Centum Investments has announced a 16.6 percent drop in earnings per share (EPS) to 12.47 shillings according to the financial statements released.
Stripped off, realized gains on sale of investments (which fell by 81 percent), group PAT had a solid 66 percent growth. Notably, FY16’s large profit uptick was realized from the sale of a 50 percent stake in Two Rivers Mall for 3.2 billion shillings, (overall realized gains in FY16 was 5.4 billion shillings). Overall, in terms of NAV growth, performance was relatively positive (outperformed benchmark by a spread of 38 percent), with NAV notching 13.6 percent to 67.34 shillings per share.
Net assets added 13.6 percent to shareholders wealth. Mainly attributed to fair value gains in NAV of its Real estate portfolio, majorly by Two Rivers properties which account for 22.4 percent of NAV, and the FMCG segment (24.2 percent of NAV).
FMCG business saw 76 percent increase in profit (37 percent from beverage business). Cost efficiencies in production lines at Almasi Beverages and the consolidation of Longhorn publishers drove the segment’s profitability.
Two Rivers Mall. With the current occupancy of 70 percent and an additional 16 percent under negotiation, it is expected that the mall will be at about 86 percent occupancy by Dec. At these occupancy levels, the mall will start to contribute to Centum’s profitability pot in FY18.
Financial services segment, on the other hand, witnessed 67 percent fall in operating profit. This is expected due to banking law that capped interest rates which hit Sidian Bank. The bank had a two-pronged punch in terms of increase in one-off cost (rebranding and restructuring) and a decline in net interest income from capped rates. Analysts expect performance to remain subdued in FY17. Across the fund management side, operations were slow due to sustained bearish run on the stock.