COMPANIES
Limuru Tea Issues a Profit Warning
Limuru Tea Plc has become the latest addition to a growing list of companies issuing profit warnings to investors, citing increased costs and a devaluation of assets. The Nairobi Securities Exchange-listed firm joins the ranks of other agricultural companies, such as Kakuzi and Sasini, in alerting shareholders to anticipate a decline in profits by at least 25 percent. In a statement released by the company, the Board of Directors of Limuru Tea Plc disclosed, "The company is expected to record a decline of more than 25 percent in profit before tax for the financial year ending 31st December 2023," following a preliminary review of their financial statements.
Limuru Tea Plc is not alone in grappling with profit concerns, as a total of 13 companies listed on the Nairobi Securities Exchange have issued warnings that their profits are expected to fall by 25 percent or more compared to the previous year. This group includes prominent names like Unga Group, Sanlam Kenya, Express Kenya, Sameer Africa, WPP Scangroup, Crown Paints, Car & General, and Nation Media Group. The common thread among these warnings is the challenging operating environment, marked by the high cost of doing business, which has become a significant hurdle for various sectors in the Kenyan market.
ECONOMY
Treasury allows firms to develop alternative tax systems to ETIMS
The government has revised its stance on mandatory electronic tax invoices for all business-to-business transactions. The Tax Procedures (Electronic Tax Invoice) Regulations, 2023, now allow businesses facing challenges in complying with the current configuration of ETIMS to apply for exemptions. This policy shift comes as a relief for enterprises, especially those with high transaction volumes, such as supermarkets and petrol stations, where including all buyer details in the tax invoice proves to be a logistical challenge.
The amended regulations state, "A person who is required to issue an electronic tax invoice may, with reasons, apply to the Commissioner in writing to be exempted from the requirements of these Regulations where … an alternative automated method for recording, storing, and transmitting the data relating to the transactions to the Commissioner is available and upon recommendation by the relevant authority."
This flexibility allows businesses to tailor-make alternative systems that better align with their specific needs, fostering a more adaptable and inclusive tax management approach.
Kenyans Recover Sh4.5 Billion in Unclaimed Assets, Surpassing UFAA Target
Kenyans successfully traced and recovered Sh4.5 billion in cash from the Unclaimed Financial Assets Authority (UFAA) in the fiscal year ending June 2023. This marks a significant 49 percent increase from the Sh3.02 billion reunited in the preceding financial year, as reported in the latest update from the UFAA. The State entity, responsible for safeguarding unclaimed assets totaling more than Sh50 billion, attributed this success to an intensified campaign urging the rightful owners to reclaim their assets.
The UFAA not only surpassed its targeted remittance of Sh4 billion during the review period but also issued a stern warning to companies holding unclaimed assets to expedite their release. The State agency credited the surpassing of its goal to a strategic moratorium campaign, designed to encourage holder compliance without incurring fines and penalties. This initiative played a pivotal role in fostering cooperation and facilitating the seamless return of unclaimed funds to their rightful owners.
Apart from the Sh4.5 billion in cash, the UFAA's efforts resulted in the reunification of 150 million stocks of unknown value with the owners or beneficiaries.
REGULATORY
Audit, law firms targeted in ownership transparency drive
Limited Liability Partnerships (LLPs) in Kenya are now required to disclose their beneficial owners as part of State-backed reforms. This marks a departure from the previous exclusion of LLPs from such disclosure requirements, as the Companies (Beneficial Ownership Information) Regulations of 2020 initially targeted only registered companies. Introduced in March 2012 through the Limited Liability Partnerships Act, of 2011, LLPs have become prevalent among professionals, including lawyers, doctors, and auditors, who face heightened risks of malpractice suits.
Attorney-General Justin Muturi has played a pivotal role in this development by publishing the Limited Liability Partnership (Beneficial Ownership Information) Regulations of 2023.
The new regulations mandate LLPs to unveil comprehensive details about their beneficial owners, including names, national identity numbers, Kenya Revenue Authority (KRA) PINs, phone numbers, occupations, and home addresses.
This initiative underscores the government's commitment to peeling back the veil of secrecy surrounding business entities, aligning with global efforts to combat corruption, money laundering, and illicit financial activities.
Kenya lost Ksh 4.2billion to telegram shutdown
In a recent report by NetBlocks, a London-based internet rights organization, it has been estimated that Kenya suffered a staggering economic loss of $27.02 million (Sh4.2 billion) due to the Telegram downtime experienced in November of last year, coinciding with the crucial week of the secondary school national examinations. The 8-day shutdown of the widely used messaging platform disrupted various businesses that heavily relied on it, resulting in billions of shillings in losses. NetBlocks' calculations indicate that each day of Telegram's inactivity translated to a loss of approximately Sh537 million, encompassing foregone sales, wages, and other economic benefits linked to the platform's extensive use in the country.
Businesses across Kenya, particularly those dependent on Telegram for communication and file sharing, found themselves severely inconvenienced during the week-long outage. The economic toll of the shutdown underscores the growing significance of social media platforms like Telegram in the country's business landscape. NetBlocks derived its economic cost calculations by referencing World Bank and International Telecommunications Union (ITU) indicators, providing a monetary assessment of the economic advantages associated with uninterrupted internet and social media use.