Investor Presentaiton

ANNUAL REPORT 2020 Chairman's Statement cont. Chairman's Statement cont. cabins and silage bunkers in Niger State to strengthen our Dairy Development Programme (DDP). As part of its expansion drive, the Company acquired Nutricima factory in Ikorodu during the year under review. The factory which is used to produce Coast, Nunu, and Olympic brands was able to produce the Three Crowns brand, this was operational within three days of completion of acquisition. The factories have continued to improve performance, with a record of 1.6% improvement in conversion costs compared to 2019 and 7.6% better than the budget; 56.5% significant improvement in supply chain cost savings compared to 2019 and 5.6% and 1.2% improvement in overall equipment capacity and utilization respectively compared to 2019. Despite the external challenges, production volume increased by 20.3% compared to 2019. The Company recorded the highest production volume in its history during the year under review. Commercial Developments As earlier mentioned, the unexpected Covid-19 pandemic and subsequent lockdown impacted the economy adversely, and by extension our RTM operations. With about 70% of Nigerians living on daily wages, purchasing power was squeezed. Interstate border closure affected movement of goods, and our biggest sales channel, the open market, was affected due to closure and restrictions. To achieve the Company's commercial vision, the Sales Division was further sub-divided to accelerate active coverage of outlets and to ensure that our products were readily accessible to consumers pan-Nigeria. We also expanded into the digital channel with our e-commerce platform to cater for digital- savvy consumers by deploying our wholesale Self Ordering app to customers in urban locations for ordering convenience in a cost-efficient manner while expanding to active spots. The commercial strategy also helped to manage the current realities: the major shift in traditional channel dynamics, evolving shopper behaviour, and consumption patterns. With the changing customer and shopper landscape, our Customer Development and Shopper Marketing Team remains committed to winning with Key Customers in the market by fulfilling the needs of its shoppers using an omni channel approach and by optimizing its conventional channels and expansion into new ones. To support the health and survival of Nigerian children, the Medical Marketing Team consolidated its relationship with relevant healthcare professionals in line with the World Health Organization's code and regulations. The Team creatively leveraged digital channels to reach its audience whilst delivering through traditional channels despite the restrictions on physical interactions. FrieslandCampina's Specialized Nutrition brands are gaining increased recommendation within the medical community as strong nutritional support in enhancing the physical development and cognitive performance of children. Developing Local Content The Company made considerable progress in 2020 with its backward integration programme, the Dairy Development Programme (DDP), by expanding its operations to Kwara state, thus improving the sustainability of the programme. Twenty Milk Collection Points (MCPs) were constructed across four states: Oyo, Ogun, Osun, and Kwara. The DDP expansion to the North was further boosted by continuous investment in the Company's 10,000-hectare facilities at Bobi Grazing Reserve in the Mariga Local Government 14 Area of Niger state. At Bobi, a Milk Collection Centre has been installed with cooling tanks and other equipment to facilitate milk collection from the dairy farmers. Continuous training and capacity-building activities are on-going for the farmers and other personnel while the Hydroponic Centre and other previously installed facilities are still in operation. Pasture development bloomed as a result of significant investment in necessary equipment and infrastructural facilities. More than 22 solar-powered boreholes were drilled; and cow sheds, earth dams, and training halls were constructed to further demonstrate our commitment to the programme as the leader in the dairy sector. Security however remained a major challenge in the area which has become notorious for banditry and kidnapping, and this has been addressed several times to the authorities. As an integral part of the DDP, several small-holder dairy farmers were supplied with pregnant crossbreds, dairy inputs, and farming equipment that have made dairy farming more enjoyable, profitable and sustainable. The farmers were also trained in best dairy farming practices and good environmental management. As a result, the Company achieved the highest daily collection volume of raw milk at 40,000 liters, which has heightened the delivery output. Safety remained paramount in our operations, and during the year under review training in safety procedure awareness as well as sensitization programmes on Covid-19 were conscientiously carried out in all of our MCCS, MCPS, and other DDP locations for the Company's staff and farmers. Strict adherence to non- pharmacological preventive protocols was observed, and as a result there was not a single case of Covid-19 in all of our DDP sites. In its bid to widen the scope of the DDP and make it more inclusive, the Company in partnership with key stakeholders, launched Nigeria's first expertise Centre for dairy development, the Centre for Nigeria Dutch Dairy Development (CNDDD). The Centre focuses on improving dairy productivity and sustainability through the entire dairy value chain in Nigeria driven and supported by the Dutch partners, who have experience and practice developed over a century. The CNDDD will strengthen cooperation among relevant stakeholders including the Nigerian Government, dairy farmers, academics, students, and key industry players. New sustainable partnerships were formed with universities and some new farms to accelerate dairy development in Nigeria. The year ended with an award from Farm Connect Limited to FrieslandCampina WAMCO for creating value for Nigerian dairy farmers. Corporate Social Responsibility The Company, under its Corporate Social Responsibility (CSR) initiatives, extended support to different groups across the country with a focus on disadvantaged communities. In keeping with its mission to provide better nutrition for Nigerians, the Company provided dairy products to the vulnerable groups affected by the coronavirus pandemic restrictions. Through partnership with the Lagos State Government, Federal Ministry of Humanitarian Affairs, Disaster Management and Social Development and key Non-Governmental Organizations, our Company catered for the nutrition needs of over 127,000 families across the federation. Health Care Professionals at the frontlines of combating the virus also received hygiene items. Taking the intervention further, the Company made a bulk cash donation of #500,000,000.00 (Five Hundred Million Naira) to the Coalition Against COVID-19 Fund (a private sector- led initiative in partnership with the Federal Government of Nigeria, the Nigeria Centre for Disease Control and the World FrieslandCampina WAMCO Nigeria PLC Health Organization) with the sole aim of combating COVID-19 in Nigeria by providing medical facilities across the country's six geo-political zones. appointed. On behalf of all of us, I wish him success in his new assignment. Five Directors (including me) will retire at the forthcoming Annual General Meeting, and being eligible, we have offered ourselves for re-election. As required by Section 278 of the Companies and Allied Matters Act 2020, I have given the Company a special notice that I would have attained the age of 70 before the next AGM. Other Directors seeking re-election are Mr. Robert Steetskamp, Engr. Mustafa Bello, Mr. Marc Galjaard, and Mrs. Oyinkan Ade- Ajayi. Under a strategic partnership with Orange Corners Nigeria (an initiative of the Ministry of Foreign Affairs and the Kingdom of the Netherlands), the FrieslandCampina WAMCO employees continued to volunteer as mentors to participating entrepreneurs on this programme who have startup businesses. The Orange Corners Nigeria has successfully produced three cohorts of twenty startups per cohort since inception in 2019 by leveraging on the power of digital channels through virtual engagement sessions. These are expected to continue into the Acknowledgments current year. The objective of the mentoring programme is for the employees who are managers to share their wealth of experience with the young and promising entrepreneurs. In line with the Company's tradition, thirty charitable organizations across the country were provided with product support in quarterly installments to complement their efforts at catering adequately for dependents under their care. Sustainable Engagement/Human Resources Our Company as an employer of choice continues to promote an atmosphere that encourages industrial peace, harmony and loyalty to the business. Our close-knit relationships motivate our employees and align them to be productive, cooperative, and supportive of one another to achieve the Company's goals. However, 2020 was not just disruptive but also redefining for us as a business in terms of people and workplace management. The implication of the novel pandemic for us was broad and substantial, hence the need to reorganize people management priorities to suit immediate business needs. The Company facilitated the essentials such as equipping leaders to manage remote teams over the long haul, preservation of our WIN-WIN culture with a more distributed workforce, and sustained employee engagement in a cost-constrained environment. Despite all odds, the business continued to thrive by focusing on critical factors such as employee health and mental wellness, critical skills development, and consistent communication to sustain employee engagement. Our human resource focus is to continuously develop a high- performing, resilient, empowered, and engaged workforce. Our Company will continue to leverage existing leadership capabilities to strengthen employee psychological resilience in readiness for future uncertainties. We are committed to supporting productivity and business growth by deploying the right people in the right roles at the right time under the right atmosphere. Board Changes During the year, Mr. Dirk van Breen resigned from the Board as an Executive Director after the completion of his tour of duty in Nigeria. He was appointed as the Company's Finance Director in 2017 and appointed to the Board on 1st September 2019. On your behalf, I thank Mr. Dirk van Breen for his services and valuable contributions to the growth of the Company; and wish him well in his future endeavours. Mr. Marc Galjaard was appointed to the Board as Executive Director, Finance, to replace Mr Dirk van Breen. Mr Galjaard has served in various capacities in FrieslandCampina and other multinational companies. We believe that he has the skills and wealth of experience required for the role to which he has been FrieslandCampina WAMCO Nigeria PLC Two of the critical factors that have continued to contribute to the success of the Company are teamwork and solid support of the Corporate Head Office. The Company milked the two to the fullest and for maximum advantage in 2020. | would therefore like to thank my colleagues on the Board and members of the Management Team for their valuable insight, counsel, and teamwork during the last financial year. Special acknowledgment goes to our Corporate Head Office for their technical support, and for making available the most needed FX through inter-company loans on generous terms. Without this support the results achieved during the year would not have been possible. Our consumers deserve special appreciation for being consistent in their decisions to buy and consume our products daily. They have continually demonstrated their confidence in our products and the Company, and we are very proud of them. I appreciate all our employees for their passion, commitment to shared values, hard work, and dedication to duty; and our suppliers, financiers, and other business partners for their commitment to our business ambition. I would also like to thank our regulators for ensuring a disciplined business environment. Business Outlook 2021 The outlook for the global economy appears hazy considering the second wave of COVID-19. The discovery of a number of vaccines however holds the promise of recovery in 2021. For the domestic economy, available data and forecasts for key macroeconomic variables suggest optimism in growth for the year 2021; GDP has been projected to grow at 2%. However, the outlook remains very fragile, clouded by uncertainty regarding oil price trajectory, scarcity of FX, rising inflation, elevated unemployment, security challenges, hike in the pump price of petroleum products, electricity price adjustments, and social tensions across the country. Notwithstanding the volatile and uncertain business environment for the year, the Board and Management remain positive and confident about the future of our Company. We are confident that our brands, which are leaders in the market segment, will continue to grow on the back of our unique Route- to-Market strategy to achieve our business ambition. We will continue to pursue our backward integration and product diversification strategies with vigor to ensure the long- term sustainability of our business. Thank you, distinguished Shareholders, for your kind attention. JMémo J. M Ajekigbe, OFR Chairman, FrieslandCampina Wamco Nig. Plc 15