Avi Limited Class Y · JSE:AVI
Avi Limited Class Y — Corporate Update (June 2005)
70 slides from Avi Limited Class Y's corporate update, June 2005
Slide 1: I&J Analyst Site Visit June 2005
I&J Analyst Site Visit June 2005
Slide 2: Contents
Contents • I&J Holdings – Roy Gordon • I&J Limited – Mo Kajee • Trawling Division – Phillip Bruwer • Processing Division – Suleiman Salie
Slide 3: I&J Holdings
I&J HOLDINGS
Slide 4: Contents
Contents • What we are • Group Structure • Group Profile • Strategic Plan
Slide 5: What We Are
WHAT WE ARE
Slide 6: Business Definition
Business Definition • Vertically integrated marketer of frozen and chilled foods • Grows, fishes, harvests, procures, processes branded products for selected world markets • Primary focus is fish and seafood
Slide 7: Main Geographic Markets
Main Geographic Markets • Frozen food markets – Southern Africa – Australia • Fish and seafood markets – EU – Northern America – Far East
Slide 8: Group Structure
GROUP STRUCTURE
Slide 9: I&J Group Structure
I&J Group Structure I&J Holdings I&J International I&J Limited South America CT Fishing Australia MB Fishing Europe Abalone Trademarks JV’s Hake Squid
Slide 10: I&J International
I&J International I&J International Argentina Chile Europe Australia Mauritius Alpesca I&J Chile Juno Juno Finance Puerto Semillas FFI Madryn Marinas Trademarks I&J Foods San Hake (Australia) Antonio R+D SAPL JV Pelagic
Slide 11: Group Profile
GROUP PROFILE
Slide 12: Sales
Sales International, RSA 32.0% Domestic, 35.8% RSA Export, 32.2%
Slide 13: Capital Employed
Capital Employed International, RSA, 49.0% 51.0%
Slide 14: Hake Rights
Hake Rights 2003 2004 2005 RSA 45 000 44 000 44 000 Argentina 18 000 19 000 23 000 TOTAL 63 000 63 000 67 000
Slide 15: Strategic Plan
STRATEGIC PLAN
Slide 16: Mission
Mission • Build a globally competitive, branded profitable fish and seafood business in selected international markets, with emphasis on our own brands • Consistently provide consumers with products that reward them with taste, enjoyment, convenience, health and nutrition
Slide 17: Strategic Drivers
Strategic Drivers • Retain competitively significant control over own fish and seafood resources – Positioning as key supplier into first world markets • Leverage brand strength, technical and marketing expertise and company reputation – Build long term supply arrangements
Slide 18: Growth Strategies
Growth Strategies • Access to resources – Alpesca – Finfish aquaculture – Abalone • Marketing and sales of 3rd party products internationally – Current – RSA, Europe, Australia – USD50 million – Increase product offering – Target (2010) – USD 100 million • Innovation – Target – 20% from products lau
Slide 19: Supply of Mid-Market White Fish
Supply of Mid-Market White Fish 5000 Tons '000 2500 0 Groundfish Farmed Total 1996 2002 2005* 2008* * Estimated by FAO Note: 1. Slowdown in farmed due to availability of suitable areas, feed. Basa stabilising at 350 000T. 2. Decrease in Groundfish = Cod. 3. Tilapia = 70% of farmed Whitefish.
Slide 20: Sourcing Quantum & Value of Sourcing
Quantum & Value Added-Value Value-Added Sourcing of Sourcing Components (Net) Markets Southern Processing Africa Fishing own quotas (sea and land) Western Europe Fishing other quotas Innovation Central Europe Fishing for non-quota species Brands USA Procurement of raw material for processing Austral
Slide 21: I&J Limited
I&J LIMITED
Slide 22: Contents
Contents • History & Milestones • Business Model • The Fishing Challenge • Quota & Long Term Rights • The Challenges Ahead
Slide 23: History & Milestones
HISTORY & MILESTONES
Slide 24: History & Milestones
History & Milestones • Established in 1910 • Pioneered Hake Industry in South Africa in 1900’s • First to introduce Individual Quick Freezing (IQF) to South Africa in the 1950’s • First I&J frozen fish product, hake fillets, produced in 1952
Slide 25: Business Model
BUSINESS MODEL
Slide 26: Vertical Integration
Vertical Integration RESOURCE MANAGEMENT TRAWLING PROCESSING / VALUE ADDING DISTRIBUTION TO MARKETS MARKETING / SALES
Slide 27: What Makes Us Distinctive
What Makes Us Distinctive • World class people and skills • World class technology • A passionate, energised team • International peer group respect • Strong brand • Strong hard currency earnings • A unique integrated business formula
Slide 28: Local Products & Sales
Local Products & Sales • I&J produces 240 different product lines for local and international markets • 20-million I&J packs sold annually in South Africa • I&J Proudly South African Marketer of the Year Award Feb 2005
Slide 29: Export Products Growth
Export Products Growth I&J exports to 28 countries across 5 continents 300 250 200 150 100 50 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 Volume Value 1997 = base year
Slide 30: Transformation
Transformation • I&J Ownership – 75% held by AVI – 20% held by two BEE companies – 5% held by black employees (± 2 500 shareholders) • I&J Management – I&J board – 57.1% black – Senior and middle management – 52.6% black, 12.8% women • Skills development – 2.7% of payroll spent on training and devel
Slide 31: The Fishing Challenge
THE FISHING CHALLENGE
Slide 32: The Fishing Challenge
The Fishing Challenge • Predominance of small fish - a more innovative approach to fishing • Challenge met by moving from Protea Class to F Class fishing vessels • Rationale – More advanced technology (superior engine and winch capacity) – Ability to fish in deeper water – up to 700m – Better size m
Slide 33: Value-Adding to Small Fish
Value-Adding to Small Fish • Increase in small fish from 20% to 40% of total catch • Price decline in traditional whole baby hake • Product development through innovation since 2003 producing: – Croccole incremental contribution R2100/ton – Flame Grills incremental contribution R2500/ton – Steam Fre
Slide 34: Quota & Long Term Rights
QUOTA & LONG TERM RIGHTS
Slide 35: Quota & TAC History
Quota & TAC History 1979 1994 2004 Actual Actual Actual No. of participants 5 28 53 TAC 147 500 148 000 161 000 I&J 43.5% 36.1% 27.3%
Slide 36: Long Term Rights
Long Term Rights HAKE TAC & I&J's % QUOTA REDUCTIONS 1994 - 2004 160 140 120 100 TONS 80 36% 36% 35% 35% 60 34% 31% 30% 31% 27% 27% 27% 40 20 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 I&J QUOTA TONNAGE LOSS SINCE 1994 : 9396t =17.6% TAC I&J %
Slide 37: Long Term Rights (cont)
Long Term Rights (cont) Abalone TAC 1995/1996 to 2004/2005 I&J Quota Reductions 700 600 500 TONS 400 300 200 21% 21% 17% 13% 100 11% 9% 9% 6% 6% 5% 0 2 3 4 5 1 6 7 8 9 0 /0 /0 /0 /0 /0 /9 /9 /9 /9 /0 02 03 04 99 00 01 95 96 97 98 TAC I&J
Slide 38: The Challenges Ahead
THE CHALLENGES AHEAD
Slide 39: The Challenges Ahead
The Challenges Ahead • Long term rights application • Retaining dominance in the retail frozen fish market • Continuous product innovation to improve margins on small fish • Developing abalone aquaculture expansion through BEE ventures • Finfish farming to meet local fresh fish demand • Increasing p
Slide 40: I&J Limited Trawling Division
I&J LIMITED TRAWLING DIVISION
Slide 41: Contents
Contents • Profile of Operations • What Makes Us Different? • Vessel Assets &Costs
Slide 42: Profile of Operations
PROFILE OF OPERATIONS
Slide 43: Profile Of Operation
Profile Of Operation • Catch Fish – Based on quota allocation (43 990 ton for 2004) – Of best quality & size mix • Distributed to – Factory (Fresh) – Cold Store (Freezer) • Major cost drivers – Vessel Utilisation – Ton per sea day
Slide 44: Profile of Operation (cont.)
Profile of Operation (cont.) • Assets: – Vessels – 18 in fleet • 14 Fresher • 4 Freezers – Hi Tech Equipment – Skilled staff • Complement: – Shore 326 – Seagoing 718 – Total 1044
Slide 45: Vessels
Shore Fleet Resources Operations Concentra Fishmeal Core Activity Admin JV’s/ Charters/ Primary Activities External Shore Human Services Resources Support activities Group IR Extra Activities Vessels Engineering Crewing/ Services Records Procure- ment
Slide 46: History: Demersal Trawl
HISTORY: Demersal Trawl • Started in late 1890’s • 1917 - Hake become primary target • 1974 - fishery collapses • 1977 - 200 mile Exclusive Economic Zone imposed • 1984 - fishery accepted to be in recovery • 2003 - TAC 164 000 (up from 141 000 over last 10 years)
Slide 47: Demersal Fishing Types
Demersal Fishing Types • Deep-sea Trawl – fishing deeper than 110 m (offshore) – primary hake: M. paradoxus • Inshore Trawl – operates inshore of 110 m – M. capensis caught – also Sole directed fishing • Longline – targets larger hake, mainly M. capensis females • Handline
Slide 48: Demersal Fishing Areas
DEMERSAL FISHING AREAS Deep-sea Inshore Longline + Handline + +
Slide 49: Graphical illustration of a trawler
Graphical illustration of a trawler Cod end Trawl Doors Floats bed a Se Spread Sensors Rock Hoppers Catch Sensor
Slide 50: What Makes Us Different
WHAT MAKES US DIFFERENT
Slide 51: A Cut Above The Rest
A Cut Above The Rest OUR PEOPLE TECHNOLOGY ENVIRONMENT
Slide 52: Our People
Our People • Only accredited training institute within the maritime industry – Accounts for 80% of training in the maritime industry • All staff are properly trained before going to sea • All employees undergo annual medicals • Only fishing company that is also an accredited ship repairer
Slide 53: Technology
Technology • State of the art, modern fleet • Fish finding technology • Fish processing technology • Engineering technology • Navigational aids
Slide 54: Environment
Environment • Return of refuse to shore for disposal • Fish waste brought ashore and used for fishmeal production • Fixed emergency procedures e.g. oil spills • Training of staff in environmental issues • Retains and markets economically marketable incidental by-catch • Actively targeting away from
Slide 55: Vessel Assets and Costs
VESSEL ASSETS AND COSTS
Slide 56: Vessel Assets & Costs
Vessel Assets & Costs • Total Investment in Assets related to vessels amounts to R400 Million • Annual operating costs for operating the fleet of vessels are approximately R195 million • Current replacement costs of vessels are – Wet R55 million – Freezer R105 million
Slide 57: I&J Limited Processing Division
I&J LIMITED PROCESSING DIVISION
Slide 58: Contents
Contents • Woodstock • Blockbusters • Future strategy
Slide 59: Woodstock
WOODSTOCK
Slide 60: Woodstock Primary Processing Lines
Woodstock Primary Processing Lines
Slide 61: Operating Statistics
Operating Statistics Hake raw material 23 000 tons/year By-catch raw material 1 100 tons/year Finished product 17 500 tons/year Capacity 120 tons input/day Employment 1 300
Slide 62: Value-Adding Process
KEY TRAWLING TRAWLING Value-Adding Process WOODSTOCK DISTRIBUTION GRADING DISCHARGE FRESH PRIMARY PACKING PROCESSING GRADING EXPORTS MARKETING & DISTRIBUTION FILLETING FRAMES & SKIN PORTIONING BLOCKMAKING MINCE IQF - RETAIL RECOVERY FOOD SERVICE PACKING PACKING PACKING FREEZING STORAGE STORAGE
Slide 63: Highlights
Highlights • Improved ability to value-add small fish – Adapting filleting & de-skinning technologies – Developing innovative products from small fillets
Slide 64: Hake Raw Material Flow
Hake Raw Material Flow 22000 tons
Slide 65: Blockbusters
BLOCKBUSTERS
Slide 66: Blockbusters
Blockbusters The most modern value-added plant in the Southern Hemisphere – opened August 1998
Slide 67: Operating Statistics
Operating Statistics Raw material 8 000 tons fish/year Production 12 500 tons/year Production growth up from 9 000 tons 6 years ago Capacity 53 tons output/day Employment 314
Slide 68: Value Added Factory
Value Added Factory Forming / Cutting / Mixing Sauce Coating Application Frying Freezing Storage Packing
Slide 69: Future Strategy
FUTURE STRATEGY
Slide 70: Future Strategy
Future Strategy • Improve value adding of small hake through innovation • Expand markets for coated products and support by procuring fish raw material internationally • Improve handling and quality of hake to extract more value from the quota • Review fixed cost base