WHITHER NAIROBI BUSINESS VENTURES LTD?

When in financial year 2016, Kenya's Nairobi Business Ventures ltd, a relatively small company quoted on the Nairobi securities exchange, issued new shares and ended up with Kes 28m in cash, it was not too much to expect things to change for the better.

After all, in business, it is always a matter of cash: Have enough of it and good products or services, you make more.

Unfortunately, according to figures recently published for the year to March 2017; more cash did not lead to more business and more profit for NBV; on the contrary it dived into even operating loss. 

So whither Nairobi business Ventures Ltd?

The year did not at any time pretend to be a good one for NBV. Its revenue almost dropped 50% to Kes 48.8m from 2016's Kes 85.1m and to make matters, the direct cost of generating reduced income rose by 5.10% to N33m.

As a result, gross profit which the first foundation for any profitable venture, declined by 74.3% to Kes 13.8m from Kes 53.7m previously.

Then unchecked, administration cost jumped by 34.3% to Kes 14.1m and other operating expenses increased by 9.77% to Kes 28.1m. Of course, both were too much for the gross profit to absorb and NBV posted Kes 28.4m loss compared to Kes 17.5m operating profit in 2016 year.

Hitherto, NBV had deployed the new cash in buying new assets and reducing both short and long term debts. Hence finance cost decreased by 60.3% to Kes 4.45m but the harm was already done.

This is because adding this to operating loss landed NBV in Kes 32.8m loss before tax for the year compared to Kes 8.32m profit previously.

In other words, compared to Kes 18.8 profit on every Kes 100 income in 2016 year, it lost Kes 67.2 on every Kes 100 income.

Now even though its shareholders fund remained beefed up by asset revaluation and share premium, and its working capital appears healthy, NBV  needs cash desperately again.

So whither Nairobi business ventures ltd? Isn't it time to look beyond dealing principally in footwear?

NAIROBI BUSINESS VENTURES LTD
                          Kes m, full year
                                2017.            2016
Revenue.               48.8.              85.1
Cost of sale.         33.0.              31.4
Gross profit.         13.8.              53.7
Administration.    14.1.              10.5
Other op. Cost      28.1.              25.6
Operating profit  (28.4).             17.5
Finance cost.        4.45.              11.2
Profit b4 tax.        (32.8).             8.32
Profit margin %   (67.2).             18.8
Working capital.  67.3.                67.8



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