Companies
Wednesday March 01 2023
Equipment on sale at a Car & General shop. FILE PHOTO | POOL
Car & General wants to change its financial year from September to December to save itself from double audit reports following the acquisition of a stake in a micro-lender.
The firm will be seeking approval from shareholders during the annual general meeting that will be held on March 23.
Car & General CEO Vijay Gidoomal told the Business Daily the change in reporting period will align it with that of Watu Credit, a micro-lender in which it owns a 29 percent stake.
The company acquired 26 percent stake in Watu Credit in 2017 for Sh26.8 million, before raising its stake in the company to 29 percent in 2020 through a Sh38.6 million additional investment.
“What has prompted the change is in consideration to what happens in our financial services business (Watu Credit) whose year ends in December. The reality is that it is important that all our audits end on the same date, otherwise right now we are having to do two audits,” said Mr Gidoomal.
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“We are having to do a comprehensive interim audit for the period to September and then do the same process again after December. It doesn’t make sense.”
Watu Credit Limited, as part of its microfinance services, offers asset finance—financing motorcycles and three-wheelers across Kenya.
Car & General’s share of Watu Credit’s profit in the year ended September 2022 stood at Sh623.27 million, a growth of 68.3 percent from Sh370.37 million a year earlier.
The profit, added to Sh11.93 million additional investment in Watu, took Car & General’s value of the investment in this associate to Sh1.18 billion from Sh747.92 million.
The Group holds a contractual right to appoint two out of six directors to the board of Watu Holdings Limited. Apart from Kenya, Watu has operations in Uganda, Tanzania and Sierra Leone.
Car & General has five distinct business lines being automotive and equipment distribution, real estate investment, financial services, poultry and helmet manufacturing.
The group’s net profit for the financial year ended September 2022 dropped 23 percent to Sh679.46 million on the back of higher debt servicing and goods clearance costs.
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The drop in net profit was from the record Sh887.2 million earnings for the preceding similar period when the firm quadrupled dividends and gave shareholders bonus shares of one for each share held.
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