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OCE
OCE
OCE - Oceana Group Limited - Interim report and dividend declaration for the
six months ended 31 March 2010
OCEANA GROUP LIMITED
Incorporated in the Republic of South Africa
(Registration Number 1939/001730/06)
JSE Share Code: OCE
ISIN Number: ZAE000025284
NSX Share Code: OCG
("Oceana" or "the group")
INTERIM REPORT AND DIVIDEND DECLARATION FOR THE SIX MONTHS ENDED 31 MARCH
2010
The unaudited results of the group for the six months ended 31 March 2010 are
set out herein.
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited
six six Audited
months months
ended ended year
ended
31 March 31 March 30 Sept
2010 2009 Change 2009
Note R`000 R`000 % R`000
Revenue 1,526,401 1,620,760 (6) 3,301,288
Cost of sales 982,961 1,169,169 (16) 2,231,648
Gross profit 543,440 451,591 20 1,069,640
Sales and distribution 133,361 109,314 22 246,473
expenditure
Marketing expenditure 15,041 12,077 25 29,641
Overhead expenditure 195,085 180,711 8 377,760
Net foreign exchange 8,174 (24,622) 4,900
loss/(profit)
Operating profit before abnormal 191,779 174,111 10 410,866
items
Abnormal items 3 (19,239) 3,416 19,329
Operating profit 172,540 177,527 (3) 430,195
Dividends received and accrued 6,846 11,624 18,731
Net interest received 877 3,856 7,230
Profit before taxation 180,263 193,007 (7) 456,156
Taxation 68,646 63,093 9 148,223
Profit after taxation 111,617 129,914 (14) 307,933
Other comprehensive income
Movement on foreign currency
translation reserve (3,037) (6,324) (24,894)
Movement on cash flow hedging 6,485 (3,357) (7,856)
reserve
Other comprehensive income, net
of taxation 3,448 (9,681) (32,750)
Total comprehensive income for 115,065 120,233 (4) 275,183
the period
Profit attributable to:
Shareholders of Oceana Group 106,671 122,504 (13) 292,199
Limited
Non-controlling interest 4,946 7,410 (33) 15,734
111,617 129,914 (14) 307,933
Total comprehensive income
attributable to:
Shareholders of Oceana Group 110,119 112,823 (2) 259,449
Limited
Non-controlling interest 4,946 7,410 (33) 15,734
115,065 120,233 (4) 275,183
Weighted average number of shares
on which earnings per share is 7 99,578 98,998 99,041
based (000`s)
Adjusted weighted average number
of shares on which diluted
earnings per share is based 104,981 101,527 101,950
(000`s)
Earnings per share (cents)
Basic 107.1 123.7 (13) 295.0
Diluted 101.6 120.7 (16) 286.6
Dividends per share (cents) 33.0 31.0 6 184.0
Headline earnings per share
(cents)
Basic 126.4 120.8 5 279.4
Diluted 119.9 117.8 2 271.5
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 March 31 March 30 Sept
2010 2009 2009
R`000 R`000 R`000
Assets
Non-current assets 515,643 524,188 534,276
Property, plant and equipment 344,206 342,225 352,170
Goodwill 21,720 18,774
Trademark 16,286 20,064 17,343
Deferred taxation 7,694 6,577 5,878
Investments and loans 147,457 133,602 140,111
Current assets 1,181,426 1,060,673 1,188,010
Inventories 587,666 491,667 589,814
Accounts receivable 504,747 467,928 408,793
Cash and cash equivalents 89,013 101,078 189,403
Total assets 1,697,069 1,584,861 1,722,286
Equity and liabilities
Equity
Share capital and premium 23,065 14,656 16,536
Foreign currency translation reserve (5,555) 16,052 (2,518)
Capital redemption reserve 130 130 130
Cash flow hedging reserve (1,371) (3,357) (7,856)
Share-based payment reserve 34,696 28,502 32,015
Distributable reserves 1,007,928 914,449 1,053,395
Interest of own shareholders 1,058,893 970,432 1,091,702
Non-controlling interest 30,144 30,136 33,994
Total equity 1,089,037 1,000,568 1,125,696
Non-current liabilities 81,969 60,264 76,291
Liability for share-based payments 30,445 18,227 26,462
Deferred taxation 51,524 42,037 49,829
Current liabilities 526,063 524,029 520,299
Accounts payable and provisions 444,531 443,670 499,866
Bank overdrafts 81,532 80,359 20,433
Total equity and liabilities 1,697,069 1,584,861 1,722,286
Number of shares in issue net of
treasury shares (000`s) 99,687 99,150 99,269
Net asset value per ordinary share (cents) 1,062 979 1,100
Total liabilities excluding deferred
taxation: Total equity (%) 51 54 49
Total borrowings: Total equity(%) 7 8 2
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited
six six Audited
months months
ended ended year
ended
31 March 31 March 30 Sept
2010 2009 2009
R`000 R`000 R`000
Balance at the beginning of the 1,125,696 999,558 999,558
period
Shares issued 6,428 11,294 12,979
Decrease in treasury shares held
by share trusts 99 992 1,187
Movement on foreign currency
translation reserve (3,037) (6,324) (24,894)
Movement on cash flow hedging 6,485 (3,357) (7,856)
reserve
Recognition of share-based 2,705 3,920 7,466
payments
Profit after taxation 111,617 129,914 307,933
(Loss)/profit on sale of treasury (3) 307
shares
Dividends declared (160,953) (135,429) (170,984)
Balance at the end of the period 1,089,037 1,000,568 1,125,696
Comprising:
Share capital and premium 23,065 14,656 16,536
Foreign currency translation (5,555) 16,052 (2,518)
reserve
Capital redemption reserve 130 130 130
Cash flow hedging reserve (1,371) (3,357) (7,856)
Share-based payment reserve 34,696 28,502 32,015
Distributable reserves 1,007,928 914,449 1,053,395
Non-controlling interest 30,144 30,136 33,994
Total 1,089,037 1,000,568 1,125,696
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited
six six Audited
months months
ended ended year
ended
31 March 31 March 30 Sept
2010 2009 2009
R`000 R`000 R`000
Cash flows from operating
activities
Operating profit before abnormal 191,779 174,111 410,866
items
Adjustment for non-cash and 41,193 37,110 89,659
other items
Cash operating profit before
working 232,972 211,221 500,525
capital changes
Working capital changes (168,028) (196,574) (206,875)
Cash generated from operations 64,944 14,647 293,650
Interest and dividends received 3,826 11,363 16,509
Interest paid (2,611) (4,157) (5,600)
Taxation paid (50,340) (68,689) (138,822)
Dividends paid (160,953) (133,925) (170,984)
Cash outflow from operating (145,134) (180,761) (5,247)
activities
Cash outflow from investing (27,299) (28,632) (62,429)
activities
Capital expenditure (27,765) (38,792) (91,138)
Proceeds on disposal of
property, 1,304 814 10,275
plant and equipment
Net movement on loans and (838) 5,930 14,221
advances
Cash related abnormal items 3,416 4,213
Cash inflow from financing 10,933 16,545 15,670
activities
Proceeds from issue of share 6,527 12,286 14,472
capital
Short-term borrowings raised 4,406 4,259 1,198
Net decrease in cash and cash (161,500) (192,848) (52,006)
equivalents
Cash and cash equivalents at the
beginning of the period 168,970 218,133 218,133
Effect of exchange rate changes 11 (4,566) 2,843
Cash and cash equivalents at the
end of the period 7,481 20,719 168,970
CONDENSED GROUP SEGMENTAL REPORT
Unaudited Unaudited
six six Audited
months months
ended ended year
ended
31 March 31 March 30 Sept
2010 2009 2009
R`000 R`000 R`000
Revenue
Inshore fishing 999,981 983,895 2,142,497
Midwater and deep-sea fishing 428,958 555,533 948,267
Commercial cold storage 97,462 81,332 210,524
Total 1,526,401 1,620,760 3,301,288
Operating profit before abnormal
items
Inshore fishing 67,790 58,838 165,451
Midwater and deep-sea fishing 99,893 96,473 177,681
Commercial cold storage 24,096 18,800 67,734
Total 191,779 174,111 410,866
Total assets
Inshore fishing 1,042,554 809,616 926,830
Midwater and deep-sea fishing 233,878 357,172 286,029
Commercial cold storage 176,472 176,816 174,035
Financing 236,471 234,680 329,514
1,689,375 1,578,284 1,716,408
Deferred taxation 7,694 6,577 5,878
Total 1,697,069 1,584,861 1,722,286
Total liabilities
Inshore fishing 302,193 245,025 351,170
Midwater and deep-sea fishing 123,731 177,575 128,385
Commercial cold storage 42,311 33,900 44,437
Financing 88,273 85,756 22,769
556,508 542,256 546,761
Deferred taxation 51,524 42,037 49,829
Total 608,032 584,293 596,590
NOTES
1. The unaudited results of the group for the six months ended 31 March
2010 have been prepared in compliance with International Financial
Reporting Standards (IFRS) applicable to Interim Financial Reporting
(IAS 34) and in accordance with the principles applied in the most
recently published annual financial statements, except as described in
note 2.
2. During the period, the group adopted IAS 1 Presentation of Financial
Statements and IFRS 8 Operating Segments.
The principle effects of the changes required by IAS 1 were as follows:
- The condensed group income statement is now the condensed group
statement of comprehensive income.
- All non-owner changes in equity are now presented in other
comprehensive income in the condensed group statement of
comprehensive income.
- The condensed group balance sheet is now the condensed group
statement of financial position.
- The condensed group cash flow is now the condensed group statement
of cash flows.
The adoption of IFRS 8 had no effect on the presentation of the current and
prior period results.
Unaudited Unaudited
six six Audited
months months
ended ended year
ended
31 March 31 March 30 Sept
2010 2009 2009
R`000 R`000 R`000
3. Abnormal Items
Goodwill impairment (19,279)
Net surplus on disposal of property 40 8,474
Reversal of provision for loans in
Namibian 3,416 7,422
whitefish business
Profit on disposal of investment 1,413
Reversal of provision for 600
irrecoverable loans
Insurance proceeds 2,799
Impairment charge on vessels and (713)
equipment
Utilisation of pension fund surplus (666)
Abnormal(loss)/profit before (19,239) 3,416 19,329
taxation
Taxation (1,196) (2,312)
Abnormal(loss)/profit after (19,239) 2,220 17,017
taxation
4. Determination of headline earnings
Profit after taxation attributable to own
shareholders 106,671 122,504 292,199
Adjusted for:
Goodwill impairment 19,279
Net surplus on disposal of property,
plant (86) (705) (9,954)
and equipment
Reversal of provision for loans in
Namibian (2,220) (7,422)
whitefish business
Profit on disposal of investment (1,413)
Impairment charge on vessels and 713
equipment
Total tax effect of adjustments 13 2,641
Headline earnings for the period 125,877 119,579 276,764
5. Dividends
Estimated dividend declared after
reporting 32,897 30,737 151,881
date
Dividend on shares issued prior to
last day 318 254
to trade
Actual dividend declared after 31,055 152,135
reporting date
Unaudited Unaudited
six six Audited
months months
ended ended year
ended
31 March 31 March 30 Sept
2010 2009 2009
R`000 R`000 R`000
6. Supplementary information
Depreciation 34,294 30,688 72,035
Operating lease charges 10,825 9,223 24,239
Capital expenditure 27,765 38,792 91,138
Expansion 16,901 19,618
Replacement 27,765 21,891 71,520
Budgeted capital commitments 118,208 74,847 105,264
Contracted 66,533 4,396 9,449
Not contracted 51,675 70,451 95,815
Number of Number of Number of
shares shares shares
`000 `000 `000
7. Elimination of treasury shares
Weighted average number of shares in 118,894 118,345 118,386
issue
Less: treasury shares held by share (14,222) (14,253) (14,251)
trusts
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 99,578 98,998 99,041
per share is based
COMMENTS
Financial Results
Operating profit before abnormal items increased by 10% compared with the
first half of the previous year due to improved results from each of the
three segments. Abnormal items primarily comprise an impairment expense
relating to goodwill which arose on acquisition of the Glenryck UK business
in 2004. Investment income was lower than last year mainly as a consequence
of increased inventory of imported canned fish to meet market requirements.
Headline earnings per share for the six months rose by 5%.
An interim dividend of 33 cents per share has been declared (2009: 31 cents
per share).
Review of operations
Inshore Fishing
The 2010 Total Allowable Catch (TAC) for pilchard in South Africa is 90 000
tons (2009: 90 000 tons). Pilchard landings and processing yields at the St
Helena Bay cannery were good. The Namibian pilchard TAC is 25 000 tons (2009:
17 000 tons). Fishing commenced in May and similar landings to last season
are expected at Etosha in Walvis Bay despite the increased TAC. Overall
production at Etosha is, however, expected to be higher for the year due to
the canning of frozen fish from Morocco.
Canned fish sales volumes increased due to a more robust supply chain with
imported product continuing to supplement local supplies. Margins showed
some improvement and Lucky Star`s market share recovered further as a result
of the higher sales.
Market conditions at Glenryck in the United Kingdom were extremely difficult
with margins under pressure due to pound weakness and competitor activity.
Overall, profit from canned fish operations was above that of the same period
last year.
Fishmeal turnover declined due to lower volumes mainly as a result of low
opening stock and poor landings at the end of last season. The lack of
volume together with high maintenance costs incurred during the annual
shutdown period resulted in a loss at the half year. The initial anchovy A
season TAC for 2010 is 303 183 tons (final A season TAC for 2009: 449 437
tons). Current season landings of anchovy and redeye herring to the group`s
fishmeal plants are higher than in the same period last year and the
expectation is that this will continue into the winter. Fishmeal selling
prices increased substantially in recent months due to concerns of an
international market shortage, the benefits of which should be seen in the
second half.
The TAC for west coast lobster increased to 2 393 tons (2009: 2 340 tons).
All commercial rights holders were allocated the same quota as the prior year
which for Oceana was 348 tons. The additional 53 tons were allocated to
subsistence fishermen. Catch rates were substantially better than last year
which resulted in lower catching costs per unit. At 31 March 2010, 53% of
Oceana`s quotas had been landed compared to 28% at the same time last year.
Selling prices were higher in foreign currency but lower in rand terms.
Profits from lobster increased due to higher sales volumes and lower unit
costs.
After a strong start to the season squid catches declined somewhat but
nevertheless were better than the comparative period which had been affected
by an industry-wide strike by fishermen. Despite selling prices in the
European markets remaining under pressure the business returned to
profitability.
The purchase cost of potatoes at the French fries business increased
substantially during the first quarter of the financial year due to major
crop failures in the growing areas. This impacted on volumes which declined
as a result of lower production and competitive imported product resulting in
a decline in profit for the six months.
Midwater and Deep-sea Fishing
The Namibian horse mackerel TAC increased to 247 000 tons (2009: 243 000
tons). Catch rates in Namibia were very good with no production lost through
vessel dry-dock refits. In South Africa the Maximum Precautionary Catch limit
remained at 31 500 tons.
Oceana`s vessel experienced less favourable fishing conditions than in the
prior year resulting in lower catches. Vessel operating costs in both Namibia
and South Africa were lower due to reduced fuel and maintenance costs.
Selling prices were generally higher in US dollar terms but lower on
conversion to rand compared to the first half of last year. Horse mackerel
trading volumes out of Mauritania and the South Pacific were significantly
lower. Overall, profit from horse mackerel was slightly up on the
comparative period.
Hake made a loss for the period as a result of low selling prices, the firm
rand exchange rate and costs associated with a breakdown on one of the
vessels.
Cold Storage
Revenue increased due to higher frozen capacity in the division and a higher
overall occupancy rate driven mainly by the facilities at City Deep and
Epping. The number of pallets handled also increased. Further expansion of
the City Deep facility is currently under construction. Operating profit for
the six months improved.
Prospects
Fishing conditions in the southern African region are expected to remain
reasonably stable. Our South African, other African and Asian markets are
anticipated to show growth whilst our European export markets have yet to
recover to levels experienced before the global economic crisis.
MA Brey FP Kuttel
Chairman Chief executive officer
6 May 2010
DIVIDEND DECLARATION
Notice is hereby given that an interim dividend number 133 of 33 cents per
share, in respect of the year ending 30 September 2010, was declared on
Thursday 6 May 2010. Relevant dates are as follows:
Last day to trade cum dividend - Friday 25 June 2010
Commence trading ex dividend - Monday 28 June 2010
Record date - Friday 2 July 2010
Dividend payable - Monday 5 July 2010
Share certificates may not be dematerialised or re-materialised between
Monday, 28 June 2010 and Friday, 2 July 2010, both dates inclusive.
By order of the board
M Allie
Company Secretary
6 May 2010
Directors:
MA Brey (Chairman), RA Williams (Vice Chairman), FP Kuttel (Chief Executive
Officer), PG de Beyer, ABA Conrad*, M Fleming, PB Matlare, RG Nicol*, S
Pather, NV Simamane, TJ Tapela (*executive)
Company Secretary:
M Allie
Registered Office:
16th Floor, Metropolitan Centre, 7 Coen Steytler Avenue, Cape Town 8001
Transfer Secretaries:
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
(P.O. Box 61051, Marshalltown, 2107)
Sponsor:
The Standard Bank of South Africa Limited
Date: 06/05/2010 16:57:01 Produced by the JSE SENS Department.
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