47th Annual General Meeting
At Two Rivers, Limuru Road
AUGUST 29, 2014
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
General Information
Details
3
1.
Fire escape
2.
First Aid
3.
Washrooms
4.
Water points
5.
Help desk - Shareholder queries – CDSC and C&R
6.
Security
7.
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)
James Mworia
CEO
(Executive)
Dr. James McFie
Deputy Chairman
(Non-Executive)
Peter Kimurwa
(Non-Executive Director)
Laila Macharia
(Non-Executive Director)
(Real Estate Subsidiaries)
2
●
●
●
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
●
●
●
Has over 10 years investment management experience
Has led and closed multiple transactions across Sub-Saharan Africa
Specialist in deal Sourcing and Structuring
●
●
●
Director, School of Accountancy of Strathmore University
Specialist in governance and financial management
Has extensive and experience spanning over 40 years
●
●
●
Executive Director of ICDC
Specialist in strategy and financial management
Has extensive and varied business experience spanning over 15 years
●
●
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
●
Board of Directors... Cont’d
3
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
AGM Program
1
Notice of the Meeting
2
Confirmation of minutes
3
Ordinary Business
4
Special Business
5
AOB
AGM Notice – Page 14 & 15 of Annual Report
8
1.
Confirmation of Quorum and Secretary to Read the Notice
2.
Confirmation of Minutes of the 46th Annual General Meeting held on Friday, 18 October
2013
3.
Ordinary
(i)
(ii)
(iii)
(iv)
4.
Special Business
Ratification of Subsidiaries and Related Companies
5.
Any Other Business
Business:
Report of Auditors, Directors and Approval of Financial Statements
Remuneration of Directors
Re-election of Directors
Appointment and Remuneration of Auditors
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 46th AGM
AGM Program
1
Notice of the Meeting
2
Confirmation of minutes
3
Ordinary Business
4
Special Business
5
AOB
3. Ordinary Business
i•
Report of the Directors & Auditors
ii•
Remuneration of Directors
• Election of Directors
iii
iv
• Appointment and remuneration of Auditors
12
3 (i) a. To receive the Chairman's report
Executive Summary
OUR 2009/14 STRATEGY – We delivered on the strategy
14
(i)
We delivered a return market beating returns across the strategic period
(ii)
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
(iii)
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
(iv)
Our understanding of a strong brand is one that consistently delivers to
promise through people
(v)
Maintained our portfolio costs at below 2.3% of assets under
management over the period well below the strategic ceiling of 2.5%.
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 – 1st Runners up Finance & Investments
c) Wharton Club of Africa – CEO of the Year
d) Acquisition International Awards – East Africa Investment Business of the
Year
15
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.
16
Executive Summary
WHAT NEXT FOR YEAR 2014/19?
(i)
Launch new strategic plan for 2014-2019
(ii)
Sector focus – FMCG, Financial Services, Real Estate, Energy, Health,
Education, Agriculture and ICT
(iii)
Our 2014/19 strategy:
17
a)
Deliver market beating annualized returns of over 35% per year
b)
Focus on the 8 sectors
c)
Scale up total assets to Kshs 120 Billion and total Assets Under
Management (AUMs) to Kshs 720 Billion
d)
Build Centum brand through delivering through people and develop
sector expertise
e)
Maintain costs below 2.0%
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
18
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
•
19
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)
Job Muriuki,
Principal (CFA)
 Over 10 years operational experience,
4yrs CEO experience (Kewberg)
 Specialization: Turnarounds, post
acquisition change management, strategic
planning & business expansion
 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
Graeme Reid – Managing Director
22

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
Pius Muchiri, Managing Director (MBA)
•
•
23
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
Charles Ogalo – Chief Executive Officer
•
•
•
24
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
Risper Mukoto,
Director Finance & Operations (FCCA, CPA)
25
Fred Murimi, Director Corporate Affairs& Company
Secretary (CPA, CPS)
• Responsible for the overall delivery of Centum Business
Solutions (CBS), which provides non investment related
business solutions to the Group.
• He has over 10 years experience in Legal and Compliance
management in the capital markets industry
• She is a member of Institute of Certified Public
Accountants (ICPAK) and a Fellow of the Association of
Certified Chartered Accountants (FCCA).
• Previously worked for Renaissance Capital and Tatu City as
Vice President – Legal & Compliance as well as with the CMA
as a Senior Compliance Officer.
• 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).
• Holds a Bachelor of Laws degree from University of Nairobi
and an MBA from United States International University Africa (USIU).
Strategy: we delivered to promise
2009-2014 Strategic themes
1
PERFORMANCE
Constantly deliver market
beating returns
 KES 1,000 invested on 1st Apr 09’ was worth KES
4,340 as at 1st Apr 14’ and KES 5,664 as at 28th
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%
Diversify by geography and
asset class
 19% of the portfolio is outside Kenya
 49% in Private Equity, 17% in Quoted Private
Equity and 34% in Real Estate
2
DIVERSIFICATION
3
GROWTH
4
BRAND
5
COSTS
2014 Position
Grow AUM to KES 30Billion
by 2014
Deliver through people
Maintain costs below 2.5% of
AUM
 Total Assets under Management at KES 147.2Bn
 Centum Portfolio value at KES 29Billion
• 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
WHAT DID WE DO IN YEAR 2013/14?
PERFORMANCE
27
(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
WHAT DID WE DO IN YEAR 2013/14?
COMPANY FUNDING
28
(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)
WHAT DID WE DO IN YEAR 2013/14?
BRAND-GROW OUR PEOPLE
(i)
29
GT 2014:
a.
Out of 3,000 applicants we recruited 22 Management Trainees in 2014 up from 10
in 2013
b.
Increased exposure for the trainees with a 6 months secondment to South Africa
WHAT DID WE DO IN YEAR 2013/14?
BRAND-GROW OUR PEOPLE
(i)
30
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
Value proposition
No. of staff
Athena Properties
REI-Centum’s Development and Project
managers in charge of delivering Two
Rivers and Pearl Marina
27
Centum Asset
Managers
QPE-Centum’s asset management business
13
Centum Capital
PE-Centum’s private equity managers and
in-charge of business incubation
14
King Beverage
FMCG in charge of bringing to market an
international premium beverage
Centum Business
Solutions
Business Support-Supports the group on
shared services in HR, Legal, Risk,
Finance, Tax and Administration
28
WHAT DID WE DO IN YEAR 2013/14?
Private Equity
31
(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)
Investment activity:
a)
Increased our shareholding in Almasi
b)
Ventured into new sectors- Power, FMCG, Agribusiness
WHAT DID WE DO IN YEAR 2013/14?
Quoted Private Equity
32
(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
(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
33
WHAT DID WE DO IN YEAR 2013/14?
Real Estate & Infrastructure
34
(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´s leading
multi-disciplinary property services company on commercial, retail, industrial and
investment property.
Strategy 2014/19 Objectives
•
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
1
PERFORMANCE
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
35
Strategy 2014/19 Objectives-How shall we
achieve this?
Focus on 8 sectors, where we shall build capacity and develop investment grade
opportunities
#
Sector
Progress to Date
1
Real Estate
 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
2
Financial
Services
 Signed SPA agreement to acquire 63% of K-REP Bank
 Significant organic growth opportunities within our financial services portfolio
companies
3
Agriculture
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.
4
Energy
 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
36
Strategy 2014/19 Objectives-How shall we
achieve this?
Focus on 8 sectors, where we shall build capacity and develop investment grade
opportunities
#
Sector
5
Education
6
Healthcare
7
FMCG
 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
8
ICT
Actively engaged with prospective partners
37
Progress to Date
We are in discussions with the prospective partners to launch an offering in education
and healthcare
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
38
3 (i) (c). Report of the Auditors and to adopt and approve
the accounts for the year ended 31 March 2014
Group Statement of Comprehensive income – Pg 92
23% increase in PBT, 22% increase in PAT
FY2014
FY2013
Var
Dividend income
460
301
53%
Interest income
218
223
(2%)
Other income
279
89
213%
Realized gains
993
1,641
(39%)
Unrealized gains
2,932
1,653
77%
Income
4,883
3,906
25%
Portfolio costs
(796)
(520)
53%
Finance costs
(469)
(401)
17%
393
263
49%
4,011
3,248
23%
(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%
Kes. m
Share of Ass. Profit
Profit before tax
Tax
40
• 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.)
FY2014
FY2013
10,845
5,456
Equipment & Intangibles
1,049
49
Investment in associates
3,901
3,659
Unquoted investments
7,569
Quoted investments
FY2014
FY2013
Borrowings
5,492
4,150
Payables and accruals
1,840
289
Unclaimed dividends
29
33
4,306
Current income tax
210
18
3,036
2,733
Deferred tax liability
1,752
829
Corporate bonds
1,071
995
Liabilities
9,324
5,319
Receivables
1,282
261
844
1,502
20,273
13,643
29,597
18,962
29,597
18,962
Investment property
Cash & cash equivalents
41
Liabilities (Kes M.)
Shareholder funds
Cash flow Statement – Pg 100
Kes M
2014
2013
3,550
2,167
(4,776)
(3,753)
(18)
(27)
(4,794)
(3,780)
-
3,150
(3)
(2)
(42)
-
(660)
(344)
(705)
2,804
(1,949)
1,191
Opening cash
1,502
322
Closing cash & cash equivalents (Net of Overdraft)
(447)
1,502
Internally generated funds:
Investing activities:
Equity & Investment Property
Equipment & intangibles
Financing Activities:
Net Proceeds from borrowings
Unclaimed dividends paid in the year
Dividends paid to non-controlling interest
Interest paid
Net Increase/(Decrease)
*Dividend paid relates to unclaimed dividends paid in the year and dividends paid to non-controlling interest in subsidiaries
42
Q and A
3. Ordinary Business
44
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
Remuneration
To To approve the remuneration of the directors for the year 2014/15
Refer to Note 32 (iii) on Page 148
45
3. Ordinary Business
46
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
Election of directors
47
(a)
To re-elect Mr. Henry Njoroge a director retiring by rotation, who
being eligible, offers himself for re-election.
b)
To re-elect Mr. Imtiaz Khan a director retiring by rotation, who being
eligible, offers himself for re-election.
c)
To elect Dr. James B. McFie a director appointed to fill a casual
vacancy, who being eligible, offers himself for election.
Election of directors
RESUME OF DR. JAMES McFIE
Current
designation
Director, School of Accountancy – Strathmore University
Track record
• 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.
48
3. Ordinary Business
49
i•
Report of the Auditors & Directors
ii•
Remuneration of Directors
iii•
Election of Directors
iv•
Appointment and remuneration of Auditors
Appointment and remuneration of Auditors
To re-appoint PricewaterhouseCoopers as the Company’s external
auditors, and to authorize the directors to fix their remuneration
50
4. Special Business
4. (i) Ratification of Incorporation of Subsidiaries and Related Companies
Agenda 4
(i)
51
Purpose
(a)
THAT the incorporation of Two Rivers Property Owners Company Limited
(incorporated in Kenya) as a wholly-owned subsidiary of the Company be ratified.
(b)
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.
(c)
THAT the incorporation of King Beverages Limited (incorporated in Kenya) as a whollyowned subsidiary of the Company be ratified.
(d)
THAT the incorporation of Bakki Holdco Limited (incorporated in Kenya) as a whollyowned subsidiary of the Company be ratified.
(e)
THAT the incorporation of Shefa Holdings Limited (incorporated in Mauritius) be
ratified.
(f)
THAT the acquisition of 73.35% shareholding in Genesis Investment Management
Kenya Limited be ratified.
(g)
THAT the acquisition of 30% shareholding in Broll Kenya Limited be ratified.
AGM Program
1
Notice of the Meeting
2
Confirmation of minutes
3
Ordinary Business
4
Special Business
5
AOB
AOB
i. Polling
ii. Prayers
iii. Lunch
53