Huge loan payments for Two Rivers Mall have plunged Centum Investment into a net loss of Sh1.4 billion in the year ending March 2021.
In March 2020, the listed company made a profit after tax of Sh4.6 billion in a period that saw it record an investment income of Sh12.4 billion after it sold its beverage company.
However, high finance costs by Two Rivers Development Ltd (TRDL), the company that manages Two Rivers Mall, in which Centum has a 58 per cent stake, booked a loss of Sh1.9 billion.
This pushed up Centum’s loss before tax to Sh2.33 billion, without which the loss would have been at Sh473 million.
Consequently, the company announced that the boards of TRDL and Two Rivers Lifestyle Centre have initiated a restructuring process aimed at lighting the debt service load.
“We expected the balance sheet restructure to be completed by the end of the current financial year, which will lead to improvement in the performance of TRDL Group,” said Centum Investment chief executive James Mworia.
Two Rivers Mall includes housing units built at a cost of Sh25 billion.
This was Centum’s first loss in 42 years.
Besides a drop in sales and investment income, the firm also grapples with increased deferred tax liability on revaluation of its real estate business which now attracts a corporate income tax of 30 per cent from an earlier rate of five per cent.
The firm booked a revaluation loss of Sh4.2 billion in the period under review.
Nonetheless, Centum’s board recommended a final dividend of Sh0.33 per share, translating into a cumulative pay-out of Sh218 million.
“The payment of the dividend is on the back of an operating profit of Sh245 million that the company recorded in the year and is intended to cushion our shareholders from the effects of the difficult economic conditions while allowing the company to retain liquidity,” said Mworia.
The loss after tax of Sh1.4 billion follows a drop in investment income in 12 months in which the company did not make major losses.
The firm associated with the late Chris Kirubi is keen on reducing its debt stock from Sh16 billion in March 2019 to Sh3 billion in March 2021.