East African Cables products./ East African Cables is insolvent with current liabilities exceeding current assets by Sh426 million, the latest audit report by KPMG has revealed.
According to the report, it owes several banks money running into billions and has been struggling with declining sales since 2013.
The company’s books show that it had overdue loans amounting to close to Sh3.5 billion by end of last year
“A material uncertainty exists that may cast significant doubt on East African Cables Plc’s ability to continue as a going concern,” says KPMG.
The cables manufacturer has put up most of its assets such as land and buildings as security for the loans, a demonstration of the extent of the financial hole the company is in
On Friday, the listed firm announced a Sh753 million loss for the delayed financial results for the year ended December 31, 2020 falling from a Sh631 million profit in 2019.
The loss was attributed to a near wipeout of other income which shrunk to just Sh7.5 million from a greater Sh.1.5 billion the previous year.
The firm also posted a pre-tax profit loss of Sh555.1 million during the year under review compared to a profit of Sh658.7 million in 2019.
EA Cables primary business nevertheless remained resilient amidst the pandemic with revenues up 14 per cent to Sh1.8 billion after leveraging new distribution channels.
Last year, the firm was suspended from trading at the Nairobi Securities Exchange (NSE) over talk of possible liquidation.
Mauritius-headquartered SBM Bank had filed a petition to liquidate East African Cables after the company defaulted on an Sh285 million loan.Other creditors include Equity Bank which offered the manufacturer Sh1.6 billion to restructure the loans previously held by Standard Chartered Bank Kenya Ltd and Standard Chartered Bank Tanzania.