PORTLAND PAINTS AND PRODUCTS NIG. PLC

PORTLAND PAINTS AND PRODUCTS NIG. PLC FINANCIAL STATEMENTS (UNAUDITED) FOR THE PERIOD ENDED 30 JUNE 2017

PORTLAND PAINTS & PRODUCTS NIGERIA PLC UNAUDITED FINANCIAL STATEMENTS CONTENTS PAGE General information 3 Statement of comprehensive income 4 Statement of financial position 5 Statement of changes in equity 6 Statement of cash flows 7 Notes to the financial statements 8 Other information: Statement of value added 21 2

PORTLAND PAINTS & PRODUCTS NIGERIA PLC GENERAL INFORMATION BOARD OF DIRECTORS REGISTERED OFFICE FACTORY REGISTERED NUMBER FRCN NUMBER COMPANY SECRETARY Mr. Larry Ettah Mr. Mukhtar Yakasai Mr. Bayo Osibo Mr. Abdul Bello Eng. Dipo Ashafa Mrs. Adeline Ogunfidodo Sandtex House 105A, Adeniyi Jones Avenue, Ikeja. Lagos State. Km 36, Abeokuta Lagos Expressway Ewekoro, Ogun State. RC76075 FRC/2012/0000000000221 Bolanle Oyekan (Mrs) UAC House 1-5 Odunlami street Lagos, Nigeria - Chairman - MD/CEO - Director - Director - Director - Director AUDITORS REGISTRAR BANKERS PricewaterhouseCoopers Landmark Towers, Plot 5B Water Corporation Road, Victoria Island, Lagos. Africa Prudential Registrars Plc (formerly UBA Registrars Ltd) No. 220B, Ikorodu Road Palmgrove, Lagos. Zenith Bank Plc United Bank for Africa Plc Skye Bank Plc Ecobank Nigeria Plc First City Monument Bank Plc First Bank Nigeria Plc Wema Bank Nigeria Plc 3

PORTLAND PAINTS & PRODUCTS NIGERIA PLC STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 3 Mths to Jun 2017 6 Mths to Jun 2017 3 Mths to Jun 6 Mths to Jun Note Revenue 3 516,884 1,066,383 408,050 808,705 Cost of Sales 5 (367,141) (781,489) (230,429) (478,886) Gross Profit 149,743 284,894 177,621 329,819 Other Operating Income 4 27,874 57,337 11,230 19,025 Selling and distribution expenses 5 (41,240) (81,004) (68,794) (135,233) Administrative expenses 5 (117,585) (206,895) (103,404) (215,150) Profit/(Loss) from Operations 18,792 54,332 16,653 (1,539) Finance Income 7 1,026 1,029 (198) 851 Finance Expenses 7 (14,690) (36,856) (24,549) (48,986) Net Finance Expenses (13,665) (35,828) (24,747) (48,135) Profit/(Loss) Before Taxation 5,128 18,505 (8,095) (49,674) Taxation 8 (1,640) (5,921) (3,782) (4,287) Total Comprehensive Profit/(Loss) 3,487 12,583 (11,876) (53,961) Earnings Per Share for Profit Attributable to Owners of The Company During The period: Basic (Kobo) 9 0.44 2 (3) (13) Diluted (Kobo) 9 0.44 2 (3) (13) The notes on pages 8 to 22 form an integral part of these financial statements 4

PORTLAND PAINTS & PRODUCTS NIGERIA PLC STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2017 Share capital Share Premium Revaluation Surplus Retained earnings Total equity 1st January 200,000-91,923 399,695 691,618 Profit for the Period - - - 8,597 8,597 31st December 200,000-91,923 408,292 700,214 1st January 2017 200,000-91,923 408,292 700,214 Increase in share capital 196,708 437,923 - - 634,631 Profit for the period - - 12,583 12,583 30 JUNE 2017 396,708 437,923 91,923 420,875 1,347,428 6

STATEMENT OF CASH FLOWS Cash flows from operating activities: 6 Mths to Jun 2017 6 Mths to Jun Cash generated from operations 18 (392,129) 64,774 Income Tax (1,061) (1,748) Net cash generated from Operating activities (393,190) 63,026 Cash flows from investing activities: Purchase of Property, Plant and Equipment 10 (12,609) (30,450) Purchase of intangible assets (47,156) - Proceeds from sale of motor vehicle 1,290 5,093 Finance income 1,029 851 Net cash provided / (absorbed) by Investing activities (57,446) (24,506) Cash flows from financing activities: Repayments of Borrowings (30,717) (50,772) Interest paid (36,856) (48,986) Proceeds from Right Issue 634,631 - Net cash provided / (absorbed) by financing activities 567,057 (99,758) Net increase/(decrease) in cash and cash equivalents 116,421 (61,239) Cash and cash equivalents brought forward 34,408 161,444 Cash and cash equivalents 150,829 100,205 7

3 Segment Information: For management purpose, the Company is organised into Strategic Business Units (SBU) based on products categories and has three reportable segments as follows: - Portland Decorative Paints segment, which manufactures and market various ranges of decorative paints. - Portland Marine Segment, which manufactures and markets various ranges of marine protective paints. - Portland Bathroom segment, which markets and distributes ranges of sanitary ware products. No other segment has been aggregated to form the above reportable operating segments. The chief operating decision maker (CODM) has been identified as the executive management. The Executive Management monitors the operating results of each business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on gross profit or loss and is measured consistently with gross profit or loss in the combined financial statements. However, the segment liabilities are absorbed by the decorative segment. (i) Income Decorative Marine & Industrial Paints Portland Bathrooms Total Jun-17 Jun-17 Jun-17 Jun-17 Revenue: Total Revenue 857,236 208,940 207 1,066,383 Inter-segmental revenue - - - Total Revenue From External Customers 857,236 208,940 207 1,066,383 Company's Revenue per Statement of Comprehensive Income 857,236 208,940 207 1,066,383 Segment Gross Profit /(loss) 235,634 49,300-39 284,894 Operating Expenses 254,630 Depreciation 31,698 Amortisation 1,572 Finance Income (1,029) Finance Expense 36,856 Other Income (57,337) Sub-total 266,390 Company's Profit Before Tax 18,505 Decorative Marine Paints Portland Bathrooms Total Jun-16 Jun-16 Jun-16 Jun-16 Revenue: Total Revenue 709,544 145,038 10,723 865,305 Total Revenue From External Customers 709,544 145,038 10,723 865,305 Company's Revenue per Statement of Comprehensive Income 709,544 145,038 10,723 865,305 Segment Gross Profit 274,302 51,823 3,694 329,819 Operating Expenses 318,792 Depreciation 11,854 Amortisation 19,737 Finance Income (851) Finance Expense 48,986 (Other Income)/Loss (19,025) Sub-total 379,493 Company's Loss Before Tax (49,674) The operating segments did not transact with each other and as such there are no transfer prices between operating segments. 8

Production activities in the factory is mainly production of decorative paints. Hence the relevant costs are absorbed by Decorative Business Unit. This accounts for the depreciation on Factory building wholly absorbed by Decorative Business Unit. Other Income is generated from the application of paints in addition to the sales and marketing of paint products. The amounts provided to the chief operating decision maker (CODM) with respect to total assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the segments and the physical location of the assets. (ii) Assets & Liabilities Decorative Marine Paints Portland Bathrooms Total Jun-17 Jun-17 Jun-17 Jun-17 Addition to Non-current Assets 12,609 12,609 Reportable Segment Assets 1,462,803 320,255 14,200 1,797,258 Factory Office Property 197,621 - - 197,621 Total Company Assets 1,673,032 320,255 14,200 2,007,488 Reportable Segment Liabilities: Loans and Borrowings (Excluding Leases and Overdrafts) 103,807 - - 103,807 Defined Contribution Pension Scheme 4,148 - - 4,148 Financial Liabilities 19,525 - - 19,525 Deferred Tax Laibilities 9,090 - - 9,090 Other Unallocated and Central Liabilities 523,490 - - 523,490 Total Company Liabilities 660,060 - - 660,060 Decorative Marine Paints Portland Bathrooms Total 31 December 31 December 31 December 31 December Addition to Non-current Assets 40,303 40,303 Reportable Segment Assets 1,120,314 367,395 13,143 1,500,852 Factory Office Property 213,164 - - 213,164 Total Company Assets 1,373,780 367,395 13,143 1,754,319 Reportable Segment Liabilities: Loans and Borrowings (Excluding Leases and Overdrafts) 139,614 139,614 Defined Contribution Pension Scheme 7,395 - - 7,395 Financial Liabilities 32,246 - - 32,246 Deferred Tax Laibilities 9,090 - - 9,090 Other Unallocated and Central Liabilities 865,760 - - 865,760 Total Company Liabilities 1,054,105 - - 1,054,105 Items of Property, Plant and Equipment are directly allocated to the SBU enjoying the economic benefits of the assets. 9

6 Mths to Jun 2017 6 Mths to Jun 4 Other Operating Income: Government grants 12,252 12,258 Profit on sale of fixed assets 545 4,452 Sale of scrap 4,426 819 Insurance claim received - 655 Income from executed projects 3,808 40 Exchange gain 17,853 - Toll Manufacturing - 381 Franchisee/Management fee 8,526 - Sundry Income 8,706 421 Container Deposit Refund 227 - Total 56,342 19,025 Cost of sales 781,489 478,886 Selling & distribution expenses 81,004 135,233 Adminstrative expenses 206,895 215,150 1,069,388 829,269 6 Expenses by nature Change in inventories of finished goods and work in progress 682,567 426,325 Amortization of intangible assets 1,572 19,737 Depreciation on property, plant and equipment 31,698 36,975 Staff costs 172,964 151,729 Distribution costs 21,590 18,530 Repairs and maintenance 20,590 10,984 Energy Consumption 19,336 12,496 Advert and promotional expenses 13,557 56,695 Commercial Service Fee 11,559 8,635 Auditors' fees 5,400 5,400 Bad debt provision 10,000 - Information technology 20,083 20,811 Rent & rates 15,340 16,847 Legal & Professional Fees 16,803 13,041 Travelling expenses 17,164 23,306 Telephone & Stationery 4,077 3,549 Other expenses 5,086 4,208 1,069,388 829,269 Interest received on bank deposits 1,029 851 Total 1,029 851 Finance costs: Interest on debts and borrowings 36,856 48,986 Total 36,856 48,986 8 Taxation (i) Current tax on profits for the period: Company income tax 5,551 3,782 Education tax 370 - Total current tax 5,921 3,782 (ii) Reconciliation of tax charge: Profit / (Loss) before tax 18,505 (49,674) Tax at Nigerian's statutory income tax rates (Minimum Tax) 5,551 (14,902) Disallowable expenses 31,012 8,294 Disallowable income (1,550) - Balancing charge 2,007 11,107 Tax effect of capital allowance (31,470) (716) Education tax @2% of assessable profit 370 - Deffered Tax - - Total tax charge for the period 5,921 3,782 9 Earnings per share Basic earnings per share amounts are calculated by dividing net profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period. The following reflects the income and share data used on the basic earnings per share computations: Net profit / (Loss) attributable to ordinary equity holders 12,583 (51,315) Weighted average number of ordinary shares for basic earnings per share 793,416 400,000 Basic earnings / (Loss) per share (in kobo) 2 (13) 10

10 Factory building Plant and machinery Furniture and fittings Computer Equipments Motor vehicles Work-inprogress Land Total Property, plant and equipment Cost At 1 January 40,000 173,164 395,160 140,779 26,841 197,609 10,634 984,187 Additions - - 10,704 803-28,396 400 40,303 Transfers / Held for sales - - 10,484 150 - - (10,634) - Disposal - - (6,920) (1,973) - (26,290) - (35,183) At 31 December 40,000 173,164 409,428 139,759 26,841 199,716 400 989,306 At 1 January 2017 40,000 173,164 409,428 139,759 26,841 199,716 400 989,306 Additions - - - 6,882-0 5,727 12,609 Transfers / Held for sales - - - - - - - Disposal - - (49) (121) (2,471) - (2,641) At 31 December 40,000 173,164 409,379 146,519 26,841 197,245 6,127 999,274 Depreciation At 1 January - 10,251 229,553 97,650 22,957 167,575-527,986 Additions - 3,561 31,029 13,954-8,631-57,176 Disposal (6,518) (2,283) 0 (25,135) (33,936) Transfer - - At 31 December - 13,812 254,064 109,321 22,957 151,071-551,226 At 1 January 2017-13,812 254,064 109,321 22,957 151,071-551,226 Additions - 1,731 14,909 7,814-7,059-31,513 Disposal (8) (94) (1,791) (1,893) 30 JUNE 2017-15,543 268,965 117,041 22,957 156,340-580,846 Net book Value as at: 30 JUNE 2017 40,000 157,621 140,414 29,478 3,884 40,905 6,127 418,428 At 31 December 40,000 159,352 155,364 30,437 3,884 48,644 400 438,080 Fair Value of land and building The company land and buildings were fair valued as at 31st December 2012 by Obosi Eleh & Co. (Estate Valuer), an accredited independent professional valuer who holds relevant professional qualifications and have recent experience in the location and categories of the properties valued. The fair value measurement is based on its "highest and best use" and its represents the price that would be received to sell the property in an orderly transaction between market participants as at 31 December 2012. Fair value is determined by reference to market-based evidence, based on active market prices, adjusted for any difference in the nature, location or condition of the specific property. Management is of the opinion that the value represents the value as at 31st May 2017. Other items of PPE were carried at cost, duly reviewed for impairment as at 31 May 2017, no impairment provision is deemed necessary. Depreciation amounting to N32m (-N37m) charged to income statement, N19.7m (-N17m) charged to cost of sales, N10.9m (- N11.85) to administrative expenses and N3.7m (-N8.4m) to selling and distribution expenses. 11

Trade Mark Computer Software 11 Intangible Assets Total Cost At 1 January 49,024 197,368 246,392 At 31 December 49,024 197,368 246,392 At 1 January 2017 49,025 197,368 246,393 Additions - externally acquired during the year - 47,156 47,156 30 JUNE 2017 49,025 244,524 293,549 Amortization: At 1 January - 121,707 121,707 Charge for the year - 75,661 75,661 At 31 December - 197,368 197,368 At 1 January 2017-197,368 197,368 Charge for the year - 1,572 1,572 30 JUNE 2017-198,940 198,940 Net Book values at: 30 JUNE 2017 49,025 45,584 94,609 At 31 December 49,024 0 49,025 The Company's intangible asset represents the N49m trade mark purchased from Blue Circle Industries Plc adjudged to have an indefinite life. N197m relates to investment on licence and technical agreement on oracle ERP applications. The oracle ERP application was acquired in 2012 and amortised to income statement until December,, the trade mark is carried at cost to be tested annually for impairment. The trade mark was reviewed for impairment as at 30 June 2017 and at present no impairment is deemed required and there are no contractual commitment that may have impact on the carry value of the trade mark. Following challenges with oracle ERP utilization dating back to implementation phase, management decided to discontinue the use of Oracle ERP and switch over to SAP ERP. The addition of N47m to computer software represents the cost of migration to SAP. Intangible assets amortization charged to income statement amounts to N1.5m (-N19.7) included as part of administrative expenses. 12

12 Inventories: 30 June 2017 31 December Raw Materials 206,645 141,367 Packaging Materials 28,956 20,507 Work in progress 6,594 1,539 Goods In Transist 33,262 - Finished Goods 608,779 621,698 Spare Parts 12,198 13,356 Diesel 7,649 9,031 Stock Impairment (99,258) (90,069) Total 804,826 717,429 Quarter end stock count was conducted across all Company's stock holding locations. The quantity counted was valued using Weighted Average Costing model as per the Company's policy and agreed as stated herein. The amount of write-down on inventories to net realizable value recognised as an expense is N10m (: N4m). This represents impairment for slow moving, obsolete and damaged inventories. All inventory with the exception of finished goods are stated at cost. Finished goods are stated at their net realisable values. The value of finished goods include N434m (Dec : N413m) imported merchandizing products. 13

31 December 30 June 2017 13 Trade and Other Receivables (i) Trade receivables 533,303 535,173 Less: Provision for impairment of trade receivables - (Note 13iii) (181,765) (171,765) Net trade receivables 351,537 363,408 Other receivables 28,786 37,672 Less: Provision for impairment of other receivables (16,397) (20,745) Net other receivables 12,389 16,927 Receivables from related parties - 3,168 Withholding tax receivable 51,939 40,526 VAT receivable 47,797 39,139 Total trade and other receivables 463,662 463,168 (ii) Prepayments Prepayments - Current 58,486 39,136 Prepayments - Non Current portion 16,647 13,402 Total prepayments 75,132 52,538 The balance on prepayment represent rent,medical and insurance paid in advance which will be charged against earnings in periods it relates. The fair values of trade and other receivables classified as loans and receivables are as follows: 31 December 30 June 2017 Trade receivables 351,537 363,408 Receivables from related parties (Note 18d) - 3,168 Withholding tax receivable 51,939 40,526 VAT receivable 47,797 39,139 Other receivables 12,389 16,927 Total 463,662 463,168 Trade receivables are non-interest bearing and are generally on terms of 30-90 days. Trade and other receivables as at 30 June 2017 were reviewed for impairment test. 30 June 2017 31 December (iii) Allowance for impairment of trade receivables: As at January 1st 171,765 188,444 Additional allowance for receivable impairment 10,000 28,684 181,765 217,128 Un-utilised amounts reversed / (amount written off) - (45,363) Total as at 30 JUNE 2017 181,765 171,765 14

14 Interest bearing loans and borrowings: (i) Non-Current Borrowings: Bank loans: 30 June 2017 31 December Long term liabilities - Note 14(iii) 7,685 43,492 Total Non Current Borrowings 7,685 43,492 (ii) Current Borrowings: Overdrafts due within one year - - Bank loans: Long term liabilities due within one year 96,122 96,122 Total Current Borrowings 96,122 96,122 Total Loans and Borrowings 103,807 139,614 The movement in Loan and Borrowings represent principal repayment as at 30 June 2017 The bank loans, overdrafts and finance lease borrowings were secured with the followings: Current borrowings: The bank overdrafts, commercial paper, import finance facility and finance lease were secured with the following: - Debenture on fixed and floating assets of Portland Paints & Products Nigeria Plc, valued at N1.1 billion as at December 2011, by Ubosi Eleh & Co. estate surveyors - Execution of trust receipts by the borrower. - Ownership of assets financed - Promissory note of the Company for principal and interest - Sales collection agreement (iii) Long term borrowings Non current liabilities The secured loan is a Central Bank of Nigeria (CBN) intervention fund through Bank of Industry (BOI). The applicable interest rate is 6% per annum subject to review by the BOI from time to time in line with the prevailing market conditions. The loan is repayable in instalments at various dates between January 2011 to 2018. After bifurcation of the government grant, in the form of a low interest rate loan, the loan bears an effective current interest rate of 22%. N13m (:N22m) interest on BOI facility was charged to income statement as at 30 June, 2017. Lender Total Facility Repayment Terms 30 June 2017 31 December Carrying Value - 28 equal quarterly Bank of Industry (BOI) Intervention funds Through Ecobank Nigeria Plc N300m installments from date of draw down 32,143 39,364 Carrying Value - 60 equal monthly Bank of Industry (BOI) Intervention Funds Through FCMB Nigeria Plc N255m installments with 12 months moratorium 71,664 100,250 Total Long Term Facility 103,807 139,614 Current Portion of Term-Loans (96,122) (96,122) Due After One Year 7,685 43,492 15

(v) Government grants: 30 June 2017 31 December As at January 32,239 56,755 Total Government Grant for the period 32,239 56,755 Released to the income statement (12,252) (24,516) 19,994 32,239 Current 12,252 24,516 Non current 7,742 7,730 19,994 32,246 Government grants relates to loan granted by Agency of Nigeria Government (Central Bank of Nigeria) with 6% interest rate which is below the current applicable market rate, the effect of this favourable interest is regarded as a government grant. There are no unfulfilled conditions or contigencies attached to these grants. (iv) Cash & Cash Equivalent: For the purpose of the statement of cash flow, cash and cash equivalents comprise the following as at 30 June 2017 Cash in hand and bank 20,829 34,080 Short term deposit 130,000 - Cash & short term deposit 150,829 34,080 Cash and Cash Equivalents 150,829 34,080 Cash at bank earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for varying periods of between one month and three months depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates. 16

15 Trade and Other Payables 30 June 2017 31 December Trade payables 162,967 210,137 Other payables 18,132 9,577 Withholding tax payable 4,410 5,127 Customer Deposits 3,311 12,846 Accruals 149,763 93,753 Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost 338,584 331,440 Intercompany Payable 135,916 493,905 Dividends payable 20,009 20,009 Total trade and other payables 494,508 845,354 Terms and conditions of the above financial and non-financial liabilities. Trade payables are non-interest bearing and normally settled on 30 day term Other payables and accruals are non-interest bearing and have an average term of 90 days. 16 Corporate Tax Liability 30 June 2017 31 December Balance at Beginning of the year Company Income Tax 26,948 19,889 Education Tax 852 852 27,800 20,741 Current Tax Expense Company Income Tax 5,551 7,860 Education Tax 370 1,061 33,722 29,662 Payment (1,061) (1,861) Income tax payable 32,661 27,800 Total as at 30 JUNE 2017 The analysis of tax payment during the period is as follows: Cash payment - 1,630 Withholding tax credit 1,061 231 1,061 1,861 Deferred taxes are calculated on all temporary differences using the liability method and an effective tax rate 30% (:30%). Deferred tax 30 June 2017 31 December At 1 January 9,090 9,090 Recognised in profit and loss Tax expense 0 - Total as at 30 JUNE 2017 9,090 9,090 17

17 Share capital (i) Authorised Authorised 31 December 31 December 30 June 2017 30 June 2017 Number Number Ordinary shares of 50 kobo each 793,415,535 396,708 400,000,000 200,000 Total 793,415,535 396,708 400,000,000 200,000 Issued and Fully Paid Issued and Fully Paid Issued and Fully Paid Issued and Fully Paid 31 December 31 December 30 June 2017 30 June 2017 Number Number Ordinary shares of 50kobo each at the beginning of the year 400,000,000 200,000 400,000,000 200,000 As at 30 June 2017 793,415,535 396,708 400,000,000 200,000 The increase in share capital is is as a result of the Rights Issue carried out in April 2017 (ii) Nature and purpose of reserves: 31 December 30 June 2017 Other capital reserve (Revaluation Reserve) At 1 January 2017 91,923 91,923 Revaluation during the year - - Total as at 30 JUNE 2017 91,923 91,923 Asset revaluation reserve: The asset revaluation reserve is used to record increases in the fair value of property, plant and equipment and decreases to the extent that such decrease relates to an increase on the same asset previously recognised in equity. The revaluation was carried out on land and building in December 2010 and 2012 by Ubosi Eleh & Co., a professional firm of Chartered Surveyors on an open market basis. (iii) Earnings per share Basic earnings per share amounts are calculated by dividing net profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period. The following reflects the income and share data used on the basic earnings per share computations: Net profit / (loss) attributable to ordinary equity holders 12,583 (51,315) Weighted average number of ordinary shares for basic earnings per share 793,416 400,000 Basic earnings / (loss) per share (in kobo) 2 (13) 18

18 Reconciliation of net profit to net cash provided by operating activities 6 Mths to Jun 2017 6 Mths to Jun Profit before tax 18,505 (49,673) Adjustments to reconcile net income to net cash provided by operating activities: Interest payable 36,856 48,986 Finance income (1,029) (851) Depreciation Charges 31,698 36,975 Exchange gain (17,853) - (Profit)/Loss on disposal of fixed assets (545) (4,452) Amortisation of intangible assets 1,572 19,737 Changes in assets and liabilities: 50,699 100,395 (Increase)/Decrease in Trade debtors and prepayments (23,089) (61,833) Decrease/(Increase) in Inventories (87,397) (24,909) (Decrease)/Increase in Trade creditors & Accruals (350,846) 100,794 (461,332) 14,052 Net Adjustment (410,633) 114,447 Net cash provided by operating activities (392,129) 64,774 19

19. Related party transactions The parent, ultimate parent and controlling party of the company is UAC of Nigeria Plc incorporated in Nigeria. There are other companies that are related to Portland Paints & Products Nigeria Plc through common share holdings and directorship. The following transactions were carried out with related parties: (a) Sales of goods and services Relationship 6 Mths to Jun 2017 6 Mths to Jun UACN Property Dev. Company Plc Sister Company 4,705 6,594 UAC Foods Ltd (UFL) Sister Company 144 863 MDS Logistics Ltd. Sister Company - 701 4,849 8,158 (b) Purchases of goods and services 6 Mths to Jun 2017 6 Mths to Jun UAC of Nigeria Plc: Service fee Principal Shareholder 11,559 8,635 20

STATEMENT OF VALUE ADDED FOR THE PERIOD ENDED 6 Mths to Jun 6 Mths to Jun 2017 % % Turnover 1,066,383 808,705 Non trading items 58,366 19,876 1,124,749 828,581 Bought-in-material and services: - Local (643,968) (534,170) - Imported (181,632) (150,663) Value added 299,149 100% 143,747 100% Applied as follows:- Salaries and labour related expenses 192,345 64% 115,875 81% To pay Government: Corporate tax 5,921 2% 1,640 1% To pay provider of capital: Interest charges 36,856 13% 48,986 34% To pay shareholders as dividend - 0% - 0% To provide for replacement of assets dividend to shareholders and 0% development of business - Depreciation 51,444 17% 28,561 20% - Deferred tax - 0% - 0% - Profit /(loss) for the period 12,583 4% (51,315) -36% 299,149 100% 143,747 100% Value added represents the additional wealth which the company has been able to create by its own and its employees' efforts. This statement shows the allocation of that wealth to employees, providers of capital, government and that retained for the future creation of more wealth. 21