2
AUDITED GROUP INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2013
Turnover
31.12.2013
Ksh M
14,179
31.12.2012
Ksh M
11,401
24%
EBITDA
3,051
2,666
14%
Profit before Tax
2,000
1790
12%
651
545
19%
Profit After Tax
1,349
1246
8%
EPS Ksh.
2.73
2.52
8%
Taxation
%
3
GROUP BALANCE SHEET
TOTAL ASSETS AS AT DECEMBER 31, 2013– KSH M
35,000
30,000
25,000
Total 29,705
Cash & Bank
1,507
Inventories
2,529
20,000
15,000
10,000
Trade & Other
Receivables
2,812
Total 26,953
Cash & Bank
2,591
Inventories
3,316
Trade & Other
Receivables
2,029
Non - Current
Assets
22,857
Non - Current
Assets
19,017
Assets 31 /12 /2013
Assets 31 /12 /2012
5,000
-
4
GROUP BALANCE SHEET
TOTAL LIABILITIES AS AT DECEMBER 31, 2013 – KSH M
35,000
Total 29,705
30,000
25,000
20,000
15,000
Trade & Other Payables
3,079
Share capital & Other
Reserves
1,696
Retained Earnings,
6,428
Deferred Tax
2,234
Total 26,953
Trade & Other Payables
2,693
Share capital & Other
Reserves
2,068
Retained Earnings
4,946
Deferred Tax
2,255
S. T. Borrowings, 4,267
S. T. Borrowings
3,917
L.T. Borrowings
12,001
L.T. Borrowings
11,074
Liabilities 31/12 /2013
Liabilities 31 /12 /2012
10,000
5,000
-
5
GROUP CASH FLOW STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 2013
SOURCES OF FUNDS
Cash Generated from Operations
Ksh M
2,521
Decrease in inventories
786
Increase in Payables
541
Increase in borrowings
1,277
Decrease in cash
1,084
Total Sources
6,209
6
GROUP CASH FLOW STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 2013
APPLICATION OF FUNDS
Ksh M
Interest Paid
581
Tax Paid
181
Dividends Paid
248
Increase in Trade/Other Receivables
783
Capital Expenditure:
4,416
Total Applications
6,209
7
HISTORICAL PERFORMANCE
TURNOVER KES M
GROUP
TURNOVER
Grows 24% over
previous year
Cement sales
grows 31%
Cement 86% of
the total
business
16000
14,179
14000
12000
11,401
10000
8,267
8000
5,965
5,145
6000
3,882
4000
2,224
4,619
2,606
2000
0
2005
2006
2007 2008 2009 2010
CAGR 23% per year
2011
2012
2013
8
HISTORICAL PERFORMANCE
EBIDTA KES M
3500
EBIDTA
3,051
3000
EBITDA increased by
14%
Combination of local
and imported clinker
Dar plant production
is based on imported
clinker
2,666
2500
2,167
2000
1,652
1,290
1500
1,172
992
1000
500
410
509
0
2005
2006
2007
2008
2009
2010
CAGR 25% per year
2011
2012
2013
9
HISTORICAL PERFORMANCE
PROFIT BEFORE TAX KES M
2100
PROFIT BEFORE
TAX
2,000
1,790
1800
1500
Profit Before Tax has
increased by 12%.
1,363
1200
1,113
949
900
621
600
300
296
705
388
0
2005 2006 2007 2008 2009 2010 2011 2012 2013
CAGR 24% per year
10
HISTORICAL PERFORMANCE
PROFIT AFTER TAX KES M
1,500
1,349
1,246
PROFIT AFTER TAX
1,150
1,075
Increases by 8%
1,000
646
500
422
200
503
265
0
2005 2006 2007 2008 2009 2010 2011 2012 2013
CAGR 24% per year
11
HISTORICAL PERFORMANCE
EARNINGS & DIVIDENDS KES PER SHARE
3.00
2.73
2.51
EPS AND DPS
The rapid growth over
the last Few Years Has
Been Part Funded With
Retained Earnings.
Dividend Payout is
22% of Earnings and
has increased by 20%
in 2013.
2.50
2.17
2.32
EPS
2.00
1.30
1.50
0.85
1.00
0.50
0.42
1.02
0.55
0.15
0.2
0.25
2005
2006
2007
0.25
0.3
0.35
2008
2009
2010
0.4
0.60
0.5
DPS
0.00
2011
2012
2013
12
HISTORICAL PERFORMANCE
TOTAL ASSETS KES M
INVESTING IN CEMENT
CAPACITY
Over the last 5 years ARM has
invested In a 1,000,000 tons
cement capacity in Kenya made
up of an integrated clinker and
cement capacity in Kaloleni and
grinding capacity in Athi River.
During 2011, ARM acquired a
cement grinding plant with
100,000 tons capacity in Kigali,
Rwanda.
29,705
30,000
26,953
25,000
20,549
20,000
16,565
15,000
12,120
10,000
6,352
The Dar Cement plant with a
capacity of 750,000 tons was
commissioned in October 2012
and the 1,200,000 ton clinker
plant in Tanga will be ready for
commissioning in June 2014
5,000
3,238
4,254
4,505
2006
2007
0
2005
2008
2009
2010
2011
2012
2013
13
HISTORICAL PERFORMANCE
CREDIT RATING
YEAR
SHORT TERM A1 :
Highest certainty of timely payments,
liquidity factors are excellent and
supported by good fundamental
protection factors. Risk factors are
minor.
LONG TERM A :
Good investment Grade, indicating
high credit quality, good protection
factors, risk factors are small and
variable due to economic cycles
SHORT
TERM
LONG
TERM
2007
A1
A
2008
A1
A
2009
A1
A
2010
A1
A
2011
A1
A
2012
A1
A
2013
A1
A
14
HISTORICAL PERFORMANCE
MARKET CAP GROWTH
MARKET CAP GROWTH
600
500
USD
500
Dec 2005 US$ 32 M
15TH NOV 2013 US$ 472M
402
400
300
200
100
39
83
93
91
111
172
207
241
Dec 11
Dec 12
0
Dec 05
Dec 06
Dec 07
Dec 08
Dec 09
Dec 10
Mar 13
Dec 13
SHARE PRICE REFLECTS INCREASED INSTITUTIONAL INTEREST
Increasing interest from institutional investors in the cement sector has enabled competitive industry benchmarked pricing
Over 15% of the free float of 48% is held by institutional investors
Whilst forward capacity utilization and earnings factored in the current price, new capacity of 1.5 m tpa under construction In
Tanzania not reflected in share price
In January 2013, The Company Shares were split 1 to 5 NSE.
KENYA CUMMULATIVE AFTER TAX CASH GENERATION
KSH 9.15 BILLION
2004 TO 2013
10,000
9,158
8,000
6,719
5,759
6,000
4,000
3,473
2,341
2,000
-
1,296
228
428
1,653
659
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
KENYA CUMMULATIVE AFTER TAX CASH
UTILIZATION KSH 9.15 BILLION
2004 TO 2013
Investment in
other
subsidiaries
0.8 B
11%
Investment in
Kenya Cement
6.22 B
68%
Dividends
1.48 B
20%
Investment in
Tanzania
Cement
0.6 B
8%
CUMMULATIVE INVESTMENT IN TANZANIA CEMENT
KSH 14.5 B
2008 TO 2013
15,000
14,459
10,570
10,000
6,936
5,000
3,680
2,246
444
0
2008
2009
2010
2011
2012
2013
18
GROUP NET DEBT KES M
16,000
14,761
14,000
12,400
12,000
10,288
10,000
7,519
8,000
6,000
4,407
4,000
2,000
2,700
1,887
1,628
2006
2007
1,106
0
2005
2008
2009
2010
2011
2012
2013
KENYA NET DEBT KSH M
5,000
4,330
4,000
3,520
3,000
2,625
2,000
1,809
2,914
3,067
3,248
1,580
1,077
1,000
348
-
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
TANZANIA NET DEBT WITH AFC CONVERTIBLE NOTES
KSH M
12,000
11,013
10,000
8,880
8,000
5,903
6,000
4,452
4,000
2,000
0
1,487
2009
2010
2011
2012
2013
TANZANIA NET DEBT EXCLUDING AFC CONVERTIBLE NOTES
KSH M
10,000
8,057
8,000
6,850
5,903
6,000
4,452
4,000
2,000
0
1,487
2009
2010
2011
2012
2013
TANZANIA DEBT PROFILE
USD M
KSH B
1
PTA/DBSA
35
2.8
2
AUREOS
10
0.9
3
ELN - NIC
20
1.7
4
STANBIC BANK
15
1.3
5
AFC (Equity Convertible Notes)
50
4.5
130
11.0
80
6.5
6
0.5
EQUITY - AFC
50
4.5
TOTAL EQUITY
56
5.0
TOTAL DEBT WITH AFC
TOTAL DEBT WITHOUT AFC
EQUITY - KENYA CASH INJECTION
DEBT TO EQUITY (80/56)
59:41
CAPACITY VALUATION
ARM CAPACITY
VALUATION PER TON OF
CAPACITY INDUSTRY
AVERAGE
POTENTIAL VALUATION
2.6 MTPA
USD 325 PER TON
2.6 MTPA x USD 325
=
USD 845 M
24
EAST AFRICA AND REGIONAL MARKETS DEMAND
NEW GRINDING CAPACITY LIKELY TO INCREASE FASTER THAN NEW CLINKER CAPACITY
AND CATCHING UP WITH DEMAND
22000
@16% growth
20000
18000
16000
14000
12000
Installed and Projected
New Capacity with Local and
Imported Clinker
Actual demand 2013
9.9 million tons
@12% growth
@ 8% growth
5 Million Ton per
year clinker deficit
10000
8000
6000
4000
2000
Installed and Projected
New Capacity with Local
Clinker
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
25
KENYA CLINKER CAPACITY SHORTFALL
2013
TOTAL CEMENT
CONSUMPTION
4.5 mtpa
TOTAL CAPACITY MET
WITH LOCAL CLINKER
3.0 mtpa
TOTAL CEMENT
CONSUMPTION MET WITH
IMPORTED CLINKER
1.5 mtpa
with
imported
clinker
33%
With Locally
manufactured
clinker
67%
26
TANZANIA CLINKER CAPACITY SHORTFALL
2013
TOTAL CEMENT
CONSUMPTION
3.5 mtpa
TOTAL CAPACITY MET
WITH LOCAL CLINKER
1.9 mtpa
TOTAL CEMENT
CONSUMPTION MET WITH
IMPORTED CLINKER
1.6 mtpa
with
imported
clinker
46%
With Locally
manufactured
clinker
54%
27
BUT IMPORTED CLINKER IS MORE EXPENSIVE
200
150
26
100
16
Imported Clinker
Cost 72 % Higher
100
50
172
Actual Figures based to 100
100
50
80
0
Local Manf Cost
Ex Factory/FOB
Freight
Imported Clinker(ExMombasa)
Duties
Port Charges
VIEW OF THE 4,000 TPD TANGA PLANT
28
29
STRATEGY 2015- 2020
STRATEGIC INTENT AND
SHAREHOLDER VALUE
PROPOSITION
• Make ARM Cement the largest
cement manufacturer in the region
with capacity doubling to 5 Million
tons.
• Operate at internationally
benchmarked efficiencies and
maintain valuation of US $ 300 +
per ton of installed annual cement
capacity
ARM CEMENT LTD
THE COMPANY ON THE MOVE