East African Cables in the red


East African Cables in the red

In Summary

  • According to the latest audit of the firm’s books by KPMG, the company’s current liabilities exceed current assets by Ksh.426 million.
  • The company which delayed its full year results for the period ending December 2020 announced a Ksh.753.2 million loss on Saturday falling from a Ksh.631 million profit in 2019.
  • In six months to June 30, EA Cables has reduced its half year loss to Ksh.228.3 million from Ksh.244.5 million buoyed by an 11 per cent jump in revenues to Ksh.837.2 million and Ksh.316 million in pending receivables.

Manufacturer East African Cables is now staring down at the bottom of the cliff as a new audit renders it virtually insolvent.

According to the latest audit of the firm’s books by KPMG, the company’s current liabilities exceed current assets by Ksh.426 million.

“A material uncertainty exists that may cast significant doubt on East African Cables Plc’s ability to continue as a going concern,” KPMG notes.

The company which delayed its full year results for the period ending December 2020 announced a Ksh.753.2 million loss on Saturday falling from a Ksh.631 million profit in 2019.

The loss for the manufacturer is greatly attributable to a near wipe out of other income which shrunk to just Ksh.7.5 million from a greater Ksh.1.5 billion in 2019.

EA Cables primary business nevertheless remained resilient amidst the pandemic with revenues up 14 per cent to Ksh.1.8 billion after leveraging new distribution channels/methods.

During the first half of 2020, EA Cables completed a debt restructure phase by signing long-term debt payment plans with its lenders.

The performance of its Tanzanian unit meanwhile faced challenges in raising funding for working capital prompting the company to seek alternative funding structures for the business.

In six months to June 30, EA Cables has reduced its half year loss to Ksh.228.3 million from Ksh.244.5 million buoyed by an 11 per cent jump in revenues to Ksh.837.2 million and Ksh.316 million in pending receivables.

The company expects the sustained demand of its products at a market place to rebuild its financial health.

“We are still seeing strong demand in our core markets and we are increasing our market presence through new market channels as well as new products.

The board of EA Cables has not declared dividends across both reporting periods.

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Story By Kepha Muiruri
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