FLOUR MILLS OF NIGERIA PLC

N28.2bn Rights Issue

Investors’ presentation

September 2011
Contents

1 Executive Summary 3

2 Market Overview 6

3 Flour Mills of Nigeria Plc 9

4 Financial Highlights 18

5 The N28.2bn Rights Issue 23

6 Q&A 26

7 Contact Details 27

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1 Executive Summary

3
Executive Summary

 One of the largest and most successful industrial conglomerates in Nigeria, focusing on
• Food
• Agro-allied
• Cement

 “Golden Penny”, an iconic brand, remains the best known and preferred choice amongst
end-consumers and industrial users alike

 Market leader in all its business lines with growing market share

 Customer centric culture, supported by an extensive distribution network

 Top-notch management team and skillful labor force

 Related portfolio of activities creating synergies along the value chain

 Raising ~US$180m via a rights issue to fund high-growth, high-margin opportunities in

the food, agro-allied and cement sectors

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Rights Issue Outline
Flour Mills of Nigeria Plc
Issuer

Issue size N28.2bn via a rights issue of 455,566,222 ordinary shares at N62 per share; i.e. 8 new
and method ordinary shares for every 33 ordinary shares held as at close of business on 7 October 2011.

S/N Fund Utilization N'bn %

1. Expansion of food business, including investment inWC 13.66 49.3

Use of net 2. Expansion of cement business 6.47 23.4

proceeds 3. Expansion of agro-allied business, including investment in WC 6.55 23.7
4. Baking & Food TechnologyCentre 1.00 3.6
Total 27.68 100

Market
Capitalization N150.3 billion (~US$970 million), as at 31 August 2011.

Rights status The shares being issued will rank pari passu in all respects with the existing issued ordinary
shares of the Company.

5
2 Market Overview

6
 Sector Outlook
Nigeria’s population forecast

 Growing penetration of convenience foods such as bread and 2015

pasta versus traditional food items 2014
2013
2012
 Positive growth outlook due to: 2011
 Large, young and fast growing population; 2010

 Low per capita consumption compared to other emerging 140 150 160 170 180 190
markets (millions)
 Increasing disposable income (growing middle
class, increases in minimum wage);
Per capita consumption of flour-
 Urbanization driven lifestyle changes underpin increasing based products (kg)
demand for ready-to-eat or quick meals
Nigeria
India
 High capacity utilization; installed capacity persistently lagging China
behind aggregate demand Algeria

Moroc…

0 100 200 300

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Flour Mills: a force to reckon with…

 Flour Mills dominates in each of its key markets

 ~55% of pasta market
 >45% in retail semolina category
 >50% in industrial flours

 Portfolio of premium brands in all categories, commanding higher margins

vis-à-vis industry’s average

 Expanding portfolio includes

 Sugar
 Rice
 Edible oils
 Breakfast cereals
 Snacks

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3 Flour Mills of Nigeria Plc

9
Group Overview
 Evolved into one of the largest millers in the world

 Leading food company in Nigeria with a diverse and growing offering of retail (eg: pasta) and
industrial products (eg: bakery flour)

 “Golden Penny”, an iconic brand, remains the best known and preferred brand amongst end-
consumers and industrial users (eg: bakers andconfectioners)

 Strategically positioned in cement manufacturing via Unicem, a JV with Lafarge and Holcim
supplementedby cement handling through its Lagos terminal

 The Group comprises several subsidiaries engaged in various related activities, such as pasta and
noodles production, sugar refining, edible oils processing, animal feeds, agriculture, cement, port
operations, logistics and packaging

 Listed on the Nigerian Stock Exchange since 1978; won numerous awards and accolades including
the Nigerian Stock Exchange Annual Merit Award for the Food & Beverages Sector in 1999 and
2006

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Flour Mills - Group Structure

Flour Mills of Nigeria Plc

UNICEM
28.15%

Niger Mills Golden PremierFeed Golden

Northern Nigerian Bag
Company Noodles Mills Transport
Nigeria Flour Manufacturing
Limited Company Company Company
Mills Plc Company Plc
98.9% Limited Limited Limited
52.6% 70%
100% 62% 100%

Golden
Nigerian Eagle Golden Pasta Golden Sugar Apapa Bulk
Kaboji Farms Shipping
Flour Mills Company Company Terminal
Limited Company
Limited Limited Limited Limited
100% Nig. Limited
51% 100% 100% 100%
100%

Flour Mills
Food businesses Registrars
Limited
Cement businesses
100%
Agro-allied businesses

Support businesses

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Flour Mills - Management Profile
 B.Sc. Chemistry - University of Nigeria, Nsukka. | Doctor of Science Degree (Honoris
Dr. (Chief) EmmanuelA. Causa) - Ladoke Akintola University Ogbomoso. | Advanced Management Programme -
Ukpabi (KJW). Lagos Business School. | Advanced Management Programme - IESE, Spain.
Group Managing Director
 Over 38 years experience in the milling business. Presently the President of Association of
Food Beverages and Tobacco Employers.

 Masters Degree in Law - Cambridge University.

Mr. Edward J.W. Jackson
 20 years at Lever Brothers in various capacities and various countries, including marketing,
Chief Operating Officer
sales and general management responsibilities in UK, US, Spain, India, Brazil and Russia.
 Has held CEO positions in three different UK foodbusinesses.

 Fellow, Association of Certified Chartered Accountants UK (ACCA) & Institute of Chartered

Alhaji Yunus Olalekan Saliu Accountants of Nigeria (ICAN). | Bachelors Degree in Economics - University of Ibadan.
Corporate Affairs Director  Has over 16 years of experience with Flour Mills and serves at board level on some of the
& Company Secretary subsidiary companies of the Company.

 IMD alumnus (PED) and graduate of Swiss Business School.

Mr Jacques Vauthier  Has over 30 years of experience, 28 of which in the Food & Beverages industry. Has held
Chief Financial Officer various CFO positions, among them as CFO for Nestlé Nigeria Plc, followed by a senior
position at Nestlé’s Headquarters. He joined Flour Mills of Nigeria Plc in September 2011

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Flour Mills - Management Profile (cont‘d)
 IMD alumnus (PED) | MBA (Finance) - ALBA Graduate School of Business, Athens, Greece
Mr. Vlassis Liakouris | Master’s degree in Political Science & Social Theory - University of Athens | Combined
Group Treasury Director Bachelor’s/Master’s degree in Sociology - Sofia University, Bulgaria.

 Over 10 years of experience in Private Equity and Investment Banking. Previously served as
CFO and later as Deputy Managing Director of UNICEM.

 Bachelor’s and Master’s degree - Mechanical Engineering.

Mr. Stephen A. Ndukwe  During a period of 27 years, had worked in various organizations and various capacities in
Technical Director the UK and the USA, from where he joined Flour Mills in 2007.

 Bachelor’s degree in Marketing - Southern University, Baton Rouge, Louisiana. | MBA -

South Eastern Louisiana University, Hammond, Louisiana.
Mr. Emmanuel E. Ogbon
Marketing & Sales Director  Over 13 years experience with Flour Mills. Was appointed Deputy Marketing and Sales
Director in February 2010.

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Flour Mills – Overview of Business Lines
Food Agro-allied Cement Support
 Consumer goods:  Animal feeds  Burham cement :  BAGCO packaging
 GP Pasta  Sugarcane  50kg bags  Logistics
 GP Noodles  Maize  Jumbo bags  Transportation
 GP Semovita  Rice  Bulk  Power generation
 GP Goldenvita  Palm  UNICEM cement:  Port operations
 GP Sugar  Various fertilizer  50kg bags
blends:
 GP Rice  Bulk
Products &
 GP Edible oils  UREA 46-0-0
services
 Intermediate products:  NPK 15-15-15

 GP Flour
 GP Soft flour
 GP Confectionery flour
 GP Sugar
 GP Edible oils

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Flour Mills - SWOT Analysis
Strengths Opportunities

 Market leader with an estimated market share of
>45% in its invested food business
 Very strong brand recognition
 Economies of scale; state-of-the-art production
facilities
 First-class customer support
 Extensive distribution network
 Top-notch management team; skilled and loyal
labor personnel
 Healthy financial position
 Nigeria’s low per capita consumption of
convenience food coupled with large and growing
population
 Leverage the strength of the Portfolio
 Tap into needs arising from changing lifestyles
 Backward integration opportunities, particularly in
the agro-allied sector
 Expansion into the highly promising and attractive
cement business

Weaknesses Threats

 Inverse demand correlation with local crops  Input prices and foreign exchange volatility

 Relatively high price elasticity due to low  Changes in regulatory framework

disposable income
 Entry of new players/competitors

15
Flour Mills – Competitive Edge Analysis

Economies of scale
Market leader
and scope

Strong brands
Flour Mills of Nigeria Plc Value adding support
A household name for businesses
generations

Extensive distribution First-class management

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Growth and Expansion Strategy

Moving up the value chain with focus on introducing high margin retail
products, such as breakfast cereals and snacks, amongst others
Food Route to market
Construction of new state-of-the-art 750,000MT sugar refinery expected
to come online by H2-2012

 Rapid scale-up of the edible oils business

Agro-allied  Expand capacity at Premier Feed Mills
 Expand the cultivation of sugarcane, palm trees, maize, soya beans
and rice

 Focus on local manufacturing

Cement  Further expansion to enhance competitive position & market share

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4 Financial Highlights

18
Overview of financial performance
Turnover & Gross margin Total assets & average total assets
180
300,000 25.0
22.3 160 125,919
250,000 20.0 140
18.5 16.8
200,000 16.4 120
15.0
12.8 100
150,000
10.0 80
100,000 60
50,000 5.0 40
0 0.0 20
0
2011 2010 2009 2008 2007
2011 2010 2009 2008 2007
Turnover (N'm) Gross margin
Total assets (N'million) Average

PBT, PAT & Net profit margin

30,000 9.0%
 Turnover consistently up between 2007 and 2011,
8.2% 7.1% 8.0%
25,000 with good and relatively stable gross margin. 2009
7.0%
financial meltdown had a significant adverse impact
20,000 6.0%
on margins.
5.0% 5.0%
15,000
3.9% 4.0%  Profit declined in 2011 due to (i) an one-off, non-
10,000 3.0% cash, write-down of N4.8 billion in UNICEM; (ii) high
2.2% 2.0% input prices.
5,000
1.0%
 PBT and PAT grew by a CAGR of 13.8% and 6.0%
0 0.0%
respectively between 2007 and 2011.
2011 2010 2009 2008 2007

Profit before taxation Profit after taxation Net Profit Margin

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Overview of financial performance (cont’d)
250 50.0%
20.0% 17.9% 17.4%
44.2%
200 40.0%
15.0% 12.1%
150 30.0% 13.2%
24.5% 10.0% 9.2% 9.2%
20.7% 22.4%
100 18.7% 20.0%
5.0%
50 10.0%
0.0%
0 0.0%
2011 2010 2009 2008 2007
2011 2010 2009 2008 2007
Return on invested capital Average
Dividend per share(kobo) Dividend pay outratio

Debt/Equity ratio (2011) Debt/Equity ratio (2010)

 Consistent return to shareholders, with an average return
on invested capital of 13.2% between 2007 to 2011.

42% 45%  Dividend of 200 kobo/share in both 2010 and 2011.

58% 55%
 Dividend payout ratio of 44.2% in2011.

Debt Equity Debt Equity

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Financial Statements – Group P&L (Highlights)

Year ended 31 March (N mn) 2011 2010 2009 2008 2007  Robust turnover and
EBITDA growth.
Turnover 238,796 206,608 180,068 127,662 105,669
 Good and stable
Gross profit 40,185 46,066 23,075 20,917 19,510
margins
EBITDA 32,649 35,182 24,290 15,379 14,637
 Strong and rising
Profit beforetaxation* 21,283 24,440 5,470 9,873 9,792 profitability

Profit beforetaxation 16,445 24,440 5,470 9,878 9,792  Attractive dividend

Profit aftertaxation 9,450 16,948 3,892 6,363 7,474 payout

Retained profit forthe year 8,487 16,518 3,815 6,340 7,474  2011 profit marginally
down, due to:
DPS (kobo) – FMN plc 200 200 50 100 90
Basic EPS (kobo) * 709 967 605 408 481 • an one-off, non-cash
Basic EPS (kobo) 452 967 223 408 481 write-down of
Gross margin 17% 22% 13% 16% 18% N4.8bn in UNICEM
Profit Margin 9% 12% 7% 8% 9%
• high input prices
*Before an exceptional, non-cash, N4.8bn write-down of FMN’s share in the accumulated losses
of UNICEM

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Financial Statements – Group Balance Sheet

Year ended 31 March (N'Million) 2011 2010

 Total assets up 14% due to

Fixed Assets 88,618 90,425 various expansionary
Other Assets 65,767 46,706 initiatives.
Cash and Bank 6,389
 Long term liabilities up 52%
8,876
due to the bond issuance in
2011. Bond proceeds of
Total Assets 163,261 143,520 N37.5 billion was used to
Current Liabilities (56,238) (52,732) finance expansion and
Long Term Liabilities (37,521) refinance bank loans.
(57,028)
 Share capital up 10% due to
bonus issue of shares.
Net Assets 53,267
49,996

Capital and Reserves:

Share Capital 939 854
Share Premium 5,867 5,867
Reserves 38,418 43,131
Minority Interest 3,415
4,772
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5 The N28.2bn Rights Issue

23
N28.2bn Rights Issue

Issuer Flour Mills of Nigeria Plc

Lead: Stanbic-IBTC Bank PLC

Issuing Houses
Joint: FCMB Capital Markets Limited
Zenith Capital Markets Limited

Expansion of food and agro-allied business, incl. working capital; further investment
Use of proceeds
in cement business; development of baking & food technology centre

Issue size and N28.2 billion via a rights issue of 455,566,222 ordinary shares at N62 per share; i.e. 8
method new ordinary shares for every 33 ordinary shares held as at close of business on 7
October 2011.

Listing Nigerian Stock Exchange

Governing Law Federal Republic of Nigeria

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 Investment case
 Strong and growing market position in chosen businesses, supported by a very strong
Market leadership brand heritage, a customer centric culture and a first-class distribution network.

 Top-notch management team

Outstanding
 Highly competent and driven personnel.
human capital

Manufacturing  Superior and consistent product quality on the back of outstanding capacity utilization
excellence (>70%), economies of scale and operational efficiency.

Sound and  Well diversified and sustainable business model, integrating key components of the value
diversified chain with a proven track record of consistently delivering healthy results over picks and
business model troughs of economic cycles.

 Expanding basket of high-growth, high-margin retail products, such as Golden Penny

Moving up the
pasta and semolina, while sustaining continuous growth in the established categories.
‘value chain’

 Wide range of retail products to be launched, including breakfast

Ambitious & well cereals, snacks, convenience foods etc.
thought through  New, state-of-the-art, 750,000 mtpa sugar refinery expected to come online in H2-2012.
business plan  Rapid scale-up of the edible oils business.
 Backward integration in the agro-allied sector
 Further expansion into the very promising cement sector.

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6 Q&A

26
7 Contact details

27
Issuing Houses’ Contact Information

For additional information, please contact:

Stanbic IBTC BankPLC FCMB Capital Markets Limited Zenith Capital Limited

Oyinda Akinyemi Damilola Aloba Simon Bassey

Head, Equity Capital Markets Vice President Zenith Capital Limited
Corporate Finance FCMB Capital Markets Limited Zenith Heights
Stanbic IBTC Bank Plc , First City Plaza 87 Ajose AdeogunStreet
Building A, I.B.T.C. Place 6th Floor, 44 Marina Victoria Island
Walter CarringtonCrescent Lagos Lagos
Victoria Island
Lagos

Tel: +234 (0)1 448 8900 Tel: +234 (0)1 461 2620 Tel: +234 (0)1 278 1140
Cell: +234 (0)803 301 1896 Cell: +234 (0)807 710 7931 Cell: +234 (0)802 354 5228
Email: oyinda.akinyemi@stanbic.com Email: damilola.aloba@firstcitygroup.com Email: simon.bassey@zenithcapitalmarkets.com

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