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Seed Co FY2013 presentation

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Seed Co FY2013 presentation for the year ended 31 March 2013

Seed Co FY2013 presentation for the year ended 31 March 2013

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  • 1. Audited Full Year IncomeStatementMARCH 2013US $ MMARCH 2012US $ M% INCREASE/(DECREASEREVENUE 110,6 117,7 (6%)OPERATING EXPENSES 30,9 29,3 5%FINANCE COSTS 7,4 4,3 72%P B T 15,5 23,4 (34%)PAT 12,6 19 (34%)
  • 2. Full Year EBITDA & EPS05,00010,00015,00020,00025,00030,0002009 2010 2011 2012 201318,23019,66328,17529,90026,341Group EBITDA $ 000s6.62 6.779.059.916.49-2.004.006.008.0010.0012.002009 2010 2011 2012 2013EPS( US cents)
  • 3. Sales VolumesMARCH 2013Metric tonesMARCH 2012Metric tones%INCREASE/(DECREASEMAIZE 34 667 35 678 (3%)WINTER CEREALS 2 758 5 450 (49%)COTTON 11 867 12 148 (2%)SOYA BEANS 7 581 5 221 45%
  • 4. Maize & Cotton• Maize seed– Very late rains in the main markets– Reduced Gvt & related input programmes– Tight liquidity facing Small scale farmers• Cotton seed– Slow uptake of seed due to price disputes inindustry
  • 5. Winter Cereals• Continued weak demand– Poor Commodity prices– Power shortage• Soya beans- Increased demand for soyabeans in the region
  • 6. F2012Turnover ContributionZimbabwe33%Zambia23%Malawi14%SCI4%SC Tanzania7%Kenya5%Quton Zim11%Quton Tanzania3%F 2013
  • 7. Gross MarginsFULL YEAR 2013 FULL YEAR 2012GP % 46 45Devaluation of the Malawi kwachareduced the growth in margins
  • 8. Operating Costs & Finance Charges• Operating Costs up 5% due to– Right sizing costs of $2m across the Group• Finance charges up 72% due to-carry over borrowings used to finance thestocks-Increase in interest rates due to liquiditychallenges in Zim and Malawi
  • 9. Statement of Financial PositionSummary of Assets at year end
  • 10. Debtors Perfomance• Zimbabwe:There has been good progress on the 13,7m due fromZim Gvt last year which has cumulatively paid 9,1mleaving a balance of 4,6m now expected to be paidbefore June 2013Other related input programmes in Zimbabwe owe$11,2m on current year sales ,expected to pay bySeptember 2013 Payments still slow on some overdue Zim debtors.• Other CountriesNo problems expected from both Gvt and Othertraders in the region
  • 11. Inventories & Borrowings• InventoriesMaize Stocks down from 49k mt to 36,9mt Zim stocks down from 23k mt last year to 13k mtStocks now balanced• BorrowingsBorrowings have remained unchanged at $45m due todelayed payments from major debtors ( esp Gvt)Interest rates now down to a weighted average rate of11,75% pa16%
  • 12. FULL YEAR 2013FULL YEAR 2013Operations Review
  • 13. THE SEED BUSINESS
  • 14. General EnvironmentZambia Economy booming Rebasing of the kwacha Continued participation in inputs schemes by Govt Low tax regime Introduction of new exchange controlsZimbabwe Depressed Government input activity Liquidity still a serious issue Payment issues ElectionsMalawi• Continued kwacha devaluation• Seed Input programme up• Renewed confidence• New factory back on track
  • 15. Environment contd• East Africa– Growing market– Inroads into Rwanda• West Africa– Growing economies– Muslim insurgency
  • 16. What have we been focussing on ?• Reducing stocks to free up cash• Chasing up debtors• Reducing costs through rightsizing• Growing business in new markets• Identify technical partners in West Africa• Reducing borrowing costs• Technology enhancement of Research activities• Widen product basket in East Africa – Highlandvarieties• Research on MNLD in East Africa
  • 17. Key developments• 16 new varieties released in 2013• 300 series released – bulking up in progress• Technology lab nearing completion• Monsanto & PSR agreement – F1 conversions now in the groundin USA• Breeders compliment beefed up• MLND Research in East AfricaResearch & development-0.501.001.502.002.503.003.504.004.502009 2010 2011 2012 20130.771.443.214.23 4.22Investment in R & D$m
  • 18. MLND INFECTION
  • 19. MLND IN EAST AFRICA
  • 20. MLND IN EAST AFRICA.
  • 21. Production• Production right-sized• Maize:• Stocks back to desired carry by next financial yearend• Focus on quality• East Africa production being managedClosing stock 2013 36600Expected deliveries 23500Total available for sale 60100Expected sales 44000Projected closing stocks 16100
  • 22. Aggregate ProductionCrop 2012/13 2013/14Maize 29,300 23,500Cotton 16,900 12,200Soya beans 10,000 10,500Winter Cereals 2,700 2,650Totals 58,900 48,850
  • 23. Processing Capacity• New Seed processing plant in Kenyacommissioned in January• New Acid delinting plant commissioned earlythis year in– Mwanza, Tanzania– Lilongwe, Malawi• Malawi factory construction – expecting tocomplete in April 2014
  • 24. Penetration•Last mile reduced with appointment ofadditional distributors in all markets•Extension officers recruited in Zim, Malawi,Zambia and Tanzania to assist withproliferation
  • 25. Proliferation• West AfricaAgreement with Saro Agro-Sciences in Nigeria signedMO826 about to be released• DRCDRC Depot was operational for first time – good earlyindications• EthiopiaProduction facilities still a stumbling block• East AfricaDistribution network grownRecruitment of growers for the highlandsFirst sales in the highlands
  • 26. OUR FOOTPRINT…..
  • 27. Key challenges inside our controlCurrenttrendComment Previous trendGrowerproductivity• Higher yields• Quality going upCosts • Unit costs are comingdown• Bad debts a concernStaff • Headcount reduced by 90
  • 28. Current trend Comment Previous trendCost of debt • Reduced WACC• Average no around 11%Sales • Volumes up in Malawi andEast Africa• New cotton plants in Malawi& Tz• Zim depressedInventories • Inventories reducing• Working capital freedKey challenges inside our control
  • 29. CurrenttrendComment PrevioustrendWeather • Erratic RainsSeed prices • Prices up in Zambia & EastAfrica• Depressed demand in Zim• Kwacha devaluation inMalawiSeed demand • Opportunities in East Africa& Malawi• Buying power +ve – region• Buying power neutral – ZimCompetition • Maintaining our position• Growing regionallyKey challenges outside our control
  • 30. CurrenttrendComment PrevioustrendPolitical • Uncertainty• Inconsistent Governmentpolicies• Election year?Bankingsector• Unstable• Absence of credit• Liberal exchange controls• High rates of interestMacro -climate• Appears to be growthKey challenges outside our control
  • 31. Outlook• Reduced stock holding freeing up cash• Better support for agriculture after elections – serious maize deficitlooming• Upcoming elections in Malawi should drive up demand in that market….• The new cotton seed businesses to start contributing meaningfully in thecoming year• Continued upward growth projectile in East Africa.• Reduced costs as a result of the right-sizing• Continued business development efforts in West Africa• Introduction of the e-voucher system in Zambia should give the farmerschoice in terms of the seed they buy• The recently released 300 series should also increase uptake bycommunal farmers in drier areas due to their earliness• Our products will continue to outperform the competition

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