HomeBusiness DigestCentury Holdings begs for $2b

Century Holdings begs for $2b

Ngoni Chanakira

CENTURY Holdings Ltd (Century) says it expects to raise $2 billion from its Renounceable Rights Offer next month.

vetica, sans-serif”>The financial services group says the money will be used to finance a branch roll-out programme, investment in information technology systems, and group working capital.

The company is holding an extraordinary general meeting in Harare next Friday to ask shareholders to approve the move.

Century company secretary Nick Nyamusa said the rights offer would be of approximately 299 829 950 ordinary shares of a nominal value of 5 cents each in the company’s share capital to existing shareholders at a subscription price of 700 cents each.

The ratio would be of one new ordinary share for every four ordinary shares already held by shareholders at the close of business on August 29.

Century this week released mediocre results.

Profit before taxation increased by 378% to $2,329 billion over the $487 million recorded for the nine months ended June 30 2002.

A growth of 250% was recorded on profit before gain on discontinuance, increasing from $366 million for the nine months ended June 30 2002 to $1,281 billion for the six months ended June 30 this year.

Shareholders approved the disposal of Century Discount House at the AGM held on June 30, the disposal of which was part of the current restructuring exercise.

However, this move initially riled shareholders who queried why a cash cow was being offloaded at a time when the institution was struggling.

The discount house contributed profit before taxation of $112 million to March 31 while Century Stockbrokers (Pvt) Ltd, also a discontinuing operation, recorded a pre-tax loss of $58 million to June 30. Century Stockbrokers folded when staff quit and joined a rival company, Sagit Stockbrokers (Pvt) Ltd, a move that resulted in speculation that Century faced imminent collapse.

The major operating units contributed $1,8 billion pretax profit before gain on discontinuance with Century Bank contributing 69%, Century Asset Management 6% and the Leasing Company of Zimbabwe 22%.

The discontinuing operations’ net contribution was a modest 3%.

Chairman Christopher Mwaturura said the impact of inflation had necessitated the recapitalisation of the group to enhance underwriting capacity.

Some shareholders had questioned the need for a rights issue to raise money when other financial institutions were chalking up billions in profit after tax.

They said Century management needed a shake up to compete with other institutions, some of which arrived on the playing field after the group.

Mwaturura said in light of the group’s recapitalisation plans, the board had made a decision not to declare an interim dividend.

He said as part of the restructuring exercise, the group had been reviewing its regional operations with a view to “enhancing shareholder value”.

“On June 30, the shareholders approved the acquisition of a controlling interest in INDEbank Ltd, a financial services institution incorporated in Malawi,” Mwaturura said.

“The regulatory authorities in both Malawi and Zimbabwe are yet to grant their necessary approvals and negotiations are in progress. It is expected that INDEbank results will be consolidated in the second half of the financial year.”

Since launch there have been regular musical chairs at Century.

At the end of 2002 founder and group chief executive officer Jefta Mugweni stood down to take up the post of deputy chairman.

Mugweni told businessdigest in an interview then that he felt the group needed new brains to enter a “new era in regional expansion where competition is stiff. I am tired and have allowed new thinking to come on board.”

Former Barclays Bank of Zimbabwe boss Gary Shoko replaced Mugweni at the helm.

Before then, however, former Century Bank managing director Ashbel Ndewere was asked to pack his bags. Ndewere was later given a million-dollar golden handshake after threatening legal action for wrongful dismissal.

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