11 June 2014

Kenya: Centum Holds Bonus for Another 5 Years

SHARES of publicly traded Centum Investments dropped 75 cents at close of business yesterday on a day the company confirmed its zero-dividend policy will stretch for another five years. The Nairobi Securities Exchange-listed firm closed at Sh39.50, down from Sh40.25 level on Monday.

Centum has not paid dividends since 2009 after it chose to plough back returns into its prime investment areas of private and quoted equity as well as real estate. Chief executive James Mworia said yesterday during an investor briefing in Nairobi that average returns over the five-year period stood at 31 per cent against the NSE 20 Share's average of 12 per cent.

This was "consistent with our investment strategy", Mworia said, although it was outperformed by the NSE the previous year when annualised return was 19 per cent against NSE's 44 per cent. Profits for the full year period to March 31, 2014 stood at Sh3.05 billion, a 21.8 per cent jump over Sh2.51 billion a year earlier. This was powered by a 25 per cent, an equivalent of Sh977 million, increase in earnings on investments to Sh4.88 billion, Mworia said.

Income from associated companies also climbed modestly to Sh393 million from Sh263 million. Costs over the review period doubled, surging 98.5 per cent to Sh796 million. "Every shilling invested in Centum in March 2009 was worth Sh4.34 in March 2014," Mworia he said in an investor statement, citing a jump in the value of shareholders funds to Sh24.3 billion from Sh5.6 billion over the period.

In new strategy to March 2019, Centum is targeting new opportunities in financial services, power generation, agribusiness,ICT, fast moving consumer goods, education and healthcare sectors.

It however started on a wrong footing in power generation having missed out on a shortlist for the government's proposed gas and coal powered projects at the Coast with capacity of close to 1,000 megawatts each. Two Rivers, its flagship project in upmarket Runda, will receive most attention having secured Sh6 billion for a 40 per cent stake and Sh5.2 billion 10-year debt the Co-operative Bank for the 100-acre project.

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