Centum Investment Group has registered a Sh1.3 billion net loss for the financial year ending March 31, on higher debt financing costs from its subsidiary, Two Rivers Development Limited (TRDL).
This has reversed gains in a Sh4.6 billion after-tax profit the group recorded in the same period last year.
Chief executive James Mworia on Tuesday said its loss-making subsidiary is now making efforts to restructure its debt, reduce the high financing costs and recover from losses.
The subsidiary's performance, however, improved significantly this year, booking a Sh1.8 billion loss down from a Sh5.9 billion loss in the previous financial year.
Centum also announced that it had cut its debt by 81 percent to Sh3 billion in March this year, down from Sh16 billion in March 2019, and operating costs totalling 44 percent of its income.
The company in March issued a profit warning in anticipation of a significant drop in its performance for the year.
It cited absence of earnings from disposal of some of its investments in the year under review, which had earned it Sh12.5 billion in the previous financial year.
"We expect the balance sheet restructure to be completed by the end of the current financial year which will lead to a significant improvement in the performance of the TRDL Group," Mr Mworia said.
"The decision to pay down the debt on the balance sheet and increase the marketable securities portfolio has significantly improved the resilience of the balance sheet, the recurring cash flow position and the liquidity position to enable the company to take advantage of positions as they emerge," he said.
Centum said it has made progress in achieving its targets amid the Covid-19 pandemic which has soured the business environment, especially its real estate segment.
The company's real estate subsidiary, Centum Real Estate, posted a 71.7 percent drop in net profit to Sh650.4 million for the period, owing to reduced demand for its residential units due to the pandemic.
"We have witnessed a strong recovery in performance across our portfolio companies and hope this recovery will not be interrupted by any unforeseen external economic shocks," Mr Mworia said.
The company's shareholders will earn a final dividend of Sh0.33 per share, which translates to a cumulative payout of Sh218 million.