Oceana Group Limited · JSE:OCE
Oceana — H1 2022 Earnings Presentation
48 slides from Oceana's earnings presentation, Jun 3, 2022
Slide 1: Investor Presentation for the Six Months Ended 31 March 2022
INVESTOR PRESENTATION FOR THE SIX MONTHS ENDED 31 MARCH 2022 1
Slide 2: Legal Disclaimer and Basis of Preparation
LEGAL DISCLAIMER AND BASIS OF PREPARATION • For purposes of this document, the presentation (the “Presentation”) shall mean and include this slide deck, the oral presentation of the slides by Oceana Group Limited (the “Company”) and/or its advisers, any question-and-answer session that may follow th
Slide 3: Agenda
1 CHAIRMAN’S WELCOME & INTRODUCTION 2 GROUP FINANCIAL PERFORMANCE H1 2022 3 OPERATIONAL UPDATE (Mustaq Brey) (Ralph Buddle) (Neville Brink) 4 DAYBROOK PERFORMANCE 5 QUESTIONS 66 APPENDICES (Neville Brink /Ralph Buddle) 3
Slide 4: Chairman's Overview
CHAIRMAN’S OVERVIEW • Throughout this challenging period, the Board has remained committed to the highest levels of corporate governance and has acted with the best interests of its shareholders and stakeholders at heart. • PwC resigned as the Company’s external auditors late last Friday, ahead of M
Slide 5: Chairman's Overview: Auditors and Looking Forward
CHAIRMAN’S OVERVIEW Auditors • Key reason for PwC’s resignation, impairment of their independence due to doubt, given the strained relationship, as to whether there was objective and transparent communication with the Board. • Three months since the publication of Oceana’s audited accounts, PwC were
Slide 6: Group Financial Performance H1 2022
1 CHAIRMAN’S WELCOME & INTRODUCTION 2 GROUP FINANCIAL PERFORMANCE H1 2022 3 OPERATIONAL UPDATE (Mustaq Brey) (Ralph Buddle) (Neville Brink) 4 DAYBROOK PERFORMANCE 5 QUESTIONS 66 APPENDICES (Neville Brink /Ralph Buddle) 6
Slide 7: H1 2022: Financial Performance Overview
H1 2022 : FINANCIAL PERFORMANCE OVERVIEW REVENUE OPERATING COSTS OPERATING PROFIT PROFIT AFTER TAX 11% 4% 41% 52% Mar 22: R3.2bn (Mar 21: R3.6bn) Mar 22: R668m (Mar 21: R640m) Mar 22: R345m (Mar 21: R584m) Mar 22: R166m (Mar 21: R348m) CASH FROM OPERATIONS DEBT REPAID HEPS Dividend Cover R320m` R92m
Slide 8: H1 2022: Performance Overview
H1 2022 : PERFORMANCE OVERVIEW Difficult first half with revenue declining 11% and and gross margin 3.7% lower to 30.2% HEADWINDS TAILWINDS • Lower inventory levels (canned fish and fish • Higher mix of fresh pilchard landings and meal) and continued global supply chain increased cannery production
Slide 9: Segmental Review
SEGMENTAL REVIEW Revenue R mill R mill VAR KEY DRIVERS 1. Lower inventory levels and continued global supply chain Mar 22 Mar 21 disruptions impeded sales volumes. Increased freight on Canned fish & fishmeal (Africa) 1 1 840 2 010 (8%) imported pilchards 2. Extremely low opening inventory levels res
Slide 10: Canned Fish, FMO (Africa) – Lucky Star
CANNED FISH, FMO (AFRICA) – LUCKY STAR Statements of Decline in revenue primarily due to 10% decline in total • comprehensive income R mill R mill VAR canned fish volumes (low opening stock and supply chain Mar 22 Mar 21 disruptions) and 47% decline in fishmeal and fish oil volumes (lower opening st
Slide 11: Canned Fish, FMO (Africa) – Lucky Star
CANNED FISH, FMO (AFRICA) – LUCKY STAR CANNED FISH OPENING INVENTORY LEVELS (CARTONS) FMO (AFRICA) OPENING INVENTORY LEVELS (TONS) 2 500 6 000 5 000 2 000 4 000 1 500 3 000 1 000 2 000 500 1 000 0 - 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Available for sale FM FO • Lower inventory levels r
Slide 12: Canned Fish, FMO (Africa) – Lucky Star
CANNED FISH, FMO (AFRICA) – LUCKY STAR CANNED FISH PRODUCTION VOLUMES (CARTONS) H1 FRESH PILCHARD LANDINGS (TONS) 6 000 000 12 000 5 000 000 10 000 4 000 000 8 000 3 000 000 6 000 2 000 000 4 000 1 000 000 2 000 0 - 2019 2020 2021 2022 Allocation Landings Allocation Landings Allocation Landings Allo
Slide 13: Fishmeal & Fish Oil (US) - Daybrook
FISHMEAL & FISH OIL (US) - DAYBROOK Statements of • Low opening inventory levels, following the low prior season comprehensive income R mill R mill VAR fish catch, contributed to 33% lower fishmeal and 15% lower Mar 22 Mar 21 fish oil sales volumes Revenue 403 556 (28%) • Positive sales price moveme
Slide 14: Horse Mackerel, Hake, Lobster & Squid - BCP
HORSE MACKEREL, HAKE, LOBSTER & SQUID - BCP Statements of Horse Mackerel comprehensive income R mill R mill VAR • Sales volumes 15% lower due to lower catch rates in South Africa and scheduled maintenance in Namibia Mar 22 Mar 21 (fewer sea days) Revenue 801 813 (1%) • Strong demand-led pricing part
Slide 15: Commercial Cold Storage (CCS)
COMMERCIAL COLD STORAGE (CCS) Statements of Decline in revenue and operating profit was due primarily comprehensive income R mill R mill VAR to an overall 9% decrease in occupancy levels : Mar 22 Mar 21 • Western Cape – lower volumes of imports constrained by port disruptions, and container pricing
Slide 16: Financial Position
FINANCIAL POSITION Restated 1. Capital expenditure (excluding the joint operation) was R’million Interim Results Interim Results % lower than the prior period at R118 million (March Mar 22 Mar 21 2021: R162 million). Property, plant & equipment* 1 2 723 2 643 3% 2. Goodwill, intellectual property an
Slide 17: Net Cash and Cash Equivalents
NET CASH AND CASH EQUIVALENTS R’M Notes: 1) Debt service ,includes R22m lease liability repayment 2) Capital expenditure, is net of proceeds on disposal of assets of R1m 3) Net totals of Cash and Cash Equivalents = Cash and Cash Equivalents net of any bank overdrafts 17
Slide 18: Group Debt
GROUP DEBT Notes March 22 March 21 VAR 1. Settlement of term debt and higher cash balances due to lower AFRICA R million stock levels and delayed final dividend (Mar 21: excludes OET restricted cash of R379 million) Gross debt 1 245 1 482 (16%) 2. R449 million (Mar 21: 503 million) of short term fac
Slide 19: Working Capital Management
WORKING CAPITAL MANAGEMENT 138 Reduction in net working capital driven by: • Inventory: - Inventory above prior year due to high levels of 95 Lucky Star frozen fish inventory levels 79 145 • Debtors / creditors: 51 - Terms largely in line with prior years 109 96 55 58 44 50 37 38 40 36 33 2020 2021
Slide 20: Interim HEPS / DPS Trend and Dividend Cover
INTERIM HEPS / DPS 5 YEAR (INTERIM) HEPS/DPS TREND 300,0 3,0 250,0 2,5 200,0 2,0 Dividend Cover (times) ZAR cents / share 150,0 1,5 100,0 1,0 50,0 0,5 0,0 0,0 2018 2019 2020 2021 2022 F Interim HEPS Interim DPS Div Cover Note: 2018 excludes the once off US deferred tax benefit 20
Slide 21: Operational Update
1 CHAIRMAN’S WELCOME & INTRODUCTION 2 GROUP FINANCIAL PERFORMANCE H1 2022 3 OPERATIONAL UPDATE (Mustaq Brey) (Ralph Buddle) (Neville Brink) 4 DAYBROOK PERFORMANCE 5 QUESTIONS 66 APPENDICES (Neville Brink /Ralph Buddle) 21
Slide 22: Operational Update: Lucky Star
Canned Fish Fishmeal & Fish Oil (Africa) OPERATIONAL UPDATE LUCKY STAR 22
Slide 23: Canned Fish – Lucky Star
CANNED FISH – LUCKY STAR Grow canned fish volumes through affordability and availability strategy. TAILWINDS CANNED FOODS – SALES VOLUMES FY22 v FY21 1 600 7 000 • Continued customer investment in Lucky Star shelf 1 400 space 6 000 1 200 • Cost pressure and supply shortage in competing 5 000 protein
Slide 24: Canned Fish – Lucky Star: Headwinds
CANNED FISH – LUCKY STAR HEADWINDS HOUSEHOLD FOOD INDEX APRIL 22 VS APRIL 21 • Weak consumer status 45% 40% • Upward pressure on raw material cost – weaker 35% Rand, freight and fuel costs 30% • Cost push on cans, tomato paste and other 25% packaging 20% • Extended freight transit times 15% 10% • Fr
Slide 25: Canned Fish – Lucky Star: Frozen Fish Procurement
CANNED FISH – LUCKY STAR FROZEN FISH PROCUREMENT – OCTOBER TO APRIL – 2018 TO 2022 90 000 80 000 70 000 60 000 50 000 40 000 30 000 20 000 10 000 - April 2018 April 2019 April 2020 April 2021 April 2022 • Optimal canned fish inventory volumes are sustained by a consistent and diversified supply of f
Slide 26: 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 & red-eye catches in the early part of the • Higher freight costs season have been encouraging, despite a late start to the season • C
Slide 27: Fishmeal & Fish Oil (Africa) - Lucky Star
FISHMEAL & FISH OIL (AFRICA) - LUCKY STAR ANCHOVY & RED-EYE LANDINGS – OCTOBER TO MAY (TONS) FISH OIL & FISH MEAL – H1 USD PRICING AND YIELD % 75 000 3 500 25,0% 3 000 60 000 20,0% 2 500 45 000 15,0% USD / ton 2 000 Yield (%) 1 500 30 000 10,0% 1 000 15 000 5,0% 500 - - 0,0% 5 Yr Av 2018/19 2019/20
Slide 28: Operational Update: Daybrook
Fishmeal & Fish Oil (US) OPERATIONAL UPDATE DAYBROOK 28
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. MENHADEN LANDINGS 2022 SEASON TO DATE (MILLION FISH) 140 000 TAILWINDS 120 000 • All 12 vessels operation
Slide 30: Daybrook Fishmeal and Fish Oil Pricing
FISHMEAL & FISH OIL (US) - DAYBROOK DAYBROOK FISHMEAL AND FISH OIL PRICING FISHMEAL PRICING (USD / ton) 2 000 HEADWINDS 1 500 • Low opening stock balances impacting H1 2022 1 000 performance 500 • Uncontrollable factors influencing fishing e.g. weather - • Condition of fish e.g. lower oil yields 1 2
Slide 31: Operational Update: Blue Continent Products
Horse mackerel Hake Lobster & squid OPERATIONAL UPDATE BLUE CONTINENT PRODUCTS 31
Slide 32: Horse Mackerel - BCP
HORSE MACKEREL - BCP Secure quota to optimise vessel capacity, whilst operating an efficient fleet. TAILWINDS HEADWINDS • Continued strong demand (and firm pricing) for low- • Unpredictable catch rates cost protein across Africa • Cost inflation due to higher fuel prices • No planned maintenance for
Slide 33: Hake / Lobster / Squid - BCP
HAKE / LOBSTER / SQUID - BCP Secure quota to optimise vessel capacity, whilst operating an efficient fleet. TAILWINDS HEADWINDS • 15-year fishing rights secured at increased proportion • 5% TAC reduction in 2022 (industry wide) of TAC (hake and south coast rock lobster) • Continued poor industry cat
Slide 34: Operational Update: Commercial Cold Storage
Commercial Cold Storage OPERATIONAL UPDATE 34
Slide 35: Commercial Cold Storage (CCS)
COMMERCIAL COLD STORAGE (CCS) Consolidate and optimise coastal stores and restore inland stores to profitability. TAILWINDS HEADWINDS • Significantly improved Gauteng occupancies • Port and supply chain disruptions impact on Western Cape − long-term fixed reservation from March 2022 • Pressure on ma
Slide 36: Daybrook Performance
1 CHAIRMAN’S WELCOME & INTRODUCTION 2 GROUP FINANCIAL PERFORMANCE H1 2022 3 OPERATIONAL UPDATE (Mustaq Brey) (Ralph Buddle) (Neville Brink) 4 DAYBROOK PERFORMANCE 5 QUESTIONS 66 APPENDICES (Neville Brink /Ralph Buddle) 36
Slide 37: Increasing Global Demand for Protein
INCREASING GLOBAL DEMAND FOR PROTEIN Kg/year PER CAPITA FISH CONSUMPTION BY REGION COMMENTARY 50 45 • As a source of protein, fatty acids and micronutrients fish will 40 remain key to global diets and playing a key role in food 35 security 30 25 20 • By 2030, it is projected that 90% of fish product
Slide 38: Daybrook Performance: 20 Year Gulf Menhaden Landings
DAYBROOK PERFORMANCE In previous years, a strong catch in Weeks 1 – 6 often contributed to above-average performance over the season 20 YEAR GULF MENHADEN LANDINGS (MILLION FISH) BP OIL OCEANA ACQUISITION Record named storm 900 000 KATRINA SPILL (JULY) seasons (incl. IDA) 800 000 700 000 600 000 500
Slide 39: Daybrook Performance: Profit and HEPS Accretion
DAYBROOK PERFORMANCE OPERATING PROFIT AND PBT ACCRETION HEPS ACCRETION 800 3 000 35% 700 30% 2 500 600 25% 2 000 500 20% R million 400 1 500 15% 300 1 000 10% 200 500 5% 100 - - 0% 2015 2016 2017 2018 2019 2020 2021 -5% Operating profit Profit before tax 2015 2016 2017 2018 2019 2020 2021 Operating
Slide 40: Daybrook Commercial Rationale Scorecard
DAYBROOK COMMERCIAL RATIONALE 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 a
Slide 41: Questions
SE OCEANA/GROUP POSITIVELY IMPACTING LIVES QUESTIONS "\ Form
Slide 42: Thank You
SE OCEANA/GROUP POSITIVELY IMPACTING LIVES THANK YOU "\ Oia
Slide 43: Appendices
SE OCEANA/GROUP POSITIVELY IMPACTING LIVES APPENDICES "\ Oia
Slide 44: Appendices: H1 2022 KPI Overview
H1 2022 KPI Overview APPENDICES 44
Slide 45: H1 2022 Key Performance Indicators
H1 2022 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) 1 734 (6%) Horse mackerel Revenue (R’m) 442 (6%) Sales volumes (000 cts) 4 175 (10%) Sales volumes (mt) 23 665 (15%) Own cart
Slide 46: H1 2022 Key Performance Indicators
H1 2022 KEY PERFORMANCE INDICATORS CANNED FISH, FMO (AFRICA) – LUCKY STAR FISHMEAL & FISH OIL (US) - DAYBROOK CANNED FISH Price increase Opening Inventory R / ctn 5% tons 39% Volumes sold Total volumes sold Ctns 10% tons 45% Landings(*) Frozen fish procurement WR tons 68% Tons 6% Fishmeal price Net
Slide 47: H1 2022 Key Performance Indicators
H1 2022 KEY PERFORMANCE INDICATORS HORSE MACKEREL, HAKE - BCP LOBSTER, SQUID - BCP HORSE MACKEREL Landings LOBSTER Landings tons 15% tons 60% Sea Days - Namibia Live selling price Days 17% $/kg 1% Catch rates - RSA SQUID Landings ton / day 35% tons 59% Average sales price Average exported tons 5% sa
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