In a statement sent to newsrooms by company secretary Nancy Kiruki, the board points at the poor performance of the group’s stock portfolio at the Nairobi Stock Exchange.
They said the lacklustre performance was due to the deteriorating global financial markets, high prevailing inflation and interest rates as well as the volatility of the shilling against hard currencies.
The board therefore said its earnings for 2011 were at least 25 percent lower than those of the 2010 financial year.
The statement further reads that the insurance and asset management business of the group continued to perform in line with the projections, with expected revenues for 2011 being significantly higher than those for the same period in 2010, while the weak performance for their equity portfolio driven by the NSE will negatively impact on the overall profitability of the company as well as the group.
The company said the firms in which it holds significant stakes continued to record higher profits in 2011 in relation to 2010 suggesting that the current unfavourable trends on stock market values might correct themselves in the short to medium term.
Overall key factors impacting on the 2011 performance were;
– Difficult market environments and the consequential poor performance of quoted equities where the NSE plunged by 31.4 percent in 2011 compared to the same period the year before.
– The high exposure of the group’s investment portfolios to the stock market.
The management has set about in increasing focus on growth opportunities including investments in real estate and going ahead with the group’s geographical expansion strategy with entry into new markets expected this year, as well as taking advantage of the returns from fixed income markets.
It is expected that the group will announce its audited financial results for the year ended December 2011 before the end of the first quarter of 2012.