Press release

Centum profit after tax crosses Ksh 3.0 billion

Nairobi/ Kampala June 10^th 2014… Centum Investment Company has released its financial performance results for the year ended 31 March 2014.  The financial results show a 22 per cent growth in profit after tax to Ksh 3.0 Billion from Ksh 2.5 Billion reported in the previous year. This is the first time in the company’s history that profitability has hit the Ksh 3 billion mark. This translated to an earnings per share of Ksh 4.54, rising from the previous year’s earnings per share of Ksh 3.77. Investment income increased by 25% to Ksh 4.9 Billion from the previous year’s Ksh 3.9 Billion mainly attributable to fair value increase in its investment property, improved dividends from portfolio companies and income from its fund management businesses. Improved performance was also credited to an improvement in the profit contribution of associate companies which increased by 49%.

At an investor briefing to announce the financial results, Centum Chief Executive Officer Mr. James Mworia, noted that the Company’s net asset value per share has increased by 42 per cent from the previous year’s Kes 24.25 per share to Kes 34.47 per share “This translated to an overall gain in the net worth of the company by Ksh 6.8 Billion during the year,” he said.

He further added that the company had constantly delivered market beating returns over its five-year strategy. Over the five-year strategy period, the Company had outperformed the NSE 20 share index performance by 19%. The Company had also grown shareholder wealth by Ksh 19 Billion from 5.9 billion in 2009 to Kes 22.9 Billion in 2014, a growth of 288% over the period.

In keeping with the company’s five year strategy for the period 2009 to 2014, he said that the Board would not distribute any dividends.

In December 2013, Centum completed the acquisition of 73.35% of Genesis Kenya Investment Management, the second largest fund manager in Kenya with over Ksh 110 Billion of pension funds under its management. The acquisition enabled the Group to grow its total assets under management to Kshs 147Bn by the end of the financial year.

Mworia explained that the Group has gained from a shift in focus from being a passive investor to active portfolio manager. To support this change in focus, operational subsidiaries were established in 2013 to support the growth of Centum. These subsidiaries have generated positive returns to the Group. Amongst the subsidiaries established is Athena Properties, a real estate project management service company, which has the mandate of managing Centum’s real estate developments. Athena Properties offers a complete suite in large scale property development ranging from master planning, urban planning, project management, construction management, development management, urban management and project finance.

Centum Asset Managers, another operational subsidiary, has the mandate to manage Centum’s quoted investment and is a registered fund manager having obtained a fund management license from the Capital Markets Authority (“CMA”). Centum Asset Managers was also among the first to receive a REIT manager license from CMA and is now seeking to introduce a D-REIT and I-REIT that will go a long way in deepening the stock market offering. In addition, the company is in the tail-end of introducing an Africa-focused Collective Investment Scheme. Centum Asset Managers reported a profit of Ksh 134 million in its first year of operation.

Mworia went on to announce that “Centum’s flagship real estate project, Two Rivers, had received USD 70 Million (over Kes 6.0 Billion) for a 40 per cent equity stake in Two Rivers. The investment gives Two Rivers a Ksh 9.0 Billion pre-money valuation. In addition, we have secured USD 60 Million (over Kes 5.2 Billion) in 10-year long term debt funding from Co-operative Bank of Kenya as project financing for the Two Rivers Mall. We are there pleased to report that the Two Rivers project is now fully funded” he said.

The Two Rivers Mall is currently under construction and is expected to be open in October 2015. The mall will be largest retail mall in Sub Saharan Africa (excluding South Africa) and has approximately 670,000 sq.ft retail gross leasable area (GLA) and a further 230,000 sq.ft office GLA. Mworia went on the add that 50% of the mall had already been pre-let and a further 20% is in final negotiations. The mall’s anchor tenant will be Carrefour, the 4^th largest retail group in the world. The anchor tenant signed 110,000 sq.ft to establish a hyper market which will be largest of its kind in the region.

On its Pearl Marina project in Uganda, Mworia said that master plan approvals had been received by the local planning council and had also received a permit from NEMA. Phase 1 of the development is expected to commence in August 2014 and will commence with the development of residential villas.

Mworia went on to announce the Company’s strategy for the five year period covering 2015-19. In the new strategy dubbed “Centum 3.0”, the Company will shift its focus from being just a portfolio manager to becoming a developer of investment grade opportunities. He announced that the company would focus on eight key sectors; Real Estate, Energy, Financial Services, Information Communication Technology (ICT), Fast Moving Consumer Goods (FMCG), Healthcare and Education. The Company’s key targets for Centum 3.0 will be to generate in excess of 35 per cent annualized return over the period, grow Centum’s portfolio value from the current Ksh 29.3 Billion to Ksh 120 Billion and grow total assets under management from Ksh 147 Billon to Ksh 720 Billion, amongst other strategic targets.

Mworia noted that that the company intends to maintain its zero-dividend policy as the new strategy would rely mainly on internally generated funds. He was however confident that the company would continue to deliver returns above the market even in the new strategy.

Ends…/

For more information contact Fred Murimi, f.murimi@centum.co.ke

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Centum Investor Briefing FY2014- Press Release and  Centum Annual Results Presentation FY2014