Homeboyz Entertainment Plc on Tuesday, March 9 issued a profit warning, less than three months after its December 2020 listing on the Growth Enterprise Market Segment (GEMS) at the Nairobi Securities Exchange (NSE). The statement to investors seen by Business Today notified them that for the financial year ending December 31, 2020, net profit attributable to shareholders was expected to be lower compared to a similar prior period ending December 31, 2019.
The company made a profit of Ksh36.6 million on revenue of Ksh311.5 million in 2019. The firm noted that it made a number of strategic moves in the past year to adapt to the Covid-19 pandemic and its effect on the economy. It further expressed confidence that performance would improve in 2021 as the pandemic was mitigated, highlighting contracts it had signed with the Football Kenya Federation, WRC Safari Rally and Magical Kenya Open among others.
The firm which has interests in events, audio-visual production, sports and youth marketing saw its event division, in particular, take a hit during the pandemic as the entertainment and events sector was affected by restrictions on gatherings and the curfew.
“To remain competitive, Homeboyz instituted a radical number of cost rationalisation measures, including instituting a hiring scheme based on active projects and innovative initiatives in the digital space to shore up revenues.
“With the progressive lifting of restrictions in the second half of 2020, the business has seen a gradual recovery in sales volumes a testament to the resilience of its brands, employees and innovative business strategies,” its statement read in part.
While the firm is a strong brand in media and entertainment, the listing of Homeboyz on the bourse was met with mixed opinions from analysts, with concerns raised over, among other things, its family ownership and management structure and political risk exposure.
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Three of five board members at the company are Rabars, keeping them firmly in control of the company.
The three directors in management take home Sh30 million a year in salaries, equivalent to 15 percent of the company’s generated gross profit.
It’s biggest clients were State House and the Kenya Revenue Authority (KRA), raising questions on how the business could be affected by the ever-changing political climate in Kenya.