Dangote Cement Plc

Proposed Investment in Nepal

27 February 2014

Dangote Group

The Dangote Group is a diversified conglomerate, headquartered in Lagos, Nigeria, with interests across a range of sectors in Africa. Current interests include cement, sugar, flour, salt, pasta, beverages and real estate, with new projects in development in the oil and Natural gas, telecommunications, fertilizer and steel. The Group focuses on provision of local, value-added products and services that meet the needs of the African population. Dangote Cement, the largest cement production company in Africa, with a market capitalization of almost US$14 billion on the Nigeria Stock Exchange, has subsidiaries in Benin, Cameroon, Congo, Ethiopia, Ghana, Nigeria, Serra Leone, South Africa, Tanzania and Zambia.

Nigeria is a growing economy and with its low cement consumption per capita base, it has significant growth opportunities.

Malawi

Ethiopia

Liberia

Zambia

Cote d'Ivoire Cameroon Rep. Congo

Nigeria Indonesia Ghana

Benin

Senegal

Colombia

South Africa

India Serbia Gabon Brazil

Morocco Algeria

Egypt

China

10

100

1,000

0 2,000 4,000 6,000 8,000 10,000 12,000

Dangote Cement target markets

Cement consumption and GDP

Assumptions: 10% growth in cement ca. 250kg 6% GDP growth

Per capita cement

consumption (kg, log scale)

GDP per capita (current US$)

History shows that demand for cement rises rapidly when GDP takes off from a low base

Per-capita GDP and cement consumption for a basket of emerging-market countries.

2020

2020

2

Nepal

Dangote has grown from a trading company into an international cement company in a short period of time

3

“Early Years”

1977-1997

“Accelerated Growth”

1998-2010

“Institutional Expansion”

2011 and beyond…

Emphasis on trading

Emphasis on institutionalization

and international expansion

Emphasis on manufacturing

“ In 1977… began trading in rice,

sugar and cement, reinvesting the

profits until he was able to venture

into full-scale manufacturing”

- The Guardian Newspaper, UK

“ … we are still expanding. We are

not slowing down at all. There is

no economic meltdown.””

- Al. Aliko Dangote (Wall St.

Journal, 2009)

“From an original small trading firm in

1977, the Dangote Group has grown

to become a multi-trillion –naira

conglomerate, controlling 28% of the

entire equities listed on the Nigerian

Stock Exchange”

- Tell Magazine, Nigeria Aug 2011

“ we are going into something

big…need to spend $7.5billion in the

next 4 years, so definitely we need a lot

of concentration.”

- Al. Aliko Dangote (Reuters, 2012)

1977 1998 2011

Key Skills Required

• Entrepreneurship

• “Deal-making”

• Distribution network and

logistics

• Raising financing

• Capital project execution

• Operations and Sales

Distribution

• Corporate Centre capabilities

(Strategy; portfolio management

• Performance management

• Talent management

Dangote Group – major business “eras”

A niche producer of cement with proven competence

• Largest producer in Nigeria and Sub-Saharan Africa – Clear leader in Nigeria, Sub-Saharan Africa’s largest cement market

– 19mt capacity, delivering ca. 60% market share

– Three plants in excellent locations, supported by strong distribution

• Delivering superior financial performance – FY 2011 sales: ₦235.9bn ($1.5bn); 56% EBITDA margin

– 8.6mt cement sold

– Strong operating cash flow - ₦164bn from operations (FY 2011)

– Modest Net Debt/EBITDA (1x) positions company for strong growth

– Strong ROE of 41%

• Highly efficient operations – Largest plant, Obajana, achieving 100% utilisation (FY 2011)

– 12mt new, higher-margin capacity replaces imports to meet demand

• Largest company on Nigerian Stock Exchange – Market capitalisation $13bn; ca. 28% of NSE

– LSE listing planned to comply with NSE rules; extra 20% stock 25% free float

– A bellwether on the African growth story

4

From 8mta production capacity in 2011, it has grown to 20.75 mta in 2012 and more than 50mta by 2015

5

FY 2011

8mt capacity

• Two plants in Nigeria, 8mt capacity • Obajana 5mt • Gboko 3mt

• Clear market leader, 50% share • 50 depots, most extensive distribution • Leading importer (from Far East)

• $1.5bn revenue • $0.82bn EBITDA, 56% margin • Ca.22% sales imported (lower margin) • Modest net debt vs peers: $0.8bn • High ROE – 41%

• Capacity expansion underway

• Obajana: 5mt brownfield • Ibese: 6mt new plant • Gboko: 1mt process upgrades • Senegal: 1.5mt new plant

• $3.9bn of additional capacity planned

• Fund with Nigerian cash flow • Raise debt in local markets

FY 2012

20.75mt capacity

• Nigerian capacity increased to 20.25mt • Obajana 10.25mt • Ibese 6mt • Gboko 3mt

• Market share extended, ca. 70% • Expanding depot network • Margin gains from new capacity • Margin gains as imports end • Ibese serving high-growth South West • Obajana opening new regional markets

• 1mt Gboko expansion due Q1 2013 • 1.5mt Senegal plant commissioned • Convert Nigerian terminals for export • Work begins on new Nigerian capacity

• Obajana +3mt by 2015 • Ibese +6mt by 2015 • Calabar +3mt by 2015 (TBC)

• Work underway on African capacity

• 15.0mt production, 8 countries • 4.0mt import on ECOWAS coast

FY 2015

51.0mt capacity

$1.5bn revenue $0.82bn EBITDA

• Nigerian capacity 32mt • Obajana 13mt • Ibese 12mt • Gboko 4mt • Calabar 3mt (TBC)

• Fully operational in 15 countries

• 47.0mt production capacity (TBC)

• 4.0mt import on ECOWAS coast • ECOWAS strategy fully operational • Exporting across other African borders

• Operating in robust, growth markets • Demand, deficits sustain pricing • Well-diversified regional exposure • Largest/major player in all markets • Strong profitability, cash generation • High barriers to entry

• Delivering high returns for shareholders

• Africa’s leading cement company

• An emerging global cement giant

6

Tunisia

Morocco

Cape Verde

Guinea-Bissau

Senegal

Mauritania

Mali

Burkina

Faso

Ghana

Ivory

Coast

Liberia

Guinea

Sierra Leone

Cameroon Central African

Republic

Nigeria

Togo Benin

Niger

Chad Sudan Eritrea

Djibouti

Ethiopia

Uganda

Somalia

Egypt Libya

Algeria

Mauritius

Reunion

Madagascar

Kenya

Tanzania

Democratic

Republic

of the Congo Congo

Gabon

Angola

Botswana

Zimbabwe

Zambia Malawi

Mozambique

Lesotho

South Africa

Swaziland

Namibia

The Gambia

Western Sahara

South

Sudan

Cape Town

Pretona

Harare

Dar Es Salam

Lusaka

Luanda

Nairobi

Kampala

Niamey Kano

Abidjan

Freetown

Noukchott

Bamako

Port Harcourt

Douala Yaounda

Librevile Burundi

Equatorial Guinea

Rwanda Seychelles

Integrated cement plant

Grinding plant

Import facility

Current/planned

Significant influence

No/low influence

Location Plant Type Capacity

Mta Nigeria Integrated 35.3

Cameroon GP 1.0

Ethiopia Integrated 3.0

Gabon GP 1.5

Rep Congo Integrated 1.5

Senegal Integrated 1.5

South Africa Integrated 3.3

Tanzania Integrated 3.0

Zambia Integrated 1.5

51.6

Ghana Terminal 3.0

Sierra Leone Terminal 0.5

Cote d'Ivoire Terminal 1.0

Guinea Terminal 1.0

Liberia Terminal 0.5

6.0

Besides Nigeria, growth strategies and clear entrepreneur vision of the management have moved investments to other African countries with US$2.5bn committed

To take Dangote Group to its next level, the Group has targeted to grow our cement production capacities to 100Mta by 2017

Nepal

DANGOTE CEMENT TEAM AND H.E ANIL JHA; HONOURABLE MINISTER OF INDUSTRY, GOVERNMENT OF NEPAL

DIRECTOR – STARTEGY AND BUSINESS DEVELOPMENT; DR. STANLEY KO AND CHIEF SECRETARY OF NEPAL GOVERNMENT;

LEELA MANI POUDYAL, GOVERNMENT OF NEPAL

Key observations

1. Nepal’s economy has been growing at an average of 4.12%. The rate eased to 3.9% in 2011

and analysts have predicted further easing to 3.9% in 2013.

2. Easing of economy has not reduced cement consumption because of ongoing construction

projects

3. The consumption of cement has historically outpaced production

4. Capacity utilization is low in the country

5. New plant capacities are expected to be added Nepal

6. Present (2013) cement demand is 4,000,000 MT estimated 7,000,000 MT by 2017

7. Estimated 2013 Clinker home production is 1,000,000 MT only. 3,000,000 MT deficit in 2013

Nepal’s economic growth of 3.9% (WB,2011) is below the Developing Asia’s average, while inflation has been high

5/20/2014 11

Nigeria (2011) Nepal(2011)

Geography

Area (km2) 924,768 147,181

Capital Abuja Kathmandu

Demography

Population (million) 152.6 30.4

Denisty (Inhab/km2) 165

Urbanisation (%) 47 17

Economy

GNI per capita (US$) 1,940 540

Currency Naira Nepalese Rupee

US$ Exchange (2012) 0.0063 0.0114

Per capita cement consumption (kg)

97 75

5/20/2014 12

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

1995 2000 2005 2010 2015

M

t

a

Nepal Cement Market (2000-2010)

Production

Consumption

Consumption has been outpacing consumption

Consumption has been driven by:

•Public investments

•Private investment

Consumption expected to be driven by

investments in

•High rise buildings

•Roads and bridges expansion

•Hydro power projects

Nepal – Foreign Investment Policy

• Foreign Investment is welcome in Nepal

• 100 % foreign owned enterprises permitted

• Permitted to repatriate the equity investment, benefits, dividends, principal and interest of foreign loans

• Government- assured security of investment

• Number of tax benefits are entitled including income tax and others

Process for Investment in a New Industry

• Documents required:

Project Report – Three copies

Certificate of Incorporation including Memorandum of Association and Article of Association

Company Profile

Financial Credibility Certificate (FCC)provided by a home country bank

Authority Letter from the company to carry out necessary work on its behalf

Limestone Mines in Nepal

• A score of limestone deposits of various grades were discovered across the country

• Most limestone lie along the southern margin of midland zone which has good cement grade limestone

• Only few deposits are being explored at the moment

• There are over 1,000,000,000 MT limestone identified across the country

DANGOTE PLAN IN NEPAL

• Invest to establish two Cement Production Plant; East and West Nepal

• Each has the capacity to produce 6,000 MT/Day and acquire 200,000,000 MT limestone Mine

• First Phase – Investment and erection of One Plant (2.1 Million MT/Annum

DANGOTE JOURNEY SO FAR…

• Visit high level missions three times in 2013 and two times in 2014

• Applied for FDI in February 2013

• Submitted Feasibility Study report in April 2013

• Check out the Mines and did detailed technical studies in Dang, Dhading and Makwanpur districts.

• Received Approval from FDI in Cement Industry for investment of $550,000,000 (Five Hundred and Fifty U.S. Dollars only) in November 2013 from The Investment Board of Nepal

• Now in the process of registering at the Company Registrar’s Office and other departments in Nepal

ISSUES/CHALLENGES

• Delay in Approval process (8 months instead of the committed 2-3 months

• Delay in process at the Investment Board and relevant Government Authority

• Assurance from high level authority but no real support from the officials at execution level

• No one –door system/policy as assured

DANGOTE CEMENT NEPAL LIMITED

• Project completion by 2017

• 6,000 MT per day production (120,000 of 50kg Cement)

• 1000 direct employment and 5000 indirect employment

• Towards self sufficient cement production in the country