November 2016 At a glance Largest independent cement producer in - PowerPoint PPT Presentation

November 2016

At a glance • Largest independent cement producer in Africa, 44Mta capacity operational as of October 2016 – 29.3Mta capacity across three state-of-the-art plants in Nigeria, Sub- Saharan Africa’s largest cement market – 1.5Mta due onstream in Congo in Q4 2016, and 0.7Mta import facility in Sierra Leone • Delivering strong financial and operating performance – FY 2015 revenues of ₦491.7bn – FY 2015 EBITDA of ₦262.4bn at 53.4% margin – 9M 2016 net debt of ₦ 286.3B • Creating a diversified pan-African business profile – Target of >75Mta capacity in 17 countries • Largest company on Nigerian Stock Exchange – Market capitalisation $10bn; ca. 30% of total NSE capitalisation – A bellwether on the cement sector and on Africa’s growth 2

Strong Financial Growth 600 60% 59% 59.5% 58.3% 500 57.8% 58% 57.0% 57% 400 56% 55.5% 19.4% CAGR 300 55% ₦B 54% 53.4% 200 53% 17.5% CAGR 52% 100 51% 0 50% 2010 2011 2012 2013 2014 2015 Revenues (₦B) EBITDA (₦B) EBITDA margin (%) 3

Strong Volume Growth 20 18 19.5% CAGR 16 14 12 Million tonnes 10 8 6 4 2 0 2010 2011 2012 2013 2014 2015 Nigeria (manufactured) Nigeria (imported) Cameroon Congo Ethiopia Ghana Senegal Sierra Leone South Africa Tanzania Zambia Increasing proportion of non-Nigerian volumes as new plants achieve good gains in market share 4

Our Presence – Existing and Planned • Present capacity 43.6Mta across 8 countries • Nigeria – 29.25Mta • South Africa – 3.3Mta • Tanzania – 3.0Mta • Ethiopia – 2.5Mta • Senegal – 1.5Mta Mali Niger 1.5 Mta • 1.5 Mta Cameroon – 1.5Mta Senegal 1.5-3.0 Mta • Zambia – 1.5Mta Nigeria Sierra Leone Ethiopia • 38-41 Mta Ghana – 1.0Mta 5.0 Mta 0.7 Mta Liberia Cameroon • 2.2Mta new capacity coming online in Q4 0.5 Mta 1.5-3.0 Mta Ghana Kenya 2.5 Mta • Côte d’Ivoire 1.5Mta integrated plant in Congo Congo 1.5-3.0 Mta 3.0 Mta 1.5 Mta • 0.7Mta import facility in Sierra Leone in Q4 Tanzania • Remain committed to scale of expansion 3.0 Mta • But expansion schedule will depend on FX availability Zambia 1.5-3.0 Mta • Priorities will be: Zimbabwe 1.5 Mta 1. New markets able to generate FX for Group 2. Increasing utilization of existing assets 3. Brownfield expansions South Africa • Group aims to be >75Mta and a top-5 producer 3.3 Mta 5

Why Sub-Saharan Africa? Why Cement? Cement is an essential Sub-Saharan Africa building material with no significantly lags global viable substitutes, average per-capita cement Africa needs billions of consumption tonnes in the coming decades Key markets are Nigeria, Ethiopia, South Africa; Africa is the last major cement ‘majors’ with high net growth market for cement debt/EBITDA are less able to with relatively little surplus take on additional debt to to capacity at present finance entry to these markets Cement demand driven by High capital cost of increasing population, entry, construction time urbanisation and prosperity and access to resources are key barriers to entry Huge opportunity for African Many incumbents are sub- scale, use older technologies, producers to expand, replace imports, especially in West so are vulnerable to well- Africa, much of which lacks funded industry disruptors limestone Dangote Cement is the only large-scale player in Sub-Saharan African Cement markets 6

Overview of African Cement Market Positive Long-Term Mega Trends Rapid Increase in Urbanisation Presents Strong Opportunity • Increasing political stability enabling rapid economic growth • Over 1.4B Africans are forecast to live in urban areas by 2050, which is > 4x North America’s current population • Steady population growth, younger profile increases need for building 2,473m • Emerging middle-class, increasing consumerisation and access to financial services e.g. banking, mortgages, credit 1,046m • Increasing demand for more and higher grades of cement as 1,041m urbanisation continues across the continent, demanding more infrastructure, housing and commercial building 634m 1,427m 408m 2010 2050 Supportive Growth Factors Urban Rural Materially Lower Cement Consumption in Africa • Unlocking of natural resources (oil, commodities) • Increased manufacturing capabilities (for both domestic consumption 600 Global and exports) Average: 573kg (1) • Increasing inward investment as aid is replaced by commercial funding 500 Laos Palestine Per-capita cement consumption (Kg) • Accelerating technological adoption, enabling ‘leap - frogging’ 400 • In early build- out phase of development, cement is used in ‘economic Congo multipliers’ e.g. infrastructure, with positive feedback for cement demand 300 Senegal Attractive Macro Economic Situation Ghana 200 • Historical SSA GDP growth of 4.6% between 2010 – 2014 Nepal Nigeria Côte d’Ivoire Mali Kenya • Expected SSA GDP growth of 4.2% between 2014 – 2018 (World Bank) Ethiopia 100 Zimbabwe Pakistan Zambia Tanzania • Construction industry value forecast to grow at 6.5% CAGR Liberia Niger Cameroon between 2015 – 2017 Sierra Leone 0 0 1,000 2,000 3,000 4,000 5,000 6,000 GNI US$ Source: Industry Sources, BMI. 1. Global average includes China. Cement consumption in Africa has high and long-term growth potential 7

Strategic Raw Material Access • Limestone is the key and irreplaceable ingredient of all types of modern cement • Commercially viable deposits of limestone are relatively scarce across many parts of Africa – Ideally need high-quality limestone to be near demand centres, fuel and distribution network • Nigeria has a relative abundance of quality limestone especially in key southern regions near to demand centres, export facilities – Nigeria also has good-quality coal that we will mine to achieve self-sufficiency in fuel • Absence of limestone in much of West and East Africa, especially coastal states, forces those countries to import bulk cement or its intermediate product, clinker, usually Limestone in Nigeria is from Far East and Nigeria high quality and close • Limestone reserves close to existing facilities each with a to demand centres life of mine in excess of 30 years • Dangote Cement plans an ‘export to import’ strategy to serve West Africa and Cameroon from Nigerian factories, exporting by road and in time by sea Location, quality and quantity of Dangote Cement’s limestone reserves is a key competitive advantage 8

Strategic Initiatives and Goals To be Africa’s leading producer of cement, respected for the quality of Vision its products and services and for the way it conducts its business Goal To deliver superior and sustainable risk-adjusted ROI, IRR on our investments • Key elements of business model – Target high-growth, populous markets with cement deficits and older/less efficient producers – Be the leader in quality, costs and service wherever we operate – Expand quickly and profitably when rivals are hampered by debt or smaller scale Strategic Pillars / Long-Term Goals Capture local Consolidate Achieve Adhere to global Tap high-value markets with Improve expansion across leadership in key standards of export markets superior quality sustainability Africa markets governance and service Grow and diversify Strive to obtain a #1 or Serve landlocked Serve markets with Achieving international Be most energy and across the last and #2 position in each markets with high delivered product standing through good CO 2 efficient company potentially most market, with at least sales prices and instead of factory gate governance enables us in our industry, with attractive major 30% share margins, generate FX sales; use financial to access global low environmental growth market for to offset imported raw strength to improve financial markets footprint when cement materials service, reduce costs compared to peers A strategy to become a respected and world-class business leader 9

Value Creation Size and buying power Careful market selection Larger scale of plants New quarries enable enables favourable looks for countries with built with high degree of optimal mining of procurement of plants at good resources, cement standardisation and highest quality raw lower cost; brownfield deficit, ageing peers and prefabrication to reduce materials, improving increases returns investment incentives capex, improve returns product quality Good emissions control Strong focus on quality Fuel strategy improves Larger kiln sizes enables helps environment, ensures best-quality margins by bulk higher-efficiency improves competitiveness materials, manufacturing procurement, switch to production of clinker in in face of increasing processes and end lower-cost kiln/power most expensive step of industry regulation products, reduces waste fuels e.g. coal production Use of modern vertical Highly automated packing Ability to buy/operate Strong competitive rolling mills enables finer and loading reduces trucks in bulk enables = advantages delivering cement grinding, manual loading, enables superior distribution improves quality with improved returns for higher throughput capabilities, extends positive impact on setting shareholders through packing lines market reach time for block makers 10