A depressed set of results from Star Africa

A depressed set of results from Star Africa with the revenue largely unchanged at $29.7 million (H1 2011: $29.5 million) whilst profitability was negated by high net finance costs of $1.3m up from $575,876 the prior period. The loss for the period from continuing operations was $1.7m after an income tax credit of $741,297 whilst the loss from discontinued operations was $906,554 down from $3.8m after a $2.1m profit was registered from disposals. This translated to a loss attributable to shareholders of $2.4m down from $3.7m (H1 2011).

The group borrowings amounted to $14.1m down from $15.4m, whilst assets classified as held for sale were $9.4m (H1 2011: $18.5m). Progress in restructuring the group operations has been slow due to property and business disposals taking longer than projected.

All business units registered improved volumes with total refined sugar sales growing by 18% to 31,148 tonnes whilst transport tonnage moved increased by 3% to 81,021 and packaging production grew by 16% to 758 tonnes. The transport and packaging units however registered losses due to raw material supply constraints. Plans are currently underway for the sell of Red Star Holdings Limited listing to West Foods, after the latter purchased the fixed assets in Red Star Wholesalers and Advance Wholesalers.

Management is optimistic that the group's flagship, sugar refining will support increased profitability given a consistent improvement in production efficiencies and strong demand in the market. We are however wary that the protracted asset disposal will result in the group continuing to carry high finance costs and negating profitability. Competition is also rampant on the sugar front, with substantial amounts of imported product still coming in.