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Centum Marathon
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guru267
#21 Posted : Tuesday, June 04, 2013 11:16:31 AM
Rank: Elder

Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
mwekez@ji wrote:
Fair value gains on investment property to drive incomes. Am sure they have hired a “suitable” valuer this time round #FYR_Expectations


These fair value gains within the P&L scare me because the properties may be sold at a lower value meaning they will have to take a loss in that year Sad

I would prefer they use the historical cost method and only book gains after the properties are sold..

If they insist on recording fair value gains then they should only do it in the section of "Other comprehensive Income"
Mark 12:29
Deuteronomy 4:16
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mwekez@ji
#22 Posted : Tuesday, June 04, 2013 11:26:46 AM
Rank: Chief

Joined: 5/31/2011
Posts: 5,121
Centum home page talks of results to be released tomorrow at 7am >>> link

However, the "Centum Invite to Briefing Note" talks of the results being released tomorrow but at 3pm >>> link

#Confusion galore. 7am? 3pm? What time will it be?
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  | | Edit by user: Tuesday, June 04, 2013 11:32 AM | Reason: Not specified
mwekez@ji
#23 Posted : Tuesday, June 04, 2013 11:35:50 AM
Rank: Chief

Joined: 5/31/2011
Posts: 5,121
... and any idea whether there will be a live stream link for the online community #Centum_FYR2012/13
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VituVingiSana
#24 Posted : Tuesday, June 04, 2013 12:06:31 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,361
Location: Nairobi
mwekez@ji wrote:
This company issued KES 3B bond recently. Expect interest expense to depress earnings #FYR_Expectations
Kwani? Unafikiri wanaweka chapaa ndani ya godoro? Laughing out loudly Laughing out loudly Laughing out loudly

The cash was probably deployed into T-Bills & T-Bonds which means a % of recovery of interest vs what they paid on the Bond. Not to mention reduce/pay-off (pricey) short-term loans & saving interest. Centum also bought a MFI which could have lent out some of this cash at crazy high rates.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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mwekez@ji
#25 Posted : Tuesday, June 04, 2013 12:22:43 PM
Rank: Chief

Joined: 5/31/2011
Posts: 5,121
VituVingiSana wrote:
mwekez@ji wrote:
This company issued KES 3B bond recently. Expect interest expense to depress earnings #FYR_Expectations
Kwani? Unafikiri wanaweka chapaa ndani ya godoro? Laughing out loudly Laughing out loudly Laughing out loudly

The cash was probably deployed into T-Bills & T-Bonds which means a % of recovery of interest vs what they paid on the Bond. Not to mention reduce/pay-off (pricey) short-term loans & saving interest. Centum also bought a MFI which could have lent out some of this cash at crazy high rates.


Laughing out loudly Laughing out loudly Laughing out loudly that doesnt stop the interest expense from depressing earnings. .... as to the impact of the bond on the top line, i await to see tomorrow. you seem to indicate there will be no lag on its impact on the top line
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VituVingiSana
#26 Posted : Tuesday, June 04, 2013 12:30:21 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,361
Location: Nairobi
mwekez@ji wrote:
VituVingiSana wrote:
mwekez@ji wrote:
This company issued KES 3B bond recently. Expect interest expense to depress earnings #FYR_Expectations
Kwani? Unafikiri wanaweka chapaa ndani ya godoro? Laughing out loudly Laughing out loudly Laughing out loudly

The cash was probably deployed into T-Bills & T-Bonds which means a % of recovery of interest vs what they paid on the Bond. Not to mention reduce/pay-off (pricey) short-term loans & saving interest. Centum also bought a MFI which could have lent out some of this cash at crazy high rates.


Laughing out loudly Laughing out loudly Laughing out loudly that doesnt stop the interest expense from depressing earnings. .... as to the impact of the bond on the top line, i await to see tomorrow. you seem to indicate there will be no lag on its impact on the top line
I think they would have either:
1) Planned beforehand to deploy the cash swiftly to 'neutralize' the interest cost. This includes short-term loans to their subsidiaries, pay off overdrafts, vendors, etc.
2) Invested the cash into GoK or Corporate Securities/Bonds as well as shares [note the NSE has jumped quite a bit since the Bond was issued]

When I add the potential gains from 1+2 ... I think they will be a-OK. There will be a net cost i.e. funds sunk into Real Estate whose pay-off will come in 2-3 years but that is acceptable.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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mwekez@ji
#27 Posted : Tuesday, June 04, 2013 12:59:20 PM
Rank: Chief

Joined: 5/31/2011
Posts: 5,121
VituVingiSana wrote:
mwekez@ji wrote:
VituVingiSana wrote:
mwekez@ji wrote:
This company issued KES 3B bond recently. Expect interest expense to depress earnings #FYR_Expectations
Kwani? Unafikiri wanaweka chapaa ndani ya godoro? Laughing out loudly Laughing out loudly Laughing out loudly

The cash was probably deployed into T-Bills & T-Bonds which means a % of recovery of interest vs what they paid on the Bond. Not to mention reduce/pay-off (pricey) short-term loans & saving interest. Centum also bought a MFI which could have lent out some of this cash at crazy high rates.


Laughing out loudly Laughing out loudly Laughing out loudly that doesnt stop the interest expense from depressing earnings. .... as to the impact of the bond on the top line, i await to see tomorrow. you seem to indicate there will be no lag on its impact on the top line
I think they would have either:
1) Planned beforehand to deploy the cash swiftly to 'neutralize' the interest cost. This includes short-term loans to their subsidiaries, pay off overdrafts, vendors, etc.
2) Invested the cash into GoK or Corporate Securities/Bonds as well as shares [note the NSE has jumped quite a bit since the Bond was issued]

When I add the potential gains from 1+2 ... I think they will be a-OK. There will be a net cost i.e. funds sunk into Real Estate whose pay-off will come in 2-3 years but that is acceptable.


Partially agreed chief @VVS. I note last year, short term loans were granted at 22% while long term loans at 20%. The bond is well priced at 13.50% for the Senior Unsecured Fixed Rate Notes and 12.75% for the Senior Unsecured Equity Linked Notes
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  | | Edit by user: Tuesday, June 04, 2013 1:13 PM | Reason: Not specified
mwekez@ji
#28 Posted : Tuesday, June 04, 2013 1:09:40 PM
Rank: Chief

Joined: 5/31/2011
Posts: 5,121
@VVS, notice purpose of the bond read:

The proceeds of the Notes will be used for investment in:
• PE opportunities.
• RE&I opportunities.
In the event the Greenshoe Option is exercised, the additional amounts raised under the Greenshoe Option will be used to repay existing bank debt.

Note Greenshoe Option was not exercised so repayment of existing bank debt could not be done
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VituVingiSana
#29 Posted : Tuesday, June 04, 2013 1:13:38 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,361
Location: Nairobi
mwekez@ji wrote:
@VVS, notice purpose of the bond read:

The proceeds of the Notes will be used for investment in:
• PE opportunities.
• RE&I opportunities.
In the event the Greenshoe Option is exercised, the additional amounts raised under the Greenshoe Option will be used to repay existing bank debt.

Note Greenshoe Option was not exercised so repayment of existing bank debt could not be done
Well, in the short-term, that will happen! Probably not to repay long-term debt but definitely short-term debt including Overdrafts. It's the same dish whether you take some rice then dip it in the mchuzi or you take a spoonful of mchuzi & add it to the rice ;-)

More good news is that interest rates have fallen from the 22% to the 18% level. I hope that helps Centum as well.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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  | | Edit by user: Tuesday, June 04, 2013 1:14 PM | Reason: Not specified
mwekez@ji
#30 Posted : Tuesday, June 04, 2013 2:18:18 PM
Rank: Chief

Joined: 5/31/2011
Posts: 5,121
VituVingiSana wrote:
mwekez@ji wrote:
@VVS, notice purpose of the bond read:

The proceeds of the Notes will be used for investment in:
• PE opportunities.
• RE&I opportunities.
In the event the Greenshoe Option is exercised, the additional amounts raised under the Greenshoe Option will be used to repay existing bank debt.

Note Greenshoe Option was not exercised so repayment of existing bank debt could not be done
Well, in the short-term, that will happen! Probably not to repay long-term debt but definitely short-term debt including Overdrafts. It's the same dish whether you take some rice then dip it in the mchuzi or you take a spoonful of mchuzi & add it to the rice ;-)

More good news is that interest rates have fallen from the 22% to the 18% level. I hope that helps Centum as well.


................ ;-)
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