Listed sugar processor starafrica corporation, has cleared all foreign obligations to the tune of US$19,7 million, a development that will allow the group to focus on capital expenditure projects.
The US$19,7 million debts almost brought the company to its knees after an earlier scheme of arrangement failed to yield the anticipated results.
However, a secondary scheme of arrangement, which came into force in 2013, has brought the much needed relief with the company meeting all its foreign obligations.
The group is now working on clearing what is left of its Zimbabwe dollar liabilities.
Said chairman Joe Mutizwa in its FY21 report:
“The Secondary Scheme of Arrangement, whose tenure expires in February 2022, remains in place with 99,8 percent of creditors having been settled leaving an amount of only $1,3 million in liabilities under the Scheme as at the end of year under review with $654 451 of this balance having been settled immediately after year end.
“The group continues with efforts to trace the whereabouts of the few remaining local Scheme creditors with a view to clearing the small amounts still outstanding within the time frame of the Scheme.
“All outstanding foreign liabilities have now been settled.”
In the year under review, revenue showed an upward trajectory, but profitability was dragged by inflationary pressures.
In inflation-adjusted terms, Starafrica’s turnover increased by 23 percent to $5,08 billion compared with $4,12 billion realised in the prior year.
“A downward adjustment in the fair value on investment properties caused by loss in value of properties in the market in real terms impacted negatively on profitability,” said the chairman.
“The group also incurred a monetary loss of $163 million caused by depreciation of the value of the monetary assets it holds, which resulted in profit after tax of $109,7 million, compared with $185,9 million achieved last year.”
In historical terms, revenue increased by 542 percent to $3,8 billion from $597 million recorded in the prior year, while profit for the year increased by 651 percent to $497 million from a prior year achievement of $66,2 million.
Starafrica’s net working capital position strengthened significantly by 78 percent to $306,2 million up from $172,2 million achieved last year.
With regards to operations, the group’s linchpin subsidiary – Goldstar Sugars Harare (GSSH) — experienced significant downtime, which affected output during the period under review.
Management reported that production at the GSSH was adversely affected by an increased plant breakdown profile, a three-week total shutdown in operations caused by a Covid-19 incident at the Harare Refinery between July and August 2020 and a fire that razed down the raw sugar warehouse.
These events resulted in a decrease in production of 9 percent from 65,568 to 59,571 tonnes of refined sugar produced in the current year.
GSSH sold 60,386 tonnes against 63,993 tonnes sold last year, a 5,6 percent drop in sales volumes, which the group attributed to the interruptions.
The group, however, maintained that demand for its products remained strong “with volumes constrained only by production challenges.”
With the company almost fully clearing its obligations, the focus is now on capital expenditure.
“A comprehensive capital investment strategy and equipment maintenance plan are now in place and will be implemented at an accelerated pace now that the business has returned to viability,” said Mutizwa.
“This will have a positive impact on plant availability which will improve productivity and profitability in the ensuing year.”
The Country Choice Foods (CCF) operation expanded its products range during FY21 “as the unit continues growing with its thrust to maximise on production of sugar specialties and other sugar related products in synergy with production from Gold Star Sugars.”
The unit’s sales volumes increased by 19 percent, which management said is indicative of the success of efforts CCF is making in increasing its market share.
Starafrica’s properties business recorded a 54 percent increase in turnover, from $13,4 million recorded in prior year to $20,7 million.
“The increase was due to improved occupancy levels and higher negotiated rental amounts per month charged despite the impact of the Covid-19 pandemic which had an adverse impact on tenants’ ability to make rental payments timely,” said Mutizwa.
Management also reported that Tongaat Hulett Botswana (THB) remains on a growth trajectory.
The associate posted a profit after tax of $208,6 million of which the group’s share was $69,5 million after converting the earnings into Zimbabwean dollars at the official exchange rate as at March 31, 2021.
The profit after tax in the associate grew 77 percent from prior year in Zimbabwe dollar terms largely as a result of the depreciation of the local currency against the Pula, said the group.
The board did not declare a dividend for the year just ended.