SMART PRODUCTS NIGERIA PLC FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER, 2013

Transcription

1 SMART PRODUCTS IGERIA PLC FIACIAL STATEMETS FOR THE YEAR EDED 31 DECEMBER, 2013

2 SMART PRODUCT IGERIA PLC FIACIAL STATEMETS FOR THE YEAR EDED COTETS 31 DECEMBER 2013 PAGE Corporate information 1 Results at a glance 2 Report of the directors 3 Independent Auditors report 6 Report of the Audit Committee 8 Statement of comprehensive income 9 Statement of financial position 10 Statement of changes in equity 11 Statement of cash flows 12 otes to the financial statements 13 Statement of value added 35 Five-year financial summary 36

3 SMART PRODUCTS IGERIA PLC -Page1- CORPORATE IFORMATIO Directors: High Chief (Sir) Simeon O. Oguntimehin, OO, FCA - Chairman Abiola A. Aderonmu, Esq., Dr. Moses O. Ajaja Akinrinola O. Laoye, Esq., Adejinle O. Adeniji, Esq., Company Secretaries: Registered office: Alpha-Genasec Limited, Kresta Laurel Complex (4 th Floor), 376, Ikorodu Road, Maryland, Lagos. Tel: , Agege Motor Road, Challenge, Mushin, Lagos. Tel: Registration number: RC 4738 Auditors: Registrars: Bankers: Baker Tilly igeria, (Chartered Accountants), Kresta Laurel Complex (4th Floor), 376, Ikorodu Road, Maryland, Lagos. Tel: Meristem Registrars Limited, 213, Herbert Macaulay Street, Adekunle, Yaba, Lagos. Tel: Diamond Bank Plc Sterling Bank Plc

4 -Page2- SMART PRODUCTS IGERIA PLC RESULT AT A GLACE Percentage Increase/ (Decrease) Gross income 47,744,501 40,001, Profit before taxation 19,335,768 14,812, Profit after taxation 12,020,828 11,659,708 3 Share equity 22,500,000 22,500,000 - Equity attributable to owners 60,433,554 54,431, Per share data: Earnings (in kobo) Total net assets (in kobo) Dividend paid (in kobo)

5 -Page3- SMART PRODUCTS IGERIA PLC REPORT OF THE DIRECTORS 1. The directors hereby submit their report and the financial statements of the company for the financial year ended 31 December, Result Profit before taxation 19,335,768 Income tax expense (7,314,940) Profit after taxation 12,020,828 ======== 3. Legal form The company, Associated Press Limited was incorporated on 11 January, 1966 as a private limited liability company and commenced operation as a legal entity immediately. The name was changed to Smurfit Print igeria Limited in 1987 and was subsequently converted to a public limited liability company in 1991 which made it change its name to Smurfit Print igeria Plc. The name was changed to Smart Products igeria Plc on 25 September, Principal activities The company continued to rely on rental income and profit on investment during the year under review. 5. Review of operational performance A profit before tax of million was achieved in 2013 compared with a profit before tax of million in the preceding year. The directors are hopeful of improved profitability in ensuing years. 6. Directors The names of the directors of the company are as stated on page 1 of these reports and financial statements. 7. Shareholders interests (i) The directors interests in the company s shares as at 31 December, 2013 were as follows:- o. of shares High Chief (Sir) S. O. Oguntimehin, OO- indirect 106, ,750 Abiola Aderonmu, Esq., 24,783,579 24,783,579 Dr. M.O. Ajaja (representing foreign interest) - indirect 9,000,000 9,000,000 - direct 250, ,000 Akin O. Laoye, Esq. 409, ,000

6 -Page4- (ii) one of the directors has notified the company for the purpose of Section 277 of the Companies and Allied Matters Act, CAP C20 LF 2004 to the effect that he had interest in any contract with which the company was involved during the period under review. 8. Substantial interest in shares According to the Register of members, the following persons held more than 5% of the issued share capital of the company on 31 December, 2013: Shareholders umber of share Percentage A. A. Aderonmu, Esq., 24,783, Dr. M. O. Ajaja (Indirect) 9,000, Directors responsibility In accordance with the provisions of Sections 334 and 335 of the Companies and Allied Matters Act CAP C20 LF 2004, the directors of the company are responsible for the preparation of financial statements which give a true and fair view of the state of affairs of the company at the end of each financial year, and of the profit or loss for that year, and comply with the provisions of the Companies and Allied Matters Act, CAP C20 LF In doing so, they ensure that:- - proper accounting records are maintained; - applicable accounting standards are followed; - suitable accounting policies are adopted and consistently applied; - the going concern basis is used, unless it is inappropriate to presume that the company will continue in business; and - adequate internal control procedures are instituted which, as far as is reasonably possible, safeguard the assets and prevent and detect fraud and other irregularities. 10. Shareholding As at 31 December, 2013 the shares of the company were held as follows: Shareholders o. of shares % o. of shares % igerian individuals and organizations 36,000, ,000, on-resident 9,000, ,000, Property, plant and equipment 45,000, ,000, ======== === ========= ===== Movements in property, plant and equipment during the period are shown in ote 11 to the financial statements on page 25. In the opinion of the directors, the market value of the company s fixed assets is not lower than the value shown in the financial statements.

7 -Page5-12. Dividend The directors recommend payment of dividend of 22.5k per 50k share amounting to million compared to dividend of 20k per 50kobo share paid in 2012 (9.00million) 13. Personnel (i) Employment of disabled persons: The company does not discriminate in considering applications for employment including those from disabled persons. All employees are given equal opportunities to develop their knowledge and skills within the organisation. As at 31 December, 2013 there were, however, no disabled persons in the company s employment. (ii) Employee s involvement and training: The company is committed to keeping employees fully informed as far as possible regarding its performance and progress and seeking their views whenever practicable, on matters which particularly affect them as employees. The company provides a range of training from time to time with potential broadening opportunities for employees career development within the organisation. (iii) Staff welfare and safety at work: 14. Auditors The company places high premium on its human resources and there is existing provision for lunch, rent and transport allowances. The company conducts its activities in a way to take foremost account of the safety of its employees and other persons. Messrs Baker Tilly igeria (Chartered Accountants) have indicated their willingness to continue as auditors in accordance with Section 357(2) of the Companies and Allied Matters Act, CAP C20 LF A resolution will be proposed to authorise the directors to fix their remuneration. By order of the Board LAGOS, igeria 24 April, 2014 Alpha-Genasec Limited Company Secretary FRC/2013/ICSA/

8 -Page6- Report on the financial statements IDEPEDET AUDITORS' REPORT TO THE MEMBERS OF SMART PRODUCTS IGERIA PLC We have audited the accompanying financial statements of Smart Products igeria Plc, for the year ended 31 December, 2013, set out on pages 9 to 36 which have been prepared on the basis of significant accounting policies on pages 13 to 25 and other explanatory notes on pages 23 to 34. Directors responsibility for the financial statements The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with the requirements of both the Financial Reporting Council Act o.6 of 2011 and the Companies and Allied Matters Act, Cap C20 LF, This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatements, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances. Auditors responsibility Our responsibility is to express an independent opinion on these financial statements based on our audit. We conducted our audit in accordance with igerian Standards on Auditing (SAs) issued by the Institute of Chartered Accountants of igeria. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements. In making those risk assessments, the auditor considers 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 entity 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.

9 -Page7- Opinion 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, 2013 in accordance with the requirements of both the Financial Reporting Council Act o 6 of 2011 and the Companies and Allied Matters Act, CAP C20 LF, Report on other legal requirements The Companies and Allied Matters Act, CAP C20 LF, 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 statements of comprehensive income and financial position are in agreement with the books of account. LAGOS, igeria 25 April, 2014 O. O. OGUDEJI FRC/2013/ICA/ On Behalf of BAKER TILLY IGERIA (CHARTERED ACCOUTATS)

10 -Page8- SMART PRODUCTS IGERIA PLC AUDIT COMMITTEE REPORT To the shareholders We, the Audit Committee members of Smart Products igeria Plc in accordance with the provision of Section 359 (6) of the Companies and Allied Matters Act, Cap C20 LF 2004, have carried out the following statutory functions:- a. Confirmed that the accounting and reporting policies of the company are in accordance with the legal requirements and agreed ethnical practices; b. Reviewed the scope and plan of the audit for the year ended 31 December, 2013; and c. Reviewed the external and internal auditors recommendations on accounting procedures and internal controls and management s responses thereon. In our opinion, the scope and planning of the audit for the year ended 31 December, 2013 were adequate and management s responses to the Auditors findings were satisfactory. S.S. Adebayo, Esq., (CHAIRMA) Members of the committee 1. Mr. Samuel Sunday Adebayo - Chairman 2. Mr. L.. Onwuka 3. Mr. A.A. Aderonmu 4. Mr. Akin Laoye Dated this 22 April, 2014

11 -Page9- SMART PRODUCTS IGERIA PLC STATEMET OF COMPREHESIVE ICOME FOR THE YEAR EDED 31 DECEMBER 2013 ote Turnover 5 44,596,787 36,132,081 Other income 6 3,147,714 3,869,486 Total income 47,744,501 40,001,567 Personnel expenses 7 (5,047,208) (4,927,216) Other operating expenses 8 (23,361,525) (20,261,388) Profit before tax 19,335,768 14,812,963 Income tax expenses 9.1 (7,314,940) (3,153,255) Profit for the year after tax 12,020,828 11,659,708 Other comprehensive income Appreciation on available for sale financial assets ,177,320 2,570,278 Total comprehensive income for the year 13,198,148 14,229,986 Earnings per share ======== ======== Basic profit for the year attributable to ordinary equity holders k 25.91k ====== ===== The notes on pages 13 to 34 form an integral part of these financial statement

12 SMART PRODUCTS IGERIA PLC -Page10- STATEMET OF FIACIAL POSITIO AS AT 31 DECEMBER 2013 ote Assets: on-current: Property, Plant and Equipment 11 8,639,727 12,992,447 Investment property 12 80,282,480 78,889,545 Available for sale financial assets 13 3,944,402 8,166,832 Loans and receivables ,866, ,048, Current: Loans and receivables 14 13,628,436 3,628,878 Cash and cash equivalent 15 1,589,277 12,123,423 15,217,713 15,752, Total assets 108,084, ,801,125 ========= ======== Liabilities on-current Deferred tax liabilities ,648,307 18,802,080 Deferred income 17-5,341,512 19,648,307 24,143, Current: Trade and other payable 16 10,451,956 11,333,456 Deferred income 17 2,642,084 15,301,148 Current tax payable ,908,421 10,591,623 28,002,461 37,226, Total liabilities 47,650,768 61,369,819 Equity Issued share capital 18 22,500,000 22,500,000 Share premium 19 1,151,920 1,151,920 Asset revaluation reserve 20 80,345,395 79,168,057 Retained earnings 21 (43,563,761) (48,388,689) Equity attributable to owners 60,433,554 54,431,306 Total liabilities and equity 108,084, ,801,125 ========= ========= The financial statements were approved by the Board of Directors on 24 April, 2014 and signed on its behalf by: High Chief (Sir) Simeon O. Oguntimehin, OO, FCA Chairman FRC/2013/ICA/ Mr. Abiola A. Aderonmu Managing Director FRC/2014/IM/ The notes on pages 13 to 34 form an integral part of these financial statements.

13 -Page11- SMART PRODUCTS IGERIA PLC STATEMET OF CHAGES I EQUITY FOR THE YEAR EDED 31 DECEMBER, 2013 Issued share Share Asset Retained Total Capital Premium Revaluation Earnings Equity Balance at January 1, ,500,000 1,151,920 79,168,075 (48,388,689) 54,431,306 Dividend paid/payable (7,195,900) (7,195,900) Statement of comprehensive income - - 1,177,320 12,020,828 13,198,148 Balance at 31 December, ,500,000 1,151,920 80,345,395 (43,563,761) 60,433,554 ========= ========= ========= ========= ======== Balance as January 1, ,500,000 1,151,920 76,597,797 (53,294,714) 46,955,003 Statement of comprehensive income - - 2,570,278 11,659,708 14,229,968 Dividend paid/payable (6,753,683) (6,753,683) Balance at 31 December, ,500,000 1,151,920 79,168,075 (48,388,689) 54,431,306 ========== ======= ========= ========= ========

14 SMART PRODUCTS IGERIA PLC -Page12- Cash flow from operating activities STATEMET OF CASH FLOWS FOR THE YEAR EDED 31 DECEMBER 2013 ote Operating profit before working capital changes 25.i 24,960,463 19,859,015 Working capital changes 25.ii (28,881,634) 13,596,995 Tax paid 9 (2,151,915) (195,868) et cash (outflow)/inflow from operating activities (6,073,086) 33,260,142 Investing activities ======== ========= Purchase of Property, Plant and Equipment 11 (168,000) (12,162,000) Proceed from sales of financial assets 1,005, ,000 Additional improvement on investment property 12 (3,451,460) (6,282,600) Interest on deposit Diminution in available for sale financial assets 2,536,142 29,442 (Increase)/decrease in available-for-sale financial assets 13 2,812,454 (2,793,912) et cash inflow/(outflow) from investing activities 2,734,840 (20,959,070) Financing activities Dividend paid (7,195,900) (6,753,683) et cash flow from investing activities (7,195,900) (6,753,683) et increase in cash and cash equivalent (10,534,146) 5,547,389 Cash and cash equivalent at 1 January 12,123,423 6,576,034 Cash and cash equivalent at 31 December 1,589,277 12,123,423 ======== ========= The notes on pages 13 to 34 form an integral part of these financial statements.

15 SMART PRODUCTS IGERIA PLC -Page13-1. Corporate information OTES TO THE FIACIAL STATEMETS The company, Smart Product igeria Plc (formerly Associated Press Limited) was incorporated on 11 January, 1966 as a limited liability company and commenced business as a legal entity immediately. It was converted to a public limited liability company in The registered office is located at 373, Agege Motor Road, Challenge, Mushin, Lagos. The principal activity of the company is the management and administration of the company s properties and investments from where it derives income. The financial statements for the year ended 31 December 2012 were authorised for issue in accordance with the resolution of the directors on 17 April, Accounting policies The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. 2.1 Basis of preparation The financial statements have been prepared on an historical cost basis, except for those available-for-sale financial assets that have been measured at fair value. The financial statements values are presented in the igerian aira (), which is the Company s presentation currency, unless otherwise indicated. The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Additional information required by national regulations is included where appropriate. For all periods up to and including the year ended 31 December, 2011, the Company prepared its financial statements in accordance with igerian generally accepted accounting principle (GAAP). These financial statements for the year ended 31 December, 2012 are the first the Company has prepared in accordance with IFRS and IFRS 1 First-time Adoption of International Financial Reporting Standards has been applied. The Company presents its statement of financial position with necessary analysis of the items presented in the respective notes. An analysis regarding recovery or settlement within 12 months after the reporting date (current) and more than 12 months after the reporting date (non-current) form an integral part of each of the notes where applicable. Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position only when there is a legally enforceable right to offset the recognized amount and there is an intention to settle on a net basis, or to realize the assets and settled the liability simultaneously.

16 -Page Summary of significant accounting policies The following are the significant accounting policies adopted by the Company in preparing of its financial statements: Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses (if any). The cost of property, plant and equipment includes expenditure incurred during construction, delivery and modification. Other subsequent expenditure is capitalised only when it increases the future economic benefits associated with the asset to which it relates. Where a substantial period of time is required to bring the asset into use, attributable finance costs are capitalised and included in the cost of the relevant asset. Depreciation is provided on straight line basis to allocate the cost/revalued amounts less their residual values over the estimated useful lives of the various classes of assets. The principal rates used are: Plant and machinery 10 years Motor vehicles 4 years Furniture, fixtures and equipment 10 years Generator 3 years Depreciation is charged based on usage in the year of purchase. The asset s residual values, useful lives and method of depreciation are reviewed at each financial year end and adjusted prospectively if appropriate to reflect the relevant market conditions and expectations, obsolescence and normal wear and tear. Impairment review is carried out when events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment losses on non-revalued assets are recognised in the income statement as an expense, while reversals of impairment losses are also stated in the income statement. An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. 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 the income statement when the asset is derecognised Investment properties Leasehold property The company has opted to use the carrying cost of its investment property as deemed cost upon transition to IFRS and subsequently measure it using the cost model. Investment properties (including borrowing cost attributable to their construction, acquisition and production) are capitalised and are initially measured at cost;

17 -Page15- subsequently, they are amortised over the remaining leasehold life of the lease agreement (less any accumulated impairment losses). The company however discloses the fair value of its investment properties as at the end of the financial period in compliance with paragraph 79 of IAS 40. The fair value is determined every three years by external independent valuers who are registered with the Financial Reporting Council (FRC) of igeria. Increase in their carrying amount are credited to revaluation reserve in shareholder s equity. Decreases that offset previous increases of the same properties are charged against revaluation reserve while, all other decreases are charged to the income statement. Revaluation surplus on disposed properties are written back to income in line with the provisions of IAS 40. The company s investment property is amortised over the remaining life of the lease agreement. The lease expires by Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. After initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses (if any). Capitalization of expenditure ceases when the asset is in the condition necessary for it to be capable of operating in the manner intended by management. Depreciable amount is allocated on a systematic basis over its useful life using the straight line basis in which charges for each period are recognised in the profit or loss. Direct computer software development costs recognised as intangible assets are amortised on a straight line basis over four years and are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful life of the asset is reviewed at each financial year end. If the expected useful life is different from the previous estimates, the amortisation period will change. And if there is a change due to the expected pattern of consumption of the future economic benefits embodied in the asset, the amortisation period will be changed to reflect the pattern which will be accounted for as a change in accounting estimate. However, the company did not have any intangible asset as at 31 December, Taxation a) Current income tax Current income tax liabilities and assets for the current and prior periods is measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted at the reporting date. Current income tax assets and liabilities also include adjustments for tax expected to be payable or recoverable in respect of previous periods. b) Deferred tax Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are calculated in respect of temporary differences using the balance sheet liability method.

18 -Page16- Deferred tax assets are recorded only to the extent that it is probable that taxable profit will be available against which the deferred tax asset will be realized or if it can be offset against existing deferred tax liabilities. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax liabilities are recognised for all taxable temporary differences, except when the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. Deferred tax assets and liabilities are measured at tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates that have been enacted or substantively enacted at the reporting period. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority Employee s retirement benefits Defined contribution The Company operates a funded defined contributory scheme with some Pension Fund Administrators. This is in compliance with the provisions of the Pension Reform Act, 2004 whereby employer and employees contribute 7.5% each of the employees eligible allowances. Staff contributions to the scheme are funded through payroll deductions, while the Company s contribution is charged to the income statement. When an employee has rendered service to an entity during a period, the company recognises the contribution payable to a defined contribution plan in exchange for that service (a) as a liability (accrued expenses), after deducting any contribution already paid, (b) as an expense Revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes. The following specific recognition criteria must also be met before revenue is recognised for each of the two major income sources available to the company as follows:-

19 -Page17- Rental income This income is generated from rent paid by tenants on the company s property and is being recognised on time basis. Rent received for the period is recognised in the income statement as turnover for the period while amount relating to the period yet to expire is deferred and recognised as payable in the statements of financial position. Investment income Investment income is generated through dividend from equity investment. This income is recognised in the statement of comprehensive income as income when the company s right to receive the payment is established Financial Instruments i) Financial assets Initial recognition and measurement Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, as appropriate. The company s financial assets include cash and short-term deposits, fixed deposits, loans and other receivables, quoted equity investment. The company recognises three classes of financial assets: a) Available for sale financial investments b) Held to maturity investment c) Loans and receivables All financial assets are recognised initially at fair value plus transaction costs. Subsequent measurement The subsequent measurement of financial assets depends on their classification as follows: Available for sale financial investments Equity investments classified as available-for-sale are those that are neither classified as held for trading nor designated at fair value through profit or loss. After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealised gains or losses recognised in the available-forsale reserve through other comprehensive income until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income or the investment is determined to be impaired, when the cumulative loss is reclassified from the available-for sale reserve to the income statement.

20 -Page18- Investments in unquoted equity instruments that do not have an active market and whose fair value cannot be reliably measured and or derivatives that is linked to and must be settled by delivery of such unquoted equity instruments are measured at cost. For a financial asset reclassified out of the available-for-sale category, any previous gain or loss on that asset that has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the Effective Interest Rate (EIR). Any difference between the new amortised cost and the expected cash flows is also amortised over the remaining life of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassified to the income statement. Held to- maturity investments on-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-to maturity when the Company has the positive intention and ability to hold them to maturity. After initial measurement, held-tomaturity investments are measured at amortised cost using the EIR, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income statement. Gains and losses are recognised in the income statement when the investments are derecognised or impaired, as well as through the amortisation process. Included in this classification are Investments in Treasury bills and Bonds issued by federal government and state government. However, the company did not have any held - to -maturity investments as at 31 December, Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income statement. Gains and losses are recognised in the income statement when the investments are derecognised or impaired, as well as through the amortisation process. Included in this classification are personal loans, car loan and mortgage loan given to employees. Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when: The right to receive cash flows from the asset have expired; and

21 -Page19- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a pass-through arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the asset is recognised to the extent of the Company s continuing involvement in the asset. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained. ii) Impairment of financial assets The company assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred loss event ) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Financial assets carried at amortised cost For financial assets carried at amortised cost, the company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current EIR.

22 -Page20- The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of investment income in the income statement. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Company. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is recognised in the income statement. Available for sale financial investments For available-for-sale financial investments, the Company assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired. In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. Significant is evaluated against the original cost of the investment and prolonged against the period in which the fair value has been below its original cost. When there is evidence of impairment, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the income statement is removed from other comprehensive income and recognised in the income statement. Impairment losses on equity investments are not reversed through the income statement; increases in their fair value after impairment are recognised directly in other comprehensive income. A threshold of 20% is applied consistently to conclude whether or not the decline in fair value is significant. iii) Financial liabilities Initial recognition and measurement Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The company determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, carried at amortised cost, this includes directly attributable transaction costs. The company s financial liabilities include trade and other payables. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified,

23 -Page21- such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the income statement. iv) Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if: There is a currently enforceable legal right to offset the recognised amounts; and There is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously v) Fair value of financial instruments The fair value of financial instruments that are traded in active markets are determined at each reporting date by reference to quoted market prices or dealer price quotations. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include: Using recent arm s length market transactions Reference to the current fair value of another instrument that is substantially the same A discounted cash flow analysis or other valuation models Cash and cash equivalent Cash and cash equivalent in the statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less. For the purpose of statement of cash flows, cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts (if any) Provision A provision is recognised if as a result of past event the Company 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. Amounts are recorded based on management s best estimate of the amount needed to settle the obligation, which includes, among other things, management s experience in similar transactions. Where the effect of the time value of money is significant, the provision is discounted at a rate that reflects the estimated timing of payment, if the timing can be reasonably determined, as well as the risk associated with the liability.

24 Leasing -Page22- (i) Finance Lease A lease arrangement under which substantially all the risks and rewards incidental to ownership of the leased item rest with the lease are capitalised at the inception of the lease at the lower of the fair value of the related item or the present value of the minimum lease payments. Lease payments are apportioned between finance charges and a reduction in the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are expensed to the income statement. Capitalised leased assets are depreciated over the shorter of the lease term and the estimated useful life of the asset. (ii) Operating Lease Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Lease payments under operating leases are charged on a straight line basis over the lease term. 2.3 First time adoption of IFRS The financial statements for the year ended 31 December, 2012, are the first the Company has prepared in accordance with IFRS. For periods up to and including the year ended 31 December 2011, the Company prepared its financial statements in accordance with igerian generally accepted accounting principles (GAAP). Accordingly, the Company has prepared financial statements which comply with IFRS applicable for periods ending on or after 31 December 2012, together with the comparative period data as at and for the year ended 31 December 2011, as described in the accounting policies. In preparing these financial statements, the Company s opening statement of financial position was prepared as at 1 January 2011, the Company s date of transition to IFRS. This note explains the principal adjustments made by the Company in restating its GAAP statement of financial position as at 1 January 2011 and its previously published GAAP financial statements as at and for the year ended 31 December Exemptions applied IFRS 1 First-Time Adoption of International Financial Reporting Standards allows first-time adopters certain exemptions from the retrospective application of certain IFRS. The Company has applied the following exemptions: The Company has elected to designate certain investments in quoted equity as available-for-sales financial assets at the date of transition to IFRS. The company has elected to measure its properties, plant and equipment at their historical cost which is now taken as the deemed cost at the date of transition to IFRS.

25 -Page23- Estimates The estimates at 1 January 2011 and at December 31, 2011 are consistent with those made for the same dates in accordance with Local GAAP (after adjustments to reflect any differences in accounting policies). The estimates used by the Company to present this amount in accordance with IFRS reflect conditions at 1 January 2011, the date of transition to IFRS and as of December 31, Turnover Rental income 44,120,097 34,173,391 Dividend received 476,690 1,958,690 44,596,787 36,132,081 ========= ========= 6. Other income Profit on disposal of shares 1,005,599 1,904,466 Service charge 2,142,010 1,715,030 Interest on bank deposit Profit on disposal of property, plant and equipment - 249,990 3,147,714 3,869,486 ======= ======== 7. Personnel expenses Pension contribution 301, ,158 Staff welfare and medical - 120,000 Directors fees and allowance 2,180,000 1,940,000 Salaries and wages 2,866,059 2, ,047,207 4,927,216 ======= ======= 8. Other operating expenses Depreciation on property, plant and equipment 4,520,720 2,730,295 Amortisation of investment properties 2,058,525 2,531,611 Annual general meeting expenses 1,910,500 1,798,140 Other professional fees 1,525,000 1,650,000 Entertainment 1,904,265 1,624,835 Security service 1,440,250 1,575,500 Vehicle running and maintenance 1,133,100 1,403,500 Repairs and maintenance 1,382,350 1,368,850 Travelling 1,191,765 1,073,970 Waste disposal/cleaning 1,401, ,500 Insurance motor vehicles 102, ,800 Generator running 976, ,000 Audit fee 750, ,000 Registrars 216, ,736 Land use charge 415, ,936 Electricity 308, ,900 Insurance building 279, ,442 Other expenses - 239,919 Financial Reporting Council due 200, ,000

26 -Page Loss on financial assets available for sale 1,183,648 - Listing fee 326, ,750 Bank charges 83, ,568 Impairment on available for sale financial assets 51,154 34,136 23,361,525 20,261,388 ======== ======== 9. Income tax expense 9.1 Statement of comprehensive income Based on the profit for the year 5,828,143 1,739,238 Education tax 488, ,772 Withholding tax 151, ,868 6,468,713 2,271,878 Deferred tax 846, ,377 7,314,940 3,153,255 ======= ======== The withholding tax figure represent the withholding tax element in the grossed up dividend received of 1,958,690 and 476,690 for 2012 and 2013 respectively. 9.2 Statement of financial position Income tax Balance at 1 January 10,591,623 8,515,613 Statements of comprehensive income 6,468,713 2,271,878 17,060,336 10,787,491 Payment during the year (2,151,915) (195,868) At 31 December 14,908,421 10,591,623 ========= ========= 9.3 Deferred tax At 1 January 18,802,080 17,920,703 Movement during the period 846, ,377 At 31 December 19,648,307 18,802,080 ======== ======== 9.4 The company income tax was based on the provision of the Company Income Tax Act (Cap.60 LF 1993) and the education tax Act 1993 as amended to date. The income tax expense for the year ended can be reconciled to the accounting profit as follows:- Profit before tax from continuing operations 19,335,768 14,812,963 ======== ======== Expected tax base on statutory rate of 32% 6,187,446 4,740,148 Effect of disallowed expenses 2,105,358 1,683,810 Effect of capital allowance (1,601,786) (3,116,469) Effect of non-taxable income (225,305) (1,035,611) Income tax expense recognised in income statements 6,468,713 2,271,878 ======== =========

27 10. Earnings per share -Page25- Basic earnings per share amounts is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding at the reporting date. The following reflects the income and share data used in the basic earnings per share computations et profit attributable to ordinary shareholders for basic earnings 12,020,828 11,659,708 Weighted average number of ordinary shares 45,000,000 45,000,000 Basic earnings per ordinary share ======= ======== 11. Property, plant and equipments Cost valuation Furniture Motor Generator Fixtures & Vehicles equipment Total As at 1 January, ,570,704 12,162,000 3,019,050 19,751,754 Additions/valuation 168, ,000 Disposals/scrapped As at 31 December, ,738,704 12,162,000 3,019,050 19,919,754 ======== ======== ======= ========= As at 1 January, ,479,832 1,266,875 2,012,600 6,759,307 Charge for the year 473,870 3,040,500 1,006,350 4,520,720 Disposals/scrapped As at 31 December, ,953,702 4,307,375 3,018,950 11,280,027 ========= ======= ======== ========= As at 1 January, ,022,762 1,494,990 1,006,250 5,524,002 Charge for the year 457,070 1,266,875 1,006,350 2,730,295 et book value At 31, December, ,002 7,854, ,639,727 ======= ======== ====== ======== At 31 December, ,090,872 10,895,125 1,006,450 12,992,447 ======== ======== ======= ========= 12. Investment property-leasehold building I January 101,264,441 94,981,841 Additions during the year 3,451, , December 104,715, ,264,441 ========= ==========

28 -Page Amortisation 1 January 22,374,896 19,843,285 Charge during the year 2,058,525 2,531, December 24,433,421 22,374,896 ======== ======== BV as at 31 December 80,282,480 78,889,545 ======== ======== The leasehold investment property is located at KM12, Agege Motor Road, Mushin, Lagos and is being amortised over the remaining term of the lease. The lease term will expire in Financial assets Available for sale financial assets (13.1) 3,944,402 8,166,832 Loans and other receivables (14) 13,628,436 3,628,878 17,572,828 11,795,710 ======== ======== 13.1 Available for sale financial assets Listed securities Dangote Flour Mills Plc 85,591 75,300 Unilever Plc 1,749, ,363 First Bank of igeria Plc - 4,303,891 AIICO 4,732 - PZ 148,672 - Ecobank Plc 830, ,136 Total available for sale financial 2,818,236 5,630,690 ======== ======== Impairment allowance At 1 January - - Impairment charge for the year (51,154) (34,136) Appreciation 1,177,320 2,570,278 1,126,166 2,536,142 At 31 December 3,944,402 8,166,832 ======= ========= 13.2 Available for sale financial assets The fair value of the quoted equity shares is determined by reference to published price on the igeria Stock Exchange. In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. The determination of what is significant or prolonged requires judgment. In making this judgment, the company evaluates, among other factors, the duration or extent to which the fair value of an investment is less than its cost.