SEED CO LIMITED confirmed that the action not to declare a dividend from its Zimbabwean-based operations was motivated by the need to retain funds and reinvest in the business in a liquidity-constrained market.
Last year, the Zimbabwean business, like any other business in Zimbabwe, struggled to raise working capital in the face of slow economic growth in a forex-induced local currency inflationary environment.
The Group declared a dividend out of the international business based in Botswana. Morgan Nzwere, the Group CEO, clarified the position at last week’s Annual General Meeting, saying it is not disadvantaging Zimbabwean resident shareholders in favour of foreign shareholders.
“The decision not to declare a dividend out of the Zimbabwean operations was informed by the need to preserve cash and reinvest in the business after it faced serious funding constraints in its financial year. It was purely a business decision not predicated on the domicile of its shareholders,” Nzwere said.
Seed Co recorded a 23 per cent volume increase from winter cereals in the first four months of the company’s fiscal year to July, while the regional business recorded a 99 per cent wheat volume increase from the Zambian business.
Due to currency distortions, Zimbabwe’s vegetable seed turnover remained stable in absolute terms but higher nominal terms due to the distortions to the US dollar.
“In terms of working capital, in Zimbabwe, we have collected 96 per cent of our year-end closing receivables and expect to collect the rest before the end of September 2021,” he said.
“In the region, out of US$41m in trade receivables at year-end, US$22m (54 per cent) has been collected to date.”
This week, the company is officially launching the Zimbabwe Artificial Drier Project and has projected a positive outlook on early rainfall.
“The main strategic objective is to continue consolidating the growth trajectory leveraging the strong pan African brand equity, skills and distribution channels in both existing and new markets whilst mitigating Covid-19 headwinds,” added Nzwere.
“The business is well-positioned to defend the growth registered last season anchored on early rainfall forecasts -increased likelihood of a weak La Niña is expected to be favourable for above-normal rainfall in Southern Africa’s FY21/22 season.
“Continued government and development partner interventions to ensure food security amidst the Pandemic and the Government and Private Sector Inputs Program expected to continue at same levels as prior year as Zimbabwe consolidates its return to maize self-sufficiency and also promotes soybean and wheat import substitution.”
