By JAMES ANYANZWA

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Centum Investments Plc suffered severe losses during the financial year ended March 31 from continued poor performance of its portfolio investments and that of its key subsidiary, Two Rivers Development Ltd (TRDL).

The regional investment firm, which is listed on the Nairobi Securities Exchange (NSE) and cross listed on the Ugandan Securities Exchange (USE), saw its net losses rise to Ksh7.31 billion ($51.47 million), from Ksh2.28 billion ($16.05 million) in 2021/2022, after years of massive debt-funded capital investments.

Audited financial statements show that all of the group’s trading, investment and subsidiary operations, save for real estate investments, posted either losses or reduced profits during the period, reducing the group’s cash flow position by 11 percent to Ksh2.9 billion ($20.42 million), from Ksh3.26 billion ($22.95 million).

Read: Centum Investments records $10m half-year loss

“Our focus remains to take the critical decisions that are necessary to continue creating value and generating enhanced cash flow in the dynamic and challenging operating environment that we are in,” said CEO James Mworia. “We are cautiously optimistic and look forward to an improved performance in the coming year.”

The firm posted a loss of Ksh52.58 million ($371,830) on the disposal of investment properties, from a profit of Ksh111.07 million ($782,183), while losses from investment operations widened to Ksh1.39 billion ($9.78 million), from Ksh547.97 million ($3.85 million).

Two Rivers debt

Centum’s investment in financial services generated reduced profit of Ksh334.36 million ($2.35 million), from Ksh691.65 million ($4.87 million), while trading operations posted a loss of Ksh119.02 million ($838,169) from a profit of Ksh73.21 million ($515,563).

The bulk of Centum’s losses were blamed on the Two Rivers development, in which it holds 58 percent stake.

Read: Centum's Two Rivers subsidiary to sell stake by April

TRDL booked a loss of Ksh7.09 billion ($49.92 million), from Ksh2.28 billion ($16.05 million), as result of declining sales and investment income, increased funding costs, and increased losses from joint venture investments.

TRDL’s losses were compounded by a massive Ksh3.87 billion ($27.25 million) impairment provisions.

Centum invested Ksh1.9 billion ($13.38 million) into the TRDL project for a 58 percent controlling stake, the remaining shares are owned by the Aviation Industry Corporation of China (39 percent) and ICDC with three percent stake.

Centum’s real estate investments, however, posted an increased profit of Ksh2.01 billion ($14.15 million) during period from Ksh127.04 million ($894,647.88) the previous year.

So far the debt has reduced to as low as Ksh2.2 billion ($15.49 million) from Ksh16 billion ($112.67 million) in 2019.

Centum has written off some of its investments such as the Ksh2 billion ($14.08 million) investment in the controversial Lamu-based Coal-fired power plant. It also suffered a Ksh900 million ($6.33 million) impairment loss on its investment in Akiira Geothermal power project, a 140MW plant under construction in Kenya’s Nakuru County.

Centum is majority (30.94 percent) owned by the estate of the late businessman Chris Kirubi and the Kenya Development Corporation (22.97 percent).

The company’s board has approved a share buyback plan to purchase up to 10 percent of its issued and paid-up share capital to shore up its share value at the stock market.

Read: Centum cancels sale of Sidian to Access

Centum invested Ksh1.97 billion ($13.87 million) in Akiira power for a 37.5 percent stake in 2016, but the carrying value of the investment declined to Ksh1.07 billion ($7.53 million) as of September 30, 2022.

In the same year Centum invested Ksh2 billion ($14.08 million) in Amu Power—a joint venture between Gulf Power (developer and co-sponsor) and Centum (Co-sponsor)— for a 50 percent shareholding.

Amu Power was designed to develop the 1,050 megawatt coal power plant in Lamu.

In January this year (2023) Centum failed to sale its banking subsidiary Sidian bank to Nigerian Access bank Plc after the West African banking giant pulled out of the deal.

Centum had opted to sale its entire stake (83.4 percent) in Sidian bank (formerly K-Rep bank) after the third-tier lender failed to generate returns (dividends) for seven years (2014-2021).

If the deal was successful Centum could have sold the bank at a loss of Ksh400 million ($2.81 million) considering that the original investment in the bank was valued at Ksh4.7 billion ($33.09 million) in 2014 and the market value had fallen to as low as Ksh Ksh2.7 billion ($19.01 million) by September 2021.