Dangote Cement Plc 2018 Annual Reort

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One of our primary business objectives is to
build a workplace that attracts and retains the
best people in all our countries of operation.
This is critical because the quality of the
workforce determines the quality of our
products and our customer care.
We understand that we cannot achieve
sustainable business growth without
an empowered, well‑trained and
motivated workforce.

2,085 8,160

New employees Total hours of training
engaged in 2018 courses offered by
Dangote Academy

Dangote Cement is a people-focused and
highly diversified company with a strong
health and safety culture.

Annual Report 2018 Dangote Cement Plc 49

Strategic report

Community

Supporting our
host communities

Strategic social investment is achieved through collaborative
community projects based on our core themes of education,
empowerment, employment and improvements in health.

Working with our partners
Dangote Cement Sustainability
Champions pictured at the Oniru
Block Makers' village in Lagos with
Mr. Olanrewaju Olaniran, Chairman
of the Unity Block Makers'
Association of Nigeria (centre).
The Champions spent a day
clearing litter around the local area
in an initiative that was appreciated
by the large number of artisan block
makers who are customers of
Dangote Cement.
It was one of many projects
undertaken with great enthusiasm
by volunteers in six countries during
our Sustainability Week.

13 locations

Our volunteers undertook
community projects in 13
locations across six countries
during Sustainability Week.

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Ibese scholarship programme Project description Others have gone into self-employment,
Selection and sponsoring of secondary creating jobs for themselves and others
400 and tertiary education for children in in the local community.
local communities.
Students benefiting from The remainder still enjoy the scholarship
Dangote Cement scholarships Beneficiaries programme at their school or college.
in our host communities Students from our Ibese plant’s host
in Ogun State, around communities of Wasimi-Imasayi, Abule The implementation of the scholarship
the Ibese cement plant. Maria, Abule-Oke, Ajibawo, Onigbedu II, programme has reportedly increased
Aga, Balogun, Ijako-Orile, Aga-Olowo, children’s enrolment in local schools
Onigbedu I, Atola, Afami, Babalawo, in these communities, which is an
Ibese, Imasayi and Kajola. obvious benefit to the children, their
families and the local community.
Impact
Some of our scholars have already secured We hope to roll out scholarship
jobs, either at our plant or elsewhere schemes in other local communities
in the community. Their salaries will help that host our operations.
to support them and their families and
benefit the local economy.

Supporting our host We value their useful feedback on how Contribution to income
communities we could be better neighbours and generation in host communities
Our host communities are among our partners for development. The direct and indirect jobs we create
most important stakeholders. have a multiplier effect on the economies
Resolving issues where we operate, generating income
They live close to our plants and are Our host communities are provided with opportunities for our internal and
impacted by their operations in ways functional platforms through which they external stakeholders.
that can be beneficial or detrimental. can express their worries and concerns
about any of our business activities that For example, the total income generated
We understand the need to continue to they may find disrupting. by Dangote Cement in Nigeria grew
invest in our host communities, create from ₦72.4B in 2017 to ₦72.7B in
new job opportunities for local people, We ensure that a dialogue exists with 2018, representing an increase of 0.4%.
provide scholarships for their children, all the communities in which we operate.
provide healthcare, housing, education By so doing, our host communities have Educational empowerment
and access to water where necessary, access to key decision makers who We understand the critical importance of
support local businesses and contractors represent Dangote Cement in their high-quality education for the development
and develop local infrastructure. communities and who are trained and of host communities. This is why we have
committed to addressing their grievances. introduced scholarship schemes to help
Furthermore, we endeavour to operate students in our host communities achieve
with minimal possible harmful impact on If the issues cannot be resolved at the their educational and career aspirations.
our local communities, taking care to local level, they can be escalated to the More than 950 students were offered
respect their land and property, their Company's headquarters for a prompt scholarships to study at different levels
animals, the air that they breathe, their and mutually acceptable resolution. of education in 2018. In our Ibese
dignity, their cultural and religious beliefs communities, for example, the advent
and their way of life. Impact on host community of the scholarship programme has
employment reportedly increased the rate of
Community engagement As part of our community empowerment children’s enrolment in schools.
We have a Community Engagement drive, our goal is to try to ensure that up
Policy that prioritises the establishment to 80% of our workforce are from local
and nurturing of a mutually beneficial communities. At the end of 2018 we
relationship with host communities. employed 18,312 people directly, with
a further 7,969 third-party contractors
working for our Company.

Annual Report 2018 Dangote Cement Plc 51

Strategic report

Community continued

Community infrastructure This is why our social impact projects are Women’s empowerment
development deliberately targeted at meeting the most In November 2018, Dangote Cement
We understand that governments alone pressing needs of the different host Senegal began a fruit and vegetable
cannot meet the needs of our local communities around our plants, in line processing training programme
communities. As a major stakeholder in with the outcome of our community specifically for women. The capacity
these communities, we remain committed engagement programmes. building initiative will help agrarian
to supporting the development of social women from the Pout community to
amenities. In 2018, we invested ₦1.4B Some of our flagship projects include: develop new skills in how to preserve
of social investment for the construction the Dangote Skills Development Centre, their fruit and vegetable products.
of roads, schools, hospitals and several Lokoja; Cottage Hospital, Mbayion, The programme will teach the women
other public utilities in the effort to close Gboko; and the Ibese scholarship scheme. best practices in the preservation and
some of the infrastructural gaps. In Ethiopia seven classroom blocks were processing of these farm products,
built during 2018. Furthermore, our thereby enhancing their trade, income
Partnership for development operations in Obajana, Ethiopia and and purchasing power.
As a leading African brand, we are partners Dangote Cement South Africa all
of governments and local communities in contributed to the construction of training
the effort to build prosperous economies centres to offer skills development
in our countries of operation. programmes for their host communities.

Ethiopia

In 2018, Dangote Cement provided a new classroom for the Ula-gora We have continued to engage with local communities,
Elementary School. as well as local authorities in Mugher and the regional
authorities of Oromia, in an effort to create trust and build
It is fair to say Dangote Cement has experienced a difficult mutual respect so that we can maintain our “social licence
relationship with its host communities in Ethiopia, a country to operate”. Without it, our business success in Ethiopia
with a complex and sensitive sociopolitical and will be diminished, affecting the performance of one of
cultural landscape. our most successful plants.

In July, three of our colleagues, including country CEO We are continuously reviewing our stakeholder engagement
Deep Kamra, were murdered on the road to Addis Ababa, and social investment projects’ implementation processes
for motives that even now remain unclear. to ensure effective and efficient project execution, at the
same time improving communication processes with both
In addition, our local operating environment has been our internal and external stakeholders.
made difficult by demands from the local community, with
respect to employment and business opportunities, that In addition, we will review and if necessary change our
we were unable to meet. employment practices to offer the local community greater
opportunities for employment and engagement with us.

The plant has continued to invest in community development
programmes and carried out projects such as construction
of seven classroom blocks, two training centres and one
water system to supply Mugher town’s 33,000 people.
We have continued to offer employment opportunities to
our host communities with 1,600 people being employed
currently. We have made positive socioeconomic
development contribution to our host communities and
have supported 15 micro-enterprises that employ more
than 600 people.

As our relations have improved, so has the performance
of our plant.

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Standardised Community We recognise that stakeholder Support for entrepreneurship
Engagement Plan engagement is a business tool and as We are committed to helping young
Community engagement is integral to such will require the commitment of all businesses and entrepreneurs to
our social performance management. plant personnel. Different departmental grow and achieve their full potential.
In 2018, we established a formal heads participated in the process of In addition to the multiplier effect that
stakeholder engagement process to developing the Nigerian plan. our value chain activities have on the
ensure consistency across the Group. real sectors of all the economies where
The aim is to have all our operations across we operate, we have also engaged
In Nigeria, we are developing a Community Africa develop a formal, standardised directly in the empowerment of
Engagement Plan that is consistent with Stakeholder/Community Engagement Plan start-ups and innovative business
global best practices and in alignment that is consistent with global standards. ideas. We prioritise patronage of local
with communities’ needs. businesses in the effort to boost their
productivity, earnings and profitability.

Senegal Nigeria South Africa
Our 1.5Mta plant is located near Pout In Nigeria, we have three plants at Our operations in South Africa are
in Senegal. Opened in December 2014, Obajana, Ibese and Gboko, with total spread between our Aganang and
it employs more than 600 people from combined production capacity of Delmas facilities, which between them
the local community. The plant produced 29.3Mta. Our Nigerian operations can produce 2.8 million tonnes of
more than 1.4 million tonnes of cement commenced at Gboko in 2007 and cement a year for sale in key markets
in 2018, approximately 91% of its rapidly grew to enable the country to around the capital.
operating capacity. become self-sufficient in cement.

As part of its social investment In 2018, Dangote Cement invested In 2018, Dangote Cement South
programmes, our plant in Senegal approximately ₦1.4B in social Africa carried out a number of local
has carried out a number of projects for the benefit of local community initiatives including:
projects that have benefited communities. These investments
1,200 households, including: covered healthcare, education and • scholarships awarded to 15 university
infrastructure developments, students to pursue engineering and
• construction of the Solidarity Bridge amongst others, including: other graduate courses;
of Keur Moussa, which has benefited
eleven villages cut off from the nearby • at Gboko, scholarship grants totalling • leadership training to empower
town by flooding; ₦10 million were awarded to 493 local community leaders in the
people in the Mbayion community; Springbokpan and Verdwaal
• rehabilitation of roads in Ngomene; communities, with a focus on mining
• at Ibese, a block of classrooms legislation, codes of conduct and
• construction of a college in Niakhip; was constructed in Aga-Olowo general transformation; and
for 80 students and we provided
• construction of a maternity hospital scholarships to benefit 400 local • youth training in driving (50 students),
in Pout; students; and computer skills (25 students) and
basic electrical and mechanical
• construction of classrooms, a • at Obajana, 249 students benefited engineering skills (15 students).
teacher’s house and toilets for from a ₦25 million scholarship grant,
a school in Dias; and among other social investments.

• rehabilitation of a primary school
and construction of a health centre
in Mont Rolland.

Annual Report 2018 Dangote Cement Plc 53

Strategic report

People

People are the drivers
of our business success

We believe in the importance of embedding our identity and
values in our workplace. A strong and decent corporate culture
will ensure that Dangote Cement achieves a sustainable and
successful future for the benefit of all our stakeholders.

Dangote Cement Annual General Meeting, 2018
54 Dangote Cement Plc Annual Report 2018

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Dr Musa Rabiu Q Q
Group Chief Human Resources Officer
Dangote Cement has one of the How would you describe the
Q most diversified workforces in relationship between human
Africa. How do you manage this resources and sustainability?
What has been the approach diversity effectively?
to internal stakeholder A
management adopted by A
Dangote Cement, and how There is a close-knit relationship
effective has this approach been? We operate in ten countries, from between the two because a
Senegal on the west coast of Africa, to sustainable business can only be
A Ethiopia in the east, and down to South created by people who understand
Africa, so our operations span a large why sustainability is important.
Our people are our biggest assets. geographic area and many different local Whether or not our sustainability
Around them revolves everything populations and ethnicities. Even within goals and objectives are achieved will
that makes us who we are and all countries, such as our home country be determined by the level of buy-in
that we wish to be as a global Nigeria, there is significant ethnic diversity and commitment at all levels, as well
institution. We are therefore in different regions of the country. So as as the quality of the people making
committed to ensuring that they an employer, we need to be mindful of the decisions and executing the
continue to perceive the Dangote differing cultures, tribal associations, strategy to achieve it.
Cement brand as the best place to religions and local customs.
work and thrive. To achieve this The 7 Sustainability Pillars of
objective, we ensure that we keep We believe that all our staff should have The Dangote Way provide a
them continuously informed and an equal platform to excel. We abhor all framework for building a strong
seek their opinion on issues that forms of discrimination based on gender, institution, achieving operational
impact them. We run a structure race, religion, ethnicity, marital status sustainability, developing a sustainable
that allows a level playing ground and so on. This is clearly stipulated in business culture and achieving social
for all employees and gives them the our human resources and employee responsibility in our internal and
freedom to hear and be heard. policies and we ensure strict compliance external relations, but the success
with our non-discrimination standards. of all of these will depend on how
well our people are aware of, involved
in and devoted to our corporate
goals and values.

Annual Report 2018 Dangote Cement Plc 55

Strategic report

Dangote Academy

Training for success

The Dangote Academy was launched in 2010
to equip colleagues with the diverse technical
and management skills that are essential for
the continuing prosperity of our business.

The Dangote Academy It was created in recognition of the fact Training courses were held at eleven
Since 2010, the Academy has been that we cannot rely on Africa’s universities locations in Nigeria, with many staff
providing training in both technical and colleges to provide the very from Pan-African facilities visiting
and management skills for employees specialised technical and managerial Nigeria for training in engineering
of the Dangote Group of companies. training required to run major cement skills at our flagship campus at
Specifically, the Academy was plants such as ours. Obajana in Kogi State.
established to:
In 2018, the Academy offered 114 With eight classrooms, five workshops,
• be the umbrella organisation for different training courses on a wide a 450-seat lecture theatre and leisure
all talent development and learning range of technical, administrative and facilities, the Obajana campus can
initiatives in the Dangote Group; marketing skills, from “7 Habits of Highly accommodate 400 people.
Effective People” to “Smarter Selling”.
• provide facility and platform 8,160
for technical skills acquisition Approximately 11,707 staff attended
benchmarked to world-class these courses, with around 5,500 being Hours of training offered
standards; trained by the Dangote Academy itself
and the rest being trained by 26 external 114
• attract and develop high-quality training providers.
talent from secondary and tertiary Different training courses
institutions through a structured
process; and

• align our skills development to the
rapid changes in technologies by
building long-term relationships
with OEMs and institutions
of learning.

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Training engineers Graduate Drivers Academy
Dangote Cement needs competent For most people outside of our locations
engineers. To that end, we have of operation, Dangote Cement’s drivers
established three training schemes, the are perhaps the most highly visible
Graduate Engineers Training Scheme part of our workforce. As such, we
(GETS), the Vocational Training Scheme believe they must be seen as good
(VTS) and the Junior Technician Scheme ambassadors for our Company,
(JTS). Between them, they provide a conveying its values properly as
wide range of skills necessary for the they go about their daily deliveries.
operation and maintenance of our
cement factories across Africa. Our Graduate Drivers Academy is
designed to improve the quality of
Of these, GETS offers the most transport fleet drivers by teaching them
advanced training, preparing graduate safe and defensive driving techniques,
engineering students with all the highway management standards and
necessary technical and supervisory HSSE awareness, thereby helping to
skills they need to become team reduce accident rates and improve
leaders within Dangote Cement. drivers’ attitudes and aptitudes when
managing the delivery of Dangote
GETS operates in four phases, covering Cement products to our customers.
engineering theory, workshop skills,
information technology and
management skills.

In 2018, nearly 50 students graduated
from GETS, with more than 100
graduating from JTS. Many will be
deployed at Dangote Cement, with
others finding work at other Dangote
Group companies, such as Dangote
Flour Mills and Dangote Sugar Refinery.

Annual Report 2018 Dangote Cement Plc 57

Strategic report

Environmental

Caring for our
environment
and addressing
the challenges
of climate change

KPIs CO2 kg per tonne Water consumption

Carbon emissions 687kg 6.3 million tonnes

16.4 million tonnes We achieved a 2% reduction in Including all uses, we consumed more
CO2 per tonne, through greater than 6.2 million tonnes of water across
Total carbon emissions were operational efficiency. our operations in 2018.
16.4 million tonnes in 2018.

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Dangote Cement believes that sustainable
environmental management, together with a
proactive approach to addressing the challenges
and opportunities of climate change, is fundamental
to maintaining a successful business.
We are committed to improving our standards
of environmental performance.
We recognise we must make a greater effort
to protect the environment, particularly at and
around our sites of operation.
We aim to apply economically sound sustainable
development principles to our business and seek
to maximise energy efficiency and minimise the
environmental impact of our operations.

“ We are studying ways to use more
waste materials such packaging in
our kilns so we can reduce our fossil
fuel burden.”

Ramprasad Guggilam
Senior General Manager

Annual Report 2018 Dangote Cement Plc 59

Strategic report

Environmental

The cement industry is a significant user of fossil fuels and
a major contributor to global carbon emissions. But modern
cement plants are not just more energy efficient, they also cost
less to run and are more environmentally friendly. A greener
plant is a more profitable plant.

“ Our environmental Q In November 2018, Dangote Cement
efforts are guided became a founder member of the
by the GCCA What are the biggest challenges Global Cement and Concrete
Sustainability Charter facing the cement industry in Association, which adopted a
to reduce our impact cutting carbon emissions? Sustainability Charter based upon
on climate change.” “Five Pillars”. In fact, the GCCA has
A taken over and expanded upon what
Massimo Bettanin was previously the Cement Sustainability
Group Chief, HSSE Even if you look at today’s production Initiative of the World Business Council
of cement it is clear that the cement for Sustainable Development.
Q industry’s emissions are too high and
need to be cut if we are to meet the As you can see on the page opposite,
What is the environmental impact targets of the Paris Agreement. the new charter’s Five Pillars are very
of cement production? much aligned with our own
The biggest challenge is to reduce the 7 Sustainability Pillars. As a member
A total burden of emissions at the same of the GCCA we are committed to
time as we increase production of adopting this Charter and publishing
The worldwide cement industry is cement, which is difficult because the results of our efforts in each of its
estimated to be responsible for perhaps demand for cement is rising, and five pillars, possibly as early as the
5% to 7% of global carbon dioxide needs to rise if large populations 2019 Annual Report.
(CO2) emissions, because the chemical are to have decent housing
and thermal combustion processes and infrastructure. Q
involved in cement production are a
significant source of CO2. Since there We cannot change the chemistry of Are the world’s investors
is no viable substitute for cement, the reaction, which is a large source demanding a more sustainable
these emissions are an inevitable of CO2 in the process, but we can do approach to business?
consequence of global development. our best to reduce our use of fossil
In addition, we mine the Earth for fuels and all the other impacts. A
raw materials such as limestone and
gypsum, use fossil fuels to produce Q Yes, I get regular feedback from our
electricity and operate large fleets management team that investors
of vehicles on the roads. What initiatives can the industry are increasingly asking about our
take to reduce emissions? sustainability efforts and our carbon
emissions because it is an important
A factor in their investment
decision process.
We can reduce fossil fuel use in several
ways. We can innovate to produce As part of our commitment to
cements that are just as strong but sustainability we are adopting the
which use less clinker, which is the GCCA Sustainability Charter. We are
heat-requiring part of the process. also moving towards GRI-certified
reporting standards and we will begin
We can increase our use of waste to provide CO2 emissions data to the
materials as an alternative to using Carbon Disclosure Project, which
coal and we can look at providing collates it on behalf of many investors
more electrical energy from renewable around the world.
sources such as solar and wind,
which are underdeveloped in Africa,
but which have good potential to cut
fossil fuel use.

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Dangote Cement believes that sound efficiency in all our production processes finished cement, while the remaining 40%
environmental management, together and reduce, as much as is feasible, our of CO2 is generated by the combustion
with a strategic proactive approach to CO2 emissions, our water footprint and of fossil fuels in the kiln and to produce
addressing the challenges and opportunities our dust emissions. electricity to power the plant. In addition,
of climate change and water scarcity, is we must factor in the carbon emissions
fundamental to maintaining a successful This year, we started exploring the of our inbound and outbound delivery
and resilient business. feasibility of using alternative fuels in our fleets, and even those of our suppliers.
kilns through effective and fit-for-purpose
As the largest cement company in reutilisation of waste produced by our Our factories are modern, with most of
Africa, we are committed to complying sites, such as old tyres and packaging. our lines having opened in the last seven
with all relevant environmental regulations years. They have been designed to be
in the countries where we operate, This is a further step towards reducing the intrinsically efficient through the adoption
maintaining good standards of practice use of fossil fuels in order to minimise of cutting edge technology in cement
on environmental management. We try emissions of greenhouse gases and production such as:
to apply economically sustainable other pollutants from our cement
development principles to our business, operations. • pre-heater and pre-calciner
while minimising the environmental technologies, which are regarded
impact of our operations on our host Understanding and managing as the most efficient technology
communities and the wider landscape. our carbon footprint because they recycle heat from the
The yearly global demand for cement kilns to pre-heat the raw mixture
In 2018, we decided to consolidate our increases at an average of 5–6%, with and achieve much of the chemical
knowledge and understanding of key most of the additional demand coming transformation of limestone before
environmental indicators including energy from emerging markets such as Africa it even enters the kiln;
consumption, water usage, greenhouse due to greater urbanisation, economic
gas emissions and dust emissions, in and demographic growth. • vertical rolling mills for raw material,
order to achieve better-informed decisions coal and cement grinding which are
on environmental matters that are relevant The global cement industry is a major 40–50% more efficient than traditional
for our business and our stakeholders. producer of global carbon dioxide ball mills;
emissions.
In line with our commitment to • mechanical material transport and
continuously improve our environmental Approximately 60% of these emissions transfer systems equipped only with
performance, we have developed and are produced in the conversion of limestone conveyors and bucket elevators,
implemented practices and technologies (CaCO3), a key natural ingredient, to clinker which are up to 80% more efficient
aimed at upholding excellent energy (CaO), an intermediate component of than the traditional pneumatic systems; 

The Five Pillars of Global Cement and Concrete Association’s Sustainability Charter

Link to the 7 Sustainability Pillars of The Dangote Way

Health and Safety Climate change Social Responsibility Environment Circular economy
and energy and nature
• Apply the good • Publish a Code of • Promote the
safety practice • D evelop a climate Conduct incorporating • Apply Environment principles of a
guidelines change mitigation the principles and Nature guidelines circular economy
of the GCCA strategy, and publish of internationally across the
targets and progress proclaimed • Set emission targets value chain
• Promote the human rights and report publicly
sharing of good on progress • A pply the guidelines
health practice • Apply Social Impact developed for fuel
Assessment guidelines and raw material
use in cement
• Establish a
systematic dialogue • P roduction
process with
stakeholders

Economic Operational Social Environmental Financial Institutional Culture

Annual Report 2018 Dangote Cement Plc 61

Strategic report

Environmental continued

Understanding and managing as fly ash, to clinker, increase the use Consequently, although our operations
our carbon footprint continued of electricity produced by renewable do not require large quantities of water
• major process fans provided with sources, such as wind and solar, in comparison with other sectors, we
particularly abundant, and still are committed to reducing the amount
variable frequency drives (VFD) to underdeveloped, in Africa. of fresh water utilised by our operations
vary the ventilation rate based on the to ensure more availability to the local
actual demand/operating conditions, In 2018, our total greenhouse gas communities. This is especially important
which can reduce the input power emissions resulting from captive power in those regions where we operate that
by 40–80% (depending on the % plants and generators, and kilns and are characterised by endemic scarcity of
flow rate) compared to more vehicles used at the quarries and sites potable water.
traditional dampers. (Scope 1), as well as those associated
with the use of purchased electricity Most of our cement plants have been
These measures have resulted in (Scope 2), were 16.4 million tonnes, designed to recover, store and recycle
operational cost savings, to the benefit equivalent to a specific or average groundwater resulting from quarry
of margins, and at the same time unit-based emission of 687kg CO2 per operations and/or the stormwater run-off
produce fewer CO2 emissions than tonne of cementitious material produced. decanting from the plant, thus reducing
less modern plants for the same the consumption of freshwater and
amount of cement. Implementing efficient mitigate the potential impact on local
water management communities and farming.
This year we have consolidated the We recognise that scarcity of drinkable
greenhouse gas emission monitoring water is a significant global issue and In 2018, our total water consumption
and reporting system in order to verify central to any sustainability initiative. from activities including production
the actual carbon footprint of all our processes, cooling, dust suppression,
operations and identify potential areas We are aware that of all water on gardening, domestic and sanitary use
for further improvement. Earth, just 2.5% is fresh water and was 6.2 million tonnes.
barely about 1% of that is usable by
However, as an increasingly humanity, since the majority is locked Across the Group’s activities, this
environmentally conscious organisation, up in ice or deep underground. represents an average use of nearly
we are aware that we cannot just rely 270 litres of water per tonne of
on the good design of our plants and Rivers and lakes hold only a small fraction, cementitious product sold.
we will need to explore innovative ways but it is this water upon which the world’s
to continuously reduce our carbon population, farming and industry depend. Controlling our dust emissions
footprint along the whole value chain. Cement manufacturing processes
Africa is no exception and the continent’s generate dust emissions that, if not
Possible options to reduce our greenhouse fast-growing population and increasing properly managed, can have significant
gas emissions may include the use of urbanisation are accompanied by a impacts on both our workforce and
alternative fuels, such as waste, in our significant rise in water demand. our neighbours.
kilns, utilisation of more additives, such

CO2 emissions at integrated plants 2018 (tonnes)

Obajana

Ibese

Ethiopia

Senegal

South Africa

Zambia

Tanzania

Gboko

Congo

0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000

62 DaannggootteeCCeemmenetnPt lPclAcnAnnunaul aRleRpeoprtor2t0210818

01 02 03 04

At Dangote Cement, we understand Measures adopted in this regard include: The good design of our plants, combined
the importance of reducing dust with good control and maintenance
emissions as much as is technically • the storage of our raw materials in practices we have adopted, has allowed
and economically feasible. warehouses and/or silos (stockpiling our plants to maintain the average dust
of dusty materials in open areas is emissions at the stacks in a range
To achieve this, all our plants have avoided and undertaken only in between 20 and 30 mg/Nm3.
been designed and provided with case of abnormal or emergency This is well below the typical regulatory
state-of-the-art dust control equipment operating conditions); threshold limits and the international
including bag house filters and best standards (50 mg/Nm3).
electrostatic precipitators. • handling of raw materials and
intermediate and final products by Massimo Bettanin
In addition to the control measures means of conveyors completely Group Chief, HSSE
adopted for the stack emissions, we closed and provided with bag house 25th February 2019
have developed and implemented filters at the transfer points; and
specific programmes to mitigate the
potential impact resulting from fugitive • continuous dust suppression activities
emissions of dust. by water spray and use of binding
material on internal roads both at the
plants and quarries.

Water preservation in South Africa Both industries, which have a major impact on the region’s
economy, are largely dependent on the area’s available
Although the cement industry is not a large user of water, groundwater resources.
we recognise the need to reduce the amount we use,
conserve local supplies of water and ensure that we do The Aganang plant has been designed in such a way so
not pollute local land or rivers. as to drain all storm water falling in the process areas into
In South Africa, Dangote Cement is committed to reducing concrete-lined canals and pathways leading to a single
its water impact for the benefit of its local community. Our discharge point, where the wastewater is further directed
Aganang facility, situated approximately 40km west of the into two return water dams.
town of Lichtenburg in the North West Province, sits in an
area well known for both its agriculture and its cement. The plant has three authorised dams: a borrow pit of
275,000m3 and two return water dams, each with storage
capacity of 45,000m3.

The borrow pit, which is situated in the mining area,
collects almost 190,000m3 per annum of water that is
being used for dust suppression. About 122,500m3
volume of water from the return water dams is recycled
and reused as process water, reducing our need for
boreholes. This means that we take far less groundwater,
which can instead be used by local communities for
agricultural activities.

This is part of Dangote Cement’s commitment to reduce
the water footprint of its operations.

AnAnnunaul aRleRpeoprtor2t021081D8 aDnagnogtoeteCCeemmeenntt PPllc 63

Strategic report

Financial

Delivering strong
and sustainable
returns for our
shareholders

KPIs

Revenue up 11.9% EBITDA up 12.1% Dividend per share up 52.4%

₦901.2B ₦435.3B ₦16.00

2018 ₦901.2B 2018 ₦435.3B 2018 ₦16.00
2017 ₦805.6B 2017 ₦388.1B 2017
2016 ₦615.1B 2016 2016 ₦10.50
₦257.2B ₦8.50

Revenue growth was driven by higher EBITDA rose with increased revenues The Board has proposed a dividend
cement sales volumes in Nigeria and higher efficiency of ₦16.0 per 50 kobo share, up 52.4%
and better pricing across our key on the dividend for 2017.
Pan-African operations.

64 Dangote Cement Plc Annual Report 2018

01 02 03 04

As the largest public company in Nigeria and one
of only seven companies with a Premium Listing on
the Nigerian Stock Exchange, we are committed to
setting a strong example by applying International
Financial Reporting Standards and ensuring our
adherence to best practices in prudent financial
management through structures and policies that
consistently comply with all relevant laws and
regulations in the countries in which we operate.
By maintaining our profitable financial growth, which
in turn creates direct and indirect contributions to
the economic development of our host countries,
we can quantify our financial impact as our gross
value added and our return on equity, both of
which increased in 2018.

Operating cash flow Return on capital invested

₦375.3B 27.1%

Dangote Cement generated ₦375.3B cash from In 2018, Dangote Cement’s ROCE was 27.1%
operations in 2018 (2017: 26.8%)

“ The strong financial performance we
achieved in 2018 has enabled us to pay
a good dividend and invest in our future.”
Dickson Boko

SAP Functional Support Consultant

Annual Report 2018 Dangote Cement Plc 65

Strategic report A record
financial
Financial review performance

Brian Egan 31st December 31st December
Group Chief Financial Officer 2018 2017

Financial highlights ’000 tonnes ’000 tonnes

Year ended 14,178 12,724
9,370 9,365
Volume of cement sales
Nigeria (13) (174)
Pan-Africa
Inter-company sales 23,535 21,915
Total cement sold
31st December 31st December
Year ended 2018 2017

Revenue by region ₦’million ₦’million
Nigeria
Pan-Africa 618,301 552,364
Inter-company sales 283,262 258,444
Total revenue
(350) (5,226)
Year ended
9 01, 213 805,582
EBITDA
EBITDA margin 31st December 31st December
Operating profit 2018 2017
Operating margin
Profit before tax 435,261 388,147
Earnings per ordinary share (Naira) 48.3% 48.2%
Dividend per share (Naira)
Total assets 338,698 304,208
37.6% 37.8%
66 Dangote Cement Plc Annual Report 2018
300,806 289,590
22.83 11.65
16.00 10.50

1,69 4,463 1,665,883

01 02 03 04

Group revenue increased by 11.9%, from ₦805.6 billion to Administration and selling costs
₦901.2 billion, driven by increased volumes in Nigeria and a 9.5%
increase in revenues per tonne in Pan-African operations. Year ended 31st December 31st December
2018 2017
Cement volumes sold by Nigerian operations increased by
11.4%, with revenue from our Nigerian operations increasing ₦’million ₦’million
by 11.9% from to ₦552.4 billion to ₦618.3 billion.
Administration and selling costs 189,426 155,297
Sales to domestic customers in Nigeria increased by
11.7% from 12.0Mt to 13.4Mt, with the remaining 0.76Mt Total administration and selling costs rose by 22.0% to
being exported. ₦189.4 billion, mostly as a result of higher sales and associated
distribution costs in Nigeria, which also include increased
Full year Pan-African volumes remained broadly constant at export sales from Nigeria whose delivery costs are higher.
nearly 9.4Mt, with lower volumes in Ethiopia, Ghana and Haulage expenses in Nigeria increased by ₦10.2 billion to
Tanzania being offset by increases in Zambia and Senegal. ₦56.7 billion from ₦46.5 billion. Haulage costs in Pan-Africa
increased by ₦3.2 billion, representing an 11.3% increase.
The increase in revenue per tonne in Pan-Africa was mainly
the result of depreciation of the Naira, driving higher Naira The depreciation also contributed to the overall increase in
values when revenue was converted into Naira, as well as Pan-African operating costs when these were converted to
price adjustments in some countries. Naira. The average exchange rate and year-end exchange rate
for the main currencies applied are as shown in the notes to
Pan-African revenue constituted 31.4% of total Group revenue the financial statements.
(2017: ₦258.4 billion, 31.9%).
Profitability
Manufacturing and operating costs 31st December 31st December
Year ended 2018 2017
Year ended 31st December 31st December
2018 2017 EBITDA ₦’million ₦’million
Depreciation and amortisation
₦’million ₦’million Operating profit 435,261 388,147
(96,563) (83,939)
Materials consumed 122,581 111,559 338,698
Fuel and power consumed 133,528 111,569 304,208
Royalties paid
Salaries and related staff costs 1,134 1,136 EBITDA by region 31st December 31st December
Depreciation and amortisation 31,557 26,713 2018 2017
Plant maintenance costs 64,544 59,598 Nigeria
Other production expenses 29,562 26,848 Pan-Africa ₦’million ₦’million
Increase in finished goods and 14,653 Central costs and inter-company
work in progress 9 ,19 9 Total EBITDA 39 7,377 360,759
(786) 49,062 38,276
(8,79 4) (11,178) (10,888)
351,290
Total manufacturing costs 383,311 435,261 388,147

Group manufacturing costs increased by 9.1%, mostly as Group earnings before interest, tax, depreciation and
a result of increased volumes in Nigeria. Manufacturing amortisation (EBITDA) increased by 12.1% to ₦435.3 billion,
costs in Nigeria increased by 7.4% from ₦158.6 billion to at a margin of 48.3% (2017: ₦388.1 billion, 48.2%) as a result
₦170.3 billion, on the back of the 11.4% increase in sales of the increased volumes in Nigeria and better prices per
volume for 2018. tonne achieved by Pan-African operations.

Although Pan-African volumes remained constant, manufacturing Excluding eliminations and central costs, EBITDA increased
costs increased by 10.6% from ₦192.7 billion to ₦213.0 billion, by 10.2% in Nigeria, to ₦397.4 billion at a margin of 64.3%
mainly due to exchange rate impacts as well as input (2017: ₦360.8 billion, 65.3%).
price adjustments.
Despite level volumes, Pan-African EBITDA rose by 28.2%
The Nigerian Naira traded at ₦359/$1 at the end of 2018 to ₦49.1 billion, at 17.3% margin (2017: 14.8%), driven by
compared to ₦331/$1 at the end of 2017, a decline of 7.8%. better pricing that helped to offset losses in Tanzania, Congo
and Ghana.

Operating profit of ₦338.7 billion was 11.3% higher than the
₦304.2 billion in 2017, at a margin of 37.6% (2017: 37.8%)
driven by higher profitability in Nigeria.

Annual Report 2018 Dangote Cement Plc 67

Strategic report

Financial review continued

Interest income/expense and similar charges Financial position

31st December 31st December As at 31st December 31st December
2018 2017 2018 2017
Property, plant and equipment
₦’million ₦’million Other non-current assets ₦’million ₦’million
Intangible assets
Interest income 11,323 9,136 Total non-current assets 1,171,864 1,192,140
Net exchange gain — 26,79 0 Current assets 87,79 2 57,089
Cash and bank balances 5,969 6,355
Finance income 11,323 35,926 Total assets
Non-current liabilities 1,265,625 1,255,584
Exchange loss (8,112) — Current liabilities 261,9 42
Interest expense (41,666) (52,711) Debt 166,89 6 241,912
Total liabilities 168,387
Net finance income/(expense) (38,455) (16,785) 1,69 4,463
1,665,883
Interest income increased by 23.9%, mainly as a result of higher 86,619
average cash balances and improved interest rates in Nigeria 285,930 121,153
and Ethiopia. 335,301
707,850 391,276
During the year to December 2018, the Nigerian Naira was 372,094
devalued from about ₦331/$1 to ₦359/$1. The devaluation
resulted in net exchange gains from inter-Group assets and 884,523
liabilities that do not eliminate in full on consolidation in the
Nigerian operations. In 2018, this exchange gain was outweighed Non-current assets increased from ₦1,255.6 billion at the end
mainly by the exchange losses from Pan-African operations of 2017 to ₦1,265.6 billion at 31st December 2018. This was
that use the CFA, as well as in Sierra Leone and Ghana, mainly the result of the increase in deferred tax assets
resulting in a net exchange loss in 2018 compared to a net following the approval of Pioneer tax exemption as well as
exchange gain in 2017. payments for fixed assets under construction. This was
partially offset the depreciation charge for the year of ₦95.6
The effective interest rate on borrowings was 11.14%. billion.

Taxation 31st December 31st December Additions to property, plant and equipment were ₦88.6 billion,
Tax credit/(charge) 2018 2017 of which ₦61.6 billion was spent in Nigeria and ₦27.0 billion
in Pan-African operations.
₦’million ₦’million
As detailed in the tax section above, a provision of
89,519 (85,342) ₦133.7 billion was reversed, resulting in the decrease
in both current and non-current liabilities.

In prior years, we made a tax provision on profits earned from
Ibese production lines 3 & 4 and Obajana production line 4
on the basis that they were yet to obtain approval for tax
exemptions under the Pioneer Status Incentive. Approval
from the NIPC was obtained in 2018 and the provision of
₦133.7 billion was reversed resulting in the tax credit of
₦89.5 billion.

The underlying effective tax rate for Nigerian operations
excluding the one-off adjustment was 12.07%.

The Group’s profit for the year was up 91.1% to ₦390.3 billion
(2017: ₦204.2 billion). As a result, earnings per share increased
by 95.9% to ₦22.83 (2017: ₦11.65).

68 Dangote Cement Plc Annual Report 2018

01 02 03 04

Movement in net debt

Year ended Cash Debt Net debt
₦’million ₦’million ₦’million
As at 1st January 2018
Cash from operations before working capital changes 168,387 (372,094) (203,707)
Change in working capital 424,416 — 424,416
Income tax paid (41,412) — (41,412)
Additions to fixed assets (11,163) — (11,163)
Change in non-current prepayments and payables (88,623) — (88,623)
Other investing activities (42,422) — (42,422)
Net interest —
(796) — (796)
Net loans obtained (repaid) (35,808) (35,808)
31,109
Dividend paid (31,109) —
Other cash and non-cash movements (net) —
(178,925) 5,684 (178,925)
As at 31st December 2018 4,351 10,035
(335,301)
Cash of ₦424.4 billion, generated from operations before changes 166,89 6 (168,405)
in working capital, was 11.8% ahead of the ₦379.7 billion
generated in 2017. After net investment of ₦41.4 billion on Capital expenditure was mainly comprised of the construction
working capital and tax payments of ₦11.2 billion, the net of new Nigerian and Pan-African plants, as well as improvements
cash flow from operations was ₦375.3 billion. in our energy efficiency in Tanzania.

Financing outflows (excluding overdrafts) of ₦257.1 billion Recommended dividend
(2017: ₦190.6 billion) were reflected in net loans repaid of On 25th February 2019, the Directors recommended an
₦32.3 billion, interest paid of ₦45.8 billion and a dividend increased dividend of ₦16.00 per share (2017: ₦10.50)
payment of ₦178.9 billion. for approval at the Annual General Meeting scheduled for
17th June 2019. The proposed dividend is 52.4% higher
Cash and cash equivalents (net of bank overdrafts used for than for the 2017 financial year and will result in a total
cash management) decreased slightly from ₦161.8 billion dividend payment of ₦272.6 billion (2017: ₦178.9 billion).
at the end of 2017 to ₦159.0 billion at 31st December 2018.
With net loans repaid at ₦32.3 billion, net debt decreased Going concern
by ₦35.3 billion from ₦203.7 billion at the end of 2017 to The Directors continue to apply the going concern principle
₦168.4 billion at the end of 2018, giving a net debt to EBITDA in the preparation of the financial statements.
ratio of 0.39x, reflecting the continuing strong cash generation
achieved by the Group and improving its already healthy After considering the liquidity position and the availability
balance sheet position. of resources, the Directors concluded that there are no
significant threats to the Group’s going concern capabilities.
Capital expenditure by region
The Directors believe that the current working capital is sufficient
Nigeria Nigeria Pan-Africa Total for the operations and the Group generates sufficient cash
Senegal ₦million ₦million ₦million flows to fund its operations.
Cameroon
Congo 61,615 — 61,615 Borrowings are mainly to fund the expansion projects.
Ghana — 794 794
Côte d’Ivoire — 1,043 Brian Egan
Sierra Leone — 136 1,043 Group Chief Financial Officer
South Africa — 481 136 25th February 2019
Ethiopia — 9,416 481
— 890
— 297 9,416
— 1,327 890
297
Tanzania — 10,586
1,327
Zambia — 671
Other — 1,367 10,586

Total 61,615 27,008 671
1,367

88,623

Annual Report 2018 Dangote Cement Plc 69

Strategic report

Institutional

Building a
world‑class
institution based
upon governance
and transparency

KPIs Board diversity Board policies

Independent Directors 2 22

6 W2i0th18just two female directors, D2a01n8gote Cement’s Board of Directors
Dangote Cement is committed to is governed by 22 separate Board
A2t01th8e end of 2018, Dangote Cement increasing the diversity of its Board. Policies, which are detailed on
had six independent directors, out pages 202 and 203.
of a total of 16 Board members.

70 Dangote Cement Plc Annual Report 2018

01 02 03 04

Effective corporate governance is the force that
drives our ambition to build a successful and
sustainable company. Balancing the needs of our
internal and external stakeholders, it establishes
our corporate values and provides guidance on
the way we do business, driving high levels of
performance and encouraging trust that we mean
what we say. By promoting a culture of performance
and transparency that can truly be described as
“world class”, we aim to encourage investment
that we can deploy to the benefits of all our
stakeholders and the economies and societies
in which we operate.

Institutional Investor SON Awards
Institutional Investor
Emerging EMEA
Executive Team

Five top-three rankings MANCAP certification

“T he success of any organisation depends
on the ability of its Board of Directors
to set a good example and demonstrate
a clear commitment to doing things right
and doing the right things.”

Cherie Blair CBE, QC
Independent Non-Executive Director

Annual Report 2018 Dangote Cement Plc 71

Strategic report

Balancing risk and
reward for success

Q&A with Dr Adenike Fajemirokun

Q Q Pan-African margins by the lack of
power capacity in Tanzania, but are
How does risk management How does risk management now building our own power station
help to create value? guide business strategy at a so we are self-sufficient.
high level?
A Another good example is our delivery
A fleet. We buy lots of trucks for cement
It is a natural and desirable delivery because in many countries
entrepreneurial instinct to take If you look at Dangote Cement there is no reliable third-party logistics
risks in order to create wealth. The we have a high degree of business capability, so having our own fleet helps
purpose of risk management is to integration and that is driven by the us reach our customers more effectively.
temper this instinct with pragmatic realities of doing business in Africa,
thinking and analysis, so that all where certain risks and challenges All of the initiatives above can be seen
potential risks can be identified, exist. For example, fuel supplies as good risk management initiatives,
assessed and, where possible, can be disrupted, as happened with but in fact they are also sources of
mitigated or avoided completely. our gas supplies some years back, competitive advantage in many of
We cannot eliminate all the risks and this drove us to adopt a coal our markets.
we face, but we can certainly mining strategy in Nigeria. In fact,
prepare for them. If we failed to do our use of own-mined coal not only Q
that, we would not only squander improved our fuel security but also
opportunities for growth, but risk helped us to reduce our foreign What is the outlook for risk
incurring losses and the destruction exchange risk. management at Dangote Cement?
of shareholder value.
In Nigeria and elsewhere there A
Q is little or no grid power, so we
mitigate this risk by building our The need for effective risk
What are the biggest risks own power stations. We have seen management is very clearly
facing Dangote Cement? the problems this created for our understood at the highest level of the
Company and will continue to be
A supported accordingly.

The biggest risks we face are the
large-scale macroeconomic and
social risks over which we have
no control. We cannot control a
country’s economic performance,
its currency or its political and social
environment, but we can certainly
analyse them and develop our risk
management strategies accordingly
to guide our operational strategies
for production, marketing
and distribution.

72 Dangote Cement Plc Annual Report 2018

01 02 03 04

Risk management

Dr Adenike Fajemirokun The risk management process
Group Chief Risk Officer We believe the identification and
management of risks are central to
Improving risk achieving the corporate purpose of
management creating long-term shareholder value,
as demonstrated by our fit-for-purpose
Good risk management is essential approach to risk management. The
for the creation of a robust institutional principal aim of Dangote Cement’s risk
framework that enables us to deliver management governance structure and
a long-term and sustainable increase internal control systems is to identify,
in value for our stakeholders. evaluate and manage risks with a view
to enhancing the value of shareholders’
investments and safeguarding assets.

Our risk management process is
disciplined and methodical to ensure
value addition and value protection for
the Group. The process ensures the
appropriate ownership of risk and
accountability of all stakeholders in the
risk management value chain whilst
ensuring collaboration between risk
management and process owners
across the business. Measurement
of risk takes into consideration our
risk appetite tolerance limits to avoid
misrepresentation of our risk profile.

Risk identification
and assessment
Our approach stresses that good risk
management starts with the right
conversations to drive better business
decisions. Hence, we embed accountability
for managing risk into our business
structures. Procedures for identifying
risks are applied at department, country
and group levels.

Qualitative and quantitative tools
deployed to manage this process
effectively across the organisation
include the conduct of risk and control
self-assessments, key risk indicator
monitoring and loss incident reporting.
These processes are supplemented with
ad-hoc on-site assessments or incident
assessments when unexpected high
risks are envisaged or occur.

Annual Report 2018 Dangote Cement Plc 73

Strategic report

Risk management continued

Risk measurement Risk management process
and prioritisation
This requires the quantification of the Group strategy and business planning
consequences of potential risks or Risk appetite tolerance limits
actual risk incidents for the proper
understanding of risk taking or risk Risk identification and assessment
exposure by relevant stakeholders. Risk measurement and prioritisation
Dangote Cement’s overall risk rating
is based on the severity of impact Risk control and reporting
or damage from each specific risk, Risk monitoring
multiplied by its probability of occurrence.
Group risk management oversight, system and tools
Risk control and reporting
Following proper identification, Risk analysis and mitigation
quantification and treatment of existing
and potential risks, mitigation strategies Assess and   Identify risk Plan action Implement Measure,
are recommended, implemented, analyse control and
monitored and reported to the Executive
Committee on a monthly basis and monitor
to the Board on a quarterly basis.
Where necessary, special risk reports
are sent to relevant stakeholders
on a need-to-know basis. The Audit,
Compliance and Risk Management
Committee reviews risk reports and
approves the implementation of
recommended risk control measures.

Risk monitoring and controls, within the criteria set by the Compliance and Risk Management
The Group Risk Management department, second line of defence. It continuously Committee and Board-level forums
headed by the Group Chief Risk Officer, monitors risk positions and reports of Dangote Cement subsidiaries, the
is responsible for coordinating all the risk inherent risks to relevant stakeholders. main Board of Dangote Cement receives
management processes implemented regular information in respect of the risk
across the Group and ensures that risk The second line of defence comprises profile of the Group, and has ultimate
controls are duly implemented. Where risk and compliance employees and responsibility for risk appetite and
risk controls remain outstanding, the oversees the first line, setting the limits, capital plans.
department ensures timely escalation rules and constraints, consistent with
to relevant approving authorities for the the risk appetite of the Group. It ensures Risk appetite
required budgetary approvals or control a holistic approach to risk management All decisions must balance risk and reward
modifications. The risk monitoring and risk reporting. to ensure all activities are economically
process sometimes leads to the profitable after due consideration of
identification and assessment of new The third line of defence comprises risk Dangote Cement’s risk appetite is
risks that are then analysed using the Internal Audit employees, providing considered at all times when making such
process flow previously described. independent assurance to the Board decisions. Our Board has responsibility
and Executive Management. The Legal for determining the level of risk that will
Three lines of defence function does not sit in any of the three be taken. The Board determines the
Our risk culture in Dangote Cement lines, but supports all three levels of overall strategic direction for the
is driven by key principles embedded defence and plays a role in overseeing business and as part of this process
in our Enterprise Risk Management legal risk. determines the Group’s risk appetite.
Framework. These principles are built
around the “three lines of defence”. The Legal function is also subject to Risk appetite defines the level of risk we
oversight from the Risk and Compliance are willing to take as a business across
The first line of defence comprises the functions with respect to the management the different risk types, whilst considering
revenue-generating and customer-facing of operational risks. Together with a varying levels of financial and non-financial
areas, alongside all associated support governance process through the Audit,
functions. The first line identifies the
risks, and sets the policies, standards

74 Dangote Cement Plc Annual Report 2018

01 02 03 04

Risk management

Dangote Risk reporting escalation and treatment
Cement Board
Audit, Compliance and Risk Management Committee
Overall risk • Approves risk management framework and applicable policies
supervision • Approves methodologies for management of strategic risk
01 03 • Approves the Dangote Cement risk management strategy

01 02 and risk appetite
• Supervises and monitors Dangote Cement's risk appetite
Board Senior Management front office 02
• Promote risk culture and desired risk behaviour Group Chief Risk Officer
Risk Management department • Group-wide, super-divisional responsibility for
in decisions being made • Understand business dynamics and
• Ensure macro and micro risk management by management of all risks
complexities for apt risk management • Comprehensive monitoring, analysis and reporting on risk
limits monitoring for acceptable risk exposures • Engage all stakeholders for timely redress • Organisation of day to day risk management
• Continuously monitor positions and report
of risks identified Risk Management Function
inherent risks to relevant stakeholders • Ensure a holistic approach to risk management • Regional Risk Management Nigeria
• Regional Risk Management Pan-Africa
and risk reporting
Specialised Risk Sub-Committees
• Ad-hoc committees set up to tackle specific risk issues

03

Audit
• Understand the business of Dangote Cement

and its prevalent or likely risks
• Ensure that business owners and risk

management staff identify and control risks
in a timely and optimal manner by providing
independent oversight on policies and
procedures deployed organisation wide

stress. Risk appetite is key for our translating specific value drivers into The management of risk is embedded
decision-making process, including series of limits and tolerance levels in each level of our business, with staff
business planning, operations, new ranging from Insignificant to Catastrophic. being responsible for the understanding
product reviews and approvals alongside Tolerance levels define escalation and management of these risks. This is
business change initiatives. Following requirements that enable appropriate carried out by specifying responsibilities
the Board’s approval of the risk appetite actions to be considered and according to the “three lines of defence”
statement, the year under review saw the implemented as required. with each line of defence overseen by
Risk Management function commence responsible personnel, resulting in
the process of quantification of the risk By applying scale limits across all our preserving a strong design, implementation,
appetite statement hinged on converting strategic and operational activities, we remediation, monitoring and testing
the Group’s qualitative risk appetite control specific activities that may have framework focused on independence
statement to a series of metrics, thereby material concentration and impact on and robust governance.
our business.

Evidence of principal risks occurrence

R1 Threat to Dangote Cement's strategic expansion across Africa due to Inherent risk
restricted FX availability in Nigeria Residual
High
R1 Impact of truck unavailability from inadequate planning for the receipt and
R2 management of spare parts and tyres
R7
R5 R6 R9 R8

R2 R3 R3 Concentration risk following from annual volumes lifted by few key distributors

Likelihood R5 R4 R2 R4 IT Infrastructure not robust enough to support future business expansion
Medium R1
R3 R5 Threat from political instability and security threat across some of our key
markets in Sub-Saharan Africa

R7 R6 R4 R6 Threat of margins shrinking in some of our key markets due to increases in
R9 R8 commodity prices globally, notably crude oil and coal

R7 Underinsurance of assets Group-wide

Low R8 Threat to our HSSE goals and targets for safety

Low Medium High R9 Credit risk of financial loss arising from non-payment on credit sales to
Impact distributors on the Special Unsecured Credit Scheme

Annual Report 2018 Dangote Cement Plc 75

Strategic report

Principal risks

Principal risks linked to strategic objectives

Strategic objective Principal risks Mitigation efforts

1. Focus on optimising • Impact of political instability or social • In-country security personnel to ensure
the efficiency of our unrest that disrupts our ability to protection of staff and assets
existing assets to manufacture and/or distribute cement
increase output and • Constant monitoring of local situations
lower costs • Fuel supply disruption
• Ongoing strategies for business continuity
• Unscheduled operational downtime and crisis management

• IT disruptions through inadequate • Greater control of own fuel supply chain,
infrastructure or training for example our mining initiatives in Nigeria

• Increase in input costs, especially for • Selection of more reliable fuel suppliers
key imports such as fuel
• Constant monitoring of systems and
• Underinsurance of assets regular maintenance thereof

• Financial loss due to non-payment on • Improvements in spare parts inventory
credit sales to distributors on Special and management
Unsecured Credit Scheme
• Develop and maintain appropriate IT
systems to support such a large enterprise
and ensure proper use and training for use

• Review of critical systems deployment and
use, with particular attention to those that
are inadequate for purpose, or being
significantly upgraded

• Use financial strength to drive
buying power

• Group-wide revaluation of assets

• Improvements in systems to monitor sales
and payments, with auto-blocking of
delinquent accounts to limit further losses

76 Dangote Cement Plc Annual Report 2018

01 02 03 04

Strategic objective Principal risks Mitigation efforts

2. I ncrease our • Truck unavailability due to inefficient • Investment in new trucks, improvements
leadership of management, accidents, lack of to logistics management systems, better
existing markets maintenance and spare parts training for drivers and mechanics,
and be the number constant monitoring of truck condition,
one or two supplier • Competitive pricing pressures better standards of maintenance at depot
with at least 30% and reduced turnaround times on loading
market share • Concentration risk and after delivery

• Operational disruption causing lack • Use of third-party logistics where available
of product in market and appropriate

3. Tap into high-value • Border shutdowns or bureaucracy • Achieve market share sufficient to be
export markets, causing delays “price maker”
generating useful
foreign currency • Lack of awareness in local markets • Focus on product quality, cost and service
that we can deploy as differentiators
outside of Nigeria • Truck unavailability or inefficient logistics
• Improve marketing and sales reach by
activating more retail outlets

• Develop broader product range to address
specific needs

• Increase own delivery capability, rather
than rely on third-party collections

• Widen distribution to reduce reliance on
larger distributors for significant volumes

• Develop retail channels, for example
through Container Programme in Nigeria,
or by increasing depot network

• Improved incentivisation of sales staff and
key distributors, with clear performance
targets

• Initiatives as detailed above in strategic
objective 1

• Improve customs procedures with
advance notice of transit and better
engagement with local customs
infrastructure

• Improved marketing and brand building
in territories where we do not produce
or import

• Initiatives as detailed above in strategic
objective 2

Annual Report 2018 Dangote Cement Plc 77

Strategic report

Principal risks continued

Strategic priorities linked to principal risks continued

Strategic objective Principal risks Mitigation efforts

4. E xpand prudently • Continuing foreign exchange controls in • Continue to drive organic FX generation
into attractive and Nigeria prevent investment outside the through exports from Nigeria
high-growth cement country; lack of available foreign currency
markets across • Improve repatriation of non-Nigerian
Sub-Saharan Africa • Entry of major producers increases profits back to Nigeria
competition, reduces prices and
creates overcapacity • Work with regulators to source FX
according to our needs

• Assess availability/desirability of external
funding, e.g. through international debt
or other sources of financing

• Continuous monitoring of potential
markets, with rigorous criteria set for
market entry

5. Adhere to high • Harm to staff and/or assets, or other • Constant focus upon improving community
standards of disruption caused by poor community relations through improved engagement
corporate relations, thereby impacting revenues, before and during operations and increasing
governance and increasing costs and creating reputational opportunities for community employment
improve our efforts and potential legal challenges for and involvement to mutual benefit
in sustainability the Company
• Constant focus on improvements in health
• Harm to staff and/or assets caused and safety through deployment of best
by poor operational health and safety practices, better training for safety
management, resulting in injury awareness, improved reporting and
and damage adoption of the 15 Golden Safety Rules

• Reputational damage caused by • Improved environmental awareness,
environmental or safety incidents monitoring, reporting and mitigation
at plants, or during transport of threats

• Stakeholder concerns about • Improved driver training to reduce accidents
corporate governance
• Adoption of international best practices in
corporate governance, including increased
number of Independent Directors with
global experience

• Continuous and transparent engagement
with investors and other external
stakeholders

78 Dangote Cement Plc Annual Report 2018

01 02 03 04

Annual Report 2018 Dangote Cement Plc 79

Corporate governance

Chairman’s introduction to corporate governance

Aliko Dangote GCON Dear shareholders,
Chairman Dangote Cement’s vision is to be a
global leader in cement production,
Improving respected for the quality of our goods
governance and services and for the way we conduct
our business.
A successful business is one that
is driven by strong, yet supportive At the same time, we are committed
corporate governance that guides to achieving sustainable growth that
its long-term strategy for profitable delivers financial returns and other
and sustainable growth. positive impacts for all our stakeholders.

We recognise that there is a strong link
between good corporate governance
and creation of long-term stakeholder
value and believe it is an essential
foundation upon which to build a
sustainable future for our Company.

Good governance drives all aspects
of the business, not just the behaviour
of our Board. It guides our long-term
strategy for growth and profitability,
enabling us to create and increase
shareholder value.

Beyond financial performance, it sets out
principles by which we deal with all our
stakeholders, notably our colleagues,
our suppliers, our customers, our host
communities and those who regulate
our activities.

Dangote Cement is the largest public
company in Nigeria, with a market
capitalisation that is typically around
28% of the total capitalisation of the
Nigerian Stock Exchange (NSE).

We are listed on the NSE’s Premium
Board, which we joined as a Founder
Member in 2015 and which even now
contains just seven companies.

It is therefore my pleasure to introduce
this Corporate Governance Report for
2018, which sets out the principles by
which Dangote Cement is governed.

It describes the activities of the Board
and its Committees during the year,
and shows how these activities are
themselves determined by international
best practices or by regulation such as
the Securities and Exchange Commission’s
Code of Corporate Governance for Public
Companies in Nigeria (“the SEC Code”).

80 Dangote Cement Plc Annual Report 2018

01 02 03 04

Corporate governance guidelines The Board is accountable for the Between them, they bring a wealth of
Our Board of Directors has established Company’s activities, strategy, risk experience to bear on providing strategic
Corporate Governance Guidelines that management and financial performance direction for the Company and ensuring
provide a framework for the effective as well as the Company’s system of its business goals are achieved.
governance of the Company. The guidelines corporate governance. Board members
address matters such as the Board’s are representatives of the stakeholders As the Chairman of the Board, I am
mission, its structure and Committees, and are responsible for establishing accountable to the Board and act as a
the responsibilities of Directors, their policies for corporate management and direct liaison between the Board and
independence and remuneration, the for safeguarding stakeholder interests. Management of the Company through
role and appraisal of the Group Chief the Group Chief Executive Officer. I
Executive Officer and our strategy for The Board sets the strategic objectives provide leadership and am responsible
Board and Executive succession. for the Company, determines investment for overall operation and governance of
policies, agrees performance criteria and the Board. I manage the business of the
The Board regularly reviews developments delegates to management the detailed Board and set its agenda in consultation
in corporate governance and updates planning and implementation of those with the Group Chief Executive Officer
the Corporate Governance Guidelines objectives and policies with due and the Company Secretary, with
and other governance materials as it consideration for the Company’s contributions from other Board
deems necessary and appropriate. appetite for risk. members. I also ensure that agendas
strike the right balance between
Our governance policies and practices are The Board also monitors compliance operational performance and strategic
designed to ensure that our business is with policies and achievement against matters. I facilitate and encourage active
conducted in a fair, honest and transparent objectives by holding management engagement of Directors, particularly
manner that conforms to the highest accountable for its activities through on matters of risk and strategy or other
ethical standards, enables us to build monthly and quarterly performance major proposals, by drawing on their
strong relationships with customers and reporting and forecast updates. skills, knowledge and experience.
suppliers, guarantees the welfare of all our
employees, takes care of our environment In addition, the Board receives regular The positions of the Chairman and Group
and gives us the opportunity and resources presentations enabling it to explore Chief Executive Officer are separate and
to implement a commendable programme specific issues and developments in held by different individuals in line with
of social investment for the good and greater detail. The Board also obtains Section 5.1(b) of the SEC Code.
continued sustainability of the periodic assurance on the integrity of the
communities in which we operate. Company’s financial and internal control Joe Makoju is Group Chief Executive
policies, while seeking to institute better Officer and is responsible for the
The Board of Directors structures for them. execution of strategy and the day to day
At the heart of our corporate governance management of the Group, supported
framework is our Board of Directors, The Board Charter sets out guidelines on by the Executive Committee (ExCo),
which is responsible for the efficient Board composition, meeting procedures which he chairs.
execution of corporate strategy based and guidelines on how the Board is to
upon sound principles of corporate manage its affairs. The Board comprises myself, the Group
governance and for ensuring the Chief Executive Officer, the Group Chief
long-term health and overall success Some matters are dealt with exclusively Financial Officer and twelve Non-Executive
of the business and its financial strength. by the Board. These include approval Directors. Of the Non-Executive Directors,
of financial statements, the Company’s five are considered to be Independent
The Board serves as the ultimate business strategy, the annual capital Non-Executive Directors (following the
decision-making body of the Company, expenditure plan, major capital projects, resignation of Olusegun Olusanya on
except for those matters reserved to or major changes to the Company’s 31st December 2018).
shared with the shareholders. As Chairman management and control structure,
of the Board, it is my responsibility to material investments or disposals, The Board considers that the
ensure its effective operation both directly risk management strategy, social and Non‑Executive Directors provide good
and through its Committees. The roles environmental policies and treasury policies. governance for the Company as they
and responsibilities of the Board and these effectively and constructively challenge
Committees are clearly documented in Board composition and monitor the success of management
the Board and Committee Charters. As at 31st December 2018 the Board in delivering the agreed strategy within
was composed of 16 people with skills the risk appetite and control framework
Read more on pages 86–90 in manufacturing, finance, engineering, set by the Board.
business and law.

Annual Report 2018 Dangote Cement Plc 81

Corporate governance

Chairman’s introduction to corporate governance continued

Board composition continued The Board reviews the independent acts as Secretary to all the Committees
The Non-Executive Directors bring a status of the Independent Non-Executive and attends all their meetings.
wide range of international experience Directors on an annual basis, in line with
and expertise to the Board. They occupy the requirements set out in the SEC Board Committees
or have occupied senior positions in Code of Corporate Governance. The Board governs the Company
industry, finance or public life and contribute through the operation of Board
significantly to the Board’s decision making. The Independent Non-Executive Committees, accompanied by effective
Directors have consistently provided monitoring and reporting systems.
We consider that the current Board unbiased and independent views to
size of 15 Directors is appropriate for the Board and ensured that minority Each Board Committee has specific
the needs of the business in line with shareholders’ interests are protected. written terms of reference issued by
Section 4 of the SEC Code. We believe the Board. The terms of reference of
that the overall composition of the Board They have continually contributed to Committees are available on our website.
is appropriate, except for the ongoing the overall quality and effectiveness of
need to improve gender diversity, which the Board by providing objective inputs All Committee Chairmen report on the
is being addressed. to strategic issues and decision making, proceedings of their Committee meetings
while ensuring compliance with applicable at the Board meeting for the quarter.
This conclusion has been reached having statutory rules and regulations. The reports of the Board Committee
regard to the independence of character meetings are included in the papers
and the integrity of our Directors and the The Company Secretary distributed to Board members in
collective experience, balance of skills The Board is supported by Mahmud advance of the next Board meeting.
and knowledge they bring to bear in Kazaure, the General Counsel and
fulfilling their duties. Company Secretary, and his Deputy, As at 25th February 2019, the Board
Edward Imoedemhe. has five Committees: Finance and
Independent Directors General Purpose; Audit, Compliance
The Board has assessed the independence They provide support, governance advice and Risk Management; Remuneration
of the Independent Non-Executive and detailed guidance to the Directors with and Governance; Nomination; and
Directors against the criteria set out in respect to their duties, responsibilities and Technical and Operations. Detailed
the SEC Code and has concluded that powers. They also ensure compliance reports from these Committees can
they are all independent in character with procedures and regulations be found on pages 96 to 121.
and judgement. necessary for the conduct of the affairs
of the Board. The Company Secretary

Position Role
Chief Executive Officer
• The Chief Executive Officer manages the Company on
Chief Financial Officer a day to day basis, executing the business strategy in
accordance with our corporate ambitions and vision to
Non-Executive Directors be a global force in cement production. The CEO takes
responsibility for creating, planning, implementing and
integrating the strategic direction of the Company.

• The Chief Financial Officer is responsible for ensuring
sound financial management and planning, and for
coordinating the production of timely and accurate
financial reports and accounts. The CFO is also
responsible for treasury management and economic
forecasting and scenario planning.

• The role of Non-Executive Directors is to oversee the
activities of the Company in terms of its strategy, business
performance, risk appetite and human resources. They
provide guidance to and, if necessary, challenge the
Board and Executive Management on strategy.

82 Dangote Cement Plc Annual Report 2018

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Delegation to Management A summary of the Tenure Policy is Director induction
The Board delegates responsibility for presented below: and development
implementing the Company’s strategy As Chairman, I am responsible for
and for managing the Group to the • Executive Director: An initial term ensuring that induction and training
Group Chief Executive Officer, who is of three years with additional terms programmes are provided for Directors
supported by the Executive Committee, of three years each, subject to based on training needs and gaps
which he chairs. satisfactory performance; identified in consultation with the Director.

The names and profiles of the Executive • Non-Executive Director: An initial They are also expected to take
Management Team can be found on term of three years with additional responsibility for identifying their
pages 32 and 33. terms of three years each, subject individual needs and to take steps
to satisfactory performance; to ensure that they are adequately
Board appointments informed about the Group and their
and re-election of Directors • Independent Non-Executive Director: responsibilities as Directors.
The Board aims to achieve a balance An initial term of three years with
of experience, knowledge and skills additional terms of three years each, The Board has established an Induction
amongst its Directors. subject to satisfactory performance; and Training Policy for Directors and
and Directors receive periodic training and
The Board, through the Nomination induction. Cherie Blair and Sir Michael
Committee, follows a formal, rigorous Non-Executive Directors who are 70 Davis underwent this induction in 2018.
and transparent procedure to select or more years of age are disclosed to
and appoint new Directors. shareholders at Annual General Meetings During the year, the Board also arranged
in line with Section 256 of the Companies briefings and a Board retreat to assist
The Nominations Committee leads the and Allied Matters Act, CAP C20, LFN the Directors in effectively discharging
process in accordance with the Board’s 2004 (CAMA). their duties to the Company. Directors
appointment policy, utilising defined also attended education programmes
Board membership criteria while taking All Directors are required to retire by to refresh and update their knowledge of
into cognisance the existing skills, rotation and stand for reappointment at business operations and best practices.
knowledge and experience of Directors least every three years in compliance with A Board retreat was held in London in
on the Board as well as those of the the provisions of CAMA and Section 19 December to coincide with the final
nominee, including other attributes of the SEC Code. Board meeting of the year.
necessary for the prospective role.
At the Annual General Meeting on The Board is confident that all its members
When considering the appointment 20th June 2018, Devakumar Edwin, have the knowledge, ability and experience
of a new Director, the Board also takes Emmanuel Ikazoboh, Joseph Makoju to perform the functions required of a
cognisance of current directorships on and Dorothy Ufot retired by rotation director of a listed company.
other Boards so as to avoid potential and were presented for re-election
conflict of interest and ensure that to the Board. The re-election of these Board and Committee meetings
Directors will be able to dedicate Directors was ratified by shareholders. Board and Committee meetings are held
the appropriate time and attention in an atmosphere of intellectual honesty
to the Company. At the 2019 Annual General Meeting, of purpose, integrity and mutual respect,
the following will retire by rotation and be requiring reporting of high standards by
The Appointment Policy of the Board is presented for re-election: Aliko Dangote, management and direct, robust and
in line with Section 13.1 of the SEC Code. Abdu Dantata, Olakunle Alake and constructive challenge and debate
Ernest Ebi. among the Company’s Directors.
Upon appointment, a new Director is
issued a letter of appointment that sets Appointment of new Directors Meeting dates for Board and Committee
out the expected time commitment, The Board recognises the need to reinforce meetings are agreed in advance for
tenure, role, responsibilities and its effectiveness by injecting new energy, proper planning and scheduling.
powers of the Director. fresh ideas and perspectives.
Notices of meetings are sent to Directors
The Company has a defined Tenure In this regard, we welcomed Cherie Blair at least 14 days before the meeting and
Policy in line with Sections 19 and 20 and Sir Michael Davis to the Board in Board papers are sent for consideration
of the SEC Code, which regulates the April 2018 and their appointments were by Directors at least a week before the
terms of Directors. ratified by shareholders at the 2018 meeting date.
Annual General Meeting in June 2018.

Between them they bring extensive
experience of global business,
corporate transactions, international
law and governance.

Annual Report 2018 Dangote Cement Plc 83

Corporate governance

Chairman’s introduction to corporate governance continued

Board and Committee meetings A summary of the related-party Board and Directors’ evaluation
continued transactions during the 2018 financial year In line with the provisions of the SEC
Working with the Company Secretary, is disclosed in the table on pages 193–195. Code and in accordance with the Board
I implement an Annual Agenda Plan to Evaluation Policy of the Company, we
assist the Board and its Committees in Review of Governance Framework conduct evaluations of the Board and
discharging their roles and responsibilities and policy formulation individual Directors to help improve
in line with their charters. The Board ensures ongoing review their performance.
of the Company’s Governance
This Annual Agenda Plan is a guide Framework, to ensure that: The process is designed to:
to specify the minimum agenda items
to be considered by the Board and its • Dangote Cement’s governance practices • enhance individual and
Committees at various meetings during accurately reflect recent changes to Board performance;
the year. the business and its structure;
• highlight the balance of skills, knowledge
Board meetings were well attended • the Governance Framework sets out and experience on the Board;
with attendance of Directors exceeding and reinforces the Company’s values;
two-thirds as required by Section 12.2 • assist Directors and the Company
of the SEC Code. Details of Directors’ • the risk and assurance processes are Secretary to identify and sustain
attendances at Board and Committee a robust and integral part of the their strengths;
meetings are shown in the table on Governance Framework; and
pages 212-214. • assist in identifying training and
• the Framework reflects best developmental needs for Directors
Key matters considered in 2018 governance practices. and the Company Secretary;
The Board met seven times during 2018
and at least once every quarter in line Further to these reviews, the Board • comply with the relevant statutory
with Section 12.1 of the SEC Code. approves the formulation of policies that or regulatory requirement and
Details of key matters discussed at are in line with good governance and determine eligibility of Directors
these Board meetings are shown in has taken cognisance of the regulatory to seek re-election;
the table on page 87. and business environment.
• clarify expectations and duties of the
Conflicts of interest and As at 25th February 2019, Dangote Board and individual Directors; and
related-party transactions Cement has a total of 22 approved
The Board maintains robust procedures policies. They are shown in the table • demonstrate accountability to
to ensure that related-party transactions on page 202 and 203. shareholders and other stakeholders.
and potential conflicts of interest are
identified, disclosed and managed. Code of Ethics To ensure that the process is objective,
These procedures include the declaration The Board has formalised a Directors’ independent and fair, we engaged the
of interests in other businesses by Code of Ethics, setting out the standards services of an external facilitator to
Directors on appointment to the Board of conduct expected from Directors. undertake an independent evaluation
and annual self-certification by all of To this end, the Directors attest to a Code of the effectiveness of the Board and
our Directors. of Conduct on a yearly basis. To inculcate its Committees. The evaluation was
good ethical conduct, the Group has conducted by Ernst & Young and
Where it is identified that a related-party also established a Code of Conduct for involved personal interviews with
relationship exists, the Board agrees employees, which has been disseminated Directors and questionnaires.
specific additional procedures to ensure to all levels of employees in the Group
the effective management of potential through the staff handbook. At the end of the review process, we
conflicts of interest. These procedures received a detailed report with several
have been documented in our Conflict Succession planning recommendations, both for short and
of Interest Policy, which is in line with The Board views succession planning long-term implementation. We identified
Section 16 of the SEC Code. as important for business continuity. those which we believed to be of higher
It is acknowledged that with succession priority and commenced implementation.
The Board also receives a quarterly planning, the key job vacancies created
Related-Party Transaction Report due to retirement and resignation would The outcome of the evaluation assists the
showing transactions that have been be filled quickly and without any business Board in determining future information
authorised during the period under interruption. To ensure its success, the relevant to Board and Board Committees’
review and those proposed for review Board has, in line with the Succession composition, responsibilities and
by the Board. Planning Policy, adopted a Succession operations. The Board performance
Plan to ensure that there are programmes appraisers also facilitated a Directors’
in place to provide for the orderly peer assessment, where each Director
succession of Senior Management. is provided with a questionnaire to
appraise the performance of their peers.

84 Dangote Cement Plc Annual Report 2018

01 02 03 04

The evaluation seeks to measure the As Chairman, I also had occasional The Chairmen of the various Committees
perception of Directors of the contribution meetings with institutional investors and I are also available to answer
of their fellow Directors on the Board. to discuss matters of mutual interest shareholders’ questions during
including corporate strategy and our formal proceedings of the Annual
The evaluation of the Executive Directors developments in corporate governance. General Meeting.
assesses their performance as Directors
of the Board, rather than their functional Annual General Meeting The Annual General Meeting to discuss
Executive responsibilities, against set The Annual General Meeting of the this 2018 Annual Report will be held at
criteria. Where a deficiency in a Company is the principal opportunity the Eko Hotel, Victoria Island, Lagos, at
Director’s performance is identified, for the Board to meet shareholders 11.00 on 17th June 2019.
an action plan will be developed and and for me, as the Chairman, to give
implemented for the Director to acquire a progress report on the Company’s I hope the following pages of this 2018
the necessary skills or develop appropriate activities during the year, and provide Annual Report, which outline the work
behavioural patterns. clarifications on issues raised of our Committees during the year, will
by shareholders. be interesting and informative to you as
Upon completion, the results are owners of the Company.
collated and given to the Chairman, who We encourage shareholders to take
in turn provides assessment feedback advantage of this opportunity to engage Aliko Dangote
to each Director. The evaluation provides with our Board and Senior Executives. Chairman
justification for re-election of Directors. Shareholders have the right to ask 25th February 2019
Consequently, the nomination of each questions at the Annual General
Director for re-election occurs after the Meeting, or by submitting them in writing
proper evaluation of the performance to the Company Secretary no later than
of that Director by all other Directors. 24 hours before the start of the AGM.

These processes identify strengths as well The Notice of Annual General Meeting is
as areas that need improvement in the sent to all our shareholders, together
Board and the identified knowledge with explanatory notes or a circular on
gaps, and training programmes for items of special business, at least 21
Directors to attend in the following working days before the AGM is held.
financial year.
It is the Company’s practice to propose
Shareholder engagement separate resolutions on each substantially
As a Board of a Premium-listed company separate issue, including a resolution
on the Nigerian Stock Exchange, our relating to the Report and Accounts.
Board attaches considerable importance This is with the exception to matters
to open dialogue and constructive where CAMA allows more than one item
relationships with shareholders and to be decided by a single resolution.
other stakeholders.

We have a dedicated Investor Relations
team that reports to the Group Chief
Financial Officer. The team is responsible
for building and maintaining long-term
relationships with institutional investors
and equity research analysts, as well
as with private investors. In addition,
it provides feedback to the Board on
market perceptions of the Company.

Extensive communication with investors,
brokers and equity research analysts was
conducted in 2018, through quarterly
results calls, one-to-one meetings, group
meetings, site visits, investor roadshows
and attendance at investor conferences
focused on emerging markets and the
building materials sector.

Annual Report 2018 Dangote Cement Plc 85

Corporate governance

The Board of Directors

as at 31st December 2018

Aliko Dangote GCON Engr. Joseph Makoju Mni, OFR. Brian Egan Olakunle Alake
Chairman Group Chief Executive Officer Group Chief Financial Officer Non-Executive Director
Attendance Attendance Attendance Attendance

Ⅹ

Cherie Blair CBE, QC Sani Dangote Abdu Dantata Sir Michael Davis
Independent Non-Executive Director Non-Executive Director Non-Executive Director Independent Non-Executive Director
Attendance Attendance Attendance Attendance

ⅩⅩⅩⅩⅩⅩⅩ

Ernest Ebi MFR Devakumar Edwin Emmanuel Ikazoboh Fidelis Madavo
Independent Non-Executive Director Non-Executive Director Independent Non-Executive Director Non-Executive Director
Attendance Attendance Attendance Attendance

Olusegun Olusanya* Viswanathan Shankar Dorothy Ufot SAN Douraid Zaghouani
Independent Non-Executive Director Non-Executive Director Independent Non-Executive Director Non-Executive Director
Attendance Attendance Attendance Attendance

Board meetings Key   Not yet joined
were held on the following dates:  Attended    Not attended  Ⅹ   Medical absence 

27/02/18, 19/03/18, 20/04/18, 20/06/18, 19/07/18, 19/10/18, 05/12/18

Board Committees

Nomination Audit, Compliance Finance and Technical Remuneration
Committee and Risk General Purpose and Operations and Governance
Members Management Committee Committee Committee
Committee Members Members Members
Aliko Dangote (Chairman) Members
Ernest Ebi Olusegun Olusanya* Fidelis Madavo (Chairman) Emmanuel Ikazoboh
Olusegun Olusanya* Ernest Ebi (Chairman) (Chairman) Olakunle Alake (Chairman)
Emmanuel Ikazoboh Olakunle Alake Olakunle Alake Abdu Dantata Sani Dangote
Fidelis Madavo Sani Dangote Sani Dangote Ernest Ebi Abdu Dantata
Devakumar Edwin Ernest Ebi Devakumar Edwin Ernest Ebi
Full Committee Emmanuel Ikazoboh Devakumar V G Edwin Douraid Zaghouani Devakumar Edwin
Report 96–97 Fidelis Madavo Emmanuel Ikazoboh Olusegun Olusanya*
Olusegun Olusanya* Fidelis Madavo Dorothy Ufot
Dorothy Ufot Douraid Zaghouani
Full Committee Full Committee
Full Committee Full Committee Report 110–113 Report 114–121
Report 98–105 Report 106–109

* Resigned 31st December 2018.

86 Dangote Cement Plc Annual Report 2018

01 02 03 04

Board activities

Key activities of the Board

Key matters considered Board activities

Appointment of new • The Board, in consideration of its internal processes, policies and best practice, appointed
Directors two new Directors as Independent Non-Executive Directors of the Company. The
appointments will enhance Board effectiveness as well as progress the Board towards its
gender diversity objectives.

Issuance of a Naira bond • The Board considered and approved a ₦300B Naira Bond programme, which will be used
for capital expenditure, working capital and general development.

Issuance of a • The Board approved a capital raising of up to ₦150B through the issuance of a
Commercial Paper Commercial Paper, whether as a standalone transaction or by way of a programme to be
executed in tranches, series or proportions, to be deployed towards capital expenditure,
working capital and general corporate purposes. Two tranches of ₦50B were successfully
issued during the year.

Review and approval • The Board reviewed and approved the Budget for the succeeding financial year.
of a budget

Subsidiary Board • The Board approved the reorganisation of the subsidiaries' Boards in line with regulatory
reorganisation requirements and for operational efficiency.

Key appointment • The Board resolved on the appointment of a Deputy Company Secretary for the Company.
Investor relations
Board and individual • The Board considered and approved the investor relations calendar for 2019.
Director evaluation
• The Board approved the commencement of a Board and individual Director evaluation to
cover the 2019 financial year.

Management trainee • The Board approved the commencement of a graduate trainee scheme to train
scheme participants in general management.

Board and subsidiary • The Board reviewed and approved Board and Committee Meeting dates for the financial
Board meetings year under review.

Approval of financial • The Board reviewed and approved the audited financial statements for 2017 and submitted
statements the same to the shareholders to approve at the Annual General Meeting.
Approval of dividends
• The Board proposed a dividend of ₦10.5 per 50 kobo share for the 2017 financial year,
which was approved by shareholders at the Annual General Meeting.

Control environment • The Board received reports on the control environment, and approved recommendations
of the Committee towards strengthening the efficacy of the control environment.

Appointment of a new • The Board approved the appointment of Joseph Makoju as the Group Chief Executive
Chief Executive Officer of the Company.

Quality/operational • The Board reviewed and approved several initiatives to enhance quality and improve
efficiency operational efficiency in the Company.

HSSE • The Board reviewed and approved systemic and strategic approaches to improve health,
safety, social and environmental matters within the Company and its subsidiaries.

Transport • The Board reviewed and approved strategic approaches to improve transport operations in
the Company.

Quarterly accounts • The Board reviewed and approved unaudited quarterly accounts of the Company.

Annual General Meeting • The Board resolved on the date, venue and other modalities for the Annual General Meeting
of the Company.

Sales and marketing • The Board considered and approved a sales and marketing strategy for the year.

Financing of subsidiaries • The Board considered and resolved to refinance its Pan-African subsidiaries as required.

Potential international • The Board formed an advisory committee to examine the possibility of an international
listing of shares listing of its shares, and to advise upon strategies and practicalities to achieve such a listing.

Annual Report 2018 Dangote Cement Plc 87

Corporate governance

Board of Directors

as at 31st December 2018

Aliko Dangote GCON Engr. Joseph Makoju Mni, OFR. Brian Egan
Chairman Group Chief Executive Officer Group Chief Financial Officer

N Date of appointment Date of appointment
2nd December 2010 27th July 2017
Date of appointment
4th November 2002 Joseph was appointed to the Board of Dangote Brian joined Dangote Cement as Group Chief
Cement in 2010, as a Non-Executive Director. Financial Officer in 2014, having previously been
Aliko is the founder of the Dangote Industries He became Acting Group Chief Executive an Executive Director and Chief Financial
Limited, over which he presides as President. Officer in January 2018, having substantial Officer of Petropavlovsk PLC and of Aricom
He has been the Chairman of Dangote experience in the cement industry. PLC, both of which were listed on the Main
Cement since its formation and is also the Market of the London Stock Exchange.
Chairman of other listed companies owned by He has worked in several world-class
Dangote Industries Limited. He graduated corporations including Shell BP, Blue Circle Prior to joining Aricom, he was Chief Financial
from the Al-Azhar University, Cairo, where he (UK) and WAPCO (now Lafarge Africa), which Officer of Gloria-Jeans Corporation, a leading
studied Business Studies. he led as Managing Director/CEO for a decade Russian apparel manufacturer and retailer. He
before taking up the appointment as Managing has more than 20 years’ international experience
He also obtained Honorary Doctorate degrees Director/CEO of National Electric Power Authority. in senior financial roles with Associated British
from Coventry University in the United Kingdom He also served as Special Adviser (Electric Foods PLC, Georgia-Pacific Ireland Limited
and the University of Ibadan in Nigeria in 2016. Power) to the President, Federal Republic of and Coca-Cola HBC.
He started business in 1978 by trading in Nigeria, under two separate administrations.
commodities, before entering into full scale He also trained as an accountant with KPMG
manufacturing. He is well known for his He has a BSc and an MPhil in and is a member of the institute of Chartered
philanthropic involvement in local and Mechanical Engineering. Accountants in Ireland.
international initiatives to improve healthcare
and social wellbeing.

Abdu Dantata Cherie Blair CBE, QC Devakumar Edwin
Non-Executive Director Independent Non-Executive Director Non-Executive Director

RT Date of appointment AFRT
20th April 2018
Date of appointment Date of appointment
22nd July 2005 Cherie Blair CBE, QC, is a leading international 22nd July 2005
lawyer, arbitrator and mediator, a former judge
Abdu is a Non-Executive Director of Dangote and a committed campaigner for women’s Devakumar was previously the Chief Executive
Cement Plc and an Executive Director of rights. She is the Founder of the Cherie Blair Officer of Dangote Cement, until he resigned as
Dangote Industries Ltd. Foundation for Women, and the Founder and Group CEO on 31st January 2015. Following
Chair of Omnia Strategy LLP, an international 14 years spent in industrial management in
He is also the Chairman of Agad Nigeria Limited, law firm. She is Chancellor of the Asian University India, he joined Dangote Industries Limited in
a trading and transportation company operating for Women, Chancellor Emeritus of the 1992 and has since held several managerial
throughout Nigeria. He is a fellow of the Nigerian Liverpool John Moores University, President positions within the Group.
Institute of Shipping. of the Loomba Foundation, Honorary Vice
President of Barnardo’s and Patron of Scope, He is a Chartered Engineer, holding graduate
He obtained an Executive Programme as well as a number of other charities. and master’s degrees in Engineering from
Certificate in Sales and Marketing from the Madras University, India, and holds a
the Kellogg Senior Management School She serves as an Independent Director on the postgraduate diploma in Management from
at Northwestern University, Chicago. Board of Groupe Renault. She was awarded IITM, Holland, all obtained in 1978, 1980
a CBE in 2013 for services to women’s issues and 1986 respectively.
and to charity in the UK and overseas.

88 Dangote Cement Plc Annual Report 2018

01 02 03 04

Key S Statutory Audit
T Technical and Operations
A Audit, Compliance and Risk Management
F Finance and General Purpose Chairman
N Nomination
R Remuneration and Governance

Dorothy Ufot SAN Douraid Zaghouani Emmanuel Ikazoboh
Independent Non-Executive Director Non-Executive Director Independent Non-Executive Director

AR FT A F NRS

Date of appointment Date of appointment Date of appointment
19th April 2016 29th April 2015 30th January 2014

Dorothy is the first woman to be appointed to Douraid Zaghouani was appointed to the Emmanuel has more than 25 years’
the Board of Dangote Cement, in recognition Board of Dangote Cement on 29th April 2015 experience in Senior Management roles in
of her vast experience in the field of commercial as a Non-Executive Director. At present, Nigeria, Côte d’Ivoire, Cameroon and South
law. She has more than 26 years’ experience Douraid is Chief Operating Officer of the Africa. He is currently Chairman of Ecobank,
in commercial litigation at trial and appellate Investment Corporation of Dubai (ICD). the Pan-African banking group. Previously, he
levels, having been admitted to the Nigerian was the Managing Partner for Francophone
Bar in 1989 and then admitted to the Inner He manages the areas of Strategy, Government offices in Côte d’Ivoire and Cameroon and
Bar as a Senior Advocate of Nigeria (SAN) Relations, Marketing, Corporate Communications, later became the Managing Partner/CEO
in April 2009. Legal and Compliance, Finance and Funding, of Deloitte West and Central Africa, until
Risk and Information Technology. Prior to 2009. He was appointed by the SEC as an
She is an internationally recognised expert joining ICD, he was with Xerox for more than Interim Administrator, to carry out capital
in commercial dispute arbitration, and was 25 years and was Chairman of the Board market reforms of the NSE and the CSCS.
appointed member of the International of several Xerox companies. During his long He serves on several corporate boards as
Chamber of Commerce’s International Court and distinguished career, he has held a number Chairman or Non-Executive Director.
of Arbitration, Paris, in 2006. She later became of senior general management, sales and
one of eight Global Vice Presidents of the ICC marketing roles in Europe and North America.
Commission on Arbitration in 2014.

Ernest Ebi MFR Fidelis Madavo Sir Michael Davis
Independent Non-Executive Director Non-Executive Director Independent Non-Executive Director

A F NR T AFNT Date of appointment
20th April 2018
Date of appointment Date of appointment
30th January 2014 30th July 2014 Sir Michael Davis is Chairman of Macsteel,
a global trading and shipping company.
Ernest has more than 40 years of Fidelis is the Head of Resources and From 2001 to 2013 he was Chief Executive
banking experience from various leadership Portfolio Manager for Strategic and African of Xstrata, one of the world’s largest global
positions in Nigeria, including Chairman, Listed Investments at the Public Investment diversified mining and metal companies. Prior
UNIC Insurance PLC; Executive Director, Corporation of South Africa (PIC), which is to joining Xstrata he was Executive Director
Corporate Banking of African Continental South Africa’s state pension fund and the and Chief Financial Officer of Billiton plc.
Bank PLC; and Deputy Managing Director largest fund in Sub-Saharan Africa.
and Chief Operating Officer of Diamond Bank He has extensive capital markets and
Limited (prior to its re-registration as a public He represents the interests of shareholder corporate transaction experience. During his
limited liability company). PIC on the Board of Dangote Cement. career, he has raised more than $40B from
Prior to joining PIC, he was Vice President global capital markets and successfully
From June 1999 to October 2009, he was at Citigroup and Investec Securities, both completed more than $120B of corporate
the Deputy Governor at the Central Bank of roles being based in Johannesburg. Before transactions including the listing of Billiton on
Nigeria. In November 2016, he was appointed returning to South Africa, Fidelis spent ten the London Stock Exchange, the merger of
Chairman of Fidelity Bank PLC. years with CRU International, a mining BHP and Billiton into the largest diversified
consultancy firm, and also worked as a mining company in the world and the
metallurgist for Anglo American. successful merger of Xstrata and Glencore.

Annual Report 2018 Dangote Cement Plc 89

Corporate governance

Board of Directors continued

Olakunle Alake Olusegun Olusanya Sani Dangote
Non-Executive Director Independent Non-Executive Director Non-Executive Director

AFST A F NRS AFR

Date of appointment Date of appointment Date of appointment
22nd July 2005 2nd December 2010 22nd July 2005

Olakunle is the Group Managing Director of Resigned Sani is a businessman with more than 30 years’
Dangote Industries Limited. He was appointed 31st December 2018 experience in key sectors of the Nigerian
to the Board of Dangote Industries Limited economy including manufacturing, agriculture
as Executive Director in 2001. Olusegun was appointed to the Board in and oil services. He is the Vice President
2010. He was Deputy General Manager, of Dangote Industries and sits on the board of
He holds a bachelor’s degree in Civil Engineering Finance and Strategic Planning at Savannah several other companies. He is also the
from Obafemi Awolowo University, lle-Ife Bank Nigeria PLC, Executive Director at Deputy Chairman of African Gum Arabic
and is a Fellow of the Institute of Chartered Afribank Nigeria Plc and Executive Director Producers Association, a Fellow of the Nigeria
Accountants of Nigeria. He joined Dangote at Union Bank PLC between 1993 and 1999. Institute of Shipping and President of the
Industries Limited in 1990, after six years at He was also Chairman of the National Bank Fertiliser Producers & Suppliers Association.
Price Waterhouse Coopers. He has held of Nigeria Limited and sits on the board of
several management positions in Dangote several companies. He is Vice Chairman of In 2012, he completed the Owner/President
Industries Limited, including Financial Meristem Securities Limited and Non-executive Management Programme at the Harvard
Controller and Head of Strategic Services. Director of Tripple Gee & Co PLC. Business School in the United States of America.

Viswanathan Shankar Board balance 88M+21Genderdiversity
Non-Executive Director Male
686M+35asat31stDecember2018 Female
Date of appointment Independence 69+315MLocationofDirector
10th December 2017 Nigeria
Chairman Europe
Viswanathan is Chief Executive Officer Independent UAE
of Gateway Partners, a private equity firm Non-independent South Africa
focused on investing in the dynamic growth 31513+2MTenure
markets of Africa, Middle East and Asia. 1–3 years
He previously served as CEO – Europe, 3–6 years
Middle East, Africa and Americas, and member 6–10 years
of the global board of Standard Chartered Plc. 10+ years
His past non-executive roles include the boards
of the Inland Revenue Authority Singapore
and the Economic Strategies Committee and
the National Integration Council constituted by
the government of Singapore; the Sub-Saharan
Advisory Board of the Exim Bank USA; Vice
Chair of the Future of Banking Global Agenda
Council of the World Economic Forum.

90 Dangote Cement Plc Annual Report 2018

01 02 03 04

Directors’ report

Mahmud Kazaure Principal activities and future plans 1. The Board is charged with ensuring
Company Secretary The Company was established for the that appropriate values, ethics and
operation of factories for the preparation, behaviours for the conduct of the
The Directors present the Annual Report manufacture, sale and distribution of C ompany are agreed and that
of the Company for the year ended cement and related products. appropriate procedures and policies
31st December 2018. are in place to ensure that these are
The operational activities of the Company implemented effectively. The Board
The Directors have considered all the matters are undertaken at various plants in Nigeria ensures leadership through effective
brought before them in the financial year and through its subsidiaries in nine other oversight and review. Supported by
under review and are satisfied that the countries in Sub-Saharan Africa. its principal Committees, the Board
Annual Report represents a fair, balanced sets the Company’s strategic direction
and realistic view of events. Details of these production, grinding and aims to deliver a sustainable
and import facilities can be found on increase in shareholder value over
Our Corporate Governance Report, which pages 38 to 47. Details of future plans the longer term.
forms part of this Report, is in accordance are contained in the Chairman’s
with international best practice, and Statement on pages 8 to 9 and in the 2. The Board ensures that proper
shows our governance systems, culture Operational Review on pages 26 to 47. accounting records are maintained,
and unique way of operating. that accounting policies are used
Directors’ responsibilities and consistently applied and that
Legal form The Directors are responsible for the appropriate financial statements
Dangote Cement Plc, previously named preparation of the financial statements, are prepared on the going concern
Obajana Cement Plc, was incorporated which they confirm give a true and fair basis, in conformity with applicable
in Nigeria as a public limited company view of the state of affairs of the Company law and standards. Most of this
on 4th November 1992 and commenced and of the profit or loss for that period. responsibility is delegated to the
operations in January 2007. Finance and General Purpose
The financial statements comply with the Committee.
In 2010, the name of the Company was provisions of the Companies and Allied
changed from Obajana Cement Plc to Matters Act, Cap 20, Laws of the 3. The Board ensures that adequate
Dangote Cement Plc by virtue of a special Federation of Nigeria 2004. internal control procedures are
resolution dated 14th July 2010. established to safeguard the assets
In so doing they ensure that they act of the Company and to present and
Dangote Cement Plc listed its shares in accordance with the Directors’ detect fraud and other irregularities.
on the Nigerian Stock Exchange (“the responsibilities outlined below: It also oversees the implementation
Exchange”) on 26th October 2010. of appropriate risk assessment
It has always been the largest company systems and processes to identify,
traded on the Exchange, with a current manage and mitigate the principal
market capitalisation of ₦3,279 billion risks of the Company’s business.
as at 25th February 2019. Much of this work is delegated to
the Audit, Compliance and Risk
Management Committee.

4. The Board implements effective
succession planning at Board and
Executive Management level and
assesses the processes in place to
ensure that there is appropriate
succession planning amongst Senior
Management. Much of this
responsibility is delegated to the
Remuneration and Governance
Committee.

5. The Board develops and implements
Board and governance policies in line
with regulatory requirements and
international best practice. Much
of this responsibility is delegated
to the Remuneration and
Governance Committee.

Annual Report 2018 Dangote Cement Plc 91

Corporate governance

Directors’ report continued

Directors’ responsibilities continued Results for the year Members are encouraged to notify the
6. The Board ensures that the technical Group revenue increased by 11.9% to registrars or the Company Secretary of
₦901.2 billion (2017: ₦805.6 billion). any changes in address or other relevant
and operational aspects of the information and take advantage of the
business are conducted efficiently EBITDA increased by 12.1% to e-dividend system by completing the
and with regard to global best ₦435.3 billion (2017: ₦388.1 billion). form included on page 217.
practices. It assesses the feasibility of
proposed new projects and ensures Net profit for the year was ₦390.3 billion Directors
that the operational, technical, (2017: ₦204.2 billion). As at 25th February 2019, Dangote
production, sustainability and staffing Cement had 15 Directors, all of whom
aspects of our plants are adequate, Earnings per share increased by 95.9% held office in the year ended 31st
comply with local and international to ₦22.83 (2017: ₦11.65). December 2018. Their biographies are
laws and are aligned with our contained on pages 88 to 90 and are
business goals. It is also responsible Dividends incorporated into this report by reference.
for overseeing new technical and The Directors pursue a dividend policy that
development programmes within the reflects the Company’s earnings and cash Olusegun Olusanya resigned on
business. Many of these responsibilities flow, while maintaining appropriate levels 31st December 2018.
are delegated to the Technical and of dividend cover.
Operations Committee. The appointment, removal or reappointment
They consider the capital needed to of Directors is governed by the
Strategic report and results fund the Company’s operations and Company’s Articles of Association,
The strategic report comprises the expansion plans. the Companies and Allied Matters Act
following, each of which is incorporated (CAMA), LFN 2004 as well as relevant
by reference into, and forms part of, this For the 2018 financial year, the Directors Board and governance policies.
Directors’ Report: have recommended a dividend of These documents also set out the
₦16.00 per ordinary 50 kobo share rights and obligations of Directors.
• the Chairman’s Statement on pages (2017: ₦10.50).
8 and 9; Directors’ interests
The final dividend, if approved by In accordance with Section 275 of
• the Interview with the Chief Executive shareholders at the Annual General the Companies and Allied Matters Act,
on pages 34 to 36; Meeting on 17th June 2019, will be paid CAP C20 LFN 2004, Directors’ direct
on 18th June 2019 to shareholders and indirect interests in the issued share
• Operating review on pages 37 to 47; listed on the register as at the close of capital of the Company are recorded
business on 3rd June 2019. in the Register of Members as at
• the Financial Review on pages 64 31st December 2018 and contained
to 69; The Board considers that the proposed on the opposite page of this report.
dividend level is appropriate and is in
• the Corporate Governance Report on line with the Company’s strategic Conflicts of interest
pages 80 to 85; growth objectives. The Company maintains a Register of
Directors’ Interests in accordance with
• the Nomination Committee Report on Unclaimed dividends the requirements of the Companies and
pages 96 and 97; The total amount of unclaimed dividends Allied Matters Act, CAP C20, LFN 2004.
outstanding as at 31st December 2018 The Company also applies a conflict of
• the Audit, Compliance and Risk is ₦2,602,841,364. interest policy developed in accordance
Management Committee Report with international best practice, and
on pages 98 to 105; A list of unclaimed dividends is available Investment and Securities Act, Laws
on the Company’s website: of the Federation, 2007.
• the Finance and General Purpose www.dangotecement.com.
Committee Report on pages 106 Powers of Directors
to 109; The Company notes that some dividend Subject to the Articles of Association
warrants have either remained unclaimed, of Dangote Cement, prevailing legislation
• the Technical and Operations are yet to be presented for payment by and any directions given by special
Committee Report on pages 110 shareholders, or have been returned to resolution, the business and affairs
to 113; and the Company for revalidation. of the Company are managed by
the Directors, who in utmost good faith
• the Remuneration and Governance Therefore, all shareholders with “unclaimed exercise all such powers for and
Committee Report on pages 114 share certificates” or “unclaimed dividends” on behalf of the Company.
to 121. should address their claim(s) to the
registrars, United Securities, or to the
These sections also include details of Company Secretary at the registered
expected future developments in the office address. Addresses are contained
Company’s business and details of on pages 208 and 209.
the key performance indicators.

92 Dangote Cement Plc Annual Report 2018

01 02 03 04

Supplier payment policy business decisions; ensure that our staff, We are committed to high standards of
It is the policy of the Company to clients and suppliers are fully aware of our corporate governance and global best
agree and clearly communicate the Sustainability Policy and are committed practice, both in Nigeria and countries
terms of payment as part of the commercial to implementing and improving it; and in which we operate.
agreement negotiated with suppliers and minimise the impact on sustainability
then to pay according to those terms of all our mining, production, Our focus at all times is recognition of
based upon receipt of an accurate invoice. administrative, sales and transportation and compliance with all laws regulating
activities. Our approach to sustainability is the business. The Chairman’s Introduction
Trade creditor days for the year ended explained across several sections of this to Corporate Governance details
31st December 2018 were 82 days on Annual Report, each related to Dangote compliance with relevant legislation
average for the Company (2017: 82 days). Group's 7 Sustainability Pillars, which are and relations with shareholders on
summarised on pages 4 and 5. pages 80 to 85 and forms part of
Donations this Directors’ Report.
Donations, sponsorship and charitable Corporate governance
donations amounted to ₦1.3 billion and investor relations The Company pursues an active
(2017: ₦1.0 billion), as detailed on During the 2018 financial year, the programme of investor relations with
pages 210 and 211. Company complied with the NSE investor meetings and earnings calls
Post-Listing Requirements and has not throughout the year.
Sustainability been fined by the SEC, NSE or CAC for
Dangote Cement is committed to any contraventions. Its website contains substantial
promoting sustainable growth for the information about the Company's
benefit of all stakeholders. Concern for Dangote Cement has emerged as performance and strategy.
the environment and promoting a broader a truly multinational manufacturing
sustainability agenda are integral to the enterprise, promoting regional Employees
Company’s professional activities and integration and providing growth and Dangote Cement operates a policy
the management of the organisation. employment opportunities for African of non-discrimination and considers
economies through the utilisation of all applications equitably.
We aim to comply with, and exceed where Africa’s natural resources by Africans
practicable, all applicable legislation, and for Africans. Based on the Company’s policy, the
regulations and codes of practice; integrate most qualified person is recruited for the
sustainability considerations into all our position, irrespective of religion, ethnic
group, physical condition or state of origin.

Ordinary shares of 50 kobo each

As at 31st December 2017 As at 31st December 2018 As at 25th February 2019

Aliko Dangote 14,522,050,220 14,522,050,220 14,527,958,138
Direct
Indirect 27,642,637 27,642,637 27,642,637

Olakunle Alake 14,494,407,583 14,494,407,583 14,500,315,501
Devakumar Edwin
Ernest Ebi 4,931,702 6,9 31,702 6,9 31,702
Emmanuel Ikazoboh
2,000,000 5,000,000 5,000,000
Direct
Indirect 100,000 100,000 100,000
Olusegun Olusanya*
Engr. Joseph Makoju Mni, OFR. 98,149 98,149 9 8,149
Abdu Dantata
Cherie Blair ———
Alhaji Sani Dangote
Sir Michael Davis 98,149 98,149 9 8,149
Brian Egan 16,313 16,313 16,313
Fidelis Madavo 11,000 11,000 11,000
Viswanathan Shankar
Dorothy Ufot 8,680 8,680 8,680
Douraid Zaghouani
———

———

———

———

———

———

———

———

* Resigned 31st December 2018. Annual Report 2018 Dangote Cement Plc 93

Corporate governance

Directors’ report continued

Employees continued Health, safety at work The Company provides adequate
Where existing employees become and welfare of employees personal protective equipment (PPE)
disabled, it is the policy, wherever Dangote Cement recognises the and other critical safety equipment and
practicable, to provide continuing importance of safeguarding the health has a system to monitor compliance.
employment under similar, or if required and safety of its workforce, including its The Company also ensures that
and possible adjusted, terms and contractors, and manages the impact adequate safety clauses are included
conditions and to provide training on the environment resulting from its in the contracts to which it is a party.
as appropriate. activities, thereby building constructive
and sustainable relationships with The Company has developed several
We review our employment policies stakeholders based on trust and respect. Health, Safety, Security and Environment
in line with the strategic objectives of (HSSE) policies, established the 15 HSSE
its business. The Company is therefore committed to: Golden Rules and implemented a suitable
incentive scheme to reward good HSSE
Key employees are recruited to add • complying with all laws and regulations practice across the Group.
value to the Company and ensure high applicable in its operating environment;
performance based on clearly defined This is because we believe that
performance indices. • identifying, measuring and protection and care of the environment
understanding the health, safety, is essential to the sustainability and
Employees are provided with information environmental and social impact growth of the Company in the long term.
about the Company through the Internal and risks of its operations, and
Communications Unit, which publishes implementing long-term and The Company continues to place a
information on our website and intranet. sustainable solutions towards premium on its human capital
mitigating impact; and development. We value the welfare of our
Retirement benefits employees and contractors and this fact
The Company operates a contributory • continuously seeking innovative will ensure the improved efficiency of the
pension scheme for its employees in ways to improve its health, safety business and help to maintain its
Nigeria, in line with the provisions of the and environmental performance. strategic advantage over its competition.
Pension Reform Act 2014.
Safety and environment workshops are During 2018, employees attended
The scheme is funded through employees’ organised with a broad focus on good numerous local and international training
and employer’s contributions in the ratio housekeeping to ensure a good and and development programmes to improve
of 8% and 10% of the total emoluments safe working environment. their HSSE knowledge and skills.
of the employee, as prescribed by the Act.
Fire prevention and firefighting
equipment is installed in strategic
locations in the offices and plants.

Dangote Cement shareholders analysis Number of % of Number of % of
shareholders shareholders shares shares
1 Share range
1,001 29,873 73.75 10,264,718 0.06
to 1,000 7,989 19.72 15,883,910 0.09
5,001 to 5,000
10,001 1,157 2.86 8,200,999 0.05
50,001 to 10,000 983 2.43 20,163,69 5 0.12
100,001 to 50,000 152 0.38 10,860,710 0.06
500,001 to 100,000 180 0.44 43,219,739 0.25
1,000,001 to 500,000 52 0.13 39,448,515 0.23
5,000,001 to 1,000,000 74 0.18 176,627,9 74 1.04
10,000,001 to 5,000,000 16 0.04 122,594,075 0.72
to 10,000,000 29 0.07 16,593,243,069 97.38
to 100,000,000,000
40,505 100.00 17,040,507,404 100.00
Total

94 Dangote Cement Plc Annual Report 2018

01 02 03 04

Training and development In 2018, the Company launched All issued shares are fully paid and
Dangote Cement is committed to the two new products called Falcon and details of the share capital history are
support of staff development for all staff. BlocMaster into the Nigerian market set out on page 200. No additional
The key purpose is to facilitate personal to expand its product line for the shares were issued in 2018.
and professional development enabling benefit of customers.
individuals and groups to achieve their Auditors
full potential at work. Falcon is a 32.5-grade cement for less In the case of each of the persons who
demanding applications such as mortaring are Directors of the Company at the
The Company recognises that its and low-rise buildings, while BlocMaster date when this report was approved:
success is linked to the contribution, is a premium, rapid-setting 42.5R product,
commitment and achievements of which was the result of extensive research • so far as each of the Directors is
individual members of staff, working and customer feedback. aware, there is no relevant material
individually and in teams or groups. information of which the Company’s
Capital structure auditors are unaware; and
Training programmes are offered at the The Company has one class of ordinary
Dangote Academy for staff across the shares, which reflect the total value of • each of the Directors has taken all
Group, with facilitation from professionals the share capital. Each ordinary share the steps that he reasonably ought
and other training experts. In addition to carries the right to one vote at the to have taken as a Director to make
skill acquisition, the training programmes Company’s Annual General Meeting. himself aware of any relevant material
enable staff to develop the interpersonal information and to establish that the
skills needed to succeed in the workplace. The percentage shareholding and transfer Company’s auditors are aware of
The courses are designed to help staff in of shares are governed by the Company’s that information.
the performance of their designated roles Articles of Association and relevant
and to help them to fulfil their potential. regulation. There are no restrictions with A resolution will be proposed authorising
respect thereto. The Articles of Association the Directors to fix the remuneration of
Identification of staff may be amended by special resolution the auditors for the 2019 financial year.
development needs approved by the shareholders.
An assessment of the skills of individuals, In compliance with the provisions of the
when they are appointed to a new role, Substantial interest in shares Securities and Exchange Commission
will lead naturally to the identification of As at 31st December 2018 and also (SEC) Code of Corporate Governance
their need for training and development, at the date of this report, only Dangote 2011, the Company puts the external
related to duties that they are to perform. Industries Limited held more than 5% of audit contract out to tender at least
the issued share capital of the Company. every ten years.
In addition, staff training and development Details of shareholdings are provided in
needs may be identified in a variety of the table on the opposite page: Mahmud Kazaure
ways, e.g. by skills audit, by feedback Group Chief Legal Counsel
and by staff performance appraisal. 31st December 2018 and Company Secretary
Shareholder: 25th February 2019
It is our policy that all staff have at least one Dangote Industries Limited
annual performance review a year with
their head of department or line manager, Number of ordinary shares:
at which time, training and development 14,494,407,583
needs will be assessed and ways of
meeting these will be identified, and an % of issued ordinary shares:
appropriate timescale agreed. 85.06%

Post balance sheet events 25th February 2019
No material event took place between Shareholder:
31st December 2018 and the date on Dangote Industries Limited
which these accounts were signed.
Number of ordinary shares:
Research and innovation 14,500,315,501
With rapid urbanisation and population
growth in Africa, the Company realises % of issued ordinary shares:
that meeting housing and infrastructure 85.1%
needs will be a challenge.
All shares other than shares held by
We are constantly looking for new Dangote Industries Limited (85.1%) and
product solutions that will respond Aliko Dangote (0.16%) are considered
to these construction challenges. to be free float shares. Aliko Dangote
is the ultimate owner of Dangote
Industries Limited.

Annual Report 2018 Dangote Cement Plc 95

Corporate governance

Nomination Committee report

Aliko Dangote GCON Introduction
Chairman The Nomination Committee was
established in 2014 to assist the Board
Role of the Committee in discharging its responsibilities in
The Nomination Committee helps the Board identify, select, recruit and relation to the composition of, and
train suitable Directors and Senior Executives to drive the Company’s matters relating to, the Board and
strategy and business operations. Senior Executive team.

Members Meetings attended In 2018, the members of the Nomination
Aliko Dangote (Chairman) (eligible to attend) Committee were Aliko Dangote (Chair of
Ernest Ebi the Committee), Ernest Ebi, Emmanuel
Olusegun Olusanya* Ikazoboh, Fidelis Madavo and Olusegun
Emmanuel Ikazoboh Olusanya. The Committee met twice
Fidelis Madavo during the year under review and the
record of members’ attendance is
  Attended    Not attended shown in the table to the left.

* Resigned 31st December 2018. Biographical details of each member
of the Committee, including relevant
qualification and experience, are set out
on pages 88 to 90 of this Annual Report.
The Company Secretary is also the
Secretary to the Nomination Committee.

Terms of reference
The role of the Committee is to assist
the Board to ensure that:

• the Board has the appropriate
composition for it to effectively
execute its duties;

• Directors are appointed through
a formal process;

• induction and ongoing training
and development of Directors
take place; and

• formal succession plans for the
Board, Chief Executive Officer and
Senior Management team are in place.

Responsibilities
The Committee must perform all the
functions necessary to fulfil its role as
stated above and including the following:

• ensure the establishment of a
formal process for the appointment
of Directors, including: identification
of suitable members of the Board;
performance of reference and
background checks of candidates
prior to nomination; formalising the
appointment of Directors through
an agreement between the Company
and the Director; oversee the
development of a formal induction
programme for new Directors;

96 Dangote Cement Plc Annual Report 2018

01 02 03 04

Committee activities during 2018 Committee actions
Key matters considered
Appointment of Chief • The Committee considered, and resolved to recommend to the Board
Executive Officer for approval, the appointment of Engineer Joseph Makoju, previously acting
Chief Executive, as the Chief Executive of the Company.
Appointment of Independent
Non‑Executive Directors • The Board considered and recommended the appointment of Cherie Blair
and Sir Michael Davis as Independent Non-Executive Directors of the Company.

and ensure that all Directors update Also, in 2018, following a thorough held several meetings in 2018, in
their skills through different search and benchmarking exercise compliance with the laws of their
programmes; of internal and external candidates, the respective operating environments.
Committee made a recommendation to
• oversee the development and the Board in April that Cherie Blair QC Future plans
implementation of continuing and Sir Michael Davis be appointed Going forward, the Committee is
professional development Independent Non-Executive Directors committed to further gender diversification
programmes for Directors; of the Company, a decision which was with a stronger representation of women
approved and ratified by the Annual on the Board. As at the end of 2018
• ensure that Directors receive regular General Meeting held on 20th June 2018. financial year, we have two women on
briefings on changes in risks, laws the Board and continue to work towards
and the environment in which the The Committee considered the Executive increasing the participation of women
Company operates; Committee talent pipeline and scheduled on the Board.
a series of meetings with prospective
• consider the performance of Directors candidates with future senior leadership Emergency succession planning is
and take steps regarding any appointments in mind. It also reviewed also an important area of discussion
changes needed to ensure an the recommendations of the independent for the Committee. It has ensured the
appropriate contribution; external evaluation, considered Board development of a framework that clearly
Committee membership, potential conflicts identified individuals capable of covering
• find and recommend to the Board a of interest and the independence of the key management roles on an interim
replacement for the Chief Executive Non-Executive Directors, and reviewed basis. All these individuals then receive
Officer, should that become its terms of reference. the necessary coaching to ensure they
necessary; and have the required skills to provide any
The Committee continued its programme critical support when needed.
• ensure that formal succession plans of succession planning. The Board takes
for the Board, Chief Executive Officer the issue of Board diversity very seriously Development for Directors and
and Senior Management are developed and believes that maintaining an appropriate high-performing individuals below Board
and implemented, conducting balance of skills, knowledge, experience level has been an essential area of focus.
searches for suitable replacements and backgrounds is key to its Coaching and mentoring is provided
when necessary. effective performance. to develop and enhance specific skill
sets, and the Committee believes the
Committee activities in 2018 Gender diversity is an important element benefits of this approach are critical for
The Committee keeps under review of this mix. It was in furtherance of its developing our own talent for the future.
the leadership needs of the Company diversity objectives that it recommended
and identifies and nominates suitable the appointment of Cherie Blair. Aliko Dangote
candidates for the Board’s approval, to Chairman of the Nomination Committee
fill vacancies when they arise. In addition, The Committee monitors 25th February 2019
it makes recommendations on who should the composition of the Boards of
be appointed to fill such vacancies. Dangote Cement and its Pan-African
subsidiaries to ensure that they are
At the start of 2018, the Committee, comprised of individuals with the skills
after considering the contribution and and qualifications necessary to
performance of the Acting Group effectively direct the affairs of the
Managing Director of the Company, Company. The Committee also monitors
recommended that the Board formally subsidiary governance to ensure that
appoint Joseph Makoju as the Group subsidiaries are run in line with best
Managing Director/Chief Executive practices. In that regard, the subsidiaries
Officer of the Company.

Annual Report 2018 Dangote Cement Plc 97

Corporate governance

Audit, Compliance and Risk Management Committee report

Ernest Ebi MFR Introduction
Independent The Board is ultimately accountable for
Non-Executive Director the risk management process, system
of internal control and monitoring
Role of the Committee compliance with applicable laws and
The Audit, Compliance and Risk Management Committee is charged regulations. These functions have been
with oversight of internal control, compliance and risk management, delegated to the Audit, Compliance and
working with the respective internal functions. Risk Management Committee, which
exercises oversight.
Members Meetings attended
Ernest Ebi (Chairman) (eligible to attend) I am pleased to present to you the
Olakunle Alake 2018 report of the Audit, Compliance
Sani Dangote ⅩⅩⅩ and Risk Management Committee.
Devakumar Edwin
Emmanuel Ikazoboh It is a standing Committee of the Board
Fidelis Madavo with powers of information, assessment
Olusegun Olusanya* and presentation of proposals to the
Dorothy Ufot Board of Directors within the scope of
its functions in accordance with the
  Attended  Ⅹ   Medical absence    Not attended Company’s corporate governance
system and as more particularly set
* Resigned 31st December 2018. forth in the Committee Charter.

The Board has satisfied itself that all
the members of the Committee have
substantial education, experience and
knowledge of accounting, risk and
corporate financial management, legal,
governance and compliance and internal
control management.

This complies with and surpasses the
requirement of Section 30.2 of the SEC
Code, which requires that at least one
member of the Committee should have
recent and relevant financial experience.

Composition and membership
In 2018, the Committee comprised
four Non‑Executive Directors and four
Independent Non-Executive Directors.

As an Independent Non-Executive
Director, I serve as the Chairman of
the Committee. Details of members
as well as meeting attendance is
shown in the table to the left.

The office of Secretary of the Committee
is held by the Company Secretary. This
enables a fluid and effective relationship
with the various units of the Group that
must cooperate with or provide
information to the Committee.

98 Dangote Cement Plc Annual Report 2018