Centum boosts liquidity position despite a decline in profitability 

Centum CEO James Mworia
Centum CEO James Mworia. PHOTO/COURTESY

Centum Investment has announced a decline in group profit after tax after recording a loss of Ksh. 1.9 billion for the six months to September 2020 down from a consolidated profit of Kshs 6.9 Billion in the prior period.

The decline in performance was largely on account of a significant drop in investment income with the prior period investment income having included Kshs 12 Billion gain on disposal of investments. Centum did not conclude any investment transaction in this period.

The company profit and loss, which is the measure of Centum’s performance as an investment company, recorded a post tax profit of Ksh. 95 Million an improvement from a prior period loss of Ksh. 1.6 billion.

The improvement in performance at the Company level was despite the lack of gains on disposal in the period and a significant decline in dividend income from portfolio companies as they conserved cash to enable them navigate the Covid 19 crisis. The Company performance was enhanced by a reduction in finance costs which reduced from Ksh. 1.2 Billion to Ksh. 335 Million following the full repayment of long term loans.

Net Asset Value Per Share declined from Ksh. 71.29 to Kshs.68.14. The decline is explained by the payout of a Ksh. 1.20 dividend per share and a Ksh. 1.3 Billion revaluation loss. Total return in the period, which is a measure of total investment return as a proportion of the opening value of shareholder funds, was negative 2 percent.

In the period under review, Centum continued to pursue its strategy of strengthening the balance sheet and enhancing liquidity. The Company made Ksh. 4.1 billion repayment of loans reducing net debt from Kshs 7.4 billion to Ksh 3.5 billion. The Company also maintained a high level of liquidity with cash and marketable securities closing at Ksh. 8.2 Billion.

The underlying lines of business have continued with their cash generative focus. Centum Real Estate a subsidiary of Centum Investment repaid Ksh. 3.75 billion shareholder loan to the parent company. The firm’s business has had a healthy pipeline of bulk land sales that underpin the repayment of the shareholder loans.

The business also recorded a strong performance in residential development arm having increased pre sales to Ksh. 9.2 Billion which represent 73% of all units under construction and presales collections rose from Ksh. 1.95 Billion to Ksh. 2.65 Billion in the six month period.

The company expects this line of business to start contributing to profit in the second half of 2020/21 as the completed projects are handed over to buyers. The Companies within the private equity business line weathered the COVID 19 storm with 5 of 8 of the companies remaining profitable in the first half. To conserve liquidity the company suspended dividend payment in the first half of the year but Centum expects to start booking dividends in the second half of the financial year.

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