Centum Investment Company Plc · NSEKE:CTUM
Centum Investment — FY2018 Earnings Presentation
61 slides from Centum Investment's earnings presentation, Jun 13, 2018
Slide 1: Investor Briefing FY 2018
Investor Briefing Group Results for Full Year Ended 31st March 2018 Investor Briefing FY 2018 Date: Wednesday, 13 June th 2018 June 13th, 2018
Slide 2: Business Review
Business Review 2
Slide 3: Operating Environment: prolonged electioneering period and political uncertainty
Operating Environment: Financial Year largely characterised by prolonged electioneering period and political uncertainty….. GDP Growth NSE 20 Performance 7.0% 6.4% NSE 20 NSEASI 6.1% 6.0% 5.6% 5.0% 5,000 200 5.0% 4.6% 4.4% 4,000 150 4.0% 3,000 100 2,000 3.0% 50 1,000 2.0% - - July Jan June Feb March
Slide 4: Operating Environment: challenging operating environment
Operating Environment: ….made for a challenging operating environment FOREX Inflation USD GBP Euro Annual Average Inflation 12-Month Inflation 200.00 14 150.00 12 10 100.00 8 6 50.00 4 2 - 0 Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jan Feb Mar April May June July Aug Sep
Slide 5: Performance Against Strategic Objectives
Performance Highlights Performance Against Strategic Objectives Centum 3.0 Strategic Objectives Achievements as at FY18 ▪ Generate 35% annualised return between ▪ 23% average annualised return achieved RETURN FY14 and FY19 between FY14 and FY18 as compared to NSE ▪ Consistently outperform the market
Slide 6: Growth in Total Assets
Performance Highlights Growth in Total Assets Total Assets, FY14 - FY18 Total Assets Portfolio Split, FY18 70 66.1 61.6 8.2% CAGR: 23.1% 6.9% 60 51.5 50 45.9% KES Bn 41.2 Total Assets: 40 KES 66.1 Bn 28.8 39.0% 30 20 10 Real Estate Growth 0 FY14 FY15 FY16 FY17 FY18 Development Marketable Securities
Slide 7: Significant Increase in NAV per Share
Performance Highlights Significant Increase in NAV per Share NAV, FY14 - FY18 (KES Bn) NAV per Share, FY14 - FY18 (KES) 80.0 73.2 60 70.0 CAGR: 20.8% 67.3 CAGR: 20.8% 48.7 59.1 50 44.8 60.0 39.3 48.0 40 50.0 KES Bn 31.9 KES 40.0 30 34.5 22.9 30.0 20 20.0 10 10.0 0 0.0 FY14 FY15 FY16 FY17 FY18 FY14 F
Slide 8: Portfolio Highlights
Portfolio Highlights 8
Slide 9: Portfolio Snapshot
Portfolio Snapshot Centum Investment Company Plc. Total Assets (31st March 2018) - KES 66.1 Bn GROWTH DEVELOPMENT MARKETABLE SECURITIES & REAL ESTATE CASH Financial FMCG “Others” Agribusiness Power Healthcare Education Services Greenblade Healthcare Growers project CENTUM Limited development EXOTICS
Slide 10: NAV Breakdown
Portfolio Highlights NAV Breakdown NAV Breakdown by Portfolio Class - FY18 Total NAV Per Total Assets Total NAV Liabilities Share NAV Per Portfolio Class Share (%) (KES Mn) (KES Mn) (KES Mn) (KES) Growth Portfolio 25,801 (3,914) 21,886 32.89 45.0% Real Estate Portfolio 30,302 (10,497) 19,805 29.76 4
Slide 11: Portfolio Highlights: Growth Portfolio
Portfolio Highlights 1 Growth Portfolio • FMCG • Financial Services • Others 2 Real Estate Portfolio 3 Marketable Securities Portfolio 4 Development Portfolio • Power • Agribusiness • Education • Healthcare 11
Slide 12: Growth Portfolio NAV Contribution
Growth Portfolio NAV Contribution Growth Sector Contribution, FY18 Sector NAV Contribution (KES Mn) 21,886 Sector NAV Contribution (%) 45.0% Sector NAV Per Share Contribution (KES) 32.89 NAV Per Total NAV Per Total Assets Sector Portfolio Companies Share Liabilities Share (%) (KES) (KES Mn) (KES Mn)
Slide 13: Growth Portfolio Performance over Centum 3.0
Growth Portfolio Performance over Centum 3.0 Growth Portfolio remains a significant driver of returns for the Group reflecting the success of our active portfolio management strategy Growth Portfolio Movement (KES Mn) 4,058 6,108 25,856 5,961 KES Mn 13,712 8,233 - Opening Value FY2013 Additional Inv
Slide 14: Growth Portfolio Income Drivers
Growth Portfolio Income Drivers Value 1 • 82% of the Growth Portfolio is profitable i.e. positive Profit After Tax Profit Growth • 78% of the Growth Portfolio increased in profitability vs. previous year 2 • 71% of the Growth Portfolio paid a dividend Dividends • 71% of the Growth Portfolio assets i
Slide 15: Robust Growth in Earnings – Bottlers
Growth Portfolio Robust Growth in Earnings – Bottlers Centum’s Share of Almasi Bottlers Limited & Nairobi Bottlers Bottlers’ Contribution to NAV, FY18 Limited EBITDA (KES mn), 2013 - 2017 2500 Bottlers NAV Contribution (KES) 18.22 CAGR: 22% 2121.6 2000 1841 Bottlers NAV Contribution to Growth 1658 5
Slide 16: Sidian Bank: Accelerated Growth in Non-funded Income
Sidian Bank Accelerated Growth in Non-funded Income KES mn 2013 2014 2015 2016 2017 Loan Book 8,694 10,454 12,519 13,571 11,409 Customer Deposits 9,165 12,065 13,380 13,685 12,761 Shareholders Funds 1,868 2,432 3,837 3,869 3,447 PAT 360 514 373 28 (422) Valuation (KES B) 56 2,556 3,969 3,232 3,891 ▪
Slide 17: Growth Portfolio Priorities in FY 2019
Growth Portfolio Priorities in FY 2019 1 • We have developed a pipeline of exits for FY19 at a considerable value uplift EXITS • The partial exits and exits will mainly be from the mature Growth Portfolio. 2 • The FY19 earnings outlook for our Growth Portfolio is positive and we VALUE UPLIFT project
Slide 18: Portfolio Highlights: Real Estate Portfolio
Portfolio Highlights 1 Growth Portfolio • FMCG • Financial Services • Others 2 Real Estate Portfolio 3 Marketable Securities Portfolio 4 Development Portfolio • Power • Agribusiness • Education • Healthcare 18
Slide 19: Real Estate Value Realization Profile FY14 to FY18
Real Estate Portfolio Value Realization Profile FY14 to FY18 Significant value uplift to KES 30.3 Bn has been realized through transactions during Centum 3.0 Strategic Period Real Estate Value Drivers (KES Mn) FY14 - FY18 19
Slide 20: Real Estate Sector Strategy Overview
Real Estate Portfolio Real Estate Sector Strategy Overview Our real estate strategy seeks to master develop attractive sites across the region and provide commercial impetus for investors to establish city-shifting developments therein Overview of Centum’s Value Creation Process in Real Estate 1 2 3
Slide 21: Real Estate Portfolio Contribution
Real Estate Portfolio Real Estate Portfolio Contribution Real Estate Sector Contribution, FY18 Sector NAV Contribution (KES Mn) 19,805 Sector NAV Contribution (%) 40.7% Sector NAV Per Share Contribution (KES) 29.76 NAV Per Total NAV Per Total Assets Real Estate Portfolio Companies % Stake Share Liab
Slide 22: Two Rivers Development Ltd.
Real Estate Portfolio Two Rivers Development Ltd. ▪ As at 31st March 2018, the Two Rivers Retail Centre was 75% let, with an average footfall of 320,000 per month. ▪ Two Rivers Office Towers, 9% of the space is currently let, with 72% under negotiation Value ▪ Two Rivers Power and Two Rivers Water &
Slide 23: Two Rivers: Project Pipeline
Real Estate Portfolio Two Rivers: Project Pipeline Riverbank Apartments Two Rivers Theme Park Phase II ▪ 196 units over a GBA of 46,000m2 with a gross ▪ Phase 2 of the theme park is currently under sales target of KES 5Bn construction following the acquisition of ▪ 3rd Party funding for Riverbank Ap
Slide 24: Vipingo Development: Progress Update
Real Estate Portfolio Vipingo Development: Progress Update Residential Precincts Investment Park Commercial Centre (Awali &The Ridge Homes) Acquire Land Master Plan and Obtain Approvals (NEMA, PPA2) Services (Water & Power Connections) - - Market Validation Ongoing Ongoing Ongoing Fundraising KES 2B
Slide 25: Vipingo Development: Overview
Real Estate Portfolio Vipingo Development: Overview Strategic Pillars Outlook Value Uplift ▪ To realize a target return 30% Sale of Unserviced ▪ Sale of circa 3,000 acres of un-serviced land Land ✓ Expressions received for 1,000 acres as at 31st March 2018 ▪ Sale of 180 acres of serviced land and pr
Slide 26: Vipingo Development: Project Pipeline
Real Estate Portfolio Vipingo Development: Project Pipeline Commercial Developments Residential Developments 1. Investment Park ▪ Spread over 180 acres, the 1. The Ridge Homes Investment Park consists of: • Light Manufacturing • Export Processing Zone ▪ 1,000 apartments on 20 acres • Warehouse/Logis
Slide 27: Pearl Marina: Overview
Real Estate Portfolio Pearl Marina: Overview Strategic Pillars 5 Year Project Outlook ▪ Sale of circa 165 acres over the 5 years, generating USD 69.5 Mn in net Sale of Un-serviced Land cashflow ▪ Sale of circa 600 residential units over 5 years, generating USD 36 Mn in net cashflow ▪ Current infill
Slide 28: Pearl Marina: Project Pipeline
Real Estate Portfolio Pearl Marina: Project Pipeline To develop critical mass within the development, focus is on developing the robust pipeline of projects having secured 3rd party capital of USD 5mn, while raising additional capital at the project level 1. Vista Lago 3. West Pearl Town Houses ▪ 40
Slide 29: Portfolio Highlights: Marketable Securities Portfolio
Portfolio Highlights 1 Growth Portfolio • FMCG • Financial Services • Others 2 Real Estate Portfolio 3 Marketable Securities Portfolio 4 Development Portfolio • Power • Agribusiness • Education • Healthcare 29
Slide 30: Marketable Securities: Return & Track Record
Marketable Securities Portfolio Return & Track Record Contribution to Group Liquidity over MSP vs NSE 20 – Long Term Track Record Centum 3.0 Growth of 1,000 Investment from March 2009 [5.8x] 7,500 7,000 6,500 1,084 6,000 5,783 5,500 1,113 5,000 2,503 4,500 4,000 3,500 3,000 2,000 2,500 1,337 3,910 3
Slide 31: Marketable Securities Portfolio Performance (1/2)
Marketable Securities Portfolio Performance (1/2) Portfolio Returns & Attribution – FY18 Portfolio Diversification by Asset Class (%) MSP vs. Primary & Secondary Benchmarks – FY 18 40% 7% 36% 16% 35% 30% 25% 25% 24% 42% 20% 35% 15% 15% 10% 5% 0% Cash & Equivalents Equities Fixed Income Mutual Funds
Slide 32: Marketable Securities Portfolio Performance (2/2)
Marketable Securities Portfolio Performance (2/2) Marketable Securities Contribution FY18 Total Portfolio (KES Mn) 5.40 NAV Contribution (%) 10.6% NAV Per Share Contribution (KES) 7.75 • We remain optimistic about capital markets in 2018 driven by pick up in global growth momentum and global capital
Slide 33: Portfolio Highlights: Development Portfolio
Portfolio Highlights 1 Growth Portfolio • FMCG • Financial Services • Others 2 Real Estate Portfolio 3 Marketable Securities Portfolio 4 Development Portfolio • Power • Agribusiness • Education • Healthcare 33
Slide 34: Development Portfolio: Investment & NAV Contribution
Development Portfolio Investment & NAV Contribution Additional Investments During Centum 3.0 KES. 5.1Bn KES. 5.2Bn • The Objective: To move from development to commercial operation and KES. 0 KES. 0 KES. 0 attract third party capital at KES. a value uplift to our 52M carrying value Opening Additiona
Slide 35: Development Portfolio Priorities in FY19 (1/2)
Development Portfolio Priorities in FY19 (1/2) Completed ▪ The objective is to establish a business that can achieve an EBITDA of Kes. 200M by 2022. ▪ Acquired land, Opened up 20Ha for cultivation, Established packhouse ▪ Acquired 6 export clients, Annual revenue of KES.58M in FY18 Next steps ▪ Focu
Slide 36: Development Portfolio Priorities in FY19 (2/2)
Development Portfolio Priorities in FY19 (2/2) Completed ▪ PPA secured, Debt term sheets secured, NEMA Approvals ▪ Drilled 2 of 5 exploratory wells Next steps ▪ Drilling remaining 3 exploratory wells ▪ Achieving Financial Close for the Project by March 2019. Completed ▪ The objective is to establish
Slide 37: Financial Review
Financial Review 37
Slide 38: FY18 Highlights: Key Drivers
Financial Performance FY18 Highlights: Key Drivers ▪ Sluggish transaction environment in 2017 Exits ▪ Exit of Platcorp Holdings Limited concluded ▪ GenAfrica exit not concluded by year end. ▪ Real estate commercial property appreciated in value at a lower rate in 2017 Property compared to previous 6
Slide 39: Performance Highlights
Performance Highlights KES Investment Group Turnover 13 Bn Income KES +1% -32% 5.6 Bn 36% Total Return on Marketable Securities Portfolio Total Company KES NAV per Share KES Assets +9% 73.2 66 Bn +7% 39
Slide 40: Company Total Return Statement
Financial Performance Company Total Return Statement KES.'millions Mar-18 Mar-17 % Dividend income 2,040 1,765 16% Interest income 1,347 1,326 2% Realised gains 9 1,063 -99% Other income 133 146 -9% Total income 3,529 4,300 -18% Portfolio costs: - Recurrent (677) (798) -15% - Non recurrent costs (17
Slide 41: Cost Efficiency
Financial Performance Cost Efficiency Cost Efficiency FY 2014 – FY 2018 2.5% Target Cost 2.0% Portfolio costs/Total assets (%) Efficiency 1.5% 1.0% 2.1% 1.7% 1.5% 1.3% 1.3% 0.5% 0.0% FY 14 FY 15 FY 16 FY 17 FY 18 The cost efficiency ratio would be 1%, net of the one-off costs 41
Slide 42: Company Statement of Financial Position
Financial Performance Company Statement of Financial Position Assets Liabilities and Shareholder Funds KES Mn FY18 FY17 KES Mn FY18 FY17 Investments Portfolio Borrowings 14,843 14,656 Investment in Subsidiaries 39,414 35,311 Other Liabilities 2,559 2,106 Total Liabilities 17,401 16,762 Debt investme
Slide 43: Portfolio Valuation Methodology
Portfolio Valuation Methodology Valuation Methodology Description Portfolio Breakdown by Valuation as at FY2018 Net Asset Value • Value derived as an investee’s book value of equity multiplied by Centum’s shareholding 7.2%1.3% Fair Value: Multiples • Market multiples of comparable listed companies 7
Slide 44: Segmented Portfolio Valuation (1 of 2)
Financial Performance Segmented Portfolio Valuation (1 of 2) Carrying Value (KES Mn) Implied Portfolio Companies Stake Sector 31-Mar- Valuation Method Valuation 31-Mar-17 Multiple 18 Growth Portfolio Almasi Beverages Limited 53.90% FMCG 8,697 7,716 FV: Multiples 6.77x Nairobi Bottlers Ltd 27.60% FMC
Slide 45: Segmented Portfolio Valuation (2 of 2)
Financial Performance Segmented Portfolio Valuation (2 of 2) Carrying Value (KES Mn) Valuation Portfolio Companies Stake Sector 31-Mar-18 31-Mar-17 Method Real Estate Portfolio Vipingo Development Limited 100.00% Real Estate 8,659 5,718 NAV Two Rivers Development Limited 58.30% Real Estate 12,389 14
Slide 46: Company Statement of Cash Flows
Financial Performance Company Statement of Cash Flows KES ‘Mn Mar-18 Mar-17 • Key driver in liquidity was redemption Cash flow from operations of the Kes 4.4bn bond together with 4,319 3,185 settlement of the USD 30mn RMB Net cash used in investing activities (2,564) (5,505) facility that was due to
Slide 47: Company Liquidity
Company Liquidity Kes 4.6Bn Listed securities Held through 100% owned Kes Cash and marketable subsidiary 3.4bn securities representing 6.96% of total company assets Listed securities Kes Held on Centum balance sheet 98m Cash and Kes equivalents 1.08Bn held by Centum 47
Slide 48: Company Gearing
Company Gearing KES million FY 2014 FY 2015 FY 2016 FY 2017 FY 18 Operating Inflows 4,146 8,114 7,904 5,259 6,289 Operating Outflows (463) (519) (1,033) (922) (695) Internally Generated Funds 3,683 7,595 6,871 4,336 5,594 Finance Costs 660 814 1,511 1,754 1,646 Debt Service Coverage 5.6x 9.3x 4.5x 2
Slide 49: Company Gearing & Debt Capacity
Company Gearing & Debt Capacity We redeemed the Kes 4.2 Bn 5-year corporate bond in Sep 2017, effectively deleveraging our balance sheet Accrued Accrued Additions Paid Paid FX 31-Mar-18 Debt KES Mn 31-Mar-17 Interest Expenses Movements Bond I - 4,331 - - - (4,331) - Bond II 6,294 6,225 228 69 - (228
Slide 50: Debt Profile
Debt Profile Borrowings by Nature of Debt FY18 (KES Bn) Debt Maturity Profile (KES Mn) 10,000 8,587 13.1% 8,000 10.2% 42.4% Total Debt: KES Mn 6,000 KES 14.8Bn 4,000 34.3% 2,521 1,948 2,000 1,513 Overdraft Facilities Revolving Credit Facilities 0 FY19 FY20 FY21 FY22 Bank Term Loans Corporate Bond 50
Slide 51: Group Turnover Analysis
Consolidated Financial Performance Group Turnover Analysis KES.'millions Mar-18 Mar-17 Change Beverage sales 8,565 8,186 5% Publishing sales 1,287 1,248 3% Agribusiness sales 59 16 274% Interest, fees and commissions income 2,677 3,458 -23% Asset management 710 617 15% Utility sales 261 60 337% Mana
Slide 52: Group Investment Income
Consolidated Financial Performance Group Investment Income KES.'millions Mar-18 Mar-17 Change Unrealised gains on revaluation of investment property 4,182 6,452 -35% Realised gains on disposal 786 1,047 -25% Dividends 271 306 -12% Interest income 101 216 -53% Other income 229 220 4% Total revenue 5,
Slide 53: Consolidated Income Statement
Consolidated Income Statement KES.'Mn Mar-18 Mar-17 %Δ Sales 10,171 9,402 8% Direct and other operating costs (9,102) (8,205) 11% Trading profit 1,069 1,197 -11% Financial services: Income from provision of financial services 2,845 3,627 -22% Funding and other costs (3,385) (3,645) -7% Operating (lo
Slide 54: Group Financial Performance: Trading Subsidiaries
Group Financial Performance Trading Subsidiaries KES.'Mn Mar-18 Mar-17 %Δ • Strong revenue performance on our Sales: - Beverage business 8,565 8,078 5% beverage business, despite the - Publishing business 1,287 1,248 3% challenging operating environment - Agribusiness 59 16 274% which occasioned dis
Slide 55: Group Financial Performance: Financial Services
Group Financial Performance Financial Services KES.'Mn Mar-18 Mar-17 %Δ • Decrease in interest income at Sidian Sidian Bank Limited: Bank driven by effect of interest rate - Interest income 1,890 2,833 -33% capping regulations - Fees, forex and other income 767 588 30% Total income 2,657 3,421 -22%
Slide 56: Consolidated Statement of Financial Position
Group Financial Performance Consolidated Statement of Financial Position Assets Liabilities and Shareholder Funds KES Mn FY18 FY17 KES Mn FY18 FY17 Customer deposits and banking Property, plant and equipment 9,665 10,072 liabilities 16,042 13,369 Investment properties 32,719 27,311 Borrowings 21,254
Slide 57: Outlook
Outlook 57
Slide 58: Recommended Dividend: Stable Pay-out Despite Headwinds
Recommended Dividend: Stable Pay-out Despite Headwinds Dividends Per Share (KES) FY16 – FY18 1.20 1.20 1.00 FY16 FY17 FY18 ▪ Board recommended the payment of a dividend of KES 1.20 per share for financial year ended March 2018 • Cumulative payout of KES 798.5 Mn recommended for FY18, similar to amou
Slide 59: Near Term Priorities
Near Term Priorities Narrow the Gap between NAV & Share Price while continuing to grow NAV STEPS: APPROACH 1 ▪ Robust exit pipeline of mature assets across the Portfolio to optimize Optimise Gross Return Gross Return ▪ Portfolio enhancements across the four business lines 2 ▪ Invest exit proceeds wi
Slide 60: Thank You
Thank You 60
Slide 61: investorelations@centum.co.ke
investorelations@centum.co.ke Centum Investment Company Plc 9 9h Floor, Southern Tower, Two Rivers Centum Investment Company Ltd. Tel +254 20 316303 PO Box 10518-00100 International House, Mobile +254 722 205339 Nairobi, Kenya Ngina St. 5th Flr. Mama Fax +254 20 223223 PO Box 10518-00100 Email info@
Centum Investment Company — FY2018 Earnings Presentation on 6ix