Starafrica narrows losses

HARARE - Hard pressed Starafrica Corporation (Starafrica) narrowed its losses to $11,9 million in the year ended March 2014 from $16,1m incurred in prior comparable period.

The group’s loss before tax from continuing operations went down to $11,7m during the period, down from $13,5m.

Revenue from continuing operations declined to $9,3m from $24m while net finance costs decreased to $4,8m from $5,3m.

The group’s chairman, Joe Mutizwa, said discontinued operations made a loss before tax amounting to $255 896, compared to $358 177 incurred prior year.

“…net loss for the period under review was $12,2m versus $16,4m recorded prior year comparative,” he said.

As at March 31, 2014, total liabilities exceeded total assets by $23,2m and current liabilities exceed current assets by $32,3m (2013: $22,2m).

Production at the company’s Goldstar Sugars Harare (GSSH) was 4 616 tonnes, a 72 percent decrease of  on prior year.

“Production was adversely affected by an eight-month plant shutdown due to the implementation of the plant upgrade.

“Sales volumes were adversely impacted by low production volumes, consequent upon the eight- month plant shutdown.

“The inflow of lower priced imported sugar on the domestic market compounded the situation,” Mutizwa said.

The upgraded plant will increase production capacity from 300 tonnes per day to 600 tonnes per day.

“This will also result in improved sugar yield, quality and operational efficiencies, in addition to bringing the latest sugar refining technology and world standards at GSSH.

“As a result, GSSH will be able to consistently satisfy refined sugar requirements for all domestic market segments and have a surplus to export,” said Mutizwa.

The Bulawayo plant, Goldstar Sugars Bulawayo (GSSB) remained under care and maintenance during the year under review.

Government recently imposed a new duty structure with regards to imported sugar, and Star Africa expects this move to help the company competitively.

Country Choice Foods, another Star Africa subsidiary recorded an operating profit of $330 286 for the year ended March 31, 2014.

Volumes were negatively impacted by lower priced imports and substitutes.

Group borrowings exceed the limits set, $37m of this excess, $31m was ratified by the group’s directors.

“This excess was mainly attributable to finance charges on group borrowings,” Mutizwa said.

Going forward, the group anticipates a positive performance on account of the upgraded plant at GSSH, on-going cost reduction measures and a stable domestic market for sugar.

The group did not declare a dividend for the period.

Last year, Starafrica shareholders approved a scheme of arrangement entailing a cocktail of measures meant to turn around the group’s fortunes.

The scheme provided that lenders and creditors would not be paid for months to allow the company to work on a payment plan.

The six-month moratorium was anticipated to allow the group to sell some of its assets to partially settle liabilities immediately thereafter while the balance would be staggered over 32 months, depending on the nature of liability.

The company was facing a bleak future, with some creditors taking legal action.

The scheme is also expected to see the company upgrading its Harare sugar refinery.

Starafrica’s major shareholders include the National Social Security Authority (18 percent), ZSR Investments UK (14 percent) and Old Mutual (10,7 percent).

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