Zeder Investments Limited · JSE:ZED
Zeder Investments — H1 FY2016 Earnings Presentation
22 slides from Zeder Investments's earnings presentation, Aug 31, 2015
Slide 1: Interim results 1H FY2016
Interim results 1H FY2016 Presented by: Norman Celliers
Slide 2: Business overview
Business overview Our corporate strategy and business definition remains unchanged… • Long-term value investor with a primary focus on Agribusiness, specifically the food and beverage sectors • Listed on the JSE – ZED - hybrid private equity vehicle • Key characteristics of investment considerations
Slide 3: Strategic focus
Strategic focus … with an expanded active strategy aimed at investing in and growing large businesses. Before 2012 Since 2012 Industry: • Agribusiness • Agribusiness Sub-sector: • Food and Beverages • Food and Beverages Geography: • South Africa (Direct) • South Africa (Direct) • Rest of World (via
Slide 4: Interim results - SOTP
Interim results - SOTP Zeder’s SOTP value per share increased by 13% to R10.37 as on 31 August 2015. Sum-of-the-parts (R/share) 12 10 10.37 9.18 8 6 5.26 4 4.35 3.48 2 2.74 2.11 0 28-Feb-10 28-Feb-11 28-Feb-12 28-Feb-13 28-Feb-14 28-Feb-15 31-Aug-15
Slide 5: Interim results – Earnings from investments
Interim results – Earnings from investments Earnings contribution from underlying portfolio companies increased substantially as a result of the Agri Voedsel merger… Total Per Share + 67% + 54% +12% +3% H1FY2015 H1FY2016
Slide 6: Interim results – Recurring headline earnings
Interim results – Recurring headline earnings … while, on a per-share basis, recurring headline earnings increased by 3.4% compared to first 6 month in prior reporting year. Recurring headline earnings from portfolio companies (cents per share) 50 46.1 45 Full Year 40 37.4 34 Full Year 35 Full Year
Slide 7: Portfolio distribution
Portfolio distribution Pioneer remains the largest investment but remainder of portfolio increasing in size and significance. R’m • 6 Core investments • Strong strategic influence • Portfolio value of R15.8bn • Pioneer ~ 71% of SOTP As reported for 28 Feb 2015 As adjusted for 31 Aug 2015
Slide 8: Portfolio review
Portfolio review Pioneer delivered strong results and reported an increase of 39% in Adjusted HEPS for their 6 months ended 31 March 2015… Recurring headline earnings from portfolio companies (cents per share) 800 700 678 Full Year 600 500 456 451 406 Full Year H1 400 Full Year 352 H1 300 219 231 20
Slide 9: Portfolio review
Portfolio review … and the trend in operational margin improvement has to be commended.
Slide 10: Portfolio review
Portfolio review Capespan is growing as an organisation with significant strategic alignment underway. 2011 2012 2013* 2014 Revenue (R’m) 2 759 5 232 7 149 7 392 Recurring headline earnings (R’m) 64 99 139 159 Recurring headline earnings (c/share) 21 31 44 49 Zeder successfully concluded the buy-out
Slide 11: Portfolio review
Portfolio review Zaad continues to grow revenues from existing business while investing in new opportunities, both locally and internationally. 2012 2013 2014 2015 Revenue (R’m) 249 294 465 947 Recurring headline earnings (R’m) 28 36 54 77 Recurring headline earnings (c/share) 314 349 406 444 Invest
Slide 12: Portfolio review
Portfolio review Kaap Agri delivered satisfactory results for 1st 6 months and is benefiting from non-agri growth. 2011 2012 2013 2014 Revenue (R’m) 2 624 4 233 5 530 6 528 Recurring headline earnings (R’m) 78 103 129 158 Recurring headline earnings (c/share) 106 148 183 224 Continue to invest and e
Slide 13: Portfolio review
Portfolio review Agrivision Africa remains in J-curve but has increased revenues and continues to grow. 2013 2014 (%) Revenue (R’m) 138 353 156 Operating (loss)/profit (R’m) (2.4) 5.1 n/a Recurring headline loss (R’m) (10.9) (11.7) n/a Successfully completed strategic equity participation of $30m
Slide 14: Portfolio review
Portfolio review Following a period of extreme challenges in the industry, Quantum delivered improved results. 2013 2014 (%) Revenue (R’bn) 3.5 3.6 3.1 Recurring headline (loss)/earnings (R’m) (80) 26 n/a Very strong interim results released – R62m headline earnings Note: Quantum Foods’ financial
Slide 15: Conclusion
Conclusion We remain optimistic about the prospects of the group. • Strong existing portfolio and management teams • Internal focus offers additional opportunities • Platform growth and adjacency expansion attractive • Strategic investment and diversification when appropriate Thank you
Slide 16: Fee discussions under way
ee @D/ZEDER Fee discussions under way
Slide 17: Fee summary
Fee summary • 2½ years ago, Zeder shareholders engaged with PSG to change the fee structure • Key shareholder concerns: Fee was based on NAV, which shareholders felt could be open to manipulation Effectively no performance fee element • The current fee structure became effective in March 2013 •
Slide 18: Are fees justified?
Are fees justified? • Shareholders should measure Zeder like a unit trust • Fact: all asset managers charge fees to manage their assets In many instances performance fees are earned if they outperform their benchmarks Flagship funds of asset managers charge 3% and more • Since inception (1 Dec 2
Slide 19: Current issues with the fees?
Current issues with the fees? • Due to the specific accounting of an investment company our fees are highlighted significantly more than in the unit trust world • Due to Zeder’s strong performance, the size and consequent payment of the management fees are putting pressure on its cash flow • Three m
Slide 20: Proposed amendments
Proposed amendments • There will be no change to the fee calculation • Payment of fees (both management and performance fees) will from now on always be in the form of Zeder shares All cash flow generated from Zeder’s underlying investments will then be available to pay dividends or to grow the Ze
Slide 21: Process
Process • Need to get additional support of major shareholders • Shareholders and regulatory authorities to approve by early 2016 • New fee structure effective for the Feb 2017 financial year • PSG cannot vote on proposed amendments [Note inserted on 27 Nov 2015: Please note that no progress has bee
Slide 22: Thank you Questions?
Thank you Questions? 22