aurora
Business Writer
Agro-concern, Ariston Holdings, says the transaction that enabled the entry of a foreign shareholder into the Group will provide the company financial leeway for expansion as well as growth in the export market.
In 2021, the Group disposed of 50 percent of its shareholding in Claremont Orchards Holdings (Private) Limited for US$2 million to Tuinbouw Zonder Grenzen, a company registered in the Netherlands.
Alexander Jongwe, the group’s chairman in an annual report for 2021 said part of the rationale for the transaction was to raise funding for further investment into macadamia nut orchards in Chipinge and Chimanimani.
“Further, the transaction enabled the entry of a foreign shareholder who has undertaken to provide significant funding for expansion of Claremont orchards into high value fruit and flower offering primarily for the export market,” he said.
He noted that it is envisaged that the sum of the two investments will provide Ariston shareholders with greater value than current.
Jongwe added that regulatory approval for the transaction was received and the sale proceeds were received shortly after year-end.
According to Jongwe, the Group’s balance sheet continued to improve in the period under review as shown by the continued improvement in the quick ratio from 0,77 to 1.16.
He said proceeds from the disposal of 50 percent of Claremont Orchards Holdings (Private) Limited are not included in the cash balances as the proceeds were received after year-end upon obtaining Exchange Control approval.
The company noted that the continued existence of the Covid-19 pandemic had a negative impact on global economies resulting in unsettled markets, but demand for good quality macadamia nuts held firm although there was a slight weakening in the prices for smaller and lower quality nuts.
During the year under review, overall selling prices for the local sales remained relatively stable, although timing of lockdowns had an effect on sales of fresh fruit.
“Yields and pricing for cereals which are grown for the local market were good and this has enabled improved contribution by local product sales to the Group results,” Mr Jongwe said.
Revenue for the Group for the year ended 30 September 2021 reflected a growth of 31 percent when compared to prior year and the growth was mainly driven by increase in sales of products grown and consumed in the local market.
“There has been increased focus on growing the contribution of local perennial crops so as to increase capacity utilisation and broaden the Group’s product offering. Current year gross margin was maintained at the same level as in the prior year of 55 percent,” he said.
Current year profit from operations declined to 11 percent of revenue compared to 21 percent of revenue experienced in the prior year comparative period due to the impact of the missmatch arising from revenue from exports where RBZ retention at 40 percent is being paid at a rate significantly lower than that being charged by suppliers resulting in erosion of value.
Bongani Ndlovu