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Financials INDEPENDENT JOINT AUDITORS’ REPORT TO THE SHAREHOLDERS OF DANGOTE CEMENT PLC Key Audit Matter How the matter was addressed in the audit Assumption of tax holiday in determining tax liability (Company) In determining the tax liability for the year, the directors have assumed that the Ibese production lines 1 - 4 and the Obajana production lines 3&4, both in Nigeria, are eligible for tax holiday (Pioneer holiday). The Ibese production lines 1&2 and the Obajana production line 3 enjoyed pioneer holidays for three years which expired on 31 December 2014 and 31 December 2015 respectively and require an extension, while the Ibese production lines 3&4 and the Obajana production line 4 are expansion projects requiring Pioneer Status Incentive (PSI) approval with effect from 1 February 2015. This is on the premise that the production lines have met all the necessary requirements to be granted tax holidays. We involved a tax specialist to evaluate the recognition and measurement of the tax liability for the year. This included: • Assessing the requirements by the relevant regulations and government agencies that qualify businesses for pioneer holidays and verifying that the company has met all requirements to enable it obtain approval for the tax holiday. In the course of our assessment, we reviewed communications to the company from a relevant government agency which noted that the company’s application for the grant of PSI on the expansion projects will be considered when the current suspension on the PSI Scheme is lifted while the application for extension is currently being reviewed. As disclosed in note 4.1.3 to the financial statements, the directors have made a significant judgement in determining the tax liability for the year based on historical trends in obtaining pioneer status and the legal expert opinion. An additional tax charge of N64.4 billion (2015: N40.0 billion) would have been incurred by the company if this assumption was not made in determining the tax liability. This requires the directors’ judgement in estimating future taxable income and is accordingly a key audit matter. • Assessing the competence of company’s legal counsel that was appointed to provide an opinion on the legal status of the company’s pioneer status applications. • Reviewing the legal expert’s opinion on the legal status of the company’s pioneer status applications. • Reviewing the conditions required for granting of the pioneer status applications and confirming that the company met the prescribed conditions. Based on existing regulations, the legal expert’s opinion and communications received from the government agency, we do not have any reason to believe that these pioneer status applications will not be approved with effect from the production day as applied for. We concur with the directors’ assumptions in determining the tax liability for the year. We found the disclosures relating to the tax holiday status and assumptions to be appropriate. Annual Report 2016 139

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