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AUDIT, COMPLIANCE & RISK MANAGEMENT COMMITTEE REPORT • Conduct of Health Awareness and Lifestyle Seminars with free medical tests done for all staff in the Head Office and Plants • Successful completion of Engineering Risk Surveys at Obajana, Ibese, Ghana, Cameroon, Tanzania, Zambia, Ethiopia, Congo and Sierra Leone Plants • Design of a Pan-African International Terrorism Programme Credit risk Credit risk exposures are monitored at Plant, Country and Group levels on an on-going basis to ensure that non-performing credits are identified promptly and escalated to relevant authorities for prompt regularisation. Past-due accounts and other credit risk related infractions are reported to management and the Board with remedial actions proposed for approval; approved recommendations are tracked for proper implementation and timely closeout. The Group’s credit policy was revised to address identified gaps in policy requirements and general credit administration practices across the Group. The following actions were implemented: • Centralisation of all credit control functions in a bid to minimise fraud which resulted in: - Withdrawal of rights from all plant personnel to review credit checks and unblock accounts - Withdrawal of rights to create credit limits on any customer account • Training of members of staff on the Credit Risk Policy across Pan-African locations • Registration with two Credit Bureaus has been established to facilitate the rating system being deployed for customers transacting business with the Group • Review and engagement of Pan-African banks whose bank guarantees would only be accepted from customers in alignment with the Group’s Credit Risk Policy • Expansion of credit risk management scope to include all credit exposures across the Group; this led to a year-on-year increase of 403.5% in the credit risk portfolio reported 102 Annual Report 2016 The credit risk exposure of the Group was adjudged a Medium Risk as the past-due obligations comprised 35% of total exposure. Efforts to ensure prompt regularisation of past-due exposures are ongoing. No major credit risk threat is envisaged, as about 25% of past-due obligations are contractor credits, which would be deducted from payments due, and 9% are inter-company credits that would be resolved internally. Market risk Dangote Cement is exposed to market risk emanating from volatilities in interest rate, foreign exchange and commodity prices across its various jurisdictions of operations. To reduce the adverse impact of these fluctuations in its various business climes, the Company utilises a variety of financial risk mitigation strategies to ensure its earnings and cash flows are assured in line with the Group’s risk appetite. Foreign exchange risk During the period under review, the business was exposed to significant shortages of foreign exchange. In Nigeria, the country experienced a fall in oil production, its major foreign exchange earner. The Central Bank of Nigeria also introduced a flexible foreign exchange policy allowing the exchange rate to float in the Nigerian Interbank Market. This resulted in the Naira falling 58% from N199/US$ in June 2016 to N304/US$ at the end of the year. Beyond Nigeria, some of our Pan-African operations, notably in Ethiopia, South Africa and Zambia, were also exposed to foreign exchange risk. Payment of foreign vendors for supply of spare parts and raw materials, provision of operations and maintenance services alongside expatriate salary payment and our African expansion projects were affected. To effectively manage the Group’s exposure to this risk, close liaison on a continuous basis with the Treasury function was maintained throughout the year for prompt and effective decision-making. A few of the risk mitigation strategies deployed include ramping up export sales to earn foreign exchange, putting a hold on the Group’s African expansion projects, refinancing of inter-company loans, financing purchase of assets

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