Centum Investment Company Plc · NSEKE:CTUM
Centum Investment — FY2018 Earnings Presentation
56 slides from Centum Investment's earnings presentation, Jun 13, 2018
Slide 1: FY2018 Investor Presentation
Investor Briefing Group Results for Full Year Ended 31st March 2018 FY2018 Investor Presentation 13th June 2018
Slide 2: Content
Content Centum Overview Portfolio Highlights pg. 7 Financial Overview pg. 46 Outlook pg. 54 2
Slide 3: Centum at a Glance
Overview of Centum Centum at a Glance 25.2 66.1 48.7 KES Billion KES Billion KES Billion Market Capitalisation (1) Total Assets (2) Net Asset Value (2) 6 23% 21% Active Sectors Average CAGR on NAV (RE, Power, FS, FMCG, Annualised Return FY14 – FY18 Agribusiness, Education) (3) FY14 – FY18 23% 1.3% 2
Slide 4: Track Record
Overview of Centum Track Record COMPANY HOLDING VALUE CREATION PLAN 23% • Demonstrating ability to exit at attractive valuations in public equity markets • Acquired 23% of listed company in 2009 for USD 5M • Exited in 2010 for USD 14M in a highly illiquid counter delivering an IRR of 56% 14% • Demon
Slide 5: Centum 3.0 Strategic Objectives
Overview of Centum Centum 3.0 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 average retu
Slide 6: Content
Content Centum Overview pg. 3 Portfolio Highlights Financial Overview pg. 46 Outlook pg. 54 6
Slide 7: 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 Greenblad Healthcare e project CENTUM Growers development EXOTICS Limite
Slide 8: 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 9: 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 10: Portfolio Highlights
Portfolio Highlights 1 Real Estate Portfolio 2 • Growth Portfolio pg. 25 • FMCG • Financial Services • Others 3 Development Portfolio pg. 36 • Power • Agribusiness • Education • Healthcare 4 Marketable Securities Portfolio pg. 41 10
Slide 11: Real Estate Sector Snapshot
Real Estate Portfolio Sector Snapshot ❖ In 2017, the performance of the real estate sector in Kenya softened as a result of political uncertainty due to the Occupancy Rates of Commercial Offices in extended electioneering period resulting in investors Nairobi, 2015 - 2017 adopting a wait and see att
Slide 12: Real Estate Portfolio Assets
Real Estate Portfolio Assets Two Rivers Development Limited Vipingo Development Limited Stake: 58.3% Stake: 100% A premium and mixed use world class master A master planned mixed use modern precinct planned urban precinct spread across 101 acres and anchored by an industrial park is set on of land,
Slide 13: Progress Against Strategy
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 14: 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 15: 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 15
Slide 16: 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. Main anchor tenant has seen a 37% increase in turnover and main sub anchor tenants have indicated that these are their best performing V
Slide 17: 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 18: 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 19: 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 20: 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 21: 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 22: 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 23: Real Estate Valuation as at FY18
Real Estate Portfolio Valuation as at FY18 PORTFOLIO COMPANIES CENTUM’S SECTOR CARRYING CARRYING VALUATION STAKE VALUE VALUE METHOD (KES MN) (KES MN) 31 MAR 2018 30 MAR 2017 Vipingo Development 100.00% Real Estate 6,153 5,040 NAV Limited Two Rivers Development 58.30% Real Estate 13,068 13,072 NAV Li
Slide 24: Portfolio Highlights
Portfolio Highlights 1 Real Estate Portfolio pg. 11 2 • Growth Portfolio • FMCG • Financial Services • Others 3 Development Portfolio pg. 36 • Power • Agribusiness • Education • Healthcare 4 Marketable Securities Portfolio pg. 41 24
Slide 25: 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) 25,856 4,058 6,108 5,961 KES Mn 13,712 8,233 - Opening Value Additional Earnings G
Slide 26: Fast Moving Consumer Goods Sector Snapshot
Growth Portfolio Fast Moving Consumer Goods Sector Snapshot ❖ Consumer spending growth expected to remain low over Total household spending, % y/y 2018 due to lingering negative impacts from extended 2016 – 2022F from 2017, namely high inflation and political unrest 10% 9% ❖ Spending on essential it
Slide 27: Fast Moving Consumer Goods Portfolio
Growth Portfolio Fast Moving Consumer Goods Portfolio Nairobi Bottlers Limited FMCG Sector Contribution, FY18 Stake: 27.6% Sector NAV Contribution (KES Mn) 12,097 The largest of the Coca Cola franchise bottlers in Kenya and is engaged in the Sector NAV Contribution (%) 25% manufacturing, packaging,
Slide 28: 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: 2121.6 2000 22% 1841 Bottlers NAV Contribution to Growth 1658 5
Slide 29: Financial Services Sector Snapshot
Growth Portfolio Financial Services Sector Snapshot Private Sector Credit Growth in Kenya ❖ Private sector credit growth dropped from its peak of October 2015 – February 2018 about 25% in mid-2014 to 2% in February 2018 25.00% ❖ The slowdown in credit growth is broad based, with 19.80% credit contra
Slide 30: Financial Services Portfolio
Growth Portfolio Financial Services Portfolio Sidian Bank Limited Zohari Leasing Limited Stake: 77.02% Stake: 100% A leading tier III bank SME focused Zohari Leasing is an SME focused tailored commercial bank in Kenya providing an leasing solutions company across various array of financial services
Slide 31: 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 32: Financial Services Sector Contribution
Growth Portfolio Financial Services Sector Contribution Financial Services Sector Contribution, FY18 Sector NAV Contribution (KES Mn) 5,557 Sector NAV Contribution (%) 11.8% Sector NAV Per Share Contribution (KES) 8.66 Financial Services Portfolio NAV Per Share NAV Per Share Carrying Value Attributa
Slide 33: “Others”
Growth Portfolio “Others” Longhorn Publishers Limited “Others” Contribution, FY18 Stake: 60.2% The second largest publisher in Kenya and is NAV Contribution (KES Mn) 4,232 also listed is listed on the Nairobi Securities Exchange. Longhorn Publishers is the first NAV Contribution (%) 8.7% publisher i
Slide 34: Growth Portfolio Valuation as at FY18
Growth Portfolio Valuation as at FY18 PORTFOLIO CENTUM’S SECTOR CARRYING VALUE CARRYING VALUE VALUATION IMPLIED COMPANIES STAKE (KES MN) (KES MN) METHOD DISCOUNT4 31 MAR 2018 31 MAR 2017 MULTIPLE Almasi Beverages Limited 53.90% FMCG 8,697 7,716 FV: Multiples 6.77x Nairobi Bottlers Ltd 27.60% FMCG 5,
Slide 35: Portfolio Highlights
Portfolio Highlights 1 Real Estate Portfolio pg. 11 2 • Growth Portfolio pg. 25 • FMCG • Financial Services • Others 3 Development Portfolio • Power • Agribusiness • Education • Healthcare 4 Marketable Securities Portfolio pg. 41 35
Slide 36: 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 attract third party capital at KES. a value uplift to our 52M carrying value Opening Additional Dividends Realised
Slide 37: 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 ▪ Produced in excess of 105 tonnes of fresh produce ▪ Acquired 6 export clients,
Slide 38: 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 39: Development Portfolio Valuation as at FY18
Development Portfolio Valuation as at FY18 PORTFOLIO CENTUM’S SECTOR CARRYING VALUE CARRYING VALUE VALUATION COMPANIES STAKE (KES MN) (KES MN) METHOD 31 MAR 2018 30 SEP 2017 Amu Power Ltd 51.00% Energy 2,103 2,144 Cost Akiira Geothermal Limited 37.50% Energy 1,491 1,347 Cost ACE Holdings Limited 40.
Slide 40: Portfolio Highlights
Portfolio Highlights 1 Real Estate Portfolio pg. 11 2 • Growth Portfolio pg. 25 • FMCG • Financial Services • Others 3 Development Portfolio pg. 36 • Power • Agribusiness • Education • Healthcare 4 Marketable Securities Portfolio 40
Slide 41: Marketable Securities Snapshot
Marketable Securities Snapshot ❖ During the year 2017, the Kenyan equities market was on NSE Performance an upward trend, with NASI, NSE 25 and NSE 20 gaining by 2012 – 2017 28.4%, 21.3% and 16.5%, respectively. This performance was driven by gains in large-cap 44.10% 45% 39.40% ❖ Following 2017’s b
Slide 42: Portfolio 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 5,000 1,113 2,503 4,000 4,500 3,000 3,500 2,000 1,337 2,500 1,000 3
Slide 43: Marketable Securities Portfolio Performance
Marketable Securities Portfolio Performance 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 Centum
Slide 44: Marketable Securities Valuation as at FY18
Marketable Securities Valuation as at FY18 PORTFOLIO CENTUM’S SECTOR CARRYING VALUE CARRYING VALUE VALUATION COMPANIES STAKE (KES MN) (KES MN) METHOD 31 MAR 2018 30 SEP 2018 Centum Exotics Marketable 100% 3,589 3,134 Market Price Limited Securities Centum QPE 100% Marketable Market Price 98 100 Secu
Slide 45: Content
Content Centum Overview pg. 3 Portfolio Highlights pg. 7 Financial Overview Outlook pg. 54 45
Slide 46: Our Performance
Financial Overview Our Performance Total Assets, FY14 - FY18 NAV, FY14 - FY18 (KES Bn) 60 70 66.1 CAGR: 23.1% 61.6 CAGR: 20.8% 50 48.7 60 44.8 51.5 50 39.3 40 KES Bn KES Bn 41.2 31.9 40 30 28.8 22.9 30 20 20 10 10 0 0 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 For the period FY14 to FY18, Tot
Slide 47: 5 Year Total Return Snapshot
Financial Overview 5 Year Total Return Snapshot KES. Millions FY2014 FY2015 FY2016 FY2017 FY2018 Return Drivers Dividend Income 1,789 1,318 2,671 1,765 2,040 FY14 ▪ Sale of TBL leading to payment of Kes 1.1Bn Interest Income 40 77 676 1,326 1,347 dividends by CEL FY15 Realised Gains 149 5,326 990 1,
Slide 48: Company Liquidity
Financial Overview 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 48
Slide 49: Company Gearing
Financial Overview Company Gearing KES million FY2014 FY2015 FY2016 FY2017 FY2018 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
Slide 50: Company Gearing & Debt Capacity
Financial Overview 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
Slide 51: Debt Profile
Financial Overview 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 14.9Bn 34.3% 4,000 2,521 1,948 2,000 1,513 Overdraft Facilities Revolving Credit Facilities 0 FY19 FY20 FY21 FY22 Bank Term Loan
Slide 52: Recommended Dividend: Stable Pay-out Despite Headwinds
Recommended Dividend: Stable Pay-out Despite Headwinds Dividends Per Share (KES) FY16 – FY18 1.20 1.20 KES 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
Slide 53: Content
Content Centum Overview pg. 3 Portfolio Highlights pg. 7 Financial Overview pg. 46 Outlook 53
Slide 54: 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 55: 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 56: investorelations@centum.co.ke
investorelations@centum.co.ke Centum Centum Investment Investment Company CompanyPlc Ltd. Tel +254 20 316303 99h Floor, Southern Tower, Two Rivers International House, Mobile +254 722 205339 PO 5th Box Flr. 10518-00100 Mama Ngina St. Fax +254 20 223223 Nairobi, Kenya PO Box 10518-00100 Email info@ce
Centum Investment Company — FY2018 Earnings Presentation on 6ix