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Wednesday, November 2, 2016


Profit machine Safaricom, a listed telco on the Nairobi Securities Exchange will on Friday tell the market how its business activities performed for six month period ended September 30, 2016.

Things Investors will look for

Investors will take keen interest in the company's Statement of Income. Also known as the Profit and Loss statement, it shows, in figures, the company's operations during the period under review and tells the market whether these operations resulted in a profit or loss.

On May 11 this year it reported full-year earnings of Sh55 billion (US$550million) before tax with net profit coming to Sh38bn ($380m).

In making its forward looking statements at the time, Management said it expected full-year earnings in the year ahead to come in at between Sh89-92bn before deducting Interest, Taxes, Depreciation and Amortisation.

This compares to EBITDA of Sh83bn the previous year.

Analysts will be right to expect Profit Before Tax to cross the Sh30bn threshold.

MPESA, the Mobile Financial Services product, will attract particular attention for two major reasons.

  1. Rapid growth - The service grew revenues by 27 per cent in the last financial year to stand at Sh41bn ($410m) and will expect this growth to be matched contributing to the bottom line.
  2. Mobile Betting - At the last briefing, Management indicated that betting companies that use its MPESA service did not contribute significantly to its revenues. This observation will come under greater scrutiny this time round especially given the high profile marketing campaigns and international endorsements that some of the betting companies have been making.
Investors will look out for a possible Interim Dividend. With Free Cash Flow oscillating around Sh30bn, many will be keen to see if the company will choose to give back some of this cash to them.

In the last period reviewed, the Board issued a Dividend of 76 cents per share, an exponential rise from a few years back when investors would bitterly complain about a 10 cents per share dividend.

Investors will also seek Management's Performance Guidance for the second half of the year.

The new Chief Financial Officer, Sateesh Kamath, will be presented to investors for his first Earnings Briefing at Safaricom. He replaced John "JT" Tombleson in the position.

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