Oliver Kazunga, Senior Business Reporter
SUGAR producer Starafrica Corporation has bounced back to profitability after posting a profit before tax of $500 000 in the half year period ended 30 September, 2018.
In a statement yesterday accompanying the company’s financial results for the period under review, Starafrica, which is under judicial management, said sugar sales in terms of volumes increased by 18 percent from 30 328 tonnes in prior year to 35 697 tonnes.
The increase in volumes also resulted in turnover growth of 21 percent from $23,2 million in the same period last year to $27,9 million in the period under review.
“The group achieved a profit before tax of $0,5 million against a loss before tax of $1,3 million during the same period last year.
“The profit before tax, which is the first since the adoption of multi-currency economy in 2009, was achieved on the back of improved earnings before interest, tax, depreciation and amortisation and the reduction in interest payable on long-term loans after significant debt to equity conversions that took place close to the end of the previous financial year,” said the group.
As at September 30, 2018 Starafrica had converted $47,4 million, which represents 72 percent of the total principal debt to equity. In 2016, the troubled sugar processor’s shareholders approved a scheme of arrangement in which its $32 million debt owed to different financial institutions was taken over by the Zimbabwe Asset Management Company (Zamco). The asset management firm has as a result taken over a majority stake in Starafrica in pursuant of debt equity conversion.
In the financial report for the period under review, the company said it was also working on resolving a net current liability of $7 million, which is a decrease from $7,9 million as at March 31, 2018 through negotiations with statutory entities, whose debts were largely legacy, for extended settlement terms.
“The performance in the period under review shows the group’s graduation into full profitability, which is starting to gradually reverse the accumulated losses from prior periods,” it said. The financial performance and position as at September 30, 2018 indicates significant improvement of the group’s ability to continue as a going concern. It is hoped that improved performance of the company would further be consolidated among others, by continued implementation of the secondary scheme of arrangement, market expansion and product development.
In the outlook, Starafrica is hopeful that the recent market volatility that resulted in price hikes and limited inputs supply would be quickly resolved to enable it to focus on consolidating domestic volume recovery, improving plant efficiencies and expanding export base. —@okazunga