Seed Co International Limited, listed on the Botswana Stock Exchange under the share code SCIL, is a leading affirmed seed company approved to market seed assortments developed by the company, government and other related seed reproducers in its business sectors.

The following is an excerpt from the company’s interim report:

Income statement

Revenue

In spite of the growth in turnover in Zambia and Malawi driven by improved wheat seed sales and early maize seed exports to Mozambique respectively; revenue decreased by 7% to $17.7m 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.

Gross margin

The slight rise in gross margin is attributable to better pricing of wheat seed in Zambia as demand exceeded supply in that market.

Other income

Other income surged on account of exchange gains on net foreign denominated assets due to the depreciation of the Zambian Kwacha.

Operating expenses

Overheads were marginally higher than prior year due to the restructuring costs incurred.

Finance costs

Finance costs decreased from last year as the Group’s net debt position improved following receipt of the capital injection before listing.

Loss for the period

The Group posted improved results recording a loss of $1.5m compared to $3.3m in prior year due to the exchange gains in Zambia and interest cost savings in Botswana.

Statement of financial position

Property, plant and equipment

The $3.7m decrease in property, plant and equipment from prior year largely resulted from the Kwacha depreciation on conversion of asset balances.

Inventories

The 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.

Trade and other receivables

Trade and other receivables surged due to early exports to regional markets as well as foreign currency constraints in some of the countries the Group operates in.

Cash and cash equivalents

Cash resources at hand increased after receipt of additional capital following the partial unbundling of the Group from Seed Co Limited.

Equity

The increase in share capital was triggered by the capital injection into the Group through a private placement.

Bank borrowings

Group borrowings were put in place to fund increased seed production in the forthcoming production season.

Trade and other payables

The increase in trade and other payables arose from delayed receipt of stock from growers which were settled subsequent to the reporting date.

Research and development

  • Four (4) new maize seed hybrids for the South Africa market were approved for internal release.
  • The seed processing shed and water reservoir construction is in progress while road construction and fencing was completed at Potchefstroom Research Station in South Africa.
  • The soil sampling results at Chokwe in Mozambique confirmed the soil to be suitable for crop research.

Outlook

Earnings are forecast to grow driven by the improved seed supplies in Tanzania and Kenya. The partial return of the Farmers Input Support Programme (FISP) to tender in Zambia after the challenges encountered in the e-voucher programme introduced last year is also expected to boost the Group profit.

Dividend

No dividends are declared during the first six months as per Group policy.