Table of Contents Who we are Historical timeline Value drivers 4 5 6 Directors and statutory Board of directors Group corporate team information 9 10 12 Division team Corporate governance Principal shareholders and distribution of shareholding 13 14 17 Chairman’s statement Chief executive’s statement Corporate social responsibility 18 21 25 Report of the directors Statement of directors’ Report of the independent responsibilities auditors 26 27 28 Consolidated statement Consolidated statement of Company statement of of profit or loss and other financial position financial position comprehensive income 30 32 33 Consolidated statement of Company statement of Consolidated statement of changes in equity changes in equity cash flows 34 36 38 Notes to the consolidated Composition of net asset and Proxy form financial statements fair value 39 98 99 ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 3 Who we are TransCentury is an Infrastructure Company listed on the Nairobi Securities Exchange with three Divisions across 12 countries in East, Central and Southern Africa. Power Division • Electrical cables; • Conductors; • Transformers; • Switchgear • Speciality cables Engineering Division • Mechanical and civil engineering; • Transport & logistics; and • Cranage & erection services • Supply, maintenance and service of industrial equipment Infrastructure Projects Division Critical energy and transport infrastructure to support key pillars of the domestic and export economy TransCentury delivers value through OUR INVESTMENT PRESENCE three divisions to four main markets Kenya • Tanzania • Uganda ENERGY / INFrastrUctURE Zambia • DRC • South Africa COMMERCIAL Ethiopia • South Sudan • Rwanda RESIDENTIAL MINING / INDUSTRIAL Burundi • Zimbabwe • Mozambique 4 ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 TransCentury’s Historical Timeline Power Division 2010 2014 - 15 • Tripling of capacity of East African Cables • Expansion of Copper plant and additional Kenya completed machinery to triple the current capacity • Tripling of capacity at Tanelec 2012 in East African Cables and Kewberg 2004 2006 completed • Additional capital completed. The project in East African • Acquisition of East • Opening of • Acquisition of Cableries du Congo expenditure towards Cables included erecting a new factory African Cables from Uganda sales • Strategic relationship signed with LS increasing efficiency in building and installing modern cable Sameer Group office for EACL Cables of Korea the production plant making machinery. 2005 2007 2011 2013 • Strategic relationship signed • Acquisition of Kewberg • Investment in the brown • EAC - Investment in plant & machinery to expand with Nexans Cable of France Cables and Braids (SA) Pty. field operations in Zambia product offering and improve efficiency, new site • Acquisition of East African • Acquisition of Tanelec, for expansion, new legislation requiring 40% local Cables Tanzania from Nexans the sole transformer content in Kenya • Opening up of Rwanda sales manufacturer in the region, • Kewberg - New factory layout and investment in office for EACL from ABB plant & machinery to improve capacity & efficiency • Installation of new at Kewberg Aluminium line at East African Cables Kenya 2014 • Building strategic relationships with stakeholders to position the division as the leading local provider of engineering and Engineering Division contracting services 2012 • TCL through it’s subsidiary TC • Focus on: Engineering & Contracting Ltd. - Power generation through (TCEC) acquired an additional construction and outfitting 30.4% shareholding in Civicon DRC 2006 of Methane Gas Power Barge Holdings Ltd. (DRC Holdings), the • Reorganisation 2009 on Lake Kivu in Rwanda holding company of the Civicon of Avery to • Launch of bearings 2010 - Oil & Gas through Congo subsidiary (Democratic achieve cost business • Avery branches opened construction of a fuel Republic of Congo Operations). TCL now holds 100% shareholding and perfomance • Launch of substation in Tanzania and Uganda storage depot for Tristar in in DRC Holdings through TCEC. improvement construction business construction business Malakal in S. Sudan 2005 2007 2011 2013 2015 • Acquisition of Avery • Introduction of power • Acquisition of Civicon • Focus on: • TCL through it’s TC from Avery Berkel from the founders of Engineering and generation sales - Oil & Gas sector through and several individual the family business Contracting Ltd. • Launch of power construction of well pads in shareholders, whose (TCEC) acquired transmission project Nothern Kenyafor Tullow Oil and legacy businesses an additional 16% business Total E&P in Uganda were industrial shareholding in weighing solutions - Power generation through Civicon Africa Group expansion of Geothermal Power Ltd. (CAGL), the Station in Naivasha for Ormat to holding company of a capacity of 125MW the Civicon Group - Mining sector through of companies. TCL construction of 500 km of now holds 78% roads and 3 new Gold mines shareholding in including the 2nd largest Gold CAGL through TCEC. mine in Africa, based in DRC and building of a new mine in Kwale for Base Titanium, in Kenya ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 5 Value Drivers Power Division The Power Division is the leading manufacturer of electrical The diagrams below illustrate the likely evolution of the sub- cables and transmission equipment in East, Central and Saharan African power sector and the resulting opportunities Southern Africa, with a broad customer base that includes for the players who will help propel it. An increase the current retail outlets, large & small electrical contractors, large projects rate of electrification is expected with the increased demand and utilities. Sub-Saharan Africa’s electricity access is extremely for electricity which is driven by growth in industrialization and low compared to the rest of the world. It has 13 percent of the growth in the urban population. (see graphs below) world’s population, but 48 percent of the share of the global Other opportunities for our Power Division include: population without access to electricity. Electricity demand is expected to rise as the economies expand and various energy • The enforcement of the Government’s policy favouring local intensive commercial activities emerge across the region sourcing of key products in the power sector from local including mining, industrial manufacturing, large scale irrigation, manufacturers. petro-chemicals industries, ports, rails, petroleum pipelines • Significant growth is expected from ongoing programs by and development of special economic zones. The demand for utilities throughout the region to rehabilitate existing grids, electrification is also a factor of the rising rates of urbanisation increase new connections and augment power generation within the region. This presents an exciting growth opportunity through geothermal, wind, coal and gas. for TransCentury’s Power Division through: • Growing private sector demand from housing sector for • Manufacture of distribution transformers and switchgear regular housing and large developments. through Tanelec • Mega infrastructure projects creating new markets e.g. • Distribution and manufacture of cables through EAC highways, railways, stadiums. • Transmission lines through EAC • Our expanded and modernized plants will provide additional • Manufacture of specialised cables for mining, oil & gas and capacity and flexibility to offer a wide product range to cover special applications the Eastern and Central African region. Sub-Saharan Africa Power Consumption Sub-Saharan Africa Urbanisation 100% 12% 90% 10% 80% 80% 10% 8% 70% 8% 60% 60% 6% 6% 50% 4% 40% 40% 4% 30% 2% 20% 2% 20% 0% 0% 0% 10% South Africa Zambia Ghana Kenya DRC South Sudan Tanzania 0% -2% South Africa Zambia Ghana Kenya DRC South Sudan Tanzania Access to Electricity Access to Electricity Increase in Electric Power Consumption Increase in Urbanisation Linear (Increase in Electric Power Consumption) Linear (Increase in Urbanisation) Source: World Bank 6 ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 Value Drivers (continued) Engineering Division The Engineering Division is the leading Mechanical and Civil strategic plans in our countries of operation, continues to spur Engineering & Contracting firm in East and Central Africa. The growth for the engineering business. Division also provides specialised engineering in niche sectors • General growth in economies in the region has spurred such as oil and gas (upstream and downstream), mining and investments in industry and the construction of industrial industrial installations, as well as related out-of-gauge logistics, installations with related infrastructure. cranage and erection services through its subsidiary, Civicon. It also distributes and services mission critical industrial equipment • Supply and maintenance of industrial equipment with growth in in weighing, power transmission, coding and marking as well as industry. power backup through AEA Limited (formerly Avery East Africa • The development of the nascent mining sector, leading to new Limited). Its competencies in engineering, logistics, cranage and mine builds in Eastern, Central and Southern African regions, erection can be utilised at many stages during the life cycle of any continues to be an area of growth for the Company, particularly infrastructure project. In the backdrop of regional growth trends