LISTED seed producer Seed CO Ltd (Seed Co) after-tax loss increased by 6% in the half year to September owing to inventory write offs, exchange rate losses and rising finance charges, the company said.
Despite increased sales and a 32% turnover growth to US$24,8 million, the loss after tax increased from US$5,6 million to US$9,3 million due to inventory write offs, exchange rate losses of US$2 million, mainly in Zambia and Malawi and ballooning finance charges doubling to US$2 million, company secretary James Matorofa said in a statement attached to the company’s financial results.
“Finance charges increased due to discounting of Treasury Bills in Zimbabwe and delays in payments by governments of Zambia and Malawi, which led to extended borrowings,” reads part of the statement.
Going forward, Seed Co said there were mixed signals for the current financial year.
“While the weather forecasts are indicating above normal rainfall the situation on the ground is yet to reflect that. If good rains materialise as anticipated; seed demand and sales should increase especially in light of the food deficits across the region,” said the company.
The loss after tax of US$9,3 million recorded for the period, movements in translation reserve and the dividend payments reduced the shareholder’s funds to US$126 million compared to year end position of US$144 million.
Seed Co said dividend payments together with payments to growers and transporters for seed deliveries reduced the cash and cash equivalents to US$10 million compared to US$19,5 million as at year end.
The seed producer said stock levels went up due to deliveries of current year production by growers in preparation of the selling season in the second half of the year. Bank borrowings increased by US$16,6 million due to seasonal funding of seed deliveries.
“The extent of the borrowings was higher than usual due to the aforementioned delayed payments by the governments of Zambia and Malawi. The average cost of borrowing is 7% and some property, inventories and receivables were pledged as collateral,” Seed Co said. – (INDEPENDENT)
By Taurai Mangudhla