Centum Investment Company Plc · NSEKE:CTUM
Centum Investment — FY2020 Earnings Presentation
45 slides from Centum Investment's earnings presentation, Jun 12, 2020
Slide 1: Investor Briefing FY 2019/2020
Investor Briefing FY 2019/2020 12th June 2020
Slide 2: Agenda
Agenda Business Review Dr. James Mworia – Group Chief Executive Officer Financial Review Samuel Kariuki – Group Chief Finance Officer Outlook Dr. James Mworia – Group Chief Executive Officer Q&A 2
Slide 3: Centum 4.0 Underlying Themes for FY20
Centum 4.0 Underlying Themes for FY20 Objective Status Total debt repayment: KES 14.4 billion ▪ KES 7.8 billion bank term loan repaid by 31 March 2020. Deleverage the balance sheet ▪ Maturing KES 6.6 billion bond retired post-balance sheet date on 8 June 2020 ▪ KES 1.8 billion in annual finance cost
Slide 4: Performance Highlights FY 2019/20
Performance Highlights FY 2019/20 Key Events and Performance Drivers Marketable Real Estate Private Equity Development Securities & cash 65% 59% 22% 25% 10% 12% 2.8% 3.4% of Total of Net Asset of Total of Net Asset of Total of Net Asset of Total of Net Asset Assets Value Assets Value Assets Value As
Slide 5: Portfolio Review
Portfolio Review 5
Slide 6: Real Estate
Real Estate Managed by 6
Slide 7: 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 Sale of infill developments within our ▪ 1,442 units under construction, of which 999 1 Infill have been pre-sold. Revenue potential of 7.8 current landbank
Slide 8: Real Estate Infill Projects: Performance as at 31 March 2020
Real Estate Infill Projects: Performance as at 31 March 2020 Two Rivers, KE Vipingo, KE Total Pearl Marina, UG & 3rd Party JVs 1,321 1,599 1,407 4,327 Total Approved Schemes Units Units Units Units Phase 1 428 500 514 1,442 Units Units Units Units Units 457 325 999 344 201 582 198 Units Pre- 81% 56
Slide 9: Real Estate Infill Projects: Sales Progress as at 31 March 2020
Real Estate Infill Projects: Sales Progress as at 31 March 2020 9
Slide 10: Real Estate Development progress as at 31 March 2020
Real Estate Development progress as at 31 March 2020 Awali Estate Palm Ridge Mirabella villas Expected Completion – Aug 2020 Expected Completion – Dec 2020 Expected Completion – Sep 2020 Bella Vista Riverbank Apartments Cascadia Apartments Expected Completion 10 Expected Completion – June 2021 Expec
Slide 11: Real Estate Land Sales: Progress as at 31 March 2020
Real Estate Land Sales: Progress as at 31 March 2020 Centum Real Estate has a robust sales pipeline and is actively pursuing sales leads to convert into actual sales FY19 Cumulative FY20 Sales with executed Sales Pipeline under Closed Sales agreements Negotiation as at FY20 KShs. millions KShs. mill
Slide 12: Real Estate Rentals: Two Rivers Lifestyle Centre
Real Estate Rentals: Two Rivers Lifestyle Centre as at 31 March 2020 Mall Occupancy on the Gross Lettable Area +3% on 59,032 sq. 81% metres 78% 75% 76% 72% HY18 FY18 HY19 FY19 FY20 Office Towers Occupancy on the Gross Lettable Area +6% on 25,244 sq. 20% metres 14% 9% 11% 6% HY18 FY18 HY19 FY19 FY20
Slide 13: Market Values vs. Transaction Price for Land Banks
Portfolio Review Market Values vs. Transaction Price for Land Banks The underlying land banks are valued below the last transaction price, representative of our conservative approach to valuations Carrying Value per Last Transaction Price Value of Debt at Acre per Acre 31.3.2020 Development Sharehol
Slide 14: Stage-Gate Process
Real Estate 3rd Party Projects 3rd party projects and residential infill developments are funded from Centum RE operations. The projects are funded through a mix of debt, land sales proceeds, 3rd party equity and pre-sales with investment being carried out at Centum Real Estate level (Centum Develop
Slide 15: Real Estate Debt Exposure at Portfolio Level
Real Estate Debt Exposure at Portfolio Level The real estate portfolio remains well capitalized with Two Rivers being the only entity/land bank with third- party interest bearing debt Entity Shareholding Real Estate Portfolio Leverage (Kes millions) % Two Rivers Development 17% 58% Debt/Total Assets
Slide 16: Private Equity
Private Equity Managed by ©) P, CENTUM
Slide 17: 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% 407.6 KShs. Million 400.0 4% Bottler Proceeds (net of Capi
Slide 18: Private Equity: Performance of remaining assets
Private Equity Performance of remaining assets • 2.7x growth in profitability year on year, driven by turnaround of Sidian Bank Limited Profitability • Seven of eight portfolio companies were profitable during the year • PE business, excluding the sold bottlers, paid KES 318 million in dividends to
Slide 19: Centum Value Fund II: Rationale for Fund Structure
Private Equity| Centum Value Fund II Rationale for Fund Structure Opportunities exist that exceed Centum's own capital We continue to evaluate a pipeline Fund II of great opportunities that could We believe that the prevailing Our local knowledge and exceed Centum’s proprietary capital experience in
Slide 20: 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 21: Development
a Development Managed by ©) P, CENTUM
Slide 22: Development: Status Update on Power Assets
Development Status Update on 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 of Support
Slide 23: Update on Africa Crest Education and Greenblade Growers
Development Update on Africa Crest Education and Greenblade Growers 17.6% Stake 100% Stake KShs. 940 million Greenblade KShs. 168 million Carrying Value Carrying Value Growers 0% Total Debt/Asset Ratio Enrolment of Students Sales volume in Tons 210 students: EBITDA 200 Break-even 300 220 213 223 150
Slide 24: Marketable Securities
Marketable Securities Managed by 24
Slide 25: Marketable Securities: Allocation and Performance Highlights
Marketable Securities Allocation and Performance Highlights 90% of total MSP 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 KES 8.9 billion at 31 March 2021 ❑ Strategic allocation of 90% of portfolio to fixed E
Slide 26: CSR Engagement
CSR Engagement Managed by @; 2/CENTUM FOUNDATIO
Slide 27: Ajiry: Tackling Youth Unemployment
Ajiry Tackling Youth Unemployment Ajiry’s mission is to create empowerment and employment for individuals as well as small businesses/start ups 1 Ajiry App 2 Ajiry Centres • Progressive Web Application (PWA) • Tribus-TSG (a Centum subsidiary) has launched in May 2019 by Tribus – TSG opened employmen
Slide 28: Covid-19 Mitigation: Standing together with our communities
Covid-19 Mitigation Standing together with our communities In the face of COVID-19 pandemic, each one us must play a part in keeping ourselves safe. Centum continues to support our communities in these tough times. 28
Slide 29: Sustainably Investing in Our Communities in support of the SDGs
Sustainably Investing in Our Communities in support of the SDGs • 200+ scholarships awarded to date in Vipingo • Vipingo scholarship programme supports 50 bright but needy students annually to transition to secondary schools. • 100+ graduates of the Vipingo Vocational training program now in gainful
Slide 30: Employer of the Year: Top 10 in All 7 categories
Employer of the Year Top 10 in All 7 categories Category Rank Leadership & Legal, governance and compliance audits, gender diversity #1 Governance (women) at Board level Collaborative workplaces, wellness facilities in place, Workplace #1 green Environment agenda Corporate Achievement and surpassing
Slide 31: Financial Performance
Financial Performance 31
Slide 32: Performance Highlights For the year ended 31 March 2020
Performance Highlights For the year ended 31 March 2020 KShs. 7.4 billion +79% Net profit (without one-off provisions) Growth in Consolidated Net Profit Group KShs. 4.6 billion +12% Performance Net profit (with one-off provisions) Highlights KShs. 19.60 billion Exit realisations from Almasi and Nair
Slide 33: Consolidated Income Statement
Consolidated Income Statement KShs. Millions FY2020 FY2019 % Investment income 14,996 9,549 57% Trading profit 395 1,117 -65% Operating income /(loss) from financial services 171 (461) -137% Other income 301 303 -1% Operating expenses (2,465) (2,128) 16% Finance costs (3,223) (2,518) 28% Share of pr
Slide 34: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position KShs. millions FY 20 FY 19 Property, plant and equipment 4,099 11,068 Investment property 41,181 40,034 Inventory - Residential houses under construction 3,016 381 Right of use assets 1,062 - Goodwill and intangible assets 1,369 2,495 Investment portfolio
Slide 35: Company Total Return Statement
Financial Performance: Company Total Return Statement KShs. millions FY 20 FY 19 %Δ Investment income 3,695 3,167 17% Operating expenses (894) (631) 42% Finance costs (1,815) (1,710) 6% Operating profit 986 827 19% Income tax expense (797) (84) 850% Profit for the year (before one-off provisions) 18
Slide 36: Company Statement of Financial Position
Company Statement of Financial Position KShs. millions FY 20 FY 19 %Δ KShs. millions FY 20 FY 19 %Δ Investment portfolio: Borrowings 7,486 16,145 -54% - Investment in Subsidiaries 30,236 42,157 -28% Other Liabilities 1,926 2,899 -34% - Debt Investment in Subsidiaries 15,631 15,696 0% Total Liabiliti
Slide 37: Company Gearing & Liquidity
Company Statement of Financial Position Company Gearing & Liquidity Company Long Term Debt ▪ Bond subsequently paid in June 2020 31 March 2020 31 March 2019 ▪ Finance costs incurred for most of 2019/20 as retirement took place late in the year Corporate Bond II ▪ Savings in finance costs estimated a
Slide 38: Company Statement of Cash Flows
Company Statement of Cash Flows KShs. millions FY 20 FY 19 Cash flows from operating activities Net cash generated from operating activities 19,083 3,736 Cash flows from investing activities Purchase of PPE (11) (15) Investments in subsidiaries (1,522) (2,053) Purchase of shares in unquoted investme
Slide 39: Dividends and Share Price
Dividends and Share Price
Slide 40: FY2020 First & Final Dividend
FY2020 First & Final Dividend The Centum Board of Directors has recommended the payment of a first and final dividend of KES 1.20 per share, Dividend amounting to KES 798 million. A similar amount was paid in the last financial year. 40
Slide 41: Market Value and Net Asset Value Gap
Market Value and Net Asset Value Gap Current share price attribution Significant Value Opportunity for Investors Portfolio Assets NAV/Share Sidian Bank 3.88 Isuzu East Africa 3.67 Longhorn Publishers 1.30 25.85 12.35 NAS Servair 0.92 ACE Holdings 1.40 Other Private Equity Assets 2.19 Private Equity
Slide 42: Outlook
x fe) 2 Y =] oO
Slide 43: Outlook FY 2020/21: Response and Strategic objectives
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 capital while unlock value across
Slide 44: Q&A
Q&A
Slide 45: Centum Investment Company Plc contact details
Centum Investment Company Plc 9th Floor South Tower, Two Rivers P.O. Box 10518 – 00100 Nairobi Kenya Tel: (+254) 20 228 6000 / (+254) 709 902000 Email: investorelations@centum.co.ke
Centum Investment Company — FY2020 Earnings Presentation on 6ix