NAIROBI, KENYA, NOVEMBER 19 ― Deacons East Africa has been suspended from trading at the Nairobi Securities Exchange as the firm navigates financial challenges which have led to its placement under receivership.
The fashion retailer recorded a Ksh229.5 million loss after-tax for the six months period ended June 30, 2018, sinking deeper in the red on the back of falling revenues.
“Notice is hereby given on the suspension in trading of Deacons (East Africa) Plc shares following the appointment of joint administrators by the Board of the company to run its business in accordance with the Insolvency Act of No. 18 of 2015,” NSE said in a public notice on Monday.
The suspension was issued by the Capital Markets Authority (CMA) pursuant to Regulation 22(2) of the Capital Markets (Securities) (Public Offers, Listings and Disclosures) Regulations, 2002.
The suspension in trading of the company’s shares takes effect from Monday, November 19, 2018 and shall remain in force for a period of Forty (40) working days.
“All shareholders, investors and the general public are asked to take note of the suspension,” NSE said.
The retailer’s board has appointed Peter Kahi and Atul Shah of PKF Consulting as joint administrators of the firm.
“It is in the best interest of the company and its creditors for the directors to place the company into administration,” Deacons CEO Muchiri Wahome said in a statement.
The retailer becomes the second listed firm after ARM Cement to be placed under administrators this year.
This is a provision under the Insolvency Act No.8 of 2015 that gives companies going through financial distress an opportunity to appoint administrators to help salvage them from being wounded up.
The retailer has been struggling to re-aligning its business after parting ways with South Africa’s Mr Price.
“Following the sale of the Mr Price (MRP) Franchised Business, the net sales for the Group decreased by 20.7 per cent for the remaining business while the overall decrease (factoring in discontinued operations) was 65 per cent,” Deacons reported earlier this year.
Revenues for the the six months period ended June 30, dropped to Ksh387.1 million from Ksh1.1 billion recorded in a similar period last year.
The fall of Kenya’s giant retailer-Nakumatt has also been blamed for Deacon’s financial woes, as the retail lost a sizable market in the partnership which allowed it to sale its products at Nakumatt stores.