HARARE, July 28 (The Source) – StarAfrica Corporation’s loss for the year ended 31 March 2016 widened to $10,2 million compared to $7,2 million in prior year after incurring high financing costs and a poor performance by associates but says it sees a path out of the woods.
Chairman Joe Mutizwa said in a statement accompanying the group’s financials that the business is forecast to be profitable in the second half of the current year as the company has streamlined operations and rationalised costs.
That would represent a major reversal of StarAfrica’s fortunes after years of loss making while its auditors, Ernst & Young, queried its ongoing concern status and qualified its financial results for last year citing “material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern.”
Mutizwa said the group’s widening loss was mainly due to finance costs amounting to $5,5 million compared to $3,9 million in prior year and poor performances by Country Choice Foods and Blue Star Logistics.
It also incurred employee costs associated with disposal of non-core operations and retrenchments at the Gold Star Sugars Harare (GSSH) plant.
Revenue more than doubled to $18,7 million from $9,3 million in prior year, largely on increased sugar sales volumes.
StarAfrica, which is operating under a scheme of arrangement — a court-sanctioned reconstruction deal between shareholders and creditors –, sold off Blue Star Logistics Company in February this year and used proceeds to settle a PTA Bank loan. The company is also still in the hunt for a buyer for its 33.3 percent stake in Tongaat Hullet Botswana.
Mutizwa said throughput has improved significantly at the GSSH plant to 350 tonnes per day and is set to increase to 600 tonnes per day upon full commissioning in September this year.
The plant produced 22,615 tonnes of refined sugar compared to 4,616 tonnes produced in prior year. The company says production was influenced by low market demand as imports continue to find way into the country.
A total 22,597 tonnes of sugar was sold in the year compared to 5,357 tonnes in the prior year.
Country Choice Foods saw a 60 percent decline in profit at $305,000 compared to $506 000 last year. Bluestar Logistics posted a loss of $520,000 prior to disposal from a prior year profit of $200,000.