Zeder Investments Limited · JSE:ZED
Zeder Investments — H1 2019 Earnings Presentation
31 slides from Zeder Investments's earnings presentation, October 2018
Slide 1: Interim Results
Interim Results 6-month period ended 31 August 2018 Presented by: Norman Celliers Chief Executive Officer
Slide 2: Agenda
Agenda • Overview and interim financial results • Portfolio review • Conclusion • Questions and answers 1
Slide 3: 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. Group positioning Business definition Strategic Focus • An actively managed investment holding Industry: • Agribusiness company listed on the Johannes
Slide 4: Executive summary
Executive summary Performance review Notwithstanding very challenging conditions Zeder managed to deliver a solid recovery in earnings for the 6-months ended 31 August 2018. Interim results NEGATIVES POSITIVES • Factors outside our control remain challenging • Items within our control remain well ma
Slide 5: Sum-of-the-Parts (SOTP)
Sum-of-the-Parts (SOTP) Performance review Zeder’s SOTP declined by 21% since 28 February 2018 and closed at R6.23 on 1 October 2018. Interim results • Largest impact is decline in share price of Pioneer Foods from R132 at 28 February 2018 to R93 at 1 October 2018 • Conservative internal valuation a
Slide 6: Recurring headline earnings
Recurring headline earnings Performance review Recurring Headline Earnings per share increased by 158% as a result of strong recoveries in earnings from most portfolio companies. Interim results • First 6-months reflect the smaller half of Zeder’s normalised annual earnings – YoY comparisons may ref
Slide 7: An investment holding company
An investment holding company Company overview We currently have 7 focused investments conservatively valued at R11,8bn providing us with strategic influence over underlying Group structure portfolio valued at R30bn. ZED ZED Full value % Value 27% R5,43bn R20,10bn 97% R2,17bn R2,24bn PSG 44% Listed
Slide 8: Broad exposure across industry
Broad exposure across industry Portfolio review Portfolio offers strategic exposure across value chain with strong management teams focused on driving growth in the long-term. Leading companies • SS Africa’s 2nd largest FMCG (Food and Beverage) Company • Best-in-class FMCG Platform • Packaged staple
Slide 9: Business overview
Business overview Portfolio review 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: Historical performance
Historical performance Portfolio review Pioneer has performed exceptionally well over the past 5 years but experienced a challenging year during 2017. 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 8.00 1,242 6.78 7.00 1,200 6.00 1,000 853 823 4.7
Slide 11: Solid interim results reported
Solid interim results reported Portfolio review Pioneer reported a strong balance sheet, healthy cash generation and a recovery in earnings for its 6-month ended 31 March 2018. 10
Slide 12: Full-year outlook positive
Full-year outlook positive Portfolio review Positive trading update released by Pioneer Foods on 4 October 2018. TRADING UPDATE RELEASED ON SENS ON 4 OCT 2018 30-Sep-17 30-Sep-18 Audited Lower range Higher range Revenue (R'm) 19,575 1.5% 19,869 4.5% 20,456 Operating profit before items of a capital
Slide 13: Business overview
Business overview Portfolio review Capespan is an internationally diversified group with a primary exposure to fruit farming, marketing, distribution, port logistics and related services. 12
Slide 14: Interim results
Interim results Portfolio review Capespan reported improved earnings for its 6-month period ended 30 June 2018. Summarised Income Statement Dec 15 Dec 16 Dec 17 Jun 17 Jun 18 %D %D %D Key metrics R'm R'm R'm R'm R'm Revenue 7,688 8.1% 8,311 -20.4% 6,619 2,981 -8.5% 2,729 EBITDA 299 -16.4% 250 -3.6%
Slide 15: Noteworthy transaction
Noteworthy transaction Portfolio review Transaction agreements have been concluded that should see the successful disposal of the investment in Joy Wing Mau in China for ~R1,18bn. • Capespan’s interest in GWM has reduced over recent years • No longer strategic influence - decided to exit this invest
Slide 16: Key observations
Key observations Portfolio review 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 • Port and te
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 and management team that provide us with an attractive entry into logistics related technology. THE LOGISTICS COMPANY • Embrace technology platforms – Transport managemen
Slide 18: An evolving Logistics Group
An evolving Logistics Group Portfolio review By combing the existing cargo flow and division of Capespan with TLC platform, we aim to establish a leading technology enabled transport platform. THE LOGISTICS GROUP TLG Customer focused… … Technology led… … Capability enabled Client engagement Platform
Slide 19: Business overview
Business overview Portfolio review Kaap Agri is a leading Agri-related retail, trade, supply and services company. 18
Slide 20: Interim results
Interim results Portfolio review 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. 19
Slide 21: Key observations
Key observations Portfolio review Kaap Agri is a leading and continuously improving group with attractive organic growth potential and selective M&A pipeline opportunities. • Improved climatic conditions in the Western Cape following severe drought • Successfully restructured divisions with clearly
Slide 22: Business overview
Business overview Portfolio review Zaad is a specialist agricultural seed company that develops and supplies a broad basket of proprietary seeds to more than 96 international markets. 21
Slide 23: Interim results
Interim results Portfolio review Zaad’s results for the 6-month period ended 31 July 2018 are pleasing as they move into the 2nd half when most of the annual sales is traditionally generated. Summarised Income Statement Feb 16" Jan 17* Jan 18 Jul 17 Jul 18 %Δ %Δ %Δ Key metrics R'm R'm R'm R'm R'm Re
Slide 24: Key observations
Key observations Portfolio review Zeder continues to support Zaad and has made additional capital commitments as the group aims to deliver on its ambitious objectives. • Zeder invested R145m during FY2018 and R192m during 1H2019 • Additional gearing has negative earnings impact in the short term but
Slide 25: Business overview
Business overview Portfolio review 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 (irrigat
Slide 26: Interim results
Interim results Portfolio review Disappointing recurring losses continue but underlying business operating well and plans underway to fix and stabilise. Summarised Income Statement Dec 15 Dec 16 Dec 17 Jun 17 Jun 18 Δ% Δ% Δ% Key metrics $'000 $'000 $'000 $'000 $'000 Revenue 31,711 25.2% 39,718 -12.0
Slide 27: Business overview
Business overview Portfolio review Quantum is South Africa’s #1 commercial egg supplier and operates a regionally dominant and nationally recognised premium animal feeds business. Farming 26
Slide 28: Solid interim results
Solid interim results Portfolio review Despite challenging macro conditions, Quantum benefitted from lower commodity input costs and improved egg prices as reported for its 6-months ended 31 March 2018. • Operating profit increased by 477% for the 6-months ended 31 March 2018 • African operations sh
Slide 29: 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 30: 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 31: Prospects and outlook
Prospects and outlook 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 • Indicati