PRE PRESE SENT NTATION TION FOR THE 12 MONTHS ENDED 30 SEPTEMBER - PowerPoint PPT Presentation

AN ANNU NUAL AL RESUL RESULTS TS PRE PRESE SENT NTATION TION FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2017

AGENDA  Business Overview – Page 3  Industry Trends – Page 20  The Period in Perspective – Page 28  Financial Overview – Page 30  Industry Matters – Page 41  Outlook – Page 43 Additional Information – Page 46  2

BUSINESS OVERVIEW

BUSINESS OVERVIEW  A year of two distinct halves impacted by both feed input costs and poultry selling prices  The year under review includes a number of factors that distort year-on-year comparisons and trends  Operational realignment and specialised focus has contributed positively to the group’s results 4

BUSINESS OVERVIEW  Revenue 3%  Profit before interest and tax Key ey 97% Fin Finan ancia cial l Ind Indica icator tors  Earnings per share 102%  Headline earnings per share 97% 5

BUSINESS OVERVIEW Feed Poultry  Sales volumes down  Sales volumes down (brine)  General market contraction  Planned production cutbacks  Lower internal feed required  Average sales realisations up  Old / New season crop swing  Feeding cost decreased  Maize price disparity  Bird performance improvement  Rand per ton net margin down  HPAI (bird flu) negative impact Other Africa  Improved profitability – better performance from all three countries 6

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POULTRY DIVISION - OVERVIEW Revenue - R million Operating profit - R million 700 10,000 9,850 9,000 9,129 600 630 8,000 500 7,000 6,000 400 5,000 300 4,000 3,000 200 2,000 100 1,000 59 - - F2016 F2017 F2016 F2017   Revenue up 7.9% Operating profit up • • Broiler sales volumes down 8.6% Selling price contribution • • Broiler sales realisations up 20.6% Net margin 6.4% F2016: 0.5% 8

POULTRY DIVISION - OVERVIEW  Broiler sales volumes decreased by 8.6% (≈ 41 000 tons) mainly due to the new brine legislation and planned broiler production cutbacks of 3 million birds  Broiler sales realisations increase impacted by a shift in the product offering due to the brine impact and the recovery of inflationary cost contributors  IQF sales realisations were higher as the lower priced 30% IQF was discontinued and replaced with 15% brined IQF at a higher cost  Broiler feed prices increased year-on-year by 3.3%, due to an enhanced feeding programme, despite lower raw material costs in the latter half of the year  Improved broiler production efficiencies – FCR improvements on new feeding programme more than offset the increased feed price  Highly pathogenic avian influenza – biological stock write-off of R54 million 9

POULTRY DIVISION - OVERVIEW Product Mix 21% 22% F2017 F2016 5% 436 694Tons 49% 478 019Tons 53% 7% Volume decrease ≈ 8.6% 13% 14% 5% 3% 4% 4% 10 10

BROILER PRODUCTION PERFORMANCE 120.0% 115.0% 110.0% 105.0% 100.0% 95.0% 90.0% 85.0% 80.0% Key indicators base-lined to 100% in F2012 75.0% F2012 F2013 F2014 F2015 F2016 F2017 Mortality Feed conversion (FCR) Efficiency factor (PEF) 11 11

BROILER PRODUCTION PERFORMANCE 106% 104% 102% 100% 98% 96% Key indicators base-lined to 100% in F2012 94% F2012 F2013 F2014 F2015 F2016 F2017 Slaughter age Live weight Average daily gain 12 12

BROILER PRODUCTION PERFORMANCE 140% 135% 130% 125% 120% 115% 110% 105% 100% 95% Key indicators base-lined to 100% in F2012 90% F2012 F2013 F2014 F2015 F2016 F2017 Broiler feed price index Feed conversion efficiency index Feeding cost index 13 13 Source: Own Data

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FEED DIVISION - OVERVIEW Revenue - R million Operating profit - R million 500 7,000 485 7,190 6,583 6,000 400 391 5,000 300 4,000 200 3,000 2,000 100 1,000 - - F2016 F2017 F2016 F2017   Revenue down 8.4% Operating profit down 19.3% • • Sales volumes down 4.8% Net margin 5.9% F2016: 6.7% • • Average selling prices down 3% Difficult trading conditions 15 15

FEED DIVISION - OVERVIEW  Feed volumes decreased due to lower internal feed requirements and lower external feed sales  Competitive intensity in the commercial feed market on surplus capacity available in the industry  Record high feed prices in first half of F2017 on back of raw material positions due to limited procurement opportunities on worst maize crop in 2016 (7,7 million tons – “price disparity”)  Record high maize crop in 2017 resulted in a significant drop in animal feed prices in the second half of F2017 (16,7 million tons)  Total expenses were well contained however the lower volumes negatively impacted margin contribution 16 16

FEED DIVISION - SALES Meadow Feeds - Sales Mix 14% 13% F2016 F2017 20% 21% 1 396 301Tons 1 329 771 Tons Volume decrease ≈ 4.8% 60% 60% 6% 6% 17 17

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OTHER AFRICA DIVISION - OVERVIEW Revenue - R million Operating profit - R million 550 27 500 25 515 450 400 427 20 350 300 15 250 200 10 150 100 5 5 50 - - F2016 F2017 F2016 F2017   Revenue down 17.2% Operating profit up • • Sales volumes down 12.7% Net margin 6.3% F2016: 1% • • Average selling prices down 6.3% Zambia feed mill good performance 19 19

INDUSTRY TRENDS

SAFEX YELLOW MAIZE PRICE 21 21 Source: CJA Strategic Risk Brokers

SAFEX YELLOW MAIZE PRICE vs. CBOT IN RAND TERMS 22 22 Source: CJA Strategic Risk Brokers

SAFEX SOYA BEANS PRICE 23 23 Source: CJA Strategic Risk Brokers

10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 Source: SAPA 5,000 POULTRY IMPORTS PER MONTH - Oct-11 Tons Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Total poultry imports Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 6 per. Mov. Avg. (Total poultry imports) Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 24 24

BROILER SELLING PRICES IQF cost Index (Rand per kg) recovery on 170% 25 new legislated 24 160% brine levels 23 22 150% 21 20 140% 19 130% 18 17 120% 16 15 110% 14 13 100% 12 11 90% 10 80% 9 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Broiler selling price index Six month average 25 25 Source: Own Data

BROILER PRICE vs. FOOD PRICE INFLATION IQF cost 170 170 recovery on new legislated 160 160 brine levels 150 150 140 140 130 130 120 120 110 110 100 100 90 90 80 80 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Broiler selling price index SA food price index 26 26 Source: Own Data & CJA Strategic Risk Brokers

-25% -15% Source: Own Data 15% 25% 35% CHANGE IN BROILER PRICE vs. FEED PRICE -5% 5% Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 % Change in feed price Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 % Change in broiler selling price Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 27 27

THE PERIOD IN PERSPECTIVE

THE PERIOD IN PERSPECTIVE  PBIT reconciliation 1,600 (R million) *20.6% 31 1,400 199 -67 -54 -303 1,200 1,000 689 * 9.7% 800 600 1,079 400 549 752 200 -718 * 10.9% 0 -200 PBIT F2016 Poultry Price Sales Feeding External HPAI Profit on Other PBIT F2017 Sales Adjustment Realisations Cost Feed Sales Biological Sale of Volumes Brine Stock Investment * Increase in sales realisations 29 29

FINANCIAL OVERVIEW

ABRIDGED STATEMENT OF COMPREHENSIVE INCOME 2017 2016 % change Year ended 30 September R million R million 3% Revenue 12 351 11 954 Operating profit 1 048 549 91% Operating profit margin 8.5% 4.6% Profit on sale of investment 31 - Profit before interest and tax 1 079 549 97% PBIT margin 8.7% 4.6% Net finance costs (15) (22) Share of profit in associates - (1) Profit before tax 1 064 526 102% Tax (309) (154) 103% Profit for the period 755 372 Headline earnings 735 373 102% EPS – Cents 1 948 964 HEPS – Cents 1 899 965 97% 31 31

GROUP ANNUAL REVENUE (R billion) 16.000 14.000 12.4 12.0 11.3 12.000 6.6 9.6 10.000 7.2 6.2 8.5 8.2 7.4 7.2 8.000 7.0 6.9 5.5 6.3 4.9 4.3 6.000 5.2 3.5 4.0 3.6 4.8 5.1 3.5 9.9 4.1 3.9 9.1 3.7 8.7 2.7 4.000 2.5 2.8 7.0 6.0 5.8 2.7 2.7 5.3 5.1 5.0 2.7 4.6 4.4 2.000 2.0 3.6 3.3 2.3 2.2 1.7 1.3 0.000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Poultry Feed Other Africa External revenue 32 32