Centum retains Sh798m dividend as net profit rises 12pc

Centum Investment #ticker:CTUM shareholders are set for Sh798.5 million dividend payout, similar to what was paid the previous year, after the Group’s net profit rose by 12 percent to Sh4.63 billion for the full year ended March 2020.

The growth was driven by investment income helping the firm retain Sh1.20 per share dividend payout for the third year running. Centum posted Sh4.12 billion net profit in the previous year.

Investment income grew by 57 percent to Sh14.99 billion boosted by Sh2.7 billion gain that was booked following disposal of stakes Almasi Beverages and Nairobi Bottlers.

“The Almasi Beverages and Nairobi Bottlers sales achieved a combined average internal rate of return of 31 percent over the last 10 years, demonstrating our track record in growing shareholder wealth through an optimal investment strategy, active portfolio management and successful exits,” said CEO James Mworia.

The firm would have booked the gain as Sh16 billion, being difference between the sales proceeds on exit and acquisition cost.

However, a change in accounting standards now require that previously unrealised valuation gains be directly transferred to equity and the gain calculated as the difference between sales proceeds and previous period’s valuation.

The company’s earnings would have jumped 79 percent in the absence of a one-off impairment provision of Sh3.6 billion in Amu Power project, which was to produce coal power.

The Amu project has courted controversies, raising uncertainty over its execution. The firm had also made Sh2.1 billion provisioning in the previous financial year.

African Development Bank (AfDB) last year withdrew support for the project, which also suffered another blow after National Environmental Tribunal cancelled the environmental impact assessment licence.

The Sh2.1 billion provisioning saw Centum post a negative return of Sh4.4 billion as net asset value also dropped from Sh52.6 billion to Sh47.4 billion.

Centum last week paid the outstanding amount of the Sh6.6 billion corporate bond, pledging to raise dividend payout in future on account of reduced finance costs.

The firm has now fully repaid all medium- and long-term debt, having earlier repaid Sh7.8 billion ($75 million) dollar-denominated debt in September last year. 

“The deleveraging will save Sh1.8 billion in annual finance costs which will further enhance the company’s performance and dividend payout,” said Mr Mworia.

Centum closed the year holding Sh9 billion marketable securities and cash deposits at Sh6.7 billion higher than the prior year, which gives it a strong liquidity position.

Mr Mworia says the enhanced liquidity provides room to take advantage of available opportunities in private equity and public markets in the current market conditions.

Centum is pursuing a sales-led development model under its real estate portfolio where it is currently constructing 1,442 residential units. The firm said 999 units with a revenue potential of Sh7.8 billion had been sold at the end of March.