Even a profit warning could not have prepared investors in Centum Investment for the shock results as profits plummeted 67 per cent.
Centum, which is majority-owned by businessman Chris Kirubi, saw its net profits for 2018 plummet to Sh2.7 billion, down from a towering Sh8.1 billion last year, a result the company largely blames on late closing of the sale of GenAfrica.
The listed financial services firm had also warned that the profits would fall drastically owing to a 35 per cent decrease in the value of its property, which lost Sh2.3 billion worth in fair value.
“The combined effect of the lower property valuation gains and deferral of recognition of realised gains on the disposal of GenAfrica asset managers was a decline in the group’s consolidated net profit by 67 per cent,” said Group Chief Executive James Mworia in the financial results for 2017.
Centum, which has over the years booked impressive gains on big ticket deals under Mr Kirubi after the privatisation of the Industrial and Commercial Development Corporation, has suffered recently.
Centum sold UAP to Old Mutual, gaining Sh5 billion in 2015, and last year it gained Sh1 billion of dividends from Investpool (Platcorp sale), Athena reserves and Almasi scrip.
It also received Sh1 billion in the exit from Kenya Wine Agencies Limited.
A closer look at the company’s books shows huge administrative and finance costs against depressed performance of its related companies in what must have been the company’s worst year in recent times.
The cost of running the firm jumped from Sh1.1 billion to Sh2 billion while finance costs were up by Sh713 million.
What the firm received from associates and joint ventures halved from Sh1.3 billion to Sh694 million during the year.
The firm holds a stake in Longhorn Publishers whose profits for the period ending December 2017 dipped from Sh43 million to Sh36 million, as well as Sidian Bank where it holds a 74.8 per cent stake.
Sidian has suffered under the rate cap regime, dipping into the red with a Sh421 million loss for the 2017 financial year from a Sh28 million profit in 2016.
But it is Centu’s own business that suffered a Sh2.6 billion depression from investments and other incomes as well as reduced revenue from financial services, which dropped from Sh3.6 billion to Sh2.8 billion last year.
Centum owns real estate holdings in Two Rivers Mall and luxury villas and apartments including Pearl Marina, Vipingo and Athena that make up half of its portfolio.
The firm has invested billions through Two Rivers Development Limited to set up an artery of infrastructure on the 102 acres and was planning on rolling out an intensive campaign aimed at selling bulk rights of the serviced land last year.
It had also planned to set up an art conference dome during the financial year that could host 3,000 delegates and hoped the launch of a three-star City Lodge Hotel would boost prospects of the development.