K-Rep, Almasi investments lift Centum profits 55pc
What you need to know:
Centum's net profit in the period ended June stood at Sh1.9 billion compared to Sh1.23 billion a year earlier.
The earnings growth was attributed to “investment and other income” which grew over three fold to Sh8.4 billion on what Centum credited to income from K-Rep and Almasi Beverages where it has increased its interests.
The company also booked a Sh900 million gain from the sale of its 21.5 per cent stake in AON besides earning capital gains on listed stocks it sold in the period.
Increased investment in Almasi Beverages and K-Rep Bank and a sale of minority stake in insurance brokerage AON Minet helped Centum grow its half -year net profit by 55 per cent.
The investment company’s net profit in the period ended June stood at Sh1.9 billion compared to Sh1.23 billion a year earlier.
The earnings growth was attributed to “investment and other income” which grew over three fold to Sh8.4 billion on what Centum credited to income from K-Rep and Almasi Beverages where it has increased its interests.
The company also booked a Sh900 million gain from the sale of its 21.5 per cent stake in AON besides earning capital gains on listed stocks it sold in the period.
“Investment and other income grew significantly. This includes earnings from our subsidiaries, realised gains on investment disposals and interest income among other revenue stream,” said James Mworia, Centum’s chief executive.
The firm early this year acquired a controlling stake in Almasi, the holding company of three Coca-Cola bottling firms and in June made an investment in capacity that has seen unit case sales grow by 47 per cent.
As a result, Centum has booked Sh3.8 billion in income on higher soft drinks sales.
It also earned Sh669 million in fees and commissions from K-Rep Bank. The investment firm acquired a 67.54 per cent stake in the lender a year ago, raising its equity from the previous 1.2 per cent.
Centum also banked interest income of Sh1.3 billion and another Sh800 million from selling listed stocks, with the balance coming from dividend and other income.
The AON share sale, which happened in August, is in line with Centum’s strategy to exit companies where it holds a minority stake.
The company last year sold its 13 per cent stake in insurance group UAP to Old Mutual for Sh5.2 billion, booking a gain of Sh2.8 billion from the transaction.
“This period’s consolidated statement includes income from two new subsidiary companies (K-Rep and Almasi) which were not present in the comparable prior period,” said Mr Mworia.
“We sold our stake in AON a few months ago and booked a gain on this transaction. We sold the shares to its existing shareholders after they exercised their pre-emptive rights.”
Centum relied on this significant increase in investment revenue to offset a steep increase in expenses.
Administrative and operating expenditures alone went up by Sh4.4 billion to Sh5 billion (a consequence of the K-Rep acquisition) while finance costs grew from Sh262 million to Sh1.3 billion.
Mr Mworia announced that the opening date of the Two Rivers Mall has been pushed forward by three months to March 2016 in order “to allow all 190 tenants to finalise preparations”.
The firm is also looking for viable sites to acquire and construct their flagship school following their partnership with a Dubai-based private equity firm and an international schools chain to launch 20 education centres across Africa.
Centum’s board of directors, in keeping with tradition, did not recommend a dividend payment.
The firm’s share price has fallen 30.5 per cent since the beginning of the year to trade at Sh42.7.
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Note: The results are not exact but very close to the actual.
