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TA Holdings says will report loss on Sable
26/04/2014 00:00:00
by The Source
 
 
RELATED STORIES
TA Holdings profits dip to US$3.2m

CONGLOMERATE TA Holdings will next week report a loss when it publishes its 2013 full-year results, on an impairment charge against its troubled agrochemicals subsidiary Sable Chemicals.

TA issued a profit warning on Friday.

“The impairment arose due to the uncertainty over the future returns to be realised by the group from its investment in Sable Chemical Industries,” TA said in a notice to the Zimbabwe Stock Exchange.

In its half-year to June 30 results, the group recorded a 12 percent jump in income to $39 million while operating profit was down eight percent to $2,6 million compared to the same period in 2012.

Its agro-chemicals subsidiary, Sable owes power utility ZESA $57 million in electricity bills, although government undertook to pay $39 million of the debt as part of a subsidy in 2009, which it has failed to do.

Sable’s performance has been largely affected by high production costs, mostly power tariffs.

The company has also been struggling with undercapitalisation and last year sought $12 million to boost its production capacity.

It recently said it was doubtful that it would be able to replace its obsolete machinery because of funding concerns and doubts over coal supplies for an envisaged new coal-bed methane plant.

TA planned to decommission its high power consuming electrolysis plant, which it would replace by producing ammonium from coal-bed methane, a more viable option.

The plant, which started operating in 1972, consumes up to 70 megawatts every month and has seen the company pile $57 million in electricity bills.

Sable is Zimbabwe’s sole manufacturer of ammonium nitrate (AN) and TA has told government, which holds 38 percent shareholding in the fertilizer maker, that it was too expensive to continue production on the current machinery.

TA has interests in agro-chemicals, hospitality, insurance and investment management. It has operations in Botswana, Uganda, South Africa.

The London AIM-listed Masawara plc holds 39 percent of TA Holdings stock.


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