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Little risk to Zeder portfolio from land reform - CEO

Although the current land issue in South Africa is "top of mind and slightly concerning for all parties", JSE-listed agribusiness group Zeder Investments [JSE:ZED] sees a minimal risk to its current portfolio of investments, CEO Norman Celliers told Fin24 on Tuesday.
 
"We are an active player in the economy. Our farms are operational and employ thousands of people. We believe in the country. We are carrying on with our farming operations and expanding. We will play our part in the revival of the SA economy," he said.

Zeder announced its interim financial results for the six months ended 31 August 2018 on Tuesday.

"We are happy with the results we managed to deliver. It is a challenging environment from a macro-economic point of view. SA consumers are under strain and inflation is another factor," said Celliers.

He said all its portfolio companies managed to stabilise or reverse corresponding lower levels of profitability reported in the previous interim period.

Over the interim period recurring headline earnings per share as a key benchmark figure increased by 158% to 9.8 cents compared to 3.8c during the same period in 2017.

This was mainly due to a strong recovery in earnings from most of Zeder's underlying investee companies compared to the previous period.

Headline earnings per share increased by 605% to 30.3c (2017: 4.3c). This was also mainly as a result of strong earnings recovery from most underlying investee companies as well as the upward fair value adjustment relating to Capespan’s interest in its Chinese investment, Joy Wing Mau.

The sum-of-the-parts (SOTP) value per share of Zeder’s other key benchmark - calculated using the quoted market prices for all JSE-listed investments, and market-related valuations for unlisted investments - decreased by 15% during the reporting period to R6.67 as at 31 August 2018.

At the close of business on Monday 1 October 2018 Zeder's SOTP value per share was R6.23.

Zeder’s underlying investment portfolio was valued at R12.5bn on 31 August 2018. Its 27% interest in Pioneer Foods remains its largest investment, representing 49.1% of the portfolio.

Zeder only declares a final dividend at year-end.

Celliers emphasised that the first six months of Zeder's earnings traditionally represents the lesser half of its annual earnings.

This period reflects the annual input-cost cycle associated with many of its agriculture investments as well as the softer half of the annual consumer sales and spending cycles associated with its other investments.

“From an operational and earnings point of view we are very satisfied with the results delivered. Unfortunately, from a valuation point of view, it has been a bit of a disappointing period,” said Celliers.

The company and the sector in which it operates had to endure downward valuation adjustments and negative market sentiment.

Celliers, however, remains confident that longer-term valuations will recover and that recent positive changes should contribute to improved conditions in the medium-term.

"Our strategy going forward remains largely unchanged. We have strong businesses with strategic exposure in the agri-value chain,” he told Fin24.

“We drive for both organic and in-organic growth. At the Zeder level we will be able to deploy capital going forward and are open to making acquisitions."

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