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ZED - Zeder - Audited abridged results for the year ended 29 February 2012
Zeder Investments Limited
Incorporated in the Republic of South Africa
Registration number: 2006/019240/06
JSE share code: ZED
ISIN number: ZAE000088431
("Zeder" or "the company" or "the group")
Audited abridged results for the year ended 29 February 2012
Recurring headline earnings per share up 3,1% to 27,9 cents
Headline earnings per share up 62,3% to 30,7 cents
Sum-of-the-parts value per share up 15% to 315 cents
Dividend per share of 4 cents
Abridged group income statement 2012 2011
R`m R`m
Investment income 63,7 22,8
Net fair value gains 51,2 32,0
Other operating income 0,6 0,8
Total income 115,5 55,6
Management fee (note 3) (48,0) (53,2)
Other expenses (3,2) (0,2)
Total expenses (51,2) (53,4)
Share of profits of associated companies 285,8 201,2
Loss on dilution of interest in associated company (7,9)
Loss on impairment of associated company (1,4)
(Loss)/gain on disposal of investment in associated (0,1) 81,3
company
Results of operating activities 342,1 283,3
Finance cost (7,2) (2,4)
Profit before taxation 334,9 280,9
Taxation (0,3) (21,8)
Profit for the year 334,6 259,1
Profit for the year attributable to equity holders of 334,6 259,1
the company
Non-headline items
Loss on dilution of interest in associated company 7,9
Non-headline items of associated companies (43,3) (10,1)
Loss/(gain) on disposal of investment in associated 0,7 (65,6)
company
Impairment of investment in an associated company 1,4
Headline earnings for the year 299,9 184,8
Earnings per share (cents)
- Attributable (basic and diluted) 34,2 26,5
- Headline (basic and diluted) 30,7 18,9
Number of shares in issue and weighted average
(million)
- In issue 978,1 978,1
- Weighted average 978,1 978,1
Abridged group statement of comprehensive income 2012 2011
R`m R`m
Profit for the year 334,6 259,1
Share of other comprehensive income of associated 55,3 8,4
companies
Other equity movements of associated companies (15,2) 1,3
Disposal of investment in associated company 10,1
Reversal of other comprehensive income of associated (40,4)
company
Total comprehensive income for the year 334,3 278,9
Attributable to equity holders of the company 334,3 278,9
Abridged group statement of financial position 2012 2011
R`m R`m
Assets
Non-current assets 2 850,7 2 350,3
Investment in associated companies (note 2) 2 633,2 2 143,6
Equity securities 217,5 206,7
Current assets 132,0 207,6
Trade and other receivables 54,5 1,6
Cash and cash equivalents 77,5 206,0
Total assets 2 982,7 2 557,9
Equity
Ordinary shareholders` funds 2 817,0 2 521,8
Total equity 2 817,0 2 521,8
Non-current liabilities 132,6 5,9
Deferred income tax 2,6 5,9
Borrowings 130,0
Current liabilities 33,1 30,2
Borrowings 0,7
Trade and other payables 32,4 30,2
Total liabilities 165,7 36,1
Total equity and liabilities 2 982,7 2 557,9
Net asset value per share (cents) 288,0 257,8
Abridged group statement of changes in owners` equity 2012 2011
R`m R`m
Ordinary shareholders` equity at beginning of year 2 521,8 2 282,0
Dividend paid (39,1) (39,1)
Total comprehensive income for the year 334,3 278,9
Ordinary shareholders` equity at end of year 2 817,0 2 521,8
Dividend per share
- 2010: 4 cents (declared and paid during April/May 2010)
- 2011: 4 cents (declared and paid during April/May 2011)
- 2012: 4 cents (declared on 7 March 2012 and paid on 2 April 2012)
Abridged group statement of cash flows 2012 2011
R`m R`m
Cash flow from operating activities 21,3 27,0
Cash flow from investment activities (240,7) 96,5
Cash flow from financing activities 90,9 (39,1)
Net increase/(decrease) in cash and cash equivalents (128,5) 84,4
Cash and cash equivalents at beginning of year 206,0 121,6
Cash and cash equivalents at end of year 77,5 206,0
Notes to the abridged financial statements
1. Basis of presentation and accounting policies
The abridged financial statements have been prepared in accordance with the
recognition and measurement principles of International Financial Reporting
Standards ("IFRS"), including IAS 34 - Interim Financial Reporting and the AC
500 standards; the requirements of the South African Companies Act of 2008, as
amended; and the Listings Requirements of the JSE Limited. The accounting
policies applied in the preparation of these abridged financial statements are
consistent with those used in the previous financial year, and no new accounting
standards, interpretations or amendments to IFRS were relevant to the group`s
operations.
Results of operating activities, as presented in the income statement, include
the group`s loss/gain on disposal of investment in associated companies as a
significant part of Zeder`s business activity is performed through associated
companies. The comparatives have been presented on a consistent basis.
2. Investment in associated companies
Zeder invests in the agriculture, food and beverage sectors.
3. Management fee
A management fee is payable to PSG Group Ltd or its nominee ("PSG Group"), the
group`s ultimate holding company, in terms of a management agreement. In
accordance with the management agreement, PSG Group provides all investment,
administrative, advisory, financial and corporate services to the group.
Management fees payable consist of a base fee and a performance fee element. The
base fee is calculated at 2% p.a. (exclusive of VAT) on the net asset value of
the group (excluding cash) at the end of every month and 0,15% p.a. (exclusive
of VAT) on the daily average cash balances. The base fee is accrued at the end
of every month. The performance fee is calculated on the last day of the
financial year at 10% p.a. on the outperformance of the group`s equity portfolio
above the equally weighted FTSE-JSE Beverage Total Return Index (TRI041) and the
FTSE-JSE Food Producers Total Return Index (TRI043) over any financial year. No
performance fee was payable during the current or prior year.
4. Segment report
The group is organised into two reportable segments, namely food and agri, and
beverages. These segments represent the major associate and equity investments
of the group. Both segments operate primarily in the Republic of South Africa.
Recurring headline earnings is calculated on a see-through basis. Zeder`s
recurring headline earnings is the sum of its effective interest in that of each
of its underlying investments, regardless of its percentage shareholding. The
result is that equity investments which Zeder does not equity account in terms
of accounting standards, are included in the calculation of recurring headline
earnings.
Non-recurring headline earnings include equity securities` see-through recurring
headline earnings and the related net fair value gains/losses and investment
income (as recognised in the income statement). Associated companies` one-off
gains/losses (e.g. Competition Commission penalties and restructuring costs) are
excluded from recurring headline earnings and included in non-recurring headline
earnings.
Segmental income comprises dividends received and fair value gains and losses
relating to equity securities, as well as income from associated companies and
gains/losses on disposal of interests in associated companies, as per the income
statement.
Non-
Recurring recurring
headline headline Headline Net asset
For the year ended earnings earnings earnings Value
29 February 2012 R`m R`m R`m R`m
Food and agri 265,1 29,8 294,9 2 134,1
Beverages 58,3 58,3 714,2
323,4 29,8 353,2 2 848,3
Net interest and other income and (2,4) (3,2) (5,6) 1,2
expenses
Management fees and taxation (48,0) 0,3 (47,7) (32,5)
Total 273,0 26,9 299,9 2 817,0
Non-headline items 34,7
Attributable earnings 334,6
Recurring headline earnings per 27,9
share (cents)
Analysis of segmental income Food and Unallocate
d
for the year ended agri Beverages income Total
29 February 2012: R`m R`m R`m R`m
Investment income
Interest income 0,4 3,8 4,2
Dividend income 59,5 59,5
Share of profits of associated 227,2 58,6 285,8
companies
Loss on disposal of investment in (0,1) (0,1)
associated company
Net fair value gains 51,2 51,2
Segmental income 338,2 58,6 3,8 400,6
Non-
Recurring recurring
headline headline Headline Net asset
For the year ended earnings earnings earnings Value
28 February 2011 R`m R`m R`m R`m
Food and agri 256,5 (73,6) 182,9 1 671,4
Beverages 60,3 60,3 675,6
316,8 (73,6) 243,2 2 347,0
Net interest and other income and 1,1 (0,3) 0,8 207,6
expenses
Management fees and taxation (53,2) (6,0) (59,2) (32,8)
Total 264,7 (79,9) 184,8 2 521,8
Non-headline items 74,3
Attributable earnings 259,1
Recurring headline earnings per 27,1
share (cents)
Analysis of segmental income Food and Unallocate
d
for the year ended agri Beverages income Total
28 February 2011: R`m R`m R`m R`m
Investment income
Interest income 2,7 2,7
Dividend income 20,1 20,1
Share of profits of associated 138,0 63,2 201,2
companies
Gain on disposal of investment in 81,3 81,3
associated company
Loss on impairment of associated (1,4) (1,4)
company
Net fair value gains 32,0 32,0
Segmental income 188,7 144,5 2,7 335,9
5. Commitments and contingencies
In terms of an investment mandate, the group has a capital commitment to invest
a further R49,2 million (2011: R28,9 million) in equity securities.
At the current and prior reporting dates, the group had no contingent
liabilities.
FINANCIAL STATEMENTS
These abridged financial statements have been compiled under the supervision of
the group`s financial director, Wynand Louw Greeff, CA (SA), and were audited in
terms of the Companies Act (71 of 2008) by the PricewaterhouseCoopers. A copy of
their unqualified audit opinion is available from the company`s registered
office.
COMMENTARY
OVERVIEW
Zeder is an investor in companies in the agriculture, food and related sectors.
The current value of its portfolio amounts to R3,1 billion, of which Agri
Voedsel Beleggings (with its interest of 31,1% in Pioneer Foods) and Capevin
Holdings (with its effective interest of 14,8% in Distell) represent 62,4%.
During the year under review, Zeder invested R338 million to increase its
interest in existing investments trading at attractive values.
RESULTS
The two key benchmarks Zeder believes to measure performance by are recurring
headline earnings per share and sum-of-the-parts ("SOTP") value per share.
2010 2011 2012
R`m R`m R`m
Recurring earnings 236,2 316,8 323,4
Food and agri 190,3 256,5 265,1
Beverages 45,9 60,3 58,3
Net interest and other income and 16,5 1,1 (2,4)
expenses
Management fee and taxation (44,6) (53,2) (48,0)
Recurring headline earnings 208,1 264,7 273,0
Non-recurring headline earnings
Investments marked to market and one- (56,1) (79,9) 26,9
off items *
Headline earnings 152,0 184,8 299,9
Non-headline items (28,4) 74,3 34,7
Attributable earnings 123,6 259,1 334,6
Recurring headline earnings per share 23,6 27,1 27,9
(cents)
Headline earnings per share (cents) 17,3 18,9 30,7
Attributable earnings per share 14,0 26,5 34,2
(cents)
Dividend per share (cents) 4,0 4,0 4,0
* The one-off items mainly relate to the impact of Pioneer Foods` Competition
Commission settlement
Zeder`s consolidated recurring headline earnings is the sum of its effective
interest in that of each of its underlying investments, regardless of its
percentage shareholding. The result is that equity investments which Zeder does
not equity account in terms of accounting standards, are included in the
calculation of recurring headline earnings. This provides management and
investors with a more realistic and simplistic way of evaluating Zeder`s
earnings performance.
Recurring headline earnings per share increased by 3,1% to 27,9 cents. Headline
earnings per share increased by 62,3% to 30,7 cents, and attributable earnings
per share by 29,1% to 34,2 cents. The significant increase in headline earnings
mainly relates to the prior year impact of Pioneer Foods` Competition Commission
settlement. The lower increase in attributable earnings, when compared to
headline earnings, reflects the prior year`s R65,6 million non-headline profit
on the disposal of Zeder`s interest in KWV.
During the year under review, Zeder`s SOTP value per share (calculated using
quoted market prices) increased by 15% to R3,15. The SOTP value is analysed in
the table below:
2010 2011 2012
% Value % Value % Value
Interest R`m Interest R`m Interest R`m
Agri Voedsel 44,7 1 230,4
Beleggings
Kaap Agri * 41,3 812,8 43,9 1 270,4 33,4 205,5
Capevin Holdings 37,0 552,5 39,5 691,3 39,8 713,1
KWV Holdings ** 31,3 214,6
Capespan 14,6 54,5 22,7 84,7 40,9 293,0
Agricol 20,3 10,1 25,1 27,1 25,1 49,8
Suidwes 18,4 53,4 21,8 76,1 23,7 82,7
Other investments 267,7 348,8 541,3
Total investments 1 965,6 2 498,4 3 115,8
Cash and cash
equivalents 121,6 206,0 77,5
Other net (20,9) (28,6) (108,6)
liabilities
SOTP value 2 066,3 2 675,8 3 084,7
SOTP value per 2,11 2,74 3,15
share (rand)
Number of shares 978,1 978,1 978,1
in issue (million)
* Kaap Agri unbundled from Agri Voedsel Beleggings (December 2011)
** KWV Holdings unbundled from Capevin Holdings (July 2009) and disposed of
(February 2011)
Agri Voedsel Beleggings (Pioneer Foods)
Kaap Agri`s operational assets were unbundled during December 2011. Following
the unbundling, Zeder is invested in two separate entities - Agri Voedsel
Beleggings ("AVB") (with its 31,1% interest in Pioneer Foods) and Kaap Agri
(housing Kaap Agri`s operational assets). The unbundling created approximately
R219 million in value for Kaap Agri shareholders.
AVB currently trades at a 10%-15% discount to the see-through value of Pioneer
Foods.
Pioneer Foods` performance for its financial year ended September 2011 was
adversely impacted by input cost pressures, delayed price increases and volume
strain, which resulted in adjusted headline earnings declining by 18,5%.
Pioneer Foods` results can be viewed at www.pioneerfoods.co.za.
Kaap Agri
Kaap Agri`s own operations produced a steady set of results with its headline
earnings increasing marginally to R78,4 million for the year ended September
2011. Zeder`s interest in Kaap Agri`s own operations diluted as part of a BEE
transaction which was concluded during the year under review.
Kaap Agri`s results can be viewed at www.kaapagri.co.za.
Capevin Holdings (Distell)
Zeder owns a 39,8% interest in Capevin Holdings ("CVH"). CVH holds an indirect
interest of 14,8% in Distell and although CVH shareholders receive almost the
same dividend as Distell shareholders, CVH trades at a 20%-25% discount to the
Distell see-through price. On 4 April 2012, CVH and Capevin Investments
announced a merger by means of a scheme of arrangement. If successful, the
discount at which CVH trades could reduce.
Distell recently reported interim results for the six months ended December
2011, reflecting a 23,7% increase in profit after tax. Distell`s cider and RTD
(ready-to-drink) brands continued their strong performance locally and their
wine portfolio showed a marginal increase in sales volumes. Results were also
favourably impacted by a weaker rand, which largely contributed to the net
operating margin improving to 14,6% (2010: 13,8%).
Distell`s results can be viewed at www.distell.co.za.
Capespan
During the year under review, Zeder made an offer to acquire the entire issued
share capital of Capespan. Through the offer and market purchases, Zeder managed
to increase its shareholding to 40,9%.
Capespan delivered impressive results for its financial year ended December
2011, with headline earnings increasing by 24,4% to R64 million.
Zeder remains optimistic about Capespan`s growth potential in both its fruit and
logistical divisions.
Capespan`s results can be viewed at www.capespan.co.za.
Other investments
During the past year, Zeder simplified its investment portfolio through the
disposal of interests in MGK, OVK Bedryf and Tuinroete Agri for total cash
proceeds of R97,3 million.
Zeder invested a further R176,5 million in its existing other investments.
Although small when compared to the aforementioned companies, the rest of our
investment portfolio continues to yield attractive returns.
EVENTS AFTER REPORTING DATE
Subsequent to year-end, Zeder acquired the remaining 74,9% shareholding in
Agricol for a purchase consideration of R150,4 million. Agricol is a seed
company, whose activities include plant breeding, production, international
trade, processing and the distribution of seed. Zeder intends to grow Agricol
aggressively, both by acquisition and organically.
Furthermore, Zeder acquired an interest of 81% in Chayton for US$9,7 million, a
large-scale commercial farming operation which invests in and develops
potentially high-return primary production units in areas of sub-Saharan Africa
with its favourable climate, soils and water availability.
For further information regarding the aforementioned acquisitions, please refer
to the Securities Exchange News Service ("SENS") announcement released on 29
March 2012.
Effective 30 April 2012, Antonie Jacobs will resign as CEO and from the Zeder
board to join Agricol on a full-time basis as executive chairman. Zeder would
like to thank Antonie for his contribution over the past six years and wishes
him well at Agricol. Piet Mouton will act as interim CEO until such time that a
new CEO has been appointed.
Following the aforementioned transactions, Zeder will have cash and facilities
of R163 million to make further acquisitions.
STRATEGY AND PROSPECTS
Zeder has historically only taken non-controlling strategic stakes in businesses
in its chosen sector. The acquisition of controlling interests in both Agricol
and Chayton will allow Zeder to play a more active role in determining strategy
and to help expand the respective businesses.
Zeder is positive about the role that Africa, with its vast agricultural
resources, could play in addressing the growing global demand for food.
DIVIDEND
A final ordinary dividend of 4 cents per share (2011: 4 cents), in respect of
the financial year ended 29 February 2012, was declared on 7 March 2012 and paid
on 2 April 2012. The dividend was calculated in accordance with Zeder`s policy
of paying 100% of free cash flow as a final ordinary dividend.
Signed on behalf of the board of directors
Jannie Mouton Antonie Jacobs
Chairman Chief Executive Officer
Stellenbosch
10 April 2012
Directors: JF Mouton (Chairman), AE Jacobs* (CEO), WL Greeff* (FD), PJ Mouton*,
CA Otto+, MS du Pre le Roux+, GD Eksteen+, LP Retief+
(* executive, + independent non-executive)
Secretary: PSG Corporate Services (Pty) Ltd
Registered office: 1st Floor, Ou Kollege, 35 Kerk Street, Stellenbosch, 7600; PO
Box 7403, Stellenbosch, 7599
Transfer secretaries: Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg, 2001; PO Box 61051, Marshalltown, 2107
Sponsor: PSG Capital
Auditor: PricewaterhouseCoopers Inc.
Date: 10/04/2012 15:52:14 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
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