HOW DEACON (EA) LTD GOT BOTTOMLESS

Kenya's Deacon East Africa ltd ended financial year 2016 bottomless in the loss league, in sharp contrast to 2015 finish and here's how.

First there was a 3.11% drop in sales to 2309.1m Ksh which was accompanied by 1.62% increase in cost producing the goods sold to 1295.2m Ksh.

The end result was that gross profit which is the foundation for each year good home run, went down 8.56% to 1013.9m Ksh.

Second, income from other sources either dried up or decreased significantly. Agreed, it was difficult replicating 2015's asset disposal profit of 64.9m Ksh, share of profit from associated companies also dried up.

Then, to worsen matters, income from other sources declined by 67.7% to just 16.1m Ksh thus helping total income to drop by 8.88% to 2325.2m Ksh.

Finally, the last nail was driven in by  leakages that grew even faster as new expenses surfaced in 2016; as good old administration cost increased and as net foreign gain in 2015 turned into loss in 2016.

Administration expenses had grown by 12.5% to 1306.4m Ksh; lease cost and provision for obsolete assets surfaced as 37.8m and 28.7m Ksh respectively, and net foreign exchange loss came to 42.2m Ksh from 2015 25.6m gain.

Hence, Deacon East Africa ltd settled for 385.1m Ksh loss in 2016 compared to 141.6m 2015 profit before tax.

Naturally, despite 108.7m Ksh respite from tax credit, loss it remained even in terms of comprehensive income after bringing yet to be realised paper profits into the picture.

It also weakened the company's liquidity position considerably as working capital surplus narrowed to 533m Ksh from 2015's 1109.3m..

DEACON (EAST AFRICA) LTD Kshm
                                2016.          2015
Total income.    2325.2.     2551.9
Sales.                  2309.1.     2383.3
Gross profit.      1013.9.     1108.8
Other income.        16.1.        49.9
Associated profit.  -

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