Centum Investment Company Plc · NSEKE:CTUM
Centum Investment — H1 FY2019 Earnings Presentation
46 slides from Centum Investment's earnings presentation, November 2018
Slide 1: HY19 Investor Briefing
HY19 Investor Briefing Results for the period to 30 September 2018 November 2018
Slide 2: Today’s agenda
Today’s agenda Business Review Dr. James Mworia – Group Chief Executive Officer Financial Review Samuel Kariuki – Group Finance Director Outlook Dr. James Mworia – Group Chief Executive Officer Q&A 2
Slide 3: Business Review
Business Review 3
Slide 4: Operating Environment
Operating Environment Interest Rates Inflation (%) Purchasing Managers' Index™ (PMI™) 25 10.0 60 20 7.5 50 15 Percentage (%) Percentage (%) 5.0 10 40 2.5 5 0 0.0 30 H1-15 H2-15 H1-16 H2-16 H1-17 H2-17 H1-18 Lower bound Overall inflation 91-T bill CBR Savings Lending rate Core inflation Upper bound P
Slide 5: Performance Highlights
Performance Highlights 6-month period ended 30 September 2018 Growth in Consolidated Profit after Tax KES 2.1 billion +27% Net profit KES 1.2 billion Group Exit realisations from GenAfrica transaction Gain on disposal Performance Highlights 29% Holding period IRR Significant pre-sales and land devel
Slide 6: Net Asset Value and Total Assets
Performance Highlights Net Asset Value and Total Assets Total Assets (KES billions) and Net Asset Value per Share (KES), FY14 - HY19 73.2 73.6 80.0 75.0 67.3 70.0 59.1 66.1 67.0 65.0 60.0 61.6 48.0 50.0 KES billions 55.0 51.5 KES 34.5 40.0 45.0 30.0 41.2 20.0 35.0 28.8 10.0 25.0 0.0 FY14 FY15 FY16 F
Slide 7: Portfolio Review
Portfolio Review 7
Slide 8: Summary of Portfolio Class as at 30th September 2018
Portfolio Review Summary of Portfolio Class as at 30th September 2018 Marketable Securities Real Estate Portfolio Private Equity Portfolio Development Portfolio Portfolio and Cash KES KES KES KES 22,002 20,930 4,613 1,438 million million million million Net Asset Value Net Asset Value Net Asset Valu
Slide 9: Portfolio Review
Portfolio Review Real Estate Portfolio Private Equity Portfolio Marketable Securities Portfolio Development Portfolio 9
Slide 10: Key Phases of Our Development Cycle
Real Estate Portfolio Key Phases of Our Development Cycle The real estate development cycle consists of 5 main gates of value creation. Market validation is an important phase to [a] validate the business assumptions from the potential market and potential investors and [b] fundraising with a target
Slide 11: Residential Infill Projects
Real Estate Portfolio Residential Infill Projects Infill Project Size Units under Development Realised Sales Key Dates 78% in market validation Construction Start 22% in pre-construction KES Q4 2018 1,326 units 1.05 billion Completion 249 units sold Q3 2020 98% in pre-construction Construction Start
Slide 12: Project Pipeline: Residential Developments in Market Validation
Real Estate Portfolio Project Pipeline: Residential Developments in Market Validation Vipingo Development Two Rivers Pearl Marina Awali Estate Riverbank Apartments Mirabella Residences Starting Price from KES 13m Starting Price from KES 33m 1255 Palm Ridge Bella Vista Apartments Starting Price from
Slide 13: Project Pipeline: Commercial Developments in Market Validation
Real Estate Portfolio Project Pipeline: Commercial Developments in Market Validation Vipingo Development Two Rivers Vipingo Investment Park 5-Star Hotel & Branded Apartments Starting Price from KES 17m Fundraising for 200-key and 110-branded residences 13
Slide 14: Two Rivers Lifestyle Centre HY19 Performance
Real Estate Portfolio Two Rivers Lifestyle Centre HY19 Performance Key Mall Metrics as at HY18 • Two Rivers Lifestyle Centre was 76% let (on gross lettable area) as at Retail Occupancy 30th September 2018 Status Units % Gross % − Increased tenant uptake on both local and international brands Lettabl
Slide 15: Vipingo Development HY19 Performance
Real Estate Portfolio Vipingo Development HY19 Performance • During the period, we have sold development rights amounting to KES 400m • We have broken ground on Phase 1 of an 1,150-acre Investment Park. Phase 1 comprises of a net acreage of 180 acres Plot Sales Realised as at HY19 Use Realised Reven
Slide 16: Portfolio Review
Portfolio Review Real Estate Portfolio Private Equity Portfolio Marketable Securities Portfolio Development Portfolio 16
Slide 17: Private Equity Portfolio Value Drivers
Private Equity Portfolio Value Drivers 1 • KES 1.5 billion in consolidated operating profit representing a 300% growth Profit Growth compared to a similar period in the prior year 2 • 60% increase in consolidated dividend income received from portfolio companies Dividends where the Group holds minor
Slide 18: Private Equity Portfolio Performance Highlights
Private Equity Portfolio Performance Highlights +68% Non-funded income over 6-month period Trade finance business +700% Banking Trade finance balances over 12-month period Subsidiary Total assets and customer deposits +15% Growth over 6-month period Strong capital base KES 1.2 billion Fully subscrib
Slide 19: Portfolio Review
Portfolio Review Real Estate Portfolio Private Equity Portfolio Marketable Securities Portfolio Development Portfolio 19
Slide 20: Marketable Securities Portfolio Quoted Private Equity Performance
Marketable Securities Portfolio Quoted Private Equity Performance MSP vs NSE 20 – Long Term Track Record Portfolio Allocation – September 2018 7,000 Total Portfolio 4% 6,000 KES 3,587 million 5,000 5,216 40% 4,000 3,000 43% 2,000 1,000 1,025 0 13% Mar/09 Mar/10 Mar/11 Mar/12 Mar/13 Mar/14 Mar/15 Mar
Slide 21: Portfolio Review
Portfolio Review Real Estate Portfolio Growth Portfolio Marketable Securities Portfolio Development Portfolio 21
Slide 22: Development Portfolio Performance Highlights
Development Portfolio Performance Highlights Investments Held Power Sector Education Sector Agribusiness Sector Greenblade Growers Limited On-track to complete financial close SABIS® International School – Runda Greenblade on course to break even for the two energy projects admitted its first studen
Slide 23: Financial Review
Financial Review 23
Slide 24: HY19 Highlights: Key Performance Drivers
Financial Performance HY19 Highlights: Key Performance Drivers 1. • Sale of 73.35% stake in GenAfrica Asset Managers Ltd. to Kuramo Capital GenAfrica Transaction 2. • Investment property valuations at HY 2019 resulted in a gain of KES 2.7 billion, validated by sale Real Estate transactions at severa
Slide 25: HY19 Highlights
Financial Performance HY19 Highlights KES 73.61 +0.6% KES 4.1 KESbillion 4.7 Bn +84.0% Net Asset Value Per Share Investment TotalIncome Return KES 2.1b KES 0.9b Consolidated Profit After +27.5% +713% Company Profit After Tax Tax KES 5.6 Bn Investment Income KES 67.0 billion +1.3% KES 1.1 billion -54
Slide 26: Company Total Return Statement
Financial Performance Company Total Return Statement KES ‘000 Sep-18 Sep-17 Change (%) • Profitability driven by KES 1.2b realised Dividend income 266,760 301,583 -12% gains from disposal of Gen Africa Interest income 621,558 750,878 -17% Realised gains 1,244,776 - - • Performance also driven by a 6
Slide 27: Cost Efficiency FY14 – HY19
Financial Performance Cost Efficiency FY14 – HY19 FY14 – FY18 HY18 vs. HY19 Comparison 2.5% 2.10% Portfolio Costs/ Total Assets (%) 2.0% Target Cost Efficiency 1.70% 1.50% 1.5% 1.30% 1.30% 1.0% 0.5% 0.40% 0.40% 0.0% FY14 FY15 FY16 FY17 FY18 HY18 HY19 Our costs as a percentage of total assets have re
Slide 28: Company Statement of Financial Position
Financial Performance Company Statement of Financial Position Assets Liabilities and Shareholder Funds KES millions HY19 FY18 KES millions HY19 FY18 Investments Portfolio Borrowings 14,770 14,843 Investment in Subsidiaries 39,590 39,414 Other Liabilities 3,199 2,559 Debt investment in Subsidiaries 1
Slide 29: Company Statement of Cash Flows
Financial Performance Company Statement of Cash Flows KES millions HY19 HY18 • Higher cash generated from operating Cash flows from operating activities activities following receipt of proceeds Net cash generated from operating activities 2,165 973 from the GenAfrica transaction Cash flows from inve
Slide 30: Company Gearing & Debt Capacity
Company Gearing & Debt Capacity Company Level Gearing KES millions 31-Mar-18 30-Sep-18 Corporate Bond II 6,294 6,294 Term Loan 5,087 5,105 Total 11,381 11,399 Debt Service Coverage Ratio KES millions FY14 FY15 FY16 FY17 FY18 HY19 Operating Inflows 4,146 8,114 7,904 5,259 6,270 3,364 Operating Outflo
Slide 31: Debt Profile
Debt Profile Borrowings by Nature of Debt HY19 Debt Maturity Profile KES million Changes in the 6-month period to 30 September 2018 As at HY19 2% 6,066 5,894 17% +1,881 43% KES million Total Debt: KES 14.77b 2,522 38% -1,661 287 Bond II Term Loan Revolving Credit Facility Overdraft Facility FY19 FY2
Slide 32: Group Turnover Analysis
Consolidated Financial Performance Group Turnover Analysis KES millions Sep-18 Sept-17 Change (%) • Publishing revenues increased due to increased Beverage business 3,423 4,044 -15% sales by Longhorn on fulfilment of government Publishing business 1,058 535 98% tender • Increase in investment income
Slide 33: Group Investment Income
Consolidated Financial Performance Group Investment Income KES millions Sep-18 Sep-17 Change (%) • Realised gains reflect the disposal of GenAfrica Dividend income 144 86 67% Realised gains on disposal • Investment property valuations, validated by 1,155 - (GenAfrica) sale transactions at HY19, resu
Slide 34: Consolidated Income Statement
Consolidated Income Statement KES millions Sep-18 Sep-17 Change (%) Sales 4,818 4,772 1% Cost of sales (3,114) (3,024) -3% Gross profit 1,704 1,748 -3% Operating and administrative expenses (1,314) (1,199) -10% Trading profit 390 549 -29% Financial services: - Income from provision of financial serv
Slide 35: Trading Subsidiaries
Group Financial Performance Trading Subsidiaries KES millions Sep-18 Sep-17 Change (%) • Robust revenue performance in publishing Sales: and Real Estate utility companies - Beverage business 3,423 4,044 -15% - Publishing business 1,058 535 98% - Agribusiness 23 28 -18% • Lower volumes in the beverag
Slide 36: Financial Services
Group Financial Performance Financial Services KES millions Sep-18 Sep-17 Change (%) • Trade finance balances have grown by 700% Sidian Bank Limited: over the last 12 months - Interest income 941 924 2% - Fees, forex and other income 514 307 68% • Growth in non-funded income speaks to the Total inco
Slide 37: Consolidated Statement of Financial Position
Group Financial Performance Consolidated Statement of Financial Position Assets Liabilities and Shareholder Funds KES millions HY19 FY18 KES millions HY19 FY18 Customer Deposits and Banking Property, Plant and Equipment 10,869 9,665 19,937 16,042 Liabilities Investment Properties 35,524 32,719 Borro
Slide 38: Outlook
Outlook 38
Slide 39: Strategic Priorities
Strategic Priorities • Robust exit pipeline of mature assets across the Portfolio to optimize Gross Return Optimise Gross Return • Portfolio enhancements across the four business lines • Optimise existing assets through infill projects and land sales and grow through targeted market-led investments
Slide 40: Questions?
Questions?
Slide 41: investorelations@centum.co.ke
investorelations@centum.co.ke Centum Investment Company Plc Tel +254 20 228 6000 9th Floor, Southern Tower, Two Rivers Mobile +254 709 902 000 PO Box 10518-00100 www.centum.co.ke Nairobi, Kenya
Slide 42: Appendix
Appendix
Slide 43: Real Estate Portfolio Valuation
Real Estate Portfolio Valuation as at 30 September 2019 Real Estate Portfolio Company Stake Carrying Value Carrying Value Valuation HY19 (KES million) FY18 (KES million) Method Portfolio Vipingo Development Limited 100% 9,999 7,646 Net Asset Value Two Rivers Development 58.30% 7,632 7,632 Net Asset
Slide 44: Private Equity Portfolio Valuation
Private Equity Portfolio Valuation as at 30 September 2019 Private Equity Portfolio Company Stake Sector Carrying Value Carrying Value Valuation Discounted HY19 (KES million) FY18 (KES million) Method Multiple4 Portfolio Almasi Beverages Limited 53.88% FMCG 8,697 8,697 FV3: Multiples - EV1/EBITDA 6.
Slide 45: Marketable Securities Portfolio Valuation
Marketable Securities Portfolio Valuation as at 30 September 2019 Marketable Portfolio Company Stake Carrying Value Carrying Value Valuation HY19 (KES million) FY18 (KES million) Method Securities Centum Exotics Limited 100% 3,587 3,589 Market Price Centum QPE 100% 58 396 Market Price Receivables 10
Slide 46: Development Portfolio Valuation
Development Portfolio Valuation as at 30 September 2019 Development Portfolio Company Stake Carrying Value Carrying Value Valuation HY19 (KES million) FY18 (KES million) Method Portfolio Amu Power Ltd 51.00% 2,100 2,144 Cost Akiira Geothermal Limited 37.50% 1,510 1,491 Cost ACE Holdings Limited 16.4
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