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ZEDER INVESTMENTS LIMITED - Condensed unaudited interim results for the six months ended 31 August 2015

Release Date: 05/10/2015 15:00
Code(s): ZED     PDF:  
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Condensed unaudited interim results for the six months ended 31 August 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”)

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2015

HIGHLIGHTS

- SOTP value per share up 13% to R10.37 as at 31 August 2015
- RHEPS from investments up 12% to 21.5 cents
- RHEPS up 3.4% to 15.4 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 from R13.4bn as at
28 February 2015 to R16.2bn as at 31 August 2015. Zeder’s 27.1% interest in Pioneer Foods remains
its largest investment representing 71.7% of the portfolio.

STRATEGY

Zeder owns large, strategic stakes in entities allowing it to play an active role in its underlying
portfolio companies and assist with the determination of appropriate long-term strategies. The focus
during the period under review was within existing investments. Zeder will continue with this
approach and drive for platform growth from within portfolio companies. New investments will be made
when opportune.

CORPORATE ACTION

Capespan scheme of arrangement
Zeder successfully concluded the Capespan scheme of arrangement valued in excess of R500m by
acquiring the remaining 25% interest held by minority shareholders other than management. The
transaction represented a significant premium for Capespan shareholders and provides them with a
liquid alternative, while allowing Zeder to focus on growing the Capespan business. 69.6m Zeder
shares were issued to Capespan shareholders as purchase consideration.

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
investments, and market-related valuations for unquoted, unlisted investments, increased by 13%
to R10.37 since 28 February 2015. At the close of business on Tuesday, 29 September 2015, Zeder’s
SOTP value per share was R10.22.

                                        28 Feb 2015         31 Aug 2015         29 Sep 2015
                                    Interest            Interest            Interest
Company                                  (%)      Rm         (%)      Rm         (%)      Rm
Pioneer Foods                           27.3   9 533        27.1  11 592        27.1  11 393
Capespan                                71.1   1 463        96.6   2 027        96.6   2 027
Zaad                                    92.0     885        92.0   1 018        92.0   1 018
Kaap Agri                               37.9     629        39.4     688        39.4     688
Agrivision                              76.5     563        55.9     614        55.9     614
Quantum Foods                           26.4     231        26.4     196        26.4     210
Other                                             52                  42                  48
Total investments                             13 356              16 177              15 998
Cash and cash equivalents                        338                  36                   1
Other net liabilities                           (439)               (428)               (433)
SOTP value                                    13 255              15 785              15 566

Number of shares in issue (m)                1 443.8             1 522.9             1 522.9

SOTP value per share (R)                        9.18               10.37               10.22

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 in which Zeder holds less than
20% and are generally not equity accountable in terms of accounting standards, are included in the
calculation of consolidated recurring headline earnings. Once-off items are excluded from recurring
headline earnings. This provides management and investors with a more realistic and transparent way
of evaluating Zeder’s earnings performance.

                                              Audited                    Unaudited
                                            28 Feb 2015       31 Aug 2014        31 Aug 2015
                                              12 months          6 months           6 months
                                                     Rm                Rm                 Rm
Recurring headline earnings from
investments                                         541               188                314
Net interest, taxation, other income
and expenses                                         (9)               (5)                (8)
Management (base) fee                              (118)              (37)               (81)
Recurring headline earnings                         414               146                225
Non-recurring headline earnings
  Management (performance) fee                     (118)              (37)               (81)
  Other                                             (38)               33                (55)
Headline earnings                                   258               142                 89
Non-headline items                                  (16)               (8)               (24)
Attributable earnings                               242               134                 65

Weighted average number of shares in
issue (m)                                       1 172.0             980.2            1 458.4

Recurring headline earnings from
investments per share (cents)                      46.1              19.2               21.5
Recurring headline earnings per
share (cents)                                      35.3              14.9               15.4
Headline earnings per share (cents)                22.0              14.5                6.1
Attributable earnings per share (cents)            20.6              13.7                4.4

The aggregate recurring headline earnings from investments increased by 67%, largely as a result
of Pioneer Foods’ strong performance and Zeder’s increased shareholding following the Agri Voedsel
scheme of arrangement in the prior year. Recurring headline earnings from investments per share
increased by 12%, while recurring headline earnings per share increased by 3.4% to 15.4 cents. The
difference was mainly due to the higher base management fee expense following Zeder’s increased market
capitalisation in the six-month period under review.

Headline earnings per share decreased by 57.9% to 6.1 cents, largely due to: i) an increase in the
non-recurring performance fee expense during the period under review following Zeder’s share price
outperformance of its benchmark hurdle being the GOVI-index yield plus 4%, adjusted for dividends; and
ii) marked-to-market losses incurred on equity securities during the period under review as opposed to
significant marked-to-market gains during the comparative period in the prior year, relating
predominantly to Zeder’s direct interest in Pioneer Foods, which has subsequently been reclassified to
investments in associates following the Agri Voedsel scheme of arrangement.

Attributable earnings per share decreased by 67.9% to 4.4 cents following the aforementioned decrease
in headline earnings and non-headline losses incurred on the impairment and disposal of equity
securities underlying the Pioneer Foods B-BBEE scheme.

Pioneer Foods

Pioneer Foods maintained its momentum and produced strong results for the six-month period ended
31 March 2015, with adjusted headline earnings per share from continuing operations increasing by 39%.
The core divisions are performing well and improvements were reported in volume, revenue, market share
and operating margin. Pioneer Foods continues to strengthen its position as one of the leading food
producers and is well positioned to benefit from the growing demand for food and beverages, both in
South Africa and select international markets. Zeder remains optimistic about Pioneer Foods’ growth
potential.

Pioneer Foods is listed on the JSE and further information is available 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. The overall industry remains in a challenging cycle, but Capespan’s strategy of
product, market and sector diversification is evolving and should ensure robustness in times of
volatility. Capespan delivered results in line with expectations for the six-month period ended
30 June 2015, albeit that its recurring headline earnings of R40.9m decreased by 55.2% from the
comparative period. This was anticipated given weaker grape prices, additional interest expense
following increased borrowings to fund further expansion and a lower contribution from China-based
associate, Golden Wing Mau, during the period under review. Zeder remains optimistic about the future
prospects for both Capespan’s 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 agri sector and the general public. It has been in existence for more than 100 years
with 183 operating points throughout South Africa. Despite a challenging macro environment for
agriculture, Kaap Agri’s headline earnings increased by 8% to R110.6m during the six-month period
ended 31 March 2015. Its strategy of product and geographic diversification should assist it in
managing cyclicality in this sector. The recent focus on introducing non-agri income streams to
complement its core agribusiness is gaining traction. Zeder remains optimistic about Kaap Agri’s
prospects.

Kaap Agri’s results can be viewed at www.kaapagri.co.za.

Zaad 

Zaad operates in the specialised agri-inputs industry and currently owns, develops, imports and
distributes a broad range of agri seeds in Africa, Europe and other international markets. Through
Agricol, Klein Karoo Seed Marketing and Gebroeders Bakker it has a proud history spanning more than
50 years exporting to more than 90 countries. Its portfolio, product and geographic mix have been
structured to mitigate agri cyclicality. Zaad invested in numerous growth initiatives during the period
under review which should yield positive results in the medium to long term. The specialised
agri-inputs market, and in particular the seed segment, remain attractive and Zaad is well positioned
to benefit from growth opportunities that it offers. Zaad reported recurring headline earnings of
R20.7m for the six-month period ended 31 August 2015, as opposed to R20.8m in the comparative period. 

Further information can be viewed at www.agricol.co.za, www.seedmarketing.co.za and
www.bakkerbrothers.nl, respectively.

Agrivision Africa

Agrivision Africa currently owns and operates two large-scale commercial farming operations and a
milling business in Zambia. It has developed productive farmland under irrigation of 4 468 hectares
since starting in 2011 and is continuously evaluating expansion opportunities. Agrivision Africa’s
balance sheet was strengthened during the period under review through a USD30m capital injection,
the majority of which was contributed by new strategic shareholder, the International Finance
Corporation (IFC), and the balance by Zeder and Norfund. 

Agrivision Africa incurred a loss of R49.9m for its six-month period ended 30 June 2015. Although
Zeder anticipates a loss for the full year, we believe Agrivision Africa will turn profitable in
2016. Zeder remains committed to help build this company into a leading regional food producer.

Further information about Agrivision Africa can be viewed at www.agrivisionafrica.com.

Quantum Foods

Quantum Foods is a diversified feeds and poultry business providing quality animal protein to select
South African and African markets. Having weathered adverse market conditions the past couple of years,
Quantum Foods released strong results for the six-month period ended 31 March 2015, reporting a 182%
increase in headline earnings per share. Although it remains exposed to a highly cyclical industry, it
has restructured its business and embarked on a clearly defined growth strategy that should see it
generate sustainable profits and cash flows from its established South African operations, while
growing its footprint in the rest of Africa.

Quantum Foods is listed on the JSE and its results 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. We believe that, despite inevitable cyclicality, the agribusiness industry
offers rewarding investment opportunities, both locally and abroad.

DIVIDEND

It is Zeder’s policy to only declare a final dividend at year-end.

UNAUDITED CONDENSED INTERIM GROUP FINANCIAL STATEMENTS

CONDENSED GROUP INCOME STATEMENT

                                                         Unaudited                   Audited
                                                 Aug 15            Aug 14*            Feb 15
                                               6 months          6 months          12 months
                                                     Rm                Rm                 Rm

Revenue                                           4 799             4 263              8 692
Cost of sales                                    (4 165)           (3 655)            (7 424)
Gross profit                                        634               608              1 268

Income
Changes in fair value of biological assets           61                21                144
Investment income                                    24                34                 75
Net fair value (losses)/gains                       (20)               39                 38
Other operating income                               13                 9                 45
Total income                                         78               103                302

Expenses
Management fees (note 3)                           (162)              (74)              (236)
Marketing, administration and other expenses       (656)             (560)            (1 130)
Total expenses                                     (818)             (634)            (1 366)

Income from associates and joint ventures
Share of profits of associates and joint ventures   253               179                300
Loss on impairment of associates**
Net income from associates and joint ventures       253               179                300

Profit before finance costs and taxation            147               256                504
Finance costs                                       (82)              (67)              (143)
Profit before taxation                               65               189                361
Taxation                                            (16)              (53)               (77)
Profit for the period                                49               136                284

Attributable to:
  Owners of the parent                               65               134                242
  Non-controlling interests                         (16)                2                 42
                                                     49               136                284

* Restated as set out in note 8.
** Amounts less than R1m.

EARNINGS PER SHARE AND NUMBER OF SHARES IN ISSUE

                                                         Unaudited                   Audited
                                                 Aug 15            Aug 14*            Feb 15
                                               6 months          6 months          12 months
                                                  cents             cents              cents

Earnings per share
  Recurring headline earnings from investments     21.5              19.2               46.1
  Recurring headline                               15.4              14.9               35.3
  Headline (basic) (note 4)                         6.1              14.5               22.0
  Headline (diluted)                                5.2              14.5               22.0
  Attributable (basic)                              4.4              13.7               20.6
  Attributable (diluted)                            3.6              13.7               20.6
Number of shares (m)
  In issue                                        1 523               980              1 444
  Weighted average (basic and diluted)            1 458               980              1 172

* Restated as set out in note 8.

CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME

                                                         Unaudited                   Audited
                                                 Aug 15            Aug 14*            Feb 15
                                               6 months          6 months          12 months
                                                     Rm                Rm                 Rm


Profit for the period                                49               136                284
Other comprehensive loss for the period, net 
of taxation
  Items that may be subsequently reclassified 
  to profit or loss                                (113)              (62)               (13)
    Currency translation adjustments               (102)              (70)               (19)
    Share of other comprehensive losses of 
    associates                                       (7)               (9)               (13)
    Cash flow hedges                                 (4)               (7)                (6)
    Reclassification of cash flow hedges                               24                 25
  Items that will not be subsequently
  reclassified to profit or loss
    Remeasurement of post-employment benefit 
    obligations                                      (1)               (5)               (18)
Total comprehensive (loss)/income
for the period                                      (65)               69                253

Attributable to:
  Owners of the parent                                9                42                218
  Non-controlling interests                         (74)               27                 35
                                                    (65)               69                253

* Restated as set out in note 8.

CONDENSED GROUP STATEMENT OF FINANCIAL POSITION

                                                         Unaudited                   Audited
                                                 Aug 15            Aug 14*            Feb 15
                                                     Rm                Rm                 Rm

Assets

Non-current assets                                8 524             4 331              8 004
Property, plant and equipment                     1 399             1 054              1 223
Intangible assets                                   622               571                601
Biological assets (bearer plants)                   260               149                182
Investment in ordinary shares of associates 
and joint ventures                                5 978             1 997              5 704
Loans granted to associates and joint ventures       40                25                 30
Equity securities                                    47               357                 51
Loans and advances                                   61                85                114
Deferred income tax assets                           82                58                 64
Employee benefits                                    35                35                 35

Current assets                                    3 784             3 312              3 132
Biological assets                                    80                64                 93
Inventories                                         905               801                988
Loans and advances                                    4
Trade and other receivables                       1 991             1 711              1 260
Derivative financial assets**
Current income tax assets                            21                25                 21
Cash, money market investments and other 
cash equivalents                                    783               711                770

Non-current asset held for sale (note 6)                                                  30

Total assets                                     12 308             7 643             11 166

Equity and liabilities

Ordinary shareholders’ equity                     7 501             3 620              7 133
Non-controlling interests                           463               578                608
Total equity                                      7 964             4 198              7 741
  
Non-current liabilities                           1 624             1 165              1 275
Deferred income tax liabilities                     102               124                106
Borrowings                                        1 320               863                970
Derivative financial liabilities                     66                47                 64
Employee benefits                                   136               131                135

Current liabilities                               2 720             2 280              2 150
Borrowings                                        1 150             1 038                902
Trade and other payables                          1 510             1 152              1 153
Derivative financial liabilities**
Current income tax liabilities                       13                38                 31
Employee benefits                                    47                52                 64

Total liabilities                                 4 344             3 445              3 425

Total equity and liabilities                     12 308             7 643             11 166

Net asset value per share (cents)                 492.5             369.4              494.0
Tangible net asset value per share (cents)        451.7             311.1              452.4

* Restated as set out in note 8.
** Amounts less than R1m.

CONDENSED GROUP STATEMENT IN CHANGE OF EQUITY

                                                         Unaudited                   Audited
                                                 Aug 15            Aug 14*            Feb 15
                                               6 months          6 months          12 months
                                                     Rm                Rm                 Rm

Ordinary shareholders’ equity at end of 
the period
Ordinary shareholders’ equity at beginning 
of the period                                     7 133             3 620              3 620
Shares issued                                       610                                3 347
Total comprehensive income for the period             9                42                218
Transactions with non-controlling interests        (175)                2                (19)
Other movements                                       3                                   11
Dividend paid                                       (79)              (44)               (44)
                                                  7 501             3 620              7 133

Non-controlling interests at end of
the period
Non-controlling interests at beginning of 
the period                                          608               545                545
Total comprehensive (loss)/income for the 
period                                              (74)               27                 35
Transactions with non-controlling interests         (50)               21                 32
Other movements                                      (1)                                  11
Dividend paid                                       (20)              (15)               (15)
                                                    463               578                608

Total equity                                      7 964             4 198              7 741

Dividend per share (cents)                                                               5.5

* Restated as set out in note 8.

CONDENSED GROUP STATEMENT OF CASH FLOWS

                                                         Unaudited                   Audited
                                                 Aug 15            Aug 14             Feb 15
                                               6 months          6 months          12 months
                                                     Rm                Rm                 Rm

Cash utilised by operations (note 7)               (343)             (321)               (77)
Investment income                                    84                60                202
Finance cost and taxation paid                     (124)             (100)              (234)
Net cash flow from operating activities            (383)             (361)              (109)

Acquisition of associates                           (66)             (210)              (265)
Acquisition of subsidiary companies (note 5)       (244)             (294)              (300)
Acquisition of equity securities                     (5)              (56)
Additions to property, plant and equipment         (128)             (120)              (257)
Additions to intangible assets                      (26)              (41)               (76)
Proceeds from disposal of associates                                    4
Proceeds from disposal of non-current assets 
held for sale                                        13               194                194
Proceeds from disposal of property, plant 
and equipment                                        16                 2                  9
Other                                                (9)              (28)               (46)
Net cash flow from investment activities           (449)             (549)              (741)

Dividends paid to group shareholders                (79)              (44)               (44)
Dividends paid to non-controlling interests         (20)              (15)               (15)
Capital contributions by non-controlling
interests                                           365                 7                  7
Borrowings repaid                                   (81)              (50)               (79)
Borrowings drawn                                    674               708                721
Other                                                (5)                1                (10)
Net cash flow from financing activities             854               607                580

Net increase/(decrease) in cash and cash
equivalents                                          22              (303)              (270)
Exchange differences on cash and
cash equivalents                                     (9)               (1)                25
Cash and cash equivalents at beginning of
the period                                          770             1 015              1 015
Cash and cash equivalents at end of
the period                                          783               711                770

NOTES TO THE CONDENSED INTERIM GROUP FINANCIAL STATEMENTS

1. Basis of presentation and accounting policies

   These condensed interim group 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, 71 of 2008, as 
   amended; and the Listings Requirements of the JSE Ltd.

   The accounting policies applied in the preparation of these condensed interim group financial
   statements are consistent in all material respects with those used in the prior financial year.
   The group adopted the various revisions to IFRS which are effective for its financial year 
   ending 29 February 2016, however, these revisions have not resulted in material changes to the
   group’s reported interim financial results or disclosures.

   In preparing these condensed interim group financial statements, the significant judgements 
   made by management in applying the group’s accounting policies and the key sources of 
   estimation uncertainty were similar to those disclosed in the group financial statements for 
   the year ended 28 February 2015.

2. Preparation

   These condensed interim group financial statements were compiled under the supervision of the 
   group financial director, Mr WL Greeff, CA(SA), and were not reviewed or audited by the group’s
   external auditor, PricewaterhouseCoopers Inc.

3. 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. As at 31 August 2015, the
   potential performance fee not yet accounted for amounts to R809m. The performance fee payable in 
   any year is limited to the base fee, with the excess being carried forward as a reduction in the
   following year’s starting hurdle.

4. Headline earnings

                                                         Unaudited                   Audited
                                                 Aug 15            Aug 14*            Feb 15
                                               6 months          6 months          12 months
                                                     Rm                Rm                 Rm

   Profit for the period attributable to 
   owners of the parent                              65               134                242

   Non-headline items                                24                 8                 16
     Gross amounts
       Non-headline items of associates              26                 8                 20
       Impairment of intangible assets and 
       goodwill                                                                           19
       Net gain on disposal of investment 
       in associates                                                   (4)
       Fair value gain on step-up from 
       associates and joint 
       ventures to subsidiaries                                        (3)                (3)
       Reversal of impairment on property, 
       plant and equipment                                                               (12)
       Other                                         (2)                8                 (9)
     Non-controlling interests                                         (1)                 3
     Taxation                                                                             (2)

   Headline earnings                                 89               142                258

   * Restated as set out in note 8.

5. Subsidiaries acquired

   Aspen Logistics (Pty) Ltd (“Aspen Logistics”)
   During March 2015, the group, through Capespan Group Ltd (“Capespan”), acquired 75% of the issued
   share capital of Aspen Logistics for a cash consideration of R5m. Capespan South Africa’s fruit 
   logistical operations were integrated with Aspen Logistics and subsequently rebranded as Contour 
   Logistics. Contour Logistics is a logistical solutions service provider supporting Capespan’s 
   operations. Goodwill arose in respect of, inter alia, synergies pertaining to the integration of 
   the logistical activities. Accounting for Contour Logistics’ business combination is provisional.

   Novo Packhouse business operations (“Novo Packhouse”)
   During March 2015, the group, through Capespan, acquired the business operations of Novo 
   Packhouse, including its coldstores, equipment and inventory, for a cash consideration of R120m. 
   Novo Packhouse compliments the group’s existing coldstore operations in South Africa. No goodwill
   arose in respect of this business combination. Accounting for Novo Packhouse’s business 
   combination is provisional.

   Theewaterskloof farming operations (“Theewaterskloof”)
   During March 2015, the group, through Capespan, acquired the farming operations of 
   Theewaterskloof, a pome fruit farm, for a cash consideration of R120m. Theewaterskloof 
   complements the group’s existing farming operations in South Africa. No goodwill arose in respect
   of this business combination. Accounting for Theewaterskloof’s business combination is provisional.

   The assets and liabilities recognised at the respective acquisition dates were:

                                                Aspen         Novo  Theewaters-
                                            Logistics    Packhouse        kloof        Total
   Unaudited                                       Rm           Rm           Rm           Rm

   Property, plant and equipment                    1          118           58          177
   Biological assets (bearer plants)                                         62           62
   Inventories                                                   2                         2
   Trade and other receivables                     43                                     43
   Cash and cash equivalents                        1                                      1
   Borrowings                                     (29)                                   (29)
   Trade and other payables                       (23)                                   (23)
   Total identifiable net (liabilities)/
   assets                                          (7)         120          120          233

   Non-controlling interests                        2                                      2
   Goodwill recognised                             10                                     10
   Total consideration                              5          120          120          245

   Cash consideration paid                         (5)        (120)        (120)        (245)
   Cash and cash equivalents acquired               1                                      1
   Net cash outflow from subsidiaries acquired     (4)        (120)        (120)        (244)

   The aforementioned business combinations do not contain any contingent consideration or 
   indemnification asset arrangements.

6. Non-current asset held for sale

   The non-current asset held for sale as at 28 February 2015 was a Capespan subsidiary, 
   Addo Cold Storage (Pty) Ltd, which was subsequently disposed of during the period under 
   review.

7. Cash utilised by operations

                                                         Unaudited                   Audited
                                                 Aug 15            Aug 14             Feb 15
                                               6 months          6 months          12 months
                                                     Rm                Rm                 Rm

   Profit before taxation                            65               189                361
   Share of profits of associates                  (253)             (179)              (300)
   Depreciation and amortisation                     71                66                132
   Changes in fair value of biological assets       (61)              (21)              (144)
   Investment income                                (24)              (34)               (75)
   Finance costs                                     82                67                143
   Other non-cash items                             (27)               71                  6
                                                   (147)              159                123
   Changes in working capital and other
   financial instruments                           (109)             (391)              (126)
   Additions to biological assets                   (87)              (89)               (74)
   Cash utilised by operations                     (343)             (321)               (77)

8. Restatement of prior period figures

   The prior period figures of Capespan, a subsidiary, have been restated to account for the
   following:

   Agriculture: Bearer plants
   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. During the
   previous year, management revised its accounting policy to account for bearer plants in 
   accordance with the cost model under IAS 16; however, the results for the period ended
   31 August 2014 did not fully incorporate these amendments, while the audited results for the
   year ended 28 February 2015 did previously incorporate these amendments.

   Accounting for the sales and cost of sales of product sold
   During the previous 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 accounting for this agreement and the related farming
   operations as principal; however, the results for the period ended 31 August 2014 did not 
   incorporate these amendments, while the audited results for the year ended 28 February 2015 did
   previously incorporate these amendments.

   The effect of aforementioned restatements on the group results are as follows:          

                                             Previously         Currently
                                               reported          reported         Difference
   Unaudited                                         Rm                Rm                 Rm
   
   Income statement for the period ended 
   31 August 2014

   Revenue                                        4 262             4 263                  1
   Cost of sales                                 (3 578)           (3 655)               (77)
   Gross profit                                                                          (76)
   Changes in fair value of biological assets        15                21                  6
   Marketing, administration and other expenses    (585)             (560)                25
   Profit before finance costs and taxation                                              (45)
   Finance costs                                    (68)              (67)                 1 
   Profit before taxation                                                                (44)
   Taxation                                         (68)              (53)                15
   Profit for the period                                                                 (29)

   Profit attributable to:
     Owners of the parent                           148               134                (14)
     Non-controlling interests                       17                 2                (15)

   Earnings per share (cents)
     Recurring headline earnings from 
     investments                                   20.7              19.2               (1.5)
     Recurring headline                            16.4              14.9               (1.5)
     Headline (basic)                              16.0              14.5               (1.5)
     Attributable (basic)                          15.1              13.7               (1.4)

   Statement of financial position
   as at 31 August 2014

   Non-current assets
     Biological assets (bearer plants)              140               149                  9
   Current asset
     Trade and other receivables                  1 677             1 711                 34
                                                                                          43
   Equity
     Ordinary shareholders equity                 3 621             3 620                 (1)
     Non-controlling interests                      585               578                 (7)
   Non-current liabilities
     Deferred income tax liabilities                123               124                  1
   Current liabilities
     Trade and other payables                     1 102             1 152                 50
                                                                                          43

9.  Financial instruments

9.1 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 condensed interim group financial statements do not include all financial risk 
    management information and disclosures set out 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 throughout the
    group under policies approved by the respective boards of directors.

9.2 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:

                                                                 Unaudited
                                              Level 1      Level 2      Level 3        Total
    31 August 2015                                 Rm           Rm           Rm           Rm

    Assets
      Equity securities                                                      47           47
        Opening balance (including non-current
        asset held for sale)                                                 80
        Additions                                                             5
        Disposals                                                           (26)
        Fair value losses                                                   (12)

    Liabilities
      Derivative financial liabilities                                       66           66
        Opening balance                                                      64
        Finance cost                                                          3
        Fair value gains                                                     (1)

                                                                 Unaudited
                                              Level 1      Level 2      Level 3        Total
    31 August 2014                                 Rm           Rm           Rm           Rm

    Assets
      Equity securities                           310                        47          357
        Opening balance                                                      42
        Additions                                                             2
        Fair value gains                                                      3

    Liabilities
      Derivative financial liabilities                                       47            47
        Opening balance                                                      46
        Finance cost                                                          2
        Fair value gains                                                     (1)
                                                         

                                                                 Audited
                                              Level 1      Level 2      Level 3        Total
    28 February 2015                               Rm           Rm           Rm           Rm

    Assets
      Equity securities                                          1           50           51
      Non-current asset held for sale
      (note 6)                                                               30           30
      Closing balance                               -            1           80           81
        Opening balance                                                      42
        Classified as non-current asset 
        held for sale                                                        30
        Fair value gains                                                      8

    Liabilities
      Derivative financial liabilities                                       64           64
        Opening balance                                                      46
        Additions                                                            20
        Fair value gains                                                     (5)
        Finance cost                                                          3

10. Segmental reporting

    The group is organised into four reportable segments, namely i) food, beverages and 
    related services, ii) agri­related retail, trade and services, iii) agri­inputs and
    iv) agri­production.

    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’ net fair value gains/losses and
    dividend income (as recognised in the income statement), and the reversal of related
    see-through recurring headline earnings. Associates’ and subsidiaries’ once-off gains/losses 
    are also included in non-recurring headline earnings.

    Segmental income comprises revenue and investment income, as per the income statement.

    Sum-of-the-parts (“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 PSG Group Executive Committee) evaluates the following
    information to assess the segments’ performance:

                                                         Unaudited                   Audited
                                                 Aug 15            Aug 14*            Feb 15
                                               6 months          6 months          12 months
                                                     Rm                Rm                 Rm

    Recurring headline earnings
      Food, beverages and related services          285               163                417
      Agri-related retail, trade and services        43                36                 64
      Agri-inputs                                    20                20                 74
      Agri-production                               (34)              (31)               (14)
    Recurring headline earnings from investments    314               188                541
    Net interest, taxation, other income and 
    expenses                                         (8)               (5)                (9)
    Management (base) fee                           (81)              (37)              (118)
    Recurring headline earnings                     225               146                414
    Non-recurring headline earnings
      Management (performance) fee                  (81)              (37)              (118)
      Other                                         (55)               33                (38)
    Headline earnings                                89               142                258
    Non-headline items (note 4)                     (24)               (8)               (16)
    Attributable earnings                            65               134                242

    SOTP segmental analysis:
    Segments
      Food, beverages and related services       13 815             4 964             11 227
      Agri-related retail, trade and services       730               625                681
      Agri-inputs                                 1 018               681                885
      Agri-production                               614               560                563
    Cash and cash equivalents                        36               329                338
    Other net liabilities                          (428)             (367)              (439)
    SOTP value                                   15 785             6 792             13 255

    Income segmental analysis:
    Food, beverages and related services          4 003             3 722              7 438
     Revenue                                      3 986             3 699              7 392
     Investment income                               17                23                 46
    Agri-inputs                                     468               406                952
      Revenue                                       466               403                947
      Investment income                               2                 3                  5
    Agri-production
      Revenue                                       347               161                353
    Unallocated investment income (mainly head 
    office interest income)                           5                 8                 24
    IFRS revenue                                  4 823             4 297              8 767

    * Restated as set out in note 8.

11. Events subsequent to the reporting period

No material event has occurred between the end of the reporting period and the date of approval
of these condensed interim group financial statements.

On behalf of the board

Jannie Mouton                         Norman Celliers
Chairman                              Chief executive officer

Stellenbosch
5 October 2015

DIRECTORS
JF Mouton (Chairman), N Celliers* (CEO), WL Greeff* (FD), GD Eksteen#, AE Jacobs, WA Hanekom#,
PJ Mouton, CA Otto#
*  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

SPONSER
PSG Capital

AUDITOR
PricewaterhouseCoopers Inc

Date: 05/10/2015 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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