starafricacorporation Limited (SACL.zw) 2021 Abridged Report
I take great pleasure in presenting the results for the year ended 31 March 2021. The results are a clear outcome of the progressive efforts the Group has made in strengthening its balance sheet and maintaining profitability despite the vagaries of the harsh operating environment. The broader business environment for the year under review was mainly shaped by the effects of the Covid-19 pandemic, particularly the national lockdowns which caused inevitable business disruptions for some parts of the year. Government’s introduction of the Foreign Currency Auction Trading System in June 2020 managed to restore currency stability in the second half of the year. Fuel and power supply improved during the period under review. The critical support given to the agricultural sector and the above normal rainfall have yielded a bumper crop for the 2020/2021 farming season, which reduces the import bill for grains and ensures that inflationary pressures on the consumer food basket are mitigated. This will also have a positive impact on disposable incomes. These interventions saw inflation closing the year under review at 240.6%, a significant decline from the peak of 837.53% recorded in July 2020.
The financial results of the Group have been inflation adjusted in compliance with the requirements of International Accounting Standard (IAS)29 and the historical numbers have been disclosed as supplementary information. Turnover increased by 23% to ZWL5.08 billion compared with ZWL4.12 billion realized in the prior year. The Group’s resilient efforts in clearing the Secondary Scheme of Arrangement debts resulted in 99.8% of the liabilities having been paid off by the end of the year under review. 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. The Group also incurred a monetary loss of ZWL163 million caused by depreciation of the value of the monetary assets it holds, which resulted in Profit After Tax of ZWL 109.7 million, compared with ZWL185.9 million achieved last year.
In historical terms, revenue increased by 542% to ZWL3.8 billion from ZWL597 million recorded in the prior year, while profit for the year increased by 651% to ZWL497 million from a prior year achievement of ZWL66.2 million.The Group’s net working capital position strengthened significantly by 78% to ZWL306.2 million up from ZWL172.2 million achieved last year.
Goldstar Sugars Harare (GSSH)
GSSH’s production was adversely affected by an increased plant breakdown profile, a 3-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 which resulted in a decrease in production of 9% from 65,568 to 59,571 tonnes of refined sugar produced in the current year. The business unit sold 60,386 tonnes against 63,993 tonnes sold last year. The 5.6% drop in sales volumes is largely attributable to interruptions to production due to Covid-19 related factors and plant downtime. Demand for our products remained strong with volumes constrained only by production challenges.
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. This will have a positive impact on plant availability which will improve productivity and profitability in the ensuing year. The plant continued to be certified by The Coca Cola Company (“TCCC”) as well as Food Safety System Certification under the FSSC 22000 series. Post-year end, GSSH was also given full authorization by TCCC for bottler ingredient supply to the whole of Africa. This will open new markets for GSSH and pave the way for sugar specialty products to be exported into the region and beyond.
Country Choice Foods (CCF)
The CCF range of products expanded in the current year as the unit continues growing with its thrust to maximize on production of sugar specialties and other sugar related products in synergy with production from Gold Star Sugars. Sales volumes increased by 19%. This is indicative of the success of efforts CCF is making in increasing its market share.
This business recorded a 54% increase in turnover, from ZWL13.4 million recorded in prior year to ZWL20.7 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.
Tongaat Hulett Botswana (THB)
THB continued to grow and dominate the Botswana market with the associate posting a profit after tax of ZWL208.6 million of which the Group’s share was ZWL69.5 million after converting the earnings into Zimbabwean Dollars at the official exchange rate as at 31 March 2021. The profit after tax in the associate grew 77% from prior year in Zimbabwe dollar terms largely as a result of the depreciation of the local currency against the Pula.
SECONDARY SCHEME OF ARRANGEMENT
The Secondary Scheme of Arrangement, whose tenure expires in February 2022, remains in place with 99.8% of creditors having been settled leaving an amount of only ZWL1.3 million in liabilities under the Scheme as at the end of year under review with ZWL654,451 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.
BOARD OF DIRECTORS
Mrs. E. Machaka Madziva resigned from the post of Finance Director with effect from 31 December 2020 and the Board wishes her success in her new endeavors. Mr. C. Matorera was appointed to the Board with effect from 29 June 2021. His confirmation as a director will be put to the next Annual General Meeting. The Board extends a warm welcome to Mr. Matorera and wishes him a fruitful tenure on the Board.
After taking due cognizance of the nee