Hi,

I have been looking at EA Cables and the financials are an eye opener to how we invest in companies without actually understanding what they do, too many of us have become like the new york coffee dealer who has no idea of how a coffee tree or cherry looks like.

EA Cables is a mint for the controlling shareholders who basically single handedly decide where the money goes.

The entity is split into 2, Group & Company, yet their is only a single entity worth writing home about in the group and that is the Kenyan business.

Group has a higher payroll than company and even has more raw material stocks. They is also no independent mention of the performance of the Uganda subsidiary.

The Tanzania company made a 24M loss last year and its contribution to the bottom line wanting. It should be treated as a division, the other is a company called Yana in South Africa that is doormat, meant dormant.

Some years back banks where stopped from reporting rental income, this needs to be extended to commercial entities from realising none core business incomes. EA Cables made 58 million from gains on foreign exchange which is 10% of the pre-tax profit.

The directors doubled their remuneration as well as that of its executive officers yet the companies profitability has dropped and the investment decision to go into Tanzania has cost the company major losses.

It is time we got boards remuneration to be pegged on performance or going to the extent is requiring any listed company with a single shareholder holding more than 30% be delisted and treated as a private entity. The 25% public shareholding in EA Cables has no say on the board so why call it a public company yet Cable Holdings Limited has total control.

As with the new constitution which will give more control away from central government to county governments we need to devolve corporate governance in listed companies to the shareholder.

@Robert Yawe

Whoever you are, kudos..I suspect you exist here under another alias.. you stopped short of calling a spade a spade.

In the same way, a controlling foreign owner of a listed subsidiary can engage in dubious tinkering under the guise of transfer pricing, so can our local controlling owners. Other jurisdictions have very stringent rules on this.

Companies like Access, OCHL, Cable, Total, Safaricom, Kakuzi and a few others in the league you mention may easily engage in the practice so as to maximize returns for the controlling outfit at the expense of the kawaida shareholders, without batting an eye or raising eyebrows.

People need to dig into the financial activities between the various companies in different jurisdictions to see if there is a pattern or something untoward. But the safest is to stay out of such except for banks that are under stringent financial supervision.

Since you said it, I must fess I was a little rattled by Centum's registration of a subsidiary in the Cayman Islands and been considering exit - I don't wanna end up with an Uchumi. Anyone here with specific insights into this practice in the Kenyan market?

hehehe..mlenny, ati... ideas-transfer ..lol

@robertyawe, point made well, very incisive.

Your analysis makes me wonder about Transcentury, considering this is the company credited for making billionaires for the shareholders, and perhaps because directors are bound to overlap, hence ethos...

At 31 Dec 2009, for TCL approximate
with group turnover and profit before tax declining 16% and 45% respectively attributable to EA Cables Group and Kewberg
...and an EPS of 0.85 with dividend of 0.05

EA Cables results for 2010 will have a greater knock-on effect on the mother ship. So wonder how fortunes would affect any small investor who has bought shares on the OTC (no CMA) market?