Centum investments yesterday published the group’s annual financial results for the year ended 31 March 2020 showing that the company’s operating profit increased from KES 827 million to KES 985 million, representing a 19% growth from the previous year.
Since 2019, the company has embarked on a 5-year strategy period running to 2024 dubbed ‘Centum 4.0’. Under that strategy, the Group’s focus is on balance sheet resilience through deleveraging of the parent Company, enhancement of liquidity and cash generation by the portfolio companies
The company reported its operating model is now focused on four business units namely Private Equity, Real Estate, Marketable Securities and Development, with its real estate business now valued at KES 36.88 billion representing 65% of total assets for the firm.
“Under the real estate business, we are pursuing a four-pronged strategy, namely: development and sale of infill developments within our land, sale of development rights within our current land bank, management of rental assets and development on third party sites on a joint-venture basis,” it said.
The Group is pursuing a sales-led development model and is currently constructing 1,442 residential units across its three mixed-use developments a pre-sale level of 70% representing a revenue potential of KES 7.8 billion had been sold as at 31 March 2020.
Majority of the completed sales were in Vipingo (88%) and Uganda’s Pearl Marina (81%) while Two Rivers housing sales were at (40%). According to the firm, the three projects have no underlying debt while the firm’s proportion of debt to total assets remains at just 17%, attributed to Two Rivers.
The business expects profitability from the developments to exceed the 27% of cash deposits it is already holding for these presold units even though the profitability is not reflected in the current year group performance
It said, all the units under construction have been financed through internally generated cash flows and the projects were debt-free as at 31 March 2020. In total, the business is holding Ksh. 10.6 billion worth of property in the pre-sale value of units and bulk land.
In line with a slower property market, the business has booked a net fair value gain on properties amounting to KES 1.8 billion, representing a decrease of 76% from the gain booked in the prior year.
The company said its Two Rivers Mall had achieved an occupancy level of 81% as at 31st March 2020 while two office towers under its management were both at 20% compared to 71% and 8% respectively as at March 2019.
The Group has signed a joint venture agreement for a 965-unit development along Thika Road, which is now under market validation.
“In accordance with our business model, the progression of this project is subject to the attainment of our pre-sale threshold,” it said.