Nigerian Aviation Handling Company Plc N5,000,000,000 DEBT ISSUANCE PROGRAMME

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1 PRICING SUPPLEMENT/SUPPLEMENTARY SHELF PROSPECTUS RC Nigerian Aviation Handling Company Plc N5,000,000,000 DEBT ISSUANCE PROGRAMME N2,050,000, % Unsecured Series 2 Bonds (Due November 2020) An application has been made to list the Bonds on The Nigerian Stock Exchange This Pricing Supplement/Supplementary Shelf Prospectus is issued by the Nigerian Aviation Handling Company Plc in connection with the Series 2 issuance under the N5,000,000,000 Debt Issuance Programme established by Nigerian Aviation Handling Company Plc ( the Issuer ); and to the extent that there is any conflict or inconsistency between the contents of this Pricing Supplement/ Supplementary Shelf Prospectus and the Shelf Prospectus, the provisions of this Pricing Supplement/ Supplementary Shelf Prospectus shall prevail. This Pricing Supplement/ Supplementary Shelf Prospectus may be used to offer and sell the Bonds only if accompanied by the Shelf Prospectus. Copies of the Shelf Prospectus can be obtained from the Issuing Houses/Book runners. The registration of the Shelf Prospectus and this Preliminary Pricing Supplement/ Supplementary Shelf Prospectus shall not be taken to indicate that the Commission endorses or recommends the Securities or assumes responsibility for the correctness of any statements made or opinions or reports expressed either in the Shelf Prospectus or this Pricing Supplement/ Supplementary Shelf Prospectus. No Securities will be allotted or issued on the basis of the Shelf Prospectus read together with this Pricing Supplement/Supplementary Shelf Prospectus later than two years after the date of the issue of the Shelf Prospectus. This Pricing Supplement/ Supplementary Shelf Prospectus contains particulars in compliance with the requirements of the Commission for the purpose of giving information with regard to the Securities being issued hereunder (the Series 2 Bonds or Bonds ). The Issuer and its Board of Directors and Issuing Houses accept full responsibility for the accuracy of the information contained in this Pricing Supplement/ Supplementary Shelf Prospectus. The Issuer declares that having taken reasonable care to ensure that such is the case, the information contained in this Pricing Supplement/ Supplementary Shelf Prospectus is, to the bestt of its knowledge, in accordance with the facts and does not omit anything likely to affect the import of such information and that save as disclosed herein, no other significant new factor, material mistake or inaccuracy relating to the information included in the Shelf Prospectus has arisen or has been noted, as the case may be, since the publication of the Shelf Prospectus. The statements made in this paragraph are without prejudice to the provisions of Section 85 (1) of the Investment & Securities Act No (Civil Liability for Mis-statements in Prospectus). Further, the material facts contained herein are true and accurate in all material respects and the Issuer confirms that, having made all reasonable enquiries, to the best of its knowledge and belief, there are no material facts, the omission of which would make any statement contained herein misleading or untrue. LEAD ISSUING HOUSE/ BOOK RUNNER RC JOINT ISSUING HOUSES/ BOOK RUNNERS RC RC RC RC RC This Pricing Supplement is dated November 14, 2013

2 This document ( Pricing Supplement / Supplementary Shelf Prospectus ) is issued to give details of the Series 2 Bond Issuance under the N5,000,000,000 Debt Issuance Programme registered by Nigerian Aviation Handling Company Plc ( NAHCO or nahco aviance or the Issuer). This Pricing Supplement/Supplementary Shelf Prospectus supplements the terms and conditions in, and incorporates by reference, the Shelf Prospectus dated September 29, 2011 and all documents incorporated therein ( the Prospectus ), and should be read in conjunction with the Prospectus. The terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions set forth in the Prospectus. This Pricing Supplement contains the specific terms of the Series 2 Bonds that are being issued hereunder and must be read in conjunction with the Prospectus. In the event of any inconsistency between the terms contained in the Pricing Supplement and the terms of the Prospectus, this Pricing Supplement will prevail for the purposes of the Series 2 Bonds. PRICING SUPPLEMENT /SUPPLEMENTARY SHELF PROSPECTUS 1. Issuer: Nigerian Aviation Handling Company Plc ( NAHCO or nahcoaviance 2. Series Number: 2 3. Description: 15.25% Fixed Rate Unsecured Bonds due 2020 as constituted pursuant to the provisions of the Series Trust Deed dated November 14, Specified Currency: Nigerian Naira 5. Aggregate Nominal Amount: N2,050,000, Par Value N1,000 (One Thousand Naira) 7. Gross Proceeds: N2,050,000, Net Proceeds 1 : N1,978,724, Issue Price: At Par, N1, (One Thousand Naira) 10. Issue Date: November 14, Maturity Date: November 14, Interest Basis: Fixed Rate 13. Forms of Bonds: The Issuer shall issue the Bonds in dematerialized form by crediting the CSCS accounts of applicants with the Principal Amount of Bonds purchased by such applicant. Dealings in the Bonds shall be in accordance with CSCS procedures and the rules of the NSE. 14. Coupon: 15.25% per annum 15. Redemption /Payment Basis: Redemption at Maturity 16. Use of Proceeds 2 : Use of Proceeds Amount (N) % Duration Procurement of Equipment (Per Appendix I) 217,659, % 18months Inorganic Expansion via the acquisition of complementary businesses (Per Appendix II) 1,385,106, % 18months Working Capital 375,957, % 3months TOTAL 1,978,724, % 1 After the deduction of N71,275,950, being the cost of the offer, or 3.48 % of the gross issue proceeds. 2 Per Appendix I and II on page 55 and based on net proceeds in Footnote 1. 2

3 17. Issuer Rating: Bond Rating: Agusto & Co: A+; Global Credit Rating: A- Agusto & Co: A+; Global Credit Rating: A- 18. Status of Bonds: Registered and Listed Bonds 19. Debt Service: nahco aviance will establish a Debt Service Reserve Account which will be maintained by the Trustees. The Issuer shall, on a monthly basis, make payments into the nahco aviance DSRA; which payment shall be the income accruing from operations and in accordance with the provisions of the repayment schedule attached to this Pricing Supplement. The monthly payments into the nahco aviance DSRA shall be paid without demand by the Trustee so as to provide the Trustee sufficient funds to settle the Coupon payment as and when due, as well as redemption payments. 20. Listing: An application shall be made to the Quotations Committee of Management of The Exchange for the Bonds to be listed on the Daily Official List and admitted to trading on The Floor of The Exchange. 21. Method of distribution: By way of a Book Build. The Issue Price/Coupon will be determined following the Bid Closing Date (the date on which the Book Runners stop accepting Bids for the Issue), at the conclusion of the Book Build PROVISIONS RELATING TO INTEREST PAYABLE 22. Fixed Rate Bond Provision: Fixed Rate Bond 23. Interest Payment Date(s): May 14 and November 14 in each year, till redemption 24. Fixed coupon amount: N per N1, Fixed Day Count Fraction: Actual number of days in a month/actual number of days in a year PROVISIONS RELATING TO REDEMPTION 26. Final redemption of each note: N 1, Gross redemption Amount: N2,050,000,000 GENERAL PROVISIONS APPLICABLE TO THE BONDS 28. Bonds Settlement: Bonds purchases will be settled by electronic funds transfers through either CBN Inter-Bank Funds Transfer System ( CIBFTS), National Electronic Funds Transfer ( NEFT ) or Real Time Gross Settlement ( RTGS ) 29. Closure of Register: Section 236 of the Investment & Securities Act 2007 ( ISA ) stipulates the closure of the register of bondholders for the 21 (Twenty-One) days immediately preceding the date on which a coupon falls due. Furthermore, no transfers of bonds are registerable during the closure period. Accordingly, the Register of Bondholders will be closed for the 21 (Twenty-One) days preceding each Coupon Payment Date 30. Tax Consideration: The Bonds are exempt from taxation in Nigeria and all payments made to the Note holders will be exempt from taxes under the CITA and the PITA, and consequently free and clear of taxes with no deduction at source. Please refer to the section Tax Considerations on Page 21 of the Shelf Prospectus 3

4 These exemptions are also set out in the Companies Income Tax (Exemption of Bonds and Short Term Government Securities) Order 2011 and the Value Added Tax (Exemption of the Proceeds of the Disposal of Government and Corporate Securities) Order DISTRIBUTION 31. Names of Book Runners: Lead Book Runner/Arranger/Issuing House Chapel Hill Advisory Partners Limited ( Chapel Hill ) Joint Book Runners/Arrangers/Issuing Houses FCMB Capital Markets Limited Skye Financial Services Limited Stanbic IBTC Capital Limited PanAfrican Capital Plc UBA Capital Plc 32. Qualified Institutional Investors: The Investors that are permitted to participate in this transaction are Fund Managers, Pension Fund Administrators, Insurance Companies, Unit Trusts, Multilateral and Bi-Lateral Institutions, Registered and/or Verifiable Hedge Funds, Market Makers, Staff schemes, Trustees/Custodians and Stockbroking firms; High Net worth Individuals (i.e. individuals with a minimum net worth of N300 million) as stipulated by Rule 78(C)(2) of the Rules and Regulation of the Securities and Exchange Commission. Retail Investors are exempted from this offer OPERATIONAL INFORMATION 33. Date of delivery: November 14, Mode of delivery: E-allotment 35. Registrar: City Securities Registrars Limited 36. Trustee: First Trustees Nigeria Limited 37. Other Parties: Lead Stockbrokers CSL Stockbrokers Limited Joint Stockbrokers Marina Securities Stockbroking Services Limited Stanwal Securities Limited Yuderb Investments & Securities Limited TIDDO Securities Limited PAC Securities Limited Auditors Horwath Dafinone Reporting Accountants KPMG Professional Services Ratings Agencies Agusto & Co Global Credit Rating Co Solicitors to the Company David Mando & Co Solicitors to the Trustee Banwo & Ighodalo Solicitors to the Offer Ahmed Uwais & Co 4

5 Receiving Banks Stanbic IBTC Bank Plc Mainstreet Bank Limited Unity Bank Plc BOARD OF DIRECTORS 38. Directors of the Issue Alhaji Suleiman Yahyah (Chairman) Mr. Denis Hasdenteufel (Vice Chairman) Mr. Kayode Oluwasegun- Ojo (Managing Director) Mr. Ike Nwachukwu (Jnr.) Mr. Mobolaji Balogun Mr. Gordon Paul Gofwan Arc. Usman A.Bello Mr. David Thomas Dr. Faruk Umar Mr. Chris Oshiafi Mr. Ahmed Tijjani Uwais Hadiza Aliko Mohammed 39. Company Secretary Mrs. Folasade Ode 5

6 INDICATIVE TRANSACTION TIMELINE ACTIVITY TARGET DATE RECEIVE APPROVAL FROM SEC SEPTEMBER 26, 2013 COMMENCE BOOK BUILDING SEPTEMBER 26, 2013 CONCLUDE BOOK BUILDING OCTOBER 10, 2013 DETERMINE COUPON AND VALUE OF BONDS OCTOBER 10, 2013 FILE UPDATED DOCUMENTS WITH THE SEC OCTOBER 14, 2013 FILE UPDATED DOCUMENTS WITH THE NSE AND APPLY FOR CERTIFICATE OF EXEMPTION OCTOBER 14, 2013 OBTAIN SEC APPROVAL OF UPDATED DOCUMENTS OCTOBER 17, 2013 COMPLETION BOARD MEETING AND FUNDING BY INVESTORS NOVEMBER 14, 2013 ALLOTMENT AND DELIVERY/SETTLEMENT OF BONDS NOVEMBER 14, 2013 TRANSFER PROCEEDS TO NAHCO AVIANCE NOVEMBER 15, 2013 FILING OF COMPLETION MEETING DOCUMENTS WITH THE SECURITIES & EXCHANGE COMMISSION NOVEMBER 18, 2013 Important Notice: The dates given above are indicative only. Events in the timetable may be subject to adjustment. 6

7 RATING INFORMATION (EXTRACT FROM RATING REPORTS) 7

8 Rating Information (Extract from Rating Reports) 8

9 FINANCIAL INFORMATION (EXTRACT FROM REPORTING ACCOUNTANTS REPORT) REPORTING ACCOUNTANTS REPORT 9

10 PROFIT FORECAST The Directors estimate that, in the absence of unforeseen circumstances and based on the assumptions stated below, the Company s income statement for five (5) years from 31 December 2013 to 2017 will be as shown below: Statement of comprehensive income Notes N 000 N 000 N 000 N 000 N 000 Turnover k, l, m 7,702,631 8,773,264 9,682,550 10,223,877 10,845,177 Operational cost (4,242,286) (4,599,729) (5,007,848) (5,490,759) (5,897,318) Gross profit 3,460,345 4,173,535 4,674,702 4,733,118 4,947,859 Other income o 421, , , , ,585 Administrative expenses (2,641,328) (2,838,221) (3,086,702) (3,379,010) (3,642,607) 1,240,602 1,500,899 1,753,585 1,519,693 1,470,837 Net finance costs s (182,357) (169,649) (16,158) 182, ,714 Profit before tax 1,058,245 1,331,250 1,737,427 1,702,659 1,608,551 Taxation (338,638) (426,000) (555,976) (544,851) (514,736) Profit after tax 719, ,250 1,181,451 1,157,808 1,093,815 Other comprehensive income Total comprehensive income 719, ,250 1,181,451 1,157,808 1,093,815 10

11 BALANCE SHEET FORECAST The Directors also estimate that, in the absence of unforeseen circumstances and based on the assumptions set out on pages 7-10 and the accounting policies on pages 12-20, the Company s forecast statement of financial position for the years ending 31 December 2013 to 2017 is as shown below: Statement of financial position Notes N 000 N 000 N 000 N 000 N 000 Assets Non-current assets Tangible fixed assets w 7,903,967 7,990,112 7,508,983 7,031,446 6,577,030 Intangible assets 159, ,534 87,840 52,145 16,451 Investment property 131, , , , ,115 Investment in subsidiaries 1,035,500 2,035,500 2,035,500 2,035,500 2,035,500 Other non-current assets 1,249,604 2,290,201 3,445,476 2,413,937 3,056,466 10,480,160 12,564,272 13,195,786 11,644,079 11,789,561 Current asset Inventories 50,557 55,310 61,007 67,473 74,828 Trade & other receivables 1,058,382 1,049,608 1,040,388 1,028,347 1,019,545 Intercompany receivables 190, , , , ,279 Short term prepayments 126, , , , ,250 Cash and bank balances 2,653,345 1,373,792 1,854,482 2,137,815 2,741,456 4,079,078 2,807,396 3,298,819 3,592,759 4,213,358 Total Assets 14,559,239 15,371,668 16,494,605 15,236,838 16,002,919 Equity Equity attributable to owners of the parent Share capital 738, , , , ,281 11

12 Share premium 1,914,758 1,914,758 1,914,758 1,914,758 1,914,758 Retained earnings 3,348,586 3,930,014 4,704,101 5,330,254 5,903,057 6,001,625 6,583,053 7,357,140 7,983,293 8,556,096 Non-controlling interest Total equity 6,001,625 6,583,053 7,357,140 7,983,293 8,556,096 Non-current liabilities Bond 4,981,211 4,981,211 4,981,211 2,850,000 2,850,000 Deferred tax liabilities 902, , , , ,000 5,883,211 5,883,211 5,883,211 3,752,000 3,752,000 Current liabilities Trade & other payables 2,335,765 2,479,404 2,698,278 2,956,694 3,180,087 Tax payable 338, , , , ,736 2,674,403 2,905,404 3,254,254 3,501,545 3,694,823 Total liabilities 8,557,614 8,788,615 9,137,465 7,253,545 7,446,823 Total equity and liabilities 14,559,239 15,371,668 16,494,605 15,236,838 16,002,919 12

13 CASH FLOW FORECAST Forecast cash flows N 000 N 000 N 000 N 000 N 000 Operating activities Operating profit 1,240,601 1,500,899 1,753,585 1,519,693 1,470,837 Adjustment for non-cash items: Depreciation & amortisation 709, , , , ,047 Bond issue costs 136, ,086,258 2,205,635 2,437,345 2,169,861 2,107,884 Other adjustments: (Increase)/Decrease in inventories (4,512) (4,752) (5,697) (6,467) (7,355) (Increase)/Decrease in trade and other receivables 134,870 8,775 9,219 12,041 8,802 (Increase)/Decrease in prepayments (11,292) (11,892) (14,256) (16,182) (18,404) Increase/(Decrease) in trade payables 323, , , , ,393 Increase/(Decrease) in deferred revenue (123,435) Taxation payments (342,172) (338,638) (426,000) (556,593) (545,861) Cash flow from operating activities 2,062,941 2,002,767 2,219,486 1,861,692 1,769,469 Investing activities Purchase of fixed asset (749,558) (748,250) (160,000) (130,000) (140,000) Contribution to Bond reserve account (911,124) (1,515,880) (1,515,880) (1,338,496) (806,341) Investment in subsidiaries (1,000,000) (1,000,000) Interest received 131, , , , ,146 Cash flow from investing activities (2,529,095) (2,936,182) (1,307,149) (1,020,098) (616,195) 13

14 Financing activities Net Bond issue proceeds 2,713, Interest expense (27,096) (22,314) (24,284) (26,609) (28,620) Dividend paid (369,141) (323,823) (407,362) (531,653) (521,014) Cash flow from financing activities 2,317,589 (346,137) (431,646) (558,262) (549,634) Increase/(Decrease) in cash 1,851,435 (1,279,552) 480, , ,640 Cash & cash equivalent at start of the year 801,910 2,653,345 1,373,793 1,854,483 2,137,816 Cash & cash equivalent at year-end 2,653,345 1,373,793 1,854,483 2,137,816 2,741,456 14

15 BASIS OF ASSUMPTIONS USED IN THE PROFIT FORECASTS FOR THE YEARS ENDING 31 DECEMBER Basis The profit forecasts for the years ending 31 December have been prepared on a basis consistent with the accounting policies adopted by the Company. General Assumptions Changes in Accounting Policies a) There will be no material changes in the accounting policies currently adopted by the Company. Political and Economic Climate b) The political landscape will be relatively stable. c) There will be no significant change in Government regulations capable of adversely affecting the operations of the Company. Going Concern d) The Company will be successful at raising the proposed second tranche of its bond issue of up to N2.85 billion. e) The Company will continue in existence as a going concern. f) The Company has assumed that it will maintain its existing market share over the forecast period. g) There will be no litigation that will have an adverse material impact on the Company. h) There will be no major labour dispute that can adversely affect the operations of the Company over the forecast period. i) There will be no new legislation that can adversely impact the aviation industry during the forecast period. Specific Assumptions Revenue The Company generates its revenues from three major sources which include: Aircraft/passenger handling and crew logistics Cargo handling and warehousing Equipment rental services The underlying assumptions for the various revenue streams are as follows: j) Revenue from aircraft/passenger handling would decline by 25% in 2013 and decline at an average rate of 2% between 2014 and 2017 driven by reduction in tariffs which would be partly offset by increase in flight frequency of NAHCo s major customers. k) Revenue from cargo handling and warehousing would grow at an average rate of 32% in 2013 and at an average growth rate of 14% between 2014 and We have assumed that cargo handling prices will be constant at N38 per kg for import, N28 per kg for export and N45 per kg for courier over the forecast period. The analysis of forecast cargo volumes is as follows: 15

16 Analysis of forecast cargo volume kg kg kg kg kg Forecast import cargo 107,652, ,144, ,936, ,217, ,652,806 Year-on-year growth rate N/A 11% 11% 9% 9% Forecast export cargo 27,049,638 29,937,021 33,151,254 36,237,215 39,613,023 Year-on-year growth rate N/A 11% 11% 9% 9% Forecast courier cargo 1,532,329 1,695,895 1,877,978 2,052,794 2,244,029 Year-on-year growth rate N/A 11% 11% 9% 9% Grand Total 136,234, ,776, ,965, ,507, ,509,858 l) Revenue from equipment rentals would decline by 21% in 2013 and at an average rate of 2% per year over the remainder of the forecast period. The analysis of forecast revenue is as follows: Analysis of forecast revenue N 000 N 000 N 000 N 000 N 000 Forecast aircraft handling revenue 2,525,314 2,471,395 2,414,744 2,340,757 2,286,669 Year-on-year growth rate -25% -2% -2% -3% -2% Forecast cargo handling and warehousing revenue 4,962,853 6,091,984 7,062,732 7,684,330 8,364,311 Year-on-year growth rate 32% 23% 16% 9% 9% Forecast equipment rental revenue 214, , , , ,197 Year-on-year growth rate -21% -2% -2% -3% -2% Grand Total 7,702,631 8,773,264 9,682,550 10,223,877 10,845,177 The underlying assumptions for the operating expenditures, interest payments, dividend payout, and capital expenditures items are stated below: Gross margin m) Gross margin has been forecasted at an average of 47% over the forecast period. Other income 16

17 n) Forecast other income for 2013 comprises mainly rental income and rebate on concession as shown in the table below: Analysis of forecast other income N 000 N 000 N 000 N 000 N 000 Rental income 165, , , , ,585 Rebate on concession 256, Total 421, , , , ,585 Expenses o) Expenses comprise operating and administrative expenses. p) Payroll cost to turnover is forecasted at 41% in 2013, 40% in 2014, 40% in 2015, 42% in 2016 and 43% in q) In view of the cost control and cost reduction measures being implemented, other expenses have been forecasted to grow at an average of 6% over the forecast period. Interest charges r) The proposed bond will mature at the end of the forecast period. In line with this, interest charges are expected to remain constant at an annual rate of 13%. Finance charges over the forecast period are projected as follows: Analysis of forecast net finance cost Net interest income/expense N 000 N 000 N 000 N 000 N 000 Interest income 131, , , , ,146 Interest expense 27,096 22,314 24,284 26,609 28,620 Sub-total (A) 104, , , , ,527 Net cost on DSRA Bond interest payments: - Tranche 1 - Tranche 2 279, , , ,625-92, , , , ,500 (372,125) (650,000) (650,000) (580,125) (370,500) Interest income on contributions 85, , , , ,688 Sub-total (B) (286,848) (475,283) (360,605) (238,823) (163,812) Grand Total ((A) + (B)) (182,357) (169,649) (16,158) 182, ,714 17

18 Profit before tax (PBT) margin s) PBT margin is expected to be 14% in 2013, 15% in 2014, 18% in 2015, 17% in 2016 and 15% in This represents an average PBT margin of 16% over the forecast period. Taxation t) Tax rate is assumed to be 32% of profit before tax in line with the existing fiscal regime for corporate and education tax. Dividend policy u) Dividend totalling N369.1 million was approved by the shareholders at the Company s 32nd Annual General Meeting (AGM) which held in July 2013 v) The company expects to maintain a relatively stable dividend payout policy of 45% of profits after tax. Dividend per share has been forecasted at 22k in 2013, 28k in 2014, 36k in 2015, 35k in 2016, and 33k in Capital expenditure w) Annual capital expenditure to turnover over the forecast period is projected at 10% in 2013, 9% in 2014, and an average of 1.4% between 2015 and NAHCo s capital expenditures comprise investments in building, plants and machinery (ground support equipment), computer equipments and software, motor vehicles, furniture and fittings. These assets are expected to be depreciated in accordance with the Company's accounting policy which is based on IFRS (IAS 16). Capital expenditures over the forecast period are projected as follows: Analysis of capital expenditures N 000 N 000 N 000 N 000 N 000 Land Building 287, ,000-50,000 - Plant & Machinery 75,000 75,000 75,000-50,000 Furniture and fittings 57,325 10,000 10,000 10,000 10,000 Motor vehicles 85,500 30,000 35,000 30,000 40,000 Computer equipments 164,233 83,250 40,000 40,000 40,000 Computer software 80, Total 749, , , , ,000 Return on assets x) Return on average total assets is forecasted to average 7% over the forecast period. Return on equity 18

19 y) Return on average equity is expected to average 14% over the forecast period. Interest coverage ratio z) Interest coverage ratio is forecasted to be 4.3 times in 2013, 3.2 times in 2014, 4.9 times in 2015, 6.4 times in 2016 and 8.9 times in 2017, and averaging 5.5 times over the forecast period. Additional disclosures aa) NAHCo, on behalf of one of its subsidiaries, NAHCo Energy & Power Limited ( NEPL ), obtained a US$15 million Bid Bond in May 2013 from a financial institution as part of the bid requirements for its proposed acquisition of the Kaduna Electricity Distribution Company (KEDC). Consequently, funds from this facility will only be made available to NEPL should it become successful in its bid for KEDC. 19

20 LETTER FROM THE REPORTING ACCOUNTANTS 20

21 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (BASED ON IFRS) The principal accounting policies adopted in the preparation of the financial statements for 2012 are set out below. These policies are consistent with the International Financial Reporting Standards ( IFRS ) adopted by nahco aviance in (a) Basis of accounting The financial statement for 2012 was prepared in accordance with the applicable IFRS standards and on the modified historical cost basis. (b) Basis of consolidation Subsidiaries Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated and separate financial statements from the date that control commences until the date that control ceases. Transactions eliminated on consolidation Intra-company balances, and income and expenses (except for foreign currency translation gains or losses) arising from intra-company transactions, are eliminated in preparing the consolidated and separate financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment (c) Foreign currency (IAS 21) Foreign currency transactions Transactions in foreign currencies are translated into the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at each reporting date are retranslated to the functional currency at exchange rates as at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in the functional currency translated at the exchange rate at the end of the financial year. (d) Property, plant and equipment (IAS 16) Recognition and measurement Items of property, plant and equipment are carried at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. The attributable cost of each asset is transferred to the relevant asset category immediately the asset is available for use and depreciated accordingly. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. 21

22 Purchased software that is integral to the functionality of the related equipment is capitalised as part of the equipment. Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss. Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day-to-day servicing of property plant and equipment are recognised in profit or loss as incurred. Depreciation Depreciation is recognised on a straight-line basis to write down the cost of each asset, to their residual values over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets under finance lease are depreciated over the shorter of the lease term and their useful lives. Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use, or in respect of internally constructed assets, from the date the asset is completed and available for commercial use. Depreciation ceases at the earlier of the date that the asset is derecognised or classified as held for sale in accordance with IFRS 5. A non-current asset or disposal group is not depreciated while it is classified as held for sale. The estimated useful lives for the current and comparative period are as follows: Buildings Land Computer hardware Computer, fittings & equipment Motor vehicles Plant and machinery Capital work-in-progress 50 years over the lease period 3-10 years 2-10 years 4-5 years 6-15 years not depreciated Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate. De-recognition An item of property plant and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the (asset) is included in profit or loss in the year the asset is derecognised 22

23 (e) Intangible assets (IAS 38) Intangible assets comprise software that is not an integral part of the related hardware. Intangible assets have finite useful lives and are measured at cost less accumulated amortisation and accumulated impairment losses. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred. Intangible assets acquired separately Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. De-recognition of intangible assets An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in profit or loss when the asset is derecognised. Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. (f) Inventories (IAS 2) Inventories are shown at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The cost of inventories is determined on the basis of specific identification of their individual costs. (g) Financial instruments (IAS 32, IAS 39, IFRS 7 & IFRS 9) Recognition Non-derivation financial instruments recognition and measurement: Non derivative financial instruments comprise trade receivables, other receivables, amounts due from related parties, cash and cash equivalents, loans and borrowings, amounts due to related parties, trade payables and other payables. Financial instruments are initially recognised at fair value, plus attributable transaction costs for instruments not at fair value through profit or loss. Subsequent to initial recognition, financial instruments are measured as described below. Cash and cash equivalents Cash and cash equivalents comprise of cash, bank balances and call deposits with original maturities of three months or less. Trade and other payables 23

24 Trade and other payables are stated at amortised cost using the effective interest method. Short-duration other payables with no stated interest rate are measured at original invoice amount unless the effect of imputing interest would be significant. Other Other non-derivative financial instruments which comprise of loans and receivables, and other financial liabilities are measured at amortised cost using the effective interest method, less any impairment losses. Short-term trade receivables and other receivables with no stated interest rate are carried at original invoice amounts where the effect of discounting is not significant Derecognition The Group derecognises a financial asset when the contractual rights to cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred, or has assumed an obligation to pay those cash flows to one or more recipients, subject to certain criteria. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. Where the Group enters into transactions under which it transfers assets recognised on its statement of financial position, but retains either all risks and rewards of the transferred assets or a portion of them, then the transferred assets are not derecognised from the statement of financial position if all or substantially all risks and rewards are retained. In transactions where the Group neither retains nor transfers substantially all the risks and rewards of ownership of a financial asset, it derecognises the asset if control over the asset is lost. The rights and obligations retained in the transfer are recognised separately as assets and liabilities as appropriate. In transfers where control over the asset is retained, the Group continues to recognise the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset. (h) Share capital Ordinary shares Ordinary shares are classified as equity. Dividend on ordinary shares Dividends on the Group s ordinary shares are recognised in equity in the period in which they are paid or, if earlier, approved by the Group s shareholders. 24

25 (i) Taxation (IAS 12) Income tax on the profit or loss for the year comprises current tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date and any adjustment required for prior period. Deferred tax is recognised in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Deferred tax is not recognised for the temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Currently enacted tax rates are used to determine deferred tax. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. (j) Impairment (IAS 36) Financial assets A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of the asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the statement of comprehensive income. Non-financial assets The carrying amounts of the Group's non-financial assets, other than inventories, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. An impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of comprehensive income. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine its recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised (k) Non-current assets held for sale (IFRS 5) 25

26 Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale. Immediately before classification as held for sale, the assets (or components of a disposal group) are measured in accordance with the Group's accounting policies. Thereafter, the assets (or disposal group) are measured at the lower of their carrying amount and fair value less cost to sell. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss. (l) Employee benefits (IAS 19) Defined contribution plan A defined contribution plan is a post employment benefit plan under which an entity pays fixed contribution into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided A liability is recognised for the amount expected to be paid under short-term cash bonus plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (m) Provisions (IAS 37) A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. (n) Revenue recognition (IAS 18) Services Revenue from services rendered is recognised in profit and loss in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed by reference to services performed to date as a percentage of total services to be performed. The Group is involved in aviation cargo, aircraft handling, crew and passenger transportation service delivery and power distribution. When the services under a single arrangement are rendered in different reporting periods, the consideration is allocated on a relative fair value basis between the services. 26

27 Rental income Rental income from investment property is recognised as revenue on a straight line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Rental income from other property is recognised as other income. (0) Finance income and expense (IAS 23) Finance income comprises interest on funds invested. Finance costs comprise interest expense on borrowings, exchange differences on financial instruments and bank charges. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in the statement of comprehensive income using the effective interest method. Foreign currency gains and losses are reported on a net basis as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position except for foreign currency translation differences recorded in other comprehensive income. (p) Leased assets (IAS 17) Leases in term of which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. (q) Lease payments (IAS 17) Payments made under operating leases are recognised on a straight-line basis over the term of the lease. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Determining whether an arrangement contains a lease At inception of an arrangement, the Company determines whether such an arrangement is or contains a lease. A specific asset is the subject to a lease if fulfilment of the arrangement is dependent on the use of that specified asset. An arrangement conveys the right to use the asset if the arrangement conveys to the Company the right to control the use of the underlying asset. At inception or upon reassessment of the arrangement, the Group separates payments and other considerations required by such an arrangement into those for other elements on the basis of their relative fair values, If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is recognised on a straight line. (r) Investment property (IAS 40) Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production of goods and services or for administrative purposes. 27

28 Investment property is measured at cost less accumulated depreciation and impairment loss. Cost includes expenditure that is directly attributable to the acquisition of the investment property. Investment property held by the Group is depreciated over the estimated useful life of 50 years. Fair values are determined at the end of the reporting period and disclosed. (s) Earnings per share (IAS 33) The Group presents basic earnings per share ( EPS ) data for its ordinary share. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the company by the weighted average number of ordinary shares outstanding during the period. (t) Determination of fair values (IFRS 13) A number of the Company s accounting policies and disclosures require the determination of fair value, both for financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods Trade and other receivables The fair value of trade and other receivables is estimated as the present of the future cash flows, discounted at the market rates of interest at the reporting date. For trade and other receivables with a remaining life of less than one year, the notional amount is deemed to reflect the fair value. Other non-derivative financial liabilities Fair value is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rates of interest at the reporting date. For trade and other creditors with a remaining life of less than one year, the notional amount is deemed to reflect the fair value. Statement of significant accounting policies (pre-adoption of IFRS) The principal accounting policies adopted in the preparation of financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. (a) Basis of accounting The financial statements have been prepared under the historical cost convention. (b) Basis of consolidation The group financial statements represent the financial statements of Nigerian Aviation Handling Company Plc and its subsidiaries, NAHCo FTZ Limited and NAHCo Energy & Power Limited. The financial information in respect of the subsidiaries is consolidated from the date that effective control over the business operations of the companies was achieved. (c) Turnover Turnover represents the amounts invoiced to the customers less trade discounts but excluding value added tax and sale of fixed assets. 28

29 (d) Fixed assets Fixed assets are recorded at the cost incurred in both acquiring the asset and putting it into its condition prior to its use. Capital work-in-progress are stated at cost and transferred to relevant class of assets when put into use. (e) Depreciation of fixed assets Depreciation is calculated to write off the cost of fixed assets on a straight line basis over the expected useful lives of the assets concerned. The principal annual rates used for this purposes are: Class of assets % Building 5 Furniture, fittings and equipment 10 Computer equipment and software 20 Motor vehicles 25 Plant and machinery 10 Capital work in progress, representing assets in the course of construction, is not depreciated until the assets are brought into use. (f) Debtors These are stated after making specific provisions for debts considered doubtful of recovery. (g) Stock These are valued at lower of cost and net realizable value, after making adequate allowances for obsolete and slow moving items. (h) Foreign currencies Transactions denominated in foreign currencies are translated into Naira at the rates of exchange ruling at the date of transaction or the rates at which the transactions are contracted to be settled. At the balance sheet date, balances denominated in foreign currencies other than those subject to contracted rates of settlement, are translated into Naira at the rates ruling at that date. Exchange gains and losses arising from such translation are dealt with in the profit and loss account. (i) Taxation Provision for income tax is based on the profits of the company as adjusted for in accordance with the current tax legislation. Education tax is based on the provisions of the Education Tax Decree, Deferred taxation is accounted for using the liability method and calculated at the current tax rate on the differences between the net book value of the qualifying fixed assets and their corresponding tax written down value. (j) Retirement benefits 29

30 In line with the provisions of the Pension Reform Act 2004, the company operates a defined contribution pension scheme. Staff contributions to the pension scheme are funded through payroll deductions while the company s contribution is charged to the profit and loss account. 30

31 HISTORICAL PROFIT AND LOSS ACCOUNT Profit and loss account Notes IFRS IFRS SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 N 000 Turnover 1 7,396,094 7,141,628 7,141,628 6,345,539 6,066,549 4,430,035 Operating costs (4,362,424) (3,719,990) (3,831,767) (3,269,750) (2,920,046) (2,396,835) Gross profit 3,033,670 3,421,638 3,309,861 3,075,789 3,146,503 2,033,200 Administrative expenses (2,141,627) (2,070,404) (2,085,599) (1,527,976) (1,305,179) (1,100,003) Trading profit 892,043 1,351,234 1,224,262 1,547,813 1,841, ,197 Other operating income 2 111,158 (26,782) 169, , , ,116 Operating profit 1,003,201 1,324,452 1,394,038 1,713,058 1,974,968 1,119,313 Exceptional items ,251 Interest receivable and similar income 4 35,920 37,663 37,663 55, , ,951 Interest payable and similar charges 5 (186,275) (22,123) (144,977) (57,152) (223,360) (186,526) Profit before tax 6 852,846 1,339,992 1,286,724 1,711,157 1,897,560 1,216,989 Taxation 7 (143,166) (434,051) (421,051) (533,653) (650,226) (414,079) Profit after tax 709, , ,673 1,177,504 1,247, ,910 Dividend (interim) - (184,570) (184,570) (307,617) (246,094) - Profit for the year after taxation and dividend 709, , , ,887 1,001, ,910 Appropriated as follows: Dividend reserve - 307, , , , ,406 31

32 Retained profit for the year 709, , , , , ,504 Earnings per share (kobo) 709, , , ,887 1,001, ,910 Basic Adjusted

33 HISTORICAL BALANCE SHEET Historical balance sheet Notes IFRS IFRS SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 N 000 Non-current assets Tangible fixed assets 8 7,901,261 5,763,804 5,942,894 4,484,258 3,449,979 3,143,239 Intangible assets 9 114, , Investment property , , Investment in subsidiaries 10 35,500 35,500 35,500 Bond repayment fund , , , `- Current asset 8,815,809 6,192,442 6,085,894 4,484,258 3,449,979 3,143,239 Stocks 13 46,045 29,035 29,035 51,125 35,274 53,030 Debtors and prepayments 15 1,308,476 1,584,421 1,683,639 1,872,819 1,083,269 1,567,061 Intercompany receivables 190,279 1,689,268 1,655, Cash and bank balances , , , ,959 2,194,715 1,225,052 Current liabilities 2,346,710 3,786,295 3,851,698 2,803,903 3,313,258 2,845,143 Creditors and accruals 16 (2,135,976) (1,168,270) (1,168,270) (1,031,333) (925,405) (1,057,094) Taxation (342,172) (523,412) (510,412) (409,834) (460,014) (215,304) 33

34 Net current assets/(liabilities) (131,438) 2,094,613 2,173,061 1,362,736 1,927,839 1,572,745 Total assets less current liabilities 8,684,371 8,287,055 8,258,910 5,846,994 5,377,818 4,715,984 Non-current liabilities Long term loan 18 (2,131,211) (2,110,958) (2,150,000) Deferred tax 19 (902,000) (927,000) (927,000) (854,000) (701,000) (499,000) Net assets 5,651,160 5,249,097 5,181,910 4,992,994 4,676,818 4,216,984 Capital And Reserves Share capital , , , , , ,187 Share premium 21 1,914,758 1,914,758 1,914,758 1,914,758 1,914,758 1,914,758 Dividend reserves , , , , ,406 Revenue reserves 23 2,998,121 2,411,488 2,344,301 1,970,815 1,593,115 1,268,633 Shareholders' funds 5,651,160 5,249,097 5,181,910 4,992,994 4,676,818 4,216,984 34

35 HISTORICAL CASH FLOW STATEMENT Historical cash flow statements Operating activities Notes IFRS IFRS SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 N 000 Operating profit 1,003,201 1,324,452 1,394,038 1,713,058 1,974,968 1,119,313 Adjustment for items not involving movement of cash: Depreciation 673, , , , , ,401 (Gain)/loss on disposal of fixed assets 13,259 23,972 23,972 (303) 1,008 (623) Library stock written off 3,525 2, Impairment of intangible assets - 69, Loans and borrowings restated at amortised costs 20,253 (39,042) Provision for doubtful debt - - (52,404) (35,373) (207,985) (176,208) Other adjustments: 1,714,230 1,958,333 2,085,280 2,239,500 2,281,751 1,403,883 Rebate on concession charges ,741 Payment of gratuities (275,490) Decrease/(Increase) in stock (17,010) 22,090 22,090 (15,851) 17,756 7,880 Increase in debtors, other receivables and prepayments 275, ,812 (1,426,788) (743,512) 522,290 (343,407) Increase/(Decrease) in creditors 940, , , ,928 (131,689) (1,320,629) Increase/(Decrease) in deferred revenue 27,531 (3,279) Taxation paid (349,406) (247,473) (286,958) (476,871) (242,014) (240,167) 35

36 Cash flow from operating activities 2,591,465 2,179, ,561 1,109,194 2,448,094 (407,189) Investing activities Purchase of fixed asset (2,821,963) (2,209,116) (2,223,884) (1,627,154) (827,317) (523,598) Proceed from sale of fixed asset 33,599 21,602 21,602 31,060 5,809 1,163 Bond repayment fund 12 (517,827) (107,500) (107,500) Investment purchased 10 - (35,500) (35,500) Acquisition of intangible assets 9 (1,819) (44,637) Acquisition of investment property (6,133) Interest received 4 35,920 37,663 37,663 55, ,952 `198,951 Cash outflow from investing activities (3,278,223) (2,337,488) (2,307,619) (1,540,843) (675,556) (323,484) Financing activities Increase in bank overdraft (391,894) Interest payable and similar charges 5 (186,275) (22,123) (92,573) (21,779) (15,375) (10,318) Loans and borrowings 18-2,150,000 2,150, Net Proceeds from share issue ,976,938 Intercompany loans 1,498,989 (1,689,268) Dividend paid (307,617) (676,757) (676,757) (861,328) (787,500) (262,500) Cash flow from financing activities (1,005,097) (238,148) 1,380,670 (883,107) (802,875) 1,312,226 Increase/(Decrease) in cash 318,339 (396,388) (396,388) (1,314,756) 969, ,553 Cash & cash equivalent at the beginning of the year 483, , ,959 2,194,715 1,225, ,499 Cash and cash equivalent at the end of the year 801, , , ,959 2,194,715 1,225,052 36

37 NOTES TO THE FINANCIAL STATEMENTS Please find the accompanying Notes to these financial statements. The Notes form a part of the Financial Statements and should be read in conjunction with the Financial Statements. Notes to the historical financial statements 1. Turnover December December December December December December IFRS IFRS SAS SAS SAS SAS Turnover (Analysis by category) N 000 N 000 N 000 N 000 N 000 N 000 Passenger handling 3,368,603 3,657,197 2,972,592 2,792,592 2,434,672 2,123,116 Cargo handling 3,757,181 3,223,728 3,908,333 3,236,480 3,370,859 2,095,982 Equipment rental and maintenance 270, , , , , ,937 7,396,094 7,141,628 7,141,628 6,345,539 6,066,549 4,430, Other operating income December December December December December December IFRS IFRS SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 N 000 Office rental 111,212 92,667 92,667 74,676 60,139 78,846 Rental from trans-shipment warehouse 54,373 52,323 52,323 62,044 38,302 57,634 Insurance claim - 4,040 4,040 16,111 1,463 2,506 Profit/(loss) on disposal of fixed assets (13,259) (23,972) Bad debt (18,116)

38 Income from advertisements - 1,170 1,170 1,275 20,250 26,375 Sundry income 57,479 19,575 19,576 10,836 13,490 20,132 Impairment loss on bond reserve (80,531) (172,585) ,158 (26,782) 169, , , , Exceptional item December December December December December December IFRS IFRS SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 N 000 Rebate on concession charges ,741 Payment of gratuity relating to change in accounting estimates (275,490) , Interest receivable and similar income December December December December December IFRS IFRS/SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 Interest income 40,721 36s,955 55, , ,299 Exchange gain (4,801) ,180 13,652 35,920 37,663 55, , ,951 38

39 5. Interest payable and similar charges December December December December December December IFRS IFRS SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 N 000 Bank charges and interests 23,233 22,123 22,124 18,401 14,367 10,318 Interest on bond 163,042-70, Loss on disposal of fixed assets ,008 - Exchange difference , ,275 22, ,977 57, , , Profit before taxation This is arrived at after charging: December December December December December December IFRS IFRS SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 N 000 Depreciation 673, , , , , ,401 Directors emoluments , , ,750 54,247 Board expenses 194, , , , ,733 60,837 General meeting expenses 59,288 97,560 97,560 40,072 86,523 28,675 Auditor's remuneration 9,000 7,000 7,000 7,000 7,000 6,000 Staff participation scheme , , ,778 59,012 39

40 Rebate on concession charges (360,741) Gratuity payment ,490 Transformation expenses , Management services fees 272,090 86,410 86, Bond issue expenses , Concession fees 375, , , Training expenses 185, , , Provision for doubtful debts ,404 35, , ,208 New business cost 67,138 14, Loss/(Profit) on disposal of fixed assets 13,259 23,972 23,972 (303) 1,008 (623) 7. Taxation Taxation balance is analysed as follows: Profit and loss account (I)Tax on ordinary items: December December December December December December IFRS IFRS SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 N 000 Income tax charge based on the total profit for the year 142, , , , , ,000 Education tax at 2% of assessable profit 29,000 42,000 42,000 46,000 48,000 32,000 (Over)/Under provision in prior years (2,834) 3,051 3,051 (1,347) 7,226 50,079 Deferred taxation (25,000) 73,000 73, , , ,000 Total tax charge for the year 143, , , , , ,079 40

41 Balance sheet Prior year unpaid tax 523, , , , , ,000 Income tax for the year 139, , , , , ,000 Education tax 29,000 42,000 42,000 46,000 48,000 32,000 Tax paid for the year (349,406) (247,473) - (432,180) (196,290) (109,696) Balance as at end of year 342, , , , , , Fixed assets December December December December December December IFRS IFRS SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 N 000 Cost 2,916 2, Land 3,403,994 1,329,950 1,64 3,691 1,600,581 1,561,200 1,367,085 Land and Building 6,605,979 4,501,237 4,502,212 4,147,484 3,266,038 2,786,394 Plant and Machinery 393, , , , , ,893 Motor Vehicle 726, ,591 1,007, , , ,753 Computer Equipment 283, , , , , ,755 Furniture Fittings and Equipment 77,367 1,656,521 1,656, ,512 14, ,240 Capital WIP 11,493,708 8,773,990 7,822,983 7,606,629 6,032,075 5,239,120 Accumulated Depreciation Land 2,276 2, Land and Building 427, , , , , ,627 Plant and Machinery 2,106,650 1,672,826 1,776,841 1,642,373 1,329,438 1,040,365 41

42 Motor Vehicle 287, , , , ,170 88,331 Computer Equipment 583, , , , , ,499 Furniture Fittings and Equipment 184, , , , ,288 85,059 Capital WIP Net Book Value 3,592,447 3,010,186 3,523,780 3,122,371 2,582,096 2,095,881 Land Land and Building 2,976, , ,106 1,007,218 1,047, ,458 Plant and Machinery 4,499,329 2,828,411 2,725,371 2,505,111 1,936,600 1,746,029 Motor Vehicle 105, , , ,100 96,065 88,562 Computer Equipment 142,458 66, , , , ,254 Furniture Fittings and Equipment 99,268 80,822 95,776 79,856 84,229 77,696 Capital WIP 77,367 1,656,521 1,656, ,512 14, ,240 7,901,261 5,763,804 5,942,894 4,484,258 3,449,979 3,143, Intangible assets December December December December December December IFRS IFRS SAS SAS SAS SAS Cost N 000 N 000 N 000 N 000 N 000 N 000 Balance at 1st January 275, ,154 Additions 1,819 44,637 Impairment - (101,665)

43 Balance at 31st December 276, , Amortisation Balance at 1st January Amortisation for the year Amortised balance on impaired asset - Balance at 31st December Carrying amount at 31st December 129, ,986 32,902 31,570 (32,436) 162, , , , Investment December December December December December December IFRS IFRS SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 N 000 Shares in subsidiaries: NAHCo FTZ Limited 10,000 10,000 10, NAHCo Energy and Power Limited 25,500 25,500 25, ,500 35,500 35, Investment property December December December December December December IFRS IFRS SAS SAS SAS SAS Cost N 000 N 000 N 000 N 000 N 000 N 000 Balance at 1st January 340, , Additions 6, Disposals

44 Balance at 31st December Depreciation 346, , Balance at 1st January Charge for the year IFRS adjustments in respect of depreciation - Balance at 31st December Carrying amount at 31st December 201, ,256 6,967 17,035 (14,227) 208, , , , Bond repayment fund December December December December December IFRS IFRS/SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 Payment made to Trustees at year end 510, , Amount due not yet paid at year end 114, , , Stocks December December December December December IFRS IFRS/SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 Spare parts 40,985 13,939 39,157 25,892 41,895 Stationery 3,414 8,833 8,901 6,783 7,367 Medical 1, Diesel - 5,473 2,486 1,768 2,777 44

45 46,045 29,035 51,125 35,274 53, Cash and bank balances December December December December December IFRS IFRS/SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 Cash balances Bank balance: Current account Fixed deposit accounts Investment in treasury bills Domiciliary accounts 578 3,616 1, , , , , , , , ,324 29,423 24, , , ,959 2,194,715 1,225, Debtors and prepayments Trade debtors Prepayments and accrued income 115, ,950 December December December December December December IFRS IFRS SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 N , ,282 1,083, , , ,975 75,722 49,214 58,836 46,464 Staff and other debtors Deposit for fixed assets Withholding tax recoverable 3,510 28,692 62, , , , , , , ,908 17, , , , , , , ,382 1,308,476 1,584,421 1,683,639 1,872,819 1,083,269 1,567,061 45

46 16. Creditors and accruals Creditors and accruals comprise the following: December December December December December December IFRS IFRS SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 N 000 Bank Overdraft Trade creditors 21,932 27,452 27,452 15,157 40,910 67,826 Other creditors (including PAYE and social security (note 15a)) 1,990,609 1,044, , , , ,735 Accruals and deferred income 123,435 95, , , , ,533 2,135,976 1,168,270 1,168,270 1,031, ,405 1,057, Other creditors December December December December December December IFRS IFRS SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 N 000 Pension contributions ,488 45,505 45,349 66,625 VAT ,111 23,332 66, ,612 Bond repayment 189, , Management support agreement fee 76,873 86, Amount due to government agencies 425, , Concession fee, FAAN rental and service charge 844, , Other accruals 234, , Industrial Fund Training 31,206 25, Performance bonus 118,

47 Withholding taxes ,254 69,156 45,971 28,287 PAYE - - 1,619-2,886 14,795 Staff participation scheme 70, , , , ,784 71,661 Others - - 5,474 1,785 7,386 6,755 1,990,969 1,044, , , , , Long term loan December December December December December December IFRS IFRS SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 N 000 Balance at the beginning of the year 2,110,958 2,150,000 2,150, Amortisation 20,253 (39,042) ,131,211 2,110,958 2,150, Deferred taxation December December December December December IFRS IFRS/SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 Balance at beginning of year 927, , , , ,000 Charge for the year (25,000) 73, , , , , , , , ,000 47

48 20. Share capital December December December December December IFRS IFRS/SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 Issued and fully paid: Balance brought forward 615, , , , ,000 Rights issue ,500 Public offer ,000 Bonus issue 123, ,047 54, , , , , , Share premium December December December December December IFRS IFRS/SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 Balance brought forward 1,914,758 1,914,758 1,914,758 1,914, Premium from rights issue of 35 million shares ,000 Premium from public offer of 90 million shares ,530,000 1,914,758 1,914,758 1,914,758 1,914,758 2,090,320 Less: Share issue expenses for rights and public offers (175,562) 1,914,758 1,914,758 1,914,758 1,914,758 1,914,758 48

49 22. Dividend reserves December December December December December IFRS IFRS/SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 Balance at beginning of year 307, , , , ,500 Dividend proposed* - 307, , , ,406 Dividend paid during the year (307,617) (492,187) (553,711) (541,406) (262,500) Balance as at end of year - 307, , , ,406 * Dividend totalling N369.1 million was approved by the shareholders at the Company s 32nd Annual General Meeting (AGM) which was held in July Revenue reserves December December December December December December IFRS IFRS SAS SAS SAS SAS N 000 N 000 N 000 N 000 N 000 N 000 Balance brought forward 2,411,488 1,997,734 1,970,815 1,593,115 1,268,633 1,061,816 Retained profit for the year 709, , , , , ,504 IFRS adjustment - 40, Bonus issue (123,047) (123,047) (54,687) Balance carried forward 2,998,121 2,411,488 2,344,301 1,970,815 1,593,115 1,268,633 49

50 CLAIMS AND LITIGATION EXTRACT FROM DAVID MANDO S LITIGATION OPINION ON NAHCO AVIANCE CLAIMS AND LITIGATION As at 1 st July, 2013, the Company was involved in fourteen (14) litigation cases pending in various courts, with total value of claims put at N952,662,984 plus $29,754, with the Company claiming N499,000, (Four Hundred and Ninety Nine Million Naira) only from three cases against its defaulting customers. While there are eleven (11) cases instituted by the customers and a former staff of the Company for wrongful dismissal, bringing the claim against the Company to be N453,662, (Four Hundred and Fifty Three Million, Six Hundred and Sixty Two Thousand, Nine Hundred and Eighty Four Naira, Seventy Seven Kobo) only plus $29, It is the humble opinion of the Solicitors that there is no material litigation against the Company, apart from the usual debt recovery cases instituted by Company against its defaulting customers, which cases cannot affect the proposed Bond Issuance, It is our opinion also that there is no threatened action, material to the proposed Bond Issuance. The Solicitors are therefore of the opinion that none of the aforementioned cases is likely to have any material effect on the Company or the Bond issuance, and are not aware of any other pending of threatened claims or litigation which may be material to the Bond Issuance. MATERIAL CONTRACTS As at present, the following contract has been entered into by the Company or intended to be entered into by the Company, which in our opinion may be considered material, other than contracts entered into in the ordinary course of business, An intended Vending Agreement between the Company and Chapel Hill Advisory Partners Limited, Stanbic IBTC Capital Limited, FCMB Capital Markets Limited, Skye Financial Services Limited, UBA Capital Plc and PanAfrican Capital Plc, and a Trust Deed, which they have agreed to issue on behalf of the Company to the general public for the N1.75 Billion Bond. 50

51 DOCUMENTS AVAILABLE FOR INSPECTION The following documents will be available for inspection throughout the life of the Bond at the principal offices of the Lead and Joint Issuing Houses/Book Runners and Nigerian Aviation Handling Company Plc: The Shelf Prospectus dated 29, September, 2011 in respect of the N5,000,000,000 Nigerian Aviation Handling Company Plc Debt Issuance Programme; The Pricing Supplement/Supplementary Shelf Prospectus dated November 14, 2013 issued in respect of the Nigerian Aviation Handling Company Plc N2,050,000,000 Fixed Bond [Series 2] 2013/2020; Nigerian Aviation Handling Company Plc s audited accounts for the 5 years ended December 31, 2012, December 31, 2011, December 31, 2010, December 31, 2009 and December 31, 2008 Nigerian Aviation Handling Company Plc s profit forecast for the 5 years from December 31, 2013 to December 31, 2017 Nigerian Aviation Handling Company Plc s Board Resolution dated May 24, 2013, authorizing the series II issuance Letter from the Solicitors to the Offer on the outstanding claims and litigations involving the Company; The Vending Agreement; The Trust Deed SEC letter of No Objection NSE Certificate of Exemption LISTING This Pricing Supplement comprises the final terms of the listing of the Bonds described herein pursuant to the N5,000,000,000 Debt Issuance Programme being pursued by Nahcoaviance RESPONSIBILITY Nahcoaviance accepts responsibility for the information contained in this Pricing Supplement. Signed for and on Behalf of the Nigerian Aviation Handling Company Plc By:.... Mr. Kayode T. Oluwasegun- Ojo Mrs. Folashade Ode Managing Director Company Secretary 51

52 PROCEDURE FOR APPLICATION AND ALLOCATION/ALLOTMENT 1.) APPLICATION 1.1 Qualified Investors are hereby invited to apply for Units of the Bond through the Book Runners. Lead Book Runner: Chapel Hill Advisory Partners Limited FCMB Capital Markets Limited, Skye Financial Services Limited, Co-Book Runners: Stanbic IBTC Capital Limited, PanAfrican Capital Plc UBA Capital Plc 1.2 Applications/Bids for the Bonds being offered must be made in accordance with the instructions set out in the Commitment Form. Care must be taken to follow these instructions, as applications that do not comply will be rejected. 1.3 The Book Build period for the Bonds now being offered will be open on September 26, 2013 and close on October 10, Applications/Orders must be for a minimum of 10,000 Units and in multiples of 5,000 thereafter. The Participation Amount(s) and the Bid Coupon Rate must be entered on the Commitment Form. 1.4 The completion of a Commitment Form is a confirmation that each Participant is in agreement that the Order is irrevocable and creates a binding obligation on the Participant which, to the fullest extent of the law, shall not be capable of recession or termination by any Participant. Applicant should make only one application, whether in his name or in the name of a nominee. Multiple or suspected multiple applications will be rejected. 1.5 Participants may order Bonds at any coupon rate within the Coupon Band subject to the Minimum Participation Amount and the terms and conditions stated on the Commitment Form. 1.6 A single applicant should sign the declaration and write his/her full name, address, daytime telephone number and occupation on the Commitment form. Joint applicants must all sign the Commitment form. A corporate applicant should affix its seal in the box and state its Incorporation (RC) Number or in the case of a corporate foreign subscriber its appropriate identification number in the jurisdiction in which it was constituted. 1.7 Upon the completion and submission of the Bid/Commitment Form, the Bidder/Participant is deemed to have authorized the Issuer and the Issuing Houses/Book Runners to effect the necessary changes in the Red Herring Prospectus as would be required for the purposes of filing the Final Prospectus with the SEC, without prior or subsequent notice of such changes to the Bidder. The Bid/Commitment Form shall be considered as the Application Form for the purposes of registration of the Final Prospectus with the SEC. 1.8 Bidders/Participants Applicants shall not be entitled to withdraw/modify Bids after the Bid/Issue Closing Date. 1.9 Bidders/Participants have the option to make a maximum of 3 (three) Orders on a Commitment Form. Such options shall not be considered multiple applications The Commitment Form presents the Bidder/Participant with the opportunity of indicating 3 (three) Bid Coupon Rates within the Coupon Band and Participation Amounts for each option. The Bid Coupon Rates and the Participation Amounts submitted by the Bidder/Participant in the Commitment Form will be regarded and treated as optional demands from the Bidder/Participant and will not be culminated Bidders/Participants must not submit another Commitment Form after the submission of a Commitment Form to a Book Runner or Stockbroker. The submission of a second or other Commitment Form(s) to either 52

53 the same Book Runner/Stockbroker will be treated as multiple Bids/Orders. Multiple or suspected multiple Bids/Applications will be rejected. 1.12Following the determination of the Coupon Rate, the maximum Participation Amount specified by a Participant at or below the Clearing Price will be considered for allocations of Bonds and all other order(s), irrespective of the corresponding Bid Coupon Rate(s), will automatically become invalid The Issuer in consultation with the Book Runners reserves the right not to proceed with the Issue at anytime including after the Bid/Issue Opening Date but before the Allotment Date without assigning any reason thereof Successful Participants must ensure that payment of the Participation Amount is received by November 14, 2013 (Pricing Date+1) via electronic funds transfers, either through CBN Inter-Bank Funds Transfer System ( CIBFTS), National Electronic Funds Transfer ( NEFT ) or Real Time Gross Settlement ( RTGS ) in the designated Issue Proceeds Account domiciled with the receiving banks 2. ALLOCATION/ALLOTMENT 2.1 On the Pricing Date, the Issuing Houses/Book Runners will analyze the demand of submitted bids and in consultation with nahco aviance the Coupon Rate will be determined and an allocation of Bonds made to each applicant whose bid is accepted. Allocation Confirmation Notices will be sent to successful participants. 2.2 The Joint Financial Advisers/Issuing Houses and nahco aviance reserve the right to accept or reject any application in whole or in part for having not complied with the terms and conditions of the Issue. 2.3 Allotment of the Bonds will be effected only upon clearance of the Final Prospectus by the Securities & Exchange Commission. Allotment will be effected in the following manner - (a) Allotment of Bonds Electronically (E-Allotment) Bidders/Applicants will be required to provide details of their CSCS account(s) in order to receive the Bonds electronically. The information must specify the Bidder/Applicant s CSCS Account Number, the Primary Dealer or Stockbroking Firm and the CHN in the spaces provided on the Bid/Application Form. Please note that Bidders/Applicants must ensure that the name specified in the Bid/Application Form is exactly the same as the name in which the CSCS Account is held where the Bid/Application Form is submitted in joint names, it should be ensured that the Beneficiary CSCS Account is also held in the same joint names and are in the same sequence in which they appear in the Bid/Application Form. 3. APPLICATION MONIES 3.1 All application monies will be retained in a separate bank account by the Book Runner upon remittance by successful bidders, pending allotment. INSTRUCTIONS FOR COMPLETING THE APPLICATION FORM 1. All applications must be made on the Commitment Form or photocopy, downloaded or scanned copy of same. 2. Applications must not be for less than the minimum number of Units and in the quantity stated on the Commitment Form. Applications for more than the minimum number of Units must be in the multiples stated on the Commitment Form. The number of Units for which an application is made and the applicable coupon should be entered in the boxes provided. 3. The Commitment Form when completed should be lodged with any of the Book Runners listed on page 4. Upon the closing of the Order Book, a confirmation letter would be issued to all successful applicants and this 53

54 will include the account details of the Offer Proceeds Account. All bank commissions and transfer charges must be pre-paid by the applicant. 4. The Applicant should make only one order, whether in his own name or in the name of a nominee. Multiple or suspected multiple orders will be rejected. 5. Joint Applicants must all sign the Commitment Form. 6. An order from a group of individuals should be made in the names of those individuals with no mention of the name of the group. An order by a firm that is not registered in compliance with the Companies and Allied Matters Act, Cap C20 LFN 2004 should be made either in the name of the proprietor or in the names of the individual partners. In neither case should the name of the firm be mentioned. 7. The Commitment Forms from all corporate entities must bear the seal and be completed under the hands of a duly authorized official. 54

55 APPENDIX I USE OF PROCEEDS (EQUIPMENTS) UTILISATION OF BOND PROCEEDS - ASSETS PORTION OF N300M S/N DESCRIPTION MODEL QUANTITY ESTIMATED PRICE (N) 1 TUG TRACTORS MA ,500, CONVEYOR BELTS ,000, TOWABLE PAX STEPS 4 22,000, TOWABLE TOILET BOWSERS 6 19,500, MOTORIZED PAX STEPS 2 120,000, GPU 180KVA 2 24,000, ASU 270PPM 1 27,500, BAGGAGE CARTS 16 10,800, ,300, APPENDIX II USE OF PROCEEDS (EXPANSION) nahco aviance is proposing to expand operations both locally and internationally, as well as diversify into new businesses. Locally, in order to align with the Nigerian government's enhancement/expansion of operations in international and local airports, nahco aviance will provide services in more locations nationwide; for example, a new operation will commence shortly at the Enugu airport. The company's services will also be provided at the planned local cargo airports. Internationally, nahco aviance will primary focus on the African market - firstly West Africa and then Central Africa. The intended business combination would depend on the operating environment and applicable local laws and will entail either a partnering with existing businesses or the establishment of a new business where the local laws permit. The Company is also creating a cargo hub through subsidiary Nahco FTZ Limited. 55

56 APPENDIX III REPAYMENT SCHEDULE Month Coupon Payment (N) Principal Payment (N) Total Payment (N) 6th Month 156, ,312,500 12th Month 156, ,312,500 18th Month 156, ,312,500 24th Month 156, ,312,500 30th Month 156, ,312,500 36th Month 156, ,312,500 42nd Month 156, ,312,500 48th Month 156, ,312,500 54th Month 156, ,312,500 60th Month 156, ,312,500 66th Month 156, ,312,500 72nd Month 156, ,312,500 78th Month 156, ,312,500 84th Month 156, ,050,000 2,206,

57 57

58 58