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Seedco 1H17 Earnings Update

​Write offs impact gross margin: Seedco’s results for the six months ended 30 September 2016 showed a further improvement in revenue on the back of early maize seed sales and improved vegetable sales as the partnership with Limagrain continues to pay off, albeit this being the Company’s weaker half. Revenue was up 32.0% to $24.81mn from $18.79mn in 1H16 driven by a 26% increase in maize volumes despite winter cereals falling 25%. Gross margins were down from 44.1% in 1H16 to 39.6% in 1H17 on the back of seed that was written down worth $782k as well as a disposal of chemicals amounting to $546k that came with the purchase of Prime Seeds. Operating expenses remained relatively flat at $15.71mn despite an increase in volumes sold. ‘Other expenses’ came in at $$1.67mn for the period in contrast to ‘other income’ recorded in the prior comparable period of $2.48mn, this was as a result of exchange losses incurred mainly in the Zambia and Malawi markets. A negative EBITDA of $7.56mn was therefore recorded in 1H17 vs. a negative EBITDA of $4.91mn reported in 1H16. Finance costs were up 90.2% h/h due to a sale of treasury bills amounting to $7mn at discount rates between 7% and 9% as well as the late payment of the Zambian and Malawian governments which led to the Company having to take out more loans to cover operations. This resulted in a net loss of $9.29mn, down from a net loss of $5.57mn in the prior comparable period.