Centum group profit weighed down by lower asset disposal

Centum Investment directors Chris Kirubi, Kennedy Wanderi and Jim Macfie follow proceedings during the release of the company’s financial results at a Nairobi hotel yesterday. [Moses Omusula, Standard]

Centum Investment Group has recorded a 16 per cent drop in net profit to Sh8.31 billion for the year ended March 31, 2017 on account of reduced one-off gains.

Group Managing Director James Mworia told investors that the performance, a drop of Sh1.64 billion from Sh9.9 billion posted last year, was a result of lower gains on disposal of assets.

The consolidated income statement shows realised gains on disposal of investments dropped by 81 per cent, or Sh4.39 billion, to Sh1.03 billion.

Mr Mworia, who announced a dividend of Sh1.20 per share (up from Sh1 per share in 2016), described the performance as impressive coming in an environment of squeezed liquidity and inflationary pressures.

“We have consistently outperformed Nairobi Securities Exchange (NSE). We achieved a return of 16 per cent compared to a 22 per cent decline on the NSE,” he said.

In the absence of the one-offs, the group’s after-tax profit increased by 66 per cent over last year.

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The group partially disposed of its stake in Two Rivers mall in 2016 at a gain of Sh3.2 billion, exited Aon Insurance Brokers and divested from a portfolio of listed securities at a gain of Sh1.7 billion.

In the 12 months to March 2017, the group sold its 26.4 per cent stake in Kenya Wines Agency Limited at Sh1.1 billion. It also sold an eight per cent stake in Platcorp Holdings Limited at Sh432 million.

The trading businesses – beverage, utilities and publishing – delivered operating profit of Sh1.2 billion, a jump by 76.5 per cent from Sh678.9 million the previous year.

Chief Finance Officer Samuel Kariuki the increase was largely because this was the first time that results of Longhorn Publishers were getting consolidated in the group’s books since Centum acquired a controlling stake in May last year.

Investment portfolio

But in the financial services segment, operating profits dipped by 67 per cent to Sh190.3 million primarily on account of dismal performance by Sidian Bank. The lender incurred rebranding and restructuring costs within the year.

“The consolidation was on five months of post-interest capping rate. We also had one-off cost on rebranding and restructuring, leading to higher costs,” said Mr Kariuki.

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In addition, asset management business – Nabo Capital and GenAfrica Asset Managers – posted a 27 per cent drop in operating profit to mirror poor performance of investment portfolio on the NSE.

Centum plans to strengthen its agribusiness segment by planting maize and soya on a 14,000-acre piece of land at Masindi in Uganda.

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