We have extracted the financial summary from the 2018 Annual Report of BOC Kenya Limited, listed on the Nairobi Stock Exchange under the share code BOC.ke. BOC Kenya Limited is a leading supplier of industrial, medical and special gases in East Africa. In 1947 the company started operations in Nairobi and later years, in Kisumu, Kampala, Mwanza and Dar-es-Salaam.
The Company’s turnover for the year ended 31st December 2018 was in line with prior year. Profit after tax was 67% ahead of the previous year as a result of cost management, sustainable efficiencies and savings initiatives that were realized during the year. The Board together with management is driving great innovation and new products pipeline over 2019 and the coming years. The Board is pleased to note the growth in the Healthcare Sector in both Liquid and Packaged gases and Customer Engineering services. This growth is driven by the National expansion in scale and new services of both Private and Public Healthcare facilities and the corresponding quality products that we continue to provide for the benefit of care providers and patients. Indeed the internal processes to maintain the integrity of our gas cylinders, cryogenic tanks and gas reticulation has created strong partnerships with the sector. We acknowledge the various County Governments and partners, with whom we engaged to explore opportunities for increased access to medical oxygen as a life-saving intervention at the first-line healthcare facilities in the Counties as well as in the larger County Hospitals. We are excited at the opportunity to work with the Regional Governments to improve access to medical gases to the last mile. Since being established in 1930, the company has provided gases used in virtually every branch of Industry, Commerce, Science and Research. It is with this experience that we are fully aligned with the Government of Kenya’ big 4 Agenda to increase local manufacturing having invested in the only Air Separation Unit (ASU) in East and Central Africa that guarantees purification of gases to the highest standards (up-to 99.95%). We participate in realization of 100% food and nutritional Security with the innovative solutions we offer other food manufactures, support universal healthcare with our portfolio of medical gases and solutions and support the affordable housing ambition by scaling up developer capacity. The Company revenue has declined over the five-year period presented above due to a variety of factors. Rather than adjust prices upwards in tandem with inflation, the Company has had to concede lower prices due to an increasingly competitive landscape occasioned by the importation of cheaper products from other parts of the world in an increasingly liberal economic environment. That notwithstanding the Company has been able to maintain a relatively steady Gross Profit margin through sustained cost control measures. In the short term the Company is intent on rationalising its operations to address the decreased Operating Profit to Sales margin, with a modest improvement being recorded in 2018. Late payments by public sector customers remain a significant risk and impact the Company’s selling expenses adversely due to increased doubtful debt provisioning. The Company continues to have a cash healthy position with quick assets (cash and cash equivalents, bank deposits and investments in treasury bills) of KShs 645.6 Million 31 December 2018. Current assets have remained more than or nearly twice current liabilities. During the five financial years from 2014 to 2018 the Company declared and paid dividends amounting to KShs 508.6 Million.
We are committed to ensuring sustainable improved financial performance of the Company in the coming years. In this regard we have developed a simplified strategy to defend our market position and break into new segments through focused internal alignment. We will achieve this through protecting our base business, creating new business streams, turning around our customer service operations and strengthening execution with our talented people. Actions have been and are being taken to mitigate against external factors that bear on the Company’s results concurrently with effort`s to ensure that, internally, all employees are demonstrating our behaviours of living our values, achieving our set goals and making an impact. We have shown in volume growth in 2018 with focus on the right channels and we are geared to continue with the trajectory over the next few years along Kenya’s Big 4 Agenda and the oil and gas upstream opportunities that are developing in our Region. We recognise the legislative bodies that continue to lead and support our ambitions and look forward to winning partnerships for the benefit of all our stakeholders.