Wrap Text
Unaudited Interim Results for the Six Months ended 31 March 2019
Oceana Group Limited
Incorporated in the Republic of South Africa
(Registration number 1939/001730/06)
JSE Share Code: OCE
NSX Share Code: OCG
ISIN Number: ZAE 000025284
("Oceana" or "the company" or "the group")
UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 MARCH 2019
Condensed consolidated statement of comprehensive income
for the period ended 31 March 2019
Restated* Restated*
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 Mar 2019 31 Mar 2018 Change 30 Sep 2018
Note R'000 R'000 % R'000
Revenue 3 3 557 416 3 452 824 3 7 657 311
Cost of sales 2 238 209 2 176 284 3 4 823 816
Gross profit 1 319 207 1 276 540 3 2 833 495
Sales and distribution expenditure 224 886 213 743 5 500 298
Marketing expenditure 20 820 23 143 (10) 55 184
Overhead expenditure 487 330 494 411 (1) 1 102 907
Net foreign exchange (profit)/loss (4 846) 21 414 123 (19 248)
Operating profit before associate and joint venture
loss 591 017 523 829 13 1 194 354
Associate and joint venture loss (36 726) (29 132) 26 (5 447)
Operating profit before other operating items 554 291 494 697 12 1 188 907
Other operating (expense)/income items 5 (770) (15 922) (95) (14 091)
Operating profit 553 521 478 775 16 1 174 816
Investment income 16 246 22 063 (26) 40 767
Interest expense (146 371) (169 887) (14) (332 532)
Profit before taxation 423 396 330 951 28 883 051
Taxation expense/(income) 6 121 979 (46 731) (361) 810
Profit after taxation 301 417 377 682 (20) 882 241
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Movement on foreign currency translation reserve
including hyperinflation effect 106 717 (488 743) 212 903
Movement on foreign currency translation reserve from
associate and joint ventures including hyperinflation effect 4 174 (31 299) 8 214
Movement on cash flow hedging reserve (11 831) 8 469 24 845
Income tax related to profit/(loss) recognised in equity 2 918 (5 813)
Other comprehensive income, net of taxation 101 978 (511 573) 120 240 149
Total comprehensive income for the period 403 395 (133 891) 401 1 122 390
Profit after taxation attributable to:
Shareholders of Oceana Group Limited 288 667 364 873 (21) 857 831
Non-controlling interests 12 750 12 809 - 24 410
301 417 377 682 (20) 882 241
Total comprehensive income for the period
attributable to:
Shareholders of Oceana Group Limited 390 645 (146 700) 366 1 097 980
Non-controlling interests 12 750 12 809 - 24 410
403 395 (133 891) 401 1 122 390
Earnings per share (cents)
Basic 247.0 312.5 (21) 734.6
Diluted 227.1 286.6 (21) 674.6
* The prior period and September 2018 revenue, sales and distribution expenditure and overhead expenditure line items have been restated,
as a result of the adoption of the new accounting standards. The impact of the restatement is a reclassification between these line items
only with all other line items unchanged. Refer to note 2 for further information.
Condensed consolidated statement of financial position
at 31 March 2019
Unaudited Unaudited Audited
31 Mar 31 Mar 30 Sep
2019 2018 2018
Notes R'000 R'000 R'000
ASSETS
Non-current assets 6 771 542 5 732 916 6 685 126
Property, plant and equipment 1 638 926 1 444 943 1 586 626
Intangible assets 4 691 433 3 901 285 4 617 278
Derivative assets 7 3 524 11 594 17 398
Deferred taxation 45 072 27 178 29 338
Investments and loans 392 587 347 916 434 486
Current assets 3 274 871 3 321 484 4 014 355
Inventories 1 668 137 1 035 551 1 467 239
Accounts receivable 1 381 485 1 366 554 1 502 331
Taxation 31 489 62 642 29 725
Cash and cash equivalents 10 193 760 856 737 1 015 060
Total assets 10 046 413 9 054 400 10 699 481
EQUITY AND LIABILITIES
Capital and reserves 4 734 634 3 596 402 4 721 969
Stated capital 1 192 138 1 187 724 1 189 482
Foreign currency translation reserve 597 920 (254 130) 487 029
Cash flow hedging reserve (2 029) (3 679) 6 884
Share-based payment reserve 85 134 86 617 90 535
Retained income 2 765 398 2 499 021 2 851 418
Interest of own shareholders 4 638 561 3 515 553 4 625 348
Non-controlling interests 96 073 80 849 96 621
Non-current liabilities 3 649 986 3 414 375 3 818 656
Liability for share-based payments 9 609 11 134 10 145
Long-term loans 9 3 162 214 2 918 015 3 339 750
Deferred taxation 478 163 485 226 468 761
Current liabilities 1 661 793 2 043 623 2 158 856
Accounts payable and provisions 1 224 765 1 175 841 1 711 483
Current portion - long-term loan 9 427 037 844 062 427 351
Taxation 9 991 23 720 20 022
Total equity and liabilities 10 046 413 9 054 400 10 699 481
Condensed consolidated statement of changes in equity
for the period ended 31 March 2019
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 Mar 2019 31 Mar 2018 30 Sep 2018
R'000 R'000 R'000
Balance at the beginning of the period 4 721 969 3 756 629 3 756 629
Total comprehensive income for the period 403 395 (133 891) 1 122 390
Profit after taxation 301 417 377 682 882 241
Movement on foreign currency translation reserve including hyperinflation
effect 106 717 (488 743) 212 903
Movement on foreign currency translation reserve of associate and joint
ventures including hyperinflation effect 4 174 (31 299) 8 214
Movement on cash flow hedging reserve (11 831) 8 469 24 845
Income tax related to profit/(loss) recognised in equity 2 918 (5 813)
Decrease in treasury shares held by share trusts 1 853
Share-based payment expense 3 473 8 041 12 456
Share-based payment exercised (6 218) (10 480) (11 017)
Profit on sale of treasury shares 1 671
Oceana Empowerment Trust dividend distribution (19 317) (7 304)
Dividends paid (368 668) (23 897) (154 709)
Balance at the end of the period 4 734 634 3 596 402 4 721 969
Comprising:
Stated capital* 1 192 138 1 187 724 1 189 482
Foreign currency translation reserve 597 920 (254 130) 487 029
Cash flow hedging reserve (2 029) (3 679) 6 884
Share-based payment reserve* 85 134 86 617 90 535
Distributable reserves 2 765 398 2 499 021 2 851 418
Non-controlling interests 96 073 80 849 96 621
Balance at the end of the period 4 734 634 3 596 402 4 721 969
* R2.7 million (March 2018: R3.5 million) was transferred between stated capital and share-based payment reserve during the period.
Condensed consolidated statement of cash flows
for the period ended 31 March 2019
Restated*
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 Mar 2019 31 Mar 2018 30 Sep 2018
Notes R'000 R'000 R'000
Cash flow from operating activities
Operating profit before associate and joint venture loss 591 017 523 829 1 194 354
Adjustment for non-cash and other items 124 069 132 774 297 905
Cash operating profit before working capital changes 715 086 656 603 1 492 259
Working capital changes (521 164) (245 797) (189 366)
Cash generated from operations 193 922 410 806 1 302 893
Investment income received 16 246 33 390 41 607
Interest paid (137 314) (155 717) (296 845)
Taxation paid (148 375) (108 649) (217 036)
Dividends paid (387 985) (23 897) (162 013)
Cash (outflow)/inflow from operating activities (463 506) 155 933 668 606
Cash outflow from investing activities (128 736) (67 777) (180 928)
Capital expenditure (138 831) (68 602) (163 742)
Replacement of intangible assets (6 905) (14 615) (20 469)
Proceeds on disposal of property, plant and equipment 1 719 9 952 10 031
Proceeds on disposal of business 8 17 500 8 000
Movement on loans and advances (2 219) 5 492 (14 748)
Acquisition of subsidiary (2)
Acquisition of a joint venture (2)
Cash outflow from financing activities (229 658) (393 418) (720 152)
Proceeds from issue of share capital 3 523
Short-term borrowings repaid (223 440) (200 353) (507 589)
Equity-settled share-based payment (6 218) (7 833) (11 017)
Costs associated with debt financing 9 (2 170)
Settlement of put option (185 232) (202 899)
Net decrease in cash and cash equivalents (821 900) (305 262) (232 474)
Cash and cash equivalents at the beginning of the period 1 015 060 1 222 040 1 222 040
Effect of exchange rate changes 600 (60 041) 25 494
Cash and cash equivalents at the end of the period 10 193 760 856 737 1 015 060
* The prior period numbers have been restated, refer to note 2 for further information.
Notes to the condensed consolidated financial statements
for the period ended 31 March 2019
1. BASIS OF PREPARATION
The condensed consolidated interim financial information has been prepared in accordance with and containing the
information required by IAS 34: Interim Financial Reporting as well as 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 JSE Listings Requirements and Companies Act of South Africa. The condensed consolidated 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 2018, except for the adoption of new standards that became effective
during the current period, as detailed in note 2. The condensed consolidated interim financial information was prepared
under the supervision of the interim chief financial officer, T Giles CA(SA).
The results have not been audited or reviewed by the group's auditors, Deloitte & Touche.
2. ADOPTION OF NEW ACCOUNTING STANDARDS AND PRIOR PERIOD RESTATEMENTS
2.1.1 Effect of adopting IFRS 15: Revenue from Contracts and Customers
The group has adopted IFRS 15 and applied it retrospectively to each prior reporting period presented. This resulted in the
restatement of comparative periods in the statement of comprehensive income.
The standard establishes a five-step model that will apply to revenue arising from contracts with customers. Revenue
is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for
transferring goods or services to a customer. The principles in IFRS 15 provide a more structured approach to measuring and
recognising revenue.
The group recognises revenue from the sale of goods and services relating to storage, handling and transport of goods.
The majority of the groups revenue is recognised when the groups significant risk and rewards have transferred or when
services are rendered consistent with the applications of IFRS 15.
Bulk and distribution allowances: IFRS 15 requires the group to estimate the value of the allowances and recognise the amount
against revenue, this was disclosed under selling and distribution under IAS 18.
In terms of IFRS 15, incidental income from customers has been restated in the prior period from overheads to revenue.
The impact of the restatement on the statement of comprehensive income is a reclassification between revenue, sales and distribution
expenditure and overhead expenditure with all other line items unchanged. The effect of the restatement is disclosed below:
Unaudited
as
previously Restated Unaudited
reported Unaudited Unaudited Audited IFRS 15 Restated
six months IFRS 15 six months year restatement year
ended restatement ended ended ended
31 Mar 2018 31 Mar 2018 31 Mar 2018 30 Sep 2018 30 Sep 2018 30 Sep 2018
R'000 R'000 R'000 R'000 R'000 R'000
Revenue 3 489 151 (36 327) 3 452 824 7 732 692 (75 381) 7 657 311
Cost of sales 2 176 284 2 176 284 4 823 816 4 823 816
Gross profit 1 312 867 (36 327) 1 276 540 2 908 876 (75 381) 2 833 495
Sales and distribution expenditure 268 550 (54 807) 213 743 610 553 (110 255) 500 298
Marketing expenditure 23 143 23 143 55 184 55 184
Overhead expenditure 475 931 18 480 494 411 1 068 033 34 874 1 102 907
Net foreign exchange loss/(profit) 21 414 21 414 (19 248) (19 248)
Operating profit before associate
and joint venture profit/(loss) 523 829 523 829 1 194 354 1 194 354
2.1.2 Effect of adopting IFRS 9: Financial Instruments
This standard introduces new requirements for classification and measurement, impairment, and hedge accounting.
IFRS 9 introduces a new approach to the classification of financial assets, which is driven by the business model in which the
asset is held and their cash flow characteristics. The new model introduces a single impairment model being applied to all
financial instruments, as well as an "expected credit loss" model for the measurement of financial assets. IFRS 9 contains a new
model for hedge accounting that aligns the accounting treatment with the risk management activities of an entity.
Based on an assessment the applications of IFRS 9 has no material impact on the prior year financial results or financial
position. Trade receivables do not have a significant financing component as the average credit terms are 30 - 45 days,
this will therefore fall within the simplified model. IFRS 9 requires an allowance to be raised for the full lifetime expected
credit loss, on initial recognition, based on history of default and claims. Expected credit losses are reassessed at each reporting date.
Whilst IFRS 9 requires that expected credit losses be discounted, the impact on Oceana is considered to be immaterial.
An assessment has been conducted on provisions carried under IAS 39 as at September 2018 and concluded that there are no
material differences to expected credit losses to be recognised under IFRS 9. Accordingly, no restatement to retained earnings
is considered necessary.
Excluding the abovemention adjustments, there are no other material impact from application of IFRS 15 and IFRS 9.
2.1.3 Restatement of Cash flow from investing activities
The settlement of the put option has been reclassified from investing activities to financing activities in the prior year
comparative cash flow statement in order to align with disclosure in the 2018 audited annual financial statement.
The put option was settled in the prior year, following the remaining shareholders of Westbank Fishing Limited Liability
Company exercising the put option in terms of the Westbank operating agreement.
Restated
Unaudited Unaudited
six months Unaudited six months
ended reclassification ended
31 Mar 2018 31 Mar 2018 31 Mar 2018
R'000 R'000 R'000
Cash outflow from investing activities (253 009) 185 232 (67 777)
Cash outflow from financing activities (208 186) (185 232) (393 418)
Restated Restated
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 Mar 2019 31 Mar 2018 30 Sep 2018
R'000 R'000 R'000
3. REVENUE
The main categories of revenue are set out below:
Sale of goods
Canned fish and fishmeal (Africa) 1 962 027 1 838 704 3 944 346
Fishmeal and fish oil (USA) 654 487 614 361 1 789 118
Horse mackerel and hake 636 032 672 053 1 287 067
Lobster and squid 87 858 102 357 180 510
Rendering of services
Commercial cold storage and logistics 206 832 206 869 421 396
Other non-trade revenue(1)
Canned fish and fishmeal (Africa) 3 672 9 388 15 761
Horse mackerel and hake 5 473 3 632 7 290
Commercial cold storage and logistics 1 035 5 460 11 823
3 557 416 3 452 824 7 657 311
Note:
(1) Other non-trade revenue includes commission, quota fees received and rental income.
Canned Fishmeal Commercial
fish and and Horse Lobster cold
fishmeal fish oil mackerel and storage and Deferred
March 2019 (Africa) (USA) and hake squid logistics taxation Financing(3) Total
Segment R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
4. SEGMENTAL RESULTS
Revenue 1 965 699 654 487 641 505 87 858 207 867 3 557 416
Operating profit
before other
operating items 221 753 118 172 158 328 21 701 34 337 554 291
Other operating
items (770) (770)
Operating profit 221 753 118 172 158 328 21 701 33 567 553 521
Investment income 6 634 5 633 3 678 301 16 246
Interest expense (102 620) (40 713) (2 958) (80) (146 371)
Profit before
taxation 125 767 83 092 159 048 21 701 33 788 423 396
Taxation expense 36 076 19 467 47 923 5 999 12 514 121 979
Profit after tax for
the period 89 691 63 625 111 125 15 702 21 274 301 417
The above profit for
the period include
the following:
Depreciation and
amortisation 32 130 51 080 37 359 1 329 10 436 132 334
Statement of
financial position
Total assets 2 469 714 6 328 427 594 955 32 740 257 468 45 072 318 037 10 046 413
Total liabilities 795 552 28 267 268 286 29 766 102 788 478 163 3 608 957 5 311 779
The above amounts
of assets and
liabilities includes
the following:
Interest in associate
and joint ventures 71 284 196 588 1 267 873
South
Africa and Other North
March 2019 Namibia Africa America Europe Far East Other Total
Region R'000 R'000 R'000 R'000 R'000 R'000 R'000
Revenue(1) 2 164 454 350 330 564 152 372 877 95 456 10 147 3 557 416
Non-current assets(2) 831 368 5 498 991 6 330 359
Canned Fishmeal Commercial
fish and and Horse Lobster cold
fishmeal fish oil mackerel and storage and Deferred
March 2018 (Africa) (USA) and hake squid logistics taxation Financing(3) Total
Segment R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Restated Revenue 1 848 092 614 361 675 685 102 357 212 329 3 452 824
Operating profit before
other operating items 178 541 72 618 175 769 27 003 40 766 494 697
Other operating items (7 526) (11 893) 3 497 (15 922)
Operating profit 171 015 60 725 179 266 27 003 40 766 478 775
Investment income 19 036 3 067 (40) 22 063
Interest expense (120 997) (45 814) (2 893) (78) (105) (169 887)
Profit before taxation 69 054 14 911 179 440 26 925 40 621 330 951
Taxation expense/
(income) 25 645 (152 181) 56 344 7 520 15 941 (46 731)
Profit after tax for the
period 43 409 167 092 123 096 19 405 24 680 377 682
The above profit for
the period include the
following:
Depreciation and
amortisation 31 241 45 548 44 316 1 386 10 804 133 295
Statement of financial
position
Total assets 2 058 917 5 138 513 553 727 57 492 252 330 27 178 966 243 9 054 400
Total liabilities 770 359 67 511 231 037 38 895 80 642 485 226 3 784 328 5 457 998
The above amounts of
assets and liabilities
includes the following:
Interest in associate and
joint ventures 132 738 105 670 1 238 409
South
Africa and Other North
March 2018 Namibia Africa America Europe Far East Other Total
Region R'000 R'000 R'000 R'000 R'000 R'000 R'000
Restated Revenue(1) 1 980 704 341 770 530 611 311 101 216 060 72 579 3 452 825
Non-current assets(2) 853 428 4 492 800 5 346 228
Canned Fishmeal Commercial
fish and and Horse Lobster cold
fishmeal fish oil mackerel and storage and Deferred
September 2018 (Africa) (USA) and hake squid logistics taxation Financing(3) Total
Segment R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Restated Revenue 3 960 107 1 789 118 1 294 357 180 510 433 219 7 657 311
Operating profit before
other operating items 436 710 392 638 255 615 32 212 71 732 1 188 907
Other operating items (25 588) 3 497 8 000 (14 091)
Operating profit 436 710 367 050 259 112 32 212 79 732 1 174 816
Investment income 32 275 1 544 6 870 72 6 40 767
Interest expense (226 241) (99 814) (5 789) (153) (535) (332 532)
Profit before taxation 242 744 268 780 260 193 32 131 79 203 883 051
Taxation expense/
(income) 68 937 (194 012) 86 158 9 180 30 547 810
Profit after tax for the
year 173 807 462 792 174 035 22 951 48 656 882 241
The above profit for
the year include the
following:
Depreciation and
amortisation 62 465 95 828 85 746 2 704 21 963 268 706
Statement of financial
position
Total assets 2 214 412 6 476 246 533 082 28 312 280 950 29 334 1 137 145 10 699 481
Total liabilities 946 144 376 923 284 807 27 725 93 583 468 761 3 779 569 5 977 512
The above amounts of
assets and liabilities
includes the following:
Interest in associate and
joint ventures 89 257 222 733 1 311 991
South
Africa and Other North
September 2018 Namibia Africa America Europe Far East Other Total
Region R'000 R'000 R'000 R'000 R'000 R'000 R'000
Restated Revenue(1) 3 866 735 778 539 1 199 893 1 161 660 432 238 218 246 7 657 311
Non-current assets(2) 849 191 5 354 713 6 203 904
The segments have been identified based on both the geographic region of primary group operations and the different
products sold and services rendered by the group.
Revenue excludes inter-segmental revenues in South Africa and Namibia which are eliminated on consolidation.
Canned fish and fishmeal R562.6 million (2018: R503.9 million), horse mackerel and hake R18.2 million (2018: R18.0 million) and
commercial cold storage and logistics R41.5 million (2018: R28.2 million).
Notes:
(1) Revenue per region discloses the region in which product is sold and services rendered.
(2) Non-current assets per region discloses where the subsidiary is located, includes property, plant and equipment, and intangible assets.
(3) Financing includes cash and cash equivalents and loans receivable and payable.
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 Mar 2019 31 Mar 2018 30 Sep 2018
R'000 R'000 R'000
5. OTHER OPERATING (EXPENSE)/INCOME ITEMS
Transaction costs(2)
(19 419) (25 588)
Profit on disposal of fishing vessel 3 497 3 497
(Loss)/profit on disposal of business(1) (770) 8 000
(770) (15 922) (14 091)
Note:
(1) The R0.8 million relates to the loss on sale of the CCS V&A cold store assets. The R8.0 million in the prior period relates to profit
on sale of the CCS Linebooker transport business.
(2) Transaction costs in the prior period relates to the extension of the Westbank Fishing Limited Liability Company ("Westbank") operating
agreement and subsequent change in Westbank shareholding.
Transactions outside the ordinary course of business that are substantially capital or non-recurring in nature and are
identified by management as warranting separate disclosure are disclosed under other operating items in the statement
of comprehensive income. These comprise profits or losses on disposal and scrapping of property, plant and equipment,
intangibles assets and non-current assets held for sale, impairments or reversal of impairments, profits or losses on disposal of
investments, operations or subsidiaries and business combination related costs or gains.
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 Mar 2019 31 Mar 2018 30 Sep 2018
R'000 R'000 R'000
6. TAXATION EXPENSE/(INCOME)
Current taxation 135 973 103 230 240 950
Current year 127 131 86 014 254 820
Capital gains tax 1 794
Withholding tax 8 842 5 323 9 943
Adjustments in respect of previous years 11 893 (25 607)
Deferred taxation (13 994) (149 961) (240 140)
Current year (13 994) 10 629 (1 271)
Adjustments in respect of previous years (1 049)
Adjustments in respect of change in tax rate(1) (160 590) (237 820)
121 979 (46 731) 810
Note:
(1) This adjustment in the prior period relates to a USD13 million (September 2018: USD18.6 million) release in Daybrook Fisheries Incorporated
following the reduction in the federal corporate tax rate in the United States of America from 35% to 21%.
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 Mar 2019 31 Mar 2018 30 Sep 2018
R'000 R'000 R'000
7. DERIVATIVE ASSETS
Non-current
Interest rate caps and swaps held as hedging instruments
Opening balance 17 398 1 837 1 837
Fair value adjustments recognised in profit or loss (ineffective portion) (264) (1 712) (5 331)
Fair value adjustments recognised in other comprehensive income
(effective portion) (13 820) 11 644 20 139
Reclassified from derivative liability 207 207
Foreign currency translation adjustment 210 (382) 546
Closing balance 3 524 11 594 17 398
Interest rate caps 74 928 586
Interest rate swaps 3 450 10 666 16 812
3 524 11 594 17 398
Interest rate caps and swaps recorded in the cash flow hedging reserve and derivative assets are regarded as level 2 financial
instruments. Level 2 fair value measurements are those derived from inputs that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
The fair value of interest rate caps and swaps is calculated as the present value of the estimated future cash flows based on
observable yield curves.
Interest rate caps were executed in the 2016 financial year, with a maturity date of 20 July 2018 and 20 July 2020. Interest
rate caps were designated as cash flow hedges and executed to hedge the interest that is payable under various debt
facilities with principal values of R1 810 million. The amount of the principal value designated as a hedged item is R390 million
(2018: R980 million). Gains or losses on interest rate caps held as hedging instruments in designated and effective hedging
relationships are recognised in other comprehensive income and are reclassified to profit or loss in the same period that the
hedge cash flows affect profit or loss. During the period a fair value loss of R0.2 million (March 2018: gain R2.3 million) was
recognised in other comprehensive income.
The notional principal amount of the interest rate swaps at 31 March 2019 amounts to R1 581 million (March 2018: R832 million).
This comprises hedges on the term debt of R1 581 million (March 2018: R1 388 million). The swap is to hedge the interest
that is payable under the debt facility. During the period a fair value loss of R13.6 million (March 2018: gain R9.3 million) was
recognised in other comprehensive income. The interest rate swap was reclassified to derivate assets in the prior period.
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 Mar 2019 31 Mar 2018 30 Sep 2018
R'000 R'000 R'000
8. DISPOSAL OF BUSINESSES
8.1 V&A Cold Store (CCS)
The group disposed of the V&A cold store assets within the
commercial cold storage and logistics segment on the 11 January 2019
and 28 February 2019.
Assets disposed:
Property, plant and equipment 8 270
Goodwill 10 000
18 270
Consideration received 17 500
Net loss on disposal (770)
8.2 Linebooker transport business (CCS)
The group disposed of the commercial cold storage Linebooker
transport business in the prior period.
Consideration received 8 000
Net profit on disposal 8 000
9. DEBT REFINANCE
During the prior year a R1 420.0 million facility was refinanced in
terms of which R500.0 million was restructured as an amortisation
payment facility maturing in 5 years, R738.0 million was restructured
as a bullet payment facility maturing in 4 years and R182.0 million as
a bullet payment facility maturing in 3 years. Debt refinancing cost of
R2.2 million was incurred.
10. NET CASH AND CASH EQUIVALENTS
Cash and cash equivalents 193 760 856 737 1 015 060
Daybrook Fisheries Incorporated ("Daybrook") received $17.3 million (net of legal costs) in the prior year following a Federal
Court settlement in relation to Daybrook's 2006 Deepwater Horizen oil spill law suit. In terms of the 2015 stock purchase
agreement entered into with the selling Daybrook stockholders, all risks and rewards relating to the Deepwater Horizen oil
spill law suit were excluded from the transaction and the purchase consideration. The settlement proceeds received, net of
any taxation and legal costs, were accordingly due and payable to the Stockholder Representative on behalf of the selling
shareholders. At the end of the prior period, these restricted funds (R246.4 million) were held in cash and cash equivalents
with a corresponding liability in accounts payable as the funds had not yet been remitted to the Stockholder Representative.
The funds were settled in full to the shareholder representative on 4 February 2019.
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 Mar 2019 31 Mar 2018 30 Sep 2018
R'000 R'000 R'000
11. DETERMINATION OF HEADLINE EARNINGS
Profit after taxation attributable to shareholders of
Oceana Group Limited 288 667 364 873 857 831
Adjusted for:
Headline earnings adjustments - joint ventures (72)
Net profit on disposal of property, plant and equipment and
intangible assets (397) (3 472) (3 491)
Loss/(profit) on disposal of business 770 (8 000)
Total non-controlling interest in above 115 (3)
Total tax effect of adjustments 2 654 972 2 793
Headline earnings for the period 291 809 362 373 849 058
Headline earnings per share (cents)
- Basic 249.7 310.4 727.1
- Diluted 229.5 284.6 667.7
12. DIVIDENDS
Dividend declared after reporting date 143 785 130 763 355 300
Dividends per share (cents) 123.0 112.0 416.0
Number of shares in issue net of treasury shares 116 898 116 753 116 875
13. SUPPLEMENTARY INFORMATION
Amortisation 31 103 27 649 59 315
Depreciation 101 231 105 646 209 391
Operating lease charges 42 542 45 304 110 400
Share-based expenses 4 807 6 569 9 958
Cash-settled compensation 1 334 (1 472) (2 498)
Equity-settled compensation 3 473 8 041 12 456
Capital expenditure 138 831 68 602 163 742
Replacement 138 831 68 602 163 742
Budgeted capital commitments 169 581 136 649 318 086
Contracted 51 014 43 489 23 218
Not contracted 118 567 93 160 294 868
Number of Number of Number of
shares shares shares
'000 '000 '000
14. ELIMINATION OF TREASURY SHARES
Weighted average number of shares in issue 135 526 135 526 135 526
Less: Weighted average treasury shares held by share trusts (13 546) (13 679) (13 654)
Less: Weighted average treasury shares held by subsidiary company (5 094) (5 094) (5 094)
Weighted average number of shares on which basic earnings per share
and basic headline earnings per share are based 116 886 116 753 116 778
Weighted average number of shares on which diluted earnings per
share and diluted headline earnings per share are based 127 131 127 313 127 164
15. CONTINGENT LIABILITIES AND GUARANTEES
The group has given cross suretyships in support of bank overdraft facilities of certain subsidiaries and the company.
During the prior year a customer of Commercial Cold Storage Proprietary Limited (CCS) sent a letter of demand for alleged
damages suffered to their products. The amount claimed in the letter of demand was R24.4 million. Legal proceedings
have subsequently been instituted by the customer in terms of which the damages are being claimed from CCS in the sum
of R27.7 million for the value of the product lost and R3.4 million for alleged ancillary expenses incurred as a result of the loss
suffered. In terms of legal advice obtained, the customer's legal action is being contested. No provision has been made in the
March 2019 financial statements as management do not consider there to be any likelihood of probable loss.
Oceana Group Limited (the "Guarantor") has issued a guarantee in favour of Standard Bank de Angola, S.A (the 'Beneficiary').
The Guarantee was issued pursuant to the facility agreement dated 22 December 2017 between the Beneficiary and Oceana Boa Pesca,
LDA (the 'Borrower'), in which the Beneficiary agreed to provide certain banking facilities to the Borrower on condition of a
Guarantee issued by the Guarantor in favour of the Beneficiary for an amount not exceeding AOA 300 million (R13.6 million). The
overdraft balance at reporting date was AOA 294 million (R13.4 million).
16. 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
31 March 2019 or require separate disclosure in these financial statements.
Comments
FINANCIAL RESULTS
Overall financial performance of the Group for the six months ended 31 March 2019 has been positive driven primarily by increased
canned fish sales volumes, and production efficiencies in the Group's local canneries. Stronger fishmeal and fish oil prices, good
hake and horse mackerel catch rates and prices combined with higher cold store occupancy levels in the South African coastal stores
are also factors contributing to the improved performance.
Group revenue increased by 3% to R3 557 million (March 2018: R3 453 million) with good volume growth in the local canned fish
segment partially offset by lower export volumes in the horse mackerel and hake segments due to planned vessel maintenance.
In the United States of America (USA), Daybrook's revenue increased by 7% in Rand terms mainly due to firmer fishmeal and oil pricing
and the weaker Rand.
Group operating profit before other operating items increased by 12% to R554 million (March 2018: R495 million).
Net interest expense related to finance costs on facilities and long-term borrowings has reduced by 12% for the period to
R130 million (March 2018: R148 million). The average interest rate for all debt is currently 7.0% (March 2018: 6.8%).
Group profit before taxation increased by 28% to R423 million (March 2018: R331 million). The prior period group profit before
taxation included non-recurring operating expenses of R16 million and fair value losses of R36 million.
TAXATION
Taxation expense of R122 million for the period is materially higher than the prior period (March 2018: taxation income R47 million)
due to a once-off release of deferred taxation amounting to R161 million in the prior year following the reduction in the federal
corporate tax rate in the USA from 35% to 21%.
HEADLINE EARNINGS AND DIVIDEND
Accordingly headline earnings for the period decreased by 19% compared to the prior period. Excluding the effect of the once-off
deferred tax adjustment, fair value adjustments and other operating items, headline earnings increased by 17%.
An interim dividend of 123 cents per share (March 2018: 112 cents per share) has been declared.
FINANCIAL POSITION AND CASH FLOW
Cash generated from operations for the period decreased to R194 million (March 2018: R411 million) due mainly to increased frozen
fish stock holdings due to additional global sourcing to supplement the reduction in the 2019 South Africa pilchard Total Allowable
Catch (TAC). As a result, cash balances reduced to R194 million (March 2018: R 857 million).
At 30 March 2019 group long term debt is R3 589 million (March 2018: R3 762 million) of which R1 581 million
(March 2018: R1 388 million) is denominated in US dollars.
REVIEW OF OPERATIONS
CANNED FISH AND FISHMEAL (AFRICA)
The canned fish business delivered a strong performance for the half aided by volume growth of 11% to 4.9 million cartons
(March 2018: 4.4 million cartons). Affordable pricing, increased promotional activity and a marketing strategy focused on
increasing the number of meal occasions drove consumer demand in a sluggish South African consumer market.
A further reduction this year in the TAC for pilchards has resulted in increased international procurement of frozen fish to
supplement local fish supply for Lucky Star's canned pilchard product. Consequently, local canneries have benefited from the
consistent supply of frozen product for processing resulting in both improved cannery efficiencies and labour productivity.
Operating profit in the canned fish business increased materially as a result.
The South African Anchovy TAC increased in 2019 by 10% and early season landings have been promising. In addition, extra fishing
capacity due to the reduction in the pilchard TAC has increased fishing efforts for industrial fish landings.
Fishing and processing operations have been suspended in Angola in view of growing concerns over the long-term sustainability
of the sardinella resource. The status of the resource will continue to be monitored. Despite this challenge overall profitability
in the Africa fishmeal business has improved with higher sales volumes and realised prices in South Africa and lower losses in Angola
following suspension of operations.
FISHMEAL AND FISH OIL (USA)
Adverse weather conditions in October 2018 resulted in landings below historical averages which contributed to lower fishmeal and
fish oil volumes in Daybrook toward the end of the calendar year. As a result, in USD terms, Daybrook's revenue reduced by 4% to
USD 45.9 million (March 2018: USD 47.6 million) due mainly to lower sales volumes of 29,317 tons (March 2018: 31,489 tons).
As expected, due to continued demand, pricing of fishmeal in USD terms improved by 1% with fish oil prices showing strong
recovery of 10% on prior period prices.
Daybrook's operating profit benefited from the weaker Rand on translation when consolidating into the Group's results, increasing
by 10% in Rand terms on the prior period.
The 2019 fishing season commenced on 15 April 2019 and will run until the end October 2019. During the off-season Daybrook
invested approximately USD 5 million in plant improvements and efficiency projects to stimulate throughput and production quality.
HORSE MACKEREL AND HAKE
The overall performance in this sector has been characterised by good catch rates and strong demand in both local and foreign
markets for horse mackerel and hake but negatively impacted by a reduction in fishing days across our fleet due to maintenance
and scheduled dry-docks. The financial performance for this sector was negatively impacted by a decline in weighted average fishing
days of 21% compared to the prior period.
In Namibia, the 2019 horse mackerel TAC increased by 3% to 349,000 tons. The Ministry of Fisheries and Marine Resources made an
initial allocation of 179,000 tons (March 2018: 236,000 tons) for the 2019 fishing season. Our allocation has remained proportionally
consistent with the prior period.
The performance of our Namibian vessels has been positive with higher catch rates during the period offset by lower volumes
landed due to reduced fishing days resulting from vessel maintenance. Firm sales prices and a weaker Rand offset the effect of lower
sales volumes resulting in the Namibian horse mackerel business contributing an operating profit in line with the prior period.
In South Africa, the Precautionary Maximum Catch Limit (PMCL) for targeted catch of horse mackerel increased by 8.5% to
27,670 tons (March 2018: 25,500 tons). Quota available to Oceana through own and joint venture allocations remained in line with
2018. The 2017 Fishing Rights Application Process (FRAP) allocation remains under appeal.
Fishing days for the Desert Diamond were materially lower due to a scheduled dry-dock during the period which reduced landings
and sales volumes. Consistently improving catch rates, solid USD pricing and the weaker Rand contributed positively to overall
performance which was negatively impacted by lower sales volumes.
The 2019 hake offshore TAC increased by 10.0% to 122,423 tons (March 2018: 111,294 tons). Strong European demand and pricing and
a weaker Rand partially offset the effect of lower sales volumes brought about by reduced fishing days due to planned maintenance.
LOBSTER AND SQUID
The 2019 TAC for West Coast Rock Lobster (WCRL) reduced by 44% due to ongoing concerns about the health of the lobster
resource. Revenue and operating profit accordingly decreased but were mitigated by strong pricing due to Chinese demand for live
lobster, the weaker Rand and cost reduction initiatives.
Fishing rights allocated to the squid business remained unchanged over the period. Lower landings resulted in the squid business
reporting lower revenue and operating profit.
COMMERCIAL COLD STORAGE AND LOGISTICS (CCS)
Revenue for this segment improved due to increased occupancy levels, storage rates and pallets handled. Performance at our
coastal facilities benefitted from increased procurement of frozen fish for the canned fish business. Occupancy levels in Namibia
were lower in the first quarter due to lower volumes arising from the delayed announcement of the 2019 Namibian Horse mackerel
TAC and in the inland facilities, increased electricity and labour costs offset the higher revenue from improved occupancy levels.
Additionally, once off debt write offs of R7 million, has offset the positive operating performance for the period.
TIGER BRANDS LIMITED ("TIGER BRANDS") UNBUNDLING
Further to the Tiger Brands announcement on 5 April 2019, Tiger Brands unbundled its entire shareholding in Oceana to its shareholders
effective 29 April 2019.
Subsequent to the unbundling, Mr Lawrence Mac Dougall and Mr Noel Doyle resigned as directors to the Oceana board of directors ("Board"),
effective 30 April 2019. The Board thanks Lawrence and Noel for their support and valued contributions during their respective Board tenures and
wishes them both well with their future endeavours.
Following Tiger Brands decision to unbundle its Oceana shares, the Board formed a sub-committee and appointed independent advisors to
consider the implications and opportunities of the unbundling. The Board has concluded that it does not expect the unbundling to impact Oceana’s
operations or its business plan and strategic outlook.
FURTHER DIRECTORATE AND COMPANY SECRETARY CHANGES
Mr Nisaar Ahmed Pangarker was appointed as a non-executive director to the Board with effect from 1 March 2019 and Ms Lesego Sennelo was appointed
as an independent non-executive director to the Board effective 18 March 2019. The Board wishes both Nisaar and Lesego well in their new roles.
Jillian Marais will resign as Company Secretary with the appointment of Adela Fortune to the position, effective 1 June 2019 and will
assume the role of Group Executive: Risk and Compliance.
PROSPECTS
Local demand for Lucky Star's canned fish remains strong but will be impacted by a tougher trading environment and the negative
impact of a weaker rand on imported frozen fish. Firmer global fishmeal and fish oil prices are expected due to projected lower
global production volumes for 2019. Early season landings in the USA and South Africa remain positive.
The second half performance will also be underpinned by improved vessel utilisation in the horse mackerel and hake segment and planned
efficiencies in the CCS business.
In Namibia, the fishing industry awaits the delayed announcement of the Namibian long term fishing rights. In South Africa,
engagement with the Department of Agriculture, Forestry and Fisheries will continue ahead of the 2020 Fishing Rights
Allocation Process.
Any forward-looking statements set out in this announcement have not been reviewed or reported on by the auditors.
On behalf of the Board
MA Brey I Soomra
Chairman (non-executive) Chief executive officer
9 May 2019
CASH DIVIDEND DECLARATION
Notice is hereby given of dividend number 150. A gross interim dividend amounting to 123 cents per share, for the six months
ended 31 March 2019, was declared on Thursday, 9 May 2019, out of current earnings. Where applicable the deduction of dividends
withholding tax at a rate of 20% will result in a net dividend amounting to 98.4 cents per share.
The number of ordinary shares in issue at the date of this declaration is 135 526 154. The company's tax reference number is
9675/139/71/2. Relevant dates are as follows:
Last day to trade cum dividend Tuesday, 25 June 2019
Commence trading ex dividend Wednesday, 26 June 2019
Record date Friday, 28 June 2019
Dividend payable Monday, 1 July 2019
Share certificates may not be dematerialised or rematerialised between Wednesday, 26 June 2019 and Friday, 28 June 2019, both
dates inclusive.
By order of the Board
JC Marais
Company secretary
9 May 2019
Directorate and statutory information
Directors: MA Brey (chairman), I Soomra* (chief executive officer), ZBM Bassa, PG de Beyer,
S Pather, NA Pangarker, L Sennelo, NV Simamane. (*Executive)
Change to Directors: NA Pangarker has been appointed as a non-executive director to the Board, effective
1 March 2019. L Sennelo has been appointed as an independent non-
executive director to the board, effective 18 March 2019. L Mac Dougall and N Doyle have
resigned as directors to the Board, effective 30 April 2019.
Prescribed Officer: T Giles (Interim chief financial officer).
Registered Office: 9th Floor, Oceana House, 25 Jan Smuts Street, Foreshore, Cape Town, 8001
Transfer Secretaries: Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196
(PO Box 61051, Marshalltown, 2107)
Sponsor - South Africa: The Standard Bank of South Africa Limited
Sponsor - Namibia: Old Mutual Investment Services (Namibia) Proprietary Limited
Auditors: Deloitte & Touche
Company Secretary: JC Marais will resign as Company Secretary with the appointment of A Fortune to the
position, effective 1 June 2019.
JSE share code: OCE
NSX share code: OCG
ISIN: ZAE000025284
www.oceana.co.za
Date: 09/05/2019 04:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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