Category Archives: ICDCI

Centum 2009 AGM

The Centum 2009 shareholders annual general meeting was held on Friday July 17 2009. The last meeting I attended was 1½ years ago in February 2008 when ICDCI (changed its name) and became Centum. a quick Google search reveals other companies around the world with a similar name. So shareholders were right when they pushed for a more authentic, African name

AGM recap: From reading the minutes of the last shareholder meeting seems there was quite a bit of drama at the company’s last AGM in January where the independence of directors was questioned, and there were some interesting director elections whos resulted were polled and motions by some shareholders to remove two directors – (Chairman James Muguiyi and businessman Chris Kirubi) flopped. Most media reports however dealt with the delayed AGM and the payment of dividends at the door, but the best recap of that comes from the Nation

Bored this time: This was one of the longest AGM’s I have been to in a while. The Chairman and the CEO of the company each give long speeches about the company, that easily took up almost 2 hours – giving views on the performance of the company and future outlook as relates to the corporate bond they are about to launch.

Centum Performance their investment book is worth 6.5 billion (($84 million) down from 8.1 billion the year before. Reasons for the decline were gains on disposal totaling 311 million, and further impairment of Rift Valley Railways (RVR) shares by 271 million.
– The portfolio is consists of: 25% is KCB shares, General Motors East Africa 25%, Insurance 19%, 4% is publishing (a 35% stake in Longhorn), Beverages is 24% (includes shares in EABL, and several Coca-Cola franchises), Services is 4% (includes 0.1% of Safaricom, and shares in NAS, and RVR), and 5% is a newly acquired (23% stake) of Carbacid. Some values are KCB Kshs. 1.84 billion, GM 978 million, UAP 877 million, Nairobi Bottlers 660 million, KWAL 263 million, EABL 426 million, Mt. Kenya Bottlers 209 million.
– Target is to have administrative costs at less than 2.5% of their assets. 2009 was 123 million (1.5%) and 2008 (136 million = ~1.6%), which includes the cost of staff, running company, shareholder costs etc. striking a blow to companies that say public shareholders are expensive to administer
– On RVR: board maintains that it is still a good company, had bad management. Once new deals are signed, new technical partners and this will see $50 million invested in the company. Fundamentals are still good, lots of foreign investor interest on the company, and it will be wrong to walk away when the value is down

Corporate Bond: Centum will be launching a corporate bond to raise Kshs 2 billion (~$26 million), reasons given include
– It’s the right yime, Safaricom and Kengen about to launch, while a recent bond from CFCstanbic bank was over-subscribed. After prospectus and approvals, it will be marketed to pension funds, institutions, insurance companies, even shareholders can subscribe
– Current borrowing costs are at 170 million out of 6.5 billion assets are very manageable. Their dividend flows are not consistent, so they sometimes need overdrafts, but can’t grow the business on overdraft. The Bond will add some long term funds to the balance sheet.
– They have a pipeline of investments lined up, and what is a bad market for others is a good time for Centum to buy into companies. Funds will be invested 60 – 70% in private companies, 20-30% in listed companies and 0.15% in real estate. They already signed the deal for Carbacid for about Kshs. 400 million that was done through Rasimu Limited, a new wholly-owned subsidiary.
– Bond is better than bank debt, cheaper, long term, more flexible. It will cost 9.5% to 12.5% per year.

Image: Centum plans to expand into Africa from Kenya and their vision is to be Africa’s foremost investment channel. Chairman mentioned that their name brand is important, and regretted that bad press had seen the share price dip

Voting: The voting was done by ballot, and the auditors will tally the results. So at the meeting, motions in the agenda were proposed and seconded, with shareholders asked to mark ballot forms and leave them outside after meeting for votes to be tallied. With the new registrars CRS, voting by this method could become the norm, especially on controversial votes, where shareholders numbers at the annual general meeting can be cancelled out by real tally of proxy votes. That was the case at the January meeting, where the 1,536 shareholder attendees (with 258 proxies) tallied yielded just 1% in the re-election of the directors.

Missing the Centum party

(EDIT: Centum’s official Press release about the AGM)

When I last looked at Centum, the company was in the news due to CEO exit and a postponed AGM and postponed dividend.

Now it appears the AGM took place yesterday: I did not attend as I (i) had sold my shares (ii) did not see the invitation document before today (iii) forgot all about Centum AGM

From today’s reading, Centum sent out an annual report with updated sections but still the financial accounts for nine months to March 2008: it now includes mentions of departures of Isaac Awuondo (September 08), and CEO Peter Mwangi (October 2008) which coincided with the postponed AGM, and also welcomes on board new directors – Kibuga Karithi (September 08), Imtiaz khan (November 2008 – Cassias Capital Partners) and new CEO James Mworia (appointed October 2008, joined board December 2008) who came on board a week after Mwangi left – for greener pastures where he’s now the CEO of the Nairobi Stock Exchange (NSE)

No agenda: The invitation letter dated 1st December 2008 mentions that a shareholder presentation would take place on Thursday at 10, followed by the AGM at 11 – but no meeting agenda was contained.

The report also states that the (Centum) board believes that the annual general meeting provides an appropriate forum for investors to communicate with the board and encourages participation

Dividend day A company statement from October had mentioned that dividend would be paid at the January 14 AGM

So what happened?

Anonymous Comments posted yesterday include

Anonymous said… You gave the Centum AGM a skip???!! Here I was looking forward to a post on that.
Part of the drama was that the company’s attorney denied a proxy audience on the grounds that co. law does not expressly provide for proxies to be heard at an AGM. I wonder how corporate s/holders are supposed to voice their concerns at AGMs in that case?
Interestingly, a special agenda to have two directors (the Chairman and Chris Kirubi) removed was in the cards; no need to wait for the result of that coz it’s sure to flop since their stake in the co is significant.

Anonymous (New CEO) MainaT – I think he’s off to a good start. He managed the anti- C.K s/holder sentiment as best as these things can be managed i.e. by requesting the co. attorney to give an (erroneous) interpretation of co law to diffuse the anti C.K sentiments that were beginning to spiral out of ctrl.

Anonymous said… Centum don’t have an in-house co. attorney. They must have hired whoever was turning proxies at the door. Their co. sec. is not an attorney. Curiously, did they send the annual reports without the proxy forms? Extremely strange. Very strange. CMA should take a peek at this. Someone should write a stinker, otherwise, minority views will continue to be suppressed.

any more comments? and was the dividend paid or just declared?

Toxic Centum Last time Centum was in the news their CEO had departed, and Discount stockbrokers had collapsed. This time the news cycle is topped by the Triton fuel scam and the departures of the Chairman of the Capital markets Authority Chege Waruingi and Kenya Airports Authority CEO George Muhoho – (more from “airport expert” – Coldtusker )

Mostly Centum

Last week the company CEO departed and the Centum (formerly ICDCI) directors postponed the annual general meeting (AGM) and payment of the year end dividend.

Today’s newspaper has a statement from the Centum Board asserting that:
– The management is firm, the company is on sound financial footing, and the departure of CEO Peter Mwangi had no relation to the delayed dividend and meeting. However, while Tony Wainaina (Mwangi’s predecessor) and Mugo Kibati (EA Cables) may have set a precedent for young CEO’s to enhance corporate performance and value and leave at the top, the timing & coincidence is not good.
– Statement does not address delay of the dividend which would amount to about Kshs. 248 million ($3.3 million). Without doubt, the conpany’s investment portfolio is down this year (quoted investments – which should be easily disposable include about Kshs. 1.5 billion of KCB (but down from 2 billion ), Kshs. 422 m of EABL and probably a healthy slice of Safaricom) – but it’s scary that three months after a company declared a dividend, it would find itself unable to fund it.

Toxic broker:
– Centum’s statement adds that its listed holdings are not accessible to any (rogue) stockbroker, and the company had no dealings with Discount Stockbrokers
– A separate from the CMA statement today effectively states that the company is under receivership by KPMG – owing to corporate governance including poor strategies manifested by an unsustainable expansion plan (branches all over the country)
– A bigger scandal than Discount appears to be at the national Social Security Fund (NSSF) whose dealings with Discount are a lesson for fraudsters.

Best Kenyan corporate site
In the wake of hiding from questions on Discount, the Centum statements along with financial results from listed companies (Kengen, EA Cables and KPLC) have appeared in the newspapers before they were posted on the NSE site. And though the NSE won an African Investor award (for 2nd runner up – most innovative African stock exchange) website updates should be a priority matter

Probably the best bank, and perhaps corporate site in Kenya, with the most relevant, timely, updates has to be the Central Bank of Kenya website with their controversial/pro-active governor Professor Njuguna Ndung’u (and his media team) who post several statements, speeches, policy matters a week (read it and judge)

Co-Op IPO: After a stop-go debate the Co-op Bank IPO has been green-lit and will begin in about a week’s time with investors still digesting refunds and possible losses from the previous IPO – Safaricom.
Dates: October 30 – November 13
Share price Kshs. 9.50 ($0.13) each (for 701 million shares)

Related Posts
– Reasons to invest in Co-op IPO (or not)
– The last Centum AGM (February 2008)
– Saying farewell at AGM’s: in style (Barclays) or in shame (Kenya Airways)

Barclays numbers

Kenya’s’ largest bank is first out of the door with year end announcement for what is expected to be a record profit year

Coldtusker used to run a financial gaffes, column and all the news outlets went with Barclays reported growth of 9% in pre-tax profits, when it was actually 7% (to about $101 million) from 2006.

The dividend was the same at 2006, you can expect good results in years to come, when the expansion pays offs (not in 2007 where expenses grew faster than income (37% to 24%). They threw all their funds into loans – up 43% in 2007; compare these results to 2005-06 when assets and loans were up 13% apiece.

Another news gaffe goes to the Standard who referred to a company called Centrum in their Saturday newspaper report on ICDCI’s name change to Centum Investments. The name confusion will continues for ex-ICDCI as long as spell checks are used.

ICDCI AGM

Shareholder woes: My first AGM this year is that of ICDCI which was held on Thursday February 21, at the Safari Park Hotel.

Sometimes it’s painful to be a shareholder and today was one of those days. I’m out of practice and forgot to check in early – and arrived at the Hotel at 11.m. sharp only to find a very long queue outside. It would have been better to be a proxy today as that queue moved faster. But the company had only four computer stations to register any of its 40,000 shareholders who showed up – and I didn’t get processed till noon after spending an hour standing in the hot sun.

The meeting was almost over and I was able to catch a few comments by the MD and the Chairman of the company:

  • On property: they sold two buildings in Nairobi, but are going to invest in the real estate sector again – and develop a building on a plot in downtown Nairobi.
  • On Eveready: it has not performed well (for shareholders) but by going public they are now able to liquidate part of their shareholding.
  • On Rift Valley Railways – it’s a long term investment, but they hope to get a return on the investment within 4 years.
  • On the company’s sustainability in these tough political times – they aim to diversify regionally, to minimize country-specific risks.
  • One shareholder complained about late delivery of the meeting invitations & company accounts (through the post office) and the Chairman answered that they are concerned about the cost of printing and distribution of the company accounts – they may print abridged ones in future and e-mail others or put them on their web site.

Hot Button issue was the proposed name change of the company from ICDCI to Centum Investments: almost all shareholders who spoke, on the matter, opposed the name change of the company – some saying old is gold, the new name is not African and can’t be translated, they don’t want to lose identity etc.

The Company Chairman was at pains to explain when one director Mrs. Pauline Muriuki stood up and exhorted shareholders to approve the name change. She said the company wanted to differentiate itself from (former parent) ICDC, and also Uchumi and the Government – saying negative stories/Matope that involved these companies affect the ICDCI share price. She also mentioned that the shares allow the company to go international (will be listed on the Uganda Stock Exchange. She said other companies had changed their names to reflect their new identities and had succeeded thereafter such as Unilever.

She was clearly worried as the company had already put in place a multi-million campaign for the new name which was yet to be revealed (a launch dinner to be held today but unfortunately coincided with the launch of CNBC Africa in Nairobi and was canceled) – also the company had already printed out shirts and gift items for shareholders with Centum to take home after the meeting

Is there shareholder democracy?: The Centum matter was eventually put to a vote on the floor and passed, but the Chairman failed to ask if there were any opposers to the name change. The matter should actually have been put to a vote (with physical ballots). But would it have mattered anyway (since directors – businessman Chris Kirubi and ICDC (23%) combined own 50% of the company’s votes?. Still, it was a warning that companies should not take shareholders votes for granted

Goodies: Centum-branded polo-shirt, tote bag and calendar. The Hotel had prepared a bland buffet lunch, and the company may have been better off handing out packed lunch boxes as the shareholders were unruly as they queued for the gifts and food.