Listed investment firm TransCentury saw its negative equity widen by Sh123 million to Sh9.08 billion in the half year ended June 2021, despite cutting its losses in the period after recording higher revenue through improved performance of subsidiaries.
The delayed performance results — due to an ongoing restructuring — showed that its net losses in the half-year period shrank by 47 percent to Sh764.3 million.
This was largely due to a revenue jump of Sh536 million to Sh2.54 billion, which the firm attributed to the improved performance of its trading arm AEA Limited and Tanelec Tanzania.
The firm also released its full-year 2020 financial result concurrently with the half-year numbers, which revealed a halving of net losses to Sh1.62 billion from Sh3.94 billion in 2019.
The firm, however, remains in the grip of negative equity and large amount of debt, which has raised concerns from its auditors KPMG Kenya on the ability of the business to keep up as a going concern after a breach of some of the covenants relating to these debts.
“During the year ended December 2020, current liabilities exceeded current assets by Sh10.5 billion and total liabilities exceeded total assets by Sh8.9 billion,” KPMG said.
“In addition as at December 2020, TransCentury Plc had outstanding loans of Sh3.3 billion for which it had breached some loan covenants with the lender.”
The company has announced new capital-raising plans even as KPMG emphasised the company’s difficulty in meeting its short-term obligations.
The Capital Markets Authority (CMA) has already approved a proposed rights issue, which the firm mooted after abandoning plans to raise funds from private equity firms which wanted it to delist from the bourse as a condition for accessing the capital.
The company, which has 375.2 million ordinary shares trading at Sh1.21 at the NSE, said in May that the rights will be issued on the basis of five new ordinary shares for every one existing share.