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OCEANA GROUP LIMITED - Audited preliminary group results and dividend declaration for the year ended 30 September 2013

Release Date: 07/11/2013 17:45
Code(s): OCE     PDF:  
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Audited preliminary group results and dividend declaration for the year ended 30 September 2013

Oceana Group Limited
Incorporated in the Republic of South Africa
(Registration Number 1939/001730/06)
("Oceana" or "the company" or "the group")

AUDITED PRELIMINARY GROUP RESULTS AND DIVIDEND DECLARATION
FOR THE YEAR ENDED 30 SEPTEMBER 2013


HEADLINE EARNINGS PER SHARE INCREASE BY 7 %

DIVIDENDS PER SHARE INCREASE BY 7 %

PRELIMINARY SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                                            Audited       Audited

                                                                         year ended    year ended

                                                                            30 Sept       30 Sept
                                                                               2013          2012    Change
                                                                Notes         R'000         R'000         %


Revenue                                                                   4 997 354     4 647 951         8
Cost of sales                                                             3 049 222     2 875 765         6
Gross profit                                                              1 948 132     1 772 186        10
Sales and distribution expenditure                                          491 756       428 870        15
Marketing expenditure                                                        63 503        51 323        24
Overhead expenditure                                                        687 622       599 363        15
Net foreign exchange gain                                                   (43 428)      (18 395)
Operating profit before abnormal items                                      748 679       711 025         5
Abnormal items                                                      3                     (47 955)
Operating profit                                                            748 679       663 070        13
Investment income                                                            16 330        36 279       (55)
Interest paid                                                               (10 282)       (3 108)
Profit before taxation                                                      754 727       696 241         8
Taxation                                                                    230 337       232 315        (1)
Profit after taxation                                                       524 390       463 926        13
Other comprehensive income
Items that may be re-classified subsequently to profit or loss
Movement on foreign currency translation reserve                              6 228         1 826
Movement on cash flow hedging reserve                                         8 788        (1 522)
Other comprehensive income, net of taxation                                  15 016           304

Total comprehensive income for the year                                     539 406       464 230        16

Profit after taxation attributable to:
Shareholders of Oceana Group Limited                                        491 016       443 790        11
Non-controlling interests                                                    33 374        20 136        66

                                                                            524 390       463 926        13

Total comprehensive income attributable to:
Shareholders of Oceana Group Limited                                        506 032       444 094        14
Non-controlling interests                                                    33 374        20 136        66

                                                                            539 406       464 230        16

Weighted average number of shares on which earnings 
per share is based (000's)                                          7       100 302       100 100
Adjusted weighted average number of shares on which 
diluted earnings per share is based (000's) 			            110 402       108 659
                                                                           
Earnings per share (cents)
   Basic                                                                      489.5         443.3        10
   Diluted                                                                    444.8         408.4         9
Dividends per share (cents)                                                   322,0         301.0         7

Headline earnings per share (cents)                                 4
   Basic                                                                      487.9         455.7         7
   Diluted                                                                    443.2         419.8         6

PRELIMINARY SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION



                                                                            Audited       Audited
                                                                            30 Sept       30 Sept
                                                                               2013          2012
                                                                              R'000         R'000
    

Assets
  Non-current assets                                                        725 407       690 615
  Property, plant and equipment                                             473 821       435 850
  Goodwill                                                                   10 000        10 000
  Trademark                                                                   8 873         6 229
  Fishing rights                                                             83 929        72 409
  Deferred taxation                                                          30 360        23 187
  Investments and loans                                                     118 424       142 940


Current assets                                                            2 169 999     1 878 113
  Inventories                                                             1 277 781       777 979
  Accounts receivable                                                       751 327       819 164
  Taxation                                                                   14 456         4 792
  Non-current assets held for sale                                            2 618
  Cash and cash equivalents                                                 123 817       276 178


Total assets                                                              2 895 406     2 568 728


Equity and liabilities
  Capital and reserves                                                    1 789 375     1 633 242
  Share capital and premium                                                  33 770        30 692
  Foreign currency translation reserve                                        5 507          (721)
  Capital redemption reserve                                                    130           130
  Cash flow hedging reserve                                                   9 188           400
  Share-based payment reserve                                                59 337        57 144
  Distributable reserves                                                  1 620 682     1 496 895
  Interest of own shareholders                                            1 728 614     1 584 540
  Non-controlling interests                                                  60 761        48 702
Non-current liabilities                                                     183 688       139 270
  Liability for share-based payments                                        143 891        97 427
  Deferred taxation                                                          39 797        41 843
Current liabilities                                                         922 343       796 216
  Accounts payable and provisions                                           628 550       751 642
  Bank overdrafts                                                           293 793        44 574


Total equity and liabilities                                              2 895 406     2 568 728

Number of shares in issue net of treasury shares (000's)                    100 416       100 219
Net asset value per ordinary share (cents)                                    1 721         1 581
Total liabilities excluding deferred taxation: Total equity (%)                  60            55
Total borrowings: Total equity (%)                                               16             3

PRELIMINARY SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


                                                                            Audited       Audited
                                                                         year ended    year ended

                                                                            30 Sept       30 Sept

                                                                               2013          2012
                                                                              R'000         R'000

Balance at the beginning of the year                                      1 633 242     1 399 351
Total comprehensive income for the year                                     539 406       464 230
Profit after taxation                                                       524 390       463 926
Movement on foreign currency translation reserve                              6 228         1 826
Movement on cash flow hedging reserve                                         8 788       (1 522)
Shares issued                                                                 1 365         3 524
Movement in treasury shares held by share trusts                              1 713           875
Recognition of share-based payments                                           2 211         7 614
Loss on sale of treasury shares                                                (470)         (130)
Acquisition of additional shares in subsidiary                               (7 158)
Dividends paid                                                             (380 934)     (242 222)
Balance at the end of the year                                            1 789 375     1 633 242

Comprising:
Share capital and premium                                                    33 770        30 692
Foreign currency translation reserve                                          5 507         (721)
Capital redemption reserve                                                      130           130
Cash flow hedging reserve                                                     9 188           400
Share-based payment reserve                                                  59 337        57 144
Distributable reserves                                                    1 620 682     1 496 895
Non-controlling interests                                                    60 761        48 702

Balance at the end of the year                                            1 789 375     1 633 242

PRELIMINARY SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS


                                                                            Audited       Audited
                                                                         year ended    year ended
                                                                            30 Sept       30 Sept
                                                                               2013          2012
                                                                Notes         R'000         R'000

Cash flows from operating activities
Operating profit before abnormal items                                      748 679       711 025
Adjustment for non-cash and other items                                     149 943       102 832
Cash operating profit before working capital changes                        898 622       813 857
Working capital changes                                                    (473 865)     (357 295)
Cash generated from operations                                              424 757       456 562
Investment income received                                                    7 317        25 312
Interest paid                                                               (10 282)       (3 108)
Taxation paid                                                              (320 209)     (242 588)
Dividends paid                                                             (380 934)     (242 222)
Cash outflow from operating activities                                     (279 351)       (6 044)
Cash outflow from investing activities                                     (135 719)     (153 331)
Capital expenditure                                                        (132 908)      (69 746)
Proceeds on disposal of property, plant, equipment 
 and fishing right                                                            6 218         1 536
Acquisition of businesses                                           8       (10 450)     (105 296)
Acquisition of additional shares in subsidiary                               (7 158)
Acquisition of fishing rights                                               (26 695)       (1 296)
Repayment received on preference shares                                      39 377        11 949
Net movement on loans and advances                                           (5 848)        9 718
Loss of control over subsidiary                                     9         3 490
Acquisition of joint venture                                        9        (1 745)
Acquisition of investment                                                                    (196)
Cash inflow from financing activities                                        11 797         7 987
Proceeds from issue of share capital                                          2 608         4 270
Short-term borrowings raised                                                  9 189         3 717

Net decrease in cash and cash equivalents                                  (403 273)     (151 388)
Cash and cash equivalents at the beginning of the year                      231 604       384 544
Effect of exchange rate changes                                               1 693        (1 552)
Cash and cash equivalents at the end of the year                           (169 976)      231 604


NOTES

1. Basis of preparation


   The preliminary summarised financial statements have been prepared and presented in accordance with the framework 
   concepts and the measurement and recognition requirements of International Financial Reporting Standards ("IFRS"), 
   the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting 
   Pronouncements as issued by the Financial Reporting Standards Council, the Listings Requirements of the JSE Limited 
   ("JSE"), the information as required by IAS 34: Interim Financial Reporting and the requirements of the South African 
   Companies Act 71 of 2008, as amended ("Companies Act"). 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 with the exception of the adoption of IAS1 - Presentation of Financial Statements: Presentation of other 
   Comprehensive Income and Circular 2/2013 ­ Headline Earnings. The preliminary summarised financial statements were 
   prepared under the supervision of the group financial director, I Soomra CA(SA) and have been audited in compliance 
   with the Companies Act.


   The auditors, Deloitte & Touche, have issued their unmodified audit opinion on the consolidated financial statements 
   for the year ended 30 September 2013. The audit was conducted in accordance with International Standards on Auditing.
   These preliminary summarised financial statements have been derived from the consolidated financial statements, with 
   which they are consistent in all material respects. These preliminary summarised financial statements have been audited 
   by the company's auditors who have issued an unmodified opinion. A copy of the audit report is available for inspection 
   at the company's registered office. The audit report does not necessarily cover all the information contained in this 
   announcement. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the 
   auditor's work they should obtain a copy of that report together with the accompanying financial information from the 
   company's website or from the registered office of the company. 

   Any reference to future financial performance included in this announcement has not been reviewed or reported on by 
   the company's auditors.

                                                                               Audited     Audited
                                                                                  year        year
                                                                                 ended       ended
                                                                               30 Sept     30 Sept
                                                                                  2013        2012
                                                                                 R'000       R'000
2. Segmental results


   Revenue
   Canned fish and fishmeal                                                  2 657 106   2 582 636
   Horse mackerel and hake                                                   1 639 556   1 435 082
   Lobster, squid and French fries                                             374 372     350 443
   Commercial cold storage                                                     326 320     279 790
   Total                                                                     4 997 354   4 647 951


   Operating profit before abnormal items
   Canned fish and fishmeal                                                    219 646     318 941
   Horse mackerel and hake                                                     422 906     296 578
   Lobster, squid and French fries                                              23 329      29 538
   Commercial cold storage                                                      82 798      65 968
   Total                                                                       748 679     711 025

   Total assets
   Canned fish and fishmeal                                                  1 773 289   1 362 685
   Horse mackerel and hake                                                     509 979     427 057
   Lobster, squid and French fries                                             103 930      95 680
   Commercial cold storage                                                     235 608     241 002
   Financing                                                                   242 240     419 117

                                                                             2 865 046   2 545 541
   Deferred taxation                                                            30 360      23 187
   Total                                                                     2 895 406   2 568 728

   Total liabilities
   Canned fish and fishmeal                                                    467 077     515 752
   Horse mackerel and hake                                                     177 684     220 055
   Lobster, squid and French fries                                              43 364      44 808
   Commercial cold storage                                                      67 129      60 456
   Financing                                                                   310 980      52 572

                                                                             1 066 234     893 643
   Deferred taxation                                                            39 797      41 843
   Total                                                                     1 106 031     935 486


                                                                               Audited     Audited
                                                                                  year        year
                                                                                 ended       ended
                                                                               30 Sept     30 Sept
                                                                                  2013        2012
                                                                                 R'000       R'000


3. Abnormal items


   Competition Commission administrative penalty                                           (34 750)
   Trademark impairment                                                                    (13 205)
   Abnormal expenses before and after taxation                                              (47 955)


4. Determination of headline earnings


   Profit after taxation attributable to shareholders
   of Oceana Group Limited                                                     491 016     443 790
   Adjusted for:
   Trademark impairment                                                                     13 205
   Net surplus on disposal of property, plant, equipment and fishing right      (2 351)     (1 193)
   Total tax effect of adjustments                                                 660         356
   Headline earnings for the year                                              489 325     456 158


5. Dividends


   Estimated dividend declared after reporting date                            222 951     256 560
   Dividend on shares issued prior to last day to trade                                         83
   Actual dividend declared after reporting date                                           256 643


6. Supplementary information


   Amortisation                                                                 15 175         853
   Depreciation                                                                 88 444      86 339
   Operating lease charges                                                      53 752      39 615
   Share-based expenses                                                        154 587      83 197
      Cash-settled compensation scheme                                         152 376      75 583
      Oceana Empowerment Trust                                                   2 211       7 614
   Capital expenditure                                                         132 908      69 746
      Expansion                                                                 23 182       2 085
      Replacement                                                              109 726      67 661
   Budgeted capital commitments                                                218 529     181 159
     Contracted                                                                 44 005      21 879
     Not contracted                                                            174 524     159 280


                                                                             Number of   Number of
                                                                                shares      shares
                                                                                  '000        '000
7. Elimination of treasury shares


   Weighted average number of shares in issue                                  119 451     119 332
   Less: treasury shares held by share trusts                                  (14 055)    (14 138)
   Less: treasury shares held by subsidiary company                             (5 094)     (5 094)
   Weighted average number of shares on which earnings per 
   share and headline earnings per share are based                             100 302     100 100



                                                                               Audited     Audited
                                                                                  year        year
                                                                                 ended       ended
                                                                               30 Sept     30 Sept
                                                                                  2013        2012
                                                                                 R'000       R'000


8. Acquisition of businesses


   Property, plant and equipment                                                           (37 400)
   Goodwill                                                                                (10 000)
   Fishing rights                                                                          (68 860)
   Accounts payable and provisions                                                             514
   Contingent purchase consideration                                           (10 450)     10 450
   Cash movement on acquisition of businesses                                  (10 450)   (105 296)


9. Reduction of interest in subsidiary


   With effect from 31 January 2013, the group's interest in Oceana International Limited ("OI") reduced from 100% 
   to 50% through the issue of new shares to an outside party. OI has been proportionately consolidated since the 
   change in shareholding.


10. 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 2013.




COMMENTS

Financial results

Group earnings for the year ended 30 September 2013 reflects the benefit of Oceanas diversified portfolio and continued 
execution of strategy. 

Earnings per share for the year ended 30 September 2013 increased by 10% and headline earnings per share increased 
by 7% compared to the previous year.

Group revenue has improved by 8% to R4,997 million in 2013.  This growth has been achieved from improvements in each 
of our four operating segments, led primarily by an increase of 14% in the horse mackerel and hake division. 
Revenue growth in the second half of the year has been affected by the continued constraints felt by South African 
consumers, resulting in a slowdown in canned fish sales volumes and a significant decline in industrial fish landings.

Overhead expenditure includes a charge to the statement of comprehensive income of R152,4 million compared to R75,6 
million in 2012, arising from IFRS2 share-based expenses. This increase, which is a direct result of the significant 
improvement in Oceanas share price during the period under review, has had a material impact on the operating profit 
for the year. 

Operating profit before abnormal items increased by 5% compared to the previous year.

Inventory levels have increased by 64% in 2013 as a direct result of intentional canned fish stock build in anticipation 
of continued demand, further impacted by a downturn in domestic canned fish volumes in the second half of the year as a 
consequence of pressure on consumers.  This has adversely impacted stock holding costs and working capital requirements. 

A final dividend of 222 cents per share has been declared which together with the interim dividend of 100 cents brings 
the total dividend for the year to 322 cents per share, an increase of 7% on the 2012 total dividend of 301 cents 
per share.


Review of operations

Canned fish and fishmeal

Canned fish sales volumes of 8.6 million cartons were marginally below 2012 levels of 8.7 million cartons. Strong first
half growth was offset by a slowdown in the second half of the year primarily due to destocking by major retailers 
coupled with a general decline in overall consumption patterns of protein products. Lower than expected sales, together 
with higher import costs affected by a weaker currency, adversely impacted operating profit and also contributed to the 
increase in canned fish inventories.

The South African Total Allowable Catch (TAC) for pilchard in 2013 was 90 000 tons (2012: 100 595 tons). Additional pilchard 
quota was contracted to offset the shortfall in TAC and maintain production volumes at the St Helena Bay cannery. The Namibian 
pilchard TAC for 2013 was 25 000 tons (2012: 31 000 tons). The full Namibian quota was landed before year end. This, in 
addition to improved cannery performance and yields, resulted in an overall increase in local supply during the period.

The South African anchovy TAC for 2013 was 450 000 tons (2012: 472 718 tons). Landings of anchovy and redeye herring were 
extremely poor during the reporting period, the lowest historically in 50 years, largely due to unfavourable climatic conditions. 
The lower volumes resulted in higher costs per ton of fishmeal and fish oil produced. Selling prices were higher due to 
firm international market prices and the weaker rand exchange rate, however this was not sufficient to compensate for lower 
sales volumes. Consequently, the fishmeal business suffered a loss for the year.

Horse mackerel and hake

The Namibian horse mackerel TAC for 2013 was increased to 350 000 tons (2012: 320 000 tons). The Ministry of Fisheries and 
Marine Resources continued to allocate further quota to new rights holders. This resulted in lower managed quota in Namibia
of 87 709 tons (2012: 107 761 tons). Catch rates in Namibia remained good.

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). Catch rates in South Africa improved significantly contributing to higher sales volumes.

The resource in both countries remains healthy and well managed.

Horse mackerel prices remained reasonably firm in our major markets with higher prices being achieved for certain sizes. 
Revenue was further enhanced by a favourable exchange rate. As a result, profit from horse mackerel showed an increase.

Hake quota available to Oceana for deep-sea trawl was improved due to an increase in TAC of 7.8% as well as the 
acquisition of the Lusitania hake business. This contributed to an increase in sales volumes to 9 396 tons compared to 
3 800 tons in 2012.

The successful integration of the businesses in addition to the abovementioned factors resulted in an increase in 
profitability.


Lobster, squid and French fries

The TAC for West coast lobster remained the same as in 2012 at 2 425 tons and quota available to Oceana for the current
season amounted to 327 tons (2012: 327 tons), which was landed in full. Catch rates were in line with those of last year. 
Improved pricing and a favourable exchange rate positively impacted revenue growth. Profits from lobster were higher 
than the prior year.

Squid catches were lower than those of last year. The effect of lower sales volumes was partly offset by higher prices.

The French fries business incurred a loss due to the effect of poor quality potatoes on production yields.

Commercial cold storage

Revenue increased by 15% due to improved and consistent occupancy levels at most stores, additional capacity secured 
in the prior year and higher volumes of fruit handled. Revenue growth, coupled with a focus on cost efficiencies, 
contributed to a material improvement in operating profit.

Prospects

In light of the prevailing economic environment our ability to extract further volume growth in South Africa will remain 
under pressure. We continue to explore growth opportunities in the rest of Africa. 

Operational efficiency and working capital management will remain focus areas.  Procurement of canned fish from foreign 
suppliers, which has a six month lead time, has been cut-back in order to compensate for current inventory levels.  We 
anticipate that this will have a positive effect on working capital during the second half of the year once the lead time 
effect has been taken into account.  

Foodcorp acquisition
 
Further to the announcement released on the Stock Exchange News Service of the JSE on 4 June 2013 in respect of Oceanas 
acquisition of the fishing interests of Foodcorp (Pty) Limited (Foodcorp), the Competition Commission has approved the 
acquisition, subject to certain conditions.  One of these conditions is not acceptable to both Oceana and Foodcorp. 
Accordingly, the parties will file a Request for Consideration with the Competition Tribunal challenging the condition in 
question. In the interim Oceana and Foodcorp have agreed to extend the sale of business agreement for a further three 
months to 31 January 2014.



On behalf of the board

MA Brey
Chairman

FP Kuttel
Chief executive officer

07 November 2013

CASH DIVIDEND DECLARATION


Notice is hereby given of dividend number 140. A gross final dividend amounting to 222,0 cents per share, in respect of 
the year ended 30 September 2013, was declared on Thursday, 07 November 2013, out of current earnings. Where applicable 
the deduction of dividends withholding tax at a rate of 15% will result in a net dividend amounting to 188,7 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 119 526 157. The company's tax reference 
number is 9675/139/71/2. Relevant dates are as follows:

Last day to trade cum dividend                ­ Friday, 03 January 2014
Commence trading ex dividend                  ­ Monday, 06 January 2014
Record date                                   ­ Friday, 10 January 2014
Dividend payable                              ­ Monday, 13 January 2014

Share certificates may not be dematerialised or re-materialised between Monday, 06 January 2014 and Friday,
10 January 2014, both dates inclusive.


By order of the board

JC Marais
Company secretary

07 November 2013



Directors:
MA Brey (chairman), FP Kuttel* (chief executive officer), ZBM Bassa, PG de Beyer, ABA Conrad*, NP Doyle, PB Matlare, 
S Pather, NV Simamane, I Soomra*, 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: 07/11/2013 05:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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