Cytonn Investments released their first-half 2017 unaudited results for the group, delivering strong growth with revenue growing by 140.4% to Kshs 638.8 mn from Kshs 265.8 mn for first-half 2016, and group earnings more than quadrupled, growing by 415.9%, to Kshs. 299.2 million from Kshs. 58.0 million.
The strong growth in revenues and earnings was driven by a 36.7% growth in their real estate deal pipeline, from Kshs 60.0 bn as at H1’2016 to Kshs 82.0 bn as at H1’2017, coupled with strong sales of real estate developments. Balance sheet growth was also robust, with total assets growing by 24.5%, from Kshs 11.8 bn as at FY’2016 to Kshs 14.7 bn as at H1’2017. The growth in total assets was driven by (i) an increase of 216.3% in Quoted Private Equity and Active Strategy Investments, from Kshs 0.3 bn as at FY’2016 to Kshs 1.0 bn as at H1’2017, and (ii) an increase of 15.9% in investment property, from Kshs 10.1 bn as FY’2016 to Kshs 11.7 bn as at H1’2017.
“Our strategy in 2017 remains growth in the firm across our four key pillars of people, products, processes and distribution, to position ourselves to consistently deliver on the attractive alternative investment opportunities, which exist in Kenya and the region,” said Edwin H. Dande, Cytonn’s Chief Executive Officer. “While the market was distracted in the first half of 2017, and with low valuations in the market, we have remained focused as a firm and built our investment portfolio, in both real estate and quoted private equity. In real estate, through coupling up real estate finance and real estate development onto one platform, we have carved up a niche with almost no competitor; we also managed to pick up several prime parcels of land at very attractive prices in the first half of the year. In financial services, we have taken advantage of the low market valuations to build strategic stakes in listed entities, the largest being KCB Group where we bought aggressively in February 2016 when the stock dipped to a low of Kshs 23.0 per share; it has now recovered to almost doubling to Kshs 45.0 per share, allowing us to book very attractive gains and have built our position to the 5th largest local institutional investor” added Edwin.
“In a year when the macroeconomic environment was challenging, and the economy faced uncertainties due to the General Elections, our investors have so far realized excellent returns of (i) 21.2% p.a. in the Real Estate Development Portfolio driven by our investments in prime real estate developments in locations with compelling demographics, (ii) 58.2% p.a. in the Quoted Private Equity Portfolio driven mainly by increasing exposure to the undervalued financial services sector, and (iii) 18.0% p.a. in the Privately Placed Commercial Paper Portfolio. More importantly, with our adherence to strong corporate governance structures, our clients can be confident that their interests come first at all times,” said Elizabeth N. Nkukuu, CFA, Cytonn’s Chief Investment Officer and Head of Real Estate. “We continue to develop institutional grade real estate, aimed at reducing the housing deficit, estimated at 200,000 units annually. Cytonn’s real estate platform, with a strong focus on execution and delivery of quality real estate products, has a total investment portfolio of 10 developments, valued at Kshs 82 bn. With over 1,200 acres under development, combined with a strong private equity deal pipeline, evidenced by the purchase of a 25.0% stake in Superior Homes Kenya, we are confident in continuing to deliver superior returns to investors. All of our investments continue to address the housing shortage, create employment opportunities, with over 1,000 jobs having been created to date, help in deepening of the capital markets, and play a part in the growth of our economy,” added Elizabeth.
“We are proud to be able to continue to present strong financial results. We continue to make heavy investments in real estate, with a 15.9% increase in our investment property portfolio, from Kshs 10.1 bn as at FY’2016 to Kshs 11.7 bn as at H1’2017. Driven by our live real estate developments, revenue increased by 140.4% from Kshs 265.8 mn for H1’2016 to Kshs 638.8 mn for H1’2017. The investment property in the development pipeline of Kshs 11.7 bn had gains of Kshs 430.3 mn in H1’2017, which together with revenue growth of 140.4% highlights the attractive investment opportunity in real estate in Kenya and the region,” said Shiv Arora, Cytonn’s Financial Controller. “Group accounting profit came in at Kshs 299.2 mn, with economic profit of Kshs 346.9 mn after removing one-off provisions. This resulted in growth of shareholder equity of 7.7% from Kshs 5.3 bn in FY’2016 to Kshs 5.7 bn in H1’2017,” added Shiv Arora.
“For our shareholders and joint venture partners, 2017 is shaping up to be a great year, as can be seen by our financial performance. Cytonn has delivered great numbers, and management has continued to execute a growth strategy that will propel us to be the leading alternative investment firm in Africa,” said Prof. Daniel Mugendi, Cytonn’s Chairman. “While others have slowed down, we have continued investing heavily in growth of our people, products, processes and distribution. With the continued attractive investment opportunity in Kenya and the region, combined with a committed team at Cytonn, we shall continue to contribute to growing Kenya, creating jobs for Kenyans, and improving the standards of living across the country.” added Prof. Mugendi.
Cytonn Investments is an independent investments management firm, with offices in Nairobi – Kenya and D.C. Metro – U.S. We are primarily focused on offering alternative investment solutions to individual high net-worth investors, global and institutional investors and Kenyans in the diaspora interested in the high-growth East-African region. We currently have over Kshs. 82 billion of investments and projects under mandate, mainly in real estate.
Cytonn Real Estate is Cytonn’s development affiliate, which is focused on developing institutional grade real estate targeted at specific institutional, high net-worth and Diaspora investors.