Dangote Flour Mill annual report 2011

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

Notice of 6th Annual General Meeting 2

Corporate Information 3

Financial Highlights 4

Chairman’s Statement 5

Board of Directors 7

Report of the Directors 8

Corporate Governance Report 12

Report of the Audit Committee 15

Report of the Independent Auditors 16

Statement of Management Responsibilities 17

Statement of Significant Accounting Policies 18

Consolidated Profit and Loss Account 20

Consolidated Balance Sheet 21

Consolidated Statement of Cash Flows 22

Notes to the Consolidated Financial Statements 23

Consolidated Value Added Statement 36

Consolidated/Company Five-Year Financial Summary 37

Share Capital History/Unclaimed Dividend 38

Mandate for e-Dividend Payment Form 39

Proxy Form 41

Contents

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 6th ANNUAL GENERAL MEETING OF DANGOTE FLOUR MILLS PLC will hold at KWARAHOTEL, ILORIN, KWARA STATE on Thursday, 5th July, 2012 at 12.00 noon prompt to transact the following business:

ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the year ended 31st December 2011 along with the reports of theDirectors and Audit Committee thereon for the year 2011.

2. To declare a Dividend.

3. To elect/re-elect Directors.

4. To re-appoint the Auditors.

5. To authorize the Directors to fix the remuneration of the Auditors.

6. To appoint members of the Audit Committee.

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.

DIVIDEND

The Board recommends for the approval of shareholders a payment of dividend of 10 kobo per ordinary share of 50 koboeach, out of the profits declared in the financial year ended 31st December, 2011 and which will be subject to withholdingtax at the appropriate rate.

DIVIDEND WARRANTS

If approved, the dividend warrants will be posted on Thursday, 19th July, 2012 to shareholders, whose names appear inthe Company Register of Members at the close of business on Wednesday, 20th June, 2012.

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 fromThursday, 21st June, 2012 to Friday, 22nd June, 2012 both days inclusive.

2. AUDIT COMMITTEE

In accordance with Section 359(5) of the Companies and Allied Matters Act 1990, a nomination (in writing) by anymember or shareholder for appointment to the Audit Committee should reach the Company Secretary at least 21days before the Annual General Meeting. The Audit Committee comprises three shareholders and three Directors.

BY ORDER OF THE BOARD

AISHA LADI ISA (MRS)Company Secretary/Legal Adviser

Dated this 28th day of May, 2012

DANGOTE FLOUR MILLS PLCTerminal ‘E’Greenview Development BuildingApapa WharfLagosNigeria.

Notice of 6th Annual General Meeting



DIRECTORS

Alhaji Aliko Dangote, GCON — Chairman

Alhaji Sani Dangote — Director

Mr. Olakunle Alake — Director

Mr. Uzoma Nwankwo — Director

Alhaji Abdu Dantata — Director

Alhaji Abdullahi S. Mahmoud — Director

Mr. Asue Ighodalo — Director

Brigadier-General S. L. Teidi (Rtd), OFR — Director

Mr. Ekanem Etim — Ag. Group Managing Director (Appointed 16th December, 2011)

Mr. Suleiman Olarinde — Executive Director, Finance (Appointed 16th December, 2011)

COMPANY SECRETARY/LEGAL ADVISER

AISHA LADI ISA (Mrs)

REGISTERED OFFICE

Terminal ‘E’Greenview Development BuildingApapa WharfLagosNigeria.

REGISTRAR AND TRANSFER OFFICE

Oceanic Registrars154, Ikorodu Road, Onipanu,Shomolu, Lagos.

AUDITORS

Akintola Williams Deloitte (Chartered Accountants)235, Ikorodu Road, Ilupeju, Lagos.

BANKERS

Zenith Bank PlcAfribank PlcEquitorial Trust Bank PlcFirst Bank of Nigeria PlcGTBank PlcOceanic Bank PlcDiamond Bank PlcAccess Bank PlcIntercontinental Bank PlcFirst City Monument Bank PlcUnited Bank for Africa PlcEcobank Nigeria Plc

Corporate Information


Financial Highlights

The Group The Company

2011 2010 2011 2010N=’000 N=’000 N=’000 N=’000

PROFIT AND LOSS

Turnover 66,281,326 67,600,954 38,679,844 42,695,383

Profit before taxation and exceptional item 1,880,974 4,911,885 2,533,459 5,481,077

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

Profit before tax and after exceptional item 396,709 4,911,885 1,049,194 5,481,077

Taxation 281,005 (2,189,310) (261,710) (1,727,829)

Profit after taxation 677,714 2,722,575 787,484 3,753,248

BALANCE SHEET

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

Shareholders’ funds 26,440,128 26,943,846 26,032,991 26,489,154

Per 50 kobo share data (kobo)

Earnings per share 14 54 16 75

Dividend per share 10 20 10 20

The Directors propose a dividend of 10 kobo per ordinary share of 50 kobo each subject to approval of the shareholders

at the Annual General Meeting for the year ended 31 December, 2011.


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

here present, Invited Guests, Gentlemen of thePress, Ladies and Gentlemen.

I have the pleasure to welcome you to the 6thAnnual General Meeting of our great Company,Dangote Flour Mills Plc.

Please permit me to present to you an overviewof our operations and other events that shapedthe year under review. The year 2011 witnessedmany challenges, ranging from high exchangerates, infrastructural challenges, high cost of wheatto security issues in the country amongst others.These factors affected our performance and hadgone ahead to shape our current business year.

The challenges faced in 2011 helped us in takingadequate steps that will guarantee an improvedand better performance in 2012 and also in thefuture.

Chairman’s Statement

COMPANY PERFORMANCE

Dangote Flour Mills Plc recorded a turnover ofN=66.28 billion in 2011. Profit before tax andexceptional items was N=1.880 billion. Theexceptional item, represents a N=1.484 billionprovision for secured doubtful trade debts. Forprudence sake, a 50% provision was made fortrade debts secured by insurance bonds providedby NEM Insurance Plc and Niger Insurance Plc.Recovery efforts are on-going to ensure that whatis due is substantially recovered.

The profit after tax and after exceptional item wasN=677 million.

DIVIDENDS

Fellow shareholders, the Board has recommendedfor your approval, the payment of a dividend of10 kobo for every 50 kobo ordinary share held bymembers in the Company. The recommendeddividend is in line with the dividend policy and ifapproved, will be paid net of withholding tax toall shareholders in the register of members as atWednesday, 20th June 2012.

THE BOARD

Since the last Annual General Meeting, there havebeen a few changes on the Board composition.An Acting Group Managing Director, in the personof Mr Ekanem Etim was appointed to run theaffairs of the Company. He joined the Companyfrom Dangote Cement in December 2011 asDeputy Managing Director and he replaces MrNarendra Kumar Somani who resigned in March2012. His appointment will be ratified in the courseof this meeting.

Also joining the Board as Finance Director is Mr.Suleiman Olarinde who served previously in thesame capacity at Dangote Sugar Refinery Plc. Hisappointment will also be ratified by Shareholdersat this meeting.

The Directors retiring by rotation at this meetingare Alhaji Abdu Dantata, Mr. Asue Ighodalo andMr. Uzoma Nwankwo, and being eligible offerthemselves for re-election.

D

Alhaji Aliko Dangote, GCONChairman


OUR STAFF

Our staff remain our strength; they have continuedto maintain productive work ethic, which hashelped your Company maintain its key positionin the industry with satisfactory service delivery tocustomers. We will continue to place high priorityon their training and development, seek and retainthe best talents in our continued pursuit ofoperational and service excellence.

THE FUTURE

In response to the challenges faced by yourCompany in 2011 and the resultant lowperformance, the Board has put in place thefollowing initiatives to ensure a quick turnaround:

The Management team was strengthened. Inaddition to Board level appointments notedearlier, more senior level staff were appointed tofurther improve the team.

The Company also embarked on costmanagement and debt collection drives to tacklethe issues of high costs and doubtful debts whichwere prevalent in previous years. A major initiativein the cost management effort is the replacementof diesel, which used to power Pasta andAgrosacks plants, with natural gas.

Advertisement and promotional efforts have beenstepped up in 2012 to further support the brands,boost revenue base and regain market share. Thisis supported by the provision of additional trucksto boost haulage of both raw materials andfinished products.

Part of the expansion project in Apapa becameoperational in March 2012. Of the six lines 250MT each capacity designed to produce a higherpercentage of semolina than existing mills, 2 linesof 250MT each have been commissioned. It isexpected that this will improve the Company’sprofitability profile and cash flow.

There is an on-going discussion between themajority shareholder of your Company and Tiger

Brands Limited, a South African basedmanufacturing and retail group which hasacquired interests in the foods sector in Nigeriaand other African countries. No final commitmenthas been agreed by both parties and thereforeno formal notification has been submitted to theCompany. In the event that both parties decideto proceed with a transaction, due process willbe followed in line with regulatory requirements.

CUSTOMERS

Our key partners in the business, our customers,had performed wonderfully well in the year underreview. They have not only demonstrated theirstrong commitment and belief in the organizationbut have also proven that doing business with ushas been a very rewarding venture. Their significantcontributions to the business through partnershipand patronage have ever remained our source ofstrength. We shall continue to hold this wonderfulgroup of people in high esteem. On behalf of theBoard, Management and Staff of the Company, Ihereby wish to say a big thank you to all ournumerous customers.

APPRECIATION

On behalf of the Board of Directors, I would liketo express our heartfelt appreciation to theManagement and Staff of the Group for theircontinued dedication, support and commitmentduring the year.

I would also like to thank you, my fellowshareholders, as well as our customers, suppliers,bankers, government agencies and regulatoryauthorities, for the unrelenting support andconfidence in Dangote Flour Mills Plc.

Thank you and God bless.

Alhaji Aliko Dangote, GCONChairman

Chairman’s Statement cont’d


1. ACCOUNTS

The Directors are pleased to submit their report together with the audited accounts of the Company for the yearended 31st December, 2011.

2. RESULTThe Group The Company

N=’000 N=’000

Turnover 66,281,326 38,679,844Profit after taxation 677,714 787,484

3. PRINCIPAL ACTIVITIES

The principal activities of the Company during the year are as follows:

(a) Manufacturing and selling of bread and biscuit flour

(b) Manufacturing and selling of Wheat Offal (Bran)

(c) Manufacturing and selling of Semolina.

The principal activities of its subsidiaries are:

Dangote Pasta Limited

Manufacturing and selling of Spaghetti, Macaroni etc.

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 as a publiclimited liability company on 1 January 2006 and commenced operations on the same date. It however becamequoted on The Nigerian Stock Exchange on 4 February 2008. Its principal activity is the milling, processing andmarketing of branded flour.

5. DIRECTORS AND DIRECTORS’ INTEREST

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

(a) Alhaji Aliko Dangote, GCON(b) Alhaji Sani Dangote(c) Mr. Olakunle Alake(d) Mr. Uzoma Nwankwo(e) Alhaji Abdu Dantata(f) Alhaji Abdullahi S. Mahmoud(g) Mr. Asue Ighodalo(h) Brigadier-Gen. S. L. Teidi (rtd), OFR(i) Mr. Narendra Kumar Somani — Resigned 5th March, 2012(j) Mr. Ekanem Etim — Appointed 16th December, 2011(k) Mr. Suleiman Olarinde — Appointed 16th December, 2011

(i) In accordance with the provisions of Section 259 of the Companies and Allied Matters Act 1990, one-third ofthe Directors of the Company shall retire from office. The Directors to retire every year shall be those who havebeen longest in office since their last election. In accordance with the provisions of this section, Alhaji AbduDantata, Mr. Asue Ighodalo and Mr. Uzoma Nwankwo retire by rotation and being eligible, offer themselves forre-election.

(ii) No Director has a service contract not determinable within five years.

Report of the Directorsfor the Year Ended 31 December, 2011


(iii) The Directors’ interest in the issued share capital of the Company as recorded in the register of membersand/or as notified by them for the purpose of Section 275 of the Companies and Allied Matters Act, C20 Lawsof the Federation of Nigeria 2004 are as follows:

Directors’ Shareholding as at 31 December, 2011

Number of 50k Shares heldas at 31 December, 2011

(a) Alhaji Aliko Dangote, GCON 38,728,948(b) Alhaji Sani Dangote —(c) Mr. Olakunle Alake 2,377,500(d) Mr. Uzoma Nwankwo —(e) Alhaji Abdu Dantata —(f) Alhaji Abdullahi S. Mahmoud 43,750(g) Mr. Asue Ighodalo —(h) Brigadier-Gen. S. L. Teidi (rtd), OFR —(i) Mr. Ekanem Etim —(j) Mr. Suleiman Olarinde —

6. DIRECTORS’ RESPONSIBILITIES

The Directors are responsible for the preparation of financial statements which give true and fair view of the state ofaffairs of the Company at the end of each financial year and of the profit or loss for that period and comply with theCompanies and Allied Matters Act, C20 Laws of the Federation of Nigeria 2004. In doing so they ensure that:

(a) Proper accounting records are maintained which disclose with reasonable accuracy the financial position ofthe Company and which ensure that the financial statements comply with the requirements of the Companiesand Allied Matters Act of Nigeria;

(b) Applicable accounting 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; unless it is inappropriateto presume that the Company will continue in business;

(g) Adequate internal control procedures are instituted which as far as is reasonably possible, safeguard the assetsand prevent and detect fraud and other irregularities.

7. CORPORATE GOVERNANCE

Dangote Flour Mills Plc is committed to manage the Company with best practice and policies which align managementof the Company with the interests of all stakeholders. This, in the long run results in beneficial relationship andlong-term growth.

Dangote Flour Mills Plc imbibes good Corporate Governance as a key factor in achieving its business success whileremaining within the ambit of the law as a good corporate entity.

The Board in line with its responsibilities to shareholders works to achieve the best practice of good CorporateGovernance. The business of the Company is conducted in a fair, honest and transparent manner which conformsto high ethical standards.

8. SUBSTANTIAL INTEREST IN SHARES

The Registrar has advised that according to the register of members on 31st December 2011, only Dangote IndustriesLimited with 3,667,716,667 ordinary shares of 50k each held more than 5% of the issued share capital of theCompany.

Report of the Directors cont’dfor the Year Ended 31 December, 2011


9. FIXED ASSETS

Movements in fixed assets during the year are shown in Note 7 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. However, during the year under review, no donation was made to any political party or religiousorganisation.

11. 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 31st December, 2011 and the profit for the year ended on that date which havenot been adequately recognized.

12. COMPANY DISTRIBUTORS

The Company’s products are distributed through many distributors across the whole country and some other partsof Africa.

13. SUPPLIERS

The Company procures its materials at arm’s length basis from overseas and local suppliers. Amongst its mainoverseas and local suppliers are Cargill International SA, Ameropa SA, Vitachem Nigeria Limited and BiochemicalDerivatives Nigeria Limited.

14. ANALYSIS OF SHAREHOLDINGS

Range analysis of shareholdings as at 31st December, 2011:

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

1 – 1,000 147,337 42.79 147,337 130,808,162 2.62 130,808,162

1,001 – 5,000 174,569 50.70 321,906 318,758,395 6.38 449,566,557

5,001 – 10,000 13,301 3.86 335,207 89,042,693 1.78 538,609,250

10,001 – 50,000 7,502 2.18 342,709 143,622,383 2.87 682,231,633

50,001 – 100,000 765 0.22 343,474 57,374,027 1.15 739,605,660

100,001 – 500,000 665 0.19 344,139 141,644,059 2.83 881,249,719

500,001 – 1,000,000 86 0.03 344,225 64,342,760 1.29 945,592,479

1,000,001 – 2,000,000 48 0.02 344,273 65,541,843 1.31 1,011,134,322

2,000,001 – 5,000,000 39 0.01 344,312 125,356,766 2.51 1,136,491,088

5,000,001 – 10,000,000 7 0.00 344,319 48,446,026 0.97 1,184,937,114

10,000,001 – 50,000,000 5 0.00 344,324 87,196,219 1.74 1,272,133,333

50,000,001 – 100,000,000 1 0.00 344,325 60,150,000 1.20 1,332,283,333

2,000,000,001 – 5,000,000,000 1 0.00 344,326 3,667,716,667 73.35 5,000,000,000

Grand Total 344,326 100.00 5,000,000,000 100.00

15. HUMAN RESOURCES

1. Employment, Training and Employees

The Company recruits without discrimination in considering applications for employment through selection ofthe most suitable for various positions after interview. The Company employs professionals and people withtechnical expertise and continues to invest in developing such skills and maintain set standards. The Companyalso has in-house training facilities in addition to external training for employees. This gives every employeeequal opportunity for career development.



2. Employee Welfare and Safety at Work

The Company continuously strives to improve its operations to ensure a safe working environment. TheCompany maintains a high standard of hygiene in all its premises through sanitation practices and the regularfumigation exercises. This is further strengthened by the installation of pest and rodent control gadgets. Safetyand environment workshops organized for all employees with a broad focus on good house-keeping to ensuregood and safe working environment. Nutritionally balanced meals are provided in staff canteens at subsidizedprices. The use of safety shoes, goggles and apron etc. by employees is enforced. The Company carries outsafety and fire awareness drills for all employees on regular basis. As a guide in the performance of all functions,a written Safety Policy for ensuring safe working practices is in place. Safety Officers and Security Supervisorsare at hand to ensure the use of and implementation of the systems and procedures for safety by all employees.There is a clinic within each factory to provide adequate medical care in the event of accidents or any emergencyin the work place. Also, the Company allows employees and their immediate families to attend good hospitalsat its expense. Fire prevention and fire-fighting equipment are installed in strategic positions within the premisesof each factory.

3. Employee Development

Local and overseas training and development programmes have been organized to meet the needs of theCompany’s modernization, automation strategy implementation. The Company continues to place premiumon its human capital development arising from the fact that this would ensure improved efficiency of thebusiness and maintain strategic advantage over competition. On the other hand, the employee is fully equippedto provide quality service which at the end will be beneficial to the organization and thus contribute to itsgrowth.

16. AUDIT COMMITTEE

In compliance with the provisions of Section 359(3) of the Companies and Allied Matters Act, Cap C20 Laws of theFederation of Nigeria 2004, the Company has an Audit Committee comprising three (3) Shareholders and three (3)Directors as follows:

1. Mr. Alex Adio — Shareholder/Chairman2. Alhaji Kasimu Ibrahim — Shareholder/Member3. Mr. Eric Akinnifesi Akinduro — Shareholder/Member4. Alhaji Abdullahi S. Mahmoud — Director/Member5. Mr. Asue Ighodalo — Director/Member6. Mr. Olakunle Alake — Director/Member

The functions of the Audit Committee are as laid down in Section 357(2) of the Companies and Allied Matters Act,Cap C20 Laws of the Federation of Nigeria 2004.

17. 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 Lawsof the Federation of Nigeria, 2004. A resolution will be proposed authorising the Directors to fix their remuneration.

BY ORDER OF THE BOARD


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




DANGOTE FLOUR MILLS PLC is committed to the best practice and procedures in corporate governance. It recognizes thatcorporate governance is fundamental to earning the confidence and trust of the shareholders. It provides the structure throughwhich the objectives of the Company are set and the means of attaining such objectives. Overseen by the Board of Directors,corporate governance practices are constantly under review in line with the dynamics of the business environment.

The Corporate Governance policies adopted by the Board of Directors are designed to ensure that the Company’s business isconducted in a fair, honest and transparent manner which conforms to high ethical standards. The code of corporate governancefor public companies provides the basis for promoting sound corporate governance in the Company. The governance frameworkhelps the Board to discharge its duties of providing oversight and strategic counsel in balance with its responsibility to ensureconformity with regulatory requirements and acceptable risk.

The Board consists of 10 members, the Chairman, Ag. Managing Director, 1 Executive Director and 7 Non-Executive Directors.

THE BOARDAppointment to the Board is made by Shareholders at the Annual General Meeting on the recommendation of the Board ofDirectors.

The Board consists of ten (10) members comprising the Chairman, Ag. Managing Director, one (1) Executive Director and seven(7) Non-Executive Directors.

The Board delegates the day-to-day running of the Company’s affairs to the Ag. Managing Director/Chief Executive. The ManagingDirector/Chief Executive is supported in this task by the Executive Directors and Executive Management Committee.

The Board governs and supervises the overall activities of the Company through the Managing Director.

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, honest 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 regulatory authorities

(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 which enables

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 out clearlytheir 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 CorporateGovernance practice; while the Audit Committee has a representative of the Shareholders as its Chairman.In compliance with the practices of good Corporate Governance, the Chairman of the Board is not a member of any of theCommittees.Members of the Board of Directors hold quarterly meetings to decide on policy matters and direct the affairs of the Company,review its performance, its operations, finances and formulate growth strategy. Attendance at Directors’ meetings was impressive.In line with provisions of Section 258(2) of the Companies and Allied Matters Act, C20 Laws of the Federation of Nigeria 2004,the records of Directors’ attendance at Board meetings is available for inspection at the Annual General Meeting.The remuneration of Executive Directors is fixed and reviewed by a Committee of Non-Executive Directors.

FREQUENCY OF MEETINGSThe 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 may however,convene a meeting whenever the need arises. During the year under review, the Board had a total of five (5) meetings.

Corporate Governance Report


STANDING COMMITTEES OF THE BOARDThe Board carries out some of the above responsibilities through the Board Committees whose terms of reference clearly set outtheir roles, responsibilities, scope of authority and procedure for reporting to the Board.

1. Governance/Remuneration Committee

Composition: (i) Mr. Asue Ighodalo (ii) Alhaji Abdu Dantata(iii) Mr. Uzoma Nwankwo

Functions: (i) To review and make recommendations to the Board for approval of the Company’s Human Resources Policy and

organizational structure and any proposed amendments when necessary. (ii) Review and advise on governance and compliance issues.(iii) To make recommendations on remuneration structure for Non-Executive Directors and variable compensation for

executive and senior management.(iv) Such other matters as the Board may delegate to the Committee.

2. Finance and Investment CommitteeComposition: (i) Alhaji Abdullahi S. Mahmoud — Chairman (ii) Brigadier-Gen. S. L. Teidi (rtd), OFR — Member(iii) Mr. Olakunle Alake — Member

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 its 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 and three(3) members of the Board of Directors. Members of the Audit Committee are elected at the General Meetings. TheCommittee, in compliance with the requirements of Corporate Governance practice is chaired by a Shareholder. TheCommittee met during the year under review

Composition:1. Mr. Alex Adio — Shareholder/Chairman2. Mr. Eric Akinnifesi Akinduro — Shareholder3. Alhaji Kasumu Ibrahim — Shareholder4. Mr. Asue Ighodalo — Director5. Mr. Olakunle Alake — Director6. Alhaji Abdullahi S. Mahmoud — Director

In addition to its responsibility to review the scope, independence and objectivity of the audit, the Audit Committee carries outall such matters as are reserved to the Audit Committee by the Companies and Allied Matters Act, Cap C20 Laws of the Federationof Nigeria, 2004.• 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 by the Board.• Direct and supervise investigations on matters within the scope, such as evaluations of the effectiveness of Dangote Flour

Mills Plc internal controls, cases of employee, business partner and client misconduct or conflict of interest.

COMPLIANCE STATEMENT

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

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

Corporate Governance Report cont’d


Corporate Governance Report cont’d

ATTENDANCE OF MEETINGS BY MEMBERS OF THE BOARD/BOARD COMMITTEES FROM 1ST JANUARY TO31ST DECEMBER 2011

BOARD OF DIRECTORS’ MEETINGS

Attendance

8th August 17th August 29th September 16th December 29th DecemberAlhaji Aliko Dangote, GCON � � � � AAlhaji Sani Dangote � � � � �

Mr. Olakunle Alake � � � � �

Alhaji Abdullahi S. Mahmoud A A � � �

Mr. Uzoma Nwankwo A A � � �

Alhaji Abdu Dantata � � � � �

Mr. Asue Ighodalo � � � � �

Brigadier-General S. L. Teidi (Rtd), OFR � � � � �

Mr. Ekanem Etim N/A N/A N/A � �

Mr. Suleiman Olarinde N/A N/A N/A � �

Mr. Narendra Kumar Somani N/A � � � A

FINANCE AND INVESTMENT COMMITTEE MEETINGS

Attendance

8th August 16th December 28th DecemberMr. Olakunle Alake � � �

Alhaji Abdullahi S. Mahmoud A � �

Brigadier-General S. L. Teidi (Rtd), OFR � � �

Mr. Ekanem Etim A � �

Mr. Suleiman Olarinde A � �

Mr. Narendra Kumar Somani N/A � A

GOVERNANCE/REMUNERATION COMMITTEE MEETINGS

Attendance

15th July 15th DecemberMr. Uzoma Nwankwo � AMr. Asue Ighodalo � �

Alhaji Abdu Dantata � �

Mr. Narendra Kumar Somani N/A �

AUDIT COMMITTEE MEETING

Attendance

23rd AugustMr. Olakunle Alake �

Mr. Adio Alex �

Mr. Akinduro Eric Akin �

Mr. Kasimu Ibrahim �


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, 2011. 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


Members of the Committee

Alhaji Kasimu IbrahimMr. Eric Akinnifesi AkinduroMr. Asue IghodaloAlhaji Abdullahi S. MahmoudMr. Olakunle Alake

Report of the Audit Committee


TO THE MEMBERS OF DANGOTE FLOUR MILLS PLC

We have audited the accompanying consolidated financial statements of Dangote Flour Mills Plc and its subsidiaries,set out on pages 18 to 37 which comprise the consolidated balance sheet as at 31 December 2011, the consolidatedincome statement, consolidated statement of cash flows and consolidated statement of value added for the year thenended, and a summary of the significant accounting policies, financial summary and other explanatory information.

Directors’ Responsibility for the Consolidated Financial Statements

The Directors are responsible for the preparation and fair presentation of these consolidated financialstatements in accordance with the Companies and Allied Matters Act, CAP C20, LFN 2004 and for suchinternal control as the Directors determine are necessary to enable the preparation of consolidated financialstatements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.We conducted our audit in accordance with International Standards on Auditing. Those standards requirethat we comply with ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe consolidated financial statements. The procedures selected depend on the auditors’ judgment, includingthe assessment of the risks of material misstatement of the consolidated financial statements, whether dueto fraud or error. In making those risk assessments, the auditors consider internal control relevant to theentity’s preparation and fair presentation of the consolidated financial statements in order to design auditprocedures 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 ofaccounting policies used and the reasonableness of accounting estimates made by the Directors, as well asevaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidatedfinancial position of Dangote Flour Mills Plc and its subsidiaries as at 31 December 2011, and of its financial performanceand its cash flows for the year then ended; the Company and its subsidiaries have kept proper books of account, whichare in agreement with the consolidated balance sheet and consolidated income statement in the manner required by theCompanies and Allied Matters Act, CAP C20, LFN 2004 and in accordance with the Statements of Accounting Standardsissued by the Financial Reporting Council of Nigeria.

Chartered AccountantsLagos, Nigeria

16 May, 2012

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


Statement of Management ResponsibilitiesFOR THE PREPARATION AND APPROVAL OF THE FINANCIAL STATEMENTS for the Year Ended 31 December, 2011

The following statement, which should be read in conjunction with the independent auditors’ responsibilities stated inthe report of the independent auditors set out on page 16, is made with a view of distinguishing the respective responsibilitiesof the management and those of the independent auditors in relation to the financial statements of Dangote Flour MillsPlc.

Management is responsible for the preparation of the financial statements that present fairly the financial position of theCompany as at 31 December 2011 and the results of its operations, cash flows and changes in equity for the year thenended, in compliance with the Statements of Accounting Standards (SAS) issued by the Financial Reporting Council ofNigeria.

In preparing the financial statements, management is responsible for:

• Selecting suitable accounting principles and applying them consistently;

• Making judgments and estimates that are reasonable and prudent;

• Stating whether SAS’s have been followed, subject to any material departures disclosed and explained in the financialstatements; and

• Preparing the financial statements on a going concern basis, unless it is inappropriate to presume that the Companywill continue in business for the foreseeable future.

Management is also responsible for:

• Designing, implementing and maintaining an effective and sound system of internal controls throughout the Company;

• Maintaining proper accounting records that disclose, with reasonable accuracy at any time, the financial position ofthe Company, and which enable them to ensure that the financial statements of the Company comply with SAS;

• Maintaining statutory accounting records in compliance with legislation;

• Taking such steps as are reasonably available to them to safeguard the assets of the Company; and

• Detecting and preventing fraud and other irregularities.

The financial statements for the year ended 31 December 2011 were approved on 16 May 2012.

Mr. Ekanem Etim Mr. Suleiman OlarindeAg. Group Managing Director Finance Director


The following are the significant accounting policies which have been adopted.

1. Basis of accounting

The consolidated financial statements are prepared on the historical cost basis.

2. Consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries whichare Dangote Pasta Limited, Dangote Agrosacks Limited and Dangote Noodles Limited whose financial statementsare equally made up to 31 December. All inter-company transactions and balances including unrealised inter-company profits are eliminated.

3. Turnover

Turnover represents the net value of goods and services sold to third parties during the year less discounts.

4. Fixed assets

Fixed assets are stated at cost less accumulated depreciation.

5. Depreciation

Depreciation is calculated to write off the cost of fixed assets on a straight line basis over their expected useful lives.The principal annual rates used for this purpose are:

%Freehold land — —

Leasehold land and buildings — 2

Plant and machinery — 6

Motor vehicles — 25

Trucks — 25

Tools and equipment — 20

Furniture and fittings — 20

Computer equipment and softwares — 33

Depreciation is not provided in respect of freehold land and assets under construction.

6. Stocks

Stocks are stated at the lower of cost based on weighted average cost and net realisable value while goods in transitare stated at the invoice price. Cost of stocks includes purchase cost, conversion cost (materials, labour and overhead)and other costs incurred to bring inventory to its present location and condition.

7. Foreign currencies

Transactions in foreign currencies are recorded in Naira at the rates of exchange ruling at the time they arise. Assetsand liabilities existing in foreign currencies are converted to Naira at the rates of exchange ruling at the balancesheet date. Gains or losses arising therefrom are included in the consolidated profit and loss account.

8. Debtors

Debtors are stated after deduction of specific provisions for debts considered doubtful of recovery.

9. Taxation

(i) Companies income tax

Income tax and education tax are provided by applying the current statutory rate on the taxable profit andadjusted profit respectively.

Statement of Significant Accounting Policiesfor the Year Ended 31 December, 2011

2–3

1–3


(ii) Deferred taxation

Deferred taxation is provided using the liability method at the current rate of income tax on all timingdifferences between the treatment of certain items for accounting purposes and their treatment for taxationin accordance with SAS 19.

10. Employees retirement benefit scheme

The Company and its subsidiaries make provision for retirement benefits in accordance with the PensionReform Act of 2004. The contribution of the employer and employee is 7.5% of employee basic salary,housing and transport allowances.

The Company and its subsidiaries also operate a gratuity scheme for its permanent Nigerian staff, the benefits underwhich are related to employees’ length of service and gross annual emolument. The gratuity is unfunded. Theprovision for liability in respect thereof is provided in full in the financial statements.

11. Investments

Investments are stated at cost after specific provision for diminution in value.

12. Provisions

Provisions are recognized when the Company and its subsidiaries have present obligation whether legal or constructive,as a result of a past event for which it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation and a reliable estimate can be made of the amount of the obligation in accordancewith the Statement of Accounting Standards (SAS) 23.

13. Segment reporting

The Group’s business segments are presented by products that are subject to similar risks and returns.

14. Earnings per share

Earnings per share are based on the profit after taxation and the weighted average number of issued and fully paidordinary shares during the year.

Statement of Significant Accounting Policies cont’dfor the Year Ended 31 December, 2011



2011 2010 2011 2010Note N=’000 N=’000 N=’000 N=’000

Turnover 3 66,281,326 67,600,954 38,679,844 42,695,383

Cost of sales (56,582,360) (54,398,306) (31,737,937) (33,659,644)

Gross profit 9,698,966 13,202,648 6,941,907 9,035,739

Distribution and administrative expenses (5,999,929) (7,042,150) (2,910,500) (2,556,816)

Operating profit 3,699,037 6,160,498 4,031,407 6,478,923

Other income 4 381,526 1,035,558 259,472 561,131

Profit before interest payable 4,080,563 7,196,056 4,290,879 7,040,054

Interest income 8,724 22,287 3,767 13,964

Interest payable and similar charges (2,208,313) (2,306,458) (1,761,187) (1,572,941)

Profit before taxation and exceptional item 5 1,880,974 4,911,885 2,533,459 5,481,077

Exceptional item 10.2 (1,484,265) — (1,484,265) —

Profit before tax and after exceptional item 396,709 4,911,885 1,049,194 5,481,077

Taxation 6 281,005 (2,189,310) (261,710) (1,727,829)

677,714 2,722,575 787,484 3,753,248

Attributable to:

Equity holders — parent 20 475,431 2,762,142 787,484 3,753,248

Non-controlling interest 21 202,283 (39,567) — —

677,714 2,722,575 787,484 3,753,248

Earnings per share — Basic (kobo) 31 14 54 16 75

The accounting policies on pages 18 and 19 and other explanatory notes on pages 23 to 35 form part of these consolidatedfinancial statements.

Consolidated Profit and Loss Accountfor the Year Ended 31 December, 2011


Consolidated Balance Sheetas at 31 December, 2011

} Directors


2011 2010 2011 2010Note N=’000 N=’000 N=’000 N=’000

FIXED ASSETS 7 44,443,322 41,229,708 19,496,207 19,880,243

INVESTMENTS 8 — — 7,553,637 7,553,637

DEFERRED TAX ASSETS 16.1 422,323 — — —

CURRENT ASSETSStocks 9 12,021,921 8,257,459 4,899,136 2,926,685Trade debtors 10 8,597,502 11,643,808 5,326,781 8,560,201Other debtors and prepayments 11 2,340,529 1,223,495 365,738 807,868Due from subsidiaries 27.1 — — 16,123,558 13,493,302Due from related parties 27.3 13,196,480 5,066,198 13,734,353 5,252,483Bank and cash 23 2,431,519 2,190,071 1,286,860 1,488,738

38,587,951 28,381,031 41,736,426 32,529,277CREDITORS: Amounts falling duewithin one yearBank loans and overdrafts 12 23,296,158 7,976,685 19,895,984 4,481,150Trade creditors 4,701,607 10,875,644 3,706,090 9,947,700Other creditors and accruals 13 11,032,543 8,077,284 5,354,899 3,808,441Due to subsidiaries 27.2 — — 1,156,049 910,005Dividend payable 14 216,669 1,900,472 216,669 1,900,472Loan from parent company 15.2 5,790,342 6,050,000 5,500,000 5,800,000Taxation 6 1,333,931 1,001,464 1,114,176 697,372Term loan 15 2,016,000 463,820 — —Due to related parties 27.4 2,120,978 1,881,052 2,236,273 2,154,529

50,508,228 38,226,421 39,180,140 29,699,669

NET CURRENT (LIABILITIES)/ASSETS (11,920,277) (9,845,390) 2,556,286 2,829,608

TOTAL ASSETS LESS CURRENT LIABILITIES 32,945,368 31,384,318 29,606,130 30,263,488

Deferred tax liability 16 (2,938,431) (3,409,430) (2,844,534) (3,136,273)

CREDITORS: Amount falling dueafter one yearTerm loan 15 (2,184,000) — — —

PROVISION FOR LIABILITIES ANDCHARGESGratuity 17 (977,497) (828,013) (728,605) (638,061)

NET ASSETS 26,845,440 27,146,875 26,032,991 26,489,154

CAPITAL AND RESERVESShare capital 18 2,500,000 2,500,000 2,500,000 2,500,000Share premium 19 18,116,249 18,116,249 18,116,249 18,116,249Reserve 20 5,823,879 6,327,597 5,416,742 5,872,905

Shareholders’ fund 26,440,128 26,943,846 26,032,991 26,489,154Non-controlling interest 21 405,312 203,029 — —

26,845,440 27,146,875 26,032,991 26,489,154

The consolidated financial statements on pages 18 to 37 were approved by the Board of Directors on 16 May, 2012 andsigned on its behalf by:

Alhaji Aliko Dangote

Mr. Ekanem Etim

The accounting policies on pages 18 and 19 and other explanatory notes on pages 23 to 35 form part of these consolidatedfinancial statements.


Consolidated Statement of Cash Flowsfor the Year Ended 31 December, 2011


2011 2010 2011 2010Note N=’000 N=’000 N=’000 N=’000

Cash flows from operating activities

Cash receipts from customers 70,158,270 66,057,186 42,368,223 42,644,129

Cash payments to suppliers and employees (74,175,758) (52,338,236) (49,631,103) (35,695,980)

Value added tax (net) (2,329,179) (813,705) (2,133,446) (667,250)Income tax paid 6 (279,850) (76,715) (136,645) (53,804)

Net cash (used in)/provided byoperating activities 22 (6,626,517) 12,828,530 (9,532,971) 6,227,095

Cash flows from investing activities

Purchase of fixed assets 7 (7,049,153) (9,494,147) (1,342,518) (2,522,840)

Investment in subsidiary — — — (90,000)

Disposal of fixed assets 4,515 — — —

Non-controlling interest in Noodles on acquisition — 10,000 — —

Net cash used in investing activities (7,044,638) (9,484,147) (1,342,518) (2,612,840)

Cash flows from financing activities

Dividend paid (2,683,803) (1,421,988) (2,683,803) (1,421,988)

Interest income 8,724 22,287 3,767 13,964

Term loan:

— Obtained 15 4,200,000 1,120,000 — —

— Repaid 15 (463,820) (656,180) — —

Intercompany loan obtained 15.2 40,342 6,250,000 — 6,000,000

Intercompany loan repaid 15.2 (300,000) (200,000) (300,000) (200,000)

Interest paid (2,208,313) (2,306,458) (1,761,187) (1,572,941)

Net cash (used in)/provided by

financing activities (1,406,870) 2,807,661 (4,741,223) 2,819,035

Net (decrease)/increase in cashand cash equivalents (15,078,025) 6,152,044 (15,616,712) 6,433,290

Cash and cash equivalents at 1 January (5,786,614) (11,938,658) (2,992,412) (9,425,702)

Cash and cash equivalents at 31 December 23 (20,864,639) (5,786,614) (18,609,124) (2,992,412)

D A N G OT E F L O U R M I L LS P L C 23

1. THE COMPANY

1.1 Legal form

The Company started operating as a division of Dangote Industries Limited in 1999. It was incorporated as apublic limited liability company on 1 January 2006, commenced operations on the same date and was quotedon the Nigerian Stock Exchange on 4 February 2008.

In 2007, the Company acquired controlling interests in Dangote Pasta Limited and Dangote Agrosacks Limited.

In addition to the above, the Company acquired a controlling interest in Dangote Noodles Limited in 2008.

Information on the Company’s subsidiaries are as follows:

Subsidiaries Percentage held Principal activities

Dangote Pasta Limited 99 Manufacture of Spaghetti, Macaroni and other Pastaproducts.

Dangote Agrosacks Limited 99 Manufacture of packaging materials. It holds 75%equity in Obajana Agrosacks Limited.

Dangote Noodles Limited 90 Manufacture and marketing of noodles products.

1.2 Principal activities

The principal activities of the Company are the milling, processing and marketing of branded flour productsand the manufacturing and sale of sacks.

2. STRATEGIC CONSIDERATIONS

Dangote Industries Limited has confirmed its capacity and commitment to continue to support Dangote Flour MillsGroup and has committed to take over all external borrowings and provide medium-term loan facilities, should theneed arise.

3. SEGMENT REPORTING

Flour Pasta Noodlesproducts Sacks products products Group

N=’000 N=’000 N=’000 N=’000 N=’0003.1 Segment operating results

At 31 December 2011

Revenue 37,594,544 13,499,253 12,581,764 2,605,765 66,281,326Cost of sales (30,656,020) (12,126,334) (11,137,230) (2,662,776) (56,582,360)

Gross profit 6,938,524 1,372,919 1,444,534 (57,011) 9,698,966

Profit before adjustment ofunrealised profit on stock 1,052,843 402,439 (116,168) (935,372) 403,742Unrealised profit on stock (3,649) — — (3,384) (7,033)

1,049,194 402,439 (116,168) (938,756) 396,709Taxation (261,710) 176,925 365,790 — 281,005

Profit/(loss) after taxation 787,484 579,364 249,622 (938,756) 677,714

At 31 December 2010

Revenue 42,695,383 12,783,696 10,917,607 1,204,268 67,600,954Cost of sales (32,717,881) (10,954,880) (9,549,291) (1,176,254) (54,398,306)

Gross profit 9,977,502 1,828,816 1,368,316 28,014 13,202,648

Profit before taxation 5,481,077 1,118,053 248,997 (1,936,242) 4,911,885Taxation (1,727,829) (380,602) (80,879) — (2,189,310)

Profit after taxation 3,753,248 737,451 168,118 (1,936,242) 2,722,575

Notes to the Consolidated Financial Statementsfor the Year Ended 31 December, 2011


Flour Pasta Noodlesproducts Sacks products products Group

N=’000 N=’000 N=’000 N=’000 N=’0003.2 Segment assets/liabilities

At 31 December 2011

Total assets 61,231,501 22,505,554 20,382,397 2,498,615 106,618,067Intercompany adjustments (16,123,486) (7,040,986) (54,767) 54,768 (23,164,471)

45,108,015 15,464,568 20,327,630 2,553,383 83,453,596

Total liabilities 42,755,795 15,160,269 16,582,951 5,273,612 79,772,627Intercompany adjustments (1,156,049) — (19,462,418) (2,546,004) (23,164,471)

41,599,746 15,160,269 2,879,467 2,727,608 56,608,156

At 31 December 2010

Total assets 52,409,520 15,879,751 18,167,088 1,963,007 88,419,366Intercompany adjustments (13,493,230) 914,116 (3,181,582) (3,047,931) (18,808,627)

38,916,290 16,793,867 14,985,506 (1,084,924) 69,610,739

Total liabilities 33,474,003 9,100,616 14,625,466 3,799,249 60,999,334Intercompany adjustments (910,005) (3,388,861) (11,241,897) (2,994,707) (18,535,470)

32,563,998 5,711,755 3,383,569 804,542 42,463,864

Segment assets consist of fixed assets, investments, deferred tax assets, cash and bank, receivables, inventoriesand due from related companies.

Segment liabilities consist of bank loans and overdraft, payables, due to related companies, dividend payable,taxation and gratuity.

3.3 There is also no distinguishable component of the entity that is engaged in providing products or serviceswithin a particular economic environment and that is subject to risk and returns that are different from thoseof components operating in other economic environments.


2011 2010 2011 2010N=’000 N=’000 N=’000 N=’000

4. OTHER INCOME

Provision no longer required 221,660 303,302 205,395 287,132Sundry income 132,916 697,256 27,188 238,999Export grant — 35,000 — 35,000Insurance claims 26,950 — 26,889 —

381,526 1,035,558 259,472 561,131

5. PROFIT BEFORE TAXATION ANDEXCEPTIONAL ITEM

This is arrived at after charging:

Directors’ emoluments:— Fees 2,500 3,100 2,500 3,100— Salaries and allowances 103,263 107,781 63,757 54,075Audit fee 57,788 61,768 31,000 30,000Depreciation 3,760,371 3,391,277 1,661,113 1,493,041Loss on sale of fixed assets 1,982 — — —Management fee (Note 28) — 593,962 — —

Notes to the Consolidated Financial Statements cont’dfor the Year Ended 31 December, 2011



2011 2010 2011 2010N=’000 N=’000 N=’000 N=’000

6. TAXATION

Profit and loss account

Tax based on the profit for the yearIncome tax 530,387 501,919 497,432 400,621Education tax 81,930 203,704 56,017 138,166Prior year underprovision — 21,488 — —

612,317 727,111 553,449 538,787Deferred taxation (Note 16) (893,322) 1,462,199 (291,739) 1,189,042

(281,005) 2,189,310 261,710 1,727,829

Balance sheet

At 1 January 1,001,464 351,068 697,372 212,389As per profit and loss account 612,317 727,111 553,449 538,787Payments during the year (279,850) (76,715) (136,645) (53,804)

At 31 December 1,333,931 1,001,464 1,114,176 697,372

The charges for taxation in these financial statements were based on the provisions of the Companies IncomeTaxation Act, CAP C21, LFN 2004 as amended and the Education Tax Act, CAP E4, LFN 2004.

7. FIXED ASSETS

7.1 The Group

Freehold/ Computer AssetsLeasehold equipment Furniture under

land and Plant and Tools and and and Motor construc-buildings machinery equipment softwares fittings vehicles Trucks tion Total

N=’000 N=’000 N=’000 N=’000 N=’000 N=’000 N=’000 N=’000 N=’000Cost

At 1 January 3,718,994 33,287,036 800,087 142,436 284,908 1,654,630 2,043,070 11,363,311 53,294,472Additions 817,521 1,630,567 47,082 23,357 29,109 534,783 725,500 3,241,234 7,049,153Transfers 13,034 4,318,703 663 — — — — (4,332,400) —Disposals — — — (4,981) — (12,027) — — (17,008)Adjustments (Note 7.4) – (5,995) – – (4,273) – – (61,375) (71,643)

At 31 December 4,549,549 39,230,311 847,832 160,812 309,744 2,177,386 2,768,570 10,210,770 60,254,974

Depreciation

At 1 January 305,872 9,471,021 644,516 100,568 155,850 727,838 659,099 — 12,064,764Charge for the year 75,883 2,472,234 117,819 24,968 46,062 437,706 585,699 — 3,760,371Disposals — — — (3,495) — (7,016) — — (10,511)Adjustments (Note 7.4) — (1,929) — — (1,043) — — — (2,972)At 31 December 381,755 11,941,326 762,335 122,041 200,869 1,158,528 1,244,798 — 15,811,652

Net book value

At 31 December 2011 4,167,794 27,288,985 85,497 38,771 108,875 1,018,858 1,523,772 10,210,770 44,443,322

At 31 December 2010 3,413,122 23,816,015 155,571 41,868 129,058 926,792 1,383,971 11,363,311 41,229,708



7.2 The Company

Computer AssetsLeasehold equipment Furniture under

land and Plant and Tools and and and Motor construc-buildings machinery equipment softwares fittings vehicles Trucks tion Total

N=’000 N=’000 N=’000 N=’000 N=’000 N=’000 N=’000 N=’000 N=’000Cost

At 1 January 2,411,345 13,255,456 470,622 75,949 123,630 256,080 2,043,070 6,571,993 25,208,145Additions 5,663 4,155 15,183 11,395 16,234 24,187 725,500 540,201 1,342,518Adjustments (Note 7.4) – (5,995) – – – – – (61,375) (67,370)Transfers 13,034 76,170 663 — — — — (89,867) —

At 31 December 2,430,042 13,329,786 486,468 87,344 139,864 280,267 2,768,570 6,960,952 26,483,293

Depreciation

At 1 January 191,226 3,801,437 385,959 56,730 77,677 155,774 659,099 — 5,327,902Charge for the year 48,525 888,444 46,054 8,627 20,736 63,028 585,699 — 1,661,113Adjustments (Note 7.4) — (1,929) — — — — — — (1,929)

At 31 December 239,751 4,687,952 432,013 65,357 98,413 218,802 1,244,798 — 6,987,086

Net book value

At 31 December 2011 2,190,291 8,641,834 54,455 21,987 41,451 61,465 1,523,772 6,960,952 19,496,207

At 31 December 2010 2,220,119 9,454,019 84,663 19,219 45,953 100,306 1,383,971 6,571,993 19,880,243

7.3 Assets under construction represent expenditure incurred on the Danvita Mills at Apapa.

7.4 Adjustments are in respect of certain assets previously capitalised in error and cost of obsolete spares forSemolina project included in capital work-in-progress now rectified.

The Company

2011 2010N=’000 N=’000

8. INVESTMENTS (UNQUOTED)

Dangote Pasta Limited49,500,000 ordinary shares of N=1 each inDangote Pasta Limited 2,507,637 2,507,637

Dangote Agrosacks Limited84,150,000 ordinary shares of N=1 each inDangote Agrosacks Limited 4,956,000 4,956,000

Dangote Noodles Limited90,000,000 ordinary shares of N=1 each inDangote Noodles Limited 90,000 90,000

7,553,637 7,553,637





2011 2010 2011 2010N=’000 N=’000 N=’000 N=’000

9. STOCKS

Raw materials and work-in-progress 7,084,813 4,618,241 3,562,013 2,227,736Finished goods 2,367,772 2,058,540 195,456 186,179Engineering spares and other stocks 2,151,319 1,479,209 355,109 319,326Goods-in-transit 786,558 193,444 786,558 193,444

12,390,462 8,349,434 4,899,136 2,926,685Provision for slow moving items (368,541) (91,975) — —

12,021,921 8,257,459 4,899,136 2,926,685

10. TRADE DEBTORS

Trade debtors 13,143,493 14,430,365 9,353,579 10,926,326Provision for bad and doubtful debts (4,545,991) (2,786,557) (4,026,798) (2,366,125)

8,597,502 11,643,808 5,326,781 8,560,201

10.1 Provision for bad debts

Provision for bad and doubtful debts— insured (1,794,377) (310,112) (1,794,377) (310,112)Provision for bad and doubtful debts— others (2,751,614) (2,476,445) (2,232,421) (2,056,013)

(4,545,991) (2,786,557) (4,026,798) (2,366,125)

10.2 N= 3,588,954,753 of the Dangote Flour Mills Plc’s trade debtors are backed by an insurance bond. The amountsare overdue by more than one year; however, the Company is confident that these would be recovered fromthe insurance companies. The two insurance companies involved, namely NEM Insurance Plc and Niger InsurancePlc, are not making significant payments against the policies. The Company has commenced discussions withthe National insurance commission (NAICOM), the insurance regulatory body, to facilitate adjudication in thismatter with the two insurance companies. For prudence sake, we have provided for 50% of the amountsconcerned, amounting to N=1,794,377,377. In view of previous provisions, the Company has received a letter ofindemnity from Dangote Industries Limited confirming that it will make up any shortfall in excess of this 50%provision should the need arise.


2011 2010 2011 2010N=’000 N=’000 N=’000 N=’000

11. OTHER DEBTORS AND PREPAYMENTS

Other debtors 603,417 370,613 85,144 74,006Advances to suppliers 1,783,098 667,579 526,466 667,579Staff debtors 75,570 113,022 34,123 95,771Prepayments 427,039 371,854 239,165 251,538

2,889,124 1,523,068 884,898 1,088,894Provision for doubtful balances (548,595) (299,573) (519,160) (281,026)

2,340,529 1,223,495 365,738 807,868

12. BANK LOANS AND OVERDRAFTSBank overdrafts 10,085,546 4,431,208 8,185,372 1,868,623Short-term loans 13,210,612 3,545,477 11,710,612 2,612,527

23,296,158 7,976,685 19,895,984 4,481,150

The loans and overdrafts are secured by Corporate Guarantee of Dangote Industries Limited.


The Group The Company2011 2010 2011 2010

N=’000 N=’000 N=’000 N=’00013. OTHER CREDITORS AND ACCRUALS

Customers’ deposits 1,570,285 1,121,173 900,404 704,918Accruals 4,266,239 2,140,109 1,329,133 627,245Staff pension (Note 13.1) 116,281 104,871 17,085 10,875VAT payable 1,904,891 2,123,395 984,212 1,251,595Other creditors 2,138,183 2,458,614 1,246,118 1,156,866Withholding tax 220,547 129,122 107,190 56,942PAYE, NHF and ITF deductions 34,516 — — —Advance on haulage 3,649 — — —Contractors 7,195 — — —Deferred income (Note 13.2) 770,757 — 770,757 —

11,032,543 8,077,284 5,354,899 3,808,441

13.1 Staff pensionAt 1 January 104,871 88,772 10,875 6,558Provision for the year 434,807 318,943 161,440 118,589Payment for the year (423,397) (302,844) (155,230) (114,272)

At 31 December 116,281 104,871 17,085 10,875

13.2 Deferred income represents wheat rebate received in respect of wheat imported in 2011 which was includedin closing stock at year end. This credit amount is deferred and it is to be used to reduce cost of sales in futurewhen the wheat is consumed.


N=’000 N=’000 N=’000 N=’00014. DIVIDEND PAYABLE

At 1 January 1,900,472 822,460 1,900,472 822,460Dividend declared (Note 20) 1,000,000 2,500,000 1,000,000 2,500,000Payment during the year (2,683,803) (1,421,988) (2,683,803) (1,421,988)

At 31 December 216,669 1,900,472 216,669 1,900,472

15. TERM LOANAt 1 January 463,820 — — —Loan obtained during the year (Note 15.1) 4,200,000 1,120,000 — —Repayment during the year (463,820) (656,180) — —

At 31 December 4,200,000 463,820 — —Due within one year (2,016,000) (463,820) — —

Due after more than one year 2,184,000 — — —

15.1 During the year, Agrosacks obtained a N=4.5 billion loan from Guaranty Trust Bank Plc. The Company has drawndown N=4.2 billion to finance the purchase and installation of 3 new production lines for the manufacture ofpolypropylene bags and sacks and refinance N=1.4 billion facilities with Oceanic Bank Plc. The loan was obtainedin January 2011 and is repayable within 36 months at 11% interest rate per annum with a moratorium periodof 12 months. The principal repayment commenced in January 2012. The loan is secured by debenture on theassets of Dangote Agrosacks Limited and Obajana Agrosacks Limited.




N=’000 N=’000 N=’000 N=’00015.2 Loan from parent company

At 1 January 6,050,000 — 5,800,000 —Loan obtained during the year 40,342 6,250,000 — 6,000,000Repayment during the year (300,000) (200,000) (300,000) (200,000)

At 31 December 5,790,342 6,050,000 5,500,000 5,800,000

The Company obtained a facility of N=5 billion for its working capital requirement and N=1billion commercialpaper from Dangote Industries Limited. The working capital facility is repayable on 27 June 2012 at an interestrate of 9.25%. The Commercial Paper is repayable in equal monthly instalments of N=100 million at an interestrate of 9%. In addition to the Company loans, a subsidiary, Dangote Noodles Limited obtained a loan of N=290million from Dangote Industries Limited for 90 days repayable at interest rate is 8.5% per annum. The facilityhas been rolled over for another 12 months repayable on a rollover basis at interest rate of 10% per annum.


2011 2010 2011 2010N=’000 N=’000 N=’000 N=’000

16. DEFERRED TAX LIABILITY

At 1 January (3,409,430) 328,067 (3,136,273) 328,067Prior year adjustment (Note 20.1) — (2,275,298) — (2,275,298)Provision for the year (Note 6) 893,322 (1,462,199) 291,739 (1,189,042)Transferred to deferred tax assets (16.1) (422,323) — — —

At 31 December (2,938,431) (3,409,430) (2,844,534) (3,136,273)

16.1 Deferred tax assetProvision for the year (Note 16) 422,323 — — —

The Group has adopted the Statement of Accounting Standards (SAS) 19 on deferred taxation which is computedusing the liability method. The deferred tax asset arising from Dangote Pasta Limited has been recorded inthese financial statements as it is likely that the amount will be recoverable from profit from operations in theforeseeable future.


2011 2010 2011 2010N=’000 N=’000 N=’000 N=’000

17. GRATUITY

At 1 January 828,013 559,926 638,061 464,623Provision for the year 277,743 310,670 183,274 200,483Payments during the year (128,259) (42,583) (92,730) (27,045)

At 31 December 977,497 828,013 728,605 638,061

The staff gratuity provision is not funded.

18. SHARE CAPITAL

Authorised6,000,000,000 ordinary shares of 50k each 3,000,000 3,000,000 3,000,000 3,000,000

Issued and fully paid5,000,000,000 ordinary shares of 50k each 2,500,000 2,500,000 2,500,000 2,500,000

19. SHARE PREMIUM

At 31 December 18,116,249 18,116,249 18,116,249 18,116,249



2011 2010Total Total

N=’000 N=’00020. RESERVES

The Group

At 1 January 6,327,597 7,573,899Prior year adjustment (Note 20.1) 20,851 (1,513,675)Dividend declared (1,000,000) (2,500,000)Consolidation adjustment — 5,231Transferred from profit and loss account 475,431 2,762,142

At 31 December 5,823,879 6,327,597

The Company

At 1 January 5,872,905 6,133,332Prior year adjustment (243,647) (1,513,675)Dividend declared (1,000,000) (2,500,000)Transferred from profit and loss account 787,484 3,753,248

At 31 December 5,416,742 5,872,905

20.1 Prior year adjustmentIntercompany reconciliation adjustment from long outstanding balances — 619,228Reversal of stale cheque for duty duplicated in prior year — 58,418Reconciliation adjustment from long outstanding balances in creditors — 83,977Deferred tax (Note 16) — (2,275,298)Reversal of sales invoices duplicated in prior year (Note 20.2) (243,647) —Prior year adjustment on interest refunded (Note 20.3) 264,498 —

20,851 (1,513,675)

20.2 The prior year adjustment relates to the correction of duplicated invoices in customers’ accounts in years 2006and 2007.

20.3 This adjustment in Agrosacks Limited was in respect of interest overcharged in previous years by Oceanic BankPlc refunded during the year.

20.4 On 29 September 2011, a dividend of 20 kobo per ordinary share of 50 kobo each totalling N=1 billion inrespect of year 2010 was approved by shareholders and subsequently paid.

At the Board of Directors meeting held on16 May 2012, the Directors proposed a final dividend of 10 kobo perordinary share of 50 kobo each amounting to N= 500 million. The dividend is subject to approval by theshareholders at the Annual General Meeting net of withholding tax at the appropriate rate. Consequently, it hasnot been included as a liability in these financial statements as they do not constitute present obligation of theCompany in accordance with Statement of Accounting Standard, SAS 23 on Provisions, Contingent Liabilitiesand Contingent Assets.




The Group2011 2010

N=’000 N=’00021. NON-CONTROLLING INTERESTS

Profit and loss accountDangote Agrosacks Limited 290,642 152,626Dangote Pasta Limited 2,533 1,896Dangote Noodles Limited (93,537) (193,874)Share of prior year under provision of tax liability — (215)Non-controlling interest share of prior year adjustment 2,645 —

202,283 (39,567)Balance sheetAt 1 January 203,029 232,596On acquisition of Dangote Noodles Limited — 10,000Profit and loss 202,283 (39,567)At 31 December 405,312 203,029


N=’000 N=’000 N=’000 N=’00022. RECONCILIATION OF NET INCOME TO NET

CASH PROVIDED BY OPERATING ACTIVITIESProfit after taxation and exceptional item 677,714 2,722,575 787,484 3,753,248Adjustments to reconcile net income tonet cash provided by operating activities:Depreciation 3,760,371 3,391,277 1,661,113 1,493,041Interest income (8,724) (22,287) (3,767) (13,964)Interest expenses 2,208,313 2,306,458 1,761,187 1,572,941Prior year adjustment 20,851 (1,513,675) (243,647) (1,513,675)Fixed assets adjustment/transfer 68,671 111,361 65,441 111,361Consolidation adjustment — 5,231 — —Loss on disposal of fixed assets 1,982 — — —Changes in assets and liabilities:(Increase)/decrease in stocks (3,764,462) (10,541) (1,972,451) 322,103Increase in trade debtors 3,046,306 (2,240,875) 3,233,420 (722,105)Decrease/(increase) in other debtorsand prepayments (1,117,034) 458,347 442,131 144,371Decrease/(increase) in due from subsidiaries — — (2,630,257) (3,224,268)Decrease/(increase) in due from related companies (8,130,282) 1,316,354 (8,481,870) (586,994)Increase in trade creditors (6,174,037) 4,467,365 (6,241,610) 4,733,111(Decrease)/increase in other creditors and accruals 2,955,259 (298,375) 1,546,457 (1,429,514)(Decrease)/increase in due to related companies 239,926 (2,520,665) 81,745 (2,470,358)(Decrease)/increase in due to subsidiaries — — 246,044 (64,964)Increase in taxation payable 332,467 650,396 416,804 484,983Increase in gratuity provision 149,484 268,087 90,544 173,438(Decrease)/ increase in deferred tax liability (470,999) 3,737,497 (291,739) 3,464,340Increase in deferred tax asset (422,323) — — —Total adjustments (7,304,231) 10,105,955 (10,320,456) 2,473,847Net cash provided by operating activities (6,626,517) 12,828,530 (9,532,971) 6,227,095




2011 2010 2011 2010N=’000 N=’000 N=’000 N=’000

23. RECONCILIATION OF CASH ANDCASH EQUIVALENTSCash and bank balances 2,431,519 2,234,799 1,286,860 1,533,466Provision — (44,728) — (44,728)

2,431,519 2,190,071 1,286,860 1,488,738Bank loans and overdrafts (23,296,158) (7,976,685) (19,895,984) (4,481,150)

(20,864,639) (5,786,614) (18,609,124) (2,992,412)

24. INFORMATION REGARDING DIRECTORSAND EMPLOYEES

24.1 Directors

(i) Directors’ emolument comprises:Fees 2,500 3,100 2,500 3,100Salaries and allowances 103,263 107,781 63,757 54,075

105,763 110,881 66,257 57,175

(ii) Highest paid Director 24,270 24,270 24,270 24,270

(iii) The number of Directors excluding theChairman with gross emoluments withinthe bands stated below were:

N= N= Number Number Number NumberUp to 5,000,000 8 8 8 8

10,000,001 — 15,000,000 3 3 — —15,000,001 and above 2 2 2 2

24.2 EmployeesAverage number of persons employedduring the year:Management 374 207 114 115Senior staff 1,055 853 449 410Junior staff 3,503 3,396 465 406

4,932 4,456 1,028 931

N=’000 N=’000 N=’000 N=’000Aggregate payroll costs:Wages, salaries, allowances and other benefits 3,175,924 3,183,625 1,613,609 1,472,432Provision for gratuity 277,743 310,670 183,274 200,483Pension cost 113,479 62,981 40,296 31,438

3,567,146 3,557,276 1,837,179 1,704,353




2011 2010 2011 2010N=’000 N=’000 N=’000 N=’000

The number of employees with grossemoluments within the bands statedbelow are:

N= N= Number Number Number Number

Up to 200,000 886 — — —200,001 — 400,000 2,021 1,275 — 2400,001 — 600,000 498 1,450 114 268600,001 — 800,000 368 581 175 159800,001 — 1,000,000 512 502 252 145

1,000,001 and above 647 648 487 357

4,932 4,456 1,028 931

25. CONTINGENT LIABILITIES

25.1 There are contingent liabilities in respect of pending litigation amounting to N=190.59 million (2010 – Nil). TheDirectors are of the opinion that the liabilities will not result in outflow of resources and therefore no provisionhas been made in these financial statements.

25.2 The Directors are of the opinion that all known commitments and liabilities which are relevant in assessingthe state of affairs of the Group has been taken into consideration in the preparation of these consolidatedfinancial statements.

26. CAPITAL COMMITMENTSThe Group The Company

2011 2010 2011 2010N=’000 N=’000 N=’000 N=’000

Capital commitments 68,858 336,354 68,858 336,354

The capital commitments were made for capacity expansion projects in Apapa.

27. RELATED PARTY TRANSACTIONS

During the year the Company had dealings with subsidiaries and related companies. The balances emanating fromthe transactions have been disclosed in the balance sheet as analysed below:


2011 2010 2011 2010N=’000 N=’000 N=’000 N=’000

27.1 Due from subsidiaries

Dangote Pasta Limited — — 13,585,059 11,898,469Dangote Noodles Limited — — 2,538,499 1,594,833

— — 16,123,558 13,493,302

27.2 Due to subsidiaries

Dangote Agrosacks Nigeria Limited — — 1,156,049 910,005




2011 2010 2011 2010N=’000 N=’000 N=’000 N=’000

27.3 Due from related parties

Dangote Cement Plc 372,048 1,657,430 — —Dangote Industries Limited 12,547,901 3,424,703 13,734,564 5,226,905National Salt Company of Nigeria Plc 75,830 73,973 — 25,649Dangote Fisheries Nigeria Limited 1,500 1,500 1,500 1,500Dangote Port Operations — 200 — 140Dangote Textiles Nigeria Limited 55,593 55,593 51,000 51,000Dangote Foundation 66,903 61,787 — —Savannah Sugar Limited — 50 — —Dangote Sugar Refinery Plc 120,100 15,341 — —ADSTAR International Company 3,353 — — —Dangote Freight Limited 15,381 — — —Others 339,510 78,946 — —

13,598,119 5,369,523 13,787,064 5,305,194Less provision (401,639) (303,325) (52,711) (52,711)

13,196,480 5,066,198 13,734,353 5,252,483

27.4 Due to related parties

Dangote Nigeria Limited 76,816 76,709 68,061 68,061Dangote Transport Nigeria Limited 1,871,357 1,773,245 1,779,631 1,779,631Dangote Sugar Refinery Plc — — 100,883 61,295Bluestar Shipping Company 44,502 4,592 48,846 4,592Greenview Development Nigeria Limited 27,591 26,500 27,591 27,591National Salt Company of Nigeria Plc — — 924 —Dangote Port Operations 9,813 — 9,813 —Dansa Foods 1,493 — — —Dangote Cement Plc — — 200,524 213,359Dancom Technologies Limited 50,630 6 — —Bulk Pack Nigeria Limited 20,527 — — —Others 18,249 — — —

2,120,978 1,881,052 2,236,273 2,154,529

27.5 Dangote Pasta Limited

Dangote Pasta Limited is a subsidiary company to Dangote Flour Mills Plc. During the year, the supply of wheatto Dangote Pasta Limited amounted to N=8.93 billion (2010: N=12.1 billion).

27.6 Dangote Agrosacks Nigeria LimitedDangote Agrosacks Nigeria Limited is a subsidiary of Dangote Flour Mills Plc. During the year, the Companyhad transactions amounting to N=657 million (2010: N=910 million) for the supply of bags for packaging ofFlour, Bran, Danvita etc.

27.7 Dangote Industries Limited

Dangote Industries Limited (DIL) is the parent Company of Dangote Flour Mills Plc. DIL undertakes paymentsfor expansion projects, recommends external consultants, negotiates bank facilities and purchases raw materialson behalf of the Group.

DIL operates a margin call account along with its related party, Bulk Commodities (See Note 27.12) in relationto the wheat purchase transactions and predetermines the price of wheat paid by Dangote Flour Mills for theyear to 31 December 2011 at $270 per tonne including carriage, freight and other charges, on commercialterms that may or may not be available with third parties (2010 — $270 per tonne).

27.8 Dangote Transport Nigeria Limited

Dangote Transport Nigeria Limited is a related company to Dangote Flour Mills Plc. The Group had transactionswith respect to haulage of finished products to customers as well as wheat to other plants.



27.9 Dangote Sugar Refinery Plc

Dangote Sugar Refinery Plc is a related company to Dangote Flour Mills Plc. Dangote Sugar supplies power toDangote Flour Mills Plc.

27.10 National Salt Company of Nigeria Plc (NASCON)

NASCON is a related company to Dangote Flour Mills Plc. There were no material transactions between thetwo companies during the year.

27.11 Dangote Noodles Limited

Dangote Noodles Limited is a subsidiary company of Dangote Flour Mills Plc. During the year the Companyhad transactions amounting to N=1.09 billion (2010: N=1.46 billion) for flour supply and other paymentsundertaken on behalf of Dangote Noodles Limited.

27.12 Bulk Commodities

Bulk Commodities is a related party of Dangote Industries Limited, the parent Company of Dangote FlourMills Plc.

Bulk Commodities, a Dubai based entity, provides support in organisation of the carriage and freight forDangote Flour Mills Plc as well as providing financing of margin calls on behalf of Dangote Industries Limitedfor the purchase of wheat on behalf of Dangote Flour Mills Plc.

28. MANAGEMENT FEE

All the companies within the Group, namely Dangote Flour Mills Plc., Dangote Pasta Limited, Dangote AgrosacksLimited and Dangote Noodles Limited entered into management and technical service agreement dated 2 January2006 with Dangote Industries Limited (DIL). The agreement is for an initial period of five years with an option torenew for a further period of five years subject to termination by either party in accordance with the terms of theagreement. As consideration for the services provided, a sum equivalent to 2% of the net revenue from DangoteFlour Mills Plc, Dangote Pasta Limited, Dangote Agrosacks Limited and Dangote Noodles sales for each month ispayable to Dangote Industries Limited. Management fees for the financial year ended 31 December 2011 werewaived by DIL (2010 — N=593.9 million).

29. COMPARATIVE FIGURES

Certain balances in prior year have been reclassified where necessary for more meaningful comparison.

30. POST BALANCE SHEET EVENTS

There were no post balance sheet events that could have a material effect on the state of affairs of the Group as at31 December 2011 and on the profit for the year ended on that date which have not been adequately provided foror disclosed in these consolidated financial statements.

31. EARNINGS PER SHARE

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.


Consolidated Value Added Statementfor the Year Ended 31 December, 2011


2011 2010 2011 2010N=’000 % N=’000 % N=’000 % N=’000 %

Turnover 66,281,326 67,600,954 38,679,844 42,695,383Other income 381,526 1,035,558 259,472 561,131Interest income 8,724 22,287 3,767 13,964

66,671,576 68,658,799 38,943,083 43,270,478

Less: Bought-in-materialsand services:— Imported (48,933,339) (34,617,298) (27,319,652) (30,775,852)— Local (7,805,698) (19,874,605) (5,314,758) (2,243,214)

Value Added 9,932,539 100 14,166,896 100 6,308,673 100 10,251,412 100

Applied as follows:

To pay employees

Salaries, wages andother benefits 3,567,146 36 3,557,276 25 1,837,179 29 1,704,353 17

To pay providers of capital

Interest payable and similarcharges 2,208,313 22 2,306,458 16 1,761,187 28 1,572,941 15

To pay government

Taxation 612,317 6 727,111 5 553,449 9 538,787 5

To provide for enhancementof assets and growth

Deferred taxation (893,322) (9) 1,462,199 10 (291,739) (5) 1,189,042 11Depreciation 3,760,371 38 3,391,277 25 1,661,113 27 1,493,041 15Profit and loss account 677,714 7 2,722,575 19 787,484 12 3,753,248 37

9,932,539 100 14,166,896 100 6,308,673 100 10,251,412 100

Value added represents the additional wealth the Company has been able to create by its own and its employees’efforts. This statement shows the allocation of that wealth among employees, capital providers, government and thatretained for future creation of more wealth.


Consolidated Five-Year Financial Summaryfor the Year Ended 31 December, 2011

31 DECEMBER 2011 2010 2009 2008 2007N=’000 N=’000 N=’000 N=’000 N=’000

ASSETS/(LIABILITIES)Fixed assets 44,443,322 41,229,708 35,238,199 32,449,283 27,357,655Investments — — — 601,900 —Deferred tax asset 422,323 — 328,067 — —Net current liabilities (11,920,277) (9,845,390) (6,583,596) (7,839,343) (4,636,107)

32,945,368 31,384,318 28,982,670 25,211,840 22,721,548Deferred tax liability (2,938,431) (3,409,430) — — —Long-term liabilities (2,184,000) — — — (187,012)Provision for liabilities and charges (977,497) (828,013) (559,926) (582,037) (389,402)

26,845,440 27,146,875 28,422,744 24,629,803 22,145,134CAPITAL AND RESERVESShare 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 18,116,249Revenue reserve 5,823,879 6,327,597 7,573,899 3,812,016 1,369,458Non-controlling interest 405,312 203,029 232,596 201,538 159,427

26,845,440 27,146,875 28,422,744 24,629,803 22,145,134TURNOVER AND PROFITTurnover 66,281,326 67,600,954 61,388,064 47,927,300 42,153,272Profit before taxation andexceptional item 396,709 4,911,885 5,374,056 3,167,625 675,703Taxation 281,005 (2,189,310) 187,024 (178,066) (114,144)Non-controlling interest (202,283) 39,567 (30,348) (42,111) (36,849)Profit transferred to revenue reserve 475,431 2,762,142 5,530,732 2,947,448 524,710Per share data — 50k ordinary shareEarnings — Basic (kobo) 14 54 111 60 11Net assets (Naira) 5 5 6 5 4

Company Five-Year Financial Summaryfor the Year Ended 31 December, 2011

31 DECEMBER 2011 2010 2009 2008 2007N=’000 N=’000 N=’000 N=’000 N=’000

ASSETS/(LIABILITIES)Fixed assets 19,496,207 19,880,243 18,961,805 15,732,634 13,375,453Investments 7,553,637 7,553,637 7,463,637 7,463,637 7,750,559Deferred tax asset — — 328,067 — —Net current assets 2,556,286 2,829,608 460,695 337,950 1,094,309

29,606,130 30,263,488 27,214,204 23,534,221 22,220,321Deferred tax liability (2,844,534) (3,136,273) — — —Provision for liabilities and charges (728,605) (638,061) (464,623) (376,362) (312,829)

26,032,991 26,489,154 26,749,581 23,157,859 21,907,492CAPITAL AND RESERVESShare 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 18,116,249Revenue reserve 5,416,742 5,872,905 6,133,332 2,541,610 1,291,243

26,032,991 26,489,154 26,749,581 23,157,859 21,907,492TURNOVER AND PROFITTurnover 38,679,844 42,695,383 41,839,919 30,109,610 31,303,845Profit before taxation andexceptional item 1,049,194 5,481,077 5,156,801 1,758,137 375,651Taxation (261,710) (1,727,829) 203,060 (54,045) (85,316)Retained profit transferredto revenue reserve 787,484 3,753,248 5,359,861 1,704,092 290,335Per share data — 50k ordinary shareEarnings — Basic (kobo) 16 75 107 34 6Net assets (Naira) 5 5 5 5 4Note:1. Earnings per share are based on profit after taxation and the number of issued and fully paid ordinary shares at the

end of each financial year.2. Net assets per share are based on net assets and the number of issued and fully paid ordinary shares at the end of

each financial year.


Share Capital History/Unclaimed Dividend

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

DANGOTE UNCLAIMED DIVIDEND AS AT 31ST DECEMBER, 2011

Dividend Declared Date Declared Dividend Paid Unpaid Balance

Dangote Dividend 1 900,000,000.00 16.12.2009 809,234,781.12 90,765,218.88

Dangote Dividend 2 1,350,000,000.00 16.12.2009 1,181,044,963.35 168,955,036.65

Dangote Dividend 3 2,250,000,000.00 25.10.2010 1,944,411,903.00 305,588,097.00

Dangote Dividend 4 900,000,000.00 17.10.2011 740,844,741.06 159,155,258.94

SHARE CAPITAL HISTORY


Dangote Flour Mill annual report 2011

Business

audit committee

board of directors

payment of dividend

dividend warrants

edividend payment form

da n g ot e f

mahmoud director

ofr director