dangote flour mills annual report-signed

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

Notice of 3rd Annual General Meeting 2

Directors, Advisers and Other Corporate Information 3

Financial Highlights 4

Chairman’s Statement 5

Report of the Directors 7

Corporate Governance Report 11

Report of the Audit Committee 13

Report of the Independent Auditors 14

Statement of Significant Accounting Policies 15

Consolidated Profit and Loss Account 17

Consolidated Balance Sheet 18

Consolidated Statement of Cash Flows 19

Notes to the Consolidated Financial Statements 20

Consolidated Financial Summary 31

Consolidated Value Added Statement 32

Proxy Form

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 3rd ANNUAL GENERAL MEETING OF DANGOTE FLOUR MILLS PLC will hold at The CivicCentre, Ozumba Mbadiwe Road, Victoria Island, Lagos on the 9th of December, 2009 at 11 am prompt to transact thefollowing business:

ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the year ended 31st December 2008 along with the reports of theDirectors and Audit Committee thereon for the year 2008.

2. To declare a Dividend.

3. To 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.

SPECIAL BUSINESS

To fix the remuneration of the Directors.

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 20 kobo per ordinary share of 50 kobo each, outof the profits declared in the financial year ended 31st December, 2008 and which will be subject to withholding tax atthe appropriate rate.

DIVIDEND WARRANTS

If approved, the dividend warrants will be posted on Wednesday 16th December, 2009 to shareholders, whose namesappear in the Company Register of Members at the close of business on Friday 20th November, 2009.

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 fromMonday 23rd November to Monday 30th November, 2009 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

A. A. SAMUELAg Company Secretary

Dated this 3rd day of November, 2009

DANGOTE FLOUR MILLS PLCNo. 8, Rycroft Road,Apapa, Lagos,Nigeria.

Notice of 3rd Annual General Meeting


DIRECTORS

Alhaji Aliko Dangote — Chairman

Alhaji Sani Dangote — Director

Mr. Olakunle Alake — Director

Mr. Uzoma Nwankwo — Director

Alhaji Abdu Dantata — Director

Alhaji Abdullahi Mahmoud — Director

Mr. Asue Ighodalo — Director

Brigadier Gen. S. L. Teidi (Rtd) — Director

Mr. Rohit Chaudhry — Managing Director

Alhaji Shuaibu Idris — Executive Director

COMPANY SECRETARY/LEGAL ADVISER

A. A. Samuel, Esq. (Ag)

REGISTERED OFFICE

8, Rycroft Road,Apapa, Lagos,Nigeria.

REGISTRAR AND TRANSFER OFFICE

Oceanic Registrars Ltd.154, 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 PlcGuaranty Trust Bank PlcOceanic Bank PlcDiamond Bank PlcAccess Bank PlcIntercontinental Bank PlcFirst City Monument Bank PlcUnited Bank for Africa Plc

Directors, Advisers and Other Corporate Information


Financial Highlights

The Group The Company

2008 2007 2008 2007N=’000 N=’000 N=’000 N=’000

Turnover 47,927,300 42,153,272 30,109,610 31,303,845

Profit before taxation 3,167,625 675,703 1,758,137 375,651

Taxation (178,066) (114,144) (54,045) (85,316)

Profit after taxation 2,989,559 561,559 1,704,092 290,335

BALANCE SHEET

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

Shareholders’ funds 24,352,609 21,985,707 23,157,859 21,907,492

Per 50 kobo share data (kobo)

Earnings per share (kobo) 60 11 34 6


Fellow Shareholders

It is with great delight that I welcome you all to thethird Annual General Meeting of our Company,DANGOTE FLOUR MILLS PLC.

This meeting gives me the opportunity to brief fellowshareholders on the performance of our Company andthe Group for the year ended 31st December 2008. Itis important to mention that the year had been one ofsignificant change and one which laid the foundationsfor strong sustainable growth in the years ahead forour Company given the fact that all our performanceindices for the year under review witnessed tremendousimprovements, compared with the previous years.

Before going into the details of our financial andoperating performance, I consider it most appropriateto review the challenges we faced, how thesechallenges were managed to make the Company stayafloat and also to share with you all the strategicdirection of the Company and the Group as well.

Moreover, I will also like to touch on the businessenvironment both locally and globally and how theyimpacted and are likely to impact on businessmanagement and performance in the near future.

OPERATING ENVIRONMENT

The year 2008 was a difficult one for business bothglobally and locally. The global financial meltdownimposed challenges on the business environmentthrough reduced access to both local and foreignfinance, reduced purchasing power in the economy andsustained high price of wheat, our major raw material.

Despite the harsh operating environment however, yourCompany was able to operate profitably and retain itsmarket share by focusing on efficiency and improvedcustomer service.

2008 RESULTS AND DIVIDEND

Increases in international prices of our raw materialsnecessitated us passing some of the cost to ourcustomers in the form of increases in selling prices.The resultant customer resistance adversely affectedour volumes in 2008. The Company’s sales turnoverdipped slightly to N=30.1 billion in 2008 compared withN=31.3 billion in 2007. Our subsidiaries contributedN=16.6 billion to Group sales, resulting in a combinedsales of N=47.9 billion.

Although selling prices were increased, we wereconstrained by the market from passing on the entireincrease and thus recouping the whole of the increasedinput cost. Management rather increased its focus oninternal efficiency to cut down on other area of costs,the effect of which made the Company profit beforetaxation to increase from N=376 million in 2007 to N=1.8billion in 2008. Group profit in 2008 also leaped fromN=676 million in 2007 to N=3.2 billion in 2008 implyingN=1.4 billion Group attributable profit from subsidiaries.

Resulting from this impressive result, the Directors arerecommending for your approval at this meeting, adividend payment at the rate of 20 kobo per share forthe year under review.

THE BOARD

After the last Annual General Meeting, the Board ofDirectors in its determination to ensure that theCompany attains greater heights for the collectivehappiness of all Shareholders, appointed Mr. RohitChaudhry as the Managing Director of the Company.

Mr. Chaudhry is a man of tremendous managementexperience and we are all happy that his competenceand ability have positively transformed the performanceof the Company as shown in the recently published 9months unaudited results of the Company with anappreciable increase in the turnover and an interimdividend of 30 kobo per ordinary 50 kobo share alreadydeclared payable to all Shareholders.

Fellow Shareholders, I enjoin you to wish Mr. Chaudhrygreater success in the arduous task of taking theCompany to the Promised Land.

Furthermore, three of your existing Directors will retireby rotation and being eligible, they will offer themselvesfor re-election in the course of this meeting.

OUR PEOPLE

We strongly believe that having an excellent ‘peopleagenda’ at the heart of our business has a real andtangible effect on business performance. We arecommitted to growing, developing and retaining ourtalents as we recognize that this is fundamental to ourlong-term success and accordingly, we are increasingemphasis and investing in this area in order to continueto add value to them as important stakeholders in theorganization.

Chairman’s Statement


At this juncture, I express on your behalf, theappreciation of the shareholders and the Board to allour valued employees and our colleagues around thebusiness who are instrumental in delivering this yearlaudable results through their drive and commitment.

FUTURE OUTLOOK

The Global Financial Meltdown is showing signs ofeasing in 2009. Oil prices are inching up and the priceof wheat is stabilizing. This should translate to increasedpurchasing power in the local economy and alsofacilitate our ability to manage our material cost better.

We are using the opportunity provided by the improvedprospects to expand the business. Our Noodles factoriesin Ikorodu, Kano and Calabar were all commissionedin 2009.

Furthermore, expansion of our production capacitiesin our factories in Apapa, Calabar and Ilorin is ongoing.The plan is to expand the current 4,800 metric tons ofmilling capacity per day to 7,300 metric tons.

GLOBAL ENVIRONMENT

I consider my speech incomplete without commentingon global external environment and the impact onNigeria and our business. The current global financialcrisis which has reduced availability of offshore fundsto finance imports makes sourcing for imported rawmaterials and spares not only challenging but moreexpensive as cost of funds has been rising in the globalmarkets. In some cases, local banks are experiencingoutright cancellation of foreign currency lines hithertobeing enjoyed prior to the crisis. Aside the abovechallenge, the Federal Government official data confirmsinflation rate at about 14%. The growth in inflation isattributed to higher food prices. Food price pressurehas become a global phenomenon because somecommodities such as wheat, sugar and corn being usedin the production of ethanol have created strongdemand for bio-fuel. Bio-fuel is being used in most ofthe advanced economies as a supplement totransportation fuels. The implication of this again is that

the international prices of this category of commoditieswould further be propelled because of possible greaterdemand for them.

All these notwithstanding, I wish to assure my fellowshareholders that our Company is financially wellinsulated to cope with any challenges that may arisefrom these crises. We shall proactively continue to putrequired safeguards in place to deal with anyenvironmental constraints, be they local or global.

CORPORATE SOCIAL RESPONSIBILITY

We would continue to play our part in the society as aresponsible corporate citizen by not only complying withrequired standards in products quality but also byengaging with the larger society to continue tocontribute positively to the improved social welfare ofour operating environment.

CUSTOMERS

Customers/Dealers are considered indispensablepartners in this difficult but interesting journey ofprogress. We shall continue to hold this wonderfulgroup of people in high esteem. On behalf of the Board,Management and Staff of the Company, I hereby wishto say a big thank you to all our numerous customers.

CONCLUSION

I thank you all for your attendance and contribution toour Company. I thank you all also for listening.

I wish you journey mercy back to your variousdestinations.

Thank you and God bless.

Alhaji (Dr.) Aliko Dangote, CONChairman

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 2008.

2. RESULTThe Group The Company

N=’000 N=’000

Turnover 47,927,300 30,109,610Profit after taxation and minority interest 2,947,448 1,704,092

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 of Semolina.

The principal activities of its subsidiaries are:

Pasta

Manufacture of Spaghetti, Macaroni etc.

Agrosacks

Manufacture of packaging materials.

4. LEGAL FORM

The Company started operating as a division of Dangote Industries Limited in 1999. It was incorporated as publiclimited liability company on 1 January 2006, commenced operations on the same date and became quoted on theNigerian Stock Exchange on 4 February 2008. Its principal activity is the milling, processing and marketing of brandedflour.

5. DIRECTORS AND DIRECTORS’ INTEREST

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

(a) Alhaji Aliko Dangote(b) Alhaji Sani Dangote(c) Mr. Olakunle Alake(d) Mr. Uzoma Nwankwo(e) Alhaji Abdu Dantata(f) Alhaji Abdullahi Mahmoud(g) Mr. Asue Ighodalo(h) Brigadier Gen. S. L. Teidi (Rtd)(i) Mr. Rohit Chaudhry(j) Alhaji Shuaibu Idris

(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, Mr. AsueIghodalo, Alhaji Abdu Dantata and Brigadier Gen. S. L. Teidi (Rtd) retire by rotation and being eligible, offerthemselves for re-election.

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

Report of the Directorsfor the Year Ended 31 December, 2008


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

Number of 50k Shares heldas at 31 December 2008

(a) Alhaji Aliko Dangote 32,283,333(b) Alhaji Sani Dangote —(c) Mr. Olakunle Alake 377,500(d) Mr. Uzoma Nwankwo 271,500(e) Alhaji Abdu Dantata —(f) Alhaji Abdullahi Mahmoud 43,750(g) Mr. Asue Ighodalo —(h) Brigadier Gen. S. L. Teidi (Rtd) —(i) Mr. Rohit Chaudhry —(j) Alhaji Shuaibu Idris 100,000

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;

(b) Applicable accounting standards are followed;

(c) Suitable accounting policies are adopted and consistently applied;

(d) Judgments and estimates made are reasonable and prudent;

(e) The going concern basis is used, unless it is inappropriate to presume that the Company will continue inbusiness; and

(f) Internal control procedures are instituted which as far as is reasonably possible, safeguard the assets andprevent and detect fraud and other irregularities.

7. CORPORATE GOVERNANCE

(a) The Company is committed to the best practice and procedures in corporate governance. Its business is conductedin a fair, honest and transparent manner which conforms to high ethical standards.

(b) Members of the Board of Directors hold quarterly meetings to decide on policy matters and direct the affairs ofthe Company, review its performance, its operations, finances and formulate growth strategy. Attendance atDirectors’ meetings was impressive. In line with provisions of section 258(2) of the Companies and AlliedMatters Act, C20 Laws of the Federation of Nigeria 2004, the records of Directors’ attendance at board meetingsis available for inspection at the Annual General Meeting.

(c) The remuneration of Executive Directors is fixed and reviewed by a Committee of Non-executive Directors.

(d) The Board of Directors consists of 10 members; a Chairman, Managing Director, Sales Director and 7 Non-Executive Directors. Appointment to the Board is made by Shareholders at the Annual General Meeting, uponthe recommendation of the Board of Directors.

(e) The oversight functions of the Board are performed through its Committees, namely:

(i) The Finance and Investment Committee

(ii) The Nomination and Remuneration Committee.

8. SUBSTANTIAL INTEREST IN SHARES

The Registrar has advised that according to the register of members on 31st December 2008, only Dangote IndustriesLimited with 3,667,691,470 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, 2008


9. FIXED ASSETS

Movements in fixed assets during the year are shown in Note 6 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

The holding Company Dangote Industries Limited currently makes donation on behalf of the Group Companies. In addition during the year the Company made a donation of N=100,000 to National Youth Service Corps (NYSC).

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 31st December, 2008 and the profit for the year ended on that date which havebeen adequately recognized.

12. COMPANY DISTRIBUTORS

The Company’s products are distributed through many distributors across the whole country.

13. SUPPLIERS

The Company obtains its materials at arm’s length basis from overseas and local suppliers. Amongst its main overseasand local suppliers are Cargill International SA, Ameropa SA, Vitachem Nigeria Limited and Biochemical DerivativesNigeria Limited.

14. ANALYSIS OF SHAREHOLDINGS

Analysis of shareholdings as at 31st December, 2008

Range No. of Holders Per cent Units Per cent

1 — 50,000 384,755 99.58 789,558,334 15.7950,001 — 100,000 801 0.21 61,800,253 1.24

100,001 — 1,000,000,000 778 0.20 480,949,943 9.621,000,000,001 and above 1 0.01 3,667,691,470 73.35

386,335 100.00 5,000,000,000 100.00

15. HUMAN RESOURCES

1. Employment and Employees

The Company has reviewed its employment policy in line with the needs of the business. Careful recruiting isnow the focus to ensure that potential high performers are attracted and retained.

2. Work Environment

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 have been further strengthened by the installation of pest and rodent control gadgets.Safety and environment workshops have been organized for all senior employees with a broad focus on goodhouse-keeping to ensure good and safe working environment. Nutritionally balanced meals are provided instaff canteens at fully subsidized prices.

3. Employee Development

Local and overseas training and development programmes have been organized to meet the need 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.



16. AUDIT COMMITTEE

Pursuant to Section 359(3) of the Companies and Allied Matters Act Cap C20 Laws of the Federation of Nigeria2004, the Company has put in place an Audit Committee comprising of 3 Shareholders and 3 Directors as follows:

1. Mr. Alex Adio — Shareholder/Chairman2. Alhaji Kasimu Ibrahim — Shareholder3. Chief M. O. Mbonu — Shareholder4. Alhaji Abdullahi Mahmoud — Director5. Mr. Asue Ighodalo — Director6. Mr. Olakunle Alake — Director

The functions of the Audit Committee are as laid down in Section 357(2) of the Companies and Allied Matters ActCap 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 authorizing the Directors to fix their remuneration.

BY ORDER OF THE BOARD

A. A. SAMUEL, Esq.Ag Company Secretary

Dangote Flour Mills Plc8, Rycroft Road,Apapa, Lagos,Nigeria.

Dated this 3rd day of November, 2009



DANGOTE FLOUR MILLS PLC is committed to the best practice and procedures in corporate governance. Overseen by theBoard of 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 Board delegates the day-to-day running of the Company’s affairs to the Managing Director/Chief Executive. TheManaging Director/Chief Executive is supported in this task by an Executive Management Committee. The Board consistsof 10 members, the Chairman, Managing Director, 1 Executive Director and 7 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 if the need arises. During the year under review, the Board had a total of four (4) meetings.

Attendance at Directors meetings is impressive. In line with provisions of Section 258(2) of the Companies and AlliedMatters Act, Cap C20 Laws of the Federation of Nigeria 2004, the record of Directors attendance at Board meetings isavailable for inspection at the Annual General Meeting.

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 plan;

• 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.

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 goodCorporate Governance 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.

Corporate Governance Report


THE FINANCE AND INVESTMENT COMMITTEE

1. Alhaji Mahmoud Abdullahi — Chairman2. Brigadier Gen. S. L. Teidi (Rtd) — Member3. Mr. Olakunle Alake — Member

THE NOMINATION AND REMUNERATION COMMITTEE

1. Mr. Asue Ighodalo — Chairman2. Mr. Uzoma Nwankwo — Member3. Alhaji Abdu Dantata — Member

THE AUDIT COMMITTEE

The Audit Committee is made up of six (6) members, three representatives of the Shareholders and three members ofthe Board of Directors. Members of the Audit Committee are elected at the General Meetings. The Committee in compliancewith the requirement of Corporate Governance practice is chaired by a Shareholder. The Committee met two (2) timesduring the year under review. Members of the Committee are:

1. Mr. Alex Adio — Shareholder/Chairman2. Chief M. O. Mbonu — Shareholder3. Alhaji Kasimu Ibrahim — Shareholder4. Mr. Asue Ighodalo — Director5. Mr. Olakunle Alake — Director6. Alhaji Mahmoud Abdullahi — Director

In addition to its responsibility to review the scope, independence and objectivity of the Audit, the Audit Committeecarries out all such matters as are reserved to the Audit Committee by the Companies and Allied Matters Act, Cap C20Laws of the Federation of Nigeria, 2004.

• Review adequacy and effectiveness of Dangote Flour Mills Plc internal control policies prior to endorsement by theBoard.

• Direct and supervise investigations on matters within the scope, such as evaluations of the effectiveness of DangoteFlour Mills Plc internal controls, cases of employee, business partner and client misconduct or conflict of interest.

Corporate Governance Report cont’d


TO THE MEMBERS OF DANGOTE FLOUR MILLS PLC

In accordance with the provisions of Section 359(6) of the Companies and Allied Matters Act , 1990, we have examinedthe Auditors’ report for the year ended 31st December, 2008. 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 ethicalpractices. Having reviewed the Auditors’ findings and recommendations on Management matters, we are satisfied withManagement’s response therein.

Mr. Alex AdioChairman, Audit Committee

Dated this 5th day of November, 2009

Members of the Committee

Chief M. O. MbonuMr. Asue IghodaloAlhaji Abdullahi MahmoudMr. Olakunle AlakeAlhaji Kasimu Ibrahim

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, as at 31 December2008, set out on pages 15 to 32 which have been prepared on the basis of the significant accounting policies on pages15 and 16 and other explanatory notes on pages 20 to 30.

Directors’ Responsibility for the Financial Statements

The Directors are responsible for the preparation and fair presentation of these financial statements in accordance withthe Companies and Allied Matters Act, CAP C20, LFN 2004. This responsibility includes: designing, implementing andmaintaining internal control relevant to the preparation and fair presentation of financial statements that are free frommaterial misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and makingaccounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit inaccordance with International Standards on Auditing. Those standards require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free frommaterial 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 control 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 appropriateto provide a basis for our audit opinion.

Opinion

In our opinion, the Group and the Company have kept proper accounting records and the financial statements are inagreement with the records in all material respects and give in the prescribed manner, information required by theCompanies and Allied Matters Act, CAP C20, LFN 2004. The consolidated financial statements give a true and fair view ofthe financial position of Dangote Flour Mills Plc as at 31 December 2008, and of its financial performance and its cashflows for the year then ended in accordance with the Statements of Accounting Standards issued by the Nigerian AccountingStandards Board.

Chartered AccountantsLagos, Nigeria

29th October, 2009

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

Tel: +234 1 2717800Fax: +234 1 2717801www.deloitte.com/ng

Report of the Independent Auditors


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. Adjustment has not been made toreflect the impact of specific price changes or changes in the general level of prices on the financial statements.

2. Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries whichare Dangote Pasta Limited and Dangote Agro Sacks Limited whose financial statements are equally made up to31 December. All inter-company transactions and balances are eliminated in full on consolidation.

Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equitytherein.

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:

%Leasehold land and buildings — 2

Plant and machinery — 6

Motor vehicles — 25

Tools and equipment — 20

Furniture and fittings — 20

Computer equipment and softwares — 33

6. Stocks and work-in-progress

Stocks and work-in-progress are stated at the lower of cost based on FIFO and net realisable value while goods intransit are stated at the invoice price. Cost of stocks includes purchase cost, conversion cost (materials, labour andoverhead) 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 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.

(ii) Deferred taxation

Deferred taxation is provided using the liability method at the current rate of income tax on all timing differencesbetween the treatment of certain items for accounting purposes and their treatment for taxation in accordancewith SAS 19.

Statement of Significant Accounting Policiesfor the Year Ended 31 December, 2008

2–3

1–3


10. Employees retirement benefit scheme

The Company makes provision for retirement benefits in accordance with the Pension Reform Act of 2004.The contribution of the employer is 7.5% while that of the employee is 7.5% of relevant emoluments.

The Company also operates a gratuity scheme for its permanent Nigerian staff, the benefits under which are relatedto employees’ length of service and remuneration. The provision for liability in respect thereof based on actuarialvaluation is made in full in the financial statements.

11. Investments

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

12. Provisions

Provision is recognized when the Company has a present obligation whether legal or constructive, as a result of apast event for which it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation and a reliable estimate can be made of the amount of the obligation in accordance with theStatement of Accounting Standards (SAS) 23.

13. Segment reporting

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

14. Earnings per share

The Group presents basic earnings per share (EPS) for its ordinary shares. Basic (EPS) is calculated by dividing theprofit or loss attributable to ordinary shareholders by the weighted average number of shares outstanding duringthe year.

15. Dividend

Proposed dividend for the year is recognised as a liability only when declared and approved by shareholders at theAnnual General Meeting.

Statement of Significant Accounting Policies cont’dfor the Year Ended 31 December, 2008



2008 2007 2008 2007Note N=’000 N=’000 N=’000 N=’000

Turnover 2 47,927,300 42,153,272 30,109,610 31,303,845

Cost of sales (38,288,106) (37,417,176) (24,078,077) (28,011,379)

Gross profit 9,639,194 4,736,096 6,031,533 3,292,466

Distribution and administrative expenses (5,182,564) (3,579,936) (3,271,788) (2,412,845)

Operating profit 4,456,630 1,156,160 2,759,745 879,621

Other income 3 1,109,614 174,421 955,745 120,269

Profit before interest payable 5,566,244 1,330,581 3,715,490 999,890

Interest payable and similar charges (2,398,619) (654,878) (1,957,353) (624,239)

Profit before taxation 4 3,167,625 675,703 1,758,137 375,651

Taxation 5 (178,066) (114,144) (54,045) (85,316)

Profit after taxation 2,989,559 561,559 1,704,092 290,335

Attributable to:

Equity holders — parent 2,947,448 524,710 1,704,092 290,335

Non-controlling interest 42,111 36,849 — —

2,989,559 561,559 1,704,092 290,335

Earnings per share — Basic (kobo) 60 11 34 6

The accounting policies on pages 15 and 16 and other explanatory notes on pages 20 to 30 form part of these financialstatements.

Consolidated Profit and Loss Accountfor the Year Ended 31 December, 2008


Consolidated Balance Sheetas at 31 December, 2008


2008 2007 2008 2007Note N=’000 N=’000 N=’000 N=’000

FIXED ASSETS 6 32,449,283 27,070,733 15,732,534 13,375,453

INVESTMENTS 7 601,900 286,922 8,065,537 7,750,559

CURRENT ASSETSStocks 8 9,910,531 11,427,343 5,397,449 8,386,006Trade debtors 9 7,410,110 5,132,810 6,118,790 4,583,207Other debtors and prepayments 10 8,466,004 2,976,372 7,758,905 2,185,785Due from subsidiaries 25 — — 12,116,069 10,967,799Due from related companies 25 8,263,988 9,545,549 2,370,221 4,419,375Bank and cash balances 1,648,773 1,680,060 371,632 776,551

35,699,406 30,762,134 34,133,066 31,318,723CREDITORS: Amounts falling duewithin one yearBank loans and overdrafts 11 20,595,334 20,231,117 15,214,170 18,004,827Trade creditors 4,387,431 2,754,271 3,173,701 1,539,797Other creditors and accruals 12 14,171,804 7,841,147 11,982,203 6,267,950Taxation 5 423,248 245,182 139,361 85,316Due to related companies 25 3,960,932 4,326,524 3,887,582 4,326,524

43,538,749 35,398,241 34,397,016 30,224,414

NET CURRENT LIABILITIES (7,839,343) (4,636,107) (263,950) 1,094,309

TOTAL ASSETS LESS CURRENTLIABILITIES 25,211,841 22,721,548 23,534,221 22,220,321

CREDITORS: Amounts falling dueafter more than one yearTerm loan 14 — (187,012) — —

PROVISION FOR LIABILITIES ANDCHARGES

Gratuity 15 (582,037) (389,402) (376,362) (312,829)

NET ASSETS 24,629,803 22,145,134 23,157,859 21,907,492

CAPITAL AND RESERVES

Share capital 16 2,500,000 2,500,000 2,500,000 2,500,000Share premium 17 11,806,537 11,806,537 11,806,537 11,806,537Reserves 18 10,046,072 7,679,170 8,851,322 7,600,955

Shareholders’ fund — attributable toequity holders 24,352,609 21,985,707 23,157,859 21,907,492Non-controlling interest 19 277,194 159,427 — —

24,629,803 22,145,134 23,157,859 21,907,492

The financial statements on pages 17 to 32 were approved by the Board of Directors on 29th of October, 2009 and signedon its behalf by:

Alhaji Aliko Dangote

Olakunle Alake

The accounting policies on pages 15 and 16 and other explanatory notes on pages 20 to 30 form part of these financialstatements.

} Directors


Consolidated Statement of Cash Flowsfor the Year Ended 31 December, 2008


2008 2007 2008 2007Note N=’000 N=’000 N=’000 N=’000

Cash flows from operating activities

Cash receipts from customers 45,993,302 38,463,811 28,917,530 32,410,139

Cash payments to suppliers and employees (36,404,326) (51,041,658) (20,985,026) (45,226,557)

Net cash provided by operating activities 20 9,588,976 (12,577,847) 7,932,504 (12,816,418)

Cash flows from investing activities

Proceeds from disposal of fixed assets 138 — 138 —

Purchase of fixed assets 6 (7,181,130) (5,643,822) (3,289,943) (2,154,794)

Deposit for investments 7 (314,978) — (314,978) —

Net cash provided by investing activities (7,495,970) (5,643,822) (3,604,783) (2,154,794)

Cash flows from financing activities

Interest income 3 97,121 15,713 15,370 11,675

Term loan:

— Obtained 244,000 2,505,801 — —

— Repaid (1,094,490) (1,048,683) — —

Interest paid (2,398,619) (654,878) (1,957,353) (624,239)

Net cash provided by financing activities (3,151,988) 817,953 (1,941,983) (612,564)

Net (decrease)/increase in cash and

cash equivalents (1,058,982) (17,403,716) 2,385,738 (15,583,776)

Cash and cash equivalents at 1 January (17,403,716) — (17,228,276) (1,644,500)

Cash and cash equivalents at 31 December 21 (18,462,698) (17,403,716) (14,842,538) (17,228,276)


1. THE COMPANY

1.1 Legal form

The Company started operating as a division of Dangote Industries Limited in 1999. It was incorporated aspublic 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.Particulars of these subsidiaries are:

Subsidiaries Percentage held Principal Activities

Dangote Pasta Limited 99 Manufacture of Spaghetti, Macaroni

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

1.2 Principal activities

Its principal activity is the milling, processing and marketing of branded flour.

2. ANALYSIS OF TURNOVER AND COST OF SALES

Analysis by: Turnover Cost of sales Gross profitActivity N=’000 N=’000 N=’000

The GroupFlour 26,269,299 21,746,622 4,522,677Bran 1,996,365 419,821 1,576,544Danvita and Semolina 2,401,532 1,911,634 489,898Sacks 8,422,720 6,774,998 1,667,722Spaghetti 8,456,424 7,435,031 1,021,393Macaroni 360,960 — 360,960

47,927,300 38,288,106 9,639,194

The CompanyFlour 26,269,299 21,746,622 4,522,677Bran 1,438,779 419,821 1,018,958Danvita and Semolina 2,401,532 1,911,634 489,898

30,109,610 24,078,077 6,031,533


2008 2007 2008 2007N=’000 N=’000 N=’000 N=’000

3. OTHER INCOME

Interest income 97,121 15,713 15,370 11,675Sale of scraps 100,689 15,426 100,689 15,426Provision no longer required 839,686 77,585 839,686 77,585Export grants — 15,583 — 15,583Exchange gain — 16,398 — —Sundry income 71,118 33,716 — —

1,109,614 174,421 955,745 120,269

Notes to the Consolidated Financial Statementsfor the Year Ended 31 December, 2008



2008 2007 2008 2007N=’000 N=’000 N=’000 N=’000

4. PROFIT BEFORE TAXATION

This is arrived at after charging/(crediting):

Directors’ emoluments:— Fees 15,900 — 2,100 —— Salaries and allowances 186,984 60,822 20,450 36,316Audit fee 45,500 36,420 27,500 22,500Depreciation 1,801,832 1,489,666 932,014 904,849Exchange gain — (16,398) — (16,398)Management fee (Note 26) 176,348 155,763 — —

5. TAXATION

Profit and loss account

Tax based on the profit for the yearIncome tax 67,407 — — —Education tax 110,659 114,144 54,045 85,316

178,066 114,144 54,045 85,316

178,066 114,144 54,045 85,316

Balance sheet

As per profit and loss account 178,066 114,144 54,045 85,316At the beginning of the year 245,182 — 85,316 —Transfer from subsidiaries — 131,038 — —Payments during the year — — — —

At the end of the year 423,248 245,182 139,361 85,316

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 E 4, LFN 2004.

Notes to the Consolidated Financial Statements cont’dfor the Year Ended 31 December, 2008


6. FIXED ASSETS

(a) The GroupComputer

Leasehold equipment Furniture Assetsland and Plant and Tools and and and Motor underbuildings machinery equipment softwares fittings vehicles construction Total

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

At 1 January 2,481,470 18,387,650 561,363 54,555 146,066 241,875 9,466,092 31,339,071Additions 24,493 1,379,171 48,690 17,490 22,728 81,598 5,606,960 7,181,130Disposals — — — (204) — — — (204)Adjustment/transfer (97) — (712) — — — 185 (624)Reclassification 225,716 6,346,482 — — — — (6,572,198) —

At 31 December 2,731,582 26,113,303 609,341 71,841 168,794 323,472 8,501,039 38,519,373

Depreciation

At 1 January 127,695 3,730,906 222,426 29,507 65,618 92,186 — 4,268,338Charge for the year 50,608 1,521,794 114,340 17,290 27,456 70,344 — 1,801,832Disposals — — — (11) — — — (11)Adjustment/transfer (1) — (68) — — — — (69)

At 31 December 178,302 5,252,700 336,698 46,786 93,074 162,530 — 6,070,090

Net book value

At 31 December 2008 2,553,280 20,860,603 272,643 25,055 75,720 160,942 8,501,039 32,449,283

At 31 December 2007 2,353,775 14,656,744 338,937 25,048 80,448 149,689 9,466,092 27,070,733

(b) The CompanyComputer

Leasehold equipment Furniture Assetsland and Plant and Tools and and and Motor underbuildings machinery equipment softwares fittings vehicles construction Total

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

At 1 January 1,843,454 10,529,572 388,800 36,210 72,177 111,428 2,203,636 15,185,277Additions 1,542 11,900 27,437 11,260 5,806 1,955 3,230,043 3,289,943Disposals — — — (204) — — — (204)Adjustment/transfer (97) — (712) — — — 185 (624)Reclassification — — — — — — — —

At 31 December 1,844,899 10,541,472 415,525 47,266 77,983 113,383 5,433,864 18,474,392

Depreciation

At 1 January 72,468 1,523,189 132,312 15,953 24,084 41,818 — 1,809,824Charge for the year 36,856 761,627 76,963 13,421 15,000 28,147 — 932,014Disposals — — — (11) — — — (11)Adjustment/transfer (1) — (68) — — — — (69)

At 31 December 109,323 2,284,816 209,207 29,363 39,084 69,965 — 2,741,758

Net book valueAt 31 December 2008 1,735,576 8,256,656 206,318 17,903 38,899 43,418 5,433,864 15,732,634

At 31 December 2007 1,770,986 9,006,383 256,488 20,257 48,093 69,610 2,203,636 13,375,453

Assets under construction comprise of capacity expansion projects in flour production mills Apapa, Ilorin and Calabar.





2008 2007 2008 2007N=’000 N=’000 N=’000 N=’000

7. INVESTMENTS (UNQUOTED)

Dangote Pasta Limited49,500,000 ordinary shares of N=1 each inDangote Pasta Limited — — 2,507,637 2,507,637Dangote Agrosacks Limited84,150,000 ordinary shares of N=1 each inDangote Agrosacks Limited — — 4,956,000 4,956,000

— — 7,463,637 7,463,637

Deposits for investmentsAt 1 January 286,922 — 286,922 —Additions 314,978 286,922 314,978 286,922

At 31 December 601,900 286,922 601,900 286,922

At 31 December, 2008 601,900 286,922 8,065,537 7,750,559

Deposit for investments relates to expenditure incurred on noodles project, a new subsidiary companyunder construction. The shares are yet to be allotted as at 31 December, 2008.


2008 2007 2008 2007N=’000 N=’000 N=’000 N=’000

8. STOCKS

Raw materials and work-in-progress 5,747,680 7,319,939 3,766,420 5,781,707Finished goods 2,321,381 2,824,121 501,985 1,532,318Engineering spares and other stocks 821,709 1,198,611 109,283 987,309Goods-in-transit 1,019,761 84,672 1,019,761 84,672

9,910,531 11,427,343 5,397,449 8,386,006

9. TRADE DEBTORS

Trade debtors 9,616,719 7,051,481 8,223,263 6,246,803Provision for bad and doubtful debts (2,206,609) (1,918,671) (2,104,473) (1,663,596)

7,410,110 5,132,810 6,118,790 4,583,207

10. OTHER DEBTORS AND PREPAYMENTS

Other debtors 7,799,981 2,285,220 7,704,937 2,093,974Deposit for stocks 600,334 577,846 — —Prepayments 65,689 113,306 53,968 91,811

8,466,004 2,976,372 7,758,905 2,185,785



2008 2007 2008 2007N=’000 N=’000 N=’000 N=’000

11. BANK LOANS AND OVERDRAFTS

Bank overdrafts 9,536,663 14,519,654 7,801,362 13,440,705Short-term loans 10,574,808 4,564,122 7,412,808 4,564,122Term loan (Note 14) 483,863 1,147,341 — —

20,595,334 20,231,117 15,214,170 18,004,827

12. OTHER CREDITORS AND ACCRUALS

Customers’ deposits 1,069,176 1,284,641 680,712 823,858Rebate received in advance — 1,603,927 — 1,603,927Accruals 1,552,827 1,974,672 1,119,969 1,787,920Other creditors 11,549,801 2,977,907 10,181,522 2,052,245

14,171,804 7,841,147 11,982,203 6,267,950

13. DEFERRED TAXATION

Deferred tax computation in the current year resulted in deferred tax assets of N=873,247,757 and N=2,969,881,066for the Company and Group respectively. These have not been adjusted in these financial statements.


2008 2007 2008 2007N=’000 N=’000 N=’000 N=’000

14. TERM LOAN

At 31 January 1,334,353 — — —Transfer from subsidiaries — 2,505,801 — —Repayment during the year (1,094,490) (1,048,683) — —Exchange equalisation — (122,765) — —Loan obtained during the year 244,000 — — —

At 31 December 483,863 1,334,353 — —Due within one year (Note 11) (483,863) (1,147,341) — —

Due after more than one year — 187,012 — —

The loan amount of $19.8 million which was obtained in prior year was granted the Company by CommerzbankGermany for the Flour Mills and Pasta line expansion projects. The loan amount is repayable in 3 years with $9.87million payable in 2008 and $1.61 million payable in 2009. The interest rate is 9.029%.


2008 2007 2008 2007N=’000 N=’000 N=’000 N=’000

15. GRATUITY

At 1 January 389,402 266,657 312,829 266,657Transfer from subsidiaries — 65,367 — —Provision for the year 267,415 65,719 114,419 48,936Payments during the year (74,780) (8,341) (50,886) (2,764)

At 31 December 582,037 389,402 376,362 312,829




2008 2007 2008 2007N=’000 N=’000 N=’000 N=’000

16. SHARE CAPITAL

Authorised

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

Issued and fully paid

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

17. SHARE PREMIUM

At 1 January 11,806,537 11,931,537 11,806,537 11,931,537Applied for bonus issue — (125,000) — (125,000)

At 31 December 11,806,537 11,806,537 11,806,537 11,806,537

ExchangeConso- equali- 2008 2007

Revenue lidation sation Capital Total TotalN=’000 N=’000 N=’000 N=’000 N=’000 N=’000

18. RESERVES

The Group

At 1 January 1,246,693 (278,925) 122,765 6,588,637 7,679,170 721,983On acquisition of subsidiaries (Note 7) — — — — — 7,463,637Nominal value of shares issued inexchange (Note 16) — — — — — (875,000)Exchange equalisation (Note 14) — — — — — 122,765On consolidation — — — (76,168) (76,168) (278,925)Prior year adjustment (504,378) — — — (504,378) —Transferred from profit and loss account 2,947,448 — — — 2,947,448 524,710

At 31 December 3,689,763 (278,925) 122,765 6,512,469 10,046,072 7,679,170

The Company

At 1 January 7,600,955 721,983Dangote Pasta and Dangote Agrosacks Limited transferred (Note 7) — 7,463,637Nominal value of shares issued in exchange — (875,000)Prior year adjustment (453,725) —Transferred from profit and loss account 1,704,092 290,335

At 31 December 8,851,322 7,600,955

Prior year adjustment relates to 2006 sales debited twice to a customer account which was corrected in 2008.

The Directors proposed that a dividend of 20 kobo per ordinary share will be paid to the shareholders. The totaldividend payable of N=1 billion is subject to approval by shareholders at the Annual General Meeting and deductionsof withholding tax at the appropriate rate; consequently, it has not been included as a liability in these financialstatements. Dividend to shareholders are now accounted for on the date of declaration as they do not meet thecriteria for present obligation in Statement of Accounting Standard (SAS) 23 on Accounting for Provisions, ContingentLiabilities and Contingent Assets.




The Group

2008 2007N=’000 N=’000

19. NON-CONTROLLING INTEREST

Profit and loss account

At 1 JanuaryOn acquisition of Obajana Agrosacks 29,552 34,482Share of profit in Dangote Agrosacks 4,759 7,239Share of profit/(loss) in Dangote Pasta 7,800 (4,872)

At 31 December 42,111 36,849

Balance sheet

At 1 January 159,427 —On acquisition of Obajana Agrosacks 29,552 84,482Share of profit/(loss):Dangote Agrosacks Limited 4,759 7,239Dangote Pasta Limited 7,800 (4,872)Share capital and reserves — Dangote Agrosacks 51,092 43,853Share capital and reserves — Dangote Pasta 25,076 28,725Prior year item (512) —

At 31 December 277,194 159,427



2008 2007 2008 2007N=’000 N=’000 N=’000 N=’000

20. RECONCILIATION OF PROFIT AFTER TAX TO NETCASH PROVIDED BY OPERATING ACTIVITIES

Profit after taxation and extraordinary items 2,989,559 561,559 1,704,092 290,335

Adjustments to reconcile net income tonet cash provided by operating activities

Depreciation 1,801,832 1,489,666 932,014 904,849Interest income (97,121) (15,713) (15,370) (11,675)Interest expenses 2,398,619 654,878 1,957,353 624,239Prior year adjustment (504,378) — — —Fixed assets adjustment/transfer 555 1,415,917 555 952,805Net fixed assets from subsidiaries — (11,254,181) — —Adjustment for opening net fixed assets — (13,365,235) — —Adjustment for opening revenue reserve — 721,983 — —Adjustment for minority interest (42,111) (36,849) — —Adjustment for goodwill written off on consolidation — (278,925) — —Loss on disposal of fixed assets 55 — 55 —

Changes in assets and liabilities

Decrease/(increase) in stocks 1,516,812 (11,427,343) 2,988,557 (4,096,775)(Increase)/decrease in trade debtors (2,277,300) (5,132,810) (1,989,308) 454,778Increase in other debtors and prepayments (5,489,632) (2,976,372) (5,573,120) (1,056,698)Increase in due from subsidiaries — — (1,148,270) (10,967,799)Decrease/(increase) in due from related companies 1,281,561 (9,545,549) 2,049,154 4,625,295(Decrease)/increase in trade creditors 1,633,160 2,754,271 1,633,904 (4,287,207)Increase in other creditors and accruals 6,330,657 7,841,147 5,714,252 1,157,596(Decrease)/increase in due to related companies (365,592) 4,326,524 (438,942) (1,549,496)Increase in taxation payable 178,066 245,182 54,045 85,316Increase in gratuity provision 192,635 389,402 63,533 58,019Increase in share capital — 2,500,000 — —Increase in share premium — 11,806,537 — —(Decrease)/increase in capital reserve (76,168) 6,588,637 — —Increase in minority interest 117,767 159,427 — —

Total adjustments 6,599,417 (13,139,406) 6,228,412 (13,106,753)

Net cash provided by operating activities 9,588,976 (12,577,847) 7,932,504 (12,816,418)

21. CASH AND CASH EQUIVALENTS

Cash and bank balances 1,648,773 1,680,060 371,632 776,551Short-term loans (10,574,808) (4,564,122) (7,412,808) (4,564,122)Bank overdrafts (9,536,663) (14,519,654) (7,801,362) (13,440,705)

(18,462,698) (17,403,716) (14,842,538) (17,228,276)




2008 2007 2008 2007N=’000 N=’000 N=’000 N=’000

22. INFORMATION REGARDING DIRECTORSAND EMPLOYEES

.1 Directors

Directors’ emolument comprises:— Fees 2,100 — 2,100 —— Salaries and allowances 58,756 60,822 20,450 36,316

60,856 60,822 22,550 36,316

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

N=’000 N=’000 Number Number Number Number

0 — 4,000 1 — — —10,000 — 15,000 1 2 — 115,000 and above 1 1 1 1

.2 Employees

Average number of persons employedduring the year:Management 157 133 106 90Senior staff 500 846 364 387Junior staff 1,657 2,622 375 461

2,314 3,601 845 938

N=’000 N=’000 N=’000 N=’000Aggregate payroll costs:Wages, salaries, allowances andother benefits 1,565,636 1,500,768 604,458 872,416Provision for gratuities 235,354 65,719 82,358 48,936Pension cost 49,045 54,961 12,438 45,723

1,850,035 1,621,448 699,254 967,075

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

N=’000 N=’000 Number Number Number Number

0 — 200 — 598 — —200 — 400 2,444 1,880 324 371401 — 600 369 532 220 232601 — 800 178 187 50 51801 — 1,000 137 167 100 108

1,001 — 2,000 190 163 102 1202,000 and above 94 74 53 56

3,412 3,601 849 938

23. CONTINGENT LIABILITIES

.1 There was no material contingent liability in respect of pending litigation against the Company.

.2 The Directors are of the opinion that all known commitments and liabilities which are relevant in assessing thestate of affairs of the Company have been taken into consideration in the preparation of these financialstatements.




2008 2007 2008 2007N=’000 N=’000 N=’000 N=’000

24. CAPITAL COMMITMENTS

Capital commitments 423,155 132,677 423,155 132,677

The capital commitments were made for capacity expansion projects in three of the four production mills (Apapa,Ilorin and Calabar).

25. RELATED PARTY TRANSACTIONS

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


2008 2007 2008 2007N=’000 N=’000 N=’000 N=’000

Due from subsidiaries

Dangote Pasta Limited — — 12,806,780 10,720,216Dangote Agrosacks Nigeria Limited — — (690,711) 247,583

— — 12,116,069 10,967,799

Due from related companies

Dangote Industries Limited 8,259,269 8,660,184 2,368,721 4,416,875Dangote Sugar Refinery Plc — 634,638 — —Dangote Fisheries Nigeria Limited 1,500 1,500 1,500 1,500Bluestar Shipping Company — 1,000 — 1,000Dangote Flour Mills Plc 3,219 — — —Others — 248,187 — —

8,263,988 9,545,549 2,370,221 4,419,375

Due to related companies

Dangote Transport Nigeria Limited 2,492,769 2,524,501 2,492,769 2,524,501Dangote Sugar Refinery Plc 1,389,885 1,802,023 1,389,885 1,802,023Bluestar Shipping Company 3,500 — 3,500 —Green View Development Nigeria Ltd. 1,428 — 1,428 —Dangote Flour Mills Plc — — — —Dangote Industries Limited 73,350 — — —

3,960,932 4,326,524 3,887,582 4,326,524

.1 Dangote Pasta Limited

Dangote Pasta is a subsidiary company to Dangote Flour Mills Plc. During the year, the supply of wheat andpasta flour to Dangote Pasta amounting to N=6.67 billion.

.2 Dangote Agrosacks Nigeria Limited

Dangote Agrosacks Nigeria Limited is a subsidiary of Dangote Flour Mills. During the year, the Company hadsignificant transactions amounting to N=491,431,071 for the supply of bags for packaging of Flour, Bran, Danvita,etc.



.3 Dangote Industries Limited

Dangote Industries Limited (DIL) is the parent company. DIL undertake payments for expansion projects,recommend external consultants, negotiate bank facilities and purchases of raw materials on behalf of theCompany. The transactions during the year amounted to N=1.46 billion.

.4 Dangote Transport Nigeria Limited

Dangote Transport is a related company to Dangote Flour Mills Plc. The Company had transactions amountingto N=1,025,303,454 with respect to haulage of finished products to customers as well as raw wheat to otherplants.

.5 Dangote Sugar Plc

Dangote Sugar Plc is a related company to Dangote Flour Mills Plc. Dangote Sugar supplies power to DangoteFlour Mills Plc. There is no trading relationship between the two companies.

.6 Dangote Salt Nigeria Limited

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

26. MANAGEMENT FEE

Dangote Pasta Limited and Dangote Agrosacks Limited entered into management and technical service agreementdated 2 January 2006 with Dangote Industries Limited (DIL). The agreement is for an initial period of five years withan option to renew for a further period of five years subject to termination by either party in accordance with theterms of the agreement. As consideration for the services provided, a sum equivalent to 2% of the net revenue fromthe Company’s sales for each month is payable to Dangote Industries Limited. Management fees for the financialyear ended 31 December 2008 amounted to N=176.3 million (2007 — N=155.8 million).

27. ACQUISITION OF SUBSIDIARIES

During the year, the Board of Directors of Dangote Flour Mills Plc at the Board Meeting held on 19 November, 2008approved the investment of N=90 million to subscribe to 90% of the shares of Dangote Noodles Limited. DangoteNoodles has not commenced operations as at 31 December, 2008 and no accounts has been prepared as at thatdate for consolidation in the Group financial statements.

28. COMPARATIVE FIGURES

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



Consolidated Financial Summaryfor the Year Ended 31 December, 2008


2008 2007 2006 2008 2007 2006N=’000 N=’000 N=’000 N=’000 N=’000 N=’000

BALANCE SHEET

Assets

Fixed assets 32,449,283 27,070,733 — 15,732,634 13,375,453 13,365,235Investments 601,900 286,922 — 8,065,537 7,750,559 —Net current (liabilities)/assets (7,839,343) (4,636,107) — (263,950) 1,094,309 1,043,095

25,211,841 22,721,548 — 23,534,221 22,220,321 14,408,330Long-term liabilities — (187,012) — — — —Provision for liabilities and charges (582,037) (389,402) — (376,362) (312,829) (254,810)

24,629,803 22,145,134 — 23,157,859 21,907,492 14,153,520

CAPITAL AND RESERVES

Share capital 2,500,000 2,500,000 — 2,500,000 2,500,000 1,500,000Share premium 11,806,537 11,806,537 — 11,806,537 11,806,537 11,931,537Revenue reserve 10,046,072 7,679,170 — 8,851,322 7,600,955 721,983Minority interest 277,194 159,427 — — — —

24,629,803 22,145,134 — 23,157,859 21,907,492 14,153,520

PROFIT AND LOSS ACCOUNT

Turnover 47,927,300 42,153,272 — 30,109,610 31,303,845 35,672,696

Profit before taxation 3,167,625 675,703 — 1,758,137 375,651 721,983Taxation (178,066) (114,144) — (54,045) (85,316) —Minority interest (42,111) (36,849) — — — —

Retained profit transferred togeneral reserve 2,947,448 524,710 — 1,704,092 290,335 721,983

Per share data —50k ordinary share

Earnings:— Basic (kobo) 60 11 — 34 6 24— Diluted (kobo) — — — — — 14Net assets (Naira) 5 4 — 5 4 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 issued and fully paid ordinary shares as at the end of eachfinancial year.



2008 2007 2008 2007N=’000 % N=’000 % N=’000 % N=’000 %

Turnover 47,927,300 42,153,272 30,109,610 31,303,845Other income 1,109,614 174,421 955,745 120,269

49,036,914 42,327,693 31,065,354 31,424,114Less: Bought-in-materials

and services— Imported (23,623,137) (33,518,001) (23,623,137) (25,650,487)— Local (16,195,666) (4,404,846) (2,095,460) (2,901,813)

Value added 9,218,111 100 4,404,846 100 5,346,758 100 2,871,814 100

Applied as follows:

To pay employees

Salaries, wages andother benefits 1,850,035 20 1,621,448 37 699,254 13 967,075 34

To pay providers of capital

Interest on loans and bankoverdrafts 2,398,619 26 654,878 15 1,957,353 37 624,239 22

To pay government

Taxation 178,066 2 114,144 2 54,045 1 85,316 3

To provide for enhancementof assets and growth

Depreciation 1,801,832 20 1,489,666 34 932,014 17 904,849 31Profit and loss account 2,989,559 32 524,710 12 1,704,092 32 290,335 10

9,218,111 100 4,404,846 100 5,346,758 100 2,871,814 100

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

Consolidated Value Added Statementfor the Year Ended 31 December, 2008


Notes

DANGOTE FLOUR MILLS PLC3RD ANNUAL GENERAL MEETING TO BE HELD AT

11.00 A.M. ON WEDNESDAY, 9TH DECEMBER, 2009 ATTHE CIVIC CENTRE, OZUMBA MBADIWE ROAD,

VICTORIA ISLAND, LAGOS.

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 ThirdAnnual General Meeting of the Company to be held at 11.00a.m. on Wednesday, 9th December, 2009 and at anyadjournment thereof.

Dated this ................ day of .......................................... 200.....

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

NOTES1. Please sign this proxy card and post it to reach the

registered 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

3RD ANNUAL GENERAL MEETING TO BE HELD AT 11.00 A.M.ON WEDNESDAY, 9TH DECEMBER, 2009 AT THE CIVIC CENTRE, OZUMBA MBADIWE ROAD,

VICTORIA ISLAND, LAGOS.

Name of Shareholder* ........................................................................................................................................................................................

IF YOU ARE UNABLE TO ATTEND THE MEETING

A member (shareholder) who is unable to attend Annual General Meeting is allowed by law to vote by proxy. A 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 Name and Address of Shareholders

IMPORTANT

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

✂

RESOLUTION FOR AGAINST

1. To receive the AuditedFinancial Statements for theyear ended 31st December2008 and the Directors’,Auditors’ and Audit Committee’sReports thereon

2. To declare a dividend

3. To re-elect Directors

4. To re-appoint the Auditors

5. To authorise the Directorsto fix the remunerationof the Auditors

6. To appoint members ofthe Audit Committee

7. To fix the remuneration of the Directors

Please indicate with an “X” in the appropriate squarehow you wish your votes to be cast on resolutions setout above. Unless otherwise instructed, the proxy willvote or abstain from voting at his/her own discretion.

Before posting the above form, please tear off this part and retain it for admission to the meeting.

Proxy FormFLOUR

Dangote Flour Mills PlcRC 501757

The RegistrarsOceanic Registrars154, Ikorodu Road, Onipanu,Shomolu, Lagos.

dangote flour mills annual report-signed

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