Regional investment firm Centum has more than tripled its net profit for the six months’ period to September 30 lifted by a one-off sale of its shareholding in three beverage firms—Almasi, Nairobi Bottlers Ltd and King Beverages Ltd.
The firm, which is listed on the Nairobi Securities Exchange (NSE), saw its profit after tax (PAT) jump by 228 per cent to Ksh6.79 billion ($67.9 million) from Ksh2.07 billion ($20.7 million) in the same period last year, riding on a massive Ksh12 billion (about $117 million) gain realised from the sale of its stake in the three beverage firms.
Centum’s disposal of its shares in the three firms was completed in September this year, pushing its earnings per share (EPS) to Ksh10.7($0.1) from Ksh3.4($0.03).
“...The private equity business is evaluating new opportunities that meet our investment criteria...,” said James Mworia, the Centum Group chief executive.
The firm, which is majority owned by Kenyan businessman Chris Kirubi, however saw its gains on the disposal of shares in listed firms drop by 40 percent to Ksh11.71 million ($117,100) from Ksh19.74 million ($197400) largely due to the persistent bear run on the Nairobi bourse.
According to the unaudited financial statements released Thursday (November 28) the firm’s sales revenues fell by one per cent to Ksh4.77 billion ($47.7 million) from Ksh4.81 billion ($48.1 million) while operating costs rose 2.26 per cent to Ksh4.52 billion ($45.2 million) from Ksh4.42 billion ($44.2 million).
Centum’s finance costs jumped to Ksh2.03 billion ($20 million) from Ksh1.23 billon ($20 million) while its associate companies returned losses of Ksh61.69 million ($600,000) compared to a profit of Ksh97.25 million ($900,000) in the same period last year.
In June this year, Centum suspended further capital expenditure and put key investments on sale as part of a grand plan to pay off mounting debts amid a wobbling cash flow position and deteriorating debt-coverage ratio.
The firm dropped the ‘development’ aspect of its investment portfolio including education sector, agribusiness, power, infrastructure, manufacturing, health and information Communication Technology (ICT) and shifted focus to real estate, private equity and marketable securities.
“Over the next 5 years, our focus is on cash annuity income and holding optimal liquidity reserve. Investments will be in cash generative assets with no further capital deployments in the development portfolio,” said Mworia.
“Under the new strategy plan, our business has been simplified into three business units namely Private Equity, Real Estate and marketable Securities.”
Centum’s debt has been on an upward trend in the past five years (2015-2019) fuelled by a number of mega projects that the firm has been undertaking.
The firm’s debt more than doubled to Ksh16.14 billion ($161.4 million) to in the 2018/2019 financial year from Ksh7.56 billion ($75.6 million) in the 2014/2015 financial year.
As a result, the firm’s debt-service coverage ratio (DSCR), a measurement of the cash flow available to pay current debt obligations weakened to 1.7 in 2019 from a high of 9.3 in 2015 while last year (2018) the ratio stood at 3.2.
To boost its liquidity, the firm sold its combined stake in Almasi Beverages Limited(ABL) and Nairobi Bottlers Limited (NBL) to Coca-Cola Sabco East Africa Limited at a transaction valuation of Ksh 19.5 billion ($195 million).
The investment group, which is also cross-listed on the Ugandan Securities Exchange (USE) cut its total debt to Ksh9.91 billion ($99.1 million) from Ksh16.14 billion ($161.4 million) after repaying a Ksh7.5 billion, $75 million bank loan, according to the financial statements.
Coca-Cola Sabco East Africa Limited is a subsidiary of Coca-Cola Beverages Africa Limited (CCBA), the largest bottler in Africa holding several bottling operations across 12 African Countries.
CCBA currently owns 72.4 per cent of NBL.