ZEDER INVESTMENTS LIMITED - Summary Preliminary Group Financial Results For The Year Ended 28 February 2018

Release Date: 17/04/2018 14:19
Code(s): ZED
 
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Summary Preliminary Group Financial Results For The Year Ended 28 February 2018

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")

SUMMARY PRELIMINARY GROUP FINANCIAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2018

HIGHLIGHTS
- SOTP value down 8.0% to R7.85 per share as at 28 February 2018
- Recurring headline earnings down 35.2% to 27.6 cents per share
- Dividend maintained at 11.0 cents per share

OVERVIEW
Zeder is an investor in the broad agribusiness industry, with a specific focus on the food and beverage
sectors. Its underlying investment portfolio was valued at R14,21bn on 28 February 2018. Zeder's 27.0%
interest in Pioneer Foods remains its largest investment, representing 53.9% (2017: 62.7%) of the
portfolio.

STRATEGY
Zeder is a long-term investor that owns large, strategic interests in companies and plays an active
role therein. It assists with the determination of appropriate long-term strategies, optimal allocation
of capital and ongoing measurement and monitoring of performance. During the year under review, Zeder
dedicated most of its efforts to existing investments while evaluating select new and adjacent
opportunities. Zeder continues to drive for additional growth from its existing investment platforms
while aiming to add to its portfolio when opportune.

REVIEW OF OPERATING ENVIRONMENT
Zeder and its portfolio companies traded under challenging macro conditions during the period under
review. Political uncertainty and the further deterioration of the fiscal stance of South Africa eroded
business and consumer confidence; local and regional economic growth remained constrained while the
impact and effects of the concurrent record drought had to be managed. Understandably, most of its
investee companies reported weaker earnings for their corresponding reporting periods due to the
aforementioned and, in large part, factors that are unlikely to reoccur. Combined, these factors weighed
on Zeder’s financial results. Notwithstanding these challenges and financial results, most portfolio
companies delivered acceptably against operational targets and should improve or recover during the next
reporting cycle as some of the aforementioned factors improved significantly towards the end of the
financial year.

FINANCIAL 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 unlisted investments, decreased by 8.0% during the reporting period
to R7.85 as at 28 February 2018. At the close of business on Thursday, 5 April 2018, Zeder's SOTP value
per share was R7.72.

                                     28 Feb 2017             28 Feb 2018              5 Apr 2018
                                  Interest                Interest                Interest
Company                                 (%)         Rm          (%)         Rm          (%)         Rm

Pioneer Foods                         27.1       9 538        27.0       7 660        27.0       7 340
Capespan                              98.1       1 975        97.5       2 259        97.5       2 259
Zaad                                  91.4       1 531        93.2       2 043        93.2       2 043
Kaap Agri                             39.8       1 321        40.9       1 376        40.9       1 465
Agrivision Africa                     55.6         614        56.0         591        56.0         591
Quantum Foods                         26.7         193        27.7         246        27.7         267
Other                                               39                      33                      34
Total investments                               15 211                  14 208                  13 999

Cash                                               173                     111                     107
Other net assets                                   120                     108                     109
Debt funding                                      (798)                 (1 000)                 (1 008)
SOTP value                                      14 706                  13 427                  13 207

Number of shares in issue (net
  of treasury shares) (million)                  1 725                   1 710                   1 710
SOTP value per share (rand)                       8.53                    7.85                    7.72

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, whilst once-off (i.e. non-recurring) income and expenses
are excluded. This provides management and investors with a more realistic and transparent way of
evaluating Zeder's earnings performance.

                                                                   28 Feb 2017      Change 28 Feb 2018
Audited                                                                     Rm          (%)         Rm

Recurring headline earnings from investments                               821       (29.8)        576
Management (base) fee                                                      (75)
Net interest, taxation and other income and expenses                       (55)                   (102)
Recurring headline earnings                                                691       (31.4)        474

Non-recurring headline earnings
 Management fee internalisation charge                                  (1 449)
 Other                                                                     (12)                    (49)
Headline (loss)/earnings                                                  (770)        n/a         425

Non-headline items                                                         (26)                   (171)
Attributable (loss)/earnings                                              (796)        n/a         254

Weighted average number of shares in issue (net of
  treasury shares) (million)                                             1 622                   1 717

Recurring headline earnings per share (cents)                             42.6       (35.2)       27.6
Headline (loss)/earnings per share (cents)                               (47.5)        n/a        24.8
Attributable (loss)/earnings per share (cents)                           (49.1)        n/a        14.8

Zeder's recurring headline earnings per share was 27.6 cents for the year ended 28 February 2018,
reflecting a decrease of 35.2% compared to the 42.6 cents reported for the prior year. This result is
due to a combination of decreases reported by Pioneer Foods, Capespan, Zaad and Agrivision Africa,
increases reported by Kaap Agri and Quantum Foods and the positive effects of the internalisation of
the base management fee.

Following the once-off management fee internalisation charge of R1,45bn to the income statement in the
prior year, headline earnings per share increased from a loss of 47.5 cents in the prior year, to a
profit of 24.8 cents in the current year. The recurring headline earnings was offset by net non-recurring
losses of R49m (2017: R1,46bn), which consists mainly of the adverse accounting effect of Pioneer Foods'
historical BEE transaction given the increase in its share price.

Attributable earnings per share increased from a loss of 49.1 cents in the prior year to a profit of
14.8 cents in the current year as a result of the aforesaid, offset by net non-headline losses of R171m
(2017: R26m), which consists mainly of the recognition of deferred tax on the transfer of the Golden
Wing Mau associate to equity securities and goodwill impairments at investee level.

Pioneer Foods
Pioneer Foods reported a 50% decrease in adjusted headline earnings per share from continuing operations
for the year ended 30 September 2017. This decrease was largely due to constrained local and regional
trading conditions and an unfavourable procurement position on maize following the severe drought in the
northern part of South Africa during the 2015/16 season. Continuing initiatives to enhance operating
margins through cost mitigation and efficiency interventions delivered sound cash flow generation during
the year and this allowed Pioneer Foods to declare a dividend equal to that of the prior year. Pioneer
Foods remains one of the leading food companies in South Africa and is well positioned for recovery
during their 2018 financial year.

Pioneer Foods is listed on the JSE and further information is available at www.pioneerfoods.co.za.

Capespan
Capespan is an unlisted 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 several strategic logistical and terminal assets in southern Africa. The group
has evolved and diversified in recent years to the extent that it today combines asset-intensive
divisions, underpinned with strong net asset values, with earnings generating divisions that require
less capital investments but offer scaleable earnings growth optionality.

For its financial year ended 31 December 2017, Capespan reported a decline of 27.6% in recurring
headline earnings per share while it maintained its SOTP valuation due to the aforementioned Net Asset
Value underpin on its farming operations and associate investments. The negative lag-effects of El Niño
and corresponding drought conditions continued to have a negative effect on overall fruit volumes in
most procurement territories, the impact of which was not recoverable through higher market pricing.
The group made significant progress during the year in its continued efforts to reposition itself in
order to achieve its long-term growth objectives.

Further information about Capespan can be viewed at www.capespangroup.com.

Zaad
Zaad is positioned as a strategic holding company that invests and operates in the specialised
agri-inputs industry. It currently owns, develops, imports and distributes a broad range of agricultural
seeds in Africa, Europe and other international emerging markets. Its portfolio of companies represents
a proud history spanning more than 50 years and it exports to more than 100 countries. During the period 
under review, it added to its solid foundation of Agricol, Klein Karoo Seed Marketing, Gebroeders Bakker
and Farm-AG, with a 35% equity investment in May Seed, the largest private sector breeder, producer and
distributor of agricultural seed in Turkey. The numerous potential synergies between Zaad and May Seed
should yield additional attractive returns. These investments ensure improved portfolio, product, IP
and geographic mix and strategic market access.

Zaad reported a 16.7% decrease in recurring headline earnings per share for its financial year ended
31 January 2018. This decline was largely due to lower sales from its South African operations during
the aforementioned drought. Zaad continues to pursue growth and investment opportunities. Accordingly,
Zeder invested an additional R145m during the period under review and have committed to invest a further
R200m during the first half of the next financial year to fund further acquisitions and investments in
research and development. While these investments are attractive in the medium to long term, the
short-term impact on earnings per share may not always be positive due to the delay in earnings
contribution from such development or j-curve acquisitions. The specialised agri-inputs market, and
particularly the proprietary hybrid seed segment, remains attractive and Zaad is well positioned to
benefit from it.

Further information can be viewed at www.agricol.co.za, www.seedmarketing.co.za,
www.bakkerbrothers.nl and www.may.com.tr/en/.

Kaap Agri
Kaap Agri is a diversified group that specialises in retailing and trading in agricultural, fuel and
related retail markets in southern Africa. It 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 and has more than 200
operating points throughout South Africa and Namibia. With its strategic footprint, infrastructure,
facilities and client network, the group follows a differentiated market approach, bolstering the core
retail business with financial, grain handling and agency services.

Despite a challenging macro environment, the group delivered encouraging results for its financial year
ended 30 September 2017, with headline earnings per share having increased by 17.9%. Its strategy of
product and geographic diversification bodes well, while its recent focus on adding non-agri income
streams and improving efficiencies continues to gain traction. A highlight of the period under review
was the successful listing of Kaap Agri on the JSE main board on 26 June 2017.

Kaap Agri is listed on the JSE and its results can be viewed at www.kaapagri.co.za.

Agrivision Africa
Agrivision Africa currently owns and operates two large-scale commercial farming operations and a
milling business in Zambia. It has developed extensive irrigated productive farmland since 2011, and is
continuously evaluating expansion opportunities. After rapid expansion, the focus during the past
24 months has been on achieving acceptable operational efficiencies, while navigating an extremely
volatile and challenging phase in the macro and business cycle of Zambia and related regional markets.

While this strategy has yielded positive operational results, the corresponding financial performance
has been disappointing as the subdued commodity price cycle and lagging drought effects continued to
negatively impact the farming results. Agrivision Africa reported a R55m recurring headline loss for
its financial year ended 31 December 2017, as opposed to a R40m recurring headline profit in the
previous year.

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 over the past couple of
years, Quantum Foods released strong results for their financial year ended 30 September 2017,
reporting a 74.0% increase in headline earnings per share. Although it remains exposed to a highly
cyclical industry, it has successfully 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.

NOTEWORTHY FEEDBACK
During the period under review, Zeder initiated and progressed on a number of corporate actions and
potential investments, both within its existing portfolio and new platform opportunities. Unfortunately,
the larger opportunities pursued did not materialise. Encouraging progress was however made on smaller,
higher growth sectors, as alluded to during Zeder's previous results presentations. In this regard,
initial investments and commitments were made to new ventures in the logistics, related technology and
smart vertical farming industries respectively.

PROSPECTS
Zeder remains actively involved with its underlying portfolio of companies and continuously seeks
new investment opportunities. We believe that, despite inevitable cyclicality, investing in the
agribusiness industry should offer attractive long-term returns and the strength of our companies
and management teams, combined with a defensive portfolio mix, should contribute to the continued
sustainability of results. We believe that the company and its shareholders will benefit from same.

DIVIDEND
The directors have resolved to declare a gross final dividend of 11.0 cents (2017: 11.0 cents) per
share from income reserves in respect of the year ended 28 February 2018. The final dividend amount,
net of South African dividend tax of 20%, is 8.8 cents per share for those shareholders who are not
exempt from dividend tax. The number of ordinary shares in issue at the declaration date is
1 715 179 121 and the income tax number of the company is 9406891151.

The salient dates of this dividend distribution are:

Last day to trade cum dividend                             Tuesday, 8 May 2018
Trading ex dividend commences                            Wednesday, 9 May 2018
Record date                                                Friday, 11 May 2018
Date of payment                                            Monday, 14 May 2018

Share certificates may not be dematerialised or re-materialised between Wednesday, 9 May 2018 and
Friday, 11 May 2018, both days inclusive.

SUMMARY GROUP INCOME STATEMENT

                                                                                         2018     2017
Audited                                                                                    Rm       Rm

Revenue                                                                                 8 485   10 209
Cost of sales                                                                          (6 996)  (8 546)
Gross profit                                                                            1 489    1 663

Income
Change in fair value of biological assets                                                 195      224
Investment income                                                                          77       67
Net fair value gains/(losses)                                                              45       (7)
Other operating income                                                                    116       29
Total income                                                                              433      313

Expenses
Management fees (note 2)                                                                           (75)
Management fee internalisation charge (note 2)                                                  (1 449)
Marketing, administration and other expenses                                           (1 671)  (1 562)
Total expenses                                                                         (1 671)  (3 086)

Net income from associates and joint ventures
Share of profits of associates and joint ventures                                         472      629
Impairment of associates and joint ventures (note 3)                                       (1)
Net loss on dilution of interest in associates (note 3)                                   (29)      (8)
Net income from associates and joint ventures                                             442      621

Profit/(loss) before finance costs and taxation                                           693     (489)

Finance costs                                                                            (289)    (232)
Profit/(loss) before taxation                                                             404     (721)

Taxation                                                                                 (196)     (21)
Profit/(loss) for the year                                                                208     (742)

Profit/(loss) attributable to:
 Owners of the parent                                                                     254     (796)
 Non-controlling interests                                                                (46)      54
                                                                                          208     (742)

EARNINGS PER SHARE AND NUMBER OF SHARES IN ISSUE

Earnings/(loss) per share (cents)
Recurring headline                                                                       27.6     42.6
Headline (basic) (note 3)                                                                24.8    (47.5)
Headline (diluted)                                                                       23.7    (49.7)
Attributable (basic)                                                                     14.8    (49.1)
Attributable (diluted)                                                                   14.0    (51.3)

Number of shares (million)
In issue                                                                                1 715    1 731
In issue (net of treasury shares)                                                       1 702    1 725
Weighted average                                                                        1 717    1 622
Diluted weighted average                                                                1 719    1 624

SUMMARY GROUP STATEMENT OF COMPREHENSIVE INCOME

                                                                                         2018     2017
Audited                                                                                    Rm       Rm

Profit/(loss) for the year                                                                208     (742)
Other comprehensive income for the year, net of taxation                                  (16)    (470)

Items that may be reclassified to profit or loss
 Currency translation adjustments                                                        (100)    (423)
 Share of other comprehensive income of associates and joint ventures                      64      (43)

Items that may not be reclassified to profit or loss
 Gains/(losses) from changes in financial and demographic assumptions
   of post-employment benefit obligations                                                  20       (4)

Total comprehensive income for the year                                                   192   (1 212)

Attributable to:
 Owners of the parent                                                                     257   (1 193)
 Non-controlling interests                                                                (65)     (19)
                                                                                          192   (1 212)

SUMMARY GROUP STATEMENT OF FINANCIAL POSITION

                                                                                         2018     2017
Audited                                                                                    Rm       Rm

Assets

Non-current assets                                                                     10 298    9 835
Property, plant and equipment                                                           1 626    1 640
Intangible assets                                                                         606      666
Biological assets (bearer plants)                                                         406      364
Investment in ordinary shares of associates and joint ventures                          6 636    6 833
Loans to associates and joint ventures                                                    136       80
Equity securities                                                                         688       46
Loans and advances                                                                        100      111
Deferred income tax assets                                                                 61       58
Employee benefits                                                                          39       37

Current assets                                                                          3 103    3 336
Biological assets (agricultural produce)                                                  152      122
Inventories                                                                             1 286    1 319
Trade and other receivables                                                             1 274    1 414
Loans and advances                                                                         38       36
Current income tax assets                                                                  27       23
Cash, money market investments and other cash equivalents                                 326      422

Non-current assets held for sale (note 6)                                                   7

Total assets                                                                           13 408   13 171

Equity and liabilities

Ordinary shareholders' equity                                                           8 269    8 291
Non-controlling interests                                                                 327      407
Total equity                                                                            8 596    8 698

Non-current liabilities                                                                 2 276    1 320
Deferred income tax liabilities                                                           222       94
Borrowings                                                                              1 939    1 015
Derivative financial liabilities                                                           24       94
Employee benefits                                                                          91      117

Current liabilities                                                                     2 536    3 153
Borrowings                                                                              1 428    1 958
Trade and other payables                                                                  994    1 092
Derivative financial liabilities                                                           15
Current income tax liabilities                                                             34       37
Employee benefits                                                                          65       66

Total liabilities                                                                       4 812    4 473

Total equity and liabilities                                                           13 408   13 171

Net asset value per share (cents)                                                       485.8    480.6
Tangible net asset value per share (cents)                                              450.2    442.0

SUMMARY GROUP STATEMENT OF CHANGES IN EQUITY

                                                                                         2018     2017
Audited                                                                                    Rm       Rm

Ordinary shareholders' equity at beginning of the year                                  8 291    8 251
Shares issued                                                                                    1 449
Shares purchased and cancelled                                                            (94)
Net movement in treasury shares                                                           (23)     (50)
Total comprehensive income for the year                                                   257   (1 193)
Transactions with non-controlling interests                                                18      (37)
Other movements                                                                            10        8
Dividends paid                                                                           (190)    (137)
Ordinary shareholders' equity at end of the year                                        8 269    8 291

Non-controlling interests at beginning of the year                                        407      442
Shares issued                                                                               8       25
Total comprehensive income for the year                                                   (65)     (19)
Transactions with non-controlling interests                                                (5)     (31)
Other movements                                                                             2        3
Dividends paid                                                                            (20)     (13)
Non-controlling interests at end of the year                                              327      407

Total equity                                                                            8 596    8 698

Dividend per share (cents)                                                               11.0     11.0

SUMMARY GROUP STATEMENT OF CASH FLOWS
                                                                                         2018     2017
Audited                                                                                    Rm       Rm

Cash generated from operations (note 7)                                                   267       97
Investment income                                                                         342      314
Finance costs and taxation paid                                                          (297)    (235)
Cash flow from operating activities                                                       312      176

Acquisition of subsidiaries                                                                       (115)
Cash acquired from acquisition of subsidiary (note 4)                                       1
Proceeds from sale of subsidiaries (note 5)                                                27
Acquisition of associates and joint ventures                                             (183)    (109)
Loans granted to associates and joint ventures                                            (52)     (69)
Additions to property, plant and equipment                                               (213)    (311)
Proceeds from disposal of property, plant and equipment                                    25       35
Additions to intangible assets                                                            (97)     (89)
Acquisition of equity securities                                                           (6)      (1)
Proceeds from sale of equity securities                                                     9
Other                                                                                      76      (66)
Cash flow from investment activities                                                     (413)    (725)

Capital contributions by non-controlling interests                                          4       25
Shares purchased and cancelled                                                            (94)
Purchase of treasury shares                                                               (27)     (62)
Treasury shares sold                                                                        5       11
Dividends paid to group shareholders                                                     (190)    (137)
Dividends paid to non-controlling interests                                               (20)     (13)
Borrowings repaid                                                                      (1 333)    (289)
Borrowings drawn                                                                        1 660      866
Other                                                                                     (10)     (53)
Cash flow from financing activities                                                        (5)     348

Net decrease in cash and cash equivalents                                                (106)    (201)
Exchange differences on cash and cash equivalents                                          10      (61)
Cash and cash equivalents at beginning of the year                                        422      684
Cash and cash equivalents at end of the year                                              326      422

NOTES TO THE SUMMARY GROUP FINANCIAL STATEMENTS

1.  Basis of presentation and accounting policies
These summary 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; and the Listings Requirements of the JSE for preliminary reports.

The accounting policies applied in the preparation of these summary group financial statements are
consistent in all material respects with those used in the prior year's annual financial statements.
The group adopted the various revisions to IFRS which were effective for its financial year ended
28 February 2018, however, these revisions have not resulted in material changes to the group's
reported results or disclosures in these summary group financial statements.

In preparing these summary 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 annual financial statements for the year ended 28 February 2017.

2.  Management fees and management fee internalisation charge
The base and performance management fees were payable during the first half of the prior year to
PSG Corporate Services Proprietary Limited ("PSGCS"), a subsidiary of PSG Group Limited, the company's
ultimate holding company, in terms of the PSG management agreement. In accordance with the management
agreement, PSGCS provided management services, including corporate, secretarial, advisory, investment
and financial services and all related aspects thereto, to the Zeder group of companies.

During the prior year and effective 1 September 2016, Zeder internalised the management agreement,
and issued 207 661 758 ordinary shares to PSGCS, valued at R1,45bn. The rights to the acquired
management agreement, did not meet the recognition criteria for intangible assets in terms of IFRS,
and was consequently accounted for in the income statement as a non-recurring headline expense. It
should be noted that this was a once-off charge, with no further management fees payable to PSGCS in
terms of this agreement.

3.  Headline earnings/(loss)
                                                                                         2018     2017
Audited                                                                                    Rm       Rm

Profit/(loss) attributable to equity holders of the company                               254     (796)

Non-headline items                                                                        171       26
 Gross amounts
  Net profit on sale of subsidiary companies (note 5)                                     (85)
  Net loss on dilution of interest in associates                                           29        8
  Impairment of associates and joint ventures                                               1
  Fair value gain resulting from transfer of associate to equity security                 (15)
  Non-headline items of associates and joint ventures                                       7       12
  Impairment of intangible assets and goodwill                                            123        5
  Net loss on sale and impairment of property, plant and equipment                         10        2
  Other                                                                                    (1)       1
 Non-controlling interests                                                                (49)      (2)
 Taxation                                                                                 151

Headline earnings/(loss)                                                                  425     (770)

During the year under review, the group, through Capespan Group Limited ("Capespan") merged its Asian
operations with Golden Wing Mau to form JWM Asia and therefore 70% of its business operations were sold
to JWM Asia and Capespan retained a 30% shareholding in JWM Asia (refer note 5).

The current year impairment relates to computer software at a restructured United Kingdom operation,
intellectual property at Klein Karoo Seed Marketing, where there is no foreseeable future commercialisation
of the specific seed line, and on goodwill at Mpongwe Milling, following two consecutive loss making years.

4.  Subsidiaries acquired
The Logistic Company Proprietary Limited
During October 2017, Zeder invested in a start-up company in the technology, transport and logistics
industries. The Logistic Company Proprietary Limited ("TLC"), had limited operations prior to investment.
Zeder paid R4m for a subscription of newly issued ordinary shares, representing 51% of the issued share
capital of TLC. Goodwill (less than R1m) arose in respect of, inter alia, synergies pertaining to the
integration of logistical activities within the Zeder group of companies. Accounting for TLC's business
combination has been finalised.

The summarised assets and liabilities recognised at the acquisition date was:
                                                                                                   TLC
Audited                                                                                             Rm

Property, plant and equipment                                                                        1
Cash, money market investments and other cash equivalents                                            1
Borrowings                                                                                          (1)
Trade and other payables                                                                            (1)
Total identifiable net assets                                                                        -

Subscription of newly issued ordinary shares                                                         4
Total consideration transferred                                                                      4

Cash consideration paid with regards to subscription of newly issued ordinary shares                (4)
Shares issued                                                                                        4
Cash and cash equivalents acquired                                                                   1
Net cash inflow from business combination                                                            1

The aforementioned business combination does not contain any contingent consideration or indemnification
asset arrangements and the acquisition-related costs expensed were insignificant.

Had TLC been consolidated with effect from 1 March 2017 instead of its acquisition date, the consolidated
income statement would have reflected additional revenue of R1.6m and profit after tax of R0.9m.

5.  Subsidiaries sold
Capespan Japan Limited and Metspan Hong Kong Limited
During July 2017, the group, through Capespan Group Limited ("Capespan") merged its Asian operations
with Golden Wing Mau to form JWM Asia. Capespan therefore sold 70% of its business operations to JWM Asia
and retained a 30% shareholding in JWM Asia.

Capespan sold the business operations of Capespan Japan Limited ("Capespan Japan"), a fruit marketing
company situated in Japan, to JWM Asia, for a cash consideration of R3m.

Capespan sold the business operations of Metspan Hong Kong Limited ("Metspan"), a fruit marketing
company situated in Hong Kong, to JWM Asia, for a cash consideration of R57m.

Nichebrands Proprietary Limited
During January 2018, the group, through Zaad Holdings Limited disposed of its 100% interest in
Nichebrands Proprietary Limited ("Nichebrands") for R1, resulting in a gain on disposal of R5m due
to previously recognised losses.

The summarised assets and liabilities recognised at the respective disposal dates were:

                                                          Capespan
                                                             Japan     Metspan Nichebrands       Total
Audited                                                         Rm          Rm          Rm          Rm

Property, plant and equipment                                    1           1           4           6
Intangible assets                                                1          11                      12
Deferred income tax assets                                                               4           4
Loans and advances                                               1           1         (35)        (33)
Inventories                                                     16           6          20          42
Trade and other receivables                                     73          82          11         166
Cash, money market investments and other cash equivalents       18          15                      33
Borrowings                                                                              (1)         (1)
Trade and other payables                                       (34)        (63)         (8)       (105)
Current income tax liabilities                                              (1)                     (1)
Total identifiable net assets                                   76          52          (5)        123

Transfer to investment in ordinary shares of associates                    (26)                    (26)
Transfer to loans to associates                                (73)        (49)                   (122)
Profit on sale of subsidiaries' operations (note 3)                         80           5          85
Cash proceeds on sale                                            3          57           -          60

Cash and cash equivalents given up                             (18)        (15)                    (33)
Net cash flow on disposal of subsidiaries' operations          (15)         42           -          27

6.  Non-current assets held for sale
As at 28 February 2018, property, plant and equipment within the Capespan UK operations, through
Capespan Group Limited, amounting to R7m is presented as non-current assets held for sale in the current
year following the adoption of a plan to sell the assets.

7.  Cash generated from operations
                                                                                         2018     2017
Audited                                                                                    Rm       Rm

Profit/(loss) before taxation                                                             404     (721)
Investment income                                                                         (77)     (67)
Finance costs                                                                             291      232
Depreciation and amortisation                                                             203      180
Net fair value (gains)/losses                                                             (43)       2
Net profit on sale of interest in subsidiary company                                      (85)
Share of profits of associates and joint ventures                                        (472)    (629)
Net loss on dilution of interest in associates                                             29        8
Impairment of associates and joint ventures                                                 1
Impairment of intangible assets and goodwill                                              123        5
Net loss on sale and impairment of property, plant and equipment                           10        2
Changes in fair value of biological assets                                               (195)    (224)
Net harvest short-term biological assets                                                   60       67
Other non-cash items                                                                       (7)     (24)
Management fee internalisation charge                                                            1 449
                                                                                          242      280

Change in working capital and other financial instruments                                 204      (30)
Additions to biological assets                                                           (179)    (153)
Cash generated from operations                                                            267       97

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 group financial statements do not include all financial risk management information and
disclosures as 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 2018. Risk
management continues to be carried out throughout 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
financial instruments. 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
Audited                                                         Rm          Rm          Rm          Rm

28 February 2018

Assets
 Equity securities                                               9                     679         688
  Opening balance                                                                       44
  Transfer from associates to equity securities                                        700
  Disposal                                                                              (7)
  Fair value losses                                                                      8
  Exchange differences                                                                 (66)

Liabilities
 Derivative financial liabilities                                                       39          39
  Opening balance                                                                       94
  Disposals                                                                            (47)
  Fair value gains                                                                     (15)
  Finance costs                                                                          7

28 February 2017

Assets
  Equity securities                                                          2          44          46
  Opening balance                                                                       72
  Disposal                                                                             (23)
  Fair value losses                                                                     (5)

Liabilities
 Derivative financial liabilities                                                       94          94
  Opening balance                                                                       65
  Additions                                                                             25
  Fair value gains                                                                      (3)
  Finance costs                                                                          7

9.  Segmental reporting
The group is organised 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
(being a measure of segment profit) is calculated on a see-through basis. The group'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 the group do not equity account or consolidate in terms of accounting standards,
are included in the calculation of recurring headline earnings.

Non-recurring headline earnings includes the elimination of equity securities' see-through recurring
headline earnings not equity accounted, the related net fair value gains/losses and investment income (as
recognised in the income statement).  Associates' and subsidiaries' once-off gains/losses are excluded
from recurring headline earnings and included in non-recurring headline earnings.

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

SOTP is a key valuation tool used to measure the group's performance. In determining SOTP value, listed
assets and liabilities are valued using quoted market prices, whereas unlisted assets and liabilities
are valued using appropriate valuation methods. These values will not necessarily correspond with the
values per the statement of financial position since the latter are predominantly 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:

                                                                                         2018     2017
Audited                                                                                    Rm       Rm

Recurring headline earnings segmental analysis:
Segments
 Food, beverages and related services                                                     394      582
 Agri-related retail, trade and services                                                  102       89
 Agri-inputs                                                                              110      124
 Agri-production                                                                          (30)      26
Recurring headline earnings from investments                                              576      821

Management (base) fee                                                                              (75)
Net interest, taxation and other income and expenses                                     (102)     (55)
Recurring headline earnings                                                               474      691

Non-recurring headline earnings
 Management fee internalisation charge                                                          (1 449)
 Other                                                                                    (49)     (12)
Headline earnings/(loss)                                                                  425     (770)

Non-headline items (note 3)                                                              (171)     (26)
Attributable earnings/(loss)                                                              254     (796)

SOTP segmental analysis:
Segments
 Food, beverages and related services                                                  10 169   11 706
 Agri-related retail, trade and services                                                1 405    1 360  
 Agri-inputs                                                                            2 043    1 531
 Agri-production                                                                          591      614
Cash and cash equivalents                                                                 111      173
Other net assets                                                                          108      120
Debt funding                                                                           (1 000)    (798)
SOTP value                                                                             13 427   14 706

SOTP value per share (rand)                                                              7.85     8.53

Profit before tax segmental analysis:
Segments
 Food, beverages and related services                                                     479      638
 Agri-related retail, trade and services                                                   93       89
 Agri-inputs                                                                              102      123
 Agri-production                                                                         (156)      29
Management fees and other income and expenses                                            (114)  (1 600)
                                                                                          404     (721)

IFRS revenue (revenue and investment income) segmental analysis:
Segments
 Food, beverages and related services                                                   6 672    8 359
  Revenue                                                                               6 621    8 311
  Investment income                                                                        51       48

 Agri-inputs                                                                            1 412    1 325
  Revenue                                                                               1 398    1 314
  Investment income                                                                        14       11

 Agri-production                                                                          467      585
  Revenue                                                                                 466      584
  Investment income                                                                         1        1

Unallocated investment income (mainly head office interest income)                         11        6
                                                                                        8 562   10 275
10.  Related-party transactions
Related-party transactions similar to those disclosed in the group's annual financial statements for
the prior year ended 28 February 2017 took place during the year under review, except treasury shares
allocated to executive directors in terms of a share incentive scheme, were recognised on loans granted
on or prior to 28 February 2018. In terms of the accounting standard, the loans receivable has been
accounted for in terms of IFRS 2 Share-based Payment.

11.  Events subsequent to the reporting date
The directors are unaware of any matter or event which is material to the financial affairs of the
group that have occurred between the reporting date and the date of approval of these annual financial
statements.

12.  Preparation
These summary group preliminary financial statements were compiled under the supervision of the group
financial director, Mr JH le Roux, 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 group financial statements were derived.

A copy of the auditor's report on the summary group preliminary financial statements and of the auditor's
report on the annual group financial statements are available for inspection at the company's registered
office, together with the financial statements identified in the respective auditor's reports.

The auditor's report does not necessarily report on all of the information contained in this announcement
and/or 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.

Signed on behalf of the board

Jannie Mouton                            Norman Celliers
Chairman                                 Chief executive officer

Stellenbosch
17 April 2018

Directors:
JF Mouton (Chairman), N Celliers* (CEO), JH le Roux* (FD), GD Eksteen#, WL Greeff,  ASM Karaan#,
N Mjoli-Mncube#, PJ Mouton, CA Otto#
*  executive
#  independent non-executive

Company secretary and registered office:
Zeder Corporate Services Proprietary Limited
2nd Floor Ou Kollege, 35 Kerk Street, Stellenbosch, 7600
PO Box 7403, Stellenbosch, 7599

Transfer secretary:
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
PO Box 61051, Marshalltown, 2107

Sponsor:
PSG Capital Proprietary Limited

Auditor:
PricewaterhouseCoopers Inc.

Date: 17/04/2018 02:19:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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