Dangote flour mill annual report 2010

VisionTo be a world class enterprise thatis passionate about the quality oflife of the general populace and

giving high returns to stakeholders.

MissionTouch the lives of people byproviding their basic needs.

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

Notice of 5th Annual General Meeting 2

Directors, Advisers and Other Corporate Information 3

Financial Highlights 4

Chairman’s Statement 5

Board of Directors 7

Report of the Directors 8

Corporate Governance Report 12

Report of the Audit Committee 14

Report of the Independent Auditors 15

Statement of Significant Accounting Policies 16

Consolidated Profit and Loss Account 18

Consolidated Balance Sheet 19

Consolidated Statement of Cash Flows 20

Notes to the Consolidated Financial Statements 21

Share Capital History 32

Consolidated Value Added Statement 33

Consolidated Four-Year Financial Summary 34

Proxy Form

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

NOTICE IS HEREBY GIVEN that the 5th ANNUAL GENERAL MEETING OF DANGOTE FLOUR MILLS PLC will be held at RoyalTropicana Hotels Limited, 17/19, Niger Street, Kano on Thursday, 29th September, 2011 at 12.00 noon prompt to transactthe following business:

ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the year ended 31st December 2010 along with the reports of theDirectors and Audit Committee thereon for the year 2010.

2. To declare a Dividend.

3. To re-elect Directors.

4. To re-appoint the Auditors.

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

6. To appoint members of the Audit Committee.

PROXY

A member of the Company entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend andvote instead of him. A proxy need not be a member of the Company. A proxy for an organization may vote on a show ofhands and on a poll. For the appointment to be valid, a completed proxy form must be deposited at the registered officeof the Company or with the Registrar not later than 48 hours before the time fixed for the meeting.

DIVIDEND

The Board recommends for the approval of shareholders a payment of 20 kobo per ordinary share of 50 kobo each, outof the profits declared in the financial year ended 31st December, 2010 and which will be subject to withholding tax atthe appropriate rate.

DIVIDEND WARRANTS

If approved, the dividend warrants will be posted on Monday, 17th October, 2011 to shareholders, whose names appearin the Company Register of Members at the close of business on Friday 23rd, September, 2011.

NOTES

1. CLOSURE OF REGISTER AND TRANSFER BOOKS

NOTICE IS HEREBY GIVEN that the Register of Members and Transfer Books of the Company will be closed onMonday, 26th September, 2011.

2. AUDIT COMMITTEE

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

BY ORDER OF THE BOARD

AISHA LADI ISA (MRS)Company Secretary/Legal Adviser

Dated this 2nd day of September, 2011

DANGOTE FLOUR MILLS PLC8, Rycroft Street,Off Liverpool Road,Apapa, Lagos,Nigeria.


Notice of 5th Annual General Meeting


DIRECTORS

Alhaji Aliko Dangote, CON — Chairman

Alhaji Sani Dangote — Director

Mr. Olakunle Alake — Director

Mr. Uzoma Nwankwo — Director

Alhaji Abdu Dantata — Director

Alhaji Abdullahi Mahmoud — Director

Mr. Asue Ighodalo — Director

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

Mr. Rohit Chaudhry — Managing Director

Alhaji Shuaibu Idris — Deputy Managing Director

COMPANY SEPP CRETARTT Y/LERR / GAL ADVISER

AISHA LADI ISA (Mrs)

REGISTERED OFFICE

1, Alfred Rewane Road,Falomo,Ikoyi, Lagos.

REGISTRAR AND TRANSFER OFFICE

Oceanic Registrars Ltd.154, Ikorodu Road, Onipanu,Shomolu, Lagos.

AUDITORS

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

BANKERS

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

Directors, Advisers and Other Corporate Information


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

Number of 50k Shares held Number of 50k Shares heldas at 31 December 2010 as at 31 December 2009

(a) Alhaji Aliko Dangote 38,148,029 38,148,029(b) Alhaji Sani Dangote 2,200,000 2,200,000(c) Mr. Olakunle Alake 2,377,500 2,377,500(d) Mr. Uzoma Nwankwo 271,500 271,500(e) Alhaji Abdu Dantata — —(f) Alhaji Abdullahi Mahmoud 43,750 43,750(g) Mr. Asue Ighodalo — —(h) Brigadier-Gen. S. L. Teidi (rtd) — —(i) Mr. Rohit Chaudhry — —(j) Alhaji Shuaibu Idris — 118,680

6. DIRECTORS’ RESPONSIBILITIES

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

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

(b) Applicable accounting standards are followed;

(c) Proper accounting records are maintained;

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

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

(f) It is appropriate for the financial statements to be prepared on a going concern basis; unless it is inappropriateto presume that the Company will continue in business;

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

7. CORPORATE GOVERNANCE

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

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

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

8. SUBSTANTIAL INTEREST IN SHARES

The Registrar has advised that according to the register of members on 31st December 2010, only Dangote IndustriesLimited with 3,667,716,667 ordinary shares of 50k each held more than 5% of the issued share capital of theCompany.

Report of the Directors cont’dfor the Year Ended 31 December, 2010


9. FIXED ASSETS

Movements in fixed assets during the year are shown in Note 7 to the Accounts. In the opinion of the Directors, themarket value of the Company’s properties is not less than the value shown in the accounts.

10. DONATIONS AND CHARITABLE GIFTS

The holding Company, Dangote Industries Limited currently makes donation on behalf of the Group Companies butDangote Flour Mills Plc as a company did not make any donation.

11. POST BALANCE SHEET EVENTS

There were no significant developments since the balance sheet date which could have had a material effect on thestate of affairs of the Company as at 31st December, 2010 and the profit for the year ended on that date which havenot been adequately recognized.

12. COMPANY DISTRIBUTORS

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

13. SUPPLIERS

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

14. ANALYSIS OF SHAREHOLDINGS

Analysis of shareholdings as at 31st December, 2010

No. of Cumulative % No. of Cumulative %Range S/Holders Holders Holders Units Units Units

1 – 1,000 149,367 149,367 41.687 133,222,318 133,222,318 2.664

1,001 – 5,000 185,460 334,827 51.761 340,182,023 473,404,341 6.804

5,001 – 10,000 14,239 349,066 3.974 95,015,963 568,420,304 1.900

10,001 – 50,000 7,583 356,649 2.116 144,803,105 713,223,409 2.896

50,001 – 100,000 775 357,424 0.216 58,880,967 772,104,376 1.178

100,001 – 500,000 711 358,135 0.198 158,122,175 930,226,551 3.162

500,001 – 1,000,000 90 358,225 0.025 63,040,086 993,266,637 1.261

1,000,001 – 2,000,000 40 358,265 0.011 53,669,416 1,046,936,053 1.073

2,000,001 – 5,000,000 25 358,290 0.007 77,257,484 1,124,193,537 1.545

5,000,001 – 10,000,000 6 358,296 0.002 41,158,546 1,165,352,083 0.823

10,000,001 – 50,000,000 4 358,300 0.001 106,781,250 1,272,133,333 2.136

50,000,001 – 2,000,000,000 1 358,301 0.000 60,150,000 1,332,283,333 1.203

2,000,000,001 – 5,000,000,000 1 358,302 0.000 3,667,716,667 5,000,000,000 73.354

TOTAL 358,302 100.00 5,000,000,000 100.00

15. HUMAN RESOURCES

1. Employment, Training and Employees

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



2. Employee Welfare and Safety at Work

The Company continuously strives to improve its operations to ensure a safe working environment. TheCompany maintains a high standard of hygiene in all its premises through sanitation practices and the regularfumigation exercises have been further strengthened by the installation of pest and rodent control gadgets.Safety and environment workshops have been organized for all employees with a broad focus on good house-keeping to ensure good and safe working environment. Nutritionally balanced meals are provided in staffcanteens at subsidized prices. The use of safety shoes, goggles and apron e.t.c. by employees is enforced. TheCompany carries out safety and fire awareness drills for all employees on regular basis. As a guide in theperformance of all functions, a written Safety Policy for ensuring safe working practices is in place. SafetyOfficers and Security Supervisors are at hand to ensure the use of and implementation of the systems andprocedures for safety by all employees. There is a clinic within each factory to provide adequate medical carein the event of accidents or any emergency in the work place. Also, the Company allows employees and theirimmediate families to attend good hospitals at its expense. Fire prevention and fire-fighting equipment areinstalled in strategic positions within the premises of each factory.

3. Employee Development

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

16. AUDIT COMMITTEE

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

1. Mr. Alex Adio2. Alhaji Kasimu Ibrahim3. Mr. Akinduro Eric Akinnifesi4. Alhaji Abdullahi S. Mahmoud5. Mr. Asue Ighodalo6. Mr. Olakunle Alake

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

17. AUDITORS

Messrs Akintola Williams Deloitte (Chartered Accountants) have indicated their willingness to continue in office asthe Company’s Auditors in accordance with Section 357(2) of the Companies and Allied Matters Act, Cap C20 Lawsof the Federation of Nigeria, 2004.

BY ORDER OF THE BOARD





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

The Corporate Governance policies adopted by the Board of Directors are designed to ensure that the Company’s business is conductedin a fair, honest and transparent manner which conforms to high ethical standards. The Code of Corporate Governance for publiccompanies provides the basis for promoting sound corporate government in the Company. The governance framework helps theBoard to discharge its roles of providing oversight and strategic counsel in balance with its responsibility to ensure conformity withregulatory requirements and acceptable risk.

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

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

The Board consists of ten (10) members comprising the Chairman, Managing Director, assisted by one (1) Deputy Managing Directorand seven (7) non-Executive Directors.

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

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

RESPONSIBILITIES OF THE BOARD OF DIRECTORSIt is the responsibility of the Board of Dangote Flour Mills Plc to:• Ensure that the Company’s operations are conducted in a fair and transparent manner that conforms to high ethical standards;• Ensure integrity of the Company’s financial and internal control policies;• Ensure the accuracy, adequacy and timely rendition of the statutory returns and financial reporting to the regulatory authorities

(NSE, CAC, SEC) and Shareholders;• Ensure value creation for the Shareholders, employees and other stakeholders;• Review and approve corporate policies, strategy, annual budget and business plans;• Monitor implementation of policies and the strategic direction of the Company;• Set performance objectives, monitor implementation and corporate performance;• Review and approve all major and capital expenditure of the Company;• Ensure that the statutory rights of all Shareholders are protected at all times;• Provide the Company with entrepreneurial leadership within a framework of prudent and effective controls which enables risk to

be assessed and managed;• Deploy the Company’s resources to profitable use;• Outline the Company’s strategic and corporate aims;• Ensure that the necessary financial and human resources are in place for the Company to meet its objectives;• Review management performance on a continuous basis;• Set the Company’s values and standards;• Take decisions objectively in the interest of the Company;• Ensure that its obligations to its Shareholders and other stakeholders are understood and met;• Constructively challenge and help develop proposals on strategy developed by Management.

The Board carries out some of the above responsibilities through the Board Committees whose terms of reference set out clearly theirroles, responsibilities, scope of authority and procedure for reporting to the Board.

Each Committee is presided over by a Non-Executive Director to ensure strict compliance with the principles of good CorporateGovernance practice; while the Audit Committee has a representative of the Shareholders as its Chairman.

In compliance with the practices of good Corporate Governance, the Chairman of the Board is not a member of any of the Committees.

Members of the Board of Directors hold regular meetings to decide on policy matters and direct the affairs of the Company, review itsperformance, its operations, finances and formulate growth strategy. Attendance at Directors’ meetings was impressive. In line withprovisions of Section 258(2) of the Companies and Allied Matters Act, C20 Laws of the Federation of Nigeria 2004, the records ofDirectors’ attendance at Board meetings is available for inspection at the Annual General Meeting.

The remuneration of Executive Directors is fixed and reviewed by a Committee of non-Executive Directors.

FREQUENCY OF MEETINGSThe Board of Directors holds at least four (4) meetings a year, to consider important corporate events and actions such as approval ofCorporate Strategy, Annual Corporate Plan, review of internal risk management and control systems, review performance and directthe affairs of the Company, its operations, finances and formulate growth strategies. It may however, convene a meeting if the needarises. During the year under review, the Board had a total of five (5) meetings.

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

Corporate Governance Report


1. Nomination and Remuneration CommitteeComposition: (i) Mr. Asue Ighodalo - Chairman (ii) Alhaji Abdu Dantata - Member(iii) Mr. Uzoma Nwankwo - MemberFunctions: (i) To review and make recommendations to the Board for approval of the Company’s Human Resources Policy and

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

and Senior Management.(iv) Such other matters as the Board may delegate to the Committee.

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

Functions: (i) To consider periodic financial statements. (ii) To review Company activities, make projections and forecast for its growth. (iii) To identify variances in the market. (iv) To review developments in the Company. (v) To identify and discuss new products and its processes. (vi) To ensure that the Company is up-to-date with significant changes in accounting policies. (vii) Overseeing the management and conduct of the business.(viii) Ensuring the integrity of financial reports. (ix) Overseeing the effectiveness and adequacy of internal control measures.

3. The Audit CommitteeThe Audit Committee is made up of six (6) members, consisting of three representatives of the Shareholders and three membersof the Board of Directors. Members of the Audit Committee are elected at the General Meetings. The Committee, in compliancewith the requirements of Corporate Governance practice is chaired by a Shareholder. The Committee met once during the yearunder review.

Composition: (i) Mr. Alex Adio — Shareholder/Chairman (iv) Mr. Asue Ighodalo — Director/Member (ii) Mr. Akinduro Eric Akinnifesi — Shareholder/Member (v) Mr. Olakunle Alake — Director/Member(iii) Alhaji Kasimu Ibrahim — Shareholder/Member (vi) Alhaji Mahmoud S. Abdullahi — Director/Member

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

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

MEETINGS OF DIRECTORSDirectors Board Audit Nomination & Finance &

Remuneration InvestmentNumber of Meetings 5 1 1 3Alhaji Aliko Dangote, CON 5 N/A N/A N/AAlhaji Sani Dangote 3 N/A N/A N/AMr. Olakunle Alake 5 1 N/A 3Alhaji Abdu Dantata 4 N/A 1 N/AMr. Asue Ighodalo 4 1 1 N/ABrigadier-Gen. S. L. Teidi (rtd) 5 N/A N/A 3Alhaji Abdullahi S. Mahmoud 2 1 N/A 2Mr. Uzoma Nwankwo 5 N/A 1 N/AMr. Rohit Chaudhry 5 1 1 3Alhaji Shuaibu Idris 5 1 1 3

Corporate Governance Report cont’d


TO THE MEMBERS OF DANGOTE FLOUR MILLS PLC

In accordance with the provisions of Section 359(6) of the Companies and Allied Matters Act, 1990, we have examinedthe Auditors’ report for the year ended 31st December, 2010. We have obtained all the information and explanation werequired.

In our opinion, the Auditors’ report is consistent with our review of the scope and planning of the audit. We are alsosatisfied that the accounting policies of the Company are in accordance with the legal requirements and agreed ethicalpractice. Having reviewed the Auditors’ findings and recommendations on Management matters, we are satisfied withManagement’s response therein.

Mr. Alex AdioChairman, Audit Committee


Members of the Committee

Alhaji Kasimu IbrahimMr. Akinduro Eric AkinnifesiMr. Asue IghodaloAlhaji Abdullahi S. MahmoudMr. Olakunle Alake

Report of the Audit Committee


TO THTT E MEMBERS OF DANGOTE FLOUR MILLS PLC

We have audited the accompanying consolidated financial statements of Dangote Flour Mills Plc andits subsidiaries, set out on pages 16 to 34 which comprise the consolidated balance sheet as at 31 December 2010, theconsolidated income statement, consolidated statement of cash flows and consolidated statement of value added for theyear then ended, and a summary of the significant accounting policies, financial summary and other explanatory information.

Directors’ Responsibility for the Consolidated Financial Statements

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

Auditors’ Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe consolidated financial statements. The procedures selected depend on the auditors’ judgment, includingthe assessment of the risks of material misstatement of the consolidated financial statements, whether dueto fraud or error. In making those risk assessments, the auditors consider internal control relevant to theentity’s preparation and fair presentation of the consolidated financial statements in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion onthe effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by the Directors, as well asevaluating the overall presentation of the consolidated financial statements.

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

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidatedfinancial position of Dangote Flour Mills Plc and its subsidiaries as at 31 December 2010, and of itsfinancial performance and its cash flows for the year then ended; the Company and its subsidiaries havekept proper books of account, which are in agreement with the consolidated balance sheet and consolidatedincome statement in the manner required by the Companies and Allied Matters Act, CAP C20, LFN 2004and in accordance with the Statements of Accounting Standards issued by the Nigerian Accounting StandardsBoard.

Chartered AccountantsLagos, Nigeria

8 August, 2011

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

Tel: +234 (1) 271 7800Fax: +234 (1) 271 7801www.deloitte.com/ng

Report of the Independent Auditors


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

1. Basis of accounting

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

2. Consolidation

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

3. Turnover

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

4. Fixed assets

Fixed assets are stated at cost less accumulated depreciation.

5. Depreciation

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

%Freehold land — —

Buildings — 2

Plant and machinery — 6

Motor vehicles — 25

Trucks — 25

Tools and equipment — 20

Furniture and fittings — 20

Computer equipment and softwares — 33

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

6. Stocks

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

7. Foreign currencies

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

8. Debtors

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

9. Taxation

(i) Companies income tax

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

Statement of Significant Accounting Policiesfor the Year Ended 31 December, 2010

2–3

1–3


(ii) Deferred taxation

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

10. Employees retirement benefit scheme

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

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

11. Investments

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

12. Provisions

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

13. Segment reporting

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

14. Earnings per share

Earnings per share are based on the profit after taxation and issued and fully paid ordinary shares at the end ofeach financial year.

Statement of Significant Accounting Policies cont’dfor the Year Ended 31 December, 2010


The Group The Company

2009 2010 20092010 2010Note N N= ’000NN = ’000 NNN N= ’000NN = ’000NN

Turnover 3 61,388,064 42,695,383 41,839,91967,600,954 42,695,383

Cost of sales (48,560,958) (33,659,644) (31,842,774)(54,398,306) (33,659,644)

Gross profit 12,827,106 9,035,739 9,997,14513,202,648 9,035,739

Distribution and administrative expenses (4,944,119) (2,556,816) (2,787,500)(7,042,150) (2,556,816)

Operating profit 7,882,987 6,478,923 7,209,6456,160,498 6,478,923

Other income 4 411,5301,035,558 5 185,87761,131

Profit before interest payable 8,294,517 7,040,054 7,395,5227,196,056 7,040,054

Interest income 95,821 13,964 65,38522,287 13,964

Interest payable and similar charges (3,016,282) (1,572,941) (2,304,106)(2,306,458) (1,572,941)

Profit before taxation 5 5,374,056 5,481,077 5,156,8014,911,885 5,481,077

Taxation 6 187(2,189,310) ,024 (1,727,829) 203,060

Profit after taxation 2,722,575 5,561,080 3,753,248 5,359,8612,722,575 3,753,248

Attributable to:

Equity holders — parent 20 2,762,142 5,530,732 3,753,248 5,359,8612,762,142 3,753,248

Non-controlling interest 21 (39,567) 30,348 — —(39,567) —

5,561,080 3,753,248 5,359,8612,722,575 3,753,248

Earnings per share — Basic (kobo) 54 111 75 10754 75

The accounting policies on pages 16 and 17 and other explanatory notes on pages 21 to 32 form part of these consolidatedfinancial statements.

Consolidated Profit and Loss Accountfor the Year Ended 31 December, 2010




FIXED ASSETS 7 41,229,708 35,238,199 19,880,243 18,961,805 41,229,708 19,880,243

INVESTMENTS 8 — — 7,553,837 7,463,637— 7,553,837

DEFERRED TAXATION 16 — 328,067 — 328,067— —

CURRENT ASSETSStocks 9 8,246,918 2,926,685 3,248,7888,257,459 2,926,685Trade debtors 10 11,643,808 9,402,933 9,560,201 7,838,09611,643,808 9,560,201Other debtors and prepayments 11 1,223,495 1,681,842 807,868 952,2391,223,495 807,868Due from subsidiaries 27.1 — — 13,493,230 10,268,962— 13,493,230Due from related companies 27.3 5,680,807 6,997,161 5,252,555 4,665,5615,680,807 5,252,555Bank and cash balances 2,190,071 1,929,598 1,488,738 1,226,8292,190,071 1,488,738

28,258,452 32,529,277 28,200,47528,995,640 32,529,277CREDITORS: Amounts falling duewithin one yearBank loans and overdrafts 12 13,868,256 4,481,150 10,652,5317,976,685 4,481,150Trade creditors 6,408,279 9,947,700 5,214,58910,875,644 9,947,700Other creditors and accruals 13 8,375,659 3,808,441 5,237,9558,077,284 3,808,441Due to subsidiaries 27.2 — — 910,005 9— 910,005 74,969Dividend payable 14 822,460 1,900,472 822,4601,900,472 1,900,472Loan from parent company 15.1 — 5,800,000 —6,050,000 5,800,000Taxation 6 351,0681,001,464 697, 212,389372Term loan 15 4 — — —63,820 —Due to related companies 27.4 5,016,326 2,154,529 4,624,8872,495,661 2,154,529

34,842,048 29,699,669 27,739,78038,841,030 29,699,669

NET CURRENT (LIABILITIES)/ASSETS (6,583,596) 2,829,608 460,695(9,845,390) 2,829,608

TOTAL ASSETS LESS CURRENT LIABILITIES 28,982,670 30,263,488 27,214,20431,384,318 30,263,488

Deferred taxation 16 (3,409,430) — (3,136,273) —(3,409,430) (3,136,273)

PROVISION FOR LIABILITIES ANDCHARGESGratuity 17 (559,926) (638,061) (464,623)(828,013) (638,061)

NET ASSETS 28,422,744 26,489,154 26,749,58127,146,875 26,489,154

CAPITAL AND RESERVES

Share capital 18 2,500,000 2,500,000 2,500,0002,500,000 2,500,000Share premium 19 18,116,249 18,116,249 18,116,24918,116,249 18,116,249Reserve 20 7,573,899 5,872,905 6,133,3326,327,597 5,872,905

Shareholders’ fund 28,190,148 26,489,154 26,749,58126,943,846 26,489,154Non-controlling interest 21 2 232,596 — —03,029 —

28,422,744 26,489,154 26,749,58127,146,875 26,489,154

The consolidated financial statements on pages 16 to 34 were approved by the Board of Directors on 8 August, 2011 andsigned on its behalf by:

Alhaji Aliko Dangote

Mr. Asue Ighodalo

The accounting policies on pages 16 and 17 and other explanatory notes on pages 21 to 32 form part of these consolidatedfinancial statements.

} Directors

Consolidated Balance Sheetas at 31 December, 2010




Cash flows from operating activities

Cash receipts from customers 60,197,219 42,644,129 40,220,97666,057,186 42,644,129

Cash payments to suppliers and employees (52,338,236) (42,346,355) (35,695,980) (25,935,874)(35,695,980)

Value added tax (net) (813,705) (632,034) (667,250) (577,301) (813,705) (667,250)

Income tax paid 6 (76,715) (213,223) (53,804) (51,979)(76,715) (53,804)

Net cash provided by operating activities 22 12,828,530 17,005,607 6,227,095 13,655,82212,828,530 6,227,095

Cash flows from investing activities

Purchase of fixed assets 7 (9,494,147) (5,399,703) (2,522,840) (4,322,725)(9,494,147) (2,522,840)

Investment in subsidiary — — (90,000) —— (90,000)

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

Net cash provided by investing activities (5,399,703) (2,612,840) (4,322,725)9,484,147 (2,612,840)

Cash flows from financing activities

Dividend paid (1,421,988) (1,677,540) (1,421,988) (1,677,540) (1,421,988) (1,421,988)

Interest income 22,287 95,821 13,964 65,38522,287 13,964

Term loan:

— Obtained 15 — — —1,120,000 —

— Repaid 15 (656,180) (483,863) — —(656,180) —

Intercompany loan obtained 15.1 — 6,000,000 —6,250,000 6,000,000

Intercompany loan repaid 15.1 — (200,000) —(200,000) (200,000)

Interest paid (2,306,458) (3,016,282) (1,572,941) (2,304,106)(2,306,458) (1,572,941)

Net cash provided by financing activities (5,081,864) 2,819,035 (3,916,261)2,807,661 2,819,035

Net increase in cash and cash equivalents 6,152,044 6,524,040 6,433,290 5,416,8366,152,044 6,433,290

Cash and cash equivalents at 1 January (18,462,698) (9,425,702) (14,842,538)(11,938,658) (9,425,702)

Cash and cash equivalents at 31 December 23 (5,786,614) (11,938,658) (2,992,412) (9,425,702)(5,786,614) (2,992,412)

Consolidated Statement of Cash Flowsfor the Year Ended 31 December, 2010

D A N G OT E F L O U R M I L LS P L C 21

1. THE COMPANY

1.1 Legal form

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

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

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

Particulars of these subsidiaries are:

Subsidiaries Percentage held Principal activities

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

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

Dangote Noodles Limited 90 Manufacture and marketing of noodles products.

1.2 Principal activities

The principal activities of the Company are the milling, processing and marketing of branded flour.

2. STRATEGIC CONSIDERATIONS

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

3. SEGMENT REPORTING

Flour Pasta Noodlesproducts Sacks products products Group

=’000 NNN =’000 NNN =’000 NNN =’000 NNN =’000NN3.1 Segment operating results

At 31 December 2010

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

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

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

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

At 31 December 2009

Revenue 41,839,919 10,007,648 9,540,497 — 61,388,064Cost of sales (31,432,205) (8,923,678) (8,205,075) — (48,560,958)

Gross profit 10,407,714 1,083,970 1,335,422 — 12,827,106

Profit before adjustment ofunrealised profit on stock 5,156,801 132,112 90,392 — 5,379,305Unrealised profit on stock (5,249) — — — (5,249)

Profit before taxation 5,151,552 132,112 90,392 — 5,374,056Taxation 203,060 (16,036) — — 187,024

Profit after taxation 5,354,612 116,076 90,392 — 5,561,080

Notes to the Consolidated Financial Statementsfor the Year Ended 31 December, 2010


Flour Pasta Noodlesproducts Sacks products products Group

=’000 NNN =’000 NNN =’000 NNN =’000 NNN =’000NN3.2 Segment assets/liabilities

At 31 December 2010

Total assets 52,409,520 15,879,751 18,167,088 1,963,007 88,419,366Intercompany adjustments (13,862,791) 914,116 (2,149,553) (3,095,790) (18,194,018)

38,546,729 16,793,867 16,017,535 (1,132,783) 70,225,348

Total liabilities 33,474,003 9,100,616 14,625,466 3,799,249 60,999,334Intercompany adjustments (1,317,425) (3,388,861) (10,493,025) (2,994,707) (18,194,018)

32,156,578 5,711,755 4,132,441 804,542 42,805,316

At 31 December 2009

Total assets 47,490,347 15,766,602 15,019,045 — 78,275,994Intercompany adjustments (10,268,962) (1,521,748) (2,660,566) — (14,451,276)

37,221,385 14,244,854 12,358,479 — 63,824,718

Total liabilities 28,204,403 10,007,877 11,640,970 — 49,853,250ntercompany adjustments (990,199) (1,973,957) (11,487,120) — (14,451,276)

27,214,204 8,033,920 153,850 — 35,401,974

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

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

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


2009 2010 20092010 2010N=’000NN =’000 NNN N=’000NN =’000NN

4. OTHER INCOME

Provision no longer required 303,302 316,844 287,132 156,689303,302 287,132Sundry income 697,256 94,686 238,999 29,188697,256 238,999Export grant 35,000 — 35,000 —35,000 35,000

411,530 561,131 185,8771,035,558 561,131

Export grant relates to incentive in the form of negotiable duty credit certificate granted by the Federal Governmentto encourage export in the Calabar Free Trade Zone in 2008 and 2009 utilised during the year.


2009 2010 20092010 2010N=’000NN =’000 NNN N=’000NN =’000NN

5. PROFIT BEFORE TAXATION

This is arrived at after charging/(crediting):

Directors’ emoluments:— Fees 3,100 2,550 3,100 2,5503,100 3,100— Salaries and allowances 107,781 66,020 54,075 51,820107,781 54,075Audit fee 61,768 50,190 30,000 28,80061,768 30,000Depreciation 3,391,277 2,603,849 1,493,041 1,093,5553,391,277 1,493,041Management fee (Note 28) 593,962 431,224 — —593,962 —

cont’dfor the Year Ended 31 December, 2010



2009 2010 200920102010N=’000NN =’000 NNN N=’000NN =’000NN

6. TAXATION

Profit and loss account

Tax based on the profit for the yearIncome tax 501,919 — 400,621 —400,621501,919Education tax 203,704 141,043 138,166 125,007138,166203,704Prior year underprovision 21,488 — — ——21,488

141,043 538,787 125,007538,787727,111Deferred taxation (Note 16) 1,462,199 (328,067) 1,189,042 (328,067)1,189,0421,462,199

(187,024) 1,727,829 (203,060)1,727,8292,189,310

Balance sheet

At 1 January 351,068 423,248 212,389 139,361212,389351,068As per profit and loss account 727,111 141,043 538,787 125,007538,787727,111Payments during the year (76,715) (213,223) (53,804) (51,979)(53,804)(76,715)

At 31 December 1,001,464 351,068 697,372 212,389697,3721,001,464

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

7. FIXED ASSETS

7.1 The Group

Freehold/ Computer AssetsLeasehold equipment Furniture under

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

=’000 NNN =’000 NNN =’000 NNN =’000 NNN =’000 NNN =’000 NNN =’000 NNN =’000 NNN =’000NNCost

At 1 January 3,073,734 30,873,716 710,126 91,029 171,691 974,429 1,740,587 6,276,374 43,911,686Additions 417,426 1,015,019 82,373 51,407 107,700 680,201 302,483 6,837,538 9,494,147Transfers 227,834 1,398,301 7,588 – 5,517 – – (1,639,240) –Adjustments (Note 7.4) – – – – – – – (111,361) (111,361)

At 31 December 3,718,994 33,287,036 800,087 142,436 284,908 1,654,630 2,043,070 11,363,311 53,294,472

Depreciation

At 1 January 234,394 7,251,308 487,123 72,199 105,736 347,228 175,499 – 8,673,487Charge for the year 71,478 2,219,713 157,393 28,369 50,114 380,610 483,600 – 3,391,277At 31 December 305,872 9,471,021 644,516 100,568 155,850 727,838 659,099 – 12,064,764

Net book value

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

At 31 December 2009 2,839,340 23,622,408 223,003 18,830 65,955 627,201 1,565,088 6,276,374 35,238,199

Notes to the Consolidated Financial Statements cont’dfor the Year Ended 31 December, 2010



7.2 The Company

Computer AssetsLeasehold equipment Furniture under

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

=’000 NNN =’000 NNN =’000 NNN =’000 NNN =’000 NNN =’000 NNN =’000 NNN =’000 NNN =’000NNCost

At 1 January 2,164,064 11,829,095 440,366 60,560 94,384 208,859 1,740,587 6,258,751 22,796,666Additions 19,447 90,952 22,668 15,389 23,729 47,221 302,483 2,000,951 2,522,840Adjustments (Note 7.4) – – – – – – – (111,361) (111,361)Transfers 227,834 1,335,409 7,588 – 5,517 – – (1,576,348) –

At 31 December 2,411,345 13,255,456 470,622 75,949 123,630 256,080 2,043,070 6,571,993 25,208,145

Depreciation

At 1 January 147,472 3,003,051 298,251 45,559 56,124 108,905 175,499 — 3,834,861Charge for the year 43,754 798,386 87,708 11,171 21,553 46,869 483,600 – 1,493,041

At 31 December 191,226 3,801,437 385,959 56,730 77,677 155,774 659,099 – 5,327,902

Net book value

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

At 31 December 2009 2,016,592 8,826,044 142,115 15,001 38,260 99,954 1,565,088 6,258,751 18,961,805

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

7.4 Adjustments relate to reversal of certain payments made on behalf of Dangote Flour Mills Plc by DangoteIndustries Limited in prior years which were erroneously charged to Capital Work In Progress instead ofintercompany commercial paper account.

The Company

20092010N=’000NN =’000NN

8. INVESTMENTS (UNQUOTED)

Dangote Pasta Limited49,500,000 ordinary shares of N=1 each inNNDangote Pasta Limited 2,507,637 2,507,6372,507,637

Dangote Agrosacks Limited84,150,000 ordinary shares of N=1 each inNNDangote Agrosacks Limited 4,956,000 4,956,0004,956,000

Dangote Noodles Limited90,000,000 ordinary shares of N=1 each inNNDangote Noodles Limited (Note 8.1) 90,000 —90,000

7,463,6377,553,637

8.1 On 19 November 2008, the Board of Directors approved the investment of N=90,000,000 (Ninety million Naira)NNto subscribe to 90% of the shares of Dangote Noodles Limited.




2009 2010 200920102010N=’000NN =’000 NNN N=’000NN =’000NN

9. STOCKS

Raw materials and work-in-progress 4,618,241 4,806,929 2,227,736 2,871,6342,227,7364,618,241Finished goods 2,058,540 2,315,765 186,179 138,431186,1792,058,540Engineering spares and other stocks 1,479,209 1,061,387 319,326 159,359319,3261,479,209Goods-in-transit 193,444 79,364 193,444 79,364193,444193,444

8,263,445 2,926,685 3,248,7882,926,6858,349,434Provision for slow moving items (91,975) (16,527) — ——(91,975)

8,246,918 2,926,685 3,248,7882,926,6858,257,459

10. TRADE DEBTORS

Trade debtors 14,430,365 12,214,178 10,926,326 10,343,82910,926,32614,430,365Provision for bad and doubtful debts (2,786,557) (2,811,245) (2,366,125) (2,505,733)(2,366,125)(2,786,557)

9,402,933 8,560,201 7,838,0968,560,20111,643,808

10.1 =930,336,000 of the trade debtors are backed by an insurance bond. The amounts are overdue by more thanNNone year, however, the Company is confident that these would be recovered. For the sake of prudency, wehave provided for one-third (N=310,112,000).NN


2009 2010 200920102010N=’000NN =’000 NNN N=’000NN =’000NN

11. OTHER DEBTORS AND PREPAYMENTS

Other debtors 370,613 1,130,483 74,006 442,63374,006370,613Advances to suppliers 667,579 954,956 667,579 954,956667,579667,579Staff debtors 113,022 67,367 95,771 67,36795,771113,022Prepayments 371,854 168,977 251,538 108,677251,538371,854

2,321,783 1,088,894 1,573,6331,088,8941,523,068Provision for doubtful balances (299,573) (639,941) (281,026) (621,394)(281,026)(299,573)

1,681,842 807,868 952,239807,8681,223,495

12. BANK LOANS AND OVERDRAFTSBank overdrafts 4,431,208 5,482,578 1,868,623 4,478,6221,868,6234,431,208Short-term loans 3,545,477 8,385,678 2,612,527 6,173,9092,612,5273,545,477

13,868,256 4,481,150 10,652,5314,481,1507,976,685

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

The Group The Company2009 2010 200920102010

N=’000NN =’000 NNN N=’000NN =’000NN13. OTHER CREDITORS AND ACCRUALS

Customers’ deposits 1,121,173 1,459,624 704,918 595,198704,9181,121,173Accruals 2,140,109 3,034,335 627,245 2,064,324627,2452,140,109Staff pension (Note 13.1) 104,871 88,772 10,875 6,55810,875104,871VAT payable 2,123,395 651,012 1,251,595 651,0121,251,5952,123,395Other creditors 2,458,614 3,141,916 1,156,866 1,920,8631,156,8662,458,614Withholding tax 129,122 — 56,942 —56,942129,122

8,375,659 3,808,441 5,237,9553,808,4418,077,284




N=’000NN =’000 NNN N=’000NN =’000NN13.1 Staff pension

At 1 January 88,772 52,110 6,558 2,6976,55888,772Provision for the year 318,943 240,042 118,589 76,519118,589318,943Payment for the year (302,844) (203,380) (114,272) (72,658)(114,272)(302,844)

At 31 December 104,871 88,772 10,875 6,55810,875104,871

14. DIVIDEND PAYABLE

At 1 January 822,460 — 822,460 —822,460822,460Dividend declared (Note 20) 2,500,000 2,500,000 2,500,000 2,500,0002,500,0002,500,000Payment during the year (1,421,988) (1,677,540) (1,421,988) (1,677,540)(1,421,988)(1,421,988)

At 31 December 1,900,472 822,460 1,900,472 822,4601,900,4721,900,472

15. TERM LOANAt 1 January — 483,863 — ———Loan obtained during the year 1,120,000 — — ——1,120,000Repayment during the year (656,180) (483,863) — ——(656,180)

At 31 December 463,820 — — ——463,820Due within one year (463,820) — — ——(463,820)

Due after more than one year — — — ———

15.1 Loan from parent companyAt 1 January — — — — ——Loan obtained during the year 6,250,000 — 6,000,000 —6,000,0006,250,000Repayment during the year (200,000) — (200,000) —(200,000)(200,000)At 31 December 6,050,000 — 5,800,0006,050,000 —

The Company obtained a facility of N=5 billion for its working capital requirement and NNN =1billion commercialNNpaper from Dangote Industries Limited. The working capital facility is repayable on 1 March 2011 at an interestrate of 9.25%. The commercial paper is repayable in equal monthly installments of N=100 million up tillNNSeptember 2011 at an interest rate of 9%. In addition to the Company loans, a subsidiary, Dangote NoodlesLimited obtained a loan of N=250 million from Dangote Industries Limited. The interest rate is 8% and theNNfacility is for a period of 12 months. The loan is repayable on 21 July 2011.


2009 2010 200920102010N=’000NN =’000 NNN N=’000NN =’000NN

16. DEFERRED TAX (LIABILITIES)/ASSETS

At 1 January 32 — 328,067 —328,0678,067Prior year adjustment (Note 20.1) — (2,275,298) —(2,275,298)(2,275,298)Provision for the year (Note 6) (1,462,199) 328,067 (1,189,042) 328,067

At 31 December (3,409,430) 328,067 (3,136,273) 328,067

17. GRATUITY

At 1 January 559,926 582,037 464,623 376,362464,623559,926Provision for the year 310,670 183,792 200,483 143,158200,483310,670Adjustments — (129,470) — ———

636,359 665,106 519,520665,106870,596Payments during the year (42,583) (76,433) (27,045) (54,897)(27,045)(42,583)

At 31 December 828,013 559,926 638,061 464,623638,061828,013

The staff gratuity provision is not funded.




2009 2010 20092010 2010N=’000NN =’000 NNN N=’000NN =’000NN

18. SHARE CAPITAL

Authorised6,000,000,000 ordinary shares of 50k each 3,000,000 3,000,000 3,000,000 3,000,0003,000,000 3,000,000

Issued and fully paid5,000,000,000 ordinary shares of 50k each 2,500,000 2,500,000 2,500,000 2,500,0002,500,000 2,500,000

19. SHARE PREMIUM

At 31 December 18,116,249 18,116,249 18,116,249 18,116,24918,116,249 18,116,249

20092010TotalTotal

N=’000NN =’000NN20. RESERVES

The Group

At 1 January 3,812,0167,573,899Transfer from non-controlling interest — (710)—Prior year adjustment (Note 20.1) (1,513,675) 731,861(1,513,675)Dividend declared (2,500,000) (2,500,000)(2,500,000)Consolidation adjustment 5,231 —5,231Transferred from profit and loss account 2,762,142 5,530,7322,762,142

At 31 December 7,573,8996,327,597

The Company

At 1 January 2,541,6106,133,332Prior year adjustment (Note 20.1) (1,513,675) 731,861(1,513,675)Dividend declared (2,500,000) (2,500,000)(2,500,000)Transferred from profit and loss account 3,753,248 5,359,8613,753,248

At 31 December 6,133,3325,872,905

20.1 Prior year adjustmentIntercompany reconciliation adjustment from long outstanding balances 619,228 731,861619,228Reversal of stale cheque for duty duplicated in prior year 58,418 —58,418Reconciliation adjustment from long outstanding balances in creditors 83,977 —83,977Deferred tax (Note 16) (2,275,298) —(2,275,298)

731,861(1,513,675)

The prior year adjustment in respect of deferred tax represents the deferred tax liability for Dangote Flour MillsPlc understated in the prior year.

20.2 On 29 November 2010, a dividend of 50 kobo per ordinary share of 50 kobo each totalling N=2.5 billion inNNrespect of 2009 was approved by shareholders and subsequently paid.

At the Board of Directors meeting held on 8 August 2011, the Directors proposed a final dividend of 20 koboper ordinary share of 50 kobo each amounting to N=1billion. The dividend is subject to approval by theNNshareholders at the Annual General Meeting net of withholding tax at the appropriate rate. Consequently, ithas not been included as a liability in these financial statements as they do not constitute present obligationto the Company in accordance with (SAS) 23 on Provisions, Contingent Liabilities and Contingent Assets.



The Group20092010

N=’000NN =’000NN21. NON-CONTROLLING INTERESTS

Profit and loss accountDangote Agrosacks Limited 152,626 29,444152,626Dangote Pasta Limited 1,896 904Dangote Noodles Limited (193,874) —Share of prior year under provision of tax liability (215) —

(39,567) 30,348Balance sheetAt 1 January 232,596 201,538Transfer to revenue reserve — 710On acquisition of Dangote Noodles Limited 10,000 —Profit and loss (39,567) 30,348At 31 December 203,029 232,596


N=’000NN =’000 NNN N=’000NN =’000NN22. RECONCILIATION OF NET INCOME TO NET

CASH PROVIDED BY OPERATING ACTIVITIESProfit after taxation and exceptional item 2,722,575 5,561,080 3,753,248 5,359,8613,753,2482,722,575Adjustments to reconcile net income tonet cash provided by operating activities:Depreciation 3,391,277 2,603,849 1,493,041 1,093,555Interest income (22,287) (95,821) (13,964) (65,385)Interest expenses 2,306,458 3,016,282 1,572,941 2,304,106Prior year adjustment (1,513,675) 731,861 (1,513,675) 731,861Fixed assets adjustment/transfer 111,361 6,939 111,361 —Consolidation adjustment 5,231 — — —Changes in assets and liabilities:(Increase)/decrease in stocks (10,541) 1,663,613 322,103 2,148,661Increase in trade debtors (2,240,875) (1,992,823) (722,105) (1,719,306)Decrease/(increase) in other debtorsand prepayments 458,347 (348,094) 144,371 (325,591)Decrease/(increase) in due from subsidiaries — — (3,224,268) 3,588,587Decrease/(increase) in due from related companies 1,316,354 1,868,728 (586,994) (2,744,209)Increase in trade creditors 4,467,365 2,020,848 4,733,111 2,040,889(Decrease)/increase in other creditors and accruals (298,375) 1,336,109 (1,429,514) 388,008(Decrease)/increase in due to related companies (2,520,665) 1,055,394 (2,470,358) 737,305(Decrease)/increase in due to subsidiaries — — (64,964) 284,258Increase/(decrease) in taxation payable 650,396 (72,180) 484,983 73,028Increase/(decrease) in gratuity provision 268,087 (22,111) 173,438 88,261Increase/(decrease) in deferred taxation 3,737,497 (328,067) 3,464,340 (328,067)Total adjustments 10,105,955 11,444,527 2,473,847 8,295,961Net cash provided by operating activities 12,828,530 17,005,607 6,227,095 13,655,822

23. CASH AND CASH EQUIVALENTSCash and bank balances 2,234,799 1,974,326 1,533,466 1,271,5571,533,4662,234,799Provision (44,728) (44,728) (44,728) (44,728)

2,190,071 1,929,598 1,488,738 1,226,829Short-term loans (3,545,477) (8,385,678) (2,612,527) (6,173,909)Bank overdrafts (4,431,208) (5,482,578) (1,868,623) (4,478,622)

(5,786,614) (11,938,658) (2,992,412) (9,425,702)




2009 2010 200920102010N=’000NN =’000 NNN N=’000NN =’000NN

24. INFORMATION REGARDING DIRECTORSAND EMPLOYEES

24.1 Directors

(i) Directors’ emolument comprises:Fees 3,100 2,550 3,100 2,5503,1003,100Salaries and allowances 107,781 66,020 54,075 51,820

110,881 68,570 57,175 54,370

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

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

=’000 NNN =’000NN Number Number Number Number Up to 5,000 8 8 8 810,001 — 15,000 3 2 — —15,001 and above 2 2 2 2

24.2 EmployeesAverage number of persons employedduring the year:Management 207 197 115 121Senior staff 853 536 410 369Junior staff 3,396 3,007 406 356

4,456 3,740 931 846

N=’000NN =’000 NNN N=’000NN =’000NNAggregate payroll costs:Wages, salaries, allowances and other benefits 3,213,405 1,982,289 1,472,432 1,210,752Provision for gratuities 280,890 183,792 200,483 143,158Pension cost 62,981 41,909 31,438 26,847

3,557,276 2,207,990 1,704,353 1,380,757

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

=’000NN =’000 Number Number Number NumberNumberNumberNN

Up to 200 — 4 — ———201 — 400 1,275 2,432 2 37401 — 600 1,450 571 268 309601 — 800 581 199 159 93801 — 1,000 502 162 145 121

1,001 and above 648 372 357 286

4,456 3,740 931 846



25. CONTINGENT LIABILITIES25.1 There were no contingent liabilities in respect of pending litigation against the Company and its subsidiaries at

31 December 2010 (2009: Nil).

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

26. CAPITAL COMMITMENTSThe Group The Company

2009 2010 20092010 2010N=’000NN =’000 NNN N=’000NN =’000NN

Capital commitments 33 190,000 336,354 190,0006,354 336,354

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

27. RELATED PARTY TRANSACTIONS

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


2009 2010 20092010 2010N=’000NN =’000 NNN N=’000NN =’000NN

27.1 Due from subsidiaries

Dangote Pasta Limited — — 11,898,397 9,218,193— 11,898,397Dangote Noodles Limited — — 1,594,833 1,050,769

— — 13,493,230 10,268,962

27.2 Due to subsidiaries

Dangote Agrosacks Nigeria Limited — — 910,005 974,969

27.3 Due from related companies

Dangote Cement PlcDangote Cement Plc Lagos terminal 891,162 1,134,258 — 107,907891,162 —Dangote Bail Nigeria Limited 312,018 12,263 — —Benue Cement Company Plc 584,082 453 — —

1,787,262 1,146,974 — 107,907Dangote Noodles Limited 60 1,079,704 — —Dangote Industries Limited 3,909,480 4,740,399 5,226,905 4,504,942National Salt Company of Nigeria Plc 73,973 51,378 25,649 —Dangote Fisheries Nigeria Limited 1,500 1,500 1,500 1,500Dangote Port Operation 200 200 140 140Dangote Pasta Limited 46,178 — 72 72Dangote Textile Nigeria Limited 55,593 55,593 51,000 51,000Dangote Foundation 61,787 122,562 — —Savannah Sugar Limited 50 43 — —Dangote Sugar Refinery Plc 15,341 — — —Others 32,708 171,508 — —

5,984,132 7,369,861 5,305,266 4,665,561Less provision (303,325) (372,700) (52,711) —

5,680,807 6,997,161 5,252,555 4,665,561




2009 2010 20092010 2010N=’000NN =’000 NNN N=’000NN =’000NN

27.4 Due to related companies

Dangote Nigeria Limited 76,709 61,937 68,061 53,182Dangote Transport Nigeria Limited 1,773,245 2,591,008 1,779,631 2,506,152Dangote Sugar Refinery Plc — 128,601 61,295 57,155Bluestar Shipping Company 4,592 3,500 4,592 3,500Greenview Development Nigeria Limited 26,500 10,882 27,591 14,347National Salt Company of Nigeria Plc — — — 924Dangote Industries Limited 484,777 — — —Dangote Pasta Limited — 93,430 — —Bulk Pack (Nig) Ltd — 27,013 — —MRS Oil Nigeria Plc — 107,204 — —Dangote Agrosacks Limited — 3,124 — —Dangote Cement Plc 129,832 — 213,359 —Dangote Industries Ltd — commercial paper — 1,989,627 — 1,989,627Dangote Communication Technology Limited 6 — — —

2,495,661 5,016,326 2,154,529 4,624,887

27.5 Dangote Pasta Limited

Dangote Pasta is a subsidiary company to Dangote Flour Mills Plc. During the year, the supply of wheat toDangote Pasta amounted to N=12.1 billion (2009: NNN =9.2 billion).NN

27.6 Dangote Agrosacks Nigeria LimitedDangote Agrosacks Nigeria Limited is a subsidiary of Dangote Flour Mills. During the year, the Company hadsignificant transactions amounting to N=910 million (2009: NNN =550 million) for the supply of bags for packagingNNof Flour, Bran, Danvita etc.

27.7 Dangote Industries Limited

Dangote Industries Limited (DIL) is the parent company. DIL undertakes payments for expansion projects,recommends external consultants, negotiates bank facilities and purchases raw materials on behalf of theGroup.

DIL operates a margin call account along with its related party, Bulk Commodities (See Note 27.12) in relationto the wheat purchase transactions and predetermines the price of wheat paid by Dangote Flour Mills for theyear to 31 December 2010 at $270 per tonne including carriage and freight on commercial terms that may ormay not be available with third parties (2009 — $270 per tonne).

27.8 Dangote Transport Nigeria Limited

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

27.9 Dangote Sugar Plc

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

27.10 National Salt Company of Nigeria Plc (NASCON)

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

27.11 Dangote Noodles Limited

NASCON is a subsidiary company of Dangote Flour Mills Plc. During the year the Company had transactionsamounting to N=1.46 billion for flour supply and other payments undertaken on behalf of noodles.NN



Dangote Flour Mills Plc was quoted on the Nigerian Stock Exchange on 4th February, 2008.

The share capital history of the Company is as indicated below:

Date Authorised Share Capital Issued and Fully Paid Consideration

Value Shares Value Shares

04/02/2008 3,000,000,000 6,000,000,000 2,500,000,000 5,000,000,000 Cash

27.12 Bulk Commodities

Bulk Commodities is a related party of Dangote Industries Limited, the parent company of Dangote Flour MillsPlc.

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

28. MANAGEMENT FEE

Dangote Pasta Limited and Dangote Agrosacks Limited entered into management and technical service agreementdated 2 January 2006 with Dangote Industries Limited (DIL). The agreement is for an initial period of five years withan option to renew for a further period of five years subject to termination by either party in accordance with theterms of the agreement. As consideration for the services provided, a sum equivalent to 2% of the net revenue fromthe Dangote Pasta Limited and Dangote Agrosacks Limited sales for each month is payable to Dangote IndustriesLimited. Management fees for the financial year ended 31 December 2010 amounted to N=593.9 million (2009 —NN=431.2 million).NN

29. COMPARATIVE FIGURES

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

30. POST BALANCE SHEET EVENTS

There were no post balance sheet events that could have a material effect on the state of affairs of the Group as at31 December 2010 and on the profit for the year ended on that date which have not been adequately provided foror disclosed in these consolidated financial statements.

Share Capital History


Consolidated Value Added Statementfor the Year Ended 31 December, 2010


2009 2010 200920102010N=’000 %NN =’000 % NNN N=’000 %NN =’000 %NN

Turnover 67,600,954 61,388,064 42,695,383 41,839,91942,695,38367,600,954Other income 1,035,558 411,530 561,131 185,877561,1311,035,558Interest income 22,287 95,821 13,964 65,38513,96422,287

68,658,799 61,895,415 43,270,478 42,091,181

Less: Bought-in-materialsand services:— Imported (34,617,298) (29,332,573) (30,775,852) (26,008,149)— Local (19,874,605) (19,360,665) (2,243,214) (6,147,813)

Value Added 14,166,896 100 13,202,177 100 10,251,412 100 9,935,219 100

Applied as follows:

To pay employees

Salaries, wages andother benefits 3,557,276 25 2,207,990 17 1,704,353 17 1,380,757 14

To pay providers of capital

Interest payable and similarcharges 2,306,458 16 3,016,282 23 1,572,941 15 2,304,106 23

To pay government

Taxation 727,111 5 141,043 1 538,787 5 125,007 1

To provide for enhancementof assets and growth

Deferred taxation 1,462,199 10 (328,067) (2) 1,189,042 11 (328,067) (3)Depreciation 3,391,277 25 2,603,849 20 1,493,041 15 1,093,555 11Profit and loss account 2,722,575 19 5,561,080 41 3,753,248 37 5,359,861 54

14,166,896 100 13,202,177 100 10,251,412 100 9,935,219 100

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 andthat retained for future creation of more wealth.


Consolidated Four-Year Financial Summaryfor the Year Ended 31 December, 2010


31 DECEMBER 2010 2009 2008 2007 2010 2009 2008 20072010 2010N=’000NN =’000 NNN =’000 NNN =’000 NNN N=’000NN =’000 NNN =’000 NNN =’000NN

BALANCE SHEET

Assets/(Liabilities)

Fixed assets 41,229,708 35,238,199 32,449,283 27,357,655 19,880,243 18,961,805 15,732,634 13,375,453Investments — — 601,900 — 7,553,637 7,463,637 7,43,637 7,750,559Deferred taxation assets — 328,067 — — — 328,067 — —Net current (liabilities)/assets (9,845,390) (6,583,596) (7,839,343) (4,636,107) 2,829,608 460,695 337,950 1,094,309

31,384,318 28,982,670 25,211,840 22,721,548 30,263,488 27,214,204 23,534,221 22,220,321

Deferred taxation liabilities (3,409,430) — — — (3,136,273) — — —Long-term liabilities — — — (187,012) — — — —Provision for liabilities andcharges (828,013) (559,926) (582,037) (389,402) (638,061) (464,623) (376,362) (312,829)

27,146,875 28,422,744 24,629,803 22,145,134 26,489,154 26,749,581 23,157,859 21,907,492

CAPITAL AND RESERVES

Share capital 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000Share premium 18,116,249 18,116,249 18,116,249 18,116,249 18,116,249 18,116,249 18,116,249 18,116,249Revenue reserve 6,327,597 7,573,899 3,812,016 1,369,458 5,872,905 6,133,332 2,541,610 1,291,243Minority interest 203,029 232,596 201,538 159,427 — — — —

27,146,875 28,422,744 24,629,803 22,145,134 26,489,154 26,749,581 23,157,859 21,907,492

TURNOVER AND PROFIT

Turnover 67,600,954 61,388,064 47,927,300 42,153,272 42,695,383 41,839,919 30,109,610 31,303,845

Profit before taxation 4,911,885 5,374,056 3,167,625 675,703 5,481,077 5,156,801 1,758,137 375,651Taxation (2,189,310) 187,024 (178,066) (114,144) (1,727,829) 203,060 (54,045) (85,316)Minority interest 39,567 (30,348) (42,111) (36,849) — — — —

Retained profit transferredto revenue reserve 2,762,142 5,530,732 2,947,448 524,710 3,753,248 5,359,861 1,704,092 290,335

Per share data —50k ordinary share

Earnings:— Basic (kobo) 111 60 11 75 107 34 654 75— Diluted (kobo) — — — 75 107 34 6— 75Net assets (Naira) 6 5 4 5 5 5 45 5

Note:

1. Earnings per share are based on profit after taxation and the number of issued and fully paid ordinary shares at theend of each financial year.

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


DANGOTE FLOUR MILLS PLC5TH ANNUAL GENERAL MEETING TO BE HELD AT

12.00 NOON ON THURSDAY, 29TH SEPTEMBER, 2011 ATROYAL TROPICANA HOTELS LIMITED, 17/19, NIGER STREET,

KANO.

I/We* ........................................................................................................

of ...............................................................................................................

hereby appoint ......................................................................................

...................................................................................................................

of ...............................................................................................................or failing him, the Chairman of the meeting, as my/our proxyto act and vote for me/us and on my/our behalf at the FifthAnnual General Meeting of the Company to be held at 12.00noon on Thursday, 29th September, 2011.

Dated this ................ day of .......................................... 2011.

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

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

registered office of the Company not less than 48 hoursbefore the time for holding the meeting.

2. If executed by a corporation, the proxy card should besealed with the common seal.

3. This proxy card will be used both by show of hands andin the event of a poll being directed or demanded.

4. In the case of joint holders the signature of any one ofthem will suffice, but the names of all joint holders shouldbe shown.

Admission CardDANGOTE FLOUR MILLS PLC

PLEASE ADMIT THE SHAREHOLDER ON THIS FORM OR HIS/HER APPOINTED PROXY TO THE5TH ANNUAL GENERAL MEETING TO BE HELD AT 12.00 NOON ON THURSDAY, 29TH SEPTEMBER, 2011

AT ROYAL TROPICANA HOTELS LIMITED, 17/19, NIGER STREET, KANO.

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

IF YOU ARE UNABLE TO ATTEND THE MEETING

A member (shareholder) who is unable to attend Annual General Meeting is allowed by law to vote by proxy. A proxyneed not be a member of the Company. The above proxy card has been prepared to enable you exercise your right tovote if you cannot personally attend.

No. of Shares held Signature of person attending

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


✂✂

RESOLUTIONS FOR AGAINST

1. To receive the AuditedFinancial Statements for theyear ended 31st December2010 and the Directors’,Auditors’ and Audit Committee’sReports thereon

2. To declare a dividend

3. To re-elect Directors

4. To re-appoint the Auditors

5. To authorise the Directorsto fix the remunerationof the Auditors

6. To appoint members ofthe Audit Committee

Please indicate with an “X” in the appropriate space howyou wish your votes to be cast on resolutions set outabove. Unless otherwise instructed, the proxy will voteor abstain from voting at his/her own discretion.

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

Proxy FormFLOUR

Dangote Flour Mills PlcRC 501757


Financial Highlights


2009 2010 20092010 2010N=’000NN =’000 NNN N=’000NN =’000NN

PROFIT AND LOSS

Turnover 67,600,954 61,388,064 42,695,383 41,839,91967,600,954 42,695,383

Profit before taxation 4,911,885 5,374,056 5,481,077 5,156,8014,911,885 5,481,077

Taxation (2,189,310) 187,024 (1,727,829) 203,060(2,189,310) (1,727,829)

Profit after taxation 2,722,575 5,561,080 3,753,248 5,359,8612,722,575 3,753,248

BALANCE SHEET

Share capital 2,500,000 2,500,000 2,500,000 2,500,0002,500,000 2,500,000

Shareholders’ funds 26,943,846 28,190,148 26,489,154 26,749,58126,943,846 26,489,154

Per 50 kobo share data (kobo)

Earnings per share (kobo) 54 111 75 10754 75


Distinguished Shareholders,

Invited Guests,

Ladies and Gentlemen,

It gives me great pleasure to welcome you on behalfof the Board of Directors to the 5th Annual GeneralMeeting of our great Company, Dangote Flour Mills Plc.

As a prelude to the presentation, I will like to highlightthe developments in the operating environment in thecourse of the year 2010. This will enable us highlightthe challenges we faced during the year and how thesechallenges were managed by your Company.

GLOBAL AND LOCAL ECONOMIC ENVIRONMENT

The international price of wheat, our major raw material,rose substantially in the year under review due to badharvest arising from disasters in wheat-producingcountries. Russia experienced a huge fire disaster, whileAustralia had severe flooding, occurring in wheat-producing regions.

Chairman’s Statement

hermore, China’s demand for ships due to theFurthnsion of its industries, raised the cost of shippingexparaw material.our r

he domestic scene, the year 2010 remained aIn thenging one for business. In spite of measures bychall

ernments across the globe to mitigate the harshgovects of the global financial crises, its negative effectseffecome sectors of the local economies especially inon soria remain a challenge. The difficulty encounteredNige

many of our distributors in accessing credit fromby mbanks did not help matters at all, whichthe

essitated banks putting stringent lendingneceditions.cond

challenges posed by poor infrastructure, includingThe cer and road network, persisted during the yearpowe

pite the government’s efforts to ameliorate thedespndition. These, as we all know, have theircoattendant consequences on the cost of production

as we have to rely heavily on diesel to powerour plants.

COMPANY PERFORMANCE

Dangote Flour Mills Plc achieved a profit beforetax of =4.91 billion in 2010. This is a declineNN

of about 8.6% from N=5.374 billion reported in theNNprevious year. Although, turnover grew 10% from=61.38 billion to NNN =67.6 billion in 2010, the declineNNin the bottom line was majorly due to the loss of about=2 billion made by Dangote Noodles Limited, a newlyNNestablished subsidiary. Dangote Noodles Limited hadto write off some of its pre-operational expenses inthe year in line with accounting standards. Added tothis is the international increase in the price of wheat,our major raw material. Profit after tax of N=2.72 billionNNwhich dipped much lower by 51% from N=5.56 billionNNreported in the previous year, was due to crystallizationof some deferred tax liability of well over N=2 billionNNin 2010. On a general note, other operating costswere reasonably managed due to our continuousefforts in growing economies of scales, and costreduction strategies through operational efficiency aswell as the effect of focusing on human capitaldevelopment.

OUR PEOPLE

Our team of committed and dedicated staff has everremained our major strength. Their valuablecontributions to our success and achievements thusfar cannot be over-emphasized. As stakeholders, they


have ever proven to be a reliable and dependableally. Their drive for constant innovation andprofessionalism has always made us to believe in theachievement of the Dangote Flour Mills Plc dream.On our part, we would remain committed to providingadequate and necessary development programmesand enabling environment in order to maximise theireffectiveness and efficiency on the job at all times.

EXPECTATIONS FOR THE NEAR FUTURE

Going forward, Dangote Flour Mills Plc is expected toperform a lot much better in 2011. The expansionproject to enlarge our manufacturing and packagingfacilities within the country which we started some yearsback is almost completed. Our dedicated plant forproduction of our wheat meal brand Alkama andDanvita would soon be ready for commissioning anymoment from now. This would no doubt, tremendouslyboost our top line growth in year 2011 as plans arealready in place to massively launch the products andincrease the distribution networks to all the hinterlands.This of course, will improve the bottom line because oflarge economies of scale that would result from theincreased production. The plan to commence directand indirect export into Chad, Cameroon, Senegal andLiberia is already yielding results and we intend tointensify efforts to deepen and strengthen the businessrelationship already established along the West AfricanCoast.

The Noodles subsidiary has been able to improve itsmarket acceptability in 2011. It is thus expected tocontribute positively to the Group’s profitability, goingforward, especially since its pre-operational expenseshave been fully written off in 2010.

DIVIDENDS

With the favourable profit for the year ended 31December 2010, the Board of Directors is pleased torecommend a final dividend of 20 kobo per 50 koboshare for your approval at this Annual General Meeting.The Board is adopting this rather cautious approach oflow dividend payout in view of our belief to conservefund for future growth and expansion, which will ofcourse translate to greater advantages for ourCompany in the long run.

CORPORATE SOCIAL RESPONSIBILITY

Throughout the year under review, the Group embarkedon various Corporate Social Responsibility (CSR)projects that impacted positively on our hostcommunities. We would also continue to play our partin the society as a responsible corporate citizen by notonly complying with required standards in productsquality, but also by engaging with the larger society incontributing positively to improve social welfare of ouroperating environment.

CUSTOMERS

Our indispensable partners in the business, ourcustomers, performed wonderfully well in the yearunder review. They have not only demonstrated theirstrong commitment and belief in the organization buthave also proven that doing business with us has beena very rewarding venture. Their significant contributionsto the business through partnership and patronage haveever remained our source of strength. We shall continueto hold this wonderful group of people in high esteem.On behalf of the Board, Management and Staff of theCompany, I hereby wish to say a big thank you to allour numerous customers.

APPRECIATION

On behalf of the Board of Directors, I would like toexpress our heartfelt appreciation to the managementand employees of the Group for their continueddedication, support and commitment during the year.

I would also like to thank you, my fellow shareholders,as well as our customers, suppliers, bankers,government agencies and regulatory authorities, foryour unflinching support and commitment to DangoteFlour Mills Plc.

Thank you.

Alhaji (Dr.) Aliko Dangote, CONChairman

Chairman’s Statement cont’d

(rtd.)


1. ACCOUNTS

The Directors are pleased to submit their report together with the audited accounts of the Company for the yearended 31st December, 2010.

2. RESULTThe Group The Company

=’000 NNN =’000NN

Turnover 67,600,954 42,695,383Profit after taxation and minority interest 2,722,575 3,753,248

3. PRINCIPAL ACTIVITIES

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

(a) Manufacturing and selling of bread and biscuit flour

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

(c) Manufacturing of Semolina.

The principal activities of its subsidiaries are:

Dangote Pasta Limited

Manufacture of Spaghetti, Macaroni etc.

Dangote Agrosacks Limited

Manufacture of packaging materials.

Dangote Noodles Limited

Manufacture of Noodles.

4. LEGAL FORM

The Company started operating as a division of Dangote Industries Limited in 1999. It was incorporated as publiclimited liability company on 1 January 2006 and commenced operations on the same date. It however becamequoted on the Nigerian Stock Exchange on 4 February 2008. Its principal activity is the milling, processing andmarketing of branded flour.

5. DIRECTORS AND DIRECTORS’ INTEREST

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

(a) Alhaji Aliko Dangote, CON(b) Alhaji Sani Dangote(c) Mr. Olakunle Alake(d) Mr. Uzoma Nwankwo(e) Alhaji Abdu Dantata(f) Alhaji Abdullahi S. Mahmoud(g) Mr. Asue Ighodalo(h) Brigadier-Gen. S. L. Teidi (rtd)(i) Mr. Rohit Chaudhry — Redeployed 17/08/2011(j) Alhaji Shuaibu Idris — Resigned 31/12/2010(k) Narendra Kumar Somani — Appointed 17/08/2011

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

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

Report of the Directorsfor the Year Ended 31 December, 2010

Investor Relations

Dangote flour mill annual report 2010