Ububele fo­cuses on sci­en­tific farm­ing

Finweek English Edition - - INVESTMENT -

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.

TAN­DI­S­IZWE MAHLUT­SHANA FIN­WEEK DEPUTY ED­I­TOR

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