Portland makes U-turn on declared 2013 dividend pay

What you need to know:

EAPCC said in a notice ahead of its annual general meeting scheduled for next Friday that it will not pay dividends for the financial year ended June and the previous period due to a net loss of Sh386.6 million.
The firm had declared the dividend of Sh0.75 for year to June 2013 when it posted a net profit of Sh1.7 billion.
The dividend was, however, not paid after the capital markets regulator suspended all resolutions passed at Portland’s stormy AGM held in December 2013

East African Portland Cement Company (EAPCC) shareholders will miss out on the Sh0.75 per share dividend the firm declared in 2013 after the firm sank into losses last year.

The Nairobi bourse-listed cement maker said in a notice ahead of its annual general meeting scheduled for next Friday that it will not pay dividends for the financial year ended June and the previous period due to a net loss of Sh386.6 million.

The firm had declared the dividend of Sh0.75 for year to June 2013 when it posted a net profit of Sh1.7 billion.

But the dividend was not paid after the capital markets regulator suspended all resolutions passed at Portland’s stormy AGM held in December 2013— including election of directors and confirmation of the cement maker’s financial accounts—following boardroom wrangles.

The EAPCC shareholders will next Friday approve financial statements for the two financial years after Capital Markets Authority (CMA) ruled the 2013 accounts had to be tabled afresh.

“To declare that in light of the company’s financial performance for the financial year ended 30 June 2013, no dividends are payable in respect of the financial year ended 30 June 2013,” EAPCC said in a notice to shareholders.

EAPCC’s U-turn will see shareholders experience a dividend drought for the third consecutive year with the cement maker saying it was hurt by price competition, high staff costs and the weakening shilling.

The company last paid a dividend of Sh0.50 in the period to June 2011.

The boardroom fights at Portland spilled into the public domain in December 2013 when Industrialisation PS Wilson Songa and National Social Security Fund (NSSF) executive Gideon Kyengo stormed out of the company’s AGM and fired a letter to the CMA highlighting alleged multiple improprieties at the cement firm.

The State and NSSF alleged that EAPCC was “in the red” and that the company’s management had cooked the statement of accounts.

CMA consequently suspended confirmation of the cement maker’s financial accounts. But last month the regulator ruled that the accounts of EAPCC had not been manipulated.

“The authority (CMA) engaged the Kenya National Audit Office (Kenao) and management of the company following allegations on the accounts. Kenao has since confirmed that the accounts of EAPCC as at June 30, 2013 present a fair view of the affairs of the company within that financial year,” said CMA in January 15.

Lafarge—which has a 41.7 per cent stake at EAPCC — challenged in court CMA’s decision to freeze the AGM decisions but lost the case.

The High Court in July last year ruled that CMA had acted within its powers when it suspended the shareholders’ decisions and also instituted investigations on matters raised.

Lafarge in December tapped former CMA chairman Kung’u Gatabaki and Prof Sarone ole Sena, the chairman of the Eldoret University Council as its directors at Portland following the exit of ex-KQ boss Titus Naikuni from the board.

Portland’s stock closed Monday at Sh70 per share and has gained 27 per cent over the past month—making it one of the top performers at the bourse over the period.