Investor Presentaiton
ANNUAL REPORT 2020
94
Notes to the Financial Statements
For the year ended 31 December 2020
(f)
Capital Management
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustain future development of the business. The Board of Directors monitors the return on capital, which the Company
defines as result from operating activities divided by total shareholders' equity. The Board of Directors also monitors the
level of dividends to ordinary shareholders.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings
and the advantages and security afforded by a sound capital position.
The Company's debt to capital ratio at the end of the reporting period was as follows:
In thousands of naira
Total liabilities
Cash and cash equivalents
Net debt
Total equity
Debt to capital ratio at December 31
2019
29
Related Parties
(a)
Parent and Ultimate Controlling Party
The parent and ultimate controlling party of the Company is Friesland International Beheer B.V., incorporated in The
Netherlands, with a 67.81% (2019: 67.81%) shareholding.
(b)
Key Management Personnel Compensation
In addition to their salaries, the Company also provides non-cash benefits to key management personnel, and contributes
to a post-employment defined contribution plan on their behalf. In accordance with the terms of the plan, key management
personnel are entitled to access the fund when they retire.
Key management personnel also participate in the Company's long service award and terminal milk benefit programmes.
These programmes award certain sums of cash benefit which accrue to the recipient on graduated periods of uninterrupted
service.
2020
180,371,725
(88,702,534)
91,669,191
82,326,993
(7,857,211)
Key management personnel compensation comprised:
74,469,782
In thousands of naira
26,290,913
3.49
24,234,981
3.07
2020
2019
There were no changes in the Company's approach to capital management during the year. The Company is not subject
to externally imposed capital requirements.
27
Operating Leases
The Company has operating leases for business premises and accommodation for certain employees. The leases typically
run for a period of one to two years. The full lease rental is paid in advance at the commencement of lease. Refer to note
7 for amounts expensed in respect of the these leases and Note 16 for prepayments at year-end.
Short-term employee benefits
Contribution to compulsory pension fund scheme
Long-term employee benefits
424,507
396,351
20,776
17,440
10,388
8,720
455,671
422,511
The directors of the Company have also been identified as related parties and their remuneration has been disclosed in
note 9 (c). At year-end, the directors held 0.41 percent (2019: 0.41 percent of the company's issued share capital).
(c)
28
Contingencies
(a)
Guarantees
Other Related Party Transactions
(i) Payables, purchases and royalty
expense
Nature of transaction
Transaction value
for the year
Balance outstanding at
year-end (Note 23)
There are contingent liabilities for guarantees to a bank in respect of:
In thousands of naira
In thousands of naira
Related Party
2020
2019
2020
2019
2020
2019
Staff car loans
3,015
Friesland Brands B.V., Netherlands
FrieslandCampina B.V., Netherlands
Koninklijke FrieslandCampina N.V.,
Netherlands
Royalty expense (Note (e)(i))
Purchases (Note (e)(ii))
4,559,415
112,053,935
4,423,295
82,338,172
4,580,723
72,210,382
3,513,054
36,381,352
Loans
Staff housing loans
65,305
74,222
101,061,713
217,675,063
86,761,467
69,287,101
146,078,206
39,894,406
The Company's exposure to contingent liabilities arising from staff car and housing loans is limited as these loans are
secured by employee retirement benefits.
(ii) Receivables and sales
Nature of transaction
(b)
Pending Litigations
Transaction value
for the year
Balance outstanding as at
year-end (Note 17)
There are fifteen lawsuits pending against the Company in courts of law and a claim against the Company which are being
handled by external legal counsel. At year-end, the contingent liability in respect of these amounted to #1.32 billion (2019:
#1.48 billion). In the opinion of the Directors and based on independent legal advice, no material losses are expected to
arise from these claims. Hence, no provision has been made in these financial statements.
In thousands of naira
Related Party
2020
2019
2020
2019
Friesland Export West Africa,
Netherlands
Sales (Note (e) (iii))
360,903
732,584
360,903
290,667
290,667
287,076
732,584
287,076
All outstanding balances with these related parties are to be settled in cash within six months of the reporting date.
FrieslandCampina WAMCO Nigeria PLC
FrieslandCampina WAMCO Nigeria PLC
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