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Seed Co Limited Group presentation by the Group CEO

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Seed Co Limited Group presentation by the Group CEO - 2010

Seed Co Limited Group presentation by the Group CEO - 2010

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  • 1. The African Seed CompanyPresentation by Morgan Nzwere Group CEO
  • 2. Structure of presentation1.1 History and Structure2. Business model3.3 Strategic Partners S i4. Impact of Seed Co in Africa’s smallholder farming5. Group performance pp6. Future prospects
  • 3. THE STORY OF OUR LIFE…. • 1940     Born as Seed Maize Association • 1949 Rattray and Arnold produced 1st hybrid for sale 1949     Rattray and Arnold produced 1 hybrid for sale • 1960 SR52 (1st commercial hybrid) released 1960     SR52  (1 commercial hybrid) released • 1977      Rattray Arnold Research station purchasedThe African Seed Company
  • 4. • 1991   Stapleford facility opened• 1991   Kadoma Research Station acquired• 1996   Floated on ZSE• 1997  Acquisition of Semoc ‐ M 1997 A i i i fS Mocambique bi• 1998   Seed Co Zambia • 2000   Seed Co Botswana 2000 Seed Co Botswana• 2001   Seed Co Malawi • 2002   Syngenta – Seed Co JV in SA y g• 2006  Quton acquired• 2010  Tanzania SBU established• 2010   Search for new horizons intensifying • Ethiopia • Kenya • West AfricaThe African Seed Company
  • 5. VISION To dominate the seed business in Africa! To dominate the seed business in Africa!The African Seed Company
  • 6. SEED CO Group Structure HOLDING COMPANY SEED CO LIMITED Quoted on ZSE PROPERTY  REGIONAL OPERATIONS ZIMBABWE  REGIONAL  OWNING  QUTON TANZANIA SEED CO INTERNATIONAL OPERATIONS OPERATIONS (100 OWNED) COMPANIES (BOTSWANA 100% OWNED) (100% OWNED) SEED CO ZAMBIA (ZIMBABWE) (87% OWNED) SEED CO  AGRI SEED CO  QUTON  SEED CO MALAWI  INTERNATIONAL  KENYA TANZANIA (100% OWNED) TANZANIA (100% OWNED) (75% OWNED) (100% OWNED)The African Seed Company
  • 7. MAJOR SHAREHOLDERS1.1 AICO AFRICA LIMITED2. OLD MUTUAL LIFE ASSURANCE COMPANY ZIMBABWE LTD3. FED NOMINEES (PVT) LTD4. BARCLAYS ZIMBABWE NOMINEES (P/L5. OLD MUTUAL ZIMBABWE LTD6. STANBIC NOMINEES (PVT) LTD NNR ( )7. LOCAL AUTHORITIES PENSION FUND8.8 NATIONAL SOCIAL SECURITY AUTHORITY-WICF9. DATVEST NOMINEES (PVT) LTD10. EDWARDS NOMINEES (PVT) LTD NNRThe African Seed Company
  • 8. LEADERSHIPThe African Seed Company
  • 9. CONTINENTAL FOOTPRINT• Seed Co Zimbabwe• Seed Co Zambia• Seed Co Kenya• Seed Co International (Botswana)• Seed Co Malawi• National Seed Co of Zimbabwe• Seed Co Swaziland• Seed Co Uganda Substantive Presence Agencies The African Seed Company
  • 10. OUR BUSINESS IDEA SeedResearchR h Seed Seed Marketing & Production Processing Distribution Strong Market  High rate of  Optimum Hybrid  Revolutionary  Share product  Mix approach to  New Markets innovation d seed processing  Strong Outgrower  at least cost Strong  World Class  Network Distribution Breeding Systems Use of world  World Class  class processing  Strong ads &  y Product Life Cycle y Quality Standards and packaging  branding Germplasm  technologies Strong  Protection Seed treated at  Customer  Marker Assisted  own plants or  focus Breeding leased facilities Unique core  brand  architectureThe African Seed Company
  • 11. OUR BUSINESS MODEL • Building barriers to entry –•Five step model in  1. Product line building new markets up, germplasm, big lead  up germplasm big lead1.Export times2.Open a local office3.Begin local production  2. Customer loyalty, deliver activities right products at right 4.Transfer of Hub 4 Transfer of Hub timeactivities, finance, mktg5.Hub provides  3. Facilities, capital intensive , pidentity, germplasm, brand 4. People, good working  environment,  Zim  situation has come rightThe African Seed Company
  • 12. OUR BUSINESS MODEL• Outsourcing Outsourcing  Growth opportunities  Growth opportunities Criteria1. Distribution – • Build relationships in target  Wholesalers & Retailers markets • Size of market must be 2. Maintenance of plant  meaningful and machinery d hi • Must be a commercial grain Must be a commercial grain 3. Major  IT work market g g g • Language, Culture, Legal  and Banking systems 4. Accounting package former Commonwealth  countries good for this countries good for this5. Production • Continuous wherever  possible e.g. East Africa • West Africa will be a big  step, caution!The African Seed Company
  • 13. OUR BUSINESS MODEL• Finance and Admin – Finance and Admin  • H Human Resources – R Working capital  Key part of group strategy financed through  borrowings, usually  b i ll • Training and development Training and development  secured by stock with or  important part of KPI’s without CMA • Hire locals to run • good support from  businesses in new  banks over time, a good  countries of operation lend for them ± 180 day  lend for them ± 180 day • Induction new recruits Induction ‐ new recruits  tenure “The Seed Co Way”• Capex mostly funded  p y • Manage and codify  internally from profits institutional knowledge  ISO 9001: 2008The African Seed Company
  • 14. OUR BUSINESS MODELOther issues –• Very strong boards of directors Very strong boards of directors• Good relationships with bankers and investors  (providers of capital) (providers of capital)• Close to Govt. Seed agencies• Work closely with CIMMYT ICRISAT etc Work closely with CIMMYT, ICRISAT etc.• Very strong germ plasm library• T h i l Technical cooperation (Syngenta) ti (S t )
  • 15. Core competencies/key competitive  advantages • Strong research capacity Strong research capacity • Sound understanding of developing  markets k t • Product range and adaptability g p y • Entrepreneurial • St Strong well established brand ll t bli h d b d • Strong balance sheet gThe African Seed Company
  • 16. • Good corporate governance  Good corporate governance • Good relationship with input suppliers • Innovative and aggressive I ti d i • Social responsibility programmes • Sound value systems • Strong management g gThe African Seed Company
  • 17. SEED‐CO RESEARCH CENTRES Station Date Est,    Location & Ecology Date Est Location & Ecology Biotic & Abiotic Biotic & Abiotic Country stresses RARS 1972,  17O 16 S    31O 03 E GLS, MSV, Ht,  Zimbabwe Alt: 1341m R/fall: 865mm KRC  KRC 1996,  1996 18O 21 S     29O 50 E  21 S 29 50 E Heat & drought Heat & drought Zimbabwe Alti: 1149m R/fall: 777mm (erratic) SRS 2001,  17O 21 S   30O 54 E GLS, MSV, Ht, PLS Zimbabwe Alt: 1300m  R/fall: 1500mm /• Realised need to develop seed products in ecological conditions nearest and similar to the end users` environment• Currently date Seed Co owns five Research Stations situated in Zimbabwe, Zambia and East Africa Currently date Seed Co owns five Research Stations situated in Zimbabwe Zambia and East Africa• Umbeluzi Seed Co Research Station in Mozambique was closed down due to logistical problemsThe African Seed Company
  • 18. SEED‐CO RESEARCH CENTRES CONT….Station Date Est,    Location & Ecology Biotic & Abiotic stresses CountryMSRS in  2003, 13O 32 S   28O 03 E Diplodia ear rots, NCLS, Ht, Copperbelt Zambia Alt: 1300m GLS,Rust, Septoria, soyabean rust GLS Rust Septoria soyabean rustBorrasus R/fall: 1500mmfarm (Wet, humid)EARC in  2004,  01O 07 N  34O 53 E Highland rust, GLS, Ht, ear rots,Kitale Kenya  Alt: 1830m Cold tolerance Highlands g R/fall: 1500mm  R/fall 1500mm (cold)Zim, Zam,  Seed Co Mal, RSA, Mal RSA maize, wheat, soyabean, sorghum  maize wheat soyabean sorghumTanz, Moz,  varieties widely evaluated for CCU, Benin,  adaptability and registered in etc many African countries in past 10  years.The African Seed Company
  • 19. PRODUCTPORTFOLIO
  • 20. Maize Hybrids
  • 21. Maize Maturity Groups y p
  • 22. COTTON SEED
  • 23. Wheat Hybrids
  • 24. SOYA HYBRIDS
  • 25. SMALL GRAINS
  • 26. Market share• Zimbabwe .... +/‐70% market share• Zambia ..... 55% bi %• Malawi..... 53%• Tanzania ... 30%• Kenya.... Kenya 10%• Ethiopia, West Africa ... 0% ..big opportunity!
  • 27. VERY HIGH QUALITY STANDARDS • Germination (minimum) ‐ 90% • Physical purity (minimum) ‐ 99% • Insect damaged seed (maximum) 1.5% • Damaged seed (maximum) ‐ D d d( i ) 0.75% 0 75% • Diseased seed (maximum) ‐ 0.75% • Total defects (maximum) ‐ 2.0% • Genetic purity (minimum) ‐ Genetic purity (minimum) 95%  95% Seed Co Production FieldThe African Seed Company
  • 28. STRATEGIC PARTNERS• Technical • Customers – Syngenta – Govt agencies• Distribution – NGOs – Retailers – End use farmers – Depots p • Bankers a es – Agencies (Suba & – Stanbic Syngenta) – Standard• Suppliers – Zanaco – Growers – Inputs
  • 29. IMPACT OF SEED CO BREEDING IN  SMALLHOLDER AGRICULTURE IN AFRICA IN: MAIZE• First organization to introduce productive hybrid maize culture in First organization to introduce productive hybrid maize culture in  Smallholder Agric Sector in Africa.• SC maize hybrids R201, SC501, SC401, SC403, SC513, and SC627  substantially raised small holder maize yield the past 40 years. b t ti ll i d ll h ld i i ld th t 40• SC maize hybrids converted Zambia, Malawi, Botswana, Swaziland, South  , y p y Africa, Kenya and Tanzania from Open Pollinated maize varieties to hybrid  culture.• Malawi in particular, benefited overwhelmingly from use of SC403, SC407,  SC627 and SC713 as opposed to maize OPVs  and achieved a national  SC627 and SC713 as opposed to maize OPVs and achieved a national bumper harvest of 3,6 million metric tones i.e. twice their domestic  requirements.The African Seed Company
  • 30. MAIZE CONTINUED..• To date released 32 maize hybrids, some widely adapted, others proactive  in disease resistance and drought stress tolerance, Wide choice within  maturities ranging from very early to very late maturity hybrids.• Wide Regional adaptation shown by Seed Co hybrids:‐ – SC403 SC407 (Shoko in Zimbabwe & Zambia Ganyani in Malawi SC403, SC407 (Shoko in Zimbabwe & Zambia, Ganyani in Malawi,  Duma 43 & 41 in East Africa) – SC627 (Shumba in Zimbabwe, Zambia and Malawi, Simba in East  Africa) – SC513 (Mbizi in Zimbabwe, Zambia and Malawi, Punda Milia in East  Africa). Africa) – SC719, SC721 and SC727 (Nzou in Zimbabwe, Zambia and Malawi,  Tembo in East Africa)The African Seed Company
  • 31. MAIZE CONTINUED…• Pioneer in the release of Maize Streak and Mottle Virus resistant  hybrids; SC403, SC411, SC533, SC535, SC627, SC635, SC641, SC633,  SC627, SC713, SC719, SC721 and SC727. SC627 SC713 SC719 SC721 and SC727• First organization to address Grey Leaf Spot disease pandemic with  SC625 and SC709 followed by SC513, SC533, SC535, SC506, SC627,  SC625 and SC709 followed by SC513 SC533 SC535 SC506 SC627 SC621, SC602, SC604, SC641, SC633, SC635, SC637, SC713, SC715,  SC719, SC721 and SC727• Seed Co heat drought stress tolerance trait incorporated in SC533  and SC529.• At verge of releasing 3‐series (Tsuro) ultra early hybrids. The African Seed Company
  • 32. SOYABEANS • Pioneer and largest soyabean Breeding Programme in Central  and East Africa with 21 varieties released so far. • Some varieties entered in 3 4 5 6 tonne clubs Some varieties entered in 3, 4, 5, 6 tonne clubs. • World leader in de novo breeding and release of pandemic  soyabean rust resistant varieties. • Programme is the first to release vegetable soyabean variety Programme is the first to release vegetable soyabean variety  in Africa and solved the Red Leaf Blotch and Frogeye disease  problems.The African Seed Company
  • 33. WHEAT • Top programme in release of high yielding, high industrial  pp g g y g g quality irrigated wheat with grain potential up to 11  tonnes/ha. • ± 90% of wheat grown in Zimbabwe, Zambia, Malawi and  Mozambique are to Seed Co wheat varieties which are widely  adapted i.e SC Nduna, SC Smart, SC Shangwa, SC Stallion and  adapted i e SC Nduna SC Smart SC Shangwa SC Stallion and SC Sky. • High field resilience and durable disease resistance  incorporated in these varieties.The African Seed Company
  • 34. COTTON • Seed Co acquired Quton, a cotton seed company from Cottco  in 2006 • Only company doing cotton planting seed in Zimbabwe • Quton breeds, processes and markets improved cotton seeds  to largely smallholder sector in SADC region • Quton has recently released a superior cotton variety in terms  of lint yield and quality (QM301) for adoption in SADC • Fast progress in incorporating genetically modified herbicide  tolerance and insect pest resistance in the new competitive  varieties is being made varieties is being made • New opportunity in TanzaniaThe African Seed Company
  • 35. GROUP EARNINGS $80,000,000 $70,000,000 $60,000,000 $50,000,000 Turnover $40,000,000 PBT PAT $ , $30,000,000 , $20,000,000 $10,000,000 $10 000 000 $- 2006 2007 2008 2009 2010The African Seed Company
  • 36. CONTRIBUTION TO SALES VOLUME F2009/10 • Maize (hybrid and OPV) 73% • Cotton 12% • Winter cereals (wheat and Barley)  5% • Soya  8% • Others 2%The African Seed Company
  • 37. SEED CO SHARE PRICE TREND US cents (Bi monthly  prices)120 102100 100 95 95 95 93 93 92 92 90 89 87 87 85 82 82 82 80 80 77 77 75 75 75 74 75 70 70 70 70 70 6560 2009 share price USc 47 2010 share price US h i USc40 38 30 2520 20 20 9 - 19 27 16 30 15 30 15 1 Jun 15 1 Jul 15 3 14 31 15 29 15 30 16 1 15 31 Feb Feb Mar Mar Apr Apr may Jun Jul Aug Aug Aug Sept Sept Oct Oct Nov Dec Dec Dec The African Seed Company
  • 38. Issues.....• Growing production capacity• Growing processing capacity• Cost f f di i C of funding in some marketsk• Continuity of donor funded programmes• GMO question
  • 39. Funding requirements g• Annual working capital –US$35m US$35m• Malawi and Zambia centralised processing /warehousing facilities – US$8m• East African expansion – US$7m• Progressive replacement of ageing equipment +/-US$15m over next three to five years
  • 40. Sources of increased profitability.. yShort-term• Zim production trebling• Zambia centralisation of facilities• New Tanzanian SBU establshd to meet demand• Going it alone in Kenya – increasing margins• Malawi production being ramped up• Exclusive cotton seed opportunity in Tanzania• I Increasing donor programmes i d• Seed a powerful electioneering weapon
  • 41. Sources of increased profitability.. yMedium to long term• New maize seed markets beckoning: – Ethiopia, Nigeria, Benin, Angola... p , g , , g• Replicate the cotton seed model in other markets• Strategic alliances ( Brazil with Syngenta)• V ti l integration – own production Vertical i t ti d ti• Large scale agriculture• Related diversification – chemicals etc
  • 42. We can.. We Will…!!!The African Seed Company