DANGOTE FLOUR MILLS PLC

Transcription

1 DANGOTE FLOUR MILLS PLC UNAUDITED CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

2 CONTENTS page Corporate Information 3 Statement of managements responsibility 4 Consolidated and separate statement of profit or loss and other comprehensive income 5-6 Consolidated and separate statement of financial position 7 Consolidated and separate statement of changes in equity 8 Consolidated and separate statement of cash flows 9 Notes to the consolidated and separate statement of cash flows 10 Notes to the consolidated and separate financial statements Consolidated and separate statement of value added 46 Five year review summary (Group) 47 Five year review summary (Company) 48

3 CORPORATE INFORMATION LEGAL FORM Dangote Flour Mills Plc was incorporated in Nigeria on 1 January The company is listed on the Lagos Floor of the Nigerian Stock Exchange (NSE) with the symbol "DANGFLOUR". The Group's parent company is Tiger Brands Limited, which is listed on the Johannesburg Stock Exchange. REGISTERED OFFICES Terminal E Greenview Development Building Apapa Wharf, Lagos. TRANSFER OFFICE EDC Registrars Limited 154, Ikorodu Road, Onipanu, Shomolu, Lagos. COMPANY SECRETARY AISHA LADI ISA (Mrs) AUDITORS Akintola Williams Deloitte (Chartered Accountants) 235, Ikorodu Road, Illupeju, Lagos. BANKERS Zenith Bank Plc Mainstreet Bank Ltd Sterling Bank Plc First Bank of Nigeria Plc GTBank Plc Stanbic IBTC Bank Plc Diamond Bank Plc Access Bank Plc First City Monument Bank Plc United Bank for Africa Plc Ecobank Nigeria Plc BOARD OF DIRECTORS The names of Directors who were in office during the period under review are as follows: Executive directors: Mr. Thabo Mabe Mr. Sudarshan Kasturi Non-executive directors: Alh. Aliko Dangote (GCON) Mr. Peter Matlare Mr. Olakunle Alake Mr. Asue Ighodalo Mrs. Olufunke Ighodaro Mr. Ian Isdale Mr. Arnold Ekpe Mr. Noel Doyle 3

4 STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2015 Management of Dangote Flour Mills Plc are responsible for the preparation of the consolidated interim financial statements that present fairly the financial position of the Group as at 31 March 2015, and the results of its operations, cash flows and changes in equity for the period then ended, in compliance with International Financial Reporting Standards ("IFRS"). In preparing the financial statements, management are responsible for: - Properly selecting and applying accounting policies; - Presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; - Providing additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the company's financial position and financial performance; - Making an assessment of the group's ability to continue as a going concern; - Maintaining adequate accounting records that are sufficient to disclose and explain the financial position of the group and its transactions and results accurately in accordance with IFRS; - Designing, implementing and maintaining an effective and sound system of internal controls throughout the group; - Maintaining statutory accounting records in compliance with legislation in force in Nigeria and in accordance with IFRS; - Taking such steps as are reasonably available to them to safeguard the assets of the Group; and - Preventing and detecting fraud and other irregularities by implementing a sound system of internal controls. The financial statements of the Group for the period ended 31 March 2015, were approved by management on 29th April 2015 Signed on behalf of management of the Group Group Chief Executive Officer FRC/2013/IODN/ Mr. Thabo Mabe Group Chief Finance Officer FRC/2013/IODN/ Mr. Sudarshan Kasturi 4

5 CONSOLIDATED AND SEPARATE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME COMPANY GROUP Period Period Year Period Period Year Mar 2015 Mar 2014 Sept 2014 (N '000) Notes Mar 2015 Mar 2014 Sept ,225,408 14,485,979 31,704,340 Revenue 4 21,971,387 18,583,698 41,268,771 (15,588,658) (14,017,918) (29,321,039) Cost of sales (19,577,701) (17,828,851) (38,872,328) 1,636, ,061 2,383,301 Gross profit 2,393, ,847 2,396,443 (2,272,928) (1,730,341) (4,256,586) Distribution and administrative expenses (4,142,591) (3,326,329) (7,539,291) 12,775 32, ,208 Other income 5 25,311 38, ,997 (623,403) (1,230,254) (1,749,077) Operating loss from continuing operations before abnormal items (1,723,595) (2,532,722) (4,839,851) (3,523,121) - - Currency devaluation (3,523,121) ,597,750 (1,469,479) Impairment of plant and equipment & investment, profit on sale of subsidiary and other non recurring items 6 - (777,000) (1,592,372) (4,146,524) 1,367,496 (3,218,556) Operating (loss)/ profit after abnormal items 5 (5,246,716) (3,309,722) (6,432,223) (1,790,512) (1,425,004) (2,843,397) Finance costs 7 (1,802,539) (1,441,056) (2,863,188) 3,132 8,392 6,841 Interest received 7 3,948 8,392 10,398 (5,933,904) (49,116) (6,055,112) Loss before taxation from continuing operations (7,045,307) (4,742,386) (9,285,013) 74,766 (99,163) 1,895,810 Taxation 8 264, ,205 3,006,708 (5,859,138) (148,279) (4,159,302) Loss after taxation from continuing operations (6,781,147) (4,308,181) (6,278,305) Discontinued operation Profit after tax for the period from discontinued operation , ,797 (5,859,138) (148,279) (4,159,302) Loss for the period (6,781,147) (4,139,400) (6,109,508) Attributable to: (5,859,138) (148,279) (4,159,302) Owners of the parent (6,755,276) (4,269,004) (6,219,905) (5,859,138) (148,279) (4,159,302) Continuing operations (6,755,276) (4,261,946) (6,212,863) Discontinued operation - (7,058) (7,042) Non-controlling interests (25,871) 129, ,397 Continuing operations (25,871) (46,235) (65,442) Discontinued operation - 175, ,839 (5,859,138) (148,279) (4,159,302) (6,781,147) (4,139,400) (6,109,508) (117.18) (2.97) (83.19) Basic and diluted loss per share (kobo per share) 9 (135.11) (85.38) (124.40) (117.18) (2.97) (83.19) Continuing operations (135.11) (85.24) (124.26) Discontinued operation - (0.14) (0.14) 5

6 CONSOLIDATED AND SEPARATE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME COMPANY GROUP Period Period Year Period Period Year Mar 2015 Mar 2014 Sept 2014 (N '000) Notes Mar 2015 Mar 2014 Sept 2014 (5,859,138) (148,279) (4,159,302) Loss for the period (6,781,147) (4,139,400) (6,109,508) Other comprehensive income: (5,859,138) (148,279) (4,159,302) Total comprehensive loss for the period (6,781,147) (4,139,400) (6,109,508) Attributable to: (5,859,138) (148,279) (4,159,302) Owners of the parent (6,755,276) (4,269,004) (6,219,905) Non-controlling interests (25,871) 129, ,397 (5,859,138) (148,279) (4,159,302) (6,781,147) (4,139,400) (6,109,508) 6

7 CONSOLIDATED AND SEPARATE STATEMENT OF FINANCIAL POSITION at 31 March 2015 COMPANY GROUP Mar 2015 Mar 2014 Sept 2014 (N '000) Notes Mar 2015 Mar 2014 Sept 2014 Assets 20,235,154 20,802,325 20,753,568 Non-current assets 30,715,494 31,956,944 31,270,965 14,824,842 16,642,518 15,353,413 Property, plant and equipment 10 25,574,756 28,785,365 26,342,645 2,597,637 2,597,637 2,597,637 Investment in subsidiary companies 11 2,812,675 1,562,170 2,802,518 Deferred taxation asset 12 5,140,739 3,171,579 4,928,320 34,055,823 32,415,787 32,810,175 Current assets 25,117,313 20,923,122 23,530,523 5,826,491 4,202,860 4,052,548 Inventories 13 7,501,275 5,843,573 5,429,059 5,671,807 5,977,882 5,267,827 Trade and other receivables 14 7,994,029 7,482,752 6,933,989 16,911,060 18,027,196 15,829,139 Amounts owed by subsidiaries 11 3,635,323 3,049,483 3,541,950 Short-term loans receivable 15 6,768,444 5,886,952 6,619,923 2,011,142 1,158,366 4,118,711 Cash and bank balances 16 2,853,565 1,709,845 4,547,552 54,290,977 53,218,112 53,563,743 Total assets 55,832,807 52,880,066 54,801,489 Equity and liabilities 8,215,385 18,085,546 14,074,523 Issued capital and reserves 3,336,001 12,042,178 10,091,277 2,500,000 2,500,000 2,500,000 Ordinary share capital 17 2,500,000 2,500,000 2,500,000 18,116,249 18,116,249 18,116,249 Share premium 17 18,116,249 18,116,249 18,116,249 (12,400,864) (2,530,703) (6,541,726) Accumulated losses (17,280,248) (8,574,071) (10,524,972) Non-controlling interests (509,016) (463,938) (483,145) 8,215,385 18,085,546 14,074,523 Total equity 2,826,985 11,578,240 9,608,132 4,355,542 9,214,045 6,515,384 Non-current liabilities 4,355,542 9,274,052 6,515,384 1,342,372 2,111,685 1,470,936 Deferred taxation liability 12 1,342,372 2,171,692 1,470,936 3,013,169 7,102,360-5,044,448 - Long-term borrowings 18 3,013,169 7,102,360-5,044,448-41,720,050 25,918,521 32,973,836 Current liabilities 48,650,279 32,027,774 38,677,973 6,590,074 6,792,590 6,198,025 Trade and other payables 19 11,433,606 10,608,222 9,841, , , ,204 Taxation , , ,276 33,218,560 16,566,908 25,243,989 Short-term borrowings 20 35,271,601 18,766,732 27,282,725 1,706,369 2,295,943 1,382,618 Bank overdrafts 16 1,706,369 2,295,943 1,382,617 54,290,977 53,218,112 53,563,743 Total equity and liabilities 55,832,807 52,880,066 54,801,489 The consolidated and separate financial statements with accompanying notes on pages 5 to 48 were approved by the Board of Directors on its behalf by: Alhaji Aliko Dangote, GCON Mr. Thabo Mabe Mr. Sudarshan Kasturi Chairman Group Chief Executive Officer Group Chief Finance Officer FRC/2013/IODN/ FRC/2013/IODN/ FRC/2013/IODN/

8 CONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITY Share Total capital attributable Nonand Accumulated to owners controlling Total (N '000) premium loss of the parent interests equity Group Balance at 30 September ,616,249 (4,305,067) 16,311,182 1,795,343 18,106,525 (Loss)/ profit for the period - (4,269,004) (4,269,004) 129,604 (4,139,400) Settlement of non-controlling interest of discontinued operations (2,388,885) (2,388,885) Balance at 31 March ,616,249 (8,574,071) 12,042,178 (463,938) 11,578,240 (Loss)/ profit for the period - (1,950,901) (1,950,901) (19,207) (1,970,108) Settlement of non-controlling interest of discontinued operations - - Balance at 30 September ,616,249 (10,524,972) 10,091,277 (483,145) 9,608,132 (Loss)/ profit for the period - (6,755,276) (6,755,276) (25,871) (6,781,147) - Balance at 31 March ,616,249 (17,280,248) 3,336,001 (509,016) 2,826,985 Company Balance at 30 September ,616,249 (2,382,424) 18,233,825-18,233,825 Loss for the period - (148,279) (148,279) - (148,279) Balance at 31 March ,616,249 (2,530,703) 18,085,546-18,085,546 Loss for the period - (4,011,023) (4,011,023) - (4,011,023) Balance at 30 September ,616,249 (6,541,726) 14,074,523-14,074,523 Loss for the period - (5,859,138) (5,859,138) - (5,859,138) Balance at 31 March ,616,249 (12,400,864) 8,215,385-8,215,385 8

9 CONSOLIDATED AND SEPARATE STATEMENTS OF CASH FLOWS COMPANY GROUP Period Period Year Period Period Year Mar 2015 Mar 2014 Sept 2014 (N '000) Notes Mar 2015 Mar 2014 Sept 2014 Cash flows from operating activities (3,303,054) (211,999) 407,155 Cash operating (loss)/ profit A (3,829,545) (397,519) (964,459) (2,703,660) (1,533,611) (2,967,355) Working capital changes B (1,541,420) 1,975,279 (71,960) (6,006,715) (1,745,610) (2,560,200) Cash (utilised)/ generated from operations (5,370,965) 1,577,760 (1,036,419) 3,132 8,392 6,841 Interest received 3,948 8,392 10,398 (1,790,512) (1,425,004) (2,843,397) Finance costs (1,802,539) (1,441,056) (2,863,188) (8,112) - - Taxation paid C (9,394) (3,977) (74,572) (7,802,206) (3,162,222) (5,396,756) Net cash (outflow)/ inflow from operating activities (7,178,951) 141,120 (3,963,781) Cash flows from investing activities (314,898) (291,379) (631,823) Purchase of property, plant and equipment D (538,880) (441,003) (1,113,115) - 7,553,750 7,553,750 Proceeds on disposal of Dangote Agrosacks Limited - 7,553,750 7,553, Proceeds on disposal of property, plant and equipment - 5,900 23,911 (314,898) 7,262,372 6,922,320 Net cash (outflow)/inflow from investing activities (538,880) 7,118,647 6,464,545 Cash flows from financing activities ,000 Long-term borrowings raised ,000 (2,288,786) (2,531,923) (6,007,124) Long-term borrowings repaid 18 (2,288,786) (2,537,933) (6,007,124) 7,974,571. (1,221,368) 7,722,089 Short term borrowings raised/ (repaid) 7,988,877. (4,331,682). 6,667,544 5,685,784 (3,753,291) 2,694,965 Net cash inflow/ (outflow) from financing activities 5,700,090 (6,869,615) 1,640,420 (2,431,321) 346,859 4,220,528 Net (decrease)/increase in cash and cash equivalents (2,017,741) 390,152 4,141,184 2,736,093 (1,484,435) (1,484,435) Cash and cash equivalents at beginning of the period 3,164,935 (976,249) (976,249) 304,773 (1,137,577) 2,736,093 Cash and cash equivalents at end of the period E 1,147,194 (586,097) 3,164,935 9

10 NOTES TO THE CONSOLIDATED AND SEPARATE STATEMENT OF CASH FLOWS COMPANY GROUP Period Period Year Period Period Year Mar 2015 Mar 2014 Sept 2014 (N '000) Notes Mar 2015 Mar 2014 Sept 2014 A Cash operating (loss)/profit (4,146,524) 1,367,496 (3,218,556) Operating loss from continuing operations (5,246,716) (3,309,722) (6,432,223) Operating profit from discontinued operation - 301, ,797 Add back: ,191 Impairment of assets not in use - - 1,592,372-18,343 - Gratuity: Provision for the period - 18,343 - Gratuity: Payment during the period - (24,352) - - (2,597,750) (2,597,750) Profit on disposal of business - Dangote Agrosacks Limited Fair value re-measurement on assets held for sale , Currency devaluation - foreign loans and LCs , Loss on disposal of fixed assets 22, ,354 Loss on obsolete assets written off 29, , Provision on statutory liabilities - 777, Fair value re-measurement on net assets held for sale - DAS - 187, , ,912 1,900,878 Depreciation 1,364,378 1,652,193 3,156, ,339,038 Impairment of amounts due by subsidiary (3,303,054) (211,999) 407,155 Cash operating (loss)/profit (3,829,545) (397,519) (964,459) B Working capital changes (1,773,943) 3,483,531 3,378,489 (Increase)/Decrease in inventories (2,102,059) 3,528,883 3,580,802 (1,579,274) (2,584,581) (3,456,632) (Increase)/Decrease in trade and other receivables (1,208,561) 607,946 (1,232,486) 649,557 (2,432,561) (2,889,212) Increase/(Decrease) in trade and other payables 1,769,200 (2,161,550) (2,420,276) (2,703,660) (1,533,611) (2,967,355) Working capital changes (1,541,420) 1,975,279 (71,960) C Taxation paid (149,204) (149,204) (149,204) Amounts payable at beginning of year (171,276) (238,448) (238,448) (63,954) (113,877) - Income statement charge - continuing operations (76,822) (122,406) (7,400) 205, , ,204 Amounts payable at the end of year 238, , ,276 (8,112) - - Total taxation paid (9,394) (3,977) (74,572) D Purchase of property, plant and equipment - (291,379) - Expansion - (291,378) - (314,898) - (631,823) Replacement (538,880) (149,625) (1,113,115) (314,898) (291,379) (631,823) (538,880) (441,003) (1,113,115) E Cash and cash equivalents at end of the year 2,011,142 1,158,366 4,118,711 Cash and bank balances 2,853,565 1,709,845 4,547,552 (1,706,369) (2,295,943) (1,382,618) Bank overdrafts (1,706,369) (2,295,943) (1,382,617) 304,773 (1,137,577) 2,736,093 1,147,195 (586,098) 3,164,935 10

11 NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 1. General information 1.1 Company information Dangote Flour Mills Plc (the Company) is a public limited company incorporated in Nigeria. Its parent company is Tiger Brands Limited, a company listed on the Johannesburg Stock Exchange. The addresses of its registered office and principal place of business are disclosed in the introduction to the financial report. 1.2 Nature of operations The principal activities of Dangote Flour Mills Plc and subsidiaries ( the Group ) are the milling of wheat and production of wheat products. Dangote Pasta Limited and Dangote Noodles Limited are subsidiaries of the Dangote Flour Group. Dangote Flour produces bread flour, confectionery flour and pasta semolina. 1.3 Accounting period The reporting period covered by the financial statements is 01 October 2014 to 31 March Performance The business continues to record healthy volume growths quarter on quarter. Underlying margins have significantly improved, aided by better operational efficiencies, cost control and efficient procurement. The business environment remains volatile. The devaluation of the Naira and the scarcity of foreign exchange pose significant challenges. Other than the one-off impact of currency devaluation, the company s results reflect a continuously improving performance in line with the turnaround plan. 1.5 Going concern Total group assets exceeded total group liabilities as at 31 March 2015 by N2.827 bn (2014: N bn). However, group current liabilities exceeded current assets as at 31 March 2015 by N bn (2014: N bn), not including a loan of N bn (2014: N353 m) advanced by the parent company.the group recognised a loss for 6 months ended March 2015 of N6.755 bn (2014: N4.269 bn) which has resulted in accumulated losses of N bn at 31 March, 2015 (2014: accumulated losses of N8.574 bn). 11

12 NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (Continued) 2. Statement of compliance with IFRS 2.1 New and revised IFRSs affecting amounts reported and/or disclosures in the financial statements In the current period, the Group has applied a number of new and revised IFRSs issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of currently has a legally enforceable right of set-off and simultaneous realisation and settlement. The amendments have been applied retrospectively. [As the Group does not have any financial assets and financial liabilities that qualify for offset, the application of the amendments has had no impact on the disclosures or on the amounts recognised in the Group's consolidated financial statements. The Group has assessed whether certain of its financial assets and financial liabilities qualify for offset based on the criteria set out in the amendments and concluded that the application of the amendments has had no impact on the amounts recognised in the Group's consolidated financial statements. Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities The amendments to IFRS 10 define an investment entity and require a reporting entity that meets the definition of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss in its consolidated and separate financial statements. To qualify as an investment entity, a reporting entity is required to: Obtain funds from one or more investors for the purpose of providing them with professional investment management services. Commit to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both. Measure and evaluate performance of substantially all of its investments on a fair value basis. Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure requirements for investment entities. The Directors of the Company do not anticipate that the investment entities amendments will have any effect on the Group s consolidated financial statements as the Company is not an investment entity. Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. The Directors of the Company do not anticipate that the application of these amendments to IAS 32 will have a significant impact on the Group s consolidated financial statements as the Group does not have any financial assets and financial liabilities that qualify for offset. IFRIC 21 Levies The Group has applied IFRIC 21 Levies for the first time in the current year. IFRIC 21 addresses the issue as to when to recognise a liability to pay a levy imposed by a government. The Interpretation defines a levy, and specifies that the obligating event that gives rise to the liability is the activity that triggers the payment of the levy, as identified by legislation. The Interpretation provides guidance on how different levy arrangements should be accounted for, in particular, it clarifies that neither economic compulsion nor the going concern basis of financial statements preparation implies that an entity has a present obligation to pay a levy that will be triggered by operating in a future period. IFRIC 21 has been applied retrospectively. The application of this Interpretation has had no material impact on the disclosures or on the amounts recognised in the Group's consolidated financial statements. 12

13 NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (Continued) 2.2 New and revised IFRSs in issue but not yet effective The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective: IFRS 9 Financial Instruments (3) IFRS 15 Revenue from Contracts with Customers (2) Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations (1) Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation (1) Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants (1) 1 Effective for annual periods beginning on or after 1 January 2016, with earlier application permitted. 2 Effective for annual periods beginning on or after 1 January 2017, with earlier application permitted. 3 Effective for annual periods beginning on or after 1 January 2018, with earlier application permitted. IFRS 9 Financial Instruments IFRS 9 issued in November 2009 introduced new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition, and in November 2013 to include the new requirements for general hedge accounting. Another revised version of IFRS 9 was issued in July 2014 mainly to include a) impairment requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a fair value through other comprehensive income (FVTOCI) measurement category for certain simple debt instruments. + Key requirements of IFRS 9: all recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured at FVTOCI. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss. with regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability's credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability's credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss is presented in profit or loss. in relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are the new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available in IAS 39. Under IFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an economic relationship. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity s risk management activities have also been introduced. The directors of the Company anticipate that the application of IFRS 9 in the future may have a material impact on amounts reported in respect of the Group's financial assets and financial liabilities. However, it is not practicable to provide a reasonable estimate of the effect of IFRS 9 until the Group undertakes a detailed review. 13

14 NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (Continued) 2.2 New and revised IFRSs in issue but not yet effective (continued) IFRS 15 Revenue from Contracts with Customers In May 2014, IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations when it becomes effective. The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition: Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when control of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by IFRS 15. The directors of the Company anticipate that the application of IFRS 15 in the future may have a material impact on the amounts reported and disclosures made in the Group's consolidated financial statements. However, it is not practicable to provide a reasonable estimate of the effect of IFRS 15 until the Group performs a detailed review. Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations The amendments to IFRS 11 provide guidance on how to account for the acquisition of a joint operation that constitutes a business as defined in IFRS 3 Business Combinations. Specifically, the amendments state that the relevant principles on accounting for business combinations in IFRS 3 and other standards (e.g. IAS 36 Impairment of Assets regarding impairment testing of a cash generating unit to which goodwill on acquisition of a joint operation has been allocated) should be applied. The same requirements should be applied to the formation of a joint operation if and only if an existing business is contributed to the joint operation by one of the parties that participate in the joint operation. A joint operator is also required to disclose the relevant information required by IFRS 3 and other standards for business combinations. The amendments to IFRS 11 apply prospectively for annual periods beginning on or after 1 January The directors of the Company do not anticipate that the application of these amendments to IFRS 11 will have a material impact on the Group's consolidated financial statements. Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations The amendments to IFRS 11 provide guidance on how to account for the acquisition of a joint operation that constitutes a business as defined in IFRS 3 Business Combinations. Specifically, the amendments state that the relevant principles on accounting for business combinations in IFRS 3 and other standards (e.g. IAS 36 Impairment of Assets regarding impairment testing of a cash generating unit to which goodwill on acquisition of a joint operation has been allocated) should be applied. The same requirements should be applied to the formation of a joint operation if and only if an existing business is contributed to the joint operation by one of the parties that participate in the joint operation. A joint operator is also required to disclose the relevant information required by IFRS 3 and other standards for business combinations. The amendments to IFRS 11 apply prospectively for annual periods beginning on or after 1 January The directors of the Company do not anticipate that the application of these amendments to IFRS 11 will have a material impact on the Group's consolidated financial statements. 14

15 NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (Continued) 2.2 New and revised IFRSs in issue but not yet effective (continued) Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation The amendments to IAS 16 prohibit entities from using a revenue-based depreciation method for items of property, plant and equipment. The amendments to IAS 38 introduce a rebuttable presumption that revenue is not an appropriate basis for amortisation of an intangible asset. This presumption can only be rebutted in the following two limited circumstances: a) when the intangible asset is expressed as a measure of revenue; or b) when it can be demonstrated that revenue and consumption of the economic benefits of the intangible asset are highly correlated. The amendments apply prospectively for annual periods beginning on or after 1 January Currently, the Group uses the straight-line method for depreciation and amortisation for its property, plant and equipment, and intangible assets respectively. The directors of the Company believe that the straight-line method is the most appropriate method to reflect the consumption of economic benefits inherent in the respective assets and accordingly, the directors of the Company do not anticipate that the application of these amendments to IAS 16 and IAS 38 will have a material impact on the Group's consolidated financial statements. Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants The amendments to IAS 16 and IAS 41 define a bearer plant and require biological assets that meet the definition of a bearer plant to be accounted for as property, plant and equipment in accordance with IAS 16, instead of IAS 41. The produce growing on bearer plants continues to be accounted for in accordance with IAS 41. The directors of the Company do not anticipate that the application of these amendments to IAS 16 and IAS 41 will have a material impact on the Group's consolidated financial statements as the Group is not engaged in agricultural activities. Amendments to IAS 19 Defined Benefit Plans: Employee Contributions The amendments to IAS 19 clarify how an entity should account for contributions made by employees or third parties to defined benefit plans, based on whether those contributions are dependent on the number of years of service provided by the employee. For contributions that are independent of the number of years of service, the entity may either recognise the contributions as a reduction in the service cost in the period in which the related service is rendered, or to attribute them to the employees periods of service using the projected unit credit method; whereas for contributions that are dependent on the number of years of service, the entity is required to attribute them to the employees periods of service. The directors of the Company do not anticipate that the application of these amendments to IAS 19 will have a significant impact on the Group's consolidated financial statements. Annual Improvements to IFRSs Cycle The Annual Improvements to IFRSs Cycle include a number of amendments to various IFRSs, which are summarised below. The amendments to IFRS 2 (i) change the definitions of vesting condition and market condition ; and (ii) add definitions for performance condition and service condition which were previously included within the definition of vesting condition. The amendments to IFRS 2 are effective for share-based payment transactions for which the grant date is on or after 1 July The amendments to IFRS 3 clarify that contingent consideration that is classified as an asset or a liability should be measured at fair value at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of IFRS 9 or IAS 39 or a non-financial asset or liability. Changes in fair value (other than measurement period adjustments) should be recognised in profit and loss. The amendments to IFRS 3 are effective for business combinations for which the acquisition date is on or after 1 July The amendments to IFRS 8 (i) require an entity to disclose the judgements made by management in applying the aggregation criteria to operating segments, including a description of the operating segments aggregated and the economic indicators assessed in determining whether the operating segments have similar economic characteristics ; and (ii) clarify that a reconciliation of the total of the reportable segments assets to the entity s assets should only be provided if the segment assets are regularly provided to the chief operating decision-maker. 15

16 NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (Continued) 2.2 New and revised IFRSs in issue but not yet effective (continued) The amendments to the basis for conclusions of IFRS 13 clarify that the issue of IFRS 13 and consequential amendments to IAS 39 and IFRS 9 did not remove the ability to measure short- term receivables and payables with no stated interest rate at their invoice amounts without discounting, if the effect of discounting is immaterial. As the amendments do not contain any effective date, they are considered to be immediately effective. The amendments to IAS 16 and IAS 38 remove perceived inconsistencies in the accounting for accumulated depreciation/amortisation when an item of property, plant and equipment or an intangible asset is revalued. The amended standards clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of the carrying amount of the asset and that accumulated depreciation/amortisation is the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses. The amendments to IAS 24 clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. Consequently, the reporting entity should disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. However, disclosure of the components of such compensation is not required. The directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group's consolidated financial statements. Annual Improvements to IFRSs Cycle The Annual Improvements to IFRSs Cycle include a number of amendments to various IFRSs, which are summarised below. The amendments to IFRS 3 clarify that the standard does not apply to the accounting for the formation of all types of joint arrangement in the financial statements of the joint arrangement itself. The amendments to IFRS 13 clarify that the scope of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis includes all contracts that are within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within IAS 32. The amendments to IAS 40 clarify that IAS 40 and IFRS 3 are not mutually exclusive and application of both standards may be required. Consequently, an entity acquiring investment property must determine whether: (a) the property meets the definition of investment property in terms of IAS 40; and (b) the transaction meets the definition of a business combination under IFRS 3. The directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group's consolidated financial statements. 16

17 NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (Continued) 3 Summary of accounting policies 3.1 Statement of Compliance with IFRS The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards. 3.2 Basis of preparation The consolidated financial statements have been prepared on the historical cost basis, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS In addition, for financial reporting purposes, fair value measurements are categorised into level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs for the asset or liability. 3.3 Presentation of financial statements in accordance with IAS 1 (revised 2007) The consolidated financial statements are presented in accordance with IAS 1 Presentation of Financial Statements (revised 2007). The Group has elected to present the Statement of comprehensive income in a separate statement from the statement of profit or loss and other comprehensive income. 3.4 Basis of consolidation The Group financial statements consolidate those of the parent company and all of its subsidiary undertaking(s) drawn up to 31 March Subsidiaries are all entities over which the Group has the power to control the financial and operating policies. The Company obtains and exercises control through more than half of the voting rights for all its subsidiaries. The results of subsidiaries acquired are included in the consolidated financial statements from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Subsidiaries acquired with the intention of disposal within 12 months are consolidated in line with the principles of IFRS 5 Noncurrent Assets Held for Sale and Discontinued Operations and disclosed as held for sale. All intragroup transactions, balances, income and expenses are eliminated on consolidation. Non-controlling interests represent the portion of profit or loss, or net assets not held by the Group. It is presented separately in the consolidated statement of profit or loss and other comprehensive income, and in the consolidated statement of financial position, separately from own shareholders equity. A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction. Losses are attributed to the non-controlling interest even if that results in a deficit balance. If the Group loses control over a subsidiary, it: Derecognises the assets (including goodwill) and liabilities of the subsidiary; Derecognises the carrying amount of any non-controlling interest; Derecognises the cumulative translation differences, recorded in equity; Recognises the fair value of the consideration received; Recognises the fair value of any investment retained; Recognises any surplus or deficit in profit or loss; and Reclassifies the parent s share of components previously recognised in other comprehensive income to profit or loss. 17

18 NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (Continued) 3.5 Interest in group companies Business combinations are accounted for using the acquisition method. The value of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree s identifiable net assets. Acquisition costs incurred are expensed. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair value of the acquirer s previously held equity interest in the acquiree is remeasured to fair value as at the acquisition date through profit and loss. Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, is recognised in accordance with IAS 39 either in profit or loss or as charge to other comprehensive income. If the contingent consideration is classified as equity, it is not remeasured until it is finally settled within equity. In instances where the contingent consideration does not fall within the scope of IAS 39, it is measured in accordance with the appropriate IFRS. The Company carries its investments in subsidiaries and associate companies at cost less accumulated impairment losses. 3.6 Interest in group companies Foreign currency transactions The consolidated financial statements are presented in Nigerian Naira, which is the Company s functional and presentation currency. Transactions in foreign currencies are initially recorded in the functional currency at the rate of exchange ruling at the date of the transaction. Translation of foreign currency transactions Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the reporting date. Exchange differences are taken to profit or loss. If non-monetary items measured in a foreign currency are carried at historical cost, the exchange rate used is the rate applicable at the initial transaction date. If they are carried at fair value, the rate used is the rate at the date when the fair value was determined. The gain or loss arising on retranslation of non-monetary items is treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively). 3.7 Segment reporting Reporting segments The Group has reportable segments that comprise the structure used by the chief operating decision-maker ( CODM ) to make key operating decisions and assess performance. The Group s reportable segments are operating segments that are differentiated by the activities that each undertakes and the products they manufacture and market (referred to as business segments). The Group evaluates the performance of its reportable segments based on operating profit. The Group accounts for intersegment sales and transfers as if the sales and transfers were entered into under the same terms and conditions as would have been entered into in a market related transaction. The financial information of the Group s reportable segments is reported to the CODM for purposes of making decisions about allocating resources to the segment and assessing its performance. 18

19 NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (Continued) 3.8 Property, plant and equipment Property, plant and equipment are stated at cost, excluding the costs of day-to-day servicing, less accumulated depreciation and accumulated impairment losses. Assets subject to finance lease agreements are capitalised at the lower of the fair value of the asset and the present value of the minimum lease payments. Where an item of property, plant and equipment comprises major components with different useful lives, the components are accounted for as separate assets. Expenditure incurred on major inspection and overhaul, or to replace an item, is also accounted for separately if the recognition criteria are met. Depreciation is calculated on a straight-line basis, on the difference between the cost and residual value of an asset, over its useful life. Depreciation starts when the asset is available for use. An asset s residual value, useful life and depreciation method is reviewed at least at each financial year-end. Any adjustments are accounted for prospectively. Depreciation is not calculated in respect of freehold land and assets under construction. The following useful lives have been estimated: Freehold land Leasehold land and buildings Plant and machinery Motor vehicles Tools and equipment Furniture and fittings Computer equipment - Not depreciated - 50 years - 15 years - 4 years - 5 years - 5 years - 3 years An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition 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. 3.9 Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of an intangible asset acquired in a business combination is the fair value at the date of acquisition. Subsequently, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Unless internally generated costs meet the criteria for development costs eligible for capitalisation in terms of IAS 38 (refer to research and development costs accounting policy below), all internally generated intangible assets are expensed as incurred Research and development costs Research costs, being the investigation undertaken with the prospect of gaining new knowledge and understanding, are recognised in profit or loss as they are incurred. Development costs arise on the application of research findings to plan or design for the production of new or substantially improved materials, products or services, before the start of commercial production. Development costs are only capitalised when the Group can demonstrate the technical feasibility of completing the project, its intention and ability to complete the project and use or sell the materials, products or services flowing from the project, how the project will generate future economic benefits, the availability of sufficient resources and the ability to measure reliably the expenditure during development. Otherwise development costs are recognised in profit or loss. During the period of development, the asset is tested annually for impairment. Following the initial recognition of the development costs, the asset is carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation begins when development is complete. The development costs are amortised over the period of expected future sales Derecognition of intangible assets An intangible asset is derecognised on disposal; or when no future economic benefits are expected from its use. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised Impairment The Group assesses tangible and intangible assets, excluding goodwill, development assets not yet available for use and indefinite life intangible assets, at each reporting date for an indication that an asset may be impaired. If such an indication exists, the recoverable amount is estimated as the higher of the fair value less costs to sell and the value in use. If the carrying value exceeds the recoverable amount, the asset is impaired and is written down to the recoverable amount. Where it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is estimated. In assessing value in use, the estimated future cash flows are discounted to their present value using an appropriate discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, the hierarchy is firstly at the principal market or the most advantageous market in the absence of principal market. Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset. A previously recognised impairment loss is reversed only if there is a change in the estimates used to determine the asset s recoverable amount since the last impairment loss was recognised. If this is the case, the carrying amount of the asset is increased to the revised recoverable amount, but not in excess of what the carrying amount would have been had there been no impairment. A reversal of an impairment loss is recognised directly in profit or loss. 19