- The IFC remains as a principal funder and shareholder for the bank.
- Diversification has paid off with the bank having 30% of assets and 19% of profits from outside Kenya. While 77% of Diamond Trust’s $61 million after-tax profit is from Kenya, the Tanzania and Uganda operations contributed about $7 million each of profit with Burundi trailing at ~$150,000
- They have extended traditional banking services in the mobile and card age by having M-Pesa at all their ATM machines. They also issues prepaid cards for NationHela, NakumattGlobal and MiCard and handle remittances/money transfer for WesternUnion, MoneyGram and XpressMoney
- Others institutions that may need to have rights issues or raise capital this year include ABC, Commercial Bank of Africa, Consolidated and Equatorial banks.
|Variety of solar options for rural households|
Due to donor-funded support from institutions such as the IFC, whose Lighting Africa initiative offers market research information as well as quality audits on products, the Kenyan market is flooded with a large variety of solar lanterns, both with the ability to charge your mobile phone and without.
|Powerpoint at Twiga|
Given the wide variety and choice available in the Nairobi market, one can choose according to design and price as per one’s preference. However, these solar solutions are limited to a single light and the vast majority of products tend to have the panel either embedded in the light source or attached to it permanently, limiting their flexibility.
4. Solar home systems (SHS): Known colloquially in upcountry locations as “sola”, the basic SHS consists of a solar panel, a battery for holding the charge, between 2 to 4 fixtures for holding energy saver bulbs (known informally as “solar lights”) and the requisite wiring. These kits can cost as little as Kshs 10,000 ($118) including installation and tend to be the starting point for many homes seeking modern energy systems.
Year – Nov-06 ; Nov-07 ; Jul-12
Target (Kshs M) – 735 ; 1,600 ; 1,809
New shares (M) – 15.5 ; 23.3 ; 24.4
Price (Kshs) – 50 ; 70 ; 74
Ratio – 1:8 ; 1;6 ; 1;8
Budget (Kshs M) 41.6 ; 54.7 ; 57.6
The information memorandum is about 236 pages, but with most of the data in it one year old, relating for the financial year that ended in March 2011. Also, there have been no stockbroker reports about this rights issue.
– The authorized share capital of the airline is Kshs 10 billion (102) comprising 2 billion shares with a par value of Kshs 5. 461 million have been issued and in 2011 shareholders had a return on equity of 15%
– Approval has been obtained from the stock exchanges in Tanzania (page 130) and Uganda (page 127) where KQ” share are cross listed
– The directors’ shareholding is listed (98) and they don’t own much in the airline while the CEO does not own any shares in the airline (odd as the marketing camping exhorts Kenyans to invest in the pride of Africa) and this does not bind the CEO to improve the share performance of the airline.
– For any KQ shareholder who does not participate in their shareholding will mean a substantial dilution in their shareholding (93) and this has been enumerate in a court case where a shareholder sued the airline to stop the rights issue
– The success level of the rights issue is to raise Kshs 14.4 billion ($173 million) (26) and KQ will lower its risk profile (and maybe borrowing costs) by having a higher equity (23)
– Kenyans have to own at least 50% of the shares and the transaction advisors may refuse transfer of shares to foreigners that will violate that (p37)
– Shareholders are being offered 16 new shares for every 5 held. They were priced at a discount when the offer was announced, but the market price is now the same as the rights price was at a discount, but now trades (Kshs 14.9) at about the offer price
– The rights issue will cost Kshs 620 million ($7.4 million) (p38) -comprising commissions of Kshs 310 million, advertising 66M , CMA Kenya fees 51M, underwriting (up to 47M), and lead transaction advisor 15M ($180,000)
– The issue is underwritten for only up to Kshs 420 million (93) and they are aiming to raise Kshs 20 billion
– For the full year to march 2011 revenue of Kshs 85 billion( comprising passenger 75, freight 6.5, handing 1.4) and had direct costs of Kshs 54 billion (comprising fuel of 25 billion, landing 8 billion, maintenance 7, sales commission 2.7), fleet ownership of 9 billion, 13 billion on administration (11 billion on staff)
– Of the revenue, 54% is from African routes, 27% Europe, and 19% Mid-East & Asia (68)
– Their hedging policy is to hedge 80% of their fuel requirements for the next one year hedged and 50% for following months (70)
– Their debt equity ratio in 2010 was 111% (borrowings of Kshs 20 billion against equity of Kshs 17 billion) and this improved to 88% in 2011.
– Deferred income – includes compensation from manufacturer (204 -likely Boeing) of Kshs 2.5 billion and they also have deferred tax liabilities of Kshs 8 billion (203)
– KLM appoints the CEO, finance director and one director for each 10% they own (106)
– Directors and key management were paid 223 million in 2011, with directors earning 78 million of that (175 )
– KQ is recruiting expatriate pilots to meet a shortage (65)
– Have an Ab Initio pilot training program (pilots who had no previous flight experience) that now has 87 pilots pilots getting training in south Africa (61). KQ has an arrangement with Co-Op bank in which these students can borrow and pay to for their expensive training of pilots and they have drawn have drawn Kshs 500 million ($6 million) (112)
– KQ will hire a director for a new fleet delivery department and separate that from the technical department (61)
– Have Kshs 20 billion worth of leases (213) and commitments to buy about Kshs 100 billion ($1.2 billion) worth of aircraft (212)
– Paid deposits of Kshs 2.1 billion to Boeing (192) and Kshs 631 million for leases of Boeing and Embraer planes & engines
– Have signed purchase agreements for 10 Embraer 190, three 777-300ER, and 9 Boeing 787 Dreamliner’s with options for 4 more (111)
– Future fleet will comprise Embraers (for domestic/short routes), Boeing 737 (NG) next generation (for medium/Africa routs), and Boeing 787/777 for inter-continental routes) . They also have board approval to acquire 12 freighters (53)
– Sold 2 Saab 340 aircraft to Alandia as well as land in Nairobi and Lusaka, (108)
– All KQ ground staff participated in customer service training at the end of 2011 (65)
– The airline seeks to maintain & improve on on on-time performance but this has been hampered by airport congestion, traffic jams unavailability of equipment and a lack of captains (65)
– KQ plans to re-design their network to decongest JKIA by having more mid-day flight blocks, in addition to the current morning & evening ones (58)
– Passenger meals are by KLM catering and NAS (111)
|On-going construction at Jomo Kenyatta International Airport, Nairobi|
– Comparing airline traffic (62) between Africa to the world, top is South Africa, Egypt air, Air France, and KQ is 8th , just behind Ethiopian and Emirates while for traffic between Africa and Asia, KQ is 6th behind Emirates, Ethiopian, Qatar, Egypt air) .
– KQ enjoys some advantages by having a young aircraft fleet, while other countries don’t have working airlines. It competes in the region with Ethiopian & South Africa, but these airlines have distant hubs in Johannesburg and Addis, while gulf carriers pull traffic away from the region with their long haul aircraft and cheap tickets (64)
– KLM owns 26% of KQ and KQ owns 41.23% of Precision Air in Tanzania (72) after their own rights issue which reduced KQ’s shareholding from 49%.