Centum has slid into a Sh1.9 billion loss after tax for the six months to September, amid a tumble on investment and other income which fell by 95.5 per cent.
This is from a Sh6.7 billion profit after tax in a corresponding period last year.
The Group which has interest in listed and non-listed entities in real estate, manufacturing, banking and publishing, has termed the half-year as an “extremely challenging one against a backdrop of Covid 19.”
It has cited economic uncertainty and disruption to business occasioned by the pandemic.
During the period, the group’s consolidated comprehensive income reduced from Sh6.6 billion last year, to a loss of Sh1.7 billion, as the value of investment and other income fell to Sh433.5 million from Sh12.4 billion in a similar period last year.
Last year's gains were realised from the disposal of beverage assets as well as Sh2.3 billion impairment provision on assets, primarily, Amu Power.
In the current period, no gain on disposal or impairment provision on assets has been recorded.
“The current economic environment has also impacted the performance of several entities within the Group,” Group CEO and managing director James Mworia said, as he remains optimistic of better days ahead.
During the period, Centum Real Estate Limited business was resilient over the impact of Covid-19 on the operating environment, recording sales of Sh1.7 billion and collecting Sh650 million within the same period.
These collections reflect the quality of the collectible amounts on the presold units.
It also launched three developments of residential units, of which one has already been market validated and has now broken ground. The other two developments are under market validation.
Centum Investment Company Plc on the other hand has reorganised its real estate business unit into two distinct businesses units: Centum Real Estate Limited, which is a wholly owned subsidiary and the holding company for all wholly owned real estate business; and Two Rivers Development Limited, of which the company holds a 58 per cent stake.
Centum Real Estate Limited is pursuing a sales-led development model and is currently constructing 1,482 residential units across three sites, namely Two Rivers Development in Nairobi, Vipingo Development in Kilifi and Pearl Marina Development in Uganda.
Of the 1,482 units under construction, 1,086 units, with a revenue potential of Sh9.2 billion had been sold as at September 30, 2020, representing a pre-sale level of 73 per cent.
The business has collected over Sh2.6 billion in cash deposits for these presold units and has a collectible Sh 6.6 billion.
Private equity business during the period under review recorded a Sh1.2 billion consolidated after-tax loss compared to an after-tax profit of Sh 8.4 billion recorded for a similar period in 2019.
The group on Friday said it has not received any dividends from portfolio companies where it holds minority stakes, in the six-month period ending September 30, as these portfolio companies have elected to build resilience in their balance sheets by preserving cash.
“On a positive note, some of the companies have resumed dividend payment,” Mworia said.
Centrum (group) held Sh6.5 billion in marketable securities and Sh1.7 billion in cash as at September 30, 2020.
Centurm which has been implementing a strategy focused on debt reduction, enhancing liquidity,
,switching to more cash flow generative assets that are less susceptible to market movements; and
value preservation, managed to reduced net debt by Sh 4.1 billion over the period.
This was mainly by retiring its five-year bond fully.
In the prior period ended September 30, 2019, the company had made an early repayment of its dollar denominated facility of $ 75 million(Sh8.3 billion).
These actions of deleveraging the balance sheet have resulted in a significant reduction in finance costs from Sh1.2 billion to Sh335 million, its financials show.
In June 2020, Centum Real Estate Limited repaid shareholder loans worth Sh 3.75 billion to Centum.
This repayment is the first significant cash contribution from our real estate subsidiary. Since this was a repayment of a shareholder loan, the transaction was not recognized in the income statement, Mworia explains in a report through the Nairobi Securities Exchange.
“We are upbeat about the strong pipeline of land sales within Centum RE and we expect further contribution in the second half of the year,” he says.