BUA CEMENT PLC FY 2019 and Q1’2020 Presentation to Investors and Analysts 1
Disclaimer Unless otherwise indicated, the financial information provided herein has been prepared under International Financial Reporting Standards (IFRS). This presentation contains forward-looking statements and information. Forward-looking statements and information are statements that are not historical facts, related to future, not past, events. They include statements about our believes and expectations and the assumptions underlying them. These statements and information are based on plans, estimates, projections as they are currently available to the management of BUA Cement. Forward-looking statements and information therefore speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. By their very nature, forward-looking statements and information are subject to certain risks and uncertainties. A variety of factors, many of which are beyond BUA Cement’s control, could cause actual results to defer materially from those that may be expressed or implied by such forward-looking statement or information. For BUA Cement particular uncertainties arise, among others, from changes in general economic and business conditions in Nigeria, where we derive a substantial portion of our revenues and hold a substantial portion of our assets; the possibility that prices will decline as result of continued adverse market conditions to a greater extent than currently anticipated by BUA Cement’s management; developments in the financial markets, including fluctuations in interest and exchange rates, commodity and equity prices, financial assets generally; continued volatility and a further deterioration of capital markets; a worsening in the conditions of the credit business and, in particular, possible uncertainties arising out of the financial market and liquidity crises; the outcome of pending investigations and legal proceedings and actions resulting from the findings of these investigations; as well as various other factors. More detailed information about certain of the risk factors affecting BUA Cement is contained throughout this presentation and in BUA Cement’s financial reports, which are available on the BUA Cement website, www.buacement.com. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement or information as expected, anticipated, intended, planned, believed, sought, estimated or projected. In addition to figures prepared in accordance with IFRS, BUA Cement also presents alternative performance measures, including, among others EBITDA, EBITDA margin, free cash flow and net debt. These alternative performance measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Alternative performance measures are not subject to IFRS or any other generally accepted accounting principles, as such, Other companies may define these terms in different ways. 2
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01 13 O Faces of Sustainability Our Corporate Philosophy 02 14 How We Create Value Amidst COVID-19: Business Continuity Assessment Low GDP Per Capita U 15 03 Macro- economic Environment (Q1’2020) Company Overview 04 T 16 Financial Highlights Strategic Milestones 05 17 EBITDA Assessment Where We Operate L 06 18 Macro-economic Cost Profile Environment (FY2019) I 19 07 Financial Highlights 2020 Strategic Priorities 20 08 EBITDA Evolution Appendix N 09 21 Meet the Board EBITDA Assessment E 10 22 Financials Cost Profile 11 23 Q & A Free Cash Flow & Net Debt 4
Our Philosophy Our Vision Our Mission Our Value Proposition To be a highly competitive To produce and market high We are a professional and easy to deal with supplier of premium brand of cement that market leader in Nigeria quality cement for national provides reliable ‘doorstep’ delivery to its development customers and professional application training to the users of cement 5
Creating Value Amid Low GDP Per Capita Population Population Urbanization Housing Infrastructure Industrial Nigeria Cement SSA Industry Growth Rate Rate Deficit Deficit Activity Growth Rate Growth 214 2.53% 4.23% 22 $300 billion 22.25% 7% (2019) 5%-6% million million (infrastructure to (2019) (2019) GDP stock, (Q1'2020; 23.65%) c. 20-25%) Cement Performance Consumption per capita Nigeria & Nigeria - 109kg E 2 SG Sub-Saharan SSA – 91kg Africa (SSA) World - 521kg Processes Systems People Data base Circular economy Training & information Development system Agile & adaptable systems Open communication Innovation & technology 6
Brief Overview Largest 1 cement producer in the North-West, South-South and South East 3 Modern lines 2 operational across two States 3rd Most Capitalised 3 company on the Nigerian Stock Exchange (NSE) – N1.2 trillion (Jan. 2020) >60 per cent 4 capacity utilization attained N175.52 billion (FY2019) 5 Cement Sales 4,501kt (FY2019) 6 Cement volume dispatched Particulate Emission 7 <10/Nm3 (well- below int’l standards) 8 7
Flawless Execution, Disciplined Approach Listed on the Nigeria Stock FGN divests its majority Incorporation of CCNN; Commissions its 500,000MT Scancem divests its majority commences operation in 1967 (Line-2), with the Exchange (NSE), resulting holding to Scancem holding to Damnaz Cement from a partial privatization by International ANS of with an installed capacity of decommissioning of Line -1 Company Limited the government Norway 100,000MT the following year 1962 1985 2000 2008 1993 2020 2010 2015 2018 2019 Commissions the line-2 BUA International Limited Obu Cement commences BUA Cement listed on the Nigeria The 1.5MMT line-2 plant at acquires Damnaz Cement operations with the 3MMT at Okpella, Edo State Kalambaina, Sokoto State in Stock Exchange, to become the 3 rd largest company by market commissioning of its green Company to become majority commissioned Completes merger between shareholder and technical field 3MMT line at Okpella, capitalization Business combination between partner in CCNN Edo State CCNN Plc and Obu Cement CCNN Plc and Kalambaina Company Plc; resulting in Included in the MSCI frontier Cement Company; resulting to an the emergence of BUA index installed capacity of 2MMT Cement Plc 8
Strategic Positioning, Increasing Market Presence Kalambaina Plant Sokoto State Line 1 – 500,000MTPA Line 2 – 1.5 MMTPA Line 3 - 3MMTPA (Q2’2021) FCT Obu Plant Edo State Line 1 – 3MMTPA Line 2 – 3MMTPA 9
Macro-Environment & Sectoral Drivers (FY2019) 2.27% 0.05% 23% Oil price was up 23% to GDP growth up 2.27% Naira appreciates by $66/bbl., resulting from (2019) from 1.91% 0.50% to N362.84/$; a trade disputes, (2018), resulting result of a stable sanctions and geo- from increased economic environment political tensions in the contribution from oil and increased dollar middle-east related activities liquidity Real Estate Construction 0.93 3.50 1.00 3.18 3.00 0.00 2.37 FY2018 Q1 Q2 Q3 FY2019 2.33 2.50 -1.00 1.81 2.00 % % -2.00 1.50 -2.31 -2.36 -3.00 1.00 0.67 -4.00 0.50 -3.84 0.00 -5.00 -4.74 FY2018 Q1 Q2 Q3 FY2019 Source: Bloomberg, NBS 10
OBU CEMENT PLANTS OBU CEMENT COMPLEX (LINES 1 & 2) Location Okpella, Edo State (South-South Nigeria) Production Capacity Line 1 – 3mmtpa Line 2 – 3mmtpa Completion Date 2019 2015 Obu Cement Line 2 Obu Cement Line 1 11
Financial Highlights (FY 2019) … our focus on value continues to sustain performance FY2019 FY2018 % Δ N ’000 except otherwise stated Cement production (kt) 1 4,501 2,901 55.2 Revenue 175,518,326 119,012,572 47.5 EBITDA margin (%) 47.0 47.0 - EBIT 71,428,017 42,841,765 66.7 EBIT margin (%) 40.7 36.0 - Net Finance cost (5,192,054) (3,675,183) 41.3 Profit before Tax (PBT) 66,235,964 39,166,582 69.1 Profit after Tax (PAT) 60,610,286 64,072,002 (5.40) Free cash flow 3,204,663 (5,400,366) 159.3 Net debt (5,836,840) (1,122,667) 420 Equity multiplier (leverage) 2 1.29x 1.58x - 1 Market share computed based on Nigerian market only, increased from 13% (2018) to 20% (2019) 2 Leverage is calculated total asset divided by total equity 12
EBITDA Evolution ( Δ ;y/y) EBITDA (2019) 81,985 Depreciation 7,521 SD&A (3,726) Gross Profit 22,490 EBITDA (2018) 55,700 (30,000) 0 30,000 60,000 90,000 N ’millions Comments Gross profit was up +37.51% or N22.49 billion from increased production volumes; though moderated by energy cost from higher gas pricing, • increased raw materials usage and changes to energy mix Selling, distribution and administration (net) increased by 34.3% or N3.73 billion, which arose from the enlarged entity • Depreciation charges was up 113.78% or N7.52 billion due to the capitalization of Obu line II and the resultant merger • Given these movements, EBITDA balance increased from N55.70 billion in 2018 to N81.99 billion in 2019: an increase of 47.19%. • 13
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