Annual General Meeting Presented by: Norman Celliers Chief - PowerPoint PPT Presentation

Annual General Meeting Presented by: Norman Celliers Chief executive officer 22 June 2018

An investment holding company Company overview We play an active role in investee companies through Business definition strategic interests with a controlling influence. Business definition Strategic Focus • • Agribusiness An actively managed investment holding Industry: company listed on the Johannesburg • Food and Beverages Sub‐sector: Securities Exchange • Adjacent and related • South Africa (direct) Geography: • Long‐term value investor with a primary • Sub‐Sahara Africa (direct) focus on Agribusiness, food and related • Rest of World (via portfolio) industries • Arbitrage Criteria: • • Undervalued Key characteristics of investment • Growth sectors considerations: • Consolidation – Sustainable growth sectors or sub‐sectors – Management with proven track record • Active Influence: – High barriers to entry  Boards – Unique and defendable products (brands)  Management – Simple (easy to understand) and scalable business  Strategy models  Transactions – Focused execution Invest in and build businesses 1

Challenging conditions prevailed Performance review The financial results reflect a period of challenging environmental Operating environment conditions exacerbated by high levels of political and economical volatility. Many of these factors have improved recently. 2012 – 2014 2014 – 2016 2016 – 2018 2018 – 2020 • Agri Cooperatives • Agribusiness – food and • Agribusiness – food, • Agribusiness and broadly Industry focus: beverage beverage and directly related or adjacent related • Rebalance portfolio • Ensure investee • Implement strategies • Monitor and assist Our strategy: • Exit non‐core • Introduce required KPI’s companies have existing companies • Increase position in • Find 1 or 2 substantial sustainable growth and measurement tools • Drive for focus and core strategies in place new investments • Build on smaller high operational efficiencies • Capitalise as required growth investments • RSA stable • RSA stable – risks • RSA deteriorates rapidly • RSA positive change Political environment: • Global volatility (i.e. • Africa regional increase Trump, Brexit etc) improvement • Global volatility remains Economic environment: • RSA credit rating • RSA credit rating risks • RSA credit downgraded • Global supplies • Supressed commodity maintained emerge normalise – marginal • Africa investment • Commodity prices pricing maintained improvement in pricing • Africa appetite reversed • Africa appetite stabilises appetite strong decline • China growth slows • Africa appetite wanes • Economic activity • Economic activity shows • Global growth slows • Economic activity slows deteriorates rapidly signs of improvement ZAR/US$: 7.53 9.01 10.76 11.66 16.17 13.11 11.79 13.80?? • Normalised to wet • Normalised • Emergence of El‐Nino • Peak/decline of El‐Nino Climatic conditions: • WC conditions improving • Emergence of WC drought 2

Sum‐of‐the‐Parts Performance review Zeder’s SOTP value per share decreased by 8.0% from R8.53 FY2018 to R7.85, as of 28 February 2018. 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 2,259 96.9 2,259 Zaad 91.4 1,531 93.2 2,043 93.7 2,143 Kaap Agri 39.8 1,321 40.9 1,376 40.9 1,308 Agrivision Africa 55.6 614 56.0 591 56.0 591 Quantum Foods 26.7 193 27.7 246 27.8 290 Other 39 33 23 Total investments 15,211 14,208 13,224 Cash 173 111 358 Other net assets 120 108 96 Debt funding (798) (1,000) (1,529) SOTP value 14,706 13,427 12,149 Number of shares in issue (net of treasury shares) (million) 1,725 1,710 1,710 SOTP value per share (rand) 8.53 7.85 7.10 • Observations: Pioneer Foods’s share price declined with corresponding negative impact on Zeder’s SOTP value • Follow‐on investments made into Zaad • Share buy‐backs resulting in number of issued shares declining from 1,725m to 1,710m • Increase in net debt 3

Intrinsic value Performance review The recent sideways trend is disappointing but longer Historical overview term outlook remains positive. R’bn R/share 16.00 12.00 14.71 14.00 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 3.15 4.00 2.85 2.57 2.25 2.00 3.09 2.00 1.29 ‐ ‐ Feb 07 Feb 08 Feb 09 Feb 10 Feb 11 Feb 12 Feb 13 Feb 14 Feb 15 Feb 16 Feb 17 Feb 18 SOTP ‐ Total value SOTP per share Share price 4

Earnings and dividends Performance review Despite the decline in earnings of 35,2%, the dividend has been maintained at 11c FY2018 per share due to comparable cash generation and likely non‐recurring factors. Recurring Headline Earnings Dividends R’million R’million 189.8 189.0 800.00 200.00 690.8 180.00 700.00 631.8 160.00 137.1 600.00 140.00 474.0 500.00 414.2 120.00 400.00 100.00 79.4 300.0 80.00 251.1 300.00 60.00 44.1 39.1 200.00 40.00 100.00 20.00 ‐ ‐ Feb 13 Feb 14 Feb 15 Feb 16 Feb 17 Feb 18 Feb 13 Feb 14 Feb 15 Feb 16 Feb 17 Feb 18 Recurring Headline Earnings Dividends Cents per share Cents per share 42.6 42.4 45.0 12.0 11.0 11.0 40.0 35.3 10.0 9.0 35.0 30.6 27.6 30.0 8.0 25.7 25.0 5.5 6.0 4.5 20.0 4.0 15.0 4.0 10.0 2.0 5.0 ‐ ‐ Feb 13 Feb 14 Feb 15 Feb 16 Feb 17 Feb 18 Feb 13 Feb 14 Feb 15 Feb 16 Feb 17 Feb 18 5

Total shareholder return Performance review Notwithstanding the recent pull‐back in share prices, Zeder Shareholder value has outperformed the index and delivered acceptable shareholder returns. Last 5 years Since inception 18.0% ZEDER 16.0% 14.0% 12.0% JSE 10.0% 8.0% 16.0% 15.1% 14.8% 12.9% 6.0% 11.4% 11.2% 4.0% 2.0% 0.0% 2013 ‐ 2018 2007 ‐ 2018 JSE TRI SOTP 6

Robust portfolio with upside Portfolio evaluation We have a stable and resilient portfolio that provides Sum‐of‐the‐parts values additional upside – platforms for further growth. • Established organisations with a material NAV underpin • Well diversified EBIT generating divisions • Leading or competitive relative market shares • Strong balance sheets with conservative capital structures • Strong and reinforced management teams • Active and evolving strategy development and implementation R2 billion Net liabilities Note: Values as at 15 June 2018 7

Business overview Portfolio evaluation Pioneer is South Africa’s 2 nd largest food producer with leading market share positions across a number of core categories and extensive geographical footprint and penetration. 8

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 10.00 1,637 8.83 1,534 9.00 8.32 1,600 8.00 1,400 1,242 6.78 7.00 1,200 6.00 1,000 4.70 853 823 4.42 5.00 800 4.00 600 3.00 400 2.00 200 1.00 0 ‐ Sep‐13 Sep‐14 Sep‐15 Sep‐16 Sep‐17 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Dividends (cents per share) Share price (Rands) 400.0 250.00 365.0 365.0 332.0 350.0 195.76 200.00 173.87 300.0 250.0 221.0 150.00 118.00 112.75 200.0 87.50 132.0 100.00 150.0 100.0 50.00 50.0 ‐ ‐ Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 9

FY17 Variance analysis Portfolio evaluation The variance in profits can largely be ascribed to three factors, some of which should be non‐recurring. 10

An improvement is underway Portfolio evaluation Recent trends show acceptable recovery or defence across most categories. interims 11

Solid interim results reported Portfolio evaluation Pioneer Foods reported improved interim results for the 6‐month period ended 31 March 2018. 12

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

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. Commentary: RHE (R'm) • 171 El‐Nino impact in fruit volumes 180 159 160 – Warm winters 139 – 140 Reduction in irrigation – 20‐30% reduction in volumes 120 98 Own farms plus 3 rd party – 100 78 80 • Cost of restructuring global operations 60 – Realignment for growth 40 – Closing down loss‐making operations 20 • Increased finance and depreciation charges 0 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 – Significant farm expansion – Short‐term impact of expenses with delayed income benefits RHEPS (Rand per share) 0.60 0.53 Outlook: 0.49 0.50 0.44 • Much improved climatic conditions 0.40 – Climatic stabilisation in the north 0.29 – Improving conditions in the south 0.30 0.21 • Restructuring well advanced 0.20 – Better focus 0.10 – Lower relative cost base and model ‐ • CAPEX cycle easing off Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 14