The Star (Nairobi)

23 August 2014

Kenya: Transcentury Hit By Major Half-Year Loss

INFRASTRUCTURE firm TransCentury has plunged into a Sh1.63 billion first half after tax loss which it attributed the sale of its stake in Rift Valley Railway at a price lower than the fair value of the investment.

In its financial results for the period January to June 2014, TransCentury reported its revenues dropped to Sh4.95 billion from Sh7.08 billion in the first half 2013 due to delayed execution of some of its planned projects.

"The revenue in the power division grew by 13 per cent attributed to increased volumes driven by new markets. However, the overall decline in revenue is attributed to the delayed execution of several major construction projects in our engineering division which have since commenced in the second half of the year," the company said in a statement accompanying the results.

In March, TransCentury sold its 34 per cent equity in RVR to Egypt based investment firm Citadel which has since been renamed Qalaa Holdings.

Though in its statement Friday it said it recovered its entire cash from the sale, the proceeds from this deal was still below the fair value of the investment. The fair value is the estimated value of all assets and liabilities of an acquired company.

"The decline in net earnings is attributed to the fair value loss on the disposal of the entire 34 per cent shareholding in Kenya Uganda Railways Holdings Limited, the lead investor in Rift Valley Railways to Africa Railways Limited," TransCentury said.

Assets declined to Sh19.2 billion from Sh21.8 billion in first half 2013 while share capital remained unchanged at Sh136.97 million. The company said it generated Sh3.18 billion from investing activities.

TransCentury said it expects a better performance in the second half boosted by "strong projects" which it said were underway adding that its recent deal of a geothermal power generation plant will also drive growth.

TransCentury which upon sale of its RVR stake said it will redeploy the proceeds to high return investments, also said that it has already invested some of that cash into modernisation of its manufacturing plants in anticipation of higher demand.

The firm is involved in manufacture of electrical cables, conductors, transformers and switchgears.

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