Wrap Text
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
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