The Annual Report
by Kobina Aidoo on May 18, 2006 in Culture
Kobina, LLC is a subsidiary of Aidoo Inc., a multinational conglomerate headquartered in Ghana, with two other subsidiaries in the UK. This US subsidiary was incorporated in Florida in 1998. The move was initially beset by language barriers and differences in corporate culture. Fluctuations in the currency exchange rate also worked against us. For the physical year ending June 2006, revenue has been weak, and expenditure has been high, with most cash outflows going to our consultants. Many times this year, we have had to borrow from the parent company and from our U.K. subsidiaries just to keep operational.
A major investment
Towards the end of the previous year, the company struggled to find a clear vision so we contracted the services of a major consulting firm to help restructure and repackage our products and services to make them more marketable. These consultants are reputed to be the best in the business but the relationship has come at acute financial cost and could leave the company in the red for the next ten years. We attempted to leverage proposals from competing consultants as a bargaining tool for competitive bidding but these consultants engage only in no-bid contracts. Most of this investment has been financed by a loan from the Citigroup. Apart from direct payments to the consultants, 30% of our expenditure has gone towards real estate, publishing, transportation, and entertainment. The relationship has also required that we move our U.S. operations from Florida to Massachusetts. We considered seeking consultants in other sectors to add more value to our products and services but the expected value from such a move does not pass the Kaldor-Hicks test.
The state of other partnerships
We have tried several times over the last year to seek mergers with producers of feminine products due to the natural synergies that our two industries enjoy. Some of those mergers have not materialized; a few have been sporadic; others have been ended due to pressure for a permanent merger; but most have been dissolved due to lack of attention to those sectors or lack of internal controls. Some have also been lost in hostile takeovers by competitors. As of now, we have decided to end all such partnerships because we speculate we could form new partnerships in the next year with new entrants into the market.
Guidance for next year
Our consultants assure us that what we gain from their services will lead to significant demand for our products and services by both government and firms, which will in turn result in increased demand by households. Potential clients have already begun soliciting our services, just by virtue of our association with these consultants. This summer, we intend to test the market with our new product, though it is still in development. Given all these positives, we expect revenues to rise sharply early in the next few years to keep us liquid but we estimate we will spend a third of those revenues servicing our debts so our long-term solvency is still questionable.
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