[2008-08-22]  Kapchorua Tea reports loss in Annual results
Kapchorua Tea Company Ltd (NSE Listed) Producer and marketer of tea products has reported their 2007 financial results. According to a company statement posted on the Nairobi Stock exchange website Kapchorua had a net loss of KES 69 million in their fiscal year ending March 31st, 2008 from KES .9 million in the previous year. Annual loss before taxation was KES 103 million, compared to loss of KES2 million in the previous year. Turnover for the year was KES574 million, down from a turnover of KES610 million in the earlier year.

Management Commentary
The Company has incurred loss of Ksh. 23.1 Million from its operating activities, a major drop from last year’s Kshs 18.1 Million profit. This was mainly due to the depressed world tea prices during the year, made worse by the strong Kenya Shilling especially in the last quarter of the year.
The Group incurred substantial foreign currency looses due to the volatility of exchange rates during the year with the Kenya Shilling closing at the strongest rate in the last decade. The bulk of our tea sales are in foreign currency compared to minimal imports on our farms inputs hence the net loss during the strong hilling regime.
Due to severe drought at the end of the year, crop declined with total production at 4.1 Million kilos compared to over 5 Million kilos in the previous year. Production costs continue to rise due to the wage increments, power and fuel costs as well as inflation.

Dividend
In line with the poor results, the Directors recommend a first dividend of KSH. 0.50 (2007 – Ksh 5.00) at the forthcoming Annual General Meeting. The dividend if approved will accrue to those members on he register at the close of business on 25th July 2008. The register will remain closed from the 26th July 2008 to 31 July 2008 both days inclusive with the dividend being paid thereafter of withholding tax as applicable.

Annual General Meeting
The annual general meeting of the Company will be held at the Nairobi Club, Ngong Road Nairobi on Thursday 31st July 2008 commencing at 2.30 pm

Prospects
In view of declining World Tea prices and the continuing strong Kenya shilling, we anticipate further reduction in our sales realizations and looses in a very challenging year ahead. The Directors and Management continue to evaluate the Company’s operations in order to effect every possible cost saving measures to mitigate the anticipated losses.



Source: NAIROBIST