Group Unaudited Financial Results For The Year Ended 31 March 2014
3. Discontinued Operations			
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starafricacorporation limited FY 2014 financial results


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Starafrica Corporation Ltd listed on the Zimbabwe Stock Exchange has released its Full Year Results. Check out
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starafricacorporation limited FY 2014 financial results

  1. 1. Group Unaudited Financial Results For The Year Ended 31 March 2014 3. Discontinued Operations Arthur Gardens Engineering, Bluestar logistics and Grant Chemicals were classified as discontinued operations during the year ended 31 March 2013. The Board of Directors also resolved to dispose of the retail and packaging business units which are not core to the operations of the group.With the exception of Bluestar logistics, these business units were disposed of in the current year. 4. Asset Held For Sale Bluestar Logistics and the investment in Tongaat Hulett Botswana (the associate) were classified as held for sale as at 31 March 2013. The Board of Directors resolved to dispose of the investment in Tongaat Hulett Botswana (the associate) and Bluestar Logistics to raise funds to partly settle creditors and lenders in terms of the scheme of arrangement by starafricacorporation limited to its lenders and creditors as sanctioned by the High court. Management could not find a buyer for Bluestar Logistics and the 33% shareholding in Tongaat Hulett Botswana. However, negotiations are continuing and management is actively trying to find buyers for the two business units. 5. Going Concern The group has continued to report significant losses in the last five years with a net loss for the year ended 31 March 2014 of $12.2 million (2013:$16.4million). As at that date, its total liabilities exceeded total assets by $23.2 million and current liabilities exceed current assets by $35 million (2013 $22.2 million). In addition, the borrowing powers of the Group as stipulated in the Memorandum and Articles of Association had been exceeded by $37.1 million as at year end.To address the working capital position and return the group to profitability, management are implementing the key deliverables of the turnaround plan: Scheme of Arrangement The Group entered into a Scheme of Arrangement with its creditors and lenders and the Scheme was sanctioned by the High Court on 7 August 2013 and registered with the Registrar of Companies on 14 August 2013. The scheme entailed a restructuring of the Company’s debt and the disposal of two business units that are non-core to the refinery business and allowed the company a moratorium period of 6months after which capital and interest payments would resume. The company has not been able to dispose of the business units identified in the scheme and consequently has not made the capital and interest payments that were due by the 7th of February 2014. Directors: J. S. Mutizwa (Chairman), *M. S. Mushiri (Group Chief Executive), K. Chibota, T.N. Chiganze, R.Njanike (Alternate), H. Chikova, R. J. Mbire *R. V. Mutyiri - (*Executive) Chairman’s Statement for the year ended 31 March 2014 OVERVIEW The year under review was burdened by challenges associated with a contracting economy, liquidity constraints and interrupted supply of utilities. The company’s core business was not operational for most of the year due to the plant upgrade project at Goldstar Sugars Harare (GSSH). The company concluded a Scheme of Arrangement with its creditors and lenders; the Scheme was sanctioned by the High Court on 7 August 2013 and registered with the Registrar of Companies on 14 August 2013. Most of the non-core businesses were disposed of during the year under review. GSSH Plant Upgrade The company procured equipment from Integrated Casetech Consultants (Private) Limited (ICCPL) of India for upgrading the plant at GSSH. This equipment was inspected by Societe Generale de Surveillence (sgs), a leading global inspection, verification, testing and certification services provider. Installation of the equipment was carried out under the supervision of ICCPL and has been completed. Pre-commissioning tests, dry and wet runs are in progress, with commissioning anticipated for completion in the second week of August 2014. The upgraded plant will increase production capacity from 300 tonnes per day to 600 tonnes per day. This will also result in improved sugar yield, quality and operational efficiencies, in addition to bringing the latest sugar refining technology and world standards at GSSH. As a result, GSSH will be able to consistently satisfy refined sugar requirements for all domestic market segments and have a surplus to export. The Board wishes to express its gratitude to National Social Security Authority (NSSA) who provided the financial support and project management expertise for the plant upgrade project. Scheme of Arrangement In terms of the Scheme of Arrangement concluded between the company and its lenders and creditors, the total amounts owed will be settled over a period of up to thirty six (36) months. The scheme entails a restructuring of both the Company’s debt and Balance Sheet, the disposal of Bluestar Logistics and the Company’s 33.3% shareholding in Tongaat Hulett Botswana (Proprietary) Limited to fund the requisite part settlement to lenders and creditors. It also allowed the Company a 6 month moratorium to facilitate the plant upgrade at Goldstar Sugars Harare (GSSH). The company has satisfied two of the three pre-requisites of the Scheme being the upgrade of plant at GSSH and restoration of raw sugar supply, subject to finalisation of the raw sugar price with the supplier. What is outstanding is the disposal of Bluestar Logistics and the company’s 33.3 % shareholding in Tongaat Hullet Botswana (Pty) Ltd, where efforts continue unabated to conclude these transactions at fair values. Scheme Members will continue to be updated on progress through periodic press publications. GROUP RESULTS The Group’s loss before tax from continuing operations was USD11.7 million, compared with a prior year loss before tax of USD13.5 million. Discontinued operations incurred a loss before tax amounting to USD255 896, compared with USD358 177 incurred last year. Finance costs for the year under review were USD4.8 million compared with USD5.3 million in prior year. Continuing Operations Production at GSSH was 4 616 tonnes, a decrease of 72% on prior year. Production was adversely affected by an eight month plant shut down due to the implementation of the plant upgrade. Sales volumes were adversely impacted by low production volumes, consequent upon the eight month plant shut down. The inflow of lower priced imported sugar on to the domestic market compounded the situation. We are grateful to Government for the duty structure put in place in respect of imported sugar as this has gone a long way in stabilizing the domestic sugar market. Goldstar Sugars Bulawayo (GSSB) remained under care and maintenance during the year under review. Country Choice Foods recorded an operating profit of USD330 286 for the year ended 31 March 2014. Volumes were negatively impacted by lower priced imports and substitutes. Discontinued Operations Arthur Garden Engineering, Bluestar Logistics, Grant Chemicals, Highfield Bag and Polyfilm Plastics, the Retail Business wereclassifiedasdiscontinuedoperations. Except for Bluestar Logistics, these non- core businesses were disposed of during the year under review. Bluestar Logistics’ profit performance was adversely affected by low business volumes from GSSH and liquidity constraints obtaining in the market. Although Bluestar Logistics is profitable, it is being disposed of as part of efforts to raise funds for the Scheme of Arrangement. Performance at both Polyfilm Plastics and Highfield Bag was adversely affected by working capital constraints and problems associated with plant obsolescence. Borrowing Powers Group borrowings exceed the limits set in the Articles of Association by USD37million. Of this excess, USD31 million was ratified at the Annual General Meeting held on 29 August 2013. The directors will seek ratification of the remaining USD6 million at the next Annual General Meeting. This excess was mainly attributable to finance charges on group borrowings. Directorate Postthereportingperiod,DrJKanyekanye resigned from the Board with effect from 6 May 2014. We extend our gratitude to Dr Kanyekanye for his contributions and wise counsel during his tenure on the Board and wish him success in his future endeavours. Outlook The company is confident that the later half of 2014/2015 will see a positive performance on account of the upgraded plant at GSSH, on-going cost reduction measures and a stable domestic market for sugar. Dividend In light of the overall performance of the Group, the Board has not declared a dividend for the year ended 31 March 2014. Conclusion I take this opportunity to express my appreciation to our stakeholders, Management, staff and my fellow Board members for their continued dedication and support under extremely challenging conditions. J. S. Mutizwa Chairman 30 July 2014 Supplementary Information 31 -Mar-2014 31-Mar-2013 Number of shares in issue 518 469 120 518 469 120 Capital expenditure (US$) 5 481 997 114 594 Capital expenditure authorised but not contracted for (US$) 1 580 717 3 250 000 Total refined sugar sales (tonnes) 5 880 15 183 Packaging production (tonnes) 726 1 179 Transport(tonnage moved) 53 263 88 543 Contingencies The Group has contingent liabilities amounting to $1 053 864. On the basis of management ‘s assessment the Board believes that there will be no outflow of funds. Notes To The Abridged Financial Statements 1.Basis of preparation The consolidated financial statements of starafricacorporation limited have been prepared in accordance with International Financial Reporting Standards(IFRS), the requirements of the Companies Act( Chapter 24.03) and the requirements of the Zimbabwe Stock Exchange. The Group’s presentation currency is the United States Dollar, which is the functional currency of the Group’s operations in Zimbabwe. Accounting policies applied in all material respects ,are consistent with those applied by the Group for the year ended 31 March 2013. 2. Segment Information On 30 June 2012, the Group disposed of its 100% interest in ZSR Transport (Pty) Limited. Assets and liabilities disposed off The assets and liabilities disposed were as follows: US$ 2014 2013 US$ US$ Property, plant and equipment - 631 341 Investment - 125 690 Trade and other receivables - 52 479 Carrying amount of assets disposed - 809 510 Finance lease liability - (175 354 ) Trade and other payables - (193 568 ) Recycling of translation reserves relating to subsidiary - (53 368 ) Purchase consideration - 440 588 Profit on disposal - (53 368) Purchase consideration received to date - 96 000 Abridged Consolidated Statement of Cash flows for the year ended 31 March 2014 2014 2013 US$ US$ Net cash flows generated from operating activities Cash (used)/generated in operations (461 642 ) 113 128 Taxation paid (43 070 ) (91 678 ) Net finance costs paid (152 766 ) (2 470 891 ) Net cash flows used in operating activities (657 478 ) (2 449 441 ) Net cash flows (used)/generated from investing activities (4 561 308 ) 1 649 153 Net cash flows generated / (used) from financing activities 4 658 214 (1 311 655 ) Net decrease in cash and cash equivalents (560 572 ) (2 111 943 ) Cash and cash equivalents at 1 April 483 394 840 586 Bank overdraft converted to a term loan - 1 758 709 Net exchange differences - (3 958 ) Cash and cash equivalents at 31 March ( 77 178 ) 483 394 Management is in discussion with potential buyers for the identified business units and anticipates that these transactions will be concluded by 30 September 2014. Proceeds from the disposals will be applied towards partly settling lenders and creditors, in line with the Scheme of Arrangement. GSSH Plant Upgrade Significant progress has been made on the plant upgrade project at Goldstar Sugars Harare (“GSSH”). As at 30 May 2014 90% of the equipment had been installed and the expected commissioning of the plant is the second week of August 2014. Management believes that the company will be able to reclaim the market share, which, in the current domestic supply constraints, is dominated by imports. Key Raw Material Supplies Management is in the process of negotiating with all key raw material suppliers, with a view to ensuring that raw materials will be supplied to the upgraded plant at viable prices and believes that this will be attained. These conditions give rise to a material uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern and, therefore it may be unable to realise its assets and discharge of its liabilities in the normal course of business. The financial statements are prepared on the basis that the group will continue to be a going concern. This basis of preparation presumes that the plant upgrade project will be successfully completed as per time line, the scheme of arrangement will continue in force for the period agreed and the company will return to profitability and will therefore realise its assets and discharge its liabilities in the ordinary course of business. 6. Publication These unaudited financial statements were published late to allow for substantial progress on the GSSH plant upgrade, which at the time of publication is under-going pre-commissioning tests, dry and wet runs with commissioning anticipated for completion in the second week of August 2014. Abridged Consolidated Statement of Comprehensive Income for the year ended 31 March 2014 2014 2013 US$ US$ Continuingoperations Revenue 9313289 24314615 Lossbeforedepreciation,interestandtax (5480076 ) (6483336 ) Lossondisposalofsubsidiary(Note2) - (53368 ) Impairmentloss (1377043 ) (1094993 ) Fairvaluegainoninvestmentproperty - 48000 Depreciation (916426 ) (1810776 ) Netfinancecosts (4785060 ) (5319682 ) Dividendreceivedfromassociate 861402 - Shareofprofitofanassociate - 1195997 Lossbeforetaxation (11697203 ) (13518158 ) Incometaxexpense (241034 ) (2593738 ) Lossfortheperiodfromcontinuingoperations (11938237 ) (16111896 ) Discontinuedoperations Profitfortheperiod(Note3) (255896 ) (358177 ) Lossfortheperiod (12194133 ) (16470073 ) Profit/(loss)fortheperiodattributableto: Noncontrollinginterest 74340 128336 Equityholdersoftheparent (12268473 ) (16598409 ) (12194133 ) (16470073 ) Losspershare(cents) Basic (2.37 ) (3.20 ) Diluted (2.37 ) (3.20 ) Weightedaveragenumberofsharesfortheperiod 518469120 518469120 Abridged Consolidated Statement of Comprehensive Income for the year ended 31 March 2014 2014 2013 US$ US$ Lossfortheperiod (12194133 ) (16470073 ) Othercomprehensiveloss (677697 ) (2357749 ) Fairvalueadjustmentonavailable-for-saleinvestments - (1062 ) Exchangedifferencesontranslatingforeignoperations - (446603 ) Recyclingofreservesondisposalofforeignsubsidiary - 53368 Impairmentofpreviouslyrevaluedassets (674459 ) (1963453 ) Recyclingofavailableforsalereserveonimpairment ofinvestment (3238 ) - Totalcomprehensivelossfortheperiod (12871830 ) (18827822 ) Totalcomprehensiveprofit/(loss)attributableto: Noncontrollinginterest 74340 128336 Equityholdersoftheparent (12946170 ) (18956158 ) (12871830 ) (18827822 ) Abridged Consolidated Statement of Financial Position As at 31 March 2014 2014 2013 US$ US$ US$ Assets Noncurrentassets 28729808 24020844 Property,plantandequipment 21304432 21243663 Othernon-currentassets 7425376 2777181 Currentassets 1513652 7226693 Disposalgroupheldforsale 5085078 10757559 Totalassets 35328538 42005096 EQUITYANDLIABILITIES Equity (23239859 ) (10368029 ) Attributabletoequityholdersoftheparent (24848530 ) (11902360 ) Noncontrollinginterest 1608671 1534331 Non-currentliabilities 19641523 12187255 Loansandborrowings 17633609 10000000 Differedtaxliability 2007914 2187255 Currentliabilities 36533603 37863757 Loansandborrowings 17812128 17290319 Other 18721475 20573438 Disposalgroupheldforsale 2393271 2322113 Totalequityandliabilities 35328538 42005096 Consolidated Statement of Changes in Equity for the year ended 31 March 2014 Equity holders Non-controlling Total of the parent interest US$ US$ US$ Balance at31March2012 7053798 1538393 8592191 Totalcomprehensiveincome (18956158 ) 128336 (18827822 ) (Loss)/profitfortheyear (16598409 ) 128336 (16470073 ) Othercomprehensiveincome (2357749 ) - (2357749 ) De-recognitionofnon-controllinginterest - (132398 ) (132398 ) Balance at31March2013 (11902360 ) 1534331 (10368029 ) Totalcomprehensiveincome (12946170 ) 74340 (12871830 ) (Loss)/profitfortheyear (12268473 ) 74340 (12194133 ) Othercomprehensiveincome (677697 ) - (677697 ) Balance at31March2014 (24848530 ) 1608671 (23239859 )