Alarm as 4 public firms fail to publish results

CMA chief executive Paul Muthaura
CMA chief executive Paul Muthaura. FILE PHOTO | NMG 

Four Nairobi Securities Exchange (NSE)-listed #ticker:CMA companies have missed the deadline for publication of their financial results, revealing the extent of their battle to survive under the weight of debts, heavy losses and management crises.

Mumias Sugar #ticker:MSC, Kenya Power #ticker:KPLC , East African Portland Cement Company (EAPCC) #ticker:EAPCC and Uchumi Supermarkets #ticker:UCHUM failed to meet the October 31 deadline set by the Capital Markets Authority (CMA), meaning investors in the firms will have to wait longer to know whether the management generated any returns during the financial year ended June 2018.

The CMA gives listed firms four months after the end of a financial year to publish the results. The regulator now warns that such delays could hurt investor confidence in the firms.

“These delays hurt investor confidence and we hope that operationalisation of the Code of Corporate Governance Practices for Issuers of Securities and enhancing the responsibilities of the audit committees will tighten the governance structures and reduce such delays in future,” the CMA said.

Uchumi and EAPCC are said to have applied for extension of the reporting period and that the CMA was still working with the Uchumi board to resolve the matter. Since January, investors in the four firms have suffered unrealised losses of Sh12.73 billion as share prices took a nose dive. Investors in the firms have also experienced a dividend drought that now looks set to persist, dealing them a double blow.


The Institute of Directors (Kenya) chairman, Duncan Watta, said the delay exposes the underlying management problems in the firms and denies investors crucial information they need to make investment decisions.

“Investors have put in their money and deserve timely reports to make investment decisions. In mature markets, that is something that is never tolerated,” said Mr Watta.

Kenya Power and Mumias Sugar have blamed the delays on recent changes in top management. “The delay is mainly attributed to recent changes in the company’s senior management, which have affected the preparation and finalisation of the annual financial statements and accounts,” said acting chief executive Jared Othieno, who took over on July 16.

Independent analyst Marubu Munyaka, however, reckoned that the delays speak of inefficiencies in the management structures of the companies.

“Firms with good structures always empower sub-committees who report to the main board to ensure that timelines are followed even when changes in top management happen,” Mr Munyaka said.

Mr Watta disagreed with Mr Othieno’s explanation, insisting that management changes cannot be so fundamental as to delay investors’ right to financial information they are entitled to by law, adding that the delays ultimately put to question the authenticity of the numbers eventually reported.

“Good corporate governance dictates that there is always succession planning to ensure continuity,” Mr Watta said.

Kenya Power, which has made changes in top management due to corruption allegations, has delayed release of annual results and issued a profit warning, sending the share price tumbling.

Year to date, investors have lost Sh9.75 billion.

Mumias, which is currently embroiled in boardroom wars amid losses and cash embezzlement claims, is expected to publish its results later this month.

Acting CEO Patrick Chebosi, who came in early June after Nashon Aseka was thrown out, said the delay was due to operational and financial challenges facing the company.

Mumias last paid dividends in 2012, the same year it last made a profit. Its share price has since dipped, shedding a total of over Sh6.2 billion.

Uchumi is struggling to stay afloat amidst Sh900 million winding up suits, and the recent exit of its chairperson, Catherine Ngahu.

The retail chain last paid a dividend in 2014 when it last returned a profit. Year to date, investors have lost Sh1.47 billion at the bourse.

EAPCC investors are waiting to see if it will recover from a six-month performance that saw the loss worsen nearly four times to Sh969.6 million on lower revenues. It has not paid any dividend since 2011. On the NSE, the share has shed Sh882 million since January.