On behalf of the board of directors and the management team, I wish you a very restful and festive holiday season. It has been a very hectic, but equally rewarding 2015 for us. We should be thankful, take a moment to celebrate our achievements, get some rest and get ready for an even better 2016.
Just to highlight some of our achievements this year:
- With regard to real estate, we entered various joint venture and purchase agreements totaling 1,200 acres of land, worth over Kshs. 5.5 billion, all within the high growth Nairobi Metropolitan areas of Karen, Ruaka, Athi River and Ongata Rongai. We closed the year with over Kshs. 50 billion of real estate projects under mandate. Of these projects, we have already launched three signature developments – Amara Ridge, Situ Village and The Alma, with Amara Ridge and The Alma already sold 80% and 25% respectively.
- On investments, we raised Kshs. 3.7 billion of new capital for our various projects, and delivered an average return of 18% to our fixed income investors and 37% to our equity investors, with over Kshs. 200 million already returned to investors. We are glad to have established and strengthened our relationship with Taaleritehdas of Finland, the leading foreign investor in real estate in the region. We have not only delivered returns to our clients, but also delivered great services. In a recent brand audit by Millward Brown, a global brands consultant, our clients described our servicing as “personalized and highly attentive…” This description should always be our brand experience for every client we take onboard. We should never take a client for whom we cannot meet these standards.
- Our share price increased 4 fold over the year, from the Kshs. 10 per share at the beginning of the year to Kshs. 40 per share at the latest privately transacted prices. The shares continue experiencing strong demand both in Kenya and in the diaspora. We closed the year at a company valuation of approx. Kshs. 4 billion, with 10% foreign investment in the company.
- Our people and culture remain our distinctive competitive advantage. We continue to attract highly talented, energetic, and driven people who thrive in a team context. Our open culture, where the quality of the idea and commitment to its execution is the primary rank that matters, continues to spur rapid innovation in the company. We trained 75 university graduates under our intensive Cytonn Young Leaders Programme during the year and absorbed on permanent basis 18 of them. In total, we have 85 committed and talented staff across our three offices (Liaison House, The Chancery and DC Metro office- which targets the Kenyan Diaspora). We continue to make significant investments in the painstaking and deliberate designing and embedding of our culture and values in our staff, by a fortnightly staff discussion of a chapter of the book ‘Winning” by Jack Welsh, and previously the reading of “What it Takes” by Charles D. Ellis. We have had a total of 22 book club meetings during the year.
- The Cytonn Report, our weekly research publication, became the leading investment research and insights publication in the market. Additionally, our banking and insurance industry reports became recognized as leading in the respective industries.
- Besides delivering great returns to our stakeholders, we are keen on growing the economy, creating jobs and lifting the standards of living. Direct staff recruitment together with real estate projects created over 180 well-paying jobs in 2015, and we expect to create well over 400 additional new jobs as more projects go live in 2016.
- Strong and ethical corporate governance is an inevitable pillar not just for our future growth and prosperity, but also survival; most organizational disasters and eventual demise, emanate from poor corporate governance. We have attracted six strong non-executive directors with global experience and all distinguished in their respective fields. The most recent addition is Mr. Mike Bristow, the Chairman of Central Depository & Settlement Corporation, CDSC. All our directors are passionate about building Cytonn as the leading regional brand in alternative investments.
- The bottom line, when we close our 2015 books, we project at least Kshs. 350 million in profitability. The board has appointed Ernst & Young (E&Y) as the company’s auditors.
With major achievements, come challenges:
- The rapid growth of our business has severely tested our support services. Great talent, products and culture have to be founded on great support services. The corporate centre, made up of HR, Finance, Legal, Administration, and Technology has not grown as fast as the business and therefore we need to ensure that we invest heavily in support services for 2016.
- Our distribution system, across our clients – diaspora, high net-worth individuals, and institutions - could be much better. We have to put every effort next year to build a world-class distribution system.
- Regrettably, other than training many young graduates through our Cytonn Young Leaders Programme, we did not do enough in terms of giving back to the community. We are a blessed, thriving and prosperous firm; we endeavor to do more next year, with the establishment of the Cytonn Foundation to focus on causes we care about.
In recognition of the extraordinary efforts put in 2015 and the resultant achievements, the management recommended and the board of directors approved a Christmas bonus equal to one-month’s salary for every 12 months worked in 2015. This bonus has been paid together with the December 2015 salary. We hope this gesture, enables you to enjoy the holiday season with your loved ones. The bonus is separate and distinct from our upcoming profit share scheme.
Despite all our sacrifices and dedication, it would be inappropriate not to recognize our supportive families, who bear the harsh brunt of our absence for long hours, including most weekends. Cytonn would not have achieved the great milestones in 2015 without their respective support and enormous sacrifices. We are thankful for their support.
The brand holds enormous possibilities and opportunities for all of us. Let us enjoy the Christmas break, rest and come back in 2016 ready to “Deliver to Promise!”
Edwin H. Dande
Managing Partner & Chief Executive Officer
