Centum Investment Company Plc · NSEKE:CTUM
Centum Investment — H1 2020/21 Earnings Presentation
46 slides from Centum Investment's earnings presentation, Nov 27, 2020
Slide 1: Investor Briefing HY 2020/2021
Investor Briefing HY 2020/2021 27th November 2020
Slide 2: Agenda
Agenda Business Review Dr. James Mworia – Group Chief Executive Officer Financial Review Wambua Kimeu – Group Chief Finance Officer Outlook Dr. James Mworia – Group Chief Executive Officer Q&A 2
Slide 3: About Centum: Company Snapshot
About Centum Company Snapshot Portfolio composition – 30 September 2020 KES 13.5Bn Market Capitalisation(1) Real Estate 64% KES 45.3Bn Net Asset Value(2) Private Equity 17% Development 3% 11x NAV growth FY2009– FY2020 Marketable Securities 16% 3 Business Segments of Focus: Centum Real Estate, Privat
Slide 4: Centum 4.0 Strategy: Underlying Themes for HY 2020/2021
Centum 4.0 Strategy Underlying Themes for HY 2020/2021 Objective Status Achieved the strategic objective of zero long-term debt at company level Balance sheet ▪ Maturing KES 6.6 billion bond redeemed on 8 June 2020. strengthening: Deleverage and build up liquidity ▪ Early repayment of USD 75 million
Slide 5: Centum 4.0 Strategy: Key Updates and Performance Drivers
Centum 4.0 Strategy: HY 2020/2021 Key Updates and Performance Drivers Marketable Real Estate Private Equity Development Securities & cash 64% 60% 17% 18% 16% 18% 3.2% 3.6% 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 A
Slide 6: Company Total Return Statement
Centum 4.0 Strategy Progress Company Total Return Statement KShs. Millions HY2021 HY2020 %Δ ▪ Company PBT increase from loss of KShs 804m to profit of KShs 95m. Investment income 729 3,022 -76% ▪ Prior Year exceptions included Operating expenses (299) (312) -4% ✓ Gain on disposal of bottlers KShs 2.
Slide 7: NAV Movement | April – September 2020
Centum 4.0 Strategy Progress NAV Movement | April – September 2020 Excluding dividend payout, the decline in NAV is 2.7%, occasioned by fair value movements as on 30 September 2020. 7
Slide 8: Company NAV | Business Segment Contribution
Centum 4.0 Strategy Progress Company NAV | Business Segment Contribution Private Equity Real estate TRDL MSP Total Kes M Sep-20 Mar-20 Sep-20 Mar-20 Sep-20 Mar-20 Sep-20 Mar-20 Sep-20 Mar-20 Investment portfolio 9,836 10,235 26,312 29,846 6,486 7,034 2,902 2,902 45,536 50,017 Marketable securities -
Slide 9: Share Price, Market Performance & NAV
Centum 4.0 Strategy Progress Share Price, Market Performance & NAV Centum Share Price vs NSE 20 Index Centum’s share price has 90.0 6,000 declined over the past 6 5,248 years in pace with the Kes per Share 80.0 4,946 79.0 5,000 overall bearish performance 70.0 73.2 71.3 of local equities market. 63.
Slide 10: Significant opportunity for value investors
Centum 4.0 Strategy Progress Significant opportunity for value investors Asset contribution to Centum’s NAV per Share | September 2020 Simulated share price attribution to our portfolio Portfolio Assets NAV/Share Valuation Methodology Multiple | Discount Sep 2020 March 2020 20.3 Kes 7.9 vs Marketabl
Slide 11: Company Cash Flows
Centum 4.0 Strategy Progress Company Cash Flows Kes M Sept ‘20 Sept ‘19 ▪ Centum received its first cash distribution from Centum Real Estate of Kes 3.75 billion in Opening cash and cash equivalents 2,912 252 repayment of shareholder loans. Net cash from operations 3,908 19,776 ▪ Prior period cash m
Slide 12: Portfolio Review
Portfolio Review 12
Slide 13: Centum Real Estate Limited
Centum Real Estate Limited Managed by 13
Slide 14: Organization structure | Centum Real Estate Limited
Centum Real Estate Organization structure |Centum Real Estate Limited We completed the consolidation of real estate assets under Centum Real Estate Limited – a HoldCo which is 100% owned by Centum Investment Plc. This structure excludes Two Rivers which we hold separately alongside other investors.
Slide 15: Centum Real Estate: Strategic Pillars
Centum Real Estate Limited Strategic Pillars Under Centum 4.0, Centum Real Estate is pursuing a three-pronged strategy to deliver Kes 16 Billion cash to Centum Investment Plc Pillar Objective Achievement 1 ✓ Market validated projects of 1,482 units under construction with a profit potential of Kes 4
Slide 16: Infill developments cash potential
Centum Real Estate Limited Infill developments cash potential Key Metrics Sep 2019 March 2020 Movement Sep 2020 Movement No. of Units U/C 1,316 1,442 126 1,482 40 Centum Real Estate Limited has No. Sold 797 999 202 1,086 87 locked in Kes 10.1 billion or 63% of % achieved 61% 69% 9% 73% 4% their five
Slide 17: Fund raising | Kes 4Bn Bond issue is underway
Centum Real Estate Limited Fund raising | Kes 4Bn Bond issue is underway Issuer Centum Real Estate Limited (subsidiary of Centum Investment Plc) Purpose Bridge funding for the construction of residential development projects Tenor 3 years Amount KES 4,000,000,0000 (with a KES 2bn green shoe option)
Slide 18: Two Rivers Development
Two Rivers Development 18
Slide 19: Two Rivers Development: Strategic objectives
Two Rivers Development Strategic objectives Pillar Objective Achievement Monetization of ▪ To generate cash through sale of bulk • Kes 1.9 billion in sales of development rights 1 development rights. the Land Bank ▪ Use proceeds in debt reduction under negotiation. • Management of rental assets such
Slide 20: Two Rivers Lifestyle Centre update as at 30 September 2020
Two Rivers Development Two Rivers Lifestyle Centre update as at 30 September 2020 Mall Occupancy on the Gross Lettable Area +1% on 59,032 sq. 82% metres 81% 78% 75% 76% 72% HY18 FY18 HY19 FY19 FY20 HY21 Office Towers Occupancy on the Gross Lettable Area 20% 20% 14% 9% 11% 6% The first 4DX cinema and
Slide 21: Private Equity
Private Equity Managed by ©) P, CENTUM
Slide 22: Private Equity Portfolio Highlights | HY2020/21
Private Equity Portfolio Highlights | HY2020/21 1 • 5 out of 8 assets remained profitable in the period, including Isuzu, Sidian, Nabo Capital. Profitability 2 • Portfolio companies demonstrated resilience in the the covid-19 environment, preserving sufficient cash to remain self funded. Liquidity •
Slide 23: Sidian Bank
Private Equity Sidian Bank 26% growth in loan book and significant improvement in asset quality as NPL ratio drops from 20% to 12% September 2020 update Sidian’s Net Interest and Non-funded Sidian’s Profit (Loss) After Tax 12% -6% Income FY2016 to HY2021 NPL ratio 113 596 38% 28 1,045 1,449 NFI cont
Slide 24: Longhorn Publishers
Private Equity Longhorn Publishers Digital and geographical diversification present the next growth frontiers Diversification to digital products ❑Extended schools closure in Kenya has significantly reduced business activity 9 markets Geographical ❑Performance expected to improve going operations fo
Slide 25: Isuzu East Africa
Private Equity Isuzu East Africa Isuzu has continued its market dominance at 40% market share Strategic partnership with consumer financiers to boost sales... Kes 2.6 Bn 5% Carrying Value Dividend Yield +4.3% Market share gained in 2020 40.0% 35.7% 28.1% 2018 2019 Oct-20 Source: Kenya Motor Industry
Slide 26: NAS Servair
Private Equity NAS Servair Market leadership in airline catering ❑ Provides in-flight airline catering with > 90% market share. ❑ Business has been impacted by reduced air travel due to Covid-19. ❑ Expected recovery over the next 6 – 12 months as activity gradually resumes. ❑ Currently focusing on d
Slide 27: Zohari Leasing
Private Equity Zohari Leasing Total Assets | 25% CAGR from FY2017 – HY2021 KShs. 470 million +8% Total Assets (Kes M) Total Assets 500 470 446 450 400 KShs. 18 million +8% 350 316 333 EBIT 300 264 241 250 217 197 200 Sector diversification 150 consumer, agribusiness, business 100 technology, constru
Slide 28: Development
28 Development Managed by ©) P, CENTUM
Slide 29: Status Update on Akiira Geothermal
Development Status Update on Akiira Geothermal 37.5% Stake KShs. 1.45 billion Carrying Value Milestones to date ✓ Geoscientific studies Power Purchase Agreement (PPA) ✓ completed and reports Government of Kenya Letter of Support ✓ showed significant Land acquired ✓ resource potential. ✓ Commenced ex
Slide 30: Marketable Securities
Marketable Securities Managed by 30
Slide 31: Portfolio Allocation and Performance Highlights
Marketable Securities Portfolio Allocation and Performance Highlights Portfolio composition | 31 March 2020 Portfolio composition | 30 September 2020 5% 5% 5% 16% 21% Equities 30% Equities Fixed Income Kes 8.9 Bn Fixed Income Kes 8.3 Bn Cash Cash 60% Mutual Funds Mutual Funds 58% ❑ 79% of the portfo
Slide 32: Strategy is to preserve value and optimize cash return
Marketable Securities Strategy is to preserves value and optimize cash return Dampened YTD Performance of Emerging Markets Equities Yield on total Nabo Capital AUMs remain on an upward trajectory 110 0.85% 105 0.80% 0.79% 100 0.80% 0.76% 95 0.75% 0.70% 90 0.70% 0.7% 0.70% 0.69% 0.67% 85 0.66% 0.64%
Slide 33: CSR Engagement
CSR Engagement Managed by @; 2/CENTUM FOUNDATIO
Slide 34: Tackling Youth Unemployment
Tackling Youth Unemployment Ajiry’s mission is to create empowerment and employment for individuals as well as small businesses/start ups 1 Ajiry App 2 Ajiry Learning • Ajiry platform (https://www.ajiry.com/jobs) connects skilled job seekers to opportunities. • Our County teams have developed over 1
Slide 35: Covid-19 Mitigation: Standing together with our communities
Covid-19 Mitigation Standing together with our communities Short- and long-term intervening measures to mitigate covid-19 impact 35
Slide 36: Financial Performance
Financial Performance 36
Slide 37: Consolidated Income Statement
Consolidated Income Statement ▪ Trading income declined due to KShs. Millions HY2021 HY2020 % ✓ Disposal of Almasi in prior year Trading (loss)/profit (404) 254 -259% ✓ Impact of Covid 19 on trading businesses Operating income /(loss) from financial 131 services 38 -71% ▪ Operating Income from finan
Slide 38: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position KShs. millions HY2021 FY 20 Property, plant and equipment 4,157 4,099 ▪ Inventory – Residential Units Investment property 41,568 41,181 ✓ Centum RE Inventory - residential Inventory - Residential houses under construction 4,257 3,016 projects increased by
Slide 39: Company Income Statement
Company Income Statement KShs. Millions HY2021 HY2020 %Δ ▪ Company PBT increased from loss of KShs 804m to profit of KShs 95m. Investment income 729 3,022 -76% Operating expenses (299) (312) -4% ▪ Prior Year exceptions included ✓ Gain on disposal of bottlers KShs 2.2b Finance costs (335) (1,228) -73
Slide 40: Company Statement of Financial Position
Company Statement of Financial Position KShs. millions HY2021FY 2020 %Δ KShs. millions HY2021FY 2020 %Δ Investment portfolio: Borrowings 3,587 7,486 (52%) - Investment in Subsidiaries 28,731 30,236 (5%) Other Liabilities 2,575 1,925 34% - Debt Investment in Subsidiaries 12,656 15,631 (19%) Total Lia
Slide 41: Company Cash Flow Statement
Company Cash Flow Statement KES millions HY 21 HY 20 Cash flows from operating activities Net cash generated from operating activities 3,908 19,776 ▪ Centum received its first cash Cash flows from investing activities distribution from Centum Real Investments in subsidiaries (equity) - (45) Estate o
Slide 42: Company Statement of Financial Position: Gearing & Liquidity
Company Statement of Financial Position Gearing & Liquidity Kes. Mn FY '16 FY '17 FY '18 FY'19 FY'20 HY’21 ▪ Bond redeemed in June 2020, leading to full repayment of long-term in HY2020/21. Short Term Debt (982) (3,482) (108) (7,486) (3,587) - ▪ Reducing debt and improving liquidity resulted Long Te
Slide 43: Outlook
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Slide 44: Outlook | 2HY 2020/21
Outlook | 2HY 2020/21 Marketable Real Estate Private Equity Development Securities objectives • Drive value creation in the Strategic • Monetization of • Portfolio management for • Liquidity preservation and underlying assets and underlying portfolio value creation. generating stable cash unlock val
Slide 45: Q&A
Q&A
Slide 46: 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
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