Cape Town - Zeder [JSE:ZED] announced in Monday that the results for the financial year to February 2016 show recurring headline earnings increased by 20% to 42.4 cents per share and the recurring headline earnings from its investment portfolio by 17% to 54.0 cents per share.
Zeder, a JSE listed agri-investment company with a specific focus on the food and beverage sectors, said the results come "amidst a widespread challenging macro environment".
In aggregate, earnings from investments totalled R805m, an increase of 49%.
Zeder's sum-of-the-parts (SOTP) value per share - calculated by using the quoted market prices for all JSE-listed investments and market-related valuations for unlisted investments - decreased by 13% to R8.03 as at 29 February 2016, but has recovered somewhat to R8.37 per share at March 31 2016.
Zeder’s underlying investment portfolio was valued at R12.4bn at February 29 2016 and R12.9bn at March 31 2016.
The company said the decrease in the SOTP value was solely due to a 21% decline in Pioneer Foods’ share price. Zeder's 27.2% interest in Pioneer Foods remains its largest investment, representing 60.9% of the portfolio.
Headline earnings per share increased by 66% to 36.5c. The company said this was due to a dilution gain as a result of a merger between Golden Wing Mau and the Joyvio group in China, as well as a performance fee not being paid to PSG Group in the period under review.
A final dividend of 9c per share - compared to 5.5c per share in 2015 - was declared.
Announcing the results, Zeder CEO Norman Celliers said the focus during the period under review remained firmly on the company’s portfolio and increasing sustainable recurring earnings and profits.
“This has been the strategy for the past three years and we are satisfied with the progress. Also of note is Zeder’s stated strategy of diversification, whereby exposure to a single commodity and climate zone had systematically been reduced," said Celliers.
“Reported valuations of unlisted investments have remained conservative notwithstanding the fact that the portfolio companies have ample room for further growth.”
With the exception of Agrivision, all of the underlying investment companies contributed to profits.
Pioneer Foods' results for the year to September 2015 show adjusted headline earnings per share from continuing operations increasing by 31%. The core divisions have been strengthened and continue to perform well, according to Zeder.
Capespan reported an 8% increase in recurring headline earnings for the year to December 2015 as the rand weakness was not fully capitalised on, the company said.
"Notwithstanding a challenging macro environment for agriculture, Kaap Agri delivered encouraging results and reported a 16% increase in headline earnings for the year to September 2015. Its strategy of product and geographic diversification should assist it in managing cyclicality in this sector," said Zeder.
It added that the specialised agri-inputs market, and in particular the seed segment, remains attractive and Zaad is well positioned to benefit from it. Zaad reported a 20% increase in recurring headline earnings for the year to February 2016.
"Despite headwinds in Zambia, Agrivision’s operating divisions performed to expectation and the group effectively made a net profit of $1.9m. However, this profit was nullified as a result of once-off items and dramatic currency weakening that in the end translated to a $7m headline loss for its financial year to December 2015," Zeder said in a statement.
"Having weathered adverse market conditions the past couple of years, Quantum Foods released strong results for the year to September 2015, reporting a 390% increase in headline earnings per share."
Celliers said the discussions between PSG Group, shareholders and regulatory bodies regarding possible alternatives to the current management fee agreement are continuing.
“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 offers attractive returns,” said Celliers.