Oceana Group Limited · JSE:OCE
Oceana — Merger or Acquisition (May 2015)
39 slides from Oceana's merger presentation, May 2015
Slide 1: Acquisition of Daybrook Fisheries
ACQUISITION OF DAYBROOK FISHERIES May 2015
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 follow
Slide 3: Video title
VIDEO TITLE www.oceana.co.za 3
Slide 4: Presentation Contents
PRESENTATION CONTENTS Overview of Becoming a global Compelling Daybrook fishing company strategic rationale Fisheries Transaction Indicative and financial Q&A timetable highlights 4
Slide 5: Section 1: Becoming a global fishing company
SECTION 1 Becoming a global fishing company
Slide 6: Becoming a Global Fishing Company
BECOMING A GLOBAL FISHING COMPANY OCEANA AIMS TO Identifying opportunities for acquisitive BECOME AFRICA’S and organic growth of the group MOST EFFICIENT CONVERTER OF FISHING RIGHTS INTO VALUE UNDERPINNED BY Achieving growth in headline earnings GENERATING SUSTAINED FINANCIAL RETURNS BY ANTICIPATING
Slide 7: Becoming a Global Fishing Company: Historical Revenue and HEPS
BECOMING A GLOBAL FISHING COMPANY OCEANA HISTORICAL REVENUE (ZARm) and HEPS (ZARc) OCEANA’S STRATEGY HAS BEEN VERY EFFECTIVE, 6 000 600 WITH REVENUES AND 2010A – 2014A HEADLINE EARNINGS CAGR: 16% 5 000 500 GROWING MATERIALLY OVER RECENT YEARS 4 000 400 2010A – 2014A CAGR: 10% 3 000 300 2 000 200 201
Slide 8: Limited opportunities remain within South Africa
BECOMING A GLOBAL FISHING COMPANY HOWEVER, LIMITED Finite fishing resource in South Africa OPPORTUNITIES REMAIN WITHIN SA AND THE rest of the AFRICAN Concentration of species CONTINENT TO MEANINGFULLY INCREASE SCALE AND DIVERSIFY FISHING South African fishing rights up for renewal RIGHTS in 2020 8
Slide 9: Strategy to seek global opportunities
BECOMING A GLOBAL FISHING COMPANY increase diversification of: • targeted species Oceana’s strategy • product portfolio is to seek out global opportunities which: • currency exposure • geographies builds a large scale, highly efficient business, exploiting benefits of an enlarged diversified group 9
Slide 10: Long-term growth in demand for fishmeal and fish oil
BECOMING A GLOBAL FISHING COMPANY Long-term growth in demand for fishmeal and fish oil: • Increasing global protein requirements Through extensive • Growing demand for aquaculture and analysis into global increased use in aquaculture production fishing trends and • Growing demand as feed ingredients
Slide 11: Daybrook Fisheries as a transformational opportunity
BECOMING A GLOBAL FISHING COMPANY Excellent track record Daybrook Fisheries is an opportunity for Oceana to undertake a truly transformational Strong cash flow generation transaction in a sustainable fishing environment World class operating plant and well maintained fleet 11
Slide 12: Section 2: Compelling strategic rationale
SECTION 2 Compelling strategic rationale
Slide 13: Increasing Global Demand for Protein
INCREASING GLOBAL DEMAND FOR PROTEIN • Global population is expected to reach 9bn by 2050 driving demand growth for food and protein • Fish are an important source of animal protein and nutrients for human consumption • Finite resources in the world’s oceans increases fish supply potential from aqua
Slide 14: Fishmeal Supply and Pricing
FISHMEAL SUPPLY AND PRICING • Global output has declined by c. 23% over the past decade due to limited resources and adverse weather conditions • Supply/demand factors have resulted in sustained price growth over the past 10 years • Potential substitutes do not have the same high quality protein and
Slide 15: Fish Oil Supply and Pricing
FISH OIL SUPPLY AND PRICING • A similar trend has been observed in fish oil production and prices • Vegetable oils, such as rapeseed and soy oil, are no longer considered suitable substitutes for fish oil and there has been a clear divergence in prices since 2012 • World Bank predicts 70% real growt
Slide 16: Transaction Supports Our Strategy
TRANSACTION SUPPORTS OUR STRATEGY • Generating sustained financial returns by anticipating market trends • Driving transformation and localisation • Optimising our operations • Leading stewardship of marine resources • Building trusted relationships • Diversification of species, geography and curren
Slide 17: Compelling Commercial Rationale
COMPELLING COMMERCIAL RATIONALE 1 Expected to provide attractive IRR and strong earnings growth from a materially higher base • Expected value creation over the next five years, through a planned expansion of the fleet and an 2 increase in plant capacity as a result of the installation of innovative
Slide 18: Compelling Commercial Rationale (continued)
COMPELLING COMMERCIAL RATIONALE 5 Increased exposure to US$ revenues and costs mitigates Rand volatility Exposure to Gulf Menhaden species will further increase diversification of Oceana’s fishing business and product mix 6 • Sustainable fishing environment – currently no quota on Gulf fisheries and
Slide 19: Section 3: Overview of Daybrook Fisheries
SECTION 3 Overview of Daybrook Fisheries
Slide 20: Video title
VIDEO TITLE Insert media www.oceana.co.za 20
Slide 21: Overview of Daybrook Fisheries
OVERVIEW OF DAYBROOK FISHERIES DAYBROOK FISHERIES’ GEOGRAPHIC LOCATION • Established in 1955 • Daybrook Fisheries is a vertically integrated company, catching and processing Gulf Menhaden into fishmeal and fish oil • Excellent track record • Strong cash flow generation • World class operating plant
Slide 22: Sustainable Fishing Environment
SUSTAINABLE FISHING ENVIRONMENT • Gulf Menhaden produce billions of offspring annually, which allows the population to easily replenish itself each year (3 year growth cycle) • Purse-seine method with the assistance of spotter aircraft allows fishing in coastal waters • Consolidation of Gulf fisheri
Slide 23: World Class Operations
WORLD CLASS OPERATIONS • Fleet of 11 refrigerated vessels and 10 single Cessna aircrafts owned and operated by a wholly-owned subsidiary of Daybrook Fisheries (Westbank) • Marine department is comprised of highly skilled captains, fishermen and maintenance crews in the industry • Vessels average 55m
Slide 24: Superior Product Offering
SUPERIOR PRODUCT OFFERING PROCESSING • The only fishmeal manufacturer in the US currently using an indirect drying process OPERATIONS • Operates a world class laboratory AQUACULTURE FEEDS PET FOOD ANIMAL FEEDS • Products used in salmon and • Fishmeal is processed specifically • Preferred by many fee
Slide 25: Competitive Landscape
COMPETITIVE LANDSCAPE • Daybrook Fisheries and Omega Protein (2014A revenue US$ 308m) are LOCATION OF GULF MENHADEN PLANTS IN US the only Menhaden operators in the Gulf • Since 2010, Omega Protein has focused its business strategy downstream towards human nutrition products • Invested over US$ 130m
Slide 26: Section 4: Transaction and financial highlights
SECTION 4 Transaction and financial highlights
Slide 27: Salient Features of the Transaction
SALIENT FEATURES OF THE TRANSACTION PURCHASE • Total purchase consideration of US$ 382.3m (ZAR 4,588m¹) CONSIDERATION • Implied enterprise value including the Put Premium / 2014 normalised² AND ENTERPRISE EBITDA multiple of 8.65x VALUE • Acquisition of an effective 100% in Daybrook Fisheries via the
Slide 28: Salient Features of the Transaction: Put Option / Warrant
SALIENT FEATURES OF THE TRANSACTION • Westbank will issue a 30 year bearer warrant (immediately exerciseable) to Daybrook Fisheries to facilitate the entry of a new US investor to Westbank • 30 year option provided to 75% shareholders in Westbank to put their PUT OPTION / shares to Daybrook Fisherie
Slide 29: Salient Features of the Transaction: Funding
SALIENT FEATURES OF THE TRANSACTION • Purchase consideration and payment of transaction costs supported by available cash resources, and commitment letters from The Standard Bank of South Africa Limited (SBSA) and Bank of Montreal (BMO) › Up to ZAR 2 400m Oceana cash resources › Up to ZAR 1 704m¹ BM
Slide 30: Salient Features of the Transaction: Shareholder Support
SALIENT FEATURES OF THE TRANSACTION STRONG • Key shareholders, Tiger Brands (43.8%) and Brimstone Investment SHAREHOLDER Corporation (17.6%), have committed to support the transaction and SUPPORT follow their rights in the proposed rights offer Note: 1. Converted at US$ / ZAR 12.00 being the hedge f
Slide 31: Transaction and Summarised Group Structure
TRANSACTION AND SUMMARISED GROUP STRUCTURE SA Funding commitment OGL – SBSA 100% USA Funding commitment Oceana US Holdings Corp – BMO 100%¹ USA Shareholders agreement Daybrook Fisheries incl. Put and Warrants 25% Fish supply agreement USA USA 75% Westbank Existing key shareholders 31 Note: Oceana US
Slide 32: Daybrook Fisheries Financial Summary
DAYBROOK FISHERIES FINANCIAL SUMMARY NORMALISED REVENUE¹ (US$m) AND GROSS PROFIT MARGIN (%) FISHMEAL AND FISH OIL SALES SPLIT (MT) 114 90 Oil yield affected 84 by BP oil spill 8 656 25 473 62% 17 012 55% 52% 56 959 51 389 38 838 2012 2013 2014 2012A 2013A 2014A Fishmeal Fish oil NORMALISED EBITDA² (
Slide 33: Combined Group Financial Summary
COMBINED GROUP FINANCIAL SUMMARY Pro-forma 2014 results ZARm COMBINED GROUP Revenue 3 086 1 203 406 344 1 202² 6 241 COMBINED GROUP EBIT 381 347 45 107 436³ 1 316 Lucky Star Horse mackerel and hake Lobster, squid & french fries CCS Logistics Daybrook Fisheries¹ Note: 1. Daybrook Fisheries’ results c
Slide 34: Geographic, Currency and Product Diversification
GEOGRAPHIC, CURRENCY AND PRODUCT DIVERSIFICATION Pro-forma 2014 results OCEANA GEOGRAPHICAL REVENUE SPLIT¹ OCEANA CURRENCY SPLIT¹,²,³ OCEANA PRODUCT REVENUE SPLIT excl CCS¹,³ 33% 46% 32% 42% 10% 7% 9% 20% 8% 9%6% 43% 10% 26% 13% 56% 75% 59% 10% 8% 30% South Africa & Namibia Canned fish Other Africa
Slide 35: Combined Group Comparative Position
COMBINED GROUP COMPARATIVE POSITION FY14 EBITDA (US$m¹,²) Salmar 279 Austevoll Seafood 270 Pacific Andes 246 Leroy Seafood 229 China Fishery Group 226 Combined Group 142 Empresa Pesquera Eperva 114 Oceana Group 94 Omega Protein 69 Pesquera Camanchaca 66 Pesquera Exalmar 57 Blumar SA 57 Daybrook Fish
Slide 36: Combined Group Comparative Position (continued)
COMBINED GROUP COMPARATIVE POSITION | CONTINUED FY14 EBITDA MARGIN (%¹, ²) China Fishery Group 36% Salmar 29% Pesquera Exalmar 26% Combined Group 24% Omega Protein 22% Oceana Group 20% Pacific Andes 15% Empresa Pesquera Eperva 14% Austevoll Seafood 14% Leroy Seafood 14% Pesquera Camanchaca 13% Bluma
Slide 37: Section 5: Indicative timetable
SECTION 5 Indicative timetable
Slide 38: Indicative Transaction Timetable
INDICATIVE TRANSACTION TIMETABLE 2015 Distribution of Category 1 circular to Oceana shareholders Mid June Shareholder vote to approve acquisition and proposed rights offer resolutions Mid-late July Completion of acquisition, pay-away and distribution of proposed rights offer circular Late July Launc
Slide 39: OCEANA/GROUP |Y
OCEANA/GROUP |Y af?