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Satchu's Rich Wrap-Up
 
 
Wednesday 12th of June 2019
 
Morning
Africa

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A pleasure speaking with @njonjo2012 Founder CEO @TwigaFoods @MetropolTVKE
Africa


a pleasure speaking with @njonjo2012 Founder CEO @TwigaFoods about
Journey from selling his house to Fund Start Up through capital
raising from likes of @OmidyarNetwork through @IFC @Creadev and others
and the Purpose which is to provide cheap food for Urban AFRICA
@MetropolTVKE

Macro Thoughts

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PEPE ESCOBAR: The Unipolar Moment is Over @Consortiumnews
Law & Politics


The Russia-China strategic partnership, consolidated last week in
Russia, has thrown U.S. elites into Supreme Paranoia mode, which is
holding the whole world hostage.
Something extraordinary began with a short walk in St. Petersburg last Friday.
After a stroll, they took a boat on the Neva River, visited the
legendary Aurora cruiser, and dropped in to examine the Renaissance
masterpieces at the Hermitage. Cool, calm, collected, all the while it
felt like they were mapping the ins and outs of a new, emerging,
multipolar world.
Chinese President Xi Jinping was the guest of honor of Russian
President Vladimir Putin. It was Xi’s eighth trip to Russia since
2013, when he announced the New Silk Roads, or Belt and Road
Initiative (BRI).
First they met in Moscow, signing multiple deals. The most important
is a bombshell: a commitment to develop bilateral trade and
cross-border payments using the ruble and the yuan, bypassing the U.S.
dollar.
Then Xi visited the St. Petersburg International Economic Forum
(SPIEF), Russia’s premier business gathering, absolutely essential for
anyone to understand the hyper-complex mechanisms inherent in the
construction of Eurasian integration. I addressed some of SPIEF’s
foremost discussions and round tables here.
In Moscow, Putin and Xi signed two joint statements – whose key
concepts, crucially, are “comprehensive partnership”, “strategic
interaction” and “global strategic stability.”
It was obvious this was slowly brewing for the past five to six years.
Now the deal is in the open. The Russia-China comprehensive strategic
partnership is thriving; not as an allied treaty, but as a consistent
road map towards Eurasia integration and the consolidation of the
multipolar world.
Unipolarism – via its demonization matrix – had first accelerated
Russia’s pivot to Asia. Now, the U.S.-driven trade war has facilitated
the consolidation of Russia as China’s top strategic partner.
Moscow better get ready to dodge and counteract reams of reports such
as the latest from the RAND corporation, which outlines – what else? –
Cold War 2.0 against Russia.
In 2014, Russia did not react to sanctions imposed by Washington.
Then, it would have sufficed to merely brandish the threat of default
on $700 billion in external debt. That would have killed the
sanctions.
Now, there’s ample debate inside Russian intelligence circles on what
to do in case Moscow faces the prospect of being cut off the
CHIPS-SWIFT financial clearing system.
The problem for the U.S. is the emergence of a formidable peer
competitor in Eurasia – and worse still, a strategic partnership. It
has thrown these elites into Supreme Paranoia mode, which is holding
the whole world hostage.
The Deep State will not flinch to unleash concentric havoc on the
periphery of both Russia and China and then try to advance to
destabilize the heartland from the inside. The Russia-China strategic
partnership has generated a sore wound: it hurts – so bad – to be a
Eurasia outsider.

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Law & Politics


Very worried for HK this time around. If Xi is giving the HK govt no
choice, which is likely, and HK people are legitimately furious,
there’s no middle ground. And given all the other ways Xi is under
siege, not backing down and making an example of HK is a very possible
outcome.

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Hong Kong 1 month hibor rises 28 bps biggest move since December 2018 at the highest level Since 31 October 2008.
Law & Politics


3-month Hibor rises 8.65 bps bps
Hong Kong Dollar strengthens to the strongest level since December

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Currency Markets at a Glance WSJ
World Currencies


Euro 1.1320
Dollar Index 96.756
Japan Yen 108.34
Swiss Franc 0.9926
Pound 1.2737
Aussie 0.6948
India Rupee 69.355
South Korea Won 1182.19
Brazil Real 3.8563
Egypt Pound 16.7320
South Africa Rand 14.76

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International Trade


Springer CEO has turned Germany’s biggest publisher into a digital
media comp. It now makes almost 3/4th of its sales from digital
businesses.
KKR & Co. is seeking to buy out minority shareholders of Axel Springer
SE in a deal that would value the German publisher at about 6.8
billion euros ($7.7 billion).
KKR offered to pay 63 euros a share in cash -- a 13% premium over
Tuesday’s close and about 40% more than the price before Bloomberg
reported the talks last month.
The move is backed by largest shareholder Friede Springer and Chief
Executive Officer Mathias Doepfner. Axel Springer shares rose as much
as 13% to 63.30 euros in early trading in Frankfurt.
The private-equity firm’s involvement would hand Doepfner additional
financial resources to help the tradition-rich publisher of the Bild
mass-circulation daily with the costly and challenging process of
transforming into a digital media group, making it easier to acquire
struggling rivals.
Axel Springer lowered its sales and profit forecast for the year on
Wednesday, citing slower growth in classifieds.
“Our growth plans will require significant investment in people,
products, technology and brands over the next years,” Doepfner said in
a statement. “KKR is a long-term focused partner who respects and
supports our commitment to independent journalism.”
Both Springer -- the widow of the company’s founder -- and CEO
Doepfner plan to keep their holdings that together amount to more than
45% of the company.
A buyout of minority investors would see Axel Springer join
Bertelsmann, the German publisher that owns Penguin Random House, in
being shielded from the scrutiny of public markets.
More companies are being taken private thanks in large part to buyout
firms’ swelling cash reserves.
The private equity industry, including real estate, debt and venture
funds, is sitting on about $1.4 trillion in unspent cash, according to
data compiled by Bloomberg, as institutional investors pour client
money into the funds seeking returns.
Last year, the number of public-to-private deals hit its highest in
more than a decade, according to Bain & Co.’s annual private equity
report.
In Germany, however, private-equity buyouts are not always successful.
Shareholders of classifieds company Scout24 AG last month rejected a
4.9 billion-euro bid from private equity firms Blackstone Group LP and
Hellman & Friedman.
Axel Springer’s shareholders should accept the “good” offer, bearing
in mind the profit warnings for this year and next, said Sarah Simon,
an analyst at Berenberg.
With EBay Inc.’s assets potentially coming up for sale, “KKR probably
wants to use Springer as a platform for further consolidation in the
European classifieds market,” Simon said by email.
In Germany, Springer remains best known for Bild, Europe’s
biggest-selling daily thanks to its political scoops, witty headlines,
and paparazzi shots of celebrities.
While the publication’s print sales have dropped in the past decade,
Doepfner has made up some of that lost revenue with fees paid by more
than 500,000 web subscribers.
Doepfner has spent almost two decades turning the publisher into a
digital media company, shedding printing, newspaper and magazine
operations to push into online news with products such as Business
Insider and classifieds sites including job portal Stepstone.
It now makes almost three quarters of its sales from digital businesses.
The sector has been looking shakier in recent years, with several news
sites closing or cutting jobs as their owners try to staunch years of
losses.
Older news titles are fighting back with an increasingly successful
subscription-based business model, and Alphabet Inc.’s Google and
Facebook Inc. are looking to muscle in on the profitable classifieds
business.
Springer warned in March it expects operating earnings to decline in
2019 after several quarters of profitable growth.
KKR’s voluntary offer to shareholders is subject to a minimum
acceptance threshold of 20% and further conditions including foreign
investment and merger control clearances.
Axel Springer now expects sales and adjusted Ebitda to drop this year,
from at the prior year’s level. “For 2020, the continuation of the
growth strategy will lead to an adjusted Ebitda significantly below
than in 2019,” the company said.

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Crude #oil's fragile state on display again today with #WTI losing 2.8% on route to key support. @Ole_S_Hansen 52.08
Commodities


Driven by news about another counter seasonal rise in US stocks (API)
and the #EIA cutting demand growth in their latest STEO.

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Ghana and Cote d'Ivoire suspend cocoa beans sales
Commodities


It is part of efforts by the two countries, which supply more than 65
per cent of global cocoa figures, to get stakeholders in the value
chain to give farmers a fair price that reflects their contribution to
the sustenance of the cocoa industry.
Ghana, Cote d'Ivoire propose US$2,600 as maiden floor price for cocoa beans
Graphic Online understands that the gesture, which is the first of its
kind by the world's top two cocoa growers, is meant to put pressure on
stakeholders to adopt a floor price for the soft crop.
Under the arrangement for a floor price, the two countries have agreed
that none of them will sell their produce in the international market
below the agreed minimum price.

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The world's two biggest cocoa producers halted sales for the harvest that will begin in October 2020, pending an agreement with buyers on a minimum price.
Commodities


Ivory Coast and Ghana want to set the floor price at $2,600 per ton,
Joe Forson, managing director of Ghana Cocoa Board’s marketing unit,
told buyers Tuesday in the Ghanaian capital, Accra. Should the market
price fall below this level, the two regulators will implement a
so-called “living-income differential” to make up the difference, said
Forson.

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FDI flows into emerging markets fall to lowest levels since 1990s @FT
Emerging Markets


Foreign direct investment in emerging markets has plunged to its
lowest level this century as mounting trade tensions build on
weakening economic growth in the developing world. FDI, which involves
buying companies and building new facilities, fell to just 2 per cent
of gross domestic product across emerging and frontier markets last
year, according to the Institute of International Finance, which
tracks cross-border capital flows. This compares with a peak of 4.4
per cent in 2007, immediately prior to the global financial crisis, as
the first chart shows.
“FDI fell particularly strongly last year as trade policy uncertainty
escalated, but also as part of a broader retrenchment of all types of
capital flows in the context of the spike of risk aversion, especially
in the fourth quarter,” said Guillermo Tolosa, economic adviser at
Oxford Economics, a consultancy.
Mr Tolosa argued there was a strong correlation between FDI inflows
into emerging markets and the degree to which EM economic growth
outstrips that of the developed world, a differential that has tumbled
from 6.1 percentage points in 2009 to just 2.3 points last year, shown
in the third chart.
“FDI to emerging markets in terms of EM GDP has been falling since
2008, in line with the systematic fall of the growth differential of
EM and advanced markets,” Mr Tolosa said. “As EMs have become
relatively less dynamic, it makes sense they receive less investment.”
In addition, he argued that the opportunities from fiscal or labour
arbitrage have declined, while investment has also become more
“asset-lite”, meaning fewer dollars are needed for a given impact.

Frontier Markets

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Ethiopia forecasts 9% growth, plans higher spending in 2019/2020 @ReutersAfrica
Africa


Ethiopia’s economy is projected to grow by 9% in 2019/2020, finance
minister Ahmed Shide told lawmakers on Tuesday as he presented plans
to raise spending.
Ahmed proposed 386.9 billion birr ($13.48 billion) in government
spending for 2019/2020, which if approved will be 12% higher than
2018/19’s 346.9 billion birr figure.
Lawmakers from the ruling coalition, who dominate parliament, are
expected to approve the plans over the next few weeks.
The International Monetary Fund projected the country’s growth for
2019 at 7.7% in April.

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@KremlinRussia_E ally Yevgeny Prigozhin leading push to turn continent into strategic hub, documents show @guardiannews
Africa


Russia is seeking to bolster its presence in at least 13 countries
across Africa by building relations with existing rulers, striking
military deals, and grooming a new generation of “leaders” and
undercover “agents”, leaked documents reveal.
The mission to increase Russian influence on the continent is being
led by Yevgeny Prigozhin, a businessman based in St Petersburg who is
a close ally of the Russian president, Vladimir Putin.
One aim is to “strong-arm” the US and the former colonial powers the
UK and France out of the region. Another is to see off “pro-western”
uprisings, the documents say.
In 2018 the US special counsel Robert Mueller indicted Prigozhin, who
is known as “Putin’s chef” because of his Kremlin catering contracts.
According to Mueller, his troll factory ran an extensive social media
campaign in 2016 to help elect Donald Trump.
The Wagner group – a private military contractor linked to Prigozhin –
has supplied mercenaries to fight in Ukraine and Syria.
The documents show the scale of Prigozhin-linked recent operations in
Africa, and Moscow’s ambition to turn the region into a strategic hub.
Multiple firms linked to the oligarch, including Wagner, are known by
employees as the “Company”. Its activities are coordinated with senior
officials inside Russia’s foreign and defence ministries, the
documents suggest.
Putin showed little interest in Africa in the 2000s. But western
sanctions imposed in 2014 over the annexation of Crimea have driven
Moscow to seek new geopolitical friends and business opportunities.
Russia has a military presence and peacekeeping mission in Central
African Republic. CAR is described as “strategically important” and a
“buffer zone between the Muslim north and Christian south”.
It allows Moscow to expand “across the continent”, and Russian
companies to strike lucrative mineral deals, the documents say.
On 24 May the Kremlin announced it was dispatching a team of army
specialists to the neighbouring Democratic Republic of the Congo.
According to Dmitry Peskov, Putin’s press spokesman, they will service
Russian-made military equipment. So far Moscow has signed military
cooperation deals with about 20 African states.
Five days later the Kremlin said it would host the first ever
Russia-Africa summit in October in the Black Sea resort of Sochi.
Putin and Egypt’s president, Abdel Fatah al-Sisi, will chair the
event.
About 50 African leaders are due to attend. The aim is to foster
political, economic and cultural cooperation.
The leaked documents were obtained by the Dossier Center, an
investigative unit based in London. The centre is funded by Mikhail
Khodorkovsky, the Russian businessman and exiled Kremlin critic.
Prigozhin has been approached for comment. He has previously denied
any links to the troll factory and has said of Wagner that it does not
exist. Putin has previously said that entities linked to Prigozhin do
not constitute the Russian state.
A map from December 2018 seen by the Guardian shows the level of
cooperation between the “Company” and African governments, country by
country.
Symbols indicate military, political and economic ties, police
training, media and humanitarian projects, and “rivalry with France”.
Five is the highest level; one is the lowest.
The closest relations are with CAR, Sudan and Madagascar – all put at
five. Libya, Zimbabwe and South Africa are listed as four, according
to the map, with South Sudan at three, and DRC, Chad and Zambia at
two.
Other documents cite Uganda, Equatorial Guinea and Mali as “countries
where we plan to work”. Libya and Ethiopia are flagged as nations
“where cooperation is possible”.
The Kremlin has recently stepped up its ground operation in Libya.
Last November the Libyan commander Khalifa Haftar travelled to Moscow
and met the defence minister, Sergei Shoigu. Prigozhin was spotted at
the talks. Egypt is described as “traditionally supportive”.
The graphic gives an overview of “Company” activities and
achievements. It claims credit in CAR for getting of rid of
politicians who are “orientated to France”, including national
assembly representatives and the foreign minister.
This appears to be Charles-Armel Doubane, sacked in December. It has
“strengthened” the army and set up newspapers and a radio station.
Russia is an “83% friend”, it says.
In Madagascar the new president, Andry Rajoelina, won election with
“the Company’s support”, the map says.
Russia “produced and distributed the island’s biggest newspaper, with
2 million copies a month”, it adds. Rajoelina denies receiving
assistance.
Another key territory is Sudan. Last year Russian specialists drew up
a programme of political and economic reform, designed to keep
President Omar al-Bashir in power.
It included a plan to smear anti-government protesters, apparently
copy-pasted from tactics used at home against the anti-Putin
opposition. (One memo mistakenly says “Russia” instead of “Sudan”.)
One ploy was to use fake news and videos to portray demonstrators in
Khartoum and other Sudanese cities as “anti-Islam”, “pro-Israel” and
“pro-LGBT”.
The government was told to increase the price of newsprint – to make
it harder for critics to get their message out – and to discover
“foreigners” at anti-government rallies.
In a leaked letter Prigozhin wrote to Bashir complaining that the
president had not actually followed through on the advice.
Prigozhin mentioned “lack of activity” by the Sudanese government and
its “extremely cautious position”.
The military deposed Bashir in April in a coup. Last week Sudan’s
Rapid Support Forces opened fire on pro-democracy protesters, killing
scores.
The Russian advisers had urged Sudan’s military council to suppress
the activists with “minimal but acceptable loss of life”, one former
regime source told CNN.
Meanwhile, Moscow is keen to exploit a long-running territorial
dispute in Comoros, the documents say. France directly controls one
out of four of the Indian Ocean islands, Mayotte.
In 2018 Prigozhin employees flew to Comoros via Belarus. Their
objective was to test if “political technologies” might be used to
inflame the row between Paris and the Comoros government.
Other suggestions in the documents include trans-African road and
rail-building schemes. A railway could be built linking Dakar in
Senegal with Port Sudan in Sudan, along the “old hajj [pilgrimage]
route”.
A separate 2,300-mile (3,700km) toll road was proposed connecting Port
Sudan with Douala in Cameroon. Neither has so far happened.
A plan to revive “pan-African consciousness” appears closely modelled
on the idea of Russkiy Mir, or Russian world.
The concept has become fashionable under Putin and signifies Russian
power and culture extended beyond current borders.
One working paper is titled “African world”. It calls for a developing
“African self-identity”.
It recommends collecting a database of Africans living in the US and
Europe, which might be used to groom “future leaders” and “agents of
influence”.
The eventual goal is a “loyal chain of representatives across African
territory”, the March 2018 paper says.
More immediate practical measures include setting up
Russian-controlled non-governmental organisations in African states
and organising local meetings.
It is unclear how many Prigozhin initiatives have actually gone
forward. There is evidence that media projects mentioned in the
documents are now up and running – albeit with marginal impact.
They include a website, Africa Daily Voice, with its HQ in Morocco,
and a French-language news service, Afrique Panorama, based in
Madagascar’s capital Antananarivo.
Russian operatives also offer thoughts on global politics. One policy
paper, titled “Russian influence in Africa”, says Moscow needs to find
“reliable partners among African states” and should establish military
bases.

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Direct quotes from @AssociationSd's Mohamed Yusif on the SPA's reasons for suspending the strike: @thomas_m_wilson
Africa


"People in the informal sector, those who are completely without any
income. They need to make some revenue generating activities..."
"At the same time we need to provide an opportunity for this mediation
to go smoothly without accusations from the military council that we
are trying to cause problems"
"There will be no direct talks at all. Any talks will be through a
mediator. Now we have the bitter experience, that always they [the
TMC] change their position. Also they change their grounds so it is
very difficult to handle them."
"Now they [the TMC] have a total monopoly on mass media, we have no
access to the media so in that context it is important for us to
ensure that there is always someone, a third party to witness what
they are saying so they cannot change it at any time"

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Nigeria Central Bank Quashes Talk of Exchange-Rate Policy Change
Africa


Nigeria’s central bank said it’s made no change to its naira policies,
after a revision on its website led some analysts to speculate that it
was ending a system of multiple exchange rates.
“Nothing has changed in Nigeria’s exchange-rate structure,” and the
naira’s value continues to be determined by trading in the Investors’
& Exporters’ FX Window, Isaac Okorafor, a spokesman for the
Abuja-based institution, said in a text message.
The I&E FX window, also know as the Nafex window, was introduced in
2017 as Nigeria sought to attract capital inflows by offering
investors a weaker and market-determined naira rate. The central bank
pegs an official rate -- meant for government bodies and fuel
importers -- at about 20% stronger than the market price.
The central bank’s homepage on Tuesday stated that the official rate
was “market-determined,” whereas it previously gave a value. The
website reverted back to its original form on Wednesday.

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Uganda confirms first case in current Ebola outbreak @BBCAfrica
Africa


A 5-year-old boy has been taken to Bwera hospital according to the
Minister of Health

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Africa's Fastest-Growing Region Banks on More Spending for Growth
Africa


East African countries plan to increase spending dramatically on
infrastructure projects in budgets to be released Thursday. It’s not
clear they can afford it.
Kenya, Tanzania, Uganda, Rwanda and Burundi will unveil plans to fund
the building of more roads, railways and power plants, as well as
expand services such as health care and education, for the year
starting July 1.
In most cases, this will raise budget gaps as a percentage of gross
domestic product, and increase borrowing requirements.
“There is a risk of rising fiscal deficits coming from the fact that
many have ambitious revenue targets they may fail to meet,” said Tony
Watima, a Nairobi-based independent economist.
Spending will probably climb about 10% in Kenya in the next fiscal
year, 17% in Uganda and 11% in Rwanda, while it will be broadly flat
in Tanzania, the nations’ respective governments have said in
forecasts.
While the governments forecast that revenue will increase by double
digits next year, Kenya, Uganda and Tanzania all have plans to
approach the debt markets to help raise the funds to finance their
deficits.
In Kenya’s case, the nation will borrow about 607 billion shillings
($6 billion) locally and internationally in 2019-20, according to
Treasury Secretary Henry Rotich.
GDP in East Africa will probably expand 5.9% in 2019 and 6.1% in 2020,
according to the African Development Bank, making it the
fastest-growing region on the continent.
Kenya is implementing its so-called Big Four agenda, which will see
the region’s largest economy hand over no less than 500,000 houses to
first-time homeowners by June 2022, and develop more manufacturing,
food production and health care to create jobs in a nation where
unemployment is a sticking electoral issue.
The projects will cost 405 billion shillings ($4 billion) in the
coming year, budget estimates show.
If approved by lawmakers, about 7.5% of Tanzania’s 33.1
trillion-shilling ($14 billion) budget will go toward building a
standard-gauge railway line that will link the East African nation’s
commercial city of Dar es Salaam with the town of Mwanza along Lake
Victoria, through the capital, Dodoma.
The country is due this month to start building the 2,115-megawatt
Rufiji hydropower project.
The International Monetary Fund in April said that Tanzania’s economy
is being harmed by the “unpredictable and interventionist policies” of
President John Magufuli’s government. It said this in a report whose
release the East African country has blocked.
“The Magufuli administration hasn’t done a good job in enticing
investors to enter the country, and erratic policy making will in fact
continue to have the opposite effect,” said Jacques Nel, the chief
economist for southern and eastern Africa at NKC African Economics.

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Bad bank loans hit an all-time high Sh345bn
Kenyan Economy


The value of bad loans in the banking sector hit a new high of Sh345
billion at the end of March, raising questions on the health of the
economy even as the lenders booked double-digit profit growth in the
first three months of the year.
Banking sector data compiled from the lenders’ financial reports shows
that gross non-performing loans increased by Sh27.5 billion or 8.7
percent in the first quarter of 2019.
The non-performing loans piled up even as banks reported a 22 percent
year-on-year rise in first quarter net profit to Sh33.6 billion.
Central Bank of Kenya data shows that credit to the private sector
expanded by 4.9 percent in the 12 months to April 2019, well below the
12 to 15 percent considered optimal to fuel healthy economic growth.

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@CentumPLC reports FY Earnings EPS +68.687%
Kenyan Economy


Par Value:                  0.50/-
Closing Price:           32.80
Total Shares Issued:          665441775.00
Market Capitalization:        21,826,490,220
EPS:               6.68
PE:                4.91

Centum Investment Company PLC FY 2018/ 19 results through 31st March
2019 vs. 31st March 2018
FY Sales 10.864087b vs. 10.171132b +6.813%
FY Direct and other operating costs [9.746717b] vs. [9.102223b] +7.081%
FY Trading profit 1.117370b vs. 1.068909b +4.534%
FY Income from financial services 3.502548b vs. 2.844698b +23.125%
FY Funding and other costs [3.963785b] vs. [3.385289b] +17.089%
FY Operating loss from financial services [461.237b] vs. [540.591m] -14.679%
FY Investment and other income 9.852606b vs. 5.712840b +72.464%
FY Operating and administrative costs [2.128453b] vs. [2.028205b] +4.943%
FY Finance costs [2.517605b] vs. [1.761201b] +42.948%
FY Share of profits from associates and joint ventures [1.423835b] vs.
694.898m -304.898%
FY Profit before tax 4.438846b vs. 3.146650b +41.066%
FY Profit from continuing operations 4.120246b vs. 2.656298b +55.196%
FY Profit from discontinued operation, net of tax – vs. 135.600m %
FY Profit for the year 4.120246b vs. 2.791898b +47.579%
Basic EPS 6.68 vs. 3.96 +68.687%
NAV per share 79.05 vs. 73.16 +8.051%
Closing cash and cash equivalents 5.284b vs. 4.074b +29.701%
Dividend 1.20 vs. 1.20 –
Total Assets 101.764b vs. 96.288b +5.687%
Total Equity 51.576b vs. 50.897b +1.334%

DIVIDEND DECLARATION

The Board of Directors has recommended the payment of a dividend
equivalent to KES 1.20 per share for the financial year ended 31 March
2019 12018: KES 1.20 per share).

FINANCIAL PERFORMANCE

The year ended 31 March 2019 marked the end of our five-year strategy
period dubbed 'Centum 3.0'. Over that five-year period, the Company's
assets grew by 249% from KES 28.8 billion to close at KES 71.6 billion
as at 31 March 2019. N. Asset Value (NAVI per share on the hand grew
by 229% from KES 34.5 to KES 79 as at 31 March 2019. The NAV per share
has grown at a compounded annual growth rate of 18% since the
commencement of our current strategy period in 2014, underscoring the
Group's commitment to sustained value creation for its shareholders.
This growth was primarily funded by internally generated funds and
borrowings as the Company elected not to raise new equity. Through
either full or partial exits in our investment portfolio over the
strategy period, we raised KES 36.3 billion in exit proceeds, which
resulted in realised capital gains of KES 24.3 billion. These
internally generated funds were complemented by two corporate bond
raises amounting to KES 10.2 billion and a bank term loan of KES 7.5
billion. Of the two bond raises, the first bond of KES 4.2 billion
which matured in September 2017 was successfully redeemed through
internally generated funds. Investors in the equity linked component
(ELNI of that bond received an additional KES 191 million,
representing a total equity upside of 15 percent of the par value in
line with the terms of the issue, which translated to an annual
internal rate of return of 14.9 percent for ELN investors. The
Company's gearing over the strategy period was on account of new
projects, under our development strategy focus. The respective real
estate projects are now cash generative and able to raise non-recourse
debt on their own. Accordingly, as communicated in our previous
investor briefing, we plan to deleverage the Company through payment
of all maturing liabilities between 2019 and June 2020.
GROUP PERFORMANCE
The Group recorded a consolidated profit growth of 48% from KES 2.7
billion in 2018 to KES 4.1 billion for the financial year ended 31
March 2019. The primary performance drivers under our respective three
business units are set out below. I. PRIVATE EQUITY During the year,
the Group completed the disposal of GenAfrica Asset Managers Limited,
realising a gain of KES 1.2 billion. Through this transaction, the
Group achieved a holding period IRR of 29% for the investment,
demonstrating our track record in growing shareholder wealth through
an optimal investment strategy, portfolio management and successful
exits. The Group's beverage business reported a flat performance in
revenues, with a nominal decrease of 3%. This performance was largely
on account of weather-related distribution channel disruptions in 2018
and depressed consumer demand in the fir, half of the year. This trend
has however reversed in the quarter ended 31 March 2019, with revenues
growing by 22% compared to a similar period last year. The Group's
banking subsidiary, Sidian Bank Limited, has seen significant
improvement in its performance compared to the prior year. The bank's
focus on growing its non-funded income through growth in trade finance
business has seen non-funded income increase by 44% compared to 2018.
Notably, non-funded income was higher than net interest income during
the period while trade finance balances have grown by 77% over the
last 12 months, demonstrating the successful implementation of the
bank's new strategic focus. The bank has also recorded a 10% growth in
total assets and 14% in customer deposits over the twelve-month period
ended 31 March 2019. To support this growth, we recapitalised the bank
in 2018 through a full subscription to its KES 1.2 billion rights
issue. The bank also closed on a KES 1.2 billion Tier II Capital
Facility from Denmark's Investment Fund for Developing Countries
(IFU). The bank's strong capital base, balance sheet and trade finance
book have provided it with a strong growth platform that saw it return
to profitability in the quarter ended 31 March 2019.
Within the trading subsidiaries segment, Longhorn Publishers Limited
recorded a 141% growth in profitability over the twelve-month period
to 31 March 2019, driven by a strong top line performance, on account
of both geographical and product diversification.

REAL ESTATE Our focus in the real estate portfolio is monetisation of
our land banks through in-fill projects development or sale of
development rights. During the year, we closed a number of development
rights sales in our land banks at valuation multiples that are several
times our book carrying value. In addition, residential projects
across our three land banks have recorded strong pre-sale performance
over the year. We are currently developing 3,000 residential units, of
which the first phase of 1,200 units is under construction. Over a
ten-month period, we have attained a 51% (606 units) pre-sale level on
the units under construction, with a sales value of KES 5.2 billion .
We also broke ground at our Vipingo Industrial Park, where some of the
referenced development rights were sold. The underlying activity and
sales in the real estate portfolio saw a growth of KES 3.3 billion in
fair value gains across the portfolio.

MARKETABLE SECURITIES The Group held a marketable securities portfolio
of KES 3.1 billion as at 31 March 2019 (2018: KES 3.4 billion). During
the period, the portfolio recorded a realised cash investment income
of KES 400 million. Consistent with the overall performance of
markets, particularly the NSE, the portfolio valuation decreased by
KES 533 million during the year.

OUTLOOK

We have commenced implementation of our new 5-year strategy dubbed
'Centum 4.0' that covers the period April 2019 to March 2024. Under
the new strategic plan, our business has been simplified into 3
business units, namely Private Equity, Real Estate and Marketable
Securities. Across the three business units, we are targeting to grow
our total returns at an annual rate of 20%, with specific targets for
cash returns. We believe that the momentum and scale achieved over
Centum 3.0 provides us with a strong growth platform for both the
Private Equity and Real Estate businesses. Specifically, for Private
Equity, Centum will be investing between KES 10 billion and 15 billion
over the next 5 years in a fund to be managed by its wholly-owned
subsidiary, Centum Capital Partners Limited. Within Real Estate, our
focus over the next five years will be continued activation of our
development sites and land bank monetisation through infill projects
and sale of development rights. Our current development pipeline
comprises of 3,000 residential units across our existing development
sites. A further 2,000 are at the concept stage. In addition to our
existing sites, we are actively pursuing opportunities in affordable
mid-market housing where we look to develop over 5,000 units over the
next five years. We have received committed funding for this
development pipeline. On land development rights sales, some
transactions were closed during the year while we have a rich pipeline
of sales under negotiation. On 10 June 2019, we entered into
agreements to sell our total combined shareholding in Almasi Beverages
Limited and Nairobi Bottlers Limited to Coca-Cola Beverages Africa
Limited at a combined valuation of KES 19.5 billion. This is an event
subsequent to the balance sheet date and the realised gains are
therefore not reflected in the results for the year ended 31 March
2019. The two investments are carried at KES 16.8 billion on the
balance sheet as at 31 March 2019. We expect to complete the
transaction in the financial year ending 31 March 2020. The proceeds
from these transactions will be applied towards repaying our current
US Dollar denominated bank term loans of KES 7.5 billion, which will
result in finance cost savings of KES 700 million. The balance of the
proceeds will be invested in our Private Equity and Marketable
Securities portfolios.

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Summary of our portfolio class as at end of March 2019 #CentumFY2019
Kenyan Economy


Conclusions

Significant progress. Attended the Investor Briefing and a
determination to narrow the NAV versus share price Gap.

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Kenya Shilling versus The Dollar Live ForexPros
Kenyan Economy


Nairobi All Share Bloomberg +6.97% 2019

http://www.BLOOMBERG.COM/quote/NSEASI:IND

Nairobi ^NSE20 Bloomberg -5.30% 2019

http://j.mp/ajuMHJ

Every Listed Share can be interrogated here

http://www.rich.co.ke/rcdata/nsestocks.ph

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by Aly Khan Satchu (www.rich.co.ke)
 
 
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June 2019
 
 
 
 
 
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