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INTERVIEW WITH THE GROUP CHIEF EXECUTIVE OFFICER activating thousands of outlets and making sure they had strong branding and promotional materials so that people could see our name and our brand everywhere across the country. We invested heavily in logistics and distribution to get the product to the customer, and we can do this because we have always maintained a strong balance sheet. So it wasn’t just an increase in demand, we were very proactive in generating demand and taking share, both of which increased our sales volumes in Nigeria. The result is the 11.1% increase in volumes we saw in 2016 and an increase in market share from 62% at the beginning of the year, to around 65% at the end. We are taking the same approach in other markets across Africa and this is driving market share gains across the region because our factories are doing well from the day they open. Our strategy is to be the leader or number two in all countries in which we operate and we aim to have more than 30% share. How did the market react when you increased prices at the end of August 2016? Right from the day we cut the price of cement in September 2015, we had been quite clear that we would increase prices if there was a devaluation of the Naira, so I don’t think anybody was surprised when we announced the new pricing a year later. We had consistently said we would take action to protect margins if our import costs rose and that is exactly what happened, because prices were simply not sustainable at those levels if the business was to remain in good health. The devaluation took place in late June and we waited until late August to adjust prices because of the rainy season, when demand normally dips, so in fact the demand was slowing even before we increased prices. We saw a contraction of sales volumes in the later months, but because we had increased the price, there was less impact on revenues. More importantly, despite lower sales volumes you can see a sharp rise in EBITDA in the final quarter and that bodes well for 2017. How did the new factory in Tanzania perform? It was a mixed year in Tanzania. We started well and despite being the furthest cement plant from the main market in Dar es Salaam, we quickly gained more than 20% share. But a few months later we had a temporary closure for some technical issues and that cost us some sales. At the same time, we were negotiating a gas supply agreement and I’m pleased to say we managed to resolve that issue satisfactorily. The lack of an agreement on gas supply had forced us to use diesel gensets before that because there isn’t enough grid power in the area to keep the plant running, and that affected margins in Tanzania quite badly. Now we have reached an agreement on gas supply we can swap the diesel gensets for much cheaper gas turbines that will 2,500 2,000 1,500 1,000 500 0 Jan-16 Feb-16 Mar-16 Nigeria Ethiopia Apr-16 May-16 Ghana South Africa Jun-16 Jul-16 Aug-16 Senegal Zambia Sep-16 Oct-16 Nov-16 Dec-16 Cameroon Tanzania 54 Annual Report 2016

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