Information Memorandum
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Transcript of Information Memorandum
COMPANY AND BUSINESS OVERVIEW
Company Overview
Dangote Sugar Refinery Company Plc (“DSR”) commenced operations as a sugar refinery in March 2000
The plant was commissioned in 2001 with an initial capacity of 600,000 MT p.a.
Now one of the largest refineries in the world with a capacity of 1.44 million MT p.a
Refinery is located in Lagos, Nigeria’s largest port where shipment of raw sugar from Brazil is received
DSR until 2008 was Nigeria’s sole white sugar refiner with a dominant market position
DSR shares were listed on The NSE in on March 12th 2007 at a price of N18 per share after a successful IPO which opened in November 2006, at N18 per 50 kobo ordinary share and listed on March 12th 2007.
Board Alhaji Aliko Dangote – Chairman
Engr. Abdullahi Sule - MD
Dr. Konyinsola Ajayi (SAN)
Mr. Olakunle Alake
Alhaji Sani Dangote
Alhaji Abdul Garba Dantata
Ms Bennedikter China Molokwu
Mr. Uzoma Nwankwo
Mr. Suleiman Olarinde
Management
Mr. Maryoud Elsunni, ED – Engineering & Operations (over 30 years of experience)
Engr. Ogunwale, General Manager Refinery (26 years experience in engineering)
Mr Okoh, Head of Processing (16 years experience in manufacturing)
Business Overview
Leading in the Sugar Refinery business in sub-Saharan Africa.
Delivering on the strategy:
Retail packaging plant.
Staff incentivisation programme
Positive long term outlook on the back of expansion plan
Competitive Advantage…..
Management
Current top management have proven track record and multi-decade experience (average tenure of c.25 years)
Highly motivated and well trained middle management
Modern manufacturing facilities
State-of-the art technology resulting in lower costs per tonne
Highly scalable, well positioned and efficient infrastructure
Attractive macro fundamentals
Favourable macro-economic environment for investments
Strong sugar market fundamentals characterised by potential upside of current low consumption per capita and increasing demand for sugar
High cash conversion
Highly cash generative business with approx. 80% cash conversion
Prudent and timely expansion strategy
Historically favourable tax incentive structure due to pioneer status
Leading market position
Major sugar refiner in Nigeria with 2nd largest refining capacity in the world
Strong overall market share with highly diversified customer base
High operational, structural and financial barriers to entry (regulatory environment)
Sound growth strategy
Clearly defined strategy to maintain leadership position in domestic and regional market
Strategic objective to initiate regional export plan, backward integration of upstream sugar and increase penetration as supplier to niche markets i.e. users of molasses, makers of biofuels etc
Strong profitability track record
Strong historical refining margin preserved at more than 15%
Highly effective cost management strategy ensuring profitability
EBITDA margins of about 9%
Competitive Advantage
FINANCIAL REVIEW
The Board of Directors of Dangote Sugar Refinery Plc hereby announce the following Results for the year ended 31 December, 2011. 2011 2010 N’000 N’000 Turnover 106,510,507 89,980,499 Cost of sales (92,777,191) (71,882,176) Gross profit 13,733,316 18,098,323 Distribution and administrative expenses (3,717,580) (3,498,016) 10,015,736 14,600,307 Other income 538,483 1,548,569 Operating profit 10,554,219 16,148,876 Interest Payable and similar charges (347) (1,946) Profit on ordinary activities before taxation 10,553,872 16,146,930 Taxation (3,442,554) (4,864,690) Profit after Taxation 7,111,318 11,282,240 Interim Dividend Paid 0 0 Profit on ordinary activities after taxation and interim dividend transferred to revenue reserve 7,111,318 11,282,240 Earnings per share (kobo) – BASIC 59 94
Results for Year Ended 31 December 2011
RESULT FOR THE 1ST QUARTER ENDED 31ST MARCH Results for the Period Ended 31 March 2012
Statement of comprehensive income
For the period ended 31 March 2012
March 2012 March 2011 N'000 N'000
Continuing operations
Revenue 26,729,353 21,540,780
Cost of sales (21,390,998) (18,303,253)
Gross profit 5,338,355 3,237,527
Other gain & (loss) 17,225 27,179
Administrative expenses (1,343,740) (1,370,479)
Net finance costs 107,382 155,479
Profit / (Loss) before tax 4,119,222 2,049,706
Income tax expense (1,318,151) (655,906)
Profit from continuing operations 2,801,071 1,393,800
Other comprehensive income
Defined benefit plan actuarial gain/loss - -
Prior year deferred tax adjustment
Total comprehensive income - -
Profit attributable to owners of the company 2,801,071 1,393,800
Non-controlling iterest - -
2,801,071 1,393,800
Non-controlling interest - -
2,801,071 1,393,800
Total comprehensive income attributable to owners of the company:
Total Comprehensive Income for the period
GROWTH STRATEGY
Product expansion
Diversify distribution chain Packaged sugar for retail consumers
Regional expansion
Enter neighbouring African markets Export to Ghana has commenced.
Vertical integration
Commence vertical integration Strategic objective to acquire
Savannah Sugar
Current production yield at 95%; target of 97%
Conversion of molasses to ethanol Increase warehouse capacity and
stocks
Efficiency
Capacity expansion
Production capacity expansion to capture regional and domestic growth
Str
ate
gy
To be among the leading integrated low cost sugar producers in the world by doubling production capacity,
with strong domestic and regional African presence and increasingly international focus
Goal
Cost management
Vessel acquisition
Retail packaging plant commissioned in 2011
Major efforts underway to achieve some exports in the current year.
Savannah integration planned for the medium term
Reviewing strategic options
Current Production yield of 95% achieved
Nigeria plant expansion in progress
Looking for opportunities
Stated strategy Status
Our Growth Strategy
First shipment of 1,500 MT sugar to Ghana in December 2007
Benefit from Nigerian export promotion council incentive
Benefit from tariff agreements within the ECOWAS zone
Region imports1 total of 1.0 mm MT due to lack of production facilities
Strategic location of refinery in Apapa port Strong potential for growth on the back of low
consumption per capita and growing middle class
Consumption per capita (kg)
Source: IMF, International Sugar Organisation, DSR management estimates
¹ Excluding Nigeria
EC
OW
AS
(ex
cl N
iger
ia)
Po
ten
tial
Mar
kets
Retail packaging plant commissioned in 2011 Target retail market through distributors with small
packs of 250g, 500g and 1.0kg branded Dangote Leverage Dangote brand at no additional costs
through existing management contract CapEx of approximately US$7 million Positive impact on margins given further
penetration of value chain at minimal costs
Consumption and imports - ECOWASExporting into ECOWAS
DSR small packaging plant
Exports and Retail Packaging Plant
Capacity Expansion
Market Expansion
Product Diversification
Improvement in Operating, Selling & Distribution Margins
Provide attractive Returns to Stakeholders
75% capacity increase from 1.44 million MT to 2.5 million MT on-goingBoost revenue growth
Export market potential within AfricaTrading Offices set up in Senegal & Ghana Planning at advanced stage for Liberia and other countries
Introduction of new products - Retail Packaging* Conversion of molasses to ethanol
100% conversion to gasReinforced supply chain management
Future Outlook
THANK YOU
Information Memorandum