NAIROBI, KENYA, NOVEMBER 27 — Investment firm-Centum has posted a 27.5 per cent jump in after tax profit for the six months period ended September 30.
The Group recorded a consolidated net profit of Ksh2.07 billion up from Ksh1.63 billion it had a similar period in the prior year, on the back of a strong investment income performance.
The Private Equity business recorded a Ksh1.5 billion consolidated operating profit for the period ended September 30, 2018.This represented a 300 per cent increase over the Ksh513 million recorded for a similar period in 2017.
During the period, the Group completed the disposal of GenAfrica Asset Managers Limited, realising a gain of Ksh1.2 billion.
“Through this transaction, the Group achieved a holding period IRR (Internal Rate of Return) of 29 per cent for the investment, demonstrating our track record in growing shareholder wealth through an optimal investment strategy, portfolio management and successful exits ,”CEO James Mworia said in a statement.
Consolidated dividend income received from portfolio companies where the Group holds minority stakes also increased by 60 per cent.
Sidian Bank Limited, which falls within this business unit, has seen significant improvement in its performance compared to the prior year. The bank’s focus on growing its non-funded income through growth in trade finance business has seen non-funded income increase by 68 per cent compared to a similar period in 2017.
Notably, non-funded income was higher than net interest income during the period while trade finance balances have grown by 700 per cent over the last 12 months, demonstrating the successful implementation of the bank’s new strategic focus.
The bank has also recorded a 15 per cent growth in both total assets and customer deposits over the last six months.
“To support this growth, we recapitalised the bank in 2018 through a full subscription to its Ksh1.2 billion rights issue. The bank’s strong capital base, balance sheet and trade finance book now provide it with a strong platform for growth and it is expected to return to profitability in the next financial year,” the management noted in its financial statement through the Nairobi Securities Exchange.
Longhorn Publishers Limited, a business Centum has a controlling stake in, recorded a 168 per cent growth in profitability over the period to September 30, 2018, driven by a strong top line performance, Centum noted.
The beverage business-Almasi Beverages Limited, however recorded lower volumes as a result of distribution chain disruptions during the heavy rains experienced in the first half of the year, resulting in a two per cent decline.
Within the real estate business unit, the group is developing three projects, namely Two Rivers Development in Nairobi, Vipingo Development in Kilifi and Pearl Marina Development in Uganda.
Focus within these three developments has been continued activation of the sites and monetization.
Over the last six months, the three companies have gained significant traction in pre-sale of residential infill projects and land development rights.
At 30 September 2018, the revenue potential for pre-sales achieved was Ksh1.8 billion, with a corresponding profit potential of Ksh460 million.
The Real estate business recorded a fair valuation gain of Ksh2.7 billion over the period. This valuation is supported by sale of land development rights during the period, which were achieved at valuations that were several multiples to the book carrying value of the land.
During the half-year period, the Group held Ksh3.5 billion in marketable securities.This portfolio is structured to minimize risk of capital loss while generating cash and additional liquidity for the Group from income and capital gains.
Over the last six months, this portfolio recorded a realised cash investment income of Ksh130 million.
Within the development portfolio, the NSE listed firm holds investments in the Sabis International School-Runda, two energy projects and in Greenblade Growers Limited, a herbs producer and exporter. The Sabis School admitted its first students in September 2018.
“We are on track to complete the financial close for the two energy projects. The agribusiness subsidiary has been scaling up its operations over the last six months and is on course to break even over the next quarter,” Mworia noted.
Company level profitability improved to Ksh1 billion from a prior period loss of Ksh152 million, driven primarily by the GenAfrica Asset Managers Limited transaction. This performance was also achieved on the back of a nine per cent decrease in operating expenses and a six per cent decrease in finance costs.
Shareholder funds increased from Ksh48.7 billion as at March 31, 2018 to Ksh48.9 billion as at September 2018 while total assets grew from ksh66 billion to Ks67 billion over the same period.