DEFINITIONS 3
ABRIDGED TIMETABLE 4
SUMMARY OF THE OFFER 5
THE OFFER 8
DIRECTORS AND OTHER PARTIES TO THE OFFER 9
THE CHAIRMAN’S LETTER 13
1. History and Business of the Company ............................................................................................................................ 14
2. Risk Factors and Mitigants ............................................................................................................................................. 20
3. Board of Directors........................................................................................................................................................... 22
4. Management and Staff .................................................................................................................................................... 24
5. Premises.......................................................................................................................................................................... 26
6. Purpose of the Offer........................................................................................................................................................ 26
7. Financial Summary ......................................................................................................................................................... 26
8. Working Capital, Profit and Dividend Forecasts ............................................................................................................ 28
9. Unclaimed Dividends...................................................................................................................................................... 28
10. Corporate Governance .................................................................................................................................................... 28
11. Research and Development............................................................................................................................................. 29
12. Mergers and Takeovers................................................................................................................................................... 29
13. Future Plans .................................................................................................................................................................... 29
THE PROFIT FORECAST 30
1. Letter from the Reporting Accountants........................................................................................................................... 30
2. Profit Forecast for the Years Ending 31 December 2006, 2007, 2008 and 2009 ............................................................ 32
3. Bases and Assumptions................................................................................................................................................... 32
4. Letter from the Reporting Accountants in respect of the Going Concern Status............................................................. 35
5. Letter from the Issuing Houses ....................................................................................................................................... 36
HISTORICAL FINANCIAL INFORMATION ON DANGOTE SUGAR 38
1. Reporting Accountants’ Report....................................................................................................................................... 38
2. Statement of Accounting Policies ................................................................................................................................... 40
3. Profit And Loss Account................................................................................................................................................. 41
4. Balance Sheet.................................................................................................................................................................. 42
5. Cash Flow Statement ...................................................................................................................................................... 43
6. Notes to the Financial Statements ................................................................................................................................... 44
STATUTORY AND GENERAL INFORMATION 47
1. Incorporation and Share Capital History......................................................................................................................... 47
2. Shareholding Structure.................................................................................................................................................... 47
3. Directors’ Beneficial Interests......................................................................................................................................... 47
4. Indebtedness.................................................................................................................................................................... 48
5. Subsidiaries and Associated Companies ......................................................................................................................... 48
6. Extracts from the Memorandum and Articles of Association ......................................................................................... 48
7. Claims and Litigation...................................................................................................................................................... 56
8. Material Contracts........................................................................................................................................................... 56
9. Costs and Expenses......................................................................................................................................................... 56
10. Declarations .................................................................................................................................................................... 56
11. Relationship between the Issuer and its Advisers ........................................................................................................... 57
12. Related Party Transactions.............................................................................................................................................. 57
13. Consents.......................................................................................................................................................................... 57
14. Documents Available for Inspection............................................................................................................................... 59
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED 61
1. Reporting Accountants’ Report....................................................................................................................................... 61
2. Statement of Accounting Policies ................................................................................................................................... 63
3. Profit And Loss Account................................................................................................................................................. 64
4. Balance Sheet.................................................................................................................................................................. 65
5. Cash Flow Statement ...................................................................................................................................................... 66
6. Notes to the Financial Statements ................................................................................................................................... 67
7. Segmental Financial Information .................................................................................................................................... 71
PROCEDURE FOR APPLICATION AND ALLOTMENT 76
RECEIVING AGENTS 77
APPLICATION FORM 78
Page 2
DEFINITIONS
Page 3
ABRIDGED TIMETABLE
Page 4
SUMMARY OF THE OFFER
The following information should be read in conjunction with the full text of this Prospectus, from which
it is derived:
16. QUOTATION: An application has been made to The Council of The Exchange for the
admission to its Daily Official List of the whole of Dangote Sugar’s
issued and paid-up share capital.
17. STATUS: The shares being offered rank pari passu in all respects with the other
existing issued Ordinary Shares of the Company.
Page 5
SUMMARY OF THE OFFER
N
= ’000
6 months PRE-SCHEME OF ARRANGEMENT
ended --- Dangote Sugar Division - Segmental financial summary as at---
30/06/06 31/12/05 31/12/04 31/12/03 31/12/02 31/12/01
Turnover 42,406,432 58,494,709 36,576,150 27,879,762 13,540,091 14,806,249
Profit before taxation 7,811,435 9,379,697 7,371,106 4,546,733 1,219,430 1,571,695
Profit after taxation 7,811,435 9,379,697 7,371,106 4,543,515 1,219,430 1,499,095
Dividend - - - - - -
Shareholders funds 19,131,959 34,716,493 25,336,796 17,965,690 13,422,175 1,278,727
Total assets 18,863,106 29,953,682 21,399,578 15,910,164 4,234,774 3,710,160
Adjusted earnings per share (kobo)* 78.11 93.80 73.71 45.44 12.19 14.99
* Calculations of adjusted earnings and dividend per share are based on the issued and paid-up capital of N
= 5 billion comprising
10 billion Ordinary Shares of 50 kobo each as at the date of this Prospectus.
20. CORPORATE DIRECTORY: Dangote Sugar currently operates from its Corporate Office and a
factory, both located in Apapa, details of which are provided below:
Head Office:
Modandola House
42/44 Warehouse Road
Apapa
Lagos
Tel: +234 1 5804646-8
Fax: +234 1 2714466, 5804654
Email: SRefinery@dangote-group.com
Factory:
Shed 20
Apapa Wharf
Lagos
Tel: +234 1 5873162, 5873091, 5454468
Fax: +234 1 5454466
Page 6
SUMMARY OF THE OFFER
21. GROUP STRUCTURE: Dangote Sugar currently has no subsidiary or associated company. The
Company is currently 99% owned by DIL and operated as a division of
DIL until January 2006, when it was spun-off via a Scheme of
Arrangement. DIL’s shareholding is expected to reduce to 69% at the
conclusion of the IPO.
22. CLAIMS AND LITIGATIONS: The Company in its ordinary course of business is presently involved in
one (1) suit. The amount claimed in the said suit is N
= 6,550,597.00 (six
million five hundred and fifty thousand five hundred and ninety seven
naira) plus interest accrued thereon.
The Solicitors to the Offer and the Directors of the Company are of the
opinion that the aforementioned suit is not likely to have any material
adverse effect on the Company and or the Offer, and are not aware of
any other pending and or threatened suits involving the Company.
23. INDEBTEDNESS: As at 30 June 2006, the Company had secured bank overdrafts in the
ordinary course of business amounting to N = 105.8 million. However, the
Company had no outstanding debenture, mortgages, charges or similar
indebtedness or contingent liabilities as at 30 June 2006.
24. SHARE CERTIFICATE Share certificate in respect of shares allotted will be sent by registered
post not later than 15 working days from the date of allotment. Any
investor who does not want to receive a physical share certificate,
should state the name of his/her stockbroker and his/her CSCS
account number in the space provided on the Application Form.
Page 7
THE OFFER
A copy of this Prospectus and the documents specified herein have been delivered to the Securities and
Exchange Commission for clearance and registration.
This Prospectus is being issued in compliance with the provisions of the Investments and Securities Act Cap I24
LFN 2004, the Rules and Regulations of the Commission and the listing requirements of The Exchange and
contains particulars in compliance with the requirements of the Commission and The Exchange, for the purpose
of giving information to the public with regard to the Initial Public Offering of 3,000,000,000 Ordinary Shares of
Dangote Sugar Refinery Plc by IBTC Chartered Bank Plc, Vetiva Capital Management Limited, Access Bank
Plc, BGL Securities Limited, Ecobank Nigeria Plc, FBN Capital Limited, FCMB Capital Markets Limited,
Fidelity Bank Plc, Intercontinental Capital Markets Limited, Oceanic Bank International Plc and Zenith Bank
Plc. An application has been made to The Council of The Exchange for the admission to its Daily Official List of
the whole of the Company’s paid-up share capital.
The Directors of Dangote Sugar individually and collectively accept full responsibility for the accuracy of the
information contained in this Prospectus. The Directors have taken reasonable care to ensure that the facts
contained herein are true and accurate in all respects and confirm, having made all reasonable enquiries, that to
the best of their knowledge and belief, there are no material facts the omission of which would make any
statement herein misleading or untrue.
FBN CAPITAL LIMITED FCMB CAPITAL MARKETS LIMITED FIDELITY BANK PLC
RC 446599 RC 446561 RC 103022
INTERCONTINENTAL CAPITAL MARKETS LIMITED OCEANIC BANK INTERNATIONAL PLC ZENITH BANK PLC
RC 428270 RC 147269 RC 150224
on behalf of
DANGOTE INDUSTRIES LIMITED
RC 71242
Page 8
DIRECTORS AND OTHER PARTIES TO THE OFFER
DIRECTORS JOINT ISSUING HOUSES
Alhaji Aliko Dangote C O N (Chairman) IBTC Chartered Bank Plc
4 Karimu Kotun Street I.B.T.C. Place
Victoria Island Walter Carrington Crescent
Lagos Victoria Island
Lagos
Mr Narendra Kumar Somani (Indian) (Managing)
Modandola House Vetiva Capital Management Limited
42/44 Warehouse Road Plot 266B Kofo Abayomi Street
Apapa Victoria Island
Lagos Lagos
Mr Suleiman Oladapo Olarinde (Executive) Access Bank Plc
Modandola House Plot 1665 Oyin Jolayemi Street
42/44 Warehouse Road Victoria Island
Apapa Lagos
Lagos
Dr Konyinsola Ajayi SAN BGL Securities Limited
4 Goriola Street Plot 1061 Abagbon Close
Off Adeola Odeku Street Off Ologun Agbaje Street
Victoria Island Victoria Island
Lagos Lagos
Page 9
DIRECTORS AND OTHER PARTIES TO THE OFFER
JOINT STOCKBROKERS TO THE OFFER EMI Capital Resources Limited
Future View Financial Services Limited 45A Campbell Street
Future View Plaza Lagos
Plot 161D Aufu Talyor Close, Off Idejo Street
ESL Securities Limited
Victoria Island
3rd Floor, Cowrie House
Lagos
27/29 Adeyemo Alakija Street
AMYN Investments Limited Victoria Island
19th Floor, Stock Exchange House Lagos
2/4 Customs Street
Fidelity Union Securities Limited
Lagos
36 Adeola Hopewell Street
APT Securities Limited Victoria Island
3rd Floor, Church House Lagos
29 Marina
Finmal Finance Services Limited
Lagos
10 Ijora Causeway
BFCL Assets & Securities Limited Lagos
5th Floor, UBA House
Heartbeat Investments Limited
57 Marina
7th Floor, Wesley House
Lagos
21/22 Marina
BGL Securities Limited Lagos
Plot 1061 Abagbon Close
IBTC Asset Management Limited
Off Ologun Agbaje Street
I.B.T.C. Place
Victoria Island
Walter Carrington Crescent
Lagos
Victoria Island
Camry Securities Limited Lagos
Wesley House Annex
ICMG Securities Limited
21/22 Marina
8B Ademola Street
Lagos
South West Ikoyi
Capital Assets Limited Lagos
8th Floor, Bookshop House
International Standard Securities Limited
50/52 Broad Street
144A Association Road
Lagos
Dolphin Estate, Ikoyi
Capital Express Securities Limited Lagos
2nd Floor, Crusader House
Lambeth Trust & Investment Company Limited
23/25 Martins Street
1st Floor, 4/6 Mobolaji Bank Anthony Street
Lagos
Off Broad Street
Clearview Investments Company Limited Lagos
6th Floor, NCR Building
LB Securities Limited
6 Broad Street
Plot 932 Idejo Street
Lagos
Victoria Island
CSL Stockbrokers Limited Lagos
3rd Floor, Primrose Tower
Marina Securities Limited
17A Tinubu Street
45 Saka Tinubu Street
Lagos
Victoria Island
De-Canon Investment Limited Lagos
4th Floor, Wesley House MBC Securities Limited
21/22 Marina 2nd Floor, South Atlantic Petroleum Towers
Lagos 7 Adeola Odeku Street
Diamond Securities Limited Victoria Island
3 Elsie Femi Pearse Street Lagos
Off Adeola Odeku Road Meristem Securities Limited
Victoria Island, Lagos 23A Ribadu Road
Greenwich Trust Limited Off Awolowo Road
Plot 1698A Oyin Jolayemi Street Ikoyi
Victoria Island, Lagos Lagos
Page 10
DIRECTORS AND OTHER PARTIES TO THE OFFER
Mutual Alliance Investment & Securities Limited Tower Assets Management Limited
Mutual Alliance House 2nd Floor, Suite 6, Maina Court
207B Ikorodu Road Plot 252A Herbert Macaulay Way
Obanikoro Opposite NNPC Tower
Lagos Abuja
Nova Finance & Securities Limited UNEX Securities & Investment Limited
1st Floor, Speedway House 3 Biaduo Street
21 Araromi Street Off Keffi Street
Off Macarthy Street South-West Ikoyi
Onikan Lagos
Lagos
Vetiva Capital Management Limited
Partnership Investment Company Limited Plot 266B Kofo Abayomi Street
37 Ademola Street Victoria Island
South West Ikoyi Lagos
Lagos
Zenith Securities Limited
Pilot Securities Limited Zenith Heights
1st Floor, Wing E Plot 87 Ajose Adeogun Street
Elephant Cement House Victoria Island
Business District Centre Lagos
Alausa AUDITORS
Lagos Akintola Williams Deloitte
Akintola Williams Deloitte House
Premium Securities Limited 235 Ikorodu Road
16 Keffi Street Ilupeju
South West Ikoyi Lagos
Lagos
REPORTING ACCOUNTANTS
PSL Limited Ahmed Zakari & Co
3rd Floor, Cathedral House (Chartered Accountants)
2 Odunlami Street African Alliance Building
Lagos F1 Sani Abacha Way
Kano
SanTrust Securities Limited SOLICITORS TO THE COMPANY
4th Floor, 28 Berkley Street ǼLEX Legal Practitioners & Arbitrators
Onikan 7th Floor, Union Marble House
Lagos 1 Alfred Rewane Road
Ikoyi
Signet Investments & Securities Limited Lagos
Signet Suite
Church House JOINT SOLICITORS TO THE OFFER
29 Marina Banwo & Ighodalo
Lagos 98 Awolowo Road
Ikoyi
SMADAC Securities Limited Lagos
2nd Floor, Kingsway Building
51/52 Marina Wali-Uwais & Co
Lagos 1st Floor Right Wing
Afri-Investment House
Spring Stockbrokers Limited Plot 2669 Aguiyi Ironsi Street
Plot 1611 Adeola Hopewell Street Maitama
Victoria Island Abuja
Lagos REGISTRARS
Zenith Registrars Limited
Summit Finance Company Limited 1 Prince Ade Odedina Street
Summit House Off Sinari Daranijo Street
6 Ajele Street Victoria Island
Lagos Lagos
Page 11
DIRECTORS AND OTHER PARTIES TO THE OFFER
JOINT UNDERWRITERS JOINT RECEIVING BANKERS
IBTC Chartered Bank Plc IBTC Chartered Bank Plc
I.B.T.C. Place I.B.T.C. Place
Walter Carrington Crescent Walter Carrington Crescent
Victoria Island Victoria Island
Lagos Lagos
Vetiva Capital Management Limited Access Bank Plc
Plot 266B Kofo Abayomi Street Plot 1665 Oyin Jolayemi Street
Victoria Island Victoria Island
Lagos Lagos
Access Bank Plc Ecobank Nigeria Plc
Plot 1665 Oyin Jolayemi Street Plot 21 Ahmadu Bello Way
Victoria Island Victoria Island
Lagos Lagos
BGL Limited Fidelity Bank Plc
Plot 1061 Abagbon Close Fidelity Place
Off Ologun Agbaje Street 2 Kofo Abayomi Street
Victoria Island Victoria Island
Lagos Lagos
Ecobank Nigeria Plc First Bank of Nigeria Plc
Plot 21 Ahmadu Bello Way Samuel Asabia House
Victoria Island 35 Marina
Lagos Lagos
Fidelity Bank Plc First City Monument Bank Plc
Fidelity Place Primrose Tower
2 Kofo Abayomi Street 17A Tinubu Street
Victoria Island Lagos
Lagos
Intercontinental Bank Plc
First Bank of Nigeria Plc Intercontinental Plaza
Samuel Asabia House Plot 999C Danmole Street
35 Marina Victoria Island
Lagos Lagos
First City Monument Bank Plc Oceanic Bank International Plc
Primrose Tower 270 Ozumba Mbadiwe Avenue
17A Tinubu Street Victoria Island
Lagos Lagos
Intercontinental Capital Markets Limited Skye Bank Plc
Wesley House Plot 708/709 Adeola Hopewell Street
21/22 Marina Victoria Island
Lagos Lagos
Oceanic Bank International Plc Zenith Bank Plc
270 Ozumba Mbadiwe Avenue Zenith Heights
Victoria Island Plot 87 Ajose Adeogun Street
Lagos Victoria Island
Skye Bank Plc Lagos
Plot 708/709 Adeola Hopewell Street
Victoria Island
Lagos
Zenith Bank Plc
Zenith Heights
Plot 87 Ajose Adeogun Street
Victoria Island
Lagos
Page 12
THE CHAIRMAN’S LETTER
The following is the text of a letter received by the Joint Issuing Houses from the Chairman of the Board of
Directors of Dangote Sugar Refinery Plc, Alhaji Aliko Dangote C O N:
01 November 2006
Dear Sirs
INITIAL PUBLIC OFFERING OF 3,000,000,000 ORDINARY SHARES OF 50 KOBO EACH IN DANGOTE SUGAR
REFINERY PLC AT N
= 18.00 PER SHARE
At an Extra-Ordinary General Meeting of Dangote Sugar Refinery Plc held on 05 September 2006, the
shareholders authorised the Board of Directors to undertake an Initial Public Offering to give every interested
investor the opportunity to own shares in the Company, which is 99% owned by Dangote Industries Limited,
and also enable the Company meet the requirements for a listing on The Nigerian Stock Exchange. JP
Morgan and Deutsche Bank, two leading international investment banks, were engaged to provide certain pre-
Offer financial advisory services to the Company along with the Lead Issuing Houses.
At a subsequent Board Meeting held on 06 September 2006, the Directors approved an Offer for Sale of
3,000,000,000 Ordinary Shares of 50 kobo each at N= 18.00 per share. On behalf of the Directors of Dangote
Sugar, I am pleased to provide you with information relating to the Company and the Offer, which you are
making on our behalf.
Page 13
THE CHAIRMAN’S LETTER
1.1 History
Dangote Sugar commenced business in March 2000 as the sugar division of Dangote Industries
Limited. DIL had initially entered the sugar business in 1978 through the importation and trading of
white sugar. DIL decided to commence white sugar production in 2000 and commissioned the sugar
refining factory located at Apapa port in 2001. The sugar division was spun-off as Dangote Sugar
Refinery Plc via a Scheme of Arrangement in January 2006 which transferred all the assets, liabilities
and undertakings attributable to the sugar division of DIL to Dangote Sugar.
1.2 Business
Dangote Sugar is in the business of sugar refining. Our objective from the onset was to expand local
sugar production by refining raw sugar for direct consumption and industrial needs, thereby reducing
the country’s dependence on refined sugar importation. The Company imports raw sugar from Brazil,
refines it into Vitamin A fortified white sugar at its Apapa factory and sells its products under the
brand name “Dangote Sugar” across Nigeria. The Company produces Vitamin A fortified white
sugar to comply with the policy of NAFDAC, which makes the fortification of staple foods with
Vitamin A mandatory in Nigeria. Dangote Sugar is one of the very few sugar refiners in the world
that produce Vitamin A fortified white sugar.
Dangote Sugar employs the talo-phosphatation and ion exchange resin technologies to purify sugar to
internationally accepted quality standards. The Company’s sugar refining factory was built using
Tate & Lyle’s technology, with an initial installed capacity to process 600,000 metric tonnes of raw
sugar per annum. Tate & Lyle is the largest sugar refiner in Europe and its refining technology is
widely regarded as one of the best in the world. The factory has undergone two expansions that have
increased installed capacity to about 1.44 million metric tonnes per annum. These expansions were
necessitated by a growing national demand for white sugar and the need to ensure that the factory’s
capacity is well above demand. The factory’s capacity utilisation is currently above 75%, making
Dangote Sugar the largest sugar refinery in sub Saharan Africa and one of the largest in the world.
Refining Process
Marketing and Distribution
Refining Process
Melting
Raw sugar is made up of sugar crystals that have a film of impurities on the surface. It is mixed with
warm sweetwater in a pre-melter to soften the film and is then fed sequentially into the melter
followed by the addition of water and steam to complete the dissolution process and obtain a
consistent liquor.
Page 14
THE CHAIRMAN’S LETTER
Decolorisation
The pressed liquor from the filters is pumped through resin to remove colour molecules. The resin
takes out impurities not substantially removed by the taloclarification and filtration process. The
decolorised solution is known as fine liquor.
Page 15
THE CHAIRMAN’S LETTER
Sugar Recovery
A three-strike boiling scheme is used in producing three grades of remelt or recovery sugar that are
recycled through the melting operation. The final exhaust syrup is sent out as blackstrap molasses.
Sugar Conditioning
The dried sugar discharged from the granulators is then screened by three Rotex Screeners to meet
the particle size requirements and conveyed to conditioning silos equipped with dehumidified air.
The conditioned white sugar leaves the silos at a moisture of less than 0.04%.
Page 16
THE CHAIRMAN’S LETTER
Fortification
The white sugar is mixed with Vitamin A in compliance with NAFDAC regulations.
Packaging
Fortified refined white sugar is packed from bagging hoppers through a Simon Richard weigher,
which discharges a minimum weight of 50kg of sugar into well labelled bags utilising the seven
packing machines in the Packaging station.
Page 17
THE CHAIRMAN’S LETTER
Large industrial users - these are leading blue chip companies in Nigeria, and include Nestle
Nigeria Plc, Cadbury Nigeria Plc, Seven-Up Bottling Company Plc and Nigerian Bottling
Company Plc. This group typically accounts for 18% of the Company’s sales.
Distributors - This group buys white sugar wholesale from Dangote Sugar for retail to
households and small industrial users. Distributors account for about 82% of the Company’s
sales.
All the white sugar produced by Dangote Sugar is sold in Nigeria. Although the Company does not
formally export, its products find their way into neighbouring West African countries through
informal cross-border trading. The Company’s main marketing strategy is market development,
relying on its growing distribution network to reach every nook and cranny of the country in the most
cost effective manner. Dangote Sugar’s parent company, DIL, has been in the sugar business since
1978 and engaged in the importation of white sugar before commencing sugar refining in 2001. DIL
and Dangote Sugar have developed a deep understanding of the Nigerian sugar market, based on the
experience gained from over 28 years of selling white sugar in Nigeria.
Dangote Sugar’s prevailing operating environment and that expected in the foreseeable future appear
very promising for the sustainable growth and profitability of the Company. The following are
examples of positive developments in the Company’s operating environment which should have a
positive impact on its profitability:
EU sugar policy changes: Changes in EU’s sugar policy will result in gradual reductions in
subsidies to EU producers and selected importers. Subsidy cuts will result in EU sugar
industry becoming less competitive. Thus EU sugar production is expected to decline
significantly over the next two to three years.
Page 18
THE CHAIRMAN’S LETTER
Increasing demand for biofuels: Rising oil prices and environmental concerns are driving
strong demand for biofuels. Initiatives to use ethanol as a transport fuel are on the rise
worldwide and this is likely to drive diversion of sugarcane from sugar to ethanol production.
Brazil, a key manufacturer and consumer of ethanol, is witnessing strong ethanol demand,
driven by flexi-fuel vehicles. This may ultimately result in a decline in white sugar supply.
India and China becoming net sugar importers: India and China consume almost a quarter
of annual global sugar output, with demand in these countries growing 4.5% faster than
global demand. Over the next few years, domestic demand in India and China are expected
to surpass the maximum domestic production thresholds of these countries, resulting in a
move towards import dependence.
We expect that in the foreseeable future, the per capita sugar consumption in Nigeria will grow in
line with expected growth in GDP per capita and urbanisation rate, as research has shown a strong
positive correlation between per capita sugar consumption and GDP per capita. With increased
urbanisation, there is an increased demand for processed foods most of which have sugar as an
ingredient. Thus with an increasing population and an increasing per capita sugar consumption, the
Nigerian sugar market should witness an exponential increase in the foreseeable future.
High import duties: The import substitution strategy of the Federal Government of Nigeria is
designed to promote the development of local industries by setting low tariffs on raw
materials and complete knocked down parts, and high tariffs on finished goods.
Accordingly, raw sugar is taxed at 5% compared to 50% (plus 10% sugar development levy)
for white sugar. This tariff differential makes imported white sugar very uncompetitive in
the Nigerian market.
Page 19
THE CHAIRMAN’S LETTER
Vitamin A fortification requirements: Nigeria has been a pioneer in the developing world in
mandating the fortification of staple foods (such as flour, vegetable oil and sugar) with
Vitamin A as a means to eradicate Vitamin A deficiency and malnutrition amongst Nigerian
masses.
Dangote Sugar has perfected and patented its Vitamin A fortification technology and fully
complies with the fortification requirement. Very few countries in the world have similar
requirements. None of the white sugar exporting countries has this requirement. Thus, for a
Nigerian importer to meet the Vitamin A fortification requirement, it has to make a special
request which will attract significant additional cost because of required customised
production. In addition, Vitamin A is relatively unstable and difficult to transport, which
makes the importation of fortified sugar more difficult.
High investment requirements: The cost of setting up a sugar refinery in Nigeria is quite
high. The Company has spent approximately US$250 million to set up its refinery at current
production capacity. Lower capacity factories are possible but may be less efficient because
of reduced economies of scale.
Political Risk
Nigeria faces economic and political challenges that can undermine the business environment.
Nigeria has experienced over 7 years of uninterrupted democratic rule for the first time since our
independence in 1960. We expect a smooth transition to another civilian government in 2007 and a
continuation of this trend. Nigeria’s recent BB- rating by both Standard & Poors and Fitch which
puts the country at par with Turkey, Brazil and Ukraine, and the commendations the Federal
Government’s economic reforms have received from the international community should stimulate
increased interest in the Nigerian economy.
Currency Risk
Fluctuations in the value of the naira can make costs unpredictable for Dangote Sugar given its
heavy dependence on imported raw sugar.
In view of the Central Bank of Nigeria’s proactive and effective management of the exchange rate
and the country’s huge foreign reserves, the exchange rate between the naira and the US dollar is
expected to be stable in the foreseeable future. In addition, Dangote Sugar is able to effectively price
its white sugar in US$, thus minimising the impact of any exchange rate fluctuation.
Regulatory Risk
Dangote Sugar is exposed to changes in the regulatory environment.
Quality: White sugar produced by Dangote Sugar complies with international quality
standards.
Fortification: The NAFDAC requirement to fortify sugar with Vitamin A is supported by the
United Nations as a means to eradicate malnutrition in children. This policy is expected to
continue in the foreseeable future.
Tariff protection: The difference in tariffs between white and raw sugar imports aims to promote
local white sugar production rather than importation, and the narrowing of this differential is
unlikely to occur. The wide disparity between the import duty levied on raw materials/complete
knocked down parts and that levied on corresponding finished goods is an essential part of the
import substitution policy of the FGN. The entire manufacturing sector (not just sugar refining)
in Nigeria is protected by this policy, and the sector’s survival is hinged on the continuity of this
policy. We do not therefore expect that the FGN will expose the manufacturing sector to unfair
competition by discarding this policy. We also do not expect a selective amendment of this
policy to the detriment of the sugar refining industry.
Page 20
THE CHAIRMAN’S LETTER
Business Risk
Dangote Sugar is exposed to fluctuations in raw sugar prices.
Like most leading manufacturing companies in Nigeria, Dangote Sugar is able to pass on any raw
material price increases to its consumers. A new entrant to the market would be exposed to the same
raw sugar price fluctuations. This should ensure that white sugar prices are market driven and follow
fluctuations of raw sugar prices, and margins remain constant. In addition, Dangote Sugar hedges
one-third of its purchases.
Dangote Sugar could face a shutdown resulting in a shortage of its products, which would have a
detrimental impact on its reputation.
Following the shutdown during the 2005 expansion of the refinery, Dangote Sugar consistently
stocks 15 days of finished goods. In addition, the Company does not operate at full capacity which
enables it to increase production temporarily to catch up on any order backlog.
Dangote Sugar could face technical challenges which it does not have the expertise to deal with.
The technology for sugar refining is standard and stable. The current refinery was commissioned by
Tate & Lyle and Dangote Sugar has operated it for over 5 years without any issues. The Company
employs one of the nation’s largest contingent of engineers, including a team of expatriates with
wide experience in the sugar industry in key emerging markets.
Sectoral Risk
If prices are too high, demand could reduce.
There are no effective substitutes for sugar.
Dangote Sugar could face a slowdown in the Nigerian sugar market and may not be able to meet
its revenue projections.
At 7.5kg/capita, sugar consumption in Nigeria is low compared to African and emerging markets.
Consumption is expected to rise in view of current and expected future growth of the Nigerian
economy. There should be an exponential growth in the Nigerian sugar market, with the expected
population growth.
Dangote Sugar has access to only one market – the Nigerian market
Dangote Sugar could actually export to any ECOWAS market at no duties, effectively providing the
Company access to about 250 million people.
Page 21
THE CHAIRMAN’S LETTER
Environmental Risk
Industrial operations cause pollution.
Only about 1,000 tonnes per annum of solid waste are produced by the factory, and the Company
uses a government designated site at Sagamu in Ogun State for waste dumping. A full conversion to
gas will soon be completed at the factory, which will completely eliminate smoke emissions. In
addition, FEPA carries out a weekly environmental compliance audit of the factory.
3. BOARD OF DIRECTORS
The Board of Directors of Dangote Sugar consists of nine members, two of whom act in executive
capacities.
I am also on the Boards of the National Council of Nigerian Vision, Mohammed Bello Endowment
for Justice and Jurisprudence, Kano Foundation, the Nigerian Economic Summit Group, African
Petroleum Plc, National Investment Promotion Council and the Heart of Africa (a management group
on Nigeria Image Project), amongst others.
Mr Somani holds a Bachelors degree in Physics, Chemistry and Mathematics from the University of
Rajasthan, India (1972) and is a Fellow of the Institute of Chartered Accountants of India (1982).
Page 22
THE CHAIRMAN’S LETTER
Mr Olarinde has attended various local and international courses and his experience within the
Dangote Group spans Internal Auditing, Acquisitions and General Management.
Dr Ajayi is a member of the International Bar Association, London, the Nigerian Bar Association and
the Nigerian Economic Summit Group. He is also a Fellow of the Institute of Advanced Legal
Studies and a member of the Chartered Institute of Arbitrators, London.
Alhaji Sani Dangote is also the Deputy Chairman of African Gum Arabic Producers Association and
a two-time President of Lagos Polo Club in addition to being a professional polo player. In
recognition of his sterling leadership qualities, he was recently appointed as the Consul-General of
the Romanian Embassy in Nigeria. He is a member of several Chambers of Commerce, a Fellow of
the Chartered Institute of Shipping of Nigeria and President of the Fertiliser Producers and Suppliers
Association.
Page 23
THE CHAIRMAN’S LETTER
She is a Fellow of the Institute of Directors and a Member of the Nigerian Bar Association,
International Bar Association, International Federation of Women Lawyers and Chartered Institute of
Bankers.
He has been Consultant/Lead Advisor to many companies both locally and internationally in the
areas of financial management, mergers and acquisitions and business process improvement. He
joined Dangote Industries Limited in 2005 as Executive Director, Corporate Finance and Treasury.
The management team, comprising the Managing Director, the Finance Director and other
management staff, oversees the day to day affairs of the Company and is responsible to the Board of
Directors. The Company had a total of 672 employees as at 30 June 2006, comprising 37 managerial
and 635 non-managerial staff.
Engineer Diego Cortes is the General Manager, Refinery. He was trained as an Engineering
Technician in Panama (1965). He has over 30 years experience in Maintenance and Personnel
Training Management and is well learned in Boiler Operations, Sugar Technology, Welding and
Steam Turbine. Prior to joining the Company in 2000, he worked at Chiriqui Sugar Mill, Panama
(1978 to 1980) as Assistant Factory Superintendent responsible for the maintenance and operations of
Page 24
THE CHAIRMAN’S LETTER
the boilers; Kenana Sugar Complex, Sudan (1980 to 1988) as Chief Engineer responsible for boiler
operation machine shop operations; F. C. Shaffer & Associates (1988 to 1989) as Consultant to study
power core regeneration from bagasse for sugar mills; and Alma Plantation, Panama (1989 to 2000)
as Assistant Chief Engineer responsible for boilers operations, machine shop operations and day-to-
day maintenance. He has attended courses in these fields in the United Kingdom and USA.
Mr Tony Nya Duke is the Assistant General Manager, Administration and Human Resources. He
holds an HND in Accountancy from Calabar Polytechnic (1985), a Post Graduate Degree in Public
Administration from University of Ibadan (1999) and an MBA in Management from Ambrose Alli
University, Ekpoma (2003). He is a Member of the Chartered Institute of Personnel Management,
Nigerian Institute of Management, the Chartered Institute of Taxation of Nigeria, the Institute of
Certified Public Accountants of Nigeria and the Institute of Industrial Security & Safety of Nigeria.
His experience spans treasury, finance, audit and risk management.
Mr Christopher Ikechukwu Okoh is the Chief Chemist. He holds a Bachelor of Science degree in
Biochemistry from University of Benin (1990) and a Masters of Science Degree in Analytical
Chemistry from University of Ibadan (1997). He has 13 years manufacturing experience involving
quality management, plant commissioning, plant upgrades and food projects implementation. He is a
Member of the Institute of Chartered Chemists of Nigeria, the Institute of Public Analysts of Nigeria,
the Nigerian Institute of Food Science & Technology, the Association of Analytical Chemists and the
American Society of Sugarcane Technologists.
Mr Tunde Enitan Mabogunje is the General Manager, Sales & Marketing. He holds a Bachelors
degree in History from Ahmadu Bello University, Zaria (1984) and an MBA from Ogun State
University (2004). He has over 20 years experience in field sales and marketing, working for
organisations such as Tate Industries Plc and Dunlop Nigeria Plc. He is a Member of the National
Institute of Marketing of Nigeria.
Mrs Aderoju Olanrewaju Akinsanya is the Head, Audit/Risk. She holds an HND in
Accountancy/Finance from Lagos State Polytechnic (1981) and an MBA from Ado-Ekiti University
(2001). She is a Fellow of the Institute of Chartered Accountants of Nigeria and a Chartered Member
of the Nigerian Institute of Management. She worked as an Accountant for Akintola Williams & Co
(1992 to 1994) and was the Head of Internal Audit at Nationwide Merchant Bank Limited before
joining DIL in 1999.
Mr Agboola Adewale Adebayo is the Company Secretary. He holds a LLB (Civil Law) from
Obafemi Awolowo University, Ile-Ife (1990) and a BL from the Nigerian Law School in 1991. He
started his career with Prince Yomi Oshikoya & Co (1992 to 1994) and joined Akinjide & Co as a
Counsel (1995 to 1998). He joined Bode Wilfred & Co as Senior Counsel in 1998 and was appointed
the Human Resource Manager and Company Secretary/Legal Adviser to Daayad Group of
Companies in 2001. He joined the Dangote Group in 2005.
Page 25
THE CHAIRMAN’S LETTER
5. PREMISES
Dangote Sugar currently operates from a Corporate Office and a factory, which are both located in
Apapa, Lagos. Details of the Company’s premises are provided below:
The IPO is being undertaken to give investors an opportunity to become part owners of Dangote
Sugar, the market leader in the Nigerian sugar industry, which is currently 99% owned by DIL. The
IPO will also enable the Company meet the requirements for a listing on The Nigerian Stock
Exchange.
7. FINANCIAL SUMMARY
The financial summary provided below has been prepared from information extracted from the
Reporting Accountants’ Report on segmental financial statements of the erstwhile Sugar Division of
DIL for the five years ended 31 December 2005, the audited financial information of Dangote Sugar
for the six months ended 30 June 2006 and the Reporting Accountants’ Report on the Profit Forecast
of Dangote Sugar for the years ending 31 December 2006, 2007, 2008 and 2009.
Earnings (N
= ’billion)
30
30
27
PBT 24
23
PAT
20
20 18 18 18
9 9
10 CAGR (2001 - 2005): 41%
7 7
5 5
2 2 1 1
0
2001 2002 2003 2004 2005 2006E 2007E 2008E 2009E
Dangote Sugar currently enjoys pioneer status and is not liable to taxation until the pioneer status
expires on 01 January 2007. The Company’s PAT for the year ended 31 December 2007 will
therefore be subject to taxation.
Page 26
THE CHAIRMAN’S LETTER
32
30 29
EBITDA (N'b)
EBITDA Margins 26
20
20 CAGR (2001 - 2005): 46%
13
10
10
7
3 2
27% 29% 29% 29%
24% 22% 23%
19% 17%
0
2001 2002 2003 2004 2005 2006E 2007E 2008E 2009E
Growth in EBITDA margins from 2006 to 2007 will be driven by a complete switch from liquid fuels
to gas by 2006 ending thereby reducing operating cost and enhancing overall efficiency. The
Company intends maintaining a cost efficient structure by keeping EBITDA margins at an average of
29% from 2007.
Turnover (N
= ’billion)
120
110
98
100
86 88
59
60
37
40
28
20 15 14
0
2001 2002 2003 2004 2005 2006E 2007E 2008E 2009E
Growth in turnover will be driven by anticipated growth in the Nigerian sugar market.
Page 27
THE CHAIRMAN’S LETTER
The Directors of Dangote Sugar, after due consideration of the Company’s present financial position,
are of the opinion that the Company will have adequate working capital for its immediate and
foreseeable future obligations and funding requirements.
The Directors estimate that in the absence of unforeseen circumstances, the profit before taxation for
the years ending 31 December 2006, 2007, 2008 and 2009 will be in the order of N = 17.9 billion, N
= 23.7
billion, N
= 27.1 billion and N = 30.2 billion respectively. If these estimates are achieved, the
appropriations thereof will be approximately as follows:
N
= ’000
Year Ending 31 December 2006 2007 2008 2009
Profit before taxation 17,930,597 23,665,328 27,094,542 30,168,553
Taxation - (5,916,332) (6,773,635) (7,542,138)
Profit after taxation 17,930,597 17,748,996 20,320,906 22,626,414
Dividend proposed (10,000,000) (12,000,000) (15,000,000) (17,000,000)
Retained profit for the year 7,930,597 5,748,996 5,320,906 5,626,414
Forecast earnings per share (kobo)* 179.31 177.49 203.21 226.26
Forecast dividend per share (kobo)* 100.00 120.00 150.00 170.00
* Calculations of forecast earnings and dividend per share for the years ending 31 December 2006, 2007, 2008 and 2009
are based on the 10 billion Ordinary Shares of 50 kobo each expected to be in issue on those dates.
9. UNCLAIMED DIVIDENDS
There are no unclaimed dividends accruing to shareholders of Dangote Sugar as at the date of this
Prospectus.
Page 28
THE CHAIRMAN’S LETTER
Non-Executive Directors
Dangote Sugar’s non-Executive Directors are of strong calibre and contribute actively to Board
deliberations and decision-making. However, non-Executive Directors are not appointed for a fixed
period, but shall instead remain in office until the Company determines their tenure or by operation
of law.
Executive Directors
The remuneration of the Chief Executive Officer is fixed by the Board. The Board Establishment
Committee will be chaired by a non-Executive Director and composed of other non-Executive
Directors. Full disclosure is provided for Directors’ remuneration i.e. highest paid Director and the
remuneration of the Chairman.
Dangote Sugar will in the near future explore the possibility of exporting white sugar to other West
African countries, to take advantage of the incentives offered by the ECOWAS free trade zone.
The Company also intends to get involved in the upstream segment of the sugar business by acquiring
and developing Savannah Sugar Company Limited, a subsidiary of DIL, to create synergies and
increase overall capacity. Savannah Sugar currently has capacity to produce 100,000 metric tonnes of
white sugar from own grown sugarcane. Post acquisition, Dangote Sugar can expand Savannah Sugar
to produce up to 600,000 metric tonnes of white sugar from own grown sugarcane.. The Apapa
refinery will continue to refine imported raw sugar, while Savannah Sugar will continue to operate as
a separate enterprise engaged in the business of producing sugarcane and processing it into white sugar.
Dangote Sugar’s historical performance and its unique position as the largest sugar refiner in Sub Saharan Africa
clearly confirm the Company’s leadership in the Nigerian sugar industry. I encourage prospective investors to
take advantage of the unique opportunity this IPO presents to become shareholders of Dangote Sugar.
Yours faithfully
Page 29
THE PROFIT FORECAST
The following is a copy of the letter on the Profit Forecast by Ahmed Zakari & Co (Chartered Accountants),
the Reporting Accountants to the Offer:
29 September 2006
Dear Sirs
We have reviewed the accounting bases and calculations for the profit forecast set out on page 32, of Dangote
Sugar Refinery Plc for the years ending 31 December 2006, 2007, 2008 and 2009 (for which the Directors of
Dangote Sugar Refinery Plc are solely responsible).
The forecast includes results shown by the Company’s audited financial statements for the six month period
ended 30 June 2006.
In our opinion the forecast, so far as the accounting policies and calculations are concerned, has been properly
compiled on the basis of the assumptions made by the Directors of the Company as set out on pages 32 to 34
and are presented on a basis consistent with the accounting policies normally adopted by the Company and in
accordance with generally accepted accounting principles applicable in Nigeria.
Page 30
THE PROFIT FORECAST
However, there will usually be differences between forecast and actual results, because events and
circumstances frequently do not occur as expected and these differences may be material.
We have no responsibility to update this report for events and circumstances occurring after the date of this
report.
Yours faithfully
Page 31
THE PROFIT FORECAST
2. PROFIT FORECAST FOR THE YEARS ENDING 31 DECEMBER 2006, 2007, 2008 AND 2009
The Directors are of the opinion that subject to unforeseen circumstances, and based on the
assumptions stated below and on pages 33 to 34, the profit before taxation for the years ending 31
December 2006, 2007, 2008 and 2009 will be of the order of N= 17.93 billion, N
= 23.67 billion, N
= 27.09
billion and N
= 30.17 billion respectively as detailed below:
Forecast ratios
Forecast earnings per 50 share (kobo)* 179.31 177.49 203.21 226.26
Forecast earnings yield at offer price (%) 9.96 9.86 11.29 12.57
Forecast EBITDA per 50 share (kobo)* 197.32 254.15 287.95 318.39
Forecast dividend per 50 share (kobo)* 100.00 120.00 150.00 170.00
Forecast dividend yield at offer price (%) 5.56 6.67 8.33 9.44
Forecast price/earnings ratio at offer price 10.04 10.14 8.86 7.96
* Forecast earnings and dividend per share for the year ending 31 December 2006, 2007, 2008 and 2009 are
based on the 10 billion Ordinary Shares expected to be in issue on those dates.
3.1 Bases
(a) Previous years’ actual performances of the erstwhile Dangote Sugar Division of Dangote
Industries Limited and the Company’s actual results for six months ended 30 June 2006 have
been used as a basis for measuring the reasonableness of the forecasts for the 2nd half year
2006 and the 2007, 2008 and 2009 financial years.
(b) The forecast includes results as shown by the audited financial statements for the six months
period ended 30 June 2006.
Page 32
THE PROFIT FORECAST
(c) The results for the six months period ended 30 June 2006 and the estimates for the remaining
six months of the year ending 31 December 2006 and the years ending 31 December 2007,
2008 and 2009 have been prepared on a basis consistent with the Company’s accounting
policies.
3.2 Assumptions
(a) At the current selling prices and based on projected level of demand and production
capacity, the turnover of the company for the years ending 31 December 2006, 2007, 2008
and 2009 will be approximately N = 85.81 billion, N
= 87.60 billion, N
= 98.19 billion and N
= 110.52
billion respectively.
(b) Turnover will grow by 2.1% over that of 2006 during the year ending 31 December 2007
and by 12.1% and 12.6% for the years ending 31 December 2008 and 2009 respectively.
(c) Cost of sales percentage is expected to be at 73.6%, 68.2%, 67.9% and 68.4% in 2006, 2007,
2008 and 2009 respectively.
(d) Operating expenses including selling and distribution costs, management fees and finance
charges are projected to be 4.7%, 3.8%, 3.7% and 3.6% of turnover during the years ending
31 December 2006, 2007, 2008 and 2009 respectively.
(e) Taxation (comprising income and education taxes) will be at an average rate of 25% of net
profit before tax for 2007, 2008 and 2009.
(f) Dividend payout will be approximately 56%, 68%, 74% and 75% of profit after tax in 2006,
2007, 2008 and 2009 respectively.
(g) There will be no adverse change in the existing price structure for the Company’s products,
other than as provided in the forecast.
(i) The total national demand for the Company’s product will be sustained, and its share of the
market will not show a significant reduction.
(j) No import restriction or ban will be imposed on the raw materials and machinery spares
requirements of the Company.
(m) There will be no material change in international currency exchange rates, or import duties
pertaining to the Company’s business.
(n) Shipping arrangements with overseas suppliers of raw materials and spares will be executed
on schedule.
(o) Interest rates and bases of taxation, both direct and indirect, will not change materially.
(p) There will be no material acquisitions or disposal of fixed assets, other than as shown in the
forecast.
(q) The political situation in this country, and in the country of suppliers of essential raw
materials and spare parts, will remain stable.
Page 33
THE PROFIT FORECAST
(r) Trading results will not be affected by industrial disputes within the Company, or in those of
its principal suppliers.
(t) The quality of the Company’s management will be sustained during the forecast period.
(u) There will be no drastic change in the legal, political and economic environment that will
adversely affect the operations of the company.
(v) There will be no material successful claims for damages against the Company.
Page 34
THE PROFIT FORECAST
4. LETTER FROM THE REPORTING ACCOUNTANTS IN RESPECT OF THE GOING CONCERN STATUS
29 September 2006
The Directors And And
IBTC Chartered Bank Plc
The Directors The Directors
I.B.T.C. Place
Vetiva Capital Management Limited Access Bank Plc
Walter Carrington Crescent
Plot 266B Kofo Abayomi Street Plot 1665 Oyin Jolayemi Street
Victoria Island
Victoria Island Victoria Island
Lagos
Lagos Lagos
And And And
The Directors The Directors The Directors
BGL Securities Limited Ecobank Nigeria Plc FBN Capital Limited
Plot 1061 Abagbon Close Plot 21 Ahmadu Bello Way 16 Keffi Street
Victoria Island Victoria Island South West Ikoyi
Lagos Lagos Lagos
And And And
The Directors The Directors The Directors
FCMB Capital Markets Limited Fidelity Bank Plc Intercontinental Capital Markets Ltd
Primrose Tower Fidelity Place Wesley House
17A Tinubu Street 2 Kofo Abayomi Street 21/22 Marina
Lagos Victoria Island, Lagos Lagos
And And
The Directors The Directors
Oceanic Bank International Plc Zenith Bank Plc
270 Ozumba Mbadiwe Avenue Plot 87 Ajose Adeogun Street
Victoria Island Victoria Island
Lagos Lagos
Dear Sirs
Based on confirmation received from the Directors of Dangote Sugar Refinery Plc and on the review of the
past results of the Company and its existing operations, we do not have reasons to doubt that the Company
will continue in operation in the foreseeable future.
Yours faithfully
Page 35
THE PROFIT FORECAST
The following is a copy of the letter from the Issuing Houses on the Profit Forecast:
Plot 266B Kofo Abayomi Street, P.O. Box 73530, Victoria Island, Lagos, Nigeria
I.B.T.C. Place Walter Carrington Crescent P O Box 71707 Victoria Island Lagos Nigeria Tel: +234 (1) 4617521-3, 2700657-8 Fax: +234 (1) 4617524
Telephone: +234 1 2626520 2712400 Fascimile: +234 1 2626541/2 E-Mail: IBTC@IBTC.com Email: info@vetiva.com
PRIMROSE TOWER, 17A, Tinubu Street, P.O. BOX 9117, Lagos, Nigeria Telephone
2665944-53 Telex 28428, 28894 Fecity Ng; Facsimile 2641296, 2665126
E-mail: capmkts@firstcitygroup.com
01 November 2006
The Directors
Dangote Sugar Refinery Plc
Modandola House
42/44 Warehouse Road
Apapa
Lagos
Dear Sirs
INITIAL PUBLIC OFFERING OF 3,000,000,000 ORDINARY SHARES OF 50 KOBO EACH IN DANGOTE SUGAR
REFINERY PLC AT N
= 18 PER SHARE
We write further to the Prospectus issued in respect of the Initial Public Offering of 3,000,000,000 Ordinary
Shares of 50 kobo each in Dangote Sugar Refinery Plc, which contains forecasts of the profits of the
Company for the years ending 31 December 2006, 2007, 2008 and 2009.
We have discussed the bases and assumptions upon which the forecasts were made with you and with Ahmed
Zakari & Co (Chartered Accountants), the Reporting Accountants. We have also considered the letter dated
29 September 2006 from the Reporting Accountants regarding the accounting bases and calculations upon
which the forecasts were compiled.
Having considered the assumptions made by you as well as the accounting bases and calculations reviewed
by Ahmed Zakari & Co (Chartered Accountants), we consider that the forecasts (for which you as Directors
are solely responsible) have been made by you after due and careful enquiry.
Yours faithfully
Page 36
THE PROFIT FORECAST
Page 37
HISTORICAL FINANCIAL INFORMATION ON DANGOTE SUGAR
The following is a copy of the report of Ahmed Zakari & Co, the Reporting Accountants to the Offer:
29 September 2006
Dear Sirs
We report on the financial information set out on pages 41 to 46, which have been prepared for inclusion in
the Prospectus to be issued in connection with the proposed Offer for Sale of 3,000,000,000 ordinary shares
of 50 kobo each of Dangote Industries Limited’s shareholding in Dangote Sugar Refinery Plc.
Sequel to a Court Order dated 23 January 2006 sanctioning the Scheme of Arrangement of Dangote Industries
Limited, the assets, liabilities and rights attached to DIL’s Sugar Division were transferred to Dangote Sugar
Refinery Plc with effect from 01 January 2006.
Page 38
HISTORICAL FINANCIAL INFORMATION ON DANGOTE SUGAR
The financial information is based on the audited financial statements of Dangote Sugar Refinery Plc for the
six month period ended 30 June 2006, and incorporates, for comparative purposes only, the segmental
financial statement summaries of the erstwhile Sugar Division of Dangote Industries Limited for the five
years ended 31 December 2005.
The financial statements were prepared under the historical cost convention. Messrs Akintola Williams
Deloitte were the Company’s auditors for the six month period ended 30 June 2006.
The financial information have been prepared in accordance with the accounting policies set out on page 40
after making such adjustments we considered necessary. The financial statements on which the information is
based are the responsibility of the Directors of the Company who approved their issue. The Directors of the
Company are responsible for the contents of the Prospectus in which this report is included.
We conducted our work in accordance with the International Standard on Auditing applicable to review
engagements. This standard requires that we plan and perform the review to obtain moderate assurance as to
whether the financial statements are free of material misstatements. Our review was limited primarily to
examination of the work papers of the external auditors, inquiries of the Company’s personnel and analytical
procedures applied to financial data and thus provides less assurance than an audit. We have not performed an
audit and, accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying
financial information does not give a true and fair view of the state of affairs of Dangote Sugar Refinery Plc
as at 30 June 2006 and of its profit and cash flows for the six months period then ended in accordance with
generally acceptable accounting principles in Nigeria.
Yours faithfully
Page 39
HISTORICAL FINANCIAL INFORMATION ON DANGOTE SUGAR
2. STATEMENT OF ACCOUNTING POLICIES
The following are the principal accounting policies adopted in the preparation of these financial
statements.
(a) Basis of preparation of financial statements
The financial statements are prepared under the historical cost convention as modified by the
revaluation of certain fixed assets.
(b) Turnover
Turnover represents the invoiced value of goods to third parties less discounts and value
added tax.
(c) Fixed assets
Fixed assets are stated at cost or valuation less accumulated depreciation.
(d) Depreciation of fixed assets
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 were:
2006 2005 2004 2003 2002 2001
Leasehold land and buildings 2% 2% 2% 2% 2% 2%
Plant and Machinery 6.67% 6.67% 6.67% 15% 15% 15%
Tools and equipment 12.5% 12.5% 20% 20% 20% 20%
Motor vehicles 25% 25% 25% 25% 25% 25%
Furniture and fittings 20% 20% 20% 20% 20% 20%
Computer equipment/software 33.33% 33.33% 33.33% 33.33% 33.33% 33.33%
In the case of revalued properties, depreciation is calculated by reference to the enhanced
values of the properties concerned. No depreciation is charged on fixed assets until they are
brought into use.
(e) Repairs and renewals
All repairs and renewals are written off as incurred but major repairs are capitalized.
(f) Stock and work-in-progress
Stock and work-in-progress are valued at the lower of cost and net realizable value.
(g) Rate of exchange
Transactions in foreign currencies are recorded in Naira at the rates of exchange ruling at the
time they arise.
Assets and liabilities existing in foreign currencies are converted to Naira at the rates of
exchange ruling at the balance sheet date. Gains or losses arising there-from are included in
the profit and loss account.
(h) Debtors
Bad debts are written off and specific provisions are made for those debts considered doubtful.
(i) Deferred taxation
Deferred taxation is provided using the liability method at the current rate of income tax on
all timing differences between the treatment of certain items for accounting purposes and
their treatment for taxation.
(j) Long-term investments
Long-term Investments are shown at cost.
(k) Employees' retirement benefits
The Company makes provision for retirement benefits in accordance with the Pension
Reform Act of 2004. The contribution of the employer is 8.5% while that of the employee is
7.5% of relevant emoluments.
The company also operates a gratuity scheme for its permanent Nigerian staff, the benefits under
which are related to employees’ length of service and remuneration. The provision for liability
in respect thereof based on actuarial valuation is provided in full in the financial statements.
Page 40
HISTORICAL FINANCIAL INFORMATION ON DANGOTE SUGAR
Interest expense and similar charges (636,892) (2,223,367) (1,290,043) (1,076,753) (553,322) (742,591)
Profit on ordinary activities before taxation 6.4 7,811,435 9,379,697 7,371,106 4,546,733 1,219,430 1,571,695
Taxation 6.5 - - - (3,218) - (72,600)
Retained profit for the year 7,811,435 9,379,697 7,371,106 4,543,515 1,219,430 1,499,095
The accounting policies on pages 40 and the notes on pages 44 to 46 form part of these accounts.
Page 41
HISTORICAL FINANCIAL INFORMATION ON DANGOTE SUGAR
4. BALANCE SHEET
PRE-SCHEME OF ARRANGEMENT
AS AT SIX MONTHS <-----DANGOTE SUGAR DIVISION - SEGMENTAL BALANCE SHEETS AS AT 31 DECEMBER----->
TO JUNE
Current Assets
Stock and work-in-progress 6.7 3,842,384 3,089,203 2,956,514 311,112 3,612,105 2,346,652
Debtors and prepayments 6.8 11,097,567 26,859,994 16,166,097 13,770,221 (473,648) 565,509
Cash and bank balances 3,923,155 4,485 2,276,967 1,828,831 1,096,317 797,999
18,863,106 29,953,682 21,399,578 15,910,164 4,234,774 3,710,160
Total Assets Less Current Liabilities 19,243,358 34,804,395 25,391,136 17,965,690 13,422,175 1,278,727
The accounting policies on page 40 and the notes on pages 44 to 46 form part of these accounts.
Page 42
HISTORICAL FINANCIAL INFORMATION ON DANGOTE SUGAR
PRE-SCHEME OF ARRANGEMENT
SIX MONTHS <----DANGOTE SUGAR DIVISION - SEGMENTAL CASH FLOW
TO JUNE STATEMENTS----> FOR THE YEARS ENDED 31 DECEMBER
2006 2005 2004 2003 2002 2001
N'000 N'000 N'000 N'000 N'000 N'000
CASH FLOW FROM OPERATING ACTIVITIES
Operating profit before taxation 7,811,435 9,379,697 7,371,106 4,546,733 1,219,430 1,571,695
Decrease/[Increase] in stock & work in progress (3,842,384) (132,689) (2,645,402) 3,300,993 (1,265,453) (1,327,158)
Decrease/[Increase] in debtors & prepayment (11,097,567) 3,040,638 4,003,680 (13,643,390) 734,967 (429,841)
Decrease/[Increase] in due from related companies - (13,734,537) (6,399,556) (600,479) 304,190 (1,071,865)
[Decrease]/Increase in creditors & accruals 13,850,600 (1,000,920) 10,110,716 (784,190) (1,306,753) (846,294)
(Decrease)/Increase in taxation payable - 25,502 (101,320) - - -
Cash generated from/[absorbed] in operations 7,091,263 (1,180,251) 13,573,377 (6,023,942) 275,241 (1,602,458)
Net decrease in cash and cash equivalents 3,817,326 (2,272,482) 12,736,582 (6,482,151) (1,188,157) (1,594,815)
Page 43
HISTORICAL FINANCIAL INFORMATION ON DANGOTE SUGAR
6.5 Taxation
Charge for the year: - - - 3,218 - 72,600
Per Profit and Loss Account: - - - 3,218 - 72,600
The Company is not liable to taxation as it acquired pioneer status through a Scheme of Arrangement with its holding
company Dangote Industries Limited which had since 1 January, 2002 been granted pioneer status by the Nigerian
Investments Promotion Commission. The pioneer status expires on January 01, 2007.
Cost / Valuation
Land & Buildings 3,273,286 3,550,638 3,550,638 3,560,033 3,954,049 625,905
Plant & Machinery 9,585,384 14,811,153 12,097,715 11,266,045 10,618,360 3,884,325
Tools & Equipment 87,917 1,022,939 2,669,508 2,661,016 2,480,791 158,894
Computer Hardware/Software 4,597 19,803 14,061 13,165 10,315 7,313
Motor Vehicles 32,942 69,871 61,357 61,357 42,815 35,414
Furniture & Fittings 8,964 65,781 54,676 49,543 46,619 53,683
Work in Progress 1,601,371 - - - - -
At 31 December 14,594,461 19,540,186 18,447,954 17,611,159 17,152,949 4,765,533
Accumulated depreciation
Land & Buildings 32,733 278,108 207,095 136,105 62,982 22,947
Plant & Machinery 319,676 3,656,477 2,774,285 1,894,968 1,033,098 590,796
Tools & Equipment 10,990 939,651 683,916 431,031 224,963 134,886
Computer Hardware/Software 766 15,975 13,481 8,794 5,589 3,188
Motor Vehicles 4,118 59,206 41,738 26,399 19,946 13,406
Furniture & Fittings 896 57,187 44,031 33,096 27,425 19,920
Work in Progress - - - - - -
At 31 December 369,179 5,006,604 3,764,547 2,530,394 1,374,003 785,143
Net book value
Land & Buildings 3,240,553 3,272,530 3,343,543 3,423,928 3,891,067 602,959
Plant & Machinery 9,265,708 11,154,676 9,323,430 9,371,076 9,585,262 3,293,529
Tools & Equipment 76,927 83,288 1,985,591 2,229,985 2,255,828 24,008
Computer Hardware/Software 3,831 3,828 580 4,370 4,725 4,124
Motor Vehicles 28,824 10,665 19,619 34,958 22,870 22,008
Furniture & Fittings 8,068 8,594 10,645 16,448 19,194 33,762
Work in Progress 1,601,371 - - - - -
At 31 December 14,225,282 14,533,581 14,683,408 15,080,766 15,778,947 3,980,390
The Company has short leasehold land and buildings at Apapa Port Complex. The lease is for a term of 21 years with
commencement date of 1 June 1999. The lease is subject to renewal on expiration of the initial tenure.
Page 44
HISTORICAL FINANCIAL INFORMATION ON DANGOTE SUGAR
<-----------------------PRE-SCHEME OF ARRANGEMENT---------------------
SIX MONTHS DANGOTE SUGAR DIVISION - SEGMENTAL FINANCIAL
TO JUNE STATEMENTS FOR THE YEARS ENDED 31 DECEMBER
6.9 Borrowings
(i) Overdrafts 105,829 - - 12,288,446 5,073,781 3,587,306
(ii) Short term Loans - - - - - -
105,829 - - 12,288,446 5,073,781 3,587,306
This represents the value of net assets of Dangote Sugar Division transferred as at January 01, 2006 over and above the
Company's authorised share capital in accordance with the Scheme of Arrangement of Dangote Industries Limited.
The Fixed Assets were revalued in year 2002 and the revalued figures were incorporated in the Financial Statements.
Transferred from profit and loss account 7,811,435 9,379,697 7,371,106 4,543,515 1,219,430 1,499,094
7,811,435 23,792,475 14,412,778 7,041,672 2,498,157 1,278,727
2 The Directors are of the opinion that all known commitments and liabilities which are relevant in assessing the state of affairs
of the Company have been taken into consideration in the preparation of these financial statements.
Page 45
HISTORICAL FINANCIAL INFORMATION ON DANGOTE SUGAR
Page 46
STATUTORY AND GENERAL INFORMATION
1. INCORPORATION AND SHARE CAPITAL HISTORY
Dangote Sugar commenced business in March 2000 as the sugar division of DIL. The sugar division
was spun-off as Dangote Sugar Refinery Plc via a Scheme of Arrangement in January 2006 which
transferred all the assets, liabilities and undertakings attributable to the sugar division of DIL to
Dangote Sugar. The Company was formally incorporated on 04 January 2005.
The Company had an initial authorised share capital of N = 50 million comprising 50 million
Ordinary Shares of N = 1 each, and an issued share capital of N
= 50 million which comprised 500,000
Ordinary Shares allotted to Alhaji Aliko Dangote which were fully paid-up, and 49,500,000
Ordinary Shares allotted to DIL which were unpaid. In 2006, the 49,500,000 shares allotted to DIL
were credited as fully paid-up pursuant to the Scheme of Arrangement. The Company’s shares
were subsequently subdivided from N = 1 shares into 50 kobo shares and the authorised share capital
was increased to N= 6 billion comprising 12 billion Ordinary Shares of 50 kobo each, of which 10
billion Ordinary Shares of 50 kobo each have now been issued and fully paid.
The changes in the Company’s authorised and paid-up share capital since incorporation are
summarised below:
Year Authorised (N
= ’000) Issued & Fully Paid-up (N
= ’000) Consideration
Increase Cumulative Increase Cumulative
2005 50,000 50,000 500 500 Cash
2006 0 50,000 49,500 50,000 Scheme shares
2006 5,950,000 6,000,000 4,950,000 5,000,000 Bonus
2. SHAREHOLDING STRUCTURE
As the date of this Prospectus, the 10 billion Ordinary Shares of 50 kobo each in the issued ordinary
share capital of the Company were beneficially held as follows:
The interests of the Directors of Dangote Sugar in the issued share capital of the Company as recorded in
the Register of Members as at the date of this Prospectus and as notified by them for the purpose of
Section 275 (1) of the Companies & Allied Matters Act Cap C20 LFN 2004 are as follows:
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STATUTORY AND GENERAL INFORMATION
4. INDEBTEDNESS
As at 30 June 2006, the Company had secured bank overdrafts in the ordinary course of business
amounting to N = 105.8 million. However, the Company had no outstanding debenture, mortgages,
charges or similar indebtedness or contingent liabilities as at 30 June 2006.
As at the date of this Prospectus, the Company had no subsidiary or associated company.
The following are the relevant extracts from the Company’s Memorandum of Association:
6: The Share Capital of the Company is Six Billion Naira (N = 6,000,000,000) divided into
Twelve Billion (12,000,000,000) Ordinary Shares of 50 kobo (N
= 0.50) each.
The following are the relevant extracts from the Company’s Articles of Association:
PUBLIC COMPANY
(b) the number of members of the Company is unlimited; PROVIDED that where two or
more persons hold one or more shares in the Company jointly, they shall for the purpose
of this registration be treated as a single member;
(c) any invitation to the public to subscribe for any shares or debentures of the Company is
authorized if done in accordance with the laws promulgated by the relevant statutory
bodies charged with the responsibility .
Art 4.1 Subject to the provisions hereinafter contained, shares in the Company shall be transferable
by a written instrument in the common form or such other form as the Directors may
approve signed by both the transferor and the transferee, and the transferor shall be deemed
to remain the holder of the share until the name of the transferee is entered in the Register in
respect thereof.
Art 4.2 The Board may refuse in their absolute discretion and without referring ay (sic) reason
therefore decline to register any transfer of shares on which the Company has a lien. The
Board may also suspend the register of transfers during the fourteen days immediately
preceding the Ordinary General Meeting each year.
Art 4.3 The Company in General Meeting shall refuse to register any instrument of transfer unless:
(a) Such fee as the Company may from time to time require, is paid to the Company in
respect thereof; and
(b) the instrument of transfer is accompanied by the certificate of the shares to which it
relates, and such other evidence as the Company in General Meeting may reasonably
require to show the right of the transferor to make the transfer, and
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STATUTORY AND GENERAL INFORMATION
Art 5 The personal representatives of a deceased sole holder of a share shall be the only persons
recognised by the Company as having any title to the shares. In the case of a share registered
in the names of two or more holders, the survivor(s) or personal representative(s) of the
deceased shall be the only person(s) recognised by the Company as having title to the share.
Art 6 Any person becoming entitled to a share in consequence of the death or bankruptcy of a
member shall, upon such evidence being produced as may from time to time be required by
the Directors, have the right either to be registered as a member in respect of the share or,
instead of being registered himself, to make such transfer of the share as the deceased or
bankrupt person could have made; PROVIDED that the Directors shall, in either case, have
the same right to decline or suspend registration as they would have had in the case of a
transfer of the share by the deceased or bankrupt person before the death or bankruptcy.
Art 7 Any person becoming entitled to a share in consequence of the death, or bankruptcy of a
member shall be entitled to the same dividend and other advantages to which he would be
entitled if he were the registered holder of the share, except that he shall not, before being
registered as a member in respect of the share, be entitled in respect of it to exercise any
rights conferred by membership in relation to meetings of the Company.
NO TRUSTS RECOGNIZED
Art 12 Except as required by law, no person shall be recognized by the Company as holding any
share upon any trust, and the Company shall not be bound by or be compelled in any way to
recognize (even when having notice thereof) any equitable, contingent, future or partial
interest in any fractional part of a share, or any rights in respect of any share except an
absolute right to the entirety thereof in the registered holder.
ALTERATION OF CAPITAL
Art 28 The Company may from time to time by Ordinary Resolution increase the share capital of
the Company by such sum to be divided into shares of such amount as the Resolution shall
prescribe.
MEETINGS
Art 30 A general Meeting to be known as the Annual General Meeting shall be held once in every
calendar year at such time (not being more than fifteen (15) months after the holding of the
last preceding Annual General Meeting) and place as may be determined by the Directors;
and shall specify the Meeting as such in the notices calling it.
Art 31 All General Meetings other than Annual General Meetings shall be called Extraordinary
General Meetings.
Art 32 The directors may convene an Extraordinary General Meeting whenever they deem fit, and
if at any time there are not within Nigeria sufficient directors capable of acting to form a
quorum, any director may convene an Extraordinary General Meeting.
Art 33 A General Meeting and a meeting called for the passing of a special resolution shall be
called by twenty-one (21) days notice in writing at the least. The notice shall be exclusive of
the day on which it is served or deemed to be served and of the day for which it is given and
shall specify the place, the day and the hour of meeting and, in case of special business, the
general nature of that business shall be given, in such a manner, if any, as may be prescribed
by the Company in General Meeting to such persons as are, under regulations of the
Company, entitled to receive such notices from the Company;
Page 49
STATUTORY AND GENERAL INFORMATION
PROVIDED that a General Meeting of the Company shall notwithstanding that it is called
by a shorter notice than that specified in this regulation, be deemed to have been duly called
if it is so agreed.
(a) in the case of a meeting called as the Annual General Meeting by all the members
entitled to attend and vote thereat; and
(b) in the case of any other meeting, by a majority in number of the members having a right
to attend and vote at the meeting being a majority together holding not less than ninety-
five per cent (95%) in nominal value of the shares giving that right.
Art 34 The accidental omission to give notice of a meeting to, or non-receipt of notice of a meeting,
by, any person entitled to receive the notice shall not invalidate the proceedings at that
meeting.
PROCEEDINGS AT GENERAL MEETINGS
Art 35 All business shall be deemed special that is transacted at an Extra-ordinary General Meeting,
and also all that is transacted at an Annual General Meeting, with the exception of the
declaration of dividends, the consideration of the Accounts, Balance Sheet, and the Reports
of the Directors and Auditors, the election of directors in the place of those retiring and the
appointment and or fixing of the remuneration of the Auditors.
Art 36 Unless otherwise provided, no business shall be transacted at any General Meeting unless a
quorum of members is present at the time when the meeting proceeds to business. Two (2)
members present in person or by proxy shall be a quorum.
Art 37 If within half an hour from the time appointed for the meeting a quorum is not present, the
meeting, if convened upon the requisition of members, shall be dissolved. In any other case,
it shall stand adjourned to the same day in the next week, at the same time and place as that
specified in the notice convening the meeting, and if at the adjourned meeting a quorum is
not present within half an hour from the time appointed for the meeting, the members
present shall be a quorum.
Art 38 The Chairman, if any, of the Board shall preside at every General Meeting, but if at any
meeting he shall not be present within fifteen minutes after the time appointed for holding
the same or shall be unwilling to act as Chairman, the members present shall choose one of
the Directors or, if no Director be present or if all the Directors present decline to take the
chair, they shall choose one of the members to be the Chairman of the meeting.
Art 39 At any General Meeting, a resolution put to the vote of the meeting shall be decided on a
slow of hands by a unanimous vote of all the members present in person or by their proxy,
unless a poll is (before or on the declaration of the result of show of hands) demanded by or
at least member entitled to cote at the meeting, or by the holders present in person or by
proxy, of at least one-tenth part of the total voting rights of all the members having the right
to vote at the meeting, or by a member or members holding shares on which an aggregate
sum has been paid up equal to not less than one-tenth of the total sum paid upon all the
shares conferring that right. Unless a poll is so demanded, a declaration by the Chairman that
a resolution has on a show of hands been carried or carried unanimously, or by a particular
majority, or lost, and an entry to that effect in the minutes book of the Company shall be
conclusive evidence thereof without proof of the number or proportion of the votes recorded
in favour of or against such resolution. A proxy need not be a member of the Company.
Art 40 Any corporation, trust, partnership or other legal entity which is a member of the Company
may, by resolution of its directors or other governing body, authorise any person to act as its
representative at any meeting or meetings of the Company or of any class of members
thereof, and such representative shall be entitled to exercise the same powers on behalf of
the entity which he represents as if he had been an individual shareholder, including power,
when personally present, to vote on a show of hands.
Page 50
STATUTORY AND GENERAL INFORMATION
Art 41 Subject to the provisions of the Act, a resolution in writing signed by all the members for the
time being entitled to receive notice of, and to attend and vote at, General Meetings (or being
corporations by their duly authorised representatives) shall be valid and effectual as if the
same had been passed at a General Meeting of the Company duly convened and held.
Art 42 A proxy may take part in the proceedings of a General Meeting as if he were the member
whom he represents.
VOTE OF MEMBERS
Art 43 On a show of hands, every member present in person or by proxy shall have one (1) vote.
On a poll, every member shall have one (1) vote for each share of which he is the holder.
Art 44 If any member be a lunatic, idiot or non compos mentis, he may vote, whether on a show of
hands or at a poll, by his committee, curator bonis, or other legal curator, and such last-
mentioned person may give their votes by proxy on a poll.
Art 45 If two or more persons are jointly entitled to a share, then, in voting upon any question, the
vote of a senior who tenders a vote, whether in person or by proxy, shall be accepted to the
exclusion of the votes of the other registered holders of the shares, and for this purpose
seniority shall be determined by the order in which the names stand in the register of
members.
Art 46 Save as herein expressly provided, no person other than a member duly registered shall, after
a call shall have been made, paid all amounts for the time being due from him and payable to
the company in respect of his shares, shall be entitled to be present or to vote on any
question either personally or by proxy, or as proxy for another member, at any General
Meeting.
Art 47 Votes may be given either personally or by proxy. On a show of hands a member present
only by proxy shall not be entitled to vote except that member is a corporation.
Art 49 Any corporation which is a member of this Company may, by resolution of its Directors or
other governing body, authorize any person to act as its representative at any meeting of this
Company or of any class of members thereof, and such representative shall be entitled to
exercise the same powers on behalf of the corporation which he represents as if he had been
an individual shareholder, including power, when personally present, to vote on a show of
hands.
Art 50 The instrument appointing a proxy shall be in writing under the hand of the appointer or his
attorney duly authorized in writing, or if such appointer is a corporation, either under its
Common Seal, or under the hand of an officer or attorney duly authorized.
Art 51 The instrument appointing a proxy and the power of attorney or other authority, if any, under
which it is signed, or a certified copy of that power or authority, shall be deposited at the
registered office or head office of the company or at such other place within Nigeria as is
specified for that purpose in the notice convening the meeting, not less than 48 hours before
the time for holding the meeting or adjourned meeting, at which the person named in the
instrument proposed to vote, or in the case of a poll, not less than 24 hours before the time
appointed for the taking of a poll: and in default, the instrument of proxy shall not be treated
as valid and the person named therein shall not be entitled to vote.
Art 52 A vote given in accordance with the terms of an instrument of proxy shall be valid
notwithstanding the previous death or insanity of the principal or revocation of the proxy or
of the authority under which it was executed, or the transfer of the share in respect of which
the vote is given, provided no intimation in writing of the death, insanity, revocation or
transfer shall have been received by the Company before the commencement of the meeting
or adjourned meeting at which the proxy is used.
Page 51
STATUTORY AND GENERAL INFORMATION
Art 53 Any instrument appointing a proxy shall be in the following form or as near thereto as
circumstances will admit:
DIRECTORS
Art 54 The subscribers to the Memorandum of Association shall appoint the first Directors of the
Company.
Art 55 The members at a general meeting shall have the power to re-elect or reject Directors and
appoint new ones.
Art 56 A shareholder holding not less than ten per cent of the issued and paid up shares of the
Company shall be entitled to nominate in writing to the Board one Director for each ten per
cent of shares held by him provided that the number of Directors nominated by a shareholder
under this sub-clause shall not be more than two persons. Such shareholder shall have the
power to remove and re-appoint a nominee as he thinks fit. Any nomination for appointment
or removal of a Director shall be in writing.
Art 58 All other shareholders, each of whom may hold less than ten per cent of the issued and paid
shares of the Company shall be entitled to nominate to the Board one Director for each ten
per cent of the shares held in aggregate by them.
Art 59 Unless and until otherwise determined by the Company in General Meeting, the number of
Directors of the Company shall not be less than two (2) nor more than fifteen (15).
Art 60 It shall not be necessary for any Director of the Company to acquire or hold any share
qualification, but a Director shall be entitled to receive notice of, and to attend, all General
Meetings.
REMUNERATION OF DIRECTORS
Art 61 The Company in General Meeting may from time to time direct such sums as may be
thought fit to be paid as and by way of remuneration to the Directors, and any such sum shall
be divided amongst them as they may agree or, failing agreement, equally. The Directors
shall also be entitled to be repaid all expenses reasonably incurred by them respectively in or
about the performance of their duties as Directors.
MANAGING DIRECTOR
Art 63 The Directors may, from time to time, appoint one of their number to be Managing Director
for such period, at such remuneration and upon such terms as to the duties to be performed,
the powers to be exercised and all such other matters as they think fit, but so that no
Managing Director shall be invested with any powers or entrusted with any duties which the
Directors themselves could not have exercised or performed and so also that there shall not
Page 52
STATUTORY AND GENERAL INFORMATION
be more than one Managing Director holding Office at any one time. The remuneration of a
Managing Director may be by way of salary and or bonus or commission or participation in
profits, or by any or all of those modes, and it may be made a term of his appointment that
he be paid a pension or gratuity on retirement from his office.
RETIREMENT BY ROTATION
Art 64 The provisions of the Act pertaining to the retirement of Directors by rotation, or any
statutory modification or replacement thereof shall not apply to the Company. Accordingly,
the Directors of the Company shall not retire by rotation, but shall instead remain in office
until the Company determines their tenure or by operation of law.
Art 65 The Directors may, from time to time, and at any time, provide through Local Boards,
Attorneys or Agencies for the management of the Company outside Nigeria, and may
appoint any person to be members of such Local Boards, or as Attorneys or Agents and may
remove any person so appointed and appoint others in their place, and may fix their
remuneration.
Art 66 The Directors may, from time to time, and at any time, delegate to any such Local Board,
Attorney or Agent any of the powers, authorities and discretion for the time being vested in
the Directors, other than the power to make calls, forfeit shares, borrow money or issue
debentures and any such delegation may be made on such terms and subject to such conditions
as the Directors may think fit, and may include a power to sub-delegate. The Directors may
annul the powers so delegated, as they deem fit, provided that no person dealing in good
faith and without notice of such annulment or variation shall be affected thereby.
Art 67 Any Director may at any time appoint any other Director or appoint any other person
approved by a majority of the other Directors for the time being to be his alternate and may
at any time remove any alternate Director appointed by him, and (subject to such approval as
aforesaid) appoint another in his place. An alternate Director shall not be entitled to receive
any remuneration from the Company, nor shall it be necessary for him to acquire or hold any
qualification share, but he shall be entitled (subject to his giving to the Company an address
within Nigeria at which notices may be served on him) to receive notice of meetings of the
Directors and to attend and vote as a Director at any such meeting, at which the Director
appointing him is not present and at such meeting, to exercise all powers, duties and
authorities of the Director appointing him. A Director who is also an alternate Director shall
be entitled, in addition to his vote, to a separate vote on behalf of the Director he is
representing. An alternate Director, if his appointor ceases for any reason to be a Director
shall, ipso facto, cease to be an alternate Director. Every person acting as an alternate
Director shall be an officer of the Company and shall alone be responsible to the Company
for his own acts and defaults, and he shall not be deemed to be an agent of, or for, the
Director appointing him. Every appointment and removal of an alternate Director made by
any Director in pursuance of this regulation shall be in writing under the hand of the Director
making the same and shall be sent to or left at the Office of the Company.
PROCEEDINGS OF DIRECTORS
Art 68: All the decisions of the Board shall be made by a simple majority of votes of the Directors
present at a meeting. In case of equality of votes, the Chairman shall have a second or
casting vote.
Art 69 The General Meeting may fix the quorum necessary for the transaction of the business of the
Directors and unless so fixed shall be two.
Art 70 A resolution in writing signed by all Directors entitled to notice of a meeting of Directors
shall have the same effect and validity as a resolution of the Board duly passed at a meeting
of the Board duly convened and held.
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STATUTORY AND GENERAL INFORMATION
CASUAL VACANCIES
Art 71 In the event of a vacancy on the Board by reason of death or resignation of a Director, the
Board may appoint new Director(s). Where a casual vacancy is filled by the Board, the
person appointed may be approved by the members at the next Annual General meeting and
if not so approved, shall forthwith cease to be a Director. This however does not affect the
validity of prior acts of such Director(s).
DISQUALIFICATION OF DIRECTORS
(c) he becomes bankrupt or makes any arrangement or composition with his creditors;
(d) he is prohibited from being a Director by an order made under any of the provisions of
the Act or other enactment;
Art 76 The Company may, by Ordinary Resolution, remove any Director and may appoint another
person in his stead. Such removal shall be without prejudice to any claim such Director may
have as to damages for breach of any contract of service between him and the Company.
BORROWING POWERS
Art 80 The Directors may exercise all the powers of the company to borrow money and to mortgage
or charge its undertaking, property and uncalled capital, or any part thereof, and to issue
debentures, debentures stock, and other securities whether outright or as security for any
debt, liability or obligation of the Company or of any third party.
DIVIDENDS
Art 83 Subject to any rights or privileges for the time being attached to any share in the capital of
the Company having preferential, deferred or other special rights in regard to dividends, the
profits for the Company which it shall from time to time be determined to distribute by way
of dividend shall be applied in payment of dividends upon the shares of the Company in
proportion to the amounts paid up thereon respectively otherwise than in advance of calls.
Art 84 The Directors may, with the sanction of a General Meeting, from time to time declare
dividends, but no such dividend shall (except as by the Statutes expressly authorised) be
payable otherwise than out of the profits of the Company. No higher dividend shall be paid
than is recommended by the Directors and a declaration by the Directors as to the amount of
profits at any time available for dividends shall be conclusive. The Directors may, if they
think fit, and if in their opinion the position of the Company justifies such payment, without
any such sanction as aforesaid, from time to time declare and pay an interim dividend, or pay
any preferential dividends on shares issued upon the terms that the preferential dividends
thereon shall be payable on fixed dates.
Art 85 With the sanction of a General Meeting, dividends may be paid wholly or in part in specie, and
may be satisfied in whole or in part by the distribution amongst the members in accordance
with their rights of fully paid shares, stock or debentures of any other company, or of any
other property suitable for distribution as aforesaid. The Directors shall have full liberty to
make all such valuations, adjustments and arrangements, and to issue all such certificates or
Page 54
STATUTORY AND GENERAL INFORMATION
Art 86 The Directors may deduct from any dividend or other moneys payable in respect of any
shares held by members either alone or jointly with any other member, all such sums of
money (if any) as may be due and payable by him either alone or jointly with any other
person to the Company on account of calls or otherwise.
Art 87 A transfer of a share shall not pass the right to any dividend declared in respect thereof
before the transfer has been registered.
Art 88 Any dividend, instalment of dividend or interest in respect of any share may be paid by
cheque or warrant payable to the order of the member entitled thereto, or (in the case of joint
holders) of that member whose name stands first on the register in respect of the joint
holding. Every such cheque or warrant shall (unless otherwise directed) be sent by post to
the last registered address of the member entitled thereto, and the receipt of the person
whose name appears on the register of members as the owner of any share, or, in the case of
joint holders of any one of such holders, or of his or their agent duly appointed in writing,
shall be a good discharge of the Company for all dividends or other payments made in
respect of such share. Every such cheque or warrant shall be sent at the risk of the person
entitled to the money represented thereby.
Art 89 The Director may, before recommending any dividend, set aside out of the profits of the
Company such sum as they think proper as a reserve fund, which shall at the discretion of
the Directors be applicable for meeting contingencies, or for repairing or maintaining any
works connected with the business of the Company, or for any other purposes for which the
profits of the Company may lawfully be applied, or shall, with the sanction of the Company
in General Meeting, be as to the whole or in part applicable for equalising dividends, or for
distribution by way of special dividend or bonus and the Directors may divide the reserve
fund into separate funds for special purposes, and may either employ the sums from time to
time carried to the credit of such fund or funds in the business of the company or invest the
same in such investments, (other than the shares of the Company) as they may select. The
Directors may also from time to time carry forward such sums, as they may deem expedient
in the interest of the Company.
Art 90 The Company in General Meeting may, upon the recommendation of the Directors, resolve
that it is desirable to capitalize any part of the amount for the time being standing to the
credit of any of the Company's reserve accounts or to the credit of the profit and loss
account, otherwise available for distribution; and accordingly that such sum be set free for
distribution amongst the members who would have been entitled thereto if distributed by
way of dividend, and in the same proportions, on the condition that the same be not paid in
cash but be applied either in or towards paying up any amounts for the time being unpaid on
any shares held by such members respectively, or paying up in full unissued shares or
debentures of the Company to be allotted and distributed credited as full paid up to and
amongst such members in the proportions aforesaid, or partly in the one way and partly in
the other, and the directors shall give effect to such resolution.
NOTICES
Art 91 A notice may be given by the company to any member either personally or by sending it by
post to him or to his registered address, or if he has no registered address within Nigeria, to
the address, if any, within Nigeria supplied by him to (the Company for the giving of notice
to him. Where a notice is sent by post, service of the notice shall be deemed to be effected
by properly addressing, prepaying, and posting a letter containing the notice, and to have
been effected at the expiration of the day after the letter containing the same is posted.
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STATUTORY AND GENERAL INFORMATION
7. CLAIMS AND LITIGATION
The Company in its ordinary course of business is presently involved in one (1) suit. The amount
claimed in the said suit is N
= 6,550,597.00 (six million five hundred and fifty thousand five hundred
and ninety seven naira) plus interest accrued thereon.
The Solicitors to the Offer and the Directors of the Company are of the opinion that the
aforementioned suit is not likely to have any material adverse effect on the Company and or the
Offer, and are not aware of any other pending and or threatened suits involving the Company.
8. MATERIAL CONTRACTS
The following agreements have been entered into and are considered material to this Offer:
(i) A Vending Agreement dated 01 November 2006 under the terms of which IBTC Chartered
Bank Plc, Vetiva Capital Management Limited, Access Bank Plc, BGL Securities Limited,
Ecobank Nigeria Plc, FBN Capital Limited, FCMB Capital Markets Limited, Fidelity Bank
Plc, Intercontinental Capital Markets Limited, Oceanic Bank International Plc and Zenith
Bank Plc have agreed to Offer for Sale 3,000,000,000 Ordinary Shares of 50 kobo each in
Dangote Sugar Refinery Plc.
(ii) An Underwriting Agreement dated 01 November 2006 under the terms of which IBTC
Chartered Bank Plc, Vetiva Capital Management Limited, Access Bank Plc, BGL Limited,
Ecobank Nigeria Plc, Fidelity Bank Plc, First Bank of Nigeria Plc, First City Monument Bank
Plc, Intercontinental Capital Markets Limited, Oceanic Bank International Plc, Skye Bank
Plc and Zenith Bank Plc have agreed to underwrite 100% of the Offer on a stand-by basis.
Other than as stated above, the Company has not entered into any material contracts except in the
ordinary course of business.
10. DECLARATIONS
Page 56
STATUTORY AND GENERAL INFORMATION
(h) No Director or key management staff of the Company is or has been involved in any of the
following:
a. A petition under any bankruptcy or insolvency laws filed (and not struck out) against
him/her or any partnership in which he/she is or was a partner or any company of
which he/she is or was a Director or key personnel.
c. The subject of any order, judgement or ruling of any court of competent jurisdiction or
regulatory body relating to fraud or dishonesty, restraining him/her from acting as an
investment adviser, dealer in securities, Director or employee of a financial institution
and engaging in any type of business or activity.
As at the date of this Prospectus, there is no relationship between Dangote Sugar and any of its
Advisers except in the ordinary course of business.
13. CONSENTS
The following have given and not withdrawn their written consents to the issue of this Prospectus
with their names and reports (where applicable) included in the form and context in which they appear:
Directors of the Company Alhaji Aliko Dangote C O N
Mr Narendra Kumar Somani
Mr Suleiman Oladapo Olarinde
Dr Konyinsola Ajayi SAN
Mr Olakunle Alake
Alhaji Sani Dangote (representing Dangote Industries Limited)
Alhaji Abdu Garba Dantata
Ms Bennedikter China Molokwu
Mr Uzoma Nwankwo
Company Secretary Mr Adewale Adebayo Agboola
Joint Issuing Houses IBTC Chartered Bank Plc
Vetiva Capital Management Limited
Access Bank Plc
BGL Securities Limited
Ecobank Nigeria Plc
FBN Capital Limited
FCMB Capital Markets Limited
Fidelity Bank Plc
Intercontinental Capital Markets Limited
Oceanic Bank International Plc
Zenith Bank Plc
Page 57
STATUTORY AND GENERAL INFORMATION
Page 58
STATUTORY AND GENERAL INFORMATION
Copies of the documents listed may be inspected at the offices of the Joint Issuing Houses listed on
page 9 during normal business hours on any weekday (except public holidays), from Wednesday, 15
November 2006 until Friday, 22 November 2006:
(vi) The audited financial statements of the Company for the six months ended 30 June 2006;
(vii) The audited financial statements of DIL for each of the five years ended 31 December 2005;
(viii) The Report of Ahmed Zakari & Co (Chartered Accountants), Reporting Accountants, on the
financial information of the Company for the six months period ended 30 June 2006;
(ix) The Report of Ahmed Zakari & Co (Chartered Accountants), Reporting Accountants, on the
financial information of DIL: for the five years ending 31 December 2005;
(x) The Report of Ahmed Zakari & Co (Chartered Accountants), Reporting Accountants, on the
Profit Forecast of the Company for the years ending 31 December 2006, 2007, 2008 and 2009;
(xi) A certified true copy of the Federal High Court Order sanctioning the Scheme of
Arrangement between DIL, Dangote Flour Mills Limited, Dangote Salt Plc, Dangote Pasta
Plc and the Company;
(xii) The list of outstanding claims and litigation referred to in Section 7 on page 56;
(xv) The letter of approval from the Securities & Exchange Commission; and
Page 59
SUPPLEMENTARY INFORMATION
Page 60
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED
The following is a copy of the report of Ahmed Zakari & Co (Reporting Accountants), the Reporting
Accountants to the Offer:
29 September 2006
Dear Sirs
We report on the financial information set out on pages 64 to 75, which have been prepared for inclusion in
the Prospectus to be issued in connection with the proposed Offer for Sale of Dangote Industries Limited’s
3,000,000,000 ordinary shares of 50 kobo each in the issued share capital of Dangote Sugar Refinery Plc.
Sequel to a Court Order dated 23rd January, 2006 sanctioning the Scheme of Arrangement of Dangote
Industries Limited (DIL), the assets, liabilities and rights attached to DIL’s Sugar Division were transferred to
Dangote Sugar Refinery Plc with effect from 01 January 2006.
Page 61
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED
The financial information is based on the audited financial statements of Dangote Industries Limited, and
incorporates segmental financial statement summaries of its Flour Mills Division, Sugar Division, Salt
Division, DIL Head Office/Cement Division and Pasta Division, for the five years ended 31 December 2005.
The financial statements were prepared under the historical cost convention, modified to include the
revaluation of certain fixed assets. Messrs Lanre Odede & Co., were the auditors of the Company for the
years ended 31 December 2001, 2002 and 2003 while Morrison Odede & Co. and Akintola Williams Deloitte
were the joint auditors for the years ended 31 December 2004 and 2005.
The financial information has been prepared in accordance with the accounting policies set out on page 63
after making such adjustments we considered necessary. The financial statements on which the information is
based are the responsibility of the Directors of Dangote Industries Limited who approved their issue. The
Directors of the company are responsible for the contents of the prospectus in which this report is included.
We conducted our work in accordance with the International Standard on Auditing applicable to review
engagements. This standard requires that we plan and perform the review to obtain moderate assurance as to
whether the financial statements are free of material misstatements. Our review was limited primarily to
examination of the work papers of the external auditors, inquiries of the company’s personnel and analytical
procedures applied to financial data and thus provides less assurance than an audit. We have not performed an
audit and, accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying
financial information does not give a true and fair view of the state of affairs of Dangote Industries Limited
and its Divisions as at the dates stated and of the profit and loss and cash flows for the years then ended in
accordance with generally acceptable accounting principles in Nigeria.
Yours faithfully
Page 62
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED
2. STATEMENT OF ACCOUNTING POLICIES
The following are the principal accounting policies adopted in the preparation of these financial
statements.
(a) Basis of preparation of financial statements
The financial statements are prepared under the historical cost convention as modified by the
revaluation of certain fixed assets.
(b) Turnover
Turnover represents the invoiced value of goods to third parties less discounts and value
added tax.
(c) Fixed assets
Fixed assets are stated at cost or valuation less accumulated depreciation.
(d) Depreciation of fixed assets
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 were:
2005 2004 2003 2002 2001
Leasehold land and buildings 2% 2% 2% 2% 2%
Plant and Machinery 6.67% 6.67% 15% 15% 15%
Tools and equipment 12.5% 20% 20% 20% 20%
Office equipment 12.5% 20% 20% 20% 20%
Motor vehicles 25% 25% 25% 25% 25%
Mobile cranes 10% 10% 10% 10% 10%
Furniture and fittings 20% 20% 20% 20% 20%
Computer equipment/software 33.33% 33.33% 33.33% 33.33% 33.33%
In the case of revalued properties, depreciation is calculated by reference to the enhanced
values of the properties concerned. No depreciation is charged on fixed assets until they are
brought into use.
(e) Repairs and renewals
All repairs and renewals are written off as incurred but major repairs are capitalized.
(f) Stock and work-in-progress
Stock and work-in-progress are valued at the lower of cost and net realizable value.
(g) Rate of exchange
Transactions in foreign currencies are recorded in Naira at the rates of exchange ruling at the
time they arise.
Assets and liabilities existing in foreign currencies are converted to Naira at the rates of
exchange ruling at the balance sheet date. Gains or losses arising therefrom are included in
the profit and loss account.
(h) Debtors
Bad debts are written off and specific provisions are made for those debts considered doubtful.
(i) Deferred taxation
Deferred taxation is provided using the liability method at the current rate of income tax on
all timing differences between the treatment of certain items for accounting purposes and
their treatment for taxation.
(j) Long-term investments
Long-term Investments are shown at cost.
(k) Employees' retirement benefits
The Company makes provision for retirement benefits in accordance with the Pension
Reform Act of 2004. The contribution of the employer is 8.5% while that of the employee is
7.5% of relevant emoluments.
The Company also operates a gratuity scheme for its permanent Nigerian staff, the benefits under
which are related to employees’ length of service and remuneration. The provision for liability
in respect thereof based on actuarial valuation is provided in full in the financial statements.
Page 63
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED
Interest expense and similar charges (8,346,779) (7,325,553) (4,466,897) (2,633,366) (2,021,720)
Profit on ordinary activities before taxation 6.4 11,115,884 9,069,841 7,368,101 5,286,071 4,145,361
Taxation 6.6 - - (484,743) (139,600) (300,000)
Retained profit for the year 11,115,884 9,069,841 6,883,358 5,146,471 3,845,361
Profit brought forward 25,234,976 16,165,135 9,281,777 4,135,306 289,945
General Reserve 6.16 36,350,860 25,234,976 16,165,135 9,281,777 4,135,306
The accounting policies on pages 63 and the notes on pages 67 to 75 form part of these accounts.
Page 64
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED
4. BALANCE SHEET
Total assets less current liabilities 81,514,284 70,268,489 57,765,053 25,588,383 5,207,171
The accounting policies on pages 63 and the notes on pages 67 to 75 form part of these accounts.
Page 65
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED
Decrease/[Increase] in stock & work in progress (3,272,880) (2,331,475) 2,199,585 (2,297,878) (1,815,933)
Decrease/[Increase] in debtors & prepayment 7,906,069 (8,137,042) (10,272,868) (1,511,969) (2,625,922)
[Increase] / Decrease in due from related companies (7,962,190) (14,806,586) (5,065,654) 5,865,056 (9,466,985)
[Decrease]/Increase in creditors & accruals 8,260,264 22,926,321 763,276 (7,250,974) 10,393,800
[Decrease]/Increase in taxation payable 2,857 (287,170) - - -
Net increase/[decrease] in cash and cash equivalents 20,058,832 (21,851,677) (11,057,903) (5,078,962) (1,098,279)
Page 66
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED
Sugar Division Refining of raw sugar is carried out in Apapa Sugar Refinery.
Flour Division Refines flour in 4 plants located in Lagos, Calabar, Ilorin and Kano. Flour is also used as
major raw material in the Pasta factory which is located in Ikorodu.
Cement Division Produces cement from bulk cement. During the year the company operated from 4 plants-
Apapa, Port Harcourt, Continental Cement Terminal and Aliko Terminal Lagos. However Port
Harcourt plant merged with Bonny Allied Cement Port Harcourt in June 2004.
Pasta Division Pasta factory is located in Ikorodu. Pasta is into production of Macaroni and Spaghetti.
Salt Division Production of edible salt is carried out in Apapa, Oregun and Port Harcourt.
Segmented financial information about these business units are presented on pages 71 to 75.
Page 67
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED
2005 2004 2003 2002 2001
Employees' Remuneration
c) The number of employees other than Directors and
their emoluments within the following range were:
The Company was granted a pioneer status by Nigerian Investment Promotion Commission with effect from its
production date - 1 January, 2002 for a period of 5 years. Accordingly, no provision for taxation has been made in 2004
and 2005 financial statements.
As a result of the present tax holiday, no provision has been made in 2004 and 2005 financial statements for deferred tax
arising on the above timing differences of approximately N2,625,211,000 in 2003. (2002: N2,605,678,000)
Page 68
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED
Accumulated depreciation
Land & Buildings 460,196 313,024 192,001 69,673 37,766
Plant & Machinery 8,512,687 6,511,444 4,316,455 2,369,852 1,360,547
Crane 5,497 5,422 5,023 4,472 617
Tools & Equipment 2,359,125 1,704,700 1,069,014 531,705 379,530
Computer Hardware / Software 58,239 45,607 32,882 20,274 8,924
Motor Vehicles 405,209 328,291 205,318 105,280 26,818
Furniture & Fittings 214,547 165,489 119,876 79,541 44,168
Research & Development - - - - -
Work in Progress - - - - -
At 31 December 12,015,500 9,073,977 5,940,569 3,180,797 1,858,370
The Company revalued its Lagos Fixed Assets in 2002 while the Up-Country Fixed Assets were revalued in 2003.
The revaluation was carried by Messrs Alagbe & Partners, Estate Surveyors and Valuers on the basis of open
market value between a willing buyer and a willing seller. The resulting surplus on revaluation was credited to a
Fixed Assets Revaluation Reserve Account. Subsequent additions to the revalued assets are stated at cost.
Page 69
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED
2005 2004 2003 2002 2001
N'000 N'000 N'000 N'000 N'000
6.10 Debtors and Prepayments
Trade Debtors 9,329,673 14,742,742 11,697,142 4,916,220 2,359,384
Due from associated companies 33,382,619 25,420,429 10,613,843 5,548,189 11,413,245
Other debtors 6,884,700 9,377,700 2,740,622 425,511 928,497
Prepayments - - 1,545,636 368,801 910,682
49,596,992 49,540,871 26,597,243 11,258,721 15,611,808
Page 70
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED
DIL HEAD
FLOUR OFFICE/CEMENT SUGAR SALT PASTA TOTAL
YEAR ENDED 31 DECEMBER 2005 N'000 N'000 N'000 N'000 N'000 N'000
TURNOVER 34,017,095 34,289,366 58,494,709 5,105,124 6,737,620 138,643,914
Cost of Sales (29,534,417) (28,311,869) (44,458,574) (3,880,043) (5,152,188) (111,337,091)
Gross Profit 4,482,678 5,977,497 14,036,135 1,225,081 1,585,431 27,306,822
Direct Expenses (2,847,045) (1,092,096) (2,433,417) (554,497) (935,236) (7,862,291)
Profit from Operations 1,635,633 4,885,401 11,602,719 670,584 650,195 19,444,532
Other Income 2,829 5,870 345 894 8,192 18,131
Profit Before Interest & Similar Charges 1,638,461 4,891,271 11,603,064 671,479 658,388 19,462,663
Interest Expenses & Similar Charges (2,207,757) (3,191,643) (2,223,367) (293,427) (430,584) (8,346,779)
Profit on Ordinary Activities Before Tax (569,295) 1,699,628 9,379,697 378,052 227,803 11,115,884
Taxation - - - - - -
Profit After Tax (569,295) 1,699,628 9,379,697 378,052 227,803 11,115,884
Profit Brought Forward 7,832,847 1,763,211 14,412,778 1,328,610 (102,469) 25,234,976
Per Balance Sheet 7,263,551 3,462,839 23,792,475 1,706,661 125,334 36,350,860
Page 71
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED
Page 72
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED
DIL HEAD
FLOUR OFFICE/CEMENT SUGAR SALT PASTA TOTAL
N'000 N'000 N'000 N'000 N'000 N'000
AS AT 31 DECEMBER 2005
ASSETS EMPLOYED
Fixed Assets 13,426,053 4,998,425 14,533,581 800,775 4,179,019 37,937,853
Investments 80,335 51,737,712 - 28,854 - 51,846,902
13,506,388 56,736,137 14,533,581 829,629 4,179,019 89,784,755
CURRENT ASSETS:
Stock 5,106,133 363,219 3,089,203 811,402 254,709 9,624,665
Debtors and Prepayments 14,231,404 5,685,623 26,859,994 4,280,038 (1,460,068) 49,596,992
Cash and Bank Balances 1,026,243 98,888 4,485 1,000 145 1,130,761
20,363,780 6,147,729 29,953,682 5,092,440 (1,205,214) 60,352,418
LESS: CURRENT LIABILITIES
Creditors 10,209,160 17,334,472 9,682,868 2,704,758 (11,466) 39,919,792
Accruals and Provisions 3,139,643 542,044 87,902 407,904 46,117 4,223,610
Bank Overdraft 7,089,827 10,070,954 - 571,669 713,109 18,445,558
Short - Term Loan - 6,467,455 - - - 6,467,455
20,438,631 34,414,925 9,770,770 3,684,330 747,760 69,056,416
AS AT 31 DECEMBER 2004
Page 73
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED
DIL HEAD
FLOUR OFFICE/CEMENT SUGAR SALT PASTA TOTAL
N'000 N'000 N'000 N'000 N'000 N'000
AS AT 31 DECEMBER 2003
ASSETS EMPLOYED
Fixed Assets 11,753,724 5,697,921 15,080,766 608,315 4,376,094 37,516,819
Investments 177,362 24,626,585 - 57,263 - 24,861,210
11,931,086 30,324,506 15,080,766 665,578 4,376,094 62,378,029
CURRENT ASSETS:
Stock 1,674,928 1,245,432 311,112 276,947 511,892 4,020,310
Debtors and Prepayments 1,487,221 9,636,551 13,770,221 2,932,751 (1,229,502) 26,597,243
Cash and Bank Balances 711,958 1,819,314 1,828,831 226,727 201,788 4,788,618
3,874,107 12,701,297 15,910,164 3,436,425 (515,822) 35,406,171
LESS: CURRENT LIABILITIES
Creditors and Accruals 2,048,220 6,304,195 736,792 2,252,385 1,899,532 13,241,124
Bank Overdraft 1,357,064 (1,489,776) 12,288,446 203,037 102,269 12,461,040
Short - Term Loan - 14,316,983 - - - 14,316,983
3,405,284 19,131,402 13,025,238 2,455,422 2,001,801 40,019,147
AS AT 31 DECEMBER 2002
ASSETS EMPLOYED
Fixed Assets 7,492,739 4,835,530 15,778,947 629,773 1,880,008 30,616,996
Investments 26,905 361,824 - 28,649 - 417,378
Work - In - Progress - - - - - -
7,519,644 5,197,354 15,778,947 658,422 1,880,008 31,034,374
CURRENT ASSETS:
Stock 1,327,294 749,675 3,612,105 450,353 80,468 6,219,895
Debtors and Prepayments 4,086,526 6,462,647 (473,648) 3,133,976 (1,950,780) 11,258,721
Cash and Bank Balances 1,479,896 2,057,128 1,096,317 91,062 62,328 4,786,732
6,893,716 9,269,450 4,234,774 3,675,391 (1,807,984) 22,265,348
LESS: CURRENT LIABILITIES
Creditors and Accruals 4,603,541 4,388,431 1,517,764 1,453,609 29,761 11,993,106
Bank Overdraft 3,711,253 6,033,745 5,073,781 741,140 158,315 15,718,233
8,314,794 10,422,176 6,591,545 2,194,749 188,076 27,711,339
Page 74
SUPPLEMENTARY INFORMATION - DANGOTE INDUSTRIES LIMITED
DIL HEAD
FLOUR OFFICE/CEMENT SUGAR SALT PASTA TOTAL
N'000 N'000 N'000 N'000 N'000 N'000
AS AT 31 DECEMBER 2001
ASSETS EMPLOYED
Fixed Assets 2,718,248 2,895,447 3,980,390 116,280 920,000 10,630,365
Investments - - - - - -
Work - In - Progress - - - - - -
2,718,248 2,895,447 3,980,390 116,280 920,000 10,630,365
CURRENT ASSETS:
Stock 295,805 1,001,327 2,346,652 142,424 135,809 3,922,017
Debtors and Prepayments 2,237,582 10,028,743 565,509 2,705,868 74,106 15,611,808
Cash and Bank Balances 809,751 900,321 797,999 36,137 42,653 2,586,861
3,343,138 11,930,391 3,710,160 2,884,429 252,568 22,120,686
LESS: CURRENT LIABILITIES
Creditors and Accruals 3,096,177 10,422,019 2,824,516 1,260,303 1,501,464 19,104,480
Bank Overdraft 1,741,015 2,643,971 3,587,306 446,395 20,713 8,439,400
4,837,192 13,065,990 6,411,822 1,706,698 1,522,177 27,543,880
Page 75
PROCEDURE FOR APPLICATION AND ALLOTMENT
1. APPLICATION
1.1 The general investing public is hereby invited to apply for the shares through any of the
Receiving Agents listed on Page 77.
1.2 Applications for the Ordinary Shares must be made in accordance with the instructions set
out at the back of the Application Form. Care must be taken to follow these instructions, as
applications which do not comply will be rejected.
1.3 The Application List for the Ordinary Shares now being offered will open from Wednesday,
15 November 2006 to Friday, 22 December 2006. Applications must be for a minimum of
500 shares and in multiples of 50 thereafter. The number of shares for which an application
is made and the value of the cheque or bank draft attached should be entered in the boxes
provided.
Any investor who does not want to receive a physical share certificate and would rather have
his/her CSCS account credited, should state the name of his/her stockbroker and his/her
CSCS account number in the space provided on the Application Form.
1.4 A single applicant should sign the declaration and write his/her full names, address, daytime
telephone number and mobile telephone number in item “1” on the Application Form. Item
“2” should be used by joint applicants. A corporate applicant should affix its seal in the box
provided and state its Incorporation/Registration Number.
1.5 An applicant should make only one application, whether in his/her own name or in the name
of a nominee. Multiple or suspected multiple applications will be rejected.
1.6 Each application should be forwarded together with the cheque or bank draft for the full
amount of the purchase price to any of the Receiving Agents listed on Page 77. Applications
must be accompanied by a cheque or bank draft made payable to the Receiving Agent to
whom the application is submitted, for the full amount payable on application. The cheque
or draft must be drawn on a bank in the same town or city in which the Receiving Agent is
located and crossed “DANGOTE SUGAR IPO” with the name, address and daytime
telephone number of the applicant written on the back. All bank commissions and transfer
charges must be prepaid by the applicant. All cheques and drafts will be presented upon
receipt and all applications in respect of which cheques are returned unpaid will be rejected
and returned through the post.
2. ALLOTMENT
The Issuing Houses and the Directors of the Company reserve the right to accept or reject any
application in whole or in part, for not meeting the conditions of the Offer. The allotment proposal
will be subject to the clearance of the Securities & Exchange Commission.
3. APPLICATION MONIES
All application monies will be retained in separate interest yielding bank accounts by the Receiving
Bankers pending allotment. If any application is not accepted, or is accepted for fewer shares than the
number applied for, a crossed cheque for the full amount or the balance of the amount paid (as the
case may be) will be returned by registered post within 5 working days of allotment. A share
certificate will be sent by registered post not later than 15 working days from the date of allotment.
Any investor who does not want to receive a physical share certificate, should state the name of
his/her stockbroker and his/her CSCS account number in the space provided on the
Application Form.
Page 76
RECEIVING AGENTS
Application Forms may be obtained free of charge from any of the following Receiving Agents, who are registered as capital
market operators by SEC, to whom brokerage will be paid at the rate of N
= 1 per N
= 100 worth of shares allotted in respect of
applications bearing their official stamps.
The Joint Issuing Houses cannot accept responsibility for the conduct of any of the institutions listed below. Investors are therefore
advised to conduct their own independent enquiries before choosing an agent to act on their behalf. Evidence of lodgement of funds
at any of the Receiving Agents listed below, in the absence of corresponding evidence of receipt by any of the Joint Issuing Houses,
cannot give rise to a liability on the part of the Joint Issuing Houses under any circumstances.
BANKS
Access Bank Plc Guaranty Trust Bank Plc Standard Chartered Bank Nigeria Limited
Afribank Nigeria Plc IBTC Chartered Bank Plc Spring Bank Plc
Diamond Bank Plc Intercontinental Bank Plc Sterling Bank Plc
Equitorial Trust Bank Limited Nigeria International Bank Limited Union Bank of Nigeria Plc
Ecobank Nigeria Plc Oceanic Bank International Plc United Bank for Africa Plc
Fidelity Bank Plc PlatinumHabib Bank Plc Unity Bank Plc
First Inland Bank Plc Skye Bank Plc Wema Bank Plc
First Bank of Nigeria Plc Stanbic Bank Nigeria Limited Zenith Bank Plc
First City Monument Bank Plc
Page 77
GROUP
Application List Opens Application List Closes
Dangote Sugar Refinery Plc
RC 613748
Applications must be made in accordance with the instructions set out on the back of this Application Form. Care must be taken to follow these instructions as applications that do not comply may be rejected.
If you are in doubt as to the action to take, please consult your Stockbroker, Accountant, Banker, Solicitor, or any other professional adviser for guidance immediately.
DECLARATION
I/We am/are 18 years of age or over I/We authorise you to send a share certificate and/or cheque for any amount overpaid by Registered post to
I/We attach the amount payable in full on application for the number of shares indicated in Dangote Sugar my/our address given below and to procure registration in my/our name as the holder(s) of such number of
Refinery Plc at N18.00
= per share. shares or such smaller number, as aforesaid.
I/We agree to accept the same or any smaller number of shares in respect of which allotment may be made I/We declare that I/we have read a copy of the Prospectus for the Offer dated 01 November 2006 issued by the Joint
upon the terms of the Prospectus dated 01 November 2006 and subject to the Memorandum and Articles of Issuing Houses on behalf of Dangote Sugar Refinery Plc.
Association of Dangote Sugar Refinery Plc.
City State
Email Address
Next of Kin
CSCS No (if you want shares allotted credited to your CSCS A/c) Name of your Stockbroker
Other Names
2. Applications must not be for less than the minimum number of shares stated on the Application
Form. Applications for more than the minimum number of shares must be in the multiples stated
on the Application Form. The number of Ordinary Shares for which an application is made and
the amount of the cheque or bank draft attached should be entered in the boxes provided.
3. The Application Form when completed should be lodged with any of the Receiving Agents listed
on Page 77. Applications must be accompanied by a cheque or bank draft made payable to the
Receiving Agent to whom the application is submitted, for the full amount payable on application.
The cheque or draft must be drawn on a bank in the same town or city in which the Receiving
Agent is located and crossed “DANGOTE SUGAR IPO” with the name, address and daytime
telephone number of the applicant written on the back. All bank commissions and transfer charges
must be prepaid by the applicant. All cheques and drafts will be presented upon receipt and all
applications in respect of which cheques are returned unpaid will be rejected and returned through
the post.
4. The applicant should make only one application, whether in his own name or in the name of a
nominee. Multiple or suspected multiple applications will be rejected.
6. An application from a group of individuals should be made in the names of those individuals with
no mention of the name of the group. An application by a firm which is not registered under the
Companies and Allied Matters Act Cap C20 LFN 2004 should be made either in the name of the
proprietor or in the names of the individual partners. In neither case should the name of the firm
be mentioned.
7. An application from a corporate body must bear the corporate body’s seal and be completed under
the hand of a duly authorised official.
8. An application by an illiterate should bear his right thumbprint on the Application Form and be
witnessed by an official of the Bank or stockbroker at which the application is lodged who must
first have explained the meaning and effect of the Application Form to the illiterate in his own
language. Above the thumb print of the illiterate, the witness must record in writing that he has
given this explanation to the illiterate in a language understandable to him and that the illiterate
appeared to have understood same before affixing his thumb impression.
9. The applicant should not print his signature. If he is unable to sign in the normal manner he should
be treated for the purpose of this Offer as an illiterate and his right thumbprint should be clearly
impressed on the Application Form.
Application Form