TANGA Cement Company has issued a cautionary notice to its shareholder over the proposed acquisition of 68.33 percent share the cement maker by Scancem International from Afrisam Mauritius Investment Holdings Limited.

Tanga cement Company Limited factory in Tanga PHOTO/FILE Tertiary Air Duct

“Shareholders of Tanga are cautioned that there is no certainty that all the Conditions to the Acquisition will be fulfilled, or waived timeously. Therefore, there is no certainty that the Acquisition will be implemented,” board chairma Lawrence Masha said in a notice issued yesterday.

This is the second cautionary notice to be issued by the cement producer over the period of two months, as the similar notice by the chairman was issued on July 4 this year.

Masha said shareholders are accordingly advised to continue to exercise caution when dealing in Tanga’s securities until a further announcement regarding the completion of the acquisition is made.

Tanga Cement Company Limited (TCCL) is listed at the Dar es Salaam Stock Exchange with the share price closed at 1,520/- on Thursday this week, and has the market capitalization of 96.78bn/-.

“The Board of Directors of Tanga understands that the parties to the share purchase agreement dated 22 October 2021 between Scancem, AfriSam and AfriSam (South Africa) Proprietary Limited in relation to the Acquisition have entered into a deed of amendment to extend the Longstop Date from 31 August 2022 to 30 September 2022 or such later date as the parties may agree (the Extension),” he said.

“Accordingly, the shareholders of Tanga are referred to the Subsequent Joint Announcement in relation to the Extension.”

Further to the joint announcements made by HeidelbergCement AG (“Heidelberg Cement”) and AfriSam Mauritius Investment Holdings Limited (“AfriSam”) on 26 October 2021 and 1 July 2022, the shareholders of the Company are referred to the subsequent joint announcement by the aforementioned parties made on 1 September 2022 (“the Subsequent Joint Announcement”)

The announcement provided an update in relation to the proposed acquisition by Scancem International DA (“Scancem”), a subsidiary of HeidelbergCement, of 43,504,403 ordinary shares in Tanga constituting AfriSam’s 68.33 percent shareholding in Tanga (“the Acquisition”).

Shareholders are therefore urged to read the Subsequent Joint Announcement, Masha added.

According to Abridged report issued on April 11 this year, the total indicative share trading liquidity for Tanga Cement Company Plc (SIMBA.tz) in the past 12 months, as of 5th April 2022, was $460.79K (2.38bn/-), an average of $38.4K (198.27mn/-) per month.

Audited report for the year ended in December 2021 shows the group’s sales revenue increased by 9 percent, to 231bn/- from 213bn/- achieved in 2020.

Congruent to the increase in revenue, the gross profit also increased by 14 percent to 61.7bn/- from 54.2bn/- achieved in the prior year.

The gross margin increased to 27 percent compared to 25 percent in 2020, despite major plant maintenance projects undertaken in 2021 and numerous electrical power dips and power outages which increased the costs of production.

The statement said the group incurred some once-off restructuring expenses during the year which resulted in a 13 percent decrease in the operating profit to 15bn/- in 2021 from 17bn/- in 2020.

These expenses mainly relate to derecognition of the kiln shell section which was replaced, and associated maintenance costs incurred to stabilise the production process.

The rationalization of the quarry mining operations to a more cost-effective outsourced solution also contributed to this once off increase.

The audited report shows the group recorded a profit before tax of 3.8bn/- in 2021 compared to the loss before tax of 0.63bn/- in 2020.

The increase in profit before tax was mainly due to the increase in gross profit and decrease in foreign exchange and fair value losses which mainly relate to the US dollar denominated term loan for the construction of the Kiln2 expansion project and the interest expense on lease liabilities.

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