Slide 1: Results presentation
Results presentation November 2016
Slide 2: Agenda
AGENDA Overview: H Lourens Financial Overview: A Muller Rest of Africa: J van Rhyn Egg Business: A vd Merwe Nova Feeds: H Lourens Farming Operations: H Lourens Outlook and management focus: H Lourens Results Presentation 2016 2
Slide 3: Overview
OVERVIEW • First full year with defensive broiler model Revenue EBIT • Solid performance from Nova Feeds with successful 13% 45% acquisition of Olifantskop feed mill • Layer business weak performance necessitated a model change • Rest of Africa - disappointing financial performance HEPS • Volatile e
Slide 4: Financial Overview
FINANCIAL OVERVIEW CP auantum
Slide 5: Statement of Income
STATEMENT OF INCOME 2016 2015 % Year ended 30 September Rm Rm change Revenue 3 913.1 3 468.3 13 Operating profit* 124.3 164.1 Income from associates 0.3 0.6 Net finance income 6.8 8.0 Profit before tax 131.4 172.7 Tax (40.0) (45.8) Profit for the year 91.4 126.9 * Operating profit includes capital i
Slide 6: Revenue Analysis (Rm)
REVENUE ANALYSIS (Rm) Total R3 913 million (2015: R3 468 million) 1 421 1 005 1 327 160 36% 26% 34% 4% Animal Eggs Farming Africa feeds 2015: 1 100 2015: 963 2015: 1 227 2015: 179 32% 28% 35% 5% Results Presentation 2016 6
Slide 7: Rand / $
RAND / $ 18 14.79* 16 12.02* 14 12 10 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 * Average for the financial year Results Presentation 2016 7
Slide 8: Segment Results
SEGMENT RESULTS 2016 2015 Adjusted operating profit Rm Rm Eggs (26.8) 31.7 Farming 61.0 47.0 Animal Feeds 72.5 65.5 Other African countries (0.2) 25.3 Head Office costs (17.1) (7.0) Total 89.4 162.5 Results Presentation 2016 8
Slide 9: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION 2016 2015 At year end Rm Rm Non-current assets 1 071.7 1 029.0 Net working capital 687.4 518.8 Non-current liabilities (236.1) (220.7) Cash 79.5 187.5 Total net assets 1 602.5 1 514.6 Borrowings (6.4) - Equity 1 596.1 1 514.6 Note: Effect of translation of foreign sub
Slide 10: Statement of Cash Flow
STATEMENT OF CASH FLOW 2016 2015 Year ended 30 September Rm Rm Cash operating profit 164.3 232.1 Working capital outflow (173.6) (53.6) Change in exchange rate 10.5 (18.4) Cash effect from hedging activities (3.0) 1.1 Tax paid (29.7) (15.8) Net finance income 7.3 8.5 Cash (utilised in)/generated by
Slide 11: Capital Expenditure
CAPITAL EXPENDITURE Future cash flow Rm Contractually committed - 2016 maintenance capex 12.4 Approved not committed - 2017 maintenance capex 31.8 - 2016 projects carried forward 7.2 - New investment in Africa 117.6 169.0 Results Presentation 2016 11
Slide 12: Operational Review: Rest of Africa
OPERATIONAL REVIEW: REST OF AFRICA
Slide 13: Rest of Africa: Zambia Macro factors
REST OF AFRICA ZAMBIA Macro factors • Low copper price caused economic slow down • Weaker ZMK increased soya costs • Increase in inflation lowered disposable income • Elections had negative effect on government spending • Drought effected electricity supply and raw material prices Results Presentati
Slide 14: ZMW / Rand
ZMW / RAND 1.0 0.9 0.73* 0.8 0.60* 0.7 0.6 0.5 0.4 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 * Average for the financial year Results Presentation 2016 14
Slide 15: Rest of Africa: Zambia Operational
REST OF AFRICA ZAMBIA Operational • Mega Eggs expansion successfully completed • Over supply of DOCs in the market • Egg volumes in the market increased • Chipata operation will be reviewed Conclusion and focus areas • Business is still profitable • Economic improvement expected • Implementation of
Slide 16: Rest of Africa: Uganda
REST OF AFRICA UGANDA Macro factors • Increase in raw material prices due to drought • Experienced regulatory challenges • Exchange rate loss on capital expenditure Operations • Masindi project completed • Weak demand for DOCs due to high feed prices Conclusion and focus areas • Improve farming oper
Slide 17: UGX / Rand
UGX / RAND 300 280 253* 260 231* 240 220 200 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 * Average for the financial year Results Presentation 2016 17
Slide 18: Operational Review: Eggs
OPERATIONAL REVIEW: EGGS CP auantum A fresh egg is... @ Nulaid
Slide 19: Egg Business: Sales focus
EGG BUSINESS Sales focus • Average selling prices increased by 8.1 % Price › Improved product mix – Less liquid egg 8.1 – Increased sales of higher value eggs • Volumes declined by 3.9% Volumes › Less production on farms › Loss of 12% capacity in Gauteng 3.9 • Changed Gauteng sales model Results Pre
Slide 20: Egg Business: Cost and efficiency drive
EGG BUSINESS Cost and efficiency drive • Successful nominal cost control › Increase of 0.5% › Per unit increase higher due to lower volumes • Progress with 3rd party distribution model › Decrease in distribution cost of 7.3% › Per unit distribution cost increase • Operational efficiency improvement
Slide 21: Safex Yellow Maize Rand per Ton
SAFEX YELLOW MAIZE RAND PER TON 4 500 R3 351* 4 000 3 500 R2 367* 3 000 2 500 2 000 1 500 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 * Average for the financial year Results Presentation 2016 21
Slide 22: Bran Rand per Ton
BRAN RAND PER TON 3 100 2 700 2 300 1 900 1 500 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Results Presentation 2016 22
Slide 23: Chop Rand per Ton
CHOP RAND PER TON 4 500 4 000 3 500 3 000 2 500 2 000 1 500 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Results Presentation 2016 23
Slide 24: Conclusion and Focus Areas
CONCLUSION AND FOCUS AREAS • Expect benefit of lower feed costs H2 • Supply and demand will determine margin • Expect volume increase due to fuller placements • Relentless focus on operational efficiencies • Complete roll out of third party distribution • Further execution of direct farm sales strat
Slide 25: Operational Review: Feeds
OPERATIONAL REVIEW: FEEDS CP auantum FEEDS-VOERE
Slide 26: Nova Feeds
NOVA FEEDS • Organic and acquisitive volume growth • Olifantskop integrated into business • Increasing capacity at Olifantskop • Operational efficiencies continued to improve • Costs well controlled • Margin closure due to product mix changes Results Presentation 2016 26
Slide 27: Operational Review: Farming
OPERATIONAL REVIEW: FARMING
Slide 28: Farming Operations: Layer farming
FARMING OPERATIONS Layer farming • Breeder performance on standard • Improved commercial layer performance during H2 • Mortalities remain problematic • Feed conversion ratio’s acceptable • Disease status improving • Normal placements from March 2017 • Improvement in productivity and cost per unit ex
Slide 29: Farming Operations: Broiler farming
FARMING OPERATIONS Broiler farming • Results on breeder level remained acceptable • Commercial Broiler farm results very good • Mortalities lowest ever • Feed conversion ratio’s acceptable • Improved supply from contract farmers in Gauteng • Improved utilization of farm assets in Western Cape in 201
Slide 30: Outlook and Management Focus
OUTLOOK AND MANAGEMENT FOCUS
Slide 31: Outlook 2017
OUTLOOK 2017 Headwinds in South African economy • Subdued consumer spending • Volatile exchange rate Quantum Foods response: • Broiler industry under tremendous pressure • Continue to improve Egg business model Improved raw material costs during H2 • Extract value from expansions in Africa • La Nina
Slide 32: Management Focus: Strategic Framework
MANAGEMENT FOCUS QUANTUM FOODS STRATEGIC FRAMEWORK 2015 2016 2017 2018 2019 STRATEGIC Business/product Unlock World-class Organic High-performance THEMES composition supply chain value efficiency growth human capacity Ensure world class Africa expansion capex Nova Feeds volume Start the gas to coal
Slide 33: Questions
QUESTIONS Results Presentation 2016 33