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Friday, August 26, 2005

KPLC announces 2004/5 Results

2004/5 vs 2003/4 (Year End is June 30)

Revenues + 7%
Profit after Taxes + 177%
Earnings per Share +177% (see comments below)

Under the terms of the Memorandum in 2003 in which Preference shares were issued to KenGen & Treasury, KPLC is required to pay KenGen & Treasury a dividend of 7.85% if KPLC announces a dividend on Ordinary Shares prior to 2009. It seems the government's need for cash has compelled KPLC to announce a dividend.

What the paid announcement on Oct 7 2005 does not reveal is the amount that KPLC has to pay out in preferred dividends. Since preferred dividends are paid AFTER taxes, this means the cost to KPLC is 11.2% on a pre-tax basis!

Considering current interest rates & the premium e.g. ARM is paying 1.75% + TBill so 11.2% isn't a bad deal for the Government & KenGen. KPLC should cheaper borrow funds from the market & redeem these Preferred Shares.

EPS overstated
Since the government will get a dividend of Shs. 962 Million the REAL profits for the Ordinary Shareholders is only Shs. 308 Million that equates to NETT EPS of Shs 3.90.

Caveat: KPLC might have cut a "deal" with KenGen & Treasury to pay less.

Paying a dividend was a poor decision for KPLC. A zero dividend would have allowed KPLC to retain an additional Shs. 962 Million. Shareholders would have been much better off if KPLC "splits" the stock or issues a bonus to reward the shareholders.

The dividend is a mere 1% (after a 5% tax) of the stock's value (140/- on Oct 6 2005 & before the announcement). A bonus or split would be tax-free & if a shareholder needed cash, they could sell 1% of their holdings. The value of the 99% would gain substantially more in value with the retention of the Shs. 962 Million.
Mumias Sugar Announces 2004/5 Results

I was unable to find their website but this is what I found on The Standard

Gross Turnover: KShs 12.5 Billion +3.1%
Net Turnover: KShs Billion +%
Profit Before Tax: KShs 1.8 Billion +64%
Profit After Tax: KShs 1.2 Billion +63%
Earnings Per Share: KShs 2.53 +63%
Dividend Per Share: KShs 1.50 +%

I am still updating info....

It seems that the management feels 2005/6 will be even better given:
  • Higher prevailing world sugar prices
  • Exports to EU under preferential terms
  • Higher efficiencies through better management of operations

East African Breweries Limited (EABL) Announces 2004/5 Results

Gross Turnover: KShs 34.8 Billion +16%
Net Turnover: KShs 19.3 Billion +16%
Profit Before Tax: KShs 8.6 Billion +22%
Profit After Tax: KShs 5.8 Billion +22%
Earnings Per Share: KShs 7.24 +23%
Dividend Per Share: KShs 4.50 +29%

Price Aug 26 2005: KShs 155.00

Management seems determined to expand their range of products BUT they have not indicated regional expansion. EABL {then Kenya Breweries Limited (KBL)} sold off their holdings in Seychelles as part of the restructuring process in the 1990s. In addition, EABL swapped 20% of KBL in exchange for 20% of Tanzania Breweries Ltd (TBL).

Management has decided to expand into non-alcoholic beverages since they:
  1. Have excess bottling capacity
  2. Have a well established distribution network
  3. Own Central Glass Industries who manufature bottles & jars
  4. Have too much cash which they want to redeploy
I believe growth in turnover & profits will continue because they:
  1. Continue to rationalise costs even further
  2. Plan to outsource distribution to retail centers
  3. Continously improve on their plant
  4. Maintain their brand name & quality
  5. Introduce new products e.g. Smirnoff Black Ice

Anyway, me thinks that EABL is overpriced.

Caught the Blog bug...

Thanx to bankelele & tHiNkEr'S rOoM for my interest in blogging. Sure I read many blogs, read about them & thought of them...

Wish me luck!