Trans-Century Group An Overview INVESTING IN AFRICA
Contents 1. Executive Summary 2. Power 3. Transport 4. Specialised Engineering 5. Consumer 6. Summary Financials 7. The Team 1
Executive Summary Trans-Century Limited ( TCL ) is a Kenya headquartered infrastructure group with investments across East, Central & Southern Africa Operating EBITDA of circa KES 1.4 Bil llion Gross investment portfolio in excess of KES 9 billion Industry sectors include: Power Infrastructure - Tanelec, Kewberg, EA Cables, Cableries Du Congo; Transport Infrastructure - Rift Valley Railways; and Specialised Engineering - Avery Uniqueness of TCL: Founded by entrepreneurial Kenyan business Entrepreneurial people and investors Focus on power infrastructure, transport infrastructure Infrastructure focus and specialized engineering Operating companies led by dynamic management with extensive experience & in-depth capabilities Ability to execute 2
Investment considerations Strong market fundamentals : under-penetration and inefficiencies in Power and Transport/ Cargo and Specialised Engineering Strong market positioning: In 7 countries; including Kenya, Uganda, Tanzania, Rwanda, DRC, Zambia and South Africa Leveraging scale for execution: Sh hareholder h funds of KES 6.9 billion Strong management teams Impressive financial performance: Shareholders have enjoyed 43 (forty three) times money back on their investment since 2003 3
TCL s focus going forward Trans-Century Ltd Power Transport Specialised Affiliated Infrastructure Infrastructure Engineering Holdings Consumer Investments Existing Aluminium Cables Investments: Copper Cables Transformers Switchgear Kenya-Uganda Distribution & Tea railway Service Banking Operations & Private equity Maintenance Engineering Growth: Power Generation Logistics Transmission Turn-key projects EPC
Historical timeline & pan-african growth 2009: TCL becomes public 2006: engagement of full-time management team 2004: TCL s initial buyout POWER TRANSPORT SPECIALISED ENGINEERING CONSUMER 5
Contents 1. Executive Summary 2. Power 3. Transport 4. Specialised Engineering 5. Consumer 6. Summary Financials 7. The Team 6
POWER 7 7
Under-penetration of electrification is a common theme across the region Installed capacity Installed capacity per capita (MW) (MW/ 1000 people) Electrification rate: % of population 1,473 38.2 6 16% (Kenya) (Uganda) 340 10. 7 5 9% (Tanzania) 919 21.6 4 14% (Ghana) 1,490 62.4 3 61% (South Africa) 40,498 831.8 2 70% (USA) 964,754 31729 3,172.9 1 100% Source: KPLC, US EIA 8
TCL s participation in the power sector Substation (step up) Focus area Power generation Focus area Transmission lines Substations (step down) Residential/ Comm l Use Distribution lines Distribution transformers 9
Regional utilities plans Kenya Connections In millions 2.0 1.8 1.6 CAGR 1.4 19% 1.2 1.0 0.8 0.8 06 0.6 0.4 0.2 0.0 1.1 1.9 2006 2008 2012 Tanzania Connections In millions 1.8 16 1.6 CAGR 1.4 13% 1.2 1.0 0.8 0.7 0.6 0.4 0.2 0.0 1.2 1.6 2007 2012 2014 Uganda Rwanda Connections Umeme Ltd, a regulated distribution company with a 20yr concession Charged with growing connections, currently at 300,000 connections Connections In thousands 400.0 350.0 300.0 Source: KPLC, Tanesco, Umeme, Ministry of Infrastructure (Rwanda) 10 250.0 200.0 150.0 100.0 50.00 0.0 91 CAGR 25% 110 350 2006 2008 2012
Segmental reporting Power In millions 2010A 2009A KES % Variance Revenues 5,505 4,485 22.7% EBIT 368 731-49.7% Strong growth in the business fundamentals, leading to increased revenues: Copper volumes up 9% Aluminiuml i i volumes up 140% Transformer volumes up 38% Impairment of working capital at subsidiary level impacted EBIT 11
Contents 1. Executive Summary 2. Power 3. Transport 4. Specialised Engineering 5. Consumer 6. Summary Financials 7. The Team 12
TRANSPORT 13 13
As port volumes rose, railway volumes continued their consistent decline MTs millions 20 18 16 19 14 12 13 10 8 7 8 6 4 2 48 4.8 2.5 2.0 1.5 0 1980s 1990s 2000 2010 Port Volume RVR Volume Source: KPA, Kenya Railway Corporation and RVR estimates 14
The RVR opportunity Techn nical partner America Latina Logistica (ALL) is a leader in Brazil People Railway engineers in the region are renowned Funding Strong shareholders Bank lenders Existing assets 2,800 km of track ~100 locomotives ~4,000 wagons Market demand 20 million MT of cargo 15
Contents 1. Executive Summary 2. Power 3. Transport 4. Specialised Engineering 5. Consumer 6. Summary Financials 7. The Team 16
Network of opportunity Strong regional presence with key relationships POWER SOURCE PRODUCTS/ PERKINS 17
Segmental reporting Specialised Engineering In millions 2010A 2009A KES % variance Revenues 411 226 82.0% EBIT 65 22 191.9% Growth in the Specialised Engineering Division driven by: Growing industrial base Focus by authorities on stringent ob servance of codes and standards (weights) Continued demand for back-up power 18
Contents 1. Executive Summary 2. Power 3. Transport 4. Specialised Engineering 5. Consumer 6. Summary Financials 7. The Team 19
Consumer Overview The products Products include: loose tea (Nguvu, Supreme, Premium) tea bags (Premium and Luxury) infusion products (Camomile, Green tea, Hibiscus) 20
Segmental reporting Consumer In millions 2010A 2009A KES % variance Revenues 915 714 28.1% EBIT 114 33 249.2% Tea volumes up 13% driven by: Growing demand for tea in the region Successful business repositioning 21
Contents 1. Executive Summary 2. Power 3. Transport 4. Specialised Engineering 5. Consumer 6. Summary Financials 7. The Team 22
2010 Group Performance Group revenues 25% at Ksh 68 6.8 billion Group earnings befo re interest & taxes (EBIT) 2 22% at Ksh 974 million Group net income 99% at Ksh 468 million 23
Summary Financial Statements Income statement Ksh in thousands GROUP GROUP 2010 2009 Turnover Profit before depreciation, impairment and finance cost Results from operating activities 6,794,650 5,414,887 1,415,828 1,105,627 974,271 796,069 Profit before income tax Profit after income tax Profit after tax is attributable to: Equity holders of the company Non-controlling interest Profit for the year 630,585 526,625 468,262 234,497 343,713 91,903 124,549 142,594 468,262 234,497 24
Summary Financial Statements Balance sheet COMPANY Ksh in thousands 2010 KShs'000 ASSETS Non current assets 9,040,291 Current assets 392,374 COMPANY GROUP GROUP 2009 2010 2009 KShs'000 KShs'000 KShs'000 7,878,499 7,141,777 5,039,372 556,398 4,094,701 3,693,959 Total Assets 9,432,665 8,434,897 11,236,478 8,733,331 EQUITY AND LIABILITIES Share capital 133,519 Share premium 106,684684 Reserves 6,692,676 Equity attributable to equity holders 6,932,879 Non-controlling interest - Total Equity 6,932,879 Non current liabilities 2,166,657 Current liabilities 333,129 131,462 133,519 131,462 106,684684 106,684684 106,684684 5,581,918 3,711,277 2,397,928 5,820,064 3,951,480 2,636,074-1,341,974 881,771 5,820,064 5,293,454 3,517,845 1,952,622 3,371,518 3,168,545 662,211 2,571,506 2,046,941 Total equity and liabilities 9432665 9,432,665 8434897 8,434,897 11,236,478 8733331 8,733,331 25
TCL s Strong Track Record TCL Group Revenues Value creation¹ 8000 8,000 10 9 50x 43 x45x enues in billions Group rev 7,000 6,000 5,000 5.5 CAGR 25% 6.8 Shareho older funds in billio ons 8 7 6 5 4 3 2 6.9 40x 35x 30x 25x 20x 15x 10x 4,000 2009A 2010A 1 0 0.1 1 x 2003 2010 5x 0x No. of Investments: 0 1 5 6 8 9 10 10 The group has seen remarkable growth in revenues, driven by organic growth in portfolio company revenue as well as new acquisitions TCL is investing in the future with circa USD 20mmof capex spent aimed at tripling capacity across core cables and transformer businesses Note: ¹Times Money Back calculation assumes investment of TCL Hold Co s 2003 shareholder capital 26
Contents 1. Executive Summary 2. Power 3. Transport 4. Specialised Engineering 5. Consumer 6. Summary Financials 7. The Team 27
Company Board of Directors Board of fdi rectors (8) Peter Kanyago Zephaniah hm Mbugua, Chair Ngugi ikiuna Founder East Africa Courier CPA (K), MBA, industrial management 30 years of entrepreneurship experience (industrial chemicals) Vast senior multinational management experience Directorship: Ecobank (chair) Fedex, Otis, KTDA Njeru Kirira Tax and fiscal policy administrator Served various capacities in Govt. Treasury Directorship: EAC (chair), P&A (EA), Abcon Group, Zeniki Investments Robin Kimotho Business advisory & Consultancy regionally (Eastern & Southern Africa) Directorship: UBA bank (Chair), Cooper Ke, Cannon Assn, X&R Tech Joseph Karago Large-scale architectural development Urban infrastructure development Directorship: Inoorero University Directorship: P Carol Musyoka Extensive experience in banking & corporate finance Directorship: Enablis (EA), Institute for Economic Affairs Polaris International (K), Sigona Golf Club Directorship: Kenya Children s Home, Karago & Associates, Mcensal Ltd Dr. Gachao Kiuna Corporate finance & strategy consulting (McKinsey) 28
Experienced Management team Yida Kemoli Group Head of Corporate finance & Strategy Capital markets investment banking (JPMorgan), Africa PE experience (Actis) MEng in Chemical Engineering Allan Munyua Division Principal, Power & Specialised Engineering Business procurement, Financial management advisory Masters in settlement & infrastructure development, Bachelors of Architecture Ng ang a Njiinu Division Manager, Specialised Engineering Financial analysis, planning & strategy Chartered Financial Analyst, MBA finance & investment management Dr. Gachao Kiuna Chief Executive Officer Corporate finance & strategy consulting (McKinsey) PhD Biotechnology, BSc Biochemistry Mumo Muthengi Division Manager, Consumer and Investor Relations Investment banking (Deutsche Bank) and private equity experience MBA (Harvard Business School), BBA finance Kibiru Muthaka Business Analyst Bachelor of Science degree in Finance from Towson Unive ersity, Maryland USA. level 3 candidate for the CFA designation Wambua Kimeu Group Head of Finance Audit & Advisory (PwC) Certified Public Accountant (Kenya) Bcom finance Geoffrey Njue Group Internal Auditor Group audit experience at Nestle and Industrial Promotion Services CPA (Kenya) BSc in Civil Engineering Janet Wanjiku Management & Financial Accountant Audit (Kenya Women Finance Trust) Certified Public Accountant (Kenya) Bcom finance 29
Contact Us www.transcentury.co.ke 30