Kausha wrote:The other notable thing to discern is the increase in operating leverage of the company (able to grow sales high off same fixed cost with at slightly lower fixed cost base). This is very important and one of the strengths of companies such as safcom and some banks. Essentially KK's gross margin expansion flowed down to the bottom line almost fully. The savings in interest expenses were gobbled up by taxation.
I still don't understand why KK cannot offset it's entire deferred tax asset in one go...
Different subsidiaries have their own Deferred Tax Assets and the application depends on the jurisdiction's tax laws. The largest level of DTAs are in Kenya and Tanzania.
Only taxable profits made in Kenya can be used to offset DTAs in Kenya. Ditto Tanzania and if the TZ subsidiary doesn't make profits, the DTAs are worthless.
DTAs are only considered assets if there is a significant likelihood of using them. In Kenya it is currently 5 years. If KK (Kenya) continues making large profits then the Kenyan portion of the DTAs will be fully utilized.
I believe Rwanda, Ethiopia & Burundi have no DTAs. I am not sure about Uganda.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett