AN EVALUATION OF THE BUSINESS AND FINANCIAL PERFORMANCE OF DANGOTE CEMENT OVER A THREE YEAR PERIOD (2013 - 2015)
This is a Research Project done to achieve a Bachelor's degree from Oxford Brookes University. The case study is on Dangote Cement with comparative analysis of Lafarge Cement Plc. Analysis was done using Financial ratios and Business models like PEST and SWOT. The project objective was achieved using these tools, with references extracted from secondary sources.
TABLE OF CONTENTS
CHAPTER 1 INTRODUCTION
1.1 The topic and its context
1.2 Reason for choosing the topic
1.3 Aims and objectives of the report
1.4 Research approach
CHAPTER 2 - INFORMATION GATHERING AND ACCOUNTING/BUSINESS TECHNIQUES 5
2.1 Sources of information and Techniques used.
2.2 Description of methods used to gather information
2.3 Limitations of information gathering methods and ethical issues
2.4 Accounting techniques used
2.5 Business techniques used
2.6 Limitations of the study
CHAPTER 3 RESULTS, ANALYSIS, CONCLUSIONS AND RECOMMENDATIONS 14
3.1 Presentation and Analysis of results obtained
3.2 Conclusions and Recommendations
Chapter one
1.1 The topic and its context
The performance of any organisation should not base solely on its financial merits, but also on its achievements within the business environment in which it operates. Every organization should also be appraised based on its social and environmental footprint on the immediate environment.
The measure of financial performance is however needed to account for the financial stewardship placed on the directors of the company by its shareholders. The general ideology in recent time is for an organization to conduct its business activities based on environmental value, economy value and social value i.e. Triple Bottom-line Reporting. (ACCA, 2013).
In some countries, it is now a requirement to publish those activities as part of reporting duty. This is a welcome development as investors now use this measure to make final decisions has to where they want to invest their funds. More so, as long as the company maintains it credibility in reporting its affairs adequately, it is bound to thrive in the eye of the public.
1.2 Reasons for choosing the topic.
I choose to carry out my research on this area because I want to gained more knowledge about financial performance measurement and also to broaden my professional skills.
I decided to carry out my research on the manufacturing industry particularly Cement because its one of the most active industry in Nigeria in terms of turnover and relevance to the economy. (Proshare, 2015)
The reason for choosing Dangote Cement as my case study is that it is an industry leader that has grown rapidly to become one of the biggest producers of Cement in Africa. It has presence in 8 African countries. As an industry player, Dangote Cements dictates the pace of market with its continued acquisition of market share via mergers and take-overs. It has continued to expand in production capacity over the last few years (The economics, 2014). Dangote Cement is a subsidiary of larger company i.e. Dangote Group, but I decided to limit my analysis to its Cement operations in Nigeria. Also, the fact that a suitable competitor exist in the same industry i.e. Lafarge Cement which is also an international cement producer.
Lafarge Cement has presence in Nigeria and South Africa. But unlike Dangote it is part of a bigger Cement manufacturing group in Europe the LafargeHolcim group. Lafarge operates in Nigeria through Ashaka Cement, Atlas Cement, Lafarge Readymix, United Cement Company Nigeria and Wapco Cement. (Lafarge Annual Report, 2015) Lafarge is the biggest competitor of Dangote hence the appropriate choice. It subsidiaries are located in all parts of the country covering the same geographical presence as Dangote.
1.3 Aims and objectives of the report
The aim of the research is to gain a desired end result which is to broaden my knowledge on the subject, as well as for academic purpose. Other aims and objectives include.
i. To analyse financial performance of Dangote Cement plc using Ratios, analysis techniques.
ii. To analyse the results of financial performance to find out reasons for changes in results in the last three years.
iii. To compare results obtained from analysis of Dangote Cement with the result of a competitor; in this case Lafarge Cement.
iv. To analyse the business performance of Dangote Cement plc its Strengths, Weaknesses, Opportunities and Threats, and also external factors like Political, Economic, Social and Technology affects the company.
Statement of Research Questions
The following questions should have been answered when the research in completed.
I. Is Dangote Cement PLC profitable?
II. Can Dangote Cement Plc sustain growth and profitability?
III. Is Dangote Cement more profitable than Lafarge Cement?
IV. What are the reasons for the changes in the ratios calculated for the three years?
V. What are the external factors affecting the business of Dangote Cement?
1.4 Overall Research Approach
The research would be carried out using secondary research approach the internet would basically serve as my source of information. Although I have the annual report of Dangote Cement and Lafarge, these cannot be solely relied on has there is need to widen research sources to obtain robust information which will be adequately referenced. I have also read extensively on the subject, therefore am also relying on knowledge gained from private study of textbooks and journals to give me an objective analysis of the report. I will also use business models like Ratios, SWOT and PEST analysis to evaluate and discuss points made.
