The operating environment remained challenging for the formal sector, characterized by liquidity constraints, high interest rates, exchange rate distortions and pricing dynamics. The El Nino- induced drought adversely impacted the economy, curtailing power generation and increasing food imports. The Group, however, held significant carryover stocks from the prior financial year, which helped mitigate regional supply-demand deficit, resulting in a 332% uplift in export volumes y/y. Despite drought-related water shortages, power outages and high input prices, wheat volumes were 9% ahead of the comparative prior year period. Maize volumes were 112% higher than the prior year, bolstered by regional exports. Consequently, total volumes were 24% ahead of the prior year at 10,625MT [1H24: 8.572MT]. At least 80% of Seed Co’s business was denominated in US$ and the Group changed its functional and reporting currency to US$ effective 01 April, 2024. Group revenue grew 73% from US$10.92mn in 1H24 to US$18.91mn in the period under review driven by winter cereals and exports. Approximately 50% of sales were government related, whilst 31% were on the open market and 19% were exports. Operating costs crystallised due to increased US$ usage and saw 145% growth y/y to US$9.47mn. Other income was 92% lower than the prior year as US$ trading significantly reduced foreign exchange gains. EBITDA margin also normalized to 25.3% from 454% due to trading in US$. Therefore, EBITDA closed the period 91% lower than the prior year at US$4.79mn. Lower interest rates and reduced local loans resulted in a 33% reduction in Seed Co’s finance costs. The Group closed the period with a PAT of US$1.21mn, down 2,176% from US$15.97mn in 1H24. The business remained reliant on borrowings to manage cash flows owing to delayed settlement of government-related receivables, bringing total borrowings at the end of the period to US$29.61mn against cash balances of US$3.19mn and reflecting a high debt burden on the Group. The Board did not declare an interim dividend as the first half of the year is typically a cost accumulative period for the Group.
