STARAFRICACORPORATION Limited is leveraging immovable assets valued at US$4 million to underpin an expensive credit strategy, as the sugar refiner grapples with a sharp decline in turnover and persistent liquidity pressures.
Despite holding property assets worth nearly five times its outstanding borrowings of US$2,51 million as at September 2025, the group is funding itself at a weighted average interest rate of 13%.
The company is banking on a recovery in operating performance to return to profitability next year.
In its half-year financial results for the period ended September 30, 2025, Starafrica reported a 25% fall in turnover to US$27,3 million from US$36,2 million in the prior year, driven largely by a 26% decline in sales volumes at Goldstar Sugars.
The weaker topline translated into a loss of US$189 105 for the period, although this was a significant improvement from the US$457 842 loss in the 2024 comparative period.
“All borrowings are denominated in USD. The above interest bearing borrowings gave rise to interest costs of US$227 791 (US$153 132: 2024),” the company said in its interim report.
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“Long-term and short-term loans have tenors ranging from six to 36 months and bear interest at an average weighted cost of 13%.
“Bank overdrafts are renewable annually and have a maximum tenor of 12 months. The loans and overdrafts are secured against immovable properties with a market value of US$4 million.”
While the board expressed confidence in the group’s ability to continue as a going concern, liquidity indicators deteriorated further during the period.
“In light of the group’s current financial position, the directors are satisfied that the group has access to adequate resources to continue in operational existence for the foreseeable future,” Starafrica said.
The current ratio weakened by 6% to US$0,54 for every dollar of short-term debt, effectively placing the group in a position of technical insolvency heading into the second half of the year.
The pressure was compounded by a rise in payables and provisions to US$13,65 million, up from US$10,81 million in the prior year.
Operationally, the group said its business-to-business segment continued to face volume pressures.
Although demand from the beverages sector grew, sugar off-take declined as manufacturers increasingly turned to non-nutritive sweeteners to cushion the impact of the Sugar Tax.
In response, Starafrica has intensified cost-containment measures and accelerated operational restructuring under its ongoing plant refurbishment and automation programme, which is scheduled for completion in 2027.
Management said the initiatives are already delivering lower conversion costs and tighter control over production and operating expenses, providing some relief as the group navigates a challenging trading and funding environment.