Zeder posts modest results after drought


PSG-controlled Zeder Investments, the JSE-listed agri-investment company, reported a rise in recurring headline earnings per share of 0,5% from 42,4c per share to 42.6c per share during its annual results presentation for the year to February, on Monday. Although relatively modest, the rise was perceived as strong in view of the worst drought to have impacted South Africa’s agricultural sector in over 30 years and ongoing political uncertainty.

The company reported cash flow generated from operating activities (including investment income) of R176 million and declared a final dividend of 11c a share, up by 22.2 percent compared with 9c a share declared last year. Its sum-of-the-parts (SOTP) value per share, a key benchmark, increased by 23,1 percent to R8,53 a share on a like-for-like basis as at February 28, 2017 with the total underlying investment portfolio amounting to R15,2 billion, from R12,4 billion as at February 29, 2016.

Another factor behind the results were the higher number of shares in issue, after it was decided that Zeder would no longer pay a management fee to PSG and issue an additional 207 million shares to its shareholder instead. The management and performance fees amounted to R155 million in the last financial year.

Zeder has investments in Pioneer Foods, where it has a 27.2 percent stake; Quantum Foods 26,4 percent; Capespan Group 98.1 percent; Agrivision Africa 55,9 percent and Zaad Holdings 92,9 percent. The Pioneer stake, worth R10,3 billion, represents about 66% of Zeder's R15,4 billion SOTP valuation. Strong performances at Kaap Agri, Zaad and Agrivision offset falling figures in other units.

Zeder also announced plans to list Kaap Agri, the retail, trade and services group that supplies the agricultural sector and the general public and which boasted revenues of more than R5,3 billion in its last financial year, sometime in 2017.

Zeder holds a 39,6% stake in the firm, but it is essentially run as a separate entity with its own board. Kaap Agri performed well in a difficult trading environment, with headline earnings per share rising by 15,1 percent.

"Nothing will change on how the company is run after the listing. It will continue to operate as it is because it has a very good management team. Its strategy of product and geographic diversification bodes well for the future and its focus on adding non-agri income streams and improving efficiencies has gained traction," said CEO Norman Celliers, adding that Kaap Agri would undergo restructuring and diversification to ensure an attractive listing.

Despite concerns over the country's recent credit rating downgrade to junk status and its impact on consumers, Celliers said the company would continue to look for prudent new investment opportunities.

"Zeder remains actively involved with its underlying portfolio of companies and will seek to add select meaningful new investments when appropriate," he said.

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