Oceanus Group

[shanrui_91]

I think this is a more important point:

"Given that the high mortality of abalones was a 'man-made factor', Oceanus is unable to make insurance claims on the losses, he added."

They hire 2 experts to prove that it was man-made mistakes, so that they cannot claim from insurance???

[d.o.g.]

Calling the discovery 'staggering', Oceanus executive chairman Ng Cher Yew

Doesn't sound very hands-on for an executive chairman if he didn't at least occasionally check in on the abalones.

the group has since removed the former chief executive, Yu De Hua, from the company, stripped him of his role as a legal representative, and seized all company seals from him.

If Yu De Hua had no role in the poor feeding of the abalones, there should have been no need to kick him out. He should have been a valuable aide in helping to find a solution. Instead he is being treated like he is part of the problem. Maybe there is a hint here.

We destroyed the seals and registered new seals in China

This seems rather extreme and would suggest a complete loss of trust in the former seal holder.

Though the experts expressed that this problem normally does not produce mortalities of the level recorded on our farms, their calculation of the empty shell volumes in the farms sampled could theoretically support the numbers

It would be interesting to know just what kind of mortalities are normally produced by poor feeding and poor breeding, and to understand just how large the deviation was in Oceanus' case. Abalone farming is not a new industry - there should be plenty of data from past case studies.

Without a 100% audit of the farms (note that only sampling was done) it will be hard to pinpoint the cause. But I think it is highly likely that many of the dead abalones never existed to begin with. That would also explain why Oceanus now requires all the shells to be kept for audit purposes (this means they did not do so before, so they don't have the shells to prove the dead abalones were ever there).

Try to conjure a mental picture of the 42m "missing presumed dead" abalones. We know that New Moon abalones for example are typically 425g net weight. But this is all meat which is only 1/3 of the abalone, offal and the shell form another 1/3 each. So the whole abalone in the shell could weigh 1.3kg. Let's assume that not all the abalones were market-ready, so the weighted average is only 100g each. So we estimate that 4.2m kg of abalones went missing.

How big a pile is 4.2m kg of something? Well, imagine your standard Olympic-size swimming pool. It's 50m long, 25m wide, and perhaps 1.5m deep on average. It holds 1,875 cubic metres of water. 1 cubic metre weighs 1 ton. So a swimming pool holds 1,875 tons of water. We are looking for 4.2m kg (4,200 tons) of abalones. That's enough to fill 2.5 Olympic-size swimming pools.

How fast can you steal that volume of abalones? It would take a while - you can't do it overnight. If you did it at night it would take many weeks, and many trips involving large trucks leaving tracks and making lots of noise. And if all the abalones died, how fast could you throw away the shells so they couldn't be found later? It would also take a while, and the rotting flesh would stink up the place pretty bad too in the meantime.

The common-sense conclusion, then, is that the abalones were not stolen, nor did they die and have their shells go missing. Rather, they were never there to begin with.

Of course, I have no proof either way. I am merely working from circumstantial evidence provided by the company itself - all this is public information, though of course the conclusion is my own.

As usual, YMMV.

[Zelphon]

Wow.. D.O.G..

Ur analysis is TOP-KNOT !!!

[d.o.g.]

BTW here is an interesting nugget from the SGX announcement that Dr Ng Cher Yew has taken over as interim CEO:

He used to be a director of Wallstraits Pte Ltd... does the name sound familiar to forum oldtimers? Small world...

[yeokiwi]

BTW here is an interesting nugget from the SGX announcement that Dr Ng Cher Yew has taken over as interim CEO:

He used to be a director of Wallstraits Pte Ltd... does the name sound familiar to forum oldtimers? Small world...

From NextInsight,
"A former business associate, Dr Ng Cher Yew, took a 15 per cent stake in WallStraits as a seed investor. Kathy sent e-mails to 50 venture capitalists, one of which was Internet Media House Asia, whose CEO, Mr Frank Lavin, subsequently invested $1 million of the company’s money. (Mr Lavin became US Ambassador to Singapore in 2001.)"

[pianist]

BTW here is an interesting nugget from the SGX announcement that Dr Ng Cher Yew has taken over as interim CEO:

He used to be a director of Wallstraits Pte Ltd... does the name sound familiar to forum oldtimers? Small world...

From NextInsight,
"A former business associate, Dr Ng Cher Yew, took a 15 per cent stake in WallStraits as a seed investor. Kathy sent e-mails to 50 venture capitalists, one of which was Internet Media House Asia, whose CEO, Mr Frank Lavin, subsequently invested $1 million of the company’s money. (Mr Lavin became US Ambassador to Singapore in 2001.)"

i dun quite understand this post..care to elaborate your thoughts?

[yeokiwi]

BTW here is an interesting nugget from the SGX announcement that Dr Ng Cher Yew has taken over as interim CEO:

He used to be a director of Wallstraits Pte Ltd... does the name sound familiar to forum oldtimers? Small world...

From NextInsight,
"A former business associate, Dr Ng Cher Yew, took a 15 per cent stake in WallStraits as a seed investor. Kathy sent e-mails to 50 venture capitalists, one of which was Internet Media House Asia, whose CEO, Mr Frank Lavin, subsequently invested $1 million of the company’s money. (Mr Lavin became US Ambassador to Singapore in 2001.)"

i dun quite understand this post..care to elaborate your thoughts?

We are just surprised that Dr Ng was one of the directors and investor of Wallstraits Pte Ltd. Wallstraits forum was the predecessor of Afralug and valuebuddies.
Kathy Zhang, wife of the founder of WS, was working with Dr Ng(as implied by the paragraph above) before she and her husband started WS.
It was quite disappointing to see Dr Ng failed to learn from the s-chip investment failures by WS despite being the director of WS.

[pianist]

i see..thanks

[Qiaofeng]

The job of the Audit Committee is described in pages 35-36 of the 2010 Annual Report. As to whether the job was actually done, that is a different question and one that remains unanswered.

Page 39 (Interested Person Transactions) of the 2010 Annual Report mentions that $429k was paid for internal audit services, to "firms which a director has an interest in".

Apart from Lai Seng Kwoon, none of the other directors is described as having an interest in an audit firm. This strongly suggests that SK Lai & Co was again involved.

I wonder whether Mr Lai is able to truly fulfill his duty to the shareholders when he is both a director and a supplier of services. Wouldn't there be a conflict of interest? All the directors were collectively paid $295k for 2010, assuming that only the 4 non-executive directors were paid, then each got $74k on average. SK Lai & Co was paid $429k. Clearly Mr Lai's interest would lie with the $429k he was being paid for internal audit, rather than the $74k he got as a director.

Certainly, as far as internal audit is concerned, the firm that provided this service failed miserably, since it did not ensure that the company was following procedures to match the abalones recorded on the balance sheet with the abalones that were physically present.

A) Most critical failure is the stock take process and the internal audit to verify that process.

Mr Lai has left.
Have they engaged an auditing/surveyor firm to audit future counts?

B) Facts
Thought that U guys should know that the shells of the abalone is a prized product itself due to the irisdescent inner layer. So those shells will find a buyer and will NOT be lying around in the 2.5 Olympic swimming pools. They are used as intricate inlays for furniture and jewelry..
Btw, the abalone has seemingly no brain and is considered a primitive specie.

C) Odd that they engaged S. African experts.
1) Apparently, known cause for disease outbreaks comes in the form of viral outbreaks---AVG in Australia (Victoria) in 2007---which wiped out 90% of stocks. So in terms of massive decimation of stocks maybe the Aussies would have better experience than the S.Africans.
Massive decimation due to undernourishment seems to be not recorded--- so far.
2) China tops in aquaculture of abalones . China is the world's largest producer with over 300 abalone farms with production expected to produce over 26,000mt in 2007, excluding lower value species. Chile and South Africa: Combined production is only 1,000 metric ton thereabouts (exceed) in 2007---- i.e nowhere on the scale of China. Maybe Oceanus should consult Chinese academia/scientists rather than S. Africans.

[Musicwhiz]

The Straits Times
Mar 14, 2012
Oceanus share placement to raise $20m

By Melissa Tan

A FISHERY firm that has been struggling with quarterly losses, as well as the mysterious demise of millions of abalone, plans to raise $20 million via a share placement and restructure its loans.

Oceanus Group said yesterday that it will issue nearly 277.8 million shares to 19 placees at 7.2 cents apiece.

This is an approximate 9 per cent discount to the volume-weighted average price of 7.9 cents for the shares traded on Monday, the day the placement agreement was signed, Oceanus noted.

The placement shares represent about 14 per cent of the company's outstanding shares.

If the placement is approved by shareholders at an extraordinary general meeting and completed, the increase in the number of outstanding shares means the placees will hold 12 per cent of the firm.

Oceanus yesterday also said it had agreed with Ocean Wonder International, a unit of AIF Capital Asia; Hupomone Capital Partners and certain 'strategic investors' to restructure its debts due to them.

These loan investors had been given warrants in 2009 in exchange for lending money to Oceanus. The warrants are due to mature in July.

Under the agreement, the loan investors will effectively re-lend the full redemption value of their warrants - around $70.2 million - to Oceanus and be issued new warrants in exchange.

Each new warrant will allow the holder to buy one share of the firm at 7.2 cents, prior to or on the maturity date in July 2015.

Ocean Wonder International, which will re-lend $38.9 million out of the $70.2 million sum to Oceanus, will also be entitled to appoint one director to the Oceanus board under the conditions of its loan restructuring arrangement.

Oceanus added that it was discussing the restructuring of another loan from Great Ocean Partners to an Oceanus subsidiary.

The firm said it would use the proceeds from the share placement and loan restructuring for general corporate and working capital.

Last month, the firm posted a full-year loss of 1.17 billion yuan (S$233 million) for last year, compared with a 188.5 million yuan net profit the year before.

Revenue for the 12 months ended Dec 31 plunged 20 per cent to 288.4 million yuan.

Oceanus has been in the red since the second quarter ended June 30 last year.

It also incurred a fair value loss of 642.6 million yuan on biological assets for the three months ended Sept 30 last year, after the mysterious death of 42 million abalones.

It had said earlier that it plans to return to profitability by 2013.

Oceanus shares closed 0.2 cent higher at 8.1 cents yesterday.