Dangote flour mill annual report 2012

VisionTo be a world class enterprise thatis passionate about the quality oflife of the general populace and

giving high returns to stakeholders.

MissionTouch the lives of people byproviding their basic needs.

D A N G OT E F L O U R M I L LS P L C 1

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

2 D A N G OT E F L O U R M I L LS P L C

NOTICE IS HEREBY GIVEN that the 7th ANNUAL GENERAL MEETING OF DANGOTE FLOUR MILLS PLC will be held atTranscorp 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 thereports 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 ofNigeria, 2004, and the Directors having so recommended and subject to agreement being reached between theCompany and Dangote Industries Limited (DIL), the sale to Dangote Industries Limited of the shares held by theCompany in the issued share capital of Dangote Agrosacks Limited be and is hereby approved subject to theCompany and Dangote Industries Limited executing a sale and purchase agreement in relation to the acquisition ofthe shares and obtaining all requisite regulatory approvals, and that the Directors be and are hereby authorised toapply 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 from31 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 andvote instead of him. A proxy need not be a member of the Company. A proxy for an organization may vote on a show ofhands and on a poll. For the appointment to be valid, a completed Proxy Form must be deposited at the registered officeof 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 onFriday, 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 ashareholder for appointment to the Audit Committee. Such nomination should be in writing and should reach theCompany 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 PLCTerminal ‘E’Greenview Development Nigeria Ltd Building (2nd Floor)Apapa [email protected]

Notice of 7th Annual General Meeting



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 theNigerian Stock Exchange (NSE) with the symbol “DANGFLOUR”. The Group’s ultimate parent company is Tiger BrandsLimited listed on the Johannesburg Stock Exchange.

REGISTERED OFFICES

Terminal ‘E’Greenview Development BuildingApapa WharfLagosNigeria.

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 Diamond Bank PlcMainstreet Bank Limited Access Bank PlcSterling Bank Plc First City Monument Bank PlcFirst Bank of Nigeria Plc United Bank for Africa PlcGTBank 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) Alh. A. Dangote, GCONMr. S. Olarinde (Reappointed 20th February, 2013) Alh. S. Dangote (Resigned 4th October, 2012)Mr. N. K. Somani (Resigned 5th March, 2012) Mr. O. AlakeMr. E. Etim (Resigned 4th October, 2012) Mr. U. Nwankwo (Resigned 4th October, 2012)

Alh. A. Dantata (Resigned 4th October, 2012)Mr. A. IghodaloBrig-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)


Financial Highlights

COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

29,859,976 38,679,844 Revenue 58,675,337 66,281,326

(826,464) 4,614,915 Operating (loss)/income before abnormal items 502,260 4,442,596

(1,409,450) (1,484,265) Abnormal items (1,409,450) (1,484,265)

(4,264,583) 1,373,230 (Loss)/profit before taxation (4,000,351) 758,742

1,126,464 (583,078) Taxation 1,737,015 (109,668)

(3,138,119) 790,152 (Loss)/profit for the year (2,263,336) 649,074

BALANCE SHEET

2,500,000 2,500,000 Share capital 2,500,000 2,500,000

22,714,473 26,352,592 Total equity 25,323,526 28,015,872

Per 50 kobo share data (kobo)

— Earnings per share (55.39) 12.47

— Dividend per share — 10


Chairman’s Statement

D

Alhaji Aliko Dangote, GCONChairman

The most significant development during the yearwas the sale of 63.35% of the Company’s issuedshare capital to Tiger Brands Limited of SouthAfrica on the 4th of October 2012. Tiger Brandsnow has a controlling stake in Dangote Flour MillsPlc and has since assumed management controlof the Company’s operations. We are excited aboutour future prospects under Tiger Brands’management control and look forward to thecontribution of their specialised expertise in thecore activities of the Company.

COMPANY PERFORMANCE

Dangote Flour Mills Plc recorded a turnover ofN=58.68 billion in 2012. The loss before tax andafter abnormal items was N=4 billion. The abnormalitem represents a N=1.409 billion provision fordoubtful trade debts. Recovery efforts are on-goingto ensure that the amounts that are overdue willbe substantially recovered.

The loss after tax and after exceptional items wasN=2.263 billion.

Although the performance of the Company for2012 was disappointing, we remain confident thata turnaround is imminent and that we can lookforward to improved performance in the future.

THE BOARD

Since the last Annual General Meeting, there havebeen a few changes on the Board’s composition.Mr. Nthabisheng Segoale was appointed as theGroup Managing Director/CEO to run theoperational affairs of the Company. He wasseconded to join the Company by Tiger BrandsLimited in October of 2012 and he replaces Mr.Ekanem Etim who resigned in October of 2012.His appointment will be ratified during the courseof this meeting.

Mr. Asue Ighodalo, Mr. Olakunle Alake and myselfwill be retiring by rotation as Directors of theCompany and we hereby offer ourselves for re-election in line with corporate governanceguidelines.

istinguished Shareholders, Members ofthe Board of Directors, Representativesof the SEC, NSE, CAC and other

Regulators here present, Invited Guests,Gentlemen of the Press, Ladies and Gentlemen.

I have the pleasure to welcome you to the 7thAnnual General Meeting of our Company, DangoteFlour Mills Plc.

I would like to present you with an overview ofour operations and other events that shaped theyear under review. We have had to deal with manychallenges during the 2012 financial year mostnotably the significant increase in the cost of wheatas a result of the escalation in international pricesand the introduction of an additional import tariffof 15% on imported wheat effective since July2012. In addition, unfortunate challenges ofinsecurity in the northern part of the countrynegatively affected sales in the region andfacilitated the entry of illegal imports. As a result,our sales volumes were negatively impacted bythese events.


Chairman’s Statement

OUR STAFF

Our employee base in various areas of thebusiness was further strengthened with theappointment of several ex-Tiger Brands technicalexperts and management staff. We therefore lookforward to further improvements in productivityand the level of competitiveness of our Company.We have also embarked on specific interventionsto further enhance the welfare of our employeessuch as mentorship and training programmes toimprove the overall skill level across the business.We remain confident that the realisation of theseobjectives should deliver significant improvementsin internal controls, efficiency and performance.

THE FUTURE

Following the handover of management controlto Tiger Brands, the Company has embarked on aturnaround plan that is aimed at reducing the costbase, improving supply chain efficiencies and theconsistency of the quality of our products. Thisincludes investments in improving our brands aswell as service levels to our customers. Capitalexpenditure projects have also been initiated toenhance business process controls and systemsas well as enable the development of additionalrevenue streams that will grow the turnover ofour Company in the future. We are also developingvarious strategies to recover market share acrossall the key categories and to improve our marketpenetration via new channels in order tostrengthen the presence of our products in otherparts of the country.

CUSTOMERS

Our key partners in the business, our customers,continue to remain the cornerstone of DangoteFlour Mills Plc. Notwithstanding the challenges wefaced during the 2012 financial year, we continuedto receive excellent patronage from some of ourkey customers of many years. We are immenselygrateful for this unwavering support and remainconfident that under the new management, youwill see new value propositions for our productsas well as stronger service levels. On behalf of theBoard, Management and Staff of the Company, Ihereby wish to say a big thank you to all ourcustomers.

APPRECIATION

On behalf of the Board of Directors, I would alsolike to express our heartfelt appreciation to theManagement and Staff of the various businessesfor their continued dedication, support andcommitment during the year. I also take thisopportunity to wish the new management teamand all other newly appointed staff the very bestin all their endeavours to reposition our Companyas 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 continuedconfidence in Dangote Flour Mills Plc.

Thank you and God bless.

Alhaji Aliko Dangote, GCONChairman


Dear Shareholders,

PROPOSED DIVESTMENT OF THE ENTIRE EQUITY INTEREST OF DANGOTE FLOUR MILLS PLC IN DANGOTE AGROSACKSLIMITED

As you are aware, your Company, Dangote Flour Mills Plc (“DFM” or “the Group” or “Company”) is the second largest flourmiller 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 industrypositioning. The Group currently has a diversified business portfolio; which are its 99% equity stake in Dangote PastaLimited (“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 consideringoptimizing the Group’s business portfolio for enhanced value to shareholders. Whilst DPL and DNL are aligned with DFMas food related businesses with significant synergistic benefits along the value chain, DASL is not a core business of theGroup. In furtherance of this strategic focus, and to optimise the portfolio of businesses within the DFM group, DFMwishes to divest its entire equity interest in DASL for a cash consideration which will be retained in the Company toreduce 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% subsidiarycompany, Obajana Agrosacks Limited, have a total of 10 Cement Bag production lines and 6 regular lines across 3 plantlocations (Oba Akran and Israel Adebajo, in Lagos and Obajana in Kogi State). DASL’s core product remains the manufacturingof bags, however, revenue is also generated from production and sale of Blown Film, Polypropylene Mats, Ball Twine andSewing thread which are produced from waste from the bag production process. Notably, an average of 75% of the totalbags 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 ofDASL to DIL’s cement business. Given that DIL is the single major customer of DASL, accounting for over 75% of DASL’ssales, your Board is considering DIL’s proposal on an arm’s length basis and I am pleased to inform you that preliminarydiscussions 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 andDangote Industries Limited (DIL), the sale to Dangote Industries Limited of the shares held by the Company in the issuedshare capital of Dangote Agrosacks Limited be and is hereby approved subject to the Company and Dangote IndustriesLimited executing a sale and purchase agreement in relation to the acquisition of the shares and obtaining all requisiteregulatory approvals, and that the Directors be and are hereby authorised to apply the proceeds of the sale to thebusiness 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 aidyour 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 formallynotified in compliance with its rules.

I look forward to welcoming you to the meeting.

Yours faithfully,

Alhaji (Dr.) Aliko Dangote, GCONChairman

Explanatory Statement to the Shareholders of Dangote Flour Mills Plc


Report of the DirectorsFor 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 yearended 31 December, 2012.

2. RESULTGroup CompanyN=’000 N=’000

Turnover 58,675,337 29,859,976Total comprehensive loss (2,192,346) (3,138,119)

3. 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 andcommenced operations as a public limited liability company on 1 January, 2006. The Company was quoted on TheNigerian Stock Exchange on 4 February, 2008. Its principal activities are the milling, processing and marketing ofbranded flour.

5. DIRECTORS AND DIRECTORS’ INTEREST

The names of Directors who are currently in office are as follows:

Alhaji Aliko Dangote, GCONAlhaji Sani Dangote — Resigned 4th October, 2012Mr. Olakunle AlakeMr. Uzoma Nwankwo — Resigned 4th October, 2012Alhaji Abdu Dantata — Resigned 4th October, 2012Alhaji Abdullahi S. Mahmoud — Resigned 4th October, 2012Mr. Asue IghodaloBrig-Gen. S. L.. Teidi (Rtd), OFR — Resigned 4th October, 2012Mr. Narendra Kumar Somani — Resigned 5th March, 2012Mr. Ekanem Etim — Resigned 4th October, 2012Mr. Ian Isdale — Appointed 20th February, 2013Mr. Suleiman Olarinde — Resigned 4th October, 2012 and reappointed on 20th February, 2013Mr. Peter Bambatha Matlare — Appointed 4th October, 2012Mr. Nthabisheng Segoale — Appointed 4th October, 2012Ms. Olufunke Ighodaro — Appointed 4th October, 2012Mr. Patrick Sithole — Appointed 4th October, 2012Mr. Thushen Govender — Appointed 4th October, 2012



In accordance with the provisions of Section 259 of the Companies and Allied Matters Act 1990, one-third of theDirectors of the Company shall retire from office annually. The retiring Directors shall be those who have beenlongest 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 DangoteAlhaji Abdu DantataMr. Uzoma NwankwoBrig.-Gen. S. L.. Teidi (Rtd)Alhaji Abdullahi S. MahmoudMr. Ekanem Etim andMr. Suleiman Olarinde

The following Directors were appointed by the Board since the most recent Annual General Meeting to representthe interest of the majority investor, Tiger Brands Limited of South Africa (“Tiger brands”):

Mr. Peter Bambatha MatlareMs. Olufunke IghodaroMr. Thushen GovenderMr. Patrick SitholeMr. Ian Isdale

Mr. Nthabisheng Segoale was appointed as Group Chief Executive Officer and Mr. Suleiman Olarinde was reappointedas Finance Director.

In accordance with the provisions of Article 77 of the Company’s Articles of Association and Section 249(3) of theCompanies and Allied Matters Act 1990, the appointed Directors retire at this meeting and being eligible offerthemselves 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 asnotified by them for the purpose of Section 275 of the Companies and Allied Matters Act , C20 Laws of the Federationof Nigeria 2004 are as follows:

Number of 50k Shares heldDirectors as at 31 December, 2012

Alhaji Aliko Dangote 38,728,948Mr. Peter Bambatha Matlare —Mr. Olakunle Alake 2,377,500Mr. Nthabisheng Segoale —Ms. Olufunke Ighodaro —Mr. Patrick Sithole —Mr. AsueIghodalo —Mr. Thushen Govender —

6. DIRECTORS’ RESPONSIBILITIES

The Directors are responsible for the preparation of financial statements which give a true and fair reflection of thestate of affairs of the Company at the end of the financial year and of the profit or loss for that period and whichcomplies with the Companies and Allied Matters Act , C20 Laws of the Federation of Nigeria 2004. In doing so theyensure that:

(a) Proper accounting records are maintained which disclose with reasonable accuracy the financial position ofthe Company and the Group and which ensure that the financial statements comply with the requirements ofthe 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 theassets 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 theCompany with the interests of all stakeholders. This, in the long run, will result in a beneficial relationship and long-term growth.

Dangote Flour Mills Plc embraces good corporate governance as a key strategy in achieving business successincorporating 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 corporategovernance and endeavours to conduct the business of the Company and Group in a fair, honest and transparentmanner 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 with3,167,716,667 and Dangote Industries Limited with 500,000,000 ordinary shares of 50k each held more than 5% ofthe 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, themarket 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 andworthy 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 thestate of affairs of the Company as at 31 December, 2012 and the profit for the year ended on that date which havenot 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 mainsuppliers are Cargill International SA, Ameropa S.A, Vitachem Nigeria Limited and Biochemical Derivatives NigeriaLimited.



15. ANALYSIS OF SHAREHOLDINGS

Analysis of shareholdings as at 31 December, 2012:

No. of Holders Holders Units UnitsRange Holders % Cumulative Units % Cumulative

1 — 1,000 145,724 43.21 145,750 129,568,131 2.59 129,568,131

1,001 – 5,000 170,309 50.49 316,033 309,874,567 6.20 439,442,698

5,001 – 10,000 12,820 3.80 328,853 85,780,452 1.72 525,223,150

10,001 — 50,000 6,994 2.07 335,847 132,780,471 2.66 658,003,621

50,001 — 100,000 728 0.22 336,575 54,449,171 1.09 712,452,792

100,001 — 500,000 562 0.17 337,137 116,893,211 2.34 829,346,003

500,001 — 1,000,000 67 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 1.06 1,092,145,306

10,000,001 — 50,000,000 5 0.00 337,286 121,337,949 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

2,000,000,001 — 5,000,000,000 1 0.00 337,290 3,167,716,667 63.35 5,000,000,000

Total 337,290 100.00 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 ofthe most suitable individuals after interview and thorough scrutiny. The Company employs managementprofessionals and technical expertise and continues to invest in developing such skills and maintaining setstandards. 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 workingenvironment. It does so through implementation of the following initiatives:

Maintaining a high standard of hygiene in all its premises through sanitation practices and the regularfumigation exercises have been further strengthened by the installation of pest and rodent control measures;

Safety and environment workshops have been organised for all employees with a broad focus on a goodhouse-keeping to ensure a safe working environment;

Nutritionally balanced meals are provided in staff canteens at subsidized prices at the various factory sites;

The use of safety shoes, goggles and aprons etc. by employees is enforced;

The Company carries out safety and fire awareness drills for all employees on a regular basis;

As a guide in the performance of all functions, a written safety policy for ensuring safe working practices isin place;

Safety Officers and Security Supervisors are at hand to ensure the use of and implementation of safetysystems and procedures;

There is a clinic within each factory to provide adequate medical care in the event of accidents or anyemergency in the work place;

The Company allows employees and their immediate families to attend good hospitals at its expenseunder the Company’s Hygeia Scheme;

Fire prevention and fire-fighting equipment are installed in strategic positions within the premises of eachfactory.


3. Employee Development

Local and overseas training and development programmes have been organized to meet the needs of theCompany’s modernization and automation strategy implementation. The Company continues to place apremium on its human capital development arising from the fact that this would ensure improved efficiency ofthe business and maintain a strategic advantage over the competition. On the other hand, employees are fullyequipped to provide quality service which ultimately will be beneficial to the organization and thus contributeto 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 theFederation 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

Alhaji Abdullahi S. Mahmoud — Director/Member — Resigned 4th October, 2012

Ms. Olufunke Ighodaro — 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 ActCap C20 (Law) of the Federation of Nigeria, 2004.

18. AUDITORS

Messrs Akintola Williams Deloitte (Chartered Accountants) have indicated their willingness to continue in office asthe 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 toformalise their remuneration.

BY ORDER OF THE BOARD

AISHA LADI ISA (MRS)Company Secretary

2nd Floor, GDNL BuildingTerminal ‘E‘Apapa WharfApapa — Lagos

Dated this 2nd day of May, 2013



Corporate Governance Report

DANGOTE FLOUR MILLS PLC is committed to best practice and procedures in corporate governance. It recognises thatcorporate governance is fundamental to earning the confidence and trust of the shareholders. It provides the structurethrough which the objectives of the Company are set and the means of attaining such objectives. Overseen by the Boardof Directors, corporate governance practices are constantly under review in line with the dynamics of the businessenvironment.

The corporate governance policies adopted by the Board of Directors are designed to ensure that the Company’s businessis conducted in a fair, honest and transparent manner which conforms to high ethical standards. The code of corporategovernance for public companies provides the basis for promoting sound corporate governance in the Company. Thegovernance framework helps the Board to discharge its duties of providing oversight and strategic counsel in balancewith 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 TigerBrands.

The Board

Appointment to the Board is made by Shareholders at the Annual General Meeting on the recommendation of the Boardof Directors.

The Board consists of ten (10) members comprising the Chairman, Group Chief Executive Officer, one (1) ExecutiveDirector 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 supportedin 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:

Ensure that the Company’s operations are conducted in a fair and transparent manner that conforms to high ethicalstandards;

Ensure integrity of the Company’s financial and internal control policies;

Ensure the accuracy, adequacy and timely rendition of the statutory returns and financial reporting to the regulatoryauthorities (NSE, CAC, SEC) and Shareholders;

Ensure value creation for the Shareholders, employees and other stakeholders;

Review and approve corporate policies, strategy, annual budget and business plans;

Monitor implementation of policies and the strategic direction of the Company;

Set performance objectives, monitor implementation and corporate performance;

Review and approve all major and capital expenditure of the Company;

Ensure that the statutory rights of all Shareholders are protected at all times;

Provide the Company with entrepreneurial leadership within a framework of prudent and effective controls whichenables risk to be assessed and managed;

Deploy the Company’s resources to profitable use;

Outline the Company’s strategic and corporate aims;

Ensure that the necessary financial and human resources are in place for the Company to meet its objectives;

Review management performance on a continuous basis;

Set the Company’s values and standards;

Take decisions objectively in the interest of the Company;

Ensure that its obligations to its Shareholders and other stakeholders are understood and met;

Constructively challenge and help develop proposals on strategies developed by Management.

The Board carries out some of the above responsibilities through the Board Committees whose terms of reference set outclearly their roles, responsibilities, scope of authority and procedure for reporting to the Board. Each committee is presided



over by a non-Executive Director to ensure strict compliance with the principles of good corporate governance, while theAudit Committee has a representative of the shareholders as its Chairman. The Chairman of the Board is not a memberof any of the Committees.

Members of the Board of Directors hold quarterly meetings to decide on policy matters and direct the affairs of theCompany and Group, review its performance, its operations, finances and formulate growth strategies. Attendance atDirectors’ 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 forinspection at the Annual General Meeting. The remuneration of Executive Directors is fixed and reviewed by a committeeof 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 asapproval of Corporate Strategy, Annual Corporate Plan, review of internal risk management and control systems, reviewperformance and direct the affairs of the Company, its operations, finances and formulate growth strategies. It mayhowever, 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 clearlyset out their roles, responsibilities, scope of authority and procedure for reporting to the Board.

1. Governance/Remuneration Committee

Composition:

Mr. Asue IghodaloAlhaji Abdu Dantata — (Resigned 4th October, 2012)Mr. Uzoma Nwankwo — (Resigned 4th October, 2012)Mr. Peter Bambatha Matlare — (Appointed 20th February 2013)Mr. Olakunle Alake — (Appointed 20th February 2013)

Functions:

(i) To review and make recommendations to the Board for approval of the Company’s human resources policyand 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 compensationfor executive and senior management.

(iv) Such other matters as the Board may delegate to the Committee.

2. Finance and Investment Committee

Composition:

Ms. Olufunke Ighodaro — ChairmanMr. Asue Ighodalo — MemberMr. Olakunle Alake — MemberAlhaji Abdullahi S. Mahmoud — (Resigned 4th October, 2012)Brig-Gen. S. L. Teidi (Rtd), OFR — (Resigned 4th October, 2012)

Functions:

(i) To consider periodic financial statements.(ii) To review Company activities, make projections and forecast for its growth.(iii) To identify variances in the market.(iv) To review developments in the Company.(v) To identify and discuss new products and processes.(vi) To ensure that the Company is up to date with significant changes in accounting policies.


(vii) Overseeing the management and conduct of the business.(viii) Ensuring the integrity of financial reports.(ix) Overseeing the effectiveness and adequacy of internal control measures.

3. The Audit Committee

The Audit Committee is made up of six (6) members, consisting of three (3) representatives of the shareholders andthree (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 — Shareholder/ChairmanMr. Eric Akinnifesi Akinduro — ShareholderAlhaji Kasumu Ibrahim — ShareholderMr. Asue Ighodalo — DirectorMr. Olakunle Alake — DirectorMs. Olufunke Ighodaro — DirectorAlhaji Abdullahi S. Mahmoud — Director (Resigned 4th October, 2012)

In addition to its responsibility to review the scope, independence and objectivity of the external audit, the AuditCommittee carries out all such matters as are reserved to the Audit Committee by the Companies and Allied MattersAct, Cap C20 (Law) of the Federation of Nigeria, 2004, listed below:

Ensuring the independence and objectivity of the Audit (Statutory and Internal)

Review adequacy and effectiveness of Dangote Flour Mills Plc internal control policies prior to endorsement bythe Board.

Direct and supervise investigations on matters within the scope, such as evaluations of the effectiveness of theCompany’s internal control system, cases of employee, business partner and client misconduct or conflict ofinterest.

COMPLIANCE STATEMENT

The Company filed its 2011 audited accounts with The Exchange in default of 21 days for which the sum of N=400,000.00was paid as a penalty.

The Board will ensure maximum compliance in the coming year. However, The Nigerian Stock Exchange had earlierextended the time for submission to 30 April, 2012.

ATTENDANCE OF MEETINGS BY MEMBERS OF THE BOARD/BOARD COMMITTEES FROM 1ST JANUARY TO 31DECEMBER 2012

BOARD OF DIRECTORS’ MEETINGS

Attendance

16th May 28th May, 5th July, 10th September, 2nd October, 4th October,2012 2012 2012 2012 2012 2012

Alhaji Aliko Dangote, GCON � � A � � �

Alhaji Sani Dangote � � � � A �

Mr. Olakunle Alake � � � � � �

Alhaji Abdullahi S. Mahmoud � � � � � �

Mr. Uzoma Nwankwo � � � � � �

Alhaji Abdu Dantata � � � � A �

Mr. Asue Ighodalo � � � � � �

Brig-Gen. S. L. Teidi (Rtd), OFR � � � � � �

Mr. Ekanem Etim � � � � � �

Mr. Suleiman Olarinde � � � � � �



FINANCE AND INVESTMENT COMMITTEE MEETINGS

Attendance

15th May, 2012 28th May, 2012 10th September, 2012

Alhaji Abdullahi S. Mahmoud � � �

Mr. Olakunle Alake � � �

Brig-Gen. S. L. Teidi (Rtd), OFR � � �

Mr. Ekanem Etim � � �

Mr. Suleiman Olarinde � � �

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 � � � �

Alhaji Abdullahi S. Mahmoud A � � �



Statement of Management’s ResponsibilitiesFOR THE PREPARATION AND APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 31 December, 2012

The Directors of Dangote Flour Mills Plc are responsible for the preparation of the consolidated financial statements thatpresent fairly the financial position of the Group as at 31 December 2012, and the results of its operations, cash flows andchanges 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 andunderstandable information;

— Providing additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enableusers to understand the impact of particular transactions, other events and conditions on the Company’s financialposition 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 theGroup 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 withIFRS;

— 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.

Mr. Nthabisheng Segoale Mr. Suleiman OlarindeGroup Chief Executive Officer Finance Director

FRC/2013/IODN/00000002455 FRC/2013/ICAN/00000002454

29 May, 2013 29 May, 2013


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 examinedthe Auditors’ report for the year ended 31st December, 2012. We have obtained all the information and explanations werequired.

In our opinion, the Auditors’ report is consistent with our review of the scope and planning of the audit. We are alsosatisfied that the accounting policies of the Company are in accordance with the legal requirements and agreed ethicalpractice. Having reviewed the Auditors’ findings and recommendations on Management matters, we are satisfied withManagement’s response therein.

Mr. Alex AdioChairman, Audit Committee

Dated this 2nd day of May, 2013

Members of the Committee

Alhaji Kasimu IbrahimMr. Eric Akinnifesi AkinduroMr. Asue IghodaloMs. Olufunke IghodaroMr. Olakunle Alake

Report of the Audit Committee


REPORT OF THE INDEPENDENT AUDITORSTO 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 itssubsidiaries 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 cashflow statement for the years ended 31 December 2012 and 31 December 2011 and a summary of significant accountingpolicies 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 inaccordance with the Companies and Allied Matters Act CAP C20 LFN 2004, the Financial Reporting Council of Nigeria ActNo. 6, 2011, International Financial Reporting Standards and for such internal controls as the Directors determine necessaryto enable the preparation of consolidated financial statements that are free from material misstatement, whether due tofraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conductedour audit in accordance with International Standards on Auditing. Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements arefree from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of materialmisstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditorsconsider internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion onthe effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of accounting estimates made by Directors, as well as evaluating the overallpresentation 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 financialposition 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 inaccordance with the Companies and Allied Matters Act CAP C20 LFN 2004, the Financial Reporting Council of Nigeria ActNo. 6, 2011 and International Financial Reporting Standards.

Chartered AccountantsLagos, Nigeria

29 May 2013

FRC number: FRC/2013/ICAN/00000001364

Akintola Williams Deloitte235 Ikorodu Road, IlupejuP.O. Box 965, MarinaLagos,Nigeria

Tel: +234 (1) 271 7800Fax: +234 (1) 271 7801www.deloitte.com/ng

Report of the Independent Auditors


Consolidated and Separate Statements of Profit and LossFor the year ended 31 December, 2012

COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) Notes 2012 2011

29,859,976 38,679,844 Revenue 5 58,675,337 66,281,326

(28,740,533) (31,372,618) Cost of sales (53,399,701) (56,196,075)

1,119,443 7,307,226 Gross profit 5,275,636 10,085,251

(2,360,838) (2,951,783) Distribution and administrative expenses (5,438,503) (6,024,182)

414,931 259,472 Other income 6 665,127 381,527

Operating (loss)/income before(826,464) 4,614,915 abnormal items 6 502,260 4,442,596

(1,409,450) (1,484,265) Abnormal items 7 (1,409,450) (1,484,265)

Operating (loss)/income after(2,235,914) 3,130,650 abnormal items (907,190) 2,958,331

(2,059,643) (1,761,187) Finance costs 8 (3,146,412) (2,208,313)

30,974 3,767 Interest received 8 53,251 8,724

(4,264,583) 1,373,230 (Loss)/profit before taxation (4,000,351) 758,742

1,126,464 (583,078) Taxation 9 1,737,015 (109,668)


Attributable to:(3,138,119) 790,152 Owners of the parent (2,840,713) 346,752

— — Non-controlling interests 577,377 302,322

(3,138,119) 790,152 (2,263,336) 649,074


Consolidated and Separate Statements of Comprehensive IncomeFor the year ended 31 December, 2012

COMPANY GROUP



Other comprehensive income:

— 130,231 Actuarial Gains — Assumption 2,382 196,820

— — Actuarial Gains — Experience 68,608 80,050

Total comprehensive (loss)/(3,138,119) 920,383 profit for the year (2,192,346) 925,944

Attributable to:

(3,138,119) 920,383 Owners of the parent (2,769,723) 623,622

— — Non-controlling interests 577,377 302,322

(3,138,119) 920,383 (2,192,346) 925,944

Basic (loss)/earnings per share (kobo) 10 (55.39) 12.47

The accompanying notes on pages 26 to 66 form an integral part of these consolidated and separate financial statements.


Consolidated and Separate Statements of Financial PositionAs at 31 December, 2012

COMPANY GROUP

31-Dec 31-Dec 1-Jan 31-Dec 31-Dec 1-Jan2012 2011 2011 (N=’000) Notes 2012 2011 2011

Assets27,302,587 28,726,626 28,421,024 Non-current assets 45,673,663 47,785,357 42,917,033

18,747,467 20,633,574 20,458,482 Property, plant and equipment 11 44,048,647 46,754,990 42,490,4987,553,637 7,553,637 7,553,637 Interest in subsidiary companies 12 — — —

— 83,502 10,765 Long-term receivables 15 3,894 90,836 28,3951,001,483 455,913 398,140 Deferred taxation asset 13 1,621,122 939,531 398,140

31,889,255 41,652,612 32,276,278 Current assets 31,775,355 38,857,325 28,820,545

7,317,448 4,899,135 2,926,685 Inventories 14 12,946,862 11,671,814 8,257,4593,732,123 5,608,778 9,115,070 Trade and other receivables 15 11,927,694 11,363,897 13,259,241

16,953,231 16,123,486 13,493,230 Amounts owed by subsidiaries 12 — — —3,025,036 13,734,353 5,252,555 Short-term loans receivable 16 5,083,533 13,390,095 5,113,774

861,417 1,286,860 1,488,738 Cash and bank balances 17 1,817,266 2,431,519 2,190,071

59,191,842 70,379,238 60,697,302 Total assets 77,449,018 86,642,682 71,737,578

Equity and liabilities22,714,473 26,352,592 26,432,209 Issued capital and reserves 24,244,178 27,513,901 27,890,279

2,500,000 2,500,000 2,500,000 Ordinary share capital 18 2,500,000 2,500,000 2,500,00018,116,249 18,116,249 18,116,249 Share premium 18 18,116,249 18,116,249 18,116,2492,098,224 5,736,343 5,815,960 Retained earnings 3,627,929 6,897,652 7,274,030

— — — Non-controlling interests 1,079,348 501,971 199,649

22,714,473 26,352,592 26,432,209 Total equity 25,323,526 28,015,872 28,089,928

14,201,759 4,846,577 4,565,424 Non-current liabilities 14,801,783 8,028,585 5,595,727

2,825,800 3,569,341 3,481,939 Deferred taxation liability 13 2,855,079 4,114,138 4,075,396851,584 1,277,236 1,083,485 Retirement benefit obligation 19 1,254,329 1,730,447 1,520,331

10,524,375 — — Long-term borrowings 20 10,692,375 2,184,000 —

22,275,610 39,180,069 29,699,669 Current liabilities 37,323,709 50,598,225 38,051,923

5,173,728 5,301,029 3,819,144 Trade and other payables 21 10,433,756 11,636,188 8,672,256212,284 1,114,176 697,372 Taxation 9 401,155 1,333,931 1,001,464

15,178,614 23,206,774 20,504,053 Short-term borrowings 22 24,346,967 27,325,891 22,046,523216,669 216,669 1,900,472 Shareholders for dividend 216,669 216,669 1,900,472

1,331,717 1,156,049 910,005 Amounts owed to subsidiaries 12 — — —162,598 8,185,372 1,868,623 Bank overdrafts 1,925,162 10,085,546 4,431,208

59,191,842 70,379,238 60,697,302 Total equity and liabilities 77,449,018 86,642,682 71,737,578

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:

Alhaji Aliko Dangote, GCON Mr. Nthabisheng Segoale Mr. Suleiman OlarindeChairman Group Chief Executive Officer Finance DirectorFRC/2013/IODN/00000001766 FRC/2013/IODN/00000002455 FRC/2013/ICAN/00000002454


Consolidated and Separate Statements of Changes in EquityFor the year ended 31 December, 2012

Share Totalcapital attributable Non-

and Accumulated to owners of controlling Total(N=’000) Notes premium profits the parent interests equity

Group

Balance at 1 January 2011 20,616,249 7,274,030 27,890,279 199,649 28,089,928

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

Dividends on ordinary shares 10 — (1,000,000) (1,000,000) — (1,000,000)

Balance at 31 December 2011 20,616,249 6,897,652 27,513,901 501,971 28,015,872

Loss for the year — (2,840,713) (2,840,713) 577,377 (2,263,336)


20,616,249 4,127,929 24,744,178 1,079,348 25,823,526

Dividends on ordinary shares 10 — (500,000) (500,000) — (500,000)

Balance at 31 December 2012 20,616,249 3,627,929 24,244,178 1,079,348 25,323,526

Company

Balance at 1 January 2011 20,616,249 5,815,960 26,432,209 — 26,432,209

Profit for the year — 790,152 790,152 — 790,152


20,616,249 6,736,343 27,352,592 — 27,352,592

Dividends on ordinary shares 10 — (1,000,000) (1,000,000) — (1,000,000)

Balance at 31 December 2011 20,616,249 5,736,343 26,352,592 — 26,352,592

Loss for the year — (3,138,119) (3,138,119) — (3,138,119)

Other comprehensive income for the year — — — — —

20,616,249 2,598,224 23,214,473 — 23,214,473

Dividends on ordinary shares 10 — (500,000) (500,000) — (500,000)

Balance at 31 December 2012 20,616,249 2,098,224 22,714,473 — 22,714,473


Consolidated and Separate Statements of Cash FlowsFor the year ended 31 December, 2012

COMPANY GROUP


796,746 6,112,335 Cash operating profit A 4,471,455 8,059,803

(2,075,911) 1,452,708 Working capital changes B (4,270,941) (101,785)

(1,279,165) 7,565,043 Cash generated (used in)/from operations 200,514 7,958,018

30,974 3,767 Interest received 53,251 8,724

(2,059,643) (1,761,187) Finance costs (3,146,412) (2,208,313)

(1,064,539) (136,645) Taxation paid C (1,136,772) (279,850)

Net cash inflow/(outflow) from operating(4,372,373) 5,670,978 activities (4,029,419) 5,478,579

(313,116) (1,342,514) Purchase of property, plant and equipment E (1,998,898) (7,405,805)

Proceeds on disposal of property, plant and161,083 — equipment 168,153 11,092

(152,033) (1,342,514) Net cash outflow from investing activities (1,830,745) (7,394,713)

14,725,606 — Long-term borrowings raised 14,725,606 4,663,820

— — Long-term borrowings repaid (2,016,000) (463,820)

(2,103,869) (8,163,289) Short-term borrowings (repaid)/received 1,196,689 (5,012,953)

(500,000) (2,683,803) Dividends paid D (500,000) (2,683,803)

Net cash inflow/(outflow) from financing12,121,737 (10,847,092) activities 13,406,295 (3,496,756)

Net increase/(decrease) in cash and7,597,331 (6,518,627) cash equivalents 7,546,131 (5,412,890)

Cash and cash equivalents at beginning(6,898,512) (379,885) of the year (7,654,027) (2,241,137)

Cash and cash equivalents at698,819 (6,898,512) end of the year F (107,896) (7,654,027)


Notes to the Consolidated and Separate Statements of Cash FlowsFor the year ended 31 December, 2012

COMPANY GROUP


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 1,316,968 1,484,265

(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

Loss on obsolete assets written off to18,939 65,441 profit and loss 28,757 68,672

2,180,284 1,101,981 Depreciation 4,669,413 3,059,567

(70,282) 6,016 Exchange (gain)/loss (70,282) —

796,746 6,112,335 Cash operating profit/(loss) 4,471,455 8,059,803

B Working capital changes

(2,418,315) (1,972,451) Increase in inventories (1,036,492) (3,414,355)

Decrease/(increase) in trade and other469,705 1,949,290 receivables (2,032,017) 348,638

Increase/(decrease) in trade and other(127,301) 1,475,869 payables (1,202,432) 2,963,932

(2,075,911) 1,452,708 Working capital changes (4,270,941) (101,785)

C Taxation paid

(1,114,176) (697,372) Amounts payable at beginning of year (1,333,931) (1,001,464)

(162,647) (553,449) Income statement charge (203,996) (612,317)

212,284 1,114,176 Amounts payable at the end of year 401,155 1,333,931

(1,064,539) (136,645) Total taxation paid (1,136,772) (279,850)

D Dividends paid

Amounts accrued and payable at(216,669) (1,900,472) beginning of year (216,669) (1,900,472)(500,000) (1,000,000) Declared per statement of changes in equity (500,000) (1,000,000)

216,669 216,669 Amounts accrued and payable at end of year 216,669 216,669

(500,000) (2,683,803) Total dividends paid (500,000) (2,683,803)

E Purchase of property, plant and equipment

(313,116) (1,289,888) Expansion (1,998,898) (7,306,257)

— (52,626) Replacement — (99,548)

(313,116) (1,342,514) Total additions (1,998,898) (7,405,805)

F Cash and cash equivalents at end of the year

861,417 1,286,860 Cash and cash equivalents 1,817,266 2,431,519

(162,598) (8,185,372) Bank overdrafts (1,925,162) (10,085,546)

698,819 (6,898,512) (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 andproduction of wheat products. Dangote Pasta Limited, Dangote Noodles Limited and Dangote Agro Sacks Limitedare subsidiaries of the Dangote Flour Group. Dangote Flour produces bread flour, confectionery flour, semolinaand 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 accordancewith 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 explanationof the transition to IFRS and cover the financial period from 1 January 2012 to 31 December 2012 with comparativesfor the year ended 31 December 2011 and opening statement of financial position as at the transition date of 1January 2011.

The consolidated financial statements for the year ended 31 December 2012 (including comparatives) were approvedand 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 financialproblems or an increase in the perceived risks associated with investing in emerging economies could adverselyaffect 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 areexperiencing 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, itsbusiness, results of operations, financial condition and prospects.

Because Nigeria produces and exports large volumes of oil, the Nigerian economy is particularly sensitive to theprice 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 financialstatements are summarised below.

The consolidated financial statements have been prepared using accounting policies specified by those IFRSs thatare 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, exceptwhere the Group has applied certain accounting policies and exemptions upon transition to IFRS. The exemptionsapplied 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 statementfrom the Income Statement.

In accordance with IFRS 1, the Group presents three statements of financial position in its first IFRS financialstatements. In subsequent periods, the Group will present two comparative periods for the statement of financialposition when it: (i) applies an accounting policy retrospectively, (ii) makes a retrospective restatement of items inits 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 thefinancial and operating policies. The Company obtains and exercises control through more than half of the votingrights for all its subsidiaries. All subsidiaries have a reporting date of 31 December.

Notes to the Consolidated and Separate Financial StatementsFor the year ended 31 December, 2012


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 suchcontrol ceases.

Subsidiaries acquired with the intention of disposal within 12 months are consolidated in line with the principlesof 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 interestsrepresent the portion of profit or loss, or net assets not held by the Group. It is presented separately in theconsolidated income statement, and in the consolidated statement of financial position, separately from ownshareholder’s equity.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equitytransaction. 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:

Derecognises the assets (including goodwill) and liabilities of the subsidiary;

Derecognises the carrying amount of any non-controlling interest;

Derecognises the cumulative translation differences, recorded in equity;

Recognises the fair value of the consideration received;

Recognises the fair value of any investment retained;

Recognises any surplus or deficit in profit or loss; and

Reclassifies the parent’s share of components previously recognised in other comprehensive income to profitor loss.

3.4. Foreign currencies

Foreign currency transactions

The consolidated financial statements are presented in Nigerian Naira, which is the Company’s functional andpresentation currency. Transactions in foreign currencies are initially recorded in the functional currency at the rateof 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 ofexchange ruling at the reporting date. Exchange differences are taken to profit or loss, except for differences arisingon foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are takendirectly to other comprehensive income, in the consolidated annual financial statements, until the disposal of thenet investment, at which time they are recognised in profit and loss. Tax charges and credits attributable to suchexchange 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 therate applicable at the initial transaction date. If they are carried at fair value, the rate used is the rate at the datewhen the fair value was determined. The gain or loss arising on retranslation of non-monetary items is treated inline with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on itemswhose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised inother 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 asthe aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controllinginterest 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 appropriateclassification and designation in accordance with the contractual terms, economic circumstances and pertinentconditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by theacquiree.



If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously heldequity 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, isrecognised in accordance with IAS 39 either in profit or loss or as change to other comprehensive income. If thecontingent consideration is classified as equity, it is not remeasured until it is finally settled within equity. Ininstances where the contingent consideration does not fall within the scope of IAS 39, it is measured in accordancewith the appropriate IFRS.

The Company carries its investments in subsidiaries and associate companies at cost less accumulated impairmentlosses.

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 segmentsthat 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 accountsfor intersegment sales and transfers as if the sales and transfers were entered into under the same terms andconditions 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 makingdecisions about allocating resources to the segment and assessing its performance.

3.7. Property, plant and equipment

Property, plant and equipment are stated at cost, excluding the costs of day-to-day servicing, less accumulateddepreciation and accumulated impairment losses. Assets subject to finance lease agreements are capitalised atthe 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, thecomponents are accounted for as separate assets. Expenditure incurred on major inspection and overhaul, or toreplace 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 anasset, over its useful life. Depreciation starts when the asset is available for use. An asset’s residual value, useful lifeand depreciation method is reviewed at least at each financial year-end. Any adjustments are accounted forprospectively. Depreciation is not calculated in respect of freehold land and assets under construction.

The following useful lives have been estimated:

Freehold land — Not depreciatedLeasehold land and buildings — 50 yearsPlant and machinery — 15 yearsMotor vehicles — 4 yearsTools and equipment — 5 yearsFurniture and fittings — 5 yearsComputer equipment — 3 years

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits areexpected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference betweenthe net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset isderecognised.

3.8. Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of an intangible assetacquired in a business combination is the fair value at the date of acquisition. Subsequently, intangible assets are



carried at cost less any accumulated amortisation and accumulated impairment losses. Unless internally generatedcosts meet the criteria for development costs eligible for capitalisation in terms of IAS 38 (refer to research anddevelopment 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 orsubstantially improved materials, products or services, before the start of commercial production. Developmentcosts are only capitalised when the Group can demonstrate the technical feasibility of completing the project, itsintention and ability to complete the project and use or sell the materials, products or services flowing from theproject, how the project will generate future economic benefits, the availability of sufficient resources and theability to measure reliably the expenditure during development. Otherwise development costs are recognised inprofit or loss.

During the period of development, the asset is tested annually for impairment. Following the initial recognition ofthe development costs, the asset is carried at cost less accumulated amortisation and accumulated impairmentlosses. Amortisation begins when development is complete. The development costs are amortised over the periodof expected future sales.

Impairment

The Group assesses tangible and intangible assets, excluding goodwill, development assets not yet available foruse and indefinite life intangible assets, at each reporting date for an indication that an asset may be impaired. Ifsuch an indication exists, the recoverable amount is estimated as the higher of the fair value less costs to sell andthe value in use. If the carrying value exceeds the recoverable amount, the asset is impaired and is written downto the recoverable amount. Where it is not possible to estimate the recoverable amount of an individual asset, therecoverable 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 appropriatediscount rate that reflects current market assessments of the time value of money and the risks specific to theasset. In determining fair value less costs to sell, the hierarchy is firstly a binding arm’s length sale, then the marketprice 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 consistentwith the function of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indicationthat previously recognised impairment losses may no longer exist or may have decreased. If such an indicationexists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognisedimpairment loss is reversed only if there is a change in the estimates used to determine the asset’s recoverableamount since the last impairment loss was recognised. If this is the case, the carrying amount of the asset isincreased to the revised recoverable amount, but not in excess of what the carrying amount would have been hadthere 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 netdisposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset isderecognised.

3.9. Financial instruments

Financial instruments are initially recognised when the Group becomes a party to the contract. The Group hasadopted trade date accounting for “regular way” purchases or sales of financial assets. The trade date is the datethat the Group commits to purchase or sell an asset.

Financial instruments are initially measured at fair value plus transaction costs, except that transaction costs inrespect of financial instruments classified at fair value through profit or loss are expensed immediately. Transactioncosts are the incremental costs that are directly attributable to the acquisition of a financial instrument, i.e. thosecosts that would not have been incurred had the instrument not been acquired.



A contract is assessed for embedded derivatives when the entity first becomes a party to the contract. When theeconomic characteristics and risks of the embedded derivative are not closely related to the host contract, theembedded 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 Available-for-saleDerivatives Financial Instruments at fair value through profit or lossLoans and advances receivable Loans and receivablesLoans to subsidiaries Loans and receivablesTrade and other receivables Loans and receivablesCash and cash equivalents Loans and receivablesLoans payable and borrowings Financial liabilities at amortised costTrade and other payables Financial liabilities at amortised costLoans from subsidiaries 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 andreceivables 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 recogniseddirectly in other comprehensive income. When such a financial asset is disposed of, the cumulative gain or losspreviously recognised in other comprehensive incomes is recognised in profit or loss. Interest earned on thefinancial asset is recognised in profit or loss using the effective interest rate method. Dividends earned are recognisedin profit or loss when the right of receipt has been established.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quotedin an active market. After initial recognition, loans and receivables are measured at amortised cost less impairmentlosses.

Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, aswell as through the amortisation process.

Financial liabilities at amortised cost

After initial recognition, liabilities that are not carried at fair value through profit or loss are measured at amortisedcost using the effective interest rate method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through theamortisation 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 techniquesinclude 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.



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 thedifference between the asset’s carrying amount and the present value of the estimated future cash flows (excludingfuture 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 areindividually significant, and collectively for financial assets that are not individually significant. In relation to tradereceivables, a provision for impairment is made when there is objective evidence (such as the probability ofinsolvency or significant financial difficulties of the debtor) that the Group will not be able to collect all of theamounts due under the original terms of the sale. The carrying amount of the asset is reduced through the use ofan allowance account, and is recognised in profit and loss. Impaired debts are derecognised when they are assessedas uncollectible.

If, in a subsequent period, the amount of the impairment decreases and the decrease relates objectively to anevent occurring after the impairment, it is reversed to the extent that the carrying value does not exceed theamortised 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:

the right to receive the cash flows have expired;

the right to receive the cash flows is retained, but an obligation to pay them to a third party under a‘pass-through’ arrangement is assumed; or

the Group transfers the right to receive the cash flows, and also transfers either all the risks and rewards, orcontrol 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 transactionrather than through continuing use. This condition is regarded as met only when the sale is highly probable andthe asset or disposal group is available for immediate sale in its present condition. Management must be committedto the sale, which should be expected to qualify for recognition as a completed sale within one year from the dateof classification.

Assets classified as held-for-sale are not subsequently depreciated and are held at the lower of their carrying valueand fair value less costs to sell.

A discontinued operation is a separate major line of business or geographical area of operation that has beendisposed of, or classified as held-for-sale, as part of a single coordinated plan. Alternatively, it could be a subsidiaryacquired exclusively with a view to resale.

In the consolidated income statement of the reporting period and of the comparable period, income and expensesfrom discontinued operations are reported separate from income and expenses from continuing activities down tothe 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 itspresent 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 manufacturingoverheads based on normal operating capacity but excludingborrowing 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 completionand selling costs.



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 reliableestimate 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, thereimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expenserelating 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 thatreflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passageof 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 isaccounted for as a lease where it is dependent on the use of a specific asset and it conveys the right to use thatasset.

Leases are classified as finance leases where substantially all the risks and rewards associated with ownership ofan asset are transferred from the lessor to the Group as lessee. Finance lease assets and liabilities are recognisedat the lower of the fair value of the leased property or the present value of the minimum lease payments. Financelease payments are allocated, using the effective interest rate method, between the lease finance cost, which isincluded 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 reasonablecertainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over theshorter 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. Operatinglease 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 rewardsof 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 therevenue can be reliably measured. Revenue is measured at the fair value of the consideration received/receivableexcluding value-added tax, normal discounts, rebates, settlement discounts, promotional allowances, and internalrevenue which is eliminated on consolidation.

The Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as principalor agent.

3.15. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarilytakes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of therespective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist ofinterest and other costs that an entity incurs in connection with the borrowing of funds. Qualifying assets generallytake 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 incomestatement because it excludes items of income or expense that are taxable or deductible in other years, and itfurther excludes items that are never taxable or deductible. Current tax may include under- or over provisionsrelating to prior year taxation. The Group’s liability for current tax is calculated using tax rates that have beenenacted or substantively enacted by the reporting date.



Current tax relating to items recognised outside profit or loss is recognised outside profit or loss. Current tax itemsare recognised in correlation to the underlying transaction either in other comprehensive income or directly inequity.

Deferred tax

Deferred tax is calculated on the liability method, using the difference between the carrying amounts of assets andliabilities and their corresponding tax base used in the computation of taxable profit.

Deferred tax liabilities are recognised for taxable temporary differences except:

where the liability arises from the initial recognition of goodwill or an asset or liability in a transaction that isnot a business combination and, at the time of the transaction, affects neither the accounting profit nortaxable profit or loss; and

in respect of taxable temporary differences associated with investments in subsidiaries, associates and interestsin joint ventures, where the timing of the reversal of the temporary differences can be controlled, and it isprobable 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 andunused tax losses, where it is probable that the asset will be utilised in the foreseeable future except:

where the asset arises from the initial recognition of an asset or liability in a transaction that is not a businesscombination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;and

in respect of deductible temporary differences associated with investments in subsidiaries, associates andinterests in joint ventures, only to the extent that it is probable that the differences will reverse in the foreseeablefuture, 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 isno 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 becomeprobable 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 theasset 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 taxitems are recognised in correlation to the underlying transaction either in other comprehensive income or directlyin equity.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current taxassets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the sametaxation authority.

Dividends withholding tax

A Dividend withholding tax of 10% is withheld on behalf of the taxation authority on dividend distributions. Thenet amount payable to the taxation authority is included as part of trade and other payables at the time a dividendis declared.

Value added tax

Revenues, expenses and assets are recognised net of the amount of value added tax except:

where the value added tax incurred on a purchase of assets or services is not recoverable from the taxationauthority, in which case the value added tax is recognised as part of the cost of acquisition of the asset or aspart of the expense item as applicable; and

receivables and payables that are stated with the amount of value added tax included.

The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part ofreceivables or payables in the statement of financial position.



3.17. Employee benefits

A liability is recognised when an employee has rendered services for benefits to be paid in the future, and anexpense 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 theemployee has rendered the service, but the contribution has not yet been paid, the amount payable is recognisedas a liability.

In respect of defined benefit plans, the Company’s contributions are based on the recommendations of independentactuaries 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 actuarialgains and losses for each individual plan at the end of the previous reporting period exceed 10% of the higher ofthe defined benefit obligation and the fair value of plan assets at that date. These gains or losses are recognisedover 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 benefitsbecome vested. If the benefits vest immediately following the introduction of, or changes to, a defined benefitplan, the past-service cost is recognised immediately.

The defined benefit asset or liability recognised in the statement of financial position comprises the present valueof the defined benefit obligation, plus any unrecognised actuarial gains (minus losses), less unrecognised past-service costs, net actuarial losses and the fair value of plan assets out of which the obligations are to be settled. Thevalue of an asset recognised is restricted to the sum of the unrecognised past-service costs and unrecognisedactuarial gain or loss and the present value of any economic benefits available in the form of refunds from the planor 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 theoccurrence 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 bythe occurrence or non-occurrence of one or more uncertain future events not wholly within the control of theCompany. Alternatively, it may be a present obligation that arises from past events but is not recognised becausean outflow of economic benefits to settle the obligation is not probable, or the amount of the obligation cannot bemeasured with sufficient reliability. Contingent liabilities are not recognised as liabilities unless they are acquiredas 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 reportingdate, but before the financial statements are authorised for issue, provided there is evidence of conditions thatexisted at the reporting date. Events after the reporting date that are indicative of conditions that arose after thereporting 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 thefinancial 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 withinthe next financial year, are discussed below.



Carrying value of tangible assets

Tangible assets are tested when there is an indicator of impairment. The calculation of the recoverable amountrequires the use of estimates and assumptions concerning the future cash flows which are inherently uncertainand could change over time. In addition, changes in economic factors, such as discount rates, could also impactthis 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 andjudgements in this regard are based on historical experience and expectations of the manner in which assets areto be used, together with expected proceeds likely to be realised when assets are disposed of at the end of theiruseful lives. Such expectations could change over time and therefore impact both depreciation charges and carryingvalues 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 willbe available against which the losses can be utilised. Significant management judgement is required to determinethe amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxableprofits 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 actuarialvaluations using the projected unit credit method, to make a reliable estimate of the ultimate cost to the Group ofthe benefit that employees have earned in return for their service in the current and prior periods. The actuarialvaluation involves making assumptions about discount rates, expected rates of return on assets, future salaryincreases, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimatesare 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 asprovisions at the reporting date. Risks, uncertainties and future events, such as changes in law and technology, aretaken 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 ratethat reflects current market assessments of the time value of money and, where appropriate, the risks specific tothe liability, all of which requires management estimation.

The establishment and review of the provisions requires significant judgement by management as to whether ornot 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 probableof occurring and the amount of the loss can be reasonably estimated. Liabilities provided for legal matters requirejudgements regarding projected outcomes and ranges of losses based on historical experience and recommendationsof legal counsel. Litigation is however unpredictable and actual costs incurred could differ materially from thoseestimated 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 yeteffective and will be adopted by the Group when they become effective. These are as follows:

IFRS 9 — Financial Instruments

Financial Assets: This phase applies to financial assets and simplifies the classification of financial assets whilstretaining the measurement principles, being at fair value or amortised cost. Financial assets are classified onthe basis of the entity’s business model for managing the financial assets and the contractual cash flowcharacteristics of the financial asset. The IAS 39 exemption which allows equity instruments to be measured atcost will be limited further and reclassifications between categories will only be allowed in exceptionalcircumstances.



Financial Liabilities: The standard retains the existing IAS 39 classification and measurement requirements forfinancial liabilities not designated at fair value through profit or loss using the Fair Value Option as well as thecriteria within IAS 39 for using the fair value option for financial liabilities. The changes only affect themeasurement of fair value option liabilities. All other requirements in IAS 39 in respect of liabilities are carriedforward into IFRS 9. For fair value option liabilities, the amount of change in the fair value of a liability that isattributable to changes in credit risk must be presented in other comprehensive income (OCI). The remainderof the change in fair value is presented in profit or loss. The Standard prohibits any recycling through profit orloss of amounts recognised in OCI upon derecognition of the liability, but these amounts may be transferred toretained earnings upon derecognition. Liabilities arising from certain derivatives on unquoted equity instrumentswill 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 animpact on the classification and measurement of financial assets and liabilities.

IFRS 10 — Consolidated Financial Statements

IFRS 10 includes a new definition of control which is used to determine which entities are consolidated. Thiswill apply to all entities, including special purpose entities (now known as ‘structured entities’). The changesintroduced by IFRS 10 will require management to exercise significant judgement to determine which entitiesare controlled and, therefore, consolidated, and may result in a change to the entities which are within theGroup.

The new standard is effective for financial periods beginning on or after 1 January 2013 and the Group is inprocess of assessing what the impact of adoption would be.

IFRS 11 — Joint Arrangements

IFRS 11 describes the accounting for joint arrangements with joint control; proportionate consolidation will nolonger be permitted for joint ventures and as such will result in a change in the Group’s accounting policy fromproportionate consolidation to equity accounting when the new standard is adopted. Under IFRS 11 thestructure of a joint arrangement is not the only factor considered when classifying the joint arrangement aseither 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 asignificant impact on adoption.

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, jointarrangements, associates and structured entities. An entity is now required to disclose the judgements madeto determine whether it controls another entity and as such the adoption of this new standard in future willresult in additional disclosures.

The new standard is effective for financial periods beginning on or after 1 January 2013 and the detaileddisclosures will only be assessed on adoption based on the implications of IFRS 10 and IFRS 11.

IFRS 13 — Fair Value Measurements

IFRS 13 provides guidance on how to measure fair value of financial and non-financial assets and liabilitieswhen 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 thisstandard on the Group is yet to be assessed.

IAS 12 — Recovery of Underlying Assets

The IASB issued an amendment to IAS 12 concerning the determination of deferred tax on investment propertymeasured at fair value. The amendments incorporate SIC-21 into IAS 12 for non-depreciable assets measuredusing the revaluation model in IAS 16.

The aim of the amendments is to provide a practical solution for jurisdictions where entities currently find itdifficult and subjective to determine the expected manner of recovery for investment property that is measuredusing the fair value model in IAS 40.



IAS 12 has been updated to include:

A rebuttable presumption that deferred tax on investment property measured using the fair value modelin 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 IAS16, should always be measured on a sale basis.

The amendment is effective for financial periods beginning on or after 1 January 2012. This amendment willhave no impact on the Group as it does not have any investment properties or non-depreciable assets measuredusing the revaluation model.

IAS 19 — Employee Benefits (revised)

Numerous changes to IAS 19 have been made. The two most significant of these relates firstly to short andlong-term benefits that will now be distinguished based on the expected timing of settlement, rather thanemployee 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 movementsare 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 interestincome or expense is the product of the net liability or asset and the discount rate used to measure theobligation – both as at the start of the year. This removes the current concept of expected return on planassets — 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 inthe statement of financial position amount (essentially these are currently described as actuarial gains andlosses 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 thisamendment is yet to be assessed.

IAS 27 — Separate financial statements.

The scope of IAS 27, as revised, is limited to the accounting for investments in subsidiaries, joint ventures andassociates in the separate financial statements of the investor. The amendment was issued in response to theissue of IFRS 10.

The amendment is effective for financial periods beginning on or after 1 January 2013. The amendment willhave no impact on the Group since the investments will remain to be measured at cost.

IAS 28 — Investments in associates and joint ventures (consequential revision due to the issue of IFRS 10 and11). The revised standard caters for joint ventures (now accounted for by applying the equity accountingmethod) 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 thisamendment is yet to be assessed.

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’sfinancial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-offassociated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financialposition.

The amendment is effective for financial periods beginning on or after 1 January 2013. The amendment is notexpected to have a significant impact on the Group.

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 financialassets and financial liabilities as well as the application of IAS 32 offsetting criteria to settlement systems (suchas clearing houses).

The amendment is effective for financial periods beginning on or after 1 January 2014. The amendment is notexpected to have a significant impact on the Group.



Numerous annual improvements to IFRS (2009 to 2011 cycle) have amendments effective for financial periodsbeginning 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 itvoluntarily provides comparative information beyond the minimum required comparative period. Theadditional 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 thefollowing circumstances: when an entity changes its accounting policies; makes retrospective restatementsor makes reclassifications, and that change has a material effect on the statement of financial position. Theopening statement would be at the beginning of the preceding period. Unlike the voluntary comparativeinformation, the related notes are not required to accompany the third balance sheet. This amendmentwill 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 ofproperty, plant and equipment are not inventory. This amendment will have no impact on the Group, asthe 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 forin accordance with IAS 12 Income Taxes. This amendment will have no impact on the Group, as therequirements 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 andliabilities for each reportable segment to enhance consistency with the requirements in IFRS 8 OperatingSegments.

Total assets and liabilities for a particular reportable segment need to be disclosed only when the amountsare regularly provided to the chief operating decision maker and there has been a material change in thetotal 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.

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).

4. First time adoption of IFRS

The Group’s full financial statements for the year ended 31 December 2012 are its first full financial statementsprepared 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 consolidatedfinancial statements, the provisions of IFRS 1 – First-time adoption of International Financial Reporting Standardshave 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 themandatory 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 anarrangement contains a lease.

The Group has elected to recognise all cumulative actuarial gains and losses for its defined benefit plans at thedate of transition. From the date of transition, the Group’s accounting policy is to base contributions on therecommendations of independent actuaries and measure the liability using the projected unit credit method.



Further, the Group has elected to use the exemption not to disclose defined benefit plan surplus/deficit andexperience adjustments before the date of transition.

The Group has elected to utilise the exemption to applying IFRS 3 retrospectively to business combinations thatoccurred before the date of transition. IFRS 3 is applied prospectively for business combinations from the date oftransition.

The Group has used estimates under IFRS that are consistent with those applied under previous GAAP (withadjustment 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 previousGAAP as follows:

GROUP 31 December 2011 1 January 2011

Effect of Effect of OpeningPrevious transition to Previous transition to statement

(N=’000) Notes GAAP IFRS IFRS GAAP IFRS IFRS

Assets

Non-current assets 44,865,645 2,919,712 47,785,357 41,229,708 1,687,325 42,917,033

Property, plant andequipment a 44,443,322 2,311,668 46,754,990 41,229,708 1,260,790 42,490,498Long-term receivables f — 90,836 90,836 — 28,395 28,395Deferred taxation asset 422,323 517,208 939,531 — 398,140 398,140

Current assets 38,587,948 269,377 38,857,325 28,381,031 439,514 28,820,545

Inventories 12,021,921 (350,107) 11,671,814 8,257,459 — 8,257,459Trade and other receivables b — 11,363,897 11,363,897 — 13,259,241 13,259,241Debtors and prepayments b 10,938,028 (10,938,028) — 12,867,303 (12,867,303) —Other short-term loans f 13,196,480 193,615 13,390,095 5,066,198 47,576 5,113,774Cash and bank balances 2,431,519 — 2,431,519 2,190,071 — 2,190,071

Total assets 83,453,593 3,189,089 86,642,682 69,610,739 2,126,839 71,737,578

Equity and liabilities

Issued capital and reserves 26,440,128 1,073,773 27,513,901 26,943,846 946,433 27,890,279

Ordinary share capital 2,500,000 — 2,500,000 2,500,000 — 2,500,000Share premium 18,116,249 — 18,116,249 18,116,249 — 18,116,249Accumulated profits 5,823,879 1,073,773 6,897,652 6,327,597 946,433 7,274,030

Non-controlling interests h 405,312 96,659 501,971 203,029 (3,380) 199,649

Total equity 26,845,440 1,170,432 28,015,872 27,146,875 943,053 28,089,928Non-current liabilities 6,099,928 1,928,657 8,028,585 4,237,443 1,358,284 5,595,727

Deferred taxation liability i 2,938,431 1,175,707 4,114,138 3,409,430 665,996 4,075,396Provision for definedbenefit gratuity c 977,497 752,950 1,730,447 828,013 692,318 1,520,331Long-term borrowings 2,184,000 — 2,184,000 — — —

Current liabilities 50,508,225 90,000 50,598,225 38,226,421 (174,498) 38,051,923

Trade and other payables b — 11,636,188 11,636,188 — 8,672,256 8,672,256Creditors and accruals b 17,855,125 (17,855,125) — 18,952,928 (18,952,928) —Taxation 1,333,931 — 1,333,931 1,001,464 — 1,001,464Short-term borrowings f 7,806,342 19,519,549 27,325,891 8,394,872 13,651,651 22,046,523Shareholders for dividend 216,669 — 216,669 1,900,472 — 1,900,472Bank overdrafts f 23,296,158 (13,210,612) 10,085,546 7,976,685 (3,545,477) 4,431,208

Total equity and liabilities 83,453,593 3,189,089 86,642,682 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 31 Dec 2011 1 Jan 2011

Over amortisation of prepayments (241) 1,414Over-depreciation of property, plant and equipment a 2,607,539 1,880,933Depreciation on spare parts included in inventory capitalised to plantand equipment j (25,417) —

Reversal of sales invoices duplicated in prior year d — (243,647)Adjustment on interest refunded in prior year e — 264,498Adjustment of provision for gratuity in line with actuarial estimations c (752,950) (692,318)

1,828,931 1,210,880Taxation i (658,499) (267,826)Non-controlling interest at subsidiary level h (101,201) (5,498)Non-controlling interest on consolidation h 4,542 8,877

Accumulated profits included in equity 1,073,773 946,433

Reconciliation of total comprehensive income

Total comprehensive income for the reporting period ended 31 December 2011 can be reconciled to the amountsreported under previous GAAP as follows:

GROUP 31 December 2011

Effect ofPrevious transition to

Notes GAAP IFRS IFRS

Revenue d 66,281,326 — 66,281,326Cost of sales a, c (56,582,360) 386,285 (56,196,075)

Gross profit 9,698,966 386,285 10,085,251Distribution and administrative expenses c (5,999,929) (24,253) (6,024,182)Other income 381,527 — 381,527

Operating income before abnormal items 4,080,564 362,032 4,442,596Abnormal items (1,484,265) — (1,484,265)

Operating income after abnormal items 2,596,299 362,032 2,958,331Finance costs (2,208,313) — (2,208,313)Interest received 8,724 — 8,724

Profit before taxation 396,710 362,032 758,742Taxation i 281,005 (390,673) (109,668)

Profit for the year 677,715 (28,641) 649,074Other comprehensive income: Actuarial gains g — 276,870 276,870

Total comprehensive income 677,715 248,229 925,944Attributable to: Non-controlling interests h (202,283) (100,039) (302,322)

Attributable to: Owners of the parent 475,432 148,190 623,622Equity attributable to owners of the parent: Opening balance 6,327,597 946,433 7,274,030 Dividend paid (1,000,000) — (1,000,000) Reversal of duplicated sales in prior year d (243,647) 243,647 — Adjustment on interest refund in prior year e 264,497 (264,497) —

Closing equity attributable to the parent 5,823,879 1,073,773 6,897,652




Reconciliation of equity — Company

Equity of the Company at transition date and at 31 December 2011 can be reconciled to the amounts reported underprevious GAAP as follows:

COMPANY 31 December 2011 1 January 2011

Effect of Effect of OpeningPrevious transition to Previous transition to statement

(N=’000) Notes GAAP IFRS IFRS GAAP IFRS IFRS

Assets

Non-current assets 27,049,844 1,676,782 28,726,626 27,433,880 987,144 28,421,024Property, plant andequipment a 19,496,207 1,137,367 20,633,574 19,880,243 578,239 20,458,482Interest in subsidiarycompanies 7,553,637 — 7,553,637 7,553,637 — 7,553,637

Deferred taxation asset k — 455,913 455,913 — 398,140 398,140Long-term receivables b — 83,502 83,502 — 10,765 10,765

Current assets 41,736,355 (83,743) 41,652,612 32,529,277 (252,999) 32,276,278

Inventories 4,899,136 (1) 4,899,135 2,926,685 — 2,926,685Trade and other receivables b — 5,608,778 5,608,778 — 9,115,070 9,115,070Debtors and prepayments b 5,692,520 (5,692,520) — 9,368,069 (9,368,069) —Amounts owed bysubsidiaries 16,123,486 — 16,123,486 13,493,230 — 13,493,230

Other short-term loans 13,734,353 — 13,734,353 5,252,555 — 5,252,555Cash and cash equivalents 1,286,860 — 1,286,860 1,488,738 — 1,488,738

Total assets 68,786,199 1,593,039 70,379,238 59,963,157 734,145 60,697,302

Equity and liabilities

Issued capital and reserves 26,032,991 319,601 26,352,592 26,489,154 (56,945) 26,432,209

Ordinary share capital 2,500,000 — 2,500,000 2,500,000 — 2,500,000Share premium 18,116,249 — 18,116,249 18,116,249 — 18,116,249Accumulated profits 5,416,742 319,601 5,736,343 5,872,905 (56,945) 5,815,960

Total equity 26,032,991 319,601 26,352,592 26,489,154 (56,945) 26,432,209Non-current liabilities 3,573,139 1,273,438 4,846,577 3,774,334 791,090 4,565,424

Deferred taxation liability i 2,844,534 724,807 3,569,341 3,136,273 345,666 3,481,939Provision for definedbenefit gratuity c 728,605 548,631 1,277,236 638,061 445,424 1,083,485

Long-term borrowings — — — — — —

Current liabilities 39,180,069 — 39,180,069 29,699,669 — 29,699,669

Trade and other payables b — 5,301,029 5,301,029 — 3,819,144 3,819,144Creditors and accruals b 9,060,990 (9,060,990) — 13,756,141 (13,756,141) —Taxation 1,114,176 — 1,114,176 697,372 — 697,372Short-term borrowings f 7,736,201 15,470,573 23,206,774 7,954,529 12,549,524 20,504,053Shareholders for dividend 216,669 — 216,669 1,900,472 — 1,900,472Amounts owed to subsidiaries 1,156,049 — 1,156,049 910,005 — 910,005Bank overdrafts f 19,895,984 (11,710,612) 8,185,372 4,481,150 (2,612,527) 1,868,623

Total equity and liabilities 68,786,199 1,593,039 70,379,238 59,963,157 734,145 60,697,302




The cumulative effect on retained earnings of the Company is further analysed as follows:

COMPANY Notes 31 Dec 2011 1 Jan 2011

Over amortisation of prepayments (241) 1,413Over-depreciation of property, plant and equipment a 1,137,367 578,239Reversal of duplicated sales in prior year d — (243,647)Adjustment of provision to actuarial estimations c (548,631) (445,424)

588,495 (109,419)Taxation i, k (268,894) 52,474

Accumulated profits 319,601 (56,945)

Reconciliation of total comprehensive income

Total comprehensive income for the reporting period ended 31 December 2011 can be reconciled to the amountsreported under previous GAAP as follows:

COMPANY 31 December 2011

Effect ofPrevious transition to

Notes GAAP IFRS IFRS

Revenue d 38,679,844 — 38,679,844

Cost of sales a, c (31,737,937) 365,319 (31,372,618)

Gross profit 6,941,907 365,319 7,307,226

Distribution and administrative expenses c (2,910,500) (41,283) (2,951,783)

Other income 259,472 — 259,472

Operating income before abnormal items 4,290,879 324,036 4,614,915

Abnormal item (1,484,265) — (1,484,265)

Operating income after abnormal items 2,806,614 324,036 3,130,650

Finance costs (1,761,187) — (1,761,187)

Interest received 3,767 — 3,767

Profit before taxation 1,049,194 324,036 1,373,230

Taxation i, k (261,710) (321,368) (583,078)

Profit for the year 787,484 2,668 790,152

Other comprehensive income: Actuarial losses g — 130,231 130,231

Total comprehensive income 787,484 132,899 920,383

Attributable to: Non-controlling interests — — —

Attributable to: Owners of the parent 787,484 132,899 920,383

Equity attributable to owners of the parent:

Opening balance 5,872,905 (56,945) 5,815,960

Dividend paid (1,000,000) — (1,000,000)

Reversal of sales invoices duplicated in prior year d (243,647) 243,647 —

Closing equity attributable to the parent 5,416,742 319,601 5,736,343




Notes to the reconciliations of IFRS adjustments

(a) Over-depreciation of property, plant and equipment in Nigerian GAAP accounts has been corrected byimplementation of fixed asset registers with accurate depreciation calculation methods. Previously, average bookvalues were used in some instances to calculate depreciation. The Group did not elect to apply the optionalexemption in IFRS 1: first time adoption of IFRS, that relieves first-time adopters from the requirement to recreatecost information for property, plant and equipment and the adjustments above relate only to adjustments from inthe manner calculating depreciation as described.

(b) Reclassifications of balance sheet items in terms of IFRS reporting requirements that relates to allocation of long-term receivables to non-current assets.

(c) Adjustment of provision for gratuity (retirement benefit scheme) per Nigerian GAAP accounts to actuarial estimationsin terms of IFRS.

(d) The prior year adjustment relates to the correction of duplicated invoices in customers’ accounts in years 2006 and2007 accounted for in opening equity balances per Nigerian GAAP and adjusted to profit and loss in the appropriateyear for IFRS reporting purposes.

(e) This represents adjustment in Dangote Agrosacks Limited in respect of interest overcharged in previous years byOceanic Bank Plc which was refunded and accounted for in opening equity balances per Nigerian GAAP andadjusted 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) underIFRS compared to previous GAAP, although the assets and liabilities included in these line items are unaffected.


D A N G OT E F L O U R M I L L S P L C 45

COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

5. Revenue

29,859,976 38,679,844 Flour products 28,388,839 37,594,544— — Spaghetti, macaroni and other pasta products 8,610,388 12,581,764— — Noodles products 4,866,467 2,605,765— — Agrosacks packaging materials 16,809,643 13,499,253

29,859,976 38,679,844 Total revenue 58,675,337 66,281,326

Revenue is net of value-added tax, normaldiscounts, rebates and promotional allowances.Refer to the segmental analysis for details of thesegmental split and inter-company eliminations.Revenue by major customer

1,413,740 1,933,850 Customer 1 13,085,872 12,398,1761,283,205 1,758,510 Customer 2 2,653,732 3,763,434

856,660 630,750 Customer 3 1,283,205 1,988,91526,306,371 34,356,734 All other customers 41,652,528 48,130,801

29,859,976 38,679,844 Total revenue 58,675,337 66,281,326

6. Operating income after charging:

External auditors’ remuneration38,750 31,000 — Audit fee 75,293 57,78825,401 — Internal auditors’ remuneration 25,401 —

2,180,284 1,101,981 Depreciation 4,669,413 3,059,56787,304 26,602 Buildings 130,475 53,272

2,051,110 1,072,201 Plant, equipment and vehicles 4,452,573 2,959,68741,870 3,178 Computer and office equipment 86,365 46,60829,238 57,979 Professional and consultant fees 46,154 103,607

Operating lease charges— — Land and buildings 134,865 144,231— — Plant, equipment and vehicles — —— — Loss on disposal of plant, equipment and vehicles — 1,982

Staff costs2,581,971 2,817,700 Salaries, allowances and other benefits 3,333,579 3,874,978

120,596 161,440 Employer’s contribution to retirement funding 165,539 219,35328,733 36,896 Employer’s contribution to medical aid 56,101 60,943

— 6,016 Foreign exchange loss — —

(414,931) (259,472) Other Income (665,127) (381,527)— (26,889) Insurance claims received (3,956) (26,950)

(70,282) — Foreign exchange profit (70,282) —(161,083) — Profit on disposal of PPE (161,083) —(127,175) — Provision no longer required — —(56,391) (232,583) Other sundry income (429,806) (354,577)


46 D A N G OT E F L O U R M I L L S P L C

COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

6. Operating income after charging (continued)

Directors’ emoluments (Note 24)

Executive Directors— — — salaries and bonuses 25,050 13,890

14,700 2,600 — retirement, medical and other benefits 27,734 7,243Non-Executive Directors

59,267 62,644 — fees and expenses 59,267 62,644

73,967 65,244 Total Directors’ emoluments 112,051 83,777— — Less: Paid by subsidiaries (38,084) (18,533)

73,967 65,244 Emoluments paid by company 73,967 65,244

Refer to Note 24 for Directors’ emoluments.

7. Abnormal items

(1,409,450) (1,484,265) Abnormal items: impairment of trade (1,409,450) (1,484,265)receivable balances

Abnormal items are items of income and expenditure which are not directly attributable to normal operations or wheretheir 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 InsuranceBonds issued by Niger Insurance Plc and NEM Insurance Plc. The amounts are overdue by more than one year. TheCompany instituted court action against both insurance companies and obtained a “Mareva Injunction” against them. Anout of court settlement was subsequently agreed between the Company and the insurance companies. This was filedwith the court and has to date been adhered to by Niger Insurance by way of payments of N=200 million in instalmentsand the appointment of a loss adjuster to verify the insurance claims. NEM Insurance has instituted an appeal processwhich is yet to formally commence. In the interim, post-dated cheques issued by NEM Insurance in compliance with theout 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 nothonoured by Niger Insurance Plc and NEM insurance by the first quarter of 2014. Considering the guarantee from DIL, theCompany has provided for 50% of the total amount outstanding of N=3.6 billion or N=1.8 billion. No provision was madein respect of the amount guaranteed by DIL.

COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

8. Finance costs

(2,059,643) (1,761,187) Finance costs (3,146,412) (2,208,313)

(1,002,242) — Long-term borrowings (1,445,016) (489,649)(1,057,401) (1,761,187) Bank and other short-term borrowings (1,200,126) (1,377,986)

— — Other — financial liabilities (501,270) (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) (1,757,420) Net finance costs (3,093,162) (2,199,589)



COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

9. Taxation

Current taxation

(154,215) (497,432) Nigerian current taxation (177,184) (530,387)— (56,017) Education tax (18,380) (81,930)

(8,432) — Capital gain tax (8,432) —

(162,647) (553,449) (203,996) (612,317)

Deferred taxation

1,289,111 (29,629) Temporary differences 1,941,011 502,649

1,126,464 (583,078) Total taxation 1,737,015 (109,668)

Financial statement position

1,114,176 697,372 At 1 January 1,333,931 1,001,464162,647 553,449 Current year income charges 203,996 612,317

(1,064,539) (136,645) Payment during the year (1,136,772) (279,850)

212,284 1,114,176 At 31 December 401,155 1,333,931

Dangote Noodles Ltd and Obajana Agrosacks Ltd,both subsidiaries of the Company, obtainedapproval from the Nigerian Investment PromotionCommission for a five-year pioneer tax statusincentive (tax holiday), taking effect from1 July 2009 for Obajana Agrosacks Ltdand 1 July 2010 for Dangote Noodles Ltd.

Reconciliation of the effective rate of taxationwith the statutory taxation rate is as follows:

26.4% 42.5% Taxation for the year as a percentage of income 43.4% 14.5%before taxation

0.0% 0.0% Income exempt from tax (tax holiday) (11.7%) 33.5%0.0% 0.0% Investment allowances (2.1%) 12.5%

Expenses and provisions not allowed for1.5% 0.0% tax purposes 3.5% (2.1%)

(14.6%) 0.0% Unabsorbed capital allowances (14.3%) (2.4%)16.7% (12.5%) Effect of prior year adjustments and others 11.2% (26.0%)

30.0% 30.0% Rate of Nigerian company taxation 30.0% 30.0%

Deferred tax assets have not been recognisedon losses available to reduce future taxableincome in some subsidiaries due to theapplication of tax holidays for some entitiesin the Group and uncertainty as to therecoverability of such assets from future profitsfor other entities.




COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

9. Taxation (continued)

Movement per deferred tax accounts

(545,574) 57,773 (Increase)/decrease in deferred taxation asset (681,591) 541,391(743,537) (87,402) (Decrease)/increase in deferred taxation liability (1,259,420) (38,742)

(1,289,111) (29,629) (1,941,011) 502,649

The charges for taxation in these financialstatements were based on the provisions of theCompanies 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 ofordinary shares outstanding during the year. Basic and diluted earnings per share are the same as there are nodilutive effects on earnings.

GROUP

31-Dec 31-Dec2012 2011

Total comprehensive (loss)/income attributable to ordinary shareholders:

Total comprehensive (loss)/income for the year (N=’000) (2,769,723) 623,622Weighted average number of ordinary shares (’000) 5,000,000 5,000,000

Basic and diluted (loss)/earnings per share (kobo per share) (55.39) 12.47

No ordinary share transactions or potential transactions occurred after the reporting date that would have changedthe number of ordinary shares or potential ordinary shares outstanding at the end of the period if those transactionshad occurred before the reporting date.

GROUP

31-Dec 31-Dec2012 2011

Dividends declared

The Company declared a dividend of 20 kobo per ordinary share out of the profitsfor the year ended 31 December 2010 and a dividend of 10 kobo per ordinaryshare for the year ending 31 December 2011.

Dividend declared (N=’000) 500,000 1,000,000Weighted average number of ordinary shares (’000) 5,000,000 5,000,000

Dividend per share (kobo per share) 10 20


Plant,Leasehold vehicles Computer Assets

GROUP land and and and office under(N=’000) buildings equipment equipment construction Total

11. Property, plant and equipment

Cost

Balance at 1 January 2011 3,718,927 37,172,833 422,844 11,363,281 52,677,885

Additions 817,976 7,261,928 54,012 (728,111) 7,405,805Disposals — (15,358) (9,253) — (24,611)Transfers between classes of assets 13,034 208,955 — (221,989) —Impairment — (9,226) — (61,375) (70,601)

Balance at 31 December 2011 4,549,937 44,619,132 467,603 10,351,806 59,988,478

Additions 78,236 1,280,057 6,635 633,969 1,998,898Disposals — (20,044) (173) — (20,217)Transfers between classes of assets 2,918,272 6,153,963 19,510 (9,094,258) (2,513)Adjustment 118,499 3,439,580 87,888 — 3,645,967Written off — (80,005) — — (80,005)


Accumulated depreciation

Balance at 1 January 2011 304,483 9,652,924 229,980 — 10,187,387Depreciation 53,272 2,959,687 46,608 — 3,059,567Disposals — (7,098) (4,439) — (11,537)Impairment — (1,929) — — (1,929)

Balance at 31 December 2011 357,755 12,603,584 272,149 — 13,233,488

Depreciation 130,475 4,452,573 86,365 — 4,669,413Disposals — (15,660) — — (15,660)Adjustment 118,499 3,439,580 87,888 — 3,645,967Written off — (76,768) — — (76,768)Impairment — 25,520 — — 25,520


Net book value

Balance at 1 January 2011 3,414,444 27,519,909 192,864 11,363,281 42,490,498Balance at 31 December 2011 4,192,182 32,015,548 195,454 10,351,806 46,754,990


The adjustment of N=3.6 billion in cost and accumulated depreciation relates to correction of book value of assetsshown 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 inprofit or loss.

Assets under construction represent mainly expenditure incurred on the Danvita Flour Mills at Apapa. Assets amountingto N=14.2 billion are encumbered by debentures in favour of Zenith Bank Plc, Eco Bank Plc, Diamond Bank Plc andFCMB 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:

Leasehold land and buildings 50 yearsPlant, vehicles and equipment 4 – 15 yearsComputer and office equipment 3 – 5 years



Plant,Leasehold vehicles Computer Assets

COMPANY land and and and office under(N=’000) buildings equipment equipment construction Total

11. Property, plant and equipment

Cost

Balance at 1 January 2011 2,411,347 16,023,028 201,777 6,571,993 25,208,145

Additions 5,662 771,220 25,431 540,201 1,342,514Transfers between classes of assets 13,034 76,833 — (89,867) —Impairment — (5,995) — (61,375) (67,370)


Additions 29,941 110,704 6,248 166,222 313,116Transfers between classes of assets 2,914,572 2,767,454 10,665 (5,695,204) (2,513)Written off — (80,005) — — (80,005)Adjustment 118,499 3,439,580 87,888 — 3,645,967


Accumulated depreciation

Balance at 1 January 2011 190,067 4,439,902 119,694 — 4,749,663

Depreciation 26,602 1,072,201 3,178 — 1,101,981Impairment — (1,929) — — (1,929)


Depreciation 87,304 2,051,110 41,870 — 2,180,284Adjustment 118,499 3,439,580 87,888 — 3,645,967Written off — (76,768) — — (76,768)Impairment — 13,189 — — 13,189


Net book value

Balance at 1 January 2011 2,221,280 11,583,126 82,083 6,571,993 20,458,482Balance at 31 December 2011 2,213,374 11,354,912 104,336 6,960,952 20,633,574


The adjustment of N=3.6 billion in cost and accumulated depreciation relates to correction of book value of assets shownnet 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-progressexpensed 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=14.2billion 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:

Leasehold land and buildings 50 yearsPlant, vehicles and equipment 4 – 15 yearsComputer and office equipment 3 – 5 years



COMPANY

31 Dec 2012 31 Dec 2011

Percentage Percentage(N=’000) holding (%) (N=’000) holding (%)

12. Interest in subsidiary companies

Unlisted — shares at cost:

Dangote Pasta Limited 2,507,637 99% 2,507,637 99%Dangote Agrosacks Limited 4,956,000 99% 4,956,000 99%Dangote Noodles Limited 90,000 90% 90,000 90%

7,553,637 7,553,637

Loans receivable from subsidiaries — held directly

Dangote Pasta Limited 14,095,272 13,585,059Dangote Noodles Limited 2,857,959 2,538,427

16,953,231 16,123,486

Loans payable to subsidiaries — held directly

Dangote Agrosacks Limited 1,331,717 1,156,049

1,331,717 1,156,049

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 companiesusing the cost and income valuation techniques. The fair value measurement took into account the ability of theGroup to generate economic benefits from the entities by using their plants and assets in their highest and best use.

COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

13. Deferred taxation

Balance at beginning of year:

455,913 398,140 — Deferred tax asset 939,531 398,140(3,569,341) (3,481,939) — Deferred tax liability (4,114,138) (4,075,396)

(3,113,428) (3,083,799) (3,174,607) (3,677,256)

Income statement movement:

545,570 57,773 — Temporary differences : deferred tax asset 681,591 541,391743,541 (87,402) — Temporary differences : deferred tax liability 1,259,059 (38,742)

(1,824,317) (3,113,428) Balance at end of year (1,233,957) (3,174,607)

1,001,483 455,913 — Deferred tax asset 1,621,122 939,531(2,825,800) (3,569,341) — Deferred tax liability (2,855,079) (4,114,138)

Assessed losses available for offset against future taxable income have been recognised in the Company as it is probablethat there will be future taxable income against which the assessed loss may be utilised.



COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

13. Deferred taxation (continued)

Analysis of deferred tax asset balances:

— — Property, plant and equipment 397,045 146,333255,475 383,171 Gratuity 329,110 444,466422,835 — Allowance for bad debts 571,794 275,990323,173 72,742 Others 323,173 72,742

1,001,483 455,913 1,621,122 939,531

Analysis of deferred tax liability balances:

(2,825,800) (3,569,341) Property, plant and equipment (2,855,079) (4,114,138)

(2,825,800) (3,569,341) (2,855,079) (4,114,138)

14. Inventories

6,591,961 4,348,570 Raw materials and work-in-progress 9,861,296 7,871,371107,410 195,456 Finished goods 1,110,440 2,367,772618,077 355,109 Engineering spares and other stock 2,105,109 1,801,212

Amount written down as provision for— — slow moving items (129,983) (368,541)

7,317,448 4,899,135 12,946,862 11,671,814

Inventory is carried at the lower of cost and net realisable value. The amount of write down of inventories recognised asan expense is N=130 million (2011: N=369 million). This expense is included in cost of sales. Inventory recognised as anexpense 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 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

15. Trade and other receivables

9,007,011 9,353,579 Trade receivables 16,758,382 13,143,49146,332 239,165 Prepayments 202,983 427,039

715,188 645,493 Sundry receivables 1,619,970 2,978,789

9,768,531 10,238,237 Total 18,581,335 16,549,319(5,436,248) (4,026,798) Impairment provision: Trade receivables (6,021,843) (4,545,991)

(600,159) (519,159) Impairment provision: Other receivables (627,903) (548,595)

3,732,123 5,692,280 Net trade and other receivables 11,931,589 11,454,733

— 83,502 Long-term portion 3,894 90,8363,732,123 5,608,778 Short-term portion 11,927,694 11,363,897

The average credit period granted to customers is 30 days. Trade receivables, which generally have 30 – 60 day terms, arenone interest-bearing and are recognised and carried at original invoice amount less an allowance for any uncollectibleamount. Included in the provision is N=2.4 billion (2011: N=1.79 billion) of the Dangote Flour Mills Plc’s trade debtorswhich is backed by an insurance bond, overdue by more than one year.



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’sability and also determine the customer’s transaction volumes. This enables a reasonable credit limit to be set. Oncethese are determined the customer is then allowed to apply for a credit facility from the Company through a rigorousprocess with several levels of approval.

Trade receivables disclosed above include amounts that are past due at the end of the reporting period for which theGroup has not recognised an allowance for doubtful debts because there has not been a significant change in creditquality 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 theGroup and Company:

COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

184,849 217,521 Company A 2,187,544 1,514,405176,472 152,278 Company B 757,400 660,547144,442 124,271 Company C 163,104 298,844

505,763 494,070 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 allowanceraised is the amount needed to reduce the carrying value to the present value of expected future cash receipts. Bad debtsare written off when identified. Movements in the provision were:

COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

4,545,957 2,647,151 Balance at the beginning of the year 5,094,586 3,086,130— (414,542) Utilised during the year — (489,554)

1,490,450 2,313,348 Raised during the year 1,555,160 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 1,581,400 Current to 60 days 4,170,229 3,780,204152,011 386,853 61 to 90 days 1,580,646 1,538,503240,235 426,328 91 – 180 days 930,955 989,700

7,785,907 6,958,998 > 180 days 10,076,552 6,835,083

9,007,011 9,353,579 Gross outstanding 16,758,382 13,143,490(5,436,248) (4,026,798) Less: provision (6,021,843) (4,545,991)

3,570,763 5,326,781 Net outstanding 10,736,539 8,597,499

In determining the recoverability of the trade receivable, the Group and Company consider any change in the creditquality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration ofcredit 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 fordoubtful debts.



COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

16. Short-term loans receivable

Unsecured, interest free loans repayableon request:

3,025,036 13,734,353 Due from related parties (refer to Note 23) 5,083,533 13,050,585— — Other short-term loans — 339,510

3,025,036 13,734,353 Total 5,083,533 13,390,095

The carrying amount of short-term loansapproximates their fair value.

17. Cash and bank balances

861,417 1,286,860 Bank balances and short-term deposits 1,817,266 2,431,519

18. Share capital and premium

Authorised share capital

3,000,000 3,000,000 6 000 000 000 ordinary shares of 50k each 3,000,000 3,000,000

Issued ordinary share capital

2,500,000 2,500,000 5 000 000 000 ordinary shares of 50k each 2,500,000 2,500,000

18,116,249 18,116,249 Share premium 18,116,249 18,116,249

19. Retirement benefit obligation

The Company and its subsidiaries operate a defined benefit gratuity scheme entitling employees to certain benefitsafter 5 years of service with the Group. The defined benefit gratuity scheme is un-funded. An actuarial valuation wasdone 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 beenperformed by independent actuaries using the projected unit credit method. The scheme terminated on 30thSeptember 2012 and in view of this, the actuarial valuation was prepared on a discontinuance basis. The scheme’sliability 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 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

(443,828) 196,618 (Curtailment)/Service cost (451,711) 347,525162,541 127,364 Interest cost 214,823 179,229

— (130,231) Actuarial gains — Assumption (2,382) (196,820)— — Actuarial gains — Experience (68,608) (80,050)

(281,287) 193,751 (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 oftransition to IFRS is N=348 million (2011: N=277 million).




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 inrespect of its defined benefit retirement benefit scheme are as follows:

COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

1,277,236 1,083,485 Balance at beginning of the year 1,730,447 1,520,331(443,828) 196,618 (Curtailment)/Service cost (451,711) 347,525162,541 127,364 Interest cost 214,823 179,229

— (130,231) Actuarial gains — Assumption (2,382) (196,820)— — Actuarial gains — Experience (68,608) (80,050)

(144,365) — Benefits paid from Company (168,239) (39,768)

851,584 1,277,236 Balance at the end of the year 1,254,329 1,730,447

Actuarial assumptions

The principal actuarial assumptions used foraccounting purposes were:

13.0% 13.0% Average long-term discount rate (p.a.) 13.0% 13.0%12.0% 12.0% Average long-term salary increase (p.a.) 12.0% 12.0%10.0% 10.0% Average long-term rate of inflation (p.a.) 10.0% 10.0%

Mortality rates in service assumed for employeesare the rates published in the A49/52 ultimatetables, published jointly by the Institute andFaculty of Actuaries in the UK.

Withdrawal from service:3.0% 3.0% Age band — Less than or equal to 30 3.0% 3.0%2.0% 2.0% Age band — 31 to 39 2.0% 2.0%2.0% 2.0% Age band — 40 to 49 2.0% 2.0%0.0% 0.0% Age band — 50 to 60 0.0% 0.0%

20. Long-term borrowings

— — Balance at beginning of the year 4,200,000 —14,725,606 — Loan advanced 14,725,606 4,663,820

— — Repayment (2,016,000) (463,820)

14,725,606 — Balance at the end of the year 16,909,606 4,200,000

10,524,375 — Long-term portion 10,692,375 2,184,000Short-term portion included in short-term

4,201,231 — 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 atfixed interest rates of 15% and 16% per annum. The loans are secured by debenture on the assets of DangoteAgrosacks Limited, Obajana Agrosacks Limited and Dangote Flour Mills Limited.


COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

21. Trade and other payables

3,758,152 3,522,678 Trade payables and accruals 8,521,991 9,074,5991,074,779 900,404 Customers’ deposits 1,473,427 1,570,285

196,048 770,757 Deferred income (wheat rebate) 196,048 770,757144,749 107,190 Withholding tax 242,290 220,547

5,173,728 5,301,029 Net trade and other payables 10,433,756 11,636,188

The average credit period on purchases is1 month. No interest is charged on the tradepayables from the date of the invoice.The Group has financial risk managementpolicies in place to ensure that all payablesare paid within pre-agreed credit terms.

22. Short-term borrowings

— 5,500,000 Unsecured loans (a) 315,867 5,790,342Amounts due to related parties

2,734,773 2,236,273 (refer to Note 23) 8,071,259 2,120,978— 11,710,541 Short-term bank loans 1,500,000 13,638,611

8,242,610 3,759,960 Letters of credit for wheat purchases 8,242,610 3,759,960Short-term portion of long-term

4,201,231 — borrowings (Note 20) 6,217,231 2,016,000

15,178,614 23,206,774 Total 24,346,967 27,325,891

(a) The Company obtained facilities of N=5 billionand N=1 billion commercial paper fromDangote Industries Limited which have beenrepaid during 2011. A subsidiary of theCompany, Dangote Noodles Limited secureda loan of N=310 million from Dangote IndustriesLimited at a fixed interest rate of 8% p.a.The carrying amount of short-term borrowingsapproximates their fair value.




COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

23. Related party disclosures

Unless stated otherwise, all related partytransactions are concluded at arm’s lengthin the normal course of business.All material intergroup transactions areeliminated on consolidation. The followingrelated party balances existed:

Amounts due from related parties(refer to Note 16)

2,516 — a Dangote Cement Plc 115,813 372,0483,021,642 13,681,853 b Dangote Industries Limited 4,662,355 12,339,877

— — c National Salt Company of Nigeria Plc — 75,8301,500 1,500 Dangote Fisheries Nigeria Limited 1,500 1,500

51,000 51,000 d Dangote Textiles Nigeria Limited 55,593 55,593— — e Dangote Foundation 115,213 66,903— — f Dangote Sugar Refinery Plc — 120,100— — ADSTAR International Company — 3,353— — Dangote Freight Limited 15,381 15,381

3,606 — Others 350,950 —(55,228) — Impairment Allowance (233,272) —

3,025,036 13,734,353 Total 5,083,533 13,050,585

During the year the Company haddealings with subsidiaries and relatedcompanies.The balances emanating from the transactionshave been disclosed in the balance sheet asanalysed below:

Purchase of goods and services

393,095 657,571 Dangote Agrosacks Nigeria Limited47,819 53,840 Dangote Sugar Refinery Plc 47,819 53,840

156,143 156,143 Greenview Development Nigeria Limited 156,143 156,14393,216 91,899 Dangote Technologies Limited 154,284 142,529

690,273 959,453 358,246 352,512



COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N=’000) 2012 2011

23. Related party disclosures

Sale of goods

1,471,137 1,085,300 Dangote Noodles Limited — —— — Dangote Foundation 239,633 34,444— — Dangote Sugar Refinery Plc 1,132,497 1,364,217— — Dangote Industries Limited 93,328 65,340— — National Salt Company of Nigeria Plc 344,435 322,563— — Dangote Cement Plc 13,148,162 9,040,432

1,471,137 1,085,300 14,958,055 10,826,996

Loans receivable/(due) from subsidiaries— held directly

14,095,272 13,585,059 Dangote Pasta Limited — —2,857,959 2,538,427 Dangote Noodles Limited — —

(1,331,717) (1,156,049) Dangote Agrosacks Limited — —

15,621,514 14,967,437

Amounts due to related parties(refer to Note 22)

68,061 68,061 g Dangote Nigeria Limited 76,817 76,816— — Dangote Industries Limited 3,953,741 —

1,779,631 1,779,631 h Dangote Transport Nigeria Limited 1,871,065 1,871,357148,694 100,883 f Dangote Sugar Refinery Plc 323,092 —42,931 48,846 Bluestar Shipping Company 42,931 44,502

474,771 27,591 Greenview Development Nigeria Limited 474,771 27,591— 924 National Salt Company of Nigeria Plc 17,033 —

17,645 9,813 Dangote Port Operations 18,168 9,813— — Dansa Foods Limited — 1,493

203,040 200,524 a Dangote Cement Plc 1,116,877 —— — Dancom Technologies Limited 111,698 50,630— — Bulk Pack Nigeria Limited 13,857 20,527— — Other 51,209 18,249

2,734,773 2,236,273 Total 8,071,259 2,120,978

(a) Dangote Cement Plc is a related company through common shareholdings. Dangote Cement Plc buysconsumables from Dangote Agrosacks Ltd, a subsidiary of the Company and provides haulage trucks from timeto time to the Company.

(b) Dangote Industries Limited is a related company through shareholding in DFM. A significant repayment of theamount due was received during the period under review.

(c) National Salt Company of Nigeria Plc is a related company through common shareholding and procuresconsumables from Dangote Agrosacks Ltd, a subsidiary of the Company.

(d) Dangote Textiles Nigeria Limited is a related company through common shareholding. No transactions wereconcluded during the period under review.

(e) Dangote Foundation is a related company through common shareholding and buys pasta and noodles productsfrom the Company’s subsidiaries.

(f) Dangote Sugar Refinery Plc is a related company by means of common shareholding and provides power andLPFO (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 concludedduring the year.

(h) Dangote Transport Nigeria Limited is a related party by means of common shareholding and provides haulageservices to the Company and the Group.

24. Remuneration of directors

Remuneration of Executive non-Executive Directors of the Company is as follows:

Basic Group(N=’000) salary benefits Bonuses Total

Executive Directors

For the year ended 31 December 2012:

Mr. Ekanem Etim — 7,350 — 7,350Alh. Suleiman Olarinde — 7,350 — 7,350Mr. Narenda Somani — — — —

— 14,700 — 14,700

For the year ended 31 December 2011:

Mr. Rohit Chaudhy — 400 — 400Alh. Suleiman Olarinde — 600 — 600Mr. Narenda Somani — 1,000 — 1,000Mr. Ekanem Etim — 600 — 600

— 2,600 — 2,600

For the year ended For the year ended31 December 2012 31 December 2011

Board Other Board Other(N=’000) meetings fees Total meetings fees Total

Non-Executive Directors

Alh. Aliko Dangote 1,250 6,274 7,524 1,200 5,701 6,901Alh. Sani Dangote 600 5,650 6,250 800 5,601 6,401Mr. Olakunle Alake 2,000 5,649 7,649 1,600 5,601 7,201Mr. Uzoma Nwankwo 1,000 5,650 6,650 600 5,601 6,201Alh. Abdu Dantata 800 5,649 6,449 1,200 5,601 6,801Mr. Asue Ighodalo 1,600 5,650 7,250 1,200 5,691 6,891Brig-Gen. S. L. Teidi 1,200 7,642 8,842 2,680 7,595 10,275Alh. Abdullahi S. Mahmoud 1,700 6,953 8,653 1,440 5,671 7,111Alh. Shuaibu Idris — — — — 4,862 4,862

10,150 49,117 59,267 10,720 51,924 62,644

Number of ordinary Percentage of issuedNature of interest shares (‘000) share capital

Directors’ interest in share capital

At 31 December 2012:

Alh. Aliko Dangote shareholding 38,729 0.77%Mr. Olakunle Alake shareholding 2,378 0.05%


Alhaji Aliko Dangote shareholding 38,728.9 0.77%Mr. Olakunle Alake shareholding 2,377.5 0.05%Alh. Abdullahi S. Mahmoud shareholding 43.8 0.00%


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 arisingprincipally as a result of commodity price, currency and interest rate fluctuations. The use of derivatives for thehedging of firm commitments against commodity price, foreign currency and interest rate exposures must be approvedby the Board of Directors. Significant finance obtained is approved by the Board of Directors. The Group finances itsoperations 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 tomeet its contractual obligations and arises principally from the Group’s trade receivables (customers) and investmentsecurities.

The potential concentration of credit risk consists mainly of other receivables and cash and cash equivalents. TheGroup limits its counterparty exposures from its cash and cash equivalents by dealing only with well establishedfinancial institutions of a high quality credit standing. The maximum exposure to credit risk is represented by thecarrying 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 monitoringprocedures.

Certain significant receivables are monitored on a daily basis. Where appropriate, credit guarantee insurance isobtained. The Group’s credit exposure in respect of its customer base is represented by the net aggregate balance ofamounts 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 supplyconditions, weather, economic conditions and other factors. The strategic raw materials acquired by the Groupinclude wheat, and polypropylene.

The Group will implement the use of commodity futures and option contracts or other derivative instruments toreduce the volatility of commodity input prices of strategic raw materials. Derivative contracts will be taken out inorder 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 anagreement 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 yearended December 2012.

31 December 31 December(N= ‘000) 2012 2011

Effect on gross profit ( + 10% ) (1,300,754) (3,297,465)Effect on gross profit ( – 10% ) 1,297,307 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’sapproach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient cash on demandto meet its liabilities when they fall due, under both normal and stressed conditions, without incurring unacceptablelosses 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 availableor 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 financialliabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on theearliest date on which the Group and Company will be required to pay. The table includes both interest and principalcash flows.



25. Financial instruments (continued)

Carrying 0–6 7–12 1–5 > 5 yearsGroup (N= ‘000) amount months months years


Trade and other payables 10,433,757 10,433,757 — — —Borrowings (long and short-term) 35,039,342 3,629,499 3,111,000 28,298,843 —



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 bankborrowings. The Group manages interest rate risk by ensuring that loans to and from subsidiary and other relatedcompanies are interest free or on a variable rate basis to reflect the interest earned on the funds so invested thusproviding an economic hedge.

The interest rate sensitivity analysis detailed below addresses only the floating interest rate exposure emanatingfrom the net cash position.

The interest rate exposure has been calculated with the stipulated change taking place at the beginning of thefinancial year and held constant throughout the reporting period. If interest rates had increased/(decreased) by10% and all other variables were held constant, the profit for the year ended would increase/(decrease) as detailedin the table below.

Average Effect onfloating profit Effect on

Carrrying rate before tax profit beforeGroup (N=’000) amount (%) (+10%) tax (–10%)


Cash and bank balances 1,817,266 17.0% 36,115 (36,115)Bank overdrafts (1,925,162) 17.0% (102,091) 102,091



Company


Cash and bank balances 861,417 17.1% 18,368 (18,368)Bank overdrafts (162,598) 17.0% (70,958) 70,958





25. Financial instruments (continued)

Foreign currency risk

The Group has currency exposure arising from purchases of raw material and goods and services in currencies otherthan the reporting currency. The Group manages this risk by settling invoices as soon as possible and by outsourcingthe procurement and supply of wheat to its parent company. The Group does not enter into foreign exchangecontracts 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 monitoredand reported regularly.

Capital management

The Group’s policy is to maintain a strong capital base and healthy capital ratios so as to maintain investor, creditorand market confidence and to sustain future development of the business. The Company and Group manages itscapital structure, calculated as equity plus net debt and makes adjustments to it, in light of changes in economicconditions. To maintain or adjust the capital structure, the Company and Group may adjust the dividend paymentto 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 ofthis review, the committee considers the cost of capital and the risks associated with each class of capital. TheGroup has put in place measures to improve on current gearing ratios.

Gearing ratio

Gearing ratios are as follows:

COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N= ‘000) 2012 2011

25,702,989 23,206,774 Debt 35,039,342 29,509,891(698,819) 6,898,512 Cash and cash equivalents 107,896 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 andreceivables Payables

at and loans at Non-amortised amortised financial Total book

cost cost items valueGroup (N= ‘000)


Non-financial assets — — 58,616,631 58,616,631Short-term loans receivable 5,083,533 — — 5,083,533Trade and other receivables 11,931,588 — — 11,931,588Cash and bank balances 1,817,266 — — 1,817,266Bank overdraft — (1,925,162) — (1,925,162)Shareholders’ equity and liabilities — — (29,432,934) (29,432,934)Long-term borrowings — (10,692,375) — (10,692,375)Trade and other payables — (11,051,580) — (11,051,580)Short-term borrowings — (24,346,967) — (24,346,967)

18,832,387 (48,016,084) 29,183,697 —




25. Financial instruments (continued)Loans and Payables

receivables at and loan at Non-amortised amortised financial Total book

cost cost items value

At 31 December 2011:Non-financial assets — — 59,449,341 59,449,341Short-term loans receivable 13,390,095 — — 13,390,095Trade and other receivables 11,454,733 — — 11,454,733Cash and bank balances 2,431,519 — — 2,431,519Bank overdraft — (10,085,546) — (10,085,546)Shareholders’ equity and liabilities — — (33,943,463) (33,943,463)Long-term borrowings — (2,184,000) — (2,184,000)Trade and other payables — (13,186,788) — (13,186,788)Short-term borrowings — (27,325,891) — (27,325,891)

27,276,347 (52,782,225) 25,505,878 —

Categorization of financial assets and liabilities

Company (N= ‘000)


Non-financial assets — — 27,066,398 27,066,398Investments in subsidiaries — — 7,553,637 7,553,637Short-term loans receivable 3,025,036 — — 3,025,036Amounts owed by subsidiaries — — 16,953,231 16,953,231Trade and other receivables 3,732,123 — — 3,732,123Cash and bank balances 861,417 — — 861,417Bank overdraft — (162,598) — (162,598)Shareholders’ equity and liabilities — — (26,391,857) (26,391,857)Long-term borrowings — (10,524,375) — (10,524,375)Trade and other payables — (5,602,681) — (5,602,681)Short-term borrowings — (16,510,331) — (16,510,331)

7,618,576 (32,799,985) 25,181,409 —


Non-financial assets — — 25,988,622 25,988,622Investments in subsidiaries — — 7,553,637 7,553,637Short-term loans receivable 13,734,353 — — 13,734,353Amounts owed by subsidiaries — — 16,123,486 16,123,486Trade and other receivables 5,692,280 — — 5,692,280Cash and bank balances 1,286,860 — — 1,286,860Bank overdraft — (8,185,372) — (8,185,372)Shareholders’ equity and liabilities — — (31,199,169) (31,199,169)Long-term borrowings — — — —Trade and other payables — (6,631,874) — (6,631,874)Short-term borrowings — (24,362,823) — (24,362,823)

20,713,493 (39,180,069) 18,466,576 —

Fair value of financial instruments

Financial instruments are normally held by the Group until they close out in the normal course of business. There areno significant differences between carrying values and fair values of financial assets and liabilities. Trade and otherreceivables, investments and loans and trade and other payables carried on the statement of financial positionapproximate the fair values thereof. Long-term and short-term borrowings are measured at amortised cost using theeffective 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 notbased on observable market data for determining and disclosing the fair value of financial instrument.


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 allegednegligence.

CommitmentsLease commitments under operating leases for periods of no more than 12 months:

COMPANY GROUP

31-Dec 31-Dec 31-Dec 31-Dec2012 2011 (N= ‘000) 2012 2011

Lease as lesseeNon-cancellable operating lease rentalsare payable as follows:

189,334 189,934 – Less than one year 227,492 231,763221,484 221,122 – One to five years 270,607 494,665

Capital commitments— 68,858 Authorised and committed — 68,858

410,818 479,914 Total commitments 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 providedfor 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. Thecases have been reported to relevant law enforcement authorities and internal recovery efforts are on-going. Fullprovision has been made in the financial statements for the net amount involved. Management has taken thefollowing steps to prevent fraudulent transactions:

— The Internal Audit Function has been strengthened with the appointment of an external consultant as GroupInternal 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 systemswith a view to identifying shortcomings, redesigning and standardizing business processes and implementingsystem changes and organizational structures where necessary, including replacing the ERP system.

29. Segment information

Products from which reportable segments derive their revenueInformation reported to the chief operating decision maker for the purposes of resource allocation and assessmentof 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 flourPasta: manufactures and sells spaghetti and macaroniSacks: manufactures and sells packaging materialsNoodles: manufactures and sells noodles

All segments operate in the same geographical area and on an arm’s length basis in relation to inter-segmentpricing.

The factors used to identify the Group’s reportable segments include the basis of organisation and the format ofregular reporting to management as a basis for decision making. Management has chosen to organise the Grouparound differences in products and separate entities within the Group. None of the segments have been aggregated.



29.

Segm

ent

reve

nue

and

resu

lts

The

follo

win

g is

the

anal

ysis

of t

he G

roup

’s r

even

ue a

nd r

esul

ts fr

om c

ontin

uing

ope

ratio

ns b

y re

port

able

seg

men

ts:

Prof

it a

ndFl

our

Past

aN

oodl

esIn

ter-

grou

p(N=

’000

)pr

oduc

tsSa

cks

prod

ucts

prod

ucts

elim

inat

ions

Tota

l

For

the

year

end

ed 3

1 D

ecem

ber

2012

Reve

nue

29,8

59,9

7617

,202

,738

8,61

0,38

84,

866,

467

(1,8

64,2

32)

58,6

75,3

37C

ost o

f sal

es(2

8,74

0,53

3)(1

4,08

9,42

7)(7

,642

,206

)(4

,791

,767

)1,

864,

232

(53,

399,

701)

Gro

ss p

rofi

t1,

119,

443

3,11

3,31

196

8,18

274

,700

—5,

275,

636

Dis

trib

utio

n an

d ad

min

istr

ativ

e ex

pens

es(2

,360

,838

)(6

28,0

02)

(1,6

33,9

38)

(815

,725

)—

(5,4

38,5

03)

Oth

er in

com

e41

4,93

117

8,55

438

,007

33,6

35—

665,

127

Ope

rati

ng in

com

e be

fore

abn

orm

al it

ems

(826

,464

)2,

663,

863

(627

,749

)(7

07,3

90)

—50

2,26

0Ab

norm

al it

ems

(1,4

09,4

50)

——

——

(1,4

09,4

50)

Ope

rati

ng in

com

e af

ter

abno

rmal

item

s(2

,235

,914

)2,

663,

863

(627

,749

)(7

07,3

90)

—(9

07,1

90)

Net

fina

nce

cost

s(2

,028

,669

)(1

,061

,243

)22

,277

(25,

526)

—(3

,093

,161

)

(Los

s)/P

rofi

t be

fore

tax

atio

n(4

,264

,583

)1,

602,

620

(605

,472

)(7

32,9

16)

—(4

,000

,351

)In

com

e ta

x ex

pens

e1,

126,

464

478,

356

132,

195

——

1,73

7,01

5

(Los

s)/P

rofi

t fo

r th

e ye

ar(3

,138

,119

)2,

080,

976

(473

,277

)(7

32,9

16)

—(2

,263

,336

)

For

the

year

end

ed 3

1 D

ecem

ber

2011

Reve

nue

38,6

79,8

4414

,156

,824

12,5

81,7

642,

605,

765

(1,7

42,8

71)

66,2

81,3

26C

ost o

f sal

es(3

1,37

2,61

8)(1

2,69

5,02

3)(1

1,18

0,53

1)(2

,683

,743

)1,

735,

840

(56,

196,

075)

Gro

ss p

rofi

t7,

307,

226

1,46

1,80

11,

401,

233

(77,

978)

(7,0

31)

10,0

85,2

51D

istr

ibut

ion

and

adm

inis

trat

ive

expe

nses

(2,9

51,7

83)

(616

,198

)(1

,581

,877

)(8

74,3

24)

—(6

,024

,182

)O

ther

inco

me

259,

472

62,6

8736

,981

22,3

87—

381,

527

Ope

rati

ng in

com

e be

fore

abn

orm

al it

ems

4,61

4,91

590

8,29

0(1

43,6

63)

(929

,915

)(7

,031

)4,

442,

596

Abno

rmal

item

s –

Impa

irmen

t allo

wan

ce o

n tr

ade

rece

ivab

les

(1,4

84,2

65)

——

——

(1,4

84,2

65)

Ope

rati

ng in

com

e af

ter

abno

rmal

item

s3,

130,

650

908,

290

(143

,663

)(9

29,9

15)

(7,0

31)

2,95

8,33

1N

et fi

nanc

e co

sts

(1,7

57,4

20)

(420

,618

)4,

873

(26,

424)

—(2

,199

,589

)

Prof

it/(

loss

) be

fore

tax

atio

n1,

373,

230

487,

672

(138

,790

)(9

56,3

39)

(7,0

31)

758,

742

Inco

me

tax

expe

nse

(583

,078

)15

1,35

632

2,05

4—

—(1

09,6

68)

Prof

it/(

loss

) fo

r th

e ye

ar79

0,15

263

9,02

818

3,26

4(9

56,3

39)

(7,0

31)

649,

074

Not

es to

the

Cons

olid

ated

and

Sep

arat

e Fi

nanc

ial S

tate

men

tsFo

r th

e ye

ar e

nded

31

Dec

embe

r, 20

12


29.

Segm

ent

reve

nue

and

resu

lts

(con

tinu

ed)

Prof

it a

ndFl

our

Past

aN

oodl

esIn

ter-

grou

pA

s at

31

Dec

embe

r 20

12(N=

’000

)pr

oduc

tsSa

cks

prod

ucts

prod

ucts

elim

inat

ions

Tota

l

Tota

l ass

ets

59,1

91,8

4422

,380

,625

19,6

23,6

452,

190,

306

(25,

937,

401)

77,4

49,0

18To

tal l

iabi

litie

s(3

6,47

7,36

9)(1

2,16

5,42

8)(1

6,11

7,87

9)(5

,741

,651

)18

,376

,835

(52,

125,

492)

As a

t 31

Dec

embe

r 20

11

Tota

l ass

ets

70,3

79,2

3821

,345

,226

20,3

90,3

282,

559,

168

(28,

031,

278)

86,6

42,6

82To

tal l

iabi

litie

s(4

4,02

6,64

6)(1

3,16

1,26

6)(1

6,54

5,87

8)(5

,363

,612

)20

,470

,592

(58,

626,

810)

Oth

er s

egm

ent i

nfor

mat

ion

For

the

year

end

ed 3

1 D

ecem

ber

2012

Dep

reci

atio

n2,

180,

284

1,03

0,86

41,

201,

078

230,

433

—4,

642,

659

Addi

tions

to

non-

curr

ent a

sset

s30

6,78

61,

088,

030

657,

417

133,

260

—2,

185,

493

For

the

year

end

ed 3

1 D

ecem

ber

2011

Dep

reci

atio

n1,

101,

981

785,

596

978,

267

193,

723

—3,

059,

567

Addi

tions

to n

on-c

urre

nt a

sset

s1,

342,

514

4,40

9,97

81,

524,

658

128,

655

—7,

405,

805

Impa

irmen

t lo

sses

rec

ogni

sed

durin

g th

e ye

ar in

resp

ect

of p

rope

rty,

pla

nt a

nd e

quip

men

t13

,189

—8,

591

3,74

0—

25,5

20

Reve

nue

from

maj

or p

rodu

cts

and

serv

ices

The

follo

win

g is

the

anal

ysis

of G

roup

’s r

even

ue fr

om c

ontin

uing

ope

ratio

ns fr

om it

s m

ajor

pro

duct

s an

d se

rvic

es:

For

the

year

end

ed 3

1 D

ecem

ber

2012

28,3

88,8

3916

,809

,643

8,61

0,38

84,

866,

467

—58

,675

,337

For

the

year

end

ed 3

1 D

ecem

ber

2011

37,5

94,5

4413

,499

,253

12,5

81,7

642,

605,

765

—66

,281

,326

Not

es to

the

Cons

olid

ated

and

Sep

arat

e Fi

nanc

ial S

tate

men

tsFo

r th

e ye

ar e

nded

31

Dec

embe

r, 20

12


Con

solid

ated

Sta

tem

ent

of V

alue

Add

edFo

r th

e ye

ar e

nded

31

Dec

embe

r, 20

12

NO

N-I

FRS

CO

MP

LIA

NT

STA

TEM

ENTS

Com

pany

Gro

up

2012

2011

2012

2011

N=’0

00%

N=’0

00%

N=’0

00%

N=’0

00%

Reve

nue

29,8

59,9

7638

,679

,844

58,6

75,3

3766

,281

,326

Oth

er in

com

e

4

14,9

31 2

59,4

72 6

65,1

2738

1,52

7In

tere

st in

com

e

30,

974

3,7

67 5

3,25

1 8

,724

30,3

05,8

8138

,943

,083

59,3

93,7

1566

,671

,577

Less

: Bou

ght i

n m

ater

ials

and

ser

vice

s:–

Impo

rted

(17,

278,

420)

(27,

319,

652)

(20,

737,

509)

(48,

933,

339)

– Lo

cal

(11,

137,

141)

(5,4

19,6

23)

(30,

779,

631)

(7,8

67,6

00)

Valu

e A

dded

1,89

0,32

010

06,

203,

808

100

7,87

6,57

510

09,

870,

638

100

App

lied

as f

ollo

ws

To p

ay e

mpl

oyee

sSa

larie

s, w

ages

and

oth

er b

enef

its1,

914,

976

101

1,83

7,17

930

3,99

0,11

151

3,56

7,14

636

To p

ay p

rovi

ders

of

capi

tal

Inte

rest

pay

able

and

sim

ilar

char

ges

2,05

9,64

310

91,

761,

187

283,

146,

412

402,

208,

313

22

To p

ay g

over

nmen

tTa

xatio

n16

2,64

79

553,

449

920

3,99

63

612,

317

6

To p

rovi

de f

or e

nhan

cem

ent

of a

sset

s an

d gr

owth

Def

erre

d ta

xatio

n lia

bilit

y/(a

sset

)(1

,289

,111

)(6

8)29

,629

—(1

,941

,011

)(2

5)(5

02,6

49)

(8)

Dep

reci

atio

n2,

180,

284

115

1,10

1,98

118

4,66

9,41

359

3,05

9,56

731

Non

-con

trol

ling

Inte

rest

——

——

577,

377

730

2,32

23

(Los

s su

stai

ned)

/pro

fit r

etai

ned

(3,1

38,1

19)

(166

)92

0,38

315

(2,7

69,7

23)

(35)

623,

622

9

1,89

0,32

010

06,

203,

808

100

7,87

6,57

510

09,

870,

638

100

Valu

e ad

ded

repr

esen

ts th

e ad

ditio

nal w

ealth

the

Gro

up h

as b

een

able

to c

reat

e by

its

own

and

its e

mpl

oyee

s’ e

ffor t

s. T

his

stat

emen

t sho

ws

the

allo

catio

nof

that

wea

lth a

mon

g em

ploy

ees,

cap

ital p

rovi

ders

, gov

ernm

ent a

nd th

at r

etai

ned

for

futu

re c

reat

ion

of m

ore

wea

lth.

This

rep

ort

is n

ot r

equi

red

unde

r IF

RS.

Inst

ead,

it h

as b

een

prep

ared

in c

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Five Years Financial SummaryAs at 31 December

GROUP

IFRS IFRS NGAAP NGAAP NGAAP2012 2011 2010 2009 2008

N=’000 N=’000 N=’000 N=’000 N=’000

Property, plant and equipment 44,048,647 46,754,990 41,229,708 35,238,199 32,449,283Investments — — — — 601,900Deferred taxation asset 1,621,122 939,531 — 328,067 —Other long-term assets 3,894 90,836 — — —Net current (liablities)/assets (5,548,354) (11,740,900) (9,845,390) (6,583,596) (7,839,343)

40,125,309 36,044,457 31,384,318 28,982,670 25,211,840

Deferred taxation liabilities (2,855,079) (4,114,138) (3,409,430) — —Gratuity provision (1,254,329) (1,730,447) (828,013) (559,926) (582,037)Long-term loan (10,692,375) (2,184,000) — — —

25,323,526 28,015,872 27,146,875 28,422,744 24,629,803

CAPITAL AND RESERVES

Share capital 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000Share premium 18,116,249 18,116,249 18,116,249 18,116,249 18,116,249Retained earnings 3,627,929 6,897,652 6,327,597 7,573,899 3,812,016Non-controlling interest 1,079,348 501,971 203,029 232,596 201,538

25,323,526 28,015,872 27,146,875 28,422,744 24,629,803

REVENUE AND PROFIT

Revenue 58,675,337 66,281,326 67,600,954 61,388,064 47,927,300

(Loss)/profit before taxation (4,000,351) 758,742 4,911,885 5,374,056 3,167,625Other comprehensive income items 70,990 276,870 — — —Taxation 1,737,015 (109,668) (2,189,310) 187,024 (178,066)Non-controlling interest (577,377) (302,322) 39,567 (30,348) (42,111)

(Loss)/profit transferred to revenue reserve (2,769,723) 623,622 2,762,142 5,530,732 2,947,448

Per share data — 50k ordinary share (55) 12 55 111 59Net assets (Naira) 5 6 5 6 5

Note:

1. Earnings per share are based on profit after taxation and the number of issued and fully paid ordinary shares at theend 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 ofeach financial year.

This report is not required under IFRS. Instead, it has been prepared in compliance with the Companies andAllied Matters Act (CAMA) requirement.


Five Years Financial SummaryAs at 31 December

COMPANY

IFRS IFRS NGAAP NGAAP NGAAP2012 2011 2010 2009 2008

N=’000 N=’000 N=’000 N=’000 N=’000

Property, plant and equipment 18,747,467 20,633,574 19,880,243 18,961,805 15,732,634Investments in subsidiary companies 7,553,637 7,553,637 7,553,637 7,463,637 7,463,637Deferred taxation asset 1,001,483 455,913 — 328,067 —Other long-term assets — 83,502 — — —Net current assets 9,613,645 2,472,543 2,829,608 460,695 337,950

36,916,232 31,199,169 30,263,488 27,214,204 23,534,221

Deferred taxation liabilities (2,825,800) (3,569,341) (3,136,273) — —Gratuity provision (851,584) (1,277,236) (638,061) (464,623) (376,362)Long-term loan (10,524,375) — — — —

22,714,473 26,352,592 26,489,154 26,749,581 23,157,859

CAPITAL AND RESERVES

Share capital 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000Share premium 18,116,249 18,116,249 18,116,249 18,116,249 18,116,249Retained earnings 2,098,224 5,736,343 5,872,905 6,133,332 2,541,610

22,714,473 26,352,592 26,489,154 26,749,581 23,157,859

REVENUE AND PROFIT

Revenue 29,859,976 38,679,844 42,695,383 41,839,919 30,109,610

(Loss)/profit before taxation (4,264,583) 1,373,230 5,481,077 5,156,801 1,758,137Other comprehensive income items — 130,231 – – –Taxation 1,126,464 (583,078) (1,727,829) 203,060 (54,045)

(Loss)/profit transferred to revenue reserve (3,138,119) 920,383 3,753,248 5,359,861 1,704,092

Per share data — 50k ordinary share(Loss)/earnings — Basic (kobo) (63) 18 75 107 34Net assets (Naira) 4.54 5.27 5.30 5.35 4.63

Note:

1. Earnings per share are based on profit after taxation and the number of issued and fully paid ordinary shares at theend 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 ofeach financial year.

This report is not required under IFRS. Instead, it has been prepared in compliance with the Companies andAllied Matters Act (CAMA) requirement.


Share Capital History/Data on Unclaimed Dividends

Total Amountof Dividends TotalTransferred Dividends Unclaimed

Total Amount to the Registrars Paid to and Total AmountDividend No. of of Dividends (Net Withholding Investors by Returned to of Unclaimed

Year Years Declared Tax) the Registrars the Company Dividends

N= N= N= N= N=

2009 1 1,000,000,000.00 900,000,000.00 810,677,244.42 — 89,322,755.58

2009 2 1,500,000,000.00 1,350,000,000.00 1,184,813,868.24 — 165,186,131.76

2010 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

Dangote Flour Mills Plc was quoted on the Nigerian Stock Exchange on 4th February, 2008.

The share capital history of the Company is as indicated below:

Date Authorised Share Capital Issued and Fully Paid Consideration

Value Shares Value Shares

04/02/2008 3,000,000,000 6,000,000,000 2,500,000,000 5,000,000,000 Cash

SHARE CAPITAL HISTORY

DATA ON UNCLAIMED DIVIDENDS

D A N G OT E F L O U R M I L LS P L C

Notes

71

D A N G OT E F L O U R M I L LS P L C

Notes

72

Proxy FormFLOUR

Dangote Flour Mills PlcRC 501757

DANGOTE FLOUR MILLS PLC7TH ANNUAL GENERAL MEETING TO BE HELD AT11.00 A.M. ON MONDAY, 19TH AUGUST, 2013 AT

TRANSCORP METROPOLITAN HOTELS, 10 MURTALAMOHAMMED HIGHWAY, CALABAR, CROSS RIVER STATE.

I/We* ........................................................................................................

of ...............................................................................................................

hereby appoint ......................................................................................

...................................................................................................................

of ...............................................................................................................or failing him, the Chairman of the meeting, as my/our proxyto act and vote for me/us and on my/our behalf at the SeventhAnnual General Meeting of the Company to be held at11.00 a.m. on Monday, 19th August, 2013.

Dated this ................ day of .......................................... 2013.

Signature .................................................................................................

NOTES

1. Please sign this proxy card and post it to reach theregistered office of the Company not less than 48 hoursbefore the time for holding the meeting.

2. If executed by a corporation, the proxy card should besealed with the common seal.

3. This proxy card will be used both by show of hands andin the event of a poll being directed or demanded.

4. In the case of joint holders the signature of any one ofthem will suffice, but the names of all joint holders shouldbe shown.

Admission CardDANGOTE FLOUR MILLS PLC

PLEASE ADMIT THE SHAREHOLDER ON THIS FORM OR HIS/HER APPOINTED PROXY TO THE7TH 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 MEETINGA member (shareholder) who is unable to attend Annual General Meeting is allowed by law to vote by proxy. A proxyneed not be a member of the Company. The above proxy card has been prepared to enable you exercise your right tovote if you cannot personally attend.

No. of Shares held Signature of person attending

IMPORTANTPlease insert your name in BLOCK CAPITALS on both proxy and admission card where marked*.


Dated this 3rd day of June, 2013

RESOLUTIONS FOR AGAINST

1. To lay the Audited Financial Statements of theCompany for the year ended 31st December2012 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 theremuneration of the Auditors

4. To appoint members of the Audit Committee

5. Special BusinessTo consider and if thought fit, pass thefollowing resolution as an Ordinary Resolution:“That in accordance with Section 284 of theCompanies and Allied Matters Act Cap C20Laws of the Federation of Nigeria, 2004, andthe Directors having so recommended andsubject to agreement being reached betweenthe Company and Dangote Industries Limited(DIL), the sale to Dangote Industries Limited ofthe shares held by the Company in the issuedshare capital of Dangote Agrosacks Limited beand is hereby approved subject to the Companyand Dangote Industries Limited executing a saleand purchase agreement in relation to theacquisition of the shares and obtaining allrequisite regulatory approvals, and that theDirectors be and are hereby authorised to applythe proceeds of the sale to the business of theCompany as they may deem fit.”

6. To consider and if thought fit pass thefollowing as a Special Resolution:“That the DIrectors having so recommended,the financial year of the Company be and ishereby changed from 31 December to30 September of each year.

The end of the first new financial year beingSeptember, 2013 having a nine-month period.”

Please indicate with an “X” in the appropriate space how you wish your votes to becast on resolutions set out above. Unless otherwise instructed, the proxy will vote orabstain 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.

The RegistrarsEDC Registrars Ltd.154, Ikorodu Road, Onipanu,Shomolu, Lagos.

Printed by Academy Press Plc., Lagos.

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Dangote flour mill annual report 2012

Investor Relations

Transcript of Dangote flour mill annual report 2012