EAPCC_Annual_Report_.. - Investing In Africa
EAPCC_Annual_Report_.. - Investing In Africa
EAPCC_Annual_Report_.. - Investing In Africa
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2010/2011<br />
EAST AFRICAN PORTLAND CEMENT COMPANY LIMITED<br />
ANNUAL REPORT AND FINANCIAL STATEMENTS<br />
CHAIRMAN’S STATEMENT (continued)<br />
10<br />
Performance<br />
East <strong>Africa</strong>n Portland Cement Company Ltd. experienced<br />
many challenges and opportunities over the<br />
past year, but returned back to profitability. The Economic<br />
climate affected our business in several major<br />
ways as did new entrants and cement imports into<br />
the country. Due to inflationary pressure, increase<br />
in global oil prices, significant decline in the Kenya<br />
Shilling against all major currencies and food shortages;<br />
raw materials, fuel oil, coal and electricity costs<br />
went up. However, <strong>EAPCC</strong> responded by becoming a<br />
more flexible and responsive organization. Our aim<br />
is to maintain our margins in the long-term given the<br />
restructuring of the distribution system and continued<br />
focus on cost containment initiatives. <strong>EAPCC</strong> has<br />
a strong management team that continues to deliver<br />
value to its shareholders.<br />
Due to stiff competition, net sales revenue increased<br />
by 8% to Sh. 10.2 billion from Sh 9.4 billion from the<br />
previous year. Although profitability was affected by<br />
increased cost of sales (by 7%), going forward we<br />
will focus our energies on minimizing our production<br />
cost, improve operational efficiencies, stream line<br />
our procurement processes and implement a wide<br />
range of costs containment measures.<br />
To build a sustainable basis for future operations for<br />
the company, substantial capital commitments were<br />
undertaken and others will be initiated to address<br />
operational inefficiencies, waste and increase capacity<br />
utilization. I am confident that these initiatives<br />
will translate into future suitable value for you in the<br />
foreseeable future.<br />
Dividends<br />
Our overall cash position at the end of June 2011 was<br />
563million from Sh 952million in prior year. <strong>In</strong> line<br />
with its expansion and modernization programme<br />
in the corporate strategy, the Company invested Sh<br />
0.5 billion during the year. The focus of the Board and<br />
Management is to use internally generated funds to<br />
finance the contracted and planned heavy capital<br />
commitments to enable the company gain market<br />
share and competitive edge. During the year the<br />
Company returned to profitability in light of measures<br />
taken to curb operational inefficiencies and<br />
cost containment. As a result the Board is pleased to<br />
recommend a first and final dividend of Sh 0.50 per<br />
share.<br />
EAST AFRICAN PORTLAND CEMENT COMPANY LIMITED<br />
ANNUAL REPORT AND FINANCIAL STATEMENTS 2010/2011<br />
Our Focus<br />
Due to inflationary pressures and Economic Challenges,<br />
consumers have become more price conscious.<br />
Pricing has emerged as a weapon for a market share<br />
in the cement sector. <strong>In</strong>creased cement stocks in the<br />
market due to fresh capacity from the new entrants<br />
and production enhancements by existing players<br />
has set the stage for price wars giving rise to eroded<br />
market share for every cement player. As <strong>EAPCC</strong> we<br />
will continue to aggressively focus on value addition<br />
activities, grow and restructure our business model<br />
in our regional market frontiers. <strong>In</strong> this regard to consolidate<br />
our position as a regional player, the Company<br />
established a subsidiary company in Uganda from 1 st<br />
July 2011.<br />
We will also continue to focus on strong cash management<br />
position and diversification of our revenue<br />
base in line with our vision and mission.<br />
Taxation<br />
As a good corporate citizen, <strong>EAPCC</strong> is committed to<br />
paying taxes promptly as required by law. During<br />
the year under review, the company paid in excess<br />
of Sh 1.34 billion in both direct and indirect taxes to<br />
the exchequer.<br />
HIV/Aids<br />
We are committed to undertake programmes and<br />
activities that shall create awareness amongst<br />
staff and community, to embrace positive behavior<br />
change so as to reduce the negative impact of the<br />
HIV pandemic on our society. We have strengthened<br />
the Peer Educators team so that we can roll out our<br />
HIV/AIDs initiatives to our key third party suppliers<br />
and contractors.<br />
Corporate Social Responsibility<br />
<strong>EAPCC</strong> recognizes the fact that good corporate citizenship<br />
is not only putting in place sound business strategies,<br />
making impressive profits, paying good salaries<br />
and making tax returns. It is about creating partnership<br />
with the community and ensuring both parties<br />
benefit from the co-operation.<br />
We therefore have put in place a comprehensive Corporate<br />
Social Responsibility programme, through which<br />
we share our gains with communities that make operations<br />
possible by being good neighbors and customers.<br />
By devoting more resources annually to CSR, we<br />
powerfully demonstrate our commitment to building a<br />
strong partnership with local communities. Our social<br />
agenda is evident in our involvement in projects, such<br />
as education, sports, water, famine relief and environmental<br />
conservation.