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Financials NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2016 in the period in which the estimates are revised and in any future periods affected. The accounting for certain provisions, certain financial instruments and the disclosure of financial assets, contingent assets and liabilities at the date of the consolidated and separate financial statements is judgmental. The items, subject to judgment, are detailed in the corresponding notes to the consolidated and separate financial statements. In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are discussed below: 4.1 Critical accounting judgements 4.1.1 Control over subsidiaries Note 17 describes that Dangote Quarries Zambia Limited is a subsidiary of the Group although the Group only holds a 49.9% ownership interest in Dangote Quarries Zambia Limited. Based on the arrangements between the Group and other investors, the Group has the power to appoint and remove the majority of the board of directors of Dangote Quarries Zambia Limited that has the power to direct the relevant activities of this entity. Therefore, the Directors of the Company concluded that the Group has the practical ability to direct the relevant activities of Dangote Quarries Zambia and hence the Group has control over the entity. 4.1.2 Recoverability of forward contracts The Directors of the Company have assessed whether or not the Group has the capability to obtain economic benefits arising from foward foreign currency contracts in existence as at 31st December, 2016. In making their judgement the directors considered if the Group has practical ability to enforce the realisation of benefits from the forward contracts. After assessment the Directors concluded that the Group may not be able to realise the benefits of the forward contracts given the scarcity of foreign currency in the market. The realisation of the benefits is on condition that the Group obtains foreign currency in the market which is scarce at the moment. The value of the contracts was estimated at ₦5.5 billion on 31st December, 2016. 4.1.3 Tax holiday The Directors of the company have assesseed whether the operations in the Ibese factory line 1 to 4 and Obajana Line 3 to 4 qualify for tax holiday under the existing regulations. After assessment, which included obtaining an opinion from legal experts, the Directors concluded that these production lines are entitled to tax holidays under the existing regulations. This is also supported by similar lines that have been officially granted tax holidays. The formal application to government authorities is now at an advanced stage and no indications so far that the holiday will not be formally granted to us. The tax charge for the year has been determined on the basis that the operations are entitled to a 5 years tax holiday period. If the lines were not entitled to tax holidays the additional tax charge would have amounted to ₦64 billion (2015: ₦40 billion) 4.2 Key sources of estimation uncertainty 4.2.1 Provision for restoration costs Directors of the Group exercises significant judgement in estimating provisions for restoration costs. Should these estimates vary, profit or loss and statement of financial position in the following years would be impacted. 4.2.2 Provisions for employee benefits The actuarial techniques used to assess the value of the defined benefit plans as at 31st December, 2015 involve financial assumptions (discount rate, rate of return on assets, medical costs trend rate) and demographic assumptions (salary increase rate, employee turnover rate, etc.). The Group uses the assistance of an external independent actuary in the assessment of these assumptions. For more details refer to note 28.2. 4.2.3 Estimated useful lives and residual values of property, plant and equipment The Group’s Directors determine the estimated useful lives and related depreciation charge for its items of property, plant and equipment on an annual basis. The Group has carried out a review of the residual values and useful lives of property, plant and equipment as at 31st December, 2016 and adjusted the remaining useful lives of some assets for the current or future periods. Annual Report 2016 169

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