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Oliver Kazunga, Senior Business Reporter
ZIMBABWE seed producer, SeedCo Limited, has partnered Botswana’s Prime SeedCo International in a deal to acquire 80 percent stake in Alliance Seeds.
Alliance Seeds is one of South Africa’s vegetable seed producers.
In a statement to shareholders accompanying results for the 2019 half year period, the seed producing group revealed that it had injected an undisclosed amount of capital for the acquisition of Alliance Seeds.
“The group injected additional capital into Prime SeedCo International in Botswana for acquisition of an 80 percent stake in Alliance Seeds,” it said.
During the period under review, Seed Co indicated that its turnover remained unchanged at $17,7 million as the increase in maize seed sales volumes in Malawi, Tanzania and Zambia were neutralised by unfavourable currency movements and the delayed start to the planting season in Kenya due to the late arrival of rains.
It said the improvement in gross margin for the period under review was attributable to the product sales mix.
“Non-core income declined to $1,3 million on account of reduced exchange gains on foreign-currency denominated receivables in Zambia as the Zambia Kwacha’s rate of depreciation decelerated,” it said.
Operating expenses were $11,6 million as overheads were marginally higher than prior year but within the regional inflation range due to cost containment efforts by management. “Interest costs rose to $1,6 million on the back of increased borrowings with working capital tied up in receivables and inventories,” said SeedCo.
During the period under review, the group’s loss widened to $2,5 million because of the decrease in exchange gains and increased finance costs. On property, plant and equipment, SeedCo said fixed assets increased to $39,2 million resulting from capital expenditure partially offset by depreciation and exchange rate adjustments.
The bulk of the capital investment went towards the purchase of a farm for seed production in Mkushi, Zambia.
“The growth in stock value to $30,3 million arose from current year’s production in preparation of the main selling season in the second half of the financial year.
“The current stock position is, therefore, expected to unwind as the year progresses,” said the group. — @okazunga.
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