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Kengen FY16
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Ebenyo
#41 Posted : Saturday, October 22, 2016 2:31:32 PM
Rank: Veteran

Joined: 4/4/2016
Posts: 2,016
Location: Kitale
mlennyma wrote:
sparkly wrote:
mlennyma wrote:
Ebenyo wrote:
Kengen initially wanted to raise kshs 28.8 bilion to finance:
1.140MW olkaria V
2.80MW meru wind phase 1
3.10MW ngong wind phase 2
Rights issue raised kshs 6.3 billion only.
Instead of gava giving 20.2 bilion in cash,it opted to convert its debts to kengen into equity.This brought a deficit of kshs 22.5 billion.With the results released,they now have 6.4 bilion more.In total they now have kshs 12.7 billion.They still have a deficit of kshs 16.1 billion.
My questions to the MD:
1.How does the board intend to fill the deficit without subjecting shareholders to prolonged dividend drought?
2.Whats the use of kshs 136 billion in retained earnings and reserves?


can you really borrow or do a rights when you have that magnitude of cash reserves the answer is NO unless you are stupid


Reserves are not necessarily in cash.
For cash see the cashflow statement.

Kengen revalued properties just before the rights hence the high reserves.

I did raise eyebrows when they revalued the power plants UPWARDS and reported gains.

retained earnings means cash or ??


Dictionary difinition:
RETAINED EARNINGS-are part of a company net income which is left after paying out dividends to shareholders.
RESERVES-are a part of retained earnings that is approprieted for a specific purpose.Its kept by the company for reinvesting it in the main business.
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  | | Edit by user: Saturday, October 22, 2016 2:33 PM | Reason: Not specified
VituVingiSana
#42 Posted : Saturday, October 22, 2016 7:27:50 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,347
Location: Nairobi
Ebenyo wrote:
Kengen initially wanted to raise kshs 28.8 bilion to finance:
1.140MW olkaria V
2.80MW meru wind phase 1
3.10MW ngong wind phase 2
Rights issue raised kshs 6.3 billion only.
Instead of gava giving 20.2 bilion in cash,it opted to convert its debts to kengen into equity.This brought a deficit of kshs 22.5 billion.With the results released,they now have 6.4 bilion more.In total they now have kshs 12.7 billion.They still have a deficit of kshs 16.1 billion.
My questions to the MD:
1.How does the board intend to fill the deficit without subjecting shareholders to prolonged dividend drought?
2.Whats the use of kshs 136 billion in retained earnings and reserves?

GoK was never going to put cash in.

Option A: KenGen converts the DEBT into EQUITY so GoK gets shares.
Option B: GoK pays cash to KenGen (for shares/equity) and then KenGen pays off the loans to GoK.

Option A was chosen. Same difference between A & B.

Retained Earnings is simply a term to indicate profits not paid out. For most firms these "retained earnings" are used to purchase the "assets" you have on the books.

Reserves: Yes, if placed in a bank then it is cash. For MOST firms, the "reserves" are not in cash but in assets. Say there's a plot bought in 1980 for 1mn and is revalued 25mn today. The "difference" of 24mn is "revaluation reserve" [not cash but in the asset].
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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  | | Edit by user: Saturday, October 22, 2016 7:33 PM | Reason: Not specified
Ebenyo
#43 Posted : Sunday, October 23, 2016 8:04:20 AM
Rank: Veteran

Joined: 4/4/2016
Posts: 2,016
Location: Kitale
VituVingiSana wrote:
Ebenyo wrote:
Kengen initially wanted to raise kshs 28.8 bilion to finance:
1.140MW olkaria V
2.80MW meru wind phase 1
3.10MW ngong wind phase 2
Rights issue raised kshs 6.3 billion only.
Instead of gava giving 20.2 bilion in cash,it opted to convert its debts to kengen into equity.This brought a deficit of kshs 22.5 billion.With the results released,they now have 6.4 bilion more.In total they now have kshs 12.7 billion.They still have a deficit of kshs 16.1 billion.
My questions to the MD:
1.How does the board intend to fill the deficit without subjecting shareholders to prolonged dividend drought?
2.Whats the use of kshs 136 billion in retained earnings and reserves?

GoK was never going to put cash in.

Option A: KenGen converts the DEBT into EQUITY so GoK gets shares.
Option B: GoK pays cash to KenGen (for shares/equity) and then KenGen pays off the loans to GoK.

Option A was chosen. Same difference between A & B.

Retained Earnings is simply a term to indicate profits not paid out. For most firms these "retained earnings" are used to purchase the "assets" you have on the books.

Reserves: Yes, if placed in a bank then it is cash. For MOST firms, the "reserves" are not in cash but in assets. Say there's a plot bought in 1980 for 1mn and is revalued 25mn today. The "difference" of 24mn is "revaluation reserve" [not cash but in the asset].


Kengen needs to do better and give us good financial reports.In the just released results,the company total assets stand at kshs 377,249,000,000 while reserves and retained earnings is quoted at kshs 136,077,000,000.Your explanation therefore means all these are assets and that there is no hard cash in form of retained earnings.
When safaricom recently gave us an extra 0.76 special dividend,the explanation was that the money was from 'retained earnings' of the company.When i checked the financial report,it was indeed consistent with their explanation.Their quoted figures in assets was intact.
Kengen needs money for the three projects and to bring down the high debt ratio.Thats why we have missed the dividend.Thats the explanation we have.
The three projects when completed will add value to the company.When the debts level are down,its healthy for the company.





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  | | Edit by user: Sunday, October 23, 2016 8:05 AM | Reason: Not specified
Ericsson
#44 Posted : Monday, October 24, 2016 5:18:17 AM
Rank: Elder

Joined: 12/4/2009
Posts: 10,804
Location: NAIROBI
Someone to explain the meaning of the article by business daily.
To me it doesn't make sense to say company hasn't been paying dividends

http://www.businessdaily...27206-gwvjliz/index.html
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Ericsson
#45 Posted : Monday, October 24, 2016 5:19:25 AM
Rank: Elder

Joined: 12/4/2009
Posts: 10,804
Location: NAIROBI
Paying dividends to goK and has been in arrears
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Ebenyo
#46 Posted : Monday, October 24, 2016 6:56:26 AM
Rank: Veteran

Joined: 4/4/2016
Posts: 2,016
Location: Kitale
[quote=Ericsson]Someone to explain the meaning of the article by business daily.
To me it doesn't make sense to say company hasn't been paying dividends

http://www.businessdaily...7206-gwvjliz/index.html[/quote]

The way i understand the article is that:
1.Kengen delayed paying dividends to gok which has 70% stake in it since 2012.
2.The total dividends accrued to 5.7 billion.
3.They finally paid gok on june this year.
4.KRA taxed kengen kshs 2.4 bilion 'compensating tax'.This tax was because kengen delayed paying the dividends for five years.
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Ericsson
#47 Posted : Monday, October 24, 2016 7:10:23 AM
Rank: Elder

Joined: 12/4/2009
Posts: 10,804
Location: NAIROBI
@Ebenyo
So in summary the company had cashflow issues which made it not to be able to pay GoK dividends
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Gatheuzi
#48 Posted : Monday, October 24, 2016 7:31:08 AM
Rank: Veteran

Joined: 8/16/2009
Posts: 994
Ericsson wrote:
@Ebenyo
So in summary the company had cashflow issues which made it not to be able to pay GoK dividends

Gok owed Kengen 5.4B and Kengen withheld dividend payment of 5.7B. Paying this according to MD would have meant going for overdrafts. It also turns out this compensating tax has been paid over other years only that the effect was not felt much as it was going to minorities.

Quote:
The Nairobi Securities Exchange-listed KenGen paid compensating tax of Sh57.4 million in 2012 and another Sh96.5 million in 2014 arising from dividend payouts to its minority shareholders.


The main reason for compensating tax (very punitive at 42.8%) is because once you receive tax credits you are encouraged to retain it into the business and not distribute the same to shareholders. If mgt was smart they would have advised shareholders to take a dividend drought for the 3 years.
Time is money, so money is time. Money saved is time gained in reverse! Money stores your life’s energy. You expend your energy, get paid money, and store that money for a future purchase made in a currency.
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  | | Edit by user: Monday, October 24, 2016 7:57 AM | Reason: Not specified
Ebenyo
#49 Posted : Monday, October 24, 2016 7:45:43 AM
Rank: Veteran

Joined: 4/4/2016
Posts: 2,016
Location: Kitale
Ericsson wrote:
@Ebenyo
So in summary the company had cashflow issues which made it not to be able to pay GoK dividends


The way it looks,thats the case.But i dont understand why the company will suffer cash flow when the just released financial statement quotes kshs 136 bilion in 'retained earnings and reserves'.Even if they are in form of assets and not cash,getting part of it in cash to ease financial pressure could have made sense.Why cheat shareholders to buy rights issue of just 29 bilion when you have 136 bilion in reserve? This man Mugo must really be a crook.They are cheating us.
Compensating tax does not make sense at all.Why should a company be taxed for delaying to pay dividends?
Last year they spruced up the financial results just to make the rights a success.The company was given tax credit then,but this year no.
Im beggining to doubt the mgt of this company.They are not having minority shareholders interest at mind.
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  | | Edit by user: Monday, October 24, 2016 7:56 AM | Reason: Not specified
Ericsson
#50 Posted : Monday, October 24, 2016 7:55:22 AM
Rank: Elder

Joined: 12/4/2009
Posts: 10,804
Location: NAIROBI
The amount of money raised by minority shareholders during the rights issue was used to retire a short term loan of sh.8bn the company took from Co-op bank last financial year
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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