Agricultural company Kakuzi Ltd has posted a 21 percent drop in profit after tax to 103.3 million shillings from 131.5 million last year on reduced income through the loss of tea growing subsidiary Siret Tea Company Limited (STCL) to Sireet Outgrowers Empowerment and Producer Co Ltd in a sale approved last month.
Kakuzi has said in its half-year statement that because of the sale of STCL, income from the latter was not included as part of Kakuzi’s reported earnings as it had been in prior financial statements. This exemption was evident in a 66 percent drop in profit from discontinuing operations to 32.1 million shillings from 95.3 million mid last year which contributed most to the drop in overall half-year profit.
Profit from discontinuing operations is that from secondary businesses that will not remain part of the parent company (Kakuzi in this case) for the foreseeable future. Excluding this profit though, Kakuzi’s profit from its core businesses climbed 87 percent to 71.2 million shillings from 38 million shillings mid last year.
To reflect the sale of STCL, Kakuzi listed assets held for sale at 675.3 million shillings being the value of Siret Tea Company’s operations to be sold.
Two weeks ago, Kakuzi gave notice confirming the sale of its 50.5 percent remaining stake in STCL to be completed by August 31st. The sale will see STCL no longer remain part of the Kakuzi Group.
In the sale notice, Kakuzi warned shareholders to “…exercise caution when dealing in the shares.” which fell 9.3 percent to KES 68 a few days after the notice was issued, but soon after rallied back to last month’s KES 75 average range into this month.
Kakuzi is involved in the growing and processing of tea, avocadoes and other crops. The company also rears livestock.