Centum issues 2023 full year profit warning
By John Otini, July 26, 2023
Centum Investment has issued a profit warning indicating its full-year profits for 2023 will dip by 25 per cent compared to the previous year on impairment provisions related to the operations of one of its subsidiaries, Two Rivers Development Limited (TRDL).
TRDL, a subsidiary of Centum Investment, had undertaken the strategic decision to sell some of its assets to reorganise its balance sheet and enhance operational efficiency.
The asset sale was carried out with the intention to streamline the company’s operations and focus on core business areas. However, despite the efforts to optimise its portfolio, TRDL faced challenges during the process.
As a result of the asset sale, TRDL was left with a balance of undeveloped land, which Centum Investment subsequently recognized as impairment losses.
“Centum’s consolidated financial performance in full year 2023 is expected to be impacted by the impairment provisions relating to the business operations of TRDL,” the company said in a statement.
Impairment losses occurs when the value of an asset declines significantly, leading to a reduction in its recorded value on the company’s balance sheet.
The impairment losses related to TRDL’s undeveloped land significantly impacted Centum Investment’s financial performance, leading to the profit warning.
In response to the profit warning, Centum communicated with shareholders, analysts, and stakeholders to provide context regarding the situation.
This also comes at a time when the company has embarked on a share buyback program to reward its investors after the share price fell and stagnated for years.