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OCEANA GROUP LIMITED - Unaudited interim results

Release Date: 09/05/2013 17:16
Code(s): OCE     PDF:  
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Unaudited interim results

Oceana Group Limited


Incorporated in the Republic of South Africa 

(Registration number: 1939/001730/06)

JSE share code: OCE 

NSX share code: OCG 

ISIN: ZAE000025284

("Oceana" or "the Group" or "the Company")





Interim report and dividend declaration for the six months ended 31 March 2013
and further cautionary announcement


CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME


                                                                                                     
                                                             Unaudited     Unaudited            
                                                            six months    six Months                 Audited 
                                                                 ended         ended              year ended
                                                              31 March      31 March                 30 Sept

                                                                  2013          2012    Change          2012
                                                 Notes           R'000         R'000         %         R'000


Revenue                                                      2 561 396     2 132 271        20     4 647 951

Cost of sales                                                1 622 182     1 342 227        21     2 875 765

Gross profit                                                   939 214       790 044        19     1 772 186

Sales and distribution expenditure                             230 789       203 621        13       428 870

Marketing expenditure                                           22 329        17 577        27        51 323

Overhead expenditure                                           328 358       268 314        22       599 363

Net foreign exchange (gain)/loss                                (8 536)          729                 (18 395)

Operating profit before abnormal items                         366 274       299 803        22       711 025

Abnormal items                                       3                       (34 750)                (47 955)

Operating profit                                               366 274       265 053        38       663 070

Investment income                                               10 335        18 763       (45)       36 279

Interest paid                                                   (2 190)       (1 213)       81        (3 108)

Profit before taxation                                         374 419       282 603        32       696 241

Taxation                                                       116 124       102 835        13       232 315

Profit after taxation                                          258 295       179 768        44       463 926



Other comprehensive income

Movement on foreign currency translation
reserve                                                          2 380          (433)                  1 826

Movement on cash flow hedging reserve                              232        (1 168)                 (1 522)

Other comprehensive income, net of taxation                      2 612        (1 601)                    304


Total comprehensive income for the period                      260 907       178 167        46       464 230



Profit after taxation attributable to:

Shareholders of Oceana Group Limited                           240 112       168 088        43       443 790

Non-controlling interests                                       18 183        11 680        56        20 136

                                                               258 295       179 768        44       463 926



Total comprehensive income for the period
attributable to:

Shareholders of Oceana Group Limited                           242 724       166 487        46       444 094

Non-controlling interests                                       18 183        11 680        56        20 136

                                                               260 907       178 167        46       464 230

Weighted average number of shares on which
earnings per share are based (000's)                       7   100 290       100 069                 100 100

Adjusted weighted average number of shares
on which diluted earnings per share are based
(000's)                                                        110 387       107 964                 108 659

Earnings per share (cents)

 Basic                                                           239,4         168,0        43         443,3

 Diluted                                                         217,5         155,7        40         408,4

Dividends per share (cents)                                      100,0          45,0       122         301,0


Headline earnings per share (cents)

 Basic                                                           239,3         167,9        43         455,7

 Diluted                                                         217,4         155,6        40         419,8



CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY

                                                             Unaudited     Unaudited     
                                                            six months    six months          Audited        
                                                                 ended         ended       year ended
                                                              31 March      31 March          30 Sept
                                                                  2013          2012             2012
                                                                 R'000         R'000            R'000


Balance at the beginning of the period                       1 633 242     1 399 351        1 399 351

Total comprehensive income for the period                      260 907       178 167          464 230

Profit after taxation                                          258 295       179 768          463 926

Movement on foreign currency translation reserve                 2 380          (433)           1 826

Movement on cash flow hedging reserve                              232        (1 168)          (1 522)

Recognition of share-based payments                              2 567         3 713            7 614

Share options exercised                                            325         2 713            3 524

Decrease in shares held by share trust                           1 370                            875

Loss on sale of shares by share trust                             (353)                          (130)

Shares in subsidiary purchased from 
non-controlling interest                                       (7 158)

Dividends declared                                            (275 130)     (195 148)        (242 222)

Balance at the end of the period                             1 615 770     1 388 796        1 633 242



Comprising:

Share capital and premium                                       32 387        29 006           30 692

Foreign currency translation reserve                             1 659        (2 980)            (721)

Capital redemption reserve                                         130           130              130

Cash flow hedging reserve                                          632           753              400

Share-based payment reserve                                     59 688        53 278           57 144

Distributable reserves                                       1 470 226     1 266 408        1 496 895

Non-controlling interests                                       51 048        42 201           48 702

Balance at the end of the period                             1 615 770     1 388 796        1 633 242



CONDENSED GROUP STATEMENT OF CASH FLOWS

                                                             Unaudited     Unaudited     
                                                            six months    six months          Audited        
                                                                 ended         ended       year ended
                                                              31 March      31 March          30 Sept
                                                                  2013          2012             2012
                                                                 R'000         R'000            R'000


Cash flows from operating activities

Operating profit before abnormal items                        366 274        299 803          711 025

Adjustment for non-cash and other items                        53 757         17 547          102 832

Cash operating profit before working capital changes          420 031        317 350          813 857

Working capital changes                                      (226 947)        (9 805)        (357 295)

Cash generated from operations                                193 084        307 545          456 562

Investment income received                                      5 474         13 211           25 312

Interest paid                                                  (2 190)        (1 213)          (3 108)

Taxation paid                                                (154 952)       (78 032)        (242 588)

Dividends paid                                               (277 008)      (195 230)        (242 222)

Cash (outflow)/inflow from operating activities              (235 592)        46 281           (6 044)

Cash outflow from investing activities                        (28 687)       (12 434)        (153 331)

 Capital expenditure                                          (52 584)       (23 468)         (69 746)

 Proceeds on disposal of property, plant and
 equipment                                                        608            118            1 536

 Repayment received on preference shares                       28 653          7 677           11 949

 Net movement on loans and advances                             1 794          3 239            9 718

 Acquisition of additional shares in subsidiary                (7 158)

 Acquisition of businesses                                                                   (105 296)

 Acquisition of fishing rights                                                                 (1 296)

 Acquisition of investment                                                                       (196)

Cash inflow from financing activities                           5 059          5 860            7 987

 Proceeds from issue of share capital                           1 342          2 713            4 270

 Short-term borrowings raised                                   3 717          3 147            3 717



Net (decrease)/increase in cash and cash equivalents         (259 220)        39 707         (151 388)

Cash and cash equivalents at the beginning of the
period                                                        231 604        384 544          384 544

Effect of exchange rate changes                                  (219)           611           (1 552)

Cash and cash equivalents at the end of the period            (27 835)       424 862          231 604



CONDENSED GROUP STATEMENT OF FINANCIAL POSITION

                                                            Unaudited      Unaudited          Audited
                                                             31 March       31 March          30 Sept
                                                                 2013           2012             2012
                                                                R'000          R'000            R'000


Assets

Non-current assets                                            671 685        584 116          690 615

 Property, plant and equipment                                447 525        400 601          435 850

 Goodwill                                                      10 000                          10 000

 Trademark                                                      7 276         17 961            6 229

 Fishing rights                                                 65 658          2 912          72 409

 Deferred taxation                                             23 874         14 561           23 187

 Investments and loans                                        117 352        148 081          142 940

Current assets                                              1 834 945      1 540 607        1 878 113

 Inventories                                                  943 985        517 318          777 979

 Accounts receivable                                          776 862        554 136          823 956

 Cash and cash equivalents                                    114 098        469 153          276 178

Total assets                                                2 506 630      2 124 723        2 568 728

    

Equity and liabilities

Capital and reserves

 Share capital and premium                                     32 387         29 006           30 692

 Foreign currency translation reserve                           1 659         (2 980)            (721)

 Capital redemption reserve                                       130            130              130

 Cash flow hedging reserve                                        632            753              400

 Share-based payment reserve                                   59 688         53 278           57 144

 Distributable reserves                                     1 470 226      1 266 408        1 496 895

 Interest of own shareholders                                1 564 722     1 346 595        1 584 540

 Non-controlling interests                                      51 048        42 201           48 702

Total capital and reserves                                   1 615 770     1 388 796        1 633 242

Non-current liabilities                                        136 401       101 379          139 270

 Liability for share-based payments                            101 564        63 713           97 427

 Deferred taxation                                              34 837        37 666           41 843

Current liabilities                                            754 459       634 548          796 216
    
 Accounts payable and provisions                               612 526       590 257          751 642

 Bank overdrafts                                               141 933        44 291           44 574

Total equity and liabilities                                 2 506 630     2 124 723        2 568 728



Number of shares in issue net of 
treasury shares (000's)                                        100 329       100 113          100 219

Net asset value per ordinary share (cents)                       1 560         1 345            1 581

Total liabilities excluding deferred taxation: 
  Total equity (%)                                                  53            50               55

Total borrowings: Total equity (%)                                   9             3                3


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), SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial
    Reporting Pronouncements as issued by the Financial Reporting Standards Council, the information
    as required by IAS 34: Interim Financial Reporting and the Companies Act of South Africa. 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 2012. The condensed financial
    information was prepared under the supervision of the group financial director, RG Nicol CA(SA).

    The results have not been audited or reviewed by the Group's auditors, Deloitte & Touche.

                                                             Unaudited        Unaudited             
                                                            six months       six months         Audited
                                                                 ended            ended      year ended
                                                              31 March         31 March         30 Sept
                                                                  2013             2012            2012
                                                                 R'000            R'000           R'000


2.  Segmental results

    Revenue

    Canned fish and fishmeal                                 1 396 141        1 107 367       2 582 636

    Horse mackerel and hake                                    853 078          747 980       1 435 082

    Lobster, squid and French fries                            174 978          167 276         350 443

    Commercial cold storage                                    137 199          109 648         279 790

    Total                                                    2 561 396        2 132 271       4 647 951



    Operating profit/(loss) before abnormal items

    Canned fish and fishmeal                                   103 759          101 852         318 941

    Horse mackerel and hake                                    239 635          173 914         296 578

    Lobster, squid and French fries                               (899)           7 441          29 538

    Commercial cold storage                                     23 779           16 596          65 968

    Total                                                      366 274          299 803         711 025



    Total assets

    Canned fish and fishmeal                                 1 386 815          832 193       1 362 685

    Horse mackerel and hake                                    517 808          348 440         427 057

    Lobster, squid and French fries                            127 312          101 922          95 680

    Commercial cold storage                                    219 371          210 374         241 002

    Financing                                                  231 450          617 233         419 117

                                                             2 482 756        2 110 162       2 545 541

    Deferred taxation                                           23 874           14 561          23 187

    Total                                                    2 506 630        2 124 723       2 568 728



    Total liabilities

    Canned fish and fishmeal                                   361 705          288 813         515 752

    Horse mackerel and hake                                    262 278          283 184         220 055

    Lobster, squid and French fries                             32 950           34 401          44 808

    Commercial cold storage                                     45 442           40 144          60 456

    Financing                                                  153 648           51 719          52 572

                                                               856 023          698 261         893 643

   Deferred taxation                                            34 837           37 666          41 843

   Total                                                       890 860          735 927         935 486



3. Abnormal items

   Competition Commission administrative penalty                                (34 750)        (34 750)

   Trademark impairment                                                                         (13 205)

   Abnormal loss before and after taxation                                      (34 750)        (47 955)



4. Determination of headline earnings

   Profit after taxation attributable to shareholders
   of Oceana Group Limited                                     240 112          168 088         443 790

   Adjusted for:

   Trademark impairment                                                                          13 205

   Net surplus on disposal of property, plant
    and equipment                                                 (151)             (68)         (1 193)

   Total tax effect of adjustments                                  43               20             356

   Headline earnings for the period                            240 004          168 040         456 158


5. Dividends

   Estimated dividend declared after reporting date            100 329           45 061         256 560

   Dividend on shares issued prior to last day to trade                               8              83

   Actual dividend declared after reporting date                                 45 069         256 643



6. Supplementary information

   Amortisation of fishing rights                                6 752              194             853

   Depreciation                                                 40 452           38 439          86 339

   Operating lease charges                                      22 705           17 499          39 615

   Capital expenditure                                          52 585           23 468          69 746

    Expansion                                                   11 242            2 006           2 085

    Replacement                                                 41 343           21 462          67 661

   Budgeted capital commitments                                157 277           82 737         181 159

    Contracted                                                  49 939           32 822          21 879
   
    Not contracted                                             107 338           49 915         159 280


                                                             Number of        Number of       Number of
                                                                shares           shares          shares
                                                                  '000             '000            '000


7. Elimination of treasury shares

   Weighted average number of shares in issue                  119 440          119 308         119 332

   Less: shares held by share trusts                           (14 056)         (14 145)        (14 138)

   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 are based                                         100 290          100 069         100 100

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 31 March 2013.


COMMENTS

Financial results 
Basic earnings per share and basic headline earnings per share for the six months ended 31 March 2013 increased 
by 43% over those of the comparative six months to 31 March 2012.

Revenue for the period increased by 20%. Operating profit before abnormal items increased by 22% due to good results
in the horse mackerel and hake, and commercial cold storage segments. Operating profit including abnormal items rose 
by 38% as the prior year comparative figures included an abnormal charge relating to the Competition Commission 
administrative penalty. In order to address the imbalance between the interim and final dividend for the financial 
year, an interim dividend of 100 cents per share has been declared (2012: 45 cents per share). The increase in the 
interim dividend should not be construed as an indicator of dividends increase for the full year.

Review of operations 

Canned fish and fishmeal
 
The Total Allowable Catch (TAC) for pilchard in 2013 is 90 000 tons (2012: 100 595 tons). Pilchard landings at 
the St Helena Bay cannery have been good and are currently significantly higher than at the same stage last season. 
The Namibian pilchard TAC for 2013 is 25 000 tons (2012: 31 000 tons). The season in Namibia commenced on 8 April 
and catches to date have been satisfactory.  The Company enhanced its international supply chain for canned fish 
over the last six months through the conclusion of further supply contracts and investment in working capital.

Canned fish sales on the domestic market increased by 30%. This was achieved through a 17% increase in volume 
and price adjustments necessitated by the impact of the weaker rand exchange rate on the landed cost of imported 
product.
 
Profit from canned fish operations was above that for the same period last year.

The initial anchovy A season TAC for 2013 is 247 500 tons (final A season TAC for 2012: 352 718 tons). Landings 
of anchovy and redeye herring were extremely poor during the reporting period and significantly lower than in the 
previous season. An improvement has, however, been evident in April and May to date. The lower volumes resulted 
in higher costs per ton of fishmeal and fish oil produced. Selling prices were high due to firm international 
market prices and the weaker rand exchange rate. The loss for the period was higher than the prior year.

Horse mackerel and hake

The Namibian horse mackerel TAC for 2013 was increased to 350 000 tons (2012: 320 000 tons). The initial 2013
quota allocation to rights holders who were first granted rights in 2012 was 115 000 tons (2012: 100 000 tons) 
and all other rights holders received 109 400 tons (2012: 100 000 tons). An amount of 84 600 tons of the TAC is 
still to be allocated by the Minister of Fisheries. In South Africa the Precautionary Maximum Catch Limit for 
directed catch of horse mackerel increased by 10% to 34 650 tons (2012: 31 500 tons). 

Although catch rates in Namibia have been very good the overall tonnage caught was lower than for the comparative 
six month period, which included additional quota made available to our South African vessel in the final quarter 
of calendar 2011. One of our three Namibian trawlers has been operating successfully in Angola since February. 
This arrangement may be extended depending on catch rates and the availability of quota in Namibia for the 
remainder of the year. Catch rates in South Africa were higher than in the previous year which resulted in a 
small decrease in vessel operating costs per ton. 

Prices remained firm in our major markets with higher prices being achieved for certain fish sizes. Revenue 
was further enhanced in rand terms due to the currency exchange rate.

Profit from horse mackerel showed a significant increase.
	
Profit from hake operations rose by 50% primarily due to the successful integration of the business acquired 
from Lusitania in September 2012. 

Lobster, squid and French fries

The TAC for West coast lobster remains the same as 2012 at 2 425 tons, and quota available to Oceana for the 
current season amounts to 327 tons (2012: 327 tons). Catch rates were in line with those of last year. Export 
prices in US dollar terms declined slightly, however, rand prices improved due to the effect of the weaker 
currency. Profits from lobster were higher for the six month period.

The squid business incurred a loss due to very poor catches which were even lower than those of last year. The 
effect of lower sales volumes was partly offset by higher prices. 

The French fry business incurred a loss due to the effect of poor quality potatoes on already thin operating margins. 

Commercial cold storage 

Revenue increased by 25% due to improved occupancy levels at most of the stores and the additional capacity secured 
last year. Overall profit from the cold storage business improved considerably.


Further cautionary announcement

Shareholders are referred to the announcement dated 27 March 2013 and are advised that Oceana remains in negotiations 
regarding a potential acquisition. Accordingly, shareholders are advised to continue to exercise caution when dealing 
in the Companys securities until a further announcement in this regard is made.

Directorate changes

Phil Roux resigned from the board of directors ("the Board") on 22 February 2013 having served as a director since 2011. 
The Board wishes to thank Phil for his contribution during this period. Noel Doyle, who holds an executive position 
at Tiger Brands, was appointed to the Board on 8 April 2013. 

Rod Nicol has elected to take early retirement and will be resigning as a director of the Company on 30 June 2013. The 
Board wishes to thank Rod for his contribution to the Company over the past 27 years. Imraan Soomra will be appointed 
Financial Director with effect from 1 July 2013. Imraan is a Chartered Accountant (SA) and joins Oceana having been 
the Financial Director of the Hospital Division of Netcare Limited and prior to that the Head of Channels at Supersport 
International.


Prospects 

The Group is well positioned to take advantage of opportunities for growth. Given the increase at half year, earnings 
for the full year are expected to exceed those of last year. The forecast information has not been audited or reviewed 
by the Groups auditors. 


On behalf of the board
  
MA Brey 	                         FP Kuttel 
Chairman	                         Chief executive officer 

9 May 2013


CASH DIVIDEND DECLARATION

Notice is hereby given of dividend number 139. A gross interim dividend amounting to 100 cents per share, 
for the six months ended 31 March 2013, was declared on Thursday, 9 May 2013. Where applicable the deduction 
of dividend withholding tax at a rate of 15% will result in a net dividend amounting to 85 cents per share.

The Company has no credits available in respect of secondary tax on companies. 

The number of ordinary shares in issue at the date of this declaration is 119 449 157. 

The Company's tax reference number is 9675/139/71/2.

Last day to trade cum dividend             - Friday, 21 June 2013
Commence trading ex dividend               - Monday, 24 June 2013
Record date                                - Friday, 28 June 2013
Dividend payable                           - Monday, 1 July 2013

Share certificates may not be dematerialised or re-materialised between Monday, 24 June 2013, and 
Friday, 28 June 2013, both dates inclusive.

By order of the board

JC Marais
Company secretary

9 May 2013

COMPANY INFORMATION

Directors: 
MA Brey (chairman), FP Kuttel* (chief executive officer), ZBM Bassa, PG de Beyer, ABA Conrad*, NP Doyle, 
PB Matlare, RG Nicol*, S Pather, 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 
(PO 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 

See www.oceana.co.za for more details


Date: 09/05/2013 05:16:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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