Centum Investment Company has announced a profit warning for its full year earnings for the period ended March 2025, attributing it to lower fair value gains on its investment property relative to the previous year.
The cautionary statement means that the company’s net profit for the period will be lower by at least 25 percent or Sh650 million compared to the Sh2.6 billion it made in the year to March 2024.
The company’s property revaluation gains in the 2024 financial year stood at Sh3.39 billion, which helped it reverse a net loss of Sh7.3 billion in 2023 to the profit of Sh2.6 billion last year. The fair value gain on property in 2023 stood at Sh2.13 billion.
In the absence of the higher gain for 2024, Centum would have booked a pre-tax loss of Sh11.5 million, compared with a pre-tax loss of Sh6.25 billion in 2023. Accounting rules allow a gain or loss in value of property such as land or buildings to be booked in the income statement.
“While the pricing of actual sales transactions within our subsidiaries has remained consistent with the prior year, the company has not booked as significant an uplift in revaluation gains as was reported in the 2024 financial year,” said Centum in a statement on Monday.
“These revaluation movements are non-cash in nature and arise from the application of International Financial Reporting Standards, which require annual revaluation of investment property. As a result, such revaluation adjustments can have a material impact on reported profitability without affecting the underlying cash flows or operational performance of the business.”
The firm’s investment properties include land and buildings at the Two Rivers special economic zone, which is known as the Two Rivers International Finance &. Innovation Centre.
Although the company returned to profit in the 2024 financial year, its dividend payout of Sh0.32 per share was nearly half of the Sh0.60 per share paid out in the previous year.
This was in line with its policy of distributing to shareholders 30 percent of income from marketable securities, which stood atSh692 million in the period.
