Padenga acquires stake in US

HARARE - Padenga Holdings Limited (Padenga) has acquired a 50 percent stake in United States alligator business, Lone Star Africa Farms (LSAF), as the local company seeks to grow operations.

The other 50 percent in LSAF is equally divided between Redell Enterprise and an individual Jorge Hernandez.

Oliver Kamundimu, Padenga chief financial officer, told a full year results briefing for the period to June 30, 2012, the Texas-based business acquired for $1,6 million.

“We have already paid $600 000 which was secured through offshore loans and the other $1 million will be paid for through dividends,” he said.

“In terms of capital expenditure, we have put in $300 000 this year to bring capacity to produce 20 000 skins and if we are going to grow it to 40 000 skins we expect to put another $1 million,” added the finance director.

Chief executive Gary Sharp said the American business was being expanded by 100 percent to meet desired production.

“There are two houses and the other two are being constructed and expected to be finished within the next two weeks,” he said.

In the long run, LSFAF is expected to contribute as much as the crocodile business, Padenga added.

The acquisition comes as Padenga plans to increase volumes, both on its meat and skin business.

In the full year, Sharp said total revenue realised stood at $17,9 million, down from $19 million in 2011 to record an operating profit of $5,3 million and a profit before tax of $6,3 million against an operating profit of $6,3 million and a profit before tax of $4,9 million in 2011.

Cash generated from operations stood at $4,1 million, $800 000 of which was used as capital expenditure.
The board declared a dividend of 0,166 cents per share.

Sharp said a total of 43 000 crocodiles were culled with a first grade ratio of 84 percent against a budget of 42 000 and 88 percent respectively.

In 2011, Padenga produced 45 000 skins, 27 000 of which are still expected to be sold to the end user in the next six months.

As a result of decline in quality, Sharp said, customers tend to scrutinize the product even more, making it difficult to recover on ratings.

“We are going to be realistic and follow up on the end product,” he said.

Average skin size also fell from 39cm to 37,1cm on account of a late season stomach infection in the culling crop which was difficult to detect.

“We closed the year with a total of 116 723 animals on the ground comparable to 115 704 animals as at 30 June 2011,” added sharp.

Meat production in the period under review stood at 287 000kg compared to 280 000kg prior year.

Meat produced for European cuts was 85 000kg while Asian cuts stood at 26 000 kg.

Non-export meat stood at 125 000kg.

Total meat export sales slid to 142 800 compared to 180 000 in 2011 with the average yield per crocodile falling to 4,02kg compared to 6,1kg.

However the meat business faces competition from global players, Sharp said.

“Legislation allows export of live crocodiles to China and Vietnam for show farming and zoos, but traders are taking advantage of this to then slaughter them for meat.

‘‘They have an advantage because they then sell their meat with skin where sowers don’t when there is suspicion you could be sold dog or chicken meat.”

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