Results Presentation

for the six months ended 31 March 2020

Agenda

Business overviewH Lourens

Financial overviewA Muller

Operational overviewH Lourens

OutlookH Lourens

Appendix

2Quantum Foods Results Presentation for the six months ended 31 March 2020

Business overview

H Lourens

3Quantum Foods Results Presentation for the six months ended 31 March 2020

• Revenue 16%

• Operating profit 25%

• HEPS 24%

• Cash generated R62m

• Interim dividend per share 2020 6 cents

• Interim dividend per share 2019 8 cents

HEPS decreased due to continued downturn of egg industry

Business overview

4Quantum Foods Results Presentation for the six months ended 31 March 2020

Business overview

1. Higher raw material prices

• SAFEX yellow maize 5.4%

• Landed soybean meal prices 10.3%

• Bran prices 17.2%

• Hominy chop prices 9.7%

• ZAR weakened by 6.2%

2. Lower egg prices

• SA layer stock Sept 2019 28.1m

March 2020 29.4m

3. Outbreak of COVID-19 at end of March 2020

5Quantum Foods Results Presentation for the six months ended 31 March 2020

Financial overview

A Muller

6Quantum Foods Results Presentation for the six months ended 31 March 2020

Statement of income

For the six months ended 31 March2020

Rm2019

Rm%

change

Revenue 2 439.1 2 103.3 16

Operating profit* 91.4 120.6 (24)

Income from associates 1.2 0.5

Net finance (cost)/income (0.8) 10.1

Profit before tax 91.8 131.2

Tax (25.2) (36.1)

Profit for the period 66.6 95.1

* Operating profit includes capital items 0.1 (0.5)

Adjusted operating profit 91.3 121.2 (25)

Adjusted operating margin 3.7% 5.8%

EPS − cents 34.5 45.2 (24)

HEPS − cents 34.5 45.4 (24)

7Quantum Foods Results Presentation for the six months ended 31 March 2020

Revenue analysis

Total R2 439 million (2019: R2 103 million)

2019: R785m | 37%

ANIMAL FEEDS

R1 085m

EGGS

R578m

FARMING

R647m

AFRICA

R129m

2019: R537m | 26% 2019: R671m | 32% 2019: R110m | 5%

8

44% 24% 27% 5%

Quantum Foods Results Presentation for the six months ended 31 March 2020

Segment results

Adjusted operating profit for the six months ended 31 March2020

Rm2019

Rm

Eggs (19.5) 27.3

Farming 67.8 52.0

Animal feeds 48.1 40.3

Other African counties 0.6 6.7

Head office costs (5.7) (5.0)

91.3 121.2

9Quantum Foods Results Presentation for the six months ended 31 March 2020

IFRS 16 – Leases impact

Impact of day 1 adoption 1 October 2019IFRS 16 impact

Rm

Assets – increase 62.0

Liabilities – increase 71.9

Equity – decrease 9.9

10Quantum Foods Results Presentation for the six months ended 31 March 2020

For the six months ended 31 March 2020 IFRS 16 impact

Operating profit – increase – Rm 4.5

Earnings per share – increase – cents 0.2

Statement of financial position

31 Mar 2020Rm

30 Sep 2019Rm

Non-current assets 1 259.2 1 181.5

Net working capital 758.9 693.2

Non-current liabilities (260.7) (250.8)

Cash 174.3 219.6

Total net assets 1 931.7 1 843.5

Borrowings – IFRS 16 (74.2) (6.1)

Equity 1 857.5 1 837.4

11Quantum Foods Results Presentation for the six months ended 31 March 2020

Statement of cash flow

For the six months ended 31 March2020

Rm2019

Rm

Cash operating profit 144.5 165.5

Working capital outflow (73.1) (84.4)

Change in exchange rate 0.1 1.1

Cash effect of hedging activities 13.5 (10.3)

Tax paid (11.2) (20.0)

Net finance income (1.1) 10.1

Principal lease payments (10.7) (0.0)

Cash generated by operations 62.1 62.1

Dividends paid (48.2) (147.1)

Treasury shares acquired by subsidiary (4.3) (2.3)

Capital expenditure (55.2) (90.9)

Proceeds from sale of assets 0.2 0.9

Net cash decrease (45.3) (177.4)

12Quantum Foods Results Presentation for the six months ended 31 March 2020

Capital expenditure

YTD Mar 2020Rm

Future cash flowRm

RSA

Expansion/efficiency 11.4 28.9

– Feed mills 4.3 18.4

– Layer hatchery 0.4 0.1

– Farms 0.6 2.3

– Packing stations 5.4 2.1

– Energy 0.7 6.0

Replacement/compliance 24.1 38.8

Africa

Expansion/efficiency 16.7 14.8

– Uganda layer farm and breeders 16.7 14.8

Replacement 3.0 3.2

55.2 85.8

13Quantum Foods Results Presentation for the six months ended 31 March 2020

Operational overview

H Lourens

14Quantum Foods Results Presentation for the six months ended 31 March 2020

Nova Feeds

• Volumes increased by 18%

• Load shedding had a negative financial

impact

• Margins improved by 2%

• Costs per unit well managed and remained

under control

• Product performance remains at a very

high level

Expansion successful

15Quantum Foods Results Presentation for the six months ended 31 March 2020

• Breeder performance stable – above Lohmann standards

• Production of day-old pullets and point-of-lay hens increased

• Day-old pullet sales decreased but point-of-lay sales increased

• Commercial rearing performance above target

• Commercial layer performance now at acceptable levels

• Cost increases in breeder business above inflation but in commercial layer business cost per dozen decreased

• Decline in layer livestock demand from February 2020

Layer farming

Productivity improvement continues

16Quantum Foods Results Presentation for the six months ended 31 March 2020

• Breeder performance slowly improving

• Hatchability not yet at an acceptable level

• Broiler performance at very high levels

• Overhead cost decreases in both day-old chicks and live broilers

• Production of day-old chicks increased by 4.1%

Broiler farming

Pleasing financial performance

Quantum Foods Results Presentation for the six months ended 31 March 2020 17

• Egg volumes increased by 16.3%

• Egg price decreased by 7.4%

• Operational efficiencies remained at high levels

• R/dozen overhead costs declined

• Margin pressure exacerbated by feed cost increase

• Initial indications that demand for eggs is improving

Nulaid Eggs

Supply and demand not in balance

18Quantum Foods Results Presentation for the six months ended 31 March 2020

• Difficult industry conditions in all three countries

• Raw material prices increased, creating subdued demand for products

• Record maize prices in Zambia coupled with decline in productivity levels

• Breeder farm in Uganda ready for placement at end of March

• Mozambique business performed well in current conditions

• Positive contribution to bottom line from all three countries

Other Africa segment

Industry conditions remain difficult

19Quantum Foods Results Presentation for the six months ended 31 March 2020

Outlook

Quantum Foods Results Presentation for the six months ended 31 March 2020

H Lourens

Outlook 2020

Challenges

• COVID-19 makes any forward view dangerous

BUT

Quantum Foods’ response

• Raw material prices expected to increase due to exchange rate

• Egg price direction too uncertain to call

• Feed and broiler livestock volumes should stabilise

• Demand for layer livestock should decrease

• Zambian business should start improving

21Quantum Foods Results Presentation for the six months ended 31 March 2020

22Quantum Foods Results Presentation for the six months ended 31 March 2020

Appendix

23Quantum Foods Results Presentation for the six months ended 31 March 2020

SAFEX yellow maize Rand per ton

24Quantum Foods Results Presentation for the six months ended 31 March 2020

1 500

2 000

2 500

3 000

3 500

4 000

4 500

Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Mar 20

2 6342 707

2 460

3 351

2 099

2 367

CBOT US$ soybean meal

25Quantum Foods Results Presentation for the six months ended 31 March 2020

250

270

290

310

330

350

370

390

410

430

Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Mar 20

342

332

312316

306300

Rand:US$ exchange rate

26Quantum Foods Results Presentation for the six months ended 31 March 2020

Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Mar 20

14.34

15.03

12.01

14.77

13.37

13.07

18.5

16.5

14.5

12.5

10.5

Flockreplacement

90.00

100.00

110.00

120.00

130.00

140.00

Egg realisation movement

27Quantum Foods Results Presentation for the six months ended 31 March 2020

Normal cycle

AI effect

Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Mar 20

Ind

ex