Centum Investments Company Plc has posted a Ksh4.6 billion net profit for the full year ended March 31, 2020, up from Ksh4.1 billion representing a 12% increase. The company’s audited financial results show.
The company is proposing to pay Ksh798 million as dividends to its shareholders at the rate of Ksh1.20 per share. The proposed Ksh798 million is the same amount the company paid out in the previous financial year.
Operating profits increased from Ksh827 million to Ksh985 million during the year, representing a 19% growth compared to the previous year attributable to the gains of Ksh2.7 billion booked following the disposal of Almasi Beverages Limited and Nairobi Bottlers Limited.
However, total assets decreased from Ksh71.6 billion to Ksh56.9 billion during the year due to servicing of debts.
The group’s balance sheet shows Centum’s Real Estate portfolio at the time of reporting was worth Ksh36.8 billion, Marketable Securities and Cash (Ksh9 billion), Private Equity assets (Ksh8.6 billion), Developments (Ksh1.6 billion) while other asset classes were worth Ksh771 million.
During the period under review, the Marketable Securities & Cash asset class recorded a realized cash investment income of Ksh450 million while Private Equity portfolio companies brought in Ksh318 million representing a 27% growth from the previous year.
In the same vein, during the year, Centum completed the disposal of the entire of its equity stakes in Almasi Beverages Limited, Nairobi Bottlers Limited, and King Beverage Limited respectively.
Disposal of these assets realised proceeds of Ksh19.6billion which were used to pay up a US Dollar bank debt and local currency revolving credit facilities while the remaining amount was invested in securities.
“The interest income from this investment in marketable securities combined with the savings in finance costs on the bank debt is Ksh 1.9 billion per year, which compares favourably to the annual dividends we were receiving of Ksh 299 million,” said Fred Murimi, the Head of Private Equity at Centum.
Speaking virtually during the release of the financial results company Chief Executive James Mworia said that in the wake of COVID-19, the company has taken the tactical decision to rearrange its marketable securities portfolio and divert 90% of its assets to fixed income as the securities market continues to remain uncertain.
“While the return in those securities would be lower, this strategy ensures capital preservation. The enhanced liquidity further provides us with a platform to take advantage of available opportunities in Private Equity and in public markets under the current market conditions,” said Mworia.
Referring to the impact of the COVID-19 impact on the group’s business, Mworia noted that the current market conditions present an opportunity to make investments at reasonably priced valuations.
“The short-term impact of Covid-19 on our Private Equity business is likely to be a substantial reduction in the
2020/2021 earnings of the underlying portfolio companies and consequently a reduction in dividend income to
Centum as the portfolio companies are likely to cut their dividend payout to preserve liquidity,” said Mworia.
“In the long term, however, the current market conditions present opportunities to make investments at reasonably priced valuations and ride the growth in earnings and market valuations as economies recover from the crisis caused by the Covid19 pandemic and companies go back to their sustainable earnings levels under normal operating conditions,” he added.