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INDEPENDENT JOINT AUDITORS’ REPORT TO THE SHAREHOLDERS OF DANGOTE CEMENT PLC Key Audit Matter The company continues to expand its operations in Nigeria and Pan Africa which requires various significant procurements for equipment and spare parts. The procurements are made in the form of advance payments to vendors and/or deposits for imports. These advances are processed through the banks and the equipment and spare parts are shipped by the vendors, cleared at the seaport and transferred to the various locations. On receipt of the items into Stores or Project locations, the respective advances/ deposits are cleared into the appropriate accounts from the advances to vendor/deposit for imports accounts. The clearance of these items requires proper and regular monitoring of the shipments through to the final locations. The transactions are usually significant in nature which increases the risk of incorrectly classifying received items as advances/deposits for imports. We consider this a key audit matter due to the significant nature of the transactions and classification of items of property, plant and equipment or inventories as advances/deposits. How the matter was addressed in the audit Reconciliation of Deposit for imports and Advance to Vendors (Company) We evaluated the company’s schedule for the deposit accounts, analysed to indicate the status of payments made (fully delivered, partially delivered, no delivery and no purchase order reference). This included: • Verifying that the schedule provided is accurate and all undelivered deposits have been included therein. • Evaluating the categorisation of the deposits made as described above, by ensuring that items included within each category are properly represented and relate to such categorisation. • Reviewing supporting documentations, payment details and contracts for deposits and advance payments made to check that they represent valid deposits and advance payments. • For items that are fully and partially delivered, we reviewed documents evidencing their receipt and subsequent clearing from the deposit/advance accounts. We concur with the company’s classification of these payments for which delivery of goods are pending and that they represent payments made for goods that are yet to be delivered. Other Information The directors are responsible for the other information. The other information comprises the directors’ Report, Audit Committee’s Report and Company Secretary’s Report, which we obtained prior to the date of this auditors’ report. The other information does not include the consolidated and separate financial statements and our report thereon. Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. Based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, if we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 140 Annual Report 2016

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