There is a formula used by KPLC. A little research would do wonders but like many Kenyans you want the easy way out.
The formula was set up years ago when oil prices were $40/bbl & KShs 62/$. Oil is now $115/bbl & KShs 85/$.
Unfortunately, Kenya does not have huge hydropower potential. Kenyans breed like rabbits. 6mn in 1963 & an estimated 44mn in 2012. The forests (water catchment areas) have decimated from 12% cover in 1963 to 2-4% today.
All these leads to an increase in electricity generation using Thermal Power aka oil fuel. Kenya does not use coal to generate electricity.

Yes, the government slacked off for many, many years though it's Kenyans who elected the same crooks over & over again. In 1992 & 1997, many Kenyans stupidly voted in daniel moi instead of coalescing behind a single (opposition) presidential candidate.

Now we know why PUMA was insisting on retrenchment and costs cuts. They must have seen this coming.

Speechless...

Avai!!

FY2012 dividend is not an issue..PUMA will have taken this thing..

KK has a case pending vs KPC. Too bad it has been delayed in the courts. A win would mitigate the loss occasioned by the forex losses!

And losing the kpc case would bleed its a*s to death.

Most fx hedges that I have seen are for periods of 1, 3,6 or 12 months.

Segman entered into this contracts around August of last year with cash settlements due this half year period.

As a cash flow tool fx hedges have significant upside or downside risk. As a business which makes all payments in USD it is imperative that you have a good understanding of these risks. Their loss shows that they hedged more than 60% of their oil cost requirements.

My 2 cents is that FY 2012 will be a loss.

No, coz not booked as a profit anywhere.

As part of defence mechanisms, management will always cite international economy, prevailing market conditions, etc for their inefficiencies. Clearly we should not analyse their perfomance by what they say. Capture this;


Cost of sales to Sales ratio 98% (2011) 93% (COS went up in 2012. Why?)
Gross profit to Income ratio 2% (2011) 7%
Growth in sales 25% (2011) 35% (with all the supa sundays campaigns?)
Efficiency ratio b4 exch losses 102% (2011)23% - using gross profit as net income. (Costs?)
Exchange losses to sales 4% (2011) 1%

So, my conclusion is that so many things went wrong in the half year not just hedging. Mr. Jacob Segman, please explain in more clear details that you are not the one running KK down because you already has an offer from PUMA when the buying price is heavily and mercilessly discounted?