Zimbabwe Stock Exchange-listed entity Padenga Holdings, says it is trying to leverage on the foreign currency it gets and invest in other businesses that will then multiply its current foreign currency earnings.
Speaking on the sidelines of the company’s annual general meeting this week, finance director Oliver Kamudimu, said the world’s leading supplier of premium quality crocodile skins, would, as previously communicated, invest in other foreign currency generating businesses.
Chief executive Gary Sharp said although the deal was close to fruition, it still had to go through some processes before being announced.
“We had expected to conclude all the statutory obligations consistent with this proposed acquisition by today (Wednesday) and would have gone public with an announcement on this.
“Regrettably, this is not the case and due process is still underway and I am, therefore, not in a position to advise any further on this matter at this time,” said Sharp.
Kamudimu said as much as the company was generating foreign currency, it was feeling the full impact of creeping local costs.
“When I sell currency at the bank, when my inflows come in, it’s at a rate of the interbank rate, but when I buy things locally, they are pricing at 8 (RTGS$8:US$1).
“That means I am picking up increases in US dollar costs,” he said.
“So you will probably go into trading and buy things that those in our line of business can also use. For example, when we buy stock-feeds we might decide to buy for others as well and sell at the right price,” he said.
Kamudimu said, the company which returns 80 percent of its generated forex, would prefer retaining 100 percent of the forex as “most of my suppliers now demand payment in forex, or at a rate which is higher than the interbank rate”.
“As long as I am not returning my full earnings, I would feel like, that’s a form of indirect tax,” he said.
In terms of the 30-day period, Kamudimu said the company was not comfortable.
“Our bankers have approached the Reserve Bank, to try and get our retention period extended, because we are seasonal exporters, we don’t export all year round.
“But we have costs every month that are US dollar denominated and we have import bills in all those months when we are feeding the crocodiles, but all the money that we would have brought in March would have been exhausted by April.”
He said this would force the company to hold more than necessary stock.
Meanwhile, Sharp indicated that the company has reduced capital expenditure in 2019 but continue to focus on the infrastructure that will improve skin quality, increase growth rates, enhance animal husbandry and improve production efficiencies.
1.2MW power plant on course
“Towards the end of 2018, 80 additional new pens were built. We commissioned the first 330kWp phase of the solar array last week at the northern farms which is now feeding into the national grid to offset the electricity the operation uses daily.
“An additional 470kWp solar array is complete and we are moving rapidly to commission that later this year. The final 400kWp array to complete the planned 1.2MW installation will commence shortly for completion by year end,” he said.
Sharp further noted that this not only achieves a reduction in energy overheads but reinforces the company’s commitment to sustainability through the application of alternative and renewable energy solutions.
Giving the market outlook, he stated that demand for defect free skins remains steady and prices are anticipated to hold as long as the quality expectations of the premium market are satisfied for both species that they produce.