Star Africa records US$16,3m loss

year.
In a statement accompanying the financial results Starafricacorporation chairman Mr Passmore Matupire attributed the loss to the restructuring process currently going on that has led to the closure of some operations.
“The group posted losses for the year of US$6,6 million and US$9,8 million from continuing and discontinuing operations, respectively.
“A process of restructuring the entire business commenced during the course of the period under review resulting in some of Red Star Holdings operations, together with Goldstar Bulawayo and West Bev (Pvt) Ltd closing down hence the consequent decline in activity,” he said.
Star Africa is currently in the process of eliminating all loss-making operations through disposal of property and streamlining activities.
“A process of eliminating all the loss making operations and bringing debt to sustainable levels which involves disposals of property, plant and Red Star operations is underway, following which the group will be streamlined and focused on adequately funded core activities of sugar refining, packaging and logistics,” he said.
The group’s turnover for the period was US$84 million, consisting of US$57 million from continuing operations and US$27 million from discontinued operations.
Compared to the previous year, turnover declined by 20 percent principally due to a deceleration of activity in the retail business during the second half of the year.
Mr Matupire attributed the turnover performance to contributions by the group’s segments including food, wholesale and retail, industrial and property.
The food business contributed 60 percent to the turnover and 47 percent to the operating loss.
A significant portion of this loss was generated by Goldstar Bulawayo hence the decision to be put on care and maintenance. Wholesale and retail business failed to raise funding for working capital and consequently had to scale down activity from 34 branches to 10 branches by year-end with very low stock levels.
The packaging business achieved volumes of 1 586 tonnes, an increase of 43 percent over the prior year.
Capacity utilisation also increased from 25 percent to 40 percent but due to the background of high start-up costs Highfield Bag incurred a loss of US$1,4 million.
The property business achieved a turnover of US$861 000 and an operating profit of US$378 000.
During the year the group decided to extract value from the portfolio, which is currently valued at US$427 million by selling some of the properties and apply proceeds towards debt reduction. Properties sold to date have raised US$7,4 million.
Meanwhile, Star Africa shareholder equity declined to US$1,8 million during the period under review leading to a decision to dispose non-viable businesses and non-core properties.
This resulted in US$18,5 million worth of assets being classified as held for sale and once sold the proceeds will be applied towards the core business of sugar refining.
The board said that due to the group’s performance they have decided not to declare a dividend.
Despite the constraints the group encountered it has made significant strides in returning to sustainable profitability, it has crafted a credible debt reduction and core-business revival strategy that will provide a strong balance sheet by year-end and address any going concern issues.