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Addendum to Oceana’s 2014 Notice of Annual General Meeting
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 Company” or “the Group”)
ADDENDUM TO OCEANA’S 2014 NOTICE OF ANNUAL GENERAL MEETING OF
SHAREHOLDERS RELATING TO THE ADDITION OF A RESOLUTION TO APPROVE
CERTAIN PROPOSED AMENDMENTS MADE IN RESPECT OF THE OCEANA BEE
TRANSACTION
1. Introduction
Shareholders of Oceana (“Shareholders”) are referred to the Company’s notice of
annual general meeting (“AGM Notice”) to be held on Thursday, 13 February 2014 at
14:00 (“the Annual General Meeting”), posted on Friday, 13 December 2013, which set
out the matters to be considered and proposed resolutions to be voted on (with or
without modification) at the Annual General Meeting.
Shareholders are advised that the JSE Limited (“the JSE”) has subsequently advised the
Company that certain proposed amendments ("the Amendments") to the BEE
transaction previously approved by the Company's shareholders in 2006 ("the Approved
BEE Transaction"), which amendments the Company proposes to implement in 2014,
require the approval of the Company's shareholders. Oceana is currently in discussions
with the JSE in relation to any further disclosure the JSE may require.
For purposes of obtaining approval from Shareholders for the Amendments, the
Company has issued an addendum ("the Addendum") supplementing the original Notice
of Annual General Meeting on 16 January 2014, which includes the proposed
resolutions to be voted on (with or without modification) at the Annual General Meeting
in order to approve the implementation of the Amendments. Proxy forms relating to the
Annual General Meeting, forming part of the AGM Notice, must be completed and
returned to the Company’s Transfer Secretaries, details of which are included in the
Company’s 2013 Integrated Report posted to Shareholders on Friday, 13 December
2013, not less than 24 hours before the time appointed for Annual General Meeting.
Further instructions relating to proxy forms are available in the AGM notice.
A summary of details of the Approved BEE Transaction and the Amendments are set out
below. Full details of the Approved BEE Transaction and the Amendments are set out in
the Addendum.
2. The Approved BEE Transaction
On 22 September 2006, Shareholders in a general meeting approved the Approved BEE
Transaction which, inter ilia resulted in the Oceana Empowerment Trust (which was
named the Oceana Group Black Employee Share Trust at the time of the Approved BEE
Transaction) ("the Trust") acquiring 12.4% of the issued share capital of the Company.
with the Company and certain subsidiaries of the Company contributing R219.3 million
required by the Trust for the acquisition by it of the Company's shares referred to above.
3. Proposed Amendments to the Approved BEE Transaction
3.1. Oceana would like to amend the terms of the Approved BEE Transaction by
amending the terms of the Trust Deed and by the Company making a further
capital contribution of approximately R280 million to the Trust.
3.2. The amendments would include:
3.2.1. Extending the Lock in Period by 4 years. This means that the Lock in Period
will end on 15 January 2021 rather than on 15 January 2017.
The effect of this extension will be that:
- the Employee Beneficiaries will not be entitled to exercise employee
distribution rights until after 15 January 2021;
- because the Trust may not be wound up (in terms of clause 13.1 of the
Trust Deed) during the Lock in Period, the Trust will not be wound up until
at least 16 January 2021.
3.2.2 Approval of a once-off distribution to Employee Beneficiaries
- In or about March 2014, the Company will make a capital contribution of
approximately R280 million to the Trust ("the Further Capital Contribution")
and a new clause will be inserted into the Trust Deed which will empower
the Trustees to use the Further Capital Contribution to make a once-off
cash distribution to the Employee Beneficiaries.
- The amount which will be distributed to each Employee Beneficiary will be
calculated by multiplying the number of rights allocated to the Employee
Beneficiary as at 1 March 2014 by R20.50 .
- The Trust will make the once-off distribution to the Employee Beneficiaries
in or about March 2014.
3.2.3 Increased Distributions to Employee Beneficiaries
The formula contained in Part III of Annexure B will, after the payment of the
final dividend by the Company during January 2014, be amended to provide
that half of the net income of the Trust, after paying the costs, expenses and
taxation of the Trust, will be distributed to the Employee Beneficiaries. To
date, most of the net income has been used to repay the capital contributions
of the Corporate Beneficiaries.
4. Rationale for the Amendments
4.1. Extending the duration of the Lock in Period will increase the period for which the
long-term Black Ownership of the Company is secured by means of the Trust
until at least 15 January 2021.
4.2. As the Oceana Group companies which hold long term commercial fishing rights
in terms of the Marine Living Resources Act will be applying for the renewal or
reallocation of such long term commercial fishing rights up to and during 2020, it
is of critical importance that the Company secure its Black Ownership over this
period.
4.3. The further amendments are to enable the Trustees to make a once-off cash
distribution, funded by a capital contribution by the Company (which is consistent
with earlier funding and will bear an effective interest rate which is unchanged
from the current interest rate applicable to funding), and to increase the
distributions paid to Employee Beneficiaries out of the income received by the
Trust.
4.4. The amendment to the formula in the Trust Deed, used to calculate the Terminal
Amount, is required in order to take into account the Further Capital Contribution
to be made by the Company when calculating the Terminal Amount.
4.5. The proposed Amendments do not alter the structure of the Approved BEE
Transaction and do not alter the terms of the Trust to any significant degree,
beyond permitting a higher level of distributions to Employee Beneficiaries of the
net income of the Trust and securing Black Ownership for a further period of 4
years to enable a reallocation of fishing rights which are vital to the Oceana
Group's business.
5. Pro forma financial effects
The table below sets out the pro forma financial effects which illustrate the impact of the
Amendments on the Earnings Per Share (“EPS”), Headline Earnings Per Share
(“HEPS”), Net Asset Value (“NAV”) Per Share and Tangible Net Asset Value (“TNAV”)
Per Share of Oceana for the twelve months ended 30 September 2013.
The pro forma financial effects are presented for illustrative purposes only and because
of their nature may not fairly present Oceana’s financial position, changes in equity,
results of operations or cash flows after the Amendments. The board of directors is
responsible for the preparation of the pro forma financial effects. The accounting policies
of Oceana as at 30 September 2013 and the Revised SAICA Guide on Pro Forma
Financial Information have been used in the preparation of the pro forma financial
effects.
It has been assumed for purposes of the pro forma financial effects that Amendments
took place with effect from 1 October 2012 for statement of comprehensive income
purposes, and on 30 September 2013 for statement of financial position purposes.
Before the After the %
Amendments Amendments Change
EPS (cents) 489.5 475.2 -2.9
Diluted EPS (cents) 444.8 431.7 -2.9
HEPS (cents) 487.9 473.6 -2.9
Diluted HEPS (cents) 443.2 430.2 -2.9
NAV Per Share (cents) 1 721.5 1 414.1 -17.9
TNAV Per Share (cents) 1 619.1 1 311.8 -19.0
Net shares in issue, excluding
treasury shares (‘000) 100 416 100 416
Weighted average number of
shares in issue for EPS calculation
('000) 100 302 100 302
Adjusted weighted average number of
shares in issue for diluted EPS
calculation ('000) 110 402 110 402
NAV (R '000) 1 728 614 1 420 030
TNAV (R '000) 1 625 812 1 317 228
Notes:
1. The "Before the Amendments" column has been derived without adjustment from Oceana's
audited consolidated results for the year ended 30 September 2013.
2. The "After the Amendments" column assumes:
a) An advance benefit of R20.50 per share for 13 986 967 shares is paid by the Trust
to all Employee Beneficiaries on 1 October 2012 for earnings purposes and on 30
September 2013 for asset value purposes.
b) The cash required by the Trust to pay the advance will be provided by an additional
capital contribution by Corporate Beneficiaries. The effect is to increase the group's
bank overdrafts.
c) Interest has been calculated at 6.83% pa, which is the expected rate applicable to
the additional borrowings, which adjustment is of a continuing nature.
d) Tax rate is 28%.
e) The Trust will distribute to Employee Beneficiaries 50% of dividends received after
deducting the expenses of running the Trust. Previously the Trust distributed a
smaller proportion of its income in terms of the Trust deed. Implementation of the
proposed amendment to increase distributions to Employee Beneficiaries, as
discussed in paragraph 8.6 of the Addendum, would have resulted in additional
dividends paid to Employee Beneficiaries of R21 601 000 in 2013.
f) Once-off transaction costs amounting to an estimated R250 000 have been
expensed.
g) The fair value of the shares granted before and after the event does not change
significantly.
3. The advance benefit paid is effectively a distribution of portion of the reserves of the Trust
and does not directly impact the equity of Oceana Group Limited. In the consolidated group
statement of financial position, the distribution is included in equity through the consolidation
of the Trust into the group figures.
4. The additional capital contribution made by corporate beneficiaries to the Trust will be
recovered, with an effective 7,46% return, over the extended lock-in period through
dividends received from the company and from the proceeds of shares realised on behalf of
employees at the end of the lock-in period.
5. There are no other post balance sheet events which require adjustment to the pro forma
financial effects.
6. Conclusion
An explanatory letter summarising the details of the Approved BEE Transaction and the
Amendments, together with the Addendum, was posted to the Company’s shareholders
today.
Cape Town
16 January 2014
Investment Bank and Sponsor
The Standard Bank of South Africa Limited
Independent Reporting Accountants
Deloitte & Touche
Date: 16/01/2014 01:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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