Sameer Africa Group reported a cumulative tax loss of Sh2.31 billion in the last decade since 2014 on the back of accumulated losses and lower earnings the firm has been facing.
A tax loss is when a company or investment loses money in a particular period, so there is no tax to pay on it.
“The deferred tax asset has not been recognised on deductible temporary differences and tax losses carried forward amounting to Sh2.31 billion (2022: Sh2.17 billion) for the group and Sh1.52 billion (2022: Sh1.4 billion) for the company due to a lack of certainty of availability of future taxable profits against which such deductible temporary differences and tax losses could be utilised,” said Sameer in the latest annual report.
“In 2023, the company incurred a tax loss of Sh123.21 million, increasing cumulative tax losses to Sh1.52 billion. Management found it prudent not to recognise any further deferred tax asset until the strategic plan in action turns the company to profitability.”
A deferred tax asset means saving on taxes in the future by carrying over some current losses, while a deferred tax liability implies owing more taxes in the future by paying less now.
Unrecognised deferred tax assets are potential future tax benefits that a firm chooses not to record on its balance sheet when there is uncertainty about whether it will be able to utilise these benefits in the future.
Sameer reported a net profit of Sh46.3 million in 2023 from Sh100.3 million in 2022, attributed to unrealised forex losses due to a weakening Kenya shilling against the US Dollar.
Net finance costs, referring to spending on servicing debts, rose by 98.5 percent to Sh140.79 million from Sh70.9 million, coming in the year the shilling shed a quarter of its value against the dollar. This inflated the foreign-dominated debts while making imports expensive.
Sameer had issued a profit warning in December, saying that the depreciation of the Kenya shilling against major currencies had seen the company incur “substantial foreign exchange losses.”
Revenue dropped 36.3 percent to Sh390.5 million while operating expenses rose by 2.4 percent to Sh48.9 million in the year ended December 2023.
The Group, which was originally involved in tyre selling diversified to the real estate business in a bid to revive its fortunes and turn things around.
The company investors have endured their 10th consecutive year without dividend since 2013 when investors got Sh0.3 per share.
Sameer blamed the double scourge of illicit trade and dumping from some major manufacturing nations and supply chain disruptions on the hit it took in the tyre business in Kenya.
The listed group has subsidiaries in Uganda, Burundi, and Tanzania.
