Starafrica ventures into honey production

HARARE – Sugar producer Starafricacorporation says it is planning to venture into honey production and export markets as a way of increasing revenue streams and preserving shareholder value.

The group’s chairperson, Joel Mutizwa, said bottling of honey has begun at Country Choice Foods and more products are lined up within the next six to 12 months to enhance the products portfolio.

“The existing portfolio will also be refreshed to revive the life cycles of some products which were almost stagnating. The capital and operating expenditure thrust is on enhancing the distribution of the products and the result has been improved product foot print the country in the half year under review,” he said.

The former Delta Corporation chief executive noted that Starafrica has also completed the registration processes for export of its products into Sadc and Comesa and should be able to resume exports in the fourth quarter of the financial year.

He further indicated that based on the performance of the half year and strong export prospects for the second half of the year, the sugar producer believe that current year target of 80 000 tonnes can be achieved.

“And the forecast growth over the next five years should see the annual sales volumes reach 137 000 tonnes by financial year 2022,” he said.

Starafrica, which is operating under a scheme of arrangement, saw its sugar sales increasing by 70 percent to 30 238 tonnes in the half year to September 2017 compared to 17 740 tonnes in the same period last year.

The increase in volumes also resulted in turnover increasing by 63 percent from $ 14,3 million in the same period last year to $23,2 million in the period under review.

The six-month period also saw the group improving on the positive earnings before interest tax, depreciation and amortisation (EBITDA) status which only began in prior year.

“The Ebitda for the period was a positive $1,9 million which is a significant improvement from the negative $0,3 million achieved in the same period last year. It is also worth noting that the current half year’s EBITDA is higher than the $1,6 million which was achieved for the full year and for the first time in the last financial year,” Mutizwa said.

“The significant improvement in Ebitda is, however, still insufficient to fully cover the finance costs arising almost entirely from legacy debts,” he added.

Consequently, the company ended with a loss before tax of $1,3 million which is 60 percent lower than a loss of $3,3 million incurred in prior year comparative period.

The interest for the period was $3,1 million which is slightly higher than $3 million for same period last year.

Starafrica is still working on the resolution of the negative equity position resulting from prior period losses and the state of the balance sheet.

By the end of September 2017 the company’s total liabilities exceeded total assets by $42,3 million and current liabilities exceed current assets by $9,1 million.

The increase in the net liability position is largely due to the effect of the finance costs which could not be entirely covered by Ebitda.

These conditions give rise to a material uncertainty which may cast significant doubt about the group’s ability to continue as a going concern and, therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.