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Satchu's Rich Wrap-Up
Thursday 27th of February 2020

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Macro Thoughts

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27-JAN-2020 :: we could see these moves turn parabolic. #WuhanCoronavirus #nCoV2019 #coronavirus

Investors dived into Safe Havens, Nest week we could see these moves
turn parabolic.
“But it is a curve each of them feels, unmistakably. It is the
parabola. They must have guessed, once or twice -guessed and refused
to believe -that everything, always, collectively, had been moving
toward that purified shape latent in the sky, that shape of no
surprise, no second chance, no return.’’

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Markets remain complacent about coronavirus despite sell-off @FT @Nouriel

Investors are deluding themselves about how severe the coronavirus
outbreak will be. Despite this week’s big sell-off in equity markets,
the worst is yet to come.
Until this week, the market reaction to the virus has been mild —
after a dip in late January, US and global equities rallied to new
highs. This complacency was based on a number of flawed assumptions.
First, that the epidemic would be contained mostly to China, rather
than becoming a global pandemic.
Second, that it would be contained and peak before the end of the
first quarter, thus limiting the economic damage to China and the
global economy.
Third, that the growth path would be V-shaped, with a strong rebound
in the second quarter and beyond.
Fourth, that policymakers — both monetary and fiscal — would take
strong early actions to support economies and markets, if things were
to weaken significantly.
It is becoming clear that this is a global pandemic rather than a
China-focused epidemic. And we do not know yet how many other
countries in Asia and other parts of the world will experience a
severe outbreak of the virus — most likely many more.
The view that the economic impact will peak before the end of Q1 now
looks very shaky. The damage to China is severe, and global supply
chains are being seriously disrupted, at a time when China accounts
for about 20 per cent of global gross domestic product, not the tiny 4
per cent it had at the time of Sars in 2003.
Add to that an economic shock to big economies like Japan, South Korea
and Italy. When the disease spreads to other developed and emerging
markets, this damage will increase.
Apart from direct trade links and supply chains, global business
confidence will soften. Last year, companies’ capital expenditure was
down as they waited for the risks of a US-China trade war and a hard
Brexit to pass.
With those tail risks partially clearing, capex will be pushed back
further because of the incentive to wait and see how severe and
widespread the virus will be.
Soon enough, headlines will also dent consumer confidence. Even in the
US where the contagion is so far limited, events are being cancelled
and consumers are starting to prefer to stay home rather than go out
and as they worry about the risks of contagion.
This is little compared to what would happen if contagion truly hits
the US, which is likely given the long latency of the disease.
The idea of a V-shaped recovery is nonsensical. Suppose that the best
Goldilocks scenario does occur: the shock to China hits only the first
quarter and the contagion is mostly contained to the country.
If its output shrinks only 2 per cent in Q1, that is an annualised
contraction of 8 per cent. A V-shaped rebound would require the same
annualised growth, which exceeds the 6 per cent that China managed
before the virus.
Assuming that China will rebound at this rate in the final three
quarters of the year — which would imply growth in 2020 of 4 per cent
— is heroically optimistic.
It is more likely that a V-shape shows growth returning to pre-virus
annualised level of 6 per cent from the second quarter onwards. In
this case, China’s calendar-year growth would be 2.5 per cent.
Compare both the rosy and more realistic scenario with current market
expectations, which have revised growth estimates for China from 6 per
cent to 5.5 per cent, and you can see how markets are still
An annual growth rate in the range of 2.5-4 per cent would also be a
major shock to global growth and to other economies. Let alone the
impact of the pandemic spreading to other big economies.
The market expectation that policymakers will rapidly come to the
rescue of economies and markets is also misguided. Fiscal policy will
react very slowly, or not at all, given political and other
Central banks are running out of bullets: how much more negative can
the European Central Bank, Bank of Japan and others go on rates?
Only a little lower. The Fed has only 1.5 percentage points of
headroom left. It will probably react in the second quarter by cutting
rates, leading to short-term market relief.
But this coronavirus outbreak is mostly a negative supply shock — that
reduces growth and increases costs and inflation — with some
side-effects for aggregate demand. Monetary policy cannot resolve
negative supply shocks.
So expect a temporary positive market reaction when central banks
signal an accommodative response to the global pandemic.
But this reaction will fizzle out when the virus becomes more severe
and the economic impact spreads globally.
The coronavirus outbreak is likely to be only one of many negative
shocks that will hit the global economy this year. Others include the
risk of a war between US and Iran causing a spike in oil prices;
political chaos in the US as foreign rivals interfere in the upcoming
election; and an escalation in tensions between US and China.
Take all of this together, and the risk of a global recession is rising.

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Chief Minister of the Gujarati government was @narendramodi who had been appointed to the position five months before. As the riots accelerated, Modi became invisible @NewYorker
Law & Politics

“No sectarian riot ever happens in India unless the government wants
it to,” Mander told me. “This was a state-sponsored massacre.”
 “If we raise the self-respect and morale of fifty million Gujaratis,”
he said, “the schemes of Alis, Malis, and Jamalis will not be able to
do us any harm.” The crowd let out a cheer
In 2007, when @narendramodi appeared on CNN-IBN, journalist Karan
Thapar asked him “Why can’t you say that you regret the killings?”
“What I have to say I have said at that time,” Modi replied his face
hardening.Modi grew agitated. “I have to rest,” he said. “I need some
Modi showed her copies of Barack Obama’s books. “He said, ‘Maithili,
look at this. I want to be like him someday,’ ” she recalled. She was
struck by his canniness. “I thought Modi was either going to be Prime
Minister or he was going to jail.”
Amit Shah, Modi’s deputy, told a group of election workers that the
Party’s social-media networks were an unstoppable force. “Do you
understand what I’m saying?” he said. “We are capable of delivering
any message we want to the public—whether sweet or sour, true or

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#Coronavirus latest: -2,801 deaths and over 82,000 cases globally -U.S. reports first case with no ties to known outbreak @business.
Law & Politics

-Expert sees epidemic contained by end of April
-Saudi Arabia halts religious visits
-China leaders including Xi donate own money

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Spread is more than just cases in a country but transmission. But @WHO uses 4 phases: pandemic is simply "global spread" with severity risk assessed separately. @alexandraphelan #COVID19
Law & Politics

3. Spread is more than just cases in a country but transmission. But
@WHO pandemic guidance no longer delineates b/w limited/sustained
human to human transmission (after H1N1). Rather, WHO uses 4 phases:
pandemic is simply “global spread” with severity risk assessed

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Who decides if we're in a pandemic? @WHO decides if we're in a pandemic? As the lead global health agency, folks likely waiting for @WHO DG to make this as a statement of fact first. @alexandraphelan #COVID19
Law & Politics

5. Who decides if we're in a pandemic? @WHO decides if we're in a
pandemic? No doubt some experts believe we've already met the pandemic
definition for #COVID19. As the lead global health agency, folks
likely waiting for WHO DG to make this as a statement of fact first.

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Donald Trump said on Wednesday that he was planning to destroy the coronavirus by sending an "incredibly mean tweet" in its direction. @NewYorker @BorowitzReport
Law & Politics

Speaking to reporters at the White House, Trump said that he was
already in the process of crafting insults about the virus that would
obliterate it once and for all.
In a preview of the mean tweet he is devising, Trump said, “The thing
about the virus is it’s incredibly small. It’s smaller than Mike
Bloomberg. Once I point that out, the coronavirus won’t know what hit
He added that he was also in the process of coming up with an
insulting nickname for the virus.
“It’s going to be something about how small it is,” Trump said.
“Something like Lil’ Micro Mini Virus. I’m still working on it, but
it’s going to be so mean. You won’t believe how mean it’s going to
Trump was dismissive of the scientists who have raised dire concerns
about the virus in recent days. “These so-called experts are the same
people who said I needed sunglasses to stare at the eclipse,” he said.

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16-FEB-2020 :: #COVID19 #coronavirus #2019nCoV
Law & Politics

Let me tell you, world,
If a thousand challengers lie beneath your feet,
Count me as number thousand and one.

I don't believe the sky is blue;
I don't believe in thunder's echoes;
I don't believe that dreams are false;
I don't believe that death has no revenge.

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As of Feb. 25, Shandong government stated that there were a total of 755 infections in the province. @EpochTimes
Law & Politics

But internal document showed that 1,992 people had tested positive for
virus via nucleic acid testing as of Feb. 23.

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Chinese medical staff request international medical assistance in fighting against COVID-19 @TheLancet
Law & Politics

In addition to the physical exhaustion, we are also suffering
psychologically. While we are professional nurses, we are also human.
Like everyone else, we feel helplessness, anxiety, and fear.
Experienced nurses occasionally find the time to comfort colleagues
and try to relieve our anxiety. But even experienced nurses may also
cry, possibly because we do not know how long we need to stay here and
we are the highest-risk group for COVID-19 infection.
So far 1716 Chinese staff have been infected with COVID-19 and nine of
them have unfortunately passed away.
Due to an extreme shortage of health-care professionals in Wuhan, 14
000 nurses from across China have voluntarily come to Wuhan to support
local medical health-care professionals.
But we need much more help. We are asking nurses and medical staff
from countries around the world to come to China now, to help us in
this battle.
We hope the COVID-19 epidemic will end soon, and that people worldwide
will remain in good health.
We declare no competing interests.

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After decades of travel in the Far North, E360's Arctic correspondent joins a voyage through Northwest Passage witnesses a world being transformed, with ice disappearing, balmy temperatures becoming common, and alien invaders - from plastic waste to new d
Law & Politics

Helicoptering over the bay earlier this month with members of a U.S.
National Science Foundation-sponsored research expedition, we saw too
many belugas to count accurately in waters riddled with rapidly
disintegrating sea ice.
Five hundred? Eight hundred? None of us could estimate with certainty.
All we knew was that there were likely equal numbers of whales
congregating in similar bays and estuaries, such as Cunningham Inlet,
which we sailed past a few days earlier.
Polar bears were there as well — a female and cub in this case, homing
in on a dead beluga that had presumably swum too far up the shallow
estuary before the tide turned and trapped it.
I had joined the Northwest Passage Project on its 18-day,
2,000-nautical-mile icebreaker journey from Greenland through the high
Canadian Arctic.
Scientists and students aboard the ship were conducting oceanographic
experiments to better understand the profound changes occurring in the
Arctic Ocean as summer sea ice disappears and as alien invaders — from
microscopic plankton and exotic fish species to large quantities of
marine plastic — pour into this once-frozen region.
For me, having spent 40 years traveling extensively in the Arctic, the
voyage was another unsettling reminder that the region has gone well
beyond a climate change tipping point and is now “transforming into a
new state,” as a Queen’s University geographer put it.
This upheaval was evident from the record warmth and melting we saw in
Greenland, to the widespread lack of sea ice along much of our route,
to the stories of ecological disruption recounted by the Inuit who
joined us aboard the Swedish icebreaker, Oden.
I repeatedly found myself thinking about numerous prior explorations
of the Northwest Passage in which expedition after expedition was
blocked by sea ice — an obstacle that is fast disappearing.
As the hundreds of beluga in Elwin Bay showed, the Arctic is still a
region teeming with marine mammals and abundant birdlife.
It was thrilling to see other whale species such as tusked narwhal
diving and giant bowheads blowing water 20 feet into the air.
Watching long-tailed jaegers ceaselessly bullying kittiwakes to force
them to disgorge a meal of fish was spellbinding.
“The Arctic is currently experiencing the fastest warming on Earth and
dramatic changes in water chemistry. Ocean acidification puts the
entire Arctic food web at risk. The rate of change challenges even the
most adaptable of organisms.”
That climate upheaval was evident when we arrived at Thule Air Base.
July temperatures in Greenland soared up to 18 degrees Fahrenheit
above normal. (As it turned out, this July proved to be the hottest
month ever recorded on the planet.)
Nearly 200 billion tons of ice on the Greenland icecap melted that
month. A record 55 billion tons disappeared from July 30 to August 3
two days before the expedition ended.
Wildfires, which until just a few years ago were virtually unheard of
in Greenland, were burning the tundra both there and across the Arctic
at a record rate.
Just before the Oden departed for Canada, hikers on Greenland’s Arctic
Circle Trail were being told to avoid a portion of the 100-mile route
linking Sisimiut and Kangerlussuaq after two Americans had to be
evacuated when they become disoriented in thick smoke.
Indeed, grizzly bears are extending their reach hundreds of miles from
the mainland of the western Arctic, sometimes even mating with polar

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.0912
Dollar Index 98.878
Japan Yen 110.10
Swiss Franc 0.9730
Pound 1.2931
Aussie 0.6557
India Rupee 71.625
South Korea Won 1215.87
Brazil Real 4.4506
Egypt Pound 15.600
South Africa Rand 15.267

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Crude Oil Chart INO 47.83 [in big trouble 40.00 Target]

Emerging Markets

Frontier Markets

Sub Saharan Africa

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A health worker at the Kotoka International Airport in Accra, Ghana, checking the temperature of a traveller on Jan 30, 2020 @STcom

Upon screening, travellers fall into one of four categories:
symptomatic but unaware of exposure; aware but asymptomatic;
symptomatic and aware; and neither symptomatic nor aware
"If someone doesn't realise they have been exposed, and doesn't yet
show symptoms, then they are fundamentally undetectable," Dr Katelyn
Gostic, a post-doctoral scholar at the University of Chicago and lead
author told AFP.
"We estimate that on average, screening will miss about two-thirds of
infected travellers."

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But what is most troubling of all is the situation - or curious lack thereof - in Africa @thedailybeast

But the opposite is even moreso, and the prevailing theory about
Africa is that a lack of medical facilities and testing capacity may
mean the virus is spreading silently.
The WHO has been working to get testing kits and other preparedness
measures in place in Africa for when, not if, the virus takes hold.

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This could mean super-spreaders during incubation period, undetected by temperature readings or showing no symptoms likely invaded Africa from China

As we detailed previously, Ethiopia's Bole International airport is
the leading African gateway to and from China.
On average, 1500 passengers per day arrive from China. Ethiopia scans
all passengers from Asia for symptoms, which essentially means taking
their temperature.

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China Southern Airliner from Guangdong (hotbed with 2nd most infections in China) landing in Kenya today. Africa can't protect itself from this kind of virus. #coronaviruschina #WuFlu #coronavirus @Jkylebass

China Southern Airliner from Guangdong (hotbed with 2nd most
infections in China) landing in Kenya today. CCP has control of Kenyan
govt...reckless behavior from the Chinese Communists. Africa can’t
protect itself from this kind of virus. #coronaviruschina #WuFlu

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@IMFNews Urges Congo's Central Bank to Stop Lending to Government @markets

The Democratic Republic of Congo should immediately stop borrowing
from the central bank and repay debt owed to the institution, the
International Monetary Fund said.
The loans, which come amid increased government spending and a
“lackluster revenue performance,” have eroded the nation’s foreign
reserves, the Washington-based lender said in a statement Tuesday.
In December, the IMF board approved a credit injection of about $370
million to support the reserves, which it said were at “critically low
Africa’s largest producer of copper and the world’s largest producer
of cobalt, Congo is negotiating its first loan with the IMF in almost
eight years. A previous loan program was halted in 2012 because of
concerns about corruption in the mining industry.
The government should control expenditures and find ways to increase
revenue, Mauricio Villafuerte, the head of an IMF mission to the
country, said in the statement.
Congo’s central bank said it agreed with the IMF.
Funding of the government’s deficit at the beginning of 2020 was a
“problem of adjustment” as spending on free education and other
programs continued to “surpass its ability to mobilize financing and
raise revenue,” Jean-Louis Kayembe, director-general of the central
bank, said by phone from Kinshasa, the capital.
Government bonds have not been sufficient to cover the budget deficit,
so the bank has had to issue its own debt and sell foreign reserves,
Kayembe said.
That’s reduced the bank’s “room to maneuver” in the event of economic
shocks, he said. Inflation remained contained at 4.6%.
Congo’s economic growth slowed to 4.4% in 2019 from 5.8% the previous
year, mainly due to lower mining production, according to the IMF

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Gross debt-to-GDP now seen reaching 71.6% by 2022/23 compared to 2019 forecast of 59.7%. WOW! Debt service cost at 15.2% of revenue. @MfunekoToy

Growth of public debt bordering on astronomical. Gross debt-to-GDP now
seen reaching 71.6% by 2022/23 compared to 2019 forecast of 59.7%.
WOW! Debt service cost at 15.2% of revenue. SHOCKER: Govt’s borrowing
requirement shot up R71.9 billion over past year.

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The Cost of Fighting Desert Locusts in East Africa Has Doubled

The money needed to combat a desert locust outbreak in eastern Africa
has doubled to $138 million, the Food and Agriculture Organization of
United Nations said.
The cash is urgently needed “to help governments control these
devastating pests, especially in the next four months.” Only $33
million has been received or committed so far, the FAO said in a
“Each day, more countries are affected,” the FAO said. This week, for
the first time since 1944, a swarm entered the Democratic Republic of
Congo. Kenya, Uganda, Ethiopia, Somalia and South Sudan already have
the pest threatening “the most important crop of the year,” FAO said.
The cost of response to the impact of locusts on food security alone
is estimated to be at least 15 times higher than the cost of
preventing their spread, according to the World Food Program.
“The math is clear, as is our moral obligation. Pay a little now, or
pay a lot more later,” the FAO said.

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Exodus 10 The Plague of Locusts "If you refuse to let them go, I will bring locusts into your country tomorrow. 5 They will cover the face of the ground so that it cannot be seen"

''If you refuse to let them go, I will bring locusts into your country
tomorrow. 5 They will cover the face of the ground so that it cannot
be seen. They will devour what little you have left after the hail,
including every tree that is growing in your fields. 6 They will fill
your houses and those of all your officials and all the
Egyptians—something neither your parents nor your ancestors have ever
seen from the day they settled in this land till now.’”

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09-DEC-2019 :: Revelation 6:12-13 When he opened the sixth seal, I looked, and behold, there was a great earthquake, and the sun became black as sackcloth, the full moon became like blood, and the stars of the sky fell to the earth

Revelation 6:12-13  When he opened the sixth seal, I looked, and
behold, there was a great earthquake, and the sun became black as
sackcloth, the full moon became like blood, and the stars of the sky
fell to the earth as the fig tree sheds its winter fruit when shaken
by a gale.

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Kenya Power & Lighting Company Ltd. FY PBT 2019 -93.277% Earnings

Par Value:                  20/-
Closing Price:           2.66
Total Shares Issued:          1951467045.00
Market Capitalization:        5,190,902,340
EPS:             0.13
PE:                 20.462

The energy company in charge of national transmission, distribution
and retail of electricity throughout Kenya.

The Kenya Power and Lighting Company PLC FY 2019 results through 30th
June 2019 vs. 30th June 2018
FY Non fuel revenue 112.429b vs. 95.435b +17.807%
FY FX Adjustment 860m vs. 9.322b -90.775%
FY Fuel cost recharge 19.852b vs. 26.622b -25.430%
FY Revenue 133.141b vs. 131.379b +1.341%
FY Non fuel costs [70.878b] vs. [52.795b] +34.251%
FY FX Costs [986m] vs. [7.714b] -87.218%
FY Fuel costs [18.289b] vs. [23.591b] -22.475%
FY Total power purchases costs [90.153b] vs. [84.100b] +7.197%
FY Gross margin 42.988b vs. 47.279b -9.076%
FY Other operating income 8.586b vs. 9.178b -6.450%
FY Transmission and distribution costs [41.043b] vs. [44.541b] -7.853%
FY Operating profit 10.531b vs. 11.916b -11.623%
FY Interest income 118m vs. 100m +18.000%
FY Finance costs [10.315b] vs. [7.048b] +46.354%
FY PBT 334m vs. 4.968b -93.277%
FY Income tax expense [72m] vs. [1.700b] -95.765%
FY PAT 262m vs. 3.268b -91.983%
Basic and diluted EPS 0.13 vs. 1.67 -92.216%
Dividend per share
Total Assets 328.005b vs. 332.269b -1.283%
Cash and cash equivalents at close of year [5.426b] vs. [7.603b] -28.633%

Trading Performance
The Company recorded a profit before tax of Kshs. 334 million for the
year ended 30 June 2019 down from Kshs. 4,968 million recorded in the
previous year.
This was mainly attributable to increase in non fuel power purchase
costs by Kshs. 18,083 million from Kshs.52,795 million to Kshs.70,878
million following the commissioning of two power plants with a
combined generation capacity of 360MW during the period.
In addition, finance costs rose by Kshs. 3,267 million due to
increased levels of short term borrowings and foreign exchange losses.
Revenue from electricity sales grew by Kshs. 16,994 million from Kshs.
95,435 million the previous year to Kshs. 112,429 million,
representing an increase of 11.8 percent.
The rise in revenue was partly attributed to a tariff review at the
beginning of the year prior to the subsequent tariff harmonisation
that lowered rates for Small Commercial customers and broadened life
line tariff for Domestic Customers.
The growth in revenue was also supported by a 3.4 percent increase in
unit sales from 7,905 GWh to 8,174 GWh owing to an expanding customer
The fuel cost decreased by Kshs. 5,302 million or 22.5 percent) from
Kshs. 23,591 million the previous year to Kshs. 18.289 million due to
improved energy mix following less utilisation of expensive thermal
plants during the year.
Units generated from thermal plants decreased by 904 GWh from 2.202
GWh the previous year to 1.298 GWh.
Transmission and distribution costs decreased by 7.8 percent from
Kshs. 44,541 million incurred the previous year to Kshs. 41,043
The reduction of Kshs. 7,253 million was attributed to less provisions
for trade and other receivables during the year compared to the
previous year.
Finance costs and Interest Income
During the year, finance income increased to Kshs. 118 million up from
Kshs. 100 million realised the previous period due to increased bank
On the other hand, finance costs increased by 46.4 percent from Kshs.
7,048 million the previous year to Kshs. 10,315 million due to
increased usage of short term borrowings to bridge cash flow
shortfalls and unrealised foreign exchange losses.
The net profit otter tax was Kshs. 262 million compared to Kshs. 3,268
million the previous year, after taking into account a tax charge of
Kshs. 72 million.
The audit of the financial statements has not been completed pending
the appointment of the Auditor General

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East African Portland Cement Company HY Loss before Tax [1.634b] 2019 Earnings here

Par Value:                  5/-
Closing Price:           14.25
Total Shares Issued:          90000000.00
Market Capitalization:        1,282,500,000
EPS:             -16.35
PE:                 -0.872

East African Portland Cement PLC HY 2020 results through 31st December 2019
HY Revenue 1.483572b vs. 1.372146b +8.121%
HY Cost of sales [1.797456b] vs. [1.800132b] -0.149%
HY Gross profit [313.884m] vs. [427.986m] -26.660%
HY Other operating income 5.596m vs. 20.417m -72.591%
HY Administration and selling expenses [1.074954b] vs. [1.011450b] +6.279%
HY Interest income 1.282m vs. 1.372m -6.560%
HY Finance costs [253.019m] vs. [204.701m] +23.604%
HY [Loss]/ profit before tax [1.634979b] vs. [1.622348b] +0.779%
HY Tax [charge]/ credit 59.576m vs. 355.545m -83.244%
HY [Loss]/ profit after tax [1.575403b] vs. [1.266803b] +24.361%
EPS [17.55] vs. [14.23] +23.331%
HY Cash and cash equivalents as at 31st December [1.204195b vs
[946.777m] +27.189%
No dividend

Sales revenue increased by 8% over the same period in the previous
year in spite of challenging business environment marked by a general
decline in selling prices. Administrative and selling expenses grew
by6% driven by restructuring costs.
Total assets reduced by 4% due to reduction in other receivables. The
company continued to stabilize on its restructuring agenda with utmost
focus to effectively serve its customers efficiently.
The Board is optimistic that with the implementation of the Company’s
medium-term plan, the Company will return back to profitability in the
short run.

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by Aly Khan Satchu (www.rich.co.ke)
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February 2020

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