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Summary Preliminary Consolidated Financial Results for the year ended 28 February 2015
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")
HIGHLIGHTS
- SOTP value per share up 74.5% to R9.18 as at 28 February 2015
- SOTP value per share of R9.75 as at 31 March 2015
- Recurring headline earnings per share up 15.4% to 35.3 cents
- Zeder makes offer to Capespan minority shareholders
- Obtained 27.3% direct interest in Pioneer Foods
- Dividend per share up 22.2% to 5.5 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 increased significantly from R5.2bn on
28 February 2014 to R13.3bn on 28 February 2015. Zeder’s 27.3% interest in Pioneer Foods remains its
largest investment representing 71.4% of the portfolio.
STRATEGY
Over the past 24 months, Zeder regularly 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. The portfolio optimisation process has been completed and focus
during the period under review was on existing investments. Going forward, Zeder will continue with
this approach and increasingly drive for platform growth from portfolio companies while adding
strategically when the opportunities and values are attractive.
SIGNIFICANT TRANSACTIONS
- Agri Voedsel merger
Zeder concluded the largest transaction in its history by acquiring all of the remaining shares
not yet held in Agri Voedsel and merging this entity with Zeder in exchange for Zeder shares.
The net result was the effective acquisition of an additional interest of 14% in Pioneer Foods
through a transaction valued in excess of R2.5bn. This transaction ensured that all remaining
structural discounts were removed and Zeder now holding its shares directly in JSE-listed Pioneer
Foods.
- Quantum Foods unbundling
Pioneer Foods concluded the separate JSE listing and unbundling of Quantum Foods in terms of
which Zeder obtained its direct interest.
- Capespan offer to minority shareholders
Immediately following this notice, Zeder will formally announce to the market its firm
intention to acquire the remaining 25% shares in Capespan held by minority shareholders other
than management by means of a scheme of arrangement. The offer of 85 Zeder shares in exchange
for every 100 Capespan shares held represents a premium of approximately 65% for Capespan
shareholders and provides them with a liquid alternative given the restrictive over-the-counter
trading environment following the FSB directive of 2014. The proposed transaction is valued in
excess of R500m. Please refer to www.zeder.co.za and a separate SENS announcement containing
the full details of the proposed transaction.
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.
SOTP
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 74.5% to R9.18 since 28 February 2014. At the close of business on Tuesday,
31 March 2015, Zeder’s SOTP value per share was R9.75.
Audited Audited
28 Feb 2014 28 Feb 2015 31 Mar 2015
Interest Interest Interest
Company % Rm % Rm % Rm
Pioneer Foods 1.1 164 27.3 9 533 27.3 10 360
Capespan 72.1 777 71.1 1 463 71.1 1 463
Zaad 92.0 679 92.0 885 92.0 885
Kaap Agri 37.9 528 37.9 629 37.9 629
Agrivision 76.7 560 76.5 563 76.5 563
Quantum 26.4 231 26.4 240
Other 76 52 50
Agri Voedsel 47.4 2 187
Capevin Holdings 2.7 177
Total investments 5 148 13 356 14 190
Cash and cash equivalents 376 338 160
Other net liabilities (365) (439) (266)
SOTP value 5 159 13 255 14 084
Number of shares in issue (million) 980.2 1 443.8 1 443.8
SOTP value per share (rand) 5.26 9.18 9.75
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.
Audited
28 Feb 2014 * Growth 28 Feb 2015
Rm % Rm
Earnings analysis
Food, beverages and related services 247 417
Agri-related retail, trade and services 74 64
Agri-inputs 50 74
Agri-production (5) (14)
Recurring headline earnings from investments 366 48 541
Net interest, taxation and other income and expenses (7) (9)
Management (base) fee (59) (118)
Recurring headline earnings 300 38 414
Management (performance) fee (59) (118)
Non-recurring headline earnings, net of taxation 19 (39)
Headline earnings 260 (1) 257
Non-headline items 47 (15)
Attributable earnings 307 (21) 242
Weighted average number of shares in issue (million) 979.8 1 172.0
Recurring headline earnings per share (cents) 30.6 15 35.3
Headline earnings per share (cents) 26.6 (17) 22.0
Attributable earnings per share (cents) 31.3 (34) 20.6
* Restated as set out in note 7.
Recurring headline earnings per share increased by 15.4% to 35.3 cents, driven by strong contributions
from the majority of Zeder's underlying portfolio companies. The aggregate recurring headline earnings
from investments increased by 47.7% (23.4% on a per share basis), which was offset by an increase in
net funding costs and the management fee payable.
Headline earnings per share decreased by 17.3% to 22.0 cents. This decrease is largely due to: i) an
increase in the non-recurring performance fee payable (refer below) following Zeder's strong share
price growth and the increased number of shares in issue as a consequence of the merger with Agri
Voedsel; ii) an increase in the deferred purchase consideration payable by Capespan for its investment
in Golden Wing Mau in China following better performance than originally anticipated; and iii) the
adverse accounting effect of Pioneer’s historical BEE transaction given the significant increase in
its share price.
Attributable earnings per share decreased by 34.2% to 20.6 cents following the aforementioned decrease
in headline earnings and a non-headline fair value gain made during the previous financial year with
Capespan becoming a subsidiary.
Management fees
Management fees are payable to a nominee of PSG Group Ltd ("the Manager") in terms of a management
agreement, whereby the Manager provides all investment, administrative, advisory, financial and
corporate services to Zeder. 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. 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. on Zeder’s share price outperformance of the GOVI-index yield
plus 4%, adjusted for dividends, and is limited to the amount of the base fee in any specific
financial year.
Following the aforementioned increase in Zeder's market capitalisation resulting from the issue of
Zeder shares in respect of the Agri Voedsel merger, as well as strong growth in Zeder's share price,
the recurring base fee and non-recurring performance fee payable in respect of the year ended
28 February 2015 amounted to R118m (2014: R59m) and R118m (2014: R59m), respectively.
Pioneer Foods
Pioneer Foods produced strong results for the period ended 30 September 2014 with adjusted headline
earnings per share having increased by 36.6%. The core divisions are performing well and positive
results following the implementation of major strategic initiatives are evident throughout the
organisation. Pioneer Foods has strengthened its position as one of the leading food producers
with strong fundamentals and remains well poised to benefit from the growing demand for food
and beverages, both in South Africa and select international markets.
Pioneer Foods' results can be viewed at www.pioneerfoods.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
worldwide, while it also owns and operates a number of strategic logistical and terminal assets in
Southern Africa. It has been a volatile year for the industry at large with climatic challenges in
the production areas and political disruptions in European markets testing the resolve of most
organisations. Notwithstanding these, Capespan delivered positive results and reported a 14.3%
increase in recurring headline earnings per share for the year ended 31 December 2014. As the
controlling shareholder, Zeder remains optimistic about Capespan's growth potential in both its
fruit and logistics divisions.
Further information about Capespan can be viewed at www.capespan.com.
Kaap Agri
Kaap Agri is an unlisted retail, trade and services group that supplies a variety of products and
services to the agricultural sector and the general public. It has been in existence for more than 100
years and 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 2014 with a 22.5% increase in headline earnings
per share.
Kaap Agri’s results can be viewed at www.kaapagri.co.za.
Zaad Holdings
Zaad is a company that operates in the specialised agri-inputs industry. It currently owns, develops,
imports and distributes a broad range of agricultural seeds. Through Agricol, Klein Karoo Seed
Marketing ("KKSB") and Gebroeders Bakker ("Bakker") it has a proud history spanning more than
50 years with operations in Africa and Europe that actively exports to more than 90 countries. Zaad
reported revenue of almost R1bn and recurring headline earnings of R77m for the year ended
28 February 2015. Additional debt and capital invested in numerous growth initiatives resulted in
higher finance and establishment costs which translated into a 9.4% increase in recurring headline
earnings per share for the year under review. The specialised agri-inputs market, and in particular
the seed market, remain attractive and Zaad is well positioned to benefit from growth opportunities
that it offers.
Further information about Agricol, KKSB and Bakker can be viewed at www.agricol.co.za,
www.seedmarketing.co.za and www.bakkerbrothers.nl, respectively.
Agrivision Africa
Agrivision Africa's (previously Chayton Africa) vision is to own and operate grain-related
agribusinesses across Southern Africa. It currently owns and operates two large-scale commercial
farming operations and a leading milling business in Zambia. Since 2011, Agrivision Africa has
increased its productive farmland under irrigation from 420 hectares to 4 200 hectares and is
continuously evaluating related development and acquisitive opportunities. The acquisition and
vertical integration of Mpongwe Milling, a leading regional mill with dominant maize meal and
wheat flour brands, was concluded during the year under review. Although Agrivision Africa is
still loss-making, its operational performance has been encouraging, albeit under challenging
macro conditions. The business remains well positioned to benefit from the growing demand for
staple foods in sub-Saharan Africa.
Further information about Agrivision Africa can be viewed at www.agrivisionafrica.com.
Quantum Foods
Effective October 2014, Zeder obtained a direct interest in Quantum Foods following its aforementioned
unbundling from Pioneer Foods. Quantum Foods is a diversified feeds and poultry business providing
quality animal protein to selected South African and African markets. After weathering a volatile
industry cycle the past couple of years, Quantum Foods released encouraging results for the year ended
30 September 2014 reporting headline earnings per share of 11 cents compared to a 34 cents per share
headline loss in the previous year. Although Quantum Foods will remain exposed to a highly cyclical
industry, it has restructured its business and embarked on a clearly defined growth strategy to
generate sustainable profits and cash flows from its established South African operations, while
growing its footprint in the rest of Africa.
Further information about Quantum Foods can be viewed at www.quantumfoods.co.za.
PROSPECTS
Zeder will remain actively involved with its existing portfolio of companies, while continuously
seeking new opportunities. It is our belief that the agribusiness, food and beverage sectors offer
rewarding investment opportunities, both locally and abroad.
DIVIDEND
The directors have approved and declare a gross final dividend of 5.5 cents (2014: 4.5 cents) per
share in respect of the year ended 28 February 2015, from income reserves, which represents an
increase of 22.2%. The dividend was calculated in accordance with Zeder’s policy of paying up to
100% of free cash flow as a final ordinary dividend.
The final dividend amount, net of South African dividend tax of 15%, is 4.675 cents per share
for those shareholders that are not exempt from dividend tax. The number of ordinary shares in
issue at the declaration date is 1 443 843 985 and the income tax number of the company is
9406891151.
The salient dates of this dividend distribution are:
Last day to trade cum dividend Wednesday, 22 April 2015
Trading ex dividend commences Thursday, 23 April 2015
Record date Thursday, 30 April 2015
Date of payment Monday, 4 May 2015
Share certificates may not be dematerialised or rematerialised between Thursday, 23 April 2015, and
Thursday, 30 April 2015, both days inclusive.
SUMMARY CONSOLIDATED INCOME STATEMENT
Audited Audited
2015 2014
Restated *
Rm Rm
Revenue 8 692.0 5 977.5
Cost of sales (7 423.8) (5 204.5)
Gross profit 1 268.2 773.0
Income
Change in fair value of biological assets 144.0 134.2
Investment income 74.8 65.9
Net fair value gains 37.7 144.0
Other operating income 44.7 16.3
Total income 301.2 360.4
Expenses
Management fees (note 2) (235.5) (118.0)
Marketing, administration and other expenses (1 129.8) (660.8)
Total expenses (1 365.3) (778.8)
Net profit from associates
Share of profits of associates and joint ventures 299.9 218.0
Loss on impairment of associates and joint ventures (0.1) (21.4)
Loss on disposal of investment in associates (3.8)
Profit before finance costs and taxation 503.9 547.4
Finance costs (142.9) (86.0)
Profit before taxation 361.0 461.4
Taxation (77.3) (104.7)
Profit for the year 283.7 356.7
Attributable to:
Owners of the parent 241.8 306.9
Non-controlling interest 41.9 49.8
283.7 356.7
EARNINGS PER SHARE AND NUMBER OF SHARES IN ISSUE
Earnings per share (cents)
Recurring headline (basic and diluted) 35.3 30.6
Headline (basic and diluted) 22.0 26.6
Attributable (basic and diluted) 20.6 31.3
Number of shares (million)
In issue 1 443.8 980.2
Weighted average number of shares 1 172.0 979.8
* Restated as set out in note 7.
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
2015 2014
Restated *
Rm Rm
Profit for the year 283.7 356.7
Other comprehensive (loss)/income for the year, net of taxation,
which may subsequently be reclassified to profit or loss (12.6) 117.0
Currency translation adjustments (19.0) 157.4
Share of other comprehensive (losses)/income of associates (12.7) 31.2
Reclassification of other comprehensive income of associates (55.9)
Cash flow hedges (5.7) (15.4)
Reclassification of cash flow hedges 25.0
Other movements (0.2) (0.3)
Other comprehensive (loss)/income for the year, net of taxation,
which may subsequently not be reclassified to profit or loss
Movement in actuarial (losses)/gains on employee defined benefit plans (18.3) 1.1
Total comprehensive (loss)/income for the year 252.8 474.8
Attributable to:
Owners of the parent 217.5 384.0
Non-controlling interest 35.3 90.8
252.8 474.8
* Restated as set out in note 7.
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
2015 2014
Restated *
Rm Rm
Assets
Non-current assets 8 003.3 3 637.2
Property, plant and equipment 1 223.2 925.0
Intangible assets 600.7 375.8
Biological assets 181.5 117.1
Investment in ordinary shares of associates 5 704.0 1 821.8
Loans to associates 30.0 18.2
Investment in ordinary shares of joint ventures 0.1 0.1
Loans granted to joint ventures 0.1 1.6
Equity securities 51.0 206.5
Loans and advances 114.4 78.6
Deferred income tax assets 63.9 59.4
Employee benefits 34.4 33.1
Current assets 3 132.2 3 122.9
Biological assets 92.8 83.4
Inventories 988.1 955.7
Trade and other receivables 1 260.0 1 045.0
Derivative financial assets 0.1 1.3
Current income tax receivables 21.2 22.7
Cash, money market investments and other cash equivalents 770.0 1 014.8
Non-current assets held for sale (note 5) 30.4 177.6
Total assets 11 165.9 6 937.7
Equity and liabilities
Ordinary shareholders' equity 7 132.7 3 620.5
Non-controlling interest 607.9 544.7
Total equity 7 740.6 4 165.2
Non-current liabilities 1 273.8 1 028.4
Deferred income tax liabilities 105.6 119.8
Borrowings 969.9 738.5
Derivative financial liabilities 63.6 45.7
Employee benefits 134.7 124.4
Current liabilities 2 151.5 1 744.1
Borrowings 902.4 459.7
Trade and other payables 1 153.2 1 176.7
Derivative financial liabilities 0.4 15.2
Current income tax payables 30.9 19.3
Employee benefits 64.6 73.2
Total liabilities 3 425.3 2 772.5
Total equity and liabilities 11 165.9 6 937.7
Net asset value per share (cents) 494.0 369.4
Tangible net asset value per share (cents) 452.4 331.0
* Restated as set out in note 7.
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Audited Audited
2015 2014
Restated *
Rm Rm
Ordinary shareholders' equity at end of year 7 132.7 3 620.5
Ordinary shareholders' equity at beginning of year 3 620.5 3 283.5
Shares issued 3 347.2 8.2
Total comprehensive income for the year 217.5 384.0
Transactions with non-controlling interest (19.1) (10.6)
Other movements 10.7 (5.5)
Dividend paid (44.1) (39.1)
Non-controlling interest at end of year 607.9 544.7
Non-controlling interest at beginning of year 544.7 109.1
Total comprehensive income for year 35.3 90.8
Transactions with non-controlling interest 32.1 (16.7)
Other movements 10.8 374.7
Dividend paid (15.1) (13.2)
Total equity 7 740.6 4 165.2
Dividend per share (cents) 5.5 4.5
* Restated as set out in note 7.
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
2015 2014
Restated *
Rm Rm
Cash (utilised by)/generated from operations (note 6) (75.7) 300.6
Investment income 201.5 127.9
Finance cost and taxation paid (234.4) (173.4)
Net cash flow from operating activities (108.6) 255.1
Acquisition of associates (264.8) (242.2)
Acquisition of subsidiary companies (note 4) (300.2) (36.4)
Acquisition of equity securities (177.8)
Additions to property, plant and equipment (256.5) (160.6)
Additions to intangible assets (75.8) (16.2)
Proceeds from disposal of associates 91.7
Proceeds from disposal of equity securities 124.6
Proceeds from disposal of non-current assets held for sale 193.5 504.5
Proceeds from disposal of property, plant and equipment 9.0 53.9
Other (46.4) 47.9
Net cash flow from investment activities (741.2) 189.4
Dividends paid to group shareholders (44.1) (39.1)
Dividends paid to non-controlling interest (15.1) (13.2)
Borrowings repaid (79.4) (252.1)
Borrowings drawn 720.8 34.4
Other (2.7) 41.6
Net cash flow from financing activities 579.5 (228.4)
Net (decrease)/increase in cash and cash equivalents (270.3) 216.1
Exchange differences on cash and cash equivalents 25.5 46.1
Cash and cash equivalents at beginning of year 1 014.8 752.6
Cash and cash equivalents at end of year 770.0 1 014.8
* Restated as set out in note 7.
NOTES TO THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of presentation and accounting policies
These summary consolidated financial statements have been prepared in accordance with the recognition
and measurement principles of International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board, including IAS 34 Interim Financial Reporting; the SAICA
Financial Reporting Guides, as issued by the Accounting Practices Committee; the Financial Reporting
Pronouncements, as issued by the Financial Reporting Standards Council; the requirements of the South
African Companies Act, No 71 of 2008, as amended, applicable to summary financial statements; and the
Listings Requirements of the JSE for preliminary reports.
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 year annual financial statements,
apart from the following amendment to IFRS which was early adopted retrospectively by the group:
Amendments to IAS 16 Property, plant and equipment and IAS 41 Agriculture: Bearer plants
Biological assets that meet the definition of bearer plants are measured either at cost or revalued
amounts, less accumulated depreciation and impairment losses. Accordingly, bearer plants are measured
similar to self-constructed items of property, plant and equipment.
The group also adopted the various other revisions to IFRS which were effective for its financial
year ended 28 February 2015. These revisions have not resulted in material changes to the group’s
reported results and disclosures in these summary consolidated financial statements.
The results of the previous year included the first-time consolidation of Capespan Group Ltd, which
formed part of the group for 8 months during the previous year.
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. Headline earnings
Audited Audited
2015 2014
Restated *
Rm Rm
Profit for the period attributable to owners of the parent 241.8 306.8
Non-headline items 15.5 (46.3)
Gross amounts
Impairment of investment in associates 0.1 21.4
Net loss on disposal of investment in associates 3.8
Fair value gain on step-up from associates and joint ventures to
subsidiaries (3.3) (74.3)
Non-headline items of associates 20.4 11.6
Net gain on disposal of associates classified as non-current assets held
for sale (14.0)
Impairment of investment of intangible assets and goodwill 19.0 1.2
Reversal of impairment on property, plant and equipment (11.9)
Other (9.2) (3.4)
Non-controlling interest 2.8 (0.1)
Taxation (2.4) 7.5
Headline earnings 257.3 260.5
* Restated as set out in note 7.
4. Subsidiaries acquired
During April 2014, the group, through Agrivision Africa (previously Chayton Africa), acquired the
entire issued share capital of Mpongwe Milling, a maize and wheat mill operating in the Copperbelt
province of Zambia, for a Zambian kwatcha-denominated cash consideration of R307.6m. Mpongwe Milling
complements the group's existing farming operations in Zambia and the acquisition provides the group
with an opportunity to expand its product offering across the value chain. Goodwill arose in respect
of, inter alia, synergies pertaining to the procurement and marketing functions of the mill and
farming operations. Accounting for Mpongwe Milling's business combination has now been finalised.
Animalzone (Pty) Ltd ("Animalzone")
During July 2014, the group, through Zaad Holdings Ltd, acquired the remaining 50% shareholding not
yet held in Animalzone, previously a joint venture, for a nominal cash consideration of R1.
Animalzone manufactures seed-based pet food and goodwill arose in respect of, inter alia, expected
synergies and its growth potential. Accounting for Animalzone's business combination has now been
finalised.
Gestao de Terminais SA
During October 2014, the group, through Capespan Group Ltd, inceased its shareholding in
Gestao de Terminais SA, previously an associate by 10% to 50%, for a cash consideration of R7.3m.
Gestao de Terminais SA operates a customs terminal in Mozambique. Accounting for Gestao de Terminais
SA's business combination has been finalised.
The assets and liabilities recognised at the respective acquisition dates were:
Mpongwe Gestao de
Milling Animalzone Terminais SA Total
Rm Rm Rm Rm
Property, plant and equipment 119.0 1.3 53.1 173.4
Biological assets 8.6 1.1 9.7
Deferred income tax assets 0.9 0.9
Inventories 26.5 0.6 27.1
Trade and other receivables 23.8 0.8 14.2 38.8
Current income tax receivables 0.1 0.1
Cash, money market investments and other
cash equivalents 13.6 3.0 16.6
Borrowings (6.6) (9.6) (25.0) (41.2)
Deferred income tax liabilities (27.6) (0.3) (27.9)
Trade and other payables (3.8) (0.6) (25.0) (29.4)
Current income tax payables (1.1) (1.1)
Total identifiable net assets/(liabilities) 152.4 (5.8) 20.4 167.0
Non-controlling interest (5.2) (5.2)
Derecognition of investment in ordinary shares of
associates/joint ventures (0.1) (7.9) (8.0)
Goodwill recognised 155.2 5.9 161.1
Total consideration 307.6 - 7.3 314.9
Cash consideration paid (307.6) (7.3) (314.9)
Bank overdraft acquired (included in borrowings) (1.9) (1.9)
Cash and cash equivalents acquired 13.6 3.0 16.6
Net cash outflow from subsidiaries acquired (294.0) (1.9) (4.3) (300.2)
The aforementioned business combinations do not contain any contingent consideration or
indemnification asset arrangements.
Had Mpongwe Milling, Animalzone and Gestao de Terminais SA been consolidated with effect from 1 March
2014 instead of their respective acquisition dates, the consolidated income statement would have
reflected additional revenue of R248m and profit after tax of R7m.
5. Non-current assets held for sale
Non-current assets held for sale as at 28 February 2014 consisted mainly of JSE-listed equity
securities in Capevin Holdings Ltd. The group disposed of these equity securities during the year
under review for cash proceeds of R193.5m.
6. Cash (utilised by)/generated from operations
Audited Audited
2015 2014
Restated *
Rm Rm
Profit before taxation 361.0 461.4
Share of profits of associates and joint ventures (299.9) (218.0)
Depreciation and amortisation 132.1 94.2
Changes in fair value of biological assets (144.0) (134.2)
Loss on disposal of investment in associates 3.8
Investment income (78.4) (64.4)
Finance costs 142.9 86.0
Other non-cash items 6.5 (116.2)
123.8 112.6
Change in working capital and other financial instruments (125.7) 316.9
Additions to biological assets (73.8) (128.9)
Cash (utilised by)/generated from operations (75.7) 300.6
* Restated as set out in note 7.
7. Restatement of prior year figures
The prior year figures of Capespan Group Ltd ("Capespan"), a subsidiary, have been restated to account
for the following:
Restatement 1: Agriculture: Bearer plants
During the year, amendments were made to IAS 41 Agriculture and IAS 16 Property, plant and equipment
that allow companies to account for bearer plants at cost less accumulated depreciation and impairment
losses. Long-term biological assets consist of bearer plants used in the production of agricultural
produce and are expected to bear produce for more than one period. Management’s intention is to recover
the economic benefit of these assets through continued use. Management revised its accounting policy to
account for bearer plants in accordance with the cost model under IAS 16.
Restatement 2: Accounting for the sales and cost of sales of product sold
During the year, management reassessed an existing management agreement which was accounted for as
management fee income, but concluded it to rather fall within IFRIC 4 Determining whether an
Arrangement contains a Lease and therefore applied IAS 17 Leases retrospectively. This resulted in
Capespan now accounting for this agreement and the related farming operations as principal.
Restatement 3: Reclassification of production costs
Certain production costs were reallocated from other expenses to cost of sales to correctly disclose
the nature thereof. This restatement had no impact on previously reported profit.
The effect of these restatements on the group results are as follows:
Previously Currently
reported reported Difference
Audited Rm Rm Rm
Income statement for the year ended 28 February 2014
Revenue 2 6 010.7 5 977.5 (33.2)
Cost of sales (5 134.6) (5 204.5) (69.9)
Restatement 1 (37.1)
Restatement 2 48.9
Restatement 3 (81.7)
Gross profit (103.1)
Change in fair value of biological assets 1 90.5 134.2 43.7
Investment income 1 64.4 65.9 1.5
Other operating income 2 8.9 16.3 7.4
Marketing, administration and other expenses (741.3) (660.8) 80.5
Restatement 1 (8.6)
Restatement 2 7.4
Restatement 3 81.7
Profit before finance costs and taxation 30.0
Taxation (97.1) (104.7) (7.6)
Restatement 1 0.4
Restatement 2 (8.0)
Profit for the year 22.4
Profit attributable to:
Owners of the parent 291.3 306.9 15.4
Non-controlling interest 42.9 49.8 6.9
Earnings per share
Recurring headline earnings 29.8 30.6 0.8
Headline earnings 25.8 26.6 0.8
Attributable earnings 29.7 31.3 1.6
Statement of financial position at 28 February 2014
Assets
Biological assets 1 201.4 200.6 (0.8)
Inventories 2 739.8 955.7 215.9
Trade and other receivables 2 1 127.2 1 045.0 (82.2)
132.9
Equity
Ordinary shareholders equity 3 606.9 3 620.5 13.6
Restatement 1 - profit for the year 0.2
Restatement 2 - profit for the year 15.3
Restatement 2 - other movements (1.9)
Non-controlling interest 535.9 544.7 8.8
Restatement 2 - profit for the year 6.9
Restatement 2 - other movements 1.9
Liabilities
Deferred income tax liabilities 104.6 119.8 15.2
Restatement 1 (0.6)
Restatement 2 15.8
Trade and other payables 2 1 081.4 1 176.7 95.3
132.9
1 Relates to Restatement 1
2 Relates to Restatement 2
Capespan, to which all of the aforementioned restatements relate, only became a subsidiary of the group
during the prior year and therefore no amendments were required to the amounts reported in respect of
earlier years.
8. Financial instruments
8.1 Financial risk factors
The group's activities expose it to a variety of financial risks; market risk (including currency risk,
cash flow and 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 2015.
Risk management continues to be carried out by each major entity within the group under policies
approved by the respective boards of directors.
8.2 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 13. The different levels in the hierarchy are defined
below:
Level 1
The fair value of financial instruments traded in active markets is based on quoted market prices at
the reporting date. A market is regarded as active if quoted prices are readily and regularly
available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency,
and those prices represent actual and regularly occurring market transactions on an arm's length
basis. The quoted market price used for financial assets held by the group is the current bid price.
Level 2
Financial instruments that trade in markets that are not considered to be active but are valued (using
valuation techniques) based on quoted market prices, dealer quotations or alternative pricing sources
supported by observable inputs are classified within level 2. These include over-the-counter traded
derivatives. As level 2 investments include positions that are not traded in active markets and/or
are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or
non-transferability, which are generally based on available market information. If all
significant inputs in determining an instrument's fair value are observable, the instrument is
included in level 2.
Level 3
If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3. Investments classified within level 3 have significant unobservable inputs, as
they trade infrequently. 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
28 February 2015 Rm Rm Rm Rm
Assets
Derivative financial assets 0.1 0.1
Equity securities 1.3 49.7 51.0
Non-current assets held for sale 30.4 30.4
Closing balance 1.4 80.1 81.5
Opening carrying value 41.7
Classified as non-current assets held for sale 30.4
Fair value gains 8.0
Liabilities
Derivative financial liabilities 0.4 63.6 64.0
Opening balance 45.7
Additions 19.5
Finance cost 3.2
Fair value gains (4.8)
28 February 2014
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 177.0 0.6 177.6
Closing balance 341.8 1.9 41.7 385.4
Opening carrying value 97.5
Additions 8.4 3.5
Disposal (86.5) (3.5)
Fair value gains 20.5
Subsidiaries acquired 3.7
Transfer from level 2 to level 3 (41.7) 41.7
Liabilities
Derivative financial liabilities 15.2 45.7 60.9
Opening balance 45.7
Finance cost 0.8
Unrealised fair value gains (0.8)
During the year ended 28 February 2014, following a decline in the trading activity of the relevant
over-the-counter traded markets (i.e. less observable inputs), it was considered necessary to transfer
a significant portion of the unquoted equity securities from level 2 to level 3 of the fair value
hierarchy.
Non-current assets held for sale included assets measured at fair value, as set out in note 5, which
was based on the JSE-listed share price or other observable inputs.
9. Segmental reporting
The group are organized into four reportable segments, namely i) food, beverages and related services,
ii) agri-related retail, trade and services, iii) agri-inputs and iv) agri-production.
The segments represent different sectors in the broad agribusiness industry.
Headline earnings comprise recurring and non-recurring headline earnings. 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
does not equity account or consolidate 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 dividend income (as recognised in the income statement).
Associates' and subsidiaries' one-off gains/losses are 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. The SOTP value is calculated using
the quoted market prices for all JSE-listed investments, and market-related valuations for unquoted,
unlisted investments. These values will not necessarily correspond with the values per the statement
of financial position since the latter are measured using the relevant accounting standards which
include historical cost and the equity accounting method.
The chief operating decision-maker (the executive committee) evaluates the following information
to assess the segments' performance:
Audited Audited
2015 2014
Restated *
Rm Rm
Recurring headline earnings:
Food, beverages and related services 417.0 247.3
Agri-related retail, trade and services 64.1 74.1
Agri-inputs 73.7 49.6
Agri-production (14.3) (4.8)
Recurring headline earnings from investments 540.5 366.2
Net interest, taxation and other income and expenses (8.5) (7.1)
Management (base) fee (117.8) (59.0)
Recurring headline earnings 414.2 300.1
Management (performance) fee (117.8) (59.0)
Other non-recurring headline earnings, net of taxation (39.1) 19.4
Headline earnings 257.3 260.5
Non-headline items (note 3) (15.5) 46.3
Attributable earnings 241.8 306.8
SOTP segmental analysis:
Segments
Food, beverages and related services 11 226.3 3 340.8
Agri-related retail, trade and services 681.0 567.9
Agri-inputs 885.3 678.8
Agri-production 562.8 560.4
Cash and cash equivalents 338.4 376.1
Other net liabilities (439.2) (365.4)
SOTP value 13 254.6 5 158.6
Income segmental analysis:
Food, beverages and related services 7 438.0 5 411.0
Revenue 7 392.4 5 374.2
Investment income 45.6 36.8
Agri-related retail, trade and services
Investment income 3.5
Agri-inputs 951.1 467.8
Revenue 946.6 465.4
Investment income 4.5 2.4
Agri-production
Revenue 353.0 137.9
Unallocated investment income (mainly head office interest income) 24.7 23.2
IFRS Revenue 8 766.8 6 043.4
* Restated as set out in note 7.
10. Events subsequent to the reporting date
Immediately following this notice, Zeder will formally announce to the market its firm intention
to acquire the remaining 25% shares in Capespan Group Ltd ("Capespan”) held by minority
shareholders other than management by means of a scheme of arrangement. In terms of the scheme
of arrangement, Zeder will issue 85 ordinary shares for every 100 Capespan ordinary shares
acquired.
Subsequent to the reporting date, the group, through Capespan, acquired the following businesses:
- Novo Packhouse (Pty) Ltd’s coldstores, packhouse and equipment for a cash purchase consideration
of R100m; and
- Theewaterskloof (Pty) Ltd’s business operations, moveable equipment, farm land and biological assets
(being a pome fruit farm) for a cash consideration of R140m.
The directors are, except for the above, unaware of any other matter or event which is material to the
financial affairs of the group that has occurred between the reporting date and the date of approval
of these annual financial statements.
11. Preparation
These summary preliminary 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 preliminary consolidated financial
statements were derived.
A copy of the auditor's report on the summary preliminary consolidated financial statements and of the
auditor's report on the annual consolidated financial statements are available for inspection at the
Zeder'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.
12. Changes to the board of directors
MS du P le Roux resigned as a non-executive director on 20 June 2014
LP Retief resigned as a non-executive director on 25 July 2014
GD Eksteen was appointed as lead independent director on 7 October 2014
DIRECTORS:
JF Mouton (Chairman), N Celliers* (CEO), WL Greeff* (FD), WA Hanekom#, AE Jacobs, PJ Mouton,
GD Eksteen#, CA Otto#
8 April 2015
* executive
# independent non-executive
APPOINTED MANAGER, 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: 08/04/2015 02:24:00 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
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