Zeder Investments Limited · JSE:ZED
Zeder Investments — Shareholder Meeting (June 2018)
33 slides from Zeder Investments's shareholder meeting presentation, Jun 22, 2018
Slide 1: Annual General Meeting
Annual General Meeting Presented by: Norman Celliers Chief executive officer 22 June 2018
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 Operating environment volatility. 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 15 Jun 2018 Interest Interest Interest Company (%) Rm (%) Rm (%) Rm Pioneer Foods 27.1 9,538 27.0 7,660 27.0 6,610 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: Earnings and dividends
Earnings and dividends Performance review Despite the decline in earnings of 35,2%, 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 7
Slide 7: Total shareholder return
Total shareholder return Performance review Notwithstanding the recent pull‐back in share prices, Zeder has outperformed the index and delivered acceptable Shareholder value shareholder returns. Last 5 years Since inception 18.0% ZEDER 16.0% 14.0% 12.0% JSE 10.0% 8.0% 16.0% 14.8% 15.1% 6.0% 12.9% 11
Slide 8: Robust portfolio with upside
Robust portfolio with upside Portfolio evaluation We have a stable and resilient portfolio that provides additional upside – platforms for further growth. Sum‐of‐the‐parts values • Established organisations with a material NAV underpin • Well diversified EBIT generating divisions • Leading or compet
Slide 9: Business overview
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. 8
Slide 10: Financial performance
Financial performance Portfolio evaluation Pioneer has performed exceptionally well over the past 5 years but experienced a challenging year during 2017 with Adj. HEPS down 50% ‐ maintained dividend. Adjusted HE (R'm) Adjusted HEPS (Rand per share) 1,800 1,637 10.00 1,534 8.83 1,600 9.00 8.32 1,400
Slide 11: FY17 Variance analysis
FY17 Variance analysis Portfolio evaluation The variance in profits can largely be ascribed to three factors, some of which should be non‐recurring. 10
Slide 12: An improvement is underway
An improvement is underway Portfolio evaluation Recent trends show acceptable recovery or defence across most categories. interims 11
Slide 13: Solid interim results reported
Solid interim results reported Portfolio evaluation Pioneer Foods reported improved interim results for the 6‐month period ended 31 March 2018. 12
Slide 14: Business overview
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
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) Commentary: 180 159 171 • El‐Nino impact in fruit volumes 160 139 – Warm winters 140 – Reduction in irrigatio
Slide 16: Important observations
Important observations Portfolio evaluation For the past 3 years we have restructured, refocused, realigned and reinforced the Capespan Group to operate as two focused divisions, each with growth prospects. FRUIT AND FARMING DIVISIONS LOGISTICS DIVISIONS • Global fruit procurement, • Grape Farms • P
Slide 17: Small seeds planted
Small seeds planted New platform investments To complement our logistics offering as a group, we invested in a new small start‐up that provide us with an affordable entry into logistics related technology. THE LOGISTICS COMPANY • Embrace technology platforms – Transport management solution (TLC GO)
Slide 18: Combining cargo with platforms
Combining cargo with platforms Portfolio evaluation By executing the existing cargo flow of the Capespan Group through the TLC platform, we will immediately establish the largest technology enabled transport platform in Africa – and grow from there. A Logistics Group Customer focused… … Technology l
Slide 19: Business overview
Business overview Portfolio evaluation Kaap Agri is a leading Agri‐related retail, trade, supply and services company. 18
Slide 20: Financial performance
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: 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. 20
Slide 22: Interim results
Interim results Portfolio evaluation Kaap Agri reported a 7,2% increase in RHEPS and an increase of 8.5% in dividends per share for its interim period ended 31 March 2018. 21
Slide 23: Business overview
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
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) Commentary: 140 133.0 123.0 • Western Cape drought 120 105.0 – Lower input sales 100 – C
Slide 25: Key observations
Key observations Portfolio evaluation Zeder continues to support Zaad and has made additional capital commitments as the group aims to deliver on its ambitious objectives. Zaad • Zeder invested R145m during FY2018 • Zeder committed to invest a further R200m through rights issue • Goal is to build a
Slide 26: Business overview
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 27: Financial performance
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 28: Business overview
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 27
Slide 29: Financial performance
Financial performance Portfolio evaluation Quantum Foods reported an increase of 74% in RHEPS and declared a special dividend due to strong cash generation for their FY2017. 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
Slide 30: Solid interim results
Solid interim results Portfolio evaluation Despite challenging macro conditions, Quantum continues to benefit from lower commodity input costs and improved egg prices. • Operating profit increased by 477% for the 6‐months ended 31 March 2018 • African operations showing encouraging recovery • Strong
Slide 31: Small seeds planted
Small seeds planted New platform investments We have partnered with an innovative team and invested in a new company that gives us an entry into smart, vertical farming. • Urbanisation and vertical farming is a growing global theme • Decline in cost effective available agricultural land and damage t
Slide 32: Small seeds planted
Small seeds planted New platform investments We have committed the funding to build full‐size commercial unit and are currently well advanced with construction. • Build full size unit in RSA • Validate assumptions and KPI’s • Roll out in SA • Test global application
Slide 33: Conclusion
Conclusion With a strong existing platform and focused addition of new opportunities, the prospects remain positive going forward. Despite the short‐term challenges, we remain committed to deliver attractive shareholder returns over the next 5 years. 32