax effect of adjustments (17) 270
Headline earnings for the year 333 210 313 908
4. Dividends
Estimated dividend declared after 182 906 174 574
reporting date
Dividend on shares issued prior to 103
last day to trade
Actual dividend declared after 174 677
reporting date
5. Supplementary information
Depreciation 77 209 76 875
Operating lease charges 28 763 28 691
Capital expenditure 125 988 91 852
Expansion 23 321 30 233
Replacement 102 667 61 619
Budgeted capital commitments 141 545 169 540
Contracted 23 981 44 904
Not contracted 117 564 124 636
Number of Number of shares
shares
`000 `000
6. Elimination of treasury shares
Weighted average number of shares in 119 157 118 895
issue
Less: treasury shares held by share (14 195) (14 221)
trusts
Less: treasury shares held by (5 094) (5 094)
subsidiary company
Weighted average number of shares on 99 868 99 580
which earnings per share and headline
earnings per share are based
7. Contingent liability
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
fully with the Commission. The outcome of the investigation and summons remains
uncertain and therefore the financial effect cannot be determined.
8. Events after the reporting date
No events occurred after the reporting date that may have an impact on the
group`s reported financial position at 30 September 2011.
Comments
Financial results
Operating profit before abnormal items increased by 6% over the previous year
with significant improvements in the horse mackerel and canned fish business
units being largely offset by disappointing results in fishmeal and certain
other business units. Turnover increased by 7%.
Headline earnings per share for the year rose by 6% and earnings per share by
13%. 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.
A final dividend of 183 cents per share has been declared which together with
the interim dividend of 37 cents brings the total dividend for the year to 220
cents per share, an increase of 6% on the 2010 total dividend of 208 cents.
Review of operations
Inshore Fishing
The 2011 Total Allowable Catch (TAC) for pilchard in South Africa was 90 000
tons (2010: 90 000 tons). Pilchard landings and processing yields at the St
Helena Bay cannery were in line with the previous financial year and the
company`s quota has been landed in full. The Namibian pilchard TAC was 25 000
tons (2010: 25 000 tons). Etosha Fishing landed its quota in full. Canned fish
sales volumes on the domestic market were considerably higher in response to
significant promotional activity in the initial months of the financial year.
Further improvements were made in the management of the supply chain which
resulted in continuous availability of product from both local and offshore
suppliers and a reduction of inventory levels. A larger proportion of product
was sourced locally compared to the previous year. The landed cost of imported
product reduced as a consequence of the strong rand exchange rate which
benefitted returns. Canned fish sales in the United Kingdom declined as a
consequence of the business restructure and difficult trading conditions.
Overall, profitability from canned fish operations was well above the prior
year.
The anchovy A season TAC which ended on 31 August was 270 291 tons and B season
120 000 tons (2010: A season 453 183 tons; B season 120 000 tons). Oceana`s
landings of anchovy were 43% lower than the prior year at 21 444 tons,
comprising 47% of its A season anchovy quota (2010: 37 555 tons being 49% of A
season quota). No anchovy has been available in the catching areas during the B
season. Landings of red-eye herring were also poor and lower than last year.
Fishmeal production volumes were consequently well below those of the previous
year. Weak demand in international markets as well as increased supply from Peru
put pressure on fishmeal prices which together with the low volumes resulted in
a substantial loss for the financial year.
The TAC for west coast lobster reduced to 2 286 tons (2010: 2 393 tons). Quota
available to Oceana for the season to 30 September 2011 amounted to 324.8 tons
(2010: 347.5 tons) of which 99.8% was landed. Selling prices were higher in
foreign currency terms although turnover was adversely affected by a stronger
rand exchange rate. Profit from lobster declined compared to the prior year
mainly due to lower sales volumes.
Squid catches were lower than the prior year. Euro selling prices improved. The
business made a small loss for the year.
The French fries business suffered a loss due mainly to competition from lower
priced imports.
Midwater and Deep-sea Fishing
The Namibian horse mackerel TAC increased to 310 000 tons (2010: 247 803 tons).
The portion of TAC previously held in reserve has largely been allocated to the
existing quota holders. In South Africa the Precautionary Maximum Catch Limit
remained at 31 500 tons. Catch rates per day improved in both Namibia and South
Africa resulting in a lower average catch cost per ton and higher volumes for
the year. Trading conditions in our major markets remained firm and access to
the Angolan market was re-established. Volumes procured from external fleets
increased due to favourable market opportunities. Turnover and profit rose
substantially on the back of higher volumes.
The hake business showed an improvement on the prior year. The group acquired an
increased shareholding in a joint venture resulting in the consolidation of its
financial results from July 2011.
Cold Storage
Revenue declined at most of the division`s facilities as a result of lower
occupancy levels and throughput volumes of frozen product. The impact was mainly
felt in Durban and Cape Town, on both locally produced and imported product. The
City Deep store experienced a similar volume to the previous year despite
expansion of the facility. The fruit handling business in Durban performed
poorly although a larger volume of commercial fruit was handled. Overall
operating profit was lower than last year.
Further cautionary announcement
Further to the cautionary announcement published on Securities Exchange News
Service on Monday, 24 October 2011 and in the press on Tuesday, 25 October 2011,
Oceana shareholders are advised that negotiations are still in progress which,
if successfully concluded may have a material effect on the price of the
company`s securities. Accordingly, shareholders are advised to continue
exercising caution when dealing in the company`s securities until a further
announcement is made.
Prospects
The group is well positioned to take advantage of opportunities for further
organic and acquisitive growth.
On behalf of the board
MA Brey FP Kuttel
Chairman Chief executive officer
Cape Town
10 November 2011
Dividend declaration
Notice is hereby given that a final dividend number 136 of 183 cents per share,
in respect of the year ended 30 September 2011, was declared on Thursday, 10
November 2011. Relevant dates are as follows:
Last day to trade cum dividend Friday, 6 January 2012
Commence trading ex dividend Monday, 9 January 2012
Record date Friday, 13 January 2012
Dividend payable Monday, 16 January 2012
Share certificates may not be dematerialised or re-materialised between Monday,
9 January 2012, and Friday, 13 January 2012, both dates inclusive.
By order of the board
JC Marais
Company secretary
10 November 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)
Registered Office: 9th Floor, Oceana House, 25 Jan Smuts Street, Foreshore, Cape
Town, 8001
Transfer Secretaries: Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001 (P.O. Box 61051, Marshalltown, 2107)
Sponsor - South Africa The Standard Bank of South Africa Limited
Sponsor - Namibia Old Mutual Investment Services (Namibia) Proprietary Limited
Company secretary: JC Marais
JSE Share Code: OCE
NSX Share Code: OCG
ISIN Number: ZAE000025284
Date: 10/11/2011 17:00:04 Supplied by www.sharenet.co.za
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