Any info on kakuzi ?an eps of 13 and a dps of 18 sh,why such a discrepancy.the divident payout is less than 8% when a company with such eps will consider payout not less than 25percent.rea vip has an eps of 2.5 yet the payout is more than 20percent.that kakuzi site does nt exist.any info?

Where did you see that one of Kakuzi havign a divided of KES18? That is very hard to comeby safe for couters like BAT ... even they give a divided equivalent to the EPS not more. Kakuzi earned 13 bob in the last FY and gave 1 bob divided. Where did you get that one of 18 bob?

@cicero i think @mwanafunzi made a mistake with 18 because the topic does say 1bob...

to answer @mwanafunzi's question.. kakuzi is an agricultural company which means its profits are very volatile and not consistent year on year with a high chance of making a loss hence it cant afford to pay a dividend which it may not be able to sustain in the future...

@mwanafunzi its the dynamics of the agricultural industry.

Firstly firms in this industry report very volatile earnings from season to season. It is not surprising to see a large HY loss transform into a profit and vice versa. They can't afford to pay huge dividends as they might leave themselves exposed.

Secondly accounting for agricultural companies is a tricky affair. Lots of prvisioning which does not mean an inflow of cash. Revaluation of tea bushes, live animals, plantations etc result in paper profits even where they have not been actualised.

Lastly on Kakuzi the company: Kakuzi has been going through restructuring of operations - getting rid of coffee, less tea, more of avocadoes,pineapples, livestock and forestry.

Restructuring was financed by bank loans and overdrafts. A huge portion of the loans has been outstanding and substantial cash goes to servicing the loans. As per last audited accounts Kakuzi's cashflows suck (to the point of being almost insolvent).

IMHO Kakuzi should first pay off those debts even before rewarding shareholders (safety first).

Then again Since the dollar inflows from tea are so good, the management decided to pay the 1 bob dividend to appease the shareholders.

@VVS i used the word insolvent for effect, not mean't to scare investors. Seriously though, the loans and O/Ds are huge. PWC dwelt on the going concern assumption at length, look at the 2008 FY accounts. You will also note that the prose in the accounts is like 99% and the figures scant. mgt trying too hard to sugar-coat a grim picture. At the end of the day, do your research, see if you can handle the risk.

Thanks wazurians.this is very informative.keep it rolling

@mwanafunzi i guess up to the historical average highs of 70. Watch out Speculation will end when they release results.