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  • 1 FAN MILK LIMITED ANNUAL REPORT

    For the year ended December 31, 2017

    FAN MILK LIMITED

    ANNUAL REPORT AND ACCOUNTS 2017

  • 2 FAN MILK LIMITED ANNUAL REPORT For the year ended December 31, 2017

    OUR MISSION STATEMENT ‘’Enhance the wellbeing for as many people as possible by offering nourishing, refreshing and enjoyable products and an inclusive business model. ”

    OUR AMBITION “Strengthen our leadership by offering nourishing, refreshing and enjoyable products, to delight the widest number of people, providing opportunities to grow, for our employees, partners and shareholders. ”

  • 3 FAN MILK LIMITED ANNUAL REPORT

    For the year ended December 31, 2017

    CONTENTS Financial Highlights

    Corporate Information

    Our board of Directors

    Shareholding Distribution

    Notice of Meeting

    Directors’ Report

    Corporate Social Responsibility

    Corporate Governance

    Independent Auditor’s Report

    Statement of Comprehensive Income

    Statement of Financial Position

    Statement of Changes in Equity

    Statement of Cash Flows

    Accounting Policies

    Notes to Financial Statements

    4

    5

    6

    8

    9

    10

    13

    16

    18

    22

    24

    25

    26

    27

    35

  • 4 FAN MILK LIMITED ANNUAL REPORT For the year ended December 31, 2017

    AMOUNTS IN GH¢’000 EXCEPT PER SHARE 2017 2016 2015 2014

    Profit After Taxation 47,297 66,128 49,716 15,049

    Earnings Per Share 0.41 0.57 0.43 0.13

    Total Shares Issued 116,207,288 116,207,288 116,207,288 116,207,288

    Dividend Per Share 0.00 0.00 0.1035 0.0900

    Year End:

    Total Assets 300,109 245,064 214,214 123,913

    Shareholders’ Fund 221,676 174,379 120,278 81,021

    Permanent Staff 487 427 414 430

    Stock price range:

    High 20.00 11.30 7.35 7.55

    Low 11.08 7.00 5.25 4.89

    Distribution of Gross Sales 2017 % 2016 %

    AMOUNTS IN GH¢’000

    Revenue (Gross) 524,007 100.0 454,022 100.0

    Revenue 445,963 85.1 386,402 85.1

    Cost of Sales 237,345 45.3 189,345 41.7

    Distribution costs 108,137 20.6 85,371 18.8

    Administrative expenses 46,216 8.8 32,162 7.1

    Finance costs 1,411 0.3 1,491 0.3

    VAT 78,044 14.9 67,620 14.9

    Tax 16,521 3.2 21,429 4.7

    Transfer to Income surplus Account 47,297 9.0 66,128 14.6

    Other Income 9,238 1.8 2,731 0.6

    Finance income 1,726 0.3 6,793 1.5

    Operational results AMOUNTS IN GH¢’000 2017 2016 change % change

    Revenue 445,963 386,402 59,561 15.4

    Cost of Sales (237,345) (189,345) (48,000) 25.4

    Distribution costs (108,137) (85,371) (22,766) 26.7

    Administrative expenses (46,216) (32,162) (14,054) 43.7

    Finance costs (1,411) (1,491) 80 (5.37)

    Finance income 1,726 6,793 (5,067) (74.59)

    Other Income 9,238 2,731 6,507 238.3

    Profit before tax 63,818 87,557 (23,739) (27.11)

    Tax (16,521) (21,429) 4,908 (22.90)

    Profit for the year 47,297 66,128 (18,831) (28.48)

    FINANCIAL HIGHLIGHTS

  • 5 FAN MILK LIMITED ANNUAL REPORT

    For the year ended December 31, 2017

    CORPORATE INFORMATION

    DIRECTORS

    Charles Mensa (Dr.) Chairman

    Jacob Kholi Vice Chairman

    Stephane Couste Managing Director

    George H. Okai Thompson Non executive Director

    Peace Ayisi-Okyere Non executive Director

    Edouard Spicher Non executive Director

    Jacques Gourmelon Non executive Director

    Pierre Armangau Non executive Director

    SECRETARY Lennap & Company P.O. Box 37 Accra

    AUDITOR

    PricewaterhouseCoopers

    Chartered Accountants

    No. 12 Airport City

    Una Home, 3rd Floor

    PMB CT 42

    Cantonments, Accra

    REGISTERED OFFICE

    Grand Oyeeman Building

    Plot No. 9, South Liberation Link

    Airport Commercial Area

    Accra

    SOLICITOR

    Quist, Brown, Wontumi & Associates P.O. Box 7566, Accra

    REGISTRAR & TRANSFER OFFICE

    NTHC Limited

    Martco House

    P.O. Box 9563

    Airport, Accra

    BANKERS

    Barclays Bank of Ghana Limited Ecobank Ghana Limited

    Societe Generale Ghana Limited

    Stanbic Bank Ghana Limited

  • BOARD OF DIRECTORS

    Dr. Charles Mensa (Age 64, Ghanaian) is the founder and Chairman of the Institute of Economic Affairs, Ghana (IEA). He is also the Board Chairman of SAB Miller Ghana Limited and was formerly Chairman of Barclays Bank Ghana Limited. Dr. Mensa brings to the board of Fan Milk Limited an extensive experience in leading key industries and also in public policy advocacy. Dr. Mensa served as the CEO of Volta Aluminium Company (VALCO) the largest aluminium smelter in sub- Saharan Africa. Prior to assuming the position of CEO in October 2004, he had been Resident Director of VALCO since joining the company in April 1996.He was also Vice President of the Association of Ghana Industries (AGI), and President of the Ghana Employers Association (GEA).

    He previously worked in the United States as a Research Associate at the Centre for Public Choice, George Mason University, and at the International Monetary Fund (IMF). He obtained a Master’s degree in finance from the George Washington University and a PhD in economics from George Mason University all in the United States.

    Committee Membership: Audit, Remuneration Other Directorships: Maersk Shipping Company, Quality Care Medical Clinic

    Dr Charles Mensa, Chairman

    Jacob Kholi (age 51, Ghanaian) was appointed as a non-executive Director in November 2013. He is currently a Partner at The Abraaj Group, a leading private equity fund manager in Global Growth Markets of Africa, Middle East, Latin America, Turkey and Asia with US$ 10 billion of assets under management. He is the Head of The Abraaj Group’s operations in Sub-Saharan Africa. Before joining the Abraaj Group, Jacob previously worked for the Shell Group in Ghana. He is a Chartered Accountant by profession and trained with KPMG.

    Committee membership: Audit Committee and Remuneration Committee. Other Directorships include Fan Milk International, Fan Milk Nigeria Limited, Ghana Home Loans Limited, Regimanuel Gray Limited, Aviance Ghana Limited, Ghana Aluminium Products Limited, Abraaj Ghana Advisers Limited, and the Teachers Fund Group.

    Jacob Kholi, Non-Executive Director

    Edouard Spicher (age 51, Swiss) was appointed as a non-executive Director in October 2014. He is currently the CEO of Fan Milk International and FanMilk West Africa Limited. Previously, he worked for 22 years at Nestlé. He started his career as an Industrial Engineer. He then moved to commercial roles in Sales & Marketing before taking General Manager roles, first in Nestle Central & West Africa and then in Asia; in particular in Dairy and Ice Cream businesses.

    Committee membership: Audit Committee and Remuneration Committee.

    Other Directorships: Fan Milk Nigeria, Fan Milk Togo and Fan Milk Côte d’Ivoire.

    Edouard Spicher, Non-Executive Director

    Stephane Couste (age 54, French),has a wealth of experience in the Danone Group and at various times served as Industrial and Supply Chain Director - Danone Turkey, Project Director for Organization and Knowledge, HR - Danone Headquarters and Vice President in charge of Integration - Danone Unimilk, Russia. He also served in his last assignments for three years as General Manager - Volga Division Group of Companies in Danone Russia

    He was for one year the General Manager of Fan Milk Togo Group and Fan Milk Ivory Coast in Lome and Abidjan.

    Stephane Couste, Managing Director

    6 FAN MILK LIMITED ANNUAL REPORT For the year ended December 31, 2017

  • George H. O Thompson, Non-Executive Director

    BOARD OF DIRECTORS

    Pierre Armangau, Non-Executive Director

    Jacques Gourmelon , Non-Executive Director

    George H.O. Thompson (age 67, Ghanaian) B.A. (Hons) LL.B (Hons) Barrister-At-Law and Solicitor. Was called to the Ghana Bar in September 1976 and to the Bar of The Gambia in March 1982. Was appointed Asst. State Attorney/Asst. Registrar General and worked at the Registrar General’s Department from 1977 to 1980. Was attached to the U.S. Department of Commerce (Patents & Trademark Office) in 1979.

    Has been in private law practice since 1980. Was appointed Special Prosecutor by the Government of The Gambia in March 1982 in connection with treason and allied offences. In private practice, he has rendered opinion and advice on a wide range of civil matters such as competition law, banking, corporate, labour, tax and land law to both local and foreign companies.

    George has acted for Volta Aluminium Company Limited, Westinghouse Electric Corporation, Sanyo Electric Co. Ltd, Maersk Ghana Limited, APM Terminals Ghana Limited, Damco Logistics Ghana Limited, Sky IP International Limited and the Saudi Arabian Embassy in Ghana. He currently runs the law firm of G.H. Thompson & Associates which has a special relationship with the South African intellectual property law firm of Spoor & Fisher.

    Committee membership: Audit Committee. Other Directorships: Aviat Networks Gha