Results Presentation

for the year ended 30 September 2019

Agenda

Business overviewH Lourens

Financial overviewA Muller

Operational overviewH Lourens

Outlook and management focusH Lourens

Quantum Foods Results Presentation for the year ended 30 September 2019 2

a

Business overview

H Lourens

Quantum Foods Results Presentation for the year ended 30 September 2019 3

Salient features

1. Unfavourable economic environment

• Slow economic growth

• Declining discretionary consumer spend

• ZAR continues to weaken

• Infrastructure challenges at Eskom

2. Quantum Foods: Overview

• Good volume growth in most categories

• Expected margin squeeze in egg business occurred

• Most operational efficiencies improved

Quantum Foods Results Presentation for the year ended 30 September 2019 4

• Revenue R4.4bn

• Operating profit R245m

• HEPS 92.3 cents

• Total dividend per share 33 cents

• Cash generated by operations R178m

• Repurchased 18.6m shares 8.8%

HEPS decreased due to downturn of egg industry

Business overview

Quantum Foods Results Presentation for the year ended 30 September 2019 5

a

Financial overview

A Muller

Quantum Foods Results Presentation for the year ended 30 September 2019 6

Statement of income

For the year ended 30 September2019

Rm2018

Rm%

change

Revenue 4 417.7 4 121.9 7

Operating profit* 245.2 473.3 (48)

Income from associates 0.2 0.7

Net finance income 11.1 23.8

Profit before tax 256.6 497.8

Tax (67.4) (135.6)

Profit for the period 189.2 362.2

* Operating profit includes capital items 0.6 0.9

Adjusted operating profit 244.6 472.4 (48)

Adjusted operating margin 5.5% 11.5%

EPS − cents 92.6 164.3 (44)

HEPS − cents 92.3 163.9 (44)

Quantum Foods Results Presentation for the year ended 30 September 2019 7

Dividends

For 2019

• Dividend at a HEPS cover of 4 times 23 cents

• Special dividend due to 2019 cash position 10 cents

• Interim dividend paid (8 cents)

• Final dividend 25 cents

Quantum Foods Results Presentation for the year ended 30 September 2019 8

Share repurchases

• 10 505 000 shares repurchased and cancelled in 2019 at an average of R3.35 per share

• 8 083 426 shares purchased by subsidiary in 2019 at an average of R3.39 per share

• R142 million returned to shareholders for 2019

• Board intends to continue with repurchase of shares

2017 2018 2019

Dividends plus share repurchases as % of HE 93% 68% 75%

Quantum Foods Results Presentation for the year ended 30 September 2019 9

Revenue analysis

Total R4 418 million (2018: R4 122 million)

2018: R1 460 | 36%

ANIMAL FEED

1 759

EGGS

1 095

FARMING

1 325

AFRICA

239

2018: R1 206 | 29% 2018: R1 233 | 30% 2018: R222 | 5%

Quantum Foods Results Presentation for the year ended 30 September 2019 10

40% 25% 30% 5%

Segment results

Adjusted operating profit2019

Rm2018

Rm

Eggs 38.3 286.7

Farming 112.1 98.5

Animal feeds 89.1 69.4

Other African counties 14.2 31.0

Head office costs (9.1) (13.2)

Profit for the year 244.6 472.4

Quantum Foods Results Presentation for the year ended 30 September 2019 11

Statement of financial position

At year-end2019

Rm2018

Rm

Non-current assets 1 181.5 1 091.9

Net working capital 693.2 574.6

Non-current liabilities (250.8) (228.3)

Cash 219.6 422.5

Total net assets 1 843.5 1 860.6

Borrowings (6.1) (6.2)

Equity 1 837.4 1 854.4

Quantum Foods Results Presentation for the year ended 30 September 2019 12

Statement of cash flow

For the year ended 30 September2019

Rm2018

Rm

Cash operating profit 329.8 547.8

Working capital (outflow) / inflow (109.2) 12.9

Changes in exchange rates 1.3 (7.9)

Cash effect of hedging activities (6.7) 8.9

Tax paid (51.2) (138.0)

Net finance income 14.4 24.4

Cash generated by operations 178.4 448.0

Shares repurchased (35.2) (52.4)

Dividends paid (162.6) (119.7)

Treasury shares acquired by subsidiary (27.4) (2.5)

Advance of loan (6.7) −

Capital expenditure (152.6) (116.0)

Proceeds from sale of assets 3.3 3.8

Net cash (decrease) / increase (202.9) 161.0

Quantum Foods Results Presentation for the year ended 30 September 2019 13

Capital expenditure

2019Rm

FutureRm

RSA

Expansion/efficiency 61.0 2.6

– Feed mills 30.3 2.0

– Layer hatchery 5.6 0.6

– Farms 8.3 −

– Packing stations 13.7 −

– Energy 3.1 −

Replacement/compliance 34.4 63.1

Africa

Expansion/efficiency 47.7 29.7

– Zambia layer farm 13.8 −

– Uganda layer farm and breeders 33.9 29.7

Replacement 9.5 5.2

152.6 100.6

Quantum Foods Results Presentation for the year ended 30 September 2019 14

Sensitivities: Eggs

Effect of movement in: Rand value EBIT/annum

Selling prices

Eggs (R/doz) 1% 15c R12m

Raw material costs

Maize R/ton R100 R7m

Soya bean meal R/ton R100 R2m

Assumption: Egg volume of 7.0 million dozen per month

Quantum Foods Results Presentation for the year ended 30 September 2019 15

a

Operational overview

H Lourens

Quantum Foods Results Presentation for the year ended 30 September 2019 16

Nova Feeds

• Relentless focus on raw material procurement had a

positive effect

• Positive volume growth: CAGR of 3.8% since 2015

• Margins decreased due to product mix changes and

price lead competition

• Cost increases per unit remained under control

• Both Paterson and Pretoria projects completed on

time, within budget

• Projects increased capacity by 16%

Solid performance

Quantum Foods Results Presentation for the year ended 30 September 2019 17

• Improved financial performance

• Breeder efficiency declined − expect little improvement in medium term

• Broiler efficiency remained excellent

• Production of day-old chicks increased by 7.2%

• Change in supply contract to Sovereign Foods

• Costs per unit throughout business under control

• New broiler executive to start 1 January 2020

Broiler farming

Strong performance

Quantum Foods Results Presentation for the year ended 30 September 2019 18

• Improved financial result

• Layer breeders continues to perform above breed standard

• Production of day-old pullets increased by 12.7%

• Point-of-lay sales volumes increased by 5.3%

• Much improved productivity at commercial layer farms

• Cost per unit decreased throughout value chain

Layer farming

Continued improvement

Quantum Foods Results Presentation for the year ended 30 September 2019 19

• All operational efficiencies improved

• Volumes increased by 5.5%

• Prices declined by 14.3%

• Feed prices increased by 16.3%

• South Africa flock estimated at c.28m layers

• Capex programme for graders near completion

• Nulaid remains the egg brand of choice

Nulaid Eggs

Excellent operational performance

Quantum Foods Results Presentation for the year ended 30 September 2019 20

• Financial performance under pressure

• Raw material prices increased in all three countries

• Egg productivity improved

• Uganda breeder farm temporarily moved to Masindi

• Cost affected by devaluation of Kwacha

• Zambia capital cycle completed

• Uganda hatchery capacity increased

• Uganda breeder farm completion by March 2020

• Zambia breeder business returned to profitability

Africa business

Tough trading conditions

Quantum Foods Results Presentation for the year ended 30 September 2019 21

aOutlook 2020

Outlook 2020

Expectations

• Challenging macro business environment

• Stable raw material costs

• Weaker egg prices

• Tough first six months in African business

Quantum Foods’ response

• Ensure egg sales in optimal channels and geographies

• Leverage investments in feeds and hatcheries

• Improve efficiencies throughout layer value chain

• Target cost-saving initiatives

Quantum Foods Results Presentation for the year ended 30 September 2019 23

Quantum Foods Results Presentation for the year ended 30 September 2019 24

a Appendix

Quantum Foods Results Presentation for the year ended 30 September 2019 25

Safex yellow maize Rand per ton

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

2 352

2 700

3 016

2 924

1 9531 770

Quantum Foods Results Presentation for the year ended 30 September 2019 26

CBOT USD soya beans

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

299

309 300 316 309

296

Quantum Foods Results Presentation for the year ended 30 September 2019 27

Rand:US dollar exchange rate

10

12

14

16

18

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

14.14 15.13

11.28

13.84

13.7113.55

Quantum Foods Results Presentation for the year ended 30 September 2019 28

Layer productivity index

95

100

105

110

115

120

125

130

135

140

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Quantum Foods Results Presentation for the year ended 30 September 2019 29

Broiler productivity index

85

90

95

100

105

110

115

120

125

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Quantum Foods Results Presentation for the year ended 30 September 2019 30