British companies ship out Sh25bn in 2014 dividends

British companies booked nearly Sh25 billion in dividend and fee payouts from listed Kenyan associates in 2014, even as the two countries continue to manage delicate diplomatic relations made difficult by 2013’s ascension to power of President Uhuru Kenyatta while facing trial at the International Criminal Court (ICC). 

The huge earnings by the UK firms, which retain a sizeable grip on the Kenyan economy, have also come despite the steady fall in trade between the two countries.

Kenyan imports from her former colonial master in 2014 fell to the lowest level in seven years to Sh47 billion from Sh49 billion in 2013, according to data from the Kenya National Bureau of Statistics.

The volume of Kenyan exports to the UK also dropped for the third year in a row, standing at Sh35.3 billion in 2014 from Sh37.1 billion a year earlier.

Britain’s trading fortunes have continued to decline as Kenya pursues a ‘look east’ policy that began under former President Mwai Kibaki with India, China, and Japan as the main beneficiaries.

Tellingly, Mr Kenyatta is yet to visit London on an official engagement with the UK since coming to power two years ago. His two visits to the UK in 2013 and 2014 were to attend a conference on Somalia and to support First lady Margaret Kenyatta in the London Marathon respectively.

UK investors in Kenya have, however, had no reason to complain as far as doing business with East Africa’s largest economy is concerned. In fact, the UK has maintained its stranglehold on the Kenyan economy with the presence of some of its biggest companies in key sectors.

British companies Vodafone, Diageo, Barclays, BAT, Standard Chartered and private equity firm Helios hold significant stakes in some of the biggest companies listed at the Nairobi Securities Exchange (NSE), placing them in pole positions when it comes to the sharing of dividends.

The 2014’s Sh24.6 billion dividend payout to UK companies represents a 28 per cent increase on the Sh19 billion they shipped out in the 2013 financial year.

Besides, the 2014 payout was more than half of the total Sh45 billion dividends and fees paid out by the 12 companies with majority British ownership at the NSE.

Vodafone Group, whose earnings from dividends and M-Pesa fees from Safaricom surpassed Sh10 billion for the year ending March 2014, topped the list of firms that were rewarded handsomely.

Vodafone earned Sh7.5 billion in dividends for its 40 per cent stake in Safaricom, plus an estimated Sh2.9 billion in M-Pesa fees.

The UK company earned a combined Sh7.3 billion in 2013 from dividends and fees. The increase in Vodafone’s 2014 take-home came from the rise in Safaricom’s dividend payout to Sh0.47 a share (compared to 2013’s Sh0.31) and the rise in Safaricom’s M-Pesa revenue from Sh21.8 billion in 2013 to Sh26.56 billion in the year ending March 2014.

M-Pesa platform

Vodafone Sales and Services Ltd (VSSL) owns proprietary rights over the M-Pesa platform and earns royalties accrued from use of the mobile money transfer solution. The fee is estimated at 11 per cent of total M-Pesa revenues.

Standard Chartered Plc is next on the dividend windfall list with its Sh3.88 billion earnings from the 73.89 per cent stake in the Kenyan unit following the announcement of a Sh17 per share dividend last week. The company earned a Sh3.3 billion in dividend in 2013.

Barclays Plc, which holds a 68.5 per cent stake in Barclays Kenya, is taking home Sh3.72 billion for the 2014 financial year from Sh2.6 billion in 2013 after a 30 cents rise in dividend paid per share to Sh1.

British American Tobacco Plc has earned Sh2.55 billion in dividends from its 60 per cent holding of BAT Kenya’s 100 million issued shares.

BAT Kenya has continued its policy of paying out its entire earnings as dividends, with the 2014 payout per share hitting a record Sh42.50 from the Sh37 paid out in 2013.

BAT and StanChart are seen as mature companies that are unlikely to lower their high dividend payouts, promising a possible rise in future earnings for shareholders with growth in profits.

EABL’s majority shareholder Diageo’s dividend earnings remain unchanged at Sh2.1 billion, following the company’s decision to maintain its dividend payout at Sh5.50 a share. Diageo, the world’s largest producer of spirits, has a 50.03 per cent stake in EABL.

UK-based PE fund Helios earned Sh1.62 billion from its 24.44 per cent stake in Equity Bank, which paid out a dividend of Sh1.80 a share in 2014. This was an increase of Sh300 million from the Sh1.3 billion earned in 2013.

Helios is, however, set to earn less dividends going forward after it sold half of its stake in Equity to a consortium led by Norwegian sovereign fund Norfund. In the agriculture sector, UK investors retain significant stakes in Kakuzi, Limuru Tea, Williamson Tea, Rea Vipingo and Kapchorua.

The Williamson family of Britain has a 51.46 per cent majority stake in Williamson Tea and a further 23.96 per cent shareholding in Kapchorua Tea through their investment vehicle Ngong Tea Holdings.

These holdings earned the family Sh36.2 million in dividends in 2014 after Williamson Tea and Kapchorua announced dividends of Sh7 and Sh5 respectively. The family earned Sh40.7 million in 2013 from both firms.

Camellia plc of England, which owns 50.7 per cent of Kakuzi through Bordure Ltd and Lintak Investments, earned Sh37.2 million out of an unchanged dividend of Sh3.75 a share.

British multinational, Unilever Tea, earned Sh4.68 from a dividend payout of Sh7.50 per share paid by Limuru Tea, where it holds a 52 per cent stake.