HOW KENYA'S EAAGADS LTD HARVESTED GOLD FROM COFFEE

The financial year to March 31, 2017 would have been a  trying one for EAAGADS ltd, one of the companies quoted on the agriculture sector of Nairobi securities exchange but for Coffee prices that stayed up on the average and drop in direct cost associated with coffee production and sale.

According to the figures released this week, there was 13.2% increase in total income to Kes143.4m principally because the average coffee price through the period was 4.218 US Dolllars per kilo compared to $3.863 per kilogram average in 2016 year.

 So, despite drop in tons of coffee sold by the company within the year, core revenue from coffee business rose by 11.3% to Kes 140.2m from Kes 1.26m.

At the same time, cost of production decreased by 24.8% to Kes 67.2m compared to Kes89.1m previously and with income from other sources closing at K2.17m as against Kes0.67m before, only 32.8% increase in administration cost to Kes 41.7m offered any resistance to profitability.

The company explained though that the rise in other income was due to fixed asset revaluation surplus but the cost of sale drop was due to greater efficiency at the farm.

In the end, profit before tax of Eaagads closed the year at Kes18.1m, way ahead of N0.477m reported in 2016 year. Decoded: the company ended the year with Kes22.5 gain on each Kes100 income it  generated within the year compared to Kes 7,65 in 2016 year.

However, much as this represented sound improvement in the company's performance, the directors declined to recommend any dividend for the year and so, when shareholders meet on September 29, this will not on the agenda.

The directors hope though that with the contracting of coffee management to Coffee Management Services ltd, new efficiency levels should emerge resulting in more distributable profit in the near future.

EAAGADDS LTD;    Full year    Kes m.
                                                                      2017                    2016
Total income                                               143.4                     126.7
Core revenue                                              140.2                      126.0
cost of production                                        67.2                        89.1
Depletion in biological asset value               1.28                        3.49
Grossw profit                                               71.8                        40.4
Other income                                                2.17                        0.67
Administration                                            41.7                        31.4
Profit before tax                                          32.2                          9.69
Profit margin %                                           22.5                         7.65

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