East African Portland Cement Company (EAPC) expects to raise Sh10 billion from the sale of land as it seeks to unlock crucial working capital for its business.
This is despite doubts about the company's ability to close the land deals, particularly for parcels currently occupied by squatters.
The cement manufacturer says it has engaged banks to provide financing to prospective buyers in addition to subdividing its bulk land, to address liquidity challenges in the planned sale.
“The company has embarked on a regularisation plan of LR 8784/144, 8784/145 and 8784/553, totaling 909 acres which has been heavily populated with informal settlers. This plan ensures that the local community has first right of purchase with expected proceeds of Sh5 billion,” EAPC says in its latest annual report.
“Furthermore, the company has subdivided 1,000 acres of the adjacent property LR 10424, into 50-acre plots which are on sale with expected proceeds totaling to approximately Sh5 billion. These measures will significantly impact working capital.”
The company carved out the land from its investment properties in 2024, valuing them at Sh4.9 billion before disposals of Sh516 million brought down the carrying value of the assets to Sh4.6 billion at year’s end.
The firm says it has identified 7,136 land holdings for disposal, out of which 3,492 parcels have been allocated to squatters who have met registration and deposit conditions.
A further 1,507 parcels have been set aside for staff debt repayment, with 251 parcels already being offered to eligible staff. The balance of 2,127 parcels remains available for disposal through public bidding.
Auditor General Nancy Gathungu has raised concerns over the full realisation of proceeds from the sale of land, saying disposal of parcels currently occupied by squatters is largely dependent on the acceptability of the company’s terms by the occupiers.
This cast doubts into the realisation of part or most of the Sh5 billion in proceeds expected from the sale of the regularised land in Athi River.
“As at the time of the audit, the company commenced the ownership regularisation process, and some settlers had applied for allocation and paid deposit towards the acquisition of the occupied property. In the circumstances, the realisation of assets held for sale is dependent on the acceptance of settlement of offers to informal settlers,” Ms Gathungu said in an audit report.
Proceeds from partial land sales last year helped EAPC end a 13-year dividend drought, after posting a Sh1 billion net profit for the year to June 2024.
The company is expected to pay a dividend of Sh1 per share or a cumulative Sh90 million –a first payout since a dividend of Sh0.50 for the period to June 2011.
“This year, dividends have been made possible through the sale of select idle assets. Enabling us to reward our investors while still prioritising the reinvestment of operational profits back into business. Moving forward, we are focused on ensuring that future payouts can be consistently supported by our strengthened operations,” EAPC board chairman Richard Mbithi said in the report.
The cement firm nevertheless remains a going concern as the manufacturer continues to carry a negative working capital position with current liabilities exceeding current assets by Sh6 billion.
