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GROUP CHIEF FINANCIAL OFFICER’S REVIEW As a result of the average lower prices in Nigeria and cost pressures detailed above, particularly the increased fuel cost in Nigeria and the use of diesel in Tanzania, Group earnings before interest, tax, depreciation and amortisation (EBITDA) fell slightly by 2.0% to ₦257.2B at a margin of 41.8% (2015: ₦262.4B, 53.4%). Excluding eliminations and central costs, EBITDA fell by 2.2% in Nigeria, to ₦242.0B at a margin of 56.8% (2015: ₦247.5B, 63.6%). However, despite lower volumes of cement being sold, EBITDA rose significantly in the final quarter of the year because of higher pricing introduced in September 2016 and a more favourable fuel mix, resulting in the best-ever quarterly EBITDA for the Group. Fourth-quarter EBITDA per tonne was almost double that of Q3 2016. Pan-African EBITDA rose by 5.5% to ₦26.5B (2015: ₦25.0B, 24.2% margin), but at lower 13.6% margin because of start-up and fuel costs in Tanzania. Operating profit of ₦182.5B was 12.2% lower than the ₦207.8B for 2015. With higher fuel costs and new plants ramping up throughout Africa, the Group operating margin eased to 29.7% in 2016, from 42.3% in 2015. Interest and similar income and expense Year ended Interest income Exchange gain Finance income Finance costs Net finance cost 2,662 41,155 43,817 45,381 1,564 31-Dec-16 31-Dec-15 ₦m ₦m 1,699 12,250 13,949 33,477 19,528 Late in June 2016, the Nigerian Naira was devalued from about ₦197/US$ to ₦280 and ending the year at ₦304. This resulted in high exchange gains from assets denominated in foreign currency and losses from liabilities denominated in foreign currencies including gains from inter-Group assets and liabilities that do not eliminate in full on consolidation. Taxation Year ended Tax credit/(charge) 66 Annual Report 2016 31-Dec-16 ₦m 5,695 31-Dec-15 ₦m (6,971) The balance sheet remains strong with non-current assets increasing from ₦945.0B at the end of 2015 to ₦1,224.7B at 31st December 2016. This was mainly as a result of exchange gains on assets held outside Nigeria following the devaluation of the Naira, as well as capital expenditure within Nigeria and other African countries. Additions to property, plant and equipment were ₦136.2B, of which ₦62.9B was spent in Nigeria and ₦33.1B on trucks and vehicles. Current assets increased by ₦62.3B, driven mainly by the increase in stocks of spares, fuel, consumables and other receivables associated with sales that increased by 25%. Deferred tax on operations outside tax holiday resulted in the increase in other non-current liabilities. The effective tax rate for Nigerian operations was 2%, representing a mix of non-taxable profits from cement produced on lines still under Pioneer Tax Exemption, the application of the Commencement Rule that resulted in increased tax rates for lines out of Pioneer status, and tax exemption on the profits of export sales. The ₦5.7B tax credit for the Group resulted from deferred tax credits for Pan-African operations. The Group’s profit for the year was ₦186.6B (2015: ₦181.3B). As a result, earnings per share increased by 4.5% to ₦11.34 (2015: ₦10.86). Financial position Year ended 31-Dec-16 31-Dec-15 ₦m ₦m Property, plant and equipment 1,155,711 Other non-current assets Intangible assets Total non-current assets Current assets Cash and bank balances Total assets Non-current liabilities Current liabilities Debt Total liabilities 64,888 4,145 1,224,744 187,471 115,693 1,527,908 65,841 308,257 356,465 730,563 917,212 25,141 2,610 944,963 125,188 40,792 1,110,943 57,196 164,058 244,969 466,223

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