Struggling sugar refiner Starafrica Corporation’s losses for the six months to September slowed to $3,154 million from $5,237 million in the same period last year despite revenue falling by nearly 60 percent, although it expects to perform better in 2015 because of cost reduction measures and a stable domestic market for sugar.
Revenue for the period fell to $2,8 million from $ 6,941million last year while the group’s loss before tax from continuing operations fell to $3,7 million from $4,1 million, the company said on Monday. In the full year to March 31 this year, its losses stood at $12,2 million, down from $16,4 million the previous year.
Discontinued operations – Bluestar Logistics – reported a profit before tax of $571,000 compared with a loss of $1,1 million last year. However, the group has failed to find a buyer for the company citing liquidity challenges in the market.
It has also failed to sell-off its 33 percent shareholding in Tongaat Hulett Botswana. The two assets were put on the market to raise funds to partly settle creditors under a scheme of arrangement sanctioned by the High Court in February last year.
However, a starafricacorporation official told The Source on November 5 that it was unlikely to dispose of its Botswana associate as the company was increasingly confident that it could settle its obligations after increasing capacity at its plant by 50 percent, enabling it to generate revenue to repay the debts.
“I think they are at a stage where it does not make sense to sell Tongaat Hullet because as it stands, it is a core asset. It is a profitable company with very good earnings. The dividends which they receive twice a year can be used as working capital because the local market is dry, which is a plus,” the official said then.
As at September 30, the group’s current liabilities exceeded current assets by $36,6 million compared to $8,2 million last year.
Additionally, it exceeded the borrowing powers as stipulated in the Memorandum and Articles of Association by $39,8 million, although $37 million of this was ratified at the company’s Annual General Meeting held on September 29.
This excess was mainly attributable to finance charges on group borrowings.
Finance costs for the half-year period under review were at $2,2 million compared with $2,8 million in prior year.
Chairman Joe Mutizwa said the company remains confident that the next financial year will see a positive performance after commissioning its new plant in the new year.
” The ongoing plant commissioning exercise has already resulted in the plant producing good quality sugar that meets the specifications of all our customers. The cost reduction measures being undertaken and a stable domestic market for sugar will result in the company operating viably,” said Mutizwa in the statement accompanying the financials.