TransCentury CEO Nganga Njiinu during a past annual general meeting in Nairobi. FILE PHOTO | NMG
Investment firm TransCentury has posted Sh297.6 million net
profit for the six months ended June 2019, lifted by a Sh1.3 billion
gain from debt restructuring.
The profit, from Sh684.8
million loss posted in a similar period last year, was also supported by
11 percent growth in revenue to Sh2.53 billion, driven by enhanced
delivery of orders.
TransCentury said that its group
wide debt reprofiling helped it book the Sh1.3 billion gain which was
recorded as other income. This was about nine times higher than the
Sh145 million that was booked as other income in previous period.
An
indebted firm books a gain on restructuring of debt in the period of
the transfer if the carrying amount of the debt payable is more than the
fair value of the assets being transferred.
TransCentury had in July announced that it had restructured Sh1.6 billion debt owed by its subsidiary East African Cables
EA Cables also jumped back to profit after posting net earnings
of Sh634 million in the six months to June, coming despite a 19 percent
decline in turnover. TransCentury holds a 68.38 percent stake in the
electrical cables manufacturer.
During the period under
review, TransCentury spent Sh322 million to service loans, down from
Sh444 million spent the previous half year. This 24 percent reduction in
finance costs came on the back of the debt restructuring.
The
investment firm closed the period in negative working capital, with
current liabilities being three times the current assets. This makes it
problematic to meet short-term obligations.
Focus now shifts on the second half of the year to see whether it will avoid a full year loss.
“Overall,
the main markets we operate in continue to display favourable
conditions for our business model and strong growth prospects in line
with our expectations,” the firm said.
TransCentury
last posted full year profit in 2013. In the last five years, it has
been in losses mainly coming from the cash crunch that had made it
difficult to deliver on orders.
Private equity firm
Kuramo Capital, which acquired a 25 percent stake in TransCentury in
2016 for Sh2 billion as a turnaround investment, is among those counting
major paper losses from the company’s past weaker performance.
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