Untitled - Nairametrics

Transcription

FrieslandCampina WAMCO Nigeria PLC
The Way We Work
With milk, you experience everything good in life: success, good health, active life and so much more. At FrieslandCampina
WAMCO Nigeria, we bring the goodness of milk to you through our extensive range of products. We aspire to be the
world’s most professional, successful and attractive dairy company. The way we work has the following three pillars:
Embrace Challenge - we strive for performance improvement by continuously raising the bar and utilizing our
conceptual strength.
Grow Together - our people feel connected to the company, and operate on a ‘we do this together’ attitude. We are
proud of and support the vision and strategy of the company.
Feel Accountable - we work with a purpose; holding ourselves and others accountable for high levels of performance
while putting in our best.
Together at FrieslandCampina WAMCO Nigeria, we Embrace Challenge, Grow Together and Feel Accountable.
Table of contents
General
Financial highlights
3
Notice of AGM
4
Chairman’s statement
7
The board of directors
12
Reports & financial statements
Directors, professional advisers and registered office
16
Report of the directors
17
Statement of director’s responsibilities
24
Report of the audit committee
25
Independent auditor’s report
26
Statement of accounting policies
27
Profit and loss account
30
Balance sheet
31
Statement of cash flows
32
Notes to the financial statements
Value added statement
33
Five-year financial summary
42
Proxy card
45
2
41
annual report 2010
Financial highlights
for the year ended 31 December 2010
2010
=N=’000
2009
=N=’000
% Increase
Turnover
90,399,530
76,377,850
18.36
Profit before taxation
16,983,557
15,353,130
10.62
Taxation
(5,364,646)
(4,796,824)
11.84
Profit after taxation
11,618,911
10,556,306
10.07
Share capital
390,535
390,535
_
Shareholders’ funds
12,524,057
11,883,067
5.39
390,534,375
390,534,375
_
29.75
27.03
10.07
Interim dividend paid
5.62
4.54
23.79
Final dividend proposed
24.13
22.49
7.29
Net assets
32.07
30.43
5.39
Number of employees
870
788
10.41
Per share data
Number of =N=1.00 ordinary shares
Earnings
annual report 2010
3
Notice of
annual general meeting
NOTICE IS HEREBY GIVEN that the Thirty Eighth Annual General Meeting of
FrieslandCampina WAMCO Nigeria PLC will be held at the Shell Hall, MUSON
Centre, 8/9 Marina, Onikan, Lagos on Friday, 29 April, 2011 at 11.00 a.m. to
transact the following business: Ordinary business
shares issued pursuant to this resolution shall not
qualify for the dividend declared in respect of the 2010
accounts and that the Directors shall give effect to this
resolution on receipt of the necessary permission from
the appropriate Authorities.”
(1) To receive the Report of the Directors and the Audited
Financial Statements for the year ended 31 December,
2010 together with the reports of the Auditors and
Audit Committee thereon.
(2) To declare a final dividend.
BY ORDER OF THE BOARD
Bolade Obat-Olowu (Mrs.)
Company Secretary
Lagos, Nigeria
Dated this 2nd day of March, 2011
(3) To elect/re-elect Directors.
(4) To authorize the Directors to fix the remuneration of
the Auditors.
(5) To elect members of the Audit Committee.
Special business
(6) To approve the remuneration of the Directors.
Notes
(7) To consider and if thought fit, pass the following
resolution as an ordinary resolution:
1. Proxy
“That pursuant to Article 125 of the Articles of
Association of the company and the recommendation
of the Directors, the sum of =N=97, 633,594 being part
of the amount standing to the credit of the company’s
Revenue Reserve Account, be and is hereby capitalized
into 97,633,594 ordinary shares of =N=1.00 each and
appropriated to the members whose names appear
in the Register of Members at the close of business
on Tuesday, 12 April 2011, in the proportion of ONE
new ordinary share for every FOUR ordinary shares
registered in such members’ names on that date, the
shares so distributed being treated for all purposes
as capital and not as income, ranking pari passu with
the existing shares of the company, provided that the
A member of the Company, who is entitled to attend
and vote at the meeting is entitled to appoint a proxy to
attend and vote in his/ her stead. A proxy need not be
a member of the Company. A proxy form is enclosed in
the Annual Report. To be valid, the instrument of proxy
must be duly stamped by the Commissioner of Stamp
Duties and deposited at the office of the Registrar,
First Registrars Nigeria Limited, Plot 2, Abebe Village
Road, Iganmu not later than 48 hours before the time
of the meeting.
2. Dividend warrants
If the dividend recommended by the Directors is
approved, dividend warrants will become payable on
Friday, 29 April 2011 to members whose names are on
the Register of Members on Tuesday, 12 April 2011.
3. Closure of register
The Register of Members and Transfer Books of the
Company will be closed from Tuesday, 12 April 2011 to
Thursday, 14 April 2011 both dates inclusive, to enable
the Registrar prepare for the payment of dividend.
4. Audit committee
4
In accordance with Section 359(5) of the Companies
and Allied Matters Act, Cap C.20, Laws of the
Federation of Nigeria 2004, any shareholder may
nominate another shareholder for appointment to the
Audit Committee by giving notice of such nomination,
in writing, to the Company Secretary, at least 21 days
before the Annual General Meeting.
annual report 2010
J. M. Ajekigbe OFR
Chairman
6
annual report 2010
Distinguished Shareholders, my colleagues on the Board, invited guests, Ladies
and Gentlemen. It is with great pleasure that I welcome you all to the 38th
Annual General Meeting of our Company. I am also delighted to present the
Annual Report and Financial Statements for the year ended 31 December
2010.
The economic environment
The company’s policy is to pay about 75 per cent of its
PAT as dividend to its shareholders. The dividend paid
in any particular year however depends on the financial
performance of the company and the level of its cash and
bank balances. Based on the strong financial performance
of the company during the year, the Board of Directors is
proposing a total dividend of =N=29.75 per =N=1.00 share,
which is equivalent to 100 per cent of the company’s PAT
for the year under review. An interim dividend of =N=5.62
was paid in November 2010. A final dividend of =N=24.13 per
=N=1.00 share is therefore being proposed for your approval.
The final dividend which will be subject to withholding tax
at the rate prescribed by Government, will be payable on 29
April 2011. The Board is also proposing for your approval,
a bonus of 1 share for every 4 shares held as at the close
of Members’ Register, in addition to the very generous
dividend.
The global dairy market
With the recovery of the global economy, worldwide demand
for dairy products from both consumers and industrial
users increased when compared to the previous year. This
increased demand exceeded the supply, and consequently
prices of commodities like milk powder, the company’s main
raw material, went up significantly.
Management will continue with its efforts to sustain and
improve on the company’s performance, but shareholders
should not take the 100 per cent dividend pay-out and
the scrip issue as precedents, as your company will soon
be embarking on modernization of existing production
lines and addition of new ones, both of which will require
substantial funding.
Operating results and performance
Market development
The economic environment in 2010 was rather harsh for
companies in the manufacturing sector. Infrastructure,
especially power supply and road network, remained
in a poor state and insecurity to life and property was
heightened in some states of the Federation by religious
and communal strife. The level of unemployment also
remained high. All these factors impacted negatively on
the ability of companies to produce and sell their products
profitably. Throughout the year, the country struggled
to recover from the effects of the global recession. The
banking sector however regained some level of confidence
as a result of the reforms introduced by the Central Bank
of Nigeria, but borrowing rate remained relatively high at
about 14 per cent per annum as at year-end, whilst deposit
rates dropped dramatically to between 2 - 3 per cent per
annum.
Despite the harsh economic environment, the commercial
and financial performance of the company remained
impressive. Turnover during the year increased by 18 per
cent to =N=90.4 billion. Profit Before Tax increased by 11 per
cent to =N=16.98 billion while Profit After Tax (PAT) increased
by 10 per cent to =N=11.62 billion. These excellent results
were achieved through efficient management of resources,
especially the ability of Management to increase sales
volume, implement proper pricing strategy and keep down
administrative cost from the previous year’s level.
Finance continued to be a major challenge to our
distributors in 2010 due to reluctance of banks to resume
lending. As a result, there was frequent stagnation in
product off -takes due to the reduced spending capacity
of our customers. Security issues in certain parts of the
country also led to market closures and disruptions in sales.
Increase in the price of raw materials made an upward
review of product prices inevitable during the year. This
was however done with caution, because of consumers
sensitivity to price movements. Despite these challenges,
Dividend
annual report 2010
7
the total dairy market in Nigeria grew by almost 4 per cent
in volume and 8 per cent in value in 2010. FrieslandCampina
Wamco’s market share of the total dairy market grew from
43 per cent in 2009 to 44 per cent in 2010.In times of
economic hardship, consumers prefer to go for brands that
they believe in and know best. FrieslandCampina Wamco
continued to invest in Advertising and Promotion of both
Peak and Three Crowns brands in order to reaffirm and
strengthen the brand image.
train about 6 Nigerian graduates in the Netherlands under
a programme with the Wagenengen Research Centre.
Evaporated and condensed milk category showed moderate
growth in value. The introduction of Low Unit Portion Pack
(LUPP) Peak Evap sachet in late 2009 however contributed
significantly to the increase in Evap volumes and the
market share of Peak. LUPP in powder category also
showed continuous growth, with Peak 22g sachet achieving
significant sales growth. In the infant and toddler segment,
FrieslandCampina Wamco occupies a strong position with
Peak GUM123. The Friso brand hitherto handled by a third
party distributor was in the final phase of transfer to the
company. Medical detailing was also successfully set up
in 2010. The Company’s sales depots were expanded to
cover more locations, improve distribution and get closer
to consumers. Sales through depots also grew significantly
in 2010, improving customer profitability. The rural
distribution model, which leverages on the affordability
of the LUPP and piloted in a few areas in 2009, was
successfully rolled out to more locations in 2010.
After installation in 2009, the first Evap LUPP production
line has now reached its highest efficiency levels in the
production of high quality evaporated milk in sachets. The
second production line was installed in 2010 and will be
fully operational in early 2011.
Dairy development programme
In response to the Federal Government’s policy to encourage
local content, the company took the initiative by starting
to source fresh milk locally under a Dairy Development
Programme (DPP) aimed at increasing the local content
of milk used in its products. This is, however, an extremely
challenging project as milk production on an industrial scale
hardly exists in Nigeria.
As a first step, a contract has been signed to accept milk
from Shonga Farms, an industrial farm already operating
in Kwara State. Over 200,000 litres of fresh milk were
collected in 2010. Furthermore, in cooperation with the
Federal Ministry of Agriculture, small-scale dairy farming
will be developed along the model that has proven effective
in South East-Asia.
Through specially designed education programs, Dutch
milk production know- how will be transferred to Nigerian
farmers, training them in yield management, hygiene,
breeding, feeding and animal well- being.
However, only a well-coordinated action in public-privatepartnership will make this programme successful and
beneficial to all stakeholders. Arrangement is being made to
8
Operations
The company continued to increase its capacity in order
to meet the growing demand of the Nigerian and other
West African markets. Process modernization continued,
thus improving on safety and efficiency. In 2010, no major
accidents or product recalls were reported.
As a result of the commencement of the DDP, fresh milk
deliveries from local farmers in Shonga, Kwara State began
in 2010. The fresh milk reception station is fully operational,
and connected to the processing of evaporated milk.
The commissioning of a new Chilled Water Plant has been
completed, replacing the smaller, maintenance-intensive
older units. The new plant is more energy efficient and is
a more environmentally friendly solution.
The on-site petrol station was relocated to a safer place
and both storage and filling equipment were upgraded, thus
improving safety in the premises.
In 2010, production output increased again across all
factories, with particular growth in powder categories
resulting in decrease of conversion costs. Overall, output
numbers exceeded both budgeted as well as last year’s
levels. The Powder factory has been extended to fulfill the
growing demand for portion packs and Choco products.
The supply problems of local cocoa not meeting the high
quality standards have also been overcome.
Close cooperation between the local Procurement
Department and their Head Office colleagues helped to
realize substantial material cost savings.
Warehouse space for the storage of finished goods and raw
materials had become a bottleneck because of the increase
in production. A third party operated warehouse on Acme
Road however eased the pressure on storage significantly.
The Supply Chain is continuously challenged by congestion
at the ports and uplifts at customs clearance. Alternative
options aimed at minimizing the effects of these problems
are being evaluated.
Research and development
Continuous improvement and innovation of the product
portfolio are essential in order to maintain our premier
position. The Research and Development team continue
to play a critical role in ensuring that new products are
annual report 2010
introduced. To improve the work of the Research and
Development Department, a new Research Centre has
been built within the company’s premises. The Centre was
officially commissioned by the Director General, National
Office for Technology Acquisition and Promotion (NOTAP),
Dr. Umar Buba Bindir on August 27, 2010.
The new Centre facilitates, amongst others, sensory tests
with consumers, pilot testing of new products and student
internships on research projects. It is hoped that the centre
can work closely with Nigerian universities to further build
up knowledge database and support. The Research and
Development Centre also works in collaboration with the
Research and Development Centres of FrieslandCampina
companies in The Netherlands.
Corporate social responsibility (CSR)
In the year under review, the Company’s CSR initiatives
continued to enhance the lives of the Nigerian people. New
solar powered water projects were constructed in Enugu,
Nasarawa, Akwa-Ibom and Osun States, while three existing
projects were converted to solar. This brought the water
projects to a total of twenty-nine boreholes spread across
the six geo-political zones of Nigeria.
The Company’s initiatives in the education sector continue
to support government efforts. An example of these is the
ICT centre at Ogba Junior Grammar School, which was
commissioned by the Deputy Governor of Lagos State
during the year. The project has indeed proved invaluable
to the students as they continue to learn the fundamentals
of computer education. The Lagos State Ministry of
Education’s “Support our Schools” Initiative, presented the
company with an award of recognition for its contributions
to the development of education in the state.
Three new charity homes namely Chims Motherless Babies
Home, Aba; Ufon Abasi Orphanage, Akwa- Ibom and Adonai
Orphanage Home & Widow Centre, Kaduna were added
to the list of charity homes that the company supports,
bringing the total to 25. The children and staff are given the
company’s products on a regular basis while cash donations
are made for their upkeep.
A total of =N=1.8million was donated to 6 institutions offering
Food Science and Technology to facilitate the development
of research. Each institution received a sum of =N=250,000
while the WAMCO Award of =N=50,000 went to the best
graduating student from each of the departments.
The Olu Akinkugbe Child Nutrition Centre was renamed Olu
Akinkugbe WAMCO Nutrition Centre. The new name was
adopted because it was felt that as WAMCO has products
that cater for all lifestages, that fact should be reflected
annual report 2010
in the name.
The company has also set up a new foundation, Isaac Ade
Agoye Foundation (IAAF), in honour of Rev. Isaac Ade Agoye,
Corporate Affairs Director and Deputy Managing Director,
who retired from the company at the end of 2010 after
27 years of meritorious service. The foundation will focus
on three main areas - education (providing scholarships
for deserving students), poverty alleviation (empowering
women in key vocational activities) and improving supply
of basic amenities, such as, provision of water in rural
communities in certain parts of the country.
Human resources
The excellent results achieved during the year would not
have been possible without the unalloyed commitment,
loyalty and professionalism of our employees. The
development of relevant competencies and talents remains
our priority. A total of 536 members of staff (out of 870)
attended at least one training programme, either in Nigeria
or overseas, during the year. An attitude of growing
together, embracing challenge and being accountable is
being promoted. Some of the best and brightest minds
in the industry were also attracted and retained. The
Company’s commitment to staff motivation, a competitive
reward system and a harmonious working environment
have helped in making staff turnover one of the lowest in
the industry.
To further maximize employees’ full potential and increase
their level of productivity, the company introduced a
performance management system, which aims to manage
staff performance towards higher levels.
Company secretary
Mrs. Bolade Obat-Olowu was appointed Company Secretary
with effect from the conclusion of the Annual General
Meeting on the 29th of April 2010.
Board changes
Mr. Theodorus Spierings resigned as a director of the
Company after the conclusion of the Annual General
Meeting on the 29th of April 2010. Upon the resignation of
Mr. Theodorus Spierings, Mr. Jacobs Moyo Ajekigbe, OFR
was appointed Chairman of the Board of Directors.
Rev. Isaac Adefemi Agoye resigned his appointment as
an Executive Director following his retirement from the
Company after 27 years of meritorious service. He was
subsequently appointed as a non- Executive Director with
effect from 1 January 2011.
Following the resignation of Rev. Agoye, Mr. Peter Eshikena
9
was appointed an Executive Director of the Company with
effect from 1 January 2011. Please join me in welcoming
him to the Board.
Mallam Ahmed Dasuki, Ms. Evelyn Oputu and Mr. Louis
Mbanefo retire by rotation and being eligible, offer
themselves for re-election.
Shareholders’ visit
At the instance of Management, some selected shareholders
toured the Company’s factory premises in Ogba, Ikeja in
March 2010. The visit afforded them the opportunity of
having a better understanding of the Company’s activities.
Feedback following the interactive session between
Management, staff and the shareholders showed that this
was a highly successful event and beneficial to both the
shareholders and the Company.
Outlook 2011
The price of raw materials will continue to rise steeply,
with increased demand being the key driver. Since there
is a limit to increase in products’ prices which the market
can tolerate without volume loss, the bulk of the raw
materials’ price increases and other inflationary effects will
have to be compensated for by efficiency gains and other
cost savings. In these challenging market conditions, the
Company will continue to do what is required to sustain its
achievements by delivering high quality products in the
most cost effective and efficient way possible to a Nigerian
market that sees the benefits and values in our brands and
in the goodness of milk.
Thank you.
J. M. Ajekigbe OFR
Chairman
10
annual report 2010
Directors
Board of
12
Mr. Jacobs Moyo Ajekigbe OFR
Chairman
Mr. Robert Steetskamp
Managing Director
Mr. Peter Eshikena
Executive Director
annual report 2010
Mr. Kapil Garg
Mr. Cees ’t Hart
Rev. Isaac Adefemi Agoye
Mrs. Oyinkan Ade-Ajayi
Ms. Evelyn Oputu OON
Mallam Ahmed Dasuki
annual report 2010
Mr. Louis Nnamdi Mbanefo SAN
13
2010
Reports & financial statements
Reports
Directors, professional advisers
And registered office
16
17
Statement of director’s responsibilities
24
25
26
Financial statements
27
30
Balance sheet
31
32
annual report 2010
33
41
15
Directors, professional advisers and
registered office
Chairman:
Managing Director:
Directors:
Company Secretary:
Mr. Peter Eshikena
Executive
Mrs. Oyinkan Ade–Ajayi
Mallam Ahmed Dasuki
Mr. Kapil Garg
(Indian)
Mr. Cees ‘t Hart
(Dutch)
Ms. Evelyn Ndali Oputu OON
Mrs. Bolade Obat-Olowu
Registered Office:
Plot 7B Acme Road
Ikeja Industrial Estate,
Ogba, Ikeja, Lagos,
Nigeria.
Auditors:
KPMG Professional Services
(Chartered Accountants)
22A Gerard Road,
Ikoyi, Lagos.
Solicitors:
T.C. Mbanefo & Co
(Barristers & Solicitors)
5th Floor, Bankers’ House,
PC 19, Adeola Hopewell Street,
Victoria Island, Lagos.
Registrars:
First Registrars Nigeria Limited
Plot 2 Abebe Village Road,
Iganmu, Lagos.
Principal Bankers:
Citibank Nigeria Limited
Diamond Bank Plc
First Bank of Nigeria Plc
Guaranty Trust Bank Plc
Stanbic IBTC Bank Plc
United Bank of Africa Plc
Zenith Bank Plc
16
(Dutch)
annual report 2010
The Directors have pleasure in submitting to members, their report and the audited financial statements for the year
ended 31 December 2010.
1. Legal form and principal activities
FrieslandCampina WAMCO Nigeria Plc was incorporated as a private limited liability company on 17 April 1973,
commenced operations on 13 September 1975 and became a public limited liability Company in 1978. The Company
is principally engaged in the manufacturing and marketing of evaporated milk, instant milk powder and other dairy
products.
There was no change in the activities of the Company during the year.
2. State of affairs/subsequent events
In the opinion of the Directors, the state of the Company’s affairs was satisfactory and no event has occurred since
the balance sheet date, which would affect the financial statements as presented.
3. Result for the year
In spite of the harsh operating environment and the difficulties the Company encountered as a result of higher than
expected raw material prices in current year, the Company achieved a creditable result during the year.
=N=’000
Turnover
90,399,530
Taxation
(5,364,646)
16,983,557
11,618,911
4. Dividend and bonus shares
The Company paid an interim dividend of =N=5.62 per share in November 2010 and the Board of Directors has
recommended a final dividend of =N=24.13 per share subject to the deduction of appropriate withholding tax at the
time of payment.
As a policy, the Company endeavors to pay out 75% of its profit after tax as dividend to its shareholders. The final
dividend pay out depends on the financial performance of the Company and the state of its cash and bank balances.
Considering the very strong cash and bank balances and a very impressive result, the Directors have decided to pay
100% of current year’s profit as dividend.
If this proposed final dividend is accepted, the total dividend in respect of year 2010 operations will be =N=29.75 per
share. In addition to the dividend pay out of 100% of current year’s profit, the Directors have decided to propose
to the shareholders, a bonus of one (1) share for every four (4) shares held as at close of Members’ Register.
5. Fixed assets
Information relating to changes in fixed assets is given in Note 5 to the financial statements. In the opinion of
the Directors, the market value of the Company’s properties is not less than the value shown in these financial
statements.
annual report 2010
17
for the year ended 31 December 2010 (Cont’d)
6. Directors
The names of Directors at the date of this report and of those who held office during the year are as follows:
Chairman
Mr. Bob Steetskamp
(Dutch)
Managing Director
Mr. Peter Eshikena
Executive Director (appointed on 1 January 2011)
Retired as Executive Director on 1 January 2011
and appointed as a non-executive director on the
same date.
Mrs. Oyinkan Ade - Ajayi
Mallam Ahmed Dasuki
Mr. Kapil Garg
(Indian)
Mr. Cees ‘t Hart
(Dutch)
Ms Evelyn Ndali Oputu OON
Mr. Theodorus Spierings
(Dutch)
Resigned on 29 April 2010
As stated in the Chairman’s Statement at the last Annual General Meeting, Mr. Theodorus Spierings resigned as a
director of the Company after the conclusion of the 29 April 2010 Annual General Meeting. Upon the resignation of
Mr. Theodorus Spierings, Mr. Jacobs Ajekigbe was appointed Chairman of the Board of Directors.
Rev. Isaac Adefemi Agoye, resigned his appointment as an Executive Director following his retirement from the
Company after 27 years of meritorious service. He was subsequently appointed a non- Executive Director with effect
from 1 January 2011.
Following the resignation of Rev. Isaac Adefemi Agoye, Mr. Peter Eshikena was appointed as an Executive Director
of the Company.
Mallam Ahmed Dasuki, Ms. Evelyn Oputu and Mr. Louis Mbanefo retire by rotation in accordance with Article 85 of
the Company’s Articles of Association and being eligible, offer themselves for re-election.
Mr. Peter Eshikena, who was appointed a director after the last Annual General Meeting, retires at this meeting
in accordance with Article 91 of the Company’s Articles of Association and being eligible, offers himself for reelection.
7. Directors interest in contracts
None of the Directors has notified the Company for the purpose of Section 277 of the Companies and Allied Matters
Act, CAP C20, LFN 2004 of any disclosable interest in contracts with which the Company was involved as at 31
December 2010.
8. Interest of directors
The interest of Directors in the issued share capital of the Company as recorded in the register of Directors’
shareholding as at 31 December 2010 are as follows:
shares
2010
2010
18
Mr. Jacobs Moyo Ajekigbe
Mrs. Oyinkan Ade - Ajayi
Mallam Ahmed Dasuki (Indirect)
Mr. Peter Eshikena
Mr. Louis Nnamdi Mbanefo
Ms. Evelyn Oputu
250,000
700,001
386,718
1,069,406
18,923
650,625
34,000
Numberof=N
=1.00ordinary
held as at 31 December
2009
700,001
386,718
1,069,406
18,923
650,625
-
annual report 2010
for the year ended 31 December 2010 (cont’d)
None of the other directors have interest in the issued share capital of the Company as at the end of the year.
9. Corporate governance
1.
Commitment
The Corporate Governance principles for the Company provides for best practices to be followed by the Company
in every area of its activities and the Board takes responsibility for ensuring that the Company maintains the
highest standards. The Board of Directors is dedicated to ensuring that the Company’s objectives are achieved.
The Company recognizes the importance of high standard corporate governance and is committed to same by
institutionalizing corporate governance principles as part of its corporate structure. It will continue to pursue
strict adherence to the implementation of Corporate Governance rules of the Manufacturers Association of
Nigeria and the Securities & Exchange Commission.
The Board continues to operate within the confines of Regulatory Code of Corporate Governance, the Company’s
Articles of Association and the Companies and Allied Matters Act CAP C20 LFN 2004. The operations and
activities of the Company are carried out transparently, without undue influence.
2. Board composition
As at 2 March 2011, the Board comprised ten (10) Directors. (eight (8) Non-Executive and two (2) Executive
Directors).
The guiding principles of the Company’s Corporate Governance guidelines are as follows:
That delegation of authority by the owners to the Board and subsequently to the Board Committees and
Executives are clearly defined and agreed.
That there is effective communication and information sharing outside of meetings.
That actions are taken on fully informed basis, in good faith with due diligence and care and in the best interest
of the company and all stakeholders.
That compliance with applicable laws and regulations and the interest of stakeholders be enhanced. Where
there is any conflict between the Company’s rules and legislation, legislation supersedes.
That there is conformity with the Company’s overall strategy and direction.
3. Role of the board
The functions or the role of the Board of Directors of the Company are guided by the provisions of the Companies
and Allied Matters Act CAP C20 LFN 2004, the Company’s Articles of Association and other related laws and
regulations.
4. Frequency of meetings
Meetings of the Board are held on regular basis. However, meetings may be convened at any time, whenever
the need arises. The Board met during the year on 18 February 2010, 29 April 2010 and 24 November 2010.
5. Audit committee
The Audit Committee met three times during the year under review for meetings and four times for depot
inspections.
i) Membership
Mr. S. S Adebayo(Shareholder)
Chairman
Sir. S.N. Nwosu (Shareholder)
Member
Mr. O.G. Emodi (Shareholder)
Member
Ms. E. N. Oputu (Director)
Member
Rev. I.A. Agoye (Director)
Member
Mr. K. Garg
(Director)
Member
ii) Responsibilities
The Committee is established in compliance with section 359(6) of the Companies and Allied Matters Act
CAP C20 LFN 2004.
annual report 2010
19
The Committee oversees the accounting and reporting policies of the company to ensure they are in accordance
with legal requirements and agreed ethical practices.
6. Management team
The Board has a Management Team that is charged with the responsibility of implementing policies and the
day-to-day management of the affairs of the Company:
Membership of the team includes the following:
1)
Managing Director
2)
Deputy Managing Director/ Sales Director
3)
Finance Manager
4)
Operations Manager
5)
Human Resources Manager
6)
Marketing Manager
The Management Team has as part of its terms of reference, ensuring constant monitoring of operations,
implementation of Board decisions and recommendations to the Board on all issues and areas of operations.
7.
Shareholders’ participation
The Company is conscious of and promotes shareholders’ rights. It continues to take necessary steps in ensuring
same. The Company organizes visits to its factory premises in Ogba, Ikeja for its shareholders. The Board and
the management have significantly benefited from the contributions and advice from the shareholder members
of the Audit Committee, the interactive session with shareholders during the Shareholders’ visit as well as the
contributions of shareholders at Annual General Meetings.
10.Employment of disabled persons
It is the policy of the Company to consider disabled persons for employment if academically and medically qualified.
The Company had no disabled person in its employment as at 31 December 2010.
11. Health, safety and welfare of employees at work
Health and safety regulations are in force within the company’s premises and employees are aware of existing
regulations. Protective clothing and fire fighting equipment are provided in the production areas, warehouses and
offices. The Company has retainership arrangement with some hospitals where employees can be treated. There is
an on-site clinic in our factory, manned by qualified medical personnel providing primary health care round the clock
for employees at work. We comply with relevant statutory provisions and regulations on health, safety and welfare
matters as well as providing the education required to enable compliance by employees. We organize a week - long
safety programme each year, to get employees involved with matters of safety.
12.Employees’ interest
The Company is committed to keeping employees fully informed as far as possible regarding the Company’s
performance and progress and seeking their views wherever practicable on matters, which particularly affect them
as employees. Management, professional and technical expertise are the Company’s major assets, and investment
in developing such skills continues.
13.Analysis of shareholdings
Range
1 - 100,000
100,001 - 500,000
500,001
- 1,000,000
1,000,001 - 5,000,000
Above 5,000,000
1,414
104
23
30
3
89.73
6.60
1.46
1.90
0.19
14,764,834
23,104,655
16,316,461
44,493,204
30,320,597
3.78
5.92
4.18
11.39
7.76
Nigerian Public
Bank of Industry
Friesland Int’l Beheer B.V
1,574
1
1
99.88
0.06
0.06
128,999,751
48,377,063
213,157,561
33.03
12.39
54.58
20
Number of shareholders
%Number of shares held
%
annual report 2010
Total
1,576
100.00
390,534,375
100.00
14. Suppliers
1.
The Company’s significant overseas suppliers are:
FrieslandCampina B.V, The Netherlands
Hoogwegt International BV, The Netherlands
Irish Dairy Board, Ireland
Kerry Ingredients Charleville Co, Ireland
Lakeland Dairies Bailie Foods Limited, Ireland
Murray Goulburn Cooperative Company Limited, Australia
Fonterra Limited, New Zealand
2.
The Company’s significant local suppliers are:
GMT Nigeria Limited
Nigerian Cartons and Packaging Company Limited
Presco Nigeria Limited
WAHUM Packaging Limited
Veevee Paper Products Limited
Arvee Industries Limited
Eskade Ventures Limited
Avons Crowns Cap Nigeria Plc
Nampak Plc
Rigid Pak Container Limited
Shonga Dairy Farms Limited
15.Royalties and technical service agreement
The Company has a Know-How and Trade mark agreement; and Research & Development Technical Know-How
agreement with Friesland Brands B.V., in the Netherlands.
Under the agreement, technological, scientific and professional assistance are provided for the manufacture, quality
control and packaging of the Company’s products, new products development and training of personnel.
The agreements specify a Royalty charge of 2% of the turnover of the products produced and sold by FrieslandCampina
WAMCO Nigeria Plc for Trademark; and research and development Know-How license (1% each); and 2% of annual
annual report 2010
21
profit before tax in respect of Technical Know-How agreement.
The agreement is made with the approval of the National Office for Technology Acquisition & Promotion (NOTAP).
16.Donations
The following donations were made during the year:
Charity donations
Besthsida Orphange, Ikachi, Benue State
Bert Torey Home for mentally handicapped children, Zaria, Kaduna State
Child Care Trust Abuja
Hope Worldwide Ikorodu Road, Lagos
Little Saints of the Poor, Enugu, Enugu State
Madonna School for the Handicapped, Okpanam, Delta State
Franciscan Sisters of Immaculate, Lekki, Lagos
Marble House of Sarah Charity Home, Ibusa, Delta State
Old Peoples Home, Yaba, Lagos
Oluyole Cheshire Home, Ibadan, Oyo State
Our Lady of Lourdes Maternity & Clinic, Ipetunmodu, Osun State
Our Lady’s Hospital & Orphanage, Zawan, Plateau State
Samaritan Project, Ebute-Metta, Lagos
Red Cross Yaba, Lagos
Ovie Brume Foundation, Victoria Island,Lagos Motherless Babies Home, Uzuakoli, Abia State
SDA Motherless Home, Aba, Abia State
Chims Motherless Babies Home, Aba, Abia State
Ufon Abasi Orphanage, Akwa- Ibom Heart of Gold Orphanage, Surulere, Lagos
SOS Children’s Village, Isolo, Lagos
Little Saints Orphanage, Ikorodu, Lagos
Marian Monastery, Enugu State
Dominican Sisters’ College Abatete, Anambra State
Adonai Orphanage Home & Widow Centre, Kaduna =N=
229,600.00
229,600.00
229,600.00
229,600.00
229,600.00
229,600.00
229,600.00
229,600.00
229,600.00
229,600.00
229,600.00
229,600.00
229,600.00
229,600.00
229,600.00
233,144.00
233,144.00
123,144.00
123,144.00
129,600.00
129,600.00
129,600.00
129,600.00
129,600.00
129,600.00
4,934,176.00
Water Project
Community Solar Borehole - Inoyi-affa in Udi LGA, Enugu State
Community Solar Borehole - Atai-Ibiakun Itam in Itu LGA, Akwa-Ibom State
Community Solar Borehole - Shabu in Lafia LGA, Nasarawa State
Community Solar Borehole - Erinmo in Oriade LGA, Osun State
Branding of 4 new Community Solar Boreholes
Conversion to Solar (3 existing water project sites in: Abia, Delta & Ebonyi) Borehole Maintenance (replacement of signage)
22
28,487,103.00
Education
Tertiary Endowment
University of Ibadan - Food Science & Technology Department
University of Maiduguri - Food Science & Technology Department
University of Nigeria Nsukka - Food Science & Technology Department
University of Uyo- Food Science & Technology Department
Federal University of Tech. Minna- Dept of Animal Production
Federal University of Tech. Yola - Dept of Food Science and Technology
School Adoption Project
Donation of Sharp AR-5520 multi-purpose photocopy machine to 12 adopted schools
5,575,128.00
4,979,025.00
4,542,225.00
4,542,225.00
3,276,000.00
4,132,500.00
1,440,000.00
300,000.00
300,000.00
300,000.00
300,000.00
300,000.00
300,000.00
3,874,500.00
5,674,500.00
annual report 2010
Total
39,095,779.00
In accordance with Section 38(2) of the Companies and Allied Matters Act, CAP C20, LFN 2004, the Company did
not make any donation or gift to any political party, political association or for any political purpose in the course
of the year.
17.Auditors
In accordance with Section 357(2) of the Companies and Allied Matters Act CAP C20 LFN 2004, Messrs. KPMG
Professional Services have indicated their willingness to continue in office as Auditors of the Company.
BY ORDER OF THE BOARD
Bolade Obat-Olowu (Mrs.)
annual report 2010
23
Statement of directors’ responsibilities
in relation to the financial statements
The directors accept responsibility for the preparation of the annual financial statements set out on pages 27 to 42
that give a true and fair view in accordance with Statements of Accounting Standards applicable in Nigeria and in the
manner required by the Companies and Allied Matters Act of Nigeria.
The directors further accept responsibility for maintaining adequate accounting records as required by the Companies
and Allied Matters Act of Nigeria and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement whether due to fraud or error.
The directors have made an assessment of the Company’s ability to continue as a going concern and have no reason to
believe the Company will not remain a going concern in the year ahead.
SIGNED ON BEHALF OF THE BOARD OF DIRECTORS BY:
____________________________
02 March 2011
24
_______________________
02 March 2011
annual report 2010
to the members of FrieslandCampina WAMCO Nigeria PLC
In accordance with section 359(4) and (6) of the Companies And Allied Matters Act CAP C20 LFN 2004, we confirm
that we have examined the Auditors’ Report for the accounting year ended 31 December, 2010 and hereby declare as
follows:
1.
The Scope and Planning of the audit were adequate in our opinion.
2. The Accounting and Reporting policies of the company conformed with legal requirements and agreed ethical
practices.
3. The Internal Control was being constantly and effectively monitored.
4. The External Auditors’ management report received satisfactory response from the management.
5. The External Auditors confirmed receiving full co-operation from the Company’s management and that the scope
of their work was not restricted in any way.
We acknowledge the co-operation of management in the conduct of our responsibilities.
Mr. S.S. Adebayo
Chairman, Audit Committee
LAGOS, NIGERIA
24 FEBRUARY 2011
MEMBERS OF THE AUDIT COMMITTEE
Mr. S.S. Adebayo - Chairman
Sir S.N. Nwosu
Mr. O.G. Emodi
Mr. K. Garg
Ms. E.N. Oputu, OON
Rev. I.A. Agoye
annual report 2010
25
KPMG Professional Services
Telephone
234
(1) 271 8955
22a Gerrard Road, Ikoyi
Fax
234 (1) 462 0704
PMB 40014, Falomo
Internet
to the Members of FrieslandCampina WAMCO Nigeria PLC
Report on the financial statements
We have audited the accompanying financial statements of FrieslandCampina WAMCO Nigeria Plc (“the Company), which
comprise the balance sheet as at 31 December 2010, and the profit and loss account, statement of cash flows and value
added statement for the year then ended, and the statement of accounting policies, notes to the financial statements
and the five year financial summary, as set out on pages 27 to 42.
Directors’ responsibility for the financial statements
The directors are responsible for the preparation of financial statements that give a true and fair view in accordance
with Statements of Accounting Standards applicable in Nigeria and the manner required by the Companies and Allied
Matters Act of Nigeria, and for such internal control as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these 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 whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the 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 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 financial statements give a true and fair view of the financial position of FrieslandCampina WAMCO
Nigeria PLC (“the Company”) as at 31 December 2010, and of the Company’s financial performance and cash flows for
the year then ended in accordance with Statements of Accounting Standards applicable in Nigeria and in the manner
required by the Companies and Allied Matters Act of Nigeria.
Report on other legal and regulatory requirements
Compliance with the requirements of schedule 6 of the Companies and Allied Matters Act of Nigeria
In our opinion, proper books of account have been kept by the Company, so far as appears from our examination of those
books and the Company’s balance sheet and profit and loss account are in agreement with the books of accounts.
2 March 2011
Lagos, Nigeria
KPMG Professional Service, a Partnership established under
Adekunle A. Elebute
Nigeria law, is a member of KPMG International Cooperative
H. Othihiwa
(“KPMG International”), a Swiss entity. All rights reserved.
Abayomi D. Sanni
Adebisi O. Lamikanra
Adetola P. Adeyemi
Adewale K. Ajayi
Chibuzor N. Anyanechi
Goodluck C. Obi
Ayodele
Joseph O. Tegbe
The following are the significant accounting policies which have been adopted:
a. Basis of accounting
The financial statements are prepared on the historical cost convention modified to include the revaluation of land,
buildings and plant and machinery.
b. Turnover
Turnover represents the invoiced value of goods delivered to third parties during the year, net of Value Added Tax
and trade discounts.
c. Fixed assets
Leasehold land and building and plant and machinery are stated at valuation less accumulated depreciation. All
additions to these asset categories after the date of the latest valuation are stated at cost less accumulated
depreciation. Other fixed assets are stated at cost less accumulated depreciation. Costs relating to fixed assets
under construction or in process of installation are disclosed as capital work-in-progress and are not depreciated.
The cost attributable to each asset is transferred to the relevant category immediately the asset is available for
use and depreciated accordingly.
d. Depreciation
Depreciation is provided on a straight line basis to write off the cost/valuation of fixed assets less estimated residual
value over their expected useful lives at the following annual rates:
%
Leasehold land over the life of the lease
Buildings
-
4
Plant and machinery
-
10
Furniture, fittings and tools -
20
Motor vehicles
- 20
Market kiosks
-
20
Gains or losses on disposal of fixed assets are included in the profit and loss account.
e. Debtors
Debtors are stated after the deduction of specific allowances for debts considered to be doubtful of collection.
f. Taxation
Income and education taxes payable are provided on taxable profits at the current statutory rate.
g. Deferred taxation
Deferred taxation is provided by the liability method at the ruling tax rate on the timing differences between the
treatment of certain items for accounting purposes and their treatment for taxation.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available
against which the amount will be utilized. Deferred tax assets are reduced to the extent that it is no longer probable
that the related tax benefit will be realized.
h. Stocks
Stocks are valued at the lower of cost and net realizable value after making allowance for obsolete or slow moving
or defective items. Net realizable value is based on estimated normal selling price less further costs expected to
be incurred to completion and disposal.
annual report 2010
27
Significant accounting policies
Cost incurred in bringing each product to its present location and condition is based on:
Raw and packaging materials,-
purchase cost on a first-in, first-out basis, including
engineering spares and transportation and clearing costs
purchased finished goods
Goods-in-transit
Manufactured finished goods
-
cost of direct materials and labor plus proportion of manufacturing overheads based on normal levels of activity.
-
Purchase cost incurred to date
i. Foreign currencies
Transactions arising in foreign currencies are recorded in Naira at the approximate rates of exchange ruling at the
time they arise. Monetary assets and liabilities existing in foreign currencies are converted to Naira at the exchange
rate applicable at the balance sheet date. Gains and losses arising therefrom are included in the profit and loss
account.
j. Retirement benefit and gratuity scheme
i.
Pension fund scheme:
The Company operates a defined contribution pension scheme for all its Nigerian staff in accordance with the
Pension Reform Act 2004. Contribution to the scheme is based on 7.5% of the relevant emoluments by employee,
while employer contributes 10.5%. Staff contributions to the scheme are funded through payroll deductions
while the Company’s contributions are charged to the profit and loss account.
ii. Gratuity scheme:
The Company also operates a staff gratuity scheme, which is accrued over the service lives of the employees
and fully recorded as a liability in the financial statements. Benefits payable to employees on retirement or
resignation are accrued for under an annualized defined benefit plan.
iii. Other long term employee benefits:
These are Long Service Awards payable upon completion of certain years in service and accrued over the service
lives of the employees.
The provision is based on independent actuarial valuation performed on the projected unit credit basis.
k. Provisions
Provision is recognized when the Company has a 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.
l. Impairment
The carrying value of assets is reviewed at each balance sheet date to determine whether there is any indication
of impairment. If any such indications exist, the asset’s recoverable amount is estimated. An impairment loss is
recognized whenever the carrying value of an asset exceeds its recoverable amount.
Impairment losses are recognized in the income statement except where they relate to previously revalued assets, in
which case, they are recognized directly against any revaluation surplus to the extent that an amount is included in the
revaluation reserve account for the related assets, with any remaining loss recognized in the income statement.
m. Unclaimed dividend
28
annual report 2010
Significant accounting policies
for the year ended 31 December 2010 (Cont’d)
Dividends which remain unclaimed for a period exceeding twelve (12) years from the date of declaration and which
are no longer actionable by shareholders in accordance with Section 385 of the Companies and Allied Matters Act
of Nigeria are written back to retained earnings.
n. Segment reporting
A segment is a distinguishable component of the Company that is engaged either in providing related products
or services (business segment), or in providing products or services within a particular economic environment
(geographical segment), which is subject to risks and returns that are different from those of other segments.
Segment information is required to be presented in respect of the Company’s business and geographical segments,
where applicable.
The Company’s primary format for segment reporting is based on geographical segments. The geographical segments
are determined by management based on the Company’s internal reporting structure.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis.
o. Revaluation reserve
Surplus/(deficits) arising on revaluation of individual fixed assets are (credited)/debited to a non-distributable
reserve known as revaluation reserve. Revaluation deficits in excess of the amount of prior revaluation surpluses
on the same asset are charged to the profit and loss account.
On disposal of previously revalued fixed assets, an amount equal to the revaluation surplus attributable to that
asset is transferred from the revaluation reserve to retained earnings.
annual report 2010
29
Note
2010
=
N
=’000
Turnover
1
90,399,530
Cost of sales
(67,570,239)
Gross profit
22,829,291
Sales, marketing and distribution expenses
(5,165,117)
Administrative expenses
(2,163,051)
Other income
2
407,511 2009
=
N
=’000
76,377,850
(55,626,590)
20,751,260
(4,243,949)
(2,462,092)
21,209
Operating profit
15,908,634
Interest Income
1,080,909
Interest expenses and similar charges
(5,986)
14,066,428
3
16,983,557
Taxation 4(i)
(5,364,646)
15,353,130
(4,796,824)
11,618,911
10,556,306
1,305,761
(19,059)
Appropriations
15
2,194,803
1,773,026
Transfer to revenue reserve
15
9,424,108
8,783,280
11,618,911 10,556,306
Earnings per share (Naira)
20
29.75
27.03
Declared dividend per share (Naira)
20 28.11 16.02
The accounting policies on pages 27 to 29 and the explanatory notes on pages 33 to 40 form part of these financial statements.
30
annual report 2010
Balance sheet
as at 31 December 2010
Note
2010
=
N
=’000
2009
=
N
=’000
6,119,590
275,024
4,995,769
161,143
6,394,614
5,156,912
16,608,447
1,932,709
52,698
16,136,014 457,163
10,650,163
974,534
280,413
12,720,164
469,398
35,187,031 25,094,672
16,513,095
3,258,069
1,115,683
107,928
5,259,654
7,691,293
2,325,612
1,051,369
77,694
4,835,147
26,254,429
15,981,115
Net current assets
8,932,602
9,113,557
Total assets less current liabilities
15,327,216
14,270,469
(603,012)
(2,200,147)
(382,959)
(2,004,443)
12,524,057
11,883,067
Share capital
14(ii)
Share premium
Fixed assets revaluation reserve
Revenue reserve
15
390,535
350,211
147,615
11,635,696
390,535
350,211
147,615
10,994,706
12,524,057
11,883,067
Non - current assets
Fixed assets
Long term receivables
5
6
Current assets
Stocks
7
Debtors and prepayments
8
Amounts due from related companies
11(i)
Short term deposits
9
Bank and cash balances
Current liabilities
Trade creditors
Other creditors and accrued expenses
10
Amounts due to related companies
11(ii)
Dividend payable
18
Tax payable
4(ii)
Long term liabilities
Deferred tax liability
Gratuity and other long term employee benefits
12
13
Net assets
Capital and reserves
The financial statements on pages 27 to 42 were approved by the Board of Directors on 02 March 2011 and signed on its behalf by:
______________________________________________
}
Mr. J. M. Ajekigbe OFR
}
} Directors
}
} ______________________________________________
}
annual report 2010
31
Note
2010
=
N
=’000
2009
=
N
=’000
Cash flows from operating activities
Cash receipts from customers
Cash payments to suppliers and employees
91,149,421
(70,113,383)
75,955,820
(63,390,118)
Cash generated from operations
Income taxes paid
4(ii)
VAT paid
21,036,038
(4,720,086)
(1,152,145)
12,565,702
(2,016,829)
(1,181,721)
15,163,807
9,367,152
Interest received
Purchase of fixed assets 5
Proceeds from sale of fixed assets
1,080,909
(1,912,198)
24,770
1,305,761
(1,530,096)
18,963
Net cash provided by investing activities
(806,519)
(205,372)
Interest paid
Dividend paid
19
(5,986)
(10,947,687)
(19,059)
(6,269,224)
Net cash provided by financing activities
(10,953,673)
(6,288,283)
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
3,403,615
13,189,562
2,873,497
10,316,065
Cash and cash equivalents at 31 December
16,593,177
13,189,562
Net cash provided by operating activities
16
Cash flows from investing activities
Cash flows from financing activities
17
32
annual report 2010
Notes to the financial
statements
2010
=
N
=’000
2009
=
N
=’000
89,111,249
1,288,281
75,796,235
581,615
90,399,530
76,377,850
Export grants
Others
401,251 6,260
3,397
17,812
407,511
21,209
1 Turnover
Analysis of Turnover by geographical area is as follows:
Local
Export to other West African countries
2 Other income
3 Profit before taxation
This is arrived at after charging/(crediting)
Depreciation of fixed assets
Directors’ emoluments
Auditors’ remuneration
Technical Assistance Royalty fees (Note 11(iii))
Profit on disposal of fixed assets
765,700
46,166
11,000
1,899,768
(2,093)
570,494
58,612
5,799
1,600,360
(4,752)
4,787,851
356,742
-
4,515,448
319,699
(31,250)
Deferred tax charge/(credit) (Note 12)
5,144,593
220,053
4,803,897
(7,073)
5,364,646
4,796,824
ii
Balance sheet
At 1 January
Charge for the year
Payments during the year
4,835,147
5,144,593
(4,720,086)
2,048,079
4,803,897
(2,016,829)
At 31 December
5,259,654
4,835,147
4
Taxation
i
Income tax charge at 30% based on the taxable profit for the year
Education tax at 2% of assessable profit
Over provision in prior years
annual report 2010
33
5. Fixed assets
Leasehold
Furniture,
Land and
Plant and
Motor
Buildings
=N=’000
Machinery
=N=’000
=N=’000
Cost or valuation
At 1 January 2010
Transfers
Additions Disposals
1,625,270
227,776
138,354 -
5,374,706
326,241 320,748
(2,976)
784,619
-
328,930
(133,889)
210,268
-
60,831
(1,980)
At 31 December 2010
1,991,400
6,018,719
979,660
Depreciation:
At 1 January 2010
Charge for the year
Disposals
393,484
66,519
-
2,730,467
554,279
(1,703)
At 31 December 2010
460,003
Net book value
At 31 December 2010
At 31 December 2009
Leasehold land and buildings and plant and machinery were revalued by Messrs. Okolo and Okolo Associates, Chartered Surveyors
and Valuers at 30 September 1992 based on market values. They are stated at that valuation plus subsequent additions at cost. The
assets carried at valuation have been fully depreciated. Fixed assets are revalued periodically as dictated by prevailing economic
conditions.
Vehicles
Fittings and Tools
Market
Capital Kiosks
=N=’000
=N=’000
work in progress
Total
=N=’000
=N=’000
119,629
-
-
-
652,729
(554,017)
1,063,335
-
8,767,221
1,912,198
(138,845)
269,119
119,629
1,162,047 10,540,574
392,273
122,761
(114,383)
135,604
22,141
(82)
119,624
-
-
-
-
-
3,283,043
400,651 157,663
119,624
- 4,420,984
1,531,397
2,735,676
579,009
111,456
5
1,162,047
6,119,590
1,231,786
2,644,239
392,346
74,664
5
652,729
4,995,769
3,771,452
765,700
(116,168)
Note
6 Long term receivables
i
Employees car loan
Long-term prepayment
Note 6(ii)
Note 6(iii)
ii
Employees car loan represents loans granted to the company’s
employees which is backed by employee retirement benefits.
It is analysed as follows:
Employee car loan
Less: Current portion included in current debtors
and prepayments (Note 8)
iii
Long-term prepayment represents advance rental payments to
third parties and is analysed as follows:
Rent prepayment
Less: Current portion included in current debtors
and prepayment (Note 8)
34
2010
=
N
=’000
2009
=
N
=’000
86,875
188,149
88,624
72,519
275,024
161,143
141,835
132,453
(54,960)
(43,829)
86,875
88,624
407,644 225,564
(219,495)
(153,045)
188,149 FrieslandCampina WAMCO Nigeria PLC
72,519
annual report 2010
2010
=
N
=’000
2009
=
N
=’000
Raw materials
Finished goods
Goods in transit
Spare parts and tools
3,941,756
4,163,344
7,843,819
659,528
2,800,444
2,999,188
4,301,665
548,866
16,608,447
10,650,163
7. Stocks
8. Debtors and prepayments
Trade debtors
Allowance for bad debts
182,053
(14,114)
24,522
(18,281)
167,939
6,241
Other debtors
Deposit with Registrars for dividend
Retail Driven Distribution vehicles loan
Current portion of rental prepayments (Note 6(iii))
Current portion of employee car loan (Note 6(ii))
1,360,135
54,524
75,656
219,495
54,960
608,728
77,694
84,997
153,045
43,829
1,932,709
974,534
16,136,014
12,720,164
Sundry creditors Distributors payment in advance
Accrued expenses
312,102
1,316,347
1,629,620
210,849
810,176
1,304,587
3,258,069
2,325,612
9. Short - term deposits
Short term deposits with banks
The amount of =N=1.738 billion (2009:=N=1.541billion) out of this balance
has been set aside to fund the staff gratuity liability.
10.Other creditors and accrued expenses
annual report 2010
35
for the year ended 31 December 2010(cont’d)
2010
=
N
=’000
2009
=
N
=’000
11.Amount due from / to related companies
i
Amount due from related companies
FrieslandCampina West Africa Ghana (Note 11 (v))
-
Friesland Campina BV (Note 11(iv))
52,698
149,003
52,698
280,413
ii
Amount due to related companies
FrieslandCampina West Africa Ghana (Note 11 (v))
46,960
-
Friesland Brands B.V. (Note 11 (iii))
660,334
874,263 Friesland Campina B.V.(Note 11 (iv))
408,389
177,106
1,115,683
1,051,369
131,410 iii
Friesland brands BV
The Company has a Know-How and Trade mark agreement; and Research & Development Technical Know-How agreement
with Friesland Brands B.V., in the Netherlands, for which it pays Royalties . Technical Know-How agreement royalty fees are
computed as a percentage of profit before tax while royalty fees on trade mark and research and development agreement
are computed as a percentage of net sales of the related products. An amount of =N=1,900million (2009:=N=1,600million) has
been charged to the profit and loss account in respect of these fees (Note 3). The agreements are made with the approval of
the National Office for Technology Acquisition and Promotion (NOTAP) and payments are made to Friesland Brands B.V.
iv
FrieslandCampina BV
The Company also entered into transactions with FrieslandCampina B.V., for the purchase of finished products, raw materials,
spare-parts among others from some foreign suppliers. FrieslandCampina BV maintains a current account with the Company
in respect of these trasactions.
v
FrieslandCampina West Africa, Ghana
The Company exports milk products to FrieslandCampina West Africa, Ghana. A trade discount of 10% of the total export
sales is payable to Ghana by the Company.
Note
12.Deferred tax liability
2010
=
N
=’000
2009
=
N
=’000
At 1 January Movement in the year 4(i) 382,959
220,053
390,032
(7,073)
At 31 December 603,012
382,959
13.Gratuity and other long term employee benefits
i
Defined benefit employees’ gratuity obligation
At 1 January Provisions made during the year
1,620,906
247,226
(69,276)
1,395,461
298,182
(72,737)
At 31 December 1,798,856
1,620,906
ii
Defined benefit long service award obligation
At 1 January Provisions made during the year
383,537
29,717
(11,963)
407,036
(23,499)
At 31 December 401,291
383,537
36
annual report 2010
2010
=
N
=’000
2009
=
N
=’000
14.Share capital
i
Authorised 500,000,000 Ordinary shares of =N=1.00 each ii
Issued and fully paid 390,534,375 Ordinary shares of =N=1.00 each 390,535
500,000
390,535
At the Board of Directors meeting held on March 2, 2011, the directors agreed and approved a bonus issue of one new ordinary share
of =N=1 each for every four ordinary shares of =N=1 each held by members as at April 12, 2011. The new shares, totalling 97,633,594
units at =N=1 each, will rank pari-passu with the old shares. This is subject to the approval of the shareholders.
15.Revenue reserve
500,000 At 1 January
Prior year final dividend paid
Transfer from profit and loss account
At 31 December 2010
=
N
=’000
2009
=
N
=’000
10,994,706
(8,783,118)
6,694,761
(4,483,335)
2,211,588
9,424,108
2,211,426
8,783,280
11,635,696
10,994,706
At the Annual General Meeting on 29 April 2010, the shareholders approved a final dividend of =N=22.49 per share amounting to
=N=8,783,118,094 .This amount was paid on to the shareholders whose names appeared on the company’s register of members at
close of business on 9 April 2010.
In respect of current year, interim dividend of =N=2,194,803,188 (2009 - =N=1,773,026,063) translating to =N=5.62 (2009 - =N=4.54)
per ordinary share was paid. In addition, the Directors are proposing that final dividend of =N=24.13 (2009:=N=22.49) per ordinary
share be paid to shareholders. This dividend is subject to approval by shareholders at the Annual General Meeting and has not
been included as a liability in these financial statements. The proposed dividend is subject to deduction of withholding tax at the
appropriate rate. The total estimated final dividend to be paid if approved is =N=9,423,594,469 (2009 - =N=8,783,118,094).
The interim and final dividends will amount to =N=11,618,397,657 (2009 - =N=10,556,144,156) and this will translate to =N=29.75 (2009
- =N=27.03) per share.
2010
=
N
=’000
2009
=
N
=’000
11,618,911
10,556,306
16.Reconciliation of net income to net cash
provided by operating activities:
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation
Interest received
Interest paid
Profit on sale of fixed assets
Changes in assets and liabilities
Increase in long term receivables
Increase in stocks
(Increase)/decrease in debtors and prepayments
Increase/(decrease) in trade creditors
Increase/(decrease) in other creditors
(Decrease)/increase in due from related company
Increase/(decrease) in due to related company
765,700
(1,080,909)
5,986
(2,093)
570,494
(1,305,761)
19,059
(4,752)
(113,881)
(5,958,284)
(958,175)
8,821,802
932,457
227,715
64,314
(30,781)
(1,625,412)
193,319
(1,129,141)
(653,060)
(210,241)
(401,855)
Cash generated from operation
Increase in taxation
Increase/(decrease) in deferred taxation
Increase in employees’ gratuities and long service award
2,704,632
424,507
220,053
195,704
(4,578,131)
2,787,068
(7,073)
608,982
Total adjustments
3,544,896
(1,189,154)
annual report 2010
37
2010
=
N
=’000
2009
=
N
=’000
Cash and bank balances
Short term deposits
457,163
16,136,014
469,398
12,720,164
16,593,177
13,189,562
17.Cash and cash equivalents
18.Information regarding directors and employees
a Chairman’s and Directors’ remuneration
i
Fees
Other emoluments (excluding pension
contributions and certain other benefits)
1,500
1,850
44,666
56,762
46,166
58,612
ii
The Directors’ remuneration shown above includes:
Chairman
Highest paid director
3,213
10,427
3,476
9,781
iii
The number of Directors excluding the Chairman with
gross emoluments within the bands stated below were:
Number
–
7
-
1
1
Number
1
7
2
1
–
b Employees
i
The number of persons in the Company’s
employment during the year is as follows:
Production
Supply chain
Sales and marketing
General administration
517
38
127
188
484
36
92
176
870
788
2,307,617
445,788
393,927
1,125,016
1,871,052
342,526
422,670
804,740
4,272,348
3,440,988
=N=
180,001
-
3,000,001 -
8,000,001
-
9,000,001 -
10,000,001 -
ii
=N=
200,000
4,000,000
9,000,000
10,000,000
11,000,000
Aggregate payroll costs (excluding certain benefits)
is as follows:
Wages and Salaries
Agency Staff Cost
Pension and gratuity costs
Training, recruitment and other personnel expenses
38
annual report 2010
iii
The number of employees of the Company as at 31 December whose duties were wholly and mainly discharged in Nigeria
received annual remuneration (excluding pension contribution and certain benefits) in the following ranges:
=N=
=N=
460,001
-
510,000
510,001
-
560,000
560,001
-
610,000
610,001
-
660,000
660,001
-
710,000
710,001
-
760,000
760,001
-
810,000
810,001
-
860,000
890,001 and above
Number
Number
–
–
12
44
22
36
57
5
694
18
42
21
62
21
56
169
74
325
870
788
19.Dividend payable
At 1 January
Declared dividend
Payment during the year
77,694
10,977,921
(10,947,687)
At 31 December
Amount above represents total unclaimed dividend as at year end for which cash of =N=54.52million has been given to the
Registrars.
107,928
90,557
6,256,361
(6,269,224)
77,694
20.Earnings per share and declared dividend per share
Earnings per share of =N=29.75 (2009:=N=27.03) and declared dividend per share of =N=28.11 (2009:=N=16.02) are based on profit after
taxation of =N=11,618,911,000 (2009:=N=10,556,306,000) and total declared dividend of =N=10,977,921,281 (2009:=N=6,256,360,687).
The number of ordinary shares of =N=1 each in issue as at 31 December 2010 was 390,534,375 (2009:390,534,375).
21.Post balance sheet event
There were no significant post balance sheet events which could have had a material effect on the state of affairs of the Company
as at 31 December 2010 that have not adequately been provided for or disclosed in these financial statements.
22.Guarantees and other financial commitments
annual report 2010
39
(a) Contingent liabilities
i
The Company has contingent liabilities in respect of guarantees given for staff loans which is backed by employees’ retirement
benefits. The loans are analysed as follows:
2010
2009
=
N
=’000
=
N
=’000
a)
b)
Bank guarantee granted in favour of the Company to third party offshore suppliers amounted to approximately =N=608million
(2009:=N=691 million). This is secured by a negative pledge on the Company’s assets and consignment of shipping
documents.
ii
Staff car loans
Staff housing loans
65,213
178,566
34,462
147,777
(b) Financial commitmments
The approved contracted capital expenditure already committed as at balance sheet date was =N=125million (2009: =N=206
million).
(c) Pending litigations
There are law suits pending against the Company in various courts of law which are being handled by external legal counsel.
The contingent liabilities in respect of pending litigation amounted to =N=5.5million (2009: =N=5million) as at 31 December 2010.
In the opinion of the Directors and based on independent legal advice, this contingent liability is not signaficant. Hence, no
provision has been made in these financial statements.
23.Segment reporting
The Company’s primary geographical segment is Nigeria. Over 98% of the Company’s sales are made in Nigeria. Also, all of the
Company’s products have identical risks and returns. Therefore, no further business or geographical segments information is
reported.
24.Comparative figures
Certain prior year comparative figures have been reclassified in line with the current year presentation format.
25.Other matters
i)
Legal Form of the Company
FrieslandCampina WAMCO Nigeria Plc was incorporated as a private limited liability Company on 17 April 1973, commenced
operations on 13 September 1975 and became a public limited liability Company in 1978.
ii)
Principal Activity
The Company is principally engaged in the manaufacturing and marketing of evaporated milk, instant milk powder and other
dairy products. There was no change in the activities of the Company during the year.
iii) Relationship with Significant Suppliers
The Company has no relationship with it’s significant local suppliers. However, some of the significant foreign suppliers
are members of the Royal FrieslandCampina group. FrieslandCampian BV, a member of the group sources most of the raw
materials, finished goods and spare parts for the Company.
40
annual report 2010
2010
=
N
=’000
%
2009
=
N
=’000
Turnover
90,399,530
76,377,850
Less: Bought in products and services:
- Imported
- Local
(12,663,090)
(57,197,269)
(9,499,557)
(49,040,540)
20,539,171
Other income
407,511
Interest received
1,080,909
Value added
%
17,837,753
240,157 1,305,761
22,027,591
100
19,383,671
100
To employees
Salaries, wages, fringe and end of service benefits
4,272,348
20
3,440,988
18
To providers of finance
Interim dividend to shareholders
Interest to lenders
2,194,803
5,986
10
-
1,773,026
19,059
9
-
5,364,646
24
4,796,824
25
765,700
9,424,108
3
43
570,494
8,783,280
3
45
22,027,591
100
19,383,671 100
Distribution of value added
To government
Taxes
Retained in the business
For replacement of fixed assets (Depreciation)
To pay proposed dividends
Note
“Value added” represents the additional wealth the company has been able to create by its own and employees’ efforts. This statement
shows the allocation of that wealth between employees, capital providers, government and that retained for future creation of more
annual report 2010
41
Five-year financial summary
2010
=
N
=’000
2009
=
N
=’000
2008
=
N
=’000
2007
=
N
=’000
2006
=
N
=’000
Balance sheet
Assets employed
Fixed assets
Long term assets
Current assets
Current liabilities
4,995,769
161,143
25,094,672
(15,981,115)
4,050,378
130,362
20,578,841
(15,390,966)
3,080,874
-
15,885,169
(10,493,770)
2,920,302
10,348,788
(3,861,517)
15,327,216
14,270,469
9,368,615
8,472,273
9,407,573
Gratuity and other long term employee benefits
Deferred tax liability
(2,200,147)
(603,012)
(2,004,443)
(382,959)
(1,395,461)
(390,032)
(1,249,998)
(231,824)
(1,069,954)
(579,367)
12,524,057
11,883,067
7,583,122
6,990,451
7,758,252
Share capital
Share premium
Revaluation reserve
Revenue reserve
390,535
350,211
147,615
11,635,696
390,535
350,211
147,615
10,994,706
390,535
350,211
147,615
6,694,761 390,535
350,211
147,615
6,102,090
390,535
350,211
147,615
6,869,891
Shareholders’ funds
12,524,057
11,883,067
7,583,122
6,990,451
7,758,252
90,399,530
76,377,850
62,173,083
49,653,609
41,995,268
Profit before taxation and exceptional item
Exceptional item
16,983,557
-
15,353,130
-
6,778,156
-
5,659,695
-
5,654,998
(203,660)
Taxation
16,983,557
(5,364,646)
15,353,130
(4,796,824)
6,778,156
(2,205,940)
5,659,695
(1,858,483)
5,451,338
(1,731,084)
11,618,911
(2,194,803)
10,556,306
(1,773,026)
4,572,216
(1,230,183)
3,801,212
(1,050,539)
3,720,254
(1,132,550)
9,424,108
8,783,280
3,342,033
2,750,673
2,587,704
29.75
32.07
27.03
30.43
11.71
19.42
9.73
17.90
9.53
19.87
Long term liabilities and provisions
Financed by
Turnover
Transfer to revenue reserve
Per share data (=N=)
Earnings
Net assets
6,119,590 275,024
35,187,031
(26,254,429)
Note:
Earnings per share is based on the profit after taxation and the number of issued and fully paid ordinary shares at the end of each
financial year.
Net assets per share are based on the net assets and the number of issued and fully paid ordinary shares at the end of each financial
year.
42
annual report 2010
annual report 2010
43
Proxy card
FrieslandCampina WAMCO Nigeria PLC (RC 11330)
38th Annual General Meeting of FrieslandCampina WAMCO Nigeria Plc to be held at the Shell Hall, MUSON Centre,
8/9 Marina, Onikan, Lagos on Friday, 29 April 2011 at 11:00 a.m.
*I/We
being a member/members of FrieslandCampina WAMCO Nigeria PLC hereby appoint
Chief/Mr/Mrs
of
or Chief/Mr/Mrs
of
as my/our
Proxy to vote for me/us and act on my /our behalf at the Annual General Meeting of the company to be held on 29 April,
2011 and at any adjournment thereof.
Dated this
day of
2011
Signature
NOTE:
Executed cards of the proxy duly stamped by the Commissioner of Stamp Duties should be deposited with the Registrar,
First Registrars Nigeria Limited, Plot 2, Abebe Village Road, Iganmu, Lagos not later than 48 hours before the time
for holding the meeting.
Admission slip
FrieslandCampina WAMCO Nigeria PLC (RC 11330)
38th Annual General Meeting of FrieslandCampina WAMCO Nigeria Plc to be held at the Shell Hall, MUSON Centre,
8/9 Marina, Onikan, Lagos on Friday, 29 April 2011 at 11:00 a.m.
Name of shareholder
Name of person attending
Number of shares held
Signature
IMPORTANT
This admission slip must be produced by the shareholder or his Proxy who need not be a member of the company, to
gain entrance to the Annual General Meeting.
Shareholders or their Proxies are requested to sign the admission slip before attending the meeting.
Notes
annual report 2010
55
Notes
56
annual report 2010

Untitled - Nairametrics

Transcription

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