Corporate News
By VICTOR JUMA
In Summary
- The capital gain is the result of Liberty’s share rally to Sh23 as at close of market on Friday, representing a 44.6 per cent increase from the Sh15.9 at which the 20.4 million shares were issued in lieu of dividends.
- Liberty in April announced a dividend payment of Sh1 per share, asking shareholders to decide whether they wanted to receive the payout in cash or shares.
Investors in Liberty Holdings
who took up the insurer’s shares instead of a cash dividend payout for
the year ended December 2013 have booked a Sh145 million paper profit by
exercising this option.
The shareholders –including majority owner South Africa’s
Liberty— by forfeiting the cash dividend also increased their combined
ownership in the Nairobi Securities Exchange-listed firm by 3.9 per
cent.
The capital gain is the result of Liberty’s share
rally to Sh23 as at close of market on Friday, representing a 44.6 per
cent increase from the Sh15.9 at which the 20.4 million shares were
issued in lieu of dividends.
Liberty in April announced a dividend payment of
Sh1 per share, asking shareholders to decide whether they wanted to
receive the payout in cash or shares.
The firm says 142 shareholders received their
dividends in cash amounting to Sh157.1 million –net of taxes— on their
9.8 million shares.
The remaining dividend equivalent to Sh324.9
million after taxes was paid out as shares in what is technically known
as scrip dividend, leading to the capital gains and dilution of those
who asked for cash.
The 20.4 million units issued as scrip dividend to
3,972 investors is however now worth Sh470 million, generating the Sh145
million paper profit.
Liberty’s stock has gained 70.3 per cent in the past one year, marking the second highest gain in the insurance segment after Britam that has appreciated 81 per cent in the same period.
The unique dividend payout allowed Liberty to save
the same amount that it would have paid out in cash, freeing up more
funds for use in operations and expansion.
It enabled the firm retain Sh940 million or 85 per
cent of the Sh1.1 billion net profit earned in the year ended December
2013. Liberty plans to expand its insurance business in the short term
including the life division.
Other publicly traded firms have opted to fund expansion by suspending, cutting or maintaining flat dividend payouts
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