Oceana Group Limited · JSE:OCE
Oceana — FY2022 Earnings Presentation
46 slides from Oceana's earnings presentation, Dec 6, 2022
Slide 1: Investor Presentation - Year ended 30 September 2022
INVESTOR PRESENTATION For the year ended 30 September 2022 6th December 2022
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
Slide 3: Agenda
AGENDA CHAIRMAN’S ADDRESS Mustaq Brey CEO OVERVIEW Neville Brink GROUP FINANCIAL RESULTS Ralph Buddle OPERATIONAL PERFORMANCE Neville Brink PROSPECTS Neville Brink QUESTIONS Neville Brink / Ralph Buddle 3
Slide 4: Chairman's Address
CHAIRMAN’S ADDRESS Mustaq Brey
Slide 5: CEO Overview
CEO OVERVIEW Neville Brink
Slide 6: CEO Overview
CEO OVERVIEW • Strong recovery in H2 after H1 impacted by low opening inventory levels • Daybrook’s best performance since the business was acquired in 2015 • Events of the last year resolved: • Stabilised executive team • Supportive Board, focused on governance throughout • Reversion in Westbank ac
Slide 7: Group Financial Results
GROUP FINANCIAL RESULTS Ralph Buddle
Slide 8: 2022 Performance Highlights
2022 PERFORMANCE HIGHLIGHTS REVENUE * OPERATING PROFIT * ^ HEPS * DIVIDEND COVER 12% 11% 17% 1.75x 2022: R8.1bn (2021: R7.3bn) 2022: R1.25bn (2021: R1.13bn) 2022: 626.0c (2021: 536.2c) 2022: 346c (2021: 358c) REVENUE - Total OPERATING PROFIT ^ - Total HEPS - Total NET DEBT TO EBITDA 11% 6%
Slide 9: Statement of Comprehensive Income Overview
STATEMENT OF COMPREHENSIVE INCOME OVERVIEW * Restated 1. Higher fishmeal and oil sales, positive pricing across most R’million 2022 2021 VAR products and the benefit of a weaker exchange rate on export Revenue 1 8,148.5 7,295.9 11.7% and foreign revenue with H1 impacted by lower opening stock Gross
Slide 10: Discontinued Operations
DISCONTINUED OPERATIONS On 4th October 2022 Oceana announced that it had entered into an Operating profit for segmental disclosure differs to that for discontinued agreement to dispose of CCS subject to regulatory approvals (EV of R895 operation disclosure due to intercompany eliminations for revenu
Slide 11: Revenue and Operating Profit Analysis
REVENUE AND OPERATING PROFIT ANALYSIS * REVENUE OPERATING PROFIT * From continuing operations. CCS has been treated as a discontinued operation having met disposal conditions of IFRS 5. Increase Decrease Total 11
Slide 12: Operating Profit Segmental Analysis
OPERATING PROFIT SEGMENTAL ANALYSIS * OPERATING PROFIT H1 OPERATING PROFIT H2 OPERATING PROFIT FULL YEAR 700 700 700 36% 51% 11% 600 600 600 500 500 500 400 400 400 300 300 300 200 200 200 100 100 100 - - - Canned Fish / FMO FMO Horse mackerel, Canned Fish / FMO FMO Horse mackerel, Canned Fish / FMO
Slide 13: Accounting Treatment - Westbank
ACCOUNTING TREATMENT- WESTBANK FY 21 – ASSOCIATE TO JOINT OPERATION FY 22 – JOINT OPERATION TO ASSOCIATE • Board communicated process undertaken with • Westbank accounting treatment has reverted to various external advisors and PWC equity accounting • Joint operation accounting treatment adopted • T
Slide 14: Statement of Financial Position Overview
STATEMENT OF FINANCIAL POSITION OVERVIEW Restated 1. Mainly goodwill, intellectual property and trademarks arising R’million 2022 2021 VAR from the Daybrook acquisition. Increase relates to higher Property, plant & equipment 1,949.4 2,078.2 (6.2%) exchange rate translation Intangible assets 1 5,846.
Slide 15: Working Capital and Capex
WORKING CAPITAL AND CAPEX * WORKING CAPITAL CAPITAL EXPENDITURE 91 62 228 113 92 231 222 55 55 16 33 25 91 53 24 61 17 25 2020 2021 2022 2020 2021 2022 Inventory Days Debtors Days Creditors Days Net Working Capital Days Expansion capex Replacement capex • FY21 expansion capex included Epping cold st
Slide 16: Debt Analysis
DEBT ANALYSIS R’million 2022 2021 VAR 1. Settlement of term debt offset by lower cash balances due to higher inventory levels Africa (R million) 2. Increase in net debt due to lower cash balances owing to Gross debt 1,173 1,249 (6%) higher net working capital levels of USD 72 million (Sep 21: USD Ne
Slide 17: Net Cash and Cash Equivalents
NET CASH AND CASH EQUIVALENTS * R’M Notes: 1) Capital expenditure is net of proceeds on disposal of assets of R8m 2) Debt service includes R43m lease liability repayment 3) From continuing operations. CCS has been treated as a discontinued operation having met disposal conditions of IFRS 5. 17
Slide 18: Operational Performance
OPERATIONAL PERFORMANCE Neville Brink
Slide 19: Operational Review: Fishmeal & Fish Oil (USA)
FISHMEAL & OPERATIONAL REVIEW FISH OIL (USA) 19
Slide 20: Fishmeal & Fish Oil (USA) - Daybrook
FISHMEAL & FISH OIL (USA) - DAYBROOK R’million 2022 2021 VAR FISH MEAL & OIL (US) - PERFORMANCE DRIVERS Revenue 1, 945.8 1,533.4 26.9% • Gulf Menhaden landings increased by 55% on 2021 with the Operating Profit 583.8 234.9 148.6% Westbank fleet benefitting from favorable fishing conditions and its f
Slide 21: Fishmeal & Fish Oil (USA) - Daybrook Performance
FISHMEAL & FISH OIL (USA) - DAYBROOK PERFORMANCE OPERATING PROFIT AND PBT ACCRETION HEPS ACCRETION 800 3,500 70% 700 3,000 60% 600 50% 2,500 500 40% 2,000 400 30% 1,500 300 20% 1,000 200 10% 100 500 0% - - -10% 2015 2016 2017 2018 2019 2020 2021 2022 2015 2016 2017 2018 2019 2020 2021 2022 Operating
Slide 22: Global FMO Supply and Demand
GLOBAL FMO SUPPLY AND DEMAND GLOBAL FISHMEAL OUTPUT GLOBAL FISH OIL OUTPUT 6,000 1,400 5,000 1,200 1,000 4,000 800 3,000 600 2,000 400 1,000 200 0 0 2018 2019 2020 2021 2022 2023*E 2018 2019 2020 2021 2022 2023*E Peru China PR Denmark, Norway, Iceland, Faroe USA Others Peru China PR Denmark, Norway,
Slide 23: Daybrook Sales and Inventory
DAYBROOK SALES AND INVENTORY CLOSING INVENTORY (TONS) 70,000 DAYBROOK FISHMEAL SALES VOLUMES 3,500 40,000 60,000 3,000 50,000 2,500 35,000 40,000 2,000 30,000 30,000 1,500 20,000 1,000 25,000 10,000 500 20,000 - - 2018 2019 2020 2021 2022 Sales volume (tons) Sales price (USD/ton) 15,000 10,000 70,00
Slide 24: Optimise Volume Through Innovation
OPTIMISE VOLUME THROUGH INNOVATION DAYBROOK PLANT OPTIMSE PROCESSING AND FISH STORAGE CAPACITY • construct additional fish storage pits • install higher capacity water-oil separation equipment • maintain improved bailing speeds WESTBANK FLEET OPTIMISATION AND INNOVATION • increase catch capacity • r
Slide 25: Operational Review: Canned Fish, Fishmeal & Fish Oil (Africa)
CANNED FISH OPERATIONAL REVIEW FISHMEAL & FISH OIL (Africa) 25
Slide 26: Canned Fish and Fishmeal and Oil (Africa)
CANNED FISH AND FISHMEAL AND OIL (AFRICA) R’million 2022 2021 VAR FMO (AFRICA) - PERFORMANCE DRIVERS Revenue 4,610.6 4,101.5 12.4% • Production and sales volumes increased due to : Operating Profit 475.4 463.5 2.6% • 8% improvement in anchovy landings OP margin 10.3% 11.3% (1.0%) • increase in pilch
Slide 27: Canned Fish and Fishmeal and Oil (Africa)
CANNED FISH AND FISHMEAL AND OIL (AFRICA) R’million 2022 2021 VAR CANNED FISH - PERFORMANCE DRIVERS Revenue 4,610.6 4,101.5 12.4% • Strong H2 volume growth, off the back of improved inventory supply, resulted in full year volumes being only Operating Profit 475.4 463.5 2.6% 1% below 2021 OP margin 1
Slide 28: Canned Fish Supply
CANNED FISH SUPPLY RAW FISH SUPPLY (TONS) 100,000 3% 7% • Lucky Star is the single largest procurer of pelagic fish 80,000 globally. Expected recovery of the SA resource which 8% will be margin enhancing 60,000 97% 93% 40,000 92% • A sophisticated supply chain has been developed with 20,000 a key fo
Slide 29: Lucky Star & Leveraging the Brand
LUCKY STAR & LEVERAGING THE BRAND GROW CANNED FISH CONSUMPTION BRAND INVESTMENT GROW SHARE OF CANNED FOODS 1 2 3 4 AVAILABILITY AFFORDABILITY VERSATILITY INNOVATION CANNED FISH CANNED FOODS MEAT / VEG PILCHARDS OTHER FISH SOYA
Slide 30: Lucky Star Brand Accolades
LUCKY STAR BRAND ACCOLADES ICON BRANDS AWARDS KASI BRANDS AWARDS Ask Africa Icon Brands 2022/2023 Ask Africa Kasi Brands 2022/2023 AWARDS #2 #1 ACTIVITY 31 Graduates - 2022 EDP 30
Slide 31: Operational Review: BCP
OPERATIONAL REVIEW BCP Horse mackerel Hake Lobster & squid 31
Slide 32: Horse Mackerel, Hake and Lobster/Squid
HORSE MACKEREL, HAKE AND LOBSTER/SQUID R’million 2022 2021 VAR HORSE MACKEREL - PERFORMANCE DRIVERS Revenue 1,592.1 1,661.0 (4.2%) Operating Profit • Sales volumes were 16% lower due mainly to lower catch 150.2 391.5 (61.6%) rates in both Namibia and South Africa. OP margin 9.4% 23.6% (14.2%) • Sche
Slide 33: Horse Mackerel, Hake and Lobster/Squid
HORSE MACKEREL, HAKE AND LOBSTER/SQUID R’million 2022 2021 VAR HAKE - PERFORMANCE DRIVERS Revenue 1,592.1 1,661.0 (4.2%) Operating Profit • Sales volumes reduced by 7% primarily due to lower vessel 150.2 391.5 (61.6%) utilization owing to fewer sea days due to unplanned OP margin 9.4% 23.6% (14.2%)
Slide 34: Horse Mackerel, Hake and Lobster/Squid
HORSE MACKEREL, HAKE AND LOBSTER/SQUID R’million 2022 2021 VAR LOBSTER & SQUID - PERFORMANCE DRIVERS Revenue 1,592.1 1,661.0 (4.2%) Operating Profit LOBSTER 150.2 391.5 (61.6%) OP margin • A decrease in the WCRL TAC together with lower catch 9.4% 23.6% (14.2%) rates reduced sales volumes however dem
Slide 35: Vessel Upgrades and Strategic Partnerships
VESSEL UPGRADES AND STRATEGIC PARTNERSHIPS VESSEL UPGRADES STRATEGIC PARTNERSHIPS • Pre-finalisation of FRAP, investment in the hake • Post-finalisation of FRAP, there are numerous & horse mackerel fleet focused on major opportunities in the hake, horse mackerel and maintenance squid sectors to ente
Slide 36: Prospects
PROSPECTS Neville Brink
Slide 37: The Oceana Pillars
THE OCEANA PILLARS LUCKY STAR FISHMEAL WILD BRAND & OIL CAUGHT Affordable branded protein Fish protein for animal / Fish protein for human for human consumption aquaculture consumption consumption LSM LSO LSO DAYBROOK BCP (canneries) (fishmeal plants) (Horse mackerel, hake, lobster & squid) 1. Lever
Slide 38: Questions
QUESTIONS Neville Brink / Ralph Buddle
Slide 39: Appendices
APPENDICES
Slide 40: Commercial Cold Storage
COMMERCIAL COLD STORAGE R’million 2022 2021 VAR CCS - PERFORMANCE DRIVERS Revenue 289.7 337.5 (14.2%) Operating Profit • Performance negatively impacted by a decline in 38.8 1 109.7 (64.6%) occupancy rates from 83% to 77% OP margin 13.4% 32.5% (19.1%) 1. 2021 includes R27,6m profit on sale of Bayhea
Slide 41: Disposal of CCS
DISPOSAL OF CCS • Announced on 4 October that Oceana has entered into transaction agreements to dispose of its interest in CCS for a purchase consideration of R760 million • Enterprise Value of R895 million including minority interests (30% in the Duncan Dock cold store and 31% in the Namibian cold
Slide 42: Prospects - Next 12 Months
PROSPECTS – NEXT 12 MONTHS FMO • US – good stock levels carried into FY23 will HAKE aid H1 performance • Improved vessel utilisation • FMO prices expected to normalise but FO to • Freon conversion and factory upgrade – 1 freezer vessel remain elevated against historical averages • Lower freight and
Slide 43: 2022 Key Performance Indicators
2022 KEY PERFORMANCE INDICATORS Segment KPI Unit 2022 2021 VAR CANNED FISH Revenue R'000 3,804 3,557 7.0% (Lucky Star) Sales volumes 000 cartons 8,818 8,933 (1.3%) Pilchard quota (own & contracted) tons 9,810 8,880 10.5% Pilchard Landings tons 6,759 5,564 21.5% Own cartons produced 000 cartons 4,627
Slide 44: 2022 Key Performance Indicators
2022 KEY PERFORMANCE INDICATORS Segment KPI Unit 2022 2021 VAR FMO (US) Revenue USD'000 116.9 103.1 13.3% (Daybrook) Menhaden landings 000 fish 704,289 453,600 55.3% Fishmeal sales volumes tons 36,479 44,160 (17.4%) Fish oil sales volumes tons 17,638 15,946 10.6% Operating profit % 30.0% 15.4% Av. F
Slide 45: 2022 Key Performance Indicators
2022 KEY PERFORMANCE INDICATORS Segment KPI Unit 2022 2021 VAR HAKE Revenue R'000 515 529 (2.7%) Sales volumes tons 11,687 12,559 (6.9%) Quota (own & contracted) tons 14,497 13,568 6.8% Av. Price movement Euro/ton 4% ● (14%) ● Fleet utilisation % (4%) ● 3% ● Catch rates tons/day 4% ● (7%) ● Vessel c
Slide 46: Thank You
— POSITIVELY IMPACTING LIVES — OCEANA/GROUP