SeedCo chief executive officer, Morgan Nzwere

SEEDCO’S income from Treasury Bills (TBs) significantly added to the company’s profit for the year ended March 2018.    
Last week, the company reported a five percent increase in profit for the year ended March 31, 2018, recording $21,4 million, up from $20,4 million in the previous period.
The company attributed the positive performance to the strength of continuing operations that it says was driven by heightened product demand, a reduction in finance costs and improved performance of the associate cotton seed business.
Income from TBs was a major influence in reducing finance costs.
SeedCo chief finance officer John Matorofa told analysts last week that besides the income from TBs, the company’s net finance income more than doubled as a result of its strong cash position at the start of the period.
“The net finance income more than doubled due to the strong cash position that we had at the beginning of the year that delayed the accessing of facilities, and also the income that we get from Treasury Bills,” Matorofa said.
SeedCo’s finance income for the period amounted to $1,44 million, up from $988 914 in 2017. Finance costs came in at $131 850, a significant decrease from $463 959 in 2017.
Matorofa said most of the company’s TB holdings of more than $50 million will mature this year, with $12,26 million worth maturing between 2019 and 2020.
He said government use the bills to pay for seed sourced from the company for its input programme, adding that the company was confident it would honour its debts.
“A significant item on the balance sheet is TB, of these, $12,26 million worth are maturing in the 2019-20 financial year and the balance of almost $40 million is maturing this year. We are confident that these will be honoured.
“During the year, the TBs were used to settle sales to the government input programme,” Matorofa said.
Over the past few years, Zimbabwe has struggled with a budget deficit which has been worsened by government’s fiscal imprudence. Government has resorted to private sector lending to finance the fiscal gap and TBs have been its main instrument.
The issuance of TBs and bonds increased from $3,2 billion in 2016 to $5,2 billion at the end of 2017. The increase of around $2 billion largely arose from securities issued for government projects which included the financing of grain producers as well as financing agriculture.
SeedCo’s revenues retreated by five percent compared to the prior year largely due to product shortages.
The group’s  overall gross margins remained unchanged compared to the prior year and the company says this was largely due to an increase in volumes of low margin winter cereals and soya beans despite production efficiencies and price adjustments necessitated by the prevailing inflationary pressures and farmer adoption of vegetable hybrids.
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