Zeder Investments Ltd. (ZED) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the Zeder full year results presentation. My name is Johann Le Roux, and today, I'll be taking you through a short presentation of what's transpired at Zeder throughout the past financial year. On the agenda for today, I will discuss the noteworthy transactions throughout the period. As you're all probably aware, the disposal of Logistics Group and also the unbundling of Kaap Agri. I'll spend some time on our strategy. Our strategy hasn't changed. We need to create maximum shareholder value. I'll spend some time on our financial results, specifically our Sum-of-the-Parts. And I'll also show you what the Sum-of-the-Parts will look like post these transactions and also post the special dividend that was announced as part of our year-end results. I'll also focus on the effect, what COVID has on our portfolio and also potentially the effect of the Russia-Ukraine conflict. And I'll spend some time on our remaining portfolio, the prospects of Zeder, and there will be time to answer all your questions at the end of the presentation. But if I can ask if you can please e-mail your questions to cosec@zeder.co.za, and I will respond to your questions at the end of the session. In terms of the noteworthy transactions, the disposal of our shares in Logistics Group, this transaction has actually come -- been coming a long time. We signed the agreement in November last year. A circular was sent to shareholders in February, and then there was a Special General Meeting held in March. We sold our entire stake, 98.22% in the business, and it was disposed at about an 18% premium to the reported Sum-of-the-Parts value at 28 February 2021. The disposal, as I mentioned, was duly approved by shareholders in the 15th of March at that Special General Meeting. And the conditions precedent were met subsequent to that and the effective closing on the 31st of March. The valuation of the business the transaction was based on was for ZAR 1.6 billion. To date, Zeder has received ZAR 1.35 billion of the proceeds. There's still additional earnouts that's due to Zeder of about ZAR 218 million. And these are all linked to extensions or renewals of agreements. So it's not linked to profit warranties. And even though the timing is uncertain, our experience with these lease renewals shows that we will get them. It just takes time. So we're confident that these additional earnouts will be paid to Zeder during the next financial year, which is the 28 February '22 -- 2023 financial year. In terms of our unbundling of Kaap Agri, the Board resolved on the 28th of February to unbundle Kaap Agri to Zeder shareholders. This unbundling was also subject to certain ex con approvals, which were obtained post year-end. The valuation of Kaap Agri in our books on the 28th of February was around ZAR 1.6 billion. So the unbundling value per share would be about ZAR 1.03 per share. In terms of the unbundling, we believe it was in the best interest of Zeder shareholders. Zeder shareholders now have a direct interest in Kaap Agri, which I think has been favorably received by the market. And the unbundling will also theoretically eliminate the discount applied to the Kaap Agri shares previously in Zeder Sum-of-the-Parts. Zeder has had a long history with Kaap Agri. We're very proud to be associated with this group. We've been a shareholder for over 16 years, and if you take this business way back, Kaap Agri actually had an interest in Pioneer Foods. That's a business that was listed and bought out by PepsiCo 3 years ago. Quantum Foods is also a business that came from Pioneer Foods. So this was -- there's been a long history with this group. This business can stand on its own feet. We think there's some really good growth prospects for it. And under the leadership of Sean Walsh and Graeme Sim, we would just like to wish him all the best of luck for the future. In terms of special dividends, I just want to take you back a few years. All the dividends that was paid in the last 3 years were declared. In February 2020, as part of that financial year, there was a dividend declared and paid to shareholders of ZAR 2.30. That was linked to the sale of our interest in Pioneer Foods at the time, and it meant that about ZAR 3.9 billion was returned to shareholders on that specific dividend. Post that in the February 2021 year, there was a further special dividend paid to shareholders of ZAR 0.20 per share. That was once again linked to the sale of our interest in Quantum Foods at that time. And there was also an additional ZAR 308 million returned to shareholders. Part of this financial year, as I mentioned, the disposal of our interest in The Logistics Group, there was a further special dividend declared of ZAR 0.925. That means an additional ZAR 1.42 billion of cash resources that will be returned to shareholders in early May. And that brings the total funds that's been paid to shareholders over the last 3 years to about ZAR 5.7 billion. And I think we must remember that this is also over the main COVID period. And I think these dividends would have been very attractive in the hands of our shareholders. In terms of our strategy, as I mentioned, our strategy hasn't changed. The objective remains to maximize shareholder wealth. We can do it in a few ways: focus on our portfolio and grow our investee portfolio companies. I think the favorable agri conditions has been good for our portfolio, and I think we've shown that there's some good growth in our portfolio over the past few years. I've just mentioned that dividend has been paid to shareholders, so we've -- we're definitely focusing on cash flow generation within our portfolio. And obviously, as and when we sold assets, there's been special dividends to shareholders. And then obviously, thirdly, one has to evaluate transactions on a continuous basis. And I think if one can do disposals at the right price and at the right time, that's obviously also a focus area for us. So in the past year, the Logistics disposal on the Kaap Agri unbundling had a positive effect on our strategy. I think if you combine these with the prior year corporate actions, these transactions were all done at premiums to the Sum-of-the-Parts. There's been decent value created for Zeder shareholders. And if you combine the special dividends and the rand per share value on the Kaap Agri unbundling, that means that over the past 3 years, about ZAR 7.3 billion has been returned to Zeder shareholders. And this should theoretically eliminate the discount applied to the cash return that was on the balance sheet and, obviously, also the Kaap Agri shares that were unbundled to shareholders. I think this is quite an important slide for us. On the left-hand side, you'll recognize all the companies that has been a part of Zeder's portfolio and some still remain today. The black column at the top, the 28 February 2019, that is our reported Sum-of-the-Parts of that financial year-end, ZAR 9.6 billion. We had 1.7 billion shares in issue, Sum-of-the-Parts value of ZAR 5.74 (sic) [ ZAR 5.64 ]. And at that time, we were trading at about a 25% discount to the Sum-of-the-Parts value, which means a share price of ZAR 4.23. If you take us a little bit further back towards the right, what I indicated there is what our Sum-of-the-Parts would look like post the special dividend payment in May. So we would still have the investment in Zaad, the investment in Capespan. We will still have our investment in Agrivision and also cash on the balance sheet. So if you take that ZAR 4.1 billion Sum-of-the-Parts value at that time and divided by the shares in issue, that gives you a Sum-of-the-Parts per share of around ZAR 2.70. And then if you apply the same discount and Zeder currently do trade at more or less the same discount that it did in 2019, that gives you an implied share price of ZAR 2. Now if you take that ZAR 2 and you add back the value that's been given back to shareholders so far, the ZAR 2.30 Pioneer special dividend, the ZAR 0.20 Quantum special dividend, the Kaap Agri unbundling and also the current special dividend, that leaves you with a indicative share price of ZAR 6.48 to Zeder shareholders, which means that over time, there's been 53% growth in the share price over the past 3 years, which is an effect of 15% per year. So in terms of that, for Zeder shareholders to have implied share of ZAR 2 with a value of ZAR 4.46 given back to shareholders over the past 3 years, I think it's quite commendable. And I also think one must remember that this is over the main COVID period when it's been tough for many businesses. In terms of our results, as for the past financial year, I think in terms of COVID, I think, we all know the impact on South African business. We've seen GDP retraction. There's been some normality and small growth last week or the week before the unemployment rate was announced, and there's, once again, an increase in that, which is obviously not good for South Africa. The economy is struggling, and we're still operating in a relatively constrained environment. But having said that, I think, Moody's last week, even though SA remains downgraded, we've -- we're from a negative to a stable outlook. So one can see that is promising. And SA has also ended our national state of disaster. So it does seem like the worst is over and some normality is restored, but yes, our economy obviously still remains under pressure. So the impact on Zeder and its investment portfolio, as I mentioned before, the management teams were very proactive, and they implemented measures quite quickly. But we're still seeing significant supply chain constraints leading to increased costs and margin erosion in our portfolio and also in certain of the industries that we operate in. I think the inefficiencies at South African and global ports remains a major obstacle, and it leads to increased costs and delays. And especially on the fresh fruit industry, that's definitely been negatively impacted. If you're trying to move a perishable product through ports from the Southern to the Northern Hemisphere, it's definitely impacted by delays, and obviously, delays affect the price that you can realize in the market. But having said that, I think our portfolio has remained resilient. We've got very good management teams, but there definitely remains supply chain challenges within our current Zeder portfolio. In terms of the most recent thing on people's radar, the Russia-Ukraine conflict, the impact on SA and business, I think, we've all seen the increase in oil price. If you've been to the petrol station recently, you'll feel it in your pocket. And also an increase in soft commodity prices, which we've probably not seen as a consumer yet, this leads to a high-inflation environment. And I think one can say with confidence that will lead to an acceleration of increased interest rates in the foreseeable future. I think if one needs to be honest, the consumer, South Africa needs to brace itself for serious food inflation. I think the food producers, specifically, will become under significant margin pressure. And unfortunately, this impact will mostly be on the poor again, with the increased transport costs and basic food prices. So what is the impact on Zeder and its investment portfolio? We are obviously aware that this conflict only started in February, and most of our portfolio companies have a December or earlier year-end. But what we can see to date is pressure on agri input costs, fertilizer and fuel. Fuel is a key ingredient, if I can, in the agricultural sector. So that will definitely lead to increased inflation, not only the inflation, but it's also the availability of key agri inputs. Some of our raw materials come from China. It's a little bit more difficult. Some fertilizer elements come from the Ukraine. They have a very big fertilizer market. So the risk remains of agri inputs also not being available for certain planting seasons. And in our sector, if one needs to -- if one has a planting window, once you miss it, you can't plant, so I think the availability of agri inputs is also going to be very topical going forward. Obviously, the high soft commodity prices can be positive for certain farming sectors, I think, specifically of the increased wheat price of late, but the inflation that farmers will feel on the farm is going to be significant. But having said that, once again, our portfolio is strong. There is definitely a management team that's proactive. So we're trying to be proactive and is aware of all the challenges. In terms of our results for the year, our Sum-of-the-Parts, this is obviously at year-end. We've seen an increase from ZAR 4.33 to ZAR 4.66 per share. It's largely as a result of the increased valuation in TLG as a result of the disposal. And also Kaap Agri has had a great year in terms of the increase in the share price. That's obviously counted by the ZAR 0.20 special dividend paid in May last year. So if you kind of add that back, it's an effect of 12% per share growth in our Sum-of-the-Parts for the year. The discount remains. The discounted rand value has, however, become smaller as we've done -- paid special dividends and also unbundling of Kaap Agri. And the discount is not unique to Zeder. I mean it's everywhere in terms of investment holding companies. In terms of our post -- again, Sum-of-the-Parts is on the 4th of April, and I'll show you a table of what it looks like. It's obviously materially different, Kaap Agri and TLG no longer part of the Zeder Group. The TLG transaction closed. So we've got a significantly increased cash balance of about ZAR 1.86 billion on our balance sheet. In terms of our balance sheet, the Board has declared a further special dividend of ZAR 0.925, and to Zeder shareholders, this will be paid in May. That will leave us with just over ZAR 400 million in the bank. And yes, we'll still be in a good position to support our portfolio companies. And yes, I think the question may be why do we still have such a significant cash balance on our bank account and why don't we increase the special dividend, and I think we're just taking a cautious conservative view. We're still in COVID, and I'll elaborate a little bit more on the impact on our portfolio. We still have this Russia-Ukraine conflict. We're not really sure how it will play out. So I mean one must remember that in terms of the remaining assets, Zaad and Capespan, Zeder is the shareholder that owns in -- the high 90%. So we need to be ready to assist our portfolio companies, if required. At this stage, it's not required, but I think it's prudent to leave cash on the Zeder balance sheet at this stage. So in terms of our Sum-of-the-Parts and what it looks like, we've got the 28 February '22 numbers there. That's the ZAR 4.66, and the 4th of April, you will see The Logistics Group, obviously, not being part of the group anymore as well as Kaap Agri. The increased cash balance, that's an additional ZAR 1.35 billion we received as part of the initial payment on the TLG disposal. That leaves us with a Sum-of-the-Part value per share of ZAR 3.62 as on 4th April. As I mentioned, there is a ZAR 0.925 special dividend that will be paid in May, which will mean that our Sum-of-the-Parts value at that time will probably drop to about ZAR 2.70 per share. In terms of our portfolio review, in terms of our remaining 3 investments, Zaad, by far the biggest investment in our portfolio. These are all the brands, Agricol's mainly a sunflower business. It had a very good year. K2 is our African seed business, focusing on maize as well as Seed Co. Bakker Brothers is our Dutch business. That's also where we have all the IP in our business, is located in the Netherlands, so if we have a business in Zimbabwe, the IP is not in Zimbabwe. It's actually in the Netherlands. Farm-Ag is our agricultural chemical business. May Seed is our business in Turkey. East African Seeds is the transaction we closed in the past financial year, very excited about that transaction and the growth that, that could mean for our company. Hygrotech is our vegetable and also chemical adjuvant business. That business has completely been restructured. So it's going well there. And Sorghum and DLF are 2 joint ventures that we have. SciCorp Laboratories is our in-house laboratory and testing facilities. Unfortunately, one has to have one's owned facilities nowadays to test our own genetics for seeds. So how did this business fair for the last 6 months? You remember at half year, I reported that Zaad has actually changed at year-end from January to June. So it's a 6-month period now. It's had a very good 6 months. I think one must remember that this business makes its money from 2 different cycles. We've got businesses that's operational in the Southern Hemisphere and autumn in the Northern Hemisphere. The first 6 months of December is mostly earnings coming from the Southern Hemisphere operations where the second half comes from the Northern Hemisphere operations. So you can't just take the 6 months earnings and double it. But to date, it's going well in this business. You'll see the debt increasing on the balance sheet there at the bottom, and that is as a result of the ZAR 180 million bridge loan that Zeder advanced during the year to do the EA Seeds acquisition. Just in terms of that, the Zeder Board has asked us to look at options, and we will probably convert that debt into equity. The full Zeder bridge loan currently is about ZAR 325 million. So if we convert that to equity, it will have a significant impact on the debt of the balance, which we think will be favorable for Zaad. Just in terms of the valuation, we've increased the valuation slightly. We're still taking a cautious view. Bakker in the Netherlands, it's still impacted by COVID. And the main reason is that we're quite dependent on some UN tenders that hasn't really been restored. But also a lot of Bakker Brothers' seeds are developed and grown in different countries. Therefore, they need to move. So Bakker is more exposed to supply chain constraints and pretty much any of our other businesses where seeds are produced in country. What that means is if you've got a supply chain problem and you can't get the seed to a specific country in time, you miss a planting season, [ you're serving ] the stock for a year, and Bakker will only know in the next 6 months in what way they've been restored to their previous profitable levels. Agricol has had a very good year. That's mainly our sunflower business. There has been an increase in sunflower hectares planted in South Africa specifically. So that's been favorable for Agricol. And also a lot of the maize farmers that planted maize early in the year lost their crops due to unseasonal heavy rains, and the later window is more favorable for sunflowers, so farmers then did not plant maize again. They rather planted sunflower, which is good for Agricol. Farm-Ag has had a very good year. There's a big focus on this business to grow into South Africa, and especially the Western Cape, and that's actually gone quite well for the business. And we hope that they can achieve a record year this year. May Seed in Turkey, still early in the season, the main season is in the next 6 months. But yes, I mean things still look very promising there. As I mentioned, the EA Seeds transaction got concluded. We're excited about that. There's -- that's a big, big distribution hub in East Africa into Kenya, Uganda and also the Rwanda areas. And we -- our aim there is to push our Zaad seed varieties and our own genetics through those distribution channels. So in terms of the Russia-Ukraine conflict, I mean May Seed, the business is located in Turkey. We do trade with Russia and Ukraine, probably only 7% of May Seed's turnover. We are monitoring it. We don't own any physical assets in Russia or the Ukraine, but they are trading partners to May. And we do believe that from this, there could be some opportunities for May Seed. Turkey is a wonderful environment to grow and produce seed. And if some of the other markets are potentially closed, one could see seed production in Turkey increase, and that will be favorable for May Seed. So in terms of this business going forward, we do think high input cost is going to affect farmers. Sunflower is a business that does not need as much agri inputs like maize. And that could probably mean that farmers, when they need to make their decision whether they're going to plant maize or sunflower, maybe they will lean more towards planting sunflower. It's got a much lower cost base per hectare to plant. But the focus on this business is -- after the EA Seeds transaction is, I think, we've got all the foundation. They're solid. We've got all the building blocks that we need for this business. The focus is now on developing our IP on margin enhancement and cash flow generation for this business. In terms of the valuation considerations, we do value Zaad at an EBITDA multiple. We look at other comparable companies. We have a sample. We work on averages, and then we apply those multiples in 2 different areas: seed and the chemicals multiple. Pharma is a big part of this business. So it makes sense for -- to kind of allocate this own multiple to the chemical side. And then the EBITDA that we use, we normalize it, and we adjust the full effect of hyperinflation in Zimbabwe. The hyperinflation environment can often lead that you boost your EBITDA. So we add back that effect completely. And obviously, part of the year-end process is these valuations were ordered by our auditors, Deloitte. In terms of the net debt, obviously, we deduct the net debt after we've applied the multiple to the EBITDA. And as I mentioned, Zeder will be converting that bridge loan to equity in the next financial year. In terms of valuation, yes, the earnings have increased by 23% for the 6 months. We're still following a cautious approach. So the valuation did not increase as much as one could potentially inspect with that increase. But as I said, we're still experiencing challenges with COVID and especially on Bakker, and we need to monitor what this Ukraine-Russia situation is going to have on our portfolio. In Capespan, our farming and global marketing business, this business is focusing on 3 commodities: pome, which is apples and pears; grapes; and also citrus. Citrus is probably the smallest part of this business. We have farms in the [ King William ] area and also in the Southern Cape. In terms of our pome division, we've got very big farms in Elgin and the Villiersdorp area, also with a packhouse located in Paarl, with cold storage facilities. And our grapes, we've got big grape farms in the Northern Cape and also in Namibia. The global fruit business, offices in some international offices, the business has been restructured significantly over the past 3 years. So really operating off a much, much lower cost base. In terms of performance for the year, Capespan do have a December year-end. We've seen fantastic performances on the farms in terms of volumes. But unfortunately, there's been some significant challenges, as I mentioned, in the SA fresh fruit industry, mainly as a result of COVID. That's leading to increased costs and lower prices realized in the market. Still a profitable business, ZAR 54 million for the year. And you'll also see that the pressure on supply chain means that the cycle is a bit longer. You get paid a bit later, and that's one of the reasons why the net debt at end of December is a bit higher as in the previous year. Then in terms of our valuation of Capespan, I think, taking into account all the challenges experienced in the supply chain, we've decreased the valuation slightly to accommodate that. But the business is experiencing supply chain constraints. There's lots of inefficiencies around South African ports and globally in the supply chain, and this is leading to higher costs. I think on the grapes alone, I can probably factor in just for additional supply chain costs, ZAR 15 to ZAR 20 for a carton, and that's significant in a grape farmer's life. In the past, when there was adequate and sufficient ships around, ships would wait outside the ports. Nowadays, if you wait for a day, the ships just keep on sailing. They bypass the port. You got to wait for a new one, and obviously, being in the fresh food industry with cold chain, you need to maintain the cold chain. Once your food is packed in a cold chain environment, you need to keep it in that cold chain environment until it pretty much gets to the retailer in the Northern Hemisphere, which means if your ship's delayed or there's any efficiencies, that cold chain needs to be plugged into electricity. And obviously, we all know electricity costs have gone over the last few years. Now in terms of that also, the longer lead times for perishable products, it leads to quality control issues -- or not control issues. This leads to quality issues. And that obviously means you'll realize much lower prices in the market. I think people often ask, "But the fresh food is in a cold container. How can the quality be a problem?" It's like anything that you keep in your fridge. You can't keep it for too long. I think some of the lead times, I think, the shipping -- or not the shipping, the supply chain lead time from transport to getting paid to the EU was about 70 days. I think that's now well over 90 days. So that's a 30% longer lead time in terms of getting your products to the retailer. In addition, the Russia-Ukraine conflict, even though it was only in February, those markets are effectively closed for certain producers, or some people are hesitant to export because, obviously, there's a risk of you not getting paid or don't necessarily want to be paid in rubles, which means that fruit must move somewhere else. The normal place for it to move, if it's not in Russia, it would be to the EU market or the U.K., and that obviously will lead to additional price pressure. But having said that, our farms are really world class. We've had exceptional volumes on the farms. I think we're very happy where our farms are. We have the best varieties that's in most demand internationally. We had full production on our grapes farms. We spent CapEx on our pome farms over the last 3 to 5 years. It's bearing the fruits in terms of netting and yield and quality, and it's really a pity that the supply chain constraints kind of affected the profit numbers of the business when there's been such an exceptional performance on the farms. I think it's also important to note that the supply chain problems, it's not unique to Capespan. I think if you're in this industry, you are, unfortunately, a bit of a price taker. But the key thing going forward is going to be to manage the volumes, back your best fruit, send it to your best markets, trying to retain those prices and, obviously, take market risk into consideration. In terms of our valuation for Capespan, once again, the same methodology followed. We use a Capespan group NAV, and we adjust it for independent third-party valuations. That's performed on all the farms, and we use earnings multiple for our associates. We have 3 associates: 1 in Asia, 1 in Turkey and 1 in India. The one in India has had a fantastic year. So that's been good for the business. And then we apply a market-related discount to the Capespan group NAV, as was mentioned above. In terms of Agrivision, Agrivision has been a tough investment for Zeder. Having said that, that's a record year this year. We are co-shareholders with the IFC and Norfund in Agrivision Africa. And as combined shareholders, we are -- we have 3 divisions here. We have the Somawhe farming unit, the Mkushi farming unit and also milling operation. We've made the combined decision to sell the milling operation. We just -- not really an asset that's performing for us, so we will probably exit that investment in the next financial year. So just in terms of the performance, it's also had a December year-end. For the year, it's made $7.2 million. Their results are all in dollars. I mean that's a fantastic year. This business has been under some debt strain in the past and has managed to reduce this debt significantly from own operating cash flow, and you can see it there in the bottom line, from December '19, I mean, $21 million to just over $8.5 million. So it's alleviated some pressure on the business. We've kept our valuation, however, unchanged. I think the -- we obviously know the history that we've had with Agrivision. So we're trying to have a conservative approach. But the results are due to sufficient water at our Mkushi farming area. That's an area where we've mainly had problems with water. So water there means you can plant your full wheat crop, which is obviously great for us. We've seen promising yields in terms of soya and wheat and, obviously, the high soft commodity prices, it kicks direct to the bottom line. Zambia, however, remains a challenging environment. We haven't had the summer rain that we normally expect. The rains are a little bit late. But the focus for this investment will be on managing inflation in terms of the cost side and also the timely availability of ag inputs. Zambia is a landlocked country, so you need to plan your agri inputs probably a little bit more carefully than someone that has got ports for imports and for getting access to those materials. Going forward, our view is that the soft -- high soft commodity prices will probably remain high in the medium term, and Agrivision should benefit from these increased prices. However, it remains a difficult investment for Zeder. It's small in our life, but yes, we'll make a decision on how we can maximize value soon. In terms of the valuation considerations, pretty similar to Capespan. We take the Agrivision group NAV. We adjust it down for specific risk factors. Zambia, as a country, has got more risk than South Africa, so we obviously adjust it with a much higher discount. And once again, we've done independent third-party valuations on all the farming blocks, and that would get us to our dollar valuation that's translated into rand. So just in terms of our prospects for Zeder, I think we'll continue to grow and support our existing portfolio. Agriculture conditions remain mostly favorable on the ground. As I said, if you look at Capespan farms, we've had a wonderful performance. If you look at the Agrivision farms, we've got a great performance in terms of yield. But the supply chain problems and also the Russia-Ukraine conflict will have an impact on the portfolio. These global supply chain challenges is resulting in inflation pressure, and it will probably remain with us for a while. In terms of the approaches that we've received in our portfolio investments, you'll notice that we withdrew our cautionary yesterday. But having said that, the Board remains engaged with several third parties on various of our portfolio assets. The funding terms and other key considerations on these approaches are not certain and also not final, and that's the result we've withdrawn our cautionary. We've been on a cautionary for a year. We've done the 2 transactions, but the Board is still considering various wealth-maximizing options. As we've done in the past, we're transparent with our shareholders, and we'll report back to the market when appropriate. And once again, if there's a transaction to be done, we'll do it in the best interest of shareholders in order to maximize shareholder wealth. I think to do good transactions takes time. So our shareholders just need to be patient with us. But in terms of our overall strategy, nothing has changed. We need to maximize shareholder wealth for our shareholders, and I think we've been successful in doing that over the past few years. That, ladies and gentlemen, brings me to the end of my presentation. We'll now go over to questions. If you can maybe just give us a minute or 2 to collate all the questions. The e-mail address was in the SENS, and it was also at the beginning of the presentation. So I'll be back with you shortly. Thank you.

Thank you for your patience. We've got quite a few questions that's come in. The first question is, Zeder's value unlock strategy seems very clear. So what's the purpose of keeping around ZAR 400 million of cash post the special dividend? I think as I mentioned before, we're still in a position -- we still want to be in a position where we can assist our portfolio companies, even though we're on a -- they're all performing well, and there's no need for capital, we're still under supply chain constraints and the Ukraine, COVID situations. So we also -- in most cases, is the shareholder of reference for these investments. So we need to be able to support these investments, if so required. The next question is, Zaad has built a nice portfolio of global seed assets over the last 10 years. Can you share some insights into the outlook and strategy for Zaad from year on? Yes, I can. As I mentioned, I think we've got all the building blocks in place now for Zaad. It is -- has a focus on the emerging markets. Our focus is now on getting our own IP genetics in terms of seed through our distribution channels in order to optimize and enhance cash flow and margin enhancement. So that's the strategy for Zaad. The next question, the growth of Zaad's recurring earnings does not seem to be fully reflected in the adjusted valuation for Zaad. Yes, as I mentioned, this business definitely has a Southern and Northern Hemisphere window, where we've banked the profits of most of the Southern Hemisphere investments now. The Northern Hemisphere investments, especially a business like Bakker, we need to make sure that the business can return to its previous profitable level. And therefore, in our view, we've stuck to a conservative approach. We'll obviously evaluate the valuation again at our interim results. The next question is, is the earnout of ZAR 218 million for TLG included in the 4th April Sum-of-the-Parts? Yes, it is. It is included under the other net assets in that slide. The next question is, the Zaad encasement valuations seem low given how well the agricultural sector is performing. Is there a reason for this? We believe the valuations of those portfolio companies are fair. I think in terms of Zaad, I think, I've explained a little bit why we haven't adjusted the valuation upwards in terms of the earnings. And I think also from a case spend point of view, while the business is still experiencing all the supply chain problems, we're taking a cautious approach. And one must remember that Capespan also have farming operations. Even though the farming operations are performing very well in terms of volumes, it is, unfortunately, also exposed to the supply chain problems experienced in international markets. There's a question. What is the plan for the large cash holdings at the group level? I think to be perfectly honest, we'll probably not pursue new investments at a Zeder level. But as I said, we need to be in a position to support our underlying portfolio in terms of transactions, acquisitions, where they see growth. Then there's a question. Thanks for the results. Zeder is now rapidly slimming down. You've withdrawn your cautionary. Can I ask on Capespan, given the [ motive ] issue with land and agriculture, is the asset under consideration for sale and I assume B considerations be hindering any potential transactions? As I mentioned, the Board is still discussing various approaches also on Capespan. And currently, there isn't a B consideration that's hampering conversations there specifically. Then there's a question. Any update on discussions regarding Agrivision and your partner in that asset, which has been slated for sale for some years, but it's not led to any disposal? Yes, it is a difficult asset. I think we have announced to the market that we would like to exit that asset at the appropriate time. I think our focus on Agrivision has been to get the debt levels down to a level where the business can operate sufficiently. And we've had a very good year. We think the [ debt level ] is there now. So we're pretty confident that we can make some headway on Agrivision. But once again, we are shareholders there with the IFC and Norfund. So any decision on that specific asset will be made on a combined shareholder basis. There's a question on what the other assets is on our Sum-of-the-Parts. The other assets on that slide includes our Agrivision investment. It's also got that ZAR 325 million loan to Zaad that we'll be converting soon. So those are the 2 main items in the other assets in our Sum-of-the-Parts. Then there's a question of whether we've accounted for any of the earnout proceeds. Yes, we have. We have -- it's under the net other assets bucket in our Sum-of-the-Parts, the full amount. There's a question. Please comment on the Board's deliberation on the withdrawal of the cautionary despite interested parties still being entered in the target assets. As I mentioned before, the Board is still having a conversation, but none of these funding terms or key considerations are certain, and they're also not final yet. And as a result, we don't see a transaction being imminent, and therefore, we've withdrawn that cautionary. There's a question. Can you guide us on whether Capespan will be sold in totality? Or do you think the farms will be sold individually? I think once again, there's no decision made to sell all Zeder assets. So we've had people approach us on various of these assets. We're entertaining discussions there, and it would never be first prize for us to break up a business. Capespan is an integrated business with the farms, with the marketing. But yes, I mean, I assume if one would want to go that route, that would be an option. There's a question about with the cautionary withdrawn, am I correct that the company can now repurchase shares in the market? How much of the cash on the balance sheet could be considered for buybacks? Yes, you are correct. We can potentially buy back shares in the market. But we've done the math. You have to buy back so many of the shares to really make a difference in terms of Sum-of-the-Parts. So I don't think it's a real consideration for Zeder at this stage. I'm just going to wait 1 or 2 minutes if there's any more questions. There's a question. If you're still engaged in discussion with third parties, why withdraw the cautionary? I mean as I mentioned, we don't -- there's still funding terms and key considerations. That's not certain on these discussions. And as a result, we don't feel like a transaction is imminent. But once again, if it changes, we'll report to the market and do the relevant. We just give you another minute or so to see if there's any more questions. It doesn't seem like there's any more questions. Ladies and gentlemen, thank you for your time today. We really appreciate it. That e-mail address at the start of the presentation will still be active and live. So if you have any follow-up questions, please send them, and I'll be able to respond. I hope you all have a nice long weekend with family and friends. Thank you very much.