UNION DICON SALT PLC FINANCIAL STATEMENTS, 31 DECEMBER 2011

Transcription

1 UNION DICON SALT PLC FINANCIAL STATEMENTS, 31 DECEMBER 2011

2 REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF UNION DICON SALT PLC We have audited the accompanying financial statements of Union Dicon Salt Plc for the year ended 31 December 2011, set out on pages 6 to 17, which have been prepared on the basis of significant accounting policies, on pages 3 and 5 and other explanatory notes on pages 8 to 15. Directors' Responsibility for the Financial Statements 2. The directors are responsible for the preparation and fair presentation of these financial statements in accordance with the relevant provisions of the Financial Reporting Council of Nigeria Act No 6, 2011 and the requirements of the Companies and Allied Matters Act, CAP C20 LFN, This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting polices, and making accounting estimates that are reasonable in the circumstances. Auditors' responsibility 3. Our responsibility is to express an independent opinion on the financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform our audit to obtain reasonable assurance that the financial statements are free from material misstatement. An audit involves performing procedures to obtain evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

3 2 Emphasis of matter 4. Without qualifying our opinion, we draw attention to note 23 in the financial statements which indicates that the Company incurred a loss after taxation of N42,217,000 during the year ended 31 December 2011 and as at that date its current liabilities exceeded its current assets by N926,139,000 and that the Company had a negative shareholders funds of N1,073,519,000 These conditions along with other matters as set in note 23 indicate the existence of a material uncertainty which may cast significant doubt about the Company s ability to continue as a going concern, unless the Company s bankers continue their financial support and the shareholders introduce additional capital not only to wipe out the negative shareholders funds but to enable the Company operate profitably. Opinion 5 In our opinion, the financial statements give a true and fair view of the state of affairs of the Company s financial position as at 31 December 2011 and of its financial performance and cash flows for the year then ended, in accordance with the requirements of the Companies and Allied Matters Act, CAP C20 LFN, 2004 and the relevant provisions of the Financial Reporting Council of Nigeria Act, No 6, 2011 Report on other legal requirements 6. The Companies and Allied Matters Act, CAP C20 LFN, 2004 requires that in carrying out our audit we consider and report to you on the following matters. We confirm that: i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. ii) in our opinion, proper books of account have been kept by the Company; and iii) the Company's balance sheet and profit and loss account are in agreement with the books of account. Lagos, Nigeria Chartered Accountant 20 August 2013 FRC/2013ICAN/

4 3 UNION DICON SALT PLC FINANCIAL STATEMENTS, 31 DECEMBER 2011 ACCOUNTING POLICIES The following are the principal accounting policies adopted in the preparation of these financial statements. Basis of preparation of financial statements (a) These financial statements are prepared under the historical cost convention as modified by the revaluation of leasehold properties, motor vehicles and plant and machinery Investments (b) i ii Investments are stated at cost less provision for any permanent diminution in value. Investment income is included in the financial statements of the year in which it is earned. Investment in subsidiaries are accounted for at cost in the company's books. The carrying amounts of these investments are reviewed annually and written down for impairment where considered necessary. Property, plant and equipment (c) Property, plant and equipment are stated at cost/revalued amount less accumulated depreciation. Depreciation of property, plant and equipment (d) Depreciation is calculated to write off the cost/revalued amount of property, plant and equipment on a straight line basis over their expected useful lives. The principal annual rates used are:- % Leasehold land and building 2 Plant and Machinery 10 Motor vehicles 25 Furniture, fittings and equipment 10 Barges & boats 20 Mining expenditure 2 In case of revalued properties, depreciation is calculated by reference to the enhanced values of the properties concerned. No depreciation is charged on property, plant and equipment until they are brought into use Repairs and Renewals (e) All repairs and renewals are written off as incurred while major repairs are capitalised. All assets purchased at a value of N10,000 and above are also capitalised. Inventories and work-in-progress (f) Inventories and packaging materials are stated at the lower of cost and net realisable value, on a First-In-First-Out basis, and net realisable value, after making due allowance for any contaminated, obsolete or slow moving items. Cost includes expenditure incurred in bringing the items to their location.

5 4 Foreign currencies (g) Transactions in foreign currencies are translated into Naira at the rates of exchange ruling on the dates of the transactions. Assets and liabilities in foreign currencies are converted into Naira using the rates of exchange ruling at the balance sheet date. All exchange gains or losses arising on conversion are included in the operating results. Turnover (h) Turnover represents the invoiced value of goods to third parties less rebate. Receivables (i) Bad receivables are written off and specific provision is made for those receivables considered doubtful of recovery. Income tax (j) Income tax expenses is the aggregate of the charge to the profit and loss account in respect of current income tax, education tax and deferred income tax. Deferred taxation (k) Deferred taxation, which arises principally from timing differences in the recognition of items for accounting and tax purposes, is calculated using the liability method. This represents taxation at the current rate of Corporate Income Tax on the difference between the depreciation charges in the financial statements and the capital allowances claimable for tax. This is in accordance with SAS 19 on Accounting for Taxes. Retirement benefit Scheme (l) The Company operates a gratuity scheme and a pension fund scheme for the benefit of its employees: (i) Gratuity Scheme The gratuity scheme is unfunded. Benefits payable to employees on retirement or resignation are accrued over the service life of the employee concerned based on current salary. (ii) Pension Fund Scheme The Company in line with the provisions of the Pension Reform Act, 2004 has instituted a defined contribution pension scheme for its employees. Contributions to the scheme are funded through payroll deductions while the Company s contribution is charged to the profit and loss account Dividends (m) Dividends on ordinary shares are appropriated from retained earnings and recognised as a liability in the period in which they are declared until they are paid. Dividends that are proposed but not yet declared are disclosed in the notes to the financial statements.

6 5 Provisions (n) Provisions are recognised when the Company has a present obligation, whether legal or constructive as a result of a past event for which it is probable that an outflow of resources embodying economic benefits will be required to settle obligations and a reliable estimate can be made of the amount of the obligation in accordance with Statement of Accounting Standard No. 23 (SAS). Segment reporting (o) The Company's business segments that are subject to similar risks and returns, are presented by geographical locations in accordance with Statement of Accounting Standard No. 24. Cash and cash equivalents (p) For the purpose of the cash flow statements, cash and cash equivalents comprise cash at bank and in hand, and investment in money market instruments, all of which are available for use by the Company, unless otherwise stated.

7 6 UNION DICON SALT PLC PROFIT AND LOSS ACCOUNT FOR THE YEAR FOR THE YEAR ENDED 31 DECEMBER Notes Turnover Cost of sales (26,717) (32,771) Gross loss (26,717) (32,771) Selling and Distribution expenses - - Administration expenses (41,206) (114,383) Trading loss (67,923) (147,154) Other income 2 26,130 59,085 (41,793) (88,069) Interest payable and similar charges 3 (134) (298) Loss before taxation 4 (41,927) (88,367) Taxation 5 (290) (290) Loss after taxation (42,217) (88,657) Basic loss per share (kobo) 6 (18)k (38)k The accounting policies on pages 3 and 5 and notes on pages 9 to 15 form part of these financial statements. Auditors' report, pages 1 and 2.

8 7 UNION DICON SALT PLC 0 BALANCE SHEET AS AT 31 DECEMBER 2011 Notes Non current assets Property, plant and equipment 7 61,935 63,795 Investments ,935 63,795 Current assets Inventories and work-in-progress Receivables and prepayments 10 3,734 2,890 Amount due from intercompany Cash at bank and in hand 3,120 2,815 6,999 5,850 Current liabilities Borrowing Amount due to related companies , ,657 Trade and other payables , ,251 Taxation 5 49,422 49, , ,204 Net current liabilities (926,139) (893,354) Total assets less current liabilities (864,204) (829,559) Non current liabilities Deferred liabilities 14 (169,724) (162,152) Deferred taxation 5 (39,591) (39,591) Total liabilities (1,073,519) (1,031,302) Financed by: Capital and reserves Share capital , ,173 Revaluation reserve 16 72,809 72,809 Share premium , ,319 General reserve , ,935 Revenue reserves 19 (1,833,755) (1,791,538) Shareholders' funds (1,073,519) (1,031,302) The financial statements and notes on pages 6 to 17 were approved by the Board of Directors on 19 August 2013 and signed on its behalf by: i) Engr. Kayode M. Erikitola, mni ii) Col. (Rtd) Henry I. Mgbemena } Director } } } Managing Director The accounting policies on pages 3 and 5 and notes on pages 9 to 15 form part of these financial statements Auditors' report, pages 1 and 2.

9 8 UNION DICON SALT PLC STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2011 CASH FLOW FROM OPERATING ACTIVITIES Notes Cash received from customers - - Cash paid to employees and suppliers (26,340) (56,584) Other income 26,130 59,085 Input VAT - - Output VAT - - Tax paid - - Net cash (outflow)/inflow from operating activities ,501 Net (decrease)/increase in cash and cash equivalents (210) 2,501 Cash and cash equivalents at 1 January 2, Cash and cash equivalents at 31 December 21 2,441 2,651 The accounting policies on pages 3 to 4 and the explanatory notes on pages 8 to 15 form an integral part of these financial statements. Auditors' report, pages 1 and 2.

10 9 UNION DICON SALT PLC FINANCIAL STATEMENTS, 31 DECEMBER 2011 NOTES TO THE FINANCIAL STATEMENTS Turnover (a) Gross sales Less rebate (b) Analysis by geographical areas: Within Nigeria - - (c ) Analysis by Operations: Domestic salt - - Industrial salt (d) Segment reporting Nigeria is the Company s primary geographical segment as the turnover is mainly derived locally. Additionally, all of the Company s turnover comprise of domestic and industrial salts. Accordingly, there is no further business or geographical reporting. Other income 2. Interest income - 26 Rental income 4,000 2,717 Provision no longer required on stocks Sales of scrap 20,000 14,254 Investment income - 42,088 Other income 1,935-26,130 59,085 Interest payable and similar charges 3. Bank charges Loss before taxation 4i) Loss before taxation is arrived at after charging: Depreciation of property, plant and equipment 1,860 3,231 Auditors' fees 2,300 2,300

11 10 ii) Emoluments of directors and employees: a) The aggregate emoluments of the Directors were: Fees - - Other emoluments including pension contributions 10,350 10,350 10,350 10,350 b) Emolument of the Chairman (excluding pension contributions)totalled - - c) The emoluments of the Chairman who is also highest paid Director (excluding pension contributions) amounted to - - d) The table below shows the number of Directors of the Company excluding the Chairman whose remuneration excluding pension contributions fell within the bands shown below: Number Number Up to - N50, N800,001 - above 1 1 e) The table below shows the number of staff excluding Directors who earned over N60,000 in the year and which fell in the bands stated below: N N Number Number 60,001 70, , , , , , , ,001 and above iii) Staff numbers and costs: Number Number a) The average number of persons employed (excluding directors) in the company during the year were: Management 9 10 Administration Production, distribution and sales b) The aggregate payroll costs of these persons were as follows: Wages and salaries including staff bonus and contribution to pension scheme 42,903 42,991

12 11 Taxation Per profit and loss account Minimum tax Education tax Per balance sheet: Balance 1 January 49,132 48,842 Payment during the year ,132 48,842 Provision for the year: Company income tax - - Education tax - - Minimum tax Balance as at December 49,422 49,132 (b) (c) (d) The amount provided as income tax on the results for the year has been computed on the basis of minimum tax, in accordance with the provision of Companies Income Tax Act,CAP C21 LFN, No provison has been made for education tax in the financial statements as the company recorded a loss Movement on deferred tax: '000 '000 Balance as at 1 January 39,591 39,591 Provision for the year - - Balance as at 31 December 39,591 39,591 Basic loss per ordinary share 6. Basic loss per ordinary share is calculated by dividing the net results attributable to shareholders by the weighted average number of ordinary shares in issue during the year. '000 '000 Loss for the year attributable to shareholders N(42,217) N(88,657) Weighted average number of ordinary shares in issue 232, ,344 Basic loss per share (kobo) (18)k (38)k

13 12 UNION DICON SALT PLC FINANCIAL STATEMENTS, 31 DECEMBER 2011 Property, plant and equipment Leasehold Furniture, 7. land & Plant & Motor fittings and Barges Computer buildings machinery vechicle equipment & Boats equipment Total Cost/revalued amount At 1 January ,868 1,131,618 85, , ,111 1,504 1,642,899 At 31 December ,868 1,131,618 85, , ,111 1,504 1,642,899 Depreciation At 1 January ,263 1,130,709 85, , , ,579,104 Charge for the year 1, ,860 At 31 December ,661 1,130,823 85, , , ,580,964 Net book values at: 31 December 2011 N60,207 N795 N- N- N- N933 N61, December 2010 N61,605 N909 N- N197 N- 1,084 N63,795 (a) (b) The Company s property, plant and equipment except furniture and fixtures were professionally valued by Messrs Knight Frank and Rutley (Nigeria) as at 31 March 1992 on the basis of their open market values resulting in a revaluation surplus of N42.81 million which has been credited to a property, plant and equipment revaluation account. The Company brought into the books, a building valued at N30 million as at 29 th June, 2006 by P. K. Ojo & Co. Chartered and Estate Surveyors, Valuers and Facility Managers. This building has been a property of the Company since 1998 but was excluded from the books. The value of the building has been credited to a capital reserve account (Note 16). Investments - Unquoted Witt & Busch Limited 53,981 53,981 Impairment on Investment (53,981) (53,981) - - In 1998, the Company acquired 100% shares of Witt & Busch Limited. The financial statements of this subsidiary have not been consolidated on the grounds of their activities being dissimilar to the company s business The investment was impaired in 2010 because there was no record of finanical performance of the company to evaluate its profitability and viability. Inventories and work in progress 9. Salt - - Engineering items 9,099 9,099 Bags and other consumables 3,012 3,012 12,111 12,111 Provision for obsolete items (12,111) (12,111) Receivables and prepayments Amount due within one year of the balance sheet date: Trade receivables 162, ,373 Provision for doubtful receivables (162,373) (162,373) Net trade receivables - - Staff receivables 1, Other receivables 2,262 2,262 3,734 2,890

14 13 Amount due from related Company Witt and Busch Limited Amount due to related Companies 12 Witt and Busch Limited 116, ,669 Marinvest Nigeria Limited 6,122 5, , ,657 Trade and other payables 13(a) Trade payables 150, ,391 Other payables 78,898 75,166 Accruals 138, ,409 Directors current account 341, ,459 Withholding tax payables 17,173 17,173 Staff pension (Note 13(b)) 32,954 28, , ,251 (b) The movement in the staff pension fund is as follows: Balance at 1 January 28,653 24,678 Addition during the year 4,301 3,975 Payment during the year - - Balance at 31 December 32,954 28,653 14(a) (b) Deferred liabilities Gratuity (note 14b) 169, ,152 The movement in staff gratuity is as follows: Balance at 1 January 162, ,580 Addition during the year 7,572 7,572 Payment during the year - - Balance at 31 December 169, ,152 Share Capital Number Values Number Values of shares of shares of shares of shares Authorised '000 '000 Ordinary shares of 50kobo each 600, , , ,000 Issued and Fully paid Ordinary shares of 50kobo each 232, , , ,173

15 14 Capital Reserve Balance at 31 December 72,809 72,809 Share premium 17. Balance at 31 December 261, ,319 General reserve 18. Balance at 31 December 309, ,935 Revenue reserve 19 The movement on the profit and loss account is analysed below: Balance at 1 January (1,791,538) (1,702,881) Loss for the year (42,217) (88,657) Balance at 31 December (1,833,755) (1,791,538) Reconciliation of Net loss to net cash (absorbed in)/ provided by operating Activities 20. Net loss before taxation (42,217) (88,657) Adjustment to reconcile net loss to net cash provided: Depreciation of property, plant and equipment 1,860 3,231 1,860 3,231 Changes in assets and liabilities (Increase)/decrease in receivables and prepayments (844) 332 Decrease in investment - 53,981 Increase in payables and accruals 32,995 24,428 Increase in deferred liabilities 7,572 7,572 Increase in tax payable Increase in amount due to related companies 134 1,324 Total adjustments 40,147 87,927 Net cash (absorbed in)/ provided by operating activities (210) 2,501 Cash and cash equivalents 21 Cash and cash equivalents comprises cash in hand and at bank, net of outstanding bank overdraft. Cash and cash equivalents at the end of the financial year as shown in the statement of cashflow is reconciled to the related items in the balance sheet as follows: Cash at bank and in hand 3,120 2,815 Bank overdraft (679) (164) 2,441 2,651

16 15 Related party transactions 22.(a) Related parties include the Board of Directors, the Group Managing Director, close family members and companies which are controlled by these individuals. (b) Total remuneration of related parties recognised in the Profit and Loss Account are as disclosed in Note 4(ii) to the financial statements (c) During the year, the company made transactions to/from Marinvest Nigeria Limited and other related companies. The transactions were conducted at arms length basis in the ordinary course of business. (d) Details of the transactions together with the outstanding amounts payable and receivable at the year end are disclosed in Notes 11 and 12 to the financial statements. Going concern 23. The financial statements have been prepared on a going concern basis. This basis may not be appropriate because the Company incurred a loss after taxation of N42,217,000 during the year ended 31 December 2011, and at that date its current liabilities exceeded its current assets N926,139,000 and had a negative shareholders funds of N1,073,519,000. Further, the validity of the going concern basis is dependent on: (i) (ii) the Company s bankers continuing their support by providing adequate working capital facilities. the willingness of the shareholders to introduce additional capital not only to wipe out the negative shareholder's funds but to provide adequate working capital required to enable the Company return to profitable operations: In the absence of such financial support, the going concern basis would be invalid and adjustments would have to be made to reduce the value of assets to their recoverable amounts and provide for any further liabilities which might arise and to reclassify property, plant and equipment and long term liabilities as current assets and liabilities. Contigent liabilities 24 In the normal course of the business, there were a number of legal suits outstanding against the Company, on the advice of the counsel, the Board of Directors are of the opinion that no material losses are expected to arise. Therefore, no provision has been made in the financial statements. Capital commitments 25 There were no commitments to capital expenditure as at 31 December 2011 (2010: Nil). Comparative figures 26 Certain prior year comparative account balances have been reclassified to conform with current year s classification.

17 16 UNION DICON SALT PLC STATEMENT OF VALUE ADDED FOR THE YEAR ENDED 31 DECEMBER % % Turnover - - Other income 26,130 59,085 26,130 59,085 Bought in materials and services: Foreign - - Local (32,290) (107,072) Value absorbed (6,160) (100) (47,987) (100) Value added as percentage of turnover - - Applied As Follows: To pay employees' salaries, wages and fringe benefits 33, ,851 (77) To pay interest on borrowings Loss absorbed by the company (42,217) (685) (88,657) 184 To pay taxes Depreciaton of property, plant and equipment 1, ,231 (7) Profit and loss account (6,160) (100) (47,987) 100

18 17 UNION DICON SALT PLC FIVE YEAR FINANCIAL SUMMARY 31 December Turnover ,734 Loss before tax (41,927) (88,367) (100,435) (202,864) (188,174) Taxation (290) (290) (290) (290) (290) Loss after taxation (42,217) (88,657) (100,725) (203,154) (188,464) BALANCE SHEETS Property, plant and equipment 61,935 63,795 67,025 77, ,222 Long term investment ,981 53,981 53,981 Current assets 6,999 5,850 3,657 29, ,731 68,934 69, , , ,934 Total assets Less: Current liabilites (933,138) (899,204) (872,324) (819,103) (797,956) Deferred liabilities (169,724) (162,152) (156,993) (147,135) (132,566) Deferred taxation (39,591) (39,591) (39,591) (39,591) (39,591) Total (liabilites)/ assets (1,073,519) (1,031,302) (944,245) (844,333) (641,179) Financed by: Share capital 116, , , , ,173 Capital reserve 72,809 72,809 72,809 72,809 72,809 General reserve 309, , , , ,935 Share premium 261, , , , ,319 Profit and loss account (1,833,755) (1,791,538) (1,704,481) (1,604,569) (1,401,415) Shareholders' funds (1,073,519) (1,031,302) (944,245) (844,333) (641,179) Basic loss per share (18)k (38)k (43)k (87)k (81)k Net liabilities per share (462 (444)k (406)k (363)k (276)k