Growing a Sweet Harvest About Us About Us Vision, Mission, Values 4 Operational Review Global Sugar Market 5 Chairman’s Statement 6 Corporate Company Rerview 10 Governance Operational Review Financial Statements Our Operation 13 Our People 19 Our Approach to Sustainabilty 20 Health and Safety 21 Food Safety 22 Our Approach to Risk Management 23 Group Managing Director's Review 24 Corporate Governance Corporate Governance Report 29 Board of Directors 39 Report of the Directors 43 Financials Financial Highlights 52 Statement of Director's Responsibilities in Relation to the Financial Statements 53 Statement of Management's Responsibilities for the Preparation and Approval of the Financial Statements 54 Statement of Directors' Responsibilities for the Preparation and Approval of the Financial Statements 55 Report Of The Audit Committee 56 Report of the Independent Auditors to the Members of Dangote Sugar Refinery Plc 57 Consolidated and Separate Statement of Profit or Loss and other Comprehensive Income 58 Consolidated and Separate Statement of Financial Position 59 Consolidated Statement of Changes in Equity 60 Separate Statement of Changes in Equity 61 Consolidated and Separate Statement of Cash Flows 62 Notes to the Consolidated and Separate Financial Statements 63 Non IFRS Statement- Statement of Value Added 108 Non IFRS Statement- Financial Summary 109 Non IFRS Statement Five Year Financial Summary 110 Supplementary Information Notice of Annual General Meeting 112 Directors And Professional Advisers 113 Corporate Information 114 Share Capitalisation History 115 E-Dividend Mandate Form 117 Proxy Form 119 Off loading at Apapa port, Lagos Unclaimed Dividend Position as at 31st December, 2014 120 D A N G O T E S U G A R R E F I N E R Y P L C A N N U A L R E P O R T 2 0 1 4 Vision, Mission, Values Vision Our vision is to be one of the world's leading integrated sugar D A N G O T E S U G A R R E F I N E R Y P L C A N N U A L R E P O R T 2 0 1 4 producers, respected for the quality of our products and the way we conduct our business. Mission To deliver consistently good returns to our shareholders by selling high-quality products at affordable prices, backed by excellent customer service. To satisfy market demand by producing the very best refined granulated sugar using exceptional resources and processes that comply with international standards and industry best practices To help Nigeria towards self-sufficiency in sugar production by moving from importation and refining to creating new plantations with their own refining facilities, close to major centres of demand, with a target to produce 1.5 million tonnes of refined sugar by 2024 across more than150,000 hectares of newly planted land. To provide economic benefits to local communities by way of direct and indirect employment. To set a good example in areas such as governance, sustainability, health and safety. Values ? Customer Service ? Entrepreneurship ? Excellence ? Leadership Apapa Refinery, Lagos, Nigeria 4 Growing a Sweet Harvest Global Sugar Market in 2014 About Us Sugar is a commodity whose price is determined by the dynamics of global supply and demand. Sugar production is affected by weather and the amount of land under cultivation, while the consumption of Operational sugar is driven by macro-economic factors such as increasing wealth and population growth in the Review developing world, set against conscious reductions in sugar consumption elsewhere. Corporate Although global sugar consumption is rising at present, its growth is being outpaced slightly by the Governance increase in sugar production. Over the last two years, favourable weather conditions and new sugar projects have created surplus stocks that led to a fall in the global price of raw sugar from more than Financial $450 per tonne to less than $350. Statements Global Sugar Production 2009/2010 - 2014/2015 (M MT) 180 177.6 175 175 172.3 172.5 170 165 162.2 160 155 153.4 150 145 140 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 Estimates Of World Sugar Production, Consumption And Global Surplus For 2013/2014 (million Tonnes, Raw) Source Production Consumption Surplus Czarnikow 184.0 181.1 2.9 F.O. Licht 181.4 175.2 4.7 ISO 182.7 178.8 4.0 KINGSMAN 180.3 175.1 5.2 USDA 175.7 168.7 1.5 Taking an average of these estimates, sugar consumption has been on a steady increase over the past few years. In 2014, consumption rose by approximately 2.0% to 175.8MT from 172.3MT in 2013. D A N G O T E S U G A R R E F I N E R Y P L C A N N U A L R E P O R T 2 0 1 4 5 To this end, our Board is following a prudent course “ of action that will support our backward integration projects and enable our Company to sustain a stronger financial footing in the future.” Aliko Dangote, GCON Chairman 6 D A N G O T E S U G A R R E F I N E R Y P L C A N N U A L R E P O R T 2 0 1 4 Growing a Sweet Harvest Chairman’s Statement Distinguished shareholders, About Us My colleagues on the Board, invited guests, Board has taken the decision to reduce the ladies and gentlemen. It is my pleasure to dividend payment for the year from 60 kobo Operational welcome you all to the 9th Annual General per share to 40 kobo per share. This is a Review Meeting of our company, Dangote Sugar transitional situation, requiring our short term Refinery Plc, at which I will also present to you sacrifices in order to build for the future, and is Corporate Governance the Annual Report and Financial Statements necessary for us to maintain prudent capital for the year ended 31st December, 2014. and liquidity levels, to sustain our operations, in tandem with our backward integration Financial 2014 was a year of challenges in our operating projects. Statements environment, particularly in the areas of declining purchasing power and security To this end, your Board is following a prudent issues in the North Eastern part of the country. course of action that will support our The situation and its impact on our business backward integration projects and enable our was a harsh reality, which we had to face and Company to sustain a stronger financial manage to the best of our ability. footing in the future. Despite challenging circumstances in the past The Global Sugar Market year, the Group posted a turnover of ? 95 Conditions in the global sugar market were billion in 2014. Profit Before Tax (PBT) stood at generally favourable to our refining business ? 15.3 billion, and Profit After Tax (PAT) ? 11.6 in 2014. The consumer demand in emerging billion. Earnings per share totaled 97kobo per markets remains subdued, despite population share an 8% increase over the corresponding growth and the seeming gradual recovery in period in 2013. market economies, world sugar prices reflected surplus supply conditions and Worthy of mention is the resounding and maintained a downward trend. unprecedented success of the recent presidential elections in Nigeria which gives From the very late 1990's up until 2014, the much cause for optimism and we look forward Global Sugar Manufacturing industry has had to a stable future in the country, in which our to contend with increasing production and business will thrive and continue to grow. volatile price levels. The increasing diversion of sugar stocks to ethanol production in Brazil 2014 Dividends did however, limit the buildup of surplus It remains the Company's policy to return part stocks. Raw sugar prices declined during the of its profits as dividends to shareholders at the year, which led to a reduction in the dollar end of each business year. The dividend paid value of our raw sugar imports within the depends on the Company's financial period. performance, investment decisions, liquidity levels and banks balances. In view of the Also, the European Commission confirmed significant investments required for our the abolition of sugar quotas from October backward integration projects, your company 2017, and this placed a further cap on world is in need of additional funding. As such, your sugar prices. As European sugar producers position themselves for a post-quota market, “2014 was a year of challenges we will continue to expect more volatility in market prices. in our operating environment, Nigerian Sugar Market in 2014 particularly in the areas of The Nigerian Sugar Market has seen an declining purchasing power increase in investment activity during the year owing to the various initiatives that were and security issues in the north prompted by the implementation of the eastern part of the country” Federal Government's National Sugar Development Plan. This plan has seen the D A N G O T E S U G A R R E F I N E R Y P L C A N N U A L R E P O R T 2 0 1 4 7 Chairman’s Statement existing sugar operators invest in sugar Oil and Currency Impact in Short-Medium plantations across the country in addition to Term consolidating their own refining activities. The beginning of 2015 has seen a carryover of the challenging business environment with Despite a sluggish global demand trend, our even more impact on our cash resources. The market remained strong in the year.