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Kengen FY16
Rank: Veteran Joined: 4/4/2016 Posts: 1,997 Location: Kitale
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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. Towards the goal of financial freedom
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Rank: Chief Joined: 1/3/2007 Posts: 18,165 Location: Nairobi
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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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Rank: Veteran Joined: 4/4/2016 Posts: 1,997 Location: Kitale
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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. Towards the goal of financial freedom
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Rank: Elder Joined: 12/4/2009 Posts: 10,760 Location: NAIROBI
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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.htmlWealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 12/4/2009 Posts: 10,760 Location: NAIROBI
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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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Rank: Veteran Joined: 4/4/2016 Posts: 1,997 Location: Kitale
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[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. Towards the goal of financial freedom
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Rank: Elder Joined: 12/4/2009 Posts: 10,760 Location: NAIROBI
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@Ebenyo So in summary the company had cashflow issues which made it not to be able to pay GoK dividends Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Veteran Joined: 8/16/2009 Posts: 994
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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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Rank: Veteran Joined: 4/4/2016 Posts: 1,997 Location: Kitale
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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. Towards the goal of financial freedom
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Rank: Elder Joined: 12/4/2009 Posts: 10,760 Location: NAIROBI
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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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Rank: Veteran Joined: 8/16/2009 Posts: 994
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Ebenyo wrote: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. @ebenyo it is very hard to liquidate assets held by Kengen. We are talking of dams, turbines etc. They may have a few buildings but selling them will not raise the billions needed for the projects. 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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Rank: Veteran Joined: 4/4/2016 Posts: 1,997 Location: Kitale
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Gatheuzi wrote:Ebenyo wrote: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. @ebenyo it is very hard to liquidate assets held by Kengen. We are talking of dams, turbines etc. They may have a few buildings but selling them will not raise the billions needed for the projects. In the next results,mgt should deferenciate between 'net asset value' and 'retained earnings'.They are two different things.For now we may live with the eps of 1.08.Lets wait for HY results in february 2017.Meanwhile lets take advantage of the falling price to work down our ABP. Towards the goal of financial freedom
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Rank: Member Joined: 10/26/2015 Posts: 151
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Gatheuzi wrote: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. This makes a whole lot of sense.
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Ebenyo wrote:Gatheuzi wrote:Ebenyo wrote: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. @ebenyo it is very hard to liquidate assets held by Kengen. We are talking of dams, turbines etc. They may have a few buildings but selling them will not raise the billions needed for the projects. In the next results,mgt should deferenciate between 'net asset value' and 'retained earnings'.They are two different things.For now we may live with the eps of 1.08.Lets wait for HY results in february 2017.Meanwhile lets take advantage of the falling price to work down our ABP. Utilities are worth the cash they generate. Kengen should be able to pay suppliers, pay loans, pay dividends with cash generated from electricity sales. So long as people are paying for stoma all stakeholders should get their share since the cost of long term maturing debts is similar to the cost of equity. Life is short. Live passionately.
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Rank: Veteran Joined: 4/4/2016 Posts: 1,997 Location: Kitale
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sparkly wrote:Ebenyo wrote:Gatheuzi wrote:Ebenyo wrote: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. @ebenyo it is very hard to liquidate assets held by Kengen. We are talking of dams, turbines etc. They may have a few buildings but selling them will not raise the billions needed for the projects. In the next results,mgt should deferenciate between 'net asset value' and 'retained earnings'.They are two different things.For now we may live with the eps of 1.08.Lets wait for HY results in february 2017.Meanwhile lets take advantage of the falling price to work down our ABP. Utilities are worth the cash they generate. Kengen should be able to pay suppliers, pay loans, pay dividends with cash generated from electricity sales. So long as people are paying for stoma all stakeholders should get their share since the cost of long term maturing debts is similar to the cost of equity. You are right. Total revenue of 38 bilion is enough amount to please all stakeholders.With EPS of 1.08,ROE of 3.9% ROA of 1.8% the future is surely not bad. Towards the goal of financial freedom
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Rank: Elder Joined: 12/4/2009 Posts: 10,760 Location: NAIROBI
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Investor briefing for full year results is today Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 12/7/2012 Posts: 11,911
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Crooks In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
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Rank: Member Joined: 5/30/2016 Posts: 217 Location: Talai
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Angelica _ann wrote:Crooks so we are officially headed to the right price of 3.50cts.  Watch and Listen and Live
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Rank: Member Joined: 9/12/2008 Posts: 436 Location: illobi
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ARAP CHARLES wrote:Angelica _ann wrote:Crooks so we are officially headed to the right price of 3.50cts. Right price was 3.50/-?
A successful man is one who makes more money than his wife can spend. A successful woman is one who can find such a man
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Rank: Elder Joined: 12/7/2012 Posts: 11,911
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K22 wrote:ARAP CHARLES wrote:Angelica _ann wrote:Crooks so we are officially headed to the right price of 3.50cts. Right price was 3.50/-? Right price not Rights price  In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
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