Oceana Group Limited · JSE:OCE
Oceana — Investor Presentation (November 2019)
69 slides from Oceana's investor presentation, November 2019
Slide 1: Investor 2019 Presentation
INVESTOR 2019 PRESENTATION YEAR ENDED 30 SEPTEMBER 2019 POSITIVELY IMPACTING LIVES 1
Slide 2: Legal Disclaimer and Basis of Preparation
LEGAL DISCLAIMER AND BASIS OF PREPARATION • For the purposes of this notice, the presentation (the “Presentation”) shall mean and include the slides that follow, the oral presentation of the slides by Oceana Group Limited (the “Company”) and/or its advisers, any question- and-answer session that fol
Slide 3: Group overview
Operational Strategic Group Financial overview & overview & overview performance outlook prospects POSITIVELY IMPACTING LIVES 3
Slide 4: Group Overview
GROUP OVERVIEW 5 46 276 000 54 7 2 species Fishing Customer Tons of Vessels Species MSC certified geographies geographies product sold 20 VESSELS 11 VESSELS & PLANES 23 VESSELS 9 COLD STORAGE FACILITIES 6 PRODUCTION FACILITIES 1 PRODUCTION FACILITY 6 PRODUCTION FACILITIES 124k PALLETS PER WEEK 2 623
Slide 5: Group Overview
GROUP OVERVIEW 5 Fishing geographies 46 Customer geographies CANNED FISH FISHMEAL (US) HORSE MACKEREL, HAKE COLD STORAGE & FISHMEAL (AFRICA) FISH OIL (US) LOBSTER & SQUID LOGISTICS POSITIVELY IMPACTING LIVES 5
Slide 6: Empowerment
EMPOWERMENT 1st Most empowered food producer 3rd Sector code: Generic 8th Ownership 2019 10th Empowerment Management control Report 12th JSE’S most empowered company: All codes 65% Senior management: Black 40% Senior management: Female POSITIVELY IMPACTING LIVES 6
Slide 7: Diversification
DIVERSIFICATION 4 YEAR AVERAGE REVENUE REGION CURRENCY SPECIES 1% 9% 5% 5% 4% 9% 16% 10% 42% 48% 51% 39% 14% 34% 13% South Africa Rest of Africa RAND USD EUR Canned fish Fishmeal and oil UK & Europe North America GBP Other Horse mackerel Hake and other Far East, Australia & other Commercial cold sto
Slide 8: Strong Margins
STRONG MARGINS 2019 11.2% CANNED FISH & FISHMEAL Total 4 YR AVE 10.7% margins 2019 20.8% 2019 FISHMEAL & FISH OIL (US) 4 YR AVE 24.0% 15.4% 4 YR AVE HORSE MACKEREL, HAKE, 2019 20.1% LOBSTER & SQUID 16.7% 4 YR AVE 20.0% COMMERCIAL COLD 2019 16.7% STORAGE 4 YR AVE 22.2% POSITIVELY IMPACTING LIVES 8
Slide 9: Review of Performance
REVIEW OF PERFORMANCE Canned fish volume Improved cannery efficiencies and Healthy biomass, MSC certification Consistent supply of frozen fish throughput Increased plant capacity Drive affordability and versatility Improved FMO pricing Pet food strategy Exit underperforming busines
Slide 10: Financial performance
Operational Strategic Group Financial overview & overview & overview performance outlook prospects POSITIVELY IMPACTING LIVES 10
Slide 11: 3 Year Review of Performance
3 YEAR REVIEW OF PERFORMANCE 3 YEAR REVENUE* CAGR: 6.8% 4 204 4 090 Revenue 3 266 CAGR 3 441 3 453 3 557 6.8% 2017 2018 2019 H1 H2 *Restated for the effect of IFRS 15 3 YEAR HEADLINE EARNINGS CAGR: 17.5% 487 Headline earnings 345 CAGR 231 17.5% 362 292 226 2017 2018 2019 H1 H2 POSITIVELY IMPACTING L
Slide 12: Income Statement
INCOME STATEMENT 2019 2018 R'000 SEPTEMBER Var SEPTEMBER Revenue 7 647 415 0% 7 657 311 Gross profit 2 620 636 -8% 2 833 495 GP margin 34% -3% 37% Operating expenditure (1 469 552) -11% (1 658 389) Foreign exchange gains 30 093 56% 19 248 Associate and JV loss (5 852) -7% (5 447) Operating profit be
Slide 13: Revenue & Operating Profit Contribution
REVENUE & OPERATING PROFIT CONTRIBUTION 2019 2018 REVENUE: R7 647m REVENUE: R7 657m OPERATING PROFIT: R1 175m OPERATING PROFIT: R1 189m PRODUCT SERVICE REVENUE:R7 274m REVENUE: R373m OPERATING PROFIT: R1 113m OPERATING PROFIT: R62m 5% 5% 20% 26% • REVENUE 38% • REVENUE • REVENUE • REVENUE R4 039m R1
Slide 14: Revenue
REVENUE REVENUE MOVEMENT (R’M) 8 500 8 000 134 385 255 169 163 20 7 500 7 000 6 500 7 657 7 647 6 000 5 500 5 000 Sep-18 Canned fish volumes Canned fish pricing Fishmeal & oil volumes Fishmeal & oil pricing Angolan fishmeal Other Sep-19 volumes Increase Decrease POSITIVELY IMPACTING LIVES 14
Slide 15: Operating Profit
OPERATING PROFIT OPERATING PROFIT MOVEMENT (R'M) 1 250 1 200 15 34 14 9 1 150 1 100 1 189 1 175 1 050 1 000 Sep-18 Canned fish and Fishmeal and oil (USA) Horse mackerel, hake CCS Sep-19 fishmeal (Africa) and other Increase Decrease POSITIVELY IMPACTING LIVES 15
Slide 16: Foreign Exchange
FOREIGN EXCHANGE 16,00 15,00 14,00 13,00 12,00 11,00 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep FY2018 FY2019 R19m R30m 16,00 15,00 14,00 13,00 12,00 11,00 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 USD RATE 3 MONTH FEC RATE POSITIVELY IMPACTING L
Slide 17: Financial Position Key Items
FINANCIAL POSITION KEY ITEMS 2019 2018 ‘000 SEPTEMBER SEPTEMBER Property, plant and equipment 1 697 221 1 586 626 Intangible assets 4 886 609 4 617 279 Other assets 458 481 481 221 Current assets 3 169 851 2 999 296 Includes R246 million restricted cash held in Net cash 588 036 1 015 060 relation to
Slide 18: Capex - Replacement
CAPEX - REPLACEMENT 250 000 200 000 150 000 (R’000’s) 100 000 50 000 - 2017 2018 2019 Actuals Actuals Actuals Replacement Depreciation Replacement average Depreciation average POSITIVELY IMPACTING LIVES 18
Slide 19: Capex Projects
CAPEX PROJECTS 2019 Horse mackerel and hake vessels R 56m Major Capex Daybrook production facility US$ 6m Projects Cannery capex R 20m St Helena Bay cold store R 13m Fishmeal plant replacement capex R 11m POSITIVELY IMPACTING LIVES 19
Slide 20: Working Capital
WORKING CAPITAL 140 120 112 120 100 99 100 80 BP Oil spill settled in 2019 72 80 Extended payment terms negotiated with frozen fish supplier - full benefit to be 60 realised in 2020 60 118 99 40 86 40 48 20 20 38 38 38 34 32 0 - 2017 2018 2019 Inventory Days Debtors Days Creditors Days Net working c
Slide 21: Long Term Debt
LONG TERM DEBT MATURITY PROFILE HEDGING Term debt 50% 47% Fixed 45% 45% 53% Floating R3.6bn 40% 35% (2018: R3.8bn) 35% NET DEBT / EBITDA 30% 2.2x (2018: 2.0x) 25% 20% SA R1.8bn INTEREST SAVING 15% US R1.8bn R31m 10% 10% 10% 5% BLENDED ALL-IN-FUNDING RATE 6.8% 0% (2018: 7.2%) 1yr 2yrs 3yrs >3yrs POSI
Slide 22: Cash Flow
CASH FLOW CASHFLOW (R'M) 2 500 342 2 000 1 385 806 1 500 228 1 000 R246 million BP oil spill settlement 678 69 500 1 015 173 588 - Sep-18 Cash operating Working capital Tax & dividends paid Capex Debt serviced Borrowings raised Other Sep-19 profit changes Increase Decrease POSITIVELY IMPACTING LIVES
Slide 23: Dividend
DIVIDEND DIVIDEND PER SHARE (CENTS) MAINTAINING DIVIDEND COVER 500 469 450 416 R’M 2016 2017 2018 2019 400 38 363 Headline earnings 820 457 849 636 350 Pre-acquisition deferred tax (187) 300 357 Total 820 457 662 636 250 266 240 Dividend cover 1.5x 4.35x 1.5x 1.5x 200 150 100 90 112 112 123 50 90 0
Slide 24: Operational overview & outlook
Operational Strategic Group Financial overview & overview & overview performance outlook prospects POSITIVELY IMPACTING LIVES 24
Slide 25: Canned fish
Canned fish POSITIVELY IMPACTING LIVES 25
Slide 26: Canned Fish - 2019 Key Performance Indicators
CANNED FISH - 2019 KEY PERFORMANCE INDICATORS 2018 2019 September September Revenue % VAR 13% 12% Volumes sold Cartons 12% 8% Trended net realisation R/ctn 2% 4% Daily throughput cartons per day R/ctn 5% 19% Total production cost per carton R/ctn 2% 11% Operating profit % VAR 72% 20% POSITIVELY IMPA
Slide 27: Total Food Overview
TOTAL FOOD OVERVIEW TOTAL SALES (CTNS’000) LUCKY STAR GROWTH VS TOTAL FOOD 10 000 14,0% 277 9 000 812 284 12,0% 8 000 733 257 711 10,0% 7 000 6 000 8,0% 5 000 8 399 6,0% 4 000 7 753 6 896 3 000 4,0% 2 000 2,0% 1 000 - 0,0% Sep-17 Sep-18 Sep-19 12MM SEP-19 6MM SEP-19 12MM SEP-19 6MM SEP-19 Volume Val
Slide 28: Canned Fish Demand Drivers
CANNED FISH DEMAND DRIVERS • Ease and affordability ― Relative affordability to other proteins, net PI of 4% ― Fully cooked and flavoured product allows for ease of converting into meal POSITIVELY IMPACTING LIVES 28
Slide 29: Canned Fish Demand
CANNED FISH DEMAND • Versatility ― Social and traditional media campaigns showcasing versatility of product ― Partnering with influencers and focused marketing appealing to the Afrilenial market ― Stretching the brand into new territory SUGA & CHEF KABELO LUNA FLORENTINO DJ ZINHLE CARPO (SOWETO TV)
Slide 30: Canned Fish Demand
CANNED FISH DEMAND • Consistent supply ― Ability to provide consistent supply to customer base ― Greater in-store exposure POSITIVELY IMPACTING LIVES 30
Slide 31: Canned Fish
CANNED FISH Soweto Kota festival Lucky Star Cup Blisters for Bread POSITIVELY IMPACTING LIVES 31
Slide 32: Canned Fish Supply
CANNED FISH SUPPLY • Pilchard procurement mainly from North West Africa – healthy biomass • Strength of balance sheet provides ability to procure larger quantities • Frozen fish strategy has enabled production efficiencies due to constant supply ― Improved production planning ― Yield and throughput
Slide 33: Canned Fish Supply
CANNED FISH SUPPLY CTNS’000 10 000 2% 9 000 12% 8 000 10% 51% 7 000 48% 6 000 5 000 41% 4 000 3 000 47% 40% 2 000 49% 1 000 - 2017 2018 2019 Frozen and canned internationally Frozen and locally canned Fresh and locally canned POSITIVELY IMPACTING LIVES 33
Slide 34: Canned Fish - Outlook
CANNED FISH - OUTLOOK Supply • Focus on efficiencies to further increase throughput and improve production costs • Look to reduce cost of procurement through leveraging strong balance sheet • Expect to produce similar levels in 2019/2020 Demand • Early Q1 indicators showing volume growth on prior ye
Slide 35: Fishmeal & fish oil
Fishmeal & fish oil POSITIVELY IMPACTING LIVES 35
Slide 36: FMO (Africa) – 2019 Key Performance Indicators
FMO (AFRICA) – 2019 KEY PERFORMANCE INDICATORS 2018 2019 September September Revenue % VAR 8% 19% Landings Tons 7% 13% Volumes sold Tons 5% 20% Average fish meal price $/mt 15% 0% Average fish oil price $/mt 14% 5% Operating profit % VAR 1% 177% POSITIVELY IMPACTING LIVES 36
Slide 37: Fishmeal and Fish Oil (Africa) - Landings
- 20 000 40 000 60 000 80 000 100 000 120 000 140 000 160 000 180 000 200 000 01-Feb 08-Feb 2017 15-Feb 22-Feb 01-Mar 2018 08-Mar 15-Mar 2019 22-Mar 29-Mar 05-Apr 5 YR AVE 12-Apr 19-Apr 26-Apr 03-May 10-May 17-May 24-May 31-May TONS 07-Jun 14-Jun 21-Jun 28-Jun 05-Jul 12-Jul 19-Jul FISHMEAL AND FISH
Slide 38: Fishmeal and Fish Oil (Africa)
FISHMEAL AND FISH OIL (AFRICA) Performance • Adverse weather conditions impacted vessel deployment • Fishmeal price flat and 5% increase in oil price • Angola exit Outlook • Anchovy biomass healthy • Higher closing stock levels • African Swine Fever effect • Fleet reviews underway - drive cost effic
Slide 39: FMO (US) - 2019 Key Performance Indicators
FMO (US) - 2019 KEY PERFORMANCE INDICATORS 2018 2019 September September Revenue % VAR 24% 12% Landings 000 fish 13% 19% Volumes sold - fishmeal Tons 22% 15% Volumes sold – fish oil Tons 38% 14% Price - fishmeal $/mt 1% 1% Price – fish oil $/mt 8% 7% Operating profit % VAR 10% 23% POSITIVELY IMPACTI
Slide 40: Fishmeal and Fish Oil (US)
FISHMEAL AND FISH OIL (US) Supply • Rainiest season in 120 years of record keeping • Resultant impact on fishing STATEWIDE PRECIPITATION RANKS (JAN-SEP 2019) CONTIGUOUS US PRECIPITATION HISTORY PERIOD 1895-2019 16.0 410 2019 400 390 15.0 370 360 14.0 350 340 MILLIMETERS 330 INCHES 13.0 320 310 MISSI
Slide 41: FMO (US) - Landings
FMO (US) - LANDINGS (‘000 FISH) 900 000 TOP 10 WEEKS CATCH 800 000 2019 46,683 2019 45,216 700 000 2018 43,494 600 000 2018 42,038 2017 41,403 500 000 2011 40,745 400 000 2011 40,179 2017 39,318 300 000 2019 39,125 200 000 2012 39,080 100 000 * 7 BEST WEEKS OF FISHING IN COMPANY HISTORY HAVE OCCURRE
Slide 42: Fishmeal and Fish Oil (US)
FISHMEAL AND FISH OIL (US) Production • Off-season investment in plant - $6m • Output at peak improved by 20% • Capacity to support 950m fish • 2019 52% utilisation vs 2018 67% POSITIVELY IMPACTING LIVES 42
Slide 43: Fishmeal and Fish Oil (US)
FISHMEAL AND FISH OIL (US) Customer overview SALES MIX • Fishmeal customers 100 000 ― 74% domestic and 26% international 90 000 • Fish oil customers ― 25% domestic and 75% international 80 000 41% 70 000 Pet food strategy 60 000 41% 43% • Further expansion into US pet food sector 50 000 30% ― Sector
Slide 44: FMO Global Outlook – Supply 2020
FMO GLOBAL OUTLOOK – SUPPLY 2020 Fishmeal 6 000 WORLD FISHMEAL PRODUCTION (000MT) Peru 2019/20 5 000 • 2019 second season quota of 2.78 million MT projected 4 000 • 60% (300 000MT) of new crop sold forward 3 000 EU 2 000 • Fishmeal production expected slightly lower in 2020 on TAC uncertainties 1 00
Slide 45: FMO Global Outlook – Demand 2020
FMO GLOBAL OUTLOOK – DEMAND 2020 Fishmeal China • 2 Million tons of fishmeal projected for consumption 2019, focus on recovery for 2020 • 2019 Port stocks reached record high of 300 000MT in late September 2019 • African Swine Fever impact on pig feed consumption in H1 has declined 14% year on year
Slide 46: Blue Continent Products
Blue Continent Products POSITIVELY IMPACTING LIVES 46
Slide 47: Horse Mackerel - 2019 Key Performance Indicators
HORSE MACKEREL - 2019 KEY PERFORMANCE INDICATORS 2018 2019 September September Revenue % VAR 30% 4% Catch per sea day - SA Tons 92% 6% Catch per sea day - Namibia Tons 4% 7% Volumes sold - Namibia Tons 21% 1% Volumes sold – SA Tons 33% 21% Average sales price US$/tons 12 % 4% Operating profit % VAR
Slide 48: Horse Mackerel - South Africa
HORSE MACKEREL - SOUTH AFRICA DESERT DIAMOND LANDINGS 3 000 140 SCHEDULED STATUTORY DRY MAINTENANCE DOCK & REFIT 120 2 500 100 2 000 80 1 500 60 1 000 40 500 20 - 0 Jul-17 Jul-18 Jul-19 Feb-17 Apr-17 Jun-17 Sep-17 Feb-18 Apr-18 Jun-18 Sep-18 Feb-19 Apr-19 Jun-19 Sep-19 Mar-17 Aug-17 Mar-18 Aug-18 Oc
Slide 49: Horse Mackerel – South Africa
HORSE MACKEREL – SOUTH AFRICA Outlook • Catch rates have been low over winter period, improved during September and October • New area review approved by scientists, expect DEFF approval shortly • Subsequent to 2016 horse mackerel appeal decision being published, key industry players challenging all
Slide 50: Horse Mackerel - Namibia
0 100 120 140 160 20 40 60 80 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 SCHEDULED MAINTENANCE Oct-17 Nov-17 Dec-17 Jan-18 HORSE MACKEREL - NAMIBIA Feb-18 Mar-18 Apr-18 May-18 Jun-18 AVERAGE CATCH RATE (TONS) Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 F
Slide 51: Horse Mackerel – Namibia
HORSE MACKEREL – NAMIBIA Outlook • 2019 new rights announcement still pending • Namibian national elections 27 November 2019, cabinet to sit in March 2020 • Season catch rates and size mix have been challenging industry wide • Biomass remains healthy POSITIVELY IMPACTING LIVES 51
Slide 52: Hake - 2019 Key Performance Indicators
HAKE - 2019 KEY PERFORMANCE INDICATORS 2018 2019 September September Revenue % VAR 14% 10% Fleet utilisation % 7% 10% Sea days Days 8% 2% Volumes sold Tons 5% 0% Sales price Euro/kg 0% 7% Margin % 0% 1% Operating profit % VAR 11% 20% POSITIVELY IMPACTING LIVES 52
Slide 53: Hake
HAKE Supply SEA DAYS AND UTILISATION • Biomass healthy and TAC increased • Vessel utilisation improved and healthy landings 72% 65% 69% Demand • Continued demand from European markets • 7% Euro price increase achieved 70% 73% 64% 2017 2018 2019 H1 H2 POSITIVELY IMPACTING LIVES 53
Slide 54: Hake - Outlook
HAKE - OUTLOOK Supply • TAC expected to be same as 2019 season • FRAP 2020 delayed for Hake Deep Sea Trawl • Global white fish supply outlook stable Demand • Strong demand for H&G product in local market and Western Europe • Shortage of fish protein in China expected to positively impact global dema
Slide 55: Lobster & Squid - 2019 Key Performance Indicators
LOBSTER & SQUID - 2019 KEY PERFORMANCE INDICATORS LOBSTER SQUID 2018 2019 2018 2019 September September September September Revenue Revenue % VAR 12% 22% % VAR 23% 23% Landings Tons 29 % 40% Catch rate Kg/man 52% 51% Sales volumes Tons 10% 33% Sales price 4% 7% Euro/kg Sales price US$/kg 18% 13% Ope
Slide 56: Lobster & Squid
LOBSTER & SQUID Lobster • TAC announced for WCRL as per 2019 season i.e. 1 035MT ― Announcement supported by WWF ― Four vessels and one factory operational • Lobster season opens on 15 November • Hong Kong unrest a concern • FRAP 2020 delayed for SCRL Squid • Very poor industry squid season to date
Slide 57: Commercial Cold Storage
Commercial Cold Storage POSITIVELY IMPACTING LIVES 57
Slide 58: CCS - 2019 Key Performance Indicators
CCS - 2019 KEY PERFORMANCE INDICATORS 2018 2019 September September Revenue % VAR 8% 14% Occupancy levels % 3% 4% Total pallets handled Pallets 19% 10% Storage revenue per frozen pallet ZAR/pallet 4% 2% Operating profit % VAR 28% 13% POSITIVELY IMPACTING LIVES 58
Slide 59: CCS
CCS Performance South Africa: 100 000 • Gauteng - increased occupancies, exit Midrand 1, overall 90 000 4 850 profitability improved, rates still challenging 13 151 80 000 15 060 • Coastal – increased occupancies, canned fish enabler 70 000 15 177 Namibia: 60 000 • Lower horse mackerel catch rates 5
Slide 60: CCS
CCS Outlook • Coastal demand strong, frozen fish key customer • Western Cape expansion on the cards ― St Helena Bay dedicated pelagic facility ― Reinvest cash from asset sales • Inland rates remain challenging • Prior period once off risks mitigated POSITIVELY IMPACTING LIVES 60
Slide 61: Strategic overview & prospects
Operational Strategic Group Financial overview & overview & overview performance outlook prospects POSITIVELY IMPACTING LIVES 61
Slide 62: Strategic Overview & Prospects
STRATEGIC OVERVIEW & PROSPECTS FRAP update • FRAP 2020 delayed – announced on 2 August 2019 • Timeline for FRAP 2021 still unknown, unlikely to be announced this year • Key next steps - policy engagement and appointment of minister’s advisory team • Oceana initiatives to support our right to renew q
Slide 63: Strategic Overview & Prospects
STRATEGIC OVERVIEW & PROSPECTS Core businesses • Canned fish ― Drive volume growth in canned fish segment by maintaining supply and affordability • Fishmeal and oil (SA) ― Improve utilisation of fleet and land-based facilities to improve landings • Fishmeal and oil (US) ― Increase sales realisation
Slide 64: Strategic Overview & Prospects
STRATEGIC OVERVIEW & PROSPECTS New business • Continue to explore aquaculture opportunities Financial performance • Management confident in its strategy to deliver growth in the next financial year POSITIVELY IMPACTING LIVES 64
Slide 65: Positively Impacting Lives
POSITIVELY IMPACTING LIVES 65
Slide 66: Annexure
Annexure POSITIVELY IMPACTING LIVES 66
Slide 67: Income Statement - Africa
INCOME STATEMENT - AFRICA 2019 2018 R'000 SEPTEMBER Var SEPTEMBER Revenue 5 926 371 1% 5 868 193 Gross profit 2 045 489 -6% 2 181 475 GP margin 35% -2% 37% Operating costs (1 231 588) 10% (1 368 291) Foreign exchange (gains)/losses 30 093 56% 19 249 Associate and JV loss (27 770) 23% (36 164) Operat
Slide 68: Income Statement - US
INCOME STATEMENT - US 2019 2018 $'000 SEPTEMBER Var SEPTEMBER Revenue 117 918 -12% 133 339 Gross profit 39 469 -19% 48 820 GP margin 33% 4% 37% Operating profit before assoc/JV income 23 117 -14% 26 859 Associate and JV income 1 449 -33% 2 177 Operating profit before IFRS costs fair value adjustment
Slide 69: Positively Impacting Lives
POSITIVELY IMPACTING LIVES 69