Category Archives: Coca Cola

M&A Moment: November 2019

A roundup of East Africa merger deals announced, ongoing, or completed in the latter half of the year 2019. Most are drawn from approval decisions from the Competition Authority of Kenya (CAK Kenya).

The deals include:

Airline/ Oil/Energy/Mining M&A

  • The CAK authorized the proposed acquisition of 863,477 Series B preferred shares in Windgen Power USA Inc. by Omidyar Network Fund LLC, Acumen Fund Inc., Stitching DOB Equity and Microgrid Catalytic Capital Partners.
  • Rubis, having completed the takeover of Kenol, are now going after Gulf Energy, the fourth-largest fuel marketer in Kenya with 46 stations.
  • A bid by the owners of IberAfrica, Kenya’s largest thermal power producer, to sell the company to a South African energy firm has collapsed. Read more.

Banking and Finance: Finance, Law, & Insurance M&A

  • The CAK approved the proposed merger between Commercial Bank of Africa and NIC Group on condition that they retain 1,872 employees for a period of 12 months. Post-merger, the market share of the entity will be 10.67%, making it the country’s second-largest bank.
  • Equity Group entered a non-binding agreement with certain shareholders of Banqué Commerciale du Congo (BCDC), for the purchase for cash of a controlling equity stake in BCDC, with a view to eventually amalgamating the business of BCDC with that of EGH’s existing banking subsidiary in DRC, Equity Bank Congo.
  • The CAK approved the proposed acquisition of National Bank of Kenya by KCB Group on condition that 90% of the merged entity’s employees will be retained for a period of eighteen months.
  • Fund manager ICEA Lion Asset Management has signed an agreement to acquire Stanlib Kenya’s business of managing funds, assets and investment in Kenya – including the Fahari I-REIT – in a deal valued at Kshs 1.5 billion. 
  • The business of non-deposit taking micro-finance carried on by Kenya Ecumenical Church Loan Fund has been transferred to ECLOF Kenya. 
  • The CAK has authorized the proposed acquisition of 93.57% of  Transnational Bank Plc by Access Bank Plc.
  • Exim Bank Tanzania acquired UBL Bank, a subsidiary of Pakistan’s UBL Bank, as part of its plan to expand nationwide and become a top- five bank in the country. It now has assets of 1.7 trillion Tanzania shillings. 
  • In 2017 private equity firm Capitalworks acquired AON’s shareholding in several African operations, alongside local shareholders including governments in many markets.
  • I&M Holdings unit, GA insurance has acquired 100% of Nova Insurance Company in Uganda. It is part of GA’s plan to expand across East Africa where insurance penetration remains low. (via Kenyan Wall Street).

Agri-Business, Food & Beverage M&A

  • Coca-Cola Sabco (East Africa), which owned 72% of Nairobi Bottlers, has bought 27.6% of that company from Centum Investments, along with 53.9 % of Almasi Bottlers for a total of Kshs 19.2 billion. Centum states that the stakes had a combined value of Kshs 16.8 billion. CAK approved the deals on condition that it continues to operate current bottling plants in Nyeri, Eldoret, Nairobi, Molo and Kisumu for at least three years and retains 1,749 of the 1,760 permanent employees for the same period. Also that Almasi reserves 20% of the storage space in its coolers to SMEs for products (excluding products of Coca-Cola’s three largest global competitors). Coca Cola shall also allow Coastal Bottlers to distribute other non-alcoholic ready-to-drink brands.
  • The CAK approved Vivo Energy B.V.’s proposed investment in Kuku Foods which operates 24 outlets in Nairobi, Mombasa, Nakuru, Eldoret, Kisumu and Nanyuki under franchise from America’s Kentucky Fried Chicken (KFC).
  • The CAK approved the proposed subscription of 33.9% and joint control of Maziwa by Pledge Holdco, which is wholly-owned by Texas Pacific Group (TPG). Maziwa is owned by Bainne and distributes of milk and milk-related products in Kenya, Uganda and Zambia under the brand name ‘Lola’.  The CA determined that the main players in the processed milk market, were Brookside Dairy (40%), New Kenya Co-operative Creameries, (25%), Sameer Agriculture (14%) and Githunguri Dairy Co-operatives (12%) while the merged entity will have a market share of 3.9%.
  • The CAK approved the acquisition of 100% of Aquamist Ltd by Aquapani Ltd. Aquapani is newly incorporated in Kenya as a wholly-owned subsidiary of the Menengai for the sole purpose of this transaction. The deal is being done alongside Aquaplast which manufactures PET bottles, jars and closures and Polycarbonate plastics for refillable water containers mainly for the bottling business of Aquamist.
  • The CA-K approved an investment by Stitching DOB Equity and Acumen Fund into Coconut Holdings which had a turnover of Kshs 162 million in 2018. More here.
  • The CA-K approved the acquisition of 100% of Gilani Butchery by Upland Meat Products. Gilani had s turnover of Kshs 116.9 million in 2017.

Health and Medical, Pharmaceutical M&A

  • The CAK authorized the proposed acquisition of Honos Parent Ltd By Doctor No Parent Ltd
  • US pharmaceutical firm Johnson & Johnson has teamed up with private equity firms, South Africa’s Inqo Investments and London-based Sumerian Partners, to buy out Naivasha-based South Lake Medical Centre in a deal valued at nearly Kshs 100 million. The hospital was acquired from Flamingo Horticulture which had established the facility to serve its low-income farmworkers.  
  • Interswitch has acquired eClat, expanding its reach into Nigeria’s health-tech sector. The move is the latest in a series of strategic investments into Africa’s growing digital marketplace by the firm. Asoko has tracked 8 other deals in the Nigerian health care industry since 2015, of which the eClat deal is the second involving a health-tech firm. Investors were most active in the pharmaceutical segment, with three deals in that space over the period. (via Asoko
  • The CAK authorized the acquisition of 54.23% of AAR Health Care Holdings by Hospital Holdings Investments.

Logistics, Engineering, & Manufacturing M&A

  • The  CAK authorized the proposed acquisition of all ARM Kenya‘s (Under Administration) businesses, assets and properties by National Cement Company on condition that the merged entity ensures continued operation at ARM’s Kaloleni and Athi River plants and retains 95% of ARMs 1,100 employees.
  • The CAK authorized the proposed acquisition of the plastic manufacturing business of Metro Plastics (Kenya) by Metro Concepts East Africa on condition that the acquirer absorbs at least ninety employees.
  • CAK has authorized the proposed acquisition of control of Chemi & Cotex Kenya by Unilever Overseas Holdings B.V on condition that the acquirer continues providing the products (Whitedent, Bodyline, Baby Soft, Skin Glow, Siri, U & Me, Lovely, Barnister and Tressa) in the market for at least three years.
  • The CAK approved the proposed acquisition of an additional 47.5% shareholding in Speedex Logistics Ltd by Suresh Naran Varsani. The transaction will result in a change of ownership from joint to sole control.
  • The CA-K approved the acquisition of direct control by Tuffsteel in Hwan Sung Industries Kenya which has a turnover of Kshs 5.8 million in 2018.

Real Estate, Tourism, & Supermarkets M&A

  • The CAK approved the proposed acquisition of 100% of Quick Mart by Sokoni Retail Kenya, which is owned by Adenia Partners of Mauritius, a private equity fund manager. Quick Mart, incorporated in 2006, has 10 supermarket outlets located in Kiambu, Nairobi and Nakuru counties. In October 2018, Sokoni had acquired Tumaini Self Service, another retailer in Kenya with 13 outlets located in Nairobi, Kiambu, Kajiado, and Kisumu counties. EDIT Quickmart has recently undergone a merger with Tumaini Self service stores and the merged entity will be the third largest retailer in Kenya, backed by a strong institutional investor, with plans to open 6 stores over the next year.
  • The CAK approved the proposed acquisition, with controlling rights, of 22.32%  of the Riara Group of Schools by Actus Education Holdings AB. Riara operates six learning institutions in Kenya which offer the 8.4.4 and British Curriculum education systems. The CA found that of the schools offering British Curriculum, Braeburn Schools with 10.2% of the students, Aga Khan Academy 7.1%, Srimad Premier Academy 3.8%, and Oshwal Academy 3.4%. The CAK has approved the acquisition of 100% of the shares in Abercrombie & Kent Group of Companies by Heritour Ltd. One of Abercrombie’s Kenya subsidiaries is a tour operator that offers tourist accommodation in the Maasai Mara.

Telecommunications, Media & Publishing M&A

  • The CAK authorized the proposed acquisition of 100% shareholding in Eaton Towers Holdings by ATC Heston B.V 
  • BRCK has acquired the Surf Network. BRCKs Moja Network passed 300,000 unique monthly users in January, with 1,500 mobile nodes in buses and matatus across Nairobi and Kigali. The new acquisition takes them close to 500,000 active monthly unique users,  and they state this is the largest public Wi-Fi network in East Africa, and second-largest on the continent. 
  • Co-creation Hub (CcHUB), the leading technology innovation centre in Nigeria, acquired Kenya’s iHub for an undisclosed fee. The deal will see the iHub become part of the CcHUB’s network, while retaining its name and senior management structure.  The move comes seven months after CcHUB expanded into Rwanda, with the launch of its Design Lab. 
  • The Airtel-Telkom merger is still ongoing. Kenya’s Parliament has raised some queries about the transfer of government assets and shares as has the Ethics and Anti-Corruption Commission. Rival Safaricom also stepped in and pressed for the two companies to settle a combined debt of Kshs 1.3 billion they are owed before the transfer is completed. They also argue that the merged entity will have an outsize frequency allocation (77.5 MHz of spectrum serving 17.3 million customers) compared to Safaricom (who serve 31.8 million customers with 57.5 MHz) and ask that this is rebalanced.
  • The CAK authorized the proposed acquisition of 100% of  De La Rue Kenya by HID Corporation on condition that all existing contracts De La Rue has with the Kenyan Government are honoured.
  • The CAK has authorized the proposed establishment of a joint venture and the acquisition of control of certain assets of Kul Graphics, The Rodwell Press, Printfast Kenya, Digital Hub and Colourprint by The Print Exchange on condition that the parties retain 100 permanent employees of the merger parties for a period of one year after completion of the transaction and the 72 contractual employees serve to the end of their contracts.  In May 2019, the directors of the six companies had announced plans to merge due to the printing industry’s price sensitivity and demands for new technological innovations that had created financial and operational challenges for them.
  • The CAK has approved the acquisition of 80% of iWayAfrica Kenya by Echotel International Proprietary. iWayAfrica Kenya provides a range of ICT services. The CA estimated market shares for the main providers of retail Internet access services to be Telkom Kenya (28%), Liquid Telecom (25%), Safaricom (14%), Internet Solutions (13%) and Simbanet (4%). iWayKenya is at 1.2% and Echotel at 0.6%.
  • It was announced this week that two of Tanzania’s best-known telecommunications companies – Tigo and Zantel – have completed there merger, combining their operations on both mainland Tanzania and Zanzibar. (via Arden Kitomari)
  • The CA-K approved the acquisition of direct control of Digital Packaging Innovation Holdings and A-One Plastics by Rifts Investments.
  • ScanGroup is set to sell two of its subsidiaries for more than Sh2.4 billion in a deal that was triggered by a related transaction involving its London-based parent company WPP Plc with Bain Capital. Read more.

Other M&A

  • The business carried on by Pa’shante Enterprises in Nairobi has been sold and transferred to Pashante Greens Africa.
  • The assets and inventory of Mapflex East Africa at Airport North Road will be transferred to Actiflex Ltd. 
  • The business of a barber and spa carried on Crystal Barber and Spa on Kiambu Road has been sold and transferred to Esther Kinya Guantai. 

Since the last update in January 2019

Coca-Cola Innovation Push

Coca-Cola today launched “Coke plus Coffee”, a coffee-flavoured beverage that is one of five new products that the company is introducing in Kenya to match new and changing consumer tastes and spending habits. 

Also unveiled was “Minute Maid Nutridefenses” in five different fruit flavours, “Sprite” and “Fanta” without sugar, “Fuze” tea bags, and “Powerade”, a rehydration drink for sports users that will feature at the Olympic Games.

At the launch, Company representatives said that the developments were guided by their research to come up with new products and to deliver choice and convenience to customers by providing quality products – dubbed  “the right refreshment, in the right package, at the right price.”

Aside from the new beverages for coffee lovers, juice lovers and sports people, Coca-Cola is also moving to reduce its plastic footprint by shifting the distribution of Dasani water to glass, returnable bottles that are sold at more affordable prices. This is alongside a wider push to accelerate the collection and recycling of plastic bottles and reduce waste pollution in East and Southern Africa.

Aside from this Coca-Cola is in the process of completing a deal with Centum Investments to take control of beverage bottling companies in Eldoret and Nyeri (through Almasi) as well as Nairobi Bottlers.

Idea Exchange: Anzisha, Obama, Elumelu, HEVA

EDIT The African Banker Awards that will take place during the African Development Bank Annual Meetings on 11th June in Malabo, Equatorial Guinea are now accepting entries for the awards of African Bank of the Year, African Banker of the Year, Investment Bank of the Year, Best Regional Bank in Africa, Best Retail Bank in Africa, Innovation in Banking, Infrastructure Deal of the Year, Deal of the Year (Debt), Deal of the Year (Equity), Award for Financial Inclusion, and Socially Responsible Bank of the Year. All financial institutions (banks, micro-financiers, investment banks, DFIs and others) are invited to compete. Completed entry forms should be submitted by Monday 1st of April.

Edit Africa CEO Forum Awards recognizes outstanding business leaders and this year includes a  “Gender Leader of the Year” prize and “Disrupter of the Year” award to go with other existing awards for CEO of the Year, African Champion of the Year, and International Company. Some nominees include Mohamed El Kettani – Attijariwafa bank and Tewolde Gebremariam – Ethiopian Airlines for “CEO of the year”, Banque Centrale Populaire, Ethiopian Airlines, OCP Group and Royal Air Maroc for “company of the year”, Absa Group, Access Bank, First Bank of Nigeria and Unilever for “gender leader” and Africa’s Talking, Baobab+, InTouch, Jumia and Kobo360 for the “disruptor” award. The awards will be given during the 7th Africa CEO Forum on 25 – 26 March 2019 in Kigali, Rwanda.

Africa Netpreneur Prize Initiative (ANPI) will officially open its call for applications starting from the 27th of March 2019. The ANPI is a US$10 million Prize competition for African entrepreneurs, founded by the Jack Ma Foundation, where ten finalists from across the continent will compete for US$1 million in total prize money. Deadline for applications is 30th June 2019

EDIT Class 5 of the Alibaba Global Initiatives eFounders fellowship is open to founders/co-founders of digital ventures from Botswana, Cameroon, Chad, Kenya, Rwanda, or Uganda. It is jointly organized by Alibaba Business School and UNCTAD and the deadline is March 17. Note that the fellowship does not cover air tickets and transportation/pick-up services to and from Hangzhou, China.

The Anzisha Prize is Africa’s biggest award for her youngest entrepreneurs and hands out over USD $100,000 every year in funding to entrepreneurs from all over the continent.  Details here.

EDIT  The British Council Future Leaders Connect, is a global network for emerging policy leaders seeking to connect to a long-term network of emerging leaders from around the globe, who want to change the world through policy making. To take part you must be aged 18-35 and live in one of our participating countries – Canada, Egypt, India, Indonesia, Kenya, Mexico, Morocco, Nigeria, Pakistan, Poland, Tunisia, UK and USA. Applications from Egypt and the USA are by invitation only. Applications close on Monday 6 May 2019.

EDIT Cities Alliance a global partnership supporting cities to deliver sustainable development, hosted by the United Nations United Nations Office for Projects Services (UNOPS), is offering grants up to USD 50,000 to people working on innovative and accessible solutions for improving tenure security and land and property rights in any African country. It is open to Innovators, microenterprises, social entrepreneurs, community-based organisations, and national and local NGOs working in African cities.  Deadline to apply for the Cities Alliance is  March 14, 2019.

Edit Coca-Cola Beverages Africa and PETCO have launched an innovation challenge, dubbed the Beyond Baling Innovation Challenge (BBIC), that aims to provide innovative solutions to bale post-consumer PET plastic in order to ease their transportation for recycling and manufacturing.

DRC Innovation for Financial Services 2019:  The Central Bank of Congo, in partnership with FSDA Africa and Elan DRC, has launched Innovation for Financial Services 2019, a competition for businesses and entrepreneurs aimed at promoting the development of innovative and relevant financial services and payment solutions in the DRC. The winner of each category will then have access to FSD Africa’s investment process with the possibility of raising up to US$130,000.

The Tony Elumelu Foundation, the leading African-funded and founded philanthropy committed to empowering African entrepreneurs, has announced its last call for applications into its prestigious 2019 Entrepreneurship Programme. Selected beneficiaries will join 4,470 current alumni and will receive $5,000 seed capital, access to mentors, bespoke training and numerous opportunities to impact policies at the local and global level.

The programs is a 10-year, $100 million commitment to identify, train, mentor and fund 10,000 African entrepreneurs, the Programme’s objective is to generate at least 1,000,000 new jobs and create at least $10 billion in new business revenue across Africa. Applicants can apply on TEFConnect, the largest digital networking platform for African entrepreneurs by March 1.

HEVA Fund: HEVA has launched a Growth Fund in collaboration with Agence Française de Développement (AFD), targeting mature businesses in the creative economy – fashion, apparel and accessories; live cultural events (music, shows, venues, festivals); and digital media content production and distribution. – that have been in operation for at least 5 years, with annual revenues exceeding KES 10 million. The targeted businesses are in the following creative economy value chains:  HEVA will be investing a minimum of KES 5 million and a maximum of KES 10 million in each successful enterprise. Deadline is 13th March 2019. HEVA is also receiving applications for its Cultural Heritage Fund and for a Young Women in Creative Enterprise Fund.

The Inter Region Economic Network (IREN) has launched the IREN Technologies and Innovations Platform 2019 (ITIC 2019) to promote the best mix of technology and innovation to processes along the agribusiness value chains. Innovators are expected to address the region’s challenges in value addition, energy, storage, logistics and marketing. The Lake region is known for fish, grain, vegetable, cash crop, dairy and livestock production. IREN welcomes Institutions and established companies to participate in the final ITIP 2019 Trade Fair to be held later in November 2019.

Edit MEST: Five promising start-ups from across Africa have been chosen as regional winners in MEST Africa’s annual Pan-African pitch competition, moving one step closer to winning $50,000 in equity investment, a place in the MEST Africa incubator of their choice and global mentorship to help their company scale. The winners who were chosen from over 1,000 applicants are AMPZ.TV – a ‘LinkedIn for Sports’ (Nigeria), OZÉ – a financial data insights company (Ghana), Snode – real-time cyber security (South Africa),  WayaWaya – a fintech company (Kenya) and Seekewa – an agricultural financing platform (Cote d’Ivoire).

Obama Founder Leaders Africa Applications are live for the Obama Foundation Leaders Africa Program which aims to identify a group of emerging African leaders from all sectors—government, civil society, and entrepreneurs—who have demonstrated a commitment to advancing the common good. Apply by February 28, 2019.

Edit  Pivot East: East Africa’s premier entrepreneurs’ program is back for its 6th year after a two year break with a call for applications opening on 11th March 2019 and the startups pitching competition and conference event happening on 27th June 2019. Applicants can be in software and hardware in five categories of finance, enterprise, entertainment, social Impact and utilities.

Sanofi, the global pharmaceutical company, extended the registration deadline for entries to this year’s edition of the VivaTech innovation conference. 17 Kenyan start-ups have registered so far and are expected to participate in the conference.

Coca-Cola in Kenya 2017

Last night, Coke Studio Africa, the musical show from Coca-Cola had performances by Bebe Cool of Uganda and Falz the Bad Guy of Nigeria. They were amazing performances by top performers and I was fortunate to be at the earlier taping of the show. The production was very impressive to see live, the crowd at the taping was enthralled and it would not be a surprise if the two stars continue to perform together for many years after their first meeting in Nairobi. Coke Studio Africa, now in showing its 2017 edition, has done a lot to introduce musicians from different parts of Africa to new audiences in other parts of the continent – and the rest of the world through the Coke Studio Africa show clips which are available on YouTube and the new songs from each of the seasons that can be downloaded on a Coke Studio Africa app.

Bebe & Falz: Image from Coke Studio Africa

Besides the filming and production of Coke Studio Africa in Nairobi, Coca-Cola has had a busy year in Kenya. In the last few weeks, despite the Kenya election which usually sees a slowdown in corporate activities, they have had two major product launches – one for Minute Maid Pulpy Orange, and another for Coca-Cola Zero Sugar (formerly Coke Zero) which is now available in a wider variety of bottles.

At the same time, the acquisition of Coca-Cola Beverages Africa Proprietary (CCBA) by Coca-Cola was completed – for continues production of Keringet bottled water brand at Molo. CCBA  also bought out Equator Bottlers at Kisumu, the third largest Coca-Cola bottler in Kenya which supplies products in the Western Kenya.

At the same time Centum Investments which owns 27% of Nairobi bottlers, and 53.9% of Almasi Beverages – both bottlers of Coca-Cola products, also moved to increase their stake in Almasi by offering other shareholders Kshs 7 per share. Almasi had Kshs 7.8 billion of sales in 2016, and a pre-tax profit of Kshs 1.05 billion. Alamasi, the second largest bottler in Kenya behind Nairobi bottlers, and according to Centum – accounts for 28% of the volumes sold in 2016, which puts Coca-Cola sales in the country at  ~Kshs 28 billion.

Reading the Tea leaves at Centum, Kenya Airways, Safaricom – Part III

Following up from last year, three companies that had their year-end in March 2017 – Centum, Kenya Airways, and Safaricom have just published their annual reports. Later this month, they will all have shareholders annual general meetings – Safaricom’s will be on September 15, Kenya Airways, who already had an EGM will have their AGM on 22 September, while Centum’s will be on September 25th at Two Rivers, Nairobi.

Notes from the annual reports.

Centum:

  • Has a massive 234-page annual report (up from 192 pages), and the company has 37,163 (last year 37,325) shareholders. 44 shareholders have more than 1 million shares.
  • Board changes at the AGM: New chairman Donald Kaberuka will meet shareholders, and this year Henry Njoroge Imtiaz Khan and Dr. James McFie all step down from the board.
  • Shareholders will also be asked to approve the incorporation of ten Ramani Arch companies as Vipingo subsidiaries, Rehati Holdings, Zahanati Holdings Greenblade Growers, and a Greenblade EPZ.
  • Centum will pay shareholders Kshs 1.2 per share dividend (up from 1.0 last year)
  • Had 86 billion assets. Profit was Kshs 1.5 billion for the year then added with other gains from value changes, this reached Kshs 6.1 billion.
  • Their auditors, PWC, flagged issues like loan impairment at Sidian, loans at Chase Bank, the value of unquoted assets, the value of goodwill, and the value of investment properties.

    Centum shareholders to meet at Two Rivers.

  • Centum has 35 billion worth of subsidiaries including Two Rivers Development (50% of lifestyle centre and 100% of water, ICT, apartments, and phase 2) , GenAfrica Asset Managers (73%), Almasi Beverages (52% of Investment holding company for Mount Kenya Bottlers, Kisii Bottlers and Rift Valley Bottlers), Bakki Holdco (Sidian Bank) and Vipingo Estates
    Associates: Centum sold off their entire 26.4% of KWAL (for Kshs 1.1 billion) while at Longhorn they raised their stake to 60%.
  • Unquoted investments include General Motors East Africa (GMEA – estimated Kshs 3 billion worth), Nas Servair (estimated Kshs 765 million) and Nabo. NAS, where they own 15% opened three Burger King restaurant franchise outlets in Kenya. Centum still owns 17.8% of GMEA after Isuzu bought a majority 57% stake from GM. They also own 25% of Platinum Credit that provides loans to civil servants and has 80,000 customers.
  • Their Lulu Field acquired 14,000 acres in Masindi Uganda for agriculture.
  • They own  27.6% of Nairobi Bottlers which accounts for 47% of the Coca Cola sold in Kenya.
  • In energy, they own 37% of Akira geothermal and 51% of Amu Power.
  • Managers earn more from performance bonuses than salaries.
  • They have borrowed Kshs 1.4 billion from Coca Cola Exports (for Almasi to buy crates and bottles), 3.1 billion from First Rand, Kshs 982 million from Cooperative Bank (for working capital), Kshs 573 million from Chase Bank (for infrastructure at Two Rivers and vehicles for Longhorn), and Kshs 440 million from KCB (for machinery at Mt. Kenya Bottlers)
  • They are owed Kshs 12 billion by related parties including 1.1 billion by Two Rivers Development, 3.1 billion by Centum Exotics, 3.3 billion from Centum development, 1.3 billion by Mvuke (Akira geothermal), 672 million at Vipingo Development and 533 million from Investpool Holdings.

Kenya Airways 

  • The report is 172 pages (up from 149 pages) and KQ has 79,753 shareholders (up from 78,577).
  • Going Concern: While their auditors KPMG have a material matter about KQ’s uncertainty as a going concern, the Directors have prepared the consolidated and company financial statements on a going concern basis since they are confident that the plans described above provide a reasonable expectation that the Group and Company will be able to meet their liabilities as and when they fall due and will have adequate resources to continue in operational existence for the foreseeable future. The Directors believe the plans above will improve the Group and Company’s profitability, cash flows and liquidity position. 
  • Sebastian Mikosz takes over as Group Managing Director & CEO, replacing Mbuvi Ngunze.
  • Tax treatment: the accumulated tax loss of Kshs 71 billion of Kenya Airways and Kshs 782 million of JamboJet will be carried forward for ten years and used to offset future taxable profits.
  • The fleet in 2017 had 39 aircraft down from 47. The board approved the sale of 6 aircraft, and 5 have since bene sold. Also, two Embraer 170’s were returned early to the lease owners while three Boeing 777-300 were leased for four years by KQ to Turkish Airlines with another two Boeing 787-800 leased to Oman Air for three years.
  • Borrowings Barclays Bank PLC – Aircraft loans 325 million at 4.87%, Citi/JP Morgan – Aircraft loans Kshs 71,649 million at 1.89%, African Export – Import Bank (Afrexim) – Aircraft Loans Kshs  21,050 million at 4.82%, and short-term facilities of 24,776 million at 8.58%, and Government of Kenya  24,540 million at 8.58%. The short term facilities were drawn down from Equity Bank, Jamii Bora Bank, Kenya Commercial Bank, Commercial Bank of Africa, I & M Bank, Chase bank, National Bank of Kenya, Diamond Trust Bank, Co-operative Bank, NIC bank and Ecobank for the financing of pre-delivery payments for ordered aircraft.
  • On Time Performance (“OTP”):  The top delays contributors were:1) Aircraft serviceability and availability;2) ATC restrictions and weather;3) Passenger and ramp handling;4) Crew shortage; and5) Connectivity due to new schedules with more efficient use of aircraft.
  • 13 incidents related to disruptive passengers/inappropriate behaviour were reported in 2016/17 financial year compared to 21 incidents reported in the prior year.
  • A total of 70 bird strikes were reported during the period under review compared to 63 cases in the prior year. Most of the reported bird strikes caused minimal damage to our aircraft, but several resulted in costly maintenance, parts replacement, and operational delays. These include two reported air turn back incidents and two rejected take-offs due to bird strikes.

Safaricom

  • The report is 144 pages (down from 172) and the company has 582,775 shareholders (down 600,000 shareholders last year and 660,000 the year before that).
  • At the AGM, shareholders will approve payment of a dividend of Kshs 0.97 per share (out of EPS of 1.21) – for a total dividend payout of almost Kshs 39 billion. Last year they paid Kshs 57 billion in dividends (35% of which went to the government to whom they also paid Kshs 84.3 billion in taxes and other fees).
  • Shareholders will approve a name change to Safaricom PLC. Also, they will vote on special board change resolutions following the Vodacom Vodafone deal; these  will mandate that the Chairman and all independent directors of Safaricom be Kenyan citizens, and also to require that a super-majority of the board (75% of directors) vote to approve changes to the business plans, appointments of the managing director and chief financial officer, and branding of the company – which previously Vodafone had a direct veto over.
  • Balance sheet of Kshs 108 billion down from 117 billion.
  • Bonga points (a loyalty scheme) now total  Kshs 3.3 billion (up from 3.2 billion) are a liability to be converted to revenue as customers utilize their points.
  • Safaricom also has deferred revenue of Kshs 3.4 billion from unused airtime and bundles (up from 2.7 billion) which include Kshs 243 million of managed services under the police contract.
  • For, the National Police Service communication project an amount of KShs7.5 billion was received during the year and the outstanding balance at the year-end was KShs4.47 billion.
  • The Group has short-term borrowing facilities with Commercial Bank of Africa, Standard Chartered Bank and Barclays Bank of Africa.
  • Safaricom has an active ESOP: 13.7 million shares historically valued at KShs193.2 million (2016: 30.4 million shares valued at KShs375.12 million) vested and were exercised by eligible staff.
  • Risks: their auditors, PWC, flagged  issues such as accuracy of revenue recognition, while
    Safaricom itself considers business risks including terror and cyber attacks, competition  (from companies like WhatsApp), the regulatory environment and weakened economic growth.
  • They have an Insider trading policy. Directors and staff are made aware that they ought not to trade in the company’s shares while in possession of any material insider information that is not available to the public or during a closed period.
  • Subsidiaries are One Communications, Instaconnect, Packet Stream Data Networks, Safaricom Money Transfer Services, East Africa Tower Company, IGO Wireless, Flexible Bandwidth Services, Comtec Training and Management Services, and Comtec Integration Systems – all 100& owned, while The East African Marines Systems Limited (TEAMS) is an associate company where they own 32.5%.
  • New products and innovations include Blaze, Flex and M-Pesa Kadogo under which they waived all charges for m-pesa transactions smaller than Kshs 100 ($1). 
  • Besides partnerships such as M-TIBA, Eneza and M-KOPA, they had others with women in technology, Little Cabs, athletics and music. Also, the Safaricom Spark Fund invested in six companies – Sendy, mSurvey, Eneza, Lynk, FarmDrive, and iProcure.
  • The company donated Kshs 381 million to the Safaricom foundation.
  • Twaweza – when we come together, great things happen– is the next phase of the Safaricom brand.