INVESTOR BRIEFING

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

ASSETS Ksh M Ksh M

Non Current Assets 4,479 3,322

Current Assets 1,873 1,183

TOTAL ASSETS 6,352 4,505
EQUITY AND LIABILITIES
Capital & Reserves 2,127 1,772
Non Current Liabilities 2,382 1,667
Current Liabilities 1,843 1,066
TOTAL EQUITY & LIABILITIES 6,352 4,505
 GROUP TURNOVER Ksh M
5000
4,619

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

Cash Generated from Operations 1,019

Net Increase in Borrowings 781

Increase in Trade/Other Payables 348

Total Sources 2,148

Dividend Paid 116

Interest Paid 154

Increase in inventories and spares 230

Increase in Trade/Other Receivables 530

Capital Expenditure 1,151

Total Applications 2,181

Decrease in Cash & Cash Equivalents 33

 EBITDA IN Ksh M
1500

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%

Net Profit Margin 11% 11%

Post Tax Return on Capital 13.4% 14%
Employed

Long Term Debt to Capital Employed 77% 64%

Total Debt to Equity 1.27:1 0.99:1

 CREDIT RATING

2002 2003 2004 2005 2006 2007 2008

Short Term A2 A1- A1 A1 A1 A1 A1

Long Term A- A A A A A A

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
 DIVISIONAL
PERFORMANCE AND
STRATEGY REVIEW
ARM EXPORT DESTINATIONS
EUROPE
•ITALY
MIDDLE EAST
•UAE
•OMAN
•SYRIA
•YEMEN
AFRICA
•EAST AFRICA (EAC)
•EGYPT
•SUDAN
•DRC
•ZAMBIA
•MOZAMBIQUE
•MAURITIUS
•SOUTH AFRICA
•ANGOLA
•NAMIBIA
•GHANA
•NIGERIA
US$ AND KSH TURNOVER
2008

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

Focus on large scale farmers and institutional

buyers

Strengthening distribution network and
brand awareness

Target to achieve a 12% market share
in Kenya = Ksh 2 B sales
 TURNOVER BY DIVISION
FERTILIZER Ksh M
500
467

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

200 101 183

71 64
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
 TURNOVER BY DIVISION
400
LIME Ksh M
362
346
309
300 285

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

Profit Before tax 17 18 -13 36 36

Tax 5 5 3 11 12

Profit After Tax 12 13 -10 25 24

 POWER CONSUMPTION KWH PER TON OF
CEMENT PRODUCED IN 2008
130
125
120 116.49
115 18% Reduction
110 in Energy
105
Consumption
100
95.67
95
90
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
 TANZANIA CEMENT PROJECT
1.5 million tons per year

4,500 tpd Clinker

& Cement
plant at Tanga
Tanga

Dar Es Salaam 2,500 tpd Cement

Grinding Plant
at Dar Es Salaam
ELEVATION OF CLINKER PLANT
 STRATEGIC FOCUS
THE CEMENT INDUSTRY
Cement Division

THE ARM
ENGINE OF
GROWTH
 ARM CEMENT BUSINESS

CEMENT NOW CORE 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

RWANDA Uganda UGANDA

150,000 tpa 300,000 tpa
ANGOLA KENYA
800,000 tpa 300,000 tpa
MOZAMBIQUE
500,000 tpa TANZANIA
200,000 tpa
SOUTH AFRICA
2,000,000 tpa
ENTIRE REGION IS NET IMPORTER OF CEMENT
 PER CAPITA CEMENT CONSUMPTION IN
AFRICA ON THE RISE
700
620
2006 INDUSTRY DATA
600

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

2,600 2,300 2,500

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

2,400 2200 2400

1,900 1,750 2,000

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

6,500 6,000 6,600

5,500
2007 2008 2009 2010 2011 2012 2013 2014
 KENYA CEMENT CAPACITY AND
PROJECTED DEMAND
10000

Green Box Shows Deficit 15% growth

8000

10% growth
CAPACITY ‘000 TPA
6000
Installed And Projected
New Capacity

4000
5% growth

2000
 KENYA + UGANDA CEMENT CAPACITY AND
PROJECTED DEMAND
18000

16000 15% growth

Green Box Shows Deficit
14000
10% growth
12000
CAPACITY ‘000 TPA

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

HOWEVER, CLINKER GRINDING NOT

COMPETITIVE IN LONG RUN
 Economics Of Imported Clinker
Current ARM Cost = 100
LOCAL IMPORTED %
MANF CLINKER HIGHER
COST
Ex Factory / FOB 100 64
Freight - 36
Duties - 10
Port Charges - 26
Clearing, Fwd.& Storage - 14

Transport to Nairobi 50 50
TOTAL COST 150 200 33%
 STRATEGIC FOCUS
THE CEMENT INDUSTRY

WHAT NEXT FOR ARM?

ARM CAPACITY INCREASE 2009

DOUBLING PRESENT CAPACITY TO
600,000 TPA, CAPACITY OPERATIONAL
IN 2010

NEW1.5 M TONS CEMENT PLANT IN

TANZANIA
 % MARKET SHARE
% MARKET SHARE KENYA 2012
Others
KENYA 2007 2%

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

KENYA 2,500 5,350

TANZANIA 1,550 2,700

UGANDA 700 1,700

TOTAL 4,750 9,750
Capital Requirements &
Financial Projections
2009 - 2014
 ARM ORGANIZATION STRUCTURE

ARM
(HOLDING COMPANY)

ARM ARM MINERALS

ARM MAVUNO
MAVUNO
CEMENT & CHEMICALS
MINERALS LTD FERTILIZERS
FERTILIZERSLTD

ARM T ARMSA
 ARM FUNDING STRUCTURE FOR
CAPITAL EXPANSION
New Equity and
or debt
injection into ARM Existing Debt
cement HOLDING COMPANY

business

CEMENT MINERALS FERTILIZER

SUBSIDIARY SUBSIDIARY SUBSIDIARY

TANZANIA OTHERS Note: New Debt ring fenced

in Tanzania
CEMENT CEMENT
FUNDING REQUIREMENTS AND DEBT
SCHEDULE (Ksh M)
2009-2014
2009 2010 2011 TOTAL

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

1500 Ksh1.22B USD21M

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

EPS 5.2 7.3 12.2 16.8 20.5 22.5

THE NEXT DECADE 2007 – 2017
A PAN AFRICAN CORPORATION