Companies

TransCentury announces first ever loss as RVR stake sale hits earnings

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TransCentury managing director Gachau Kiuna. Delays in the execution of projects has pushed infrastructure firm, TransCentury, into the loss making territory. FILE PHOTO | NATION MEDIA GROUP

TransCentury has reported a Sh2.3 billion net loss for the full year to December as delayed projects and a paper loss from its recent sale of a 34 per cent stake in Rift Valley Railways (RVR) ate into its earnings.

The NSE-listed infrastructure investment group has announced that its revenues for the period stood at Sh10.2 billion, a 13.6 per cent drop from the previous year’s Sh11.8 billion.

TransCentury, which has substantial interests in key sectors like power generation and infrastructure, said its revenues in the engineering division dropped 36 per cent due to delayed projects which commenced this year.

The company reported a net profit of Sh626.4 million for the full year to December 2013, representing a decline 15.4 per cent from Sh740.6 million reported the previous year.

“2014 was a challenging year for the Group, which resulted in TransCentury making an operating loss for the first time in its history,” said Gachao Kiuna, the firm’s chief executive officer.

“The exit from RVR was a bold decision and impacted negatively on our performance but has allowed us to redeploy significant capital recovered from the investment to kick start our growth strategy,” said Mr Kiuna.

READ: TransCentury exits RVR after sell of stake to Egyptian firm

While it recouped all the Sh3.8 billion invested in RVR when it sold its stake to a group of investors led by Cairo-based Citadel Capital, the company did not get replacement value in its books hence recording a loss.

It is unclear what fair value TransCentury had assigned to its RVR equity prior to the divestiture, but analysts estimate the figure at hundreds of millions of shillings.

The company now says it will direct the sale funds towards debt reduction and growth capital in their power and engineering divisions where it has several multi-billion shilling projects lined up.

TransCentury says it plans to invest up to Sh50 billion over the next three years in the several projects that will include power generation, oil pipelines and toll roads. Some of the green field infrastructure projects include a 35 megawatt geothermal power plant in Menengai.

The company has secured the Project Implementation and Steam Supply Agreement (PISSA) with the Geothermal Development Company (GDC) and a 25 year Power Purchase Agreement (PPA) with Kenya Power.

Civicon, one of TransCentury’s subsidiaries, was recently shortlisted as the preferred bidder for the first lot of the government’s annuity roads program along with its technical partner Eiffage Traveaux a leading European construction company.

The firm says it has competed a corporate restructuring exercise through which it has divided its expansive business into two - TransCentury Power and TransCentury Engineering.

“To support our investments in the operating companies, we have completed a corporate re-organization that has seen our subsidiaries restructured into two operational subgroups,” said Mr Kiuna.

“The reorganisation’s objective is to allow the operating companies to realize the revenue and cost synergies that exist between them.”