Old Mutual posts Sh1.3 billion rise in net profit

The Old Mutual Group has reported a Sh1.3 billion rise in profit after tax from continuing operations after selling the troublesome Tanzanian unit for an undisclosed amount early this year.

The listed insurer disposed of its stake bought in 2015 to Strategic Ventures Company Limited, a grouping from the minority shareholders of UAP Insurance Tanzania Limited after the subsidiary faced challenges in meeting expected return on capital for various operational and environmental reasons.

Following the sale, the Group recorded a loss on disposal of Sh363 million. The diversified financial firm attributes a rise in profitability to a combination of strong performances in the asset management business, underwriting profits from insurance businesses and a good return on invested assets.

It reported a profit of 0.2 billion in 2023. The firm’s basic Earnings Per Share (EPS), a metric that measures a company’s profit per outstanding common share rose from a negative position in the previous financial year to Sh2.29.

Shareholders will be walking home empty-handed for the seventh consecutive year, a move likely to intensify squabbles that have seen one of the top investors, billionaire Joe Kibe drag the insurer to court, blocking it from selling some of its assets.

Late last month, High Court Judge Josephine Mong’are allowed Old Mutual to proceed with the planned sale of UAP Tower in Upper Hill, on the condition that Sh500 million from the sale proceeds be held in an escrow account managed by the advocates of both parties, pending the hearing and determination of the case.

Kibe had sought to freeze the sale of any Old Mutual assets, the incurring of new debt, and the transfer of funds out of Kenya.

He has since appealed the ruling. The conversion of shareholder loans to equity significantly eased the Group’s debt burden, with a substantial reduction in finance costs from Sh2.4 billion in the previous financial year to Sh1.2 billion during the period under review.

This was a direct result of the conversion of shareholder loans to equity, significantly easing the Group’s debt burden.