8 March 2014

Kenya: Britam's Growth Plan Holds Dividend Slice

British-American Investment Company's shareholders will have to contend with a flat dividend payout for 2013 as the firm retained most of its earnings to fund expansion.

The NSE-listed financial services firm has proposed a dividend of Sh0.25 per share, translating into a Sh472.9 million payout, just as in the previous year.

It has recorded a 4.9 per cent increase in net profit to Sh2.65 billion for the year ended December 31 from Sh2.52 billion.

"We have retained most of our earnings primarily because we are in a growth phase and we'll need more cash for investments. 2013 was mid-way of our strategy for expansion which ends in 2016," group managing director Benson Wairegi said yesterday.

Britam's expansion spree has weighed in on its top line as operating expenses jumped by 40.8 per cent to Sh3.21 billion in the year under review from Sh2.28 billion.

"South Sudan was in its first year of operations, Rwanda is completely new and we had some mergers and acquisitions in the year. Added to local expansion, all these added costs that were not there in 2012," said Gladys Karuri, finance and strategy director.

Britam opened 10 branches countrywide to target counties. It is currently in four countries - Kenya, Uganda, South Sudan and Rwanda - but acquisition of Real Insurance will take it to Tanzania, Malawi and Mozambique.

It acquired 99 per cent of Real Insurance and 25 per cent equity in Acorn Group which deals in property development and management.

The latter will steer its foray into big-time real estate as it plans to raise its property portfolio to 20-30 per cent by 2016 from the current eight per cent. It intends to reduce equities to below 30 per cent.

Wairegi said the Insurance Regulatory Authority has given nod to Real's acquisition and now awaits approval by the Competition Authority of Kenya.

"We have also written to regulators in the three markets and expect to finalise the deal by end of April," he said, adding that Britam is in talks with several advisory firms including McKinsey Consulting to advise on merger of operations.

The group's investment income increased to Sh6.3 billion from Sh5 billion a year before. It however took a foreign currency loss of Sh7.73 million in the year, contrasting a Sh2.53 million gain in 2012.


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