Muthengi mike bamburi financial model - enhancement

Income Statement
Balance Sheet
Cash Flow Statement
Debt Schedule
Interest Schedule
Discounted Cash Flow Analysis
WACC
Comparative Analysis
Credit and Leverage Statistics
IRR Analysis
Illustrative Reference Range
Football Field
Illustrative Graphs
Historical Statement
DISCLAIMER:
The content provided on this document is provided as general information on research and does not constitute advice or
recommendation by Muthengi Mike and should not be relied upon for investment decisions or any other matter and that this
document does not constitute a distribution recommending the purchase or sale of any security or portfolio. Please note that past
performance is no indication of future results. The ideas expressed in the document are solely the opinions of the author at the
time of publication and are subject to change without notice. Although the author has made every effort to provide accurate
information at the date of publication all information available in this report is provided without any express or implied warranty of
any kind as to its correctness. You should consult your own independent financial adviser to obtain professional advice before
exercising any decisions based on the information present in this document. Any action that you take as a result of this
information, analysis, or advertisement is ultimately your responsibility.
Bamburi Cement Limited Financial Model
Muthengi Mike
mmusimi@gmail.com
TABLE OF CONTENTS

D
R
AFT
VER
SIO
N
TW
O
M
U
TH
EN
G
IM
IKE
Bamburi Financial Model - Enhancements - V2.xlsx: IS 7/18/2017
Bamburi Cement Limited Base Case
Income Statement
(All figures in millions, except per share data)
Actual Estimated Projected
Fiscal 2013 2014 2015 2016 2017 2018 2019 2020 2021
Net Revenue 28,075 KES 33,928 KES 36,029 KES 39,200 KES 38,034 KES 39,936 KES 41,932 KES 44,029 KES 46,231 KES 48,542
Cost of Sales (25,411) (26,683) (26,663) (24,790) (25,950) (27,163) (28,433) (29,763) (31,154)
Gross Profit KES 8,517 KES 9,346 KES 12,537 KES 13,244 KES 13,986 KES 14,769 KES 15,596 KES 16,468 KES 17,388
SG&A Expenses (3,353) (3,818) (4,302) (5,342) (5,689) (6,057) (6,448) (6,863) (7,303)
Investment Income 473 349 374 369 350 611 756 914 1,086
Operating Income 5,637 5,877 8,609 8,271 8,647 9,323 9,904 10,519 11,171
Interest Expense (121) (76) - - - - - - -
Pre-Tax Income KES 5,516 KES 5,801 KES 8,609 KES 8,271 KES 8,647 KES 9,323 KES 9,904 KES 10,519 KES 11,171
Income Taxes (1,843) (1,898) (2,631) (2,381) (2,594) (2,797) (2,971) (3,156) (3,351)
Minority Interest (210) (205) (345) (612) (647) (686) (727) (771) (817) (866)
Net Income KES 3,468 KES 3,558 KES 5,366 KES 5,243 KES 5,367 KES 5,799 KES 6,162 KES 6,547 KES 6,954
Diluted Shares Outstanding 363.0 363.0 363.0 363.0 363.0 363.0 363.0 363.0 363.0
Diluted Earnings per Share KES 9.55 KES 9.80 KES 14.78 KES 14.45 KES 14.79 KES 15.98 KES 16.98 KES 18.04 KES 19.16
EBITDA KES 7,172 KES 7,511 KES 10,249 KES 9,868 KES 10,324 KES 11,084 KES 11,753 KES 12,460 KES 13,209
EBITDA Margin 21.1% 20.8% 26.1% 25.9% 25.9% 26.4% 26.7% 27.0% 27.2%
Income Statement Assumptions
SCENARIO Base Case
Net Revenue Growth (9.5)% 6.2% 8.8% (3.0)% 5.0% 5.0% 5.0% 5.0% 5.0%
Upside Case 8.0% 8.0% 8.0% 8.0% 8.0%
Base Case 5.0% 5.0% 5.0% 5.0% 5.0%
Downside 2.0% 2.0% 2.0% 2.0% 2.0%
COGS, % of Revenue -0.20% 74.9% 74.1% 68.0% 65.2% 65.0% 64.8% 64.6% 64.4% 64.2%
SG&A Expenses, % of Revenue 0.20% 9.9% 10.6% 11.0% 14.0% 14.2% 14.4% 14.6% 14.8% 15.0%
Minority Interest Growth (56.0)% 68.3% 77.4% 5.7% 6.0% 6.0% 6.0% 6.0% 6.0%
Effective Tax Rate 33.4% 32.7% 30.6% 28.8% 30.0% 30.0% 30.0% 30.0% 30.0%
Depreciation & Amortization KES 1,535 KES 1,634 KES 1,640 KES 1,597 KES 1,677 KES 1,761 KES 1,849 KES 1,941 KES 2,038
D&A, % of Revenue 4.5% 4.5% 4.2% 4.2% 4.2% 4.2% 4.2% 4.2% 4.2%
Note: Fiscal year ends December 31 of each year.
Mike Muthengi:
Decrease in COGS due to economies of scale.
Mike Muthengi:
One time Restructuring
charges of Kes. 192M
normalized. AR p 57.
Bad debt recoveries of 48M
adjusted. AR P 113.
Mike Muthengi:
Adjustments for above
Inventory write down,
Restructuring charges, Bad
debts recovery effected in
Income Taxes.
Mike Muthengi:
One time Inventory write
down of Kes. 7M normalized.
AR Pg 112
Mike Muthengi:
SG&A exhibiting diseconomies of scale, thus
increasing overtime.
mmusimi@gmail.com 1 of 14 Muthengi Mike

D
R
AFT
VER
SIO
N
TW
O
M
U
TH
EN
G
IM
IKE
Bamburi Financial Model - Enhancements - V2.xlsx: BS 7/18/2017
Balance Sheet
(Kes. in millions)
Fiscal 2014 2015 2016 2017 2018 2019 2020 2021
ASSETS
Current Assets
Cash & Equivalents KES 7,644 KES 8,453 KES 6,972 KES 12,160 KES 15,052 KES 18,195 KES 21,608 KES 25,305
Trade & other Receivables, net 2,209 2,945 5,529 3,282 3,447 3,619 3,800 3,990
Inventories 5,585 6,604 6,331 6,627 6,937 7,261 7,601 7,956
Corporate Tax Recoverable 107 131 168 168 168 168 168 168
Total Current Assets KES 15,545 KES 18,133 KES 19,000 KES 22,237 KES 25,603 KES 29,244 KES 33,177 KES 37,419
Net PPE KES 24,263 KES 22,897 KES 21,093 KES 19,916 KES 18,655 KES 17,307 KES 15,866 KES 14,327
Goodwill 217 217 217 217 217 217 217 217
Prepaid Operating Lease Rentals 186 164 145 145 145 145 145 145
Intangible Assets 118 84 78 78 78 78 78 78
Other Equity Investments 662 535 278 278 278 278 278 278
TOTAL ASSETS KES 40,991 KES 42,030 KES 40,811 KES 42,871 KES 44,977 KES 47,269 KES 49,760 KES 52,465
LIABILITIES
Current Liabilities
Trade & Other Payable KES 6,414 KES 6,803 KES 6,883 KES 7,227 KES 7,589 KES 7,968 KES 8,366 KES 8,785
Accrued Liabilities & Others 354 890 163 399 419 440 462 485
Revolver - - - - - - - -
Short Term & Current Portion of Long-Term Debt - - - - - - - -
Total Current Liabilities KES 6,768 KES 7,693 KES 7,046 KES 7,627 KES 8,008 KES 8,408 KES 8,829 KES 9,270
Long-Term Debt KES 0 KES 0 KES 0 KES 0 KES 0 KES 0 KES 0 KES 0
Deferred Tax Liability 3,955 3,365 2,674 2,674 2,674 2,674 2,674 2,674
Provisions 457 620 695 695 695 695 695 695
Employee's Benefit Liabilities 692 646 577 577 577 577 577 577
TOTAL LIABILITIES KES 11,872 KES 12,324 KES 10,992 KES 11,573 KES 11,954 KES 12,354 KES 12,775 KES 13,216
SHAREHOLDERS' EQUITY
Minority Interest KES 2,391 KES 2,817 KES 3,414 KES 4,100 KES 4,827 KES 5,597 KES 6,414 KES 7,280
Share Capital 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815
Retained Earnings 17,220 18,348 19,148 19,942 20,939 22,060 23,315 24,712
Accumulated Other Comp. Income 7,693 6,726 5,442 5,442 5,442 5,442 5,442 5,442
TOTAL SHAREHOLDERS' EQUITY KES 29,119 KES 29,706 KES 29,819 KES 31,299 KES 33,023 KES 34,914 KES 36,986 KES 39,249
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY KES 40,991 KES 42,030 KES 40,811 KES 42,871 KES 44,977 KES 47,269 KES 49,760 KES 52,465
Check o.k o.k o.k o.k o.k o.k o.k o.k
Net Revenue KES 36,029 KES 39,200 KES 38,034 KES 39,936 KES 41,932 KES 44,029 KES 46,231 KES 48,542
Cost of Sales 26,683 26,663 24,790 25,950 27,163 28,433 29,763 31,154
SG&A Expenses before D&A 2,184 2,662 3,745 4,012 4,297 4,599 4,922 5,265
Days Receivable Outstanding 22.4 27.4 53.1 30.0 30.0 30.0 30.0 30.0
Days Inventories Outstanding 76.4 90.4 93.2 93.2 93.2 93.2 93.2 93.2
Days Payable Outstanding 81.1 84.7 88.0 88.0 88.0 88.0 88.0 88.0
Accrued Liabilities & Others, % of Revenue 1.0% 1.1% 0.4% 1.0% 1.0% 1.0% 1.0% 1.0%
Mike Muthengi:
DSO AR16, P100.
Mike Muthengi:
SG&A before D&A and
Interest.

D
R
AFT
VER
SIO
N
TW
O
M
U
TH
EN
G
IM
IKE
Bamburi Financial Model - Enhancements - V2.xlsx: CF 7/18/2017
Cash Flow Statement
(Kes. in millions)
Estimated Projected
Fiscal 2017 2018 2019 2020 2021
Cash From Operating Activities:
Net Income KES 6,053 KES 6,526 KES 6,933 KES 7,363 KES 7,820
Plus: Depreciation & Amortization 1,677 1,761 1,849 1,941 2,038
Changes in Working Capital:
(Increase)/Decrease in Trade & other Receivables, net KES 2,247 (KES 164) (KES 172) (KES 181) (KES 190)
(Increase)/Decrease in Inventories (296) (310) (324) (339) (355)
Increase/(Decrease) in Trade & Other Payable 344 361 379 398 418
Increase/(Decrease) in Accrued Liabilities & Others 236 20 21 22 23
Total Change in Working Capital KES 2,531 (KES 93) (KES 96) (KES 100) (KES 104)
Total Cash From Operating Activities KES 10,261 KES 8,194 KES 8,685 KES 9,205 KES 9,754
Cash From Investing Activities:
(Increase)/Decrease in Capital Expenditures (897) (407) (500) (500) (500) (500) (500)
Total Cash From Investing Activities (KES 500) (KES 500) (KES 500) (KES 500) (KES 500)
Net D in PPE
Cash From Financing Activities:
Issuance of Common Stock KES 0 KES 0 KES 0 KES 0 KES 0
Common Stock Dividends (4,573) (4,802) (5,042) (5,292) (5,557)
Cash Available / (Required) Before Debt KES 5,188 KES 2,892 KES 3,144 KES 3,413 KES 3,697
Debt Borrowing / (Repayment) - - - - -
Total Cash From Financing Activities (KES 4,573) (KES 4,802) (KES 5,042) (KES 5,292) (KES 5,557)
Beginning Cash Balance KES 6,972 KES 12,160 KES 15,052 KES 18,195 KES 21,608
Change in Cash 5,188 2,892 3,144 3,413 3,697
Ending Cash Balance KES 12,160 KES 15,052 KES 18,195 KES 21,608 KES 25,305
Average Cash Balance 9,566 13,606 16,624 19,902 23,457
Dividends Estimate
Dividends per Share KES 13.00 KES 12.00 KES 12.60 KES 13.23 KES 13.89 KES 14.58 KES 15.31
Dividends per Share Growth 5.0% 5.0% 5.0% 5.0% 5.0%
Basic Shares Outstanding 363.0 363.0 363.0 363.0 363.0 363.0 363.0
Total Dividends KES 4,764 KES 4,573 KES 4,802 KES 5,042 KES 5,292 KES 5,557

D
R
AFT
VER
SIO
N
TW
O
M
U
TH
EN
G
IM
IKE
Bamburi Financial Model - Enhancements - V2.xlsx: Debt Sweep 7/18/2017
Debt Schedule
(Kes. in millions)
Estimated Projected
Fiscal 2017 2018 2019 2020 2021
Cash Available/(Required) Before Debt KES 5,188 KES 2,892 KES 3,144 KES 3,413 KES 3,697
Plus: Beginning Cash on Balance Sheet 6,972 12,160 15,052 18,195 21,608
Less: Minimum Cash Balance (5,000) (5,000) (5,000) (5,000) (5,000)
Mandatory Debt Repayment - - - - -
Cash Before Discretionary Debt Repayment / (Borrowing) KES 7,160 KES 10,052 KES 13,195 KES 16,608 KES 20,305
Tranche 1
Beginning Balance KES 0 KES 0 KES 0 KES 0 KES 0
Ending Balance KES 0 KES 0 KES 0 KES 0 KES 0 KES 0
Average Balance KES 0 KES 0 KES 0 KES 0 KES 0
Tranche 2
Commercial Paper
Revolver
Discretionary Sweep - - - - -
Total Debt, Beginning Balance KES 0 KES 0 KES 0 KES 0 KES 0
Less: Mandatory Debt Repayment - - - - -
Revolver Debt Borrowing / (Repayment) - - - - -
Total Debt, Ending Balance KES 0 KES 0 KES 0 KES 0 KES 0
Less: Current Portion - - - - -
Less: Commercial Paper - - - - -
Less: Revolver - - - - -
Total Debt, less Current Portion KES 0 KES 0 KES 0 KES 0 KES 0
Beginning Cash Balance KES 6,972 KES 12,160 KES 15,052 KES 18,195 KES 21,608
Ending Cash Balance 12,160 15,052 18,195 21,608 25,305
Average Cash Balance 9,566 13,606 16,624 19,902 23,457
Mike:
Amount paid off in 2017.
That’s already gone.
Mike:
This is next year's
mandatory payment…as
@ the end of 2017 which
is due.

D
R
AFT
VER
SIO
N
TW
O
M
U
TH
EN
G
IM
IKE
Bamburi Financial Model - Enhancements - V2.xlsx: Debt Sweep 7/18/2017
Bamburi Cement Limited
Interest Schedule
(Kes. in millions)
Estimated Projected
Fiscal Year Ending December 31, 2017 2018 2019 2020 2021
Interest Rates
Cash & Cash Equivalents 10.1% 10.1% 10.1% 10.1% 10.1% 10.1%
Tranche 1 14.0% 14.0% 14.0% 14.0% 14.0% 14.0%
Tranche 2 14.0% 14.0% 14.0% 14.0% 14.0% 14.0%
Commercial Paper 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Revolver 15.0% 15.0% 15.0% 15.0% 15.0% 15.0%
Interest Income 1 (1 = Beginning balance
Cash & Cash Equivalents 2 = Average Balance) KES 350 KES 611 KES 756 KES 914 KES 1,086
Interest Expense
Tranche 1 KES 0 KES 0 KES 0 KES 0 KES 0
Tranche 2 - - - - -
Commercial Paper - - - - -
Revolver - - - - -
Total Interest Expense - KES 0 KES 0 KES 0 KES 0 KES 0
Net Interest Expense (KES 350) (KES 611) (KES 756) (KES 914) (KES 1,086)
Mike Muthengi:
WA of Interest Rates earned
on cash deposited & loan to
Subsidiary, AR p 114/130.

D
R
AFT
VER
SIO
N
TW
O
M
U
TH
EN
G
IM
IKE
Bamburi Financial Model - Enhancements - V2.xlsx: WACC 7/18/2017
Weighted Average Cost Of Capital
WACC CALCULATION
I. Cost of Debt (Kd):
Estimated All-In Cost for Company 13.3%
Tax Rate (T) 30.0%
Kd = Cost of Debt * (1-T) = 9.3%
II. Cost of Equity (Ke):
Risk Free Rate (10-year T-Note) (rf) (a)
13.3%
Target Beta
(b)
0.60 1.07
Market Risk Premium (rm) (c)
6.0%
Ke = rf + beta * rm = 16.9%
III. Weighted Average Cost of Capital (WACC): D/E Ratio
Target Debt to Cap. Ratio 20.0 16.7% 20.0%
Implicit Equity to Cap. Ratio 100.0 83.3%
WACC = (Kd * wd) + (Ke * we) 120.0 15.6%
CALCULATION OF BETA
Peer Companies Ticker Total Debt Preferred Equity Value
Debt to
Equity
Preferred
to Equity
Marginal
Tax Rate
Levered
Beta (d)
Unlevered
Beta (e)
Adjusted
Beta (f)
Trailing
P/E
Athi River Mining ARM KES 24,381 - KES 15,849 153.8% 0.0% 18.0% 1.62 0.72 0.81 NA
EA. Portland Cement PORT KES 5,592 - KES 2,925 191.2% 0.0% 30.0% 0.48 0.21 0.47 NA
Anhui Conch Cement Ltd 0914 ¥13,898 - ¥107,001 13.0% 0.0% 23.4% 1.48 1.35 1.23 12.8x–
Shree Cement Limited SHCM 717 - 597,360 0.1% 0.0% 27.3% 1.25 1.25 1.17 59.5x–
Cementos Argos SA CCB_p $ 2,248,795 $ 1,610,823 $ 15,886,730 14.2% 10.1% 27.3% 0.83 0.69 0.79 24.2x–
Asia Cement Corp 1102 $ 135 - $ 99,330 0.1% 0.0% 17.8% 0.97 0.97 0.98 52.7x–
Lafarge Surma Cement Ltd Taka 943 - Taka 88,381 1.1% 0.0% 32.0% 1.21 1.20 1.13 47.0x–
Average 1.12 0.91 0.94 39.2x–
Median 1.21 0.97 0.98 47.0x–
- -
Bamburi Cement Limited BAMB KES 0 KES 0 KES 60,251 0.0% 0.0% 30.0% 0.52 0.52 0.68 12.2x–
(a) 10 year Kenya Government Bond as of August 1, 2016.
(b) Target beta equals average unlevered beta for comparable group * [1+(1- tax rate) * (target debt to equity ratio) + target preferred to equity ratio].
Assumes any preferred stock is not tax-deductible.
(c) Source: Moodys.com. Long-horizon expected equity risk premium of 12.71% (.i.e 6.71% + CRP of 6%).
(d) Two year weekly beta vs. Nairobi All Share Index, as of August 1, 2016.
(e) Unlevered beta equals [levered beta / [1+(1-tax rate) x (debt to equity ratio) + (preferred to equity ratio)].
(f) All beta should gravitate towards 1.

D
R
AFT
VER
SIO
N
TW
O
M
U
TH
EN
G
IM
IKE
Bamburi Financial Model - Enhancements - V2.xlsx: DCF 7/18/2017
Estimated Projected
Fiscal 2017 2018 2019 2020 2021
EBITDA KES 10,324 KES 11,084 KES 11,753 KES 12,460 KES 13,209
EBIT 8,647 9,323 9,904 10,519 11,171
Less: Cash Taxes @ 30.0% (2,594) (2,797) (2,971) (3,156) (3,351)
Tax-effected EBIT KES 6,053 KES 6,526 KES 6,933 KES 7,363 KES 7,820
Plus: Depreciation & Amortization 1,677 1,761 1,849 1,941 2,038
Less: Capital expenditures (500) (500) (500) (500) (500)
Plus / (Less): Change in net working capital 2,531 (93) (96) (100) (104)
Unlevered free cash flow KES 9,761 KES 7,694 KES 8,185 KES 8,705 KES 9,254
WACC @ 16%
NPV of Unlevered free cash flow @ 16.0% KES 28,590
EBITDA MULTIPLE METHOD
Terminal Value Undiscounted Discounted Implied Perpetual Growth Rate
EBITDA Multiple 6.0x KES 79,255 KES 37,734 5.6%
6.5x 85,860 40,879 6.3%
DCF Range (Implied Enterprise Value) KES 66,324 KES 69,469
Equity Value
(a)
KES 69,882 KES 73,027
Implied Price per Share (b)
KES 193 KES 201
PERPETUITY GROWTH METHOD
Terminal Value Undiscounted Discounted Implied EBITDA Multiple
Perpetuity Growth Rate 5.0% KES 74,643 KES 35,538 5.7
6.0% 82,889 39,464 6.3
DCF Range (Implied Enterprise Value) KES 64,128 KES 68,054
Equity Value (a)
KES 67,686 KES 71,612
Implied Price per Share (b)
KES 186 KES 197
EBITDA MULTIPLE METHOD
Terminal EBITDA Multiple
192.54 4.0x 5.0x 6.0x 7.0x 8.0x
14.0% KES 167.97 KES 186.87 KES 205.78 KES 224.68 KES 243.58
15.0% 162.81 180.90 199.00 217.09 235.18
16.0% 157.88 175.21 192.54 209.86 227.19
17.0% 153.18 169.78 186.38 202.98 219.58
18.0% 148.69 164.60 180.50 196.41 212.32
19.0% 144.40 159.65 174.90 190.15 205.40
20.0% 140.30 154.92 169.55 184.18 198.80
21.0% 136.38 150.41 164.44 178.47 192.50
PERPETUITY GROWTH METHOD
Perpetuity Growth Rate
186.48 4.0% 5.0% 6.0% 7.0% 8.0%
14.0% KES 208.74 KES 222.91 KES 240.63 KES 263.41 KES 293.78
15.0% 191.70 202.90 216.59 233.70 255.69
16.0% 177.47 186.48 197.30 210.52 227.05
17.0% 165.39 172.76 181.47 191.93 204.70
18.0% 155.01 161.12 168.24 176.66 186.76
19.0% 145.99 151.11 157.01 163.90 172.04
20.0% 138.07 142.40 147.35 153.06 159.72
21.0% 131.07 134.76 138.95 143.74 149.26
Note: Present Values as of January 1, 2017.
(a) Assumes KES -3,558M of net debt.
(b) Assumes 363.0M shares outstanding.
WACCWACC
–
––
–
–
––
–
–
–
––

D
R
AFT
VER
SIO
N
TW
O
M
U
TH
EN
G
IM
IKE
Bamburi Financial Model - Enhancements - V2.xlsx: Ratios 7/18/2017
Credit and Leverage Statistics
(Kes. in millions)
Fiscal 2016 2017 2018 2019 2020 2021
Tranche 1 KES 0 KES 0 KES 0 KES 0 KES 0 KES 0
Tranche 2 - - - - - -
Commercial Paper - - - - - -
Revolver - - - - - -
Total Debt - - - - - -
Less: Cash (6,972) (12,160) (15,052) (18,195) (21,608) (25,305)
Total Net Debt (Cash) (6,972) (12,160) (15,052) (18,195) (21,608) (25,305)
Preferred Debt - - - - - -
Total S/H Equity 29,819 31,299 33,023 34,914 36,986 39,249
Total Net Capital 22,847 19,139 17,971 16,719 15,378 13,943
Total Capital 29,819 31,299 33,023 34,914 36,986 39,249
EBITDA 9,868 10,324 11,084 11,753 12,460 13,209
EBIT 8,271 8,647 9,323 9,904 10,519 11,171
Total Capex 407 500 500 500 500 500
Total Interest Expense - - - - - -
Net Interest Expense - - - - - -
Total Assets 40,811 42,871 44,977 47,269 49,760 52,465
RATIOS
Total Debt / EBITDA 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x
Net Debt / EBITDA -0.7x -1.2x -1.4x -1.5x -1.7x -1.9x
Total Debt / (EBITDA - Total Capex) 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x
(Total Debt + Preferred Stock) / EBITDA 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x
(Total Debt + Preferred Stock) / (EBITDA-Total capex) 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x
EBITDA / Total Interest Expense NA NA NA NA NA NA
(EBITDA-Total Capex) / Total Interest Expense NA NA NA NA NA NA
EBIT / Total Interest Expense NA NA NA NA NA NA
(EBIT-Total Capex) / Total Interest Expense NA NA NA NA NA NA
Total Debt / Total Capitalization 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
(Total Debt + Preferred) / Total Capitalization 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
EBITDA / Total Assets 24.2% 24.1% 24.6% 24.9% 25.0% 25.2%
Net Debt / Net Capitalization (30.5)% (63.5)% (83.8)% (108.8)% (140.5)% (181.5)%
(Net Debt + Preferred) / Net Capitalization (30.5)% (63.5)% (83.8)% (108.8)% (140.5)% (181.5)%
Note: Excludes future lease payments.
S&P Median Industrial Rating Statistics ('02-'04)
AAA AA A BBB BB B CCC
2017
EBIT Interest Coverage NA 23.8x 19.5x 8.0x 4.7x 2.5x 1.2x 0.4x
EBITDA Interest Coverage NA 25.5x 24.6x 10.2x 6.5x 3.5x 1.9x 0.9x
Total Debt / EBITDA 0.0x 0.4x 0.9x 1.6x 2.2x 3.5x 5.3x 7.9x
Total Debt / Total Capital 0.0% 12.4% 28.3% 37.5% 42.5% 53.7% 75.9% 113.5%
S&P Median Industrial Rating Statistics ('01-'03)
AAA AA A BBB BB B CCC
2017
EBIT Interest Coverage NA 23.8x 13.6x 6.9x 4.2x 2.3x 0.9x 0.4x
EBITDA Interest Coverage NA 25.3x 17.1x 9.4x 5.9x 3.1x 1.6x 0.9x
Total Debt / EBITDA 0.0x 0.2x 1.1x 1.7x 2.4x 3.8x 5.6x 7.4x
Total Debt / Total Capital 0.0% 6.2% 34.8% 39.8% 45.6% 57.2% 74.2% 101.2%
Mike:
CapEx is still a cash
outflow.
Thus we remove the
outflow effect

D
R
AFT
VER
SIO
N
TW
O
M
U
TH
EN
G
IM
IKE
Bamburi Financial Model - Enhancements - V2.xlsx: Ratios 7/18/2017
Common Ratios
(Kes. in millions)
Fiscal Year Ending December 31, 2016 2017 2018 2019 2020 2021
Total Assets KES 40,991 KES 42,030 KES 40,811 KES 42,871 KES 44,977 KES 47,269 KES 49,760 KES 52,465
Shareholders' Equity 26,728 26,889 26,405 27,199 28,196 29,317 30,572 31,969
Net Revenue 36,029 39,200 38,034 39,936 41,932 44,029 46,231 48,542
Gross Profit 9,346 12,537 13,244 13,986 14,769 15,596 16,468 17,388
Net Income 5,859 4,882 3,673 3,903 5,978 5,890 6,053 6,526 6,933 7,363 7,820
FCFF 9,761 9,761 7,694 8,185 8,705 9,254
Common Stock Dividends 4,764 4,573 4,802 5,042 5,292 5,557
Gross Profit Margin 34.8% 35.0% 35.2% 35.4% 35.6% 35.8%
EBITDA Margin 25.9% 25.9% 26.4% 26.7% 27.0% 27.2%
EBIT Margin 21.7% 21.7% 22.2% 22.5% 22.8% 23.0%
Net Profit Margin 15.5% 15.2% 15.6% 15.7% 15.9% 16.1%
ROA 14.0% 14.8% 15.2% 15.4% 15.6% 15.7%
ROE 21.9% 22.9% 24.0% 24.6% 25.1% 25.6%
Dividend Payout Ratio 0.8x 0.8x 0.7x 0.7x 0.7x 0.7x
Retetion ration (b) 0.2x 0.2x 0.3x 0.3x 0.3x 0.3x
Sustainable growth rate 4.2% 5.6% 6.3% 6.7% 7.1% 7.4%
Net Income Growth Rate (16.7)% (24.8)% 6.3% 53.2% (1.5)% 2.8% 7.8% 6.2% 6.2% 6.2%
FCFF Growth Rate - (21.2)% 6.4% 6.3% 6.3%
Mike Muthengi:
Ratios before effects of Minority
Interest. i.e. Non Controling
Interest is inclusive in the ratios.

D
R
AFT
VER
SIO
N
TW
O
M
U
TH
EN
G
IM
IKE
Bamburi Financial Model - Enhancements - V2.xlsx: IRR 7/18/2017
IRR Simulation Analysis
Estimated Projected
Fiscal 2017 2018 2019 2020 2021
Sponsor Equity Investment 30,040
Ownership 100.0%
EBITDA KES 10,324 KES 11,084 KES 11,753 KES 12,460 KES 13,209
Exit EBITDA Multiple Implied Total Enterprise Value
3.0x KES 30,973 KES 33,251 KES 35,258 KES 37,381 KES 39,628
4.0x 41,297 44,335 47,011 49,842 52,837
5.0x 51,621 55,418 58,763 62,302 66,046
Less: Net Debt & Preferred KES 12,160 KES 15,052 KES 18,195 KES 21,608 KES 25,305
Exit EBITDA Multiple Implied Total Equity Value
4.0 53,457 59,387 65,206 71,450 78,142
5.0 63,781 70,470 76,959 83,910 91,351
Exit EBITDA Multiple Implied Equity Value to Financial Sponsor
4.0 53,457 59,387 65,206 71,450 78,142
5.0 63,781 70,470 76,959 83,910 91,351
Exit EBITDA Multiple Implied IRR to Financial Sponsor
3.0x 44% 27% 21% 18% 17%
4.0 78% 41% 29% 24% 21%
5.0 112% 53% 37% 29% 25%
Exit EBITDA Multiple Financial Sponsor Multiple of Capital
3.0x 1.4x 1.6x 1.8x 2.0x 2.2x
4.0 1.8x 2.0x 2.2x 2.4x 2.6x
5.0 2.1x 2.3x 2.6x 2.8x 3.0x
Enterprise Value Current Transaction
Share price 6/16/2017 KES 170 KES 204
Transaction premium 20.0%
Diluted shares outstanding 362.959 362.959
Equity value KES 61,703 KES 74,044
Plus: Existing debt and preferred stock - -
Plus: Minority Interest 3,414 3,414
Less: Cash (6,972) (6,972)
Enterprise value KES 58,145 KES 70,486
Uses of Funds
Purchase Equity KES 74,044
Total Transaction Costs 705
Total Financing Fees 352
Total Uses of Funds KES 75,101
Sources of Funds
New Equity KES 30,040
New Debt 45,061
Total Sources of Funds KES 75,101
Equity Sources
% Rollover Amount Ownership
Management 0.0% - -
Rollover equity 0.0% - -
Financial sponsor 30,040 100.0%
Total equity sources KES 30,040 100.0%

D
R
AFT
VER
SIO
N
TW
O
M
U
TH
EN
G
IM
IKE
Bamburi Financial Model - Enhancements - V2.xlsx: Ref Range 7/18/2017
Relevant Multiple Implied Enterprise Implied Equity Implied Price per
Methodology Statistic Range Value Value Share
Analysis of Selected Publicly Traded Construction Companies
Net Revenue 2016A KES 38,034 1.50x – 1.55x KES 57,051 – KES 58,953 KES 60,609 – KES 62,511 KES 166.99 – KES 172.23
2017E 39,936 1.45x – 1.50x 57,907 – 59,904 61,465 – 63,462 169.34 – 174.84
2018P 41,932 1.40x – 1.45x 58,705 – 60,802 62,263 – 64,360 171.54 – 177.32
EBITDA 2016A KES 9,868 6.5x – 7.0x KES 64,142 – KES 69,076 KES 67,700 – KES 72,634 KES 186.52 – KES 200.12
2017E 10,324 6.0x – 6.5x 61,946 – 67,108 65,504 – 70,666 180.47 – 194.69
2018P 11,084 5.5x – 6.0x 60,960 – 66,502 64,518 – 70,060 177.76 – 193.02
EBIT 2016A KES 8,271 7.5x – 8.0x KES 62,033 – KES 66,168 KES 65,591 – KES 69,726 KES 180.71 – KES 192.10
2017E 8,647 7.0x – 7.5x 60,532 – 64,856 64,090 – 68,414 176.58 – 188.49
2018P 9,323 6.5x – 7.0x 60,599 – 65,261 64,157 – 68,819 176.76 – 189.60
EPS 2016A KES 14.45 12.0x – 13.0x KES 59,358 – KES 64,601 KES 62,916 – KES 68,159 KES 173.34 – KES 187.79
2017E 14.79 12.0x – 13.0x 60,851 – 66,218 64,409 – 69,776 177.45 – 192.24
2018P 15.98 12.0x – 13.0x 66,031 – 71,831 69,589 – 75,389 191.73 – 207.71
Reference Range KES 60,000 – KES 65,000 KES 65,000 – KES 70,000 KES 180.00 – KES 190.00
KES 61,000 KES 65,000 KES 64,000 KES 69,000 KES 177.00 KES 189.00
Analysis of Selected Construction Acquisitions
LTM Net Revenue KES 38,034 1.70x – 1.90x KES 64,658 – KES 72,265 KES 68,216 – KES 75,823 KES 188 – KES 209
EBITDA 9,868 6.5x – 7.0x 64,142 – 69,076 67,700 – 72,634 186.52 – 200.12
EBIT 8,271 8.0x – 8.5x 66,168 – 70,304 69,726 – 73,862 192.10 – 203.50
EPS 14.45 13.5x – 14.5x 67,223 – 72,466 70,781 – 76,024 195.01 – 209.45
Analysis of Selected Premiums Paid
Stock Price 4 Weeks Prior KES 160.00 20.0% – 25.0% KES 66,130 – KES 69,034 KES 69,688 – KES 72,592 KES 192.00 – KES 200.00
1 Day Prior 175.00 5.0% – 15.0% 63,136 – 69,488 66,694 – 73,046 183.75 – 201.25
EBITDA Multiple Method 6.0x – 7.0x KES 66,493 – KES 69,397 KES 70,051 – KES 72,955 KES 193.00 – KES 201.00
Perpetuity Growth Method 6.0% – 7.0% 63,952 – 67,945 67,510 – 71,503 186.00 – 197.00
6/15/2017

D
R
AFT
VER
SIO
N
TW
O
M
U
TH
EN
G
IM
IKE
Bamburi Financial Model - Enhancements - V2.xlsx: Football 7/18/2017
min Range max
52-week Trading Range KES 140.00 39.00 KES 179.00
Analysis of Selected Publicly Traded Construction Companies KES 180.00 10.00 KES 190.00
Analysis of Selected Acquisitions KES 190.00 20.00 KES 210.00
Analysis of Selected Premiums Paid KES 190.00 10.00 KES 200.00
Discounted Cash Flow Analysis KES 190.00 10.00 KES 200.00
Reference Range KES 188.00 12.00 KES 200.00
Current Stock Price KES 167.00 0
167.00 1
KES 140.00
KES 180.00
KES 190.00
KES 190.00
KES 190.00
KES 188.00
KES 179.00
KES 190.00
KES 210.00
KES 200.00
KES 200.00
KES 200.00
120 140 160 180 200 220 240 260
52-week Trading Range
Analysis of Selected Publicly
Traded
Construction Companies
Analysis of Selected Acquisitions
Analysis of Selected Premiums
Paid
Reference Range
Bamburi Price Per Share
METHODOLOGY

D
R
AFT
VER
SIO
N
TW
O
M
U
TH
EN
G
IM
IKE
Bamburi Financial Model - Enhancements - V2.xlsx: Graphs 7/18/2017
Illustrative Graphs
KES 0.00
KES 5.00
KES 10.00
KES 15.00
KES 20.00
2013 2014 2015 2016 2017 2018 2019 2020 2021
AmountPerShare
Fiscal Year
Earnings / Dividends Per Share
Basic & Diluted Earnings per Share Dividends per Share
KES 3,000
KES 3,500
KES 4,000
KES 4,500
KES 5,000
KES 5,500
KES 6,000
KES 6,500
KES 7,000
KES 7,500
2013 2014 2015 2016 2017 2018 2019 2020 2021
AmountinMillions
Fiscal Year
Profit (Loss) for the Year
Net Income % Change
KES 0
KES 10,000
KES 20,000
KES 30,000
KES 40,000
KES 50,000
2013 2014 2015
2016
2017
2018
2019
2020
2021
AmountinMillions
Fiscal Year
REVENUE BREAKDOWN
Net Revenue EBITDA Operating Income Net Income

D
R
AFT
VER
SIO
N
TW
O
M
U
TH
EN
G
IM
IKE
Bamburi Financial Model - Enhancements - V2.xlsx: Historicals 7/18/2017
Historical Statement
Notes Actual CAGR/
Fiscal 2011 2012 2013 2014 2015 2016 Avg
Revenue 4 KES 28,075 KES 35,884 KES 37,491 KES 33,928 KES 36,029 KES 39,200 KES 38,034 1.2%
Cost of sales 5 (25,920) (27,635) (25,411) (26,683) (26,670) (24,790) (0.9)%
Gross profit KES 9,964 KES 9,856 KES 8,517 KES 9,346 KES 12,530 KES 13,244 5.9%
Investment income 6 342 657 473 349 374 369 1.5%
Other gains and losses 7 544 (71) (78) 253 997 33 (42.9)%
Distribution costs (213) (115) (73) (223) (1,115) (1,405) 45.8%
Marketing expenses (94) (154) (168) (190) (205) (209) 17.3%
Administration expenses 8 (1,151) (1,363) (1,435) (1,721) (2,287) (2,069) 12.4%
Other expenses 9(a) (552) (1,383) (1,599) (1,937) (1,644) (1,682) 25.0%
Restructuring costs 9(b) - - - - (192) -
Finance costs 10 (374) (251) (121) (76) - -
Profit before tax 11(a) KES 8,466 KES 7,176 KES 5,516 KES 5,801 KES 8,458 KES 8,271 (0.5)%
Tax expense 12(a) (2,607) (2,294) (1,843) (1,898) (2,586) (2,381) (1.8)%
Profit for the year KES 5,859 KES 4,882 KES 3,673 KES 3,903 KES 5,872 KES 5,890 0.1%
Earnings per share – basic and diluted 13 KES 14.02 KES 14.44 KES 12.17 KES 9.55 KES 9.80 KES 14.49 KES 14.44 -
Dividends 8.50 10.00 11.00 11.00 12.00 13.00 12.00 3.7%
Dividend Growth 17.6% 10.0% - 9.1% 8.3% (7.7)% 6.2%
Dividend Payout Rate 69.3% 90.4% 115.2% 122.4% 89.7% 83.1% 95.0%
Retention Ratio 30.7% 9.6% (15.2)% (22.4)% 10.3% 16.9% 5.0%
Net Sales Growth 27.8% 4.5% (9.5)% 6.2% 8.8% (3.0)% 5.8%
EPS Growth 3.0% (15.7)% (21.5)% 2.6% 47.9% (0.3)% 2.6%
NON-CURRENT ASSETS
Property, plant and equipment 15(a) KES 25,572 KES 25,651 KES 24,263 KES 22,897 KES 21,093 (4.7)%
Prepaid operating lease rentals 16 175 206 186 164 145 (4.6)%
Intangible assets 17 160 118 118 84 78 (16.4)%
Other equity investments 19(a) 452 787 662 535 278 (11.4)%
Goodwill 20 217 217 217 217 217 -
KES 26,576 KES 26,979 KES 25,446 KES 23,897 KES 21,811 (4.8)%
CURRENT ASSETS
Inventories 21 5,606 5357 5,585 6,604 6,331 3.1%
Trade and other receivables 22(a) 1,712 1,487 2,209 2,945 5,529 34.1%
Corporate tax recoverable 12(c) 375 317 107 131 168 (18.2)%
Cash and cash equivalents 23(a) 8,769 8876 7,644 8,453 6,972 (5.6)%
KES 16,462 KES 16,037 KES 15,545 KES 18,133 KES 19,000 3.6%
TOTAL ASSETS KES 43,038 KES 43,016 KES 40,991 KES 42,030 KES 40,811 (1.3)%
EQUITY AND LIABILITIES
EQUITY
Share capital 24 1,815 1.815 1,815 1,815 1,815 -
Asset revaluation reserve 25(a) 8,307 7.963 7,683 7,424 7,163 (3.6)%
Available-for-sale reserve 25(b) 249 584 459 332 75 (25.9)%
Translation reserve 25(c) (860) ,3116, (449) (1,030) (1,796) 20.2%
Retained earnings 18,875 18,874 17,220 18,348 19,148 0.4%
Equity attributable to owners of the Company KES 28,386 KES 28,930 KES 26,728 KES 26,889 KES 26,405 (1.8)%
Non-controlling interests 2,475 2580 2,391 2,817 3,414 8.4%
Total equity KES 30,861 KES 31,510 KES 29,119 KES 29,706 KES 29,819 (0.9)%
NON-CURRENT LIABILITIES
Deferred tax liability 26 4,033 4,191 3,955 3,365 2,674 (9.8)%
Provisions 27 556 1,025 457 620 695 5.7%
Employees' benefit liabilities 28 - - 692 646 577
Term loan 577 309 - - -
CURRENT LIABILITIES KES 5,166 KES 5,525 KES 5,104 KES 4,631 KES 3,946 (6.5)%
Unclaimed dividends 14(a) 23 37 25 6 6 (28.5)%
Dividend payable 14(d) - - - 91 -
Provisions 27 505 410 316 284 59 (41.5)%
Employees’ benefit liabilities 28 - - 13 37 98
Trade and other payables 30 6,195 5236 6,414 6,803 6,883 2.7%
Corporate tax payable 12(c) - - - 472 -
Term loan 28(a) 288 309 - - -
KES 7,011 KES 5,981 KES 6,768 KES 7,693 KES 7,046 0.1%
TOTAL EQUITY AND LIABILITIES KES 43,038 KES 43,016 KES 40,991 KES 42,030 KES 40,811 (0.8)%

Muthengi mike bamburi financial model - enhancement

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (15)

Similaire à Muthengi mike bamburi financial model - enhancement

Similaire à Muthengi mike bamburi financial model - enhancement (20)

Dernier

Dernier (20)

Muthengi mike bamburi financial model - enhancement