flour mills nigeria annual report 2013

FLOUR MILLS OF NIGERIA PLC Consolidated and separate financial statements

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Table of Contents

Mission and Vision ................................................................................................................. 3

Board of Directors, Officers and Other Corporate Information .............................................. 4

Financial Highlights ................................................................................................................ 5

Company Profile .................................................................................................................... 6

Chairman’s Statement ........................................................................................................... 7

Report of the Directors ........................................................................................................ 15

Statement of Directors' Responsibilities .............................................................................. 25

Audit Committee Report ..................................................................................................... 26

Report of the Independent Auditors .................................................................................... 27

Consolidated and Separate Statements Of Financial Position .............................................. 28

Consolidated and Separate Statement of Comprehensive Income ...................................... 29

Consolidated and Separate Statements of Changes in Equity .............................................. 30

Consolidated and Separate Statements of Cash Flows ......................................................... 31

Notes to the Consolidated and Separate Financial Statements ............................................ 32

Notes to the Reconciliations of IFRS Financial Statements with NGAAP ............................. 119

Consolidated Statement of Value Added ........................................................................... 122

Non IFRS Statement for Five Years Financial Summary - Company .................................... 123

Non IFRS Statement for Five Years Financial Summary - Group ......................................... 124

Performance Indicators .................................................................................................... 125

Share Capital History of the Company ............................................................................... 126


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BOARD OF DIRECTORS, OFFICERS AND OTHER CORPORATE IN FORMATION

Directors:

Chairman: George S. Coumantaros (U.S. Citizen)

Vice Chairman: John G. Coumantaros (U.S. Citizen)

Dr. (Chief) Emmanuel A. Ukpabi (KJW)

Group Managing Director: Paul Miyonmide Gbededo

Alhaji Abdullahi A. Abba

Adebayo Alade-Loba

Chief James O. Fagbemi

Prof. Jerry Gana, CON

Alhaji Rabiu M. Gwarzo, OON

John Katsaounis (Greek)

Thanassis Mazarakis (Greek)

Atedo N. A. Peterside, CON

Alhaji Y. Olalekan A. Saliu

Folarin R. A. Williams

Company Secretary Alhaji Y. Olalekan A. Saliu

Registrars and Transfer Office: Flour Mills Registrars Ltd.,

34, Eric Moore Road,

Iganmu,

(BAGCO Building),

P.O. Box 341,

Apapa,

Lagos State.

Auditors: Akintola Williams Deloitte

(Chartered Accountants)

Akintola Williams Deloitte House

234, Ikorodu Road,

Ilupeju, Lagos,

P. O. Box 965,

Marina, Lagos State.

Registered Office: Apapa Mills

2, Old Dock Road

Apapa,

Lagos State.


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COMPANY PROFILE

Incorporated in September 1960, Flour Mills of Nigeria Plc (FMN) is one of Nigeria's leading food and agro-

allied companies which has grown into a diversified group with a broad product range, an iconic brand –

“Golden Penny”, and extensive distribution network.

The Group is primarily engaged in flour milling; production of pasta, noodles and edible oil; livestock feeds;

farming and other agro-allied activities; distribution and sale of fertilizer; manufacturing and marketing of

laminated woven polypropylene sacks and flexible packaging materials; cement manufacturing; operation of

Terminals A and B at the Apapa Port; customs clearing, forwarding agents, shipping agents and logistics; and,

management of the mills of Maiduguri Flour Mills Limited and Port Harcourt Flour Mills limited.

FMN was listed on The Nigerian Stock Exchange in 1978 and presently has a paid-up Share Capital of

N1.193 billion and Market Capitalisation of N183.7 billion on 31st March 2013. With current ownership

structure of 55.65% overseas shareholders and 44.35% Nigerian and Institutional investors, there is a broad

ownership base of over 78,000 shareholders. The Group employs over 8,000 direct and indirect employees

with diverse ethnic, cultural and religious background who work harmoniously together to deliver superior

value to customers nationwide.

Recently, the Company's flour operations witnessed new investments in milling technology and gained

accreditation to the Quality Standard ISO 9001:2008 recognizing that its flour manufacturing facilities are

world class and operating within an internationally recognized Quality System.

Group's Income for the year ended 31st March, 2013 was at N302 billion, while it posted an After Tax Profit of

N7.73 billion.

During the financial year ended 31st March 2013, FMN made two strategic acquisitions in pursuit of its long

term growth objectives, viz – Thai Farm International Company Ltd, a leading cassava flour processing

company and ROM Oil Mills Limited, an integrated edible oil processing company. Additionally, FMN

successfully merged with two of its subsidiary companies to consolidate group structure, reduce overhead,

streamline operations and create synergies.

Flour Mills' future outlook is bright with a strategic focus in growing the Company's food and agro-allied

business. The Company has put appropriate strategies in place to strengthen its core business of flour

milling, broaden and diversify its revenue yielding base and launch new products.

Joint venture possibilities, acquisitions, mergers and take overs are being explored with reputable partners to

grow and consolidate agro-allied business, break new grounds and align fully with Federal Government's

Agricultural and Industrial Transformation Agenda.

In spite of the current global financial crisis and economic upheavals, the Board of Directors is confident that

Flour Mills Group has a bright, robust and prosperous future with incredible opportunities to grow, build long-

term values for all stakeholders and remain on top of the competition.


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CHAIRMAN’S STATEMENT

Distinguished Shareholders, Ladies and Gentlemen:

It is with great pleasure that I welcome you to the 53rd Annual General Meeting of our company, FLOUR MILLS OF NIGERIA PLC and to present to you the Annual Report and Accounts of the company for the financial year ending 31st March, 2013.

BUSINESS ENVIRONMENT

I would like to begin my report with a brief review of the socio-economic environment under which we operated during the financial year.

The global economy which is yet to recover fully from the monumental challenges resulting from the economic and financial crises of recent years, struggled to achieve a growth of less than 3% in 2012. The uncertainties and upheavals bedeviling the weak global economy were worsened by the Euro zone sovereign debt crisis and protracted recessions; unprecedented increases in unemployment; and concerns over the US economy's slow growth and the unresolved “fiscal cliff' issue. China and other powerful economies in Asia came under pressure while the emerging markets did not fully pick up the slack.

Indeed, the slowdown in global economic growth coupled with instability in financial markets took a heavy toll on consumer spending and impacted prices of leading world commodities which remained high and volatile.

Against this backdrop, the Nigerian economy achieved a modest performance recording a growth in external reserves, maintaining exchange rate stability and slowing down inflation.

Nigeria's crude oil price which was about UD$126 in March 2012 fell during the year trading in the region of US$106 – US$116. However, increases in production and sale of crude oil helped to mitigate the impact of the fall in price. In addition, the volume increase coupled with Central Bank of Nigeria's foreign exchange management policies helped to shore up the Nation's external reserve which climbed to its highest level in more than three years - US$44.17 billion (US$35.6 billion in March, 2012).

Nigeria's Gross Domestic Product (GDP) recorded modest growth improving from 6.17% in March, 2012 to 6.9% by December and slowing down to 6.6% at the end on March, 2013. However, inflation slowed down appreciably moving from 12.3% in March, 2012 to single digit of 8.6% by March, 2013.

Just like most capital markets, The Nigerian Stock Exchange (NSE) ended the year - 2012 on a positive note with an impressive 35.4% increase in the All Share Index and 37.4% rise in Market Capitalization to N8.97 trillion as against N6.53 trillion in 2011.

The improved performance is attributable to the relentless efforts of NSE's management which implemented progressive reforms aimed at spurring an efficient allocation of capital and rejuvenating investor confidence in the market.

The manufacturing industry continued to grapple with challenges posed by inadequate public power supply, poor road infrastructure, and very high cost of borrowing. The situation was compounded by the lingering unrest and security challenges in some parts of the country which unfortunately affected lives and hindered movement of people, raw materials, and product sale and distribution thereby negatively impacting on the retail sector of the economy.

The massive floods of August/September, 2012 devastated several parts of the country with severe damage to people, homes, structures and farmland creating concerns for the nation's food supply chain.

Mergers

Following the overwhelming consent given by shareholders at the Extra Ordinary General Meetings held on 19th February, 2013 and 20th February, 2013 approving the mergers between Flour Mills of Nigeria Plc. and Nigerian Bag Manufacturing Company Plc. (and its subsidiaries) on the one hand; and Flour Mills of Nigeria Plc. and Niger Mills Company Limited on the other hand, the said companies were successfully merged in March, 2013.

The strategic restructuring was necessitated by the need to streamline operations, reduce administrative costs, rationalize facilities, improve productivity and operating efficiency and capture full synergies for the benefit of all stakeholders – consumers, customers, shareholders, employees, Government, suppliers among others.


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I want to express my profound gratitude to our shareholders for the renewed and unfailing confidence in their company, the regulators and capital market operators for their support; and, the Financial Advisers, Solicitors and Reporting Accountants for their diligent and timely completion of the transactions.

RESULTS FOR THE YEAR

I am pleased to report that in spite of the challenging business operating environment and cessation of cement importation business which accounted for about 17% of income last year, Flour Mills of Nigeria Plc posted an impressive turnover of N225.6 billion, a growth of 23%, thanks to the remarkable performance of our core business – food and agro-allied which achieved an excellent growth of 32%. Benefits accruing from the company's latest investment in milling technology – “West Mills” commissioned in September, 2012 also helped the bottom line. The Company's Profit After Tax grew by 6.6% to N8.75 billion from the N8.2 billion posted last year.

We are confident that the growth of our food and agro-allied business coupled with group synergies and cost advantages resulting from recent group restructuring will help to generate improved earnings and enhance shareholder value.

I am also delighted to report that Flour Mills Group, despite the difficult business terrain, delivered good results during the financial year under review. Group income grew 7% to reach N301.9 billion while Group Profit After Tax dropped slightly by 0.5% from N7.76 billion to N7.73 billion primarily due to rising input cost and increased spending on sale and distribution network.

DIVIDEND

In view of the company's improved financial performance, the directors are pleased to propose to shareholders at the Annual General Meeting, the payment of a dividend of N2.00 for every ordinary share of 50 kobo each, an increase of 25% compared with N1.60 of last year.

I wish to inform our Shareholders that we are committed to implementing the electronic dividend and electronic bonus payment system, which will help in reducing incidence of unclaimed dividends and share certificates. I therefore urge shareholders to complete the e-dividend and e-bonus Application Form in the Annual Report and Accounts and deliver it to “Flour Mills Registrars Limited, c/o Bagco Division, 34 Eric Moore Road, Iganmu, Lagos, P.O. Box 341, Apapa”.

FOOD BUSINESS

Flour Operations

Flour Operations recorded a remarkable performance during the financial year under review in spite of the tough business environment, soaring raw materials prices, the introduction of a levy on imported wheat, and strong competition.

I am pleased to report that a significant milestone was achieved in the history of our Flour Operations by the commissioning of an ultra-modern milling complex named “West Mills” with capacity to grind 2,250 metric tonnes of wheat per day.

The investment of US$65 million in this facility totally supports our long term strategic objective to consolidate and maintain our leadership position in the food industry. Indeed “West Mills” has increased our milling production capacity by over 30% to over 8,000 metric tonnes of wheat daily making our Apapa milling site the largest in Africa and one of the largest single flour milling sites in the world.

I am also pleased to report that we have started seeing the impact of this world-class facility designed to accommodate our projected sales growth of wheat-based products over the next five years. “West Mills” has started adding great value in terms of high efficiency and good quality products allowing us to reap the following additional benefits:

• the flour-blending capability to produce a wide range of flours at a high level of efficiency, thereby providing us with the flexibility to meet the demands of a fast-changing consumer environment;

• the blending of High Quality Cassava Flour (HQCF) into wheat flour at prescribed levels in order to accommodate the requirements of Government Cassava Inclusion Policy;

• the provision of excellent working conditions for our staff as well as ensuring minimum environmental impact – relatively cool working conditions, low noise levels, spaciousness with extremely low power usage per metric tonne of wheat milled.


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It is also my delight to inform you that following a comprehensive and rigorous review of our operational procedures and processes, our Flour Operations in Apapa was accredited with the International Quality Standard ISO 9001:2008 in December 2012 by the Standards Organization of Nigeria (SON). We now possess an acknowledged world-class production facility and the newly acquired ISO Quality Standard will help strengthen the foundation on which we shall continue to build our future manufacturing excellence.

Northern Nigeria Flour Mills (NNFM) Kano

The worsening security challenges in some parts of the North impacted negatively on NNFM's growth momentum. There was a 7.7% drop in revenue which fell from N12.7 billion to N11.7 billion.

However, the company posted an impressive Profit After Tax of N225.1 million against Loss of N135.7 million suffered last year.

We are confident that NNFM will continue to deploy appropriate business strategies to grow its business and enhance returns to all stakeholders as soon as the security concerns ease off.

Niger Mills

In spite of growing competition, Niger Mills, a Division of Flour Mills, formerly Niger Mills Company Limited, continued its robust performance. It posted a turnover of N17.8 billion a 7% increase over last year with an impressive 55% increase in Pre Tax Profit from N891,751 to N1,380,733.

Niger Mills is strategically focused on capacity expansion to accommodate growing demand for its products. We are optimistic that the resulting synergies from the merger with Flour Mills will help improve operational efficiency and the overall performance in coming years.

Golden Pasta (GP)

I am pleased to report that in keeping with its successful track record, our pasta operations delivered a strong performance, maintaining market leadership in an increasingly competitive environment. The operations recorded income growth of 15.71% with an appreciable increase in margins.

Also cheering is the fact that our pasta operation in Iganmu was ISO- certified by SON during the year.

As I reported last year, we have embarked on a major investment programme to construct a 'green-field' pasta factory in Agbara Industrial Estate, Ogun State. The plant commenced partial operation during the financial year with the production of spaghetti, macaroni and other pasta products. The snacks line is expected to be commissioned during the last quarter of 2013.

We are hopeful that the new investment and facilities will help Golden Pasta achieve meaningful and sustainable growth and attain superiority in product delivery to meet customer's satisfaction.

Golden Noodles Nigeria Limited

The management of Golden Noodles Company (GNC), a wholly owned subsidiary, made major investments during the year to expand capacity and improve operational performance which had become necessary to support the growing popularity of its brand.

These investments include:

• Commissioning of two additional lines to double noodles plant production capacity. • Commissioning of Maize puff extruder plant and launching of the “Marios” brand on 25th July 2012. • Launching of two additional varieties of noodles - sweet and savoury. • Introduction of Chicken, Seafood, and Beef seasonings in 100 grams packs. • Completion of an additional Seasoning room for Sachet appropriately equipped to control temperature

and relative humidity.

Sugar Refinery

I am pleased to report that our 750,000 metric tons per annum Sugar Refinery built at a cost of USD250 million commenced commissioning from December 2012 in record time. This was accomplished about 25 months after signing the design contract, thanks to the wonderful support of our bankers and engineers.

The Plant went into commercial operations in February 2013 when it successfully rolled out the highest quality conditioned sugar into the Nigerian sugar market and it is exciting to see the widespread market acceptance and the phenomenal growth of - “Golden Penny” brand's popularity.


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The ultra-modern refinery utilizes the latest method of sugar decolourization through the Granulated Activated Carbon (GAC) filtering. Although more costly, the method guarantees sugar quality levels unsurpassed by other technologies, giving the “Golden Penny” brand a competitive edge. The Plant is now at an advantageous position to produce the best quality sugar in line with the high expectations of our consumers and stakeholders.

The state - of -the –art refinery is powered by two sets of gas turbines and heat recovery boilers designed to reduce the emission of greenhouse gases into the atmosphere. Indeed, these environmentally friendly facilities have substantially met the requirements of the Carbon Trade and Clean Development Mechanism (CDM) and we are at the final stage of our carbon credits approval process.

I am delighted to report that we are progressing well with our Backward Integration Programme in support of Federal Government's Agricultural and Industrial Transformation Agenda. We made a good beginning with the planting of imported sugar cane under center pivot irrigation at our Sugar Estate in Sunti, Niger State.

Our target is to develop 10,000 hectares of sugarcane by 2016 in demonstration of our passionate interest and commitment towards supporting, complementing and playing a significant role geared at the realization of Government's visionary policy and objectives aimed at promoting rapid economic development, creating jobs and developing social infrastructure with great benefits for the Nigerian economy and its people, particularly the rural communities.

Quality Assurance

Quality has been the foundation and bedrock of Flour Mills of Nigeria's 52 years’ successful track record in business and we continue to make further investments in high tech quality assurance and testing equipment to enhance our quality assurance program and speed up the provision of product testing results.

We also continue to send our quality assurance and milling personnel for courses in the United States of America, Switzerland, Germany, South Africa, etc to upgrade their skills and broaden their exposure. Our duly trained bakery support officers are deployed to all geo political zones of Nigeria to transfer skills and support master bakers in the art of modern baking.

AGRO-ALLIED BUSINESS

In furtherance of its strategic focus and vertical integration of agro allied business, Flour Mills has invested in large scale commercial farming of different crops across the country.

As one of the largest promoters of agro-allied initiatives in Nigeria, we are heavily committed to the cultivation of soybean, maize, palm, rice and cassava, and processing these crops into animal and fish feeds, edible oils, rice, sugar and high quality cassava flour. All this is geared towards realizing our vision of creating an integrated food company with specialties in almost all spheres of food products.

Kaboji Farms Ltd

Kaboji Farm is one of the largest commercial farms in Nigeria with farmland comprising 10,000 hectares near Kontagora, Niger State. This season witnessed cultivation of 2,000 hectares of maize, 1,000 hectares of soybean, 1,000 hectares of cassava and a trial of 50 hectares of sorghum.

To achieve maximum yield and sustain profitability in the farm's operations, we have entered into a technical co-operation Agreement with Adecoagro, a leading South American company, well known for the production of food and renewable energy, including the production of grains, rice, oilseed, dairy products, sugar, ethanol and cotton. Following signing of the Agreement, we have started trials on no-tillage farming where organic plant material left after harvesting is not burnt or ploughed in but left on the surface to decompose naturally. It is believed that this will result in further yield gains.

It is encouraging to note that yields of maize, soybean seed and cassava have progressively increased with the introduction of imported hybrid seed varieties and improved farm practices. We are optimistic that the arrangement with Adecoagro will help guarantee the realization of Kaboji farms potential for further gains.

Premier Feed Mills Company Limited (Premier Feeds)

Premier Feeds, Ibadan is a dominant player in the production of animal feeds in Nigeria. In continuation of its growth trajectory and to broaden its scope of feed supply to the protein sector, Premier Feeds commissioned its new Aqua Feed Mill during the year.


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Following recent expansion of the Ibadan feed mill, our poultry feed capacity now exceeds 480,000 metric tons per annum from Ibadan and Sapele mills. Construction of a third mill in Calabar, Cross River state is underway as part of the strategic initiative to improve the geographical spread of our animal feed business and meet the growing demand for livestock feeds.

ROM Oil

Following shareholders' approval at the last Annual General Meeting, we have acquired a controlling interest in ROM Oil Mills Ltd, Ibadan, a medium sized edible oils extraction and refining company which continues to operate as a separate entity post acquisition.

The strategic investment is expected to enhance sustained profitability and improve group synergies since part of the raw materials used in the production of refined edible oils and associated products will be sourced from the Group's commercial farming business. Similarly, byproducts of the refined oils will serve as key inputs in the Group's animal feed mills. Presently, ROM Oil plants crush soya beans from our Kaboji Farm to extract oil and the remaining meal is supplied to our subsidiary, Premier Feeds for their operations in Ibadan and Sapele where it is converted to Poultry Feed.

Undoubtedly, FMN's intervention in ROM Oil has led to a significant increase in capacity, quality and value; and has positioned ROM Oil to keep up with demand and facilitate completion of the new refinery project by the end of 2013.

Thai Farm International Ltd (Thai Farm)

Thai Farm, which began operations in 2010, grows and processes cassava in Ososa, Ogun State and is one of the two leading suppliers of High Quality Cassava Flour (HQCF) to flour millers in Nigeria under the Cassava flour Inclusion initiative of the Federal Government. The projected availability of HQCF through the acquisition is expected to boost implementation of the initiative and ensure consistency of quality, availability and affordability of HQCF.

Flour Mills made this additional investment to address the need to increase Thai Farm's capacity in order to meet the growing demand for HQCF by flour millers in Nigeria.

LOGISTICS, SUPPORT, AND OTHER SUBSIDIARIES

Bagco

Bagco, formerly a publicly quoted company with major equity stake held by Flour Mills of Nigeria Plc, is now a division of FMN following the successful completion of a merger during the year. Bagco's 2012/2013 year end performance recorded a turnover of N22.96 billion, a decrease of 5.2 % compared to previous year's figure of N24.22 billion. Overall Profit before tax was down by 20% from N2.126 billion to N1.69 billion.

The insufficiency of local supply of the key raw material, polymer, was a big challenge and the company had to resort to importation at a time when world price of polymer remained high and unstable.

During the year, Bagco's operations were further strengthened with the installation of one new granule to tape line (GT machine) and laminating line leading to increased production capacity. This has assisted us in meeting increased demand for laminated bags both within the country and export market.

Bagco North which continues to remain the industry's northern flagship platform suffered a decline in fortune during the year due to the current wave of security challenges in some parts of the North. The virtual cessation of cross border trade had a negative impact on its production and sales.

Apapa Bulk Terminal Limited (ABTL)

Apapa Bulk Terminal Limited (ABTL), FMN's wholly owned subsidiary company, experienced a decline in cargo throughput largely attributable to the stoppage of cement importation. The company reported a 13.0% drop in revenue - N3.31 billion against N3.84 billion, last year, whilst Profit after tax dropped by 69.5%- N260 million against N851 million.

We are delighted to report the completion of ABTL's N3.3 billion multipurpose warehouse, which will serve as transit storage for Golden Sugar Co. Limited and help ABTL in its drive to generate increased third party revenue.


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Golden Transport Company Limited (GTC)

GTC, a wholly owned subsidiary of FMN, provides strong logistics support for FMN and Group companies with the over 485 trucks in its nationwide distribution fleet.

GTC's services have in no small way ensured the effective and timely delivery of products to customers in all the geo-political zones of Nigeria and plans are underway to double the current fleet by 2015. This will further strengthen our commitment to customer satisfaction.

United Cement Company of Nigeria (Unicem)

I am happy to report that our associated company, Unicem, where we have 28.15% equity stake grew sales revenue by an impressive increase of 18% to N49billion. It is pleasing to note that Unicem has continued with the remarkable trend, growing sales revenue by 19% to N28billion in the first half year of 2013. The improvement is driven by better operating efficiency in both clinker and cement productions.

It is instructive to note that Market outlook for Unicem's cement remains very bright.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

We at Flour Mills of Nigeria Plc strongly believe that business should be run in a profitable but sustainable and socially responsible manner, creating great value for consumers, employees, shareholders, other stakeholders and giving back to the society. Accordingly, our Corporate Social Responsibility philosophy, initiatives and programmes focus on the following vital areas:

• Environmental Sustainability • Education, Research and Skills Development • Health & Welfare • Infrastructural Development • Security

Environmental Sustainability

We are committed to adopting technologies that greatly reduce emission of harmful gases to the atmosphere. This is demonstrated by our adoption of gas-fired engines for generators to gradually replace our old diesel engines, thereby contributing greatly to the preservation of the ecosystem and reduction of climate change.

Our new state-of-the art milling complex 'West Mills' provides excellent working conditions for staff, ensures minimum impact on the environment and minimizes carbon emission. The complex was designed to be environmentally friendly, relatively cool, spacious with good lighting, low noise levels, low power usage and equipped with very good dust collection and monitoring system.

Education, Research and Skills Development

• Flour Mills of Nigeria Plc's Food Research Centre, University of Ibadan (UI) This year, Flour Mills took a giant leap in its CSR activities with a landmark achievement - the setting up of a Food Research Centre in partnership with the University of Ibadan. A total sum of N30million has been disbursed towards take-off of the centre which will undoubtedly strengthen the weak industry-academia linkages in Nigeria and promote greater collaboration between the food industry and institutions that offer training in food science and technology in the country.

Commissioning of United Christian Primary School, Apapa (UCP)

The newly renovated and refurbished United Christian Primary School, Apapa, commissioned by Flour Mills, now wears a befitting look, a pleasant and environmentally friendly learning environment for the more than three hundred & seventy pupils and over forty teaching and non-teaching staff.

Health and Welfare

• Flood Disaster Relief During the year, FMN demonstrated its commitment towards the provision of better life for Nigerians and humanity in general with its active participation in Government's Flood relief initiative in caring for people, homes, farmlands and structures worst hit by the massive flood which affected many states of Nigeria, in 2012. A donation of N200 million was made to the Flood Relief Committee of the Federal Government to support efforts in alleviating the condition and welfare of the people affected by the flood disaster.


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In addition, truckloads of food items produced by FMN to the tune of N5.7 million were delivered to each of the 14 states of the Federation worst affected by the devastating flood. Products given out included bags of Rice, Semovita, Goldenvita, Spaghetti and Noodles.

• Free Eye Screening Exercise We recently commissioned Ophthalmologists from the Lagos University Teaching Hospital to conduct free eye screening exercise within our premises in Apapa.

• Infrastructural Development & Security In the past year, Flour Mills of Nigeria Plc continued to complement Government efforts by supporting infrastructural development and security in the Apapa environ through the repairs and maintenance of roads and drainages in addition to provision of traffic lights and traffic control.

HUMAN CAPITAL

Our Human Capital Management philosophy has consistently driven our resolve to sustain best practice in people management. We have always recognized and acknowledged that regarding our employees as the heart of our business is the surest way to sustainability as this keeps them highly motivated and results driven. Indeed, a key element of our core strengths is the capability and experience of our Management. This is borne from a culture of empowering and developing our people to succeed at every level, and encouraging accountability and excellence.

Our Organization Development [OD] efforts have progressed with the complete overhaul of our Group Compensation and Benefit Policy and Practices with the following main features:

• Establishment of an Annual Incentive Plan [AIP] bonus scheme in replacement of ex gratia bonuses to ensure employee reward is linked to performance.

• Adoption of the Total Reward Concept which enables the employee to appreciate the value proposition and ensures competitiveness and talent retention.

• Better clarity of the link between benefits and job structure enabling administrative efficiency and cost effectiveness.

This has proven to be a talent attraction /retention strategy and performance improvement initiative which continually incentivizes the employee during a performance management period and brings about a balanced compensation mix.

We recognize that our leadership development model is one of the most successful in the country with our history of successive leaders who have been groomed in the business through our Graduate Trainee schemes. We have continued to emphasize the importance of this value-driven initiative and a new set of Graduate trainees have recently concluded screening and would soon be resuming with the company. Succession planning tools have been deployed to enable positioning of potential successors for mission critical roles in the business for immediate and future needs of the company.

The integrated Talent Management Platform recently introduced has allowed employees visibility of career opportunities and established competencies across the Group to enable them plan their careers; and exceptional employees are given due recognition to further motivate and build a high performance culture in the organization. Good and open communication is maintained with all recognized trade unions in our businesses and we have enjoyed their cooperation and contributions to our employee management initiatives.

We regard all who deliver value along the value chain as partners and therefore the outsourcing model we put in place continues to meet all standards and best practice evaluation in the industry. Our employee engagement activities are open to all whether staff or outsourced and this helps to reduce the challenge of integration of the different status of partners along the value chain.

I would like to express the Board's appreciation and indeed admiration for the outstanding contribution of FMN's many people during the year.

BOARD AND MANAGEMENT CHANGES

I like to inform shareholders about the retirement of our Group Managing Director, Chief (Dr.) Emmanuel Akwari Ukpabi (KJW) who had held that position since January 2002 and retired on 31st March, 2013.

Chief Ukpabi virtually spent his entire working career with FMN demonstrating a high level of passion, dedication, commitment and competence. He joined in 1972 as a Management Trainee and held several challenging managerial and executive positions. In recognition of his invaluable contributions to the company, the Board approved his elevation to the position of Vice-chairman from 1st April, 2013.


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I take this opportunity to express our very sincere appreciation to Chief Ukpabi for his remarkable achievements.

Two new directors, Mr. Paul Miyonmide Gbededo and Prof. Jerry Gana, CON, were invited to the Board of Directors on 13th March, 2013. Mr. Gbededo was the Managing Director of FMN's Agro-Allied business while Prof. Jerry Gana, a Commander of the Order of Niger (CON), current Pro-Chancellor and Chairman of Council of the University of Lagos and a former non-executive director of Bagco is an accomplished and highly respected Nigerian with diverse background in academics, business administration and politics. I welcome both of them on board on your behalf.

I am pleased to inform you that your Board has decided to appoint Mr. Paul Miyonmide Gbededo to succeed Chief Ukpabi as Group Managing Director/Chief Executive Officer of FMN with effect from 1st April, 2013. Mr. Gbededo had served in various capacities with Flour Mills since he joined in 1982 including Process Control Manager, Production Manager, General Manager Production and as the first Nigerian Production Director in Bagco. He also served as General Manager/Director in charge of our fertilizer and pasta operations.

I am sure that Mr. Gbededo's extensive knowledge and solid experience, which cover many aspects of our group and the company's operations, will be of immense help to him in successfully managing the Group.

CONCLUSION

We will continue to invest in our Food Division to maintain and extend our dominant market share in flour, pasta and other food products that make up the Golden Penny food basket. In addition to expanding our interest in the food processing industry, we will actively support the Federal Government's backward integration policy by expanding our agricultural holdings.

We are determined to ensure that our Agro-Allied strategy provides sustainable returns on capital invested by maximizing local content in Group products. Raw materials will be produced locally wherever possible to ensure that good quality but fair value products are developed through the food supply chain from growing to final consumer consumption. Our vision is to be involved at all stages of the food value chain – from farm to table.

Going forward, I want to assure all our stakeholders that we will leverage on the unassailable quality of our flagship product, Golden Penny Flour; the growing popularity and market acceptability of our sugar brand; our continuous investment in new milling technology; our major investment in a 'green-field' pasta factory at Agbara; synergies arising from recent group restructuring and new acquisitions; development and introduction of new products in response to evolving consumer expectations; and, our strengthened Pan Nigerian products distribution network to generate improved earnings and deliver superior shareholder value.

I would like to express my appreciation to the nation's bakers and our growing band of consumers and customers of “Golden Penny” products – Flour, Semovita, Goldenvita, Spaghetti, Macaroni, Golden Noodles, Golden Rice, Golden Sugar; and customers of Premier Feed, Golden Fertilizer, Unicem Portland cement, BAGCO super sacks, Golden Transport Company Limited and Apapa Bulk Terminal Ltd for their patronage, loyalty and wonderful support.

Finally, I want to seize this opportunity to express my gratitude and deepest appreciation to my colleagues on the Board, for their support and cooperation. I wish to put it on record that they made it easy for the Company to remain stable and focused. Similarly, I also express my thanks to members of the Audit Committee, our distinguished shareholders, our bankers and other professional advisers for their interest, support, trust, confidence and commitment.

Thank you.

George S. Coumantaros

Chairman


31 March 2013

15

Report of the Directors 1. ACCOUNTS

The Directors are pleased to submit their report together with the audited accounts of the company and the

group for the year ended 31st March, 2013.

2. RESULT N’000

The group profit for the year after taxation and

non-controlling interest was - 7,726,671 ========

Proposed Dividend - 4,771,369 ========

The proposed dividend is subject to withholding tax at the appropriate rate.

3. PRINCIPAL ACTIVITIES

The group is primarily engaged in flour milling ;production of pasta, noodles edible oil and livestock feeds;

farming and other agro-allied activities; distribution and sale of fertilizer; manufacturing and marketing of

laminated woven polypropylene sacks and flexible packaging materials; cement manufacturing; operation

of Terminals A and B at the Apapa Port; customs clearing, forwarding agents, shipping agents and

logistics; and, management of the mills of Maiduguri Flour Mills Limited and Port Harcourt Flour Mills

limited.

4. LEGAL FORM

The Company, which was incorporated on 29th September, 1960 as a private limited liability company was

converted to a public company in November, 1978. The shares are currently quoted on the Nigerian Stock

Exchange.

5. DIRECTORS AND DIRECTORS’ INTERESTS

.1 The names of Directors who are currently in office are detailed on page 4.

.2 In accordance with the Company’s Articles of Association, the following

Directors retire and, being eligible, offer themselves for re-election at the Annual General Meeting:

Retiring by rotation:

Mr. George Stravos Coumantaros

Alhaji Abdullahi A. Abba

Mr. Atedo N. A. Peterside, CON

Alhaji Rabiu M. Gwarzo, OON

Dr. (Chief) E.A. Ukpabi who retired from the office of Group Managing Director/CEO of the Company on 31st March

2013, remains on the Board as a Non – Executive Director and Vice Chairman.

Mr. Paul M. Gbededo was appointed as a director of Flour Mills of Nigeria Plc on 13th March 2013 and Group

Managing Director/CEO with effect from 1st April 2013. Ratification of his appointment as a Director of the Company

will be required at the Annual General Meeting.


31 March 2013

16

Prof. Jerry Gana (a Commander of the Order of the Niger),who was appointed to the Board of Flour Mills of Nigeria

Plc as a Non- Executive Director on 13thMarch 2013 will seek confirmation of his appointment at the Annual

General Meeting.

.3 No Director has a service contract not determinable within five years.

.4 The Directors’ interests 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, Cap C20 LFN 2004 are as follows:

No. of 50k shares at

31st March

2013 2012

Alh. Abdullahi A. Abba 11,221 11,221

Chief E. A. Ukpabi (KJW) 3,813,624 3,492,714

Chief J. O. Fagbemi 1,263,771 1,263,771

Mr. P. M. Gbededo 535,718 525,718

Professor Jerry Gana, CON 40,000 NIL

Mr. J. Katsaounis 2,115,421 1,991,507

Mr. F. R. A. Williams, Jnr. 27,348 27,348

Mr. A. N. A. Peterside, CON 1, 500,000 1,500,000

Alh.R. M. Gwarzo, OON 181,566 131,566

Alh. Y. O. A. Saliu 1,462,714 1,452,131

6. Profile of Directors seeking re-election at the 53rd Annual General Meeting.

i) Mr. G. S. Coumantaros

Mr. George Coumantaros who was educated at Athens University, Greece moved to the United

States in 1946 to embark on what has become a 64 years international business career.

He was primarily responsible for the establishment of Flour Mills of Nigeria Plc. on 29th September

1960 and currently serves on the Board of many reputable companies and organizations in Nigeria

and overseas.

A highly accomplished man with wide experience in the USA and Europe, Mr. Coumantaros had

been a Director of Flour Mills of Nigeria Plc. since its inception. He became Chairman on 26th

September 1978 on the retirement from the Board of his father Mr. John S. Coumantaros.

Mr. Coumantaros is a man of integrity, who has piloted the Group’s affairs to its present status

through his vision, passion and hard work.

ii) Alhaji Abdullahi Ardo Abba

Alhaji Abdullahi was educated at Yola Middle School and later proceeded to further his educational

career in London between 1963 and 1967 where he attended the College for Distributive Trade and

later University of London for his Diploma in Livestock Production.


31 March 2013

17

His work experience includes being Kaduna Abbatoir Manager, Production Manager/Deputy

Managing Director Mokwa Cattle Ranch; and, Managing Director at the Bauchi Meat Company Ltd

and former Commissioner for Agriculture in North Eastern State and later Gongola State from 1975 -

1979.

Alhaji Abdullahi who joined the Board of Flour Mills of Nigeria Plc as a Non-Executive Director in

1983 is presently the Chief Executive of Abbas Agro Limited. In addition, he runs a medium-sized

dairy plant for the production of yoghurt, ice cream and citrus fruit drinks as well as being the

Proprietor of Alkama Bakery, Yola.

iii) Mr. Atedo N. A. Peterside, CON

Atedo Peterside is the President and Founder of ANAP Foundation, which is a non-profit

organization committed to promoting Good Governance.

He is also the Founder and Chairman of Stanbic IBTC Bank Plc, where he was the Chief Executive

Officer (CEO) from inception of the Bank in February 1989 at the age of 33 (then IBTC) until 2007

when he was elected chairman.

He is presently the non-executive Chairman of Cadbury Nigeria PLC and sits on the Board of

Directors of Nigerian Breweries Plc (Heineken Subsidiary), Presco Plc and Unilever Nigeria Plc.

Mr. Peterside (a Commander of the Order of the Niger) is a member of the National Council on

Privatisation (NCP) and is the Chairman of the NCP's Technical Committee. He is also a member of

the National Economic Management Team which is headed by the President of the Federal Republic

of Nigeria.

iv) Alhaji Rabiu Muhammad Gwarzo, OON

Alhaji Rabiu Gwarzo, OON, Vice Chairman of Northern Nigeria Flour Mills Plc started his educational

career with a brief stint at Bayero University Kano and proceeded to West Ham College and North

East London Polytechnic, both in London where he studied Commercial Accounting between 1972

and 1975. He holds a Certificate in Accounting and Finance of University of Strathclyde, Glasgow,

Scotland (1982).

He joined Northern Nigeria Flour Mills Plc as an Accountant in 1985, rose to the position of Deputy

Managing Director in 1991 ; Managing Director in 1997 and was elevated to the position of Vice-

Chairman of the Company in 2011.

Alhaji Rabiu, (an Officer of the Order of Niger),who joined the Board of Flour Mills of Nigeria Plc. as a

non-executive member on 8th December, 2009, is also a member of Kano Peace Development

Initiative and a Director of Kano State Investment Company Limited.


31 March 2013

18

v) Mr. Paul Miyonmide Gbededo

Paul was educated at the Polytechnic of North London UK where he obtained Graduateship of

Plastic and Rubber Institute and Associateship of National College of Rubber Technology in 1980,

and holds MSc. Degree in Polymer Technology (1981) of Loughborough University of Technology,

UK. An alumnus of Lagos Business School, Advanced Management Programme 3, and Harvard

University’s Finance for Senior Executive Programme, he attended Pasta Machinery Use,

Maintenance and Operation at FAVA, Italy in 2005.

His over 30 years career with FMN Group started at Bagco where he acquired extensive experience

and served in several managerial positions. He was Bagco’s first Nigerian Production Director from

1993 to 1998.

Mr. Gbededo joined Flour Mills in 1998 as General Manager/Director in charge of fertilizer

operations, pioneering development of the product, “Golden Fertilizer” the first choice of Nigerian

farmers. He later served as General Manager/Director of Golden Pasta (now a division of the

Company) and was elevated to the position of Managing Director, Flour Mills Agro-Allied business in

July 2012.

Paul who directs the operations of Golden Penny Rice Limited, sits on the Boards of Golden Sugar

Company Limited and some other subsidiaries of Flour Mills. He has a keen focus on results and is

fully engaged in mentoring career development of Nigerian Managers as well as expatriates. He

brings seriousness and a broad based knowledge and experience of Flour Mills different businesses

into his new position as the Group Managing Director.

vi) Professor Jerry Gana CON.

Professor Jerry Gana (a Commander of the Order of the Niger), graduated from Ahmadu Bello

University, Zaria in 1970 with a B.A. (Hons.) degree, (Upper Division) in Geography, and proceeded

to the University of Aberdeen, Scotland, for an M.sc Course in Rural Resources Planning, leading to

a Ph.D thesis on Market Place Systems and Rural Development in 1974. He further obtained a

Certificate in Education from the University of London, and taught at Ahmadu Bello University from

1974 to 1986, rising to the post of Professor in 1985.

Prof. Jerry Gana has served the nation in various capacities with distinction. These include: Senator

of the Federal Republic; Consulting Director of the Directorate of Food, Roads and Rural

Infrastructure (DFRRI); Chairman of MAMSER; Minister of Agriculture and Natural Resources;

Information and Culture; Cooperation and Integration in Africa; and Information and National

Orientation.

He is presently the Pro-Chancellor and Chairman of Council of the University of Lagos, UNILAG.


31 March 2013

19

7. DIRECTORS’ RESPONSIBILITIES

The Directors are responsible for the preparation of financial statements which give a true and fair view of the

state of affairs of the company at the end of each financial year and of the profit or loss for that period and

comply with the Companies and Allied Matters Act C20 LFN2004. In doing so, they ensure that:

• proper accounting records are maintained;

• applicable accounting statements are followed;

• suitable accounting policies are adopted and consistently applied;

• judgments and estimates made are reasonable and prudent;

• the going concern basis is used, unless it is inappropriate to presume that the Company will

continue in business and;

• Internal control procedures are instituted which, as far as is reasonably possible, safeguard the

assets, prevent and detect fraud and other irregularities.

8. CORPORATE GOVERNANCE

� The Company is committed to the best practice and procedures in corporate governance. Its business

is conducted in a fair, honest and transparent manner which conforms to high ethical standards.

This enables the Board of Directors and Management to accomplish the company’s strategic goals,

ensure good growth and corporate stability for the benefit of all stakeholders.

� The Company’s Articles of Association provides that the Company’s Board of Directors shall consist of

not more than fifteen directors. Presently, the Board is headed by a non-executive Chairman with two

executive directors and eleven non-executive directors, one of which is an independent director.

The composition of the Board of Directors gives premium to integrity, competence, capability,

knowledge, experience and diversity.

� Members of the Board of Directors hold a minimum of four quarterly meetings to approve the

company’s business strategy and objectives, decide on policy matters, direct and oversee the

Company’s affairs, progress, performance, operations, finances; and ensure that adequate resources

are available to meet the Company’s goal and objectives. Attendance of Directors at quarterly

meetings is very good.

� In line with provisions of Section 258(2) of the Companies and Allied Matters Act, Cap. C20 Laws of

the Federation of Nigeria 2004, record of Directors’ attendance at Board meetings is available for

inspection at the Annual General Meeting.

� The Board of Directors has two principal board committees in line with SEC’s Code of Corporate

Governance. These are:

Remuneration/Governance Committee

• Mr. T. Mazarakis

• Mr. A. N. A. Peterside, CON

• Mr. A. Alade-Loba

• Chief J. O. Fagbemi

• Alhaji A. A. Abba


31 March 2013

20

Risk Management Committee

• Chief E. A. Ukpabi

• Mr. T. Mazarakis

• Mr. F. R. A. Williams, Jnr.

• Alh. Y. O. A. Saliu

• Mr. E. J. W. Jackson - Managing Director – Food Business

• Mr. J. Vauthier - Chief Financial Officer

• Mr. W. Percival – Deigh - Group Head, Internal Audit

� For effective management, the Company is structured along the following Divisions and Directorates :

- Finance -Agro Allied

- Corporate Services/Legal -Fertilizer Operations

- Technical -Marketing & Sales

- Flour Operations - Supplies/Procurement

- Bag Manufacturing - Logistics

- Pasta Production - General Services

- Human Resources - Internal Audit

� Frequency and Attendance of Board Meetings:

The Board held five meetings during the financial year ended 31 March 2013. The notice for each

meeting was in line with the Company’s Articles of Association and board papers are usually provided

to directors in advance.

Senior Executives of the company are invited to attend board meetings and make representations of

their business units.

A summary of record of attendance at the meetings is presented below:

S/N NAME TOTAL NO. OF

MEETINGS HELD

NO. OF MEETINGS

ATTENDED

1. Mr. George Stravos Coumantaros 4 4

2. Mr. John George Coumantaros 4 4

3. Dr. (Chief) Emmanuel Akwari Ukpabi (KJW) 4 4

4. Alhaji Abdulahi Ardo Abba 4 4

5. Mr. Adebayo Alade-Loba [Independent] 4 4

6. Chief James Oladapo Fagbemi 4 4

7. Alhaji Rabiu Muhammad Gwarzo, OON 4 4

8. Mr. John Katsaounis 4 4

9. Mr. Thanassis Mazarakis 4 4

10. Mr. Atedo N. A. Peterside, CON 4 4


31 March 2013

21

11. Mr. Folarin Rotimi Abiola Williams 4 4

12. Alhaji Yunus Olalekan Saliu 4 4

13. Mr. Paul M. Gbededo 4 1

� Audit Committee

Composition

Pursuant to section 359(3) of the Companies and Allied Matters Act C20 LFN 2004, the Company has

put in place an Audit Committee comprising three Directors and three shareholders as follows:

Mr. Lazarus N. Onwuka Mrs. G. O. Igeleke Engr. O. Oresegun

Chief E. A. Ukpabi Chief J. O. Fagbemi Alh. Y. O. A. Saliu

The functions of the Committee are laid down under section 359 (6) of the Companies and Allied

Matters Act C20 LFN, 2004.

Meetings:

Members of the Audit Committee receive regular reports and updates on financial matters and internal

control reviews from internal and external auditors. A summary of record of attendance at Audit

Committee meetings held during the financial year ended 31st March, 2013 is presented below:

NAME TOTAL NO. OF MEETINGS

HELD

NO OF MEETINGS ATTENDED

Mr. Lazarus N. Onwuka 4 4

Mrs. G. O. Igeleke 4 4

Engr. O. Oresegun 4 4

Chief J. O. Fagbemi 4 4

Dr. (Chief) E. A. Ukpabi 4 3

Alh. Y. O. A. Saliu 4 3

Internal Audit:

The Company’s efforts to continuously ensure sound financial discipline and adherence to high ethical

standards, as part of its enhanced corporate governance strategy, have resulted in the setting up of a

robust Group Internal Audit which is risk focused.

Internal audit function is currently manned by a team of professionals charged with the responsibility of

ensuring that strategic business risks facing the Group are promptly identified, effectively mitigated,

recommendations proffered and continuously monitored. To ensure independence of this important

function, Internal Audit reports directly to the statutory Audit Committee on a quarterly basis and is

supervised by the Risk Management Committee of the Board.


31 March 2013

22

9. SUBSTANTIAL INTEREST IN SHARES

The Registrar has advised that according to the Register of Members on 31st March, 2013, apart from

Excelsior Shipping Company Limited with 1,244,755,606 (2012 –

1,244,275,606) and Stanbic Nominees Nigeria Limited with 119,319,448 ordinary shares of 50k each,

representing 52.18% and 5% of the paid up share capital respectively, no other individual shareholder held up

to 5% of the issued share capital of the Company.

10. ANALYSIS OF SHAREHOLDING as at 31st March, 2013:

11. DONATIONS AND CHARITABLE GIFTS:

Donations and charitable gifts amounting to N30,200,000 were made during the year: (2012 - N19, 180,000):

NAIRA(N)

Others below N400,000 each: 1,900,000 30,200,000 ‗‗‗‗‗‗‗‗‗‗ No donation was made to any political party or organization during the year.

HOLDINGS BETWEEN

NO. OF SHAREHOLDERS

PERCENTAGE %

NO. OF SHAREHOLDINGS

PERCENTAGE %

1 - 1,000 27,676 35.24 11,607,812 0.48

1,001 - 5,000 40,026 50.96 90,620,074 3.80

5,001 - 10,000 5,154 6.56 35,475,430 1.49

10,001 - 50,000 4,461 5.68 90,328,138 3.79

50,001 - 100,000 577 0.74 39,897,415 1.67

100,001 - 500,000 482 0.61 102,141,003 4.28

500,001 - 1,000,000 71 0.09 49,670,478 2.08

1,000,001 - Above 93 0.12 1,965,944,366 82.41

78,540 100.00 2,385,684,716 100.00

Support for the Blind & Disabled Persons 600,000

Kids Soccer Competition 3,000,000

Ophthalmic/Medical Support 1,250,000

Nepad Business Group 500,000

Kidney Foundation & Kidney Transplant Patient 750,000

Association of Master Bakers & Exhibition 1,800,000

University of Ibadan - Cereals Research Centre 20,000,000

Institute of Customer Service of Nigeria - Premium Education International Centre 400,000


31 March 2013

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12. POST BALANCE SHEET EVENTS

There were no significant developments since the balance sheet date which could have had a material

effect on the state of affairs of the Company at 31st March, 2013 and the profit for the year ended on that

date which have not been adequately provided for or recognized.

13. COMPANY’S DISTRIBUTORS

The Company does not have registered distributors.

14. SUPPLIERS

The Company obtains its materials at arm’s length basis from overseas and local suppliers. Amongst its

main overseas and local suppliers are Star Trading Company Limited, Southern Star Shipping Co. Inc.,

Cementia Trading AG. and Nigerian Bag Manufacturing Company Plc.

15. FIXED ASSETS

Movements in fixed assets during the year are shown in Note 6 to the Accounts. In the opinion of the

Directors, the market value of the Company’s properties is not less than the value shown in the audited

financial statements.

16. HUMAN CAPITAL

.1 Employment and Employees

The Company reviews its employment policy in line with the needs of our business. Careful

recruiting is undertaken to ensure that potential high performers are attracted and retained.

.2 Employee Developments

Local and Overseas Training and Development Programmes are organized to meet the needs of

the company’s modernization / automation strategy implementation.

The Company continues to place premium on its Human Capital Development arising from the fact

that this would ensure improved efficiency of the business and maintain strategic advantage over

competition.

.3 Health, Safety and Environment

The Company appreciates the value of safe work environment to business success and therefore

embarks on periodic assessment to ensure compliance and safety. Employees are continuously

sensitized and pep talks on safe work procedures precede the commencement of each shift in the

operational areas. The Company provides Personal Protective Equipment to employees as required

by the nature of job and safety officers are on regular monitoring to ensure usage compliance.

There is a fully equipped clinic at the docksite to cater for employees located at the Port. This is in

addition to the well-equipped Clinics at Apapa and Iganmu. Needful employees requiring referrals

on health issues are handled by the retainer hospitals.

The employee canteens in Iganmu and Apapa continue to provide nutritionally balanced meals in

very conducive environment and at subsidized rates.


31 March 2013

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.4 HIV/AIDS Policy

HIV/AIDS policy guidelines are in place and employees are encouraged to undertake voluntary

counseling and testing (VCT) in order to confirm their HIV status. Continuous interactions at

workshops with known HIV positive individuals are arranged from time to time to educate staff and

eliminate discrimination and stigmatization. Regular educational programmes are arranged to

sustain the message as part of the activities to mark World’s AIDS day annually.

.5 Performance Management/Target Setting

Performance Management/Target Setting is implemented in line with Management resolve to set

strategic objectives for effective monitoring of performance of the company and its employees.

17. AUDITORS

The Auditors, Messrs Akintola Williams Deloitte have indicated their willingness to continue in office. A

resolution will be proposed authorizing the Directors to determine their remuneration.

BY ORDER OF THE BOARD

ALH. Y. OLALEKAN SALIU

Director/Company Secretary

Apapa Mills,

Old Dock Road, Apapa.

Lagos, Nigeria.

7thAugust, 2013


31 March 2013

25

STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR THE PR EPARATION AND APPROVAL OF THE FINANCIAL STATEMENTS For the year ended 31 March 2013 The Directors of Flour Mills of Nigeria Plc are responsible for the preparation of the consolidated and separate financial statements that present fairly the financial position of the Company and its subsidiaries ("the Group") as at 31 March 2013, and the results of its operations, cash flows and changes in equity for the year then ended, in compliance with International Financial Reporting Standards ("IFRS"), and in the manner required by the Companies and Allied Matters Act of Nigeria and the Federal Reporting Council of Nigeria Act, 2011. In preparing the financial statements, the Directors are responsible for: • properly selecting and applying accounting policies; • presenting information, including accounting policies, in a manner that provides relevant, reliable,

comparable and understandable information; • providing additional disclosures when compliance with the specific requirements in IFRSs are

insufficient, to enable users understand the impact of particular transactions, and conditions on the Company’s consolidated and separate financial position and financial performance; and

• making an assessment of the Group's ability to continue as a going concern. The Directors are responsible for: • designing, implementing and maintaining an effective and sound system of internal controls throughout

the Company; • maintaining adequate accounting records that are sufficient to show and explain the Group's

transactions and disclose with reasonable accuracy at any time the consolidated financial position of the Company, and which enable them to ensure that the financial statements of the Company comply with IFRS;

• maintaining statutory accounting records in compliance with the legislation of Nigeria and IFRS; • taking such steps as are reasonably available to them to safeguard the assets of the Company; and • preventing and detecting fraud and other irregularities. The consolidated and separate financial statements of the Group for the year ended 31 March 2013 were approved by management on 30 July 2013. Signed on behalf of management of the Company

______________________________ ____________________________ Mr Paul Gbededo Alhaji Y. O. A. Saliu Managing Director Director FRC/2013/IODN/00000003828 FRC/2013/ICAN/00000003595 30 July 2013 30 July 2013


31 March 2013

26

AUDIT COMMITTEE REPORT TO MEMBERS OF FLOUR MILLS OF NIGERIA PLC FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2013 In compliance with section 359 (3) to (6) of the Companies of Allied Matters Act 1990 the Audit Committee received the Audited Financial Statements for the year ended 31st March 2013 together with Management Control Report from the external auditors and management response thereto duly convened meeting of the committee. We reviewed the scope and planning of the audit requirement and found them adequate. After due consideration the Committee accepted the Report of the External Auditors that the financial statement give a true and fair view of the state of the company's financial affairs as at 31st March 2013 having been prepared in accordance with generally accepted accounting principles, agreed ethical practices and statutory requirements. The Committee reviewed management's response to the External Auditors findings in the Management Control Report and we and the External Auditors are satisfied with Management response. The committee considered and approved the provision made in the Financial Statements for the remuneration of the External Auditors. We confirm that the internal control system was being constantly and effectively monitored through robust internal audit function. The External Auditors confirm having received full cooperation from management in the course of their statutory audit. The committee therefore recommended that the Audited Financial Statement for the year ended 31st March 2013 and the External Auditors' Report thereon be presented for adoption at this Annual General Meeting. Dated 10th July, 2013

MR. LAZARUS NNADOZIE ONWUKA CHAIRMAN, AUDIT COMMITTEE Other Members of the Audit Committee: Mrs. Grace Oluyemisi Igeleke Engr. Abiodun Olalekan Oresegun Chief (Dr.) Emmanuel Akwari Ukpabi, (KJW) Chief James Oladapo Fagbemi Alhaji Yunus Olalekan Saliu


31 March 2013

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Deloitte

REPORT OF THE INDEPENDENT AUDITORS

TO THE MEMBERS OF FLOUR MILLS OF NIGERIA PLC Report on the Financial Statements We have audited the accompanying consolidated and separate financial statements of Flour Mills of Nigeria Plc and its subsidiaries which comprise the consolidated and separate statements of financial position as at 31 March 2013, 31 March 2012 and 1 April 2011, the consolidated income statement, statement of changes in equity, cash flow statement for the years ended 31 March 2013 and 31 March 2012, a summary of significant accounting policies and other explanatory information set out on pages 16 to 120. Directors’ Responsibility for the Financial Stateme nts The Directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with the Companies and Allied Matters Act CAP C20 LFN 2004, the Financial Reporting Council of Nigeria Act No 6, 2011, the International Financial Reporting Standards and for such internal control as the Directors determine are necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the financial position of Flour Mills of Nigeria Plc and its subsidiaries as at 31 March 2013, 31 March 2012 and 1 April 2011 and the financial performance and cash flows for the years ended 31 March 2013 and 31 March 2012 in accordance with the Companies and Allied Matters Act CAP C20 LFN 2004, the Financial Reporting Council of Nigeria Act No 6, 2011 and the International Financial Reporting Standards.

Akintola Williams Deloitte Chartered Accountants Lagos, Nigeria 31 July 2013 FRC/2013/ICAN/00000001364


31 March 2013

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CONSOLIDATED AND SEPARATE STATEMENTS OF FINANCIAL P OSITION AS AT 31 MARCH 2013

Group

Company

Note

31-Mar-13

31-Mar-12

1-Apr -11

31-Mar-13

31-Mar-12

1-Apr -11

N'000 N'000

N'000 N'000 N'000

N'000 Asset s

Non-current assets Property, plant and equipment 6 144,346,381 112,194,408 73,326,414 67,031,425 47,202,771 26,454,515 Intangible assets 7 672,908 520,868 752,694 164,640 17,785 6,081 Goodwill 7 4,148,022 583,728 583,728 - - - Investment in subsidiaries 8

-

-

-

3,585,132

3,020,575

3,007,567

Investment in associate 9

2,058,203

1,391,674

4,258,901

20,781,295

19,076,773

19,076,773 Other financial assets/investments 10

24,948

414,198

432,258

663,236

414,198

432,258

Long-term loans receivable 11

19,717,445

18,578,584

10,513,140

19,717,445

18,578,584

11,363,140 Deferred tax assets 25

311,072

-

-

57,907

-

-

Deposit for shares 12

-

2,194,171

-

-

2,194,171

-

Total non -current assets

171,278,979

135,877,631

89,867,135

112,001,080

90,504,857

60,340,334

Current assets Inventories 13 64,366,539 50,277,454 45,881,319 40,992,727 26,274,989 28,612,812 Biological assets 696 - - - - - Other financial assets 10 - - - - - 337,520 Trade and other receivables 14

19,467,295

17,425,462

13,326,911

50,950,150

34,009,681

20,791,516

Other assets 15

1,710,231

1,402,967

1,891,643

1,460,321

657,803

582,320 Due from related companies 40

1,585,988

1,355,402

3,129,324

1,570,838

659,396

1,008,177

Cash and bank balances 16

21,837,482

26,239,138

8,876,377

16,914,612

20,433,020

5,057,755

Total current assets 108,968,231 96,700,423

73,105,574

111,888,648

82,034,889

56,390,100

Total assets 280,247,210 232,578,054 162,972,709 223,889,728 172,539,746 116,730,434

Equity and Liabilities

Capital and reserves Share capital 17 1,192,842 1,167,388 939,605 1,192,842 1,167,388 939,605

Share premium 18 36,812,540 33,526,369 5,866,676 36,812,540 33,526,369 5,866,676 Capital reserve 19 6,838,833 8,730,525 4,405,525 6,557,632 4,325,000 - Retained earnings 20 36,134,594 33,231,165 33,624,862 48,960,506 41,020,777 35,759,738

Attributable to equity holders of the parent 80,978,809 76,655,447 44,836,668 93,523,520 80,039,534 42,566,019 Non-controlling interests 21 2,914,853 5,058,796 4,762,139 - - -

Total equity

83,893,662

81,714,243

49,598,807

93,523,520

80,039,534

42,566,019

Non-current liabilities Borrowings 22

39,863,248

27,081,005

7,463,690

7,445,013

276,066

-

Unsecured fixed rate bond 23

23,211,894

30,005,046

33,610,948

23,211,894

30,005,046

33,610,949 Deferred revenue 24

3,372,148

1,401,513

470,795

1,374,788

-

-

Deferred tax liabilities 25

10,926,660

9,433,955

7,555,668

10,048,033

7,457,983

4,307,976 Retirement benefit obligation 26

4,453,271

4,425,753

4,424,394

3,684,408

2,584,246

2,606,720

Total non -current liabilities

81,827,221

72,347,272

53,525,495

45,764,136

40,323,341

40,525,645

Current liabilities Borrowings 22 53,877,818 39,703,057 17,166,387 32,825,633 20,532,481 3,130,093 Unsecured fixed rate bond 23 11,324,384 8,262,329 4,512,329 11,324,384 8,262,329 4,512,329 Deferred revenue 24 607,220 319,184 124,353 119,858 - - Trade and other payables 27 45,503,625 25,129,987 29,578,873 37,860,321 19,827,409 19,806,366 Due to related companies 40 45,645 461 8,491 45,645 - - Provisions 230,537 570,040 118,367 214,925 9,590 22,905 Current tax liabilities 33

2,747,305

4,339,540

8,072,666

2,021,513

3,353,121

5,900,136

Dividend payable 35

189,793

191,941

266,941

189,793

191,941

266,941

Total current liabilities 114,526,327 78,516,539

59,848,407

84,602,072

52,176,871

33,638,770

Total liabilities 196,353,548 150,863,811

113,373,902

130,366,208

92,500,212

74,164,415

Total equity and liabilities

280,247,210

232,578,054 162,972,709 223,889,728 172,539,746 116,730,434

The consolidated and separate statements on pages 28 to 124 were approved by the Board of Directors on 30 July 2013 and signed on its behalf by:

_______________________________ ___________________________ ____________________________

Mr. Paul Gbededo Alhaji Y. O. A. Saliu Mrs. Lydi a Aruleba Managing Director Director Head of Finance FRC No:00000003828 FRC/2013/ICAN/00000003595 FRC/ 2013/ICAN/00000003554 The accompanying Notes form an integral part of these financial statements.


31 March 2013

29

CONSOLIDATED AND SEPARATE STATEMENT OF COMPREHENSIV E INCOME FOR THE YEAR ENDED 31 MARCH 2013

Group

Company Notes

31-Mar-13

31-Mar-12

31-Mar-13

31-Mar-12

N'000 N'000

N'000

N'000

Continuing operations Revenue 28 301,941,329 258,268,251 225,629,747 183,402,710 Cost of sales (263,931,207) (218,559,730) (202,445,764) (162,714,347)

Gross profit 38,010,122 39,708,521 23,183,983 20,688,363 Other operating income 29 5,407,308 2,596,509 3,705,300 728,072 Selling and distribution expenses (10,066,912) (7,513,409) (3,002,061) (1,342,839) Administration expenses (15,204,512) (14,000,952) (10,177,854) (5,818,533) Operating profit 18,146,006 20,790,669 13,709,368 14,255,063 Investment income 30 5,464,686 2,372,931 6,212,520 2,938,200 Finance costs 31 (11,407,268) (8,493,212) (8,281,195) (5,733,726) Share of loss in associate company 9 (1,037,993) (2,867,227) - -

Profit before tax 32 11,165,431 11,803,161 11,640,693 11,459,537 Income tax expense 33 (3,438,760) (4,041,532) (2,895,246) (3,259,079)

Profit for the year 7,726,671 7,761,629 8,745,447 8,200,458 Other comprehensive income for the year, net of tax 26 Actuarial gain 35,212 385,086 37,466 217,062

Total comprehensive income 7,761,883 8,146,715

8,782,913 8,417,520

Profit attributable to: Owners of the Company 6,932,773 7,196,931 8,745,447 8,200,458 Non-controlling Interests 793,898 564,698 - -

7,726,671 7,761,629

8,745,447 8,200,458 Total comprehensive income attributable to: Owners of the Company 6,959,660 7,544,349 8,782,913 8,417,520 Non-controlling Interests 802,223 602,366 - -

7,761,883

8,146,715

8,782,913

8,417,520

Earnings per share (kobo) From continuing operations Basic (kobo) 34 291

308

367

351

Diluted (kobo) 34 291 308

367

351


31 March 2013

30

CONSOLIDATED AND SEPARATE STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2013 Group Share

capital Revaluation

reserve Share

premium Capital reserve

Retained earnings

Non-controlling

interest

Total equity

N'000 N'000 N'000 N'000 N'000 N'000 N'000 Balance at 1 April 2011 939,605 5,866,676 4,405,525 33,624,862 4,762,139 49,598,807 Dividends - - - - (3,758,421) - (3,758,421) Profit or loss for the period - - - - 7,196,931 - 7,196,931 Other comprehensive income - - - - 347,418 37,668 385,086 Issue of share capital(right issue) 227,783 - 27,659,693 - - - 27,887,476 Post consolidation adjustments - - - - 145,375 - 145,375 Transfer to capital reserve on merger of Golden Pasta Company Limited - - - 4,325,000 (4,325,000) - - Movement during the year - - - - - (305,709) (305,709) Share of subsidiaries' profit for the year - - - - - 564,698 564,698

Balance at 31 March 2012

1,167,388 - 33,526,369 8,730,525 33,231,165 5,058,796 81,714,243 Dividends - - - - (3,735,643) - (3,735,643) Dividend paid to Nigerian Bag Manufacturing Company Plc. to Non-controlling Interest during the year - - - - (320,587) - (320,587) Profit or loss for the period - - - - 6,932,773 - 6,932,773 Other comprehensive income - - - - 26,886 8,326 35,212 Share option consideration in respect of Flour Mills of Nigeria Plc/Nigerian Bag Manufacturing Company Plc merger 25,454 - - - - - 25,454 Share premium arising from merger of Nigerian Bag Manufacturing Company Plc merger with Flour Mills of Nigeria Plc. - - 3,285,219 - - - 3,285,219 Share premium arising from the merger of Niger Mills Company Limited with Flour Mills of Nigeria Plc. - - 953 - - - 953 Share of subsidiaries' profit for the year - - - - - 793,898 793,898 Capital reserve from merger of Flour Mills of Nigeria Plc with Nigerian Bag Manufacturing Company Plc. - - - 2,232,632 - - 2,232,632 Eliminated on merger with Nigerian Bag Manufacturing Company Plc and Niger Mills Company Limited - - - (4,124,324) - - (4,124,324) Non-controlling interest adjustments on merger of Nigerian Bag Manufacturing Company Plc - - - - - (2,965,057) (2,965,057) Non-controlling interest on acquisition of Rom Oil Limited - - - - - 18,890 18,890

IFRS Balance at 31 March 2013 1,192,842 - 36,812,540 6,838,833 36,134,594 2,914,853 83,893,662


31 March 2013

31

CONSOLIDATED AND SEPARATE STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2013 Group Company

Note 31-Mar-13 31-Mar-12

31-Mar-13 31-Mar-12

N'000

N'000

N'000

N'000

Cash flows from operating activities

Cash receipts from customers 306,266,060 260,899,922 224,410,883 187,030,556 Cash payments to suppliers and employees (282,462,001) (247,486,095) (221,022,528) (179,698,576)

Cash generated from operations 23,804,059 13,413,827 3,388,355 7,331,980) Value added tax received (paid) (964,423) (836,460) (131,616) (226,674) Income taxes paid (4,178,085) (5,906,244) (3,775,616) (4,641,232)

Net cash generated by operating activities 36

18,661,551

6,671,123

(518,877)

2,464,074

Cash flows from investing activities Purchase of investments in subsidiary companies - - (2,544,675) (42,066) Purchase of investments associate company (1,704,522) - (1,704,522) - Purchase of other investment (2,000) (249,038) (2,000) Loans granted to related companies (3,404,792) (9,248,351) (3,404,792) (9,248,351) Loans repaid by related companies 2,265,931 1,182,906 2,265,931 2,370,426 Deposit for shares 2,194,171 (2,194,171) 2,194,171 (2,194,171) Proceeds from disposal of property, plant and equipment 65,416 486,038 53,740 16,727 Purchase of property, plant and equipment (38,698,683) (39,736,480) (12,300,808) (17,046,504) Purchase of intangible assets (317,029) (28,160) (224,842) (23,950) Interest received 5,456,436 2,372,931 5,210,270 2,352,668 Dividend received 8,250 - 1,002,250 585,532

Net cash utilised by investing activities (34,134,822) (47,167,287) (9,702,315) (23,231,689)

Cash flows from financing activities

Proceed from issue of shares 3,311,625 27,887,476 3,311,625 27,887,476 Proceeds from term loan 42,282,537 26,055,855 35,515,890 8,881,080 Repayment of term loan (3,731,326) (7,689,392) (3,731,326) (7,689,392) Repayment of bond (3,731,097) 144,097 (3,731,097) 144,097 Interest paid (11,407,268) (8,493,212) (8,281,195) (5,733,726) Dividend paid 35 (4,058,648) (3,833,421) (4,058,648) (3,833,421)

Net cash generated by financing activities 22,665,823 34,071,403 19,025,249 19,656,114

Net decrease in cash and cash equivalents 7,192,552 (6,424,761) 8,804,057 (1,111,501) Cash and cash equivalents at the beginning of the year (7,403,970) (979,209) 1,528,971 2,640,472

Cash and cash equivalents at the end of the year 16 (211,418) (7,403,970)

10,333,028

1,528,971


31 March 2013

32

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 1. General Information 1.1 Legal form

Flour Mills of Nigeria Plc (Flour Mills) was incorporated in Nigeria as a private limited Company on 29 September 1960 and was converted to a public liability company in November 1978. Its registered head office is located at 2 Old Dock Road, Apapa. Lagos.

1.2 Principal Activities

The Group is primarily engaged in flour milling, production of pasta, noodles edible oil and livestock feeds, farming and other agro-allied activities, distribution and sales of fertilizer, manufacturing and marketing of laminated woven polypropylene sacks and flexible packaging materials, cement manufacturing, operation of terminals A and B at the Apapa Port, customs clearing, forwarding agents, shipping agents and logistics and management of third party mills.

1.3 Going concern status

The Group has consistently been making profits. The Directors believe that there is no intention or threat from any source to curtail significantly its line of business in the foreseeable future. Thus, these financial statements are prepared on a going concern basis.

1.4 Ownership Structure

Name of shareholder No. of shares held Percentage

shareholding Excelsior Shipping Company Ltd 1,244,755,606 52.18 Nigeria public 929,642,259 38.97 West African investments 86,684,112 3.47 Stanbic IBTC 128,602,739 5.38

The ultimate holding company is Excelsior Shipping Company, Limited, a company registered in Liberia. The beneficial owner of Excelsior Shipping Company is a trust established by the late Mr. John S. Coumantaros for his descendants.

1.5 Operating environments Emerging markets such as Nigeria are subject to different risks than more developed markets, including economic, political and social, and legal and legislative risks. As has happened in the past, actual or perceived financial problems or an increase in the perceived risks associated with investing in emerging economies could adversely affect the investment climate in Nigeria and the country’s economy in general. The global financial system continues to exhibit signs of deep stress and many economies around the world are experiencing lesser or no growth than in prior years. These conditions could slow or disrupt Nigeria’s economy, adversely affect the Company’s access to capital and cost of capital for the Company and, more generally, its business, results of operations, financial condition and prospects. Because Nigeria produces and exports large volumes of oil, Nigerian’s economy is particularly sensitive to the price of oil on the world market which has fluctuated significantly during 2012 and 2011.

2 Financial period These financial statements cover the financial year from 1 April 2012 to March 2013, with the opening statement of financial position as at the transition date of 1 April 2011.


31 March 2013

33

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 3 New and revised IFRS in issue but not yet effecti ve

The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective:

Effective date

IFRS 9 Financial Instruments annual periods beginning on or after 1 January 2015 IFRS 10 Consolidated Financial Statements annual periods beginning on or after 1 January 2013 IFRS 11 Joint Arrangements annual periods beginning on or after 1 January 2013 IFRS 13 Fair Value Measurement annual periods beginning on or after 1 January 2013 Amendments to IAS 1 Presentation of Items

of Other Comprehensive Income annual periods beginning on or after 1 July 2012. IAS 19 (as revised in 2011) Employee

Benefits annual periods beginning on or after 1 January 2013 IAS 27 (as revised in 2011) Separate

Financial Statements annual periods beginning on or after 1 January 2013 IAS 28 (as revised in 2011) Investments in

Associates and Joint Ventures annual periods beginning on or after 1 January 2013

IFRS 9 issued in November 2009 introduces new requirements for the classification and measurement of financial assets. IFRS 9 was amended in October 2010 to include the requirements for the classification and measurement of financial liabilities and for derecognition.

Key requirements of IFRS 9 are described as follows:

IFRS 9 requires all recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent accounting periods.

The most significant effect of IFRS 9 regarding the classification and measurement of financial liabilities relates to the accounting for changes in the fair value of a financial liability (designated as at fair value through profit or loss) attributable to changes in the credit risk of that liability. Specifically, under IFRS 9, for financial liabilities that are designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Previously, under IAS 39, the entire amount of the change in the fair value of the financial liability designated as at fair value through profit or loss was presented in profit or loss. IFRS 9 is effective for annual periods beginning on or after 1 April 2015, with earlier application permitted. The directors anticipate that the standard will be adopted in the Company's financial statements for the annual period beginning 1 January 2015. The application of this standard will not have significant impact on amounts reported in the financial statements. In May 2011, a package of five Standards on consolidation, joint arrangements, associates and disclosures was issued, including IFRS 10, IFRS 11, IFRS 12, IAS 27 (as revised in 2011) and IAS 28 (as revised in 2011).


31 March 2013

34

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 3 New and revised IFRS in issue but not yet effecti ve (continued)

Key requirements of these five Standards are descri bed below. IFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statements that deal with consolidated financial statements and SIC-12 Consolidation – Special Purpose Entities. Under IFRS 10, there is only one basis for consolidation that is control. In addition, IFRS 10 includes a new definition of control that contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor’s returns. Extensive guidance has been added in IFRS 10 to deal with complex scenarios.

IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly Controlled Entities – Non-monetary Contributions by Venturers. IFRS 11 deals with how a joint arrangement of which two or more parties have joint control should be classified. Under IFRS 11, joint arrangements are classified as joint operations or joint ventures, pending on the rights and obligations of the parties to the arrangements. In contrast, under IAS 31, there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly controlled operations. In addition, joint ventures under IFRS 11 are required to be accounted for using the equity method of accounting, whereas jointly controlled entities under IAS 31 can be accounted for using the equity method of accounting or proportionate accounting. IFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 are more extensive than those in the current standards. These five standards are effective for annual periods beginning on or after 1 January 2013. Earlier application is permitted provided that all of these five standards are applied early at the same time. The Directors anticipate that these standards will be adopted in the Company’s financial statements for the period beginning 1 January 2013. The application of this standard may have impact on the amounts reported but the Directors have not yet performed a detailed analysis of the changes and hence have not quantified the impact. IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The Standard defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The scope of IFRS 13 is broad; it applies to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except in specified circumstances. In general, the disclosure requirements in IFRS 13 are more extensive than those required in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for financial instruments only under IFRS 7 Financial Instruments: Disclosures will be extended by IFRS 13 to cover all assets and liabilities within its scope. IFRS 13 is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted. The directors anticipate that IFRS 13 will be adopted in the Company's financial statements for the annual period beginning 1 April 2013 and that the application of the new Standard may affect the amounts reported in the financial statements and result in more extensive disclosures in the financial statements. However, it is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed. The amendments to IAS 1 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to IAS 1 require additional disclosures to be made in the other comprehensive income section such that items of other comprehensive income are grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss; and (b) items that will be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis. The amendments to IAS 1 are effective for annual periods beginning on or after 1 July 2012. The presentation of items of other comprehensive income will be modified accordingly when the amendments are applied in the future accounting periods.


31 March 2013

35

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 3 New and revised IFRS in issue but not yet effecti ve (continued)

The amendments to IAS 19 change the accounting for defined benefit plans and termination benefits. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, and hence eliminate the 'corridor approach’ permitted under the previous version of IAS 19 and accelerate the recognition of past service costs. The amendments require all actuarial gains and losses to be recognised immediately through other comprehensive income in order for the net pension asset or liability recognised in the statement of financial position to reflect the full value of the plan deficit or surplus. The amendments to IAS 19 are effective for annual periods beginning on or after 1 January 2013 and require retrospective application with certain exceptions. The Directors anticipate that the amendments to IAS 19 will be adopted in the Group's financial statements for the annual period beginning 1 January 2013 and that the application of the amendments to IAS 19 may have impact on amounts reported in respect of the Group's defined benefit plans. However, the directors have not yet performed a detailed analysis of the impact of the application of the amendments and hence have not yet quantified the extent of the impact.

4 Significant accounting policies 4.1 Statement of compliance with IFRSs

The consolidated and separate financial statements have for the first time, been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB”), and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (together “IFRS”) that are effective at 31 March 2013 (the Company’s first reporting date under IFRS) and requirements of the Companies and Allied Matters Act (CAMA) of Nigeria and the Financial Reporting Council (FRC) Act of Nigeria In the preparation of these consolidated financial statements, the provisions of IFRS 1- First-time Adoption of International Financial Reporting Standards have been applied, and the impacts of adopting IFRS are disclosed in the appendix. The effect of adopting IFRS on the accounting policies are disclosed on note 4.27.

4.2 Basis of preparation On initial adoption of IFRS, the Company applied the following exemptions from the requirements of IFRS and from their retrospective application as permitted by IFRS 1 “First-time Adoption of International Financial Reporting Standards” (“IFRS 1”).

The principal accounting policies are set out below. 4.3 Basis of consolidation

The Group financial statements incorporate the financial statements of the Parent Company and its subsidiaries and associates made up to 31 March each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the Group statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation. Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The interests of non-controlling shareholders may be initially measured at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Company.


31 March 2013

36

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 4.3 Basis of consolidation (continued)

When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), less liabilities of the subsidiary and any non-controlling interests. Amounts previously recognized in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities are disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the costs on initial recognition of an investment in an associate or jointly controlled entity.

4.4 Subsidiary companies

"Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. Consideration is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the consideration over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the consideration is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in profit or loss in the statement of comprehensive income.

Inter-Company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group."

4.5 Business combinations Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognized in profit or loss as incurred. Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant IFRSs. Changes in the fair value of contingent consideration classified as equity are not recognized. Where a business combination is achieved in stages, the Group’s previously-held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognized in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.


31 March 2013

37

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013

Business combinations (continued) The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3, Business combinations are recognized at their fair value at the acquisition date, except that: - deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are

recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;

- assets (or disposal Groups) that are classified as held for sale in accordance with IFRS 5 Non-current

Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

"Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS. When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. " "The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39, Financial Instruments: Recognition and Measurement, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss. " If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period or additional assets or liabilities are recognized to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date.

4.6 Acquisition of entities under common control Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted prospectively as of the date that transfer of interest was effected. The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Group controlling shareholder’s consolidated financial statements. The difference between the consideration paid and the net assets acquired is accounted for directly in capital reserve.


31 March 2013

38

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 4.7 Investments in associates

An associate is an entity over which the Group has significant influence, which is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The results, assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in associates are carried in the Group statement of financial position at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate) are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Any excess of the consideration over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss. Where a Group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate. "The requirements of IAS 36 Impairment of Assets are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36, Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount, Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36, Impairment of Assets to the extent that the recoverable amount of the investment subsequently increases. Upon disposal of an associate that results in the Group losing significant influence over that associate, any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset in accordance with IAS 39, Financial Instruments: Recognition and Measurement. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when it loses significant influence over that associate.

When a Group entity transacts with its associate, profits and losses resulting from the transactions with the associate are recognised in the Group's financial statements only to the extent of interests in the associate that are not related to the Group."

4.8 Non-current assets held for sale

Non-current assets and disposal groups classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.


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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 4.9 Goodwill

Goodwill represents the excess of the consideration over the fair value of the Group’s share of the net identifiable assets of the acquired entity at the date of the acquisition. Goodwill arising from business combinations is included in ‘intangible assets’ whereas goodwill on acquisition of associates is included in ‘investments in associates’ and is tested for impairment as part of the overall balance. The excess of the purchase price over the carrying amount of non-controlling interest, when the Group increases its interest in an existing subsidiary, is recognised in equity. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

The Group’s policy for goodwill arising on the acquisition of an associate is described in 4.7 above. 4.10 Revenue recognition

Revenue is measured as the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.

4.10.1 Sale of goods Revenue from the sale of goods is recognised when the goods are delivered and titles have passed, at which time all the following conditions are satisfied: - the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; - the Group retains neither continuing managerial involvement to the degree usually associated with

ownership nor effective control over the goods sold; - the amount of revenue can be measured reliably; - it is probable that the economic benefits associated with the transaction will flow to the entity; and - the costs incurred or to be incurred in respect of the transaction can be measured reliably.

4.10.2 Dividend and interest revenue

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established (provided that it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably). Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

4.10.3 Rental income

Rental income from letting property is recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives granted are considered as an integral part of the total rental income and recognised over the term of the lease.


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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 4.11 Foreign currency translation

For the purpose of these financial statements, the results and financial position of Flour Mills and its subsidiaries are expressed in Naira, which is the functional currency of the Group and Company, and the presentation currency for the Group financial statements. In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing on the dates of the transactions. At the end of each reporting period, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognised in the income statement in the period in which they arise except for:

· exchange differences on foreign currency borrowings relating to assets under construction for future

productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;

· exchange differences on transactions entered into in order to hedge certain foreign currency risk · exchange differences on monetary items receivable from or payable to a foreign operation for which

settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.

4.12 Pensions and other post-employment benefits

The Group and Company operate a defined contribution based retirement benefit scheme for its staff, in accordance with the Pension Reform Act of 2004 with employee contributing 7.5% and the employer contributing 9% each of the employee’s relevant emoluments. Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered the service entitling them to the contributions. The Group also operates a gratuity scheme for its qualified staff. Benefits are related to the employees' length of service and remuneration. The cost of providing gratuity benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of each reporting period. Actuarial gains and losses (if any) are recognised fully in other comprehensive income. Past service cost is recognised immediately in profit or loss.

4.13 Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. 4.13.1 Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement of comprehensive income because of items of income or expense that are taxable or deductible in future years and items that are never taxable or deductible. The Group and Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

4.13.2 Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.


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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 4.13.2 Deferred tax (continued)

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Current and deferred tax are recognised in the statement of comprehensive income, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

4.14 Property, plant and equipment. Land and buildings mainly comprise factories, depots, warehouses and offices. All property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which it is incurred. Depreciation on property, factory buildings, machinery, vehicles, furniture and equipment is calculated on a straight-line basis at rates deemed appropriate to write off the cost of the assets to their residual values over their expected useful lives.

Leasehold land is depreciated over the lease term. Freehold land is not depreciated.

Fixtures and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.

Depreciation is recognised so as to write off the cost or valuation of assets (other than land and properties under construction) less their residual values over their useful lives, using the straight-line method, on the following bases:

Freehold land Nil Buildings 50 years Plant and machinery 5 - 10 years Furniture and equipment 4 - 10 years Motor vehicles 5 years Computer equipment 3 years

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.


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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 4.14 Property, plant and equipment (continued)

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Properties in the course of construction (capital work-in-progress) are carried at cost, less any recognised impairment losses. Cost includes professional fees and for qualifying assets borrowing costs capitalised in accordance with the Group's accounting policy."

4.15 Borrowing cost

Borrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds. These include interest expenses calculated using the effective interest rate method, finance charges in respect of finance leases and exchange differences arising from foreign currency borrowings’ interest cost. Where a range of debt instruments is used to borrow funds, or where the financing activities are coordinated centrally, a weighted average capitalisation rate is applied. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. The Group defines a qualifying asset as an asset that takes more than a year to prepare for its intended use. All other borrowing costs are expensed in the period in which they are incurred. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are correct.

4.16 Government grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable. The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.

4.17 Intangible assets 4.17.1 Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.


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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 4.17.2 Intangible assets acquired in a business com bination

Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

4.17.3 Derecognition of intangible assets An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.

4.17.4 Impairment of tangible and intangible assets excluding goodwill and financial assets. At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest Group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

4.17.5 Impairment of tangible and intangible assets excluding goodwill and financial assets continued If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

4.18 Inventories Inventories are stated in the financial statements at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the first in first out method (FIFO). Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Spare parts are valued at the lower of cost and net realisable value. Value reductions and usage of parts are charged to profit or loss. Spare parts that are acquired as part of an equipment purchase and only to be used in connection with this specific equipment are initially capitalised and depreciated as part of the equipment.


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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 4.19 Biological assets

A biological asset is a living animal or plant. Agricultural produce is the harvested product of the entity’s biological assets. The Group's agricultural produce consists of soya bean, cassava and maize. Agricultural produce harvested from the Group’s biological assets is measured at its fair value less costs to sell at the point of harvest. Fair value is measured with reference to the price in an active market at the point of harvest adjusted for its present location and condition. Fair value changes and expenses incurred in establishing and maintaining the assets are recognised in statement of profit or loss. Finance charges are not capitalised.

4.20 Trade payables

Trade payables are held at amortised cost which equates to nominal value. Long-term payables are discounted where the effect is material.

4.21 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, current balances with banks and similar institutions and highly liquid investments generally with maturities of three months or less. They are readily convertible into known amounts of cash and have an insignificant risk of changes in value.

4.22 Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

4.23 Restructurings

A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the on-going activities of the entity.

4.24 Financial instruments

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the income statement.

4.24.1 Financial assets

The Groups financial assets are classified into available for sale (AFS) and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.


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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 4.24.2 Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

4.24.3 Available-for-sale financial assets (AFS fin ancial assets) AFS financial assets are non-derivatives that are either designated as AFS or are not classified as (a) loans and receivables, (b) held-to-maturity investments or (c) financial assets at fair value through profit or loss. Listed equities held by the Group that are traded in an active market are classified as AFS and are stated at fair value at the end of each reporting period. Changes in the carrying amount of available-for-sale financial assets are recognised in other comprehensive income and accumulated under the heading of fair value reserve. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the fair value reserve is reclassified to profit or loss.

Dividends on AFS equity instruments are recognised in the income statement when the Group's right to receive the dividends is established. The fair value of AFS monetary financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate prevailing at the end of the reporting period. The foreign exchange gains and losses that are recognised in profit or loss are determined based on the amortised cost of the monetary asset. AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less any identified impairment losses at the end of each reporting period.

4.24.4 Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables include ‘trade and other receivables’, ‘loans to joint ventures’ and ‘cash and cash equivalents’ in the statement of financial position which are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

4.24.5 Impairment of financial assets Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. For AFS equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment

For all other financial assets, objective evidence of impairment could include:

*significant financial difficulty of the issuer or counterparty; or *breach of contract, such as a default or delinquency in interest or principal payments; or *it is becoming probable that the borrower will enter bankruptcy or financial re-organisation; or *the disappearance of an active market for that financial asset because of financial difficulties


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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 4.24.5 Impairment of financial assets (continued)

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 90 days, as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in the income statement. When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period. For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve. In respect of AFS debt securities, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

4.24.6 Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss. Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.

On derecognition of a financial asset other than in its entirety (e.g. when the Group retains an option to repurchase part of a transferred asset), the Group allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.


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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 4.25 Financial liabilities and equity instruments 4.25.1 Classification as debt or equity

Debt and equity instruments issued by the Group are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

4.25.2 Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised as the proceeds received, net of direct issue costs.

Repurchase of the Group's own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group's own equity instruments.

4.25.3 Financial liabilities Financial liabilities are classified as ‘other financial liabilities'. 4.25.3.1 Other financial liabilities

Other financial liabilities (including borrowings and trade and other payables) are initially measured at fair value. Subsequently they are measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

4.25.3.2 Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

4.26 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments and has been identified as the Chief Executive Officer of Flour Mills of Nigeria Plc. The Group's segment reporting is set out in the financial statements

4.27 IFRS 1 - First time adoption

As these financial statements represent the initial presentation of the group and Company's results and financial position under IFRS, they were prepared in accordance with IFRS 1, First Time Adoption of International Financial Reporting Standards ("IFRS 1"). IFRS 1 requires retrospective application of all IFRS standards, with certain optional exemptions and mandatory exceptions, which are described further in this Note. The accounting policies described in Note 4 have been applied consistently to all periods presented in the financial statements with the exception of the optional exemptions elected and the mandatory exceptions required. At 1 April 2011 ("the transition date"), an opening statement of financial position was prepared under IFRS. The 2011and 2012 financial statements were previously prepared in accordance with Nigerian SAS. In this Note, our transition to IFRS is explained through the following: i. First time adoption optional exemptions from retrospective application of IFRS

This section describes the standards for which IFRS was not applied retrospectively as available in IFRS

ii. Reconciliation of total equity and comprehensive income from Nigerian SAS to IFRS quantitative and qualitative explanations are included in this section to explain the differences between Nigerian SAS and IFRS in total equity and comprehensive income.


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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 4.27 IFRS 1 - First time adoption (continued)

iii. Reconciliation of statement of financial position from Nigerian SAS to IFRS This section explains quantitatively and qualitatively the impact and differences between Nigerian SAS and IFRS.

4.27.1 First time adoption optional exemption and m andatory

As previously noted, IFRS 1 requires retrospective application of all IFRS standard with certain optional exemptions and mandatory exceptions. The optional exemptions elected and the mandatory exceptions to retrospective application of IFRS are described below and the quantification of these are shown in the appendix. Optional exemptions a. Employee benefits

IAS 19 provides the option of recognising all cumulative unamortized actuarial gains and losses in equity at the date of transition. IAS 19, Employee Benefits, requires retrospective application for the recognition of actuarial gains and losses on employee benefits. IFRS 1 provides the option to recognise all deferred cumulative unamortised actuarial gains and losses on defined benefit pension plans and other benefits plans under Nigerian SAS in opening equity at the Transition Date and provide disclosures on a prospective basis. The company has taken this option, resulting in the cumulative amount of actuarial losses on our defined benefit pension plans and other benefits plans being recognised in retained earnings at the Transition Date.

b. Leases IFRIC 4, Determining Whether an Arrangement Contains a Lease, requires an assessment of whether a contract or arrangement contains a lease. The assessment should be carried out at the inception of the contract or arrangement. First-time adopters must apply IFRIC 4, but can elect to make this assessment as of the date of transition based on the facts at that date, rather than at inception of the arrangement. The company elected to take this exception and did not assess arrangement according to IFRIC 4 prior to transition date.

4.28 Basis of preparation

On initial adoption of IFRS, the Company applied the following exemptions from the requirements of IFRS and from their retrospective application as permitted by IFRS 1 “First-time Adoption of International Financial Reporting Standards” (“IFRS 1”).

Business Combinations The Company has chosen not to restate business combinations that occurred prior to 1 April 2011 to comply with IFRS 3 “Business combinations.

Plant and equipment Net book value of property, plant and equipment under Nigerian GAAP are deemed to be carried at cost for subsequent accounting under IFRS.

Employee benefits All cumulative actuarial gains and losses on defined pension schemes have been recognised in retained earnings at the transition date, 1 April 2011.

Borrowing costs The Company has applied the transitional provisions in IAS 23 “Borrowing costs” and capitalises borrowing costs on assets where construction was commenced on or after the date of transition. Investments in subsidiaries, jointly controlled ent ities and associate. Flour Mills of Nigeria has elected to measure its investment in subsidiaries and associates at the carrying amount under previous GAAP.


31 March 2013

49


4.28 Basis of preparation

Leases

Flour Mills of Nigeria has opted to determine whether an arrangement, existing at the date of transition, contains a lease on the basis of fact and circumstances existing at the date of transition. In accordance with IFRS, the Company has not revised its estimates required under IFRS that were also required under local GAAP as at 1 April 2011 and 31 March 2012 and, in addition, where estimates were not required under local GAAP; they have been based on information known at that time and not on subsequent events

IFRS 1 also enforces some mandatory exceptions to retrospective application of IFRS: de-recognition of financial assets and financial liabilities, hedge accounting, accounting for changes in estimates, embedded derivatives and classification and measurement of financial assets. The Company has applied IFRS requirements on these items prospectively.

All accounting policies applied at 31 March 2013 and described in these financial statements have been applied consistently to all periods presented.

5 Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group’s accounting policies, which are described in note 4, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The following are the critical judgements, and key sources of estimation uncertainty, that the directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in financial statements.

5.1 Property, plant and equipment Property, plant and equipment represent a significant proportion of the asset base of the Group, accounting for about 51% of the Group’s total assets. Therefore the estimates and assumptions made to determine their carrying value and related depreciation are critical to the Group’s financial position and performance. The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. Increasing an asset’s expected life or it’s residual value would result in the reduced depreciation charge in the statement of comprehensive income. The useful lives and residual values of property, plant and equipment are determined by management based on historical experience as well as anticipation of future events and circumstances which may impact their useful lives.

5.2 Valuation of financial liabilities As at the end of the reporting period, the Group reported balances in government assisted loans at below market rates. In accordance with IAS 20, the government grant which is the difference between the proceeds of the loans and their fair value at the inception of the loan should be accounted for. Based on IAS 39, all financial liabilities should be initially recognized at fair value. In computing the fair value of these loans, the imputed interest rate used in discounting the cashflows associated with the loans is based on management’s judgement of the best estimate of the market borrowing cost at the time the loans were granted.


31 March 2013

50

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 5.3 Provision for gratuity

The Company operates an unfunded defined benefit scheme which entitles staff who put in a minimum qualifying working period of five years to gratuity upon leaving the employment of the Company. IAS 19 requires the application of the Projected Unit Credit Method for actuarial valuations. Actuarial measurements involve the making of several demographic projections regarding mortality, rates of employee turnover etc. and financial projections in the area of future salaries and benefit levels, discount rate, inflation etc.

5.4 Provision for long term service award A provision for long term service award is made when there is a present obligation, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount to settle the obligation. Thus, in estimating a reliable amount for an item of such provision, management uses judgement.

5.5 Taxation The Group’s tax charge on ordinary activities is the sum of the total current and deferred tax charges. The calculation of the of the Group’s total tax charge necessarily involves a degree of estimation and judgment in respect of certain items whose treatment cannot be finally determined until resolution has been reached with the relevant tax authority. Under the Nigerian tax system, self-assessment returns are subjected to a desk review for the determination of tax due for remittance in the relevant year of assessment. This is however not conclusive as field audits are carried out within six years of the end of the relevant year of assessment to determine the adequacy or otherwise of sums remitted under self-assessment thus making tax positions uncertain.


31 March 2013

51


6 Property, plant and equipment

Plant , machinery,

Trucks,

Leasehold

Capital

furniture

motorcycles land and

work -in -

and

and motor

6.1 Group buildings

progress

equipment

vehicles

Total N'000

N'000

N'000

N'000

N'000

Cost At 1 April 2011 15,054,917 17,489,484 64,535,891 6,528,489 103,608,781

Additions 540,548 33,067,868 4,685,651 1,442,413 39,736,480 Transfers / reclassifications 104,736 149,816 4,717,833 401,305 5,373,690 Adjustments (Note 6.1.1) 1,004,150 1,512,417 (76,300) 19,397 2,459,664

On disposals (241,459) - (204,181) (292,892) (738,532)

At 31 March 2012 16,462,892 52,219,585 73,658,894 8,098,712 150,440,083

Depreciation At 1 April 2011 1,433,834 - 26,110,304 2,738,229 30,282,367 Charge for the year 363,901 - 6,780,169 1,116,057 8,260,127 Adjustments (1) - (26,974) (12,959) (39,934)

On disposals (23,560) - (100,290) (133,036) (256,886)

At 31 March 2012 1,774,175 - 32,763,209 3,708,291 38,245,675

Net book value At 31 March 2012 14,688,717

52,219,585

40,895,685 4,390,421

112,194,408

At 31 March 2011 13,621,083

17,489,484

38,425,587 3,790,260

73,326,414

Cost

At 1 April 2012 16,462,892 52,219,585 73,658,894 8,098,712 150,440,083 Additions 814,122 33,264,600 3,434,143 1,185,818 38,698,683 Transfer on acquisition of Thai Farm International Ltd, New Horizon Limited and ROM Oil Ltd 3,186,788 9,132 1,162,631 42,473 4,401,022 Transfers /Reclassification 5,368,478 (21,230,277) 15,891,127 (29,328) - Adjustments (Note 6.1.1) (86) (684,093) (22,791) (117,852) (824,823)

On disposals - - (217,498) (427,478) (644,976)

At 31 March 2013 25,832,194 63,578,947 93,906,507 8,752,345 192,069,991

Depreciation At 1 April 2012 1,774,175 - 32,763,209 3,708,291 38,245,675 Charge for the year 442,841 - 7,801,992 1,226,463 9,471,296 Transfer on acquisition of Thai Farm International Ltd, New Horizon Limited and ROM Oil Ltd 37,356 - 211,181 13,843 262,381 Adjustments 8,189 - 291,733 17,987 317,909

- - - - - On disposals - - (151,317) (422,333) (573,650)

At 31 March 2013 2,262,563 - 40,916,797 4,544,251 47,723,610

Net book value At 31 March 2013 23,569,631

63,578,947

52,989,709 4,208,093

144,346,381

At 31 March 2012 14,688,717

52,219,585

40,895,685

4,390,421

112,194,408


31 March 2013

52

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 6.1.1 Adjustments

Adjustments relates to corrections for items including spares, computer software as well as certain preoperational expenses in one of the subsidiaries which were reclassified to fixed assets.

6.1.2 Reclassifications/transfers These represent capital work in progress reclassified from other lines of assets.

6.1.3 Capital work in progress Capital work in progress comprises of Building, Plant and Machinery under construction during the year.

6.1.4 Impairment losses recognised in the year The company carried out impairment assessment of its fixed assets in the period, no impairment loss was identified.

Plant , Machinery,

Trucks, motor cycles

Leasehold

Capital

furniture,

and Land &

work -in -

and

motor

6.2 The Company Buildings

progress

equipment

vehicle s

Total

N'000

N'000

N'000

N'000

N'000

Cost/valuation

At 1 April 2011 6,278,580 3,284,110 30,188,678 1,169,562 40,920,930

Transfer on merger of Golden Pasta Company Limited 760,788 2,563,102 8,114,724 325,590 11,764,204

Additions during the period 132 16,170,786 439,928 435,658 17,046,504

Transfers / Reclassifications 65,777 (2,147,353) 1,241,300 410,547 (429,729)

Adjustments - - - - -

On disposals - - (12,451) (37,380) (49,831)

At 31 March 2012 7,105,277 19,870,645 39,972,179 2,303,978 69,252,079

Depreciation

At 1 April 2011 623,759 - 13,219,579 623,077 14,466,415

Adjustments (1) - (8,132) (4,113) (12,246) Transfer on merger of Golden Pasta Company Limited 184,185 - 3,269,385 158,923 3,612,493

Charge for the year 161,854 - 3,555,224 291,853 4,008,931

On disposals - - (9,215) (17,070) (26,285)

At 31 March 2012 969,797 - 20,026,841 1,052,670 22,049,308

Net book value

At 31 March 2012 6,135,480

19,870,645

19,945,338

1,251,308

47,202,771

At 31 March 2011 5,654,821

3,284,110

16,969,099

546,485

26,454,515


31 March 2013

53


6 Property, plant and equipment (continued)

Plant, machinery,

Trucks,

Leasehold

Capital

furniture

Motor cycles Land &

work -in -

and

and motor

The Company Buildings

progress

equipmen t

vehicles

Total

N'000

N'000

N'000

N'000

N'000

Cost/valuation

At 1 April 2012 7,105,277 19,870,645 39,972,179 2,303,978 69,252,079 Transfer on merger of Nigeria Bag Manufacturing Company Plc and Niger Mills Company Limited. 3,366,597 2,286,735 17,506,837 504,708 23,664,877

Additions 279,332 10,470,721 1,081,696 469,059 12,300,808

Transfers / Reclassifications 2,355,108 (14,693,091) 12,333,403 4,579 -

Adjustments - - (181,171) - (181,171)

On disposals - - (160,670) (241,636) (402,306)

At 31 March 2013 13,106,314 17,935,010 70,552,274 3,040,689 104,634,289

Depreciation

At 1 April 2012 969,797 - 20,026,841 1,052,670 22,049,308 Transfer on merger of Nigeria Bag Manufacturing Company Plc and Niger Mills Company Limited. 336,279 - 8,654,791 341,364 9,332,434

Charge for the year 272,501 - 5,843,759 447,396 6,563,656

On disposals - - (116,163) (226,372) (342,534)

At 31 March 2013 1,578,577 - 34,409,228 1,615,058 37,602,864

Net book value

At 31 March 2013 11,527,737

17,935,010

36,143,046

1,425,631

67,031,425

At 31 March 2012 6,135,480

19,870,645

19,945,338

1,251,308

47,202,771

6.2.1 Adjustments

Adjustments relates to corrections for items including spares, computer software and others which were reclassified to fixed assets.

6.2.2 Transfers/Reclassifications These represent capital work in progress reclassified to other classes of assets .

6.2.3 Capital work in progress Capital work in progress comprises of Building, Plant and Machinery under construction during the year.

6.2.4 Impairment losses recognised in the year The company carried out impairment assessment of its fixed assets in the period, no impairment loss was identified.


31 March 2013

54

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 7 Intangible assets

Computer software

Berth Rehabilitation

Trademarks

7.1 Group

Total N'000

N'000

N'000

N'000

Cost

At 1 April 2011 49,605 487,742 460,000 997,347 Additions 28,160 - - 28,160 At 31 March 2012 77,765 487,742 460,000 1,025,507 Amortisation At 1 April 2011 6,427 23,226 215,000 244,653 Charge for the year 21,760 23,226 215,000 259,986 At 31 March 2012 28,187 46,452 430,000 504,639 Net book value At 31 March 2012 49,578

441,290

30,000

520,868

At 31 March 2011 43,178

464,516

245,000

752,694

Group

Computer software

Berth Rehabilitation

Trademarks

Total

N'000

N'000

N'000

N'000

Cost At 1 April 2012 77,765 487,742 460,000 1,025,507 Additions 317,029 - - 317,029 At 31 March 2013 394,794 487,742 460,000 1,342,536 Amortisation At 1 April 2012 28,187 46,452 430,000 504,639 Charge for the year 111,763 23,226 30,000 164,989 At 31 March 2013 139,950 69,678 460,000 669,628 Net book value At 31 March 2013 254,844

418,064

-

672,908

At 31 March 2012 49,578

441,290

30,000

520,868

7.1.1 Computer software relates to acquisition of software licence and any other development costs directly

attributable to the preparation of the computer software for its intended use. Amortization of computer software is calculated based on useful life of 5 years.

7.1.2 The Berths Rehabilitation represents the cost of dredging and rehabilitation of berths at the Nigerian Ports Authority terminals A and B, which is being amortised over the remaining period of initial concession period of 20 years.


31 March 2013

55

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 7 Intangible assets 7.1.3 Trademark represents consideration for the use of "Topfeeds" brand by Premier Feed Mills Company

Limited, structured in two parts, of US$4m (N600 million) and US$500,000 (N75 million) respectively. The US$4m is to be amortised over a period of 3 years while the US$500,000 is payable annually for 5 years at US$100,000 per annum.

Computer

software 7.2 Company

N'000

Cost At 1 April 2011 11,549 Additions 23,950 On disposals - At 31 March 2012 35,499 Amortisatio n At 1 April 2011 5,468 Charge for the year 12,246 At 31 March 2012 17,714 Net book value At 31 March 2012 17,785

At 31 March 2011 6,081

Company

Computer software

N'000

Cost At 1 April 2012 35,499 Additions 216,502 Transfer on acquisition of Nigerian Bag Manufacturing Company Plc. 8,340 At 31 March 2013 260,341 Amortisation At 1 April 2012 17,714 Charge for the year 77,987 Adjustments Reclassifications On disposals At 31 March 2013 95,701 Net book value At 31 March 2013 164,640

At 31 March 2012 17,785


31 March 2013

56


7 Intangible assets

Computer software relates to acquisition of software licence and any other development costs directly attributable to the preparation of the computer software for its intended use. Amortization of computer software is calculated based on useful life of 5 years.

Group Company 31-Mar-13 31-Mar-12

1-Apr-11 31-Mar-13 31-Mar-12

1-Apr-11

N'000 N'000

N'000 N'000 N'000

N'000 7.4 Goodwill

Cost 583,728 583,728 583,728 - - - Goodwill derecognized on merger (583,728) - - - - - Goodwill on acquisition of ROM Oil Limited 1,351,067 - - - - - Goodwill on acquisition of Thai Farm Limited 920,139 - - - - - Goodwill from Quilvest Properties 1,876,816 - - - - - Less: Accumulated impairment losses - - - -

4,148,022 583,728 583,728 - - -


31 March 2013

57

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 7 Intangible assets 7.4 Goodwill continued Allocation of goodwill to cash generating units

Goodwill was apportioned to CGUs that are expected to benefit from the synergies of the respective business combinations on the basis of their net asset values.

* Flour mills of Nigeria Plc. * Apapa Bulk Terminal Limited * Golden Noodles Company Limited * Premier Feed Mills Company Limited * Nigerian Eagle Flour Mills Limited * ROM Oil Mills Limited * Northern Nigeria Flour Mills Plc

Before recognition of impairment losses the carrying amount of goodwill was allocated to the cash generating units as follows.

31-Mar-13 31-Mar-12

N'000 N'000

Flour mills of Nigeria Plc. 3,937,593 583,728 Apapa Bulk Terminal Limited 103,948 - Golden Noodles Company Limited 25,380 - Premier Feed Mills Company Limited 28,379 -

Nigerian Eagle Flour Mills Limited

27,058 -

ROM Oil Mills Limited

11,148 - Northern Nigeria Flour Mills Plc 14,516 -

4,148,022 583,728 Cash generating units

The recoverable amount of the cash generating units is determined based on a value in use calculation which uses cash flow projections based on financial budgets approved by the directors covering a five year period and a pre-tax discount rate of 12% per annum (2012: 12% per annum) The directors believe that any reasonably possible change in the key assumptions on which the recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash generating unit. Key forecast assumptions The key assumptions used in the value in use calculations Budgeted market share

The budgeted market share is the average market share in the period immediately before the forecast period plus growth of 2-3% of market share per year. The values assigned to the assumption reflect past experience and are consistent with the directors plans for focusing operations in these markets. The directors believe that the planned market share growth for the next five years is reasonably achievable. Budgeted gross margin The budgeted gross margin is based on average gross margins achieved in the period immediately before the budget period increased for expected efficiency improvements. This reflects past experience, except for efficiency improvements. The directors expect efficiency improvements of 1-2% per year to be reasonably achievable. Raw materials price inflation

Raw materials price inflation is based on forecast consumer price indices during the budget period for the countries from which raw materials are purchased. The values assigned to the key assumption are consistent with external sources of information.


31 March 2013

58


Company

31-Mar-13

31-Mar-12

1-Apr -11

8. Investments in subsidiaries

N'000

N'000

N'000

Unquoted Apapa Bulk Terminal Limited 50,000 50,000 50,000

Flour Mills Registrars Limited 50,000 50,000 50,000 Golden Shipping Company Nigeria Limited 10,000 10,000 10,000 Golden Pasta Company Limited - - 10,000 Niger Mills Company Limited - 1,098,118 1,098,118 Golden Noodles Company Limited 50,000 50,000 50,000 Golden Transport Company Limited 25,000 25,000 25,000 Golden Sugar Company Limited 10,000 10,000 10,000 Southern Star Shipping Company (Nigeria) Limited 10,000 10,000 10,000 Kaboji Farms Limited 30,000 30,000 30,000 Premier Feed Mills Company Limited 12,750 12,750 12,750 Nigerian Eagles Flour Mills Limited 510,000 510,000 510,000 Golden Penny Rice Limited 10,000 10,000 - Crestview Towers Limited 1,000 1,000 - Olympic Towers Limited 10,000 10,000 - New Horizon Limited 125,000 - - ROM Oil Mills Limited 1,521,078 - - Thai Farm International Limited 878,598 - - Agri Palm Limited 5,000 - - Agric Estate Limited 5,000 - - Agro Allied Farms Sunti Limited 5,000 - - Agro Allied Syrups Limited 5,000 - - Provision for investment in unquoted Company - - Flour Mills Registrars Limited (31,734) (31,734) (12,676) Southern Star Shipping Company (Nigeria) Limited (10,000) (10,000) (10,000)

3,281,691 1,835,134

1,843,192 Quoted Northern Nigeria Flour Mills Plc 303,441 303,441 282,375 Nigerian Bag Manufacturing Company Plc - 882,000 882,000

303,441 1,185,441

1,164,375

3,585,132

3,020,575

3,007,567


31 March 2013

59

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 8. Investments in subsidiaries (continued)

Company

Shareholding % Principal activity

31-Mar-13 31-Mar-12 1-Apr -11

Subsidiaries Apapa Bulk Terminal Limited 50,000,000 ordinary shares of N1 each 100 100 100 Port operations

Flour Mills Registrars Limited 50,000,000 ordinary shares of N1 each 100 100 100 Company registrars

Golden Shipping Company Nigeria Limited 10,000,000 ordinary shares of N1 each 100 100 100 Shipping agency

Niger Mills Company Limited (Note 8.3) 247,298,000 ordinary shares of N2 each - 99 99 Flour milling

Nigerian Bag Manufacturing Company Plc (Note 8.3) 4,350,000,000 ordinary shares of 50k each - 70 70 Manufacturing of polypropylene bags

Golden Noodles Company Limited 100,000,000 ordinary shares of 50k each 100 100 100 Manufacturing of noodles

Golden Transport Company Limited 50,000,000 ordinary shares of 50k each 100 100 100 Haulage of goods and services

Golden Sugar Company Limited 20,000,000 (2010-19,500,000) ordinary shares of 50k each 100 100 100 Manufacturing of sugar Northern Nigeria Flour Mills Plc

78,120,966 ordinary shares of 50k each 53 53 53 Flour milling Southern Star Shipping Company (Nigeria) Limited

20,000,000 ordinary shares of 50k each 100 100 100 Shipping agency Kaboji Farms Limited

30,000,000 ordinary shares of N1 each 100 100 100 Farming Premier Feed Mills Company Limited 25,500,000 ordinary shares of N0.5 each 51 51 62 Livestock feeds Nigerian Eagles Flour Mills Limited 510,000,000 ordinary shares of N1 each 51 51 51 Flour milling Golden Penny Rice Ltd

20,000,000 ordinary shares of 50k each 100 100 - Importation and bagging of rice Crestview Towers Ltd

2,000,000 ordinary shares of 50k each 100 100 - Real estate Olympic Towers Ltd

20,000,000 ordinary shares of 50k each 100 100 - Real estate Agri Palm Limited

10,000,000 ordinary shares of 50k each 100 - - Agriculture


31 March 2013

60


Company

Shareholding % Principal activity

31-Mar-13 31-Mar-12 1-Apr -11

Subsidiaries Agri Estate Limited

10,000,000 ordinary shares of 50k each 100 - - Agriculture Agro Allied Farms Sunti Limited

10,000,000 ordinary shares of 50k each 100 - - Agriculture Agro Allied Syrups Limited

10,000,000 ordinary shares of 50k each 100 - - Agriculture New Horizon Limited

250,000,000 ordinary shares of 50k each 100 - - Holding company Rom Oil Mills limited

9,000,000 ordinary shares of 50k each 90 - - Manufacturing of Edible oil Thai Farm international limited

349,650,135 ordinary shares of 50k share 100 - - Manufacturing of cassava flour 8.2 The accounts of all the subsidiary companies except the newly incorporated agro allied companies were included in the consolidated financial statements.

8.3 The merger of Niger Mills Company Limited, Nigerian Bag Manufacturing Company Plc and its subsidiaries were sanctioned by the Federal High Court on

15th day and 18th day of March 2013 respectively. Consequently the results of the companies for the financial year are incorporated into Flour Mills of Nigeria Plc accounts.

8.4 On July 2011, Flour Mills of Nigeria Plc increased its holding in Northern Nigeria Flour Mills Plc from 52.6% to 53.15% by purchasing additional 800,000

shares at N21.066 million. 8.5 The subsidiary companies are incorporated in Nigeria.


31 March 2013

61


Business Combinations Subsidiaries acquired

2012/13 Principal activity Date of acquisition

Proportion of voting equity acquired

Consideration transferred

N'000

ROM Oil Mills Limited Manufacturing of edible oil 01/04/2012 90%

1,521,078

Thai Farm International Limited Manufacturing of cassava flour 01/07/2012 100%

878,598 Quilvest Properties Limited

(Indirect holding through New Horizon Limited) Real estate 06/01/2012 100% 4,059,406

6,459,081

ROM Oil Mills Limited and Thai Farm International Limited were acquired in line with Flour Mills of Nigeria Plc's focused drive to expand its agro-allied business while Quilvest was acquired to secure more land area and properties for office accommodation and future developments in Apapa.

Consideration transferred


Thai Farm International

Limited

Quilvest Properties

Limited

Cash 1,521,078 878,598 4,059,406

Assets acquired and liabilities recognised at the d ate of acquisition



Limited

Quilvest Properties

Limited Total N'000 N'000 N'000

Current assets Cash and cash equivalent 8,388 255,535 30,261 294,184 Trade and other receivables 170,772 9,802 - 180,574 Inventories 570,485 22,382 - 592,867

Non-current assets Plant and equipment 717,773 495,588 2,929,548 4,142,909

Current liabilities Trade and other payables (691,296) (13,849) (777,218) (1,482,363) Current taxation (98,418) - - (98,418)

Non-current liabilities Long term loan (391,180) (811,051) - (1,202,231) Deferred taxation (97,624) - - (97,624)

188,900 (41,541) 2,182,591 2,329,899

Non-controlling interests The non-controlling interests (10% ownership interest in ROM Oil mills Limited) recognised at the acquisition date was measured as 10% of the net asset value acquired on 1st April 2012 and amounted to N18,890,092. There were no share options granted to employees of the acquired businesses.


31 March 2013

62


Goodwill arising on acquisition

ROM Oil Mills

Limited


Limited

Quilvest Properties

Limited Total

N'000 N'000 N'000

N'000

Consideration transferred 1,521,078 878,598 4,059,406 6,459,081 Less: fair value of net assets acquired (170,011) 41,542 (2,182,591) (2,311,060)

Goodwill arising on acquisition 1,351,067 920,140 1,876,815 4,148,021 Goodwill arose on the acquisition of ROM oil mills and Thai farms international limited because the cost of the combination included a control premium. In addition, the consideration paid for the combination included amounts in relation to the ben efit of expected synergies, revenue growth, future market development and the expertise of the workforce of the acquired businesses. These benefits are not recognised separately from goodwil l because they do not meet the recognition criteria for identifiable assets. None of the goodwill arising on these acquisitions is expected to be deductible for tax purposes. Net cash outflow on acquisition of subsidiaries

31-Mar-13

Consideration paid in cash 6,459,081 Less: Cash and cash equivalent balances acquired (294,184)

6,164,897


31 March 2013

63


Group Company

31-Mar-13 31-Mar-12 1-Apr -11 31-Mar-13 31-Mar-12 1-Apr -11

N'000 N'000 N'000 N'000

9 Investment in Associate

Unquoted United Cement Company of Nigeria Limited 19,076,773 19,076,773 19,076,773 19,076,773 19,076,773 19,076,773

Additions in the period 1,704,522 - - 1,704,522 - - Share of previous year's loss (17,685,099) (14,817,872) (9,980,171) - - -

3,096,196 4,258,901 9,096,602 20,781,295 19,076,773 19,076,773 Share of current year's loss (1,037,993) (2,867,227) (4,837,701) - -

2,058,203 1,391,674 4,258,901 20,781,295 19,076,773 19,076,773 Summary financial information on associate

Effective

ownership interest

Total

Total

Revenues

Loss

assets

liabilities

N'000 N'000 N'000 N'000

2013

%

28.1

48,240,265

4,426,402

115,231,826

113,482,756

2012

%

28.1

42,900,000

10,203,655

115,770,000

113,660,000

2011

28.1 33,600,000

17,216,018

112,870,000

99,730,000

The right issue made by the associate company in the period was allocated to the existing shareholders in the same proportion.

The gross assets, gross liabilities and revenue of the associate company are N115.23 billion, N113.48 billion and N48.2 billion respectively.

The Directors believe that the revenue to be generated from the operations of the associated company in future will improve its prospects. This is based on increased capacity utilisation and availability of gas supply. Therefore no impairment allowance has been made for the value of this investment.

The associate company is incorporated in Nigeria. The Directors are of the opinion that the market value of the unquoted investments is not lower than the cost.


31 March 2013

64


Group Company


N'000 N'000 N'000 N'000 N'000 N'000

10 Other financial assets

Available for sale investments Unquoted Maiduguri Flour Mills Limited 5,268 5,268 5,268 5,268 5,268 5,268 Nextport Tradings Limited 2,000 2,000 - 2,000 2,000 - Less: Allowance for impairment - - - - - -

7,268 7,268 5,268 7,268 7,268 5,268

Quoted Nigeria Cement Company Plc 60 60 60 60 60 60 Transnational Corporation Plc 102,000 102,000 102,000 102,000 102,000 102,000 Less: Allowance for impairment (84,380) (84,380) (64,320) (84,380) (84,380) (64,320)

17,680 17,680 37,740 17,680 17,680 37,740

Loans carried at amortised cost Interest free loan to subsidiaries Nigerian Eagle Flour Mills Limited - - - - - 217,770

The loan is unsecured and will be repaid within the next 12 months.

Premier Feed Mills Company Limited - - - - - 119,750 The loan is unsecured and will be repaid within the next 12 months.

- - - - - 337,520 Interest free loan to target Companies

ROM Oil Mills Limited - 389,250 389,250 389,250 389,250 389,250 Thai Farm International limited

249,038

24,948 414,198 432,258 663,236 414,198 769,778

Current - - - - - 337,520 Non- current 24,948 414,198 432,258 663,236 414,198 432,258

24,948 414,198 432,258 663,236 414,198 769,778


31 March 2013

65

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 10 Other financial assets

In 2011, Flour Mills of Nigeria Plc increased its holdings in Maiduguri Flour Mills Limited to 17% representing 17,037,668 ordinary shares of 50 kobo each. This investment is accounted for using the cost method as the investment is unquoted. In 2011, the company granted an interest free loan amounting to N389 million to ROM Oil Mills Limited, a target company now acquired. The loan does not have a specified duration for its repayment. Thus, this has been recognized as a quasi-equity investment in ROM Oil Mills Limited, the target company. Also in 2012, the company granted an interest free loan amounting to N249 million to its newly acquired subsidiary - Thai Farm International Limited. The loan also which does not have a specified duration for its repayment and has been recognized as a quasi-equity investment in Thai Farm International Limited.

Group Company 31-Mar-13 31-Mar-12 1-Apr -11 31-Mar-13 31-Mar-12 1-Apr -11 N'000 N'000 N'000 N'000 N'000 N'000 11 Long -term loans receivable

Nigerian Bag Manufacturing Company Plc - - - - - 850,000

United Cement Company of Nigeria Limited 19,717,445 18,578,584 10,513,140 19,717,445 18,578,584 10,513,140

At 31 March 19,717,445 18,578,584

10,513,140

19,717,445

18,578,584

11,363,140

11.1 Movement in long -term loans receivable

At 1 April 18,578,584 10,513,140 27,703,183 18,578,584 11,363,140 28,922,933 Additions during the year 3,404,792 9,248,351 2,876,950 3,404,792 9,248,351 2,876,950

21,983,376 19,761,491 30,580,133 21,983,376 20,611,491

31,799,883 Repayments in the year (2,265,931) (1,182,906) (19,677,743) (2,265,931) (2,032,906) (19,709,973) Reclassified to other investment - - (389,250) - - (726,770)

At 31 March 19,717,445 18,578,584

10,513,140 19,717,445

18,578,584

11,363,140

The loan granted to United Cement Company of Nigeria Limited, an associated company, was to finance projects at the greenfield cement plant, Mfamosing, Calabar, under the terms of shareholders' agreement. The loan, which has no fixed term or repayment date attracts interest at 90 day NIBOR plus 2%.

In 2011 a sum of N18.8 billion was converted to acquire 18,847973,250 ordinary shares of N1 each. Similarly in 2013, a sum of N1.7 billion was converted to acquire 1,704,521,910 ordinary shares of N1 each at par in United Cement Company of Nigeria Limited.


31 March 2013

66


Group Company


N'000 N'000 N'000 N'000 N'000 N'000 12 Deposit for shares

ROM Oil Mills Ltd(Note 12.1) - 1,494,171 - - 1,494,171 -

FBC Beverages Company Limited(Note 12.2)

- 700,000 - - 700,000 -

- 2,194,171 - - 2,194,171 -

12.1 This represents the amount paid for shares in ROM Oil Mills Limited, an edible oil processing company

based in Ibadan. All legal processes relating to the acquisition of the shares have not been concluded and also the Company did not have control or the ability to direct the relevant activities of ROM Oil Mills Limited as at 31 March 2012. Upon conclusion of acquisition arrangement during this financial year, the deposit for shares was transferred to investment in subsidiaries account.

12.2 This represents part payment to acquire the shares of FBC Beverages Company Limited, with an agreement

to pay up the balance of N1,300,000,000 at the end of January 2012. This amount has been refunded to Flour Mills of Nigeria Plc in 2013.

13 Inventories

Raw materials 48,908,044 37,769,954 34,565,249 28,347,765 20,559,329 24,806,482 Work-in-progress 1,035,259 736,366 719,856 1,028,361 222,166 305,105 Finished goods 4,551,293 2,691,112 1,979,258 3,139,624 872,656 556,965 Consumables stores and maintenance Spares 10,366,962 9,374,603 8,847,073 8,831,209 4,814,940 3,052,367 Allowance for obsolete stock (495,019) (294,581) (230,115) (354,232) (194,102) (108,107)

64,366,538 50,277,454

45,881,321

40,992,727

26,274,989

28,612,812

The cost of inventories recognised as an expense during the year in respect of continuing operations was N200.2 billion (31 March 2012: N162.9 million). Raw materials and Consumables stores and maintenance spare includes an amount of N7.7 billion and N1.7 billion million respectively of value of goods imported not yet received (Goods in transit).

14 Trade and other receivables Trade receivables Trade receivables 9,286,916 8,960,799 9,285,949 8,377,121 4,881,179 6,713,991 Allowance for doubtful debts (1,100,798) (787,319) (662,202) (1,014,720) (520,949) (547,090)

8,186,119 8,173,480 8,623,747 7,362,401 4,360,230 6,166,901 Other receivables Advance to contractors and suppliers 4,011,746 4,751,719 2,893,270 3,114,162 3,957,452 2,018,083 Staff debtors 839,420 948,759 829,324 721,386 657,648 552,892 Other debtors 6,430,010 3,551,501 980,570 3,578,401 1,949,250 887,460 Intercompany receivables - - - 36,173,800 23,085,101 11,166,180

19,467,295 17,425,462

13,326,911 50,950,150 34,009,681

20,791,516

The average credit period on sales of goods is 30 days. No interest is charged on the overdue receivables. The Group has recognised an allowance for doubtful debts of 100% against all receivables over 365 days because historical experience has been that receivables that are past due beyond 365 days are not recoverable. Allowances for doubtful debt are recognised against trade receivables between 30 and 365 days based on estimated irrecoverable amounts determined by reference to past default experience of the counterparty and an analysis of the counterparty's current financial position.

Before accepting a new customer the Group initially trades with the customer on cash basis to assess the customer’s ability and also determine the customer’s transaction volumes. This enables a reasonable credit limit to be set. Once these are determined the customer is then allowed to apply for a credit facility from the company through a rigorous process with several levels of approval. Also certain categories of credit customers provide bank guarantees before being accepted as credit customers of the Group.


31 March 2013

67


Credit sales form a small portion of overall sales. The concentration of credit risk is limited due to this fact and the large and unrelated customer base. The Group has pledged no trade receivables during the year.

Of the trade receivables balance at the end of the year, top largest customers in the Group and Company are:

, N'000 % Customer A 1,502,676 36% Customer B 253,952 6% Customer C 231,066 5% Customer D 217,655 5%

No other customer represents more than 5% of the total balance of trade receivables


31 March 2013

68

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 14 Trade and other receivables (continued)

Included in the Group and Company’s trade receivables balance are receivables with a carrying value of N6.5 billion which are past due at the reporting date for which the Group has not made any impairment allowance as there has not been a significant change in the credit quality and the amounts are still considered recoverable. The Group and Company do not hold any collateral over these balances.

Group

Company 31-Mar-13 31-Mar-12 31-Mar-13 31-Mar-12

N'000 N'000 N'000 N'000 Ageing of past due but not impaired receivables 31-60 days 4,938,579 4,930,956 3,381,675 2,630,471 61-180 days 910,343 908,938 623,354 484,882 181-365 days 699,970 698,890 479,302 372,830

Total

6,548,895 6,538,784 4,484,332 3,488,184

Ageing of impaired trade receivables 31-60 days - - - - 61-180 days - - - - 181-365 days - - - - Over 365 days 1,100,798 787319 1,014,720 520,949

Total

1,100,798 787,319 1,014,720 520,949

Movement in the allowance for doubtful debts Balance at the beginning of the period 787,319 662,202 520,949 547,090 Transfer from Nigerian Bag company Plc and Niger Mills Company Limited - - 251,482 -

Amounts written off during the year as uncollectible (21,927) (10,588) (21,927) (10,588) Amounts recovered during the year (377,113) (157,326) (267,113) (77,326) Increase in allowance recognised in profit or loss 712,519 293,031 531,329 61,773

Balance at the end of the period

1,100,798 787,319 1,014,720 520,949


31 March 2013

69


Group Company

31-Mar-13

31-Mar-12 1-Apr-11 31-Mar-13 31-Mar-12 1-Apr-11

N'000 N'000 N'000 N'000 N'000 N'000 15 Other assets

Prepayments 1,710,231 1,402,967 1,891,643 1,460,321 657,803 582,320

1,710,231 1,402,967 1,891,643 1,460,321 657,803 582,320

16 Cash and cash equivalents

Cash on hand 85,209 - - 69,785 46,913 49,659

Bank balance 21,752,273 26,239,138 8,876,377 16,844,827 20,386,107 5,008,096

Cash and bank balances 21,837,482 26,239,138 8,876,377 16,914,612 20,433,020 5,057,755

Bank overdrafts (Note 22) (22,048,900) (33,643,108) (9,855,586) (6,581,584) (18,904,049) (2,417,283)

(211,418) (7,403,970) (979,209) 10,333,028 1,528,971 2,640,472 Cash and cash equivalents comprise cash and bank balance, net of outstanding bank overdrafts. The carrying amount of these assets approximate their fair value.


31 March 2013

70


17 Share capital Group Company

31-Mar-13

31-Mar-12 31-Mar-13 31-Mar-12

Authorised: N'000 N'000 N'000 N'000

4,000,000,000 ordinary shares of 50 kobo each 2,000,000 2,000,000

2,000,000 2,000,000

Issued and fully paid:

At 1 April

2,334,776,889 ordinary shares of 50 kobo each (2012:1,879,210,667) 1,167,388 939,605

1,167,388 939,605

Bonus issue

170,837,333 ordinary shares of 50 kobo each - - - - Rights issue

455,566,222 ordinary shares of 50 kobo each 227,783 - 227,783 On merger with Nigerian Bag Manufacturing Company Plc and Niger Mills Company Limited 25,454 25,454

- At 31 March

2,385,684,716 ordinary share s of 50 kobo each 1,192,842

1,167,388 1,192,842 1,167,388 At the extra-ordinary general meeting held on the 22 June 2011, the shareholders approved a rights issue of 8 for every 33 shares held. Also upon conclusion of the merger with Niger Mills Company Limited and Nigerian Bag Manufacturing Company Plc, some minority shareholders exercised their right to share option as follows:- 11 ordinary shares of Niger Mills Company Limited for 2 ordinary shares of Flour Mills of Nigeria Plc and 25 ordinary shares of Nigerian Bag Manufacturing Company Plc for 1 Flour Mills of Nigeria Plc share. This resulted in N3.3 billion share premium. On 12 September 2012, a dividend of N1.65k per ordinary share was approved by the shareholders and subsequently paid (2011:N2 per share). In respect of the current year, the directors propose that a dividend of N2 per ordinary share be paid to shareholders. This is subject to approval by the shareholders at the Annual General Meeting and the dividend is also subject to the deduction of withholding tax at the appropriate rate. At the Extra Ordinary/General Meeting of Nigerian Bag Manufacturing Company Plc and Niger Mills Company Limited held on 19 February 2013 and 20 February 2013 respectively, the Shareholders approved the merger of the two companies with Flour Mills of Nigeria Plc, an arrangement which was subsequently sanctioned by the court.


31 March 2013

71

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 Group Company 31-Mar-13 31-Mar-12 31-Mar-13 31-Mar-12 18 Share premium N'000 N'000 N'000 N'000

At 1 April 33,526,369 5,866,676

33,526,369

5,866,676

Arising from rights issue during the year - 27,659,693

-

27,659,693

On merger with Nigerian Bag Manufacturing Company Plc and Niger Mills Company Limited 3,286,171 -

3,286,171

-

Balance at end of year 36,812,540 33,526,369

36,812,540 33,526,369

This comprises share premium arising from rights issue of 436.8 million ordinary shares at N12 per share in 2005 and 156 million ordinary shares at N7.70 per share in 2000 and 455.6 million ordinary shares at N62 in 2012 by Flour Mills of Nigeria Plc.

19 Capital reserve

At 1 April 8,730,525 4,405,525 4,325,000 -

On merger with Nigerian Bag Manufacturing Company Plc and Niger Mills Company Limited 2,232,632 - 2,232,632 -

Eliminated on merger of Nigerian Bag Manufacturing Company Plc and Niger Mills Company Limited (4,124,324) - - -

On merger with Golden Pasta Company Limited - 4,325,000 - 4,325,000

At 31 March 6,838,833 8,730,525 6,557,632 4,325,000

In September 2011, Golden Pasta Company limited (GPC), a wholly owned subsidiary of Flour Mills of Nigeria Plc merged with Flour Mills of Nigeria Plc. The difference between the paid-up share capital of GPC and the nominal value of the investment in Flour Mills of Nigeria Plc was transferred to Capital Reserves.

Upon conclusion of Merger arrangement between Niger Mills Company Limited and Nigerian Bag Manufacturing Company Plc, the difference between the share capital and share premium of the merged entities and the nominal value of their investment in Flour Mills of Nigeria Plc was transferred to Capital Reserves


31 March 2013

72


Group Company 31-Mar-13 31-Mar-12 31-Mar-13 31-Mar-12

N'000 N'000 N'000 N'000 20 Retained earnings At 1 April 33,231,165 33,624,862 41,020,777 35,759,738

Transfer to share capital for bonus issue (Note 17) - - - Dividend declared during the year (3,735,643) (3,758,421) (3,735,643) (3,758,421) Deferred tax adjustment (IFRS) - - - - Niger Mills Company Limited retained earnings transferred on merger - - 2,356,954 - Nigerian Bag Manufacturing Company Plc retained earnings transferred on merger - - 856,092 - Dividend paid by Nigerian Bag Company Plc to non-controlling interest during the year (320,587) - (320,587) - Golden Pasta Company Limited retained earnings transferred - - 601,940 Share of previous years loss in United Cement Company limited - - - Post consolidation adjustments 145,375 - Transfer to capital reserve on merger of Golden Pasta Company Limited - (4,325,000) - Total comprehensive income for the year 6,959,659 7,544,349 8,782,914 8,417,520

36,134,594 33,231,165 48,960,505 41,020,777

21. Non-controlling interest (NCI) 35,165,828 33,231,165 47,991,740

At 1 April 5,058,796 4,762,139 - -

Movement during the year - (305,709) - -

Share of subsidiaries' profit for the year 802,223 602,366 - -

Elimination of NCI on Nigerian Bag Manufacturing Company Plc on merger (2,929,823)

Elimination NCI of Niger Mills Company Limited on merger (35,233)

IFRS adjustment - -

On acquisition of ROM Oil Limited 18,890 - - -

At 31 March

2,914,853

5,058,796

-

-


31 March 2013

73


Group Company

22. Borrowings 31-Mar-13 31-Mar-12 1-Apr-11 31-Mar-13 31-Mar-12 1- Apr-11

N'000 N'000 N'000 N'000 N'000 N'000

Borrowings at amortised cost

Unsecured borrowings at amortised cost

Bank overdrafts (Note 16) 22,048,900 33,643,108 9,855,586 6,581,584 18,904,049 417,283

Other borrowings

Bank of industry Loan - CBN intervention fund (a) 7,318,389 4,810,282 - 6,019,266 - -

Commercial Agricultural Credit Scheme -Agricultural loans (b) 3,093,192 1,189,237 1,140,307 - - -

Other Bank loans (c) 22,104,769 - - - - -

Supplier's credit - 59,659 1,998,417 - 276,066 385,756

54,565,250 39,702,286 12,994,310 12,600,850 19,180,115 2,803,039

Secured borrowings at amortised cost

Bank overdrafts (Note 16) - - - - - -

Other borrowings

Other Bank loans (d ) and (e) 39,175,817 27,081,776 11,635,767 27,669,796 1,628,432 327,054

39,175,816 27,081,776 11,635,767 27,669,796 1,628,432 327,054

Total borrowings at 31 March 93,741,066 66,784,062 24,630,077 40,270,646 20,808,547 3,130,093

Movement on other borrowings

At 1 April 33,140,954 14,774,491 35,751,284 1,904,498 712,810 21,689,603

Additions 42,282,537 26,055,855 - 35,515,890 8,881,080 -

Repayments (3,731,326) (7,689,392) (20,976,793) (3,731,326) (7,689,392) (20,976,793)

At 31 March 71,692,165

33,140,954

14,774,491 33,689,062 1,904,498 712,810

Analysed into

Current 53,877,818

39,703,057

17,166,387 32,825,633 20,532,481 3,130,093

Non-current 39,863,248

27,081,005

7,463,690 7,445,013 276,066 -

93,741,066

66,784,062

24,630,077 40,270,646 20,808,547 3,130,093

(a) Flour Mills of Nigeria Plc group obtained funds from the CBN/BOI Power and Aviation Intervention Fund and Manufacturing Intervention Fund in different tranches, with tenures of 6 to 10

years. The amortised cost of these loans as at 31 March 2013 was N7.318billion. Principal repayment commenced in September 2011. Principal and interest are paid quarterly. The facilities have fixed interest rates between 6% and 10%. The loans were granted to finance or refinance the construction cost of the group’s power plants and expansion of manufacturing plants.

(b) N3.093billion (2012: N1.189billion) outstanding in Commercial Agricultural Credit Scheme - Agricultural loans as at 31 March 2013 was obtained by some subsidiaries with interest rates between 7% and 9%. The moratorium periods for these loans are between 18 months and 24 months. Loan tenures ranged between 6 months and 7 years. Principal and interest are also payable quarterly.

(c) Other bank loans (unsecured) are Usance facilities totalling N22.1billion; obtained by the group from various commercial banks in Nigeria. The facilities are used to finance the importation of raw materials. These facilities were granted at average interest rates of 5% with tenures of less than one year.

(d) Included in other bank loans above is a 5 years syndicated term loan facility granted in year ended 31 March 2012 to Golden Sugar Company Limited amounting to N22 billion by a consortium of banks. The loan is secured on a floating charge over all the company’s assets and has been fully drawn down as at 31 March 2013.

(e) The remaining Other bank loans are repayable by instalments at various dates between 2014 and 2022 with interest rate varying between 5% to 10%. Loans obtained under (a) and (b) were obtained at below market interest rate and were hence recorded at their fair value at inception using the appropriate market rate at date of draw down. Due to the nature of the lending and the providers, the benefit of the below market rate has been treated as government assistance and included in deferred revenue (Note 24) .


31 March 2013

74


Group Company

23 Unsecured fixed rate bond 31-Mar-13 31-Mar-12 1-Apr -11 31-Mar-13 31-Mar-12 1-Apr -11

N'000 N'000 N'000 N'000 N'000 N'000

5-Year 12% fixed rate unsecured bond 34,536,278 38,267,375 38,123,278 34,536,278 38,267,375 38,123,278

Analysed into:

Non-current 23,211,894 30,005,046 33,610,949 23,211,894 30,005,046 33,610,949 Current 11,324,384 8,262,329 4,512,329 11,324,384 8,262,329 4,512,329

At March 31 34,536,278 38,267,375 38,123,278 34,536,278 38,267,375 38,123,278

The Company issued a 5 year 12% fixed rate unsecured bond of N37.5 billion due on 09 December 2015. The bond is repayable over 5 years with a 2-year moratorium on principal. The coupon is payable semi-annually in arrears on 09 December and 09 June of each year up to and including the Final Maturity Date. An effective interest rate of 12.57% is incurred on the bond.

Group

Company

31-Mar-13 31-Mar-12 1-Apr -11

31-Mar-13 31-Mar-12 1-Apr -11

N'000 N'000 N'000

N'000 N'000 N'000

24 Deferred revenue

Opening balance 1,720,696 595,148 595,148 - - -

Additions 1,966,160 1,411,145 - 1,494,646

Release of deferred income from government grant 292,512 (285,597) - - - -

3,979,368 1,720,696 595,148 1,494,646 - -

Current 607,220 319,184 124,353 119,858 - -

Non-current 3,372,148 1,401,513 470,795 1,374,788 - -

3,979,368 1,720,696 595,148

1,494,646 - -


31 March 2013

75

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 24 Deferred revenue (continued)

The deferred revenue arises as a result of the benefit received from below-market-interest rate government assisted loans (BOI loans) granted in July to date. The revenue is recognized in profit or loss over the useful life of the assets financed with the loan.

25 Deferred tax liabilities The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior reporting period.

Group

Total

N'000

Deferred tax liabilities At 1 April 2010 5,691,055

Charge to profit or loss 1,485,038 Transfer on consolidation of Nigerian Eagle Flour 379,575

At 1 April 2011 7,555,668

Charge/(credit) to profit or loss 1,878,287

As 31 March 2012

9,433,955

At 1 April 2012 9,433,955

Charge for the year 1,262,401 On acquisition of ROM Oil Mills Limited 97,624 Adjustment in relation to prior year 132,680 At 31 March 2013 10,926,661 10,926,660 Deferred tax assets At 1 April 2012 - Movement during the year 311,072

At 31 March 2013 311,072

Deferred tax assets and liabilities are offset wher e the Group has a legally enforceable right to do s o. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Company Total

N'000 At 1 April 2010 3,666,203

Charge to profit or loss 641,773

4,307,976 Charge/(credit) to profit or loss -


31 March 2013

76

Charge for the year 1,822,635 Transfer on merger with Golden Pasta Co. Ltd. 1,327,372 Transfer on consolidation of Nigerian Eagle Flour Mills Ltd - As 31 March 2012 7,457,983

At 1 April 2012 7,457,983 Charge/(credit) to profit or loss - Charge for the year 1,162,313 Transfer on merger with Nigerian Bag Manufacturing Company Plc 1,427,737 Transfer on consolidation of Nigerian Eagle Flour Mills Ltd -

As 31 March 2013 10,048,033

Deferred tax assets and liabilities are offset where the Company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:


25 Deferred tax liabilities continued

2013 2012 2011 N'000 N'000 N'000

Deferred tax liabilities 10,048,033 7,457,983 4,307,976 Deferred tax assets (57,907) -

9,990,126 7,457,983 4,307,976

Deferr ed tax - Group The following is the analysis of deferred tax (assets)/liabilities presented in the statement of financial position:

2013 2012

N'000

N'000

Deferred tax liabilities 10,926,660 9,433,955 Deferred tax assets (311,072)

10,615,588

9,433,955

2013 Opening

balance Recognised

Recognised

Closing balance in profit or

directly in


31 March 2013

77

loss

equity

N'000

N'000

N'000

N'000 Deferred tax (assets)/liabilities in relation to: Property, plant and equipment 10,335,120

1,485,776

- 11,820,896

Tax losses (2,996)

(180,700)

- (183,696) Exchange difference 11,579

11,399

- 22,977

Retirement benefit (689,489)

(240,437)

- (929,926) Provisions for bad debt (112,314) (206,109) - (318,423) Provisions for obsolete stock (25,798)

(85,284)

- (111,082)

Other provisions (269,879)

240,085

- (29,794) Upfront fees 242,351

-

- 242,351

Armotized cost adjustments (49,034)

2,876

- (46,158) - 463 - 463 Deferred income -

(12,837)

- (12,837)

Accrual of interest payment (5,585)

(5,997)

- (11,582) Arising on acturial (gains)/losses on staff retirement benefit -

(57,907)

- (57,907)

On acquisition etc - - 230,304 230,304

9,433,955 951,329 230,304 10,615,588

9,433,955

951,329

230,304

10,615,588

2012 Opening balance

Recognised

Recognised

Closing balance

in profit or

directly in to

loss

equity

N'000

N'000

N'000

N'000

Deferred tax (assets)/liabilities in relation to: Property, plant and equipment 8,263,331 2,071,789 - 10,335,120 Tax losses -

(2,996)

- (2,996)

Exchange difference (24,325)

35,904

- 11,579 Retirement benefit (557,357) (132,132) - (689,489) Provisions for bad debt (120,110)

7,795

- (112,314)

Provisions for obsolete stock - (25,798) - (25,798) Other provisions (5,872)

(264,007)

- (269,879)

Upfront fees -

242,351

- 242,351 Armotized cost adjustments - (49,034) - (49,034) Prepayment -

-

- -

Deferred income - - - - Accrual of interest payment -

(5,585)

- (5,585)

On acquisition etc

7,555,668

1,878,287

-

9,433,955


31 March 2013

78

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 25. Deferred tax (continued) - Group

Movement at a glance 2013 2012

N'000 N'000

Deferred tax (liabilities)/assets Opening balance 9,433,955 7,555,668 Recognised in profit or loss 951,329 1,878,287 Recognised directly in equity on acquisition with Rom Oil Limited 97,624 - Adjustment in relation to prior year 132,680 - Closing balance 10,615,588 9,433,955

Deferred tax - Company

2013 2012 2011

N'000 N'000 N'000

Deferred tax liabilities 10,048,033 7,457,983 4,307,976 Deferred tax assets (57,907) - - 9,990,126

7,457,983

4,307,976

-

2013

Opening balance

Recognised Recognised Recognised

Closing balance

in profit or in other directly in

loss comprehensive equity on

merger

income with BagCo and Niger Mills

N'000 N'000 N'000 N'000 N'000

Deferred tax (assets)/liabilities in relation to: Property, plant and equipment 8,356,152 1,085,559 - 1,972,422 11,414,132 Tax losses -

57,584

- (241,280) (183,696) Exchange difference 11,579

(32,181)

- 52,517 31,916 Retirement benefit (689,489) 7,978 - (245,748) (927,259) Provisions for bad debt (112,314)

(157,403)

- (48,706) (318,423) Provisions for obsolete stock (25,798) (48,039) - (37,244) (111,082) Other provisions (269,879)

248,814

- (8,729) (29,794) Upfront fees 242,351

-

- - 242,351 Armotized cost adjustments (49,034) (0) - 2,876 (46,158)

Prepayment -

-

463 - 463 Deferred income - (0) - (12,837) (12,837) Accrual of interest payment (5,585)

-

- (5,997) (11,582)


31 March 2013

79

Arising on acturial (gains)/losses on staff retirement benefit -

-

(57,907) - (57,907)

7,457,983

1,162,313

(57,907)

1,427,740

9,990,126

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 25. Deferred tax (continued)

Deferred tax – company 2012

Opening balance

Recognised Recognised Recognised Closing balance

in profit or in other directly in

loss comprehensive equity on

merger with

income Golden Pasta

& IFRS

Conversion

N'000 N'000 N'000 N'000 N'000

Deferred tax (assets)/liabilities in relation to:

Property, plant and equipment 5,015,639

1,988,922

- 1,351,590 8,356,152

Tax losses - - - - - Exchange difference (24,325)

35,904

- - 11,579

Retirement benefit (557,357) (107,913) - (24,218) (689,489) Provisions for bad debt (120,110)

7,795

(112,314)

Provisions for obsolete stock -

(25,798)

(25,798)

Other provisions (5,872) (264,007) - - (269,879) Upfront fees -

242,351

242,351

Armotized cost adjustments -

(49,034)

(49,034)

Prepayment -

-

- - -

Deferred income -

-

- - -

Accrual of interest payment - (5,585) - - (5,585)

4,307,976

1,822,635

-

1,327,372

7,457,983

Movement at a glance - 2012 2013 2012 2011

N'000 N'000 N'000

Deferred tax (liabilities)/assets Opening balance 7,457,983 4,307,976 - Recognised in profit or loss 1,162,313 1,822,635 4,307,976 Recognised in other comprehensive income (57,907) - - Recognised directly in equity on merger with Golden Pasta &IFRS conversion 1,427,740 1,327,372 -

Closing balance 9,990,126 7,457,983 4,307,976


31 March 2013

80

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 26. Retirement benefit plans

The employees of the Group are members of government approved Pension scheme (Pension reform act, 2004) which is managed

by several private sector service providers. The Group is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specified contributions.

The total expense recognised in the consolidated statement of comprehensive income of N1.65 billion (2012: N586 million) represents contributions payable to these plans by the Group at rates specified in the rules of the plans. As at 31 March 2013, contributions of N329 million (2012: N157 million) due in respect of the 2013 (2012) reporting period had not been paid over to the plans. The amounts were paid subsequent to the end of the reporting period.

The Group operates unfunded defined benefit plans for qualifying employees of the Group. Under the plans, the employees are entitled to retirement benefits on attainment of a retirement age ranging from 50 to 60 years. The most recent actuarial valuations of the present value of the defined benefit obligation were carried out at 31 March 2013 by HR Nigeria Limited. The present value of the defined benefit obligation, and the related current service cost, were measured using the Projected Unit Credit Method.

Group Company


N'000 N'000 N'000 N'000 N'000 N'000

At 1 April 4,425,753 4,424,394 4,849,208 2,584,246 2,606,720 2,996,972 Transfer on acquisition of subsidiary - - - 1,006,367 - - Net periodic benefit expense 702,635 640,687 579,072 582,917 369,906 350,684 Actuarial (gains)/losses (35,212) (385,086) (662,715) 20,441 (217,062) (423,151) Curtailment (46,522) (69,644) - - - - Payment during the year (593,383) (184,598) (341,171) (509,563) (175,318) (317,785)

At 31 March 4,453,271 4,425,753

4,424,394 3,684,408 2,584,246

2,606,720

The principal assumptions used for the purpose of the actuarial valuations were as follows

Valuation at

Valuation at 2013 2012 2011 2013 2012 2011

%

%

%

%

%

%

Discount rate 14.5 13 13 14.5 13 13 Expected rate(s) of salary increases 12 12 12 12 12 12 Average rate on inflation (p.a) 10 10 10 10 10 10

Amounts recognised in income in respect of these defined benefit schemes are as follows: Demographic assumptions: Mortality in service The rates of mortality assumed for employees are the rates published in the A67/70 Ultimate Tables, published jointly by the Institute and Faculty of Actuaries in the UK.

Sample age

Number of deaths in year out of 10,000

lives Withdrawal from Service

Age band

Rate

25 7 </= 30 2.5% 30 7 31 - 39 1.5% 35 9 40 - 44 1.0% 40 14 45 - 50 0.0%

31-Mar-13 31-Mar-12 31-Mar-13 31-Mar-12

N'000 N'000 N'000 N'000

Current service cost 388,076 338,697 319,938 184,575 Interest on obligation 314,559 301,990 262,979 185,331 Actuarial (gains)/losses recognised in the year (35,212) (385,086) 20,441 (217,062)

667,423 255,601 603,358 152,844


31 March 2013

81

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 26. Retirement benefit obligation (continued)

Of the expense for the year, N702.64 million (2012: N640.69 million) has been included in profit or loss in the statement of comprehensive income as administrative expenses. Actuarial gains and losses have been reported in other comprehensive income.

The cumulative amount of actuarial gains recognised in other comprehensive income since the date of transition to IFRS is N417.30 million (2012: N385.09 million). The amount included in the statement of financial position arising from the Group’s obligations in respect of its defined benefit retirement benefit schemes is as follows: Group 31-Mar-13 31-Mar-12 1-Apr-11

N'000 N'000 N'000

Present value of defined benefit obligations 4,453,271 4,425,753 4,424,394 Fair value of scheme assets - - -

Deficit in scheme 4,453,271 4,425,753 4,424,394

Past service cost not yet recognised in statement of financial position. - - -

Liability recognised in the statement of financial position. 4,453,271 4,425,753 4,424,394

Movements in the present value of defined benefit obligations were as follows: 31-Mar-13 31-Mar-12

N'000 N'000

At 1 April 4,425,753 4,424,394 Service cost 307,346 386,445 Interest cost 314,559 - Actuarial gains and losses (35,212) (385,086) Benefits paid (512,653) - Curtailment (46,522) -

At 31 March 4,453,271 4,425,753

Of the expense for the year, N582.92 million (2012: N369.91 million) has been included in profit or loss in the statement of comprehensive income as administrative expenses. Actuarial gains and losses have been reported in other comprehensive income.

The cumulative amount of actuarial gains/(losses) recognised in other comprehensive income since the date of transition to IFRS is N196.62 million (2012: N217.06 million). The amount included in the statement of financial position arising from the Group’s obligations in respect of its defined benefit retirement benefit schemes is as follows:


31 March 2013

82

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 26. Retirement benefit obligation (continued)

Company 31-Mar-13 31-Mar-12 1-Apr-11

N'000 N'000 N'000

Present value of defined benefit obligations 3,684,408 2,584,246 2,606,720 Fair value of scheme assets - - - Deficit in scheme 3,684,408 2,584,246 2,606,720 Past service cost not yet recognised in the statement of financial position. - - -

Liability recognised in the statement of financial position. 3,684,408 2,584,246 2,606,720

Movements in the present value of defined benefit obligations were as follows:

31-Mar-13 31-Mar-12 N'000 N'000

At 1 April 2,584,246 2,606,720 Service cost 319,938 184,575 Interest cost 262,979 185,331 Actuarial gains and losses 20,441 (217,062) Benefits paid (509,563) (175,318) Transfer on acquisition of subsidiary 1,006,367 -

At 31 March 3,684,408 2,584,246

Group

Company

31-Mar-13 31-Mar-12 1-Apr -11 31-Mar-13 31-Mar-12 1-Apr -11 N'000 N'000 N'000 N'000 N'000 N'000

27. Trade and other payables

Trade payables 29,599,750 9,249,269 8,259,343 20,791,361 5,506,907 4,812,439

Amounts received in advance 7,331,200 8,401,138 8,816,243 6,078,853 8,000,845 6,907,743 Value added tax payable 150,062 2,116,011 1,889,126 68,517 1,716,011 1,489,126 Withholding tax payable 42,586 174,864 150,423 42,480 74,864 50,423 Sundry creditors 4,293,876 976,855 3,089,696 3,665,350 796,052 805,711 Intercompany Payables - - - 1,171,698 885,105 1,165,030 Accruals 4,086,153 4,211,850 7,374,042 6,042,062 2,847,624 4,575,894

45,503,626 25,129,987 29,578,873 37,860,321 19,827,408 19,806,366

The average credit period on purchases is 58 days. No interest is charged on trade payables. The Group and Company have financial risk management policies in place to ensure that all payables are paid within a reasonable time of the credit time frame.

Included in the company’s trade and other payables is N1.1 billion (2012:N885 million) due to subsidiary companies


31 March 2013

83


Group

Company

28. Revenue

31-Mar-13

31-Mar-12

31-Mar-13 31-Mar-12

N'000

N'000

N'000 N'000

Analysis by geographical area

Within Nigeria 299,167,844 255,301,687 222,856,262 180,680,140

Outside Nigeria 2,773,485 2,966,564 2,773,485 2,722,570

301,941,329 258,268,251

225,629,747 183,402,710

Group 31-Mar-13

31-Mar-12

Products Revenue

Cost of sales

Gross profit

Revenue

Cost of sales

Gross profit

N'000

N'000 N'000 N'000

N'000 N'000

Food 221,109,191 193,274,686 27,834,505 175,483,202 148,502,811 26,980,391

Cement 899,324 786,112 113,212 30,675,272 25,958,975 4,716,297

Agro Allied 50,852,120 44,450,561 6,401,559 33,159,288 28,061,076 5,098,212

Packaging 22,456,950 19,629,939 2,827,011 15,770,933 13,346,166 2,424,767

Port operations and others 3,513,367 3,071,084 442,283 2,613,556 2,211,724 401,832

Real Estate - - - - - -

Others 3,110,377 2,718,825 391,552 566,000 478,978 87,022

301,941,329

263,931,207 38,010,122 258,559,730

218,559,730 39,708,521

Company 31-Mar-13

31-Mar-12

Product Revenue

Cost of sales

Gross profit

Revenue

Cost of sales

Gross profit

N'000

N'000 N'000 N'000

N'000 N'000

Food 189,013,645 169,592,052 19,421,593 142,711,483 126,613,209 16,098,273

Cement 899,324 806,916 92,408 30,675,272 27,215,012 3,460,261

Agro Allied 13,259,828 11,897,350 2,307,504 10,015,955 8,886,126 1,129,829

Packaging 22,456,950 20,149,446 2,307,504 - - -

225,629,747

202,445,764 23,183,983 183,402,710

162,714,347 20,688,363

29. Other operating income Group

Company 31-Mar-13 31-Mar-12

31-Mar-13 31-Mar-12

N'000 N'000

N'000 N'000

Insurance claims 134,610 40,444 115,353 20,023 Sundry income 2,301,333 709,892 1,613,951 148,112 Rent received 176,167 216,023 217,039 177,076 (Loss)/profit on disposal of fixed assets (5,909) 4,392 (6,031) (6,818) Demurrage 26,097 68,022 - - Expenses recovered - 4,121 - - Sales of scraps 549,328 187,713 57,273 52,361 Freight recovery - 380,968 - - Discount received on NDDC certificate purchased - 108,574 - - Exchange gain/(loss) 61,079 132,425 63,916 (24,203) Release of deferred income on BOI loan 292,512 285,597 100,720 - Provision no longer required 653,739 205,009 593,350 77,171 Bad debts recovered 14,115 - 14,115 - Income on government grant 1,081,014 - 935,613 - Export expansion grant 123,223 253,329 -

253,329

5,407,308 2,596,509

3,705,300

728,072 30. Investment income

Dividend income

8,250

- 1,002,250

585,532

Interest receivable and similar income

5,456,436

2,372,931 5,210,270

2,352,668

5,464,686 2,372,931

6,212,520

2,938,200

31. Finance costs

Interest on loans and overdraft 7,307,728 4,207,113 4,373,447 1,733,224

Interest on bonds 3,807,028 4,000,502 3,807,028 4,000,502 Interest released from deferred revenue 292,512 285,597 100,720 -

11,407,268 8,493,212

8,281,195 5,733,726


31 March 2013

84


Group

Company 31-Mar-13 31-Mar-12

31-Mar-13 31-Mar-12

N'000 N'000

N'000 N'000 32. Profit before tax

The profit before tax is arrived at after charging/(crediting):

Depreciation and amortisation 9,471,296 8,260,127 6,563,656 4,008,931 Directors' emoluments Fees 2,200 2,200 2,200 2,200 Salaries and other emoluments 49,203 44,164 49,203 44,164 Restructuring cost 159,668 170 159,668 - Auditors' remuneration 135,947 126,865 88,800 50,000 (Profit)/loss on disposal of fixed assets (5,909) (4,392) 6,031 6,818 Finance cost 11,407,268 8,493,212 8,281,195 5,733,726 Impairment allowance/write- back of investment - 20,060 - 39,118 Exchange (gain)/loss (61,079) (132,425) (63,916) 24,203

33. Taxation

Income taxes relating to continuing operation Income tax recognised in profit or loss

31-Mar-13 31-Mar-12

31-Mar-13 31-Mar-12 N'000

N'000

N'000 N'000

Current t ax

Income tax charged at 30% based on the adjusted profit for the year 1,948,617 1,702,635 1,434,381 1,120,693 Education tax (2% of assessable profit) 419,564 435,809 298,551 315,751 Capital gains tax 1 3,150 1 - In respect of prior years 119,249 21,651 - -

2,487,431 2,163,245 1,732,933 1,436,444 Deferred taxation

Deferred tax expense recognized in the current period 951,329 1,878,287 1,162,313 1,822,635

Total income ta x expense recognized in the current period relating to continuing operations. 3,438,760 4,041,532

2,895,246 3,259,079

Per statement of financial position At 1 April 4,339,540 8,072,666 3,353,121 5,900,136

Transfer on merger with Golden Pasta Co. Ltd. - - 657,773 Transfer on merger with Nigerian Bag Manufacturing Company Plc and Niger Mills Company Limited. - - 711,075 Charge for the year 2,487,431 2,163,245 1,732,933 1,436,444

Transfer on consolidation of Rom Oil Limited 98,419 - - Prior year overprovision 26,782 - - Prior year adjustment (Northern Nigeria Flour Mills) - (16,909) - - Payment during the year: - - - - Cash (4,169,384) (5,599,766) (3,775,616) (4,338,895) Withholding tax utilised (8,701) (306,478) (302,337)

2,747,305 4,339,540

2,021,513 3,353,121

Corporation tax and education tax is calculated at 30 % and 2% respectively (2011: 30 % & 2%) of the estimated taxable profit for the year.

The charge for the year can be reconciled to the profit per the statement of comprehensive income as follows:

Group Company

31-Mar-13 31-Mar-12

31-Mar-13 31-Mar-12 Current tax liabilities N'000

N'000

N'000 N'000

Income tax payable 2,327,740 3,900,581 1,719,553 3,037,370 Education tax 419,564 435,809 301,960 315,751 Capital gains tax 1 3,150 1 -

2,747,305 4,339,540 2,021,513 3,353,121


31 March 2013

85

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 33. Taxation

Income taxes relating to continuing operations

The income tax expense for the year can be reconciled to the accounting profit as follows: -

31-Mar-13 31-Mar-12

31-Mar-13 31-Mar-12

N'000

N'000

N'000 N'000 Profit before tax on continuing operations 11,165,431 11,803,161 11,640,693 11,459,537

Tax at the statutory corporation tax rate of 30% (2012: 30 %) 3,349,635 3,540,948 3,492,208 3,667,052 Effect of income that is exempt from taxation (1,200,204) (117,352) (938,487) (294,330) Effect of expenses that are not deductible in determining taxable profit 56,554 26,937 8,921 32,061

Effect of application of commencement rules 569,802 - Effect of concessions (research and development and other allowances) (133,499) (792,518) 34,050 (415,061)

Effect of unused tax losses and tax offset not recognized as deferred tax assets 311,397 860,168 Education tax at 2% of assessable profits 359,661 315,750 298,551 315,750 Capital gains tax 1 3,150 1

Minimum tax adjustments 5,917 - Changes due to transition to IFRS - 182,798 - 182,798

Others 247 -

3,319,510 4,019,881 2,895,246 3,259,079

Adjustments recognized in the current period in relation to current tax of prior periods 119,249 21,651 - Income tax expense recognized in profit or loss (relating to continuing operations) 3,438,760

4,041,532

2,895,246 3,259,079

Effective tax rate 30.80%

34.24%

24.87% 28%

Income tax recognised directly in equity

Group

Company

2013 2012

2013 2012

N'000 N'000

N'000 N'000 Current tax On merger with Golden pasta -

- -

657,773

On merger with Nigerian Bag Manufacturing Company Plc/ Niger Mills Company Limited

-

- 711,075

-

- - 711,075 657,773

Deferred tax Arising on merger with Nigerian Bag Manufacturing Company Plc and Niger Mills Company Limited

- - 1,606,501 1,332,699

Total income tax recognized directly in equity

- - 2,317,576 1,990,472

Income tax recognized in other comprehensive income Group Company

31-Mar-13 31-Mar-12

31-Mar-13 31-Mar-12

N'000

N'000

N'000 N'000

Current tax

- - - - Deferred tax Arising on income and expenses recognized in other comprehensive income: Arising on actuarial (gains)/losses on staff retirement benefit - - (57,907) -

- - (57,907) -

Total income tax recognized in other comprehensive income -

- (57,907)

-


31 March 2013

86


Group Company 31-Mar-13 31-Mar-12 31-Mar-13 31-Mar-12

N'000 N'000

N'000

N'000 34. Earnings per share

From continuing operations

Net profit attributable to equity holders of the parent 6,932,773 7,196,931 8,745,448 8,200,458 Earnings from continuing operations for the purpose of basic earnings per share excluding discontinued operations

6,932,773 7,196,931 8,745,448 8,200,458 Effect of dilutive potential ordinary shares: - - - - Earnings from continuing operations for the purpose of diluted earnings per share excluding discontinued operations 6,932,773 7,196,931

8,745,448

8,200,458

The denominators used are the same as those detailed above for both basic and diluted earnings per share from continuing and discontinued operations.

Weighted average number of shares ('000) 2,385,685 2,334,777

2,385,685 2,334,777

Basic (kobo) 291 308 367 351

Diluted (kobo)

291 308 367 351


31 March 2013

87


Group Company

31-Mar-13 31-Mar-12 31-Mar-11 31-Mar-13 31-Mar-12 31-Mar-11

N'000 N'000 N'000 N'000 N'000

35 Dividend payable

At the beginning of the year 191,941 266,941 137,344 191,941 266,941 137,344 Declared during the year 4,056,500 3,758,421 3,416,747 4,056,500 3,758,421 3,416,747 Unclaimed dividend - - 148,820 - - 148,820 Payments during the year (4,058,648) (3,833,421) (3,435,970) (4,058,648) (3,833,421) (3,435,970)

At the end of the year 189,793 191,941 266,941 189,793 191,941 266,941

Group Company

31-Mar-13 31-Mar-12 31-Mar-13 31-Mar-12

N'000 N'000

N'000

N'000

36. Cash generated from operations

Reconciliation of profit after tax to net cash generated by operating activities

Profit after taxation 7,761,882 8,146,715 8,745,448 8,417,520 Adjustments for: Depreciation 9,471,296 8,260,127 6,563,656 4,008,931 Finance cost 11,407,268 8,493,212 8,281,195 5,733,726 Interest received (5,456,436) (2,372,931) (5,210,270) (2,352,668) Dividend received (8,250) - (1,002,250) (585,532) Loss/(profit) on disposal of fixed assets 5,909 (4,392) 6,031 6,819 Allowance for investment - 20,060 - 39,118 Goodwill adjustment (3,564,294) - - - Amortisation of intangible assets 111,763 21,760 77,987 12,246 Other amortisations 53,226 238,226 - - Non-controlling interest in subsidiaries (2,946,165) (305,709) - - Share of loss in associate 1,037,993 2,867,227 - - Transfer on merger of Nigerian Bag Manufacturing Company Plc and Niger Mills Company Limited (1,502,172) - 5,445,679 - Transfers on merger of Golden Pasta Company 145,376 4,926,940 Investments adjustment on Niger Mills Company Limited and Nigerian Bag Manufacturing Company Plc on merger

- - 1,980,118 10,000

Fixed Assets transferred on the merger of subsidiaries and acquisition of subsidiaries (4,138,643) - (14,332,177) (8,151,718) Fixed assets adjustments 1,142,730 (7,873,291) 181,169 417,484 Operating cash flows before movements in working capital 13,324,979 17,636,380 9,805,285 12,482,866 Changes in assets and liabilities: (Increase)/decrease in inventories; (14,089,780) (4,396,133) (14,717,737) 2,337,822 Increase in trade and other receivables (2,041,833) (4,098,551) (16,940,470) (13,218,164) (Increase)/decrease in other assets (307,264) 488,676 (802,518) (75,483) (Increase)/decrease in due from related parties (230,586) 1,773,922 (911,442) 348,781 Increase/(decrease) in trade and other payables 20,373,638 (4,448,883) 18,032,910 21,043 Increase/(decrease) in trade deferred income 2,258,671 1,125,549 1,494,646 - Increase/(decrease) in due to related parties 45,184 (8,030) 45,645 - Increase/(decrease) in retirement benefit obligation 27,518 1,359 1,100,162 (22,474) (Decrease)/ increase in provisions (339,503) 451,673 205,335 (13,315) Increase in deferred taxation liabilities 1,492,705 1,878,287 2,590,050 3,150,007 Increase in deferred taxation assets (311,072) - (57,907) - (Decrease)/ increase in tax payable (1,541,107) (3,733,126) (1,331,608) (2,547,015) Net cash generated by operating activities 18,661,551 6,671,123 (518,877) 2,464,074


31 March 2013

88

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 36.1. Substantial interest in shares

Excelsior Shipping Company Limited has1,244,755,606 (2012 - 1,244,755,606) ordinary shares of 50k each, representing 52.18% of the issued and paid-up share capital of the Company, Stanbic Nominees Nigeria Limited has 1,19319448 ordinary share of 50k each representing 5% of the issued and paid -up share capital of the company. No other individual shareholder held up to 5% of the issued share capital of the Company at 31 March 2013.

Group Company

2013

2012

2013 2012 37. Directors N'000

N'000

N'000

N'000

The remuneration paid to Directors was: Fees 2,200 2,200 2,200 2,200 Salaries and other emoluments 49,203 44,164 49,203 44,164

51,403 46,364 51,403 46,364

Fees and other emoluments disclosed above include amount paid to:

Chairman - - - - Other Directors 51,403 46,364 51,403 46,364

51,403 31,443 51,403 46,364

The Chairman waived his rights to receive emoluments.

The number of Directors excluding the Chairman whose emoluments were within the following ranges:

N N Number

Number

Number

Number

190,001 - 200,000 11 11 11 11 19,000,001 - 20,000,000 2 2 2 2

13

13

13

13

N'000

N'000

N'000

N'000

Highest paid Director received 28,671

26,106

28,671

26,106


31 March 2013

89

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS

FOR THE YEAR ENDED 31 MARCH 2013

38. Employees

Group Company

The average number of persons employed during the year was as follows:

2013

2012

2013 2012 Number Number Number Number

Managerial 752 620 548 452 Others 4,119 3,721 1,129 1,020

4,946

4,341

1,677

1,472

Staff costs relating to the above were: N'000 N'000 N'000 N'000

Salaries, wages and other benefits 13,956,840 8,756,978 8,400,172 4,231,862 Pension 566,977 585,936 447,346 462,980

14,523,817 9,342,914 8,847,518 4,694,842

Gratuity 702,635 727,557 582,917 531,530

15,226,452 10,070,471 9,430,435 5,226,372

The number of employees in receipt of emoluments excluding allowances and pension/gratuity within the following ranges were:

Group Company

2013

2012

2013 2012 N N Number Number Number Number

60,001 - 90,000 - - - - 90,001 - 100,000 55 48 - -

100,001 - 200,000 574 504 - 17 200,001 - 300,000 488 428 44.00 2 300,001 - 400,000 543 477 4.00 - 400,001 - 500,000 333 292 6.00 - 500,001 - 600,000 648 569 7.00 275 600,001 - 700,000 795 698 50.00 241 700,001 - 800,000 386 339 250.00 249 800,001 - 900,000 272 239 169.00 167 900,001 - 1,000,000 155 136 182.00 56

Over - 1,000,001 696 611 965.00 465

4,946 4,341 1,677 1,472 39 Segment information

Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on types of goods or services delivered or provided. The Group's reportable segments under IFRS 8, Operating segments are therefore as follows.

Foods

Cement Fertilizer Packaging Port Operation Livestock Feeds Others


31 March 2013

90

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 39.1 The Group 39.1.1 Segment profit or loss

The following is an analysis of the Group’s revenue and results from continuing operations by reportable segment.

Segment revenue

Segment profit

Segment revenue

Segment profit

31-Mar-13 31-Mar-13

31-Mar-12 31-Mar-12 N '000 N '000

N '000 N '000

Foods 221,109,191 11,072,791 175,483,202 6,311,572 Cement 899,324 (414,670) 30,675,272 6,220,617 Agro Allied 50,852,120 889,798 33,159,288 1,530,225 Packaging 22,456,950 1,267,838 15,770,933 1,963,191 Port Operation 3,513,367 222,579 2,613,556 4,816,258 Real Estate - - - - Others 3,110,377 (834,912) 566,000 (6,171,475)

301,941,329 12,203,424 258,268,251 14,670,388

Share of profits of associates (1,037,993) (2,867,227) Profit before tax (continuing operations) 11,165,431

11,165,431 11,803,161

Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the current year. The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 4. Segment profit represents the profit earned by each segment without allocation of share of profits of associates, IFRS adjustment and income tax expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

39.1.2 Segment assets and liabilities

31-Mar-13 31-Mar-12 1-Apr-11 N '000 N '000 N '000

Segment assets Foods 198,481,848 85,434,094 48,787,252

Cement 1,078,237 12,727,591 4,568,000 Agro Allied 20,474,521 14,885,153 13,505,000 Packaging 24,313,421 24,299,687 23,092,000 Port Operation 11,335,118 9,885,809 21,683,000 Real Estate 8,237,806 - - Others 16,326,258 85,345,718 51,564,863

Consolidated total assets 280,247,210 232,578,054 162,972,709

Segment liabilities Foods 138,684,802 34,898,180 14,771,472 Cement 70,893 17,955,616 5,343,000 Agro Allied 14,072,236 13,031,995 4,482,000 Packaging 15,164,357 14,126,611 13,906,000 Port Operation 6,523,847 3,470,046 14,579,000 Real Estate 2,996,550 Others 19,809,631 67,381,364 60,292,429 Consolidated total liabilities 196,353,548 150,863,811 113,373,902


31 March 2013

91

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 39.2 Company 39.2.1 Segment profit or loss

The following is an analysis of the Company’s revenue and results from continuing operations by reportable segment.

Segment revenue

Segment profit

Segment revenue

Segment profit

31-Mar-13 31-Mar-13 31-Mar-12 31-Mar-12 N '000 N '000 N '000 N '000 Food 189,013,645 9,753,353 142,711,483 11,176,065 Cement 899,324 (414,670) 30,675,272 6,220,617 Fertilizer 13,259,828 1,034,172 10,015,955 889,318 Packaging 22,456,950 1,267,838 Others - - - (6,826,464)

Total 225,629,747 11,640,693 183,402,710 11,459,537

Profit before tax (continuing operations) 11,640,693 11,459,537

39.2.2 Segment assets and liabilities

31-Mar-13 31-Mar-12 1-Apr -11 N'000 N '000 N '000

Segment assets Foods 176,341,266 54,442,429 34,141,940

Cement 1,148,261 12,727,591 4,568,000 Agro Allied 7,538,071 6,892,153 8,343,000 Packaging 25,892,418 - - Others 12,969,712 98,477,573 69,677,495

Total assets

223,889,728 172,539,746 116,730,435

Segment liabilities

Foods 95,936,156 8,528,630 8,843,708 Cement 72,802 17,955,616 5,343,000 Agro Allied 3,811,848 6,722,995 287,000 Packaging 15,572,630 59,292,972 59,690,707 Others 15,941,538

Total liabilities

130,366,208

92,500,212

74,164,415


31 March 2013

92

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 40 Related party transactions

Company 40.1 The following transactions were

carried out with related parties during the year:

31-Mar-13

31-Mar-12

1-Apr -11 N'000 N'000 N'000

Purchase of goods and services

Nigerian Bag Manufacturing Company Plc - 4,674,973 3,529,393 Golden Transport Company Limited 1,853,940 1,687,034 1,873,440 Golden Penny Rice Limited 13,129,379 1,072,503 - Golden Noodles Company Limited 332,879 - - Golden Shipping Company Nigeria Limited 134,615 206,056 131,932 Flour Mills Registrars Limited - - 75,462 Thai Farm International Limited 62,435 - - Apapa Bulk Terminal Limited 48,346 2,044,891 1,735,705

15,561,594

9,685,457 7,345,932

Company

31-Mar-13

31-Mar-12

1-Apr -11 N'000 N'000 N'000

Sale of goods Golden Noodles Company Limited 1,959,644 1,103,542 924,561 Premier Feed Mills Company Limited 299,536 417,873 338,294 Kaboji Farms Limited 240,600 Northern Nigeria Flour Mills Plc 323,425 Nigerian Eagle Flour Mills Limited 808,249 429,461 395,611 Golden Pasta Company Limited - - 11,862,927

3,631,454

1,950,876 13,521,393

40.2 Inter -company receivables

Golden Shipping Company Nigeria Limited 66,526 - 23,972 Golden Pasta Company Limited - 1,476,499 Niger Mills Company Limited - 943,922 Golden Penny Rice Limited 2,361,209 - Apapa Bulk Terminal Limited 1,522,011 2,046,049 1,470,763 Golden Transport Company Limited 117,913 504,661 350,887 Flour Mills Registrars Limited 869 21,460 34,182 Golden Sugar Company Limited 21,276,588 12,613,059 4,770,785 Kaboji Farms Limited 1,324,837 319,134 - Nigerian Eagle Flour Mills Limited 12,095 - 92,654 Golden Noodles Company Limited 5,449,598 Premier Feed Mills Company Limited 52,455 - 90,573 Northern Nigeria Flour Mills Plc 1,263,100 319,418 - Thai Farm International Limited 59,041 Olympic Towers Limited 906,131 551,304 - New Horizon Limited 3,806,304 Crestview Towers Limited - 551,412 - ROM Oil Mills Limited 316,332 - - Golden Noodles Company Limited - 3,797,394 1,911,943

36,173,800

23,085,101 11,166,180


31 March 2013

93


Group Company

31-Mar-13 31-Mar-12

1-Apr -11

31-Mar-13

31-Mar-12

1-Apr -11

N'000 N'000 N'000 N'000 N'000 N'000 40.3 Amounts due from

associated Company

United Cement Company of Nigeria Limited 490,728 815,849 2,245,240 490,728 303,495 804,870

40.4 Amount due from related companies

Maiduguri Flour Mills Limited 1,095,260 539,553 884,084 95,559 355,901 203,307 Others - - - 984,550 - -

1,585,988 539,553 884,084 1,080,109 355,901 203,307

Amount due from related party 1,585,988

1,355,402

3,129,324

1,570,837

659,396

1,008,177

40.5 Inter -company payables

Bagco Morpak Limited - - - - 70,714 47,709 Golden Shipping Company Nigeria Limited - - - - 42,015 - Crestview Towers Limited - - - 258,937 - - Golden Penny Rice Limited - - - 912,761 - - Niger Mills Company Limited - - - - 434,737 - Premier Feed Mills Company Limited - - - - 19,442 - Nigerian Eagle Flour Mills Limited - - - - 200,300 - Kaboji Farms Limited - - - - - 321,883 Agro Allied Farms Sunti Limited - - - - - - Northern Nigeria Flour Mills Plc - - - - - 639,740 Nigerian Bag Manufacturing Company Plc - - - - 117,897 155,698

- -

-

1,171,699

885,105

1,165,030

40.6 Amount due to related companies Agri Estates Limited 4,427 - - 4,427 - - Agro Allied Farms Sunti Limited 2,039 - - 2,039 - - Other related companies 39,179 461 8,491 39,179

45,645 461 8,491 45,645 - -

45,645 461 8,491 45,645 - -

40.7 Loans to related parties

19,717,445 18,578,584 10,513,140 19,717,445 18,578,584 11,363,140

19,717,445 18,578,584

10,513,140

19,717,445

18,578,584

11,363,140

Interest rates on intra group loans are comparable to the average commercial rate of interest.


31 March 2013

94

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 41. Compensation of key management personnel

31-Mar-13

31-Mar-12

1-Apr -11

N'000

N'000 N'000

Short term benefits 236,317 224,502 213,277 Post-employment benefits 38,197 36,287 34,473 Other long term benefits 18,389 17,469 16,596 Share based payments - - - Terminal benefits 19,809 18,818 17,877

312,712

297,076

282,223

The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.


31 March 2013

95

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 42 Financial instruments

42.1 Capital risk management

The Group and Company manage their capital to ensure that it is able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group’s and Company's overall strategy remains unchanged from 2012. The Group monitors capital on the basis of the debt to equity ratio. This ratio is calculated as net debt divided by total equity. Net debt is calculated as total borrowings (including overdrafts, bonds and other bank loans as shown in the consolidated statement of financial position) less cash and cash equivalents. Total equity is the equity attributable to owners of Flour Mills of Nigeria Plc. in the consolidated statement of financial position.

The Group and Company are not subject to any externally imposed capital requirements.

The Group’s risk management committee reviews the capital structure of the Group on a semi-annual basis. As part of this review, the committee considers the cost of capital and the risks associated with each class of capital.

Gearing ratio The debt to equity ratios as at the end of the reporting period were as follows:

Group Company

31-Mar-13 31-Mar-12 1-Apr-11 31-Mar-13 31-Mar-12 1- Apr-11 N'000 N'000 N'000 N'000 N'000 N'000

Debt 128,277,344 105,051,437 62,753,354 74,806,924 59,075,922 41,253,371 Cash and cash equivalents (21,837,482) (26,239,138) (8,876,377) (16,914,612) (20,433,020) (5,057,755) Net Debt 106,439,862 78,812,299 53,876,977 57,892,313 38,642,902 36,195,616

Equity 83,893,662 81,714,243 49,598,807 93,523,520 80,039,534 42,566,019

Net debt to equity ratio

127% 96% 109% 63% 48% 85%

Debt is defined as long and short term borrowings (excluding derivatives and financial guarantee contract) Equity includes all capital and reserves of the Group and Company that are managed as capital.

42.2 Categories of financial instruments

- Group

31-Mar-13 Loans and

receivables Available for

sale

Other financial

assets Total N'000 N'000 N'000 N'000 Assets Cash and bank balances 21,837,482 - - 21,837,482 Trade and other receivables 9,025,539 - 10,441,756 19,467,294 Long term loan receivable 19,717,445 - - 19,717,445 Other investments - 24,948 - 24,948 Investment in associate - - 2,058,203 2,058,203 Due from related companies - - 1,585,988 1,585,988

50,580,466 24,948 14,085,946 64,691,360 Group

31-Mar-13 Amortized

cost

Other financial liabilities Total

N'000 N'000 N'000

Liabilities Borrowings 93,741,066 - 93,741,066 Unsecured fixed rate bond 34,536,278 - 34,536,278 Trade and other payables 29,599,750 15,903,877 45,503,627 Due to related companies - 45,645 45,645

157,877,093 15,949,522 173,826,615


31 March 2013

96


42.2 Categories of financia l instruments (continued) Group

31-Mar-12 Loans and


sale

Other financial

assets Total

N'000 N'000 N'000 N'000

Assets Cash and bank balances 26,239,138 - - 26,239,138 Trade and other receivables 9,122,239 - 8,303,222 17,425,461 Long term loan receivable 18,578,584 - - 18,578,584 Investments - 414,198 - 414,198 Investment in associate - - 1,391,674 1,391,674 Due from related companies - - 1,355,402 1,355,402

53,939,961 414,198 11,050,298 65,404,457 Group

31-Mar-12 Amortized

cost


N'000 N'000 N'000

Liabilities Borrowings 66,784,062 - 66,784,062 Unsecured fixed rate bond 38,267,375 - 38,267,375 Trade and other payables 9,249,269 15,880,717 25,129,986 Due to related companies - 461 461

114,300,706 15,881,178 130,181,884

Group

1-Apr-11 Loans and


sale

Other financial

assets Total

N'000 N'000 N'000 N'000

Assets Cash and bank balances 8,876,377 - - 8,876,377 Trade and other receivables 9,453,071 - 3,873,839 13,326,910 Long term loan receivable 10,513,140 - - 10,513,140 Investments - 432,258 - 432,258 Investment in associate - - 4,258,901 4,258,901 Due from related companies - - 3,129,324 3,129,324

28,842,588 432,258 11,262,064 40,536,910 Group

1-Apr-11 Amortized

cost


N'000 N'000 N'000

Liabilities Borrowings 24,630,077 - 24,630,077 Unsecured fixed rate bond 38,123,277 - 38,123,277 Trade and other payables 8,259,343 21,319,530 29,578,873 Due to related companies - 8,491 8,491

71,012,697 21,328,021 92,340,717


31 March 2013

97


42.2 Categories of financial instruments (Continued)

Company

31-Mar-13 Loans and


sale

Other financial

assets Total

N'000 N'000 N'000 N'000

Assets Cash and bank balances 16,914,612 - - 16,914,612 Trade and other receivables 8,083,787 - 42,866,363 50,950,150 Long term loan receivable 19,717,445 - - 19,717,445 Investments - 663,236 - 663,236 Inventories - - 40,992,727 40,992,727 Other assets - - 1,460,321 1,460,321 Due from related company - - 1,570,838 1,570,838

44,715,844 663,236 86,890,249 132,269,332 Company

31-Mar-13 Amortized

cost


N'000 N'000 N'000

Liabilities Borrowings 40,270,646 - 40,270,646 Unsecured fixed rate bond 34,536,278 - 34,536,278 Trade and other payables 20,791,361 17,068,960 37,860,321 Current tax payable - 2,990,279 2,990,279 Deferred tax - 10,048,033 10,048,033 Due to related company - 45,645 45,645

95,598,286 29,184,151 124,782,437

Company

31-Mar-12 Loans and


sale

Other financial

assets Total

N'000 N'000 N'000 N'000

Assets Cash and bank balances 20,433,020 - - 20,433,020 Trade and other receivables 5,017,878 - 28,991,802 34,009,680 Long term loan receivable 18,578,584 - - 18,578,584 Investments - 414,198 - 414,198 Inventories - - 26,274,989 26,274,989 Other assets - - 657,803 657,803

44,029,482 414,198 55,924,594 100,368,275

Company

31-Mar-12 Amortized

cost


N'000 N'000 N'000

Liabilities Borrowings 59,075,922 - 59,075,922 Trade and other payables 5,506,907 14,320,502 19,827,410 Current tax payable - 3,353,121 3,353,121

64,582,829 17,673,623 82,256,453


31 March 2013

98


42.2 Catego ries of financial instruments (continued) Company

1-Apr-11 Loans and


sale

Other financial

assets Total

N'000 N'000 N'000 N'000

Assets

Cash and bank balances 5,057,755 - - 5,057,755 Trade and other receivables 6,719,793 - 14,071,723 20,791,516 Long term loan receivable 11,363,140 - - 11,363,140 Investments 337,520 432,258 - 769,778 Inventories - - 28,612,812 28,612,812 Other assets - - 582,320 582,320 Due from related company - - 1,008,177 1,008,177

23,478,208 432,258 44,275,032 68,185,498

Company

1-Apr-11 Amortized

cost


N'000 N'000 N'000

Liabilities Borrowings 3,130,093 - 3,130,093 Unsecured fixed rate bond 38,123,278 - 38,123,278 Trade and other payables 4,812,439 14,993,927 19,806,366 Current tax payable - 5,900,136 5,900,136 Dividend payable - 266,941 266,941 Retirement benefit obligations - 2,606,720 2,606,720

46,065,810 23,767,724 69,833,535 Risk management

Risk management roles and responsibilities are assigned to stake holders in the Group at three levels: The board, executive committee and line managers.

The Board oversight is performed by the Board of Directors through the Board Risk and Ethics Committee. The second level is performed by the Executive Management Committee (EXCOM)

The third level is performed by all line managers under EXCOM and their direct reports. They are required to comply with all risk policies and procedures and to manage risk exposures that arise from daily operations. The Internal Audit Department provides an independent assurance of the risk frame work. They assess compliance with established controls and recommendations for improvement in processes are escalated to relevant management, Audit Committee and Board of Directors.

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and commodity price risk), credit risk and liquidity risk. Risk management is carried out by management under policies approved by the board of directors. Management identifies and evaluates the financial risks in co-operation with the Group’s operating units. The board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and liquidity risk. The Group’s overall risk management program seeks to minimize potential adverse effects on the company’s financial performance.

42.4 Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices such as interest rate, exchange rates and other prices. The Group's activities expose it primarily to financial risks of changes in foreign currency exchange rates, interest rates and commodity prices. Market risks exposures are measured using sensitivity analysis. There has been no change to the Group's exposure to market risks or the manner in which these risks are managed and measured.


31 March 2013

99

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 42.4.1 Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to the changes in market interest rates. The Group is exposed to interest rate risk because it borrows funds denominated in USD and CHF at floating interest rates. The sensitivity analyses below have been determined based on the exposure to interest rates for both USD and CHF denominated borrowings at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. 10 basis points (BP) increase or decrease are used when reporting LIBOR risk internally to key management personnel and these represent management’s assessment of the reasonably possible change in interest rates. If LIBOR had been 10 basis points (i.e. 0.1%) higher/lower and all other variables were held constant, the Group and Company's profit or loss will be affected as follows:

Group Company

31-Mar-13

31-Mar-12 1-Apr -11 31-Mar-13 31-Mar-12 1-Apr -11

N'000

N'000

N'000 N'000 N'000

N'000

Profit/(loss) after tax






If LIBOR is 10 BP lower:

Borrowings (USD) 2,011 557 59 928 10 - Borrowings (CHF) - - 38 - - 25

If LIBOR is 10 BP higher:

Borrowings (USD) (2,011) (557) (59) (928) (10) - Borrowings (CHF) - - (38) - - (25)

42.4.2 Foreign currency risk management

The Group and Company undertake transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Group and Company are mainly exposed to USD, GBP, EUR and CHF.

The following table details the Group and Company's sensitivity to a 3%, increase and decrease in Naira against USD, GBP, EUR and CHF currencies. Management believes that a 3% movement in either direction is reasonably possible at the balance sheet date. The sensitivity analyses below include outstanding balances of USD, GBP, EUR and CHF denominated assets and liabilities. A positive number indicates an increase in profit where Naira strengthens by 3% against the USD, GBP, EUR and CHF. For a 3% weakening of Naira against the USD, GBP, EUR and CHF there would be an equal and opposite impact on profit, and the balances below would be negative.

Group Company

31-Mar-13 31-Mar-12 1-Apr-11 31-Mar-13 31-Mar-12 1- Apr-11

N'000 N'000

N'000 N'000 N'000

N'000







Naira strengthens by 3% against the USD 1,366,377 372,743 8,678 847,382 72,521 7,075 Naira strengthens by 3% against the GBP 946 1,486 2,052 195 810 2,098 Naira strengthens by 3% against the EUR 1,408 4,615 2,157 109 274 2,180 Naira strengthens by 3% against the CHF 389 1,170 15,573 389 1,170 15,573

Naira weakens by 3% against the USD (1,366,377) (372,743) (8,678) (847,382) (72,521) (7,075) Naira weakens by 3% against the GBP (946) (1,486) (2,052) (195) (810) (2,098) Naira weakens by 3% against the EUR (1,408) (4,615) (2,157) (109) (274) (2,180) Naira weakens by 3% against the CHF (389) (1,170) (15,573) (389) (1,170) (15,573)

42.4.3 Commodity price risk

The Group is further exposed to commodity price risk. The risk arises from the Group’s need to buy specific quantities and qualities of raw materials to meet its milling requirements. These raw materials include wheat, rice and cassava flour. The risk is partly mitigated by buying these raw materials xxx months in advance of use.


31 March 2013

100

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 42.5 Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the Group uses other publicly available financial information and its own trading records to rate its major customers. The Group's exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. On-going credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee insurance cover is purchased.

Apart from the Companies list below, the Group does not have significant credit risk exposure to any single counterparty or any Group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are related entities.

Financial assets and other credit exposures

Maximum credit risk

Group Company 31-Mar-13 31-Mar-12 1-Apr -11 31-Mar-13 31-Mar-12 1-Apr -11

Trade Receivables 8,186,119 8,173,480 8,623,747 7,362,401 4,360,230 6,166,901 Other receivables 11,281,175 9,251,981 4,703,164 43,587,748 29,649,450 14,624,615 Bank deposits 21,752,273 26,239,138 8,876,377 16,844,827 20,386,107 5,008,096

The Group does not hold any collateral or other credit enhancements to cover this credit risk.

42.5 Credit risk management continued

The table below shows the credit limit and balance of five major counterparties at the financial reporting date using the rating symbols.

31-Mar-13 31-Mar-12 1-Apr -11

Counterparty

Credit limit

Carrying amount Credit limit

Carrying amount Credit limit

Carrying amount

N'000 N'000 N'000 N'000 N'000 N'000 Company A 2,500,000 1,502,676 2,500,000 1,727,089 2,500,000 1,280,169 Company B 265,000 253,952 265,000 130,950 265,000 45,843 Company C 261,000 231,066 225,000 171,277 225,000 148,100 Company D 300,000 217,655 300,000 817,655 300,000 - Company E 150,000 124,659 150,000 114,531 150,000 120,225

42.6 Liquidity risk management

Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Group’s short-, medium- and long-term funding and liquidity management requirements. The Group and Company manage liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The following table details the Group's and Company’s expected maturity for its non-derivative financial assets. The tables below have been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary to understand the Group’s liquidity risk management as the liquidity is managed on a net asset and liability basis.

Maturity analysis of financial liabilities

The following tables details the Group and the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the balance sheet date. The contractual maturity is based on the earliest date on which the entities may be required to pay.


31 March 2013

101

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 42.6 Liquidity risk management (continued)

Group

3 months to 1 year

31 March 2013

Less than 1

month 1-3

months 1-5 years 5+ years Total

N'000 N'000 N'000 N'000 N'000 N'000

Unsecured fixed rate bond - 4,536,278 3,750,000 26,250,000 - 34,536,278 Overdrafts 22,048,998 - - - - 22,048,998 Other borrowings - 671,256 5,336,939 26,114,660 2,954,286 35,077,141 Trade payables 1,479,987 4,439,962 14,799,875 8,879,925 - 29,599,749

23,528,985 9,647,496 23,886,814 61,244,585 2,954,286 121,262,166 Group 1 April 2012 Unsecured fixed rate bond - 767,375 3,750,000 33,750,000 - 38,267,375 Overdrafts 6,581,584 - - - - 6,581,584 Other borrowings - 54,550 554,256 30,120,129 6,915,758 37,644,693 Trade payables 462,463 1,387,390 4,624,635 2,774,781 - 9,249,269

7,044,047 2,209,316 8,928,891 66,644,910 6,915,758 91,742,921

Company

3 months to 1 year

31 March 2013

Less than 1

month 1-3

months 1-5 years 5+ years Total N'000 N'000 N'000 N'000 N'000 N'000

Unsecured fixed rate bond - 4,536,278 3,750,000 26,250,000 - 34,536,278 Overdrafts 6,581,584 - - - - 6,581,584 Other borrowings - 187,143 561,036 1,088,777 - 1,836,956 Trade payables 1,039,568 3,118,704 10,395,681 6,237,408 - 20,791,361

7,621,152 7,842,126 14,706,716 33,576,185 - 63,746,179 Company 1 April 2012 Unsecured fixed rate bond - 767,375 3,750,000 33,750,000 - 38,267,375 Overdrafts 18,904,049 - - - - 18,904,049 Other borrowings - - - 2,133,408 259,745 2,393,153 Trade payables 275,345 826,036 2,753,454 1,652,072 - 5,506,907

19,179,394 1,593,411 6,503,454 37,535,480 259,745 65,071,484


31 March 2013

102

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 43 Fair value of financial instruments

Except as detailed in the following table, the directors consider that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values

Group

Financial assets Carrying

amount

Fair value Carrying amount

Fair value

Carrying amount

Fair value

N'000 N'000 N'000 N'000 N'000 N'000

31-Mar-13 31-Mar-13 31-Mar-12

31-Mar-12 1-Apr-11

1-Apr-11

Available for sale financial assets 24,948 24,948 24,948 24,948 43,003 45,008

Long term loan receivable 19,717,445 - 18,578,584 18,578,584 10,513,140 10,513,140

Trade receivables 8,186,119 8,186,119 8,173,480 8,173,480 8,623,747 8,623,747

Other receivables 839,420 839,420 948,759 948,759 829,324 829,324

Cash and bank balances 21,837,482 21,837,482 26,239,138 26,239,138 8,876,377 8,876,377

Financial liabilities

Unsecured fixed rate bond 34,536,278 34,950,476 38,267,375 34,950,476 38,123,278 38,123,278 Overdrafts 22,048,900 22,048,900 33,643,108 33,643,108 9,855,586 9,855,586 Other borrowings 71,692,165 71,692,165 33,140,954 33,140,954 14,774,491 14,774,491 Trade payables 29,599,750 29,599,750 9,249,269 9,249,269 8,259,343 8,259,343

Company Carrying amount

Fair value

Carrying amount

Fair value

Carrying amount

Fair value

N'000 N'000 N'000 N'000 N'000 N'000 31-Mar-13 31-Mar-13 31-Mar-12

31-Mar-12 1-Apr -11

1-Apr -11

Available for sale financial assets 24,948 24,948 24,948 24,948 43,008 43,008 Long term loan receivable 19,717,445 19,717,445 18,578,584 18,578,584 11,363,140 11,383,140 Trade receivables 7,362,401 7,362,401 4,360,230 4,360,230 6,166,901 6,166,901 Other receivables 721,386 721,386 657,648 657,648 552,892 552,892 Cash and bank balances 16,914,612 16,914,612 20,433,020 20,433,020 5,057,755 5,057,755

Financial liabilities

Unsecured fixed rate bond 34,536,278 34,536,278 38,267,375 38,267,375 38,123,278 38,123,278 Overdrafts 6,581,584 6,581,584 18,904,049 18,904,049 2,417,283 2,417,283 Other borrowings 33,689,063 33,689,063 1,904,498 1,904,498 712,810 712,810 Trade payables 20,791,361 20,791,361 5,506,907 5,506,907 4,812,439 4,812,439


31 March 2013

103

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 44 Guarantees and other financial commitments (a) Financial commitments

The Directors are of the opinion that all known liabilities and commitments which are relevant in assessing the Company's state of affairs have been taken into consideration in the preparation of the financial statements under review.

Capital expenditure authorised by the Directors but not provided for in these financial statements was N17.1billion (2012 - N37billion).

(b) Gas agreement

The long term gas purchase agreement signed by the Company for the supply of natural gas to Apapa Factory in April 2005 for twenty years came into effect during the last quarter of 2006. This commits the Company to taking up a specified minimum quantity of gas over the duration of the purchase agreement.

45 Contingent liabilities

As at 31 March 2013, there were contingent liabilities in respect of litigation against the Group and the Company amounting to N1.4 billion and N77.4 million (2012 - N817million and N75.1 million) respectively. According to the Directors and Solicitors acting on behalf of the Company, the liabilities, if any, are not likely to be significant. The Group also had contingent liabilities arising from unconfirmed letters of credit amounting to N23.6 billion (2012:Nil). No provision has been made in these financial statements.

46 Events after the reporting period

There were no events after the reporting date that could have had a material effect on the financial statements of the Group that have not been provided for or disclosed in the financial statements.


31 March 2013

104

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 47 Effects of first time adoption of IFRS - Consolidated statement of comprehensive income for the year ended

31 March 2012 The impact of adopting International Financial Reporting Standards is shown in the reconciliation below: 47.1

Notes Previous

GAAP Correction of

errors

Effect of transition to

IFRSs IFRSs N'000 N'000 N'000 N'000

Revenue 258,268,251 - - 258,268,251 Cost of sales (218,702,439) 142,709 - (218,559,730)

Adjustment on inventories

142,709 Gross profit

39,565,812 142,709 - 39,708,521

Distribution and selling expenses

(7,513,409) (7,513,409)

Administrative expenses

(13,668,845) (332,107) (14,000,952) Adjustment of preoperational expenses 8 (157,919) Fair value adjustment on inventories

(56,444)

adjustment for retirement benefit obligation 22 (117,744)

Other operating income

2,831,037 (234,528) 2,596,509 Reclassification of interest income 20 (520,125) Release of deferred income on loans 12 285,597

Operating profit

21,214,595 142,709 (566,635) 20,790,669

Investment income

1,852,806 - 520,125 2,372,931 Reclassification of interest income 21 520,125

Finance cost (8,151,393) - (341,819) (8,493,212)

Adjustment for under-accrual of interest on bond 15 - (163,446) Adjustment for under-accrual of interest on loans 13 - (176,831) Amortization of upfront fees on loans 6 - (1,542)

Share of year loss in associated Company (2,867,227) - (2,867,227) Dividend received from related Company - Profit before tax 12,048,781 142,709 (388,329) 11,803,161 Income tax expenses (3,672,125) (369,407) (4,041,532)

Tax adjustment (369,407)

Profit for the year 8,376,656 (226,698) (388,329) 7,761,633

Other comprehensive income for the year - - 385,086 385,086 Adjustment for actuarial gain - - 385,086 -

Total comprehensive income 8,376,656 (226,698) (3,243) 8,146,715

Total comprehensive income attributable to: Owners of the Company 7,703,073 (222,930) 64,206 7,544,349

Non-controlling interest 673,583 (3,768) (67,449) 602,366 NCI share of IFRS impact on SCI 12,13,6 - 0 (105,117) - Tax adjustment (3,768) - NCI share of IFRS impact on OCI 37,668

8,376,656 (226,694) (3,243) 8,146,715


31 March 2013

105

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 Effects of first time adoption of IFRS - Company Income Statement for the year ended as at 31 March 2012 The impact of adopting International Financial Reporting Standards is shown in the reconciliation below:

Year ended 31/03/2012

47.2

Notes Previous

GAAP


IFRSs IFRSs N'000 N'000 N'000 Revenue 183,402,710 183,402,710 Cost of sales (162,714,347)

(162,714,347)

Adjustment of production cost 11 Gross profit 20,688,363 20,688,363 Other operating income 1,248,197 (520,125) 728,072

Reclassification of interest income 20 (520,125) Selling and distribution expenses (1,342,839) (1,342,839) Administrative expenses (6,064,383) 245,850 (5,818,533)

Adjustment for retirement benefit obligation 22 245,850 Operating profit 14,529,338 (274,275) 14,255,063

Investment income 1,832,543 1,105,657 2,938,200 Reclassification of interest income 20 520,125

Reclassification of dividend income 20 585,532

Dividend received from related companies 585,532 (585,532) - Reclassification of dividend income 20 (585,532)

Finance cost (5,570,280) (163,446) (5,733,726) Adjustment for under-accrual of interest on

bond 15 (163,446) Profit before tax 11,377,133 82,404 11,459,537 Income tax expenses (2,480,415) (778,664) (3,259,079)

Deferred tax adjustment (778,664) Profit for the year 8,896,718 82,404 8,200,458 Other comprehensive income for the year 217,062 217,062

Adjustment for actuarial gain 217,062

Total comprehensive income 8,896,718 299,466 8,417,520


31 March 2013

106

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 Effects of first time adoption of IFRS - Group Financial Position as at 31 March 2012

The impact of adopting International Financial Reporting Standards is shown in the reconciliation below:

Notes Previous

Correction of errors

Effect of transition

47.3 Group GAAP GAAP to IFRSs IFRSs N'000 N'000 N'000 N'000 Property, plant and equipment

103,744,041 8,450,368 112,194,409

Reclassification of deposit for assets 1 5,780,777 Reclassification of computer software 2 (49,579) Adjustment of preoperational expenses 8 2,201,996 Adjustment for under-accrual of interest

52,172

Reclassification of goods in transit 1 465,002

Intangible assets

1,104,597 1,104,597 Reclassification of computer software 2 49,579 Adjustment on goodwill

(318,213)

Reclassification of deferred charges , goodwill and trade mark 2 1,373,231

Investment in associates

1,391,674 1,391,674

Other investments

25,008 389,190 414,198 Reclassification of long term loan receivable 4 389,250 Impairment of other investments 5 (60)

Deferred charges

441,290 (441,290) - Reclassification of deferred charges 2 (441,290)

Trademarks

30,000 (30,000) - Reclassification of trade mark 2 (30,000)

Goodwill on acquisition

901,941 (901,941) - Reclassification of goodwill 2 (901,941)

Long-term loans receivable

18,967,834 (389,250) 18,578,584 Reclassification of long term loan receivable 4 (389,250)

Deposit for shares

2,194,171 2,194,171 Reclassification of deposit for shares 3 2,194,171


125,501,787

10,375,845 135,877,633

Inventories

50,565,385 251,026 (538,956) 50,277,454 Reclassification of goods in transit 1 (465,002) Adjustment on inventories

251,026

Fair value adjustment

(73,954)

Trade debtors

8,173,480 (8,173,480) - Reclassification of trade debtors 7 (8,173,480)

Amount due from related companies

1,355,402 1,355,402

Other debtors and prepayments

21,022,177 (21,022,177) - Reclassification of other debtors and prepayments 7 (21,022,177)

Trade and other receivables

- 17,425,461 17,425,461 Reclassification of trade debtors 7 8,173,480 Reclassification of other debtors and prepayments 7 21,022,177 Reclassification of deposit for shares 3 (2,194,171) Adjustment of preoperational expenses 8 (2,423,145) Reclassification of deposit for assets 1 (5,780,777) Reclassification of capital work in progress 1 Reclassification of prepayments 9 (1,372,103)

Other assets

1,402,967 1,402,967 Reclassification of prepayments 9 30,864 Reclassification of prepayments 9 1,372,103

Cash and cash equivalents 26,239,138 26,239,138

Total current assets 107,355,582 251,026 (10,906,185) 96,700,423

Total assets 232,857,369 251,026 (530,340) 232,578,054


31 March 2013

107

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 47.3

Group continued

Notes Previous



GAAP GAAP to IFRSs IFRSs N'000 N'000 N'000 N'000 Equity and Liabilities

Capital and reserves

Share capital 1,167,388 1,167,388 Share premium 33,526,369 33,526,369 Capital reserve 8,730,525 8,730,525 Revaluation reserve 960,784 (960,784) -

Reclassification of revaluation reserve (960,784)

Retained earnings 32,815,733 (114,609) 530,046 33,231,169 Impairment of other investments 5 (60)

Restatement of prior period upfront fees on bond 10 807,838 Adjustment for under-accrual of interest on bond 15 (163,446) Restatement of prior period adjustment of under

accrual of interest 19 (18,615) Adjustment on inventories

251,026


(73,954) Adjustment on goodwill

(318,213)

Current tax adjustment

(221,393) Deferred tax adjustment

(144,243)

Reclassification of revaluation reserve

960,784 Prior period adjustment for retirement benefit

obligation 22 (869,971) adjustment for retirement benefit obligation 22 345,533

Adjustment of production cost 11 Restatement of prior period release of deferred

income on loans 12 74,528 Release of deferred income on loans 12 229,768

Adjustment of preoperational expenses 8 (221,149) Restatement of prior period adjustment for under-

accrual of interest on loans 13 (90,789) Adjustment for under accrual of interest on loans 13 (132,207)

Attributable to equity holders of the parent

77,200,799 (114,609) (430,738) 76,655,451

Non-controlling interests

5,140,013 (3,768) (77,449) 5,058,796 Release of deferred income on loans 12 55,829

Adjustment for under accrual of interest on loans 13 (44,624) Prior period adjustment for retirement benefit

obligation 22 (1,362) Adjustment for retirement benefit obligation 22 (78,191)

Current tax adjustment

(2,281) Deferred tax adjustment

(1,486)

Restatement of prior period release of deferred income on loans 12 31,005

Restatement of prior period adjustment for under-accrual of interest on loans 13 (40,106)

Total equity

82,340,812 (118,377) (508,187) 81,714,247


31 March 2013

108


Group continued

Notes Previous



GAAP GAAP to IFRSs IFRSs N'000 N'000 N'000 N'000 Non-current liabilities

Borrowings

28,832,933 (1,751,928) 27,081,005

Adjustment for under accrual of interest on loans 13 229,003 Restatement of prior period adjustment for under-

accrual of interest on loans 13 130,895 Adjustment for loan restructuring

(34,131)

Recognition of deferred income on loans 12 (2,077,695)

Unsecured fixed rate bond

33,750,000 (3,744,954) 30,005,046 Restatement of prior period upfront fees on bond 10 (807,838)

Reclassification of current portion of long term loan 17 (4,512,329) Restatement of prior period adjustment of under

accrual of interest 20 18,615 Adjustment for under-accrual of interest on bond 15 163,446

Reclassification of interest accrual on bond based on contractual interest rate 15 1,393,151 85,975

Deferred income

1,401,512 1,401,512 Reclassification of current portion of deferred

income 12 (319,184) Adjustment for loan restructuring

34,131

Recognition of deferred income on loans 12 2,077,695 Restatement of prior period release of deferred

income on loans 12 (105,533) Release of deferred income on loans 12 (285,597)

Deferred tax liabilities

9,288,226 145,729 9,433,955 Deferred tax adjustment

145,729

Retirement benefit obligation

3,821,761 603,991 4,425,752 Prior period adjustment for retirement benefit

obligation 23 871,333 adjustment for retirement benefit obligation 23 (267,342)


75,692,920 - (3,491,379) 72,347,270


31 March 2013

109


Group continued

Note Previous



GAAP GAAP to IFRSs IFRSs N'000 N'000 N'000 N'000 Current liabilities

Trade creditors

8,668,244 (8,668,244) -

Reclassification of trade creditors 18 (8,668,244)

Bank overdraft

33,643,108 (33,643,108) - Reclassification of overdrafts 17 (33,643,108)

Borrowings

7,328,422 32,322,567 39,650,989 Reclassification of interest accrual on bond based

on contractual interest rate 15 (1,393,151) Reclassification of accrued interest on other

borrowings 21 72,610 Reclassification of overdrafts 17 33,643,108

Amount due to related companies

461 461


3,750,000 4,512,329 8,262,329 Reclassification of current portion of long term loan 17 4,512,329

Deferred income

319,184 319,184 Reclassification of current portion of deferred

income 12 319,184

Other creditors and accruals

17,125,599 (17,125,599) - Reclassification of other creditors and accruals 18 (17,125,599)

Trade and other payables

25,182,057 25,129,989 Reclassification of other creditors and accruals 18 17,125,599

Reclassification of trade creditors 18 8,668,244 Adjustment of production cost 11

Reclassification of prepayments 9 30,864 Reclassification of provision 14 (9,590) Reclassification of provision 14 (511,577) Reclassification of provision 14 (5,479) Reclassification of provision 14 (34,017)

Reclassification of accrued interest on other borrowings 21 (72,610)

Reclassification of provision 14 (9,377)

Provisions

570,040 570,040 Reclassification of provision 14 9,590 Reclassification of provision 14 511,577 Reclassification of provision 14 5,479 Reclassification of provision 14 34,017 Reclassification of provision 14 9,377

Current tax liabilities

4,115,862 223,674 - 4,339,540 Current tax adjustment

223,674

Dividend payable

191,941 191,941

Total current liabilities

74,823,637 - 3,469,226 78,516,537

Total liabilities

150,516,557 - (22,153) 150,863,807 Total equity and liabilities

232,857,369 (118,377) (530,340) 232,578,054


31 March 2013

110


Effects of first time adoption of IFRS - Company Financial Position as at 31 March 2012 The impact of adopting International Financial Reporting Standards is shown in the reconciliation below:

Previous GAAP N'000


IFRSs N,000

Note IFRSs

47.4 N'000 Non-current assets

Property, plant and machinery 46,868,263 334,508 47,202,771 Reclassification of goods in transit 1 352,293 Reclassification of computer software 2 (17,785)

Intangible assets 17,785 17,785 Reclassification of computer software 2 17,785

Investments in subsidiaries 3,020,575 3,020,575 Investments in associated company 19,076,773 19,076,773 Other investments 25,008 389,190 414,198

Reclassification of long term loan receivable 4 389,250 Impairment of other investments 5 (60)

Long-term loans receivable 18,967,834 (389,250) 18,578,584 Reclassification of long term loan receivable 4 (389,250)

Deposit for shares 2,194,172 2,194,171 Reclassification of deposit for shares 3 2,194,172

87,958,453 2,546,405 90,504,858 Current assets Inventories 26,627,282 (352,293) 26,274,989

Reclassification of goods in transit 1 (352,293) Trade debtors 4,360,230 (4,360,230) -

Reclassification of trade debtors 7 (4,360,230) Amount due from related companies 23,744,496 (23,744,496) -

Reclassification of due from related companies 7 (23,744,496) Other debtors and prepayments 9,385,460 (9,385,460) -

Reclassification of debtors and prepayments 7 (9,385,460) Trade and other receivables 34,669,075 34,669,075

Reclassification of deposit for shares 3 (2,194,172) Reclassification of trade debtors 7 4,360,230 Reclassification of due from related companies 7 23,744,496 Reclassification of debtors and prepayments 7 9,385,460 Reclassification of prepayments 9 (626,939)

Other assets 657,803 657,803 Reclassification of prepayments 9 30,864 Reclassification of prepayments 9 626,939

Bank deposits, balances and cash 20,433,020 20,433,020 84,550,488 (2,515,601) 82,034,887

Total assets 172,508,941 30,804 172,539,746


31 March 2013

111


Previous GAAP N'000


IFRSs N,000 47.4 (continued) Note IFRSs Equity and Liabilitie s Capital and reserves Share capital 1,167,388 1,167,388 Share premium 33,526,369 33,526,369 Capital reserve 4,325,000 4,325,000 Revaluation reserve 822,554 (822,554) -

Reclassification of revaluation reserve (822,554) Retained earnings 40,175,190 845,584 41,020,774

Impairment of other investments 5 (60) Adjustment of production cost 11

Deferred tax adjustment (316,732) Reclassification of revaluation reserve 822,554

Adjustment for under-accrual of interest on bond 15 (163,446) Restatement of prior period upfront fees on bond 10 807,838

Prior year adjustment for retirement benefit obligation 22

(748,862) Adjustment for retirement benefit obligation 22

462,912

Restatement of prior period adjustment of under accrual of interest 19 (18,615)

80,016,501 23,030 80,039,531 Non-current liabilities Borrowings 276,066 276,066

Unsecured fixed rate bond 33,750,000 (3,744,954) 30,005,046 Reclassification of current portion of long term loan 17 (4,512,329)

Reclassification of interest accrual on bond based on contractual interest rate 15 1,393,151

Adjustment for under-accrual of interest on bond 15 163,446 Restatement of prior period upfront fees on bond 10 (807,838)

Restatement of prior period adjustment of under accrual of interest 19 18,615

Deferred tax liabilities 7,141,251 316,732 7,457,983 Deferred tax adjustment 316,732

Retirement benefit obligation 2,298,296 285,950 2,584,246 Prior year adjustment for retirement benefit obligation 22 748,862

Adjustment for retirement benefit obligation 22 (462,912)

43,465,613 (3,459,004) 40,323,341 Current liabilities Borrowings 21,925,632 (1,393,151) 20,808,547

Reclassification of interest accrual on bond based on contractual interest rate 15 (1,393,151)

Unsecured fixed rate bond 3,750,000 4,512,329 8,262,329 Reclassification of current portion of long term loan 17 4,512,329

Trade creditors 5,506,907 (5,506,907) - Reclassification of trade creditors 18 (5,506,907)

Other creditors and accruals 13,414,121 (13,414,121) - Reclassification of other creditors and accruals 18 (13,414,121)

Amount due to subsidiary companies 885,105 (885,105) - Reclassification of due to subsidiary companies 18 (885,105)

Provisions 9,590 9,590 Reclassification of provisions 14 9,590

Trade and other payables 19,827,411 19,827,411 Reclassification of prepayments 9 30,864

Reclassification of trade creditors 18 5,506,907 Reclassification of other creditors and accruals 18 13,414,121

Reclassification of due to subsidiary companies 18 885,105 Adjustment of production cost 11 Reclassification of provisions 14 (9,590)

Taxation 3,353,121 3,353,121 Dividend payable 191,941 191,941

49,026,827 3,150,046 52,176,873

Total liabilities 92,492,440 (308,958) 92,500,214

Total equity and liabilities 172,508,941 (285,928) 172,539,746


31 March 2013

112

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 Effects of first time adoption of IFRS - Group statement financial position as at 1 April 2011


47.5 Group

Note Previous Corre ction of

errors Effect of

transition GAAP GAAP to IFRSs IFRSs N'000 N'000 N'000 N'000 Property, plant and equipment

71,801,682 1,524,732 73,326,414

Reclassification of capital work in progress 1 Reclassification of computer software 2 (43,178) Adjustment of preoperational expenses 8 723,982 Reclassification of goods in transit 1 843,928

Intangible assets

1,336,422 1,336,422 Reclassification of computer software 2 43,178 Correction of error

(318,213)

Reclassification of deferred charges , goodwill and trade mark 2 1,611,457

Investment in associates

4,258,901 4,258,901 Other investments

43,068 389,190 432,258

Reclassification of long term loan receivable 4 389,250 Impairment of other investments 5 (60)

Deferred charges

464,516 (464,516) - Reclassification of deferred charges 2 (464,516)

Trademarks

245,000 (245,000) - Reclassification of trade mark 2 (245,000)

Goodwill

901,941 (901,941) - Correction of error

Reclassification of goodwill 2 (901,941)


10,902,390 (389,250) 10,513,140 Reclassification of long term loan receivable 4 (389,250)


88,617,498

1,249,637 89,867,135

Inventories

46,634,442 108,317 (861,438) 45,881,322 Reclassification of goods in transit 1 (843,928) Adjustment on inventories

108,317


(17,510)

Trade debtors

8,623,747 (8,623,747) - Reclassification of trade debtors 7 (8,623,747)

Amount due from related companies

3,129,324 3,129,324 Other debtors and prepayments

7,380,475 (7,380,475) -

Reclassification of other debtors and prepayments 7 (7,380,475)

Trade and other receivables

- 13,326,535 13,326,535 Reclassification of trade debtors 7 8,623,747 Reclassification of other debtors and prepayments 7 7,380,475 Adjustment of preoperational expenses 8 (787,211) Reclassification of capital work in progress 1 Reclassification of prepayments 9 (1,890,476)

Other assets

1,892,018 1,892,018 Reclassification of prepayments 9 1,890,476 Reclassification of upfront fees on loan 6 1,542

Cash and cash equivalents 8,876,377 8,876,377

Total current assets 74,644,365 108,317 (1,647,106) 73,105,576

Total assets 163,261,863 108,317 (397,471) 162,972,710


31 March 2013

113


Note Previous



GAAP GAAP to IFRSs IFRSs N'000 N'000 N'000 N'000 Equity and Liabilities

Capital and reserves

Share capital 939,605 939,605 Share premium 5,866,676 5,866,676 Capital reserve 4,405,525 4,405,525 Revaluation reserve 835,648 (835,648) -

Reclassification of revaluation reserve (835,648)

Retained earnings 33,175,841 108,317 340,706 33,624,862 Impairment of other investments 5 (60)

Adjustment of upfront fees on loan 6 1,080 Correction of error

(318,213)


835,648 Adjustment on inventories

108,317


(17,510) Adjustment of upfront fees on loan 6 807,838

Adjustment for under-accrual of interest on bond 15 (18,615) Adjustment for retirement benefit obligation 23 (869,971)

Adjustment for under-accrual of interest on loans 13 (90,789) Release of deferred income on loans 12 74,528

Adjustment of preoperational expenses 8 (63,230)

Attributable to equity holders of the parent 45,223,295 108,317 (494,942) 44,836,670

Non-controlling interests 4,772,139 (10,000) 4,762,139 Adjustment of upfront fees on loan 6 463

Adjustment for under-accrual of interest on loans 13 (40,106) Release of deferred income on loans 12 31,005

Adjustment for retirement benefit obligation 22 (1,362)

Total equity 49,995,434 108,317 (504,943) 49,598,808

Non-current liabilities

Borrowings 8,419,232 (955,542) 7,463,690 Reclassification of current portion of long term loan 17 (385,756)

Adjustment for under-accrual of interest on loans 13 130,895 Recognition of government grant on loans 12 (700,681)

Unsecured fixed rate bond 37,500,000 (3,889,052) 33,610,948

Reclassification of accrued interest on bond 15 1,412,500 Reclassification of current portion of long term loan 17 (4,512,329)

Adjustment on upfront fees on bond 6 (807,838) Adjustment for under-accrual of interest on bond 15 18,615

Deferred income 470,795 470,795 Recognition of government grant on loans 12 700,681

Release of deferred income on loans 12 (105,533) Reclassification of current portion of deferred income 12 (124,353)

Deferred tax liabilities 7,555,668 7,555,668

Retirement benefit obligation 3,553,061 871,333 4,424,394 Adjustment for retirement benefit obligation 22 871,333

Total non -current liabilities 57,027,961

(3,502,466) 53,525,495


31 March 2013

114


Note Previous



GAAP GAAP to IFRSs IFRSs N'000 N'000 N'000 N'000 Current liabilities

Trade creditors 7,637,359 (7,637,359) 8,259,343 Reclassification of trade debtors 18 (7,637,359)

Bank overdrafts 9,855,586 (9,855,586) - Reclassification of overdrafts 17 (9,855,586)

Borrowings 6,880,745 10,285,642 17,166,387 Reclassification of current portion of long term loan 17 385,756

Reclassification of overdrafts 17 9,855,586 Reclassification of accrued interest on other borrowings 21 44,300

Amount due to related companies 8,491 8,491

Unsecured fixed rate bond 4,512,329 4,512,329 Reclassification of current portion of long term loan 17 4,512,329

Other creditors and accruals 23,516,680 (23,516,680) - Reclassification of other creditors and accruals 18 (23,516,680)

Deferred income

124,353 124,353 Reclassification of current portion of deferred income 12 124,353

Trade and other payables

29,578,872 29,578,872 Reclassification of other creditors and accruals 18 23,516,680

Reclassification of trade debtors 18 7,637,359 Reclassification of accrued interest on other borrowings 21 (44,300)

Reclassification of accrued interest on bond 15 (1,412,500) Reclassification of provision 14 (22,905) Reclassification of provision 14 (88,665) Reclassification of provision 14 (6,797)

Provisions

118,367 118,367 Reclassification of provision 14 22,905 Reclassification of provision 14 88,665 Reclassification of provision 14 6,797

Current tax liabilities

8,072,666 8,072,666

Dividend payable 266,941 266,941

Total current liabilities 56,238,468 - 3,609,938 59,848,407

Total liabilit ies 113,266,429 - 107,472 113,373,901

Total equity and liabilities 163,261,863 108,318 (397,470) 162,972,711


31 March 2013

115

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 Effects of first time adoption of IFRS - Company statement of financial position as at 1 April 2011


47.6 Company

Note Previous Effect of

transition GAAP to IFRSs IFRSs

N'000 N'000 N'000 Property, plant and equipment

25,702,524 751,991 26,454,515

Reclassification of goods in transit 1 758,072 Reclassification of computer software 2 (6,081)

Intangible assets

- 6,081 6,081 Reclassification of intangible assets 2 6,081

Investment in subsidiaries

3,007,567 - 3,007,567 Investment in associates

19,076,773 - 19,076,773

Other investments

43,068 389,190 432,258 Reclassification of long term loan receivable 4 389,250 Impairment allowance for investments 5 (60)


12,089,910 (726,770) 11,363,140 Reclassification of long term loan receivable 4 (389,250) Reclassification of short-term loan receivable 16 (337,520)

Total no n-current assets

59,919,842 420,492 60,340,334

Inventories

29,370,884 (758,072) 28,612,812 Reclassification of goods in transit 1 (758,072)

Trade debtors 7 6,166,901 (6,166,901) - Amount due from related companies 7 12,174,357 (12,174,357) - Other debtors and prepayments 7 4,040,755 (4,040,755) - Trade and other receivables

- 21,799,693 21,799,693

Reclassification of trade and other receivables 7 22,382,013 Reclassification of prepayments 9 (582,320)

Short-term loans receivable

- 337,520 337,520 Reclassification of short-term loan receivable 16 337,520

Other assets

582,320 582,320 Reclassification of prepayments 9 582,320

Cash and cash equivalents

5,057,755 - 5,057,755

Total current ass ets

56,810,652 (420,552) 56,390,100

Total assets

116,730,494 (60) 116,730,434

Equity and Liabilities Capital and reserves

Share capital

939,605 - 939,605 Share premium

5,866,676 - 5,866,676

Capital reserve

- - - Revaluation reserve

822,554 (822,554) -


(822,554) Retained earnings

34,434,953 1,324,785 35,759,738

Impairment allowance for investments 5 (60) Reclassification of revaluation reserve

822,554

Adjustment of upfront fees 6 807,838 Deferred tax adjustment

461,931

Adjustment for retirement benefit obligation 22 (748,862) Adjustment for under-accrual of interest on bond 15 (18,615)

Attributable to equity holders of the parent

42,063,788 1,324,785 42,566,019 Non-controlling interests

- -

Total equity

42,063,788 1,324,785 42,566,019


31 March 2013

116


Non-current liabilities

Term loans

385,756 (385,756) - Reclassification of short term portion of loans 17 (385,756)


37,500,000 (3,889,051) 33,610,949 Adjustment of upfront fees 6 (807,838)

Adjustment for under-accrual of interest on bond 15 18,615 Reclassification of accrued interest 15 1,412,500

Reclassification of current portion of fixed rate bond 17 (4,512,329)

Deferred tax liabilities

4,769,907 (461,931) 4,307,976 Deferred tax adjustment

(461,931)

Retirement benefit obligation

1,857,858 748,862 2,606,720 Adjustment for retirement benefit obligation 22 748,862


44,513,521 (3,525,945) 40,525,645

Current liabilities

Bank overdraft 17 2,417,283 (2,417,283) - Term loans 17 327,054 (327,054) - Borrowings

- 3,130,093 3,130,093

Reclassification of short term portion of loans 17 3,130,093


- 4,512,329 4,512,329 Reclassification of current portion of fixed rate bond 17 4,512,329

Trade creditors 18 4,812,439 (4,812,439) - Amount due to related subsidiaries 18 1,165,030 (1,165,030) - Other creditors and accruals 18 15,264,302 (15,264,302) - Trade and other payables

- 19,806,366 19,806,366

Reclassification of trade and other payables 18 21,241,771 Reclassification of accrued interest 15 (1,412,500)

Reclassification of provisions 14 (22,905)

Provisions

- 22,905 22,905 Reclassification of provisions 14 22,905

Taxation

5,900,136 - 5,900,136 Dividend payable

266,941 - 266,941

Total current liabilities

30,153,185 3,485,585 33,638,770

Total liabilities

74,666,706 (40,360) 74,164,415

Total equity and liabilities

116,730,494 1,284,425 116,730,434


31 March 2013

117

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 Reconciliation of equity

Group Company

30/03/2012 1/4/2011 30/03/2012 1/4/2011

Note N'000 N'000 N'000 N'000

Total equity under previous GAAP

82,340,812 49,995,434 80,016,501 42,063,788

Allowance for impairment of financial assets 5 (60) (60) (60) (60)

Adjustment for under-accrual of interest on bond 15, 19 (182,061) (18,615) (182,061) (18,615)

Adjustment on upfront fees on bond and other loans 6 807,838 809,380 807,838 807,838

Adjustment on goodwill (318,213) (318,213)

Adjustment for inventories 251,026 108,317

Fair value adjustment on inventories (73,954) (17,510)

Adjustment of preoperational expenses 8 (221,149) (63,230) - -

Current tax adjustment (223,674)

Adjustment on deferred tax (145,729) - (316,732) 461,931

Adjustment for retirement benefit obligation 22 (603,991) (871,333) (285,950) (748,862)

Release of deferred income on loans 12 391,130 105,533 - -

Adjustment for under accrual of interest on loans 13 (307,726) (130,895) - -

Adjustment of production cost 11 - -

Total adjustment to equity

(626,563) (396,625) 23,030 502,231 Total equity under IFRSs

81,714,243 49,598,807 80,039,534 42,566,019

81,714,247 49,598,808 80,039,531 42,566,019


31 March 2013

118

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL ST ATEMENTS FOR THE YEAR ENDED 31 MARCH 2013 Reconciliation of Cashflows Effects of first time adoption of IFRS Cash Flow for the year ended 31 March 2012


Group Company

NGAAP IFRS

IFRS adjusted NGAAP IFRS

IFRS adjusted

31-Mar-12 Reclassification 31-Mar-12 31-Mar-12 Reclassification 31-Mar-12 N'000 N'000 N'000 N'000

Cash flows from operating activities Net cash provided by operating activities 3,770,449 (2,900,674) 6,671,123 847,747 (1,616,327) 2,464,074

Net cash provided by investing activities (46,959,251) 208,036

(47,167,287 (23,027,863) 203,826 (23,231,689)

Net cash provided by financing activities 36,764,041 2,692,638 34,071,403 21,068,615 1,412,501 19,656,114

Net increase in cash and cash equivalents (6,424,761) - (6,424,761) (1,111,501) - (1,111,501)

Cash and cash equivalents at beginning of the year (979,209) - (979,209) 2,640,472 - 2,640,472

Cash and cash equivalents at end of the year (7,403,970) - (7,403,970) 1,528,971 - 1,528,971


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119

Notes to the reconciliations of IFRS financial stat ements with NGAAP 1 Reclassification of deposit for assets/goods in t ransit/capital work in progress

These are items of property, plant and equipment (PPE) (included in inventories and receivables) some of which were in transit and ownership had been transferred to the entity but have been reclassified to property, plant and equipment (PPE) under capital work in progress since they are not available for use. The items will further be reclassified to the appropriate class of property, plant and equipment (PPE) after completion of work for purposes of depreciation.

2 Reclassification of intangible assets

Under NGAAP, cost of software was included in property, plant and equipment. IFRS requires that identifiable non-monetary asset without physical substance be classified as intangible assets and separated from physical assets. Other items such as goodwill, deferred charges and trade mark which were presented individually in the balance sheet under NGAAP are also reclassified to intangible assets for appropriate presentation.

3 Reclassification of deposit for shares

These are deposit for shares in a target company for which the legal formalities have not been concluded and control had not been established. In line with IAS 1:55, these are separately disclosed as a line item in the statement of financial position to enhance users understanding of the financial statements.

4 Reclassification of long term loan receivable

This represents an interest free loan with no stated repayment date granted to ROM Oil which meets the definition of an equity investment, hence is reclassified to other investments.

5 Impairment of other investments

This relates to Maiduguri Flour Mills and Nigeria Cement Company which were impaired because the companies are dormant.

6 Adjustment of upfront fees

Under NGAAP, upfront fees on loans were expensed. The N807 million upfront fees incurred on the bond is is to be included in the amortized cost of the bond. A total of N 7.93 million upfront fees incurred on a floating rate loan granted to BAGCO is reclassified and amortized over the period of the loan on a straight line basis. Thus, N1,542,000 relates to the unamortized portion of the fees as at April 1, 2011.

Restatement of prior period direct costs of bond These are directly attributable used as part of effective interest rate computation. This was reclassified from income in prior period to be amortized over the period of the bond was not effected in 2012 NGAAP financial statements and therefore to ensure that the retained earnings and bond balances are correctly stated, this reclassification is restated in current period.

7 Reclassification of trade and other receivables

These are items which were separately disclosed on the face of balance sheet under NGAAP and have been reclassified to trade and other receivables for better presentation.

8 Adjustment of preoperational expenses

Under NGAAP, preoperational expenses were recognised as assets. Under IFRS, preoperational expenses do not meet the criteria for asset recognition as the benefits have already been consumed. Hence, they are charged to profit or loss in 2012 and retained earnings as at the date of transition.

9 Reclassification of prepayments

Prepayments are not receivables as they will be settled by rendering of services and not by receipt of cash or other financial assets. Hence, the reclassification to enhance presentation of information. The N30.8 million relates to prepaid insurance charged to other payables in the Parent's account under NGAAP. This was reclassified for better presentation of information.

10 Restatement of prior period upfront fees on bond

These are directly attributable costs used as part of the effective interest rate computation. This was reclassified from income in prior period to be amortized over the period of the bond. To ensure that the opening balances of retained earnings and bond agree with the closing balances, this reclassification is restated in current period.

11 Adjustment of production cost


31 March 2013

120

This relates to production costs that were debited to accruals in error in the NGAAP financial statements. This has now been charged to cost of sales in the statement of profit or loss.

12 Recognition of deferred income on BOI loans

Under NGAAP, the government grant element embedded in the BOI loans that were obtained by BAGCO at below market rate was not accounted for. This adjustment relates to the discount on this loan which is deemed to be a government grant which should be recognised as income over the life of the asset financed by the loans. Since the loans were used to finance the acquisition of machineries that were readily available for use, the deferred income is amortized over the tenure of the loans. The current portion of the deferred income is also reclassified to current liabilities.

13 Adjustment for under accrual of interest on BOI loans

Under NGAAP, the interest accrual on the BOI loans was based on the contractual rate. Under IFRS, the interest accrual is based on the imputed market rate which is also the effective interest rate. Thus, this adjustment relates to the additional interest expense arising from the use of the imputed market interest rate/effective interest rate.

14 Reclassification of provisions

In the NGAAP financial statements, amounts provided for restructuring, long service award and leave pay were included as part of trade payables and accruals. Under IAS 37, Provisions should be distinguished from other liabilities such as trade payables and accruals because there is uncertainty about the timing or amount of the future expenditure required in settlement. Therefore, the amount made for provisions has been disclosed on a separate line. IAS 37 states that a provision shall be recognised when; an entity has a present obligation (legal or constructive) as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settee the obligation; and a reliable estimate can be made of the amount of the obligation. The provisions for restructuring, long service award and leave pay meet these criteria, hence the reclassification.

15 Adjustment for under-accrual of interest on bond

This relates to the additional interest expense arising from the use of an effective interest rate in accruing for interest expense as against the use of contractual rate under NGAAP.

16 Reclassification of short-term loan receivable

Included in long term loan receivables are loans totalling N337.52 million which will be recovered within 12 months, and in accordance with IAS 1 - Presentation of Financial Statements, these are required to be classified as current assets.

17 Reclassification of short term portion of loans

Term Loans (of N385.756 million) classified as non-current liabilities have been reclassified into current liabilities (as part of Borrowings) as required by IAS 1 - Presentation of Financial Statements as they will be repaid within 12 months. Furthermore, Bank Overdraft (of N2,417.283 million) and Term Loans classified as current liabilities (of N327.054 million) separately presented in the financial statements under NGAAP have been reclassified to Borrowings. Also the current portion of the unsecured fixed rate bond of N 4,4512.329 million has been recalculated and reallocated to Current Liabilities as the amount due for repayment within 12 months as required by IAS 1 - Presentation of Financial Statements.

18 Reclassification of trade and other payables

Trade creditors, other creditors and accruals and due to related companies, separately presented in the financial statements under NGAAP, have been reclassified as Trade and Other Payables. This is to enhance presentation of information only.

19 Restatement of prior period adjustment of under accrual of interest


31 March 2013

121

This adjustment is restated in the current period to ensure that the opening balances of retained earnings and the bond agree with their closing balances since the adjustment was not posted in the NGAAP financial statements in the prior period.

20 Reclassification of investment income

This relates to investment income included in other operating income. This is disclosed separately to enhance the users understanding of the financial statements and has no financial implication.

21 Reclassification of accrued interest on other bo rrowings This relates to accrued interest reclassified to borrowings for purposes of amortized cost measurement 22 Adjustment for retirement benefit obligation

This relates to the adjustment made on the retirement benefit obligation arising from the actuarial valuation of gratuity.

23 Reclassification of revaluation reserve

Under NGAAP, a revaluation reserve was recognized on the revaluation of property, plant and equipment. Under IFRS, the Group has adopted the cost model for subsequent measurement of property, plant and equipment. Thus, the revaluation reserve is no longer required, hence the reclassification to retained earnings.

24 Fair value adjustment on agricultural produce

Under IAS 41, biological assets are to be measured at fair value less costs to sell up to the point of harvest. Thus, this adjustment relates to the fair value change on harvested biological assets.

25 Adjustment on inventories

Under NGAAP, some directly attributable costs incurred on inventories (i.e. agricultural produce) were not capitalized in error. Thus, this adjustment relates to correction of the error.

26 Deferred tax adjustment This relates to the cumulative impact of IFRS on deferred tax. 27 Adjustment on goodwill

This relates to the correction of an error on the goodwill calculation arising from a prior period business combination.

28 Tax adjustment

In NGAAP, the tax figure relating to Niger Mills was not consolidated in the Group account. Thus, this relates to the correction of an error.

29 Adjustment for loan restructure This relates to an adjustment on loans due to the restructuring of the Group’s borrowings.


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122

CONSOLIDATED STATEMENT OF VALUE ADDED FOR THE YEAR ENDED 31 March 2013 NON IFRS STATEMENT

Group Company

2013

2012

2013

2012

N'000

% N'000

%

N'000

% N'000

%

Turnover 301,941,329 258,268,251 225,629,747 183,402,710 Other income 10,871,994 4,969,440 9,917,821 3,666,273

312,813,323 263,237,691 235,547,567 187,068,983

Less: Bought in materials and services: - Imported (197,070,738) (138,979,150) (165,233,971) (141,950,776) - Local (75,396,586) (92,790,833) (42,757,215) (27,421,629)

Value Added 40,345,999

100 31,467,708 100

27,170,532

100 18,228,108 100

Applied as follows

To pay employees Salaries, wages and other benefits 15,226,452 38 10,070,471 32 9,430,435 35 5,226,372 29

To pay providers of capital Interest payable and similar charges 11,407,268 28 8,493,212 27 8,281,195 30 5,733,726 31

To pay government Taxation 2,487,431 6 2,163,245 7 2,701,699 10 1,436,444 8

To provide for enhancement of assets and growth Deferred taxation 951,329 2 1,878,287 6 1,162,313 4 1,822,635 10 Depreciation 9,471,296 24 8,260,127 26 6,563,656 24 4,008,931 22 Non-controlling Interest 802,223 2 602,366 2 - -

40,345,999

100 30,740,151 100

27,170,532

100 18,228,108 100 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 that retained for future creation of more wealth.


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123

NON IFRS STATEMENT FIVE YEARS FINANCIAL SUMMARY At 31 March COMPANY

IFRS

IFRS

NGAAP

NGAAP

NGAAP 2013

2012

2011

2010

2009

N'000

N'000

N'000

N'000

N'000

Property, plant and equipment 67,031,425 47,202,771 25,702,524 25,553,986 22,129,335 Investments 25,029,663 24,705,717 22,127,408 2,759,993 2,771,993 Other Long term assets 19,882,085 18,596,369 12,089,910 28,922,933 21,374,453 Deferred taxation asset 57,907 Net current assets 27,286,576 29,858,017 26,657,467 5,359,078 4,171,387 Long term loan (30,656,907) (30,281,112) (37,885,756) (21,012,322) (21,734,433) Deferred revenue (1,374,788) - - Deferred taxation liabilities (10,048,033) (7,457,983) (4,769,907) (4,128,134) (3,724,534) Retirement benefit obligation (3,684,408) (2,584,246) (1,857,858) (2,070,751) (2,119,962)

93,523,520

80,039,534

42,063,788

35,384,783

22,868,239

CAPITAL AND RESERVES Share capital 1,192,842 1,167,388 939,605 854,186 854,186 Share premium 36,812,540 33,526,369 5,866,676 5,866,676 5,866,676 Capital reserve 6,557,632 4,325,000 - Revenue reserve 48,960,506 41,020,777 35,257,507 28,663,921 16,147,377

93,523,520

80,039,534

42,063,788

35,384,783

22,868,239

TURNOVER AND PROFIT Turnover 225,629,747 183,402,710 161,796,284 157,094,863 147,388,331

Profit before taxation 11,640,693 11,459,537 14,264,723 19,300,962 3,595,443 Other comprehensive (loss)/ profit 37,466 217,062 - - - Taxation (2,896,246) (3,259,079) (4,168,971) (5,930,231) (1,125,931)

Profit transferred to Revenue reserve 8,782,913

8,417,520

10,095,752

13,370,731

2,469,512

Per share data - (kobo)

Earnings - basic 367 351 537 783 145 Earnings - diluted 367 351 537 783 145 Dividend 200 160 200 200 50 Net assets (Naira) 40 35 22 21 15 Note: 1. Earnings per share are based on profit after taxation and the number of issued and fully paid ordinary

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

end of each financial year.


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124

NON IFRS STATEMENT FIVE YEARS FINANCIAL SUMMARY At 31 March Group

IFRS

IFRS

NGAAP

NGAAP

NGAAP

2013

2012

2011

2010

2009 N'000

N'000

N'000

N'000

N'000

Property, plant and equipment 144,346,381 112,194,408 71,801,682 60,631,911 47,831,394 Investments 21,800,596 22,578,627 4,301,969 240,000 404,500 Deferred taxation asset 311,072 - Other Long term assets 4,820,931 1,104,597 12,513,847 29,552,866 21,937,362 Net (current liabilities)/current assets (5,558,098) 18,183,883 18,405,897 363,305 2,165,947 Long term loan (63,075,142) (57,086,051) (45,919,232) (28,220,786) (27,240,347) Deferred revenue (3,372,148) (1,401,513) - - - Deferred taxation liabilities (10,926,660) (9,433,955) (7,555,668) (5,691,055) (4,431,058) Retirement benefit obligation (4,453,271) (4,425,753) (3,553,061) (3,609,321) (3,509,523)

83,893,661

81,714,243

49,995,434

53,266,920

37,158,275

CAPITAL AND RESERVES Share capital 1,192,842 1,167,388 939,605 854,186 854,186 Share premium 36,812,540 33,526,369 5,866,676 5,866,676 5,866,676 Capital reserve 6,838,833 8,730,525 4,405,525 4,124,324 4,124,324 General reserve 36,134,594 33,231,165 34,011,489 39,006,891 23,340,421 Owners of the Company 80,978,809

76,655,447

45,223,295

49,852,077

34,185,607

Non-controlling interest 2,914,853 5,058,796

4,772,139

3,414,843

2,972,668

83,893,662

81,714,243 49,995,434 53,266,920 37,158,275

TURNOVER AND PROFIT Turnover 301,941,329 258,268,251 238,796,940 206,608,017 180,068,194

Profit before taxation 11,165,431 11,803,161 16,445,415 24,439,549 5,470,455 Other comprehensive (loss)/ profit 35,212 385,086 - - - Taxation (3,438,760) (4,041,532)

(6,995,211)

(7,491,563)

(1,578,701)

Profit after taxation 7,761,883 8,146,715

9,450,204

16,947,986

3,891,754

Non-controlling interest 802,223 602,366 963,269 429,675 76,316

Profit transfer to general reserve 6,959,660 7,544,349 8,486,935 16,518,311 3,815,438

Earnings Basic (kobo) 291 308 452 967 246 Earnings Diluted (kobo) 291 308 452 967 246 Net assets (Naira) 36 43 27 31 24 Note: 1. Earnings per share are based on profit after taxation and the number of issued and fully paid ordinary

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

end of each financial year.


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125

Performance Indicator


31 March 2013

126

SHARE CAPITAL HISTORY OF THE COMPANY

Date Authorised (N=) Issued & Fully Paid-up (N=) Consideration

Increase Cumulative Increase Cumulative

26/09/78 0 15,000,000 8,000,000 15,000,000

26/08/80 10,000,000 25,000,000 0 15,000,000

21/11/80 0 25,000,000 10,000,000 25,000,000 Scrip 2:3

12/11/84 7,500,000 32,500,000 0 25,000,000

16/01/85 0 32,500,000 7,500,000 32,500,000 Scrip 3:10

09/11/93 65,000,000 97,500,000 0 32,500,000

18/02/94 0 97,500,000 65,000,000 97,500,000 Scrip 2:1

03/10/96 152,500,000 250,000,000 0 97,500,000

01/11/96 0 250,000,000 32,500,000 130,000,000 Scrip 1:3

23/11/96 0 250,000,000 65,000,000 195,000,000 Scrip 1:2

16/09/99 100,000,000 350,000,000 0 195,000,000

04/01/00 0 350,000,000 78,000,000 273,000,000 Cash

10/09/02 150,000,000 500,000,000 0 273,000,000

27/02/03 0 500,000,000 91,000,000 364,000,000 Scrip 1:3

04/02/05 0 1,000,000,000 218,400,000 582,400,000 Rights issue 3 for 5

07/09/06 0 1,000,000,000 194,133,334 776,533,334 Scrip 1:3

10/09/08 0 1,000,000,000 854,186,668 854,186,668 Scrip 1:10

21/10/10 0 1,000,000,000 77,653,334 939,605,334 Scrip 1:10

22/06/11 1,000,000,000 2,000,000,000 0 939,605,334

15/02/12 0 2,000,000,000 227,782,666 1,167,388,445 Rights Issue 8 for 33

31/03/13 0 2,000,000,000 25,454,000 1,192,842,445 Share exchange upon BAGCO and Niger Mills Merger


31 March 2013

127


31 March 2013

128


31 March 2013

129


31 March 2013

130


31 March 2013

131


31 March 2013

132


31 March 2013

133


31 March 2013

134


31 March 2013

135


31 March 2013

136


31 March 2013

137

flour mills nigeria annual report 2013

Investor Relations

separate financial statements

separate statements

financial highlights

ifrs statement

board of directors

chairmans statement

flour mills of nigeria

alhaji rabiu