Report due on stock dip

October 4, 2008
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, NAIROBI, October 4 – The government expects next week to receive a report on the circumstances that led to a drop in the share price of cement manufacturer East African Portland Cement.

Industrialization Permanent Secretary Prof John Lonyangapuo said Friday that during the next board meeting, they would be able to get the report from the Capital Markets Authority (CMA) on why the share price dropped by 42.5 percent, a few days after the company reported a 35 percent drop in profits.

The price had nosedived from Sh108 to Sh40 before settling at Sh62, in what many believe was insider trading, because the margin was way above the 10 percent allowed by Nairobi Stock Exchange (NSE) rules.

“The CMA Chief Executive informed me today (Friday) that they are about to make their findings and we will be able to get the report and probably the steps to take to rectify the situation,” the PS said.

The government and the company lodged a complaint with the CMA resulting in the formation of a sub-committee to look into the matter.

Speaking after a tour of the Athi River based company, Mr Lonyangapuo assured the public that the cement manufacturer was financially solid and cited that the share price had begun to appreciate. It was trading at Sh74.50 on Thursday.

“We are sure that the price will reach where it was before the drop,” he expressed.

On September 23, EAPCC announced that its profits had declined from Sh1.1 billion to Sh715 million for the year ended June, 2008, a decline that was blamed on the foreign exchange loss resulting from a loan that had been taken from the Japanese government eight years ago.

"During the year, the shilling depreciated against the (Japanese) yen resulting in an unrealised foreign exchange loss of Sh345 million, compared to last year’s gain of Sh517 million," EAPCC Managing Director Eng John Nyambok said earlier in a statement.

Mr Lonyangapuo said that the government was working to clear the loan, which had a repayment period of 30 years.

The PS toured the milling plant, which is under construction and which is expected to be commissioned by the end of October. It has the capacity to produce 600 tonnes of cement.

“By next year, we will have doubled our capacity,” the PS enthused.

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