for 2012 - Tiger Brands

Transcription

2012
Vision
To be a world class enterprise that
is passionate about the quality of
life of the general populace and
giving high returns to stakeholders.
Mission
Touch the lives of people by
providing their basic needs.
Contents
Notice of 7th Annual General Meeting
2
Corporate Information
3
Financial Highlights
4
Chairman’s Statement
5
Explanatory Statement to the Shareholders of Dangote Flour Mills Plc
7
Board of Directors
8
Report of the Directors
9
Corporate Governance Report
14
Statement of Management’s Responsibilities
18
Report of the Audit Committee
19
Report of the Independent Auditors
20
Consolidated and Separate Statements of Profit and Loss
21
Consolidated and Separate Statements of Comprehensive Income
22
Consolidated and Separate Statements of Financial Position
23
Consolidated and Separate Statements of Changes in Equity
24
Consolidated and Separate Statements of Cash Flows
25
Notes to the Consolidated and Separate Statements of Cash Flows
26
Notes to the Consolidated and Separate Financial Statements
27
Consolidated Statement of Value Added
67
Five Years Financial Summary — Group
68
Five Years Financial Summary — Company
69
Share Capital History/Data on Unclaimed Dividends
70
Proxy Form
73
DAN GOTE F LO U R M I LLS P LC
1
Notice of 7th Annual General Meeting
NOTICE IS HEREBY GIVEN that the 7th ANNUAL GENERAL MEETING OF DANGOTE FLOUR MILLS PLC will be held at
Transcorp Metropolitan Hotels, 10 Murtala Mohammed Highway, Calabar, Cross River State, on Monday, 19th August,
2013 at 11.00 a.m. prompt to transact the following business:
ORDINARY BUSINESS
1.
To lay the Audited Financial Statements of the Company for the year ended 31st December 2012 together with the
reports of the Directors, Auditors and the Audit Committee thereon.
2.
To elect/re-elect Directors.
3.
To authorize the Directors to fix the remuneration of the Auditors.
4.
To appoint members of the Audit Committee.
SPECIAL BUSINESS
5.
To consider and if thought fit, pass the following resolution as an Ordinary Resolution:
“That in accordance with Section 284 of the Companies and Allied Matters Act Cap C20 Laws of the Federation of
Nigeria, 2004, and the Directors having so recommended and subject to agreement being reached between the
Company and Dangote Industries Limited (DIL), the sale to Dangote Industries Limited of the shares held by the
Company in the issued share capital of Dangote Agrosacks Limited be and is hereby approved subject to the
Company and Dangote Industries Limited executing a sale and purchase agreement in relation to the acquisition of
the shares and obtaining all requisite regulatory approvals, and that the Directors be and are hereby authorised to
apply the proceeds of the sale to the business of the Company as they may deem fit.”
6.
To consider and if thought fit pass the following as a Special Resolution:
“That the DIrectors having so recommended, the financial year of the Company be and is hereby changed from
31 December to 30 September of each year.
The end of the first new financial year being September, 2013 having a nine-month period.”
PROXY
A member of the Company entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend and
vote instead of him. A proxy need not be a member of the Company. A proxy for an organization may vote on a show of
hands and on a poll. For the appointment to be valid, a completed Proxy Form must be deposited at the registered office
of the Company or with the Registrar not later than 48 hours before the time fixed for the meeting.
NOTES
1.
CLOSURE OF REGISTER AND TRANSFER BOOKS
NOTICE IS HEREBY GIVEN that the Register of Members and Transfer Books of the Company will be closed on
Friday, 16th August, 2013 and Monday, 19th August, 2013.
2.
AUDIT COMMITTEE
In accordance with Section 359(5) of the Companies and Allied Matters Act 1990, any shareholder may nominate a
shareholder for appointment to the Audit Committee. Such nomination should be in writing and should reach the
Company Secretary at least 21 days before the Annual General Meeting.
BY ORDER OF THE BOARD
AISHA LADI ISA (MRS)
Company Secretary/Legal Adviser
Dated this 3rd day of June, 2013
DANGOTE FLOUR MILLS PLC
Terminal ‘E’
Greenview Development Nigeria Ltd Building (2nd Floor)
Apapa Wharf
Lagos.
[email protected]
2
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
EDC Registrars Ltd.
154, Ikorodu Road, Onipanu,
Shomolu, Lagos.
COMPANY SECRETARY
Aisha Ladi Isa (Mrs)
AUDITORS
Akintola Williams Deloitte
(Chartered Accountants)
235, Ikorodu Road,
Ilupeju, Lagos.
BANKERS
Zenith Bank Plc
Mainstreet Bank Limited
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. N. Segoale (Appointed 4th October 2012)
Mr. S. Olarinde (Reappointed 20th February, 2013)
Mr. N. K. Somani (Resigned 5th March, 2012)
Mr. E. Etim (Resigned 4th October, 2012)
Alh. A. Dangote, GCON
Alh. S. Dangote (Resigned 4th October, 2012)
Mr. O. Alake
Mr. U. Nwankwo (Resigned 4th October, 2012)
Alh. A. Dantata (Resigned 4th October, 2012)
Mr. A. Ighodalo
Brig-Gen. S. L.. Teidi (Resigned 4th October, 2012)
Alh. A. S. Mahmoud (Resigned 4th October, 2012)
Mr. P. B. Matlare (Appointed 4th October, 2012)
Ms. O. Ighodaro (Appointed 4th October, 2012)
Mr. T. Govender (Appointed 4th October, 2012)
Mr. P. Sithole (Appointed 4th October, 2012)
Mr. I. Isdale (Appointed 20th February, 2013)
3
Financial Highlights
COMPANY
GROUP
31-Dec
2012
31-Dec
2011
29,859,976
38,679,844
(826,464)
4,614,915
(1,409,450)
(1,484,265)
(4,264,583)
1,373,230
1,126,464
(583,078)
(3,138,119)
790,152
(N
=’000)
Revenue
Operating (loss)/income before abnormal items
31-Dec
2012
31-Dec
2011
58,675,337
66,281,326
502,260
4,442,596
Abnormal items
(1,409,450)
(Loss)/profit before taxation
(4,000,351)
758,742
1,737,015
(109,668)
(2,263,336)
649,074
Taxation
(Loss)/profit for the year
(1,484,265)
BALANCE SHEET
2,500,000
2,500,000
22,714,473
26,352,592
Share capital
Total equity
2,500,000
2,500,000
25,323,526
28,015,872
Per 50 kobo share data (kobo)
4
— Earnings per share
(55.39)
12.47
— Dividend per share
—
10
The most significant development during the year
was the sale of 63.35% of the Company’s issued
share capital to Tiger Brands Limited of South
Africa on the 4th of October 2012. Tiger Brands
now has a controlling stake in Dangote Flour Mills
Plc and has since assumed management control
of the Company’s operations. We are excited about
our future prospects under Tiger Brands’
management control and look forward to the
contribution of their specialised expertise in the
core activities of the Company.
COMPANY PERFORMANCE
Dangote Flour Mills Plc recorded a turnover of
N
= 58.68 billion in 2012. The loss before tax and
after abnormal items was N
= 4 billion. The abnormal
item represents a N
= 1.409 billion provision for
doubtful trade debts. Recovery efforts are on-going
to ensure that the amounts that are overdue will
be substantially recovered.
Alhaji Aliko Dangote, GCON
Chairman
istinguished Shareholders, Members of
the Board of Directors, Representatives
of the SEC, NSE, CAC and other
Regulators here present, Invited Guests,
Gentlemen of the Press, Ladies and Gentlemen.
D
I have the pleasure to welcome you to the 7th
Annual General Meeting of our Company, Dangote
Flour Mills Plc.
I would like to present you with an overview of
our operations and other events that shaped the
year under review. We have had to deal with many
challenges during the 2012 financial year most
notably the significant increase in the cost of wheat
as a result of the escalation in international prices
and the introduction of an additional import tariff
of 15% on imported wheat effective since July
2012. In addition, unfortunate challenges of
insecurity in the northern part of the country
negatively affected sales in the region and
facilitated the entry of illegal imports. As a result,
our sales volumes were negatively impacted by
these events.
The loss after tax and after exceptional items was
N
= 2.263 billion.
Although the performance of the Company for
2012 was disappointing, we remain confident that
a turnaround is imminent and that we can look
forward to improved performance in the future.
THE BOARD
Since the last Annual General Meeting, there have
been a few changes on the Board’s composition.
Mr. Nthabisheng Segoale was appointed as the
Group Managing Director/CEO to run the
operational affairs of the Company. He was
seconded to join the Company by Tiger Brands
Limited in October of 2012 and he replaces Mr.
Ekanem Etim who resigned in October of 2012.
His appointment will be ratified during the course
of this meeting.
Mr. Asue Ighodalo, Mr. Olakunle Alake and myself
will be retiring by rotation as Directors of the
Company and we hereby offer ourselves for reelection in line with corporate governance
guidelines.
5
OUR STAFF
CUSTOMERS
Our employee base in various areas of the
business was further strengthened with the
appointment of several ex-Tiger Brands technical
experts and management staff. We therefore look
forward to further improvements in productivity
and the level of competitiveness of our Company.
We have also embarked on specific interventions
to further enhance the welfare of our employees
such as mentorship and training programmes to
improve the overall skill level across the business.
We remain confident that the realisation of these
objectives should deliver significant improvements
in internal controls, efficiency and performance.
Our key partners in the business, our customers,
continue to remain the cornerstone of Dangote
Flour Mills Plc. Notwithstanding the challenges we
faced during the 2012 financial year, we continued
to receive excellent patronage from some of our
key customers of many years. We are immensely
grateful for this unwavering support and remain
confident that under the new management, you
will see new value propositions for our products
as well as stronger service levels. On behalf of the
Board, Management and Staff of the Company, I
hereby wish to say a big thank you to all our
customers.
THE FUTURE
Following the handover of management control
to Tiger Brands, the Company has embarked on a
turnaround plan that is aimed at reducing the cost
base, improving supply chain efficiencies and the
consistency of the quality of our products. This
includes investments in improving our brands as
well as service levels to our customers. Capital
expenditure projects have also been initiated to
enhance business process controls and systems
as well as enable the development of additional
revenue streams that will grow the turnover of
our Company in the future. We are also developing
various strategies to recover market share across
all the key categories and to improve our market
penetration via new channels in order to
strengthen the presence of our products in other
parts of the country.
6
APPRECIATION
On behalf of the Board of Directors, I would also
like to express our heartfelt appreciation to the
Management and Staff of the various businesses
for their continued dedication, support and
commitment during the year. I also take this
opportunity to wish the new management team
and all other newly appointed staff the very best
in all their endeavours to reposition our Company
as a leading food business in the country.
I also wish to thank you, my fellow shareholders,
as well as our customers, suppliers, bankers,
government agencies and regulatory authorities,
for the unrelenting support and continued
confidence in Dangote Flour Mills Plc.
Thank you and God bless.
Chairman
Explanatory Statement to the Shareholders of Dangote Flour Mills Plc
Dear Shareholders,
PROPOSED DIVESTMENT OF THE ENTIRE EQUITY INTEREST OF DANGOTE FLOUR MILLS PLC IN DANGOTE AGROSACKS
LIMITED
As you are aware, your Company, Dangote Flour Mills Plc (“DFM” or “the Group” or “Company”) is the second largest flour
miller in Nigeria with a market share of 28.4% based on total industry installed capacity of 25,710 metric tonnes per day.
The Company is positioned as a leading player with a strong brand and a strategic platform to strengthen its industry
positioning. The Group currently has a diversified business portfolio; which are its 99% equity stake in Dangote Pasta
Limited (“DPL”), a 90% stake in Dangote Noodles Limited (“DNL”) as well as a 99% stake in Dangote Agrosacks Limited
(“DASL”).
As part of its strategy going forward, the Company plans to sustain its market leadership position and thus is considering
optimizing the Group’s business portfolio for enhanced value to shareholders. Whilst DPL and DNL are aligned with DFM
as food related businesses with significant synergistic benefits along the value chain, DASL is not a core business of the
Group. In furtherance of this strategic focus, and to optimise the portfolio of businesses within the DFM group, DFM
wishes to divest its entire equity interest in DASL for a cash consideration which will be retained in the Company to
reduce the Group’s overall debt levels.
DASL is involved in the manufacture and sale of bags for the companies in the Dangote Group as well as other customers.
Its products include Cement Bags, Flour Bags, Sugar Bags, Salt Bags, and Shopping Bags. DASL and its 75% subsidiary
company, Obajana Agrosacks Limited, have a total of 10 Cement Bag production lines and 6 regular lines across 3 plant
locations (Oba Akran and Israel Adebajo, in Lagos and Obajana in Kogi State). DASL’s core product remains the manufacturing
of bags, however, revenue is also generated from production and sale of Blown Film, Polypropylene Mats, Ball Twine and
Sewing thread which are produced from waste from the bag production process. Notably, an average of 75% of the total
bags sold over the last three years (from 2010 to 2012) was bought by Dangote Industries Limited (excluding DFM).
Dangote Industries Limited (“DIL”) has indicated its interest in acquiring DFM’s stake in DASL in view of the strategic fit of
DASL to DIL’s cement business. Given that DIL is the single major customer of DASL, accounting for over 75% of DASL’s
sales, your Board is considering DIL’s proposal on an arm’s length basis and I am pleased to inform you that preliminary
discussions are on-going between the Board of DFM and DIL in this regard. Consequently, the following Ordinary Resolution,
supporting the divestment/sale will be presented for your kind consideration and approval at the Annual General Meeting
(“AGM”) scheduled to hold on Monday, 19th August, 2013:
Special Business (5)
To consider and if thought fit, pass the following resolution as an Ordinary Resolution:
“That in accordance with Section 284 of the Companies and Allied Matters Act Cap C20 Laws of the Federation of Nigeria,
2004, and the Directors having so recommended and subject to agreement being reached between the Company and
Dangote Industries Limited (DIL), the sale to Dangote Industries Limited of the shares held by the Company in the issued
share capital of Dangote Agrosacks Limited be and is hereby approved subject to the Company and Dangote Industries
Limited executing a sale and purchase agreement in relation to the acquisition of the shares and obtaining all requisite
regulatory approvals, and that the Directors be and are hereby authorised to apply the proceeds of the sale to the
business of the Company as they may deem fit.”
This Explanatory Statement is intended to provide you with further information on the proposed divestment/sale to aid
your decision on the above resolution to be proposed at the AGM.
Upon receiving your approval and concluding discussions with DIL, a formal application will be made to the Securities &
Exchange Commission for the approval of the proposed divestment. The Nigerian Stock Exchange will also be formally
notified in compliance with its rules.
I look forward to welcoming you to the meeting.
Yours faithfully,
Alhaji (Dr.) Aliko Dangote, GCON
Chairman
7
For the year ended 31 December, 2012
1.
ACCOUNTS
The Directors are pleased to submit their report together with the audited accounts of the Company for the year
ended 31 December, 2012.
2.
RESULT
Group
N
=’000
Turnover
Total comprehensive loss
3.
58,675,337
(2,192,346)
Company
N
=’000
29,859,976
(3,138,119)
PRINCIPAL ACTIVITIES
The principal activities of the Company during the year were as follows:
(a) Manufacturing and selling of bread and confectionery flour
(b) Manufacturing and selling of wheat offal (Bran)
(c)
Manufacturing of semolina.
The principal activities of its subsidiaries are:
Dangote Pasta Limited
Manufacturing and selling of spaghetti, macaroni and other pasta products.
Dangote Agrosacks Limited
Manufacturing and selling of packaging materials.
Dangote Noodles Limited
Manufacturing and selling of noodles.
4.
LEGAL FORM
The Company started operating as a division of Dangote Industries Limited in 1999. It was incorporated and
commenced operations as a public limited liability company on 1 January, 2006. The Company was quoted on The
Nigerian Stock Exchange on 4 February, 2008. Its principal activities are the milling, processing and marketing of
branded flour.
5.
DIRECTORS AND DIRECTORS’ INTEREST
The names of Directors who are currently in office are as follows:
Alhaji Sani Dangote
Mr. Olakunle Alake
Mr. Uzoma Nwankwo
Alhaji Abdu Dantata
Alhaji Abdullahi S. Mahmoud
Mr. Asue Ighodalo
Brig-Gen. S. L.. Teidi (Rtd), OFR
Mr. Narendra Kumar Somani
Mr. Ekanem Etim
Mr. Ian Isdale
Mr. Suleiman Olarinde
Mr. Peter Bambatha Matlare
Mr. Nthabisheng Segoale
Ms. Olufunke Ighodaro
Mr. Patrick Sithole
Mr. Thushen Govender
—
Resigned 4th October, 2012
—
—
—
—
—
—
—
—
—
—
—
—
—
Resigned 5th March, 2012
Appointed 20th February, 2013
Resigned 4th October, 2012 and reappointed on 20th February, 2013
Appointed 4th October, 2012
9
In accordance with the provisions of Section 259 of the Companies and Allied Matters Act 1990, one-third of the
Directors of the Company shall retire from office annually. The retiring Directors shall be those who have been
longest in office since their last election. In accordance with the provisions of this section, Alhaji Aliko Dangote,
GCON, Mr. Asue Ighodalo and Mr. Olakunle Alake retire by rotation at the forthcoming Annual General Meeting
(AGM) and being eligible, offer themselves for re-election.
The following Directors resigned from the Board since the most recent Annual General Meeting:
Alhaji Sani Dangote
Alhaji Abdu Dantata
Mr. Uzoma Nwankwo
Brig.-Gen. S. L.. Teidi (Rtd)
Mr. Ekanem Etim and
The following Directors were appointed by the Board since the most recent Annual General Meeting to represent
the interest of the majority investor, Tiger Brands Limited of South Africa (“Tiger brands”):
Mr. Patrick Sithole
Mr. Ian Isdale
Mr. Nthabisheng Segoale was appointed as Group Chief Executive Officer and Mr. Suleiman Olarinde was reappointed
as Finance Director.
In accordance with the provisions of Article 77 of the Company’s Articles of Association and Section 249(3) of the
Companies and Allied Matters Act 1990, the appointed Directors retire at this meeting and being eligible offer
themselves for re-election.
No Director has a service contract not terminable within five years.
The Directors’ interest in the issued share capital of the Company as recorded in the register of members and/or as
notified by them for the purpose of Section 275 of the Companies and Allied Matters Act , C20 Laws of the Federation
of Nigeria 2004 are as follows:
Directors
Alhaji Aliko Dangote
Mr. Olakunle Alake
Mr. Patrick Sithole
Mr. AsueIghodalo
6.
Number of 50k Shares held
as at 31 December, 2012
38,728,948
—
2,377,500
—
—
—
—
—
DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for the preparation of financial statements which give a true and fair reflection of the
state of affairs of the Company at the end of the financial year and of the profit or loss for that period and which
complies with the Companies and Allied Matters Act , C20 Laws of the Federation of Nigeria 2004. In doing so they
ensure that:
(a)
10
Proper accounting records are maintained which disclose with reasonable accuracy the financial position of
the Company and the Group and which ensure that the financial statements comply with the requirements of
the Companies and Allied Matters Act of Nigeria;
(b) Applicable International Financial Reporting Standards are followed;
(c)
Proper Accounting records are maintained;
(d)
Suitable accounting policies are adopted and consistently applied;
(e)
Judgments and estimates made are reasonable and prudent;
(f)
It is appropriate for the financial statements to be prepared on a going concern basis;
(g) Adequate internal control procedures are instituted and maintained which are designed to safeguard the
assets of the Company and Group and to prevent and detect fraud and other irregularities.
7.
CORPORATE GOVERNANCE
Management is committed to manage the Company with best practice and policies which align the strategy of the
Company with the interests of all stakeholders. This, in the long run, will result in a beneficial relationship and longterm growth.
Dangote Flour Mills Plc embraces good corporate governance as a key strategy in achieving business success
incorporating compliance with applicable laws and regulations as a responsible corporate entity.
The Board, in line with its responsibilities to shareholders, works to achieve worldwide best practice in corporate
governance and endeavours to conduct the business of the Company and Group in a fair, honest and transparent
manner which conforms to high ethical standards.
8.
SUBSTANTIAL INTEREST IN SHARES
The Registrar has advised that according to the Register of members on 31 December 2012, Tiger Brands with
3,167,716,667 and Dangote Industries Limited with 500,000,000 ordinary shares of 50k each held more than 5% of
the issued share capital of the Company.
9.
FIXED ASSETS
Movements in fixed assets during the year are shown in Note 11 to the Accounts. In the opinion of the Directors, the
market value of the Company’s properties is not less than the value shown in the accounts.
10. DONATIONS AND CHARITABLE GIFTS
Dangote Flour Mills Plc identifies with the aspirations of our operational environment by supporting charitable and
worthy causes. During the year under review, no donation was made to any political party or religious organisation.
11. REPORTED FRAUD
During the year, fraud was discovered at two of the Company’s flour mills involving fraudulent trading on customers’
accounts. Appropriate action has been taken to strengthen internal controls and prevent recurrence of the fraud.
The cases have been reported to relevant law enforcement authorities and internal recovery efforts are on-going.
Full provision has been made in the financial statements for the net amount involved.
12. POST BALANCE SHEET EVENTS
There were no significant developments since the balance sheet date which could have had a material effect on the
state of affairs of the Company as at 31 December, 2012 and the profit for the year ended on that date which have
not been adequately recognised.
13. COMPANY DISTRIBUTORS
The Company’s products are distributed through many distributors across the country.
14. SUPPLIERS
The Company procures its materials on an arm’s length basis from foreign and local suppliers. Amongst its main
suppliers are Cargill International SA, Ameropa S.A, Vitachem Nigeria Limited and Biochemical Derivatives Nigeria
Limited.
11
15. ANALYSIS OF SHAREHOLDINGS
Analysis of shareholdings as at 31 December, 2012:
No. of
Holders
Range
1 —
Holders Holders
%
Cumulative
1,000
145,724
43.21
1,001 –
5,000
170,309
5,001 –
10,000
12,820
10,001 —
50,000
50,001 —
100,000
100,001 —
500,000
562
500,001 —
1,000,000
67
Units
Units
%
Units
Cumulative
145,750
129,568,131
2.59
129,568,131
50.49
316,033
309,874,567
6.20
439,442,698
3.80
328,853
85,780,452
1.72
525,223,150
6,994
2.07
335,847
132,780,471
2.66
658,003,621
728
0.22
336,575
54,449,171
1.09
712,452,792
0.17
337,137
116,893,211
2.34
829,346,003
0.02
337,204
50,007,926
1.00
879,353,929
1,000,001 —
2,000,000
36
0.01
337,240
50,416,661
1.01
929,770,590
2,000,001 —
5,000,000
32
0.01
337,272
104,496,696
2.09
1,034,267,286
5,000,001 —
10,000,000
9
0.00
337,281
57,878,020
10,000,001 —
50,000,000
5
0.00
337,286
121,337,949
1.06 1,092,145,306
2.43
1,213,483,255
50,000,001 —
100,000,000
2
0.00
337,288
118,800,078
2.38
1,332,283,333
100,000,001 —
500,000,000
1
0.00
337,289
500,000,000
10.00
1,832,283,333
1
0.00
337,290
337,290
100.00
2,000,000,001 — 5,000,000,000
Total
3,167,716,667
63.35 5,000,000,000
5,000,000,000 100.00
16. HUMAN RESOURCES
1.
Employment, training and employees
The Company recruits without discrimination in considering applications for employment through selection of
the most suitable individuals after interview and thorough scrutiny. The Company employs management
professionals and technical expertise and continues to invest in developing such skills and maintaining set
standards. The Company also has in-house training facilities in addition to external training for employees.
This gives every employee equal opportunity for career development.
2.
Employee welfare and safety at work
The Company continuously strives to improve safety measures at its operations to ensure a safe working
environment. It does so through implementation of the following initiatives:
12
x
Maintaining a high standard of hygiene in all its premises through sanitation practices and the regular
fumigation exercises have been further strengthened by the installation of pest and rodent control measures;
x
Safety and environment workshops have been organised for all employees with a broad focus on a good
house-keeping to ensure a safe working environment;
x
Nutritionally balanced meals are provided in staff canteens at subsidized prices at the various factory sites;
x
The use of safety shoes, goggles and aprons etc. by employees is enforced;
x
The Company carries out safety and fire awareness drills for all employees on a regular basis;
x
As a guide in the performance of all functions, a written safety policy for ensuring safe working practices is
in place;
x
Safety Officers and Security Supervisors are at hand to ensure the use of and implementation of safety
systems and procedures;
x
There is a clinic within each factory to provide adequate medical care in the event of accidents or any
emergency in the work place;
x
The Company allows employees and their immediate families to attend good hospitals at its expense
under the Company’s Hygeia Scheme;
x
Fire prevention and fire-fighting equipment are installed in strategic positions within the premises of each
factory.
3.
Employee Development
Local and overseas training and development programmes have been organized to meet the needs of the
Company’s modernization and automation strategy implementation. The Company continues to place a
premium on its human capital development arising from the fact that this would ensure improved efficiency of
the business and maintain a strategic advantage over the competition. On the other hand, employees are fully
equipped to provide quality service which ultimately will be beneficial to the organization and thus contribute
to its growth.
17.
AUDIT COMMITTEE
In compliance with the provisions of section 359(3) of the Companies and Allied Matters Act Cap C20 (Law) of the
Federation of Nigeria 2004, the Company has an Audit Committee comprising three (3) Shareholders and three (3)
Directors as follows:
Mr. Alex Adio
—
Shareholder/Chairman
Alhaji Kasimu Ibrahim
—
Shareholder/Member
Mr. Eric Akinnifesi Akinduro
—
Shareholder/Member
—
Director/Member — Resigned 4th October, 2012
—
Director/Member — Appointed 4th October, 2012
Mr. Asue Ighodalo
—
Director/Member
Mr. Olakunle Alake
—
Director/Member
The functions of the Audit Committee are as laid down in section 357(2) of the Companies and Allied Matters Act
Cap C20 (Law) of the Federation of Nigeria, 2004.
18. AUDITORS
Messrs Akintola Williams Deloitte (Chartered Accountants) have indicated their willingness to continue in office as
the Company’s Auditors in accordance with Section 357(2) of the Companies and Allied Matters Act. Cap C20 (Law)
of the Federation of Nigeria, 2004. A resolution will be proposed at the upcoming AGM authorizing the Directors to
formalise their remuneration.
BY ORDER OF THE BOARD
Company Secretary
2nd Floor, GDNL Building
Terminal ‘E‘
Apapa Wharf
Apapa — Lagos
Dated this 2nd day of May, 2013
13
DANGOTE FLOUR MILLS PLC is committed to best practice and procedures in corporate governance. It recognises that
corporate governance is fundamental to earning the confidence and trust of the shareholders. It provides the structure
through which the objectives of the Company are set and the means of attaining such objectives. Overseen by the Board
of Directors, corporate governance practices are constantly under review in line with the dynamics of the business
environment.
The corporate governance policies adopted by the Board of Directors are designed to ensure that the Company’s business
is conducted in a fair, honest and transparent manner which conforms to high ethical standards. The code of corporate
governance for public companies provides the basis for promoting sound corporate governance in the Company. The
governance framework helps the Board to discharge its duties of providing oversight and strategic counsel in balance
with its responsibility to ensure conformity with regulatory requirements and acceptable risk.
The Board was reconstituted on 4th October, 2012 after the acquisition of 63.35% of the equity of the Company by Tiger
Brands.
The Board
Appointment to the Board is made by Shareholders at the Annual General Meeting on the recommendation of the Board
of Directors.
The Board consists of ten (10) members comprising the Chairman, Group Chief Executive Officer, one (1) Executive
Director and seven (7) non-Executive Directors.
The Board delegates the day-to-day running of the Company’s affairs to the Group Chief Executive Officer, who is supported
in this task by the Executive Director and Executive Management Committee.
The Board governs and supervises the overall activities of the Company through the Group Chief Executive Officer.
Responsibilities of the Board of Directors
It is the responsibility of the Board of Dangote Flour Mills Plc to:
x
Ensure that the Company’s operations are conducted in a fair and transparent manner that conforms to high ethical
standards;
x
Ensure integrity of the Company’s financial and internal control policies;
x
Ensure the accuracy, adequacy and timely rendition of the statutory returns and financial reporting to the regulatory
authorities (NSE, CAC, SEC) and Shareholders;
x
Ensure value creation for the Shareholders, employees and other stakeholders;
x
Review and approve corporate policies, strategy, annual budget and business plans;
x
Monitor implementation of policies and the strategic direction of the Company;
x
Set performance objectives, monitor implementation and corporate performance;
x
Review and approve all major and capital expenditure of the Company;
x
Ensure that the statutory rights of all Shareholders are protected at all times;
x
Provide the Company with entrepreneurial leadership within a framework of prudent and effective controls which
enables risk to be assessed and managed;
x
Deploy the Company’s resources to profitable use;
x
Outline the Company’s strategic and corporate aims;
x
Ensure that the necessary financial and human resources are in place for the Company to meet its objectives;
x
Review management performance on a continuous basis;
x
Set the Company’s values and standards;
x
Take decisions objectively in the interest of the Company;
x
Ensure that its obligations to its Shareholders and other stakeholders are understood and met;
x
Constructively challenge and help develop proposals on strategies developed by Management.
The Board carries out some of the above responsibilities through the Board Committees whose terms of reference set out
clearly their roles, responsibilities, scope of authority and procedure for reporting to the Board. Each committee is presided
14
over by a non-Executive Director to ensure strict compliance with the principles of good corporate governance, while the
Audit Committee has a representative of the shareholders as its Chairman. The Chairman of the Board is not a member
of any of the Committees.
Members of the Board of Directors hold quarterly meetings to decide on policy matters and direct the affairs of the
Company and Group, review its performance, its operations, finances and formulate growth strategies. Attendance at
Directors’ meetings was impressive. In line with provisions of section 258(2) of the Companies and Allied Matters Act,
C20 (Law) of the Federation of Nigeria 2004, the records of Directors’ attendance at Board meetings is available for
inspection at the Annual General Meeting. The remuneration of Executive Directors is fixed and reviewed by a committee
of non-Executive Directors.
Frequency of Meetings
The Board of Directors holds at least four (4) meetings a year, to consider important corporate events and actions such as
approval of Corporate Strategy, Annual Corporate Plan, review of internal risk management and control systems, review
performance and direct the affairs of the Company, its operations, finances and formulate growth strategies. It may
however, convene a meeting whenever the need arises. During the year under review, the Board had a total of six (6)
meetings.
Standing Committees of the Board
The Board carries out some of the above responsibilities through the Board Committees whose terms of reference clearly
set out their roles, responsibilities, scope of authority and procedure for reporting to the Board.
1.
Governance/Remuneration Committee
Composition:
Mr. Asue Ighodalo
Alhaji Abdu Dantata
Mr. Uzoma Nwankwo
Mr. Olakunle Alake
—
—
—
—
(Resigned 4th October, 2012)
(Appointed 20th February 2013)
(Appointed 20th February 2013)
Functions:
(i) To review and make recommendations to the Board for approval of the Company’s human resources policy
and organizational structure and any proposed amendments when necessary.
(ii) Review and advise on governance and compliance issues.
(iii) To make recommendations on the remuneration structure for non-Executive Directors and variable compensation
for executive and senior management.
(iv) Such other matters as the Board may delegate to the Committee.
2.
Finance and Investment Committee
Composition:
Mr. Asue Ighodalo
Mr. Olakunle Alake
Brig-Gen. S. L. Teidi (Rtd), OFR
—
—
—
—
—
Chairman
Member
Member
Functions:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
To consider periodic financial statements.
To review Company activities, make projections and forecast for its growth.
To identify variances in the market.
To review developments in the Company.
To identify and discuss new products and processes.
To ensure that the Company is up to date with significant changes in accounting policies.
15
(vii) Overseeing the management and conduct of the business.
(viii) Ensuring the integrity of financial reports.
(ix) Overseeing the effectiveness and adequacy of internal control measures.
3.
The Audit Committee
The Audit Committee is made up of six (6) members, consisting of three (3) representatives of the shareholders and
three (3) members of the Board of Directors. Members of the Audit Committee are elected at the general meetings.
The Committee, in compliance with the requirements of corporate governance practice is chaired by a shareholder.
The Committee met four times during the year under review.
Composition:
Mr. Alex Adio
Alhaji Kasumu Ibrahim
Mr. Asue Ighodalo
Mr. Olakunle Alake
—
—
—
—
—
—
—
Shareholder/Chairman
Shareholder
Shareholder
Director
Director
Director
Director (Resigned 4th October, 2012)
In addition to its responsibility to review the scope, independence and objectivity of the external audit, the Audit
Committee carries out all such matters as are reserved to the Audit Committee by the Companies and Allied Matters
Act, Cap C20 (Law) of the Federation of Nigeria, 2004, listed below:
x
Ensuring the independence and objectivity of the Audit (Statutory and Internal)
x
Review adequacy and effectiveness of Dangote Flour Mills Plc internal control policies prior to endorsement by
the Board.
x
Direct and supervise investigations on matters within the scope, such as evaluations of the effectiveness of the
Company’s internal control system, cases of employee, business partner and client misconduct or conflict of
interest.
COMPLIANCE STATEMENT
The Company filed its 2011 audited accounts with The Exchange in default of 21 days for which the sum of N
= 400,000.00
was paid as a penalty.
The Board will ensure maximum compliance in the coming year. However, The Nigerian Stock Exchange had earlier
extended the time for submission to 30 April, 2012.
ATTENDANCE OF MEETINGS BY MEMBERS OF THE BOARD/BOARD COMMITTEES FROM 1ST JANUARY TO 31
DECEMBER 2012
BOARD OF DIRECTORS’ MEETINGS
Attendance
16th May 28th May,
2012
2012
Alhaji Sani Dangote
Mr. Olakunle Alake
Mr. Uzoma Nwankwo
Alhaji Abdu Dantata
Mr. Asue Ighodalo
Mr. Ekanem Etim
16
5th July, 10th September, 2nd October,
2012
2012
2012
A
A
A
4th October,
2012
FINANCE AND INVESTMENT COMMITTEE MEETINGS
Attendance
15th May, 2012
28th May, 2012
10th September, 2012
Mr. Olakunle Alake
Mr. Ekanem Etim
GOVERNANCE/REMUNERATION COMMITTEE MEETINGS
7th February, 2012
Mr. Uzoma Nwankwo
Mr. Asue Ighodalo
Alhaji Abdu Dantata
Mr. Narendra Kumar Somani
AUDIT COMMITTEE MEETINGS
Attendance
14th March, 2012
16th May, 2012
5th June, 2012
8th October, 2012
Mr. Olakunle Alake
Mr. Adio Alex
Mr. Akinduro Eric Akin
Mr. Kasimu Ibrahim
Mr. Asue Ighodalo
A
17
Statement of Management’s Responsibilities
FOR THE PREPARATION AND APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS
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 31 December 2012, and the results of its operations, cash flows and
changes in equity for the year 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 year ended 31 December 2012, were approved by management on 1st May,
2013.
Signed on behalf of management of the Group.
18
Group Chief Executive Officer
Finance Director
FRC/2013/IODN/00000002455
FRC/2013/ICAN/00000002454
29 May, 2013
29 May, 2013
Report of the Audit Committee
TO THE MEMBERS OF DANGOTE FLOUR MILLS PLC
In accordance with the provisions of Section 359(6) of the Companies and Allied Matters Act, 2004, we have examined
the Auditors’ report for the year ended 31st December, 2012. We have obtained all the information and explanations we
required.
In our opinion, the Auditors’ report is consistent with our review of the scope and planning of the audit. We are also
satisfied that the accounting policies of the Company are in accordance with the legal requirements and agreed ethical
practice. Having reviewed the Auditors’ findings and recommendations on Management matters, we are satisfied with
Management’s response therein.
Mr. Alex Adio
Chairman, Audit Committee
Dated this 2nd day of May, 2013
Members of the Committee
Alhaji Kasimu Ibrahim
Mr. Asue Ighodalo
Mr. Olakunle Alake
19
Report of the Independent Auditors
Akintola Williams Deloitte
235 Ikorodu Road, Ilupeju
P.O. Box 965, Marina
Lagos,
Nigeria
Tel: +234 (1) 271 7800
Fax: +234 (1) 271 7801
www.deloitte.com/ng
REPORT OF THE INDEPENDENT AUDITORS
TO THE MEMBERS OF DANGOTE FLOUR MILLS PLC
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 31 December 2012,
31 December, 2011 and 1 January, 2011, the consolidated income statement, statement of changes in equity and cash
flow statement for the years ended 31 December 2012 and 31 December 2011 and a summary of significant accounting
policies and other explanatory information set out on pages 21 to 69.
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 31 December 2012, 31 December 2011 and 1 January,
2011 and the financial performance and cash flows for the years ended 31 December 2012 and 31 December 2011 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.
Chartered Accountants
Lagos, Nigeria
29 May 2013
FRC number: FRC/2013/ICAN/00000001364
20
Consolidated and Separate Statements of Profit and Loss
COMPANY
GROUP
31-Dec
2012
31-Dec
2011
29,859,976
38,679,844
(28,740,533)
(31,372,618)
1,119,443
7,307,226
(2,360,838)
(2,951,783)
414,931
(826,464)
259,472
4,614,915
(N
=’000)
Revenue
Notes
5
Cost of sales
Gross profit
Distribution and administrative expenses
(53,399,701)
(56,196,075)
5,275,636
10,085,251
(5,438,503)
(6,024,182)
381,527
Operating (loss)/income before
abnormal items
6
502,260
4,442,596
Abnormal items
7
(1,409,450)
(3,146,412)
3,130,650
Operating (loss)/income after
abnormal items
(2,059,643)
(1,761,187)
Finance costs
8
Interest received
8
1,373,230
66,281,326
665,127
(2,235,914)
(4,264,583)
58,675,337
6
(1,484,265)
3,767
31-Dec
2011
Other income
(1,409,450)
30,974
31-Dec
2012
(907,190)
1,737,015
(109,668)
649,074
(3,138,119)
790,152
(2,263,336)
(3,138,119)
790,152
Attributable to:
Owners of the parent
(2,840,713)
(3,138,119)
Non-controlling interests
790,152
8,724
758,742
(583,078)
—
9
2,958,331
(2,208,313)
(4,000,351)
1,126,464
—
Taxation
53,251
(1,484,265)
577,377
(2,263,336)
346,752
302,322
649,074
21
Consolidated and Separate Statements of Comprehensive Income
COMPANY
31-Dec
2012
(3,138,119)
GROUP
31-Dec
2011
790,152
(N
=’000)
Notes
31-Dec
2012
(2,263,336)
31-Dec
2011
649,074
Other comprehensive income:
—
130,231
—
—
Actuarial Gains — Experience
920,383
Total comprehensive (loss)/
profit for the year
(3,138,119)
Actuarial Gains — Assumption
2,382
196,820
68,608
80,050
(2,192,346)
925,944
(2,769,723)
623,622
Attributable to:
(3,138,119)
—
(3,138,119)
920,383
—
Owners of the parent
577,377
920,383
(2,192,346)
Basic (loss)/earnings per share (kobo)
10
(55.39)
302,322
925,944
12.47
The accompanying notes on pages 26 to 66 form an integral part of these consolidated and separate financial statements.
22
Consolidated and Separate Statements of Financial Position
As at 31 December, 2012
COMPANY
31-Dec
2012
GROUP
31-Dec
2011
1-Jan
2011
(N
=’000)
Notes
31-Dec
2012
31-Dec
2011
1-Jan
2011
45,673,663 47,785,357
42,917,033
44,048,647 46,754,990
—
—
3,894
90,836
1,621,122
939,531
42,490,498
—
28,395
398,140
31,775,355 38,857,325
28,820,545
12,946,862 11,671,814
11,927,694 11,363,897
—
—
5,083,533 13,390,095
1,817,266 2,431,519
8,257,459
13,259,241
—
5,113,774
2,190,071
27,302,587 28,726,626 28,421,024
Assets
Non-current assets
18,747,467 20,633,574 20,458,482
7,553,637 7,553,637 7,553,637
—
83,502
10,765
1,001,483
455,913
398,140
Property, plant and equipment
Interest in subsidiary companies
Long-term receivables
Deferred taxation asset
31,889,255 41,652,612 32,276,278
Current assets
7,317,448 4,899,135 2,926,685
3,732,123 5,608,778 9,115,070
16,953,231 16,123,486 13,493,230
3,025,036 13,734,353 5,252,555
861,417 1,286,860 1,488,738
Inventories
Trade and other receivables
Amounts owed by subsidiaries
Short-term loans receivable
Cash and bank balances
59,191,842 70,379,238 60,697,302
Total assets
77,449,018 86,642,682
71,737,578
22,714,473 26,352,592 26,432,209
Equity and liabilities
Issued capital and reserves
24,244,178 27,513,901
27,890,279
2,500,000 2,500,000 2,500,000
18,116,249 18,116,249 18,116,249
2,098,224 5,736,343 5,815,960
Ordinary share capital
Share premium
Retained earnings
2,500,000 2,500,000
18,116,249 18,116,249
3,627,929 6,897,652
2,500,000
18,116,249
7,274,030
—
—
—
11
12
15
13
14
15
12
16
17
18
18
1,079,348
501,971
199,649
28,089,928
22,714,473 26,352,592 26,432,209
Total equity
25,323,526 28,015,872
14,201,759
4,846,577
4,565,424
Non-current liabilities
14,801,783
8,028,585
5,595,727
2,825,800
851,584
10,524,375
3,569,341
1,277,236
—
3,481,939
1,083,485
—
Deferred taxation liability
Retirement benefit obligation
Long-term borrowings
2,855,079
1,254,329
10,692,375
4,114,138
1,730,447
2,184,000
4,075,396
1,520,331
—
37,323,709 50,598,225
38,051,923
10,433,756 11,636,188
401,155 1,333,931
24,346,967 27,325,891
216,669
216,669
—
—
1,925,162 10,085,546
8,672,256
1,001,464
22,046,523
1,900,472
—
4,431,208
77,449,018 86,642,682
71,737,578
22,275,610 39,180,069 29,699,669
Current liabilities
5,173,728 5,301,029 3,819,144
212,284 1,114,176
697,372
15,178,614 23,206,774 20,504,053
216,669
216,669 1,900,472
1,331,717 1,156,049
910,005
162,598 8,185,372 1,868,623
Trade and other payables
Taxation
Short-term borrowings
Shareholders for dividend
Amounts owed to subsidiaries
Bank overdrafts
59,191,842 70,379,238 60,697,302
Total equity and liabilities
13
19
20
21
9
22
12
The consolidated and separate financial statements on pages 21 to 69 were approved by the Board of Directors on 1 May,
2013 and signed on its behalf by:
Chairman
FRC/2013/IODN/00000001766
Group Chief Executive Officer
FRC/2013/IODN/00000002455
Finance Director
FRC/2013/ICAN/00000002454
23
Consolidated and Separate Statements of Changes in Equity
(N
=’000)
Notes
Share
Total
capital
attributable
Nonand Accumulated to owners of controlling
premium
profits the parent
interests
Total
equity
Group
Balance at 1 January 2011
20,616,249
7,274,030
27,890,279
Profit for the year
—
346,752
346,752
302,322
649,074
Other comprehensive income for the year
—
276,870
276,870
—
276,870
20,616,249
7,897,652
28,513,901
501,971
29,015,872
(1,000,000)
(1,000,000)
6,897,652
27,513,901
501,971
28,015,872
(2,840,713)
(2,840,713)
577,377
(2,263,336)
Dividends on ordinary shares
10
Balance at 31 December 2011
—
20,616,249
Loss for the year
—
—
70,990
70,990
20,616,249
4,127,929
24,744,178
10
—
(500,000)
(500,000)
199,649 28,089,928
—
—
(1,000,000)
70,990
1,079,348 25,823,526
—
(500,000)
20,616,249
3,627,929
24,244,178
1,079,348 25,323,526
20,616,249
5,815,960
26,432,209
— 26,432,209
Profit for the year
—
790,152
790,152
—
790,152
—
130,231
130,231
—
130,231
20,616,249
6,736,343
27,352,592
—
27,352,592
(1,000,000)
(1,000,000)
—
(1,000,000)
5,736,343
26,352,592
— 26,352,592
(3,138,119)
—
Company
10
20,616,249
Loss for the year
—
—
—
—
—
—
20,616,249
2,598,224
23,214,473
—
23,214,473
24
—
10
—
20,616,249
(3,138,119)
(500,000)
2,098,224
(500,000)
22,714,473
—
—
(3,138,119)
(500,000)
22,714,473
Consolidated and Separate Statements of Cash Flows
COMPANY
GROUP
31-Dec
2012
31-Dec
2011
796,746
6,112,335
Cash operating profit
(2,075,911)
1,452,708
Working capital changes
(1,279,165)
7,565,043
Cash generated (used in)/from operations
30,974
3,767
(N
=’000)
(1,761,187)
Finance costs
(1,064,539)
(136,645)
Taxation paid
(313,116)
161,083
(152,033)
5,670,978
Net cash inflow/(outflow) from operating
activities
(1,342,514)
Purchase of property, plant and equipment
—
(1,342,514)
31-Dec
2011
A
4,471,455
8,059,803
B
(4,270,941)
Interest received
(2,059,643)
(4,372,373)
31-Dec
2012
Notes
C
E
Proceeds on disposal of property, plant and
equipment
200,514
7,958,018
53,251
8,724
(3,146,412)
(2,208,313)
(1,136,772)
(279,850)
(4,029,419)
5,478,579
(1,998,898)
(7,405,805)
168,153
(1,830,745)
(7,394,713)
4,663,820
—
Long-term borrowings raised
14,725,606
—
—
Long-term borrowings repaid
(2,016,000)
(2,103,869)
(8,163,289)
Short-term borrowings (repaid)/received
(500,000)
(2,683,803)
Dividends paid
(10,847,092)
7,597,331
(6,518,627)
(6,898,512)
698,819
(379,885)
(6,898,512)
11,092
Net cash outflow from investing activities
14,725,606
12,121,737
(101,785)
1,196,689
D
Net cash inflow/(outflow) from financing
activities
Net increase/(decrease) in cash and
cash equivalents
Cash and cash equivalents at beginning
of the year
Cash and cash equivalents at
end of the year
F
(500,000)
(463,820)
(5,012,953)
(2,683,803)
13,406,295
(3,496,756)
7,546,131
(5,412,890)
(7,654,027)
(2,241,137)
(107,896)
(7,654,027)
25
Notes to the Consolidated and Separate Statements of Cash Flows
COMPANY
31-Dec
2012
GROUP
31-Dec
2011
(N
=’000)
Notes
31-Dec
2012
31-Dec
2011
A Cash operating (loss)/profit
(2,235,914)
3,260,881
Operating (loss)/income
(836,200)
3,235,201
Add back:
1,490,454
1,484,265
Non-cash flow abnormal items
(281,287)
193,751
Gratuity: Provision for the year
(307,879)
249,884
(144,365)
—
Gratuity: Payments during the year
(168,239)
(39,768)
(161,083)
—
(Profit)/Loss on disposal of fixed assets
(161,083)
1,982
18,939
65,441
2,180,284
1,101,981
(70,282)
796,746
6,016
6,112,335
1,316,968
Loss on obsolete assets written off to
profit and loss
Depreciation
Exchange (gain)/loss
28,757
68,672
4,669,413
3,059,567
(70,282)
Cash operating profit/(loss)
1,484,265
—
4,471,455
8,059,803
Increase in inventories
(1,036,492)
(3,414,355)
B Working capital changes
(2,418,315)
(1,972,451)
469,705
1,949,290
Decrease/(increase) in trade and other
receivables
(2,032,017)
348,638
(127,301)
1,475,869
Increase/(decrease) in trade and other
payables
(1,202,432)
2,963,932
(2,075,911)
1,452,708
Working capital changes
(4,270,941)
(101,785)
(1,333,931)
(1,001,464)
(203,996)
(612,317)
C Taxation paid
(1,114,176)
(697,372)
Amounts payable at beginning of year
(162,647)
(553,449)
Income statement charge
1,114,176
Amounts payable at the end of year
212,284
(1,064,539)
(136,645)
401,155
Total taxation paid
1,333,931
(1,136,772)
(279,850)
Amounts accrued and payable at
beginning of year
Declared per statement of changes in equity
(216,669)
(500,000)
(1,900,472)
(1,000,000)
Amounts accrued and payable at end of year
216,669
D Dividends paid
(216,669)
(500,000)
216,669
(500,000)
(1,900,472)
(1,000,000)
216,669
(2,683,803)
Total dividends paid
216,669
(500,000)
(2,683,803)
(1,998,898)
(7,306,257)
E Purchase of property, plant and equipment
(313,116)
—
(313,116)
(1,289,888)
(52,626)
(1,342,514)
Expansion
Replacement
—
Total additions
(1,998,898)
(99,548)
(7,405,805)
F Cash and cash equivalents at end of the year
26
861,417
1,286,860
(162,598)
(8,185,372)
698,819
(6,898,512)
Cash and cash equivalents
Bank overdrafts
1,817,266
2,431,519
(1,925,162)
(10,085,546)
(107,896)
(7,654,027)
1.
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 subsidiaries of the Dangote Flour Group. Dangote Flour produces bread flour, confectionery flour, semolina
and alkama and Dangote Agro Sacks Limited manufacture packaging materials.
2.
General information and statement of compliance with IFRS
The consolidated financial statements for the year ended 31 December 2012 have been prepared in accordance
with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board
(IASB). These are the Group’s first financial statements prepared in accordance with IFRS (see Note) for explanation
of the transition to IFRS and cover the financial period from 1 January 2012 to 31 December 2012 with comparatives
for the year ended 31 December 2011 and opening statement of financial position as at the transition date of 1
January 2011.
The consolidated financial statements for the year ended 31 December 2012 (including comparatives) were approved
and authorised for issue by the Board of Directors on 1 May, 2013.
Emerging markets such as Nigeria are subject to different risks than more developed markets, including economic,
political and social, and legal and legislative risks. As has happened in the past, actual or perceived financial
problems or an increase in the perceived risks associated with investing in emerging economies could adversely
affect the investment climate in Nigeria and the country’s economy in general.
The global financial system continues to exhibit signs of deep stress and many economies around the world are
experiencing lesser or no growth than in prior years. These conditions could slow or disrupt Nigeria’s economy,
adversely affect the Company’s access to capital and cost of capital for the Company and, more generally, its
business, results of operations, financial condition and prospects.
Because Nigeria produces and exports large volumes of oil, the Nigerian economy is particularly sensitive to the
price of oil on the world market which has fluctuated significantly during 2012 and 2011.
3.
Summary of accounting policies
3.1.
Overall considerations and first-time adoption of IFRS
The significant accounting policies that have been applied in the preparation of these consolidated financial
statements are summarised below.
The consolidated financial statements have been prepared using accounting policies specified by those IFRSs that
are in effect at the end of the reporting period, or which have been adopted early (see Note 4).
These accounting policies have been used throughout all periods presented in the financial statements, except
where the Group has applied certain accounting policies and exemptions upon transition to IFRS. The exemptions
applied by the Group and the effects of transition to IFRS are presented in Note 4.
3.2.
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.
In accordance with IFRS 1, the Group presents three statements of financial position in its first IFRS financial
statements. In subsequent periods, the Group will present two comparative periods for the statement of financial
position when it: (i) applies an accounting policy retrospectively, (ii) makes a retrospective restatement of items in
its financial statements, or (iii) reclassifies items in the financial statements.
3.3.
Basis of consolidation
The Group financial statements consolidate those of the parent company and all of its subsidiary undertaking(s)
drawn up to 31 December 2012. 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 31 December.
27
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. 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:
3.4.
x
Derecognises the assets (including goodwill) and liabilities of the subsidiary;
x
Derecognises the carrying amount of any non-controlling interest;
x
Derecognises the cumulative translation differences, recorded in equity;
x
Recognises the fair value of the consideration received;
x
Recognises the fair value of any investment retained;
x
Recognises any surplus or deficit in profit or loss; and
x
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 and 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 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).
3.5.
Business combinations
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 noncontrolling interest in the acquiree. For each business combination, the acquirer measures the non-controlling
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.
28
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 change 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.
3.6.
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.
3.7.
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.
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.
3.8.
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
29
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.
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.
3.9.
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.
30
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 and 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 incomes is recognised in profit or loss. Interest earned on the
financial asset is recognised in profit or loss using the effective interest rate method. Dividends earned are recognised
in profit or loss when the right of receipt has been established.
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 rate 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.
Disclosure of fair values of financial instruments is provided in Note 25.
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.
31
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 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 and 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.
Derecognition of financial assets and financial liabilities
Financial assets or parts thereof are derecognised when:
x
the right to receive the cash flows have expired;
x
the right to receive the cash flows is retained, but an obligation to pay them to a third party under a
‘pass-through’ arrangement is assumed; or
x
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.
3.10. 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.
3.11. Inventories
Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing each product to its
present location and conditions are accounted for as follows:
Raw materials:
Weighted average cost.
Finished goods and work-in-progress:
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.
32
3.12. 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.
3.13. 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 rate 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.
3.14. 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.
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.
3.15. 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 its intended use.
3.16. 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.
33
Current tax 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 tax
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:
x
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
x
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:
x
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
x
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. The
net amount payable to the taxation authority is included as part of trade and other payables at the time a dividend
is declared.
Value added tax
Revenues, expenses and assets are recognised net of the amount of value added tax except:
x
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
x
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.
34
3.17. 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 are based on the recommendations of independent
actuaries and the liability is measured using the projected unit credit method.
Actuarial gains and losses are 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 are recognised
over the expected average remaining working lives of the employees participating in the plans.
Past-service costs are recognised as an expense on a straight-line basis over the average period until the benefits
become vested. If the benefits vest immediately following the introduction of, or changes to, a defined benefit
plan, the past-service cost is recognised immediately.
The defined benefit asset or liability recognised in the statement of financial position comprises the present value
of the defined benefit obligation, plus any unrecognised actuarial gains (minus losses), less unrecognised pastservice costs, net actuarial losses and the fair value of plan assets out of which the obligations are to be settled. The
value of an asset recognised is restricted to the sum of the unrecognised past-service costs and unrecognised
actuarial gain or loss and the present value of any economic benefits available in the form of refunds from the plan
or reductions in the future contributions.
3.18. 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.
3.19. 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.
3.20. 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 has 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.
35
Carrying value of tangible assets
Tangible 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 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 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 13.
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 19.
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.
3.21. Standards and interpretations not yet effective
The Group has not applied the following IFRS and IFRIC Interpretations that have been issued but are not yet
effective and will be adopted by the Group when they become effective. These are as follows:
x
IFRS 9 — Financial Instruments
Financial Assets: This phase applies to financial assets and simplifies the classification of financial assets whilst
retaining the measurement principles, being at fair value or amortised cost. Financial assets are classified on
the basis of the entity’s business model for managing the financial assets and the contractual cash flow
characteristics of the financial asset. The IAS 39 exemption which allows equity instruments to be measured at
cost will be limited further and reclassifications between categories will only be allowed in exceptional
circumstances.
36
Financial Liabilities: The standard retains the existing IAS 39 classification and measurement requirements for
financial liabilities not designated at fair value through profit or loss using the Fair Value Option as well as the
criteria within IAS 39 for using the fair value option for financial liabilities. The changes only affect the
measurement of fair value option liabilities. All other requirements in IAS 39 in respect of liabilities are carried
forward into IFRS 9. For fair value option liabilities, the amount of change in the fair value of a liability that is
attributable to changes in credit risk must be presented in other comprehensive income (OCI). The remainder
of the change in fair value is presented in profit or loss. The Standard prohibits any recycling through profit or
loss of amounts recognised in OCI upon derecognition of the liability, but these amounts may be transferred to
retained earnings upon derecognition. Liabilities arising from certain derivatives on unquoted equity instruments
will no longer be able to be measured at cost and will be required to be measured at fair value.
The revised standard is effective for financial periods beginning on or after 1 January 2015. It will have an
impact on the classification and measurement of financial assets and liabilities.
x
IFRS 10 — Consolidated Financial Statements
IFRS 10 includes a new definition of control which is used to determine which entities are consolidated. This
will apply to all entities, including special purpose entities (now known as ‘structured entities’). The changes
introduced by IFRS 10 will require management to exercise significant judgement to determine which entities
are controlled and, therefore, consolidated, and may result in a change to the entities which are within the
Group.
The new standard is effective for financial periods beginning on or after 1 January 2013 and the Group is in
process of assessing what the impact of adoption would be.
x
IFRS 11 — Joint Arrangements
IFRS 11 describes the accounting for joint arrangements with joint control; proportionate consolidation will no
longer be permitted for joint ventures and as such will result in a change in the Group’s accounting policy from
proportionate consolidation to equity accounting when the new standard is adopted. Under IFRS 11 the
structure of a joint arrangement is not the only factor considered when classifying the joint arrangement as
either a joint operation or joint venture.
The new standard is effective for financial periods beginning on or after 1 January 2013 and will not have a
significant impact on adoption.
x
IFRS 12 — Disclosure of Interests in Other Entities
IFRS 12 includes all the disclosures that are required relating to an entity’s interests in subsidiaries, joint
arrangements, associates and structured entities. An entity is now required to disclose the judgements made
to determine whether it controls another entity and as such the adoption of this new standard in future will
result in additional disclosures.
The new standard is effective for financial periods beginning on or after 1 January 2013 and the detailed
disclosures will only be assessed on adoption based on the implications of IFRS 10 and IFRS 11.
x
IFRS 13 — Fair Value Measurements
IFRS 13 provides guidance on how to measure fair value of financial and non-financial assets and liabilities
when fair value measurement is required or permitted by IFRS.
The new standard is effective for financial periods beginning on or after 1 January 2013. The impact of this
standard on the Group is yet to be assessed.
x
IAS 12 — Recovery of Underlying Assets
The IASB issued an amendment to IAS 12 concerning the determination of deferred tax on investment property
measured at fair value. The amendments incorporate SIC-21 into IAS 12 for non-depreciable assets measured
using the revaluation model in IAS 16.
The aim of the amendments is to provide a practical solution for jurisdictions where entities currently find it
difficult and subjective to determine the expected manner of recovery for investment property that is measured
using the fair value model in IAS 40.
37
IAS 12 has been updated to include:
±
A rebuttable presumption that deferred tax on investment property measured using the fair value model
in IAS 40 should be determined on the basis that its carrying amount will be recovered through sale; and
±
A requirement that deferred tax on non-depreciable assets, measured using the revaluation model in IAS
16, should always be measured on a sale basis.
The amendment is effective for financial periods beginning on or after 1 January 2012. This amendment will
have no impact on the Group as it does not have any investment properties or non-depreciable assets measured
using the revaluation model.
x
IAS 19 — Employee Benefits (revised)
Numerous changes to IAS 19 have been made. The two most significant of these relates firstly to short and
long-term benefits that will now be distinguished based on the expected timing of settlement, rather than
employee entitlement. The second item relates to the corridor mechanism for pension plans being removed.
This means all changes in the value of defined benefit plans will be recognised as they occur. Those movements
are recorded in profit or loss and other comprehensive income as follows:
±
Profit or loss will be charged with a service cost and a net interest income or expense. The net interest
income or expense is the product of the net liability or asset and the discount rate used to measure the
obligation – both as at the start of the year. This removes the current concept of expected return on plan
assets — where income is credited with the expected long-term yield on the assets in the fund.
±
“Remeasurements” will be recorded in other comprehensive income. These are all other movements in
the statement of financial position amount (essentially these are currently described as actuarial gains and
losses and any effects of the restriction of a surplus to its recoverable amount).
Entities will no longer be allowed to recognise all movements in profit or loss.
The amendment is effective for financial periods beginning on or after 1 January 2013. The impact of this
amendment is yet to be assessed.
x
IAS 27 — Separate financial statements.
The scope of IAS 27, as revised, is limited to the accounting for investments in subsidiaries, joint ventures and
associates in the separate financial statements of the investor. The amendment was issued in response to the
issue of IFRS 10.
The amendment is effective for financial periods beginning on or after 1 January 2013. The amendment will
have no impact on the Group since the investments will remain to be measured at cost.
x
IAS 28 — Investments in associates and joint ventures (consequential revision due to the issue of IFRS 10 and
11). The revised standard caters for joint ventures (now accounted for by applying the equity accounting
method) in addition to prescribing the accounting for investments in associates.
The amendment is effective for financial periods beginning on or after 1 January 2013. The impact of this
amendment is yet to be assessed.
x
IFRS 7 — Disclosures: offsetting financial assets and financial liabilities
The amendment amends the required disclosures to include information that will enable users of an entity’s
financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off
associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial
position.
The amendment is effective for financial periods beginning on or after 1 January 2013. The amendment is not
expected to have a significant impact on the Group.
x
IAS 32 — Offsetting financial assets and financial liabilities
The amendment clarifies the meaning of the entity currently having a legally enforceable right to set off financial
assets and financial liabilities as well as the application of IAS 32 offsetting criteria to settlement systems (such
as clearing houses).
The amendment is effective for financial periods beginning on or after 1 January 2014. The amendment is not
expected to have a significant impact on the Group.
38
x
Numerous annual improvements to IFRS (2009 to 2011 cycle) have amendments effective for financial periods
beginning on or after 1 January 2013 which will be applied retrospectively:
±
IAS 1 — Clarification of the requirements for comparative information
An entity must include comparative information in the related notes to the financial statements when it
voluntarily provides comparative information beyond the minimum required comparative period. The
additional comparative period does not need to contain a complete set of financial statements. In addition,
the opening statement of financial position (known as the third balance sheet) must be presented in the
following circumstances: when an entity changes its accounting policies; makes retrospective restatements
or makes reclassifications, and that change has a material effect on the statement of financial position. The
opening statement would be at the beginning of the preceding period. Unlike the voluntary comparative
information, the related notes are not required to accompany the third balance sheet. This amendment
will impact comparatives provided in future if there is a retrospective adjustment.
±
IAS 16 — Classification of servicing equipment
The amendment clarifies that major spare parts and servicing equipment that meet the definition of
property, plant and equipment are not inventory. This amendment will have no impact on the Group, as
the requirements of this amendment are already applied.
±
IAS 32 — Tax effect of distributions to holders of equity instruments
The amendment clarifies that income taxes arising from distributions to equity holders are accounted for
in accordance with IAS 12 Income Taxes. This amendment will have no impact on the Group, as the
requirements of this amendment are already applied.
±
IAS 34 — Interim financial reporting and segment information for total assets and liabilities
The amendment clarifies the requirements in IAS 34 relating to segment information for total assets and
liabilities for each reportable segment to enhance consistency with the requirements in IFRS 8 Operating
Segments.
Total assets and liabilities for a particular reportable segment need to be disclosed only when the amounts
are regularly provided to the chief operating decision maker and there has been a material change in the
total amount disclosed in the entity’s previous annual financial statements for that reportable segment.
This amendment will impact the Group’s interim report and/or condensed financial statements only.
x
4.
The following amendments and interpretations have also been issued:
±
Amendment to IFRS 1 — Below market government loans (effective 1 January 2013).
±
Amendment to IFRS 1 — Borrowing costs (effective 1 January 2013).
±
IFRIC 20 — Stripping Costs in the Production Phase of a Surface Mine (effective 1 January 2013).
First time adoption of IFRS
The Group’s full financial statements for the year ended 31 December 2012 are its first full financial statements
prepared in accordance with IFRS. These financial statements are presented in accordance with, and comply with,
International Financial Reporting Standards (IFRS) and International Reporting Interpretations Committee (IFRIC)
interpretations issued and effective at the time of preparing these statements. In the preparation of these consolidated
financial statements, the provisions of IFRS 1 – First-time adoption of International Financial Reporting Standards
have been applied, and the impacts of adopting IFRS are disclosed in Note 4.
First-time adoption exemptions applied
Upon transition, IFRS 1 permits certain exemptions from full retrospective application. The Group has applied the
mandatory exemptions and certain optional exemptions. The exemptions adopted by the Group are set out below:
The Group has elected to use facts and circumstances existing at the date of transition to determine whether an
arrangement contains a lease.
The Group has elected to recognise all cumulative actuarial gains and losses for its defined benefit plans at the
date of transition. From the date of transition, the Group’s accounting policy is to base contributions on the
recommendations of independent actuaries and measure the liability using the projected unit credit method.
39
Further, the Group has elected to use the exemption not to disclose defined benefit plan surplus/deficit and
experience adjustments before the date of transition.
The Group has elected to utilise the exemption to applying IFRS 3 retrospectively to business combinations that
occurred before the date of transition. IFRS 3 is applied prospectively for business combinations from the date of
transition.
The Group has used estimates under IFRS that are consistent with those applied under previous GAAP (with
adjustment for accounting policy differences) unless there is objective evidence those estimates were in error.
Reconciliation of equity — Group
Equity at the date of transition and at 31 December 2011 can be reconciled to the amounts reported under previous
GAAP as follows:
GROUP
(N
=’000)
31 December 2011
Notes
Effect of
Previous transition to
GAAP
IFRS
1 January 2011
IFRS
Effect of
GAAP
IFRS
Opening
statement
IFRS
Assets
Non-current assets
Property, plant and
equipment
a
f
Current assets
Inventories
Debtors and prepayments
Other short-term loans
b
b
f
Total assets
44,865,645
2,919,712
47,785,357
41,229,708
1,687,325
42,917,033
44,443,322
—
422,323
2,311,668
90,836
517,208
46,754,990
90,836
939,531
41,229,708
—
—
1,260,790
28,395
398,140
42,490,498
28,395
398,140
38,587,948
269,377
38,857,325
28,381,031
439,514
28,820,545
(350,107) 11,671,814
11,363,897 11,363,897
(10,938,028)
—
193,615 13,390,095
—
2,431,519
8,257,459
—
12,867,303
5,066,198
2,190,071
12,021,921
—
10,938,028
13,196,480
2,431,519
—
8,257,459
13,259,241 13,259,241
(12,867,303)
—
47,576
5,113,774
—
2,190,071
83,453,593
3,189,089
86,642,682
69,610,739
2,126,839
71,737,578
26,440,128
1,073,773
27,513,901
26,943,846
946,433
27,890,279
Share premium
Accumulated profits
2,500,000
18,116,249
5,823,879
—
—
1,073,773
2,500,000
18,116,249
6,897,652
2,500,000
18,116,249
6,327,597
—
—
946,433
2,500,000
18,116,249
7,274,030
h
405,312
96,659
501,971
203,029
26,845,440
6,099,928
1,170,432
1,928,657
28,015,872
8,028,585
27,146,875
4,237,443
943,053
1,358,284
28,089,928
5,595,727
i
2,938,431
1,175,707
4,114,138
3,409,430
665,996
4,075,396
c
977,497
2,184,000
752,950
—
1,730,447
2,184,000
828,013
—
692,318
—
1,520,331
—
50,508,225
90,000
50,598,225
38,226,421
Total equity
Provision for defined
benefit gratuity
Current liabilities
Creditors and accruals
Taxation
Bank overdrafts
40
b
b
f
f
—
17,855,125
1,333,931
7,806,342
216,669
23,296,158
83,453,593
11,636,188 11,636,188
(17,855,125)
—
—
1,333,931
19,519,549 27,325,891
—
216,669
(13,210,612) 10,085,546
3,189,089
86,642,682
(3,380)
199,649
(174,498) 38,051,923
—
8,672,256
8,672,256
18,952,928 (18,952,928)
—
1,001,464
—
1,001,464
8,394,872 13,651,651 22,046,523
1,900,472
—
1,900,472
7,976,685
(3,545,477) 4,431,208
69,610,739
2,126,839
71,737,578
4.
First time adoption of IFRS (continued)
The cumulative effect on retained earnings is further analysed as follows:
Notes
Over amortisation of prepayments
Over-depreciation of property, plant and equipment
31 Dec 2011
1 Jan 2011
a
(241)
2,607,539
Depreciation on spare parts included in inventory capitalised to plant
and equipment
j
(25,417)
Reversal of sales invoices duplicated in prior year
Adjustment on interest refunded in prior year
Adjustment of provision for gratuity in line with actuarial estimations
d
e
c
—
—
(752,950)
(243,647)
264,498
(692,318)
Taxation
Non-controlling interest at subsidiary level
Non-controlling interest on consolidation
i
h
h
1,828,931
(658,499)
(101,201)
4,542
1,210,880
(267,826)
(5,498)
8,877
1,073,773
946,433
Accumulated profits included in equity
1,414
1,880,933
—
Reconciliation of total comprehensive income
Total comprehensive income for the reporting period ended 31 December 2011 can be reconciled to the amounts
reported under previous GAAP as follows:
GROUP
31 December 2011
Notes
Revenue
Cost of sales
Previous
GAAP
Effect of
transition to
IFRS
IFRS
d
a, c
66,281,326
(56,582,360)
—
386,285
66,281,326
(56,196,075)
c
9,698,966
(5,999,929)
381,527
386,285
(24,253)
—
10,085,251
(6,024,182)
381,527
Operating income before abnormal items
Abnormal items
4,080,564
(1,484,265)
362,032
—
4,442,596
(1,484,265)
Operating income after abnormal items
Finance costs
Interest received
2,596,299
(2,208,313)
8,724
362,032
—
—
2,958,331
(2,208,313)
8,724
Gross profit
Other income
Profit before taxation
Taxation
i
396,710
281,005
362,032
(390,673)
758,742
(109,668)
Profit for the year
Other comprehensive income: Actuarial gains
g
677,715
—
(28,641)
276,870
649,074
276,870
Total comprehensive income
Attributable to: Non-controlling interests
h
677,715
(202,283)
248,229
(100,039)
925,944
(302,322)
475,432
148,190
623,622
Attributable to: Owners of the parent
Equity attributable to owners of the parent:
Opening balance
Dividend paid
Reversal of duplicated sales in prior year
Adjustment on interest refund in prior year
Closing equity attributable to the parent
d
e
6,327,597
(1,000,000)
(243,647)
264,497
5,823,879
946,433
—
243,647
(264,497)
1,073,773
7,274,030
(1,000,000)
—
—
6,897,652
41
4.
Reconciliation of equity — Company
Equity of the Company at transition date and at 31 December 2011 can be reconciled to the amounts reported under
previous GAAP as follows:
COMPANY
(N
=’000)
31 December 2011
Notes
Effect of
GAAP
IFRS
1 January 2011
IFRS
Effect of
GAAP
IFRS
Opening
statement
IFRS
Assets
Non-current assets
Property, plant and
equipment
Interest in subsidiary
companies
a
k
b
1,676,782
28,726,626
27,433,880
987,144
28,421,024
19,496,207
1,137,367
20,633,574
19,880,243
578,239
20,458,482
7,553,637
—
7,553,637
7,553,637
—
7,553,637
—
—
455,913
83,502
455,913
83,502
—
—
398,140
10,765
398,140
10,765
(83,743) 41,652,612
32,529,277
41,736,355
Current assets
Inventories
Debtors and prepayments
27,049,844
b
b
4,899,136
—
5,692,520
(1)
5,608,778
(5,692,520)
4,899,135
5,608,778
—
2,926,685
—
9,368,069
(252,999) 32,276,278
—
9,115,070
(9,368,069)
2,926,685
9,115,070
—
Amounts owed by
subsidiaries
16,123,486
—
16,123,486
13,493,230
—
13,493,230
13,734,353
1,286,860
—
—
13,734,353
1,286,860
5,252,555
1,488,738
—
—
5,252,555
1,488,738
Total assets
68,786,199
1,593,039
70,379,238
59,963,157
734,145
60,697,302
26,032,991
319,601
26,352,592
26,489,154
(56,945) 26,432,209
Share premium
Accumulated profits
2,500,000
18,116,249
5,416,742
—
—
319,601
2,500,000
18,116,249
5,736,343
2,500,000
18,116,249
5,872,905
—
2,500,000
— 18,116,249
(56,945) 5,815,960
Total equity
26,032,991
3,573,139
319,601
1,273,438
26,352,592
4,846,577
26,489,154
3,774,334
(56,945) 26,432,209
791,090
4,565,424
i
2,844,534
724,807
3,569,341
3,136,273
345,666
3,481,939
Provision for defined
benefit gratuity
c
728,605
548,631
1,277,236
638,061
445,424
1,083,485
—
—
—
—
—
—
—
39,180,069
29,699,669
—
29,699,669
5,301,029
5,301,029
(9,060,990)
—
—
1,114,176
15,470,573 23,206,774
—
216,669
—
1,156,049
(11,710,612) 8,185,372
—
13,756,141
697,372
7,954,529
1,900,472
910,005
4,481,150
42
Current liabilities
39,180,069
b
Creditors and accruals
b
Taxation
f
Amounts owed to subsidiaries
Bank overdrafts
f
—
9,060,990
1,114,176
7,736,201
216,669
1,156,049
19,895,984
68,786,199
1,593,039
70,379,238
59,963,157
3,819,144
3,819,144
(13,756,141)
—
—
697,372
12,549,524 20,504,053
—
1,900,472
—
910,005
(2,612,527) 1,868,623
734,145
60,697,302
4.
The cumulative effect on retained earnings of the Company is further analysed as follows:
COMPANY
Notes
Over amortisation of prepayments
Over-depreciation of property, plant and equipment
Reversal of duplicated sales in prior year
Adjustment of provision to actuarial estimations
Taxation
31 Dec 2011
1 Jan 2011
a
d
c
(241)
1,137,367
—
(548,631)
1,413
578,239
(243,647)
(445,424)
i, k
588,495
(268,894)
(109,419)
52,474
319,601
(56,945)
Accumulated profits
Reconciliation of total comprehensive income
Total comprehensive income for the reporting period ended 31 December 2011 can be reconciled to the amounts
reported under previous GAAP as follows:
COMPANY
31 December 2011
Previous
GAAP
Effect of
transition to
IFRS
IFRS
d
38,679,844
—
38,679,844
a, c
(31,737,937)
365,319
6,941,907
365,319
7,307,226
c
(2,910,500)
(41,283)
(2,951,783)
Notes
Revenue
Cost of sales
Gross profit
Other income
Abnormal item
259,472
—
259,472
4,290,879
324,036
4,614,915
(1,484,265)
2,806,614
Finance costs
(1,761,187)
Interest received
3,767
Profit before taxation
Taxation
1,049,194
i, k
Profit for the year
Other comprehensive income: Actuarial losses
g
Total comprehensive income
Attributable to: Non-controlling interests
Attributable to: Owners of the parent
(31,372,618)
(261,710)
—
324,036
—
(1,484,265)
3,130,650
(1,761,187)
—
3,767
324,036
1,373,230
(321,368)
(583,078)
787,484
2,668
790,152
—
130,231
130,231
787,484
132,899
920,383
—
—
—
787,484
132,899
920,383
Equity attributable to owners of the parent:
Opening balance
5,872,905
Dividend paid
Reversal of sales invoices duplicated in prior year
Closing equity attributable to the parent
d
(56,945)
5,815,960
(1,000,000)
—
(243,647)
243,647
—
319,601
5,736,343
5,416,742
(1,000,000)
43
4.
Notes to the reconciliations of IFRS adjustments
(a)
Over-depreciation of property, plant and equipment in Nigerian GAAP accounts has been corrected by
implementation of fixed asset registers with accurate depreciation calculation methods. Previously, average book
values were used in some instances to calculate depreciation. The Group did not elect to apply the optional
exemption in IFRS 1: first time adoption of IFRS, that relieves first-time adopters from the requirement to recreate
cost information for property, plant and equipment and the adjustments above relate only to adjustments from in
the manner calculating depreciation as described.
(b)
Reclassifications of balance sheet items in terms of IFRS reporting requirements that relates to allocation of longterm receivables to non-current assets.
(c)
Adjustment of provision for gratuity (retirement benefit scheme) per Nigerian GAAP accounts to actuarial estimations
in terms of IFRS.
(d)
The prior year adjustment relates to the correction of duplicated invoices in customers’ accounts in years 2006 and
2007 accounted for in opening equity balances per Nigerian GAAP and adjusted to profit and loss in the appropriate
year for IFRS reporting purposes.
(e)
This represents adjustment in Dangote Agrosacks Limited in respect of interest overcharged in previous years by
Oceanic Bank Plc which was refunded and accounted for in opening equity balances per Nigerian GAAP and
adjusted to profit and loss in the appropriate year for IFRS reporting purposes.
(f)
Allocation of bank overdrafts to short-term borrowings in terms of IFRS reporting.
(g)
Reporting of actuarial gains under other comprehensive income for purposes of IFRS reporting.
(h)
Effect of above on non-controlling interests.
(i)
Effect of above on deferred taxation.
(j)
Major spares previously included in inventory have been capitalised to plant and equipment in terms of IFRS.
(k)
Correction of error in calculation of deferred tax balances (N
= 1.2 billion).
Presentation differences
Some assets and liabilities have been reclassified into another line items under IFRS at the date of transition.
The reclassification is recorded in the reconciliations above. Some line items are described differently (renamed) under
IFRS compared to previous GAAP, although the assets and liabilities included in these line items are unaffected.
44
COMPANY
31-Dec
2012
GROUP
31-Dec
2011
(N
=’000)
31-Dec
2012
31-Dec
2011
5. Revenue
29,859,976
—
—
—
38,679,844
—
—
—
Flour products
Spaghetti, macaroni and other pasta products
Noodles products
Agrosacks packaging materials
28,388,839
8,610,388
4,866,467
16,809,643
37,594,544
12,581,764
2,605,765
13,499,253
29,859,976
38,679,844
Total revenue
58,675,337
66,281,326
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.
Revenue by major customer
1,413,740
1,283,205
856,660
26,306,371
1,933,850
1,758,510
630,750
34,356,734
Customer 1
Customer 2
Customer 3
All other customers
13,085,872
2,653,732
1,283,205
41,652,528
12,398,176
3,763,434
1,988,915
48,130,801
29,859,976
38,679,844
Total revenue
58,675,337
66,281,326
75,293
25,401
4,669,413
130,475
4,452,573
86,365
46,154
57,788
—
3,059,567
53,272
2,959,687
46,608
103,607
134,865
—
—
144,231
—
1,982
3,333,579
165,539
56,101
—
3,874,978
219,353
60,943
—
6. Operating income after charging:
38,750
25,401
2,180,284
87,304
2,051,110
41,870
29,238
31,000
—
1,101,981
26,602
1,072,201
3,178
57,979
—
—
—
—
—
—
2,581,971
120,596
28,733
—
2,817,700
161,440
36,896
6,016
External auditors’ remuneration
— Audit fee
Internal auditors’ remuneration
Depreciation
Buildings
Plant, equipment and vehicles
Computer and office equipment
Professional and consultant fees
Operating lease charges
Land and buildings
Plant, equipment and vehicles
Loss on disposal of plant, equipment and vehicles
Staff costs
Salaries, allowances and other benefits
Employer’s contribution to retirement funding
Employer’s contribution to medical aid
Foreign exchange loss
(259,472)
(26,889)
—
—
—
(232,583)
Other Income
Insurance claims received
Foreign exchange profit
Profit on disposal of PPE
Provision no longer required
Other sundry income
(414,931)
—
(70,282)
(161,083)
(127,175)
(56,391)
(665,127)
(3,956)
(70,282)
(161,083)
—
(429,806)
(381,527)
(26,950)
—
—
—
(354,577)
45
COMPANY
31-Dec
2012
GROUP
31-Dec
2011
(N
=’000)
31-Dec
2012
31-Dec
2011
25,050
27,734
13,890
7,243
59,267
62,644
112,051
(38,084)
83,777
(18,533)
73,967
65,244
6. Operating income after charging (continued)
Directors’ emoluments (Note 24)
—
14,700
—
2,600
59,267
62,644
Executive Directors
— salaries and bonuses
— retirement, medical and other benefits
— fees and expenses
73,967
—
65,244
—
Total Directors’ emoluments
Less: Paid by subsidiaries
73,967
65,244
Emoluments paid by company
Refer to Note 24 for Directors’ emoluments.
7. Abnormal items
(1,409,450)
(1,484,265)
Abnormal items: impairment of trade
receivable balances
(1,409,450)
(1,484,265)
Abnormal items are items of income and expenditure which are not directly attributable to normal operations or where
their size or nature is such that additional disclosure is considered appropriate.
Some of the Company’s trade debtors amounting to about N
= 3.6 billion (2011: N
= 3.6 billion) are backed by Insurance
Bonds issued by Niger Insurance Plc and NEM Insurance Plc. The amounts are overdue by more than one year. The
Company instituted court action against both insurance companies and obtained a “Mareva Injunction” against them. An
out of court settlement was subsequently agreed between the Company and the insurance companies. This was filed
with the court and has to date been adhered to by Niger Insurance by way of payments of N
= 200 million in instalments
and the appointment of a loss adjuster to verify the insurance claims. NEM Insurance has instituted an appeal process
which is yet to formally commence. In the interim, post-dated cheques issued by NEM Insurance in compliance with the
out of court settlement are being honoured.
Dangote Industries Limited (DIL) guaranteed to pay Dangote Flour Mills Plc 50% (N
= 1.8 billion) of the amount not
honoured by Niger Insurance Plc and NEM insurance by the first quarter of 2014. Considering the guarantee from DIL, the
Company has provided for 50% of the total amount outstanding of N
= 3.6 billion or N
= 1.8 billion. No provision was made
in respect of the amount guaranteed by DIL.
COMPANY
31-Dec
2012
GROUP
31-Dec
2011
(N
=’000)
31-Dec
2012
31-Dec
2011
8. Finance costs
(2,059,643)
(1,761,187)
Finance costs
(3,146,412)
(2,208,313)
(1,002,242)
(1,057,401)
—
—
(1,761,187)
—
Bank and other short-term borrowings
Other — financial liabilities
(1,445,016)
(1,200,126)
(501,270)
(489,649)
(1,377,986)
(340,678)
30,974
3,767
Interest received
53,251
8,724
30,974
3,767
From cash and cash equivalents
53,251
8,724
(2,028,669)
46
(1,757,420)
Net finance costs
(3,093,162)
(2,199,589)
COMPANY
31-Dec
2012
GROUP
31-Dec
2011
(N
=’000)
31-Dec
2012
31-Dec
2011
(177,184)
(18,380)
(8,432)
(530,387)
(81,930)
—
(203,996)
(612,317)
9. Taxation
Current taxation
(154,215)
—
(8,432)
(497,432)
(56,017)
—
(162,647)
(553,449)
Nigerian current taxation
Education tax
Capital gain tax
Deferred taxation
1,289,111
(29,629)
1,126,464
(583,078)
Temporary differences
1,941,011
502,649
Total taxation
1,737,015
(109,668)
1,333,931
203,996
(1,136,772)
1,001,464
612,317
(279,850)
Financial statement position
1,114,176
162,647
(1,064,539)
212,284
697,372
553,449
(136,645)
1,114,176
At 1 January
Current year income charges
Payment during the year
At 31 December
401,155
1,333,931
Dangote Noodles Ltd and Obajana Agrosacks Ltd,
both subsidiaries of the Company, obtained
approval from the Nigerian Investment Promotion
Commission for a five-year pioneer tax status
incentive (tax holiday), taking effect from
1 July 2009 for Obajana Agrosacks Ltd
and 1 July 2010 for Dangote Noodles Ltd.
Reconciliation of the effective rate of taxation
with the statutory taxation rate is as follows:
26.4%
42.5%
0.0%
0.0%
0.0%
0.0%
1.5%
(14.6%)
16.7%
0.0%
0.0%
(12.5%)
30.0%
30.0%
Taxation for the year as a percentage of income
before taxation
Income exempt from tax (tax holiday)
Investment allowances
Expenses and provisions not allowed for
tax purposes
Unabsorbed capital allowances
Effect of prior year adjustments and others
Rate of Nigerian company taxation
43.4%
14.5%
(11.7%)
(2.1%)
33.5%
12.5%
3.5%
(14.3%)
11.2%
(2.1%)
(2.4%)
(26.0%)
30.0%
30.0%
Deferred tax assets have not been recognised
on losses available to reduce future taxable
income in some subsidiaries due to the
application of tax holidays for some entities
in the Group and uncertainty as to the
recoverability of such assets from future profits
for other entities.
47
COMPANY
31-Dec
2012
GROUP
31-Dec
2011
31-Dec
2012
(N
=’000)
31-Dec
2011
9. Taxation (continued)
Movement per deferred tax accounts
(545,574)
(743,537)
57,773
(87,402)
(1,289,111)
(29,629)
(Increase)/decrease in deferred taxation asset
(Decrease)/increase in deferred taxation liability
(681,591)
(1,259,420)
541,391
(38,742)
(1,941,011)
502,649
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.
10. 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 are the same as there are no
dilutive effects on earnings.
GROUP
31-Dec
2012
31-Dec
2011
Total comprehensive (loss)/income attributable to ordinary shareholders:
Total comprehensive (loss)/income for the year (N
=’000)
Weighted average number of ordinary shares (’000)
Basic and diluted (loss)/earnings per share (kobo per share)
(2,769,723)
5,000,000
623,622
5,000,000
(55.39)
12.47
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.
GROUP
31-Dec
2012
31-Dec
2011
500,000
5,000,000
1,000,000
5,000,000
10
20
Dividends declared
The Company declared a dividend of 20 kobo per ordinary share out of the profits
for the year ended 31 December 2010 and a dividend of 10 kobo per ordinary
share for the year ending 31 December 2011.
Dividend declared (N
=’000)
Weighted average number of ordinary shares (’000)
Dividend per share (kobo per share)
48
GROUP
(N
=’000)
Leasehold
land and
buildings
Plant,
vehicles
and
equipment
3,718,927
37,172,833
Computer
Assets
and office
under
equipment construction
Total
11. Property, plant and equipment
Cost
Additions
Disposals
Transfers between classes of assets
Impairment
817,976
—
13,034
—
4,549,937
Additions
Disposals
Adjustment
Written off
78,236
—
2,918,272
118,499
—
7,664,944
7,261,928
(15,358)
208,955
(9,226)
44,619,132
1,280,057
(20,044)
6,153,963
3,439,580
(80,005)
55,392,683
422,844
54,012
(9,253)
—
—
467,603
6,635
(173)
19,510
87,888
—
581,463
11,363,281
52,677,885
(728,111)
—
(221,989)
(61,375)
10,351,806
7,405,805
(24,611)
—
(70,601)
59,988,478
633,969
—
(9,094,258)
—
—
1,891,517
1,998,898
(20,217)
(2,513)
3,645,967
(80,005)
65,530,608
Accumulated depreciation
Depreciation
Disposals
Impairment
304,483
53,272
—
—
9,652,924
2,959,687
(7,098)
(1,929)
12,603,584
229,980
46,608
(4,439)
—
—
—
—
—
10,187,387
3,059,567
(11,537)
(1,929)
272,149
—
13,233,488
86,365
—
87,888
—
—
—
—
—
—
—
357,755
Depreciation
Disposals
Adjustment
Written off
Impairment
130,475
—
118,499
—
—
606,729
20,428,829
446,402
—
21,481,960
3,414,444
4,192,182
27,519,909
32,015,548
192,864
195,454
11,363,281
10,351,806
42,490,498
46,754,990
7,058,215
34,963,854
135,061
1,891,517
44,048,647
4,452,573
(15,660)
3,439,580
(76,768)
25,520
4,669,413
(15,660)
3,645,967
(76,768)
25,520
Net book value
The adjustment of N
= 3.6 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 N
= 2.513 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 mainly expenditure incurred on the Danvita Flour Mills at Apapa. Assets amounting
to N
= 14.2 billion are encumbered by debentures in favour of Zenith Bank Plc, Eco Bank Plc, Diamond Bank Plc and
FCMB Plc.
Borrowing costs amounting to N
= 98.2 million (2011: N
= 269.1 million) were capitalised during the year.
The following useful lives are used in the calculation of depreciation:
Plant, vehicles and equipment
50 years
4 – 15 years
3 – 5 years
49
COMPANY
(N
=’000)
Leasehold
land and
buildings
Plant,
vehicles
and
equipment
2,411,347
16,023,028
Computer
Assets
and office
under
equipment construction
Total
11. Property, plant and equipment
Cost
Additions
Impairment
5,662
13,034
—
2,430,043
Additions
Written off
Adjustment
29,941
2,914,572
—
118,499
5,493,055
771,220
76,833
(5,995)
16,865,086
201,777
25,431
—
—
6,571,993
540,201
(89,867)
(61,375)
25,208,145
1,342,514
—
(67,370)
227,208
6,960,952
6,248
10,665
—
87,888
166,222
(5,695,204)
—
—
23,102,819
332,009
1,431,970
30,359,854
190,067
4,439,902
119,694
—
4,749,663
26,602
—
1,072,201
(1,929)
3,178
—
—
—
1,101,981
(1,929)
216,669
5,510,174
122,872
—
5,849,715
Depreciation
Adjustment
Written off
Impairment
87,304
118,499
—
—
2,051,110
3,439,580
(76,768)
13,189
41,870
87,888
—
—
—
—
—
—
2,180,284
3,645,967
(76,768)
13,189
422,472
10,937,285
252,630
—
11,612,387
2,221,280
2,213,374
11,583,126
11,354,912
82,083
104,336
6,571,993
6,960,952
20,458,482
20,633,574
5,070,584
12,165,534
79,379
1,431,970
18,747,467
110,704
2,767,454
(80,005)
3,439,580
26,483,289
313,116
(2,513)
(80,005)
3,645,967
Accumulated depreciation
Depreciation
Impairment
Net book value
The adjustment of N
= 3.6 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 N
= 2.513 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 expenditure incurred on the Danvita Flour Mills at Apapa. Assets amounting to N
= 14.2
billion are encumbered by debentures in favour of Zenith Bank Plc, Eco Bank Plc, Diamond Bank Plc and FCMB Plc.
Borrowing costs amounting to NIL (2011: N
= 12.9 million) were capitalised during the year.
The following useful lives are used in the calculation of depreciation:
Plant, vehicles and equipment
50
50 years
4 – 15 years
3 – 5 years
COMPANY
31 Dec 2012
(N
=’000)
31 Dec 2011
Percentage
holding (%)
(N
=’000)
Percentage
holding (%)
12. Interest in subsidiary companies
Unlisted — shares at cost:
2,507,637
4,956,000
90,000
99%
99%
90%
2,507,637
4,956,000
90,000
7,553,637
7,553,637
14,095,272
2,857,959
13,585,059
2,538,427
16,953,231
16,123,486
1,331,717
1,156,049
1,331,717
1,156,049
99%
99%
90%
Loans receivable from subsidiaries — held directly
Loans payable to subsidiaries — held directly
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.
COMPANY
31-Dec
2012
GROUP
31-Dec
2011
(N
=’000)
31-Dec
2012
31-Dec
2011
13. Deferred taxation
Balance at beginning of year:
455,913
(3,569,341)
398,140
(3,481,939)
(3,113,428)
(3,083,799)
— Deferred tax asset
— Deferred tax liability
939,531
(4,114,138)
398,140
(4,075,396)
(3,174,607)
(3,677,256)
Income statement movement:
545,570
743,541
57,773
(87,402)
— Temporary differences : deferred tax asset
— Temporary differences : deferred tax liability
681,591
1,259,059
541,391
(38,742)
(1,824,317)
(3,113,428)
Balance at end of year
(1,233,957)
(3,174,607)
1,001,483
(2,825,800)
455,913
(3,569,341)
— Deferred tax asset
— Deferred tax liability
1,621,122
(2,855,079)
939,531
(4,114,138)
Assessed losses available for offset against future taxable income have been recognised in the Company as it is probable
that there will be future taxable income against which the assessed loss may be utilised.
51
COMPANY
31-Dec
2012
GROUP
31-Dec
2011
(N
=’000)
31-Dec
2012
31-Dec
2011
397,045
329,110
571,794
323,173
146,333
444,466
275,990
72,742
1,621,122
939,531
13. Deferred taxation (continued)
Analysis of deferred tax asset balances:
—
255,475
422,835
323,173
—
383,171
—
72,742
1,001,483
455,913
Gratuity
Allowance for bad debts
Others
Analysis of deferred tax liability balances:
(2,825,800)
(3,569,341)
(2,825,800)
(3,569,341)
6,591,961
107,410
618,077
4,348,570
195,456
355,109
—
—
7,317,448
4,899,135
(2,855,079)
(4,114,138)
(2,855,079)
(4,114,138)
9,861,296
1,110,440
2,105,109
7,871,371
2,367,772
1,801,212
14. Inventories
Raw materials and work-in-progress
Finished goods
Engineering spares and other stock
Amount written down as provision for
slow moving items
(129,983)
12,946,862
(368,541)
11,671,814
Inventory is carried at the lower of cost and net realisable value. The amount of write down of inventories recognised as
an expense is N
= 130 million (2011: N
= 369 million). This expense is included in cost of sales. Inventory recognised as an
expense during the period totalled N
= 48 billion (2011: N
= 53.4 billion).
Goods in transit Included in raw materials are N
= 151 million (2011: N
= 789 million).
COMPANY
GROUP
31-Dec
2012
31-Dec
2011
9,007,011
46,332
715,188
9,353,579
239,165
645,493
9,768,531
(5,436,248)
(600,159)
10,238,237
(4,026,798)
(519,159)
3,732,123
5,692,280
—
3,732,123
83,502
5,608,778
31-Dec
2012
31-Dec
2011
Trade receivables
Prepayments
Sundry receivables
16,758,382
202,983
1,619,970
13,143,491
427,039
2,978,789
Total
Impairment provision: Trade receivables
Impairment provision: Other receivables
18,581,335
(6,021,843)
(627,903)
16,549,319
(4,545,991)
(548,595)
Net trade and other receivables
11,931,589
11,454,733
3,894
11,927,694
90,836
11,363,897
(N
=’000)
15. Trade and other receivables
Long-term portion
Short-term portion
The average credit period granted to customers is 30 days. Trade receivables, which generally have 30 – 60 day terms, are
none interest-bearing and are recognised and carried at original invoice amount less an allowance for any uncollectible
amount. Included in the provision is N
= 2.4 billion (2011: N
= 1.79 billion) of the Dangote Flour Mills Plc’s trade debtors
which is backed by an insurance bond, overdue by more than one year.
52
15. Trade and other receivables (continued)
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
GROUP
31-Dec
2012
31-Dec
2011
184,849
176,472
144,442
217,521
152,278
124,271
505,763
494,070
(N
=’000)
Company A
Company B
Company C
31-Dec
2012
31-Dec
2011
2,187,544
757,400
163,104
1,514,405
660,547
298,844
3,108,048
2,473,796
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
31-Dec
2012
GROUP
31-Dec
2011
(N
=’000)
31-Dec
2012
31-Dec
2011
4,545,957
—
1,490,450
2,647,151
(414,542)
2,313,348
Balance at the beginning of the year
Utilised during the year
Raised during the year
5,094,586
—
1,555,160
3,086,130
(489,554)
2,498,010
6,036,407
4,545,957
Balance at the end of the year
6,649,746
5,094,586
Past due or impaired analysis:
Trade receivables ageing:
828,858
152,011
240,235
7,785,907
1,581,400
386,853
426,328
6,958,998
Current to 60 days
61 to 90 days
91 – 180 days
> 180 days
4,170,229
1,580,646
930,955
10,076,552
3,780,204
1,538,503
989,700
6,835,083
9,007,011
(5,436,248)
9,353,579
(4,026,798)
Gross outstanding
Less: provision
16,758,382
(6,021,843)
13,143,490
(4,545,991)
3,570,763
5,326,781
10,736,539
8,597,499
Net outstanding
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 large and unrelated customer base and large credit risks are insured against recoverability.
Accordingly, the Directors believe that there is no further impairment allowance required in excess of the allowance for
doubtful debts.
53
COMPANY
31-Dec
2012
GROUP
31-Dec
2011
(N
=’000)
31-Dec
2012
31-Dec
2011
16. Short-term loans receivable
Unsecured, interest free loans repayable
on request:
3,025,036
—
13,734,353
—
Due from related parties (refer to Note 23)
5,083,533
—
13,050,585
339,510
3,025,036
13,734,353
Total
5,083,533
13,390,095
1,817,266
2,431,519
3,000,000
3,000,000
2,500,000
2,500,000
18,116,249
18,116,249
The carrying amount of short-term loans
approximates their fair value.
17.
861,417
1,286,860
Bank balances and short-term deposits
18. Share capital and premium
Authorised share capital
3,000,000
3,000,000
6 000 000 000 ordinary shares of 50k each
Issued ordinary share capital
2,500,000
2,500,000
18,116,249
18,116,249
5 000 000 000 ordinary shares of 50k each
Share premium
19. Retirement benefit obligation
The Company and its subsidiaries operate a defined benefit gratuity scheme entitling employees to certain benefits
after 5 years of service with the Group. The defined benefit gratuity scheme is un-funded. An actuarial valuation was
done for the years ended December 2011 and December 2012.
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.
Amount recognised in income in respect of this defined benefit scheme are as follows:
COMPANY
GROUP
31-Dec
2012
31-Dec
2011
(443,828)
162,541
—
—
196,618
127,364
(130,231)
—
(281,287)
193,751
(N
=’000)
(Curtailment)/Service cost
Interest cost
Actuarial gains — Assumption
Actuarial gains — Experience
31-Dec
2012
31-Dec
2011
(451,711)
214,823
(2,382)
(68,608)
347,525
179,229
(196,820)
(80,050)
(307,878)
249,884
Actuarial gains have been reported in other comprehensive income.
The cumulative amount of actuarial gains and losses recognised in other comprehensive income since the date of
transition to IFRS is N
= 348 million (2011: N
= 277 million).
54
19. Retirement benefit obligation (continued)
Movement in the liability recognised in the statement of financial position
The amount 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
31-Dec
2012
GROUP
31-Dec
2011
(N
=’000)
31-Dec
2012
31-Dec
2011
1,277,236
(443,828)
162,541
—
—
(144,365)
1,083,485
196,618
127,364
(130,231)
—
—
Balance at beginning of the year
(Curtailment)/Service cost
Interest cost
Actuarial gains — Assumption
Actuarial gains — Experience
Benefits paid from Company
1,730,447
(451,711)
214,823
(2,382)
(68,608)
(168,239)
1,520,331
347,525
179,229
(196,820)
(80,050)
(39,768)
851,584
1,277,236
1,254,329
1,730,447
13.0%
12.0%
10.0%
13.0%
12.0%
10.0%
3.0%
2.0%
2.0%
0.0%
3.0%
2.0%
2.0%
0.0%
Actuarial assumptions
13.0%
12.0%
10.0%
The principal actuarial assumptions used for
accounting purposes were:
Average long-term discount rate (p.a.)
Average long-term salary increase (p.a.)
Average long-term rate of inflation (p.a.)
13.0%
12.0%
10.0%
Mortality rates in service assumed for employees
are the rates published in the A49/52 ultimate
tables, published jointly by the Institute and
Faculty of Actuaries in the UK.
3.0%
2.0%
2.0%
0.0%
Withdrawal from service:
Age band — Less than or equal to 30
Age band — 31 to 39
3.0%
2.0%
2.0%
0.0%
20. Long-term borrowings
—
14,725,606
—
—
—
—
Balance at beginning of the year
Loan advanced
Repayment
4,200,000
14,725,606
(2,016,000)
—
4,663,820
(463,820)
14,725,606
—
16,909,606
4,200,000
10,524,375
—
10,692,375
2,184,000
4,201,231
—
Long-term portion
Short-term portion included in short-term
borrowings (Note 22)
6,217,231
2,016,000
The loans were obtained in January 2011 and January 2012 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 debenture on the assets of Dangote
Agrosacks Limited, Obajana Agrosacks Limited and Dangote Flour Mills Limited.
55
COMPANY
GROUP
31-Dec
2012
31-Dec
2011
3,758,152
1,074,779
196,048
144,749
3,522,678
900,404
770,757
107,190
Trade payables and accruals
Customers’ deposits
Deferred income (wheat rebate)
Withholding tax
5,173,728
5,301,029
Net trade and other payables
(N
=’000)
31-Dec
2012
31-Dec
2011
8,521,991
1,473,427
196,048
242,290
9,074,599
1,570,285
770,757
220,547
10,433,756
11,636,188
315,867
5,790,342
8,071,259
1,500,000
8,242,610
2,120,978
13,638,611
3,759,960
6,217,231
2,016,000
24,346,967
27,325,891
21. Trade and other payables
The average credit period on purchases is
1 month. 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 pre-agreed credit terms.
22. Short-term borrowings
—
5,500,000
2,734,773
—
8,242,610
2,236,273
11,710,541
3,759,960
4,201,231
—
15,178,614
23,206,774
Unsecured loans (a)
Amounts due to related parties
(refer to Note 23)
Short-term bank loans
Letters of credit for wheat purchases
Short-term portion of long-term
borrowings (Note 20)
Total
(a)
56
The Company obtained facilities of N
= 5 billion
and N
= 1 billion commercial paper from
Dangote Industries Limited which have been
repaid during 2011. A subsidiary of the
Company, Dangote Noodles Limited secured
a loan of N
= 310 million from Dangote Industries
Limited at a fixed interest rate of 8% p.a.
The carrying amount of short-term borrowings
approximates their fair value.
COMPANY
31-Dec
2012
GROUP
31-Dec
2011
(N
=’000)
31-Dec
2012
31-Dec
2011
23. 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:
Amounts due from related parties
(refer to Note 16)
2,516
3,021,642
—
1,500
51,000
—
—
—
—
3,606
(55,228)
—
13,681,853
—
1,500
51,000
—
—
—
—
—
—
3,025,036
13,734,353
a
b
c
d
e
f
Dangote Cement Plc
Dangote Industries Limited
National Salt Company of Nigeria Plc
Dangote Fisheries Nigeria Limited
Dangote Textiles Nigeria Limited
Dangote Foundation
Dangote Sugar Refinery Plc
ADSTAR International Company
Dangote Freight Limited
Others
Impairment Allowance
115,813
4,662,355
—
1,500
55,593
115,213
—
—
15,381
350,950
(233,272)
372,048
12,339,877
75,830
1,500
55,593
66,903
120,100
3,353
15,381
—
—
Total
5,083,533
13,050,585
47,819
156,143
154,284
53,840
156,143
142,529
358,246
352,512
During the year the Company had
dealings with subsidiaries and related
companies.
The balances emanating from the transactions
have been disclosed in the balance sheet as
analysed below:
Purchase of goods and services
393,095
47,819
156,143
93,216
657,571
53,840
156,143
91,899
690,273
959,453
Dangote Agrosacks Nigeria Limited
Greenview Development Nigeria Limited
Dangote Technologies Limited
57
COMPANY
31-Dec
2012
GROUP
31-Dec
2011
31-Dec
2012
31-Dec
2011
—
239,633
1,132,497
93,328
344,435
13,148,162
—
34,444
1,364,217
65,340
322,563
9,040,432
14,958,055
10,826,996
—
—
—
—
—
—
Dangote Nigeria Limited
Dangote Transport Nigeria Limited
Bluestar Shipping Company
Greenview Development Nigeria Limited
Dangote Port Operations
Dansa Foods Limited
Dangote Cement Plc
Dancom Technologies Limited
Bulk Pack Nigeria Limited
Other
76,817
3,953,741
1,871,065
323,092
42,931
474,771
17,033
18,168
—
1,116,877
111,698
13,857
51,209
76,816
—
1,871,357
—
44,502
27,591
—
9,813
1,493
—
50,630
20,527
18,249
Total
8,071,259
2,120,978
(N
=’000)
23. Related party disclosures
Sale of goods
1,471,137
—
—
—
—
—
1,085,300
—
—
—
—
—
1,471,137
1,085,300
Dangote Foundation
Dangote Cement Plc
Loans receivable/(due) from subsidiaries
— held directly
14,095,272
2,857,959
(1,331,717)
13,585,059
2,538,427
(1,156,049)
15,621,514
14,967,437
Amounts due to related parties
(refer to Note 22)
58
68,061
—
1,779,631
148,694
42,931
474,771
—
17,645
—
203,040
—
—
—
68,061
—
1,779,631
100,883
48,846
27,591
924
9,813
—
200,524
—
—
—
2,734,773
2,236,273
g
h
f
a
(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 DFM. A significant repayment of the
amount due was received during the period under review.
(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.
(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. No transactions were concluded
during the year.
(h) Dangote Transport Nigeria Limited is a related party by means of common shareholding and provides haulage
services to the Company and the Group.
24. Remuneration of directors
Remuneration of Executive non-Executive Directors of the Company is as follows:
(N
= ’000)
Basic
salary
Group
benefits
Bonuses
Total
—
—
—
7,350
7,350
—
—
—
—
7,350
7,350
—
—
14,700
—
14,700
—
—
—
—
400
600
1,000
600
—
—
—
—
400
600
1,000
600
—
2,600
—
2,600
Executive Directors
For the year ended 31 December 2012:
Mr. Ekanem Etim
Alh. Suleiman Olarinde
Mr. Narenda Somani
For the year ended 31 December 2011:
Mr. Rohit Chaudhy
Alh. Suleiman Olarinde
Mr. Narenda Somani
Mr. Ekanem Etim
For the year ended
31 December 2012
(N
= ’000)
For the year ended
31 December 2011
Board
meetings
Other
fees
Total
Board
meetings
Other
fees
Total
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
—
1,200
800
1,600
600
1,200
1,200
2,680
1,440
—
5,701
5,601
5,601
5,601
5,601
5,691
7,595
5,671
4,862
6,901
6,401
7,201
6,201
6,801
6,891
10,275
7,111
4,862
10,150
49,117
59,267
10,720
51,924
62,644
Alh. Aliko Dangote
Alh. Sani Dangote
Mr. Olakunle Alake
Mr. Uzoma Nwankwo
Alh. Abdu Dantata
Mr. Asue Ighodalo
Brig-Gen. S. L. Teidi
Alh. Abdullahi S. Mahmoud
Alh. Shuaibu Idris
Nature of interest
Number of ordinary Percentage of issued
shares (‘000)
share capital
Directors’ interest in share capital
At 31 December 2012:
Alh. Aliko Dangote
Mr. Olakunle Alake
shareholding
shareholding
38,729
2,378
0.77%
0.05%
shareholding
shareholding
shareholding
38,728.9
2,377.5
43.8
0.77%
0.05%
0.00%
Alhaji Aliko Dangote
Mr. Olakunle Alake
Alh. Abdullahi S. Mahmoud
59
25. 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. Concentrations of credit risk (ageing analysis of trade receivables) are disclosed in Note 15.
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.
During the year ended December 2011, the company purchased wheat at a price guaranteed by the agent under an
agreement with the Group.
The 10% stringency is the sensitivity rate used when reporting the commodity price risk internally to key management.
A positive/(negative) number indicates an increase/(decrease) in profit or loss.
The following table details the Group’s sensitivity to a 10% increase and decrease in the price of wheat for the year
ended December 2012.
(N
= ‘000)
Effect on gross profit ( + 10% )
Effect on gross profit ( – 10% )
31 December
2012
(1,300,754)
1,297,307
31 December
2011
(3,297,465)
3,264,817
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.
60
25. Financial instruments (continued)
Group
(N
= ‘000)
Carrying
amount
0–6
months
7–12
months
1–5
years
> 5 years
10,433,757
35,039,342
10,433,757
3,629,499
—
3,111,000
—
28,298,843
—
—
11,636,188
29,509,891
11,636,188
4,336,857
—
3,717,306
—
21,455,729
—
—
5,173,728
25,702,989
5,173,728
2,334,017
—
1,909,650
—
21,459,321
—
—
5,301,029
23,206,774
5,301,029
3,055,556
—
2,619,048
—
17,532,171
—
—
Borrowings (long and short-term)
Company
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 to and from subsidiary and other related
companies are interest free or on a variable rate basis to reflect the interest earned on the funds so invested thus
providing an economic hedge.
The interest rate sensitivity analysis detailed below addresses only the floating interest rate exposure emanating
from the net cash position.
The interest rate exposure has been calculated with the stipulated change taking place at the beginning of the
financial year and held constant throughout the reporting period. If interest rates had increased/(decreased) by
10% and all other variables were held constant, the profit for the year ended would increase/(decrease) as detailed
in the table below.
Group
(N
=’000)
Carrrying
amount
Average
floating
rate
(%)
Effect on
profit
before tax
(+10%)
Effect on
profit before
tax (–10%)
Bank overdrafts
1,817,266
(1,925,162)
17.0%
17.0%
36,115
(102,091)
(36,115)
102,091
2,431,519
(10,085,546)
17.1%
17.0%
39,515
(123,392)
(39,515)
123,392
861,417
(162,598)
17.1%
17.0%
18,368
(70,958)
(18,368)
70,958
1,286,860
(8,185,372)
17.1%
17.0%
23,593
(107,665)
(23,593)
107,665
Bank overdrafts
Company
Bank overdrafts
Bank overdrafts
61
Foreign currency risk
The Group has currency exposure arising from purchases of raw material and goods and services in currencies other
than the reporting currency. The Group manages this risk by settling invoices as soon as possible and by outsourcing
the procurement and supply of wheat to its parent company. The Group does not enter into foreign exchange
contracts as part of the management of its foreign exchange exposures.
There were therefore no material foreign currency exposure at 31 December 2012. Foreign currency risk is monitored
and reported regularly.
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.
Gearing ratio
Gearing ratios are as follows:
COMPANY
31-Dec
2012
GROUP
31-Dec
2011
31-Dec
2012
(N
= ‘000)
31-Dec
2011
25,702,989
(698,819)
23,206,774
6,898,512
Debt
35,039,342
107,896
29,509,891
7,654,027
25,004,170
30,105,286
Net borrowings
35,147,238
37,163,918
22,714,473
26,352,592
Equity
25,323,526
28,015,872
108%
114%
Debt to equity ratio
117%
133%
Categorization of financial assets and liabilities
Loans and
receivables
at
amortised
cost
Group
Payables
and loans at
amortised
cost
Nonfinancial
items
Total book
value
(N
= ‘000)
Non-financial assets
Bank overdraft
Shareholders’ equity and liabilities
62
—
5,083,533
11,931,588
1,817,266
—
—
—
—
—
—
—
—
—
(1,925,162)
—
(10,692,375)
(11,051,580)
(24,346,967)
58,616,631
—
—
—
—
(29,432,934)
—
—
—
18,832,387
(48,016,084)
29,183,697
58,616,631
5,083,533
11,931,588
1,817,266
(1,925,162)
(29,432,934)
(10,692,375)
(11,051,580)
(24,346,967)
—
Loans and
receivables at
amortised
cost
Bank overdraft
Payables
and loan at
amortised
cost
Nonfinancial
items
—
13,390,095
11,454,733
2,431,519
—
—
—
—
—
—
—
—
—
(10,085,546)
—
(2,184,000)
(13,186,788)
(27,325,891)
59,449,341
—
—
—
—
(33,943,463)
—
—
—
27,276,347
(52,782,225)
25,505,878
—
—
3,025,036
—
3,732,123
861,417
—
—
—
—
—
—
—
—
—
—
—
(162,598)
—
(10,524,375)
(5,602,681)
(16,510,331)
27,066,398
7,553,637
—
16,953,231
—
—
—
(26,391,857)
—
—
—
7,618,576
(32,799,985)
25,181,409
—
—
13,734,353
—
5,692,280
1,286,860
—
—
—
—
—
—
—
—
—
—
—
(8,185,372)
—
—
(6,631,874)
(24,362,823)
25,988,622
7,553,637
—
16,123,486
—
—
—
(31,199,169)
—
—
—
20,713,493
(39,180,069)
18,466,576
Total book
value
59,449,341
13,390,095
11,454,733
2,431,519
(10,085,546)
(33,943,463)
(2,184,000)
(13,186,788)
(27,325,891)
—
Categorization of financial assets and liabilities
Company
(N
= ‘000)
Investments in subsidiaries
Bank overdraft
27,066,398
7,553,637
3,025,036
16,953,231
3,732,123
861,417
(162,598)
(26,391,857)
(10,524,375)
(5,602,681)
(16,510,331)
—
Investments in subsidiaries
Bank overdraft
25,988,622
7,553,637
13,734,353
16,123,486
5,692,280
1,286,860
(8,185,372)
(31,199,169)
—
(6,631,874)
(24,362,823)
—
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 instrument.
63
26. Contingent liabilities and commitments
Contingent liability
As at 31 December 2012, the contingent liabilities in respect of legal litigations against the Group were N
=209 million
(2011: N
=191 million). According to the Directors and Solicitors acting on behalf of the Group, the 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.
Commitments
Lease commitments under operating leases for periods of no more than 12 months:
COMPANY
31-Dec
2012
31-Dec
2011
189,334
221,484
189,934
221,122
—
68,858
410,818
479,914
GROUP
(N
= ‘000)
Lease as lessee
Non-cancellable operating lease rentals
are payable as follows:
– Less than one year
– One to five years
Capital commitments
Authorised and committed
Total commitments
31-Dec
2012
31-Dec
2011
227,492
270,607
231,763
494,665
—
68,858
498,099
795,286
Capital commitments were made for capacity expansion projects in Apapa.
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.
27.
Events after the reporting period
There are no significant events after the reporting period.
28. Reported fraud
During the year fraud was discovered at two of the Company’s flour mills involving fraudulent trading on customers’
accounts. Appropriate action has been taken to strengthen internal controls and prevent recurrence of the fraud. The
cases have been reported to relevant law enforcement authorities and internal recovery efforts are on-going. Full
provision has been made in the financial statements for the net amount involved. Management has taken the
following steps to prevent fraudulent transactions:
—
The Internal Audit Function has been strengthened with the appointment of an external consultant as Group
Internal Auditors, in addition to the existing internal audit function.
—
Consulting advisers have also been engaged to carry out a review of all existing business processes and systems
with a view to identifying shortcomings, redesigning and standardizing business processes and implementing
system changes and organizational structures where necessary, including replacing the ERP system.
29. 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
Pasta: manufactures and sells spaghetti and macaroni
Sacks: 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 Group’s 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.
64
65
(826,464)
(1,409,450)
(2,235,914)
(2,028,669)
(4,264,583)
1,126,464
(3,138,119)
Abnormal items
Net finance costs
(Loss)/Profit before taxation
Income tax expense
(Loss)/Profit for the year
4,614,915
(1,484,265)
3,130,650
(1,757,420)
1,373,230
(583,078)
Abnormal items – Impairment allowance on trade receivables
Net finance costs
Profit/(loss) before taxation
Income tax expense
790,152
7,307,226
(2,951,783)
259,472
Profit/(loss) for the year
2,080,976
1,602,620
478,356
2,663,863
(1,061,243)
2,663,863
—
(473,277)
(605,472)
132,195
(627,749)
22,277
(627,749)
—
968,182
(1,633,938)
38,007
8,610,388
(7,642,206)
Pasta
products
639,028
487,672
151,356
908,290
(420,618)
908,290
—
1,461,801
(616,198)
62,687
183,264
(138,790)
322,054
(143,663)
4,873
(143,663)
—
1,401,233
(1,581,877)
36,981
38,679,844
14,156,824
12,581,764
(31,372,618) (12,695,023) (11,180,531)
Gross profit
Other income
Revenue
Cost of sales
For the year ended 31 December 2011
1,119,443
(2,360,838)
414,931
Gross profit
Other income
3,113,311
(628,002)
178,554
29,859,976
17,202,738
(28,740,533) (14,089,427)
Sacks
Revenue
Cost of sales
(N
=’000)
Flour
products
(956,339)
(956,339)
—
(929,915)
(26,424)
(929,915)
—
(77,978)
(874,324)
22,387
2,605,765
(2,683,743)
(732,916)
(732,916)
—
(707,390)
(25,526)
(707,390)
—
74,700
(815,725)
33,635
4,866,467
(4,791,767)
(7,031)
(7,031)
—
(7,031)
—
(7,031)
—
(7,031)
—
—
(1,742,871)
1,735,840
—
—
—
—
—
—
—
—
—
—
(1,864,232)
1,864,232
Profit and
Noodles Inter-group
products eliminations
The following is the analysis of the Group’s revenue and results from continuing operations by reportable segments:
29. Segment revenue and results
649,074
758,742
(109,668)
2,958,331
(2,199,589)
4,442,596
(1,484,265)
10,085,251
(6,024,182)
381,527
66,281,326
(56,196,075)
(2,263,336)
(4,000,351)
1,737,015
(907,190)
(3,093,161)
502,260
(1,409,450)
5,275,636
(5,438,503)
665,127
58,675,337
(53,399,701)
Total
66
(N
=’000)
19,623,645
(16,117,879)
13,189
1,101,981
1,342,514
2,180,284
306,786
—
785,596
4,409,978
1,030,864
1,088,030
8,591
978,267
1,524,658
1,201,078
657,417
70,379,238
21,345,226
20,390,328
(44,026,646) (13,161,266) (16,545,878)
59,191,844
22,380,625
(36,477,369) (12,165,428)
Sacks
Pasta
products
28,388,839
37,594,544
13,499,253
16,809,643
12,581,764
8,610,388
(25,937,401)
18,376,835
3,740
193,723
128,655
230,433
133,260
2,605,765
4,866,467
—
—
—
—
—
—
—
2,559,168 (28,031,278)
(5,363,612) 20,470,592
2,190,306
(5,741,651)
Profit and
Noodles Inter-group
products eliminations
The following is the analysis of Group’s revenue from continuing operations from its major products and services:
Revenue from major products and services
Impairment losses recognised during the year in
respect of property, plant and equipment
Depreciation
Additions to non-current assets
Depreciation
Additions to non-current assets
Other segment information
Total assets
Total liabilities
As at 31 December 2011
Total assets
Total liabilities
As at 31 December 2012
29. Segment revenue and results (continued)
Flour
products
66,281,326
58,675,337
25,520
3,059,567
7,405,805
4,642,659
2,185,493
86,642,682
(58,626,810)
77,449,018
(52,125,492)
Total
67
2,059,643
To pay providers of capital
Interest payable and similar charges
(68)
115
—
(166)
100
(1,289,111)
2,180,284
—
(3,138,119)
1,890,320
9
109
101
6,203,808
29,629
1,101,981
—
920,383
553,449
1,761,187
1,837,179
6,203,808
(27,319,652)
(5,419,623)
100
—
18
—
15
9
28
30
100
%
7,876,575
(1,941,011)
4,669,413
577,377
(2,769,723)
203,996
3,146,412
3,990,111
7,876,575
(20,737,509)
(30,779,631)
59,393,715
58,675,337
665,127
53,251
2012
N
=’000
100
(25)
59
7
(35)
3
40
51
100
%
Group
9,870,638
(502,649)
3,059,567
302,322
623,622
612,317
2,208,313
3,567,146
9,870,638
(48,933,339)
(7,867,600)
66,671,577
66,281,326
381,527
8,724
2011
N
=’000
100
(8)
31
3
9
6
22
36
100
%
This report is not required under IFRS. Instead, it has been prepared in compliance with the Companies and Allied Matters Act (CAMA) requirement.
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.
To provide for enhancement of assets and growth
Deferred taxation liability/(asset)
Depreciation
Non-controlling Interest
(Loss sustained)/profit retained
162,647
1,914,976
Applied as follows
To pay employees
Salaries, wages and other benefits
To pay government
Taxation
1,890,320
(17,278,420)
(11,137,141)
38,943,083
30,305,881
2011
N
=’000
38,679,844
259,472
3,767
100
%
29,859,976
414,931
30,974
2012
N
=’000
Value Added
Less: Bought in materials and services:
– Imported
– Local
Revenue
Other income
Interest income
NON-IFRS COMPLIANT STATEMENTS
Company
Consolidated Statement of Value Added
Five Years Financial Summary
As at 31 December
GROUP
IFRS
2012
N
=’000
Investments
Other long-term assets
Net current (liablities)/assets
IFRS
2011
N
=’000
NGAAP
2010
N
=’000
NGAAP
2009
N
=’000
NGAAP
2008
N
=’000
44,048,647
46,754,990
—
—
1,621,122
939,531
3,894
90,836
(5,548,354) (11,740,900)
41,229,708
—
—
—
(9,845,390)
35,238,199
—
328,067
—
(6,583,596)
32,449,283
601,900
—
—
(7,839,343)
40,125,309
36,044,457
31,384,318
28,982,670
25,211,840
(2,855,079)
(1,254,329)
(10,692,375)
(4,114,138)
(1,730,447)
(2,184,000)
(3,409,430)
(828,013)
—
25,323,526
28,015,872
27,146,875
28,422,744
24,629,803
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
2,500,000
18,116,249
3,812,016
201,538
25,323,526
28,015,872
27,146,875
28,422,744
24,629,803
Revenue
58,675,337
66,281,326
67,600,954
61,388,064
47,927,300
Other comprehensive income items
Taxation
Non-controlling interest
(4,000,351)
70,990
1,737,015
(577,377)
758,742
276,870
(109,668)
(302,322)
4,911,885
—
(2,189,310)
39,567
5,374,056
—
187,024
(30,348)
3,167,625
—
(178,066)
(42,111)
(Loss)/profit transferred to revenue reserve
(2,769,723)
623,622
2,762,142
5,530,732
2,947,448
(55)
5
12
6
55
5
111
6
59
5
Deferred taxation liabilities
Gratuity provision
Long-term loan
—
(559,926)
—
—
(582,037)
—
CAPITAL AND RESERVES
Share capital
Share premium
Retained earnings
Non-controlling interest
REVENUE AND PROFIT
Per share data — 50k ordinary share
Net assets (Naira)
Note:
1.
Earnings per share are based on profit after taxation and the number of issued and fully paid ordinary shares at the
end of each financial year.
2.
Net assets per share are based on net assets and the number of issued and fully paid ordinary shares at the end of
each financial year.
This report is not required under IFRS. Instead, it has been prepared in compliance with the Companies and
Allied Matters Act (CAMA) requirement.
68
Five Years Financial Summary
As at 31 December
COMPANY
Investments in subsidiary companies
Other long-term assets
Net current assets
Deferred taxation liabilities
Gratuity provision
Long-term loan
IFRS
2012
N
=’000
IFRS
2011
N
=’000
NGAAP
2010
N
=’000
NGAAP
2009
N
=’000
NGAAP
2008
N
=’000
18,747,467
7,553,637
1,001,483
—
9,613,645
20,633,574
7,553,637
455,913
83,502
2,472,543
19,880,243
7,553,637
—
—
2,829,608
18,961,805
7,463,637
328,067
—
460,695
15,732,634
7,463,637
—
—
337,950
36,916,232
31,199,169
30,263,488
27,214,204
23,534,221
(2,825,800)
(851,584)
(10,524,375)
(3,569,341)
(1,277,236)
—
(3,136,273)
(638,061)
—
—
(464,623)
—
—
(376,362)
—
22,714,473
26,352,592
26,489,154
26,749,581
23,157,859
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
2,500,000
18,116,249
2,541,610
22,714,473
26,352,592
26,489,154
26,749,581
23,157,859
Revenue
29,859,976
38,679,844
42,695,383
41,839,919
30,109,610
Other comprehensive income items
Taxation
(4,264,583)
—
1,126,464
1,373,230
130,231
(583,078)
5,481,077
–
(1,727,829)
5,156,801
–
203,060
1,758,137
–
(54,045)
(Loss)/profit transferred to revenue reserve
(3,138,119)
920,383
3,753,248
5,359,861
1,704,092
18
5.27
75
5.30
107
5.35
34
4.63
CAPITAL AND RESERVES
Share capital
Share premium
Retained earnings
REVENUE AND PROFIT
Per share data — 50k ordinary share
(Loss)/earnings — Basic (kobo)
Net assets (Naira)
(63)
4.54
Note:
1.
Earnings per share are based on profit after taxation and the number of issued and fully paid ordinary shares at the
end of each financial year.
2.
Net assets per share are based on net assets and the number of issued and fully paid ordinary shares at the end of
each financial year.
This report is not required under IFRS. Instead, it has been prepared in compliance with the Companies and
Allied Matters Act (CAMA) requirement.
69
Share Capital History/Data on Unclaimed Dividends
SHARE CAPITAL HISTORY
Dangote Flour Mills Plc was quoted on the Nigerian Stock Exchange on 4th February, 2008.
The share capital history of the Company is as indicated below:
Date
Authorised Share Capital
04/02/2008
Issued and Fully Paid
Consideration
Value
Shares
Value
Shares
3,000,000,000
6,000,000,000
2,500,000,000
5,000,000,000
Cash
DATA ON UNCLAIMED DIVIDENDS
Dividend
Year
70
No. of
Years
Total Amount
of Dividends
Declared
Total Amount
of Dividends
Transferred
to the Registrars
(Net Withholding
Tax)
Total
Dividends
Paid to
Investors by
the Registrars
Unclaimed
and
Returned to
the Company
Total Amount
of Unclaimed
Dividends
N
=
N
=
N
=
N
=
N
=
2009
1
1,000,000,000.00
2009
2
2010
900,000,000.00
810,677,244.42
—
89,322,755.58
1,500,000,000.00
1,350,000,000.00 1,184,813,868.24
—
165,186,131.76
3
2,500,000,000.00
2,250,000,000.00
1,957,413,968.10
—
292,586,031.90
2011
4
1,000,000,000.00
900,000,000.00
765,649,014.66
—
134,350,985.34
2012
5
500,000,000.00
450,000,000.00
392,724,872.10
—
57,275,127.90
Notes
71
Notes
72
FLOUR
Dangote Flour Mills Plc
RC 501757
Proxy Form
7TH ANNUAL GENERAL MEETING TO BE HELD AT
11.00 A.M. ON MONDAY, 19TH AUGUST, 2013 AT
TRANSCORP METROPOLITAN HOTELS, 10 MURTALA
MOHAMMED HIGHWAY, CALABAR, CROSS RIVER STATE.
I/We* ........................................................................................................
of ...............................................................................................................
hereby appoint ......................................................................................
...................................................................................................................
RESOLUTIONS
1.
To lay the Audited Financial Statements of the
Company for the year ended 31st December
2012 together with the reports of the Directors,
Auditors and the Audit Committee thereon
2.
To elect/re-elect Directors
3.
To authorize the Directors to fix the
remuneration of the Auditors
4.
To appoint members of the Audit Committee
5.
Special Business
Dated this ................ day of .......................................... 2013.
Signature .................................................................................................
NOTES
Please sign this proxy card and post it to reach the
registered office of the Company not less than 48 hours
before the time for holding the meeting.
2.
If executed by a corporation, the proxy card should be
sealed with the common seal.
3.
This proxy card will be used both by show of hands and
in the event of a poll being directed or demanded.
4.
In the case of joint holders the signature of any one of
them will suffice, but the names of all joint holders should
be shown.
AGAINST
To consider and if thought fit, pass the
following resolution as an Ordinary Resolution:
“That in accordance with Section 284 of the
Companies and Allied Matters Act Cap C20
Laws of the Federation of Nigeria, 2004, and
the Directors having so recommended and
subject to agreement being reached between
the Company and Dangote Industries Limited
(DIL), the sale to Dangote Industries Limited of
the shares held by the Company in the issued
share capital of Dangote Agrosacks Limited be
and is hereby approved subject to the Company
and Dangote Industries Limited executing a sale
and purchase agreement in relation to the
acquisition of the shares and obtaining all
requisite regulatory approvals, and that the
Directors be and are hereby authorised to apply
the proceeds of the sale to the business of the
Company as they may deem fit.”
of ...............................................................................................................
or failing him, the Chairman of the meeting, as my/our proxy
to act and vote for me/us and on my/our behalf at the Seventh
Annual General Meeting of the Company to be held at
11.00 a.m. on Monday, 19th August, 2013.
1.
FOR
6.
To consider and if thought fit pass the
following as a Special Resolution:
“That the DIrectors having so recommended,
the financial year of the Company be and is
hereby changed from 31 December to
30 September of each year.
The end of the first new financial year being
September, 2013 having a nine-month period.”
Please indicate with an “X” in the appropriate space how you wish your votes to be
cast on resolutions set out above. Unless otherwise instructed, the proxy will vote or
abstain from voting at his/her own discretion.
Before posting the above form, please sign/tear off this part and retain it for admission to the meeting.
Admission Card
PLEASE ADMIT THE SHAREHOLDER ON THIS FORM OR HIS/HER APPOINTED PROXY TO THE
7TH ANNUAL GENERAL MEETING TO BE HELD AT 11.00 A.M. ON MONDAY, 19TH AUGUST, 2013
AT TRANSCORP METROPOLITAN HOTELS, 10 MURTALA MOHAMMED HIGHWAY, CALABAR, CROSS RIVER STATE.
Name of Shareholder * ........................................................................................................................................................................................
IF YOU ARE UNABLE TO ATTEND THE MEETING
A member (shareholder) who is unable to attend Annual General Meeting is allowed by law to vote by proxy. A proxy
need not be a member of the Company. The above proxy card has been prepared to enable you exercise your right to
vote if you cannot personally attend.
No. of Shares held
Signature of person attending
IMPORTANT
Please insert your name in BLOCK CAPITALS on both proxy and admission card where marked *.
Dated this 3rd day of June, 2013
The Registrars
EDC Registrars Ltd.
154, Ikorodu Road, Onipanu,
Shomolu, Lagos.
Printed by Academy Press Plc., Lagos.

for 2012 - Tiger Brands

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