Centum Investment Company Plc · NSEKE:CTUM
Centum Investment — H1 FY2017 Earnings Presentation
39 slides from Centum Investment's earnings presentation, Nov 16, 2016
Slide 1: Investor Briefing: Group Results for Half Year Ended 30 September 2016
Investor Briefing Group Results for Half Year Ended 30 September 2016 16 November 2016
Slide 2: Business Review
Business Review Group Chief Executive Officer: James Mworia 2
Slide 3: Group's Vision, Mission and Strategy
Group’s Vision: “To Be Africa’s Foremost Investment Channel” Our Mission: To create real tangible wealth by providing the channel through which investors access and build extraordinary enterprises in Africa” Our Strategy: “To develop investment grade opportunities of scale across 8 key sectors” 3
Slide 4: Business Model to Drive Value Creation
Business Model to Drive Value Creation 4
Slide 5: Challenging Operating Environment
Challenging Operating Environment GDP Growth NSE 20 Performance 4,200 6.5% 6.2% 6.0% 5.9% 5.9% 5.8% 3,800 5.7% 23% decline 5.5% 3,400 5.0% 5.0% 3,000 4.5% May 2016 June 2016 July 2016 August 2016 September October November Q12015 Q22015 Q32015 Q42015 Q12016 Q22016 2016 2016 2016 Interest Rate Trend
Slide 6: Returns Delivered Under Centum 3.0
Returns Delivered Under Centum 3.0 Company NAV Per Share, FY 2014 – HY 2017 Centum ROE v NSE Returns, FY 2014 – HY 2017 70 42% 39% 60 Percentage CAGR: 21% 23% KES 50 6% 5% 61 59 1% 40 48 FY 2014 FY2015 FY2016 HY2017 Centum ROE 34.5 30 FY 2014 FY2015 FY2016 HY2017 NSE -20% -24% During the Centum 3.0
Slide 7: Performance Highlights
Performance Highlights Centum 3.0 Strategic Objectives Achievements as at HY2017 • Generate 35% annualised return • 27% annualized return to date as RETURN between FY2014 and 2019 compared to NSE return of –16% p.a. over • Consistently outperform the market the same period • Develop and scale invest
Slide 8: Portfolio Overview
Portfolio Overview Centum Investment Company Ltd Total Assets (30 Sep 2016) - KES 56.7 Bn Real Estate Financial FMCG Power Agribusiness Others Marketable Education Healthcare Services Securities Significant Progress Green CENTUM Towards Blade EXOTICS Initial Growers LTD Investment Limited Total asse
Slide 9: Portfolio Characteristics
Portfolio Characteristics Portfolio Breakdown by Stage of Underlying NAV by Sector Assets 1% 0.40% Real Estate 6% “Development” Power Portfolio 12% Education 35% Agribusiness Healthcare 16% Financial Services “Growth” Portfolio 20% FMCG Real Estate FMCG Financial Services Others Power Education Othe
Slide 10: Income Generating Sector Profitability
Income Generating Sector Profitability Disaggregated Net Profit Performance of “Growth” Portfolio Net Profits Y-o-Y Growth FMCG 722,906 42% Financial Services 599,701 4% Others 64,525 80% Total 1,387,132 24% “Growth” portfolio companies (subsidiaries and associates) that recorded a combined 24% grow
Slide 11: Investment Activity
Investment Activity Investment Activity by Sector Significant Individual Capital Deployments Sector KES (Mn) Sector KES (Mn) Real Estate 1,852 Two Rivers 1,272 FMCG 1,070 Almasi 1,000 Financial Services 560 Longhorn 507 Other 507 Akiira 314 Marketable Securities 349 ACE (Education) 295 Energy 314 TO
Slide 12: Portfolio Highlights Real Estate: Two Rivers
Portfolio Highlights Real Estate: Two Rivers Overview of Two Rivers Development • Phase 1 of our Two Rivers development Phases strategy is substantially complete: Regional Mall − Regional mall with gross lettable area (GLA) of 67,000 m2 complete Developments − Phase 1 of adjacent theme park Theme Pa
Slide 13: Portfolio Highlights Real Estate: Vipingo
Portfolio Highlights Real Estate: Vipingo We seek to develop a world-class, regional industrial hub at Vipingo • Our vision is to establish the lowest cost regional destination for light-to-medium industrial activities supported by high quality We will leverage infrastructure, residential developmen
Slide 14: Real Estate: Overview of Vipingo Phase 1
Portfolio Highlights Real Estate: Overview of Vipingo Phase 1 Project to be developed in 15 phases, with phase 1 comprising 400 acres of mixed use development anchored around an industrial park We have secured all the necessary approvals to proceed with our development plans, and are in exploratory
Slide 15: Real Estate: Vipingo Infrastructure Highlights
Portfolio Highlights Real Estate: Vipingo Infrastructure Highlights • Significant investment to be made to ensure adequate water supply e.g. establishment of desalination plant • Packaged sewer treatment plants to be built on site • Waste water and sewage to be treated in line with Local Authority a
Slide 16: Financial Services: Sidian Bank
Portfolio Highlights Financial Services: Sidian Bank • Successful completion of a rights issue saw bank’s core capitalisation increase to KES 3.99bn, making it 23rd largest bank in terms of capitalisation out of 43 players − Centum’s shareholding increased to 74.8% through the rights issue − Resulta
Slide 17: FMCG: Almasi Beverages
Portfolio Highlights FMCG: Almasi Beverages • KES 1 Bn deployed in Almasi rights issue, increasing Centum’s stake from 49.3% to 53.8% • Continued focus on plant optimisation to enhance efficiency, including significant capex investments: − 36,000 bph PET line installed at Nyeri in addition to new RG
Slide 18: Power: Akiira Geothermal
Portfolio Highlights Power: Akiira Geothermal • 140 MW geothermal power plant development adjacent to Olkaria in Nakuru County • First fully private greenfield geothermal power plant development in Africa • Exploratory drilling of two wells has confirmed presence of a viable resource of sufficient t
Slide 19: Power: Amu Power
Portfolio Highlights Power: Amu Power • Largest private sector-funded infrastructure development in East Africa (total cost of USD 1.8 Bn) • Shall be the lowest cost producing Independent Power Plant in Kenya − ~35% cheaper than the cost of wind and solar at an average cost of USD 0.08/kwh • To use
Slide 20: Agribusiness: Greenblade Growers
Portfolio Highlights Agribusiness: Greenblade Growers • Set on 120 acres of land in Ol Kalau, producing herbs , including chives, rosemary and basil • 53 acres of arable land opened up to date − Cropped on 31 acres − Erection of first 10 acres of greenhouses commenced • Commenced harvesting and sell
Slide 21: Marketable Securities: Portfolio Reallocation
Portfolio Highlights Marketable Securities: Portfolio Reallocation Portfolio Allocation as at 30th Sept. 2015 Portfolio Allocation as at 30th Sept. 2016 14% 17% 35% 8% 11% 53% 25% 37% Cash Equities Mutual Funds Fixed Income Focus remains capital preservation, however we continue to take advantage of
Slide 22: Marketable Securities: Portfolio Performance
Portfolio Highlights Marketable Securities: Portfolio Performance Our marketable securities portfolio strategy continues to outperform the NSE 20 Index, and has delivered an average outperformance of 14%* over the last 7 years M SP NSE 20 Centum Centum Marketable Securities Return and NSE Return, Ye
Slide 23: Financial Review
Financial Review Group Finance Director: Samuel Kariuki 23
Slide 24: Half Year Financial Performance
Half Year Financial Performance Key Drivers New • Consolidation of Longhorn Publisher’s results for the first time, Subsidiary following acquisition of control in May 2016 Portfolio • Improved profitability of portfolio companies Performance Realised • In the prior year, we exited Aon and recorded r
Slide 25: Group Financial Performance Summary
Group Financial Performance Summary Consolidated net profit up 8%, on the back of better cost management, reduced consolidated finance costs and increased share of associate profits Kes Bn HY 2017 HY 2016 YoY Change Group Turnover 8.5 8.4 1% Operating Costs (5.1) (5.1) 1% Finance Costs (0.9) (1.3) -
Slide 26: Key Drivers of Performance
Key Drivers of Performance Change in Group Revenues, HY 2016 to HY 2017 571 1,520 1,721 380 644 KES (Mn) 8,384 8,490 HY2016 group Longhorn sales Increased Gains on Decline in Decline in other HY2017 group turnover interest income property realized gains income (FMI & turnover -Sidian revaluation- NF
Slide 27: Consolidated Income Statement
Consolidated Income Statement KES million HY 2017 HY 2016 Variance Sale of Goods (Beverage Business) 3,741 3,805 -2% Sale of Goods (Publishing Business) 380 - 100% Sale of Goods (Agribusiness) 1 - 100% Dividend Income 191 327 -42% Interest Income 1,921 1,350 42% Fund Management Income 349 449 -22% L
Slide 28: Group Statement of Financial Position
Group Statement of Financial Position Assets Liabilities and Shareholder Funds KES million HY 2017 FY 2016 KES million HY 2017 FY 2016 Property Plant and Equipment 8,513 7,004 Customer Deposits 10,940 12,040 Biological Assets 12 - Borrowings 19,327 16,356 Investment Property 21,108 16,514 Dividends
Slide 29: Company Total Return: Growing shareholder wealth
Company Total Return Growing shareholder wealth… Company NAV Per Share, FY 2014 – HY 2017 Centum ROE v NSE Returns, FY 2014 – HY 2017 70 42% 39% 60 CAGR: 21% Percentage (%) 23% KES 50 6% 5% 61 59 1% 40 48 FY 2014 FY2015 FY2016 HY2017 Centum ROE 34.5 30 FY 2014 FY2015 FY2016 HY2017 NSE -20% -24% Sinc
Slide 30: Company Total Return: Value uplifts and cost efficiency
Company Total Return …through significant value uplifts and cost efficiency NAV Growth Attribution, HY 2017 Cost Efficiency, FY 2014 - HY 2017 45 3.0% 43 2.10% 0.23 Strategic cost 1.54 0.74 2.0% Percentage efficiency ceiling KES (Bn) 0.67 1.70% 0.71 1.50% 40 0.74 1.0% 41 38 39 0.41% 35 0.0% Opening
Slide 31: Company Statement of Financial Position
Company Statement of Financial Position Total investment assets have grown by 14% during the 6 months to KES 53.8 billion, driven by KES 5 billion in new capital investments and KES 1.7 billion unrealized gains Centum Portfolio Movement, HY 2017 Portfolio Analysis by Sector, 30th Sept. 2016 300 21 2
Slide 32: Company Statement of Financial Position
Company Statement of Financial Position Assets Liabilities and Shareholder Capital KES Mn HY 2017 FY 2016 KES Mn HY 2017 FY 2016 Investment Portfolio Borrowings 13,967 10,475 Equity Investment in Subsidiaries 28,994 25,411 Trade and Payables 96 571 Debt Investment in Subsidiaries 11,282 8,334 Divide
Slide 33: Leverage: Borrowings and Debt Capacity
Leverage Borrowings and Debt Capacity Company’s Credit Rating was maintained at A1(short term) and A(long term) KES Mn HY 2017 FY 2016 50% ceiling on gearing (D/E) Total Borrowings by the Company 13,967 10,475 31% Less: Cash and Cash Equivalents (2,097) (3,916) Available headroom Net Company Debt 11
Slide 34: Liquidity
Liquidity A strong liquidity position allows us to take advantage of rare but good opportunities whenever they arise Category KES Mn Marketable Securities (on Company Balance Sheet) 130 Marketable Securities (held through 100% owned SPVs) 1,941 Company Cash and Cash Equivalents 2,097 Total Liquid As
Slide 35: Outlook
Outlook Group Chief Executive Officer: James Mworia 35
Slide 36: Outlook
Outlook “Growth” • In advanced stages of negotiation on significant exits at sizeable value Portfolio uplifts • We will be commencing the next phase of projects at Two Rivers (five star hotel, apartments and parking silo) in the near term • Vipingo phase 1 development to commence in Q1 2017 − We hav
Slide 37: Changes in Board of Directors
Changes in Board of Directors Changes to Centum Group Board were effected in line with the Code of Good Governance for Issuers of Public Securities enacted by the Capital Markets Authority Retired from Centum Board New Directors Appointed James Muguyi Hon. William Mary Githiaka Ngige Byaruhanga Marg
Slide 38: Incoming Board Chair: Dr. Donald Kaberuka
Incoming Board Chair: Dr. Donald Kaberuka Current Roles • AU High Representative for the Peace Fund • Hauser Leader-in-Residence: Centre for Public Leadership Harvard Kennedy School, Harvard University • Visiting Fellow – Institute of Development Studies Sussex University, UK • Visiting Fellow – Cen
Slide 39: Centum Investment Company Ltd. contact details
Centum Investment Company Ltd. Tel +254 20 316303 International House, Mobile +254 722 205339 5th Flr. Mama Ngina St. Fax +254 20 223223 PO Box 10518-00100 Email info@centum.co.ke Nairobi, Kenya www.centum.co.ke
Centum Investment Company — H1 FY2017 Earnings Presentation on 6ix