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OCE
OCE
Oceana - Interim report and dividend declaration: six months ended 31 March 2006
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
INTERIM REPORT AND DIVIDEND DECLARATION FOR THE SIX MONTHS ENDED 31 MARCH 2006
The unaudited results of the group for the six months ended 31 March 2006 are
set out herein.
This report has been prepared in compliance with International Financial
Reporting Standards (IFRS) which were adopted with effect from 01 October 2005.
The previous year"s figures, which were prepared in accordance with South
African Statements of Generally Accepted Accounting Practice (SA GAAP), have
been restated in accordance with IFRS.
Directors:
MA Brey (Chairman), RA Williams (Vice Chairman), AB Marshall* (Chief Executive
Officer), BP Connellan, N Dennis, NP Doyle, RG Nicol*, S Pather,
L Ruthilal (*Executive)
Company Secretary: JD Cole
GROUP INCOME STATEMENT Unaudited Audited
Six months ended Year ended
31 March 30 Sept
2006 2005 2005
Restated Change Restated
Note R"000 R"000 % R"000
Revenue 1,197,087 1,230,712 (3) 2,576,513
Operating profit before
abnormal items 52,606 52,723 - 180,672
Abnormal items 2 710 (26,863) (27,830)
Operating profit 53,316 25,860 106 152,842
Dividends received 422 1 1
Net interest received 15,420 12,435 26,607
Profit before taxation 69,158 38,296 81 179,450
Taxation 27,645 16,881 64 64,541
Profit after taxation 41,513 21,415 94 114,909
Attributable to:
Shareholders of Oceana Group Ltd 38,500 19,938 93 107,491
Outside shareholders in
subsidiaries 3,013 1,477 104 7,418
41,513 21,415 94 114,909
Number of shares in
issue (000"s) 113,166 111,720 112,104
Weighted average number of shares
on which earnings per share and
headline earnings per share are
based (000"s) 113,036 111,467 111,525
Adjusted weighted average
number of shares on which diluted
earnings per share and diluted
headline earnings per share are
based (000"s) 113,358 112,470 112,246
Earnings per share (cents)
Basic 34.1 17.9 90 96.4
Diluted 34.0 17.7 92 95.8
Headline earnings per share (cents)
Basic 33.2 29.2 14 106.2
Diluted 33.1 28.9 15 105.5
Dividends per share (cents) 15.0 15.0 - 74.0
DETERMINATION OF HEADLINE EARNINGS
Attributable to own shareholders 38,500 19,938 107,491
Adjusted for:
Net surplus on disposal of
property and fishing rights (702) (2,075) (2,364)
Net surplus on disposal of
plant and equipment (223) 73 (2,176)
Provision for loans, staff re-
trenchment and other closure
costs in Namibian whitefish
business - 10,115 14,201
Impairment loss on property,
plant and equipment in Namibian
whitefish business - 5,580 5,580
Impairment loss on other assets - - 2,779
Profit on change of interest in
subsidiaries/joint ventures - (1,125) (7,103)
Headline earnings for the period 37,575 32,506 16 118,408
DIVIDEND DECLARATION
Notice is hereby given that an interim dividend No. 125 of 15.0 cents per share,
in respect of the year ending 30 September 2006, was declared on Wednesday 10
May 2006. Relevant dates are as follows:
Last day to trade cum dividend - Friday 23 June 2006.
Commence trading ex dividend - Monday 26 June 2006.
Record date - Friday 30 June 2006.
Dividend payable - Monday 3 July 2006.
Share certificates may not be dematerialised or re-materialised between
Monday 26 June 2006 and Friday 30 June 2006, both dates inclusive.
By order of the board
JD Cole Secretary
10 May 2006
Registered Office: 16th Floor, Metropolitan Centre, 7 Coen Steytler Avenue,
Cape Town 8001
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg, 2001
(P.O. Box 61051, Marshalltown, 2107)
Sponsor: The Standard Bank of South Africa Limited
CONDENSED STATEMENT OF CHANGES IN EQUITY
Unaudited Audited
Six months ended Year ended
31 March 30 Sept
2006 2005 2005
Restated Restated
R"000 R"000 R"000
Balance at the beginning of the period
as previously reported 863,190 863,190
IFRS adjustments (note 1) 4,632 4,632
Balance at the beginning of the period
in accordance with IFRS 916,344 867,822 867,822
Shares issued 9,309 11,881 14,420
Decrease/(increase) in treasury shares
held by share trust 3 (75) (336)
Movement on foreign currency
translation reserve (5,551) (921) (905)
Movement on share based payment reserve 1,031 1,856 3,709
Net profit for the period 41,513 21,415 114,909
Profit on sale of treasury shares 105 189 238
Dividends declared (68,283) (66,322) (83,415)
Disposal of subsidiary - interest
of outside shareholders - - (98)
Balance at the end of the period 894,471 835,845 916,344
Comprising:
Share capital and premium 64,792 53,202 55,480
Foreign currency translation reserve (1,673) 3,863 3,878
Share based payment reserve 9,647 6,763 8,616
Capital redemption reserve 90 90 90
Distributable reserves 799,164 756,496 827,320
Outsiders shareholders interest 22,451 15,431 20,960
Total 894,471 835,845 916,344
GROUP BALANCE SHEET
Unaudited Audited
31 March 30 Sept
2006 2005 2005
Restated Restated
R"000 R"000 R"000
Assets
Non-current assets 381,088 422,793 396,071
Property, plant and equipment 276,538 299,143 285,052
Goodwill 17,271 18,219 18,302
Fishing rights, trademarks 32,139 36,195 34,536
Deferred taxation 11,380 18,965 15,256
Investments and loans 43,760 50,271 42,925
Current assets 916,616 901,136 1,080,991
Inventories 204,549 216,815 242,413
Accounts receivable 299,797 454,066 457,997
Cash and cash equivalents 412,270 230,255 380,581
_______ _______ _______
Total assets 1,297,704 1,323 929 1,477,062
Equity and liabilities
Capital and reserves
Share capital and premium 64,792 53,202 55,480
Non-distributable reserves 8,064 10,716 12,584
Distributable reserves 799,164 756,496 827,320
Interest of own shareholders 872,020 820,414 895,384
Interest of outside shareholders 22,451 15,431 20,960
Total equity 894,471 835,845 916,344
Non-current liabilities
Deferred taxation 29,603 23,887 25,502
Current liabilities 373,630 464,197 535,216
Accounts payable and provisions 325,670 440,949 437,830
Bank overdraft 47,960 23,248 97,386
Total equity and liabilities 1,297,704 1,323,929 1,477,062
Net asset value per ordinary
share (cents) 771 734 799
Total liabilities excluding
deferred taxation: Interest of
own shareholders 42 57 60
Total borrowings: Interest of
own shareholders 6 4 12
GROUP CASH FLOW STATEMENT
Unaudited Audited
Six months ended Year ended
31 March 30 Sept
2006 2005 2005
Restated Restated
R"000 R"000 R"000
Cash flows from operating activities
Operating profit 52,606 52,723 180,672
Adjustment for non-cash items 22,222 27,718 63,898
Cash operating profit before working
capital changes 74,828 80,441 244,570
Working capital changes 84,435 77,350 33,989
Cash generated from operations 159,263 157,791 278,559
Interest and dividends received 18,148 12,771 29,048
Interest paid (2,306) (335) (2,440)
Taxation paid (13,592) (22,222) (62,366)
Dividends paid (68,498) (66,707) (83,587)
Net cash inflow from
operating activities 93,015 81,298 159,214
Cash outflow from investing
activities (14,164) (10,956) (16,119)
Net cash inflow before financing
activities 78,851 70,342 143,095
Net cash flows from financing
activities 1,617 16,602 17,822
Net increase in cash
and cash equivalents 80,468 86,944 160,917
Cash and cash equivalents at the
beginning of the period 283,195 117,455 117,455
Effect of exchange rate changes 647 2,608 4,823
Cash and cash equivalents at the
end of the period 364,310 207,007 283,195
SEGMENT REPORT
Unaudited Audited
31 March 30 Sept
2006 2005 2005
Restated Restated
R"000 R"000 R"000
Revenue
Inshore Fishing 611,335 717,434 1,470,587
Midwater and Deepsea Fishing 524,418 448,681 939,091
Commercial Cold Storage and Logistics 61,334 64,597 166,835
_______ ________ ________
Total 1,197,087 1,230,712 2,576,513
Operating profit before abnormal items
Inshore Fishing (3,706) 27,639 102,518
Midwater and Deepsea Fishing 37,500 7,196 16,867
Commercial Cold Storage and Logistics 18,812 17,888 61,287
_______ ________ _______
Total 52,606 52,723 180,672
Total assets
Inshore Fishing 408,386 540,757 640,913
Midwater and Deepsea Fishing 299,166 295,617 270,852
Commercial Cold Storage and Logistics 122,742 188,064 126,535
Financing 456,030 280,526 423,506
1,286,324 1,304,964 1,461,806
Deferred taxation 11,380 18,965 15,256
Total 1,297,704 1,323,929 1,477,062
Total liabilities
Inshore Fishing 208,980 261,325 335,015
Midwater and Deepsea Fishing 87,329 91,703 60,655
Commercial Cold Storage and Logistics 22,848 73,608 27,848
Financing 54,473 37,561 111,698
373,630 464,197 535,216
Deferred taxation 29,603 23,887 25,502
Total 403,233 488,084 560,718
RECONCILIATION OF SA GAAP TO IFRS (note 1)
1 October 31 March 30 Sept
2004 2005 2005
R"000 R"000 R"000
Equity
Ordinary shareholders interest as
previously reported 848,613 815,753 890,894
IFRS adjustment:
Recalculation of depreciation of property,
plant and equipment, net of deferred
taxation 4,828 4,661 4,490
Ordinary shareholders interest restated 853,441 820,414 895,384
Outside shareholders interest as
previously reported 14,577 15,645 21,192
IFRS adjustment:
Recalculation of depreciation of property,
plant and equipment, net of deferred
taxation (196) (214) (232)
Outsider shareholder interest restated 14,381 15,431 20,960
Liabilities
Deferred taxation as previously reported 24,287 20,809 22,453
IFRS adjustment:
Timing differences on recalculation of
depreciation of property, plant and
equipment 1,214 3,078 3,049
Deferred taxation restated 25,501 23,887 25,502
Assets
Property, plant and equipment as
previously reported 310,389 293,159 279,413
IFRS adjustment:
Recalculation of depreciation 6,330 5,984 5,639
316,719 299,143 285,052
Deferred taxation as previously reported 20,990 17,424 13,588
IFRS adjustment:
Timing differences on recalculation
of depreciation of property, plant
and equipment (484) 1,541 1,668
Deferred taxation restated 20,506 18,965 15,256
Profit attributable to own shareholders
As previously reported 21,961 111,538
IFRS adjustments:
Recalculation of depreciation of
property, plant and equipment, net of
deferred taxation (167) (338)
Cost of share based payments (1,856) (3,709)
Restated 19,938 107,491
NOTES
Unaudited Audited
31 March 30 Sept
2006 2005 2005
Restated Restated
R"000 R"000 R"000
1. In accordance with the listing require-
ments of the JSE Limited, Oceana Group
Limited has adopted International Finan-
cial Reporting Standards (IFRS) with
effect from 1 October 2005. Comparative
information for the six months ended
31 March 2005 and the year ended
30 September 2005, which was originally
reported in accordance with South African
Statements of Generally Accepted Account-
ing Practice (SA GAAP), has been restated
in accordance with IFRS. Further inter-
pretations by standard setting author-
ities may require further adjustments to
restated figures when results for the year
ending 30 September 2006 are published.
The disclosures required by IFRS 1 (First-
time Adoption of International Financial
Reporting Standards) showing the effects
of the changes in accounting policies from
SA GAAP to IFRS are presented under the
heading "Reconciliation of SA GAAP to IFRS".
The group"s transitional elections in terms
of IRFS 1 are as follows:
- Property, plant and equipment are
measured at original cost. Revised
estimates of useful lives and
residual values have been applied to
recalculate accumulated depreciation.
Share-based payments. The provisions
of IFRS 2 have been applied only to
share options granted on or after 7
November 2002. Costs of equity
settled share-based payments are
recognised as an expense in the income
statement, with a corresponding credit
to a share-based payment reserve
included in equity.
- Certain non-distributable reserves have
been transferred to distributable
reserves.
Unaudited Audited
31 March 30 Sept
2006 2005 2005
Restated Restated
R"000 R"000 R"000
2. Abnormal items
Surplus on disposal of property, plant
and equipment. 485 2,075 2,364
Surplus on disposal of fishing rights
in Namibia 225 - -
Provision for loans, staff retrench-
ment and other closure costs in Namibian
whitefish business - (24,682) (28,764)
Impairment loss on property, plant
and equipment in Namibian whitefish
business - (5,580) (5,580)
Impairment loss on other assets - - (3,138)
Profit on change of interest in
subsidiary/joint ventures - 1,324 7,288
Abnormal profit/(loss) before taxation 710 (26,863) (27,830)
Taxation (8) (199) 162
Abnormal profit/(loss) after taxation 702 (27,062) (27,688)
3. Dividends
Estimated dividend declared
after reporting date 16,975 16,758 66,141
Dividend on shares issued prior
to last day to trade 21 621
Actual dividend declared 16,779 66,762
4. Supplementary information
Cost of sales 885,425 889,164 1,813,927
Depreciation 26,304 26,720 58,860
Operating lease charges 7,200 8,470 18,647
Foreign exchange profit (1,006) (271) (2,075)
Capital expenditure 18,413 17,957 46,072
Expansion 8,555 2,510 2,643
Replacement 9,858 15,447 43,429
Capital commitments 89,989 46,375 96,925
Contracted 41,717 13,532 703
Approved 48,272 32,843 96,222
COMMENTS
Financial Results
Headline earnings per share for the six months ended 31 March 2006 increased by
14% compared to those of the first half of the previous year. Earnings per share
for the same period were 90% higher than the previous year mainly as a result of
the non recurrence in 2006 of significant restructuring and closure costs of the
Namibian whitefish operations in 2005.
Group turnover decreased by 3% whilst operating profit before abnormal items was
in line with last year.
Net cash balances increased by R81 million since year end mainly as a result of
the further reduction in working capital.
An interim dividend of 15.0 cents per share has been declared. (2005: 15.0 cents
per share).
Allocation of Long Term Commercial Fishing Rights
Initial allocations in all the sectors in which the group is active have been
awarded. These allocations are subject to the outcome of a process of appeals.
Review of operations
Inshore Fishing
The 2006 Total Allowable Catch (TAC) for pilchard was reduced to 204 000 tons
(2005: 397 000 tons). Pilchard landings were significantly lower than last year
mainly due to fish being available only on the south and east coasts.
Consequently a larger proportion of fish was transported by road from Mossel Bay
to the cannery at St Helena Bay which increased the overall cost of production.
Strikes in December by cannery workers and in February by crew on the vessels
also impacted negatively on production levels. Pilchard fishing has not yet
commenced in Namibia where the announcement of a provisional TAC is awaited
(2005: final TAC 25 000 tons).
Sales volumes of Lucky Star canned fish on the domestic market decreased
compared to the previous year due to stock shortages as a consequence of lower
landings and production. Glenryck UK performed well and achieved increased sales
volumes in the UK market.
Overall, profitability from canned fish was considerably lower than the same
period last year.
Fish meal operations recorded a loss for the six months mainly due to
significantly lower industrial fish landings. The anchovy TAC for 2006 is 212
251 tons (2005: 215 000 tons) and is normally landed in the winter months. Sales
volumes were lower than the previous year. Prices were slightly firmer and are
expected to be maintained in the second half.
The west coast lobster TAC was reduced to 3 173 tons (2005: 3 527 tons).
Although dispensation was given by Marine & Coastal Management for the lobster
fishing season to commence prior to the announcement of long term rights,
catches were behind those of last year due to certain regulatory delays and
lower catch rates. Production costs per unit were higher mainly as a result of
the lower volumes landed. Whilst export prices improved considerably on those of
last year, earnings from lobster were nevertheless lower. Landing of the full
lobster quota may not be achieved if the long term fishing rights allocation
process is not completed well before the close of the season.
Squid catches were slightly above those of last year. Market prices improved and
an increased profit contribution was achieved.
Midwater and Deepsea Fishing
Selling prices for Namibian horse mackerel were at very high levels during the
first quarter. However prices have subsequently reduced following increased
supply out of Mauritania to the major African markets. High fuel prices
continued to impact negatively on fishing costs. The company owned vessel Desert
Diamond performed well in South Africa. Trading in fish sourced from external
fleets resulted in an increased contribution to that of the previous year.
Overall results from midwater pelagic were substantially higher than last year.
The Group"s earnings from hake continued to be affected by inconsistent catches
and a large proportion of small fish resulting in lower prices. Profits were,
however, higher than the previous year mainly due to a reduction in overhead
costs.
The restructured tuna trading business recorded a profit compared to a loss last
year.
Cold Storage and Logistics
The cold storage division experienced higher occupancy levels although volumes
handled were slightly lower. Profits were substantially higher than those of
last year.
Directorate
As reported earlier, Mr LT Langeni passed away suddenly on 06 February. The
chairman Mr DMJ Ncube resigned on 09 February and was succeeded by Mr MA Brey.
Mr RV Smither resigned on 31 March. Mr NP Doyle and Ms L Ruthilal were appointed
to the board on 10 May 2006.
Prospects
Any earnings growth for the full year will be dependant on an improvement in
pelagic fishing conditions.
On behalf of the board.
MA Brey AB Marshall
Chairman Chief Executive Officer
10 May 2006
Date: 10/05/2006 03:05:32 PM Produced by the JSE SENS Department
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