We have extracted below the Chairman’s Statement from the 2019 abridged report of starafricacorporation Limited (SACL.zw), listed on the Zimbabwe Stock Exchange:
I am pleased to present the results for the year ended 31 March 2019 in which the Group has transitioned into full profitability for the first time since the adoption of multi currencies in 2009. The results are presented in Real Time Gross Settlement Dollars which became the Group’s functional currency in February 2019 in line with the Government of Zimbabwe’s policy announcements and related legislation.
Despite the challenges arising from foreign currency shortages and unrelenting cost pressures, the year under review saw the consolidation of the company’s journey towards a return to viability. There were foreign currency shortages which constrained the ability of the Group to make key imports on time together with costs pressure from locally sourced materials especially those with imported components. There was also marked increase in inflation starting from October 2018 which also created heightened pressure for salary and wage adjustments from employees. On the positive side the Government announced further plans for sugar cane farming developments around Tugwi-Mukosi Dam in the Masvingo Province which will assist in the availability of sugar for both local and export requirements for the country.
The Group achieved a 51% increase in turnover which amounted to RTGS$ 72.7 million compared with RTGS$ 48.1 million recorded in prior year. The Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) went up three-fold to RTGS$ 12.4 million in comparison with RTGS$ 3.1 million that was achieved last year. The profitable performance was on the back of continued improvements in both quality and quantity of products, cost management strategies and the continued positive impact of the relief that came from the Secondary Scheme of Arrangement. As a result, the Group achieved its first Profit after Tax (PAT) of $ RTGS$ 8.8 million, marking a significant milestone for the company.
Goldstar Sugars Harare (GSSH)
GSSH produced 72 252 tonnes of refined sugar compared with 63 182 tonnes produced in prior year and sold 71 683 tonnes against 62 889 tonnes sold in the comparative period. The increases in production and sales volumes were both 14% above prior year. The growth was against a background of challenges with imported raw materials procurement. The plant was recertified by The Coca Cola Company (“TCCC”) as well as Food Safety certification under the FSSC 22000 series. The certifications enable the Group to supply products to TCCC franchisees within and beyond the Southern Africa region.
Country Choice Foods (CCF)
CCF achieved an EBITDA of RTGS$ 3.5 million for the year under review against RTGS$ 0.5 million in prior year. The increase in EBITDA came from an increase in actual sales volumes, change in product mix and consistent margins on core products.
Tongaat Hulett Botswana
The associate company’s performance surpassed prior year levels as it achieved a profit after tax of RTGS$ 3.9 million of which the Group’s share was RTGS$ 1.3 million against RTGS$ 2.5 million and a share of RTGS$ 0.8 million achieved last year.
The business unit recorded an increase in EBITDA from RTGS$ 0.1 million in prior year to RTGS$ 1.1 million due to better rental yields complemented by marginal increases in occupancies in the year. There were also less repairs and maintenance costs incurred in the current year under review when compared with prior year.
SCHEME OF ARRANGEMENT
The Scheme of arrangement, whose tenure expires in 2022, remains in place with 72% of creditors with conversion option having exercised their rights. The Group is servicing its interest obligations and continues to engage the remaining Scheme creditors to exercise their right in light of the Group’s return to profitability.
In light of the Group’s existing Scheme related obligations and other operational requirements, the Board has deemed it fit not to declare a dividend for the year ended 31 March 2019.
The Group believes that the policies being implemented by Government, though resulting in initial pressures, will eventually lead to a better trading environment. Export prospects that arose from business scouting that took place in the year in the region and in Central Africa will be followed through and the Group is confident of at least doubling the export tonnage achieved in the year. We are pleased with the healthy demand for our products and are confident that the existing production capacity which is being gradually buttressed through phased refurbishments will be able to meet forecast local and export demand.
The Group is working on several strategies for sustainable growth and profitability into the future, hinged on exports and increasing market share in the household direct consumption space.
I wish to thank the Group’s various stakeholders, my fellow board members, management and staff for their contribution to the Group’s return to profitability and look forward to the same support into the promising future ahead.