Transcript 3 (i) - Centum
47
th
Annual General Meeting At Two Rivers, Limuru Road
AUGUST 29, 2014
AGM Program
Welcome , Prayer & General Information Introduction of Directors
1 2
Notice of the Meeting Confirmation of minutes
3
Ordinary Business
4
Special Business
5
AOB
3
General Information Details
1.
Fire escape 2.
3.
4.
5.
6.
7.
First Aid Washrooms Water points Help desk - Shareholder queries – CDSC and C&R Security Lunch
AGM Program
Welcome , Prayer & General Information Introduction of Directors
1
Notice of the Meeting
2
Confirmation of minutes
3
Ordinary Business
4
Special Business
5
AOB
Board of Directors
James Muguiyi
Chairman (Non-Executive) ● ● ● Managing Director of UAP Holdings Has over 40 years business experience in senior management positions Has vast industry and board experience encompassing Financial Services, Bottling and Real Estate Sector
James Mworia
CEO (Executive) ● ● ● Has over 10 years investment management experience Has led and closed multiple transactions across Sub-Saharan Africa Specialist in deal Sourcing and Structuring
Dr. James McFie
Deputy Chairman (Non-Executive) ● ● ● Director, School of Accountancy of Strathmore University Specialist in governance and financial management Has extensive and experience spanning over 40 years
Peter Kimurwa
(Non-Executive Director) ● ● ● Executive Director of ICDC Specialist in strategy and financial management Has extensive and varied business experience spanning over 15 years
Laila Macharia
(Non-Executive Director) (Real Estate Subsidiaries) ● ● ● Founder and Principal of Scion Real Estate Has over 15 years experience in corporate law and finance, property development and investment and training Specialist in property, urban development, telecommunications, transport and financial services 2
Board of Directors... Cont’d
Margaret Byama
(Non-Executive Director) ● ● ● Chief Finance Officer in the Ministry of Trade Has over 20 years experience in Public Service Specialist in Public Finance management
Imtiaz Khan
(Non-Executive Director) ● ● ● Founder and Director of Cassia Capital Has over 15 years business experience in Financial Services Specialist in Corporate Finance, Private Equity and Real Estate
Henry Njoroge
(Non-Executive Director) ● ● ● Chief Executive Officer of Xtranet Communication Has over 20 years business experience Entrepreneur and specialist in the ICT industry
Christopher Kirubi
(Non-Executive Director) ● ● ● Renown Industrialist Has over 40 years business experience Has vast industry and board experience in Financial Services, Industrials, Media and Real Estate 3
AGM Program
1
Notice of the Meeting
2
Confirmation of minutes
3
Ordinary Business
4
Special Business
5
AOB
8
AGM Notice – Page 14 & 15 of Annual Report
1.
Confirmation of Quorum and Secretary to Read the Notice 2.
Confirmation of Minutes of the 46 th 2013 Annual General Meeting held on Friday, 18 October 3.
Ordinary Business: (i) Report of Auditors, Directors and Approval of Financial Statements (ii) (iii) (iv) Remuneration of Directors Re-election of Directors Appointment and Remuneration of Auditors 4.
Special Business Ratification of Subsidiaries and Related Companies 5.
Any Other Business
AGM Program
1
Notice of the Meeting
2
Confirmation of minutes
3
Ordinary Business
4
Special Business
5
AOB
2. To confirm minutes of the 46
th
AGM
AGM Program
1
Notice of the Meeting
2
Confirmation of minutes
3
Ordinary Business
4
Special Business
5
AOB
12
3. Ordinary Business
i
• Report of the Directors & Auditors
ii
• Remuneration of Directors Election of Directors Appointment and remuneration of Auditors
3 (i) a. To receive the Chairman's report
14
Executive Summary
OUR 2009/14 STRATEGY – We delivered on the strategy (i) (ii) (iii) (iv) (v) We delivered a return market beating returns across the strategic period We grew the value of Centum’s portfolio by Kshs 23.4 Billion from Kshs 5.9 Billion to 29.3 Billion and third party funds by Kshs 117 Billion from Kshs 6 Billion in 2009 We have progressively increased our exposure outside of Kenya from less than 1% to 19% at the close of the strategy period. The 19% represents assets of Kshs 5.3 Billion Our understanding of a strong brand is one that consistently delivers to promise through people Maintained our portfolio costs at below 2.3% of assets under management over the period well below the strategic ceiling of 2.5%.
15
Executive Summary
WHAT HAVE WE ACHIEVED IN 2013/2014?
Operating Environment a) 2013 General Election b) Stable operating environment and investor confidence Awards Won a) Financial Reporting Excellence (FiRe) Awards 2013 – Overall winner b) Champions of Corporate Governance – 1 st Runners up Finance & Investments c) Wharton Club of Africa – CEO of the Year d) Acquisition International Awards – East Africa Investment Business of the Year
16
Executive Summary
WHAT HAVE WE ACHIEVED IN 2013/2014?
Service Subsidiaries a) Athena Properties Limited b) Nabo Capital (formerly Centum Asset Managers) c) Centum Business Solutions (formerly Centum Shared Services Limited) d) Genesis Kenya Investment Management Ltd – Acquired in the year.
17
Executive Summary
WHAT NEXT FOR YEAR 2014/19?
(i) (ii) (iii) a) b) c) d) e) Launch new strategic plan for 2014-2019 Sector focus – FMCG, Financial Services, Real Estate, Energy, Health, Education, Agriculture and ICT Our 2014/19 strategy: Deliver market beating annualized returns of over 35% per year Focus on the 8 sectors Scale up total assets to Kshs 120 Billion and total Assets Under Management (AUMs) to Kshs 720 Billion Build Centum brand through delivering through people and develop sector expertise Maintain costs below 2.0%
18
Board Changes
(i) Appointment of Dr. James McFie • Director, School of Accountancy of Strathmore University • • Specialist in governance and financial management Has extensive and experience spanning over 40 years (ii) Resignation of Robert Bunyi • Remains a director in Centum subsidiaries
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Appreciation
• On behalf of the Board, we would like to record our sincere appreciation to: − Shareholders for continued support; − Board and Management teams of our investee companies for without whom we
not have achieved the good performance; and
− Fellow Board Members and The Management team for their contribution
towards execution of the strategy and urge all to redouble their efforts
• We look forward to even greater successes in the coming year
3 (i) b. To receive the CEO's report
Private Equity Executive Team
21
James Kaguchia, Ag. Director Private Equity (CPA)
Over 10 years operational experience, 4yrs CEO experience (Kewberg) Specialization: Turnarounds, post acquisition change management, strategic planning & business expansion
Job Muriuki, Principal (CFA)
Over 5 years international investment experience Deals: Acquisition of Platcorp Holdings, Bottler consolidation, Longhorn exit Board Directorships: Rift valley Bottlers, AON, Longhorn, Platinum
Athena Properties Executive Team
22
Graeme Reid – Managing Director
A Lawyer by profession with over 20 years experience in project management delivery of commercial mixed use developments.
He was the first Chief Executive Officer of the Johannesburg Development Agency He was the Executive Director of the consultancy Urban Places Africa providing services to the public and private sectors on a range of large scale, mixed use and mixed income developments
Chris Ochieng – Deputy Managing Director
Over 10 years experience in delivery of mixed use developments comprising of Infrastructure, Residential, Sports, Retail, Commercial and Hospitality developments from inception through to completion in the Middle East and Africa. He is a specialist in project development planning. He holds a BSC. in Civil Engineering from Egerton University, He is a Certified Project Management Professional (PMP).
Nabo Capital Executive Team
23
Pius Muchiri, Managing Director (MBA)
• • Over 10 years combined experience in investment and accounting Experience in Sub-Saharan Africa Equities and Fixed Income markets
Teresia Muthoni, Investment Products Manager (MBA)
• • Over 5 years experience in risk management with an emphasis on portfolio & operational risk Holds a BSC Actuarial Science and is a member of Professional Risk Managers
Genesis Kenya Executive
24
Charles Ogalo – Chief Executive Officer
• • • Over 32 years combined experience in investment and banking He served in key senior positions at Kenya Commercial Bank (KCB) with his last posting as Chief Manager, Correspondent Banking and International Trade Finance. Holds a Bachelor of Economics degree
Centum Business Solutions Executive Team
25
Risper Mukoto, Director Finance & Operations (FCCA, CPA)
• Responsible for the overall delivery of Centum Business Solutions (CBS), which provides non investment related business solutions to the Group.
• She is a member of Institute of Certified Public Accountants (ICPAK) and a Fellow of the Association of Certified Chartered Accountants (FCCA).
• She holds a Bachelor of Arts Degree in Business Management from Moi University and an MBA from the United States International University-Africa (USIU-A).
Fred Murimi, Director Corporate Affairs& Company Secretary (CPA, CPS)
• He has over 10 years experience in Legal and Compliance management in the capital markets industry • Previously worked for Renaissance Capital and Tatu City as Vice President – Legal & Compliance as well as with the CMA as a Senior Compliance Officer.
• Holds a Bachelor of Laws degree from University of Nairobi and an MBA from United States International University Africa (USIU).
26 5 4 3
Strategy: we delivered to promise
1 PERFORMANCE 2 DIVERSIFICATION
2009-2014 Strategic themes
Constantly deliver market beating returns Diversify by geography and asset class
2014 Position
KES 1,000 invested on 1 st 4,340 as at 1 st Apr 09’ was worth KES Apr 14’ and KES 5,664 as at 28 th Aug 14 Grown market capitalization by KES 18.7 Billion representing 334% growth over the period.
Total NAV Return of 291% against NSE 20 Return of 75% 19% of the portfolio is outside Kenya 49% in Private Equity, 17% in Quoted Private Equity and 34% in Real Estate GROWTH Grow AUM to KES 30Billion by 2014 Total Assets under Management at KES 147.2Bn
Centum Portfolio value at KES 29Billion BRAND COSTS Deliver through people Maintain costs below 2.5% of AUM • • Centum has consistently delivered to promise through a highly qualified team. Centum has continued to attract and retain top talent within the organization. Costs closed at 1.5% in 2014. Costs maintained below 2.3% of AUM over the period
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WHAT DID WE DO IN YEAR 2013/14?
PERFORMANCE
(i) In the year: Grew the book value of Shareholder wealth by KES.6.8 Billion, a NAV growth of 42% (ii) Over the Strategy period: Grew the book value of shareholder wealth by KES 17Billion, a 291% growth (iii) Cumulatively outperformed the NSE 20 share index by 216% over the 5yrs (iv) The share price increased by 83% from KES 19.90 to KES 36.50; a growth in market capitalization of KES 12 Billion to KES 24.3 Billion
28
WHAT DID WE DO IN YEAR 2013/14?
COMPANY FUNDING
(i) Increased our group overdraft facility with Co-operative Bank from Kes. 1 Billion to KES 2 Billion in addition to KES 5.25 Billion Project Financing for the Two Rivers Mall (ii) Improvement in the Company’s Credit Rating from A1-(short term) A-(long term) to A1(short term) A(long term)
29
WHAT DID WE DO IN YEAR 2013/14?
BRAND-GROW OUR PEOPLE
(i) GT 2014: a.
b.
Out of 3,000 applicants we recruited 22 Management Trainees in 2014 up from 10 in 2013 Increased exposure for the trainees with a 6 months secondment to South Africa
30
WHAT DID WE DO IN YEAR 2013/14?
BRAND-GROW OUR PEOPLE
(i) A shift in how we do business from cost to profit centres with ALL Heads of Departments in-charge of delivery of profit from respective businesses
Business
Athena Properties Centum Asset Managers Centum Capital King Beverage Centum Business Solutions
Value proposition
REI-Centum’s Development and Project managers in charge of delivering Two Rivers and Pearl Marina QPE-Centum’s asset management business
No. of staff
27 13 PE-Centum’s private equity managers and in-charge of business incubation FMCG in charge of bringing to market an international premium beverage Business Support-Supports the group on shared services in HR, Legal, Risk, Finance, Tax and Administration 14 28
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WHAT DID WE DO IN YEAR 2013/14?
Private Equity (i) PE portfolio had a gross return of 45% amounting to KES.3.9 Billion (ii) Value increased from Kes.4 Billion (2009) to Kes.14.1 Billion (2014) (iii) a) b) Investment activity: Increased our shareholding in Almasi Ventured into new sectors- Power, FMCG, Agribusiness
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WHAT DID WE DO IN YEAR 2013/14?
Quoted Private Equity
(i) QPE portfolio had a gross return of 35% amounting to Kes.1,753 Million (ii) Begun operations as a licensed Fund Manager also registered as a REIT Manager, and Pension fund manager (iii) Acquisition of 73.35% in Genesis Kenya Investment Management which is the second largest Pension Fund Manager in Kenya with over KES 100 Billion in assets under management
WHAT DID WE DO IN YEAR 2013/14?
Real Estate & Infrastructure
(i) RE&I portfolio had a gross return of 84% amounting to Kes.2,062 million (ii) Portfolio valued at KES 10.3 Billion 33 (iii) Two Rivers Update a) Secured KES 6.6 Billion investment for 42.8% equity in Two Rivers b) Secured KES 5.25 Billion in debt financing from Co-operative Bank for the mall c) Construction of Infrastructure for Phase 1 on schedule for commissioning in June 2015 d) Construction of Retail Mall on schedule for opening in October 2015 e) Carrefour – Two Rivers Mall’s anchor tenant
34
WHAT DID WE DO IN YEAR 2013/14?
Real Estate & Infrastructure (i)
Pearl Marina - Acquired additional land to bring the total land to 361 acres and commencement of construction of Phase 1 Residential Villas to commence.
(ii) Investment in Broll East Africa in partnership with Broll who are South Africa investment property.
´ s leading multi-disciplinary property services company on commercial, retail, industrial and
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Strategy 2014/19 Objectives
1 PERFORMANCE • • Generate 35% annualized return on book value per share The projected NAV per share to grow from KES 34.47 to KES 155 by March 31, 2019 2 GROWTH • • To grow Total Assets of the company from KES 29 Billion to KES 120 Billion by 2019 To grow Total Asset under Management from KES 147 Billion to KES 720 Billion by 2019
36
Strategy 2014/19 Objectives-How shall we achieve this?
Focus on 8 sectors, where we shall build capacity and develop investment grade opportunities
#
1
Sector
Real Estate 2 3 4 Financial Services Agriculture Energy
Progress to Date
Continued development of Two Rivers and inviting partners in Commercial, Residential and Hospitality to site Seeking additional sites to roll out large mixed use developments across the region Signed SPA agreement to acquire 63% of K-REP Bank Significant organic growth opportunities within our financial services portfolio companies Actively seeking to acquire sizable agricultural land 10,000 acres+ to be the foundation of our agriculture business where we shall be integrated across the value chain from inputs to production, processing and finally distribution.
A 37.5% investor in Akiira 1 project involved in the development of 140Mw Geothermal power plant in Longonot Advanced stage of developing other power projects
37
Strategy 2014/19 Objectives-How shall we achieve this?
Focus on 8 sectors, where we shall build capacity and develop investment grade opportunities
#
5 6 7
Sector
Education Healthcare FMCG 8 ICT
Progress to Date
We are in discussions with the prospective partners to launch an offering in education and healthcare Have an active presence with Almasi & KWAL King Beverage-Have established a premium beverage distributing business and shall be seeking to the processing plant by April 2015 Actively engaged with prospective partners
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Appreciation
• We are grateful for your continued support and believe that you will continue to support your Company, Board and the Management team as you have done in the past
3 (i) (c). Report of the Auditors and to adopt and approve the accounts for the year ended 31 March 2014
40
Group Statement of Comprehensive income – Pg 92
23% increase in PBT, 22% increase in PAT
Kes. m FY2014 FY2013 Var
Dividend income 460 301 53% Interest income 218 223 (2%) Other income 279 89 213% Realized gains Unrealized gains 993 2,932 1,641 1,653 (39%) 77%
Income 4,883 3,906 25%
Portfolio costs (796) (520) 53% Finance costs (469) (401) 17% Share of Ass. Profit
Profit before tax
393
4,011
263
3,248
49%
23%
Tax (956) (739) 29% Profit after tax
3,055 2,509 22%
Other comp income 3,576 1,092 227%
Total comp income 6,631 3,601 84%
• • • • 25% improvement in income due to improved Portfolio performance Increase in portfolio costs on account of growth strategy.
Improvement in performance of Associate companies Improvement in performance & valuations of the investment portfolio
Group Statement of Financial Position – Pg 94
56% growth in total assets as at 31 March 2014
Assets (Kes M.)
Investment property Equipment & Intangibles Investment in associates Unquoted investments Quoted investments Corporate bonds Receivables Cash & cash equivalents
FY2014
10,845
FY2013
5,456 1,049 3,901 7,569 49 3,659 4,306 3,036 1,071 1,282 844
29,597
2,733 995 261 1,502
18,962 Liabilities (Kes M.)
Borrowings Payables and accruals Unclaimed dividends Current income tax Deferred tax liability
Liabilities Shareholder funds FY2014
5,492 1,840 29 210 1,752
9,324 FY2013
4,150 289 33 18 829
5,319 20,273 29,597 13,643 18,962
41
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Cash flow Statement – Pg 100
Kes M Internally generated funds: 2014 3,550 Investing activities:
Equity & Investment Property Equipment & intangibles (4,776) (18)
(4,794) Financing Activities:
Net Proceeds from borrowings Unclaimed dividends paid in the year Dividends paid to non-controlling interest Interest paid
Net Increase/(Decrease) Opening cash Closing cash & cash equivalents (Net of Overdraft)
(3) (42) (660)
(705) (1,949) 1,502 (447)
*Dividend paid relates to unclaimed dividends paid in the year and dividends paid to non-controlling interest in subsidiaries
2013 2,167
(3,753) (27)
(3,780)
3,150 (2) (344) -
2,804 1,191 322 1,502
Q and A
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3. Ordinary Business
i
• Report of the Directors & Auditors
ii
• Remuneration of Directors
iii
• Election of Directors
iv
• Election of Directors over the age of 70
v
• Appointment and remuneration of Auditors
45
Remuneration
To To approve the remuneration of the directors for the year 2014/15 Refer to Note 32 (iii) on Page 148
46
3. Ordinary Business
i
• Report of the Auditors & Directors
ii
• Remuneration of Directors
iii
• Election of Directors
iv
• Election of Directors over the age of 70
v
• Appointment and remuneration of Auditors
47
Election of directors
(a) To re-elect Mr. Henry Njoroge a director retiring by rotation, who being eligible, offers himself for re-election.
b) c) To re-elect Mr. Imtiaz Khan a director retiring by rotation, who being eligible, offers himself for re-election.
To elect Dr. James B. McFie a director appointed to fill a casual vacancy, who being eligible, offers himself for election.
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Election of directors
RESUME OF DR. JAMES McFIE
Current designation Track record Director, School of Accountancy – Strathmore University • • Dr. McFie has exemplary industry experience and has been a Training Manager, Ernst and Young and a member of Education and Training Committee, Institute of Certified Public Accountant of Kenya. He was also a member of the Board of Directors of the Kenya Capital Markets Authority and a Trustee in the Centre for Corporate Governance.
Dr. McFie has written published documents including, Business Combinations and the Equity Method of Accounting, Accounting for Leasehold Land in Kenya.
Experience • Dr. McFie has a PHD in Accounting, University of Strathclyde and M.A. (Mathematics), Oxford University. He is a Fellow of the Association of Chartered Certified Accountants (FCCA) and a Fellow of the Institute of Certified Public Accountants of Kenya.
49
3. Ordinary Business
i
• Report of the Auditors & Directors
ii
• Remuneration of Directors
iii
• Election of Directors
iv
• Appointment and remuneration of Auditors
50
Appointment and remuneration of Auditors
To re-appoint PricewaterhouseCoopers as the Company’s external auditors, and to authorize the directors to fix their remuneration
4. Special Business
4. (i) Ratification of Incorporation of Subsidiaries and Related Companies
Agenda 4 (i)
(a)
Purpose
THAT the incorporation of Two Rivers Property Owners Company Limited (incorporated in Kenya) as a wholly-owned subsidiary of the Company be ratified. (b) (c) (d) (e) (f) (g) THAT the incorporation of Two Rivers Lifestyle Centre Limited (incorporated in Kenya) as a branch of Two Rivers Lifestyle Centre Limited in Mauritius be ratified. THAT the incorporation of King Beverages Limited (incorporated in Kenya) as a wholly owned subsidiary of the Company be ratified. THAT the incorporation of Bakki Holdco Limited (incorporated in Kenya) as a wholly owned subsidiary of the Company be ratified. THAT the incorporation of Shefa Holdings Limited (incorporated in Mauritius) be ratified.
THAT the acquisition of 73.35% shareholding in Genesis Investment Management Kenya Limited be ratified.
THAT the acquisition of 30% shareholding in Broll Kenya Limited be ratified.
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AGM Program
1
Notice of the Meeting
2
Confirmation of minutes
3
Ordinary Business
4
Special Business
5
AOB
53