FIDSON HEALTHCA RE PLC Lagos, Nigeria
REPORT OF THE DIRECTORS AUDITED FINANCIAL STATEMENTS
AND
SUPPLEMENTARY FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2008
FIDSON HEALTHCA RE PLC REPORT OF THE DIRECTORS,
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION
FOR THE YEAR ENDED JUNE 30, 2008
CONTENT PAGE
Directors, professional advisers, etc 3
Results at a glance 4
Notice of Annual General Meeting 5
Chairman’s Statement 7
Report of the Directors 9
Audited Financial Statements
Report of the Auditors 15
Statement of Significant Accounting Policies 16
Balance Sheet 18
Profit and Loss Account 19
Statement of Cash Flows 20
Notes to the Financial Statements 21
Statement of Value Added 35
Five-Year Financial Summary 36
Supplementary Information
3 FIDSON HEALTHCA RE PLC
DIRECTORS, PROFESSIONAL ADVISERS, ETC
DIRECTORS: Mr. Felix O.A. Ohiwerei Chairman(Appointed 8th November, 2007) Mr. Fidelis A. Ayebae (Managing Director/Chief Executive Officer) Emeritus Prof. Oladipo O. Akinkugbe (Appointed 8th November, 2007) Mrs. Olufunmilola O. Ayebae
Mr. Olugbenga O. Olayeye Executive Mr. Abiola A. Adebayo Executive Mr. Olatunde B. Olanipekun Executive Mr. Olutoyin B. Ehinlaiye
COMPANY
SECRETARY: Olatunde B. Olanipekun REGISTERED 6, Ilupeju by-pass
OFFICE: Ilupeju
Lagos.
AUDITORS: Ernst & Young
(Chartered Accountants) 2A, Bayo Kuku Road Off Alfred Rewane Road Ikoyi, Lagos.
SOLICITORS: Oval Law Firm
110, Obafemi Awolowo Way Ikeja
Lagos. PRINCIPAL
BANKERS: Guaranty Trust Bank Plc
Intercontinental Bank Plc Access Bank Plc Diamond Bank Plc Wema Bank Plc Skye Bank Plc First Bank Plc Sterling Bank Plc
4 FIDSON HEALTHCA RE PLC RESULTS AT A GLANCE 2008 2007 N=’000 N=’000 Turnover 4,503,645 3,307,421
Profit before taxation 526,379 505,304
Profit after taxation 189,300 505,304
Dividend (Declared) 300,000 202,122
At Year End
Paid-up share capital 750,000 89,181
Shareholders’ funds 4,965,948 1,426,726
Per –Share data
Earnings per share 13k 402k
Dividend per share (Proposed) 20k 227k
Net assets per share 331k 1,600k
Number of shareholders
Number of employees 294 255
5
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Tenth Annual General Meeting of Fidson Healthcare Plc will be held at the Sheraton Hotels & Towers, Mobolaji Bank Anthony Way, Ikeja, Lagos State, Nigeria on Friday, the 23rd of January, 2009 at 10:00am for the purpose of transacting the following business:
Ordinary Business
1. To present the annual financial statements of the Company for the year ended 30th June, 2008 and Reports of Directors and Auditors thereon;
2. To declare the dividend recommended by the directors of the Company;
3. To elect members of the Audit Committee;
4. To authorize the directors of the Company to fix the remuneration of the Auditors;
5. To re-elect the following directors who in accordance with section 259 of Companies and Allied Matters Act, retire by rotation, but are eligible and offer themselves for re-election: Mr. Fidelis A. Ayebae, Mrs. O. O. Ayebae and Mr. Olugbenga O. Olayeye
6. To approve the appointments of Chief Felix O.A. Ohiwerei and Professor Oladipo O. Akinkugbe as directors of the company in accordance with Article 24 of the company’s Articles of Association.
Voting and Proxies
On a show of hands, every member present in person or by proxy shall have one vote, and on a poll, every member shall have one vote for each share of which he is the holder.
A member of the Company entitled to attend and vote at the annual general meeting (the “Meeting”) is entitled to appoint a proxy to attend, speak and vote instead of that member. A proxy need not be a member of the Company.
Registered holders of certificated Fidson Healthcare Plc shares and holders of dematerialised Fidson Healthcare Plc shares in their own name who are unable to attend the Meeting and who wish to be represented at the Meeting, must complete and return the attached form of proxy in accordance with the instructions contained in the form of proxy so as to be received by the share registrars, Meristem Registrars, 305, Herbert Macaulay Way, Sabo, Yaba, Lagos not less than 48 hours before the date of the Meeting.
6 Dividend Payment
If the dividend of 20k per 50k share recommended is approved and declared, the dividend warrants will be posted or shareholders accounts credited directly on the 27th day of January, 2009 to those shareholders, whose names appear in the Company’s Register of Members at the close of business on 17th of December, 2008
Closure of Register of Members
The Register of members and Transfer Books of the Company will be closed between the 17th to 20th of December, 2008 in terms of the provisions of Section 89 of the companies and Allied matters Act, 1990.
Nomination for the Audit Committee
In accordance with Section 259 of the companies Act, any member may nominate a shareholder as a member of the Audit Committee, by giving notice in writing of such nomination to the Company Secretary at least 21 days before the Meeting.
By the Order of the Board
Olatunde B. Olanipekun Company Secretary
7 CHAIRMAN’S STATEMENT
INTRODUCTION
It is my pleasure to welcome you to the inaugural Annual General meeting of our company as a public liability company. It is also my first outing as the chairman of our great company and the same goes for majority of members here present as stakeholders. I look forward to our working together to make Fidson Healthcare Plc the leader in it’s sector of our economy.
OPERATING ENVIRONMENT
The year started on a cautious note for the real sector with the uncertainties that followed the general elections. It took considerable time for the new governments to settle down and outline their programmes for the country. Delays in announcing the National Budget did not augur well for the economy. Inflation continued its upward journey, rising from 4.8% at the beginning of our financial year to 12% at the end. The state of the infrastructure impacted negatively on the cost of doing business. Fuel and electricity supplies were costly and epileptic. Confusion at our ports made the cost of clearing goods unpredictable and this resulted to production stoppages.
On the brighter side, activities of regulatory agencies, particularly NAFDAC and Standards Organization of Nigeria positively impacted on our sector as fakers had tough times staying in business. Bank consolidation exercise has made loanable funds available to organizations on longer term basis than hitherto. In addition exchange rate of the naira against other major currencies has become relatively stable, making planning a lot easier. Improved crude oil prices also made available the required foreign exchange for the Nation’s imports.
OUR COMPANY
The company underwent many transformations during the year starting with a very successful private placement exercise done for the following purposes:
· Establishment of a Biotech plant.
· Upgrade of existing plant to WHO/GMP standards.
· Establishment of a hygiene/paper products plant.
· Establishment of a Food & Beverages plant and,
· Completion of our head office complex.
While some of these projects are nearing completion, others have advanced considerably. The benefits are to be seen in the very near future in terms of superior performance and returns.
As a follow – up to the private placement and as promised in the Placement Memorandum, your company successfully went through the rigorous process of listing at the Nigerian Stock Exchange. We got listed on June 04, 2008 and our stock has been doing relatively well in the market, trading decently above the Private Placement price.
Earlier in the year, the company obtained the ISO 9001:2000 certification after a painstaking and meticulous audit of our processes by the Nigerian Standards Organization.
8
We are determined to uphold and to continuously improve on our systems with the ultimate aim of achieving the next level of certification.
Your company recently unveiled its new logo that is more aesthetically appealing. The new logo aims at giving us a distinct identity fit for the leadership position which we now occupy in the industry.
OUR PERFORMANCE
The company recorded a turnover of N4.52b for the year which represents a growth of 37% over that of the previous year. The growth is almost double the industry average of 17%. Profit before tax of N526m was 4% higher than that of 2006/2007. The year’s result took account of necessary provision for staff pension/ gratuity. We have come to the end of a tax holiday granted by government for our pioneering efforts in local manufacture. A Company Income tax provision of N188.7m has therefore been made in the accounts.
DIVIDENDS
In line with our policy of rewarding our investors, the board has recommended the approval at this meeting a dividend of 20k per 50k share. This figure represents an increase of 54% over the 13k per share (adjusted) paid last year.
FUTURE OUTLOOK
The Board looks to the future with optimism borne out of the confidence that the various projects embarked upon will soon start to yield good results.
Production activities have commenced in our new Hygiene products plant (diapers and paper products.) We have also started the test marketing of these products. The Biotech plant hopefully will
be completed by the 3rd quarter of the company’s financial year. All these are expected to
significantly increase our turnover and consequently profit after tax.
Our vision to position the company as a multi-faceted conglomerate remains on track. We shall also endeavour to bring to bear continuous improvement on our current operations.
CONCLUSION
Distinguished shareholders, I will like to express our appreciation on your behalf, to the management & staff of the company for the impressive results recorded. The expertise of our technical partners remains our source of strength for which we are equally grateful.
To you our stakeholders, your confidence in the company is profoundly appreciated. It is our prayer that the returns on your investment will continue to be excellent.
I thank you for your attention.
MR. F.O.A OHIWEREI Chairman
9 FIDSON HEALTHCA RE PLC
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED JUNE 30, 2008
1. The Directors have pleasure in submitting to the members of the Company their report together with the audited financial statements for the year ended June 30, 2008.
2. PRINCIPAL ACTIVITIES
The principal activities of the company are the manufacture and distribution of pharmaceutical products. The company commenced manufacturing of pharmaceutical products in July 2002.
3. LEGAL FORM
The Company operated as a private limited liability company until June 5, 2008 when it was incorporated as a Public Limited Liability Company. The shares are currently quoted on the Stock Exchange.
4. STATE OF AFFAIRS
In the opinion of the Directors, the state of the Company’s affairs is satisfactory and there has been no material change since the balance sheet date, which would affect the financial statements as presented.
5. RESULT FOR THE YEAR
N=’000
Turnover 4,503,645
=======
Profit before taxation 526,379
Taxation (337,079)
---
Profit after taxation 189,300
======
6. DIVIDEND
The Directors recommended that a dividend of 20k per share (2007: N2.27k) which translates to N=300,000,000 (2007: N202,121,595) be paid out of the profit for the 2008 financial year.
10 FIDSON HEALTHCA RE PLC
REPORT OF THE DIRECTORS – (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2008
7. FIXED ASSETS
Information relating to movement in fixed assets is shown in notes 2 and 3 to the financial statements.
8. MAJOR CUSTOMERS
Moddy Drugs Company Limited Adol Pharmacy & Industry Ardmonds Nigeria Limited Zest Pharmacy
Canez HealthCare Limited Ogbuagu Pharmacy JBO Pharmacy Kunbi Pharmacy
Oskajay Chemists Limited Bicon Pharmacy Chemist Sweetflower Pharmacy Danax Pharmacy Bez Pharmacy Matador Pharmacy Tanimola Pharmacy Fiolu Pharmacy MassEldo Pharmacy 9. MAJOR SUPPLIERS
Overseas Suppliers Local Suppliers
V.S. International India NCI Pharmaceuticals Chemists
TIL Exports Pvt Limited India Khushbu Sciences Limited
Gland Pharma Ltd. India Benchmark Sciences Limited
Capsugel (Belgium) Knightsbridge Limited
Hindustan National Glass Fiyique Venture
Industries Ltd,India Incapint Limited
Oriental Containers Ltd., India Glorious Haven Limited
Industries Ltd, India Nuechem (F & P) Limited
MJ Biopharm Pvt. Ltd SAB Nigeria Limited
IFIA Nigeria Limited Hetos Limited
11 FIDSON HEALTHCA RE PLC
REPORT OF THE DIRECTORS – (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2008
10. DIRECTORS
The names of the Directors at the date of this report and of those who held office during the financial year are as follows:
Mr. Felix A. O. Ohiwerei Chairman (Appointed 8th November, 2007) Mr. Fidelis A. Ayebae Managing Director/Chief Executive Officer Emeritus Prof. Oladipo O.Akinkugbe Director (Appointed 8th November, 2007) Mrs. Olufunmilola O. Ayebae Director
Mr. Olugbenga O. Olayeye Executive Mr. Abiola A. Adebayo Executive Mr. Olatunde B. Olanipekun Executive Mr. Olutoyin B. Ehinlaiye Director
11. DIRECTORS’ INTERESTS
Directors’ interests in the issued share capital of the company are as follows: Numbers of
Shares % Mr. Felix A.O.Ohiwerei (Indirect) 30,000,000 2.00 Mr. Fidelis A. Ayebae 554,095,543 36.94 Prof. Oladipo O. Akinkugbe 6,253,165 0.42 Mrs. Olufunmilola O. Ayebae 54,220,000 3.61 Mr. Olugbenga O. Olayeye 30,302,856 2.02 Mr. Abiola A. Adebayo 30,054,288 2.00 Mr. Olatunde B. Olanipekun 12,000,000 0.80
12. BOARD OF DIRECTORS
In accordance with the provisions of section 259 of the companies & Allied matters Act of Nigeria, one third of the directors of the company shall retire from office.The directors to retire every year shall be those who have been longest in office since their last election.Accordingly, Messrs F.A. Ayebae,O.O. Ayebae and O.O.Olayeye retire by rotation and being eligible,offer themselves for reelection.
13. DIRECTORS INTEREST IN CONTRACTS
None of the Directors has notified the company for the purpose of Section 277 of the Companies and Allied Matters Act, CAP C20 LFN 2004 of any disclosable interest in contracts with which the company is involved as at June 30, 2008.
12 FIDSON HEALTHCA RE PLC
REPORT OF THE DIRECTORS – (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2008
14. RESPONSIBILITIES OF DIRECTORS
In accordance with the provisions of sections 334 and 335 of the Companies and Allied Matters Act, CAP C20 Law of Federation of Nigeria (LFN) 2004, the Company's Directors are responsible for the preparation of financial statements which give a true and fair view of the state of affairs of the Company as at the end of the financial year and of its profit and cash flows for the year and comply with the provisions of the Act. These responsibilities include:
i) maintenance of proper accounting records;
ii) internal control procedures are instituted which, as far as is reasonably possible, safeguard the assets, prevent and detect fraud and other irregularities;
iii) applicable accounting standards are followed;
iv) suitable accounting policies are used and consistently applied; v) judgment and estimates made are reasonable and prudent; and
v) the going concern basis is used, unless it is inappropriate to presume that the Company will continue in business.
15. SUBSTANTIAL INTEREST IN SHARES
The Registrar has advised that according to the Register of members as at June 30, 2008, only Mr. Fidelis Ayebae with 554,095,543 ordinary shares of 50k each, held more than 5% of the issued share capital of the Company.
16. DONATIONS
The Company made donations amounting to N 66,362,854 (2007: N60,434,355) to charitable organizations and societies during the year as follows:-
N Religious Organizations 27,099,500 Hospitals/Health Institutions 39,263,354 --- 66,362,854 ========
13 FIDSON HEALTHCA RE PLC
REPORT OF THE DIRECTORS – (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2008
17. POST BALANCE SHEET EVENTS
There are no material post balance sheet events which could have had a material effect on the state of affairs of the Company as at June 30, 2008.
18. ANALYSIS OF SHAREHOLDERS
Analysis of shareholdings as at June 30, 2008.
Range No. of Holders % Units %
1 - 50,000 2,900 81 46,765,632 3 50,001 - 100,000 270 8 21,684,048 1 100,001 - 1,000,000 336 9 97,453,724 7 1,000,001 and above 83 2 1,334,096,596 89
19. EMPLOYMENT AND EMPLOYEES
1. Employment of disabled Persons
It is the Company’s policy that there is no discrimination in considering applications for employment including those from disabled persons. All employees whether or not disabled are given equal opportunities to develop their expertise and knowledge and to qualify for promotion in furtherance of their careers. No disabled person was in the employment of the Company as at June 30, 2008.
2. Welfare
The Company has retainership agreement with a number of private hospitals to whom cases of illness are referred for treatment and/or admission.
The Company provides subsidy to employees in respect of transportation, lunch, housing and healthcare.
3. Training
The Company attaches great importance to training and all categories of staff attend courses or seminars as considered necessary by the Company’s management.
Incentive schemes designed to meet the circumstances of each individual are implemented wherever appropriate and some of these schemes include, bonus promotions and wages review.
14 FIDSON HEALTHCA RE PLC
REPORT OF THE DIRECTORS – (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2008
20. AUDITORS
Messrs Ernst & Young having indicated their willingness will continue in office as the company’s auditor in accordance with section 357(2) of the Companies and Allied Matters Act, CAP C20 LFN 2004. A resolution will be proposed authorizing the Directors to fix their remuneration.
BY ORDER OF THE BOARD
OLATUNDE OLANIPEKUN COMPANY SECRETARY
15 REPORT OF THE AUDITORS TO THE MEMBERS OF FIDSON HEALTHCARE PLC
We have audited the accompanying financial statements of Fidson Healthcare Plc which comprise the balance sheet as at June 30, 2008, the profit and loss account, and Statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.
As stated on page 8, the Directors are responsible for the preparation and fair presentation of these financial statements. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing which require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of Fidson HealthCare Plc as at June 30, 2008 and of its financial performance and its cash flows for the year then ended in accordance with Companies and Allied Matters Act, CAP C20 LFN 2004 and relevant accounting standards issued by the Nigerian Accounting Standards Board.
Lagos, Nigeria October ---, 2008
16 FIDSON HEALTHCA RE PLC
STATEMENT OF SIGNIFICANT ACCOUNT ING POLICIES FOR THE YEAR ENDED JUNE 30, 2008
The significant accounting policies adopted by the Company in the preparation of its financial statements are as follows:
a. Basis of accounting
The financial statements are prepared under the historical cost convention as modified by the inclusion of certain fixed assets at professional valuation.
b. Turnover
Turnover represents the net invoice value of goods sold to third parties during the year.
c. Fixed assets
Fixed assets are stated at cost or valuation less accumulated depreciation.
Depreciation of fixed assets is calculated on straight line basis at the following annual rates which are expected to write off their cost or valuation over their estimated useful lives:
%
Building 2
Plant and Machinery- Head Office 25
Plant and Machinery- Factory 10
Office equipments 25
Furniture & Fixtures 121/2
Motor vehicles 25
d. Fixed assets revaluation
Surplus/(deficits) arising on the revaluation of individual fixed assets are credited/(debited) to a non-distributable reserve known as the fixed assets revaluation reserve. Revaluation deficit in excess of the amount of prior revaluation surpluses on the same assets are charged to the profit and loss account. On disposal of previously revalued fixed assets, an amount equal to the revaluation surplus attributable to that asset is transferred from the fixed assets revaluation reserve to general reserve.
17 FIDSON HEALTHCA RE PLC
STATEMENT OF SIGNIFICANT ACCOUNT ING POLICIES - (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2008
e. Leased assets
The capital element of assets under finance lease is capitalized along with the Company’s fixed assets and depreciated at the same rates for assets of that category. The obligation to leassor is shown as part of borrowings appropriately classified as to maturity.
f. Investments
Long term investments in subsidiaries and other investments are stated at cost. Investments in quoted companies are stated at the lower of cost and market value.
g. Stocks and work-in-progress
Stocks are stated at the lower of cost and net realizable value after making adequate provision for obsolescence and damaged items. In the case of goods manufactured by the Company, cost includes production overheads. Goods in transit are valued at the invoice price.
Finished goods and work-in-progress are stated at the lower of cost and net realizable value. Cost in this case consists of direct purchase cost, conversion cost (materials, labour and overhead) and other costs incurred to bring inventory to its present condition and location.
h. Debtors
Debtors are stated after deduction of specific provision for any debt considered to be doubtful of collection.
i. Foreign Currencies
Transactions in foreign currencies are recorded in Naira at the rates of exchange ruling on the date they arise. Assets and liabilities denominated in foreign currencies are converted to Naira at the applicable rates at the balance sheet date. Gains or losses arising therefrom are treated in the profit and loss account.
j. Deferred taxation
Deferred taxation is provided using the liability method for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Currently enacted tax rates are used to determine deferred taxation.
k. Retirement Benefit Scheme
The Company operates a pension scheme in line with the Pension Reform Act 2004. The employee and Company each contribute 7.5%. The benefits under the scheme are generally related to employees’ length of service and remuneration. The Company’s contributions are accrued and charged to the profit and loss account while the fund is being managed by IBTC Pension Manager, Pension Alliance Ltd and First Guarantee Ltd.The Company also operates non- contributory gratuity scheme. The costs associated wih the scheme are charged to the Profit and Loss account for the year.
18 FIDSON HEALTHCA RE PLC BALANCE SHEET AS AT JUNE 30, 2008 Notes 2008 2007 N=’000 N=’000 FIXED ASSETS 2 870,478 586,483
FINANCE LEASE ASSETS 3 140,465 77,418
INVESTMENTS 4 1,606,063 283,824 --- --- 2,617,006 947,725 --- --- CURRENT ASSETS Stocks 5 777,567 504,270
Debtors and Prepayments 6 2,737,290 1,184,894
Due from related Companies 7 541,681 43,105
Cash at bank and in hand 289,771 43,754
--- ---
4,346,309 1,776,023
CREDITORS – DUE WITHIN
ONE YEAR 8 (1,532,330) (1,017,173)
Taxation 9i (188,697) -
Dividend 11 (28,521) (152,147)
--- ---
NET CURRENT ASSETS 2,596,761 606,703
--- --- TOTAL ASSETS LESS CURRENT
LIABILITIES 5,213,767 1,554,428
Obligation under finance lease 12 (46,245) (51,681)
Deferred taxation 10 (198,356) (49,974)
Staff retirement benefits 13 (3,218) (26,047)
--- ---
4,965,948 1,426,726
======= =======
CAPITAL AND RESERVES
Share capital 14 750,000 89,181
Share premium 15 2,973,043 81,818
Fixed assets revaluation reserve 16 26,279 26,279
General Reserve 17 1,216,626 1,229,448 --- --- 4,965,948 1,426,726 ======= ======= ---) ) Directors ---)
19 FIDSON HEALTHCA RE PLC
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2008
Notes 2008 2007 N=’000 N=’000 Turnover 18 4,503,645 3,307,421 Cost of sales 19 (2,018,552) (1,665,851) --- --- Gross profit 2,485,093 1,641,570 Administrative Expenses (1,811,717) (1,024,410) Financial charges (170,375) (117,628)
Other operating income 20 23,378 5,772
--- ---
Profit before taxation 21 526,379 505,304
Taxation 9.1 (337,079) -
--- ---
Profit after taxation 189,300 505,304
--- ---
Profit for the year 189,300 505,304
====== ======
Earnings per share (kobo) 22 13k 566k
===== =====
*Dividend per share (kobo) (proposed) 20k 227k ===== =====
See notes to the financial statements.
*20k dividend per share amounting to N300m (Three hundred million naira) has been declared for the year.
20 FIDSON HEALTHCA RE PLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2008
2008 2007 Notes N=’000 N=’000 CASHFLOWS FROM OPERATING
ACTIVITIES
Cash received from customers 2,476,051 2,616,174
Cash paid to suppliers and employees (3,355,270) (2,349,105) --- --- Net cash (utilized)/ provided by
operating activities 23 (879,219) 267,069
--- --- Cash flows from Investing Activities
Purchase of fixed assets 2 (372,958) (160,714)
Additions to finance lease assets 3 (107,235) (22,440)
Investment in related companies (14,189) (102,064)
Investment in other companies (1,308,050) (10,000)
Proceeds from sale of fixed assets 17,789 2,215
--- --- Net cash provided by investing activities (1,784,643) (293,003) --- --- Cash flows from financing activities
(Repayment)/ Additional lease obtained (5,436) 27,381 Interest paid on loans and overdraft (170,375) (117,628) Dividend paid 11 (325,748) (19,557) Additions to Share Capital 14 660,819 - Additions to Share Premium 15 2,891,225 -
--- --- Net cash provided/(utilized) by
financing activities 3,050,485 (109,804)
--- --- Net increase (decrease) in cash
and cash equivalents 386,623 (135,738)
Cash and cash equivalents at July 1 (265,803) (130,065)
--- --- Cash and cash equivalents at June 30 24 120,820 (265,803)
21 FIDSON HEALTHCA RE PLC
NOTES TO THE FINANCIAL STATEMENTS
1. THE COMPANY
The Company was incorporated as a private limited liability company on 13 March 1995 and commenced business activities on 15 March 1995. The principal activities of the company include manufacturing and distribution of pharmaceutical products. The Company became quoted on the Nigerian Stock Exchange in 5 June, 2008. The issued share capital is held as to 47.79% by the Directors and 52.21% by the Nigerian Public.
2. FIXED ASSETS
Plant Furniture
Land and machinery & & Motor Construction
buildings equipment fittings vehicles in progress Total N N N N N N COST At July 1, 2007 88,766 299,886 14,832 144,009 259,271 806,764 Additions 21,240 70,348 627 55,971 224,772 372,958 Disposals - (196) - (16,157) - (16,353) Reclassification 127,975 - - - (127,975) - --- --- --- --- --- --- At June 30, 2008 237,981 370,038 15,459 183,823 356,068 1,163,369 --- --- --- --- --- --- DEPRECIATION At July 1, 2007 3,732 113,692 5,770 97,087 - 220,281 Charge for the year 1,169 35,887 1,908 46,220 - 85,184 Disposals - (196) - (12,378) - (12,574)
--- --- --- --- --- --- At June 30, 2008 4,901 149,383 7,678 130,929 - 292,891 --- --- --- --- --- --- NET BOOK VALUE
At June 30, 2008 233,080 220,655 7,781 52,894 356,068 870,478 ====== ====== ==== ===== ====== ====== At June 30, 2007 85,034 186,194 9,062 46,922 259,271 586,483 ====== ====== ==== ===== ====== ======
22 FIDSON HEALTHCA RE PLC
NOTES TO THE FINANCIAL STATEMENTS – (Continued)
2.1 Included in construction in progress is a landed property valued at a cost of N88.1million with the title documents in the name of the Managing Director. Arrangement is being made by the Managing Director to obtain a mortgage loan to pay the Company back for the cost of the property.
3. FINANCE LEASE ASSETS
Motor Office
Vehicles Equipment Total N=’000 N=’000 N=’000 Cost
At July 1, 2007 106,059 15,623 121,682
Additions during the year 107,235 - 107,235
Disposal (22,418) - (22,418) --- --- --- At June 30, 2008 190,876 15,623 206,499 --- --- --- Depreciation At July 1, 2007 38,080 6,184 44,264
Charged during the year 26,805 3,906 30,711
Disposal (8,941) - (8,941)
--- --- ---
At June 30, 2008 55,944 10,090 66,034
--- --- --- Net Book Value
At June 30, 2008 134,932 5,533 140,465
====== ==== ======
At June 30, 2007 67,979 9,439 77,418
23 FIDSON HEALTHCA RE PLC
NOTES TO THE FINANCIAL STATEMENTS – (Continued)
2008 2007 N=’000 N=’000
4. INVESTMENTS
Long-term investments (Note 4.2)
FIL Pharmaceuticals Limited 149,286 149,286
Widenet Impex Limited 30,000 30,000
Ecomed Pharma 95,262 73,990 Farm Account - 7,083 --- --- 274,548 260,359 --- --- INVESTMENTS IN SHARES
Spring Bank Plc (Market value N18,006,245) 10,085 10,085 Zenith Bank Plc (Market Value N8,690,000) 3,380 3,380 Friendship Height Nigeria Ltd (Unquoted) 17,430 10,000
Meristem Securities Nigeria Limited 921,600 -
--- ---
952,495 23,465
--- ---
OTHER INVESTMENTS
Investment in IBTC 10,000 -
Investment in Jubilee Life 250,000 -
Investment in Sprukfield (SAPL) UK 119,020 -
--- --- 379,020 - --- ---
1,606,063 283,824
======= ======
4.1 The Directors are of the opinion that the market values of unquoted investments are not below the cost
24 FIDSON HEALTHCA RE PLC
NOTES TO THE FINANCIAL STATEMENTS – (Continued)
4.2 The subsidiary companies which are wholly owned are not consolidated. The Directors are of the opinion that the amounts involved are insignificant due to the relatively low level of operations. The highlights of the subsidiaries financial statements are as follows:
2008 2007 N=’000 N=’000 FIL Pharmaceuticals Limited
Turnover 204,080 154,337
Profit/ (Loss) before tax 6,073 (20,420)
Profit/ (Loss) after tax 4,175 (23,019)
Net assets 90,950 85,030
====== ======
Widenet impex Limited
Turnover 123,607 123,607
(Loss)/Profit before tax (5,861) 1,457
Profit after tax (6,092) 1,457
Net assets 52,648 58,777
====== ======
5. STOCKS
Finished goods 279,799 114,194
Raw and packaging materials 233,224 127,084
Work-in-progress 10,630 18,526
Goods-in-transit 253,914 244,466
--- --- 777,567 504,270
====== ======
6. DEBTORS AND PREPAYMENTS
Trade debtors 1,262,465 903,034
Sundry debtors 480,469 130,760
Prepayments - 4,997
Directors current account 167,091 126,673
Advance for machineries & spare parts 827,265 19,430 --- --- 2,737,290 1,184,894 ======= =======
25 FIDSON HEALTHCA RE PLC
NOTES TO THE FINANCIAL STATEMENTS – (Continued)
2008 2007
N=’000 N=’000
7. DUE FROM RELATED COMPANIES
FIL Pharmaceuticals Limited 18,270 16,669 Widenet Impex Limited 15,793 - Portlab Nigeria Limited 10,900 - Fidson Product (Diaper Project) 486,931 - Ayebae Holdings Limited 9,787 9,723 Ecomed Pharma Ltd - 16,713 --- --- 541,681 43,105 ====== =====
8. CREDITORS DUE WITHIN ONE YEAR
Trade creditors 315,644 391,057
Bank loans (Note 26c) 536,330 56,973
Bank Overdraft (Note 26c) 168,951 309,557
Other creditor and accruals 460,582 213,297
Obligation under finance lease due
within 1 year (Note 12) 50,823 46,289
--- --- 1,532,330 1,017,173 ======= =======
9. TAXATION
i. Balance Sheet:
Provision for the period 188,697 -
--- ---
Balance carried forward 188,697 -
====== ===== ii. Profit and Loss account:
Company Income Tax 167,964 -
Education Tax 20,733 -
Deferred Tax 148,382 -
--- ---
337,079 - ====== =====
26 FIDSON HEALTHCA RE PLC
NOTES TO THE FINANCIAL STATEMENTS – (Continued)
2008 2007 N=’000 N=’000
10. DEFERRED TAXATION
At July 1 49,974 49,974
Charge for the period 148,382 -
--- ---
198,356 49,974 ====== =====
i. The Company enjoyed Pioneer Status in accordance with Section 6 of the Industrial Development (Income Tax Relief) Act No. 22 of 1971 with Production day being 1 November 2002. The pioneer status was for a period of 5 years commencing from the production day. However, the pioneer status lapsed on October 30, 2007.
ii. The charge for taxation in these financial statements is based on the provisions of the Companies Income Tax Act, CAP C21 LFN 2004 and Education Tax Act, CAP E4, LFN 2004.
2008 2007 N=’000 N=’000
11. DIVIDEND
Per Balance Sheet
Balance at July 1, 152,147 24,555
Dividend 202,122 147,149
Payment (325,748) (19,557)
--- ---
Balance carried forward 28,521 152,147
====== ======
11.1 The Directors recommended that a dividend of 20k per share (2007: N2.27k) amounting to N300,000,000 (2007: N202,121,595) be paid out of the profit for the 2008 financial year. No provision has been made in these financial statements in accordance with the Statement of Accounting Standards 23 (SAS) issued by the Nigerian Accounting Standards Board.
27 FIDSON HEALTHCA RE PLC
NOTES TO THE FINANCIAL STATEMENTS – (Continued)
12. OBLIGATION UNDER FINANCE LEASE
2008 2007 N=’000 N=’000 The maturity of these amounts is as follows:
Amounts payable within one year 50,823 46,289
Amount payable within two to five years 72,405 68,876 Less: Finance charges allocated to future periods (26,160) (17,195)
--- --- 97,068 97,970 ===== ===== Finance leases are analyzed as follows:
Current Obligations (Note 8) 50,823 46,289 Non Current Obligations 46,245 51,681 --- --- 97,068 97,970 ===== =====
Lease obligations are secured on the value of the assets under lease.
2008 2007 N=’000 N=’000
13. STAFF RETIREMENT BENEFITS
At July 1, 26,047 15,530
Provision for the year 20,662 14,340
Amount invested with an insurance company (45,629) (3,925)
Interest on Fund Invested 4,463 989
Payments during the year (2,325) (887) --- ---
At June 30, 3,218 26,047
28 FIDSON HEALTHCA RE PLC
NOTES TO THE FINANCIAL STATEMENTS – (Continued)
2008 2007 N=’000 N=’000
14. SHARE CAPITAL
Authorized: Share capital
1, 500,000,000 ordinary shares of 50k each 750,000 100,000 (2007:100,000,000 ordinary shares of N1 each) ====== ======
On November 8, 2007 the Board of Directors approved that the nominal value of the share be split from N1 per share to 50k per share, and increase the authorized share capital to 1,500,000,000 by the creation of 1,300,000,000 ordinary shares of 50k each.
2008 2007 N=’000 N=’000 Issued and fully paid:
1,500,000,000 ordinary shares of 50k each
(2007: 100,000,000 ordinary shares of N1) 750,000 89,181 ====== =====
15. SHARE PREMIUM
As at July 1 81,818 81,818
Additions during the year 2,891,225 - --- ---
2,973,043 81,818 ======= =====
16. FIXED ASSETS REVALUATION RESERVE
Land, Buildings, Plant, Machinery, Furniture, Fittings and Equipment situated at the Ota Factory were professionally valued by Messrs Diya Fatimilehin & Co., Estate Surveyors & Valuers on April 24, 2002. The valuation was carried out on an open market basis between a willing buyer and willing seller. The net surplus arising on the revaluation amounting to N26.279m has been credited to fixed assets revaluation reserve. Revaluation is carried out as the need arises.
29 FIDSON HEALTHCA RE PLC
NOTES TO THE FINANCIAL STATEMENTS – (Continued)
2008 2007 N=’000 N=’000
17. GENERAL RESERVE
Balance at July 1, 1,229,448 871,293
Dividend paid during the year (202,122) (147,149)
Profit for the year 189,300 505,304
--- ---
Balance at June 30, 1,216,626 1,229,448
======= =======
Analysed as followed:
Reserve for proposed dividend 300,000 202,122
Retained in General Reserve 916,626 1,027,326
--- ---
1,216,626 1,229,448
======= =======
18. TURNOVER
Turnover represents the total value of goods invoiced to third parties locally and is categorized into the following groups:
2008 2007 N=’000 N=’000 Specialties 2,015,532 668,076 Bio Sciences 1,332,177 659,212 Generics 811,648 367,307 Bio-Tech 217,546 - General Goods 126,742 1,612,826 --- --- 4,503,645 3,307,421 ======= ======= 19. COST OF SALES Specialties 1,037,443 302,940 Bio Sciences 384,124 286,413 Generics 425,133 233,840 Bio Tech 94,382 - General Goods 77,470 842,658 --- --- 2,018,552 1,665,851 ======= =======
30 FIDSON HEALTHCA RE PLC
NOTES TO THE FINANCIAL STATEMENTS – (Continued)
20. OTHER OPERATING INCOME
Interest earned 22,845 5,722
Others 533 50
--- --- 23,378 5,772
===== =====
21. PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION This is stated after charging:
Auditors’ remuneration 4,250 3,000
Bank interest 153,142 107,144
Depreciation - Finance lease assets 30,711 27,615
Depreciation - Fixed assets 85,184 66,561
Directors’ emoluments 58,042 34,135
Lease interest 17,233 10,484
(Profit)/Loss on disposal of fixed assets (533) 8,842
Staff cost 437,670 219,694
====== ======
22. Earnings per share is based on profit after tax and on issued & fully paid capital as at June 30th of each year.
31 FIDSON HEALTHCA RE PLC
NOTES TO THE FINANCIAL STATEMENTS – (Continued)
2008 2007 N=’000 N=’000
23. RECONCILIATION OF NET INCOME
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Net income after taxation 189,300 505,304
Adjustment to reconcile income to net cash provided:
Depreciation 115,895 94,176
(Profit)/Loss on disposal of fixed assets (533) 8,840
Net interest payable 170,375 117,628
Changes in assets and liabilities:
Increase in inventory (273,297) (136,888)
Increase in trade debtors (359,431) (518,355)
(Increase)/decrease in due from related companies (498,576) 9,735 Increase in other debtors (1,192,965) (188,398)
Increase in creditors 655,763 374,193
(Increase)/ (decrease) in due to related companies - (9,683)
Increase in Tax Payable 188,697 -
Increase in Deferred Tax Payable 148,382 - (Decrease)/Increase in retirement benefits (22,829) 10,517
--- --- Net cash (utilized)/ provided by operating activities (879,219) 267,069 ====== ======
24. RECONCILIATION OF CASH AND
CASH EQUIVALENT
Cash and bank 289,771 43,754
Bank overdrafts (168,951) (309,557)
--- ---
Cash and cash equivalents 120,820 (265,803)
32 FIDSON HEALTHCA RE PLC
NOTES TO THE FINANCIAL STATEMENTS – (Continued)
2008 2007 N=’000 N=’000
25. DIRECTORS AND STAFF REMUNERATION
Chairman and Directors’ emoluments:-
a) Chairman ( Non-Executive) 450 -
b) Others (Non- Executive) 6,115 1,100
c) Executive Directors 51,477 33,035 --- --- 58,042 34,135 ===== ===== HIGHEST PAID DIRECTOR 8,000 6,500
c) The number of directors excluding the Chairman whose emoluments fell within the following ranges were:-
N= N= Numbers Numbers
1,500,000 – 3,000,000 - 2
3,000,001 – 5,000,000 3 -
5,000,001 – 7,000,000 4 3
== ==
d) The average number of persons employed in the financial year and the staff cost were as follows:
Numbers Numbers Managerial and senior staff 148 153
Junior staff 146 102 --- --- 294 255 === === 2008 2007 N=’000 N=’000
Salaries and wages 417,037 212,524
Pension cost 20,633 7,170
--- --- 437,670 219,694
33 FIDSON HEALTHCA RE PLC
NOTES TO THE FINANCIAL STATEMENTS – (Continued)
e) The number of employees in receipt of emoluments excluding allowances within the following ranges were:
2008 2007 N N Numbers Numbers 70,001 – 80,000 - 3 80,001 – 90,000 - 31 90,001 – 100,000 48 30 110,001 – 120,000 41 24 140,001 – 150,000 43 18 150,001 – 200,000 26 17 200,001 – 500,000 97 134 500,001 – 800,000 30 - 800,000 – 1000,000 4 - 1000,001 – and above 5 - === ===
26. GUARANTEES AND OTHER FINANCIAL COMMITMENTS
a. Capital expenditure
The company proposed N547 million for capital expenditure for 2008 financial year as follows:
Contracted out: N427m
Not Contracted out: N120m
b) Financial commitments
The Directors are of the opinion that all known liabilities and commitments have been taken into account in the preparation of the accounts under review. These liabilities are relevant in assessing the Company’s state of affairs.
c) Security of facilities
The bank loans and overdrafts are secured principally by a legal mortgage over some of the Company’s land and buildings, debenture on the company’s assets, lien on shipping documents of goods imported, personal guarantee of Mr. Fidelis A. Ayebae and joint and several guarantees of the Directors of Fidson Healthcare Plc.
34 FIDSON HEALTHCA RE PLC
NOTES TO THE FINANCIAL STATEMENTS – (Continued)
27. CONTINGEN T LIABILITIES
The company had no contingent liabilities as at 30 June 2008 (2007 – Nil).
28. RELATED PARTY TRANSACTIONS
2008 2007 N=’000 N=’000 Purchase of raw materials
Widenet Impex 15,793 -
===== ===== Settlement of bills
Ayebae Holdings Limited 9,781 9,723
Ecomed Pharma Limited - 16,713
FIL Pharmaceuticals Limited 18,270 16,669 Fidson Products Limited 486,931 - Portlab Nigeria Limited 10,900 - --- --- 541,675 43,105 ====== =====
29. RECLASSIFICATION
Certain reclassifications were made to the reported figures in the prior year in order to conform to this year’s presentation.
35 FIDSON HEALTHCA RE PLC
STATEMENT OF VALUE ADDED FOR THE YEAR ENDED JUNE 30, 2008
2008 2007 N=’000 N=’000
Turnover 4,503,645 3,307,421
Other operating income 23,378 5,772
Bought in materials and services
- Imported (1,829,593) (1,473,361) - Local (1,121,363) (903,029) --- --- Value added 1,576,067 100 936,803 100 ======= === ====== === Applied as follows: % % To pay employees:
Salaries and other benefits 437,670 28 219,694 24
To pay government:
Income tax 188,697 12 - -
To pay providers of capital:
Dividend 325,748 21 147,149 16
Bank interest 170,375 11 117,628 12
To provide for replacement of assets and expansion of business:
- Depreciation – finance lease 30,711 2 27,616 3 - Depreciation – fixed assets 85,184 5 66,561 7 - Deferred Taxation 148,382 9 - -
- Retained profit 189,300 12 358,155 38
--- --- --- --- 1,576,067 100 936,803 100 ======= === ====== ===
The value added represents the additional wealth which the Company has been able to create by its own and its employees’ efforts. This statement shows the allocation of that wealth to employees, providers of finance, shareholders, government and that retained for the future creation of more wealth.
36 FIDSON HEALTHCA RE PLC
FIVE-YEAR FINANCIAL SUMMARY YEARS ENDED JUNE 30,
2008 2007 2006 2005 2004 N='000 N='000 N='000 N='000 N='000 ASSETS Fixed assets 870,478 586,483 501,154 441,992 362,934 Leased assets 140,465 77,418 84,825 18,883 9,500 Investments 1,606,063 283,824 171,760 57,416 50,000 Net current assets 2,596,761 606,703 400,636 234,666 156,746 --- --- --- --- --- 5,213,767 1,554,428 1,158,375 752,957 579,180
Creditors – due after
one year (46,245) (51,681) (24,300) (1,086) (848) Deferred taxation (198,356) (49,974) (49,974) (49,974) (47,054) Staff retirement benefits (3,218) (26,047) (15,530) (3,756) (2,436) --- --- --- --- --- 4,965,948 1,426,726 1,068,571 698,141 528,842 ======= ======= ======= ====== ====== Financed by: Share capital 750,000 89,181 89,181 89,181 84,636 Share Premium 2,973,043 81,818 81,818 81,818 61,363 Revaluation reserve 26,279 26,279 26,279 26,279 29,199 Revenue reserve 1,216,626 1,229,448 871,293 500,863 353,644 --- --- --- --- --- 4,965,948 1,426,726 1,068,571 698,141 528,842 ======= ======= ======= ====== ====== Turnover 4,503,645 3,307,421 2,200,167 1,624,471 1,080,231 ======= ======= ======= ======= =======
Profit before taxation 526,379 505,304 370,430 246,268 182,984 Profit after taxation 189,300 505,304 370,430 245,318 219,058 Dividend - 147,149 98,099 73,634 38,197 ====== ====== ====== ====== ====== Per Share Data
Earnings per share (kobo) 13 402 305 275 25 Dividend per share (kobo) - * 227 110 110 87 Net assets per share (kobo) 331 1,600 1,198 783 625 === ==== ==== ==== ===== Notes:
- Earnings, dividend and net assets per share are based on the number of shares issued and fully paid at the end of each year.
- Earnings and dividend per share are based on profit after taxation.
FIDSON HEALTHCA RE PLC
SUPPLEMENTARY FINANCIAL INFORMATION JUNE 30, 2008
38 FIDSON HEALTHCA RE PLC
SUPPLEMENTARY FINANCIAL SUMMARY JUNE 30, 2008 ADMINISTRATIVE EXPENSES 2008 2007 N=’000 N=’000 Advertisement 661,298 247,797 Audit fees 4,250 3,000
Depreciation- Fixed Assets 85,184 66,561
Depreciation-Finance lease assets 30,711 27,615
Donation 66,363 60,434
Fuel and Motor running expenses 76,709 67,597
Insurance 19,658 6,794
Inventory write off 4,448 10,623
Legal & Professional expenses 20,450 26,305
Newspaper & periodicals 541 777
Office supplies 10,450 10,047
Other expenses 11,738 20,867
Printing & stationery 10,181 7,553
Provision for bad debts 84,685 66,228
Rent 11,237 11,628
Recruitment 23 158
Repairs & maintenance 59,429 48,127
Salaries & related cost 437,670 219,694
Security 3,530 3,708
Subscription 10,247 7,505
Telephone & Postage 16,468 15,256
Training & Development 8,921 3,535
Traveling & entertainment 177,525 92,601
--- ---
1,811,717 1,024,410