CAUTIONARY STATEMENT

Olympia Capital Holdings Limited (OCHL) owns 51% of Olympia Capital Corporation Limited (OCC), a company listed on the Botswana Stock Exchange. In December 2006, OCC purchased 74% of Plush Products (pty) Limited (Plush).

For the fnancial periods ended December 2006, February 2008 and February 2009, Plush did not contributed positively to the bottom line of the group. From September 2008, following the slipping of the South African economy into a recession, we saw a signifcant drop in our sales that made the company go into a loss making situation.

We believe in the products and the market, but not the model to market that we have used to date. A decision has been made to close the company, sell the assets to meet our obligations and consider re-entering the market with a leaner model.

The closure of Plush will not have any negative effect on the operational group proftability, however we will only tell with time the effect that the loss of the actual investment will have on our group balance sheet.

Michael Matu

Chief Executive

23rd June 2009

Many folks have been asking about Olympia Capital Holdings (Kenya). The shares' trading was suspended on Monday at 11am but resumed trading on Tuesday after the statement was released. We will have to wait for the FY 2008-9 results expected by 30 June 2009.

The conventional wisdom in financial markets is that the longer the delay in announcing results, the worse they are.

[KQ released their 2008-9 results 1 week later than usual. Well, there was a Kes 7.5bn charge to profits relating to hedging.]

It is highly likely that OCHL will have to write off the ENTIRE equity injection into Plush-Yokota. And there is a chance that the profitable units might suffer as well from the cash drain or 'connection'. Nevertheless, OCHL's acquisition of Plush has set Olympia back many years.

That said, Plush has NEVER contributed to the bottomline for OCC (Botswana). So this action will stop the cash outflows for now.

• “I wasn’t bowing . . . I was ducking in case someone threw a shoe.”
  
• "Oops, I dropped my contact lens."
• "Keep buying our T-Bills or my goose is cooked!"
  

• Providing payment guarantees to the banks & other financiers (taxpayers' cost if funds not recovered from Triton/Devani/Cronies).
  
• Special bonds to KCB (& other firms) similar to bonds given to NBK.
• Sale of KPC & proceeds used to pay-off the financiers.
  
• Sale of shares in KPC to the Libyans or Chinese or Iranians.
  

• lower interest rates on loans
• lower housing costs
• lower fuel/energy costs
• reduced salaries (loss of jobs or no more increases)
• discounting of merchandise/food

[www.eastandard.net]

BTW... in typical Kenyan style... when someone becomes 'powerful' the sycophancy starts! So Kogelo, a back water village will soon have electricity, piped water & adequate security!

• Oodles of cash on the balance sheet
  
• Cash generating/collection capability
• Large procurement needs

• Better infrastructure so products can move easily to & from all parts of the country. This will reduce costs of transporting foods as well as reduce wastage.
• Better access to credit facilities but through private institutions e.g. KCB, Equity Bank, etc.
• Change from 'imported' crops (e.g. maize, wheat) to local/native crops like Sorghum, Millet, Cassavas, etc.
• Secure our forests & water catchment areas.
  
• Reduce population growth. Kenya's population grows much faster than it's real rate of growth. This is unsustainable. China has improved its per capita income by introducing severe measures to curb population growth. I do not advocate what they did but we need to work at reducing the rate.
• Improve agriculture outreach services while reducing direct subsidies. These better techniques can help farmers improve yields.
  

• Rights Issue (over-subscribed) which raised 420mn
• "Loss" of OCC (Botswana) as a subsidiary but later regained after OCHL's Rights Issue
• Inclusion of Paul Wanderi Ndungu (of CMC & KQ fame) as a director
• Increase in Issued Shares from 10mn to 40mn
• Change of year end from 31 Dec to 28 Feb (see the prospectus)
  

• CRIMINAL charges against fraud.
• Move to bank-backed brokers e.g. CFCFS & now NIC Capital.
• Move to strong brokers i.e. publicly published & audited financial statements like insurance firms have to do.
• Sell new licenses with 100% of the funds going into the IC fund.
  

• Equity - one of the receiving banks has a sweet deal. They lend money that gets back to them immediately with the application. They can re-lend the funds...
  

• CFC Bank - 75% LTV.

• I&M - 75% LTV (max loan is KShs 5mn). They are flexible & great to work with but they do not want 'smaller' loans since they don't have the capacity to handle too many clients.

• There are at least 800,000 CDS accounts = minimum applications for KShs 8bn.
  
• Another 200,000 accounts are expected to be opened by E.Africans = minimum applications for KShs 2bn.
  
• At least 100 unit trusts, pension funds & other QIIs in Kenya that can buy at least 10,000,000 shares each = minimum KShs 5bn
  
• SafCon dealers & employees will get preferential - higher - allocations. I expect a full subscription. an estimated 5% = 500mn shares = KShs 5bn
  

• There must be at least 10,000 Kenyans who can apply for KShs 1mn. Many of these in Nairobi. Add an additional KShs 10bn.
• There must be 100,000 Kenyans who can apply for Kshs 100,000. Pick your towns like Eldoret, Nakuru, etc. Add an additional KShs 10bn
  
• There must be at least 10,000 diasporans (USA, UK, Dubai, S.Africa) who can apply for 100,000/- thus an additional KShs 1bn.
  

• Raila's daddy... Oginga Odinga
• There was a decent, honest guy... Joseph Murumbi who quit coz he could not stand the shenanigans
• Josephat Karanja... poor guy was hounded out in fashion... though I am not sure what his crime was
  
• Musalia Mudavadi... VP for a few months then even lost his MP's seat in 2002. Now in ODM. Would have been VP (again) if Raila became prez
  
• Saitoti, corrupt, corrupt, corrupt. Goldenberg happened under his watch. Was told to shut up in public by dan moi.

1. PROTECTION of lives & property. Shoot to kill any thieves/muggers/looters. Of course, my assumption is that the police are part of the crooks' networks. Kenyan police are known to be behind many robberies.
2. Allow peaceful demonstrations. This will allow for the venting of anger while directing police efforts to (1) above. Savings from police overtime, tear gas purchases, etc... Of course, kibz' hardliners would rather the police kill innocents than preserve Kenyans' properties.
   
3. TAX breaks/reduction. Sure the government will "lose" income but the economic boost will be enormous. This is a time to suspend or eliminate many punitive taxes on agricultural products & inputs. Unfortunately, the corruption networks are getting stronger. Mumias has PUBLICLY complained about the non-action by police on smuggled sugar.
   
4. PR campaigns. Yes, these are needed to boost tourism. The campaign has to include new markets like China & Russia. Tourism remains a key driver of our economy. The ancillary industries/sectors e.g. agriculture, transport, etc that need tourism will start growing. This is an expensive process & might take 6-12 months before the benefits kick in.
   
5. Expand private/public partnerships. Fire political appointees like george muhoho at the KAA. We need PRIVATE SECTOR initiatives that have a positive ROE. KQ has been begging for a larger airport but the idiots at KAA proposed an expansion (2008-2011) to cater for 4mn passengers. KQ expects 4mn passengers on its own by 2011. We need a larger pipeline from Mombasa -Kampala. We can't control the Ugandans but let's extend it to Kisumu. There will be a steep learning curve but there is little choice. I expect the ROE requirements for private investors might raise prices BUT the efficiencies will negate these cost increases over the mid-term.
6. Reduce barriers to business. The License Raj needs to be eliminated. Hong Kong & Singapore have a one-stop shop. The idiocy of standing in line to pay taxes is STUPID. The same with (insert city/town/county) license fees. Spending hours in line to pay for services. I am glad KPLC has finally expanded their pay points to include Posta. Now we need to pay these ONLINE.
7. Reduce government expenditure. kibz has planned for 34 ministers. That means 34 Mercedes cars or Range Rovers or BMWs. Then there are asst ministers who do little. Add ex-officio members. And their staff. And chase cars. And perks. Sigh... I should have stood for office...
8. Rebuild/build infrastructure. PPP are the way to go. A new highway to Uganda would immediately boost our exports. A decent road to Namanga would allow Kenyan manufacturers dominate the region. A new highway to S.Sudan would allow Kenyans a foothold NOW before others get in. I believe the future of Kenyan exports lies in Africa not Europe.

• Loss on inbound traffic into Kenya esp from Europe. KQ opened route to Paris in 2007 but it seems doom & gloom. The drop in passengers is frightening.
• Competition has pummeled KQ on the LHR-NBO sector. Add the clashes & it gets worse during KQ's "profitable" Jan-Apr period.
• Many N.Americans (2nd largest tourist market) have stopped flying to Kenya.
  
• KQ has suspended the LHR-MBA route since there are few tourists willing to come to Kenya on holiday. The Jo'burg-MBA sector has been suspended as well. Therefore, all flights have to pass through NBO.
• Weaker KShs means higher fuel & interest costs.
  
• KQ's saving grace are the W.Africa bound passengers.
• High oil prices makes it worse. All airlines will suffer (except the Mid East).
  
• If peace prevails, then KQ will see inbound passengers increase from August 2008.
• Replacement plane (767) delivery in Oct 2008 to ease current equipment "shortage". The SAABs will be retired.
• Weaker KShs will "boost" profits in KShs but the break-even factor has increased.
  

• Lucky for them, they expanded to include the Tanzanian portfolio of hotels & lodges. Some loss of Kenyan business has transferred to Tanzania.
  
• Serena Nairobi is normally 85%+ occupancy at this time. They are at 20%. Yes, only 20%. They are bleeding money.
• Serena's other lodges are almost empty. Most tour operators prefer the tourists fly but this can be prohibitive to middle-class tourists.
• Serena Mombasa may be shut down for "renovations" until tourism picks up!
  

• Rights Offer of 30mn shares at 14/- each = KShs 420mn
• Owns 26% of Olympia Capital (Botswana)
• OCC(B) owns 76% of Plush-Yokota (S.Africa)
• Year-end is 28 Feb 2008

• Privatisation - India is moving from a socialist mindset to a capitalist mindset. Some may argue that India has alway been a dyed-in-the-wool capitalist nation. Well so was most of pre-colonial Africa. The largest Indian firms are PRIVATE enterprises/groups including Reliance, Tata, Birla, Wipro, etc. Many state owned firms are being privatised as competition sets in. (Kenya is doing well on this aspect esp after Kibaki came to power. I hope the trend continues).
  
• Technocratic appointments - Manmohan Singh (PM) was a technocrat who was appointed as Finance Minister in the 1980s. And then give them a free hand. The "Dream Team" of the 1990s was a good idea but derailed when they did not kiss moi's ass. (Sigh... Kenya could do much better in this respect. Political appointments rule the day not merit. Then add underworked but overpaid assistant ministers to this mix!).
  
• De-tribalisation - India has more issues/problems than Kenya regarding "tribes", religions & castes. Nevertheless, there has been a slow but steady growth in those who don't care about these matters. And it starts from the top. Rajiv Gandhi married Sonia (an Italian). Indira Gandhi (a Hindu) married a Feroz (a Parsi). There are many other examples that are not widely known. The CEO of BioCon is Kiran Mazumdar-Shaw. Kiran is India's richest woman & married to a Scot. (Kenya is doing poor in this regard especially when the populace is intent on electing their "own" regardless of merit. The good news is that the urban youth are not swayed as much but the rural - ethnic - vote exceeds the urban vote. Raila's son, Castro, is married to a Kikuyu girl! But will this turn into votes for him?)
• Women empowerment - Even though women are often treated as second-class citizens, India's current president is a woman. India's kingmaker is also a woman (Sonia Gandhi). Indira Gandhi was the PM for many years. Many of the states have Chief Ministers who are women. (Kenya has women politicians (karua, ojiambo, ndungu, etc) but except for Wangari Mathaai, I do not see these politicians agitating for the common woman. Campaigning for another 40 "special" seats does not count. What about the 17,000,000 other girls & women? And why do women who constitute 50% of the population need special treatment? If the women ganged up, they could elect a woman president as well as the majority in parliament!)
  
• Domestic Market - Indian firms export BUT the domestic market is important. Indians support local firms. Even Coke had a tough time when many Indian favoured the local "Thums Up" over "Coca-Cola". (I am embarrassed when I see imported butter & eggs in Kenyan supermarkets!!! Yet we have KCC among other firms exporting dairy products to the Middle East. We import canned "Heinz" beans & "Ceres" juices whereas we have local firms producing the same /similar goods! Kenyans' obsession with imports is pathetic!
  
• Spread e-government - India has spread government's reach to embrace substantial portions of the population through technology. The kids are becoming the teachers in many villages. The trend is fueled by examples/idols ranging from billionaires like Azim Premji of Wipro among others. India's huge BPO industry is pushing technology into the villages. (Kenya has been talking the talk but not walking the walk regarding technology. We need to employ savvier professionals who can spearhead e-government. Credit to Kimunya among others who are driving the computerisation process. But we need to do more, sooner.)
• India has embarked on connecting the corners of the country with expressways. The idea is to boost trade as well as encourage exports & efficiencies. The rail network has great coverage all over India. (Kenya does not have a decent highway across the country. The Nairobi-Mombasa highway is a veritable mess. Nairobi-Kisumu is even worse. Imagine the possibilities if we had a decent North-South highway from Namanga to Lokichoggio AND a 4-lane decent highway from Mombasa-Kisumu. Our cross-border trade with S. Sudan & Uganda would show strong gains as would Kenyan domestic tourism).
  

• Fairly good presidents can get sucked into bad political schemes that tarnish even otherwise decent presidents e.g. Kibz, who seems to have done a fairly decent economic job, has re-appointed most of the ministers tainted by anglo-fleecing!!! Perhaps this is a result of the desire to bring in votes from various tribes... fronted by these politicians?
• Politicking by incumbents wastes time & money e.g. Most of 2007 has/will be spent politicking by kibz especially if he wants to stand for re-election.
• Limiting the term to 7 years will encourage presidents to leave (good) legacies. They could remain out of the pig-sty since, well, they are already at the top of the dog-pile!!!
• A one-term president has greater immunity (or a thicker skin) to political kingmakers & manipulators.

• There is the fear that some presidents will rig the elections to elect their proteges but this is no different from the current suituation e.g. Nigeria's Obasanjo favouring Yar'Adua.
• No fear of not being (re)elected provides a sense of hubris but the parliament retains the power to impeach.
• If the president dies or resigns without completing his term, they can be replaced by the Vice-President pending new elections &/or some mechanism of succession. We can use the USA model where the VP becomes the prez for the remainder of the term. An alternate is to have pre-set limits depending on when the transfer of power takes place.
• We might lose a competent president who we want to run again but there are many smart competent Kenyans. We need new blood, new ideas & accountability.
  
• Too many presidents on our payroll! But this is mitigated by fewer presidents serving a mere one term lasting 5 years! Hopefully, some of these presidents will take up international roles e.g. UN appointments, etc. Kenya should lobby for these positions on condition the presidents so appointed/elected to these bodies "give" up their GOK salaries/pensions for the term of employment with the UN, etc.
  

• Negotiate a conversion from Preferred Shares to Ordinary Shares which would dilute the current shareholders' stake.
  
• Pay off the GOK by exchanging the T-Bonds for the Preference shares but this will result in reduced income.

• Not cheap on a NAV or PE basis.
• Growth will continue for next 3 years.
  
• Cash out by Somens not a good indicator (OFS of 35mn shares).
• Growth will be at lower net margins.
• Expansion is a strong possibility into the region by acquisitions
• Corporate market prefers RELIABILITY over (cheapest) price. As long as Access Kenya delivers RELIABILITY there is great potential among the MNCs & SMEs.
• Cheaper bandwidth (TEAMS, Eassy) will boost usage.
• Increased use by government organisations will boost usage & sales.
• No debt plus IPO cash (KShs 426mn)to be used to boost service, sales & customer service.
• Somens want to increase the "value" of their shares so expect their dedication coz I think there will be a merger &/or sale of the AK (as we know it) to someone else!
  

• We don't need to send KShs "Billions" to Australia, USA, Malaysia or the UK for tertiary education when we can/should set up WORLD-CLASS universities in collaboration with top-notch universities, departments or research centers around the world. Singapore & Dubai have done it. So can we.
• The cost of living in Nairobi is much lower than S.Africa, Dubai or the UK. In addition, it is cheaper for African students to fly to/fro from Nairobi than many of the other cities.
  
• We can attract students from Africa while providing Kenyans with jobs (lecturers, clerks, janitors, etc). These students become ambassadors for Kenyan universities. This has bee proven time & again by American universities' African alumni.
  
• We can attract African talent to these universities & think tanks to provide African solutions to Africa's problems. They understand Kenya's problems as we understand theirs. This allows for collaboration of peers.
  
• Networking opportunities arise from the interaction of African professionals that allow the expansion of inter-African commerce. It is a fact that "connections" spurs investments. The connotation is not about "corruption" but "connections" between classmates.
  

• Kenyans spend KShs "Billions" on treatments abroad. Our so-called "leaders" lead the way to more waste of funds... kibz went to UK, dan moi recently went to Germany. All the "heart" operations that are done abroad since we lack the facilities. The less well-heeled go to S.Africa & India.
• Medical facilities will encourage research that can boost Kenya's stature beyond the HIV & Malaria programs.
  
• Kenya has 2 medical schools & can expand its facilities to ensure we produce more doctors. We can then keep them in Kenya instead of "exporting" them to UK, USA or Australia!
  
• Kenya "exports" nurses to UK. We can keep them in Kenya by offering them better opportunities within Kenya!
  
• India has taken up the concept of "Medical Tourism" with gusto & it is a major growth industry for them. The benefits of Medical Tourism then flow to the rest of the population as the latest technology is used & personnel trained.
  
• Nairobi has become the premier airline hub for the East, Central & West Africa region - multiple carriers e.g. KQ - with the necessary connections to Nairobi. Kenya can effectively compete against S.Africa to become the preferred choice for medical treatment.
• The medical per capita "spend" is much higher than regular tourism! Of course, the patients' guests/visitors might tour other "touristy" locations e.g. Game Parks.
  
• The knock-on benefits for Kenya's construction sector, industrial (e.g. BOC Gases), education sector (nurses, doctors, technicians), agriculture (food, flowers) & tourism (relatives, friends visiting parks) are tremendous.

• We can capture some of the growing BPO market from India or complement India.
• There is need for BPO services for many African countries as these countries' economies expand.
  
• The fiber-optic broadband systems (planned) could substantially reduce the cost of telecommunications between African countries.
• Kenya needs to expand language classes in German, Italian & French since these countries may not be effectively served by India.
  

• Being "poor" is no excuse for being a thief. And being a violent thief is worse!
• I support brutal suppression of the "violent" elements. Yes, it will not be popular with the "human rights" folks but I would rather a thief is killed than my near & dear hurt. That's my opinion... What about my Rights to enjoy my hard-earned cash & life?
  
• My "little finger" is more important to me than the life of a violent thief! I would rather the police kill the thug/crook/thief before a single hair on my head is harmed.
• We need a 24-hour "economy" especially if we want to serve the BPO market in the USA.
  
• JKIA's utilization can increase substantially if insecurity is not an issue since the travelers may start their journeys much earlier & fly in much later.
• The transport industry - using lorries - can be boosted if these carriers move goods at night without fear. This means that the roads are "clear" for passenger & tourist traffic during the day!
  

• Despite advances in telecommunications, the cost of phone calls remain much higher than necessary. We need more competitors as well as increased "openness" for them then operate effectively.
• Data costs too much to access. Hopefully, the government will get its act together or allow private firms to lay fiber-optic cables all over the country (without onerous conditions/permits/fees) as well as international connections.
• Progress has been made with EaSSy & TEAMS but the there have been too many delays.

• Political & ethnic conflicts (esp violent clashes) e.g. Mt. Elgon clashes in 2007 need to be stopped asap. Even if it requires a military response. Nevertheless, the cause roots need to be examined.
• Property rights should be supreme. Kenya should not succumb to a "tribal" or "nationalistic" tendency that tramples on Human Rights that will dissuade further investments & aggravate poverty e.g. mugabe's antics in Zimbabwe.
  
• Politics seem to be a 24/7 obssession with Kenyans. No wonder we remain poor since "talking politics' takes precedence over "work productivity".
• Kenyans spend less time working, even at their jobs, than discussing politics!