SeedCo offshoot narrows its losses

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SEEDCO’S Botswana Stock Exchange (BSE)-listed spin off, SeedCo International, last week posted its first financial results post-unbundling showing that it more than halved its losses during the half-year ended September 30, 2018.
The company, which was unbundled during the period under review, posted a loss of $1,5 million, progressing from a loss of $3,3 million in the prior comparable period.
The company says its business is highly seasonal with the bulk of the sales taking place in the second half when summer rains come and planting takes place.
“As a result, the business traditionally makes a loss in the first half as it will mainly be incurring production, processing and administrative costs in preparation for the main selling season,” the company said in a comment accompanying its financial statements.
The company’s improved performance in the period under review is attributable to turnover growth in Zambia and Malawi “driven by improved wheat seed sales and early maize seed exports to Mozambique”.
Revenues however decreased by seven percent to $17,7 million “due to late availability of maize seed in Tanzania and Kenya as last year’s seed production from growers was negatively affected by high moisture content”.
The company says its stock levels are higher than the previous year end value due to deliveries of current year’s production by growers in preparation of the selling season in the second half of the year.
Earnings are forecast to grow driven by the improved seed supplies in Tanzania and Kenya.
“The partial return of the Farmers Input Support Programme to tender in Zambia after the challenges encountered in the electronic voucher programme introduced last year is also expected to boost the group profit,” the company said.
Morgan Nzwere, SeedCo’s chief executive said the parent group was happy with the results of SeedCo International.
“The stock has been doing well on the BSE on which it has generally been trading at a premium of over 200 percent to what our stock is trading at on the Zimbabwe Stock Exchange.
“We managed to raise the money that we needed to raise, we got $20 million in hard cash, which we are deploying into the region to capacitate our business, so yes it has been a very good move.
“We now have got adequate capital for our research and for capacitation of our regional businesses,” Nzwere told The Financial Gazette on the sidelines of an analyst briefing in Harare last week.
Meanwhile, SeedCo reported a profit after tax from continuing operations of $5,9 million for the six months ended September 30, 2018 coming off a $2 million loss in the prior comparable period.
The half year profit is uncommon for the seed company that also has traditionally reported interim losses on account of the seasonality of its business.
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