Centum has reported a 160 per cent growth in annual net profit to Sh7.9 billion, helped mainly by a huge gain that the NSE-listed investment firm booked from the sale of its stake in insurance group UAP.
The firm earned Sh5.2 billion from the sale of its 13 per cent stake in UAP Holdings to Old Mutual, making a gain of Sh2.8 billion over the book value of the stock.
The company also exited two investment funds (Helios and Nigeria-based African Capital Alliance) in a Sh500 million transaction, from which it reported a gain of about Sh100 million.
“The sale of our UAP stake definitely contributed positively to our bottom line but it was not the only contributor to the good earnings,” said Centum CEO James Mworia after the release of the company’s results on Wednesday.
“All our investment lines such as dividend and interest income went up with total returns increasing to Sh9 billion from Sh6.8 billion in the previous year. Even without the UAP sale, we were still going to do well.”
The company plans to exit investments in which it holds minority stakes. Centum’s total assets in the financial year to March 2015 increased to Sh72.3 billion from Sh29.6 billion the previous year, representing a jump of 144.2 per cent.
Old Mutual in January acquired 23.3 per cent of UAP Holdings for $97.6 million (Sh9.5 billion), being a combined stake from investment firm Centum and businessman Chris Kirubi, who is also a director of Centum.
The transaction, which this week received regulatory approval, earned Mr Kirubi about Sh2.8 billion.
Old Mutual’s buyout effectively made UAP a subsidiary of the financial services group.
Positive revenue inflow
Exiting UAP supplemented Centum’s other positive revenue inflows from sectors such as energy, first moving consumer goods, financial services and the lucrative real estate.
The company holds a total portfolio worth Sh68.9 billion. Interest income grew by nearly four-fold to Sh1 billion while dividend income from its investment in associates and subsidiaries grew by 57.6 per cent to Sh725 million, boosting the company further.
Fund management income (including from its subsidiaries Nabo Capital and Genesis Kenya) grew 140 per cent to Sh639 million, while realised gains (which includes the UAP sale) grew from Sh993 million to Sh7.1 billion.
Centum’s loan and advances stand at Sh11.06 billion while its consolidated liabilities grew from Sh9.32 billion in 2014 to Sh33.8 billion as at the end of March this year.