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Interim results for the six months ended 31 March 2015, dividend declaration and further cautionary announcement
Oceana Group Limited
Incorporated in the Republic of South Africa
(Registration Number 1939/001730/06)
("Oceana" or "the company" or "the group")
INTERIM REPORT AND DIVIDEND DECLARATION FOR THE SIX MONTHS ENDED 31 MARCH 2015 AND FURTHER
CAUTIONARY ANNOUNCEMENT
The unaudited interim results of the group for the six months ended 31 March 2015 are set out herein.
SUMMARISED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 March 31 March 30 Sept
2015 2014 Change 2014
Notes R'000 R'000 % R'000
Revenue 2 566 132 2 361 652 9 5 039 134
Cost of sales 1 635 734 1 456 299 12 3 062 606
Gross profit 930 398 905 353 3 1 976 528
Sales and distribution expenditure 238 962 241 878 (1) 500 320
Marketing expenditure 30 063 19 659 53 57 804
Overhead expenditure 327 755 299 388 9 599 358
Net foreign exchange gain (7 684) (21 588) (64) (37 196)
Operating profit before joint venture income 341 302 366 016 (7) 856 242
Joint venture income 10 636 22 628 (53) 23 324
Operating profit before abnormal items 351 938 388 644 (9) 879 566
Abnormal items 4 (11 191)
Operating profit 340 747 388 644 (12) 879 566
Investment income 22 520 6 312 13 273
Interest paid (27 303) (4 249) (17 102)
Profit before taxation 335 964 390 707 (14) 875 737
Taxation 100 457 118 541 (15) 266 818
Profit after taxation 235 507 272 166 (13) 608 919
Other comprehensive income
Movement on foreign currency translation reserve (138) 2 267 (106) 6 205
Movement on cash flow hedging reserve 10 729 (9 386) (7 346)
Other comprehensive income, net of taxation 10 591 (7 119) (1 141)
Total comprehensive income for the period 246 098 265 047 (7) 607 778
Profit after taxation attributable to:
Shareholders of Oceana Group Limited 225 836 253 758 (11) 573 931
Non-controlling interests 9 671 18 408 (47) 34 988
235 507 272 166 (13) 608 919
Total comprehensive income for the period
attributable to:
Shareholders of Oceana Group Limited 236 427 246 639 (4) 572 790
Non-controlling interests 9 671 18 408 (47) 34 988
246 098 265 047 (7) 607 778
Weighted average number of shares on which
earnings per share is based (000's) 8 100 512 100 366 100 400
Adjusted weighted average number of shares on
which diluted earnings per share is based (000's) 111 526 111 051 111 009
Earnings per share (cents)
Basic 224,7 252,8 (11) 571,6
Diluted 202,5 228,5 (11) 517,0
Dividends per share (cents) 106,0 106,0 377,0
Headline earnings per share (cents)
Basic 224,2 252,6 (11) 565,0
Diluted 202,1 228,3 (11) 511,0
Adjusted headline earnings per share (cents)
Basic 235,3 252,6 (7) 565,0
Diluted 212,1 228,3 (7) 511,0
SUMMARISED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 MarcH 31 March 30 Sept
2015 2014 2014
R'000 R'000 R'000
Assets
Non-current assets 1 235 580 813 650 859 640
Property, plant and equipment 680 994 463 383 512 342
Intangible assets 249 098 94 312 97 625
Deferred taxation 21 761 22 967 24 119
Investments and loans 283 727 232 988 225 554
Current assets 3 170 264 1 817 166 2 115 657
Inventories 953 862 976 115 838 615
Accounts receivable 974 857 761 099 933 039
Cash and cash equivalents 1 241 545 79 952 344 003
Total assets 4 405 844 2 630 816 2 975 297
Equity and liabilities
Capital and reserves
Share capital and premium 35 245 33 964 35 245
Foreign currency translation reserve 11 570 7 770 11 708
Capital redemption reserve 130 130 130
Cash flow hedging reserve 12 571 (198) 1 842
Share-based payment reserve 70 444 61 353 65 202
Distributable reserves 1 499 033 1 356 677 1 563 243
Interest of own shareholders 1 628 993 1 459 696 1 677 370
Non-controlling interests 61 827 56 103 69 536
Total capital and reserves 1 690 820 1 515 799 1 746 906
Non-current liabilities 840 417 148 978 439 403
Liability for share-based payments 59 485 116 979 81 188
Long-term loan 680 985 300 000
Deferred taxation 99 947 31 999 58 215
Current liabilities 1 874 607 966 039 788 988
Accounts payable and provisions 765 941 557 966 788 988
Distribution to Oceana Empowerment Trust
beneficiaries 5 662 291 573
Bank overdrafts 1 103 004 116 500
Total equity and liabilities 4 405 844 2 630 816 2 975 297
Number of shares in issue net of treasury shares (000's) 100 512 100 428 100 512
Net asset value per ordinary share (cents) 1 621 1 453 1 669
Total liabilities excluding deferred taxation:
Total equity (%) 155 71 67
Total borrowings: Total equity (%) 106 8 17
SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 March 31 March 30 Sept
2015 2014 2014
Notes R'000 R'000 R'000
Balance at the beginning of the period 1 746 906 1 789 371 1 789 371
Total comprehensive income for the period 246 098 265 047 607 778
Profit after taxation 235 507 272 166 608 919
Movement on foreign currency translation reserve (138) 2 267 6 205
Movement on cash flow hedging reserve 10 729 (9 386) (7 346)
Recognition of share-based payments 5 249 2 016 5 875
Share options exercised 194 195
Movement in treasury shares held by share trusts 1 280
Loss on sale of treasury shares (189)
Additional non-controlling interest arising on acquisition 2 807
Distribution to Oceana Empowerment Trust beneficiaries (291 573) (291 524)
Dividends declared (310 240) (249 256) (365 880)
Balance at the end of the period 1 690 820 1 515 799 1 746 906
Comprising:
Share capital and premium 35 245 33 964 35 245
Foreign currency translation reserve 11 570 7 770 11 708
Capital redemption reserve 130 130 130
Cash flow hedging reserve 12 571 (198) 1 842
Share-based payment reserve 70 444 61 353 65 202
Distributable reserves 1 499 033 1 356 677 1 563 243
Non-controlling interests 61 827 56 103 69 536
Balance at the end of the period 1 690 820 1 515 799 1 746 906
SUMMARISED GROUP STATEMENT OF CASH FLOWS
Cash flow from operating activities
Operating profit before joint venture income 341 302 366 016 856 242
Adjustment for non-cash and other items 41 645 27 679 56 335
Cash operating profit before working capital changes 382 947 393 695 912 577
Working capital changes (153 287) 125 843 325 800
Cash generated from operations 229 660 519 538 1 238 377
Investment income received 21 868 21 840 24 476
Interest paid (27 303) (4 249) (17 102)
Taxation paid (124 484) (134 694) (264 090)
Distribution to employee beneficiaries of Oceana
Empowerment Trust (291 524)
Dividends paid (310 240) (249 256) (365 880)
Cash (outflow)/inflow from operating activities (210 499) 153 179 324 257
Cash outflow from investing activities (372 530) (49 168) (147 383)
Capital expenditure (75 264) (49 691) (163 386)
Proceeds on disposal of property, plant and equipment 507 139 990
Repayment received on preference shares 31 426 4 339 8 573
Net movement on loans and advances (75 490) (4 223) 6 172
Acquisition of business 5 (251 478)
Acquisition of fishing rights (2 812)
Proceeds on disposal of joint venture 268 268
Proceeds on disposal of investment 581
Cash inflow from financing activities 380 732 4 540 310 471
Proceeds from issue of share capital 195 1 286
Long-term loan raised 380 985 300 000
Short-term borrowings (repaid)/raised (253) 4 345 9 185
Net (decrease)/increase in cash and cash equivalents (202 297) 108 551 487 345
Cash and cash equivalents at the beginning of the period 344 003 (145 797) (145 797)
Effect of exchange rate changes (3 165) 698 2 455
Cash and cash equivalents at the end of the period 138 541 (36 548) 344 003
Notes
1. Basis of preparation
The summarised consolidated interim financial information has been prepared 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, Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council, the information as required by IAS 34:
Interim Financial Reporting, the JSE Listings Requirements and the requirements of the South African Companies
Act, 71 of 2008. The condensed group interim financial statements have 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 2014, except for the adoption of accounting standards and interpretations that became effective during
the current period. The adoption of these standards and interpretations had no material impact on the group. The
condensed financial information was prepared under the supervision of the group financial director, I Soomra
CA(SA).
The results have not been audited or reviewed by the group's auditors, Deloitte & Touche.
2. Segmental results
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 MarcH 31 March 30 Sept
2015 2014 2014
R'000 R'000 R'000
Revenue
Canned fish and fishmeal 1 580 611 1 401 580 3 086 476
Horse mackerel and hake 588 824 611 279 1 203 470
Lobster, squid and French fries 227 857 204 424 405 497
Commercial cold storage 168 840 144 369 343 691
Total 2 566 132 2 361 652 5 039 134
Operating profit before abnormal items
Canned fish and fishmeal 167 065 124 842 380 931
Horse mackerel and hake 108 998 204 205 347 251
Lobster, squid and French fries 34 772 22 083 44 870
Commercial cold storage 41 103 37 514 106 514
Total 351 938 388 644 879 566
Total assets
Canned fish and fishmeal 1 702 782 1 571 330 1 550 944
Horse mackerel and hake 844 356 485 605 588 916
Lobster, squid and French fries 148 516 122 222 112 746
Commercial cold storage 249 228 224 479 240 610
Financing 1 439 201 204 213 457 962
4 384 083 2 607 849 2 951 178
Deferred taxation 21 761 22 967 24 119
Total 4 405 844 2 630 816 2 975 297
Total liabilities
Canned fish and fishmeal 540 938 414 702 556 434
Horse mackerel and hake 162 559 126 152 183 108
Lobster, squid and French fries 56 182 57 986 49 402
Commercial cold storage 46 177 55 461 55 747
Financing 1 809 221 428 717 325 485
2 615 077 1 083 018 1 170 176
Deferred taxation 99 947 31 999 58 215
Total 2 715 024 1 115 017 1 228 391
3. Determination of headline earnings and adjusted headline earnings
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 MarcH 31 March 30 Sept
2015 2014 2014
R'000 R'000 R'000
Profit after taxation attributable to shareholders of
Oceana Group Limited 225 836 253 758 573 931
Adjusted for:
Compensation from third party for property, plant and
equipment impaired (11 370)
Headline earnings adjustments - joint ventures 2 141
Net surplus on disposal of property, plant, equipment and
intangible assets (265) (192)
Profit on change of interest in investment (381)
Surplus on disposal of joint venture (316) (268)
Total tax effect of adjustments 161 63 2 996
Headline earnings for the period 225 351 253 505 567 238
Adjusted for:
Abnormal Items 11 191
Adjusted headline earnings for the period 236 542 253 505 567 238
4. Abnormal items
Transaction costs (11 191)
Transaction cost relates to the cost associated with the potential transaction, which was announced on
Securities Exchange News Service on 11 May 2015.
5. Acquisition of business
On 2 February 2015, the Group acquired hake, pelagic and lobster fishing rights and related assets from Foodcorp
Proprietary Limited for a consideration of R355,4 million. Foodcorp Proprietary Limited was acquired to enhance
the groups hake, pelagic and lobster footprint.
The fair value of the acquired fishing rights and assets is provisional upon the transfer and registration of
immovable property and the fair value determination of the fishing rights. The transfer of the immovable
property is represented by the purchase consideration outstanding. The provisional fair value of the identifiable
assets and liabilities are shown below.
Assets acquired and liabilities recognised at date of acquisition:
Unaudited
six months
ended
31 MarcH
2015
R'000
Property, plant and equipment 148 037
Intangible asset - Fishing rights 128 277
Goodwill 35 918
Accounts receivables 26 745
Taxation 97
Inventories 39 815
Cash and cash equivalents 52 899
Non-controlling interest (2 807)
Deferred taxation (37 309)
Long-term loan (170)
Trade and other payables (36 125)
Total purchase price 355 377
Less: Purchase consideration outstanding (51 000)
Consideration paid in cash 304 377
Net cash flow on acquisition of business
Consideration paid in cash 304 377
Less: Cash and cash equivalents balances acquired (52 899)
251 478
Goodwill on acquisition
Consideration 355 377
Less: Fair value of identifiable assets acquired and liabilities assumed 319 459
35 918
The goodwill on acquisition arose mainly due to the provisional fair value determination of the intangible asset,
which amounts to R35,9 million.
Included in the consolidated operating profit before abnormal items for the period is a loss of R7,5 million
attributable to the acquisition. Revenue for the period includes R21,1 million in respect of the acquisition.
Had these business combinations been in effect as at 1 October 2014, the revenue of the group would have been
R2 788,2 million, and the profit before abnormal items for the period would have been R355,5 million. Management
considers these estimated numbers to represent an approximate measure of the performance of the combined group
for the period and cautions the use of the reference point for future comparisons due to seasonality and
unpredictability of fishing.
6. Dividends
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 MarcH 31 March 30 Sept
2015 2014 2014
R'000 R'000 R'000
Estimated dividend declared after reporting date 106 543 106 454 272 389
Dividend on shares issued prior to last day to trade
Actual dividend declared after reporting date 106 543 106 454 272 389
7. Supplementary information
Amortisation of fishing rights 12 260 8 490 22 421
Depreciation 54 328 44 401 91 202
Operating lease charges 23 054 23 383 54 454
Capital expenditure 75 264 49 691 163 386
Expansion 35 281 17 320 24 592
Replacement 39 983 32 371 138 794
Budgeted capital commitments 167 363 137 107 327 397
Contracted 24 978 12 905 22 479
Not contracted 142 385 124 202 304 918
8. Elimination of treasury shares
Number Number Number
of shares of shares of shares
'000 '000 '000
Weighted average number of shares in issue 119 526 119 464 119 526
Less: shares held by share trusts (13 920) (14 004) (14 032)
Less: treasury shares held by subsidiary company (5 094) (5 094) (5 094)
100 512 100 366 100 400
9. Events after the reporting date
No events occurred subsequent to the reporting date that may have an impact on the group's reported financial
position at 31 March 2015.
COMMENTS
Financial results
Group revenue has shown satisfactory growth for the six months ended 31 March 2015, increasing by 9%, primarily
due to growth in three of our four divisions, led by an increase of 13% in the canned fish and fishmeal
division and the positive effect of a weaker exchange rate.
Group earnings for the period have declined as a result of increased quota costs and adverse conditions
in the horse mackerel division offsetting the positive performance of the remaining divisions. Basic earnings
per share and basic headline earnings per share decreased by 11% over the same period.
Operating profit before abnormal items decreased by 9% over the same period.
An interim dividend of 106 cents per share has been declared (2014: 106 cents per share).
Review of operations
Canned fish and fishmeal
Revenue growth for canned fish has been achieved mainly through inflationary price adjustments, offset by a 4%
reduction in volumes for the six month period. Volume relative to the prior year was negatively impacted by the
implementation of a price increase in January (prior year price increase was implemented in March). This impact
offset good volume growth in the first four months.
The initial 2015 South African Total Allowable Catch (“TAC”) for pilchard decreased to 75 443 tons
(2014: 90 000 tons). It is anticipated that this will return to prior year levels once the provisional TAC is
reviewed later this year. Pilchard landings at the St Helena Bay cannery have been good. The Namibian pilchard
TAC for 2015 is 25 000 tons (2014: 30 000 tons).
The 2015 initial South Africa anchovy A season TAC is 305 060 tons (final A season TAC for 2014: 450 000 tons).
Current season landings of industrial fish to the group’s fishmeal plants were higher than the previous season
resulting in improved production efficiencies and lower cost of manufactured product. Profit from fishmeal
operations was above that for the same period last year due to the combined effect of increased
volumes, weaker exchange rate and strong global pricing.
Horse mackerel and hake
The 2015 Namibian horse mackerel TAC remains unchanged for 2015 at 350 000 tons. The Ministry of Fisheries
and Marine Resources continued to allocate further quota to the new rights holders which resulted in a
reduction of owned quota held by the group. As a result the percentage of purchased quota has increased over
the period in order to maintain appropriate overall quota requirements.
Catch rates in Namibia have improved over the period resulting in increased revenue. Margins in Namibia have
been adversely impacted by the cost of additional purchased quota and the timing of owned quota caught, when
compared with the same period last year.
In South Africa the Precautionary Maximum Catch Limit for targeted catch of horse mackerel increased by 10%
to 41 927 tons (2014: 38 115 tons). Catch rates in South Africa have been significantly reduced due to the
continued scarcity of horse mackerel in our traditional fishing grounds. Profit from horse mackerel in
South Africa decreased as a direct result of lower tonnage caught for the period.
Horse mackeral pricing is under pressure following an oversupply of fish in the market originating from Namibia,
Angola and Mauritania.
The 2015 hake TAC has decreased by 5% to 123 020 tons (2014: 129 658 tons). Hake operations showed an
improvement as a consequence of stable prices, increased sales volumes and operating efficiencies which was
offset by a weaker euro exchange rate.
Lobster, squid and French fries
The 2015 TAC for West coast lobster decreased by 17% to 1 801 tons (2014: 2 167 tons), and quota available to
Oceana for the current season amounts to 238 tons (2014: 288 tons). Improved sales volumes aided by higher sales
prices and a favourable exchange rate resulted in an increase in profits in the current period.
Following the 2013 commercial fishing rights allocation process in the squid sector, the fishing rights allocated
to Oceana remained unchanged. In the current period the squid business generated a profit due to improved
landings and higher sales volumes.
The French fries operation has declined primarily due to a decrease in yield, driven by lower quality of raw
material and a decrease in sales volumes due to power outages which affected production.
Commercial cold storage (CCS)
The CCS Logistics business continues to show improvement. Revenue increased by 17% due to improved occupancy
levels at most stores aided by the commissioning of the new Midrand store while cost efficiencies have further
contributed to growth in operating profit margins.
Foodcorp acquisition
On 19 December 2014, the Competition Appeal Court approved the acquisition of the fishing interests of Foodcorp
Proprietary Limited. This became effective from 2 February 2015.
Further cautionary announcement
Further to the cautionary announcement published on the Securities Exchange News Service on Monday, 11 May 2015,
Oceana shareholders are advised that the company is still in advanced discussions with Daybrook Holdings
Incorporated, a United States fishing and processing operation relating to a potential transaction 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.
On behalf of the board
MA Brey FP Kuttel
Chairman Chief executive officer
14 May 2015
CASH DIVIDEND DECLARATION
Notice is hereby given of dividend number 143. A gross interim dividend amounting to 106 cents per share, for
the six months ended 31 March 2015, was declared on Thursday, 14 May 2015, 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 90,1 cents per share.
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, 26 June 2015
Commence trading ex dividend Monday, 29 June 2015
Record date Friday, 3 July 2015
Dividend payable Monday, 6 July 2015
Share certificates may not be dematerialised or re-materialised between Monday, 29 June 2015 and Friday,
3 July 2015, both dates inclusive.
By order of the board
JC Marais
Company secretary
14 May 2015
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 (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
JSE share code: OCE
NSX share code: OCG
ISIN number: ZAE000025284
Date: 14/05/2015 05:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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