Ububele focuses on scientific farming
Meaning‘ generosity’ in Xhosa, t oday Ububele looks like a new and fresh company compared to what it was when it was formed some 11 years ago. Ububele listed on the junior bourse, the Altx Exchange, in 2009, with only two business units, food and agriculture, after it had already divested from airline catering, property and security.
It is, however, in the process of invigorating its airline catering division at the Hosea Kutako International Airport in Windhoek, Namibia. It is investing some R6.8m in kitchen facilities on the site. Its company in this space, Flamingo InFlight Catering, signed a 15-year lease in 2012 with Namibia Airports Company, with the option to renew for another five years.
In 2012, Ububele divested from the high-risk, low-margin food processing division to focus its efforts on its agricultural offerings, which make up about 80% of the business. This led to it growing its profitability by a staggering 120% and increasing its cash generation from operations to R39m from R13m. To the year ended 30 June 2013, Ububele grew revenue by 9% with gross profit showing a meagre 2%. This was, in part, due to a lack of rain, hot and dry conditions in the North West and Free State provinces, which resulted in losses and reduced spending by farmers.
Ububele f urther brought i n more income in a form of profit through the sale of Unique Dairy Products ( UDP) for R1.2m. UDP was sold with the Just Fruit & Veg brands, excluding the Just Fresh brand, however. The cash consideration for the transaction was R22 870 682. Since 31 March, Ububele has been receiving R6.6m as part of the sale pay- ment instalment terms. The last payment will be on 28 February 2014. Ububele alludes to lack of return on investment as grounds for disposing of this asset.
Ububele’s strategic direction going forward is providing innovative technological and scientific infrastructure to the farming sector, designed to monitor and analyse weather patterns, providing accurate and current data. The company is now in the process of building 100 weather and climate analysis stations across the country over the next three years.
As part of its investment and focus on water management, Ububele has acquired a 51% controlling stake i n Turf-Ag Products, which imports and distributes agricultural and irrigation equipment. Turf-Ag also holds distribution rights to internationally recognised American irrigation brand, Hunter.
Ububele is now looking to grow its agriculture business as well as the chemical and biological offerings through, among others, new distribution capabilities with multinational companies. The company has also now been beefed up with more scientists being hired as a means to offer robust scientific farming products and services.