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About Us OUR STRATEGY In this way we can sell higher-grade cement at a price that will compete with lower-grade products already in the market. Furthermore, our plants are designed to make the higher-strength cements (such as 42.5 and 52.5 grades) that will increasingly be required as the size and height of buildings increase in Africa’s growing and urbanising economies. This is an inevitable shift in the market from which we will benefit. The advantages accrued by our factories will be augmented by the advantages that we can achieve in logistics and procurement, where our size and financial strength enable us to invest in strong distribution capabilities at costs unattainable by smaller and less financially strong competitors. A good example of this is the outline agreement we have with the Industrial and Commercial Bank of China to fund our expansion at very attractive terms, albeit at a more modest pace than we outlined in our 2015 Annual Report, because of continuing difficulties in obtaining foreign currency. Our business is organised into two strategic regions: Nigeria and the Rest of Africa. Each region pursues its business plan in line with the overall corporate strategy set out by the Group’s Board and Executive Management, but mindful of the prevailing conditions in each market. Nigeria is Sub-Saharan Africa’s largest market for cement, consuming more than 22.7Mt in 2016. From the 29.25Mta capacity of our three factories, all located south of the country’s two main rivers, we can reach every local market in Nigeria with our extensive and market-leading fleet of distribution trucks. In 2016, we sold almost 14.8Mt of cement, representing 65% share of the Nigerian market. Nigeria has substantial limestone deposits and is surrounded by countries that do not have sufficient limestone to make their own cement. Because of this deficiency they must import bulk cement or clinker. In fact, many of the 15 countries in the Economic Community of West African States (ECOWAS), especially those on the coast, are obligatory importers of cement, reliant mainly on imports from outside ECOWAS. By trading within the ECOWAS region we are able to offer a product that is free of import duties, compared to the non-ECOWAS products the region currently imports. Because we ourselves import bulk cement into Ghana and clinker into Cameroon, our goal is to substitute these imports for products we make in Nigeria. By manufacturing additional cement in Nigeria, we will increase the capacity utilisation of our plants, thereby increasing their efficiency and profitability, which is an obvious benefit to our Nigerian business. Our operations in West Africa and Central Africa are located in Senegal, Sierra Leone, Ghana, Cameroon and the Republic of Congo. In the coming years we plan to extend our reach with a new plant in Niger and grinding plants in Mali, Ghana, Côte d’Ivoire and Liberia. We will, in time, increase the size of our plants in Senegal and Ethiopia and look to double the scale of our operations in Cameroon. In the east and south of Africa we have existing or planned operations in Ethiopia, South Africa, Zambia, Tanzania, Kenya and Zimbabwe. All these countries have ample native limestone, so all our facilities there will be integrated factories, with the exception of the Delmas cement milling plant in South Africa. Countries on Africa’s east coast are to some degree exposed to cheap imports from Pakistan and the Far East. As a result, our strategy is in most cases to site our factories well inland, where pricing is higher and where imported cement would face additional shipping costs to reach the market. We have achieved successful market entries in Ethiopia, South Africa, Tanzania and Zambia because of our strategy to be the leader on costs, quality and service. The markets we have entered have been characterised by competitors with older factories that may be smaller-scale or less efficient than our own. As a result, we believe we will surely benefit from the numerous competitive advantages we have achieved in Sub-Saharan Africa’s rapidly growing markets for high-quality cement. Annual Report 2016 27

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