Managing Director of Bulk Oil Storage and Transportation (BOST) Company Limited, Mr Edwin Alfred Provencal has disclosed that the company has turned around with the management making significant gains of about GH¢30 million at the end of the year 2020.
Disclosing the management account to the media at the end-of-year media engagement, the Managing Director of BOST said that the last time the company made a profit was in 2012 but added that the company in 2020 has crossed the zero mark.
Mr Edwin Provencal noted that the asset utilization of BOST has increased to over 30 percent in 2020 as compared to 2017 which was 17 percent.
“Our asset utilisation was 17 percent and as we speak, our asset utilisation has increased to over 30%”, he disclosed.
He, however, feared that the performance of management of BOST may be rendered irrelevant by two major events which are still hanging on the company; thus, BOST has to battle the foreign exchange losses from its loan book and the contingent liabilities which mainly focus on cases they have in court.
In explaining the foreign exchange losses, Mr Edwin Provencal said that every year, there is depreciation as those loans in their books were taken in dollars and BOST also earns in Cedis, creating foreign exchange lost whenever the loans are revalued.
“I can personally tell you that BOST has turned around but these two major events may take us back. This year on the management account alone, without these two incidents, this year we may make 30 million Cedis profit. The last time we made a profit was in 2012”, he said.
“For the contingent liabilities, they are mainly focused on cases we have in court; pending cases we have in court. It can either go for us or go against us. The GH¢97 million Ghana Cedis contingent liabilities mean that if we lose all the cases, we have to look for GH¢97 million Ghana Cedis to pay everybody off”, he added.
“We have people we bought assets from that we have not paid; we paid part and we have those whose products have gotten missing in our system who have taken us to court and we have to refund. So, it is possible we may win some and lose some but this is the worst-case scenario on the contingent liability. Those we know we have a bad case, we tried to take them out of court and we are settling out of court to manage that”, he stressed.
He mentioned that the foreign exchange losses from the company’s loan book and the court cases when they materialised will be over GH¢200 million which will wipe away the gains the company has made; reiterating that the foreign exchange losses will definitely hit the company’s income statement.
Offering solution to the major events which may set the company back, Mr Edwin Provencal suggested that the loan can be packaged and sell it to willing investors to become shareholders on BOST and use that to increase the company’s capitalization.
He also suggested that an appeal can be made to the shareholder to covert the monies lend to BOST to equities in order to make the company’s capitalisation looks good as it is currently undercapitalised.
“In the books, the company’s capitalisation is GH¢500,000 and that is too low. And so if one of the suggestion is achieved, then that will resolve the problem the challenge we are going through”, he stated.
“For 2021, we believe strongly that if these things are dealt with by the shareholder, we believe in 2021, we will keep making more profits; I don’t know how much profit but we will do better than 2020. I am saying this because our asset utilisation has not peaked. By the end of 2021, our revenue earning asset would have increased more than 50% and so we know very well that in 2021 we will do better than 2020 but as to how much, I don’t know,” he stated.