Seed Co Limited (Zimbabwe) releases its 2023 Annual Report

Seed Co Limited (SEED.zw) 2023 Annual Report

Chairman’s Letter

Dear Stakeholders

It is my honour to present the Seed Co Limited Annual Report for the financial year ended 31 March 2023 (FY23). The last financial year (FY23) was challenging on several fronts in the country, but the business showed resilience. As you are aware, the Zimbabwean economy continued to experience a myriad of challenges. This was further exacerbated by external pressures mainly because of the war in Ukraine constraining supply chains and continuing to stoke global inflation and rising interest rates.

Operating Environment

Continuing from prior year, the period under review was a difficult operating environment in Zimbabwe characterised by inflationary pressures, scarcity of critical inputs, high prices, unstable exchange rates, liquidity challenges, policy inconsistencies and uneconomic interest rates. The fiscal and monetary policy measures aimed at managing inflation and exchange rates had unintended effects of stifling critical funding for business operations. The regional economies also faced a combination of challenges including climate change effects of drought in East Africa and flooding in some parts of Southern Africa, security issues in East and West Africa and crumbling local currencies in almost all regional markets.

Against these challenges, the business registered volume, turnover and profitability growth leveraging its strong brand, and strong intimacy with farmers and key stakeholders.

Financial Performance

The business posted an inflation-adjusted turnover of ZWL$49.3BN which is 56% above the restated prior year ZWL$31.5BN with the growth driven by an uptick in volumes of 14% due to better rains and better season preparedness. Inflation adjusted PBT increased to ZWL$25.1BN from ZWL$1.9BN because of better value preservation from increased local and export hard currency denominated sales as well as pricing and invoicing indexed to the moving local currency official exchange rate against the USD.

Production and Quality

Product availability was more than adequate for the season helped by seed carried over from prior year which experienced lower sales than anticipated due to pricing challenges and late rains. The quality of our products continues to improve benefiting from the investment in best industry quality laboratories as well as the recently commissioned artificial seed conditioner at Stapleford.

Research and Development

Our Research and Development (R&D) function continues to showcase pragmatic thought leadership and industry influence by introducing a range of climate-smart seed varieties. The breeding thrust for the business is designed to stay abreast of the ever-shifting dynamics of climate change as well as emerging pests and diseases. This has helped the business to remain on top of addressing seed solutions needs of our farmers under a proactively managed product life cycle plan. In addition, we continue to respond to the call by farmers for new crop species, like rice, potato, hybrid sorghum and vegetable seeds, and at the same time diversifying our revenue streams across multiple crop species.

We understand the critical role of R&D in our science-based business and this function continues to receive priority budget allocation to continue being a market leader in terms of superior performing and profitable seed solutions for our farmers.

Business Development

Our Business Development function is always on the lookout for related growth and crop specie diversification opportunities on the local market. We also continue to benefit from the growth of our regional associate, Seed Co International, both as a captive export market and a growing investment in the region with new growth frontiers being established in East, Central, and West Africa.

We rely on data driven market analysis and insights to understand the needs of farmers and all our stakeholders to effectively address the identified gaps and opportunities.

Prospects

Global supply shocks and imported inflation remain elevated and a challenge to business regionally; while in Zimbabwe we pray for post-elections stability and an environment conducive for formal economic activities to thrive. To mitigate adverse effects of economic challenges, we trust the Government and development partners will continue to prioritise primary food production, and the business is prepared and ready to play its role in the quest to achieve food self-sufficiency.

While early weather forecasts for the upcoming season are not favourable, the business has a good mix of sub-normal and/or drought tolerant seed varieties to supply the market.

Responsible and sustainable business

We reiterate Seed Co’s commitment to sustainable ethical business practices, the protection of the environment, and economic development while improving the livelihoods of all its stakeholders, including but not limited to employees, farmers, consumers, and communities. To this end, the DNA of our seed-to-feed business is to innovate and make available climate-smart high-yielding seed solutions, agronomic support, and training for the efficient utilisation of arable land and other farming inputs to sustainably make both small and large-scale farming profitable enterprises that feed both people and livestock with catalytic effects on critical economic value chains.

During the year under review, our business continued to contribute positively to the following socio-economic activities:

• Improved food security;
• Enhanced agricultural productivity;
• Empowering the contracted growers of our seed;
• Knowledge sharing and capacity building;
• Employment generation and empowerment of local communities; and
• Fiscal revenue generation by being a responsible and compliant corporate citizen in all our markets.

Human Capital

The Company holds a profound appreciation for its workforce, recognizing their pivotal role and placing utmost importance on their contributions. Our comprehensive array of retention strategies is strategically deployed across all operational spheres. We have diligently instituted a range of incentives, including educational advancement opportunities, and have adeptly implemented various supportive measures to cushion our staff from the socio-economic challenges.

Appreciations

Seed Co’s core mission has consistently revolved around generating value for our esteemed stakeholders who include our customers, staff, and shareholders. We have ardently endeavoured to embody the values that have earned us our reputation as The African Seed Company. I wish to acknowledge that these accomplishments would not have materialized without the remarkable efforts exerted by our dedicated Board, seamlessly bolstered by the unwavering commitment of our employees, our farmer customers, and our committed shareholders. Equally significant are the numerous African governments and development partners across the globe with whom we collaborate, collectively contributing to the realization of enhanced primary food production and upliftment of livelihoods.

Colleagues and stakeholders please be advised that my time as your chairman is coming to an end as I am preparing to retire during the upcoming AGM. This marks the culmination of a profoundly rewarding chapter. The past year has been a meaningful farewell, allowing me to reflect on the journey I have undertaken alongside Seed Co. Looking back, I am reminded of the challenges, invigorating experiences, and profound fulfilment that have accompanied each step.

Guiding and collaborating with the remarkable team at Seed Co, a team I believe is unparalleled in the seed sector, has been a distinct privilege. The path I have walked has been humbling, as my roles first as a Non-Executive Director and later as Non-Executive Chairman have enabled me to contribute in ways I hope have significantly impacted the Group’s expansion and advancement throughout Africa.

My admiration for my fellow Board members knows no bounds, as their exceptional partnership has been a cornerstone of this journey. As I prepare to depart, my sincere hope is that the Group continues to uphold and embody our fundamental principle – “The African Seed Company.” With this guiding principle, the Group is poised to continue on its strategic mission that aims to fortify and expand its presence, catering to the needs of every farmer across the African continent.

D.E.B. Long
Chairman