Centum Investment Company Plc · NSEKE:CTUM
Centum Investment — HY 2019/20 Earnings Presentation
55 slides from Centum Investment's earnings presentation, Nov 28, 2019
Slide 1: Investor Briefing HY 2019/2020
Investor Briefing HY 2019/2020 28th November 2019
Slide 2: Centum 4.0 Underlying Themes for FY20
Centum 4.0 Underlying Themes for FY20 KShs. 7.7 billion Debt Repaid by HY20 • Strong balance sheet with assets that are not leveraged • Deleverage the KShs. 3.5 billion balance sheet Short term debt subsequently Repaid beyond HY20 • On target to retire all debt on the Centum balance sheet by June KS
Slide 3: Performance against the Strategic Pillars
Centum 4.0 Performance as at HY 2019/20 against the Strategic Pillars Return & On track having delivered significant returns through exits and investment activity Dividend Pay-out Capital Structure Total debt repayment of KShs. 11.3 billion resulting in interest savings of KShs. 990 million. and Liq
Slide 4: Performance Highlights HY 2019/20
Performance Highlights HY 2019/20 Key Events and Performance Drivers Marketable Real Estate Private Equity Development Securities 56.1% 51.6% 36.2% 38.5% 4.4% 5.6% 3.4% 4.3% 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
Slide 5: Sustainably Investing in Our Communities Aligned to the SDGs
Sustainably Investing in Our Communities Aligned to the SDGs • 152 scholarships awarded to date in Vipingo • Shortlisting of candidates for the next academic year ongoing • 172 NYS graduates onboarded into Tribus - TSG • >5,000 successful hires through the Ajiry App • Plan to establish 10 Ajiry Job
Slide 6: Employer of the Year
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 7: Performance Highlights HY 2019/20
Performance Highlights HY 2019/20 6-month period ended 30 September 2019 Growth in Consolidated Profit after Tax KShs. 6.79 billion +226% Group Net profit Performance Highlights Exit realisations from Almasi and Nairobi Bottlers KShs. 18.60 billion transaction Proceeds on disposal, net of taxes KShs
Slide 8: Portfolio Review
Portfolio Review 8
Slide 9: Portfolio Review Summary as at September 2019
Portfolio Review Summary as at 30 September 2019 Real Estate Private Equity Marketable Securities Development 51.6% | KShs. 39. 97 38.5% | KShs. 29.11 5.6% | KShs. 4.22 3.4% | KShs. 3.22 NAV per share NAV per share NAV per share NAV per share KShs. KShs. KShs. KShs. 25.93 19.37 2.81 2.14 billion bil
Slide 10: Market Cap. Attribution
Portfolio Review Market Cap. Attribution Portfolio Assets NAV/Share Significant Value Opportunity for Investors Sidian Bank 3.52 Kshs. 13.61 per Isuzu East Africa 3.34 share for PE Longhorn Publishers 1.71 31.45 26.58 NAS Servair 1.27 ACE Holdings 1.25 Other Private Equity Assets 1.06 KShs. 12.97 Pr
Slide 11: 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 Value of Debt at Acre Price per Acre Asset Level Development Shareh
Slide 12: Real Estate
Real Estate Managed by 12
Slide 13: Real Estate Strategic Pillars
Real Estate Strategic Pillars Under Centum 4.0 (five year strategy from 2019 – 2024), the Centum Group’s focus is cash returns. Centum Real Estate is pursuing a four-pronged real estate strategy Pillar Rationale Objective Infill Shift from a develop and sale model to Sale of infill developments with
Slide 14: Infill Projects: Performance as at September 2019
Real Estate Infill Projects: Performance as at 30 September 2019 Vipingo, KE Total Pearl Marina, UG Two Rivers, KE 1,321 568 1,407 3,296 Total Units Units Units Units Units Phase 1 428 484 404 1,316 Units Units Units Units Units 394 325 827 279 201 582 154 Units Pre- 65% 56 32% 98% 63% Sold FY19 HY2
Slide 15: Infill Projects: Sales Progress
Real Estate Infill Projects: Sales Progress as at 30 September 2019 15
Slide 16: Land Sales: Progress as at September 2019
Real Estate Land Sales: Progress as at 30 September 2019 Centum Real Estate has a robust sales pipeline and is actively pursuing sales leads to convert into actual sales Sales Pipeline under FY19 Closed Sales Negotiation as at HY20 KShs. millions KShs. millions 412 2,798 30 1,556 - 8,890 Total 442 1
Slide 17: Rentals: Two Rivers Lifestyle Centre
Real Estate Rentals: Two Rivers Lifestyle Centre as at 30 September 2019 Mall Occupancy on the Gross Lettable Area +8% on 47,338 of 149 of 186 59,032 sq. 59,032 sq. units leased 80% metres metres 76% 78% GLA leased 75% 72% HY18 FY18 HY19 FY19 HY20 Office Towers Occupancy on the Gross Lettable Area 4
Slide 18: 3rd Party Projects Stage-Gate Process
Real Estate 3rd Party Projects 3rd party projects and residential infill developments are self funding with no capital from CICP. 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 D
Slide 19: 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 Total Assets Interest Bearing Debt Debt/Total Assets % KShs. Million KShs. Million % Two Rivers
Slide 20: Private Equity
Private Equity Managed by ©) P, CENTUM
Slide 21: Centum Value Fund I Track Record
Private Equity| Centum Value Fund I Track Record Fund I performance Examples of Centum Capital’s value add to portfolio companies successfully exited Gross IRR1 achieved since 26% 2009 • Centum engineered a share swap merger with three Kenyan bottlers • Economies of scale drove opex & capex synergie
Slide 22: Almasi Case Study: Timeline & Value Creation Levers
Private Equity| Centum Value Fund I Almasi Case Study: Timeline & Value Creation Levers 2012 2013 2014 2015 2016 2017 2019 • Consolidation of Kisii, Rift • Centum’s shareholding • Investment in a 36,000 Valley and Mount Kenya increases to 47.4% bph PET Line Bottlers’ into Almasi with the following s
Slide 23: Almasi Case Study: Impact of Value Creation Levers
Private Equity| Centum Value Fund I Almasi Case Study: Impact of Value Creation Levers Almasi EBITDA in KShs. Millions and Value Creation Attribution in KShs. Millions Adj. EV/EBITDA multiple 2013 - 2018 11,770 864 4,000 12 3,230 +8.4% 9.9 10 +31.5% 3,000 3,211 7.3 8 6.4 6.7 +31.3% 5.9 2,374 2,000 4
Slide 24: Exit of Almasi Beverages and Nairobi Bottlers Limited
Private Equity| Centum Value Fund I 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
Slide 25: Exit of King Beverage Limited
Private Equity| Centum Value Fund I Exit of King Beverage Limited 100% stake Total Investment KShs. 602 Million 2014 2019 To validate business assumptions, Centum + The business was unable to scale up Centum invests into volumes and two options were available Carlsberg agree to an import model of di
Slide 26: Sidian Bank
Private Equity| Centum Value Fund I Sidian Bank Sidian has experienced declined growth in overall income mainly due to interest rate capping, however in a bid to recover from market shocks, management has been able to reverse the business into profit through growth of NFI and other interventions Sid
Slide 27: Longhorn Publishers
Private Equity| Centum Value Fund I Longhorn Publishers Longhorn continues to diversify away from traditional markets as it expands regionally and reduced reliance on Kenya government orders Longhorn Publisher’s EBIT and EBIT 9 markets Margins Geographical operations FY 2014 - 2018 450 30% 24.5% 25%
Slide 28: Fund I Track Record
Private Equity| Centum Value Fund II Fund I Track Record Centum has invested in 15 deals with 10 exits with a focus on high growth consumer facing businesses Fair value of Dividends since % of Centum Cost of investment investment inception Gross IRR Company Industry Investment Date holding (USD 'M)
Slide 29: Rationale for Fund Structure
Private Equity| Centum Value Fund II Rationale for Fund Structure Opportunities exist that exceed Centum's own capital We have identified opportunities to invest in that exceed Centum's own capital Fund II Consequently, there is need to With strong leadership, we leverage 3rd party capital find the
Slide 30: Development
30 Development Managed by ©) P, CENTUM
Slide 31: Status Update on Power Assets
Development Status Update on Power Assets 37.5% Stake 51% Stake KShs. 1.86 billion nil Carrying Value Carrying Value 0% 0% Total Debt/Asset Ratio Total Debt/Asset Ratio Milestones to date Milestones to date ✓ Power Purchase Agreement (PPA) ✓ Power Purchase Agreement (PPA) ✓ Government of Kenya Lette
Slide 32: Status Update on Africa Crest Education and Greenblade
Development Status Update on Africa Crest Education and Greenblade 17.6% Stake 100% Stake KShs. 828 million Greenblade KShs. 278 million Carrying Value Carrying Value 0% Growers 0% Total Debt/Asset Ratio Total Debt/Asset Ratio Enrolment of Students Production in Tonnes 200 300 220 150 200 100 117 15
Slide 33: Marketable Securities
Marketable Securities Managed by 33
Slide 34: Marketable Securities Performance Highlights
Marketable Securities Performance Highlights Performance Highlights and Cash Generation Performance: April 2015 to Present KShs. Million Sep-19 Sep-18 200 Opening Portfolio Value 3,159 3,349 180 160 Interest Income 48 65 140 Dividend Income 73 68 120 100 Cash Return: Interest + Dividends 121 133 80
Slide 35: Marketable Securities Asset Allocation
Marketable Securities Asset Allocation Asset Allocation as at 30 September 2019 Unit Trusts • Going forward, the strategic focus of the portfolio will be 20% to enhance its ability to generate significant and consistent cash flow for the Group - The portfolio has generated KShs. 3.5 billion in Equit
Slide 36: CSR Engagement
CSR Engagement Managed by 2"%/CENTUM Ame | FOUNDATION
Slide 37: 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 • Ajiry’s strategy is to utilise two main platforms stated below to tackle this challenge: 1 Ajiry App 2 Ajiry Centres • Progressive Web Application (PWA
Slide 38: Financial Performance
Financial Performance 38
Slide 39: Key Performance Drivers
Key Performance Drivers Increase in investment income by 206% to KShs. 12.39 billion Realised Gains One-off One-off impairment provisions of KShs. 2.29 billion primarily due to Amu Power KShs. 2.10 billion Provisions 39
Slide 40: Consolidated Income Statement
Consolidated Income Statement KShs. millions HY 20 HY 19 %Δ Sales 4,775 4,818 (1%) Cost of sales (3,158) (3,114) 1% Gross profit 1,617 1,704 (5%) Operating and administrative expenses (1,363) (1,314) 4% Trading profit 254 390 (35%) Financial services: - Income from provision of financial services 1,
Slide 41: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position KShs. millions HY 20 FY 19 %Δ Property, plant and equipment 3,868 11,068 -65% Investment property 40,031 40,034 0% Goodwill and intangible assets 1,238 2,495 -50% Investment portfolio: - Associates 1,859 2,921 -36% - Joint ventures 4,806 7,065 -32% - Unqu
Slide 42: Company Total Return Statement
Financial Performance: Company Total Return Statement KShs. millions HY 20 HY 19 %Δ • Profitability was driven by: Dividend income 387 267 45% - KShs. 2.64 billion gains from disposal of Interest income 235 622 (62%) Almasi and Nairobi Bottlers Realised gains 2,240 1,245 100% Other income 161 (0) (4
Slide 43: Company Statement of Financial Position
Company Statement of Financial Position KShs. millions HY 20 FY 19 %Δ KShs. millions HY 20 FY19 %Δ Investment portfolio: Borrowings 9,914 16,145 (39%) - Investment in Subsidiaries 31,374 42,157 (26%) Other Liabilities 3,294 2,899 14% - Debt Investment in Subsidiaries 15,437 15,696 (2%) Total Liabili
Slide 44: Company Gearing & Liquidity
Company Statement of Financial Position Company Gearing & Liquidity The company closed the half year period with a Company Level Gearing liquidity position of KShs. 13.6 billion KShs. Million HY20 FY19 Cash, fixed and call deposits as shown on the 11,945 balance sheet Corporate Bond II Marketable se
Slide 45: Company Statement of Cash Flows
Company Statement of Cash Flows KShs. millions HY 20 HY 19 Cash flows from operating activities Net cash generated from operating activities 19,776 2,165 Cash flows from investing activities Purchase of PPE - (13) Investments in subsidiaries (45) (561) Net debt investment in subsidiaries (502) (726)
Slide 46: Outlook
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Slide 47: Outlook FY 19/20
Outlook| FY 19/20 Marketable Real Estate Private Equity Development Securities • Leverage new • Evaluating new • Invest in cash- • Unlock value across developments that are opportunities that generative investment the development market validated meet the investment instruments in line portfolio in
Slide 48: Q&A
Q&A
Slide 49: Appendices
CoteEes } Appendices
Slide 50: Private Equity Portfolio Carrying Value
Private Equity| Centum Value Fund I Portfolio Carrying Value KShs. millions HY20 FY19 Valuation Method Multiple Almasi Beverages Limited - 9,851.14 Market multiples 9.60x Nairobi Bottlers Limited - 6,912.21 Market multiples 9.60x Sidian Bank Limited 3,470.27 3,314.67 Market multiples 0.85x Isuzu (E.
Slide 51: Real Estate Portfolio Carrying Value
Real Estate Portfolio Carrying Value KShs. millions HY20 FY19 Athena Properties Limited 502.14 351.64 Rasimu Limited 604.08 604.30 Two Rivers Luxury Apartments - 37.92 Two Rivers Development Limited 8,706.21 9,897.78 Vipingo Development Limited 14,203.41 13,865.55 Vipingo Estates Limited 1,601.29 1,
Slide 52: Development Portfolio Carrying Value
Development Portfolio Carrying Value KShs. millions HY20 FY19 Amu Power Limited - 2,097.55 Akiira Geothermal Limited 1,858.98 1,542.12 King Beverage Limited - 533.98 Greenblade Growers Limited 278.37 248.59 Assets Under Development 4.01 298.42 Total 2,141.36 4,720.67 52
Slide 53: Marketable Securities Portfolio Carrying Value
Marketable Securities Portfolio Carrying Value KShs. millions HY20 FY19 Centum Exotics Limited 2,773.21 3,781.64 Centum - QPE 36.90 52.58 Total 2,810.11 3,834.22 53
Slide 54: Impact of Investment in Amu Power to NAV
Impact of Investment in Amu Power to NAV Impact of Amu Power Provision on Total Assets • Amu Power Company Limited (‘Amu Power’) historically carried (2.1) at cost as per International Financial Reporting Standards Kshs. Billion 71.6 65.5 63.4 • NEMA Tribunal ruling to revoke the ESIA issued to Amu
Slide 55: Centum Investment Company Plc
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 — HY 2019/20 Earnings Presentation on 6ix