Arranged Corporate Marriages

Some local merger activity of note

 

Barclays of UK and South Africa’s Absa Group are in talks to merge their African operations - but this is not really new as the plan was set in motion six years ago. 

There’s no certainty the talks will lead to any deal, which wouldn’t be completed until 2013, the banks said in a statement. The combination would affect assets in Kenya, Botswana, Zambia, Tanzania and Ghana. 

Barclays, based in London, bought 54 percent of Absa in 2005 for $4.5 billion to expand in emerging markets. Absa dropped its original plan to buy the Barclays assets in 2008 after commodity-driven economic growth in Africa sent their earnings surging, making the businesses too expensive to acquire. Barclays revived the plan in April 2011, aiming to consolidate operations at Absa headquarters in Johannesburg and move other work to Dubai, but Barclays’ listed subsidiaries in Kenya and Botswana will be maintained.

Coca Cola have prepared the Information Memorandum (with D Capital Partners, UK) to persuade local coca cola shareholders to buy into the deal that will see their shareholding in three local bottlers - Mount Kenya Bottlers, Rift Valley Bottlers and Kisii Bottlers merged into a new holding company called Almasi.

Coca Cola dominates the non alcoholic beverage in Kenya with a 78% market share, leaving EABL, Kevian, Del Monte, Excel with 2-4% each. The global giant  has 6 bottling licensing agreements in Kenya with Coastal, Equator, Rift Valley, Mount Kenya, Kisii and Nairobi - which itself was boosted by earlier partnership deals ( with Flamingo Bottlers and East Kenya Bottlers Limited).  The three bottlers each which each sell about 9% of cokes cases, will become Coke's second largest after Nairobi with about 28% of sales. 

Peeling back Almasi

The boards of the three have approved it and now have to sell the deal to their shareholders as a potential value addition through increased revenue and cost savings of Kshs 2.5 billion ($29 million) derived from  lower management costs (single management, single board of directors) shared purchasing, and the IM noted none of the three can afford to invest in new bottling line, or plastic packing lines for soda, juices and water

Mt Kenya has 2011 sales of about $29 million, Rift Valley $21 million and Kisii $18 million, with Mt. Kenya and Rift both having after tax profits of ~$1.3 million. A nominal shareholding of 20,000 (1,000 shares of par 20)  in each, will be worth Kshs 80,000 (11,400 new shares) for Kisii Bottler shareholders, Kshs 526,000 (75,000 shares) for Mount Kenya Bottler and Kshs 112,000 (16,000 shares) for Rift Valley Bottler shareholders. The IM also dangles a carrot that, Almasi could one day be a listed company.

Haco boost?  - Tiger Brands which own 51% of Kenya's Haco are now buying 63% of Dangote Flour Mills in Nigeria. Will Haco get a boost in the food business, exporting to Nigeria?

Kenol  Reassures - Kenol made a surprising (to many)  half year loss  due to foreign exchange hedging contracts. They subsequently issued a statement of reassurance that a planned majority sale to  Puma Energy was sill on, with the due diligence process yet to be completed. Unfortunately, it is likely that, once the deal is done, Puma will also buy out the other minority shareholders and de-list the company - which is a shame, as it was one of the most pro-active companies in shareholder communications

Urban Inflation Index: September 2011

One year after the euphoria of a new constitution, the direction of the economy is uncertain as seen in the weakening Kenya shilling, tangles in implementation of the constitution, and rising food prices. It has been a year of some price controls in the fuel, and possibly in the food sector whose parliamentary price control bill was signed into law last week by the President.

Comparing prices to six months ago and last year. On to the index

Gotten Cheaper: Nothing really.

About the same:

Communication: All Kenya’s mobile phone companies have call rates of about Kshs 3 shillings ($0.03) per minute to call across networks. It is unclear what will happen with call rates, as the smallest company in the market, Yu, launched free daytime phone calls, Airtel Kenya lost a CEO, and Safaricom has indicated that they may raise their call rates, as has happened in Uganda with MTN . The real battle is in data, where prices have not really dropped but companies are offering more speeds for less. The market here is divided between the companies with 3G (Orange & Safaricom) who compete on speed, and those without 3G(Airtel & Yu) who offer cheap internet rates of about Kshs 50 (~$0.5) per day for unlimited use.

Another communication developments that, in a way, lower the cost of business include the launch last week at G-Kenya of GKBO, which encompasses free website creation tool, domain registration, and site hosting for small companies by Google in Kenya.

Utilities: The bill on pre-paid electricity is still at about Kshs 2,000 ($21) per month, and getting about 30 – 35 units per buy via M-Pesa. However that is expected to go up after notice was issued for rates to go up 22% per kwh unit. So what alternatives are there? In a somewhat timely move, Samsung launched the NC215, a solar powered netbook laptop last week. It gives 1 hour of power for every 2 hours of charge in the sun, has a 15-hour battery life, and is able to charge other devices by USB even when it is off.

Also got a gift of a solar phone charger (T2126 Hemera from Hirsch) that works quite well; it takes about 12 hours to charge in the Sun or 2 hours via USB, has a flash light and can charge a variety of phone models.

But when you look at the rapid advances in laptop batteries and cell phone batteries over the lasts decade, you get the feeling that there has been a lag in the pace of solar devices, and that more solar based solutions and advances should be emphasized.

More Expensive

Fuel: A litre of petrol fuel, which is regulated by the Government, now costs 117.75 (~$5.6 per gallon) in Nairobi. Regulated fuel has proven to be more expensive than unregulated fuel, and while this can be attributed to the weaker shilling and fluctuating oil prices, the formula used to arrive at the price remains vague, and the limit on margins (stipulated buying and selling price of petrol, diesel, kerosene in each town) appears to have hurt small oil industry companies, more than large ones. However, among the listed companies, Kenol appears to have weathered the regulatory regime better than Total, by having diverse operations in other countries in East and Central Africa that remain unregulated.

Staple Food: Maize flour, which is used to make Ugali that is eaten by a majority of Kenyans daily. A 2kg bag which cost Kshs. 80 six months ago, and Kshs 65 a year ago, is now Kshs 119, the highest it has been in the short history of this index.

Other food item: Sugar : A 2 kg. Mumias pack which has hovered at about Kshs 200 for the last years, now costs Kshs. 385 (90% more than last year) and . The sugar sector has really gone full circle causing many to questions its relevance, recurring shortages shortage (why all factories close at the same month for maintenance), why sugar is grown in a food producing area and how many items we can consume without having to use sugar as a sweetener e.g. tea without sugar, or use of honey as a substitute.

Foreign Exchange: 1 US$ equals Kshs 95.6 compared (now 96.8) to Kshs 80.8 a year ago (and 83 in June 2011) - a loss of almost 20% in a year. It’s unclear of this has been a concern to the Central Bank which has made other confusing policy moves as related to interest rates at a time of mounting government debt and their laxity has enabled banks to spot and take advantage of an arbitrage opportunities to trade with government money.

Beer/Entertainment: A bottle of Tusker beer is Kshs 180 ($1.9) (at a local pub) a slight increase from compared to Kshs. 170 a year ago. However beer has become out of reach for many poorer Kenyan who have resorted to drinking unsafe local brews, which in some unfortunate cases have resulted in blindness or even death.

Motoring Moment: Thika Road, Commuter Trains

Discovering Thika road: Took a road trip up Thika Road to hang with the Kuweni Serious crew last weekend. Chinese contractors are converting the road into a super highway and the dramatic transformation (follow Thika Road blog ) has plenty of soil hills, deep valleys, closed roads, missing roundabouts etc. It was a fun trip, but as it is said every day, don't drive on Thika Road if you're a stranger, or it’s dark, or the road is wet.

The journey is made more dangerous by Matatu’s and some road regulars who make their way anywhere they see fit - by driving in the wrong land, making U-turns in traffic, over-lapping patient motorists etc.

The highway defies belief, and when it’s done it will probably need other roads to be closed off or expanded. e.g Outer Ring Road and a bypass to Mombasa Road. The large volumes of traffic need to enter and exit cleanly and without delay otherwise there will be more situations like the one at Riverside Drive and (current) Museum Hill Roundabout where traffic waiting to enter these smaller roads spills over backwards onto the large highway causing more jams.

The on-going rains make it more difficult and with all the un-drained water, some cars are probably washed daily only to end up covered in red mud. For users of public vehicles, the rains mean added journey times and increased fares on Matauts.

More Commuter Trains: However there is some relief for commuters who live along Thika Road since Rift Valley Railways (RVR) has upped the number of daily consumer trains in Nairobi from 8 to 18 which collectively serve Kahawa, Dandora, Embakasi, Ruiru, Kikuyu, and Kitengela/Athi River

The addition of the early morning trains has slashed some commuters’ fares by almost 2/3 e.g. some Embakasi residents who take the train paying Kshs 30/- per trip compared to the previous Kshs 70 – 100 per trip by Matatu. Also, the train is more dependable, and takes 25 minutes to complete the journey, unlike driving in a car or matatu, which usually takes over an hour in 'rush hour'.

Ultimately having dependable train travel may lessen the burden on the roads (fewer Vitz card) and while there is talk of having a train to Jomo Kenyatta Airport, it is not a government priority or feasible in the short to medium term.

Commuter trains aside, the reason that the concessionaire, Egypt’s Citadel (operating as Kenya Uganda Railway Holdings) invested was for cargo and the train transport while significantly cheaper than the Kshs 120,000 ($1,500) to transport a container by lorry from Mombasa to Nairobi ($3,600 for Mombasa to Kampala) needs to emphasize this aspect and demonstrate more reliability to business owners. This will relieve the burden on the roads.

Oil Shipment: As the international price of oil is expected to go up owing to instability in the Middle East, in Kenya there is a small dispute between oil companies led by Shell and Kenol pitted against NOCK - National Oil Corporation (NOCK), a Kenya government state agency that imported the latest shipment of diesel on behalf of all the oil companies. After some postponed arrival delays, and tales of missing phantom ships [MT Volga, MT Adden, MT Ratna Sheruti, MT Ratan Namrata], which resulted in a partial cancelation by Shell, a shipment finally arrived on March 1.

However that did not put the matter to rest since NOCK has announced that they would bill the oil companies using the higher March prices instead of the February price. And where is the diesel? NOCK says it has all been sold, but the other oil companies say they have not bought it, and won't be buying it owing to the higher price being demanded.

Fuel Relief: Some slight relief for motorists comes from Kenol who have discounted the price of petrol and diesel by 2 shillings on Tuesdays and Fridays – so petrol today costs about Kshs 100 (~$5.30/gallon) under Deal Poa promotion, and for holders of Kenol corporate fuel cards, they enjoy a 2 shilling discount every day, which doubles to Kshs 4 on Tuesday and Friday

In Car Beverage: My current in-car beverage is Nestea iced tea that you can make in a supermarket. How? (i) Buy a Kshs 20 Nestea satchet (ii) Buy a one litre bottled water for Kshs 40 - 60 (any brand) (iii) pour the sachet contents in the bottle & shake (iv) you have a litre of iced tea for less than $1.

Too Big to Fail?

Embattled market leaders Kenol and Safaricom got some reprieves last week.

In the case of Safaricom, it was signaled in the form of a public complaint from rival Zain Kenya CEO (and which he followed up in a letter to the President) alleging that the communications industry regulator altered its new rules to shield Safaricom.

At Kenol, the Permanent Secretary for Energy announced a settlement of the dispute between Kenol and the Ministry (Kenya Pipeline Company, Kenya Pipeline Refineries), which Kenol echoed that with a cautious statement.

Kenol, Safaricom, and probably Kenya Airways and Equity Bank (with 5 million bank account holders) have reached a status of being too big to fail. They are huge tax-payers (Safaricom, Kenol), models of privatization (Kenya Airways), critical to the country and region (Uganda was affected by the Kenol shutoff) or source of international pride (Safaricom’s M-pesa)

The government goes out of its way to listen to these companies and protectthem and make rules that will assist them in their growth. In the case of Safaricom, cracking down on them does not guarantee that Zain or Orange will fill the gap in the near term. The price war started by Zain has been called unsustainable by the Safaricom CEO and that language is also creeping into government circles

Urban Inflation Index September 2010

Tracking changes from three months ago - in June and one year ago

Quarterly Review - Young population: The results of the Kenya's national census done in 2009 were released last month and the results are still being interpreted. Politicians obsess on tribal numbers, economists caution on birth rates, while businesses can look to demographics like the number of mobile phone owners, the number of youth in the country, along with other intriguing findings such as the population of Kibera (largest slum in Africa) being 1/3 of previous claims, and remote Mandera is the 4th most populated constituency in Kenya (after Embakasi, Kasarani and Juja which are all in Nairobi environs). It confirms other findings like the Safaricom 2010 A/R which notes that “…with the North Eastern
region’s economy growing by over 200%, owing to improved security & enhanced economic activities, the area is no longer ‘served’ from Nairobi.”

Price control: A price control bill was rejected by the President who referred it back to Parliament for amendments.

Costly Health Insurance: The National Hospital Insurance Fund set in motion a plan to roll out a rather expensive health plan by increasing mandatory deductions from 320 per month to up to Kshs 2,000 ($25) for anyone earning over 100,000 ($1,200) per month. The matter has been challenged in court and the agency has been accused of not consulting widely with other health sector players and employers in a bid to revive earlier health bill

On to the index

Gotten Cheaper - Staple Food: Maize flour, which is used to make Ugali that is eaten by a majority of Kenyans daily. A 2 kg. Unga pack at Uchumi today costs Kshs 65 compared to Kshs. 71 three months ago and 84 a year ago.

Communications: All Kenya’s mobile phone companies have call rates of about Kshs 3 shillings per minute to call across networks. Exactly a year ago Safaricom has launched super ongea tariff, which promised rates of as low as 0.8 shillings, but from a base of Kshs. 8 within network. What has changed? The arrival of airtel in Kenya who will pursue a low cost high volume model though outsourcing of services among other measures. i.e. today it was announced in India that they will sell their African mobile base stations to a subsidiary company (Bharti Infratel) that will re-sell them to private equity funds.

Even as Kenyans have celebrated the new chap call rates, Airtel have ruffled many feathers in the last month, forcing Safaricom and the other smaller mobile companies to match the very low tariffs, and this has been called unsustainable by some, a dis-incentive to investors by others, and even a situation which may result in a mobile operator closing shop. Two years ago, Safaricom had launched 'ongea tariff' which was a Kshs 10/= rate

About the same - Utilities: Latest electricity bill is Kshs 1,700 ($21 for a month) up from Kshs 1,450 on June, but better than 1,900 a year ago when there was drought in the country.

Other food item: Sugar : A 2 kg. Mumias pack is Kshs 200, unchanged over the last year. Two years ago, it cost 145, a price we may see next year when the COMESA regional sugar quotas are done away with. Already, leading sugar company Mumias has diversified into electricity co-generation, bottled water, and soon, ethanol production.

Foreign Exchange: 1 US$ equals Kshs 80.8 compared to 80.6 in June. BUT, Two years ago it was Kshs 67.

Beer/Entertainment: A bottle of Tusker beer is Kshs 170 ($2.1) (at a local pub) compared to Kshs. 160 three months ago. However it is tough to find a perennial location to keep track in Nairobi’s fast changing pub scene, where even Nairobi’s favorite sports pub Hooters closed last month. What needs to happen is a combination of Murua’s Tusker Index with this interactive beer map from the Czech Republic!

More Expensive - Fuel: A litre of petrol fuel (at local petrol station) is now Kshs 94.5 ($5.25 gallon) up from Kshs 90.9 per litre in June. The back and forth petrol war continues between leading oil distributor Kenol and the Ministry of Energy officials who include the Kenya pipeline company, the Kenya oil refinery and the energy regulatory commission about the issue of preferential allocation of space and who owes who more. On their side Kenol can count on some political muscle, the fact that they blew the whistle on Triton Oil before it collapsed, they are the country largest corporate taxpayers. High prices at the pump are not unusual, as two years ago petrol was retailing at Kshs 101

Total 2010 AGM

The annual general meeting of Total Kenya was held on June 2 at KICC Nairobi. (Excerpts from shareholder Q&A)

Hot Button issue was the Low Divided
- Board said DPS of 1/= ($0.12) per share down from traditional 2.50/= ($0.03) per share is the best they can do
- Why are you not paying dividend as high as rival Kenol? If rival Kenol is paying more, it is because they have not invested like Total (Note: today was also the day Kenol effected their second ever share split, giving their shareholders 10 new shares, for every one they owned)
- Buyout of Chevron by creation of new shares has diluted ordinary shareholder stake and dividend? true but this information was disclosed before the deal was approved and completed

Preference shares: - Since parent owns 83% why not re-classify minority shareholders as preference shareholders? the preference shares only participate in dividends and are non-voting
- When will class A shareholders who have been locked in be released to trade their shares? CMA finally granted approval and they have been free to trade from May 17 2010

Will Total bid for Shell assets? No they will not bid - various reasons cited include, its an international deal that covers 20 countries, they (and Shell) are already at about 30% market share in Kenya and can't go higher (also cost)

High Working Capital: one shareholder noted the company traditionally carried high debtor levels, high stocks and high borrowings and called on the Board to be vigilant in collections, reduce stocks, and perhaps do a rights issue to rectify this. Chairman said they are vigilant with credit sales, and that inventory was currently higher as it was for the two individual companies (Chevron & Total), and that they will review the rights issue to see if it is relevant

Chevron stations: Which were bought in 2009 – and those not being sold onwards (as directed by Kenyan Government) will be-rebranded by year end, and there will be no loss of staff at either company

Goodies: umbrella, tote bag, t-shirt, lunch box (1/4 chicken, sausage, spring roll, beef sandwich, soda, and water

Past AGM's in 2008 and 2009

NSE Portfolio May 2009

hit bottom? Time to buy?

Last quarterly check of the Nairobi share portfolio was in February 2009 and a year ago
The Stable

Diamond Trust ↓
Kenya Airways
KCB ↑
Safaricom ↓
Scangroup ↓
Stanbic (Uganda) ↓

Review:
- Best performer: KCB up 2%
- Worst performer Stanbic down 30% (combination of share drop and weaker Uganda shilling), and Safaricom down 10%
- In: Kenya Airways
- Out: none
- Increase none
- Decerease none
- Unexpected gains/losses: none

Events & Outlook:
- Performance: Portfolio is up 1% in the last three months while the NSE Index is down 3.5%
- Bought KQ, tried to buy illiquid Kenol at 30

Looking forward to
- Dividend payments expected from Diamond Trust, KCB, Scangroup, Stanbic (UG)
- Privatization commission has lined up several companies that may be availed later in 2009

Kutwa Tuesday: Reverse Safaricom IPO and other such tales

Safaricom needs a reverse stock split to get rid of their unhappy shareholders.
- Anyone who has less than 10,000 shares by December should be paid off by the Government or Vodafone at the IPO price of 5 shillings or market price, whichever is lower at the end of the year. Investors will not sell their shares at a loss and the least they can do is recoup their money from this mess (excluding their loans)

Kenol tweak: 36.67 million shares change hands worth 3.3 billion shillings on Friday. Meanwhile kenol/kobil stations have the most expensive fuel in Nairobi. Diesel has hit 101 shilling per litre ($1.55), while petrol is at 108, that’s about 6 shillings more than my station of choice.

Cola tweak: After enduring a difficult first quarter, coca cola is having a bit of a tumble in the second quarter due to to EABL’s Alvaro – at least in urban areas where it has become the non-alcoholic drink of choice for many previous soda (and juice) sippers. Coke has unleashed another multi-million shilling giveaway promotion to win back customers


alvaro cases at Nakumatt

Celtel tweak - More celtel confusion; The ink is not dry on posters for their newest promotion and already the terms have changed (for the better) [for customers to get free calls will now cost 65/= ($1) a day down from 99/=].

August will be a significant month for the mobile sector as Celtel switches to the Zain brand, Safaricom release their first quarterly results after the IPO, and Econet should finaly/hopefuly roll out operations.

Media tweaks: All journalists and correspondents practicing in Kenya must be registered with the Media Council of Kenya – and to do so they must each pay Kshs. 2,000, while foreign journalists will have to pay 10,000 ($154) per year [those on short term assignment of up to 3 months pay 5,000]. Amounts due by 30/9. Television radio and newspaper organizations also have to pay a quarterly fee depending on the number of media outlets

- Standard tweaks Two weeks after the launch of the new Standard, their strap line of the standard has changed;


new standard at launch


standard yesterday

Sunday Nation tweaks now has the best of best of Whispers - favorite columns of the late humorist Wahome Mutahi and some articles of the New York Times

From the blogs
- Pointer for Access Kenya shareholders to read
- There are only 60 lions (adult) in the Mara – but that's an improvement by 50% from year 2001
- How bad are things for those who took IPO loans for Safaricom? Ssembonge shows that small investors are hurting more than bigger borrowers.
- Cautionary tales on life insurance from Tujuane
- Peer pressure: tales of GDP growth of rates of 8% in Ghana and
21% in Angola
- Link to a puff piece in memory of the former finance minister
-US Airways to remove all in-seat movies from their planes, while Emirates is targeting to remove all paper (in-flight magazines and publications) to save a ton of weight on the new A380 (to compensate for a ton of water for showers in first class (from airliners.net)

Opportunities

African Banker Awards. deadline for nominations if 31 July in the following categories: African Banker of the Year, African Bank of the Year, African Investment Bank, Best Development Bank in Africa, African Microfinance Bank, Best Issuing House, Most Innovative Bank, Deal of the Year, Socially Responsible Bank of the Year, Best Global Bank in Africa, Award for Gender Sensitivity

Jobs
from the daily papers last week
- Aircraft Leasing Services: captains, first officers for Embarer 135. als@als.co.ke
- HR director at Housing Finance. Apply through deloitte esd@deloitte.co.ke by 1/8
- MD of KCB Rwanda. Apply to recruitement@kcb.co.ke by 8/8
- KPMG Uganda: Internal Audit Services manager, Senior Internal Auditor, Internal auditor, forensic auditors. Apply to talentrecruit@kpmg.co.ke by 1/8
- Corporate affairs manager of Nation media group.
- Independent sales agents at Standard Chartered Bank. Apply to Susan.Ombati@ke.standardchartered.com by 31/7

Others vacancies at Kencall, Kenya Airways, and Family Bank [Credit officer, Procurement Officer, Works Officer, Accountant, Accounts Assistant, Administrative Assistant, Assistant Manager, Audit Manager, Branch Accountant]

Beach plots too good to be true? Lots of land available in Mombasa for real estate investment from Datkit agents including 3 acres creek in new Nyali with 120m sea frontage, 1.3 acres over looking Nyali golf club, 5 acre lots in kikambala, 14 acre beach plot next to Neptune beach, 25 acre beach plot next to kaskazi hotel with 168m beach front, 1/3 acre residential plots in shanzu (2nd row from beach)

Regional diversification

Taking regional investments a step further - how are various local listed companies doing on the regional front? January 2008 showed that having a focus on Kenya alone could be an Achilles heel despite it being considered one of the strongest economies in the region. Various listed companies are making pushes in East and Central Africa – however many of these countries are all dependent on Kenyan access, hence its not really true diversification of political risk. In that sense, Olympia Capital, an NSE laggard may be ahead of its peers with its tangled Botswana and South African corporate moves.

here’s a recap:

- CMC says regional sales are on target in Uganda and Tanzania (from ½ year results this week)
- Diamond Trust has set its sights on Burundi (adding to Uganda and Tanzania) while many other banks have targeted Rwanda
- East Africa Cables attribute good performance to their subsidiaries in Uganda, Rwanda and Tanzania
- KCB has subsidiaries in Uganda, Tanzania and S. Sudan (though it wrongly had the flag of Sudan on its’ annual report cover. These countries contribute less than 10% to their income and Ug had a loss of 49 million (setup costs) while Tz barely broke even with a profit of 0.2m in 2007. KCB opened in Kampala in November 07 and will open 6 more Ug branches in 2008, 4 new ones in S. Sudan in 08, and another 20 new branches in Tz over the next two years according to their annual report
- Kenol who after acquiring Kobil could be the first 100 billion shilling turnover company, have subsidiaries in Uganda, Tanzania, Rwanda, Zambia and Ethiopia. 80% of their sales are from Kenya, while the other countries contribute about 20%.
- TPS East Africa acquired 8% of Serena Rwanda which includes Kigali Serena and Lake Kivu Serena. Of Serena's 2007 sales of Kshs. 3.7 billion (~60 million), Kenya accounted for 64% and Tanzania 36%.
- Total Oil Kenya has sister companies in Uganda, Tanzania Congo Rwanda so essentially remain a Kenyan company with 97% of their sales being local. They however complain in their 2007 report that other countries who should be buying from Kenya are (because of our tax regulations) buying offshore and shipping through Kenya instead.
- Sameer Africa are looking for transporters to Somalia, DRC, Ethiopia, Rwanda, Sudan, Burundi, Mozambique, Zambia, Malawi Uganda and Tanzania for their products.

Wanted

Savings A/C
I wanna be with “_____ Bank” but KCB need not apply
I want a savings account- that has no ledger fees, no monthly fees, or EFT fees, that has a reasonable minimum balance and sends statements out frequently. I want a savings account that emphasizes savings, not fees. Short-listed banks include ABC, Barclays, Consolidated, Equity, Stanbic, and Standard Chartered. Any other suggestions or referrals?

Kenol shareholder
I’d like a Kenol shareholder to volunteer and write up an account of the company’s AGM this coming Friday. Full credit will be given.

E-bill
Ever since their MD looked like he was about to leave, Kenya Power & Lighting Company’s revolutionary system of billing (by SMS or e-mail) have stopped. I have yet to see my bill and fear a power cut soon as this company is quick to cut of subscribers who default. I’ll pre-pay an estimated amount tomorrow just in case – to avoid the cut & expensive time-consuming reconnection hassle.

Explanations
Why this and Why that? - Or is it business as usual?

January 27

bank jobs

KCB
- IT security manager: applicants should have university degree with 5 years banking experience, 2 in IT. Also possess CCNA and some security certification (CISSP, CISM, or Comptia+) in addition to good knowledge of Oracle and Swift systems. App to the divisional director, HR, P O Box 48400-00100 Nairobi by February 10
- Director – Marketing: Applicants should have MBA, a professional marketing qualification and 10 years marketing experience – 5 of which should be at banking, finance, FMGC or services-related organization. Apply through Hawkins associates at hawkins.associates@khigroup.com by 13 February

HFCK
Apply for the vacant position of Managing Director at Housing Finance Company of Kenya (HFCK). Applicants should have MBA, 10 years banking experience, 5 leading a bank or major department of one. Apply through (ref MD/01.01) esd@deloitte.co.ke by February 10.

IFC
At the Growth Oriented Women Entrepreneurs (GOWE Kenya) program of the Private Enterprise Partnership for Africa (PEP Africa) at the International Finance Corporation (IFC)
- Program manager
- Business development officer
- Financial analyst
Details at their site and apply be February 7.

World Bank
The application window for summer internships closes on January 31.

financial jobs
Oserain Development Company
- Accountant: must have business degree and be fully qualified accountant with 3 years experience.
- Assistant accountant; must have business degree, at least CPA 2 and a years experience.
Apply to jobs@oserian.com by February 10.

Vegpro
Financial Controller - farming division. Applicants should have CPA (K) and good knowledge of pastel & tally accounting systems. Apply to group human resource manager, P O Box Kenya 32931-00600 by February 15.

Kenya Orient Insurance
- Branch Managers: Applicants should be aged 30 – 35, have business degree and 3 years marking experience, preferably with insurance company. Apply to info@korient.co.ke.

Coca-Cola
sales & marketing (40 opportunities) at Nairobi Bottlers. Apply to vkimeria@ccsabco.co.za by February 2.

Opportunities

Airports
Firms are invited to set up restaurants, fast food outlets, ATM facilities Forex bureau, cold storage, curios, petrol stations shopping malls or other businesses at Moi International Airport - Mombasa. Apply to the Airport Manager, MIA, P O Box 93904 Mombasa.

Petrol/Oil sector

- Somken: Somken are selling 45 petrol stations located in prime urban areas such as Nairobi and Mombasa. Send bids to somken@dyerandblair.com by February 18.
- Kenol: Results are now out for the financial year ended in September 2005. Turnover was up from 34.5 to 41.7 billion shillings and after-tax profit rose from 839m (8.20 EPS) to 916 million shillings (8.92 EPS). The company will pay a first and final dividend of 2.25 shillings per share after their AGM on March 28.
- Shell/BP
Over a year ago I complained to Shell Kenya about the diesel fuel sold at one of their stations that is now closed.

Other News
- Western Union is for sale: it is being spun off by the parent company.
- Newspaper inflation On the same Saturday early this month, both the Standard and the Nation raised the price of their Saturday editions from 35 to 40 shillings.
- Kenyan Pundit suggests that someone should investigate the procurement/source of Alco-blow gadgets
- Things fall apart. The managing director of the booming Panari Hotel has resigned
- The Economist writes aboutcorruption in Kenya
- After a year’s silence John Githongo has returned.
- Richard Leakey argues that for wildlife (and the Kenya tourism sector) to survive the current drought, national park boundaries should be flexible to enable animals to migrate out of parks in search of water and food.

Thieves in the Temple

Over the weekend, Kobil Oil took over the management of 3 fuel stations owned by retired President Daniel arap Moi that had been making losses for several years – and also replaced managers, security and other staff. I hear this sad tale is actually a reflection of many of his businesses, schools, and farms where his own employees have been robbing him blind for many years through phoney billing, unnecessary purchases and repairs and outright theft of property. It is said that farmers around Kabarak don’t have to buy supplies in town, as they simply buy off seed and fertilizer cheaply from his farm managers and workers that is meant for his crops.

Total AGM

Intro
Total Kenya Limited held it’s 51st annual general meeting (AGM) at the French Cultural Centre on Monday April 11. The company ended the year with sales of 37 billion shillings and a profit of 938 million before tax. This translated to earnings per share of 3.31 shillings and the firm declared a dividend of 2.50 shillings per share, payable after this meeting. Total is 78% owned by parent Total, and 21% by Kenyan shareholders ( 4,450 shareholders, 1,800 of whom own fewer than 1,000 shares) and 1% by employees.

The meeting began promptly at 3 p.m. Earlier shareholders had been given the annual reports, minutes (of 2004 meet), sheet to write questions and a goody bag (with an umbrella, polo shirt and baseball cap)

best part
This was the most interactive meeting I have seen. After Chairman (& Executive VP East Africa & Indian Ocean) Momar Nguer read his speech, and the auditor’s read their statement, he proceeded to go though most of the written questions submitted by shareholders after they had been seated. The number of questions was large, as people are less intimidated writing their questions, as opposed to being handed a microphone in a hall full of stranger. Anyway it led to a very insightful debate on Total; it’s competitors, the oil sector in Kenya. Here are some of the answers

Total
- Chairman Nguer showed that Total had been gaining, was 18 shillings two years ago, 27 a year ago, now 40
- Under Nguer, has gone from the no. 4 company in Kenya in 1997 when he arrived to no. 1
- The company will not cut corners. A 28-year-old tanker ship used by a rival company caused an oil spill in Mombasa last week. Nguer said that ships over 20 years old are not widely used anymore, and are not allowed in European ports.
- Said there was no need for bonus shares as long as the company was giving dividends
- The company’s main social project is the “Total Eco Challenge” which seeks to plant 100 million trees a year in Kenya to restore forest cover while meeting demand for charcoal and other wood products (which provide for 80% of Kenya’s annual fuel requirements) in 2004 Total spearheaded the planting of 10 million trees

Kenol (Kenya Oil)
Competitor Kenol has been one of the hottest companies on the NSE and it’s share priced passed the 500 shilling mark, before it was split 10 to 1 – bringing the price to more affordable 50 shillings, from where it has risen to 64 (equivalent 640)

Chairman Nguer was put to task by some shareholders for posting lacklustre results compared to Kenol, having a flat share prices and generally being left 10 steps behind by Kenol. Nguer forcefully defended his company (he must have expected such questions because he had the 2004 accounts of Kenol with him) and tried to prove that Total was a better choice for shareholders.

- Nguer poured cold water on Kenol’s plans to expand into Ethiopia and Zambia. He’s the Total Chairman in those countries and said that any operation in (price-controlled) Ethiopia is very unprofitable while he’s never seen any presence of the company in Zambia.
- Claimed Kenol made a lot of non-oil income, including 226 million from the sale of commercial paper, while Total focused on its core operations only
- Said Total was giving a better return: 2.5 shilling dividend on a 40 shillings share versus Kenol’s 2 shillings on a 60 shilling share
- Admitted that he was confused by the Kenol’s accounts system and urged their shareholders to look at their books

Government of Kenya
- Has been detrimental to Total and the Oil Industry, and consumers of their products
- It is cheaper for Total and oil companies to import petrol and diesel into the country, but they are required to import crude and refine 70% at the government refinery in Mombasa. Unfortunately this also means higher fuel prices for motorists
- The government reneged on a deal to waive all taxes on cooking gas and cylinder’s (as it is with kerosene). Nguer believes that his is the only way to reduce the cost of cooking gas in Kenya.
- Government also reneged on an agreement it signed to mandate the use of low-sulphur diesel and unleaded petrol by 2006. Our Mombasa refinery cannot produce these fuels yet - and this has also prevented willing governments like Rwanda & Uganda (who import though Mombasa) from implementing the same.

Oil Industry
- Said contrary to public perception fuel prices go up and down, not just up.
- OPEC has proved ineffective in managing the price of oil
- Does not expect oil prices to go down any time soon owing to the great demand of China and Asia
- Oil is a low margin business, and profit come from increasing volumes, not prices
- Network fuel stations only contribute 1/6 of Total’s sales
- Is a tricky business to finance: $ interest rates are 3%, while shilling rates are 10%, and most suppliers have to be paid in $

Other shareholder questions
- asked why meeting were held in the afternoon causing people to get home late
- asked for umbrellas (which had got finished)
- asked for extra umbrella for wife at home
- asked for a job
- asked for a promotion for a certain worker
- asked Total to pay shareholder travel expenses

All the question session took up more than an hour, after which all the voting matters – dividend, auditor & director fees and re-election (the actual purpose of the meeting) were concluded in about ten minutes. The Chairman then invited shareholders for refreshments

worst moment
Refreshments after the meeting
Today, churches like All Saints Cathedral are honest enough to admit that they have thieves in their service and advise worshippers to watch their own pockets and not to leave bags unattended when they go for communion. Likewise Kenyan corporate giants should accept the fact that some of their shareholders only attend meetings to grab food and gift bags. The smash and grab scene in the food court of the French Cultural Centre was a sad spectacle. I suspect that some of the grabbers were no shareholders, since the registration and security at the meeting was quite lax.

I recommend that in future:
(i) give individual lunch bags (apologies for criticizing Barclays)
(ii) If they must serve meals at the meeting, employ ushers and arrange for groups to be served in sequence. It’s tough enough serving 1,000 civil guests at a wedding, so why should Total expect 1,000 strangers to behave themselves wedding- Total should have done the same as they dished out a limited supply of wine, juice, beer and bitings such as samosas, beef cuts, mini pizzas etc.
(iii) or give vouchers for meals and gifts – to be claimed on a day after the meeting e.g. vouchers for pizza at Total food courts
(iv) or don’t serve any food at the event.