Bank Roundup (June 07)

all banks share capital raised from 250 million to 1 billion. At the beginning of the year, 25 of 43 banks were below this mark (with 7 banks below 500 million). This is an update/reversal of an older proposal to lower the share capital when some banks were struggling a few years ago. Not many mergers expected though it may prompt some mid size banks to go for a public listing to raise cash (only 3 banks lost money last year)

Central bank has advertised for some currency destruction contracts as the east African reports on talks for the government to invest in the current currency supplier DE La Rue

Diamond Trust to venture into Islamic Banking

East African Development Bank profit went up by 229% to $4.6 million – up from $1.4 million the year before. Assets increased to $262m dollars and their non-performing portfolio reduced by 11%

Equity bank won an international award – the 2007 global vision in microfinance award. Also KTN reported that the that the bank will open three women only branches in Nairobi

Two month old Family Bank is seeking a new managing director

KCB to expand into Uganda as it also wins an international award – the Africa investor for best performing stock in Africa award (shares price up 97% ) > but the company also held one of the longest dreariest AGM’s in history on Friday

National bank finally got recapitalized. NBK could receive 346 million in 2007 and 2008, a bullet payment in 2009 of 4.3 billion, 220m in 2010 and 2011 and another bullet payment of 5.2 billion in 2012. For 2013 – 2015 123m each and in 2016 a lump sum of 5.2b. 2017 to 2020 58m each and a final payment of 6 billion – for a total of Kshs. 22.48 billion ($340 million)

NIC to increase authorized share capital via a rights issue. The board approved it on June 14, but there was no mention at the AGM on May 16. This follows a Fitch Report indicating that mid-size Kenyan banks need to increase their capital

opportunities

East African breweries is accepting applications for a graduate management program. Details online and D/L is 22/6

Family bank: chief executive officer, credit manager. Apply through deloitte – esd@deloitte.co.ke by 29/6

Kenital solar : sales & marketing manager, technical manager, engineer sales executives (5) regional managers (4). Apply to cm@kenital.com by 22/6

Country manager at Steadman Tanzania . Apply to janis@steadman-group.com by 22/6

A dozen IT, research and engineering jobs at Safaricom

Writers at a new Swahili newspaper. Apply to gazetijipya@gmail.com

Project management specialist at USAID.apply to hrnaiorobi@usaid.gov

Rhodes scholarships: 2 for Kenyans to pursue full time post graduate study at the University of Oxford. Apply to rhodeskec@wananchi.com by 15/9

Real estate: for the monied in the Diaspora, those who have worked hard and are looking to return in style, consider investing in Kihingo village a gated community development in Kitusuru where prices start at $500,000.

2007 Budget A to Z

6.5 to 7% economic growth expected in 2007/08 and the budget will focus on strengthening the financial sector, reducing the cost of doing business, enhanced productivity and fixing infrastructure.

Some measure mentioned in the budget speech today (only heard 1/2 of it) include:

alcoholduty up on spirits, wine and some beer
auto spares Reduce import duty 25 to 10% for oil filter, but with increased excise duty on imported used spares
Banks minimum share capital increased from 250 million to 1 billion (over the next 3 years) and benchmarks will be set up to be adhered to
battery to protect local battery companies, a duty imposed on imported recycled batteries
Cigarettes tax up
east African investors get the same treatment as Kenyans, – i.e. withholding tax of 5% on dividends and improved allocation chances (will be treated same as Kenyan in pool expanded form 25 to 40%)
energy rural electrification to be continued as mini grids will be set up in large towns. 8 billion has been allocated to deal with (anticipated?) energy shortages so they don’t hamper manufacturing processes and the government will also complete the oil pipeline to Uganda and refurbish the refinery at Mombasa (even though other shareholders have refused to chip in)
Educationincreased funding for free secondary education, implement increased teacher salary agreement and hire 7,000 new teachers
hawkers 400m to be spent to construct a market for them in Nairobi
ICT 1 billion ($15 million) for TEAMS which is expected to be completed in mid-2008. Also a national fibre optic network will be in place to reduce the cost of communications. In addition a 200m ($3m) endowment fund for innovation and research will be set up and the private sector invited to top it up.
insurance companies minimum share capital raised. For Long term (50m to 150m), general (100m to 300m) and composite from (150m to 450m) – within 3 years.
leasing: Zero rate leasing of some equipment and removal of withholding tax requirement
licenses for businesses – eliminate 205, reform 371 others
Medical equipment duty removed
milkZero rate milk powder to promote local processing and value addition
mineral water tax imposed
police 25,000 new officers to be hired
plastic bags tax imposed while thin plastic bags are banned to improve the environment.
Privatization 36.1b shillings ($0.5 billion) expected from privatization: Telkom Kenya (get a strategic partner this month), Safaricom IPO on the NSE, more shares sold of Kengen (when price corrects) and National bank [these shares could be offloaded to 3rd parties and not through the exchange]
Pyrethrumextracts are zero rated to promote local insecticide production
real estate duty exemption for developed of low cost housing (but not in slums). Also pension savings can now be used as security for home loans (not just as down payment)
retirees monthly pension benefits will be exempt from tax. Also social security will accept voluntary contributions from those whose employers don’t take part
sugar development levy removed from imported industrial sugar
textiles removed import duty
trade import duty reduced from 2.75% to 2.25% for all goods from all outside east Africa and none from within east Africa
transportation removed TLB from non passenger commercial vehicles,
Tourism 2 million visitors expected this year and as benefited the local air and hotel sectors. Will develop eco and lake tourism and will create resorts in Mombasa, Turkana and Isiolo.
universities (private) duty removed on goods and services supplied to them
VAT refunds to speed up refunds (which business community has complained about), will become automatic for those companies with a proven track record
women a 2 billion shilling ($30 million) women enterprise fund to be set up – starting with 1 billion this coming year, and call on corporates to assist the fund.
youth fund allocation increase by 250m to 1.25 billion with a goal of taking it to 2 billion

Uchumi shareholder bond

Uchumi Supermarkets (in receivership) has now formally asked shareholders to subscribe to a bond to raise Kshs 650 million ($9.85 million). These bondholders will rank alongside the government who lent Kshs. 675 million to Uchumi last year, but subordinate to (paid after) to bank ‘s debt

The bond offers 10% per annum, (which is more than any bank savings account in the country) and is allocated at a rate of 5 shillings for each share held (minimum subscription is 5,000 shillings, in 1,000 increments thereafter) D/L is 31/7

While the solicitation for the bond mentions the company’s’ very successful and impressive turnaround in receivership, there are no numbers to back this up.

I remain a faithful shopper (for groceries & other household items) at Uchumi, but as a shareholder, it is prudent to ask some questions before considering reinvesting:

– What is the performance of the company in receivership? Is it profitable on a monthly basis? Is it generating or consuming cash? Putting together a bond prospectus is expensive and a receiver manager is under no obligation to disclose financial performance to shareholders – but Uchumi was is a public company and disclosing such information to potential investors and the public should not coats more than 100,000 by way of a newspaper advertisement
– What is the level of bank debt and has it gone down? How much is still owed to the banks i.e. KCB and PTA? This is the 4th or 5th time the company is raising money in 3 years (after the 1.2 billion rights issue, 300 million suppliers assistance, 657 million from the government, 300 million attempted from shareholders
– If company is doing so well (media have reported 50% improvement over Uchumi’s best ever recent year), what was so wrong that the company collapsed? I have written before on how receiver managers can sometimes be better managers than the owners of a company and would like to see if this is a textbook example.

Kutwa Tuesday (June 12)

IPO Wanted

To plug a hole in the budget
Kenya Pipeline is in the news again – this time suing the Kenya Times group. The company has an enviable profitable track record for a Parastatal which makes it a ripe prime candidate for an IPO but mostly gets saddled with bad news for all the wrong reasons and controversial. A dose of public shareholding will lead to greater transparency & accountability and less political football at the company which is more profitable than Kengen (It earned 3.9 billion (pre-tax) in June 2006, up from 2.4 billion in June 2005 (Kengen reported 3.8 and 1.8 billion pre-tax in those years)

Kenya Re earnings
A point brought out by MainaT’s comment – what was Kenya Re’s true profit in 2005?

Post TED: Kenyan wildlife
The Economist analyses hippos and cheetahs

opportunities

Jobs

  • Director of internal audit at East African Development Bank. Apply through KPMG at esd@kpmg.co.ug by 20/6
  • Investment Climate Facility for Africa: Finance Director, Director, Strategic Knowledge, Projects Director, Director, and Legal/Regulatory Affairs. Apply through PWC at recruit@tz.pwc.com by 15/6
  • Project manager at Inmobia. Apply to job@inmobia.com by 12/6
  • Research assistants at Kemri-Wellcome. Apply online
  • Management trainees at Kenya Wildlife Services. D/L is 22/6
  • Chief internal auditor at Kenya Women’s Finance Trust. (D/L is 18/6)
  • Nielsen: IT system manager, research executives. Apply to hr@acnielsen.co.ke by 16/6
  • Safaricom: senior manager financial systems & analysis, site acquisition officer, senior learning & development officer, senior buyers (communication, technology – 3 positions). Apply to hr@safaricom.co.ke by 15/6
  • Group head of ICT at UAP insurance (D/L is 21/6)
  • Urgent Cargo: credit controller, sales executives, HR & admin officer. Jobs@urgentcargo.com by 22/6
  • Wilderness Lodges (owners of Keekorok) head of marketing, internal auditor. Apply to recruit@adeptsystems.co.ke by 22/6

Awards

  • Africa women entrepreneurs (from Ethiopia, Kenya, Rwanda, Tanzania Uganda) get voices heard and be recognized. Nominations to be submitted to the Cineartsafrika website by 29/6
  • East African Community students essay competition. D/L is 19/7

Partnerships

  • Become a Citi hoppa franchisee. Cost at 50,000 per bus and get details at info@citihoppa.com
  • Become a Keringet water distributor. Details at keringet@water.co.ke
  • Get a mobile phone kiosk Sasanet. Details at sales@sasanet.co.ke

Vote The Electoral Commission of Kenya has reopened voter registration from June 11 to July 10 for Kenyans wishing to vote in the elections expected in December 2007.

Previous Kutwa Tuesday

TPSEA (Serena) 2007 AGM

TPSEA aka Serena Hotels held their first ever (public) AGM, as the company was listed after the last AGM was held.

The company with with 15 properties (11 owned, 4 managed) is enjoying the ongoing tourist boom. (Sarova should hurry up and take advantage with an IPO while the sector is doing well). 64% of income is earned in Kenya, with improved returns from Tanzania and other properties recorded. But, though Kenya recorded an increase in tourists visiting, a significant number were conference tourists – whose and gains are only felt by Nairobi (not coast or safari) hotels

In a keynote speech, the MD mentioned that they have maintained profitability despite the appreciating shilling, noting that a weakening or the SA rand had provided significant benefits to the south African tourism sector.

He also mentioned that the expansion into the region would cushion the company from company specific risk. Through managing properties (they don’t own) in Rwanda and Uganda, they were able to increase awareness of the Serena brand at lower cost – and once those hotels are established and profitable then the group may bid for equity in them.

Future growth plans include Lake Nakuru, Laikipia, and southern Tanzania. The company has also invested in an energy efficiency program that will be completed this year.

The MD called on government to improve on infrastructure (roads) and security while he at the same time lamented that the environmental authorities (NEMA) had approved some lodge expansions that could harm environment and ecosystem.

Shareholders asked:
why company has high retained earnings & low dividend and, increased property investment costs: MD response was that tourism is a high risk business and it is important to keep reinvesting in hotels to maintain premier status and visitor preference. He noted that Kenya used to have four major hotel chains – and that block hotel and AT&H went out of business because they did not make such crucial investments to keep up. Serena must continually refurbish facilities, and must have ready cash since a lot of opportunities come up at short notice. Still, they were able to contain other costs (only 1% increase from the year before)
Serena a market leader? hotels in Nairobi do share information and this confirms Serena’s leadership in terms of (revenue per available room), while coast and safari circuit hotel statistics are not easily available – but going by the packages that tour operators put together confirm that Serena properties are marketed as premier packages
corporate social responsibility can shareholders recommend CSR projects to the company? Management said yes as long as projects are in areas where the company has properties. Shareholders can also get discount rates if they book through the Serena offices.

goodies: bonus share, dividend, and a lunch box (with roast beef slice, bottled water, apple & banana, yogurt, boiled egg, cake). I noticed some other shareholders boxes had juice & hamburger as opposed to my water & roast) and I gave my offered my boiled egg (can’t eat that) to a lady seated neat to me, who surprised me by giving me her yogurt – fair trade?

See: another past Serena AGM report.