monday, 18th august, 2008

==

DataPro Limited Ground Floor, Foresight House

163-165 Broad Street By Marina Water Front

234-1-4605395, 4605396 Email:[email protected]

[email protected] Website:www.datapronigeria.net

February, 2021

2

DataPro

Dufil Prima Foods 2021 Corporate Rating

SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:

Dufil Prima Foods Plc

• Date Compiled

17-Feb-2021

Dat

aPro

@ 2

021


DUFIL Prima Foods Plc

This report is provided by DataPro subject to the terms & condition stipulated in our Terms of Engagement

CORPORATE RATING REPORT

References

Abiodun Adeseyoju, FCA.

Abimbola Adeseyoju

Oladele Adeoye

EVALUATION VALID TILL: February, 2022

Long-term Rating: A-

Short term Rating A2

Previous Rating: A-

Rating Outlook: Positive Trend: UP Currency: Naira

EXECUTIVE SUMMARY

2019 2018 2017 2016 2015 N’000 N’000 N’000 N’000 N’000

Turnover 208,113,028 206,173,035 171,751,766 120,740,993 103,893,936

Profi t Before Tax 9,148,005 13,737,604 23,166,491 8,301,943 1,460,649

Equity 35,654,788 31,182,741 25,256,143 18,723,507 10,843,110

Prop., Plant & Eqpt. 50,529,215 45,757,017 35,145,616 26,811,006 28,619,240

Total Asset 153,459,095 134,884,171 111,781,485 80,942,690 60,740,980

Non Current Liabs 35,907,499 24,496,545 23,112,965 10,009,388 7,864,380

RATING EXPLANATION

The Short term rating of A2 indicates Fair Credit Quality and adequate capacity for

timely payment of financial commitments.

The long term rating of A- indicates Low Risk. It shows fair financial strength, operating

performance and business profile when compared to the standard established by DataPro.

This company, in our opinion, has the ability to meet its ongoing obligations, but its financial

strength is vulnerable to adverse changes in economic conditions.

This report does not represent an offer to trade in securities. It is a reference source and not a substitute for your own judgment. As

far as we are aware, this report is based on reliable data and information, but we have not verified this or obtained an independent

verification to this effect. We provide no guarantee with respect to accuracy or completeness of the data relied upon, and therefore the

conclusions derived from the data. This report has been prepared at the request of, and for the purpose of, our client only and neither

we nor any of our employees accept any responsibility on any ground whatsoever, including liability in negligence, to any other person.

Finally, DataPro and its employees accept no liability whatsoever for any direct or consequential loss of any kind arising from the use

of this document in any way whatsoever.

3

DataPro


SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

Dat

aPro

@ 2

021


RATING SYNOPSIS

The rating took into consideration all relevant qualitative and

quantitative factors to arrive at the assigned risk indicator.

The qualitative information used was based on industry and

market intelligence including public information.

The quantitative information was obtained from the company’s

audited and management accounts.

The risk factors were assessed using the company’s

Capitalization, Earnings Profile, Liquidity, Corporate Governance,

Regulatory Risk and Sustainability of subject’s current healthy

profile in the medium to long term period.

Overall, the following were observed:

Strengths:

• Stable Management

• Diversified Earning Profile

• Strong Brand Presence

Weakness:

• High Debt Profile

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DataPro


SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

Dat

aPro

@ 2

021


BACKGROUND

Dufil Prima Foods Plc (“The Group”) was incorporated on December 19,

2001 as a private Limited Liability Company and began operations in

January 2, 2004. It was converted into a Public Limited Liability company

upon completion of a restructuring exercise in 2008 and subsequently

adopted a holding structure with two subsidiaries. This has since

increased to eight subsidiaries including three foreign companies. The

Group structure is as presented:

GROUP CORPORATE STRUCTURE

Source: Dufil Prima Foods Plc

The Group is reputed to be the owner of the first noodles manufacturing

factory in Nigeria. Aside noodles, other products of the Group include:

Seasoning Pasta, Wheat Flour, Packaging Material, Snacks, Vegetable Oil

and RBDPO.

The brand portfolio of the Group includes; Indomie Noodles, Pure Flour

and Semolina, Power Pasta, Power Oil, Emperor Oil, Minimie Chinchin

Minimie Noodles, Minimie Pasta and Mimee Noodles.

Under the Indomie Noodles brand, the group has four (4) flavours. These

flavours are: Chicken, Onion, Pepper, Oriental Fried, Crayfish and

Seafood.

Dufil Prima Food Plc

De United Foods Industries Ltd

99.99%

Raffles Oil LFTZ Enterprises

Insignia Print Technology LFTZ

99.99%

De United Foods Industries Ghana

Ltd

Northern Noodles Limited

99.99%

Enriched PTE Limited

Pure Flour Mills Limited

99.99%

Infinity FZCO

100%

99.99% 100% 100%

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SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

Dat

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The Group’s Indomie Noodles is a leading brand in that sector of the

Nigerian economy. Other products of the company also maintained a

significant market share.

The ownership of the Group is divided among Tolaram Africa Foods Pte

Ltd, Platinum Stream Profits Limited and other minority shareholders.

The shareholding is as distributed:

ANALYSIS OF SHAREHOLDING STRUCTURE


DIRECTORS PROFILE

The following persons served as directors during the year under review;

Mr. Harkishin Aswani, Mr. Deepak Singhal, Mr. Adhi Narto, Chief

(Dr.) J. Sanusi, Mr. Axton Salim, Mr. Kasim Rusmin, Mr Amit Banati.

The Directors’ profiles are as follows:

1. Name: Mr. Harkishin Aswani, MFR

Position: Chairman

Years of Experience: 37 years

Job Experience: Honorary Consul-General of Singapore in

Nigeria

Board Membership: Since 2002

2. Name: Mr. Deepak Singhal

Position: Non-Executive Director


Education: St. Xavier’s College

Calcutta University, India

Job Experience: Tolaram Group

Multipro Enterprises Ltd

Tolaram Africa Pte. Ltd

49%

Platinum Stream Profits

Limited49%

Others 2%

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SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

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Unilever India


3. Name: Mr. Adhi Narto

Position: Chief Executive Officer


Education: Bandung Institute of Technology, Indonesia

Job Experience: Salim Group


4. Name: Dr. Joseph Oladele Sanusi


Profession: Banker


Education: Member, Institute of Chartered

Accountants of Nigeria

South-West London College

Kingston College of Technology, England

Fellow, Nigeria Institute of Bankers

Job Experience: United Bank for Africa Plc

Central Bank of Nigeria

Securities & Exchange Commission

First Bank of Nigeria Ltd

FBN Merchant Bank Ltd

Lafarge Africa Plc


5. Name: Mr. Axton Salim



Education: B. A., University of Colorado, USA

Job Experience: Credit Suisse Singapore

Salim Group of Companies


6. Name: Mr. Kasim Rusmin



Education: University of Portland, Oregon, USA

Job Experience: PT DBS Vickers Securities Indonesia

PT ING Vickers Securities Indonesia

Salim Group of Companies


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SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

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7. Name: Mr. Amit Banati


Education: B. Sc - Calcutta University

MBA – Indian Institute of Management

Job Experience: Kellogg Company

Kraft Foods

Cadbury

Schweppes

Procter and Gamble


FINANCIAL PERFORMANCE

• EARNINGS PROFILE

REVENUE GROWTH (2016 – 2020)


Dufil Prima Foods Plc derives its major Earnings from the sale of goods.

This grew marginally by 1% from N206.2b (Yr. 18) to N208.1b (Yr. 19).

The Unaudited Accounts for the year 2020 showed a further growth of

9% in Revenue from N208.1b (Yr.19) to N226b (Yr.20). The increase in

Revenue was due to the growth in production capacity and high sales

volume.

The major segments accountable for the growth were the Noodle and

Vegetable oil. The Noodle segment constituted the highest chunk of the

Total Revenue in the year 2020. It contributed 68% to the Company’s

Total Revenue.

0

50

100

150

200

250

2016 2017 2018 2019 2020

Revenue PBT

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SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

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COMPOSITION OF REVENUE BY BUSINESS SEGMENT FOR THE YEAR 2020


The Group earned Revenue from both Ghana and Nigeria markets.

Revenue made in Nigeria accounted for 94% as at the year-end 2020.

GEOGRAPHICAL DISTRIBUTION OF REVENUE (2020)


Cost of Sales increased by 2% from N166.6b (Yr. 18) to N170.7b (Yr. 19).

This was further increased by 7% to N183b as at December 2020. The

increase in Revenue outpaced the growth in Cost of Sales during the year

end 2020. This led to a marginal increase in Gross Profit Margin from 18%

(Yr. 19) to 19% (Yr. 20).

PEER COMPARISON OF GROSS PROFIT MARGIN FOR THE YEAR 2019


Noodle 68%

Flour 1%

Pasta 6%

Snacks4%

Packaging 3%

Vegetable Oil18%

Nigeria 94%

Ghana6%

18%

9%

8.70%

17%

0% 5% 10% 15% 20%

Dufil

FMN

Dangote

Honeywell

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DataPro


SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

Dat

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The Gross Profit Margin recorded in the year 2019 compared well with

its closest competitors in the industry.

• PROFITABILITY

Item 2020 2019 2018

Gross Profit 42,589,273 37,438,996 39,533,020

Total Expenses 35,837,575 29,522,358 27,353,237

Profit Before Tax 6,751,698 9,148,005 13,737,604


Total Expenses increased by 7% from N27.4b (Yr. 18) to N29.5 (Yr.19).

This increased further to N35.8b (Yr. 20). Advertising and Promotion

Cost constituted a major portion accounting for 36% of the Total

Expenses.

COMPOSITION OF TOTAL EXPENSES FOR THE YEAR 2020


The Group’s profit has been experiencing a steady decline in Pre-Tax

Profit as a result of the increase in Operating Expenses. This is primarily

due to growing prices of commodity and increased Finance Cost.

Consequently, Pretax Profit went down from N9.1b (Yr.19) to N6.8b

(Yr.20).

• CAPITALIZATION

Shareholder’s Funds grew by 14% in the year 2019. It increased from

N31.2b (Yr. 18) to N35.7b (Yr. 19). The growth in Retained Earnings

accounted for the increase. Retained Earnings went up from N28.2b (Yr.

18) to N33.2b (Yr. 19). As at December 2020, Equity has further grown

to N41.7b largely due to injection of N8b loan from Shareholders.

Advertising & Promotion

36%

Marketing 11%

Administration21%

Finance Cost32%

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SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

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Total Asset however grew by 16% from N153.5b (Y.19) to N178.6b

(Yr.20). The growth in Total Assets is largely driven by Advances and

Deposits.

BREAKDOWN OF THE TOTAL ASSET

ITEM 2019 %

Current Asset 99,758,589 65

Non Current Asset 53,701,406 35

Total Asset 153,459,995 100

Equity as a proportion of total asset was 23% in the year 2018, 2019 and

2020. This implies that 77% of the company’s total asset is financed by

liabilities in the year.

However, Borrowings accounted for 71% of the Total Liabilities in the

year 2020. This is an increase compared with the 70% recorded in the

year 2019. The distribution of the group Interest Bearing Liabilities is as

presented.

DISTRIBUTION OF LOAN PORTFOLIO (2020)


The Group’s borrowings for the year 2020 are largely in short term.

Current borrowings accounted for 58% of total loans of the Group. In the

year 2020, the Group restructured some of the short-term loans to long-

term in other to take advantage of lower cost of funding.

Commercial Bank 64%

Government 26%

Bond 10%

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DataPro


SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

Dat

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@ 2

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FUNDING OF OPERATIONS


• ASSET UTILITY

Dufil currently operates from factory locations in Ghana and Nigeria.

The factory locations in Nigeria are; Lagos, Ogun, Rivers, Kaduna

and Lekki (Free Zone). As at the year 2020, the Group has only been

able to fully utilize production capacities for its Flour products. The

factory install capacity and utilization is as presented.

PRODUCTION CAPACITY UTILIZATION


Total Asset comprised of Current Assets and Non-Current Assets. The

Current Assets constituted 68% of Total Assets. It increased from

N99.8b (Yr. 19) to N120.5b (Yr. 20). Inventories and Cash Balance

accounted for 64% (Yr. 2020) of Total Current Assets. The composition

of Total Current Assets is as presented.

18.7 25.3 31.2 35.7 41.7

49.465.3

84.3 83.2

97

12.8

21.2

19.4

34.6

40

0

50

100

150

200

2016 2017 2018 2019 2020

Other liabilities Borrowings Equity

0%

20%

40%

60%

80%

100%

23%

56%

69% 70%

80%

100%

Nb

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DataPro


SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

Dat

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COMPOSITION OF CURRENT ASSETS FOR THE YEAR 2020


Non-Current Assets comprised of Fixed Assets and Constructions In

Progress. It accounted for 32% of the Total Assets. It increased from

N53.7b (Yr. 19) to N58.1b (Yr. 20). The major component of Non-Current

Assets in the year 2020 was the Property, Plant & Equipment. The

composition of the Non-Current Assets is as presented.

COMPOSITION OF NON-CURRENT ASSETS FOR THE YEAR 2020


The ability of the Group to efficiently generate Profit using it Total

Assets reduced from 10% (Yr. 18) to 6% (Yr. 19). This further declined

to 4% in the year 2020. Similarly, ability to effectively generate Revenue

using Assets went down from 153% (Yr. 18) to 136% (Yr. 19). This has

being on a steady decline since the year 2017. However, this level of

efficiency compared well with its competitors in the industry.

Fixed Asset81%

Construction in progress

19%

Inventories43%

Trade & Other receivables

8%

Advaces & Deposits

25%

Cash & bank balance

21%

Prepayment3%

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DataPro


SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

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ASSET UTILIZATION TREND (2015-2020)

Source: Dufil Prima Food Plc

• LIQUIDITY

Total Liabilities increased by 14% from N103.7 (Yr. 18) to N117.8b (Yr.

19). This grew further by 16% to N136.9b(Yr. 20). The growth was due to

significant increase in Borrowings. The Borrowings were in short and long

term and grew by 14% from N83.2b (Yr.19) to N97b (Yr.20). The

composition of Total Liabilities is as presented:

COMPOSITION OF TOTAL LIABILITIES (2020)


Current Liabilities increased from N81.7b (Yr. 19) to N91.4b (Yr. 20). It

accounted for 63% of the Total Liabilities. However, the major portion

of Current Liabilities was largely concentrated in Bank Loans. The

component of current liabilities is as presented.

210

2110 7 4

171

149 154 153

136127

0

20

40

60

80

100

120

140

160

180

2015 2016 2017 2018 2019 2020

Profit to Total Asset Revenue to Total Asset

Current 67%

Non-current 33%

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SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

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COMPOSITION OF CURRENT LIABILITIES (2020)


Dufil Prima Foods Plc continued to generate positive cash flow from its

operation. As at December 2018, Cash generated from operation was

N6.4b. This grew significantly to N42.8b (Y.19). Ability to settle short

term obligations using liquid assets increased from 111%(Yr.19) to 129%

(Yr.20).

CORPORATE GOVERNANCE & RISK MANAGEMENT

The affair of the Group is directed by its Board of Directors which

consists of one (1) Executive and six (6) Non-Executives including an

independent director and the Chairman.

The Group recognizes that it has Market Risk, Operational Risk, Interest

Rate Risk, Foreign Currency Risk, Credit Risk and Liquidity Risk. In line

with details contained in its annual report, the Group has in place

measures to deal with its various risks.

REGULATORY ENVIRONMENT

The products of the Group are subject to the regulation of National

Agency for Food Drug Administration and Control (NAFDAC) in Nigeria.

All the group’s products are registered with NAFDAC. Additionally, it has

received 1SO 9001:2000 and 22 000: 2005 Certification for its food

chain operation.

Payables 24%

Bank loans56%

Taxes4%

Others 16%

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DataPro


SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

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FUTURE OUTLOOK

The group intends to further expand into cassava operation with

estimated project cost of $2.9m. It also plans to expand its Noodles

seasoning capacity at an estimated cost of $1m.

CONCLUSION

The rating of the Group is supported by its strong brand presence,

experienced management team and diversified income sources.

However, it is constrained by its high debt profile. Consequently, we

assigned a rating of “A-”

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DataPro


SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

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FINANCES

Financial Position as at

Dec, 2019 Dec, 2018 Dec, 2017

N’000 % N’000 % N’000

ASSETS EMPLOYED

Property, Plant and Equipment 50,529,215 10.43 45,757,017 30.19 35,145,616

Goodwill 608,910 - 608,910 - 608,910

Intangible Assets - 415 (90.99) 4,606

Other Assets 1,249,854 283.29 326,084 86.29 175,045

Lease Liability (387,049) - - - -

Right-of-Use Asset 1,313,427 - - - -

Net Working Capital 17,860,881 98.74 8,986,860 (27.73) 12,434,931

Borrowings (non current) (30,234,938) 45.37 (20,799,028) 1.08 (20,576,908)

Deferred Income (3,054,398) 77.51 (1,720,660) 103.31 (846,340)

Retirement benefit Obligation (1,270,111) 22.38 (1,037,808) 22.63 (846,294)

Deferred Tax Liability (961,003) 2.34 (939,049) 11.34 (843,423)

35,654,788 14.34 31,182,741 23.47 25,256,143

CAPITAL AND RESERVES

Share Capital 3,376,667 - 3,376,667 - 3,376,667

Retained Earnings 32,278,095 16.08 27,806,053 27.09 21,879,460

Non controlling interest 26 23.81 21 31.25 16

Shareholders Funds 35,654,788 14.34 31,182,741 23.47 25,256,143

REVENUE AND PROFITS

REVENUE 208,113,028 20.04 206,173,035 20.04 171,751,766

Profit Before Taxation 9,148,005 (40.70) 13,737,604 (40.70) 23,166,491

Profit after Taxation 8,976,284 (40.74) 13,315,808 (40.74) 22,470,737

17

DataPro


SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

Dat

aPro

@ 2

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Signed: Name: Oladele Adeoye Designation: Chief Rating Officer Date: 17th February, 2020

For and on behalf of: DataPro Limited Ground Floor, Foresight House By Marina Water Front 163/165 Broad Street, Lagos Island, Lagos. Tel: 234-1-4605395, 4605396 Cell: 0805-530-3677 Email: [email protected],[email protected] Website: www.datapronigeria.net

© DataPro 2021

All right reserved.

This report is provided for your internal business use only and may not be reproduced

or re-distributed in any manner whether mechanical or without the permission of

DataPro.

Whilst DataPro attempts to ensure that the information provided is accurate and

complete, however due to the immense quantity of detailed matter used in compiling the

information and the fact that some of the data are supplied from sources not controlled

by DataPro, we will not be responsible for any omission therefrom.

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DataPro


SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

17-Feb-2021

Dat

aPro

@ 2

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USER GUIDE

DataPro’scredit rating is an opinion of an issuer’s overall creditworthiness and

its capacity to meet its financial commitment.

Our short-term ratings have a time horizon of less than 12 months in line with

industry standards reflecting risk characteristics. The ratings place greater

emphasis on the liquidity to meet financial commitment in a timely manner.

The long-term risk indicator is divided into 8 bands ranging from AAA through

DD. Each band could be modified by + or –. With + representing slightly less risk

than –. Such suffixes are not added to the ‘AAA’ long –term rating category and

to categories below ‘CCC’. Or to short-term rating older than A1+.

LONG-TERM RATING

Investment Grade

Indicator Meaning Explanation

AAA Lowest Risk (Superior) Assigned to issuers which have

superior financial strength, operating

performances and profile when compared to the

standards established by DataPro Limited.

These funds, in our opinion, have aExcellent

ability to meet their ongoing obligations.

AA Lower Risk (Excellent) Assigned to issuers which

haveexcellent financial strength, operating

performance and profile when compared to the


These funds, in our opinion, have a very strong

ability to meet their ongoing obligations.

A Low Risk (Very Good) Assigned to issuers which have

very good financial strength, operating

performance And profile when compared to the


These funds, in our opinion, have a strong ability

to meet their ongoing obligation.

BBB Slight Risk (Fair) Assigned to issuers which have fair

financial strength, operating performance and

profile when compared to the standards

established by DataPro Limited. These funds, in

our opinion, have an ability to meet their

current obligations, but their financial strength

is vulnerable to adverse changes in economic

conditions.

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SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

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@ 2

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Non-Investment Grade

Indicator Meaning Explanation

BB Moderate Risk (Marginal) Assigned to issuers which have, marginal



established by DataPro Limited. These funds,

in our opinion have an ability to meet their

current obligation, but their financial strength


conditions.

B High Risk (Weak) Assigned to issuers which have, weak


profile when compared to the standard

established by DataPro Limited. These funds,

in our opinion have an ability to meet their

current obligation, but their financial strength


conditions.

CCC Higher Risk (Poor) Assigned to issuers, which have poor



established DataPro Limited. These funds, in

our opinion may not have an ability to meet

their current obligation and their financial

strength is extremely vulnerable to adverse

changes in economic conditions.

DD Highest Risk (Very Poor) Assigned to issuers, which have

very poor financial strength, operating

performance and profile when compared to the


These funds, in our opinion may not have an

ability to meet their current obligation and

their financial strength is extremely

vulnerable to adverse changes in economic

conditions.

SHORT-TERM RATING

Indicator Meaning Explanation A1+ Highest credit quality Indicates the strongest capacity for

timely payment of financial commitments. May

have an added “+” to denote any exceptionally

strong credit feature.

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SUMMARY

• Rating

A-

• Report Type:

Corporate Rating

• Client:


• Date Compiled

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@ 2

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A1 Good credit quality A satisfactory capacity for timely payment of

financial commitments, but the margin of safety is

not as great as in the case of the higher ratings.

A2 Fair credit quality The capacity for timely payment of financial

commitments is adequate. However, near term

adverse changes could result in reduction to non

investment grade.

B Speculative Minimal capacity for timely payment of financial

commitments, plus vulnerability to near term

adverse changes in financial and economic

conditions.

C High default risk Default is a real possibility. Capacity for meeting

financial commitments is solely reliant upon a

sustained, favorable business and economic

environment.

D Indicates an entity that has defaulted on all its financial obligations.

monday, 18th august, 2008

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