Centum Investment Company Plc · NSEKE:CTUM
Centum Investment — FY2019 Earnings Presentation
46 slides from Centum Investment's earnings presentation, Jun 12, 2019
Slide 1: Investor Briefing FY19
Investor Briefing FY19 12th June 2019
Slide 2: Agenda
Agenda Business Review Dr. James Mworia – Group Chief Executive Officer Financial Review Samuel Kariuki – Group Chief Finance Officer Outlook Dr. James Mworia – Group Chief Executive Officer Q&A 2
Slide 3: Centum 3.0 Scorecard
Centum 3.0 Scorecard 3
Slide 4: Centum 3.0 Scorecard: FY14 – FY19 Performance Snapshot
Centum 3.0 Scorecard: FY14 – FY19 Performance Snapshot Achievements as at FY19 NAV growth from KES 22.9 billion to KES. 52.60 billion and NAV per share growth from KES 34.5 to Return KES 79.0 between FY14 and FY19. Focus Active in six sectors (Real Estate, Power, Financial Services, FMCG, Agribusine
Slide 5: Remarkable success in Asset and NAV growth over the last 5 years
Centum 3.0 Scorecard: FY14 – FY19 Remarkable success in Asset and NAV growth over the last 5 years Total Assets (KES billions), FY14 - FY19 Net Asset Value per Share (KES), FY14 - FY19 85.0 85.0 79.0 18.0% 73.2 71.6 CAGR 20.0% 67.3 66.1 CAGR 65.0 65.0 61.6 59.1 51.5 48 45.0 41.2 45.0 34.5 28.8 25.0
Slide 6: Centum 3.0 Scorecard: Key Events and Drivers of Growth
Centum 3.0 Scorecard: FY14 – FY19 Key Events and Drivers of Growth • KES 36.2 billion raised from full or partial exits from our investment portfolio, with realised gains of Exits KES 24.3 billion • Successfully raised two corporate bonds totalling KES 10.2 billion Debt fund • KES 4.2 billion bond m
Slide 7: Sale of Almasi Beverages and Nairobi Bottlers Limited
Sale of Almasi Beverages and Nairobi Bottlers Limited • We have entered into an agreement to sell our shareholding in Almasi Beverages and Nairobi Bottlers Limited at a transaction price of KES 19.5 billion • The combined historical cost of the two assets is KES 3.4 billion • The achieved exit valua
Slide 8: Centum 4.0 Strategic Priorities
Centum 4.0 Strategic Priorities 8
Slide 9: Centum 4.0: FY20 – FY24
Centum 4.0: FY20 – FY24 Over Centum 3.0, focus was on Centum 4.0 capital appreciation, supported by favourable operating environment Over the next 5 years, our focus is GDP Growth (2014 – 2018) on cash annuity income and holding 6.0% 5.9% 5.8% optimal liquidity reserves 5.7% 5.4% Investments will be
Slide 10: Centum 4.0: FY20 – FY24 Strategic Priorities
Centum 4.0: FY20 – FY24 Strategic Priorities • Generate a minimum return on equity of 20% through value-creating activities Return & Dividend Payout • Optimise dividend pay-out to the higher of 30% of the cash annuity income (excluding capital gains) and the previous year’s dividend pay-out • Balanc
Slide 11: Portfolio Review
Portfolio Review 11
Slide 12: Summary of Portfolio Class as at 31st March 2019
Portfolio Review: Summary of Portfolio Class as at 31st March 2019 Marketable Securities Real Estate Portfolio Private Equity Portfolio Development Portfolio Portfolio and Cash KES KES KES KES 24,919 21,192 4,450 2,039 million million million million Net Asset Value Net Asset Value Net Asset Value N
Slide 13: Real Estate
Real Estate Managed by 13
Slide 14: Real Estate | Performance over Centum 3.0
Real Estate| Performance over Centum 3.0 ▪ Acquisition of Vipingo Key Investment ▪ Completion of Two Rivers Development 37% Activities ▪ Activation of all land nodes IRR over Centum 3.0 Exit Transactions, FY14 – FY19 Year of Initial Exit KES million Initial FY14 FY15 FY16 FY17 FY18 Exit gains Invest
Slide 15: Real Estate | Centum 4.0 Strategic Pillars
Real Estate| Centum 4.0 Strategic Pillars Centum RE Strategic Pillars 3rd Party Infill Projects Land Monetisation Rentals Projects 15
Slide 16: Real Estate | Residential Infill Projects
Real Estate| Residential Infill Projects Sale Value of Phase 1 Pre-sales Pre-sold Units Units under Shareholding Development Units % of Phase 1 KES million 100% 510 65 13% 985 100% 402 337 84% 2,361 100% 279 204 74% 1,839 Total 1,188 606 51% 5,186 The above are units being developed on our existing
Slide 17: Real Estate | Residential Developments
Real Estate| Residential Developments Awali Estate 1255 Palm Ridge Riverbank Cascadia Project Mirabella Bella Vista Pipeline Signature Villas Riviera Villas 17 Market Validation Construction Post Construction Sales
Slide 18: Real Estate | Land Monetisation
Real Estate| Land Monetisation FY 19 closed Under Expression of sales Negotiation Interest KES million KES million KES million Projected Revenue 412 400 1,480 Projected Revenue 30 309 1,155 Projected Revenue 433 3,573 6,433 Total 875 4,282 9,068 18
Slide 19: Real Estate | Rental Properties
Real Estate| Rental Properties Key Mall Metrics as at March 2019 79% 81% ▪ Two Rivers Power and Two Rivers Water & Leased Leased on Total on Total Sewerage Co. recorded 28% increase in revenue Units GLA1 to KES 334m 47,881 of 147 of 186 59,032 sq. mtrs units leased GLA2 leased ▪ Robust pipeline of r
Slide 20: Private Equity
Private Equity Managed by ©) cp CENTUM
Slide 21: Private Equity | Fund I Centum 3.0 Approach
Private Equity| Fund I Centum 3.0 Approach Fund I ‘Comprises of legacy investments and mature companies’ Banking Publishing Food & Beverage Automotive Asset Plan: • Deliver returns through progressive dividend payments • Drive value creation through active portfolio management • Robust exit pipeline
Slide 22: Private Equity | Fund I Successful Execution of our Investment Approach
Private Equity| Fund I Successful Execution of our Investment Approach in Centum 3.0 Successful Exit Activities, FY14 – FY19 Year of Initial Exit KES million Initial FY14 FY15 FY16 FY17 FY18 Exit gains Investment Proceeds Investment UAP 2012 653 - 5,845 - - - 5,845 5,192 AoN Minet 1992 12 - - 1,028
Slide 23: Private Equity | Value Drivers FY19
Private Equity| Value Drivers FY19 1 75% 75% Profit Growth of the assets had a positive of the assets increased in profit after tax profitability vs. previous year 2 38% 63% of the assets increased the Dividends of the assets paid a dividend dividend paid vs. previous year 3 • KES 1.2 billion realis
Slide 24: Private Equity | Fund I Exit Transactions
Private Equity| Fund I Exit Transactions GenAfrica Asset Managers Limited Investment Year 2013 Initial Investment (KES mn) 1,050 Exit Proceeds (KES mn) 2,324 Holding Period IRR 29% Agreement for Sale of Bottlers to CCBA • Signed an agreement on 10 June 2019 to sell the total combined stake in Almasi
Slide 25: Private Equity | Fund II Strategic Priorities
Private Equity| Fund II Strategic Priorities Centum Capital will reposition itself as an institutional private equity fund manager with the portfolio segmented into two business lines; Fund I and Fund II Fund II ‘KES 50 billion mid-market buyout/ growth fund focused on EA Centum commits to be a corn
Slide 26: Marketable Securities
Marketable Securities Managed by 26
Slide 27: Marketable Securities | Performance Highlights
Marketable Securities| Performance Highlights Annualized Performance: 2014-2019 Performance Highlights & Cash Generation 15% 13% FY'15 - FY'19 10% KES Millions Opening Portfolio 3,765 6% 5% Net Cash to Centum (2,538) Total Return 1,997 0% 0% of which Dividend & Interest Income 1,293 of which Capital
Slide 28: Financial Performance
Financial Performance 28
Slide 29: Consolidated Income Statement
Consolidated Income Statement KES millions FY19 FY18 %Δ Sales 10,864 10,171 7% Cost of sales (6,861) (6,586) 4% Gross profit 4,003 3,585 12% Operating and administrative expenses (2,885) (2,516) 15% Trading profit 1,117 1,069 5% Financial services: - Income from provision of financial services 3,503
Slide 30: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position KES million Mar-19 Mar-18 %Δ Property, plant and equipment 11,067 9,665 15% Investment property 40,034 32,719 22% Goodwill and intangible assets 2,495 3,247 (23%) Investment portfolio: - Associates 2,921 2,746 6% - Joint ventures 7,065 9,798 (28%) - Unquo
Slide 31: Company Total Return Statement
Financial Performance: Company Total Return Statement KES. millions FY19 FY18 % Dividend income 700 2,040 (66%) Commentary Interest income 1,347 (11%) • Profitability driven by KES 1.2b realised gains from 1,197 disposal of Gen Africa Realised gains 1,262 9 14448% Other income 8 133 (94%) • Recurren
Slide 32: Company Statement of Financial Position
Company Statement of Financial Position KES millions FY19 FY18 KES millions FY19 FY18 Investments Portfolio Borrowings 16,145 14,843 Investment in Subsidiaries 42,156 37,090 Other Liabilities 2,899 2,559 Debt investment in subsidiaries 15,696 13,386 Total Liabilities 19,044 17,401 Investment in Asso
Slide 33: Company Statement of Financial Position: Portfolio Valuation
Company Statement of Financial Position Portfolio Valuation FY19 FY18 Portfolio valuation is conservative, as validated by exit transactions to date KES million KES million Prior period Sales proceeds Investment portfolio: Year Investment carrying value on exit Private equity 25,607 24,699 KES milli
Slide 34: Company Gearing & Debt Capacity
Company Statement of Financial Position Company Gearing & Debt Capacity Company Level Gearing FY19 FY18 Corporate Bond II KES 6,367 million KES 6,294 million 1% Term Loan KES 7,520 million KES 5,087 million 48% Total KES 11,381 million KES 13,887 million 22% Debt Service Coverage Ratio KES millions
Slide 35: Debt Profile
Company Statement of Financial Position Debt Profile Borrowings by Nature of Debt FY19 Debt Maturity Profile KES million Changes in the 12-month period to March 2019 As at FY19 12% (102) 5,504 6,108 4,503 1% 42 39% 2,011 Total Debt KES million KES 16.14Bn 47% Bond II RMB Facility Overdraft Facilitie
Slide 36: Company Statement of Cash Flows
Company Statement of Cash Flows KES millions FY19 FY18 Cash flows from operating activities Net cash generated from operating activities 3,736 4,794 Cash flows from investing activities Purchase of PPE (15) (116) Investments in subsidiaries (931) (336) Net debt investment in subsidiaries (2,310) (3,
Slide 37: FY19 First & Final Dividend
FY19 First & Final Dividend The Board of Directors has recommended a first and final dividend payout of KES 1.20 per share, amounting to KES 798 million A similar amount was paid in the prior financial year 37
Slide 38: Outlook
Outlook 38
Slide 39: Outlook | FY 19/20
Outlook| FY 19/20 ▪ Generate a minimum return on equity of 20% through value-creating activities Return & Dividend Payout ▪ Dividend pay-out at the higher of 30% of the cash annuity income (excluding capital gains) and KES 1.20 per share. Capital Structure and ▪ Payment of KES. 7.5 billion USD denom
Slide 40: Q&A
Q&A 40
Slide 41: Appendices
SSS Appendices . A = =F
Slide 42: Real Estate Portfolio Valuation as at March 2019
Real Estate Portfolio Valuation as at 31 March 2019 Real Estate Portfolio Company Stake Carrying Value Carrying Value Valuation FY19 (KES million) FY18 (KES million) Method Portfolio Vipingo Development Limited 100% 13,865 7,646 Net Asset Value Two Rivers Development Limited 58.30% 9,898 12,357 Net
Slide 43: Private Equity Portfolio Valuation as at March 2019
Private Equity Portfolio Valuation as at 31 March 2019 Private Equity Portfolio Company Stake Sector Carrying Value Carrying Value Valuation Discounted FY19 (KES million) FY18 (KES million) Method Multiple4 Portfolio Almasi Beverages Limited 53.88% FMCG 9,851 8,697 FV3: Multiples - EV1/EBITDA 6.94x
Slide 44: Marketable Securities Portfolio Valuation as at March 2019
Marketable Securities Portfolio Valuation as at 31 March 2019 Marketable Portfolio Company Stake Carrying Value Carrying Value FY19 (KES million) FY18 (KES million) Securities Centum Exotics Limited 100% 3,782 3,589 Market Price Centum QPE 100% 53 98 Market Price Receivables 100% 417 628 Cost Cash 1
Slide 45: Development Portfolio Valuation as at March 2019
Development Portfolio Valuation as at 31 March 2019 Development Portfolio Company Stake Carrying Value Carrying Value FY19 (KES million) FY18 (KES million) Portfolio Amu Power Ltd 51.00% 2,098 2,144 Cost Akiira Geothermal Limited 37.50% 1,542 1,491 Cost ACE Holdings Limited 16.40% 711 556 Cost Green
Slide 46: 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 46
Centum Investment Company — FY2019 Earnings Presentation on 6ix