Zeder Investment’s strategy to create wealth for its shareholders is bearing fruit with prospects of further special dividends this financial year, even though the normal interim dividend was passed.
Zeder is an investor in the broad agribusiness and related industries with an underlying investment portfolio valued at R3.3 billion on August 31, 2024.
Its sum-of-the-parts value per share decreased by 33 cents per share or 17.9% to R2.15 per share from R2.48 per share as at February 29, 2024. The decrease was mainly a result of the ad-hoc special dividends of 30 cents per share (R462m) paid during the period, and the adjustments to the valuation of the unlisted investments.
The share price fell 3% to R1.94 on Friday on the JSE, but remained 11.7% higher than the same time a year previously. Transactions to dispose of further assets have been concluded and the intention was for the proceeds to be paid out as further special dividends.
“We believe the disposals reflect a respectable value realisation for the individual Pome [Investments] assets and to the extent that the aforementioned disposal proceeds are received by Capespan Agri and special dividends declared and paid by the respective boards of Capespan Agri and Pome Investments, Zeder intends to distribute the majority of such special dividends received to Zeder shareholders,” said Zeder CEO Johann le Roux in a statement.
Regarding Zaad, Le Roux said that Zeder was engaged with third parties and continued to assess further wealth maximising strategies in a responsible way, which could also include the disposal of assets within the group.
This followed signed agreements concluded for the disposal of the main Pome assets held via Capespan Agri, consisting of three primary farming production units, and the Novo fruit packhouse operation situated in Paarl.
The disposal price for the four transactions amounted to R713 million in total, with R621m going to Zeder in terms of its effective 87.1% interest.
The main conditions precedent for the TWK, Novo fruit packhouse and Applethwaite disposals were the approval by the relevant Competition Commission authorities, and although these were obtained, there were still other conditions precedent outstanding.
Addressing shareholders via a virtual presentation of its interim results to August 31, 2024, Le Roux said maximising long-term shareholder wealth remained their strategic objective.
Zaad invests and operates in the specialised agri-inputs industry with a focus on emerging markets, especially Africa, the Middle East and Eastern Europe. Through acquisitions and organic growth, it has aggregated and developed businesses that own, develop, import and distribute a broad range of agricultural seeds and chemicals.
Le Roux said the macro environment for Zeder’s portfolio companies remained relatively constrained during the interim period, mainly due to volatile weather patterns and lower commodity prices.
“After a sharp decline in the Agbiz Agribusinesses Confidence Index during the first quarter of 2024, the index recovered by 10 points to 48 points during the third quarter. This can be attributed to the renewed optimism around the formation of the Government of National Unity, but still remains below the neutral point mark of 50,” said Le Roux.
He said local agribusinesses in general remained downbeat about the business environment. The recent El Niño weather pattern led to drought conditions, which were devastating to the summer grains and oilseed regions.
In addition, geopolitical tensions and persistent inefficiencies at the ports, poor rail and road infrastructure, and worsening municipal service delivery were driving negative sentiment.
“We anticipate continued uncertainty and volatility in our markets in the short and medium term,” Le Roux said.
However, he said that despite these challenges, the company remained well positioned with a stable balance sheet and cash resources.
BUSINESS REPORT