EAST AFRICAN PORTLAND'S FORTUNE TWIST AND TURNS.

The audited figures of Kenya's East African Portland Cement PLC released earlier this month by company secretary, Sheila Kabuki was a classic of twist and turn that could be frustrating.

From the figures, at first it looked like EAPC was headed for real trouble as it revenue dropped 21.9% to Kes 6928.3m with cost of sale refusing to go down as fast, ending at Kes 6165.5m, down only 15.4%.

The net result of this first twist was that gross profit tumbled by 51.9% to Kes 762.8m. Surely from this operating profit should be worse than 2016's. Right? Wrong.

In the end, EAPC reported operating loss of Kes 1316.3m, down 16.9% from 2016's Kes 1584.6m as administration expenses dropped by 29.7% to Kes 2283.3m; as againstoverprovision of Kes 183.3m was written back and even as Other income declined by 72.7% to just Kes 21.5m.

Now surely, 2017 year should end relatively better than 2016 even if as a result of reduced loss. Wrong again.

In spite of Kes 134m forex income compared to Kes 305.7m loss in 2016; and in spite of near firm Kes 617m in finance costs; EAPC reported Kes 1712.9m loss for the year, as against Kes 3734.8m profit before tax in 2016.

How come?Kes Simple: Fair value profit for investment properties delivered the jugular blow by diving by 98.7% to only Kes 84.2m from 2016's Kes 6238.8m.

So, all considered, driven more by paper profits, EAPC total income crumbled to Kes 7036.13m from 2016's Kes 15,192.84m, down 53.7%.

Decoded: because of production challenges, downwards pressure on retail prices due to excess supply and management efforts to squeeze out more efficiency, hopes were raised and dashed by two book entries: over provision written back and tumble in fair value gains.

Naturally, all stakeholders eyes are now fixed on year 2018 to come up with more heartwarming figures.

Meanwhile, liquidity pressure mounts as working capital ended the year at Kes 4247.1m deficit, much worse than minus Kes 2847.3m in 2016 year.

EAST AFRICAN PORTLAND CEMENT;
                         Full year Kes m
                             2017.               2016
Total income   7036.13.          15192.84
Core revenue.  6928.3.              8871.5
Cost of sale.    6165.5.              7238.9
Gross profit.       762.8.             1586.5
Other income.      21.5.                 78.8
Written back.      183.3.                  -
Admin. Cost     2283.9.             3250.8
Op. Profit.        (1316.3).         (1584.6)
Interest income     2.13.                4.36
Forex gain.           134.0.           (305.7)
Fair value gain       84.2.          6238.8
Finance cost.       617.0.            618.1
Profit b4 tax.     (1712.9).       3734.8
Profit margin %.  (24.3).             24.6
Working capital (4247.1).      (2847.3)

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