S.T.E.C. losses climbs to $5.8 million
The Samoa Trust Estate Corporation [S.T.E.C.] has accumulated trading losses to the tune of $5.81 million tala as of June 2019.
The State-owned entity’s financial position was highlighted in the corporation’s annual report for the financial year 2018-2019.
“The corporation's continuation as a going concern is dependent on the ability of the board management to achieve the corporation’s planned activities and become profitable in the future,” stated the auditor’s report in the S.T.E.C. Annual Report for 2018-2019.
“These are the factors which raise doubt that the corporation will be able to continue as a going concern.”
The report stated that in the 2017 financial year the corporation reported a loss of $3.40 million. A year later it recorded a $4.77 million loss and in 2019 a total of $5.81 million in losses was recorded.
S.T.E.C. Chief Executive Officer, Patea Loli Setefano, was also quoted in the annual report saying that the return on capital has been low due to the lack of funding to start new economic activities.
“In addition, the corporation has identified profitable projects, both in lease and agricultural developments, the pipeline that would generate more income but a lack of investment funds has stagnated the development of the corporation.”
Furthermore, Patea said the land leases that were awarded to the private sector for business development are part of the Government’s plan to develop a tourism and commercial center alongside the Faleolo International Airport.
“The development of tourism around this area involves upgrading of the Mulifanua wharf, construction of Aggie Grey’s Beach Resort and the golf course. These have resulted in an increase in the number of requests from the business community to lease S.T.E.C. land opposite the airport.”
Patea said these are expected to become major revenue generators for the S.T.E.C. in the future.
“This is expected to become a major income earner for S.T.E.C. in the near future,” he added.
Patea indicated in the report that the S.T.E.C. management has developed a proposal to dispose of some of its existing property leases in the form of “lease to own term” but it is subject to Cabinet approval.
“[The] S.T.E.C. has opted for this as a means to generate sufficient revenue in order to be able to to invest in much needed capital equipment, to meet its yearly operating costs, make profits and to clear its current debts,” he said.
In 2018 the Samoa Government took over the repayment of a loan that the S.T.E.C. took from the Unit Trust of Samoa [U.T.O.S].
“Hence the reclassification of this loan to related party payables to managed funds under the Long Term Liabilities,” Patea emphasised. “The Government will make direct payments to U.T.O.S. In February 2019 a loan agreement was executed with a term of five years at an interest of 8.5 percent per annum.
“As at June 2019 $575,710 has been contributed to loan repayments and interest expense totalled $337,244.
“This resulted in a net contribution by the government of $238,469 which has been transferred to Government capital.”
The Samoa Observer has sought comments from the S.T.E.C. Chief Executive Officer but he had not responded by the time of going to press.
According to the annual report, S.T.E.C. Chairman Leaupepe Poliko Esera noted that the main economic activity throughout the reviewed financial period was collecting coconuts and drying copra wholesaling coconut to sell to the general public and private coconut retailers.
“Other anchovies include grazing of cattle and sheep, farming papaya vegetable gardens, and some cash crops such as bananas and taro using ecologically based pest controls and biological fertilisers,” he said.
The Chairman says despite a number of challenges that the corporation encountered, he believes that the S.T.E.C. has potential and is eligible to use Government assets to generate revenue, which in turn would strengthen the capacity to prosper through government grants and networking partners/donors from overseas to assist with projects at Mulifanua.
“As Chairman of the Board of Directors, I am optimistic concerning the progress so far given the financial restraint and prevailing constraints confronting agricultural development especially market availability.”
The S.T.E.C. currently owns approximately 8.177 acres of land in Mulifanua and it has recently revitalised its crops developments project which include cocoa, coffee, bananas, taro, tahitian lime and coconuts.
Approximately 500 acres of land has been cultivated for crops and the corporation is also leasing out land at Mulifanua to nearby schools, villages, local businesses and some Government ministries.