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Tiger Brands Limited Integrated Annual Report
2014
Performance review
disposable income, the lifeblood of our
industry. As a result, particular focus has been
placed on the price positioning of the group’s
products, at the appropriate level that meets
both the expectations of our consumers in terms
of affordability, while taking into account the
impact of raw material cost increases on the
cost of production.
In the rest of Africa where Tiger Brands
operates, environmental factors were more
favourable. Ethiopia and Kenya, in particular,
continued on their strong economic growth
trend, with the latter in particular settling down
well following the implementation of a new
constitution and recent elections. The Nigerian
economy also remains robust, although the
highly competitive environment represents
considerable challenges to our business there.
Further details in respect of the performance
of our Nigerian operations are dealt with
hereunder.
Strategy implementation
Although Tiger Brands remains on the lookout
for potential value-adding acquisitions in
sub-Saharan Africa, the year under review
did not deliver any targets that met our criteria.
This has enabled management to focus on
addressing key strategic and operational issues
in our existing portfolio of businesses.
In my letter to stakeholders last year, I notified
you of our intention to acquire Rafiki Milling
and Magic Oven Bakeries, a flour milling and
bread baking business in Kenya. However,
this transaction did not proceed due to the
performance of these companies not meeting
the expected thresholds in the period between
the conclusion of agreements and approvals
received by the regulatory authorities.
Significant focus was given during the year to
the performance of Dangote Flour Mills (DFM)
of Nigeria which was acquired on 4 October
2012. As I reported last year, the performance
for that period was disappointing. Steps
were taken during the year under review to
significantly strengthen our management team
in Nigeria with seasoned executives who have
significant experience of operating in Nigeria.
Although DFM has not yet been able to return
to profitability, good progress has been made
in reducing losses, and we remain confident
that this investment will prove to be beneficial
to Tiger Brands in the medium term. Given the
current underperformance of the DFM business,
it was considered prudent to impair the
goodwill and intangible assets related to Tiger
Brands’ investment, as well as certain surplus
fixed assets of the company.