Category Archives: KRA

Total 2009 AGM

The 55th annual general meeting of Total Kenya was held on May 19 2009 at KICC and was presided over by company Chairman Herve Allibert
Easy registration took a minute. Total have introduced an electronic check-in, shareholders or their proxies show up with a bar code, which is scanned and they as they sign in

Q&A

Erroneous publication: company secretary apologized for some omitting list of top shareholders and wrong agenda contained in the annual report; saying the printer gave out wrong copy.

Buyout of Chevron assets: in 2007 Chevron decided has divested from petrol stations in west and east Africa and Total is buying their stations in Kenya and Uganda. The chairman clarified that parent Total Group (pronounced Tota hutra -meh) is buying the assets and deal will be finalized in June 2009. Thereafter Total Kenya (78% owned by Total Group) will buy the assets from the Total Group. Total Kenya has obtained regulatory approvals in Kenya, is arranging financing for that deal, and the directors will call for a shareholders meeting in a few months to approve that deal.
In answering another shareholder, Chairman added that Total Group is not divesting from Africa; they know how to do business in Africa, work well here and will continue to invest here

Performance drop in fourth quarter: board member answered shareholder that it was true that Q4 performance was worse. He said it was a s a result of negative stock effect (oil bought at $140+ that was sold at lower prices), and company had to make provision of Kshs 171 million for a supplier (Triton?) who was paid, but failed to deliver products to the company. He added that Q1 of 09 was much improved as the company had received a payment of 150 million in refunds from the Kenya revenue authority (KRA), a feat, which the Chairman added, was very difficult to attain.

Increase in borrowing costs: this had gone up because of the price of fuel was up, while they also had to pay upfront for all taxes

Bio energy: the group does research and investment for that and deploys products such as bio-diesel now sold in Ethiopia

No women directors Chairman said company was aware of this mis-match. They were continuously seeking some women to join the board and also plan to have more women in all management levels of the company

Hot point I – Total’s Q&A format; instead of having shareholders stand and ask questions, Total have (for some years now) had shareholders write their questions down on notes which are then handed to the board table and the company secretary selects a few which to read. The directors were today accused of ignoring some questions, not answering other key questions properly (about the flat share price and lack of bonus shares), while altogether leaving shareholders and some directors in the dark . The Chairman said they would review the practice before next meeting. Another aspect of the meeting (the French Chairman called it a “general assembly” ) that was challenged was the time of the meeting 3 PM

Hot Point II – Goodies:
– Total still doesn’t get it; they always have buffet of meat bitings , today by San Valencia that is messy to serve with shareholders jostling to get some food before it’s finished. They should just serve lunch boxes.

– each shareholder got a tote bag, t-shirt and an umbrella. Some shareholders complained that they had not got their gift items (but somehow other shareholder had 3 or 4 umbrellas) – and the company secretary was asked to record their names and see if the company could have them delivered after the meeting

Total 2008 AGM

Excerpts

Total Kenya’s Managing Director Bertrand Fontanges follows in the footsteps of previous Chairman Momar Nguer (or is it a French company thing?) to AGM to educate shareholders on the state of their company and the industry in an hour-long presentation on Wednesday.

Oil sector grew at 6.5% last year which coincided with the country’s economic growth. The market share of the companies at the end of 2007 was Kenol/Kobil 22.4%, Shell 21.8%, Total 21.2%, Chevron 13%, Oil Libya 7.3%, NOCK 2.4% and independents 11.5%.

Challenges include;

The Government; makes all oil companies tender for oil together, for which they have to pay upfront. He referred to the process as they pre-finance the government – on top of which they pay Kshs. 30 per litre of petrol (~$0.48) and 20 per diesel litre. They also pay upfront taxes for fuel they export (i.e. to other African countries) – but don’t get refunded for at least six months after the claim. As such they have reduced their export amounts as it is not viable. He’s the second CEO in a month to put the government on blast after Eveready also went after KRA and KEBS.

The Pipeline: the oil pipeline which has capacity constraints. At least expansion of the Nairobi-Mombasa pipeline expansion should be completed by year-end which should double capacity and end the constraint problem.

The Mombasa refinery; given the opportunity, none of the companies would use the refinery which is outdated, inefficient and makes products expensive – yet they have to refine about 50% of their products there. He added that independents don’t process at the refinery which gives them an ‘unfair; advantage.

LPG i.e. cooking gas. He expressed concern and they have cautioned the Government about the proliferation of illegal re-fillers in the market. These are companies who refill gas cylinders – saying there are safety issues (they can explode) and consumers cannot ascertain the quantity of gas in the tanks from these shops.

Aviation Gas margins in aviation have become so low that they have reduced their sales there and will wait till the market improves before they go back in.

Despite all, the company’s performance improved (EPS of Kshs. 2.99 from 2.7 – out of which a dividend of 2.5 will be paid) thanks to asset sales, Kengen and reduced financial costs. Of the 623KMT of sales, 21% (134KMT) are through their petrol station network while 78% (498KMT) is though bulk, general trade, big companies etc.

Finance charges: Have been an albatross at Total for years. The price of oil (Murban crude) has doubled over the last year to about $120 per barrel (even though some OPEC officials say it should be $60 – $70) and the cost of holding inventory has likewise doubled. So Total has resorted to carrying only as much inventory as is needed and requiring customers to pay upfront.

Kengen awarded a contract to Total which runs for almost another two years. It is not part of the government tender process so they are able to get supplier credit for the oil which has reduced their borrowing charges significantly. (2006 Q3 had financial costs of Kshs. 415m compared to Kshs. 287m in Q3 of 2007).

Tax Collection is Unprofitable

KRA shocker: The Kenya Revenue Authority, the organization which has re-written our donor relationship, championed responsibility/awareness of tax paying among citizens, spurred parastatals to start paying dividends back to the government (instead of draining it) and enable the fixing of the economy – is not profitable!

Year end results (June 2006) show the tax collector with income of 4.8 billion and expenditure of 6.0 billion – meaning a deficit of 1.2 billion and that compares to 2005 when they just about broke even with 5.1 billion of both income and expenditure. They also don’t have the title-deed to their headquarters – Times Tower worth 2.5 billion that is still in the name of Central Bank (for whom the tower was built).

Stanbic CFC merger approved:  The Finance Minister has approved the merger between Stanbic and CFC paving the creation of the country’s 4th largest bank (see bank rankings and an earlier comparison of the parties)

The combined, but yet to be named, bank will have assets of over 55 billion shillings ($800 million), deposits of 43 billion, loans of 30 billion and a pre tax profit as at June 2007 of 934 million ($14 million)

Capital markets authority (CMA) approval should be a formality, as they have already been assured that the new bank will remain listed on the NSE.

MP behaving badly: A high-flying MP has grabbed i.e. taken over and fenced the parking lot of a popular Nairobi Sports Pub which he frequents the place – even as he is trying to extract an exorbitant rent from the pub for use of the yard.

Taxes, IPO’s and Unit Trusts

Taxing corruption
So Parliamentdealt another blow to the war on corruption by denying the Kenya Anti-Corruption Commission with the authority to investigate crimes that happened before it was formed (2003).

KACC as a body has aimed high (going after high profile figures – CEO’s, Ministers) but mostly caught small fry leaving many Kenyans dissatisfied and who now consider the Commission to be a waste of money

But there’s another public institution – the Kenya Revenue Authority (KRA) that has achieved milestones in the war of corruption that KACC can only dream of. They have gone after untouchables, and some lawyers and MP’s have had their accounts and salaries frozen and asset seized. Now if only they could publicize this.


RICO in Kenya?

Why not legislate a tax on corruption, so if you’re named, you could lose 90% of property, leaving the accused with 10%? This is humane, but is as good as taking back everything – and bypassing court processes. Hitting Pattni with a tax bill would end 10 years of court injunction and delays and realize some significant gains in cash recovered.

Kenye Re slipping away
My strategy to bypass the IPO of Kenya Re not working as well as I thought. I placed orders at 13 shillings, only for the share to zoom. It’s tempting to buy the shares at 17 or 18 and then the balance when they drop (if ever).

Unit Trust get more accessible
Market leader, Old Mutual, has lowered their minimum entry amount for unit trusts from Kshs.500,000 to Kshs. 200,000 (about $3,000). The offer runs till December 2007.

New stockbroker

Finally a new stockbroker is going to be invited to join the lucrative club that is the Nairobi Stock Exchange. The number of shareholders has gone up approximately ten times from pre-Kengen IPO, but the number of stockbrokers, through which investors must trade their shares has been stuck at 18 all that time (currently 17 since Francis Thuo was suspended earlier this year).

It’s only one seat to access this Kshs. 4 billion a year industry, but that can only improve the current situation. Who should win? Ideally a bank or financial institution with an extensive branch network. CFC bank – the only bank that’s also a stockbroker has the widest reach nationwide when compared to several one office stockbrokers in Nairobi

Application details here and only firms that can qualify as a stockbroker or investment bank are eligible. The Application fee is Kshs 50,000 ($700) to the NSE, and 2,500 to the Capital Markets Authority. Applications should also include a company profile and statement of financial support/bank guarantee for the bid amount which is reported to have a reserve price of Kshs 150 million ($2 million). D/L of 13/8 is just over a week away.

Other News & Follow up’s

– KTN reported that the housing Finance deal (buy in by Equity) could be in jeopardy owing to a burden of borrower lawsuits that could be a major liability for the bank since the introduction of in duplum rules to the banking sector. (One plaintiff won a major case against the bank last month)

– I & M: Two European development finance institutions take up a 12% stake in I&M – Kenya’s 11th largest bank

– NIC shareholders will this month be asked to vote on right issue and bonus share – in addition to modifying the company laws to expand the bank beyond Kenya, enter insurance, custodial, and investment banking, and allow unclaimed dividends by to be reinvested by the Bank until a shareholder shows up to claim them

– Welcome to the Kenya, land of milk & honey: The Safaricom IPO honey pot has attracted interest from BNP Paribas, Citicorp, Credit Suisse, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley and other banking, financial and legal giants

– Next week’s East African reports on a proposed merger in the cement industry between Bamburi and East African Portland Cement companies.

– As expected parliament, without a legitimate quorum, passed the media bill

– Weak laws and evasion are robbin Kenya of tax money.

Opportunities

– Borrow up to Kshs 1,000,000 at 0% interest from Halaal Credit, but eligible only to Kenyan Sunni Muslims.

– Diaspora conference; a conference dubbed Incorporating the Preparatory Kenya Diaspora Home-Coming Forum will take place at KICC on 14-16 August, 2007. some issues will be exploring investment opportunities in Kenya, debate the Diaspora bill 2007 , building partnerships between European and African private and public sector stakeholders, SME and Diaspora sectors be mainstreamed into vision 2030, and proposal that an annual Kenya Diaspora Homecoming week be held every August of each year. Details can be got from info@kenyadiaspora.go.ke

– Design a logo and come up with a motto for the Kenya Investment Authority :

some jobs

– AON: retail broking manager, senior business development executive (health). Apply to HR@aon.co.ke by 17/8
– Chief executive officer at the export processing zones authority. Apply through manpower associates by 14/8
– KCB: branch managers, business banking managers. Apply to recruitment@kcb.co.ke by 17/8
– Safaricom: Investigator, senior fraud analyst, senior information security officer, senior information systems auditor, and a dozen technical jobs. Apply to
hr@safarciom.co.ke by 10/8
– UAP: Relationship officer, internal risk surveyor, agricultural underwriter. Apply to recruitment@uapkenya.com.