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Centrale Danone
SUMMARY PROSPECTUS
MERGER-ABSORPTION OF FROMAGERIE DES DOUKKALA SA BY
CENTRALE DANONE
Proposed to the Extraordinary General Meetings of Centrale Danone and
Fromagerie des Doukkala SA. scheduled for December 31, 2018
Merger subject to the merger waiver scheme, not giving rise to a capital increase
Advisory Body
APPROVAL OF THE MOROCCAN CAPITAL MARKETS AUTHORITY (AMMC)
In accordance with the provisions of the AMMC circular, delivered in application of Article 14 of the Dahir No.
1-93-212 of September 21, 1993, as amended and supplemented, the original copy of this prospectus has been
approved by the AMMC on December 14, 2018 under reference VI/EM/035/2018.
NET ASSET CONTRIBUTION MAD 435,000,000
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DISCLAIMER
The Moroccan Capital Markets Authority (AMMC) has approved on December 14, 2018 a
Prospectus relating to the merger-absorption of Fromagerie des Doukkala (FDD) by Centrale
Danone. (CDA)
The Prospectus approved by the AMMC is available at any time at the headquarters of Centrale
Danone and of its financial advisor.
The Prospectus is available to the public on the AMMC website, (www.ammc.ma).
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I- Overview of the transaction
1.1 Objective of the transaction:
The aim of the merger is to create a synergy between the organizations and the human, material and
financial resources of FDD and CDA.
The merger will also reduce the operating and management costs of the Companies and will allow for a
more rational use of their resources.
1.2 Characteristics of the transaction:
Principle of the Merger-Absorption
CDA will proceed with the absorption of FDD with effect from December 31, 2018, the date on which
FDD is willing to transfer its assets and liabilities to CDA and to dissolve itself on the date of completion
of the merger-absorption.
Valuation methods used
The Merger will be carried out on the basis of the real value of FDD’s assets and liabilities transferred as
part of the Merger-Absorption.
The following assets: Constructions, technical installations and machinery and tools have been revalued
in relation to their net book value in FDD’s balance sheet as at December 31, 2017, to determine their real
value.
For other assets and liabilities, the real value is considered to be equal to their net book value in FDD
Morocco’s balance sheet as at December 31, 2017.
Designation and valuation of contributions – Compensation terms – Exchange report
Asset contribution (in MAD) 589 502 688.85
Liabilities taken over (in MAD) 154 502 688.85
Net asset contribution (in MAD) 435 000 000.00
Source: Merger Treaty – Centrale Danone
In accordance with the provisions of Article 224 paragraph 3 of Law 17-95 and as soon as CDA holds all
the shares representing 100 % of the share capital of FDD on the Date of Completion, the Merger will not
give rise to an exchange of FDD shares for CDA shares.
Accounting for contributions – Merger premium
FDD’s net asset contribution, which corresponds to the participation of CDA in the share capital of FDD,
will have as accounting counterpart in CDA’s entries the cancellation of the equity interests that the latter
holds in the share capital of FDD and the recognition of a merger premium of MAD 240 000 100.00 which
will correspond to the difference between FDD’s net asset contribution and the net book value of FDD’s
equity interests as at December 31, 2017 (435 000 000.00 – 194 999 900.00).
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Dissolution of FDD
As a result of the universal transfer of its assets to CDA, FDD will be dissolved as of right solely on the
basis of the final completion of the Merger.
Valuation method adopted for FDD
The following table shows a summary of the valuation methods adopted by the accounting firm Hdid
Consultants and their weighting:
In thousands of MAD Weighting Value in
thousands of MAD
Valuation according to the DCF method 50% 492 008
Valuation according to the « yield value » method 50% 378 077
Final valuation adopted 435 0001
Source: Valuation report – Hdid Consultants
Expected asset transfer
FDD’s expected asset contribution to CDA includes as at December 31, 2017, the date of FDD’s reference
financial statements, the following designated and valued assets, rights and securities (in MAD) :
Asset items to be contributed
Net book value as at December 31,
2017
(In MAD)
Transfer value
(In MAD)
Intangible assets
Patents, trademarks, rights and similar assets 194 535.21 194 535.21
Goodwill 312 747 749.51
Other intangible assets
Land
Buildings 28 245 878.06 28 410 000.00
Technical installations, machinery & tools 65 716 757.57 97 267 850.00
Office furniture and miscellaneous fittings 384 295.59 384 295.59
Tangible assets under construction 12 263 959.11 12 263 959.11
Financial assets 129 394.30 129 394.30
Inventory 49 671 688.51 49 671 688.51
Current assets receivables 87 851 668.69 87 851 668.69
Investment securities
Currency translation differences - Assets 473 259.17 473 259.17
Cash and cash equivalents - Assets 108 288.76 108 288.76
Total assets 245 039 724.97 589 502 688.85 Source: Merger Treaty – Centrale Danone
The total expected asset contribution of FDD to CDA amounts to MAD 589 502 688.85.
Expected liability transfer
FDD’s liabilities that are expected to be transferred to CDA include the following designated and valued
debts and other liabilities (in MAD):
1 Rounded value
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Liabilities items taken over
Net book value as at December
31, 2017
(In MAD)
Transfer value
(In MAD)
Regulated provisions 18 169 359.43 18 169 359.43
Financial debts 0 0
Current liabilities (current account) 76 687 652.67 76 687 652.67
Accruals and deferred income 0 0
Other provisions for liabilities and
charges 1 091 292.16 1 091 292.16
Currency translation differences 10 311.84 10 311.84
Shareholders-dividends payable (*) 50 000 000.00 50 000 000.00
Cash liabilities 8 544 072.75 8 544 072.75
Total liabilities 154 502 688.85 154 502 688.85 Source: Merger Treaty – Centrale Danone
Thus, the total amount of FDD's liabilities, which are expected to be transferred to CDA, amounts to
MAD 154 502 688.85.
(*)Dividends distributed at FDD’s annual general meeting held on June 13, 2018.
Net asset contribution
On the basis of the above, it follows that FDD’s net asset contribution to CDA amounts to (in MAD):
Asset contribution (In MAD) 589 502 688.85
Liabilities taken over (In MAD) 154 502 688.85
Net asset contribution (In MAD) 435 000 000. 00
Source: Merger Treaty – Centrale Danone
As a result of the foregoing, the net asset value of the contribution made by FDD to CDA as part of the
Merger amounts to MAD 435 000 000.00.
Off-balance sheet commitments expected to be transferred
It is specified that CDA will assume all the commitments that FDD may have made and which, because
they are contingent in nature, are included under the "off-balance sheet" item.
Financial commitments received to be
transmitted excluding leasing transactions
Value (in MAD)
Deposits and guarantees
Other commitments given 35 000 000.00
Source: Statutory auditors' report of FDD – 12/31/2017
The amount of off-balance sheet commitments received by FDD, which are expected to be transferred, is
estimated at MAD 35 million.
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Ownership and use of the property transferred by FDD
• CDA will own and use FDD’s assets and rights, including those that have been omitted, either herein or
in its accounts, from the Date of Completion of the Merger.
• As from that date, CDA will be subrogated purely and simply, in general, to all the rights, shares,
obligations and commitments of FDD.
General terms and conditions of the Merger-Absorption
• CDA will be purely and simply substituted in all FDD's rights and obligations (including off-balance sheet
commitments given and received).
• CDA will take the goods transferred by FDD in the condition in which they are found on the Date of
Completion of the Merger, without being able to exercise any recourse against FDD, for any reason
whatsoever and in particular for construction defects, wear and tear or poor condition of the installations,
furniture and machinery or tools transferred, error in the designation and capacity of the goods, regardless
of their importance.
• CDA will take, as the case may be, the equity interests and other securities transferred, and the rights that
FDD holds in any legal entity whatsoever, in the state in which they are on the Date of Completion of the
Merger.
• As previously indicated, FDD’s contributions are granted and accepted in return for the payment by CDA
in lieu of FDD, of all the liabilities of the latter, as set out above, as such liabilities will exist on the Date
of Completion of the Merger, as well as the liabilities that would not have been recognized and transferred
under this act, and the liabilities, having a cause existing prior to December 31, 2017, but which would be
disclosed after the Date of Completion of the Merger.
• CDA will carry the burden of any guarantees that may have been provided with respect to the liabilities
taken over. It will also be required, under the same conditions, to fulfill the commitments for the deposits,
endorsements and guarantees made by FDD, and will benefit from any counter-guarantee and securities
relating to them.
• CDA will continue to carry out FDD's operations, and will execute from the Date of Completion of the
Merger in lieu of FDD, all the responsibilities and obligations relating to the activity of the latter and in
particular, it will take over and continue all past or current banking and financial transactions.
• CDA will execute in lieu of FDD, all treaties, contracts, procurement, agreements, arrangement,
commitments of any kind, entered into with customers, suppliers, staff, creditors, and more generally third
parties having contracted with FDD.
In addition, CDA will take over the commitments made by FDD with regard to the administrations.
CDA will replace FDD in all the rights and obligations under the right of occupancy in any form
whatsoever (lease, rental, domiciliation, etc.) of real estate owned by FDD and will pay the corresponding
rents.
CDA shall be subrogated to all the rights and obligations arising from the acts and agreements defined
above.
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Similarly, CDA will be subrogated to the benefit of all claims included in the contributions made and
especially to the benefits of the deposits, endorsements and guarantees, and any security interests or
personal securities benefiting FDD.
As a result, CDA may also validly release any registrations or publications made in favor of FDD, without
prior modification of the original registration or publication.
• CDA shall have sole possession, as from the Date of Completion of the Merger, of the ownership, and all
related rights, trademarks, domain names and other intellectual property rights belonging to FDD.
Accordingly, as from that date, CDA shall have the sole right to freely use and exploit such trademarks,
domain names and other intellectual property rights throughout the territory in which such intangible
elements are or will be protected, it being specified that CDA shall be substituted and subrogated in all
rights and obligations arising from agreements relating to such intangible elements entered into with third
parties.
• Employment contracts:
In accordance with Law No. 65-99 establishing the Labor Code, all employment contracts in force on the
Date of Completion of the Merger between FDD and its employees will remain between CDA and the
said employees.
CDA will therefore substitute FDD with respect to all benefits and other in kind or in cash charges,
including paid leave, as well as all related social security and tax charges.
• CDA shall have full powers, as from the Date of Completion of the Merger, in particular to initiate or
defend any ongoing or new legal or arbitral proceedings, in lieu of FDD and relating to the assets
transferred, to give all acquiescence to any decisions, to receive or pay all monies owed as a result of
judgments or settlements.
• CDA shall bear and pay, as from the Date of Completion of the Merger, all taxes and duties, insurance
premiums and contributions, as well as all ordinary or extraordinary charges of any kind, whether ordinary
or extraordinary, affecting or likely to affect the property and rights transferred and those which are or
will be inherent in the operation or ownership of the property transferred.
• It shall comply with all laws, decrees, orders, regulations and practices concerning the operations of the
nature of that of which the property transferred is part and shall be personally liable for any authorizations
that may be necessary, all at its own risk.
Conditions precedent
The Merger-Absorption will become final only after the fulfillment of the last of the following suspensive
conditions (the Conditions Precedent):
• The acquisition by CDA of four shares of FDD, which should enable it to hold 100% of the shares making
up the share capital of FDD;
• The approval of the prospectus by the AMMC;
• The approval of the Merger by the Extraordinary General Meeting of FDD;
• The approval of the Merger by the Extraordinary General Meeting of CDA.
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The fulfillment of the Suspensive Conditions shall be sufficiently established, vis-à-vis any person, by all
appropriate means, and in particular by the delivery of copies or certified extracts of the minutes of CDA's
general meeting.
The definitive completion of this merger may be established by any other appropriate means.
Reporting to the statutory auditors
The Extraordinary General Meeting of CDA and the Extraordinary General Meeting of FDD will
deliberate on the basis of the reports of the statutory auditors of each of the companies in accordance with
the provisions of Article 233 of Law 17-95 as amended and supplemented.
In accordance with the provisions of Article 233 of Law No. 17-95, as amended and supplemented, the
merger agreement will be reported to the statutory auditors of CDA and FDD at least 45 days before the
date of the Extraordinary General Meeting of each of the companies called upon to vote on the proposed
merger.
All documents, analysis reports, valuation and expert reports, minutes and other documentation have been
made available to the statutory auditors to facilitate the execution of their tasks.
In accordance with statutory auditors’ reports of each of the companies, prepared as part of the proposed
merger-absorption of FDD by CDA, the statutory auditors have no comments to make on the relevance
of the value attributed to the shares of Fromagerie des Doukkala.
Publication of the merger agreement
The merger agreement has been filed in accordance with the provisions of Article 226 of Law No. 17-95,
as amended and supplemented, with the Registry of the Commercial Court of Casablanca and shall be the
subject of a notice inserted in a newspaper of legal notices and the Official Bulletin. The filing with the
Registry took place on November 19, 2018. The formalities for publication in the Journal of Legal
Announcements and in the Official Bulletin for both companies have been undertaken. The creditors of
the two companies involved in the merger were thus informed of the opening of the opposition period
provided for in Article 239 of Law No 17-95.
1.3 Schedule of the offer:
Steps At the latest on
1 Prospectus approved by the AMMC December 14, 2018
2 Publication of the prospectus extract December 19, 2018
3 Purchase of four shares by CDA December 27, 2018
4 Approval of the merger project by the EGMs of CDA and FDD December 31, 2018
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II- Presentation of Centrale Danone
Centrale Danone is the initiator of the Merger-Absorption transaction. CDA is involved in the entire milk
sector value chain, from the upstream steps of the dairy sector to distribution, including production with
its various treatment, pasteurization, packaging and storage processes.
General overview
Corporate name Centrale Danone SA
Registered office Tour Crystal 1, Boulevard Sidi Mohamed Ben Abdellah,
Marina, Casablanca
Phone +212 5 29 00 23 63
Fax +212 5 29 08 99 11
Website www.centralelaitiere.com
Legal form Public limited company under Moroccan private law with a
Board of Directors
Date of registration in the trade register July 21, 1959
Lifespan of the company 99 years
Trade register Casablanca – 26.977
Financial year From January 1st to December 31st
Share capital as at September 30, 2018 MAD 94,200,000 divided into 9,420,000 shares of MAD 10
each, all of the same class and fully paid up
Access to legal documents
The corporate, accounting and legal documents, which must be
made available to shareholders and third parties in accordance
with the law and the articles of association, can be consulted at
the company's registered office.
Corporate purpose
According to Article 3 of the Articles of Association, the
company's corporate purpose consists of:
▪ in general, to carry out all operations relating to the production,
collection, processing, hygienisation and sale of agricultural
products, in particular those relating to breeding, arboriculture
and viticulture;
▪ more particularly to build, install and operate plants in Morocco
to collect, hygienize, pasteurize and refrigerate by any processes
it deems useful, in particular by using the patents at its disposal,
the milk intended either for sale in its natural state or for the
production of butter, cheese, yoghurt and its processing in all
other forms, including those of the various by-products;
▪ to produce, package, import, distribute, promote and market milk
and processed cereal-based foods, fruits, vegetables, meat or other
preparations for infants and young children;
▪ to collect, store, process and sell fruits, vegetables and their by-
products for consumption in all their various forms;
▪ to produce and sell all ice creams and sorbets as well as edible
ices;
▪ to install and operate any industrial cold chain;
▪ to export, sell and market abroad all the company's products and
all the products related to its activity;
▪ to warrant all products kept in its stores or warehouses;
▪ to transport all food products, especially those requiring special
conditions for their preservation;
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▪ to carry out all maintenance, servicing and repair operations
necessary for the proper functioning of the fleet of vehicles used
for the needs of the company's operations;
▪ to award all contracts, to participate in all tenders and public
supply contracts;
▪ the study, acquisition in all its forms, the contribution, the
disposal and the exploitation or the direct or indirect
representation of all patents, trademarks and processes; licenses,
agencies, exclusive rights, registrations and concessions;
▪ generally, any financial, commercial, industrial, agricultural,
securities or real estate transactions that may be directly or
indirectly related to any of the aforementioned purposes or to any
other similar or related purposes;
▪ it may be directly or indirectly interested by way of contribution,
participation, alliance, merger, subscription, mortgage, purchase
of shares, bonds or any other securities whatsoever, or otherwise
in any company, unions, groups or mediations having a principal
or secondary object similar, analogous or related to its own,
directly or indirectly related to it, or likely to promote, facilitate
or extend its realization;
▪ the company may carry out any operations falling within its
purpose, either alone or on its own account, on behalf of third
parties, or in partnership or association, in any form whatsoever,
or by any other means.
Laws and regulations applicable to Centrale
Danone
The sector in which Centrale Danone operates is governed by
several regulatory texts, including:
▪ with regard to fraud prevention and consumer protection since the
application of the Dahir of October 14 , 1914 on the prevention
of fraud in the sale of goods and the falsification of foodstuffs and
agricultural products until the application of Dahir No. 09-20 of
February 18, 2009 promulgating Law No. 25-08 establishing the
Food Safety Authority and Dahir No. 1-11-03 of February 18,
2011 promulgating Law No. 31-08 on consumer protection
measures;
▪ with regard to antiseptics and food additives, governed essentially
by the Viziriel Decree of February 6, 1916 and its supplements
regulating the use of antiseptic substances, coloring matters and
artificial essences in food and beverages;
▪ with regard to microbiological and physico-chemical standards
governed essentially by the circular of February 1, 1994 on
microbiological criteria for milk and milk products;
▪ with regard to the control of production and marketing governed
by the Viziriel Decree of January 2, 1915 and its supplements
laying down the conditions under which products must be
presented to consumers and ensuring that sales are fair in the
merchandise trade;
▪ with regard to transport, storage and period of validity as from
Decree No 2-97-177 of March 23, 1999 on the transport of
perishable foods;
▪ with regard to health, safety and the environment governed since
1914 by the Dahir of September 7, 1914 and its supplements until
Dahir No. 1-12-25 of August 2, 2012 law No. 23-12 amending
law No. 28-00 on waste management and disposal.
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As a result of its participation in a highly competitive sector and
the impact of its activity on the consumer, Centrale Danone is
subject, in particular, to the legal and regulatory provisions
relating to:
▪ Dahir No. 1-00-255 of June 5, 2000 promulgating law No. 06-99
on freedom of pricing and competition;
▪ Dahir No. 1-11-03 of February 18, 2011 promulgating law No.
31-08 enacting consumer protection measures;
▪ Dahir No. 1-10-08 of Safar 26, 1431 (February 11, 2010)
promulgating Law No. 28-07 on food safety.
By listing its shares on the Casablanca Stock Exchange, Centrale
Danone is subject to all legal and regulatory provisions relating to
the financial market, including:
▪ The General Regulations of the Stock Exchange approved by
Order No. 1268-08 of the Minister of Economy and Finance dated
July 7, 2008, as amended and supplemented by Order No. 1156-
10 of the Minister of Economy and Finance dated April 7, 2010,
as amended and supplemented by Order No. 30-14 of the Minister
of Economy and Finance dated Rabii I 4, 1435 (January 6, 2014),
as amended and supplemented by Order No. 1955-16 of the
Minister of Economy and Finance dated July 4, 2016;
▪ The Dahir providing law No 1-93-211 of September 21, 1993
relating to the Stock Exchange amended and supplemented by
laws No. 34-96, 29-00, 52-01, 45-06, 43-09;
▪ The Dahir providing law No. 35-96, as amended and
supplemented, relating to the establishment of a central securities
depository and a general scheme for account registration of
certain securities;
The General Regulations of the central securities depository
approved by the Minister of Economy and Finance’s Decree No.
932-98 of April 16, 1998 and amended by the Minister of
Economy, Finance, Privatisation and Tourism’s Decree No.
1961-01 of October 30, 2001;
▪ The Dahir providing law No. 1-93-212 of September 21, 1993 as
amended and supplemented;
▪ The General Regulations of the Moroccan Capital Markets
Authority approved by the Minister of Economy and Finance’s
Decree No. 2169-16 of July 14, 2016;
▪ The circular of the AMMC
Competent court
Commercial Court of Casablanca
Applicable tax regime
• The net result from the sales turnover realised in MAD is taxed
at the progressive corporate tax rate:
✓ 10% (0 MAD – 300,000 MAD)
✓ 20% (300,001 MAD - 1,000,000 MAD)
✓ 31% (over 1,000,000 MAD)
With regard to Value Added Tax, the Company is subject to a rate of
20%
Source: Centrale Danone SA
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Information on the share capital
The share capital of Centrale Danone SA is MAD 94 200 000, fully paid up. Gervais Danone is a 99.68%
shareholder and the remaining shares (0.32%) are free float.
Changes in the shareholding structure between 2015 and 2017
Centrale Danone's shareholding structure over the last three financial years and as at September 30, 2018
is as follows:
Shareholders
12/31/2015 12/31/2016 12/31/2017 09/30/2018
Number of % of the Number of % of the Number of % of the Number of % of the
shares share capital and
shares share capital and
shares share capital and
shares share capital and
voting rights voting rights voting rights voting rights
Gervais Danone 9 030 122 95.86% 9 393 615 99.72% 9 389 865 99.68% 9 389 865 99.68%
Free float 389 878 4.14% 26 385 0.28% 30 135 0.32% 30 135 0.32%
Total 9 420 000 100.00% 9 420 000 100.00% 9 420 000 100.00% 9 420 000 100.00%
Source: Centrale Danone SA
13
Composition of Centrale Danone’s Board of Directors
The composition of Centrale Danone SA’s Board of Directors as at November 30, 2018 is as follows:
Source: Centrale Danone SA
Members of the Board of Directors Current position Date of
appointment
Date of the EGM that
ratified the
appointments
Expiry date of the
mandate
Didier LAMBLIN
(intuitu personae) Director 12/14/2015 06/10/2016 12/31/2018
COMPAGNIE GERVAIS DANONE,
[represented by Marina SAGRAMOSO] Director 11/05/2014 12/11/2014 12/31/2019
DANONE SA,
[represented by Frederic LEBLAN] Director 11/05/2014 12/11/2014 12/31/2019
Pierre Jean Marie ARMANGAU
(intuitu personae) Director 03/09/2016 06/10/2016 12/31/2018
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Functional organization chart of the issuer as at October 31, 2018
Organization chart of Centrale Danone SA
Source: Centrale Danone SA
Centrale Danone Business Model as at September 30, 2018
The Centrale Danone group’s business model is fully integrated and is as follows:
BUSINESS MODEL OF CENTRALE DANONE SA AS AT SEPTEMBER 30, 2018
Source: Centrale Danone SA
Denis HERMANT Industrial VP
Didier LAMBLIN Chairman & CEO
Boujemaa IHFA VP of Finance
Oliver Mary VP of Marketing
Nada IHBAN Human Resources
Director
Abdeljalil LIKAIMI VP of Sales
Jalal JAKANI VP Supply Chain
Claude Eric Marc CHOUT R&I Director Morocco and
North Africca
Samia KABBAJ DOUIRI Secretary General
Adil BENKIRANE Director SSD &
Upstream dairy
sector
Hind SLAOUI Quality & Food Safety
Director
Laurent AMMEUX ELN Category
Director
Nawal TAHIRI
Legal & Regulatory
clustercompliance officer
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Change in consolidated sales turnover by business segment
In 2017, Centrale Danone's consolidated turnover stood at MAD 6,519 million.
The change in consolidated sales turnover of Centrale Danone group, by business segment over the last
three financial years and the first semester of 2018, is as follows:
Change in consolidated turnover in MAD millions
Source: Centrale Danone SA
III- Presentation of Fromagerie des Doukkala (FDD)
FDD’s main area of business is the production of processed cheeses (triangle and square) and fresh cheese
spreads (Jben).
General overview
Corporate name Fromagerie des Doukkala
Registered office Marina, Boulevard Sidi Mohamed Ben Abdellah, Tour Crystal 1, 2nd floor
– Casablanca
Phone +212 5 29 00 23 63
Fax +212 5 29 08 99 02
Legal form Public limited company under Moroccan private law with a Board of
Directors
Date of registration in the trade register 1998
Lifespan of the company 99 years
Trade register Casablanca – No. 90987 on January 19, 1998
Financial year From January 1st to December 31st
Share capital
MAD 50,000,000 as at September 30, 2018 (Presence of Class A and B
shares; Either ordinary or preferred Class A shares, offer additional benefits
to their holders such as greater voting rights; a higher dividend priority than
Class B shares).
6 745 6 824 6 519
2 618
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Access to legal documents
The Articles of Association, minutes of General Meetings, Statutory
Auditors' reports, and management reports are available at the company's
registered office.
Corporate purpose
According to Article 3 of the Articles of Association, the company's
corporate purpose consists of:
▪ The manufacture and marketing, import and export of any cheese,
including fresh cheese;
▪ The construction, installation and operation of plants, warehouses
and cold chains for this purpose;
▪ The import and marketing of all food products;
▪ The acquisition in all its forms, the contribution, transfer,
operation, representation of all patents, trademarks, processes,
licenses and exclusivities;
▪ And more generally, all commercial, industrial, financial, movable
and immovable transactions directly or indirectly related to any of
the aforementioned purposes or any similar related purposes.
Laws and Regulations applicable to
Fromagerie des Doukkala
The sector in which Fromagerie des Doukkala operates is governed by
several regulatory texts, including:
▪ in terms of Moroccan cheese standards governed by the texts
published in Official Gazette No. 5844 of June 3, 2010;
▪ in the field of food additives governed essentially by the joint order
of the Ministry of Agriculture and Maritime Fisheries and the
Ministry of Health No. 1795-14 of May 14, 2014 establishing the
list of food additives authorized for use in primary products and
food products, as well as the markings that their packaging must
bear;
▪ in the field of food conservation governed by the joint order of the
Ministry of Agriculture, Rural Development and Water and
Forestry, the Ministry of Maritime Fisheries and the Ministry of
Health No. 440-01 of February 26, 2001 on the period of validity
and storage conditions for certain products;
▪ with regard to the control of the production and marketing of milk
and dairy products governed by Decree No. 2-00-425 of December
7, 2000;
▪ with regard to labelling governed by Order No. 2037-16 of the
Ministry of Agriculture and Maritime Fisheries of July 12, 2016,
laying down the technical procedures for the designation of
ingredients in the labelling of food products;
▪ with regard to nutritional information governed by the joint order
of the Ministry of Agriculture and Maritime Fisheries and the
Ministry of Health No. 281-16 of February 1, 2016 laying down
the requirements for the marking of nutritional information on the
labelling of pre-packaged food products.
▪ with regard to the control of the production and marketing
governed by the Viziriel Decree of January 2, 1915 and these
supplements specifying the conditions under which the products
must be presented to consumers and ensuring fair sale in the trade
of goods;
▪ with regard to transport, storage and period of validity as from
Decree No 2-97-177 of March 23, 1999 on the transport of
perishable foods;
▪ in terms of health, safety and the environment governed since 1914
by the Dahir of September 7, 1914 and these supplements until
Dahir No. 1-12-25 of August 2, 2012 Law No. 23-12 amending
Law No. 28-00 on waste management and their disposal.
As a result of its presence in a highly competitive sector and the impact
of its business on the consumer, Centrale Danone is subject, in
particular, to the legal and regulatory provisions relating to:
▪ Dahir No. 1-00-255 of June 5, 2000 promulgating Law No. 06-99
on freedom of pricing and competition;
▪ Dahir No. 1-11-03 of February 18, 2011 promulgating Law No. 31-
08 enacting consumer protection measures;
17
▪ Dahir No. 1-10-08 of Safar 26, 1431 (February 11, 2010)
promulgating Law No. 28-07 on Food Safety.
Competent court
Commercial Court of Casablanca
Applicable tax regime
• The net result from the sales turnover realised in MAD is taxed at the
progressive corporate tax rate:
✓ 10% (0 MAD – 300,000 MAD)
✓ 20% (300,001 MAD - 1,000,000 MAD)
✓ 31% (over 1,000,000 MAD)
• With regard to Value Added Tax, the Company is subject to a rate of
20%
Source : Centrale Danone SA
Information on the share capital
The share capital of FDD stands at MAD 50,000,000, fully paid up. All the capital is held by CDA.
Changes in the shareholding structure between 2015 and 2017
Fromagerie des Doukkala’s shareholding structure over the last three financial years is as follows:
Shareholders
12/31/2015 12/31/2016 12/31/2017 09/30/2018
Number
of % of
Number
of % of
Number
of % of
Number
of % of
shares
Capital and
voting shares
Capital and
voting shares
Capital and
voting shares
Capital and
voting
rights rights rights rights
Centrale Danone 499 994 99.99 499 996 99.99 499 996 99.99 499 996 99.99
Driss Bencheikh 1 0.0017 1 0.0017 0 0
Jacques Ponty 1 0.0017 0 0 0
Thomas Rondot 1 0.0017 0 0 0
Catherien Lewko 1 0.0017 0 0 0
Filip Kegels 1 0.0017 0 0 0
Cécile Cabanis 1 0.0017 0 0 0
Didier Lamblin 0 1 0.0025 1 0.0025 1 0.0025
Samia Kabbaj
Diouri 0 1 0.0025 1 0.0025 1 0.0025
Boujemaa Ihfa 0 1 0.0025 1 0.0025 1 0.0025
Lait Plus 0 1 0.0025 1 0.0025 1 0.0025
Total 500 000 100% 500 000 100% 500 000 100% 500 000 100%
Source: Centrale Danone SA
18
Composition of the Board of Directors
The composition of FDD's Board of Directors as at September 30, 2018 is as follows:
Source: Centrale Danone S.A.
Management Body of Fromagerie Des Doukkala
Functional organization chart:
The merger is already in effect at the operational level between CDA and FDD with a pooling of support,
purchasing, distribution functions, etc.
FDD's operational organization is supported by a CEO and workers, the other support functions are
carried by CDA. (see: CDA functional organization chart, Prospectus, Part III).
Curriculum Vitae of the main managers
The merger is already in effect at the operational level between CDA and FDD with a pooling of support,
purchasing, distribution functions, etc. There is therefore no functional organization chart for FDD.
Please refer to the curricula vitae of CDA's key executives (see: Prospectus, Part III).
Employee profit-sharing and incentives
There is no employee profit-sharing and incentive scheme within FDD.
Works councils
The merger is already in effect at the operational level between CDA and FDD with a pooling of
support, purchasing, distribution functions, etc. FDD benefits from the same works councils set up by
CDA, composed of the company’s managers and business experts who decide in all areas of the
business with different skill levels. (see: CDA Committee, Prospectus, Part III).
Members of the Board of Directors Current position Date of co-
option
Date of the OGMs
that ratified the co-
options
Expiry date of the
mandate
Centrale Danone,
[represented by Didier Lamblin] Director 02/01/2016 06/30/2016
General Meeting called to
approve the financial
statements for the 2022
financial year
Didier Lamblin
(intuitu personae) Director 02/01/2016 06/30/2016
General Meeting called to
approve the financial
statements for the 2022
financial year
Samia Kabbaj Diouri
(intuitu personae) Director 02/01/2016 06/30/2016
General Meeting called to
approve the financial
statements for the 2022
financial year
Boujemaa Ihfa
(intuitu personae) Director 02/01/2016 06/30/2016
General Meeting called to
approve the financial
statements for the 2022
financial year
19
Business Model of Fromagerie Des Doukkala
Business model of Fromagerie des Doukkala
Source: Centrale Danone SA
IV- Financial Data
CDA’s social balance sheet
The following table details Centrale Danone’s balance sheet items for 2015, 2016, 2017 and the first half
of 2018:
In MAD millions 2015 2016 2017 Var.
16/15 Var. 17/16 H1 2018
Var S1 17/S1
18
Assets
Other assets - - - - - - -
Intangible assets 3 3 3 0% 0% 3 0%
Tangible assets 1 748 1 690 1 639 -3.3% -3% 1 578 -3.7%
Financial assets 589 586 589 -0.5% 0.5% 581 -1.4%
Currency translation differences - - - - - - -
Fixed assets 2 343 2 279 2 231 -2.7% -2.1% 2 163 -3%
Current assets 809 833 654 3% -21.5% 1 007 54%
Inventories 409 341 288 -16.6% -15.5% 635 120.5%
Current asset receivables 398 492 363 23.6% -26.2% 371 2.2%
Securities and investment securities - - - - - - -
20
Currency translation differences 3 1 4 -66.7% >100% 1 -75%
Cash and cash equivalents 62 166 85 >100% -48.8% 52 -38.8%
Total Assets 3 215 3 279 2 970 2% -9.4% 3 222 8.5%
Liabilities
Permanent funding 1 330 1 294 1 327 -2.7% 2.6% 1 232 -7.2%
Shareholders’ equity 813 795 863 -2.2% 8.6% 783 -9.3%
Quasi-equity 516 499 464 -3.3% -7.0% 449 -3.2%
Of which investment grant - - - - - - -
Of which provisions for special
depreciation allowances 516 499 464 -3.3% -7.0% 499 7.5%
Financing liabilities - - - - - - -
Long-term provisions for liabilities and
charges - - - - - - -
Currency translation difference - - - - - - -
Debts on current liabilities 1 071 1 359 1 282 26.9% -5.7% 1 297 1.2%
Other provisions for liabilities and
charges 74 62 118 -16.2% 90.3% 152 28.8%
Translation differences - Liabilities 3 3 0 0.0% -100.0% 3 >100%
Cash liabilities 737 561 242 -23.9% -56.9% 537 >100%
Total Liabilities 3 215 3 279 2 970 2.0% -9.4% 3 222 8.5%
21
CDA’s social income statement
The following table summarizes the historical data from Centrale Danone’s corporate income statement
for the 2015 - H1 2018 period:
In MAD millions 2015 2016 2017 Var. 16/15 Var. 17/16 H1 2017 H1
2018
Var. H1
17/H1 18
Sales of goods (as is) 448 464 469 3,6% 1,1% 222 256 14,9%
Cost of goods sold 500 469 472 -6,4% 0,8% 226 270 19%
Gross margin on as is sales -53 -5 -3 -91% -33,7% -4 -14 >100%
Production for the year 6 383 6 347 5 996 -0,6% -5,5% 3 012 2 402 -20,3%
Sales of goods and services produced 6 379 6 354 5 984 -0,4% -5,8% 3 001 2 356 -21,5%
Change in product inventories 4 -7 13 <-100% <-100% 11 46 >100%
Self-constructed assets - - Ns
Consumption for the year 5 033 4 983 4 800 -1% -3,7% 2 399 2 033 -15,3%
Purchases of materials and supplies 3 907 3 799 3 647 -2,8% -4% 1 839 1 487 -19,1%
Other external charges 1 126 1 185 1 153 5,2% -2,7% 560 546 -2,5%
Added value 1 297 1 359 1 193 1,1% -12,3% 610 354 -39,8%
Operating grants 0 0 Ns
Taxes and duties 46 34 29 -26,9% -14,7% 12 13 8,3%
Personnel charges 736 743 674 0,9% -9,2% 345 329 -4,6%
Gross operating surplus 515 583 490 3,5% -16% 253 12 -89,5%
Other operating income 19 29 45 56,1% 54% 18 68 >100%
Other operating expenses 0 - - -100,0% - - Ns
Resumption of operations, transfer of expenses 37 33 42 -8,6% 25,3% 35 11 -68,6%
Operating provisions 369 345 314 -6,4% -9% 162 183 13%
Operating income 201 300 263 49,5% -12,5% 144 -92 <-100%
Operating margin (operating income/turnover) 2,9% 4,4% 4,1% 1,5pts -0,3 pts 4,5% -3,5% -8 pts
Financial income 12 32 42 >100% 31,7% 58 40 -31,%
Current income 213 332 304 55,9% -8,3% 202 -52 <-100%
Non-current income -15 -194 -100 >100% -48,7% -44 -14 -68,2%
Income tax 106 57 59 -46,0% -0,8% 38 13 -65,8%
Net income for the year 92 80 148 -12,7% 84,2% 120 -80 <-100%
Net margin (NI/turnover) 1,3% 1,2% 2,3% -0,1 pts 1,1 pts 3,7% -3,1% -6,8 pts
22
CDA’s consolidated balance sheet
The following table presents the balance sheet items of the Centrale Danone group over the 2015-H1 2018
period:
In MAD millions 2015 2016 2017 Var.16/15 Var.17/16 H1 2018 Var.
H1.18 / 17
Assets
Goodwill - - - Ns Ns - Ns
Intangible assets, net 0.3 - - -100.0% Ns - Ns
Tangible assets, net 2 589 2 544 2 457 -1.8% -3.4% 2 385 -2.9%
Biological assets 52 52 64 -0.7% 23.1% 67 4.7%
Investment property, net 2 2 2 -12.6% 0.0% 2 0.0%
Investments in equity affiliates - - - Ns Ns - Ns
Other financial assets 5 3 3 -40.0% 0.0% 2 -33.3%
- Derivative hedging instruments - - - Ns Ns - Ns
- Financial assets at fair value through profit or loss - - - Ns Ns - Ns
- Loans and receivables 2 - - -100.0% Ns - Ns
- Held-to-maturity financial assets - - - Ns Ns - Ns
- Available-for-sale assets 3 3 3 -10.5% 0.0% 2 -33.3%
Deferred tax assets 88 90 92 2.7% 2.2% 97 5.4%
Other non-current receivables -10 - - -100.0% Ns 3 Ns
Non-current assets 2 727 2 692 2 618 -1.3% -2.7% 2 557 -2.3%
Other financial assets 16 11 14 -30.1% 27.3% 8 -42.9%
- Derivative hedging instruments 4 - - -100.0% Ns - Ns
- Financial assets at fair value through profit or loss - - - Ns Ns - Ns
- Available-for-sale assets - - - Ns Ns - Ns
- Held-to-maturity financial assets - - - Ns Ns - Ns
- Loans and receivables and investments 12 11 14 -7.2% 27.3% 8 -42.9%
Non-current held-for-sale assets - - - Ns Ns - Ns
Inventories 452 379 352 -16.1% -7.1% 744 >100%
Trade receivables and related accounts 134 190 217 41.7% 14.2% 129 -40.6%
Other accounts receivable 212 295 150 39.2% -49.2% 187 24.7%
Cash and cash equivalents 74 168 93 >100% -44.6% 52 -44.1%
Current assets 887 1 044 827 17.7% -20.8% 1 120 35.4%
Total assets 3 614 3 736 3 445 3.4% -7.8% 3 677 6.7%
23
In MAD millions 2015 2016 2017 Var.16/15 Var.17/16 H1 2018 Var.
H1.18 / 17
Liabilities
Capital 94 94 94 0.0% 0.0% 94 0.0%
Share issue and merger premium - - - Ns Ns - Ns
Reserves 936 887 851 -5.2% -4.1% 974 14.5%
Currency translation differences - - - Ns Ns - Ns
Net income, group share 53 59 115 11.3% 94.9% -115 <-100%
Shareholders’ equity, group share 1 083 1 041 1 061 -3.9% 1.9% 953 -10.2%
Minority interests - - - Ns Ns - Ns
Shareholders’ equity of the consolidated group 1 083 1 041 1 061 -3.9% 1.9% 953 -10.2%
Provisions 5 7 8 40.0% 14.3% - -100.0%
Employee benefits 244 247 243 1.2% -1.6% 228 -6.2%
Non-current financial debts 41 50 79 22.0% 58.0% 80 1.3%
Corporate income tax liabilities - - - Ns Ns - Ns
Deferred taxes liabilities 316 314 298 -0.6% -5.1% 294 -1.3%
Non-current trade payables - - - Ns Ns - Ns
Other non-current payables 8 25 8 >100% -68.0% 5 -37.5%
Non-current liabilities 614 643 637 4.7% -0.9% 607 -4.7%
Provisions 73 62 115 -15.1% 85.5% 156 35.7%
Current financial debts 743 589 261 -20.7% -55.7% 577 >100%
- Derivative hedging instruments 9 3 6 -66.7% 100.0% 2 -66.7%
- Debts to credit institutions 734 586 255 -20.2% -56.5% 575 >100%
- Debts represented by a security - - - Ns Ns - Ns
- Debts related to finance leases - - - Ns Ns - Ns
Current trade payables 730 1 034 1 074 41.6% 3.9% 1 102 2.6% Liabilities related to non-current held-for-sale
assets - - - Ns Ns - Ns
Other current payables 371 368 297 -0.8% -19.3% 282 -5.1%
Current liabilities 1 917 2 053 1 747 7.1% -14.9% 2 117 21.2%
Total liabilities 3 614 3 736 3 445 3.4% -7.8% 3 677 6.7%
Source: Centrale Danone SA.
24
CDA’s consolidated income statement
The following table summarizes the historical data from the consolidated statement of comprehensive
income of Centrale Danone for the 2015 - H1 2018 period:
In MAD millions 2015 2016 2017 Var.16/15 Var.17/16 H1
2017
H1
2018
Var.
H1 18
/ HS1
17
Turnover 6 745 6 824 6 519 1.2% -4.5% 3 224 2 618 -18.8%
Other operating income 11 24 33 >100% 37.5% 34 109 >100%
Ordinary income from operations 6 756 6 848 6 552 1.4% -4.3% 3 258 2 727 -16.3%
Purchases 4 119 4 044 3 975 -1.8% -1.7% 1 954 1 665 -14.8%
Other external expenses 1 205 1 246 1 175 3.4% -5.7% 591 562 -4.9%
Personnel charges 786 791 697 0.6% -11.9% 368 335 -9.0%
Taxes and duties 47 35 30 -25.5% -14.3% 23 23 0.0%
Depreciation, amortization and operating provisions 342 373 405 9.1% 8.6% 202 261 29.2%
Other net operating income and expenses -43 -47 -52 -9.3% -10.6% -16 -26 -62.5%
Current operating expenses 6 456 6 442 6 230 -0.2% -3.3% 3 122 2 820 -9.7%
Current operating income 299 407 322 36.1% -20.9% 135 -94 <-
100%
Current operating income (current operating income/turnover) 4.4% 6.0% 4.9% 1.5 pts - 1.0 pts 4.2% -3.6% -7.8 pts
Asset disposals 8 24 1 >100% -95.8% - - Ns
Disposals of subsidiaries and equity interests - - - Ns Ns - - Ns
Income from financial instruments -5 -1 - 80.0% -100.0% - - Ns
Other non-current operating income and expenses -59 -254 -84 <-100% 66.9% -28 12 >100%
Other operating income and expenses -56 -230 -83 <-100% 63.9% -28 12 >100%
Income from operating activities 243 176 238 -27.6% 35.2% 107 -82 <-
100%
Cost of net financial debt 44 33 29 -25.0% -12.1% 12 13 8.3%
Other financial income - - 2 Ns Ns 2 1 -50.0%
Other financial expenses 17 12 23 -29.4% 91.7% 5 8 60.0%
Financial income -61 -45 -50 26.2% 11.1% -15 -20 -33.3%
Pre-tax income 183 132 188 -27.9% 42.4% 92 -101 <-
100%
Pre-tax margin (Pre-tax income/turnover) 2.7% 1.9% 2.9% -0.8 pts 0.9 pts 2.9% -3.9% -6.7 pts
Income tax 132 88 88 -33.3% 0.0% 55 25 -54.5%
Deferred taxes -2 -16 -15 <-100% 6.3% -19 -12 36.8%
Net income 53 59 115 11.3% 94.9% 56 -115 <-
100%
Net margin (NI/turnover) 0.8% 0.9% 1.8% 0.1 pts 0.9 pts 1.7% -4.4% -6.1 pts
Share in the income of companies accounted for by the equity method - - - Ns Ns - - Ns
Net income from continuing operations 53 59 115 11.3% 94.9% 56 -115 <-
100%
Net income from discontinued operations - - - Ns Ns - - Ns
Consolidated net income 53 59 115 11.3% 94.9% 56 -115 <-
100%
Minority interests - - - Ns Ns Ns
Net income – Group share 53 59 115 11.3% 94.9% 56 -115 <-
100%
Source : Centrale Danone SA
25
FDD’s balance sheet
The following table provides details of the balance sheet items of Fromagerie des Doukkala for the years
2015, 2016, 2017 and the first half of 2018:
In MAD millions 2015 2016 2017 Var.
16/15
Var.
17/16 H1 2018
Var.
H1.18 / 17
Assets
Other assets - - - Ns Ns - Ns
Intangible assets 0.2 0.2 0.2 0.0% 0.0% 0.2 0.0%
Tangible assets 112.9 106.1 106.6 -6.0% 0.5% 101.8 -4.5%
Financial assets 0.2 0.2 0.1 46.9% -44.9% 0.1 0.0%
Currency translation differences - - - Ns Ns - Ns
Fixed assets 113.3 106.6 106.9 -5.9% 0.3% 102.1 -4.5%
Current assets 130.2 157.8 138.0 21.2% -12.6% 166.8 20.9%
Inventories 27.3 31.7 49.7 16.0% 56.9% 94.8 90.9%
Current assets receivables 102.9 126.2 87.9 22.6% -30.4% 71.8 -18.2%
Securities and investment securities - - - Ns Ns - Ns
Currency translation differences 0.0 0.0 0.5 -67.2% >100% 0.1 -71.8%
Cash and cash equivalents 0.3 0.2 0.1 -44.1% -32.5% 0.1 -0.3%
Total assets 243.8 264.6 245.0 8.5% -7.4% 269.0 9.8%
Liabilities
Permanent funding 165.8 170.0 160.3 2.5% -5.7% 127.4 -20.5%
Shareholders’ equity 146.8 151.4 140.5 3.1% -7.1% 108.6 -22.7%
Quasi-equity 19.0 18.6 18.2 -1.9% -2.5% 18.8 3.5%
Of which investment grant - - - Ns Ns - Ns
Of which provisions for special depreciation allowances
19.0 18.6 18.2 -1.9% -2.5% 18.8 3.5%
Financing liabilities - - 1.6 Ns Ns - -100.0%
Long-term provisions for liabilities and charges - - - Ns Ns - Ns
Currency translation differences - - - Ns Ns - Ns
Debts on current liabilities 73.0 83.5 76.7 14.4% -8.1% 133.8 74.5%
Other provisions for liabilities and charges 0.7 0.2 1.1 -63.9% >100% 0.9 -20.4%
Translation differences - Liabilities 0.2 0.1 0.0 -67.8% -82.0% 0.3 >100%
Cash liabilities 4.1 10.8 8.5 >100% -20.8% 6.5 -23.5%
Total liabilities 243.8 264.6 245.0 8.5% -7.4% 269.0 9.8%
Source: Centrale Danone
26
FDD’s income statement
The following table summarizes the historical data from the Fromagerie des Doukkala's corporate income
statement for the 2015 - S1 2018 period:
In MAD millions 2015 2016 2017 Var. 16/15 Var. 17/16 H1 2017 H1
2018
Var. H1
17/H1 18
Sales of goods (as is) 25.6 12.7 8.7 -50.6% -31.3% 4.2 4.7 10.7%
Cost of goods sold 25.5 12.2 8.2 -52.4% -32.8% 4.1 4.4 7.4%
Gross margin on as is sales 0.1 0.5 0.5 >100% 3.9% 0.2 0.3 99.1%
Ns
Production for the year 418.2 427.8 427.0 2.3% -0.2% 223.4 199.1 -10.9%
Sales of goods and services produced 431.3 428.8 426.4 -0.6% -0.6% 219.6 193.1 -12.1%
Change in product inventories -13.0 -1.0 0.6 92.0% >100% 3.8 6.1 59.0%
Self-constructed assets - - - Ns Ns - - Ns
Consumption for the year 287.3 285.8 309.7 -0.5% 8.4% 158.8 146.6 -7.7%
Purchases of materials and supplies 203.7 208.4 238.5 2.3% 14.4% 120.4 114.6 -4.8%
Other external charges 83.7 77.4 71.3 -7.4% -7.9% 38.4 32.0 -16.6%
Added value 131.0 142.5 117.8 8.8% -17.4% 64.8 52.8 -18.4%
Operating grants - - - Ns Ns - - Ns
Taxes and duties 1.1 1.1 1.1 0.0% -0.1% 0.5 0.5 0.0%
Personnel charges 31.8 31.1 28.1 -2.0% -9.7% 14.6 13.8 -5.1%
Gross operating surplus 98.1 110.3 88.6 12.4% -19.7% 49.7 38.5 -22.5%
Other operating income - 0.2 - Ns -100.0% - - Ns
Other operating expenses - - - Ns Ns - - Ns
Resumption of operations, transfer of expenses 1.4 0.3 0.2 -76.1% -32.6% - - Ns
Operating provisions 16.8 18.7 17.7 11.1% -5.4% 10.2 10.5 3.6%
Operating income 82.6 92.1 71.1 11.4% -22.8% 39.5 28.0 -29.3%
Operating margin (operating income/turnover) 18.1% 20.9% 16.3% 2.8 pts -4.5 pts 17.7% 14.1% -3.5 pts
Financial income 1.3 2.3 1.2 85.3% -50.1% 1.7 0.2 -89.1%
Current income 83.9 94.4 72.2 12.5% -23.5% 41.2 28.1 -31.7%
Non-current income -1.0 -2.3 4.0 <-100% >100% 2.3 -0.3 <-100%
Income tax 25.0 29.6 24.5 18.0% -17.0% 14.3 9.7 -32.1%
Net income for the year 57.8 62.5 51.6 8.2% -17.5% 29.2 18.1 -37.9%
Net margin (NI/turnover) 12.7% 14.2% 11.9% 1.5 pts -2.3 pts 13.0% 9.2% -3.8 pts
Source: Centrale Danone SA
V- Risk factors
The main risks to which CDA is exposed are as follows:
1. Risk related to the macroeconomic and socio-economic environment
Risk related to the decline in purchasing power
As CDA’s business consists of the production and marketing of food products, pressure on the purchasing
power of Moroccan consumers could have a negative impact on the sales volume of CDA’s products.
However, this risk would be mitigated by the fact that dairy products and their derivatives represent basic
foodstuffs and should therefore be less affected by a decrease in purchasing power compared to other
categories of expenditure.
27
Foreign exchange risk
As part of its operations, CDA imports mainly raw materials and packaging. CDA is therefore exposed
to exchange rate fluctuations to the extent that the composition of its foreign currency inflows and
outflows differs. An unfavorable change in exchange rates is likely to have a negative impact on CDA’s
performance. In order to limit the uncertainty related to its future revenues and purchases, CDA has
implemented a dynamic currency hedging approach, using forward and spot hedging instruments.
2. Sector-related risks
Climate-related risk
As the supply of raw milk in terms of both quantity and quality is essential for CDA to carry out its
business successfully, CDA could be negatively affected by adverse weather conditions affecting
livestock productivity.
This risk would be mitigated, in particular, by the implementation by the State of a livestock protection
program to enable livestock farmers to access irrigation and thus better manage periods of low rainfall.
Risk related to upstream agriculture
CDA is subject to the risk of non-alignment of Upstream - Downstream growth. Indeed, since CDA’s
main business consists of the production and marketing of milk and dairy products, there is a risk that raw
materials, mainly raw milk, will not be available in sufficient quality and quantity. This risk may be the
consequence of a decrease in livestock productivity, particularly through disease or harsh climatic
conditions.
Given the high socio-economic importance of this sector, the State supports upstream agriculture, in
particular by setting up an import subsidy program for heifers, with the main objectives of improving the
productivity of milk breeds and modernizing livestock farming. In addition, ONSSA supports farmers in
the prevention of diseases through vaccination campaigns at the national level.
Moreover, CDA, aware of the importance of the upstream sector, is active at the level of livestock farmers
by setting up projects aimed at developing and sustaining dairy farming in Morocco, such as the “Hlib
Bladi” program.
Hygiene and food safety risk
CDA’s business exposes it to a risk, which is known but also only perceived, anticipated or alleged, of
contamination or harmfulness of its products, which could have a negative impact on CDA’s sales and
earnings.
In order to guarantee the quality and safety of its products2, CDA has set up strict processes based on the
fundamentals of “food safety”. CDA carries out approximately 2000 quality controls per day on finished
products. With a view to guaranteeing consumer safety, CDA is the only company to produce milk and
dairy products without antibiotics.
In addition, since quality begins upstream through the collection of raw milk, FIMALAIT and the public
authorities signed the "Milk Quality Charter" at SIAM 2016, which provides for the joint commitment of
all actors in the interprofessional organisation, including small farmers, to promote the quality of the milk
collected.
2 Centrale Danone
28
Risk related to communication on the harmful effects of milk consumption on health
Some media, with a strong presence on social networks, convey preconceived ideas about the supposed
negative impacts that the consumption of milk and dairy products could have on consumer health, for
example by being one of the causes of obesity or certain diseases, which is likely to have a negative effect
on CDA’s image, as well as on its sales and performance.
Despite these occasional campaigns to denigrate the dairy sector, the WHO maintains its
recommendations of 90 liters of dairy products per person per year, while recommending that the
consumption of those with low fat content be encouraged.
Although milk consumption in Morocco has been on a downward trend since 2014, there is a significant
potential for growth, particularly through:
• The implementation of actions aimed at achieving one of the objectives of the 2015-2020 Programme
Contract, namely to switch to a consumption of 90 L/person/year by 2020, in accordance with the
WHO objective, compared to 72 L/person/year in 2017.
• National awareness-raising actions on the consumption of dairy products by Fimalait (Moroccan
Interprofessional Milk Federation) and the entire dairy industry ecosystem (for example: awareness-
raising campaign held from April to July 2018 throughout the country, organization of an evening
debate on the theme “Milk Night” in December 2017).
• CDA’s awareness-raising actions on the benefits of healthy and balanced nutrition (for example:
Symposium Institut Danone, 16th edition of the National Nutrition Week “Sehaty Fi Taghdiaty” in
March 2018).
• The adaptation of industrialists to the “healthy” way of eating by offering a varied range of “light”
products in order to meet consumer requirements for a less sweet and less fatty diet.
Risk related to the informal channel
The presence of the informal sector in the milk sales channel is likely to maintain competitive pressure
on all industrialists, particularly with regard to the purchase price of milk from farmers.
This risk is nevertheless mitigated by the involvement of all stakeholders in the sector (State, trade
federations, industry, etc.) and the adjustment measures implemented throughout the value chain with the
primary objectives of (i) improving the farmer's income and (ii) guaranteeing the quality and safety of
milk through processing that complies with hygiene standards.
Risk related to consumer taste and preferences
Consumers’ purchasing preferences are influenced by taste and eating habits. Failure to anticipate these
changes in preference and taste could have a negative impact on CDA’s performance and reputation.
In order to mitigate this risk, CDA has developed a wide portfolio of ranges to offer a wide variety of
products to meet different needs and consumption times.
Risk related to the volatility of raw materials
CDA’s main needs in terms of raw materials concern primarily milk and fruit, packaging materials and
energy raw materials. Changes in local or international supply and demand, climatic conditions,
government controls, regulatory developments and geopolitical events could have a significant effect on
the price and availability of these inputs.
In this context, CDA monitors weekly or even almost daily the changes in the prices of the main dairy
commodities by the milk purchasing team in liaison with the upstream dairy industry to supplement the
dairy requirements for strategic commodities with imports when necessary.
Centrale Danone also benefits from contracts negotiated by Danone for the purchase of packaging and
ingredients.
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Risk related to regulations
As a player in the agri-food industry, CDA is subject to laws and regulations, particularly in terms of
hygiene, quality and labor law.
CDA has a legal department that ensures compliance with applicable laws and regulations.
As of the date of this document, there are no legal proceedings or any other dispute related to non-
compliance with regulations.
Risk related to human resources
CDA has a business that employs a significant number of qualified people and may be affected by a risk
related to a shortage of human resources both at the level of supervisors and workers.
In order to mitigate this risk, CDA has implemented an appropriate HR policy (see “the human resources
policy” Prospectus, Part VI point XI.2).
3. Strategy-related risks
Image-related risk
Like any large company in Morocco and around the world, CDA is exposed to criticism of all kinds and
from all directions, whether legitimate or not, that could damage its image and reputation. The
dissemination of such criticism in the media, whether in good faith or not, is facilitated by social networks,
which can quickly amplify its effect. This type of risk, inherent in large companies, can have negative
effects on the company's image and have a negative impact on its activities and development prospects.
In order to prevent this type of risk, the company has developed rules of governance and best practice that
meet the highest standards, based on transparent institutional communication, and remains a socially
involved player in the lives of Moroccans through various CSR actions.
4. Business risks
Competition risk
CDA is active in a sector that remains concentrated around 3 main players (CDA, Copag and Safilait),
the other companies have a market share of less than 5%.
CDA limits the effects of competition from the main players through its differentiation strategy in terms
of products, quality/price ratio and positioning.
Risks related to a change in tax regulations
CDA is subject to corporate income tax but also to various charges, taxes, duties, taxes and social security
contributions related to its business. Any change in tax regulations by increasing existing taxes or
introducing new taxes, such as tax rates, dividends, social security contributions, special tax regimes or
tax exemption rules, could adversely affect CDA’s performance.
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DISCLAIMER
The aforementioned information is only part of the prospectus approved by the Moroccan Capital
Markets Authority (AMMC) under reference VI/EM/035/2018
The AMMC recommends that the entire prospectus, which is available to the public in French, be
read.
