Fantastic but expensive
On the surface, the Oceana results were very modest with diluted headline earnings per share (HEPS) for the six months to end March up only 7% and the dividend up 8%. But some digging is required as the company suffered a net foreign exchange loss of nearly R70m, compared to just under R8m in the previous year. With US-based fishmeal and fish oil specialist Daybrook Fisheries, which Oceana acquired last year, now contributing dollar earnings, this will fluctuate as the rand moves around. This is something shareholders are going to have to get used to. The other significant issue was the cost of the Daybrook transaction of R4.6bn, including the diluting effect of the rights issue. Operating profit without Daybrook would have been up 13% and Daybrook’s earnings were only included for one of the six-month periods being reported. That said, I have commented before that the Daybrook deal is a great one for Oceana and if we strip out the abnormal events discussed above, HEPS would have been better and the price-to-earnings ratio (P/E) would be in the high teens rather than the current 21 times. This is a great company but it’s expensive.
The Henrietta, a luxury residential development on the south-west corner of Covent Garden Piazza in London, is owned by Capco.