TransCentury loss hits Sh2.4bn as forex burden takes heavy toll
East African Cables chairman Zeph Mbugua (right) with CEO Peter Arina this month: East African Cables, TransCentury’s power division’s profit dropped 30 per cent. PHOTO | FILE
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TransCentury net loss widened by 6.4 per cent from the Sh2.3 billion it recorded during a similar period in 2014 as forex losses jumped from Sh184.3 million to Sh1.1 billion.
TransCentury has reported a Sh2.4 billion net loss for the year 2015 as significantly higher foreign exchange losses and selling costs pulled the company further into the red.
The investment firm’s net loss widened by 6.4 per cent from the Sh2.3 billion it recorded during a similar period in 2014 as forex losses jumped from Sh184.3 million to Sh1.1 billion.
TransCentury saw its revenue increase 15 per cent to close the year at Sh11.8 billion, but the earnings were whittled down by higher cost of sales which went up by a fifth to close the year at Sh9.3 billion.
“The Group’s overall performance was negatively impacted by foreign exchange losses due to sharp depreciation of regional currencies against the US dollar,” the company said in statement.
TransCentury further stated that earnings from its power division (East African Cables) dropped 30 per cent due to a dip in copper prices at the London metal exchange as well as production disruptions during factory refurbishments.
However, its engineering division reported a 97 per cent revenue growth coming mainly from some major projects (such as the Lake Turkana Wind Power roads and GZI canning factory) that delayed in 2014 and new ones that started during the year.
The NSE-listed company closed the year with assets of Sh21.81 billion (Sh2.35 billion higher than the previous year) while its liabilities more than doubled to Sh18.27 billion.
This significant jump in its obligations resulted from the company booking its Sh6 billion convertible bond, which matured on March 25 (but has since been renegotiated) and a 64 per cent jump in long-term loans to Sh2.83 billion.
Its trade and payables (money it owes) grew 60 per cent to Sh4.3 billion even as the firm grapples to collect money it is owed by customers, which now stands at Sh6.4 billion, a year-on-year growth half a billion shillings.
“The Group’s performance was negatively impacted by impairment of receivables in line with a more conservative management policy. Collection efforts are however ongoing with significant progress made post year end.”
TransCentury in March reached a settlement with its bondholders halving its principal debt to $40 million (Sh4.04 billion), coming days after it announced an equity injection of $20 million (Sh2.02 billion) by South Africa’s Kuramo Capital.
The original dollar-denominated bond of Sh6 billion inflated considerably to more than Sh10 billion due to accrued interest and the impact that the weakened shilling since it was listed in 2011.
The bond’s renegotiation, which entails TransCentury paying off the Sh4.04 billion by September 25, will help to improve the company’s debt position.
“As part of that (debt) reduction, the Group will write back the principal and interest charges amounting to $19.4 million (Sh1.95 billion) in 2016,” said TransCentury.
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