Sanlam Kenya Plc, a subsidiary of South Africa’s Sanlam Ltd, has disclosed plans to wind down its property, bottled mineral water, and asset management subsidiaries in Kenya. This decision follows persistent financial losses and a prolonged period without dividends for shareholders.
In 2023, Sanlam Kenya reported a net loss of Ksh127 million ($992,187), marking the fourth consecutive year of negative earnings, compared to a loss of Ksh83 million ($648,437) in 2022. Cumulative losses rose to Ksh2.28 billion ($17.81 million), reflecting escalating financial pressures exacerbated by rising finance costs and declining investment returns.
To address these challenges, the company is streamlining operations by closing dormant subsidiaries such as Sanlam Investments Limited, ChemiCemi Mineral Water Company, and Mae Properties. These entities have not contributed positively to earnings and are being wound up to refocus resources on core business areas.
Sanlam Kenya Plc, listed on the Nairobi Securities Exchange (NSE), last paid dividends in 2013, amounting to Ksh4.5 ($0.03) per share, totaling Ksh432 million ($3.37 million). Since then, shareholders have faced a prolonged dividend drought amid ongoing financial difficulties.
To bolster liquidity, Sanlam Kenya has restructured existing debt facilities, including a Ksh3.5 billion ($27.34 million) credit facility with Stanbic Bank, with repayment obligations deferred until March 2025. Additionally, Sanlam Emerging Markets provided a crucial Ksh1.08 billion ($8.43 million) loan to Sanlam General Insurance Ltd to address capital shortfalls.
Sanlam Ltd, headquartered in South Africa and listed on the Johannesburg Stock Exchange (JSE), continues to support its Kenyan subsidiary amidst the challenging economic and regulatory environment. The closure of non-performing subsidiaries underscores the company’s strategic focus on enhancing operational efficiency and restoring profitability in the East African market.
As Sanlam Kenya Plc navigates these restructuring efforts, stakeholders are closely monitoring its progress in stabilizing financial performance and delivering shareholder value amid evolving market conditions.
Photo source: Google
By: Montel Kamau
Serrari Financial Analyst
25th June, 2024
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