Centum raises dividend payout despite posting Sh7 billion loss

An aerial view of the Two Rivers Mall which was developed by Centum Investments. [File, Standard]

Centum Investments has reported a Sh7 billion loss in the year to March 2023 even as it proposed to give shareholders a Sh400 million dividend.

The firm, which made a loss of Sh2 billion in the previous year, attributed the poor performance to its real estate subsidiary - Two Rivers Development - which reported a Sh7 billion loss.

“The consolidated net loss after tax for the period was Sh7.3 billion in the 2023 financial year compared to Sh2.4 billion (in 2022). The performance was largely impacted by the loss from the Two Rivers Development operations on account of Sh3.9 billion impairment provision in addition to a high level of finance costs,” said the company in a statement Friday.

The firm said it took following the purchase of the undeveloped land from the Two Rivers Development Limited (TRDL), which is 58 per cent owned by Centum, by Two Rivers International Finance and Innovation Centre (TRIFIC) (a 100 per cent owned by Centum).

“Following the completion of the transaction, the board of TRDL took the decision to fully provide for the balance of their unsold assets,” said the company. “Although we do not hold 100 per cent of TRDL we are required to consolidate the full financial statements of TRDL. This provision and performance of TRDL in the year account for the loss of Sh7 billion in the consolidated financial statements.” 

“We have also fully provided for our investment in TRDL in our company balance sheet. We have previously carried this investment at Sh3.9 billion. Of the Sh3.9 billion provision, Sh1.2 billion reflects the investment cost, and balance of Sh2.7 billion reflects previously recognised gains.”

Centum noted that the board of TRDL made a decision to impair the balance of its unsold assets, following the sale of its development rights to Two Rivers Development Company (SEZ) Limited. “These assets were in respect to TRDL’s investment in joint ventures  - Two Rivers Lifestyle Company and Two Rivers Theme Park. These two assets are now carrying at nil value in the balance sheet of TRDL,” said the company.

“The sale of development rights by TRDL on May 31, 2022 has enabled the entity to extinguish its key liabilities which include the $50 million (Sh7 billion) debt. These value movements are non-cash and they largely impacted the net asset value per share which declined from Sh62.10 to Sh54.”

This is even as the company recommended paying shareholders a dividend of 60 cents per share or a total of Sh400 million. This is up from Sh59 cents last year. “This represents dividend per share of Sh0.60, up from Sh0.59 in the last financial year, in line with the policy to pay out 30 per cent of annuity income. This proposal will be considered for approval by shareholders at the next annual general meeting,” said Centum.

Two Rivers has recently been gazetted as a special economic zone and is set to establish the Two Rivers International Finance and Innovation Centre (TRIFIC) which it said had recorded investor bookings of up to 60 per cent.