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MARCH 2009
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Audited Results 2008
Divisional Performance
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Strategic Focus - Cement Industry
Capital Requirements & Financial Projections
2009 - 2014
AUDITED RESULTS
31st DECEMBER 2008
GROUP INCOME STATEMENT
FOR THE YEAR ENDING DECEMBER 31, 2008
31.12.2008 31.12.2007 %
Ksh M Ksh M
Turnover 4,619 3,882 19%
EBITDA 1,172 992 18%
Profit before Tax 705 621 14%
Taxation 202 199 2%
Profit After Tax 503 422 19%
EPS Ksh 5.08 4.26 19%
GROUP BALANCE SHEET
AS AT DECEMBER 31, 2008
31.12.2008 31.12.2007
4000 3,882
2,606
3000
2,224
2000
1,640
890 884 1,126 1,240
1000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
NET PROFIT Ksh M
600
503
500
422
400
300 265
200
200
116
97
100 57
35 20 30 34
7
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
EARNINGS PER SHARE Ksh M
6.00
5.08
4.26
4.00
2.76
2.10
2.00
1.25
1.04
0.62
0.40
0.00
2001 2002 2003 2004 2005 2006 2007 2008
DIVIDENDS PER SHARE Ksh M
1.50
1.25 1.25
1.25
1.00
1.00
0.75
0.75
0.50
0.50 0.40 0.40
0.20
0.25
0.00
2001 2002 2003 2004 2005 2006 2007 2008
DISTRIBUTION OF WEALTH
Dividends to
Shareholders
7% Govt Taxes
11%
Remuneration
to Staff WEALTH CREATED
27%
IN 2008
Ksh. 1.62 Billion
To Retain &
Expand Banks -
Company Financing
46% Costs
9%
GROUP CASH FLOW STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2008
Ksh M
1172
992
1000
509
500 410
272
152 161 180
124 102 131 133
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
LOAN REPAYMENT SCHEDULE Ksh M
600 558
500 466
400
344 329
310 302
300
200
100
0
2009 2010 1011 2012 2013 2014
GROUP NET DEBT Ksh M
3000
2,700
1,887
2000
1,628
1,106
1000
362
187
115 105 95
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
FIXED ASSETS Ksh M
5000
4,480
4000
3,198 3,322
3000
2,182
2,026
2000
1,575
1,415
1,271 1,261
1000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
TOTAL ASSETS Ksh M 6,352
6500
5500
4,505
4500 4,254
3500 3,238
2500
2,026
1,575
1,415
1500 1,178 1,234 1,271 1,261
1,045
500
-500 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
DEBT TO EQUITY & DEBT TO TOTAL ASSETS
IMPROVING COVERAGE RATIOS
200
179
Debt/Equity
150
127
115
% 99
100
Debt/Total
Assets
50 35 58
24 45
13 39 42
8 15 20
0
2002 2003 2004 2005 2006 2007 2008
KEY FINANCIAL RATIOS
DECEMBER 31st 2008
2008 2007
Interest Cover 5.6 X 4.7 X
Operating Cash Flow to Total Debt 23% 49%
Long Term A- A A A A A A
Exports
Sales
US$ 14.7 M
Ksh1.176 B
26%
Local Sales
Ksh 3.443 B
74% TOTAL SALES
Ksh 4.619 B
DIVISIONAL TURNOVER 2008
Fertiliser
10%
Sodium
Silicate
22%
Cement
50%
Lime
8%
TOTAL
Minerals TURNOVER
10%
Ksh. 4.6 B
DIVISIONAL TURNOVER 2008
2007
Fertilizer Fertilizer
2008
8% 10%
Sodium Cement
Silicate Sodium 50%
22% Silicate
22%
Cement
54%
Lime
Lime
8%
7%
Minerals
Minerals 10%
9%
TOTAL TURNOVER TOTAL TURNOVER
Ksh. 3.8 B Ksh. 4.6 B
FERTILIZER DIVISION
400
316
300
200
160 154
100
48
7
0
2003 2004 2005 2006 2007 2008
TURNOVER BY DIVISION
SILICATE Ksh M
1000
973
846
800 752
600
433
400
212
227
200 175
152
104 110
100
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
TURNOVER BY DIVISION
MINERALS Ksh M
500
438
400
331 339
319
288
300
216
182
200
145
119
100
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
TURNOVER BY DIVISION
CEMENT Ksh M
2500
2,219
1,971
2000
1500
924
1000 864 901
667 683
594 566
500
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
COMPARATIVE INCOME STATEMENT
ARM – BCL – EAPCL-PPC(SA)- 2008
ACTUALS BASED AS PERCENTAGE
Tanga
ARM BCL EAPCL Cement PPC
Turnover 100 100 100 100 100
Operating Profit 27 22 13 35 37
Finance Cost 10 1 26 0 3
Tax 5 5 3 11 12
THE ARM
ENGINE OF
GROWTH
ARM CEMENT BUSINESS
CEMENTDIVISION
INTERNATIONALLY
BENCHMARKED TO COST,
QUALITY AND TECHNOLOGY, AND
PLANT MANAGEMENT
ARM’S STRENGTHS
Strong engineering team which has built world
class cement plant at costs which are
substantially lower than international cost per ton
of capital outlay
Strong project team which ensured that the
project was completed in a period of 21 months
Strong operations and process team which
ensure that clinker and cement is manufactured
to international quality and cost bench marks
Strong management team, with proven track
record in commercial functions, customer
relationships, distribution and logistics, and
financial controls
AFRICA CEMENT MARKETS
ALMOST ENTIRE AFRICA UNDER GOING A
RESURGENCE IN ECONOMIC GROWTH
MORE SPECIFICALLY EAST, CENTRAL,
AND SOUTHERN AFRICA CEMENT
CONSUMPTION GROWTH AROUND 15% pa
OVER PAST 5 YEARS AND PROJECTED TO
CONTINUE
CEMENT GROWTH GENERALLY TWICE
THE UNDERLYING GDP GROWTH RATE
Clinker & Cement
Imports into
Africa 2007
Sudan
SUDAN
1,500,000 tpa
500 480
400 380
KGS
300
225
200
100 65 70
40 45
0
Uganda Tanzania Kenya Mauritius S Africa Egypt China Japan
PER CAPITA CONSUMPTION v GDP
900
Spain
800 Greece. Israel
700
600 Italy
Turk Switz
500
Tunisia Germ
400
Egyp France USA
Mex.
300
Mor. South Africa . Finland
200
Rom
100 Nigeria East Africa
0
0 5000 10000 15000 20000 25000 30000
ANNUAL PER CAPITA GDP
EAST AFRICA – MARKET SNAPSHOT
2000 - 2014
East African Cement market grown by 16% pa
over last 10 years
East African market is expected to double over
next five years from 5.5 mtpa 11.0 mtpa by 2012
Investments into new capacity slow and market
would still be deficient even if all the new
capacities which have been announced come on
stream
KENYA CEMENT DEMAND EVOLUTION
1999 - 2014
4,100 4100
3750
3,600 3300
3400
3,100 2,783 3000
2,100
1,800
1,950
1,600 1,350
1,150 1,500
900 TREND LINE 16% GROWTH
1,100 1,250
1,100
600
TANZANIA CEMENT DEMAND
EVOLUTION 1999 – 2014
3600
3,400 3300
2,900 3000
2650
1,375 1,550
1,400 1,150
1,250 TREND LINE 14% GROWTH
900
900 700 800 1,000
400
EAST AFRICAN REGION CEMENT
DEMAND PROJECTION 2007-2014
11,650
11,500
10,600
10,500
9,500 9,650
8,750
8,500
7,950
7,500 7,250
5,500
2007 2008 2009 2010 2011 2012 2013 2014
KENYA CEMENT CAPACITY AND
PROJECTED DEMAND
10000
10% growth
CAPACITY ‘000 TPA
6000
Installed And Projected
New Capacity
4000
5% growth
2000
KENYA + UGANDA CEMENT CAPACITY AND
PROJECTED DEMAND
18000
10000
Installed And Projected
8000 New Capacity
6000 5% growth
4000
COMPETITIVE SCENARIO
HIGH CEMENT DEMAND BUT LOW LOCAL
CAPACITY
IMPORTS OF FINISHED CEMENT DIFFICULT
QUICK FIX OPTION TO IMPORT CLINKER
(SEMI FINISHED CEMENT)
NEW PROJECTS FOR CLINKER GRINDING BY
EAPC, TORORO CEMENT, AND OTHERS
Transport to Nairobi 50 50
TOTAL COST 150 200 33%
STRATEGIC FOCUS
THE CEMENT INDUSTRY
ARM
Tororo
12%
14%
ARM
14% Bamburi
EAPC
54%
30% Bamburi
58%
EAPC
16%
% MARKET SHARE % MARKET SHARE
EAST AFRICA -2007 EAST AFRICA-2012
Twiga
Twiga 14%
14%
Tanga
Cement Bamburi
Tanga 9% 36%
Cement Bamburi
13% 46% Tororo
Tororo 14%
8%
ARM EAPC
5% ARM 7%
EAPC
14% 20%
COMBINED INDUSTRY CAPACITIES IN
KENYA-TANZANIA-UGANDA
EXISTING PROPOSED
2007 2014
MTPA MTPA
ARM
(HOLDING COMPANY)
ARM T ARMSA
ARM FUNDING STRUCTURE FOR
CAPITAL EXPANSION
New Equity and
or debt
injection into ARM Existing Debt
cement HOLDING COMPANY
business
Kenya
Fully 2,772 2,772
funded
Cement
Project 2,000 4,000 2,000 8,000
Tanzania
TOTAL
Ksh M 4,772 4,000 2,000 10,772
DEBT REPAYMENT SCHEDULE (Ksh M)
2009-2014
2009 2010 2011 2012 2013 2014
Kenya 628 324 316 312 400 400
Repayment
Tanzania
Repayment - - - 1,000 1,000 1,000
Total
Repayment 628 324 316 1,312 1,400 1,400
Kenya
Outstanding 2,772 2,144 1,828 1,512 1,200 800
Debt
Tanzania
Outstanding 2,000 6,000 8,000 7,000 6,000 5,000
Debt
TOTAL Debt
Outstanding 4,772 8,144 9,828 8,512 7,200 5,800
PROJECTED TURNOVER
20000
Ksh16.1B Ksh16.8B
USD 210 M
15000 Ksh13.4B
USD 201 M
Ksh10B USD 168 M
10000
Ksh6B USD 125 M
Ksh4.7B
5000
USD 75 M
USD59 M
0
2009 2010 2011 2012 2013 2014
PROJECTED EBITDA
6000
Ksh5.4B
Ksh5.2B
USD68M
Ksh4.32B USD65M
4000 USD54M
Ksh2.9B
USD36M
2000 Ksh1.44B
Ksh1.2B
USD18M
USD15M
0
2009 2010 2011 2012 2013 2014
PROJECTED PROFIT AFTER TAX
KSH BILLION
2500
Ksh2.25B
Ksh2.05B
2000 USD28M
Ksh1.68B USD26M
1000 Ksh0.72B
USD15M
Ksh0.5B
500 USD9M
USD6.25M
0
2009 2010 2011 2012 2013 2014
PROJECTED EPS KSH
25
22.5
20.5
20
16.8
15
12.2
10
7.3
5.2
5
0
2009 2010 2011 2012 2013 2014
PROJECTED TURNOVER AND PROFIT (Ksh M)
2009-2014
2009 2010 2011 2012 2013 2014
Revenues:
Kenya 4,700 6,000 7,000 7,400 7,600 7,800
Tanzania - - 3,000 6,000 8,500 9,000
Total 4,700 6,000 10,000 13,400 16,100 16,800
EBITDA:
Kenya 1,200 1,440 1,900 2,320 2,400 2,480
Tanzania - - 1,000 2,000 2,800 3,000
Total 1,200 1,440 2,900 4,320 5,200 5,480
PAT:
Kenya 520 725 850 925 1,000 1,100
Tanzania - - 375 750 1,050 1,150
Total 520 725 1,225 1,675 2,050 2,250