BAD YEAR LOOMS FOR KENYA'S EAAGADS LTD.

It is most likely that Kenya's EAAGADS Ltd will end the current financial year by March 2018 groping for profit.

According to half year unaudited figures to September released recently, the company is already very much in the loss league and is not likely to spring out of it in the remaining half year.

Due to prolonged dry weather, reduced coffee crop harvest and higher uptake cost, says the management, EAAGADS recorded 38.5% decline in revenue to Kes 44.69m within the six months.

To make matters worse, cost production rose by 42.1% to Kes 56.70m despite the drop in sales revenue.

Thus, EAAGADS reported Kes 7.71m gross loss compared to Kes 1.91m gross profit at the same time last financial year.

Unfortunately, the company was also unable to control its overhead costs because, in spite of the revenue dive, total cost rose to Kes 13.67m from Kes 13.58m previously.

Hence the company settled for Kes 21.38m loss before tax within the period as against Kes 11.67m loss in last financial year's first half.

It could have been worse if book profit of Kes 5.19m from fair value of biological assets had not been recognised because, last first half, a loss of Kes 30.24m was reported from fair value.

Hence EAAGADS total income within the period came to Kes 49.88m leading to loss margin of 42.9% compared to 16.1% loss margin previously.

Surprisingly, even as loss thus mounted, the company was yet to have any issues with its liquidity position. The working capital closed the half year at Kes 116.55m as against Kes 87.16m at the same time last financial year which, of course, gives hope that if the elements could stop being unfavourable, profit may be possible.

EAAGADS LTD: Half year, KesM.
                                   2017.           2016
Total income          49.88.           72.68
Core revenue.         44.69.           72.68
Fair value gain.         5.19.          (30.24)
Cost of production 57.60.           40.53
Gross profit.           (7.71).             1.91
Overhead cost.      13.67.             13.58
Profit before tax.  (21.38).          (11.67)
Profit margin %.    (42.9).            (16.1)
Working capital   145.37.             88.05

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