Seed producers, Seed Co, recorded a 41% increase in net earnings for the year ended March 31, 2017 to $20,7 million on the back of increased revenue emanating from a strong demand for maize seed.
BY BUSINESS REPORTER
The demand for maize seed was up in the financial year after government embarked on command agriculture to boost output of maize.
Revenue was up 40% to $135m from $96m in the comparable period last year as a good rainy season spurred an increase in the demand for maize seed.
Finance charges increased to $4,1 million from $1,9 million in 2016 due to the discounting of Treasury Bills for cash in Zimbabwe and timing delays in payments by some regional government, which led to extended borrowings.
As at the end of the financial year, Seed Co was owed $20 million.
Overheads were 22% up due to impairments of some receivable relating to the cotton seed business and increased distribution and marketing costs.
“As we increase footprint in the development of the market, we also increased higher distribution costs,” John Matorofa, the group’s finance director said.
Group chief executive officer, Morgan Nzwere, said the company would increase investing in research and would want it to account for 10% of total revenue.In the outlook, Nzwere said Zimbabwe will be a good market due to the command agriculture. He said the group was expecting growth in Zambia and would increase its presence in Tanzania.
Nzwere was bullish about the outlook saying demand for the seed would be spurred by command agriculture.
“This year, the volumes have been up. Going forward there is going to be demand for seed. It”s going to be another year where we might run out of seed,” he said.
“In the past four to five years, we barely went above 1 000 tonnes in wheat seed. This year the command programme asked for 6 000 tonnes. When we are planning for production for next year, we will not chase the target, but looking at increased volumes.”
The group paid a dividend of 2,92 cents per share for the financial year. It will also give shareholders a special dividend of 1,46 cents per share due to exceptional performance in the financial year.
“We have enough cash as far as the business is concerned and have said let’s give the excess cash to shareholders. We are saying let’s give part of the money rather than say what do we do with the cash,” Nzwere said.