Centum retains dividend at Ksh.1.20 per share as profits rise to Ksh.4.6B
- The pandemic is nevertheless expected to impact shareholder pay out from its private equity portfolio as the business seeks to preserve liquidity under the uncertainties arising from the pandemic.
- However, investment in marketable securities will be barely scratched as the Group continues its bias for fixed income while long-term development projects will see no major impact.
- The firm will now seek to raise Ksh.20 billion for its second private equity fund as it seeks to expand its capital investments in the year to take advantage of low market valuations.
Centum Group has retained its shareholder pay out at Ksh. 1.20 a piece or a combined Ksh. 798million after booking a 12 percent growth in the year ending March 31.
The Group’s net profit hit Ksh. 4.6billion Ksh.4.1 billion on significant gains from the disposal of its holdings in Nairobi Bottlers and Almasi Beverages in 2019.
In spite of the windfall made from the exit in its Private Equity (PE) portfolio, the firm has forgone a higher pay out to shareholders having used the majority of proceeds from the sale to clear its total outstanding debt.
“We have retained the dividend policy to pay the higher dividend from the last year or 30 percent of annuity income. We think this is a good dividend and we will be enhancing this pay out as we will not be carrying liabilities on debt servicing going forward,” said Centum Group CEO James Mworia
During the year, the Group settled debt in excess of Ksh.14 billion including a Ksh.7.8 billion bank overdraft denominated in US dollars and a further Ksh.6.6 billion outstanding bond on June 8 this year after the close of reporting in March.
The Group now says it has improved its balance sheet resilience which now includes savings of Ksh.1.8 billion annually from retired debt servicing to improve its return to shareholders.
“One of the ways to do this has been through paying down interest on debt. As fate would have it, the Covid-19 pandemic has brought forward the importance of this resilience,” added Mworia.
At the end of March, Centum readily available cash stood at Ksh.11.9 billion to include Ksh.8.9 billion from its marketable securities bag and Ksh.3 billion in undrawn overdraft facilities to mirror the strengthened cash position.
Proceeds from exits in the beverage companies amounted to Ksh.3.6 billion excluding a trim from the payment of capital gains tax having realized gains of Ksh.19.6 billion from the sale against a Ksh.16 billion carrying value on the assets on its balance sheet.
However, Centum saw one off cost in the provisioning of an expected Ksh.2.8 billion loss from its investment in the Amu Power as the coal project remains on hold from an ongoing suit at the National Environment Tribunal.
Centum expects to remain on the growth curved backed by its five year strategy dubbed Centum 4.0 which seeks to complete the development on infill investments and the sale of bulk land.
Already, the Group is expected to move revenues in excess of Ksh.10 billion from its real estate projects to its balance sheet in the current financial year after the completion of sales including a remaining 443 housing units on its real estate portfolio.
Sales have however been tapered by the current Covid-19 global pandemic even as the impact eases.
“We had expected a more significant decline but still averaged sales of 24 units a month in April and May from the usual 40. We have seen some recovery so far in June,” said James Mworia.
The pandemic is nevertheless expected to impact shareholder pay out from its private equity portfolio as the business seeks to preserve liquidity under the uncertainties arising from the pandemic.
However, investment in marketable securities will be barely scratched as the Group continues its bias for fixed income while long-term development projects will see no major impact.
The firm will now seek to raise Ksh.20 billion for its second private equity fund as it seeks to expand its capital investments in the year to take advantage of low market valuations.
Centum says it will inject 20 percent of the funds or an equivalent Ksh.4 billion to the investment vehicle.
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