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What you need to know:
- CEO says end of the zero-dividend policy is informed by strong growth momentum of firm’s subsidiaries.
Centum Investment has a ended a dividend drought for its shareholders that lasted nearly a decade, with a planned payout of Sh1 per share after announcing a double-digit growth in after-tax profit to Sh9.9 billion.
The dividend represents a Sh665 million total payout by the firm listed on the Nairobi Securities Exchange.
Centum Group Chief Executive Officer James Mworia yesterday said the end of the zero-dividend policy is informed by the strong growth momentum of the company’s subsidiaries which has also boosted its cash balance.
“The company had a strong performance during the year and closed in a good liquidity position. We have chosen to recommend the dividend payout as delivering value to our shareholders is our primary focus and the company has sufficient liquidity to fund its deal pipeline,” said Mr Mworia.
Centum has had a no-dividends policy since 2009.
The dividend drought was meant to provide the company funds to make acquisitions.
The investments over the years have seen its asset classes multiply, while its stock value has multiplied nearly seven times. It last paid its shareholders in March, 2008 – a dividend of 45 cents per share.
Mr Mworia said the board is confident that it has sufficient funding for its planned projects and for distribution to shareholders.
“The company has over the years consistently delivered the return that now allows it to have a consistent dividend policy,” said Mr Mworia.
He added that the firm anticipates a sustained dividend payment going forward.
Centum’s net profit increased 25 per cent to Sh9.9 billion from Sh7.9 billion earned in 2014.
Mr Mworia attributed the performance to gains on disposals of investments, increase in value of property, higher dividends from portfolio companies and higher income from subsidiaries.
“The increase in the group’s profitability speaks to the profitability of the underlying assets which represent our investments,” Mr Mworia told investors at the release of the company’s results at its upcoming Two Rivers project in Nairobi. The project is said to be one of the largest shopping malls in Africa.
Centum has a diversified portfolio of assets in seven sectors including financial services, real estate and property development, fast moving consumer goods, ICT, power generation, healthcare, education and agribusiness.
The company recorded a 106 per cent growth in consolidated revenues for the full year ended March 2016 to Sh24.2 billion from Sh11.8 billion recorded in the previous period.
Mr Mworia said the company’s planned shift from a portfolio investor to being an institutional developer of assets under its “Centum 3.0” strategy now in its third year of implementation had shown signs of paying off.
“The company’s focus is to preserve and grow the value of shareholder wealth through different market cycles as measured by net asset value per share,” he said.