Centum Investment Company Plc · NSEKE:CTUM
Centum Investment — FY2022 Earnings Presentation
58 slides from Centum Investment's earnings presentation, Jul 26, 2022
Slide 1: Investor Briefing & Results Announcement
Investor Briefing & Results Announcement For the Period ended 31 March 2022 26th July 2022
Slide 2: Agenda
Agenda Business Review Dr. James Mworia – Chief Executive Officer Financial Review Risper Alaro – Group Finance Director Outlook Dr. James Mworia – Chief Executive Officer Q&A 2
Slide 3: Business Review
Business Review Chief Executive Officer: Dr. James Mworia 3
Slide 4: Business Review: About Centum
Business Review Section 1: About Centum 4
Slide 5: Our business model
Our business model We are investors. We find good opportunities make them Use capital base great and exit to monetize value created to lock in to attract other superior returns for our stakeholders. funds Diversify Deploy capital & Focus Shareholder • Identify compelling opportunities and Deploy Cap
Slide 6: Company Snapshot (1/2)
Company Snapshot (1/2) KES 6.6 Bn Market Capitalisation(1) Portfolio Allocation – 31 March 2022 KES 41.3 Bn Net Asset Value(2) translates to Kes 62.1 NAV per share Growth Portfolio 85% 3.3x NAV growth between FY2011 – FY2022 Marketable Securities 15% Kes 22 Bn Retained earnings generated between Mar
Slide 7: Company Snapshot (2/2)
Company Snapshot (2/2) Following an ambitious debt funded growth cycle, the focus under Centum 4.0 shifted to deleveraging and liquidity build up to rationalize risk, preserve and grow shareholder value Shareholder value evolution (KES Mn) Kes Bn Deleveraging the balance sheet to preserve value 50,0
Slide 8: Business Review: Centum 4.0 Strategy Update
Business Review Section 2: Centum 4.0 Strategy Update 8
Slide 9: FY2022 Key focus areas
FY2022 Key focus areas Objective Status ▪ We have maintained zero long-term debt at Company level in line with Centum 4.0 deleveraging objective. Balance sheet ▪ USD 21.4 million off balance sheet guarantee was dropped following favourable ruling strengthening: Deleverage on an Excise Duty Claim aga
Slide 10: Strategy Overview | Key Assumptions
Strategy Overview | Key Assumptions We had a bearish outlook on the economic environment which underpinned Centum 4.0 Strategic focus on risk reduction and capital preservation Centum 4.0 Assumptions Actual outcomes | FY2020 – FY2022 GDP • Projected subdued Kenya’s economic growth (average: 5.2%) on
Slide 11: Strategy Overview | Progress highlights so far
Strategy Overview | Progress highlights so far… Strategic Pillars (FY2022 – FY2024) Achievements | FY2020 – FY2022 Returns & Dividend Pay-out: ▪ 86% achievement – Net Asset Value at 31 March 2022 was Kes 41.0 Bn • Generate 20% annualised return and grow NAV to Kes 70Bn by against the strategy target
Slide 12: Shareholder value | Preserving NAV in an elevated risk environment
Shareholder value |Preserving NAV in an elevated risk environment Ksh Centum NAV & Share Price vs NSE 20 Index NSE Market metrics Mar-2019 Mar-2022 90.0 6,000 5,248 NASI Dividend Yield 4.5% 6.3% 80.0 4,946 79.0 5,000 NASI Price to Earnings 11.0x 7.2x 70.0 73.2 71.3 63.5 3,982 67.3 3,845 NSE Index re
Slide 13: FY2021/2022 Company Total Return Statement
FY2021/2022 Company Total Return Statement ▪ Operating cash profits increased by 142% on the back of reduced Kes Mn Mar 2022 Mar 2021 %Δ finance costs and operating costs. Dividend and interest income 1,303 1,411 (8%) ▪ We aim to grow the annuity cash income base by increasing the Other investment i
Slide 14: Business Review: Portfolio Updates
Business Review Section 3: Portfolio Updates 14
Slide 15: Portfolio Snapshot
Portfolio Snapshot Centum Investment Company Plc. (31 March 2022) Total Assets - KES 47 Bn | Total NAV – 41.3 Bn | NAV Per Share – Kes 62.1 A. GROWTH PORTFOLIO: 85% B. MARKETABLE SECURITIES: 15% Sector diversification CENTUM 1. Financial Services (3) EXOTICS LTD 2. Technology (2) 3. Services (2) 4.
Slide 16: Shareholder value | NAV decomposition and its drivers
Shareholder value |NAV decomposition and its drivers Portfolio Assets Value Per Share Kenya Shillings Mar-22 Mar-21 Mar-19 Change in NAV Comments Sidian Bank* 4.32 3.86 4.79 (0.47) Revaluation loss, now recovered on the higher negotiated exit price Isuzu East Africa 4.30 3.50 2.92 1.38 Reflects unde
Slide 17: Track record | Cash yield over the years
Balance of assets held | Value creation Track record | Cash yield over the years Initial Cost of Cash Distribution Cash Carrying Value investment since inception Distribution (KES Mn) Net Cost of Investment Multiple on Net Cost Portfolio Assets Sector Stake Apr - Mar Investment (KES Mn) Date (KES Mn
Slide 18: A. Growth Portfolio
A. Growth Portfolio 18
Slide 19: Track record | Almasi Bottlers case study
Exited assets | Value creation and monetization Track record | Almasi Bottlers case study Almasi EBITDA in million Ksh1 and Adj.2 EV/EBITDA Value creation attribution in million KSh multiple 2013–2018 864 11,770 3,230 9.9 +8.4% 6.7 +31.5% 7.3 3,211 6.4 5.9 4.9 +31.3% 1,238 2,374 1,845 2,014 1,806 +1
Slide 20: Track record | GenAfrica and Platinum Credit
Exited assets | Value creation and monetization Track record | GenAfrica and Platinum Credit GenAfrica PAT trend (Kes Mn) Exit Enterprise Value Implied P/E 153.1 144.8 153.9 142.1 101.4 Kes 3.2Bn 20.5x 2013 2014 2015 2016 2017 Platinum PAT trend (USD Mn) 9.1 9.1 7.4 6.0 4.7 USD 75Mn 8.2x 2013 2014 2
Slide 21: Centum Real Estate (1/4) | Value creation stages
1. Centum Real Estate (1/4) | Value creation stages As a Master Developer of large mixed-used destinations, Centum RE’s value creation process entails the following critical steps: 1 2 3 4 5 Attract third party Avail construction Master plan capital at Acquire land in Roll out select infill ready si
Slide 22: Centum Real Estate (2/4) | Growth opportunity
1. Centum Real Estate (2/4) | Growth opportunity Centum Real Estate value enhancement opportunity Centum Real Estate gearing summary 4,000 Kes 10.6Bn free cash flows generating ability Financial Metrics March 22 March 21 3,500 3,272 3,332 3,000 Borrowings Kes 5.8 Bn Kes 6.7 Bn Less: Cash holdings (K
Slide 23: Centum Real Estate (3/4) | Key value drivers
1. Centum Real Estate (3/4) | Key value drivers Centum Real Estate has revamped its business model to enhance performance around key value drivers Drivers of value Development rights business Housing Business Property Management (sale of development rights) (Build to rent & Sell) (leasing & asset ma
Slide 24: Centum Real Estate (4/4) | FY22 performance highlights
1. Centum Real Estate (4/4) | FY22 performance highlights Kes 1.3 Billion Free Cash Flows generated 24
Slide 25: Two Rivers Development (1/2) | Value opportunity
2. Two Rivers Development (1/2) |Value opportunity TRDL has an opportunity to capitalize on its competitiveness to realize value Two Rivers Development Valuation Completed Sales Monetized Bulk (Sqm) 157,906 Total sales proceeds 2,858 ▪ Estimated 1.5 million households in Nairobi are tenants with Ave
Slide 26: Two Rivers Development (2/2) | Capital structure
2. Two Rivers Development (2/2) | Capital structure Two Rivers Development Limited gearing summary Reduction of CICP guarantee exposure in line with TRDL debt repayment Debt Coverage March 2022 65.65 65.65 61.42 Total Assets Kes 20.8 Bn 55.21 53.21 53.21 50.00 Borrowings Kes 10.2 Bn USD Mn Assets co
Slide 27: Sidian Bank (1/3)
3. Sidian Bank (1/3) Five-years of consistent growth in assets and customer deposits Total Assets Customer Deposits 45,000 30,000 41,432 40,000 25,830 25,000 33,509 22,740 35,000 30,000 20,000 26,460 17,198 25,309 16,942 Kes 'Mn' Kes 'Mn' 25,000 15,000 19,290 12,728 20,000 15,000 10,000 10,000 5,000
Slide 28: Sidian Bank (2/3)
3. Sidian Bank (2/3) Shareholder Equity Net Profit 6,000 600 486 4,765 500 5,000 400 4,076 4,080 4,099 4,000 3,469 300 + Ksh 892 Mn 200 Kes 'Mn' 112 Kes 'Mn' 3,000 100 19 Enhancement in 0 2,000 profitability -100 2017 2018 2019 2020 2021 leading to 1,000 -200 growth in value -300 0 -400 2017 2018 20
Slide 29: Sidian Bank (3/3) – Comparable valuation
3. Sidian Bank (3/3) – Comparable valuation Sidian Bank comparables Share price performance Valuation highlights: Mar' Mar' Jun' Return (2019 - Return (2014 - Market returns between 2019 2014 2019 2022 2022) 2022) Kes 4.3Bn | Expected exit proceeds and 2022 Kes Kes Kes % % Kes 2.7Bn | Pre-exit Carry
Slide 30: Longhorn Publishers
4. Longhorn Publishers 22% Debt reduction between June 2020 and December Kes 572 Mn | Carrying value based on market price 2021 on the back of improved cash flows from operations. Kes 201 Mn | FY2021 EBITDA 9.7x | Implied EV/EBITDA 3.3x Strong Revenue growth HY21 v HY20 recovery Longhorn EBITDA tren
Slide 31: Isuzu East Africa
5. Isuzu East Africa Isuzu recorded an average PAT of Kes 1.3 Bn in the pre-covid period. The business was slightly impacted by supply chain disruptions during Covid but has remained resilient and is now well on the path to full recovery Renewal of partnership between Eliud Kipchoge Isuzu E.A market
Slide 32: NAS Servair
6. NAS Servair Average Pre-Covid PAT | Kes 900 Mn Core business : Inflight catering Carrying Value FY22 | Kes 859Mn Implied P/E multiple | 7.12x New product : Home deliveries in partnership with Jumia online shop 2022 Q 1 NAS Performance highlights Air Travel Numbers (Passenger throughput) 90,000,00
Slide 33: Greenblade Growers
7. Greenblade Growers Kes 273Mn | Carrying Value Kes 2.7x | Implied EBITDA multiple Kes 100Mn | Annualized EBITDA Zero Debt potential Greenblade Growers has established a cash generating business with positive EBITDA over the past three years and still has scope for exponential growth. Market opport
Slide 34: Zohari Leasing
8. Zohari Leasing Zohari EBITDA trend (Kes Mn) 120.0 • Zohari provides asset leasing a cross diverse 99.2 sectors such as financial services, real estate, 100.0 manufacturing and agribusiness. 80.0 58.4 56.9 • The business is valued at Net Asset Value in the 60.0 42.6 39.9 books of Centum and as at
Slide 35: Other portfolio companies
9. Other portfolio companies Tier Data and Tribus are B2B service providers which could leverage on the growth of Centum Real Estate business as well as rope in other third-party developers to grow their markets and product offering Tier Data EBITDA trend (Kes Mn) Tribus EBITDA trend (Kes mn) 40.0 3
Slide 36: Marketable Securities
Marketable Securities Managed by 36
Slide 37: Marketable Securities | Portfolio diversification
Marketable Securities| Portfolio diversification Asset Allocation | 31 March 2021 Asset Allocation | 31 March 2022 Cash & Equivalents 7% 11% 5% 8% 0% 16% Government fixed Cash & Equivalents income Corporate fixed Government fixed income Kes Kes income Equities 32% 7.50 Bn 7.25 Bn Corporate fixed 40%
Slide 38: Marketable Securities | Portfolio returns
Marketable Securities | Portfolio returns Centum MSP Returns vs NSE 20 Index 20.0% 18.4% 16.7% 14.9% 15.0% 13.1% 14.0% ▪ The marketable securities portfolio has consistently outperformed the market, on 11.5% the back of active management and 10.0% diversification. Annualized returns (%) 5.2% ▪ In th
Slide 39: ESG Considerations and Impact
ESG Considerations and Impact 39
Slide 40: Environmental, Social and Governance (ESG) Considerations
Environmental, Social and Governance (ESG) Considerations Our investment activities and operations are designed with due regard to Environmental, Social and Governance Considerations to contribute towards the achievement of the UN Sustainable Development Goals ESG in a Snapshot Water and Solar Energ
Slide 41: ESG | Highlights of Impact
ESG | Highlights of Impact • 300+ scholarships awarded to date to Vipingo residents • Every year, the Vipingo Scholarship Programme supports 50 bright but needy students to transition to secondary schools. • Centum sponsors 5 top performing and needy students at the Alliance High School. The first c
Slide 42: ESG | Highlights of Impact
ESG | Highlights of Impact Installed Sea Water Desalination Plant provides potable water for the development and the communities around Vipingo. 42
Slide 43: Financial Performance
Financial Performance Group Finance Director: Risper Alaro 43
Slide 44: Company Statement of Comprehensive Income
Company Statement of Comprehensive Income Kes Mn Mar 2022 Mar 2021 %Δ The total return statement represents the performance of Centum as an Dividend and interest income 1,303 1,411 (8%) investment holding company. Income from the portfolio net of operating expenses and finance costs represent the op
Slide 45: Company Statement of Financial Position
Company Statement of Financial Position Kes Mn Mar 2022 Mar 2021 %Δ Kes Mn Mar 2022 Mar 2021 %Δ Growth portfolio: Borrowings 4,159 4,122 1% - Investment in Subsidiaries 22,243 26,258 (15%) Other Liabilities 1,476 1,572 (6%) - Debt Investment in Subsidiaries 9,275 9,528 (3%) Total Liabilities 5,635 5
Slide 46: Company Cash Flow Statement
Company Cash Flow Statement Kes Mn Mar 2022 Mar 2021 Net cash generated from operating activities 1,240 4,541 Cash flows from investing activities ▪ Kes 1.2 Bn cash flows generated from operations Purchase of property and equipment (7) (0) reflect income from marketable securities and Investments in
Slide 47: Consolidated Financial Statements
Consolidated Financial Statements For purposes of compliance with the Company’s Act requirements
Slide 48: Consolidated Income Statement
Consolidated Income Statement Summary (Kes Mn) Mar 2022 Mar 2021 %Δ Kes Mn Mar 2022 Mar 2021 %Δ Profit/(loss) from trading businesses 73,215 (529,034) (114%) 4. Two Rivers Development Profit from financial services 691,657 329,858 (110%) Sales and investment income 752,867 1,066,420 (29%) Profit fro
Slide 49: Consolidated Income Statement
Consolidated Income Statement Consolidated performance analysis FY2022 FY2021 Kshs'000 Kshs'000 %Δ 114% Profit from trading business 73,215 (529,034) ▪ With exception of the TRDL sub-group, the Profit from real estate operations 875,300 (85%) 127,049 profit before tax increased by 173% to close at O
Slide 50: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position Kes Mn Mar 2022 Mar 2021 Investment portfolio 11,655 20,173 Loans and advances - 20,423 Cash and cash equivalents 1,196 5,122 ▪ The Consolidated Statement of Financials Assets held for sale 43,030 - Position represents an aggregation of the Other assets 6
Slide 51: Group Borrowings | Debt levels and asset coverage
Group Borrowings | Debt levels and asset coverage Centum made a strategic decision to deleverage in the Centum 4.0 Strategy period. At portfolio level, borrowings is aligned to the respective company’s debt capacity. Ongoing initiatives to re-align the capital structure at TRDL Centum and subsidiari
Slide 52: Proposed Dividend
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Slide 53: FY2022 First & Final Dividend
FY2022 First & Final Dividend ▪ In FY2022, the company generated cash annuity income (dividend and interest income) of Kes 1.3Bn from the portfolio. ▪ Our dividend policy is to pay out 30% of annuity income to shareholders. ▪ In line with the policy, the Board of Directors of the Company proposes to
Slide 54: Outlook
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Slide 55: Outlook | FY 2022/23
Outlook | FY 2022/23 We are optimistic that the key value drivers we embarked on in FY2022 will be closed during FY2023 and significant progress be made towards our strategic objectives Portfolio Aspect Key Focus Areas ▪ Complete the Centum RE and TRDL capital raise to capitalize the growth opportun
Slide 56: Outlook | FY2022/23
Outlook | FY2022/23 Portfolio Aspect Key Focus Areas Marketable ▪ Maintain the average cash return yield on the portfolio above 15% p.a. Securities Portfolio ▪ Preserve and grow the portfolio value to the strategic target level of above 20% in order to generate a sizeable long term return to cover c
Slide 57: Q&A
Q&A
Slide 58: 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 — FY2022 Earnings Presentation on 6ix