Zeder Investments Limited · JSE:ZED
Zeder Investments — Shareholder Meeting (June 2017)
28 slides from Zeder Investments's shareholder meeting presentation, Jun 23, 2017
Slide 1: Annual General Meeting
Annual General Meeting Presented by: Norman Celliers Chief executive officer 23 June 2017
Slide 2: An investment holding company: Company overview
An investment holding company Company overview We play an active role in investee companies through strategic interests with a controlling influence. Business definition Strategic Focus • An actively managed investment holding Industry: • Agribusiness company listed on the Johannesburg Sub‐sector: •
Slide 3: Challenging conditions prevailed
Challenging conditions prevailed Performance review The year in review was characterised by extremely challenging environmental conditions exacerbated by high levels of political Macro environment and economical volatility.
Slide 4: Sum-of-the-Parts
Sum‐of‐the‐Parts Performance review From an intrinsic value point of view, Zeder reported strong growth for the year ended 28 February 2017, but has since experienced a pull‐back largely due to the FY2017 subsequent release of Pioneer’s interim results. Noteworthy observations: • Gearing increased f
Slide 5: Intrinsic value growth
Intrinsic value growth Performance review Despite this recent pull‐back, the overall growth in value has been encouraging over the past 5 years following the implementation Historical overview of our amended strategy. R’bn R/share 16.00 12.00 14.00 14.71 10.00 12.88 12.00 8.53 8.00 10.00 7.44 7.47 6
Slide 6: Recurring headline earnings
Recurring headline earnings Performance review Recurring headline earnings from investments increased by 2% to R821m but translated into only a marginal improvement of 0.5% per share for the FY2017 year ended 28 February 2017. Noteworthy observations: • R1.45bn charge correlates to the issuing of 20
Slide 7: Management fees internalised
Management fees internalised Performance review The pressing issue of the management agreement was successfully addressed with the final R75m paid during the year Management agreement ‐ no further fees due to PSG in terms hereof. Management Fees (R’m) Base Performance
Slide 8: Earnings and dividend growth
Earnings and dividend growth Performance review Over the past 5 years we achieved our objectives with positive trends – we aim to regain this momentum following current challenging cycle. Historical overview Recurring Headline Earnings Dividends R’million R’million 800.00 200.00 189.76 691 700.00 63
Slide 9: Total shareholder return
Total shareholder return Performance review An improved performance has ensured that Zeder’s overall shareholder value creation since inception has been attractive. Shareholder value 5‐years 5‐years 10‐years 30.0% 25.0% 26.8% 25.0% 20.0% 17.1% 15.0% 15.8% 10.0% 11.6% 11.5% 10.0% 7.6% 8.1% 5.0% 0.0%
Slide 10: Robust portfolio with upside
Robust portfolio with upside Portfolio evaluation We have a stable and resilient portfolio with growth plans in place that should deliver against targets over medium term. Portfolio construction Noteworthy observations: • Values as per reported results for year ended 28 February 2017 • Unlisted comp
Slide 11: Business overview (Pioneer)
Business overview Portfolio evaluation Pioneer is South Africa’s 2nd largest food producer with leading market share positions across a number of core categories and extensive geographical footprint and penetration.
Slide 12: Historical performance (Pioneer)
Historical performance Portfolio evaluation Pioneer has performed exceptionally well over the past 5 years but has experienced a pull‐back from its highs of 2015… RHE (R'm) RHEPS (Rand per share) 1,800 1,637 10.00 1,534 8.83 1,600 9.00 8.32 1,400 8.00 1,242 6.78 1,200 7.00 6.00 1,000 853 4.70 726 76
Slide 13: Interim results and outlook
Interim results and outlook Portfolio evaluation … largely due to the anticipated impact of the drought as reflected in its recent interim results. However, the medium to long term outlook remains positive.
Slide 14: Business overview (Capespan)
Business overview Portfolio evaluation Capespan is an internationally diversified group with a primary exposure to fruit farming, marketing, distribution, port logistics and related services.
Slide 15: Historical performance (Capespan)
Historical performance Portfolio evaluation Capespan reported a decline in profits due to challenges in UK and a reduction in available fruit volumes due to El Nino – but underlying growth encouraging. Revenue (R’m) EBITDA (R’m) 9,000 8,311 350 7,392 7,688 299 8,000 7,149 300 7,000 250 5,631 250 228
Slide 16: Divisions and outlook
Divisions and outlook Portfolio evaluation Despite the largely once‐off decline in RHEPS, the underlying divisions remain on track to deliver target profits in the medium term. • > R1.3bn in assets • ~ 1,000 ha grapes • ~ Citrus and Pome • Maturing bio assets • Steady improvement • Global earnings •
Slide 17: Business overview (Zaad)
Business overview Portfolio evaluation Zaad is a specialist agricultural seed company that develops and supplies a broad basket of proprietary seeds to more than 96 international markets. Zaad
Slide 18: Historical performance (Zaad)
Historical performance Portfolio evaluation Zaad reported an encouraging increase in RHEPS despite tough trading conditions benefitting from new investments, including Farm AG. Zaad Revenue (R'm) EBITDA (R'm) 1,600 250 232 1,349 219 1,400 1,226 200 1,200 947 142 1,000 150 800 92 600 100 465 400 257
Slide 19: Post balance sheet investment
Post balance sheet investment Portfolio evaluation An investment has been made in Turkey where we acquired a 35% interest in May Seeds. Zaad Company overview • Biggest independent seed company in Turkey • Family owned business • Strong management team • Locally bred and adapted products ‐ strong loc
Slide 20: Business overview (Kaap Agri)
Business overview Portfolio evaluation Kaap Agri is South Africa’s leading Agri‐related retail, trade, supply and services company.
Slide 21: Historical performance (Kaap Agri)
Historical performance Portfolio evaluation Kaap Agri reported a steady increase in RHEPS and longer term outlook remains positive. Revenue (R'm) EBITDA (R'm) 6,000 5,653 400 368 5,341 4,875 350 5,000 311 4,008 300 263 4,000 3,212 250 219 3,000 2,624 200 183 147 150 2,000 100 1,000 50 ‐ ‐ Sep 11 Sep
Slide 22: JSE listing and outlook
JSE listing and outlook Portfolio evaluation The group has announced that its current business plans should generate annual profits in excess of R500m in the medium to long term. • Listing on the JSE main board Monday, 26 June 2017 Good luck to team • Restructuring over past 5 years Clear divi
Slide 23: Business overview (Agrivision Africa)
Business overview Portfolio evaluation Agrivision Africa is a vertically integrated, grain‐related food supplier that farms, mills and distributes products in the northern region of Zambia and southern parts of the DRC. Farming & Development Milling & Processing Brands & Distribution • 4,200 ha (irr
Slide 24: Agricultural development
Agricultural development Portfolio evaluation We have a total of 6,700 ha (4,200 ha irrigated) and have managed to deliver acceptable average yields. Soya yield Wheat yield (tons per hectare) (tons per hectare) 4 3.61 9 8.16 7.92 7.73 4 3.27 8 7.38 3.10 6.66 2.84 2.85 7 3 6 3 5 2 4 2 3 1 2 1 1 0 0 2
Slide 25: Financial performance (Agrivision)
Financial performance Portfolio evaluation Operational and financial trends are encouraging and Agrivision reported a profit of $1,3m for 2016. Revenue (US$'000) EBITDA (US$'000) 45,000 8,000 7,326 39,718 40,000 7,000 35,000 32,532 31,711 6,000 30,000 5,000 25,000 4,000 3,576 20,000 2,831 14,304 3,0
Slide 26: Business overview (Quantum)
Business overview Portfolio evaluation Quantum is South Africa’s #1 commercial egg supplier and operates a regionally dominant and nationally recognised premium animal feeds business. Farming
Slide 27: Financial performance (Quantum)
Financial performance Portfolio evaluation Quantum’s repositioning focus has ensured the delivery of profits instead of losses during this tough cycle – should benefit from current favourable pricing. Revenue (R'm) EBITDA (R'm) 4,500 250 220 3,913 4,000 3,561 3,483 3,468 200 3,500 150 134 3,000 2,50
Slide 28: The next chapter
The next chapter Conclusion With a strong existing platform and focused addition of new opportunities, the prospects are positive going forward. General commentary • We have a strong and well diversified portfolio that provides us with broad exposure to the industry • We have worked hard internally