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Ndegwa family gives up right to raise stake in NIC

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the deal		#11 Posted : Thursday, October 11, 2012 7:02:27 PM
Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery		guru267 wrote: the deal wrote: The new shares will always dilute the EPS and the DPS unless the company increases its payout ratio or EPS rises faster than the dilution factor. @the deal you need to improve your accounting knowledge.. Let me help! I hear what you are saying but with bonus shares it is very very different from rights issues, preferred issues and bond conversions! 1.Bonus shares do not increase or decrease the capital of a company! 2. Every shareholder receives the bonus shares for free pro rata hence the % ownership of ALL shareholders remains the same! (not dilutive) 3. If i had 1,000 NIC shares bought at an average cost of 30bob, when they give a 1:10 bonus i will get an extra 100 shares & my average cost will now be (30k/1,100 shares) which is 27.3bob... If the EPS for NIC was 3bob and falls to 2.73bob because of new shares my P/E still remains at 10.. If DPS was 1bob and fell to 91cents because of the new shares i would still receive the same dividend... *(10001)=(1,1000.91)=1k* The value of my shares also remains the same... *(1,00030)=(1,10027.3) = 30k* That is why a bonus issue is not dilutive provided the shareholder does not sell their bonus shares! in the other share issues and debt conversions introduction of new investors and lack of funds by some shareholders are the main cause of dilution! I know everything you have stated above but you completely missed my initial post! What I was referring to above is Earnings Dilution 1. 1:10 means number of issued shares increase by 10%, everything held constant: your EPS in the example above is suppose to fall to 2.7 not 2.73. 2. If your EPS falls to 2.7 then your PE is not 1 its suppose to be 1.1...3/2.7=1.1 [/quote] The new shares will always dilute the EPS and the DPS unless the company increases its payout ratio or EPS rises faster than the dilution factor. [/quote] By that statement above I meant this:- *The difference between the earnings growth and dilution rate is referred as real growth (or growth in earnings per share).*
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gesowan		#12 Posted : Thursday, October 11, 2012 7:52:05 PM
Rank: Member Joined: 11/6/2010 Posts: 289		@ SPARKY advised "Do both. Sell the shares that you have now, remaining with 100 shares. Apply for additional rights at 21. " @guru267"This is the most dangerous advice for any rights issue that will be surely oversubscribed.. This move completely failed in the Stanchart issue and all previous DTB rights issues due to generous valuations and tiny capital reqirements.. The NIC and DTB issues will be highly oversubscribed so if you remain with 100 shares do not expect more than 25 additional shares from NIC.. Less ambitious but more realistic!!
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guru267		#13 Posted : Thursday, October 11, 2012 10:46:19 PM
Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi		the deal wrote: 1:10 means number of issued shares increase by 10%, everything held constant: your EPS in the example above is suppose to fall to 2.7 not 2.73. I did not know i would have to help with basic math too! If company A has shs 3billion PAT and 1billion shares that gives an EPS of 3bob.. If the company gives a 1:10 bonus there will be 1.1billion shares.. if PAT stays constant the EPS will fall to (3/1.1)= 2.73 If the price was 30bob before the issue then market cap was *(301)=30billion If the market P/E is constant at 10 then share price after the issue will fall to 27.3bob but the market cap will still be (27.31.1)=30billion* The EPS and share price are just nominal values! The absolute values like market cap are what matter! Just like a stock split bonus shares do not affect market cap!! Mark 12:29 Deuteronomy 4:16
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FUNKY		#14 Posted : Friday, October 12, 2012 8:29:26 AM
Rank: Veteran Joined: 4/30/2010 Posts: 1,635		http://bit.ly/R2CRb0
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VituVingiSana		#15 Posted : Wednesday, January 02, 2013 9:59:44 AM
Rank: Chief Joined: 1/3/2007 Posts: 18,366 Location: Nairobi		Ndegwa family makes u-turn on NIC Bank stake http://www.businessdaily.../-/3ev6t3z/-/index.html The Board (controlled by ndegwas) applied an allocation formula that was not disclosed. The folks at CMA have no clue or are involved. Other shady deals approved by CMA include: - Transfer of Marshall's shares using 'fake' or 'duplicate' certificates while the original were held by Oriental Bank. - Allowed KQ to publish an IM without projected financial statements for the 1/2 year. Then announced a KES 6bn loss which is almost 40% of the money collected in the Rights Issue. - KQ was given exemptions from rules in the IM which would have kept GoK stake less than KLM. Greedy when others are fearful. Very fearful when others are greedy - *to paraphrase Warren Buffett*
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