2017 AGENDA Business Overview [# 03] Industry Trends [# 21] - PowerPoint PPT Presentation

interim results presentation for the six months ended 31 March 2017 2017

AGENDA  Business Overview [# 03]  Industry Trends [# 21]  Financial Overview [# 29]  Industry Matters [# 40]  Outlook [# 42]  Additional Information [# 46] 2

business overview 2017

THE PERIOD IN PERSPECTIVE “The period under review includes a number of factors that distort year-on-year comparisons and trends”  Impact of brining legislation  Sales volume / tonnage  Average sales realisation and product mix  IQF cost (15% brine cap)  Impact of revised poultry feeding program  Feed cost  Feed conversion efficiency  Live cost focus  Lower feed volumes  Planned poultry production cutbacks  Marked improvement in feed conversion  External market contraction 4

THE PERIOD IN PERSPECTIVE  Revenue 1%  Operating profit 51% Fina Financ ncial ial Ind Indica icator tors  Earnings per share 55%  Headline earnings per share 54% 5

THE PERIOD IN PERSPECTIVE Poultry Feed  Volumes down  Volumes down  Average realisations up  Market contraction  Record high feed costs  Smallest maize crop on record  Planned production cutbacks  Maize import program  Enhanced feeding program  Old / New season crop swing  Improved poultry efficiencies  Rand per ton margin down Other Africa  Improvement in profitability but contribution relatively low 6

poultry division 2017

POULTRY DIVISION - OVERVIEW Revenue - R million Operating profit - R million 5,000 200 194 4,456 4,436 4,000 150 3,000 100 2,000 50 1,000 22 - - 1H2016 1H2017 1H2016 1H2017   Revenue up 0.4% Operating profit down 88.5% • • Broiler volumes down 10.5% Net margin 0.5% 1H2016: 4.4% • • Avg. broiler realisations up 15.1% Feed costs up 16.8%; where • • IQF brine & mix distortion Feed program cost 4.9% 8

POULTRY DIVISION - OVERVIEW  Broiler sales volumes decreased by 10.5% (≈ 24 000 tons) mainly on the back of the new brine regulations  Broiler production cutbacks equalling 4,6 million birds over the period  Broiler selling prices increased in an effort to recover higher feed and inflationary costs  IQF realisations were higher as the lower priced 30% IQF was discontinued and replaced with IQF brined at 15% with a higher cost  Continued high level of total poultry imports – avg. 8,2 million bpw for the six months ended March 2017 ≈ 45% of local production  Broiler feed prices increased by 16.8% for the period on the back of higher raw material costs (11.9%) and a feed specification change (4.9%)  Improved broiler production efficiencies – FCR improvements partially offset increased feeding costs (live cost up 9.1%) 9

POULTRY DIVISION - SALES Product Mix 22% 23% 1H2017 1H2016 5% 47% 204 887 Tons 52% 228 907 Tons 7% Volume decrease ≈ -10.5% 13% 14% 5% 3% 5% 4% 10 10

POULTRY DIVISION - SALES Poultry Sales Volume Variance Reconciliation • Poultry Production Volume Growth Consignment stock adjustment = 1.2% Lower meat sales = 4.1% Brine = 5.2% 1H2016 = 228 907 t 1H2017 = 204 887 t Sales volumes 1H2017 (decrease of 24 020 tons ≈ 10.5%) 11 11

BROILER PRODUCTION PERFORMANCE 150% 145% 140% 135% 130% 125% 120% 115% 110% 105% 100% 95% 90% 85% Key indicators base-lined to 100% in 2011 80% F2011 F2012 F2013 F2014 F2015 F2016 1H2017 Mortality Feed conversion (FCR) Efficiency factor (PEF) 12 12

BROILER PRODUCTION PERFORMANCE 106% 104% 102% 100% 98% 96% Key indicators base-lined to 100% in 2011 94% F2011 F2012 F2013 F2014 F2015 F2016 1H2017 Slaughter age Live weight Average daily gain Processing yield 13 13

BROILER PRODUCTION PERFORMANCE 190 180 170 160 150 140 130 120 110 100 90 Key indicators base-lined to 100% in 2011 80 F2011 F2012 F2013 F2014 F2015 F2016 1H2017 Broiler feed price index Live cost index Feed conversion efficiency index 14 14

feed division 2017

FEED DIVISION - OVERVIEW Revenue - R million Operating profit - R million 4,000 250 233 3,461 3,448 200 3,000 184 150 2,000 100 1,000 50 - - 1H2016 1H2017 1H2016 1H2017   Revenue down 0.4% Operating profit down 21.0% • • Sales volumes down 8.0% Net margin 5.3% 1H2016: 6.7% • • Average selling prices up 10.4% Difficult trading conditions 16 16

FEED DIVISION - OVERVIEW  Feed volumes decreased due to internal poultry production cutbacks and a drought affected external feed market  Broiler feed conversion efficiency improvements in the poultry division further contributed to the lower internal feed sales  Record high feed prices on back of raw material positions due to limited procurement opportunities on worst maize crop on record (7,7 million tons)  The increase in raw material costs were partially recovered in the selling price of animal feed  Total expenses were well contained however the lower volumes negatively impacted margin contribution 17 17

FEED DIVISION - SALES Meadow Feeds - Sales Mix 13% 13% 1H2017 20% 1H2016 21% 656 169 Tons 605 066 Tons 712 962 Tons Volume decrease ≈ 8% 59% 60% 7% 7% 18 18

other africa division 2017

OTHER AFRICA DIVISION - OVERVIEW Revenue - R million Operating profit - R million 300 6 5 250 258 5 4 200 216 3 150 2 100 50 1 1 - - 1H2016 1H2017 1H2016 1H2017   Revenue down 16.5% Operating profit up 284% • • Sales volumes down 15.5% Net margin 2.4% 1H016: 0.5% • • Average selling prices down 1.3% Zambia improved performance • Mozambique country risk 20 20

industry trends 2017

SAFEX YELLOW MAIZE PRICE 22 22 Source: CJA Strategic Risk Brokers

SAFEX YELLOW MAIZE vs. CBOT IN RAND TERMS 23 23 Source: CJA Strategic Risk Brokers

SAFEX SOYA BEANS PRICE 24 24 Source: CJA Strategic Risk Brokers

Source: SAPA 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 5,000 - Oct-10 Tons Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Total poultry imports Oct-11 TOTAL POULTRY IMPORTS PER MONTH 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 6 per. Mov. Avg. (Total poultry imports) 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 65 658 tons Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 25 25

Source: SAPA 12.00 12.50 13.00 13.50 14.00 14.50 15.00 15.50 16.00 16.50 17.00 17.50 18.00 18.50 19.00 19.50 20.00 20.50 21.00 21.50 22.00 22.50 23.00 Rand per kilogram Oct-10 12.33 12.83 Dec-10 13.51 13.34 Feb-11 13.42 13.20 Apr-11 13.38 13.46 Jun-11 13.18 12.79 Aug-11 12.86 13.56 Oct-11 13.91 14.90 Dec-11 15.53 14.51 Feb-12 INDUSTRY BROILER SELLING PRICES 13.66 Broiler selling price 13.21 Apr-12 13.42 13.15 Jun-12 12.67 12.51 Aug-12 13.40 15.03 Oct-12 15.79 15.55 Dec-12 14.82 13.85 Feb-13 14.08 15.53 Apr-13 15.35 15.24 Jun-13 15.07 15.42 Aug-13 15.44 16.01 Oct-13 16.27 16.26 Dec-13 17.05 16.15 Feb-14 16.60 16.88 Apr-14 16.97 17.13 Jun-14 17.23 15.94 Aug-14 16.96 16.74 Oct-14 17.44 Six month average 18.48 Dec-14 18.68 17.69 Feb-15 17.93 18.32 Apr-15 18.65 19.18 Jun-15 18.82 18.23 Aug-15 18.00 17.88 Oct-15 18.28 19.26 Dec-15 19.15 18.02 Feb-16 18.33 18.05 Apr-16 18.27 18.90 Jun-16 18.57 17.93 Aug-16 18.49 18.43 Oct-16 18.91 21.23 Dec-16 21.92 21.47 Feb-17 21.35 26 26

BROILER PRICE vs. FOOD PRICE INFLATION 170 170 165 165 160 160 155 155 150 150 145 145 140 140 135 135 130 130 125 125 120 120 115 115 110 110 105 105 100 100 95 95 90 90 85 85 80 80 75 75 70 70 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 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 Broiler selling price index SA food price index Poly. (Broiler selling price index) Poly. (SA food price index) 27 27 Source: SAPA & CJA Strategic Risk Brokers

Source: SAPA & Own Data -15% -10% 10% 15% 20% 25% 30% 35% -5% 0% 5% Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 CHANGE IN BROILER PRICE vs. FEED PRICE % Change in feed price 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 % Change in broiler selling price 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 28 28

financial overview 2017

ABRIDGED STATEMENT OF COMPREHENSIVE INCOME 2017 2016 Six months ended 31 March % change R million R million 1% Revenue 5 795 5 823 Operating profit 212 429 51% Operating profit margin 3.7% 7.4% Net finance costs (16) (4) Profit before tax 196 425 54% Tax (60) (124) 55% Profit for the period 136 301 Headline earnings 138 299 54% EPS – Cents 353 777 55% 54% HEPS – Cents 356 774 30 30