The group has seen positive profit growth from R296 million to R492 million for its 2021 half-year results.
The disposal of Zeder Group’s Pioneer Foods and Quantum Foods investments, as well as the declaration of the substantial special dividends during the past 18 months, have resulted in a material change to the size and composition of the group.
According to CEO and FD Johann le Roux, this has necessitated the board to reconsider Zeder’s future strategy. “Our focus during the Covid-19 pandemic was, and remains, deliberately cautious and conservative. Accordingly, we are dedicating most of our efforts to existing investments, strengthening their operating models and balance sheets where possible, while driving growth from within existing investment platforms.”
Johann explains that, during the six months ended 31 August 2021, Zeder also received third-party approaches on various portfolio investments and the group is currently evaluating them, as well as a strategy shift towards value unlock options. “Good progress has been made in this regard, but unfortunately Covid-19 has led to delays in certain instances.”
He says that the group’s investment portfolio as a whole has also proven more resilient than expected during this period. “The improved agricultural conditions have resulted in a better performance across a large part of the portfolio, with the majority having reported acceptable earnings growth.”
As a result, and also due to pro-active portfolio management interventions, Johann adds that he is pleased with the portfolio companies’ performance during the reporting period. “On a relative basis, our portfolio companies appear to be better positioned than most companies with regards to the Covid-19 risks.”
The group’s net asset value per share increased by 19.3 percent from 373 cents per share to 445 cents per share. Headline earnings per share (HEPS) increased from a loss of 14.3 cents per share to a gain of 31.4 cents per share. Profit before finance costs and taxation from continued operations per Zeder’s consolidated income statement also increased by 66.2 percent from R296 million to R492 million.
Despite improved results, Johann says that it remains difficult to predict the business environment that will unfold in the short to medium term, but that Zeder’s immediate focus will remain on ensuring that its existing companies position themselves competitively, maintain market shares and conserve balance sheets while continuously driving for operational and cash generation improvements.
“The positive climatic environment and demand for commodities should contribute to improved trading conditions in the medium term and Zeder’s portfolio companies are well positioned to benefit from the same. This, combined with the healthy cash reserves on hand and focus on additional value unlock strategies, should allow us to deliver attractive returns,” he concludes.
