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Friday, 5 August 2011

ACCESS KENYA HALF YEAR 2011 RESULTS ANALYSIS: TURNOVER SLIGHTLY DOWN BUT PROFIT AFTER TAX DOUBLES



Access Kenya has released their Half Year results for the period ended 30th June 2011.

Profit After Tax doubled to Kshs. 61.7 Million. Profit Before Tax rose by 90.8% to Kshs. 76.5 Million from Kshs. 40.1 Million for the previous half

Turnover however was down 2.8% to Kshs. 852 Million

H1 2010 vs. H1 2011


HALF YEAR 2010
Kshs.
HALF YEAR 2011
Kshs.
% CHANGE
TURNOVER
876.3 MILLION
852 MILLION
-2.8%
COST OF SALES
278.3 MILLION
169.2 MILLION
-39.2%
GROSS PROFIT
598 MILLION
682.9 MILLION
+14.2%
ADMINISTRATIVE EXPENSES
347 MILLION
375.3 MILLION
+8.2%
EBITDA
251 MILLION
307.5 MILLION
+22.5%
PROFIT BEFORE TAX
40.1 MILLION
76.5 MILLION
+90.8%
PROFIT AFTER TAX
30.7 MILLION
61.7 MILLION
+101.3%

Both Corporate and Residential internet revenues increased over the half year.

I.T revenues declined while revenues from the internet decision grew. This, management noted, was as a result of the company de-emphasising the low margin hardware sales.

Net Financing Costs rose by 35.4% to Kshs. 54.8 Million. The company said this was due to the conversion of low interest rate dollar borrowing to shilling to reduce the Foreign Exchange exposure. Access Kenya is now confident that it has substantially mitigated its FOREX exposure. Indeed, exchange losses were down 42.9% to Kshs. 28.4 Million.

Total Assets in comparison to the Half Year 2010, was down 6.4%to Kshs. 1.74 Billion. For the 6 month period to 30th June 2011 however, Total Assets was up 7.7%

Net cash from operating activities was down 69.5% to Kshs. 43 Million from Kshs. 141 Million.

The closing cash position was further depressed to a negative cash position of Kshs. 154.2 Million, from the previous half negative Kshs. 83.3 Million.

Depreciation increased by 22.5% due to the impact of their network investment.

The rise in Earnings Before, Interest, Taxes, Depreciation and Amortisation (EBITDA) was attributed to careful cost management that ensured administrative expenses rose by a lower rate than Gross Profit growth.

During the period under review, the company was able to renegotiate and restructure bandwidth leases which were executed towards the end of last year. This signifies cheaper bandwidth rates for Access Kenya.

Management reiterated their focus on growing revenues.

My view is that Access Kenya will have it very rough from competition over the next few years, key among them Safaricom Business. The drop in Cost of Sales though looks set to push them into Full Year 2011 profitability. They made a loss of Kshs. 8 Million for the Full Year 2010




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