Centum Investment Company Plc · NSEKE:CTUM
Centum Investment — Investor Presentation (October 2020)
51 slides from Centum Investment's investor presentation, October 2020
Slide 1: Investor Update Presentation
Investor Update Presentation October 2020
Slide 2: Table of Contents
Table of Contents Company Overview 3 Our Portfolio 7 Our NAV and Share Price 41 Covid-19 Impact & Outlook | FY2020/21 47 2
Slide 3: Centum at a Glance
Centum at a Glance Portfolio make up – 31 March 2020 KES 13.5Bn Market Capitalisation(1) Real Estate 65% (2) KES 47.4Bn Net Asset Value Private Equity 22% Development 2.8% 11x NAV growth FY2009– FY2020 Marketable Securities 10% 3 Business Segments of Focus: RE, PE & MSP KES 57Bn Total 30% Centum 4.0
Slide 4: Evolution of our business
Centum Investment Plc Evolution of our business Centum is the leading listed investment company in East Africa and has existed for 53 years. We are listed on the Nairobi Securities Exchange and the Uganda Securities Exchange NAV growth in Centum 4.0 11x the past decade Sustainable growth Centum 3.0
Slide 5: Centum's investment philosophy
Centum’s investment philosophy Centum’s twin objectives are: Private Invest in companies where we can achieve Equity significant growth in value and position for exit To give investors access To grow net asset value Pursue market led infill developments and sale Real Estate of development rights to
Slide 6: Centum 4.0 Strategy
Centum 4.0 Strategy FY20 – FY24 Priorities Strategic Pillar Progress and FY2021 focus ✓ Group posted Ksh 4.6bn in FY2020 PAT, 12% y-o-y growth. • Generate a minimum return on equity of 20% Return & Dividend • Optimise dividend pay-out to the higher of 30% of ✓ Made exits worth Ksh 19.6bn realizing 3
Slide 7: Our Portfolio
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Slide 8: Our portfolio
Our portfolio We have structured our operations under three distinct segments Holds and Manages Private Equity & Greenblade Growers Development Holds and Manages Centum Development (K) Ltd [CDKL] Real Estate Holds and manages the marketable securities portfolio as well as other client funds as a lic
Slide 9: Centum 4.0 Strategy Overview
Our Portfolio Centum 4.0 Strategy Overview Under Centum 4.0, the Group’s focus is on cash returns with a 5-year target of generating Kes 21 billion in annuity income and Kes 26 billion in exit proceeds and shareholder loan repayments CICP Annuity Income: KES 21 billion Exit Proceeds: KES 26 billion
Slide 10: Real Estate
Real Estate Managed by 10
Slide 11: Real Estate: Organization structure
Real Estate Organization structure Centum Investment Plc 100% 58% Centum Real Estate Two Rivers Development 50% Two Rivers Mall Limited Limited 100% 100% 100% 100% Uhuru Heights Limited Vipingo Development Limited Centum Development Company Kenya Centum Development Kenya Limited (Mauritius) Kenya Li
Slide 12: Value creation progress under Centum 4.0 strategy
Real Estate Value creation progress under Centum 4.0 strategy Cash Return Target Over Centum 4.0 CICP Shareholder Loan Residential Units Land sales Repayment Target is to contribute KES 16 Bn to Centum over the 5-year strategy period ending FY2024 Real Estate KES 6 bn KES 4.6 bn KES 0.54 bn Dividend
Slide 13: Real Estate Strategic Pillars
Real Estate Strategic Pillars Under Centum 4.0, Centum Real Estate is pursuing a four-pronged real estate strategy Pillar Objective Achievement at 30 September 2020 To monetize our land banks through ▪ 1,450 units under construction, of which 1 Infill 1,112 units (77%) have been pre-sold with a infi
Slide 14: Our Development model | sales-led
Real Estate Our Development model | sales-led 1 2 3 4 5 Feasibility Business Concept Market Pre-Construction Construction Case Business Case Validation & Fundraising – Product brief with unique – Updated product brief – Final marketing launch and – Detailed design and BOQs – Project update/progress
Slide 15: Model designed to mitigate risks across the value chain
Real Estate Our model is designed to mitigate risks across the development value chain Nature Mitigation ▪ Development process is sales-led. Our policy is 30% pre-sales ▪ Inability to sell developed units as a result of before ground breaking. [Of 996 units to be delivered in 2020/21, over-supply in
Slide 16: Model designed to mitigate risks across the value chain
Real Estate Our model is designed to mitigate risks across the development value chain Nature Mitigation ▪ In-house Costs and Contracts management team ▪ Escalation of project cost through change in complemented by outsourcing to QS firms; scope or variations will impact projected ▪ We only enter in
Slide 17: Infill Projects: Performance as at September 2020
Real Estate Infill Projects: Performance as at 30 September 2020 Two Rivers, KE Total Pearl Marina, UG & 3rd Party JVs Vipingo, KE 1,321 1,862 1,407 4,590 Total Approved Schemes Units Units Units Units Phase 1 Total: 428 Units Total: 1,141 Units Total: 514 Units Total: 2,083 Units Units Under constr
Slide 18: Fund raise: Kes 4Bn bond issue is underway
Real Estate Fund raise: Kes 4Bn bond issue is underway Issuer Centum Real Estate Limited (subsidiary of Centum Investment Plc) Purpose Bridge funding for the construction of residential development projects Tenor 3 years Amount KES 4,000,000,0000 (with a KES 2bn green shoe option) Description Secure
Slide 19: Covid-19 Impact on Sales and Collections up to Sep 2020
Real Estate Covid-19 Impact on Sales and Collections up to Sep 2020 2019 2020 Our real estate business has remained resilient in the covid-19 environment owing to Apr-Sep 2020 KShs KShs risk mitigation embedded in our strategy. Performance 'millions' 'millions' % Change ✓ Revenue potential of units
Slide 20: Projects completed and handed over to buyers in Oct 2020
Real Estate Projects completed and handed over to buyers in Oct 2020 Awali Estate in Vipingo, Kilifi – 74 Units Mirabella Villas at Pearl Marina, Uganda – 22 Units 20
Slide 21: Handover of Completed Units in Vipingo and Pearl Marina
Real Estate Handover of Completed Units in Vipingo and Pearl Marina 21
Slide 22: Development progress to Sep 2020
Real Estate Development progress to Sep 2020 Palm Ridge Expected Completion – Q1 2021 Riverbank Apartments Cascadia Apartments Expected Completion – June 2021 Expected Completion – 2022 22
Slide 23: Development progress to Sep 2020
Real Estate Development progress to Sep 2020 Bella Vista Expected Completion Q1 2021 23
Slide 24: Rentals: Two Rivers Lifestyle Centre update
Real Estate Rentals: Two Rivers Lifestyle Centre update Mall Occupancy on the Gross Lettable Area – 31 March 2020 +3% on 59,032 sq. metres 81% 78% 75% 76% 72% HY18 FY18 HY19 FY19 FY20 Office Towers Occupancy on the Gross Lettable Area – 31 March 2020 Mall roof top Cinema +6% on complete 25,244 and s
Slide 25: Private Equity
Private Equity Managed by ©) P, CENTUM
Slide 26: Private Equity: Value Drivers FY20
Private Equity Value Drivers FY20 1 ▪ We completed the sale of Almasi Beverages, Nairobi Bottlers and King Beverage Limited and realized total sales proceeds of Kes 19.6 Investment Activity Billion. ▪ We continue to evaluate a pipeline of compelling opportunities for possible future deployment. 2 ▪
Slide 27: A solid track record of value creation and realization
Private Equity A solid track record of value creation and realization Dividends Total Dividend % of Cost of Holding Exit realized Yield on Exit Exit Multiple Gross KES since Company Industry company investment Period proceeds proceeds Proceeds on Cost inception IRR acquired (Kes bn) (months) (KES bn
Slide 28: Exit of Almasi Beverages and Nairobi Bottlers Limited
Private Equity Exit of Almasi Beverages and Nairobi Bottlers Limited Compared to the historic dividend and dividend …..repayment of the debt represented an yield between FY15 to FY19… incremental recurrent income KShs. 1,489 million 450.0 5% KShs. Million 407.6 400.0 Bottler Proceeds (net of Capital
Slide 29: Bottlers exit proceeds reduced leverage & enhanced liquidity
Private Equity Bottlers exit proceeds reduced leverage & enhanced liquidity Company Long Term Debt Utilization of Bottlers Exit Proceeds Utilization KShs Bottler Proceeds Received 31 March 2020 31 March 2019 18,602 (Net of Capital Gains Tax) Corporate Bond II Debt Repayment (principal + interest) (1
Slide 30: Sidian Bank
Private Equity Sidian Bank Sidian Bank remains profitable with 30% growth in loan book and significant improvement in asset quality as NPL ratio drops from 20% to 12% September 2020 update Sidian’s Net Interest and Non-funded Sidian’s Profit (Loss) After Tax 12% -6% Income FY2016 to FY2020 NPL ratio
Slide 31: Longhorn Publishers
Private Equity Longhorn Publishers Longhorn has experienced significant growth in recent years with diversification in products and markets Longhorn Publisher’s EBIT and EBIT 9 markets Diversification to digital Margins FY 2014 - 2018 Geographical operations products 450 30% 24% 23% 25% 24.5% 350 Ma
Slide 32: NAS Servair & Zohari
Private Equity NAS Servair & Zohari Market leader in 8% airline catering Y-o-Y asset growth ❑ Provides in flight airline catering with 99% KShs. 469 million +8% Total Assets market share. KShs. 16 million +8% EBIT ❑ Currently focusing on diversification of revenue streams into corporate catering and
Slide 33: Isuzu East Africa
Private Equity Isuzu East Africa Isuzu has continued its market dominance with approximately 39% share +3.7% Strategic partnerships with financiers to boost sales... Market share gained in 2020 39.4% 35.7% 28.1% 2018 2019 2020 33
Slide 34: Centum Value Fund II: positioning for economic recovery
Private Equity Centum Value Fund II: positioning for economic recovery MSCI World Index 3,000.00 2,500.00 2,000.00 1,500.00 1,000.00 500.00 0.00 • We anticipate that depressed entry multiples could present some great opportunities to re-enter the private equity market at attractive valuations • We a
Slide 35: Development
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Slide 36: Private Equity: Development Portfolio
Private Equity: Development Portfolio Power Assets 37.5% Stake 51% Stake KShs. 1.45 billion nil Carrying Value Carrying Value Milestones to date Milestones to date ✓ Power Purchase Agreement (PPA) ✓ Power Purchase Agreement (PPA) ✓ Government of Kenya Letter of Support ✓ Government of Kenya Letter o
Slide 37: SABIS School and Greenblade Growers
Private Equity: Development Portfolio SABIS School and Greenblade Growers 87% of prior year export volumes achieved despite covid-19. Enrolment of Students 210 students: EBITDA 200 Break-even Major improvement in efficiency leading to enhanced and consistent gross profit margins in FY2021. 150 100 1
Slide 38: Marketable Securities
Marketable Securities Managed by 38
Slide 39: Marketable Securities Allocation and Performance Highlights
Marketable Securities Allocation and Performance Highlights 90% of total MSP was allocated to fixed income and cash ❑ Growth in holdings of marketable securities and 5% 5% cash from KES 4.1 billion at 31 March 2019 to Kshs 8.9 billion at 31 March 2020 ❑ Strategic allocation of 90% of portfolio to fi
Slide 40: Our NAV and Share Price
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Slide 41: Centum's Value: Portfolio value attribution
Centum’s Value Portfolio value attribution | 31 March 2020 Total Assets NAV NAV/ Share 01 Real Estate Master-planned to new urban nodes KES 36.9 billion KES 27.9 billion KES 42.0 | 59% Catalyst Infill developments 02 Private Equity Trading subsidiaries or investments KES 9.4 billion KES 8.9 billion
Slide 42: Centum's Market Cap and Intrinsic Value
Centum’s Market Cap and Intrinsic Value Share Price, Market Performance & NAV Centum Share Price vs NSE 20 Index 90.0 6,000 Kes per Share 80.0 5,248 4,946 79.0 5,000 Centum’s share price has 70.0 73.2 71.3 71.3 declined over the past 6 60.0 63.5 67.3 4,000 years in pace with the 3,982 3,845 59.1 ove
Slide 43: Significant opportunity for value investors
Centum’s Market Cap and Intrinsic Value Significant opportunity for value investors Simulated share price attribution to our portfolio Asset contribution to NAV per Share | Mar 2020 Portfolio Assets NAV/Share 20.7 Kes Sidian Bank 3.88 7.2 vs 57.8 Isuzu East Africa 3.67 Longhorn Publishers 1.30 NAS S
Slide 44: Closing the NAVPS and share price gap
Centum’s Value Gap Closing the NAVPS and share price gap Whereas the company’s market price movements is subject to many external factors, management has considered some drivers that may be within our control Driver Commentary Implementation status 1 Dividend policy ✓ Dividend policy has been define
Slide 45: Centum's Shareholding: Staff and Directors holdings
Centum’s Shareholding Staff and Directors holdings The holdings by Centum staff and directors has increased over the last 5 years Centum Shareholding by Staff and Directors No. of shares held (millions) 360 353 353 352 348 2016 2017 2018 2019 2020 45
Slide 46: Covid-19 Impact & Outlook | FY2020/21
Covid-19 Impact & Outlook | FY2020/21 46
Slide 47: Overview of Covid-19 Impact on our portfolio
Overview of Covid-19 Impact on our portfolio Proportion of assets impacted: NAV per % Expected share Contribution recovery of Positively Neutral Negatively 31 Mar 2020 to Centum portion with Portfolio segment (Kes) NAV negative impact Short - Medium Growth portfolio 13.36 19% 0% 56% 44% term Real Es
Slide 48: Covid-19 Impact and Future Outlook | FY 2020/21
Covid-19 Impact and Future Outlook | FY 2020/21 Marketable Real Estate Private Equity Development Securities Strategic objectives • Drive value creation in the • Leverage new • Evaluating new • Strategic allocation to underlying assets and developments that are opportunities that meet preserve capit
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Slide 50: Disclaimer
Disclaimer Certain statements in this presentation concerning our future growth prospects are forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those presented in this report. The risks and uncertainties relating t
Slide 51: investorelations@centum.co.ke
investorelations@centum.co.ke Centum Investment Company Plc Tel +254 20 2286000 99h Floor, Southern Tower, Two Rivers Mobile +254 709 902 000 PO Box 10518-00100 Email investorelations@centum.co.ke Nairobi, Kenya www.centum.co.ke
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