Centum Investment Company Plc · NSEKE:CTUM
Centum Investment — HY 2023 Earnings Presentation
57 slides from Centum Investment's earnings presentation, Nov 29, 2022
Slide 1: HY 2023 Investor Briefing & Results Announcement
HY 2023 Investor Briefing & Results Announcement. For the Period ended 30 September 2022 November 29, 2022
Slide 2: Agenda
Agenda. BUSINESS REVIEW Dr. James Mworia – Chief Executive Officer FINANCIAL REVIEW Risper Alaro – Group Finance Director OUTLOOK Dr. James Mworia – Chief Executive Officer Q&A
Slide 3: Business Review
BUSINESS REVIEW Dr. James Mworia – Chief Executive Officer
Slide 4: About Centum
BUSINESS REVIEW Dr. James Mworia – Chief Executive Officer About Centum.
Slide 5: Our Business Model
Our Business Model. Our Competitive Advantage. Deploy Create & A high-quality portfolio Capital Grow Value IDENTIFY comprising assets with Identifying and or creating potential for both Identify • Institutionalize high quality investment compelling robust governance significant cash yield and opport
Slide 6: Company Snapshot
Company Snapshot. Portfolio Allocation as of 30 September 2022 Growth Portfolio Marketable Securities 84.6% 15.4% Total Assets 46.0billion (1) Share price as of 18 November 2022 (2) As at 30 September 2022 (3) Rating accorded by Global Credit Ratings (GCR) in October 2022
Slide 7: Company Snapshot: Returns and Dividend Distribution
2009 -20022 Snapshot. Company Snapshot. Annualized Dividend Growth in Return Distribution Shareholders’ Equity 20% 10X KES The shareholders’ equity value at March 2009 was 4.5 • billion KES 4.1 billion • Centum has since made dividend distributions to shareholders amounting to KES 4.5 billion • With
Slide 8: Centum 4.0 - Strategy Update
BUSINESS REVIEW Dr. James Mworia – Chief Executive Officer Centum 4.0 - Strategy Update.
Slide 9: Strategy Evolution – Our Journey
Strategy Evolution – Our Journey.
Slide 10: Centum 4.0 – Operating Context
Centum 4.0 – Operating Context. We had a bearish outlook on the economic environment which underpinned Centum 4.0 strategic focus on risk reduction and capital preservation. Centum 4.0 - Assumptions Actual Operating Environment (Centum 4.0 period | Apr 2019 – Sep 2022)
Slide 11: Performance Overview – Strategic Pillars & Progress Highlights
Performance Overview – Strategic Pillars & Progress Highlights. Strategic Pillars Key Objectives Achievements (FY 2022 – FY 2024) (FY 2020 - 2022) • Generate 20% annualized return and grow NAV to • KES 2.2Bn dividend distribution made in Centum 4.0 strategy Returns & KES 70Bn by FY2024 period Divide
Slide 12: HY 2023 Key Focus Areas
HY 2023 Key Focus Areas. Objectives. Status. • We have maintained zero long-term debt at Company level in line with Centum 4.0 deleveraging objective Balance Sheet Strengthening • Off balance sheet contingent exposures continue to reduce as the guaranteed debt Deleverage and Build Up Liquidity facil
Slide 13: Company Total Return Statement
HY 2022 / 23 – Company Total Return • A 20x improvement in profit after tax was recorded, driven by: Statement. a) A 45% increase in dividend income on Private Equity portfolio & 10% increase in interest income on marketable securities. The annualized yield on MSP portfolio was c. 14%. b) A reductio
Slide 14: Company Debt Levels
Company Debt Levels. Centum continues to maintain low gearing levels and enhanced liquidity to improve overall credit profile. Key considerations for the assigned 2022 rating | October 2022. Positive Factors ✓ Relatively sizeable portfolio with a significant chunk in high quality liquid portfolio (M
Slide 15: Portfolio Updates
BUSINESS REVIEW Dr. James Mworia – Chief Executive Officer Portfolio Updates.
Slide 16: Portfolio Snapshot
Portfolio Snapshot. Total Assets - KES 46 Bn | Total NAV – 39.8 Bn | NAV Per Share – KES 59.8 GROWTH PORTFOLIO – 86.4% MARKETABLE SECURITIES – 15.4% Sector Diversification 1. Financial Services (3) 2. Technology (2) 3. Services (1) 4. Real Estate (2) 5. Automotive (1) 6. Power (1) 7. Education (2) 8
Slide 17: Portfolio Summary
Portfolio Summary. Initial Cash % of Cash Distribution Net Cost of Cost Investment Distribution Apr Carrying Value Multiple on Growth Portfolio Assets Sector company since inception Investement (KES of Date - Sep 2022 (KES (KES Mn) Sep 2022 Net Cost (MOC) owned (KES Mn) Mn) invest Mn) Sidian Bank Fi
Slide 18: Portfolio Updates: Growth Portfolio
BUSINESS REVIEW Dr. James Mworia – Chief Executive Officer Portfolio Updates: Growth Portfolio
Slide 19: Growth Portfolio – Centum RE: Investment Profile
Growth Portfolio – Centum RE Investment profile. Centum has recouped 67% of its initial investment in Centum Real Estate Limited and expects to recoup the balance over Centum 4.0 Strategy period ending March 2024 Centum will fully recoup its initial investment in Centum Real Estate of KES 7.8bn and
Slide 20: Centum RE: Our Original Investment Thesis
Growth Portfolio – Centum RE Our Original Investment Thesis. Source: Centum Annual Report 2010/11 (Business Review – Real Estate, pg. 37)
Slide 21: Centum RE: Progress along the Value Curve
Growth Portfolio – Centum RE Progress along the Value Curve. As a Master Developer of large mixed-used destinations, Centum RE’s value creation process entails the following critical steps: We have pursued value creation across We are now focused on active monetization and banks. to cash out the val
Slide 22: Centum RE: Strategies for Value Monetization
Growth Portfolio – Centum RE Strategies for Value Monetization. Centum Real Estate has revamped its business model to enhance performance around key value drivers. • Increase sales velocity within our land bank • We pursue a sell-to-build model • We pre-sell at least 30% of units and collect 10% of
Slide 23: Centum RE: Value Creation Progress
Growth Portfolio – Centum RE Value Creation Progress. Development Rights Monetization The balance of KES 23.5Bn Centum RE has KES 23.57Bn represents the platform in value to be monetized 4.8 for incremental value as through outright sales and 3.9 we continue to validate development of residential 2.
Slide 24: Centum RE: Sale of Development Rights
Growth Portfolio – Centum RE Sale of Development Rights. The development rights business segment focuses on monetizing the Centum RE landbanks. Since revaluation gains have previously been recognized to mark the value of these parcels to market, this activity does not have any further impact on the
Slide 25: Centum RE: Residential Developments
Growth Portfolio – Centum RE Residential Developments. The residential developments business has achieved cash breakeven and is on course to generating a total return of KES 4.5 billion over the next 24 to 36 months. Centum RE has generated KES 4.5Bn in cash return potential on completed • Of the 2,
Slide 26: Centum RE: HY 2023 Performance Highlights
Growth Portfolio – Centum RE HY 2023 Performance Highlights. Residential Residential Receivable from Signed UNIT SALES COLLECTIONS SALES CONTRACTS KES 15.8 Billion KES 7.9 Billion KES 7.9 Billion Value of Units Pre-Sold To Date Deposits Collected To date Value of Development Rights Pipeline on Pre-s
Slide 27: Centum RE: Residential Development
Growth Portfolio – Centum RE Residential Development. Reconciling the investor basis Gross Profit to the IFRS Gross Profit. Contracts under our residential units business are long-term in nature (> 12 months) as such under IFRS, the payment and delivery of the product don’t happen within the same fi
Slide 28: Centum RE: Two Rivers Development
Growth Portfolio – Centum RE Two Rivers Development. • TRDL has sold development rights to Centum RE for residential unit projects (Loft, Mzizi & Riverbank). • The projects are more that 80% sold on average, indicating strong demand for the destination. • Over the next 12 – 36 months, Centum RE is e
Slide 29: Growth Portfolio – Two Rivers Mall
Growth Portfolio – Two Rivers Mall. • The business is on track to achieving pre- covid operating profit levels; • The launch of the Cinema (largest screen in East Africa) is expected to continue driving footfall; • Occupancy has ramped up in 1H 23 with new tenants coming and total occupancy set to h
Slide 30: Growth Portfolio – Sidian Bank
Growth Portfolio – Sidian Bank. Transaction Date: Kes 1.5Bn is expected to be booked in realized • We are on course to conclude the sale of our entire stake in Sidian Bank to access Bank Nigeria gains on completion of the exit and this will • The bulk of the key milestone have been meet be largely a
Slide 31: Growth Portfolio – Longhorn Publishers
Growth Portfolio – Longhorn Publishers. Carrying Value based on Market Price Debt Reduction 22% KES 656 Mn Performance Revenue Growth 40% Continued Highlights (FY22 vs. FY21) Longhorn EBITDA trend (Kes Mn) Business recovery post PAT Growth 4X 822 781 Covid. (FY22 vs. FY21) 652 487 497 465 463 9 mark
Slide 32: Growth Portfolio – Isuzu East Africa
Growth Portfolio – Isuzu East Africa. Carrying Value Isuzu Market Share FY 2022 remains on the growth Isuzu E.A. Market Share Δ +27% trajectory. KES 3.0Bn 50.3% 45.4% With the enhanced production Implied EBITDA capacity, we expect continued 38.6% Multiple 35.7% improvement in profitability. 7.99X 28
Slide 33: Growth Portfolio – NAS Servair
Growth Portfolio – NAS Servair. • Business is back to profitability following 2022 1HY NAS Performance Highlights. and advancing towards full recovery Revenue Gross Profit Dividend • NAS resumed dividend distributions in +54% +54% +100% HY2023 after 2 years freeze Average Pre-Covid PAT KES 900Mn Air
Slide 34: Growth Portfolio – Greenblade Growers
Growth Portfolio – Greenblade Growers. Carrying Value Key Value Drivers: KES 273Mn • Production Capacity Expansion Implied EBITDA Multiple • Sustainable >60% 2.7X Gross Margins • Management has expanded the farm’s water storage capacity by sinking an additional dam to mitigate the risk of water shor
Slide 35: Growth Portfolio – Tier Data and Tribus
Growth Portfolio – Tier Data and Tribus. 30.46 34.2 Tier Data EBITDA trend (Kes Mn) Tribus EBITDA trend (Kes mn) 19.0 17.5 Tier Data and Tribus 15.9 13.5 1.36 are B2B service FY2021 FY2022 FY2023 P providers which could -8.95 FY2019 FY2020 FY2021 FY2022 FY2023 P leverage on the A relatively new comp
Slide 36: Portfolio Updates: Marketable Securities
BUSINESS REVIEW Dr. James Mworia – Chief Executive Officer Portfolio Updates: Marketable Securities Managed By:
Slide 37: Marketable Securities – Portfolio Diversification
Marketable Securities – Portfolio Diversification. Asset Allocation | 31 March 2022 Asset Allocation | 30 September 2022 8% 8% 16% Cash & Equivalents 16% Cash & Equivalents Government fixed Government fixed income income KES KES Corporate fixed Corporate fixed 40% 7.25Bn income Equities 40% 7.0Bn in
Slide 38: Marketable Securities – Portfolio Returns
Marketable Securities – Portfolio Returns. The marketable securities portfolio has consistently outperformed the market on the back of active management and diversification. • In the prevailing macro environment, we expect a strong performance of the fixed income asset class. • 91% of the portfolio
Slide 39: Share Buy Back Proposal
BUSINESS REVIEW Dr. James Mworia – Chief Executive Officer Share Buy Back Proposal.
Slide 40: Share Buy Back Announcement
Share Buy Back Announcement. Salient Features of the Proposed Share Buyback Buyback Method On-market (Nairobi Securities Exchange) The Board of Directors has passed a resolution approving an on-market Share Buyback Scheme in line Buyback Period 18 months with the CMA Guidelines. Maximum Price Kes 9.
Slide 41: ESG Considerations and Impact
BUSINESS REVIEW Dr. James Mworia – Chief Executive Officer ESG Considerations and Impact.
Slide 42: ESG Highlights and Impact
ESG Highlights and Impact. School Infrastructure Beneficiaries of our scholarship programs have Mathari Primary (Nairobi) and Timboni Primary (Vipingo, Kilifi) interactive sessions with the Centum team Project increased 311 in additional pupils number of classrooms enrolled at Mathari from 8 to 32 P
Slide 43: ESG Highlights and Impact
ESG Highlights and Impact. We are committed to providing and promoting equal opportunities and ensure “At Centum, the that diversity and inclusion are incorporated diversity of our in our corporate culture. workforce is a source of Over the years, Centum has continuously a wide array of skills incre
Slide 44: ESG Highlights and Impact
ESG Highlights and Impact. Newly installed reverse osmosis desalination plant 2+ million litres of wastewater recycled daily at Two Rivers 3 million litres of sea water desalinated plant at Vipingo Supplied 1+ million litres of treated water to Githogoro informal settlement KES 20+ million towards c
Slide 45: ESG Highlights and Impact
ESG Highlights and Impact. 1.2 MW Solar Plant at Two Rivers Reduced Carbon emissions at Vipingo Akiira Geothermal Plant
Slide 46: Financial Review
FINANCIAL REVIEW Risper Alaro – Group Finance Director
Slide 47: HY2022/23 Company Total Return Statement
Financial Review – HY2022/23 Company Total Return Statement. • A 20x improvement in profit after tax was recorded, driven by: a) A 45% increase in dividend income on Private Equity portfolio & 10% increase in interest income on marketable securities. The annualized yield on MSP portfolio was c. 14%.
Slide 48: Company Statement of Financial Position
Financial Review – Company Statement of Financial Position. KES million Sep ‘22 Mar ‘22 • 4% decline in NAV driven by: Investment portfolio 42,204 42,694 a) unrealized Fx translation movements in some of Assets held for sale 2,776 2,776 the subsidiaries and an increase in cost Cash and cash equivale
Slide 49: Company Cash Flow Statement
Financial Review – Company Cash Flow Statement. KShs. Mn 1HY 2023 1H 2022 Cash flows from operating activities Net cash generated from operating activities 161 776 Cash flows from investing activities • Kes 161Mn net cash flows Purchase of property and equipment (0.4) - generated from operations. In
Slide 50: Consolidated Financial Statements
FINANCIAL REVIEW Risper Alaro – Group Finance Director Consolidated Financial Statements. For purposes of compliance with the Company’s Act requirements.
Slide 51: Consolidated Income Statement
Financial Review – Consolidated Income Statement. Kes ’000 1H23 A 1H22 A %Δ (Loss)/Profit from Trading businesses (22,593) 183,724 -112% • Performance for the period was impacted Loss from Real Estate operations (267,992) (141,807) -89% by the depreciation of the Kes against the Loss from Two Rivers
Slide 52: Consolidated Income Statement
Financial Review – Consolidated Income Statement. KShs. Mn 1HY 2023 1HY 2022 % • The Group operating profit increase by 62% Operating profit from trading subsidiaries 43 255 (83%) compared to the prior period. Operating (loss)/ profit from Centum Real Estate (5) 82 (106%) Operating (loss)/ profit fr
Slide 53: Consolidated Statement of Financial Position
Financial Review – Consolidated Statement of Financial Position. KShs. Mn Sep 2022 Mar 2022 Property, plant and equipment 3,257 3,238 Investment property 40,874 41,193 Inventory - Residential houses under construction 7,632 7,551 Right of use assets 76 127 Goodwill and intangible assets 1,622 1,671
Slide 54: Outlook
OUTLOOK Dr. James Mworia – Chief Executive Officer
Slide 55: Outlook HY 2022/23: Key Focus Areas
Outlook HY 2022/23. Key Focus Areas • Focus on monetizing value created by converting illiquid assets into cash and redeployment of the same to new opportunities. • Completion of the sale of Sidian Bank to unlock liquidity and returns in 2HY2023. Growth We are optimistic Portfolio • Accelerate the t
Slide 56: Q&A
C CENTUM Q&A
Slide 57: Investor Briefing & Results Announcement
HY 2023 Investor Briefing & Results Announcement. For the Period ended 30 September 2022 November 29, 2022 Centum Investment Company Plc Tel: (+254) 20 228 6000 / 9th Floor South Tower, Two Rivers (+254) 709 902000 P.O. Box 10518 – 00100 Nairobi Kenya Email: investorelations@centum.co.ke
Centum Investment Company — HY 2023 Earnings Presentation on 6ix