BAT shines

BAT posted a 41% increase in profits

We highlight the key business news this week.

BAT Kenya Shines

BAT Kenya was another company to buck the profit warning trend as it posted a record 41% year over year increase in its profit after tax to Kshs. 5.5B. The increased profit after tax was due to the increase in net revenue, reduction in costs, and the reduction in the Corporate Tax rate in April 2020.

The company is set to pay a Ksh 41.50 per share final dividend for the year 2020 bringing to total dividend for the year to Kshs 45 per share (a 35% year over year increase). Net revenue was up 5.4% to Ksh 25.3B driven by higher export revenues and lower Excise Duty and Value Added Tax which reflected the impact of the decline in domestic sales volumes and the reduction in the VAT rate in April 2020 as part of the Government’s COVID-19 relief measures.

The share price has rather responded well going up ~10.2% on Friday alone and is now up 34.28% year to date.

BAT 5-year price chart

Source: Reuters

Petrol Prices Rise

Petrol prices in Kenya jumped by KShs 8 while diesel prices were up by KShs 5 owing to increased average landed cost of imported Super Petrol, Diesel, and Kerosene.

Taking into account the weighted average cost of imported refined petroleum products, the changes in the maximum allowed petroleum pump prices in Nairobi are as follows, Super Petrol, Diesel and Kerosene increase by Ksh 0.17 per litre, KShs 4.57 per litre and KShs 3.56 per litre respectively. The prices are inclusive of the 8% Value Added Tax(VAT) in line with the provisions of the Finance Act 2018, the Tax Laws(Amendment) Act 2020 and the revised rates for excise duty adjusted for inflation as per Legal Notice No. 194 of 2020

— The Energy and Petroleum Regulatory Authority (EPRA)

IMF Loan to Kenya

Kenya is set to get a Ksh. 263B IMF loan in Covid budget relief. The fund is to dispense a 38-month staff level financing package for the economy under its Extended Fund Facility and Extended Credit Facility arrangements.

The program will support the next phase of the country’s Covid-19 response and the authorities’ plans for a strong multi-year effort to stabilize and begin reducing debt levels relative to GDP

— Mary Goodman, IMF mission Leader to Kenya

KQ not on the List

KQ is not among airlines that have been shortlisted to transport COVID-19 vaccines around the world. Only two African airlines made it to the list: Nairobi-based Astral Aviation and Ethiopian Airways.

The participation of the airline industry is vital to support equal access to vaccines worldwide. The initiative will also act as a global logistics preparedness mechanism for other humanitarian and health crises over the longer term

— UNICEF

Kenya Set to Borrow More

Kenya to borrow Ksh1 trillion to finance its expanded budget. Kenya plans to borrow more this financial year to fund additional budget needs in the revised budget for 2020/2021. According to the 2020 Budget Review and Outlook Paper tabled by CS Ukur Yatani in Parliament, the country will borrow Sh1.002 trillion in the current financial year to meet the additional Sh 200 billion expenditure.

In this regard, revenue projections for 2020/2021 have been revised, taking into account the outcome of the 2019/2020 where revenue falls short of the target by Sh131.2 billion

— The Kenyan Treasury

ICPAK wants Minimum Tax Deferred

ICPAK wants the proposed minimum tax to be deferred citing COVID-19 impact on businesses. ICPAK is mandated to regulate the accountancy profession in Kenya. Minimum Tax was introduced vide Finance Act 2020, effective from 1st January 2021. The rate of minimum tax is 1% of the gross turnover of the company.

There is a need to defer the introduction of minimum tax from 2021 to 2023 to give businesses and the economy at large an opportunity to recover from the negative effects of the Covid-19 pandemic

— ICPAK Board Chair Rose Mwaura

Other Noteworthy Items:

Limuru Tea PLC issues profit warning

The Board is of the view that the estimated decrease in the results for the period is mainly due to the lower tea market prices that were realized in 2020 compared to 2019 in the midst of rising cost of production and the prevailing global downturn on account of Covid-19

— Limuru tea

Expect new listings at the Nairobi Securities Exchange in 2021

We will possibly have two main listings and two Ibuka companies converting

— NSE CEO Geoffrey Odundo

WPP Scangroup suspends its CEO citing allegations of gross misconduct

WPP Scangroup Plc(the Company) announces that the Board of directors has suspended the employment of the Chief Executive Officer, Mr Bharat Thakrar and the Chief Finance Officer , Mr Satyabrata Das to allow for investigations into allegations of gross misconduct and possible offences in their capacity as senior executives and employees of the Company

— WPP Scangroup