Dangote Flour Mill annual report 2011

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Dangote Flour Mill annual report 2011

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Dangote Flour Mill annual report 2011

  1. 1. 1DA N G OT E F L O U R M I L LS P L C Notice of 6th Annual General Meeting 2 Corporate Information 3 Financial Highlights 4 Chairman’s Statement 5 Board of Directors 7 Report of the Directors 8 Corporate Governance Report 12 Report of the Audit Committee 15 Report of the Independent Auditors 16 Statement of Management Responsibilities 17 Statement of Significant Accounting Policies 18 Consolidated Profit and Loss Account 20 Consolidated Balance Sheet 21 Consolidated Statement of Cash Flows 22 Notes to the Consolidated Financial Statements 23 Consolidated Value Added Statement 36 Consolidated/Company Five-Year Financial Summary 37 Share Capital History/Unclaimed Dividend 38 Mandate for e-Dividend Payment Form 39 Proxy Form 41 Contents
  2. 2. 2 DA N G OT E F L O U R M I L LS P L C NOTICE IS HEREBY GIVEN that the 6th ANNUAL GENERAL MEETING OF DANGOTE FLOUR MILLS PLC will hold at KWARA HOTEL, ILORIN, KWARA STATE on Thursday, 5th July, 2012 at 12.00 noon prompt to transact the following business: ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the year ended 31st December 2011 along with the reports of the Directors and Audit Committee thereon for the year 2011. 2. To declare a Dividend. 3. To elect/re-elect Directors. 4. To re-appoint the Auditors. 5. To authorize the Directors to fix the remuneration of the Auditors. 6. To appoint members of the Audit Committee. PROXY A member of the Company entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend and vote instead of him. A proxy need not be a member of the Company. A proxy for an organization may vote on a show of hands and on a poll. For the appointment to be valid, a completed proxy form must be deposited at the registered office of the Company or with the Registrar not later than 48 hours before the time fixed for the meeting. DIVIDEND The Board recommends for the approval of shareholders a payment of dividend of 10 kobo per ordinary share of 50 kobo each, out of the profits declared in the financial year ended 31st December, 2011 and which will be subject to withholding tax at the appropriate rate. DIVIDEND WARRANTS If approved, the dividend warrants will be posted on Thursday, 19th July, 2012 to shareholders, whose names appear in the Company Register of Members at the close of business on Wednesday, 20th June, 2012. NOTES 1. CLOSURE OF REGISTER AND TRANSFER BOOKS NOTICE IS HEREBY GIVEN that the Register of Members and Transfer Books of the Company will be closed from Thursday, 21st June, 2012 to Friday, 22nd June, 2012 both days inclusive. 2. AUDIT COMMITTEE In accordance with Section 359(5) of the Companies and Allied Matters Act 1990, a nomination (in writing) by any member or shareholder for appointment to the Audit Committee should reach the Company Secretary at least 21 days before the Annual General Meeting. The Audit Committee comprises three shareholders and three Directors. BY ORDER OF THE BOARD AISHA LADI ISA (MRS) Company Secretary/Legal Adviser Dated this 28th day of May, 2012 DANGOTE FLOUR MILLS PLC Terminal ‘E’ Greenview Development Building Apapa Wharf Lagos Nigeria. Notice of 6th Annual General Meeting AISHA LADI ISA (MRS) Company Secretary/Legal Adviser
  3. 3. 3DA N G OT E F L O U R M I L LS P L C DIRECTORS Alhaji Aliko Dangote, GCON — Chairman Alhaji Sani Dangote — Director Mr. Olakunle Alake — Director Mr. Uzoma Nwankwo — Director Alhaji Abdu Dantata — Director Alhaji Abdullahi S. Mahmoud — Director Mr. Asue Ighodalo — Director Brigadier-General S. L. Teidi (Rtd), OFR — Director Mr. Ekanem Etim — Ag. Group Managing Director (Appointed 16th December, 2011) Mr. Suleiman Olarinde — Executive Director, Finance (Appointed 16th December, 2011) COMPANY SECRETARY/LEGAL ADVISER AISHA LADI ISA (Mrs) REGISTERED OFFICE Terminal ‘E’ Greenview Development Building Apapa Wharf Lagos Nigeria. REGISTRAR AND TRANSFER OFFICE Oceanic Registrars 154, Ikorodu Road, Onipanu, Shomolu, Lagos. AUDITORS Akintola Williams Deloitte (Chartered Accountants) 235, Ikorodu Road, Ilupeju, Lagos. BANKERS Zenith Bank Plc Afribank Plc Equitorial Trust Bank Plc First Bank of Nigeria Plc GTBank Plc Oceanic Bank Plc Diamond Bank Plc Access Bank Plc Intercontinental Bank Plc First City Monument Bank Plc United Bank for Africa Plc Ecobank Nigeria Plc Corporate Information
  4. 4. 4 DA N G OT E F L O U R M I L LS P L C Financial Highlights The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 PROFIT AND LOSS Turnover 66,281,326 67,600,954 38,679,844 42,695,383 Profit before taxation and exceptional item 1,880,974 4,911,885 2,533,459 5,481,077 Exceptional item (1,484,265) — (1,484,265) — Profit before tax and after exceptional item 396,709 4,911,885 1,049,194 5,481,077 Taxation 281,005 (2,189,310) (261,710) (1,727,829) Profit after taxation 677,714 2,722,575 787,484 3,753,248 BALANCE SHEET Share capital 2,500,000 2,500,000 2,500,000 2,500,000 Shareholders’ funds 26,440,128 26,943,846 26,032,991 26,489,154 Per 50 kobo share data (kobo) Earnings per share 14 54 16 75 Dividend per share 10 20 10 20 The Directors propose a dividend of 10 kobo per ordinary share of 50 kobo each subject to approval of the shareholders at the Annual General Meeting for the year ended 31 December, 2011.
  5. 5. 5DA N G OT E F L O U R M I L LS P L C istinguished Shareholders, Members of the Board of Directors, Representatives of the SEC, NSE, CAC and other regulators here present, Invited Guests, Gentlemen of the Press, Ladies and Gentlemen. I have the pleasure to welcome you to the 6th Annual General Meeting of our great Company, Dangote Flour Mills Plc. Please permit me to present to you an overview of our operations and other events that shaped the year under review. The year 2011 witnessed many challenges, ranging from high exchange rates, infrastructural challenges, high cost of wheat to security issues in the country amongst others. These factors affected our performance and had gone ahead to shape our current business year. The challenges faced in 2011 helped us in taking adequate steps that will guarantee an improved and better performance in 2012 and also in the future. Chairman’s Statement COMPANY PERFORMANCE Dangote Flour Mills Plc recorded a turnover of N=66.28 billion in 2011. Profit before tax and exceptional items was N=1.880 billion. The exceptional item, represents a N=1.484 billion provision for secured doubtful trade debts. For prudence sake, a 50% provision was made for trade debts secured by insurance bonds provided by NEM Insurance Plc and Niger Insurance Plc. Recovery efforts are on-going to ensure that what is due is substantially recovered. The profit after tax and after exceptional item was N=677 million. DIVIDENDS Fellow shareholders, the Board has recommended for your approval, the payment of a dividend of 10 kobo for every 50 kobo ordinary share held by members in the Company. The recommended dividend is in line with the dividend policy and if approved, will be paid net of withholding tax to all shareholders in the register of members as at Wednesday, 20th June 2012. THE BOARD Since the last Annual General Meeting, there have been a few changes on the Board composition. An Acting Group Managing Director, in the person of Mr Ekanem Etim was appointed to run the affairs of the Company. He joined the Company from Dangote Cement in December 2011 as Deputy Managing Director and he replaces Mr Narendra Kumar Somani who resigned in March 2012. His appointment will be ratified in the course of this meeting. Also joining the Board as Finance Director is Mr. Suleiman Olarinde who served previously in the same capacity at Dangote Sugar Refinery Plc. His appointment will also be ratified by Shareholders at this meeting. The Directors retiring by rotation at this meeting are Alhaji Abdu Dantata, Mr. Asue Ighodalo and Mr. Uzoma Nwankwo, and being eligible offer themselves for re-election. D Alhaji Aliko Dangote, GCON Chairman
  6. 6. 6 DA N G OT E F L O U R M I L LS P L C OUR STAFF Our staff remain our strength; they have continued to maintain productive work ethic, which has helped your Company maintain its key position in the industry with satisfactory service delivery to customers. We will continue to place high priority on their training and development, seek and retain the best talents in our continued pursuit of operational and service excellence. THE FUTURE In response to the challenges faced by your Company in 2011 and the resultant low performance, the Board has put in place the following initiatives to ensure a quick turnaround: The Management team was strengthened. In addition to Board level appointments noted earlier, more senior level staff were appointed to further improve the team. The Company also embarked on cost management and debt collection drives to tackle the issues of high costs and doubtful debts which were prevalent in previous years. A major initiative in the cost management effort is the replacement of diesel, which used to power Pasta and Agrosacks plants, with natural gas. Advertisement and promotional efforts have been stepped up in 2012 to further support the brands, boost revenue base and regain market share. This is supported by the provision of additional trucks to boost haulage of both raw materials and finished products. Part of the expansion project in Apapa became operational in March 2012. Of the six lines 250 MT each capacity designed to produce a higher percentage of semolina than existing mills, 2 lines of 250MT each have been commissioned. It is expected that this will improve the Company’s profitability profile and cash flow. There is an on-going discussion between the majority shareholder of your Company and Tiger Brands Limited, a South African based manufacturing and retail group which has acquired interests in the foods sector in Nigeria and other African countries. No final commitment has been agreed by both parties and therefore no formal notification has been submitted to the Company. In the event that both parties decide to proceed with a transaction, due process will be followed in line with regulatory requirements. CUSTOMERS Our key partners in the business, our customers, had performed wonderfully well in the year under review. They have not only demonstrated their strong commitment and belief in the organization but have also proven that doing business with us has been a very rewarding venture. Their significant contributions to the business through partnership and patronage have ever remained our source of strength. We shall continue to hold this wonderful group of people in high esteem. On behalf of the Board, Management and Staff of the Company, I hereby wish to say a big thank you to all our numerous customers. APPRECIATION On behalf of the Board of Directors, I would like to express our heartfelt appreciation to the Management and Staff of the Group for their continued dedication, support and commitment during the year. I would also like to thank you, my fellow shareholders, as well as our customers, suppliers, bankers, government agencies and regulatory authorities, for the unrelenting support and confidence in Dangote Flour Mills Plc. Thank you and God bless. Alhaji Aliko Dangote, GCON Chairman Chairman’s Statement cont’d
  7. 7. 8 DA N G OT E F L O U R M I L LS P L C 1. ACCOUNTS The Directors are pleased to submit their report together with the audited accounts of the Company for the year ended 31st December, 2011. 2. RESULT The Group The Company N=’000 N=’000 Turnover 66,281,326 38,679,844 Profit after taxation 677,714 787,484 3. PRINCIPAL ACTIVITIES The principal activities of the Company during the year are as follows: (a) Manufacturing and selling of bread and biscuit flour (b) Manufacturing and selling of Wheat Offal (Bran) (c) Manufacturing and selling of Semolina. The principal activities of its subsidiaries are: Dangote Pasta Limited Manufacturing and selling of Spaghetti, Macaroni etc. Dangote Agrosacks Limited Manufacturing and selling of packaging materials. Dangote Noodles Limited Manufacturing and selling of Noodles. 4. LEGAL FORM The Company started operating as a division of Dangote Industries Limited in 1999. It was incorporated as a public limited liability company on 1 January 2006 and commenced operations on the same date. It however became quoted on The Nigerian Stock Exchange on 4 February 2008. Its principal activity is the milling, processing and marketing of branded flour. 5. DIRECTORS AND DIRECTORS’ INTEREST The names of Directors who are currently in office are as follows: (a) Alhaji Aliko Dangote, GCON (b) Alhaji Sani Dangote (c) Mr. Olakunle Alake (d) Mr. Uzoma Nwankwo (e) Alhaji Abdu Dantata (f) Alhaji Abdullahi S. Mahmoud (g) Mr. Asue Ighodalo (h) Brigadier-Gen. S. L. Teidi (rtd), OFR (i) Mr. Narendra Kumar Somani — Resigned 5th March, 2012 (j) Mr. Ekanem Etim — Appointed 16th December, 2011 (k) Mr. Suleiman Olarinde — Appointed 16th December, 2011 (i) In accordance with the provisions of Section 259 of the Companies and Allied Matters Act 1990, one-third of the Directors of the Company shall retire from office. The Directors to retire every year shall be those who have been longest in office since their last election. In accordance with the provisions of this section, Alhaji Abdu Dantata, Mr. Asue Ighodalo and Mr. Uzoma Nwankwo retire by rotation and being eligible, offer themselves for re-election. (ii) No Director has a service contract not determinable within five years. Report of the Directors for the Year Ended 31 December, 2011
  8. 8. 9DA N G OT E F L O U R M I L LS P L C (iii) The Directors’ interest in the issued share capital of the Company as recorded in the register of members and/or as notified by them for the purpose of Section 275 of the Companies and Allied Matters Act, C20 Laws of the Federation of Nigeria 2004 are as follows: Directors’ Shareholding as at 31 December, 2011 Number of 50k Shares held as at 31 December, 2011 (a) Alhaji Aliko Dangote, GCON 38,728,948 (b) Alhaji Sani Dangote — (c) Mr. Olakunle Alake 2,377,500 (d) Mr. Uzoma Nwankwo — (e) Alhaji Abdu Dantata — (f) Alhaji Abdullahi S. Mahmoud 43,750 (g) Mr. Asue Ighodalo — (h) Brigadier-Gen. S. L. Teidi (rtd), OFR — (i) Mr. Ekanem Etim — (j) Mr. Suleiman Olarinde — 6. DIRECTORS’ RESPONSIBILITIES The Directors are responsible for the preparation of financial statements which give true and fair view of the state of affairs of the Company at the end of each financial year and of the profit or loss for that period and comply with the Companies and Allied Matters Act, C20 Laws of the Federation of Nigeria 2004. In doing so they ensure that: (a) Proper accounting records are maintained which disclose with reasonable accuracy the financial position of the Company and which ensure that the financial statements comply with the requirements of the Companies and Allied Matters Act of Nigeria; (b) Applicable accounting standards are followed; (c) Proper accounting records are maintained; (d) Suitable accounting policies are adopted and consistently applied; (e) Judgments and estimates made are reasonable and prudent; (f) It is appropriate for the financial statements to be prepared on a going concern basis; unless it is inappropriate to presume that the Company will continue in business; (g) Adequate internal control procedures are instituted which as far as is reasonably possible, safeguard the assets and prevent and detect fraud and other irregularities. 7. CORPORATE GOVERNANCE Dangote Flour Mills Plc is committed to manage the Company with best practice and policies which align management of the Company with the interests of all stakeholders. This, in the long run results in beneficial relationship and long-term growth. Dangote Flour Mills Plc imbibes good Corporate Governance as a key factor in achieving its business success while remaining within the ambit of the law as a good corporate entity. The Board in line with its responsibilities to shareholders works to achieve the best practice of good Corporate Governance. The business of the Company is conducted in a fair, honest and transparent manner which conforms to high ethical standards. 8. SUBSTANTIAL INTEREST IN SHARES The Registrar has advised that according to the register of members on 31st December 2011, only Dangote Industries Limited with 3,667,716,667 ordinary shares of 50k each held more than 5% of the issued share capital of the Company. Report of the Directors cont’d for the Year Ended 31 December, 2011
  9. 9. 10 DA N G OT E F L O U R M I L LS P L C 9. FIXED ASSETS Movements in fixed assets during the year are shown in Note 7 to the Accounts. In the opinion of the Directors, the market value of the Company’s properties is not less than the value shown in the accounts. 10. DONATIONS AND CHARITABLE GIFTS Dangote Flour Mills Plc identifies with the aspirations of our operational environment by supporting charitable and worthy causes. However, during the year under review, no donation was made to any political party or religious organisation. 11. POST BALANCE SHEET EVENTS There were no significant developments since the balance sheet date which could have had a material effect on the state of affairs of the Company as at 31st December, 2011 and the profit for the year ended on that date which have not been adequately recognized. 12. COMPANY DISTRIBUTORS The Company’s products are distributed through many distributors across the whole country and some other parts of Africa. 13. SUPPLIERS The Company procures its materials at arm’s length basis from overseas and local suppliers. Amongst its main overseas and local suppliers are Cargill International SA, Ameropa SA, Vitachem Nigeria Limited and Biochemical Derivatives Nigeria Limited. 14. ANALYSIS OF SHAREHOLDINGS Range analysis of shareholdings as at 31st December, 2011: No. of Holders Holders No. of Units Units Range Holders % Cumulative Units % Cumulative 1 – 1,000 147,337 42.79 147,337 130,808,162 2.62 130,808,162 1,001 – 5,000 174,569 50.70 321,906 318,758,395 6.38 449,566,557 5,001 – 10,000 13,301 3.86 335,207 89,042,693 1.78 538,609,250 10,001 – 50,000 7,502 2.18 342,709 143,622,383 2.87 682,231,633 50,001 – 100,000 765 0.22 343,474 57,374,027 1.15 739,605,660 100,001 – 500,000 665 0.19 344,139 141,644,059 2.83 881,249,719 500,001 – 1,000,000 86 0.03 344,225 64,342,760 1.29 945,592,479 1,000,001 – 2,000,000 48 0.02 344,273 65,541,843 1.31 1,011,134,322 2,000,001 – 5,000,000 39 0.01 344,312 125,356,766 2.51 1,136,491,088 5,000,001 – 10,000,000 7 0.00 344,319 48,446,026 0.97 1,184,937,114 10,000,001 – 50,000,000 5 0.00 344,324 87,196,219 1.74 1,272,133,333 50,000,001 – 100,000,000 1 0.00 344,325 60,150,000 1.20 1,332,283,333 2,000,000,001 – 5,000,000,000 1 0.00 344,326 3,667,716,667 73.35 5,000,000,000 Grand Total 344,326 100.00 5,000,000,000 100.00 15. HUMAN RESOURCES 1. Employment, Training and Employees The Company recruits without discrimination in considering applications for employment through selection of the most suitable for various positions after interview. The Company employs professionals and people with technical expertise and continues to invest in developing such skills and maintain set standards. The Company also has in-house training facilities in addition to external training for employees. This gives every employee equal opportunity for career development. Report of the Directors cont’d for the Year Ended 31 December, 2011
  10. 10. 11DA N G OT E F L O U R M I L LS P L C 2. Employee Welfare and Safety at Work The Company continuously strives to improve its operations to ensure a safe working environment. The Company maintains a high standard of hygiene in all its premises through sanitation practices and the regular fumigation exercises. This is further strengthened by the installation of pest and rodent control gadgets. Safety and environment workshops organized for all employees with a broad focus on good house-keeping to ensure good and safe working environment. Nutritionally balanced meals are provided in staff canteens at subsidized prices. The use of safety shoes, goggles and apron etc. by employees is enforced. The Company carries out safety and fire awareness drills for all employees on regular basis. As a guide in the performance of all functions, a written Safety Policy for ensuring safe working practices is in place. Safety Officers and Security Supervisors are at hand to ensure the use of and implementation of the systems and procedures for safety by all employees. There is a clinic within each factory to provide adequate medical care in the event of accidents or any emergency in the work place. Also, the Company allows employees and their immediate families to attend good hospitals at its expense. Fire prevention and fire-fighting equipment are installed in strategic positions within the premises of each factory. 3. Employee Development Local and overseas training and development programmes have been organized to meet the needs of the Company’s modernization, automation strategy implementation. The Company continues to place premium on its human capital development arising from the fact that this would ensure improved efficiency of the business and maintain strategic advantage over competition. On the other hand, the employee is fully equipped to provide quality service which at the end will be beneficial to the organization and thus contribute to its growth. 16. AUDIT COMMITTEE In compliance with the provisions of Section 359(3) of the Companies and Allied Matters Act, Cap C20 Laws of the Federation of Nigeria 2004, the Company has an Audit Committee comprising three (3) Shareholders and three (3) Directors as follows: 1. Mr. Alex Adio — Shareholder/Chairman 2. Alhaji Kasimu Ibrahim — Shareholder/Member 3. Mr. Eric Akinnifesi Akinduro — Shareholder/Member 4. Alhaji Abdullahi S. Mahmoud — Director/Member 5. Mr. Asue Ighodalo — Director/Member 6. Mr. Olakunle Alake — Director/Member The functions of the Audit Committee are as laid down in Section 357(2) of the Companies and Allied Matters Act, Cap C20 Laws of the Federation of Nigeria 2004. 17. AUDITORS Messrs Akintola Williams Deloitte (Chartered Accountants) have indicated their willingness to continue in office as the Company’s Auditors in accordance with Section 357(2) of the Companies and Allied Matters Act, Cap C20 Laws of the Federation of Nigeria, 2004. A resolution will be proposed authorising the Directors to fix their remuneration. BY ORDER OF THE BOARD AISHA LADI ISA (MRS) Company Secretary/Legal Adviser 2nd Floor, GDNL Building Terminal ‘E’ Apapa Wharf Apapa — Lagos Dated this 17th day of May, 2012 Report of the Directors cont’d for the Year Ended 31 December, 2011
  11. 11. 12 DA N G OT E F L O U R M I L LS P L C DANGOTE FLOUR MILLS PLC is committed to the best practice and procedures in corporate governance. It recognizes that corporate governance is fundamental to earning the confidence and trust of the shareholders. It provides the structure through which the objectives of the Company are set and the means of attaining such objectives. Overseen by the Board of Directors, corporate governance practices are constantly under review in line with the dynamics of the business environment. The Corporate Governance policies adopted by the Board of Directors are designed to ensure that the Company’s business is conducted in a fair, honest and transparent manner which conforms to high ethical standards. The code of corporate governance for public companies provides the basis for promoting sound corporate governance in the Company. The governance framework helps the Board to discharge its duties of providing oversight and strategic counsel in balance with its responsibility to ensure conformity with regulatory requirements and acceptable risk. The Board consists of 10 members, the Chairman, Ag. Managing Director, 1 Executive Director and 7 Non-Executive Directors. THE BOARD Appointment to the Board is made by Shareholders at the Annual General Meeting on the recommendation of the Board of Directors. The Board consists of ten (10) members comprising the Chairman, Ag. Managing Director, one (1) Executive Director and seven (7) Non-Executive Directors. The Board delegates the day-to-day running of the Company’s affairs to the Ag. Managing Director/Chief Executive. The Managing Director/Chief Executive is supported in this task by the Executive Directors and Executive Management Committee. The Board governs and supervises the overall activities of the Company through the Managing Director. RESPONSIBILITIES OF THE BOARD OF DIRECTORS It is the responsibility of the Board of Dangote Flour Mills Plc to: • Ensure that the Company’s operations are conducted in a fair, honest and transparent manner that conforms to high ethical standards; • Ensure integrity of the Company’s financial and internal control policies; • Ensure the accuracy, adequacy and timely rendition of the statutory returns and financial reporting to the regulatory authorities (NSE, CAC, SEC) and Shareholders; • Ensure value creation for the Shareholders, employees and other stakeholders; • Review and approve corporate policies, strategy, annual budget and business plans; • Monitor implementation of policies and the strategic direction of the Company; • Set performance objectives, monitor implementation and corporate performance; • Review and approve all major and capital expenditure of the Company; • Ensure that the statutory rights of all Shareholders are protected at all times; • Provide the Company with entrepreneurial leadership within a framework of prudent and effective controls which enables risk to be assessed and managed; • Deploy the Company’s resources to profitable use; • Outline the Company’s strategic and corporate aims; • Ensure that the necessary financial and human resources are in place for the Company to meet its objectives; • Review management performance on a continuous basis; • Set the Company’s values and standards; • Take decisions objectively in the interest of the Company; • Ensure that its obligations to its Shareholders and other stakeholders are understood and met; • Constructively challenge and help develop proposals on strategies developed by Management. The Board carries out some of the above responsibilities through the Board Committees whose terms of reference set out clearly their roles, responsibilities, scope of authority and procedure for reporting to the Board. Each Committee is presided over by a Non-Executive Director to ensure strict compliance with the principles of good Corporate Governance practice; while the Audit Committee has a representative of the Shareholders as its Chairman. In compliance with the practices of good Corporate Governance, the Chairman of the Board is not a member of any of the Committees. Members of the Board of Directors hold quarterly meetings to decide on policy matters and direct the affairs of the Company, review its performance, its operations, finances and formulate growth strategy. Attendance at Directors’ meetings was impressive. In line with provisions of Section 258(2) of the Companies and Allied Matters Act, C20 Laws of the Federation of Nigeria 2004, the records of Directors’ attendance at Board meetings is available for inspection at the Annual General Meeting. The remuneration of Executive Directors is fixed and reviewed by a Committee of Non-Executive Directors. FREQUENCY OF MEETINGS The Board of Directors holds at least four (4) meetings a year, to consider important corporate events and actions such as approval of Corporate Strategy, Annual Corporate Plan, review of internal risk management and control systems, review performance and direct the affairs of the Company, its operations, finances and formulate growth strategies. It may however, convene a meeting whenever the need arises. During the year under review, the Board had a total of five (5) meetings. Corporate Governance Report
  12. 12. 13DA N G OT E F L O U R M I L LS P L C STANDING COMMITTEES OF THE BOARD The Board carries out some of the above responsibilities through the Board Committees whose terms of reference clearly set out their roles, responsibilities, scope of authority and procedure for reporting to the Board. 1. Governance/Remuneration Committee Composition: (i) Mr. Asue Ighodalo (ii) Alhaji Abdu Dantata (iii) Mr. Uzoma Nwankwo Functions: (i) To review and make recommendations to the Board for approval of the Company’s Human Resources Policy and organizational structure and any proposed amendments when necessary. (ii) Review and advise on governance and compliance issues. (iii) To make recommendations on remuneration structure for Non-Executive Directors and variable compensation for executive and senior management. (iv) Such other matters as the Board may delegate to the Committee. 2. Finance and Investment Committee Composition: (i) Alhaji Abdullahi S. Mahmoud — Chairman (ii) Brigadier-Gen. S. L. Teidi (rtd), OFR — Member (iii) Mr. Olakunle Alake — Member Functions: (i) To consider periodic financial statements. (ii) To review Company activities, make projections and forecast for its growth. (iii) To identify variances in the market. (iv) To review developments in the Company. (v) To identify and discuss new products and its processes. (vi) To ensure that the Company is up to date with significant changes in accounting policies. (vii) Overseeing the management and conduct of the business. (viii) Ensuring the integrity of financial reports. (ix) Overseeing the effectiveness and adequacy of internal control measures. 3. The Audit Committee The Audit Committee is made up of six (6) members, consisting of three (3) representatives of the Shareholders and three (3) members of the Board of Directors. Members of the Audit Committee are elected at the General Meetings. The Committee, in compliance with the requirements of Corporate Governance practice is chaired by a Shareholder. The Committee met during the year under review Composition: 1. Mr. Alex Adio — Shareholder/Chairman 2. Mr. Eric Akinnifesi Akinduro — Shareholder 3. Alhaji Kasumu Ibrahim — Shareholder 4. Mr. Asue Ighodalo — Director 5. Mr. Olakunle Alake — Director 6. Alhaji Abdullahi S. Mahmoud — Director In addition to its responsibility to review the scope, independence and objectivity of the audit, the Audit Committee carries out all such matters as are reserved to the Audit Committee by the Companies and Allied Matters Act, Cap C20 Laws of the Federation of Nigeria, 2004. • Ensuring the independence and objectivity of the Audit (Statutory and Internal). • Review adequacy and effectiveness of Dangote Flour Mills Plc internal control policies prior to endorsement by the Board. • Direct and supervise investigations on matters within the scope, such as evaluations of the effectiveness of Dangote Flour Mills Plc internal controls, cases of employee, business partner and client misconduct or conflict of interest. COMPLIANCE STATEMENT The Company filed its 2011 audited accounts with The Exchange in default of 21 days for which the sum of N=400,000.00 was paid as penalty. The Board will ensure maximum compliance in the coming year. However, The Nigerian Stock Exchange had earlier extended the time for submission to 30 April, 2012. Corporate Governance Report cont’d
  13. 13. 14 DA N G OT E F L O U R M I L LS P L C Corporate Governance Report cont’d ATTENDANCE OF MEETINGS BY MEMBERS OF THE BOARD/BOARD COMMITTEES FROM 1ST JANUARY TO 31ST DECEMBER 2011 BOARD OF DIRECTORS’ MEETINGS Attendance 8th August 17th August 29th September 16th December 29th December Alhaji Aliko Dangote, GCON A Alhaji Sani Dangote Mr. Olakunle Alake Alhaji Abdullahi S. Mahmoud A A Mr. Uzoma Nwankwo A A Alhaji Abdu Dantata Mr. Asue Ighodalo Brigadier-General S. L. Teidi (Rtd), OFR Mr. Ekanem Etim N/A N/A N/A Mr. Suleiman Olarinde N/A N/A N/A Mr. Narendra Kumar Somani N/A A FINANCE AND INVESTMENT COMMITTEE MEETINGS Attendance 8th August 16th December 28th December Mr. Olakunle Alake Alhaji Abdullahi S. Mahmoud A Brigadier-General S. L. Teidi (Rtd), OFR Mr. Ekanem Etim A Mr. Suleiman Olarinde A Mr. Narendra Kumar Somani N/A A GOVERNANCE/REMUNERATION COMMITTEE MEETINGS Attendance 15th July 15th December Mr. Uzoma Nwankwo A Mr. Asue Ighodalo Alhaji Abdu Dantata Mr. Narendra Kumar Somani N/A AUDIT COMMITTEE MEETING Attendance 23rd August Mr. Olakunle Alake Mr. Adio Alex Mr. Akinduro Eric Akin Mr. Kasimu Ibrahim
  14. 14. 15DA N G OT E F L O U R M I L LS P L C TO THE MEMBERS OF DANGOTE FLOUR MILLS PLC In accordance with the provisions of Section 359(6) of the Companies and Allied Matters Act, 2004, we have examined the Auditors’ report for the year ended 31st December, 2011. We have obtained all the information and explanations we required. In our opinion, the Auditors’ report is consistent with our review of the scope and planning of the audit. We are also satisfied that the accounting policies of the Company are in accordance with the legal requirements and agreed ethical practice. Having reviewed the Auditors’ findings and recommendations on Management matters, we are satisfied with Management’s response therein. Mr. Alex Adio Chairman, Audit Committee Dated this 17th day of May, 2012 Members of the Committee Alhaji Kasimu Ibrahim Mr. Eric Akinnifesi Akinduro Mr. Asue Ighodalo Alhaji Abdullahi S. Mahmoud Mr. Olakunle Alake Report of the Audit Committee
  15. 15. 16 DA N G OT E F L O U R M I L LS P L C TO THE MEMBERS OF DANGOTE FLOUR MILLS PLC We have audited the accompanying consolidated financial statements of Dangote Flour Mills Plc and its subsidiaries, set out on pages 18 to 37 which comprise the consolidated balance sheet as at 31 December 2011, the consolidated income statement, consolidated statement of cash flows and consolidated statement of value added for the year then ended, and a summary of the significant accounting policies, financial summary and other explanatory information. Directors’ Responsibility for the Consolidated Financial Statements The Directors are responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the Companies and Allied Matters Act, CAP C20, LFN 2004 and for such internal control as the Directors determine are necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Dangote Flour Mills Plc and its subsidiaries as at 31 December 2011, and of its financial performance and its cash flows for the year then ended; the Company and its subsidiaries have kept proper books of account, which are in agreement with the consolidated balance sheet and consolidated income statement in the manner required by the Companies and Allied Matters Act, CAP C20, LFN 2004 and in accordance with the Statements of Accounting Standards issued by the Financial Reporting Council of Nigeria. Chartered Accountants Lagos, Nigeria 16 May, 2012 Akintola Williams Deloitte 235 Ikorodu Road, Ilupeju P.O. Box 965, Marina Lagos, Nigeria Tel: +234 (1) 271 7800 Fax: +234 (1) 271 7801 www.deloitte.com/ng Report of the Independent Auditors
  16. 16. 17DA N G OT E F L O U R M I L LS P L C Statement of Management Responsibilities FOR THE PREPARATION AND APPROVAL OF THE FINANCIAL STATEMENTS for the Year Ended 31 December, 2011 The following statement, which should be read in conjunction with the independent auditors’ responsibilities stated in the report of the independent auditors set out on page 16, is made with a view of distinguishing the respective responsibilities of the management and those of the independent auditors in relation to the financial statements of Dangote Flour Mills Plc. Management is responsible for the preparation of the financial statements that present fairly the financial position of the Company as at 31 December 2011 and the results of its operations, cash flows and changes in equity for the year then ended, in compliance with the Statements of Accounting Standards (SAS) issued by the Financial Reporting Council of Nigeria. In preparing the financial statements, management is responsible for: • Selecting suitable accounting principles and applying them consistently; • Making judgments and estimates that are reasonable and prudent; • Stating whether SAS’s have been followed, subject to any material departures disclosed and explained in the financial statements; and • Preparing the financial statements on a going concern basis, unless it is inappropriate to presume that the Company will continue in business for the foreseeable future. Management is also responsible for: • Designing, implementing and maintaining an effective and sound system of internal controls throughout the Company; • Maintaining proper accounting records that disclose, with reasonable accuracy at any time, the financial position of the Company, and which enable them to ensure that the financial statements of the Company comply with SAS; • Maintaining statutory accounting records in compliance with legislation; • Taking such steps as are reasonably available to them to safeguard the assets of the Company; and • Detecting and preventing fraud and other irregularities. The financial statements for the year ended 31 December 2011 were approved on 16 May 2012. Mr. Ekanem Etim Mr. Suleiman Olarinde Ag. Group Managing Director Finance Director
  17. 17. 18 DA N G OT E F L O U R M I L LS P L C The following are the significant accounting policies which have been adopted. 1. Basis of accounting The consolidated financial statements are prepared on the historical cost basis. 2. Consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries which are Dangote Pasta Limited, Dangote Agrosacks Limited and Dangote Noodles Limited whose financial statements are equally made up to 31 December. All inter-company transactions and balances including unrealised inter- company profits are eliminated. 3. Turnover Turnover represents the net value of goods and services sold to third parties during the year less discounts. 4. Fixed assets Fixed assets are stated at cost less accumulated depreciation. 5. Depreciation Depreciation is calculated to write off the cost of fixed assets on a straight line basis over their expected useful lives. The principal annual rates used for this purpose are: % Freehold land — — Leasehold land and buildings — 2 Plant and machinery — 6 Motor vehicles — 25 Trucks — 25 Tools and equipment — 20 Furniture and fittings — 20 Computer equipment and softwares — 33 Depreciation is not provided in respect of freehold land and assets under construction. 6. Stocks Stocks are stated at the lower of cost based on weighted average cost and net realisable value while goods in transit are stated at the invoice price. Cost of stocks includes purchase cost, conversion cost (materials, labour and overhead) and other costs incurred to bring inventory to its present location and condition. 7. Foreign currencies Transactions in foreign currencies are recorded in Naira at the rates of exchange ruling at the time they arise. Assets and liabilities existing in foreign currencies are converted to Naira at the rates of exchange ruling at the balance sheet date. Gains or losses arising therefrom are included in the consolidated profit and loss account. 8. Debtors Debtors are stated after deduction of specific provisions for debts considered doubtful of recovery. 9. Taxation (i) Companies income tax Income tax and education tax are provided by applying the current statutory rate on the taxable profit and adjusted profit respectively. Statement of Significant Accounting Policies for the Year Ended 31 December, 2011 2 – 3 1 – 3
  18. 18. 19DA N G OT E F L O U R M I L LS P L C (ii) Deferred taxation Deferred taxation is provided using the liability method at the current rate of income tax on all timing differences between the treatment of certain items for accounting purposes and their treatment for taxation in accordance with SAS 19. 10. Employees retirement benefit scheme The Company and its subsidiaries make provision for retirement benefits in accordance with the Pension Reform Act of 2004. The contribution of the employer and employee is 7.5% of employee basic salary, housing and transport allowances. The Company and its subsidiaries also operate a gratuity scheme for its permanent Nigerian staff, the benefits under which are related to employees’ length of service and gross annual emolument. The gratuity is unfunded. The provision for liability in respect thereof is provided in full in the financial statements. 11. Investments Investments are stated at cost after specific provision for diminution in value. 12. Provisions Provisions are recognized when the Company and its subsidiaries have present obligation whether legal or constructive, as a result of a past event for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation in accordance with the Statement of Accounting Standards (SAS) 23. 13. Segment reporting The Group’s business segments are presented by products that are subject to similar risks and returns. 14. Earnings per share Earnings per share are based on the profit after taxation and the weighted average number of issued and fully paid ordinary shares during the year. Statement of Significant Accounting Policies cont’d for the Year Ended 31 December, 2011
  19. 19. 20 DA N G OT E F L O U R M I L LS P L C The Group The Company 2011 2010 2011 2010 Note N=’000 N=’000 N=’000 N=’000 Turnover 3 66,281,326 67,600,954 38,679,844 42,695,383 Cost of sales (56,582,360) (54,398,306) (31,737,937) (33,659,644) Gross profit 9,698,966 13,202,648 6,941,907 9,035,739 Distribution and administrative expenses (5,999,929) (7,042,150) (2,910,500) (2,556,816) Operating profit 3,699,037 6,160,498 4,031,407 6,478,923 Other income 4 381,526 1,035,558 259,472 561,131 Profit before interest payable 4,080,563 7,196,056 4,290,879 7,040,054 Interest income 8,724 22,287 3,767 13,964 Interest payable and similar charges (2,208,313) (2,306,458) (1,761,187) (1,572,941) Profit before taxation and exceptional item 5 1,880,974 4,911,885 2,533,459 5,481,077 Exceptional item 10.2 (1,484,265) — (1,484,265) — Profit before tax and after exceptional item 396,709 4,911,885 1,049,194 5,481,077 Taxation 6 281,005 (2,189,310) (261,710) (1,727,829) 677,714 2,722,575 787,484 3,753,248 Attributable to: Equity holders — parent 20 475,431 2,762,142 787,484 3,753,248 Non-controlling interest 21 202,283 (39,567) — — 677,714 2,722,575 787,484 3,753,248 Earnings per share — Basic (kobo) 31 14 54 16 75 The accounting policies on pages 18 and 19 and other explanatory notes on pages 23 to 35 form part of these consolidated financial statements. Consolidated Profit and Loss Account for the Year Ended 31 December, 2011
  20. 20. 21DA N G OT E F L O U R M I L LS P L C Consolidated Balance Sheet as at 31 December, 2011 }Directors The Group The Company 2011 2010 2011 2010 Note N=’000 N=’000 N=’000 N=’000 FIXED ASSETS 7 44,443,322 41,229,708 19,496,207 19,880,243 INVESTMENTS 8 — — 7,553,637 7,553,637 DEFERRED TAX ASSETS 16.1 422,323 — — — CURRENT ASSETS Stocks 9 12,021,921 8,257,459 4,899,136 2,926,685 Trade debtors 10 8,597,502 11,643,808 5,326,781 8,560,201 Other debtors and prepayments 11 2,340,529 1,223,495 365,738 807,868 Due from subsidiaries 27.1 — — 16,123,558 13,493,302 Due from related parties 27.3 13,196,480 5,066,198 13,734,353 5,252,483 Bank and cash 23 2,431,519 2,190,071 1,286,860 1,488,738 38,587,951 28,381,031 41,736,426 32,529,277 CREDITORS: Amounts falling due within one year Bank loans and overdrafts 12 23,296,158 7,976,685 19,895,984 4,481,150 Trade creditors 4,701,607 10,875,644 3,706,090 9,947,700 Other creditors and accruals 13 11,032,543 8,077,284 5,354,899 3,808,441 Due to subsidiaries 27.2 — — 1,156,049 910,005 Dividend payable 14 216,669 1,900,472 216,669 1,900,472 Loan from parent company 15.2 5,790,342 6,050,000 5,500,000 5,800,000 Taxation 6 1,333,931 1,001,464 1,114,176 697,372 Term loan 15 2,016,000 463,820 — — Due to related parties 27.4 2,120,978 1,881,052 2,236,273 2,154,529 50,508,228 38,226,421 39,180,140 29,699,669 NET CURRENT (LIABILITIES)/ASSETS (11,920,277) (9,845,390) 2,556,286 2,829,608 TOTAL ASSETS LESS CURRENT LIABILITIES 32,945,368 31,384,318 29,606,130 30,263,488 Deferred tax liability 16 (2,938,431) (3,409,430) (2,844,534) (3,136,273) CREDITORS: Amount falling due after one year Term loan 15 (2,184,000) — — — PROVISION FOR LIABILITIES AND CHARGES Gratuity 17 (977,497) (828,013) (728,605) (638,061) NET ASSETS 26,845,440 27,146,875 26,032,991 26,489,154 CAPITAL AND RESERVES Share capital 18 2,500,000 2,500,000 2,500,000 2,500,000 Share premium 19 18,116,249 18,116,249 18,116,249 18,116,249 Reserve 20 5,823,879 6,327,597 5,416,742 5,872,905 Shareholders’ fund 26,440,128 26,943,846 26,032,991 26,489,154 Non-controlling interest 21 405,312 203,029 — — 26,845,440 27,146,875 26,032,991 26,489,154 The consolidated financial statements on pages 18 to 37 were approved by the Board of Directors on 16 May, 2012 and signed on its behalf by: Alhaji Aliko Dangote Mr. Ekanem Etim The accounting policies on pages 18 and 19 and other explanatory notes on pages 23 to 35 form part of these consolidated financial statements.
  21. 21. 22 DA N G OT E F L O U R M I L LS P L C Consolidated Statement of Cash Flows for the Year Ended 31 December, 2011 The Group The Company 2011 2010 2011 2010 Note N=’000 N=’000 N=’000 N=’000 Cash flows from operating activities Cash receipts from customers 70,158,270 66,057,186 42,368,223 42,644,129 Cash payments to suppliers and employees (74,175,758) (52,338,236) (49,631,103) (35,695,980) Value added tax (net) (2,329,179) (813,705) (2,133,446) (667,250) Income tax paid 6 (279,850) (76,715) (136,645) (53,804) Net cash (used in)/provided by operating activities 22 (6,626,517) 12,828,530 (9,532,971) 6,227,095 Cash flows from investing activities Purchase of fixed assets 7 (7,049,153) (9,494,147) (1,342,518) (2,522,840) Investment in subsidiary — — — (90,000) Disposal of fixed assets 4,515 — — — Non-controlling interest in Noodles on acquisition — 10,000 — — Net cash used in investing activities (7,044,638) (9,484,147) (1,342,518) (2,612,840) Cash flows from financing activities Dividend paid (2,683,803) (1,421,988) (2,683,803) (1,421,988) Interest income 8,724 22,287 3,767 13,964 Term loan: — Obtained 15 4,200,000 1,120,000 — — — Repaid 15 (463,820) (656,180) — — Intercompany loan obtained 15.2 40,342 6,250,000 — 6,000,000 Intercompany loan repaid 15.2 (300,000) (200,000) (300,000) (200,000) Interest paid (2,208,313) (2,306,458) (1,761,187) (1,572,941) Net cash (used in)/provided by financing activities (1,406,870) 2,807,661 (4,741,223) 2,819,035 Net (decrease)/increase in cash and cash equivalents (15,078,025) 6,152,044 (15,616,712) 6,433,290 Cash and cash equivalents at 1 January (5,786,614) (11,938,658) (2,992,412) (9,425,702) Cash and cash equivalents at 31 December 23 (20,864,639) (5,786,614) (18,609,124) (2,992,412)
  22. 22. DA N G OT E F L O U R M I L LS P L C 23 1. THE COMPANY 1.1 Legal form The Company started operating as a division of Dangote Industries Limited in 1999. It was incorporated as a public limited liability company on 1 January 2006, commenced operations on the same date and was quoted on the Nigerian Stock Exchange on 4 February 2008. In 2007, the Company acquired controlling interests in Dangote Pasta Limited and Dangote Agrosacks Limited. In addition to the above, the Company acquired a controlling interest in Dangote Noodles Limited in 2008. Information on the Company’s subsidiaries are as follows: Subsidiaries Percentage held Principal activities Dangote Pasta Limited 99 Manufacture of Spaghetti, Macaroni and other Pasta products. Dangote Agrosacks Limited 99 Manufacture of packaging materials. It holds 75% equity in Obajana Agrosacks Limited. Dangote Noodles Limited 90 Manufacture and marketing of noodles products. 1.2 Principal activities The principal activities of the Company are the milling, processing and marketing of branded flour products and the manufacturing and sale of sacks. 2. STRATEGIC CONSIDERATIONS Dangote Industries Limited has confirmed its capacity and commitment to continue to support Dangote Flour Mills Group and has committed to take over all external borrowings and provide medium-term loan facilities, should the need arise. 3. SEGMENT REPORTING Flour Pasta Noodles products Sacks products products Group N=’000 N=’000 N=’000 N=’000 N=’000 3.1 Segment operating results At 31 December 2011 Revenue 37,594,544 13,499,253 12,581,764 2,605,765 66,281,326 Cost of sales (30,656,020) (12,126,334) (11,137,230) (2,662,776) (56,582,360) Gross profit 6,938,524 1,372,919 1,444,534 (57,011) 9,698,966 Profit before adjustment of unrealised profit on stock 1,052,843 402,439 (116,168) (935,372) 403,742 Unrealised profit on stock (3,649) — — (3,384) (7,033) 1,049,194 402,439 (116,168) (938,756) 396,709 Taxation (261,710) 176,925 365,790 — 281,005 Profit/(loss) after taxation 787,484 579,364 249,622 (938,756) 677,714 At 31 December 2010 Revenue 42,695,383 12,783,696 10,917,607 1,204,268 67,600,954 Cost of sales (32,717,881) (10,954,880) (9,549,291) (1,176,254) (54,398,306) Gross profit 9,977,502 1,828,816 1,368,316 28,014 13,202,648 Profit before taxation 5,481,077 1,118,053 248,997 (1,936,242) 4,911,885 Taxation (1,727,829) (380,602) (80,879) — (2,189,310) Profit after taxation 3,753,248 737,451 168,118 (1,936,242) 2,722,575 Notes to the Consolidated Financial Statements for the Year Ended 31 December, 2011
  23. 23. 24 DA N G OT E F L O U R M I L LS P L C Flour Pasta Noodles products Sacks products products Group N=’000 N=’000 N=’000 N=’000 N=’000 3.2 Segment assets/liabilities At 31 December 2011 Total assets 61,231,501 22,505,554 20,382,397 2,498,615 106,618,067 Intercompany adjustments (16,123,486) (7,040,986) (54,767) 54,768 (23,164,471) 45,108,015 15,464,568 20,327,630 2,553,383 83,453,596 Total liabilities 42,755,795 15,160,269 16,582,951 5,273,612 79,772,627 Intercompany adjustments (1,156,049) — (19,462,418) (2,546,004) (23,164,471) 41,599,746 15,160,269 2,879,467 2,727,608 56,608,156 At 31 December 2010 Total assets 52,409,520 15,879,751 18,167,088 1,963,007 88,419,366 Intercompany adjustments (13,493,230) 914,116 (3,181,582) (3,047,931) (18,808,627) 38,916,290 16,793,867 14,985,506 (1,084,924) 69,610,739 Total liabilities 33,474,003 9,100,616 14,625,466 3,799,249 60,999,334 Intercompany adjustments (910,005) (3,388,861) (11,241,897) (2,994,707) (18,535,470) 32,563,998 5,711,755 3,383,569 804,542 42,463,864 Segment assets consist of fixed assets, investments, deferred tax assets, cash and bank, receivables, inventories and due from related companies. Segment liabilities consist of bank loans and overdraft, payables, due to related companies, dividend payable, taxation and gratuity. 3.3 There is also no distinguishable component of the entity that is engaged in providing products or services within a particular economic environment and that is subject to risk and returns that are different from those of components operating in other economic environments. The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 4. OTHER INCOME Provision no longer required 221,660 303,302 205,395 287,132 Sundry income 132,916 697,256 27,188 238,999 Export grant — 35,000 — 35,000 Insurance claims 26,950 — 26,889 — 381,526 1,035,558 259,472 561,131 5. PROFIT BEFORE TAXATION AND EXCEPTIONAL ITEM This is arrived at after charging: Directors’ emoluments: — Fees 2,500 3,100 2,500 3,100 — Salaries and allowances 103,263 107,781 63,757 54,075 Audit fee 57,788 61,768 31,000 30,000 Depreciation 3,760,371 3,391,277 1,661,113 1,493,041 Loss on sale of fixed assets 1,982 — — — Management fee (Note 28) — 593,962 — — Notes to the Consolidated Financial Statements cont’d for the Year Ended 31 December, 2011
  24. 24. DA N G OT E F L O U R M I L LS P L C 25 The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 6. TAXATION Profit and loss account Tax based on the profit for the year Income tax 530,387 501,919 497,432 400,621 Education tax 81,930 203,704 56,017 138,166 Prior year underprovision — 21,488 — — 612,317 727,111 553,449 538,787 Deferred taxation (Note 16) (893,322) 1,462,199 (291,739) 1,189,042 (281,005) 2,189,310 261,710 1,727,829 Balance sheet At 1 January 1,001,464 351,068 697,372 212,389 As per profit and loss account 612,317 727,111 553,449 538,787 Payments during the year (279,850) (76,715) (136,645) (53,804) At 31 December 1,333,931 1,001,464 1,114,176 697,372 The charges for taxation in these financial statements were based on the provisions of the Companies Income Taxation Act, CAP C21, LFN 2004 as amended and the Education Tax Act, CAP E4, LFN 2004. 7. FIXED ASSETS 7.1 The Group Freehold/ Computer Assets Leasehold equipment Furniture under land and Plant and Tools and and and Motor construc- buildings machinery equipment softwares fittings vehicles Trucks tion Total N=’000 N=’000 N=’000 N=’000 N=’000 N=’000 N=’000 N=’000 N=’000 Cost At 1 January 3,718,994 33,287,036 800,087 142,436 284,908 1,654,630 2,043,070 11,363,311 53,294,472 Additions 817,521 1,630,567 47,082 23,357 29,109 534,783 725,500 3,241,234 7,049,153 Transfers 13,034 4,318,703 663 — — — — (4,332,400) — Disposals — — — (4,981) — (12,027) — — (17,008) Adjustments (Note 7.4) – (5,995) – – (4,273) – – (61,375) (71,643) At 31 December 4,549,549 39,230,311 847,832 160,812 309,744 2,177,386 2,768,570 10,210,770 60,254,974 Depreciation At 1 January 305,872 9,471,021 644,516 100,568 155,850 727,838 659,099 — 12,064,764 Charge for the year 75,883 2,472,234 117,819 24,968 46,062 437,706 585,699 — 3,760,371 Disposals — — — (3,495) — (7,016) — — (10,511) Adjustments (Note 7.4) — (1,929) — — (1,043) — — — (2,972) At 31 December 381,755 11,941,326 762,335 122,041 200,869 1,158,528 1,244,798 — 15,811,652 Net book value At 31 December 2011 4,167,794 27,288,985 85,497 38,771 108,875 1,018,858 1,523,772 10,210,770 44,443,322 At 31 December 2010 3,413,122 23,816,015 155,571 41,868 129,058 926,792 1,383,971 11,363,311 41,229,708 Notes to the Consolidated Financial Statements cont’d for the Year Ended 31 December, 2011
  25. 25. 26 DA N G OT E F L O U R M I L LS P L C 7.2 The Company Computer Assets Leasehold equipment Furniture under land and Plant and Tools and and and Motor construc- buildings machinery equipment softwares fittings vehicles Trucks tion Total N=’000 N=’000 N=’000 N=’000 N=’000 N=’000 N=’000 N=’000 N=’000 Cost At 1 January 2,411,345 13,255,456 470,622 75,949 123,630 256,080 2,043,070 6,571,993 25,208,145 Additions 5,663 4,155 15,183 11,395 16,234 24,187 725,500 540,201 1,342,518 Adjustments (Note 7.4) – (5,995) – – – – – (61,375) (67,370) Transfers 13,034 76,170 663 — — — — (89,867) — At 31 December 2,430,042 13,329,786 486,468 87,344 139,864 280,267 2,768,570 6,960,952 26,483,293 Depreciation At 1 January 191,226 3,801,437 385,959 56,730 77,677 155,774 659,099 — 5,327,902 Charge for the year 48,525 888,444 46,054 8,627 20,736 63,028 585,699 — 1,661,113 Adjustments (Note 7.4) — (1,929) — — — — — — (1,929) At 31 December 239,751 4,687,952 432,013 65,357 98,413 218,802 1,244,798 — 6,987,086 Net book value At 31 December 2011 2,190,291 8,641,834 54,455 21,987 41,451 61,465 1,523,772 6,960,952 19,496,207 At 31 December 2010 2,220,119 9,454,019 84,663 19,219 45,953 100,306 1,383,971 6,571,993 19,880,243 7.3 Assets under construction represent expenditure incurred on the Danvita Mills at Apapa. 7.4 Adjustments are in respect of certain assets previously capitalised in error and cost of obsolete spares for Semolina project included in capital work-in-progress now rectified. The Company 2011 2010 N=’000 N=’000 8. INVESTMENTS (UNQUOTED) Dangote Pasta Limited 49,500,000 ordinary shares of N=1 each in Dangote Pasta Limited 2,507,637 2,507,637 Dangote Agrosacks Limited 84,150,000 ordinary shares of N=1 each in Dangote Agrosacks Limited 4,956,000 4,956,000 Dangote Noodles Limited 90,000,000 ordinary shares of N=1 each in Dangote Noodles Limited 90,000 90,000 7,553,637 7,553,637 Notes to the Consolidated Financial Statements cont’d for the Year Ended 31 December, 2011
  26. 26. DA N G OT E F L O U R M I L LS P L C 27 Notes to the Consolidated Financial Statements cont’d for the Year Ended 31 December, 2011 The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 9. STOCKS Raw materials and work-in-progress 7,084,813 4,618,241 3,562,013 2,227,736 Finished goods 2,367,772 2,058,540 195,456 186,179 Engineering spares and other stocks 2,151,319 1,479,209 355,109 319,326 Goods-in-transit 786,558 193,444 786,558 193,444 12,390,462 8,349,434 4,899,136 2,926,685 Provision for slow moving items (368,541) (91,975) — — 12,021,921 8,257,459 4,899,136 2,926,685 10. TRADE DEBTORS Trade debtors 13,143,493 14,430,365 9,353,579 10,926,326 Provision for bad and doubtful debts (4,545,991) (2,786,557) (4,026,798) (2,366,125) 8,597,502 11,643,808 5,326,781 8,560,201 10.1 Provision for bad debts Provision for bad and doubtful debts — insured (1,794,377) (310,112) (1,794,377) (310,112) Provision for bad and doubtful debts — others (2,751,614) (2,476,445) (2,232,421) (2,056,013) (4,545,991) (2,786,557) (4,026,798) (2,366,125) 10.2 N= 3,588,954,753 of the Dangote Flour Mills Plc’s trade debtors are backed by an insurance bond. The amounts are overdue by more than one year; however, the Company is confident that these would be recovered from the insurance companies. The two insurance companies involved, namely NEM Insurance Plc and Niger Insurance Plc, are not making significant payments against the policies. The Company has commenced discussions with the National insurance commission (NAICOM), the insurance regulatory body, to facilitate adjudication in this matter with the two insurance companies. For prudence sake, we have provided for 50% of the amounts concerned, amounting to N=1,794,377,377. In view of previous provisions, the Company has received a letter of indemnity from Dangote Industries Limited confirming that it will make up any shortfall in excess of this 50% provision should the need arise. The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 11. OTHER DEBTORS AND PREPAYMENTS Other debtors 603,417 370,613 85,144 74,006 Advances to suppliers 1,783,098 667,579 526,466 667,579 Staff debtors 75,570 113,022 34,123 95,771 Prepayments 427,039 371,854 239,165 251,538 2,889,124 1,523,068 884,898 1,088,894 Provision for doubtful balances (548,595) (299,573) (519,160) (281,026) 2,340,529 1,223,495 365,738 807,868 12. BANK LOANS AND OVERDRAFTS Bank overdrafts 10,085,546 4,431,208 8,185,372 1,868,623 Short-term loans 13,210,612 3,545,477 11,710,612 2,612,527 23,296,158 7,976,685 19,895,984 4,481,150 The loans and overdrafts are secured by Corporate Guarantee of Dangote Industries Limited.
  27. 27. 28 DA N G OT E F L O U R M I L LS P L C The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 13. OTHER CREDITORS AND ACCRUALS Customers’ deposits 1,570,285 1,121,173 900,404 704,918 Accruals 4,266,239 2,140,109 1,329,133 627,245 Staff pension (Note 13.1) 116,281 104,871 17,085 10,875 VAT payable 1,904,891 2,123,395 984,212 1,251,595 Other creditors 2,138,183 2,458,614 1,246,118 1,156,866 Withholding tax 220,547 129,122 107,190 56,942 PAYE, NHF and ITF deductions 34,516 — — — Advance on haulage 3,649 — — — Contractors 7,195 — — — Deferred income (Note 13.2) 770,757 — 770,757 — 11,032,543 8,077,284 5,354,899 3,808,441 13.1 Staff pension At 1 January 104,871 88,772 10,875 6,558 Provision for the year 434,807 318,943 161,440 118,589 Payment for the year (423,397) (302,844) (155,230) (114,272) At 31 December 116,281 104,871 17,085 10,875 13.2 Deferred income represents wheat rebate received in respect of wheat imported in 2011 which was included in closing stock at year end. This credit amount is deferred and it is to be used to reduce cost of sales in future when the wheat is consumed. The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 14. DIVIDEND PAYABLE At 1 January 1,900,472 822,460 1,900,472 822,460 Dividend declared (Note 20) 1,000,000 2,500,000 1,000,000 2,500,000 Payment during the year (2,683,803) (1,421,988) (2,683,803) (1,421,988) At 31 December 216,669 1,900,472 216,669 1,900,472 15. TERM LOAN At 1 January 463,820 — — — Loan obtained during the year (Note 15.1) 4,200,000 1,120,000 — — Repayment during the year (463,820) (656,180) — — At 31 December 4,200,000 463,820 — — Due within one year (2,016,000) (463,820) — — Due after more than one year 2,184,000 — — — 15.1 During the year, Agrosacks obtained a N=4.5 billion loan from Guaranty Trust Bank Plc. The Company has drawn down N=4.2 billion to finance the purchase and installation of 3 new production lines for the manufacture of polypropylene bags and sacks and refinance N=1.4 billion facilities with Oceanic Bank Plc. The loan was obtained in January 2011 and is repayable within 36 months at 11% interest rate per annum with a moratorium period of 12 months. The principal repayment commenced in January 2012. The loan is secured by debenture on the assets of Dangote Agrosacks Limited and Obajana Agrosacks Limited. Notes to the Consolidated Financial Statements cont’d for the Year Ended 31 December, 2011
  28. 28. DA N G OT E F L O U R M I L LS P L C 29 The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 15.2 Loan from parent company At 1 January 6,050,000 — 5,800,000 — Loan obtained during the year 40,342 6,250,000 — 6,000,000 Repayment during the year (300,000) (200,000) (300,000) (200,000) At 31 December 5,790,342 6,050,000 5,500,000 5,800,000 The Company obtained a facility of N=5 billion for its working capital requirement and N=1billion commercial paper from Dangote Industries Limited. The working capital facility is repayable on 27 June 2012 at an interest rate of 9.25%. The Commercial Paper is repayable in equal monthly instalments of N=100 million at an interest rate of 9%. In addition to the Company loans, a subsidiary, Dangote Noodles Limited obtained a loan of N=290 million from Dangote Industries Limited for 90 days repayable at interest rate is 8.5% per annum. The facility has been rolled over for another 12 months repayable on a rollover basis at interest rate of 10% per annum. The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 16. DEFERRED TAX LIABILITY At 1 January (3,409,430) 328,067 (3,136,273) 328,067 Prior year adjustment (Note 20.1) — (2,275,298) — (2,275,298) Provision for the year (Note 6) 893,322 (1,462,199) 291,739 (1,189,042) Transferred to deferred tax assets (16.1) (422,323) — — — At 31 December (2,938,431) (3,409,430) (2,844,534) (3,136,273) 16.1 Deferred tax asset Provision for the year (Note 16) 422,323 — — — The Group has adopted the Statement of Accounting Standards (SAS) 19 on deferred taxation which is computed using the liability method. The deferred tax asset arising from Dangote Pasta Limited has been recorded in these financial statements as it is likely that the amount will be recoverable from profit from operations in the foreseeable future. The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 17. GRATUITY At 1 January 828,013 559,926 638,061 464,623 Provision for the year 277,743 310,670 183,274 200,483 Payments during the year (128,259) (42,583) (92,730) (27,045) At 31 December 977,497 828,013 728,605 638,061 The staff gratuity provision is not funded. 18. SHARE CAPITAL Authorised 6,000,000,000 ordinary shares of 50k each 3,000,000 3,000,000 3,000,000 3,000,000 Issued and fully paid 5,000,000,000 ordinary shares of 50k each 2,500,000 2,500,000 2,500,000 2,500,000 19. SHARE PREMIUM At 31 December 18,116,249 18,116,249 18,116,249 18,116,249 Notes to the Consolidated Financial Statements cont’d for the Year Ended 31 December, 2011
  29. 29. 30 DA N G OT E F L O U R M I L LS P L C 2011 2010 Total Total N=’000 N=’000 20. RESERVES The Group At 1 January 6,327,597 7,573,899 Prior year adjustment (Note 20.1) 20,851 (1,513,675) Dividend declared (1,000,000) (2,500,000) Consolidation adjustment — 5,231 Transferred from profit and loss account 475,431 2,762,142 At 31 December 5,823,879 6,327,597 The Company At 1 January 5,872,905 6,133,332 Prior year adjustment (243,647) (1,513,675) Dividend declared (1,000,000) (2,500,000) Transferred from profit and loss account 787,484 3,753,248 At 31 December 5,416,742 5,872,905 20.1 Prior year adjustment Intercompany reconciliation adjustment from long outstanding balances — 619,228 Reversal of stale cheque for duty duplicated in prior year — 58,418 Reconciliation adjustment from long outstanding balances in creditors — 83,977 Deferred tax (Note 16) — (2,275,298) Reversal of sales invoices duplicated in prior year (Note 20.2) (243,647) — Prior year adjustment on interest refunded (Note 20.3) 264,498 — 20,851 (1,513,675) 20.2 The prior year adjustment relates to the correction of duplicated invoices in customers’ accounts in years 2006 and 2007. 20.3 This adjustment in Agrosacks Limited was in respect of interest overcharged in previous years by Oceanic Bank Plc refunded during the year. 20.4 On 29 September 2011, a dividend of 20 kobo per ordinary share of 50 kobo each totalling N=1 billion in respect of year 2010 was approved by shareholders and subsequently paid. At the Board of Directors meeting held on16 May 2012, the Directors proposed a final dividend of 10 kobo per ordinary share of 50 kobo each amounting to N= 500 million. The dividend is subject to approval by the shareholders at the Annual General Meeting net of withholding tax at the appropriate rate. Consequently, it has not been included as a liability in these financial statements as they do not constitute present obligation of the Company in accordance with Statement of Accounting Standard, SAS 23 on Provisions, Contingent Liabilities and Contingent Assets. Notes to the Consolidated Financial Statements cont’d for the Year Ended 31 December, 2011
  30. 30. DA N G OT E F L O U R M I L LS P L C 31 Notes to the Consolidated Financial Statements cont’d for the Year Ended 31 December, 2011 The Group 2011 2010 N=’000 N=’000 21. NON-CONTROLLING INTERESTS Profit and loss account Dangote Agrosacks Limited 290,642 152,626 Dangote Pasta Limited 2,533 1,896 Dangote Noodles Limited (93,537) (193,874) Share of prior year under provision of tax liability — (215) Non-controlling interest share of prior year adjustment 2,645 — 202,283 (39,567) Balance sheet At 1 January 203,029 232,596 On acquisition of Dangote Noodles Limited — 10,000 Profit and loss 202,283 (39,567) At 31 December 405,312 203,029 The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 22. RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Profit after taxation and exceptional item 677,714 2,722,575 787,484 3,753,248 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,760,371 3,391,277 1,661,113 1,493,041 Interest income (8,724) (22,287) (3,767) (13,964) Interest expenses 2,208,313 2,306,458 1,761,187 1,572,941 Prior year adjustment 20,851 (1,513,675) (243,647) (1,513,675) Fixed assets adjustment/transfer 68,671 111,361 65,441 111,361 Consolidation adjustment — 5,231 — — Loss on disposal of fixed assets 1,982 — — — Changes in assets and liabilities: (Increase)/decrease in stocks (3,764,462) (10,541) (1,972,451) 322,103 Increase in trade debtors 3,046,306 (2,240,875) 3,233,420 (722,105) Decrease/(increase) in other debtors and prepayments (1,117,034) 458,347 442,131 144,371 Decrease/(increase) in due from subsidiaries — — (2,630,257) (3,224,268) Decrease/(increase) in due from related companies (8,130,282) 1,316,354 (8,481,870) (586,994) Increase in trade creditors (6,174,037) 4,467,365 (6,241,610) 4,733,111 (Decrease)/increase in other creditors and accruals 2,955,259 (298,375) 1,546,457 (1,429,514) (Decrease)/increase in due to related companies 239,926 (2,520,665) 81,745 (2,470,358) (Decrease)/increase in due to subsidiaries — — 246,044 (64,964) Increase in taxation payable 332,467 650,396 416,804 484,983 Increase in gratuity provision 149,484 268,087 90,544 173,438 (Decrease)/ increase in deferred tax liability (470,999) 3,737,497 (291,739) 3,464,340 Increase in deferred tax asset (422,323) — — — Total adjustments (7,304,231) 10,105,955 (10,320,456) 2,473,847 Net cash provided by operating activities (6,626,517) 12,828,530 (9,532,971) 6,227,095
  31. 31. 32 DA N G OT E F L O U R M I L LS P L C Notes to the Consolidated Financial Statements cont’d for the Year Ended 31 December, 2011 The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 23. RECONCILIATION OF CASH AND CASH EQUIVALENTS Cash and bank balances 2,431,519 2,234,799 1,286,860 1,533,466 Provision — (44,728) — (44,728) 2,431,519 2,190,071 1,286,860 1,488,738 Bank loans and overdrafts (23,296,158) (7,976,685) (19,895,984) (4,481,150) (20,864,639) (5,786,614) (18,609,124) (2,992,412) 24. INFORMATION REGARDING DIRECTORS AND EMPLOYEES 24.1 Directors (i) Directors’ emolument comprises: Fees 2,500 3,100 2,500 3,100 Salaries and allowances 103,263 107,781 63,757 54,075 105,763 110,881 66,257 57,175 (ii) Highest paid Director 24,270 24,270 24,270 24,270 (iii) The number of Directors excluding the Chairman with gross emoluments within the bands stated below were: N= N= Number Number Number Number Up to 5,000,000 8 8 8 8 10,000,001 — 15,000,000 3 3 — — 15,000,001 and above 2 2 2 2 24.2 Employees Average number of persons employed during the year: Management 374 207 114 115 Senior staff 1,055 853 449 410 Junior staff 3,503 3,396 465 406 4,932 4,456 1,028 931 N=’000 N=’000 N=’000 N=’000 Aggregate payroll costs: Wages, salaries, allowances and other benefits 3,175,924 3,183,625 1,613,609 1,472,432 Provision for gratuity 277,743 310,670 183,274 200,483 Pension cost 113,479 62,981 40,296 31,438 3,567,146 3,557,276 1,837,179 1,704,353
  32. 32. DA N G OT E F L O U R M I L LS P L C 33 Notes to the Consolidated Financial Statements cont’d for the Year Ended 31 December, 2011 The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 The number of employees with gross emoluments within the bands stated below are: N= N= Number Number Number Number Up to 200,000 886 — — — 200,001 — 400,000 2,021 1,275 — 2 400,001 — 600,000 498 1,450 114 268 600,001 — 800,000 368 581 175 159 800,001 — 1,000,000 512 502 252 145 1,000,001 and above 647 648 487 357 4,932 4,456 1,028 931 25. CONTINGENT LIABILITIES 25.1 There are contingent liabilities in respect of pending litigation amounting to N=190.59 million (2010 – Nil). The Directors are of the opinion that the liabilities will not result in outflow of resources and therefore no provision has been made in these financial statements. 25.2 The Directors are of the opinion that all known commitments and liabilities which are relevant in assessing the state of affairs of the Group has been taken into consideration in the preparation of these consolidated financial statements. 26. CAPITAL COMMITMENTS The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 Capital commitments 68,858 336,354 68,858 336,354 The capital commitments were made for capacity expansion projects in Apapa. 27. RELATED PARTY TRANSACTIONS During the year the Company had dealings with subsidiaries and related companies. The balances emanating from the transactions have been disclosed in the balance sheet as analysed below: The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 27.1 Due from subsidiaries Dangote Pasta Limited — — 13,585,059 11,898,469 Dangote Noodles Limited — — 2,538,499 1,594,833 — — 16,123,558 13,493,302 27.2 Due to subsidiaries Dangote Agrosacks Nigeria Limited — — 1,156,049 910,005
  33. 33. 34 DA N G OT E F L O U R M I L LS P L C Notes to the Consolidated Financial Statements cont’d for the Year Ended 31 December, 2011 The Group The Company 2011 2010 2011 2010 N=’000 N=’000 N=’000 N=’000 27.3 Due from related parties Dangote Cement Plc 372,048 1,657,430 — — Dangote Industries Limited 12,547,901 3,424,703 13,734,564 5,226,905 National Salt Company of Nigeria Plc 75,830 73,973 — 25,649 Dangote Fisheries Nigeria Limited 1,500 1,500 1,500 1,500 Dangote Port Operations — 200 — 140 Dangote Textiles Nigeria Limited 55,593 55,593 51,000 51,000 Dangote Foundation 66,903 61,787 — — Savannah Sugar Limited — 50 — — Dangote Sugar Refinery Plc 120,100 15,341 — — ADSTAR International Company 3,353 — — — Dangote Freight Limited 15,381 — — — Others 339,510 78,946 — — 13,598,119 5,369,523 13,787,064 5,305,194 Less provision (401,639) (303,325) (52,711) (52,711) 13,196,480 5,066,198 13,734,353 5,252,483 27.4 Due to related parties Dangote Nigeria Limited 76,816 76,709 68,061 68,061 Dangote Transport Nigeria Limited 1,871,357 1,773,245 1,779,631 1,779,631 Dangote Sugar Refinery Plc — — 100,883 61,295 Bluestar Shipping Company 44,502 4,592 48,846 4,592 Greenview Development Nigeria Limited 27,591 26,500 27,591 27,591 National Salt Company of Nigeria Plc — — 924 — Dangote Port Operations 9,813 — 9,813 — Dansa Foods 1,493 — — — Dangote Cement Plc — — 200,524 213,359 Dancom Technologies Limited 50,630 6 — — Bulk Pack Nigeria Limited 20,527 — — — Others 18,249 — — — 2,120,978 1,881,052 2,236,273 2,154,529 27.5 Dangote Pasta Limited Dangote Pasta Limited is a subsidiary company to Dangote Flour Mills Plc. During the year, the supply of wheat to Dangote Pasta Limited amounted to N=8.93 billion (2010: N=12.1 billion). 27.6 Dangote Agrosacks Nigeria Limited Dangote Agrosacks Nigeria Limited is a subsidiary of Dangote Flour Mills Plc. During the year, the Company had transactions amounting to N=657 million (2010: N=910 million) for the supply of bags for packaging of Flour, Bran, Danvita etc. 27.7 Dangote Industries Limited Dangote Industries Limited (DIL) is the parent Company of Dangote Flour Mills Plc. DIL undertakes payments for expansion projects, recommends external consultants, negotiates bank facilities and purchases raw materials on behalf of the Group. DIL operates a margin call account along with its related party, Bulk Commodities (See Note 27.12) in relation to the wheat purchase transactions and predetermines the price of wheat paid by Dangote Flour Mills for the year to 31 December 2011 at $270 per tonne including carriage, freight and other charges, on commercial terms that may or may not be available with third parties (2010 — $270 per tonne). 27.8 Dangote Transport Nigeria Limited Dangote Transport Nigeria Limited is a related company to Dangote Flour Mills Plc. The Group had transactions with respect to haulage of finished products to customers as well as wheat to other plants.
  34. 34. DA N G OT E F L O U R M I L LS P L C 35 Notes to the Consolidated Financial Statements cont’d for the Year Ended 31 December, 2011 27.9 Dangote Sugar Refinery Plc Dangote Sugar Refinery Plc is a related company to Dangote Flour Mills Plc. Dangote Sugar supplies power to Dangote Flour Mills Plc. 27.10 National Salt Company of Nigeria Plc (NASCON) NASCON is a related company to Dangote Flour Mills Plc. There were no material transactions between the two companies during the year. 27.11 Dangote Noodles Limited Dangote Noodles Limited is a subsidiary company of Dangote Flour Mills Plc. During the year the Company had transactions amounting to N=1.09 billion (2010: N=1.46 billion) for flour supply and other payments undertaken on behalf of Dangote Noodles Limited. 27.12 Bulk Commodities Bulk Commodities is a related party of Dangote Industries Limited, the parent Company of Dangote Flour Mills Plc. Bulk Commodities, a Dubai based entity, provides support in organisation of the carriage and freight for Dangote Flour Mills Plc as well as providing financing of margin calls on behalf of Dangote Industries Limited for the purchase of wheat on behalf of Dangote Flour Mills Plc. 28. MANAGEMENT FEE All the companies within the Group, namely Dangote Flour Mills Plc., Dangote Pasta Limited, Dangote Agrosacks Limited and Dangote Noodles Limited entered into management and technical service agreement dated 2 January 2006 with Dangote Industries Limited (DIL). The agreement is for an initial period of five years with an option to renew for a further period of five years subject to termination by either party in accordance with the terms of the agreement. As consideration for the services provided, a sum equivalent to 2% of the net revenue from Dangote Flour Mills Plc, Dangote Pasta Limited, Dangote Agrosacks Limited and Dangote Noodles sales for each month is payable to Dangote Industries Limited. Management fees for the financial year ended 31 December 2011 were waived by DIL (2010 — N=593.9 million). 29. COMPARATIVE FIGURES Certain balances in prior year have been reclassified where necessary for more meaningful comparison. 30. POST BALANCE SHEET EVENTS There were no post balance sheet events that could have a material effect on the state of affairs of the Group as at 31 December 2011 and on the profit for the year ended on that date which have not been adequately provided for or disclosed in these consolidated financial statements. 31. EARNINGS PER SHARE Earnings per share are based on profit after taxation and the number of issued and fully paid ordinary shares at the end of each financial year.
  35. 35. 36 DA N G OT E F L O U R M I L LS P L C Consolidated Value Added Statement for the Year Ended 31 December, 2011 The Group The Company 2011 2010 2011 2010 N=’000 % N=’000 % N=’000 % N=’000 % Turnover 66,281,326 67,600,954 38,679,844 42,695,383 Other income 381,526 1,035,558 259,472 561,131 Interest income 8,724 22,287 3,767 13,964 66,671,576 68,658,799 38,943,083 43,270,478 Less: Bought-in-materials and services: — Imported (48,933,339) (34,617,298) (27,319,652) (30,775,852) — Local (7,805,698) (19,874,605) (5,314,758) (2,243,214) Value Added 9,932,539 100 14,166,896 100 6,308,673 100 10,251,412 100 Applied as follows: To pay employees Salaries, wages and other benefits 3,567,146 36 3,557,276 25 1,837,179 29 1,704,353 17 To pay providers of capital Interest payable and similar charges 2,208,313 22 2,306,458 16 1,761,187 28 1,572,941 15 To pay government Taxation 612,317 6 727,111 5 553,449 9 538,787 5 To provide for enhancement of assets and growth Deferred taxation (893,322) (9) 1,462,199 10 (291,739) (5) 1,189,042 11 Depreciation 3,760,371 38 3,391,277 25 1,661,113 27 1,493,041 15 Profit and loss account 677,714 7 2,722,575 19 787,484 12 3,753,248 37 9,932,539 100 14,166,896 100 6,308,673 100 10,251,412 100 Value added represents the additional wealth the Company has been able to create by its own and its employees’ efforts. This statement shows the allocation of that wealth among employees, capital providers, government and that retained for future creation of more wealth.
  36. 36. DA N G OT E F L O U R M I L LS P L C 37 Consolidated Five-Year Financial Summary for the Year Ended 31 December, 2011 31 DECEMBER 2011 2010 2009 2008 2007 N=’000 N=’000 N=’000 N=’000 N=’000 ASSETS/(LIABILITIES) Fixed assets 44,443,322 41,229,708 35,238,199 32,449,283 27,357,655 Investments — — — 601,900 — Deferred tax asset 422,323 — 328,067 — — Net current liabilities (11,920,277) (9,845,390) (6,583,596) (7,839,343) (4,636,107) 32,945,368 31,384,318 28,982,670 25,211,840 22,721,548 Deferred tax liability (2,938,431) (3,409,430) — — — Long-term liabilities (2,184,000) — — — (187,012) Provision for liabilities and charges (977,497) (828,013) (559,926) (582,037) (389,402) 26,845,440 27,146,875 28,422,744 24,629,803 22,145,134 CAPITAL AND RESERVES Share capital 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 Share premium 18,116,249 18,116,249 18,116,249 18,116,249 18,116,249 Revenue reserve 5,823,879 6,327,597 7,573,899 3,812,016 1,369,458 Non-controlling interest 405,312 203,029 232,596 201,538 159,427 26,845,440 27,146,875 28,422,744 24,629,803 22,145,134 TURNOVER AND PROFIT Turnover 66,281,326 67,600,954 61,388,064 47,927,300 42,153,272 Profit before taxation and exceptional item 396,709 4,911,885 5,374,056 3,167,625 675,703 Taxation 281,005 (2,189,310) 187,024 (178,066) (114,144) Non-controlling interest (202,283) 39,567 (30,348) (42,111) (36,849) Profit transferred to revenue reserve 475,431 2,762,142 5,530,732 2,947,448 524,710 Per share data — 50k ordinary share Earnings — Basic (kobo) 14 54 111 60 11 Net assets (Naira) 5 5 6 5 4 Company Five-Year Financial Summary for the Year Ended 31 December, 2011 31 DECEMBER 2011 2010 2009 2008 2007 N=’000 N=’000 N=’000 N=’000 N=’000 ASSETS/(LIABILITIES) Fixed assets 19,496,207 19,880,243 18,961,805 15,732,634 13,375,453 Investments 7,553,637 7,553,637 7,463,637 7,463,637 7,750,559 Deferred tax asset — — 328,067 — — Net current assets 2,556,286 2,829,608 460,695 337,950 1,094,309 29,606,130 30,263,488 27,214,204 23,534,221 22,220,321 Deferred tax liability (2,844,534) (3,136,273) — — — Provision for liabilities and charges (728,605) (638,061) (464,623) (376,362) (312,829) 26,032,991 26,489,154 26,749,581 23,157,859 21,907,492 CAPITAL AND RESERVES Share capital 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 Share premium 18,116,249 18,116,249 18,116,249 18,116,249 18,116,249 Revenue reserve 5,416,742 5,872,905 6,133,332 2,541,610 1,291,243 26,032,991 26,489,154 26,749,581 23,157,859 21,907,492 TURNOVER AND PROFIT Turnover 38,679,844 42,695,383 41,839,919 30,109,610 31,303,845 Profit before taxation and exceptional item 1,049,194 5,481,077 5,156,801 1,758,137 375,651 Taxation (261,710) (1,727,829) 203,060 (54,045) (85,316) Retained profit transferred to revenue reserve 787,484 3,753,248 5,359,861 1,704,092 290,335 Per share data — 50k ordinary share Earnings — Basic (kobo) 16 75 107 34 6 Net assets (Naira) 5 5 5 5 4 Note: 1. Earnings per share are based on profit after taxation and the number of issued and fully paid ordinary shares at the end of each financial year. 2. Net assets per share are based on net assets and the number of issued and fully paid ordinary shares at the end of each financial year.
  37. 37. 38 DA N G OT E F L O U R M I L LS P L C Share Capital History/Unclaimed Dividend Dangote Flour Mills Plc was quoted on the Nigerian Stock Exchange on 4th February, 2008. The share capital history of the Company is as indicated below: Date Authorised Share Capital Issued and Fully Paid Consideration Value Shares Value Shares 04/02/2008 3,000,000,000 6,000,000,000 2,500,000,000 5,000,000,000 Cash DANGOTE UNCLAIMED DIVIDEND AS AT 31ST DECEMBER, 2011 Dividend Declared Date Declared Dividend Paid Unpaid Balance Dangote Dividend 1 900,000,000.00 16.12.2009 809,234,781.12 90,765,218.88 Dangote Dividend 2 1,350,000,000.00 16.12.2009 1,181,044,963.35 168,955,036.65 Dangote Dividend 3 2,250,000,000.00 25.10.2010 1,944,411,903.00 305,588,097.00 Dangote Dividend 4 900,000,000.00 17.10.2011 740,844,741.06 159,155,258.94 SHARE CAPITAL HISTORY
  38. 38. DA N G OT E F L O U R M I L LS P L C 39

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