Flour Mills of Nigeria Plc

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1 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Initiation of Coverage Capacity Additions to Boost Topline In this report we present our views on (FLOURMILL) following its recent release of Q1 14 and FY 13 results, and updates on the company s recently commissioned 750,000 tonnes sugar refinery and additional flour mills. Thus, we initiate coverage with a HOLD rating on the counter, as current price of N83.90 represents an 8% upside potential from our FY 14 target price of N90.67 Gains from recent capacity expansion to boost turnover During the 2013 fiscal year, Flour Mills completed a number of projects expected to boost revenue considerably in the medium term. The most important of these projects is the commissioning of the 750,000MT sugar refinery in Apapa Lagos, which has since begun operation, selling to industrial customers, with plans to commence sale of retail sugar in the pipeline for September. Based on the company s guidance of a 100,000MT raw sugar importation quota for the year, we estimate that about 93,500MT (using a standard to refined sugar ratio) of refined sugar would be produced and sold. We believe that the low utilization of the installed capacity is due to the fact that the refinery has just been commissioned and will not be used at full capacity, at least in the first year. Also in the year, Flour Mills commissioned a 350,000MT pasta factory in Ogun State, and three new flour mills in Apapa, Lagos. The company also disclosed plans to complete the capacity expansion of the recently acquired Rom Oil Mills Ltd by the end of FY 14. The gains from the recent CAPEX were evident in the company s Q1 14 result, where topline grew by an impressive 43% YoY. But elevated cost still poses threat to profitability: The positive showing in Flour Mills revenue line was unable to trickle down, as PAT declined by 8% YoY in Q1 14. The poor showing in Flour Mills bottomline was hinged on a faster rise in cost of sales, which spiked 54% YoY, similar to the trend seen in the recently released FY 13 numbers, where cost of sales also paced ahead of revenue. Whilst we do not have the segmental breakdown of the Q1 14 numbers, we surmise that the sharp rise in cost of sales is attributable to increased input costs in the food and agro allied business as average wheat prices were up 8% YoY. We saw a similar trend in UACN s H1 13 result (we consider Flour Mills and UACN as comparables, as food and agro-allied business contribute at least two-third in revenues for both companies) where the company recorded higher costs in its agriculture related business. Overall profitability margins were lower as both PBT and PAT margins came in lower for Q1 14, settling at 4.6% and 3.6% from 7.3% and 5.6% in corresponding quarter of the 2013 financial year, respectively. For FY 14, we expect the recent investments in capacity to translate into a 41% YoY growth in topline, while we expect Flour Mills after tax earnings to rise by 40%. Despite the 8% decline seen in Q1 after tax earnings, we expect some improvement in the other quarters, based on the recent trend in quarterly PAT contribution to full year earnings figure. Over the last four years (except for FY 13 where the company recorded a loss in Q4 and FY 10 where Q4 contributed 50% to FY earnings) Q1-Q3 have accounted for an average of 85% of FY earnings. Taking the above into account, our revised EPS for FY 14 comes in at N4.55, 40% higher than FY 12 EPS of N3.24. Stock Data Bloomberg Ticker: 27 August 2013 FLOURMIL:NL Market Price (N) Shares Outs (Mn) 2,386 Market cap (N Mn) 200,158 Price Performance FLOURMIL NSE 12-month (%) month (%) 10 8 YTD (%) Key Ratios 2012A 2013A 2014F EBITDA Margin 10.32% 6.55% 9.00% EBIT Margin 8.21% 7.82% 7.41% PAT Margin 3.24% 2.56% 2.55% ROAA 3.60% 2.96% 3.58% ROAE 12.66% 8.70% 11.11% Valuation 2012A 2013A 2014F P/E (x) P/BV (x) Div. Yield (%) 1.91% 2.38% 2.56% Analyst Tochukwu Ezeoke* Tochukwu.Ezeoke@cardinal-stone.com YTD Price Performance (rebased) FLOURMIL NSEASI Source: NSE, CardinalStone Research 1

2 PBT margin analysis 120, ,000 11% 100,975 12% 10% 80,000 60,000 40,000 38,882 8% 70,703 7% 7% 43,524 45,911 5% 8% 6% 4% 20,000 2% 0 Q1'10 Q1'11 Q1'12 Q1'13 Q1'14 0% Turnover N'mn PBT N'mn PBT margin % Sources: CardinalStone Research, Company Financials FY 13 Review Strong growth in Food business drives FY 13 topline : Flour Mills grew revenue by 17% YoY for FY 13, as turnover for the period came in at N301.9 billion, significantly better than the moderate 8% YoY growth recorded in FY 12. The significant growth in revenue was buoyed by strong showings in Flour Mills Agro-allied, Packaging, and Food businesses as revenue for the trio grew 53%, 42%, and 26% respectively. The Food business remained the largest contributor to topline, accounting for 73% of Flour Mills revenue figure, while the Agro-allied business maintained a distant second place, contributing 17% to turnover. But spike in input costs depress earnings: However, Flour Mills recorded a faster rise in its cost of sales line (21% YoY rise), while selling and distribution expenses were up 34% YoY as the company expanded its sales force and increased marketing activities in a bid to grow market share. From the company s FY 13 presentation, we deduced that the sharp rise in the cost of sales was on the back of the increase in prices of input materials for the company s Agro-alllied business. Our point is further buttressed by the 42% YoY decline in Flour Mills agro-allied business PBT line, despite the 53% YoY rise in revenue, which translated into a PBT margin of 1.8% for FY 13 from 4.6% for FY 12. On the other hand before-tax earnings were up 75% YoY in the Flour Mills food business, the strong growth was hinged on larger volumes and higher margins. Thus margins came in lower: Overall, after tax earnings for the FY came in at N7.7 billion, down 0.5% YoY from the N7.8 billion figure posted for FY 12. Also, PBT and PAT margins declined for the period, standing at 3.7% and 2.6% from 4.6% and 3.0% in FY 12 respectively. Thus, Flour Mills FY 13 EPS came in at N3.24, down 0.5% from the N3.25 EPS recorded for FY 12. The company is proposing a dividend of N2.00 per share, the payment date is 16 th of September,

3 FY 13 Contribution to turnover by business segment Packaging, 7% Others, 2% Agroallied, 17% Foods Agro-allied Foods, 73% Packaging Others Sources: CardinalStone Research, Company presentation FY 13 Contribution to before-tax earnings by business segment Packaging, 10 % Others, -8% Agro-allied, 7% Food Agro-allied Food, 91% Packaging Others Sources: CardinalStone Research, Company presentation Company Overview Flour Mills of Nigeria is the largest flour miller in Nigeria, with installed capacity of 3.63 million MT per annum. Over time, the company diversified into other businesses, enabling it to tap into other markets, and grow efficiency in its core flour milling business. Flour Mills has four major business segments namely; the food business, the agro allied business, the logistics and support business, and other subsidiaries. The food business has remained the major contributor to both topline in recent times followed by the agro-allied business, as the duo contributed 73% and 17% to FY 13 revenue. 3

4 Contribution to revenue by business segment 120% 100% 80% 60% 40% 20% 6% 5% 7% 10% 13% 17% 15% 12% 0% 65% 68% 73% Others Port operations Packaging Agro-allied Cement Food 0% Sources: CardinalStone Research, Company Financials Business Segments The Food Business The food business comprises of a number of products, and it is divided into two sub-sectors; the branded consumer goods, and the branded intermediate goods. The branded consumer goods consist of pasta, noodles, semovita, goldenvita, sugar, rice, edible oils, and snacks. While the branded intermediate products includes; flour, soft flour, confectionery flour, sugar, and edible oils. Flour Mills has the following subsidiaries under its food business; Northern Nigeria Flour Mills Plc (52.6% stake): NNFM is a flour milling company with capacity of 1,200MT per day. The company produces Golden Penny Flour, Golden Penny Semovita, Wheat Offlas, and a range of maize products. Nigerian Eagle Flour Mills Limited (51% stake): Is a flour milling company with a capacity 340,000MT per year. Golden Pasta (100% stake): The company is involved in the production and sale of different variants of macaroni and spaghetti. Golden Noodles Company Limited (100% stake): Golden Noodles produces and sells noodles to the general public. Golden Sugar Company Limited (100% stake): Golden Sugar started operations this year, as the company commissioned its 750,000MT per year factory. The company commenced sale of industrial sugar in February this year, while it disclosed plans to begin retail sale in Spetember. The Agro-allied Business The agro-allied business covers Fertilizer blending and distribution, domestic cultivation of sugarcane, soybean, maize, rice and oil palm. The company is also involved in crop processing, oil seed crushing and refining, as well as animal feed production. Under the agro-allied business, the company has the following subsidiaries; 4

5 Premier Feed Mills Company Limited (62% stake): Premier Feeds is one of the major animal feed manufacturers in the country, and manufactures under its trade name TOPFEEDS. The company has a wide range of products which covers all aspects of animal feed requirements in the domestic economy. In June 2010 Premier Feeds completed its 300,000 ton per year animal feed factory, and this brought total production capacity to 600,000 tons per year. Kaboji Farms Limited (100% stake) Kaboji Farms is a farming enterprise with over 3,000 hectares of farmland which cultivates maize, soyabean, rice and cassava. Flour Mills have disclosed plans to increase the cultivated area further by 2,000 hectares over the next five years, Flour Mills recently entered into a technical assistance agreement with Adecoagro, a leading South American agro-industrial company to help manage and develop Kaboji Farms. ROM Oils Pty Limited (90% stake) A recently acquired subsidiary, is a mid-sized edible oil extraction and refining company. Thai Farms International Limited (100% stake) Thai Farms is involved in the processing of cassava tubers to produce cassava flour. Golden Fertilizer (100% stake) Golden Fertilizer is involved in fertilizer blending, distribution and supply. The Logistics and Support Business Under the logistics and support business, Flour Mills provides a wide range of services, namely; packaging, transportation, logistics, power generation, and port operations. The company has the following subsidiaries under this business; Apapa Bulk Terminal Limited (100% stake): Was set up as an SPV to take advantage of the concession granted by the Nigerian Ports Authority/Bureau of Public Enterprises to manage and operate Terminals A and B of the Apapa Port Complete. The company offers services such as, transit warehousing for export cargo, and network cargo distribution and delivery. Golden Transport Company Limited (100% stake): Golden Transport is a haulage and dsitribution company with nationwide reach, which enables efficient product delivery of Flour Mills goods to customers.; Other subsidiaries in the Logistics and Support business are, Golden Shipping Company Limited (100% stake), Flour Mills Registrars Limited (100% stake), and a Real Estate business in which the company has a 100% stake. Other Subsidiaries/Associate Companies The sole constituent in this business is UNICEM, a 2.5 million MT integrated cement plant in which Flour Mills has a 28% stake, in a joint venture including Lafarge S.A and Holcim Ltd, the world s two biggest cement producers. The 2.5 million tonnes plant plant, which was commissioned early 2009, is currently fourth biggest cement plant in the country. UNICEM discontinued the importation of cement in Q1 13, given the increased ramp up of its plant and an increasingly stricter government policy regarding cement importation; thus UNICEM s contribution to Flour Mills topline dwindled as the year matured. 5

6 Forecasts & Valuation Assumptions DCF Assumptions The Discounted Cash-Flow valuation for FLOURMILL spans a period of five years and our assumptions are highlighted below; The major revenue driver for Flour Mills is the recent investments in increasing capacity in the different business segments. Most significant is the company s commissioning of a 750,000MT sugar refinery in Lagos. We expect the price of refined sugar to trend upwards over the forecast years (on the back of data from OECD FAO Agricultural Outlook ) and this should boost revenue for Flour Mills. We opine that the company will increase utilization in the coming years, and this has been factored into our valuation. On the back of this, we expect the revenue from the sugar refinery to double over the next 5 years. Also, the increase in flour milling capacity is expected to add to topline as the company commissioned 3 new flour mills with capacity of about 363,000MT per annum, which brings the total flour milling capacity of the company to 3.63 million MT per annum. Assuming similar price level and capacity utilization as FY 13 level, We expect the new flour milling capacity to account for about 6% of the FY 14 turnover figure. Given the trend over the last few years, we expect some uptick in the company s Cost of sales (as % of sales) in FY 14, as wheat prices remain high. However, over the next five years wheat prices are expected to soften moderately as countries, especially in Africa and Asia ramp up production. Though the insecurity in the northern region of the country has caused prices of agricultural inputs to rise, we expect the recent state of emergency declaration to aid in curbing the menace. On the back of the above, we expect to see a slower rise in the cost of sales line in the coming years. Our WACC assumptions are as detailed in the table below; WACC Assumptions After tax cost of debt 8.34% Tax rate 30.80% Risk Free Rate 12.73% Beta 0.43 Equity Risk Premium 5.50% Stock beta (3Y daily adj.) 0.43 Debt/Equity 1.58x Weighted Avg Cost of Capital (WACC) 10.95% LT growth rate 3.00% Source: CardinalStone Research 6

7 Valuation: On the back of the deviation in Flour Mills FY 13 bottom-line performance from our forecast, we have revised our model accordingly (see Appendix table for revised forecasts). Hence our equally weighted DCF and P/E valuation, gives a revised TP of N90.67 for FLOURMILL, which implies an 8% upside potential from current price of N We therefore put a HOLD rating on the stock. On our revised numbers, FLOURMILL is trading at a trailing and forward P/E of 27x and 18x, compared to its comparable (Middle East and Africa) emerging market peers average of 16x and 17x. Valuation Enterprise Value DCF and PE Valuation (N'mn) 2014F 2015F 2016F 2017F 2018F EBIT 31,476 35,553 43,094 49,702 55,691 Tax charge (9,695) (10,950) (13,273) (15,308) (17,153) NOPAT 21,781 24,603 29,821 34,394 38,538 Less: Capex (42,469) (33,317) (20,230) (31,184) (26,803) Add: Depreciation 11,747 17,202 19,225 20,784 23,464 +/- Decrease/Increase in OpWC 21,397 (5,223) (4,321) (3,227) (3,429) Operating FCF 12,456 3,264 24,495 20,767 31,771 Discount factor Present Value of OpFCF 11,227 2,652 17,937 13,707 18,901 Terminal Value Operating FCF 390,480 Discount factor Present Value of OpFCF 232,305 EV 309,455 Less: Net debt (71,904) Staff gratuities 4,453 Minorities 2,915 Equity Value (Market cap) 244,920 Price/Share (N) PE Valuation PE (3YR. Daily AVG.) 17 FY'14 EPS 4.55 FY'14 TP (N) Weighted TP (FY'14) (N) Risks: Major risks to our outlook on Flour Mills include volatility in the prices of input materials, increasing unpredictability of weather patterns as well as insecurity in Northern Nigeria. Also, the company s increasing leverage position is a source of concern, as interest expense continues to depress earnings. 7

8 Emerging Market Comparables Valuation1 Name Country Mkt Cap $'m EBITDA Mrgn EV/EBITDA T12M Est P/E Curr Yr Nigeria 1, Savola Saudi Arabia 7, Dangote Flour Mills plc Nigeria Dangote Sugar Refinery Plc Nigeria Agthia Group Pjsc United Arab Emirates Zad Holding Co Qatar n/a n/a Oman Flour Mills Oman n/a n/a Salalah Mills Co Oman n/a n/a Tongaat Hulett Ltd South Africa 1, Lesieur Cristal Morocco Afgri Ltd South Africa Tiger Brands Ltd South Africa 5, Cosumar Morocco Enl Land Ltd Mauritius n/a Nestle Nigeria Plc Nigeria 4, Delta Sugar Egypt Peer comparables in the Middle East and Africa Source: Bloomberg 8

9 Financial Statements and Key Ratios (N'Mn) Income Statement (N'Mn) F 2015F 2016F Revenue 238, , , , , ,334 Cost of Sales (190,885) (210,442) (256,886) (351,221) (461,445) (561,046) Gross Profit 47,912 47,826 45,055 73,472 93, ,288 Sell.Distri. And Admin Expenses (18,086) (21,182) (25,271) (35,249) (46,089) (55,970) EBITDA 29,825 26,644 19,784 38,222 47,755 57,318 Depreciation (7,726) (8,260) (7,045) (11,747) (17,202) (19,225) EBIT/Operating profit 24,923 21,215 23,611 31,476 35,553 43,094 Interest Expense/Income (3,640) (6,299) (11,407) (12,797) (14,354) (15,714) Pre-tax earnings 16,445 12,049 11,165 15,679 18,199 24,380 Taxation (6,995) (3,672) (3,439) (4,829) (5,605) (7,509) Profit after tax 9,450 8,377 7,727 10,850 12,593 16,871 Statement of Financial Position (N'Mn) F 2015F 2016F Assets Fixed Assets 71, , , , , ,190 Inventories 46,634 50,565 64,367 67,357 88, ,598 Trade Debtors 8,624 8,173 19,467 13,962 18,256 22,170 Bank and Cash Balances 8,876 26,239 21,837 15,450 1,055 2,785 Other current assets 10,510 22,378 3,296 4,654 6,085 7,390 Total Assets 163, , , , , ,065 Liabilities Trade Creditors 7,637 8,668 45,504 64,471 84, ,986 Bank overdrafts 9,856 33,643 53,878 55,878 58,878 62,878 Taxation 8,073 4,116 2,747 4,184 5,404 7,129 Amount due to related companies Dividend payable Term loans 8,419 28,833 39,863 41,863 44,863 48,863 Retirement Benefit Obligation 3,553 3,822 4,453 4,936 5,683 6,630 Deferred taxation 7,556 9,288 10,927 10,927 10,927 10,927 Total Liabilities 113, , , , , ,298 Capital and Reserves Share capital 940 1,167 1,193 1,193 1,193 1,193 Share Premium 5,867 33,526 36,813 36,813 36,813 36,813 Retained Earnings 33,176 32,816 36,135 45,125 51,887 63,051 Other component of equity 5,241 9,691 6,839 6,839 6,839 6,839 Shareholders' funds 45,223 77,200 80,979 89,969 96, ,895 Total liabilities and equity 158, , , , , ,193 Key Ratios F 2015F 2016F Profitability Return on Average Equity 18.30% 12.66% 8.70% 11.11% 12.14% 14.65% Return on Average Assets 5.79% 3.60% 2.96% 3.58% 3.79% 4.70% EBITDA Margin 12.49% 10.32% 6.55% 9.00% 8.60% 8.50% EBIT Margin 10.44% 8.21% 7.82% 7.41% 6.40% 6.39% Pretax Profit Margin 6.89% 4.67% 3.70% 3.69% 3.28% 3.62% Net Profit Margin 3.96% 3.24% 2.56% 2.55% 2.27% 2.50% Valuation Multiples P/E (x) P/B (x) Dividend Yield (%) 1.92% 1.91% 2.38% 2.56% 2.37% 3.18% EV/EBITDA (x) Sources: CardinalStone Research, Company Financials 9

10 Financial Statements and Key Ratios ($'Mn) Income Statement ($'Mn) F 2015F 2016F Revenue 1,568 1,656 1,939 2,647 3,361 3,962 Cost of Sales (1,254) (1,350) (1,649) (2,189) (2,793) (3,297) Gross Profit Sell.Distri. And Admin Expenses (119) (136) (162) (220) (279) (329) EBITDA Depreciation (51) (53) (45) (73) (104) (113) EBIT/Operating profit Interest Expense/Income (24) (40) (73) (80) (87) (92) Pre-tax earnings Taxation (46) (24) (22) (30) (34) (44) Profit after tax Statement of Financial Position ($'Mn) F 2015F 2016F Assets Fixed Assets ,091 1,157 1,129 Inventories Trade Debtors Bank and Cash Balances Other current assets Total Assets 1,042 1,495 1,799 1,891 2,009 2,110 Liabilities Trade Creditors Bank overdrafts Taxation Amount due to related companies Dividend payable Term loans Retirement Benefit Obligation Deferred taxation Total Liabilities ,261 1,308 1,396 1,441 Capital and Reserves Share capital Share Premium Retained Earnings Other component of equity Shareholders' funds Total liabilities and equity 1,011 1,462 1,781 1,868 1,981 2,075 Key Ratios F 2015F 2016F Profitability Return on Average Equity 18.30% 12.66% 8.70% 11.11% 12.14% 14.65% Return on Average Assets 5.79% 3.60% 2.96% 3.58% 3.79% 4.70% EBITDA Margin 12.49% 10.32% 6.55% 9.00% 8.60% 8.50% EBIT Margin 10.44% 8.21% 7.82% 7.41% 6.40% 6.39% Pretax Profit Margin 6.89% 4.67% 3.70% 3.69% 3.28% 3.62% Net Profit Margin 3.96% 3.24% 2.56% 2.55% 2.27% 2.50% Valuation Multiples P/E (x) P/B (x) Dividend Yield (%) 1.92% 1.91% 2.38% 2.56% 2.37% 3.18% EV/EBITDA (x) Sources: CardinalStone Research, Company Financials 10

11 Disclosure Analyst Certification The research analyst(s) denoted by an * on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analysts denoted by an * on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst(s) cover in this research) that: (1) all of the views expressed in this report accurately articulate the research analyst(s) independent views/opinions, based on public information regarding the companies, securities, industries or markets discussed in this report. (2) The research analyst(s) compensation or remuneration is in no way connected (either directly or indirectly) to the specific recommendations, estimates or opinions expressed in this report. Analysts Compensation: The research analyst(s) responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues, which include revenues from, among other business units, Investment Banking and Asset Management. Investment Ratings CardinalStone employs a 3-step rating system for equities under coverage: Buy, Hold, and Sell. Buy % expected share price performance Hold +5.00% to % expected share price performance Sell < +5.00% expected share price performance A BUY rating is given to equities with strong fundamentals, which have the potential to rise by at least % between the current price and the analyst s target price. An HOLD rating is given to equities with good fundamentals, which have upside potential within a range of +5.00% and %, A SELL rating is given to equities that are highly overvalued or with weak fundamentals, where potential returns of less than -5.00% is expected, between the current price and analyst s target price. Cardinal Stone Research distribution of ratings/investment banking relationships as of August 26, 2013 Rating Buy Sell Hold % of total recommendations 29% 53% 18% % with investment banking relationships 0% 0% 0% Valuation and Risks: Please see the most recent company-specific research report for an analysis of valuation methodology and risks on any security recommended herein. You can contact the analyst named on the front of this note for further details. Frequency of Next Update: An update of our view on the company would be provided when next there are substantial developments/financial news on the company. Conflict of Interest: It is the policy of CardinalStone Partners Limited and its subsidiaries and affiliates (individually and collectively referred to as CardinalStone ) that research analysts may not be involved in activities that suggest that they are representing the interests of Cardinal Stone in a way likely to appear to be inconsistent with providing independent investment research. In addition, research analysts reporting lines are structured so as to avoid any conflict of interests. For example, research analysts are not subject to the supervision or control of anyone in CardinalStone s Investment Banking or Sales and Trading departments. 11

12 However, such sales and trading departments may trade, as principal, on the basis of the research analyst s published research. Therefore, the proprietary interests of those Sales and Trading departments may conflict with your interests. Company Disclosure: CardinalStone may have financial or beneficial interest in securities or related investments discussed in this report, which could, unintentionally, affect the objectivity of this report. Material interests which CardinalStone has with companies or in securities discussed in this report are disclosed hereunder: Company Disclosure FLOUR MILLS OF NIGERIA PLC a. The analyst holds personal positions (directly or indirectly) in a class of the common equity securities of the company b. The analyst responsible for this report as indicated on the front page is a board member, officer or director of the Company c. CardinalStone is a market maker in the publicly traded equities of the Company d. CardinalStone has been lead arranger or co-lead arranger over the past 12 months of any publicly disclosed offer of securities of the Company e. CardinalStone beneficially own 1% or more of the equity securities of the Company f. CardinalStone holds a major interest in the debt of the Company g. CardinalStone has received compensation for investment banking activities from the Company within the last 12 months h. CardinalStone intends to seek, or anticipates to receive compensation for investment banking services from the Company in the next 3 months i. The content of this research report has been communicated with the Company, following which this research report has been materially amended before its distribution j. The Company is a client of CardinalStone k. The Company owns more than 5% of the issued share capital of CardinalStone l. CardinalStone has other financial or other material interest in the Company Important Regional Disclosures The analyst(s) involved in the preparation of this report may not have visited the material operations of the subject Company (ies) within the past 12 months. Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that. To the extent this is a report authored in whole or in part by a Non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any Non-U.S. analyst contributors: The Non-U.S. research analysts (denoted by an * in the report) are not registered/qualified as research analysts with FINRA; and therefore, may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Each analyst (denoted by an *) is a Non-U.S. Analyst and is currently employed by Cardinal Stone. Legal Entities Legal entity disclosures: CardinalStone Partners is a member of The Nigerian Stock Exchange (NSE) and is authorized and regulated by the Securities and Exchange Commission (SEC) to conduct investment business in Nigeria. 12