Oceana Group Limited · JSE:OCE

Oceana — FY2021 Earnings Presentation

52 slides from Oceana's earnings presentation, March 2022

  1. Slide 1: Investor Presentation for the Year Ended 30 September 2021

    INVESTOR PRESENTATION FOR THE YEAR ENDED 30 SEPTEMBER 2021 1

  2. 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 foll

  3. Slide 3: Agenda

    CHAIRMAN’S WELCOME GROUP FINANCIAL TRADING UPDATE & INTRODUCTION PERFORMANCE 2021 1 2 3 (Mustaq Brey) (Ralph Buddle) (Ralph Buddle) OPERATIONAL FISHING RIGHTS APPENDICES 4 UPDATE 5 APPLICATION PROCESS 6 (Neville Brink) (Neville Brink) 3

  4. Slide 4: Chairman's Overview

    CHAIRMAN’S OVERVIEW 1. A challenging financial year end close • Whistle-blower event (mid October 2021) • ENS forensic investigation completed (24 December 2021) • Further insurance investigation (4 February 2022) • Accounting treatment technical review (Westbank investment, USD 3.5m receivable, ins

  5. Slide 5: Chairman's Overview: Board priorities

    CHAIRMAN’S OVERVIEW 6. Board priorities • Finalise September 2021 financial results for publishing, including obtaining technical and legal advise on several accounting treatment related matters: - Reviewed condensed results by 9 March 2022 - Audited AFS expected by 25 March 2022 • Engaged with the

  6. Slide 6: Chairman's Overview

    CHAIRMAN’S OVERVIEW The 2nd year of the global COVID-19 pandemic has tested us, but we have risen to the challenge Remembering and acknowledging those that have passed away from COVID-19 • Shams Pather, our lead independent director and chairman of audit committee who dedicated 25 years of his life

  7. Slide 7: Chairman's Overview: Appreciation

    CHAIRMAN’S OVERVIEW Appreciation Thank you to our team involved in our very successful 2021 fishing rights application process Thank you for your patience and support through the recent difficulties endured by the group • to our people and business partners • to our investors and lenders • to our cu

  8. Slide 8: Group Financial Performance

    CHAIRMAN’S WELCOME GROUP FINANCIAL TRADING UPDATE & INTRODUCTION PERFORMANCE 2021 1 2 3 (Mustaq Brey) (Ralph Buddle) (Ralph Buddle) OPERATIONAL FISHING RIGHTS APPENDICES 4 UPDATE 5 APPLICATION PROCESS 6 (Neville Brink) (Neville Brink) 8

  9. Slide 9: Financial Performance Overview

    FINANCIAL PERFORMANCE OVERVIEW REVENUE OPERATING COSTS OPERATING PROFIT PROFIT AFTER TAX 8% 17% 14% 12% 2021: R7.6bn (2020: R8.3bn) 2021: R1.4bn (2020: R1.7bn) 2021: R1.2bn (2020: R1.4bn) 2021: R719m (2020: R816m) HEPS DPS CASH FROM OPERATIONS DEBT REPAID R1.5bn ` R222m ` 12% ` 9%` 2021: 358c (2020:

  10. Slide 10: 2021 Performance Overview

    2021 PERFORMANCE OVERVIEW Good operating performance in 2021 off strong 2020 base, HEPS maintained at pre-COVID 19 levels TAILWINDS HEADWINDS • Strong demand across all products – in-home • Lower stock availability caused by global supply chain consumption up, shortage of fresh product challenges an

  11. Slide 11: Segmental Review

    SEGMENTAL REVIEW Revenue R mill R mill VAR KEY DRIVERS Note 2021 2020 Canned fish & fishmeal (Africa) 1 4 101 4 472 -8% 1. Lower supply and landings offset by price movement Fishmeal & fish oil (US) – 2 1 533 1 906 -20% ZAR 2. Lower catch offset by price movement and stronger Horse mackerel & hake 3

  12. Slide 12: Canned Fish, FMO (Africa) – Lucky Star

    CANNED FISH, FMO (AFRICA) – LUCKY STAR Statements of comprehensive income R mill R mill VAR • Decline in revenue primarily due to 6% decline in total canned fish volumes (supply constraints) and 31% decline 2021 2020 in fishmeal and fish oil volumes (lower landings). Lower Revenue 4 101 4 472 -8% vo

  13. Slide 13: Fishmeal & Fish Oil (US) - Daybrook

    FISHMEAL & FISH OIL (US) - DAYBROOK Statements of • Decline in revenue primarily due to 12% decline in sales comprehensive income R mill R mill VAR volumes off a 20% lower fish catch and a 11% 2021 2020 strengthening in the ZAR vs the US dollar. Lower volumes were offset by improved pricing Revenue

  14. Slide 14: Horse Mackerel, Hake, Lobster & Squid - BCP

    HORSE MACKEREL, HAKE, LOBSTER & SQUID - BCP Statements of • Revenue increase driven by favourable horse mackerel comprehensive income R mill R mill VAR pricing in traditional African markets, improved live 2021 2020 lobster prices in China and higher squid volumes. Lower hake volumes and European pr

  15. Slide 15: Commercial Cold Storage (CCS)

    COMMERCIAL COLD STORAGE (CCS) Statements of comprehensive income R mill R mill VAR • Revenue decline due to lower occupancy levels impacted by: 2021 2020 - reduced imports from global container shortage and port Revenue 338 385 -12% logistic challenges Operating profit before non- - Lucky Star froze

  16. Slide 16: Reviewed Financial Position

    REVIEWED FINANCIAL POSITION Restated 1. Expansion and replacement capex of R525m incurred, includes a Reviewed Reviewed right of use asset of R69m (2020: R347m+ R24m Right of use asset). R’million Notes Results Results % 2. Goodwill, intellectual property and trademarks arising from the 2021 2020 Da

  17. Slide 17: Net Cash and Cash Equivalents

    NET CASH AND CASH EQUIVALENTS R’M Notes: 1) Debt service ,includes R49m lease liability repayment Increase Decrease Total 2) Capital expenditure, is net of proceeds on disposal of assets of R38m 17

  18. Slide 18: Debt

    DEBT Notes 2021 2020 VAR 1. Settlement of term debt, partly offset by lower cash balances. AFRICA R million 2. R91m of short term facilities utilised at year end of the R1.1bn Gross debt 1 248 1 533 (19%) available. Net debt 1 885 1 068 (17%) 3. Lower cash balances following a poor fishing season. S

  19. Slide 19: SA Long Term Debt - Refinance

    SA LONG TERM DEBT - REFINANCE CURRENT PROFILE REFINANCED PROFILE 92% 44% 20% 12% 12% 8% 6% 6% FY22 FY23 FY22 FY23 FY24 FY25 FY26 FY27 • SA debt refinanced on similar terms & covenants but with longer-dated repayment periods • Includes sustainability overlay in pricing (specific annual criteria) • In

  20. Slide 20: HEPS / DPS

    HEPS / DPS 5 YEAR HEPS / DPS TREND 700 600 500 1.36x 1.60x 400 1.50x 1.50x 300 628 523 544 550 200 392 416 393 363 358 100 90 0 2017 2018 2019 2020 2021 Headline Earnings per Share Dividends per share 1. 2018 excludes the once off US deferred tax benefit 2. 2021 DPS includes final DPS of 248c per sh

  21. Slide 21: Trading Update

    CHAIRMAN’S WELCOME GROUP FINANCIAL TRADING UPDATE & INTRODUCTION PERFORMANCE 2021 1 2 3 (Mustaq Brey) (Ralph Buddle) (Ralph Buddle) OPERATIONAL FISHING RIGHTS APPENDICES 4 UPDATE 5 APPLICATION PROCESS 6 (Neville Brink) (Neville Brink) 21

  22. Slide 22: Trading Update

    TRADING UPDATE HEPS and EPS for H1/FY22 are likely to be more than 20% lower than H1/FY21 No trading range at this point due to the inherent uncertainty of fish catch rates for the remaining three weeks The reduction in earnings due to: • Lower opening fishmeal and fish oil inventory levels • Except

  23. Slide 23: Operational Update

    CHAIRMAN’S WELCOME GROUP FINANCIAL TRADING UPDATE & INTRODUCTION PERFORMANCE 2021 1 2 3 (Mustaq Brey) (Ralph Buddle) (Ralph Buddle) OPERATIONAL FISHING RIGHTS APPENDICES 4 UPDATE 5 APPLICATION PROCESS 6 (Neville Brink) (Neville Brink) 23

  24. Slide 24: Operational Update: Lucky Star

    Canned Fish Fishmeal & Fish Oil (Africa) LUCKY STAR OPERATIONAL UPDATE 24

  25. Slide 25: Canned Fish (Marketing) – Lucky Star

    CANNED FISH (MARKETING) – LUCKY STAR Grow canned fish volumes through affordability and availability strategy TAILWINDS HEADWINDS • The retail and wholesale trade set to continue • In the short-term supply chain disruptions will positioning canned pilchards as the affordable continue to negatively i

  26. Slide 26: Canned Fish (Operations) – Lucky Star

    CANNED FISH (OPERATIONS) – LUCKY STAR Reduce cost and maximise capacity to support canned fish affordability strategy TAILWINDS HEADWINDS • Fishing fleet and logistics infrastructure are • Increased cost of tin cans and tomato paste working well in the early part of the fishing • Slow recovery of su

  27. Slide 27: Fishmeal & Fish Oil (Africa) - Lucky Star

    FISHMEAL & FISH OIL (AFRICA) - LUCKY STAR Drive consistent performance by maximising production capacity and improving product quality TAILWINDS HEADWINDS • Anchovy and redeye herring resources remain in • Uncontrollable factors influencing fishing e.g. a healthy state weather • Continuous improveme

  28. Slide 28: Operational Update: Daybrook

    Fishmeal & Fish Oil (US) DAYBROOK OPERATIONAL UPDATE 28

  29. Slide 29: Fishmeal & Fish Oil (US) - Daybrook

    FISHMEAL & FISH OIL (US) - DAYBROOK Increase fish catch through fleet optimisation and innovation. Maximise production capacity and FMO quality. Enhance presence in high margin consumer markets. TAILWINDS HEADWINDS • Optimise underutilised production capacity • Uncontrollable factors influencing fis

  30. Slide 30: Fishmeal and Fish Oil - Global Outlook 2022

    FISHMEAL AND FISH OIL - GLOBAL OUTLOOK 2022 SUPPLY DEMAND DYNAMICS GLOBAL FISHMEAL PRODUCTION (‘000MT) • Cumulative global fishmeal production lower in 2021 but 7000 expected to return to 2020 levels of 5 million tons in 2022 6000 • Peru remains the biggest exporter of fishmeal and based on 5000 400

  31. Slide 31: Operational Update: Blue Continent Products

    Horse mackerel Hake Lobster & squid BLUE CONTINENT PRODUCTS OPERATIONAL UPDATE 31

  32. Slide 32: Horse Mackerel - BCP

    HORSE MACKEREL - BCP Secure quota to optimise and allow for growth in vessel capacity, whilst operating an efficient fleet. TAILWINDS HEADWINDS • Continued strong demand (and firm pricing) for • Cost inflation due to higher fuel prices and supply low-cost protein across Africa chain disruptions • No

  33. Slide 33: Hake - BCP

    HAKE - BCP Secure quota to optimise and allow for growth in vessel capacity, whilst operating an efficient fleet TAILWINDS HEADWINDS • 15-year fishing rights secured at increased • 5% TAC reduction in 2022 (industry wide) proportion of TAC • Cost inflation due to higher fuel prices and supply • Russ

  34. Slide 34: Lobster and Squid - BCP

    LOBSTER AND SQUID - BCP Secure quota to optimise and allow for growth in vessel capacity, whilst operating an efficient fleet TAILWINDS HEADWINDS • 15-year fishing rights/licenses secured for Squid • Cost inflation due to higher fuel prices and and SCRL supply chain disruptions • Increase in the WCR

  35. Slide 35: Operational Update: Commercial Cold Storage

    COMMERCIAL COLD STORAGE OPERATIONAL UPDATE 35

  36. Slide 36: Commercial Cold Storage (CCS)

    COMMERCIAL COLD STORAGE (CCS) Consolidate and optimise coastal stores and restore inland stores to profitability TAILWINDS HEADWINDS • Improved Gauteng occupancies • Potential supply chain disruptions from Russia Ukraine conflict − long term fixed reservation from March 2022 • Pressure on margins wi

  37. Slide 37: Fishing Rights Application Process

    CHAIRMAN’S WELCOME GROUP FINANCIAL TRADING UPDATE & INTRODUCTION PERFORMANCE 2021 1 2 3 (Mustaq Brey) (Ralph Buddle) (Ralph Buddle) OPERATIONAL FISHING RIGHTS APPENDICES 4 UPDATE 5 APPLICATION PROCESS 6 (Neville Brink) (Neville Brink) 37

  38. Slide 38: Fishing Rights Application Process (FRAP)

    FISHING RIGHTS APPLICATION PROCESS (FRAP) • DFFE published General Public Allocations on the allocations plus the 15-year rights allocations 28 February/1 March 2022 in 9 commercial fishing sectors • FRAP Allocation Process: - was fair and pragmatic - capital intensive sectors had greater weighting

  39. Slide 39: Thank You

    SE OCEANA/GROUP POSITIVELY IMPACTING LIVES THANK YOU \ UGE

  40. Slide 40: Appendices

    SE OCEANA/GROUP POSITIVELY IMPACTING LIVES APPENDICES "\ Oia

  41. Slide 41: Appendices: Oceana Overview

    OCEANA OVERVIEW APPENDICES 41

  42. Slide 42: Oceana Group

    OCEANA GROUP • A diversified fish protein company Level 1 over 45 000 B-BBEE direct and indirect • Operating primarily in SA, jobs Namibia and USA • Harvesting and procuring a diverse range of global marine 1st 525 000 tons fish resources, utilising over 50 most empowered food producer in 2019 proce

  43. Slide 43: Diversified Operations and Earnings

    DIVERSIFIED OPERATIONS AND EARNINGS NORTH AMERICA EARNINGS EUROPE EARNINGS 23% 5 27% FAR EAST EARNINGS FISHING GEOGRAPHIES 1% REST OFAFRICA EARNINGS 41 9% CUSTOMER GEOGRAPHIES SOUTH AFRICA AUSTRALIA EARNINGS EARNINGS 39% 1% EARNINGS PER REGION CAPE TOWN AS AT 30 SEPT 2021 HEAD OFFICE 16 5 2 335 12 1

  44. Slide 44: Diversified Operations and Earnings

    DIVERSIFIED OPERATIONS AND EARNINGS FISH SUPPLY SPECIES 4% 6% 17% 30% 24% 33% 24% 26% 37% Pilchard/sardines Anchovy/menhaden Horse Mackerel Hake & other *Fish supply and species data as at 30 September 2021 44

  45. Slide 45: Appendices: 2021 KPI Overview

    2021 KPI OVERVIEW APPENDICES 45

  46. Slide 46: 2021 Key Performance Indicators

    2021 KEY PERFORMANCE INDICATORS CANNED FISH, FISHMEAL AND FISH OIL HORSE MACKEREL, HAKE, LOBSTER & SQUID, CCS Segment KPI % VAR Segment KPI % VAR Canned fish Revenue (R’m) 3 557 -2% Horse mackerel Revenue (R’m) 956 9% Sales volumes (000 cts) 8 933 -6% Sales volumes (000 cts) 57 253 -1% Own cartons p

  47. Slide 47: 2021 Key Performance Indicators

    2021 KEY PERFORMANCE INDICATORS CANNED FISH, FMO (AFRICA) – LUCKY STAR FISHMEAL & FISH OIL (US) - DAYBROOK CANNED FISH Price increase Opening Inventory R / ctn 4% tons 36% Local volumes sold Volumes sold Ctns 5% M tons 12% Neighbouring country Landings volumes sold 11% tons 20% ctns Fish oil yield F

  48. Slide 48: 2021 Key Performance Indicators

    2021 KEY PERFORMANCE INDICATORS HORSE MACKEREL, HAKE - BCP LOBSTER, SQUID - BCP HORSE MACKEREL Landings LOBSTER Landings tons 1% tons 21% Sea Days - Namibia Live selling price Days 22% $/kg 37% Sea Days - RSA SQUID Landings Days 35% tons 185% Average sales price Average exported tons 21% sales price

  49. Slide 49: Appendices: Daybrook Scorecard, FRAP Allocations

    DAYBROOK SCORECARD FRAP ALLOCATIONS APPENDICES 49

  50. Slide 50: Daybrook Scorecard

    DAYBROOK SCORECARD MEASURE SCORECARD • Attractive IRR and strong earnings growth • Daybrook investment has been HEPS accretive, however earnings have been volatile due to largely uncontrollable factors i.e. global pricing, oil  yield • Value creation through fleet expansion and increased plant • Pl

  51. Slide 51: FRAP – Oceana Allocations

    FRAP – OCEANA ALLOCATIONS Retain allocated quota’s and grow volumes through SMME/new entrant partnerships 2021 (Pre FRAP) 2022 (Post FRAP) Variance TAC % Quota tons TAC % Quota tons TAC % Quota tons TAC Hake (Deep Sea) 8,97% 9 907 9,50% 10 488 0,53% 582 Pilchard 26,25% 4 677 24,94% 4 444 -1,31% (234

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Oceana Group — FY2021 Earnings Presentation on 6ix