Zeder is set to remain engaged with third parties on approaches received on various portfolio investments and is currently in the process of evaluating further options
. As in the past, this will be dealt with in a responsible manner in order to maximise shareholder wealth.
The group nevertheless remains focused on growing its remaining investor companies and will evaluate opportunities as and when deemed appropriate in the interest of all stakeholders.
This according to Zeder CEO, Johann le Roux, who addressed Zeder shareholders and analysts via a virtual presentation recently following the withdrawal of a previous cautionary announcement. The group’s financial results for the year ended 28 February 2022 was announced at the same time.
As an investor in the broad agribusiness and related industries, with a historical focus on the food and beverage sectors, Zeder’s underlying investment portfolio was valued at R6,43 billion on 28 February 2022.
Significant value created for shareholders
Le Roux said that against the backdrop of successfully concluding two major transactions – the unbundling of Zeder’s Kaap Agri shareholding and the disposal of its investment in The Logistics Group (TLG) – and several current and prior year special dividend payments, significant value has been created for Zeder shareholders.
With Zeder’s share price trading at R4,23 per share back in 28 February 2019, the group would now have returned value of R4,46 per share or R7,3 billion to shareholders over the last three years. This was by way of special dividends of R3,43 per share and an additional R1,03 per share in terms of the recent Kaap Agri unbundling, after completion of the May 2022 special dividend payment of 92,5c for the year under review.
The group’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 during the year to R4,66 per share. The increase was mainly due to the increased valuations of TLG and Kaap Agri, countered by the payment of the 20 cents per share special dividend on 10 May 2021 out of cash reserves.
At the close of business on 4 April 2022, Zeder’s SOTP value per share was R3,62, which includes the cash proceeds of R1,35 billion received on 31 March 2022 as a result of the disposal of TLG, as well as the provision for the proceeds of the earn-out payments of R218 million. The SOTP value now also excludes the investment in Kaap Agri, subsequent to the unbundling implementation on 4 April 2022.
Zeder’s macro environment
Le Roux said that the macro environment in which Zeder and its portfolio companies operated, remained relatively constrained during the year under review, even with an improved climatic cycle. This was largely due to supply chain constraints resulting in increased costs and margin pressure as a result of Covid.
Zaad, a strategic holding company that invests and operates in the specialised agri-inputs industry with a focus on emerging markets, especially Africa, the Middle East and Eastern Europe, recently changed its year-end from January to June, in order to better align the financial reporting requirements to fall outside the key summer crop cycle. As a result, for its six-months period ended 31 December 2021, Zaad reported recurring headline earnings of R139 million, an increase of 23% per share from the corresponding prior period.
This was off the back of good performances from Agricol, FarmAg and the African maize operations. The increased sunflower hectares planted in South Africa had a positive impact on Agricol, while FarmAg managed to increase its market share.
Capespan, a vertically integrated fruit producer with global marketing and sales capabilities that can service and supply growers and customers in key international markets, reported recurring headline earnings of R54 million for the financial year ended 31 December 2021.
The stream-lined global marketing business experienced difficulties on the supply chain side of the business, especially with increased shipping rates and the unreliable availability of containers hampering operations. The inefficiencies at most of the South African ports remain the biggest concern in terms of the quality of fruit and resultant “time on the water” for a perishable product destined for the export market. The farming operations performed exceptionally during the year, with excellent volumes and quality of the fruit on the farms.
Outlook for farming operations
Agrivision Africa, which owns and operates two large-scale commercial farming operations and a milling business in Zambia, reported recurring headline earnings of $7,2 million, an increase of 226% per share from the prior year. The farming operations performed above expectations during the year, mainly as a result of access to sufficient water resources at our Mkushi farming area, improved crop yields and acceptable soft commodity prices.
Concerning prospects Le Roux said: “The Russia-Ukraine conflict is leading to a higher oil price, which will lead to an increase in certain agri-input costs, especially fertilizer and fuel and in addition soft commodity prices. We anticipate significant food inflation pressure in the short to medium term.
“Having said that, agricultural weather conditions remain mostly favourable and sufficient water resources in the Western Cape is promising for agricultural activities.
“Zeder remains well positioned, with a stable balance sheet and cash resources,” Le Roux said.
