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Tapiwanashe Mangwiro
Senior Business Reporter
Victoria Falls Stock Exchange-listed (VFEX) Padenga Holdings plans to spend about US$2 million on capital expenditure programmes for its crocodile business.
The group’s crocodile breeding division is working on crocodile pen rehabilitation to improve skin quality.
“We are actually, at the moment, exceptionally tight on capex expenditure,” chief executive officer Gary John Sharp told the company’s annual general meeting recently.
“We are focusing on retiring debt, so we are only spending on what we deem to be essential capital requirements, and most of that this year is focused on the resurfacing of pen floors.
“So, we will spend under US$2 million on the crocodile division this year.”
In 2022, the group generated US$127,89 million in revenue, which was a 68 percent increase from US$76,10 million in 2021.
Revenue declined by 7 percent compared to the same prior year period due to the 17 percent decrease in skin volumes, which was partially offset by improvement in the average return per skin.
In terms of revenue, the mining business contributed 82 percent while the Zimbabwe crocodile operation weighed in with 18 percent.
The firm is now prioritising the production of smaller skin sizes in response to shifting customer preferences from large to tiny handbags and the higher skin ratings by off-takers.
As a result, IH Securities said in its recent earnings update that sales volumes should start to normalise.
To enhance skin quality, Padenga has also made research and development investments.
“Hence, we forecast an uptick in skin sales in the current financial year compared to the previous year,” it said.
“Installation of phase three solar array to bring the solar plant operating capacity to a total of 1,2 megawatts began during the last quarter of the financial year and will be completed during the first half of 2023,” the researchers said.
“This is expected to alleviate energy costs. We expect the top line to slightly decrease and normalise in the full year 2024 in line with gold price movements.”
The group’s earnings before interest and tax amortisation for the year increased to US$32,28 million from US$14,17 million in the full year to December 2021.
Padenga realised a fair value gain of US$2,69 million on its biological assets, primarily as a result of higher average skin prices anticipated for the full-year 2023 and more cattle on hand at the conclusion of the present year.
The mining business’s decision to restructure its borrowings is primarily responsible for the marginal reduction of 3 percent in interest expenditure for the group, which was recorded at US$9,96 million.
The increase in revenue, cost-cutting initiatives, and the change in the fair value of biological assets from a loss to a gain allowed the group to realise a profit before taxation from ongoing operations of US$13.89 million for the year as opposed to a loss before taxation recorded in full year 2021.
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