dangote flour mills plc

Transcription

DANGOTE FLOUR MILLS PLC
AUDITED CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
FOR NINE MONTHS ENDED 30 SEPTEMBER 2013 AND THE YEAR ENDED 31 DECEMBER 2012
For the nine months ended 30 September 2013
Content
Page
Corporate information
i
Report of the Directors
ii
Corporate Governance report
vii
Statement of management's responsibilities
xi
Report of the independent auditors
1
Consolidated and separate statements of profit or loss
2
Consolidated and separate statement of comprehensive income
3
Consolidated and separate statements of financial position
4
Consolidated and separate statements of changes in equity
5
Consolidated and separate statements of cash flows
6
Notes to the consolidated and separate statements of cash flows
7
Notes to the consolidated and separate financial statements
8
Segment report
48
Statement of value added
52
Financial summary
53
CORPORATE INFORMATION
LEGAL FORM
Dangote Flour Mills Plc was incorporated in Nigeria on 1 January, 2006. The company is listed on the Lagos Floor of
the Nigerian Stock Exchange (NSE) with the symbol "DANGFLOUR". The Group's ultimate parent company is Tiger
Brands Limited, listed on the Johannesburg Stock Exchange.
REGISTERED OFFICES
Terminal ‘E’
Greenview Development Building
Apapa Wharf
Lagos.
Nigeria.
TRANSFER OFFICE
Oceanic Registrars
154, Ikorodu Road, Onipanu,
Shomolu, Lagos.
COMPANY SECRETARY
AISHA LADI ISA (Mrs)
AUDITORS
Akintola Williams Deloitte (Chartered Accountants)
235, Ikorodu Road, Illupeju, Lagos
BANKERS
Zenith Bank Plc
Mainstreet Bank Ltd
Sterling Bank Plc
First Bank of Nigeria Plc
GTBank Plc
Diamond Bank Plc
Access Bank Plc
First City Monument Bank Plc
United Bank for Africa Plc.
Ecobank Nigeria Plc
BOARD OF DIRECTORS
The names of Directors who are currently in office are as follows:
Executive directors:
Non-executive directors:
Mr. Nthabiseng Segoale (Appointed 4th October, 2012)
Alh. Aliko Dangote (GCON)
Mr. Suleiman Olarinde (Appointed 20th February,
Mr. Olakunle Alake
2013 and resigned 1st August, 2013)
Mr. Asue Ighodalo
Mr Peter Matlare ( Appointed 4th October, 2012)
Ms. Olufunke Ighodaro (Appointed 4th October,
2012)
Mr Thushen Govender (Appointed 4th October, 2012
and resigned 30th June, 2013)
Mr Patrick Sithole (Appointed 4th October, 2012 and
resigned 30th June, 2013)
Mr Ian Isdale (Appointed 20th February, 2013)
i
STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE-MONTH PERIOD ENDED 30 SEPTEMBER 2013
The Directors of Dangote Flour Mills Plc are responsible for the preparation of the consolidated financial statements
that present fairly the financial position of the Group as at 30 September 2013, and the results of its operations, cash
flows and changes in equity for the period then ended, in compliance with International Financial Reporting Standards
("IFRS").
In preparing the financial statements, the Directors are responsible for:
-
Properly selecting and applying accounting policies;
-
Presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information;
-
Providing additional disclosures when compliance with the specific requirements in IFRSs are insufficient to
enable users to understand the impact of particular transactions, other events and conditions on the company's
financial position and financial performance;
-
Making an assessment of the group's ability to continue as a going concern;
-
Maintaining adequate accounting records that are sufficient to disclose and explain the financial position of the
group and its transactions and results accurately in accordance with IFRS;
-
Designing, implementing and maintaining an effective and sound system of internal controls throughout the group;
-
Maintaining statutory accounting records in compliance with legislation in force in Nigeria and in accordance with
IFRS;
-
Taking such steps as are reasonably available to them to safeguard the assets of the Group; and
-
Preventing and detecting fraud and other irregularities by implementing a sound system of internal controls.
The financial statements of the Group for the nine-month period ended 30 September 2013, were approved by
management on
16 November, 2013
Signed on behalf of management of the Group
Mr Nthabisheng Segoale
Group Chief Executive Officer
Mr Moruf Adealu
Chief Finance Officer
Date: 16 November, 2013
Date 16 November, 2013
xi
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
Report on the Financial Statements
We have audited the accompanying consolidated and separate financial statements of Dangote Flour Mills Plc and its
subsidiaries which comprise the consolidated and separate statements of financial position as at 30 September 2013, the
consolidated income statement, statement of changes in equity and cash flow statement for the nine month period ended 30
September 2013 and a summary of significant accounting policies and other explanatory information set out on pages 2 to
54.
Directors’ Responsibility for the 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, the Financial Reporting Council of Nigeria Act
No 6, 2011, International Financial Reporting Standards and for such internal controls as the Directors determine 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 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 auditors’ 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 auditors
consider internal controls 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 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 consolidated and separate financial statements present fairly, in all material respects, the financial
position of Dangote Flour Mills Plc. and its subsidiaries as at 30 September 2013 and the financial performance and cash
flows for the nine month period ended 30 September 2013 in accordance with the Companies and Allied Matters Act CAP
C20 LFN 2004, the Financial Reporting Council of Nigeria Act No 6, 2011 and International Financial Reporting Standards.
Emphasis of Matters
We draw attention to Note 1.3 which describes that in 2013, the Company changed its reporting period end from December
31 to September 30 to align its reporting period with that of its majority shareholder. Accordingly, in 2013, the Company has
reported its performance for the 9 months period ended September 30, 2013 whereas prior year comparatives are based on
12 months reported figures to December 31, 2012. The balance sheet and related notes were reported as at September 30,
2013, whereas prior year comparatives were reported as at December 31, 2012
We also draw attention to note 1.4 which describes the effects of the decision of the shareholders to sell the company’s
holding in Agrosacks Limited, and the classification of the company’s assets and liabilities as held for sale, and the effect of
the re-classification of the profit and loss account of Agrosacks to a single line as discontinued activities, with the
corresponding re-classifications in the prior year.
Chartered Accountants
Lagos, Nigeria
19 November 2013
FRC/2013/ICAN/00000001364
STATEMENT OF PROFIT OR LOSS
for nine months ended 30 September 2013
COMPANY
GROUP
9 months
ended
30-Sep
2013
Restated
12 months
ended
31-Dec
2012
29,960,419
(29,317,791)
41,472,599
(39,310,274)
642,628
(6,541,606)
233,975
(201,584)
2,162,325
(4,810,501)
325,490
(1,409,450)
6
(130,678)
161,083
7
7
(5,997,265)
(2,364,956)
19,927
(3,571,053)
(2,085,169)
53,250
(4,264,583)
1,126,464
Loss before taxation from continuing operations
8
Taxation
(8,342,294)
1,577,990
(5,602,972)
1,258,659
.
(3,138,119)
Loss for the year from continuing operations
Discontinued operations
25
Profit after tax for the period from discontinued
operations
(6,764,304)
(4,344,313)
(452,697)
2,080,976
.
Loss for the period
Owners of the parent
Continuing operations
Non-controlling interests
(7,217,001)
(7,932,996)
(6,698,446)
(1,234,550)
715,995
(65,858)
781,853
(2,263,337)
(2,840,714)
(4,261,802)
1,421,088
577,377
(82,511)
659,888
(7,217,001)
(2,263,337)
9 months
ended
30-Sep
2013
12 months
ended
31-Dec
2012
23,079,590
(22,728,987)
29,859,976
(28,740,533)
350,603
(3,642,573)
42,708
-
1,119,443
(2,360,838)
253,848
(1,409,450)
(64,618)
161,083
(3,313,880)
(2,346,275)
12,665
(2,235,914)
(2,059,643)
30,974
Operating (loss) / profit
Finance costs
Interest received
(5,647,490)
1,166,842
(4,480,648)
(4,480,648)
(4,480,648)
-
(3,138,119)
(3,138,119)
-
(4,480,648)
(3,138,119)
(N '000)
Revenue
Cost of sales
Notes
4
Gross profit
Distribution and administrative expenses
Other income
Impairment of trade receivables
(Loss)/profit on significant disposal of fixed
assets
2
5
STATEMENT OF OTHER COMPREHENSIVE INCOME
COMPANY
GROUP
9 months
ended
30-Sep
2013
Restated
12 months
ended
31-Dec
2012
(7,217,001)
(2,263,337)
-
2,382
68,608
Total comprehensive loss for the year
(7,217,001)
(2,192,347)
Attributable to:
(7,932,996)
715,995
(2,769,724)
577,377
(7,217,001)
(2,192,347)
(158.66)
(55.39)
9 months
ended
30-Sep
2013
12 months
ended
31-Dec
2012
(4,480,648)
(3,138,119)
-
-
(N '000)
Loss for the year from continuing
operations
Other comprehensive income:
Actuarial Gains - Assumption
Actuarial Gains - Experience
(4,480,648)
(3,138,119)
(4,480,648)
-
(3,138,119)
-
(4,480,648)
(3,138,119)
Basic and diluted loss per share
(kobo per share)
3
Notes
9
STATEMENT OF FINANCIAL POSITION
As at 30 September 2013
COMPANY
30-Sep
2013
31-Dec
2012
(N '000)
Notes
GROUP
30-Sep
2013
31-Dec
2012
21,777,704
17,351,051
2,597,637
1,829,016
27,302,587
18,747,467
7,553,637
1,001,483
Assets
Non-current assets
Property, plant and equipment
Interest in subsidiary companies
Long-term receivables
Deferred taxation asset
10
11
14
12
32,898,984
30,002,456
2,896,528
45,673,663
44,048,647
3,894
1,621,122
33,066,395
7,686,391
3,961,715
17,219,636
3,288,629
910,024
31,889,256
7,317,448
3,732,124
16,953,231
3,025,036
861,417
Current assets
Inventories
Trade and other receivables
Amounts owed by subsidiaries
Short-term loans receivable
Cash and bank balances
13
14
11
15
16
24,768,875
9,372,457
7,789,466
6,183,288
1,423,664
31,775,355
12,946,862
11,927,694
5,083,533
1,817,266
4,956,000
-
Assets classified as held for sale
25
17,813,681
-
59,800,099
59,191,843
Total assets
75,481,540
77,449,018
18,233,825
2,500,000
18,116,249
(2,382,424)
22,714,473
2,500,000
18,116,249
2,098,224
Equity and liabilities
Issued capital and reserves
Ordinary share capital
Share premium
Retained earnings
16,311,182
2,500,000
18,116,249
(4,305,067)
24,244,178
2,500,000
18,116,249
3,627,929
1,795,343
1,079,348
18,106,525
25,323,526
12,099,553
2,453,251
9,646,302
14,801,783
2,855,079
1,254,329
10,692,375
11
16
35,671,584
11,992,772
238,448
21,040,451
2,399,913
37,323,709
10,433,756
401,155
24,346,967
216,669
1,925,162
25
9,603,878
-
75,481,540
77,449,018
17
17
18,233,825
22,714,473
Total equity
12,039,546
2,393,244
9,646,302
14,201,759
2,825,800
851,584
10,524,375
Non-current liabilities
Deferred taxation liability
Retirement benefit obligation
Long-term borrowings
29,526,728
7,677,861
149,204
17,757,915
1,547,289
2,394,459
22,275,611
5,173,729
212,284
15,178,614
216,669
1,331,717
162,598
Current liabilities
Trade and other payables
Taxation
Short-term borrowings
Shareholders for dividend
Amounts owed to subsidiaries
Bank overdrafts
-
-
Liabilities classified as held for
sale
59,800,099
59,191,843
Total equity and liabilities
12
18
19
20
21
The consolidated and separate financial statements on pages 2 to 54 were approved by the Board of Directors on
16 November, 2013 and signed on its behalf by:
_________________________
Alhaji Aliko Dangote
Chairman
FRC/2013/IODN/00000001766
____________________________
Mr Nthabisheng Segoale
Group Chief Executive Officer
FRC/2013/IODN/00000002455
4
____________________________
Mr Moruf Adealu
Chief Finance Officer
FRC/2013/ICAN/
STATEMENT OF CHANGES IN EQUITY
Accumulated
profit
Total
attributable
to owners
of the
parent
NonControlling
interests
equity
20,616,249
-
6,897,652
(2,840,713)
27,513,901
(2,840,713)
501,971
577,377
28,015,872
(2,263,336)
-
70,990
70,990
-
70,990
20,616,249
-
4,127,929
(500,000)
24,744,178
(500,000)
1,079,348
-
25,823,526
(500,000)
Balance at 31 December 2012
Loss for the period
20,616,249
-
3,627,929
(7,932,996)
24,244,178
(7,932,996)
1,079,348
715,995
25,323,526
(7,217,001)
Balance at 30 September 2013
20,616,249
(4,305,067)
16,311,182
1,795,343
18,106,525
Balance at 1 January 2012
Loss for the period
Dividends on ordinary shares
20,616,249
-
5,736,343
(3,138,119)
(500,000)
26,352,592
(3,138,119)
(500,000)
-
26,352,592
(3,138,119)
(500,000)
Loss for the period
20,616,249
-
2,098,224
(4,480,648)
22,714,473
(4,480,648)
-
20,616,249
(2,382,424)
18,233,825
-
22,714,473
(4,480,648)
18,233,825
20,616,249
(2,382,424)
18,233,825
-
18,233,825
(N '000)
Notes
Share
capital
and
premium
Total
Group
Loss for the period
Other comprehensive loss
for the period
Dividends on ordinary shares
9
Company
5
STATEMENT OF CASH FLOWS
COMPANY
9 months
12 months
ended
ended
30-Sep
31-Dec
2013
2012
Notes
(N '000)
(1,865,103)
761,804
(1,103,299)
12,665
(2,346,275)
(156,328)
796,745
(2,075,911)
(1,279,166)
30,974
(2,059,643)
(1,064,539)
(3,593,237)
(332,096)
(4,372,374)
(313,116)
60,812
161,083
(271,284)
(152,033)
6,003,525
1,844,845
(6,167,103)
-
14,725,606
(2,103,869)
(500,000)
Long-term borrowings raised
Long-term borrowings (repaid)/raised
Short term borrowings (repaid)/raised
Dividends paid
1,681,267
12,121,737
Net cash (outflow) / inflow from
financing activities
(3,680,590)
13,406,295
(2,183,254)
7,597,332
Net (decrease)/ increase in cash and cash
equivalents
(3,065,208)
7,546,132
2,196,855
(329,089)
2,525,943
-
(107,896)
(7,654,028)
(976,249)
(107,896)
Cash operating profit
Working capital changes
Cash generated from operations
Interest received
Finance costs
Taxation paid
Net cash inflow/ (outflow) from operating
activities
Purchase of property, plant and equipment
Proceeds on disposal of property, plant
and equipment
A
B
GROUP
9 months
12 months
ended
ended
30-Sep
31-Dec
2013
2012
C
6,547
4,167,690
4,174,237
19,927
(2,871,893)
(161,232)
4,471,455
(4,270,941)
200,514
53,251
(3,146,412)
(1,136,772)
E
1,161,039
(851,023)
(4,029,419)
(1,998,897)
305,366
168,153
(545,657)
(1,830,744)
6,003,525
(8,351,103)
(1,333,012)
-
14,725,606
(2,016,000)
1,196,689
(500,000)
.
Net cash outflow from investing
activities
D
.
698,819
(6,898,513)
Transferred to assets held for sale
Cash and cash equivalents
Bank overdrafts
Cash and cash equivalents at beginning of
the year
(1,484,435)
698,819
Cash and cash equivalents at end of the
year
6
25
F
NOTES TO THE STATEMENT OF CASH FLOWS
COMPANY
9 months
12 months
ended
ended
30-Sep
31-Dec
2013
2012
(3,313,880)
(2,235,914)
(206,887)
1,490,453
(281,287)
(144,365)
(64,618)
117,200
1,603,082
-
(161,083)
18,939
2,180,284
(70,282)
(1,865,103)
796,745
(416,217)
(805,229)
1,983,250
(2,418,315)
469,705
(127,301)
761,804
(2,075,911)
(212,284)
(93,248)
(1,114,176)
(162,647)
149,204
212,284
(156,328)
(1,064,539)
(216,669)
216,669
-
(216,669)
(500,000)
216,669
-
(500,000)
(332,096)
-
(3,830,276)
-
(332,096)
(3,830,276)
910,024
(2,394,459)
-
861,417
(162,598)
-
(1,484,435)
698,819
(N '000)
Notes
A Cash operating profit
Operating loss after impairment allowance - continuing
operations
Operating loss after impairment allowance - discontinued
operations
Add back:
Non-cash flow impairment allowance
Gratuity: Provision for the year
Gratuity: Payments during the year
Fair value re-measurement on assets held for sale - DAS
(Profit) / Loss on disposal of fixed assets
Loss on obsolete assets written off to profit and loss
Depreciation (Note 10)
Exchange gain
Cash operating profit / (loss)
B Working capital changes
Increase in inventories
Increase in trade and other receivables
Increase / (decrease) in trade and other payables
Working capital changes
C Taxation paid
Amounts payable at beginning of year
Income statement charge - continuing operations
Income statement charge - discontinued operations
Classified as held for sale
Amounts payable at the end of year
Total taxation paid
D Dividends paid
Amounts accrued and payable at beginning of year
Declared per statement of changes in equity
Reclassified to other payables
Amounts accrued and payable at end of year
Total dividends paid
E Purchase of property, plant and equipment
Expansion
Replacement
F Cash and cash equivalents at end of the year
Bank overdrafts
7
GROUP
9 months
12 months
ended
ended
30-Sep
31-Dec
2013
2012
(5,997,264)
(3,571,053)
(343,860)
2,734,853
(444,596)
2,627,873
378,241
237,703
3,548,450
-
1,316,968
(307,879)
(168,239)
6,547
4,471,455
(577,858)
(1,900,640)
6,646,188
(1,036,492)
(2,032,017)
(1,202,432)
4,167,690
(4,270,941)
(401,155)
(134,034)
(23,786)
159,296
238,447
(1,333,931)
(203,996)
401,155
(161,232)
(1,136,772)
(216,669)
216,669
-
(216,669)
(500,000)
216,669
-
(500,000)
(601,774)
(249,249)
(1,998,897)
-
(851,023)
(1,998,897)
1,423,664
(2,399,913)
1,817,266
(1,925,162)
-
(976,249)
(107,896)
(161,083)
28,757
4,669,413
(70,282)
NOTES TO THE FINANCIAL STATEMENTS
1.
General Information
1.1
Company Information
Dangote Flour Mills Plc (the Company) is a public limited company incorporated in Nigeria. Its parent
and ultimate holding company is Tiger Brands Limited, a company listed on the Johannesburg Stock
Exchange. The addresses of its registered office and principal place of business are disclosed in the
introduction to the annual report.
1.2
Nature of operations
The principal activities of Dangote Flour Mills PLC and subsidiaries (“the Group”) are the milling of wheat and
production of wheat products. Dangote Pasta Limited, Dangote Noodles Limited and Dangote Agro Sacks
Limited are fully owned subsidiaries of the Dangote Flour Group. Dangote Flour produces bread flour,
confectionary flour, bread flour, pasta semolina and alkama.
1.3
Accounting period
In 2013, the Company changed its reporting period end from 31 December to 30 September, so as to align its
reporting period with that of its owner. Accordingly, in 2013, the Company has reported its performance for the
9 months period ended 30 September, 2013, whereas the prior year comparatives are based on the 12
months reported figures to 31 December, 2012. The balance sheet and related notes were reported as at 30
September, 2013 whereas the prior year comparatives were reported as at 31 December, 2012. Accordingly,
the amounts presented in the financial statements are not entirely comparable with those reported as prior
year comparatives
1.4
Assets held for sale
At the Annual general meeting held on 19 August, 2013 the shareholders approved the resolution to dispose
of the shares in Dangote Agrosacks Limited and as a result Agrosacks assets and liabilities have been
classified as “Held for sale” to give visibility of the impact of the disposal.
As a result, the amount relating to Agrosacks Limited have been re-classified and included as a separate line
item relating to discontinued operations and the comparative amounts in the profit and loss account have
been re-stated for comparability.
1.5
Performance
The group’s performance for the nine months ended September 2013 continues to reflect the effects of
significant challenges faced during the latter half of 2012 financial year. The group continues to pursue
recoveries in supply chain efficiencies as well as market share across its core categories.
Management changes, process improvement, customer engagements, enhancement of the internal control
environment as well as a review of the products positioning were amongst the key focus areas of
management’s attention. Satisfactory progress has been achieved in implementing these interventions which
have been designed to turn the group’s performance around.
1.6
Going Concern
The group has experienced a loss for the period of N7,932,996,000 (year ended 31 December 2012:
N2,840,713,000) which has resulted in accumulated losses of N4,305,067,000 at 30 September,
2013 (31 December 2012: retained earnings of N3,627,929,000).
Group current liabilities exceeded current assets at 30 September 2013 by N10,902,709,000 (31
December 2012: N5,548,354,000). However there was a net cash inflow from operations for the
period ended 30 September 2013 of N1,161,039,000 (year ended 31 December 2012 net cash
outflow – N4,029,419,000).
8
1.6.1
Going Concern
Management considers that, in light of the changes implemented as noted in Note 1.4, and
considering the improved performance indicated in the group’s budgets for the coming year, and
expected cash flows in the next twelve months, that the company will be able to continue to meet its
obligations as they fall due, and hence the preparation of the group financial statements on a going
concern basis, is appropriate.
2.
General information and statement of compliance with IFRS
2.1
New and revised IFRSs affecting amounts reported and/or disclosures in the financial
statements
In the current year, the Group has applied a number of new and revised IFRSs issued by the
International Accounting Standards Board (IASB) that are mandatorily effective for an accounting
period that begins on or after 1 January 2013.
Amendments to IFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities
The Group has applied the amendments to IFRS 7 Disclosures - Offsetting Financial Assets and
Financial Liabilities for the first time in the current year. The amendments to IFRS 7 require entities to
disclose information about rights of offset and related arrangements (such as collateral posting
requirements) for financial instruments under an enforceable master netting agreement or similar
arrangement.
The amendments have been applied retrospectively. As the Group does not have any offsetting
arrangements in place, the application of the amendments has had no material impact on the
disclosures or on the amounts recognised in the consolidated financial statements.
New and revised Standards on consolidation, joint arrangements, associates and disclosures
In May 2011, a package of five standards on consolidation, joint arrangements, associates and
disclosures was issued comprising IFRS 10 Consolidated Financial Statements, IFRS 11 Joint
Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 (as revised in 2011) Separate
Financial Statements and IAS 28 (as revised in 2011) Investments in Associates and Joint Ventures.
Subsequent to the issue of these standards, amendments to IFRS 10, IFRS 11 and IFRS 12 were
issued to clarify certain transitional guidance on the first-time application of the standards.
In the current year, the Group has applied for the first time IFRS 10, IFRS 11, IFRS 12 and IAS 28 (as
revised in 2011) together with the amendments to IFRS 10, IFRS 11 and IFRS 12 regarding the
transitional guidance. IAS 27 (as revised in 2011) is not applicable to the Group as it deals only with
separate financial statements.
The impact of the application of these standards is set out below.
Impact of the application of IFRS 10
IFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statements that deal with
consolidated financial statements and SIC-12 Consolidation - Special Purpose Entities. IFRS 10
changes the definition of control such that an investor has control over an investee when a) it has
power over the investee, b) it is exposed, or has rights, to variable returns from its involvement with
the investee and c) has the ability to use its power to affect its returns. All three of these criteria must
be met for an investor to have control over an investee. Previously, control was defined as the power
to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
Additional guidance has been included in IFRS 10 to explain when an investor has control over an
investee. Some guidance included in IFRS 10 that deals with whether or not an investor that owns
less than 50% of the voting rights in an investee has control over the investee is relevant to the
Group.
The application of IFRS 10 has had no material impact on the disclosure or the amounts recognized in
the consolidated financial statement.
9
2.1
New and revised IFRSs affecting amounts reported and/or disclosures in the financial statements
(continued)
IFRS 11 replaces IAS 31 Interests in Joint Ventures, and the guidance contained in a related interpretation,
SIC-13 Jointly Controlled Entities - Non-Monetary Contributions by Venturers, has been incorporated in IAS 28
(as revised in 2011). IFRS 11 deals with how a joint arrangement of which two or more parties have joint
control should be classified and accounted for. Under IFRS 11, there are only two types of joint arrangements joint operations and joint ventures. The classification of joint arrangements under IFRS 11 is determined based
on the rights and obligations of parties to the joint arrangements by considering the structure, the legal form of
the arrangements, the contractual terms agreed by the parties to the arrangement, and, when relevant, other
facts and circumstances. A joint operation is a joint arrangement whereby the parties that have joint control of
the arrangement (i.e. joint operators) have rights to the assets, and obligations for the liabilities, relating to the
arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the
arrangement (i.e. joint venturers) have rights to the net assets of the arrangement. Previously, IAS 31
contemplated three types of joint arrangements - jointly controlled entities, jointly controlled operations and
jointly controlled assets. The classification of joint arrangements under IAS 31 was primarily determined based
on the legal form of the arrangement (e.g. a joint arrangement that was established through a separate entity
was accounted for as a jointly controlled entity).
As the group does not have any interests in JVs, the application of IFRS 11 has had no material impact on the
disclosure or the amount recognised in the consolidated financial statement.
IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint
arrangements, associates and/or unconsolidated structured entities. In general, the application of IFRS 12 has
resulted in more extensive disclosures in the consolidated financial statements (please see note 3).
Amendments to IAS 1 Presentation of Financial Statements
(as part of the Annual Improvements to IFRSs 2009 - 2011 Cycle issued in May 2012)
The Annual Improvements to IFRSs 2009 - 2011 have made a number of amendments to IFRSs. The
amendments that are relevant to the Group are the amendments to IAS 1 regarding when a statement of
financial position as at the beginning of the preceding period (third statement of financial position) and the
related notes are required to be presented. The amendments specify that a third statement of financial
position is required when a) an entity applies an accounting policy retrospectively, or makes a retrospective
restatement or reclassification of items in its financialstatements, and b) the retrospective application,
restatement or reclassification has a material effect on the information in the third statement of financial
position. The amendments specify that related notes are not required to accompany the third statement of
financial position.
In the current year, the application of the new accounting standards have not resulted in material effects on the
information in the consolidated statement of financial position as at 1 January 2012. No third statement of
financial position as at 01 January, 2012 has therefore been presented.
Changes in Accounting Estimates and Errors as detailed below.
The Group has not applied the following new and revised IFRSs that have been issued but are not yet
effective:
IFRS 9 Financial Instruments
2
Amendments to IFRS 9 and IFRS 7
Mandatory Effective Date of IFRS 9 and Transition Disclosures
Amendments to IFRS 10, IFRS 12 and IAS 27
Investment Entities
1
Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities
1
1
Effective for annual periods beginning on or after 1 January 2014, with earlier application permitted.
2
Effective for annual periods beginning on or after 1 January 2015, with earlier application permitted.
10
2
2.1
New and revised IFRSs
statements(continued)
affecting
amounts
reported
and/or
disclosures
in
the
financial
IFRS 9 Financial Instruments
IFRS 9, issued in November 2009, introduced new requirements for the classification and measurement of
financial assets. IFRS 9 was amended in October 2010 to include requirements for the classification and
measurement of financial liabilities and for derecognition.
Key requirements of IFRS 9:
• All recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and
Measurement are required to be subsequently measured at amortised cost or fair value. Specifically, debt
investments that are held within a business model whose objective is to collect the contractual cash flows,
and that have contractual cash flows that are solely payments of principal and interest on the principal
outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All
other debt investments and equity investments are measured attheir fair value at the end of subsequent
accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to present
subsequent changes in the fair value of an equity investment (that is not held for trading) in other
comprehensive income, with only dividend income generally recognised in profit or loss.
 With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS
9 requires that the amount of change in the fair value of the financial liability that is attributable to changes
in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the
effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an
accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk
are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair
value of the financial liability designated as fair value through profit or loss is presented in profit or loss.
The directors of the Company anticipate that the application of IFRS 9 in the future may have a significant
impact on amounts reported in respect of the Group’s financial assets and financial liabilities. However, it is not
practicable to provide a reasonable estimate of the effect of IFRS 9 until a detailed review has been completed.
Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities
The amendments to IFRS 10 define an investment entity and require a reporting entity that meets the definition
of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value
through profit or loss in its consolidated and separate financial statements.
To qualify as an investment entity, a reporting entity is required to:
• Obtain funds from one or more investors for the purpose of providing them with professional investment
management services.
• Commit to its investor(s) that its business purpose is to invest funds solely for returns from capital
appreciation, investment income, or both.
• Measure and evaluate performance of substantially all of its investments on a fair value basis.
Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure requirements
for investment entities.
The directors of the Company do not anticipate that the investment entities amendments will have any effect
on the Group’s consolidated financial statements as the Company is not an investment entity.
Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities
The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial
liabilities.
Specifically, the amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ and
‘simultaneous realisation and settlement’.
The directors of the Company do not anticipate that the application of these amendments to IAS 32 will have a
significant impact on the Group’s consolidated financial statements as the Group does not have any financial
assets and financial liabilities that qualify for offset.
11
3.
Summary of accounting policies
3.1
Statement of Compliance with IFRS
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards.
3.2
Basis of preparation
The consolidated financial statements have been prepared on the historical cost basis, as
explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and
services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price is directly
observable or estimated using another valuation technique. In estimating the fair value of an asset or a
liability, the Group takes into account the characteristics of the asset or liability if market participants would
take those characteristics into account when pricing the asset or liability at the measurement date. Fair value
for measurement and/or disclosure purposes in these consolidated financial statements is determined on
such a basis, except for share-based payment transactions that are within the scope of IFRS 2, leasing
transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value
but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3
based on the degree to which the inputs to the fair value measurements are observable and the significance
of the inputs to the fair value measurement in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset
or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
3.3.
Presentation of financial statements in accordance with IAS 1 (revised 2007)
The consolidated financial statements are presented in accordance with IAS 1 Presentation of Financial
Statements (revised 2007). The Group has elected to present the 'Statement of comprehensive income' in a
separate statement from the Income statement.
3.4.
Basis of consolidation
The Group financial statements consolidate those of the parent company and all of its subsidiary
undertaking(s) drawn up to 30 September 2013. Subsidiaries are all entities over which the Group has the
power to control the financial and operating policies. The company obtains and exercises control through
more than half of the voting rights for all its subsidiaries. All subsidiaries have a reporting date of 30
September except Dangote Agrosacks Nigeria Limited which was classified as discontinued operation. .
The results of subsidiaries acquired are included in the consolidated financial statements from the date of
acquisition, being the date on which the group obtains control, and continue to be consolidated until the date
that such control ceases.
Subsidiaries acquired with the intention of disposal within 12 months are consolidated in line with the
principles of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations and disclosed as held for
sale.
All intragroup transactions, balances, income and expenses are eliminated on consolidation.
12
3.4
Basis of consolidation (continued)
Non-controlling interests represent the portion of profit or loss, or net assets not held by the group. It is
presented separately in the consolidated income statement, and in the consolidated statement of financial
position, separately from own shareholder’s equity.
A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity
transaction.
Losses are attributed to the non-controlling interest even if that results in a deficit balance.
If the group loses control over a subsidiary, it:







3.5.
Derecognises the assets (including goodwill) and liabilities of the subsidiary;
Derecognises the carrying amount of any non-controlling interest;
Derecognises the cumulative translation differences, recorded in equity;
Recognises the fair value of the consideration received;
Recognises the fair value of any investment retained;
Recognises any surplus or deficit in profit or loss; and
Reclassifies the parent’s share of components previously recognised in other comprehensive income to
profit or loss.
Foreign currencies
Foreign currency transactions
The consolidated financial statements are presented in Nigerian Naira, which is the company’s functional and
presentation currency. Transactions in foreign currencies are initially recorded in the functional currency at the
rate of exchange ruling at the date of the transaction.
Translation of foreign currency transactions
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate
of exchange ruling at the reporting date. Exchange differences are taken to profit or loss, except for differences
arising on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These
are taken directly to other comprehensive income, in the consolidated annual financial statements, until the
disposal of the net investment, at which time they are recognised in profit or loss. Tax charges and credits
attributable to such exchange differences are also accounted for in other comprehensive income.
If non-monetary items measured in a foreign currency are carried at historical cost, the exchange rate used is
the rate applicable at the initial transaction date. If they are carried at fair value, the rate used is the rate at the
date when the fair value was determined. The gain or loss arising on retranslation of non-monetary items is
treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss
is also recognised in other comprehensive income or profit or loss, respectively).
13
3.6.
Interest in group companies
Business combinations are accounted for using the acquisition method. The value of an acquisition is measured
as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any
non-controlling interest in the acquiree. For each business combination, the acquirer measures the noncontrolling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable
net assets. Acquisition costs incurred are expensed.
When the group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by
the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held
equity interest in the acquiree is remeasured to fair value as at the acquisition date through profit and loss.
Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability,
is recognised in accordance with IAS 39 either in profit or loss or as charge to other comprehensive income. If
the contingent consideration is classified as equity, it is not remeasured until it is finally settled within equity. In
instances where the contingent consideration does not fall within the scope of IAS 39, it is measured in
accordance with the appropriate IFRS.
The company carries its investments in subsidiaries and associate companies at cost less accumulated
impairment losses.
3.7.
Segment reporting
Reporting segments
The group has reportable segments that comprise the structure used by the chief operating decision-maker
(“CODM”) to make key operating decisions and assess performance. The group’s reportable segments are
operating segments that are differentiated by the activities that each undertakes and the products they
manufacture and market (referred to as business segments).
The group evaluates the performance of its reportable segments based on operating profit. The group accounts
for intersegment sales and transfers as if the sales and transfers were entered into under the same terms and
conditions as would have been entered into in a market related transaction.
The financial information of the group’s reportable segments is reported to the CODM for purposes of making
decisions about allocating resources to the segment and assessing its performance.
3.8.
Property, plant and equipment are stated at cost, excluding the costs of day-to-day servicing, less accumulated
depreciation and accumulated impairment losses. Assets subject to finance lease agreements are capitalised at
the lower of the fair value of the asset and the present value of the minimum lease payments.
Where an item of property, plant and equipment comprises major components with different useful lives, the
components are accounted for as separate assets. Expenditure incurred on major inspection and overhaul, or to
replace an item, is also accounted for separately if the recognition criteria are met.
Depreciation is calculated on a straight-line basis, on the difference between the cost and residual value of an
asset, over its useful life. Depreciation starts when the asset is available for use. An asset’s residual value,
useful life and depreciation method is reviewed at least at each financial year-end. Any adjustments are
accounted for prospectively. Depreciation is not calculated in respect of freehold land and assets under
construction.
14
3.8 Property, plant and equipment (continued)
The following useful lives have been estimated:
Freehold land
Leasehold land and buildings
Plant and machinery
Motor vehicles
Tools and equipment
Furniture and fittings
Computer equipment
- Not depreciated
- 50 years
- 15 years
- 4 years
- 5 years
- 5 years
- 3 years
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year
the asset is derecognised.
3.9.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of an intangible asset
acquired in a business combination is the fair value at the date of acquisition. Subsequently, intangible assets
are carried at cost less any accumulated amortisation and accumulated impairment losses. Unless internally
generated costs meet the criteria for development costs eligible for capitalisation in terms of IAS 38 (refer to
research and development costs accounting policy below), all internally generated intangible assets are
expensed as incurred.
Research and development costs
Research costs, being the investigation undertaken with the prospect of gaining new knowledge and
understanding, are recognised in profit or loss as they are incurred.
Development costs arise on the application of research findings to plan or design for the production of new or
substantially improved materials, products or services, before the start of commercial production. Development
costs are only capitalised when the group can demonstrate the technical feasibility of completing the project, its
intention and ability to complete the project and use or sell the materials, products or services flowing from the
project, how the project will generate future economic benefits, the availability of sufficient resources and the
ability to measure reliably the expenditure during development. Otherwise development costs are recognised in
profit or loss.
During the period of development, the asset is tested annually for impairment. Following the initial recognition of
the development costs, the asset is carried at cost less accumulated amortisation and accumulated impairment
losses. Amortisation begins when development is complete. The development costs are amortised over the
period of expected future sales.
Impairment
The group assesses tangible and intangible assets, excluding goodwill, development assets not yet available for
use and indefinite life intangible assets, at each reporting date for an indication that an asset may be impaired. If
such an indication exists, the recoverable amount is estimated as the higher of the fair value less costs to sell
and the value in use. If the carrying value exceeds the recoverable amount, the asset is impaired and is written
down to the recoverable amount. Where it is not possible to estimate the recoverable amount of an individual
asset, the recoverable amount of the cash-generating unit to which the asset belongs is estimated.
In assessing value in use, the estimated future cash flows are discounted to their present value using an
appropriate discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. In determining fair value less costs to sell, the hierarchy is firstly a binding arm’s length
sale, then the market price if the asset is traded in an active market, and lastly recent transactions for similar
assets.
Impairment losses of continuing operations are recognised in profit or loss in those expense categories
consistent with the function of the impaired asset.
15
3.9
Intangible assets (continued)
For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer exist or may have decreased. If such an
indication exists, the group estimates the asset’s or cash-generating unit’s recoverable amount. A previously
recognised impairment loss is reversed only if there is a change in the estimates used to determine the asset’s
recoverable amount since the last impairment loss was recognised. If this is the case, the carrying amount of
the asset is increased to the revised recoverable amount, but not in excess of what the carrying amount would
have been had there been no impairment. A reversal of an impairment loss is recognised directly in profit or
loss.
Derecognition of intangible assets
An intangible asset is derecognised on disposal; or when no future economic benefits are expected from its use.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset
is derecognised.
3.10. Financial instruments
Financial instruments are initially recognised when the group becomes a party to the contract. The group has
adopted trade date accounting for “regular way” purchases or sales of financial assets. The trade date is the
date that the group commits to purchase or sell an asset.
Financial instruments are initially measured at fair value plus transaction costs, except that transaction costs in
respect of financial instruments classified at fair value through profit or loss are expensed immediately.
Transaction costs are the incremental costs that are directly attributable to the acquisition of a financial
instrument, i.e. those costs that would not have been incurred had the instrument not been acquired.
A contract is assessed for embedded derivatives when the entity first becomes a party to the contract. When the
economic characteristics and risks of the embedded derivative are not closely related to the host contract, the
embedded derivative is separated out, unless the host contract is measured at fair value through profit or loss.
The group determines the classification of its financial instruments at initial recognition.
Classification
The group’s classification of financial assets and financial liabilities are as follows:
Description of asset/liability
Classification
Investments
Derivatives
Loans and advances receivable
Loans to subsidiaries
Loans payable and borrowings
Loans from subsidiaries
Available-for-sale
Financial Instruments at Fair value through profit or loss
Loans and receivables
Financial liabilities at amortised cost
Available-for-sale financial assets
These are non-derivative financial assets that are designated as available-for-sale or are not classified as loans
and receivables or held-to-maturity investments or financial assets at fair value through profit or loss.
Available-for-sale financial assets are subsequently measured at fair value with unrealised gains or losses
recognised directly in other comprehensive income. When such a financial asset is disposed of, the cumulative
gain or loss previously recognised in other comprehensive income is recognised in profit or loss. Interest earned
on the financial asset is recognised in profit or loss using the effective interest method. Dividends earned are
recognised in profit or loss when the right of receipt has been established.
16
3.10
Financial Instruments (continued)
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. After initial recognition, loans and receivables are measured at amortised cost less
impairment losses.
Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or
impaired, as well as through the amortisation process.
After initial recognition, liabilities that are not carried at fair value through profit or loss are measured at
amortised cost using the effective interest method.
Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the
amortisation process.
Fair value
The fair value of listed investments is the quoted market bid price at the close of business on the reporting
date. For unlisted investments, the fair value is determined using appropriate valuation techniques. Such
techniques include using recent arm’s length market transactions, reference to the current market value of
similar instruments, discounted cash flow analysis and option-pricing models.
Impairment of financial assets
The group assesses at each reporting date whether there is objective evidence a financial asset, or group of
assets, is impaired.
Available-for-sale financial assets
In the case of equity investments classified as available- for-sale, objective evidence would include a
significant or prolonged decline in the fair value of the investment below its cost. “Significant” is to be
evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value
has been below its original cost. Factors taken into consideration would include external market and economic
outlook reports, observable trends and cyclicality.
If an available-for-sale asset is impaired, the amount transferred from other comprehensive income to profit or
loss is:
 the difference between the asset’s acquisition cost (net of any principal payments and amortisation); and
 its current fair value, less any impairment loss previously recognised in profit or loss.
Reversals in respect of equity instruments classified as available-for-sale are not recognised in profit or loss.
Reversals of impairment losses on debt instruments are reversed through profit or loss if the increase in fair
value of the instrument can be objectively related to an event occurring after the impairment loss was
recognised in profit or loss.
Assets carried at amortised cost
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured
as the difference between the asset’s carrying amount and the present value of the estimated future cash
flows (excluding future expected credit losses) discounted at the asset’s original effective interest rate.
The group assesses whether there is objective evidence of impairment individually for financial assets that are
individually significant, and individually or collectively for financial assets that are not individually significant. In
relation to trade receivables, a provision for impairment is made when there is objective evidence (such as the
probability of insolvency or significant financial difficulties of the debtor) that the group will not be able to
collect all of the amounts due under the original terms of the sale. The carrying amount of the asset is reduced
through the use of an allowance account, and is recognised in profit or loss. Impaired debts are derecognised
when they are assessed as uncollectible.
If, in a subsequent period, the amount of the impairment decreases and the decrease relates objectively to an
event occurring after the impairment, it is reversed to the extent that the carrying value does not exceed the
amortised cost. Any subsequent reversal of an impairment loss is recognised in profit or loss.
17
3.10
Financial Instruments (continued)
Derivative instruments
Derivatives are financial instruments whose value changes in response to an underlying factor, require little or
no net investment and are settled at a future date. Derivatives, other than those arising on designated hedges,
are measured at fair value with changes in fair value being recognised in profit or loss.
Derecognition of financial assets and financial liabilities
Financial assets or parts thereof are derecognised when:
 the right to receive the cash flows have expired;
 the right to receive the cash flows is retained, but an obligation to pay them to a third party under a ‘passthrough’ arrangement is assumed; or
 the group transfers the right to receive the cash flows, and also transfers either all the risks and rewards, or
control over the asset.
Financial liabilities are derecognised when the obligation is discharged, cancelled or expired.
3.11.
Non-current assets held for sale and discontinued operations
An item is classified as held-for-sale if its carrying amount will be recovered principally through a sale
transaction rather than through continuing use. This condition is regarded as met only when the sale is highly
probable and the asset or disposal group is available for immediate sale in its present condition. Management
must be committed to the sale, which should be expected to qualify for recognition as a completed sale within
one year from the date of classification.
Assets classified as held-for-sale are not subsequently depreciated and are held at the lower of their carrying
value and fair value less costs to sell.
A discontinued operation is a separate major line of business or geographical area of operation that has been
disposed of, or classified as held-for-sale, as part of a single coordinated plan. Alternatively, it could be a
subsidiary acquired exclusively with a view to resale.
In the consolidated income statement of the reporting period and of the comparable period, income and
expenses from discontinued operations are reported separate from income and expenses from continuing
activities down to the level of profit after taxes, even when the group retains a non-controlling interest in the
subsidiary after the sale.
The resulting profit or loss (after taxes) is reported separately in the income statement.
3.12.
Inventories
Inventories are stated at the lower of cost or net realisable value. Costs incurred in bringing each product to its
present location and conditions are accounted for as follows:
Raw materials:
Finished goods and work-in-progress:
Weighted average cost.
Cost of direct material and labour and a proportion of manufacturing
overheads based on normal operating capacity but excluding
borrowing costs.
Consumables are written down with regard to their age, condition and utility.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated
completion and selling costs.
18
3.13.
Provisions
Provisions are recognised when the group has a present legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of economic benefits will be required to settle the obligation,
and a reliable estimate can be made of the amount of the obligation.
Where the group expects some or all of a provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually
certain. The expense relating to any provision is presented in the income statement net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost.
3.14.
Leases
At inception date an arrangement is assessed to determine whether it is, or contains, a lease. An arrangement
is accounted for as a lease where it is dependent on the use of a specific asset and it conveys the right to use
that asset.
Leases are classified as finance leases where substantially all the risks and rewards associated with
ownership of an asset are transferred from the lessor to the group as lessee. Finance lease assets and
liabilities are recognised at the lower of the fair value of the leased property or the present value of the
minimum lease payments. Finance lease payments are allocated, using the effective interest method,
between the lease finance cost, which is included in financing costs, and the capital repayment, which
reduces the liability to the lessor.
Capitalised lease assets are depreciated in line with the group’s stated depreciation policy. If there is no
reasonable certainty that the group will obtain ownership by the end of the lease term, the asset is depreciated
over the shorter of its estimated useful life and lease term.
Operating leases are those leases which do not fall within the scope of the definition of a finance lease.
Operating lease rentals are charged against trading profit on a straight-line basis over the lease term.
3.15.
Revenue
Revenue comprises turnover. Turnover from the sale of goods is recognised when the significant risks and
rewards of ownership have passed to the buyer, usually on dispatch of the goods, unless the group is
responsible for delivery, in which case the sale of goods is recognised on delivery.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the
revenue can be reliably measured. Revenue is measured at the fair value of the consideration
received/receivable excluding value-added tax, normal discounts, rebates, settlement discounts, promotional
allowances, and internal revenue which is eliminated on consolidation.
The group assesses its revenue arrangements against specific criteria in order to determine if it is acting as
principal or agent.
3.16.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily
takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of
the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs
consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Qualifying
assets generally take two years to get ready for their intended use.
19
3.17.
Taxation
The income tax expense represents the sum of current tax payable (both current and deferred).
Current tax
The current tax is based on taxable profit for the year. Taxable profit differs from profit as reported in the
income statement because it excludes items of income or expense that are taxable or deductible in other
years, and it further excludes items that are never taxable or deductible. Current tax may include under- or
over provisions relating to prior year taxation. The group’s liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the reporting date.
Current taxation relating to items recognised outside profit or loss is recognised outside profit or loss. Current
tax items are recognised in correlation to the underlying transaction either in other comprehensive income or
directly in equity.
Deferred taxation
Deferred tax is calculated on the liability method, using the difference between the carrying amounts of assets
and liabilities and their corresponding tax base used in the computation of taxable profit.
Deferred tax liabilities are recognised for taxable temporary differences except:
 where the liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is
not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; and
 in respect of taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled,
and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax
credits and unused tax losses, where it is probable that the asset will be utilised in the foreseeable future
except:
 where the asset arises from the initial recognition of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects neither the accounting profit nor taxable
profit or loss; and
 in respect of deductible temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, only to the extent that it is probable that the differences will reverse in the
foreseeable future, and taxable profit will be available against which these differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered. Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the
extent it has become probable that future taxable profit will allow the asset to be utilised.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or
the asset realised based on tax rates/laws that have been enacted or substantively enacted by the reporting
date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax
items are recognised in correlation to the underlying transaction either in other comprehensive income or
directly in equity.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current
tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and
the same taxation authority.
Dividends withholding tax
A Dividend withholding tax of 10% is withheld on behalf of the taxation authority on dividend distributions.
Withholding tax is payable on the earliest of declaration or payment of dividends. Should payment not have
been affected when due, the net amount payable to the taxation authority is included as part of trade and
other payables at the time a dividend is declared.
20
3.17
Taxation (continued)
Value added tax
Revenues, expenses and assets are recognised net of the amount of value added tax except:
 where the value added tax incurred on a purchase of assets or services is not recoverable from the
taxation authority, in which case the value added tax is recognised as part of the cost of acquisition of the
asset or as part of the expense item as applicable; and
 receivables and payables that are stated with the amount of value added tax included.
The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part
of receivables or payables in the statement of financial position.
3.18.
Employee benefits
A liability is recognised when an employee has rendered services for benefits to be paid in the future, and an
expense when the entity consumes the economic benefit arising from the service provided by the employee.
In respect of defined contribution plans, the contribution paid by the company is recognised as an expense. If
the employee has rendered the service, but the contribution has not yet been paid, the amount payable is
recognised as a liability.
In respect of defined benefit plans, the company’s contributions were based on the recommendations of
independent actuaries and the liability measured using the projected unit credit method, up to the date of
cessation of the scheme.
Actuarial gains and losses were recognised in the income statement when the net cumulative unrecognised
actuarial gains and losses for each individual plan at the end of the previous reporting period exceed 10% of
the higher of the defined benefit obligation and the fair value of plan assets at that date. These gains or losses
were recognised over the expected average remaining working lives of the employees participating in the
plans.
Past-service costs were recognised as an expense on a straight-line basis over the average period until the
benefits became vested. If the benefits vested immediately following the introduction of, or changes to, a
defined benefit plan, the past-service cost was recognised immediately.
On cessation of the scheme, it was agreed that the frozen liability at closure would be paid into an
independently administered fund, as a contribution to a defined contribution plan.
3.19. Contingent assets and contingent liabilities
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
company.
Contingent assets are not recognised as assets.
A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed
by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
company. Alternatively, it may be a present obligation that arises from past events but is not recognised
because an outflow of economic benefits to settle the obligation is not probable, or the amount of the obligation
cannot be measured with sufficient reliability. Contingent liabilities are not recognised as liabilities unless they
are acquired as part of a business combination.
3.20. Events after the reporting period
Recognised amounts in the financial statements are adjusted to reflect significant events arising after the
reporting date, but before the financial statements are authorised for issue, provided there is evidence of
conditions that existed at the reporting date. Events after the reporting date that are indicative of conditions that
arose after the reporting date are dealt with by way of a note.
21
3.21. Significant accounting judgements and estimates
Judgements
In the process of applying the group’s accounting policies, management has made the following judgements,
apart from those involving estimations, which have the most significant effect on the amounts recognised in the
financial statements:
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are discussed below.
Carrying value of intangible assets
Intangible assets are tested for impairment annually or more frequently if there is an indicator of impairment.
Tangible assets and finite life intangible assets are tested when there is an indicator of impairment. The
calculation of the recoverable amount requires the use of estimates and assumptions concerning the future
cash flows which are inherently uncertain and could change over time. In addition, changes in economic factors,
such as discount rates, could also impact this calculation.
Residual values and useful lives of tangible and intangible assets
Residual values and useful lives of tangible and intangible assets are assessed on an annual basis. Estimates
and judgements in this regard are based on historical experience and expectations of the manner in which
assets are to be used, together with expected proceeds likely to be realised when assets are disposed of at the
end of their useful lives. Such expectations could change over time and therefore impact both depreciation
charges and carrying values of tangible and intangible assets in the future.
Deferred tax assets
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit
will be available against which the losses can be utilised. Significant management judgement is required to
determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of
future taxable profits together with future tax planning strategies. Further details are contained in note 12.
Pension and other post-employment benefits
The cost of defined benefit pension plans and other post-employment medical benefits is determined by
actuarial valuations using the projected unit credit method, to make a reliable estimate of the ultimate cost to the
group of the benefit that employees have earned in return for their service in the current and prior periods. The
actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future
salary increases, mortality rates and future pension increases. Due to the long-term nature of these plans, such
estimates are subject to significant uncertainty. Further details are given in note 18.
Provisions
Best estimates, being the amount that the group would rationally pay to settle the obligation, are recognised as
provisions at the reporting date. Risks, uncertainties and future events, such as changes in law and technology,
are taken into account by management in determining the best estimates.
Where the effect of discounting is material, provisions are discounted. The discount rate used is the pre-tax rate
that reflects current market assessments of the time value of money and, where appropriate, the risks specific to
the liability, all of which requires management estimation.
The establishment and review of the provisions requires significant judgement by management as to whether or
not a reliable estimate can be made of the amount of the obligation.
The group is required to record provisions for legal or constructive contingencies when the contingency is
probable of occurring and the amount of the loss can be reasonably estimated. Liabilities provided for legal
matters require judgements regarding projected outcomes and ranges of losses based on historical experience
and recommendations of legal counsel. Litigation is however unpredictable and actual costs incurred could differ
materially from those estimated at the reporting date.
22
3.21 Significant accounting judgements and estimates
Impairment of trade and other receivable
The Company makes allowance for doubtful debts based on an assessment of the recoverability of receivables.
Allowances are applied to receivables where events or changes in circumstances indicate that the carrying
amounts may not be recoverable. Management specifically analysed historical bad debts, customer
concentrations, customer creditworthiness, current economic trends and changes in customer payment terms
when making a judgment to evaluate the adequacy of the allowance of doubtful debts of receivables. Where the
expectation is different from the original estimate, such difference will impact the carrying value of receivables.
Allowance for inventories written down
Reviews are made periodically by management on damaged, obsolete and slow moving inventories. These
reviews require judgment and estimates. Possible changes in these estimates could result in revisions to the
valuation of inventories.
Impairment of assets
Determining whether assets are impaired requires an estimation of the value in use of the cash-generating units
to which assets have been allocated. The value in use calculation requires the entity to estimate the future cash
flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present
value. The assets were tested for impairment which resulted in no impairment loss being identified. No
impairment loss was therefore recognised during 2013.
COMPANY
9 months
ended
30-Sep
2013
12 months
ended
31-Dec
2012
(N '000)
4
23,079,590 29,859,976
23,079,590 29,859,976
GROUP
Restated
9 months
12 months
ended
ended
30-Sep
31-Dec
2013
2012
Revenue
Flour products
Spaghetti, macaroni and other pasta products
Noodles products
Agrosacks packaging materials
Total revenue
Revenue is net of value-added tax, normal
discounts, rebates and promotional allowances.
Refer to the segmental analysis for details
of the segmental split and inter-company
eliminations.
23
21,219,884
4,667,669
4,072,866
27,995,744
8,610,388
4,866,467
-
29,960,419
41,472,599
COMPANY
9 months
ended
30-Sep
2013
12 months
ended
31-Dec
2012
(N '000)
5
44,000
20,881
38,750
25,401
1,603,082
84,877
1,493,087
25,118
2,180,284
87,304
2,051,110
41,870
115,692
-
29,328
134,865
-
1,525,676
28,643
41,807
-
2,581,971
120,596
28,733
-
(42,708)
(42,708)
(253,848)
(70,282)
(127,175)
(56,391)
904,174
244,188
95,000
564,986
141,792
32,000
109,792
GROUP
Restated
9 months
12 months
ended
ended
30-Sep
31-Dec
2013
2012
Operating (loss)/ profit
Operating (loss)/ profit from continuing
operations is determined after
charging/(crediting) the following:
External auditors' remuneration
- Audit fees
- Other fees and expenses
67,500
20,881
60,250
25,401
2,844,268
103,180
2,706,593
34,495
4,350,384
108,119
4,175,939
66,326
160,004
75,000
-
46,154
152,585
-
Staff costs
Salaries, allowances and other benefits
Employer's contribution to retirement funding
Employer's contribution to medical aid
Foreign exchange loss
2,301,473
68,744
46,441
-
3,422,592
165,393
56,053
-
Other Income
Insurance claims received
Foreign exchange profit
Provision no longer required
Other sundry income
(233,975)
(233,975)
(325,490)
(3,956)
(70,282)
(251,252)
Non-recurring items
Redundancy costs
Stock write off
Provision for bad debts
VAT (prior years)
Penalties on late submission of VAT
1,839,970
495,881
116,410
201,584
461,109
564,986
208,459
98,667
109,792
Depreciation
Buildings
Plant, equipment and vehicles
Computer and office equipment
Professional and consultant fees
Operating lease charges
Land and buildings
Plant, equipment and vehicles
24
COMPANY
9 months
ended
30-Sep
2013
GROUP
12 months
ended
31-Dec
2012
(N '000)
5 Operating (loss)/ profit (continued)
1,993
14,700
35,115
37,108
-
59,267
73,967
-
Directors' emoluments
Executive directors
- salaries and bonuses
- retirement, medical and other benefits
Non-executive directors
- fees
Total directors' emoluments
Less: Paid by subsidiaries
37,108
73,967
Emoluments paid by company
3
1
8
1
1
193
256
119
328
351
122
568
801
90
245
5
228
99
352
3
347
568
801
The number of Directors excluding the Chairman
whoseemoluments were within the following ranges
were:
N5 000 000 – N10 000 000
N14 800 001 - N15 000 000
N15 000 000 and above
The number of employees with gross emoluments
within the bands stated below are:
Up to N1 000 000
N 1 000 001 - N2 000 000
Above 2 000 001
Average number of persons in the Company's
employment in the financial period were as follows:
Managerial
Senior staff
Expatriates
Junior staff
6
(64,618)
-
161,083
(64,618)
161,083
7
(Loss)/Profit on disposal of Fixed Assets:
Loss on disposal on PPE (trucks and motor
vehicles)
Profit on disposal on PPE (Production machinery)
Restated
12 months
ended
31-Dec
2012
9 months
ended
30-Sep
2013
33,000
1,993
21,780
27,734
22,423
57,416
-
59,267
108,781
(34,814)
57,416
73,967
3
1
8
1
1
747
359
159
1,065
467
179
1,265
1,711
142
440
5
678
153
564
9
985
1,265
1,711
(130,678)
-
161,083
(130,678)
161,083
Finance costs
(2,346,275)
(2,059,643)
Finance costs
(2,364,956)
(2,085,169)
(2,208,403)
(137,872)
-
(1,002,242)
(1,057,401)
-
Bank and other short term borrowings
Other - financial liabilities
(2,208,403)
(156,553)
-
(383,773)
(1,200,126)
(501,270)
12,665
30,974
Interest received
19,927
53,250
12,665
30,974
From cash and cash equivalents
19,927
53,250
(2,333,610)
(2,028,669)
(2,345,029)
(2,031,919)
Net finance costs
25
COMPANY
9 months
ended
30-Sep
2013
12 months
ended
31-Dec
2012
(109,526)
-
(154,216)
(8,431)
(127,689)
3,480
-
(93,248)
(162,647)
1,260,089
1,289,111
1,260,089
1,289,111
1,166,842
1,126,464
GROUP
Restated
9 months
12 months
ended
ended
30-Sep
31-Dec
2013
2012
(N '000)
8
Income tax relating to continuing operations
8.1
Income tax recognised in profit and loss
Current taxation
Nigerian current taxation
Education tax
Capital gain tax
In respect of prior years
Nigerian current taxation
Education tax
Deferred taxation
In respect of current year
Total income tax relating to continuing
operations
(132,918)
-
(177,185)
(18,380)
(8,431)
6,980
2,027
-
(123,911)
(203,996)
1,701,901
1,462,655
1,701,901
1,462,655
1,577,990
1,258,659
(942,874)
(759,027)
(681,591)
(781,064)
Dangote Noodles Ltd, a subsidiary of the
company obtained approval from the Nigerian
Investment PromotionCommission for a five year
pioneer tax status incentive (tax holiday), taking
effect from 1 July 2010.
(827,533)
(432,556)
(545,570)
(743,541)
Movement per deferred tax accounts
(Increase) / decrease in deferred taxation asset
(Decrease) / increase in deferred taxation liability
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.
26
8.2
The income tax expense for the period can be reconciled to accounting loss as follows:
COMPANY
8.3
9 months
ended
30-Sep
2013
12 months
ended
31-Dec
2012
(5,647,490)
(4,264,583)
Loss before tax from continuing operations
(8,342,294)
(5,602,972)
(1,694,247)
-
(1,279,375)
-
(2,502,688)
-
(1,680,891)
-
326,401
101,562
464,734
203,768
169,496
-
222,418
218,464
-
-
(97,838)
-
121,277
79,727
-
150,896
(99,547)
Income tax expense calculated at 30% (2012: 30%)
Effects of income tax that is exempt taxation
Effects of expenses that are not deductible in
determing taxable profit
Effects of unused tax losses and tax offsets not
recognised as deferred tax assets
Effects of recognising tax offsets not previously
recognised as deferred tax assets
Effect of utilising minimum tax provisions and
education tax
Others
Effect of prior year over/(under) provision
128,595
206,789
-
1,166,842
1,126,464
(1,577,990)
(1,258,659)
Income tax expense recognised in profit or loss
(relating to continuing operations)
-
Unrecognised deductible temporary differences, unused tax losses and unused tax credits
COMPANY
9 months
12 months
ended
ended
30-Sep
31-Dec
2013
2012
8. 4
(N '000)
The income tax expense for the period can be
reconciled to accounting loss as follows:
9 months
ended
30-Sep
2013
GROUP
Restated
12 months
ended
31-Dec
2012
9 months
ended
30-Sep
2013
(N '000)
-
-
Deductible temporary differences, unused tax losses
and unused tax credits for which
no deferred tax assets has been recognised are
attributable to the following:
Tax losses (revenue in nature)
Other deductible temporary differences
-
-
Total
GROUP
12 months
ended
31-Dec
2012
779,009
-
656,591
97,838
779,009
754,429
Current tax liabilities
COMPANY
9 months
12 months
ended
ended
30-Sep
31-Dec
2013
2012
83,770
57,003
8,431
146,330
63,523
8,431
149,204
212,284
9 months
ended
30-Sep
2013
(N '000)
Current tax liabilities
Income tax payable
Education tax
Capital gains tax
27
GROUP
12 months
ended
31-Dec
2012
148,666
81,351
8,431
322,786
69,938
8,431
238,448
401,155
9 Basic and diluted earnings per share and dividends declared
COMPANY
9 months
ended
30-Sep
2013
GROUP
12 months
ended
31-Dec
2012
9 months
ended
30-Sep
2013
Restated
12 months
ended
31-Dec
2012
(7,933,883)
(2,769,724)
(6,698,841)
(1,235,042)
(4,261,802)
1,421,088
9 Basic and diluted earnings per share and
dividends declared
Basic earnings per share is calculated by dividing
the net profit for the year by the weighted average
number of ordinary shares outstanding during the
year. Basic and diluted earnings per share is the
same as there are no dilutive effects on earnings.
Total comprehensive loss attributable to
ordinary shareholders:
Total comprehensive loss for the period (N '000)
(4,480,648)
(3,138,119)
(4,480,648)
-
(3,138,119)
-
5,000
5,000
Weighted average number of ordinary shares
(million)
5,000
5,000
(89.61)
(62.76)
Basic and diluted loss per share (kobo per
share)
(158.68)
(55.39)
(89.61)
-
(62.76)
-
(133.98)
(24.70)
(85.24)
28.42
-
500,000
5,000
5,000
-
10.00
Discontinued operation
No ordinary share transactions or potential
transactions occurred after the reporting date that
would have changed the number of ordinary
shares or potential ordinary shares outstanding at
the end of the period if those transactions had
occurred before the reporting date.
Dividends declared
The company declared a dividend of 10 kobo per
ordinary share out of the profits for the year
ended 31 December 2012 and no dividend has
been declared for the period ending
30 September 2013.
-
500,000
5,000
5,000
Dividend declared (N '000)
Weighted average number of ordinary shares
(Million)
-
10.00
Dividend per share (kobo per share)
28
GROUP
(N '000)
10
Cost
Additions
Disposals
Transfers between classes of assets
Adjustment - allocation correction
from accumulated depreciation
Written off
Additions
Disposals
Transfer from discontinued operation
Accumulated depreciation
Depreciation
Continued operations
Disposals
Adjustment - allocation correction
from accumulated depreciation
Impairment
Written off
Depreciation
Continued operations
Disposals
Fair value loss on remeasurement
of DAS
Transfer from discontinued
operation
Net book value
Leasehold
Plant,
vehicles
Computer
land and
buildings
and
equipment
4,549,937
78,236
2,918,272
and office
equipment
Assets
under
construction
Total
44,619,132
1,280,057
(20,044)
6,153,963
467,603
6,635
(173)
19,510
10,351,806
633,969
(9,094,258)
59,988,478
1,998,897
(20,217)
(2,513)
118,499
-
3,439,579
(80,005)
87,888
-
-
3,645,966
(80,005)
7,664,944
73,178
(1,103,050)
55,392,683
680,402
(1,417,690)
(14,299,517)
581,463
21,354
-
1,891,517
76,089
(278,262)
65,530,607
851,023
(1,417,690)
(15,680,829)
6,635,072
40,355,878
602,817
1,689,344
49,283,111
357,755
130,475
108,119
22,356
-
12,603,584
4,452,573
4,175,939
276,634
(15,660)
272,149
86,365
66,326
20,039
-
-
13,233,488
4,669,413
4,350,384
319,029
(15,660)
118,499
-
3,439,579
25,520
(76,768)
87,888
-
-
3,645,966
25,520
(76,768)
606,729
120,976
103,180
17,797
-
20,428,829
3,396,294
2,706,593
689,701
(734,083)
446,402
31,180
34,495
(3,315)
-
-
21,481,960
3,548,450
2,844,268
704,183
(734,083)
(57,105)
(2,570,769)
-
-
(2,627,873)
(51,888)
(2,335,912)
-
-
(2,387,799)
618,713
18,184,360
477,582
-
19,280,655
4,192,182
7,058,215
6,016,359
32,015,548
34,963,854
22,171,518
195,454
135,061
125,235
10,351,806
1,891,517
1,689,344
46,754,990
44,048,647
30,002,456
29
10
Property, plant and equipment (continued)
The adjustment of N3.6 billion in cost and accumulated depreciation in the prior year relates to correction of book
value of assets shown net in the cost of assets in prior years. The net transfer of assets of N2.513 million relates to
an item of work-in-progress expensed during the year. Impairment represents damaged vehicles which have been
recognised in profit or loss.
Assets under construction represent mainly expenditure incurred on the Danvita Flour Mills at Apapa. Assets
amounting to N14.2 billion are encumbered by debenture in favour of Zenith Bank Plc, Eco Bank Plc, Diamond
Bank Plc and FCMB Plc.
The following useful lives are used in the calulation of depreciation:
Plant, vehicles and equipment
4 - 15 years
3 - 5 years
Plant,
Leasehold
vehicles
land and
buildings
and
equipment
and office
equipment
Assets
under
construction
2,430,043
29,941
2,914,572
16,865,086
110,704
2,767,454
227,208
6,248
10,665
6,960,952
166,222
(5,695,204)
26,483,289
313,115
(2,513)
118,499
-
3,439,579
(80,005)
87,888
-
-
3,645,966
(80,005)
Additions
Disposals
5,493,055
50,917
-
23,102,819
183,736
(395,715)
332,009
21,354
-
1,431,970
76,089
-
30,359,853
332,096
(395,715)
Accumulated depreciation
Additions
Depreciation
Adjustment - allocation correction from
accumulated depreciation
Impairment
Written off
5,543,972
22,890,840
353,363
1,508,059
30,296,234
216,669
87,304
5,510,174
2,051,110
122,872
41,870
-
5,849,715
2,180,284
118,499
-
3,439,579
13,189
(76,768)
87,888
-
-
3,645,966
13,189
(76,768)
Depreciation
Disposals
422,472
84,877
-
10,937,285
1,493,087
(270,285)
252,630
25,118
-
-
11,612,387
1,603,082
(270,285)
Net book value
507,349
12,160,087
277,748
-
12,945,184
2,213,374
5,070,583
5,036,623
11,354,912
12,165,534
10,730,753
104,336
79,379
75,615
6,960,952
1,431,970
1,508,059
20,633,574
18,747,467
17,351,050
Company
(N '000)
10
Cost
Additions
Transfers between classes of assets
Adjustment - allocation correction from
accumulated depreciation
Written off
The following useful lives are used in the calulation of depreciation:
Leasehold land and buildings
50 years
4 - 15
Plant, vehicles and equipment
years
3 - 5 years
30
Computer
Total
10
Property, plant and equipment (continued)
The adjustment of N3.6 billion in cost and accumulated depreciation relates to correction of book value of assets
shown net in the cost of assets in prior years. The net transfer of assets of N2.513 million relates to an item of workin-progress expensed during the year. Impairment represents damaged vehicles which have been recognised in
profit or loss.
Assets under construction represent expenditure incurred on the Danvita Flour mills at Apapa. Assets amounting to
N14.2 billion are encumbered by debentures in favour of Zenith Bank Plc, Eco Bank Plc, Diamond Bank Plc and
FCMB Plc.
30 September 2013
Percentage
(N '000) holding (%)
11
Interest in subsidiary companies
Unlisted - shares at cost:
Dangote Pasta Limited
Dangote Agrosacks Limited
Dangote Noodles Limited
2,507,637
90,000
Loans receivable from subsidiaries – held
directly
99%
90%
COMPANY
31 December 2012
Percentage
(N '000) holding (%)
2,507,637
4,956,000
90,000
2,597,637
7,553,637
14,612,558
2,607,078
14,095,272
2,857,959
17,219,636
16,953,231
1,547,289
1,331,717
1,547,289
1,331,717
Loans payable to subsidiaries – held directly
99%
99%
90%
In 2007 the company acquired controlling interests in Dangote Pasta Limited and Dangote Agrosacks Limited.
During 2008, the company acquired a controlling interest in Dangote Noodles Limited.
The investments and loans were evaluated for impairment by evaluating net asset values of the subsidiary
companies using the cost and income valuation techniques. The fair value measurement took into account the
ability of the group to generate economic benefits from the entities by using their plants and assets in their highest
and best use.
The investment in Dangote Agrosacks Limited has been re-classified as assets held for sale. Details of the
transaction are contained in Note 25.
11.1
Subsidiaries
Details of Group's material subsidiaries as at the end of reporting period are as follows:
Place of
Name of subsidiary
Principal activity
Manufacturing and sale
of pasta products
Manufacturing and sale
of noodles products
Manufacture and sale of
sacks
31
Portion of ownership,
interest and voting
power held by the
Group
30-Sep
31-Dec
2013
2012
Nigeria
99%
99%
Nigeria
90%
90%
Nigeria
99%
99%
incorporation
and
operation
11.2
Composition of Group
Number of
non-whollyowned
subsidiaries
Name of subsidiary
Dangote Noodles
Limited
Dangote Agrosacks
Limited
11.3
Place of
incorporation
and operation
Principal activity
30-Sep
2013
31-Dec
2012
Manufacturing and sale of pasta products
Nigeria
1
1
Manufacturing and sale of noodles products
Manufacture and sale of sacks
Nigeria
1
1
Nigeria
1
1
Details of non-wholly owned subsidiaries that have material non-controlling interests
Portion of ownership,
interest and voting
power held by noncontrolling interests
Name of subsidiary
Agrosacks Obajana Limited
30-Sep
2013
(Loss)/ profit allocated
to non-controlling
interests
(9 months) (12 months)
ended
ended
30-Sep
31-Dec
31-Dec
2013
2012
2012
1%
10%
1%
25%
1%
10%
1%
25%
Total
32
(18,112)
(47,253)
22,977
758,383
(4,109)
(73,666)
16,074
639,078
(715,995)
(577,377)
Accumulated noncontrolling interests
30-Sep
2013
31-Dec
2012
(5,315)
(412,388)
123,955
2,089,071
12,797
(365,135)
105,266
1,326,420
(1,795,323) (1,079,348)
11.3
Details of non-wholly owned subsidiaries that have material non-controlling interests (continued)
Summarised information in respect of each of the Group's subsidiaries that has material non-controlling
interest is set below.
The summarised amounts below represent amounts before intragroup eliminations.
Current assets
Non-current assets
Current liabilities
Equity attributable to the owners of the company
Revenue
Expenses
(Loss) / profit for the period
Attributable to:
Total comprehensive (loss)/income for the year
Net cash inflow/ (outflow) from operating activities
Net cash outflow from investing activities
Net cash (outflow) / inflow from financing activities
Net cash inflow/ (outflow)
33
9 months
ended
30-Sep
2013
12 months
ended
31-Dec
2012
5,157,077
13,107,745
(1,884,443)
(14,685,847)
(1,699,847)
6,733,100
12,890,545
(1,330,538)
(14,787,341)
(3,492,969)
4,674,880
6,486,153
8,610,388
9,021,268
(1,811,273)
(410,880)
(1,793,161)
18,112
(406,771)
4,109
-
70,280
710
(1,793,161)
18,112
(339,890)
4,819
(16,146)
(279,339)
352,945
723,813
(322,616)
(367,167)
57,460
34,030
11.3
Details of non-wholly owned subsidiaries that have material non-controlling interests (continued)
30-Sep
2013
31-Dec
2012
751,244
1,352,918
888,809
1,301,497
(2,775,166)
(3,352,894)
4,023,899
(1,080,110)
(4,661,541)
3,551,348
4,073,866
4,545,419
(472,553)
4,866,467
5,603,123
(736,656)
(425,298)
47,253
(662,990)
73,666
-
-
(425,298)
47,253
(662,990)
73,666
Net cash inflow/ (outflow) from operating activities
Net cash outflow from investing activities
Net cash (outflow) / inflow from financing activities
(1,870,539)
2,378
(59,721)
437,821
(128,506)
(127,057)
Net cash inflow/ (outflow)
(1,927,882)
182,258
Current assets
Non-current assets
Current liabilities
Equity attributable to the owners of the company
Revenue
Expenses
(Loss) / profit for the period
Attributable to:
Total comprehensive (loss)/income for the year
COMPANY
30-Sep
2013
31-Dec
2012
(N '000)
12
1,001,483
(2,825,800)
(1,824,317)
455,913
(3,569,341)
(3,113,428)
827,533
432,556
545,570
743,541
(564,228)
1,829,016
(2,393,244)
(1,824,317)
1,001,483
(2,825,800)
GROUP
30-Sep
2013
Deferred taxation
Balance at beginning of year:
- Deferred tax asset
- Deferred tax liability
Income statement movement
- Temporary differences : deferred tax asset
- Temporary differences : deferred tax liability
- Temporary differences : deferred tax asset
(discontinued operations)
- Temporary differences : deferred tax liability
(discontinued operations)
Transfer from discontinued operations
Balance at end of year
34
31-Dec
2012
1,621,122
(2,855,079)
(1,233,957)
939,531
(4,114,138)
(3,174,607)
1,408,471
268,763
681,591
780,703
589,721
-
133,065
478,356
(589,721)
133,065
-
443,277
2,896,528
(2,453,251)
(1,233,957)
1,621,122
(2,855,079)
25
12
Deferred taxation (continued)
Assessed losses available for offset against future taxable income have been recognised when it is probable
that there will be future taxable income against which the assessed loss may be utilised.
12.1
Analysis of deferred tax asset balances:
COMPANY
30-Sep
2013
GROUP
31-Dec
2012
(N '000)
30-Sep
2013
31-Dec
2012
193,409
606,712
1,028,895
255,475
422,835
323,173
Property, plant and
equipment
Gratuity
Allowance for bad debt
Others
595,541
337,215
823,225
1,140,548
397,045
329,110
571,794
323,173
1,829,016
1,001,483
2,896,528
1,621,122
(2,393,244)
Analysis of deferred tax liability balances:
Property, plant and
(2,825,800)
equipment
(2,453,251)
(2,855,079)
(2,393,244)
(2,825,800)
(2,453,251)
(2,855,079)
779,009
-
656,591
97,838
779,009
754,429
12.2
Deductible temporary differences, unused tax losses and unused tax credits for
which no deferred tax assets have been recognised are attributable to the following:
- tax losses (revenue in nature)
- deductible temporary differences
12.3 Analysis of movement in deferred tax balances
COMPANY
Gratuity
Tax losses available for carry forward
Opening
Balance
Profit and
Loss
Closing
Balance
(2,825,800)
255,475
422,835
323,173
432,556
(62,066)
183,877
705,722
(2,393,244)
193,409
606,712
1,028,895
(1,824,317)
1,260,089
(564,228)
GROUP
Gratuity
Tax losses available for carry forward
Others
35
Opening
Balance
(2,458,034)
329,110
571,794
323,173
-
Profit and
Loss
759,027
(62,066)
259,522
789,922
(44,504)
Held for
sale
(158,703)
70,171
(8,091)
71,956
Closing
Balance
(1,857,710)
337,215
823,225
1,113,095
27,452
(1,233,957)
1,701,901
(24,667)
443,277
COMPANY
30-Sep
2013
31-Dec
2012
(N '000)
13
7,030,498
207,909
565,184
(117,200)
6,591,961
107,410
618,077
-
7,686,391
20,959,691
7,317,448
27,117,287
8,677,964
520,271
799,887
9,007,011
46,332
715,188
9,998,122
(5,436,248)
(600,159)
9,768,531
(5,436,248)
(600,159)
3,961,715
3,961,715
3,732,124
3,732,124
GROUP
30-Sep
2013
Inventories
Raw material and work-in-progress
Finished goods
Engineering spares and other stock
Amounts written down as slow moving
The cost of inventories recognised as an
expense in cost of sales during the period
in respect of continuing operations
14
Trade receivables
Prepayments
Sundry receivables
Total
Impairment provision: Trade receivables
Impairment provision: Other receivables
Net trade and other receivables
Long-term portion
Short-term portion
31-Dec
2012
7,882,459
765,089
962,612
(237,703)
9,861,296
1,110,440
2,105,109
(129,983)
9,372,457
26,609,286
12,946,862
37,090,273
9,940,320
602,431
4,000,808
16,758,381
202,983
1,619,970
14,543,559
(6,126,190)
(627,903)
18,581,334
(6,021,843)
(627,903)
7,789,466
7,789,466
11,931,588
3,894
11,927,694
The average credit period granted to customers is 30 days. Trade receivables, which generally have 30-60 day
terms, are non interest-bearing and are recognised and carried at original invoice amount less an allowance for
any uncollectible amounts.
Included in the provision is N2.4 billion of the Dangote Flour Mills Plc’s trade debtors which is backed by an
insurance bond, overdue by more than one year. The carrying amount approximates fair value.
Before accepting a new customer the Group initially trades with the customer on a
cash basis to assess the
customer’s ability and also determine the customer’s transaction volumes. This enables a reasonable credit limit to
be set. Once these are determined the customer is then allowed to apply for a credit facility from the company
through a rigorous process with several levels of approval.
Trade receivables disclosed above include amounts that are past due at the end of the reporting period for which
the Group has not recognised an allowance for doubtful debts because there has not been a significant change in
credit quality and the amounts are still considered recoverable.
Of the trade receivables balance at the end of the year, the following Companies made up the largest customers
in the Group and Company:
COMPANY
30-Sep
2013
160,950
95,098
90,242
346,290
31-Dec
2012
184,849
176,472
144,442
(N '000)
Company A
Company B
Company C
GROUP
30-Sep
31-Dec
2013
2012
294,224
2,187,544
188,402
757,400
165,617
163,104
648,243
505,763
3,108,048
The reduced concentration arises due to the reclassification of receivables to Dangote Agrosacks Limited, which
are now included in assets held for re-sale.
36
14 Trade and other receivables (continued)
Impairment Provisions
Provision is made when there is objective evidence that the company will not be able to collect the debts. The allowance
raised is the amount needed to reduce the carrying value to the present value of expected future cash receipts. Bad
debts are written off when identified. Movements in the provision were:
COMPANY
GROUP
30-Sep
30-Sep
31-Dec
31-Dec
2013
(N '000)
2013
2012
2012
6,036,407
6,649,746
4,545,957
Balance at the beginning of the year
5,094,586
Utilised during the year
104,347
1,490,450
Raised during the year
1,555,160
6,036,407
6,036,407
Balance at the end of the year
Past due but not impaired analysis: Trade
receivables ageing:
Current to 60 days
61 to 90 days
91 - 180 days
180 - 365 days
6,754,093
6,649,746
1,784,291
38,129
7,237
1,412,060
828,858
152,011
240,235
2,349,659
2,085,770
46,733
105,803
1,575,824
4,170,229
1,580,646
930,955
4,054,709
3,241,717
3,570,763
3,814,130
10,736,539
5,436,248
Total
Impaired analysis: Trade receivables
ageing:
Current to 60 days
61 to 90 days
91 - 180 days
> 365 days
5,436,248
6,126,190
6,021,843
5,436,248
5,436,248
Net outstanding
6,126,190
6,021,843
In determining the recoverability of the trade receivable, the Group and Company consider any change in the credit
quality of the trade receivable from the date credit
was initially granted up to the reporting date. The concentration
of credit risk is limited because of the customer base being large and unrelated and large credit risks are insured against
irrecoverability. Accordingly, the directors believe that there is no further impairment allowance required in excess of the
allowance for doubtful debts.
Amounts past due but not impaired 180 – 365 days are covered by an indemnity of N1.7 billion provided by Dangote
Industries Limited and hence have not been provided for.
COMPANY
30-Sep
31-Dec
2013
2012
(N '000)
15
3,288,629
-
3,288,629
3,025,036
-
3,025,036
GROUP
30-Sep
31-Dec
2013
2012
Short-term loans receivable
Unsecured, interest free loans repayable on
request:
Due from related parties (refer to note 22)
Other short-term loans
6,122,476
60,812
6,183,288
Total
The carrying amount of short-term loans approximates their fair value.
37
5,083,533
-
5,083,533
COMPANY
30-Sep
31-Dec
2013
2012
(N '000)
16
910,024
(2,394,459)
(1,484,435)
GROUP
30-Sep
31-Dec
2013
2012
861,417
(162,598)
Bank balances and short-term deposits
Bank overdrafts
698,819
17
3,000,000
3,000,000
Share capital and premium
Authorised share capital
6 000 000 000 ordinary shares of 50k each
2,500,000
18,116,249
2,500,000
18,116,249
Issued ordinary share capital
5 000 000 000 ordinary shares of 50k each
Share premium
18
1,423,664
(2,399,913)
1,817,266
(1,925,162)
(976,249)
(107,896)
3,000,000
3,000,000
2,500,000
18,116,249
2,500,000
18,116,249
Retirement benefit obligation
The company and its subsidiaries were operating a defined benefit gratuity scheme which entitled employees
to certain benefits after 5 years of service with the group.
The defined benefit gratuity scheme was un-funded.
For the purpose of these disclosures and in order to comply with the requirements of IAS 19, valuations have
been performed by independent actuaries using the projected unit credit method. The scheme terminated on
30th September 2012 and in view of this, the actuarial valuation was prepared on a discontinuance basis.
The scheme's liability at termination date was without any projection.
The amounts included in the statement of financial position arising from the Group and Company’s obligations
in respect of its defined benefit retirement benefit scheme are as follows:
COMPANY
30-Sep
31-Dec
2013
(N '000)
2012
851,584
1,277,236
(443,828)
162,541
(206,887)
(144,365)
(644,697)
-
851,584
Balance at beginning of the year
Current Service Cost
Interest Cost
Actuarial Gains / (losses) - Assumption
Actuarial Gains / (losses) - Experience
Benefits paid by from company
Transferred to other payables
Balance at the end of the year
GROUP
30-Sep
31-Dec
2013
2012
1,254,329 1,730,447
(451,711)
214,822
(2,382)
(68,608)
(444,596)
(168,239)
(809,733)
-
1,254,329
The outstanding balance of N810m as at September 2013 has been transferred to accounts payable as a
result of management intention to fund this scheme and pay the balance to a fund manager within the next
year.
38
COMPANY
30-Sep
31-Dec
2013
2012
GROUP
30-Sep
31-Dec
2013
2012
(N '000)
19
14,725,606
6,003,525
(6,167,103)
14,725,606
-
14,562,028
9,646,302
14,725,606
10,524,375
4,915,726
4,201,231
Balance at beginning of the year
Loan advanced
Repayment
Balance at the end of the period
Long-term portion
Short-term portion included in shortterm borrowings (note 21)
16,909,606
6,003,525
(8,351,103)
4,200,000
14,725,606
(2,016,000)
14,562,028
9,646,302
16,909,606
10,692,375
4,915,726
6,217,231
The loans were obtained in January 2012 and January 2013 and are repayable over periods of 36 to 48 months at
fixed interest rates of 15% and 16% per annum. The loans are secured by a debenture over the assets of Dangote
Agrosacks Limited (DAS), Obajana Agrosacks Limited and Dangote Flour Mills Plc.
Short term portion of the long-term borrowing for Dangote
liabilities held to sale.
COMPANY
30-Sep
31-Dec
2013
2012
20
5,493,944
1,163,076
3,758,150
1,074,782
644,697
376,144
196,048
144,749
7,677,861
5,173,729
Agrosacks Limited
of N672m has been transferred
(N '000)
Trade payables and accruals
Customers' deposits
Retirement benefit obligation (due to pension
fund administrator)
Deferred income (wheat rebate)
Withholding tax
Net trade and other payables
GROUP
30-Sep
31-Dec
2013
2012
9,425,128
1,163,076
8,521,991
1,473,427
809,733
594,835
196,048
242,290
11,992,772
10,433,756
The average credit period on purchases is 30 days. No interest is charged on the trade payables from the date of the
invoice. The Group has financial risk management policies in place to ensure that all payables are paid within
preagreed credit terms.
The carrying amount approximates fair value.
COMPANY
30-Sep
31-Dec
2013
2012
21
-
-
3,377,132
9,465,058
2,734,773
8,242,610
4,915,726
4,201,231
17,757,915
15,178,614
(a)
(N '000)
Unsecured loans (a)
Amounts due to related parties (refer to note
22)
Short-term bank loans
Letters of credit for wheat purchases
Short-term portion of long-term borrowings
(note 19)
Total
GROUP
30-Sep
31-Dec
2013
2012
250,000
315,867
6,409,667
9,465,058
8,071,259
1,500,000
8,242,610
4,915,726
6,217,231
21,040,451
24,346,967
A subsidiary of the company, Dangote Noodles Limited secured a loan of N310 million from Dangote
Industries Limited at a fixed interest rate of 8% per annum.
The carrying amount of short-term borrowings approximates their fair value.
39
22
Related party disclosures
Unless stated otherwise, all related party transactions are concluded at arm’s length in the normal course of
business. All material intergroup transactions are eliminated on consolidation. The following related party
balances existed:
COMPANY
30-Sep
31-Dec
2013
2012
3,058,121
2,516
3,021,642
a
b
1,500
51,000
230,647
72
(52,711)
1,500
51,000
3,606
(55,228)
c
3,288,629
3,025,036
174,339
68,061
1,779,631
148,694
42,931
474,771
17,645
203,040
-
1,779,602
184,777
42,931
557,221
17,645
202,985
403,725
13,907
3,377,132
2,734,773
d
e
j
k
g
b
h
f
i
c
a
m
l
(N '000)
Amounts due from related parties (refer to
note 15)
Dangote Cement Plc.
Dangote Industries Limited
National Salt Company of Nigeria
Plc
Dangote Fisheries Nigeria Limited
Dangote Textiles Nigeria Limited
Dangote Foundation
Dangote Freight Limited
UAC Foods
Others
Impairment allowance
GROUP
30-Sep
31-Dec
2013
2012
24,014
5,786,636
115,813
4,662,355
1,500
51,000
65,937
15,381
230,647
72
(52,711)
1,500
55,593
115,213
15,381
350,950
(233,272)
Total
Amounts due to related parties (refer to
note 21)
Dangote Nigeria Limited
Dangote Industries Limited
Dangote Transport Nigeria Limited
Dangote Sugar Refinery Plc
Bluestar Shipping Company
Greenview Development Nigeria limited
National Salt Company of Nigeria Plc
Dangote Port Operations
Tiger Brands Limited
Dangote Cement Plc
Dancom Technologies Limited
Deli Foods Limited
Bulk Pack Nigeria Limited
Other
6,122,476
5,083,533
174,446
2,661,108
1,873,960
255,353
42,931
557,221
12,640
17,645
202,985
501,920
93,679
13,907
802
1,070
76,817
3,953,741
1,871,065
323,092
42,931
474,771
17,033
18,168
1,116,877
111,698
Total
6,409,667
8,071,259
13,857
51,209
a
Dangote Cement Plc is a related company through common shareholdings. Dangote Cement Plc buys
consumables from Dangote Agrosacks Ltd, a subsidiary of the company and provides haulage trucks from
time to time to the company.
b
Dangote Industries Limited is a related company through shareholding in Dangote Flour Mills Plc. It provides
strategic management services.
c
National Salt Company of Nigeria Plc is a related company through common shareholding and procures
consumables from Dangote Agrosacks Ltd, a subsidiary of the company.
d
Dangote Textiles Nigeria Limited is a related company through common shareholding. No transactions were
concluded during the period under review.
40
22
Related party disclosures (continued)
e
Dangote Foundation is a related company through common shareholding and buys pasta and noodles
products from the company's subsidiaries.
f
Dangote Sugar Refinery Plc is a related company by means of common shareholding and provides power
and LPFO (Low Pour Fuel Oil) to some of the company's mills.
g
Dangote Nigeria Ltd is a related party by means of common shareholding.
h,j
Dangote Transport Nigeria Limited and Dangote Freight Limited are a related party by means of common
shareholding and provides haulage services to the company and the group.
i
Greenview Development Nigeria Limited is a related party by means of common shareholding and provides
leased property during the period under review.
k
UAC Foods is a related party by means of common shareholding and buys flour (raw material) from DFM
l
Deli Foods Limited is a related party by means of common shareholding and buys flour (ram material) from
DFM
m
Dancom Technologies Limited is a related party by means of common shareholding and information
technology services
23
Financial instruments
The main risks arising from the group's financial instruments are, in order of priority: credit risk, procurement
risk, liquidity risk, interest rate risk and foreign currency risk, as detailed below.
The group's objective in using financial instruments is to reduce the uncertainty over future cash flows arising
principally as a result of commodity price, currency and interest rate fluctuations. The use of derivatives for
the hedging of firm commitments against commodity price, foreign currency and interest rate exposures must
be approved by the board of directors. Significant finance obtained is approved by the board of directors. The
group finances its operations through a combination of retained surpluses, bank borrowings and long-term
loans.
Credit risk
Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations and arises principally from the group’s trade receivables (customers) and
investment securities.
The potential concentration of credit risk consists mainly of other receivables and cash and cash equivalents.
The group limits its counterparty exposures from its cash and cash equivalents by dealing only with well
established financial institutions of a high quality credit standing. The maximum exposure to credit risk is
represented by the carrying amount of each financial asset in the statement of financial position.
Credit risk in respect of the group's customer base is controlled by the application of credit limits and credit
monitoring procedures.
Certain significant receivables are monitored on a daily basis. Where appropriate, credit guarantee insurance
is obtained. The group's credit exposure in respect of its customer base is represented by the net aggregate
balance of amounts receivable.
41
23
Financial instruments (continued)
Procurement risk (commodity price risk)
Commodity price risk arises from the group being subject to raw material price fluctuations caused by supply
conditions, weather, economic conditions and other factors. The strategic raw materials acquired by the
group include wheat, and polypropylene.
The group will implement the use of commodity futures and option contracts or other derivative instruments to
reduce the volatility of commodity input prices of strategic raw materials. Derivative contracts will be taken
out in order only to match an underlying physical requirement for the raw material. The group will not enter
into 'naked' derivative contracts.
Liquidity risk
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The
group’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient
cash on demand to meet its liabilities when they fall due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the group’s reputation.
The group manages its liquidity risk by monitoring weekly cash flows and ensuring that adequate cash is
available or borrowing facilities with shareholders and holding company structures are accessible and
maintained.
The following tables detail the group’s and company’s remaining contractual maturity for non-derivative
financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities
based on the earliest date on which the group and company will be required to pay. The table includes both
interest and principal cash flows.
Group
At 30 September 2013:
Borrowings (long and short term)
0–6
months
7 – 12
months
11,992,772
11,689,139
9,351,311
9,646,302
-
At 31 December 2012:
10,433,756
3,629,499
3,111,000
28,298,843
-
7,677,861
9,865,509
7,892,407
9,646,302
-
5,173,729
2,334,017
1,909,650
21,459,321
-
1 – 5 years
> 5 years
Company
42
23
Financial instruments (continued)
Interest rate risk management
Interest rate risk results from the cash flow and financial performance uncertainty arising from interest rate
fluctuations. Financial assets and liabilities affected by interest rate fluctuations include bank and cash
deposits as well as bank borrowings. The group manages interest rate risk by ensuring that loans and
overdrafts are on fixed rates and balances from subsidiary and other related companies are interest free.
Foreign currency risk
The group has currency exposure arising from purchases of raw materials (wheat) and goods and services in
currencies other than the reporting currency. The Group is exposed to the extent of exchange rate fluctuation
on it’s outstanding liabilities under letters of credit. As at 30 September, 2013 the Company had short – term
financial liabilities in US Dollar of N9,924,592,000 (2012: N8,180,036,000). The effect of a 5% fluctuation in
the exchange rate would result in a corresponding movement in the Naira value of financial liabilities held in
US Dollars N500,000,000 (2012: 410,000,000). The level of foreign currency risk is monitored regularly by the
Company’s management.
Capital management
The group’s policy is to maintain a strong capital base and healthy capital ratios so as to maintain investor,
creditor and market confidence and to sustain future development of the business. The company and group
manages its capital structure, calculated as equity plus net debt and makes adjustments to it, in light of
changes in economic conditions. To maintain or adjust the capital structure, the company and group may
adjust the dividend payment to shareholders, return capital to shareholders, issue new shares or increase or
decrease levels of debt.
The Group and Company are not subject to any externally imposed capital requirements.
The Group’s risk management committee reviews the capital structure of the Group on a frequent basis. As
part of this review, the committee considers the cost of capital and the risks associated with each class of
capital. The Group has put in place measures to improve on current gearing ratios.
Fair value of financial instruments
Financial instruments are normally held by the group until they close out in the normal course of business.
There are no significant differences between carrying values and fair values of financial assets and liabilities.
Trade and other receivables, investments and loans and trade and other payables carried on the statement
of financial position approximate the fair values thereof. Long-term and short-term borrowings are measured
at amortised cost using the effective interest method and the carrying amounts approximate their fair value.
The group used techniques which use inputs which have a significant effect on the recorded fair value that are
not based on observable market data for determining and disclosing the fair value of financial instruments.
43
24
Contingent liabilities and commitments
Contingent liability
As at 30 September 2013, the contingent liabilities in respect of legal litigation against the Group were N 209 million (2012:N209 million). According to
the directors and solicitors acting on behalf of the Group, the expected final liabilities, if any, are not likely to be significant and no provision has been
made in these financial statements.
The contingent liability relates to claims made for demurrage costs, loss of income and damages from alleged negligence.
There is an outstanding tax enquiry into the affairs of Dangote Pasta Limited for the years 2006 to 2008. A provision of N461m has
included in the statement of profit and loss.
been
Commitments
Lease commitments under operating leases for periods of no more than 12 months:
30-Sep
2013
COMPANY
30-Sep
2012
31-Dec
2012
30-Sep
2013
(N '000)
30-Sep
2012
GROUP
31-Dec
2012
Lease as lessee
Non-cancellable operating lease rentals are payable
as follows:
189,934
212,674
189,934
268,605
189,334
221,484
Capital commitments
Authorised and committed
15,100
402,608
473,639
189,934
212,674
- Less than one year
- One to five years
410,818
228,091
317,729
207,492
270,607
15,100
402,608
Total commitments
560,920
478,099
Some leases require restoration of the facilities at the group's expense upon termination of the agreements. Management is confident all lease agreements will
be renewed under largely the same terms and has not provided for demolition costs.
44
25 Discontinued operations
On 19 August 2013, the Group at the annual general meeting announced the decision of its board to dispose of
Dangote Agrosacks Limited. Management is committed to a plan to sell the company to Dangote Industries
Limited.
The results of Dangote Agrosacks Limited are therefore classified as held-for-sale in the balance sheet and income
statement of the group.
The results for the period are presented below:
9 months
30-Sep
2013
12 months
31-Dec
2012
13,621,327
(10,351,855)
17,202,738
(14,089,427)
Gross profit
Other income
3,269,472
(984,646)
-
3,113,311
(628,002)
178,554
Operating profit
Net finance costs
2,284,826
(506,937)
2,663,863
(1,061,243)
(Loss)/ profit before taxation
Taxation
1,777,083
398,093
1,602,620
478,356
(Loss)/ profit for the period
Attributable to:
2,175,176
2,080,976
1,416,793
758,382
1,441,898
639,078
2,175,176
2,080,976
(2,627,873)
-
(452,697)
2,080,976
(N '000)
Revenue
Cost of sales
Fair value re-measurement on Assets held for sale
(Loss)/Profit after tax on discontinued activities
45
25
Discontinued operations (continued)
The major classes of assets and liabilities of Dangote Agrosaacks Limited classified as held for sale as at 30
September 2013 are, as follows:
N’000
Dangote Agrosacks
Group Assets &
Liabilities held for Sale
10,665,157
589,721
1,557,881
3,914,560
4,943,007
329,089
Assets
Amounts due from related parties
Inventories
Fair value re-measurement on Assets held for Sale
Elimination of intercompany balances
Net Assets Classified as held for Sale
21,999,415
(2,627,873)
(1,557,881)
17,813,661
Liabilities
Deferred taxation liability
Taxation
(133,065)
(159,296)
(6,113,574)
(3,197,943)
(9,603,878)
12,395,537
Liabilities classified as held for sale
Net Assets
Minority Interest
Obajana Agrosacks Limited
(2,089,958)
(123,955)
Net assets attributable to the company
Sales Proceeds
10,181,623
7,553,750
Fair value re-measurement on assets held for sale
(2,627,873)
The net cash flows incurred by Dangote Agrosacks Limited
are, as follows:
Operating
Investing
Financing
Net cash inflow
4,288,291
(390,562)
(3,624,337)
273,392
46
26
Remuneration of directors
Remuneration of directors and key management personnel for the 9 months ended 30 September 2013 was N192 million (2012: 136 million)
Non-executive Directors:
(N '000)
Alh. Aliko Dangote
Alh. Sani Dangote (Resigned)
Mr. Olakunle Alake
Mr. Uzoma Nwankwo (Resigned)
Alh. Abdu Dantata (Resigned)
Mr. Asue Ighodalo
Brig. Gen. S.L.Teidi (Resigned)
Alh. Abdullahi S. Mahmoud (Resigned)
For nine months ended 30 September 2013
For the 12 months ended 31 December 2012
Board
meetings
Other
fees
Total
Board meetings
Other fees
Total
1,250
2,000
1,600
-
6,274
5,649
5,650
-
7,524
7,649
7,250
-
1,250
600
2,000
1,000
800
1,600
1,200
1,700
6,274
5,650
5,649
5,650
5,649
5,650
7,642
6,953
7,524
6,250
7,649
6,650
6,449
7,250
8,842
8,653
4,850
17,573
22,423
10,150
49,117
59,267
47
26
Remuneration of directors (continued)
Percentage of
issued share
capital
Directors’ interest in share capital
Olakunle Alake
shareholding
shareholding
38,729
2,378
0.77%
0.05%
Nature of
interest
Number of
ordinary shares
('000)
Percentage of
issued share
capital
shareholding
shareholding
shareholding
38,729
2,378
44
0.77%
0.05%
0.00%
Directors’ interest in share capital
Olakunle Alake
Alhaji Abdullahi S. Mahmoud
27
Number of
ordinary shares
('000)
Nature of
interest
Events after the reporting period
There are no significant events after the reporting period.
28
Segment information
Products from which reportable segments derive their revenue
Information reported to the chief operating decision maker for the purposes of resource allocation and
assessment of segment performance focuses on types of goods or services delivered or provided.
The Group's reportable segments under IFRS 8, Operating segments are therefore as follows:
Flour: milling and sale of bread and confectionery flour
Sacks: manufactures and sells spaghetti and macaroni
Pasta: manufactures and sells packaging materials
Noodles: manufactures and sells noodles
All segments operate in the same geographical area and on an arm's length basis in relation to inter-segment
pricing.
The factors used to identify the groups reportable segments include the basis of organisation and the format
of regular reporting to management as a basis for decision making. Management has chosen to organise the
group around differences in products and separate entities within the group. None of the segments have been
aggregated.
48
28
Segment information (continued)
Segment revenue and results
The following is the analysis of the Group's revenue and results from continuing operations by reportable segments:
Discontinued
operations
Sacks
Pasta
products
Noodles
products
Inter-group
eliminations
23,079,590
(22,728,987)
350,603
(2,738,399)
(904,174)
42,708
4,667,669
(5,022,803)
(355,134)
(719,892)
(1,114,365)
167,757
4,072,866
(3,871,340)
201,526
(786,336)
(41,098)
23,510
(1,859,707)
2,305,339
445,633
(438,926)
-
29,960,419
(29,317,791)
642,628
(4,683,553)
(2,059,637)
233,975
Operating (loss) / profit before abnormal items
Abnormal items
(3,249,262)
(64,618)
(2,021,633)
(46,156)
(602,398)
(19,904)
6,707
-
(5,866,586)
(130,678)
Operating (loss) / profit after abnormal items
Net finance costs
(3,313,880)
(2,333,610)
(2,067,789)
6,790
(622,302)
(18,210)
6,707
-
(5,997,264)
(2,345,030)
Taxation
(5,647,490)
1,166,842
(2,060,999)
250,971
(640,511)
160,177
6,707
-
(4,480,648)
(1,810,028)
(480,335)
6,707
(8,342,294)
1,577,990
(7,217,001)
29,859,976
(28,740,533)
8,610,388
(7,642,206)
4,866,467
(4,791,767)
(1,864,232)
1,864,232
41,472,599
(39,310,274)
Gross profit
Other income
Operating (loss) / profit before abnormal items
Abnormal items
1,119,443
(2,360,838)
253,848
(987,547)
(1,248,367)
968,182
(1,633,938)
38,007
(627,749)
-
74,700
(815,725)
33,635
(707,390)
-
-
2,162,325
(4,810,501)
325,490
(2,322,686)
(1,248,367)
Operating (loss) / profit after abnormal items
Net finance costs
(2,235,914)
(2,028,669)
(627,749)
22,276
(707,390)
(25,526)
-
(3,571,053)
(2,031,919)
Taxation
(4,264,583)
1,126,464
(605,473)
132,195
(732,916)
-
-
(3,138,119)
(473,278)
(732,916)
-
(5,602,972)
1,258,659
(2,263,337)
(N '000)
Revenue
Cost of sales
Gross profit
Non-recurring items
Other income
For the year ended 31 December 2012
Revenue
Cost of sales
Flour
products
49
(452,697)
2,080,976
Total
28
Segment assets and liabilities
As at 30 September 2013
Total assets
Total liabilities
Flour
products
Held for sale
Sacks
Pasta
products
Noodles
products
Inter-group
eliminations
Total
59,800,099
(41,566,274)
17,813,681
(9,603,878)
18,264,822
(16,570,290)
2,104,162
(6,128,060)
(22,501,224)
16,493,488
75,481,540
(57,375,015)
59,191,843
(36,477,370)
22,380,625
(12,165,428)
19,623,645
(16,117,879)
2,190,306
(5,741,651)
(25,937,403)
18,376,838
77,449,016
(52,125,490)
1,603,082
332,096
704,183
153,419
1,124,865
299,785
116,321
65,723
-
3,548,450
851,023
2,180,284
310,602
1,057,618
897,618
1,201,078
657,417
230,433
133,260
-
4,669,413
1,998,897
As at 31 December 2012
Total assets
Total liabilities
Other segment information
Depreciation
Additions to non-current assets
Depreciation
Additions to non-current assets
50
28
Revenue from major products and services
The following is the analysis of Group's revenue from continuing operations from its major products and services:
Flour
products
Sacks
Pasta
products
Noodles
products
Inter-group
eliminations
Total
23,079,590
-
4,667,669
4,072,866
(1,859,707)
29,960,419
27,995,744
-
8,610,388
4,866,467
-
41,472,599
No segmental report is provided in relation to the company as the company's revenue and losses are all generated from the milling and sale of flour
(one segment).
51
NON IFRS STATEMENT
CONSOLIDATED STATEMENT OF VALUE ADDED
COMPANY
30-Sep
2013
N'000
Revenue
Other income
Interest income
%
GROUP
31-Dec
2012
N'000
%
30-Sep
2013
N'000
%
31-Dec
2012
N'000
%
23,079,590
42,708
12,665
29,859,976
414,931
30,974
29,960,419
233,975
19,927
41,472,599
325,490
53,250
23,134,963
30,305,881
30,214,321
41,851,339
(15,599,144)
(7,637,826)
(17,278,420)
(11,137,141)
(18,934,434)
(11,744,814)
(20,737,509)
(14,237,206)
(102,007)
1,890,320
100
(464,927)
6,876,624
100
Less: Bought in materials and services:
- Imported
- Local
Value Added
Applied as follows
To pay employees
Salaries, wages and other benefits
1,596,126
(1,565)
1,914,976
101
2,416,658
(520)
3,644,038
51
To pay providers of capital
Interest payable and similar charges
2,346,275
(2,300)
2,059,643
109
2,364,956
(509)
2,085,169
40
93,248
(91)
162,647
9
123,911
7
203,996
3
(1,260,089)
1,603,082
(4,480,648)
1,235
(1,572)
4,392
(1,289,111)
2,180,284
(3,138,119)
(68)
115
(166)
(1,701,901)
3,548,450
715,995
(7,932,996)
332
(763)
(154)
1,706
(1,462,655)
4,669,413
577,377
(2,840,714)
(25)
59
7
(35)
(102,007)
100
1,890,320
100
(464,927)
100
6,876,624
100
To pay government
Taxation
To provide for enhancement of assets and growth
Deferred taxation Liability/(asset)
Depreciation
Non-controlling Interest
(Loss sustained)/profit retained
Value added represents the additional wealth the Group 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.
This report is not prepared under IFRS. Instead, it has been prepared in compliance with the Company and Allied Matters Act (CAMA) requirement
52
FIVE YEARS FINANCIAL SUMMARY
30-Sep
IFRS
2013
N'000
Restated
31-Dec
IFRS
2012
N'000
31-Dec
IFRS
2011
N'000
31-Dec
NGAAP
2010
N'000
31-Dec
NGAAP
2009
N'000
30,002,456
2,896,528
17,813,681
(10,902,709)
44,048,647
1,621,122
3,894
(5,548,354)
46,754,990
939,531
90,836
(11,740,900)
41,229,708
(9,845,390)
35,238,199
328,067
(6,583,596)
39,809,956
40,125,309
36,044,457
31,384,318
28,982,670
(2,453,251)
(9,603,878)
(9,646,302)
(2,855,079)
(1,254,329)
(10,692,375)
(4,114,138)
(1,730,447)
(2,184,000)
(3,409,430)
(828,013)
-
(559,926)
-
18,106,525
25,323,526
28,015,872
27,146,875
28,422,744
2,500,000
18,116,249
(4,305,067)
1,795,343
2,500,000
18,116,249
3,627,929
1,079,348
2,500,000
18,116,249
6,897,652
501,971
2,500,000
18,116,249
6,327,597
203,029
2,500,000
18,116,249
7,573,899
232,596
18,106,525
25,323,526
28,015,872
27,146,875
28,422,744
29,960,419
41,472,599
66,281,326
67,600,954
61,388,064
(Loss) /profit before taxation
Other comprehensive income items
Taxation
Profit after tax for the period from
discontinued operations
Non controlling interest
(Loss)/profit transferred to
revenue reserve
(8,342,294)
1,577,990
(5,602,972)
70,990
1,258,659
758,742
276,870
(109,668)
4,911,885
(2,189,310)
5,374,056
187,024
(452,697)
(715,995)
2,080,976
(577,377)
(302,322)
39,567
(30,348)
(7,932,996)
(2,769,724)
623,622
2,762,142
5,530,732
Per share data- 50k ordinary share
Net assets (Naira)
(159)
3
(55)
5
12
6
55
5
111
6
GROUP
Investments
Other Long term Assets
Net current (liabilities) /assets
Deferred taxation liabilities
Gratuity provision
Liabilities classified as held for sale
Long term loan
CAPITAL AND RESERVES
Share capital
Share premium
Retained earnings
Non controlling interest
REVENUE AND PROFIT
Revenue
Note:
1.
2.
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.
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.
This report is not prepared under IFRS. Instead, it has been prepared in compliance with the Company
and Allied Matters Act (CAMA) requirement
53
FIVE YEARS FINANCIAL SUMMARY
COMPANY
30-Sep
IFRS
2013
N'000
31-Dec
IFRS
2012
N'000
31-Dec
IFRS
2011
N'000
31-Dec
NGAAP
2010
N'000
31-Dec
NGAAP
2009
N'000
17,351,051
2,597,637
1,829,016
-
18,747,467
7,553,637
1,001,483
-
20,633,574
7,553,637
455,913
83,502
19,880,243
7,553,637
-
18,961,805
7,463,637
328,067
-
4,956,000
3,539,666
9,613,645
2,472,543
2,829,608
460,695
30,273,370
36,916,232
31,199,169
30,263,488
27,214,204
(2,393,244)
(9,646,302)
(2,825,800)
(851,584)
(10,524,375)
(3,569,341)
(1,277,236)
-
(3,136,273)
(638,061)
-
(464,623)
-
18,233,824
22,714,473
26,352,592
26,489,154
26,749,581
2,500,000
18,116,249
(2,382,424)
2,500,000
18,116,249
2,098,224
2,500,000
18,116,249
5,736,343
2,500,000
18,116,249
5,872,905
2,500,000
18,116,249
6,133,332
18,233,825
22,714,473
26,352,592
26,489,154
26,749,581
REVENUE AND PROFIT
Revenue
(Loss)/profit before taxation
Other comprehensive income items
Taxation
23,079,590
(5,647,490)
1,166,842
29,859,976
(4,264,583)
1,126,464
38,679,844
1,373,230
130,231
(583,078)
42,695,383
5,481,077
(1,727,829)
41,839,919
5,156,801
203,060
(Loss)/profit transferred to revenue reserve
(4,480,649)
(3,138,119)
920,383
3,753,248
5,359,861
(90)
3.65
(63)
4.54
18
5.27
75
5.30
107
5.35
Property, plant and
equipment
Investments in subsidiary companies
Other Long term Assets
Assets classified as held
for sale
Net current assets
Deferred taxation
liabilities
Gratuity provision
Long term loan
CAPITAL AND RESERVES
Share capital
Share premium
Retained earnings
Per share data- 50k ordinary share
(Loss)/earnings- Basic (kobo)
Net assets (Naira)
Note:
1.
2.
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.
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.
This report is not prepared under IFRS. Instead, it has been prepared in compliance with the Company
and Allied Matters Act (CAMA) requirement
54

dangote flour mills plc

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