Centum Group half-year profit quadruples

In Summary

• Centum Investment Group half year profit to September more than quadrupled to Sh6.79 billion lifted by strong investment income mainly as result of net gains on disposal of three investments.
• Group chief executive said private equity business booked net gains of Sh12 billion from the disposal of Almasi Beverages Limited, Nairobi Bottlers Limited and King Beverages Limited.
• Centum Investment, however, returned a Sh1.6 billion loss compared to the preceding similar period’s profit of Sh929 million.

Centum Investment Group’s half-year profit to September more than quadrupled to Sh6.79 billion, lifted by strong investment income mainly as a result of net gains on disposal of three companies.

The performance, a contrast from Sh2.07 billion in a similar period last year, is higher than the bottom-line that the group has been returning year-on-year since 2016. This raises prospects of beating the Sh7.94 billion profit of 2015, which is the highest in the group’s history.

ASSETS

However, Centum Investment, which is listed on the Nairobi bourse, returned a Sh1.6 billion loss compared to the preceding similar period’s profit of Sh929 million. This was on account of Sh2.28 billion impairment provision on assets.

Group chief executive James Mworia on Friday said private equity business booked net gains of Sh12 billion from the disposal of Almasi Beverages Limited, Nairobi Bottlers Limited and King Beverages Limited, all of which were concluded within the reporting period.

This helped investment and other income to triple from preceding period’s Sh4.05 billion to Sh12.4 billion.

Mr Mworia said the Sh18.6 billion net proceeds from exiting Almasi and Nairobi Bottlers have been used to pay off dollar-denominated bank debt and revolving credit facilities as well as invest in marketable securities.

“There was no further room left for value creation through efficiency, so we had to exit.

‘‘The saving in finance costs is Sh1.9 billion, which compares favourably with the Sh299 million annual dividends that was receivable from the two firms,” said Mr Mworia.

ESCAPE LOSS

Consolidated dividend income from other portfolio companies where Centum holds minority stakes increased by 118 per cent to Sh257 million during the period in review.

Sidian Bank, where Centum holds a 72.93 per cent stake, posted a profit of Sh67 million in the first nine months of the year, marking it as the first time since 2016 to escape loss position. Mr Mworia ruled out any plans to exit, saying focus will now be on an expanded loan book.

Centum is also constructing 1,316 residential units across its mixed-use developments in Nairobi, Kilifi and Uganda. Mr Mworia told investors that 827 units with revenue potential of Sh6.1 billion have been sold, translating to a pre-sale level of 63 per cent.

“We expect real estate contribution to our income to rise as we finish and sell the units. Revenues for pre-sold units will be booked in the coming financial period,” he said.