Total Kenya
Total Kenya: A closer look at selected items in the financial statements
Total Kenya: A closer look at selected items in the financial statements
In 2006, the company managed to record good results despite the many challenges facing the oil industry in Kenya. The industry experienced lower margins on main product sales mainly due to stiff competition and pressure by the government and public to reduce prices. Business has also been affected by insufficient pipeline capacity within KPC, the requirement to process crude at KPRL despite its uncompetitive characteristics and increased financing costs resulting from the upfront payment of taxes on petroleum products.
Sales volumes from all business channels were 607 kilometric tonnes in 2006. The reduction in sales volumes is mainly attributed to a drop in exports, aviation and bulk industry sales. The operating profit remained at almost the same level as in the previous year. Profit after tax however reduced by 15% due to increase in net finance costs. The financial position of the company remain strong with net current assets of Kshs 1.8 billion, same as 2005.
The company intends to remain a major player in the local oil industry through continued presence in all market segments, investmnet in profitable network, general trage and LPG outlests and prudent working capital management.
In line with the company’s stable dividend policy and the maximisation of returns to shareholders, divided for the year 2006 is proposed at Kshs 2.50 per share, same rate as in the previous year.
PROPOSED DIVIDEND
The Directors are recommending for the approval at the Annual General meeting the payment of a first and final dividend of Kshs 2.50 per share for the year ended 31 December 2006, subject to withholding tax where applicable.
Subject to approval at the Shareholders’ Annual General Meeting the dividend cheques will be posted on or about 25th June 2007.
| A closer look at selected items in the 2006 Total Kenya Financial statements | |||
| 2006 (KES) | 2005 (KES) | % change | |
| Gross Sales | 38,052,875.00 | 40,547,536.00 | -6.15% |
| Cost of Sales | 28,408,979.00 | 31,048,530.00 | -8.50% |
| Amortisation of prepaid operating leases | 19,687.00 | 6,164.00 | 219.39% |
| Finance charges | 388,556.00 | 284,256.00 | 36.69% |
| Net Profit | 486,078.00 | 531,561.00 | -8.56% |
| EPS | 2.78 | 3.04 | -8.55% |
| Intangible assets | 71,686.00 | 881.00 | 8036.89% |
| Inventories | 6,049,585.00 | 2,902,972.00 | 108.39% |
| Accounts Receivable | 4,558,518.00 | 3,209,989.00 | 42.01% |
| Bank and Cash balances | 1,264,389.00 | 1,067,382.00 | 18.46% |
| Trade and other payables | 5,379,352.00 | 1,471,192.00 | 265.65% |
| Short term bank borrowings | 5,014,000.00 | 4,239,622.00 | 18.27% |
| Cash Generated from operations | 380,438.00 | 1,659,512.00 | -77.08% |
| Gross Sales: Down 6.15% | |||
| The amount of money that Total received from its activities in 2006, mostly from sales of products and/or services to customers. Compared to their 2005 turnover number - the 2006 turnover dropped by 6.15% | |||
| EPS: Dropped by 8.55 % | |||
| The portion of Total’s profit allocated to each outstanding share of common stock. Total’s EPS dropped by 8.55% | |||
| Bank and Cash balances: Decreased by 18.46% | |||
| The most liquid assets on Total’s balance sheet decreased by 18.46% from 1,264,389 KES to 1,067,382 KES. | |||
| Amortisation of prepaid operating leases: Increased by 219.39% | |||
| A lease is defined as a contractual agreement between a lessor and Total that gives Total the right to use specific property, either owned by or in the possession of the lessor, for a specified period of time in return for stipulated, and generally periodic, cash payment. In an operating lease, the lessor (or owner) transfers only the right to use the property to the Total Kenya. At the end of the lease period, the Total Kenya returns the property to the lessor. Since Total Kenya does not assume the risk of ownership, the lease expense is treated as an operating expense in the income statement and the lease does not affect the balance sheet. Amortization refers to the provision for the payment of a debt as to both principal and interest in equal installments over a period of time. | |||
| Net cash from operating activities: Decreased by 77.08% | |||
| This represents the amount of cash generated by Total from operating its business. In 2006 this number dropped by 77.08% | |||
| Inventories: Increased by 108.39% | |||
| Inventories are assets: held for sale in the ordinary course of business; in the process of production for sale; or in the form of materials or supplies to be consumed in production or in rendering services. As at the end of year 2006, Total Kenya had 108.39 percent more inventory compared to 2005. | |||
| Accounts receivable: Increased by 42.05% | |||
| Represents the amount due toTotal Kenya by its customers at a given point in time. | |||
| Trade and Other Payables: Increased by 265.65% | |||
| Trade and other payables are current liabilities for which the amount to be settled is usually known rather than uncertain. Entities, almost without exception, carry some type of trade and other payables on their balance sheet. Items generally included in trade and other payables are: trade payables and amounts payable under statutory obligations | |||
| Intangible Assets: Increased by 8036.89% | |||
| Intangible assets are identifiable non-monetary assets without physical substance. Examples of intangible assets include computer software, licences, patents, brands and copyrights . | |||
| Short-term bank borrowings: Increased by 18.27% | |||
| Short-term borrowings are borrowed funds generally with an original maturity of one year or less. | |||
Evaluate the perfomance of this company’s balance sheet (Using a FastTrac Growth Venture Model)
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