Olympia in yet another subsidiary shut down

Corporate News

Olympia’s chief executive Michael Matu. PHOTO | FILE 

By VICTOR JUMA, vjuma@ke.nationmedia.com

In Summary

• Olympia Capital is shutting down Dunlop Industries, a Nairobi-based manufacturer of vinyl floor tiles, and Cape Town-based Tiespro Trading, which makes bathroom and kitchen fittings.
• The money-losing subsidiaries have relied on loans from the parent company and its directors to stay afloat.

Investment company Olympia Capital has announced plans to close two of its loss-making subsidiaries, indicating yet another financial blow to shareholders of the NSE-listed firm.

The company is shutting down Dunlop Industries, a Nairobi-based manufacturer of vinyl floor tiles, and Cape Town-based Tiespro Trading, which makes bathroom and kitchen fittings.

Besides posting losses, the subsidiaries have relied on loans from the parent company and its directors to stay afloat.

Dunlop, for instance, made a pre-tax loss of Sh6.2 million in the year ended February last year and owed Olympia Sh49.9 million. The Nairobi Securities Exchange (NSE) listed firm has invested Sh11.5 million in the company.

Olympia had also lent Sh72.8 million to Tiespro for the purpose of taking over the activities of its predecessor Natwood Pty Limited that went into liquidation in 2009.

The firm had told shareholders that the investments and loans to the subsidiaries would be recouped in future either in cash or through conversion to equity.

The decision to close the units however puts the amounts at risk. Olympia’s chief executive Michael Matu told the Business Daily that the write-downs will be “minimal.”

READ: Michael Matu takes back CEO seat at Olympia Capital

The company’s other loss-making subsidiaries, Mather and Platt Kenya Limited-—a fire and mechanical engineering firm and Dunlop received a Sh30 million capital injection from director John Simba and Mr Matu Wamae’s family among other board members.

Mather and Platt and Dunlop Industries posted losses of Sh8.2 million and Sh6.2 million respectively for the full year to February last year, the first time the former dipped into the red and the second consecutive year the latter was in the negative.

Olympia said the two subsidiaries’ current liabilities exceeded their current assets, underlining the urgency of the intervention.

The upcoming closure of Dunlop and Tiespro will scale down Olympia’s geographical footprint and product portfolio, with the company retaining significant interests in firms dealing in household fittings, fire equipment and real estate in Kenya and Botswana.

Standard Investment Bank (SIB) analysts said Olympia plans to re-develop its property along Enterprise Road in Nairobi’s Industrial Area at a cost of Sh500 million.

SIB also noted that the company anticipates completing the sale of its Nanyuki Road-based property in Nairobi in the near term.

Olympia has in recent years had management wrangles over its strategic direction, resulting in changes of several senior-level personnel.