Cape Town - Earnings for agribusiness investor Zeder Investments were dented by the company's share of the R350m provision set aside for Pioneer Foods' potential fine to the Competition Commission.
According to financial statements released on Monday evening, Zeder reportable headline earnings fell by over 30% to 17.3 cents per share after shaving off the company's R44m share of Pioneer's provision.
Zeder, which is controlled by investment company PSG Group, is one of the biggest shareholders in Pioneer via its holding in Kaap Agri and other agribusiness entities. Pioneer was fingered in a bread price-fixing scandal, and now faces the possibility of an increased fine.
Zeder CEO Antonie Jacobs said that without the penalty provision the company's headline earnings would have come in at 22.2c/share.
However, Zeder is deemed an investment company, therefore, earnings are arguably of secondary importance. The key performance gauge revolves around the net value of the underlying agribusiness portfolio.
In this regard, Zeder's investment portfolio - anchored by large investments in Kaap Agri (Pioneer) as well as liquor groups KWV Holdings and CapeVin - grew by an impressive 29% to R2.2bn.
Zeder's net asset value (NAV) at the end of February was 233c/share, which means the share (last traded at 198c) is discounting NAV by about 18%.
Interestingly, Zeder's intrinsic value jumps to 268c/share if the "see-through" value of Distell (held in Capevin) and Pioneer Foods (housed in Kaap Agri) is used as a value gauge. That would suggest the market is placing a hefty discount of some 35% on Zeder's intrinsic value.
Zeder declared a dividend of 4c/share - down from last year's 7c/share. The firm has a policy of paying out 100% of free cash flow as a dividend.