EAST AFRICAN CABLES 2017 TIGHT CABLE

In the financial year to December 2017, there was only one cable in East African Cables Ltd that was stretched to breaking point: Cost of funds  It went haywire and brought all the gains of the year crashing below ground level

According to figures released on Monday, EAC's interest bill more than doubled to Ksh533.1m from Ksh258.9m and greater loss than in 2016 year was inevitable.

Yet, it has looked like a year of good rewards for better cost management before financiers took their good flesh.

Sure, Total income had dropped by 35.6% to Ksh 2353.96m as core revenue dived by 35.8% to Ksh 2345.1m, good cost management almost turned even this into good news

This was because cost of sale dropped by 40.9% to Ksh 1681m; selling and distribution cost decreased by 41.4% to Ksh 81.3m and factory expenses went down by 38.5% to Ksh 208.8m.

That left only administration cost upwards but even by absorbable 1.27% to Ksh349.6m.

Hence all said profit of Ksh 33.3m before interest and tax was reported compared to Ksh 11.6m corresponding loss in 2016.

It was a glimmer of light that even looked like shinning some more because impairment provision declined by 51% to Ksh 121.7m and exchange loss dropped to Ksh 17m but alas, the interest bill hammer came down.

Hence compared to Ksh 810.3m loss in 2016 before tax, Ksh 926.9m loss was reported this time around.

Management maintains that its efforts at holding down costs were checkmated by unfavourable political situation within the year, credit sourcing challenges and decline in construction.

Yet, there does not seem to be end to the tunnel yet. EAC's liquidity position remains precarious and it is likely to reach out for more costly short term funds in the future unless new money is injected by shareholders or new investors.

EAST AFRICAN CABLES LTD: Ksh m
                                 2017.           2016
Total income.       2353.96.      3657.96
Core revenue.       2345.1.        3650.5
Cost of sale.         1681.0.        2846.5
Gross profit.            664.1.          804.3
Other income.             8.86.           7.46
Factory expenses.  208.8.          339.4
Administration.       349.6.          345.2
Selling etc.                 81.3.          138.8
Operating profit.       33.3.          (11.6)
Impairment.             121.7.         248.2
Interest charges      533.1.        258.9
Exchange gain.       (17).            (20)
Profit b4 tax.          (926.9).     (810.3)
Tax credit.                264.1.        227.7
Profit after tax.     (662.8).     (582.6)
Working capital.  (2229.6).   (1335.2).

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