TA Holdings expects to finalise a viable electricity tariff for Sable Chemicals during the second half of this year as the unit did not get enough power supply to operate at profitable levels in the six months to June.
Sable Chemicals is a subsidiary of TA Holdings and incurred impairments in 2013 due to uncertainty over future returns from these investments.
“Whilst significant progress has been made in the negotiation for a viable tariff, the company was not receiving sufficient power supply in order to operate at profitable levels.
“In light of this, returns to be realised from Sable are still uncertain and the investments in this company remained impaired as at June 2014,” TA Holdings said.
“The company is optimistic that a viable electricity tariff for Sable will be finalised during the second quarter of 2014. In addition it is anticipated that normal power supplies will be restored in the third quarter. These will enable the company to complete refurbishment of the plant so as to return the company to its installed capacity.”
The group said Sable was engaged in negotiations to explore the use of coal bed methane as an alternative feedstock in the manufacture of hydrogen.
“This study will compliment earlier feasibility studies on coal gasification. It is anticipated that the choice of technology will be finalised after completion of this investigation so that migration to a new technology can be done expeditiously,” the group said.
Sable posted an impairment of $13,7 million in 2013. An impairment is a reduction in a company’s stated capital and it is bad for the company.
Sable Chemicals recorded a decline in losses to $0,2 million in 2013 from $2,5 million in the prior year due to an increase in fertiliser sales and reduction in finance costs as the company changed its credit policy to major distributors.
Sable Chemicals is the sole manufacturer of ammonium nitrate. During the six months ended June 2014, TA Holdings posted a profit of $3,4 million compared to $2,7 million in the same period last year.
Income for the group increased to $22,1 million in the half year period compared to $21,8 million in June 2013. Gross written premium increased to $47,1 million from $40 million in the prior year.
Group earnings per share grew by 104% to 1,59 cents per share from 0,78 cents per share.
“This growth in earnings was on the back of increased earnings by Zimbabwe investments which more offset the decrease in profits from outside Zimbabwe investments,” the group said.
Zimbabwe investments recorded a profit after tax of $2,6 million versus a loss of $800 000 during the same period last year while outside Zimbabwe profit after tax fell by 77% to $800 000 from $3,6 million for the half year in 2013. TA Holdings subsidiaries include Botswana Insurance Company, Cresta Marakanelo, Cresta Zimbabwe, Zimnat Life, ZFC and others.