Centum Investment Company has nearly halved its dividend to Sh210 million for the financial year ended March 2024, amid a bounce back to profitability supported by a rise in the valuation of investment properties.
The latest dividend, an equivalent of Sh0.32 per share, is a 46 percent decline from Sh0.60 per share totaling Sh400 million that the investment firm paid for the prior year.
The investment firm’s proposed dividend is on the back of net profit hitting Sh2.6 billion from a Sh7.3 billion net loss posted a year earlier.
The bounce back to profitability was helped by a Sh3.39 billion rise in fair value of its investment properties including lands and buildings in Two Rivers Special Economic Zone (SEZ).
Accounting rules allow a gain or loss in the value of properties such as land or buildings to be booked in the income statement. In the absence of the fair value gain, Centum would have booked a pre-tax loss of Sh11.54 million compared with a pre-tax loss of Sh6.25 billion a year earlier.
Centum’s Chief Executive Officer James Mworia said the dividend is in line with the firm’s policy of distributing to shareholders 30 percent of income from marketable securities, also referred to as annuity income which stood at Sh692 million in the review period.
He added that even though cash flows from annuity income and shareholder loan repayments amounted to Sh3.1 billion while Sh3.5 billion was realised from disposal of marketable securities, the firm decided to be conservative with dividends and settle debts so as to shield itself from high interest rates. Post March 2024, Centum further repaid Sh1.1 billion worth of loans.
“Had we not taken this move and, say, allocated more money to dividends, we would have had more debt now and the higher interest rate would have put a lot of strain on the cash flow,” said Mr Mworia during the virtual press briefing.
“We are now down to about Sh800 million debt (at holding company level) and we will be able to clear that figure in 2024/2025. Any future proceeds from shareholder loans repayments will be available for full distribution to shareholders. We are very cognizant of the need to improve payouts to shareholders.”
The Nairobi Securities Exchange-listed firm, which has about six business segments, saw its trading business post a pre-tax loss of Sh705.9 million or nearly six times more than the Sh119 million loss in the preceding period. Under the real estate business, pre-tax profit from the sale of residential units grew by 24.5 percent to Sh2.5 billion, while Two Rivers investment operations narrowed its pre-tax loss to Sh965.5 million from Sh7.09 billion.
Its financial services business posted a pre-tax loss of Sh500.4 million from a pre-tax profit of Sh334.36 million.
Centum also narrowed its pre-tax loss from investment operations to Sh352.9 million from Sh1.39 billion loss a year earlier. The SEZ unit, which started in June last year, returned an operating profit of Sh2.92 billion on asset revaluation.
