Seed Co Limited has acquired a 100 percent stake in Prime Seeds Limited, one of the biggest vegetable seed growers in the country.
Seed Co Limited group chief executive Mr Morgan Nzwere told analysts at the company’s results briefing that the company has acquired Prime Seeds to enable it to enter into the vegetable business.
He said Seed Co will venture into the vegetable seed business leveraging on its technical partner, Limagrain’s extensive knowledge of the sector.
“There is quite an opportunity in the business considering that Prime Seeds is a $6 million turnover business,” said Mr Nzwere.
“This is not a very big transaction but we are going to take assets of the company and we will continue to engage the current management of Prime Seeds who have vast knowledge of the business.”
Prime Seeds Private Limited was started by horticulturalist Willie Ranby in 2002.
Mr Nzwere said the group is looking at expanding the vegetable business to other countries where they have operations.
He said the group is optimistic of future growth coming from the strategic technical equity partnership with Limagrain, which has enabled the group’s research and development efforts to access the latest technologies in seed breeding as well as broadening genomic diversity through germplasm exchange and technology transfer.
Meanwhile the group’s turnover for the year-end to March 31, 2015 went down 11 percent to $95 million from about $106 million due to maize seed product shortages as demand shifted to the medium to short season varieties due to poor rains and subdued input programmes across the region.
Margins for the period remained on prior levels while other income increased due to exchange gains and non-seed sales.
Operating costs at $31,2 million were contained at 11 percent below prior year, with major emphasis being placed on increased investment in research and development, expansion of the distribution network in the new markets and brand building activities in all markets.
Reduced credit sales and tight credit risk management during the period significantly reduced impairments.
Finance charges reduced by 56 percent benefiting from aggressive debt collection and injection of new capital from the technical partner.
Profit after tax from continuing operations increased 19 percent to $14,9 million from about $12 million recorded in the previous year. The loss for the year from the cotton seed business of $2,4 million was offset with the profit on disposal of the 60 percent stake of $2,6 million.
Non-current assets for the year went up 81 percent due to inclusion of Treasury Bills worth $23,7 million issued by Government of Zimbabwe in the helm to maturity investments category.
Seed Co said in its financial results that the increase in property, plant and equipment was mainly due to the capitalisation of the Malawi factory, warehouse and new office complex which was commissioned in November 2014 and revaluation of land and buildings at year-end.
The investment in associates of $3,5 million represents the 40 percent remaining stake in Quton seed company.
The company said current assets at $98 million were 19 percent lower than prior year mainly due to the concerted efforts on debt collection and management of inventories downwards.
Accounts receivable for the period reduced 41 percent to $44 million due to more aggressive debt collections and the conversion of $23,9 million due from Government of Zimbabwe to 3-5 year Treasury Bills.
Out of the $44 million trade receivables, various Governments across the region owed the group $20 million, of which $7,8 million was collected after year-end.
Intensified debt collection, increased sales on near cash terms and the second tranche of the capital injection from the Limagrain transaction reduced the net debt position of the group from $28 million last year to $5 million at year-end. The Herald