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Summary consolidated results for the year ended 28 February 2014
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 group” or “the company”)
Summary consolidated results for the year ended 28 February 2014
Sum-of-the-parts value per share increased by 26% to R5,02
See-through SOTP value per share increased by 21% to R5,26
Recurring headline earnings per share increased by 16% to 29,8 cents
Headline earnings per share increased by 28% to 25,8 cents
Dividend per share of 4,5 cents
OVERVIEW
Zeder is an investor in the broad agribusiness industry with a specific focus on the food and beverage sectors. The value of its underlying
investment portfolio amounted to R4,9bn (R5,2bn on a see-through basis) as at 28 February 2014. Agri Voedsel (with its 30,4% interest in Pioneer
Foods) remains a large strategic investment representing 39,8% of the portfolio. During the year under review, Zeder continued rebalancing its
portfolio in line with its amended strategy. It disposed of investments valued at R528,7m and invested an additional R879,4m, of which R817,2m
was utilised to acquire additional stakes in its existing core portfolio.
STRATEGY
Over the past 18 months, Zeder has communicated a refined strategy to the market. It seeks larger, strategic stakes in entities that allow it
to play a more active role in its underlying portfolio companies and assist with the determination of appropriate long-term strategies to help
expand the respective businesses.
During the past year significant progress has been made in this regard through further investments in Agri Voedsel, Capespan, Zaad, Chayton
Africa and Kaap Agri. Zeder also disposed of its interests in NWK, Suidwes and Overberg Agri. Zeder’s portfolio is now well balanced with fewer
but larger core investments. These companies offer attractive growth prospects and Zeder has no intention of listing them.
RESULTS
The two key benchmarks which Zeder believes to measure performance by are sum-of-the-parts (“SOTP”) value per share and recurring headline
earnings per share.
Sum Of the Parts
Zeder’s SOTP value per share, calculated using the quoted market prices for all JSE-listed and over-the-counter (“OTC”) traded investments, and
market-related valuations for unquoted, unlisted investments, increased by 25,8% to R5,02 since 28 February 2013. Zeder’s see-through SOTP value
per share, calculated on the same basis apart from using the see-through JSE-listed market price for Agri Voedsel’s investment in Pioneer Foods
instead of Agri Voedsel’s own OTC share price, increased by 20,9% to R5,26 during the same period. At the close of business on Friday, 4 April
2014, Zeder’s SOTP and see-through SOTP value per share were R5,14 and R5,58 respectively.
2012 2013 2014
Interest Interest Interest
Company (%) Rm (%) Rm (%) Rm
Agri Voedsel 44,7 1 230,4 45,0 1 475,2 47,4 1 960,0
Capespan 40,9 293,0 37,1 284,2 72,1 777,2
Zaad Holdings 25,1 49,8 92,0 368,9 92,0 678,8
Chayton 73,4 276,9 76,7 560,4
Kaap Agri 33,4 205,5 34,9 343,2 39,9 527,8
Capevin Holdings 39,8 713,1 5,3 287,6 2,7 177,2
Other 147,9 54,0 229,3
Suidwes 23,7 82,7 24,1 90,2
NWK 19,9 206,5 19,9 224,7
Overberg Agri 18,6 186,9 18,6 107,3
Total investments 3 115,8 3 512,2 4 910,7
Cash and cash equivalents 77,5 692,2 376,1
Other net liabilities (108,6) (301,1) (365,4)
SOTP value 3 084,7 3 903,3 4 921,4
Number of shares in issue (million) 978,1 978,1 980,2
SOTP value per share (rand) 3,15 3,99 5,02
See-through SOTP value per share (rand) 3,48 4,35 5,26
Recurring headline earnings
Zeder’s consolidated recurring headline earnings is the sum of its effective interest in that of each of its underlying investments. The result
is that investments which Zeder does not equity account in terms of accounting standards are included in the calculation of consolidated recurring
headline earnings. This provides management and investors with a more realistic and simplistic way of evaluating Zeder’s earnings performance.
Feb 2013 Feb 2014
Rm Rm
Earnings analysis
Food, beverages and related services 205,7 239,3
Agri-related retail, trade and services 120,4 74,1
Agri-inputs 28,7 49,6
Agri-production (21,8) (4,8)
Net interest, taxation and other income and expenses (23,3) (7,1)
Management (base) fee (58,6) (59,0)
Recurring headline earnings 251,1 292,1
Management (performance) fee (59,0)
Non-recurring headline earnings, net of taxation (54,8) 19,4
Headline earnings 196,3 252,5
Non-headline items 315,4 38,8
Attributable earnings 511,7 291,3
Recurring headline earnings per share (cents) 25,7 29,8
Headline earnings per share (cents) 20,1 25,8
Attributable earnings per share (cents) 52,3 29,7
Recurring headline earnings per share increased by 16% to 29,8 cents, mainly due to improved contributions from Agri Voedsel (i.e. Pioneer Foods),
Capespan, Zaad, Kaap Agri and Chayton.
However, the positive effect of the aforementioned was to some extent offset by:
- the cash proceeds from the disposal of the bulk of Zeder’s Capevin Holdings shares that yielded a lower return than what the Capevin Holdings
investment did during the prior year; and
- a weaker performance from NWK and Suidwes, prior to disposing of same during September 2013, as a result of drought conditions experienced
in their geographical locations.
Headline earnings per share increased by 28,4% to 25,8 cents. The aforementioned, coupled with higher marked-to-market gains, resulted in the
increase in headline earnings per share.
Attributable earnings per share decreased by 43,2% to 29,7 cents and profit before finance costs and taxation by 19,5% to R517,3m, mainly as a
result of the one-off non-headline gain on the disposal of the majority of the Capevin Holdings investment during the prior year.
Agri Voedsel (Pioneer Foods)
Agri Voedsel is an unlisted investment holding company that owns a 30,4% economic interest in the JSE-listed Pioneer Foods. During the year under
review, Zeder invested a further R106,5m in cash and issued ordinary shares to the value of R3,8m to increase its stake in Agri Voedsel from 45%
to 47,4%.
Pioneer Foods produced satisfactory results for the period ended 30 September 2013 with adjusted headline earnings per share having increased by
12%. In line with its competitors, Pioneer Foods commented that although its overall performance is encouraging, it continues to face challenges
resulting from a prolonged high commodity price cycle, structural challenges within the poultry industry and constrained consumer spending.
However, early indications are that the core divisions within the organisation are performing well and that new management is making
significant strides to strategically realign the organisation and improve operational efficiencies. It is a leading food producer with strong
fundamentals and is well poised to benefit from the growing demand for food and beverages, both in sub-Saharan Africa and select international
markets. Agri Voedsel represents a strategic interest and there is no intention of unbundling its Pioneer Foods investment.
Pioneer Foods’ results can be viewed at www.pioneerfoods.co.za.
Kaap Agri
Kaap Agri is an unlisted retail, trade and services group which supplies a variety of products and services to the agricultural sector and the
general public. It has 167 operating points throughout South Africa, as well as a growing exposure to the rest of Africa. Kaap Agri’s underlying
performance remains encouraging and the company produced satisfactory results for the year ended 30 September 2013 with a 23,4% increase in
headline earnings per share. During the year under review, Zeder invested an additional R26,6m in cash and issued ordinary shares to the value of
R4,4m to increase its stake in Kaap Agri from 34,9% to 39,9%.
Kaap Agri’s results can be viewed at www.kaapagri.co.za.
Capespan
Capespan is an unlisted fruit and logistics group with a history spanning more than 70 years. Its core business activities are focused on the
production, procurement, distribution and marketing of fruit in more than 60 countries worldwide. Capespan continued to deliver satisfactory
results and reported a 42,2% increase in recurring headline earnings per share for the year ended 31 December 2013. Zeder remains optimistic about
Capespan’s growth potential in both its fruit and logistics divisions and has invested R358m in cash to increase its interest from 37,1% to 72,1%
during the year under review.
Capespan’s results can be viewed at www.capespan.com.
Zaad Holdings
Zeder owns a 92% interest in Zaad Holdings, the holding company of wholly-owned Agricol and Klein Karoo Seed Marketing Group (“KKS”), which
includes a subsidiary Bakker Brothers based in Holland. Agricol is a seed business that has established itself in both the South African and
international markets with a proud history spanning more than 50 years. KKS develops and distributes vegetable, pasture and agronomic seed in
mainly Africa, the Middle East and Asia. The financial performance of Zaad is encouraging, with a 16,3% growth in recurring headline earnings
per share for the period under review. The seed market remains attractive, particularly in an African context where the demand for agricultural
inputs is expected to grow exponentially as it provides food for its own needs, as well as the rest of the world.
Further information about Agricol and KKS can be viewed at www.agricol.co.za, www.seedmarketing.co.za and www.bakkerbrothers.nl respectively.
Chayton Africa
Chayton Africa’s vision is to own and operate grain-related agribusinesses across Southern Africa. It owns and operates two large-scale commercial
farming operations in Zambia and has recently acquired Mpongwe Milling, the implementation of which is expected to be finalised shortly, a leading
milling business to complement its production activities. In less than two years, Chayton Africa has managed to increase its productive farmland
under irrigation from 420 hectares to 4 200 hectares and is actively evaluating related development and acquisitive opportunities. The integration
of the mill, with dominant regional maize meal and wheat flour brands is anticipated to unlock synergies. While the company remains in the
development phase, operational performance to date has been encouraging with actual agricultural yields exceeding expectations. Chayton is well
positioned to benefit from the growing demand for staple foods in sub-Saharan Africa.
Further information about Chayton Africa can be viewed at www.chaytonafrica.com.
Capevin Holdings (Distell)
Capevin Holdings (“CVH”) is a listed holding company with its core asset being an effective interest of 28,9% in JSE-listed Distell. During the
previous reporting period, Zeder announced its strategic decision to exit its investment in CVH and reported its disposal of 15,1% in CVH for
R799,8m. During the year under review, Zeder has obtained the required shareholder approval and will dispose of its remaining 2,7% interest in CVH
at the appropriate time.
Distell’s results can be viewed at www.distell.co.za.
PSG MANAGEMENT FEE
Effective 1 March 2013, Zeder shareholders approved a restructuring of the Zeder management agreement in terms of which the basis of the
calculation of the base and performance fee payable to PSG was changed.The base fee is now calculated as 1,5% p.a. of Zeder's volume weighted
average market capitalisation for the year, and the performance fee as 20% p.a. of Zeder's share price outperformance of the GOVI-index yield
plus 4% ("benchmark hurdle"). The performance fee, however, is limited to the base fee in the event that it exceeds same. The excess
performance fee is carried over to the next financial year as a reduction of the benchmark hurdle.
The base management fee (recurring) and performance fee (non-recurring) calculated in terms of the revised fee arrangement amounted to R59m
(2013: R58,6m) and R59m (non recurring headline cost) respectively for the year under review. As the performance fee exceeded the base fee,
the benchmark hurdle per Zeder share for its 2015 financial year has been reduced by 10 cents from R4.09 to R3.99.
PROSPECTS
Zeder will remain actively engaged with its existing portfolio of companies, while also increasingly seeking new opportunities. We continue to
believe that the agribusiness, food and beverage sectors offer rewarding investment opportunities, both locally and abroad.
DIVIDEND
The directors have resolved to declare a gross final dividend of 4,5 cents (2013: 4 cents) per share in respect of the year ended 28 February 2014.
The dividend was calculated in accordance with Zeder’s policy of paying 100% of free cash flow as a final ordinary dividend.
The company will be utilising STC credits amounting to 4,5 cents per ordinary share, and as a result there will be no dividend tax deducted from
this dividend for any Zeder shareholder. The number of ordinary shares in issue at the declaration date is 980 188 331. The income tax number of
the company is 9406891151.
The salient dates of this dividend distribution are:
Last day to trade cum dividend Wednesday, 23 April 2014
Trading ex dividend commences Thursday, 24 April 2014
Record date Friday, 2 May 2014
Date of payment Monday, 5 May 2014
Share certificates may not be dematerialised or rematerialised between Thursday, 24 April 2014, and Friday, 2 May 2014, both days
inclusive.
Signed on behalf of the board of directors
Jannie Mouton Norman Celliers
Chairman Chief executive officer
Stellenbosch
7 April 2014
SUMMARY CONSOLIDATED INCOME STATEMENT
Audited Audited
2014 2013
Rm Rm
Revenue 6 010,6 328,1
Cost of sales (5 134,6) (234,4)
Gross profit 876,0 93,7
Income
Change in fair value of biological assets 90,5 28,7
Investment income 64,4 13,1
Net fair value gains 144,0 32,5
Other operating income 8,9 5,5
Total income 307,8 79,8
Expenses
Management fees (note 2) (118,0) (58,6)
Marketing, administration and other expenses (741,3) (120,1)
Total expenses (859,3) (178,7)
Net profit from associates
Equity accounted earnings 218,0 300,2
Loss on impairment of associate (21,4)
Loss on dilution of interest in associates (155,3)
(Loss)/gain on disposal of investment in associates (3,8) 502,9
Profit before finance costs and taxation 517,3 642,6
Finance costs (86,0) (37,2)
Profit before taxation 431,3 605,4
Taxation (97,1) (95,9)
Profit for the year 334,2 509,5
Attributable to:
Owners of the parent 291,3 511,7
Non-controlling interests 42,9 (2,2)
334,2 509,5
Reconciliation to headline earnings
Attributable to owners of the parent 291,3 511,7
Non-headline items (note 3) (38,8) (315,4)
Headline earnings 252,5 196,3
Earnings per share (cents)
Attributable (basic and diluted) 29,7 52,3
Headline (basic and diluted) 25,8 20,1
Recurring headline (basic and diluted) 29,8 25,7
Weighted average number of shares (million) 979,8 978,1
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
2014 2013
Rm Rm
Profit for the year 334,2 509,5
Other comprehensive income for the year,net of taxation,
which may subsequently be reclassified to profit or loss 117,0 44,7
Currency translation adjustments 157,4 13,4
Fair value gains on available-for-sale investments 0,4 0,4
Share of other comprehensive income of associates 31,2 32,3
Reclassification of other comprehensive income of associates (55,9) (1,2)
Cash flow hedges (15,4)
Reclassification of fair value gains on disposal of
available-for-sale investments (0,7)
Share of other equity movements of associates (0,2)
Other comprehensive income for the year, net of taxation,
which may subsequently not be reclassified to profit or loss
Actuarial gains on employee defined benefit plans 1,1
Total comprehensive income for the year 452,3 554,2
Attributable to:
Owners of the parent 361,6 552,6
Non-controlling interests 90,7 1,6
452,3 554,2
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
2014 2013
Rm Rm
Assets
Non-current assets 3 638,1 2 838,5
Property, plant and equipment 925,0 381,8
Intangible assets 375,8 158,9
Biological assets 118,0
Investment in ordinary shares of associates 1 821,8 2 126,5
Loans and preference share investments in associates 18,2 54,5
Investment in ordinary shares of joint ventures 0,1
Loans granted to joint ventures 1,6
Equity securities 206,5 100,5
Loans and advances 78,6 16,3
Deferred income tax assets 59,4
Employee benefits 33,1
Current assets 2 989,2 1 059,2
Biological assets 83,4 31,3
Inventories 739,8 174,6
Trade and other receivables 1 127,2 100,7
Derivative financial assets 1,3
Current income tax receivable 22,7
Cash, money market investments and other cash equivalents 1 014,8 752,6
Non-current assets held for sale (note 5) 177,6 287,7
Total assets 6 804,9 4 185,4
Equity and liabilities
Ordinary shareholders' equity 3 606,9 3 283,5
Non-controlling interests 536,0 109,1
Total equity 4 142,9 3 392,6
Non-current liabilities 1 013,2 544,8
Deferred income tax liabilities 104,6 53,9
Borrowings 738,5 445,2
Derivative financial liabilities 45,7 45,7
Employee benefits 124,4
Current liabilities 1 648,8 248,0
Borrowings 459,8 60,0
Trade and other payables 1 081,3 184,9
Derivative financial liabilities 15,2
Current income tax payable 19,3 0,5
Employee benefits 73,2 2,6
Total liabilities 2 662,0 792,8
Total equity and liabilities 6 804,9 4 185,4
Net asset value per share (cents) 368,0 335,7
Tangible net asset value per share (cents) 329,6 319,5
Number of shares in issue (million) 980,2 978,1
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Audited Audited
2014 2013
Rm Rm
Ordinary shareholders' equity at beginning of year 3 283,5 2 817,0
Shares issued 8,2
Total comprehensive income for the year 361,6 552,6
Transactions with non-controlling interests (7,3) (47,0)
Dividend paid (39,1) (39,1)
Ordinary shareholders' equity at end of year 3 606,9 3 283,5
Non-controlling interests at end of year 536,0 109,1
Non-controlling interests at beginning of year 109,1
Total comprehensive income for year 90,7 1,6
Transactions with non-controlling interests 336,2 107,5
Total equity 4 142,9 3 392,6
Dividend per share (cents) 4,5 4,0
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
2014 2013
Rm Rm
Net cash flow from operating activities 255,1 44,8
Net cash flow from investment activities 189,4 386,3
Net cash flow from financing activities (228,4) 242,7
Net increase in cash and cash equivalents 216,1 673,8
Exchange gains on cash and cash equivalents 46,1 1,3
Cash and cash equivalents at beginning of year 752,6 77,5
Cash and cash equivalents at end of year 1 014,8 752,6
NOTES TO THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of presentation and accounting policies
The summary consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements for pre-
liminary reports, and the requirements of the Companies Act applicable to summary financial statements.The Listings Requirements require preliminary
reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial
Reporting Standards ("IFRS") and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements
as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial
Reporting. The accounting policies applied in the preparation of the consolidated financial statements from which the summary consolidated financial
statements were derived are in terms of International Financial Reporting Standards and are consistent with those accounting policies applied in the
preparation of the previous consolidated annual financial statements, apart from the following new accounting standards and amendments to IFRS which
were relevant to the group's operations from 1 March 2013.
The accounting policies applied in the preparation of these summary consolidated financial statements are consistent in all material respects with
those used in the prior financial year, apart from the following new accounting standards and amendments to IFRSs which were relevant to the group's
operations from 1 March 2013:
- IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Ventures and amendments to IAS 28 Investments in Associates.
The group has adopted aforementioned suite of IFRSs and amendments which deal with the accounting treatment for the group's interests in its
investees. The group has reviewed its accounting policies and concluded that the adoption of same did not result in any material changes to the
group's accounting for its investees.
- IFRS 13 Fair Value Measurement
The group has adopted the new standard on how to measure fair value and enhance fair value disclosures. The adoption did not result in any material
impact on the financial statements.
- Amendments to IAS 19 Employee Benefits
The amendments became relevant to the group following its acquisition of a controlling interest in Capespan Group Ltd ("Capespan")(note 4), which
operates defined benefit plans. Capespan previously elected to follow a policy of recognising remeasurements to employee benefit assets and
liabilities in other comprehensive income, which has now become mandatory.
The prior year employee benefits liability as per the statement of financial position, were included in trade and other payables at the previous
reporting date.
- Amendments to IAS 34 Interim Financial Reporting
The amendments relate to the introduction of IFRS 13 Fair Value Measurement and changes to IFRS 7 Financial Instruments: Disclosures. The group
has complied with the requirements of the additional disclosures in these summary financial.
The group also adopted the various other revisions to IFRS which became effective during the year. These revisions have not resulted in material
impacts to the group's reported results.
Enhanced disclosures, as required by IFRS 12 Disclosures of Interests in Other Entities, have been provided in the full set of annual financial
statements.
2. Management fees
Management fees are payable to PSG Group Ltd (“PSG Group”), Zeder's ultimate holding company, or its nominee (“the Manager”) in terms of a management
agreement. In accordance with the management agreement, the Manager provides all investment, administrative, advisory, financial and corporate
services to the Zeder group of companies.
The management fees payable consist of a base fee and a performance fee element. The base fee is calculated at the end of every half-year as 1,5% p.a
(exclusive of VAT) of Zeder's volume weighted average market capitalisation for that half-year. The performance fee is calculated at the end of the
financial year as 20% p.a. (exclusive of VAT) on Zeder's share price outperformance of the GOVI-index yield plus 4%, adjusted for dividends.
3. Non-headline items
Audited Audited
2014 2013
Rm Rm
Gross amounts
Net loss on dilution of interest in associates 155,3
Share of non-headline items of associates 11,6 (42,8)
Fair value adjustment on step-up of associate to subsidiary (17,2) (22,0)
Reclassification of other comprehensive income of associates
with step-up to subsidiary or upon disposal (57,1)
Impairment of investment in associates 21,4
Net gain on disposal of non-current assets held for sale (14,0)
Net loss/(gain) on disposal of investments in associates 3,8 (502,9)
Other 5,3 5,5
Non-controlling interests (0,1) 0,2
Taxation 7,5 91,3
(38,8) (315,4)
4. Subsidiaries acquired
Capespan
The group acquired a further 25,3% shareholding in Capespan and thereby increased its interest to 71,1%. At the reporting date, the group held 72,1%
in Capespan, which is a global fruit procurement company and South Africa's largest fruit exporter. The remeasurement of the previously held associate
interest resulted in a non-headline gain of R16,1m being recognised in net fair value gains in the income statement.
Klein Karoo Seed Marketing (“KKS”)
The group, through Zaad, acquired the remaining 51% of KKS on 31 October 2013. The remeasurement of the previously held interest in the associate
resulted in a non-headline gain of R1,1m being recognised in net fair value gains in the income statement. KKS is a seed company that develops and
distributes vegetable, pasture and agronomic seed in developing countries, mainly throughout Africa, the Middle East and Asia. KKS has offices and
research stations in, inter alia, South Africa, Zambia, Zimbabwe, Jordan and the Netherlands.
Accounting for these business combinations has been finalised and the summarised assets and liabilities recognised at acquisition date were:
Capespan KKS Total
Rm Rm Rm
Property, plant and equipment 308,3 124,5 432,8
Biological assets 144,1 144,1
Intangible assets 58,1 70,8 128,9
Investment in associates 181,0 181,0
Loans to and preference share investments in associates 9,3 9,3
Equity securities 6,2 6,2
Loans and advances 64,4 4,3 68,7
Derivative financial assets 0,1 0,1
Deferred income tax assets 59,3 1,1 60,4
Income tax receivable 19,6 19,6
Inventories 105,7 319,6 425,3
Trade and other receivables 973,3 147,4 1 120,7
Cash and cash equivalents 350,3 1,4 351,7
Non-current assets held for sale 10,1 10,1
Borrowings (538,7) (371,9) (910,6)
Deferred income tax liabilities (36,2) (12,8) (49,0)
Net employee benefits (122,3) (4,8) (127,1)
Income tax payable (14,9) (1,0) (15,9)
Trade and other payables (638,8) (91,7) (730,5)
Total identifiable net assets 929,5 196,3 1 125,8
Non-controlling interest at fair value (268,6) (34,2) (302,8)
Previously held investment at fair value (403,0) (101,0) (504,0)
Goodwill recognised 69,1 69,1
Total consideration 257,9 130,2 388,1
Cash consideration paid (257,9) (130,2) (388,1)
Cash and cash equivalents acquired 350,3 1,4 351,7
Net cash inflow/(outflow) from business combination 92,4 (128,8) (36,4)
Goodwill recognised from these business combinations can be attributed to the employee corps, geographical footprint and growth potential of the
entities acquired. Acquisition costs of R4,2m were incurred with the aforementioned business combinations, and are included in marketing,
administration and other expenses in the income statement.
Had Capespan and KKS been consolidated with effect from 1 March 2013 instead of their respective acquisition dates, the consolidated income
statement would have reflected additional revenue of R1,9bn and profit after tax of R9m.
5. Non-current assets held for sale
Non-current assets held for sale consists mainly of JSE-listed equity securities in Capevin Holdings with a carrying value of R177m. These equity
securities were classified as held for sale during the previous financial year and are expected to be realised through sale in the coming months.
6. Financial instruments
6.1 Financial risk factors
The group's activities expose it to a variety of financial risks; market risk (including currency risk, fair value interest rate risk, and price
risk), credit risk and liquidity risk.
The summary financial statements do not include all financial risk management information and disclosures required in the annual financial
statements, and therefore they should be read in conjunction with the group's annual financial statements for the year ended 28 February 2014.
Risk management continues to be carried out by each major entity within the group under policies approved by the respective boards of directors.
6.2 Fair value estimation
The information below analyses financial assets and financial liabilities, which are carried at fair value, by level of hierarchy as required by
IFRS 7 and IFRS 13. The different levels in the hierarchy are defined below:
- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices)
or indirectly (that is, derived from prices) (level 2)
- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3)
The fair value of financial assets and liabilities carried at amortised cost approximates their fair value, while those measured at fair value in
the statement of financial position can be summarised as follows:
Level 1 Level 2 Level 3 Total
Rm Rm Rm Rm
Assets
Derivative financial assets 1,0 0,3 1,3
Equity securities 163,8 1,0 41,7 206,5
Non-current assets held for sale (note 5) 177,0 0,6 177,6
341,8 1,9 41,7 385,4
Liabilities
Derivative financial liabilities 15,2 45,7 60,9
There have been no significant transfers between level 1, 2 or 3 during the year under review, nor were there any significant changes to the
valuation techniques and inputs used to determine fair values.
7. Segmental reporting
At 28 February 2013, the group was organized into four reportable segments, namely i) Zaad Holdings, ii) Chayton, iii) food and agri, and
iv) beverages. Zaad Holdings and Chayton are subsidiaries, while food and agri and beverages comprises investments in associates and equity
securities.
Following Zeder obtaining a controlling interest in Capespan (refer note 4), the chief operating decision-maker (being PSG Group's executive
committee, which manages the group) has revised their segmentation of how they review segments' performance and allocate capital. This revision
resulted in the reportable segments being restated to consist of the following: i) food, beverages and related services, ii) agri related retail,
trade and services, iii) agri inputs and iv) agri production.
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. The result is that investments which Zeder do not equity account or consolidate in terms of
accounting standards, are included in the calculation of recurring headline earnings.
The segments represent different sectors in the broad agribusiness industry. The segment report set out below was compiled based on the revised
segmentation and comparatives have been restated accordingly. These restatements had no impact on reported amounts of profit or loss, assets,
liabilities, equity or cash flows.
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). Associates' and subsidiaries' one-off gains/losses are excluded from recurring
headline earnings and included in non-recurring headline earnings.
Segmental income comprises revenue and investment income, as per the income statement.
SOTP is a key valuation tool used to measure Zeder's performance. In determining SOTP, listed assets and liabilities are valued using quoted
market prices, whereas unlisted assets and liabilities are valued using appropriate valuation methods. These values will not necessarily
correspond with the values per the statement of financial position since the latter are measured in terms of the relevant accounting standards
which include historical cost and the equity accounting method.
Audited Audited
2014 2013
Rm Rm
Recurring headline earnings
Food, beverages and related services 239,3 205,7
Agri-related retail, trade and services 74,1 120,4
Agri-inputs 49,6 28,7
Agri-production (4,8) (21,8)
Net interest, taxation and other income and expenses (7,1) (23,3)
Management (base) fee (59,0) (58,6)
Recurring headline earnings 292,1 251,1
Management (performance) fee (59,0)
Other non-recurring headline earnings 19,4 (54,8)
Headline earnings 252,5 196,3
Non-headline items (note 3) 38,8 315,4
Attributable earnings 291,3 511,7
SOTP segmental analysis:
Segments
Food, beverages and related services 3 078,2 2 047,0
Agri-related retail, trade and services 593,3 819,4
Agri-inputs 678,8 368,9
Agri-production 560,4 276,9
Cash and cash equivalents 376,1 692,2
Other net liabilities (365,4) (301,1)
SOTP value 4 921,4 3 903,3
Income segmental analysis:
Food, beverages and related services 5 442,6 -
Revenue 5 407,3
Investment income 35,3
Agri-related retail, trade and services
Investment income 3,5 5,9
Agri-inputs 467,8 266,6
Revenue 465,4 264,7
Investment income 2,4 1,9
Agri-production 137,9 63,7
Revenue 137,9 63,4
Investment income 0,3
Unallocated investment income (mainly head office interest income) 23,2 5,0
IFRS Revenue 6 075,0 341,2
8. Events subsequent to to the reporting date
The acquisition of Mpongwe Milling that was announced on SENS on 13 November 2013, became effective after the reporting date and is being
implemented at present.
The directors are unaware of any other matter or event which is material to the financial affairs of the group that have occurred between the
reporting date and the date of approval of these annual financial statements.
9. Preparation
These summary consolidated financial statements were compiled under the supervision of the group financial director, Mr WL Greeff, CA (SA),
and have been audited by PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon. The auditor also expressed an unmodified
opinion on the annual financial statements from which these summary consolidated financial statements were derived.
A copy of the auditor’s report on the summary consolidated financial statements and of the auditor’s report on the annual consolidated
financial statements are available for inspection at the company’s registered office, together with the financial statements identified in the
respective auditor’s reports.
The auditor's report does not necessarily report on all of the information contained in this announcement/financial results. Shareholders are
therefore advised that in order to obtain a full understanding of the nature of the auditor's engagement they should obtain a copy of the
auditor's report together with the accompanying financial information from the issuer's registered office.
10. Changes to the Board of directors
AE Jacobs was appointed as a non-executive director on 22 April 2013
WA Hanekom was appointed as a non-executive director on 8 October 2013
LP Retief was appointed as lead independent director on 11 November 2013
DIRECTORS:
JF Mouton (Chairman)**, N Celliers* (CEO), WL Greeff* (FD), GD Eksteen#, AE Jacobs**, WA Hanekom#, MS du P le Roux#, PJ Mouton**, CA Otto#, LP Retief#
* executive
** non-executive
# independent non-executive
SECRETARY AND REGISTERED OFFICE:
PSG Corporate Services (Pty) Ltd, 1st Floor, Ou Kollege, 35 Kerk Street, Stellenbosch, 7600;
PO Box 7403, Stellenbosch, 7599
TRANSFER SECRETARY:
Computershare Investor Services (Pty) Ltd, 70 Marshall Street, Johannesburg, 2001; PO Box 61051, Marshalltown, 2107
SPONSOR: PSG Capital
AUDITOR: PricewaterhouseCoopers Inc.
Date: 07/04/2014 04:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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