Workers at East African Cables plant in Industrial Area, Nairobi. PHOTO | DIANA NGILA | NMG East African Cables remains insolvent despite restructuring its Sh1.6 billion debt with a two and a half year moratorium on making any payments.
The firm has reported a loss of Sh568 million in 2018, having narrowed its losses from Sh662 million in 2017.
The company’s current liabilities exceeded current assets by Sh3.27 billion, leaving a cloud over its future.
The firm’s current liabilities stood at Sh4.4 billion at the end of 2018, up from Sh3.9 billion in 2017. Its liquid assets are only worth Sh1.1 billion, down from Sh1.7 billion in 2017.
“These events or conditions along with other matters as set forth in the audited consolidated financial statements indicate that a material uncertainty exists that may cast significant doubt on its ability to continue as a going concern,” KPMG said.
The business, through its owners TransCentury Limited who hold 68.38 percent stake, completed a restructuring of the debt to 10 years including a moratorium of two and a half years.
The firm says this resulted in a reduction of debt by Sh1.65 billion, representing 44 percent of total debt with the firm saying benefits and cost-cutting initiatives would have an impact this year. The bulk of the liabilities are a short-term bank loan of Sh3.5 billion, trade and other payables of Sh832 million and an overdraft of Sh2.4 million.
Last year, the company revenue dipped 30 per cent from Sh2.3 billion in 2017 to Sh1.6 billion, on working capital constraints although management said demand for their product remained promising if only they could get their funding right.
“We believe that the positive outcome of our funding initiative will enable us to exponentially grow our top-line going forward,” Ms Virginia Ndunge, the Company Secretary wrote in a notice.
EA Cables’ other income grew sevenfold from Sh8 million to Sh61 million even as it trimmed expenses in factory administrative and distribution. Interest expense dropped from Sh533 million to Sh510 million which was, however, countered by an increase in finance costs from Sh17 million to Sh25 million.
The firm said it would hold its annual general meeting on August 22.