Zeder Investments Limited · JSE:ZED
Zeder Investments — FY2018 Earnings Presentation
35 slides from Zeder Investments's earnings presentation, April 2018
Slide 1: Full Year Results
Full Year Results For the year ended 28 February 2018 Presented by: Norman Celliers Chief Executive Officer
Slide 2: An investment holding company
An investment holding company Company overview We play an active role in investee companies through strategic interests with a controlling influence. Business definition Business definition Strategic Focus • An actively managed investment holding Industry: • Agribusiness company listed on the Johann
Slide 3: Challenging conditions prevailed
Challenging conditions prevailed Performance review The financial results reflect a period of challenging environmental conditions exacerbated by high levels of political and economical volatility. Operating environment Many of these factors have improved recently. 2012 – 2014 2014 – 2016 2016 – 201
Slide 4: Sum-of-the-Parts
Sum‐of‐the‐Parts Performance review Zeder’s SOTP value per share decreased by 8.0% from R8.53 to R7.85, as of 28 February 2018. FY2018 28 Feb 2017 28 Feb 2018 5 Apr 2018 Interest Interest Interest Company (%) Rm (%) Rm (%) Rm Pioneer Foods 27.1 9,538 27.0 7,660 27.0 7,340 Capespan 98.1 1,975 97.5 2,
Slide 5: Intrinsic value
Intrinsic value Performance review The recent sideways trend is disappointing but longer term outlook remains positive. Historical overview R’bn R/share 16.00 12.00 14.00 14.71 10.00 13.43 12.00 8.53 8.00 7.85 10.00 7.44 6.45 8.00 6.00 6.00 4.00 4.00 3.15 2.85 2.57 2.25 3.09 2.00 2.00 1.29 ‐ ‐ Feb 0
Slide 6: Recurring headline earnings
Recurring headline earnings Performance review Recurring headline earnings per share decreased 35.2% for the period ending 28 February 2018. FY2018 Audited 28 Feb 2017 Change 28 Feb 2018 Rm (%) Rm Recurring headline earnings from investments 821 (29.8) 576 Management (base) fee (75) Net interest, ta
Slide 7: Context and dividends
Context and dividends Performance review Despite the decline in earnings, the dividend has been maintained at 11c per share due to comparable cash generation and likely non‐recurring factors. FY2018 Recurring Headline Earnings Dividends R’million R’million 800.00 200.00 189.8 189.0 690.8 700.00 631.
Slide 8: Total shareholder return
Total shareholder return Performance review Total shareholder return acceptable to date but objective remains to improve on this performance. Shareholder value Last 5 years Since inception 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 15.9% 14.8% 14.0% 6.0% 12.9% 11.2% 11.4% 4.0% 2.0% 0.0% 2013 ‐ 2018 2007 ‐ 2
Slide 9: Robust portfolio with upside
Robust portfolio with upside Portfolio evaluation We have a stable and resilient portfolio that provides additional upside. FY2018 Value of investments R’m 8,000 7,000 6,000 5,000 4,000 7,340 3,000 R2 billion 2,000 1,000 2,259 2,043 591 1,465 267 34 0 Pioneer Capespan Zaad Kaap Agri Agrivision Quant
Slide 10: Business overview (Pioneer Foods)
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. 9
Slide 11: Financial performance (Pioneer)
Financial performance Portfolio evaluation Pioneer has performed exceptionally well over the past 5 years but experienced a challenging year during 2017. 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 1,000 853 823 4.70 5.00 4.42 8
Slide 12: Despite disappointing results…
Despite disappointing results… Portfolio evaluation Adjusted headline earnings per share declined by 50% during the year ended 30 September 2017, due in part to an unfavourable maise procurement position… 11
Slide 13: …an improvement likely.
…an improvement likely. Portfolio evaluation … but recent trends encouraging and, with a strong balance sheet and cash flow, a recovery should be possible during 2018. 12
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. 13
Slide 15: Financial performance (Capespan)
Financial performance Portfolio evaluation Capespan reported a 26.7% decline in RHEPS due to the lagged effect of volume declines following the drought and increased finance costs. RHE (R'm) RHEPS (Rand per share) 180 171 0.60 159 0.53 160 0.49 139 0.50 140 0.44 120 0.40 98 100 0.29 78 0.30 80 0.21
Slide 16: Historical review
Historical review Portfolio evaluation The recent decline in RHEPS should not detract from the underlying investments made to drive medium‐ to long‐term EBITDA growth and SOTP value creation. Summarised Income Statement Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Key metrics R'm R'm R'm R'm R'm
Slide 17: Key observations
Key observations Portfolio evaluation Focus is to complete divisional repositioning… 16
Slide 18: Key observations
Key observations Portfolio evaluation … and continue on journey of growing to deliver sustainable annualised RHE ~R500m. 17
Slide 19: Business overview (Kaap Agri)
Business overview Portfolio evaluation Kaap Agri is a leading Agri‐related retail, trade, supply and services company. 18
Slide 20: Financial performance (Kaap Agri)
Financial performance Portfolio evaluation Kaap Agri reported a 17.9% increase in RHEPS and an increase of 18.5% in dividends per share. RHE (R'm) RHEPS (Rand per share) 300 4.00 3.52 248.0 3.50 250 2.98 210.0 3.00 2.59 200 183.0 2.50 2.24 158.0 150 129.0 2.00 1.83 1.50 100 1.00 50 0.50 0 ‐ Sep 13 S
Slide 21: Historical review
Historical review Portfolio evaluation Encouraging longer term trend of growth in key metrics combined with a measured degree of margin improvements bode well for the group. Summarised Income Statement Sep 11 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Key metrics R'm R'm R'm R'm R'm R'm R'm Revenue 2
Slide 22: Key observations
Key observations Portfolio evaluation The past financial year included numerous highlights as group continued to grow and expand with strong balance sheet in place. 21
Slide 23: 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 22
Slide 24: Financial performance (Zaad)
Financial performance Portfolio evaluation Zaad reported a decrease of 16.7% in RHEPS, driven in most part by weaker results in South Africa as a result of the drought and increased finance costs. Zaad RHE (R'm) RHEPS (Rand per share) 140 133.0 7.00 123.0 6.04 120 6.00 5.33 105.0 5.03 100 5.00 4.44
Slide 25: Historical review
Historical review Portfolio evaluation Through a combination of strategic acquisitions, R&D and organic growth the group has been strengthened over the past 5 years. Zaad ` Summarised Income Statement Feb 12 Feb 13 Feb 14 Feb 15 Feb 16 Jan 17* Jan 18 Key metrics R'm R'm R'm R'm R'm R'm R'm Revenue 2
Slide 26: Key observations
Key observations Portfolio evaluation Zeder continues to support Zaad and have made additional capital commitments as the group aims to deliver on its ambitious objectives. Zaad • Zeder invested R145m during FY2018 • Zeder committed to participate in further R200m rights issue • Goal is to build one
Slide 27: 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 28: Financial performance (Agrivision)
Financial performance Portfolio evaluation Disappointing recurring losses reported but net asset value in US$ and conservative exchange rate approach supports investment value.. Summarised Income Statement Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Key metrics $'000 $'000 $'000 $'000 $'000 Revenue 14,304 32
Slide 29: Business overview (Quantum Foods)
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 28
Slide 30: Financial performance (Quantum Foods)
Financial performance Portfolio evaluation Quantum Foods reported an increase of 74% in RHEPS and declared a special dividend due to strong cash generation. RHE (R'm) RHEPS (Rand per share) 150 0.60 0.54 126.0 0.49 112.0 0.50 100 0.40 66.0 0.28 0.30 50 0.20 0.11 26.0 0.10 0 ‐ Sep 13 Sep 14 Sep 15 Se
Slide 31: Key observations
Key observations Portfolio evaluation Despite challenging macro conditions, Quantum benefited from lower commodity prices following the drought. 30
Slide 32: Outlook
Outlook Portfolio evaluation Business has been structured with clear divisional focus and growth strategies. 31
Slide 33: Small seeds planted
Small seeds planted New platform investments We have acquired controlling interests in two new small companies that provide us with an affordable entry into smart urban farming and logistics related technology. CAN‐AGRI THE LOGISTICS COMPANY • Urbanisation and vertical farming is a growing theme • D
Slide 34: Prospects
Prospects Conclusion With a strong existing platform and focused addition of new opportunities, the prospects remain positive going forward. General commentary • Early indications of improved political, economical and climatic conditions in markets where our portfolio operates • Indications of infla
Slide 35: Thank you
Thank you @D) ZEDER