Zeder Investments Limited · JSE:ZED
Zeder Investments — FY2014 Earnings Presentation
44 slides from Zeder Investments's earnings presentation, Apr 8, 2014
Slide 1: Full year results FY2014
Full year results FY2014 Presented by: Norman Celliers Chief executive officer 8 April 2014
Slide 2: Slide 2
Slide 3: Agenda
AGENDA • Full year results • Strategy review • Portfolio overview • Core investments
Slide 4: Executive summary
FULL YEAR RESULTS Executive summary Feb 13 Feb 14 4 Apr 14 Sum of the parts R3,903m R4,921m R5,034m Sum of the parts per share 26% R3.99 R5.02 R5.14 Sum of the parts (see-through) R4,164m R5,155m R5,465m Sum of the parts per share (see-through) 21% R4.26 R5.26 R5.58 Recurring headline earnings R251,
Slide 5: Sum-of-the-parts
FULL YEAR RESULTS Sum-of-the-parts 2012 2013 2014
Slide 6: Agenda
AGENDA • Interim results • Strategy review • Portfolio overview • Core investments
Slide 7: Strategy review: business definition
STRATEGY REVIEW Over the past 18 months we have reconfirmed our business definition… • 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 consideration
Slide 8: Investment focus: agribusiness food and beverage
STRATEGY REVIEW … and our investment focus – the AGRIBUSINESS industry with a specific focus on the food and beverage sub-sectors. Upstream Midstream Downstream Services and support Food Primary Beverages Secondary Marketing Inputs Processing Distribution Retail production production and sales Bio F
Slide 9: Opportunity for P/E rerating has diminished
STRATEGY REVIEW We recognized that opportunity for P/E rerating has diminished and that longer term value will be derived from earnings growth... Recurring HEPS & DPS SOTP & Share price (Cents) (Cents) 35 600 502 30 500 399 25 400 409 20 285 274 340 315 300 15 211 257 260 200 192 262 225 200 10 216
Slide 10: Expanded strategy
STRATEGY REVIEW … and expanded our strategy accordingly. Historically Going forward Industry: • Agribusiness • Agribusiness Sub-sector: • Food and Beverages • Food and Beverages • Bio Fuels • Non-food (i.e. Rubber, timber) Geography: • South Africa (Direct) • South Africa (Direct) • Rest of World (v
Slide 11: Agenda
AGENDA • Interim results • Strategy review • Portfolio overview • Core investments
Slide 12: Portfolio decisions in line with revised strategy
PORTFOLIO OVERVIEW We made big decisions in line with revised strategy… Investment Decision Reason Pioneer Core Perfect fit with strategy Zeder influence high Will emerge from margin compression Significant opp for efficiency improvement End of capex cycle – improved dividends Distell Non-core No in
Slide 13: Portfolio rationalised to 5 core investments
PORTFOLIO OVERVIEW Zeder’s portfolio has been rationalised to 5 core investments valued at R4,9m at year-end (~R5,5b see-through – 4 April 2014) 6 000.00 SOTP (see-through) Other financial instruments R5,465 Nett Cash SOTP R5,034m Chayton 5 000.00 Outspan CHA Senwes + R1 billion Pioneer 4 000.00 Tui
Slide 14: Portfolio optimisation
PORTFOLIO OPTIMISATION During FY2014 investments totaling R879m were made while R529m was realised through disinvestments from non-core exposures. R’m 400 357 199 200 125 125 107 25 Overberg Suidwes CVH NWK 0 Capespan Chayton ZAAD AVB Other Kaap Agri -78 -97 -200 -171 -224 -400 Investments during FY
Slide 15: Increased influence over core portfolio companies
PORTFOLIO OVERVIEW We focused and increased our influence over core portfolio companies. 100.0% 92.0 80.0 76.5 72.1 60.0 50.1% 47.4 39.9 40.0 25.1% 20.0 2.7 0.0 Agricol Chayton Capespan AVB Kaap Agri CVH Core portfolio Non-core portfolio – available for sale
Slide 16: Core investments of at least R500m each
PORTFOLIO OVERVIEW Each of our core investments now reflect investment values of at least R500m providing an improved balance to portfolio. R’m 1,986 2,000 1,000 777 679 560 528 500 229 177 376 Liabilities 0 AVB Capespan Zaad Chayton Kaap Agri Cash Other CVH -365 -1,000 Core portfolio (at OTC values
Slide 17: Portfolio overview – strategic observations
PORTFOLIO OVERVIEW – STRATEGIC OBSERVATIONS • Clear validation that previous arbitrage strategy is well and truly over • However, our existing investments have all got the makings to be large successful companies generating sustained profits over medium to long term • Our portfolio offers very good
Slide 18: Agenda
AGENDA • Interim results • Strategy review • Portfolio overview • Core investments
Slide 19: Pioneer delivered good results despite difficult conditions
Despite difficult conditions, Pioneer delivered good results for the year ended 30 September 2013… Source: Pioneer Foods results presentation
Slide 20: Pioneer positive trading update
… and Pioneer released positive trading update on 4 April 2014 regarding expected results for 6 months (H1) ended 31 March 2014. Expected H1 Expected H1 Low High Group Earnings +80% +95% Group Headline Earnings +95% +110% Group Adjusted HE (cont. Operations) +38% +52% Source: Pioneer Foods trading u
Slide 21: Zeder satisfied with Pioneer investment
Zeder is very satisfied with this investment and optimistic about prospects. DPS / HEPS (cents) PIONEER FOODS Share Price (cents) 600 10 000 • Very good investment to date – Capital invested to date ~ R890m 9 000 – Market value of investment ~ R2,417m* 500 8 000 • Recent earnings growth encouraging
Slide 22: Capespan delivered solid results
Capespan delivered solid results for year ended 31 December 2013.
Slide 23: Capespan two complementary divisions
Over 70 years, the Capespan Group has developed two large and complimentary divisions which are increasingly less interdependent. FRUIT LOGISTICS Profit before tax = R88,7m Profit before tax = R89,7m
Slide 24: Fruit division
The fruit division produces, procures, markets and distributes fresh produce from more than 12 countries to more than 60 countries. FRUIT Salient features • Capespan markets and delivers exceptional fruit from the orchard to international retail, wholesale and food service partners • Procures fruit
Slide 25: ~, 5S: Ea
~, 5S: Ea ‘A S) ff * € CAPFSPAN ia
Slide 26: Largest SA fruit exporter increased volumes
Capespan remains the largest South African exporter of fruit and increased its volumes by 5% - first increase since 2005. Fruit volumes exported (million cartons) 46.0 43.6 Non-SA Non-SA 20.0 18.7 SA SA 24.9 26.0 2012 2013
Slide 27: Volume increases in largest markets
Positive volume increases were achieved in largest markets. Fruit volumes exported (million cartons) 20 16.4 15 14.4 10 9.2 8.7 9.0 8.2 5.3 5 4.5 3.7 3.9 2.8 2.6 0 EU Africa UK North Japan Far East Russia America Note: All volumes exclude Golden Wing Mau business. Far East and China reduction due to
Slide 28: Golden Wing Mau entry into Chinese market
Through its investment in Golden Wing Mau, Capespan has established a credible entry into the growing Chinese market. • Capespan has 25% interest in Golden Wing Mau • Company started trading in Shenzhen in 1997 • Delivered Sustained Annual Growth-average 35% P.A • 40 Fruit Production Bases in China
Slide 29: Logistics: FPT and MCT services
Through FPT and MCT, Capespan offers a broad range of landside and port logistic services in South African and Mozambique. LOGISTICS Salient features • Owns and operates four multipurpose terminals in Southern Africa situated in the ports of Cape Town, PE, Durban and Maputo • Terminals handle ~ 1 mi
Slide 30: Strong recovery in logistics
Very strong recovery in logistics as anticipated following critical license renewals. Profit before tax - Logistics (R’million) 89.7 20.1 2012 2013
Slide 31: Increased investment in Capespan produced excellent results
The increased investment in Capespan produced excellent results during FY2014 and Zeder remains optimistic about future prospects. DPS / HEPS Share Price (cents) Capespan (cents) 45.00 450 • Very good investment to date – Capital invested to date ~ R544m 40.00 400 – Market value of investment ~ R988
Slide 32: Kaap Agri celebrated its 101st year
Kaap Agri celebrated its 101st year and has become a well established, focused business with growth ambitions.
Slide 33: Strong and consistent results over 3 years
Over the past 3 years it has delivered strong and consistent results.
Slide 34: Core business activities focus on agricultural trade
It’s core business activities increasingly focus on agricultural and related trade activities including retail, wholesale and directs.
Slide 35: Activities focused around diversified crops and areas
Business activities are focused around diversified crops and areas.
Slide 36: Zeder satisfied with Kaap Agri investment
Zeder is very satisfied with this investment and excited about prospects. DPS / HEPS Share price (cents) (cents) 194 1 800 • Very good investment to date – Capital invested to date ~ R196m 174 1 600 – Market value of investment ~ R580m* 154 1 400 • Recent earnings growth encouraging 134 1 200 – 2011
Slide 37: Zaad holding structure
ZAAD Zaad is an operational holding company through which Zeder has made its investments in Agricol and Klein Karoo Seed Marketing. Zaad Holdings Ltd 100% 100% 100% 100% 100% 50% Agricol (Pty) Ltd Zaad Mauritius Salok (Pty) Ltd Agricol Klein Karoo Saad Bemarking (Pty) Ltd Animalzone (Pty) Ltd Retail
Slide 38: Agricol and KKSB category leaders
ZAAD Agricol and KKSB are category leaders spanning a broad product range with complimentary geographical footprints and brands. Strong footprint + Broad product range + Trusted brands • Vegetable seeds • Forage seeds • Pasture seeds • Agronomy seeds • Horticulture seeds • Lucerne seeds • Lawn seeds
Slide 39: Zaad scalable platform for sustainable growth
ZAAD Zeder believes that Zaad is one of the most exciting companies in its portfolio with a scalable platform for sustainable growth. R millions Recurring Earnings 60 • Very good investment to date – Capital invested to date ~ R342m – Market value of investment ~ R678m 50 • HEPS growth encouraging 4
Slide 40: Chayton large scale farming in Zambia
Chayton has thus far been a large scale farming operation in Zambia… Salient features: • Holding company for grain related operations in Sub Saharan Africa • Zeder acquired 73.4% during 2012 in Partnership with Norfund • Start-up company in rapid development phase (3-5 years) • Double cropping (whea
Slide 41: Zeder's role in Chayton execution and alignment
… and Zeder has played a significant role in ensuring effective execution and strategic alignment… • Fund structure to operating company • Improved management team - W Meyer (CEO) - Stuart Kearns /Phil Nicol • Zambian operations streamlined • Two current farming units - Mkushi - Somawhe • Current st
Slide 42: 4,200 irrigated hectares completed in 24 months
… and a total of 4,200 irrigated hectares have been completed within 24 months and additional capacity is currently being added. Irrigated hectares • Operations under 5,969 6,000 5969 control and efficiency 5,369 improvements being 4,769 implemented 4,169 4200 • Harvested yields 4,000 ahead of budge
Slide 43: Mpongwe Milling acquisition
… and a leading mill is currently being acquired and will be integrated with farming operations. • Recently acquired Mpongwe Milling in Zambia’s Copperbelt • Maize and wheat milling operations • 50,000 tons of maize and 24,000 tons of wheat milled annually • Synergies with the farm operations • Offe
Slide 44: Conclusion – Questions?
CONCLUSION • Questions?