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Reviewed Results For The Year Ended 29 February 2020
ZEDER INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 2006/019240/06
Share code: ZED
ISIN: ZAE000088431
LEI code: 37890022AF5FD117D649
("Zeder" or "the Company")
REVIEWED RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2020
OVERVIEW
Zeder is an active investor in the broad agribusiness and related industries, with a historical focus
on the food and beverage sectors. Its underlying investment portfolio was valued at R11.58bn on
29 February 2020.
NOTEWORTHY TRANSACTIONS
Category 1 disposal of investment in Pioneer Foods and application of proceeds
In line with the relevant announcements, circulars and shareholder approvals obtained, Zeder
disposed of its entire interest in Pioneer Foods on 23 March 2020 for a total consideration of
R6.41bn.
Zeder has used R1.55bn of the cash proceeds received to settle all its debt and related obligations
and has declared a special dividend of 230 cents per share to shareholders.
This marks the end of a long and proud association with Pioneer Foods and its stakeholders for
which Zeder is grateful. Zeder would like to wish PepsiCo, as the new beneficial owner of Pioneer
Foods, and all employees the very best for the journey that lies ahead.
SALIENT FEATURES
Zeder's Sum-of-the-Parts ("SOTP") value per share, calculated using the quoted market prices for
all JSE-listed investments, and internal valuations for unlisted investments, increased by 5.8% during
the reporting period to R5.97 as at 29 February 2020.
At the close of business on Tuesday, 7 April 2020, Zeder's SOTP value per share was R5.95, which
includes the cash amount to be paid as a special dividend of 230 cents per share which was declared
on 1 April 2020 and is payable on 28 April 2020. The special dividend will be paid out of cash
reserves, reducing the total cash holdings by R3.93bn and Zeder will retain approximately R1bn of
cash reserves with no debt.
28 Feb 2019 29 Feb 2020 7 Apr 2020
Interest Interest Interest
Company (%) Rm (%) Rm (%) Rm
Pioneer Foods 27.1 4 689 28.6 6 348
Zaad 95.3 2 235 95.7 2 034 95.7 2 034
The Logistics Group 97.4 978 98.6 1 028 98.6 1 028
Capespan 97.4 1 193 96.7 999 96.7 999
Kaap Agri 41.1 959 41.0 723 41.0 652
Agrivision Africa 56.0 493 56.0 242 56.0 242
Quantum Foods 29.3 216 32.1 188 32.1 210
Other 19 19 21
Total investments 10 782 11 581 5 186
Cash and cash equivalents 254 83 4 948
Other net assets 109 40 43
Debt funding (1 500) (1 500)
SOTP value 9 645 10 204 10 177
Number of shares in issue
(net of treasury shares) (million) 1 710 1 710 1 710
SOTP value per share (rand) 5.64 5.97 5.95
Note: Zeder's live SOTP is available at www.zeder.co.za.
The SOTP valuations of Zeder’s unlisted investments have been based on the respective investee companies’
latest financial results as contained in Zeder’s consolidated results for the financial year ended
29 February 2020. Such valuation methodologies are consistent with those applied in previous years.
Suffice to say, the wide-spread impact of COVID-19 on the global economy and financial markets is already
evident. The short- to medium-term severity thereof and consequent impact on the profitability and valuation
of our investments, however, remain uncertain.
While the SOTP calculation is indicative of the value of Zeder’s underlying portfolio of net assets, it does not
take into account factors such as adjustments for the size of shareholdings, liquidity of the underlying assets,
tax on the potential disposal of underlying assets, head office operating profit/loss and other factors.
Zeder's consolidated recurring headline earnings is the sum of its effective interest in the recurring
headline earnings 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
transparent way of evaluating Zeder's earnings performance.
Audited Reviewed
28 Feb 19 Change 29 Feb 20
Rm % Rm
Recurring headline earnings from investments 604 725
Net interest, taxation and other income and expenses (133) (166)
Recurring headline earnings 471 18.7 559
Continued operations 177 263
Discontinued operations 294 296
Non-recurring headline items 296 (155)
Headline earnings 767 (47.3) 404
Continued operations 466 121
Discontinued operations 301 283
Non-headline items (678) 157
Attributable earnings 89 530.3 561
Continued operations 374 (234)
Discontinued operations (285) 795
Weighted average number of shares in issue
(net of treasury shares) (million) 1 702 1 702
Recurring headline earnings per share (cents) 27.7 18.4 32.8
Headline earnings per share (cents) 45.1 (47.5) 23.7
Attributable earnings per share (cents) 5.2 532.7 32.9
Recurring headline earnings per share increased by 18.4% to 32.8 cents mainly due to improved
performance from most of Zeder’s underlying investee companies.
Headline earnings per share decreased by 47.5% to 23.7 cents mainly due to the non-recurrence of
the upward fair value adjustment of Capespan’s investment in Joy Wing Mau prior to its disposal in
the prior year.
Attributable earnings per share increased by 532.7% to 32.9 cents mainly due to the reversal of the
non-headline impairment charge recognised by Zeder on its associate investment in Pioneer Foods
in the prior year, partly offset by impairments of non-financial assets.
Profit before finance costs and taxation from continued operations per Zeder's consolidated income
statement decreased by 70.0% to R252.4m, mainly as a result of the aforementioned prior year
upward fair value adjustment of the investment in Joy Wing Mau and impairments during the current
year. The reversal of the prior year impairment on its associate investment in Pioneer Foods is
included in discontinued operations.
REVIEW OF BUSINESS ENVIRONMENT
During the year under review, Zeder and its investee companies were impacted by constrained
economic conditions and corresponding downward adjustments to market valuations. The full effect
was moderated by the announcement of the Pioneer Foods disposal at R110 per share, reflecting a
premium of 58% at the time. This uplift ensured that Zeder’s Sum-of-the-Parts valuation, at an
aggregate level, increased by 5.8% during the year.
Notwithstanding the challenging conditions and valuation implications, Zeder and its investee
companies managed controllable elements well and delivered satisfactory operating results across
the portfolio with recurring headline earnings per share increasing by 18.4% during the year under
review. Apart from Quantum Foods, all portfolio companies stabilised or reversed the corresponding
lower levels of profitability reported in the results for the previous year.
COVID-19
The financial results reported and business environment reviewed reflect the year ended 29
February 2020 as well as subsequent events that transpired prior to the publication of these results.
It is, however, critical to note that, at the time of producing this report, there is a global coronavirus
pandemic and corresponding international health and economic crises unfolding. South Africa,
similar to many countries around the world, is locked-down in terms of strict regulations imposed by
government. While the final outcome is unclear, it is anticipated that the negative economic impact
in South Africa and around the world will be severe in the short- to medium term. While Zeder and
its portfolio companies will not be immune to these challenges, the deliberate process over the past
few years to strengthen balance sheets, reduce debt and preserve cash resources should assist
Zeder during this crisis.
It is worth noting though that many of Zeder’s portfolio companies fall within the “essential services”
classification under the current regulations and have been allowed to continue certain operations.
PROSPECTS AND OUTLOOK
The successful disposal of its largest investment and the declaration of the substantial special
dividend are considered in a positive light from a Zeder shareholder’s perspective. These
transactions understandably also represent a material change to the size and composition of Zeder
and its portfolio as it results in the disposal and distribution of a substantial portion of the underlying
value of the group.
Albeit from a lower base, Zeder remains optimistic about its prospects going forward. The remainder
of its portfolio represents strategic equity interests in leading organisations that span the
agribusiness value chain. While the broader investor sentiment towards the sector and country is
clearly negative at present and the external operating environment remains challenging, the
underlying fundamentals of Zeder and its portfolio have not changed. The investee companies are
well positioned with strong balance sheets and leading management teams that are committed to
delivering on their respective long-term strategies.
We believe that, despite inevitable cyclicality, investing in the agribusiness industry should offer
attractive long-term returns and the strength of our defensive portfolio should ensure that we deliver
the required shareholder return over time.
SPECIAL DIVIDEND
Shareholders are referred to the Company’s SENS announcement dated 1 April 2020, regarding the
declaration of a special gross dividend of 230 cents per share by the Company, pursuant to the
disposal of its shareholding in Pioneer Foods to a subsidiary of PepsiCo, Inc., in terms of a scheme
of arrangement.
For ease of reference, the salient dates of this dividend, as previously announced on SENS, are:
Last day to trade cum dividend Tuesday, 21 April 2020
Trading ex-dividend commences Wednesday, 22 April 2020
Record date Friday, 24 April 2020
Date of payment Tuesday, 28 April 2020
Share certificates may not be dematerialised or rematerialised between Wednesday, 22 April 2020
and Friday, 24 April 2020, both days inclusive.
Following the significant special dividend, the directors have resolved to amend the Zeder dividend
policy. Going forward the payment of dividends will be conditional on the Group having sufficient
reserves to fund its operations, investments and growth plans.
REVIEWED FINANCIAL RESULTS
This short-form announcement is the responsibility of the directors of the Company. It contains only
a summary of the reviewed information in the full announcement ("Full Announcement") and does
not contain full or complete details. The Full Announcement can be found at:
https://senspdf.jse.co.za/documents/2020/JSE/ISSE/ZED/LFAFY20.pdf
A copy of the Full Announcement is also available for viewing on the Company's website at
http://www.zeder.co.za/investor-centre/. In addition, electronic copies of the Full Announcement may
be requested and obtained, at no charge, from the Company at cosec@zeder.co.za and from PSG
Capital.
Any investment decisions by investors and/or shareholders should be based on consideration of the
Full Announcement.
The Company has based this short-form announcement on the financial results for the year ended
29 February 2020 which have been reviewed by the Company’s auditors, PricewaterhouseCoopers
Inc., who expressed an unmodified review conclusion.
Stellenbosch
17 April 2020
Sponsor
PSG Capital
Date: 17-04-2020 02:53:00
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